Ladies and gentlemen, welcome to the Basilea Pharmaceutica’s Full-Year 2020 Conference Call and Live Webcast. I am Sandra, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. [Operator Instructions] At this time, it's my pleasure to hand over to David Veitch, Chief Executive Officer. Please go ahead, sir.

Hello. This is David Veitch, CEO of Basilea. And I would like to welcome you to our conference call and webcast, reviewing our financial results and key achievements for the full-year 2020 and discussing our upcoming milestones and financial guidance for 2021. I would also like to mention that this call contains forward-looking statements. Joining me on our call today are Adesh Kaul, our Chief Financial Officer; and Dr. Marc Engelhardt, our Chief Medical Officer. This morning, we issued a press release and our financial report on our results for the full-year 2020. These documents are available on our website at basilea.com. I would first like to provide a brief summary of our key achievements for 2020 and year-to-date 2021. As already outlined of the half year, we have remained fully operational despite COVID-19. We achieved significant clinical milestones. We started two new clinical studies for derazantinib and lisavanbulin, and our other clinical studies are progressing well. Our two marketed drugs, Cresemba and Zevtera, continue to show a strong commercial performance in 2020 leading to CHF 78 million of non-deferred revenue contributions. A more than 13% increase versus prior year. In the 12 months to September 2020 in-market sales for Cresemba grew by almost 30% year-on-year. We have executed two strategic transactions. We successfully issued a new convertible bond due 2027 and extended the maturity of a substantial part of our debt from 2022 to 2027 by repurchasing a proportion of our 2022 convertible bond. We have also taken the first step to move from two different locations in Basel into a new headquarters in mid-2022 by a sale and lease back agreement for our Cowen headquarters property. These transactions resulted in a positive one-off effect of about CHF 15 million on our P&L and generated a cash in-flow of approximately CHF 59 million. As of December 31, 2020, Basilea’s combined cash and investments amounted to approximately CHF 167 million. We also announced just yesterday the divestment of our Chinese R&D facility. This transaction provides us with both increased sourcing flexibility going forwards and reduced operational cost in the mid-term. Adesh will now give you an update on our commercial progress, and present more detailed financial highlights for the full-year 2020, as well as provide our financial guidance for 2021. Then Marc will provide you with detailed information on the progress of our clinical programs. I'll now hand over to Adesh.

Thank you, David. In 2020, together with our partners, we continue to make significant progress in the commercialization of Cresemba and Zevtera. The most current public in-market sales numbers available for Cresemba show that in the 12-month period ending September 30, 2020, the global sales of Cresemba grew by more than 28% year-on-year to $244 million. Partnerships continue to play an important role in the execution of our global commercialization strategy of our brands, and provide a strong basis for the future revenue growth. In 2020, Cresemba was launched in key countries in Asia Pacific and gained regulatory approval in Russia. Zevtera was approved in China for the treatment of lung infections. These achievements triggered milestone payments of around CHF 9 million for both brands combined. In January 2021, Pfizer crossed the Cresemba sales threshold that triggered a $10 million milestone payment to us. This is an impressive sign of the continued strong sales performance of Cresemba, and a high medical need it serves. In total, Basilea has received to date more than $260 million in upfront and milestone payments from its Cresemba and Zevtera partnerships. And there are potential milestones remaining of more than $1 billion in total. Marketing application processes have been initiated in a number of additional countries, including for Cresemba in China with a marketing authorization applications were accepted for regulatory review last year. Moving on to financials. I will highlight some of the key financial figures that were published in today's press release, and in more detail in the full-year report. I would like to mention that all figures I will refer to are in Swiss francs. Financials for the full-year 2020 are characterized by a significant change in revenue mix, and the positive impact from our headquarters property sales. As already anticipated at the beginning of 2020, deferred revenue contributions from Cresemba and Zevtera, which relates to upfront development and regulatory milestone payments received in prior years decreased 25.9% to 33.8 million. Most importantly, non-deferred revenue contributions, which most closely correlate with the actual in-market performance of our brands, increased 13.8% to 78.2 million. Other revenue components decreased by 22% to 15.6 million, mainly driven by lower order reimbursements due to lower costs incurred related to the completed ceftobiprole skin infection study and the impact of the slight delay in recruitment in the blood stream infection study due to COVID-19. Considering all these factors, total revenue decreased by 5.1% to 127.6 million. Cost of product sold increased by 27.6% to 24.1 million, mainly due to the increase in product deliveries to partners. R&D and SG&A expenses decreased 4.4% to 126.8 million, reflecting our continued focus on cost management. We reported an operating loss of 8.2 million, which is an improvement of 52.3%, compared to 2019, and a net loss of 14.7 million, which is an improvement of 34.4% year-on-year. Net cash used for operating activities was reduced significantly by 15.2% to 54.1 million, and it does not even consider the proceeds from the headquarters property sales and our convertible bonds transaction. As of December 31, 2020, Basilea’s combined cash and investments amounted to 167.3 million. Moving on to our convertible bond transactions, which were completed in July, the main purpose of the transactions was to improve the debt maturity profile. To this end, we conducted two transactions. The first transaction concerns the issuance of a new bond with maturity 2027. The provisional allocation was very successful reflected by the fact that we were able to allocate a maximum targeted amount of 125 million. The second transaction concerns using the proceeds from the new bonds to repurchase approximately 50% of the 2022 goals. Because many bondholders held on to their bonds rather than taking the opportunity to sell them at a cash premium, we reduced the size of the 2027 bonds, as we had no intention of significantly increasing our debt level to this transaction. We were therefore able to reduce the 2022 bonds around 25% in our first step [has] earmarked the majority of the cash from the issuance of the 2027 bonds not already used to repurchase the 2022 bonds to further reduce the 2022 bonds by another 25%. At year-end 2020, we have produced the outstanding nominal amount of the 2022 bonds by more than CHF 50 million. Hence, we remain confident that we will meet our initial goal of reducing the 2022 bond exposure significantly, but over time, rather than in a single step. Yesterday, we announced that we have entered into an agreement with a custom manufacturing organization PHT International to divest our Chinese R&D subsidiary. The total purchase price will be $6.3 million, of which $2.5 million are due upon closing and the remaining $3.8 million over the course of next three years. All 72 employees and the facilities will be transferred to PHT, which ensures continuity for our ongoing R&D projects and also provides sufficient time to optimize our external sourcing of R&D services. We expect closing off this transaction in the second quarter of 2021. With regard to the expected financial impact, the annual operating expenses related to our Chinese subsidiary are in the mid-single-digit million range. The transaction will have immediately a small positive P&L impact upon closing in 2021. Due to the transition period and the continued support being provided by PHT to ensure continuity in our R&D activities, the positive impact on our operating expenses will be limited in the initial 12-months after closing. We expect to see increasing levels of cost savings thereafter, as the [accounts start leveraging] increased flexibility in sourcing external R&D services. I’m turning now to our financial guidance for 2021. We expect a continued improvement of our revenue mix reflected by an anticipated 38% to 51% increase to 108 million to 118 million in non-deferred revenue contributions from Cresemba and Zevtera. As in the past, the range reflects several potential milestone events for 2021. This should be the last financial year that we separately discussed deferred revenue contributions from Cresemba and Zevtera after our expected decline by around 90% to 2.5 million. Now, that we have fully recognized the past upfront and milestone payments from our partners, Pfizer, Astellas and Gosun. Overall, we expect an increase in total revenue to 128 million to 138 million. Once again, we expect total R&D and SG&A expenses to remain approximately stable. Cost of products sold is expected to increase based on higher product deliveries to partners. Based on this, the anticipated operating loss amounts to 13 million to 23 million, which is below the operating loss reported for 2020, excluding the one-off positive impact from the sale of the headquarters property. Finally, we assumed a strong cash position of around 110 million to 120 million at year-end, excluding any potential impact from a reduction of the outstanding convertible bonds. Our year-end cash and investment guidance considers that certain milestone payments and product deliveries may actually occur towards the end of the year, which would result in us reporting the P&L impact in 2021, but the corresponding cash in-flow only happening in 2022. Also, our guidance takes into consideration that part of the purchase price for our Chinese subsidiary is only going to be paid after 2021. This should bridge the cash guidance to the operating loss guidance. I will now hand over to Marc for the clinical development update.

