Wells Fargo initiates coverage on YM BioSciences (NYSE: YMI) with a Outperform. $4-5 valuation range.
Wells analyst says, "YMI's lead compound, CYT387 ('387), is a Jak inhibitor in phase II for myeloproliferative diseases (MPDs) such as myelofibrosis (MF). Jak inhibitors have gained recent attention due to profound benefits observed with the most advanced drug in the space, INCY/NVS's ruxolitinib.
Based on early data and feedback from expert physicians, we believe '387 has the most promising profile of any mid-stage Jak inhibitor for MPDs. Although YMI is several years behind INCY/NVS, interim data have suggested a potential benefit for '387 on anemia responses, which, if confirmed in further studies, would provide an important differentiator.
Regardless of whether anemia benefits ultimately appear as strong as in the interim data, we believe additional phase II results throughout 2011 will validate that '387 is a legitimate contender in the evolving Jak inhibitor area. Shares have appreciated since initial data were reported in 2010, but we believe YMI remains undervalued on a risk/reward basis and expect evolving '387 data to drive further upside potential."
Shares of YM BioSciences closed at $2.60 yesterday, with a 52 week range of $1.06-$2.87.