Good afternoon, and welcome to the MEI Pharma 2018 Fiscal Year-End Conference Call. Please be advised that this call is being recorded at the company's request. At this time, I would like to turn the call over to Mr. David Walsey, MEI's Vice President, Investor Relations and Corporate Communications. Please proceed..

Thank you, Operator. Good afternoon, everyone, and thank you for joining us.

After the market closed today, we filed our Form 10-K for the fiscal year ended June 30, 2018, with the Securities and Exchange Commission and issued our financial results and corporate highlights press release, both of which are available in the Investors section of our website at www.meipharma.com.

On our call today, we will review corporate highlights and progress in the clinic over the last year as well as a summary of our financials from the fiscal year ended June 30, 2018. We will also review some potential upcoming milestones from the ongoing development of our four clinical-stage drug candidates.

Before we get started, I want to call your attention to the fact that this conference call may contain certain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

You should be aware that our actual results could differ materially from those contained in its forward-looking statements, which are based on management's current expectations and are subject to a number of risks and uncertainties as discussed in our SEC filings, including our most recent annual report on Form 10-K filed earlier today.

A replay of this call will be available on our website approximately an hour after its completion. With that said, I'd like to introduce you to our speakers for today. With me are Dan Gold, our President and Chief Executive Officer; Brian Drazba, our Chief Financial Officer.

Additionally, David Urso, our Chief Operating Officer; Richard Ghalie, our Senior Vice President of Clinical Development; and Karen Potts, our Senior Vice President of Regulatory Affairs are also with us and available to answer questions.

Brian will start with a summary of our financial results, after which Dan will provide an update on our clinical programs. Following the prepared remarks, we'll open the line to your questions. With that, I'll turn the call over to Brian..

Thank you, David. Since we are excited to review the highlights in our development programs and our plans to build on the progress we've made over the last year, I'll keep my remarks brief. For more detailed information regarding our financial results, I invite you to review our 10-K filed earlier today.

I am pleased to report that we finished fiscal year 2018 in our strongest financial position ever. As of June 30, we had $102.7 million in cash, cash equivalents, and short-term investments with no outstanding debt. The cash balance includes proceeds from the $75 million private placement we completed in May 2018.

Additionally, our research and development expenses were $17.1 million for the year ended compared to $7.2 million for 2017. General and administrative expenses were $9.8 million compared to $8.6 million for 2017.

Revenues were $1.6 million for the year ended June 30, 2018, which is comprised of reimbursable pass-through costs for services provided by third-party vendors. Cash expenditures from operations were $21.3 million for the year ended June 30, 2018 compared to $16.5 million for 2017.

Cash expenditures were $3.8 million [ph] for the quarter ended June 30, 2018 compared to $3.1 million for the same period in 2017. Net loss was $40.1 million or $0.97 per share for the fiscal year ended June 30, 2018 compared to net income of $2.7 million or $0.07 per share for 2017.

Our net loss includes a $9.7 million noncash expense related to the change in the fair value of the warrants issued in connection with the May 2018 financing and $2.4 million in transaction costs related to the May 2018 financing recorded as financing expense on the statement of operations.

We are required to calculate the change in fair value of the warrants and record the noncash charge to the statement of operations at each reporting date. Lastly, I'll note that, excluding these two non-operational items, our net loss per share on that basis is approximately $0.67 per share.

In summary, we'll start fiscal 2019 in a very strong position to continue aggressively advancing our programs. With that, I'll now turn the call over to Dan..

HDAC inhibition, PI3K delta inhibition, CDK9 inhibition and mitochondrial inhibition. An example of the implementation of this model is our most advanced candidate, pracinostat, which is partnered with Helsinn and is currently in a global Phase III registration study.

We believe our decision to partner with Helsinn successfully added value to pracinostat, and the resulting additional investment in other programs added value to the pipeline. Most notably to date, in ME-401, which after reporting highly promising data at ASCO earlier this year, is moving into a Phase II accelerated approval study.

Now, let me update you on our clinical progress over this past year. I'll start with pracinostat.

The first patient in the pivotal, double-blinded, placebo-controlled Phase III study comparing pracinostat in combination with azacitidine to azacitidine alone in adults with newly diagnosed AML who are unfit to receive intensive chemotherapy was dosed last August. The primary endpoint for this study will be overall survival.

Meanwhile, our clinical team here at MEI is actively managing a Phase II study of pracinostat plus azacitidine in patients with high and very high risk myelodysplasia who were previously untreated with a hypomethylating agent.

