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Another Cresemba Pfizer milestone

The anti-infectives franchise is now front and centre of Basilea's growth strategy. Much of the belief in the merits of focusing on anti-infectives has been the ongoing success of the anti-fungal Cresemba.

As we have noted previously, most of that success has been due to Cresemba's differentiated offering, which comprises a broad spectrum and a benign safety profile. However, the uptake has also been driven by the strong anti-infectives franchises at its commercial partners, which include Astellas and Pfizer in major markets. We like the anti-fungal field from a commercial perspective, and Cresemba targets a growing market driven by an increase in the severely immunocompromised patient population, primarily due to aggressive chemotherapy and organ transplantation. The development of new antifungals has been slow, and we have previously highlighted the importance of novel therapies. We expect that Basilea will seek to continue its strong anti-fungals heritage by developing novel treatments at some point in the future.

Basilea announced this morning a CHF1.25m milestone from Pfizer thanks to ongoing strong sales progress in Asia Pacific and China. It might be small given the sales progress elsewhere (particularly Astellas in the US), however, this is the second Asia Pacific/ China milestone payment that Basilea has received in eight months. In addition, milestone payments of up to CHF580m are possible under the existing Pfizer relationship, which covers Europe (not the Nordic region) as well as Asia Pacific and China. We have noted previously that Cresemba is becoming a mature product in major markets, and we believe that the Asia Pacific region and China, particularly, are important to extending the longevity of the anti-fungals franchise at Basilea.

Ultimately, the anti-infectives franchise at Basilea is more than Cresemba, and although the 5th generation cephalosporin antibiotic ceftobiprole is currently a modest contributor to the anti-infectives franchise, the prospect of entering the important US antibiotic market with a differentiated label, promises significant sales potential. Ceftobiprole has delivered overtly positive results in both bacteraemia (ERADICATE) and severe skin infections (TARGET), which bodes well for the attraction of a suitable commercial partner to ensure success in the key US market for Basilea.

We calculate a discounted cash flow fair value of CHF 91 per share for Basilea.

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Calvine Partners LLP is authorised and regulated by the Financial Conduct Authority.

Basilea Pharmaceutica is a client of Calvine Partners, and as such, this publication is not independent and should be considered a marketing communication under FCA Rules. None of the information in this publication should be considered as any form of advice.



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