ROC

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 000-50484

MEI Pharma, Inc.

(Exact name of registrant as specified in its charter)

DELAWARE	51-0407811
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

11455 El Camino Real, San Diego, CA 92130

(Address of principal executive offices) (Zip Code)

(858) 369-7100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.00000002 par value	MEIP	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

As of November 8, 2021, the number of shares outstanding of the issuer’s common stock, $0.00000002 par value, was 112,721,212.

MEI PHARMA, INC.

Table of Contents

		Page
PART I	FINANCIAL INFORMATION		3
Item 1:	Financial Statements (Unaudited)		3
	Condensed Balance Sheets as of September 30, 2021 and June 30, 2021		3
	Condensed Statements of Operations for the three months ended September 30, 2021 and 2020		4
	Condensed Statements of Stockholders’ Equity for the three months ended September 30, 2021 and 2020		5
	Condensed Statements of Cash Flows for the three months ended September 30, 2021 and 2020		6
	Notes to Condensed Financial Statements		7
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations		19
Item 3:	Quantitative and Qualitative Disclosures about Market Risk		32
Item 4:	Controls and Procedures		32
PART II	OTHER INFORMATION		33
Item 1:	Legal Proceedings		33
Item 1A:	Risk Factors		33
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds		33
Item 3:	Defaults upon Senior Securities		33
Item 4:	Mine Safety Disclosures		33
Item 5:	Other Information		33
Item 6:	Exhibits		34
SIGNATURES			35

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PART I FINANCIAL INFORMATION

Item 1: Condensed Financial Statements – Unaudited

MEI PHARMA, INC.

CONDENSED BALANCE SHEETS

(In thousands, except per share amounts)

	September 30, 2021			June 30, 2021
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	15,621		$	8,543
Short-term investments		129,882			144,883
Total cash, cash equivalents and short-term investments		145,503			153,426
Accounts receivable		10,000			—
Contract assets		8,120			7,582
Prepaid expenses and other current assets		3,739			3,809
Total current assets		167,362			164,817
Operating lease right-of-use asset		7,551			7,774
Property and equipment, net		1,438			1,507
Total assets	$	176,351		$	174,098
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	8,472		$	6,355
Accrued liabilities		6,099			8,402
Deferred revenue		14,837			14,609
Operating lease liability		957			928
Total current liabilities		30,365			30,294
Deferred revenue, long-term		87,276			72,717
Operating lease liability, long-term		7,115			7,370
Warrant liability		19,768			22,355
Total liabilities		144,524			132,736
Commitments and contingencies (Note 6)
Stockholders’ equity:
Preferred stock, $0.01 par value; 100 shares authorized; none outstanding		—			—
Common stock, $0.00000002 par value; 226,000 shares authorized; 112,678 and    112,615 shares issued and outstanding at September 30, 2021 and June 30, 2021,    respectively		—			—
Additional paid-in capital		371,516			369,171
Accumulated deficit		(339,689	)		(327,809	)
Total stockholders’ equity		31,827			41,362
Total liabilities and stockholders’ equity	$	176,351		$	174,098

See accompanying notes to condensed financial statements.

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MEI PHARMA, INC.

CONDENSED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended September 30,
	2021			2020
Revenue	$	13,387		$	3,834
Operating expenses:
Cost of revenue		—			509
Research and development		19,953			12,996
General and administrative		7,909			5,915
Total operating expenses		27,862			19,420
Loss from operations		(14,475	)		(15,586	)
Other income (expense):
Change in fair value of warrant liability		2,587			13,224
Interest and dividend income		8			275
Other expense		—			(5	)
Net loss	$	(11,880	)	$	(2,092	)
Net loss:
Basic	$	(11,880	)	$	(2,092	)
Diluted	$	(14,467	)	$	(15,316	)
Net loss per share:
Basic	$	(0.11	)	$	(0.02	)
Diluted	$	(0.13	)	$	(0.13	)
Shares used in computing net loss per share:
Basic		112,677			112,435
Diluted		113,917			114,957

See accompanying notes to condensed financial statements.

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MEI PHARMA, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

	Common Shares		Additional Paid-In Capital			Accumulated Deficit			Total Stockholders’ Equity
Balance at June 30, 2021		112,615	$	369,171		$	(327,809	)	$	41,362
Net loss		—		—			(11,880	)		(11,880	)
Issuance of common stock for vested restricted stock units		63		(194	)		—			(194	)
Share-based compensation expense		—		2,539			—			2,539
Balance at September 30, 2021		112,678	$	371,516		$	(339,689	)	$	31,827

	Common Shares		Additional Paid-In Capital		Accumulated Deficit			Total Stockholders’ Equity
Balance at June 30, 2020		111,514	$	355,452	$	(277,234	)	$	78,218
Net loss		—		—		(2,092	)		(2,092	)
Issuance of common stock, net		958		3,136		—			3,136
Exercise of stock options		50		124		—			124
Share-based compensation expense		—		2,942		—			2,942
Balance at September 30, 2020		112,522	$	361,654	$	(279,326	)	$	82,328

See accompanying notes to condensed financial statements.

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MEI PHARMA, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Three Months Ended September 30,
	2021			2020
Cash flows from operating activities:
Net loss	$	(11,880	)	$	(2,092	)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of warrant liability		(2,587	)		(13,224	)
Share-based compensation		2,539			2,942
Depreciation and amortization		77			69
Non-cash lease expense		—			269
Changes in operating assets and liabilities:
Accounts receivable		(10,000	)		—
Contract assets		(538	)		(2,061	)
Prepaid expenses and other current assets		70			280
Accounts payable		2,117			3,938
Accrued liabilities		(2,303	)		(553	)
Deferred revenue		14,787			1,336
Operating lease liability		(3	)		(15	)
Net cash used in operating activities		(7,721	)		(9,111	)
Cash flows from investing activities:
Purchases of property and equipment		(8	)		(644	)
Purchases of short-term investments		(59,992	)		(54,989	)
Proceeds from maturity of short-term investments		74,993			60,109
Net cash provided by investing activities		14,993			4,476
Cash flows from financing activities:
Payment of RSU tax withholdings in exchange for common shares surrendered by RSU holders		(194	)		—
Proceeds from exercise of stock options		—			124
Proceeds from issuance of common stock, net		—			3,136
Net cash (used in) provided by financing activities		(194	)		3,260
Net increase (decrease) in cash and cash equivalents		7,078			(1,375	)
Cash and cash equivalents at beginning of the period		8,543			12,331
Cash and cash equivalents at end of the period	$	15,621		$	10,956
Supplemental disclosures:
Income taxes paid	$	—		$	(8	)
Operating lease right-of-use assets obtained in exchange for operating lease liabilities	$	—		$	8,689

See accompanying notes to condensed financial statements.

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MEI PHARMA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Note 1. The Company and Summary of Significant Accounting Policies

The Company

MEI Pharma, Inc. is a late-stage pharmaceutical company committed to the development and commercialization of novel cancer therapies intended to improve outcomes for patients. Our portfolio of drug candidates includes three clinical-stage assets, including zandelisib (f/k/a ME-401), currently in multiple ongoing clinical studies intended to support marketing applications with the U.S. Food and Drug Administration (“FDA”) and other regulatory authorities globally. Our common stock is listed on the NASDAQ Capital Market under the symbol “MEIP.”

Clinical Development Programs

We build our pipeline by licensing or acquiring promising cancer agents and creating value in programs through development, commercialization and strategic partnerships, as appropriate. Our objective is to leverage the mechanisms and properties of our pipeline drug candidates to optimize the balance between efficacy and tolerability to meet the needs of patients with cancer. Our drug candidate pipeline includes:

Zandelisib (formerly known as ME-401), an oral phosphatidylinositol 3-kinase (“PI3K”) delta inhibitor;

Voruciclib, an oral cyclin-dependent kinase (“CDK”) inhibitor; and

ME-344, a mitochondrial inhibitor targeting the oxidative phosphorylation (“OXPHOS”) complex.

The results of pre-clinical studies and completed clinical trials are not necessarily predictive of future results, and our current drug candidates may not have favorable results in later studies or trials. The commercial opportunity will be reduced or eliminated if competitors develop and market products that are more effective, have fewer side effects or are less expensive than our drug candidates. We will need substantial additional funds to progress the clinical trial programs for the drug candidates zandelisib, voruciclib, and ME-344, and to develop new compounds. The actual amount of funds that will be needed are determined by a number of factors, some of which are beyond our control. Negative U.S. and global economic conditions may pose challenges to our business strategy, which relies on funding from the financial markets or collaborators.

Liquidity

We have accumulated losses of $339.7 million since inception and expect to incur operating losses and generate negative cash flows from operations for the foreseeable future. As of September 30, 2021, we had $145.5 million in cash and cash equivalents and short-term investments. We believe that these resources will be sufficient to meet our obligations and fund our liquidity and capital expenditure requirements for at least the next 12 months from the issuance of these financial statements. Our current business operations are focused on continuing the clinical development of our drug candidates. Changes to our research and development plans or other changes affecting our operating expenses may affect actual future use of existing cash resources. Our research and development expenses are expected to increase in the foreseeable future. We cannot determine with certainty costs associated with ongoing and future clinical trials or the regulatory approval process. The duration, costs and timing associated with the development of our product candidates will depend on a variety of factors, including uncertainties associated with the results of our clinical trials.

To date, we have obtained cash and funded our operations primarily through equity financings and license agreements. In order to continue the development of our drug candidates, at some point in the future we expect to pursue one or more capital transactions, whether through the sale of equity securities, debt financing, license agreements or entry into strategic partnerships. There can be no assurance that we will be able to continue to raise additional capital in the future.

Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the accompanying financial statements do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying financial statements reflect all adjustments (consisting of normal recurring adjustments) that are necessary for a fair statement of the financial position, results of operations and cash flows for the periods presented.

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The accompanying unaudited financial statements should be read in conjunction with the audited financial statements and notes thereto as of and for the fiscal year ended June 30, 2021, included in our Annual Report on Form 10-K (“2021 Annual Report”) filed with the Securities and Exchange Commission on September 2, 2021. Interim results are not necessarily indicative of results for a full year.

Reclassifications

Certain reclassifications have been made to the prior year financial statements to conform to the current year financial statement presentation of contract assets. These changes did not impact previously reported net loss, loss per share, stockholders’ equity, total assets or cash flows.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and disclosures made in the accompanying notes to the financial statements. We use estimates that affect the reported amounts (including assets, liabilities, revenues and expenses) and related disclosures. Actual results could materially differ from those estimates.