In May, we and Helsinn announced that an interim analysis of this Phase II study beat a predefined 10% discontinuation threshold due to an adverse event in the first three treatment cycles among the first 20 evaluable patients. This rate is consistent with our experience for azacitidine given as monotherapy.

Meeting this threshold triggered expansion of the study to a total of 60 patients. Our current plan is to follow patients for up to one year to evaluate safety and efficacy, both overall response and one year survival. We are equally sharing the cost of this study with Helsinn.

If the study is successful, we would anticipate that the program would progress into a registration study for MDS, whereby all costs moving forward will be borne by Helsinn. We look forward to having an opportunity to update you on this Phase II study at a medical meeting later on this year.

Now I'd like to turn your attention to our PI3 delta inhibitor, ME-401, an asset that continues to exceed our high expectations. For those of you less familiar with this space, PI3 delta inhibitors have demonstrated clear activity in B-cell malignancies, including follicular lymphoma and chronic lymphocytic leukemia.

However, unfortunately, we see the FDA-approved inhibitors idelalisib and the intravenous PI3 alpha/delta inhibitor, copanlisib, as well as other candidates in development as being challenged by treatment-limiting toxicities which compromise their overall efficacy.

We believe this provides an opportunity for the development of a next-generation candidate with superior pharmaceutical properties to provide efficacy that better maximizes the biologic potential of PI3 delta inhibition without being limited by toxicities that reduce its clinical utility.

This past June, we presented results at ASCO from our Phase Ib study in relapsed/refractory follicular lymphoma and CLL, demonstrating that MEI 401 demonstrated a single-agent activity of over 90% among 30 evaluable patients as well as specifically a response rate of 86% in the group of 21 patients with follicular lymphoma.

Of note, we observed a 100% objective response rate among a subset of 10 follicular patients whose disease progressed within 24 months of initial immunochemotherapy.

There is a significant interest in the medical community with this subset of patients, referred to as the POD24 since progression of disease within 24 months after initial treatment with immunochemotherapy is associated with a very poor outcome.

Only about 50% of POD24 patients survive for five years compared to about 90% of patients that do not have early disease progression. Further, MEI 401 was generally well tolerated and no dose-limiting toxicities were identified at any dose level tested.

Grade 3 adverse events were consistent across all three doses evaluated and were also considered consistent with on-target activity.

All events were reported in cycle three or later, and all events resolved with drug interruption in corticosteroid, allowing multiple patients [ph] to resume treatment on an intermittent schedule without apparent loss of response.

Importantly, no opportunistic infections or noninfectious pneumonitis were reported, and there have been no Grade 4 or 5 adverse events.

We continue to follow these initial 30 patients and have added an expansion cohort of up to 30 further patients with follicular, CLL and SLL to further evaluate the safety and efficacy of ME-401 as a single agent at the 60-milligram dose.

In a separate arm of the study, an additional 15 patients have been treated to date at the 60-milligram dose in combination with rituximab in patients with various B-cell malignancies.

With these data in hand, last month, we discussed with the FDA an MEI 401 monotherapy accelerated approval strategy in patients with relapsed or refractory follicular lymphoma.

In that meeting, the agency affirmed that the accelerated approval path is possible for ME-401 in relapsed/refractory follicular lymphoma, although marketing approval for 401 is, of course, ultimately subject to FDA review of the improvement provided by 401 over other therapies available at the time of the regulatory action.

Informed by these discussions, we have designed a global randomized Phase II study to evaluate the efficacy, safety and tolerability of ME-401 in patients with follicular lymphoma after failure of at least two prior systemic therapies, including chemotherapy and an anti-CD20 antibody.

The study will evaluate two different ME-401 single-agent dosing regimens. In one arm, ME-401 will be administered once daily continuously.

And in another arm, the 401 will be administered for 60 milligrams, once daily, continuous for two cycles, i.e., eight weeks, followed by an intermittent schedule in which 401 will be administered once daily for the first seven days of a 28-day cycle, followed by three weeks of a placebo.

Approximately 150 patients will be randomized in the study, and the primary efficacy endpoint will be the rate of the objective response to therapy in the 2arms. The FDA communicated support for the company's proposed randomized Phase II trial, and we plan to initiate this study by the end of this calendar year.

Beyond our efforts to develop 401 as a single agent in relapsed/refractory follicular lymphoma, we see significant potential in other lines of therapy and across other B-cell malignancies.

