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Basilea - Cresemba's China approval

Following hot on the heels of a second $10m milestone from licensee Pfizer, Cresemba has delivered another $10m payment. This time, Basilea has received a milestone payment for the award of a Drug Approval License from the Chinese National Medical Products Administration (NMPA) for the oral formulation of Cresemba.

The approval relates to the treatment of invasive mucormycosis and is the first for Cresemba in China. Pfizer has also filed for approval of the intravenous formulation in China, which is being reviewed under a separate application.

In addition, Pfizer submitted marketing authorisation applications for Cresemba for the treatment of invasive aspergillosis (IA) which remain under regulatory review. IA is a life-threatening disorder with a high mortality rate, resulting in potential hospitalisation of up to one month, and it represents the major opportunity for Cresemba.

Royalties from Cresemba have represented an important source of revenue for Basilea, helping support the investment behind the emerging oncology pipeline. Cresemba continues to deliver sales that have outperformed our expectations with end-market sales to June 2021 estimated at $285m, representing growth of 24% versus 2020. To date, licensee Astellas has provided the majority of royalty revenue from sales in the US market. However, sales under the auspices of Pfizer are growing, with China in particular, representing an important market. The release this morning notes that China represents approximately 20% of global sales of newer antifungals.

Outside of the US, Basilea attracted Pfizer as a commercial partner, firstly for Europe (in June 2017) and then for Asia-Pacific (in December 2017). The initial European license generated CHF70m in upfront payments with total potential milestones for the two agreements amounting to an impressive CHF650m on unspecified regulatory and sales-related milestones. Of significant importance is the mid-teens royalties that Basilea secured for ongoing sales.

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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