Derazantinib is Basilea's most advanced and possibly most important pipeline product as it continues to build its oncology franchise. This morning, at the American Society of Clinical Oncology (ASCO) symposium, the company reported updated interim results from its Phase 2 (FIDES-1) study. Data reported support derazantinib's use in intrahepatic cholangiocarcinoma (iCCA), a form of bile duct cancer, for patients with the FGFR gene mutation.
Patients with advanced iCCA have a poor prognosis. With chemotherapy as the current standard of care, the median overall survival for patients is less than one year.
Derazantinib is an FGFR inhibitor (FGFRi), a drug class that has already delivered remarkable results. FGFRis have already achieved early regulatory approvals in difficult to treat cancers, including urothelial and bile duct. Derazantinib targets both of these diseases, as well as gastric cancer. Basilea's management has adapted derazantinib's development strategy to ensure commercial success against the increasing competition. Derazantinib's efficacy and safety data reported so far have been encouraging. They suggest that a higher dose of derazantinib versus other FGFRi's should be manageable and provide an opportunity to generate a class-leading response.
Our enthusiasm for derazantinib is mainly due to its ability to target colony-stimulating factor 1 receptor (CSF1R). CSFR1 plays a vital role in maintaining a favourable tumour microenvironment, and derazantinib's additional activity should boost the activity of the widely used checkpoint inhibitors (CKIs). The checkpoint inhibitor market is worth roughly $20bn and is dominated by large pharma companies such as Merck, Bristol Myers Squib and Roche.
We believe that derazantinib's differentiation should allow it a key role in this market, both as a monotherapy and in combination with the CKIs. We expect to see important clinical data reported later this year.
Basilea has a fast growth revenue-generating anti-infectives portfolio supporting its investment elsewhere. With derazantinib and also earlier stage lisavanbulin, we believe Basilea can build a valuable and robust oncology business.
We calculate a discounted cash flow fair value of CHF120 per share for Basilea.
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IMPORTANT:
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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