Press Release: Basilea to become a leading anti-infectives company backed by strong financial results 2021

-- 65% year-on-year growth in non-deferred revenue from Cresemba and Zevtera

-- Operating profit of CHF 1.2 million

-- Future strategic focus on anti-infectives

-- Exploring strategic options to maximize the value of oncology assets

-- Sustainable profitability from FY 2023 expected

Ad hoc announcement pursuant to Art. 53 LR

Basel, Switzerland, February 15, 2022

Basilea Pharmaceutica Ltd. (SIX: BSLN), a commercial-stage biopharmaceutical company, announced today its results for the financial year ended December 31, 2021, and strategic decisions to optimize the long-term value of its two business pillars, anti-infectives and oncology.

David Veitch, Chief Executive Officer, stated: "Following a strategic review, we have decided to separate our activities in anti-infectives from oncology. Our two businesses are at different stages of development, requiring different approaches. For our oncology assets, we aim to optimize the value through either portfolio or individual asset transactions, with partners specialized in oncology. We will focus in the future on the research, development and commercialization of innovative treatments for severe bacterial and fungal infections. Basilea is uniquely positioned to benefit from the improving business environment for anti-infectives and to become a leading company in this space, based on its proven expertise in advancing anti-infectives through research and development to the market."

Adesh Kaul, Chief Financial Officer, said: "We have delivered very strong financial results in 2021. The performance and progress of our anti-infectives business is reflected by the 29% increase in royalty income year-on-year and the more than five-fold increase of regulatory and commercial milestone payments to CHF 49 million in 2021. Also maintaining a focus on our cost structure enabled us to further improve our operating cash flow. Our strategic decision to focus on anti-infectives, will accelerate our path to sustained profitability from 2023 and provides us with the financial flexibility to both invest in our internal pipeline and access external assets."

In 2022, Basilea will continue its activities in oncology in order to ensure project continuity and progression. For derazantinib, the company will focus on continuing the FIDES-01 study in intrahepatic cholangiocarcinoma (iCCA) and the FIDES-03 study in gastric cancer, but de-prioritize the FIDES-02 program in advanced urothelial cancer. This entails stopping enrolment of patients in the substudies in first-line treatment of cisplatin-ineligible patients and in the treatment of patients refractory to other FGFR inhibitors. Patient enrolment has been challenging in these substudies, due to the evolving competitive environment in urothelial cancer treatment. For the remaining substudy, in the second-line treatment of patients with advanced urothelial cancer, patient enrolment into the first stage has been completed and patients will be followed-up through to data maturity.

Financial summary

Total revenue in the financial year (FY) 2021 increased 16% to CHF 148.1 million (FY 2020: CHF 127.6 million), reflecting the regulatory and commercial progress made in particular with Cresemba. Non-deferred revenue contributions from Cresemba and Zevtera increased by 64.7% to CHF 128.8 million (FY 2020: CHF 78.2 million). This included royalty income from Cresemba, which increased by 29.1% to CHF 53.2 million (FY 2020: CHF 41.2 million), and upfront and milestone payments of CHF 49.4 million (FY 2020: CHF 9.0 million). Other revenue amounted to CHF 16.6 million (FY 2020: CHF 15.2 million). This included CHF 14.0 million BARDA reimbursements (FY 2020: CHF 13.2 million), which are offsetting a substantial portion of the ceftobiprole phase 3 development expenses.(1)

In 2021, research and development expenses remained stable at CHF 93.2 million (FY 2020: CHF 97.4 million). The expenses mainly included the costs for the phase 3 program for ceftobiprole, the costs related to the ongoing preclinical and clinical programs for derazantinib and lisavanbulin, the ongoing pediatric programs for ceftobiprole and isavuconazole, as well as the completion of the preclinical program for BAL0891.

Selling, general and administrative expenses amounted to CHF 29.7 million (FY 2020: CHF 29.4 million). Cost of products sold remained stable at CHF 24.1 million (FY 2020: CHF 24.1 million).

In 2021, an operating profit of CHF 1.2 million was recorded (FY 2020: operating loss of CHF 8.2 million). The net loss was reduced to CHF 6.8 million (FY 2020: CHF 14.7 million), resulting in a basic and diluted loss per share of CHF 0.58 (FY 2020: CHF 1.43).

Net cash used in operating activities in 2021 was reduced by 40.9% to CHF 32.0 million (FY 2020: CHF 54.1 million). This improvement is a result, on the one hand of the significant increase in cash inflow, based on the growth of Cresemba and Zevtera non-deferred revenue contributions and on the other hand, of Basilea's continued focus on managing operating expenses, by optimizing investments into the R&D portfolio and improving the cost base through strategic transactions. Cash, restricted cash and investments amounted to CHF 150.0 million as of December 31, 2021, compared to CHF 167.3 million as of December 31, 2020. The convertible bond maturing in December 2022 (ISIN CH0305398148) was reduced by CHF 22.7 million in 2021.

Key financial figures

(in CHF million, except per share data) FY 2021 FY 2020

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Product revenue 26.2 48.7

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Contract revenue 105.2 63.3

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Revenue from R&D services 0.2 0.4

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Other revenue 16.6 15.2

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Total revenue 148.1 127.6

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Cost of products sold (24.1) (24.1)

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Research & development expenses, net (93.2) (97.4)

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Selling, general & administrative

expenses (29.7) (29.4)

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Total cost and operating expenses (147.0) (150.9)

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Profit from sale of assets - 15.0

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Operating profit/loss 1.2 (8.2)

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Net loss (6.8) (14.7)

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Net cash used in operating activities (32.0) (54.1)

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Basic loss per share, in CHF (0.58) (1.43)

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Diluted loss per share, in CHF (0.58) (1.43)

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(in CHF million) Dec 31, 2021 Dec. 31, 2020

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Cash, restricted cash and investments 150.0 167.3

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Note: Consolidated figures in conformity with U.S. GAAP; rounding

was applied consistently.

The consolidated financial statements of Basilea Pharmaceutica Ltd. for the financial year 2021 can be found on the Company's website at https://www.basilea.com/financial-reports.

Financial guidance

Based on further increasing revenue from Cresemba and Zevtera and an expected reduction of around 30% in operating expenses in 2023 versus 2022, Basilea expects to reach sustainable profitability and generate positive cash flow from operating activities in 2023.

For 2022, Basilea expects continued strong in-market sales growth of its key brand Cresemba, even accounting for an expected decrease in one-off sales related to COVID-19. The company provides the following financial guidance, which does not take into consideration the potential effect of any strategic transactions related to its oncology business:

-- In line with the expected continued strong growth of Cresemba in-market

sales, royalty income is expected to increase double-digit to

approximately CHF 59 million, reflecting the underlying health of the

commercial business.

-- Cresemba & Zevtera related revenue is expected to amount to CHF 98 -- 104

million. The decrease versus 2021 is only due to lower expected milestone

payments from partners. 2022 milestone payments are expected to be more

in line with previous years.

-- Net cash used in operating activities is expected to improve further to

CHF 10 -- 15 million.

(in CHF million) FY 2022e FY 2021a

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Cresemba & Zevtera related revenue 98 to 104 131.4

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February 15, 2022 01:15 ET (06:15 GMT)