Basilea announced this morning that it has secured Innoviva Specialty Therapeutics as a distribution and license partner for the US commercialisation of its 5th-generation cephalosporin antibiotic Zevtera (ceftobiprole). In its endeavour to maximise the commercial potential of ceftobiprole, Basilea has sought to ensure that the partner has relevant anti-infective expertise, particularly in the key hospital setting. We believe that Innoviva fulfils that requirement demostrated by its current portfolio, including Xerava (eravacycline) and the recently approved Xacduro (sulbactam; durlobactam).
Ceftobiprole looks to be a good fit for Innoviva, extending its growing anti-infectives portfolio. Ceftobiprole brings its key staphylococcal aureus bacteraemia (SAB) indication, as well as severe skin infections (ABSSSI) and community-acquired bacterial pneumonia (CABP) in the US. Xacduro's label is for the treatment of hospital-acquired bacterial pneumonia and ventilator-acquired pneumonia (caused by acenitobacter baumannii (a WHO highlighted threat).
Xerava is approved for complicated intra-abdominal infections. Innoviva Specialty Therapeutics is a wholly owned subsidiary of drug royalty company Innoviva which has grown its portfolio largely through acquisition. Xerava (originator Tetraphase) was added through the acquisition of La Jolla Pharmaceutical, and Xacduro from the 2022 acquisition of Entasis.
As expected, with Basilea seeking to ensure the maximum commercial return on its (and BARDA's) investment in the development of ceftobiprole, the agreement with Innoviva comes with a small upfront payment ($4m). Basilea will also receive tiered royalties on net sales in the high-teens to mid-twenties percentage range, and sales milestones of up to $223 million. Additionally, Innoviva Specialty Therapeutics will purchase Zevtera drug products from Basilea
With the partnering of ceftobiprole in the US, Basilea management has delivered on the lofty objectives it set out to establish itself as a leading global anti-infectives company. These attainments have included the acquisition of the novel anti-fungal fosmanogepix, which has recently entered Phase 3 trials in the US. Basilea has also secured funding for fosmanogepix and other pipeline assets as part of a long-term agreement with BARDA, which will cover approximately 60% of costs, up to $268m, over 12 years.
Notwithstanding the apparent current lack of investor enthusiasm for anti-infectives, we believe that this enviable track record of execution effectively de-risks the investment case for Basilea. In particular, with Cresemba expected to suffer a loss of exclusivity in the US and Europe from Q4 2027, revenues from the US sales of ceftobiprole should go some way to offset any impact. In the longer term, we look forward to the clinical progress of fosmanogepix with the second Phase 3 trial in the treatment of invasive moulds due to start at the end of the year. When approved, we expect fosmanogepix not only to secure the longevity of the anti-fungal franchise at Basilea but to take it to new heights with a peak sales potential of $1.2bn.
We have a DCF-derived valuation of CHF 120 per share for Basilea.
Please subscribe here to receive our research, articles and invitations as soon as they are available.
IMPORTANT:
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.
Comments