Basilea Pharmaceutica — Profitability sooner than expected

Basilea Pharmaceutica (SIX: BSLN)

Currency in CHF

Last close As at 22/09/2023

CHF43.05

−0.45 (−1.03%)

Market capitalisation

CHF572m

Research: Healthcare

Basilea Pharmaceutica — Profitability sooner than expected

Basilea reported strong FY22 results following the successful execution of its strategic realignment to focus on anti-infectives. The top-line beat (c 21% ahead of the top end of guidance) was driven by accelerating global uptake of its marketed assets, primarily Cresemba, which recorded 22% year-on-year growth in royalties (to CHF65m). In combination with the receipt of milestone payments, lower-than-expected operating expenses and the sale of oncology assets, management was able to achieve profitability (FY22 net profit of CHF12.1m) a year earlier than anticipated. As Cresemba peaks, we expect additional support to come from the successful US launch of Zevtera (NDA expected in March/April 2023) and the introduction of novel late pre-clinical/clinical anti-infective assets in Basilea’s development pipeline. Our updated valuation is CHF785m or CHF65.7/share (previously CHF921.7m or CHF77.8/share), reflecting our revised estimates and the recent sale of oncology assets, partially offset by lower net debt (CHF46.7m at end-FY22) following repayment of the 2022 convertibles.

Jyoti Prakash

Written by

Jyoti Prakash

Analyst, Healthcare

Healthcare

Basilea Pharmaceutica

Profitability sooner than expected

FY22 update

Pharma and biotech

17 February 2023

Price

CHF51.2

Market cap

CHF612m

US$1.09/CHF

Net debt (CHFm) at end-FY22

46.7

Shares in issue (excluding 1.15m treasury shares)

11.95m

Free float

90%

Code

BSLN

Primary exchange

SIX

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(1.3)

6.6

22.7

Rel (local)

0.8

4.1

33.6

52-week high/low

CHF52.6

CHF29.95

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). It plans to submit an NDA for US approval of Zevtera in March/April 2023.

Next events

Expected Zevtera NDA filling with FDA

H123

Analysts

Jyoti Prakash, CFA

+44 (0)20 3077 5700

Basilea Pharmaceutica is a research client of Edison Investment Research Limited

Basilea reported strong FY22 results following the successful execution of its strategic realignment to focus on anti-infectives. The top-line beat (c 21% ahead of the top end of guidance) was driven by accelerating global uptake of its marketed assets, primarily Cresemba, which recorded 22% year-on-year growth in royalties (to CHF65m). In combination with the receipt of milestone payments, lower-than-expected operating expenses and the sale of oncology assets, management was able to achieve profitability (FY22 net profit of CHF12.1m) a year earlier than anticipated. As Cresemba peaks, we expect additional support to come from the successful US launch of Zevtera (NDA expected in March/April 2023) and the introduction of novel late pre-clinical/clinical anti-infective assets in Basilea’s development pipeline. Our updated valuation is CHF785m or CHF65.7/share (previously CHF921.7m or CHF77.8/share), reflecting our revised estimates and the recent sale of oncology assets, partially offset by lower net debt (CHF46.7m at end-FY22) following repayment of the 2022 convertibles.

Year end

Revenue (CHFm)

PBT*
(CHFm)

EPS*
(CHFc)

DPS
(CHFc)

P/E
(x)

Yield
(%)

12/21

148.1

(6.6)

(56.9)

0.0

N/A

N/A

12/22

147.8

12.3

104.1

0.0

49.2

N/A

12/23e

156.7

40.9

312.6

0.0

16.3

N/A

12/24e

180.7

62.0

473.4

0.0

10.8

N/A

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

Cresemba continues to impress

The achievement of profitability in FY22 tops a year marked by successful strategic realignment and positive newsflow, largely driven by Cresemba’s worldwide success, triggering significant milestone and royalty payments to Basilea. Product revenue and royalties related to Cresemba and Zevtera were CHF97.7m in FY22, 23% higher than the FY21 figure of CHF79.3m. With regulatory approvals received in China and Japan in FY22 (c 25% of Cresemba’s market potential), we expect continued sales momentum to drive profitability in FY23 (total revenue guidance: CHF155–158m; Cresemba plus Zevtera: CHF145–148m).

