Shares of Y-mAbs Therapeutics (YMAB) have risen by over 25% since IPO pricing at $16 in September of last year. While the stock price briefly peaked above $30, it's come back down to a more reasonable level (performance is flat so far in 2019).
The company initially drew my attention given that much of leadership hails from Danish pharmaceutical giant Genmab (OTCPK:GNMSF) (OTCPK:GMXAY) and two lead programs could see regulatory submissions later this year for oncology indications of high unmet need.
The theme the company is operating in (precision medicine/targeted oncology) has been a hot one with a number of winners over the past couple years and my first glance at its JPMorgan presentation revealed significant optionality in the basket trial of B7-H3 positive CNS/LM tumors.
Figure 1: YMAB daily advanced chart (Source: Finviz)
Figure 2: YMAB 15-minute chart (Source: Finviz)
When looking at charts, clarity often comes from taking a look at distinct time frames in order to determine important technical levels to get a feel for what's going on. In the first chart (daily advanced), we can see that since IPO the stock has bounced around quite a bit and currently appears to be consolidating around the $20 level. In the second chart (15-minute), we can see a bit of weakness and selling pressure taking place (albeit on low volume). In fact, the stock trades just 66,000 shares on average daily and oftentimes much lower.
One thing that immediately sticks about Y-mAbs is that both lead programs have been granted the coveted Breakthrough Therapy Designation by the FDA, as well as Rare Pediatric Disease and Orphan Drug designations.
Figure 3: Pipeline (Source: corporate presentation)
Naxitamab is an anti-GD2 antibody with multiple advantages over other GD2 targeting therapies, including modest toxicity (allows for 2.5x greater dose) and shorter infusion time (30 minutes in outpatient setting versus 10-20 hours with hospitalization for several days dinutuxumab).
B7-H3 targeting antibody omburtamab has shown impressive data in CNS/LM from neuroblastoma patients (median overall survival of 47 months as compared to historical median overall survival of approximately six months).
Initial indications the company is going after are quite small, but when considered in aggregate a decent-sized opportunity is being targeted.
Figure 4: Commercial opportunity (Source: corporate presentation)
However, the opportunity gets considerably larger when you consider that a basket study for B7-H3 positive CNS/LM tumors could get underway in the second half of 2019 after IND is filed in the next quarter or so.
Also consider that the company started clinical testing for huGD2-BsAb in December in refractory GD2+ solid tumors (incidence >200,000 per year in the U.S.). This bispecific antibody is thought to have improved efficacy and convenience due to longer serum half-life, not to mention a better safety profile as the larger molecule size avoids CNS neurotoxicity. Of course, the proof is in the pudding and we'll have to wait for initial data before the company can prove it's up to the task of tackling these larger market opportunities.
On April 16th, the company announced phase 1 data for omburtamab in Desmoplastic Small Round Cell Tumor (DSRCT), a rare sarcoma of adolescents and young adults. Cohorts of 3 to 6 patients were treated with escalated doses of intraperitoneal 131I- omburtamab and a prior dose of 2mCi 124I-omburtamab intraperitoneal was used to acquire PET images and biodistribution data. A total of 41 patients were treated at doses of 30-90mCi/m2 and maximum tolerated dose was not reached. There were three grade 4 adverse events (neutropenia) and no dose-limiting toxicities. Median progression-free survival was 18.5±2.4 months for the 20 patients who underwent complete cytoreductive surgery followed by RIT and whole-abdominal radiotherapy, which contrasts sharply to a patient with gross residual disease pre-RIT with median PFS of 5.3±3.8 months. As with other opportunities being targeted, note that annual addressable cases are quite low (160).
On August 21st, the company announced that it'd received Breakthrough Therapy Designation for naxitamab in combination with GM-CSF for the treatment of high risk neuroblastoma refractory to initial therapy or with incomplete response to salvage therapy in patients older than 12 months with persistent, refractory disease limited to bone marrow with or without evidence of concurrent bone involvement.
Figure 5: Naxitamab results from phase 2 expansion study (Source: corporate presentation)
On December 10th, the FDA cleared the Investigational New Drug application for the company's humanized bispecific GD2 antibody, after which a phase 1/2 study was initiated to evaluate the drug candidate in patients with relapsed/refractory neuroblastoma, high grade osteosarcoma and other GD2(+) solid tumors where patients have relapsed or refractory disease that is resistant to standard therapy. Preclinical data presented at ASH had shown such bispecific GD2 antibodies to induce rapid T-cell homing to tumors, mediating antibody dependent T-cell mediated cytotoxicity against GD2 and infiltrating tumors with little to no immune response (otherwise known as cold tumors).
