Basilea reports 2010 interim results

Basilea Pharmaceutica Ltd. announced today its 2010 interim financial results reflecting the positive impact of the partnering agreement with Astellas Pharma Inc. for Basilea's phase III antifungal agent isavuconazole; the continued commercial roll-out of Toctino® (alitretinoin) for the treatment of severe chronic hand eczema including a distribution agreement with Almirall, S.A.; and the positive one-time impact from the accelerated recognition of upfront and milestone payments related to the antibiotic ceftobiprole. Basilea increased its cash position to CHF 193.8 million in the reporting period providing the company with greater operational flexibility for advancing its broad and innovative product portfolio. Toctino® product sales almost doubled year-on-year to CHF 13.6 million in the first half of 2010 based on the continued market penetration in Germany, the United Kingdom and Denmark and first contributions from recent launch countries France and Switzerland. Operating expenses were lower compared to H1 2009 with continued investments into the commercialization of Toctino® and the advancement of the phase III clinical programs for Toctino® and isavuconazole.

In the first half of 2010, the average monthly net loss was significantly reduced to around CHF 4.2 million primarily due to recognition of the isavuconazole upfront payment and the positive one-time accounting impact related to ceftobiprole. Excluding this one- time effect, the average monthly net loss was approximately CHF 8.5 million.

inancial summary
Combined cash and short-term investments amounted to CHF 193.8 million as of June 30, 2010, compared to CHF 178.4 million at year-end 2009. The improved cash position and operating cash flow in the first half of 2010 is mainly a result of the upfront payments which the Company received under the licensing agreement with Astellas and the distribution agreement with Almirall. Revenue and other income increased to CHF 53.1 million compared to CHF 12.2 million in the prior year period. Contract revenue increased from CHF 4.2 million in the first half of 2009 to CHF 39.1 million in the first six months of 2010 as a result of an accelerated recognition of upfront and milestone payments due to the notice of termination of the licensing agreement for ceftobiprole as well as from recognized revenues related to the collaborations with Astellas and Almirall. In addition, Toctino® product sales increased by 84% from CHF 7.4 million in the first six months of 2009 to CHF 13.6 million in the first half of 2010. Research and development expenses were significantly reduced to CHF 33.4 million in the first half of 2010 compared to CHF 44.5 million in the prior year period, mainly reflecting the cost sharing mechanism under the co-development arrangement with Astellas. The Company continued to invest in the phase III clinical trials of isavuconazole and the U.S. trial of Toctino®. General and administrative expenses rose to CHF 42.4 million from CHF 34.8 million in the first half of 2009 impacted by legal expenses associated with the Company's arbitration proceedings against Johnson & Johnson. In summary, net loss for the first six months of 2010 was significantly reduced to CHF 24.9 million as compared to CHF 66.5 million in the respective period in 2009.

Key figures


The unaudited condensed consolidated interim financial statements of Basilea Pharmaceutica Ltd. for the first half of 2010 can be found on the company's website at http://interimreport.basilea.com.

Ron Scott, Chief Financial Officer, commented, "The significant upfront payments related to the partnering agreements concluded in the first half year have further improved our cash position. Going forward we will be eligible to additional payments on achievement of certain milestones and we also anticipate an increasing positive impact on our bottom- line resulting from the partnering of isavuconazole and the commercialization of Toctino."

"As a result of our product partnering strategy, we have even more financial flexibility to ensure sustainable value creation from our rich portfolio," added Dr. Anthony Man, CEO. "We aim to advance our phase III programs for Toctino and isavuconazole and move our next two innovative research compounds into clinical development within the next six months. Once the transition of ceftobiprole back to Basilea has been completed, we will finalize our strategy for this novel antibiotic."

Given the decline in the value of the Euro versus the Swiss Franc and considering the negative impact on pricing as well as the delays in national reimbursement decisions due to the scrutiny currently put on healthcare budgets across Europe, Basilea now expects Toctino® product sales of around CHF 30 million in 2010. Considering the impact of collaborations entered into the first half of 2010 and the positive accounting impact related to ceftobiprole upfront and milestone recognition, Basilea reduces its net loss guidance in 2010 to be estimated at between CHF 3‑4 million per month as compared to its previous guidance of approximately CHF 9 million per month. This equates to an estimated net loss of approximately CHF 8 million per month for 2010, excluding the impact from the accelerated recognition of upfront and milestone payments related to ceftobiprole.

Product and pipeline update


Toctino® (alitretinoin)
- the only therapy approved for severe chronic hand eczema unresponsive to topical corticosteroids

Basilea currently markets Toctino® in Denmark, France, Germany, Switzerland and the United Kingdom and has appointed Almirall, S.A. as its distributor for Toctino® in other selected European markets and Mexico in June 2010.

In the U.S., patient enrollment into the phase III HANDEL study has reached around 90% of the targeted patient number. Patient recruitment is anticipated to be completed in Q4 2010 with the last patients completing treatment in H1 2011. Top line results will now be expanded to include clinical relapse data at six months after completing treatment and are anticipated to be available at the end of 2011. Submission of the New Drug Application is anticipated in 2012.

Zevtera(TM) (ceftobiprole)
- the first approved anti-MRSA (methicillin-resistant Staphylococcus aureus) broad-spectrum cephalosporin antibiotic targeting Gram-positive and Gram-negative pathogens, including Pseudomonas

Full rights to ceftobiprole are being transferred from Cilag GmbH International, a Johnson & Johnson company, back to Basilea. The arbitration proceeding against Johnson & Johnson relating to milestone payments and other damages suffered by Basilea as consequence of the rejection of approval of ceftobiprole is ongoing. An arbitration decision is anticipated before the end of 2010.

Isavuconazole
- a novel broad-spectrum antifungal with the potential to become the best-in-class azole for the treatment of severe invasive fungal infections

Basilea entered into a license, co-development and co-promotion agreement with Astellas Pharma Inc. Following the temporary hold on new patient recruitment, the process to re- open phase III clinical sites for the isavuconazole trials has commenced. First approvals from local authorities have been obtained and continuation of patient recruitment is anticipated in Q3 2010. Patient recruitment is anticipated to be completed in 2012 and first trial results are expected in 2013.

Early-stage programs
Basilea is preparing to move two novel innovative molecules into phase I clinical testing.

BAL30072
is a novel sulfactam antibiotic against multi-resistant Gram-negative bacteria. Phase I clinical testing is anticipated to start in Q4 2010.

BAL101553
is a highly soluble prodrug of BAL27862, a microtubule destabilizing antitumor drug. Phase I clinical testing is anticipated to start in Q1 2011.

Contact
Basilea Pharmaceutica Ltd. Grenzacherstrasse 487 PO Box 4005 Basel Switzerland T: +41 61 606 11 11 F: +41 61 606 11 12 email: info_basilea@basilea.com

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