Ladies and gentlemen, welcome to the Basilea Pharmaceuticals 2020 Half Year Results and Publication of the Half Year Reports 2020 Conference Call and Live Webcast. I am Alessandro, 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 and A session. The conference must not be recorded for publication or broadcast.
At this time, it's my pleasure to hand over to David Veatch, Chief Executive Officer. Please go ahead, sir.
Thank you. Hello. This is David Veatch, CEO of Basilea. I would like to welcome you all to our conference call and webcast reviewing our financial results and key achievements for the first half year twenty twenty and discussing our upcoming milestones and financial guidance for the remainder of the year. I would also like to mention that this call contains forward looking statements.
Joining me on our call today are Ritesh Kaul, our Chief Financial Officer and Doctor. Mark Engelhardt, our Chief Medical Officer. This morning we issued a press release and our financial report on our results for the half year twenty twenty. These documents are available on our website atbasilea.com. I would first like to provide a brief summary of our key achievements for 2020 to date.
Importantly, we've been executing through our plan despite COVID-nineteen and have remained fully operational during the pandemic. Our 2 marketed drugs Precemba and Zevtera are serving critical medical needs. Growing demand has led to an increase in revenue contributions of 17% first year twenty twenty first half year twenty twenty versus the prior year to CHF 62,000,000. We were able also to reduce our total expenses during the first half year by more than 6% despite the fact that we successfully progressed our clinical pipeline assets towards the next development milestones. We also executed 2 strategic transactions.
We successfully extended the maturity of a substantial part of our debt from 2022 to 2027 through both the issuance of a new convertible bond and the repurchase of 25 percent of the outstanding one. We've also taken the first steps to move from 2 different locations in Basel into a new headquarters in mid-twenty 22 by selling quarter property and signing a lease agreement for the new headquarter site in the GRID Innovation Center in Auchreville in the Basel area. This generated CHF19 1,000,000 in gross cash proceeds, but will also reduce our midterm operational and capital expenses. As of June 30 this year, Azalea's combined cash and investments amounted to approximately CHF 145,000,000. Importantly, we also made excellent progress with our clinical stage assets and have had no material coronavirus related delay on the key clinical studies with our most advanced oncology drug candidates derazantinib and lisavambulin.
For our FGFR kinase inhibitor derazantinib, we completed patient enrollment into the first of 2 cohorts in the FITIZ-one Phase 2 study in patients with bile duct cancer or iCCA and FGFR2 gene fusions. The preparation has also continued for the FIDD3 study in patients with advanced gastric cancer and this is planned to start in Q3 this year. For our tumor checkpoint control at least of Ambulin, we've been preparing to start the biomarker driven Phase 2 study in patients with the most common type of primary brain cancer, glioblastoma, one of the most lethal types of cancer. Finally, we're also pleased that the FDA approved the protocol amendment for our ceftoviprole Phase 3 study which can now expand enrollment to patients with the more difficult to treat staphylococcus aureus bloodstream infections. To gain approval for the treatment of such patients will be beneficial for positioning ceftobiprole
in the U. S. Market.
Adesh will now give an update on our commercial progress and present more detailed financial highlights for the half year twenty twenty, as well as provide our updated financial guidance for the full year 2020. Then Mark will provide you with more detailed information on the progress of our most advanced development programs. I'll now hand over to Hitesh.
Thank you, David. In the first half of twenty twenty, together with our partners, we continued 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 March 31, 2020, the global sales of Cresemba grew by more than 30% year on year to 2 $20,000,000 Partnerships continue to play an important role in the execution of our global commercialization strategy and provides a strong basis for the future revenue growth. Since the beginning of 2020, Cresemba was launched in key countries in Asia Pacific and gained regulatory approval in Russia. These triggered commercial and regulatory milestone payments of around CHF 6,000,000.
In total, Basilea has received to date about US255 $1,000,000 in upfront and milestone payments from its Cresemba and Zevtera partnerships. Marketing application processes have been initiated in a number of additional countries, including in China, where the marketing authorization application for myelcomycosis was recently accepted for regulatory review by the health authority. 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 half year report. I would like to mention that all the figures I will refer to are in Swiss francs.
The financials for the first half year twenty twenty are characterized by a significant increase of the revenue contributions from Cresemba and Zevtera. Deferred revenue from Cresemba and Zevtera increased 11.8 percent to $25,500,000 while non deferred revenue, which more closely correlates with the actual in market performance of our brands, increased 21.3% to $36,500,000 dollars The increase in revenue from Cresemba and Zevtera more than offset the already anticipated decrease in other revenue components, which is mainly driven by lower ARDA reimbursements due to lower costs incurred related to the completed ZestoBifrost skin infection study and the impact of the slight delay in recruitment in the bloodstream infection study due to COVID-nineteen. Total revenue increased by 9.7 percent to $69,300,000 Cost of products sold increased by 39.4 percent to $13,100,000 mainly reflecting the increase in product deliveries to partners. R and D and SG and A expenses decreased 12.8 percent to $58,400,000 reflecting our continued focus on cost management, but also due to timing effect on clinical activities and the savings on travel and other external activities due to COVID-nineteen. We reported an operating profit of $12,800,000 and a net profit of 9,900,000 dollars Even without the $15,000,000 one time positive impact from the sale of our headquarters property, you have seen a very strong underlying operational performance in the first half of twenty twenty.
