2024 has proven to be a pivotal year for Basilea with the start of the fosmanogepix Phase 3 trials along with securing funding from BARDA, which should help facilitate a smooth development pathway. Irrespective, Basilea remains well-placed financially, while Cresemba is still firmly in its growth phase. The final piece of the jigsaw for us was the identity of the commercial partner for Zevtera (ceftobiprole) in the key US market. Innoviva Specialty Therapeutics (IST) appears to be a relevant and highly motivated partner with a complementary portfolio of antibiotics. The bacteraemia indication looks to be key to commercial success, and Zevtera is well-placed as the only cephalosporin with this specific indication, with few treatment options available elsewhere. Finally, we look forward to further progress in the pipeline, anticipating that BAL2062 will enter the clinic (with BARDA funding) in 2026 and the LptA inhibitor programme (BAL2420) moving forward.
Fosmanogepix is the jewel in the anti-infective crown
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Fosmanogepix has recently started Phase 3 development for the treatment of candidaemia and/or invasive candidiasis, with a second Phase 3 trial targeting invasive moulds, which will begin shortly. The profile of fosmanogepix suggests that it should provide longevity to the antifungal franchise after the expected loss of exclusivity for Cresemba in the US and Europe in Q4 2027. Based on its profile and clinical data, we also forecast fosmanogepix to exceed peak sales of Cresemba comfortably. Importantly, its broad spectrum suggests it has activity against most of the critical fungal infections highlighted by WHO. Additionally, the importance of fosmanogepix as a novel antifungal has been reflected in the FDA conferring Fast Track status for various invasive fungal infections, including invasive aspergillosis, candidiasis and mucormycosis. Encouraging Phase 2 data suggests the Phase 3 programme has been substantially de-risked. Also, data from Expanded Access have provided a tempting insight into the potential of fosmanogepix to help cure patients with otherwise intractable fungal infections. Our peak sales estimate for fosmanogepix is $1.2bn based on its clinical profile.
Management executing
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Successful in-licensing activities have secured the future of the anti-infectives franchise at Basilea and have the potential to create an anti-infectives powerhouse. The OTA agreement with BARDA further enhances Basilea’s anti-infectives prowess and provides further proof that the company is a go-to partner for anti-infective assets. The future looks bright with a balanced pipeline of novel antifungal and antibiotic programmes. While we expect further in-licensing activities, we have been encouraged by execution so far, particularly in the key antifungal field.
Creating a global anti-infectives powerhouse
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Basilea has proven that being a leading participant in the delivery of medically and commercially relevant anti-infectives can be a lucrative and fulfilling endeavour. To date, this has largely been thanks to the continued success of the antifungal Cresemba and the efforts of its licensees, particularly Astellas in the US and Pfizer (Europe ex. Nordics), as well as distributors. While Cresemba may be maturing with loss of exclusivity expected in the US and Europe in Q4 2027, it continues to grow and is now the leading branded antifungal by sales globally.
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The financial performance of Cresemba has facilitated the creation of a broad anti-infective pipeline, although it is the antifungal franchise that we remain most enthused about. Thankfully, the pipeline of novel antifungals generally looks healthier, partly, we suspect, because of WHO’s efforts to raise awareness and engender a sense of urgency to deliver new antifungal agents.
Awareness of the growing threat from emerging antifungal infections has been boosted by the WHO, which published a list of critical fungal infections in 2022 for the first time. This has served to significantly increase the profile and industry participation in the development of novel antifungal treatments.
WHO fungal priority pathogens list
Source: World Health Organization
Securing a multi-year Other Transaction Agreement (OTA), which provides up to $268m of funding over up to 12 years, represents a key transformational event for the company. BARDA uses OTAs to “…foster innovation and promote collaboration” and are a key element of the US government's preparedness for various threats, which include, in the case of Basilea, emerging infectious disease threats.
