The simple step of a courageous individual is not to take part in the lie. "One word of truth outweighs the world.”― Aleksandr I. Solzhenitsyn
Shares of monoclonal antibody concern Y-mAbs Therapeutics, Inc. (NASDAQ:YMAB) have rebounded massively since March 2023 as the company’s restructuring has extended its cash runway into 2027. The shares gained nearly 30% in trading on Friday. However, the stock was down 95% peak-to-trough after a shoddily conceived BLA application journey for its radiolabeled cancer candidate, ultimately resulting in its rejection in November 2022. With one commercial therapy on the market and with recent insider buying, it merited a deeper dive. An analysis follows below.
Company Overview
Y-mAbs Therapeutics, Inc. is a New York City based commercial stage biopharmaceutical concern focused on the development of monoclonal antibodies for the treatment of cancer. The company has one commercial asset, Danyelza (naxitamab), which is being evaluated for other indications, as well as two early stage radioimmunotherapy candidates spawned from its Self-Assembly DisAssembly (SADA) platform. Y-mAbs was formed in 2015 and went public in 2018, raising net proceeds of $99.8 million at $16 per share. The stock currently trades just over $9.50 a share and sports an approximate market capitalization of $420 million.
Danyelza
The company received FDA accelerated approval for Danyelza in combination with granulocyte macrophage colony stimulating factor (GM-CSF) for the treatment of patients one year of age and older with relapsed/refractory, high-risk neuroblastoma in the bone or bone barrow who have responded to prior therapy in 2020. The current population for Danyelza is very small, comprised of ~800 new patients annually in the U.S., of which ~300 qualify for second-line treatment. Neuroblastoma is a cancer of the sympathetic nervous system – almost exclusively in babies and children – that carries signals from the brain throughout the body. It typically initiates from an adrenal gland but can also develop in the neck, chest, abdomen, or spine. It is the most common cancer in infants and the third most prevalent childhood cancer.
Danyelza is a monoclonal antibody targeting cell surface antigen ganglioside (grey matter of the brain) GD2, which is highly expressed in various neuroectoderm-derived tumors and sarcomas (bones and soft tissues) but not normal cells. There are other approved GD2 therapies, including United Therapeutics’ (UTHR) Unituxin (dinutuximab – 2015) in combination with GM-CSF, interleukin-2, and isotretinoin, as well as EUSA Pharma’s Qarziba (dinutuximab beta) in Europe (2017) and China (2021). That said, Danyelza has administration advantages over Unituxin, including a solid safety profile, permitting 2.5 times greater dosing versus other GD2 therapies, which results in fewer doses per cycle and a substantially shorter infusion time (30 to 60 minutes versus 10 to 20 hours for dinutuximab). Owing to these benefits, Danyelza can be administered in an outpatient setting versus dinutuximab, which generally requires hospitalization of four or more days.
Its accelerated approval was based on the interim results of two clinical trials (12-230 and 201), which demonstrated objective response rates (ORRs) of 78% (primary refractory) and 37% (secondary refractory) in the former and 68% (59% complete response) in the latter. To obtain full approval for Danyelza, Y-mAbs must complete its 201 study and produce data on progression free survival, which it expects to provide by 2027.
Considering its currently minute target population, sales of Danyelza have been brisk, reaching $61.0 million in the first nine months of 2023 (YTD23), up 86% from $32.8 million in the prior year period.
In an attempt to expand its market, Y-mAbs is evaluating Danyelza in other indications where GD2 expression is prevalent, including high-risk neuroblastoma in a frontline setting (Phase 2), relapsed/refractory osteosarcoma (Phase 2 – 200 patients annually), and GD2-expressing advanced breast cancers (Phase 1b/2 – ~8,900). With the exception of the osteosarcoma trial, which commenced in 2015 and is currently at 46 patients with a read out anticipated in 4Q24 – meaningful data from these trials are several years away.
SADA
The company’s other program is SADA, a seemingly novel approach to cancer treatment, whereby bispecific antibody fragments bind to specific tumor antigens before a radioactive payload is subsequently injected into the tumor with a goal of minimizing exposure to normal tissue. The initial Phase 1 indications are GD2-SADA targeting solid tumors and CD38-SADA treating non-Hodgkin lymphoma with very preliminary data from the former to be presented in 4Q24. Management will likely seek a partner or partners to advance its SADA programs.
