Basilea Pharmaceutica — Strong close to FY23 with another milestone payment

Basilea Pharmaceutica (SIX: BSLN)

Last close As at 17/07/2024

CHF42.00

−0.25 (−0.59%)

Market capitalisation

CHF557m

More on this equity

Research: Healthcare

Basilea Pharmaceutica — Strong close to FY23 with another milestone payment

Basilea has announced receipt of its first sales-related milestone (for an undisclosed amount) from distribution partner Knight Therapeutics. The payment was triggered by combined Cresemba sales in Latin America exceeding a pre-defined sales threshold. Cresemba continues to see strong market traction for the treatment of invasive aspergillosis and mucormycosis, with the drug reporting in-market sales of US$445m in the 12 months ending September 2023 (+22% y-o-y), reflecting a growing market share in value terms (15% globally and 38% in the US among best-in-class antifungals). In FY23 Basilea recorded around CHF30m in milestone payments for lead product Cresemba, including CHF25m from Pfizer in Europe (>CHF355m in upfront and milestone payments received to date). In December 2023, Cresemba was granted a paediatric label expansion in the US, extending market exclusivity to September 2027 (EU decision anticipated in Q124), by which time we estimate sales to peak at c US$700m.

Soo Romanoff

Written by

Soo Romanoff

Managing Director - Head of Content, Healthcare

misael-moreno-fN6K30xtiKE-unsplash-Basilea

Healthcare

Basilea Pharmaceutica

Strong close to FY23 with another milestone payment

Milestone update

Pipeline update

Pharma and biotech

26 January 2024

Price

CHF34.95

Market cap

CHF419m

Net debt (CHFm) at 30 June 2023

38.1

Shares in issue (excluding 1.12m treasury shares)

11.98m

Free float

90%

Code

BSLN

Primary exchange

SIX

Secondary exchange

N/A

Share price performance

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/early 2024, the company expanded its pipeline to include antifungal GR-2397 (now BAL2062), antibiotic tonabacase (evaluation licence), a preclinical antibiotic programme from Spexis GA and Phase III-ready, novel broad-spectrum antifungal treatment fosmanogepix (two Phase III trials planned for 2024).

Analysts

Soo Romanoff

+44 (0)20 3077 5700

Jyoti Prakash, CFA

+44 (0)20 3077 5700

Basilea Pharmaceutica is a research client of Edison Investment Research Limited

Basilea has announced receipt of its first sales-related milestone (for an undisclosed amount) from distribution partner Knight Therapeutics. The payment was triggered by combined Cresemba sales in Latin America exceeding a pre-defined sales threshold. Cresemba continues to see strong market traction for the treatment of invasive aspergillosis and mucormycosis, with the drug reporting in-market sales of US$445m in the 12 months ending September 2023 (+22% y-o-y), reflecting a growing market share in value terms (15% globally and 38% in the US among best-in-class antifungals). In FY23 Basilea recorded around CHF30m in milestone payments for lead product Cresemba, including CHF25m from Pfizer in Europe (>CHF355m in upfront and milestone payments received to date). In December 2023, Cresemba was granted a paediatric label expansion in the US, extending market exclusivity to September 2027 (EU decision anticipated in Q124), by which time we estimate sales to peak at c US$700m.

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

33.6

N/A

12/23e

155.0

5.2

43.8

0.0

79.8

N/A

12/24e

183.3

35.1

293.1

0.0

11.9

N/A

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

Cresemba (generic name isavuconazole) is an intravenous and oral azole antifungal therapy used to treat life-threatening invasive mould infections such as invasive aspergillosis and mucormycosis. The drug has been approved in 76 countries and is marketed in over 70 countries (licence and distribution agreements cover 115 countries), with Orphan Drug designation in the US, Europe and Australia. The distribution agreement was signed with Grupo Biotoscana in September 2016 (subsequently acquired by Knight Therapeutics in 2019) and includes the supply and distribution of Cresemba, as well as the company’s second commercial asset (Zevtera, an antibacterial therapy), in 19 countries in Latin America including Brazil, Mexico, Argentina and Colombia. The recent payment marks the first sales-related milestone from the region. In FY23, we estimate Cresemba to bring in c CHF129m in revenues for Basilea (including c CHF76m in royalties), a c 22% y-o-y improvement over the previous year.

While we continue to expect Cresemba to drive sales momentum across FY24–25, we believe the upcoming PDUFA decision on Zevtera (expected by 3 April 2024) will be the next major catalyst for the company, given management estimates that the US will make up 85–90% of Zevtera sales. More recently, the company has been focusing on strengthening its therapeutic pipeline with the aim of supporting longer-term growth and traction. In the past few months, Basilea has acquired/in-licensed four antifungal and antibacterial assets, including the Phase III-ready novel anti-fungal treatment fosmanogepix (November 2023), for which two Phase III trials are expected to start this year, in candidemia and invasive candidiasis (mid-2024) and invasive mould infections (late 2024).

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.

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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.

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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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