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Last close As at 09/06/2023
CHF45.25
▲ 0.60 (1.34%)
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CHF593m
Research: Healthcare
Basilea Pharmaceutica continues its positive wave of Q322 activity with the successful asset purchase and sub-licence agreement of its tyrosine kinase/polo-like kinase 1 (TTK/PLK1) inhibitor, BAL0891, to SillaJen (a privately held South Korean biotech). The deal will see Basilea receive up to US$14m (CHF13.5m) in upfront and near-term milestones, with potential future milestone payments of up to c US$320m (c CHF310m). The company is also entitled to tiered royalties on net sales, which will range from single- to double-digit percentages. We see this latest development as a positive indicator of management delivering on its intention to separate the oncology business by end-FY22. We have updated our financials to align with company guidance and value Basilea at CHF903.5m or CHF76.3/share.
Basilea Pharmaceutica |
Oncology asset sales continue |
Q322 update |
Pharma and biotech |
23 September 2022 |
Share price performance
Business description
Next events
Analysts
Basilea Pharmaceutica is a research client of Edison Investment Research Limited |
Basilea Pharmaceutica continues its positive wave of Q322 activity with the successful asset purchase and sub-licence agreement of its tyrosine kinase/polo-like kinase 1 (TTK/PLK1) inhibitor, BAL0891, to SillaJen (a privately held South Korean biotech). The deal will see Basilea receive up to US$14m (CHF13.5m) in upfront and near-term milestones, with potential future milestone payments of up to c US$320m (c CHF310m). The company is also entitled to tiered royalties on net sales, which will range from single- to double-digit percentages. We see this latest development as a positive indicator of management delivering on its intention to separate the oncology business by end-FY22. We have updated our financials to align with company guidance and value Basilea at CHF903.5m or CHF76.3/share.
Year end |
Revenue (CHFm) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/20 |
127.6 |
(29.6) |
(288.5) |
0.0 |
N/A |
N/A |
12/21 |
148.1 |
(6.6) |
(56.9) |
0.0 |
N/A |
N/A |
12/22e |
121.0 |
(15.3) |
(129.4) |
0.0 |
N/A |
N/A |
12/23e |
128.8 |
6.4 |
47.0 |
0.0 |
82.3 |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
BAL0891 a strategic fit
Basilea has progressed BAL0891 through preclinical studies and is poised to enter clinical development, receiving FDA approval to initiate trials at end-FY21. SillaJen has a wide-ranging clinical and preclinical oncology pipeline, primarily focused on the development of its lead oncolytic viral cancer vaccine candidate, Pexa-Vec (JX-594). We believe SillaJen’s focus on oncology provides a strategic rationale for the acquisition of BAL0891. Additionally, the company is exploring Pexa-Vec in multiple combination drug studies, an important differentiator in the oncology treatment market, which may offer future opportunity for BAL0891, in our view.
Updated guidance for FY22
As a result of the recent transactions, management has increased FY22 revenue guidance to CHF116–122m (previously CHF106–112m), the operating loss to CHF10–15m (previously CHF20–25m) and operating cash outflow to CHF0–5m (previously CHF10–15m). We have included upfront payments of c CHF11m for FY22 from the poly (ADP-ribose) glycohydrolase discovery programme and BAL0891 sales into our model. We have also included interest expenses (c 6.7% per year) associated with the senior secured loan of CHF75m, which will be used to repay the convertible bonds (c CHF117m) due in December 2022.
Valuation: CHF903.5m or CHF76.4/share
We have updated our model to reflect the change in guidance and value Basilea at CHF903.5m or CHF76.4/share (CHF893.8m or CHF75.5/share previously). While our underlying assumptions remain unchanged, value uplift has been realised by rolling our model forward.
