Basilea Pharmaceutica AG

Ladies and gentlemen, welcome to the Basilea Pharmaceutica Half Your Results 2026 conference call and live webcast. I am Matilda, 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. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to David Veach, Chief Executive Officer. Please go ahead.

Thank you. Hello, I'm David Veach, CEO of Bazalaya. Thank you for joining us today on our conference call and webcast. will be reviewing our financial results and key achievements for the first half year 2026, as well as highlighting our priorities going forwards. For further detailed information, please see the ad hoc announcement issued this morning and our half-year report. These documents, together with the webcast presentation, are all available on our website at basilea.com. I would like to mention that this call contains forward-looking statements. Joining me on our call today are Adesh Kaur, our Chief Financial Officer, and Dr. Mark Englehart, our Chief Medical Officer. We have had a great start to the year, delivering strong financial results and continued execution across the business. Let me briefly summarize some of the key highlights from the first half of 2026. Starting with our strong financial performance, Baselaya's total revenue grew 14% year-on-year, to 119 million Swiss francs, resulting in an operating profit of 32 million Swiss francs, an increase of 32% year-on-year. Our net cash position doubled to 105 million Swiss francs. During the first six months of 2026, we were awarded $61 million in non-diluted funding, which offsets a significant proportion of our R&D costs. Portfolio highlights include continued strong in-market sales of our lead commercial product, Crosemba, which are now close to $800 million and growing almost 30% year-on-year. The Phase 3 program of Phosphonajepix, our lead antifungal in development, is progressing as planned, evidenced by the recent BARDA funding award for achievement of a particular enrollment milestone. Also, our novel antibiotic, BAL2420, has started its first in-human phase 1 study. We also continue to invest in our earlier pipeline. In this context, we signed the collaboration agreement with Prokaryotics for the preclinical development of a novel broad-spectrum antifungal candidate. Basilea's pipeline today combines two commercial products, Grisembren's and Tura, with a diversified portfolio of development-stage anti-infective acids. all added over the last three years. We have now two phase three assets, Fosmanagepix and Ceftabutin-Ledermore-Bactam, which together have the potential to generate peak sales of approximately $1.5 billion, roughly doubling our current in-market sales level. Our earlier stage programs, BAL 2062 and BAL 2420, continue to advance towards their next decision points, adding further depth to the pipeline. Overall, we have built a balanced anti-infective portfolio, combining commercial growth drivers, late-stage value creation opportunities and early-stage innovation. Behind these assets, we also have preclinical research programs, developed both internally and from external collaborations. We announced two early-stage collaborations in the last eight months that further expand our innovative research pipeline. The first is a partnership with Fairbio, which applies generative artificial intelligence to the discovery of novel antibiotics, aiming to improve the efficiency of identifying and developing a new antibiotic candidate. Then we entered the collaboration with Prokaryotics to develop a first-in-class broad-spectrum antifungal candidate. The program aims to deliver an effective, safe, and easy-to-administer treatment for severe invasive fungal infections. Together, these partnerships expand our access to innovative technologies and new approaches with limited upfront investment from Basilea. I'll now hand over to Adesh for the commercial and financial update.

Thank you, David. Starting with Cresemba, which remains the cornerstone of our current commercial business. Global in-market sales in the 12-month period to the end of March 2026 amounted to $782 million. This 27% increase year-on-year underscores the continued strong demand across all key markets and is driven by continuous gain in market share, even in markets where Crescenta is already market leader. Let me turn to Ceftera, which was commercially launched in the US about a year ago by our partner in Aviva Specialty Therapeutics. For novel hospital antibiotics, the key focus in the initial 12-month period of the launch phase is on establishing broad market access and on supporting positive clinical experience. The KPIs we track in this early phase reflect these focus areas. Seferra continues to make good progress in securing access across the healthcare system, with important wins in group purchasing organizations, formularies, and reimbursement programs, helping to support future uptake. At the same time, increasing account numbers and repeat ordering trends, combined with encouraging medical community feedback, provide early evidence of positive clinical experience and acceptance. Inoviva has also further expanded its workforce to increase hospital coverage, from which Seftera is expected to benefit. We are therefore pleased with the progress in this launch phase and are looking forward to seeing these encouraging key lead indicators translate into increasing adoption and sales in the quarters and years to come, especially as Seftera has market exclusivity in the U.S. until April 2034. All of our clinical programs continue to be supported through BARDA and CARB-X agreements, which provide non-diluted funding for our R&D portfolio. Across these contracts, more than $440 million has been committed to Basilea. Approximately $165 million has been awarded to date, out of which $61 million was awarded in the first half of 2026. This non-diluted funding enables us to advance our clinical programs in a capital-efficient manner. Moving now to the financial results for the first six months of 2026. Unless otherwise stated, all numbers are in such ranks. Cresemba and Zephyr related revenue totaled 92.3 million. This included royalty income of 57.8 million. which grew by about 11% year-on-year. Milestone and upfront payments were $4.7 million. Other revenue, which include mainly reimbursements from Barta and Carbex, rose to $26.7 million. This brings total revenue to $119 million, an increase of 14% compared to the first half of 2025. Costs of products sold decreased to $15.4 million in the first half of 2026, positively impacted by the customer and product mix. Operating expenses amounted to $72 million, increasing mainly due to costs associated with the progress of the Phosphonanthropics Phase III program, preparations for the Ceftibutin Later Borobactam Phase III program, as well as the Phase I study for BAL 2420. As a result, we achieved an operating profit of 31.6 million and a net profit of 27.9 million, both significantly increasing year on year. Finally, cash and cash equivalents and restricted cash rose to 176 million. The cash flow from operating activities amounted to 19 million, including the impact from a temporary increase in receivables and inventory, reflecting the continued growth of our commercial business and strong operational execution in the first half of the year. The receivables are expected to be collected within their respective due dates in Q3 2026, and the inventories will allow us to address the increased product demand in the second half of 2026. We also continued to strengthen our balance sheet through debt reductions. During the reporting period, we repurchased $5 million in nominal value of our convertible bonds, reducing the outstanding nominal balance to $71 million. The convertible bond is due to mature in July 2027. Let me now turn to our updated full year guidance. Based on the strong performance in the first half of this year and the continued positive outlook, We now expect total revenue for full year 2026 to grow by approximately 15%. Within this, Cresemba Ancestera-related revenue is expected to reach around $210 million, compared to our previous guidance of around $200 million. This is expected to translate into a cash contribution of approximately $180 million from our commercial business. We continue to expect an increase of 20% year-on-year of our investments into R&D. Driven by the high expected revenue, we are raising our operating profit guidance and now expect an increase by approximately 40% year-on-year compared with our previous expectation of around 20% increase. This demonstrates the strength of our business model and our ability to maintain solid profitability while increasing investments in our growth pipeline. Looking at the components of our full-year guidance on Crescent Magispera-related revenues, we expect approximately $125 million from royalties, $35 million from milestone payments, and $50 million from product revenues. We expect the revenue mix to keep on shifting to its higher margin royalties and milestones, resulting in a significantly higher cash flow contribution from our commercial business in the second half of the year. I will now hand over to Mark for the portfolio update.