Net cash used for operating activities was reduced significantly by 26.9 percent to 33,200,000 without considering the net proceeds from the sale of our headquarters property. As of June 30, 2020, Vasilea's combined cash and short term and long term investments amounted to 144,700,000 dollars The reported cash position does not include the net proceeds from the convertible bond transactions, which we completed in July. Turning now to points that may be relevant for the second half of twenty twenty and beyond. We had previously indicated that Pfizer would aim to assume full responsibility for its own supply of Cresemba in the course of 2020. The plan has changed and Basilea will likely now continue to supply Pfizer with API and bulk wires through 2020 and into 2021.
An extension of the supply period would have several consequences for us. Our product sales in Swiss francs would be higher, especially in 2021. Correspondingly, we would anticipate an increase in cost of products sold in Swiss francs. The reported gross margin in percentage of product sales would decrease in 2021, which, however, would be partially offset by economies of scale for product supply to distribution partners. We would expect a temporary increase in working capital, which would be expected to be reversed as we deliver product to Pfizer.
In summary, an extension of the Pfizer supply period would result in an increase in net cash flow, especially in 2021. Now turning the discussion to gross margins. Let me start with an overview of the distributor structure. Distributors purchase product from Basilea at a transfer price, which Basilea books as product revenue. Basilea bears the manufacturing costs or COGS.
The gross margin in percentage for Basilea is therefore COGS divided by the transfer price, not the net selling price. Let us now look at a licensing structure where Basilea supplies its license partner with products, such as currently in the case of Pfizer. In this case, Basilea books royalties and milestones on the contract revenue with a gross margin of 100%. Basilea books separately product revenue on deliveries to its license partner, which in essence are COGS plus a small markup. The gross margin in percentage for Basilea based on COGS divided by product revenue is therefore significantly smaller as compared to the distribution setup.
As a consequence, the gross margin in percentage largely depends on the partner mix. Importantly, in any event, there is a positive cash flow in absolute terms for Basilea in both settings. 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 by reducing the 2022 convertible bonds by approximately 50% and replacing it with a new bond with a maturity of 2027. To this end, we conducted 2 transactions.
The first transaction concerns the issuance of a new convertible bond with maturity 2027. The provisional allocation was very successful, reflected by the fact that we were able to allocate the maximum targeted amount of $125,000,000 The second transaction concerns using the proceeds from the new convertible bond to repurchase approximately 50% of the 2022 convertible bonds. 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 convertible bond as we had no intention of significantly increasing our debt level through the transactions. We were therefore able to reduce the cash from the issuance of the 2027 convertible bond not already used to repurchase the 2022 convertible bond to further reduce the 2022 convertible bond by another 25% over the next 2 years. Hence, we remain confident that we will meet our initial goal of reducing the 2022 convertible bond exposure significantly, but over time rather than in a single step.
The updated guidance for full year 2020 is based on few important assumptions for the second half year. We assume an average U. S. Dollar Swiss franc exchange rate of around 0.94 and we expect that there will be a gradual easing of the COVID-nineteen related lockdown measures. On these assumptions, we confirm our previous guidance for the revenue contributions of Cresemba and Zevtera, reflecting the continued significant growth of the in market sales by our partners.
We assume a lower operating loss based on a one time positive impact from the sale of our headquarters property. The underlying operating loss remains in line with our original guidance. Finally, we assume a strong cash position of around $150,000,000 at year end. The positive cash flow impact from our convertible bond transactions in July expected to be partially offset by a temporary increase in working capital at year end. The working capital impact is expected to be reversed in early 2021.
I will now hand over to Mark for the clinical development update.
Thank you, Adesh. Let me start with our antibiotic ceftobiprole. In Europe and several markets outside of Europe, ceftobiprole is approved 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 by far the most important country for the commercialization of branded hospital antibiotics and is estimated to account for up to 90% of global sales for anti MRS A treatments as seen for daptomycin or ceftarolin. Based on special protocol assessment agreements with the U. S. FDA, 2 successful cross supportive Phase 3 studies are necessary for registration in the U. S.
Our Phase 3 program includes 1 study in acute curious skin and construction infections, and one study in staphylococcus aureus bacteremia or 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 us to advance the development of gptopuliprole for the U.
