Emerging epigenetics player

Oryzon Genomics 6 January 2016 QuickView

Oryzon Genomics

Emerging epigenetics player

Pharma & biotech

QuickView

 

6 January 2016

Price

€3.75

Market cap

€107m

Share price graph

Share details

Code

ORY

Listing

Madrid Stock Exchange

Shares in issue

28.47m

Business description

Oryzon is a Spanish biotechnology company focused on developing novel epigenetic compounds. Lead compound ORY-1001 is partnered with Roche and is undergoing a Phase I/IIa study for acute leukaemia. ORY-2001 has potential for Alzheimer’s disease and is poised to enter Phase I.

Bull

Pure-play in epigenetics, highly promising technology.

Lead product is partnered with Roche; to fund further development.

Solid estimated cash position of €21m at end 2015.

Bear

Early-stage pipeline with limited clinical data so far.

LSD1 inhibition is an unproven mechanism, thus R&D risk remains high.

New public market listings can be subject to significant initial volatility.

Analysts

Jonas Peciulis

+44 (0) 20 3077 5728

Christian Glennie

+44 (0) 20 3077 5727

Oryzon Genomics’ public listing in Madrid puts this rapidly emerging epigenetic player on the map in a highly promising yet still uncrowded technology space. Oryzon has advanced its lead compound ORY-1001 to a Phase I/IIa trial in acute leukaemia patients and we expect initial efficacy data around the end of 2016. Oryzon is a rare pure-play in epigenetics, with Roche already on board, and now trades at a relatively modest EV of €96m.

Listing in Madrid, potential NASDAQ IPO

On 14 December, Oryzon listed its shares on the Madrid Stock Exchange. However, this was a technical listing without raising new funds, as the company is well funded after a recent €16.5m financing round. The public listing was therefore a strategic step to boost share liquidity in the near term, but also to provide access to capital markets. Oryzon also has plans for a dual listing on NASDAQ.

Pure-play epigenetics player

The next major event for the company is the initial efficacy data from Part 2 of the ongoing Phase I/IIa study with lead product ORY-1001 in different subsets of acute myeloid leukaemia patients. We expect the results might come in around year-end 2016. ORY-1001 is an inhibitor of lysine specific demethylase 1 (LSD1), which modifies histones by removing methyl groups. LSD1 is upregulated in a number of cancers and its role is best understood in acute leukaemia, which makes this disease an obvious first target, although there is also strong scientific rationale for ORY-1001’s potential efficacy in solid tumours, such as small-cell lung cancer (SCLC). Oryzon’s second product, ORY-2001, targets Alzheimer’s disease (AD) and will be evaluated in a Phase I trial with healthy volunteers in 2016 (CTA filed). ORY-2001 has a dual activity, inhibiting LSD1 and monoamine oxidase B, so represents a novel mode of action in AD research. Oryzon also has a number of preclinical epigenetics projects in oncology and other indications.

Roche already on board for ORY-1001

Roche licensed ORY-1001 in April 2014, agreeing to pay >$500m in milestones ($21m paid in upfront/near-term milestones) and tiered royalties (up to 15%), which we view as attractive terms for a relatively early-stage asset. After completion of the ongoing Phase I/IIa, Roche will be solely responsible for further clinical development/commercialisation.

Valuation: Relatively modest EV of €96m

There are a limited number of comparable listed companies focused on epigenetics with clinical-stage projects. In our view, Epizyme is an obvious comparator in terms of technology (histone methylation process) and R&D pipeline breadth, although slightly more advanced. Oryzon’s new EV of €96m (estimated year-end 2015 cash €21m, debt €10m) therefore looks modest compared to Epizyme’s EV of €378.1m. We expect to initiate full coverage of Oryzon with a valuation model in due course.

Historical financials

Year end

Revenue (€m)

PBT (€m)

EPS (€)

DPS (€)

P/E (x)

Yield (%)

12/13

0.0

(1.9)

N/A

N/A

N/A

N/A

12/14

13.1

6.7

N/A

N/A

N/A

N/A

Source: Company data

Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 100 analysts and investment professionals work with leading companies, fund managers and investment banks worldwide to support their capital markets activity. We provide services to more than 400 retained corporate and investor clients from our offices in London, New York, Frankfurt, Sydney and Wellington. Edison is authorised and regulated by the Financial Conduct Authority (www.fsa.gov.uk/register/firmBasicDetails.do?sid=181584). Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER Copyright 2016 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Oryzon Genomics and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison's solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are "wholesale clients" for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a "personalised service" and, to the extent that it contains any financial advice, is intended only as a "class service" provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited ("FTSE") (c) FTSE [2016]. "FTSE(r)" is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE's express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Share this with friends and colleagues