Oryzon Genomics — Planning iadademstat’s path to market

Oryzon is a pure play in epigenetics and has developed a proprietary platform to create therapeutic inhibitors for a class of enzymes known as histone lysine demethylases (KDMs). Iadademstat, Oryzon’s lead oncology asset, is a first-in-class LSD1 inhibitor (also called KDM1A inhibitor). Vafidemstat is a central nervous system (CNS)-optimised LSD1 inhibitor for neurological and neuropsychiatric conditions.

Put simply, epigenetics can be defined as the study of changes in how genes are ‘read’ (expressed). A number of external factors can switch genes on and off modifying the expression, but without actually making any changes in the sequence of DNA (a more detailed introduction to epigenetics can be found here). Oryzon’s technology evolves around histone modifications. Histones are protein complexes, which the DNA is rolled up on. Epigenetic modifications (eg methylation and demethylation) cause changes in this spatial organisation, which lead to different genes becoming accessible for expression or silenced. This process is a part of normal gene expression regulation, but if it falters, it can also be the cause of a variety of diseases.

Epigenetics is relatively young field in terms of drug development. Epigenetic therapies induce profound biological changes, therefore they can have broad action potential, as opposed to targeted therapies, like monoclonal antibodies. This means that Oryzon had no guiding principles when it comes to specific indication selection or treatment setting. For this reason, the strategy of accumulating as much useful clinical data as possible in a variety of settings took some time to deliver, but it has now started paying off.

Oryzon is developing iadademstat for patients with AML and SCLC. The two original trials in these indications are the Phase IIa ALICE study in advanced AML (still ongoing, but because it is open label, Oryzon presents regular follow ups) and the Phase IIa CLEPSIDRA study in SCLC (now complete).

The ALICE trial, which is investigating iadademstat in combination with azacitidine, is fully enrolled with a total of 36 patients. This is a single-arm, open-label study that enrolled newly diagnosed, elderly AML patients who were administered iadademstat in combination with standard of care chemotherapy drug azacitidine.

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

The latest update was the interim data after 36 months of follow up, which was presented at the ASH 2021 congress in December 2021. Of the 27 evaluable patients, 21 (78%) achieved ORR (62% were complete remission/complete remission with incomplete hematologic recovery). For comparison, ORRs are c 30% in AML patients treated with azacitidine monotherapy. This was the sixth update from the ALICE trial and the maturing data have been very consistent so far (Exhibit 2): the ORR is being reported at c 80%, which is much higher than the historical response rates with classic chemotherapy (c 30%). Moreover, such rates compare well with BCL2 inhibitor venetoclax (AbbVie/Genentech), a novel approved drug for front-line AML treatment. Venetoclax plus azacitidine or decitabine achieved an ORR of 68% in a late-stage trial and the consensus estimate is for sales to reach $1.4bn in AML alone by 2026 (EvaluatePharma).

Patients will be followed for an additional 12 months in the ALICE trial, so the final data from this trial are expected to be released at the ASH conference in December 2022.

Since the ALICE trial is open label, Oryzon has been able to learn from the data before waiting until the follow-up periods of all the patients have been completed. Encouraged by the observed efficacy signals, Oryzon introduced with its Q321 results report a new Phase Ib/II trial FRIDA, which will investigate iadademstat in patients with FLT3 mutated AML as a second-line treatment (relapsed/refractory AML). Iadademstat will be combined with Xospata (gilteritinib, FLT3 inhibitor, Astellas; 2020 sales of $225m). Xospata is a relatively new drug approved by the FDA in November 2018 as monotherapy for adults with FLT3-positive AML in a relapsed or refractory setting.

In preclinical studies Oryzon saw synergies between iadademstat and Xospata, which is the rationale for this trial. Also, Oryzon has an orphan drug designation granted for AML in the United States and EU and believes that the FRIDA trial could provide sufficient data to register the drug (presuming a positive outcome). This strategy will also avoid direct competition with venetoclax.

