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Initiating CoverageDecember 13, 2016
Basilea Pharmaceutica Ltd. (BSLN.S)Initiation Report
LifeSci Investment Abstract
Basilea Pharmaceutica (SIX: BSLN.S) is a commercial stage biopharmaceutical company withtwo marketed anti-infective products and two early stage oncology assets. CRESEMBA is apotent antifungal with activity against multiple clinically relevant species that is approved inboth the US and Europe. Basilea has a commercialization agreement with Astellas for the drugin the US. Zevtera, a broad-spectrum antibiotic, has been approved in over a dozen Europeancountries for the treatment of community acquired and hospital acquired pneumonia. It hasQIDP status and BARDA funding for a US Phase III program, which is expected to begin inthe first half of 2017. BAL3833 is a kinase inhibitor indicated for melanoma and other smalltumors that is currently being evaluated in a Phase I study for the treatment of refractory solidtumors. BAL101553 showed early signs of efficacy in Phase I/IIa study and an oral study isongoing.
Key Points of Discussion
■ CRESEMBA is Partnered with Astellas. CRESEMBA (isavuconazole) is an anti-fungal targeting invasive mold species. CRESEMBA is available in oral and intravenousformulations and is approved in the US for the treatment of invasive aspergillosis andinvasive mucormycosis in adults and in the EU for the treatment of adult patients withinvasive aspergillosis and for the treatment of adult patients with mucormycosis forwho amphotericin is inappropriate. Basilea entered into licensing, co-development, andcommercialization agreement for the drug with Astellas (OTC: ALPMY) in February of2010. This agreement stipulated that Basilea would receive an initial payment of CHF 75million (approximately $77 million), followed by an additional payment of CHF 42 millionpredicated on attainment certain regulatory milestones. Under the current agreement,Astellas has commercial rights to CRESEMBA in the US and in addition to royalties Basileais still eligible for up to CHF 290 million in milestone payments related to sales. TheCompany also recently entered an agreement with Asahi Kasei Pharma (TSE: 3407) forthe development and commercialization of this asset in Japan.
Expected Upcoming Milestones
■ H2 2016 – Expansion of Phase I/IIa oral study of BAL101553 to include glioblastomapatients.
■ H1 2017 – Completion of Phase I study for BAL3833.■ H1 2017 – Initiate Phase III study of Zevtera in S. aureus bacteremia and ABSSI under
SPA.
Analysts
Jerry Isaacson, Ph.D. (AC)(646) [email protected]
Market Data
Price $69.97Market Cap (M) $826EV (M) $762Shares Outstanding (M) 11.8Fully Diluted Shares (M) 14.452-week Range: $57.62 - $95.60Cash (M) $255.7Net Cash/Share $5.46Annualized Cash Burn (M) $48.7Years of Cash Left >2.0Debt (M) $195.1
Financials
FY Dec 2014A 2015A 2016AEPS H1 (1.87)A (3.00)A (2.76)A
H2 NA NA NAFY (4.17)A (6.09)A NA
For analyst certification and disclosures please see page 44Page 1
Growing Need for Efficacy Against Emerging Invasive Species. Invasive fungal infections are a growing medical
concern, especially for immunocompromised patients. These infections are associated with high rates of morbidity
and mortality, with some infections having mortality rates as high as 80%. Furthermore, the proportion of these
infections caused by emerging invasive fungal species has also grown. The increasing prevalence of fungal infections
caused by apergillosis and mucorales strains necessitates the incorporation of antifungals with efficacy against these species
in clinical practice. Because patients are usually treated empirically, before the infection is identified, there is a need
for therapies with broad spectrum activity. With both a favorably safety and tolerability profile and potency against
these species, CRESEMBA is poised to play a critical role in the antimicrobial armamentarium whenever a fungal
infection is suspected.
CRESEMBA is Broadly Active with Good Safety. Basilea has conducted three Phase III studies that demonstrated
the pharmacokinetics, safety, and efficacy of CRESEMBA for the treatment of different fungal infections in patients
with and without renal impairment. The VITAL and SECURE Phase III trials demonstrated the efficacy of
CRESEMBA for the treatment of IFI’s caused by mucormycosis and aspergillosis, respectively. The ACTIVE Phase
III study of CRESEMBA in Candida infections revealed safety profile is comparable to that of caspofungin.
CRESEMBA was found to be a good IV to oral option for these patients.
Fungal infections most often affect vulnerable populations, such as patients undergoing treatment for cancer, or those
who are faced with other immune-system compromising conditions. The myriad of associated co-morbidities in many
patients with fungal infections underscores the importance of an amenable tolerability and safety profile. In a Phase
III study evaluating the outcome of Aspergillosis infections in patients treated with voriconazole or CRESEMBA,
patients in the CRESEMBA treatment arm experienced fewer adverse events. This difference was statistically
significant, and positions CRESEMBA to become the treatment of choice for these infections.
Zevtera is the First Broad-Spectrum Anti-MRSA Cephalosporin Approved for Hospital and Community
Acquired Pneumonia. With demonstrated efficacy against MRSA and other clinically relevant strains, Zevtera has
been approved for the treatment of community acquired and hospital acquired bacterial pneumonia in 13 European
countries. In Phase III studies, it was effective against both gram positive and gram negative bacterial species, and
many of the most common clinical strains. Zevtera was also found to have a favorable safety and tolerability profile,
similar to that of other antibiotics in its class. Basilea has a distribution agreement with Unimedic Pharma AB (private)
for the Nordic countries including Sweden, Denmark, Norway, and Finland for CRESEMBA and Zevtera.
Zevtera is in Phase III with QIDP Status and BARDA Funding. Basilea’s broad-spectrum antibiotic Zevtera has
received Qualified Infectious Disease Product status from the FDA for the potential treatment of community acquired
pneumonia, Staphylococcus aureus bacteremia, and acute bacterial skin and skin structure infections. While Zevtera is not
yet approved in the US, Basilea has a contract with BARDA for up to $100 million to support Phase III programs
that will evaluate Zevtera’s use in these conditions. In addition to activity against MRSA and many other clinically-
relevant gram positive and gram negative species, Zevtera has exhibited a favorable safety profile in both European
clinical trials, and in practice. Basilea plans to initiate US Phase III trials for Zevtera in the first half of 2017.
Basilea has two Oncology Assets for Drug Refractory and Other Advanced Solid Tumors. In addition to the
commercial stage anti-microbial programs, Basilea has two oncology assets. BAL3833 is being studied in melanoma
and other advanced solid tumors and BAL101553 is being developed for drug-refractory tumors. Both programs are
differentiated for their use of biomarkers to stratify the potential patient population and optimize tumor selection.
The Company has completed a Phase I/IIa trial with an intravenous formulation of BAL101553, and it was well
December 13, 2016
Page 2
tolerated. Oral and continuous infusion formulations of this compound are currently in Phase I/IIa trials. BAL3833
is in development for melanoma and other advanced, solid tumors. An oral formulation of the drug is currently in a
Phase I study that is being conducted by a group of UK institutions that includes the Institute of Cancer Research,
London, and the Royal Marsden. This dual acting kinase inhibitor has the potential to be used in patients with tumors
that are resistant to BRAF inhibitors.
Financial Discussion
First Half 2016 Results. Basilea reported total revenues of CHF 29.7 million ($30.6 million) in the first half of 2016,
as compared to CHF 25.0 million ($26.5 million) for the same period in 2015. Product revenues were CHF 1.9 million
($1.9 million) in the first half of 2016, and there were no product revenues during the same period of 2015. Contract
revenues were CHF 27.8 million ($28.6 million) in the first half of 2016, as compared to CHF 24.4 million ($25.9
million) during the first half of 2015. The increase in contract revenues was related to the licensing agreement for
isavuconazole with Astellas Pharma (Other OTC: ALPMY). Total operating expenses were CHF 54.6 million ($55.9
million) for the first half of 2016, as compared to CHF 55.0 million ($58.3 million) for the first half of 2015. The
Company reported a net loss of CHF 27.9 million ($28.7 million) in the first half of 2016, down from CHF 30.1
million ($31.9 million) in the first half of 2015. Total cash and cash equivalents was CHF 310.9 million ($320.2 million)
as of June 30, 2016.
Full Year 2016 Guidance. The Company has provided product sales guidance of approximately CHF 5.1 million
($5.0 million) for full year 2016. Basilea has provided operating expense guidance of CHF 9-10 million ($8.8-9.8
million) on average per month in 2016, which annualizes to CHF 108-120 million ($105.8-117.6 million) for full year
2016. Basilea provided operating loss guidance of CHF 4-5 million ($3.9-4.9 million) per month in 2016, which
annualizes to CHF 48-60 million ($47.0-58.8 million) for full year 2016.
Product Revenue. A nascent source of revenue for Basilea is from their two approved products being
commercialized in EU markets, CRESEMBA and Zevtera/Mabelio. The proportion of revenue attributed to these
products is presented in Figure X. The Company launched CRESEMBA in select EU territories beginning in March
2016, and the product is currently available in Germany, Italy, the United Kingdom (UK), and Austria.
December 13, 2016
Page 3
Table of Contents
Company Description .................................................................................................................................................................... 5
Basilea’s Historical Revenue and Growth Potential .................................................................................................................. 6
CRESEMBA (isavuconazole): A Broad-Spectrum Antifungal Agent .................................................................................... 8
Mechanism of Action ................................................................................................................................................................ 8
Safety Profile ............................................................................................................................................................................. 10
Preclinical Data ........................................................................................................................................................................ 10
Invasive Fungal Infections .......................................................................................................................................................... 10
Causes and Pathogenesis ........................................................................................................................................................ 11
Diagnosis and Symptoms ....................................................................................................................................................... 12
Treatment .................................................................................................................................................................................. 13
CRESEMBA Market Information ............................................................................................................................................. 14
Epidemiology ............................................................................................................................................................................ 14
Market Size ................................................................................................................................................................................ 14
Clinical Data Discussion .............................................................................................................................................................. 15
VITAL Phase III Trial for the Treatment of Renally-Impaired Aspergillosis and Rare Fungi ................................... 16
SECURE Phase III Trial for the Primary Treatment of Invasive Aspergillosis ............................................................ 18
Phase III Trial for Isavuconazole Treatment of Candida Infections ............................................................................... 19
Competitive Landscape ................................................................................................................................................................ 20
Zevtera/Mabelio (ceftobiprole medocaril) For Pneumonia and Other Infections ................................................................ 22
Hospital Acquired Pneumonia and Community Acquired Bacterial Pneumonia .............................................................. 24
Pneumonia Market Information............................................................................................................................................ 27
Acute Bacterial Skin and Skin Structure Infections (ABSSSI) ............................................................................................... 29
ABSSSI Market Information .................................................................................................................................................. 29
Staphylococcus aureus Bacteremia ............................................................................................................................................... 31
Clinical Data Discussion .............................................................................................................................................................. 31
Other Treatments in Development ........................................................................................................................................... 32
Ceftobiprole Competitive Landscape ........................................................................................................................................ 35
BAL101553: Drug-Refractory Solid Tumors ........................................................................................................................... 38
BAL101553 Clinical Data Discussion .................................................................................................................................. 39
BAL3833: Melanoma and Other Tumors ................................................................................................................................. 39
Intellectual Property ..................................................................................................................................................................... 39
Management Team ....................................................................................................................................................................... 41
Risk to an Investment .................................................................................................................................................................. 43
Analyst Certification ..................................................................................................................................................................... 44
Disclosures ..................................................................................................................................................................................... 44
December 13, 2016
Page 4
Company Description
Basilea is a commercial stage biopharmaceutical company dedicated to the discovery and development of novel
pharmaceutical products for patients with serious and life-threatening medical conditions. Basilea has assets in the
therapeutic areas of bacterial and fungal infections and cancer and is focused on medicines that can address drug
resistance and non-responsiveness to current therapeutics. Headquartered in Basel, Switzerland, Basilea is fully
integrated from research and development to commercial operations, and has leveraged the marketing of their assets
through multiple strategic partnerships.
Basilea’s product pipeline includes two commercially marketed products and two clinical-stage oncology drug
candidates. CRESEMBA (isavuconazole) is an anti-fungal targeting invasive mold species. CRESEMBA is available
in oral and intravenous formulations and is approved in the US for the treatment of invasive aspergillosis and invasive
mucormycosis in adults and in the EU for the treatment of adult patients with invasive aspergillosis and for the
treatment of adult patients with mucormycosis for who amphotericin is inappropriate. Basilea entered into licensing,
co-development, and commercialization agreement for the drug with Astellas (OTC: ALPMY) in February of 2010.
This agreement stipulated that Basilea would receive an initial payment of CHF 75 million (approximately $77 million),
followed by an additional payment of CHF 42 million predicated on attainment certain regulatory milestones. Under
the current agreement, Astellas has commercial rights to CRESEMBA in the US and in addition to royalties Basilea is
still eligible for up to CHF 290 million in milestone payments related to sales.
Zevtera and Mabelio are commercial names for ceftobiprole medocaril, a cephalosporin antibiotic with activity against
both gram positive and gram negative bacterial species, including MRSA. This intravenous antibiotic has already been
approved in 13 European countries and Canada for community and hospital acquired pneumonia in adults, excluding
ventilator-associated pneumonia. It has received FDA QIDP status and initial BARDA funding of about $20 million
for a registration-directed Phase III program to evaluate its use in the treatment of acute bacterial skin and skin
structure infections (ABSSSIs), Staphylococcus aureus bacteremia (SAB) and community acquired bacterial pneumonia
(CABP). The BARDA contract could be worth up to $100 million over 4.5 years based on the successful completion
of certain milestones.
Basilea is also developing two oncology assets, BAL101553 and BAL3833. BAL101553 is intended for drug-refractory
solid tumors. The Company has completed a Phase I/IIa trial with an intravenous formulation of the drug. Oral and
continuous infusion formulations of this compound are currently in Phase I/IIa trials. BAL3833 is in development
for melanoma and other advanced, solid tumors. An oral formulation of the drug is currently in a Phase I study that
is being conducted by a group of UK institutions that includes the Institute of Cancer Research, London, and the
Royal Marsden. A comprehensive diagram of Basilea’s pipeline is shown in Figure 1.
December 13, 2016
Page 5
Figure 1. Basilea’s Developmental Pipeline
Source: LifeSci Capital
Basilea’s Historical Revenue and Growth Potential
Basilea has a strong revenue base primarily derived from sales of proprietary products and revenue from out-licensed
assets. The largest ongoing revenue stream is due to an out-licensing agreement with Stiefel for global rights to Toctino,
for which the Company received an upfront payment of CHF 224 million ($226 million) in 2012 that is being
recognized as deferred revenue through August of 2018. Basilea’s revenue growth over the past several years is a result
of the CRESEMBA franchise, which consists of an out-licensing agreement with Astellas Pharma for US
commercialization rights and an ongoing rollout in key EU markets. Basilea’s total revenue breakdown is in Figure 2,
with revenues attributable to each key driver presented separately.
