Basilea Pharmaceutica — Need for innovation against severe infections

Basilea Pharmaceutica (SIX: BSLN)

Last close As at 18/05/2024

CHF44.30

0.40 (0.91%)

Market capitalisation

CHF584m

More on this equity

Research: Healthcare

Basilea Pharmaceutica — Need for innovation against severe infections

At its recent capital markets day (CMD) and with the support of key opinion leaders, Basilea highlighted the rising need for innovative therapies to address serious fungal and bacterial infections. It continues to make advancements in this specialised segment through the development of opportunistic acquisitions leveraging its anti-infective expertise. Its growth initiatives remain funded through the traction of its commercialised products, Cresemba and Zevtera. FY24 key strategic priorities include the US commercial launch of antibacterial Zevtera and Phase III trial initiation of first-in-class, broad-spectrum antifungal fosmanogepix.

Soo Romanoff

Written by

Soo Romanoff

Managing Director - Head of Content, Healthcare

Healthcare

Basilea Pharmaceutica

Need for innovation against severe infections

Capital markets day

Pharma and biotech

22 April 2024

Price

CHF40.75

Market cap

CHF489m

US$/CHF0.91

Net debt (CHFm) at 31 December 2023

46.6

Shares in issue (excluding 1.12m treasury shares)

12.0m

Free float

90%

Code

BSLN

Primary exchange

SIX

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

15.9

20.0

(8.4)

Rel (local)

18.8

18.5

(7.9)

52-week high/low

CHF48.65

CHF32.25

Business description

Basilea Pharmaceutica is focused on treating infectious diseases. Its marketed products are Cresemba (an antifungal) and Zevtera (an anti-MRSA broad-spectrum antibiotic). In late 2023, it expanded its clinical pipeline to include antifungal BAL2062, antibiotic tonabacase (evaluation licence) and Phase III-ready, novel broad-spectrum antifungal treatment fosmanogepix (two Phase III trials planned for 2024). In January, it acquired the preclinical LptA inhibitor programme from Spexis.

Next events

Decision on EU paediatric extension

H124

Fosmanogepix Phase III initiation

Mid-24

Announcement of US partner for Zevtera

Mid-24

Analysts

Soo Romanoff

+44 (0)20 3077 5700

Jyoti Prakash, CFA

+44 (0)20 3077 5700

Basilea Pharmaceutica is a research client of Edison Investment Research Limited

At its recent capital markets day (CMD) and with the support of key opinion leaders, Basilea highlighted the rising need for innovative therapies to address serious fungal and bacterial infections. It continues to make advancements in this specialised segment through the development of opportunistic acquisitions leveraging its anti-infective expertise. Its growth initiatives remain funded through the traction of its commercialised products, Cresemba and Zevtera. FY24 key strategic priorities include the US commercial launch of antibacterial Zevtera and Phase III trial initiation of first-in-class, broad-spectrum antifungal fosmanogepix.

Year end

Revenue
(CHFm)

PBT*
(CHFm)

EPS*
(CHFc)

DPS
(CHFc)

P/E
(x)

Yield
(%)

12/22

147.8

12.3

104.1

0.0

39.1

N/A

12/23

157.6

10.8

89.7

0.0

45.4

N/A

12/24e

187.2

28.0

233.6

0.0

17.4

N/A

12/25e

209.1

32.3

269.2

0.0

15.1

N/A

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

Anti-infectives: A large, underserved market

The CMD highlighted the growing menace of treatment-resistant microbial strains that are exacerbated by environmental and external factors, with mortality rates trending higher (bacterial infections account for c 14% of deaths globally; 6.55 million cases of invasive fungal infections annually, with a c 40% mortality rate linked to the infection). Despite this, new treatment options have been lacking and no new class of antifungals has been approved in the past 20 years. Zevtera is the first antibiotic approved for Staphylococcus aureus bacteraemia (SAB), the leading cause of bacterial deaths in the last 15 years in the US. Big pharma has traditionally shunned R&D investments in the space (choosing to in-license commercial-stage products instead), highlighting the strategic importance of specialists such as Basilea.

