Sparks - Basilea Pharmaceutica

Basilea reported strong H126 results, ahead of consensus and our expectations, accompanied by a meaningful upgrade to FY26 guidance. Revenue increased 14.4% y-o-y to CHF119m (vs our expectation of CHF108.3m), while operating profit rose 32% to CHF31.6m (Edison estimate: CHF21m) and net profit reached CHF27.9m (+76.6% y-o-y). This was achieved despite a meaningful step-up in R&D investment (CHF54m against our expectation of CHF51m), highlighting the improved sales mix, with a higher proportion of royalties (CHF57.8m, +10.9% y-o-y), milestones (CHF4.7m) and BARDA/CARB-X R&D-related reimbursements (CHF24.0m in H126 vs CHF13.0m in H125) versus lower-margin product revenues (CHF29.9m vs CHF31.5m in H125). The strong growth in royalties was supported by Cresemba’s continued commercial momentum, with in-market sales growing 27% y-o-y to $782m for the 12-month period ended March 2026.

The balance sheet also strengthened further. Basilea repurchased CHF5m of its 2027 convertible bond during H126, reducing outstanding debt to CHF71m. Gross cash increased 32.6% y-o-y to CHF176m, while net cash more than doubled to CHF105.3m from CHF50.7m at end-H125, providing additional flexibility to fund internal development and selective portfolio expansion.

Supported by the H126 traction and expectations of an H2-weighed revenue profile, management has upgraded its FY26 guidance: revenue growth is now expected to be +15% from +10% while operating profit growth guidance has been raised to c 40% from c 20%, despite unchanged R&D growth guidance of c 20%. Cresemba/Zevtera-related revenue is now expected at c CHF210m (previously c CHF200m), with a commercial cash contribution of c CHF180m. Fosmanogepix remains on track for a 2028 readout/submission, representing the key medium-term clinical catalyst. CTB-LEDA also continues to advance, with initiation of the global Phase III programme in complicated urinary tract infection targeted for mid-2027, providing an additional late-stage growth opportunity. Overall, we view H126 as a clear positive read-through for earnings momentum, balance-sheet optionality and pipeline funding capacity.