MEI Pharma, Inc. (NASDAQ:MEIP) is a clinical-stage pharmaceutical company that has been developing novel and differentiated cancer therapies. The company has faced its fair share of challenges over the years, but its steadfast commitment to advancing its pipeline of promising oncology drug candidates has positioned it as a key player in the ever-evolving landscape of cancer treatment.
Business Overview and History
MEI Pharma was founded in 2000 with the goal of developing innovative cancer therapies. The company's journey began with the acquisition of promising cancer agents, which it then sought to advance through clinical development, strategic partnerships, and out-licensing or commercialization strategies.
Throughout its history, MEI Pharma has built its pipeline by acquiring promising cancer agents and creating value in programs through clinical development, strategic partnerships, and out-licensing or commercialization, as appropriate. One of the company's significant milestones was the development of zandelisib, an oral, once-daily, selective PI3Kδ inhibitor.
In April 2020, MEI Pharma entered into a global license, development, and commercialization agreement with Kyowa Kirin Co., Ltd. (KKC) for zandelisib. Under this agreement, KKC was responsible for the development and commercialization of zandelisib outside the U.S., while MEI Pharma retained U.S. rights. However, in July 2023, MEI Pharma and KKC mutually terminated this agreement after jointly deciding to discontinue global development of zandelisib outside of Japan.
Prior to its sale in October 2024, MEI Pharma was also advancing its mitochondrial inhibitor drug candidate ME-344. This drug had demonstrated clinical activity in combination with the anti-angiogenic agent bevacizumab in patients with breast cancer and colorectal cancer. The company's remaining clinical-stage drug candidate is voruciclib, an oral cyclin-dependent kinase 9 (CDK9) inhibitor, which was being evaluated in a Phase 1 clinical trial in combination with the BCL-2 inhibitor venetoclax in patients with relapsed/refractory acute myeloid leukemia (AML).
Throughout its journey, MEI Pharma has faced various challenges, including the discontinuation of the zandelisib program outside of Japan and the need to identify strategic alternatives to maximize value for shareholders. The company has navigated these challenges through decisions such as the termination of the KKC agreement and the sale of the ME-344 asset.
Financial Overview
Financials
MEI Pharma's financial performance has been mixed in recent years. The company's annual net income, revenue, operating cash flow, and free cash flow for the fiscal year ended June 30, 2024, are not available. This lack of information reflects the significant changes in the company's operations and strategic direction.
In terms of quarterly data, for the three months ended December 31, 2024, MEI Pharma reported a net loss of $2.68 million, with no revenues. This is a significant change from the same period in the previous year when the company recognized $65.3 million in revenue related to the now-terminated license agreement with Kyowa Kirin Co., Ltd. for zandelisib. The company's research and development expenses for the quarter were $308,000, while general and administrative expenses were $3.14 million.
The dramatic decrease in research and development expenses from $3.91 million in the prior year period to $0.31 million in the current quarter is primarily due to the discontinuation of clinical studies following MEI's strategic review. Similarly, general and administrative expenses decreased from $8.02 million to $3.14 million, driven by reductions in headcount and other operational expenses.
Operating cash flow for the most recent quarter was negative $3.67 million, which was also the same as the free cash flow for the period. The company does not report performance by geographic markets, as it appears to operate primarily in the United States.
Liquidity
As of December 31, 2024, MEI Pharma had $23.74 million in cash and cash equivalents, which the company believes will be sufficient to meet its obligations and fund operations for at least the next 12 months from the issuance of the financial statements. The company has no debt, resulting in a debt-to-equity ratio of 0. Both the current ratio and quick ratio stand at 10.66, indicating a strong short-term liquidity position. No available credit lines have been disclosed.
Clinical Pipeline and Strategic Alternatives
MEI Pharma's clinical-stage drug candidate pipeline includes voruciclib, an oral CDK9 inhibitor, and ME-344, an intravenous small molecule mitochondrial inhibitor targeting the oxidative phosphorylation pathway.