Basilea’s therapies tailored to meet a growing need

Management reiterated that Basilea’s portfolio is strategically focused on disease areas with the highest unmet need and meaningful commercial potential. Its unique business model leverages acquisitive/licensing opportunities (early-stage assets with a differentiated profile; c US$40m spent on acquisition of three assets in 2023) subsequently monetised by partnering with larger commercial players. The rich pipeline has both commercial products (Cresemba: >35% market share in value terms in the US, double-digit growth annually since launch; Zevtera: recently approved in the US, expected to account for 85–90% of its global market potential) and clinical-stage assets (BAL2062, tonabacase, fosmanogepix), targeting major disease areas. Management reiterated that internally generated capital is sufficient to fund anticipated development work, although often government/research support is also available, given the aggressiveness of microbial infections and unmet need.

Valuation: Significant upside potential

Although the share price has gained 17.4% ytd (trading at CHF40.75 currently), we estimate further upside potential based on the strength of the pipeline and additions to it. We maintain our valuation of Basilea at CHF84/share.

Highlights from the CMD

A refreshed business strategy

The Basilea CMD highlighted the company’s focus on developing treatments for invasive/serious fungal and bacterial infections, its differentiated product portfolio (Exhibit 1) and business strategy aimed at risk mitigation and maximisation of commercial potential. The past couple of years have seen the company right size itself (fully divesting its oncology portfolio), with a renewed focus on anti-infectives supported by the acquisition of three clinical-stage assets in 2023 and one preclinical programme in early 2024. Basilea turned cash flow positive in FY22, with the liquidity position improving in FY23, despite a total of c US$40m upfront spend on the three acquisitions/in-licensing deals in 2023 and early repayment of the senior secured loan (last pending payment made in Q124).

Exhibit 1: Basilea’s product portfolio

Source: Basilea CMD, April 2024

Microbial infections: A widespread, serious unmet need

Despite the large incidence and concerning mortality rates (as noted above), microbial infections have fallen under the radar, with limited therapeutic options and no real innovation in the past decade or two. At Basilea’s CMD, the invited key opinion leaders, Professor Oliver A Cornely, professor of translational research, faculty of medicine, University of Cologne, and Professor Thomas L Holland, associate professor, division of infectious diseases, Duke University, highlighted the rising threat of invasive fungal infections and SAB, the most prevalent and deadly bacterial infection.

While these invasive fungal infections are typically assumed to affect mostly immunocompromised patients, Professor Cornely also discussed the role of climate change, natural disasters and environmental factors in the rising number of invasive fungal infections. Examples quoted include the increasing number of pulmonary aspergillosis cases, a mould infection that afflicts up to 25% of severe influenza and COVID-19 cases. He also highlighted the rise in treatment-resistant strains such as Candida auris, a type of yeast infection, termed an urgent threat in the CDC antimicrobial threats report, citing the Spanish Candida auris outbreak, which had a mortality rate of 41% and was treatment resistant to commonly used azoles. The growing incidence of treatment-resistant Candida (primarily affecting the blood, abdominal abscesses and bones) and Aspergillus (primarily affecting the lungs) related cases (among others) resulted in a 37% mortality rate at day 30 in 79 candidemia patients in Europe. According to the professor, the utility of current antifungal drug classes is limited by dose-limiting toxicities, drug-drug interactions, slow onset of action and long treatment durations, indicative of the need to develop more effective, novel drug classes. Basilea’s Cresemba is a market leader in the treatment of invasive mould infections (such as aspergillosis and mucormycosis). Fosmanogepix, its Phase-III ready asset, is a broad-spectrum antifungal treatment with activity against both yeast and mould infections (discussed in more detail later).

Professor Thomas L Holland focused specifically on SAB, a common and serious bloodstream infection, associated with significant morbidity and mortality, particularly in hospitalised patients. SAB is believed to have an incidence rate of 20–50 cases per 100,000 population, with a mortality rate between 10% and 30%. These figures are likely to be significantly higher in hospitalised patients and the professor noted that SAB infection rates in patients with prosthetics or implants can be as high as 30–70%. Results for a 21-year, prospective longitudinal study (n=2348) noted that SAB has been getting more complicated over time, with risk factors including patients with prosthetics, co-morbid conditions and metastatic complications. The study also highlighted the rising cases of community acquired infection. The professor noted that while the mortality rates have come down modestly, there is further scope for improvement.