Transforming the antifungal franchise
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Although the therapeutic focus for Basilea comprises both antifungals and antibacterials, there is a recognition that antifungals offer a larger commercial opportunity. Risk of serious invasive fungal infections continues to increase as procedures which drive growth in the immunocompromised patient population increase. These are well-understood and include organ transplantation and more aggressive cancer treatments. Emerging resistance has also become more of an issue.
It is important to note that while Cresemba may be subject to loss of exclusivity from Q4 2027 in the US and Europe, it is still very much in its growth phase despite this apparent maturity, delivering sales of $562m in the 12 months to the end of December.
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The first addition to Basilea’s antifungal pipeline was BAL2062 (formerly GR-2397), a novel first-in-class antifungal agent with activity against clinically important moulds such as Aspergillus spp, including those resistant to currently available therapies. The commercial relevance of this acquisition is clear with IA, the principal revenue generator for Cresemba, and potentially providing an alternative where resistance is suspected.
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The acquisition of fosmanogepix, on the other hand, has been another transformational de-risking event and promises to take the anti-infective franchise to new heights. Crucially, fosmanogepix demonstrates activity against almost all the problem fungal infections highlighted on the WHO list. As such, should the Phase 3 programme confirm its broad spectrum and clinical activity we believe that commercial success is assured.
Fosmanogepix the jewel in the Basilea crown
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Fosmanogepix is the first in the new ‘gepix’ class of novel antifungals. It inhibits fungal cell wall synthesis by targeting GPI-anchored protein maturation by inhibiting Gwt1 in the GPI biosynthesis pathway. Despite its evolutionary conservation, there are important differences in the GPI pathway in humans and other organisms, allowing for the development of inhibitors with excellent selectivity. This apparent selectivity has been borne out in clinical studies, which confirm its benign safety profile.
We are aware of only two novel antifungals with activity against Gwt1. One of which is fosmanogepix, while gepinacin development has been compromised by its instability and offers no competition to fosmanogepix.
Preclinical and clinical data suggest that fosmanogepix has a differentiated and highly relevant profile. It has high bioavailability (>90%), providing the potential for both oral and IV preparations. This is relevant to the extent that the echinocandins can only be delivered by the IV route. The importance of the echinocandins is that they represent the first line of treatment for Candida auris infections where increasing resistance to the azoles has become an emerging concern.
We believe that fosmanogepix, with its broad spectrum against all priority pathogens and activity against resistant fungal infections, could take the anti-infectives franchise at Basilea to new heights. More recently, C. auris and Nakaseomyces glabrata have proven to be problematic fungal infections in the US. Moreover, fosmanogepix post-approval should possess a much broader label than Cresemba. Importantly, fosmanogepix has also displayed activity against other rare, difficult-to-treat moulds, which were typically resistant to other antifungal agents. Furthermore, fosmanogepix displayed activity against Aspergillus resistant to echinocandins and fluconazole.
The broad spectrum and potency of fosmanogepix have been demonstrated in various animal models. Several key attributes have been confirmed, including its ability to reduce fungal burden, particularly in key organs such as the brain, where the echinocandins have negligible activity. Overall, fosmanogepix has a good volume of distribution, penetrating many important tissues and organs, including liver, lung, and eye.
As a novel first-in-class antifungal, resistance to fosmanogepix should be a distant concern in a real-world environment. However, we note the concern regarding the potential introduction of the pesticide aminopyrifen and the heightened risk of emerging resistance associated with its similar mode of action. Nevertheless, given that fosmanogepix has demonstrated both in vitro and in vivo activity against strains of Aspergillus and Candida (arguably the key near-term commercial targets for fosmanogepix) which are resistant to the echinocandins, amphotericin B, itraconazole and fluconazole, we believe that the differentiated profile of fosmanogepix suggests that it should be an important new treatment option.
