Oryzon Genomics — Update 5 January 2016

Oryzon Genomics (BME: ORY)

Last close As at 27/03/2024

EUR1.71

0.00 (0.00%)

Market capitalisation

EUR107m

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Research: Healthcare

Oryzon Genomics — Update 5 January 2016

Oryzon Genomics

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Healthcare

Oryzon Genomics

Emerging epigenetics player

Pharma & biotech

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6 January 2016

Price

€3.75

Market cap

€107m

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Share details

Code

ORY

Listing

Madrid Stock Exchange

Shares in issue

28.47m

Business description

Oryzon is a Spanish biotechnology company focused on developing novel epigenetic compounds. Lead compound ORY-1001 is partnered with Roche and is undergoing a Phase I/IIa study for acute leukaemia. ORY-2001 has potential for Alzheimer’s disease and is poised to enter Phase I.

Bull

Pure-play in epigenetics, highly promising technology.

Lead product is partnered with Roche; to fund further development.

Solid estimated cash position of €21m at end 2015.

Bear

Early-stage pipeline with limited clinical data so far.

LSD1 inhibition is an unproven mechanism, thus R&D risk remains high.

New public market listings can be subject to significant initial volatility.

Analysts

Jonas Peciulis

+44 (0) 20 3077 5728

Christian Glennie

+44 (0) 20 3077 5727

Oryzon Genomics’ public listing in Madrid puts this rapidly emerging epigenetic player on the map in a highly promising yet still uncrowded technology space. Oryzon has advanced its lead compound ORY-1001 to a Phase I/IIa trial in acute leukaemia patients and we expect initial efficacy data around the end of 2016. Oryzon is a rare pure-play in epigenetics, with Roche already on board, and now trades at a relatively modest EV of €96m.

Listing in Madrid, potential NASDAQ IPO

On 14 December, Oryzon listed its shares on the Madrid Stock Exchange. However, this was a technical listing without raising new funds, as the company is well funded after a recent €16.5m financing round. The public listing was therefore a strategic step to boost share liquidity in the near term, but also to provide access to capital markets. Oryzon also has plans for a dual listing on NASDAQ.

Pure-play epigenetics player

The next major event for the company is the initial efficacy data from Part 2 of the ongoing Phase I/IIa study with lead product ORY-1001 in different subsets of acute myeloid leukaemia patients. We expect the results might come in around year-end 2016. ORY-1001 is an inhibitor of lysine specific demethylase 1 (LSD1), which modifies histones by removing methyl groups. LSD1 is upregulated in a number of cancers and its role is best understood in acute leukaemia, which makes this disease an obvious first target, although there is also strong scientific rationale for ORY-1001’s potential efficacy in solid tumours, such as small-cell lung cancer (SCLC). Oryzon’s second product, ORY-2001, targets Alzheimer’s disease (AD) and will be evaluated in a Phase I trial with healthy volunteers in 2016 (CTA filed). ORY-2001 has a dual activity, inhibiting LSD1 and monoamine oxidase B, so represents a novel mode of action in AD research. Oryzon also has a number of preclinical epigenetics projects in oncology and other indications.

Roche already on board for ORY-1001

Roche licensed ORY-1001 in April 2014, agreeing to pay >$500m in milestones ($21m paid in upfront/near-term milestones) and tiered royalties (up to 15%), which we view as attractive terms for a relatively early-stage asset. After completion of the ongoing Phase I/IIa, Roche will be solely responsible for further clinical development/commercialisation.

Valuation: Relatively modest EV of €96m

There are a limited number of comparable listed companies focused on epigenetics with clinical-stage projects. In our view, Epizyme is an obvious comparator in terms of technology (histone methylation process) and R&D pipeline breadth, although slightly more advanced. Oryzon’s new EV of €96m (estimated year-end 2015 cash €21m, debt €10m) therefore looks modest compared to Epizyme’s EV of €378.1m. We expect to initiate full coverage of Oryzon with a valuation model in due course.

Historical financials

Year
end

Revenue
(€m)

PBT
(€m)

EPS
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/13

0.0

(1.9)

N/A

N/A

N/A

N/A

12/14

13.1

6.7

N/A

N/A

N/A

N/A

Source: Company data

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New Zealand

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

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

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