Methicillin-resistant Staphylococcus aureus (MRSA), which accounts for c 50% of all SAB infections, was noted to have caused over 50% of multidrug-resistant bacterial infections in hospitalised patients in the US, highting the scale of the issue. Infective endocarditis (inflammation of the inner lining of the heart and valves), a major complication related to SAB, was observed in 12% of over 4,800 prospectively enrolled patients with SAB. Despite this concerning statistic, optimal treatment options have been limited due to inherent or acquired resistance (antibiotics such as gentamicin, rifampin and antistaphylococcal penicillin have proven to be ineffective). The current treatments of choice are the glycopeptides vancomycin and daptomycin, which are intravenously administered, followed by an oral step-down treatment. However, there have been concerns around the bacteria developing resistance to these treatments. Professor Holland noted the potential of new antibiotic classes such as ceftobiprole (Zevtera) and lysins (tonabacase) in the treatment of SAB. Zevtera demonstrated non-inferiority to the standard of care daptomycin in a large clinical trial and is the first new class of antibiotics to be approved for the treatment of SAB in the past 15 years in the US (discussed in more detail later).

An enviable portfolio of anti-infectives

As part of the CMD, Basilea’s management reconfirmed its focus on treating aggressive and serious infections by developing its novel class of assets, spanning both antifungal and antibacterial treatments. We present a brief portfolio overview below.

Basilea’s antifungal portfolio includes its lead commercial asset Cresemba and clinical-stage assets fosmanogepix and BAL2062:

Cresemba was approved by the FDA in 2015 for the two most common invasive mould infections, aspergillosis and mucormycosis, and received label expansion in the paediatric population in December 2023, expanding market exclusivity to September 2027. Cresemba is approved in 76 countries and marketed in 73, capturing 15% of the global market. It recorded in-market sales of US$473m in the 12 months ending December 2023 (+27% y-o-y), with management indicating that the current sales trajectory would point to peak sales of more than US$800m (ahead of our estimate of c US$700m), making it one of the top-selling anti-infective treatments. Cresemba’s royalties (CHF78.9m), milestone payments (CHF32.2m) and product revenues (CHF17.1m) drove the company’s top-line performance in FY23. The US currently contributes c 60% of Cresemba sales (where it holds a category-leading 38% market share), but management anticipates China and Japan (approval in 2022 and 2023, respectively) to play a crucial role in future traction given these two markets constitute c 25% of the market opportunity for Cresemba.

Fosmanogepix: touted by the company to be the successor to Cresemba, fosmanogepix is a Phase III-ready, broad-spectrum antifungal therapy (with activity against both yeast and mould infections, including multidrug-resistant fungi) and is the most advanced clinical-stage asset in the company’s pipeline. It was acquired in late 2023 from Amplyx Pharmaceuticals, an affiliate of Pfizer, and has a novel mechanism of action, a key differentiator in the face of antifungal drug resistance. Management highlighted that it had been seeking to acquire the asset for a long time and believes that it holds the potential to become the treatment of choice in difficult to treat fungal infections. We currently ascribe peak sales potential of c US$800m to the drug. Exhibit 2 presents a snapshot of the drug’s activity against various infections.

Exhibit 2: Fosmanogepix’s activity against different fungus species

Source: Basilea CMD, April 2024

Two Phase III trials are planned for 2024, for the treatment of candidemia and invasive candidiasis (expected to commence by mid-2024) and for the treatment of mould infections (to commence by end 2024). The drug holds the Fast Track and Orphan Drug designations from the FDA, as well as a QIDP tag, which should provide more than 12 years of market exclusivity post launch. Note that Pfizer continues to hold the right of first negotiation for commercial rights to fosmanogepix, which we believe it will exercise, if clinical data are favourable. For more details on the drug, please refer to our update notes (Refilling the pipeline for growth, From strength to strength).

