Creo Medical — Setting the stage for pivotal growth

Creo Medical (AIM: CREO)

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Research: Healthcare

Creo Medical — Setting the stage for pivotal growth

Creo Medical’s FY23 results recapped strategic, regulatory and operational wins for its core electrosurgical device suite, including Speedboat’s approval for upper gastrointestinal (GI) procedures in Europe and launch of Speedboat UltraSlim. With MicroBlate and SpydrBlade nearing commercial launch and increased traction with partners Intuitive Surgical and CMR Surgical, we anticipate the product uptake curve to steepen in the medium term. FY23 was a solid year with 13.4% y-o-y revenue growth and Creo’s core portfolio more than doubled to £2.3m, with a c 120% increase of its user base. Q124 core revenues were c 14% higher compared to the FY23 quarterly average. Cost optimisation drove the narrowing of operating losses to £16.4m (FY22: £20.8m) and we continue to project topline growth and current cash at hand (gross cash of £17.4m at end-Q124) to support break-even in H126, slightly more conservative than management’s FY25 target. With minor adjustments to our estimates and rolling our model forward, we value Creo at £506m or 140p/share.

Soo Romanoff

Written by

Soo Romanoff

Managing Director - Head of Content, Healthcare

Healthcare

Creo Medical

Setting the stage for pivotal growth

FY23 results

Healthcare equipment
and services

20 May 2024

Price

35.3p

Market cap

£128m

Net cash at 31 December 2023

£10.2m

Shares in issue

361.5m

Free float

87.7%

Code

CREO

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

2.3

2.0

44.1

Rel (local)

(4.6)

(6.4)

32.3

52-week high/low

48.1p

23.3p

Business description

Creo Medical is a UK-based healthcare company focusing on the development and commercialisation of minimally invasive electrosurgical devices. It has six products in the flagship CROMA platform, all of which have been CE marked and cleared by the FDA. Creo’s consumables business (through subsidiary Albyn Medical) provides it with profitable products and a direct salesforce in Europe. Licensing opportunities for its Kamaptive IP (current partnerships with major robotics players Intuitive Surgical and CMR Surgical) offer further monetisation opportunities.

Next events

H124 results

September 2024

Analysts

Soo Romanoff

+44 (0)20 3077 5700

Jyoti Prakash, CFA

+44 (0)20 3077 5700

Creo Medical is a research client of Edison Investment Research Limited

Creo Medical’s FY23 results recapped strategic, regulatory and operational wins for its core electrosurgical device suite, including Speedboat’s approval for upper gastrointestinal (GI) procedures in Europe and launch of Speedboat UltraSlim. With MicroBlate and SpydrBlade nearing commercial launch and increased traction with partners Intuitive Surgical and CMR Surgical, we anticipate the product uptake curve to steepen in the medium term. FY23 was a solid year with 13.4% y-o-y revenue growth and Creo’s core portfolio more than doubled to £2.3m, with a c 120% increase of its user base. Q124 core revenues were c 14% higher compared to the FY23 quarterly average. Cost optimisation drove the narrowing of operating losses to £16.4m (FY22: £20.8m) and we continue to project topline growth and current cash at hand (gross cash of £17.4m at end-Q124) to support break-even in H126, slightly more conservative than management’s FY25 target. With minor adjustments to our estimates and rolling our model forward, we value Creo at £506m or 140p/share.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/22

27.2

(28.6)

(13.5)

0.0

N/A

N/A

12/23

30.8

(22.1)

(6.2)

0.0

N/A

N/A

12/24e

40.1

(16.6)

(3.9)

0.0

N/A

N/A

12/25e

54.1

(4.8)

(1.0)

0.0

N/A

N/A

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

Topline traction to be supported by core portfolio

Meeting the forecast break-even target requires significant topline momentum in FY24 and FY25, which we anticipate will be underpinned by Creo’s Speedboat franchise and enhanced by the commercial launch of MicroBlate and SpydrBlade in late 2024/early 2025. Speedboat UltraSlim has garnered significant market attention since launch in December 2023 and continues to materially expand Creo’s footprint, given its compatibility with all commonly used endoscopes. The mid-2023 approval of Speedboat Inject in upper GI procedures is another driver of potential growth. We view the recent NHS supply chain data as a validation of Speedboat’s utility in hospital procedures, which should positively influence the upcoming NICE guidance and support UK orderbook growth.

