Basilea announced a hat trick of positive news flow in June. This includes two separate licensing deals covering Cresemba (for invasive mould infections) and Zevtera, as well as triggering the allocation of $54.8m reimbursement funding from the Biomedical Advanced Research and Development Authority (BARDA) relating to the advancement of Zevtera’s US phase III clinical programme for bacterial infections (trials to initiate H217). Most notable is the major licensing deal with Pfizer for Cresemba in Europe, Russia, Turkey and Israel; Pfizer is the partner of choice given its long-standing expertise in this market. Additionally, Avir Pharma has licensed both Cresemba and Zevtera for the Canadian market. Our forecasts and valuation are under review; we will update both post further disclosure on the PFE deal at the interim results on 10 August.
Basilea has entered into a licence agreement with Pfizer for Cresemba (isavuconazole) commercialisation in Europe (ex Nordics), Russia, Turkey and Israel. The deal with Pfizer could be a game changer for Cresemba; Pfizer has the expertise to manufacture and commercialise Cresemba rapidly throughout its inlicensed territories using its established existing marketing infrastructure during a period where its own anti-fungal Vfend has lost patent protection in key markets. Under the terms of the deal Basilea will receive an upfront payment of CHF70m and will be eligible to receive up to $427m in additional payments upon achievement of pre-specified regulatory and sales milestones. Basilea will also receive royalties in the mid-teen range on Pfizer’s sales in the territories mentioned.
Basilea has reached an agreement with the FDA on Special Protocol Assessments for the two Phase III clinical studies in staphylococcus aureus bacteraemia and skin infection; triggering the allocation of $54.8m funding from BARDA available for the reimbursement of costs related to the advancement of Zevtera’s US Phase III clinical programme.
Our valuation is under review while we await further clarity at the interim results on the accounting treatment for the Pfizer deal. Our previous valuation of CHF1,048m (see our update note of 1 March) was predicated on $600m in Cresemba peak sales, which, in view of the Pfizer agreement, looks light. Subject to the transaction closing, management has revised guidance for the year to operating expenses of CHF9-10m per month (net of anticipated BARDA reimbursements) from CHF10m/month and operating losses of CHF2-3m per month from CHF3m/month.