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EUR247m
Research: Healthcare
On 14 June 2019, Oryzon presented dose-finding data from the Phase II ALICE trial at the 24th Congress of the European Hematology Association (EHA-2019) in Amsterdam. The single-arm, open-label study enrolled newly diagnosed, elderly acute myeloid leukaemia (AML) patients and investigated iadademstat in combination with standard of care chemotherapy drug azacitidine. In addition to dose finding data, initial efficacy was also investigated. Overall, findings in this trial confirm the data seen in the first-in-man Phase I study Oryzon completed in late 2016 and support further investigation of an azacitidine/iadademstat combination in the second efficacy part of the ALICE trial.
Written by
Oryzon Genomics |
Positive signals from first ALICE trial dataset |
R&D results |
Pharma & biotech |
18 June 2019 |
Share price performance
Business description
Next events
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On 14 June 2019, Oryzon presented dose-finding data from the Phase II ALICE trial at the 24th Congress of the European Hematology Association (EHA-2019) in Amsterdam. The single-arm, open-label study enrolled newly diagnosed, elderly acute myeloid leukaemia (AML) patients and investigated iadademstat in combination with standard of care chemotherapy drug azacitidine. In addition to dose finding data, initial efficacy was also investigated. Overall, findings in this trial confirm the data seen in the first-in-man Phase I study Oryzon completed in late 2016 and support further investigation of an azacitidine/iadademstat combination in the second efficacy part of the ALICE trial.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/17 |
4.3 |
(4.6) |
(0.14) |
0.0 |
N/A |
N/A |
12/18 |
6.8 |
(3.7) |
(0.03) |
0.0 |
N/A |
N/A |
12/19e |
6.1 |
(6.8) |
(0.17) |
0.0 |
N/A |
N/A |
12/20e |
6.1 |
(6.8) |
(0.17) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Dose-finding data set from Phase II ALICE trial
In this part of the study, which included six AML patients, the combination of iadademstat with azacitidine demonstrated a good safety profile and the recommended dose of 90 µg/m2 was established. This was the initially selected dose, therefore only six patients were needed. Iadademstat produced a clear differentiation effect in leukaemic blasts, ie turn them into normal blood cells (Exhibit 1). 80% of objective responses were observed in five evaluable patients (Exhibit 2). Of these, 75% (3/5) were complete remissions with incomplete haematologic recovery (CRi), while 25% (1/5) were partial remissions. Interestingly, the observed clinical responses appeared rapidly with a median time of 1.5 months.
Our take
Although the study was small and the focus was on establishing the recommended dose, the efficacy findings can be interpreted as showing potential. Notably, impaired differentiation of the leukaemic blasts is at the core of the pathophysiology of the disease. Iadademstat’s ability to induce the differentiation of blasts demonstrates it does what it was designed for. We note that reported overall response rates (ORR) in AML patients treated with azacitidine monotherapy are 25–32% depending on age (Seymour et al, 2016). A recently published article (DiNardo et al, 2019) described a clinical trial (n=145) where AML patients received venetoclax plus azacitidine or decitabine (both chemical analogs of cytidine) and the ORR was 67%. Venetoclax is a novel anticancer drug being developed by AbbVie/Genentech and the ORR of 67% compares well with the initial 80% rate observed in Oryzon’s trial. The second part of the ALICE trial should provide more insight in this regard.
Valuation: €430m or €11.0/share
Our valuation remains €430m or €11.0/share and our forecasts are unchanged. The full results from the ALICE trial is the next catalyst in this indication and will prompt us to review our rNPV of the project including the success probability and other target populations as Oryzon indicated that one of the goals of the trial is to understand the broader application of iadademstat in other leukaemias.
Oryzon Genomics is a research client of Edison Investment Research Limited
Next steps
The second part of the ALICE study will enrol up to 18 more patients and focus on the effectiveness of the drug combination. The next set of data should be presented at the ASH meeting in Orlando in December 2019. Iadademstat, as a selective LSD1 inhibitor, has been shown to be effective in preclinical models, including combinations with azacitidine. In addition, Oryzon has already completed a Phase I first-in-man trial, where iadademstat was given as a monotherapy, and demonstrated preliminary antileukaemic activity (reviewed in detail in our initiation report).
