Updated: Jun 18
Basilea faces an important data read out in the next few months that could significantly enhance its anti-infectives franchise. Our latest report details the opportunity for Basilea’s ceftobiprole.
Basilea was initially spun out from Roche to focus on anti-infectives. The substantial success of antifungal Cresemba allowed management resources to invest in oncology. Investors have failed to credit any of the cancer success, so the company took the decision to refocus on anti-infectives while attempting to unlock value from the oncology investment.
Cresemba has been commercially successful. However, the antibiotic ceftobiprole has not fared as well. Ceftobiprole (branded Zevtera and Mabello) is a fifth-generation cephalosporin approved only outside the US to treat hospital-acquired pneumonia and community-acquired pneumonia. Without US approval, sales have been modest. However, this situation could be about to change should we see a positive readout mid-year from the ERADICATE study in bloodstream infections (Staphylococcus aureus bacteraemia or SAB).
There is a significant need for an effective SAB treatment, with only the antibiotics vancomycin and daptomycin approved by the FDA. However, both suffer from substantial limitations, including renal toxicity and emerging resistance. The importance of ceftobiprole in SAB is highlighted by BARDA’s commitment to providing up to 70% of Basilea’s Phase 3 development cost.
The US represents almost 90% of the global market for hospital anti-MRSA treatments.
Ceftobiprole has already delivered a positive Phase 3 result in the TARGET study in severe skin infections (ABSSSI). A positive outcome in both the TARGET and the ERADICATE Phase 3 studies is required for FDA approval. The ERADICATE study is due to report topline results during the summer. Previous data generated in SAB patients for ceftobiprole give reasons to be confident.
ERADICATE is set to be the first study to report which has evaluated the use of a 5th generation cephalosporin specifically in SAB. Additionally, the ABSSSI indication is commercially important, and even a small market share should generate meaningful ceftobiprole revenues for Basilea.
Continuing growth from Cresemba in existing and new territories, together with the reduction in oncology R&D expenditure, will bring 2023 profitability - much earlier than previously expected. Assuming a successful ERADICATE result and the consequent additional revenues from ceftobiprole, Basilea should become highly cash generative. All this before assuming any proceeds from the exit of oncology.
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.