Thank you, Adesh. Let me start with our antibiotic ceftobiprole. In Europe and several markets outside of Europe, Zevtera was approved for the treatment of community and hospital-acquired pneumonia. One of our key priorities for ceftobiprole is to gain access to the U.S. market, which is by far the most important country for the commercialization of branded hospital antibiotics. Based on special protocol assessment agreements with the U.S. FDA two successful cross-supportive Phase 3 studies are necessary for registration in the U.S. Our Phase 3 program includes one study called TARGET in acute bacterial skin and skin structure infections, and one study called ERADICATE and Staphylococcus aureus bacteremia of bloodstream infections. The program is funded up to approximately 70% by the Biomedical Advanced Research and Development Authority or BARDA, which is part of the U.S. Department of Health and Human Services. This allows you to advance the development of ceftobiprole portfolio to market in a cost effective way. In 2019, we reported positive top line results from TARGET study. For the ERADICATE study, we expect that patient enrollment will be completed by year-end 2021 leading to the reporting of [top line] results in the first half of 2022. If the bacteremia study is also positive, Basilea plans to submit a new drug application to the U.S. FDA. As ceftobiprole is designated a qualified infectious disease product by the FDA for these indications, if approved, it will be eligible to receive 10 years of market exclusivity in the U.S. from the date of approval. Nearly 120,000 Staphylococcus aureus bacteremia or SAB infections have been reported in the U.S. in 2017. The ERADICATE study targets complicated SAB, which are characterized by concomitant or metastatic infections such as bone, joint, or heart valve infections, persistent bacteremia or bacteremia in patients on dialysis. SAB is an area of high medical need with substantial morbidity and a 30-day mortality of approximately 20%, and there are limited antibiotic treatment options with only two approved treatments in the U.S., which are vancomycin and daptomycin that cover both methicillin susceptible and methicillin resistant Staphylococcus aureus or MSSA and MRSA. In 2020, the FDA approved a protocol amendment, extending the maximum treatment duration from 4 weeks to now up to 6 weeks in the ERADICATE study. This is important because it allows for the inclusion of patients with more difficult to treat infections, including those with complications such as osteomyelitis and epidural or cerebral abscess. Now moving on to oncology. Our lead oncology drug candidate is derazantinib, which we in-licensed in 2018 from the U.S. company ArQule, which is now a wholly-owned subsidiary of Merck. Derazantinib is a targeted orally available small molecule inhibitor of the fibroblast growth factor receptor or FGFR family of kinases. FGFR genetic operations, for example, gene fusions, mutations or amplifications has been identified as potentially important therapeutic targets for various cancers, including intrahepatic cholangiocarcinoma or iCCA, urothelial, gastric, breast and lung cancer. Due to this [small potential] we refer to derazantinib as a pipeline in the product. Our development strategy focuses on achieving differentiation over other FGFR kinase inhibitors by leveraging the unique properties of derazantinib. Key differentiating factors include its unique kinase inhibition profile and its clinical safety profile. Besides FGFR, derazantinib also inhibits the Colony-stimulating Factor 1 Receptor or CSF1R kinase, which has been reported to play a role in immune response to tumors. Derazantinib also inhibits to vascular endothelial growth factor 2 or VEGFR2 kinase, which is known as a therapeutic target in the anti-androgenic treatment in multiple cancers, including gastric cancer. Basilea's clinical development program currently comprises 3 ongoing studies. FIDES-01 and intrahepatic cholangiocarcinoma or iCCA, which is a type of bile duct cancer and urothelial cancer and FIDES-03 started in 2020 in gastric cancer. In February 2021, we reported positive top line results from the first quarter of the FIDES-01 study, which provides a clinical proof-of-concept for derazantinib as monotherapy in its first indication. This first cohort includes 103 patients with FGFR2 gene fusions positive response iCCA in a second line and post-second line treatment setting. FGFR2 fusions are currently about 50% of the patients with iCCA. The objective response rate in these patients was 20.4%, with a median progression-free survival of 6.6 months. These results are consistent with an earlier Phase 1/2 study conducted by ArQule and they also confirmed the interim results from the response study that we reported in 2019. The efficacy results shown in the derazantinib are consistent with the efficacy [Indiscernible] and FGFR2 fusion positive iCCA patients and the safety and tolerability data for derazantinib’s potential differentiation versus other FGFR inhibitors. To be noted as the data from FIDES-01 are not fully mature yet and a number of patients are still continuing that treatment. We have expanded the FIDES-01 study with an additional cohort of iCCA patients with FGFR2 gene mutations or amplifications in that tumor. In October 2020, we presented pooled efficacy data, including patients from the second cohort, the [actual] Phase 1 study and our expanded access program. This pooled analysis demonstrated that derazantinib also has anti-tumor activity in this patient population. These are encouraging results as other FGFR2 inhibitors and advanced clinical development, so far only [Indiscernible] in this patient population. We’re therefore looking forward to interim results from the second quarter Phase 1, which are expected in the first half of 2021. [Indiscernible] is a Phase 1, 2 study with derazantinib as monotherapy and in combination with Roche’s FIDES-01 checkpoint inhibitor, atezolizumab. This is a biomarker driven multi-core clinical study in patients with advanced urothelial cancer, expressing FGFR genetic aberrations and interim resides from derazantinib are expected to become available in the first half 2021. We recently reported to recommend the Phase 2 dose for the derazantinib atezolizumab combination in patients with advanced solid tumor in this study. Interim efficacy results for the derazantinib atezolizumab combination in patient with urothelial cancer are expected to become available in the second half of 2021. We also plan to amend the FIDES-02 protocol to store a high dose of derazantinib in two cohorts of this study. This dose increase is supported by the safety and tolerability profile of derazantinib at the current dose of 300 mg per day. This may provide additional benefits in monotherapy and combination to patients with FGFR-positive urothelial cancer and also considers the evolving highly competitive treatment landscape in urothelial cancer in patients both with and without FGFR genetic aberrations. FIDES-03 was started in 2020. This study explores derazantinib as monotherapy and in combination with atezolizumab and with Lilly anti-angiogenic drug ramucirumab in patients with advanced gastric cancer and FGFR genetic aberrations. Interim results for derazantinib monotherapy enter definition of the recommended Phase 2 dose for the combination of derazantinib with ramucirumab, that’s another anti-cancer drug of [Indiscernible], anticipated for the second half of 2021. We have decided to investigate derazantinib and gastric cancer based on its unique kinase inhibition profile, from its increasing of in-vivo data and the high medical need in this indication. Clinical supply agreements are in place with Roche and Eli Lilly who provides atezolizumab and ramucirumab. Moving to our tumor checkpoint controller lisavanbulin formerly known as BAL101553. We are focusing our clinical development activities with lisavanbulin on glioblastoma, the most common and aggressive form of primary malignant brain tumors and an area of high unmet medical need with [Indiscernible] and very few treatment options available. Lisavanbulin is a novel microtubule targeting small molecule, which induces tumor cell death through spindle assembly checkpoint activation. It can be administered oral and IV crosses the blood-brain barrier and has shown [potent activity] in brain tumor models in monotherapy and in combination therapy. In line with our approach to involve biomarkers early in clinical development, we have been evaluating a panel of biomarkers. One of those is end binding protein 1 or EB1, which was previously identified in preclinical models as a potentially response biomarker for glioblastoma. We have completed Phase 1 glioblastoma clinical study with daily oral dosing; we have observed a profound and exceptional objective response in the glioblastoma patients whose tumor tissue was EB1 positive. This patient continues on treatment for more than 2 years now. Based on our encouraging clinical and pre-clinical data with EB1, we have started a biomarker-driven clinical Phase II study in glioblastoma in 2020, using EB1 positivity as a patient selection criteria. Interim results on this study are expected in the second half of 2021. I will now turn over to David.