Figure 2. Basilea Revenue Breakdown from 2013 to 2016
Source: LifeSci Capital
$37.8 $37.8 $38.5 $38.5
$1.9 $5.3 $13.9
$18.6
$5.1
$2.7 $0.5
$1.6
$0
$10
$20
$30
$40
$50
$60
$70
2013 2014 2015 2016 (estimate)
Rev
enue
(mill
ion
s)
Toctino - Contract Revenue Cresemba - Contract Revenue Product Revenue Other Revenue
December 13, 2016
Page 6
Revenues related to the CRESEMBA franchise are derived from two sources, Basilea’s contract agreement with
Astellas Pharma for US commercialization rights of CRESEMBA, and the Company’s own commercialization efforts
in the EU, which shown as product revenue. It should be noted that the contract revenue received from Astellas also
includes royalty payments.
Deferred Revenue Related to Out-Licensing of Toctino
In July 2012, Basilea out-licensed global rights for Toctino (alitretinoin) to Stiefel, a GlaxoSmithKline (NYSE: GSK)
subsideary. Tocitino is a derivative of vitamin A indicated for the treatment of skin conditions. This agreement yielded
the Company a payment of approximately CHF 224 million ($225 million). This payment is being recognized as
deferred revenue on a straight-line basis from the beginning of the agreement until August 2018.
As of June 30th, 2016, Basilea had deferred revenues of CHF 83 million related to this contract, CHF 39 million of
which are current liabilities. In January 2016, Stiefel notified Basilea that they no longer intend to continue the
development of alitretinoin in the US. Stiefel’s discontinuation of the alitretinoin program eliminates the potential for
Basilea to receive any payments from the partnership beyond August 2018, but the Company maintains the option to
re-acquire US rights and is currently amidst discussions with Stiefel to do so. Toctino contract revenue has made up the
vast majority of Basilea’s total revenue since the initiation of the agreement, with approximately CHF 38 million being
recognized as deferred revenue each year.
Deferred Contract Revenue
From 2010 until the approval of CRESEMBA in 2015, contract revenue was primarily due to deferred recognition of
upfront and milestone payments from the co-development and commercialization agreement with Astellas for
CRESEMBA in the US. Basilea received the initial CHF 75.0 million ($69.8 million) upfront payment in February
2010, which is being recognized as deferred revenue. As of June 30th, 2016, approximately CHF 19.7 million ($20.3
million) of deferred revenue related to this upfront payment remained, CHF 4.7 million of which is presented as a
short-term liability. In September 2014, the FDA accepted Astellas’ NDA for CRESEMBA, resulting in a CHF 12.0
million ($12.6 million) milestone payment to the Company that is being recognized as deferred contract revenue. As
of June 30th, 2016, approximately CHF 8.4 million ($8.7 million) of deferred revenue related to the NDA remained,
CHF 2.0 million ($2.1 million) of which are presented as current liabilities. In March 2015, the FDA approved
CRESEMBA, resulting in a CHF 30.0 million ($30.9 million) payment being recognized as deferred revenue. As of
June 30th, 2016, approximately CHF 23.0 million ($23.7 million) of deferred revenue related to the NDA remained,
CHF 5.3 million ($5.5 million) of which are presented as short-term. These sources of deferred revenue, listed in
Figure 3, currently compose a large portion of the Company’s contract revenues.
Figure 3. Deferred Revenues Related to the Licensing Agreement with Astellas for CRESEMBA
Payment Type Payment Date Payment Amount Outstanding Amount
Upfront February 2010 CHF 75.0 M ($69.8 M) CHF 19.7 M ($20.3 M)
NDA Acceptance September 2014 CHF 12.0 M ($12.6 M) CHF 8.4 M ($8.7 M)
FDA Approval March 2015 CHF 30.0 M ($30.9 M) CHF 23.0 M ($23.7 M)
Source: LifeSci Capital
December 13, 2016
Page 7
Basilea’s has achieved significant top-line growth since 2013, which is greatly due to increases in CRESEMBA contract
revenue. Basilea reported CRESEMBA contract revenue of CHF 13.6 million ($14.1 million) in 2015, which compares
favorably to CHF 5.2 million ($5.7 million) in 2014 and CHF 1.9 million ($2.1 million) in 2013. In the first half of
2016, the Company reported CRESEMBA contract revenue of CHF 9.0 million ($9.3 million), which we estimate will
be maintained in the second half of 2016 to produce full year revenue of CHF 18.0 million ($17.6 million). Growth in
this segment has been primarily derived from the Astellas licensing agreement, as they have been hitting key regulatory
milestones and making associated payments to the Company.
Milestones achieved include the NDA acceptance of CRESEMBA in September of 2014 and subsequent FDA
approval in March of 2015. Since the approval of the product in March 2015, Basilea also began receiving royalties on
net sales. Going forward, the primary source of CRESEMBA contract revenue growth will be due to increasing royalty
revenues from an expansion in the total number of treated patients in the US.
CRESEMBA (isavuconazole): A Broad-Spectrum Antifungal Agent
Basilea’s flagship product, CRESEMBA, is a prodrug of the antifungal isavuconazole with activity against multiple
invasive fungal species. CRESEMBA’s oral and intravenous formulations are approved in the United States for the
treatment of invasive aspergillosis and invasive mucormycosis in adults and in the EU for the treatment of adult
patients with invasive aspergillosis and for the treatment of adult patients with mucormycosis for who amphotericin
is inappropriate. The Company has licensed all US rights to Astellas and is marketing the drug through a partnership
with the dedicated contract sales organization Quintiles in Europe. Additional geographies are covered by distribution
agreements with several partners, including Hikma in the Middle East and North Africa, Grupo Biotoscana in Central
and South America, and Unimedic for the Nordic countries. Basilea is currently in discussions with other potential
distributors for additional territories. As a triazole antifungal, CRESEMBA activity compromises the metabolism
underlying the stability of the fungal cell membrane. Disruption of this pathway impedes growth and survival of the
fungal population.1 In addition, CRESEMBA has a pharmacokinetic profile that makes it compatible with once-daily
oral or intravenous administration.
While invasive fungal infections can occur in healthy individuals, they are most commonly found in individuals with
impaired immune systems function. For example, invasive fungal infections are one of the leading causes of morbidity
and mortality in patients undergoing intensive chemotherapy regimens.2 After successful completion of three Phase
III trials, CRESEMBA was approved by the FDA in March 2015 for the treatment of invasive aspergillosis and
invasive mucormycosis in adults. In addition to receiving Qualified Infectious Disease Product (QIDP) designation in
the US, CRESEMBA has received orphan drug designation, granting Basilea exclusivity for these two indications till
2027.
Mechanism of Action. CRESEMBA is a novel triazole antifungal drug with broad-spectrum activity against a number
of medically relevant fungal species. Administered as the water soluble pro-drug isavuconazonium sulfate,
CRESEMBA is composed of an easily cleaved leaving group conjugated to isavuconazole. This pro-drug is rapidly
transformed after administration to yield the active form, isavuconazole. The structures of the prodrug, active drug
1 Walker, R.C., et al., 2016. Isavuconazonium Sulfate For the Treatmetn of Fungal Infection. Drugs Today 52(2), doi: 10.1358/dot.2016.52.1.2404002. 2 Leventakos, K., et al., 2010. Fungal Infections in Leukemia Patients: How Do We Prevent and Treat Them? Clinical Infectious Diseases 50(3), pp405-415.
December 13, 2016
Page 8
and cleavage by-product are shown in Figure 4. Green shading highlights the components of the active drug before
and after cleavage into the active form.
Figure 4. The Chemical Structure and Production of Isavuconazole
Source: LifeSci Capital
CRESEMBA works by blocking the activity of lanosterol 14-α-demethylase, a member of the cytochrome P450
(CYP450) class of enzymes that is responsible for a key step in the biosynthesis of sterols. This enzyme is specifically
responsible for the conversion of lanosterol to ergosterol. Sterols are a subclass of steroids that play an important role
in the structure and functionality cell membranes. These organic molecules occur naturally in plants, animals and fungi
and regulate membrane permeability and rigidity. Ergosterol is an analog of cholesterol necessary for fungi and
protozoan survival. CRESEMBA impedes ergosterol synthesis through inhibition of lanosterol 14-α-demethylase,
preventing lanosterol conversion to ergosterol. In addition to this triazole ring mediated mechanism of enzyme
inhibition, the side arm of the isavuconazole molecule may enhance its activity through strengthening its affinity to
the drug target. The drug’s activity ultimately results in the inhibition of fungal growth and replication.3
Figure 5 shows the key differences between the chemical structures of lanosterol and ergosterol, which are highlighted
in orange and green, respectively.
3 Donnellay, M.A., et al., 2016. Isavuconazole in the Treatment of Invasive Aspergillosis and Mucormycosis Infections. Journal of
Infection and Drug Resistance, 9, pp79-86.
December 13, 2016
Page 9
Figure 5. Inhibitory Activity of Isavuconazole
Source: LifeSci Capital
Safety Profile. As a water-soluble prodrug, CRESEMBA can be administered orally or intravenously, and does not
require co-administration with cyclodextrin, a potentially nephrotoxic compound required for the intravenous delivery
of many other antifungals. CRESEMBA was shown to have a superior safety profile with fewer treatment related
adverse events compared to voriconazole in the Phase III SECURE trial treating aspergillosis patients. CRESEMBA
was associated with a reduction in drug related adverse events. Patients in the isavuconazole treatment arm had a lower
rate of hepatobiliary disorders (p=0.016), eye disorders (p=0.002) and skin disorders (p=0.037) as compared to
voriconazole. In addition, CRESEMBA demonstrated consistent plasma levels and the ability to be safely administered
in renally impaired patients.
Preclinical Data. CRESEMBA demonstrated preclinical activity against the medically-relevant invasive mold species
aspergillosis and mucormycosis, and some Candida species and other prevalent fungal pathogens. In a preclinical study
with 72 Mucorales clinical isolates, including 12 different species, CRESEMBA demonstrated efficacy against all but
those of Mucor circinelloides, and also had differential levels of potency against the other strains.4 In another study that
included drug-resistant species of Candida, CRESEMBA had activity against many drug resistant strains, displaying an
efficacy profile similar to that of antifungal market-leader, Pfizer’s (NYSE: PFE) Vfend (voriconazole). In a mouse
model of Aspergillus fumigatus, CRESEMBA demonstrated exposure-time and concentration dependent activity against
both wild-type and most triazole-resistant isolates of Aspergillgus fumigatus.5
Invasive Fungal Infections
Invasive fungal infections (IFIs) are responsible for more than 1.3 million deaths worldwide each year and are the
leading cause of infection-related morbidity and mortality in patients with hematological malignancies, acute leukemia,
myelodysplatic syndromes, and those undergoing hematopoietic stem cell transplants.6 This threat is especially acute
in patients with prolonged neutropenia and those undergoing protracted immunosuppressive treatment. The
4 Arendrup, M.C., et al., 2015. In Vitro Activity of Isavuconazole and Comparators against Clinical Isolates of the Mucorales
Order. Antimircrobial Agents and Chemotherapy, 59(12), pp7735-7742. 5 Seyedmojtaba, S., et al., 2015. Pharmacokinetics of Isavuconazole in an Aspergillus fumigatus Mouse Infection Model.
Antimicrobial Agents and Chemotherapy, 59(5), pp2855-2866. 6 Vazquez, JA, et al., 2013. Invasive fungal infections in transplant recipients. Therapeutic Advances in Infectious Disease, 1(3),
pp85-105.
December 13, 2016
Page 10
incidence of invasive fungal infections (IFIs) has continued to rise, even with advances in their prevention.7,8 The most
common invasive fungal pathogens are from the genera Aspergillus, Candida, and Mucomycetes.
Invasive aspergillosis (IA) infections account for a large number of life-threatening IFIs cases in immunocompromised
patients, and invasive candidiasis is the fourth most common hospital associated bloodstream infection in the US.9 IA
is especially common in patients with hematologic malignancies and those undergoing hematopoietic stem cell
transplantations, with reported mortality rates as high as 90% in some patient groups.10 AI infection are especially
concerning in AML patients during the period of immunosuppression following their first cycle of chemotherapy and
can compromise downstream therapeutic measures for AML. Similar to IA, mucormycosis infections are frequently
found in patients with hematologic malignancies and patients undergoing transplantations.11 While substantially less
common, mucorales infections can have mortality rates of 40-80%.
The potentially fatal outcome of these infections is underscored by the existence of antifungal prophylaxis
recommendations and research for at-risk patients.12,13 These prophylactic measures have been put into place in an
attempt to curtail the growing issue of antifungal resistance, and the failure of many first-line treatments to be potent
against a wide array of potential invasive species. With a favorable safety profile and broad-spectrum activity against
invasive fungal species, CRESEMBA may help address the growing medical need for new antifungal agents.
Causes and Pathogenesis. Invasive fungal infections occur when the immune system fails to recognize or effectively
attack when these microorganisms breach the skin, eyes, reproductive tract, lungs, gastrointestinal tract, or
bloodstream. Invasions of seed quantities of these microorganisms are usually resolved with natural immune
intervention in healthy individuals. However, people with compromised immune systems may not be able to eliminate
these pathogens before they proliferate to critical levels. Neutrophils comprise the majority of circulating white blood
cells and are chiefly responsible for destroying pathogens found in the blood. With fewer of these white blood cells
in circulation, patients with neutropenia due to any type of chronic or transient condition are more likely to have an
infection take hold.14
In addition to general exploitation of a weakened immune response, some opportunistic fungi possess a virulence
factor that allows them to undergo a reversible morphological transformation from a unicellular form to a filamentous
hyphal growth form. The transformation is represented by the images in Figure 6. Commonly seen in Candida species,
7 Debourgongne, A., et al., 2016. Emerging Infections Due to Filamentous Fungi in Humans and Animals: Only the Tip of the
Iceberg. Environmental Microbial Reports, 8(3), pp332-342. 8 Enoch, D.A., et al., 2006. Invasive Fungal Infections: a Review of Epidemiology and Management Options. Journal of Medical
Microbiology, 55, pp809-818. 9 Lewis, RE, 2009. Overview of the changing epidemiology of candidemia. Current Medical Research and Opinion, 25(7), pp1732-
1740. 10 Dagenais, T.R., et al., 2009. Pathogenesis of Aspergillus fumigatus in Invasive Aspergillosis. Clinical Microbiology Reviews, 22(3),
pp447-465. 11 Pagano, L., et al., The Epidemiology of Fungal Infections in Patients with Hematologic Malignancies: The SEIFEM-2004
Study. Haematologica, 12 Cornely, O.A., et al., 2009. Primary Prophylaxis of Invasive Fungal Infections in Patients With Hematologic Malignancies.
Recommendations for the Infectious Diseases Working Party of the German Society of Haematology and Oncology.
Haematologica, 94(1), 13 Pound, M.W., et al., Overview of Treatment Options for Invasive Fungal Infections. Medical Mycology, 49(6), pp561-580. 14 Drewniak, A., et al., 2013. Invasive Fungal Infection and Impaired Neutrophil Killing in Human CARD9 Deficiency. Blood,
121, pp2385-2392.
