Currency in CHF
Last close As at 30/03/2023
CHF49.75
▲ 0.50 (1.02%)
Market capitalisation
CHF653m
Research: Healthcare
As expected, Basilea continues to derive value from its oncology exit as it has received a transition-related milestone payment of US$4m (CHF3.7m) from its licensing partner SillaJen triggered by the progression of the oncology asset BAL0891 towards Phase I clinical studies. The company had previously received an upfront payment of US$10m (CHF9.3m) following closure of the deal with SillaJen in September 2022. As part of the licensing agreement, Basilea is set to receive potential future performance-based milestone payments of up to c US$320m (c CHF297m) and is also entitled to tiered royalties on net sales, which will range from single- to double-digit percentages. Basilea remains responsible for making milestone and royalty payments to the licensor, NTRC, for BAL0891. We value Basilea at CHF921.7m or CHF77.8/share (previously CHF903.5m or CHF76.3/share).
Basilea Pharmaceutica |
Oncology milestone payment triggered |
Q422 update |
Pharma and biotech |
21 December 2022 |
Share price performance
Business description
Next events
Analysts
Basilea Pharmaceutica is a research client of Edison Investment Research Limited |
As expected, Basilea continues to derive value from its oncology exit as it has received a transition-related milestone payment of US$4m (CHF3.7m) from its licensing partner SillaJen triggered by the progression of the oncology asset BAL0891 towards Phase I clinical studies. The company had previously received an upfront payment of US$10m (CHF9.3m) following closure of the deal with SillaJen in September 2022. As part of the licensing agreement, Basilea is set to receive potential future performance-based milestone payments of up to c US$320m (c CHF297m) and is also entitled to tiered royalties on net sales, which will range from single- to double-digit percentages. Basilea remains responsible for making milestone and royalty payments to the licensor, NTRC, for BAL0891. We value Basilea at CHF921.7m or CHF77.8/share (previously CHF903.5m or CHF76.3/share).
Year end |
Revenue |
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 |
120.7 |
(14.6) |
(123.2) |
0.0 |
N/A |
N/A |
12/23e |
131.3 |
9.0 |
66.0 |
0.0 |
72.3 |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
A year of transactions
2022 has been an eventful period for Basilea as management has continued to execute on its strategy to separate its oncology business and shift focus to become a pure-play anti-infectives company. In addition to the deal with SillaJen, the company has sold its PARG inhibitor discovery programme to Nodus Oncology as well as its preclinical CLK kinase inhibitors to 28-7 Therapeutics.
BAL0891 poised for the clinic
As a reminder, BAL0891 is a tyrosine kinase/polo-like kinase 1 (TTK/PLK1) inhibitor, which Basilea in-licensed from Dutch precision medicine company NTRC Therapeutics in 2018. The company progressed BAL0891 through preclinical studies, receiving FDA approval to initiate trials at end-FY21, before out-licensing it to SillaJen to further clinical development. Under the current licensing agreement with NTRC, Basilea is responsible for making milestone and royalty payments.
Valuation: CHF921.7m or CHF77.8/share
We have updated our model to reflect the latest milestone payment and value Basilea at CHF921.7m or CHF77.8/share (CHF903.5m or CHF76.3/share previously). Updating our foreign exchange rate assumption to $1.07/€ (from $1.02/€) has slightly brought forward the timing of milestone payments and projected revenue. While our underlying assumptions remain unchanged, value uplift has been realised by rolling our model forward. At end FY22, we expect Basilea to have cash of CHF1.5m, following repayment of the convertible note; however, the company has c CHF96.5m in cash and cash equivalents, which we assume will allow the company to meet its near-term obligations.