Exhibit 1: Financial summary
Accounts: US GAAP, Yr end: December 31, CHF:000s |
|
|
2019 |
2020 |
2021 |
2022e |
2023e |
PROFIT & LOSS |
|
|
|
|
|
|
|
Total revenues |
|
|
134,381 |
127,629 |
148,122 |
120,021 |
128,820 |
Product revenues (Cresemba and Zevtera) |
|
|
114,461 |
112,032 |
131,382 |
102,859 |
124,673 |
Cost of sales |
|
|
(18,868) |
(24,054) |
(24,072) |
(25,722) |
(26,135) |
Gross profit |
|
|
115,513 |
103,575 |
124,050 |
94,300 |
102,685 |
Research and development expenses (net) |
|
|
(102,662) |
(97,410) |
(93,157) |
(73,111) |
(63,751) |
SG&A costs |
|
|
(30,051) |
(29,422) |
(29,721) |
(32,258) |
(25,995) |
Other income/(expense) |
|
|
0 |
0 |
0 |
0 |
0 |
Exceptionals and adjustments |
|
|
0 |
15,035 |
15 |
0 |
0 |
EBITDA (reported) |
|
|
(15,561) |
(7,032) |
1,941 |
(10,356) |
13,689 |
Reported operating income |
|
|
(17,200) |
(8,222) |
1,187 |
(11,069) |
12,939 |
Operating margin % |
|
|
n/a |
n/a |
n/a |
n/a |
n/a |
Finance income/(expense) |
|
|
(5,182) |
(6,445) |
(7,982) |
(4,451) |
(6,777) |
Exceptionals and adjustments |
|
|
0 |
0 |
0 |
0 |
0 |
Profit before tax (reported) |
|
|
(22,382) |
(14,667) |
(6,795) |
(15,520) |
6,162 |
Profit before tax (normalised) |
|
|
(22,282) |
(29,602) |
(6,610) |
(15,320) |
6,369 |
Income tax expense (includes exceptionals) |
|
|
(40) |
(55) |
(37) |
0 |
(801) |
Net income (reported) |
|
|
(22,422) |
(14,722) |
(6,832) |
(15,520) |
5,361 |
Net income (normalised) |
|
|
(22,322) |
(29,657) |
(6,647) |
(15,320) |
5,568 |
Basic average number of shares, m |
|
|
10.76 |
10.28 |
11.68 |
11.84 |
11.84 |
Basic EPS (CHF c) |
|
|
(208.5) |
(143.2) |
(58.5) |
(131.1) |
45.3 |
Adjusted EPS (CHF c) |
|
|
(207.5) |
(288.5) |
(56.9) |
(129.4) |
47.0 |
Dividend per share (CHF c) |
|
|
0 |
0 |
0 |
0 |
0 |
BALANCE SHEET |
|
|
|
|
|
|
|
Tangible assets |
|
|
5,162 |
2,627 |
2,018 |
3,129 |
3,586 |
Intangible assets |
|
|
372 |
672 |
632 |
1,137 |
1,130 |
Long-term investments |
|
|
30,000 |
0 |
2,390 |
2,390 |
2,390 |
Other non-current assets |
|
|
1,073 |
2,967 |
1,161 |
19,405 |
19,405 |
Total non-current assets |
|
|
36,607 |
6,266 |
6,201 |
26,061 |
26,511 |
Cash and equivalents |
|
|
109,024 |
60,749 |
53,700 |
790 |
3,333 |
Short-term investments |
|
|
20,000 |
101,023 |
95,000 |
94,990 |
94,990 |
Inventories |
|
|
18,569 |
21,192 |
22,783 |
24,344 |
24,735 |
Trade and other receivables |
|
|
6,242 |
8,710 |
24,947 |
20,214 |
21,696 |
Other current assets |
|
|
31,025 |
31,854 |
44,636 |
40,136 |
40,136 |
Total current assets |
|
|
184,860 |
223,528 |
241,066 |
180,475 |
184,890 |
Convertible senior unsecured bonds (long-term) |
|
|
197,740 |
239,668 |
94,544 |
94,544 |
94,544 |
Senior secured loan |
|
|
0 |
0 |
0 |
75,000 |
70,000 |
Deferred revenue |
|
|
16,471 |
13,158 |
11,926 |
11,926 |
11,926 |
Non-current operating lease liabilities |
|
|
548 |
896 |
10 |
18,254 |
18,254 |
Other non-current liabilities |
|
|
24,174 |
27,957 |
24,986 |
24,986 |
24,986 |
Total non-current liabilities |
|
|
238,933 |
281,679 |
131,466 |
224,710 |
219,710 |
