BAL2420 moves into human studies

Basilea announced this morning that its novel antibiotic to treat problematic Gram-negative infections has moved into first-in-human clinical studies.

BAL2420 is targeting the lipopolysaccharide (LPS) transport bridge which helps maintain the integrity of the outer membrane in Gram-negative bacteria. Targeting LPS production and its transport machinery has already proven to be a productive approach in the development of antibiotics targeting the outer membrane of Gram-negative bacteria.

However, attempts to date to develop direct inhibitors of LPS have proven to be challenging. Existing antibiotics such as colistin and the polymyxins have significant limitations (kidney damage), and are generally reserved as a last resort treatment option. There is a clear need for safe and effective alternatives and in this regard preclinical data has suggested that BAL2420 is a potent inhibitor of LptA with rapid bactericidal activity. Importantly, it has activity against Enterobacteriaceae strains (WHO Priority1 infection), including those resistant to beta-lactam antibiotics and colistin.

According to the release, this first-in-man study is designed as a randomised, dose-escalation, double-blind and placebo controlled study. While these are early days, and BAL2420 does not yet contribute to our financial model or valuation for Basilea, we believe that its importance is reflected in the receipt of non-dilutive funding from CARB-X. CARB-X focusses on accelerating programmes targeting the WHO's and CDC's priority pathogens list.

We believe that BAL2420 represents an important early stage programme in Basilea's anti-infective pipeline. In the near term, it will be the progress of the late stage Phase 3 programmes represented by the novel antifungal fosmanogepix and the antibiotic combination ceftibuten-ledaborbactam which represent key elements of the future growth story at Basilea. Our peak sales forecast for both are $1.2bn and $450m respectively.

We have a DCF-derived fair value of CHF120 per share.

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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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