Business context and reporting period
The supplied filing is MEI Pharma, Inc.’s unaudited Form 10-Q for the quarter ended December 31, 2014, covering the three- and six-month periods ended that date. This does not match the request metadata, which identifies Lite Strategy, Inc. and 2013 Q2; verify the intended company and filing period.
MEI Pharma is a clinical-stage oncology company with no revenue. Its lead candidate, Pracinostat, was in Phase II trials; ME-344 was in a Phase Ib trial, and the company expected to begin a first-in-human study of PWT143 in the first half of calendar 2015.
Financial performance and liquidity
| Metric | Three months ended Dec. 31, 2014 | Six months ended Dec. 31, 2014 |
|---|---|---|
| Revenue | None reported | None reported |
| Research and development expense | $6.7 million | $13.3 million |
| General and administrative expense | $2.4 million | $4.9 million |
| Net loss | $9.1 million | $18.1 million |
| Net loss per share, basic and diluted | $0.39 | $0.80 |
For the six months, operating cash use was $13.2 million; investing cash use was $20.0 million, primarily reflecting purchases of short-term investments; and financing provided $43.1 million, net, from a common-stock offering. Cash and cash equivalents increased to $23.7 million from $13.8 million at June 30, 2014. Cash, cash equivalents and short-term investments totaled $78.7 million, versus $48.8 million at June 30, 2014.
At December 31, 2014, total assets were $79.7 million, current liabilities $6.9 million, and stockholders’ equity $72.9 million. The balance sheet reports no debt. Profit margins are not meaningful because the company had no revenue and incurred losses.
Material changes versus prior comparable periods
Compared with the three months ended December 31, 2013, quarterly net loss increased from $6.3 million to $9.1 million; R&D expense rose from $4.4 million to $6.7 million and G&A from $1.9 million to $2.4 million. For the six-month comparison, net loss increased from $11.2 million to $18.1 million, with R&D rising from $7.5 million to $13.3 million and G&A from $3.8 million to $4.9 million. Management attributed the expense growth mainly to Pracinostat manufacturing and Phase II trial costs, ME-344 trial costs, and increased staffing.
In December 2014, MEI completed an offering of 11.5 million shares at $4.00 per share, generating $43.1 million in net proceeds after offering costs. Shares issued and outstanding increased to 33,291,247 from 21,607,296 at June 30, 2014.
Outlook, risks and contingencies
Management stated that existing cash and short-term investments were expected to fund operations through at least calendar 2016, while noting that changes to development plans or expenses could affect cash use and that future financing or strategic partnerships may be needed. The company expected topline results in March 2015 from a 102-patient Pracinostat Phase II MDS trial and planned a Phase III Pracinostat/azacitidine study in newly diagnosed elderly AML patients around mid-2015. It also expected a Phase III-related milestone payment to S*Bio when the first patient was dosed in a pivotal trial: $200,000 plus company shares valued at $500,000. Additional S*Bio milestones could total up to $75.2 million, subject to regulatory and sales events; none had been accrued at period end.
Key risks include clinical-trial failure or delay, regulatory uncertainty, financing needs, dependence on third-party research and manufacturing arrangements, competition, and intellectual-property risks. The filing reported no legal proceedings and no material changes to the risk factors in the company’s 2014 Form 10-K. Management reported effective disclosure controls and no material change in internal control over financial reporting.
Important facts for investors to verify
- Confirm that MEI Pharma’s quarter ended December 31, 2014—not Lite Strategy, Inc.’s 2013 Q2—is the intended filing.
- Check subsequent filings for the March 2015 Pracinostat MDS topline results and the timing and design of planned Phase III trials.
- Assess cash burn against management’s stated runway through at least calendar 2016, including the effect of expanded clinical programs.
- Review dilution from the December 2014 equity offering and outstanding options and warrants.
- Track potential S*Bio milestone obligations and other clinical, regulatory, and commercialization contingencies.