Basilea continues to make good partnering progress with key assets Cresemba for mould infections and Zevtera for bacterial infections. Both drugs will be developed and marketed across Latin America by Grupo Biotoscana (GBT), while Cresemba will be developed and marketed by Asahi Kasei Pharma in Japan. Basilea will receive a total upfront of CHF18m (to be treated as deferred revenue over a number of years), plus additional payments on reaching regulatory and commercialisation milestones (up to CHF60m from Asahi plus royalties, undisclosed amounts from GBT). We value Basilea at CHF1,091m.
Year
end |
Revenue (CHFm) |
PBT*
(CHFm) |
EPS*
(CHF) |
DPS
(CHF) |
P/E
(x) |
Yield
(%) |
12/14 |
42.6 |
(41.2) |
(4.14) |
0.0 |
N/A |
N/A |
12/15 |
52.8 |
(61.3) |
(6.07) |
0.0 |
N/A |
N/A |
12/16e |
61.2 |
(54.1) |
(4.96) |
0.0 |
N/A |
N/A |
12/17e |
88.6 |
(35.6) |
(3.20) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Cresemba and Zevtera underpin current share price
Basilea continues to make good partnering progress with key assets Cresemba and Zevtera against a backdrop of an ongoing European roll-out for both and a US roll-out for Cresemba by licence partner, Astellas. Following on from the extension with Hikma in the MENA region to cover Cresemba, in addition to the original agreement on Zevtera, Basilea has now announced two separate licence agreements covering Latin America and Japan. GBT has the exclusive licence for Cresemba and Zevtera across 19 Latin American countries whilst Asahi Kasei Pharma has been granted the sole licence for Cresemba in Japan.
Expect pipeline progress through 2016/17
Following the award of the BARDA contract (up to $100m) for the US development of Zevtera, we anticipate its US Phase III clinical trials could start in H117. The company is in discussions with the FDA to finalise the Phase III study SPAs. Oncology assets BAL101553 and BAL3833 are making progress in targeting drug-resistant tumour types; there could be synergies between the anti-infectives and oncology pipelines as a large number of invasive fungal and bacterial infections develop in leukaemia cancer patients that are immunocompromised owing to treatment with aggressive chemotherapies.
Valuation: rNPV of CHF1,091m or CHF101/share
Our valuation of Basilea remains unchanged at CHF1,091m. Our valuation is based on an NPV analysis, which includes the main portfolio of products and net cash. Cresemba, based on $600m peak sales globally, which encompasses the LatAm and Japanese markets (our model does not include the CHF18m in upfronts), is worth c 65% of our rNPV and underpins c 90% of the current market cap. We also include Zevtera in Europe, in addition to risk-adjusted contributions for the US opportunity and the earlier-stage pipeline.
Cresemba and Zevtera underpin current share price
Basilea continues to make good partnering progress with key assets Cresemba for mould infections and Zevtera for bacterial infections against a backdrop of an ongoing European roll-out for both and the US roll-out of Cresemba by licence partner, Astellas. Following on from the extension with Hikma in the MENA region to cover Cresemba, in addition to the original agreement on Zevtera, Basilea has now announced collaborative partnership with Grupo Biotoscana (GBT) for LatAm (Cresemba and Zevtera) and Ashai Kasei Pharma for Japan (Cresemba).
GBT to commercialise Cresemba and Zevtera across LatAm
Basilea has announced a supply, distribution and licence agreement with Grupo Biotoscana (GBT) for the LatAm region for its key antimicrobial agents, Cresemba and Zevtera. Basilea will receive CHF11m upfront for the agreement (to be treated as deferred revenue over a number of years; not included in our model assumptions), plus additional undisclosed amounts on reaching regulatory and commercialisation milestones. GBT holds the sole licence to commercialise both drugs across 19 countries in the region; including Brazil, Mexico, Argentina and Colombia. GBT has established operations in 10 countries in LatAm and focuses on rapidly growing healthcare segments including speciality pharmaceuticals and oncology; we see Cresemba and Zevtera as neat fits into its existing partnership portfolio of drugs.
Ashai Kasei Pharma to commercialise Cresemba across in Japan
Basilea has entered into a partnering agreement with Ashai Kasei Pharma for Cresemba in Japan. Under the terms of the deal Ashai Kasei Pharma has the sole licence to develop and commercialise the product; Basilea will receive CHF7m upfront for the agreement (to be treated as deferred revenue over a number of years; not included in our model), plus up to an additional CHF60m contingent on reaching regulatory and commercialisation milestones. Basilea will receive double digit tiered royalties on product sales in Japan. Ashai Kasei Pharma will be initiating the Cresemba clinical trials for the treatment of invasive aspergillosis and mucormycosis required for the Japanese marketing authorisation.
We forecast Cresemba global peak sales potential of $600m
We forecast global peak sales potential of $600m, with Cresemba contributing c 65% to our valuation. Our Cresemba valuation is based on a blended royalty which assumes around 30% for countries like Japan where bridging studies will be needed and a distribution agreement where the economic interest is likely to be around 40%. We will maintain our current assumptions until we have more visibility as to start of the bridging trials and the timing of a potential launch in these newly partnered markets.
Total Zevtera peak sales of $556m forecast
We continue to forecast $100m peak sales for Zevtera in Europe (for the currently approved indications) and $456m for RoW (including $317m for the US opportunity, which is risk adjusted). Phase III data from the US trials, if positive, could be used to expand Zevtera’s EU/RoW label to include Staphylococcus aureus bacteraemia and acute skin and skin structure infections indications. Our current peak sales estimates for EU/RoW do not include these indications, hence this could provide upside to our financial forecasts.
For more detail on Cresemba and Zevtera see our note dated March 2016, Riding the crest of the antimicrobial wave.