December 13, 2016
Page 11
this switch has been correlated with pathogenicity and is thought to enable these microorganisms to adapt to new
environments and aid in host invasion.15 Regardless of morphological form, the unchecked growth of fungi
populations in the body can result in vessel occlusion, renal toxicity, and immune-mediated systemic shock that can
culminate in multiple organ failure.16 Furthermore, many fungal species secrete toxins that can aggravate the health of
the host through a variety of mechanisms. Procreation of fungi in the eyes or lungs can result in blindness or
obstruction of airways, respectively.17,18
Figure 6. Fungi Morphological States
Source: Thompson, 2011
Diagnosis and Symptoms. Depending on the species and site of infection, patients may present with fever, rashes,
malaise, gastrointestinal disruptions, and difficulty breathing. Unfortunately, bacteria and antifungal infections are
often undistinguishable in their early stages. This often necessitates the empiric commencement of treatment before
the underlying microorganism is identified. Determining the culprit fungal species after an IFI is suspected is also a
diagnostic challenge. While DNA and antibody tests exist for some fungal species, many of these pathogens can only
be positively identified through observation of morphological and metabolic characteristics after sample collection,
and cultivation in a laboratory. Respiratory fungal infections can sometimes be diagnosed via imaging systems such as
x-rays and CT scans.
15 Thompson, D.S., et al., 2011. Coevolution of Morphology and Virulence in Candida Species. Eukaryotic Cell, 10(9), pp1173-
1182. 16 Gandhi, B.V, et al., 2005. Systemic Fungal Infections in Renal Diseases. Journal of Postgraduate Medicine, 51 (S1), pp1:30-6. 17 Klotz, S.A., et al.,2000. Fungal and Parasitic Infections of the Eye. Clinical Microbiology Review, 13(4), pp662-685. 18 Limper, A.H., 2010. An Official American Thoracic Society Statement: Treatment of Fungal Infections in Adult Pulmonary
and Critical Care Patients. American Thoracic Society Documents, 183, pp96-128.
December 13, 2016
Page 12
However, the species may not be positively determined by this method. An example of a chest radiographic diagnostic
positive for invasive aspergillosis is shown in Figure 7. In this figure a white arrow points towards an area of abnormal
white opacity that may be indicative of the presence of invasive fungal growth in the lung. In this particular clinical
case the presence of invasive aspergillosis was positively identified after observation of this radiographic finding. More
advanced diagnostic technologies employing nanoparticle technology show promise, but have not yet advanced
beyond early clinical development.19 Cultivation of a fungal species for laboratory analysis can take weeks, and
underscores the need for additional broad spectrum antifungals.20
Figure 7. Radiograph of Invasive Aspergillosis
Source: Chen, 2001
Treatment. Polyenes, triazoles and echinocandins are the three primary families of prescription antifungal agents
used to treat IFIs. Amphotericin B, a polyene, has historically been the go-to treatment for life-threatening IFI’s.
However, due to the frequency of drug related adverse events, the use of amphotericin B has declined in lieu of safer
alternatives.21 Lipid-based formulations of amphotericin have also become a popular treatment choice for certain
IFIs. Introduced in the 1990’s, triazoles such as fluconazole have also been used as an alternative to amphotericin B.
The emergence of resistant Candida strains has dissuaded the medical community from using fluconazole without clear
evidence. For IA, voriconazole has emerged as a preferred treatment, but side-effects, potential drug interactions, and
unreliable patient to patient pharmacokinetics have prevented its more wide-spread adoption as a primary resource.22
Merck’s (NYSE: MRK) Noxafil (posaconazole) is currently approved for the prophylaxis of invasive Aspergillus and
Candida infections in patients who are at high-risk of developing these infections due to being severely
immunocompromised, such as hematopoietic stem cell transplant (HSCT) recipients with graft-versus-host disease
19 Mabbott, S., et al., 2016. From Synthetic DNA to PCR Product: Detection of Fungal Infections Using SERS. Faraday
Discussions, 187, pp461-472. 20 Antinori, S., et al., 2016. Candidemia and Invasive Candidiasis in Adults: A Narrative Review. European Journal of Internal
Medicine, 16, S0953-6205. 21 Sanglard, D., et al., 2016. Activity of Isavuconazole and Other Azoles against Candida Clinical Isolates and Yeast Model
Systems with Known Azole Resistance Mechanisms. Antimicrobial Agents and Chemotherapy, 60(1), pp229-238. 22 Wilson, D.T., et al., 2016. Role of Isavuconazole in the Treatment of Invasive Fungal Infections. Therapeutics and Clinical Risk
Management, 12, pp1197-1206.
December 13, 2016
Page 13
(GVHD) or those with hematologic malignancies with prolonged neutropenia from chemotherapy. While not
indicated for treatment, it is often used sequentially in infections that are non-responsive or in patients who are unable
to tolerate amphotericin B. However, documented complications of intravenous posaconazole use in patients with
sub-optimal creatinine clearance has impeded its wider use.23 Introduced in the 2000s, echinocandins have been used
to treat refractory IA and candidiasis. Unfortunately, the lack of an oral ehinocandin formulation and the inability to
demonstrate efficacy against mucormycetes has dampened their broader utility.24 Isavuconazole’s availability in both
IV and oral formulations, and broad spectrum of activity that includes Aspergillus spp and Mucormycetes, has positioned
it as a potential first line IFI treatment, and as an option for the treatment of refractory IFIs.
CRESEMBA Market Information
Epidemiology. Invasive fungal infections (IFIs) have grown in frequency, and are increasingly recognized as a serious
threat to critically-ill, elderly, and pediatric patients. This increase in invasive fungal infections has grown in line with
immune-system compromising conditions, especially those mitigated by protracted cancer treatments.25 IFIs,
especially those caused by the presence of Aspergillus fumigatus, are also becoming an increasing burden in patients with
cystic fibrosis.26 IFIs have been progressively recognized for the role they play in the morbidity of diabetes mellitus
patients.27 The escalation in the prevalence of invasive fungal infections has been compounded by rising rates of
resistance to current therapies, and the inability of many antifungals to effectively treat clinically relevant emerging
species.
Market Size. The compound annual growth rate (CAGR) of worldwide antifungal sales is steadily increasing, and is
indicative of CRESEMBA’s potential market opportunity. A graphical breakdown of this growth is shown in Figure
8.
23 Clark, N.M., et al., 2015. Posaconazole: Use in the Prophylaxis and Treatment of Fungal Infections. Seminars in Respiratory
Clinical Care Medicine. 36(5), pp767-785. 24 Eschenauer, G., et al., 2007. Comparison of Echinocandin Antifungals. Therapeutic Clincial Risk Management. 3(1), 71-97. 25 Gullo, A., 2009. Invasive Fungal Infections: The Challenge Continues. Drugs, 69, pp65-73. 26 Horre, R., 2010. Fungal Respiratory Infections in Cystic Fibrosis: A Growing Problem. Medical Mycology, 48(S1), ppS1-S3. 27 Poradzka, A., et al., 2013. Clinical Aspects of Fungal Infections in Diabetes. Acta Poloniae Pharmaceutica,(70)4, pp587-596.
December 13, 2016
Page 14
Figure 8. Worldwide Antifungals Market
Source: Basilea Presentation
In addition to a general increase in IFIs, there is a growing prevalence of IFI’s caused by the two fungal types
CRESEMBA has been approved to treat: aspergillus and mucorales. A breakdown of the approximate number of
confirmed US cases per year for each of these subtypes is shown in Figure 9. IFIs caused by species of the Aspergillus
genus are attributable towards approximately 8,000 cases per year, while those caused by species of the Mucorales
order are estimated to occur around 700 times per year.
Figure 9. Frequency of Fungal Pathogens
Type of Pathogen ~ US Cases / Year
Aspergillosis 8,000
Mucormycosis 700
Source: LifeSci Capital
Clinical Data Discussion
Basilea has conducted three Phase III studies, shown in Figure 10, that demonstrated the pharmacokinetics, safety,
and efficacy of CRESEMBA for the treatment of different fungal infections in patients with and without renal
impairment. The VITAL and SECURE Phase III trials demonstrated the efficacy of CRESEMBA for the treatment
of IFI’s caused by mucormycosis and aspergillosis, respectively. The ACTIVE Phase III study revealed that
CRESEMBA’s safety profile is comparable to that of caspofungin, however, CRESEMBA did not meet the primary
endpoint of non-inferiority to caspofungin for the treatment of Candida infections. Basilea’s partner Astellas has also
conducted several drug interaction studies to examine the use of CRESEMBA in tandem with other pharmaceuticals,
December 13, 2016
Page 15
which will be an important component of any regulatory filing. Data from the VITAL and SECURE Phase III trials
have been published, as detailed below.
Figure 10. CRESEMBA Phase III Trials
Trial Primary Endpoint Design Details
VITAL Phase III
Non-inferiority to
voriconazole in all-cause
mortality through day 42
146 Patients
Open Label
Interventional
Met Primary Endpoint
Efficacy data used for
invasive Aspergillosis in
renally impaired patients
and invasive
mucormycosis indications
SECURE Phase III
Non-inferiority to
voriconazole in all-cause
mortality through day 42
516 Patients
Randomized
Double-Blind
Interventional
Met Primary Endpoint
Efficacy data used for
invasive aspergillosis
indication
ACTIVE Phase III
Non-inferiority to
caspofungin/voriconazole
at end of IV stage of
therapy
440 Patients
Randomized
Double-Blind
Primary endpoint not
achieved
Comparable secondary
endpoint
Demonstrated Safety
profile similar to
caspofungin
Data demonstrates
potential for use as oral
step-down
Source: LifeSci Capital
VITAL Phase III Trial for the Treatment of Renally-Impaired Aspergillosis and Rare Fungi
The VITAL Phase III trial was designed to evaluate the safety and efficacy of isavuconazole in the treatment of
invasive fungal infections in renally-impaired aspergillus patients. The primary endpoint was overall response as
determined by a comprehensive, independent data review according to pre-specified criteria. Results from this study
demonstrated that CRESEMBA has efficacy against mucomycosis, a rapidly progressing, aggressive fungal infection
associated with high morbidity and mortality rates. CRESEMBA demonstrated similar efficacy to historical
amphotericin B data with a satisfactory safety and tolerability profile. Key sub-group data from VITAL’s matched,
case-controlled analysis bolstered registration package for the mucormycosis indications for CRESEMBA in the US
and Europe. This trial was completed in 2013 and a detailed analysis of the results was recently published in The Lancet
Infectious Diseases.28
28 Marty, F.M., et al., 2016. Isavuconazole Treatment for Mucomycosis: A Single-Arm Open-Label Trial and Case Control
Analysis. The Lancet Infectious Diseases, 16(7), pp828-837.
December 13, 2016
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Trial Design. The VITAL Phase III trial was a single-arm, interventional, open-label study that enrolled adult patients
with an invasive fungal infection caused by rare fungi.29 In 34 centers worldwide, 147 patients followed an oral or
intravenous dose-loading protocol that consisted of six doses of 200 mg of CRESEMBA every 8 hours, followed by
a daily 200 mg maintenance dose. Utilizing the Fungi-Scope Registry, these isavuconazole-treated patients were case-
matched to patients who were treated with amphotericin B. The Fungi-Scope registry is a database containing patient
cases caused by emerging invasive fungal diseases. Case-matching patients in the Fungi-Scope registry allowed for a
clearer picture of comparative outcomes. The primary endpoint of this study was overall response at day 42 as assessed
by an independent data-review committee. Secondary endpoints included evaluation of all-cause mortality at days 42
and 84.
Efficacy Results. In the VITAL Phase III trial, CRESEMBA demonstrated similar efficacy to amphotericin B in case
controlled matches of invasive mucormycosis infections. This study demonstrated that CRESEMBA can be used as a
primary treatment for mucormycosis, or for intolerant or drug refractory patients. By day 42 post initiation of
isavuconazole treatment, 43% of patients achieved stable disease and 11% experienced a partial response. The day 42
all-cause mortality of 33% was similar to that of 39% in the case-control amphotericin B matches. The mortality rate
of inadequately treated mucormycosis infections in some patient sub-groups is cited to be as high as 90%.30 Figure
11 shows the results of a Kaplan-Meier analysis of VITAL patients compared to case-matched controls, including a
hazard ratio (HR) and 95% confidence interval. Circles denote patients who were censored on the day of their last
available survival status. The results from this analysis illustrate isavuconazole’s similar efficacy to amphotericin B.
Figure 11. Kaplan-Meier Analysis of VITAL Phase III Trial Patients
Source: Marty, F.M., et al., 2016
Safety Results. Mortality did not differ significantly between VITAL study participants and case-controlled
amphotericin B matches. The most common adverse events (AEs) were vomiting (32%) pyrexia (27%), diarrhea
(27%), nausea (27%) and constipation (22%). While 95% of trial enrollee’s experienced at least one AE, this not
unexpected in patients with serious invasive mold infections and associated co-morbidities.
29 https://clinicaltrials.gov/ct2/show/study/NCT00634049 30 Goldstein, E.J.C., 2009. Recent Advances in the Management of Mucormycosis: From Bench to Bedside. Clinical Infectious
Diseases, 48(12), pp1743-1751.
December 13, 2016
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SECURE Phase III Trial for the Primary Treatment of Invasive Aspergillosis
The SECURE Phase III trial was designed to evaluate the safety and efficacy of CRESEMBA versus vorinconazole
in patients with invasive mold infections. The primary endpoint of this trial was all-cause mortality at day 42 for
CRESEMBA compared to voriconazole. In this study CRESEMBA was found to be non-inferior compared to
voriconazole and had a favorable safety profile. The results from this study support the use of CRESEMBA as a
primary treatment for patients with invasive mold infections.
Trial Design. The SECURE Phase III trial was a double-bind, randomized, global, multi-center, comparative-group
study that enrolled adult patients with an invasive fungal infection or a suspected invasive fungal infection.31 527
patients were randomized 1:1 to receive isavuconazole or voriconazole. The patients were stratified by geography,
active malignancy, and allogenic hematopoietic stem cell transplantation status. The isavuconazole arm received 200
mg intravenous doses three times a day for the first two days and one daily intravenous or oral dose for every day
following. The voriconazole treatment arm received two, 6 mg/kg intravenous doses on the day 1, a 4 mg/kg
intravenous dose on day 2, and once daily oral or intravenous doses of 4 mg/kg from day 3 onwards.
The primary endpoint was all-cause mortality at day 42 for all patients who received at least one dose of the assigned
drug. Safety was evaluated in all patients who received at least one dose of CRESEMBA. This trial was completed in
2013 and detailed analysis of this trial design and pivotal data from this trial were published in The Lancet.32
Efficacy Results. In the Secure Phase III trial, CRESEMBA was found to be non-inferior compared to voriconazole
as a primary treatment for invasive fungal infections. The 42 day all-cause mortality rate for the intent to treat
population was 18.6% in the CRESEMBA arm and 20.2% for voriconazole. The upper bound of the 95% confidence
interval was 5.7%, which falls within the 10% non-inferiority margin to meet the primary endpoint. A modified intent-
to-treat population, containing only patients with a confirmed fungal infection, was 19.6% for the CRESEMBA arm
and 23.3% in the voriconazole arm.
