YM BioSciences: An Update From Collins Stewart Growth Conference Presentation

The Chairman and CEO of Canadian biotech YM BioSciences (YMI), David Allan, presented yesterday at the Collins Stewart Fourth Annual Growth Conference, which provided investors with an overview and update on the prospects for the Company. YM Bio has two late-stage products in development, including the cancer drug nimotuzumab (nimo) and inhaled pain treatment AeroLEF. The stock closed today near all-time lows at 77 cents within a 52-week range of $0.70 - $1.89, resulting in a market cap of just $43 million (M) despite having no debt, a projected cash level of at least $55M as of mid-year, and an expected cash burn rate of between $3M – $4M.

YM Bio expects to report Phase 2 clinical trial results for nimo in a colorectal cancer study some time during 3Q08, which are expected to have a major impact on the stock price. Nimo has the potential to be best-in-class among epidermal growth factor receptor (EGFR) inhibitors such as ImClone’s (IMCL) Erbitux, Amgen’s (AMGN) Vectibix, and Genentech’s (DNA) Tarceva. The key differentiating feature for nimo is the lack of severe (Grade 3 or 4) toxic side effects such as a potentially fatal skin rash that may develop with other EGFR-inhibitors. To be deemed successful in the Phase 2 colorectal cancer trial, nimo must demonstrate progression-free survival of about four months with no incidence of severe skin rash. In addition, Japan licensee Daichii-Sankyo is expected to release late-stage results for nimo throughout the remainder of this year.

A European Marketing Authorization Application has already been filed by licensee Oncoscience AG with potential approval and launch in 2009, pending successful review of the 120-day list of questions and a manufacturing inspection. YM Bio is able to leverage Phase 3 data for nimo from less-regulated markets where the drug is already used such as India, Argentina, and Colombia. As of late 2007, a consortium of licensees was also formed to share late-stage clinical trials in order to rapidly recruit patients in numerous countries and familiarize oncologists with the drug as part of the clinical development process for nimo in developed markets. Nimo is approved for use in India and is marketed by licensee Biocon and the drug is also available in Singapore, Malaysia, Indonesia, and several European countries on a special-access, compassionate use basis.

YM Bio’s other late-stage drug candidate is AeroLEF, which is a unique formulation of the widely-used opiate painkiller fentanyl. AeroLEF is targeted for inpatient use in hospitals in conjunction with an FDA-approved inhaler device to provide both immediate and long-lasting (e.g. 4 – 5 hours) pain relief through a proprietary combination of free and liposomal fentanyl for inhalation. AeroLEF allows patients to precisely and effectively control their pain versus standard procedures such as fixed dosing intervals or patient-controlled analgesia (PCA) pumps. PCA pump administration typically results in just 60 – 90 minutes of pain relief; while intravenous fentanyl is rapidly degraded and falls below effective levels in about 45 minutes. The FDA released its clinical hold on AeroLEF last month, allowing the Company to continue clinical development into Phase 3 trials in the United States, and YM Bio has also established a team to aggressively advance the drug through late-stage trials in Europe.

YM Bio is a speculative, micro-cap biotech play with a near-term catalyst in the form of Phase 2 results for nimo in the treatment of colorectal cancer. Trading at more than a $15M discount to its cash position as of mid-year, YM Bio is already being priced for failure by the market despite two late-stage drug candidates which have established mechanisms of action. YM Bio has retained the rights to nimo in the US, Canada, Israel, Australia, and New Zealand; with partnership discussions underway for some of these regions. YM Bio expects to have a total of four Phase 3 trials underway by the end of this year, which is an impressive feat for a Company with a $43M market cap and cash burn rate of less than $4M per quarter. Given a closing price today near all-time lows at 77 cents, investors and traders should view YM Bio as a cheap call option which could rise substantially on positive nimo results or lose nearly all of its value if the trial is a failure.