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Clinical development of fosmanogepix
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Three Phase 2 studies have been completed in patients with candidaemia, including those caused by C. auris and invasive mould infections. C. auris has been associated with high mortality rates (circa 60%) in patients hospitalised with a C.auris infection. Resistance to existing classes of antifungals has been a characteristic of almost all C. auris strains. The rapid emergence of C. auris, with its multi-drug resistance and associated high mortality rate, has resulted in various health authorities highlighting it as a fungal infection of significant concern. In the US, the CDC has highlighted the increasing prevalence of C. auris infections. Consequently, CDC has designated C. auris as an urgent antimicrobial resistance threat in the US. In March 2023, the CDC issued a warning regarding the increasing risk of infection from drug-resistant C. auris following a spike in cases in California.
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Phase 3 underway
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​Reflecting the unmet need and the commercial opportunity, the two Phase 3 trials planned comprise one targeting candidaemia/invasive candidiasis and a second targeting invasive mould infections.
Fosmanogepix Global Phase 3 programme
Source: Basilea investor presentation
The first Phase 3 study - Fosmanogepix Against Standard-of-care Treatment in Invasive Candidiasis (FAST-IC), was initiated in September 2024. This study is a global, randomised, double-blind trial intended to show non-inferiority to standard of care. The trial aims to enrol 450 patients and will compare fosmanogepix to caspofungin – both offering oral step-down options. The primary endpoint agreed with FDA is 30-day survival, while for EMA approval, the primary endpoint is overall response at the end of study treatment.
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The invasive mould (FORWARD-IM) study is open-label and randomised and is expected to enrol about 200 patients. The study aims to compare fosmanogepix versus best available therapy against a broad range of clinically and commercially relevant invasive fungal infections, including Invasive aspergillosis (IA), Fusarium spp, Scedosporium spp, Mucorales, Lomentospora prolificans as well as other multi-drug-resistant moulds. This study is expected to start in Q2 2025. Given that fosmanogepix has obtained Fast Track status from FDA for seven different fungal infections, we believe that, ultimately, it will be relevant to a broad range of critical fungal pathogens.
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Importantly, the Phase 3 trials for fosmanogepix are global, suggesting a less protracted launch than Cresemba in the key markets. Inevitably, given the expected extended profile of fosmanogepix and its relevance to a broader range of problematic infections, we suspect there will be significant interest in making it available to patients in all markets expeditiously.
In that regard, we note the importance of expanded access programmes (EAPs), which provide access to novel treatments ahead of approval in that geography. Basilea provides Expanded Access to fosmanogepix through an agreement with the CRO WEP Clinical.
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Supporting the use of fosmanogepix as part of an EAP are the data already generated in the clinical programme as well as the February 2024 report in NEJM of its successful compassionate use in immunocompetent patients as part of an outbreak of Fusarium solani meningitis at two clinics in Mexico, among patients who received epidural anaesthesia. Of the thirteen patients identified in the article (from a Texas hospital) and treated with existing antifungal agents, nine died, while three out of four who received fosmanogepix survived. Additional (postmortem) analysis showed that the fungus causing the outbreak was resistant to all available antifungals except fosmanogepix. Of note is that the brain stem (vertebrobasilar system) was involved, suggesting that fosmanogepix's excellent tissue penetration may have played a part in the successful outcome. While these are small numbers, sadly, nosocomial fungal infections have been observed in several situations. Given that the source of the infection has not been confirmed, it is possible that similar infections could still occur, especially where medical tourism is involved.
Given the high-profile nature of the abovementioned cure for patients with life-threatening fusarium infections (where other antifungals have failed), fosmanogepix may well be used as part of other EAPs. Basilea has reported that it has been used in over 250 patients in over 11 countries with infections including aspergillosis and Candida infections, as well as invasive fusariosis and rare but life-threatening moulds. Data were also presented at ESCMID Global 2025, which showed that treatment of patients with invasive fusarium and mucormycosis with fosmanogepix experienced a highly creditable response rate of 70% or higher and was well tolerated. Further data generated from Expanded Access could help provide some insight into fosmanogepix commercial potential and help save lives, particularly where existing treatments have been exhausted or where no suitable alternative is available. It is also worth noting that the invasive moulds trial is an open-label design. As a result, there may be an opportunity to provide an update on its progress without compromising the quality of the data readout at the primary endpoint.