Second-line AML is an underserved population, as 50% of AML patients relapse after first-line treatment. FLT3 is the most common mutation in AML (30%) and patients have an adverse prognosis. Second-line FLT3-mutated patients are now treated with gilteritinib, yet it remains a subpopulation with high medical need.

The FRIDA trial will be an open-label trial with all centres based in the United States and will enrol around 120 patients. It will consist of two parts: Phase Ib will evaluate safety/tolerability and the recommended dose for the Phase II part of the study, which will evaluate the efficacy (the trial protocol is not published yet).

Although there is no direct control arm in the FRIDA study, Oryzon expects that a matched control sample (Xospata monotherapy) will be sufficient as a comparator. Furthermore, the intervention sample is powered enough so that this trial could be used for an accelerated approval (if the data are positive). Oryzon plans to submit the Investigational New Drug application to the FDA and start enrolling patients in H122.

Like the FRIDA trial, the Phase Ib/II STELLAR trial is a new addition to the R&D pipeline. Oryzon has designed this study using insights gained from the now completed Phase IIa CLEPSIDRA trial. As a reminder, Oryzon presented the final update from the CLEPSIDRA trial at the ESMO conference in September 2020 (our review of the data is here).

CLEPSIDRA was an open-label, single-arm Phase IIa study of iadademstat in combination with platinum and etoposide chemotherapy (triple combination) in relapsed, extensive disease SCLC patients (14 patients enrolled; 10 were evaluable for efficacy), so this was a very advanced setting. The safety profile did not allow for this combination to proceed despite attempts to modify the dosing regimen. The side effects of this specific drug combination were haematological changes, which included decreased platelets, neutrophils and anaemia, in some cases serious. The investigators tried different dosing regimens; however, the conclusion was made that such combination therapy is not suitable in this setting. Notably, iadademstat monotherapy did not show any haematological toxicity, while etoposide and platinum (classical chemotherapy agents) have known haematological side effects.

On the positive side, the data showed efficacy rates that compared well with other therapies in this setting. The ORR of 40% (4/10 partial responses) compared well with the historical averages of SCLC second-line chemotherapy drug topotecan (15–24%) and lurbinectedin (35%). SCLC is generally considered a non-immunogenic cancer, so reported ORRs to immune checkpoint inhibitors are also relatively low: 22% nivolumab plus ipilimumab and 19% pembrolizumab as monotherapy (Saleh, 2019). Furthermore, this efficacy rate was achieved at suboptimal doses of iadademstat (the dose was lowered after the side effects started to appear).

Oryzon indicated it would explore iadademstat combinations with non-haematotoxic agents in SCLC, which has now materialised in the form of the STELLAR trial. In preclinical studies Oryzon observed synergy between iadademstat and checkpoint inhibitors, which generally have better haematological safety profiles.

The STELLAR trial will investigate iadademstat as a first-line treatment in combination with a checkpoint inhibitor in patients with metastatic SCLC. The study will also be conducted in the United States and will aim to recruit 120 patients. The Phase Ib part will assess the safety/tolerability of the combination and the recommended dose for the Phase II part. The latter will be randomised and controlled with a checkpoint inhibitor (CPI)-only arm. The efficacy will be evaluated using a progression-free survival (PFS) endpoint which, if significant, Oryzon expects will allow for an application for accelerated approval in this setting.

Oryzon plans to submit the Investigational New Drug application to the FDA in H122 and start enrolling patients in H222. The study protocol has not been disclosed yet, so further details will be announced in due course.

SCLC is an aggressive form of lung cancer associated with very poor prognosis. It represents around 15% of all lung cancers and 60–70% of patients have extensive-stage disease at diagnosis. Despite intense R&D efforts to improve clinical outcomes, classical platinum/etoposide chemotherapy has remained the most effective regimen for first-line extensive disease SCLC for decades. It is only recently that checkpoint inhibitors have been proven to add clinical benefit.

