YM Biosciences Inc. lost more than half its value Wednesday on news that tesmilifene would fail to demonstrate a survival benefit in a pivotal Phase III trial in patients with metastatic or recurrent breast cancer.

The company acted on the recommendation of trial monitors and discontinued the study. YM Chairman and CEO David Allan said in a conference call that the company had no intention of conducting subset analyses or other data-mining efforts to seek potential ways forward in breast cancer. "There is no purpose in continuing," he said.

Allan, however, told BioWorld Today his company "is far from being down and out." He said the company ended the year with about C$80 million (US$68 million) in cash, has two other promising products in the clinic and had demonstrated its capabilities in making acquisitions and in conducting clinical trials.

"We have the management, the means and the money to be able to do it all over again," he said, adding that steps likely would be taken to enhance its pipeline. "That is our business strategy."

Tesmilifene, a small-molecule agent believed to sensitize tumor cells to chemotherapy, has been tested in various other tumor types and as part of different regimens. Allan said it was too early to assess what impact the pivotal data would have on other development plans for tesmilifene, including trials with partner Sanofi-Aventis Group evaluating the agent with docetaxel (Taxotere) in metastatic breast cancer. He said decisions would be made later on other trials in other indications being planned by the company and its partners.

The stock of Mississauga, Ontario-based YM fell C$2.50 on the Toronto Stock Exchange Wednesday, or 56 percent, to close at C$1.96. On AMEX (YMI), shares fell $2.03 to close at $1.75.

Katherine Kim, who last week downgraded the stock on suspicions that the pivotal trial was not going to turn out well, said the extent of the stock drop was perhaps an overreaction by investors. The company has about $1.25 per share in cash, and she valued its other assets at $1.75 per share, leaving US$3 as a fair price, she said.

"This was a binary event from the company," Kim told BioWorld Today. "Most of the focus was on the potential of this compound." Kim took potential tesmilifene sales in all indications out of her models.

"I think they will re-evaluate everything for tesmilifene," Kim said. "It will hit a wall if they are going to continue in other indications. I think after the data from this trial it will be very difficult to convince people there would be potential in other cancers."

The pivotal trial data surprised many because of positive results from an earlier Phase III trial in Canada. Data published in January 2004 from that study in 305 patients with metastatic breast cancer showed a 50 percent increase in median survival versus the chemotherapy-only arm.

The pivotal trial that began in March 2004 compared the drug with epirubicin and cyclophosphamide to that regimen alone. Enrollment of 723 patients was completed in September 2005. The monitoring board made its recommendation after its third interim analysis, which covered 351 events.

Kim said the pivotal trial was taking longer than she expected, leading her to believe that median survival was improved in the control arm versus what was seen in the first Phase III, and what was expected. She said the endpoint of a 33 percent improvement in median survival was a high hurdle to meet.

Kim expects the company, which has more than two years of cash based on her projections, to look for in-licensing opportunities.

The other clinical-stage products at YM are AeroLEF, a formulation of free and liposome-encapsulated fentanyl, an opioid analgesic, administered by pulmonary inhalation; and nimotuzumab, a humanized monoclonal antibody targeting the epidermal growth factor receptor, a target already established by approved drugs such as Erbitux and Tarceva.

Both product candidates, Allan said, have characteristics that could set them apart from potential competitors. AeroLEF is the only opioid-based product for which patients can vary their own dosing, "though it's such an obvious thing to do." And for nimotuzumab, he said, "Our version of the drug does not produce the debilitating side effects of the competitive drugs, so it has the prospect of being best in class."

Enrollment in a 121-patient Phase IIb trial of AeroLEF in postoperative pain is nearly completed, Allan said, with preliminary data expected as soon as this quarter. Positive data from that study would lead to a Phase II trial in the U.S., or under the best-case scenario, a Phase III trial, Allan said.

Nimotuzumab is being tested in mostly Phase II-stage trials in about 12 different indications in various centers around the world, Allan said. The drug has been approved in China and India, and is partnered in Japan with Daiichi Pharmaceutical Co. Ltd. Partner Biocon Biopharmaceuticals Ltd. is launching the product in India for treating head and neck cancer.