Basilea's expertise in oncology is clearly growing, benefiting from a strategy to identify those patients best suited to respond across the oncology pipeline. This is particularly important in previously intractable cancers where an all-comers approach elsewhere has been beset with disappointment and failure. One of the most challenging cancers remains brain cancer and glioblastoma multiforme in particular. Attempts to develop effective treatments have been largely unsuccessful, but the observation that patients receiving lisavanbulin have derived significant benefit is potentially transformational for relevant patients.
From an existing class but highly differentiated
Basilea has invested heavily in establishing a meaningful and relevant oncology franchise. Lisavanbulin represents an important programme targeting the mitotic spindle. While historically, microtubule targeting agents (MTAs) have been dominated by natural compounds and have proven to be some of the most effective chemotherapeutic agents available commercially, they have been associated with significant toxicity and the rapid emergence of resistance. Nevertheless, advances in our understanding of the importance of the microtubule in tumour biology has led to the development of new synthetic candidates like lisavanbulin, which are active against previously resistant cancers. Furthermore, Basilea appears to have identified a predictive biomarker (EB1), which should enable the identification of suitable patients for lisavanbulin, improving the odds of success.
Recent insight at ASCO extremely encouraging
These may be early days for lisavanbulin, but the observation that some patients have a profound response is extremely encouraging, given glioblastoma is usually an aggressive and deadly cancer. The role of EB1 is still being evaluated. Data presented at relevant medical conferences such as ESMO and now ASCO have shown that EB1 is potentially a key prognostic factor. Importantly, those patients who benefited most were found to have strong EB1 positive status suggesting this should be a key eligibility factor for lisavanbulin treatment. Prevalence data suggest that circa 5% of glioblastoma patients would benefit with broader potential in other strongly EB1 positive tumours such as medulloblastoma and neuroblastoma, while metastatic melanoma, lung (NSCLC), colon and triple-negative breast cancers may also be candidates. Lisavanbulin currently sits outside of our forecasts and valuation suggesting an important source of upside as data mature. (See Risks Section).
Lisavanbulin – potentially a transformative treatment for selected brain cancer patients
Brain cancer remains one of the most insidious of human tumours. Of these, glioblastoma multiforme (glioblastoma) is generally considered the most aggressive and deadly of human cancers. Unsurprisingly, glioblastoma mortality rates are high and median life expectancy is approximately 14-15 months.
Despite remarkable advances in the treatment of many previously intractable cancers, particularly the introduction of the checkpoint inhibitors in immunotherapy, little has been achieved in improving the outlook and prognosis for glioblastoma patients. Despite the introduction of radiotherapy and chemotherapies (1st line temozolomide; TMZ), glioblastoma is notable for its ability to develop resistance leading to relapse and the abovementioned poor expected lifespan.
This is perhaps unsurprising given that glioblastoma presents several previously insurmountable challenges. As it grows, the tumour infiltrates surrounding healthy brain tissue in an erratic fashion, making it difficult for the resecting surgeon to remove the entire tumour successfully. Furthermore, the tumour presents a collection of heterogeneous tumour cells, many of which employ separate biological pathways, making it difficult to develop a treatment that is universally efficacious in a broad range of glioblastoma patients.
This has also presented a further challenge to the medical community particularly with respect to the development of useful animal models to use in drug development. Animal models often represent cells from a discrete part of the tumour and do not reflect the physiological reality and heterogeneity of a human glioblastoma in situ.
Clearly, smarter strategies are required when developing novel treatments for glioblastoma. The use of biomarkers has been well documented in other cancers, with companion diagnostics typically approved at the same time as a targeted therapy. Even the checkpoint inhibitors (CKIs) appear to work best in patients with tumours with high levels of PD-L1 receptors. Additionally, tumour mutational burden has been touted as a potential biomarker for improved CKI performance. However, glioblastomas are immunologically cold, and as a result, there appears little prospect of CKIs providing a clinically meaningful benefit in many patients. Indeed, efforts so far have been limited by a combination of molecular and immunological heterogeneity typical of glioblastoma making the identification of suitable biomarkers for immunotherapy challenging although efforts are ongoing.
