2024 has proven to be another year of excellent progress both financially and operationally. Cresemba delivered another strong financial performance generating royalty revenue approaching CHF100m representing 22.5% growth. With costs carefully controlled, FY’24 represented another profitable year with Basilea ending the year with cash and equivalents of CHF 124.6m (net cash CHF 28.6m).
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Antifungal focus reflects the market potential
The antifungal franchise at Basilea enters 2025 in a very strong position. While Cresemba may be maturing in the US and Europe, newer territories such as China and Japan represent significant markets and should help drive further growth. With Cresemba facing loss of exclusivity in the US and Europe from Q4 2027, all eyes are on the novel first in class antifungal fosmanogepix. The Phase 3 programme has already begun in candidaemia and/or invasive candidiasis, with a second Phase 3 trial targeting invasive yeasts and moulds due to begin soon. If the Phase 3 programme pans out as we expect then fosmanogepix should have a broader label and take the antifungal franchise to new heights. Our forecasts suggest a peak sales potential of circa $1.2bn based on a broad label targeting most of the critical fungal infections highlighted by WHO. 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 (AI), candidiasis and mucormycosis In addition, BAL2062 looks to be an important treatment option in the IA indication. A large chunk of the development of these programmes (and others) should be facilitated by the OTA signed with BARDA during the year. This appears to be transformational to us providing significant flexibility as well as funding for the anti-infective pipeline.
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Antibiotic franchise taking shape
The approval and the securing of a relevant commercial partner bring a very satisfactory conclusion to the protracted development of ceftobiprole in the US market. We believe Innoviva to be an excellent partner with objectives which appear to be aligned with those of Basilea, and offering commercial terms that promise to maximise long term value. With the tonabacase development terminated, we look forward to further progress in the antibacterial pipeline as the LptA inhibitor BAL2420 promises much, albeit remains at an early stage.
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2025 in view
Financial guidance for 2025 suggests another strong performance driven by Cresemba. R&D investment will increase as fosmanogepix progresses, although much will be offset by BARDA payments. The future looks bright with a balanced pipeline of antifungal and antibiotic programmes. While we expect further in-licensing activities, we are encouraged by execution so far. I am running a few minutes late; my previous meeting is running over.
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Securing the anti-infective franchise
We have previously highlighted our belief that management at Basilea are creating a global anti-infectives powerhouse. We believe that most of the building blocks are in place. Basilea has a broad and balanced pipeline funded by a combination of strong sales growth of the antifungal Cresemba and non-dilutive funding from important and prestigious sources such as BARDA and CARB-X.
During 2025, all eyes will be on the progress of the novel antifungal fosmanogepix. For many, we suspect the focus will be on its potential to provide longevity to the antifungal franchise after Cresemba’s loss of exclusivity in the US and Europe, likely from Q4 2027. However, we believe that the importance of fosmanogepix lies beyond that near term transition period. Fosmanogepix has already delivered positive data from a broad Phase 2 programme which suggests that it should benefit from a broader label than Cresemba. The ongoing Phase 3 programme includes patients with candida/candidiasis as well as for invasive moulds. The Phase 3 trial in invasive moulds is due to start shortly. As a result, we believe that if approved and with activity against all (WHO) priority pathogens including resistant fungal infections, fosmanogepix should take the antifungal franchise at Basilea to new heights. Our peak sales forecast for fosmanogepix remains at approximately $1.2bn which compares to the current in-market sales for Cresemba of $533m (12-month sales to the end of September).
2024 also bore witness to the attraction of a US commercial partner for Basilea’s 5th generation antibiotic Zevtera (ceftobiprole). We believe Innoviva to be an excellent partner with a broad range of hospital use antibiotics and objectives closely aligned with Basilea. The attraction of a suitable partner like Innoviva is important as Basilea seeks to maximise the sales potential of Zevtera in the key US market – a geography where AMR remains problematic and where ceftobiprole has proven efficacy against MRSA. Reassuringly, we note that Zevtera features prominently in presentations delivered by Innoviva highlighting its importance as the only cephalosporin specifically approved for the treatment of Staphylococcus aureus bacteraemia (SAB). Further, there is a recognition that there are limited treatment options (vancomycin and daptomycin) which both suffer from concerns regarding emerging resistance as well as the need for monitoring. We remain encouraged by the importance that Innoviva appears to attach to Zevtera, and look forward to further updates post-launch later in 2025.
Looking for further pipeline progress in 2025
While all eyes are rightly on fosmanogepix, BAL2062 represents another important antifungal programme. Although the principal commercial target is likely to be invasive aspergillus infections, BAL2062 also has activity against other important fungal pathogens including Candida glabrata and Fusarium solani. Basilea will continue to flesh out the preclinical profile of BAL2062 during 2025 with the intention of commencing Phase 2 trials in 2026. The addition of BARDA funding should help accelerate development should BAL-2062’s attractive profile warrant further development.
Antibiotic pipeline progress
Basilea’s antifungal pipeline looks to be well-stocked for now. Undoubtedly, the broad label for ceftobiprole (Zevtera) in the US, along with the attraction of Innoviva, has finally brought to a close the extended development of this important new treatment option. As a result, we look forward to news on the prospects for the antibacterial pipeline progressing during 2025.
While the news on the termination of tonabacase development was disappointing, we have previously noted that this molecule has already had a chequered past and there was nothing included in our financial model or valuation.
On the other hand, we have high hopes for the LptA inhibitor programme (BAL2420). This is a novel approach targeting Gram-negative bloodstream infections. Most critical bacterial infections involve Gram-negative bacteria and the LptA programme has focussed on disrupting the outer membrane of Gram-negative bacteria. Targeting lipopolysaccharide (LPS) production and its transport machinery has proven to be an attractive approach in antibiotic drug development. Nevertheless, existing approaches such as the polymyxins and colistin, suffer from a heightened risk of kidney damage and are usually only used as a rescue/last resort treatment. While still early stage, we note that Basilea’s candidates have an attractive profile with activity against carbapenem-resistant isolates.
In the release today, Basilea confirmed the importance of the programme and expect to continue preclinical profiling with the expectation of progressing into the clinic in 2026.
Our forecasts and valuation are under review following better-than-expected results today.
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