A new strategy

 

2022 has borne witness to several strategically important events for Basilea. Firstly, the decision to exit its oncology franchise has been realised with programmes offloaded and the sizeable associated oncology R&D spending winding down. Lead oncology candidate derazantinib will be returned to Merck & Co. (formerly Arqule) by the end of 2022, while three preclinical programmes targeting PARG, TTK/PLK1 and CLK kinases have been out-licensed to Nodus Oncology, SillaJen and Twentyeight-Seven Therapeutics, respectively.

 

Antifungal franchise powering ahead

 

The antifungal Cresemba (isavuconazole) has long dominated Basilea's anti-infectives franchise and now represents the largest antifungal by sales value in the important US market. As we have previously intimated, Cresemba sales have consistently outpaced our expectations, and we suspect that the investment community has generally overlooked the commercial importance of antifungals. It is well-documented that fungal infections can be highly dangerous, leaving patients with a variety of life-threatening disorders that can be invasive, acute and chronic.

 

Of the invasive fungal diseases, meningitis, fungaemia, and pneumonia are particularly problematic. In the chronic setting, infections such as chronic pulmonary Aspergillosis and allergic bronchopulmonary Aspergillosis feature heavily. While Mucorales and Fusarium may be rare infections, they can be challenging to treat given resistance issues. Another morbid and concerning statistic is that only circa 50% of fatal invasive fungal infections are diagnosed (before death).

 

With most life-threatening invasive fungal infections affecting individuals suffering from a compromised immune function, the need for more effective antifungals has increased proportionately with a rise in HIV infections, increasingly aggressive cancer chemotherapy, and the use of immunosuppressant therapy in organ transplantation. These infections are associated with significant mortality risk.

 

Unfortunately, the development of new antifungals has not kept pace with the emergence of resistance. Available antifungals are still limited to only three classes: polyenes, azoles and echinocandins. Given the paucity of available antifungal classes, the emergence of antifungal resistance is arguably of even greater concern than in antibiotics, despite receiving significantly less publicity. Increasing resistance is a genuine concern with the azoles and Aspergillus, and Candida with the increased use of echinocandins.

 

Underlying growth dynamics appear to support continued antifungal growth and the requirement for new effective options to deal with increasing resistance. In particular, the use of aggressive chemotherapy regimens, particularly as they relate to haematological cancers, has been a significant driver of invasive fungal infections. Furthermore, it is important to note that stem cell transplantations have effectively more than doubled in the past 20 years.

 

As a result, the outlook for patients with invasive fungal infections is quite bleak. Mould infections are particularly worrisome in the immunocompromised patient population and represent a significant source of morbidity and mortality. In Aspergillosis, the mortality rate varies from 30%-60% and can be higher in high-risk patient populations such as chemotherapy-induced neutropaenia. 

 

Current antifungal classes have limitations that can restrict their use in clinical practice. The echinocandins suffer from poor bioavailability and require injection. Particularly for mould infections, echinocandins are used for salvage therapy and in combination. The polyenes (such as amphotericin B) suffer from limited efficacy and substantial toxicities (acute renal failure) in high-risk patients leading to the successful introduction of lipid formulations. Antifungal resistance to polyene therapy is common in Aspergillus.

 

The azoles, on the other hand, represent the most widely used class of antifungals. They kill fungi through the C14∞ demethylation of lanosterol, which leads to the inhibition of ergosterol production in the cell membrane, and cell death. Ergosterol regulates membrane fluidity and permeability and is required for fungal growth. Their widespread use, however, has resulted in widespread resistance, with its emergence developing by various mechanisms. These include overexpression of CYP51 or mechanisms which effectively reduce the intracellular presence of antifungal compounds such as ATP-binding cassette transporters. 

 

Significant advantages of the second-generation triazoles, posaconazole and voriconazole, include their extended antifungal spectrum and availability in both oral and intravenous formulations (voriconazole). As the leading branded antifungal, VFEND (voriconazole) generated peak sales of about $900m.

However, the use of these agents is often limited by their variable bioavailability, severe adverse events, significant drug-drug interactions, and the emergence of resistance. Posaconazole use is limited to prophylaxis of mould infections only. Cresemba, on the other hand, is a relatively new triazole possessing an extended spectrum with activity against yeasts, moulds, and dimorphic fungi. It also possesses an excellent safety profile which, combined with good pharmacokinetic properties, has led to its success in treating various severe and potentially life-threatening fungal infections. Also crucial to its commercial success is the excellent volume of distribution and oral bioavailability, combined with highly predictable pharmacokinetics with little interpatient variability. 

Cresemba was approved in the US for the treatment of invasive Aspergillosis (IA), having been shown to be non-inferior to voriconazole. The FDA has also approved it for the treatment of mucormycosis. Unfortunately, the role of the echinocandins as first-line treatment for invasive candidiasis was re-enforced with the negative result from the ACTIVE Phase III study where isavuconazole failed to prove non-inferiority to caspofungin. 

Invasive Aspergillosis, therefore, represents the major commercial opportunity for Cresemba. Mucormycosis is much rarer, although its prevalence is increasing. Mucormycosis results in high morbidity and mortality (40-80% in neutropenic patients and disseminated infections) and results in a burden to the US healthcare system of circa $100,000 per patient.