Convertible senior unsecured bonds (short-term) |
|
|
0 |
0 |
123,505 |
0 |
0 |
Accounts payable |
|
|
6,765 |
13,151 |
10,617 |
11,345 |
11,527 |
Deferred revenue |
|
|
32,873 |
2,556 |
1,233 |
1,233 |
1,233 |
Current operating lease liabilities |
|
|
352 |
1,752 |
896 |
896 |
896 |
Other current liabilities |
|
|
35,504 |
32,702 |
38,157 |
38,157 |
38,157 |
Total current liabilities |
|
|
75,494 |
50,161 |
174,408 |
51,631 |
51,813 |
Net assets |
|
|
(92,960) |
(102,046) |
(58,607) |
(69,805) |
(60,122) |
CASH FLOW STATEMENT |
|
|
|
|
|
|
|
Reported net income |
|
|
(22,422) |
(14,722) |
(6,831) |
(15,520) |
5,361 |
Depreciation and amortisation |
|
|
1,639 |
1,190 |
754 |
713 |
750 |
Share based payments |
|
|
3,048 |
3,525 |
4,322 |
4,322 |
4,322 |
Other adjustments |
|
|
758 |
(13,365) |
1,522 |
0 |
0 |
Movements in working capital |
|
|
(46,859) |
(30,762) |
(31,787) |
8,399 |
(1,691) |
Cash from operations (CFO) |
|
|
(63,836) |
(54,134) |
(32,020) |
(2,086) |
8,743 |
Capex |
|
|
(294) |
(1,823) |
(581) |
(1,624) |
(1,000) |
Short-term investments |
|
|
30,000 |
(51,023) |
6,023 |
10 |
0 |
Long-term investments |
|
|
(30,000) |
0 |
0 |
0 |
0 |
Other investing activities |
|
|
(110) |
17,883 |
(1,867) |
(705) |
(200) |
Cash used in investing activities (CFIA) |
|
|
(404) |
(34,963) |
3,575 |
(2,319) |
(1,200) |
Net proceeds from issue of shares |
|
|
0 |
0 |
42,240 |
0 |
0 |
Movements in debt |
|
|
0 |
43,451 |
(23,212) |
(48,505) |
(5,000) |
Other financing activities |
|
|
1,309 |
1,616 |
(2,388) |
0 |
0 |
Cash from financing activities (CFF) |
|
|
1,309 |
45,067 |
16,640 |
(48,505) |
(5,000) |
Cash and equivalents at beginning of period |
|
|
173,908 |
111,044 |
66,256 |
54,953 |
2,043 |
Increase/(decrease) in cash and equivalents |
|
|
(62,931) |
(44,030) |
(11,805) |
(52,910) |
2,543 |
Effect of FX on cash and equivalents |
|
|
67 |
(758) |
501 |
0 |
0 |
Cash and equivalents at end of period |
|
|
111,044 |
66,256 |
54,952 |
2,043 |
4,586 |
Net (debt)/cash |
|
|
(68,716) |
(77,896) |
(69,349) |
(73,764) |
(66,221) |
Source: Basilea Pharmaceutica company accounts, Edison Investment Research
|
|
Research: Healthcare
The pathway to regulatory approval for OSE’s neoepitope cancer vaccine, Tedopi, continues to be a key point of focus for the company. Following the presentation of positive data from the Phase III ATALANTE-1 trial over H122, OSE is discussing potential pathways to approval of Tedopi in non-small cell lung cancer (NSCLC) with the regulators. We expect an update on this in H222, with the possibility of inclusion in the FDA early access programme still on the table. Concomitantly, the company is preparing for further Phase III trials with Tedopi. In its H122 report, the company reported results that are largely in line with our estimates (excluding a €10m milestone payment from Boehringer Ingelheim). At end-June 2022, OSE reported a cash position of €31.2m, which, at our estimated FY22 burn rate of €20.4m, we forecast will fund the company to Q323.
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