Given the clinical profile observed to date, we believe there is significant potential to utilize ME-401 in combination with other modalities to obtain further benefits with applications across additional indications. To that end, we see independent commercialization of ME-401 in the U.S.

as an attractive opportunity to optimize value, and we have begun making an investment in the planning and implementation of early-stage commercialization activities. As we continue to advance this program, we will continue to evaluate this investment.

And in parallel, we will consider potential partnering opportunities for ME-401 in markets outside the United States. The progress and potential of this program is truly exciting for MEI.

We look forward to announcing the start of the Phase II accelerated approval study around year-end and to having an opportunity to update you on the ongoing Phase Ib study at a medical meeting later this year. Now I'll turn my discussion to our CDK inhibitor, voruciclib.

This is another exciting program that we believe has tremendous potential to improve on existing treatments, particularly in combination with venetoclax, an FDA-approved BCL-2 inhibitor. Voruciclib is an orally available CDK9 inhibitor, differentiated by its activity, primarily on CDK9, in addition to CDK6, 4 and 1.

CDK9 regulates the myeloid leukemia cell differentiation protein, MCL-1, a member of the family of anti-apoptotic proteins, which when elevated may prevent cells from undergoing cell death. Inhibition of CDK9 blocks the production of MCL-1, which is an established resistant mechanism to the BCL-2 inhibitor, venetoclax.

CDK9 also regulates MYC, a transcription factor regulating cell proliferation and growth, which contributes to many human cancers and is frequently associated with poor prognosis and an unfavorable patient survival.

Targeting MYC directly has historically been difficult, but CDK9 is a transcriptional regulator of MYC and is a promising approach to target this oncogene. Preclinical studies of voruciclib show dose-dependent, concurrent suppression of both MCL-1 and MYC and synergistic antitumor efficacy when dosed in combination with venetoclax.

In addition to preclinical data evaluating voruciclib, we have clinical data in more than 70 patients with solid tumors from multiple Phase I studies.

With a tolerability profile consistent with other drugs in this class, along with PK/PD data from the earlier clinical evaluation, we have initiated a Phase Ib dose-ranging study in patients with B-cell malignancies. I'm happy to report that as of today, we have dosed the first patient in this dose-escalation study.

After obtaining initial safety information from our Phase Ib study, we plan to evaluate voruciclib in combination with venetoclax to confirm the synergies observed in the preclinical data and to assess opportunities for combination treatment across multiple indication with BCL-2 inhibition.

We look forward to the chance to update you on the progress of this study and initiation of dosing in combination with venetoclax in an upcoming medical meeting next year. And finally, I'll briefly comment on the status of ME-344, our clinical-stage mitochondrial inhibitor. This is a highly novel program, and we remain excited by its prospects.

Currently, we are awaiting the results from an ongoing randomized study in Madrid evaluating ME-344 in combination with Avastin in women recently diagnosed with HER2-negative breast cancer.

Our hypothesis with respect to this candidate is that while anti-angiogenics like Avastin may reduce the rate of glycolysis in tumor as a mechanism to slow their growth, plasticity of the tumor metabolism often results in a shift to mitochondrial metabolism to continue energy requirements for supporting tumor proliferation.

In such cases, targeting the metabolic source of the mitochondria with ME-344 may open an important therapeutic opportunity. Interim data from this study presented at ASCO recently suggest that the inhibition of tumor proliferation with Avastin plus ME-344 was greater than that observed with Avastin alone.

We look forward to reporting the final results from this study later next year. In addition to the progress we made in the clinic this year, this also brought us several important corporate highlights.

These include, as Brian noted, the $75 million private placement, which included investments from multiple leading health care investment firms, the addition of Fred Driscoll to our Board of Directors and the promotion of David Urso to Chief Operating Officer. In summary, we are very encouraged with our progress over the last year.

We have a diverse clinical-stage pipeline, the prospect of having two candidates in global studies to support marketing authorization by year-end and a very healthy balance sheet. We are in a strong position to continue building value for our shareholders as we work diligently to advance our clinical candidates towards approval for our patients.

With that update, I'll pause and I think we're now ready for questions. Operator, please open the line for questions..

[Operator Instructions]. The first question in the queue comes from Yale Jen from Laidlaw & Company..

My first question is on the Phase II study design for 401.

What kind consideration for the POD24 patient in the study? Was there any prospective analysis or grouping on the patient and how would you -- any colors on that front?.

Right.

So if I understand correctly, you're asking on the accelerated approval study, did we consider the POD24s as well, is that correct, Yale?.

Yes.

And is there any kind of prospective analysis about that subgroup and how would that potentially then impact the total data going forward?.