The approach taken by Basilea in its development of lisavanbulin has been to use a novel biomarker (EB1) which should help identify those patients who would benefit most from an inhibitor of the spindle assembly checkpoint. Data so far have been highly encouraging.
Lisavanbulin exploits a well-characterised cancer target
Lisavanbulin is a tumour checkpoint controller exerting its influence at the mitotic checkpoint or spindle assembly checkpoint (SAC). The mitotic checkpoint has long been an important target in cancer, since preventing cells (in this case tumour cells) from passing through mitosis (somatic cell division) rapidly leads to apoptosis and cell death. Unsurprisingly, mitosis has been identified as a particularly important step in cancer cell proliferation.
Over time it has proven to be a successful therapeutic strategy to selectively eliminate actively growing cancer cells. The mitotic checkpoint is one of four checkpoints which ensure the fidelity of cell division, arresting cell division if each checkpoints condition is not successfully met. In addition to the mitotic checkpoint the other three (G1/S, S & G2/S) are DNA damage checkpoints.
Microtubules perform several important roles in cell division (mitosis and meiosis) as well as migration and have proven to be important targets for chemotherapy. In dividing cells during mitosis, the microtubules forming the mitotic spindle ensure that chromosomes are shared equally between dividing cells.
With many existing microtubule therapies derived from natural sources, the development of newer synthetic (or semi-synthetic) microtubule agents has been slow but represents an obvious route for development, particularly as they should be able to cross the blood-brain barrier.
Although MTAs have proven to be highly effective in multiple solid and haematological cancers, side effects associated with their long and short-term use have limited their applicability and use. DNA damage and apoptosis are the main causes of drug-induced cytotoxicity, while neurological and haematological side effects are dose-limiting toxicities. As a result, peripheral neuropathy is estimated to affect as many as 80% of patients receiving taxanes. There are also other challenges, which include poor solubility and cumbersome synthesis/manufacture, which have served to hamper their optimisation.
One of the most significant factors limiting the applicability of microtubule inhibitors has been the development of rapid resistance. Multiple mechanisms of drug resistance have been characterised, which typically involve efflux mechanisms and membrane-associated changes to prevent drug accumulation within tumour cells.
Lisavanbulin has a differentiated profile
Basilea's focus has been to overcome resistance issues and deliver a chemotherapy combining strong efficacy, a suitable therapeutic window, and reduced resistance issues. Lisavanbulin (formerly BAL101553) is a (highly soluble) prodrug of BAL27862, retaining its potency in human tumour models which are resistant to archetypal MTAs, including the taxanes and the vinca alkaloids. BAL27862 binds to the colchicine site with distinct effects on microtubule organisation via a unique mechanism of action, which importantly, is separate to that of other established MTAs. Preclinical studies have shown that BAL27862 leads to an activation of the SAC arresting tumour cell proliferation in the G2/M phase of the cell cycle. As a result, it is an extremely potent inhibitor of tumour growth and a promoter of cell death.
As a small molecule, another key feature of lisavanbulin is its ability to cross the blood-brain barrier - unlike many commercially available MTAs, which are natural compounds. Additionally, lisavanbulin appears to possess a dual mechanism of action, inhibiting not only growth and viability of the tumour but also the vasculature feeding the tumour.
Basilea has been assiduous in ensuring that lisavanbulin has an appropriate therapeutic window, balancing its antitumour effect with an acceptable side effect profile. Given that all commercially available MTAs are delivered parenterally, lisavanbulin offers a clear convenience advantage given that it is orally bioavailable.
