Basilea Pharmaceutica (BSLN.SW) reported a positive financial outlook in their Half Year Results for 2024. They saw a significant 24% increase in global sales of their antifungal product Cresemba and a 16.6% growth in royalty income year-on-year. Additionally, they celebrated the FDA approval of ZEVTERA in the US and are actively seeking commercialization partners. Basilea’s pipeline, including the antifungal Fosmanogepix, is about to enter Phase 3 studies, giving them confidence in their financial guidance for 2024, with projected increases in revenue and milestone payments.
Key takeaways from the report include the rise in Cresemba’s global sales leading to a boost in royalty income, a positive operating result of CHF 9.3 million, and FDA approval secured for ZEVTERA. Basilea’s pipeline also includes Fosmanogepix, BAL2062, and Tonabacase, targeting various fungal and bacterial infections. Financial guidance for 2024 projects significant increases in revenue and milestone payments.
The company’s outlook for 2024 is optimistic, with expectations of higher revenue from Cresemba and ZEVTERA. Basilea is confident in funding its development programs with current resources and is open to non-dilutive funding. However, sales to Pfizer for Cresemba will cease after December, which could impact revenue, though this is expected to be offset by lower costs of products sold.
Despite uncertainties regarding Phase 3 study timelines, Basilea’s strategic focus on anti-infectives and efforts to secure funding and partnerships position the company for future growth. The FDA’s designations for Fosmanogepix and an expanded pipeline highlight their potential in the market. The company’s financial guidance remains positive, reflecting confidence in managing costs and generating revenue. Cresemba achieved in-market sales of $489 million in the 12-month period ending in March 2024, marking a 24% increase year-on-year. The brand continues to show significant growth potential, particularly in established markets and emerging markets like China and Japan. These two countries alone represent a quarter of the global market opportunity for Cresemba. Additionally, ZEVTERA received approval in the U.S. for various bacterial infections earlier this year, with 10 years of market exclusivity. We are currently in negotiations with potential partners for the commercialization of ZEVTERA in the U.S. The first half of 2024 saw strong financial results, with Cresemba and ZEVTERA related revenue reaching $73.3 million. Looking ahead, we expect milestone payments to increase in the second half of the year, leading to higher revenues compared to 2023. Our financial guidance for full-year 2024 includes a 26% increase in Cresemba and ZEVTERA related revenue to around $190 million, with total revenue expected to reach approximately $196 million. We anticipate a significant growth in net profit, reflecting our continued sales growth and strong financial performance. With our healthy financial situation, we plan to invest in our expanded R&D pipeline to support long-term growth. Additionally, we have added four new programs to our portfolio since October 2023, with Fosmanogepix being the most advanced asset targeting the treatment of invasive yeast and mold infections. This novel antifungal has the potential to become a key commercial product for us in the future. Manogepix disrupts cell wall proteins, leading to fungal cell disintegration and death, targeting multi-drug resistant fungal species. It covers a wide range of critical priority pathogens identified by the WHO, addressing the urgent need for new treatment options due to high mortality rates in yeast and mold infections. Fosmanogepix has received FDA fast-track and orphan drug designations for various indications and is effective in both inpatient and outpatient settings. A Phase 3 study for candidemia and invasive candidiasis is set to begin soon, with a secondary study for invasive mold infections planned later in the year.
BAL2062 is a novel antifungal with a unique mode of action targeting invasive aspergillosis, showing promise for superior efficacy. It has received FDA QIDP orphan drug and fast-track designations and is currently undergoing preclinical studies. Tonabacase, a potent bactericidal endolysin, is being evaluated as an adjunct therapy for complicated staphylococcal infections. The LPTA inhibitor program, targeting gram negative bacteria, is in preclinical development and shows potential as a new treatment option.
Financially, the company has seen strong results in the first half of 2024 and expects continued growth, with a focus on commercial partnerships for ZEVTERA in the U.S. Clinical trials and preclinical development are progressing, with Phase 3 studies for Fosmanogepix and plans for future studies for other assets. Yes, thank you for the question regarding JEPX. We acquired JEPX based on extensive Phase 2 data, which gives us a good understanding of the compound and its clinical potential. We believe we have minimized risk by having this data and our expertise in the field. In terms of optimizing value, we are actively considering potential partnerships that could enhance the development and commercialization of JEPX. We are open to partnering before concluding pivotal development if it makes strategic sense for the program. In terms of partnering, it is important to note that when we acquired the program from Pfizer last year, the agreement was structured in a way that Pfizer retains the right of first negotiations once the Phase 3 program is completed. Our plan from the beginning was to complete the Phase 3 program, add value by conducting it broadly, and then commercialize with a partner in line with our business model. Pfizer, as an existing partner for Cresemba, would be the first party we would engage with. We are confident in the path forward for JEPX.
