Leonard Zehr. Globetechnology.com.
Wednesday, May 2, 2001
MISSISSAUGA -- David Allan's three-year turnaround of YM BioSciences Inc. is
almost complete.
This month, the closely held biotech company will tell delegates at the
American Society of Clinical Oncology that its TheraCIM drug has regressed
tumours in patients with head and neck cancers.
"This will be our first full presentation," says Mr. Allan, who
became YM's chief executive officer in 1998 in a management shakeup. "Right
now, it's looking very good."
Created in 1994 to commercialize medical discoveries from Cuba, YM is now
moving further afield to get out from under the shadow of U.S.-Cuban political
and trade frictions. TheraCIM was one of the first projects it imported from
Cuba.
"Developing a product that originates in Cuba is definitely a greater
challenge than developing a product that originates elsewhere," Mr. Allan
says.
For example, YM has been forced to raise most of its $35-million of equity
in private transactions with European investors. Mr. Allan is heading to Europe
this month to raise another $10-million to $15-million.
Moreover, a $20-million initial public offering at the end of 1996 fell
through largely because of the company's Cuban ties, and YM had to settle for
$12.5-million through a private placement.
YM also would face a major challenge winning marketing approval from the
U.S. Food and Drug Administration for its lead product, TheraCIM, which was
discovered at the Centre of Molecular Immunology (CIM) in Cuba. CIM remains a
partner with YM in any profits from the imported drugs' development.
But Mr. Allan counters that TheraCIM, an antibody that targets the epidermal
growth factor (EGF) receptor to block tumour growth, won't be ready for sale
until 2003 and "a lot could change by then."
Mr. Allan is currently working on what he calls a "transatlantic"
initial public offering or a merger with a European partner this year. The
objective: to expand YM's product pipeline and accelerate development of three
anti-cancer drugs that are now in Phase II clinical trials and two more that are
expected to be in Phase II before the end of the year.
A successful Phase II trial would facilitate a marketing and distribution
deal with a big drug company.
"YM now has one of the broadest pipelines of oncology products around
and there's clinical experience with each product," says Ezra Lwowski, a
biotech analyst with Yorkton Securities Inc. of Toronto.
Mr. Allan and Mr. Lwowski, a YM shareholder, co-founded YM's predecessor,
York Medical Inc. in 1994.
In the early 1990s, the Cuban government asked Yorkton Securities for help
in getting some of the country's medical discoveries out of the lab and into the
market.
Mr. Allan, an investment banker and founder of Yorkton's knowledge-based
industries group, and Mr. Lwowski spent 10 days touring various medical
institutes in Cuba.
"We came away convinced there was no way we could commercialize their
science," Mr. Allan recalls. "There were too many political and
credibility issues to overcome."
But on the plane ride back to Toronto, Mr. Lwowski convinced his boss that
Yorkton had a "humanitarian" obligation to try to help.
"We had to transfer rights to the technology, repeat the clinical
trials done in Cuba to be sure they were done properly and then try to license
the products," Mr. Lwowski says.
Progress was slow. By 1998, the company still hadn't obtained patents for
its intellectual property, stalling the start of its clinical program. "Our
business plan was two years behind schedule," Mr. Allan recalls.
After a management shuffle in 1998, the board invited Mr. Allan, who was
non-executive chairman of the company, to assume the additional full-time post
of chief executive officer.
"David had no previous experience running a biopharmaceutical company,
but he's a quick learner and one of the brightest people I know," says a
former associate.
Mississauga-based YM now considers itself to be a "receptor company,"
Mr. Allan says.
As a result, YM doesn't conduct drug discovery research but teams up with
universities and biotech companies that need a partner to complete the clinical
and regulatory requirements.
As part of that mandate, Mr. Allan is expanding YM's business model beyond
its Cuban stable of TheraCIM; an EGF cancer vaccine and RadioTheraCIM, a
radioisotope version of the EGF antibody.
Last year, YM acquired rights to Norelin, a cancer vaccine, from Biostar
Inc. of Saskatoon to treat prostate, breast and ovarian cancers.
It also teamed up with the University of Manitoba to develop the drug
Tesmilifene against prostate cancer. YM hopes to get Tesmilifene into late-stage
trials this year.
YM also has new collaborations with two British companies -- KS Biomedix
Holdings PLC, to develop five anti-cancer drugs, and SR Pharma PLC, to work on a
new cancer vaccine.
Still, the company has high hopes for its lead product TheraCIM in the wake
of a $90-million (U.S.) European licensing deal between Merck KGaA of Darmstadt,
Germany and ImClone Systems Inc. of New York.
ImClone is in late-stage cancer testing with an EGF antibody that acts like
YM's TheraCIM.
"If any other oncology company wants to compete with Merck in Europe or
Canada, they have to come to us because there is no other EGF receptor in
clinical trials that has not been partnered," Mr. Allan says.
"If we cut a deal like ImClone, it would be the biggest cancer deal for
a Canadian company."
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