ORYZON_750x300_Epigenetics

Large response benefit consistent in ALICE trial

Oryzon Genomics 15 June 2021 Update
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Oryzon Genomics

Large response benefit consistent in ALICE trial

R&D update

Pharma & biotech

15 June 2021

Price

€3.8

Market cap

€202m

Net cash (€m) at end Q121

23.0

Shares in issue

53.1m

Free float

80%

Code

ORY

Primary exchange

Madrid Stock Exchange

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

11.4

1.5

12.1

Rel (local)

9.8

(5.5)

(11.9)

52-week high/low

€4.3

€2.6

Business description

Oryzon Genomics is a Spanish biotech focused on epigenetics. Iadademstat (Phase IIa) is being explored for acute leukaemias and SCLC; vafidemstat, its CNS product, has completed several Phase IIa trials and a Phase IIb trial in borderline personality disorder has received an approval to start. Newer asset ORY-3001 is being developed for certain orphan indications.

Next events

Next update from the ALICE trial

December 2021

Analyst

Jonas Peciulis

+44 (0)20 3077 5728

Oryzon Genomics is a research client of Edison Investment Research Limited

On 11 June 2021, Oryzon presented an updated set of data from the Phase IIa ALICE trial in acute myeloid leukaemia (AML) at the virtual Congress of the European Hematology Association (EHA-2021). The single-arm, open-label study enrolled newly diagnosed, elderly AML patients who were administered iadademstat in combination with standard of care chemotherapy drug azacitidine. Of the 18 evaluable patients, 15 (83%) achieved objective responses (OR). For comparison, OR rates are c 30% in AML patients treated with azacitidine monotherapy. This is now the fifth update from the ALICE trial (30 months since the start) and the maturing data are consistent with the previously released early efficacy results. Our valuation is €591m or €11.1 per share.

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/19

10.3

(4.6)

(0.09)

0.0

N/A

N/A

12/20

9.5

(4.8)

(0.07)

0.0

N/A

N/A

12/21e

9.9

(4.2)

(0.06)

0.0

N/A

N/A

12/22e

9.9

(4.2)

(0.05)

0.0

N/A

N/A

Note: *Normalised, excluding amortisation of acquired intangibles and exceptional items.

Confidence reaffirmed in iada plus aza combo in AML

OR rates were assessed by bone marrow (BM) aspirate. Of the 27 enrolled patients, 18 had at least one BM aspirate and therefore were evaluable on a per protocol basis. Of the 18 evaluable patients, 15 achieved OR (83%): 10 achieved complete response with or without incomplete haematologic recovery (CR/CRi) and five achieved partial responses (PR). These results are in line with the previously published updates from the ALICE trial. The OR rate is consistent at c 80% and is much higher than the historical response rates with classic chemotherapy (c 30%). Moreover, such rates compare well with a novel combination chemotherapy that includes BCL2 inhibitor venetoclax, a novel approved drug for front-line AML treatment (AbbVie/Genentech). Venetoclax plus azacitidine or decitabine achieved an OR rate of 68% in a late-stage trial and the consensus estimate is for sales to reach $1.4bn in AML alone by 2026 (EvaluatePharma).

Next steps

The trial aims to enrol 36 patients in total, so the data will be expanded in coming months with additional patients and longer follow-up times. Oryzon also reiterated its view that the late-stage development strategy could be focused on combination of iadademstat with other targeted therapy agents like BCL2 inhibitors or others to assess its potential in refractory or relapsed patients. We expect the next update from the ALICE trial at ASH in December 2021.

Valuation: €591m or €11.1 per share

Our valuation is slightly higher at €591m or €11.1 per share, versus €560m or €10.6 per share previously, due to rolling our model forward, which was partially offset by lower net cash. At end-Q121, the cash position was €38.5m (net cash of €23.0m). We make no changes to our product assumptions for now.

Phase IIa ALICE update

The single-arm, open-label study is enrolling newly diagnosed, elderly AML patients and investigates iadademstat in combination with standard-of-care chemotherapy drug azacitidine. At the time of writing the EHA-2021 poster (up to 24 May 2021), 27 patients had been enrolled.

Besides dose-finding data and safety/tolerability evaluation (primary endpoints), initial efficacy was evaluated using the secondary endpoints, OR, time to response (TTR) and duration of response (DOR).

