Another year of strong execution

Basilea's 2024 financial results reflect another year of strong financial and operational progress. Total revenues of CHF 208.5m comfortably exceeded guidance of CHF 203m and our forecast of CHF 206.9m thanks to the continued strong growth of the antifungal Cresemba and with a modest Zevtera contribution outside of the US. The performance of Cresemba deserves further comment, with royalty revenue increasing by 22.6% and approaching CHF 100m, reflecting underlying demand growth. It is also worth highlighting the initial milestone contributions for Cresemba from important future markets such as Japan and MENA, noting that these markets, along with China in particular, offer new growth opportunities as Cresemba matures in existing markets.

Investment in R&D remained largely flat in 2024 at CHF 77.1m with the preparation for the start of the fosmanogepix Phase 3 programme an important undertaking. Securing long-term funding from BARDA of CHF 268m over 12 years will help offset the significant investment required for the ongoing Phase 3 programme of fosmanogepix together with the development of the antifungal BAL2062. An excellent top-line performance and careful cost control resulted in another profitable year with operating cash flow of CHF 74.4m, allowing the company to repay the remainder of the CHF 75m senior secured loan. Basilea ended FY '24 with net cash of CHF 28.6m (cash and equivalents of CHF 124.6m).

Guidance for FY '25 suggests a 5% increase in revenues to CHF 220m, which compares favourably to our forecast of CHF 213.4m. While some of this growth will likely be due to an increase in BARDA and CARB-X contributions, we note that guidance includes an expected 14% increase in royalty income to CHF 110m and the expected conclusion of product supply to Pfizer. With the second fosmanogepix Phase 3 trial due to start shortly, 2025 reflects a year of increased R&D investment (guidance CHF 88m), although mostly offset by the reimbursements noted above, allowing Basilea to deliver another strong year of profitability (operating profit guidance of CHF 62m).

It is also important to highlight the operational progress during the year with fosmanogepix entering Phase 3 trials and securing Innoviva as Zevtera's US commercial partner. Fosmanogepix is key to the long-term outlook for the group and the antifungal franchise. We continue to believe that securing a broader label compared to Cresemba should deliver higher peak sales of approximately $1.2bn and secure the antiinfective franchise for the long term.

The attraction of Innoviva as the US commercial partner for Zevtera is an important derisking event, and we look forward to the US launch later in the year. Encouragingly, Zevtera features prominently with Innoviva highlighting the unmet need as the only cephalosporin specifically approved for the treatment of Staphylococcus aureus bacteraemia (SAB). With tonabacase development terminated, antibiotic development will be focused on progressing the LptA inhibitor BAL2420. Now that ceftobiprole's future has been secured we look forward to further news on the prospects for the antibacterial pipeline during 2025.

Following the better-than-expected results today, our forecasts and fair value are under review.

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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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