Encouraging position in a turbulent market

Looking ahead, we believe the key strategic focus will be to maximise Zevtera’s potential in the United States while refilling Basilea’s development pipeline. With an improved net debt position of CHF46.7m and two consecutive years of operating profitability on the books, Basilea remains well capitalised to fund its portfolio growth ambitions in FY23.

Valuation: CHF785m or CHF65.7/share

After revisiting and updating our assumptions for Cresemba and Zevtera, and excluding the divested oncology assets, our valuation is now CHF785 or CHF65.7/share (previously CHF921.7m or CHF77.8/share). The lower valuation has been partially offset by an improved net debt position of CHF46.7m at end-FY22 (previously CHF71.2m).

Cresemba-related revenues drive profitability in FY22

In FY22, the uptake of Basilea’s antifungal product Cresemba continued to drive the company’s top line as launches in new territories increased licensing revenue payments from partners. In particular, royalty income from global Cresemba sales grew 22% y-o-y in FY22 to CHF65m, with the antifungal drug reaching more than $363m in global sales in the 12 months to September 2022. The US remains a key market, contributing over 55% of Cresemba’s in-market sales. Notably, a $20m sales-related milestone payment for US partner Astellas towards yearend 2022 bolstered Basilea’s top line. By end-2022, Cresemba was marketed in 63 countries (and outlicensed in a further 10 countries) and had captured 12% of global antifungal sales (Exhibit 1). Importantly, Basilea has gained a significant portion (31%) of the US antifungal market versus other competing, best-in-class treatments (Exhibit 2). We expect Cresemba’s global reach to continue in FY23, following important approvals in FY22 in China and Japan.

Exhibit 1: Cresemba global market share

Exhibit 2: Cresemba US market share

Source: Basilea corporate presentation, February 2023

Source: Basilea corporate presentation, February 2023

Exhibit 1: Cresemba global market share

Source: Basilea corporate presentation, February 2023

Exhibit 2: Cresemba US market share

Source: Basilea corporate presentation, February 2023

China and Japan: Key markets for FY23

We believe that global uptake of Cresemba will continue in FY23, with a key driver for revenue growth coming from the launch in China, following the drug’s oral and iv formulation approval in the region in FY22 and recent inclusion of the iv formulation in the National Reimbursement Drug List (NRDL). We see the Chinese market as a particularly important opportunity for Basilea as, while accurate invasive aspergillosis (IA) and mucormycosis (IM) case numbers are not available in the country, a recent risk-based assessment of IA prevalence in China estimated that there are 154,000–462,000 hospitalised IA cases in the country each year. If accurate, this would represent a significant increase in the global addressable patient population for Cresemba (management estimates China to be c 20% of the global market opportunity for Cresemba). We note that Cresemba’s recent inclusion on the NRDL is a key development and should support maximising its market penetration in the region.

Another key market is likely to be Japan (c 5% of Cresemba’s overall market opportunity) where Basilea’s licence partner, Asahi Kasei Pharma, received marketing authorisation for Cresemba (for the treatment of adult patients with aspergillosis, mucormycosis and cryptococcosis) from the Japanese regulatory authority in December 2022. Management expects Cresemba’s launch in the Japanese market in H123.