BAL2062 was acquired in October 2023 from Gravitas Therapeutics (original patent owned by Astellas Pharma) for an upfront payment of US$2m. The drug is a potentially first-in-class, fast-acting antifungal compound for the treatment of invasive mould infections, mainly caused by the Aspergillus species. Management has highlighted that the drug has a very rapid fungicidal activity and low propensity for drug-drug interaction and cross-resistance. This implies a potential for improved efficacy and makes it ideal for use in difficult-to-treat patients who receive multiple medications. The asset has already received Fast Track, Orphan Drug and QIDP designations from the FDA for invasive aspergillosis. If preclinical profiling is successful, management plans to commence Phase I studies in H125. This asset does not currently feature in our valuation for Basilea, and we note the upside potential on clinical entry.

Basilea’s antibacterial portfolio includes its commercial-stage asset Zevtera, clinical-stage asset tonabacase and the preclinical programme of LptA inhibitors:

Zevtera is a new-generation cephalosporin anti-infective, with broad spectrum activity against both drug-resistant, gram-positive and gram-negative bacterial infections. The drug was already approved in several non-US markets for bacterial lung infections (pneumonia) and recently received FDA approval for three indications: SAB, acute bacterial skin and skin structure infections (ABSSSI) and community-acquired bacterial pneumonia (CABP). The initial commercial focus is likely to be on SAB and the company is in the process of finalising a commercial partner in the US (expected by mid-2024). We understand that the slight delay in announcing a partner has been driven by considerable market interest in the asset and Basilea is working on optimising the deal. We also note that the company foresees no significant delay in the drug launch (expected within 2024). The US is the most important market for Zevtera, accounting for 80–90% of the drug’s market potential. We estimate global peak sales of more than US$500m. Note that the QIDP designation allows 10 years of market exclusivity in the US.

Tonabacase is a potentially first-in-class antibacterial therapy of the endolysin class, for the treatment of SAB infections, including multi-drug resistant strains and those forming difficult-to-eradicate biofilms. The drug is being evaluated in preclinical testing under a licence and option agreement with iNtRON Biotechnology which, if successful may lead to Basilea exercising the option to in-license followed by commencement of Phase II studies in 2025. During the CMD, management noted that tonabacase has a differentiated profile to another clinical-stage lysin, exebacase (which failed a Phase III futility analysis), due to its ability to use multiple dosing. Our valuation currently does not include this asset.

The LpTA inhibitor was acquired in January 2024 from Spexis and is currently in preclinical development. The compound has demonstrated in vitro and in vivo activity against gram-negative bacteria (GNB) by disrupting part of the lipopolysaccharide transport bridge, an essential component of the outer membrane in GNB. The programme received initial funding of US$0.9m from combating antibiotic-resistant bacteria biopharmaceutical accelerator (CARB-X), with potential for additional funding. A clinical candidate is expected to be shortlisted by H224, with clinical development commencing in 2026. This programme is currently not included in our valuation for Basilea.

Business model optimised for growth

The CMD also saw the company explain its operational strategy and business model, which focuses on identifying and acquiring novel and promising early-stage assets (late preclinical to Phase II clinical stage), taking them through to the end of Phase III trials (creating value by adding clinical differentiation) and then out-licensing the assets to larger commercial-stage players (global or local), for upfront, milestone and royalty payments. Management asserted that this allows it to de-risk its exposure and supports faster market entry and scale-up, translating to a larger income stream for Basilea. This also works to the mutual benefit of big pharma, which has traditionally shunned investing R&D dollars in anti-infectives, instead focusing on in-licensing commercial-stage assets. As per data shared by management, this strategy results in the company recognising 30–40% of the in-market sales of the product as income (including product sales and upfront, milestones and royalty payments) over the lifetime of the drug. This translates to a 20–30% operating margin on a product basis for a comparable self-commercialisation model, a healthy return in our opinion, particular given the lower risk profile (these returns can be generated with a lean, lower-risk business model with minimal fixed costs and launch investments). Management also shared the difference in gross margin across the different asset profiles, with internal programmes generating gross margins of 75–85% versus 55–75% for acquired assets, based on the stage of development.