Revenue Recognition

Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers (“Topic 606” or the “new revenue standard”)

We recognize revenue when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. For enforceable contracts with our customers, we first identify the distinct performance obligations – or accounting units – within the contract. Performance obligations are commitments in a contract to transfer a distinct good or service to the customer.

Payments received under commercial arrangements, such as licensing technology rights, may include non-refundable fees at the inception of the arrangements, milestone payments for specific achievements designated in the agreements, and royalties on the sale of products. At the inception of arrangements that include milestone payments, we use judgment to evaluate whether the milestones are probable of being achieved and we estimate the amount to include in the transaction price using the most likely method. If it is probable that a significant revenue reversal will not occur, the estimated amount is included in the transaction price. Milestone payments that are not within our or the licensee’s control, such as regulatory approvals, are not included in the transaction price until those approvals are received. At the end of each reporting period, we re-evaluate the probability of achievement of development milestones and any related constraint and, as necessary, we adjust our estimate of the overall transaction price. Any adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment.

We develop estimates of the stand-alone selling price for each distinct performance obligation. Variable consideration that relates specifically to our efforts to satisfy specific performance obligations is allocated entirely to those performance obligations. Other components of the transaction price are allocated based on the relative stand-alone selling price, over which management has applied significant judgment. We develop assumptions that require judgment to determine the stand-alone selling price for license-related performance obligations, which may include forecasted revenues, development timelines, reimbursement rates for personnel costs, discount rates and probabilities of technical, regulatory and commercial success. We estimate stand-alone selling price for research and development performance obligations by forecasting the expected costs of satisfying a performance obligation plus an appropriate margin.

In the case of a license that is a distinct performance obligation, we recognize revenue allocated to the license from non-refundable, up-front fees at the point in time when the license is transferred to the licensee and the licensee can use and benefit from the license. For licenses that are bundled with other distinct or combined obligations, we use judgment to assess the nature of the performance obligation to determine whether the performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue. If the performance obligation is satisfied over time, we evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition.

The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. Revenue is recorded proportionally as costs are incurred. We generally use the cost-to-cost measure of progress because it best depicts the transfer of control to the customer which occurs as we incur costs. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation (an “input method” under Topic 606). We use judgment to estimate the total cost expected to complete the research and development performance obligations, which include subcontractors’ costs, labor,

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materials, other direct costs and an allocation of indirect costs. We evaluate these cost estimates and the progress each reporting period and, as necessary, we adjust the measure of progress and related revenue recognition.

For arrangements that include sales-based or usage-based royalties, we recognize revenue at the later of (i) when the related sales occur or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied or partially satisfied. To date, we have not recognized any sales-based or usage-based royalty revenue from license agreements.

We recognized revenue associated with the following license agreements (in thousands):

	Three Months Ended September 30,
	2021		2020
KKC License Agreements	$	13,387	$	3,569
Helsinn License Agreement		—		265
	$	13,387	$	3,834
Timing of Revenue Recognition:
Services performed over time	$	13,387	$	3,834
	$	13,387	$	3,834

The KKC Commercialization Agreement and KKC Japan License Agreement (Note 3) included other distinct performance obligations satisfied over time, and accordingly we recognized $13.4 million and $3.6 million related to our progress toward satisfying those obligations during the three months ended September 30, 2021 and 2020, respectively.

Based on the characteristics of the Helsinn License Agreement (Note 3), we recognized revenue based on the extent of progress towards completion of the performance obligations. Our performance obligations related to the Helsinn License Agreement have been met and no future revenue or cost of revenue will be recognized.

Contract Balances

Contract liabilities are included in “Deferred revenue” and “Deferred revenue long-term”. The following table presents changes in contract assets and contract liabilities accounted for under Topic 606 during the three months ended September 30, 2021 and 2020 (in thousands):

	Three Months Ended September 30,
	2021			2020
Accounts Receivable
Accounts Receivable, beginning of period	$	—		$	83
Amounts billed		27,638			2,727
Payments received		(17,638	)		(2,693	)
Accounts Receivable, end of period	$	10,000		$	117
Contract assets
Contract assets, beginning of period	$	7,582		$	2,858
Billable amounts		28,176			5,114
Amounts billed		(27,638	)		(2,727	)
Contract assets, end of period	$	8,120		$	5,245
Contract liabilities
Contract liabilities, beginning of period	$	22,781		$	17,955
Net change		14,787			1,336
Contract liabilities, end of period	$	37,568		$	19,291

The timing of revenue recognition, invoicing and cash collections results in billed accounts receivable and unbilled receivables (contract assets) and deferred revenue (contract liabilities). We invoice our customers in accordance with agreed-upon contractual terms, typically at periodic intervals or upon achievement of contractual milestones. Invoicing may occur subsequent to revenue recognition, resulting in contract assets. We may receive advance payments from our customers before revenue is recognized, resulting in contract liabilities. The contract assets and liabilities reported on the Condensed Balance Sheet relate to the KKC Commercialization Agreement, the KKC Japan License Agreement and Helsinn License Agreement.

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As of September 30, 2021, we had $8.1 million of contract assets related to our remaining performance obligations under the KKC Commercialization Agreement. Our contract assets are comprised of amounts that are billable based on the contractual provisions of the license agreement but not yet billed.

As of September 30, 2021, we had $102.1 million of deferred revenue associated with the KKC Commercialization Agreement, of which $64.5 million relates to the U.S. license which is a unit of account under the scope of Topic 808 and is not a deliverable under Topic 606, and $37.6 million relates to the Ex-U.S. License and development services performance obligations which are under the scope of Topic 606.

Our contract liabilities accounted for under Topic 606 relate to the amount of initial upfront consideration that was allocated to the research and development performance obligations as well as additional cost reimbursements in excess of revenue recognized. Contract liabilities are expected to be recognized over the duration of the performance obligations based on the costs incurred relative to total expected costs. Our contract liabilities may fluctuate due to changes in the total estimated cost of the performance obligations and our expected reimbursement of those costs. For the three months ended September 30, 2021, we recognized revenue of $8.2 million that was included in the contract liabilities balance at June 30, 2021 related to performance obligations under ASC 606.

For the three months ended September 30, 2020, we recognized revenue of $2.8 million that was included in the contract liabilities balance at June 30, 2020 related to performance obligations under ASC 606. To date we have not recognized any amounts related to units of account under Topic 808.

Revenues from Collaborators

We earn revenue in connection with collaboration agreements, which are described in Note 3, License Agreements.

At contract inception, we assess whether the collaboration arrangements are within the scope of ASC Topic 808, Collaborative Arrangements (“Topic 808”), to determine whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities. This assessment is performed based on the responsibilities of all parties in the arrangement. For collaboration arrangements within the scope of Topic 808 that contain multiple units of account, we first determine which units of account within the arrangement are within the scope of Topic 808 and which elements are within the scope of Topic 606. For units of account within collaboration arrangements that are accounted for pursuant to Topic 808, an appropriate recognition method is determined and applied consistently, by analogy to authoritative accounting literature. For elements of collaboration arrangements that are accounted for pursuant to Topic 606, we recognize revenue as discussed above. Consideration received that does not meet the requirements to satisfy Topic 606 revenue recognition criteria is recorded as deferred revenue in the accompanying consolidated balance sheets, classified as either short-term or long-term deferred revenue based on our best estimate of when such amounts will be recognized.

Research and Development Costs

Research and development costs are expensed as incurred and include costs paid to third-party contractors to perform research, conduct clinical trials and develop and manufacture drug materials. Clinical trial costs, including costs associated with third-party contractors, are a significant component of research and development expenses. We expense research and development costs based on work performed. In determining the amount to expense, management relies on estimates of total costs based on contract components completed, the enrollment of subjects, the completion of trials, and other events. Costs incurred related to the purchase or licensing of in-process research and development for early-stage products or products that are not commercially viable and ready for use, or have no alternative future use, are charged to expense in the period incurred.

Share-based Compensation

Share-based compensation expense for employees and directors is recognized in the Condensed Statement of Operations based on estimated amounts, including the grant date fair value and the expected service period. For stock options, we estimate the grant date fair value using a Black-Scholes valuation model, which requires the use of multiple subjective inputs including estimated future volatility, expected forfeitures and the expected term of the awards. We estimate the expected future volatility based on the stock’s historical price volatility. The stock’s future volatility may differ from the estimated volatility at the grant date. For restricted stock unit (“RSU”) equity awards, we estimate the grant date fair value using our closing stock price on the date of grant. We recognize the effect of forfeitures in compensation expense when the forfeitures occur. The estimated forfeiture rates may differ from actual forfeiture rates which would affect the amount of expense recognized during the period. We recognize the value of the awards over the awards’ requisite service or performance periods. The requisite service period is generally the time over which our share-based awards vest.

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Income Taxes

Our income tax expense consists of current and deferred income tax expense or benefit. Current income tax expense or benefit is the amount of income taxes expected to be payable or refundable for the current year. A deferred income tax asset or liability is recognized for the future tax consequences attributable to tax credits and loss carryforwards and to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. As of September 30, 2021, we have established a valuation allowance to fully reserve our net deferred tax assets. Tax rate changes are reflected in income during the period such changes are enacted. Changes in our ownership may limit the amount of net operating loss carryforwards that can be utilized in the future to offset taxable income.

There have been no material changes in our unrecognized tax benefits since June 30, 2021, and, as such, the disclosures included in our 2021 Annual Report continue to be relevant for the three months ended September 30, 2021.

Leases

We account for our leases under FASB ASC Topic 842, Leases (“ASC 842”). Leases which are identified within the scope of ASC 842 and which have a term greater than one year are recognized on our Condensed Balance Sheet as ROU assets and lease liabilities. Operating lease liabilities and their corresponding ROU assets are recorded based on the present value of lease payments over the expected remaining lease term. The lease term includes any renewal options and termination options that we are reasonably certain to exercise. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received. The present value of lease payments is determined by using the interest rate implicit in the lease, if that rate is readily determinable; otherwise, we use our incremental borrowing rate. The incremental borrowing rate is determined based on the rate of interest that we would pay to borrow on a collateralized basis an amount equal to the lease payments for a similar term and in a similar economic environment. The interest rate implicit in lease contracts to calculate the present value is typically not readily determinable. As such, significant management judgment is required to estimate the incremental borrowing rate.

Rent expense for operating leases is recognized on a straight-line basis over the lease term based on the total lease payments. We have elected the practical expedient to not separate lease and non-lease components for our real estate leases. Our non-lease components are primarily related to property maintenance, which varies based on future outcomes, and thus is recognized in rent expense when incurred. 

Note 2. Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value is as follows:

Level 1 – Observable inputs such as quoted prices in active markets for identical assets or liabilities.