Yes. Right. So I mean, we certainly expect that there will be some POD24 patients enrolled since the trial requires both progression following chemotherapy and CD20. These would be POD24s that have had at least two independent rounds of therapy.

We think that this is a very important population, and we think that there is certainly an unmet medical need and an opportunity to address this.

Internally, our plans would be to further investigate this population more in a Phase II study or setting in order to get a better sense of the response, either alone or in combination with perhaps other agents to see if we can maximize a response.

And then that could be the subject of a further study down the road, either for a fuller approval or a label expansion.

But currently, if these patients are enrolled, we certainly will look at them and as supportive evidence for addressing this population and for ascertaining what the true single-agent activity is on intermittent versus continuous dosing. I mean, I should say, I probably didn't explain adequately on the call.

Our current treatment paradigm has been continuous dosing, and that has generated the data that we're very, very excited about. As we've discussed previously, we have a strategy for mitigating the toxicities that we have seen, and that was switching to this intermittent dosing.

The aspect that we're going to address in the accelerated approval trial with the two dosing arms is if we can even mitigate the toxicities further without losing any of the response, so we know we can get very strong, very deep responses in the continuous dosing that are maintained when we switch to intermittent dosing.

Now the question is, can we even get better toxicity without losing that response? And we felt that the best way of addressing that was actually doing it in a randomized study. And that is what we are setting out to do..

Maybe quick follow-up on that in terms of the additional data to be reported from the Phase I study in the fourth quarter.

Should we get a deeper look in terms of the intermittent outcome from duration for obviously a tox profile as well, maybe some sort of a duration-related endpoint, for example, six months progression-free or something of that nature this winter?.

Yes. Yes. I think that's absolutely our intention, Yale. We are continuing to follow all the patients that we reported on at ASCO as they are all continuing to be treated on the intermittent schedule.

And also, again, for clarity, the patients that we alluded to that have received Rituxan, all those patients received the continuous for two months and then switched to intermittent thereafter schedule with Rituxan. So that will add additional information, both from a safety perspective as well as a durability prospective.

So it is our intention to update you on all that information, both from the original patients as well as the subsequent patients later this year..

And maybe the last question here is, in terms of the next year, so fiscal '19, the operating expenses, could you guys give any kind of directional guidance? The last quarter, the fourth quarter '18, fiscal fourth quarter '18 would be a proxy for the things to anticipate over the next four quarters?.

I think the most specific I can get, Yale, is that probably need more. We're initiating -- the voruciclib study is now up. We're in the planning phases. And we will be initiating the Phase III -- the randomized accelerated approval study. And with those, obviously, will be increase in clinical costs.

So I think that whereas we're not going to provide guidance, but I think that the anticipation is that our spending would probably increase in the coming quarters..

The next question in the queue comes from Peter Lawson with SunTrust..

Just as we think about the initial plans for commercialization for 401, what kind of an investment or size of salesforce would you be thinking about? Kind of how should we think of SG&A over the next couple of years?.

I'm going to let David Urso, our COO, answer that for you, Peter. It's a very good question. I mean, we're obviously early days right now, but we are clearly thinking about and as we roll out some pre-commercialization plans, but I think I'll let David give you a little more color..

Yes. I mean, it's in the hundreds of thousands of dollars over the next -- in the short term. And obviously, will be ramping up between now and through the next three years as we get toward launch. I mean, I don't think we want to get any more specific on a year-by-year basis, but that is the plan. And we have a road map to create commercial function.

It's obviously going to be focused on the U.S. market. I think our intention would be to look for a partner to commercialize ex U.S..

What's the kind of scale of the sales force we should be thinking about for a product like that in the U.S.?.

I mean, I think it's something between 25 and 50, but we haven't done a lot of work. Really, it's very early days for us to really hone in on that. That's probably even one of the last pieces of the puzzle that we need to put in, and it will also depend on what other indications, I think, are quickly following.

We're interested in other B-cell malignancies and so that will also depend on the approach that we're going to take. But I'd say, it's something like that given the size of the indication in follicular that would be totally manageable with that kind of a sales detail..

Got you.

And then as we think about the next update for 401, how many patients or what kind of readouts do you think we should expect to see?.

Sorry, Peter. I guess in the near term, we've said that we've completed -- we enrolled like 15 patients with Rituxan. We do have an expansion arm open for follicular and SLL/CLL at the 60-milligram dose with the intermittent schedule. So I would say by the end of this year, we'll probably have data on roughly 50 to 60 patients in total.