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New antifungals moving through development
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The acquisition of fosmanogepix has been timely. Not only is Cresemba moving towards maturity in the major markets of the US and Europe, but the competitive environment is also beginning to show signs of intensifying with several novel antifungals in clinical development. Nevertheless, we believe that the profile of fosmanogepix suggests that it has a highly competitive profile.
Fosmanogepix's favourable profile
Source: Basilea investor presentation
The above schematic demonstrates the excellent applicability of fosmanogepix to a broad range of important fungal infections. While the competitive environment surrounding Candida and Aspergillus may be more intense, the schematic does not include other important differentiating features which favour fosmanogepix. Nevertheless, it is encouraging and reassuring to see that there is a relatively full pipeline of novel antifungal agents progressing through clinical development. While olorofim may have been undone by following a limited population pathway, we are heartened to see that rezafungin was approved on the back of a relatively small Phase 3 study (with a generous 20% non-inferiority margin).
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Looking into the competitive environment in more detail, we have previously highlighted the checkered development of olorofim. Olorofim is a member of the ortomide antifungal class targeting fungal dihydroorotate dehydrogenase (DHODH), which is involved in pyrimidine synthesis. Although not a broad-spectrum antifungal, it has broad microbiologic activity against several important invasive moulds. Available orally, olorofim has been awarded FDA Breakthrough Therapy Designation for the treatment of invasive fungal infections in patients with limited or no treatment options, including aspergillosis refractory or intolerant to currently available therapy, and infections due to Lomentospora prolificans, Scedosporium, and Scopulariopsis species as well as treatment of patients with coccidioidomycosis refractory to standard of care.
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In May 2022, the originator F2G received $100m in upfront payments with the potential to receive up to a further $380m in regulatory and commercial milestones as well as double-digit sales royalties. However, olorofim received a complete response letter from FDA in June 2023 following its application for approval with a proposed label for the treatment of invasive fungal infections in patients who have limited or no treatment options. More recently, the outlook for the progression of olorofim took a significant step forward with the announcement that F2G had raised $100m to fund additional Phase 3 evaluation.
Ibrexafungerp (SCY-078) represents the first of a new class of “fungerps”. It may share the same target as the echinocandins but targets a different binding site in the fungal cell wall (a derivative of enfumafungin). Its mode of action increases the permeability of the fungal cell wall, ultimately resulting in cell death.
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Ibrexafungerp displays fungistatic activity against Aspergillus and fungicidal activity against Candida but lacks reliable activity against Fusarium or Mucorales. Given a general lack of cross-resistance with the echinocandins and its availability as an oral presentation, there is the potential for ibrexafungerp to be used as an oral step-down therapy to injectable echinocandins in the short term. We note that the Phase 3 study (MARIO) with ibrexafungerp as a step-down therapy in the treatment of invasive candidiasis should re-start in early 2025 following an earlier clinical hold.
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The antifungal pipeline at Scynexis also features its second-generation “fungerp” SCY-247. SCY-247 looks to have potent activity against a broad range of fungal infections, including multi-drug-resistant strains, including azole-resistant Candida and Aspergillus spp. If successful, SCY-247 could capitalise on the use of the echinocandins as first-line treatment options in invasive fungal infections caused by Candida and Aspergillus. SCY-247 has activity against resistant strains and appears more potent (greater bactericidal activity) than ibrexafungerp against resistant strains of C. auris. It also offers both IV and oral preparations.
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While the profile of SCY-247 looks promising, it is still in early development. SCY-247 entered Phase I trials in December 2024. This is a randomised, double-blind, placebo-controlled study targeting the olymyxin of around 100 healthy volunteers.