The Phase IIb PORTICO trial is now enrolling patients in Europe and the United States. The goal is to enrol 156 subjects (n=78 in each arm) with diagnosed BPD. The patients are randomised to receive vafidemstat or placebo. There will be multiple primary and secondary endpoints, but the trial has two goals: to demonstrate reduction of aggression/agitation and overall BPD improvement. The PORTICO study has an adaptive design with a pre-defined interim analysis to adjust the sample size in case of excessive results variability or an unexpectedly high response in the placebo arm.

As a reminder, BPD as the lead indication for vafidemstat emerged from Oryzon’s innovative basket type Phase IIa study REIMAGINE, which investigated vafidemstat in several neuropsychiatric conditions (attention deficit hyperactivity disorder (ADHD), BPD and autism spectrum disorder (ASD)). In those three different indications, vafidemstat not only significantly improved scores across several commonly used subscales that measure agitation and aggression, but also significantly improved the total scores of those same specific psychiatric scales (the results are discussed in detail in our January 2020 report). Although the cohorts were relatively small, the consistent results across several scales and in three different indications were promising. Of the three indications investigated in this trial, Oryzon chose to prioritise BPD, which is relatively prevalent among adults (clinical trials that are easier to run when the population is large), but no specific treatments available.

The PORTICO study treatment period is 14 weeks, so the results should be obtained relatively quickly. Interim data are expected potentially by the end of 2022. The development strategy will depend on the data.

Oryzon has been exploring vafidemstat’s potential in AD with two clinical studies now completed. The Phase IIa ETHERAL study in mild and moderate AD enrolled 140 patients, who were randomised to received treatment with vafidemstat or placebo for 12 months. In terms of treatment period and sample size, this was a fairly substantial study. Since it was a Phase IIa stage trial, safety and tolerability were the primary endpoints, which were met. The exploratory secondary endpoints included several biomarkers and clinical efficacy. Vafidemstat reduced pro-inflammatory biomarker YKL40 in cerebrospinal fluid (CSF). Other biomarkers in the CSF were unchanged and there were no significant differences in cognition among the patients receiving vafidemstat or placebo (measured by ADAS-Cog, one of the most commonly used cognition scales in AD).

The scope of the ETHERAL study was broad. It was designed to test even the disease modifying potential of vafidemstat, which is notoriously difficult. Since no effect was observed on cognition, Oryzon is now focusing on a specific setting in AD, which is aggression and agitation in moderately or severely ill patients. The basis for this comes from another trial, Phase IIa REIMAGINE-AD, that Oryzon had completed in parallel to the ETHERAL study. REIMAGINE-AD (like the basket trial REIMAGINE described above) showed that vafidemstat significantly reduced agitation and aggression after 12 months of treatment in these patients with a good safety and tolerability profile (there was even an anecdotal finding that the drug improved cognition in a subset of AD patients).

The idea that vafidemstat could be helpful in controlling aggression and agitation comes from preclinical studies. Vafidemstat demonstrated an ability to reduce aggression, enhance sociability and reverse social withdrawal in animals. Both the REIMAGINE and REIMAGINE-AD studies were initiated while the ETHERAL study was still running. This again demonstrates Oryzon’s strategy to explore as many settings as possible given the novel mechanism of action of vafidemstat. The data from the AD trials now point to symptomatic treatment of aggression and agitation in moderately or severely ill patients (although, as mentioned, there were anecdotal improvements in cognition in several patents in the REIMAGINE-AD trial, which presumably will be explored further). Oryzon has not yet communicated any plan for the next study in this setting.

The management of AD has seen significant changes in the past year. The FDA approved the first-ever disease-modifying drug, Aduhelm, on 7 June 2021 (anti-Aβ antibody, aducanumab, Biogen). The final data set that supported the approval was rather controversial (one Phase III was considered successful, the second Phase III trial failed). This meant that although much needed, the launch of this drug was troublesome: several of the FDA advisory committee members resigned, Biogen had to voluntarily narrow the label, initial sales did not meet expectations, insurance reimbursement is still not clear and the EMA recommended that the European Commission reject Aduhelm. All this led Biogen to cut the initial price tag of $56k in half. In the latest turn of events the US Centers for Medicare & Medicaid Services offered Aduhelm cover only for patients in clinical trials, implying lack of supportive efficacy data. Although there is no read-across from Aduhelm’s story from a technology perspective to Oryzon’s vafidemstat and its positioning, we believe the controversial approval from the FDA is a strong indication that regulators are keen to make novel AD treatments (disease modifying, but also symptomatic) available as quickly as possible.