As mentioned, the ORR results are in line with the previously published updates from the ALICE trial (Exhibit 1). As the data have matured, Oryzon has reported durability results. In total, 53% of the responding patients had responses lasting more than six months (durable response), while median time to response was 29 (better durability means more likelihood there will be a clinical survival benefit; as the trial is still ongoing, data are yet to reach maturity). Oryzon noted one standout patient case who had been diagnosed with M5b (monocytic) AML, a hard-to-treat form of leukaemia. This patient achieved CRi in 29 days while on iadademstat plus azacytidine therapy.

Exhibit 1: Evolution of Phase IIa ALICE trial efficacy data

Phase IIa ALICE trial
(iadademstat + azacytidine)

Venetoclax
+ azacitidine or decitabine

Azacitidine

Update/publication

EHA 2019

ASH 2019

EHA 2020

ASH 2020

EHA 2021

DiNardo et al, 2019

Dombret et al, 2015

Enrolment

17% (6/36)

36% (13/36)

50% (18/36)

50% (18/36)

75% (27/36)

-

-

Evaluable patients

5 patients

8 patients

13 patients

13 patients

18 patients

145 patients

241 patients

ORR(CR, CRi, PR)

80% (4/5)

75% (6/8)

77% (10/13)

85% (11/13)

83% (15/18)

68% (99/145)

31% (75/241)

Source: Edison Investment Research, Oryzon Genomics

Safety and tolerability

Overall, the authors of the EHA 2021 poster concluded that the combination of iadademstat and azacitidine shows a relatively good safety profile in elderly AML patients at the selected iadademstat dose level (60µg/m2). Most patients experienced adverse reactions (ARs) that were considered related to the study drugs (azacitidine and/or iadademstat), but most of those were expected haematological AEs (neutropenia and thrombocytopenia). Only two ARs were deemed serious (reported previously). LSD1 inhibitor class drugs are known to have haematological side effects at higher doses. However, these are usually predictable and manageable. The key point, in our view, is that this fifth safety update shows the non-haematological safety profile of the combination treatment in the ALICE trial remains good.

Valuation and financials

Our valuation is slightly higher at €591m or €11.1 per share, versus €560m or €10.6 per share previously, due to rolling our model forward, which was partially offset by lower net cash. Oryzon’s total operational spending in Q121 was €4.8m, similar to that of a year ago. Oryzon booked €3.0m as other income, which represents capitalised R&D costs (Oryzon follows local GAAP). The reported Q121 cash position was €38.5m (net cash: €23.0m). We are introducing 2022 estimates, which indicate a similar trend of spending to 2021. As a result, our model suggests the current cash position should be sufficient until early 2023, which is in line with the company’s guidance.

Exhibit 2: Oryzon NPV valuation

Product

Indication

Launch

Peak sales
(US$m)

Value
(€m)

Probability of success (%)

rNPV
(€m)

NPV/share
(€/share)

Iadademstat (ORY-1001)

AML

2023

927

332.7

15%

65.9

1.2

Iadademstat (ORY-1001)

SCLC

2026

571

171.5

8%

37.7

0.7

Vafidemstat (ORY-2001)

AD

2026

4,510

1,281.8

15%

223.0

4.2

Vafidemstat (ORY-2001)

MS

2027

1,940

539.7

20%

144.1

2.7

Vafidemstat (ORY-2001)

BPD

2027

1,340

360.8

20%

97.5

1.8

Net cash (last reported)

23.0

100%

23.0

0.4

Valuation

 

 

2,709.5

591.0

11.1

Source: Edison Investment Research. Note: AML: acute myeloid leukaemia; SCLC: small cell lung cancer; AD: Alzheimer’s disease; MS: multiple sclerosis; BPD: borderline personality disorder.

Exhibit 3: Financial summary

€000s

 

2018

2019

2020

2021e

2022e

Year end 31 December

Local GAAP

Local GAAP

Local GAAP

Local GAAP

Local GAAP

PROFIT & LOSS

Revenue

 

 

6,781

10,278

9,521

9,857

9,857

Cost of Sales

0

0

0

0

0

Gross Profit

6,781

10,278

9,521

9,857

9,857

Research and development

(7,412)

(11,322)

(11,075)

(11,060)

(11,060)

EBITDA

 

 

(2,766)

(3,679)

(4,148)

(4,077)

(4,076)

Operating Profit (before amort. and except.)

