FDA's approval of Basilea's 5th-generation cephalosporin antibiotic Zevtera (ceftobiprole) represents the successful culmination of the company's determination to bring this important treatment option to patients in the key US market.
Zevtera has been approved by FDA for the treatment of Staphylococcus aureus bacteraemia (SAB), including those with right-sided infective endocarditis and acute bacterial skin and skin structure infections (ABSSSI) as well as adults and children with community-acquired bacterial pneumonia (CABP). Of the three, we believe there is a real unmet need for patients suffering from SAB, with Basilea noting that there are approximately 120,000 cases in the US. There is particularly a need where MRSA is involved and limited treatment options exist.
The presence of MRSA leads to poorer outcomes, with 15%-50% mortality rates in patients with MRSA bacteraemia. The glycopeptides vancomycin and daptomycin are first-line treatments in MRSA bacteraemia, requiring 4-6 weeks of intravenous therapy. Metastatic infections often require surgical intervention and can result in extended hospitalisation. However, both daptomycin and vancomycin have concerns over emerging resistance (and the potential for cross-resistance), as well as vancomycin's poor tissue distribution and risk of renal toxicity. Additionally, daptomycin is inactivated in the lung, rendering it useless for the treatment of respiratory infections. As a result, we believe there is a clear need for new, effective, and well-tolerated treatment options like Zevtera.
Our optimistic outlook for ceftobiprole, which drives our $400m peak sales potential, is based largely on the need for effective treatment options for SAB, particularly where resistant bacteria (MRSA) are involved. Furthermore, the importance of ceftobiprole has been reflected in BARDA's provision of $112m (approximately 75%) of the funding for clinical development and regulatory activity.
FDA approval of ceftobiprole is also important to the extent that it provides a product at the beginning of its product life cycle thanks to the protection (10 years of exclusivity) offered by QIDP status. The company has been very active recently, bolstering its antibacterial pipeline with the endolysin tonabacase, which could prove to act synergistically with ceftobiprole.
The approval of ceftobiprole represents another element of the ongoing de-risking of the Basilea investment case, along with the recent acquisition of the novel Phase 3 ready anti-fungal fosmanogepix. While the initial objective was to deliver a partner prior to FDA approval, we note commentary today that details the heightened interest received as Zevtera approached US approval. As such, we look forward to the attraction of a suitable commercial partner by mid-year 2024, which should allow Zevtera to reach its full commercial potential.
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.