Licensing opportunities to remain in focus

Collaborations and partnerships remain a focal point, including traction from Creo’s existing robotics deals with Intuitive and CMR. With ongoing clinical studies (first robotic surgery using MicroBlate Flex with Intuitive’s Ion robot in November 2023 and a non-cash milestone recorded for the CMR deal), we may see an acceleration, if clinical data is supportive, which could drive further upside potential.

Valuation: £506m or 140p per share

As we roll our model forward and adjust for the lower cash balance of £10.2m at end-FY23, our valuation adjusts to £506m or 140p per share, from £512m or 142p per share, previously. We maintain our underlying long-term assumptions and continue to see the company funded to profitability in H126.

Core portfolio gaining traction led by Speedboat

FY23 saw Creo make significant inroads in expanding the footprint of its core technology franchise. The Speedboat user base increased to 175 users by end-FY23, a c 120% increase from 80 users at the end of FY22 and a c 52% growth over H123 of 115 users. This figure has grown further to 195 users by end-Q124, as per updated data shared by management (Exhibit 1). This likely includes a significant contribution from Speedboat UltraSlim, which launched in December 2023 and has received a positive reception from the market, to our knowledge. The UltraSlim version is Creo’s slimmest Speedboat device to date, after Speedboat Inject and Speedboat Slim, and is designed to be compatible with all endoscopes with a 2.8mm or larger working channel, which accounts for most GI endoscopic procedures undertaken currently. In November 2023, Creo received 510(k) clearance from the FDA for its Speedboat UltraSlim device, following an accelerated clearance pathway in Europe, roughly 18 months earlier than anticipated. First commercial sales were booked in Europe in December 2023, swiftly followed by the US, Latin America and the Asia-Pacific region. Creo has indicated that the Q124 core revenue has increased c 14% over the FY23 quarterly average (c £0.7m in Q124, per our calculations) and Creo expects it to solidify further in Q2, supported by traction of the UltraSlim device.

We also expect increased impetus to come from Speedboat Inject’s CE mark extension for upper GI indications (such as swallowing disorders, oesophageal and stomach cancers) in Europe in June 2023, which potentially doubles the addressable market in Europe. Management estimates upper GI tract procedures to account for over 40% of Creo procedures in the US and Asia-Pacific, which we expect should translate to an increased user base in Europe the near to medium term. With the current pipeline of more than 160 potential users currently undergoing training and mentoring (Exhibit 2), we expect the user base to increase incrementally in the coming years.

Exhibit 1: Speedboat user base

Exhibit 2: Speedboat user pipeline

Source: Creo Medical presentation, May 2024

Source: Creo Medical presentation, May 2024

Exhibit 1: Speedboat user base

Source: Creo Medical presentation, May 2024

Exhibit 2: Speedboat user pipeline

Source: Creo Medical presentation, May 2024

Speedboat Inject’s value proposition lies in its ability to undertake endoscopic GI procedures (dissection, resection and coagulation in precancerous and cancerous lesions) in outpatient setting, with the promise to deliver improved clinical outcomes for patients but also cost savings for the healthcare system. The company recently reported real-world healthcare economic data from a procurement analysis for Speedboat Inject-powered submucosal dissection (SSD) procedures by the NHS supply chain. The results were based on 130 SSD procedures related to bowel cancer and therapeutic endoscopy undertaken at East Kent Hospitals University NHS Foundation Trust. When compared with other surgical alternatives, procedures using Speedboat Inject resulted in cost saving of c £5,000 per procedure for the NHS, as well as materially lower hospitalisation periods, an eightfold reduction from 8.4 days to 1.1 days. Key highlights include a 99% reduction in critical care costs, a 91% reduction in accommodation costs (from £3.4k to £0.3k) and a 59% reduction in operating theatre costs (from £8.8k to £3.6k).