And that will sort of set the stage for -- right at the time we're initiating the accelerated approval study..

Got you.

And then just switching gears and final question just on pracinostat, where should we think about getting that data? Are you kind of targeting ASH for that and would that be both AML and MDS data as best you could see?.

Yes. No, I think, well, certainly for the AML study, since it's a blinded, randomized study, I don't think that there will be a lot to report at ASH this year. For the MDS study, we had initially reported that we've, as I mentioned on my script, that we'd treated the first 20 patients in the threshold. We exceeded the threshold for discontinuation.

We expect by ASH that we will have significantly more patients, very close to that 60-patient number. And so we'll be able to update what the true discon rate is amongst a larger number of patients and the initial response of those patients who have gone through at least six months of treatment or not.

So I would say, we won't be able to report the complete dataset at ASH, but we will certainly be able to give a much larger update than we did previously. And then certainly, by ASCO, we will have complete response data on all 60 patients. So I think within the next 6 to 9 months, we'll be able to give a lot more color on that study.

And then as I mentioned, we, of course, want to look at the one year survival because this high and very high risk patient population survival horizon is not that extended beyond a year. So survival is certainly something we're keeping an eye on, and that's going to take a little bit longer time..

[Operator Instructions]. The next question comes from Jim Birchenough from Wells Fargo Securities..

It's Nick on for Jim this afternoon. Just wondered, Dan, can you give us some idea on, some guidance on the number of patients that would be enrolled in each of the two arms and the time line of conducting the study? This is the 401 follicular..

Yes. Yes. So we're targeting about a total of 150 patients plus or minus, which equally distributed between the two arms. We think we can enroll that study in about 18 months. Of course, we're going to strive to do it more quickly, but that's kind of the target.

This is going to be an international study, both North America, Europe and a few countries outside of those territories, but it'll be in that ballpark..

And then you mentioned that some of these patients might be blind plus POD24.

Do you tend to stratify patients coming into this Phase II trial between the two arms?.

I'm going to let Richard Ghalie, our Head of Clinical, here in San Diego answer that question..

Nick, we're going to stratify the patients based on tumor bulk because that's certainly an important prognostic factor. And that's going to be the key stratification factor for the study. And we will do that in the -- POD24 as a subset analysis.

But since we don't know how many will enroll who are POD24, we didn't want to prespecify this as a stratification factor. So it's going to be in the subset analysis..

And then, Dan, you noted in your prepared comments that the FDA will review the 401 data in the context of what is available.

Do you expect the competitor landscape to change significantly between now and then beyond perhaps duvelisib?.

Well, no. But we always have to be mindful that there could be things that we're not aware of. And certainly, duvelisib is being reviewed as far as we understand now. And we do know that copanlisib is in under study in large, very large Phase III studies with Rituxan and Rituxan chemotherapy.

And so when those studies actually read out and how that could impact the landscape is a little unclear. Those studies, I believe, are being done more in second line, not in the relapsed and refractory populations. So again, in our conversation with the agency, it will be based on the risk, the benefit and the currently available treatment.

So those are the ones that we're aware of and those are the ones -- but it's always possible those could pop up..

And maybe last one for me on voruciclib.

So once you've demonstrated the safety -- hopefully, demonstrated safety with venetoclax, what type of patients would you then enroll in this area, faster market opportunity here, say, for patients who are progressing on venetoclax?.

Yes. So that's a great question, Nick. And I think we clearly have thought about that. And we see multiple different opportunities. One, as you mentioned, is patients who have progressed on venetoclax or even not responded and who can now enter into a response or return into response with a combination.

AML is certainly an indication that we are considering. We know that the BCL-2 does play a role. Certainly, venetoclax is being tested actively in that setting, in the relapsed setting. So that is another opportunity to us.

And another one that I think we always are interested in is in these more difficult to treat diffuse large patients because these double hit patients who express both BCL-2 overexpression and a MYC activation would seem to be interesting candidates to evaluate.

We haven't looked at those patients yet, but that is another opportunity for us with BCL-2 inhibition. And then certainly, there are other opportunities, perhaps outside of the BCL-2, that could be explored down the road..

Thank you, sir. There are no further questions in the queue at this time..

Well then, I'd like to thank you again for joining us today. We begin our new fiscal year stronger than ever, and we look forward to reporting our progress to you across our entire portfolio in the coming quarters. Have a great long weekend, and we look forward to speaking to you soon. Thank you..

Thank you, ladies and gentlemen. This concludes today's teleconference. Thank you for participating. You may now disconnect..