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EUR247m
Research: Healthcare
On 11 June 2021, Oryzon presented an updated set of data from the Phase IIa ALICE trial in acute myeloid leukaemia (AML) at the virtual Congress of the European Hematology Association (EHA-2021). 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 18 evaluable patients, 15 (83%) achieved objective responses (OR). For comparison, OR rates are c 30% in AML patients treated with azacitidine monotherapy. This is now the fifth update from the ALICE trial (30 months since the start) and the maturing data are consistent with the previously released early efficacy results. Our valuation is €591m or €11.1 per share.
Written by
Oryzon Genomics |
Large response benefit consistent in ALICE trial |
R&D update |
Pharma & biotech |
15 June 2021 |
Share price performance
Business description
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On 11 June 2021, Oryzon presented an updated set of data from the Phase IIa ALICE trial in acute myeloid leukaemia (AML) at the virtual Congress of the European Hematology Association (EHA-2021). 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 18 evaluable patients, 15 (83%) achieved objective responses (OR). For comparison, OR rates are c 30% in AML patients treated with azacitidine monotherapy. This is now the fifth update from the ALICE trial (30 months since the start) and the maturing data are consistent with the previously released early efficacy results. Our valuation is €591m or €11.1 per share.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/19 |
10.3 |
(4.6) |
(0.09) |
0.0 |
N/A |
N/A |
12/20 |
9.5 |
(4.8) |
(0.07) |
0.0 |
N/A |
N/A |
12/21e |
9.9 |
(4.2) |
(0.06) |
0.0 |
N/A |
N/A |
12/22e |
9.9 |
(4.2) |
(0.05) |
0.0 |
N/A |
N/A |
Note: *Normalised, excluding amortisation of acquired intangibles and exceptional items.
Confidence reaffirmed in iada plus aza combo in AML
OR rates were assessed by bone marrow (BM) aspirate. Of the 27 enrolled patients, 18 had at least one BM aspirate and therefore were evaluable on a per protocol basis. Of the 18 evaluable patients, 15 achieved OR (83%): 10 achieved complete response with or without incomplete haematologic recovery (CR/CRi) and five achieved partial responses (PR). These results are in line with the previously published updates from the ALICE trial. The OR rate is consistent at c 80% and is much higher than the historical response rates with classic chemotherapy (c 30%). Moreover, such rates compare well with a novel combination chemotherapy that includes BCL2 inhibitor venetoclax, a novel approved drug for front-line AML treatment (AbbVie/Genentech). Venetoclax plus azacitidine or decitabine achieved an OR rate of 68% in a late-stage trial and the consensus estimate is for sales to reach $1.4bn in AML alone by 2026 (EvaluatePharma).
Next steps
The trial aims to enrol 36 patients in total, so the data will be expanded in coming months with additional patients and longer follow-up times. Oryzon also reiterated its view that the late-stage development strategy could be focused on combination of iadademstat with other targeted therapy agents like BCL2 inhibitors or others to assess its potential in refractory or relapsed patients. We expect the next update from the ALICE trial at ASH in December 2021.
Valuation: €591m or €11.1 per share
Our valuation is slightly higher at €591m or €11.1 per share, versus €560m or €10.6 per share previously, due to rolling our model forward, which was partially offset by lower net cash. At end-Q121, the cash position was €38.5m (net cash of €23.0m). We make no changes to our product assumptions for now.
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-2021 poster (up to 24 May 2021), 27 patients had 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).
As mentioned, the ORR results are in line with the previously published updates from the ALICE trial (Exhibit 1). As the data have matured, Oryzon has reported durability results. In total, 53% of the responding patients had responses lasting more than six months (durable response), while median time to response was 29 (better durability means more likelihood there will be a clinical survival benefit; as the trial is still ongoing, data are yet to reach maturity). Oryzon noted one standout patient case who had been diagnosed with M5b (monocytic) AML, a hard-to-treat form of leukaemia. This patient achieved CRi in 29 days while on iadademstat plus azacytidine therapy.