We believe this data supports the economic merits of using Speedboat in hospital procedures (driving lower costs and shorter waitlists for procedures), while also benefiting patients with significantly shorter hospitalisation and recovery periods. Management has indicated that costs associated with installing the CROMA box of c £20,000, the power source behind the device, can be recouped in as little as four to five procedures (the cost of the single-use Speedboat device is c £800–1,000). We anticipate this real-world validation will support positive guidance from the National Institute for Health and Care Excellence (NICE), which we expect in the near term, and increased adoption by the NHS.

Beyond Speedboat: Plenty more to come

While Speedboat has been the star of Creo’s core technology franchise, the company has made up ground with its other electrosurgical devices as well, particularly with MicroBlate, which is used in ablation/coagulation of soft tissue, and with SpydrBlade, which is used in resection and coagulation of highly perfused tissue. Both are approaching commercial launch by late 2024 (Exhibit 3). The company noted that the combined potential of these target markets for electrosurgical devices is upwards of US$5bn (Exhibit 4).

Creo’s MicroBlate device is focused on soft-tissue microwave ablation of nodules and tumours in lung, pancreatic, liver, kidney and bladder cancers and is available in two variants: MicroBlate Fine (FDA 510(k) clearance in November 2020) and MicroBlate Flex (FDA clearance in January 2021). Creo has thus far been evaluating these devices under clinical studies and management plans a commercial launch by late 2024 or in early 2025. MicroBlate Flex is being studied as part of a multicentre observational study (announced in April 2023) to assess the safety and efficacy of the device in bronchoscopic microwave ablation of peripheral lung nodules. This study is a post-market, prospective, single-arm, multicentre, non-randomised, observational study, with plans to enrol up to 32 patients across sites in Europe and potentially the US. The first-in-man procedure was conducted in March 2023 and the first use in a robotics assisted surgery (using Intuitive’s Ion robotics system) was noted in November 2023. Management has indicated that, based on interim results from the clinical studies, commercial sales can be launched as early as 2024.

SpydrBlade, which offers laparoscopic dissection and coagulation functionality endoscopically, is prepped for launch in 2024 via Creo’s core sales channels. We believe the same product is also being developed in conjunction with CMR’s Versius surgical robotics systems under a non-exclusive agreement. We also believe that Creo is in talks with Intuitive to develop SpydrBlade to function with Intuitive’s da Vinci robotics system, which could be a considerable market opportunity for Creo, should talks progress.

Exhibit 3: Creo’s core portfolio

Exhibit 4: Core portfolio market potential

Source: Creo Medical presentation, May 2024

Source: Creo Medical presentation, May 2024

Exhibit 3: Creo’s core portfolio

Source: Creo Medical presentation, May 2024

Exhibit 4: Core portfolio market potential

Source: Creo Medical presentation, May 2024

Consumables reaping benefits from global expansion

Creo’s consumables business has grown inorganically through the acquisition of Europe-focused Albyn Medical in July 2020 and continues to drive the company’s topline, with revenues of £26.8m in FY23 (roughly 87% of group revenue), an 8% y-o-y growth over FY22. Although a mature business, we believe the FY23 uptick stems from the commencement of US commercial sales in 2023. Given the size of the US market, we expect consumables sales momentum to continue in the coming years, with further support from planned launches in the Asia-Pacific region and incremental other markets. Management has indicated that over 80% of the revenue from consumables is now coming from products shipped under the Creo brand, which we believe should improve market visibility of the company’s products and support market penetration.

Monetising opportunities for Kamaptive still in play

Licensing opportunities continues to be a key growth pillar for Creo and, although there were no new deals announced in 2023, the company began 2024 by signing a collaborative agreement with the Khalifa University of Science and Technology in Abu Dhabi to expand the applicability of its proprietary Kamaptive technology and CROMA platform. In 2022 Creo signed research and commercial partnering agreements with leading robotics players Intuitive Surgical (a global technology leader in robotics surgeries with an installed base of over 9,000 da Vinci and Ion robots across hospitals worldwide) and CMR Surgical, for its surgical robotics system Versius so it can develop compatibility and customise the usage of Creo’s electrosurgical devices with the robots.

