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CHF681m
Research: Healthcare
Basilea has announced an extension to its licence agreement with Pfizer (PFE) for Cresemba (for invasive fungal infections). The original deal granted PFE exclusive commercialisation rights to the product in Europe (ex-Nordics), Russia, Turkey and Israel and the new amendment includes China and 16 countries within Asia Pacific. The extension of Cresemba’s global footprint at this stage highlights PFE’s commitment to the product in areas outside of Europe. Concomitantly Basilea has updated its guidance for FY17 to a reduced operating loss of CHF1m per month vs CHF2m per month. Our valuation rises slightly to CHF1,222m.
Written by
Basilea Pharmaceutica |
Pfizer Cresemba deal extended to Asia and China |
Corporate update |
Pharma & biotech |
7 December 2017 |
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Basilea Pharmaceutica is a research client of Edison Investment Research Limited |
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Basilea has announced an extension to its licence agreement with Pfizer (PFE) for Cresemba (for invasive fungal infections). The original deal granted PFE exclusive commercialisation rights to the product in Europe (ex-Nordics), Russia, Turkey and Israel and the new amendment includes China and 16 countries within Asia Pacific. The extension of Cresemba’s global footprint at this stage highlights PFE’s commitment to the product in areas outside of Europe. Concomitantly Basilea has updated its guidance for FY17 to a reduced operating loss of CHF1m per month vs CHF2m per month. Our valuation rises slightly to CHF1,222m.
Year end |
Revenue (CHFm) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/15 |
52.8 |
(61.3) |
(6.07) |
0.0 |
N/A |
N/A |
12/16 |
66.0 |
(50.9) |
(5.06) |
0.0 |
N/A |
N/A |
12/17e |
95.1 |
(19.8) |
(1.83) |
0.0 |
N/A |
N/A |
12/18e |
84.4 |
(28.0) |
(2.59) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
PFE to commercialise Cresemba in China & Asia Pac
Pfizer is to use its extensive footprint in China and Asia Pac to commercialise Cresemba (isavuconazole) contingent on approval in each territory. The revised agreement includes a $3m upfront payment (deferred) and up to ~$223m in additional payments dependent upon the achievement of pre-specified regulatory and sales milestones. Basilea will also receive royalties in the mid-teen range on Pfizer’s sales in these territories. Importantly, as of November 2017 PFE has launched Cresemba into Spain so it is now available in the top five EU markets. In addition, Swissmedic has granted marketing authorisation for Switzerland.
Revised guidance for 2017: lower operating loss
Basilea has updated its financial guidance for 2017 to a reduced operating loss of CHF1m/month vs CHF2m/month. The reduction in our estimated operating loss to CHF11.9m from CHF23.3m reflects higher anticipated product and contract revenues plus lower operating expenses. Basilea has communicated an acceleration in the transition of operational responsibilities to partners.
Valuation: rNPV of CHF1,222m or CHF113.2/share
Our revised valuation of CHF1,222m (from CHF1,188m) reflects changes to our Cresemba ROW assumptions, as Basilea will benefit from royalties and milestones from this deal. At this point we crudely model the China and Asia Pac opportunity by increasing our ROW penetration rates and trajectory of sales pick up. More visibility upon launch or communication of eligible patient populations in these regions will prompt us to refine our modelling assumptions. Our valuation is based on Cresemba (worldwide) and antibiotic Zevtera (ex-US) plus and net cash. Based on $0.87bn peak sales, Cresemba is worth CHF944m (previously CHF913.5m). We also include risk-adjusted contributions for Zevtera US (PIII trials in the US are due to start) and the earlier-stage pipeline.
