With Basilea's focus squarely on its anti-infectives franchise, the company's 5th generation cephalosporin antibiotic ceftobiprole has taken on significantly greater importance. Notably, the availability and granting of QIDP status have ensured its commercial position, with 10 years of data exclusivity available post-approval in the key US market.
Our optimistic view on the outlook for ceftobiprole, which fuels our $400m peak sales expectation, is based on the positive nature of the Phase 3 programme and the observation that Basilea had previously secured a Special Protocol Assessment (SPA) from FDA for both ERADICATE and TARGET. Additionally, the importance of ceftobiprole has been reflected in BARDA, providing 70% of the funding for clinical development. Basilea is seeking FDA approval for bacteraemia caused by Staphylococcus aureus (SAB), acute bacterial skin and skin structure infections (ABSSSI), and community-acquired pneumonia (CABP). Of the three, we believe there is a real unmet need for patients suffering from SAB, particularly where MRSA is involved and limited treatment options exist. As a result, we believe that Basilea should be able to secure a relevant commercial partner on acceptable commercial terms.
The news this morning that one of the contract manufacturers associated with ceftobiprole will require 3-6 months to ensure readiness for an FDA inspection is frustrating, particularly given how long ceftobiprole has been in development. Nevertheless, our view is that it is the identity and relevance of the commercial partner and the terms secured by Basilea which are crucial to maximising ceftobiprole's sales potential and the returns to Basilea. In this regard, we note that the delay has given management more time to deliver a partner before FDA registration. The revised timelines now suggest a regulatory submission in Q3 2023 with a regulatory decision in Q2 2024.
We calculate a discounted cash flow fair value of CHF 91 per share for Basilea.
For all our research on Basilea, please use the link here.
Please subscribe here to receive our research, articles and invitations as soon as they are available.
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 in this publication should be considered as any form of advice.