Reaching the US antibiotic market

We expect medium-term growth for Basilea to hinge on the success of Zevtera in the US antibiotic market. Basilea plans to submit a new drug application (NDA) for Zevtera’s use in Staphylococcus aureus bacteraemia (SAB), acute bacterial skin and skin structure infection (ABSSI) and community-acquired pneumonia (CABP) in March/April 2023, after which management expects a decision from the regulators by end-2023. Top-line results from the Phase III ERADICATE trial in June 2022 showed that Zevtera met the primary endpoint of non-inferiority to standard-of-care daptomycin (with or without aztreonam) in the intent-to-treat population in patients with SAB. The data also demonstrated that treatment with Zevtera resulted in an overall success rate of 69.8% versus 68.7% for daptomycin, a microbiological eradication rate of 82.0% (77.3% for daptomycin), an all-cause mortality rate of 9.0% (9.1% for daptomycin) and a new SAB complications rate of 5.8% (5.6% for daptomycin) at 70 days post-randomisation in the modified intent-to-treat population. Overall success in the clinically evaluable population was 77.9% compared to 77.8% for daptomycin (Exhibit 3).

Exhibit 3: ERADICATE top-line data in SAB

Source: Basilea corporate presentation, June 2022

In addition, the median time to bloodstream clearance for methicillin-resistant Staphylococcus aureus (MRSA) was three days with Zevtera (four days with daptomycin), and five days for MRSA for Zevtera and daptomycin. Safety data from the study showed that ceftobiprole’s safety profile was consistent with previous data and the overall rate of adverse events was similar in the two groups. We believe this represents a strong clinical profile for Zevtera, considering that the approval of novel, safe and effective antibiotics is an important global health initiative.

Outlook for FY23: US approval and pipeline refuel

In FY23, in addition to the continued market push for Cresemba we expect Basilea to pursue two main strategic goals to maximise shareholder value. Firstly, approval of Zevtera in the United States represents a potentially lucrative opportunity for Basilea, given that the country represents c 85% of global anti-MRSA antibiotics sales (Exhibit 4). The FDA had previously reached agreements with Basilea on trial designs for the Phase III ERADICATE and TARGET studies and has granted Qualified Infectious Disease Product (QIDP) designation to Zevtera, which should allow for priority review following filing of the NDA. The anticipated timeline for approval is end-FY23 and management plans to sign a licensing partner prior to the regulatory decision. We note that the QIDP designation will allow Zevtera 10 years of market exclusivity in the United States, following approval.

Exhibit 4: Global and US MRSA antibiotic market

Source: Basilea corporate presentation, February 2023. Note: LOE: loss of exclusivity; MAT: moving annual total.

With Cresemba closing in on expiration of market exclusivity in multiple key territories in 2025–27 (notwithstanding the possibility of receiving two-year and six-month marketing exclusivity extensions in Europe and the United States, respectively, on paediatric label expansion; FDA/EMA submission planned for H223), the second strategic goal we expect Basilea to pursue in FY23 will be filling the clinical development pipeline with new anti-infective assets. The company has one confirmed preclinical programme (DXR inhibitor) and only minor ongoing clinical activities (ERADICATE follow-up period paediatric trials for Cresemba and Zevtera). We therefore expect Basilea to actively engage in in-licensing and/or acquisition activity to fill the development pipeline with novel anti-infectives. Given the strong balance sheet and profitability guided for FY23, we believe inlicensing/acquisition deals could be internally funded depending on deal terms, mitigating the need for further capital raises.

Valuation

We value Basilea at CHF785m or CHF65.7 per share (previously CHF921.7m or CHF77.8 per share). Our valuation is based on a risk-adjusted net present value (NPV) calculation for Cresemba and Zevtera and includes net debt of CHF46.7m at end-FY22. We have revisited and updated our assumptions concerning population estimates for global fungal infection rates (based on available data) and have reassessed our pricing and market penetration assumptions for Cresemba (Exhibit 5). Owing to the approval of the oral and iv formulation of Cresemba in China during FY22 and subsequent inclusion of the iv formulation in the NRDL, we now model sales in China independently of the rest of the world (RoW). Our peak sales estimates for Cresemba therefore increase to CHF691m (CHF604m previously). However, the positive effect on our valuation resulting from the uplift in peak sales is largely offset by the rolling our model forward, bringing expiration of market exclusivity in key territories closer although we see higher sales stickiness from China and Japan following regulatory approval in 2022. This results in our per share valuation of Cresemba staying largely unchanged at CHF54.5 versus CHF53.3 previously.