Exhibit 1: Financial summary
Accounts: US GAAP; year end 31 December; CHF000s |
|
|
2019 |
2020 |
2021 |
2022e |
2023e |
PROFIT & LOSS |
|
|
|
|
|
|
|
Total revenues |
|
|
134,381 |
127,629 |
148,122 |
120,667 |
131,296 |
Product revenues (Cresemba and Zevtera) |
|
|
114,461 |
112,032 |
131,382 |
99,805 |
127,150 |
Cost of sales |
|
|
(18,868) |
(24,054) |
(24,072) |
(25,629) |
(26,025) |
Gross profit |
|
|
115,513 |
103,575 |
124,050 |
95,039 |
105,272 |
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 |
(9,617) |
16,276 |
Reported operating income |
|
|
(17,200) |
(8,222) |
1,187 |
(10,330) |
15,526 |
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) |
(14,781) |
8,749 |
Profit before tax (normalised) |
|
|
(22,282) |
(29,602) |
(6,610) |
(14,581) |
8,956 |
Income tax expense (includes exceptionals) |
|
|
(40) |
(55) |
(37) |
0 |
(1,137) |
Net income (reported) |
|
|
(22,422) |
(14,722) |
(6,832) |
(14,781) |
7,611 |
Net income (normalised) |
|
|
(22,322) |
(29,657) |
(6,647) |
(14,581) |
7,818 |
Basic average number of shares, m |
|
|
10.76 |
10.28 |
11.68 |
11.84 |
11.84 |
Basic EPS (CHFc) |
|
|
(208.5) |
(143.2) |
(58.5) |
(124.8) |
64.3 |
Adjusted EPS (CHFc) |
|
|
(207.5) |
(288.5) |
(56.9) |
(123.2) |
66.0 |
Dividend per share (CHFc) |
|
|
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 |
1,467 |
5,961 |
Short-term investments |
|
|
20,000 |
101,023 |
95,000 |
94,990 |
94,990 |
Inventories |
|
|
18,569 |
21,192 |
22,783 |
24,256 |
24,631 |
Trade and other receivables |
|
|
6,242 |
8,710 |
24,947 |
20,323 |
22,113 |
Other current assets |
|
|
31,025 |
31,854 |
44,636 |
40,136 |
40,136 |
Total current assets |
|
|
184,860 |
223,528 |
241,066 |
181,173 |
187,831 |
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 |
11,304 |
11,478 |
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 |
51,590 |
51,764 |
Net assets |
|
|
(92,960) |
(102,046) |
(58,607) |
(69,066) |
(57,132) |
|
|
|
|
|
|
|
|
CASH FLOW STATEMENT |
|
|
|
|
|
|
|
Reported net income |
|
|
(22,422) |
(14,722) |
(6,831) |
(14,781) |
7,611 |
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) |
8,337 |
(1,990) |
Cash from operations (CFO) |
|
|
(63,836) |
(54,134) |
(32,020) |
(1,409) |
10,693 |
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 |
2,720 |
Increase/(decrease) in cash and equivalents |
|
|
(62,931) |
(44,030) |
(11,805) |
(52,233) |
4,493 |
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 |
2,720 |
7,214 |
Net (debt)/cash |
|
|
(68,716) |
(77,896) |
(69,349) |
(73,087) |
(63,593) |
Source: Basilea Pharmaceutica company accounts, Edison Investment Research
|
|
Research: Healthcare
Ultimovacs has announced that the Phase II LUNGVAC study (NCT05344209) will be switching the immune checkpoint inhibitor (ICI) to be used in combination with its lead cancer vaccine candidate, UV1. The trial is currently dosing UV1 and ICI pembrolizumab (Keytruda) in patients with advanced or metastatic non-small cell lung cancer (NSCLC). However, as of 1 January 2023, patients enrolled in the study will receive cemiplimab (Libtayo). The decision was taken after the Norwegian health authorities agreed to provide reimbursement for Libtayo in NSCLC. Multiple ICI/UV1 combination treatment modalities, including Libtayo, had already been integrated into the LUNGVAC trial protocol, so we do not see the change in drug as having any impact on patient enrolment. We value the company at NOK7.9bn or NOK231 per share.
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