Well placed for the future

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While today's release focuses mainly on achievements in 2025, the evident progress reflects an extended period of successful delivery as the company seeks to become a global anti-infectives powerhouse. Clearly, Cresemba's ongoing success through licensees, particularly in the US and Europe, has been a major driver of its financial performance. Since launch 10 years ago, it has achieved the lofty heights of treating 500k patients worldwide with 12-month sales to the end of September 2025 reaching $693m, confirming its position as the leading anti-fungal by value.

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With Cresemba facing loss of exclusivity in the US and Europe from Q4 2027, Basilea has been assiduous in diversifying revenues and strengthening its late-stage pipeline. We have previously highlighted the importance of the US launch of the 5th-generation cephalosporin antibiotic, Zevtera (ceftobiprole), through a highly relevant partner, IST. We look forward to additional updates as the US launch continues. We also note encouraging progress in securing successful reimbursement and access pathways. Additionally, repeat orders from major hospitals suggest a positive user experience from early adopters. Undoubtedly, the bacteraemia indication (SAB) is the key driver, accounting for around $250m of our $380m peak sales forecast. 

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The addition of the Phase 3-ready combination ceftibuten-ledaborbactam from Venatorx significantly strengthens the late-stage pipeline, with the objective of developing an oral therapy for the treatment of cUTIs caused by Enterobacterales. We believe this to be a validated approach, suggesting a lower-risk endeavour. The news release confirmed that Basilea is on track to initiate the Phase 3 programme in Q1 2027, with efforts this year focusing on regulatory interactions and securing sufficient supply to enable the trial to be conducted expeditiously. There is already an expectation of rapid patient enrolment rates. We have previously suggested that a conservative 10% market share could generate peak sales of circa $450m. Given the combination of positive Phase I and susceptibility data, and our belief that this is a validated approach, we previously introduced sales from 2029F, albeit with a conservative 60% probability of success.

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While still early days, there are clear signs of progress in strengthening the earlier-stage pipeline. The novel antifungal BAL2062 completed its preclinical profiling, with further regulatory discussions expected in 2026 as the company seeks to optimise clinical development. BAL2420 represents a novel approach to developing a first-in-class antibiotic targeting LptA, with the potential to treat important Gram-negative infections effectively. BAL2420 is expected to enter the clinic in H1 2026. In-licensing and collaborations remain important, as noted above for Venatorx, as well as the Phare Bio and Prokaryotics relationships, which are delivering meaningful innovation to the anti-infectives pipeline. We anticipate further agreements as Basilea rapidly becomes a potential partner of choice for anti-infective companies keen to expedite the commercialisation of their anti-infective programmes.

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Equally important has been the company's ability to access non-dilutive funding. In particular, the award of a large multi-year OTA with BARDA has undoubtedly further enhanced Basilea’s ambitions, providing funding (approximately 60% of development costs) and flexibility. The transfer to Basilea of BARDA funding for ceftibuten-ledaborbactam has further cemented the importance of this source of non-dilutive funding. However, it should be noted that Basilea could have self-funded these programmes from existing cash flow. We suspect that BARDA’s support has highlighted the company’s anti-infectives prowess to potential partners seeking an experienced development partner in the complex anti-infectives field.

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Of the above accomplishments, we remain particularly excited by the prospects for fosmanogepix. Given its profile and despite the intensifying competitive landscape, fosmanogepix has the potential to be an even larger commercial success than Cresemba. Fosmanogepix also holds promise in the context of IV to oral step-down therapy to provide outpatient treatment options. At the same time, its activity against almost all of the fungi on the WHO critical list suggests a broader label than Cresemba and should help maximise commercial success. Moreover, its activity against resistant strains and its ability to penetrate important organs (particularly CNS) better than currently available antifungal classes should result in fosmanogepix featuring strongly in treatment guidelines.

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With Phase 3 now fully underway, enrolment is progressing, and the company has confirmed that both trials are progressing as planned, with topline results expected in H1 2028. In the interim, we look forward to updates from the ongoing expanded access programme, noting that with over 400 patients already experiencing the lifesaving benefits of fosmanogepix before approval, there is the distinct possibility that more patients may have received fosmanogepix to treat challenging (often life-threatening) infections in a real-world setting than in the Phase 3 programme. These data should certainly provide comfort regarding the commercial applicability of fosmanogepix and hopefully result in an accelerated roll out once approved.

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Financially, despite its significant commitment to R&D, Basilea remains a profitable company with a royalty stream that consistently delivers double-digit growth, reflecting the high quality and recurring nature of Cresemba revenues. Moreover, the addition of BARDA revenues, offsetting up to 60% of the costs of key late-stage programmes (fosmanogepix, BAL2062 and ceftibuten-ledaborbactam), provides significant financial flexibility.

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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 the recent launches in important markets, such as China and Japan, which represent substantial opportunities and account for approximately 18% of the global market.

Although licensing efforts cannot compensate for the lost Cresemba sales in 2028, we should have fosmanogepix Phase 3 data, which should provide further clarity on the long-term outlook for Basilea's anti-infectives franchise. Before that, we expect confidence in the Phase 3 programme's positive outcome to grow. Hopefully, additional EAPs will provide further insight into the potential of fosmanogepix in other needy treatment settings. We have previously highlighted the extremely encouraging results of the fusarium patient subset published by NEJM. Additionally, it is worth remembering the open-label nature of the Phase 3 trial in invasive moulds, suggesting the potential for de-risking as the trial progresses.

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With Phase 3 trial data yet to come, our forecasts still reflect a risk-adjustment of 75%. Given the Phase 2 data and the excellent EAP success, this approach seems 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 will enter markets outside the US and Europe on a timelier basis than Cresemba did.

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Our forecasts are aligned with guidance for 2025F and suggest a period of strong positive cash flow and sustainable profitability. Given the scale of operating loss carry forwards, we do not anticipate tax payments for the next several years. The addition of BARDA funding now offsets a significant portion of the R&D spend and will be received through other revenue streams. For now, however, we have not included sales from BAL2062 or BAL2420, as we suspect they are beyond our forecast time horizon in any case. Also, the timing of future milestone commitments for 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.