=DJ YM Biosciences Pipeline, Cuban Visit Lead To Versant Upgrade
TORONTO (Dow Jones)--A positive view of YM Biosciences Inc.'s (YMI) product pipeline following a visit to Cuba - birthplace of the nimotuzumab antibody - led Versant Partners to boost its target price on the stock to C$4.25 from C$2.50 and upgrade its recommendation to speculative buy from hold. In a research report Tuesday, analyst Douglas Loe said revenue projections for nimotuzumab sales in Japan by YM's partner, Daiichi Pharmaceutical Co., also played a part in the upgrade. Nimotuzumab is a monoclonal antibody that targets the Epidermal Growth Factor Receptor (known as EGFR) and was developed at the Center for Genetic Engineering and Biotechnology and the Center for Molecular Immunology in Havana. The product is approved in several countries for the treatment of various types of head and neck cancer. YM licenses nimotuzumab for the major markets, including Europe, North America, Japan and the Pacific Rim countries, excluding China. Last September, it received approval to import nimotuzumab into the U.S. for the purpose of clinical trials in pediatric patients with pontine glioma, an inoperable malignant brain cancer. The Mississauga, Ont. company, which acquires, commercializes and develops oncolgy and acute-care products, licensed development and marketing rights in Japan for the antibody last July to Daiichi. Loe said he remains positive that nimotuzumab's potential to confer "efficacy without rash" remains a key point of differentiation from comparable products, though he noted this will have to be demonstrated in larger combination-therapy Phase II/III trials, perhaps in colorectal cancer. Loe said "apples-to-apples" comparisons of nimotuzumab and other EGFR antibody therapies aren't easy to come by, but available data suggest comparable nimotuzumab efficacy without acneforum rash. Versant's model still assumes nimotuzumab's lead indication is pediatric glioma, for which the firm assumes a European launch in the second half of 2010. Incorporating Japan-based royalty, Versant has introduced nimotuzumab royalty revenue forecasts in fiscal 2014 of US$57.4 million, rising to US$116.3 million by fiscal 2017. Loe believes that non-small cell lung cancer represents an attractive initial market for Daiichi, noting his model assumes an Investigational New Drug application will be submitted to Japanese regulators within the next several weeks and that a Phase I trial in Japan can begin by mid-2007. Despite the setback with YM's lead product, tesmilifene, earlier this year, Versant believes multiple nimotuzumab and tesmilifene milestones could drive YM's shares in 2007. YM terminated a pivotal trial of tesmilifene in patients with metastatic or recurrent breast cancer after an independent Data Safety Monitoring Board concluded that significant differences in overall survival between the treatment arms would be "very unlikely." No safety concerns were raised. Versant believes that, for nimotuzumab royalty revenue to ramp appreciably in the U.S., YM will need to undertake Phase II/III colorectal cancer testing in combination with standard-of-care chemotherapy. If data shows comparable efficacy to EGFR thearapies Erbitux or Vectibix with more favorable side-effect profile, then Versant believes colorectal cancer-directed royalty revenue could contribute materially to overall revenue. In Toronto, YM is up 3.1% to C$1.97. Versant doesn't have an investment-banking relationship with YM and Loe doesn't own the stock. Company Web site: http://www.ymbiosciences.com
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