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

We measure the following financial instruments at fair value on a recurring basis. The fair values of these financial instruments were as follows (in thousands):

	September 30, 2021						June 30, 2021
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Warrant liability	$	—	$	—	$	19,768	$	—	$	—	$	22,355
Total	$	—	$	—	$	19,768	$	—	$	—	$	22,355

The carrying amounts of financial instruments such as cash equivalents, short-term investments and accounts payable approximate the related fair values due to the short-term maturities of these instruments. We invest our excess cash in financial

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instruments which are readily convertible into cash, such as money market funds and U.S. government securities. Cash equivalents, where applicable, and short-term investments are classified as Level 1 as defined by the fair value hierarchy.

In May 2018, we issued warrants in connection with our private placement of shares of common stock. Pursuant to the terms of the warrants, we could be required to settle the warrants in cash in the event of an acquisition of the Company and, as a result, the warrants are required to be measured at fair value and reported as a liability in the Condensed Balance Sheet. We recorded the fair value of the warrants upon issuance using the Black-Scholes valuation model and are required to revalue the warrants at each reporting date with any changes in fair value recorded on our Condensed Statement of Operations. The valuation of the warrants is considered under Level 3 of the fair value hierarchy due to the need to use assumptions in the valuation that are both significant to the fair value measurement and unobservable. Inputs used to determine estimated fair value of the warrant liabilities include the estimated fair value of the underlying stock at the valuation date, the estimated term of the warrants, risk-free interest rates, expected dividends and the expected volatility of the underlying stock. The significant unobservable inputs used in the fair value measurement of the warrant liabilities were the volatility rate and the estimated term of the warrants. Generally, increases (decreases) in the fair value of the underlying stock and estimated term would result in a directionally similar impact to the fair value measurement. The change in the fair value of the Level 3 warrant liability is reflected in the Condensed Statement of Operations for the three months ended September 30, 2021 and 2020, respectively.

To calculate the fair value of the warrant liability, the following assumptions were used:

	September 30, 2021			June 30, 2021
Risk-free interest rate		0.2	%		0.2	%
Expected life (years)		1.6			1.9
Expected volatility		87.2	%		88.5	%
Dividend yield		0.0	%		0.0	%
Black-Scholes Fair Value	$	1.23		$	1.39

The following table sets forth a summary of changes in the estimated fair value of our Level 3 warrant liability for the three months ended September 30, 2021 and 2020 (in thousands):

	Fair Value of Warrants Using Significant Unobservable Inputs (Level 3)
	2021			2020
Balance at July 1,	$	22,355		$	40,483
Change in estimated fair value of liability classified warrants		(2,587	)		(13,224	)
Balance at September 30,	$	19,768		$	27,259

Note 3. License Agreements

KKC License, Development and Commercialization Agreement

In April 2020, we entered into the License, Development and Commercialization Agreement (the “KKC Commercialization Agreement”) with Kyowa Kirin Company (“KKC”). Under the agreement, we granted to KKC a co-exclusive, sublicensable, payment-bearing license under certain patents and know-how controlled by us to develop and commercialize zandelisib and any pharmaceutical product containing zandelisib for all human indications in the U.S. (the "U.S. License"), and an exclusive (subject to certain retained rights to perform obligations under the KKC Commercialization Agreement), sublicensable, payment-bearing, license under certain patents and know-how controlled by us to develop and commercialize zandelisib and any pharmaceutical product containing zandelisib for all human indications in countries outside of the United States (the “Ex-U.S.”) (the “Ex-U.S. License”). KKC granted to us a co-exclusive, sublicensable, license under certain patents and know-how controlled by KKC to develop and commercialize zandelisib for all human indications in the U.S., and a co-exclusive, sublicensable, royalty-free, fully paid license under certain patents and know-how controlled by KKC to perform our obligations in the Ex-U.S. under the KKC Commercialization Agreement. KKC paid us an initial payment of $100.0 million. Additionally, we may earn up to approximately $582.5 million in potential development, regulatory and commercialization milestone payments, plus royalties on net sales of zandelisib in the Ex-U.S., which are tiered beginning in the teens. During the three months ended September 30, 2021, we reached two milestones triggering a total of $20.0 million. During the three months ended September 30, 2021, we received $10.0 million with the remaining $10.0 million recorded as a receivable on our balance sheet as of September 30, 2021, and expected to be received during the quarter ending December 31, 2021.

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KKC will be responsible for the development and commercialization of zandelisib in the Ex-U.S. and, subject to certain exceptions, will be solely responsible for all costs related thereto. We will co-develop and co-promote zandelisib with KKC in the U.S., with the Company recording all revenue from U.S. sales. We will share U.S. profits and costs (including development costs) on a 50-50 basis with KKC. We will also provide to KKC certain drug supplies necessary for the development and commercialization of zandelisib in the Ex-U.S., with the understanding that KKC will assume responsibility for manufacturing for the Ex-U.S. as soon as practicable.

We assessed the KKC Commercialization Agreement in accordance with Topic 808 and Topic 606 and determined that our obligations comprise the U.S. License, the Ex-U.S. License, and development services (the “Development Services”). We determined that the KKC Commercialization Agreement is a collaborative arrangement in accordance with Topic 808 that contains multiple units of account, as we and KKC are both active participants in the development and commercialization activities and are exposed to significant risks and rewards that are dependent on commercial success of the activities of the arrangement. The U.S. License is a unit of account under the scope of Topic 808 and is not a deliverable under Topic 606, while the Ex-U.S. License and Development Services performance obligations are under the scope of Topic 606.

We determined, at the time of our initial assessment, that the total transaction price of $191.5 million is comprised of the upfront payment of $100.0 million, milestone payments of $20.0 million, estimated development cost-sharing of $66.3 million, and deferred revenue of $5.2 million from the KKC Japan License Agreement. During the three months ended September 30, 2021, we updated our estimate of variable consideration related to development cost sharing to $137.2 million. We increased our estimate primarily as a result of the removal of constraints on transaction price under ASC 606 as a result of higher probability that certain development projects will be undertaken in the future, as well as, further visibility into total expected costs for these development estimates. Any variable consideration related to sales-based royalties and commercial milestones related to licenses of intellectual property will be determined when the sale or usage occurs, and is therefore excluded from the transaction price. In addition, we are eligible to receive future development and regulatory milestones upon the achievement of certain criteria; however, these amounts are excluded from variable consideration as the risk of significant revenue reversal will only be resolved depending on future research and development and/or regulatory approval outcomes. We re-evaluate the estimated variable consideration included in the transaction price and any related constraints at the end of each reporting period.

We allocated the transaction price to each unit of account. Variable consideration that relates specifically to our efforts to satisfy specific performance obligations are allocated entirely to those performance obligations. Other components of the transaction price are allocated based on the relative stand-alone selling price, over which management has applied significant judgment. We developed the estimated stand-alone selling price for the licenses using the risk-adjusted net present values of estimated cash flows, and the estimated stand-alone selling price of the development services performance obligations by estimating costs to be incurred, and an appropriate margin, using an income approach.

We determined that control of the U.S. License and Ex-U.S. License were transferred to KKC during the year ended June 30, 2020, and recognized revenue of $21.0 million related to the Ex-U.S. License. The $64.5 million transaction price allocated to the U.S. License obligation accounted for under Topic 808 is recorded as non-current deferred revenue and will begin to be recognized upon future commercialization as non-ASC 606 revenue. As of September 30, 2021 and 2020, we recorded deferred revenue of $37.6 million and $19.3 million, respectively, for the transaction price allocated to the Development Services performance obligations and are recognizing this revenue based on the proportional performance of these development activities, which we expect to recognize through fiscal year 2026.

Helsinn License Agreement

In August 2016, we entered into an exclusive worldwide license, development, manufacturing and commercialization agreement with Helsinn Healthcare SA, a Swiss pharmaceutical corporation (“Helsinn”) for pracinostat in acute myeloid leukemia (“AML”), myelodysplastic syndrome (“MDS”) and other potential indications (the “Helsinn License Agreement”). Under the terms of the agreement, Helsinn was granted a worldwide exclusive license to develop, manufacture and commercialize pracinostat. After a thorough review of the Phase 3 AML and Phase 2 MDS data, we and Helsinn have mutually agreed to terminate the Helsinn License Agreement. We do not intend to develop pracinostat further for any use, and do not anticipate any future material financial obligations regarding the compound.

Presage License Agreement

In September 2017, we entered into a license agreement with Presage Biosciences, Inc. (“Presage”). Under the terms of such license agreement (the “Presage License Agreement”), Presage granted to us exclusive worldwide rights to develop, manufacture and commercialize voruciclib, a clinical-stage, oral and selective CDK inhibitor, and related compounds. In exchange, we paid $2.9 million. With respect to the first indication, an incremental $2.0 million payment, due upon dosing of the first subject in the first registration trial, will be owed to Presage, for total payments of $4.9 million prior to receipt of marketing approval of the first indication in the U.S., E.U. or Japan. Additional potential payments of up to $179 million will be due upon the achievement of certain development, regulatory and commercial milestones. We will also pay mid-single-digit tiered royalties on the net sales of any product

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successfully developed. As an alternative to milestone and royalty payments related to countries in which we sublicense product rights, we will pay to Presage a tiered percent (which decreases as product development progresses) of amounts received from such sublicensees.

Note 4. BeiGene Collaboration

In October 2018, we entered into a clinical collaboration with BeiGene, Ltd. (“BeiGene”) to evaluate the safety and efficacy of zandelisib in combination with BeiGene’s zanubrutinib (marketed as Brukinsa®), an inhibitor of Bruton’s tyrosine kinase, for the treatment of patients with B-cell malignancies. Under the terms of the clinical collaboration agreement, we amended our ongoing Phase 1b trial to include evaluation of zandelisib in combination with zanubrutinib in patients with B-cell malignancies. Study costs are being shared equally by the parties, and we agreed to supply zandelisib and BeiGene agreed to supply zanubrutinib. We record the costs reimbursed by BeiGene as a reduction of our research and development expenses. We retained full commercial rights for zandelisib and BeiGene retained full commercial rights for zanubrutinib.

Note 5. Net Loss Per Share

Basic and diluted net loss per share are computed using the weighted-average number of shares of common stock outstanding during the period, less any shares subject to repurchase or forfeiture. There were no shares of common stock subject to repurchase or forfeiture for the three months ended September 30, 2021 and 2020. Diluted net loss per share is computed based on the sum of the weighted average number of common shares and potentially dilutive common shares outstanding during the period.