The final data from the Phase II trial SATEEN, which investigated vafidemstat’s ability to reduce the inflammation in multiple sclerosis (MS) patients was presented at the 37th Congress of the European Committee for Treatment and Research in Multiple Sclerosis (ECTRIMS-2021) on 13–15 October 2021. This randomised, double-blind, placebo-controlled Phase II trial (n=18) aimed to evaluate the safety and tolerability of vafidemstat in relapse-remitting MS (RRMS) or secondary progressive MS (SPMS) patients. The final results showed that:

Oryzon pointed out that due to its small scale, the SATEEN trial was not powered to get definitive efficacy data. The observed clinical activity in the MS patients supports vafidemstat’s potential to reduce the neuroinflammation component in MS. Neuroinflammation is a core feature in MS and also in other CNS conditions. However, when evaluating strategic opportunities, Oryzon has decided not to pursue MS further. Accordingly, we have removed this indication from our valuation model.

As mentioned above, Oryzon has been investigating vafidemstat in a variety of neurological and neuropsychiatric conditions. While BPD is now the lead indication, the company is working on several other indications as well. The two newest clinical trials are a Phase IIb EVOLUTION study in schizophrenia (recruiting patients) and a Phase I/II HOPE study in patients with Kabuki syndrome. The EVOLUTION study is partially funded with public funds and is running in Spain.

The Phase IIb EVOLUTION trial is a double-blind, randomized, placebo-controlled, 24-week trial to evaluate the efficacy and safety of vafidemstat in adult schizophrenia patients, who are receiving antipsychotic therapy. The trial has two primary independent objectives:

The patients (n = 100; 50:50 in both arms) will be treated for six months. The final number of patients needed to assess efficacy will be adjusted during an interim analysis. The scientific rationale for this study is based on vafidemstat’s ability via LSD1 inhibition to reduce aggression, enhance sociability and mitigate social withdrawal, as demonstrated in several preclinical models and clinical trials discussed above.

Schizophrenia is a chronic and severe mental disorder involving a breakdown in the relation between thought, emotion and behaviour, leading to faulty perception and the inability to function normally. Signs and symptoms can vary. Generally, symptoms are classified into three, sometimes four, categories:

Antipsychotic medications (also known as neuroleptic medications) diminish the positive symptoms of schizophrenia and prevent relapses. However, there are no approved drugs aimed at negative symptoms. Approximately 80% of patients relapse within one year if antipsychotic medications are stopped, whereas only 20% relapse if treated. So the treatment of positive symptoms is fairly effective. The choice of which drug to use for treatment of a patient depends on many issues, but there is no broad consensus on specific treatment protocols. The current treatment approach is largely trial and error across different medication choices. Negative symptoms generally do not respond well to currently available antipsychotic treatment. For obvious reasons negative symptoms are generally not the reason that patients seek clinical care, yet they constitute an unmet medical need in schizophrenia, therefore new and effective treatments are urgently needed (Correll and Schooler, 2020). Currently there are no drugs approved by the FDA for the treatment of negative symptoms (Aleman et al, 2017).

The lifetime prevalence of schizophrenia has generally been estimated to be approximately 1% worldwide. Negative symptoms are common with up to 60% of patients having clinically relevant negative symptoms that require treatment (Correll and Schooler, 2020). Negative symptoms can occur at any point in the course of illness, although they are described as the most common first symptom of schizophrenia before the first psychotic episode.

