“Near-Term Zandelisib Launch off the Table” After “Bewildering” FDA Feedback – MEI Pharma (MEIP) Stock Crashes as Analysts Downgrades Roll In

MEI Pharma (NASDAQ:) shares are taking a significant hit Friday morning “ down as much as 60% in heavy early trading – as the company disclosed FDA’s recent feedback on the regulatory path of MEIP’s PI3K inhibitor drug candidate.

In what Stifel’s Stephen Willey calls a “surprising/bewildering FDA feedback,” the agency noted that it now requires an additional Phase 3 trial to fully access the safety and efficacy of PI3K, before any marketing authorization decision can be made. The company, and investors, were previously anticipating an accelerated approval pathway for the drug under 21 CFR Part 314.500, Subpart H, based on data generated by the single-arm Phase 2 TIDAL study. Stifel analyst thus downgrades MEIP to a “Hold” rating from Buy and slashes his price target on shares to $2 from $8, noting the FDA’s feedback takes “any zandesilib accelerated approval prospects off the table.”

The need for a complete Phase 3 trial significantly pushes back the potential approval timeline – Wells Fargo (NYSE:) analyst Nick Abbott believes that assuming the successful trial outcome, “a zib NDA filing could be delayed into 2026.” He further notes that while the company has “sufficient cash to complete enrollment”, “MEIP will need additional funding to complete COASTAL (phase 3 trial)”, implying potential dilution down the road. Wells Fargo analyst agrees that a near-term zandelisib launch is now out of the question, as he cuts his price target to $2 from $13 and downgrades the stock to “Equal-Weight” from “Overweight.”

Adding to the downgrade bonanza was Jefferies’ analyst Chris Howerton. He cut shares to “Hold” from “Buy” and slashed the price target to $1 on the delayed timeline delays and reduced probability for Zandelisib’s launch as 2L+ therapy in FL/MZL.

While admitting that the delay is not favorable, Brookline Capital Markets analyst Leah Rush Cann maintains a more positive tone. She notes: “while the TIDAL data may no longer sufficient for registration, these data are still valuable to establish zandelisib’s potential to improve outcomes for patients, once approved.” She reiterates her belief that “the favorable safety profile demonstrated in the TIDAL study further support use of Zandelisib in combination with other agents in earlier lines of treatment of follicular lymphoma, which is being evaluated in the on-going COASTAL study, which could be used for registration.”

Brookline Capital Markets defends MEIP if the face of pessimism, maintaining a “Buy” rating, but adjusts price target to $15 from $20.

MEIP stock is losing nearly 60% early into the Friday trading session.

By Vlad Schepkov