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Exhibit 1: Peripheral blast differentiation (data from patient #203) |
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Source: Oryzon, EHA-2019 conference |
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Exhibit 2: Preliminary efficacy results |
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Source: Oryzon, EHA-2019 conference |
Exhibit 3: Oryzon rNPV valuation
Product |
Indication |
Launch |
Peak sales |
Value |
Probability of success (%) |
rNPV |
NPV/share |
Iadademstat (ORY-1001) |
AML |
2023 |
927 |
284.1 |
15% |
56.3 |
1.4 |
Iadademstat (ORY-1001) |
SCLC |
2026 |
571 |
137.6 |
8% |
25.2 |
0.6 |
Vafidemstat (ORY-2001) |
AD |
2026 |
4,510 |
1,018.3 |
15% |
160.5 |
4.1 |
Vafidemstat (ORY-2001) |
MS |
2027 |
1,940 |
446.6 |
20% |
105.8 |
2.7 |
Vafidemstat (ORY-2001) |
BPD |
2027 |
1,290 |
277.0 |
20% |
65.7 |
1.7 |
Net cash (end-2018) |
16.1 |
100% |
16.1 |
0.4 |
|||
Valuation |
|
|
2,179.6 |
429.6 |
11.0 |
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 4: Financial summary
€000s |
|
2017 |
2018 |
2019e |
2020e |
||
Year end 31 December |
Local GAAP |
Local GAAP |
Local GAAP |
Local GAAP |
|||
PROFIT & LOSS |
|||||||
Revenue |
|
|
4,317 |
6,781 |
6,119 |
6,137 |
|
Cost of Sales |
0 |
0 |
0 |
0 |
|||
Gross Profit |
4,317 |
6,781 |
6,119 |
6,137 |
|||
Research and development |
(5,306) |
(7,412) |
(9,454) |
(9,560) |
|||
EBITDA |
|
|
(3,498) |
(2,766) |
(6,046) |
(6,175) |
|
Operating Profit (before amort. and except.) |
(3,660) |
(2,905) |
(3,660) |
(2,905) |
|||
Intangible Amortisation |
(664) |
(7) |
(8) |
(9) |
|||
Exceptionals |
0 |
(4) |
0 |
0 |
|||
Other |
0 |
0 |
0 |
0 |
|||
Operating Profit |
(4,324) |
(2,916) |
(6,194) |
(6,324) |
|||
Exceptionals |
0 |
0 |
0 |
0 |
|||
Net Interest |
(928) |
(796) |
(586) |
(471) |
|||
Profit Before Tax (norm) |
|
|
(4,588) |
(3,701) |
(6,771) |
(6,786) |
|
Profit Before Tax (reported) |
|
|
(5,252) |
(3,712) |
(6,780) |
(6,795) |
|
Tax |
55 |
2,535 |
0 |
0 |
|||
Profit After Tax (norm) |
(4,533) |
(1,166) |
(6,771) |
(6,786) |
|||
Profit After Tax (reported) |
(5,197) |
(1,177) |
(6,780) |
(6,795) |
|||
Average Number of Shares Outstanding (m) |
31.7 |
31.7 |
34.6 |
39.1 |
|||
EPS - normalised (€) |
|
|
(0.14) |
(0.03) |
(0.17) |
(0.17) |
|
EPS - reported (€) |
|
|
(0.16) |
(0.03) |
(0.17) |
(0.17) |
|
Dividend per share (€) |
0.0 |
0.0 |
0.0 |
0.0 |
|||
Gross Margin (%) |
100.0 |
100.0 |
100.0 |
100.0 |
|||
EBITDA Margin (%) |
N/A |
N/A |
N/A |
N/A |
|||
Operating Margin (before GW and except.) (%) |
N/A |
N/A |
N/A |
N/A |
|||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
24,914 |
31,786 |
37,758 |
43,807 |
|
Intangible Assets |
22,458 |
29,330 |
35,441 |
41,569 |
|||
Tangible Assets |
638 |
665 |
526 |
447 |
|||
Investments |
1,818 |
1,791 |
1,791 |
1,791 |
|||
Current Assets |
|
|
36,130 |
35,664 |
16,488 |
3,856 |
|
Stocks |
7 |
135 |
71 |
103 |
|||
Debtors |
857 |
971 |
914 |
943 |
|||
Cash |
34,950 |
34,320 |
15,264 |
2,572 |
|||
Other |
316 |
239 |
239 |
239 |
|||
Current Liabilities |
|
|
(8,696) |
(10,441) |
(4,017) |
(4,229) |
|
Creditors |
(1,343) |
(2,192) |
(1,767) |
(1,979) |
|||
Short term borrowings |
(7,354) |
(8,249) |
(2,249) |
(2,249) |
|||
Long Term Liabilities |
|
|
(17,915) |
(11,884) |
(11,884) |
(11,884) |
|
Long term borrowings |
(16,041) |
(9,977) |
(9,977) |
(9,977) |
|||
Other long term liabilities |
(1,874) |
(1,907) |
(1,907) |
(1,907) |
|||
Net Assets |
|
|
34,432 |
45,125 |
38,345 |
31,550 |
|
CASH FLOW |
|||||||
Operating Cash Flow |
|
|
(4,281) |
(2,799) |
(6,936) |
(6,495) |
|
Net Interest |
(426) |
2,133 |
(586) |
(471) |
|||
Tax |
0 |
0 |
0 |
0 |
|||
Capex |
(105) |
(170) |
0 |
0 |
|||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
|||
Financing |
16,887 |
11,949 |
0 |
0 |
|||
Other* |
653 |
(6,576) |
(5,534) |
(5,726) |
|||
Dividends |
0 |
0 |
0 |
0 |
|||
Net Cash Flow |
12,728 |
4,538 |
(13,055) |
(12,692) |
|||
Opening net debt/(cash) |
|
|
1,172 |
(11,555) |
(16,093) |
(3,038) |
|
HP finance leases initiated |
0 |
0 |
0 |
0 |
|||
Other |
0 |
0 |
0 |
0 |
|||
Closing net debt/(cash) |
|
|
(11,555) |
(16,093) |
(3,038) |
9,655 |
|
Source: Edison Investment Research, Oryzon Genomics accounts. Note: Oryzon reports in Spanish GAAP. *Includes cash outflows related to development costs that were capitalised.
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Research: Investment Companies
BB Biotech (BION) has continued the process of refocusing its portfolio on innovative smaller and mid-cap stocks, selling out of bigger names such as Novo Nordisk and Regeneron, and taking new positions in smaller stocks at the cutting edge of genetic medicine. The Switzerland-based fund retains a highly concentrated portfolio of c 30–35 stocks (and five to eight core holdings make up more than half of total assets), but has a broad spread of clinical indications and development stages. Lead Manager Daniel Koller says that focusing the portfolio away from the big index names allows BION to remain relevant to investors who may hold such stocks directly. The fund has a high distribution policy (funded out of capital returns) and currently yields 4.6%.