Sparks - Basilea Pharmaceutica

Basilea has announced a further $30m non-dilutive funding award from BARDA following achievement of a predefined enrolment milestone in the Phase III development programme for fosmanogepix. The award increases BARDA’s committed funding under the existing Other Transaction Agreement (OTA) to $123m (from $93m previously), while the agreement continues to provide access to up to $268m of potential funding over its lifetime (up to 12 years), subject to future option exercises.

We note that of the previously committed $93m (c CHF74m), Basilea has recognised c CHF31m as reimbursement income in FY26. The company has guided to c CHF55m in total non-dilutive reimbursement income for FY26 (including CARB-X funding, although the majority is expected to come from BARDA). At this stage, it remains unclear whether the latest award will result in an upgrade to this guidance, as this will depend on the timing of revenue recognition. We expect further clarity with the upcoming H126 results.

Overall, we view the announcement as a positive development. The additional funding further reduces Basilea’s internal development spend on fosmanogepix and BAL2062, with BARDA continuing to cover c 60% of eligible programme costs. We estimate the fosmanogepix Phase III development cost to be c $150m, highlighting the significance of the BARDA support. More importantly, the milestone-based payment indicates that the Phase III programme continues to progress in line with the plan, incrementally reducing both execution and funding risk as the FAST-IC and FORWARD-IM studies continue to enrol.