Stifel downgraded MEI Pharma (NASDAQ:MEIP) to “hold” from “buy” and reduced its price target to $2 from $6 after the FDA discouraged a regulatory filing based on single-arm Phase 2 TIDAL study data, despite previous guidance and prior accelerated approvals in the class.
The news, after the market close on March 24, prompted BTIG to slash its price target to $4 from $11 but it maintained a “buy” rating. The stock closed at $1.81 on March 24.
The FDA also messaged to MEI Pharma that safety for the 60 mg intermittent schedule dosing appears reasonable, and to continue collecting data in the Phase 3 COASTAL study, with the current dosage regimen in order to file.
Stifel analyst Stephen Willey writes that MEI expects to complete enrollment in the COASTAL study of zandelisib for the treatment of relapsed/refractory follicular lymphoma in 2024 and “pushes what was always teed up as a ‘show-me’ commercialization story now into 2027,” its revised estimate.
“While we believe the presentation of TIDAL data in the second half of 2022 will continue to support our thesis re: zandelisib as a best-in-class PI3K-delta inhibitor, which changes the historical narrative around safety/tolerability, we’re inclined to believe FDA’s decision here likely represents an indictment of this class, pending further clarity from the April 21 meeting of the FDA’s oncologic drugs advisory committee and Genentech’s BLA filing for mosunetuzumab,” he added.
BTIG analyst Justin Zelin writes that in his view, the FDA’s stance on PI3K-delta inhibition has “shifted toward a more cautious sentiment, where the agency would like to see randomized data in larger populations.”
While the FDA’s feedback is unfortunate news, Mr. Zelin said the company continues to reiterate its conviction in zandelisib’s strong clinical profile and will continue to enroll patients into the COASTAL clinical trial.
“We extend our timeline for zandelisib’s approval to 2026 from 2023, given COASTAL’s expected enrollment completion in 2024, data submission in 2025, and approval in 2026,” he added.