Rezafungin rounds out the near-term competitive environment. Rezzayo (rezafungin) is a novel echinocandin (derived from anidulafungin). Its main differentiating features include a longer half-life allowing once-weekly dosing, better volume of distribution, and activity against biofilms and azole-resistant Candida, including C. auris and N. glabrata. The pharmacokinetic profile of rezafungin facilitates a front-loading dosing regimen with a higher loading dose administered. This regimen results in high exposure early in patient treatment, resulting in increased fungal killing. Rezafungin should benefit from the echinocandins position in guidelines as first-line treatment, and its once-weekly dosing should facilitate outpatient treatment, potentially removing the need for a central venous line. Rezafungin also offers greater stability than other echinocandins and represents a significant advance over existing members of the class.
Rezafungin was approved in the US in March 2023 for the treatment of adults with limited or no alternative treatment options with candidaemia and/or invasive candidiasis. European and UK approval was secured in late 2023/early 2024. Approval was based on a single Phase 3 trial where rezafungin was compared to caspofungin (followed by oral step-down therapy). The primary endpoint was 30-day all-cause mortality using a 20% non-inferiority margin.
Looking at the competitive environment, it is tempting to conclude that if successfully developed, fosmanogepix offers a broader spectrum, including most of the WHO-listed critical fungal infections. Importantly, its excellent penetration of tissues and organs, like the CNS and eye, where other antifungal approaches are deemed insufficient, promises an important differentiation. It also offers the potential for oral step-down therapy, which could be a meaningful differentiator given that it’s the same treatment. In contrast, oral step-down therapy in invasive candidiasis with an echinocandin usually involves moving to azole-based treatment.
BAL2062 – a differentiated antifungal approach
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BAL2062 is the first of a new class of siderophore-like hexapeptide antifungal agents. BAL2062 is differentiated by its novel mechanism of action that includes rapid fungicidal activity, with data generated to date suggesting activity against a range of difficult-to-treat fungal pathogens (including azole-resistant strains). The rapid reduction in fungal burden, as well as a lack of cross-resistance to existing antifungal classes (such as the azoles), could be highly attractive features of BAL2062.
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BAL2062 originated at Astellas and is a naturally derived cyclic hexapeptide from the Malaysian leaf litter fungus. Its mechanism of action is based on the use by fungi (and other pathogens) of the siderophore ferrichrome. Fungi require ferrichrome to scavenge for essential iron when levels are low. Importantly, it is transported in fungal cells by the Sit1 transporter, and fortunately, since human cells do not possess a Sit1 transporter, BAL2062 should have minimal toxicity.
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Although the principal commercial target is likely to be invasive aspergillus infections, including azole-resistant, BAL2062 also has activity against other important fungal pathogens, including N. glabrata and Fusarium solani.
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BAL2062 is still early in its clinical development, with Phase 1 clinical evaluation showing it to be safe and well tolerated. BAL2062 also benefits from QIDP and Fast Track designations for IA. Basilea intends to flesh out the profile of BAL2062 further, with the intention of commencing Phase 2 trials in 2026. The addition of BARDA funding should help accelerate development should BAL2062’s attractive profile warrant further development.
Zevtera on the near-term horizon
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The path to commercialisation for Zevtera has been long and tortuous. However, there remains a need for new anti-MRSA antibiotics, and thankfully, the conferring of QIDP status has provided 10 years of market exclusivity in the US post-approval. The attraction of Innoviva Specialty Therapeutics (IST) brings a committed partner for the US commercialisation of Zevtera. Clearly, these are early days, with launch scheduled for mid-2025. However, there are several reasons why the attraction of IST represents a committed partner. The current anti-infective portfolio at IST comprises several hospital-based complementary antibiotics targeting important infectious diseases. Although Zevtera as a 5th generation cephalosporin may not represent a transformative approach, reflecting on the long-term availability of other similar treatments such as ceftaroline, it is the only cephalosporin to have a specific approval for Staphylococcus aureus bacteraemia (SAB).
