Basilea Pharmaceutica — Cresemba sales the focus for future profitability

Basilea Pharmaceutica (SIX: BSLN)

Last close As at 04/11/2024

CHF43.20

0.40 (0.93%)

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CHF575m

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Research: Healthcare

Basilea Pharmaceutica — Cresemba sales the focus for future profitability

Basilea continues to build on its key franchises, Cresemba and Zevtera, with FY19 contributions from both increasing 39% to CHF114m, driven mainly by Cresemba. Longer-term value creation is dependent on crystallising mid/late-stage oncology assets, with new trials initiated or expected for both derazantinib (multiple data points expected in 2020) and lisavanbulin (trial initiation by mid-year expected). We forecast break-even at the operating profit level in 2021 and value Basilea at CHF1.10bn.

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Healthcare

Basilea Pharmaceutica

Cresemba sales the focus for future profitability

Full Year results

Pharma & biotech

20 February 2020

Price

CHF55.1

Market cap

CHF656m

Net debt (CHFm) at 31 December 2019

36.7

Shares in issue (including 1.1m treasury shares)

11.9m

Free float

91%

Code

BSLN

Primary exchange

SIX

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(4.9)

9.2

10.1

Rel (local)

(8.5)

0.5

(9.5)

52-week high/low

CHF60.3

CHF34.1

Business description

Basilea is focused on oncology and infectious diseases. Its marketed products are Cresemba (an antifungal) and Zevtera (an anti-MRSA broad-spectrum antibiotic). The oncology R&D pipeline consists of three assets including clinical-stage products lisavanbulin and derazantinib.

Next events

Derazantinib top-line results from Phase II in iCCA (FGFR2 fusion cohort)

H220

Derazantinib interim data from first cohort in urothelial cancer

H220

Ceftobiprole Phase III ERADICATE top-line data for bacteraemia (SAB)

H221

Analyst

Dr Susie Jana

+44 (0)20 3077 5700

Basilea Pharmaceutica is a research client of Edison Investment Research Limited

Basilea continues to build on its key franchises, Cresemba and Zevtera, with FY19 contributions from both increasing 39% to CHF114m, driven mainly by Cresemba. Longer-term value creation is dependent on crystallising mid/late-stage oncology assets, with new trials initiated or expected for both derazantinib (multiple data points expected in 2020) and lisavanbulin (trial initiation by mid-year expected). We forecast break-even at the operating profit level in 2021 and value Basilea at CHF1.10bn.

Year end

Revenue (CHFm)

PBT*
(CHFm)

EPS*
(CHF)

DPS
(CHF)

P/E
(x)

Yield
(%)

12/18

132.6

(31.0)

(2.88)

0.0

N/A

N/A

12/19

134.4

(22.2)

(2.07)

0.0

N/A

N/A

12/20e

134.4

(26.7)

(2.48)

0.0

N/A

N/A

12/21e

151.6

(4.4)

(0.41)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Advancing on all fronts

Now available in 40 countries (forecast to reach 60 by end 2021), Cresemba (isavuconazole) sales continue to accelerate, with in-market sales (year ending September 2019) from partners of approximately $190m (+32% y-o-y). In 2019, Basilea reported positive US Phase III TARGET data on Zevtera which, together with the ERADICATE study, will form the basis of a US NDA submission (potential launch in 2023). Mid-stage asset derazantinib (fibroblast growth factor receptor (FGFR) inhibitor) could be the first of Basilea’s oncology assets to market (forecast in 2023 in bile duct cancer based on data from FIDES-01). Two new trials in urothelial (FIDES-02 initiated in Q319) and gastric cancers (FIDES-03 forecast to be initiated in Q320) could further expand derazantinib’s utility. Lisavanbulin, a potential novel tumour checkpoint controller, is forecast to enter Phase II development by mid-year.

Financials: Current product contribution growing

Non-deferred Cresemba and Zevtera (C&Z) revenue grew in FY19 to CHF68.7m (from CHF50.5m) to contribute 60% of C&Z-related revenue (CHF114.3m) from 38% previously. This trend is expected to continue in 2020, with Basilea forecasting that non-deferred revenue represents c 70% of total C&Z-related revenues (company forecasts CHF77–87m in FY20). Revenue growth in FY19 was offset by a reduction in the deferred contract revenue from Toctino to zero (FY18: CHF23.9m). Cost and total operating expenses decreased slightly y-o-y to CHF151.6m from CHF156.6m, aiding a reduction in the net loss to CHF22.4m vs CHF31.4m previously. Basilea has a convertible bond in issue, which is not due for conversion until end 2022. We forecast break-even at the operating profit level in 2021, with subsequent profitability driven by Cresemba and Zevtera revenues.

Valuation: rNPV of CHF1.10bn or CHF102/share

Our revised valuation is CHF1.10bn or CHF102/share versus CHF1.18bn or CHF109/share previously. The decrease is driven by an increase in near-term costs and reduction in cash (net debt CHF36.7m vs CHF19.5m at end June 2019). Our valuation is based on an NPV analysis for marketed products, a risk-adjusted NPV for the pipeline and net debt of CHF36.7m at 31 December 2019.

