Currency in EUR
Last close As at 25/03/2023
EUR2.15
▲ −0.04 (−1.83%)
Market capitalisation
EUR125m
Research: Healthcare
Oryzon Genomics has presented the top-line results of its Phase IIa ALICE trial investigating its lead oncology LSD1 inhibitor iadademstat in combination with azacitidine for the treatment of acute myeloid leukaemia (AML) in newly diagnosed elderly/unfit patients. The study met its primary endpoints of safety and tolerability with no major non-haematological or organ related toxicities reported. Notably, iadademstat also displayed an encouraging efficacy profile, achieving an objective response rate (ORR) of 81% and median overall survival (mOS) of 11.1 months, significantly higher than previously reported values for azacitidine monotherapy (ORR: c 30%; mOS: c 7–8 months). We believe these positive results clearly demonstrate the clinical utility of iadademstat and provide important proof of concept for the drug’s use in the AML setting. We value Oryzon at €847m or €15.5 per share.
Oryzon Genomics |
Positive ALICE readouts pave way in AML |
Clinical trial update |
Pharma and biotech |
13 December 2022 |
Share price performance
Business description
Next events
Analysts
Oryzon Genomics is a research client of Edison Investment Research Limited |
Oryzon Genomics has presented the top-line results of its Phase IIa ALICE trial investigating its lead oncology LSD1 inhibitor iadademstat in combination with azacitidine for the treatment of acute myeloid leukaemia (AML) in newly diagnosed elderly/unfit patients. The study met its primary endpoints of safety and tolerability with no major non-haematological or organ related toxicities reported. Notably, iadademstat also displayed an encouraging efficacy profile, achieving an objective response rate (ORR) of 81% and median overall survival (mOS) of 11.1 months, significantly higher than previously reported values for azacitidine monotherapy (ORR: c 30%; mOS: c 7–8 months). We believe these positive results clearly demonstrate the clinical utility of iadademstat and provide important proof of concept for the drug’s use in the AML setting. We value Oryzon at €847m or €15.5 per share.
Year end |
Revenue |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/20 |
9.5 |
(4.8) |
(0.07) |
0.0 |
N/A |
N/A |
12/21 |
10.6 |
(7.2) |
(0.09) |
0.0 |
N/A |
N/A |
12/22e |
14.4 |
(5.0) |
(0.05) |
0.0 |
N/A |
N/A |
12/23e |
15.9 |
(5.8) |
(0.06) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS is normalised, excluding amortisation of acquired intangibles, other income and exceptional items
FRIDA next on the horizon in second-line AML
With the conclusion of the ALICE study, Oryzon intends to keep up the clinical pace of iadademstat in AML with the initiation of the Phase Ib FRIDA study in relapsed/refractory (r/r) FLT3+ AML patients, which is anticipated in Q422. While the AML market is highly competitive, second-line treatment options in r/r FLT3+ AML remain limited and suboptimal, so we view management’s pursuit of this setting as a sensible clinical strategy to maximise the potential opportunity for iadademstat. Additionally, FLT3+ patients in the ALICE study all showed a response to treatment, providing encouraging signs for this AML sub-population in FRIDA.
Recent transactions put LSD1 in the spotlight
The positive readouts from the ALICE trial could not have been more timely, coinciding with some notable deal activity in the LSD1 inhibitor space. In November 2022 Merck announced it would acquire Imago BioSciences for US$1.35bn; Imago BioSciences’ lead clinical asset, LSD1 inhibitor bomedemstat, is being investigated in Phase II studies for the treatment of haematological disorders. While Imago and Oryzon’s pipelines may not directly correlate, we believe such a transaction is a positive development for LSD1 clinical programmes in general, highlighting big pharma’s interest and enhancing their clinical reputation.
Valuation: €847m or €15.5/share
We value Oryzon at €847m or €15.5/share (previously €861m or €16.2/share). The valuation has been affected by our model rolling forward and the update of our exchange rate assumption to $1.06/€ (from $1.01/€), but our underlying long-term assumptions remain unchanged.
