Y-mAbs Therapeutics: Interesting History But Questions Abound

Y-mAbs Therapeutics (NASDAQ:YMAB) has an interesting background for its lead drug omburtamab, which, although inspiring, probably led them to be too confident and run a poorly designed and poorly run trial, which the advisory committee voted 16–0 against, and the FDA summarily rejected. Despite the anecdotal evidence, which I discussed in an earlier article and will explore further, this decision seems justified. However, that evidence also seems to justify some measure of confidence that the drug will, ultimately, be successful, just as it has been in saving the life of the daughter of the CEO, Thomas Gad, for over 10 years. Here’s the story in brief, from company filings:

Thomas Gad, our Founder, Chairman, President and Head of Business Development, co-founded Singad Pharma ApS, a Danish pharmaceutical and distribution company, where, as part of senior management, he gained more than 12 years of experience in the pharmaceutical industry, including in business development, financing and licensing negotiations and manufacturing site qualification. In 2006, Mr. Gad's then two year old daughter was diagnosed with high-risk NB and was treated at MSK with the murine version of naxitamab. In 2009, she relapsed with CNS/LM from NB and again was treated at MSK, this time with 131I-omburtamab. Since then, she has been disease free and is now 13 years old.

The company ran a single center, single arm open label trial with an external control population. This control or comparator arm had a less intensive treatment regimen than the multimodal drug arm. The control arm was also based on a childhood cancer registry. Thus, the difference between this control arm and the drug arm was not created on a level playing field. Naturally, the FDA did not like this, and said so in their briefing docs. The advisory committee members agreed unanimously.

There were other issues, including that objective response rates data was not collected by the company during the trial. All of this begs the question: why did the company with its experienced CEO conduct such a trial and expect the FDA to like it? In science, repeatability is key, and mere anecdotal evidence is not enough.

So, what now, for YMAB? If you go back and read that first quote above, you will notice that Mr Gad’s daughter took another medicine called naxitamab, on which she relapsed, and then took omburtamab. Naxitamab is today approved as Danyelza, and the indication is Relapsed/Refractory High-Risk Neuroblastoma (Pediatric/Adult), while for omburtamab it was CNS/Leptomeningeal Metastases from Neuroblastoma (Pediatric). Mr Gad’s daughter had high risk neuroblastoma, and for her at least, omburtamab did better than Danyelza. So if naxitamab is now approved, it does make sense to assume that omburtamab is an active drug as well, and should someday be approved, as long as YMAB can run a properly designed and conducted trial. Danyelza also made around $50mn last year, and has a peak sales estimate of $400mn. It follows that omburtamab has an equally promising future.

Omburtamab has, however, been relegated to something of an afterthought in their current program, as it appears to me. Their current focus, besides Naxitamab, is their GD2-SADA program, where SADA is basically a payload delivery mechanism where an antibody latches on to a tumor, while the unlatched ones are broken down and excreted through the kidney; and a second infusion of radioactive molecules then bind to these antibodies, effectively targeting cancer cells with precision. That is the idea, and this program is in a phase 1 trial.

Financials

YMAB has a market cap of $287mn and a cash balance of $93mn. The company had revenues of $20mn in the previous quarter, mainly from naxitamab, which was recently approved in Brazil. On January 4, 2023, Y-mAbs announced a restructuring plan including a 35% reduction in workforce and an anticipated 28% reduction in annual operating expenses for 2023.

Research and development expenses were $13.4 million for the three months ended March 31, 2023, while Selling, general, and administrative expenses decreased by $1.2 million to $12.2 million. At that rate of expenditure, the company has around 3-4 more quarters of cash. However, with expected $85mn revenue from naxitamab, the company states:

…existing cash and cash equivalents, when combined with anticipated DANYELZA revenues, which are assumed to increase by 10% for 2024 and 2025 for the purpose of our analysis of runway, is expected to be sufficient to fund our operations as currently planned into 2026.

25% of the company stock is held by the public, while the rest is held by institutions and others. Key holders are HBM Healthcare Investments, BlackRock and others. Insider transactions include a few recent purchases, but otherwise they are all sells, including mostly a lot of sales from Mr Thomas Gad.

Risks

YMAB is not investable in any way right now. The trial situation is just too risky for comfort. Also their cash situation is okay for a heads down low key company, but they just do not have enough cash to do anything serious with their pipeline. Moreover, I am surprised by the large open market sales of Mr Thomas Gad. The former CEO left abruptly last year, and Mr Gad took over. I am not happy with the CEO selling such large amount of stock.

Bottomline

YMAB has an approved drug and a developing pipeline, which alone makes it interesting. However there are unresolved issues here - why such a poorly designed/run trial for omburtamab, what about raising cash, management sells, and so on? I will stay on the sidelines.

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