Basilea Pharmaceutica - On track for operating profitability in FY23

Basilea’s H122 revenues of CHF58.7m were roughly in-line with our annualised estimates (FY22e: CHF110m) and company guidance, including CHF28.9m in royalty payments from sales of Cresemba (H121: CHF23.6m, a 22.5% increase). We see this as a positive sign for the company as we expect Cresemba royalties to provide important support for the top-line. Following positive results from the Phase III ERADICATE study in June 2022 and winding down of oncology activities in H122, R&D expenses fell to CHF37.1m (from CHF41.7m in H121) resulting in a reduction in the operating loss to CHF9.0m, 42% lower than H121 (CHF15.4m). We see this as encouraging support for management’s goal of reaching operating profitability in FY23. Basilea reduced its December 2022-maturing convertible bond position by CHF6.6m in H122 and we expect further information on the company’s debt strategy in H222. Our financial estimates are affected only by our updated FX rate assumptions. We value Basilea at CHF893.8 or CHF75.5/share (previously CHF886.7m or CHF74.9/share).