Basilea Pharmaceutica — Pfizer Cresemba deal extended to Asia and China

Basilea Pharmaceutica (SIX: BSLN)

Last close As at 28/03/2024

CHF37.75

0.25 (0.67%)

Market capitalisation

CHF492m

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Research: Healthcare

Basilea Pharmaceutica — Pfizer Cresemba deal extended to Asia and China

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.

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Healthcare

Basilea Pharmaceutica

Pfizer Cresemba deal extended to Asia and China

Corporate update

Pharma & biotech

7 December 2017

Price

CHF75.20

Market cap

CHF887m

US$1.03/CHF

Net cash (CHFm) at 30 June 2017

57.3

Shares in issue (including 1m treasury shares)

11.8m

Free float

91.46%

Code

BSLN

Primary exchange

SIX

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(5.3)

(6.5)

7.0

Rel (local)

(5.6)

(11.0)

(9.0)

52-week high/low

CHF91.0

CHF69.4

Business description

Basilea Pharmaceutica is focused on anti-infectives and oncology. Its lead products are Cresemba (an antifungal), which is approved in the US and Europe, and Zevtera (an anti-MRSA broad-spectrum antibiotic), approved in major European and several non-European countries for pneumonia. R&D pipeline includes two clinical-stage assets for cancer resistance.

Next events

Zevtera initiate Phase III ABSSSI US study

Q417

Zevtera initiate Phase III SAB US study

H118

FY17 results

February 2018

Analysts

Dr Susie Jana

+44 (0)20 3077 5700

Daniel Wilkinson

+44 (0)20 3077 5734

Basilea Pharmaceutica is a research client of Edison Investment Research Limited

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*
(CHFm)

EPS*
(CHF)

DPS
(CHF)

P/E
(x)

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

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Basilea Pharmaceutica and prepared and issued by Edison for publication globally. 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. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US 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. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and 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 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. This document is provided 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.
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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

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Basilea Pharmaceutica and prepared and issued by Edison for publication globally. 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. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US 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. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and 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 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. This document is provided 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.
Edison has a restrictive policy relating to personal dealing. 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. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. 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. 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 (ie 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. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

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

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, 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

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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