ALICE signs off with positive results
The Phase IIa ALICE study represented one of Oryzon’s most advanced clinical oncology programmes. The 48-month open-label study assessed the safety, tolerability, efficacy and optimal dosing of iadademstat in combination with azacitidine as a first-line therapy in adult patients with AML. Being open label, Oryzon was able to provide rolling updates from the trial every six months, consistently displaying impressive response rates in patients, and the latest top-line data did not deviate from this pattern (see Exhibit 1):
Exhibit 1: Evolution of Phase IIa ALICE trial efficacy data
Phase IIa ALICE trial |
Venetoclax |
Azacitidine |
||||||||
Update/publication |
ASH 2022 |
|||||||||
Enrolment |
17% (6/36) |
36% (13/36) |
50% (18/36) |
50% (18/36) |
75% (27/36) |
100% (n=36) |
100% (n=36) |
100% (n=36) |
- |
- |
Evaluable patients |
5 patients |
8 patients |
13 patients |
13 patients |
18 patients |
27 patients |
27 patients |
27 patients |
145 patients |
241 patients |
ORR (CR, CRi, PR) |
80% (4/5) |
75% (6/8) |
77% (10/13) |
85% (11/13) |
83% (15/18) |
78% (21/27) |
81% (22/27) |
81% (22/27) |
68% (99/145) |
31% (75/241) |
Source: Edison Investment Research, Oryzon Genomics
Of the 27 evaluable patients, 22 (81%) achieved an ORR, comprising 14 complete responses (CR) or complete responses with incomplete haematologic recovery (CRi), and eight partial responses (PR). Notably, 10 CR/CRi patients (71%) achieved transfusion independence for red blood cells and platelets, a result that we believe may elicit a positive impact on overall patient compliance for future studies. Nine out of 11 evaluable CR/CRi patients were also shown to be measurable residual disease negative.
The time to response (TTR) was rapid: 19 of 22 ORR patients (86%) responded after two 28-day cycles of treatment; and durable, as 36% of patients responded for more than 12 months and 30% for more than 18 months. Short treatment TTRs are of particular importance for older AML patients and, due to the aggressive nature of chemotherapy treatment, many patients are unable to complete the minimum recommended four cycles of hypomethylating agent (HMA) monotherapy treatment, such as azacitidine, required to achieve a beneficial response. A TTR of 86% achieved by the iadademstat/azacitidine combination after two treatment cycles is therefore clinically significant, in our view.
Finally, an mOS of 11.1 months was reported from the ALICE study, a significant improvement over azacytidine monotherapy, which has reported mOS in the range of 7–8 months. The mOS consisted of the combined results from two dosed patient cohorts of 60μg/m2/day (13 patients) and 90μg/m2/day (14 patients) with mOS of 8.1 and 12.3 months respectively. While Oryzon is not looking to pursue iadademstat/azacitidine in first-line AML, we believe these results still provide valuable and highly encouraging clinical proof of concept.
Paving the route to market with FRIDA
In our view, a potentially significant result from the ALICE study, and one that may provide insight into the upcoming Phase Ib FRIDA trial, was the observation that those evaluable AML patients (n = 3) possessing an FLT3 mutation (FLT3+) all responded to iadademstat treatment. FRIDA will investigate iadademstat in combination with Astella’s FDA-approved FLT3 inhibitor gilteritinib (Xospata) for patients with relapsed/refractory (r/r) FLT3+ AML in a second-line setting. Approximately 50% of patients relapse after first-line AML treatment and 30% possess an FLT3 mutation. Xospata was approved by the FDA in 2018 as a monotherapy treatment for adults with r/r FLT3+ AML and is anticipated to dominate the FLT3+ AML inhibitor market, with sales of the drug expected to reach US$977m by 2028 (see Exhibit 2):
Exhibit 2: Estimated global sales of FLT3+ inhibitors in AML (US$m) |
Source: EvaluatePharma, Edison Investment Research |
Additionally, the mOS for Xospata monotherapy treatment is 9.3 months and, in our view, combinational treatments may provide scope for further improvements. In our recent Oncology ABCs report, we discussed combination therapies being critical for developing new efficacious treatment regimens in oncology and, should similar positive synergistic effects from iadademstat/Xospata be observed in patients enrolled in FRIDA, we believe this could represent a significant market opportunity for Oryzon.
