YM BioSciences Inc. (YMI)

[Harleyman]

YM Biosciences Rises on Promising Study Data for Blood Drug

By Brett Chase Dec 13, 2011 1:00 pm


The biotech is still at least three years from bringing a drug to market that can rival competitor Incyte's Jakafi.

YMI 1.69 (+15.75%)

INCY 13.62 (-4.76%)

YM Biosciences (YMI) had a short-lived surge in stock price Tuesday morning after it announced its experimental drug for the blood disease myelofibrosis showed promise in early studies.

But after jumping more than 20% right out of the gate, the stock was trading up less than 14% to $1.66 midday Tuesday. The shares are down almost 40% in the past six months.

The potential some investors see in YM Biosciences is a lead drug that may be three years away from competing with the just-approved treatment Jakafi, which is sold by rival Incyte (INCY). Jakafi is considered a future blockbuster by some analysts and is the first of a new class of drugs known as Jak inhibitors to hit the market. (See Incyte CEO Touts Prospects of New Cancer Drug.)

YM Biosciences still has some work to do before it is close to proving its treatment, known as CYT387. Potential market approval is still years away but the just-released data a good start toward building the drug’s rep -- especially after somewhat disappointing results announced last June. (See Incyte Pulls Further Ahead of YM Biosciences.)

Myelofibrosis is a disease in which bone marrow is replaced by scar tissue. Because of scarring, the bone marrow is not able to make enough blood cells. Jakafi and CYT387 have similar profiles for safety and effectiveness (though, again, it should be noted that YM Biosciences is still in early stages of testing).

One key difference between the drugs, according to YM Biosciences execs, is that CYT387 has shown some effect in improving anemia, one of the effects of myelofibrosis.

Rodman & Renshaw analyst Reni Benjamin says YM Biosciences’ new data is good enough to draw the attention of other companies -- and that’s a key point. The biotech could use some muscle and a potential partnership is a catalyst for the company’s stock.

The “data adds strength to CYT387’s overall clinical profile and increases the value proposition for potential partners,” Benjamin says in a note Tuesday.

He predicts YM Biosciences could attract a partner that would pay as much as $1 billion in licensing milestones. On the other hand, the company could be taken over by a bigger rival, he says.

Benjamin recommends buying the stock and set a price target of $6 a share. He also notes Incyte’s $1.8 billion market value as a possible gauge for YM Biosciences’ ($190 million market cap) future valuation.


Read more: http://www.minyanville.com/businessmarkets/articles/biotech-sector-biotech-stocks-drug-stocks/12/13/2011/id/38375#ixzz1gTKA7fs7