We believe that the SAB indication is key to Zevtera’s commercial success. This is a substantial opportunity with circa 120,000 SAB patients in the US per year, of whom approximately half involve infection with MRSA. With only vancomycin and daptomycin approved for SAB and with a growing threat of emerging resistance, there is a clear need for new treatment alternatives, particularly one with the known safety and tolerability profile associated with the cephalosporin class.
Even in the key SAB indication, it will be interesting to see how ceftobiprole is used in the absence of up-to-date treatment guidelines. There appears to be considerable practice variation in the treatment of SAB, perhaps reflecting the lack of treatment options and compelling clinical data from well-controlled trials (until now). Treatment with a beta-lactam antibiotic remains first line for patients with susceptible infections (MSSA), which can last up to six weeks if the condition has become metastatic compared to two weeks if the bacteraemia remains uncomplicated. Antibiotics typically used for MSSA include anti-Staphylococcal penicillins, such as flucloxacillin, and first-generation cephalosporins, such as cefazolin.
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Patients with confirmed and suspected MRSA, as well as in institutions where resistance is a concern, look to be the initial unmet need for Zevtera. MRSA inevitably leads to poorer outcomes, with 15%-50% mortality rates in patients with MRSA bacteraemia. The glycopeptides, vancomycin and daptomycin, are first-line treatments in MRSA bacteraemia, requiring 4-6 weeks of intravenous therapy. Metastatic infections often require surgical intervention and can result in extended hospitalisation.
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Although still relatively rare, there is a growing risk of resistance to both vancomycin and daptomycin. As a result, the lipoglycopeptide dalbavancin may be used (currently off-label) as an alternative to vancomycin-resistant infections and has the added benefit of offering a lower level of renal injury in comparison and a long half-life resulting in a much-reduced dosing schedule. Dalbavancin offers the potential for a shorter and less invasive treatment regimen, lowering risks associated with prolonged central venous access.
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To confirm the potential of dalbavancin in complicated SAB, the DOTS (dalbavancin as an option for treatment of SAB) trial has been designed as a prospective Phase 2b study. DOTS enrolled 200 SAB patients who had already experienced bacteraemia clearance before randomisation to two doses of dalbavancin or 4-8 weeks of standard intravenous antibiotic therapy. Positive results from the DOTS study were presented at ESCMID in April 2024 with dalbavancin observed to be non-inferior to standard of care.
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The standard of care (vancomycin and daptomycin) has been associated with a significant risk of treatment failure. Furthermore, vancomycin has poor tissue distribution and a risk of renal toxicity. Also, daptomycin is inactivated in the lung, rendering it useless for the treatment of respiratory infections. Ultimately, we believe there is a clear need for additional antibiotics in SAB with a notable shortage of high-quality controlled studies. As noted above, salvage therapy using a non-approved (off-label) antibiotic (such as the combination with ceftaroline) has proven to be a last resort approach in those with a persistent infection.
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IST has clearly recognised the need and market potential associated with the SAB opportunity, and we look forward to feedback post-launch, noting that the salesforce is currently in preparation for a mid-year launch. Previously, we modelled ceftobiprole to achieve a 10-12% peak penetration of the US bacteraemia market, resulting in a peak sales opportunity of $250m. Patients with SAB usually receive antibiotics for between 2 to 6 weeks. Additionally, we have assumed that ceftobiprole can secure a modest 2-3% share of the large ABSSSI market at peak, recognising that this is a much more competitive area with other more entrenched competitions (e.g. ceftaroline). Nevertheless, such is the size of the ABSSSI indication in the US; even this modest market penetration suggests a peak sales market potential of $130m, and we also have the CABP indication to include. Overall, we forecast that ceftobiprole could deliver peak in-market sales of approximately $380m in the US.
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BAL2420 – a novel Gram-negative candidate
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The major unmet need in bacterial infections has been problematic infections caused by Gram-negative bacteria. For Basilea, if the antibacterial franchise is extended beyond ceftobiprole, targeting Gram-negative infections is the obvious target. Gram-negative infections are generally more challenging to treat than Gram-positive infections because of the outer membrane, which effectively blocks some antibiotic classes. Ceftobiprole, for example, may have an extended spectrum that includes some Gram-negative bacteria, but, in general, it would only be used where a broad-spectrum antibiotic is required. There is a clear desire, reflected in treatment guidelines, for a more tailored approach to treating infections where the causative agent can be ascertained.
