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EUR247m
Research: Healthcare
Oryzon has reported Q123 results highlighting its near-term strategic priorities, including a favourable interim analysis of its lead asset study, the Phase IIb PORTICO study (vafidemstat, central nervous system, CNS), and the commencement of patient enrolment for the Phase Ib FRIDA study (iadademstat, oncology). Total operating expenses stood at $5.6m for Q123, largely similar to Q122, with the majority (78.1%) from R&D expenses ($4.4m) as Oryzon continues to advance its clinical pipeline. With a cash balance of $20.0m at end Q123, we estimate a cash runway into H124. Going forward, we anticipate top-line data from the FRIDA and PORTICO studies will be key catalysts. Our valuation of Oryzon adjusts to €874.1m or €15.6/share, from €869.0m previously.
Written by
Oryzon Genomics |
Advancing on multiple clinical fronts in Q1 |
Q123 update |
Pharma and biotech |
11 May 2023 |
Share price performance
Business description
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Oryzon Genomics is a research client of Edison Investment Research Limited |
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Oryzon has reported Q123 results highlighting its near-term strategic priorities, including a favourable interim analysis of its lead asset study, the Phase IIb PORTICO study (vafidemstat, central nervous system, CNS), and the commencement of patient enrolment for the Phase Ib FRIDA study (iadademstat, oncology). Total operating expenses stood at $5.6m for Q123, largely similar to Q122, with the majority (78.1%) from R&D expenses ($4.4m) as Oryzon continues to advance its clinical pipeline. With a cash balance of $20.0m at end Q123, we estimate a cash runway into H124. Going forward, we anticipate top-line data from the FRIDA and PORTICO studies will be key catalysts. Our valuation of Oryzon adjusts to €874.1m or €15.6/share, from €869.0m previously.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/21 |
10.6 |
(7.2) |
(0.09) |
0.0 |
N/A |
N/A |
12/22 |
15.7 |
(6.4) |
(0.07) |
0.0 |
N/A |
N/A |
12/23e |
17.3 |
(4.2) |
(0.03) |
0.0 |
N/A |
N/A |
12/24e |
19.0 |
(10.0) |
(0.14) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, other income and exceptional items.
PORTICO and FRIDA to remain the prime focus
Following a favourable interim analysis (April 2023) of the Phase IIb PORTICO study (borderline personality disorder, BPD), Oryzon is actively recruiting patients across Europe and the United States (expected n=188). We view the top-line data (anticipated in early 2024) as a key driving factor in shaping the future development strategy for vafidemstat. Additionally, patient enrolment is ongoing for the Phase IIb EVOLUTION trial (schizophrenia) and an investigational new drug (IND) application is expected in 2023 to support initiation of the Phase Ib/II HOPE trial (Kabuki syndrome). In oncology, the Phase Ib FRIDA study (acute myeloid leukaemia, AML) remains a key focus of Oryzon’s pipeline, as the second-line AML setting may expedite iadademstat’s route to market, according to management. Further, patient enrolment is ongoing for the Phase II trial in collaboration with the Fox Chase Cancer Center (neuroendocrine tumours) and preparations are underway for the Phase Ib/II trial STELLAR trial (small-cell lung cancer, SCLC).
Expanding CNS portfolio with ORY-4001
In March 2023, Oryzon nominated a new clinical development candidate, ORY-4001, a histone deacetylase 6 inhibitor, for the treatment of neurological diseases and it represents the company’s expansion into new epigenetic targets. Oryzon is planning IND-enabling studies to prepare the compound for clinical trials.
Valuation: €874.1m or €15.6/share
We value Oryzon at €874.1m or €15.6/share, slightly up from €869.0m or €15.6/share previously. The increased valuation comes from the combined impact of rolling our model forward, updating our FX assumption to $1.10/€ (from $1.07/€) and a period end net cash balance of €0.9m (vs €4.0m previously).
