Basilea reported FY2018 revenue growth of 31% to CHF133m, driven by antifungal Cresemba. We expect limited revenue growth in 2019E, but note that there will be a shift towards cash-generating revenues, since deferred revenue of CHF23.9m related to Toctino will be replaced by contributions from Cresemba and antibiotic Zevtera (we forecast +30% YoY), translating to a reduction in net cash burn. With the commercialisation of Cresemba and Zevtera handed over to partners, Basilea is fully focused on its pipeline, particularly oncology asset derazantinib, which will enter additional clinical trials this year. We trim our target price (“TP”) to CHF107 (from CHF112), reflecting a lower cash balance by YE2019E and delay of a potential US licensing deal for ceftobiprole by one year, and retain our OUTPERFORM recommendation. We believe that the share price neither reflects continued strong growth from marketed products nor attributes value to clinical-stage pipeline assets.
