MEI Pharma Is Oversold And Will Recover

TM editors' note: This article discusses a penny stock and/or microcap. Such stocks are easily manipulated; do your own careful due diligence. 

  • On March 23rd, MEI Pharma reported that its Phase II trial investigational drug candidate Pracinostat in combination with azacitidine failed to meet its primary endpoint, improved complete response/remission rates.
  • The study was a double-blinded and placebo-controlled, enrolling 102 patients with previously untreated intermediate-2 or high-risk myelodysplastic syndrome (MDS). The trial was geared towards Pracinostat as a first line treatment.
  • The company remarked that it saw a high dropout rate in the drug arm, and is looking to see if this resulted in the trial failure.
  • However, Pracinostat has shown a strong signal in treating previously untreated (first line) patients with acute myeloid leukemia (AML).
  • Additionally, the company has 2 other drugs in its early pipeline, but currently trades below its current cash level. This may have to do with end of Q "window dressing.".

Sometimes in biotech, things do not go as expected. In the case of MEI Pharma (NASDAQ: MEIP), this was definitely one of those times when the company's cancer drug failed to meet the main goal in a mid-stage study. In December of last year, the company engaged in an offering along with reporting some very promising early data for its lead investigational drug, Pracinostat. Based on the early data, institutions piled in, bringing the company's institutional ownership up over 70%, quite a feat for a stock that was selling under $5/share at the time.

These institutions, along with us did not expect the company announcing on March 25, 2015, that the combination of Pracinostat and azacitidine showed no difference compared to patients being treated with azacitidine alone.

After all, the company's pilot data for patients with MDS was very positive, with 10 patients who were treated with a combination of Pracinostat and azacitidine showing an overall response rate (ORR) of 89% including one additional responder, bringing the response rate to 90%. The ORR was defined by either a CR or a complete remission with incomplete blood count recovery (CRI).

So what happened in the latest trial of Procinostat in the same combination with azacitidine that lead to the trial failing to produce positive CR/CRI over placebo?

One part of the answer is likely the fact that in the pilot study, seven patients had received prior treatment for their MDS with three patients failing to show any benefit whatsoever from prior therapy. So, these patients were refractory (hard to treat, resistant to first line/prior therapy).

From the pilot study PDF;

Seven (78%) patients had therapy related MDS with history of prior chemotherapy/radiotherapy exposure (3 breast cancer, 2 non-Hodgkin's lymphoma, 1 breast and ovarian cancer, and 1 melanoma). Three patients had failed prior therapy.

Another part of the answer may lie in the actions of the investigators in the trial itself. In the trial, the patients were randomized to receive azacitidine alone and Pracinostat in combination with azacitidine (the combination being studied for a positive result).

In the trial, there was a high dropout rate as trial investigators discontinued administering Pracinostat and azacitidine to many patients. Pracinostat is an HDAC inhibitor which are known to cause worsening conditions at first, including blocked maturation of red blood cells, platelets, and neutrophils (myelosuppression). However, once these adverse conditions subside, the patients should then see a benefit (similar to chemotherapy).

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Disclosure: Long MEIP.

Disclaimer: This article is intended for informational and entertainment use only, and should not be construed as professional investment ...

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