Exhibit 1: Financial summary

CHF'000s

2017

2018

2019

2020e

2021e

December

US GAAP

US GAAP

US GAAP

US GAAP

US GAAP

PROFIT & LOSS

Revenue

 

 

101,521

132,555

134,381

134,368

151,570

Cost of Sales

(9,025)

(20,299)

(18,868)

(18,412)

(16,499)

Gross Profit

92,496

112,256

115,513

115,956

135,071

Research and development (gross)

(55,055)

(104,942)

(102,662)

(105,000)

(101,000)

SG&A

(54,491)

(31,409)

(30,051)

(32,574)

(33,319)

EBITDA

 

 

(15,150)

(22,272)

(15,560)

(19,019)

3,575

Operating Profit (before amort. and except.)

 

 

(16,950)

(23,972)

(17,060)

(21,382)

997

Intangible Amortisation

(100)

(123)

(140)

(237)

(245)

Exceptionals

0

0

0

0

0

Other

0

0

0

0

0

Operating Profit

(17,050)

(24,095)

(17,200)

(21,619)

752

Net Interest

(1,976)

(7,065)

(5,182)

(5,417)

(5,417)

Profit Before Tax (norm)

 

 

(18,926)

(31,037)

(22,242)

(26,799)

(4,420)

Profit Before Tax (reported)

 

 

(19,026)

(31,160)

(22,382)

(27,036)

(4,665)

Tax

(334)

(192)

(40)

(26)

(26)

Profit After Tax (norm)

(19,260)

(31,229)

(22,282)

(26,825)

(4,446)

Profit After Tax (reported)

(19,360)

(31,352)

(22,422)

(27,062)

(4,691)

Average Number of Shares Outstanding (m)

10.8

10.8

10.8

10.8

10.8

EPS - normalised (CHFc)

 

 

(178.36)

(288.15)

(207.16)

(249.40)

(41.34)

EPS - (reported) (CHFc)

 

 

(179.28)

(289.28)

(208.47)

(251.60)

(43.62)

Dividend per share (c)

0.0

0.0

0.0

0.0

0.0

Gross Margin (%)

91.1

84.7

86.0

86.3

89.1

EBITDA Margin (%)

N/A

N/A

N/A

N/A

2.4

Operating Margin (before GW and except.) (%)

N/A

N/A

N/A

N/A

0.7

BALANCE SHEET

Fixed Assets

 

 

58,189

7,013

36,607

38,238

40,162

Intangible Assets

326

372

372

572

772

Tangible Assets

7,768

6,424

5,162

6,593

8,317

Investments

50,095

217

31,073

31,073

31,073

Current Assets

 

 

292,976

274,738

184,860

129,351

123,049

Stocks

15,320

14,411

18,569

17,655

13,561

Debtors

4,955

3,757

6,242

6,258

7,059

Cash

260,724

223,908

131,044

76,433

73,423

Other

11,977

32,662

29,005

29,005

29,005

Current Liabilities

 

 

(79,491)

(66,684)

(75,494)

(54,161)

(254,832)

Creditors

(79,491)

(66,684)

(75,494)

(54,161)

(59,366)

Short term borrowings

0

0

0

0

(195,466)

Long Term Liabilities

 

 

(313,114)

(281,754)

(238,933)

(230,402)

(26,238)

Long term borrowings

(196,224)

(196,982)

(197,740)

(197,740)

(1,516)

Other long term liabilities

(116,890)

(84,772)

(41,193)

(32,662)

(24,722)

Net Assets

 

 

(41,440)

(66,687)

(92,960)

(116,974)

(117,859)

CASH FLOW

Operating Cash Flow

 

 

19,014

(79,210)

(63,836)

(44,937)

7,181

Net Interest

0

0

0

(5,417)

(5,417)

Tax

0

0

0

(26)

(26)

Capex

(711)

(419)

(294)

(4,031)

(4,547)

Acquisitions/disposals

0

0

0

0

0

Financing

0

0

0

0

0

Other

3,391

42,813

1,266

(200)

(200)

Dividends

0

0

0

0

0

Net Cash Flow

21,694

(36,816)

(62,864)

(54,611)

(3,010)

Opening net debt/(cash)

 

 

(43,564)

(64,500)

(26,926)

36,696

91,307

HP finance leases initiated

0

0

0

0

0

Other

(758)

(758)

(758)

0

758

Closing net debt/(cash)

 

 

(64,500)

(26,926)

36,696

91,307

93,559

Source: Company accounts, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by Basilea Pharmaceutica and prepared and issued by Edison, in consideration of a fee payable by Basilea Pharmaceutica. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Basilea Pharmaceutica and prepared and issued by Edison, in consideration of a fee payable by Basilea Pharmaceutica. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2020. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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