YM BioSciences, Inc. (USA) (NYSEMKT:YMI.DL)

CAPS Rating: No stars

A biopharmaceutical company engaged in the development of products for the treatment of patients with cancer.


Player Avatar zzlangerhans (99.79) Submitted: 11/21/2011 11:59:28 PM : Outperform Start Price: $1.50 YMI.DL Score: +69.17

There's a move in baby biotech that I call the Sandbag, in honor of the original Indiana Jones movie Raiders of the Lost Ark. In the opening scene, Indiana braves numerous booby traps to reach his goal, the golden head of an Aztec god. Indy knows that removing the head from the pedestal will trigger the collapse of the temple so he has brought a bag of sand with him that approximates the weight of the head. He deftly knocks the head off the pedestal with the bag and leaves the bag in its place. For a moment he thinks he has succeeded in fooling the weight detection system, but then the pedestal starts to sink into the ground and all hell breaks loose.

As you might have guessed, the baby biotech Sandbag occurs when a company bumps a failing lead drug out of their PR statements and replaces it at the top with a new compound. The goal is to cushion or totally avoid the plunging share price that would be precipitated by abandoning the lead program by diverting investors' focus to a new area. If done poorly, the stock may collapse into the pennies like an Aztec temple (see CytRx, Adventrx). On the other hand, companies like Synta and Neurocrine have been much more successful with the move.

After reading YMI's most recent earnings PR, I saw that they've completed the Sandbag maneuver they began about a year ago. The body of the statement features pipeline newcomer CYT387 prominently while former lead compound nimotuzumab has been relegated to the "About YMI" postscript, despite several late stage trials still in progress. Right now, YMI's pedestal seems to be quivering ominously.

I've learned not to count out a biotech because of the messy failure of a lead compound, so I'm keeping an open mind about CYT387. The drug was responsible for elevating the share price over 3.5 after the company reported encouraging response rates in myelofibrosis at ASCO, and the effects compare favorably to Incyte's ruxolitinib which was just approved for the same indication. Updated data from the ongoing phase II trial will be presented at ASH in early December, and strong results could have a very dramatic effect at the current depressed share price. YMI is looking like a potential real buy later this month as long as the world's economic cheese doesn't completely fall off its cracker.

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Member Avatar jeffrycooks (71.24) Submitted: 11/26/2011 3:27:35 PM
Recs: 0

That 'economic cheese' you mentioned has been a bit runny much like a piece of heated guyere. Still things are intact, and YMI is a small biotech with a pipeline of promising drugs. I'm not so sure about your 'sandbag' theory at least as it applies to YMI. Much of the run up in the stocks price, before this recent retreat, seems to be correlated to more thumbs up signals and institutional buying. These small biotech stocks seem to take a beating when the market is down and folks are running away from spec plays. YMI seems to be a great trading stock until a couple of these drugs win further approval. At the recent depressed level of $1.20 I was happily able to gobble up some shares knowing that any good news will propel this back up. Also I believe there is good support at the $1.10 level.

Member Avatar cthomas1017 (97.69) Submitted: 11/28/2011 2:47:27 PM
Recs: 1

Watching the recent movement of YMI (highly volatile at this writing today and one day last week.) I'm curious about the possibility of leaked information about what can be expected with the "ASH presentation in early December". Having never followed biotechs closely, is this typical as new information is released about a trial? Is this normal speculation or might it be an indicator of something a bit more insidious?

Member Avatar rrl121 (< 20) Submitted: 11/28/2011 4:58:38 PM
Recs: 0

Obviously insiders sold ahead of ASH to take their profits before everyone else gets killed. Get ready for the stinky tird flush after ASH when this Tird flushes down to the penny stocks:)

This company will have to raise an enormous amount of cash for a very expensive Phase III study (head to head vs Ruxolitinib, which they'll have to buy from INCY for 84k per year). It's currently impossible to raise the cash needed for this trial at the currently depressed price per share, while preserving any value for shareholders.

Oh yeah, they won't even be able to draft protocols for Phase III's until after they conclude ph2. so we're talking at least a year until they even start a Ph3, plus another year or two after that (total of at least 3 years behind INCY). INCY had the advantage there, as there were no treatments. YMI however will have to do a larger, longer, more expensive study compared back to Ruxo. and they won't get the same gift the FDA gave to INCY (spleen size for the primary endpoint), they'll most likely have to show an increase to survival, which is statistically much harder and requires larger, longer trials

Have fun with that uphill battle

Member Avatar rrl121 (< 20) Submitted: 11/28/2011 5:00:40 PM
Recs: 0

Forgot to mention, if another company had wanted to buy YMI, it would have already happened. Looks like they're on their own here

Member Avatar zzlangerhans (99.79) Submitted: 11/28/2011 5:20:00 PM
Recs: 3

Geez, welcome to the new Yahoo message board for YMI. I doubt that ASH data will be disappointing enough for the stock to get dumped below the current depressed level, so I'm not buying the leak rumor. Another rumor is that a hedge fund got caught short on Pharmasset and is liquidating a large YMI position to meet their obligations. That also seems unlikely in that no other small cap biotechs are getting hit this way. Either way, the stock seems rather dangerous to play with right now and I've already picked enough losers in 2011. It'll be interesting to see how this one plays out, but I won't be a part of it.

Member Avatar cthomas1017 (97.69) Submitted: 11/29/2011 12:13:43 PM
Recs: 3

Thanks ZZ. I'm on CAPS about 97% less than I was two years ago. A few trusted and insightful posters and commenters. You, I count among them. Thanks so much for your thoughts here!

Member Avatar jeffrycooks (71.24) Submitted: 12/8/2011 12:21:44 AM
Recs: 1

Doubled down at 1.10 and resistance was just below that. I do believe a large fund was liquidating position, in combination with some
hedge fund posturing. Their main drug now has every opportunity of beating out Incytes drug if it is proven to help with anemia which I believe the Jakifi
drug does not. Good reports at ASH meeting over weekend could add a nice pop to this stock- a volatile spec play no doubt, but one in which I am taking a stab at. The chart is now headed in the right direction again- have hit about a 30% gain over past week or so and would not be surprised to see +2 very soon.
Look at volume and overall chart- this stock is being traded a lot more all the time which is a good thing. More interest/ more potential.

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