Edison Investment Research Limited: Basilea Pharmaceutica (BSLN): Renewed focus on anti-infectives

London, UK, 5 May 2022

Basilea Pharmaceutica (BSLN): Renewed focus on anti-infectives

In February, Basilea announced a strategic refocusing on its core anti-infective business and is exploring strategic options for its oncology assets. Strong FY21 results were driven by key anti-infective assets Cresemba and Zevtera, which collectively contributed CHF131.4m to Basilea’s revenue (up 18% y-o-y). Global Cresemba sales were US$324m in FY21, resulting in significantly increased royalty and milestone payments. Management envisages sustainable profitability and positive operating cash flow from 2023. Top-line data from the key ERADICATE study of Zevtera in bloodstream infections is expected in mid-2022. If positive, this would enable an NDA submission, paving the way to the US antibiotics market. In oncology, potential value uplift could come from positive readouts (expected in H122) from lead asset derazantinib in trials for iCCA (FIDES-01) and gastric cancer (FIDES-03).

Our rNPV model suggests a fair value of CHF847.7m or CHF71.6/share (previously CHF106/share). We value the oncology assets at CHF14.8/share, excluding any valuation for potential strategic actions. We have revisited our Cresemba and Zevtera milestone payment assumptions and are now taking a more conservative view. We roll our model forward, with FY21 net debt of CHF69.3m.

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