H1 2024 has been characterised by another strong performance from the existing anti-infectives franchise, particularly the anti-fungal Cresemba (isavuconazole).
Royalty revenue improved by a healthy 16.6%, reflecting underlying sales growth. While milestone payments may have been lower in H1'24 compared to H1'23, Basilea expects H2'24 to deliver higher milestone payments compared to H2'23. As a result of these milestones and higher royalty revenue, Basilea has increased its FY'24 revenue guidance to around CHF196m compared to CHF183m before. Within this, royalty revenue is now expected to be CHF92m compared to CHF89m. Although Cresemba may be maturing in the key US and European markets, we note that the CHMP has recommended approval of the paediatric indication, which will extend market exclusivity in Europe until Q4 2027. Basilea was also able to recognise deferred tax credits in H1'24 of CHF13.4m helping to deliver a healthy net profit of CHF20.7m. Basilea took advantage of a strong H1 result to repay the outstanding CHF15.6m of its CHF75m secured loan during the period. Additionally, the company increased its operating profit guidance for H1'24 to CHF36m from CHF30m, and its net profit guidance to CHF42m from CHF25m.
H2 represents an important period for Basilea as it seeks to deliver a relevant commercial partner for the 5th-generation cephalosporin ceftobiprole. In April 2024, ceftobiprole was approved in the USA for the important bacteraemia indication (SAB) as well as severe skin and community-acquired pneumonia. While negotiations have been protracted, we note that the company previously highlighted increased interest given the broad label. According to the release today, the company is "...in negotiations with a number of interested partners". Basilea should be commended for its determination to bring ceftobiprole to the US market and deliver an appropriate partner. Based on our peak sales estimate approaching $400m for ceftobiprole, its commercialisation in the US remains an important element in bridging the gap between Cresemba's loss of exclusivity and the launch of the novel anti-fungal fosmanogepix which is approaching the commencement of Phase 3 evaluation. Successful delivery of a US partner for ceftobiprole should remove a key uncertainty from the Basilea investment case.
We remain of the view that the addition of fosmanogepix to Basilea's anti-infective pipeline has been a transformational event. Fosmanogepix looks to have a best-in-class profile and should significantly extend the company's anti-fungal franchise into important and lucrative infections. This recognition has been reflected in the FDA conferring Fast Track status for various important fungal infections including invasive aspergillosis, candidiasis and mucormycosis. Based on the Phase 2 data, we believe that the fosmanogepix Phase 3 programme has been largely de-risked, and we have suggested peak sales of circa $1.2bn. In the release today, Basilea has confirmed that the Phase 3 programme will start shortly.
We calculate a discounted cash flow fair value of CHF 105 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 in this publication should be considered as any form of advice.
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