 

 

(2,905)

(3,820)

(4,293)

(4,225)

(4,225)

Intangible Amortisation

(7)

(9)

0

0

0

Exceptionals

(4)

(11)

0

0

0

Other

0

0

0

0

0

Operating Profit

(2,916)

(3,839)

(4,293)

(4,225)

(4,225)

Exceptionals

0

0

0

0

0

Net Interest

(796)

(737)

(471)

0

0

Profit Before Tax (norm)

 

 

(3,701)

(4,557)

(4,765)

(4,225)

(4,225)

Profit Before Tax (reported)

 

 

(3,712)

(4,576)

(4,765)

(4,225)

(4,225)

Tax

2,535

892

1,379

1,302

1,508

Profit After Tax (norm)

(1,166)

(3,666)

(3,386)

(2,922)

(2,717)

Profit After Tax (reported)

(1,177)

(3,685)

(3,386)

(2,922)

(2,717)

Average Number of Shares Outstanding (m)

34.6

41.6

49.2

53.1

53.1

EPS - normalised (€)

 

 

(0.03)

(0.09)

(0.07)

(0.06)

(0.05)

EPS - reported (€)

 

 

(0.03)

(0.09)

(0.07)

(0.06)

(0.05)

Dividend per share (€)

0.0

0.0

0.0

0.0

0.0

Gross Margin (%)

100.0

100.0

100.0

100.0

100.0

EBITDA Margin (%)

N/A

N/A

N/A

N/A

N/A

Operating Margin (before GW and except.) (%)

N/A

N/A

N/A

N/A

N/A

BALANCE SHEET

Fixed Assets

 

 

31,786

42,357

51,729

61,592

71,453

Intangible Assets

29,330

39,938

49,216

59,074

68,931

Tangible Assets

665

631

644

649

652

Investments

1,791

1,788

1,869

1,869

1,869

Current Assets

 

 

35,664

37,738

42,377

29,045

16,467

Stocks

135

289

317

317

317

Debtors

971

2,071

2,351

2,211

2,281

Cash

34,320

35,111

39,605

26,412

13,764

Other

239

267

105

105

105

Current Liabilities

 

 

(10,441)

(10,546)

(7,693)

(7,145)

(7,144)

Creditors

(2,192)

(4,000)

(2,839)

(2,291)

(2,290)

Short term borrowings

(8,249)

(6,547)

(4,854)

(4,854)

(4,854)

Long Term Liabilities

 

 

(11,884)

(8,420)

(10,483)

(10,483)

(10,483)

Long term borrowings

(9,977)

(6,699)

(8,680)

(8,680)

(8,680)

Other long term liabilities

(1,907)

(1,721)

(1,803)

(1,803)

(1,803)

Net Assets

 

 

45,125

61,129

75,931

73,009

70,292

CASH FLOW

Operating Cash Flow

 

 

(2,799)

(3,610)

(5,432)

(4,485)

(4,146)

Net Interest

2,133

(324)

(247)

0

0

Tax

0

0

862

1,302

1,508

Capex

(170)

(115)

(153)

(153)

(153)

Acquisitions/disposals

0

0

0

0

0

Financing

11,949

18,374

18,181

0

0

Other*

(6,576)

(9,916)

(9,007)

(9,753)

(9,857)

Dividends

0

0

0

0

0

Net Cash Flow

4,538

4,409

4,205

(13,088)

(12,648)

Opening net debt/(cash)

 

 

(11,555)

(16,093)

(21,866)

(26,071)

(12,878)

HP finance leases initiated

0

0

0

0

0

Other

0

1,364

0

0

0

Closing net debt/(cash)

 

 

(16,093)

(21,866)

(26,071)

(12,983)

(230)

Source: Oryzon Genomics, Edison Investment Research. Note: Oryzon reports in Spanish GAAP. *Includes cash outflows related to development costs that were capitalised.


General disclaimer and copyright

This report has been commissioned by Oryzon Genomics and prepared and issued by Edison, in consideration of a fee payable by Oryzon Genomics. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: 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 and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. 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.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, 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 securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. 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, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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. 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 (i.e. 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.

United Kingdom

This document is prepared and provided by Edison 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.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison 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. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

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

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Oryzon Genomics and prepared and issued by Edison, in consideration of a fee payable by Oryzon Genomics. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: 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 and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. 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.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, 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 securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. 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, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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. 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 (i.e. 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.

United Kingdom

This document is prepared and provided by Edison 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.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison 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. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

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

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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