After Strikeout, San Diego’s MEI Pharma Looks to Rebuild Confidence

12/17/12Follow @bvbigelow

Sometimes, innovation companies operate in stealth mode to keep the technology they’re development out of the limelight.

And sometimes, companies maintain a low profile until they’re ready to present their best case to shareholders, potential investors, and others. Such is the case with San Diego’s MEI Pharma (Nasdaq: MEIP), a cancer drug development company originally known as Marshall Edwards that moved to San Diego two years ago in a bid to reboot its reputation.

“We wanted to get away from Marshall Edwards, which was kind of a long, sordid story,” says MEI spokesman Pete De Spain. “There was too much baggage.”

Marshall Edwards acquired its unwanted luggage in 2010, after the company halted a late-stage clinical trial of phenoxodiol, an experimental drug advanced as a potential treatment for recurrent ovarian cancer. The company ended the trial after recruiting 142 of a planned 340 patients. An interim analysis showed that phenoxodiol had no significant effect in either stopping the cancer or improving patient survival.

MEI Pharma CEO Daniel Gold, Marshall Edwards, Cancer

Daniel Gold

“The design of the study in and of itself made it difficult for women to decide whether or not to participate in the study,” said Daniel Gold, the former CEO of San Diego-based Favrille, who joined Marshall Edwards as CEO in 2010.

Marshall Edwards was founded in Sydney, Australia, in 2000 by Novogen, an Australian biotech company with a library of isoflavonoid compounds with cancer-fighting characteristics. Novogen continued to hold a majority stake and operated Marshall Edwards as a public subsidiary after Marshall Edwards went public on the Nasdaq market in 2003.

The failure of phenoxodiol, however, prompted a reassessment.

Novogen spun out Marshall Edwards, distributing its majority ownership of the firm among its own shareholders, and selling the isoflavonoid drug assets to the newly independent company. “My mandate was to take the company to the U.S. and develop a true oncology company that would be separate from Novogen,” Gold says. “We started over basically from scratch.”

He stopped development of phenoxodiol, closed down Marshall Edwards’ Australian research group, and terminated the company’s service contracts with Novogen.

After relocating to San Diego in 2010, Marshall Edwards officially changed its name to MEI Pharma just over five months ago. De Spain, who also handles investor relations, says changing the name was the culmination of a year-long effort “to go out and reintroduce the company, even though people still associate you with a failed phase 3 trial.”

When Gold assessed the Novogen’s library of isoflavonoid compounds, he saw two compounds he liked. ME-143 is a next-generation analog of phenoxodiol and ME-344 is a first-generation compound with anti-tumor activity against a broad panel of human cancer cell lines in preclinical studies. Both are at an early stage of development, however. So Gold was immediately interested earlier this year to learn that a biotech company based in Singapore was liquidating assets that included a late-stage oral compound with a validated anti-cancer target.

The drug, known as pracinostat, inhibits histone deacetylase, a molecule that turns genes on and off. MEI Pharma acquired the compound in August, and presented preliminary data from a small, early stage trial last week at the annual American Society of Hematology meeting in Atlanta. The findings indicate that combining pracsinostat with azacitidine (Vidaza), a chemotherapy drug, was well-tolerated and yielded a response by eight of the nine patients in the study. The patients were being treated for myelodysplastic syndrome, a bone marrow disease that often leads to leukemia.

Results of the pilot study are encouraging, and MEI is moving ahead with plans for a larger mid-stage trial that would provide a better sense of the overall response rate of the pracsinostat-azacitidine combo. “The two compounds seem to interfere and disrupt cancer cell metabolism,” Gold said.

Acquiring pracinostat has relieved some of the pressure on MEI to advance development of its early pipeline drugs, ME-143 and ME 344, as fast as possible, De Spain said.

The pracinostat deal also helped MEI raise $27.5 million in early November through a private stock placement. Two new investors, New Leaf Venture Partners and Vivo Ventures, led the financing, and were joined by RA Capital Management and Three Arch Opportunity Fund. (Before the deal, Gold estimated the company had previously raised a total of between $10 million and $12 million.)

Since Nov. 5, when the company disclosed the new financing, shares of MEI have risen from 39 cents a share to $1.30.

Most of the financing will go to initiating a new clinical trial of pracinostat, Gold said. The company intends to also formulate its plans to take ME-143 and ME-344 into a randomized mid-stage trial as a therapy for patients with ovarian cancer, or perhaps certain forms of breast cancer.

The progress so far helps to explain why the company is a little more willing to take the stage these days, and should make 2013 an interesting year for MEI Pharma.

Working to restore investor confidence in MEI became the key mission since 2010, said De Spain. But much now depends on Gold’s success as a turnaround CEO.

“He helped to raise more than $200 million to fund the development of Favrille’s cancer immunotherapy drug candidate,” and that equates to credibility with Wall Street, De Spain wrote in an e-mail. “He helped to usher that drug candidate from pre-clinical, to IND up through a Phase III registration trial = clinical development expertise. Unfortunately, the drug just didn’t show the clinical efficacy we’d hoped for…

“Fast forward two and a half years, and he’s managed to acquire all of the IP surrounding our drug candidates, get two INDs approved, persuade the former Head of Medical Affairs at Genentech to join us, execute two Phase I clinical trials, acquire a third clinical asset… and raise approximately $40 million in the process.”

Moving forward, De Spain and Gold say they want MEI to be like other biotech companies. They want to work on collaborating with Big Pharma partners. They want to continue presenting at conferences. It was hard to do that as Marshall Edwards. But now they’re MEI Pharma.

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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