I wrote an article last week detailing why investors should buy MEI Pharma Inc (NASDAQ:MEIP) before the American Society of Hematology (ASH) meeting on Decemeber 7th where updated data will be presented for their lead drug Pracinostat in Acute Myeloid Leukemia and Myelodysplastic Syndrome. The two abstracts for the presentation were released last Thursday and the data is more impressive than I anticipated for both MDS and AML. Investors sold on the news, likely taking profits from the ~30% run-up the last two weeks. I’ve been getting a lot of emails regarding my take on the abstracts so I thought it would be easier to release a brief summary explaining the updated data which clearly illustrates that the target overall survival metric needed to move Pracinostat into Phase 3 for elderly AML has already been achieved and why the MDS indication could be back on the table. I reiterate my position and look for a nice run-up leading into ASH.

Updated Phase 2 Results of Pracinostat Combo in MDS Impresses

By now we all know the story, the Pracinostat and Azacitidine combo failed to meet the primary endpoint of complete response (CR) rate compared to Azacitidine alone due to the higher rate of drop-outs in the Phase 2 front-line MDS trial. The stock tanked and has never recovered. As I’ve stated in the past, there was a good chance that although the drug failed to increase the number of CR compared to Azacitidine alone it is very likely there would be a positive impact on the secondary endpoints of overall survival, progression free survival or event free survival for those that could tolerate the drug combination. This appears to be the case. The abstract states:

Exploratory sensitivity analyses, censoring patients not starting cycle 5 (n=54), showed the following HR’s all favoring Pracinostat: PFS=0.37, EFS=0.33, OS=0.59.

For those familiar with hazard ratios these are pretty impressive numbers. For example, the overall survival HR of .59 illustrates there was a 41% reduction in risk of death in the combination arm compared with Azacitidine alone. It should also be noted that all three metrics, progression free survival, event free survival and overall survival favored the Pracinostat combination, which should provide investors comfort this is not a fluke. In my opinion, this was best case scenario data for the MDS study as most investors, as evidenced by the stock price, had written off Pracinostat in MDS altogether. The data illustrates what Dr. Guillermo of MD Anderson Cancer Center and lead author of the abstract has stated in the past that the responses seen with the combo treatment were deep responses. He concludes in the abstract:

Pracinostat failed to improve the clinical effectiveness of AZA in this population of higher risk MDS. This appears related to a higher rate of early study discontinuation in the PR group, primarily due to AE’s.Exploratory analyses suggest that patients able to tolerate PR for at least 4 cycles may derive benefit.

It is becoming increasingly clear that complete response rates may not be the best metric to evaluate histone deacetylase (HDAC) inhibitors in clinical trials. The Phase 2 MDS trial comparing the HDAC inhibitor Vorinostat and Azacitidine compared to Azacitidine alone had a similar drop-out rate of 24% and CR rate of 15% as seen in the Pracinostat combo trial. However, although not statistically significant (p =.11) there was an advantage in relapse-free survival of 6 months compared to Azacitidine alone. Importantly, the histone deacetylase (HDAC) inhibitor Farydak owned by Novartis was FDA approved for use in multiple myeloma after failing to show a difference in overall response rate compared to placebo. Despite no difference in overall response rate, the drug was approved based on a 4.8 month increase in progression free survival. The HR in this FDA approved trial for PFS was 0.52, which is not as good as the HR of 0.37 observed in the Pracinostat trial for those that could tolerate treatment.

Previously, analysts had stated that despite missing the CR primary endpoint in MDS an advantage seen in OS or PFS would breathe new life into Pracinostat. Wedbush stated,

We note that CR is considered as a high-bar endpoint, and positive trends in these other endpoints (especially survival) could indicate a viable path forward for pracinostat in front-line MDS.

Cantor Fitzgerald stated:

We believe the duration endpoints of overall survival and progression-free survival are better indicators of clinical benefit, and, though these endpoints are not powered for statistical significance, we believe numerically superior results will justify continued development, given a more tolerant dosing regimen.

Based on the updated ASH data, MEI Pharma management should seriously consider a trial comparing Pracinostat combo to Azacitidine in second-line treatment in high-risk MDS patients. Clinicians and patients would be much more willing to tolerate the side-effects of the combination therapy in this indication and stay on the drug, similar to AML. Mei Pharma can use what is has learned in these trials to educate doctors and patients regarding dosing and how to manage patients on drug in order to obtain the observed clinical efficacy.

ASH Abstract Reveals Overall Survival Advantage in AML

Regardless of what the company wants to do with the MDS indication now that they see an effect on the secondary outcomes, their focus appears to remain on Pracinostat in elderly AML. For good reason as doctors are much more willing to keep these patients on the drug due to the limited options available for treatment and the very high mortality rate. This is illustrated by a discontinuation rate in the Phase 2 AML trial almost half of that seen in the MDS trial in the first 2 treatment cycles. At first glance the ASH abstract offers little new details as the high full CR rate of 42% (21/50) and 54% response rate were already known. Investors, including myself, are focused on the overall survival outcome of the study which management has continuously stressed will determine if they progress the drug into Phase 3. Importantly, the median overall survival has not been reached in the study in any of the cohorts:

Median overall survival has not been reached in the overall study population and neither in patients with high-risk cytogenetics or those with AML secondary to MDS or prior anti-cancer therapy.

For those selling on the news of the ASH abstract data not having reached the median overall survival is a good thing. Management is comparing their data to the international AZA-AML-001 study looking at Azacitidine responses in 241 elderly AML patients. Although the patient profiles between the Pracinostat study and the AZA-AML-001 are not the same (nearly impossible to do) the Prancinostat data is favorable in all metrics.

*Slide from Bio Investor Forum Conference October 20-21 2015

Management has stated that they want to see median overall survival north of 12 months to move Pracinostat forward. Analysts have agreed with this metric. Cowen analyst Boris Peaker stated last month:

We expect to see survival data at ASH and believe anything beyond 1 year warrants Phase III development.

Investors should realize that the ASH abstract illustrates that the median overall survival is already over 12 months. The ASH abstracts were due on August 4th where 62% (31/50) of patients remained alive (range 8.5 to 18.5 months) with estimated 12 month survival of 60%. For reference, in June there were 32 patients (64%) alive on study, so in ~2 months only one patient was lost. I contacted management following the press release to clarify if the median overall survival still had not been reached. They confirmed that to their knowledge as of November 5th it had still not been reached. Therefore, the data has matured an additional 3 months since the ASH abstracts were submitted and still have not reached median survival. Therefore, it’s a foregone conclusion they have hit their mark of 12 months and likely will see median of 14-15 months.

Final Thought

The elderly AML data in combination with the overall survival and progression free survival results observed in the MDS trial provides good evidence that Pracinostat will move into Phase 3. The ASH data as presented in the abstracts is already good, breathing new life into MDS, and should give investors comfort heading into ASH presentations. Sitting at ~$60M market cap, near cash on hand, I expect shares to run-up in anticipation of ASH and much higher following results and analyst feedback.