Exhibit 1: Evolution of Phase IIa ALICE trial efficacy data
Phase IIa ALICE trial |
Venetoclax |
Azacitidine |
|||||
Update/publication |
|||||||
Enrolment |
17% (6/36) |
36% (13/36) |
50% (18/36) |
50% (18/36) |
75% (27/36) |
- |
- |
Evaluable patients |
5 patients |
8 patients |
13 patients |
13 patients |
18 patients |
145 patients |
241 patients |
ORR(CR, CRi, PR) |
80% (4/5) |
75% (6/8) |
77% (10/13) |
85% (11/13) |
83% (15/18) |
68% (99/145) |
31% (75/241) |
Source: Edison Investment Research, Oryzon Genomics
Safety and tolerability
Overall, the authors of the EHA 2021 poster concluded that the combination of iadademstat and azacitidine shows a relatively good safety profile in elderly AML patients at the selected iadademstat dose level (60µg/m2). Most patients experienced adverse reactions (ARs) that were considered related to the study drugs (azacitidine and/or iadademstat), but most of those were expected haematological AEs (neutropenia and thrombocytopenia). Only two ARs were deemed serious (reported previously). 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, is that this fifth safety update shows the non-haematological safety profile of the combination treatment in the ALICE trial remains good.
Valuation and financials
Our valuation is slightly higher at €591m or €11.1 per share, versus €560m or €10.6 per share previously, due to rolling our model forward, which was partially offset by lower net cash. Oryzon’s total operational spending in Q121 was €4.8m, similar to that of a year ago. Oryzon booked €3.0m as other income, which represents capitalised R&D costs (Oryzon follows local GAAP). The reported Q121 cash position was €38.5m (net cash: €23.0m). We are introducing 2022 estimates, which indicate a similar trend of spending to 2021. As a result, our model suggests the current cash position should be sufficient until early 2023, which is in line with the company’s guidance.
Exhibit 2: Oryzon NPV valuation
Product |
Indication |
Launch |
Peak sales |
Value |
Probability of success (%) |
rNPV |
NPV/share |
Iadademstat (ORY-1001) |
AML |
2023 |
927 |
332.7 |
15% |
65.9 |
1.2 |
Iadademstat (ORY-1001) |
SCLC |
2026 |
571 |
171.5 |
8% |
37.7 |
0.7 |
Vafidemstat (ORY-2001) |
AD |
2026 |
4,510 |
1,281.8 |
15% |
223.0 |
4.2 |
Vafidemstat (ORY-2001) |
MS |
2027 |
1,940 |
539.7 |
20% |
144.1 |
2.7 |
Vafidemstat (ORY-2001) |
BPD |
2027 |
1,340 |
360.8 |
20% |
97.5 |
1.8 |
Net cash (last reported) |
23.0 |
100% |
23.0 |
0.4 |
|||
Valuation |
|
|
2,709.5 |
591.0 |
11.1 |
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 |
2020 |
2021e |
2022e |
|
Year end 31 December |
Local GAAP |
Local GAAP |
Local GAAP |
Local GAAP |
Local GAAP |
||
PROFIT & LOSS |
|||||||
Revenue |
|
|
6,781 |
10,278 |
9,521 |
9,857 |
9,857 |
Cost of Sales |
0 |
0 |
0 |
0 |
0 |
||
Gross Profit |
6,781 |
10,278 |
9,521 |
9,857 |
9,857 |
||
Research and development |
(7,412) |
(11,322) |
(11,075) |
(11,060) |
(11,060) |
||
EBITDA |
|
|
(2,766) |
(3,679) |
(4,148) |
(4,077) |
(4,076) |
Operating Profit (before amort. and except.) |
|
|
(2,905) |
(3,820) |
(4,293) |
(4,225) |
(4,225) |
Intangible Amortisation |
(7) |
(9) |
0 |
0 |
0 |
||
Exceptionals |
(4) |
(11) |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
0 |
||
Operating Profit |
(2,916) |
(3,839) |
(4,293) |
(4,225) |
(4,225) |
||
Exceptionals |
0 |
0 |
0 |
0 |
0 |
||
Net Interest |
(796) |
(737) |
(471) |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
