On 10/28/09, Griffin Securities issued a research report, reiterating its buy rating on YM BioSciences (AMEX: YMI) (TSX: YM.TO) and increasing the 12-month price target to $5.50 per share. Below is a summary of the rationale behind the updated buy rating and new price target.
1.) YMI has 11 global Phase II / III trials ongoing for nimotuzumab (nimo), which is an EGFR-targeting monoclonal antibody with best-in-class potential in an established class of billion dollar drugs with only two other antibodies available that target EGFR, including Erbitux and Vectibix
2.) YMI has a strong development partner in Japan, Daiichi Sankyo (OTC: DSKYY.PK), that provides both validation for nimo’s commercial potential and funding for clinical trials in Japan with YMI receiving a royalty on sales, milestone payments and the use of clinical data that is generated. Data is expected from Daiichi’s Phase II trial of nimo with chemo / radiation as a first-line treatment for non-small-cell lung cancer (NSCLC) and data from Daiichi’s Phase II trial of nimo in recurrent gastric cancer during 1H10.
3.) Data from a Phase II randomized trial in head and neck cancer for nimo demonstrates comparable efficacy to Erbitux in high-EGFR expressing cells without the numerous severe toxicities of Erbitux, such as severe rash.
4.) The Company’s proposed all-stock acquisition of Cytopia Ltd. (ASX: CYT.AX) includes a promising clinical stage portfolio to YMI at a favorable valuation (would involve the issuance of approximately 7.2 million new shares of YMI stock). CYT997 is currently in a Phase II trial in glioblastoma multiforme (GBM) and a Phase II trial in multiple myeloma. Results are expected from the GBM Phase II study in mid-2010. In addition, the estimated impact on YMI’s cash burn rate from this acquisition is minimal at $1 million in 2010 and $3 million in 2011 for the additional upside potential and pipeline expansion that is provided.
5.) YMI enjoys a solid balance sheet with approximately US$36 million in cash / equivalents as of mid-year, which provides ample resources to support further clinical development of the Company’s key programs.
Disclosure: No positions
$1.07 (10/28/09)
