Basilea has reported positive interim results from the derazantinib Phase II registration trial in intrahepatic cholangiocarcinoma (iCCA, bile duct cancer). The promising efficacy shown highlights the potential for the product in FGFR-driven solid tumours, an unmet need. Full data are expected to be available once the study has completed (mid-2020). Basilea in-licensed derazantinib from ArQule in April 2018. The asset is a complementary addition to its oncology portfolio and the company now has three diversified, early/mid-stage clinical assets targeting cancer resistance in its portfolio. We anticipate increased investor focus on the oncology strategy at Basilea. We value Basilea at CHF115/share.
Derazantinib is a tyrosine kinase inhibitor (pan FGFR) with potential utility across a range of cancers that test positive for FGFR genetic aberrations. Its most advanced indication is for iCCA (second line for FGFR2 fusion), Phase II studies in other FGFR-driven tumours are expected to initiate in mid-2019. Although there are no approved targeted therapies for iCCA, the discovery of FGFR2 fusions in ~10–20% of patients could change the treatment paradigm for these patients. While small patient populations in iCCA are expected, there is an unmet need and thus the FDA and EMA have granted orphan drug designation.
The interim analysis of the Phase II study, based on the subset of 29 patients (42 enrolled on the study) who had at least one post-baseline imaging assessment, showed an objective response rate of 21% and disease control rate (partial response or stable disease) of 83%. Safety and tolerability were confirmed as seen in previous studies. Full data from the ICCA trial should be available mid-2020, the trial is expected to enrol 100 patients. We model 2023 launch following a traditional development path including a Phase III trial.
Our valuation remains unchanged at CHF1,239m or CHF115/share. We include derazantinib for only iCCA in our model (peak sales of $59.4m), but the valuation is largely based on Cresemba (worldwide) and antibiotic Zevtera (ex-US), plus net cash of CHF51.3m at 30June 2018. We also include risk-adjusted contributions for Zevtera (US), BAL101553 and BAL3833. Basilea has provided a preliminary update to FY18 results; unaudited revenue for 2018 of CHF133m vs our CHF124m estimate is partly driven by a strong sales ramp up of Cresemba. The company also reported a cash position of c CHF223m at 31 December 2018 (preliminary, unaudited). We will update our model once the audited financials are published.
