London, UK, 16 July 2018

Edison issues outlook on Basilea Pharmaceutica (BSLN)

Basilea has successfully brought two anti-infective drugs to the market: Cresemba (severe mould infections) and Zevtera (bacterial infections). With the commercialisation of both assets largely in the hands of partners and Zevtera's Phase III US clinical programme underway, we turn our focus to the next pillar of growth, the oncology portfolio. The recent deal with ArQule (in-licensing of Phase II product, derazantinib) means Basilea now has three diversified, early/mid-stage clinical assets targeting cancer resistance in its portfolio offering. We value Basilea at CHF119/share.

Our revised valuation of CHF1,285m or CHF119/share (vs CHF1,231m previously) reflects the inclusion of derazantinib for iCCA in our model (peak sales of $59.4m), and is largely based on Cresemba (worldwide) and antibiotic Zevtera (ex-US), plus net cash of CHF114.5m at 31 December 2017. We also include risk-adjusted contributions for Zevtera US, BAL101553 and BAL3833. Further progression of the oncology assets would drive upgrades to our valuation.

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