Basilea has been evaluating lisavanbulin in a broad range of cancer types, both in monotherapy as well as in combination (in a preclinical setting so far), reflecting the broad applicability of the approach. Glioblastoma has been the initial focus. Post resection, current standard of care consists of radiotherapy and concomitant temozolomide. Despite the use of radiation and TMZ, treatment provides a disappointing median survival period of only 14.6 months. While new therapeutic approaches are urgently required, development of novel therapies for glioblastoma has been disappointing.
Identifying appropriate patients is key
With the development of targeted therapies, the identification of patients who most benefit from treatment has become the new normal for cancer drug development. This has the benefit of increasing the likelihood of a positive clinical outcome (and regulatory approval) as well as removing the risks associated with the side effects of administering unwarranted treatment to patients who experience little to no benefit.
Given that lisavanbulin inhibits the spindle assembly checkpoint, this is an obvious target for Basilea's search for an appropriate biomarker. This has resulted in the identification and selection of End-binding protein (EB1) due to its important role (along with its binding partners) in microtubule regulation. EB1 is a member of the plus-end-tracking protein family, which accumulates at growing microtubule ends and serves to regulate microtubule dynamics. MTAs are thought to induce apoptosis through an EB1 dependent mechanism. Consequently, there are good reasons to believe EB1 expression levels in cancer should be a predictive biomarker of MTA activity.
Effects of EB1 and MTAs in regulating MT dynamics
Source: ASCO 2021
From Basilea's perspective, the preclinical data supporting the role of EB1 appears strong, with daily oral administration of lisavanbulin associated with a significant improvement in survival in an EB1 positive model of glioblastoma. Median survival was extended by 327 days in EB1 proficient mice compared with 155 days in EB1 negative mice treated with lisavanbulin.
Effect of lisavanbulin on survival in mice with EB1 proficient or deficient glioblastoma
Source: ESMO 2020 poster
In the clinic, data have been very promising indeed. Two patients have exhibited long-lasting clinical benefit. Of these, one EB1 (highly) positive patient experienced a strong and durable response to lisavanbulin. Basilea provided additional information on this patient at ESMO 2020. This glioblastoma patient’s cancer had previously progressed rapidly after two prior lines of therapy. The patient experienced an 80% glioblastoma area reduction and remains on study two years after start of lisavanbulin therapy.
More recently at ASCO 2021, further detail was provided on the relevance of EB1 as a biomarker for lisavanbulin and on the EB1 positive patients who have experienced sustained clinical benefit. Of the 20 patients in the Phase 1 portion of the ongoing Phase 2 study, glioblastoma tissue was available from 13 patients of which 3 were EB1 positive. While none of the EB1 negative patients appeared to benefit from lisavanbulin the patients who experienced a long-lasting clinical benefit (previously described as a profound response) were both EB1 positive. In addition to the patient who experienced a >80% reduction in glioblastoma tumour area, a second patient experienced stable disease in glioblastoma lesions with improvement in non-target disease.
Phase 1 study - duration of treatment and response
Source: Calvine Partners Research
Source: ASCO 2021
Looking at alternative approaches to more easily measure EB1 levels
EB1 biomarker studies have been based on immunohistochemical (IHC) staining of glioblastoma tissue. The criteria used for determining whether a patient is EB1 positive are based on the EB1 staining intensity observed in the exceptional EB1 responder and requires moderate or strong staining in at least 70% of sample cells. Results presented at ASCO 2021 suggested that using these criteria, approximately 5% of glioblastoma patients are sufficiently EB1 positive to be candidates for lisavanbulin therapy.
Basilea is also evaluating the potential for a response-predictive gene signature to determine EB1 positivity. Data presented at ASCO 2021 suggests that a retrospective analysis of tissue samples from the Phase 1 portion suggests that patients who are EB1 positive have different gene expression profiles compared to EB1 negative patients.