The following table presents the calculation of net loss used to calculate basic loss and diluted loss per share (in thousands):

	Three Months Ended September 30,
	2021			2020
Net loss – basic	$	(11,880	)	$	(2,092	)
Change in fair value of warrant liability		(2,587	)		(13,224	)
Net loss – diluted	$	(14,467	)	$	(15,316	)

Share used in calculating net loss per share was determined as follows (in thousands):

	Three Months Ended September 30,
	2021		2020
Weighted average shares used in calculating basic net loss per share		112,677		112,435
Effect of potentially dilutive common shares from equity awards and liability-classified warrants		1,240		2,522
Weighted average shares used in calculating diluted net loss per share		113,917		114,957

Our potentially dilutive shares, which include outstanding stock options, restricted stock units, and warrants, are considered to be common stock equivalents and are only included in the calculation of diluted net loss per share when their effect is dilutive.

The following table presents weighted-average potentially dilutive shares that have been excluded from the calculation of net loss per share because of their anti-dilutive effect (in thousands):

	Three Months Ended September 30,
	2021		2020
Stock options		20,882		15,128
Restricted stock units		259		429
Total anti-dilutive shares		21,141		15,557

Note 6. Commitments and Contingencies

We have contracted with various consultants and third parties to assist us in pre-clinical research and development and clinical trials work for our leading drug compounds. The contracts are terminable at any time, but obligate us to reimburse the providers for

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any time or costs incurred through the date of termination. We also have employment agreements with certain of our current employees that provide for severance payments and accelerated vesting for share-based awards if their employment is terminated under specified circumstances.

Presage License Agreement

As discussed in Note 3, we are party to a license agreement with Presage under which we may be required to make future payments upon the achievement of certain development, regulatory and commercial milestones, as well as potential future royalties based upon net sales. As of September 30, 2021, we had not accrued any amounts for potential future payments.

COVID-19

As a result of the ongoing and rapidly evolving COVID-19 pandemic, various public health orders and guidance measures have been implemented across much of the United States, and across the globe, including in the locations of our office, clinical trial sites, key vendors and partners. Despite the relaxation of many governmental orders earlier this year, COVID-19 still impacts the normal conduct of business. While we continue to enroll and dose patients in our clinical trials, our clinical development program timelines may continue to be subject to potential negative impacts from the ongoing pandemic in the U.S. and globally.

We may experience enrollment delays and suspensions, patient withdrawals, postponement of planned clinical or preclinical studies, redirection of site resources from studies, and study deviations or noncompliance. We may also need to maintain or implement study modifications, suspensions, or terminations, the introduction of additional remote study procedures and modified informed consent procedures, study site changes, direct delivery of investigational products to patient homes or alternative sites, which may require state licensing, and changes or delays in site monitoring. The foregoing may require that we consult with relevant review and ethics committees, IRBs, and the FDA. The foregoing may also impact the integrity of our study data. The COVID-19 outbreak may further increase the need for clinical trial patient monitoring and regulatory reporting of adverse effects, and may delay regulatory authority meetings, inspections, or the regulatory review of marketing or investigational applications or submissions.

Not only might the continuing COVID-19 pandemic impact the conduct of our clinical trials, but it may also impact our ability to procure the necessary supply of our investigational drug products, as well as any ancillary supplies necessary for the conduct of our studies. Third party manufacturers may also need to implement measures and changes, or deviate from typical manufacturing requirements that may otherwise adversely impact our product candidates.

Government stimulus programs enacted in response to the COVID-19 pandemic have not had a material impact on our financial condition, results of operations, or liquidity.

Note 7. Leases

We are party to a lease agreement for approximately 32,800 square feet of office space in San Diego, California. We have accounted for the lease as an operating lease. The contractual lease term began in July 2020 and is scheduled to expire in March 2028. The lease contains an option to renew and extend the lease terms. We have not included the lease extension within the ROU asset and lease liability on the balance sheet as it is not reasonably certain to be exercised. The lease includes variable non-lease components (e.g., common area maintenance, maintenance, etc.) that are not included in the ROU asset and lease liability and are reflected as an expense in the period incurred. We do not have any other operating or finance leases. Upon commencement of the lease, we recognized an operating lease ROU asset of $8.7 million and a corresponding operating lease liability of $8.7 million.

The total operating lease costs were as follows (in thousands):

	Three Months Ended September 30,
	2021		2020
Operating lease cost	$	377	$	377

Supplemental cash flow information related to our operating leases were as follows (in thousands):

	Three Months Ended September 30,
	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	380	$	123
Right-of-use assets obtained in exchange for operating lease obligations:		—		8,689

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The following is a schedule of the future minimum rental payments for our operating lease, reconciled to the lease liability as of September 30, 2021 (in thousands):

	September 30, 2021
Remainder of fiscal year ending June 30, 2022	$	1,139
Years ending June 30,
2023		1,565
2024		1,612
2025		1,168
2026		1,710
2027		1,761
Thereafter		1,360
Total lease payments		10,315
Less: Present value discount		(2,243	)
Total operating lease liability	$	8,072
Balance Sheet Classification – Operating Lease
Operating lease liability	$	957
Operating lease liability, long-term		7,115
Total operating lease liability	$	8,072
Other Balance Sheet Information – Operating Lease
Weighted average remaining lease term (in years)		6.5
Weighted average discount rate		7.50	%

Note 8. Short-Term Investments

As of September 30, 2021, and June 30, 2021, our short-term investments consisted of $129.9 million and $144.9 million, respectively, in U.S. government securities. The short-term investments held as of September 30, 2021 and June 30, 2021 had maturity dates of less than one year, are considered to be “held to maturity” and are carried at amortized cost. As of September 30, 2021, and June 30, 2021, the gross holding gains and losses were immaterial.

Note 9. Stockholders’ Equity

Equity Transactions

Shelf Registration Statement

We have a shelf registration statement that permits us to sell, from time to time, up to $200.0 million of common stock, preferred stock and warrants. The shelf registration was filed and declared effective in May 2020, replacing our prior shelf registration statement that was filed and declared effective in May 2017, and carrying forward approximately $107.5 million of unsold securities registered under the prior shelf registration statement. As of September 30, 2021, there is $175.7 million aggregate value of securities available under the shelf registration statement, including up to $60.0 million remaining available under the 2020 ATM Sales Agreement described below.

At-The-Market Equity Offering

On November 10, 2020, we entered into an At-The-Market Equity Offering Sales Agreement (the “2020 ATM Sales Agreement”), pursuant to which we may sell an aggregate of up to $60.0 million of our common stock pursuant to the shelf registration statement. As of September 30, 2021, there is $60.0 million remaining available under the 2020 ATM Sales Agreement.

During the three months ended September 30, 2020, we sold 958,083 shares under a previous ATM agreement for net proceeds of $3.1 million, after costs of $0.1 million.

Warrants

As of September 30, 2021, we have outstanding warrants to purchase 16,058,985 shares of our common stock. The warrants are fully vested, exercisable at a price of $2.54 per share and expire in May 2023. Pursuant to the terms of the warrants, we could be required to settle the warrants in cash in the event of an acquisition of the Company and, as a result, the warrants are required to be measured at fair value and reported as a liability in the Condensed Balance Sheet. Therefore, we are required to account for the warrants as liabilities and record them at fair value. The warrants were revalued as of September 30, 2021 and June 30, 2021 at $19.8 million and $22.4 million, respectively; the changes in fair value were recorded in our Condensed Statement of Operations.

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Note 10. Share-based Compensation

We use equity-based compensation programs to provide long-term performance incentives for our employees. These incentives consist primarily of stock options and RSUs. In December 2008, we adopted the MEI Pharma, Inc. 2008 Stock Omnibus Equity Compensation Plan (“Omnibus Plan”), as amended and restated from time-to-time, under which 29,014,794 shares of common stock are authorized for issuance. The Omnibus Plan provides for the grant of options and/or other stock-based or stock-denominated awards to our non-employee directors, officers, employees and advisors. As of September 30, 2021, there were 7,106,383 shares available for future grant under the Omnibus Plan.

In May 2021, we adopted the 2021 Inducement Plan ("Inducement Plan"), under which 2,500,000 shares of common stock are authorized for issuance. The Inducement Plan is intended to assist us in attracting and retaining selected individuals to serve as employees who are expected to contribute to our success, by providing an inducement for such individuals to enter into employment with us, and to achieve long-term objectives that will benefit stockholders of the Company. As of September 30, 2021, there were 1,772,000 shares available for future grant under the Inducement Plan.

Total share-based compensation expense for all stock awards consists of the following (in thousands):

	Three Months Ended September 30,
	2021		2020
Research and development	$	622	$	1,129
General and administrative		1,917		1,813
Total share-based compensation	$	2,539	$	2,942

Stock Options

Stock option activity for the three months ended September 30, 2021 was as follows:

	Number of Options			Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at June 30, 2021		16,668,542		$	3.01
Granted		5,051,400			2.93
Forfeited / Cancelled		(1,078,419	)		3.10
Outstanding at September 30, 2021		20,641,523			2.98		7.9	$	4,131,984
Vested and exercisable at September 30, 2021		9,748,144			2.86		6.6	$	3,610,815

The fair value of each stock option granted during the three months ended September 30, 2021 is estimated on the grant date under the fair value method using a Black-Scholes valuation model. Stock options granted to employees during the three months ended September 30, 2021 vest 25% one year from the date of grant and ratably each month thereafter for a period of 36 months and expire ten years from the date of grant. Stock options granted to directors during the three months ended September 30, 2021 vest ratably each month for a period of 12 months from the date of grant and expire ten years from the date of grant. The estimated fair values of the stock options, including the effect of estimated forfeitures, are expensed over the service period.

The following weighted-average assumptions were used to determine the fair value of options granted during the period:

	Three Months Ended September 30,
	2021			2020
Risk-free interest rate		1.1	%		0.4	%
Expected life (years)		6.1			6.0
Expected volatility		67.8	%		80.6	%
Dividend yield		0.0	%		0.0	%
Weighted-average grant date fair value	$	1.78		$	2.35

As of September 30, 2021, there was $13.0 million of unrecognized compensation expense related to the unvested portion of stock options. Such compensation expense is expected to be recognized over a weighted-average period of 1.8 years.