Having received IND approval, Oryzon has communicated that it expects the first patient to be recruited (FPI) in FRIDA in Q422.
Heightened interest in targeting LSD1
As a reminder, iadademstat is being developed as an inhibitor of the epigenetic target Lysine specific demethylase 1 (LSD1). LSD1 is a gene expression regulator, dysregulation of which has been shown to play a key role in the development of a variety of cancers. With LSD1 contributing to broad, dynamic gene regulation, Oryzon has viewed this as a prime therapeutic target for small molecule inhibition across multiple indications in oncology. Indeed, LSD1 has been identified as a target of interest by both peer biotechs and big pharma. Notably, Merck recently announced that it would acquire the LSD1 focused biotech Imago Biosciences for US$1.35bn ($36.00 per share in cash), news that saw Imago’s stock jump by c 100%. Following closure of the deal (expected in Q123), Oryzon will become one of the most advanced independent LSD1 inhibitor players, as shown in Exhibit 3. Overall, we view the Merck/Imago deal as a highly encouraging precedent transaction in the LSD1 space. Additionally, with the global AML market expected to reach US$10.2bn by 2028 (EvaluatePharma) we see this as a potentially attractive opportunity that may trigger renewed interest from further big pharma players.
Exhibit 3: LSD1 targeting oncology pipeline
Company |
Drug |
Phase |
Indication/s |
Notes |
Oryzon |
Iadademstat |
1st line AML r/r FLT3+ AML Neuroendocrine cancers |
Phase Ib FRIDA study in r/r FLT3+ AML expected to initiate in Q422 Phase II study in neuroendocrine cancers in combination with paclitaxel expected to initiate in Q422 Preparing new Phase Ib/II trial (STELLAR) in metastatic small cell lung cancer |
|
Imago Biosciences (Merck)* |
Bomedemstat |
Essential thrombocythemia myelofibrosis |
Trial readouts expected by end CY22. Merck announced acquisition of Imago for US$1.35bn |
|
Jubilant Therapeutics |
JB-802 |
Advanced solid tumours |
Targets both LSD1 and HDAC6 |
|
Salarius Pharmaceuticals |
Seclidemstat |
Ewing sarcoma |
Study currently on hold due to patient death classified as a suspected unexpected serious adverse reaction |
|
Bristol Myers Squibb / Celgene |
Pulrodemstat |
Solid tumours and non-Hodgkin lymphomas |
In combination with either an antibiotic (Rifampin) or antifungal (Itraconazole) |
|
Otsuka Pharmaceuticals (Astex Pharmaceuticals) |
TAS1440 |
r/r AML |
In combination with all-trans retinoic acid |
Source: EvaluatePharma Note: *Merck acquisition announced on 21 November and expected to close in Q1 CY23.
Valuation
We value Oryzon at €847m or €15.5/share, based on a risk-adjusted NPV analysis using a 12.5% discount rate and Q322 net cash of c €9.7m. Our underlying long-term assumptions remain unchanged, and we roll our model forward in time by four months. We have also updated our exchange rate assumption to $1.06/€ (from $1.01/€), which had a c 3% negative impact on our valuation. Our model includes five rNPV projects (Exhibit 4; for more details see our Outlook note).