Differential Patient gene expression profiles based on EB1 status
Source: ASCO 2021
EB1 relevance to other cancers
In addition to the difficult glioblastoma cancer indication, EB1 overexpression has also been reported in several other cancers suggesting a broader patient population that may respond to lisavanbulin. These include lung, gastric, hepatic and oral cancers, where EB1 potentially serves as a biomarker for tumour progression. Its cancer-causing potential has also been noted in oesophageal, and breast cancer cell lines.
Basilea has endeavoured to measure the degree to which patients suffering from various cancer also present with a sufficient levels of EB1 to suggest that they may also be tractable to treatment with lisavanbulin. At ASCO 2021, data were presented from 565 tissue samples (108 were glioblastoma) with the remainder representing 13 different tumour types.
Summary of moderate or strong EB1 staining across 14 tumour types
Source: ASCO 2021
Outside of glioblastoma, analysis of these tissue samples suggests that other tumour types, where there is EB1 staining in at least 70% of cells, may also be tractable to lisavanbulin include medulloblastoma, neuroblastoma and metastatic melanoma. With respect to prevalence, these data further suggest that in medulloblastoma and neuroblastoma over 10% of tissue samples met this threshold, whereas this number would be less than 5% in metastatic melanoma.
While these tumour types may represent obvious next steps for Basilea based on strong (at least 70% EB1 positivity), several other cancer were modestly below this threshold (circa 60%) with lung cancer (NSCLC), colorectal cancer and triple negative breast cancer. Prevalence data suggested that <5% of tissue samples met this threshold.
Prevalence of moderate/strong EB1 staining
Source: ASCO 2021
Basilea's currently marketed products are out-licensed 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).
While the antibiotic Zevtera is already marketed outside of the USA for the treatment of CAP and HAP (excluding VAP), we see the more significant market opportunity in the Staph aureus bacteraemia indication. While data from those patients in the four completed Phase III trials which suffered from a bacteraemia are supportive of this approach, there is uncertainty associated with this difficult to treat patient population which is reflected in the probability adjustment we have employed. Approval of ceftobiprole in the US requires a positive outcome for both the (lower risk) ABSSSI indication (already achieved) as well as the bacteraemia indication. .
The oncology programmes are also unpartnered. This is a highly competitive field, but we note Basilea's endeavours to differentiate derazantinib and we would highlight the combination with the checkpoint inhibitors as a starting point. Data on lisavanbulin may be in a small number of patients but the effects have been remarkable in two patients with long-lasting clinical benefit. For now, lisavanbulin sits outside our forecasts so represents upside to our financial model and valuation.
Our financial forecasts suggest Basilea will experience several years of losses. With our expectation of a 2023 launch for ceftobiprole, our forecasts do not incorporate the expected upfront payment that the company would receive from a commercial partnership. Consequently, we are forecasting a negative cash position but recognise that there are many puts and takes to our forecasts. Additionally, we have effectively taxed the company on its first year of profits despite the observation that there are significant tax losses which will significantly reduce the tax burden in the near term.
Financial Model and Summary
Basilea has invested heavily in pursuing its goal of delivering an oncology franchise, diversifying its historical reliance on anti-infectives. Clearly much relies in the near term on the future of derazantinib given it is a late-stage asset in a class (FGFR inhibitors) which has been validated by approvals elsewhere. Data so far in biliary cancer has been highly competitive, and we look to further data readouts as they arise particularly in the urothelial and gastric cancer indications where the company is now following a dose intensification strategy to maximise derazantinib's potential. Ultimately, success here will rely on the ability of Basilea to deliver a differentiated profile in an intensifying competitive environment.
Lisavanbulin represents an increasingly important pipeline asset as more promising data emerges. Lisavanbulin has shown significant promise of delivering a potent and effective chemotherapy in glioblastoma, one of the most challenging and aggressive of cancers. While the efficacy hurdle may be low, lisavanbulin needs to balance its potency with an effective therapeutic window from a class which has been associated with significant toxicities. Effective targeting could be key to addressing this balance.
