The strong financial performance at Basilea is attributable to the success of the anti-fungal Cresemba (isavuconazole). Novel anti-fungals remain an unmet need driven by an increase in the severely immunocompromised patient population, primarily as a result of aggressive chemotherapy as well as transplantation. Cresemba possesses a differentiated profile with an extended-spectrum. Cresemba's commercial success is driven by its excellent tissue distribution, oral bioavailability, safety and highly predictable pharmacokinetics, with little interpatient variability. Cresemba's differentiated profile has been endorsed by the attraction of pharmaceutical heavyweight commercial partners, Astellas and Pfizer, each already possessing an impressive anti-fungal franchise. The strength of these partners, along with Cresemba's differentiated profile, is reflected in impressive end-market sales, estimated at over $300m in the 12 months to September 2021, representing excellent growth of 26.5%.
This success, along with a lack of appreciation for the oncology pipeline, has resulted in a refocusing of the company back to its anti-infectives franchise where it retains considerable expertise. As part of this transformation, there has been a desire to re-populate the anti-infectives pipeline. Basilea announced today that it has entered into a licensing agreement with the Fox Chase Chemical Diversity Center (FCCDC) for its preclinical programme developing novel first-in-class broad-spectrum antifungals. This news suggests the potential for greater longevity in the anti-fungal franchise given the increasing maturity of the Cresemba franchise in the US (albeit Cresemba has recently been approved in China - a key market for newer antifungals).
These are early days for this class of compounds but we note that preclinical data on the expected profile and broad anti-fungal activity of the lead compound "...are very promising". Basilea will complete preclinical profiling before deciding on positioning and development strategy.
While we are particularly enthusiastic about the potential for novel antifungals, it is important to remember that the Basilea anti-infectives franchise could be significantly boosted by upcoming Phase 3 data for its 5th generation cephalosporin ceftobiprole in Staph aureus bloodstream infections, with top-line results expected in the middle of 2022. A successful result here would allow access to the US and a large market opportunity where there are limited adequate treatment options.
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.