Analyst Ram Selvaraju of H.C. Wainwright reiterated a Buy rating on Basilea Pharmaceutica, retaining the price target of CHF105.00.
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Ram Selvaraju has given his Buy rating due to a combination of factors including Basilea Pharmaceutica’s strategic partnership with Phare Bio, which leverages artificial intelligence to enhance antibiotic discovery. This collaboration is seen as a pioneering approach in the field, combining technological innovation with industrial expertise to address unmet medical needs and ensure commercial viability. Additionally, Basilea’s antifungal franchise, particularly Cresemba, is expected to maintain strong growth in the medium term despite anticipated generic competition. The company’s pipeline includes fosmanogepix, a potential successor to Cresemba, which could secure approval in various markets before Cresemba’s sales decline significantly.
Valuation considerations also play a role in Selvaraju’s rating, with a discounted cash flow analysis suggesting a robust enterprise value based on future revenue from key products. The analysis employs conservative assumptions, such as a 50% probability of approval for fosmanogepix, yet still supports a price target of CHF105 per share. However, potential risks include challenges in optimizing the value of existing products globally, achieving market penetration, and managing expenses to sustain profitability.