YM BioSciences (YMI) Reports Fiscal Second Quarter 2011 Operational and Financial Results

MISSISSAUGA, ON – YM BioSciences Inc. (NYSE Amex: YMI, TSX: YM), a life sciences product development company advancing a diverse portfolio of promising hematology and cancer-related products at various stages of development, today reported operational and financial results for the second quarter of fiscal 2011, ended December 31, 2010.

“At the American Society of Hematology Annual Meeting in December 2010, we presented interim data from the Phase I/II trial of our JAK inhibitor, CYT387, in myelofibrosis. In addition to demonstrating positive efficacy signals in the approvable endpoints in this indication, splenomegaly and symptomatic improvement, CYT387 also exhibited a promising ability to positively impact anemia, a major life-shortening symptom associated with myelofibrosis. We now look forward to updated data from the full 140 patient clinical trial in calendar mid-2011 to further quantify these outcomes, including the durability of this compelling anemia response,” said Dr. Nick Glover, President and CEO of YM BioSciences. “We are encouraged by these data and accordingly are also reviewing development opportunities for the compound in other indications where the properties of our drug might benefit patients. During the quarter we raised net proceeds before expenses of $43.3 million, underscoring the shared desire our investors have for supporting the timely development this asset.”

Highlights from the second quarter:

CYT387:

    -   Mayo Clinic announced positive interim data from the first
        60 patients enrolled in the Phase I/II trial for CYT387 in
        myelofibrosis. The results were reported in an oral presentation at
        the 52nd American Society of Hematology (ASH) Annual Meeting.

        -  The Overall Response Rate (spleen, anemia), as per the
           International Working Group for Myeloproliferative Neoplasms
           Research and Treatment (IWG-MRT) criteria, was 62%.
        -  Of the 53 evaluable subjects who had splenomegaly at baseline,
           47% achieved a minimum 50% decrease in palpable spleen size,
           qualifying for Clinical Improvement (CI) per IWG-MRT criteria.
        -  CYT387 controlled constitutional symptoms in a significant
           percentage of patients (night sweats: 88%, bone pain 80%,
           pruritus: 92%, fever: 100%).
        -  Of 42 subjects who were evaluable for anemia response, 50% had
           achieved CI as per IWG-MRT criteria. A 57% response rate was
           observed in transfusion-dependent patients.
    -   Full enrollment of 140 patients into the trial is anticipated in
        calendar Q1 2011. To date, 111 patients have been enrolled into the
        study. The Company anticipates that an additional set of updated
        interim data will be reported in the second quarter of calendar 2011
        and a full data set will be reported by the end of calendar 2011. The
        Company is also working towards completing in calendar 2011 any
        preclinical and manufacturing activities required to enable CYT387 to
        commence a Phase III pivotal trial in calendar Q1 2012.

Nimotuzumab:

    -   Daiichi Sankyo Co., Ltd., CIMYM's licensee for nimotuzumab in Japan,
        previously initiated a randomized trial with nimotuzumab in second
        line gastric cancer, together with Kuhnil Pharma Co. Ltd., CIMYM's
        licensee in Korea. Data from this trial were presented in January
        2011 at the ASCO Gastrointestinal Cancers Symposium and demonstrated
        an improvement in Progression Free Survival in a subset of patients
        whose tumors were EGFR-positive. Should Daiichi Sankyo indicate an
        interest in advancing nimotuzumab into a Phase III clinical trial in
        gastric cancer, it could initiate in calendar 2012 subject to
        achieving commercial-scale production. Daiichi Sankyo also launched a
        Phase II trial in first-line treatment of advanced NSCLC for which YM
        has been advised that recruitment has been completed, with data
        expected during the first half of calendar 2011.

    -   Oncoscience AG (OSAG), CIMYM's licensee for Europe, has advised that
        data from a Phase III trial in adult glioma patients may be reported
        in the first half of calendar 2011. OSAG continues to recruit
        patients into a Phase IIb/III trial in pancreatic cancer patients.

