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EUR247m
Research: Healthcare
Last Friday, Oryzon presented an updated set of data from the Phase IIa ALICE trial in acute myeloid leukaemia (AML) at the virtual 25th Congress of the European Hematology Association (EHA-2020). This is now the third update from the ALICE trial and the maturing data are consistent with the previously released positive early efficacy results. 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 13 evaluable patients, 10 (77%) achieved objective responses (OR). For comparison, OR rates are 25–32% in AML patients treated with azacitidine monotherapy. More data are due to follow. Our valuation is €496m or €10.8 per share.
Written by
Oryzon Genomics |
Third positive update from Phase II ALICE trial |
R&D results |
Pharma & biotech |
15 June 2020 |
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Last Friday, Oryzon presented an updated set of data from the Phase IIa ALICE trial in acute myeloid leukaemia (AML) at the virtual 25th Congress of the European Hematology Association (EHA-2020). This is now the third update from the ALICE trial and the maturing data are consistent with the previously released positive early efficacy results. 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 13 evaluable patients, 10 (77%) achieved objective responses (OR). For comparison, OR rates are 25–32% in AML patients treated with azacitidine monotherapy. More data are due to follow. Our valuation is €496m or €10.8 per share.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/18 |
6.8 |
(3.7) |
(0.03) |
0.0 |
N/A |
N/A |
12/19 |
10.3 |
(4.6) |
(0.09) |
0.0 |
N/A |
N/A |
12/20e |
9.9 |
(4.7) |
(0.07) |
0.0 |
N/A |
N/A |
12/21e |
9.9 |
(4.2) |
(0.06) |
0.0 |
N/A |
N/A |
Note: *Normalised, excluding amortisation of acquired intangibles and exceptional items.
Growing confidence in iada plus aza combo in AML
OR rates were assessed by bone marrow (BM) aspirate. Of the 18 enrolled patients, 13 had at least one BM aspirate and therefore were evaluable. Of the 13 evaluable patients, 10 (77%) achieved ORs: four complete responses (CRs), two CRs with incomplete haematologic recovery (CRi) and four partial responses (PR). These results are in line with the previously published updates from the ALICE trial. The OR rate is consistently 75–80% and is much higher than the historical response rates with classic chemotherapy (25–32%). Moreover, such rates compare well with a novel combination chemotherapy that includes venetoclax, a recently approved drug for front-line AML treatment (AbbVie/Genentech). Venetoclax plus azacitidine or decitabine achieved an OR rate of 67% in a late-stage trial and the consensus expects sales to reach $1.4bn in AML alone by 2026 (EvaluatePharma). More data will be released from the ALICE study.
No major disruption from COVID-19
As per its last update (17 April 2019) on the expected impact of the COVID-19 pandemic, Oryzon stated that despite all the precautionary measures none of the ongoing trials were cancelled and patient recruitment was not postponed. Hospital visits, when possible, were replaced by remote monitoring. Oryzon had planned to initiate a new Phase IIb trial in agitation-aggression in patients with borderline-personality disorder (PORTICO trial). This has now been postponed by ‘a few months’, which we believe is a manageable delay given the circumstances.
Valuation: €496m or €10.8 per share
Our valuation is slightly higher at €496m or €10.8 per share due to rolling our model forward, which is offset by lower net cash. As of end-Q120, Oryzon reported €29.3m in cash and €11.0m in total debt. We make no changes to our rNPV for the time being. A detailed review of all of the company’s ongoing programmes including upcoming catalysts can be found in our recent outlook report.
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-2020 poster, 18 patients have 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). These secondary endpoints were measured by BM aspirate.
Of the 18 enrolled patients, 13 had at least one BM aspirate and therefore were evaluable (the last trial update released in December 2019 included data from eight evaluable patients). New data include:
▪
10 of the 13 evaluable patients (77%) achieved ORs: four CRs, two CRis and four PRs.
▪
TTR and DOR were 37 days and 20 weeks, respectively.
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Exhibit 1: Patients enrolled in the Phase IIa ALICE trial |
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Source: Oryzon |
Safety/tolerability
Overall, the authors of the EHA-2020 poster concluded that the combination of iadademstat and azacitidine shows a relatively good safety profile in elderly AML patients at the selected iadademstat’s dose level of 60µg/m2. Most patients experienced adverse events (AEs) that were considered related to the study drugs (azacitidine and/or iadademstat) and most of those AEs were neutropenia and thrombocytopenia. Only three non-haematological AEs (asthenia and distortion of the sense of taste in one patient and weight reduction in another patient) were observed. 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, from this third safety data update is that the non-haematological safety profile of this combination treatment remains good.
Iadademstat/azacitidine combo efficacy results in perspective
OR rates in AML patients treated with azacitidine monotherapy are 25–32% depending on age (Maurillo et al, 2012). 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 analogues of cytidine) and the OR rate was 67%. Venetoclax (Venclexta, AbbVie/Genentech) is a novel anticancer drug approved (accelerated approval) by the FDA for frontline treatment of AML in combination with azacitidine or decitabine or low-dose cytarabine.
In the first set of data from the ALICE trial published in June 2019, the OR rate was 80% in five evaluable patients. In the second data update released in December 2019, the OR rate was 75% in eight evaluable patients. The current update, now from 13 evaluable patients, shows an OR rate of 77%, so even though the patient number is still relatively small, the results clearly track the 75–80% range. This is much higher than the historical response rates with classic chemotherapy and compares well with venetoclax’s OR of 67%. Consensus expects venetoclax to reach $1.4bn in sales in AML alone by 2026 (EvaluatePharma).