Regarding BAL2062 and Tonabacase, our commitment is to take these assets through clinical development to market independently, as we believe this is where we can truly add value. We design our clinical development programs with a commercial lens to create differentiated profiles for potential partners. The current plan is to advance these programs ourselves, with the only potential partnership being for non-dilutive financing.
In terms of timings, we have decision points towards the end of this year for both BAL2062 and Tonabacase to determine next steps based on preclinical profiling results. We will make decisions on moving forward with Phase 2 studies next year.
The increase in operating profit guidance is driven by revenue growth, as increasing sales flow through to the profit line due to our commercialization model with partners. We continue to seek to reduce our debt level and have been successful in doing so over the past two years.
Our guidance for 2024 does not include material contributions from a partnership for ZEVTERA in the U.S., with more meaningful contributions expected in 2025. The structure of any potential upfront payment would likely be deferred over the lifetime of the agreement to participate in the overall value creation of ceftobiprole.
Progress with preclinical profiling for BAL2062 and Tonabacase is going well, and we are confident it will inform our decision-making process by the end of 2024. Compared to Fosmanogepix, the compounds BAL2062 and term markets are considered higher risk projects, but they also offer potentially high returns. Once we have all the data from the preclinical profiling studies, we will review these projects based on their ability to address unmet medical needs, assess the risks and potential returns, and then make a decision and communicate it.
David Veitch: Yes, and just to add, we believe that these products, including Fosmanogepix, are suitable for non-dilutive funding bodies such as BARDA. We will be applying for funding for these compounds in our portfolio as well as CARBX for earlier compounds. These types of products align with the needs of non-dilutive funding bodies.
Soo Romanoff: Is the strategic focus now on developing existing pipelines or further acquisitions after investing heavily in building the portfolio in 2023? Are there specific categories or stages of assets being targeted?
David Veitch: Our focus remains on bacterial and fungal infections treatment, as we believe this area offers enough opportunities for asset acquisitions. We continue to look for assets in this area to enhance our portfolio and address unmet medical needs. Adesh, would you like to add anything?
Adesh Kaul: We constantly monitor opportunities for acquisitions in our focus areas, even if we may not transact immediately. We maintain a shortlist of assets of interest and will pursue transactions when opportunities arise.
Chien-Hsun Lee: Can you provide more information on the non-dilutive funding strategy for Fosmanogepix and the estimated timelines for potential BARDA funding?
David Veitch: We are actively seeking funding for Fosmanogepix and our other compounds in development, including from BARDA. While I can’t provide specific timelines, we are working towards securing funding for our compounds in clinical development.
Chien-Hsun Lee: Given the revenue outlook for ZEVTERA and the timeline for Fosmanogepix sales, do you see a need to acquire more later-stage assets to bridge the revenue gap?
David Veitch: Our focus is on in-licensing compounds up to the end of Phase 2, as it aligns with our commercialization model. Fosmanogepix is likely the latest stage compound we would consider, as we can add value through Phase 3 and seek a commercial partner. In the future, our business model may change as we reach critical mass and can expand into selected markets. However, at present, our current model is not suitable for a portfolio beyond Phase 2. It’s important to note that while Cresemba revenues may decline after the end of exclusivity in the EU and U.S., we anticipate growth in other regions that will offset this decline. Additionally, our business model allows us to generate positive cash flows even as revenues decrease because we avoid the costs of commercialization. This stability is reflected in our SG&A costs, which have remained steady regardless of the countries in which our products are launched. Looking ahead, we expect a positive cash flow for the full year, with milestones related to Cresemba contributing to this. As our supply agreement with Pfizer for Cresemba ends this year, we will no longer have product sales with them, but our costs of products sold will decrease accordingly. Thank you for your questions, and have a great day. sentence: Please do not forget to turn off the lights before leaving the room.