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Basilea - Dilution overhang removed

Basilea announced this morning that it has secured non-dilutive financing to help repay the outstanding CHF117m of December 2022 convertible bonds.

Basilea has successfully used the convertible bond market in the past to help fund its R&D expenditure. With its exit from oncology investment, the overall commitment to R&D in the near term will be considerably reduced, and as a result, we look forward to Basilea achieving its near-term financial goal of positive cash flow and sustainable profitability from 2023.

The company has announced today that it has entered into a senior secured loan agreement with Athyrium Capital Management LP for CHF75m which will be repaid over a two-year period starting in Q1 2023. The remaining amount will be met from existing cash resources, reflecting the growing financial strength of the business as the anti-infectives franchise continues to grow.

Basilea's strong operational performance 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 and transplantation. Cresemba's differentiated profile has been endorsed by the attraction of pharmaceutical heavyweight commercial partners, Astellas and Pfizer, each possessing an impressive anti-fungal franchise. The strength of these partners, along with Cresemba's differentiated profile, is reflected in impressive end-market sales, which delivered growth of 31% in the year to March 2022. The continued roll out of Cresemba in new markets such as China and Japan suggests further significant growth potential.

With the Phase 3 ceftobiprole programme in the US now successfully completed, we look forward to Basilea securing a suitable commercial partner and forthcoming approval in this key market for antibiotics. The addition of revenues from ceftobiprole in Staph aureus bacteraemia as well as severe skin infections should further boost the already impressive anti-infectives franchise.

We calculate a discounted cash flow fair value of CHF120 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 contained in this publication should be considered as any form of advice.



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