Oryzon Genomics — Final PORTICO data reaffirms potential in BPD

Oryzon Genomics (BME: ORY)

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Research: Healthcare

Oryzon Genomics — Final PORTICO data reaffirms potential in BPD

Oryzon has presented the results of the final analysis from the Phase IIb PORTICO trial, which evaluated the efficacy and safety of vafidemstat in borderline personality disorder (BPD). While top-line results were initially published in January, the final data (presented at the 37th ECNP 2024 congress) show notable improvements across key efficacy measures, reaffirming the potential of the candidate to deliver meaningful benefits to patients with BPD, a highly underserved condition with no approved drugs. Management also confirmed that the data, and a registrational Phase III programme, have been discussed with the FDA at an end-of-Phase II (EoP2) meeting. We view this update as highly encouraging for Oryzon and await the announcement of a formal outcome from the FDA on the proposed Phase III programme, which we anticipate in early-Q424.

Written by

Arron Aatkar

Analyst

Healthcare

Oryzon Genomics

Final PORTICO data reaffirms potential in BPD

Clinical update

Pharma and biotech

23 September 2024

Price

€1.84

Market cap

€118m

Net debt (€m) at 30 June 2024

3.2

Shares in issue

64.0m

Free float

82%

Code

ORY

Primary exchange

Madrid Stock Exchange

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

3.8

(2.5)

(12.8)

Rel (local)

(2.1)

(7.5)

(28.4)

52-week high/low

€2.22

€1.60

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 asset, has completed several Phase IIa trials and a Phase IIb trial in borderline personality disorder (now the lead programme), and is in a Phase IIb trial in schizophrenia.

Next events

FDA EoP2 meeting (BPD) outcome

Q424

EVOLUTION trial timeline update

H224

FRIDA trial update

Dec 2024

HOPE trial initiation

2024

Analysts

Dr Arron Aatkar

+44 (0)20 3077 5700

Jyoti Prakash, CFA

+44 (0)20 3077 5700

Oryzon Genomics is a research client of Edison Investment Research Limited

Oryzon has presented the results of the final analysis from the Phase IIb PORTICO trial, which evaluated the efficacy and safety of vafidemstat in borderline personality disorder (BPD). While top-line results were initially published in January, the final data (presented at the 37th ECNP 2024 congress) show notable improvements across key efficacy measures, reaffirming the potential of the candidate to deliver meaningful benefits to patients with BPD, a highly underserved condition with no approved drugs. Management also confirmed that the data, and a registrational Phase III programme, have been discussed with the FDA at an end-of-Phase II (EoP2) meeting. We view this update as highly encouraging for Oryzon and await the announcement of a formal outcome from the FDA on the proposed Phase III programme, which we anticipate in early-Q424.

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/22

15.7

(6.6)

(0.07)

0.0

N/A

N/A

12/23

14.2

(6.1)

(0.06)

0.0

N/A

N/A

12/24e

8.6

(4.9)

(0.05)

0.0

N/A

N/A

12/25e

31.6

15.5

0.28

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Meaningful benefit for an underserved condition

Despite its c 2% prevalence in the general population, BPD is a neglected condition with no approved drugs and no established regulatory endpoints. For PORTICO the selected primary measures were overall improvement in BPD severity (Borderline Personality Disorder Checklist (BPDCL)) and reduction of agitation and aggression (Clinical Global Impression – Severity Agitation/Aggression (CGI-S A/A)). The two key secondary endpoints had similar focuses but with alternate measures: Borderline Evaluation of Severity (BEST) and State-Trait Anger Expression Inventory 2 (STAXI-2) Trait Anger. While the primary endpoints were not met with statistical significance, vafidemstat was favoured over placebo in all measures and the secondary endpoints were met with statistical significance, showing clinically meaningful benefits. The final data also highlight improved statistical significance compared to the top-line results released in January, strengthening the data package for the programme, in our view.

Fate of Phase III programme in the hands of the FDA

The planned Phase III programme comes down to the formal outcome from the FDA. A positive response would trigger immediate preparations for a Phase III PORTICO-2 trial, according to management, and would make Oryzon the only company with a Phase III BPD candidate, to our knowledge. With FDA guidelines stating that formal written minutes will be shared within 30 days of the meeting, an outcome is expected in early-Q424, representing Oryzon’s next catalyst.