As highlighted above, Creo marked a milestone in the applicability of its portfolio with the first use of its MicroBlate Flex device in a robotic-guided lung tissue ablation procedure using Intuitive’s Ion bronchoscopy-focused robotics platform. We note this was part of an ongoing 32-patient clinical study and MicroBlate Flex was used to successfully ablate a 27mm cancerous nodule from a patient’s lung. We expect further procedures to be performed during the study, which, if positive, could translate to a sizeable licencing agreement with Intuitive. While we were previously expecting a definitive commercial agreement and launch in 2024, we note a slight delay in trials due to upgrades in the Intuitive’s robotics system and now expect it to occur in 2025. At the end of 2023, the Ion systems had an installed base of 534 robots, with the majority in the US.

There are fewer available details on Creo’s deal with CMR (non-exclusive) but we believe it relates to Creo’s SpydrBlade device to be used with CMR’s portable Versius robotics system. The company has reported the receipt of a significant, albeit undisclosed, non-cash milestone as part of the deal. We await more updates from management on the progress with CMR, but note that Creo is also in discussions with Intuitive to potential collaborate on a SpydrBlade-da Vinci partnership. If successful, this would be a material win for Creo, given that da Vinci is the largest robotics system globally, with an installed base of 8,606 systems at the end of 2023 (Intuitive holds an estimated 57% global market share in robotic surgical systems).

Financials

In FY23, Creo reported total revenue of £30.8m (lower than our estimate of £32.8m), representing 13.2% y-o-y growth from £27.2m in FY22. Revenue from core technology products (Speedboat and CROMA), although still fairly small, increased two-and-a-half times year-on-year to £2.3m in FY23 (from £0.9m in FY22), supported by a late push from initial commercial sales of Creo’s slimmest electrosurgical device, Speedboat UltraSlim, following FDA clearance in November 2023. Revenue (licensing income/milestone payments) from the Kamaptive agreements grew by 21.4% y-o-y to £1.7m (from £1.4m in FY22), indicating continued efforts to develop its Kamaptive licensing programme. Revenue from the mature consumables business, which accounts for around 87% of Creo’s total revenues, was also up by 7.6% y-o-y to £26.8m, supported by expansion into the US market. Management has reported that in Q124, revenue from the core technology products increased by 14% over the FY23 quarterly average (c £0.58m). Consumables sales in Q124 were adversely affected by an early Easter (31 March in 2024 vs 9 April in 2023) although management expects to stay on track with its internal targets for H124. Geographically, management has indicated that Europe and the US account for 40–45% of sales each, with the remaining attributed to other international markets.

Gross margin for the period improved from 48.5% in FY22 to 49.6% in FY23 driven by strong margins in Creo’s core products and Kamaptive’s revenues, along with a stable margin from the consumables business. With a growing contribution from core products in future years, we expect gross margins to continue to improve.

During FY23, total operating expenses decreased to £40.1m from £43.8m in FY22, mainly reflecting the introduction of cost-control measures with reduced R&D spend, lower employee headcount and investment in operational capacity. R&D expenses decreased by 12.5% to £11.8m (£13.5m in FY22) primarily due to the completion of development and regulatory activities related to Creo’s core products. Management has indicated that close to 50% of the R&D expenses in FY23 (c £5–6m) were attributed to development activities under the R&D collaborations with Intuitive and CMR. As these deals progress, the responsibility for funding further development work will shift to the partners, freeing up capital for Creo. In FY23, Creo was reimbursed £2.8m, 20.7% of FY22 R&D expenditure, under the tax credit scheme. SG&A expenses were down by 5.7% to £28.7m, from £30.4m in FY22, and we believe this to have partially been driven by a lower headcount (staff costs reduced to £22.7m in FY23 from £23.1m in the previous year). Benefiting from the higher revenue, an improved gross margin and lower operating expenses, the FY23 operating loss improved to £24.8m in FY23, from £30.8m in FY22. This also translated to an improved operating cash burn position (£21.6m vs £25.0m in FY22).