Valuation
Our valuation for Oryzon improves to €874.1m, marginally up from our previous valuation of €869.0m. However, the per share valuation remains the same at €15.6/share due to an increase in the total number of outstanding shares (56.2m in Q123 vs 55.6m in FY22). Though our underlying long-term assumptions remain unchanged, we have rolled our model forward, and updated our exchange rate assumption to $1.10/€ (from $1.07/€) as well as the net cash balance. The positive roll forward impact on the overall valuation was partially offset by FX movements and a lower net cash balance of €0.9m compared to €4.0m previously. The net cash balance of €0.9m includes gross cash of $20.0m (€18.2m) at end Q123 and the FY22 debt balance, which is the most recent debt figure the company has reported.
Considering the anticipated debt repayments due in FY23, we estimate the need to raise a total of €50m (€8m in FY23, €20m in FY24 and €22m in FY25), currently shown as illustrative debt in our model. Alternatively, if the funding is realised through an equity issue instead (assuming at the current trading price of €2.08/share), Oryzon would have to issue 23.7m shares, resulting in our per share valuation coming down to €10.9/share from $15.6 currently (shares outstanding would increase from 56.2m to 79.9m). A breakdown of our risk-adjusted net present value (NPV) valuation is shown in Exhibit 1:
Exhibit 1: Valuation of Oryzon
Product |
Indication |
Launch |
Peak sales ($m) |
Value |
Probability |
rNPV |
NPV/share (€/share) |
|
Iadademstat |
2L AML |
2026 |
510 |
781.2 |
30% |
231.0 |
4.1 |
|
1L SCLC |
2026 |
740 |
826.8 |
25% |
203.0 |
3.6 |
||
Vafidemstat |
BPD |
2027 |
1,640 |
1,291.7 |
20% |
250.5 |
4.5 |
|
Schizophrenia, negative symptoms |
2027 |
710 |
649.9 |
15% |
90.9 |
1.6 |
||
Aggression in Alzheimer's disease |
2028 |
920 |
690.9 |
15% |
97.8 |
1.7 |
||
Estimated net cash end Q123 |
0.9 |
100% |
0.9 |
0.0 |
||||
Valuation |
|
|
|
4,241.5 |
|
874.1 |
15.6 |
|
Source: Edison Investment Research
Exhibit 2: Financial summary
Accounts: Year end 31 December (€000s) |
2021 |
2022 |
2023e |
2024e |
INCOME STATEMENT |
|
|
|
|
Total revenues |
10,615 |
15,698 |
17,268 |
18,995 |
Cost of sales |
(746) |
(464) |
(487) |
(512) |
Gross profit |
9,869 |
15,234 |
16,781 |
18,483 |
Gross margin % |
93% |
97% |
97% |
97% |
SG&A (expenses) |
(3,782) |
(3,163) |
(3,479) |
(3,827) |
R&D costs |
(9,746) |
(13,681) |
(16,975) |
(23,975) |
Other income/(expense) |
(3,203) |
(3,714) |
0 |
0 |
Exceptionals and adjustments |
(4) |
0 |
0 |
0 |
Reported EBITDA |
(6,866) |
(5,323) |
(3,673) |
(9,318) |
Depreciation and amortisation |
144 |
167 |
149 |
131 |
Reported EBIT |
(7,011) |
(5,490) |
(3,822) |
(9,450) |
Finance income/(expense) |
(169) |
(871) |
(426) |
(579) |
Other income/(expense) |
0 |
(195) |
0 |
0 |
Reported PBT |
(7,180) |
(6,557) |
(4,248) |
(10,029) |
Income tax expense (includes exceptionals) |
2,493 |
2,325 |
2,409 |
2,367 |
Reported net income |
(4,687) |
(4,231) |
(1,839) |
(7,662) |
Basic average number of shares, m |
53.1 |
55.6 |
56.2 |
56.2 |
Basic EPS (€) |
(0.09) |
(0.08) |
(0.03) |
(0.14) |
|
|
|
|
|
Adjusted EBITDA |
(6,862) |
(5,323) |
(3,673) |
(9,318) |
Adjusted EBIT |
(7,007) |
(5,490) |
(3,822) |
(9,450) |
Adjusted PBT |
(7,176) |
(6,361) |
(4,248) |