Valuation: Maintained at €774.7m or €12.1 per share

For now, we maintain our valuation at €774.7m or €12.1 per basic share. We plan to revisit our assumptions once there is better visibility on the feasibility of a registrational Phase III programme for vafidemstat in BPD. For a more detailed discussion about Oryzon’s current financial position, please see our prior note.

PORTICO final data: Improvements vs top-line results

Primary endpoint measures

The final analysis of the PORTICO data revealed improvements compared to the top-line results published in January, though the primary endpoints still did not achieve statistical significance. Despite this, we believe that encouragement should be taken from the fact that there was a separation in performance between the vafidemstat and placebo arms (Exhibits 1 and 2). This was true of the BPDCL data (p=0.3839, versus initial measurement of p=0.412), as well as the CGI-S A/A data (p=0.2266, versus initial measurement of p=0.254). Overall, we believe that the positive trends with improved significance, based on both patient-reported (BPDCL) and clinician-reported (CGI-S A/A) measures, add confidence to the results.

Exhibit 1: PORTICO BPDCL final analysis

Exhibit 2: PORTICO CGI-S A/A final analysis

Source: Company presentation

Source: Company presentation

Exhibit 1: PORTICO BPDCL final analysis

Source: Company presentation

Exhibit 2: PORTICO CGI-S A/A final analysis

Source: Company presentation

Secondary endpoint measures

While the secondary endpoints both showed statistically significant benefits in the top-line results, the final data showed improved nominal statistical significance. The results followed the trend favouring vafidemstat over placebo, with notable separation between the arms (Exhibits 3 and 4). The BEST data demonstrated a distinct benefit in overall BPD severity (p=0.0260, versus the initial measurement of p=0.0423), with the maximum relative reduction in the vafidemstat group reported as 38.9% at week 10, with an average reduction of 30.9% across weeks 8–12 (versus initial measurements of 38.3% and 28.9%, respectively). The STAXI-2 Trait Anger final data revealed a clinically meaningful improvement in agitation and aggression (p=0.0071, versus initial measurement of p=0.0259). The relative reduction reached a maximum of 92.1% at week 10, with an average reduction of 58.6% across weeks 8–12 (versus initial measurements of 80.8% and 46.7%, respectively).

Exhibit 3: PORTICO BEST final analysis

Exhibit 4: PORTICO STAXI-2 Trait Anger final analysis

Source: Company presentation

Source: Company presentation

Exhibit 3: PORTICO BEST final analysis

Source: Company presentation

Exhibit 4: PORTICO STAXI-2 Trait Anger final analysis

Source: Company presentation

Additional data and outlook

The final analysis also provided further insights into additional measures used in the PORTICO trial. For example, a trend of improvement in terms of depression was observed, measured by the Beck’s Depression Inventory-II Total Score by weeks 8–12 (p=0.0944), with an average reduction of 42.2% with vafidemstat over placebo. This was consistent with the observation that the vafidemstat group showed a reduced inclination towards self-harm compared to placebo (one patient on vafidemstat versus six patients on placebo). Furthermore, the final analysis of the global treatment effect, as visualised with the Global Statistical Test (GST), highlighted the overall benefit favouring vafidemstat treatment, accounting for various aspects of the condition (eg psychiatric, behavioural, functional) (Exhibit 5). We continue to believe that it is rare to see all data favouring the treatment group to this extent in complex psychiatric indications such as BPD, emphasising the opportunity for Oryzon.

Exhibit 5: PORTICO GST final analysis

Source: Company presentation

Importantly, the final results also confirmed the safety of vafidemstat, consistent with all prior clinical studies. It is our opinion that the efficacy and safety data form a robust data package to support vafidemstat for the treatment for BPD, holding potential as a real-world solution in an indication for which there are currently no approved drugs. However, we acknowledge that the feasibility of further clinical development efforts (the planned Phase III PORTICO-2 trial) will come down to the FDA’s interpretation of the results and formal response following the recent EoP2 meeting.

PORTICO trial design

As a reminder, PORTICO was a randomised, placebo-controlled, double-blinded 14-week Phase IIb trial (Exhibit 6). To be included, participants had to have a confirmed BPD diagnosis, reach a defined threshold for agitation and aggression based on the Agitation-Aggression Psychiatric Inventory Clinician Report, and be on a stable regimen of background pharmacotherapy. Psychotherapy alongside treatment was also permitted, provided this was consistent throughout the trial duration. Patients (n=211) were randomised 1:1 to receive either vafidemstat (1.2mg orally once daily, five days on and two days off, n=106) or placebo (once daily, n=105). The trial involved 27 sites, including 14 in the US and 13 in Europe (Germany, Spain, Bulgaria and Serbia).

