Basilea announced this morning that it has secured additional non-dilutive funding to help progress its novel antibiotic BAL2420 into the clinic. The award further highlights the importance of this programme. BAL2420 emanates from the acquisition of preclinical antibiotic development programmes from Spexis (previously Polyphor) in early 2024. The focus of these programmes has been targeting novel antibiotic development as it relates to Gram-negative infections. Gram-negative infections are generally more problematic to treat than Gram-positive infections due to the presence of an outer membrane, which effectively blocks some antibiotic classes. Therefore, resistance associated with Gram-negative infections is particularly challenging, with few treatment options and little progress in the development of new drug candidates.
Given the seriousness of resistance, the World Health Organization has published a list of priority pathogens of which the majority are Gram-negative infections. The highest level Priority 1 pathogens are all Gram-negative, are deemed to pose a critical threat and comprise Acinetobacter baumanii, Pseudomonas aeruginosa and Enterobacteriaceae, where resistance has become particularly challenging.
BAL2420 targets LptA with the objective of disrupting the outer membrane of Gram-negative bacteria by targeting the lipopolysaccharide (LPS) bridge. Given the importance of the outer membrane in preserving the integrity of Gram-negative bacteria, targeting LPS production and its transport machinery has proven to be a productive approach in antibiotic drug development. Nevertheless, apart from the polymixins and colistin, which have significant limitations, efforts to develop direct inhibitors of LPS have been found wanting so far. Given the heightened risk of kidney damage associated with colistin and polymixin B, they are generally regarded as last-resort treatment options. The preclinical profile of BAL2420 looks to be very appealing as a potent inhibitor of LptA with a rapid bactericidal activity, noting in particular that it has activity against Enterobacteriaceae strains (WHO Priority 1), including those resistant to beta-lactams and colistin.
Despite its relatively early stage of development, we have previously viewed the initial award of non-dilutive funding from CARB-X as an important endorsement of this approach, noting that CARB-X focuses on accelerating programmes targeting the WHO and CDC's priority pathogens list. The announcement today that an additional $7.5m of funding has been secured reflects Basilea's progress in nominating a candidate to progress into first-in-man studies. It also reflects the importance of LptA and BAL2420 as an exciting novel approach to targeting insidious and life-threatening infections caused by Enterobacteriaceae. We look forward to BAL2420 entering first-in-man studies, which are anticipated in mid-2026. BAL2420 is currently not included in our financial model or valuation of Basilea.
We have a DCF-derived valuation of CHF 120 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 in this publication should be considered as any form of advice.
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