Basilea Pharmaceutica — Multiple catalysts on the horizon

Basilea Pharmaceutica (SIX: BSLN)

Last close As at 23/04/2024

CHF41.25

0.35 (0.86%)

Market capitalisation

CHF541m

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Research: Healthcare

Basilea Pharmaceutica — Multiple catalysts on the horizon

Basilea has provided an update on the three ongoing derazantinib Phase II trials (FIDES-01/02/03) that will define its utility in iCCA (bile duct cancer), urothelial cancer (UC) and gastric cancer (GC). Importantly, updated data from the open-label FIDES-01 study confirm encouraging efficacy in iCCA patients with FGFR2 gene fusions. Derazantinib’s value lies in its unique MOA (FGFR inhibition plus CSF1R activity) and favourable safety profile, which suggests it could enable synergies with other therapies. While we forecast its first route to market in 2023 in iCCA, multiple data readouts expected in 2021/22 from FIDES-02 (UC) and FIDES-03 (GC) will determine combination strategies and its potential differentiation from the competition. We maintain our valuation of CHF1.17bn or CHF99 per share.

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Healthcare

Basilea Pharmaceutica

Multiple catalysts on the horizon

FIDES clinical trials update

Pharma & biotech

4 June 2021

Price

CHF43.9

Market cap

CHF567m

$1.12/CHF

Net debt (CHFm) at 31 December 2020 (excluding net proceeds from sale of Chinese R&D subsidiary and capital raise)

77.9

Shares in issue

12.9m

Free float

90%

Code

BSLN

Primary exchange

SIX

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(1.4)

(4.9)

(13.5)

Rel (local)

(4.7)

(11.0)

(23.5)

52-week high/low

CHF61.0

CHF42.8

Business description

Basilea is focused on oncology and infectious diseases. Its marketed products are Cresemba (an antifungal) and Zevtera (an anti-MRSA broad-spectrum antibiotic). The oncology R&D pipeline includes two clinical-stage assets, derazantinib and lisavanbulin.

Next events

Derazantinib monotherapy FIDES-02 interim data in urothelial cancer

H121

Derazantinib monotherapy & combination FIDES-02 interim data in urothelial cancer

H221

Ceftobiprole Phase III ERADICATE top-line data for bacteraemia (SAB)

H122

Analysts

Dr Susie Jana

+44 (0)20 3077 5700

Dr John Priestner

+44 (0)20 3077 5700

Basilea Pharmaceutica is a research client of Edison Investment Research Limited

Basilea has provided an update on the three ongoing derazantinib Phase II trials (FIDES-01/02/03) that will define its utility in iCCA (bile duct cancer), urothelial cancer (UC) and gastric cancer (GC). Importantly, updated data from the open-label FIDES-01 study confirm encouraging efficacy in iCCA patients with FGFR2 gene fusions. Derazantinib’s value lies in its unique MOA (FGFR inhibition plus CSF1R activity) and favourable safety profile, which suggests it could enable synergies with other therapies. While we forecast its first route to market in 2023 in iCCA, multiple data readouts expected in 2021/22 from FIDES-02 (UC) and FIDES-03 (GC) will determine combination strategies and its potential differentiation from the competition. We maintain our valuation of CHF1.17bn or CHF99 per share.

Year end

Revenue (CHFm)

PBT*
(CHFm)

EPS*
(CHF)

DPS
(CHF)

P/E
(x)

Yield
(%)

12/19

134.4

(22.3)

(2.08)

0.0

N/A

N/A

12/20

127.6

(29.6)

(2.89)

0.0

N/A

N/A

12/21e

135.1

(26.8)

(2.10)

0.0

N/A

N/A

12/22e

140.1

1.5

0.12

0.0

N/A

N/A

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

iCCA provides competitive clinical proof-of-concept

Updated top-line data (April data cut-off) from the FIDES-01 study in iCCA patients with FGFR2 gene fusions (cohort 1, n=103) highlight further improvement in efficacy (ORR 21.4% vs 20.4% and DCR 74.8% vs 72.8%). The mPFS of 7.8 months (vs 6.6 months) is in the upper range of peers in the FGFR inhibitor class. These data establish a competitive clinical proof-of-concept as monotherapy (MT) with potential read across to other cancers where FGFR2 aberrations are implicated. Enrolment into cohort 2 (FGFR2 gene mutations or amplifications) is ongoing (top-line results expected in H122). This cohort is important as it could provide differentiating data versus competitors.

Combinations key to larger opportunities in UC & GC

With the competitive landscape evolving in UC and GC, Basilea is strategically exploring a higher dose of derazantinib (400mg per day) to maximise efficacy and differentiate it from existing therapies. Derazantinib’s favourable safety profile and good tolerability provide an improved value proposition vs competitors and could prove advantageous for use in rational combinations. Interim results from FIDES-02 (UC) for the higher dose MT and combination with Tecentriq are now expected in H122. While interim results from FIDES-03 (GC) for the higher dose MT and recommended Phase II dose of the combination with Cyramza and paclitaxel are expected in H122. UC and GC represent the biggest opportunities for derazantinib, and collectively these data will enable Basilea to define an optimal registration and commercialisation strategy.

Valuation: rNPV of CHF1.17bn or CHF99 per share

Our valuation is unchanged at CHF1.17bn or CHF99 per share and reflects CHF77.9m net debt at 31 December 2020, excluding the gross CHF45.75m post-period capital raise.