Exhibit 6: PORTICO trial design

Source: Company presentation. Note: 1 Patients took placebo capsules during the two days off.

Building a robust IP estate around vafidemstat

FY24, particularly across the past several months, has seen Oryzon make multiple announcements relating to incremental patents for vafidemstat:

September 2024: Oryzon received an ‘Intention to grant’ communication from the European Patent Office relating to a patent application for vafidemstat entitled ‘Methods of treating borderline personality disorder’. Once granted, it will provide protection in Europe until at least 2040, excluding any potential patent term extensions that may provide additional protection.

September 2024: Oryzon received ‘Decision to grant’ communications for patents related to vafidemstat in Australia and Malaysia (‘Methods of treating behaviour alterations’), as well as in Mexico (‘Methods of treating borderline personality disorder’). Once granted, these patents will not expire in these regions until at least 2038 and at least 2040, respectively, excluding any potential patent term extensions that may provide additional protection in these regions.

July 2024: Oryzon received ‘Decision to grant’ communications from the Japanese Patent Office for two patents entitled ‘Methods of treating borderline personality disorder’ and ‘Methods of treating attention-deficit hyperactivity disorder using KDM1A inhibitors such as the compound vafidemstat’. Once granted, these patents will not expire until at least 2040, excluding any potential patent term extensions that may provide additional protection.

It was noted in this release, that the company had already been granted patents in Europe, Korea and Russia relating to the use of vafidemstat to treat aggression and social withdrawal, key characteristics of both BPD and schizophrenia.

Collectively, we believe these patents add to the value proposition of the BPD programme for vafidemstat and note that similar patent applications are pending in other relevant markets. Provided the drug candidate is successful with subsequent clinical development efforts, it will be well-protected across these various key geographies. Oryzon also holds composition-of-matter patents for vafidemstat, expected to expire in the US and EU in 2037 and 2036, respectively, including patent term extension/supplementary protection certificates.

Financials and valuation

Oryzon recently reported its Q224 results. For a more detailed discussion about Oryzon’s current financial position, and other ongoing activities, please refer to our prior update note.

We continue to value Oryzon using a risk-adjusted net present value (rNPV) approach and maintain out latest valuation of €774.7m or €12.1 per share (Exhibit 7). Our assigned probability of success for the BPD programme remains conservative at 20%, though we note the potential upside should this become Phase III-ready. This is contingent on a positive response from the FDA following the company’s recent EoP2 meeting; the outcome (expected from early-Q424) represents Oryzon’s next significant upcoming catalyst.

Exhibit 7: Valuation of Oryzon (rNPV)

Product

Indication

Launch

Peak sales (US$m)

Value
(€m)

Probability

rNPV
(€m)

NPV/share (€/share)

Iadademstat

2L AML

2029

555

541.9

30%

154.5

2.4

1L SCLC

2030

720

635.1

20%

120.0

1.9

Vafidemstat

BPD

2028

1,625

830.1

20%

245.0

3.8

Schizophrenia, negative symptoms

2029

702

582.1

15%

120.8

1.9

Aggression related to AD

2029

911

686.4

15%

137.8

2.2

Net debt at end-June 2024

(3.2)

100%

(3.2)

(0.1)

Valuation

 

 

 

3,272.3

774.7

12.1

Source: Edison Investment Research

Exhibit 8: Financial summary

Accounts: Spanish GAAP. Year end 31 December (€000s)

2021

2022

2023

2024e

2025e

INCOME STATEMENT

 

 

 

 

 

Total revenues

10,615

15,698

14,192

8,550

31,550

Cost of sales

(746)

(464)

(244)

(317)

(333)

Gross profit

9,869

15,234

13,948

8,233

31,217

Gross margin %

93%

97%

98%

96%

99%

SG&A (expenses)

(3,782)

(3,163)

(3,390)

(3,424)

(3,458)

R&D costs

(9,746)

(13,681)

(12,177)

(9,000)

(11,000)

Other income/(expense)

(3,203)

(3,714)

(2,777)

74

0

Exceptionals and adjustments

(4)

0

0

55

0

Reported EBITDA

(6,866)

(5,323)

(4,396)

(4,062)

16,759

Depreciation and amortisation

(144)

(167)

(153)

(129)

(110)

Reported EBIT

(7,011)

(5,490)

(4,549)

(4,191)

16,649

Finance income/(expense)

