Oryzon Genomics — Interim data from Phase IIa ETHERAL AD study

Oryzon Genomics (BME: ORY)

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Research: Healthcare

Oryzon Genomics — Interim data from Phase IIa ETHERAL AD study

On 15 July 2019, Oryzon presented interim data from the Phase IIa ETHERAL trial at the Alzheimer’s Association International Conference (AAIC 2019) in Los Angeles. A randomised, double-blind, three-arm study is enrolling mild- to moderate Alzheimer’s disease (AD) patients to investigate vafidemstat, an LSD1/MAOB inhibitor. The interim analysis of the blinded data from the first 104 patients (out of 125 in European centres plus 30 more patients in the US) showed the drug was safe and well tolerated. The trial remains blinded, so no conclusions on efficacy can be made at this point, but Oryzon’s presentation included an initial assessment of certain functional parameters and some biomarker data. The placebo-controlled, 24-week treatment results from the European part of the trial are expected in H120. We maintain our valuation of €430m or €11.0/share.

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Healthcare

Oryzon Genomics

Interim data from Phase IIa ETHERAL AD study

R&D results

Pharma & biotech

18 July 2019

Price

€3.68

Market cap

€144m

Net cash (€m) at end Q119

16.2

Shares in issue

39.1m

Free float

70%

Code

ORY

Primary exchange

Madrid Stock Exchange

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

6.1

(3.4)

(3.3)

Rel (local)

4.3

(0.7)

1.2

52-week high/low

€4.64

€2.08

Business description

Oryzon Genomics is a Spanish biotech focused on epigenetics. Iadademstat (Phase IIa) is being explored for acute leukaemias and SCLC; vafidemstat, its CNS product, is in Phase IIa trials in MS, AD and aggression. Newer asset ORY-3001 is being developed for certain orphan indications.

Next events

Autism spectrum disorder results from the Phase II REIMAGINE trial

9 September 2019

First readout from Phase IIa CLEPSIDRA with iadademstat in SCLC

Q319

Aggression in AD results from the vafidemstat’s Phase II REIMAGINE

December 2019

Readouts from Phase II trials with vafidemstat in AD and MS

H219/

H120

Analysts

Jonas Peciulis

+44 (0)20 3077 5728

Alice Nettleton

+44 (0)20 3077 5700

On 15 July 2019, Oryzon presented interim data from the Phase IIa ETHERAL trial at the Alzheimer's Association International Conference (AAIC 2019) in Los Angeles. A randomised, double-blind, three-arm study is enrolling mild- to moderate Alzheimer’s disease (AD) patients to investigate vafidemstat, an LSD1/MAOB inhibitor. The interim analysis of the blinded data from the first 104 patients (out of 125 in European centres plus 30 more patients in the US) showed the drug was safe and well tolerated. The trial remains blinded, so no conclusions on efficacy can be made at this point, but Oryzon’s presentation included an initial assessment of certain functional parameters and some biomarker data. The placebo-controlled, 24-week treatment results from the European part of the trial are expected in H120. We maintain our valuation of €430m or €11.0/share.

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

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.

No clinically relevant safety concerns

Although the primary endpoint of the study is safety and tolerability, secondary endpoints include measures of cognition, function, behaviour and CSF biomarkers, which will provide insights into efficacy. At the time of the interim analysis 87.5% (91/104) patients had completed at least one month of treatment and no clinically relevant effects on platelets, neutrophils and other haematological parameters have been observed. 36 patients completed six month of treatment with no significant safety issues. This confirmed the data from the Phase I trial with healthy volunteers and is a significant reassurance given that any AD treatment would likely be a life-long intervention and that LSD1 is a key regulator of haematopoiesis.

Initial analysis of blinded patient data

Because the trial remains blinded, no conclusions on efficacy can be made yet, but the poster did describe disease progression in the first 33 patients, who completed 24 weeks of therapy. The researchers said that ‘while some patients clearly progress, others maintain baseline values or even improve’. This was shown using selected functional scores (MMSE and CMAI) and the proinflammatory biomarker S100A9 (Exhibit 1). Only six patients showed a clear increase on S100A9 levels, whereas the other patients were stable or showed a significant decrease.

Valuation: €430m or €11.0/share

Our valuation remains €430m or €11.0/share and our forecasts are unchanged (Exhibit 3). The full results from the ETHERAL trial are the next catalyst in this indication and will prompt us to review our rNPV of the project. As a reminder, Oryzon recently presented interim data from the two cohorts of ADHD and borderline personality disorder patients from the Phase II REIMAGINE trial with vafidemstat, which showed improvements in aggression and agitation, as well as other core features of the diseases.

Oryzon Genomics is a research client of Edison Investment Research Limited

Next steps

By mid-June, 75% of patients were enrolled to the ETHERAL trial (total n = 104). This suggests the last patient may be recruited by end of July 2019. ETHERAL-US (n = 30) is also enrolling after the FDA approved the initial new drug application IND in early 2019. The patients are randomised into three arms (placebo, low dose, high dose) using an adaptive design. The first 24 weeks are placebo-controlled, following which the placebo patients are randomised into vafidemstat therapy (low dose or high dose) so that all patients receive treatment (ie no placebo control, Exhibit 2) for another 24 weeks. Oryzon plans to report the placebo-controlled results (ie from the first 24 weeks) from the European part of the trial in H120. The full results including the extension period and the US data should be reported later in 2020.

Exhibit 1: Functional score and biomarker evolution in blinded data analysis

Source: Bullock et al, AAIC 2019, Oryzon. Note: MMSE = mini-mental state examination; CMAI = Cohen-Mansfield agitation inventory.

Exhibit 2: Phase IIa ETHERAL AD study design

Source: Oryzon. Note: FUP = follow up; V = visit; R = randomisation.

Exhibit 3: Oryzon rNPV valuation

Product

Indication

Launch

Peak sales
(US$m)

Value
(€m)

Probability of success (%)

rNPV
(€m)

NPV/share
(€/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.


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 £49,500 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 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

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.

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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 £49,500 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 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

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

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. 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.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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