Minor near-term estimate adjustments; long-term unchanged

Based on Creo’s FY23 results and operational visibility, we keep our long-term assumptions unchanged but make minor adjustments to our FY24 estimates. We also introduce FY25 estimates with the model roll-forward. We reduce our FY24 revenue estimates slightly to £40.1m, from £40.8m previously, to account for the timeline extension (from 2024 to 2025) we now expect for commercial launch under the Intuitive collaboration; we were previously estimating £1m from commercial partnership sales in FY24. The decline has been offset by an upgrade in consumables revenues to reflect the FY23 trend. We estimate FY25 revenues to be £54.1m (more conservative than management’s target of over £60m), with £17m coming from core products (c 30% of total revenue), £32.2m from consumables and £4.9m from licensing partnerships (Exhibit 5).

We also make certain adjustments to our FY24 operating expense estimates. While our projections for R&D expenses remain largely unchanged (£9.4m vs £9.2m previously), we increase our SG&A estimate to £30.1m, from £26.8m previously, to account for higher expenses related to the marketing activities for Speedboat UltraSlim and the launch of SpydrBlade and MicroBlate expected in 2024. For FY25 we estimate R&D and SG&A expenses of £7.6m and £31.6m, respectively. Overall, we forecast operating losses of £16.3m and £4.7m in FY24 and FY25, respectively. We estimate Creo will turn cash flow positive in H126 (vs management’s target of FY25).

Exhibit 5: FY23–25 revenue by business area

Source: Creo Medical, Edison Investment Research

Valuation

We continue to value Creo Medical using a risk-adjusted NPV model, valuing all three business areas (core technology, consumables and licensing partnerships) separately. Note that our valuation for the core technology segment includes projections only for the Speedboat franchise presently. We will revise our estimates to incorporate the other products following commercial launch and/or as more information becomes available. This will likely add upside to our valuation.

While we made slight changes to our near-term forecasts, we have kept our long-term assumptions and expectations unchanged. Our valuation for Creo decreases marginally to £506.1m or 140p per share, from £511.9m or 142p per share, with the benefits from rolling the model forward being offset by the lower net cash and cash equivalent balance of £10.2m (£17.3m at end-H123). The net cash balance includes gross cash at hand of £3m, term deposits of £15.5m and interest-bearing liabilities of £8.3m. Exhibit 6 presents the breakdown of our valuation.

Exhibit 6: Creo’s valuation

Product

Main indication

Status

Probability of successful commercialisation

2027 sales
(£m)

rNPV
(£m)

Core technology (CROMA Platform)

GI, soft tissues and pulmonology

Market

100%

48

387.2

Consumables (Albyn Medical)

Urology, gynaecology and GI

Market

100%

39

78.1

Partnerships (Intuitive)

50%

30.7

Total

 

 

 

 

495.9

Net cash at 31 December 2023

10.2

Total firm value

506.1

Total basic shares (m)

361.5

Value per basic share (£)

1.40

Options (m)

0.0

Total number of shares (m)

361.5

Diluted value per share (£)

1.40

Source: Edison Investment Research

Creo ended FY23 with a gross cash balance of £18.5m and this figure stood at £17.4m at the end of Q124. Note that this cash balance was supported by a £33.7m cash injection (gross proceeds) in March 2023 via two rounds of equity raises in March 2023. Based on our topline projections and cash burn estimates, we see Creo sufficiently funded to profitability in H126.

Exhibit 7: Financial summary

£m

2022

2023

2024e

2025e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

27.169

30.800

40.123

54.144

Cost of Sales

(14.047)

(15.500)

(16.808)

(19.611)

Gross Profit

13.122

15.300

23.315

34.533

Research & Development Expenses

(13.492)

(11.800)

(9.440)

(7.552)

Sales, General & Administrative expenses

(30.437)

(28.700)

(30.135)

(31.642)

Operating profit (normalised)

 

 

(28.332)

(22.400)

(16.260)

(4.661)

Underlying operating profit/loss (company reported)

 

(20.805)

(16.400)

(13.244)

(1.953)

Underlying EBITDA (company reported)

 

 

(22.085)

(17.600)

(13.244)

(1.953)

Intangible Amortisation

0.0

0.0

0.0

0.0

Other

0.0

0.0

0.0

0.0

Exceptionals

0.000

0.000

0.000

0.000

Operating Profit

(30.756)

