Basilea Pharmaceutica — Poised for an eventful H224

Basilea Pharmaceutica (SIX: BSLN)

Last close As at 13/11/2024

CHF41.00

−0.20 (−0.49%)

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Research: Healthcare

Basilea Pharmaceutica — Poised for an eventful H224

Basilea’s H124 results reflect strong momentum across its pipeline and we expect the pace to accelerate in H224. The key highlight of the period was the FDA approval of Zevtera. We now expect all eyes to be on the announcement of a US commercial partner and the Phase III launch for fosmanogepix (expected imminently). Lead product Cresemba continued its outperformance versus our estimates (16.6% growth in royalties), contributing >90% of H124 revenues of CHF76.3m and driving the company’s FY24 guidance upgrade (group revenues of CHF196m versus CHF183m previously) with H2-weighed milestone payments. The balance sheet continues to strengthen, with strong operating cash flows (CHF17.9m in H124) and a healthy cash balance (gross cash of CHF63m). We adjust our estimates for the stronger than anticipated performance of Cresemba, with our valuation rising to CHF89.7 per share from CHF84.0 per share previously.

Soo Romanoff

Written by

Soo Romanoff

Managing Director - Head of Content, Healthcare

Healthcare

Basilea Pharmaceutica

Poised for an eventful H224

H124 update

Pharma and biotech

15 August 2024

Price

CHF44.1

Market cap

CHF534m

US$/CHF1.16

Net debt (CHFm) at 30 June 2024

26.2

Shares in issue (excluding 1.12m treasury shares)

12.1m

Free float

90%

Code

BSLN

Primary exchange

SIX

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

7.3

(1.0)

3.9

Rel (local)

9.9

(3.4)

(4.4)

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 and Phase III-ready, novel broad-spectrum antifungal treatment fosmanogepix.

Next events

Announcement of US partner for Zevtera

H224

Fosmanogepix Phase III initiation (candidemia/invasive candidiasis)

H224

Analysts

Soo Romanoff

+44 (0)20 3077 5700

Jyoti Prakash, CFA

+44 (0)20 3077 5700

Dr Arron Aatkar

+44 (0)20 3077 5700

Basilea Pharmaceutica is a research client of Edison Investment Research Limited

Basilea’s H124 results reflect strong momentum across its pipeline and we expect the pace to accelerate in H224. The key highlight of the period was the FDA approval of Zevtera. We now expect all eyes to be on the announcement of a US commercial partner and the Phase III launch for fosmanogepix (expected imminently). Lead product Cresemba continued its outperformance versus our estimates (16.6% growth in royalties), contributing >90% of H124 revenues of CHF76.3m and driving the company’s FY24 guidance upgrade (group revenues of CHF196m versus CHF183m previously) with H2-weighed milestone payments. The balance sheet continues to strengthen, with strong operating cash flows (CHF17.9m in H124) and a healthy cash balance (gross cash of CHF63m). We adjust our estimates for the stronger than anticipated performance of Cresemba, with our valuation rising to CHF89.7 per share from CHF84.0 per share previously.

Year end

Revenue
(CHFm)

PBT*
(CHFm)

EPS*
(CHFc)

DPS
(CHFc)

P/E
(x)

Yield
(%)

12/22

147.8

12.3

104.1

0.0

39.4

N/A

12/23

157.6

10.8

89.7

0.0

45.7

N/A

12/24e

196.0

31.9

350.6

0.0

11.7

N/A

12/25e

201.6

34.1

282.4

0.0

14.5

N/A

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

Cresemba leading the way in H124

Cresemba continued its strong showing in H124, supported by growing in-market sales (US$489m for the 12 months ending March 2024, a 24.4% jump y-o-y), which translated to 16.6% y-o-y growth in royalty income to CHF42.8m. Product revenues grew over 2x to CHF27.6m, highlighting sustained demand. The H124 run rate, a paediatric label expansion in the EU in Q324 and a milestone-rich second half (c CHF37m) has triggered another guidance upgrade. While Cresemba will continue to front the growth in FY24, we look forward to the announcement of a commercial partner for Zevtera in H224 and expect contributions to revenue to begin from FY25.

Fosmanogepix Phase III launch a key catalyst

Another focus area for Basilea in H224 will be the initiation of the first Phase III trial for fosmanogepix (candidemia/invasive candidiasis), expected to commence in the next few weeks. Fosmanogepix has a novel mechanism of action and is expected to be the successor to Cresemba, and we expect development activity to be keenly watched. The second trial (in invasive mould infections) stays on track for end 2024. Fosmanogepix holds FDA Fast Track and Orphan Drug designations, and the QIDP tag, providing 12 years of US market exclusivity, if approved.