Thank you, Marc. In summary, we are on track with the execution of our strategy with our two business pillars of oncology and infectious diseases. We are significantly growing our cash relevant revenues from our marketed brands Cresemba and Zevtera. We’re also on track to have Cresemba launched in 60 countries by the end of 2021. We're also continuing to advance our clinical programs towards the next milestones through 2021 and 2022. 2021 holds a number of important milestones, especially related to our clinical programs. We anticipate the top line results from the isavuconazole phase 3 study conducted in Japan by our partner Asahi Kasei Pharma. We also expect completion of patient enrollment into the Ceftobiprole Phase 3 ERADICATE SAB study. For derazantinib, we have already reported top line results for the FIDES-01 FGFR2 gene fusion cohort in iCCA and in the first half of this year; we’re also expected interim results from the second cohort with other FGFR2 genetic aberrations. In addition, we are looking forward to interim results for derazantinib as monotherapy and in combination in urothelial cancer. And we also expect the first data in gastric cancer in monotherapy and combination therapy for derazantinib. For lisavanbulin, we are expecting interim results from the EB1 biomarker driven Phase 2 study in recurrent glioblastoma. And finally, as we've just recently announced, we have passed an important preclinical milestone for a compound that we hope can be in the clinic early in 2022, hopefully adding to our already exciting pipeline. Thank you for your attention and we’ll now open the line up for your questions.