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Resistance associated with Gram-negative infections is therefore particularly concerning, with few treatment options available and little progress. Such is the seriousness of AMR that the WHO has published a list of priority pathogens, of which the majority are Gram-negative. The list is split into three priorities relating to their risk to human life. The highest-level Priority 1 pathogens are all Gram-negative and are deemed to pose a critical threat and comprise Acinetobacter baumannii, Pseudomonas aeruginosa and Enterobacteriaceae, where resistance has become a significant problem.
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BAL2420 targets LptA with the objective of disrupting the outer membrane of Gram-negative bacteria by targeting the lipopolysaccharide (LPS) bridge. Given the outer membrane’s importance in preserving Gram-negative bacteria’s integrity, targeting LPS production and its transport machinery has proven a productive approach in antibiotic drug development. Nevertheless, apart from the polymixins and colistin, which have significant limitations, efforts to develop direct inhibitors of LPS have been found wanting so far. Given the heightened risk of kidney damage associated with colistin and Polymyxin B, they are generally regarded as last-resort treatment options. The preclinical profile of BAL2420 looks to be very appealing as a potent inhibitor of LptA with a rapid bactericidal activity, noting in particular that it has activity against Enterobacteriaceae strains (WHO Priority 1), including those resistant to beta-lactams and colistin.
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Despite its relatively early stage of development, we believe the award of non-dilutive funding from CARB-X is an important endorsement of this approach, noting that CARB-X focuses on accelerating programmes targeting the WHO and CDC’s priority pathogens list. CARB-X interest reflects the importance of LptA and BAL2420 as an exciting novel approach to targeting insidious and life-threatening infections caused by Enterobacteriaceae. We look forward to BAL2420 entering first-in-man studies, which are anticipated in mid-2026. BAL2420 is currently not included in our financial model or valuation of Basilea.
Risks
Basilea's business model currently involves partnerships and out-licensing to third parties, suggesting little influence over sales performance. Nevertheless, execution on key product Cresemba has been through highly appropriate partners (particularly Astellas and Pfizer), and we believe this model has worked well for Basilea and its partners.
Fosmanogepix is key to the long-term future of the company’s anti-infectives aspirations. The clinical data to date has been supportive and, with positive EAP results, suggest that the programme has been somewhat de-risked. However, Phase 3 clinical evaluation is ongoing, and we have used a 75% probability of success to reflect the remaining risk.
We believe IST will be a committed and effective commercial partner for Zevtera in the US. Given our expectations of sales success, we look forward to early launch feedback, particularly in the SAB indication.
The LptA programme is both novel and early stage, suggesting that there is still a very real risk of failure. Therefore, we have not included BAL2420 in our financial model until more compelling data are generated. In any event, we expect Basilea to continue replenishing its pipeline with interesting programmes.
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Financial Model and Summary
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FY’24 delivered another better-than-expected performance from Cresemba and set the scene for the commercialisation of Zevtera through IST later in the year. While the attraction of a large multi-year OTA with BARDA has undoubtedly further enhanced Basilea’s ambitions to become a leading anti-infectives company, it is worth remembering that Basilea remains a profitable company despite committing significant resources to completing the fosmanogepix Phase 3 programme. Basilea has previously suggested that the OTA will cover approximately 60% of the costs of developing its current antifungal pipeline.
Given the larger commercial opportunity associated with the treatment of fungal diseases, we suspect that the antifungal franchise will continue to dominate the future shape of the Basilea anti-infectives portfolio. Undoubtedly, the introduction of a list of critical fungal infections by the WHO should stimulate interest, and Basilea stands to be a major beneficiary.
