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CHF681m
Research: Healthcare
Basilea has announced receipt of two separate sales-related milestone payments totalling US$26.25m (CHF23.7m) from licensing partner Pfizer. The milestones relate to sales in Europe (ex-Nordic countries), as well as in China and 16 countries in the Asia-Pacific region where Pfizer is the licensing partner. The payments were tiggered by cumulative sales of its antifungal therapy Cresemba exceeding specific thresholds in the aforementioned regions, and we believe this indicates strong continued demand for the drug (13% global share and 34% in the US in best-in-class antifungals as of December 2022, according to IQVIA). As part of the agreement with Pfizer, Basilea is eligible to receive additional potential milestone payments of up to approximately CHF515m, as well as mid-teen royalties based on net sales. We will adjust our model to reflect receipt of these milestone payments slightly sooner than we expected, but overall, these have come within management guided milestones for 2023.
Written by
Basilea Pharmaceutica |
Prompt receipt of milestone payments for Cresemba |
Milestone update |
Pharma and biotech |
9 June 2023 |
Share price performance
Business description
Analysts
Basilea Pharmaceutica is a research client of Edison Investment Research Limited |
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Basilea has announced receipt of two separate sales-related milestone payments totalling US$26.25m (CHF23.7m) from licensing partner Pfizer. The milestones relate to sales in Europe (ex-Nordic countries), as well as in China and 16 countries in the Asia-Pacific region where Pfizer is the licensing partner. The payments were tiggered by cumulative sales of its antifungal therapy Cresemba exceeding specific thresholds in the aforementioned regions, and we believe this indicates strong continued demand for the drug (13% global share and 34% in the US in best-in-class antifungals as of December 2022, according to IQVIA). As part of the agreement with Pfizer, Basilea is eligible to receive additional potential milestone payments of up to approximately CHF515m, as well as mid-teen royalties based on net sales. We will adjust our model to reflect receipt of these milestone payments slightly sooner than we expected, but overall, these have come within management guided milestones for 2023.
Year |
Revenue |
PBT* |
EPS* |
DPS |
P/E |
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 |
43.5 |
N/A |
12/23e |
156.7 |
40.9 |
312.6 |
0.0 |
14.5 |
N/A |
12/24e |
180.7 |
62.0 |
473.4 |
0.0 |
9.6 |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
As a reminder, Cresemba (or isavuconazole) is an intravenous and oral antifungal therapy used to treat life-threatening invasive mould infections. Cresemba holds US market exclusivity through to 2027, has been approved in 73 countries and is marketed in 67 countries, with orphan drug designation in the US, Europe and Australia. Cresemba continues to be important to Basilea, with sustained market appetite driving continued sales momentum. Royalty income from global Cresemba sales grew 22% y-o-y in FY22 to CHF65m with it reaching more than US$373m in global sales in the 12 months to December 2022 (+15% y-o-y). The US remains a key market, contributing over 55% of Cresemba’s in-market sales. However, we expect a material sales push for Cresemba to come from Japan and China in FY23 (which combined make up c 25% of the global market opportunity for Cresemba) following recent regulatory wins (launched in China and approved in Japan in 2022). We note that Basilea received a CHF20m sales-related milestone payment from US partner Astellas in January 2023 based on total US sales in 2022.
Beyond Cresemba, we see the upcoming new drug application (NDA) for Zevtera (antibiotic already launched in other countries) to the US FDA in Q323 as the next key milestone for Basilea. This regulatory decision is expected in Q224, and if successful, Zevtera may be launched by end-2024. The FDA has granted Qualified Infectious Disease Product designation to Zevtera, enabling a priority review following the filing of the NDA, and a 10-year market exclusivity period. Basilea hopes to sign a licensing partner prior to the regulatory decision, representing a potentially significant catalyst, in our view.
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Research: Healthcare
Mendus has announced that it has secured financing commitments of c SEK317m, realised through an equity issue. The proposed capital raise consists of a SEK90m directed issue to Flerie Invest and a SEK227m fully secured rights issue. Through both subscriptions, shares will be offered at SEK0.48 per share, resulting in the issuance of c 660m new shares. Shares in both the directed issue and rights issue are attached with warrants that, if fully exercised at the strike price of SEK0.48/share, could provide an additional SEK90.6m in financing (c 189m shares). Separately, Mendus announced a manufacturing agreement with NorthX Biologics to develop a cell therapy manufacturing facility in Sweden. The investment by Flerie will support the realisation of this facility and the manufacturing of vididencel batches for late-stage clinical development. While both the proposed fund-raising and manufacturing alliance are subject to shareholder approval (at the upcoming EGM on 10 July), management expects the financing to extend the company’s cash runway to Q424. While the proposed funding is dilutive in nature, the proceeds provide an operational cash runway past key value inflection points, and in parallel, secures the required manufacturing infrastructure for the late-stage development of vididencel.