S. Market in a cost effective way. In 2019, we reported positive top line results from the first of these studies, the so called TARGET study, a Phase 3 study in patients with acute bacterial skin and construction infections. The 2nd Phase 3 study in staphylococcus aureus bucterema is called ERADICATE. It is on track to report top line results in the Q1 of 2022.
If the Bacteremia study is also positive, Basilea plans to submit a new drug application to the U. S. FDA. As ceftobiprole designated a qualified infectious disease product by the FDA for these indications, if approved it will be eligible to read 10 years of market exclusivity in the U. S.
From the date of approval. Nearly 120,000 Staphylococcus Aureus bupterymia or SAB infections have been reported in the US 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 buccduremia or buccduremia in patients on dialysis. SIB 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 2 approved treatments in the U. S.
Which are vancomycin and daptomycin that cover both methicillin susceptible and methicillin resistant to follococcal aureus or MSSA and MRSA. Septobalfa provides a number of key attributes supporting its use in SAB. It is a beta lactam antibiotic with rapid puctal cycle activity against MSSA and MRSA has shown a superior activity profile in preclinical models of endocarditis or heart valve infections compared to vancomycin and daptomycin and has a low propensity for resistance development. It also provides negative coverage in cases with polymicrobial infections. Fickency has been demonstrated in Phase 3 clinical trials in pneumonia where DOPTOMIZE is not effective and in complicated skin and soft tissue infections ceftobiprolepro has an established safety profile which is consistent with the cephalosporin class.
Moving on to oncology, our lead oncology drug candidate is Derazantinib. 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 have been identified as potential important therapeutic targets for various cancers including intrapedical oncocarcinoma or ICCA, urothelial, gastric, breast and lung cancer. Our development strategy focuses on achieving differentiation over other FGFR kinase inhibitors by leveraging the unique properties of darazantinib. Key differentiation factors include its unique kinase inhibition profile and its clinical safety profile.
Besides FGFR, darazant also inhibits the colony stimulating Factor 1 receptor or CSF1R kinase, which has been reported to play a role in immune response to tumors and the vascular endothelial growth factor 2 or VEGFR2 kinase which is known as a therapeutic target in the anti angiogenic treatment in multiple cancers including gastric cancer. Adler's clinical development program currently comprises 3 studies. 2 of them, fetus 1 and fetus 2 are ongoing in intra particle angiocarcinoma which is a type of product cancer and in urothelial cancer. And we are planning to start the 3rd study, Fetal 3 industrial cancer in the Q3 of 2020. In January 2019, we reported encouraging interim results from the registrational Phase 2 study called fetus 1 in the second line treatment of FGFR2 fusion positive intraparticle oncocarcinoma or iCCA.
Enrollment into this cohort has been completed in July 2020 and top line results for this cohort are expected in the second half of twenty twenty. We have expanded the PD-one study with an additional cohort of ICCA patients with FGFR2 gene mutations or amplifications in that tumors. In this group of patients, clinical benefit has been observed in the earlier Phase III study and the aim of the additional cohort is to confirm these results in a larger number of iCCA patients in the ongoing study. Through this additional cohort, we intend to further define the full therapeutic potential of derazantinib in patients with iCCA as other FGFR kinase inhibitors in pharma's clinical development have so far only reported very limited clinical activity in this patient population. Interim data from the second cohort will be presented in the second half of twenty twenty.
PDAS-two is a Phase onetwo study with diazonib as monotherapy and in combination with Roche PDL-one checkpoint inhibitor atezolizumab or Tecentriq. This is a biomarker driven multi cohort clinical study in patients with advanced urothelial cancer expressing FGFR genetic operations and first interim results are anticipated for the second half of twenty twenty. In the Q3 of 2020, we are planning to start FEEDUS-three. This study will explore derazantinib in patients with advanced gastric cancer and FGFR genetic operations and will also include a cohort in which derazantinib combined with atezolizumab. We've decided to investigate derazantinib in gastric cancer based on its unique kinase inhibition profile, convincing preclinical in vivo data and the high medical need in this indication.
Clinical supply agreements are in place with Roche, provides atezolizumab for both urothelial and the gastric cancer studies. Moving to our tumor check on controller lizavambulin formantly known as BIO 11553. We are focusing our clinical development activities with lizavambulin of glioblastoma, the most common and aggressive form of primary malignant brain tumors and an area of high unmet medical need with very few treatment options available. Lisovambulin is a noble microtubule targeting small molecule which induces tumor cell death through spindle assembly checkpoint activation which impacts tumor cell division. It can be administered oral and IV, crosses the blood brain barrier and has shown total 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 N binding protein 1 or EB1, which was previously identified in preclinical models as a potentially response predictive biomarker for glioblastoma. Based on our clinical and preclinical data with EB-one, we will start a biomarker driven clinical Phase 2 study in glioblastoma in the next few months using EB1 positivity as a patient selection criteria. In our completed Phase 1 glioblastoma clinical study with daily oral dosing, we have observed a profound and exceptional objective response in a glioblastoma patient whose tumor tissue was EB1 positive. This patient continues on treatment for more than 2 years now and shows a more than 80% area reduction in the brain tumor.