Safety Results. The proportion of treatment-related adverse events (TRAEs) was similar between the two treatment
arms except for AEs affecting the liver, skin, and eye. Patients in the CRESEMBA treatment arm experienced a lower
frequency of hepatobiliary (p=.016), skin (p=0.037) and eye (p=0.002) disorders. These data are shown in Figure 12,
where the y-axis represents the percentage of patients experiencing an adverse event. 96% and 98% of patients in the
CRESEMBA and voriconazole arms experienced at least one AE, which is in line with expectations for patients with
serious invasive mold infections. Drug related adverse events were reported in 42% of patients in the CRESEMBA
arm compared to 60% in the voriconazole arm (p<0.001).
31 https://clinicaltrials.gov/ct2/show/study/NCT00634049 32 Maertens, J.A., et al., 2016. Isavuconazole Versus Voriconazole For Primary Treatment of Invasive Mould Disease Caused by
Aspergillus and other Filamentous Fungi (SECURE): a Phase 3, Randomised-Controlled, Non-Inferiority Trial. The Lancet,
387(10020), pp760-769.
December 13, 2016
Page 18
Figure 12. Safety Profile of CRESEMBA versus Voriconazole by Organ Class
Source: Maertens et al., 2016
Phase III Trial for Isavuconazole Treatment of Candida Infections
In partnership with Astellas, Basilea completed a Phase III study evaluating the use of IV/oral isavuconazole
compared to IV caspofungin and oral voriconazole to treat Candida-based invasive fungal infections in 2015. The
primary endpoint of this trial, an overall positive response and mycological eradication as assessed by an independent
Data Review Committee (DRC), was not achieved. This study demonstrated that isavuconazole has a safety profile
comparable to caspofungin.
Trial Design. The ACTIVE Phase III trial was an interventional, randomized, double-blind study evaluating
isavuconazole for the treatment of candidemia and other invasive candida infections.33 Enrolling over 440 adults in
multiple centers, this study was intended to evaluate oral and intravenous isavuconazole treatment against a regimen
of intravenous caspofungin and oral voriconazole. The trial involved two stages: administration of intravenous
isavuconazole or caspofungin, followed by an additional dosing period with oral /IV formulations. The ACTIVE
Phase III treatment regimens are illustrated below.
Arm 1: IV CRESEMBA Oral CRESEMBA.
Arm 2: IV Caspofungin Oral voriconazole or additional IV caspofungin.
Efficacy Data. The primary endpoint of this trial of a non-inferior overall response after initial intravenous
isavuconazole and caspofungin IV administration was not achieved. However, a key secondary endpoint was attained.
The secondary endpoint of a non-inferior overall response after the transition to oral isavuconazole as compared to
oral voriconazole, or additional IV caspofungin, was achieved.
33 https://clinicaltrials.gov/ct2/show/NCT00413218?term=isavuconazole+candida&rank=1
December 13, 2016
Page 19
Safety Data. In the ACTIVE Phase III trial isavuconazole demonstrated a safety profile comparable to caspofungin
and was consistent with safety data reported in other clinical trials. These safety and efficacy data suggest that
CRESEMBA may have the future potential for inclusion in an oral step-down therapy.
Competitive Landscape
The incidence rate of sepsis due to invasive fungal infections is growing. While gram positive bacteria are still
the leading cause of sepsis, the rate of growth in incidence of fungal-induced sepsis is growing rapidly.34,35 The reason
for this increase may be due to the growing prevalence of drug-resistant invasive fungal species, or due to a lag in the
development of effective antifungals to treat resistant pathogens relative to antibiotics. In addition, these infections
have experienced a shift in prevalence away from common Candida species, with infections caused by Aspergillus and
Mucorales species growing in regularity.36 There is an unmet clinical demand for potent new antifungals with activity
against these invasive species. This demand is underscored by the growing rate of CRESEMBA prescriptions since its
recent introduction to market. With the growth in incidence of IFIs likely to continue, increased physician awareness
of its efficacy and safety profile are important for future growth.
CRESEMBA has shown efficacy against multiple clinically relevant fungal strains. Invasive aspergillosis is now
the second most common IFI, with incidence rates that have kept pace with hematological malignancies.37
Mucormycosis is the second most frequent mold infection, with increasing incidence, exceedingly high mortality, and
few treatment options.38 In Phase III studies CRESEMBA demonstrated the ability to treat IFIs caused by both
aspergillosis and mucorales fungal species. With pivotal data indicating non-inferiority to current treatment options,
and an improved safety and tolerability profile, CRESEMBA is well positioned to become a first-line treatment when
these species are suspected to be present. Figure 13 summarizes CRESEMBA’s indication profile in relation to the
other comparable IFI treatments available. CRESEMBA is just one of three agents with the ability to treat both
Aspergillus and Mucorales based infections.
34 Martin, G.S., et al., 2003. The Epidemiology of Sepsis in the United States From 1979 through 2000. New England Journal of
Medicine. 348(16), pp1546-1554. 35 Martin, G.S., et al., Sepsis, Severe Sepsis and Septic Shock: Changes in Incidence, Pathogens and Outcomes. Expert Review of
Anti-Infective Therapy, 10(6), pp701-706. 36 Richardson., M., 2008. Changing Epidemiology of Systemic Fungal Infections. Clinical Microbiology and Infection, 14(4), pp5-24.
37 Oren, I., 2014. Up to Date Epidemiology, Diagnosis and Management of Invasive Fungal Infections. Clinical Microbiology and
Infection, 20(66), 10.1111/1469-0691.12642.
38 Riley, TT., et al., Breaking the Mold: A Review of Mucormycosis and Current Pharmacological Treatment Options. Annals of
Pharmacotherapy, 50(9), pp747-757.
December 13, 2016
Page 20
Figure 13. Treatment Profiles of Commercialized Antifungals
Drugs Candida Aspergillus Mucorales
CRESEMBA
(isavuconazole)
Ambisome /Amphotec
(amphotericin B)
Cancidas
(caspofungin)
Diflucan
(fluconazole)
Eraxis
(anidulafungin)
Mycamine
(micafungin)
Noxafil
(posaconazole)
Sporanox
(itraconazole)
Vfend
(voriconazole)
Source: LifeSci Capital
CRESEMBA is available in both oral and intravenous formulations. CRESEMBA has demonstrated efficacy in
both oral and intravenous formulations. The availability of an oral formulation has the potential to decrease the clinical
burden of IFI treatment, and may be an important convenience factor for both physicians and patients. In addition
to this critical convenience feature, CRESEMBA’s potency and pharmacokinetic profile makes it amenable to once
daily dosing, reinforcing its accommodating clinical profile and potential use as an oral-step down after intravenous
antifungal treatment.
CRESEMBA has a favorable safety profile for the treatment of invasive aspergillosis. In the SECURE Phase
III study, the CRESEMBA treatment arm experienced a statistically significant reduction in drug-related adverse
events compared to voriconazole. These aspergillosis-infected patients had fewer treatment-emergent adverse events
in important organ classes such as the liver, skin and eyes. CRESEMBA has also demonstrated consistent plasma
levels, and has shown amenability towards use in renally compromise patients. Furthermore, Basilea and Astellas have
conducted numerous Phase I trials that have outlined the possibilities of using CRESEMBA in the elderly, women
using contraception, and other drugs with which it may interact, streamlining its incorporation into clinical practice.39,40
These factors poise CRESEMBA to become the treatment of choice for these infections.
39 Groll, A.H., et al., 2016. Pharmacokinetic Assessment of Drug-Drug Interactions of Isavuconazole With the
Immunosuppressants Clyclosporine, Mycophenolic Acid, Prednisolone, Sirolimus and Tacrolimus in Healthy Adults. Clinical
Pharacology and Drug Discovery, June 8, Epub doi: 10.1002/cpdd.284 40 Wilson, D.T, et al., Role of Isavuconazole in the Treatment of Invasive Fungal Infections. Therapeutics and Clinical Risk
Management, 12, pp1197-1206.
December 13, 2016
Page 21
Zevtera/Mabelio (ceftobiprole medocaril) For Pneumonia and Other Infections
Marketed as Zevtera, and Mabelio, ceftobiprole medocaril is a next generation cephalosporin with activity against many
clinically relevant bacterial species, including methicillin-resistant Staphylococcus aureus (MRSA). Ceftobiprole has
demonstrated activity against clinically relevant bacterial species that are both gram positive and gram negative, many
of which that are associated with hospital acquired bacterial pneumonia (HABP) and community acquired pneumonia
(CABP). This has resulted in the drug becoming the first cephalosporin monotherapy approved for these indications
in Europe after demonstrating non-inferiority to ceftazidime and linezolid for HABP and to ceftriaxone plus linezolid
for CABP in Phase III studies. This indicates that ceftobiprole may have the potential to replace antibiotic combination
therapies commonly used for these indications. Furthermore, its broad-spectrum activity may lead to a label expansion
that could potentially include indications such as acute bacterial skin and skin structure infections (ABSSSIs), and
Staphylococcus aureus based bacteremia (SAB).
Basilea’s plans for ceftobiprole in the US market includes acute bacterial skin and skin structure infections (ABSSSIs),
CABP and Staphylococcus aureus bacteremia (SAB). Two of three cross-supportive Phase III trials are required for US
registration and are expected to launch in the first half of 2017. The first trial will focus on ABSSSIs, with a study in
SAB likely to follow in in the second half of 2017. Ceftobiprole was granted Qualified Infectious Disease Product
(QIDP) status by the US FDA for the potential treatment of CABP and ABSSSIs in August 2015. Basilea has also
signed a contract with BARDA to fund the Phase III programs for this asset. Successful completion of these US Phase
III trials is expected to support regulatory filing for use of the treatment for these additional indications in Europe as
well.
Mechanism of Action. Ceftobiprole targets penicillin-binding protein 2a (PB2a) with high affinity. This binding
affinity confers this agent activity against MRSA. Cephalosporins are a subclass of -lactam antibiotics that that are
less susceptible to -lactamase resistance mechanisms. The general chemical structure cephalosporins and ceftobiprole
in particular are shown in Figure 14. Modifications were made to the core structure at two key sites in order to increase
affinity to PBP2a and stabilize the compound in the presence of many penicillinases.41 The cephalosporin backbone
is contained in the grey sphere, while the two unique side-arms of ceftobiprole are highlighted by green spheres.
Potential pharmacokinetic issues presented by the inherent lipophilicity of this molecule are circumvented through
formulation of this compound as a water soluble pro-drug, ceftobiprole medocaril.42
41 Glinka, T.W., 2002. Novel Cephalosporins For the Treatment of MRSA Infections. Current Opinions in Investigative Drugs, 3,
pp206-217. 42 Moreillon, P., 2008. New and Emerging Treatment of Staphylococcus Aureus Infections in the Hospital Setting. Journal
Compilation European Society of Clincial Microbiology and Infectious Diseases, 14(S3), PP32-41.
December 13, 2016
Page 22
Figure 14. Ceftobiprole Chemical Structure
Source: LifeSci Capital
Through binding of the PBP2a protein, ceftobiprole prevents a key trans-peptidation step in the synthesis of the
bacterial cell wall. This compromises its integrity and prevents the plasticity necessary for bacterial division and
metabolism, ultimately causing lysis-mediated cell death.43
Safety Profile. In both clinical trials and in European clinical practice, ceftobiprole has demonstrated a favorable
safety profile similar that is in line with the cephalosporin drug class. Ceftobiprole was generally well tolerated in
HABP and CABP clinical studies with the most common side effects including nausea, diarrhea, infusion site reactions,
hepatic enzyme elevations, and gastrointestinal and taste disturbances.44 While the overall frequency of adverse side
effects with ceftobiprole treatment are similar to that of its comparators, clinical studies have revealed a difference in
the distribution of side effect type. In a HABP study comparing ceftobiprole to a ceftazidime/linezolid combination
therapy, the ceftobiprole treatment arm had more than a 50% reduction in diarrhea, however, more ceftobiprole
patients experienced hyponatremia.45 Overall, the treatment related adverse events for ceftobiprole are anticipated and
manageable. This drug is not compatible for patients with allergic sensitivity to -lactam antibiotics.
Preclinical Data. In preclinical studies, ceftobiprole was the first -lactam to demonstrate activity against many
clinically relevant bacterial strains including MRSA. It also exhibited activity against other clinically relevant strains
such as Enterococcus faecalis, penicillin-resistant Streptococcus pneumoniae, and resistant Staphylococcus aureus. Confirmation of
the molecular action of ceftobiprole was obtained through structural analysis of the ceftobiprole-PBP2a complex.46
The drug’s activity is supported by numerous in vitro and in vivo studies conducted in both animal models and clinical
43 Lovering, A.L., et al., 2012. Structural Insight Into the Anti-Methicillin Resistant Staphylococcus aureus (MRSA) Activity of
Ceftobiprole. Journal of Biological Chemistry, 14;287(38), pp32096-32102. 44 Liapikou, A., et al., 2015. Ceftobiprole for the Treatment of Pneumonia: a European Perspective. The Journal of Drug Design,
Development and Therapy, 45 Awad, S.S., 2014. A Phase III Randomized Double-Blind Comparison of Ceftobiprole Medocaril versus Ceftazidime Plus
Linezolid for the Treatment of Hospital Acquired Pneumonia. Clinical Infectious Disease, Apr 9, Epub. 46 Lovering, A.L., 2012. Structural Insights into the Anti-Methicillin-Resistant Staphylococcus aureus (MRSA) Activity of
Ceftobiprole. Journal of Biological Chemistry, 287(38), pp32096-32102.
December 13, 2016
Page 23
isolates that that further characterized the agent’s antibacterial action.47,48,49,50 In Figure 15, the results of an assay
using ceftobiprole and vancomycin in a rabbit model of MRSA osteomyelitis is shown. This study demonstrated that
ceftobiprole was able to decrease the amount of colony forming units (CFU) of MRSA in a manner similar to that of
vancomycin. 51
Figure 15. Ceftobiprole in a Rabbit Model of MRSA Osteomyelitis
Source: Saleh-Mghir, 2012
Hospital Acquired Pneumonia and Community Acquired Bacterial Pneumonia
Pneumonia is a bacterial, viral, or other infection of the lung that leads to inflammation of the alveolar tissue.52,53
Roughly 5.6 million cases of infectious pneumonia occur annually in the United States, resulting in more than 1 million
hospitalizations.52 Pneumonia treatment is guided by a joint effort led by the Infectious Diseases Society of America
(IDSA) and the American Thoracic Society (ATS) based on guidelines released in 2007.54 The increased prevalence of
pneumonia caused by drug-resistant strains has complicated the treatment landscape.