Valuation: CHF1,087.2m or CHF89.7 per share

We upgrade our projections for Cresemba to reflect the H124 run rate and sustained sales performance. We also make slight timeline adjustments for Zevtera’s commercial launch (early 2025 versus H224 previously) and reduced net debt (CHF26.2m vs CHF46.6m at end FY23). Rolling our model forwards and incorporating FX changes results in our valuation rising to CHF1,087.2m or CHF89.7 per share (from CHF1,008.6m or CHF84.0 per share previously).

Multiple forthcoming product pipeline milestones

Basilea remains committed to advancing its innovative pipeline of anti-infective products and product candidates (Exhibit 1). Lead antifungal asset, Cresemba, is an intravenous and oral antifungal treatment for life-threatening, invasive mould infections: aspergillosis and mucormycosis in adults (and children in the US), and for cryptococcosis in Japan. Overall, it has received regulatory approval in 76 countries and is marketed in 73 countries, including the US, most EU member states, China, Japan and countries in Latin America. The company’s lead antibiotic product is Zevtera, which notably received FDA approval in April 2024 for three indications: Staphylococcus aureus bacteremia (SAB), acute bacterial skin and skin structure infections (ABSSSI) and community-acquired bacterial pneumonia (CABP). In our view, the next major catalyst for Basilea will be the announcement of a US commercialisation partnership deal. While management had previously communicated that this should have been secured around mid-2024, the latest update states that partnership negotiations are ongoing. Beyond the US, Zevtera has been approved in major countries across Europe, Latin America, the Middle East, North Africa and Canada, and marketed in 21 countries. The performances of these two marketed products are discussed in further detail below.

Exhibit 1: Basilea’s pipeline of anti-infective products and candidates

Source: Basilea investor presentation (13 August 2024)

From late 2023, Basilea has made several additions to its product pipeline, including multiple antifungal and antibiotic programmes, aiming to equip the company for long-term growth:

Fosmanogepix is a broad-spectrum antifungal, acquired from Amplyx Pharmaceuticals (an affiliate of Pfizer), and holds potential to be the successor to Cresemba as it nears the end of market exclusivity in the US and Europe (Q427). We believe that with its novel mechanism of action, as well as options for both oral and IV formulations, it could offer differentiation over current approved antifungal therapies. The first of two planned Phase III trials, targeting candidemia/invasive candidiasis, is expected to start in the next few weeks.

BAL2062 was acquired from Gravitas Therapeutics (original patent owned by Astellas Pharma). It has previously demonstrated rapid fungicidal activity in vitro against invasive aspergillus species, and completed a Phase I study at single and multiple ascending intravenous doses, showing adequate safety and tolerability. The candidate has already received Fast Track, Orphan Drug and Qualified infectious disease product (QIDP) designations from the FDA for invasive aspergillosis. Preclinical profiling studies are progressing as anticipated, and management has communicated that a potential Phase II programme is on track to commence from 2025, consistent with prior guided timelines.

Tonabacase is the most advanced of Basilea’s recently acquired antibiotic candidates. It is a potentially first-in-class therapy of the endolysin class designed to address SAB infections, including multi-drug-resistant strains and those forming difficult-to-eradicate biofilms. It is being evaluated in preclinical testing under a licence and option agreement with iNtRON Biotechnology. A decision on the definitive licensing option is anticipated by end 2024, which may be followed by a Phase II programme from 2025.

The LptA inhibitor programme was acquired in January 2024 from Spexis and is currently in preclinical development. The programme comprises a novel class of compounds designed to target gram-negative bacteria, which are highly resistant to antibiotics and hence represent an important ongoing medical dilemma. The programme has received initial funding of US$0.9m from the Combating Antibiotic-Resistant Bacteria Biopharmaceutical Accelerator, with potential for additional funding. We expect a clinical candidate to be shortlisted in H224, with first-in-human studies guided to commence from 2026.

We also note that during H124, Basilea divested the last of its legacy oncology assets, lisavanbulin. In June 2024, the company announced an asset purchase agreement with the Glioblastoma Foundation. While the initial purchase price has not been disclosed, management has communicated that Basilea will be eligible for a fixed double-digit share of any subsequent commercial partnerships.