Exhibit 5: Cresemba valuation assumptions

Cresemba assumptions

Detail

Target populations in target geographies

Global IA cases estimated at 300,000 pa. We note that this is based on reported prevalence numbers and may underestimate the actual target population, although the overall figure is difficult to quantify accurately.

We assume European and US cases at c 30,000 patients each per year and apply a peak market penetration of 35% in 2027, which we believe is justified given the demonstrated uptake in these areas and Cresemba’s competitive safety profile.

We estimate Japanese cases using the South Korean incidence rate of 4.5 cases per 100,000 people, leading to our assumption of c 7,000 patients in 2023. We assume peak penetration in Japan of 35% in 2030.

We estimate 155,000 cases per year in China based on hospitalised chronic obstructive pulmonary disease patients due to lack of reliable data for overall cases. Given the large patient population and governmental restrictions (NRDL inclusion), we estimate peak penetration of 10% in 2030.

RoW cases estimated as remaining global infections, c 76,000 patients in 2023, for which we assume peak penetration of 7% in 2027.

Pricing

$21k per patient per year based on Medicare Part D estimate (Evaluate Pharma) with 50% and 40% discounts in Europe and Japan respectively and $8k per patient per year in China and RoW.

Cresemba assumptions

Target populations in target geographies

Pricing

Detail

Global IA cases estimated at 300,000 pa. We note that this is based on reported prevalence numbers and may underestimate the actual target population, although the overall figure is difficult to quantify accurately.

We assume European and US cases at c 30,000 patients each per year and apply a peak market penetration of 35% in 2027, which we believe is justified given the demonstrated uptake in these areas and Cresemba’s competitive safety profile.

We estimate Japanese cases using the South Korean incidence rate of 4.5 cases per 100,000 people, leading to our assumption of c 7,000 patients in 2023. We assume peak penetration in Japan of 35% in 2030.

We estimate 155,000 cases per year in China based on hospitalised chronic obstructive pulmonary disease patients due to lack of reliable data for overall cases. Given the large patient population and governmental restrictions (NRDL inclusion), we estimate peak penetration of 10% in 2030.

RoW cases estimated as remaining global infections, c 76,000 patients in 2023, for which we assume peak penetration of 7% in 2027.

$21k per patient per year based on Medicare Part D estimate (Evaluate Pharma) with 50% and 40% discounts in Europe and Japan respectively and $8k per patient per year in China and RoW.

Source: Evaluate Pharma, Edison Investment Research

With the addition of China as a distinct territory in our valuation, we have updated the terms of our modelled Pfizer licensing deal to include this region. We include sales from the EU and China in the Pfizer licensing deal, along with 50% of RoW sales to reflect revenues from other important territories (Russia, Israel, Turkey and Asia-Pacific). Our licensing deal assumptions for Basilea’s other commercial partners are unchanged.

For Zevtera, we have revisited our assumptions concerning the drug’s uptake in the United States. Considering the historical average peak market share of other cephalosporin antibiotics and those indicated in bacteraemia, we have raised our US peak penetration rate to 3% (from 2% previously), but expect this to now come in FY33 versus our previous expectation of FY27. We believe this represents a conservative estimate, which encompasses what we believe is a competitive profile for Zevtera in the United States. We also make certain downward adjustments to our market share assumptions for Europe and RoW based on current visibility. Overall our peak sales estimate for Zevtera goes up to CHF581m from CHF550m previously. We now value Zevtera at CHF15.1 per share, from CHF14.3 per share previously. We note that signing a commercialisation deal in the United States will be important in maximising Zevtera’s impact in this market. As communicated by management, finding a deal of this type is a key strategic goal in FY23. Basilea’s aim is to secure a licensing partnership in advance of the US regulatory decision.