[Operator Instructions] The first question comes from Louise Chen from Cantor. Please go ahead.

Hi, congratulations on all the progress this year. Thanks for taking my questions. So, my first question for you is, how do you plan to show the competitive advantages of derazantinib, through your clinical trial programs you have several readouts coming up still through the end of the year? And then second question is, can you elucidate more the market opportunity for lisavanbulin, the competitive advantages of that product and where would fit into the treatment paradigm if it were approved? And the last question is, can you provide any more color on your potential first in class small molecule kinase inhibitor that you had disclosed recently? Thank you.

Okay, thank you, Louise, for those questions. Actually, why don't we begin Marc with you in terms of, you know, how do we hope to show sort of advantaged or differentiation for derazantinib and then also, maybe you could also address Marc the lisavanbulin and its sort of positioning in the glioblastoma market. Why don't we start with you, Marc?

Yeah, certainly David. Thank you very much for the question. So, as mentioned before, we are building on the intrinsic features of derazantinib the kinase inhibition profile and the safety profile to show differentiation. I think one of the key studies that we are conducting are the combination with derazantinib and also the combination with [Indiscernible] gastric cancer. So these readouts that we'll kind of see during the year or towards the end of the year, will certainly provide us with a direction of, out of the [Indiscernible] development further and I think the FGFR inhibition together with the CSF1R inhibition rationalizes this combination and considering that the CSF1R inhibition of derazantinib is unique amongst kinase inhibition – amongst FGFR inhibitors we think that this will provide the differentiation in addition to the clinical safety profile. To the second question, the market opportunity of lisavanbulin here, GBM is clearly a proof of concept indication. We have seen effective signals in the Phase 1 study that we could link to EB1 positivity. We have now relatively robust prevalence estimates for EB1 positivity in GBM, which is in a range of 5%. So, this will not be a huge market segment, but if we are successful in GBM in a refractory setting, we would certainly be able in this indication to move directly in a first line newly diagnosed setting. And I just wanted to mention that we have a study with the adult brain tumor consultant in the U.S. ongoing to assess the recommended Phase 2 dose and the maximum tolerated dose in radio therapy combination. So that would support the study in a first-line setting. In addition, we are conducting, and we will be presenting later this year prevalence assessments in non-GBM tumor types and this would provide, you know, the basis for a market size estimate beyond GBM. I think that that's in-short the answer to these two questions. I'm not sure, Adesh did you want to add anything to that?

I think the only thing I would add is that a GBM of course is a high unmet medical need area, and at the end of the day, the market opportunity will also be driven by the extent of the clinical benefits that can be provided to this patient population. Then maybe on the earlier compounds that he asked, I think we are at this point in time – we have provided the level of specificity that we can give just as a reminder, this is a an externally sourced compensated example for a partnership that we have done on the preclinical side in 2018 and [aimed at] now to this milestone, it's a small molecule, it’s our area of focus, a kinase. With a unique kinase inhibition profile, which we believe would provide the opportunity for a targeted development on the one hand, and also for a potentially, first to market opportunity with this specific mode of action. It is probably a little bit too early to disclose more about the compound. We will certainly provide some more information when we enter the clinic, which is planned for the early part of 2022.

Thank you.

Thank you.

The next question comes from Arsene Guekam from Kepler Cheuvreux. Please go ahead.

Hello, gentlemen. Thank you for taking my question. First of all, first question on the horizontal need. What is your strategy with [Indiscernible] it assumes that the next result will be positive? What will be your strategy? Are you seeking for a partner or if you could elaborate a little bit, would be great? Two quick questions. Could you remind me the patent expansion in Europe and in the U.S. for Cresemba and Zevtera? And last one for Adesh, [I’m not sure to well understand] could you give us more color on your guidance, mainly in the discrepancy between [EBIT for cash] under cash expectation and the end of 2021?

Okay. So, let me, I'll take the middle one of those questions in terms of the Cresemba, it’s not always patent actually, but the exclusivity – the effect of exclusivity in the U.S. is 2027. It's the end of Q1 2027 without the pediatric program approved with the pediatric program, which is ongoing, it extends into the end of Q3 2027, and then in Europe, it's 2025. But with the pediatric program, which is ongoing, as I say, if that's approved, that takes you to 2027, in Europe, as well. So, in terms of Europe and the U.S., we talk about the effect of exclusivity, as long as we complete the pediatric program, which is well on track to 2027 in those two areas, geographies. In terms of the strategy and the partnering strategy for derazantinib, I think the important point is that we've got a history of us as a company of partnering at the end of Phase 2. We aim to try and participate in the Phase 3 to enable us more participation. Sort of down the line we participated with pharma or when the cases have to buy [Indiscernible] with the U.S. Government. That doesn't mean that forevermore, we will always go down that model. But we have a view at the moment that for derazantinib to maximize this pipeline in a product, that we would probably seek the partner in approach for the Phase 3. But as I said, that's not sort of a [Indiscernible]. That's just like a history and looking at the potential to maximize this pipeline and a product. It probably makes most sense. Having said that, the lisavanbulin it might be a very different situation of lisavanbulin in a smaller targeted niche area, if it was initially. For example, in GBM, we could even consider commercializing ourselves in selected markets, not everywhere, but in selected markets. So, it depends a little bit on a number of factors, the strength of the data, the speed, the size of the market opportunity, etcetera. There are a few factors that come into play, and obviously clearly also the interest from potential partners. That's what I'd say a little bit about the strategy. Adesh, do you want to come back on the financial question?