The final results from this Phase 1 study will be presented at the upcoming ESMO Virtual Congress in September 2020. Will now turn over to David.
Thank you, Mark. To summarize, we are on track with the execution of our strategy. 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 20 21 and we are continuing to advance our R and D portfolio towards the next milestones. The remainder of the year holds a number of important milestones especially related to our oncology programs.
For derazantinib, we're expecting the top line results for the FIDI1 FGFR2 gene fusion cohort in the second half of this year and the interim results from the second cohort with iCCA patients with other FGFR2 genetic aberrations, these are also expected in the second half of this year. In addition, we're looking forward to the safety data and the recommended Phase 2 dose for the combination of derazantinib and Tecentriq in the FITIZ-two urothelial cancer study. We believe that derazantinib could enhance the response to such immuno oncology drugs and I go into further explore this too in the PHILIS-three study in gastric cancer patients planning to start in Q3 this year. The lease of Ambulance, we're currently preparing the start of the biomarker driven study in patients with glioblastoma in the next few months with interim results then expected in the first half of twenty twenty one. I would like to thank you for your attention.
We'll now open the line for your questions.
We will now begin the question and answer The first question comes from Louise Chen from Cantor. Please go ahead.
Hi, congratulations on the quarter and thanks for taking my questions here. So my first question is, what are your capital allocation priorities as you build upon this cash balance that you have? Secondly, can you give more color on how the expansion of Zevtera for bacteremia 4 to 6 weeks really enhances your competitive advantage in the market? And then last question I had for you was what do you expect to see from the lease of ambulant biomarker study with patients in GBM? Thank
you. Hi, Louise, and thank you for your questions. Actually in terms of where we allocate our capital maybe I'll hand that over to Adesh in terms and then the comment on the 4 to 6 weeks of ceftobiprole, Mark can answer that question. And in terms of yes, so why don't you start, Adesh?
Yes. Hi, Louise. From I think if you think about where do we invest our resources at the moment. So the key is the derazantinib program and almost at an equal level we are with the ceftobiprole Phase 3 program on a gross level pre BARDA reimbursement. I think purely from let's say allocation of costs and FTEs, so internal and external costs, these are the biggest investments that we're making.
Otherwise,
the next level is then the pediatric programs for ceftobiprole and for esaluconozole, especially for esaluconozole that would also result in a potential extension of exclusivity. In Europe, especially by 2 years and by 6 months in the U. S. So that's another important element. And the last bit is that we keep on investing into the optimization of the supply chain.
I think broadly speaking, these are sort of the priorities that we currently have.
And to the second question about the expansion from 4 to 6 weeks, this has several beneficial components. First of all, there are a number of infections which per guideline require treatment that is longer than 4 weeks in staphylococcus aureus plecteremia. These include, for example, osteomyelitis, so vertebral bone infections or central nervous system infections, but also for other infections that usually can be treated with 4 weeks of treatment, the flexibility to be able to expand to 6 weeks, I think is quite beneficial to just increase the versatility of the compound in treating more indications and just have the flexibility to increase the treatment duration if needed.
And then your third question on the biomarker study in terms of what are we looking for in the GBM biomarker study, Mark maybe do you want to comment on that?
As we will present at the virtual Congress at ESMO, we've seen benefit in a subset of patients in the Phase 1 study and we believe that the biomarker driven approach will potentially enrich for patients that are more prone to respond to lizabumbulin. So, it's an enrichment by selection biomarker EB1 and we hope that we will therefore increase the number of responses and being able to predict which patients are more likely to respond to lizavamulin.
And I think the benefit of the way the study is designed is that because it's an open label study, we'll know the results pretty quickly in a couple of handfuls of patients. If we get a certain response rate, we'll know that we're onto something and then we'll be able to expand it to bigger patient numbers. So actually the beauty of that's why I say the results of this study, the interim results will have in the first half of twenty twenty one.
Correct. Unfortunately, the TBM patients in the recurrent setting usually have a relatively short progression free time. That's why from a clinical trial methodology perspective, it is possible to detect treatment effects relatively quickly by having patients not progressing.
Thank you.
Your next question comes from Bob Pooler from Valuation Lab. Please go ahead.
Good afternoon, gentlemen. Congratulations on the
excellent first half. Three questions on KRYSTENBA. First of all, the strong uptake, is that due to volume growth? And then for the second half, do you expect any major country launches, which might trigger sales milestones? And then could you remind us maybe of what the Astellas sales guidance is for 2020?
Thank you.
In terms of the Cresemba growth, it's coming from correct, coming from volume growth. It's not coming from price increases. It's coming from pure demand in the market. And that's actually for those of you who are on the slides, you'll see the what used to be the IMS, the IQVIA sales uptake is directly related to the volume in market volume and that's causing the Cresemba growth in revenues rather than any pricing effects. In terms of major country launches, I think we're currently launched in 45 markets.