Following the recent retirement of Basilea’s 2022 convertible bond issue and receipt of a CHF75m loan from Athyrium Capital Management, the company had net debt of CHF46.7m at end-FY22, which we also include in our valuation. Our model no longer includes any oncology assets. A breakdown of our sum-of-the-parts valuation of Basilea is shown in Exhibit 6.

Exhibit 6: Basilea Pharmaceutica valuation breakdown

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)

691

667.7

85–100%*

651.3

54.5

Zevtera/Mabelio (ceftobiprole)

Severe bacterial infections

2015 (EU); 2018 (RoW); 2024 (US -expected)

581

195.1

85–100%

180.4

15.1

Reported net cash/(debt) at endDecember 2022

 

 

(46.7)

100%

(46.7)

(3.9)

Valuation

 

 

 

816.1

 

785.0

65.7

Source: Edison Investment Research. Note: *Approved in most key geographies. 85% probability assumed for additional RoW countries not currently approved.

Financials

In FY22, Basilea recorded total revenue of CHF147.8m (FY21: CHF148.1m), including CHF65m in royalty income from global Cresemba sales (FY21: CHF53.1m), Cresemba and Zevtera milestone payments of CHF23.4m (FY21: CHF49.4m), CHF15m from the disposal of oncology assets and CHF8.4m in Biomedical Advanced Research and Development Authority (BARDA) reimbursements (FY21: CHF14m). Overall, this represents income comparable to the year prior, although FY21 revenues were buoyed by unexpected milestone payments. Total operating expenses decreased by 15% in FY22 to CHF104.6m (CHF129.22m including cost of goods sold, COGS, a 12% decrease), led by a 20.8% decrease in R&D expenses (FY22: CHF73.8m versus FY21: CHF93.2m) related to divesting/out-licensing the oncology portfolio. In all, this resulted in Basilea reporting an operating profit of CHF18.5m in FY22 (FY21: CHF1.2m), significantly above guidance, and net profit of CHF12.1m (FY21 net loss of CHF6.8m). Cash flow from operations for the period was CHF7.1m, contributing to cash and cash equivalents, restricted cash and short-term investments of CHF108.6m at year-end. In December 2022, Basilea retired its outstanding 2022 convertible bonds (CHF113.8m outstanding), financed through a CHF75m two-year loan and cash at hand. We note that the CHF75m loan from Athyrium Capital Management bears an interest rate of 7.75% plus the lesser of the Swiss Average Rate Overnight or 3%, payable quarterly.

In FY23 we expect the continued growth of Cresemba- and Zevtera-related revenue to continue, estimating revenues related to the two assets (including royalties, milestones and product revenue) of CHF148.2m, in line with management guidance. In addition, we estimate a BARDA reimbursement of c CHF4m and c CHF2.5m in milestone payments from the out-licensed oncology assets. As a factor of revenues, we forecast COGS at a comparable rate to previous years (c 17%), which we anticipate will result in gross profit of CHF129.9m. Consistent with management guidance (Exhibit 7) and divestment of the oncology portfolio, we forecast a further decrease in operating expenses (excluding COGS) in FY23 to CHF80.7m, again driven largely by a decrease in R&D related costs to CHF51.7m (CHF73.8m in FY22). We therefore forecast an operating profit of CHF49.1m and net profit of CHF40.7m, again in line with company guidance. In total, we expect an operating cash inflow of CHF52.7m, which, accounting for capex and expected repayment of CHF37.5m of the Athyrium loan, results in a net cash inflow of CHF11.8m in FY23.