Exhibit 1: Financial summary

Accounts: US GAAP, year-end: 31 December, CHF000s

 

 

2018

2019

2020

2021e

2022e

PROFT & LOSS

 

 

 

 

 

 

 

Total revenues

 

 

132,555

134,381

127,629

135,148

140,122

Product revenues (Cresemba and Zevtera)

 

 

105,900

114,461

112,032

116,800

139,809

Cost of sales

 

 

(20,299)

(18,868)

(24,054)

(27,319)

(22,696)

Gross profit

 

 

112,256

115,513

103,575

107,830

117,426

Research and development expenses (net)

 

 

(104,942)

(102,662)

(97,410)

(97,000)

(78,700)

SG&A costs

 

 

(31,409)

(30,051)

(29,422)

(29,442)

(29,813)

Other income/(expense)

 

 

0

0

0

0

0

Exceptionals and adjustments

 

 

0

0

15,035

0

0

EBITDA (reported)

 

 

(22,243)

(15,561)

(7,032)

(17,110)

10,520

Reported operating income

 

 

(24,095)

(17,200)

(8,222)

(18,613)

8,913

Operating margin %

 

 

n/a

n/a

n/a

n/a

n/a

Finance income/(expense)

 

 

(7,065)

(5,182)

(6,445)

(8,307)

(7,497)

Exceptionals and adjustments

 

 

0

0

0

0

0

Profit before tax (reported)

 

 

(31,160)

(22,382)

(14,667)

(26,919)

1,416

Profit before tax (normalised)

 

 

(31,060)

(22,282)

(29,602)

(26,801)

1,538

Income tax expense (includes exceptionals)

 

 

(192)

(40)

(55)

0

0

Net income (reported)

 

 

(31,352)

(22,422)

(14,722)

(26,919)

1,416

Net income (normalised)

 

 

(31,252)

(22,322)

(29,657)

(26,801)

1,538

Basic average number of shares, m

 

 

10.8

10.8

10.3

12.8

12.9

Basic EPS (CHF c)

 

 

(289.3)

(208.5)

(143.2)

(210.8)

11.0

Adjusted EPS (CHF c)

 

 

(288.4)

(207.5)

(288.5)

(209.9)

11.9

Dividend per share (CHF c)

 

 

0

0

0

0

0

BALANCE SHEET

 

 

 

 

 

 

 

Tangible assets

 

 

6,424

5,162

2,627

3,242

3,757

Intangible assets

 

 

372

372

672

754

832

Long-term investments

 

 

0

30,000

0

0

0

Other non-current assets

 

 

217

1,073

2,967

2,967

2,967

Total non-current assets

 

 

7,013

36,607

6,266

6,963

7,556

Cash and equivalents

 

 

173,034

109,024

60,749

53,319

60,103

Short-term investments

 

 

50,000

20,000

101,023

101,023

101,023

Inventories

 

 

14,411

18,569

21,192

32,184

26,738

Trade and other receivables

 

 

3,757

6,242

8,710

11,108

11,517

Other current assets

 

 

33,536

31,025

31,854

31,854

31,854

Total current assets

 

 

274,738

184,860

223,528

229,487

231,235

Long-term liabilities

 

 

196,982

197,740

239,668

241,024

242,380

Deferred revenue

 

 

69,945

16,471

13,158

2,990

2,990

Non-current operating lease liabilities

 

 

0

548

896

896

896

Other non-current liabilities

 

 

14,827

24,174

27,957

27,957

27,957

Total non-current liabilities

 

 

281,754

238,933

281,679

272,867

274,223

Accounts payable

 

 

6,399

6,765

13,151

8,607

7,151

Deferred revenue

 

 

25,025

32,873

2,556

2,500

0

Current operating lease liabilities

 

 

0

352

1,752

1,752

1,752

Other current liabilities

 

 

35,260

35,504

32,702

32,702

32,702

Total current liabilities

 

 

66,684

75,494

50,161

45,561

41,605

Net assets

 

 

(66,687)

(92,960)

(102,046)

(81,978)

(77,037)

CASH FLOW STATEMENT

 

 

 

 

 

 

 

Reported net income

 

 

(31,352)

(22,422)

(14,722)

(26,919)

1,416

Depreciation and amortisation

 

 

1,852

1,639

1,190

1,503

1,607

Share based payments

 

 

6,251

3,048

3,525

3,525

3,525

Other adjustments

 

 

758

758

(13,365)

1,356

1,356

Movements in working capital

 

 

(56,719)

(46,859)

(30,762)

(28,158)

1,080

Cash from operations (CFO)

 

 

(79,210)

(63,836)

(54,134)

(48,693)

8,985

Capex

 

 

(419)

(294)

(1,823)

(2,000)

(2,000)

Short-term investments

 

 

60,000

30,000

(51,023)

0

0

Long-term investments

 

 

0

(30,000)

0

0

0

Other investing activities

 

 

(190)

(110)

17,883

(200)

(200)

Cash used in investing activities (CFIA)

 

 

59,391

(404)

(34,963)

(2,200)

(2,200)

Net proceeds from issue of shares

 

 

0

0

0

43,463

0

Movements in debt

 

 

0

0

43,451

0

0

Other financing activities

 

 

(5,986)

1,309

1,616

0

0

Cash from financing activities (CFF)

 

 

(5,986)

1,309

45,067

43,463

0

Cash and equivalents at beginning of period

 

 

200,724

173,908

111,044

66,256

58,826

Increase/(decrease) in cash and equivalents

 

 

(25,805)

(62,931)

(44,030)

(7,430)

6,785

Effect of FX on cash and equivalents

 

 

(1,011)

67

(758)

0

0

Cash and equivalents at end of period

 

 

173,908

111,044

66,256

58,826

65,610

Net (debt)/cash

 

 

26,052

(68,716)

(77,896)

(86,682)

(81,254)

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 2021 Edison Investment Research Limited (Edison).

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

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

1185 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

1185 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 2021 Edison Investment Research Limited (Edison).

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

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

1185 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

1185 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

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