Business Overview and History
MEI Pharma, Inc. (NASDAQ:MEIP) is a clinical-stage pharmaceutical company that has been developing novel and differentiated cancer therapies. The company’s drug candidate pipeline includes voruciclib, an oral cyclin-dependent kinase 9 (CDK9) inhibitor, and ME-344, an intravenous small molecule mitochondrial inhibitor targeting the oxidative phosphorylation pathway.
MEI Pharma was founded in 2000 and is headquartered in San Diego, California. The company was originally named Marshall Edwards, Inc. and changed its name to MEI Pharma, Inc. in 2012. Over the years, 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.
In April 2020, MEI Pharma entered into a license, development and commercialization agreement with Kyowa Kirin Co., Ltd. (KKC) for its PI3Kδ inhibitor zandelisib. Under the agreement, KKC was granted co-exclusive and exclusive rights to develop and commercialize zandelisib in the U.S. and ex-U.S. markets, respectively. MEI Pharma received an initial $100 million upfront payment from KKC. In March 2022, MEI Pharma and KKC jointly decided to discontinue the global development of zandelisib outside of Japan. The companies then began closing all ongoing zandelisib clinical studies outside of Japan, including the Phase 3 COASTAL trial, the Phase 2 TIDAL trial, and the Phase 2 CORAL trial.
In July 2023, MEI Pharma and KKC entered into a termination agreement to mutually terminate the zandelisib agreement and all other related agreements between the parties. As a result, MEI Pharma regained full, global rights to develop, manufacture and commercialize zandelisib, subject to KKC’s limited rights for compassionate use.
Following the discontinuation of the zandelisib program, on July 22, 2024, MEI Pharma announced that its Board of Directors had determined unanimously to begin the evaluation of the company’s strategic alternatives, including potential transactions as well as an orderly wind down of operations, if appropriate, in order to maximize the value of its assets for its stockholders. The company engaged Oppenheimer & Co. Inc. to serve as its exclusive financial advisor in this process.
In connection with the exploration of strategic alternatives, MEI Pharma initiated a reduction-in-force on August 1, 2024 and discontinued the clinical development of voruciclib. However, the company continues to conduct certain nonclinical activities related to its drug candidate assets. The company’s President and CEO, David M. Urso, and Chief Medical Officer, Richard Ghalie, M.D., stepped down effective August 1, 2024.
Financial Overview
As of September 30, 2024, MEI Pharma had $26.9 million in cash, cash equivalents, and short-term investments. The company’s net loss for the fiscal year ended June 30, 2024 was $17.78 million, compared to a net loss of $31.84 million for the prior fiscal year. MEI Pharma’s annual revenue for the fiscal year ended June 30, 2024 was $65.30 million, compared to $48.82 million in the prior fiscal year. Operating cash flow for fiscal year 2024 was -$50.47 million, and free cash flow was -$50.48 million.
For the three months ended September 30, 2024 (Q1 2025), the company reported no revenue, as all deferred revenue associated with the KKC agreement had been recognized in fiscal year 2024. This represents a 100% year-over-year decrease in revenue due to the discontinuation of the zandelisib program outside of Japan. Research and development expenses decreased by $0.30 million to $3.16 million, while general and administrative expenses decreased by $1.30 million to $5.19 million during the same period. The net loss for Q1 2025 was $8.01 million, with operating cash flow of -$11.45 million and free cash flow of -$11.45 million. The decreases in net income, operating cash flow, and free cash flow were primarily due to the company’s decision to discontinue the clinical development of voruciclib and reduce headcount as part of its strategic alternatives review.
Liquidity
The company’s cash balance, including short-term investments, is believed to be sufficient to fund operations for at least the next 12 months. However, MEI Pharma’s future capital requirements will depend on many factors, including the Board’s decision regarding strategic alternatives, the scope and results of the company’s drug discovery and development programs, and the costs associated with establishing or contracting for sales, marketing, and distribution capabilities.
As of September 30, 2024, MEI Pharma had a debt/equity ratio of 0, as the company had no outstanding debt. The company did not have any available credit lines. MEI Pharma’s current ratio was 9.66 and its quick ratio was also 9.66 as of September 30, 2024, indicating strong liquidity.