    -   YM's two randomized, Phase II, double-blind trials of nimotuzumab
        (for brain metastasis from non-small cell lung cancer and for
        palliative treatment of NSCLC) are lagging recruitment targets and
        consequently these programs are under review as the Company focuses
        support on the more advanced trials involving Daiichi Sankyo, which
        have the prospect of earlier registration trial initiation. YM's
        Phase II, second-line, single-arm study in children with progressive
        diffuse intrinsic pontine glioma (DIPG) has concluded recruitment at
        multiple sites in the US, Canada, and Israel and YM should report
        results in calendar Q1 2011.

CYT997:

    -   CYT997 is a small molecule therapeutic capable of being developed in
        IV and oral dose formulations with dual mechanisms of vascular
        disruption and cytotoxicity. Preliminary data from YM's current Phase
        I/II trial of CYT997 given IV in glioma patients are expected in
        calendar H2 2011.

Financial Results (CDN dollars)

Total revenue for the second quarter of fiscal 2011, ended December 31, 2010, was $0.3 million compared to $0.7 million for the second quarter of fiscal 2010, ended December 31, 2009. Total revenue for the first six months of fiscal 2011, ended December 31, 2010, was $0.7 million compared to $1.4 million for the first six months of fiscal 2010, ended December 31, 2010. Interest income for the first quarter of fiscal 2011 was $83 thousand compared with $13 thousand for the second quarter of fiscal 2010.

Licensing and product development expenses were $5.3 million for the second quarter of fiscal 2011 compared to $2.4 million for the second quarter of fiscal 2010. Licensing and product development expenses were $10.5 million for the first six months of fiscal 2011 compared to $4.8 million for the first six months of fiscal 2010. The increases were due mainly to increases in salaries, travel and office expenses as a result of restructuring and the addition of the Australian office.

General and administrative expenses were $3.1 million for the second quarter of fiscal 2011 compared with $1.7 million for the second quarter of fiscal 2010. General and administrative expenses were $5.5 million for the first six months of fiscal 2011 compared with $3.5 million for the first six months of fiscal 2010. The increases were due mainly to higher stock-based compensation expense, restructuring costs, bonuses awarded and increased Board of Director fees and travel expenses as a result of additional meetings held during the year.

Net loss for the second quarter of fiscal 2011 was $8.4 million ($0.10 per share) compared to $3.4 million ($0.06 per share) for the same period last year. Net loss for the first six months of fiscal 2011 was $16.0 million ($0.19 per share) compared to $6.9 million ($0.12 per share) for the same period last year.

As at December 31, 2010, the Company had cash and short-term deposits totaling $78.7 million and accounts payables and accrued liabilities totaling $4.9 million compared to $45.6 million and $2.8 million respectively, at June 30, 2010. Management believes that the cash and short-term deposits at December 31, 2010 are sufficient to support the Company’s activities for at least the next twelve months.

As at December 31, 2010 the Company had 109,956,275 common shares and 7,639,137 warrants outstanding.

About YM BioSciences

YM BioSciences Inc. is a drug development company advancing three clinical-stage products: CYT387, a small molecule, dual inhibitor of the JAK1/JAK2 kinases; nimotuzumab, an EGFR-targeting monoclonal antibody; and CYT997, a potent vascular disrupting agent (VDA).

CYT387 is an orally administered inhibitor of both the JAK1 and JAK2 kinases, which have been implicated in a number of immune cell disorders including myeloproliferative neoplasms and inflammatory diseases as well as certain cancers. CYT387 is currently in a Phase I/II trial in myelofibrosis. Nimotuzumab is a humanized monoclonal antibody targeting EGFR with an enhanced side effect profile. Nimotuzumab is being evaluated in numerous Phase II and III trials worldwide by YM’s licensees. CYT997 is an orally-available small molecule therapeutic with dual mechanisms of vascular disruption and cytotoxicity, and is currently in a Phase II trial for glioblastoma multiforme. In addition to YM’s three clinical stage products, the Company has a library of more than 4,000 novel compounds identified through internal research conducted at YM BioSciences Australia which are currently being evaluated.

