MEI Pharma (Nasdaq: MEIP) is a San Diego-based oncology drug development company with a pipeline of three clinical-stage drug candidates and a management team with proven oncology drug development experience.
The company’s stock has unsurprisingly found strength in the recent past. Followed by promising partnerships, well-funded clinical programs, and most recently an extremely promising data at ASCO for ME-401 and the potential for having a best-in-class P13K Delta oral inhibitor.
On June 4th, the company announced that data presented at ASCO 2018 from a Phase 1b study of ME-401, demonstrated a 90% objective response rate in patients with relapsed or refractory follicular lymphoma (FL), chronic lymphocytic lymphoma (CLL) and small lymphocytic lymphoma (SLL). Based on the data in this program, MEI now anticipates progressing into a single-agent registration study later in 2018 for the treatment of adults with relapsed or refractory follicular lymphoma. ME-401 is a next-generation selective oral inhibitor of PI3K delta.
As per management, “The clinical evidence from the Phase 1b study of ME-401 is very promising; the data demonstrate a 90% response rate across all patients with relapsed or refractory FL, CLL and SL, and an 86% rate in patients with relapsed or refractory follicular lymphoma”.
In another update on May 31st, the company confirmed that Helsinn, a Swiss pharmaceutical group focused on building quality cancer care products, announced that a planned interim analysis in the ongoing Phase 2 study of pracinostat and azacitidine in higher risk MDS patients successfully met a predefined patient retention threshold. The positive outcome supports the continuation of the study.
In fact, based on the positive interim analysis announced, Helsinn and MEI are expanding open-label enrollment to a total of up to 60 MDS patients. The goal of this expanded cohort is to gain an estimate of the response rate and overall survival in this patient population to better inform the design of a global registration study. Therefore, there’s plenty of upside revaluation potential on the outcome of this study.
Furthermore, in Mid-May, the company announced $75 Million Private Placement led by Vivo Capital and CAM Capital. Proceeds from the financing will be used to fund continued clinical development of MEI-401, a selective oral inhibitor of phosphatidylinositol 3-kinase (“PI3K”) delta and for general corporate purposes. The financing indicates confidence of leading healthcare investment firms on the company and ensuring that MEIP remains well funded to progress a robust portfolio of potential first-in-class and best-in-class oncology drugs.
So far overall financial performance and liquidity are concerned, the company recently reported results for its third quarter ended March 31, 2018. MEIP had cash and equivalents of $36.2 million, with management guiding for a clear runway into the first half of 2019, which was further extended due to proceeds from recent financing. Net loss totaled $5.9 million, while research and development expenses came in at $4 million.
Multiple near-term catalysts – as these catalysts are read out, MEIP could continue to appreciate:
- ME-401: updated data later in the year for ME-401 & initiation of the pivotal study.
- Voruciclib: Initiate Phase 1 study in R/R B cell malignancies (Q2 2018)
- Pracinostat -Data from stage 1 of Phase 2 dose – optimization study in MDS (Q2 2018)
Analysts tracking the stock/sector believes that MEIP continues to build on the momentum of last quarter and notwithstanding the recent surge, the stock remains an attractive investment option due to its well-funded status following the recent funding, positive dataset ensuring limited downside risk and promising upcoming catalysts.
Several brokerage firms have initiated coverage on the company, and the stock currently has an average rating of “Buy” and a consensus price target of $7.00.
About the Company: The Company’s portfolio of drug candidates includes pracinostat, an oral HDAC inhibitor that is partnered with Helsinn Healthcare, SA. Pracinostat has been granted Breakthrough Therapy Designation from the U.S. Food and Drug Administration for use in combination with azacitidine for the treatment of patients with newly diagnosed acute myeloid leukemia (AML) who are unfit for intensive chemotherapy. Pracinostat is also being developed in combination with azacitidine for the treatment of patients with high and very high-risk myelodysplastic syndrome (MDS) (NCT03151304). MEI Pharma’s clinical development pipeline also includes ME-401, a highly differentiated oral PI3K delta inhibitor currently in a Phase 1b study in patients with relapsed/refractory follicular lymphoma or CLL, and voruciclib, an oral, selective CDK inhibitor shown to suppress MCL1, a known mechanism of resistance to BCL2 inhibitors. The Company is also developing ME-344, a novel mitochondrial inhibitor currently in an investigator-sponsored study in combination with bevacizumab evaluating patients with HER2-negative breast cancer.
Other recent updates:
Clinical Data for ME-344 in HER2 Negative Breast Cancer Patients: On June 4th, the company announced that data presented at ASCO 2018 from an investigator-initiated study of ME-344 in patients with HER2 negative breast cancer demonstrate evidence of inhibition of tumor proliferation as measured by Ki-67 reductions. As per management, these interim data are consistent with preclinical results indicating ME-344’s potential to reverse resistance to anti-angiogenic therapy, thereby warranting the continuation of the ongoing study.
- As of March 31, 2018, the Company had $36.2 million in cash, cash equivalents, and short-term investments, with no outstanding debt. The Company believes its cash position will be sufficient to fund operations into through the first half of the calendar year 2019.
- Research and development expenses, including the cost of research and development revenue, were $4.0 million for the three months ended March 31, 2018, compared to $3.0 million for the three months ended March 31, 2017. The increase was primarily due to increased drug manufacturing expenses for ME-401, expenses related to voruciclib, and increased costs related to salaries, share-based compensation, and other internal costs.
- Revenues were $0.4 million for the three months ended March 31, 2018, compared to $4.5 million for the three months ended March 31, 2017. The decrease was related to lower levels of research and development activities associated with the Helsinn license agreement and $3.8 of upfront license fee revenue recognized for the three months ended March 31, 2017.
- Net loss was $5.9 million, or $0.16 per share, for the three months ended March 31, 2018, compared to net loss of $0.6 million, or $0.02 per share for the three months ended March 31, 2017.
Key risk factors:
- Successful completion of the upcoming milestones/Catalysts would lead future direction for the company.
- On the flip side, the company is exposed to risks related to competition, negative data updates for ME-401 and or other lead candidates and clinical setbacks impinging its operational profile.
- MEIP is still an early stage entity and has not yet generated revenue and will likely operate at a loss as it grows its market position and seeks ways to monetize it. The company’ prospects are dependent on ME-401 and pracinostat, which might have limited sales potential initially.
- MEIP has a history of operating losses. Therefore, any time or cost overrun in its ongoing R&D activities and its impact on business & financial profile will remain a key business sensitivity factor.
- On Friday, June 8th, 2018, MEIP closed at $4.95, on an average volume of 448,812 shares exchanging hands. Market capitalization is $508.99 million. Current RSI is steady at 84.13
- In the past 52 weeks, shares of MEIP have traded as low as $1.79 and as high as $5.14.
- At $4.95, shares of MEIP are trading significantly above its 50-day moving average (MA) at $2.67 and above its 200-day moving average (MA) at $2.43
- The present support and resistance levels for the stock are at $4.52 & $5.22 respectively.
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