The current mainstay of the treatment is antipsychotic drugs. So-called typical antipsychotics were developed in the 1950s and examples include haloperidol, chlorpromazine and fluphenazine. Atypical antipsychotics include a newer generation of drugs developed in the 1990s and examples include aripiprazole (Abilify, Bristol Myers Squibb), olanzapine (Zyprexa, Lilly) and quetiapine (Seroquel, AstraZeneca). According to EvaluatePharma, the global antipsychotic drug market was worth $10.2bn in 2020 and is forecast to grow at a 6.2% CAGR over 2020–26. It is a highly fragmented market and most of the drugs used widely to treat the anti-psychotic symptoms of schizophrenia are out of market exclusivity, with generics widely available. From this perspective, Oryzon’s focus on negative symptom improvement would entirely sidestep the crowded neuroleptic market.

Like many biotechs that have assets that could prove beneficial in managing the COVID-19 pandemic, Oryzon opportunistically launched a Phase II ESCAPE study that investigated vafidemstat’s efficacy in seriously ill patients with COVID-19. Preliminary data were presented at the 31st European Congress of Clinical Microbiology and Infectious Diseases (ECCMID-2021, July 2021). ESCAPE was an open-label, randomized Phase II trial (n=60) aimed to evaluate the efficacy and tolerability of vafidemstat in combination with standard treatment used in hospitals to prevent progression to acute respiratory distress syndrome, a potentially life-threatening complication. Vafidemstat was safe and well tolerated in severe COVID-19 patients. Vafidemstat reduced the exacerbated activation of CD4+ T cells and reduced the release of key inflammatory cytokines. However, there were no significant differences in the number of deaths between the two arms of the study and the patients in both arms of the study recovered quickly.

The lack of clinical effect could be partially explained by the fact that COVID-19 in-hospital management has been rapidly changing with new drugs being approved and quickly becoming standard of care. So, the management of COVID-19 patients significantly has improved since the start of the pandemic, which is a significant confounding factor in all COVID-19 studies.

The rationale for this study is vafidemstat’s well documented ability to reduce inflammation. Although the findings from this study support this effect, due to lack of clear clinical benefit we believe that Oryzon is unlikely to pursue this indication alone. Infectious diseases were never the focus for the company. There is a potential for some form of collaboration with other interested players in the area, but so far no news has been released in this regard.

One of the more recent initiatives by Oryzon is to investigate vafidemstat in so-called monogenic diseases. Monogenic diseases result from modifications to a single gene. Many different forms of brain impairment are associated with monogenic neurological disorders, such as fragile X syndrome, Huntington’s disease, monogenic autism or some forms of Parkinson’s disease. Up until now, Oryzon investigated vafidemstat in CNS indications that could be described as multifactorial, that is there are no known or clear single cause for BPD, AD or autism. With this new initiative, Oryzon’s management has been exploring whether there is potential to use vafidemstat in diseases with a known single gene mutation (a precision medicine approach).

Oryzon identified Kabuki syndrome as the first suitable condition. The rationale comes from preclinical studies and third-party data (Zhang et al, 2021), which show that excessive LSD1 activity may be a key cause. This is a rare form of intellectual disability primarily caused by loss of function mutations in lysine-specific methyltransferase 2D (mutated KMT2D; causes Kabuki syndrome in c 70% of cases). KMT2D normally adds methyl to histones. Since lysine-specific demethylase 1A (LSD1, which is also known as KDM1A) normally removes the methyl groups added by KMT2D, the hypothesis is that inhibition of KDM1A demethylase (or LSD1) activity with vafidemstat (LSD1 inhibitor) may ameliorate the defects stemming from KMT2D mutation. Such effect was proven in animal models (third-party data) and now Oryzon is preparing a clinical trial.

The Phase I/II HOPE study will be a randomized, double-blind, placebo-controlled trial to investigate vafidemstat’s safety and potential to improve the symptoms of Kabuki syndrome. The trial plans to enrol 50–60 patients and will be performed in children older than 12 years and in young adults. Oryzon expects to start enrolling patients in H122 in several hospitals and sites in the United States and eventually in Europe. The trial protocol has not been published yet, but Oryzon indicated that it is designed so that if a clinical benefit is established, the data could serve as the basis for accelerated approval. So although this is the latest initiative in Oryzon’s portfolio, the path to market could be quick if the data are positive.