This press release may contain forward-looking statements, which reflect the Company’s current expectation regarding future events. These forward-looking statements involve risks and uncertainties that may cause actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward-looking statements. Such factors include, but are not limited to, changing market conditions, the successful and timely completion of clinical studies, the establishment of corporate alliances, the impact of competitive products and pricing, new product development, uncertainties related to the regulatory approval process or the ability to obtain drug product in sufficient quantity or at standards acceptable to health regulatory authorities to complete clinical trials or to meet commercial demand; and other risks detailed from time to time in the Company’s ongoing quarterly and annual reporting. Certain of the assumptions made in preparing forward-looking statements include but are not limited to the following: that nimotuzumab will continue to demonstrate a competitive safety profile in ongoing and future clinical trials; that our JAK1/JAK2 inhibitor CYT387 and our VDA small molecule CYT997 will generate positive efficacy and safety data in future clinical trials; that YM and its various partners will complete their respective clinical trials within the timelines communicated in this release. Except as required by applicable securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Summary financial statements attached:

    YM BIOSCIENCES INC.
    Interim Consolidated Balance Sheets
    (Expressed in Canadian dollars, unless otherwise noted)

    -------------------------------------------------------------------------
                                                   December 31,      June 30,
                                                          2010          2010
    -------------------------------------------------------------------------
                                                    (Unaudited)

    Assets

    Current assets:
      Cash and cash equivalents                 $  25,261,196  $  19,460,141
      Short-term deposits                          53,451,681     26,184,991
      Accounts receivable                             203,163        161,184
      Prepaid expenses                                494,678        237,962
      -----------------------------------------------------------------------
                                                   79,410,718     46,044,278

    Property and equipment                            109,065         84,775

    Intangible assets                               9,391,706     11,645,714

    -------------------------------------------------------------------------
                                                $  88,911,489  $  57,774,767
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity

    Current liabilities:
      Accounts payable                          $   1,411,962  $     699,277
      Accrued liabilities                           3,524,184      2,085,824
      Deferred revenue                                594,072      1,523,916
      -----------------------------------------------------------------------
                                                    5,530,218      4,309,017

    Deferred revenue                                2,128,758      1,650,909

    Shareholders' equity:
      Share capital                               248,203,430    203,498,239
      Share purchase warrants                       1,378,324      1,473,246
      Contributed surplus                          14,916,826     14,088,671
      Deficit                                    (183,246,067)  (167,245,315)
      -----------------------------------------------------------------------
                                                   81,252,513     51,814,841

    Basis of presentation
    Commitments
    -------------------------------------------------------------------------
                                                $  88,911,489  $  57,774,767
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    YM BIOSCIENCES INC.
    Interim Consolidated Statements of Operations and Comprehensive Loss
    and Deficit
    (Expressed in Canadian dollars, unless otherwise noted)

    -------------------------------------------------------------------------
                              Three months ended          Six months ended
                                 December 31,                December 31,
                              2010           2009        2010           2009
    -------------------------------------------------------------------------
                                  (Unaudited)                (Unaudited)
    Out-licensing
     revenue      $     251,417  $     687,222  $     593,773  $   1,411,910
    Interest
     income              82,740         13,174        138,375         32,293
    -------------------------------------------------------------------------
                        334,157        700,396        732,148      1,444,203

    Expenses:
      Licensing
       and product
       development    5,289,150      2,372,946     10,498,331      4,808,994
      General and
       adminis-
       trative        3,099,952      1,699,330      5,517,058      3,483,762
      -----------------------------------------------------------------------
                      8,389,102      4,072,276     16,015,389      8,292,756
    -------------------------------------------------------------------------

