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YM BioSciences Inc. (AMEX: YMI) develops, markets, and commercializes hematology and cancer-related products in the drug development arena. Below is the 1 year chart showing their ascension into the $3.7 range, then precipitous drop off to almost $1.
On the financial side, as of September 2011, the company had about $76M in cash, and was burning about $25M/yr. The thing that we need to be aware of is that the company has filed a preliminary short form base shelf prospectus and a registration statement on Form F-10 (July 2011) for another $125M over the next 2 years, with the Canadian securities regulatory authorities and the US Securities and Exchange commission, respectively.
Over the past few years, the company has placed stock and warrant offerings for shares in the $1.20 to $1.60 range, so there is more to come – hence my not wanting to overpay.
A bit of history, in October 2009, YM BioSciences agreed to acquire all of the issued shares and options in Cytopia by scheme of arrangement. YM would exchange 1 common share for every 11.737 Cytopia shares, which would lead to the issue of 7.2 million new YM shares. This represented a share price of $0.1659, a premium of 58% over the trading price of Cytopia shares on the ASX at that time. Following the acquisition Cytopia shareholders would own 11% of YM. This is where CYT387 came from (see below).
On the scientific side of things, the company has many drugs in the pipeline that, if they come to fruition, could give the stock and company a bit of up side. First, it has one drug on the market, nimotuzumab, which is an EGF receptor-targeting humanized IgG1 mAb, for the iv infusion treatment of cancers of epithelial origin. Many of the cancers are still in trial, including breast, lung, prostate, esophageal, head and neck and pancreatic cancers. The drug is co-marketed with several other companies and brings in about $1M in revenue for the company.
The Company's flagship product is CYT-387 (in Phase 2), a small-molecule JAK1/JAK2 tyrosine kinase inhibitor, for the potential oral treatment of myeloproliferative disorders (MPD), including myelofibrosis (MF), polycythemia vera (PV) and essential thrombocythemia (ET). JAK stands for Janus Kinase, and is a receptor that is activated by a signal from interferon, interleukin (both of which activate the immune system), growth factors, or other chemical messengers. The pathway is conserved among the species.
Clearly, MF, a rare blood disorder, represents CYT387's largest opportunity, in that estimates put the disease at ~$1B. There are competitors in the space, including Incyte’s (INCY) & Novartis’ (NVS) Jakafi (TM)(ruxolitinib), as well as Sanofi- Aventis (SNY). SNY's drug, as reported, is not as good, so I will not put any more effort into researching them until more data come out. Jakafi, though, has just reached the market (we played a December bull call spread on INCY that are not looking good). In addition, Jakafi is looking to garner a label expansion into other blood disorders (2 potential) which is expected to drive sales beyond $1B (according to some analysts by late 2014/15). Companies have paid handsomely for JAK inhibitors as noted in the slide below and YMI is planning on showing all the data from their Phase 1/2 study in December (Corporate presentation is here):
Originally, CYT387 was seen as a me-too drug (aka Lipitor, Zocor, Crestor) lagging behind Jakafi. Recently, data were presented at the June ASCO which differentiated CYT387 from Jakafi – anemia. Jakafi treats two of three important hallmarks of MF (spleen enlargement and disease symptoms), but it does not treat the third hallmark: anemia. In fact, anemia is one of the side effects ofJakafi , which more than doubles the anemia rates compared to placebo. CYT387 appears to be different, as it improves existing anemia in MF patients (n = 60 MF patients, 42 had anemia, and 21 experienced a response). Many clinicians and investors want to see more data (upcoming at the ASH in San Diego, December 2011). If the anemia effect is real, CYT387 could easily replace Jakafi as the market leader when approved. Time will tell, and maybe a real partner will step up to the plate to move this drug rapidly through Phase 3 trials. But, regardless of the anemia quagmire, CYT387 works and is comparable to Jakafi. The drug is 2-3 years behind Jakafi, so the worst case isfor CYT387 to be a fast follower. The MF market is big enough for several compounds and could also expand to rheumatoid arthritis and blood cancers.
CYT997, a small molecule microtubule polymerisation inhibitor and vascular disrupting agent, which is Phase Ib/II clinical study for the treatment of solid tumors. Microtubules are the backbones of cells, giving them structure. Cancer cells multiply more rapidly than normal cells, so the basis is that if you can disrupt their proliferation, then one can slow down and potentially make the cells apoptose (die). There are several clinical trials ongoing, including glioblastoma multiforme (GBM) and multiple myeloma (MM). The MM trial, as of my last look, was on hold, but GBM trial data are due out in the first part of 2012.
All other projects are in the early phases of discovery or development, so putting a ton of weight on them is not justified yet. I like easing into the stock in here, with a 1/4 to 1/5 entry, and if things get going, then the stock should rise. I am still trying to find the abstract for the information on the ASH meeting next week….so stay tuned in chat.
Until next time.
– Pharm