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Restricted Stock Units

RSU activity for the three months ended September 30, 2021 was as follows:

	Number of RSUs			Weighted-Average Grant Date Fair Value
Non-vested at June 30, 2021		400,650		$	3.49
Vested		(130,000	)	$	3.49
Forfeited / Cancelled		(38,000	)	$	3.49
Non-vested at September 30, 2021		232,650		$	3.49

Each RSU represents the contingent right to receive one share of our common stock. Under the terms of the Omnibus Plan, each of the RSUs is calculated as 1.25 shares of common stock for purposes of determining the number of shares available for future grant. During the three months ended September 30, 2021, 130,000 RSUs vested. We issued 63,855 shares of common stock to RSU holders; 66,145 shares were surrendered to us by RSU holders as payment for the employee portion of the required withholding of associated payroll taxes. As of September 30, 2021, unrecognized compensation expense related to the unvested portion of our RSUs was approximately $0.3 million and is expected to be recognized over approximately nine months.

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Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding the future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including, without limitation, those described in “Risk Factors” in our 2021 Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on September 2, 2021. Set forth below is a summary of the principal risks we face:

We will need substantial additional funds to progress the clinical trial programs for our drug candidates, to commercialize our drug candidates, and to develop new compounds. The actual amount of funds we will need will be determined by a number of factors, some of which are beyond our control;

We are a late stage clinical research and development stage company and are likely to incur operating losses for the foreseeable future;

The results of pre-clinical studies and completed clinical trials are not necessarily predictive of future results, and our current drug candidates may not have favorable results in later studies or trials;

The outbreak of the novel coronavirus disease, COVID-19, or other pandemic, epidemic or outbreak of an infectious disease may materially and adversely impact our business, including our preclinical studies and clinical trials;

Changes in drug candidate manufacturing or formulation may result in additional costs or delay;

If KKC or other parties with whom we collaborate on the development and commercialization of our drug candidates do not satisfy their obligations, do not otherwise pursue development or commercialization of our drug candidates or if they terminate their agreements with us, we may not be able to develop or commercialize our drug candidates;

We are subject to significant obligations to Presage in connection with our license of voruciclib, and we may become subject to significant obligations in connection with future licenses we obtain, which could adversely affect the overall profitability of any products we may seek to commercialize, and such licenses of drug candidates, the development and commercialization for which we are solely responsible, may never become profitable;

Our business strategy may include entry into additional collaborative or license agreements. We may not be able to enter into collaborative or license agreements or may not be able to negotiate commercially acceptable terms for these agreements;

Final approval by regulatory authorities of our drug candidates for commercial use may be delayed, limited or prevented, any of which would adversely affect our ability to generate operating revenues;

The FDA may determine that our drug candidates have undesirable side effects that could delay or prevent their regulatory approval or commercialization;

If we experience delays or difficulties in the enrolment of patients in clinical trials, our completion of clinical trials and receipt of necessary regulatory approvals could be delayed or prevented;

Changes in funding for the FDA and other government agencies or future government shutdowns could cause delays in the submission and regulatory review of marketing applications, which could negatively impact our business or prospects;

Failure to obtain regulatory approval in foreign jurisdictions would prevent us from marketing our products internationally;

Any designation granted by the FDA for any of our product candidates may not lead to a faster development or regulatory review or approval process, and does not increase the likelihood that our product candidates will receive marketing approval. We may also not be able to obtain or maintain any such designation;

Any orphan drug designations we receive may not confer marketing exclusivity or other benefits;

Even if we or our licensees receive regulatory approval to commercialize our drug candidates, our ability to generate revenues from any resulting products will be subject to a variety of risks, many of which are out of our control;

If any products we develop become subject to unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives, our ability to successfully commercialize our products will be impaired;

Our drug candidates are subject to ongoing government regulation both before and after regulatory approval;

We may not be able to establish the contractual arrangements necessary to develop, market and distribute our drug candidates;

Our commercial opportunity will be reduced or eliminated if competitors develop and market products that are more effective, have fewer side effects or are less expensive than our drug candidates;

Our product candidates may face competition sooner than anticipated;

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We rely on third parties to conduct our clinical trials and pre-clinical studies. If those parties do not successfully carry out their contractual duties or meet expected deadlines, our drug candidates may not advance in a timely manner or at all;

We will depend on third party suppliers and contract manufacturers for the manufacturing of our drug candidates and have no direct control over the cost of manufacturing our drug candidates. Increases in the cost of manufacturing our drug candidates would increase our costs of conducting clinical trials and could adversely affect our future profitability;

We rely on acquisitions or licenses from third parties to expand our pipeline of drug candidates;

Our commercial success is dependent, in part, on obtaining and maintaining patent protection and preserving trade secrets, which cannot be guaranteed;

Claims by other companies that we infringe on their proprietary technology may result in liability for damages or stop our development and commercialization efforts;

We may be subject to claims by third parties asserting that our employees or we have misappropriated their intellectual property, or claiming ownership of what we regard as our own intellectual property;

We may be subject to substantial costs stemming from our defense against third-party intellectual property infringement claims;

We face a risk of product liability claims and claims may exceed our insurance limits;

Our employees, independent contractors, consultants, commercial partners, principal investigators, or CROs may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could have a material adverse effect on our business;

Our business and operations would suffer in the event of system failures;

Our efforts will be seriously jeopardized if we are unable to retain and attract key employees;

Negative U.S. and global economic conditions may pose challenges to our business strategy, which relies on funding from the financial markets or collaborators;

Laws, rules and regulations relating to public companies may be costly and impact our ability to attract and retain directors and executive officers;

If we fail to establish and maintain proper and effective internal controls, our ability to produce accurate financial statements on a timely basis could be impaired, which would adversely affect our operating results, our ability to operate our business, and our stock price, and could result in litigation or similar actions;

Security breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer;

If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could harm our business;

We or the third parties upon whom we depend may be adversely affected by natural disasters and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster;

Limitations on the deductibility of net operating losses could adversely affect our business and financial condition;

The trading price of the shares of our common stock has been and may continue to be highly volatile and could decline in value and we may incur significant costs from class action litigation;

Future sales of our common stock, including common stock issued upon exercise of outstanding warrants or options, may depress the market price of our common stock and cause stockholders to experience dilution;

Because we do not intend to pay, and have not paid, any cash dividends on our shares of common stock, our stockholders will not be able to receive a return on their shares unless the value of our common stock appreciates and they sell their shares;

We will have broad discretion over the use of the net proceeds from any exercise of outstanding warrants and options;

We are authorized to issue blank check preferred stock, which could adversely affect the holders of our common stock;

Anti-takeover provisions contained in our amended and restated certificate of incorporation and third amended and restated bylaws, as well as provisions of Delaware law, could impair a takeover attempt;

Our third amended and restated bylaws require, to the fullest extent permitted by law, that derivative actions brought in our name, actions against our directors, officers, other employees or stockholders for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel, which may have the effect of discouraging lawsuits against our directors, officers, other employees or stockholders; and

Our executive officers and directors may sell shares of their stock, and these sales could adversely affect our stock price.

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These risks are not exhaustive. Other sections of this report and our other filings with the SEC include additional factors which could adversely impact our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. There is substantial uncertainty regarding the impact of the COVID-19 on our business, industry, global economic conditions and government policy. New risk factors emerge from time to time and it is not possible for us to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Past performance may not be an indicator of future results. The following discussion is qualified in its entirety by, and should be read in conjunction with, the more detailed information set forth in the financial statements and the notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q and the audited financial statements and notes thereto included in our 2021 Annual Report, as filed with the SEC. Operating results are not necessarily indicative of results that may occur in future periods.

Overview and Recent Developments

We are a late-stage pharmaceutical company committed to the development and commercialization of novel cancer therapies intended to improve outcomes for patients. Our portfolio of drug candidates has three clinical-stage assets, including zandelisib, currently in multiple ongoing clinical studies intended to support marketing applications with the U.S. Food and Drug Administration (“FDA”) and other regulatory authorities globally. Our common stock is listed on the NASDAQ Capital Market under the symbol “MEIP.”

Our approach to building our pipeline is to license or acquire promising cancer agents and build value in programs through development, commercialization and strategic partnerships, as appropriate.

As a result of the ongoing and rapidly evolving COVID-19 pandemic, various public health orders and guidance measures have been implemented across much of the United States, and across the globe, including in the locations of our office, clinical trial sites, key vendors and partners. The COVID-19 virus may continue to mutate into different strains, which could be more contagious or severe or for which current vaccines and treatments are not effective or available.

While we continue to enroll and dose patients in our clinical trials, certain of our clinical trials evaluating zandelisib and voruciclib have been delayed due to COVID-19, and our clinical development program timelines may continue to be subject to potential negative impacts from the ongoing pandemic in the U.S. and globally. The extent to which the ongoing pandemic continues to impact our business, including our preclinical studies, chemistry, manufacturing and controls (“CMC”) studies, manufacturing, and clinical trials, will depend on future developments, which are highly uncertain and cannot be predicted with confidence including the ultimate geographic spread of the disease, the duration of the pandemic, the development, effectiveness and timing of distribution of treatments and vaccines for COVID-19, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease and to minimize its economic impact, including vaccination rates and effectiveness. See the section entitled "Results of Operations - Contractual Obligations - COVID-19."

Clinical Development Programs

We build our pipeline by licensing or acquiring promising cancer agents and creating value in programs through development, commercialization and strategic partnerships, as appropriate. Our objective is to leverage the mechanisms and properties of our pipeline drug candidates to optimize the balance between efficacy and tolerability to meet the needs of patients with cancer. Our drug candidate pipeline includes:

Zandelisib (f/k/a ME-401), an oral phosphatidylinositol 3-kinase (“PI3K”) delta inhibitor;

Voruciclib, an oral cyclin-dependent kinase 9 (“CDK9”) inhibitor; and

ME-344, a mitochondrial inhibitor targeting the oxidative phosphorylation (“OXPHOS”) complex.

After a thorough review of the Phase 3 AML and Phase 2 MDS data, we and Helsinn have mutually agreed to terminate the Helsinn License Agreement. We do not intend to develop pracinostat further for any use, and do not anticipate any future material financial obligations regarding the compound.

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1.Phase 2 study intended to support accelerated approval marketing applications with the FDA.

2.Study arm initiated under clinical collaboration with BeiGene, Ltd.

3.Investigator-initiated trial.

4.Initiation of clinical studies is subject to opening of a new Investigational New Drug Application ("IND") with the FDA.

Zandelisib (f/k/a ME-401): PI3Kδ Inhibitor in Multiple Trials Intended to Support Marketing Approvals in Relapsed or Refractory Follicular and Marginal Zone Lymphomas

Zandelisib is an oral, once-daily, selective PI3Kδ inhibitor in clinical development for the treatment of B-cell malignancies. In March 2020, the FDA granted zandelisib Fast Track designation for the treatment of adult patients with relapsed or refractory (“r/r”) follicular lymphoma (“FL”) who have received at least two prior systemic therapies. In April 2020, we entered into a global license, development and commercialization agreement to further develop and commercialize zandelisib with Kyowa Kirin Co., Ltd. (“KKC”). MEI and KKC will co-develop and co-promote zandelisib in the U.S., with MEI recording all revenue from U.S. sales. KKC has exclusive commercialization rights outside of the U.S.