47 Farrell, D.J., et al., 2014., Ceftobioprole Activity Against Over 60,000 Clinical Bacterial Pathogens Isolated in Europe, Turkey,
and Israel from 2005 to 2010, Antimicrobial Agents and Chemotherapy, 58(7), pp3882-3888. 48 Saleh-Mghir, A., 2012. Ceftobiprole Efficacy In Vitro against Panton-Valentine Leukocidin Production and In Vivo against
Community-Associated Methicillin-Resistant Staphylococcus aureus Osteomyelitis in Rabbits. Antimicrobial Agents and Chemotherapy,
56(12), pp6291-6297. 49 Fernandez, J., et al., 2010. In Vivo Activity of Ceftobiprole in Murine Skin Infections Due to Staphylococcus aureus and
Pseudomonas aeruginosa. Antimicrobial Agentst and Chemotherapy, 54(1), pp 116-125. 50 Singh, K. and Murray, B.E., 2012. Efficacy of Ceftobiprole Medocaril Against Enterococcus faecalis in a Murine Urinary Tract
Infection Model. Antimicrobial Agents and Chemotherapy, 56(6), pp3457-3460. 51 Saleh-Mghir, A., 2012. Ceftobiprole Efficacy In Vitro against Panton-Valentine Leukocidin Production and In Vivo against
Community-Associated Methicillin-Resistant Staphylococcus aureus Osteomyelitis in Rabbits. 52 Anevlavis, S and Bouros, D, 2010. Community-Acquired Bacterial Pneumonia. Expert Opinions in Pharmacotherapy, 11(3),
pp361-374. 53 Musher, DM and Thorner, AR, 2014. Community-Acquired Pneumonia. New England Journal of Medicine, 371, pp1619-1628. 54 Mandell, LA, et al., 2007. Infectious Diseases Society of America/American Thoracic Society Consensus Guidelines on the
Management of Community-Acquired Pneumonia in Adults. Clinical Infectious Diseases, 44supp2, pp27-72.
December 13, 2016
Page 24
Categorization of Pneumonia. There are several categories of pneumonia that are defined according to the manner
in which infection was acquired:
Hospital-Acquired Bacterial Pneumonia (HABP) – A patient who was admitted without infection and
has been in the hospital for at least two days has a first positive bacterial culture.
VABP (Ventilator-Acquired Bacterial Pneumonia) – A subtype of HABP, this type of pneumonia occurs
when a patient has received mechanical ventilation for at least 24 hours prior to first positive bacterial culture.
HCAP (Healthcare-Acquired Bacterial Pneumonia) – This category includes patients from the
community who have had frequent contact with the healthcare system prior to diagnosis. Hospitalizations
within the last 90 days, residence in a nursing home, or outpatient intravenous therapies are risk factors
associated with HCAP.
CABP (Community-Acquired Bacterial Pneumonia) – CABP describes patients who acquired
pneumonia from normal social contact in the community absent interaction with the healthcare system.
HABP and CABP are caused by unchecked bacteria proliferation in the respiratory tract after exposure from clinical
or other sources. HABP is both one of the most common infections and one of the most life-threatening, with
mortality rates of 30% to 70%.55 HABP and CABP lead to high rates of morbidity and mortality, especially in the
elderly and immune-compromised populations. Often associated with drug-resistant pathogens, HABPs can
substantially increase the length of patient hospital stays and concomitant burden on health care resources.
Furthermore, these infections are often found in patients whose associated comorbidities make them more vulnerable
to medical complications.56
Pneumonia Pathogenesis. CABP and HABP are principally caused by the colonization of the respiratory tract by
pathogenic bacteria. In cases of HABP, this colonization occurs while in contact with medical facilities or clinicians,
and is more likely to involve resistant species that are pervasive in the hospital setting. CABP occurs in individuals
without medical facility contact or clinician intervention. The bacterial species underlying the etiologies of HABP and
CABP can vary. However, the rise in frequency of methicillin-resistant Staphylococcus aureus (MRSA) and other drug
resistant species is a growing concern. The drug resistance of these infections may be enhanced by biofilm formation
in the lungs, and by the expression of other resistance factors such as enzymes that impede the activity of antibiotic
agents. Biofilms are organized aggregates of bacteria whose formation makes them able to resist the impact of
antibiotics. While more commonly seen in ventilator-associated cases of pneumonia, their presence in other types of
pneumonia is a medical concern. Ceftobiprole has demonstrated the ability to remain potency in an vitro S. aureus
biofilm assay.57
While the bacterial species underlying these conditions vary, they almost all lead to a rapid rate of patient decline
without treatment. The myriad potential culprit strains often necessitate commencement of treatment before a specific
diagnosis can be made. Best medical practices call for prompt intervention with a broad spectrum antibiotic. The
55 American Thoracic Society., 2005.Guidelines for the Management of Adults with Hospital-Acquired, Ventilator-Assisted and
Healthcare-Associated Pneumonia. American Journal of Respiratory Critical Care Medicine, 171, pp388-416. 56American Thoracic Society.,2005. Guidelines for the Management of Adults with Hospital-Acquired, Ventilator-Associated,
and Healthcare-Associated Pneumonia. American Journal of Respiratory Critical Care Medicine, 15;171(4), pp388-416. 57 Abbanat, D., et al., Evaluation of the In Vitro Activites of Ceftobiprole and Comparators in Staphylococcal Colony or
Microtitre Plate Biofilm Assays. International Journal of Antimicrobial Agents, 43(1), pp32-39.
December 13, 2016
Page 25
growing rates of resistance to currently available antibiotics underscores the importance of the development of new,
potent agents such as ceftobiprole that are capable of safely treating these life-threatening infections.
Symptoms & Diagnosis. The most common symptoms of pneumonia are malaise, cough, fever, shortness of breath,
sputum production, and chest pain.58 Pneumonia is usually suspected based on a physical examination that includes a
physician listening to a patient’s lungs for sounds of crackling, bubbling, wheezing, or rumbling. Measurements of
oxygen saturation via pulse oximetry and arterial blood gases via arterial blood draws are also recommended, especially
for patients with underlying cardiac and pulmonary conditions.59
Along with clinical signs and symptoms, a pneumonia diagnosis is confirmed with a chest x-ray that very often shows
signs of a lung infiltrate, which is the filling of airspaces with fluid, inflammatory exudates, or cells. If further
characterization is necessary, computer tomography (CT) scans can assist in detecting smaller infiltrates not seen on
x-ray.60
Common tests for pneumonia include complete blood count (CBC) for white blood cell count, two sets of blood
cultures, sputum Gram stain and culture, and urine antigens.58 Although helpful in identifying a pathogen, these tests
are unreliable and only produce culture isolates of S. pneumoniae in 40-50% of cases. However, this test may produce
valuable prognostic information, so current guidelines recommend two sets of blood cultures for hospitalized
pneumonia patients.
Risk-Factor Stratification. There are two major predictive models to help categorize pneumonia severity and the
associated risk of death within 30 days of diagnosis, the Pneumonia Severity Index (PSI) and the CURB65 scale.61 The
PSI index divides patients into five classes of disease severity, with class I to III indicating low risk, IV indicating
intermediate risk, and V indicating high risk. The index takes into account factors like age, coexisting illnesses, and a
variety of other physical, laboratory, demographic, and radiographic findings. Patients with scores in risk class I and
II are usually candidates for outpatient treatment, while patients in risk class IV and V are most often hospitalized.
Risk class III is an intermediate case that requires a judgment call on the part of the clinician.
The CURB65 scoring system is simpler and takes into account only five variables: confusion, blood urea nitrogen
(BUN), respiratory rate, blood pressure, and age. Each factor that makes up CURB-65 is assigned zero or one point
based on specific cut-offs. CURB-65 is easier than the PSI to use in a primary care setting where blood testing and
radiography may not be immediately available.62 A CURB-65 score of 0 or 1 is considered low risk and the physician
may consider outpatient treatment. A score of 3 or more is considered high risk and the patient must be hospitalized,
with consideration given to possible transfer to the intensive care unit if necessary.
58 Lutfiyya, MN et al., 2006. Diagnosis and treatment of community-acquired pneumonia. American Family Physician. 73(3),
pp442-450. 59 Alfageme, I et al., 2005. Guidelines for the diagnosis and treatment of community-acquired pneumonia. Archivos de
Bronconeumologia, 41(5), pp272-289. 60 Katz, DS and Leung, AN, 1999. Radiology of pneumonia. Clinics in Chest Medicine, 20, pp549-562. 61 Fine, MJ et al., 1997. A prediction rule to identify low-risk patients with community-acquired pneumonia. New England Journal
of Medicine, 336(4), pp243-250. 62 Ebell, MH, 2006. Outpatient vs. inpatient treatment of community-acquired pneumonia. Family Practice Management, 13(4),
pp41-44.
December 13, 2016
Page 26
Treatment. Treatment for HABP and CABP is directed towards broad antimicrobial therapy against both typical and
atypical pathogens. Outpatients who have no recent history of antibiotic use or coexisting illnesses are generally
prescribed a macrolide, such as azithromycin, clarithromycin, or erythromycin, or a tetracycline such as doxycycline.
Outpatients with recent antibiotic use, coexisting illnesses, or other risk factors for drug resistant pathogens are usually
given fluoroquinolones such as moxifloxacin, gemifloxacin, or levofloxacin. Patients requiring hospital admission
initially receive intravenous antibiotics, often in combination, and are transitioned to a course of oral antibiotics for a
total of 14 days of combined therapy. Exact treatment regimens may vary according to the specific history and needs
of the patient.
The emergence of drug resistant Streptococcus pneumoniae (DRSP) has complicated the treatment of pneumonia, and
30% of severe S. pneumoniae cases result from bacteria that are fully resistant to one or more commonly used
antibiotics.63 In cases of with suspected CA-MRSA, vancomycin or Zyvox (linezolid) are often preferred due to the
strong anti-MRSA activity of these drugs. With the increasing threat of DRSP and MRSA as causes of HABP and
CABP, alternative broad spectrum antibiotics are necessary in order to cover these resistant strains.
The FDA has recently approved two antibiotics for the treatment of severe cases of CABP, Pfizer’s Tygacil (tigecycline)
and Actavis/Allergan’s Teflaro (ceftaroline). Although Tygacil (tigecycline) was shown to be non-inferior to levofloxacin
in clinical trials, an increased rate of gastrointestinal adverse events has hampered its use. Teflaro is indicated for
treatment of CABP caused by S. pneumoniae and methicillin-susceptible S. aureus (MSSA), but there is no clinical data
supporting its use in pneumonia caused by penicillin-resistant Streptococcus pneumoniae (PRSP) or MRSA.
Pneumonia Market Information
Epidemiology. Every year in the United States, 5.6 million CABP cases are diagnosed and over 1 million require
hospitalization.64 CABP is responsible for 50,000 estimated deaths per year in the US alone.65 There are approximately
1.3 million cases of HABP in the US each year. Pneumonia is a leading cause of death and the most common cause
of infection-related mortality. Presently, the 30-day case fatality rate is 8.5% and 3.8% for inpatient and outpatient
CABP, respectively.66 The fatality rate can rise to as high as 10% when the pneumonia is caused by certain types of
multi-drug resistant (MDR) pathogens such as drug-resistant S. pneumoniae (DRSP) or methicillin-resistant S. aureus
(MRSA).67 The CDC estimates that approximately 1.2 million cases of drug-resistant S. pneumoniae infections, including
pneumonia infections, occur each year leading to 7,000 deaths. Although MRSA is a less common cause of pneumonia
than S. pneumoniae, cases involving this pathogen tend to be more virulent and more difficult to treat. One study
reported a 30-day mortality rate as high as 20% for CABP caused by MRSA.68,69
63 Antibiotic resistance threats in the United States, 2013. Centers for Disease Control and Prevention. 64 Anevlavis, S and Bouros, D, 2010. Community-Acquired Bacterial Pneumonia. Expert Opinions in Pharmacotherapy, 11(3),
pp361-374. 65 Watkins, R.R. and Lemonovich, T.L., 2011. Diagnosis and management of community-acquired pneumonia in adults.
American Family Physician, 83, pp1299-1306. 66 Yu, H, et al., 2012. Clinical and Economic Burden of Community-Acquired Pneumonia in the Medicare Fee-for-Service
Population. Journal of the American Geriatrics Society, 60(11), pp2137-2143. 67 Gross, AE, et al., 2014. Epidemiology and Predictors of Multidrug-Resistant Community-Acquired and Healthcare-
Associated Pneumonia. Antimicrobial Agents and Chemotherapy, 58(12), pp5262-5268. 68 Tadros, M, et al., 2013. Epidemiology and outcome of pneumonia caused by methicillin-resistant Staphylococcus aureus
(MRSA) in Canadian hospitals. PLoS One, 8, e75171. 69 Remington, L.T. and Sligl, W.I., 2014. Community-acquired pneumonia. Current Opinion in Pulmonary Medicine, 20, pp215-224.
December 13, 2016
Page 27
HABP is cited to account for approximately 15% of all hospital-associated infections and is associated with an increase
in morbidity and mortality, especially in vulnerable patient populations such as infants, the elderly, and the immune-
compromised.70 Staphylococcus aureus, Pseudomonas aeruginosa and Enterobacteriaceae are the most frequently found bacterial
species in these patients, with 50-80% of the S. aureus cases demonstrating methicillin resistance.71 While primarily
associated with patients within intensive care units, these infections are now frequently reported in general wards as
well. Studies have found that there are between 2.45 and 3.3 cases of HABP from non-intensive care units per 1,000
discharges. These infections constitute a tremendous burden on the health care system.
Market Estimates. Pneumonia bears a substantial cost on the healthcare system and society. Additionally, the rise of
resistant bacteria has substantially added to this burden. The mean cost for treating a CABP patient is $8,606 overall,
reflecting costs of $18,670 and $2,394 for inpatient and outpatient treatments, respectively.72 CABP primarily affects
children less than 5 years of age and people over 65 years of age, but can also affect working age adults leading to lost
productivity costs.73 Overall, the economic burden of community-acquired pneumonia is estimated to be over $17
billion annually, most of which is spent on hospital care.74 The economic burden in the US of drug-resistant S.
pneumoniae alone is estimated to be $90 million in direct medical costs and $230 million in total.
Beta lactams, macrolides, and fluoroquinolones make up the bulk of the market especially for susceptible strains
causing pneumonia. However, there is unmet need for antibiotics targeting resistant strains like DRSP and CA-MRSA,
which cause more severe disease and complicate treatment. Patients infected with MDR organisms can require more
than double the hospital stay as patients infected with non-MDR pathogens,75 and one study suggested that one in
seven non-ICU CABP patients experience failure of initial antibiotic therapy.76 Premium pricing relative to competing
antibiotics may even be possible for a drug with a cleaner safety profile than existing therapies.
Most of the frequently prescribed antibiotics for pneumonia are generic. Figure 16 highlights the commercially
available branded drugs that are utilized to treat CABP, HABP, as well as other serious bacterial infections. Of the
drugs listed, only Zyvox is indicated for HABP. Tygacil has serious tolerability issues and carries a boxed warning from
the FDA on an increased risk of death, which has hampered adoption. Teflaro’s commercial launch has been slow,
although this is typical of newly-introduced intravenous antibiotics.
70 Davis, J., et al, The Breadth of Hospital Acquired Pneumonia: Nonventilated versus Ventilated Patients in Pennslyvannia.