Kabuki syndrome is a rare disorder that affects multiple systems, including neuro, immune, auditory, and cardiac systems. It is characterised by distinctive facial features, growth retardation and mild to moderate intellectual disability. Life expectancy is not shortened in most cases of Kabuki syndrome. The syndrome was named because of the facial resemblance of affected individuals to stage makeup used in kabuki, a Japanese traditional theatrical form. This condition occurs in approximately one in 32,000 new-borns, so it is a rare disease. There is no specific treatment for Kabuki syndrome; only symptoms are managed.

The HOPE study marks Oryzon’s first attempt to develop therapeutics for rare conditions. Orphan drug development strategy is somewhat less standardised than for large indications. The R&D strategy in rare diseases can involve just one trial in less than 200 patients (presuming pharmacokinetic (PK), pharmacodynamic (PD) and safety data are already present), which would be sufficient to register the drug if clinical effect is proven. The commercial strategy differs as well due to the fact that the patient population is small and spread widely. Typically, rare disease patients are connected with their respective patient associations, which tend to be significant advocacy players when it comes to new drug development (in September 2021, Oryzon received a $1m grant from a donor who is on the board of the Kabuki Syndrome Foundation). Another distinctive aspect of orphan drug strategy is pricing. Since the target population is small, the economic incentive to develop drugs has always been dampened. However, in recent years orphan drugs have achieved prices well above $100k per year per patient, which has boosted interest in orphan drug development.

Oryzon is also working with various institutions in order to identify other subsets of patients suitable for its precision medicine approach:

The goal of these collaborations is to characterise patients with specific mutations, which could then lead to clinical trials with vafidemstat.

Oryzon is subject to the usual risks associated with drug development, including establishing a favourable safety/efficacy profile, clinical development delays or failures, regulatory risks, competitor successes, partnering setbacks, and financing and commercial risks. The outcomes from the ALICE and CLEPSIDRA trials are known, so, in our view, the near-term sensitivities are spread across the key new trials (FRIDA, STELLAR, PORTICO, EVOLUTION and HOPE). Our valuation implies the iadademstat trials (FRIDA and STELLAR) carry more value given they have potential to generate data sufficient for registration.

Our risk-adjusted net present valuation (rNPV) is based on a number of assumptions. However, future pricing and market dynamics are hard to predict, especially if competitors are successful. Future financing needs will depend on the scale of operations with preclinical candidates, progress with vafidemstat and iadademstat and any potential revenues from partnerships.

Our updated valuation is €739m, or €13.9 per share, vs €591m, or €11.1 per share previously. Given the progress Oryzon has made over the last year, the updated strategy for iadademstat (potentially registrational trials) and the initiation of new trials in new indications, we have extensively revised our rNPV model and R&D assumptions. Exhibit 4 provides a detailed description of the assumptions we have used in our rNPV model. Key changes from our previously published model include:

Currently we do not include vafidemstat for Kabuki syndrome in our valuation. This project is the most recent initiative and the first attempt to investigate vafidemstat’s potential in monogenic diseases. These are rare conditions, so the R&D and commercial strategy is somewhat different from Oryzon’s other projects targeting larger indications. We will reassess this opportunity on an ongoing basis.

Oryzon’s total operational spending in the first nine months of 2021 (9M21) was €12.6m ($14.6m), which as expected was somewhat higher than the €10.5m ($12.3m) booked in 9M20 due to a more intensive R&D programme. Oryzon booked €7.7m ($8.9m) as other income, which represents capitalised R&D costs (Oryzon follows local GAAP). After finetuning our estimates, our operating loss forecasts now are €6.9m and €6.1m in 2021 and 2022, respectively. The reported Q321 cash position was €31.0m (cash and short-term investments; net cash €16.1m). Our model suggests the current cash position should be sufficient until 2023 (funding gap is €2.8m in 2023 according to our estimates). Our expected R&D costs until the respective launch dates in each project are in Exhibit 4.