Cresemba uptake remains strong

In line with prior financial updates, Cresemba continues to be the main revenue driver for Basilea. In H124, the company netted CHF42.8m in royalties for Cresemba, representing a 16.6% increase from the H123 figure of CHF36.7m. In terms of Cresemba-related milestone payments, Basilea received US$2.5m from Pfizer (two payments of US$1.25m announced in March and May 2024) for its strong sales performance in the Asia-Pacific region and China in H124. The US remains the key market for the drug (c 55% of sales in FY23), although we have seen increasing contributions from other regions, particularly China and Japan, which together represent 25% of the market opportunity for Cresemba. The drug is launched in 73 countries and has a market-leading position in the US (a more than 37% market share in best-in-class antifungals) and a healthy 17% market share globally. The latest data showed that total global in-market sales reached US$489m between April 2023 and March 2024, a 24.4% jump y-o-y (Exhibit 2). Looking ahead, we see Cresemba maintaining its sales momentum to maturity, supported by sustained demand and likely paediatric label expansion in the EU. Management has indicated that in its June meeting, the Committee for Medicinal Products for Human Uses of the European Medicines Agency recommended awarding paediatric label extension to Cresemba and a formal decision is expected in Q324. Approval will extend the drug’s market exclusivity in the EU by two years to October 2027, which we currently factor in our estimates.

Exhibit 2: Cresemba in-market sales uptake

Source: Basilea investor presentation. Note: MAT = moving annual total. (As of March 2024, IQVIA).

Zevtera: US approval secured, awaiting partnership

As highlighted above, a key milestone for Basilea in H124 was FDA approval for Zevtera, under a broad label. The FDA greenlight was backed by positive results from three Phase III clinical trials: the ERADICATE study for SAB, the TARGET study for ABSSSI, and a Phase III study in CABP. While Zevtera has already been approved in selected countries across Europe, Latin America, the Middle East, North Africa and Canada, the US represents a key target market for Zevtera as an effective anti-MRSA therapy (accounting for 85–90% of its total market potential). Basilea’s latest investor presentation highlights this potential, exemplified with regional sales data for anti-MRSA agents daptomycin and ceftaroline (Exhibit 3). We believe that the announcement of a US commercialisation partnership deal for Zevtera will be the next significant milestone for Basilea.

Exhibit 3: Regional sales data for FDA-approved anti-MRSA agents

Source: Basilea investor presentation. Notes: LOE = loss of exclusivity; ROW = rest of world; MAT = moving annual total. (As of March 2024, IQVIA).

Financials: Another solid performance

H124 included another solid period for Basilea, with results coming in slightly ahead of our estimates. Total revenues were CHF76.3m, driven by strong sales uptick from Cresemba, which translated to a 16.6% jump in royalty income to CHF42.8m (CHF36.7m in H123). The period was also marked by strong growth in product revenue (sale of products, active pharmaceutical ingredients or semi-finished goods to partners), which grew 109% y-o-y to CHF27.6m. On the other hand, unlike H123, milestones payments in H124 were limited to CHF2.9m, including two milestone payments for Pfizer totalling US$2.5m (CHF30.6m in H123), although this was more as a result of timing differences, with management expecting the bulk of milestone-related inflows to come in the second half. Group sales also included CHF2m in Biomedical Advanced Research and Development Authority (BARDA) reimbursements, although with the conclusion of the Zevtera Phase III trials, this figure will likely fall in the coming periods (the company recognised US$101.6m of the US$111.9m total payment from BARDA as income as of June 2024).

A key observation was the significant increase in cost of sales to CHF18.1m, an 81% jump over the H123 figure of CHF10.0m, but this can be directly attributed to the rise in product revenues during the period. The H124 gross margin was 76.3%, lower than the 88.2% recorded in H123. Operating expenses were in line with expectations, growing to CHF48.9m from CHF38.0m in the comparable period. Opex as a percentage of sales was 64.1% versus 44.8% in H123, with the increase driven by lower milestone payments recognised in H124, and the fact that all portfolio transactions took place in late-2023/early-2024. R&D expenses rose materially during the period to CHF33.6m (from CHF21.5m in H123), which we believe can largely be attributed to preparatory activities for the expected Phase III trials for fosmanogepix, as well as research activities for other acquired assets (BAL2062, Tonabacase and the LptA programme). Note that the R&D expenses also include CHF1.3m in upfront and milestone payments made to Spexis for the antibiotic LptA inhibitor programme acquired in January 2024. We expect R&D expenses to rise in H224 with commencement of the two Phase III trials for fosmanogepix. While management is open to seeking non-dilutive external funding for its preclinical and clinical programmes (and is in talks with multiple stakeholders), pending further clarity we continue to assume that all development work will be funded through internal capital. SG&A expenses were broadly stable at CHF15.3m (H123: CHF16.5m). Overall, operating profit for the period was CHF9.3m versus CHF36.9m in H123. Note that the company recognised deferred tax assets of CHF13.4m in H124, resulting in net profit jumping to CHF20.7m (H123: CHF31.8m).