Pennslyvannia Patient Safety Advisory, 9(3), pp 99-105. 71 Barbier, F., et al., Hospital Acquired Pneumonia and Ventilator – Associated Pneumonia: Recent Advances in Epidemiology
and Management. Current Opinions in Pulmonary Medicine, 19(3), pp 216-228. 72 Yu, H, et al., 2012. Clinical and Economic Burden of Community-Acquired Pneumonia in the Medicare Fee-for-Service
Population. Journal of the American Geriatrics Society, 60(11), pp2137-2143. 73 Broulette, J. et al., 2013. The incidence rate and economic burden of community-acquired pneumonia in a working-age
population. American Health & Drug Benefits, 6(8), pp494-503. 74 File, TM Jr, and Marrie, TJ, 2010. Burden of community-acquired pneumonia in North American adults. Postgraduate Medicine,
122(2), pp130-141. 75 Gross, AE, et al., 2014. Epidemiology and Predictors of Multidrug-Resistant Community-Acquired and Healthcare-
Associated Pneumonia. Antimicrobial Agents and Chemotherapy, 58(12), pp5262-5268. 76 Ramirez, J.A. and Anzueto, A.R., 2011. Changing needs of community-acquired pneumonia. Journal of Antimicrobial
Chemotherapy, 66(suppl 3): iii3-iii9.
December 13, 2016
Page 28
Figure 16. Worldwide Sales in Millions for Branded CABP Antibiotics
Antibiotic 2013 2014 2015
Tygacil (tigecycline) Pfizer $358 $323 $304
Zyvox (linezolid) Pfizer $1,353 $1,352 $883
Teflaro (ceftaroline) Actavis/Allergan $44 $70 $125
Total $1,755 $1,745 $1,312
Source: LifeSci Capital
Acute Bacterial Skin and Skin Structure Infections (ABSSSI)
Acute bacterial skin and skin structure infections (ABSSSIs) encompass a broad range of microbial skin and associated
subcutaneous tissue infections.77 According to FDA guidelines, ABSSSIs include cellulitis and erysipelas, wound
infections, and major cutaneous abscesses.78 Clinically, ABSSSIs can have a wide variety of disease severity, from mild
cellulitis to serious necrotizing infections.77 . In 2010, there were over 800,000 hospital admissions for ABSSSIs, which
reflects a 33% increase since 2004. During this time, the proportion of ABSSSI cases caused by methicillin-resistant
Staphylococcus aureus (MRSA) grew from 27% to 41%, underscoring the rising prevalence of resistant bacterial strains
and growing difficulty in successfully treating ABSSSIs.
Due to inadequate coverage of the underlying pathogen, a failure rate up 25% has been reported with the first selected
antibiotic. Successive treatment failures are a major driver of hospitalizations for this indication. This protracted course
of care not only creates increased patient morbidity and risk of mortality, but also translates into a financial and medical
resource burden. As treatment must often commence before the underlying pathogen is positively identified, use of a
broad spectrum agent with activity against the most common resistant species is imperative. Ceftobiprole’ss potency
against MRSA, as well as other clinically impactful strains, positions this agent to play an important role in the front-
line of treating these infections, pending demonstration of efficacy and US FDA approval after a Phase III trial.
ABSSSI Market Information
Epidemiology. In the United States, there are nearly 900,000 hospitalizations for ABSSSI per year, second only to
pneumonia among infections leading to hospitalization.79 In a study of US emergency room patients, 60% of ABSSSI
cases were the result of infection with CA-MRSA,80 although the prevalence of MRSA varies widely across geographic
77 Moran, G.J. et al., 2013. Acute bacterial skin infections: developments since 2005 Infectious Diseases Society of America
(IDSA) guidelines. The Journal of Emergency Medicine, 44(6), ppE397-E412. 78 Guidance for Industry - Acute Bacterial Skin and Skin Structure Infections: Developing Drugs for Treatment.
http://www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/ucm071185.pdf 79 Jenkins, T.C. et al., 2014. Antibiotic prescribing practices in a multicenter cohort of patients hospitalized for acute bacterial
skin and skin structure infection. Infection Control and Hospital Epidemiology, 35(10), pp1241-1250. 80 Moran, GJ, et al., 2006. Methicillin-resistant S. aureus infections among patients in the emergency department. New England
Journal of Medicine, 355, pp666-674.
December 13, 2016
Page 29
regions. Roughly 30% of humans are carriers of S. aureus,81 and MRSA is thought to have colonized 2% of the general
population and 12% of hospital patients in the US. In 2011, the CDC found 80,000 severe cases of invasive MRSA
that led to 11,000 deaths; roughly 20,000 of these infections were community-acquired.82 MRSA was once limited to
hospitals and the rise of MRSA in the community setting reflects a major shift in the epidemiology of ABSSSIs. This
increased MRSA prevalence has also led to a greater number of hospitalizations for ABSSSIs.
Market Estimates. Antibiotic treatment lasting longer than 10 days was necessary in 80% of ABSSSI cases, which is
a driver of the soaring healthcare costs associated with ABSSSIs.79 The average total cost of a hospitalization to treat
an ABSSSI was $9,388 in 2011.83 When a MRSA infection is community acquired, the typical cost of treating a skin
infection ranges from $7,000-$20,000.84 The treatment of ABSSSIs is concentrated within the healthcare system, with
the top 500 hospitals covering an estimated 40% of cases and 1,900 hospitals covering roughly 80% of cases. The total
MRSA therapeutics market worldwide was estimated to be $2.7 billion in 2011 and is expected to grow to $3.5 billion
by 2019. The CDC estimates that the total economic costs of bacterial resistance are as much as $35 billion per year.82
Novel antibiotics that overcome bacterial resistance can substantially reduce this considerable economic burden and
should be eligible for premium pricing.
Branded antibiotics currently used to treat ABSSSI are Cubist/Merck’s (NYSE: MRK) Cubicin (daptomycin), Pfizer’s
(NYSE: PFE) Tygacil (tigecycline), Pfizer’s Zyvox (linezolid), and Actavis/Allergan’s (NYSE: ACT) Teflaro (ceftaroline).
Vancomycin is a widely used and well-known antibiotic whose sales command 70% of the market based on days of
therapy, although the introduction of generic forms has substantially reduced revenue generated from vancomycin
sales. In addition, a recent judicial ruling invalidated two key patents on Cubicin, which will allow market entry of
generics as early as 2016.
Figure 17 shows the last three years of sales for the main branded antibiotics used to treat ABSSSIs. Given evolving
resistance patterns and safety concerns, the antibiotic market is dynamic and innovative treatments are welcomed.
Given the 900,000 patients hospitalized for ABSSSIs each year, the market for ceftobiprole as a frontline monotherapy
could easily exceed $1 billion annually. Premium value-based pricing relative to competing antibiotics may be possible
for a drug with a cleaner safety profile than existing therapies.
81 Gorwitz RJ, et al., 2008. Changes in the prevalence of nasal colonization with Staphylococcus aureus in the United States,
2001–2004. Journal of Infectious Disease, 19:7, pp1226-1234. 82 Antibiotic resistance threats in the United States, 2013. Centers for Disease Control and Prevention. 83 Khachtryan, A, et al., 2014. Rising US Hospital Admissions for Gram+ Acute Bacterial Skin and Skin Structure Infections (ABSSSI).
Society for Hospital Medicine, March 24-27, 2014. 84 Lee, B.Y. et al., 2013. The economic burden of community-associated methicillin-resistant Staphylococcus aureus (CA-
MRSA). Clinical Microbiology and Infection, 19(6), pp528-536.
December 13, 2016
Page 30
Figure 17. Worldwide Sales in Millions for Branded ABSSSI Antibiotics
Antibiotic 2013 2014 2015
Cubicin (daptomycin) Merck $908 1,046 $1,127
Tygacil (tigecycline) Pfizer $358 $323 $304
Zyvox (linezolid) Pfizer $1,353 $1,352 $883
Teflaro (ceftaroline) Allergan $44 $70 $125
Total $2,663 $2,791 $2,439
Source: LifeSci Capital
Staphylococcus aureus Bacteremia
Staphylococcus aureus bacteremia (SAB) is a growing threat compounded by the prevalence of drug resistant strains such
as MRSA. The rise in incidence and high morbidity and mortality rates associated with this condition have become an
urgent medical problem. While skin and mucosa colonization of S. aureus is not inherently problematic, introduction
and unchecked growth of this opportunistic pathogen in the soft tissues and bloodstream can have devastating clinical
outcomes. Systemic spread may be precipitated by an abrasion, surgical contamination, or intravascular devices, and
further facilitated by immunosuppression, bacterial expression of drug resistance factors, and delay in appropriate
medical intervention.
As the efficacy of last-resort agents such as vancomycin has dwindled towards progressively drug resistant strains, the
development of new, efficacious, and broadly-acting antibiotics is imperative. There are currently very few approved
agents against SAB due to MRSA on the market, and many of those available have safety and tolerability profiles that
restricts their ready use. With both an amenable tolerability profile in the treatment of pneumonia, and the safety
features characteristic of a cephalosporin, ceftobiprole is well positioned to address these infections pending Phase III
completion and FDA approval.
Clinical Data Discussion
Ceftobiprole’s safety and efficacy for the treatment of community and hospital acquired bacterial pneumonia were
evaluated in multiple European Phase III studies. In 2007 Basilea completed a Phase III trial for the use of ceftobiprole
in in HABP patients. A Phase III study affirming the safety and efficacy of ceftobiprole to treat community acquired
pneumonia was completed in 2008. Approval and commercialization in 13 European countries followed the successful
completion of these trials. A US Phase III study to evaluate the safety and efficacy of ceftobiprole for the treatment
of skin and other infections is expected to begin in the first half of 2017. A summary of Basilea’s pivotal trials for
ceftobiprole are outlined in Figure 18.
December 13, 2016
Page 31
Figure 18. Ceftobiprole Clinical Trials
Indication Phase Design Treatment Arms Date Completed
CABP (EU) Phase III interventional,
randomized, double-blind
IV ceftobiprole
ceftriaxone/ linezolid 03/2008
HABP (EU) Phase III Randomized, double-
blind, active-control,
IV ceftobiprole
Linezolid-
ceftazidime
05/2007
ABSSSI (EU) Phase III
(STRAUSS I)
Randomized, double-
blind, active-control
IV ceftobiprole
Vancomycin 10/2007
ABSSSI (EU) Phase III
(STRAUSS II)
Randomized, double-
blind, active-control
IV ceftobiprole
Vancomycin &
ceftazidime
10/2007
Source: LifeSci Capital
Other Treatments in Development
There are a number of antibiotics in development for the treatment of ABSSSI and pneumonia to replace existing
therapies whose efficacy has waned in the face of rising bacterial resistance. While many of these antibiotics have
demonstrated efficacy against clinically-relevant pathogens, issues of safety, flexibility, and dosing convenience will
shape their adoption if approved. Figure 19 highlights the most important late-stage drugs in development for the
treatment of ABSSSI and pneumonia. Paratek Pharmaceuticals (NasdaqGM: PRTK) is developing omadacycline for
both ABSSSI and CABP. Cempra’s (NasdaqGS: CEMP) solithromycin and Melinta’s (private) delafloxacin are two
antibiotics that are currently under evaluation in Phase III trials in CABP and ABSSSI, respectively. Actavis/Furiex’s
avarofloxacin, and Nabriva Therapeutics’ lefamulin are Phase III-ready assets that have already undergone testing in
Phase II trials.
Figure 19. Treatments in Development for ABSSSI, HABP, and/or CABP
Drug Company Formulation Frequency Indication Stage
Ceftobiprole Basilea IV TID ABSSI, CABP,
HABP Approved in EU
Solithromycin Cempra IV & Oral QD CABP NDA
Omadacycline Paratek IV & Oral QD ABSSI, CABP Phase III
Delafloxacin Melinta IV & Oral BID ABSSSI Phase III
Avarofloxacin Allergan IV & Oral BID ABSSSI, CABP Phase III ready
Lefamulin Nabriva IV & Oral BID CABP Phase III ready
Source: LifeSci Capital
December 13, 2016
Page 32
Omadacycline – Paratek Pharmaceuticals (NasdaqGM: PRTK). Omadacycline is a novel tetracycline derivative
that was designed to overcome the only two known, clinically-significant mechanisms of bacterial resistance to
tetracyclines. Omadacycline is a well-tolerated, once-daily, oral and IV broad-spectrum antibiotic. Paratek is
developing omadacycline as a potential treatment for ABSSSIs, CABP, and urinary tract infections (UTIs). Earlier this
year, the Company reported positive results from an IV-to-oral Phase III trial evaluating omadacycline in ABSSSI
patients. Paratek is also conducting an oral-only ABSSSI Phase III trial, which may support a label that includes oral-
only use of omadacycline, as well as a IV-to-oral Phase III study for CABP. Data from the oral-only ABSSSI and
CABP trials are both expected in the second quarter of 2017. This would allow Paratek to submit their NDA for
omadacycline in the first half of 2018 covering IV and oral ABSSSI indications as well as IV-to-oral use for community
acquired bacterial pneumonia (CABP). Omadacycline has been granted QIDP and Fast Track status, which may
provide for an NDA review under the priority review process. Paratek also plans to submit a Marketing Authorization
Application (MAA) for omadacycline in ABSSSI supported by data from the two ABSSSI studies. The Company has
not yet clarified its regulatory strategy for CABP in Europe.
Paratek’s Phase III trial in ABSSSI met the primary endpoint for the FDA as well as the co-primary endpoints for the
EMA, confirming the non-inferiority of omadacycline in comparison to Pfizer’s (NYSE: PFE) Zyvox (linezolid). In
early clinical response, the primary endpoint for the FDA, the omadacycline-treated group had an 84.8% response
rate compared with an 85.5% rate in the linezolid-treated group. This falls within the 10% non-inferiority margin that
is defined in FDA guidelines for the clinical development of antibiotics. The results of the study also confirmed that
omadacycline has a favorable safety and tolerability profile in line with that of other tetracycline antibiotics.
Solithromycin – Cempra (NasdaqGS: CEMP). Solithromycin is a fourth-generation macrolide currently in
development for the CABP indication, but with the potential to treat urethritis and genitourinary tract infections.
Solithromycin has several structural modifications from previous macrolides that are expected to have increased its
microbial activity, metabolic stability, and tolerability. In particular, Cempra appears to have eliminated any effect on
QT interval that is commonplace in the macrolide family. Cempra has demonstrated solithromycin’s activity against
some but not all macrolide-resistant bacterial strains. In 2013, solithromycin was granted QIDP and Fast Track
designation from the FDA.
In Phase II, solithromycin was shown to have comparable efficacy to levofloxacin with a possibly cleaner safety
profile.85,86 No patients discontinued the study due to treatment-emergent adverse events in the solithromycin-treated
group, compared to 6 patients in the levofloxacin group. Cempra initiated two Phase III trials, SOLITAIRE-Oral in
December 2012 and SOLIAIRE-IV in December 2013, to evaluate solithromycin in CABP patients.87,88 Cempra
completed the enrollment of 860 CABP patients in the SOLITAIRE-Oral trial in September 2014 and announced
positive topline data in the first quarter of 2015. The study demonstrated that solithromycin was non-inferior to
moxifloxacin within the stipulated 10% margin. Solithromycin had a 78.2% early clinical response rate at 72 hours,
which was the primary efficacy endpoint, compared with a 77.9% early response rate for moxifloxacin.