Exhibit 7: FY23 corporate guidance

CHFm

FY23e

FY22

Cresemba- and Zevtera-related revenue

145–148

122.3

Royalty income

~74

65.0

Total revenue

155–158

147.8

Cost of products sold

25–28

24.6

Operating expenses

~80

104.5

Operating profit

45–50

18.5

Net profit

36–41

12.1

Source: Basilea corporate presentation, February 2023

In FY24, we forecast revenue growth to CHF180.7m. However, we note that this is largely a result of milestone timing, as milestones are difficult to predict. Accordingly, we model an increase in operating profit in FY24 to CHF66.0m with an increase in net profit to CHF62.0m, as the Athyrium loan is repaid over FY23–24. Hence, we forecast a net cash inflow of CHF17.3m in FY24. We note that any significant in-licensing or acquisition deals conducted by Basilea over the forecast period could significantly alter our forecasts, although this will depend on how the company chooses to finance these and each new asset’s stage of development.

Exhibit 8: Financial summary

Accounts: US GAAP, year end 31 December; CHF’000s

 

 

2020

2021

2022

2023e

2024e

PROFIT & LOSS

 

 

 

 

 

 

 

Total revenues

 

 

127,629

148,122

147,765

156,702

180,737

Product revenues (Cresemba and Zevtera)

 

 

112,032

131,382

122,315

148,202

180,737

Cost of sales

 

 

(24,054)

(24,072)

(24,603)

(26,851)

(33,746)

Gross profit

 

 

103,575

124,050

123,162

129,851

146,991

Research and development expenses (net)

 

 

(97,410)

(93,157)

(73,804)

(51,660)

(49,077)

SG&A costs

 

 

(29,422)

(29,721)

(30,815)

(29,088)

(31,933)

Other income/(expense)

 

 

0

0

0

0

0

Exceptionals and adjustments

 

 

15,035

15

0

0

0

EBITDA (reported)

 

 

(7,032)

1,941

19,640

49,795

66,776

Reported operating income

 

 

(8,222)

1,187

18,543

49,103

65,981

Operating margin %

 

 

n/a

n/a

n/a

n/a

n/a

Finance income/(expense)

 

 

(6,445)

(7,982)

(6,441)

(8,369)

(4,207)

Exceptionals and adjustments

 

 

0

0

0

0

0

Profit before tax (reported)

 

 

(14,667)

(6,795)

12,102

40,735

61,774

Profit before tax (normalised)

 

 

(29,602)

(6,610)

12,302

40,935

61,981

Income tax expense (includes exceptionals)

 

 

(55)

(37)

45

0

0

Net income (reported)

 

 

(14,722)

(6,832)

12,147

40,735

61,774

Net income (normalised)

 

 

(29,657)

(6,647)

12,347

40,935

61,981

Basic average number of shares, m

 

 

10.28

11.68

11.86

13.09

13.09

Basic EPS (CHF c)

 

 

(143.2)

(58.5)

102.4

311.1

471.8

Adjusted EPS (CHF c)

 

 

(288.5)

(56.9)

104.1

312.6

473.4

Dividend per share (CHF c)

 

 

0

0

0

0

0

BALANCE SHEET

 

 

 

 

 

 

 

Restricted cash

 

 

0

0

22,000

22,000

22,000

Tangible assets

 

 

2,627

2,018

4,277

6,985

9,597

Intangible assets

 

 

672

632

578

578

571

Long-term investments

 

 

0

2,390

1,266

1,266

1,266

Other non-current assets

 

 

2,967

1,161

17,363

17,363

17,363

Total non-current assets

 

 

6,266

6,201

45,484

48,192

50,797

Cash and equivalents

 

 

60,749

53,700

84,659

96,454

113,769

Short-term investments

 

 

101,023

95,000

0

0

0

Inventories

 

 

21,192

22,783

24,244

26,459

33,254

Trade and other receivables

 

 

8,710

24,947

33,152

35,157

40,549

Other current assets

 

 

31,854

44,636

33,309

33,309

33,309

Total current assets

 

 

223,528

241,066

175,364

191,379

220,881

Convertible senior unsecured bonds (long-term)

 

 