Exhibit 1: Financial summary
CHF'000s |
2015 |
2016 |
2017e |
2018e |
|||
December |
US GAAP |
US GAAP |
US GAAP |
US GAAP |
|||
PROFIT & LOSS |
|||||||
Revenue |
|
|
52,825 |
65,984 |
95,119 |
84,363 |
|
Cost of Sales |
0 |
(5,347) |
(9,225) |
(11,574) |
|||
Gross Profit |
52,825 |
60,637 |
85,895 |
72,790 |
|||
Research and development (net) |
(60,075) |
(48,449) |
(46,000) |
(64,000) |
|||
SG&A |
(54,235) |
(56,077) |
(54,380) |
(31,527) |
|||
EBITDA |
|
|
(58,885) |
(41,570) |
(12,056) |
(20,150) |
|
Operating Profit (before amort. and except.) |
(61,285) |
(43,789) |
(14,385) |
(22,614) |
|||
Intangible Amortisation |
(200) |
(100) |
(100) |
(123) |
|||
Exceptionals |
0 |
0 |
0 |
0 |
|||
Other |
0 |
0 |
0 |
0 |
|||
Operating Profit |
(61,485) |
(43,889) |
(14,485) |
(22,737) |
|||
Net Interest |
(35) |
(7,065) |
(5,375) |
(5,375) |
|||
Profit Before Tax (norm) |
|
|
(61,320) |
(50,854) |
(19,760) |
(27,989) |
|
Profit Before Tax (reported) |
|
|
(61,520) |
(50,954) |
(19,860) |
(28,112) |
|
Tax |
(83) |
(333) |
(26) |
(26) |
|||
Profit After Tax (norm) |
(61,403) |
(51,187) |
(19,787) |
(28,016) |
|||
Profit After Tax (reported) |
(61,603) |
(51,287) |
(19,887) |
(28,139) |
|||
Average Number of Shares Outstanding (m) excluding treasury shares |
10.1 |
10.1 |
10.8 |
10.8 |
|||
EPS - normalised fully diluted (CHFc) |
|
(607.22) |
(505.74) |
(183.23) |
(259.44) |
||
EPS - (reported) (CHFc) |
|
|
(609.20) |
(506.73) |
(184.16) |
(260.58) |
|
Dividend per share (c) |
0.0 |
0.0 |
0.0 |
0.0 |
|||
Gross Margin (%) |
100.0 |
91.9 |
90.3 |
86.3 |
|||
EBITDA Margin (%) |
N/A |
N/A |
N/A |
N/A |
|||
Operating Margin (before GW and except.) (%) |
N/A |
N/A |
N/A |
N/A |
|||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
13,870 |
59,264 |
59,648 |
59,592 |
|
Intangible Assets |
346 |
232 |
132 |
9 |
|||
Tangible Assets |
10,724 |
8,878 |
9,363 |
9,430 |
|||
Investments |
2,800 |
50,154 |
50,154 |
50,154 |
|||
Current Assets |
|
|
384,865 |
268,494 |
266,430 |
209,010 |
|
Stocks |
9,579 |
14,931 |
10,710 |
15,854 |
|||
Debtors |
1,545 |
2,492 |
2,606 |
2,311 |
|||
Cash |
364,688 |
239,030 |
241,072 |
178,803 |
|||
Other |
9,053 |
12,041 |
12,041 |
12,041 |
|||
Current Liabilities |
|
|
(68,836) |
(72,914) |
(64,332) |
(45,994) |
|
Creditors |
(68,836) |
(72,914) |
(64,332) |
(45,994) |
|||
Short term borrowings |
0 |
0 |
0 |
0 |
|||
Long Term Liabilities |
|
|
(315,043) |
(289,844) |
(311,673) |
(287,673) |
|
Long term borrowings |
(194,706) |
(195,466) |
(195,466) |
(195,466) |
|||
Other long term liabilities |
(120,337) |
(94,378) |
(116,207) |
(92,207) |
|||
Net Assets |
|
|
14,856 |
(35,000) |
(49,927) |
(65,065) |
|
CASH FLOW |
|||||||
Operating Cash Flow |
|
|
(67,780) |
(75,003) |
10,298 |
(54,337) |
|
Net Interest |
0 |
0 |
(5,375) |
(5,375) |
|||
Tax |
0 |
0 |
(26) |
(26) |
|||
Capex |
(1,009) |
(394) |
(2,854) |
(2,531) |
|||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
|||
Financing |
(0) |
0 |
0 |
0 |
|||
Other |
12,645 |
(51,021) |
0 |
0 |
|||
Dividends |
0 |
0 |
0 |
0 |
|||
Net Cash Flow |
(56,143) |
(126,418) |
2,042 |
(62,269) |
|||
Opening net debt/(cash) |
|
|
(226,125) |
(169,982) |
(43,564) |
(45,606) |
|
HP finance leases initiated |
0 |
0 |
0 |
0 |
|||
Other |
0 |
0 |
(0) |
0 |
|||
Closing net debt/(cash) |
|
|
(169,982) |
(43,564) |
(45,606) |
16,663 |
|
Source: Edison Investment research, company reports
|
|
Research: Investment Companies
The European Investment Trust (EUT) has been managed by Edinburgh Partners (EP) since 2010. Lead manager Craig Armour employs EP’s strict valuation-driven investment process, aiming to generate long-term capital growth from a diversified portfolio of continental European equities. Following a period of outsized equity returns, Armour says that investors will once again pay more attention to individual company fundamentals and valuations. Since July 2017, EUT pays semi-annual, rather than annual dividends. While the focus is on capital rather than income growth, the ordinary distribution has increased every year since 2009. EUT’s current yield, including indicated and special dividends, is 2.5%.