Sure. So thanks for the question Arsene. I suppose the biggest gap between the P&L guidance, which is the operating loss guidance of 13 million to 23 million that we have guided for, and the cash position at the end of the year, it is probably the timing when certain milestones would happen, and when product delivery happen. Because how this usually happens is, we hit a milestone. We get a notification at some point. We issue an invoice, and if such a milestone, for instance, is hit in November or December, we would of course record the milestones in accordance with U.S. GAAP in our profit and loss statements. The cash would only be coming in after December 31. And because it is sort of [really binary] invoice has been paid on the 31st of December or not, we sort of have to assume the full, let’s say, invoices or the due date of invoices. So that's the whole secret behind it. In essence, you could almost like say there is a buildup, an expected buildup of working capital towards the end of the year. But the working capital does not relate to any product in the sense of inventory, it relates to receivables.

Okay, okay, very clear. Thanks for that.

The next question comes from Ram Selvaraju from H.C. Wainwright. Please go ahead.

Hi, guys, this is Robert Burns online for Ram. Thank you for taking my questions. Just two, if I may. So, the first one, could you discuss how you're thinking about the opportunity – the revenue opportunity for derazantinib in the [FGFR2 mutated biliary tract] cancer space, given the relatively comparable Median PFS to that of [brigatinib] and also taking into account [Indiscernible] lead time in that area. And then my second question is, how are you thinking about the kind of landscape, as some of these next generation FGFR2/3 inhibitors are making their way through the pipeline. For example, relay therapeutics, [Indiscernible]? Thank you?

Yeah. Thank you for the question. Why don't – Adesh, do you want to take the first one on the iCCA, sort of opportunity, how we’re thinking about that, and then Marc, if you could comment maybe on the future FGFR compounds?

Sure. So, I think we are not looking at iCCA [in our isolation], but I think it is a good case for the point that we believe strongly in differentiation. So, when it comes to iCCA, for instance, as you correctly pointed out, I think from the perspective of clinical benefit, a relevant factor is the progression free survival. And as such, we are actually quite pleased with the outcome of the FIDES-01 study that we have just announced with PFS up 6.6 months. So far, we believe we are in the range of what has been reported with other FGFR inhibitors, generally speaking as a class. But then we – differentiation at the monotherapy in iCCA would from our perspective driven by the safety and tolerability profile of derazantinib where we believe that the profile is actually quite competitive. If you look at this page, it's quite favorable, and potentially the differentiation through the cohort 2, which is still ongoing, which is in other genetic aberrations in FGFR2 gene fusion, which is in patient population that is smaller than the gene fusion patient population that clearly would provide a differentiation versus, for instance, you mentioned pemigatinib, but also other FGFR inhibitors that are in more advanced clinical development. So in essence, it is really about differentiation, but then also to be quite honest, our strategy is not necessarily to position derazantinib as an iCCA drug, but we believe that the scope for derazantinib is far beyond iCCA. So, therefore, we are looking at the urothelial cancer indication remark, previously indicated that based on the unique kinase inhibition profile, we believe that there is scope for differentiation, especially in combination with immune checkpoint inhibitors. There's also scope for differentiation on the safety and tolerability profile. And then in gastric cancer, where we are even – we have a potential first-in-class opportunity. So, we are looking broader at derazantinib and just looking at the iCCA opportunity. And then maybe, on your second question, I would hand over to Marc.

Yeah. I think the newer FGFR inhibitors that we're seeing now, coming to clinical study, I think there's a number of them tested mainly in China, but also, as you mentioned, really 4008, I think there's little published data on these inhibitors out there. I think the really compound is supposed to be very selective for FGFR2. We’ll need to see how these play out. How much selectivity really plays a role also in terms of maybe the toxicity profile? Too early to say, I would make a statement at this point, we really need to see the clinical data whether these [comments] provide comparable efficacy, and especially whether the highest selectivity as an intern – has an impact on the safety profile. One thought maybe for the derazantinib differentiation that – as I said, in response to the first question, I mean, our differentiation, part of our differentiation is really based on the activity to other kinase, especially CSF1R and also FGFR2 where we think when using combination actually this may provide advantages and profiling against other FGFR inhibitor. So it will be interesting to see how the various selective FGFR2 inhibitors, for example, how the benefit risk is in the end.

Thank you.

Next question comes from John Priestner from Edison Research. Please go ahead.

Hi, congratulations on the progress and thanks for taking my questions. So, I have three. The first is really, you know, what are the key sales catalysts for Cresemba and Zevtera over the next few years we should really be looking out for? And the second, I understand the sellers from the University of San Diego have initiated a Phase 3 trial with Cresemba for the treatment of COVID-19 associated pulmo aspergillosis. Can you really discuss the potential implications and benefits of [Indiscernible]? And then my final question really is given the [involving] standard of care and gastric cancer, how important is the [Indiscernible] paclitaxel derazantinib cohort? And how does this really expand the potential patient population for derazantinib?

Okay. Thank you for those questions. I'll actually – I'll address the first one, the one around the sales catalyst. I mean, in terms of obviously, as you’ve seen from the data that Adesh has talked about, we're actually in the existing markets, we've launched Cresemba and Zevtera, sales are going well, we've highlighted before the majority of our sales are coming from Cresemba. And Cresemba actually is growing in all markets that it's in. So, we have continued growth there, but sort of, in terms of new catalysts for the future, clearly two markets that are very important that Adesh actually alluded to is, China, and the launch in China and also Japan. And obviously China, we've – as he said, we've – had accepted out two marketing applications by the regulators. We don't know yet how long that will take and whether we need to require to do additional studies or not, but the good news is that the regulatory process by our partner Pfizer, is underway. And then Japan where we did have to do a Phase 3, and as I said, that's actually completed enrollment now and we expect the results later this year. If they're positive, then we begin or our partner Asahi Kasei begins the regulatory process in Japan. So they would be two very strategic important markets for us because they represent we believe about 25% of the global potential of the compound. So, they will be two major events and then for Zevtera, ceftobiprole, it's clear the approval we got for China is important. So, the launch in China in 2022, end of this year, is very important. And then also, the most important, though is the U.S., Mark mentioned that. So, opportunity for Zevtera we believe is the U.S. and obviously then the next major event there was completing the Phase 3 study, as he said at the end of this year, and then the results of that in the first half of next year. And if that's positive, then obviously every focus we will have is seeking the regulatory approval in the important U.S. market. So that's sort of the answer to the major sort of catalysts for the Cresemba and Zevtera. Marc, can you comment on the Estela, San Diego collaboration with regard to looking at in terms of COVID-19?