We're still on track, as I said earlier to or in terms of the 60 market target by the end of 2021. We've got a whole number of countries launching. In terms of the remainder of the year, are there any major country launches? I mean, the big ones like, for example, the ones coming, the big next ones would be the China and Japan and they're not planned for this year, Bob, to answer your question. But there's an ongoing slew of countries that we'll be launching, not the biggest ones, but they're definitely launching during the course, like I said, in the next 6 months and then the next 18 months because we're on track, as I said, to be in 60 countries by the end of next year.
In terms of the Astellas sales, maybe Adesh, you could comment on the U. S. Sales from Astellas?
Yes. Maybe on the guidance. And one important point is that there is some overlap, let's say, with regards to their fiscal year and our calendar year. So Astellas reported $75,000,000 in sales from January 2020 to end of June 2020. That's a 12% growth year on year.
What we are guiding for in the period from April 1, 2020 to March 31, 20 21 is for US155 $1,000,000 As a matter of fact, what they have just recently done is, as you may have seen, they have updated sort of their whole portfolio to some degree to reflect the uncertainties and their assumptions around the uncertainties of the potential impact of the COVID-nineteen pandemic. So I think from that perspective, we'll have to see where the sales will end up. But I think from an underlying health perspective, the key point is that in the U. S, we're seeing continued volume growth and also more from a global or aggregate level, I'd like to remind you that the U. S.
Represents about 25 percent of, generally speaking, the global potential probably for newer antifungals. And as such, on a global level, we're seeing growth in other regions that are that is certainly going to do that is in essence reflected in our guidance. That's why we have been able to maintain our guidance overall.
Okay. Very clear. And maybe you might get some additional sales milestones on reaching certain plateaus or levels in the Cresemba sales as well. Is that true?
I would say at some point in time, we would certainly be able to see the sales milestones. To some degree, I would have to also admit, it's sometimes difficult to precisely predict whether a sales threshold is being reached in a given calendar year. And to some degree, that's also reflected then in the range that we are providing now top line guidance. So as you know, historically, we are providing a range for our top line assumptions on revenues and that really reflects a little bit the uncertainty around timing. Okay, very clear.
Thank you.
The next question comes from Ram Selvaraju from H. C. Wainwright. Wainwright. Please go ahead.
Thanks so much for taking my questions. Firstly, I was wondering if you could comment on and this may be a long term outlook topic, the potential advantage of exploring derazantinib in combination with both an anti PD-one or PD L1 approach as well as an anti TIGIT antibody therapy?
Ram, thanks for the question. We didn't quite hear the PD L1 we got, the 2nd class of compound that you said was what?
An anti
Fidget. Okay. In terms of our strategy with darazantinib and combinations with versus monotherapy, as you're probably aware, we are actually studying in iCCA as monotherapy and then in urothelial cancer and gastric cancer in combination and in monotherapy and in both urothelial and gastric is the focus it's with PD L1. So we're exploring because we think with the CSF1R inhibition that we actually have a rationale for combining with a PD L1. So that's why we're looking exploring in that setting there.
In terms of the TIGIT, I mean, I'm not the expert in that area. So I'll look to my colleague and ask Mark your thoughts around combination with PD L1 going forward versus the TIGIT mark?
I think what we've discussed with Roche certainly was to go into a combination with atezolizumab to start with. This is mainly based on the biological rationale that does not also inhibit CSF1R which may change the immune market environment. We've set up that study clinically and we are currently in the process of establishing the recommended Phase 2 dose, which we will report out later this year. It would be mechanistically certainly no reason why not to also explore combination with an anti titrated compound or even combining several compounds. But I think as you say, it's a little bit of a long shot and I believe we need to first maybe provide a proof of concept in terms of that really this potential synergy with derazantinib and atezolizumab plays out and then we're certainly open to look into any type of other approaches combining darazantinib with immunotherapy with a combination with checkpoint inhibitor or TIGIT inhibitor or other classes of compounds.
And it's reasonable to expect that whether we think about this in combination solely with an anti PD L1 or in combination with both an anti PD L1 as well as some of the newer checkpoint inhibition modalities. Derazantinib among the FGFR inhibitor compounds is really unique because it has the CSF1R activity modality as well and therefore should be more readily combinable with these classical immunotherapy approach as opposed to other FGFR inhibitors. Is that a fair statement?
That's correct. I think the CSF on our component is unique. What also is potentially advantageous in this context is the VEGFR2 component, which Gazanbib shares with erlafitinib, but it is potentially playing into the you have a combination of the CSF1R component and the VEGFR2 component plus. When we compare adverse event profiles across various FGFR inhibitors, within the limitations of cross study comparison, the safety profiles in terms of side effects such as retinal events, thrombosis, nail effects and food syndrome seems to be really lower with derazantinib. So this may also be an advantage in combining with other compounds including immuno oncology compounds.