Next steps
The second part of the ALICE study is still enrolling patients, so these results will be expanded in the coming months with additional patients and longer follow-up times. Oryzon also indicated that if these results are maintained, then ‘further trials with this combination therapy in a confirmatory study setting’ will be warranted.
Exhibit 2: Oryzon rNPV valuation
Product |
Indication |
Launch |
Peak sales |
Value |
Probability of success (%) |
rNPV |
NPV/share |
Iadademstat (ORY-1001) |
AML |
2023 |
927 |
311.3 |
15% |
53.2 |
1.2 |
Iadademstat (ORY-1001) |
SCLC |
2026 |
571 |
160.2 |
8% |
29.4 |
0.6 |
Vafidemstat (ORY-2001) |
AD |
2026 |
4,510 |
1,192.5 |
15% |
192.0 |
4.2 |
Vafidemstat (ORY-2001) |
MS |
2027 |
1,940 |
523.7 |
20% |
126.2 |
2.8 |
Vafidemstat (ORY-2001) |
BPD |
2027 |
1,290 |
322.4 |
20% |
76.5 |
1.7 |
Net cash (end-2019) |
18.4 |
100% |
18.4 |
0.4 |
|||
Valuation |
|
|
2,528.5 |
495.7 |
10.8 |
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 |
2020e |
2021e |
||
Year end 31 December |
Local GAAP |
Local GAAP |
Local GAAP |
Local GAAP |
|||
PROFIT & LOSS |
|||||||
Revenue |
|
|
6,781 |
10,278 |
9,857 |
9,857 |
|
Cost of Sales |
0 |
0 |
0 |
0 |
|||
Gross Profit |
6,781 |
10,278 |
9,857 |
9,857 |
|||
Research and development |
(7,412) |
(11,322) |
(11,060) |
(11,060) |
|||
EBITDA |
|
|
(2,766) |
(3,679) |
(4,091) |
(4,095) |
|
Operating Profit (before amort. and except.) |
(3,660) |
(2,905) |
(2,905) |
(3,820) |
|||
Intangible Amortisation |
(7) |
(9) |
0 |
0 |
|||
Exceptionals |
(4) |
(11) |
0 |
0 |
|||
Other |
0 |
0 |
0 |
0 |
|||
Operating Profit |
(2,916) |
(3,839) |
(4,225) |
(4,225) |
|||
Exceptionals |
0 |
0 |
0 |
0 |
|||
Net Interest |
(796) |
(737) |
(471) |
0 |
|||
Profit Before Tax (norm) |
|
|
(3,701) |
(4,557) |
(4,696) |
(4,225) |
|
Profit Before Tax (reported) |
|
|
(3,712) |
(4,576) |
(4,696) |
(4,225) |
|
Tax |
2,535 |
892 |
1,713 |
1,302 |
|||
Profit After Tax (norm) |
(1,166) |
(3,666) |
(2,983) |
(2,922) |
|||
Profit After Tax (reported) |
(1,177) |
(3,685) |
(2,983) |
(2,922) |
|||
Average Number of Shares Outstanding (m) |
31.7 |
34.6 |
41.6 |
45.8 |
|||
EPS - normalised (€) |
|
|
(0.03) |
(0.09) |
(0.07) |
(0.06) |
|
EPS - reported (€) |
|
|
(0.03) |
(0.09) |
(0.07) |
(0.06) |
|
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 |
|
|
31,786 |
42,357 |
52,196 |
62,039 |
|
Intangible Assets |
29,330 |
39,938 |
49,795 |
59,653 |
|||
Tangible Assets |
665 |
631 |
613 |
598 |
|||
Investments |
1,791 |
1,788 |
1,788 |
1,788 |
|||
Current Assets |
|
|
35,664 |
37,738 |
24,012 |
10,445 |
|
Stocks |
135 |
289 |
289 |
289 |
|||
Debtors |
971 |
2,071 |
1,521 |
1,796 |
|||
Cash |
34,320 |
35,111 |
21,935 |
8,093 |
|||
Other |
239 |
267 |
267 |
267 |
|||
Current Liabilities |
|
|
(10,441) |
(10,546) |
(9,642) |
(8,840) |
|
Creditors |
(2,192) |
(4,000) |
(3,096) |
(2,293) |
|||
Short term borrowings |
(8,249) |
(6,547) |
(6,547) |
(6,547) |
|||
Long Term Liabilities |
|
|
(11,884) |
(8,420) |
(8,420) |
(8,420) |
|
Long term borrowings |
(9,977) |
(6,699) |
(6,699) |
(6,699) |
|||
Other long term liabilities |
(1,907) |
(1,721) |
(1,721) |
(1,721) |
|||
Net Assets |
|
|
45,125 |
61,129 |
58,146 |
55,223 |
|
CASH FLOW |
|||||||
Operating Cash Flow |
|
|
(2,799) |
(3,610) |
(4,916) |
(5,172) |
|
Net Interest |
2,133 |
(324) |
0 |
0 |
|||
Tax |
0 |
0 |
1,713 |
1,302 |
|||
Capex |
(170) |
(115) |
(115) |
(115) |
|||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
|||
Financing |
11,949 |
18,374 |
0 |
0 |
|||
Other* |
(6,576) |
(9,916) |
(9,858) |
(9,590) |
|||
Dividends |
0 |
0 |
0 |
0 |
|||
Net Cash Flow |
4,538 |
4,409 |
(13,176) |
(13,575) |
|||
Opening net debt/(cash) |
|
|
(11,555) |
(16,093) |
(21,866) |
(8,689) |
|
HP finance leases initiated |
0 |
0 |
0 |
0 |
|||
Other |
0 |
1,364 |
0 |
0 |
|||
Closing net debt/(cash) |
|
|
(16,093) |
(21,866) |
(8,689) |
4,886 |
|
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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