(24.800)

(16.260)

(4.661)

Net Interest

(0.221)

0.300

(0.299)

(0.153)

Other

0.0

0.0

0.0

0.0

Profit Before Tax (normalised)

 

 

(28.553)

(22.100)

(16.559)

(4.813)

Profit Before Tax (reported)

 

 

(30.977)

(24.500)

(16.559)

(4.813)

Tax

4.041

2.800

2.484

1.203

Deferred tax

0.0

0.0

0.0

0.0

Profit After Tax (normalised)

(24.512)

(19.300)

(14.075)

(3.610)

Profit After Tax (reported)

(26.936)

(21.700)

(14.075)

(3.610)

Average Number of Shares Outstanding (m)

181.3

313.0

361.5

361.5

EPS - normalised (p)

 

 

(13.52)

(6.17)

(3.89)

(1.00)

EPS - reported (£)

 

 

(0.149)

(0.069)

(0.039)

(0.010)

Dividend per share (£)

0.0

0.0

0.0

0.0

BALANCE SHEET

Fixed Assets

 

 

41.650

38.700

37.044

35.505

Intangible Assets

27.643

26.200

25.695

25.283

Tangible Assets

10.184

9.100

7.949

6.822

Other

3.823

3.400

3.400

3.400

Current Assets

 

 

33.687

37.900

24.107

21.601

Stocks

9.325

8.100

7.905

8.301

Debtors

6.765

8.600

8.170

7.762

Cash and cash equivalent

13.097

18.500

5.332

2.838

Other

4.500

2.700

2.700

2.700

Current Liabilities

 

 

17.483

9.900

9.014

8.437

Creditors

9.000

5.700

6.181

6.181

Short term borrowings

5.616

3.100

1.733

1.156

Other short-term liabilities

2.867

1.100

1.100

1.100

Long Term Liabilities

 

 

8.451

6.900

5.167

4.011

Long term borrowings

6.067

5.200

3.467

2.311

Other long-term liabilities

2.384

1.700

1.700

1.700

Net Assets

 

 

49.403

59.800

46.970

44.658

CASH FLOW

Operating Cash Flow

 

 

(24.984)

(21.600)

(8.705)

0.408

Net Interest

(0.287)

(0.400)

(0.299)

(0.153)

Tax

0.258

1.700

0.000

0.000

Capex

(3.274)

(1.600)

(1.360)

(1.168)

Acquisitions/disposals

(2.753)

(2.400)

0.000

0.000

Financing

0.000

31.700

0.000

0.000

Dividends

0.000

0.000

0.000

0.000

Investments

0.000

(15.000)

0.000

0.000

Other

0.518

(1.200)

(3.100)

(1.733)

Net Cash Flow

(30.493)

(10.100)

(13.165)

(2.493)

Opening net debt/(cash)

 

 

(32.978)

(1.414)

(10.200)

(0.132)

HP finance leases initiated

0.000

0.000

0.000

0.000

Exchange rate movements

(0.056)

0.000

0.000

0.000

Other

(1.015)

18.886

3.097

1.733

Closing net debt/(cash)

 

 

(1.414)

(10.200)

(0.132)

0.628

Source: Company reports, Edison Investment Research

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United Kingdom

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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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Basilea Pharmaceutica — Cresemba milestone payments continue to roll in

Basilea Pharmaceutica has announced the triggering of a US$1.25m milestone payment from Pfizer, triggered by sustained strong sales of Cresemba in the Asia-Pacific region and China. This is the second FY24 milestone payment for the region and is incremental to the payment received in March. We note that, according to the latest available data, total in-market sales of Cresemba amounted to US$473m in the 12 months ending December 2023, representing a +26% year-on-year increase. Basilea is preparing to launch its Phase III programme for fosmanogepix, a broad-spectrum antifungal therapy, with the first of two Phase III trials expected to initiate in mid-2024. The company also made positive regulatory and operational strides with its lead antibiotic asset, Zevtera (following FDA approval in April 2024), and we eagerly await the announcement of a potential US commercial partner.

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