Deprioritized Programs
Also, Y-mAbs had submitted a BLA for radiolabeled 131I-omburtamab for the treatment of central nervous system/leptomeningeal metastases in children with neuroblastoma after standard multimodality treatment in August 2020. In December 2022, the FDA soundly rejected the therapy, citing amongst other issues, trial design and size – more on this below. After the verdict, the company deprioritized omburtamab and a cancer vaccine program concurrent to cutting its staff by one-third.
Share Price Performance
When Danyelza was approved in November 2020, Y-mAbs appeared to have a bright future, with more indications to pursue plus a problematic but seemingly promising omburtamab program. Its stock touched $55 per share in both November and December 2020, but that marked the all-time high. First depressed by a secondary offering in February 2021, shares of YMAB began a protracted decline, which was further exacerbated by a short report published by Mariner Research in March 2021, citing potential significant conflicts of interest, poor trial designs, and inconsistencies in the company’s published clinical data as red flags. Further delays and setbacks regarding omburtamab – after Y-mAbs received a Refuse to File notification from the FDA in October 2020 due to chemistry, manufacturing, and control issues – acted as an incessant drag on shares of YMAB. The saga terminated in November 2022 with the receipt of a CRL from the FDA, but effectively ended when briefing documents questioning the case for efficacy (followed quickly by a 16-0 Advisory Panel ‘no’ vote) were released in October 2022, triggering a seven-session collapse in the company’s stock from $15.17 to $3.00 per share.
As it became increasingly clearer to the board that omburtamab’s fate was likely sealed by shoddy trial design and efforts in the clinic, the CEO resigned in April 2022 and was replaced on an interim basis by Y-mAbs founder and (at that time) Chairman of the Board Thomas Gad., who oversaw the workforce reduction in 1Q23. A permanent replacement was just onboarded in November 2023.
3Q23 Update
From a messaging perspective, the company has pivoted to Danyelza sales and its SADA clinical program, which were front and center when it reported 3Q23 financials on November 13, 2023. It posted a loss of $0.18 a share (GAAP) on product revenue of $20.0 million as compared to a loss of $0.63 a share (GAAP) on product revenue of $12.5 million in 3Q22, representing a 59% improvement at the top line – although it was $0.5 million below expectations. A total of 158 patients have started Danyelza therapy since its 2020 approval.
Balance Sheet & Analyst Commentary
Owing to its stringent cost control measures, Y-mAbs did lower its FY23 cash burn guidance from $45 million to $29.5 million, based on range midpoints. With cash on the balance sheet of $86.6 million as of September 30, 2023, this development extended the company’s cash runway from 2026 to 2027, assuming only 10% annual increases in Danyelza sales 2024-2026.
That said, the Street is very split on Y-mAbs, featuring four buy or outperform ratings against three holds and two underperforms. Price objectives range from $5 to $22, with a median of $12. On average, they expect the company to lose $0.69 per share on revenue of $82.4 million in FY23, followed by a loss of $0.72 a share on revenue of $100.2 million in FY24 as the advancement of the SADA programs is expected to raise clinical expenses.
Board member Johan Wedell-Wedellsborg is not split on his outlook for Y-mAbs, having purchased 145,024 shares at an average price of $5.73 on November 27-29, 2023. Another director sold just over $1 million worth of shares in mid-December it should be noted.
Verdict
Given the extremely small patient population for Danyelza, the even smaller label expansion opportunity into osteosarcoma, and very lengthy timelines for additional indications, sales for Y-mAbs’s lone commercial product will struggle to surpass $150 million. SADA is far too early stage to assign it any significant value until first data are produced near YE24. That said, shares of YMAB have some upside. Assuming a peak sales figure of $125 million to Danyelza and employing a 3.5 price-to-sales multiple results in a $10 per share valuation with a free option on SADA. I can't not find any company specific news to account for the big rally in the equity on Friday at the time of submission. However, I would not be chasing the stock at these levels after its huge recent rise.
When a thing is funny, search it carefully for a hidden truth.”― George Bernard Shaw
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