Basilea announced this morning that it has secured Innoviva Specialty Therapeutics as a distribution and license partner for the US commercialisation of its 5th generation cephalosporin antibiotic Zevtera (ceftobiprole). In its endeavour to maximise the commercial potential of ceftobiprole, Basilea sought to ensure that the partner has relevant anti-infective expertise, particularly in the key hospital setting. We believe that Innoviva fulfils that requirement demonstrated by its current portfolio, including Xerava (everacycline) and the recently approved Xacduro (sulbactam; durlabactam). Ceftobiprole looks to be a good fit for Innoviva, growing its anti-infectives portfolio. Ceftobiprole brings its key staphylococcus aureus bacteraemia (SAB) label, as well as acute skin and soft tissue infections (ABSSSI) and community acquired bacterial pneumonia (CABP) in the US. Innoviva Specialty Therapeutics is a wholly owned subsidiary of drug royalty company Innoviva which has grown its portfolio largely through acquisition. Xerava (originator Tetraphase) was added through the acquisition of La Jolla Pharmaceuticals, and Xacduro from the 2022 acquisition of Entasis.
Innoviva is an excellent partner for ceftobiprole
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As expected, with Basilea seeking to ensure the maximum commercial return on its (and Barda’s) investment in the development of ceftobiprole, the agreement with Innoviva comes with a small upfront payment ($4m). Basilea will also receive tiered royalties on net sales in the high teens to mid-twenties percentage range and sales milestones of up to $223m. Additionally, Innoviva Specialty Therapeutics will purchase drug product from Basilea.
Management executing
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With the partnering of ceftobiprole in the US, Basilea has delivered on the lofty objectives that it set out to establish itself as a leading global anti-infectives company. These attainments have included the acquisition of the novel Phase 3 anti-fungal fosmanogepix and securing funding for this and other pipeline programmes as part of a long-term agreement with BARDA. The funding agreement will cover approximately 60% of costs, up to $268m, over 12 years.
Notwithstanding the current lack of investor enthusiasm for anti-infectives, we believe that this enviable track record of execution effectively de-risks the investment case for Basilea. In particular, with Cresemba expected to suffer a loss of exclusivity from Q4 2027 in the US and Europe, revenues from US sales of ceftobiprole should go some way to offset any impact. In the longer term, we look forward to the clinical progress of fosmanogepix with the Phase 3 trial in invasive moulds due to start at the year end. When approved, we expect fosmanogepix to not only secure the longevity of the anti-fungal franchise but to take it to new heights with a peak sales potential of $1.2bn.
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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