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Basilea - a year of significant achievement

Basilea's preliminary 2022 revenue performance and portfolio update, released this morning, reflect a period of significant commercial and clinical achievements.

The anti-fungal Cresemba continues to surprise on the upside thanks to a combination of unmet need, strong partners and Cresemba's differentiated profile. Looking at the numbers, revenues from Cresemba and Zevtera during 2022 were approximately CHF122m, which compares very favourably to company guidance of CHF98m-CHF104m. We suspect that the vast majority of this outperformance is due to strong sales of Cresemba thanks to continued growth in more mature markets and the addition of new geographies. This product-related outperformance also translated into Basilea beating its total revenue guidance for 2022, with revenues expected to be approximately CHF148m, compared to guidance of CHF116-CHF122m. An impressive performance by commercial partners and distributors has led to end market sales of Cresemba in the 12 months to September 2022 of $363m, representing 19% growth - the vast majority coming from Astellas in the USA. Going forward, we have highlighted the potential for growth from recent approvals in China (in particular) and Japan, which should provide longevity to the overall Cresemba franchise.

The 5th generation cephalosporin antibiotic ceftobiprole (Zevtera) has yet to deliver its full potential as it is only approved outside of the US for HAP/CAP (not VAP). Positive study results from TARGET (severe skin infections; ABSSSI) and ERADICATE (Staphylococcus aureus bacteraemia, or SAB) suggest this is about to change. The release this morning has provided an update on the US following a Q4 pre-NDA meeting with FDA. Regulatory submission is expected within the next two-three months, with the release confirming that Basilea will seek approval not just for SAB and severe skin infections but also for community-acquired bacterial pneumonia (CABP). From our perspective, it is the SAB indication which represents the major unmet need, with few treatment options available, particularly for resistant (MRSA) infections. Nevertheless, a broader label should increase the attraction of ceftobiprole to infectious disease physicians. Our forecasts suggest peak end-market sales for ceftobiprole approaching $400m in the US alone. Fine-tuning this forecast awaits the attraction (and identity) of a commercial partner for ceftobiprole in the US. Clearly, a company with an existing anti-infectives franchise would bring greater certainty to ceftobiprole attaining its full commercial potential.

Elsewhere, Basilea has reflected on the successful divestiture of several of its oncology programmes, attracting the attention of relevant oncology companies for three preclinical assets which could, if ultimately approved, provide Basilea with ongoing participation in their commercial potential. With derazantinib returned to its originator and spending on lisavanbulin curtailed, Basilea enters 2023 as a pure-play anti-infectives company.

During 2022, Basilea has experienced mixed success in generating a broad-based anti-infectives pipeline. While the DXR inhibitor programme targeting multi-drug resistant Gram-negative bacteria continues towards its next preclinical decision point in 2023, the preclinical novel anti-fungal programme did not meet Basilea's exacting requirements and has been returned to its originator. As yet undisclosed, internally derived programmes continue to progress. We look forward to the company's licensing efforts bearing fruit in 2023 and beyond as the company continues to execute on its strategy. Basilea looks to build a balanced portfolio of novel drug candidates targeting unmet needs in the bacterial and fungal infection settings and also provide longevity to the anti-infectives franchise beyond Cresemba and Zevtera.

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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