I can comment, but cannot provide a lot of details to this because it's not in our territory. We know also from Germany, about case theories of COVID-19 patients who acquired an invasive aspergillosis and the use of Cresemba. I think Cresemba is particularly opposite to this because of, you know, the pharmacological profile and also the drug interaction profile, which allows us to, you know alleviate concerns regarding interactions with other compounds. The percentage of patients with severe COVID-19 and lung infections that suffer then from invasive aspergillosis, I'm not sure whether that's entirely clear. Because of the, you know, relatively high prevalence of COVID-19 this may be a sizable number, but I'm not – I don't know whether there is a clear prevalent estimate of this. But I would consider this really an invasive aspergillosis in these patients is secondary. And that [Indiscernible] which has shown to work and following [Indiscernible] based aspergillosis [Indiscernible] it is very well suited to treat these infections. And I think the other question was the value of the ramucirumab paclitaxel on the cohort. I would approach this from a perspective that ramucirumab paclitaxel is the key treatment standard in the second line, metastatic setting of gastric cancer, and that's quite a large group of patients. And I think it's quite important to – and in the group of about 10% of FGFR, [aberrations industry] cancer patient to target these patients or may improve their outcome by adding an FGFR inhibitor to this combination. In our viewpoint, the ramucirumab paclitaxel is quite well established. I also think it will stay the standard in second line treatment, even if the [primary] landscape may shift a little bit. That could be, you know, but in the perioperative setting [Indiscernible] is now increasingly used in the context of the [flock] regimen. So if these patients occur early, there may be a concern of re-exposing them to [Indiscernible]. But this is probably a relatively limited group, but if the first line treatment changed from a 5-FU [Indiscernible] immunotherapy combination, I think that would not necessarily impact the second line. And then we're also running a atezolizumab derazantinib combination cohort, which then may actually help us with the state of a positive to rationalize going in gastric cancer, metastatic setting first line. I'm not sure whether that answers the question. So, if you have any other questions open, bring them on.

No. That's great. Thank you. Thanks for answering all my questions.

Thank you.

The next question comes from Brian White from Calvine Partners. Please go ahead.

Yes, thanks. I've got a couple of questions. I see them. I'm still a little bit confused on the strategy for lisavanbulin in terms of development. So, looking at EB1, it sounds about 5% or GBM patients, is the intention then to move on to other biomarkers or some appears to be other relevant ones to look at, or to move on to [all comers], or to the cat, other tumors where EB1 is relevant [Indiscernible]? And then secondly, just again, I hate to ask another question about differentiation of derazantinib, but it's very clear that resistance is going to be an increasing issue for the FGR inhibitor class in general. I wondered if there was any merit in the additional activities in the CSF1R pathway we, perhaps, which may help in terms of having potentially a better resistance profile than some of the competing, already commercially available products? Thank you.

Yeah. I mean, I think, Marc, why don't you kick off and then I'll come back, in terms of the EB1, the strategy, and the approach there?

Yes, certainly. We are – so I think EB1 to us is a biomarker that we've known about for a long time. On animal experiments, it is biomarker back in [2015], and we've seen that this was a response-predictive biomarker in glioblastoma in animal models. And then the EB1 is a [Indiscernible] on the microtubules, which has a function regulating the dynamic of the microtubules and there has been descriptions also from other authors that have shown that this is a potentially prognostic marker, for example, breast cancer. So, looking at the evidence we have in terms of animal models, it was quite, I think, intuitive to say this, biomarkers really is on the path of physiological pathway to make sense. We have then proposed a relatively high threshold for EB1 positivity based on the clinical data we've seen in a couple of patients. And with a threshold, we are now selecting about 5% of positive patients into our Phase 2 study and this will provide a proof of concept. We have not published, but we know that EB1 is or EB1 positivity also occurs in other cancer types, but we have submitted this for publication later this year. So, we can provide a more detailed update and talk about other cancer types. This could go down either, you know, tumor specific role. If we see EB1 positive in a low percentage of the larger content types or even in an agnostic role. What we do in parallel is that we are sequencing all patients who go into our study in our EB1 positive and it could be a refinement of the biomarker in the sense that we made the EB1 positive population responders and non-responders and that may define the signature further. For now, the problem is really directed towards EB1, but of course, we try to get a deep understanding, you know how EB1 is genetically characterized, and whether the biomarker signature can be further developed.

Just to add on the EB1 strategy. What's clear though, is we're not planning on starting the next non-GBM studies, until we've proven the concept that it works. The EB1 is a response-predictive biomarker in GBM. If we prove that and it works, and we know that we predict in the second half of – before the end of this year, then we could look at moving into other tumor types in the way Marc described. But clearly, if it doesn't work, then obviously the program will stop. And just to be clear on that point. In terms of the other point about the differentiation of derazantinib and whether maybe the resistance could be different having FGFR and CSF1R, etcetera. Maybe, Marc, that's another question for you, the best to answer that.

I think it's a very interesting thinking. And I think recently, people have talked more about that the [FGFR] is located such a central place in the signaling cascade, that the FGFR inhibition may be involved also in modulating resistance to other protein kinase inhibitors. And certainly, if we could show that the CSF1R inhibition really changes the tumor immune microenvironment, I think that would just be an additional component to it. So, yes, that certainly is the extra inhibition in cells and the inhibition of other kinases like VEGFR2 and CSF1R could play a role in modulating resistance to other kinase inhibitors.