This strategy, along with the decision to offload its oncology assets in 2022, has allowed the company to turn operating cash flow positive in 2022 and further consolidate its balance sheet strength in 2023 (Exhibit 3). Moreover, the improved cash balance was achieved without external funding, even after absorbing c US$40m in upfront payments for acquisitions made in 2023. The company also used the improved free cash flows and cash at hand to significantly reduce its indebtedness (CHF59m in debt repayment out of the total CHF75m outstanding) (Exhibit 4). This reflects Basilea’s confidence in its future operational and financial prospects, in our opinion.

Exhibit 3: Operating cash flow trend (CHFm)

Exhibit 4: Debt position (CHFm)

Source: Basilea CMD, April 2024

Source: Basilea CMD, April 2024

Exhibit 3: Operating cash flow trend (CHFm)

Source: Basilea CMD, April 2024

Exhibit 4: Debt position (CHFm)

Source: Basilea CMD, April 2024

Based on the current operating performance and our near-term estimates, we expect the company to be sufficiently capitalised to fund ongoing development work from internally generated funds. Note that this does not discount the potential of receiving further government or non-profit R&D funding to advance its clinical programmes. As a reminder, the US Phase III clinical trials were 75% funded (equivalent of US$112m) by the Biomedical Advanced Research and Development Authority (BARDA) and the preclinical LptA inhibitor programme recently received US$0.9m in funding from CARB-X.

Exhibit 5: Financial summary

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

 

 

2021

2022

2023

2024e

2025e

PROFIT & LOSS

 

 

 

 

 

 

 

Total revenues

 

 

148,122

147,765

157,634

187,212

209,058

Product revenues (Cresemba and Zevtera)

 

 

131,382

122,315

150,275

183,912

205,758

Cost of sales

 

 

(24,072)

(24,603)

(26,794)

(33,875)

(41,251)

Gross profit

 

 

124,050

123,162

130,840

153,337

167,807

Research and development expenses (net)

 

 

(93,157)

(73,804)

(77,852)

(84,924)

(92,343)

SG&A costs

 

 

(29,721)

(30,815)

(33,783)

(35,665)

(38,859)

Exceptionals and adjustments

 

 

15

0

0

0

0

EBITDA (reported)

 

 

1,941

19,640

20,782

33,954

37,889

Reported operating income

 

 

1,187

18,543

19,205

32,747

36,605

Operating margin %

 

 

N/A

N/A

N/A

N/A

N/A

Finance income/(expense)

 

 

(7,982)

(6,441)

(8,744)

(5,021)

(4,622)

Profit before tax (reported)

 

 

(6,795)

12,102

10,461

27,727

31,983

Profit before tax (normalised)

 

 

(6,610)

12,302

10,761

28,018

32,286

Income tax expense (includes exceptionals)

 

 

(37)

45

(10)

0

0

Net income (reported)

 

 

(6,832)

12,147

10,451

27,727

31,983

Net income (normalised)

 

 

(6,647)

12,347

10,751

28,018

32,286

Basic average number of shares, m

 

 

11.68

11.86

11.99

11.99

11.99

Basic EPS (CHF c)

 

 

(58.5)

102.4

87.2

231.2

266.7

Adjusted EPS (CHF c)

 

 

(56.9)

104.1

89.7

233.6

269.2

Dividend per share (CHF c)

 

 

0

0

0

0

0

BALANCE SHEET

 

 

 

 

 

 

 

Restricted cash

 

 

0

22,000

0

0

0

Tangible assets

 

 

2,018

4,277

3,757

3,942

4,061

Intangible assets

 

 

632

578

548

457

354

Long-term investments

 

 

2,390

1,266

0

0

0

Other non-current assets

 

 

1,161

17,363

16,839

16,839

16,839

Total non-current assets

 

 

6,201

45,484

21,144

21,238

21,254

Cash and equivalents

 

 

53,700

84,659

59,933

66,207

93,411

Restricted cash

 

 

