Basilea continued to build on its foundations for growth in 2018, reporting FY18 revenues of CHF132.6m (+31%) and an operating loss of CHF24.1m (+41%), beating guidance for the year. Revenues benefit from the multitude of global licensing/distribution deals for launched assets Cresemba and Zevtera. The main revenue driver is Cresemba, whose sales growth has accelerated in the US and EU. R&D investment in the oncology pipeline continues. This represents the next pillar of growth and we anticipate further progress in 2019. We expect further in-licensing opportunities given the strength of the balance sheet (cash and financial investments CHF223m). We value Basilea at CHF1082m or CHF100/share.
Cresemba (isavuconazole) sales accelerated in 2018. Total sales reported by partners exceeded $150m, leading to CHF26.4m in royalties and CHF10.0m in sales milestones. The product is available in over 20 countries, including the US and Europe through multiple partners, and sales will benefit from further launches through 2019–21. Zevtera (ceftobiprole) sales remain lacklustre due to antibiotic stewardship. The significant value driver for the product will depend on a US launch (potentially in 2022/23). Two ongoing cross-supportive studies report in 2019/21.
In 2018, Basilea strengthened its oncology pipeline through the in-licensing of derazantinib. Positive interim results from a registrational Phase II trial in iCCA (bile duct cancer) were announced in early 2019. Studies in other FGFR-driven tumours could maximise the value of this unique asset. Basilea has announced that it is planning a collaborative multi-cohort Phase I/II study (mid-2019), investigating derazantinib alone and in combination with Roche’s Tecentriq (PD-L1 antibody) for the treatment of urothelial carcinoma (UC).
Guidance for FY19 operating loss of CHF20–30m reflects an increase in revenue expectations for Cresemba and Zevtera (CHF100–110m) with stable operating and R&D expense. Increasing the revenue contribution from Cresemba translates to break-even in 2020 and sustainable profitability from 2021.
Our revised valuation of CHF1082m (from CHF1,239m) largely reflects changes to the timing and amounts of milestones received on Cresemba US and EU sales from partners (Pfizer milestones based on cumulative sales). Additionally, we roll forward our DCF and update for net cash of CHF26.1m at 31 December 2018.