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Basilea - Cresemba's momentum continues

While the development pipeline at Basilea promises to provide the company with an exciting portfolio of cancer treatments, the long-established anti-infectives franchise continues its important financial contribution, helping to offset the considerable investment in the pipeline. The announcement of a second $10m sales milestone from licensee Pfizer in 2021 reflects continued strong demand for the antifungal Cresemba and serves as a reminder of the need for differentiated treatment options.

Cresemba possesses a differentiated profile with an extended spectrum. Commercial success is driven by its excellent tissue distribution, oral bioavailability, safety and highly predictable pharmacokinetics, with little interpatient variability. In general, we believe that the importance of developing new antifungal classes has been overlooked by the pharmaceutical industry with few existing (three) classes available for physicians. Unsurprisingly, this lack of investment has led to an increased resistance to existing agents which is a real issue given a rising population of immunosuppressed patients with an associated high mortality rate.

Cresemba is approved in the US for the treatment of invasive aspergillosis (IA). It has also been approved by the FDA for the treatment of invasive mucormycosis. Cresemba is also approved in the EU (and other countries) for the treatment of adult patients with invasive aspergillosis and for the treatment of adult patients with mucormycosis for whom amphotericin B is inappropriate. IA is a life-threatening disorder with a high mortality rate, resulting in potential hospitalisation of up to one month and represents the major opportunity for Cresemba. Mucormycosis may be rarer, but its prevalence is increasing rapidly, and it is acknowledged to result in unacceptable morbidity and mortality (90-100% in neutropenic patients and disseminated infection). Mucormycosis also results in a burden to the US healthcare system of circa $100,000 per patient.

The importance of the differentiated profile of Cresemba has been endorsed by the attraction of two pharmaceutical heavyweight commercial partners, Astellas and Pfizer, each already possessing an impressive antifungal franchise. Cresemba continues to deliver sales that have outperformed our expectations with end-market sales to June 2021 estimated at $285m, representing excellent growth of 24% - the vast majority from the agreement with Astellas in the US. Outside of the US, Basilea attracted Pfizer as a commercial partner, firstly for Europe (in June 2017) and then for Asia-Pacific (in December 2017). The initial European license generated CHF70m in upfront payments with total potential milestones for the two agreements amounting to an impressive CHF650m on unspecified regulatory and sales-related milestones. Of significant importance is the mid-teens royalties on ongoing sales which Basilea also secured.

Basilea has suggested that Cresemba should be launched in 60 countries by the year-end with a target of 70 by the end of 2022. Asahi Kasei, Basilea's partner for Cresemba in Japan, filed an NDA at the end of September 2021. Japan is important geography and Asahi Kasei is another impressive partner. We have previously highlighted the importance of guidelines such as ECIL-6, which positions isavuconazole favourably versus market leader voriconazole in IA. At peak, voriconazole generated sales of $900m suggesting more growth to come from Cresemba. As clinical experience with Cresemba increases over time, we anticipate that the willingness of physicians to use this differentiated anti-fungal in the treatment of invasive moulds should increase, particularly if the relevant guidelines evolve and provide a greater emphasis on its use in earlier lines of treatment.

We calculate a discounted cash flow fair value of CHF120 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.



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