Exhibit 4: Valuation of Oryzon
Product |
Indication |
Launch |
Peak sales ($m) |
Value |
Probability |
rNPV |
NPV/share (€/share) |
|
Iadademstat |
2L AML |
2026 |
500 |
756.9 |
30% |
221.2 |
4.0 |
|
1L SCLC |
2026 |
730 |
800.2 |
25% |
193.8 |
3.5 |
||
Vafidemstat |
BPD |
2027 |
1,610 |
1,251.0 |
20% |
239.7 |
4.4 |
|
Schizophrenia, negative symptoms |
2027 |
700 |
629.1 |
15% |
86.3 |
1.6 |
||
Aggression in Alzheimer’s disease |
2028 |
910 |
671.0 |
15% |
96.0 |
1.8 |
||
Net cash end Q322 |
9.7 |
100% |
9.7 |
0.2 |
||||
Valuation |
|
|
|
4,118.0 |
846.7 |
15.5 |
Source: Edison Investment Research. Note: SCLC: small-cell lung cancer.
Exhibit 5: Financial summary
Accounts: Year end 31 December (€000s) |
2019 |
2020 |
2021 |
2022e |
2023e |
INCOME STATEMENT |
|
|
|
|
|
Total revenues |
10,278 |
9,521 |
10,615 |
14,418 |
15,860 |
Cost of sales |
(430) |
(526) |
(746) |
(473) |
(497) |
Gross profit |
9,847 |
8,995 |
9,869 |
13,945 |
15,363 |
Gross margin % |
96% |
94% |
93% |
97% |
97% |
SG&A (expenses) |
(2,983) |
(3,541) |
(3,782) |
(3,513) |
(3,864) |
R&D costs |
(11,322) |
(11,075) |
(13,023) |
(15,403) |
(16,975) |
Other income/(expense) |
779 |
1,476 |
73 |
6 |
6 |
Exceptionals and adjustments |
(11) |
(5) |
(4) |
0 |
0 |
Reported EBITDA |
(3,690) |
(4,149) |
(6,866) |
(4,965) |
(5,470) |
Depreciation and amortisation |
150 |
145 |
144 |
180 |
179 |
Reported EBIT |
(3,839) |
(4,294) |
(7,011) |
(4,784) |
(5,291) |
Finance income/(expense) |
(737) |
(485) |
(169) |
(236) |
(511) |
Other income/(expense) |
0 |
0 |
0 |
0 |
0 |
Reported PBT |
(4,576) |
(4,779) |
(7,180) |
(5,020) |
(5,802) |
Income tax expense (includes exceptionals) |
892 |
1,379 |
2,493 |
2,138 |
2,316 |
Reported net income |
(3,685) |
(3,400) |
(4,687) |
(2,882) |
(3,486) |
Basic average number of shares, m |
41.6 |
49.2 |
53.1 |
53.6 |
54.7 |
Basic EPS (€) |
(0.09) |
(0.07) |
(0.09) |
(0.05) |
(0.06) |
|
|
|
|
|
|
Adjusted EBITDA |
(3,679) |
(4,145) |
(6,862) |
(4,965) |
(5,470) |
Adjusted EBIT |
(3,829) |
(4,290) |
(7,007) |
(4,784) |
(5,291) |
Adjusted PBT |
(4,566) |
(4,774) |
(7,176) |
(5,020) |
(5,802) |
Adjusted EPS (€) |
(0.09) |
(0.07) |
(0.09) |
(0.05) |
(0.07) |
Adjusted diluted EPS (€) |
(0.09) |
(0.07) |
(0.09) |
(0.05) |
(0.07) |
|
|
|
|
|
|
BALANCE SHEET |
|
|
|
|
|
Property, plant and equipment |
631 |
644 |
682 |
677 |
674 |
Intangible assets |
39,938 |
49,216 |
60,254 |
70,811 |
81,216 |
Investments |
67 |
66 |
29 |
29 |
29 |
Deferred tax assets |
1,721 |
1,803 |
1,812 |
1,812 |
1,812 |
Total non-current assets |
42,357 |
51,729 |
62,778 |
73,330 |
83,731 |
Cash and equivalents |
35,111 |
39,605 |
28,725 |
15,598 |
9,558 |
Trade and other receivables |
2,071 |
2,351 |
3,645 |
2,998 |
3,321 |
Inventories |
289 |
317 |
104 |
104 |
104 |
Other current assets |
267 |
105 |
132 |
132 |
132 |
Total current assets |
37,738 |
42,377 |
32,606 |
18,833 |
13,116 |
Deferred tax liabilities |
1,721 |
1,803 |
1,812 |
1,812 |
1,812 |
Long term debt |
6,699 |
8,680 |