Given its profile, and despite the intensifying competitive landscape, fosmanogepix has the potential to be an even larger commercial success than Cresemba. We have highlighted the potential for an IV to oral step-down therapy to provide outpatient treatment options. At the same time, its activity against most of the fungi on the WHO critical list should ensure commercial success. Its activity against resistant strains and ability to penetrate important organs (particularly CNS) better than currently available antifungal classes should result in fosmanogepix featuring strongly in treatment guidelines.
Based on successful Phase 2 results, we look forward to the completion of the Phase 3 programme for fosmanogepix with the Phase 3 programme now underway. The attraction of BARDA funding reflects the importance of fosmanogepix, with $29m of BARDA funding earmarked for this and BAL2062 in the near term. Our forecasts suggest fosmanogepix promises not only to continue the existing antifungal franchise established by Cresemba but should also extend the franchise into the treatment of candidiasis – a rapidly growing fungal threat. Along with our expectation that there should be a more expeditious (than Cresemba) global roll out, our forecasts suggest peak sales of $1.2bn.
Our forecasts continue to assume that Cresemba sales will start to decline in both the US and Europe after the expiry of exclusivity in Q4 2027. Key to the longer-term outlook for Cresemba will be recent launches in important markets such as China and Japan, which represent substantial opportunities at about 22% of the overall global market. Both oral and IV preparations of Cresemba are now available in China. Although data for China are difficult to find, we note that there are significant growth drivers, including a marked increase in organ transplantation (particularly lung) in China in the recent past.
With the fosmanogepix Phase 3 programme only now underway, it cannot compensate for Cresemba sales lost from 2028F. However, we should have the Phase 3 data, which will provide further clarity on the long-term outlook for the anti-infectives franchise at Basilea. Before that, we expect confidence in the positive outcome of the Phase 3 programme to grow. Hopefully, additional EAPs will provide further insight into the potential of fosmanogepix in other needy treatment settings. The results of the fusarium study published by NEJM are extremely gratifying and encourage continuing this endeavour where relevant. Additionally, we have highlighted the open-label nature of the Phase 3 trial in invasive moulds, suggesting the potential for de-risking as the trial progresses.
In the interim, we expect Zevtera’s forthcoming US launch to help offset some of the predicted decline in Cresemba sales in 2028F, with the launch scheduled for mid-2025. Our peak sales forecast of $380m was based principally on the SAB indication and the company securing a commercial partner with relevant expertise. We believe that IST fulfils those requirements and note that recent corporate presentations have highlighted the importance of Zevtera as the first cephalosporin with a specific approval for SAB. This gives us comfort that IST is a committed partner with objectives for Zevtera that are aligned with those of Basilea.
With Phase 3 trial data yet to come, we have risk-adjusted fosmanogepix sales with a probability of success of 75%. Given the Phase 2 data and excellent EAP success, this feels conservative. Nevertheless, risks remain. Post-launch, we hope that given the activity of fosmanogepix along with the global nature of the Phase 3 programme, fosmanogepix should enter markets outside of the US and Europe on a timelier basis than Cresemba did.
Our forecasts include guidance for 2025F and suggest a period of strong positive cash flow and sustainable profitability. Given the scale of operating loss carryforwards, we do not anticipate tax payments for the next several years. The addition of the BARDA funding now offsets a significant portion of R&D spend and will be received through other revenue. There are still several variables in the pipeline to consider, although tonabacase development has been terminated. For now, however, we have not included sales from BAL2062 or BAL2420 and suspect they are beyond our forecast time horizon in any case. Also, the timing of future milestone commitments as part of the fosmanogepix in-licensing has yet to be detailed. However, Basilea has been adept at managing costs while aggressively pursuing the creation of a world-leading anti-infective franchise.
We look forward to more of the same as the expanded pipeline progresses.
Basilea Income Statement (CHF' 000)
Source: Calvine Partners Research
Basilea Cash Flow Statement (CHF' 000)
Source: Calvine Partners Research
Basilea Balance Sheet (CHF' 000)
Source: Calvine Partners Research
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