Ceftobiprole hits its TARGET

Basilea Pharmaceutica 6 August 2019 Update
Download PDF

Basilea Pharmaceutica

Ceftobiprole hits its TARGET

Positive clinical trial results

Pharma & biotech

6 August 2019

Price

CHF34.86

Market cap

CHF415m

US$1.00/CHF

Net cash (CHFm) at 31 December 2018
(excluding restricted cash)

26.1

Shares in issue
(including 1.1m treasury shares)

11.9m

Free float

91.46%

Code

BSLN

Primary exchange

SIX

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(6.5)

(23.4)

(47.9)

Rel (local)

(2.8)

(22.3)

(50.3)

52-week high/low

CHF69.05

CHF34.06

Business description

Basilea Pharmaceutica is focused on anti-infectives and oncology. Its marketed products are Cresemba (an antifungal) and Zevtera (an anti-MRSA broad-spectrum antibiotic). The R&D pipeline includes two oncology drug candidates in clinical development.

Next events

H119 results

20 August 2019

(1600 CEST)

Derazantinib + Tecentriq Phase I/II trial start (urothelial cancer)

H219

BAL101553 Phase IIa data (glioblastoma & ovarian cancer)

H219

Analysts

Dr Susie Jana

+44 (0)20 3077 5700

Sean Conroy

+44 (0)20 3681 2534

Daniel Wilkinson

+44 (0)20 3077 5734

Basilea Pharmaceutica is a research client of Edison Investment Research Limited

Basilea has announced positive top-line data from the Phase III TARGET trial which is evaluating Zevtera/Mabelio (ceftobiprole) in the treatment of acute bacterial skin and skin structure infections (ABSSSI). Ceftobiprole, a broad spectrum antibiotic, met primary and secondary efficacy endpoints including non-inferiority to standard of care vancomycin plus aztreonam in the intent-to-treat population. While this news is positive, TARGET is one of two cross-supportive Phase III trials required for the US filing; top-line data from the second study in Staphylococcus aureus bacteraemia (SAB) bloodstream infections (ERADICATE) is expected in H221. A US launch date of 2022/23 for ceftobiprole could be feasible, with a focus on SAB and ABSSSI. We value Basilea at CHF1,082m or CHF100/share.

Year end

Revenue (CHFm)

PBT*
(CHFm)

EPS*
(CHF)

DPS
(CHF)

P/E
(x)

Yield
(%)

12/17

101.5

(18.9)

(1.78)

0.0

N/A

N/A

12/18

132.6

(31.0)

(2.89)

0.0

N/A

N/A

12/19e

134.4

(31.9)

(2.95)

0.0

N/A

N/A

12/20e

149.5

(4.8)

(0.45)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Zevtera fortunes reside in US market

Zevtera/Mabelio (ceftobiprole) is a broad-spectrum antibiotic for the treatment of drug resistant Gram-positive infections, including methicillin-resistant Staphylococcus aureus (MRSA), and Gram-negative bacterial infections, including Pseudomonas. The product is available in major European countries (approved for both community and hospital-acquired bacterial pneumonia) and some international markets through multiple partners and further roll-outs are expected (ex US) in 2019 and 2020. We believe the major commercial opportunity for Zevtera resides in the US market. Data from the TARGET study could be used to support a post-marketing label extension outside the US.

TARGET hitting efficacy and safety

The TARGET trial evaluated 679 patients – ceftobiprole met pre-specified primary efficacy of non-inferiority (with the pre-specified margin of 10%) to vancomycin plus aztreonam (91.3% vs 88.1%). Ceftobiprole was well tolerated; drug-related adverse events in both treatment groups were nausea, diarrhoea and headache. Full data from this study will be presented at an upcoming scientific conference. We forecast $550m in peak sales for ceftobiprole; comprising US peak sales of $317m in 2027, this is predicated on securing a US commercialisation partner.

Valuation: rNPV of CHF1,082m or CHF100/share

We value Basilea at CHF1,082m. Our valuation is based on an NPV analysis, which includes the main portfolio of products (anti-infectives Cresemba and Zevtera/Mabelio, oncology assets BAL101553 and Derazantinib) and net cash of CHF26.1m at 31 December 2018.