Cash flow from operations for the period was CHF17.9m, higher than the FY23 figure of CHF14.2m, indicative of the strong cash flow-generative business activities. This allowed Basilea to fully repay the pending CHF15.6m under the CHF75m senior secured loan from Athyrium Capital in March 2024 (earlier than the originally set repayment timelines). Since 2022, the company has repaid CHF124m of debt on its books, with the CHF97m convertible notes due in 2027 the only remining debt liability. Basilea intends to pay down or convert this debt, should the cash position be favourable. Following the aforementioned debt repayment, Basilea’s net debt position has improved to CHF26.2m from CHF46.6m at the end of FY23. Gross cash on books (including restricted cash) was CHF69.5m.

Following the strong H124 results, management has upgraded its FY24 guidance (presented in Exhibit 4.

Exhibit 4: Company guidance

CHFm

H124

FY24 previous guidance

FY24 new guidance

Cresemba- and Zevtera-related revenue

73.3

c 180

c 190

Of which – royalty income

42.8

c 89

c 92

Total revenue

76.3

c 183

c 196

Cost of products sold

18.1

c 33

c 40

Operating expenses

48.9

c 120

c 120

Operating profit

9.3

c 30

c 36

Net profit

20.7

c 25

c 42

Source: Basilea corporate presentation, August 2024

We update our FY24 estimates to reflect the revised management guidance. We now project revenues related to the two assets of CHF190.2m. This includes a Cresemba-related royalty payment of CHF92.6m and milestones of CHF40.3m (management has guided to a c 25% increase in milestone payments y-o-y). We also estimate a total of CHF3m in BARDA reimbursement for the full year. Overall, we now project revenues of CHF196.0m versus CHF187.2m previously. We also increase our estimate for cost of sales to CHF40.0m from CHF33.9m previously, to reflect the higher top-line contribution from product sales. Our estimate for other operating expenses, including R&D and SG&A, is unchanged at CHF120.1m. Overall, we now estimate operating and net profit for FY24 of CHF35.9m and CHF42.1m, respectively (CHF32.7m and CHF27.7m previously). We also make minor adjustments to our FY25 forecasts and now estimates total revenues of CHF201.6m, lower than our previous estimate of CHF209.1m, to account for completion of the supply service agreement with Pfizer at the end of December 2024, which would result in lower product revenues in FY25. We also adjust our cost assumptions slightly and expect operating profit in FY25 to be CHF37.7m versus CHF36.6m previously.

Valuation

Following the aforementioned adjustments to our estimates for the H124 performance and full year guidance, the latest net debt position and updated FX, we revise our valuation to CHF1,087.2m or CHF89.7 per share (from CHF1,008.6m or CHF84.0 per share previously).

Reflecting Cresemba’s strong outperformance versus previous company guidance, as well as our estimates and continued growth prospects, we have adjusted our long-term sales estimates for the drug and now expect peak sales to be US$747m, from US$686m previously. Accordingly, our risk-adjusted NPV (rNPV) valuation goes up to CHF682.6m from CHF608.9m in our last update. For Zevtera, we have adjusted our estimates for the potential slight delay in launch timelines given the longer-than-anticipated time taken for finalisation of a commercial partner in the US. Accordingly, we have pushed out some of the sales inflows from H224 to H125. We adjust our rNPV for Zevtera to CHF312.5m from CHF328.5m previously. For fosmanogepix, we keep our projections largely unchanged for now, estimating an rNPV of CHF118.3m (CHF117.9m previously). Exhibit 5 presents a breakdown of our rNPV valuation of Basilea by asset.