Okay. And then just 2 other quick ones. What would be the reason specifically to expect derazantinib to show better EB1 protein expression that you saw in the EB1 protein expression that you saw in the single durable responder with regard to lissavandolin in GBM.
And if
you could comment on whether this is likely to be a significant biomarker when you look at potentially selecting patients most likely to respond? And if you could elucidate what the biological function of this EB1 protein is? Thank you.
Okay. So actually Mark is coming your way. Why don't you comment on the FGFR, other aberrations and why it might work there?
So,
in the ICC in ICCA patients with non fusion genetic aberrations, the efficacy data that have been published so far were not striking. We had seen in a small number of patients in the study conducted by ArQule, we haven't seen a lot of objective response, but we had seen progression free survival for more than half a year in these patients. And that's what we are that's why we started this cohort and we will report data later this year. The potential mechanism why derazantinib and not other FGFR inhibitors would work on different mutations, we currently would not be able to really provide that explanation. Our research group is working on models looking at certain mutations where we had seen the benefit in patients to see whether we can elaborate on a differential mechanism of derazantinib versus other inhibitors.
So, that explanation may be possible to provide that these models are not easy to run. The other question you had about EB1. EB1 is a protein that's located on the plus ends of the microtubule. So, it is, if you wish, in the mainstream of the mechanism of action of lizavambulin, which is a microtubule interacting drug, they are key proteins for the dynamic turnover of the microtubules when they move to the kinetics course in the context of the mitotic cell separation. We have evidence from preclinical models since 2015 that EB1 looked response predictive in a mouse model.
So, this identification of EB1 positivity in this exceptional responder in the ongoing Phase 1 study was not kind of a random pick. We had looked for EB1 and very few other biomarkers and this patient came out strongly EB1 positive. We've then done some additional work, some of which were presented at the virtual ESMO Congress, and we believe that strong EB-one positivity is an entity in itself. It's also probably genetically different to EB1 negativity. Whether it's response predictive for lizavambulin in a clinical setting, I think the only way to get that answer is actually on the clinical trial.
Understood. Thank you.
Thank you.
The next question comes from John Priester from Edison Investment Research. Please go ahead.
Yes. Thank you for taking my questions and congratulations on the progress so far this year. So I have two questions. And the first question is around derazantinib. So in addition to the 3 indications you've already mentioned, what is the next indication that you'll be looking to develop derazantinib in?
And also whether this I know these future combinations might include PD L1 inhibitors other than to Kendrick? Or is there a exclusivity to Roche?
Yes. So in short thanks for your question, John. In short, the indication question is quite straightforward, which is what we believe with our current plan, which is the ongoing iCCA, which has a number of cohorts and with the ongoing urothelial cancer, which has a number of cohorts and then with the planned gastric cancer, that's sufficient for us to build a book of evidence across numerous tumors in different settings and different combinations and monotherapy for us to be as the concept for us as we've done with our previous compounds is that we would look to partner the compound. And so we believe with the current set of different studies we have ongoing and planned for derazantinib that's sufficient to get us to the point of having a meaningful differentiated partnering package and then we would subsequently follow in partnering, then it will be in discussions with ourselves and a partner to actually explore further utility of the compound. So that's pretty much so we haven't announced or we're not thinking of announcing another indication on top of those that we've already announced.
In terms of the exclusivity comment and with the PD L1 with the Roche compound, no, that's not exclusive. Just because we're working with Roche doesn't mean that we have exclusivity and we could only ever it's a Roche and us agreed on a collaboration agreement very quickly across both the urothelial and the gastric cancer studies, but it doesn't preclude us from doing other combinations with other PD L1s or other combinations per se is the short answer to your question.
That's great. And my second question is, what is the current preference for the in licensing of anti infectives versus oncology assets? And really whether you
would look to acquire an asset that you
could potentially use in combination with Derazantinib?
I mean, the short answer is we are looking as we have done previously in licensing to complement our own discovery efforts and we're looking at in licensing in both anti infectives and oncology. Having said that, it's fair to say that the oncology number of assets out there are much more numerous than the number of anti infective assets, whether it be antibiotics or antifungals. So actually the law of averages is probably why we do more in licensing of oncology versus anti infectives just because the number of assets out there. And then in terms of the whether we would if we're looking at oncology, are we looking to combine with darazantinib, I think no. I think the fact is that the asset has to stand up on its own merits and fit with our approach, which is small molecules, biomarker potential for biomarker driven.
And actually in our half year report, we outlined the different types of target areas like the kinase signaling, the DNA damage repair, the transcription factors that we are focused on in terms of our own focus and that very much also externally is what we would focus on as a first port of call. But definitely not it doesn't have to be combined with derazantinib. And there's an argument in terms of risk management that we actually wouldn't drive being combined with those, Anthony, just in case down the line something went wrong, then all our eggs are in one basket. So clearly, it would make common sense, I think, to focus on things that stand up by their own merits, if you understand my point.