Clinical Programs
MEI Pharma’s clinical-stage drug candidate pipeline includes voruciclib and ME-344.
Voruciclib is a selective oral CDK9 inhibitor that has been evaluated in a Phase 1 clinical trial in combination with the BCL-2 inhibitor venetoclax (Venclexta®) in patients with relapsed or refractory acute myeloid leukemia (AML). The trial has demonstrated anti-leukemic activity, including complete responses, anticipated decreases in Mcl-1, and no overlapping toxicity in heavily pretreated patients. Despite the discontinuation of the voruciclib program, the company continues to conduct certain nonclinical activities related to the asset.
Voruciclib is a potent, orally administered, selective cyclin-dependent kinase 9 (CDK9) inhibitor that has shown the ability to inhibit MCL1, a protein involved in tumor cell survival, as well as MYC, a transcription factor that regulates cell proliferation and growth. Voruciclib was previously in a Phase 1 trial evaluating the dose and schedule in combination with the BCL-2 inhibitor venetoclax for the treatment of relapsed/refractory acute myeloid leukemia (AML).
ME-344 is an intravenous small molecule mitochondrial inhibitor targeting the oxidative phosphorylation pathway. Prior to the announcement of the strategic alternatives review, MEI Pharma was advancing ME-344 via the development of a new formulation with the goal of increasing biological activity, improving patient convenience of administration, and increasing commercial opportunity. The company had also been evaluating ME-344 in combination with the anti-angiogenic antibody bevacizumab (Avastin®) in a Phase 1b study in patients with relapsed metastatic colorectal cancer.
ME-344 had been evaluated in several clinical studies, including a Phase 1b study in combination with the anti-angiogenic agent bevacizumab (Avastin) for the treatment of relapsed metastatic colorectal cancer. The data from this study showed that the ME-344 and bevacizumab combination was generally well-tolerated, with 5 out of 20 evaluable patients completing 16 weeks of therapy without disease progression.
On October 22, 2024, MEI Pharma announced the sale of its rights, title, and interest in ME-344 to Aardvark Therapeutics, Inc. The transaction included an initial payment of $0.5 million in cash, plus a reimbursement amount of $55,000, as well as potential future milestone payments of up to $62 million upon the achievement of certain regulatory and revenue milestones.
Zandelisib was an oral, once-daily, selective PI3Kδ inhibitor that MEI was jointly developing with Kyowa Kirin Co., Ltd. (KKC) under a global license, development, and commercialization agreement. In March 2022, MEI and KKC jointly decided to discontinue the global development of zandelisib for indolent forms of non-Hodgkin lymphoma outside of Japan. Subsequently, in May 2023, KKC decided to discontinue the development of zandelisib in Japan as well. As a result, the licensing agreement between MEI and KKC was terminated in July 2023, and MEI regained full, global rights to zandelisib.
Risks and Challenges
MEI Pharma’s strategic review and potential wind down of operations introduce significant uncertainty regarding the company’s future. The successful development and commercialization of its drug candidates, voruciclib and ME-344, are subject to various risks, including clinical trial failures, regulatory hurdles, and competition from other therapies.
The company’s reliance on strategic partnerships, such as the now-terminated agreement with KKC, also poses a risk, as the failure of these partnerships can have a material impact on MEI Pharma’s financial and operational performance.
Additionally, MEI Pharma’s limited financial resources and the need to preserve cash during the strategic review process may constrain its ability to invest in and advance its drug development programs, potentially impacting the company’s long-term growth prospects.
Conclusion
MEI Pharma is navigating a critical juncture in its history as it explores strategic alternatives to maximize the value of its assets for shareholders. While the company has made progress in its clinical programs, the discontinuation of the zandelisib program and the uncertainty surrounding the future of voruciclib and ME-344 present significant challenges.
As MEI Pharma continues its strategic review process, investors will be closely watching for updates on the company’s decision-making and any potential transactions or partnerships that may emerge. The successful execution of the strategic review and the ability to secure favorable outcomes for the company’s drug candidates will be crucial in determining MEI Pharma’s long-term trajectory. The company’s strong liquidity position, with $26.9 million in cash and short-term investments and no outstanding debt, provides some financial flexibility as it navigates this period of transition and strategic decision-making.
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