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Basilea - 2021 trading update provides financial reassurance

Basilea's reassuring trading update this morning reflects the impressive performance of its anti-fungal Cresemba (isavuconazole) during 2021.

Indeed, the anti-infectives franchise at Basilea is often overlooked given the increasing focus on the emerging oncology franchise, but as we have noted before, the cash from the anti-infectives portfolio (Cresemba and Zevtera) allows Basilea to invest in the oncology pipeline and compete with the deeper-pocketed competition. Although the current performance is dominated by Cresemba and its sales progress in the key US market for invasive fungal infections through Astellas, we look forward to key approvals in China and Japan during 2022, as well as other geographies, to further drive Cresemba's growth potential. Additionally, the anti-infectives franchise could be significantly boosted should the Phase 3 result of ceftobiprole in Staph aureus bacteraemia (ERADICATE) deliver a positive result and lead to FDA approval in bacteraemia and severe skin infections (ABSSSI). It is also worth highlighting that the majority (approximately 70%) of the cost of Phase 3 ceftobiprole development has been paid for by BARDA.

Looking at the numbers, Basilea has reported that (non-deferred) revenues from the anti-infectives portfolio will be approximately CHF129m, representing highly impressive growth of 65% YoY and compared to the guidance of CHF115m-125m. As a result, total revenues will be approximately CHF148m versus the previous guidance of CHF134m-144m, and our forecast of CHF137m. Importantly, the cash position at year-end should be approximately CHF150m in cash and financial investments or CHF 173m, excluding the impact from the reduction of outstanding convertible bonds. This also exceeds the guidance of CHF142m-147m.

While no indication of costs has been provided, this strong financial performance gives Basilea additional financial flexibility as it progresses its oncology pipeline. Impressively, and despite progressing two (soon to be three) oncology programmes through the clinic in multiple indications, Basilea has been able to keep its commitment to R&D stable. Important insights into the commercial prospects for the oncology pipeline should emerge in 2022, with clinical data anticipated from the ongoing development of its leading oncology candidate derazantinib in various FGFR driven cancers (bladder, gastric and biliary). Data, particularly at higher doses and in combination with the checkpoint inhibitor atezolizumab (Tecentriq), will inform its differentiated profile as well as its filing strategy and ultimately commercial potential. Additionally, data on the ability of lisavanbulin to treat patients with glioblastoma using a novel biomarker is also anticipated. Glioblastoma represents a particularly challenging patient population and represents a significant source of upside to forecasts if supportive.

We calculate a discounted cash flow fair value of CHF120 per share for Basilea.

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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 contained in this publication should be considered as any form of advice.



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