The current guidelines for the treatment of invasive Aspergillosis remain those issued by the IDSA in December 2016. Voriconazole administration, therefore, still represents the centrepiece of 1st line antifungal therapy here supported by a high level of evidence, particularly in the pulmonary aspergillosis setting. Isavuconazole was provided with a relatively limited position in the guidelines as an alternative to voriconazole. The lack of an update is perhaps a frustration, but it is clear that the experience with Cresemba, particularly in the US, is growing. Several key benefits offered by isavuconazole have been highlighted, which include a lack of toxicity with no requirement for a cyclodextrin-based solubility agent (important in renally impaired patients), a once-daily dosing and a more limited drug interaction profile. Elsewhere, ASCO/IDSA guidelines (2018) for antimicrobial prophylaxis in patients with cancer-related immunosuppression also suggest a role for prophylaxis in patients at risk of “…profound, protracted neutropaenia”. 

Over time and certainly since the production of the IDSA guidelines, we hope that the clinical experience with Cresemba in the US should have grown to the extent that clinicians are better aware of its differentiated profile. Updated guidelines that better reflect the Cresemba proposition for invasive Aspergillosis would be beneficial, particularly if they were to suggest usage in earlier lines of treatment. However, as far as we know, there are no timelines for updated IDSA guidelines on IA.

We also suspect that central to Cresemba’s commercial success to date has been the attraction of Astellas in the US. Cresemba represented an important addition to the Astellas antifungal franchise. The importance of Cresemba to Astellas was reflected in the commercial agreement struck when isavuconazole was still in Phase III development. Basilea received CHF 75m upfront, up to CHF 478m on development and sales milestones, and significant double-digit tiered sales royalties. The agreement was subsequently amended with Basilea regaining full ex-US rights with the total sales-based milestones amounting to CHF 290m (after having already received CHF 42m of regulatory and CHF 5m of sales milestones). Basilea also maintained double-digit tiered royalties on US sales.

In Europe, the European Conference on Infections in Leukaemia (ECIL) provided recommendations for the targeted treatment of candidiasis, Aspergillosis and mucormycosis. The latest ECIL-6 meeting in March 2017 reported that isavuconazole appeared to be as effective as voriconazole for treating invasive Aspergillosis and with a better safety profile. Consequently, it was afforded an impressive A1 grade, the same status as voriconazole. As a result, Aspergillus guidelines recommend either treatment as first-line therapy for invasive Aspergillosis. It is reassuring to see the better safety profile being highlighted, which we believe should put isavuconazole in a favourable position when prescribing choices are made.

Outside of the US, Basilea has attracted Pfizer, firstly for Europe (in June 2017) and then for Asia Pacific (in December 2017) as a commercial partner for Cresemba. The European license delivered CHF 70m in upfront payments while the addition of Asia-Pacific a more modest $3m. Total potential milestones for the two agreements amount to an impressive $650m on unspecified regulatory and sales-related milestones. Of greater importance is the mid-teens royalties on sales which Basilea secured. For Pfizer, the originator of voriconazole (branded as VFEND), adding Cresemba provided an antifungal which can be positioned as an alternative to voriconazole as per the current guidelines and which also offers a more benign tolerability profile resulting in fewer adverse events (42% vs 60%) with an improvement in measures such as hepatobiliary disorders, skin and eye disorders.

Fortunately, invasive Aspergillosis is relatively uncommon, and mucormycosis even less so. Both are challenging to diagnose, which is reflected in the underreporting of these conditions. In its favour, isavuconazole’s broad spectrum (including Mucorales) should position it well in the empiric setting, compared to alternative agents (such as voriconazole), where infection is suspected but not confirmed.

Invasive Aspergillosis is the most common invasive mould, although surveillance for IA and mucormycosis has been limited, and neither are reportable diseases. However, it would appear that both are growing in prevalence along with an increasing population of immunocompromised patients. Data may be hard to find, and we note various sources which suggest that the scale of the issue is potentially significant, with 10m patients at risk of contracting invasive Aspergillosis. However, data from US hospital discharge rates suggest a rate per 1m of circa 46 for invasive Aspergillosis and 3.4 per 1m for mucormycosis in 2013.

We note that 80% of the antifungal market resides outside the US, with 70K patients in Europe dying from invasive Aspergillosis. By extrapolation, assuming that the mortality rate for patients with IA was 41% in solid organ transplant patients and 75% among stem cell transplant patients, this suggests a potential market opportunity in Europe alone approaching 200,000, assuming a conservative blended mortality rate.

Although mucormycosis is considerably rarer, the population at risk is growing, suggesting a similar population in the US, although the actual number of cases is small (circa 1000). The figure in Europe for deaths from mucormycosis is higher at approximately 3,000. Therefore, in our forecasts, we have assumed that there are circa 200,000 patients in the combined IA and mucormycosis markets in the US and Europe. Ultimately, Cresemba is available on a much broader basis, and we have endeavoured to capture this opportunity as well (although at a lower effective price).

Looking at the commercial potential, we have assumed Cresemba is used for 47 days, representing the mean treatment duration in the Phase III pivotal IA study (as per the prescribing label). We have also assumed that the IV formulation (one vial) was used for 8 days, with the oral capsule for the remainder. We have also used a price of $180/ day for the oral capsules and $319 for IV administration. Using these figures suggests a price per course of therapy of circa $10000. We have assumed a similar price in Europe in line with typical antifungal pricing.