Yes,
that's very clear. Thank you for taking my questions.
Thank you.
The next question comes from Brian White from Kelvin Partners. Please go ahead.
Yes, Good afternoon. Just a couple of questions from me. Actually thinking about FIDIUS-two looks to be a very important data point for the company and your lead cancer asset coming up in H2. And I just wondered if internally or in discussions with Roche, you have sort of a threshold for the benefit of adding derazantinib to Centric in that particular setting. And what would it take to justify moving the program forward?
And then secondly, just understanding better the and taking into account the comments you made earlier about the extension of the treatment period for ceftobiprole. I wasn't quite clear. Was it based on internal thinking? Was it based on guidelines? Was it based on conversations with regulators or conversations with potential commercial partners in terms of extending the treatment period?
Yes.
So Mark, actually why don't you deal with the second one first, the reason why the 4 to 6 week happened?
So initially, the health authorities had asked us to administer ceftobiprole for treatment period of up to 4 weeks because although we had several Phase 3 studies, we've never tested ceftobiprole for more than 2 weeks treatment duration. So, the extension to a longer treatment period was a consequence of a safety data review, which was kind of which didn't flag any problems. And that's when we could expand the FIDM duration to 6 weeks duration, which as mentioned before provides a number of advantages in terms of versatility of using the drug in infections that require longer treatment duration or extend the treatment duration in patients if it turns out that after the 4 weeks they need longer time of treatment.
And just to say, I think I made this point earlier, but there is obviously a benefit to have the safety data for 6 weeks as well from a commercial perspective, as well as the fact that we can access extra different patient types, we can also it's also beneficial having the safety data as well.
So this was a predefined process that has been agreed with the FDA before we started the study.
Right. And then, if that's okay, in coming back to your first question around the FIDUS-two, you're quite right, it's a key study. I mean, at the moment, just to be clear, so we're at the end of this year, the second half of this year, we'll have safety data and the recommended Phase 2 dose for the combination of the Tecentriq with the derazantinib, that's this year. And then moving into next year, that will come the 1st efficacy data, if you want to think of it as that in terms of, first of all, will come the monotherapy interim data. And then later on towards the end of the year will come the interim combination efficacy data for Tecentriq and derazantinib.
Did you want to add anything to that Mark?
My understanding was that part of your question was how the study would move on and whether we had discussed any thresholds with Roche. I think this is more defining the study design. These are randomized assignment 2 stage designs where you look at certain number of patients and then these patients require a certain level of efficacy to then move the study on into a second cohort. So this is less negotiation between companies. We have a clinical supply agreement with Roche.
So, we are running the study and we're running the study to predefined study design with clear rules of what efficacy levels need to be fulfilled to promote the study in its next stage. And if the study continues, we have the supply agreement with Roche that they will provide atezolizumab.
Right. Okay. I probably didn't ask it very well then. So, have you disclosed what those thresholds are in terms of the benefit?
For the initial phase, I think for the safety, there is not a pretty it has to be safe. So I think there is no other threshold. So the initial safety recommended Phase 2 dose is purely driven by safety and not by any considerations about response.
Yes. And I guess my question is that in terms of what level of response or ORR are you looking for to justify taking patients through to next step?
Let's put it this way. We're looking at orientating our efficacy threshold on published standard of care and comparative efficacy information available at the time. So I'm not going to name a number now, but it's basically we are looking at efficacy in the kind of range that we've seen with Olafitinib.
Right. So if I look at the valverso label, that's the one to look at then?
Yes, exactly. For urothelial cancer, you're correct. So that's what will be that's in our thinking clearly.
And also ethically that's always the approach that's taken that one has to pick an efficacy threshold that's meaningful for patients.
Perfect. Thank you.
Thank you.
The next question comes from Paul Verbraeken from Research Partners. Please go ahead.
Hi, good afternoon. A question on Cresemba. I noticed Astellas is quite cautious for the remainder of this calendar year. Is that really corona related, the same effect that we saw in the Q2 or are there other factors at work there as well?
So first of all thanks, Paul. First of all, the key point is there's continued growth in patient days and prescriptions are going up. So from that perspective, there is not any issue with the underlying business. What Astellas indicated in when they updated their guidance was in essence that they have taken a view on the portfolio to reflect that there is an increasing shift for the timing at least from inpatient to outpatient treatment, which affects of course primarily hospital drugs as such. So that is in essence that was one effect And the second effect that Astellas pointed to not specifically for Cresemba, but across the portfolio was a certain level of stocking that has been seen before and a certain level of destocking of course as a consequence related to the 1st wave.