13,354 |
13,354 |
21,354 |
Other non-current liabilities |
0 |
0 |
285 |
285 |
285 |
Total non-current liabilities |
8,420 |
10,483 |
15,451 |
15,451 |
23,451 |
Trade and other payables |
4,000 |
2,839 |
3,518 |
3,179 |
3,349 |
Short term debt |
6,547 |
4,854 |
4,306 |
4,306 |
4,306 |
Other current liabilities |
0 |
0 |
847 |
847 |
847 |
Total current liabilities |
10,546 |
7,693 |
8,672 |
8,332 |
8,502 |
Equity attributable to company |
61,129 |
75,931 |
71,262 |
68,380 |
64,894 |
|
0 |
0 |
0 |
0 |
0 |
CASH FLOW STATEMENT |
|
|
|
|
|
Profit before tax |
(4,576) |
(4,779) |
(7,180) |
(5,020) |
(5,802) |
Cash from operations (CFO) |
(3,934) |
(4,817) |
(3,626) |
(2,394) |
(3,461) |
Capex* |
(9,585) |
(9,223) |
(11,761) |
(10,732) |
(10,580) |
Acquisitions & disposals net |
0 |
0 |
0 |
0 |
0 |
Acquisition of intangible assets |
(9,469) |
(9,070) |
(11,586) |
(10,557) |
(10,404) |
Other investing activities |
8 |
142 |
37 |
0 |
0 |
Cash used in investing activities (CFIA) |
(19,046) |
(18,152) |
(23,310) |
(21,289) |
(20,984) |
Net proceeds from issue of shares |
18,374 |
18,181 |
0 |
0 |
0 |
Movements in debt |
(4,112) |
200 |
4,123 |
0 |
8,000 |
Other financing activities |
0 |
0 |
0 |
0 |
0 |
Cash from financing activities (CFF) |
14,262 |
18,382 |
4,123 |
0 |
8,000 |
Increase/(decrease) in cash and equivalents |
791 |
4,494 |
(10,880) |
(13,126) |
(6,041) |
Currency translation differences and other |
40 |
11 |
348 |
0 |
0 |
Cash and equivalents at start of period |
34,320 |
35,111 |
39,605 |
28,725 |
15,598 |
Cash and equivalents at end of period |
35,111 |
39,605 |
28,725 |
15,598 |
9,558 |
Net (debt) cash |
21,866 |
26,071 |
11,065 |
(2,061) |
(24,102) |
Source: Oryzon Genomics, Edison Investment Research. Note: Oryzon reports in Spanish GAAP. *Includes cash outflows related to development costs that were capitalised.
|
|
Research: Healthcare
Mendus has reported encouraging survival data from its Phase II ADVANCE II study, assessing its lead cancer vaccine candidate, DCP-001, as a maintenance monotherapy in acute myeloid leukaemia (AML) patients with measurable residual disease (MRD). At a median follow-up of 19.4 months, median relapse-free survival (mRFS) had not been reached, with 12 out of 20 patients still in complete disease remission, and median overall survival (mOS) was recorded as 30.9 months. In our view, these results represent a significant improvement over existing standard of care AML maintenance therapy, azacitidine (mRFS: 7.1 months; mOS: 14.6 months). Additionally, an increased tumour immune response was observed in 17 out of 20 patients, supportive of DCP-001’s immune stimulating mechanism of action. With limited treatment options available in the AML maintenance setting, we view the ADVANCE II data as highly positive, providing important proof of concept of DCP-001’s clinical utility in AML. We value Mendus at SEK1.8bn or SEK9.1 per share.
Get access to the very latest content matched to your personal investment style.