$MEIP, I took a beating on this play and have been working through the investment thesis since, as it seems oversold.
A few points to keep in minds
- I don't expect much reaction from ME-344 data next week at AACR. Where I think positive data/ update helps. First ME-344 is still early, but importantly it will show investors that they do have a viable pipeline asset behind Pracinostat.
-I have been encourage by the lack of key stakeholders selling after the data miss around MDS. At least we know that New Leaf and FMR are the only funds that took their chips off the table. Others may have lightened, but they would have to report/ file if they went under 5%. Orbimed, Franklin, Deerfield, and Point72 seem to be holding. MEI had 71% institutional ownership going into MDS data, that seems to have remained high.
-AML will be important with abstracts in late May. They will give full data on the 50 AML patients on Pracinostat. Importantly company indicated on a prior call that the AML data continues to be strong and improving.
- MDS, we are unlikely to get more color until ASH in December. That is unfortunate. Reading the tea leaves we should see a subset analysis (I know everyone hates 'subsets') but in this case it may be very telling around MDS data miss. Company seems to be indicating two problems with the study
1) This drug class has high AE, this was known. AML patients are facing certain death in the near term and there are no options, so attending Physicians in the AML study are keeping patients on Pracinostat. After 2 months the drug appears to be really helping. MDS patients are not as sick and it appears the early tolerability problems caused 35%drop out. Basically patients not sure which arm they are on, drug or placebo. Docs don't know either and importantly they have other MDS options so they are not pressing the case to stay on the trial.
2) MEI's hypothesis is patients simply did not stay on treatment long enough to draw any conclusions on activity.
The above does not mean the drug will ultimately prevail in MDS. We need to see how results for those that stayed on the drug for 4+months to better support the hypothesis above. Next designing a new trial might be hard unless open label.
All that said MEI is worth at least $4 on AML and ME-344. The stock should move higher over the next 60 days, as the 3 near term catalyst approach, all with specific dates to trade around.
-BioHunter