Okay, that's helpful. Thanks Marc.

The next question comes from Paul Verbraeken from Research Partners. Please go ahead.

Yeah. A few questions on Cresemba. First, it comes based on the Astellas numbers in which they give an outlook for Q1 of this calendar year, which is quite cautious seeing a year-on-year decline. The question is, are they just being cautious or is there still a corona effect or are there some underlying causes there? So that would be the first one. The second is on, also on Cresemba in the U.S., if I understand correctly, the in-market sales were up some 9% last year, can you give a little bit of a feeling of the development of the number of prescriptions versus average price development? Because I can imagine if people are unemployed, the reimbursement goes through public rather than private health insurance. So what was the effect of that influence last year? And the last one, if I may, on the handover of the manufacturing of Cresemba to Pfizer, is it now completed? And what was the impact on the numbers in 2020? Thanks.

Thank you for the questions. In terms of the U.S., what I would say is that, to look at one quarter to the next is sometimes it was not that meaningful. There’s a little bit of a Sawtooth Effect from one quarter to the next. I can't comment on whether Astellas is being conservative, but what I can say is that the gross sales growth in last year for the full-year, if my memory serves me correct it is around 13%, but it's – so it's healthy from a gross sales point of view. You are correct, by the way, in your comment about the channel when the discounts, because obviously more people in 2020 were out of employment, and there was more Medicare, Medicaid lower, a bigger discount channels used. But that's obviously hopefully, if COVID starts to be managed in a different level than 2020. That's sort of one off effect. And that will affect gross to net. What we tend to look at is, is the underlying health in the gross sales? And so, you know, the double-digit U.S. in our most mature established market, the U.S. the double-digit growth last year is what we focus on in terms of showing the underlying health of the business and post-COVID we hope that the gross to net will also, you know, reflect go back to what it was before. So, yeah, that's the sort of the view on Cresemba in terms of the U.S. In terms of – one other factor that obviously was a factor that I think we made a comment in a previous either half year or different press release where we talked about the obviously the U.S. dollar to Swiss franc exchange rate that was another factor that actually affects Basilea, when the exchange rate goes in favor of the Swiss franc, because obviously it Astellas is selling in dollars. So, there are a couple of factors that are that you hope are more like one off events rather than, you know, constant events. So, which is why I say we, we tend to look at the volume growth, the organic volume growth, and that's looking very healthy in the U.S., even though it's been launched a number of years. That's my comment on Cresemba. In terms of the transfer to Pfizer of the supply, Adesh, do you want to take that question?

So, first, where do we stand? We're expecting in 2021 to actually keep on supplying Pfizer with their API and with some [Indiscernible] that I would extend to 2023. So, in essence, handover is partially completed. On the API level it will be completed by the end of the year. And then we may be carrying on supplying them with some Cresemba for another couple of years. On the impact perspective, some numbers have been disclosed. Some [haven’t]. What we have disclosed in financial report is that product sales to Pfizer amounted to 38 million in 2020. That 38 million included 20 million in – or 21 million in deferred revenue for the actual product sales work in essence, the 17 million difference between the deferred revenues and the total product revenues or product sales related to Pfizer. So that gives you sort of a perspective on 2020. Then as indicated in 2021, this will continue in 2022. We would of course expect this to be sort of fade away. This will then have an impact on a positive impact in turn on our cost of products sold, because as you know, on the product sales to Pfizer, we have sort of limited margin, because the margin is coming through the royalty payments and the milestones that we get from Pfizer on that sale. Does answer your question Paul?

Yeah, that’s clear. Thank you very much.

Thank you.

The next question comes from Kieron Banerjee from Goetzpartners. Please go ahead.

Hi gentlemen. Thank you for taking my question. Just two for me, quickly. I know, firstly, don't break out the Zevtera versus Cresemba mix, but could you give us sort of indication onto whether the Zevtera was better or worse than it did in the previous financial year because I think it was slightly underperformed with your expectations? And then secondly, could you provide a little commentary on how you think the reimbursement environment for antibiotics is changing, especially in the U.S. the head of the Zevtera launch? Thank you.

Adesh, do you want to comment on the product revenues? What we can? I can come back on the environment.

So with regard to Zevtera, I think there are two separate points. One is the in-market performance, which generally speaking increased year-on-year. The other point is that unlike with Cresemba for Zevtera, we are only doing product sale to our partners. So, we don't have royalties. And hence, our revenues do not necessarily reflect exactly how the product is doing in the market in a given period. And after not breaking it out, we can't comment on how our Zevtera revenues have doing. The in-market demand in key markets has actually increased in 2020 versus previous years. And the important factor, there is, of course, the approval in China, which will have a significant impact or is expected to have a significant impact forward. Looking at China is probably the second most important market after the U.S. from a commercial perspective or commercial opportunity perspective.

And the segue to your sort of second question, because the link is that we believe that up to about 90% of the potential, the revenue potential of Zevtera is in the U.S. looking at other analogues. And so, the U.S. opportunity is significant for us and your question is a good one in terms of, you know, could the environment, the external environment in the U.S., particularly given our opportunity there, could it improve? And we know there's – our standard answer to that question is that, as of today, the environment is what it is. We think there seems to be momentum in terms of moving in terms of, you know, different changing legislation that could impact and separate be provided more than a pull incentive for antibiotics and make them more commercially viable in the U.S. market. And, you know, the two pieces of legislation are The DISARM Act, and even more importantly, I think the [Pasto Act], we don't know if they will become law or if they will, when they would become law. But what we do know is that there seems to be an increase in visibility that something needs to change. And, you know, we believe that in the U.S. something will happen in this area. We don't know exactly when, but that can only then improve the environment for us with Zevtera. Obviously, what you got to bear in mind is that we're not given the timelines we talked about earlier. If we have the results of our Phase 3 SAB study in the first half of 2022, we're not going to be filing until if it's positive, filing until the – you know, Q3, Q4 2022. And then that will be an approval sometime in 2023, at which point our – with [QADP], we would have 10 years of exclusivity following the approval date, but that's the sort of timeline. So, in one respect, we've got some time for the external environment to improve. And if it did improve that would obviously could only help us with regard to our futures ceftobiprole revenue potential.