    Loss before the
     undernoted      (8,054,945)    (3,371,880)   (15,283,241)    (6,848,553)

    Loss on foreign
     exchange          (603,528)        (7,130)    (1,010,362)       (33,877)
    Gain (loss) on
     short-term
     deposits             4,152         (6,888)        11,123         (9,106)
    Gain on disposal
     of property and
     equipment                -              -         10,744              -
    Other income        270,984         10,361        270,984         13,211
    -------------------------------------------------------------------------
                       (328,392)        (3,657)      (717,511)       (29,772)
    -------------------------------------------------------------------------

    Loss and
     comprehensive
     loss for the
     period          (8,383,337)    (3,375,537)   (16,000,752)    (6,878,325)

    Deficit,
     beginning of
     period        (174,862,730)  (149,754,739)  (167,245,315)  (146,251,951)

    -------------------------------------------------------------------------
    Deficit, end
     of period    $(183,246,067) $(153,130,276) $(183,246,067) $(153,130,276)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and
     diluted loss
     per common
     share        $       (0.10) $       (0.06) $       (0.19) $       (0.12)

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Weighted
     average number
     of common
     shares
     outstanding     85,323,592     55,888,710     82,853,129     55,862,879
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    YM BIOSCIENCES INC.
    Interim Consolidated Statements of Cash Flows
    (Expressed in Canadian dollars, unless otherwise noted)

    -------------------------------------------------------------------------
                              Three months ended          Six months ended
                                 December 31,                December 31,
                              2010           2009        2010           2009
    -------------------------------------------------------------------------
                                  (Unaudited)                (Unaudited)

    Cash provided by
     (used in):

    Operating
     activities:
      Loss for the
       period      $ (8,383,337)  $ (3,375,537) $ (16,000,752)  $ (6,878,325)
      Items not
       involving
       cash:
        Amortiza-
         tion of
         property
         and
         equipment       19,789         17,331         39,147         33,583
        Amortiza-
         tion of
         intangible
         assets       1,127,004        265,135      2,254,008        530,271
        Unrealized
         loss (gain)
         on short-
         term
         deposits        (4,152)         6,888        (11,123)         9,106
        Gain on
         disposal
         of property
         and equipment        -              -        (10,744)             -
        Stock-based
         compensation   399,475        118,046        999,935        514,690
      Change in
       non-cash
       operating
       working
       capital:
        Accounts
         receivable
         and prepaid
         expenses      (407,406)         87,560      (298,695)       333,595
        Accounts
         payable,
         accrued
         liabili-
         ties and
         deferred
         revenue      1,364,785        (722,825)    1,699,050       (727,675)
      -----------------------------------------------------------------------
                     (5,883,842)     (3,603,402)  (11,329,174)    (6,184,755)

    Financing
     activities:
      Issuance of
      common shares
      on exercise
      of options        238,809          51,165       253,809         62,589
      Issue of
       common shares
       on exercise
       of warrants      850,159               -       850,159              -
      Net proceeds
       from issuance
       of shares     43,334,522               -    43,334,522              -
      -----------------------------------------------------------------------
                     44,423,490          51,165    44,438,490         62,589

    Investing
     activities:
      Short-term
       deposits     (28,374,371)         25,422   (27,255,567)    34,530,291
      Property and
       equipment              -         (13,974)      (52,694)       (17,537)
      -----------------------------------------------------------------------
                    (28,374,371)         11,448   (27,308,261)    34,512,754
    -------------------------------------------------------------------------

    Increase
     (decrease) in
     cash and cash
     equivalents     10,165,277      (3,540,789)    5,801,055     28,390,588

    Cash and cash
     equivalents,
     beginning of
     period          15,095,919      34,269,093    19,460,141      2,337,716

    -------------------------------------------------------------------------
    Cash and cash
     equivalents,
     end of period $ 25,261,196   $  30,728,304 $  25,261,196  $  30,728,304
    -------------------------------------------------------------------------
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