239,668

94,544

95,000

95,000

95,000

Senior secured loan

 

 

0

0

36,360

0

0

Deferred revenue

 

 

13,158

11,926

10,693

10,693

10,693

Non-current operating lease liabilities

 

 

896

10

16,323

16,323

16,323

Other non-current liabilities

 

 

27,957

24,986

8,337

8,337

8,337

Total non-current liabilities

 

 

281,679

131,466

166,713

130,353

130,353

Convertible senior unsecured bonds (short-term)

 

 

0

123,505

0

0

0

Senior secured loan

 

 

0

0

37,467

36,360

0

Accounts payable

 

 

13,151

10,617

191

12,050

15,144

Deferred revenue

 

 

2,556

1,233

1,233

1,233

1,233

Current operating lease liabilities

 

 

1,752

896

1,988

1,988

1,988

Other current liabilities

 

 

32,702

38,157

33,971

33,971

33,971

Total current liabilities

 

 

50,161

174,408

74,850

85,602

52,336

Net assets

 

 

(102,046)

(58,607)

(20,715)

23,617

88,989

CASH FLOW STATEMENT

 

 

 

 

 

 

 

Reported net income

 

 

(14,722)

(6,831)

12,147

40,735

61,774

Depreciation and amortisation

 

 

1,190

754

1,097

692

795

Share based payments

 

 

3,525

4,322

3,598

3,598

3,598

Other adjustments

 

 

(13,365)

1,522

497

0

0

Movements in working capital

 

 

(30,762)

(31,787)

(10,282)

7,639

(9,092)

Cash from operations (CFO)

 

 

(54,134)

(32,020)

7,057

52,663

57,075

Capex

 

 

(1,823)

(581)

(3,138)

(3,200)

(3,200)

Short-term investments

 

 

(51,023)

6,023

94,951

0

0

Long-term investments

 

 

0

0

0

0

0

Other investing activities

 

 

17,883

(1,867)

(165)

(200)

(200)

Cash used in investing activities (CFIA)

 

 

(34,963)

3,575

91,648

(3,400)

(3,400)

Net proceeds from issue of shares

 

 

0

42,240

250

0

0

Movements in debt

 

 

43,451

(23,212)

(49,672)

(37,467)

(36,360)

Other financing activities

 

 

1,616

(2,388)

4,176

0

0

Cash from financing activities (CFF)

 

 

45,067

16,640

(45,246)

(37,467)

(36,360)

Cash and equivalents at beginning of period

 

 

111,044

66,256

54,952

108,566

120,362

Increase/(decrease) in cash and equivalents

 

 

(44,030)

(11,805)

53,459

11,796

17,315

Effect of FX on cash and equivalents

 

 

(758)

501

155

0

0

Cash and equivalents at end of period

 

 

66,256

54,952

108,566

120,362

137,677

Net (debt)/cash

 

 

(77,896)

(69,349)

(46,701)

1,454

18,769

Source: Basilea 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.

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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 2023 Edison Investment Research Limited (Edison).

Australia

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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

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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.

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

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, 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

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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 2023 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.

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

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, 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

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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Pan African Resources — Forecast upgrade

Pan African Resources (PAF) announced its FY23 interim results in the context of known production results and a JSE listing requirement paragraph 3(b) trading statement that indicated both earnings per share and headline earnings per share (HEPS) in the range 1.40–1.64c at the interim stage. In the event, HEPS and EPS for the six-month period were exactly in the middle of the guided range at 1.52c/share. In the wake of the H123 results, we have upgraded our forecast for normalised HEPS for FY23 from 3.82c/share to 4.17c/share (assuming the gold price remains at US$1,835/oz for the remainder of the year). NB Our upgrade would have been to 3.91c/share had our gold price forecast for the balance of the year remained unchanged at US$1,749/oz. Further out, we estimate that development of additional productive assets will increase PAF’s production to c 250koz in 2026 and its normalised HEPS to c 6.00c/share.

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