85 https://clinicaltrials.gov/show/NCT01168713 86 Oldach, D. et al., 2013. Randomized, double-blind, multicenter phase 2 study comparing the efficacy and safety of oral
solithromycin (CEM-101) to those of oral levofloxacin in the treatment of patients with community-acquired bacterial
pneumonia. Antimicrobial Agents and Chemotherapy, 57(6), pp2526-2534. 87 https://clinicaltrials.gov/show/NCT01756339 88 https://clinicaltrials.gov/show/NCT01968733
December 13, 2016
Page 33
The SOLITAIRE-IV trial employed an IV-to-oral design to demonstrate the dosing flexibility of solithromycin for
this dosing regimen. Since this is an important facet of transitioning from inpatient to outpatient therapy, several
companies in the space have already shown IV and oral dosing flexibility in Phase II development. In addition,
Cempra’s pursuit of a single indication, CABP, limits the economic potential of solithromycin compared to other
drugs that can be prescribed across several indications. This decision is based on solithromycin’s weak activity against
MRSA bacteria, which is a common cause of ABSSSIs, and lack of activity against E. coli which is a common cause of
UTIs. The FDA is currently evaluating NDAs for both oral and IV formulations of solithromycin for CABP with a
decision expected this month.
Delafloxacin – Melinta (Private). Delafloxacin is a next-generation fluoroquinolone antibiotic that was originally
licensed from Wakunaga Pharma in 2006 and has received QIDP designation from the FDA. This antibiotic was
designed with a proprietary drug discovery platform intended to reduce the risk of future bacterial resistance.
Delafloxacin is under development for the treatment of ABSSSI, and its safety, tolerability, and efficacy have been
demonstrated in 4 Phase II clinical trials.89 In May 2013, Melinta initiated a randomized, double-blind, placebo
controlled PROCEED Phase III study to compare the efficacy of IV delafloxacin to a combination of IV vancomycin
and aztreonam for treating ABSSSI patients.90 This study has been completed and Melinta reported topline data in
January 2015, finding that the study hit its primary endpoint. Melinta has also launched a second Phase III trial in
September 2014 assessing an IV-to-oral regimen of delafloxacin in comparison to the IV combination of vancomycin
and aztreonam.91 In October of 2015 the company announced that the trial met its primary endpoint.
Delafloxacin use has a modest association with gastrointestinal problems, including nausea, vomiting, and diarrhea. In
the most recent Phase III trial, nausea, diarrhea, and vomiting affected 22%, 15%, and 13% of patients, respectively.
Avarofloxacin (JNJ-Q2) – Actavis/Furiex (NYSE: ACT; NasdaqGS: FURX). Avarofloxacin is a Phase III-ready,
novel fluoroquinolone antibiotic in development as a potential treatment for ABSSSI and CABP that has received
both QIDP and Fast Track designation from the FDA. Furiex Pharmaceuticals licensed avarofloxacin from Johnson
& Johnson (NYSE: JNJ) in 2009, and the company was recently acquired by Actavis/Allergan (NYSE: ACT) in
September 2014. Avarofloxacin, which has been formulated for IV and oral use, has broad-spectrum activity against
clinically-relevant bacterial strains for both ABSSSI and CABP, including MRSA and other resistant strains. Furiex
demonstrated the non-inferiority of avarofloxacin compared to Zyvox (linezolid) in treating ABSSSI in a Phase II trial,
as measured by the clinical test of cure rate.92 Furiex also generated positive results in a small Phase II trial comparing
avarofloxacin to moxifloxacin in treating severe CABP, although the sample size was too small to statistically test for
non-inferiority.93 The drug is considered ready for Phase III development in both indications, although
Actavis/Allergan has not outlined its plans for timing of its next steps.
89 Bassetti, M, et al., 2015. Delafloxacin for the treatment of respiratory and skin infections. Expert Opinion on Investigational Drugs,
24(3), pp433-442. 90 https://clinicaltrials.gov/show/NCT01811732 91 https://clinicaltrials.gov/show/NCT01984684 92 Covington, PS, et al., 2013. A Phase 2 study of the novel fluoroquinolone JNJ-Q2 in community-acquired bacterial
pneumonia. Journal of Antimicrobial Chemotherapy, 68(11), pp2691-2693. 93 Covington, PS, et al., 2011. Randomized, Double-Blind, Phase II, Multicenter Study Evaluating the Safety/Tolerability and
Efficacy of JNJ-Q2, a Novel Fluoroquinolone, Compared with Linezolid for Treatment of Acute Bacterial Skin and Skin
Structure Infection. Antimicrobial Agents and Chemotherapy, 55(12), pp5790-5797.
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Avarofloxacin has been evaluated in Phase II trials for ABSSSI that utilized Zyvox as a comparator. Treatment with
avarofloxacin led to a clinical response rate of 83.1% in the intent-to-treat (ITT) patient population, compared to an
82.1% response rate following Zyvox treatment. Similar to delafloxacin, avarofloxacin, is being developed for twice
daily dosing.
Lefamulin (BC 3781) – Nabriva (Private). Lefamulin is a Phase III-ready antibiotic with QIDP and Fast Track
designation from the FDA that is being developed as a potential treatment for CABP. Nabriva was developing
lefamulin under a collaborative agreement with Forest Labs; however, in July 2013, Forest Labs decided not to exercise
its option to acquire Nabriva and the collaboration ended. The Company has demonstrated that lefamulin has
comparable efficacy to vancomycin in a Phase IIb trial with a possibly improved safety profile. In addition, Nabriva
recently presented data showing good penetration of the drug into epithelial lining fluid, which supports lefamulin’s
potential use for respiratory tract infections.94
In a Phase II trial for ABSSSIs, Nabriva demonstrated that lefamulin treatment had a clinical success rate among
clinically-evaluable patients of 90.0% with the 100 mg dose and 88.9% with the 150 mg dose.95 This was slightly lower
than the 92.2% response rate in patients treated with vancomycin. Lefamulin had an 85.3% response rate against
infections caused by MRSA. Lefamulin is dosed twice daily.
The Company is currently evaluating the drug in two Phase III trials. The LEAP and LEAP 2 trials, each evaluating
lefamulin in CABP, and data are expected in the fourth quarter of 2017 for LEAP and the second half of 2017 for
LEAP 2.
Ceftobiprole Competitive Landscape
Demonstrated Efficacy against Clinically Impactful Bacteria. In preclinical and clinical studies, ceftobiprole had
activity against both gram-negative and gram-positive bacterial strains, including MRSA. In addition to addressing the
growing rates of MRSA infection, this wide-range of activity positions ceftobiprole for use in patients even when the
underlying infectious agent is unknown. This broad-spectrum characteristic may facilitate fast clinical incorporation
as both a first-line and refractory treatment option.
Ceftobiprole’s Potential to Treat Many Types of Infections. Ceftobiprole received approval for the treatment of
community-acquired and hospital-acquired pneumonia in 13 European countries. However, in addition to the
treatment of respiratory conditions, it has the potential to treat other serious bacterial infections. Results from
preclinical and European trials suggest that the drug may be used to treat ABSSSI’s. In the first half of 2017 Basilea
plans to initiate a US Phase III study evaluating the use of ceftobiprole for this, SAB, and CABP. The potential
approval in more than one indication underscores the potential utility of this antimicrobial, and provides multiple
routes for incorporation into clinical practice.
94 Sader, H.S. et al., 2012. Antimicrobial activity of the novel pleuromutilin antibiotic BC-3781 against organisms responsible for
community-acquired respiratory tract infections (CARTIs). Journal of Antimicrobial Chemotherapy, 67, pp1170-1175. 95 Prince, WT, et al., 2013. Phase II Clinical Study of BC-3781, a Pleuromutilin Antibiotic, in Treatment of Patients with Acute
Bacterial Skin and Skin Structure Infections. Antimicrobial Agents and Chemotherapy, 57(5), pp2087-2094.
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Ceftobiprole has a Tolerable Safety Profile. Ceftobiprole is a next-generation cephalosporin, which are a class of
-lactam antibiotics with less susceptibility to -lactamases and a preferable tolerability profile compared to other
antibiotics. Ceftobiprole’s safety, tolerability and potential drug-drug interactions have been extensively studied. In
clinical trials ceftobiprole has been characterized by a superior safety and tolerability profile when evaluated against
other agents with comparable potency. Its favorable safety and tolerability profile may help it become a preferred
agent over other antibiotics with commensurate efficacy.
QIDP Status and BARDA Funding for US Development of Ceftobiprole. In 2016 BARDA, a division of the US
Department of Health and Human Services, awarded Basilea a contract of up to $100 million for the Phase III
development of ceftobiprole for skin and blood infections. This contract stipulates that Basilea will initially receive
$20 million, followed by another $80 million contingent upon the completion of certain milestones over the following
4.5 years. In addition, ceftobiprole received QIDP status from the US FDA, which expedites the review of a drugs
application and grants five years of additional marketing exclusivity.
Reshaped Market may Accept Premium Pricing. Although antibiotics have not traditionally garnered premium
pricing, the growing threat of bacterial resistance and emerging need for new antibiotics has changed many people’s
thinking. Recent entrants to the market have pushed pricing substantially higher than in the past. Durata Therapeutics
recently priced Dalvance (dalbavancin) at $4,500 for a 3 dose treatment regimen and Cubist/Merck priced Sivextro
(tedizolid) at $1800 for 6 days of treatment. This is made possible by the waning efficacy of generic antibiotics which
do not exert pricing pressure on new entrants into the market. In addition to improving the financial prospects of
antibiotic development, premium pricing also serves an important role in antibiotic stewardship by ensuring that these
powerful antibiotics are used appropriately when necessary to combat serious infections.
Dearth of New Antibiotics Reaching Approval. Development of new antibiotics has not kept pace with the rise
of bacterial resistance, creating a dire need for therapies that are effective against resistant pathogens. Resistance
hinders the treatment of even basic bacterial infections and with dwindling numbers of effective antibiotics, the
viability of modern medical procedures such as surgery, transplants, and chemotherapy could be compromised. The
implications are well known within the hospital setting since resistance and multi-drug resistance have been known
for decades. The situation is now occurring in the community setting, potentially creating situations where instead of
taking home an oral antibiotic prescription, one must undergo hospitalization and continued intravenous antibiotic
therapy until the infection is completely cured.
Figure 20 shows the number of submitted antibiotic NDAs that received approval between 1980 and 2012,
underscoring the slowdown in antibiotic development in recent years. Stringent FDA regulations on trial design and
diminished return on investment have discouraged companies from entering this space.96 However, ceftobiprole’s
demonstrated broad spectrum activity in multiple infectious disease indications, unlike many of the drugs under
development, may greatly improve the economic outlook and likely return on investment for the drug.
96 Spellberg, B, 2012. New Antibiotic Development: Barriers and Opportunities in 2012. Alliance for the Prudent Use of Antibiotics
Clinical Newsletter, 30(1), p2.
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Figure 20. Number of Approved Antibiotic NDAs 1980-2012
Source: Centers for Disease Control and Prevention
Rising Tide of Antibiotic Resistance. The introduction of antibiotics in the 1940s revolutionized the treatment of
infections and saves millions of lives worldwide annually. However, antibiotics use has applied selective pressure that
has led to the emergence of antibiotic-resistant bacteria. While penicillin-resistance was rare in S. aureus bacteria when
introduced in the 1940s, 70-85% of isolated bacterial cultures were found to be resistant by the 1970s. In fact, the
introduction of every novel antibiotic has been followed by the emergence of clinically significant bacterial resistance.97
The CDC estimates that at least 2 million illnesses and 23,000 deaths annually in the US are the result of antibiotic-
resistant bacteria. Development of new antibiotics has not kept pace with the emergence of resistance, setting the
groundwork for a future public health crisis. Waning efficacy of antibiotics threatens the viability of modern medical
advances like surgery, transplants, and chemotherapy.98
Key Principles for Responding to Antibiotic Resistance. Government agencies have become increasingly aware
of this emerging public health crisis and have drawn up a coordinated national strategy to address the problem. The
five stated goals outlined in the White House’s National Strategy for Combating Antibiotic-Resistant Bacteria 2014
report are:
Slow the emergence and spread of resistant bacterial strains through proper antibiotic stewardship.
Strengthen national infrastructure responsible for tracking antibiotic resistance patterns.
Develop and expand use of rapid diagnostic tests to improve treatment.
Accelerate the development of novel antibiotics.
Improve international collaboration for surveillance, research, and prevention.
97 Clatworthy, AE, et al., 2007. Targeting virulence: a new paradigm for antimicrobial therapy. Nature Chemical Biology, 3(9),
pp541-548. 98 National Strategy for Combating Antibiotic-Resistant Bacteria. White House. 2014.
0
4
8
12
16
20
1980-1984 1985-1989 1990-1994 1995-1999 2000-2004 2005-2009 2010-2012 2013-2014
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The most important factor contributing to antibiotic resistance is their overuse; roughly 50% of antibiotics
prescriptions are unnecessary or not optimally targeted.99 The national strategy aims to promote judicious use of
antibiotics and the recognition of this drug class as a precious resource requiring preservation. In addition, the FDA
has also announced new guidelines for innovative antibiotic development intended to ensure an appropriate balance
between safety and efficacy in next-generation antibiotics.100,101,102
FDA GAIN Provisions Have Incentivized New Antibiotic Development. Stringent new FDA guidelines on trial
design and concerns over return on investment have limited research and development in this space in recent years.
The Generating Antibiotic Incentives Now (GAIN) provisions of the FDA Safety and Innovation Act, signed into
law in 2012, incentivize the development of new antibiotics against resistant bacteria. These provisions provide 5
additional years of market exclusivity on top of existing protections for drugs that are deemed to be qualified infectious
disease products (QIDP), as well as eligibility for fast track status and priority review. The net effect is to expedite the
approval process for qualifying drugs and provide financial incentive for companies that undertake development in
this space.
BAL101553: Drug-Refractory Solid Tumors
Basilea is assessing the potential of BAL101553 for the treatment of various types of advanced solid tumors that are
refractory to current therapies. BAL101553 is a small-molecule tumor checkpoint controller acting through a novel
mechanism of action intended to improve the potency of this compound in the refractory setting. BAL101553 is a
microtubule destabilization agent that binds to the colchicine site of tubulin with unique kinetics. Administration of
BAL101553 is also associated with formation of the spindle assembly checkpoint (SAC), which causes tumor cell
death when microtubules become destabilized.103 In other words, BAL101553 acts by causing microtubule
destabilization, which leads to tumor cell death through SAC.
The BAL101553 program is differentiated by the use of biomarkers, which the Company is using to stratify patient
populations, optimize tumor selection, and evaluate the relationship between dose and tumor response. Two specific
biomarkers have already been identified and are under evaluation: BubR1, which plays a role with the SAC and tumor
cell division, and EB1, which regulates microtubules and appears to have a positive impact on BAL101553 activity in
glioblastoma tumor models.
