Cheap Stocks: YM BioSciences (YMI) Banking on CYT387

Since Canaccord Genuity initiated coverage with a “buy” rating and $4.00 price target, the penny stock of YM BioSciences Inc. (AMEX: YMI), has dropped -9.33%. Why the shares of YMI are so undervalued when you look deep into their product line is puzzling. Shares of YMI closed up 4.17% at $1.75 on lighter than average volume in the last trading session.

There has been no news or SEC filings for the month thus far but strangely enough, this penny stock has buy written all over it. Just two months ago the company announced pricing of 35,000,000 common shares at $2.00. (see here) Right now, it seems that the penny market for YMI basically comes down to whether or not YM BioScience’s CYT387, their lead compound, can prove it has the ability to reverse/reduce anemia in myelofibrosis patients.

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YMI Stock Snap Shot:

Market Cap: 204.24M
52-Week High
(May 26, 2011): 3.78
52-Week Low
(Nov 22, 2011): 1.03
Avg Vol (3 month): 1,337,070
Avg Vol (10 day): 923,729
Shares Outstanding: 151.71M*
Float: 144.69M*
% Held by Insiders: 5.11%

* – Adjusted for the recent issuance of 35 million shares.

YM BioSciences Inc. is a a drug development company advancing CYT387, a small molecule, dual inhibitor of the JAK1 and JAK2 kinases. YMI‘s assets also include nimotuzumab, a monoclonal antibody targeting a protein known as Epidermal Growth Factor Receptor (“EGFR”); CYT997, a vascular disrupting agent and a library of several thousand pre-clinical molecules.

The company focuses strictly on developing hematology and cancer-related products, using their expertise to manage and perform value-enhancing activities in the development process of a drug.

To vies the SEC filings for YMI, click here.

Bottom Line: As of December 31, 2011, YM BioSciences had an accumulated deficit of roughly $220 million. (see here) However,  assuming that CYT387 gets approved, no other competitive drugs (apart from Jakafi) has shown a clinical profile that suggests a real commercial threat.

Add YMI to your list of penny stocks to watch. Shares in YMI are up a mere 6.71% thus far in 2012. Revenues are low, the company is hemorrhaging cash, and all their attention s focused n CYT387. If those anemia results hold up in a pivotal trial and YMI can get that on the label, CYT387 could be the top drug in its class despite the incremental side-effects.

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