Data so far have been extremely encouraging and we look forward with keen anticipation to the results from the ongoing Phase 2 trial. Evidence of profound responses in two patients, both of whom were EB1 positive suggests that Basilea is following a highly targeted approach. Indeed, data presented at recent cancer conferences ESMO and ASCO appear to validate the use of EB1 as a key marker determining eligibility for future treatment with lisavanbulin.
A future path for lisavanbulin will clearly depend on the data, and while 5% of glioblastoma patients may seem a modest opportunity, the potential to deliver a long lasting treatment option for these patients could be transformational.
Despite its promise, lisavanbulin currently sits outside of our financial model and valuation for Basilea. Clearly glioblastoma is a challenging cancer although the use of EB1 should increase the probability of success. Ultimately, the market potential for lisavanbulin could be substantial particularly if the EB1 driven approach is relevant to a broader range of cancers.
Basilea Income Statement (CHF 000s)
Source: Calvine Partners Research
Basilea Cash Flow Statement (CHF 000s)
Source: Calvine Partners Research
Basilea Balance Sheet (CHF 000s)
Source: Calvine Partners Research
Calvine Partners LLP is authorised and regulated by the Financial Conduct Authority in respect of UK investment advisory and arranging activities.
This publication has been commissioned and paid for by Basilea Pharmaceutica and as defined by the FCA is not independent research. This report is considered to be a marketing communication under FCA rules, and it has not been prepared under the laws and requirements established to promote the independence of investment research, and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. The information provided is widely available to the public.
This report in the United Kingdom is directed at investment professionals, certified high net worth individuals, high net worth entities, self-certified sophisticated investors, eligible counterparties as defined by Financial Services and Markets Act 2000 (Financial Promotion) Order 2000. The report may also be distributed and made available to persons to whom Calvine Partners is lawfully permitted. This publication is not intended for use by any individual or entity in any jurisdiction or country where that use would breach law or regulations, or which would subject Calvine Partners or its affiliates to any registration requirement within such jurisdiction or country.
Calvine Partners may provide, or seek to provide, services to other companies mentioned in this report. Partners, employees, or related parties thereof may hold positions in the companies mentioned in the report subject to Calvine Partners’ personal account dealing rules.
Calvine Partners has only used publicly available information believed to be reliable at the time of this publication and made best efforts to ensure that the facts and opinions stated are fair, accurate, timely and complete at the publication date. However, Calvine Partners provides no guarantee concerning the accuracy or completeness of the report or the information or opinions within. This publication is not intended to be an investment recommendation, personal or otherwise, and it is not intended to be advice and should not be treated in any way as such. Any valuation estimates, such as those derived from a discounted cash flow, price multiple, or peer group comparison, do not represent estimates or forecasts of a future company share price. In no circumstances should the report be relied on or acted upon by non-qualified individuals. Personal or otherwise, it is not intended to be advice and should not be relied on in any way as such.
Forward-looking statements, information, estimates and assumptions contained in this report are not yet known, and uncertainties may cause the actual results, performance or achievements to be significantly different from expectations.
This report does not constitute an offer, invitation or inducement to engage in a purchase or sale of any securities in the companies mention. The information provided is for educational purposes only and this publication should not be relied upon when making any investment decision or entering any commercial contract. Past performance of any security mentioned is not a reliable indicator of future results and readers should seek appropriate, independent advice before acting on any of the information contained herein. This report should not be considered as investment advice, and Calvine Partners will not be liable for any losses, costs or damages arising from the use of this report. The information provided in this report should not be considered in any circumstances as personalised advice.
Calvine Partners LLP, its affiliates, officers or employees, do not accept any liability or responsibility with regard to the information in this publication. None of the information or opinions in this publication has been independently verified. Information and opinions are subject to change after the publication of this report, possibly rendering them inaccurate and/or incomplete.
Any unauthorised copying, alteration, distribution, transmission, performance, or display, of this report, is prohibited.