(10,029) |
Adjusted EPS (€) |
(0.09) |
(0.07) |
(0.03) |
(0.14) |
Adjusted diluted EPS (€) |
(0.09) |
(0.07) |
(0.03) |
(0.14) |
|
|
|
|
|
BALANCE SHEET |
|
|
|
|
Property, plant and equipment |
682 |
611 |
538 |
482 |
Intangible assets |
60,254 |
75,843 |
87,460 |
99,926 |
Investments |
29 |
31 |
31 |
31 |
Deferred tax assets |
1,812 |
2,050 |
2,050 |
2,050 |
Total non-current assets |
62,778 |
78,535 |
90,078 |
102,489 |
Cash and equivalents |
28,725 |
21,317 |
5,152 |
496 |
Trade and other receivables |
3,645 |
3,709 |
3,677 |
3,693 |
Inventories |
104 |
10 |
10 |
10 |
Other current assets |
132 |
129 |
129 |
129 |
Total current assets |
32,606 |
25,165 |
8,968 |
4,328 |
Deferred tax liabilities |
1,812 |
2,050 |
2,050 |
2,050 |
Long term debt |
13,354 |
10,346 |
14,486 |
31,877 |
Other non-current liabilities |
285 |
0 |
0 |
0 |
Total non-current liabilities |
15,451 |
12,396 |
16,536 |
33,927 |
Trade and other payables |
3,518 |
5,742 |
4,630 |
5,186 |
Short term debt |
4,306 |
12,920 |
7,077 |
4,562 |
Other current liabilities |
847 |
70 |
70 |
70 |
Total current liabilities |
8,672 |
18,732 |
11,777 |
9,818 |
Equity attributable to company |
71,262 |
72,572 |
70,733 |
63,071 |
|
0 |
0 |
0 |
0 |
CASH FLOW STATEMENT |
|
|
|
|
Profit before tax |
(7,180) |
(6,557) |
(4,248) |
(10,029) |
Cash from operations (CFO) |
(3,626) |
(1,848) |
(2,770) |
(6,991) |
Capex |
(175) |
(76) |
(76) |
(76) |
Acquisitions & disposals net |
0 |
0 |
0 |
0 |
Acquisition of intangible assets |
(11,586) |
(14,195) |
(11,617) |
(12,466) |
Other investing activities |
37 |
(1) |
0 |
0 |
Cash used in investing activities (CFIA) |
(11,724) |
(14,271) |
(11,693) |
(12,542) |
Net proceeds from issue of shares |
0 |
(932) |
0 |
0 |
Movements in debt |
4,123 |
9,642 |
(1,703) |
14,877 |
Other financing activities |
0 |
0 |
0 |
0 |
Cash from financing activities (CFF) |
4,123 |
8,710 |
(1,703) |
14,877 |
Increase/(decrease) in cash and equivalents |
(10,880) |
(7,408) |
(16,165) |
(4,656) |
Currency translation differences and other |
348 |
1 |
0 |
0 |
Cash and equivalents at start of period |
39,605 |
28,725 |
21,317 |
5,152 |
Cash and equivalents at end of period |
28,725 |
21,317 |
5,152 |
496 |
Net (debt) cash |
14,954 |
3,975 |
(3,094) |
(2,648) |
Source: Company reports, Edison Investment Research
|
|
Research: Healthcare
Context Therapeutics reported Q123 results and its strategic priority for FY23 and beyond. The key highlight for the quarter was its decision to pivot its pipeline focus towards its novel bispecific CLDN6xCD3 antibody, CTIM-76 (IND-enabling studies ongoing) and terminate the development of its ONA-XR program. Operating expenses for the quarter were $6.7m, an increase of 94% y-o-y (Q122: $3.4m), driven by a more than 3x increase in R&D expenses to $4.5m (Q122: $1.4m). With no further R&D earmarked for ONA-XR ($2.1m in Q123), we expect a lower run rate for operating expenses for the remainder of FY23. The period-end net cash balance was $29.8m, which management has guided to last into late 2024, well past the Q124 timeline for the CTIM-76 investigational new drug (IND) filing. This implies a quarterly burn rate of c $4.3m until Q424 ($5.7m in Q123; $3.6m ex-ONA-XR R&D expenses). We expect the IND filing for CTIM-76 to be the next share price catalyst for Context.