(3,701) |
(4,557) |
(4,765) |
(4,225) |
(4,225) |
Profit Before Tax (reported) |
|
|
(3,712) |
(4,576) |
(4,765) |
(4,225) |
(4,225) |
Tax |
2,535 |
892 |
1,379 |
1,302 |
1,508 |
||
Profit After Tax (norm) |
(1,166) |
(3,666) |
(3,386) |
(2,922) |
(2,717) |
||
Profit After Tax (reported) |
(1,177) |
(3,685) |
(3,386) |
(2,922) |
(2,717) |
||
Average Number of Shares Outstanding (m) |
34.6 |
41.6 |
49.2 |
53.1 |
53.1 |
||
EPS - normalised (€) |
|
|
(0.03) |
(0.09) |
(0.07) |
(0.06) |
(0.05) |
EPS - reported (€) |
|
|
(0.03) |
(0.09) |
(0.07) |
(0.06) |
(0.05) |
Dividend per share (€) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Gross Margin (%) |
100.0 |
100.0 |
100.0 |
100.0 |
100.0 |
||
EBITDA Margin (%) |
N/A |
N/A |
N/A |
N/A |
N/A |
||
Operating Margin (before GW and except.) (%) |
N/A |
N/A |
N/A |
N/A |
N/A |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
31,786 |
42,357 |
51,729 |
61,592 |
71,453 |
Intangible Assets |
29,330 |
39,938 |
49,216 |
59,074 |
68,931 |
||
Tangible Assets |
665 |
631 |
644 |
649 |
652 |
||
Investments |
1,791 |
1,788 |
1,869 |
1,869 |
1,869 |
||
Current Assets |
|
|
35,664 |
37,738 |
42,377 |
29,045 |
16,467 |
Stocks |
135 |
289 |
317 |
317 |
317 |
||
Debtors |
971 |
2,071 |
2,351 |
2,211 |
2,281 |
||
Cash |
34,320 |
35,111 |
39,605 |
26,412 |
13,764 |
||
Other |
239 |
267 |
105 |
105 |
105 |
||
Current Liabilities |
|
|
(10,441) |
(10,546) |
(7,693) |
(7,145) |
(7,144) |
Creditors |
(2,192) |
(4,000) |
(2,839) |
(2,291) |
(2,290) |
||
Short term borrowings |
(8,249) |
(6,547) |
(4,854) |
(4,854) |
(4,854) |
||
Long Term Liabilities |
|
|
(11,884) |
(8,420) |
(10,483) |
(10,483) |
(10,483) |
Long term borrowings |
(9,977) |
(6,699) |
(8,680) |
(8,680) |
(8,680) |
||
Other long term liabilities |
(1,907) |
(1,721) |
(1,803) |
(1,803) |
(1,803) |
||
Net Assets |
|
|
45,125 |
61,129 |
75,931 |
73,009 |
70,292 |
CASH FLOW |
|||||||
Operating Cash Flow |
|
|
(2,799) |
(3,610) |
(5,432) |
(4,485) |
(4,146) |
Net Interest |
2,133 |
(324) |
(247) |
0 |
0 |
||
Tax |
0 |
0 |
862 |
1,302 |
1,508 |
||
Capex |
(170) |
(115) |
(153) |
(153) |
(153) |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
0 |
||
Financing |
11,949 |
18,374 |
18,181 |
0 |
0 |
||
Other* |
(6,576) |
(9,916) |
(9,007) |
(9,753) |
(9,857) |
||
Dividends |
0 |
0 |
0 |
0 |
0 |
||
Net Cash Flow |
4,538 |
4,409 |
4,205 |
(13,088) |
(12,648) |
||
Opening net debt/(cash) |
|
|
(11,555) |
(16,093) |
(21,866) |
(26,071) |
(12,878) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
||
Other |
0 |
1,364 |
0 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(16,093) |
(21,866) |
(26,071) |
(12,983) |
(230) |
Source: Oryzon Genomics, Edison Investment Research. Note: Oryzon reports in Spanish GAAP. *Includes cash outflows related to development costs that were capitalised.
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Research: TMT
GB Group (GBG) reported FY21 results substantially in line with our recently upgraded forecasts. In a difficult year, GBG managed to grow revenue by 9% (12% on an organic basis) and EPS by 21% while repaying all debt. Management has returned to a growth footing, investing in product development and sales capacity while continuing to seek acquisitions that could expand product or market coverage. We have upgraded our normalised diluted EPS forecasts by 3.1% for FY22 and 2.0% for FY23 and introduce a forecast for EPS growth of 9.3% in FY24.