We are conducting multiple ongoing studies evaluating zandelisib. Our studies include TIDAL, a Phase 2 study evaluating zandelisib as a monotherapy in patients with r/r FL and marginal zone lymphoma (“MZL”) patients who have received at least two prior lines of treatment. Enrollment in the FL cohort of the study is complete. Enrollment of the MZL cohort remains ongoing. Subject to the results, data from TIDAL are intended to support submissions for accelerated approval marketing applications with the FDA in r/r FL and MZL patients receiving at least two prior lines of treatment.

Also ongoing is COASTAL, a Phase 3 study evaluating zandelisib in combination with rituximab in patients with r/r FL and MZL who have received at least one prior line of treatment. COASTAL is intended to support full marketing applications in the U.S. and globally in r/r FL and MZL patients receiving at least one prior line of treatment. COASTAL is also intended (subject to FDA agreement) to act as the required confirmatory study for the potential U.S. accelerated approvals of zandelisib based on the TIDAL study.

We are also conducting a multi-arm, open-label, Phase 1b dose finding and expansion trial evaluating zandelisib as a monotherapy and in combination with other therapies in patients with relapsed or refractory B-cell malignancies. Other initiated studies include Phase 1 and Phase 2 studies being conducted by KKC evaluating zandelisib as a monotherapy in patients in Japan with indolent B-cell malignancy pursuant to our agreement with KKC.

Zandelisib: Potentially Highly Differentiated Pharmaceutical Properties within a Clinically Validated Class of Treatments

While PI3Kδ inhibitors as a group are a clinically validated class for the treatment of B-cell malignancies, the FDA approved orally administered products, idelalisib (marketed as Zydelig®), duvelisib (marketed as COPIKTRA®), umbralisib (marketed as UKONIQ™), and the intravenously administered PI3Kδ/α inhibitor copanlisib (marketed as Aliqopa®), are challenged by dose-limiting toxicities, modest efficacy and/or inconvenience of administration route. We believe this provides an opportunity for the development of a next-generation candidate with pharmaceutical properties that may better maximize the therapeutic potential of PI3Kδ inhibition by limiting toxicities and improving upon modest efficacy, which together hinder clinical utility.

The molecular structure and pharmacodynamic characteristics of zandelisib are distinct from the FDA approved PI3Kδ inhibitors. Zandelisib’s distinct characteristics include prolonged target binding, preferential cellular accumulation, high volume of

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distribution throughout the body tissues, and an approximately 28-hour half-life suitable for once daily oral administration. The properties of zandelisib support an innovative dosing regimen, known as Intermittent Dosing Therapy, or “IDT.” The IDT consists of daily dosing only in the first seven days of each 28-day dosing cycle. The unique zandelisib IDT is hypothesized to allow for the recovery of regulatory T cells, which in turn may lead to fewer and/or less severe immune-related adverse events. This may provide long-term disease control through maintenance therapy, without the need for dose reductions or premature discontinuations. Clinical evaluation of the IDT to date has demonstrated the potential to maintain clinical benefit while minimizing immune-related toxicities common to other PI3Kδ agents, either as a monotherapy or in combination with other therapies.

KKC License, Development and Commercialization Agreement

In April 2020, we entered into a License, Development and Commercialization Agreement with KKC (the “KKC Commercialization Agreement”). We granted to KKC a co-exclusive, sublicensable, payment-bearing license under certain patents and know-how controlled by us to develop and commercialize zandelisib and any pharmaceutical product containing zandelisib for all human indications in the U.S., and an exclusive (subject to certain retained rights to perform obligations under the agreement), sublicensable, payment-bearing, license under certain patents and know-how controlled by us to develop and commercialize zandelisib and any pharmaceutical product containing zandelisib for all human indications in countries outside of the United States (the “Ex-U.S”). KKC grants to us a co-exclusive, sublicensable, license under certain patents and know-how controlled by KKC to develop and commercialize zandelisib for all human indications in the U.S., and a co-exclusive, sublicensable, royalty-free, fully paid license under certain patents and know-how controlled by KKC to perform our obligations in the Ex-U.S. under the KKC Commercialization Agreement. The KKC Commercialization Agreement substantially retains and consolidates the terms of the 2018 license agreement with KKC to develop and commercialize zandelisib in Japan.

KKC will be responsible for the development and commercialization of zandelisib in the Ex-U.S. and, subject to certain exceptions, will be solely responsible for all costs related thereto. We will co-develop and co-promote zandelisib with KKC in the U.S., with the Company recording all revenue from U.S. sales. We will share U.S. profits and costs (including development costs) on a 50-50 basis with KKC. We will also provide to KKC certain drug supplies necessary for the development and commercialization of zandelisib in the Ex-U.S. pursuant to supply agreements to be entered into on customary terms, with the understanding that KKC will assume responsibility for manufacturing for the Ex-U.S. as soon as practicable.

Under the terms of the KKC Commercialization Agreement, KKC paid us an initial payment of $100 million. We may also earn up to approximately $582.5 million in potential development, regulatory and commercialization milestone payments, plus royalties on net sales of zandelisib in the Ex-U.S., which are tiered beginning in the teens. During the three months ended September 30, 2021, two $10 million milestones were earned in connection with the initiation of the Phase 3 COASTAL study.

Zandelisib Scientific Overview: at the Crossroads of B-cell Signaling Pathways

The PI3K/AKT/mTOR pathway is an important signaling pathway for many cellular functions such as cell survival, cell cycle progression and cellular growth. PI3Ks are a family of enzymes within this pathway that have been shown to play a critical role in the proliferation and survival of certain cancer cells.

There are several isoforms of PI3K that are expressed in different types of cells. The PI3Kδ isoform is at the crossroads of B-cell receptor signaling pathways that are major drivers of survival and proliferation of many B-cell malignancies. Because the δ isoform is often overexpressed in cancer cells of the B-lymphocyte lineage, such as B-cell leukemias and lymphomas, it is understood to be important for survival of these cells. Zandelisib displays high selectivity for the PI3K delta isoform and functions to inhibit its activity.

Clinical Program Overview

We are conducting multiple ongoing studies evaluating zandelisib including TIDAL, a global Phase 2 trial evaluating patients with r/r FL and MZL with at least two prior of lines of therapy that is intended to support FDA marketing applications for accelerated approval. Also ongoing is COASTAL, a global Phase 3 study evaluating patients with r/r FL and MZL with at least one prior line of therapy that is intended to support full marketing authorization with the FDA as well as regulatory authorities globally.

Additionally, we are conducting a multi-arm, open-label, Phase 1b dose escalation and expansion trial as a monotherapy and in combination with rituximab or zanubrutinib in patients with FL and other B-cell malignancies. The Phase 1b trial continues enrollment in the study arm exploring zandelisib in combination with zanubrutinib (marketed as BRUKINSA®), an inhibitor of Bruton’s tyrosine kinase developed by BeiGene, Ltd. (“BeiGene”). This study arm completed the safety evaluation stage in patients with B-cell malignancies and has expanded into disease specific B-cell malignancy cohorts. The evaluation of zandelisib in combination with zanubrutinib is conducted under a collaboration established with BeiGene in October 2018, pursuant to which the cost of the combination trial is being equally shared, and each company is supplying its own investigational agent. We retain all commercial rights to zandelisib (subject to the KKC Commercialization Agreement) and BeiGene retains all commercial rights to zanubrutinib.

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Ongoing clinical trials also include Phase 1 and Phase 2 studies conducted by KKC evaluating zandelisib as a monotherapy in patients in Japan with indolent B-cell malignancies. The Phase 2 study is intended to support marketing authorization in Japan.

In addition to other planned clinical studies sponsored by us, such as initiation of a Phase 2 study evaluating zandelisib plus venetoclax in patients with chronic lymphocytic leukemia ("CLL"), we also plan to support select investigator-initiated studies, including one being conducted at the Cleveland Clinic evaluating zandelisib combined with standard of care in patients with newly diagnosed diffuse large B-cell lymphoma (“DLBCL”).

All ongoing studies, as well as planned studies, utilize zandelisib’s unique Intermittent Dosing Therapy, or “IDT,” intended to optimize zandelisib’s therapeutic profile and also support its potential as a backbone for combination approaches with other modalities in the treatment of B-cell malignances.

Phase 1b Multi-arm Trial

In May 2021, we reported updated data from the Phase 1b clinical trial evaluating zandelisib as a monotherapy and in combination with rituximab or zanubrutinib in patients with r/r FL and other B-cell malignancies as featured in poster discussions at the American Society of Clinical Oncology ("ASCO") 2021 annual meeting.

Data were reported from 37 patients with r/r FL administered zandelisib 60 mg once daily for two 28-day cycles and then on an intermittent schedule (“IS”) of once daily dosing for the first seven days of each subsequent 28-day cycle. The objective of this data presentation was to evaluate the safety, tolerability and efficacy of zandelisib as monotherapy or in combination with rituximab in patients with FL who had disease progression within 24 months after initial chemoimmunotherapy ("POD24") or disease progression beyond 24 months ("non-POD24").

The overall response rate in the 37 patients with r/r FL was 87%, with 27% achieving a complete response. The overall response rate was 78% in 18 patients administered zandelisib as a monotherapy and 95% in 19 patients administered zandelisib in combination with rituximab. The overall response rate in nine evaluable patients with CLL, previously reported separately, was 89%.

Overall Response Rates (“ORR”)

	POD24 n = 22	Non-POD24 n = 15	Total FL n = 37
Overall response rate (ORR)	18 (82%)	14 (93%)	32 (87%)
Regimen
Monotherapy	8/11 (73%)	6/7 (86%)	14/18 (78%)
Combination with rituximab	10/11 (91%)	8/8 (100%)	18/19 (95%)
Prior lines of therapy
1 prior	5/7 (71%)	9/9 (100%)	14/16 (88%)
≥ 2 prior	13/15 (87%)	5/6 (83%)	18/21 (86%)
CR rate, n (%)	4 (18%)	6 (40%)	10 (27%)

Median duration of response in the 37 patients with FL, as reported in a poster presentation at the 16th International Conference on Malignant Lymphoma, has not yet been reached, and median follow-up was 16.9 months (range: 1.2 to 33.1 months). Responses appeared durable across patient subsets analyzed (prior lines of therapy (1 vs ≥ 2), treatment group (i.e., monotherapy or in combination with rituximab) or tumor bulk (< 5 cm vs ≥5 cm)).

