MEIP: MEI Pharma ($5.94)

MEI Pharmaceuticals has the potential to become best in class as an oral HDAC inhibitor (histone deacetylases) for MDS - Myelodysplastic Syndrome and AML - Acute Myeloid Leukemia.  The company recently presented at two conferences, the Bank of America last week and UBS just yesterday. As usual CEO Dr. Gold did a good job of presenting the story what their lead drug Pracinostat has shown to date, and the best in class HDAC inhibitor it could potentially be.  This post will compare what the best standard of care (Vidaza) has already achieved in Myelodysplastic Syndrome (MDS), and what current competitor's (Vorinostat/Vidaza combo), (Mocetinostat/Vidaza combo) have accomplished with similar patients that MEI is targeting in their phase 2 trial for patients with intermediate-2 to high risk MDS.  These comparisons can serve as benchmarks when MEI presents data from their trials.

Current Standard of Care - Vidaza:
Vidaza Intermediate - High Risk MDS
CR = 17%
PR = 12%
Median overall survival of 24.5 months.
Vidaza is FDA approved for all subtypes of MDS.
Celgene Vidaza US patent expired in 2012.

Mocetinostat with Vidaza:
Phase 2, 22 Patients.  (Manero Trial)
Mocetinostat 90-110mg 3x/wk and Vidaza 75mg.
High Risk MDS.
ORR (CR+CRi+PR+HI) 64%
ORR (CR+CRi+HI) 55%
ORR (CR+CRi+PR) 59%
ORR (CR+PR) of 18%
CR (CR+CRi) of 50%
CR of 9%
Median overall survival was 12.4 months.
The above results are based on a subset of 22 patients with characteristics for a planned registration phase 3 trial second half of 2014.

Vorinostat with Vidaza:
Phase 2, N=33.  (Silverman Trial)
Vorinostat 300 mg twice daily and Vidaza 75mg.
Intermediate-1 (23%), Intermediate-2 (31%), High-Risk (31%) MDS.
ORR (CR+CRi+HI) 73%
CR (CR+CRi) of 42%
CR of 30%
Median overall survival was 37 months for (300mg / twice daily + Vidaza 75mg).

Pracinostat with Vidaza:
Phase 1, 10 Patients.  (Manero Trial)
Pracinostat 60 mg 3x/wk and Vidaza 75mg.
Intermediate Risk-2, or High Risk.
ORR (CR+CRi+PR) of 90%
ORR (CR+PR) of 70%
CR (CR+CRi) of 80%
CR of 60%

50% achieved a complete cytogenetic response and proceeded to stem cell therapy.

Pracinostat with Vidaza:  (Manero Trial)
Clinical Trials
Phase 2, 100 Patients in Progress.
Pracinostat 60 mg 3x/wk and Vidaza 75mg.
Intermediate Risk-2, or High Risk.
ORR (CR+PR)  ______
CR of  ______
OS of ______

Potential Market Statistics:
Estimated 101,000 MDS Patients in the US and EU.
Estimated 25,000 are Int-2 and High Risk MDS Patients in the US and EU.
2013 WW Sales of MDS/AML Products $1.4 Billion.
Vidaza and Dacogen:  560M + in U.S. 2012 Sales.
Celgene reported $800 million Vidaza w/w sales in 2012, lost U.S. patent protection in 2011.
Celgene holds patent exclusivity in the EU for Vidaza until December 2018.

Quantitative Easing 2012-2013

The markets can be simplified down to a few different variables over the past few years.  QE also known as quantitative easing = risk on, no QE = risk off. It is that simple. Currently we are about half way through the tapering process, or elimination of QE.  At the peak of QE the Federal Reserve was providing $85 billion per month.  At present that amount has been tapered down to $45 billion.  How will the markets react in the absence of QE?  Let's go back a few years to see what kind of corrections were exhibited at different phases of QE.  Below is a 2012 chart of the S&P 500 at the time when QE was running $45 billion per month.

There happened to be two corrections, one was -10.6%, and the other was -9.1% during the year of 2012 while there was $45 billion each and every month available to aid the economy. The chart below fast forwards to 2013 to see what transpired with QE at $85 billion per month (almost double from 2012) granted from the Federal Reserve to aid the economy.

The corrections/pullbacks were small in percentage and duration with the average pullback around -4.9% and the steepest being -7.3%.  In 2013 it was risk-on, which meant every dip was bought that led to new highs in the market, and the high beta sectors benefited from the excess $85 bllion per month liquidity compared to 2012's $45 billion per month.

Bottom Line:  If added liquidity in the form of quantitative easing was the fuel for the markets in 2013, the lack of additional liquidity in 2014 due to the tapering off of approximately $10 billion per month may have the reverse effect.  Due to the lack of stimulus, steeper and longer duration corrections similar to 2012  (-10.6% and -9.3%) could be the new norm in the future. Thank you for reading.