Alright. Thank you.

The next question comes from Bob Pooler from valuationLAB. Please go ahead.

Good afternoon, gentlemen. Congrats again on the excellent results for 2020, especially in phase of COVID-19 and also the negative currency translation effect. Just like COVID-19, do expect the COVID-19 pandemic to have a lasting impact on your future operations? You know, you had to, you know, work from home, less traveling. So, do you see anything going forward to the future and potentially where there's also cost savings for hiring people abroad, not based in Basel, etcetera?

Yeah, thanks for the question. It's a good question. There’s probably maybe a standard answer you might get from a lot of companies. But I think clearly, it's shown us like a lot of companies that we can work effectively by being remote. I mean, there are certain roles in our company, like, for example, you know, lab workers, whether they be researchers or analytical people in our company, who actually need to have sort of lab use. So, there are some roles that can't, but the majority of our people, I think it's taught us that we can work effectively from home. We've changed our practices, we've changed – like a lot of companies sort of SOPs and things to align with remote working, and I think an element of that will absolutely stay. And I think that also plays to your question about, you know, could we be more flexible with employment? I think, yes, we we've proved that it's not, you know, where you sit, it's the job you do that's important and so, yeah, I think the easy answer to that is, yes, there will be some sort of things that stay on after COVID hopefully has disappeared or reduced to a much lower level.

Okay, thank you. Then on your pipeline, do you expect to extend that as soon and then would be internally or externally and also the rather anti-infective for oncology?

Yeah, yeah, I mean, what we said earlier was that we have this compound that we talked about earlier that we hope, you know, as long as the IND enabling studies are successful. This year, we hope to move that into the clinic. That's an oncology. It's a kinase we talked about. And we can get obviously, as we said, give more details of that, as we are around that time, beginning of 2022. We hope to put that into the clinic. We've also got other oncology and anti-infective agents in the different degrees of preclinical stages that we're trying to push towards the clinic, that they're not quite too close as this last one I just mentioned. We are also continually looking, and Adesh can comment because he's responsible for this, but we're also looking for external assets that fulfill our criteria in oncology and anti-infective. I think the nature of the number of assets that are out there, there'll be more oncology than anti-infective. But may be Adesh you want to comment on our external strategy?

There's not much more to that. So, we are being selective about what we are looking at, in order to make sure that we can actually add value. It's more about ensuring that opportunities fit to our external expertise, where we believe we could create value, which we can then later on, really pass on and potentially even partner if needed. That's actually the only other element that I would add to this.

Okay. And then my final question, you're saying that you're, you know, the revenues are going up. You're still heavily investing also in your oncology portfolio products here, next to Zevtera, but it seems that potentially you’re going to breakeven, would that be possible next year?

Adesh, do you want to take that one.

Yeah. For sure. The breaking – but as you’re saying, I think what we have now consistently demonstrated over the course of the last two or three years of cash outflow is under control. We are, sort of, we have stable expenses on the R&D and SG&A side. Our cash in-flow reflected by the non-deferred revenues from Cresemba and Zevtera is constantly going up. And as such, we are – it is now controlled to some degree, if you could also say, whether or not or when do we actually reach profitability? In response to your question, I would say it is purely a function of what our choices are going to be related to our oncology pipeline. We're working through with a number of different readouts in the course of 2021, and the early part of 2022. And based on the readout, as David indicated, we will have to make decisions around partnering, taking things forward ourselves. And that will at the end of the date, indicate [of will drive] whether we breakeven or when do we breakeven?

Okay. So yeah, also there is the main drive is adding value and maximizing profitability, depending on the indication areas here. Thank you.

Right. Looking at things from a perspective of creating value.

Very clear. Thank you. Thank you, Adesh.

Thank you. Thanks for the question.

[Operator Instructions] The next question comes from Victor Floc'h from Bryan Garnier. Please go ahead. Victor Floc'h: Hi, guys. Victor Floc'h from Bryan Garnier. Thank you for taking my question. Actually, most of my question have already been answered. But I still have one regarding the iCCA indication, do you believe that the interim results from the second quarter is expected in H1 will be enough to give you confidence to move on or is there a possibility that you will wait for the top line results expecting next year? Thanks for that.

Yeah. You mean in terms of a regulatory progression or regulatory process do you mean, for iCCA? Victor Floc'h: Yeah, definitely. Yeah.

Yeah. Because our view on this is that you're right. You know, with regard to iCCA, we need initially the top line results that are in the first half of this year, but also in terms of our overall regulatory strategy for derazantinib, because we've got a number of data points as we've explained in quite quick succession across different tumor types, across gastric, and across [Indiscernible] and iCCA. I mean, if we didn't have so many points, we'd probably come to a different conclusion, but we want to see how the data evolves across those different tumor types to understand what's the best overall regulatory strategy. So, you know, because these are quite quick succession, we think, you know, because we're focused on differentiation, rather than just speed and speed is useful, but also differentiation is useful. So we want to see how these different data's play out over the next 12 months to understand what is the best approach from a sort of regulatory point of view for the compound as a whole. Victor Floc'h: Okay, got it. Thanks.

[Operator Instructions] Gentlemen, there are no more questions.

Okay, well, thank you, all of you for your questions, and your continued interest in Basilea. Enjoy the rest of your day.