MEI offloads rights to PhIII-ready AML drug to Helsinn in backloaded $464M deal

MEI Pharma ($MEIP) has offloaded the global rights to its acute myeloid leukemia (AML) drug pracinostat to Helsinn, pocketing $15 million upfront and the chance to earn a further $449 million in milestones. The agreement secures the advance of the oral histone deacetylase (HDAC) inhibitor into a Phase III trial, continuing the recent flow of good news for microcap MEI.

San Diego, CA-based MEI has developed pracinostat primarily as a treatment for elderly AML patients who are unable to tolerate the intensive chemotherapy used in younger populations.

Targeting this subpopulation enabled MEI to pick up a FDA breakthrough designation last week on the strength of Phase II data it released in December. In the Phase II trial, two-fifths of the 50 subjects experienced a complete response when given pracinostat and azacitidine, the active ingredient in Celgene’s ($CELG) now-generic Vidaza.

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Those data prompted MEI to commit to advancing pracinostat into Phase III. Since then, MEI has worked with FDA to secure the breakthrough designation and separately to land a deal with Helsinn.

The agreement gives MEI an immediate, and, by its standards, significant cash boost, plus the chance for future paydays. MEI had $14 million in cash in the bank as of the end of March. Now, it has landed $15 million upfront, with another $5 million to follow when the first patient is dosed in the Phase III AML trial.

MEI will also benefit from having a partner that is better versed that it is in developing and selling products for use in oncology indications, even if pracinostat is in some regards outside of Helsinn’s traditional areas of expertise.

Lugano, Switzerland-based Helsinn is focused squarely on cancer care, but its bread and butter are drugs that address complications of the condition, rather than the tumors themselves. As it stands, Helsinn’s pipeline is stocked with drugs to treat chemotherapy-induced nausea, diarrhea and neuropathic pain, as well as a form of anorexia that can affect people who have tumors. While drugs such as pracinostat are therefore new to Helsinn, it thinks the experience of developing and selling cancer care products will stand it in good stead.

“Helsinn Therapeutics, our U.S. sales organization, will allow us to accelerate the development and commercialization of this product, once approved, as we will be able to leverage our clinical and regulatory expertise coupled with our existing oncology specialist sales organization,” Helsinn CEO Riccardo Braglia said in a statement.

By striking the deal for pracinostat, Helsinn has started its expansion into oncology therapeutics. The plan is to advance pracinostat into a Phase III in a subpopulation of AML patients, while also working with MEI to develop the drug as a treatment for high-risk myelodysplastic syndrome (MDS). MEI expects Helsinn to start a clinical trial of pracinostat in the blood disorder MDS in the first half of next year.

As Helsinn executes this strategy, MEI will receive anything up to $449 million in milestones. While all the milestones bar the $5 million tied to the start of the Phase III AML trial are some way down the line, and may never materialize, the $444 million nonetheless represents sizable potential paydays for a company that had a market cap of $56 million as of the end of last week. Helsinn is also making a $5 million equity investment in MEI.

- here's the statement

Related Articles:
MEI's second go at cancer R&D flunks a Phase II MDS trial
MEI Pharma to buy S*BIO's rights to HDAC inhibitor, Pracinostat

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