Oryzon Genomics — Advancing on multiple clinical fronts in Q1

Oryzon Genomics (BME: ORY)

Last close As at 15/06/2024

EUR1.90

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EUR124m

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Research: Healthcare

Oryzon Genomics — Advancing on multiple clinical fronts in Q1

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.

Soo Romanoff

Written by

Soo Romanoff

Managing Director - Head of Content, Healthcare

Healthcare

Oryzon Genomics

Advancing on multiple clinical fronts in Q1

Q123 update

Pharma and biotech

11 May 2023

Price

€2.08

Market cap

€120m

Estimated net cash (€m) at end March 2023

0.9

Shares in issue

56.2m

Free float

80%

Code

ORY

Primary exchange

Madrid Stock Exchange

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(5.9)

(16.5)

(4.1)

Rel (local)

(4.4)

(16.9)

(14.9)

52-week high/low

€2.96

€2.05

Business description

Oryzon Genomics is a Spanish biotech focused on epigenetics. Iadademstat is being explored for acute leukaemias, small-cell lung cancer and neuroendocrine tumours. Vafidemstat, its central nervous system (CNS) asset, has completed several Phase IIa trials and a Phase IIb trial in borderline personality disorder is now the lead study, but Oryzon is rapidly expanding its CNS R&D pipeline.

Next events

Q1 results

July 2023

Analysts

Soo Romanoff

+44 (0)20 3077 5700

Dr. Arron Aatkar

+44 (0)20 3077 5700

Nidhi Singh

+44 (0)20 3077 5700

Oryzon Genomics is a research client of Edison Investment Research Limited

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*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

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
(€m)

Probability 

rNPV
(€m) 

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

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 £60,000 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 2023 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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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 £60,000 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 2023 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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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