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Duration of Response: Follicular Lymphoma Patients

 

Zandelisib was generally well-tolerated. The rate of drug related grade 3 Adverse Events of Special Interest (“AESI”) in the 37 patients with r/r FL was: diarrhea 5% (2/37); colitis 5% (2/37); rash 8% (3/37); alanine aminotransferase (“ALT”)/ aspartate aminotransferase (“AST”) elevation 8% (3/37); The discontinuation rate due to adverse events was 8% (3/37).

Data from the arm of the Phase 1b study evaluating 20 patients receiving zandelisib in combination with zanubrutinib was also reported in a poster session at the ASCO 2021 Annual Meeting. In this arm of the study two treatment dosing regimens were explored: Group A received zandelisib 60 mg, oral, daily continuously for eight weeks followed by days 1-7 of each subsequent 28-day cycle, and zanubrutinib, 160 mg oral, twice daily; Group B received zandelisib 60 mg, oral, daily on days 1-7 of each 28-day cycle starting Cycle 1 and zanubrutinib 80 mg, oral, twice daily. Group A enrolled a total of seven patients: one FL, three CLL, one MZL, one mantle cell lymphoma ("MCL"), and one diffuse large B-cell lymphoma/high grade B-cell lymphoma ("DLBCL/HGBCL"). Group B enrolled a total of 13 patients: seven FL, two CLL, one MZL, and three DLBCL/HGBCL. Treatment was continued until disease progression, intolerance or withdrawal of consent.

The overall response rate in all evaluable patients with r/r indolent B-cell malignancies and CLL was 100%. No response was noted in the two patients with DLBCL/HGBCL. Responses were durable with median follow up for all patients was 6.6 months (0.6 to 21.3 months) with the majority of responders still on treatment.

Overall Response Rate

Evaluable n = 18	FL (n = 8)	CLL/SLL (n = 5)	MZL (n = 2)	MCL (n = 1)	DLBCL/HGBCL (n = 2)
ORR*, n (%)	8 (100%)	5 (100%)	2 (100%)	1 (100%)	0 (0%)
Group A	1 (100%)	3 (100%)	1 (100%)	1 (100%)	0 (0%)
Group B	7 (100%)	2 (100%)	1 (100%)	0 (0%)	0 (0%)

*CR/CRi in two of eight patients with FL (25%) and in two of five patients with CLL (40%).

Imaging scans were taken at months 3, 7, 13, and then every six months until disease progression. Response reported based on Lugano criteria and International Workshop on Chronic Lymphocytic Leukemia ("iwCLL"). Two of 20 patients (one in DLBCL and one in HGBCL) did not have on-therapy scans. One patient had clinical progressive disease ("PD") and one patient had adverse events ("AE") due to prior therapy and discontinued early. Median follow-up time was 6.6 months for all patients (range 0.6 to 21.3 months), 3.6 months for Group A (range 0.6 to 21.3 months), and 6.6 months for Group B (range 1.9 to 14.1 months).

Group B, which received zandelisib 60 mg orally, daily on days 1-7 of each 28-day cycle starting Cycle 1 and zanubrutinib 80 mg, orally, twice daily, was well tolerated across the various B-cell malignancies in the completed part of the study. The combination administered on the optimized, Group B, dosing regimen did not result in additive toxicity to each agent alone. One of the two patients with Grade 3 AST/ALT increases in Group B was successfully retreated and continued therapy.

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Treatment-Emergent Adverse Events of Special Interest

Grade 3-4 AESI, n (%)	Group A (n = 7)	Group B (n = 13)
ALT / ALT increased	2 (29%)	2 (15%)
Rash	1 (14%)	0 (0%)
CMV colitis	1 (14%)	0 (0%)
Pneumonia	*1 (14%)	0 (0%)
Diarrhea	0 (0%)	0 (0%)
Atrial fibrillation	0 (0%)	0 (0%)

* 1 DLBCL patient had several Grade 3 AEs on Day 1 attributed to prior therapy and discontinued treatment on Day 17.

The Phase 1b study is continuing to enroll expansion cohorts in r/r FL and r/r MCL to further evaluate the combination of zandelisib 60 mg administered on days 1-7 starting Cycle 1 and zanubrutinib administered at 80 mg twice daily.

TIDAL: A Phase 2 Trial Intended to Support Accelerated Approval of Marketing Applications

TIDAL is a global Phase 2 trial evaluating zandelisib as a monotherapy across two study cohorts: the first study cohort for the treatment of adults with r/r FL and the second study cohort for r/r MZL, in both cases after failure of at least two prior systemic therapies including chemotherapy and an anti-CD20 antibody. Subject to the results and discussions with the FDA, data from each study cohort are intended to be submitted to the FDA to support marketing applications for accelerated approval. The study is evaluating zandelisib administered once daily at 60 mg for two 28-day cycles and then on an intermittent schedule of once daily dosing for the first seven days of each subsequent 28-day cycle (i.e., IS). The primary efficacy endpoint will be the rate of objective responses to therapy and other endpoints will include duration of response and tolerability of zandelisib. The primary efficacy population sample size for r/r FL is 91 patients and the primary efficacy population sample size for r/r MZL is 64 patients. Total study enrollment in the FL cohort is 121 patients administered zandelisib on the IDT after 2 cycles (56 days) of daily dosing to provide additional safety data for the registration application. Enrollment of the FL cohort of the TIDAL study is complete. Data from the Phase 2 TIDAL study is expected in the fourth calendar quarter of 2021.

COASTAL: A Phase 3 Trial Intended to Support Full FDA and Global Marketing Authorizations

COASTAL is a global, randomized, two-arm Phase 3 trial comparing zandelisib plus rituximab to standard of care chemotherapy plus rituximab, in patients with r/r FL or MZL who received at least one prior line of therapy, which must have included an anti-CD20 antibody in combination with chemotherapy or lenalidomide. COASTAL is expected to enroll 534 patients. Zandelisib will be administered once daily for two 28-day cycles followed by an intermittent schedule of once daily dosing for seven days of each subsequent 28-day cycle for a total of 24 months, in combination with rituximab (R) in the first six months only. The control arm will consist of six cycles of the standard chemoimmunotherapy regimens R-CHOP or R-bendamustine. The primary efficacy endpoint is progression-free survival; secondary endpoints include overall response rate, overall survival, patient reported outcomes assessments, and safety and tolerability.

COASTAL is intended to support full marketing applications in the U.S. and globally in r/r FL and MZL patients who have received at least one prior line of treatment. COASTAL is also intended (subject to FDA agreement) to act as the required confirmatory study for the potential U.S. accelerated approval of zandelisib based on the ongoing Phase 2 TIDAL study evaluating patients with r/r FL and MZL patients who have received two or more prior lines of treatment.

Impact of COVID-19 on the TIDAL and COASTAL Studies

The extent to which the COVID-19 pandemic will impact the progress of the zandelisib development program, including the enrollment and completion of the COASTAL and TIDAL studies, is subject to future developments, which are highly uncertain and cannot be predicted with confidence. Currently, we believe that the integrity of the program and individual studies remains intact; however, the pandemic did have a negative impact on the rate of enrollment in the TIDAL study. Enrollment in the FL cohort of the TIDAL study was completed in August 2021, and data is expected by year end 2021; enrollment in the MZL cohort is ongoing. Study start-up of COASTAL is ongoing, the first subject was enrolled in July 2021. There is a potential that the COVID-19 pandemic could have a negative impact on the execution of the COASTAL study but that is unclear at this time as the trial is just underway. We will continue to closely monitor for potential negative impacts on the development program related to the ongoing COVID-19 pandemic. We will also continue efforts to be proactive in managing the impact from the pandemic, including various actions to communicate with sites and investigators, and making accommodations to patients consistent with FDA guidance and guidance from other regulatory authorities, as we may deem appropriate.

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Voruciclib: Potent Orally Administered CDK9 Inhibitor in Phase 1 Studies

Voruciclib is a potent orally administered CDK9 inhibitor. Voruciclib is being evaluated in a Phase 1b trial evaluating dose and schedule in patients with acute myeloid leukemia (“AML”) and B-cell malignancies. Voruciclib is also being evaluated in pre-clinical studies to explore the potential synergistic activity in various solid tumor cancers of voruciclib in combination with drug-candidates that targets in the RAS signaling pathway, including KRAS.

Voruciclib Scientific Overview: Cell Cycle Signaling

CDK9 has important functions in cell cycle regulation, including the modulation of two therapeutic targets in cancer:

CDK9 is a transcriptional regulator of the myeloid leukemia cell differentiation protein ("MCL1"), a member of the family of anti-apoptotic proteins which, when elevated, may prevent the cell from undergoing cell death. Inhibition of CDK9 blocks the production of MCL1, which is an established resistance mechanism to the B-cell lymphoma ("BCL2") inhibitor venetoclax (marketed as Venclexta®).

CDK9 is a transcriptional regulator of the MYC proto-oncogene protein ("MYC") which regulates cell proliferation and growth. Upregulation of MYC is implicated in many human cancers and is frequently associated with poor prognosis and unfavorable patient survival. CDK9, in addition to being a transcription factor for MYC, also decreases phosphorylation of MYC protein that is implicated in stabilizing MYC in KRAS mutant cancers. Targeting MYC directly has historically been difficult, but CDK9 is a promising approach to target this oncogene.

Voruciclib: Inhibition of MCL1

In pre-clinical studies voruciclib shows dose-dependent suppression of MCL1; in December 2017, a study of voruciclib published in the journal Nature Scientific Reports reported that the combination of voruciclib plus the BCL-2 inhibitor venetoclax was capable of inhibiting two master regulators of cell survival, MCL-1 and BCL-2, and achieved synergistic antitumor effect in an aggressive subset of DLBCL pre-clinical models.

Additionally, a peer reviewed manuscript published in 2020 by Luedtke et al, concluded that the inhibition of CDK9 by voruciclib synergistically enhances cell death induced by the Bcl-2 selective inhibitor venetoclax in preclinical models of acute myeloid leukemia.

The research presented suggests that voruciclib could be an attractive therapeutic target for treating cancers in combination with venetoclax or other BCL-2 inhibitors.

Voruciclib: Inhibition of MYC

Many cancers are associated with overexpression of MYC, a transcription factor regulating cell proliferation and growth. CDK9 is a known regulator of MYC transcription and a modulator of MYC protein phosphorylation. Data reported at the American Association for Cancer Research ("AACR") Annual Meeting 2021 in preclinical models demonstrates that voruciclib:

Results in a rapid decrease in the phosphorylation of proteins that promote MYC transcription;

Rapidly decreases phosphorylation of MYC protein on Ser62, a site implicated in stabilizing MYC in KRAS mutant cancers;

Possesses single agent activity against multiple KRAS mutant cancer cell lines both in vitro and in vivo;

Synergistically inhibits KRAS G12C mutant cancer cell lines in combination with KRAS G12C inhibitors, both in vitro and in vivo.