Exhibit 5: Basilea Pharmaceutica valuation

Product

Indication

Launch

Peak sales
($m)

NPV
(CHFm)

Probability

rNPV
(CHFm)

rNPV/share (CHF)

Cresemba (isavuconazole)

Severe fungal infections

2015 (US); 2016 (EU); 2018 (RoW); 2022 (China): 2023 (Japan)

747

682.6

100%

682.6

56.3

Zevtera/Mabelio (ceftobiprole)

Severe bacterial infections

2015 (EU); 2018 (RoW); 2025 (US)

486

312.5

100%

312.5

25.8

Fosmanogepix

Severe fungal infections

2029 (US, EU and Japan), 2030 (RoW)

801

243.1

60%

118.3

9.8

Net debt at end June 2024

 

 

(26.2)

100%

(26.2)

(2.2)

Valuation

 

 

 

1,212.0

 

1,087.2

89.7

Source: Edison Investment Research

Exhibit 6: 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

196,042

201,623

Product revenues (Cresemba and Zevtera)

 

 

131,382

122,315

150,275

190,242

195,823

Cost of sales

 

 

(24,072)

(24,603)

(26,794)

(40,041)

(34,616)

Gross profit

 

 

124,050

123,162

130,840

156,001

167,007

Research and development expenses (net)

 

 

(93,157)

(73,804)

(77,852)

(84,869)

(92,343)

SG&A costs

 

 

(29,721)

(30,815)

(33,783)

(35,201)

(36,922)

Exceptionals and adjustments

 

 

15

0

0

0

0

EBITDA (reported)

 

 

1,941

19,640

20,782

37,137

39,026

Reported operating income

 

 

1,187

18,543

19,205

35,931

37,742

Operating margin %

 

 

N/A

N/A

N/A

N/A

N/A

Finance income/(expense)

 

 

(7,982)

(6,441)

(8,744)

(4,356)

(3,918)

Profit before tax (reported)

 

 

(6,795)

12,102

10,461

31,575

33,825

Profit before tax (normalised)

 

 

(6,610)

12,302

10,761

31,866

34,127

Income tax expense (includes exceptionals)

 

 

(37)

45

(10)

10,500

0

Net income (reported)

 

 

(6,832)

12,147

10,451

42,075

33,825

Net income (normalised)

 

 

(6,647)

12,347

10,751

42,366

34,127

Basic average number of shares, m

 

 

11.68

11.86

11.99

12.09

12.09

Basic EPS (CHF c)

 

 

(58.5)

102.4

87.2

348.1

279.9

Adjusted EPS (CHF c)

 

 

(56.9)

104.1

89.7

350.6

282.4

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

Deferred tax assets

 

 

0

0

0

10,500

10,500

Other non-current assets

 

 

1,161

17,363

16,839

16,839

16,839

Total non-current assets

 

 

6,201

45,484

21,144

31,738

31,754

Cash and equivalents

 

 

53,700

84,659

59,933

62,528

103,041

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

39,467

34,120

Trade and other receivables

 

 

24,947

33,152

27,891

34,687

35,674

Other current assets

 

 

43,383

31,401

33,522

33,522

33,522

Total current assets

 

 

241,066

175,364

152,145

174,593

210,747

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

8,227

6,994

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

134,467

133,234

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

8,738

7,554

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

35,030

33,846

Net assets

 

 

(58,607)

(20,715)

(10,003)

36,834

75,420

CASH FLOW STATEMENT

 

 

 

 

 

 

 

Reported net income

 

 

(6,831)

12,147

10,451

42,075

33,825

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

Deferred tax

 

 

0

0

0

(10,500)

0

Other adjustments

 

 

1,522

497

1,443

0

0

Movements in working capital

 

 

(31,787)

(10,282)

(3,988)

(18,195)

1,943

Cash from operations (CFO)

 

 

(32,020)

7,057

14,245

19,348

41,813

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

66,917

Increase/(decrease) in cash and equivalents

 

 

(11,805)

53,459

(44,094)

2,595

40,513

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

66,917

107,430

Net (debt)/cash

 

 

(68,096)

(60,260)

(46,586)

(28,538)

11,975

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

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Immix Biopharma’s second quarter was headlined by intensified clinical activity for lead CAR-T asset NXC-201 (targeting amyloid light chain amyloidosis, ALA), followed by commencement of patient dosing in the US-based NEXICART-2 trial in July 2024. With an 18- to 24-month timeline for full trial enrollment (planned n=40) and top-line data expected in Q2/Q326, we now anticipate a biological license application (BLA) to be filed in H127 (vs 2026 previously). In our view, the development path has been partially de-risked by the potential $8m grant inflows from the California Institute for Regenerative Medicine (CIRM), which should bolster liquidity and extend the operational runway to Q425. We adjust our top-line estimates to reflect grant inflows but conservatively push out the NXC-201 launch timeline to 2028 (vs 2027 previously). We revise our valuation to $123.1m or $4.5/share (from $139.5m or $5.3/share).

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