Following the announcement of the exploration of strategic alternatives in July 2024, all ongoing clinical trial efforts for voruciclib have ceased, while certain nonclinical activities have continued. Voruciclib was recently evaluated in a Phase 1 trial in combination with the B-cell lymphoma 2 (BCL-2) inhibitor venetoclax, demonstrating anti-leukemic activity, including complete responses, anticipated decreases in Mcl-1, and no overlapping toxicity in heavily pretreated patients with relapsed or refractory acute myeloid leukemia (AML).
Voruciclib has shown promise as an oral, selective cyclin-dependent kinase 9 (CDK9) inhibitor. The data from clinical trials has demonstrated that voruciclib can inhibit the expression of the anti-apoptotic protein MCL-1 and the MYC oncogene, which are important drivers of cancer cell survival and proliferation. While the clinical development of voruciclib has been discontinued following MEI's strategic review, the company continues to conduct certain nonclinical activities related to the asset.
As for ME-344, the company was previously advancing the drug candidate via the development of a new formulation with the goal of increasing biological activity, improving patient convenience of administration, and increasing commercial opportunity. However, in October 2024, MEI Pharma sold its rights, title, and interest in ME-344 to Aardvark Therapeutics, Inc. for an initial payment of $0.50 million, plus potential future milestone payments of up to $62.00 million. Prior to its sale, ME-344 had shown potential in earlier-stage clinical trials, including a Phase 1b study in combination with the anti-angiogenic agent bevacizumab in patients with relapsed metastatic colorectal cancer. The data suggested ME-344 had the potential to induce metabolic synthetic lethality when combined with anti-angiogenic therapies.
The exploration of strategic alternatives announced in July 2024 is still ongoing, with the company considering options such as out-licensing opportunities for existing programs and merger and acquisition opportunities, with the goal of maximizing the value of its assets for its stockholders. Oppenheimer & Co., Inc. is serving as the company's exclusive financial advisor in this process.
As part of this strategic review, MEI Pharma initiated a reduction-in-force beginning August 1, 2024. Additionally, David M. Urso, the former President and CEO, and Richard Ghalie, the former Chief Medical Officer, stepped down effective August 1, 2024. Charles V. Baltic III also stepped down from the Board at that time.
Risks and Challenges
MEI Pharma's journey has not been without its challenges. The company has faced setbacks, including the discontinuation of the zandelisib program and the suspension of the clinical development of voruciclib. These events have highlighted the inherent risks and uncertainties in oncology drug development, where success is not guaranteed, and regulatory guidance can significantly impact a program's trajectory.
Additionally, the company's financial performance has been inconsistent, with fluctuations in revenue and net income. The ongoing strategic review and the potential for an orderly wind-down of operations introduce further uncertainty for MEI Pharma's future.
Industry Trends and Market Position
Despite the challenges faced by MEI Pharma, the global biotech industry as a whole is projected to experience significant growth. According to Grand View Research, the industry is expected to grow at a compound annual growth rate (CAGR) of 13% to reach $3.88 trillion by 2030. This growth trajectory underscores the potential opportunities in the sector, even as individual companies like MEI Pharma navigate their own unique challenges.
Conclusion
Despite the challenges it has faced, MEI Pharma remains committed to exploring strategic alternatives to maximize value for its stockholders. The company's focus on addressing known resistance mechanisms to standard-of-care cancer therapies continues to position it as a potential player in the ever-evolving landscape of oncology drug development.
As MEI Pharma navigates the uncertainty ahead, investors and industry observers will closely follow the progress of the company's strategic review and the potential outcomes that may emerge. The company's ability to capitalize on its existing assets and identify new opportunities will be crucial in determining its long-term success. With a strong cash position and no debt, MEI Pharma has some flexibility as it considers its options, which may include potential transactions or an orderly wind-down of operations, if deemed appropriate.
The outcome of this strategic review will be pivotal in shaping the future of MEI Pharma and its potential contributions to the field of oncology. As the global biotech industry continues to grow, the company's next steps will be closely watched by stakeholders and industry observers alike.