$YMTX a promising Yumanitarian play in Parkinson’s
Background
Yumanity Therapeutics (NASDAQ) is a biotech firm trading at ~15/share focusing on neurodegenerative diseases set up by founders Tony Coles and Susan Lindquist. Of note, Dr. Linduquist’s platform which is licensed by MIT Whitehead institute has successfully helped the company discover 15 novel targets within this field and leading to its new current therapy YTX-9814, the company’s most advanced clinical candidate targeting Parkinsons.
Parkinson’s disease is a brain disorder that leads to shaking, stiffness, and difficulty with walking, balance, and coordination. Parkinson’s symptoms usually begin gradually and get worse over time. As the disease progresses, people may have difficulty walking and talking.
Market Dynamics
Given the premature nature of other candidates this article will focus exclusively on Parkinsons. According to Nature, parkinsons’ results in an economic burden of $51.9bn with indirect costs of $26.5bn, $14.5 bn of which relates to payments toward PWPs (Persons with Parkinsons) and caregivers. There is also a time burden, Whetten-Goldstein surveyed, that on average, caregivers spend 22h per week on care.
Standard of Care
Dopamine precursors & Dopa carboxylase inhibitors,Dopamine agonists,COMT inhibitors and MAOI-B (Monoamine Oxidase) inhibitors however efficacy is lacking as targets only focus on improving dopamine levels and not the root cause of neurodegeneration. See chart below for a clearer understanding.
As you can see in the above, the current therapies do not result in huge improvements in UPDRS (a universal parkinson’s rating scale) the higher the score the worse the condition. Also consider that current therapies result in only 10 years worth of benefit after which there is no benefit. The side effect profile is particularly unfavorable demonstrating a clear unmet need for a new therapy. One side effect in particular is an increase in compulsive behaviour such as gambling, sexual promiscuity etc.
Pipeline
Source: YMTX presentation
YTX-7739
YTX-7739 is a SCD (Stearoyl-CoA Desaturase inhibitor) which targets the a-synuclein bundles which result in tangles of protein that result in neurodegeneration in the substantia nigra, a prominent part of the brain involved in motor function. Why is it exciting? Mouse models demonstrated that the mice which were KO i.e. had the gene for SCD removed were able to complete motor tasks at a similar rate to those without Parkinsons. See figure below. This is what the FDA, clinicians and patients care about most, functional improvements over biomarkers.
Source: YMTX presentation
SCD inhibition has also demonstrated decreases in a-synuclein (the toxic protein that is suggested to be responsible for parkinsons) supporting potential efficacy in later trials.
To add to the evidence, YTX-7739 also demonstrated a “tolerable side effect profile” with the most common side effects being headaches and rhinorrhea in its recent Phase 1a study (n=12) . This is a major positive given the side effect profiles of the current standard of care.
Management and Financials
Source: YMTX presentation
For a small cap biotech the company boasts a well respected management team with several board members hailing from Pfizer, Biogen and Genzyme. Considering that the CEO Dr. Richard Peters previously held positions at Sanofi and Genzyme (Sanofi) have therapies targeting proteinopathies in Parkinson’s suggests that there may be potential for a partnership or a buyout. Another potential suitor could be Biogen given the head of research Robert Scannevin was previously employed by the pharma giant who is currently facing issues with their Alzheimer’s therapy and are in need of a boost to their pipeline.
The balance sheet also looks strong and the company expects to have a runway through to Q3 2022 and based on the burn rate of ~12m (note recent burn including extraordinary items due to the reverse merger) I would also agree. See below for further info.
Verdict
Investing in biotech firms at such an early stage is always difficult especially in the CNS space given a high level of failure. However based on the preclinical data and the greater understanding in Parkinsons’ I am quietly optimistic over their potential. Reviewing the stock price, it has fallen down from highs of $32, presenting a compelling time to buy. Parkinsons is also a hot market see previous stock move on data in a fellow smallcap $ANVS trading at a similar market cap which jumped from 25$ to 48$ a share on positive phase 2a data. I would expect a move of around 30–50% based on positive data P1b data on motor skills which is expected to come in mid 2021. See chart below.
Source: Finviz
Another headwind is overall XBI weakness which has been one of the worst sectors YTD and so I’d expect some mean reversion since fundamentals haven’t changed for many stocks.
Disclosure:
I am long $YMTX.
I reserve the right to sell some or all of my positions, or initiate new positions, after publishing if I receive new information that changes my view or if my financial situation changes.