(169)

(1,067)

(1,555)

(755)

(1,172)

Other income/(expense)

0

0

0

0

0

Reported PBT

(7,180)

(6,557)

(6,104)

(4,946)

15,477

Income tax expense (includes exceptionals)

2,493

2,325

2,751

1,878

2,315

Reported net income

(4,687)

(4,231)

(3,353)

(3,067)

17,791

Basic average number of shares, m

53.1

53.3

57.6

62.6

64.0

Basic EPS (€)

(0.09)

(0.08)

(0.06)

(0.05)

0.28

 

 

 

 

 

 

Adjusted EBITDA

(6,862)

(5,323)

(4,396)

(4,117)

16,759

Adjusted EBIT

(7,007)

(5,490)

(4,549)

(4,246)

16,649

Adjusted PBT

(6,896)

(6,320)

(6,004)

(5,001)

15,477

Adjusted EPS (€)

(0.08)

(0.07)

(0.06)

(0.05)

0.28

Adjusted diluted EPS (€)

(0.08)

(0.07)

(0.06)

(0.05)

0.28

 

 

 

 

 

 

BALANCE SHEET

 

 

 

 

 

Property, plant and equipment

682

611

481

379

298

Intangible assets

60,254

75,843

89,895

98,418

109,939

Investments

29

31

26

26

26

Deferred tax assets

1,812

2,050

2,222

2,222

2,222

Total non-current assets

62,778

78,535

92,624

101,045

112,484

Cash and equivalents

28,725

21,317

12,257

4,903

34,154

Trade and other receivables

3,645

3,709

1,909

2,809

2,359

Inventories

104

10

6

6

6

Other current assets

132

129

104

104

104

Total current assets

32,606

25,165

14,276

7,822

36,623

Deferred tax liabilities

1,812

2,050

2,222

2,222

2,222

Long term debt

13,354

10,346

6,335

3,172

3,148

Other non-current liabilities

285

0

155

155

155

Total non-current liabilities

15,451

12,396

8,711

5,549

5,525

Trade and other payables

3,518

5,742

4,210

2,986

3,598

Short term debt

4,306

12,920

12,194

16,194

38,056

Other current liabilities

847

70

11

11

11

Total current liabilities

8,672

18,732

16,414

19,190

41,664

Equity attributable to company

71,262

72,572

81,775

84,127

101,919

 

0

0

0

0

0

CASH FLOW STATEMENT

 

 

 

 

 

Profit before tax

(7,180)

(6,557)

(6,104)

(4,946)

15,477

Cash from operations (CFO)

(3,626)

(1,848)

(575)

(5,062)

18,964

Capex

(175)

(76)

0

0

0

Acquistion of intangible assets

(11,586)

(14,195)

(14,503)

(8,550)

(11,550)

Other investing activities

37

(1)

(1)

0

0

Cash used in investing activities (CFIA)

(11,724)

(14,271)

(14,504)

(8,550)

(11,550)

Net proceeds from issue of shares

0

(932)

(1,880)

5,420

0

Movements in debt

4,123

9,642

7,901

838

21,838

Other financing activities

0

0

0

0

0

Cash from financing activities (CFF)

4,123

8,710

6,021

6,258

21,838

Increase/(decrease) in cash and equivalents

(10,880)

(7,408)

(9,060)

(7,354)

29,251

Currency translation differences and other

348

1

(3)

0

0

Cash and equivalents at start of period

39,605

28,725

21,317

12,257

4,903

Cash and equivalents at end of period

28,725

21,317

12,257

4,903

34,154

Net (debt) cash

11,065

(1,948)

(6,272)

(14,464)

(7,050)

Free cash flow (CFO + Net capex + Intangible assets)

(15,388)

(16,118)

(15,078)

(13,612)

7,414

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 2024 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

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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 2024 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

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London, WC1R 4PS

United Kingdom

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Research: Financials

S&U — Timing is everything

Interim results, for the six months to 31 July (H125), will be published on 8 October. Ahead of that, S&U has alerted the market that based on the H1 performance, full year PBT is unlikely to meet the previous market consensus expectations. We believe this to be primarily a timing issue, reflecting the continuing impact of the temporary FCA restrictions on collections activity in the motor finance business. Once regulatory clarity has been established, we expect a significant recovery. Meanwhile, as previously reported, the property lending division continues to perform strongly. We have reduced our FY25 PBT estimate by 7% to £27m and will review our FY26 forecasts with the interim results.

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