But again, I think the health of the business can be seen in the actual number of prescriptions and patient base. And there we have not seen any negative impact. And Astellas has not indicated that there is a negative impact in terms of patient days.
Okay. And maybe just to add on with Pfizer for Cresemba outside the U. S, do you see the same trends at work there?
I think there are just many more countries as you can tell. So actually as a matter of fact that some countries where you actually see a positive almost like COVID-nineteen impact And there are other countries where you have maybe a similar pattern as you have in the U. S. But there is this natural hedging across the country. So if you look at this is what we reported with regards to Pfizer is that the royalty rate, which correlates to some degree at least with the in market sales or quite directly with in market sales increased by I think it was almost like 40% year on year.
So, the Pfizer territory or Pfizer kept on reporting faster growth than Astellas in the U. S, which is not surprising also given that the U. S. Was the 1st launch country. I don't know if that really answers your question, but at the end of the day, there's not like a unified view.
And I think the most important part is and that's reflected in our guidance, we think that overall, the sales will remain in the level that we had anticipated at Avin. So that the levels will somehow the levels will even out and that's why we maintained our top line guidance for percent length of tariff.
Yes. And a different way of looking at it, which you've probably done yourself looking at our press release is that for the 1st 6 months of the year, the non deferred, which as Adesh said earlier, is more closely aligned to the in market performance. The non deferred percent of the total performance for the first half of this year showed this 21% growth versus the same 6 months of last year. And then if you look at the what we're guiding on, we're guiding for the non deferred to 12% to 27% growth. So the 21% is nicely, strongly in that range.
So we haven't seen net net overall across all countries this sort of this us coming off our guidance which is just to add a little bit more color to Adesh's comments.
Okay. And the non deferred revenues are largely Pfizer, aren't they?
No. The non deferred revenues are really combined. So that's have to admit, it is complicated. It's royalties on the one hand and that means, of course, it's royalties from Astellas and from Pfizer and it is product sales. Within product sales, the non deferred part is primarily Pfizer.
That's right. But if you look at overall non deferred revenues, it's Astellas and Pfizer that are mainly contributing both of them.
Okay, okay, got it. Thank you. Thank
you. The next question comes from Olaf Zylian from Mirabeau. Please go ahead.
Yes. Congratulations on your progress. I'll keep it very brief. Two questions, if I may. Firstly, as the bonds have only been partially tendered compared to what your plans have been, you are now facing a situation where you have €50,000,000 excess in cash.
The question would be how will you allocate this cash as you are also facing a negative interest rate should you keep it on your savings account? And the second question is more concerning the marketing of Casemba in China. So we saw that Pfizer got the approval of their filing in China for the use of Cresemba in mucormercosis. I'm missing invasive aspergillosis. So could you please comment on the dynamics on the frontal market in China and how the dog would be positioned over there?
Thank you.
Yes. Ola, thanks for the questions. So actually let me take the second one, then Adesh, I'll pass over to you about the what are we doing with our $50,000,000 from the convert that's left over. So in terms of the second one, just to be clear, we haven't got an approval of mucormycosis in China. What we've announced is that and what we've stated in our half year report actually is the fact that in China, so Pfizer, our partner for China, they have applied for and the application, the marketing authorization application has been accepted for mucormycosis in China.
That doesn't mean it's approved yet, it just means it's sort of the next stage of the sort of regulatory process after you submit. The reason why it's mucormycosis and well spotted, it's not mucormycosis invasive aspergillosis, is the invasive aspergillosis will be the subject of a separate regulatory process. So actually it's not that we haven't been accepted for invasive aspergillosis, it's just on a separate timeline than the mucormycosis form. Yes. So at some point, hopefully, you'll hear more about that one.
So just to be clear on the China one, but maybe it is what are we doing with our $50,000,000 that we have left over?
I wouldn't call it left over, but basically the cash inflow from the converts. So overall, we have since years now or since several years a treasury strategy, which is a combination of keeping, of course, cash deposits in order to manage our liquidity needs, but then also we have increasingly moved to short term time deposits and long term time deposits in order to really manage the impact of negative interest rate. But there's no magic solution. So it's not that I can present to you now, oh, we have found a way to get positive interest rates on cash. We're just trying to manage basically the impact by putting out I think since especially since the $50,000,000 are earmarked largely or the proceeds are largely earmarked to manage the 2022 convertible bonds, we have more flexibility with regards to the long term, let's say, investment of that money.
And the longer you invest, the less you have in your current impact of negative interest rates.
Okay. Thank
Ladies and gentlemen, we have no further questions at this time. I would now like to turn the conference back over to Basilea for any closing remarks.
So thank you for your continued interest in Basilea. If you have any further follow-up questions that you want to ask us, please reach out to any of us, including our Investor Relations team, Per and Hazel as well. We'll be happy to answer any other follow-up questions. But as I said, thank you for your continued interest and enjoy the rest of your day. Thank you very much.
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