Exhibit 1: Financial summary

CHF'000s

2016

2017

2018

2019e

2020e

December

US GAAP

US GAAP

US GAAP

US GAAP

US GAAP

PROFIT & LOSS

Revenue

 

 

65,984

101,521

132,555

134,380

149,543

Cost of Sales

(5,347)

(9,025)

(20,299)

(24,371)

(27,438)

Gross Profit

60,637

92,496

112,256

110,008

122,105

Research and development (gross)

(48,449)

(55,055)

(104,942)

(105,000)

(90,400)

SG&A

(56,077)

(54,491)

(31,409)

(31,679)

(31,319)

EBITDA

 

 

(41,570)

(15,150)

(22,272)

(24,094)

3,184

Operating Profit (before amort. and except.)

(43,789)

(16,950)

(23,972)

(26,443)

623

Intangible Amortisation

(100)

(100)

(123)

(228)

(237)

Exceptionals

0

0

0

0

0

Other

0

0

0

0

0

Operating Profit

(43,889)

(17,050)

(24,095)

(26,671)

386

Net Interest

(7,065)

(1,976)

(7,065)

(5,417)

(5,417)

Profit Before Tax (norm)

 

 

(50,854)

(18,926)

(31,037)

(31,860)

(4,794)

Profit Before Tax (reported)

 

 

(50,954)

(19,026)

(31,160)

(32,088)

(5,031)

Tax

(333)

(334)

(192)

(26)

(26)

Profit After Tax (norm)

(51,187)

(19,260)

(31,229)

(31,886)

(4,821)

Profit After Tax (reported)

(51,287)

(19,360)

(31,352)

(32,114)

(5,057)

Average Number of Shares Outstanding (m)

10.1

10.8

10.8

10.8

10.8

EPS - normalised fully diluted (CHFc)

 

(505.74)

(178.36)

(289.19)

(295.28)

(44.64)

EPS - (reported) (CHFc)

 

 

(506.73)

(179.28)

(290.33)

(297.39)

(46.83)

Dividend per share (c)

0.0

0.0

0.0

0.0

0.0

Gross Margin (%)

91.9

91.1

84.7

81.9

81.7

EBITDA Margin (%)

N/A

N/A

N/A

N/A

2.1

Operating Margin (before GW and except.) (%)

N/A

N/A

N/A

N/A

0.4

BALANCE SHEET

Fixed Assets

 

 

59,264

58,189

7,013

8,668

10,556

Intangible Assets

232

326

372

572

772

Tangible Assets

8,878

7,768

6,424

7,879

9,567

Investments

50,154

50,095

217

217

217

Current Assets

 

 

268,494

292,976

274,738

230,207

192,503

Stocks

14,931

15,320

14,411

26,708

18,793

Debtors

2,492

4,955

3,757

6,259

6,965

Cash

239,030

260,724

223,908

164,578

134,083

Other

12,041

11,977

32,662

32,662

32,662

Current Liabilities

 

 

(72,914)

(79,491)

(66,684)

(81,666)

(58,657)

Creditors

(72,914)

(79,491)

(66,684)

(81,666)

(58,657)

Short term borrowings

0

0

0

0

0

Long Term Liabilities

 

 

(289,844)

(313,114)

(281,754)

(249,759)

(235,759)

Long term borrowings

(195,466)

(196,224)

(196,982)

(196,982)

(196,982)

Other long term liabilities

(94,378)

(116,890)

(84,772)

(52,777)

(38,777)

Net Assets

 

 

(35,000)

(41,440)

(66,687)

(92,550)

(91,356)

CASH FLOW

Operating Cash Flow

 

 

(75,003)

19,014

(79,210)

(49,655)

(20,365)

Net Interest

0

0

0

(5,417)

(5,417)

Tax

0

0

0

(26)

(26)

Capex

(394)

(711)

(419)

(4,031)

(4,486)

Acquisitions/disposals

0

0

0

0

0

Financing

0

0

0

0

0

Other

(51,021)

3,391

42,813

(200)

(200)

Dividends

0

0

0

0

0

Net Cash Flow

(126,418)

21,694

(36,816)

(59,330)

(30,495)

Opening net debt/(cash)

 

 

(169,982)

(43,564)

(64,500)

(26,926)

32,404

HP finance leases initiated

0

0

0

0

0

Other

0

(758)

(758)

0

0

Closing net debt/(cash)

 

 

(43,564)

(64,500)

(26,926)

32,404

62,899

Source: Company accounts, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by Basilea Pharmaceutica and prepared and issued by Edison, in consideration of a fee payable by Basilea Pharmaceutica. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Basilea Pharmaceutica and prepared and issued by Edison, in consideration of a fee payable by Basilea Pharmaceutica. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Share this with friends and colleagues