99 Antibiotic Resistance Threats in the United States, 2013. Centers for Disease Control and Prevention.
http://www.cdc.gov/drugresistance/threat-report-2013/pdf/ar-threats-2013-508.pdf 100 Food and Drug Administration, 2013. Guidance for Industry Acute Bacterial Skin and Skin Structure Infections: Developing Drugs for
Treatment. October 2013. 101 Food and Drug Administration, 2014. Guidance for Industry Community-Acquired Bacterial Pneumonia: Developing Drugs for Treatment.
January 2014. 102 Food and Drug Administration, 2015. Guidance for Industry Complicated Urinary Tract Infections: Developing Drugs for Treatment.
February 2015. 103 Bachmann, F. et al., 2015. BAL101553 (prodrug of BAL27862): the spindle assembly checkpoint is required for anticancer
activity. AACR 106th Annual Meeting, 75(15), Abstract 3789.
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BAL101553 Clinical Data Discussion
Basilea has completed a Phase I/IIa study of BAL101553 in treating advanced solid tumors, revealing preliminary
signs of efficacy. This was an open-label trial testing BAL101553 for the treatment of colorectal, gastric, non-small
cell lung, ovarian, pancreatic, or triple-negative breast cancer refractory to currently available therapies.104 73 patients
were randomized to receive two-hour infusions of BAL101553 doses ranging from 15 to 80 mg/m2, and the optimal
once-weekly dose was determined to be 30 mg/m2.
39 of the 59 patients evaluated for efficacy received a dose of 30 mg/m2, and these patients experienced the following
responses to treatment: 1 partial response that was greater than 2 years in length, 1 prolonged stable disease response
that lasted longer than 6 months, and 9 stable disease responses ranging in length from 2-8 months. Dose-limiting
adverse events occurred at doses greater than 30 mg/m2, and included transient and reversible gait disturbance,
transient peripheral sensory neuropathy, and asymptomatic and reversible myocardial ischemia. Investigators found
these dose-limiting events to be mostly related to peak drug plasma concentration (Cmax), while the therapeutic effects
of the compound are thought to be related to total drug exposure or area under the curve (AUC). BAL101553 dosing
may be optimized with an alternative dosing regimen or formulation that focuses on more frequent dosing. The
Company has since initiated two additional Phase I/IIa studies for both continuous infusion and oral formulations of
BAL101553 in the treatment of advanced solid tumors.105,106 Basilea plans to expand the oral study in the second half
of 2016 to include patients with glioblastoma.
BAL3833: Melanoma and Other Tumors
Basilea in-licensed several kinase inhibitors in April 2015 and the lead compound is BAL3833, which is being
developed for the treatment of melanoma and other advanced solid tumors. BAL3833 is an oral small molecule that
acts on cell signaling pathways involved with tumor growth and treatment resistance. Specifically, BAL3833 is a dual-
targeting compound that inhibits the RAF (BRAF & CRAF) and SRC kinase families. This drug has potential to help
patients who have developed resistance to BRAF inhibitors such as Roche’s (SWX: ROG.VX) Zelboraf (vemurafenib)
and Novartis’s Tafinlar (NYSE: NVS) (dabrafenib), as it specifically targets the implicated pathways. Preliminary data
point towards potential efficacy in KRAS-driven tumors. The Company plans to use biomarkers to select appropriate
tumors to target in the future. A group of UK institutions that includes the Institute of Cancer Research, London, and
the Royal Marsden is currently conducting a Phase I study with BAL3833 for the treatment of solid tumors refractory
to current therapy.
Intellectual Property
Basilea holds extensive intellectual property rights for their approved and clinical stage products that include patent
protection and market exclusivity.
104 https://clinicaltrials.gov/ct2/show/NCT01397929 105 https://clinicaltrials.gov/ct2/show/NCT02895360 106 https://clinicaltrials.gov/ct2/show/NCT02490800
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CRESEMBA. Basilea intellectual property rights for CRESEMBA (isavuconazonium sulfate) involve both patent
protection and market exclusivity granted by regulators. The Company’s patents for the product include substance
and method of use claims for fungal infections, and are separated into two distinct patent families pertaining to the
drug and pro-drug. The family relating to the drug includes patents issued in the US and abroad, which expire in March
of 2019. The patent family for the pro-drug, which we believe to offer greater protection, includes 2 issued patents in
the US and 28 issued patents in foreign countries. This patent family expires on October 31, 2020, although the
Company has submitted an application for patent extension that could extend patent life until October 2025.
Importantly, the Company has also been granted Orphan Drug exclusivity (ODE) and Qualified Infectious Disease
Product (QIDP) designation for CRESEMBA, which provides combined market exclusivity of 12 years; 7 years plus
5 years, respectively. In accordance, the expiration of US market exclusivity for CRESEMBA is expected to occur in
March 2027. A summary of the patent and market exclusivity information for CRESEMBA is in Figure 21.
Figure 21. CRESEMBA Patent and Exclusivity Information
Type of Protection Primary Claim Expiration
Patent 6812238 Substance 2020
Patent 7459561 Substance 2020
Patent 6300353 Method of Substance 2019
Orphan drug exclusivity (ODE) NA 2022
Qualified infectious disease product (QIDP) NA 2027
Source: LifeSci Capital
Ceftobiprole. Basilea also has intellectual property rights for ceftobiprole in the US that involve patents and market
exclusivity. The Company’s patents for the product include substance and method of use claims for the treatment of
infectious diseases, and are separated into two distinct patent families pertaining to the drug and the pro-drug of
ceftobiprole. Both families include 1 issued US patent and 28 additional issued patents in foreign countries. The family
of patents relating to the ceftobiprole drug expire in December 2017, while the family relating to the pro-drug expire
in May 2019 in the US and June of 2019 ex-US. Ceftobiprole qualifies for new chemical exclusivity (NCE) in the US
and the Company has also received QIDP designation for the treatment of both CABP and ABSSSI. This provides
Basilea with a total of 10 years of market exclusivity for this product upon approval, 5 years plus 5 years, respectively,
in addition to patent protection.
Oncology Assets. Basilea also holds several patents to protect BAL101553 and has in-licensed patents protecting
BAL3833. The Company’s patents for BAL101553 include substance and method of use claims for the treatment of
neoplastic diseases and are separated into distinct patent families pertaining to the drug and pro-drug. The family
relating to the drug includes 1 issued US patent and 30 additional issued and pending patents in foreign countries,
which expire in May of 2024. The family relating to the pro-drug includes 1 issued US patent and 55 issued and
pending patents in foreign countries, which expire in October 2030 in the US and July of 2030 ex-US. Basilea’s patent
protection for BAL3833 includes 3 issued patents in the US and 30 issued and pending patents in foreign countries,
which expire in December of 2028.
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Management Team
Ronald Scott
Chief Executive Officer
Ronald Scott, a Swiss citizen, has served as Chief Executive Officer since January 2013. He was Basilea's Chief
Operating Officer from January 2012 through December 2012, and served as Basilea's Chief Financial Officer from
the Company’s founding in 2000 through January 2012 as well as ad interim Chief Financial Officer from February
2013 until November 2013. From 2004 to October 2011, Mr. Scott served on the Board of Directors. Prior to joining
Basilea, Mr. Scott worked at Roche Holding AG in management positions in Pharmaceutical Finance, Licensing, and
the Roche Corporate Finance Mergers and Acquisitions group. Prior to joining Roche, Mr. Scott worked for Prudential
Investment Corporation in the United States as Director in Prudential’s Finance and International Business
Development Units, managing divestitures and joint venture transactions. Mr. Scott has a bachelor’s degree from Utah
State University and a master’s degree from Harvard University.
Gunter Ditzinger, Ph.D.
Chief Technology Officer
Dr. Günter Ditzinger, a German citizen, has served as Chief Technology Officer since February 2016. He joined
Basilea in 2002 as CMC Project Leader & Pharmaceutical Development Manager. He was promoted in 2009 to Head
of Pharmaceutics in which position he led the pharmaceutical development and manufacturing group and acted as
deputy Chief Technology Officer. Prior to joining Basilea, he held various positions with increasing responsibility at
Hoechst Marion Roussel in Frankfurt, Germany and at Novartis Pharma AG in Basel, Switzerland. Dr. Ditzinger
holds a PhD in Pharmaceutical Technology from the Johann Wolfgang Goethe University in Frankfurt/Main,
Germany.
Achim Kaufhold, Ph.D.
Chief Medical Officer
Prof. Achim Kaufhold, a German citizen, has served as Chief Medical Officer since February 2010. He holds a medical
degree from the University of Cologne. During his 10-year academic career he worked in the fields of pediatrics, basic
and applied medical microbiology, laboratory medicine and infectious diseases in Germany and the U.S. He is
Professor of Medical Microbiology and Infectious Diseases and member of the Faculty of Medicine of the University
of Aachen (Germany), and also served as a member of the board of directors of Vaximm AG (until February 2016).
He has spent more than 20 years in senior management positions in the biotech and pharmaceutical industry, mainly
in leadership roles in research, product and business development, and general management.
Prior to joining Basilea, from 2008 to 2009, he served as the President and Chief Executive Officer of Affitech A/S.
From 2007 to 2008, Prof. Kaufhold worked at Pharmexa A/S, first as its Chief Medical Officer and Chief Scientific
Officer before becoming Chief Executive Officer. From 2005 to 2006, Prof. Kaufhold served as the Chief Medical
Officer and Vice President of Development at Chiron. From 2001 to 2005, he served as the Chief Medical Officer of
Berna Biotech AG, and as its Head of Research, Product and Business Development. From 1994 to 2001 he served
as Director of Clinical Development and Head of the Pediatric Vaccines Development Unit of GlaxoSmithKline
Biologicals.
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Laurenz Kellenberger, PhD
Chief Scientific Officer
Dr. Laurenz Kellenberger, a Swiss citizen, has served as Chief Scientific Officer since 2009. From 2000 to 2009, Dr.
Kellenberger held roles of increasing responsibility at Basilea and served as Head of Chemistry from 2004 to 2009 and
member of the research management team with responsibilities for key projects from lead finding and optimization
through to preclinical development. Dr. Kellenberger’s expertise covers the range of synthetic organic and natural
product chemistry to microbial molecular genetics. After receiving his Ph.D., he continued his scientific research at
the University of Cambridge and at F. Hoffmann-La Roche, Basel, where he held different positions in preclinical
research and chemical technologies before joining Basilea in 2000. He is author of numerous scientific publications.
He holds a Ph.D. in Organic Chemistry from the Swiss Federal Institute of Technology Zurich. He is a member of
the Board of the Medicinal Chemistry & Chemical Biology division of the Swiss Chemical Society.
Heidi McDaid
Head of Global Human Resources
Heidi McDaid, a Swiss citizen, has served as Head of Global Human Resources since January 2008 and was appointed
Executive Officer in 2013. From 2002 through 2008, Ms. McDaid has held the position Head of Human Resources.
Prior to joining Basilea in 2002 as Head of Human Resources, she worked for Bank CIAL AG and Mepha AG in
Finance and Human Resources. From 2002 to 2003, she served as Manager and from 2003 to 2011 as the President
of the Board of Trustees at the Basilea Pension Fund. Before joining Basilea, she held various positions in finance and
administration at Lubapharm AG and Bank und Finanz-Institut AG. Ms. McDaid has both business management and
human resources qualifications.
Donato Spota
Chief Financial Officer
Donato Spota, an Italian citizen, has served as Chief Financial Officer since November 2013. Mr. Spota has held
various positions at Basilea since joining the company in 2002, including Global Head of Finance & Services and Head
of Global Controlling. Prior to joining Basilea, Mr. Spota held positions in financial planning and controlling at F.
Hoffmann-La Roche, Basel, in the area of Pharma Global Informatics. Mr. Spota has a degree in Information
Technology from the Swiss BBT (Bundesamt für Berufsbildung und Technologie) and holds a master degree in
business administration from the University of Applied Sciences Nürtingen.
David Veitch
Chief Commercial Officer
David Veitch, British citizen, has served as Chief Commercial Officer since September 2014. Mr. Veitch served as the
President of European Operations at Savient Pharmaceuticals from 2012 to 2013. From 2007 to 2011, he served as
Senior Vice President of European Marketing & Brand Commercialization at Bristol-Myers Squibb Pharmaceuticals.
From 2004 to 2007, he was Vice President and General Manager UK at Bristol-Myers Squibb Pharmaceuticals. Prior
to this Mr. Veitch held various general management and commercial roles in Bristol-Myers Squibb Pharmaceuticals
and prior to that with SmithKline Beecham Pharmaceuticals. Mr. Veitch received a B.Sc. in Biology from the
University of Bristol.
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Risk to an Investment
We consider an investment in Basilea to be a high-risk investment. There are clinical and commercialization risks
associated with their programs, and as with any company, Basilea may be unable to obtain sufficient capital to fund
planned development programs. There are regulatory risks associated with the development of any drug, and Basilea
may not receive FDA or EMA approval for its drug candidates despite significant time and financial investments.
Regulatory approval to market and sell a drug does not guarantee that the drug will penetrate the market, and sales
may not meet expectations.
December 13, 2016
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Analyst CertificationThe research analyst denoted by an “AC” on the cover of this report certifies (or, where multiple research analysts are primarily responsiblefor this report, the research analyst denoted by an “AC” on the cover or within the document individually certifies), with respect to eachsecurity or subject company that the research analyst covers in this research, that: (1) all of the views expressed in this report accuratelyreflect his or her personal views about any and all of the subject securities or subject companies, and (2) no part of any of the researchanalyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the researchanalyst(s) in this report.
DISCLOSURESThis research contains the views, opinions and recommendations of LifeSci Capital, LLC (“LSC”) research analysts. LSC (or an affiliate)has received compensation from the subject company for producing this research report. Additionally, LSC may provide investmentbanking and other broker-dealer services to the subject company and may receive compensation from the subject company for suchservices. LSC (or an affiliate) has also provided non-investment banking securities-related services, non-securities services, and otherproducts or services other than investment banking services to the subject company and received compensation for such services withinthe past 12 months.
Neither the research analyst(s), a member of the research analyst’s household, nor any individual directly involved in the preparation ofthis report, has a financial interest in the securities of the subject company. Neither LSC nor any of its affiliates beneficially own 1% ormore of any class of common equity securities of the subject company.
LSC is a member of FINRA and SIPC. Information has been obtained from sources believed to be reliable but LSC or its affiliates (LifeSciAdvisors, LLC) do not warrant its completeness or accuracy except with respect to any disclosures relative to LSC and/or its affiliates andthe analyst's involvement with the company that is the subject of the research. Any pricing is as of the close of market for the securitiesdiscussed, unless otherwise stated. Opinions and estimates constitute LSC’s judgment as of the date of this report and are subject to changewithout notice. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchaseor sale of any financial instrument. The opinions and recommendations herein do not take into account individual client circumstances,objectives, or needs and are not intended as recommendations of particular securities, companies, financial instruments or strategies toparticular clients. The recipient of this report must make his/her/its own independent decisions regarding any securities or financialinstruments mentioned herein. Periodic updates may be provided on companies/industries based on company specific developments orannouncements, market conditions or any other publicly available information. Additional information is available upon request.
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