YMI positioned for growth in 2011 Print E-mail
By Patrick Crutcher   
Tuesday, 03 May 2011 21:08
icon_watchlistWith biotechs on the run the past few weeks, we wanted to bring investors attention to YM BioSciences (AMEX: YMI). Much of YMI's price action over the last couple of months is mainly because of clinical news dealing with their JAK1/2 inhibitor, CYT387.  There are upcoming catalysts that could warrant further price increases because of the added clarity this pending data will have.

Of the earlier stage JAK inhibitors, it looks very competitive with the lead candidate, Incyte's Ruxolitinib, which could be approved later this year. CYT387 is currently being investigated in a Phase I/II clinical study at Mayo Clinic in patients with myelofibrosis. The main point is that they will be presenting some more mature data on CYT387 at ASCO 2011 that will be important to it’s future partnership and market potential. We think the overall efficacy looks promising and don't see any particular safety signals that should be worrisome. 

CYT387 brought a lot of attention to YMI back in December, when it surprisingly demonstrated a significant anemia response in this patient population. This is a significant development, since no other JAK-inhibitor to date has shown this effect. Dr. Alayew Tefferi, of the Mayo Clinic, noted,"Anemia is the most serious symptom associated with myelofibrosis, so I am highly encouraged by the emerging activity profile of CYT387, which uniquely continues to demonstrate a substantial ability to improve anemia while producing similar results to its peers in reducing spleen size and controlling constitutional symptoms." Researchers at the Mayo Clinic also believe that anemia response is the most significant endpoint for labeling claims of JAK inhibitors in myelofibrosis, except for improvements in survival. Now, given the deals in this space, we think that YMI could be able to find a suitable partner. Ideally, they'd help fund future developments of CYT387 and provide YMI with a nice lump sum upfront. See the table below from Paradigm Capital Inc., who have a $5 price target on YMI.

YMI also has nimotuzumab, an EGFR-targeting monoclonal antibody, that is being tested in multiple cancer indications. It’s hallmark has been it’s clean safety profile(lack of severe rash), due to it’s high affinity for cancer cells with high levels of EFGR and avoidance of normal cells. There is some upcoming Phase 2 NSCLC data to be presented mid-2011 by Daiichi Sankyo and Phase 3 adult glioma data from Oncoscience AG. There was already some very interesting Phase 2 data in gastric cancer that Daiichi Sankyo presented, which showed in increase in overall survival but not progression-free survival. Subanalysis showed that higher EGFR expression levels were correlated with increased survival. I’d suspect that if Daiichi takes this into Phase 3, they’ll be looking at those patients with over-expressed EGFR levels. For now, we aren’t subscribing much value to this asset because nimotuzumab’s future in the US is tied up in international politics involving Cuba. Once this is cleared up, I’d expect to see YMI look for a partner for nimotuzumab in North America. Financially, we think YMI should be fine for the rest of 2011 and into 2012, given they have cash and short-term deposits totaling $78.7 million as of December 31, 2010. 

Disclosure: Long YMI

YM BioSciences Reports Positive Updated Anemia Response Data For Its JAK1/JAK2 Inhibitor CYT387 -- http://bit.ly/feQv6x



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