Lastly, on December 11th, the company strengthened the Board of Directors with the appointment of Dr. Gerard Ber (served as Chief Operating Officer of Advanced Accelerator Applications, a favorite prior idea of mine that was bought out for $3.9 billion by Novartis). As there's been considerably more interest in the Molecular Nuclear Medicine space over the past few years, Dr. Ber's experience will come in handy as the company expands its pipeline of liquid radiopharmaceuticals.
For the third quarter of 2018, the company reported cash and equivalents of $163.3 million as compared to net loss of $11.4 million. Quarterly research and development expenses rose significantly to $8.7 million, while G&A came in at $2.7 million.
As for future catalysts of note, the main ones that come to mind are regulatory submissions (BLA) for naxitamab and omburtamab later this year. Initial and updated results are expected for multiple additional indications in which these drug candidates are being evaluated. Keep in mind that the company believes it could qualify for supplemental BLA filing for DIPG and DSRCT assuming positive pivotal results.
Figure 6: Omburtamab clinical overview, impressive improvement in survival highlights substantial unmet need (Source: corporate presentation)
Additionally, IND filing for 177Lu-omburtamab-DTPA (2x 50mCi I-131 radiolabeled omburtamab) for the treatment of B7-H3 positive LM from solid tumors is expected in the next quarter or so. Consider again that for this indication there is annual estimated incidence of over 30,000 in the US and EU. Initial data for huGD2-BsAb in GD2 positive solid tumors later this year or in 2020 will be interesting as well, considering estimated incidence of over 200,000 in the US alone.
As for institutional investors of note, HBM Healthcare Investments owns an 8.23% stake. Memorial Sloan Kettering retains an 8.04% stake and Sofinnova Venture Partners owns 6.3% of shares outstanding. Trends in insider buying are also encouraging.
As stated before, the management team is quite experienced with several of the top brass from Genmab having migrated over to this venture. These include CEO Claus Moller, MD, PhD (Co-founder of Genmab), Chief Financial Officer Bo Kruse (served as CFO and Vice President of Genmab), SVP Head of Technical Operations Torben Lund-Hansen, PhD (Senior Vice President, Technical Operations at Genmab) and others.
To conclude, clinical and regulatory catalysts throughout 2019 should drive more interest for the stock and pullback to the $20 level ($700 million market capitalization) has left it reasonably valued (though not cheap). Initial indications being targeted have a high probability of success in my opinion, but playing devil's advocate initial size of addressable patient populations is rather small. Inherent advantages of naxitamab and omburtamab could help them beat out competition, yet said competition (e.g. United Therapeutics (NASDAQ:UTHR), MacroGenics (NASDAQ:MGNX)) has considerably more in the way of resources and marketing power.
For readers who are interested in the story and have done their due diligence, I can see the rationale for scooping up shares in the near term assuming a multi-year time horizon. I'd caution readers who do decide to accumulate a position to do so patiently over the next couple quarters in case the stock price loses more ground in the meantime.
Risks include disappointing data for any number of indications, negative regulatory feedback, delays in the clinic, safety concerns (liver toxicity for MacroGenics' MGD009 and clinical hold serve as potential warning sign) and competition in certain indications being targeted (United Therapeutics' dinutuximab did $84.8 million of sales in 2018, representing growth of 11.6%). Other competitors include Daiichi Sankyo (B7-H3) and Apeiron Biologics AG (GD2 antibody product dinutuximab beta approved in Europe and filing for approval in US). Given current cash position and burn rate dilution in the near term does not appear likely, but could occur later this year or in 2020.
As for downside cushion and elements of derisking, current cash position accounts for about 20% of the market capitalization and promising data for lead indications does provide a measure of cushion. That said, given competition in the space and current valuation, I can't rule out shares falling into the mid-teens.
For our purposes in ROTY, I prefer to focus on companies with less in the way of competition, larger market opportunities (relative to current valuation) and important near to medium term catalysts that have a high probability of success (and resulting in corresponding move in share price).
Other Relevant Links:
Potential Questions for Discussion (including aspects of bear thesis):
What are your thoughts on competition for lead programs?
Do you think that larger market opportunities (i.e., GD2 positive solid tumors, B7-H3 positive LM from solid tumors) will pay off? Why?
Author's Note: I greatly appreciate you taking the time out of your day to read my material and hope you found it to be helpful in some form or fashion. If you're willing, I look forward to interacting with you in the Comments Section. Whether bull, bear or simply a skeptic, we all typically have something worth saying and feedback (plus community-driven due diligence) is one of the reasons I enjoy writing. Have a good one!
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