Our research reported published today examines Basilea's decision to concentrate its efforts on anti-infectives and the associated implications.
In recent years Basilea's management invested significant resources in building an oncology pipeline. However, investors have been unwilling to give credit to developments, particularly with FGFR inhibitor derazantinib and tumour checkpoint controller lisavanbulin. Derazantinib is currently in three clinical studies for biliary, urothelial and gastric cancers. In gastric cancer, there is an acute unmet need and there are no FGFR inhibitors currently approved. Important data is expected later this year which will hopefully provide incentive for potential partners. In addition, Amgen's $1.9bn acquisition of Five Prime Therapeutics, largely to access FGFR inhibitor bemarituzumab, illustrates the attraction of FGFRi's such as Basilea's.
Investment in oncology has possibly distracted investors from Basilea's commercial success in anti-infectives. Antifungal Cresemba continues to produce strong growth in established markets and we can look forward to further progress through the international roll out.
Basilea's ceftobiprole is broad-spectrum anti-MRSA antibiotic. It is currently approved outside the US for community-acquired and hospital-acquired pneumonia. The US is by far the most important market for anti-MRSA antibiotics, representing over 80% of global sales and worth approximately $2.8bn per annum. Ceftobiprole's development is largely funded by BARDA and potentially offers a major upside for shareholders. It is currently in a Phase 3 study for Staphylococcus aureus bloodstream infections with top-line results expected in the middle of 2022. A successful result here would allow access to a large market opportunity where there are limited adequate treatment options.
Following the decision to split the two businesses, Basilea is now guiding to a significant reduction in expenses and a transition to sustainable profitability.
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.