1,253

1,908

4,389

4,389

4,389

Short-term investments

 

 

95,000

0

0

0

0

Inventories

 

 

22,783

24,244

26,410

33,389

40,659

Trade and other receivables

 

 

24,947

33,152

27,891

33,124

36,990

Other current assets

 

 

43,383

31,401

33,522

33,522

33,522

Total current assets

 

 

241,066

175,364

152,145

170,632

208,971

Convertible senior unsecured bonds (long-term)

 

 

94,544

95,000

95,455

95,455

95,455

Senior secured loan

 

 

0

36,360

0

0

0

Deferred revenue

 

 

11,926

10,693

9,460

9,460

9,460

Non-current operating lease liabilities

 

 

10

16,323

15,636

15,636

15,636

Other non-current liabilities

 

 

24,986

8,337

15,149

15,149

15,149

Total non-current liabilities

 

 

131,466

166,713

135,700

135,700

135,700

Convertible senior unsecured bonds (short-term)

 

 

123,505

0

0

0

0

Senior secured loan

 

 

0

37,467

15,453

0

0

Accounts payable

 

 

10,617

191

5,847

7,392

9,002

Deferred revenue

 

 

1,233

1,233

1,233

1,233

1,233

Current operating lease liabilities

 

 

896

1,988

2,062

2,062

2,062

Other current liabilities

 

 

38,157

33,971

22,997

22,997

22,997

Total current liabilities

 

 

174,408

74,850

47,592

33,684

35,294

Net assets

 

 

(58,607)

(20,715)

(10,003)

22,486

59,231

CASH FLOW STATEMENT

 

 

 

 

 

 

 

Reported net income

 

 

(6,831)

12,147

10,451

27,727

31,983

Depreciation and amortisation

 

 

754

1,097

1,577

1,206

1,284

Share based payments

 

 

4,322

3,598

4,762

4,762

4,762

Other adjustments

 

 

1,522

497

1,443

0

0

Movements in working capital

 

 

(31,787)

(10,282)

(3,988)

(10,667)

(9,526)

Cash from operations (CFO)

 

 

(32,020)

7,057

14,245

23,027

28,503

Capex

 

 

(581)

(3,138)

(813)

(1,100)

(1,100)

Short-term investments

 

 

6,023

94,951

0

0

0

Long-term investments

 

 

0

0

0

0

0

Other investing activities

 

 

(1,867)

(165)

(221)

(200)

(200)

Cash used in investing activities (CFIA)

 

 

3,575

91,648

(1,034)

(1,300)

(1,300)

Net proceeds from issue of shares

 

 

42,240

250

(381)

0

0

Movements in debt

 

 

(23,212)

(49,672)

(59,314)

(15,453)

0

Other financing activities

 

 

(2,388)

4,176

2,390

0

0

Cash from financing activities (CFF)

 

 

16,640

(45,246)

(57,305)

(15,453)

0

Cash and equivalents at beginning of period

 

 

66,256

54,952

108,566

64,321

70,596

Increase/(decrease) in cash and equivalents

 

 

(11,805)

53,459

(44,094)

6,274

27,203

Effect of FX on cash and equivalents

 

 

501

155

(151)

0

0

Cash and equivalents at end of period

 

 

54,952

108,566

64,321

70,596

97,800

Net (debt)/cash

 

 

(68,096)

(60,260)

(46,586)

(24,859)

2,345

Source: company reports, 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 £60,000 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 2024 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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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 £60,000 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 2024 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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

More on Basilea Pharmaceutica

View All

Latest from the Healthcare sector

View All Healthcare content

Research: TMT

discoverIE Group — FY24 EPS in line; good margin progress

discoverIE anticipates reporting FY24 underlying EPS in line with board expectations. After a period in mid-FY24 of working down inventory, customers appear to be reverting to normal ordering patterns, with Q424 organic revenue growth of 2% y-o-y and 11% q-o-q and a strong pipeline of design wins at year-end. We have revised our forecasts to reflect lower revenue, partly due to a disposal, but maintain our profit forecasts, which results in operating margin expansion in FY24 and FY25.

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free