Who let the dogs out?

I did, and I apologize.

The canines I'm referring to are three stocks: YM BioSciences ( YMI), Spectrum Pharmaceuticals ( SPPI) and Genelabs Technologies ( GNLB). I've written bullishly about each over the past year or so. Yet, my repayment for being so positive has been bitter disappointment and slumping stock prices.

I've been terribly wrong about these stocks. It's just ugly. But I believe in forgiveness and redemption and I know you do, too. So, let's take another look at these biotech bumblers.

What went wrong? And more importantly, is there any reason to still believe?

Why YM BioSciences?

I first wrote about YM BioSciences in June 2007, right after the annual meeting of the American Society of Clinical Oncology. What had me jazzed was the potential of nimotuzumab, the Canadian company's EGFR-inhibitor drug.

Nimotuzumab -- or "nimo," for short -- showed the potential to shrink tumors as effectively as ImClone Systems' ( IMCL) Erbitux, but without causing the severe rash that is the main side effect in this class of targeted cancer compounds.

I also liked YM BioSciences because the stock was cheap, at around $2 last summer. The nimo program was risky, just moving into phase II studies, but for $2, the stock looked like a buy to me.

Well, funny how this works out, but $2 stocks are not as cheap as sub-$1, which is where YM BioSciences finds itself today. (Note to self: "cheap" may not be the best reason to recommend a biotech stock.)

Where did I go wrong, other than the "this stock is cheap" thing? Well, I overlooked the company's other pipeline drug, an inhaled painkiller called AeroLEF. Unfortunately, AeroLEF hit a big snag in January, when the Food and Drug Administration put the program on clinical hold.

I also underestimated the time gap for new and meaningful data from the nimo program. It's a long wait , something catalyst-hungry biotech investors don't particularly like.

So, is YM BioSciences still a dog, or can it be salvaged? Fortunately, the answer should be coming in March or April. That's when the company will be releasing data from the first 50-patient cohort in an all-important nimo colon cancer trial.

This is a make-or-break study for nimo and YM BioSciences. The best-case scenario is Erbitux-like efficacy in terms of tumor shrinkage and progression-free survival, but without the severe rash side effect.

That means an overall response rate for nimo in the range of 22% to 23%, with median progression-free survival of about four months. And no significant rash.

There are plenty of nimo doubters out there. That should be amply clear by looking at the stock price. But with nimo data just around the corner, I'm not ready to take this one to the dog pound just yet.

Spectrum Can't Shake Fleas

It didn't seem like such a stretch to write favorably about Spectrum Pharmaceuticals last April with shares priced around $7. Today, the stock is below $3. Ouch.

I like Spectrum for a couple of reasons. First, it was all set to receive royalties on a prostate cancer drug, satraplatin, that was being developed by Germany's GPC Biotech ( GPCB). The phase III satraplatin data looked strong, and I didn't think there was much risk to the ongoing FDA review.

Second, and more important to me, was Spectrum's internal drug pipeline, particularly its drug ozarelix for the treatment of benign prostatic hyperplasia, better known as an enlarged prostate.

Well, there is no other good way to say this, but satraplatin blew up. The FDA hated the drug's clinical data, an FDA advisory panel dinged it, then follow-on survival data in prostate cancer patients came up short. Satraplatin is toast.

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