The research presented suggests that voruciclib could be an attractive therapeutic agent for cancers, including solid tumors, dependent on the activity of MYC.

Clinical Program

We are evaluating patients with hematological malignancies in a Phase 1b clinical trial evaluating the dose and schedule of voruciclib. The trial is initially intended to evaluate the dose and schedule of voruciclib as a monotherapy in patients with relapsed and refractory B-cell malignancies and AML after failure of prior standard therapies to determine the safety, preliminary efficacy and maximum tolerated dose. Once dose levels and schedules have been explored and established, we plan in parallel, subject to FDA agreement, to evaluate the dose and schedule of voruciclib in combination with a BCL2 inhibitor such as venetoclax to assess synergies and the opportunity for combination treatments, initially in patients with AML and subsequently across multiple indications.

Preliminary data to date from the Phase 1b study evaluating voruciclib as a monotherapy at the doses studied demonstrates that voruciclib has not been associated with drug related gastrointestinal toxicity or neutropenia. Also, favorable pharmacokinetics have been observed, including a half-life supporting once-a-day oral dosing and dose proportional C-max. Our projections suggest that doses of 150-200 mg may be sufficient to achieve plasma concentrations sufficient to inhibit the molecular target. Early signs of biological activity have also been observed in patients with AML.

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Voruciclib was also previously evaluated in more than 70 patients with solid tumors in multiple Phase 1 studies. The totality of the clinical data, along with data from pre-clinical studies, suggests voruciclib’s ability to inhibit its molecular target at a projected dose as low as 150 mg daily. In one clinical study, voruciclib was evaluated in combination with vemurafenib (marketed as Zelboraf®) in nine patients with BRAF mutated advanced/inoperable malignant melanoma. Three of three BRAF/MEK naive patients achieved a response: two partial responses and one complete response. In this study voruciclib was dosed at 150 mg daily plus vemurafenib 720 mg or 960 mg twice daily in 28-day cycles. The most common adverse events were fatigue, constipation, diarrhea, arthralgia and headache. One instance of grade 3 fatigue was dose limiting and no serious adverse events related to voruciclib were reported. Other clinical studies evaluated voruciclib at doses up to 850 mg in patients with solid tumors, demonstrating additional evidence of potential biologic activity and an adverse event profile generally consistent with other drugs in its class.

We are exploring opportunities to clinically evaluate voruciclib in solid tumors where MYC may play an important role in tumor growth.

Impact of COVID-19 on the Voruciclib Clinical Development Program

While the extent to which the COVID-19 pandemic will impact the progress of the voruciclib clinical development program, including the ongoing Phase 1b study, is subject to future developments, which are highly uncertain and cannot be predicted with confidence, the study remains ongoing and is continuing to enroll patients; however, the rate of enrollment of patients has been negatively impacted by the pandemic. We will continue efforts to be proactive in managing the impact from the pandemic, including various actions to communicate with sites and investigators, and making accommodations to patients consistent with FDA guidance as we may deem appropriate.

ME-344: Clinical Stage Mitochondrial Inhibitor with Combinatorial Potential

ME-344 is our novel and tumor selective, isoflavone-derived mitochondrial inhibitor drug candidate. It directly targets the OXPHOS complex 1, a pathway involved in adenosine triphosphate ("ATP") production in the mitochondria. ME-344 was studied in an investigator-initiated, multi-center, randomized clinical trial in combination with the vascular endothelial growth factor (“VEGF”) inhibitor bevacizumab (marketed as Avastin®) in a total of 42 patients with human epidermal growth factor receptor 2 (“HER2”) negative breast cancer.

ME-344 Scientific Overview: Cancer Metabolism

Tumor cells often display a high metabolic rate to support cell division and growth. This heightened metabolism requires a continual supply of energy in the form of ATP. The two major sources of ATP are the specialized cellular organelles termed mitochondria and through the metabolism of carbohydrates, proteins and lipids.

ME-344 was identified through a screen of more than 400 new chemical structures originally created based on the central design of naturally occurring plant isoflavones. We believe that some of these synthetic compounds, including our drug candidate ME-344, interact with specific mitochondrial enzyme targets, resulting in the inhibition of ATP generation. When these compounds interact with their target, a rapid reduction in ATP occurs, which leads to a cascade of biochemical events within the cell and ultimately to cell death.

Clinical Program

ME-344 demonstrated evidence of single agent activity against refractory solid tumors in a Phase 1 trial, and in pre-clinical studies tumor cells treated with ME-344 resulted in a rapid loss of ATP and cancer cell death. In addition to single agent activity, ME-344 may also have significant potential in combination with anti-angiogenic therapeutics. In pre-clinical studies, it was shown that one outcome of anti-angiogenics was to reduce the rate of glycolysis in tumors as a mechanism to slow tumor growth. However, tumor metabolism was able to shift to mitochondrial metabolism for energy production to support continued tumor proliferation. In such cases of tumor plasticity in the presence of treatment with anti-angiogenics, targeting the alternative metabolic source with ME-344 may open an important therapeutic opportunity.

Support for this combinatorial use of ME-344 was first published in the June 2016 edition of Cell Reports; pre-clinical data from a collaboration with the Spanish National Cancer Research Centre in Madrid demonstrated mitochondria-specific effects of ME-344 in cancer cells, including substantially enhanced anti-tumor activity when combined with agents that inhibit the activity of VEGF. These data demonstrating the potential anti-cancer effects of combining ME-344 with a VEGF inhibitor due to an inhibition of both mitochondrial and glycolytic metabolism provided a basis for commencement of an investigator-initiated trial of ME-344 in combination with bevacizumab in HER2 negative breast cancer patients.

Results published in the November 2019 issue of Clinical Cancer Research from a multicenter, investigator-initiated, randomized, open-label, clinical trial that evaluated the combination of ME-344 and bevacizumab in 42 women with early HER2-negative breast cancer further support the combinatorial use of ME-344 with anti-angiogenic therapeutics.

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The primary objective of the trial was to show proof of ME-344 biologic activity as measured by Ki67 reductions in the presence of the nuclear protein Ki67 (expression of which is strongly associated with tumor cell proliferation and growth) from days 0 to 28 compared to the control group who received bevacizumab alone. Secondary objectives included determining whether ME-344 biologic activity correlates with vascular normalization. The data demonstrate significant biologic activity in the ME-344 treatment group:

In ME-344 treated patients, mean absolute Ki67 decreases were 13.3 compared to an increase of 1.1 in the bevacizumab monotherapy group (P=0.01).

In ME-344 treated patients, mean relative Ki67 decreases were 23% compared to an increase of 186% in the bevacizumab monotherapy group (P < 0.01).

The mean relative Ki67 reduction in patients experiencing vascular normalization in the ME-344 treated patients was 33%, compared to an increase of 11.8% in normalized patients from the bevacizumab monotherapy group (P=0.09). Approximately one-third of patients in each arm had vascular normalization.

Treatment was generally well tolerated; three grade 3 adverse events of high blood pressure were reported, two in the ME-344 arm and one in the bevacizumab monotherapy arm.

Results from our earlier, first-in-human, single-agent Phase 1 clinical trial of ME-344 in patients with refractory solid tumors were published in the April 1, 2015 issue of Cancer. The results indicated that eight of 21 evaluable patients (38%) treated with ME-344 achieved stable disease or better, including five who experienced progression-free survival that was at least twice the duration of their last prior treatment before entry into the trial. In addition, one of these patients, a heavily pre-treated patient with small cell lung cancer, achieved a confirmed partial response and remained on study for two years. ME-344 was generally well tolerated at doses equal to or less than 10 mg/kg delivered on a weekly schedule for extended durations. Treatment-related adverse events included nausea, dizziness and fatigue. Dose-limiting toxicities were observed at both the 15 mg/kg and 20 mg/kg dose levels, consisting primarily of grade 3 peripheral neuropathy. We are planning to advance ME-344 in combination with the anti-angiogenic antibody bevacizumab in a Phase 2 study evaluating patients with relapsed colorectal cancer.

Results of Operations

Comparison of three months ended September 30, 2021 and 2020

We had a loss from operations of $14.5 million for the three months ended September 30, 2021 compared to a loss from operations of $15.6 million for the three months ended September 30, 2020.

Revenue: We recognized revenue of $13.4 million for the three months ended September 30, 2021 compared to $3.8 million for the three months ended September 30, 2020. Revenue increased as a result of increased research and development activity related to zandelisib, and the partial satisfaction of our research and development obligations under our license agreement with KKC. Revenue related to the license agreement with KKC was $13.4 million for the three months ended September 30, 2021 compared to $3.6 million for the three months ended September 30, 2020.

Research and Development: The following is a summary of our research and development expenses to supplement the more detailed discussion below. The dollar values in the following table are in thousands.

	Three Months Ended September 30,
Research and development expenses	2021		2020
Zandelisib	$	12,392	$	7,996
Voruciclib		1,041		784
ME-344		640		65
Other		5,880		4,151
Total research and development expenses	$	19,953	$	12,996

Research and development expenses consist primarily of clinical trial costs (including payments to contract research organizations “CROs”), pre-clinical study costs, and costs to manufacture our drug candidates for non-clinical and clinical studies. Other research and development expenses consist primarily of salaries and personnel costs, share-based compensation, legal costs, and other costs not allocated to specific drug programs. Research and development expenses were $20.0 million for the three months ended September 30, 2021 compared to $13.0 million for the three months ended September 30, 2020. Costs related to zandelisib for the three months ended September 30, 2021 reflected an increase in clinical trial costs ($1.5 million) primarily as a result of increased activity in the clinical studies, an increase in drug manufacturing costs ($0.9 million), and increased consulting fees ($2.0 million).

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Costs related to voruciclib increased for the three months ended September 30, 2021 compared with the three months ended September 30, 2020, due to increased clinical trial costs. Costs related to ME-344 increased for the three months ended September 30, 2021 compared with the three months ended September 30, 2020, due to increased drug manufacturing costs. Other research and development costs increased for the three months ended September 30, 2021 due to higher levels of personnel costs ($1.1 million) associated with increased headcount to support our clinical activities.

General and Administrative: General and administrative expenses increased by $2.0 million to $7.9 million for the three months ended September 30, 2021 compared to $5.9 million for the three months ended September 30, 2020. The increase is primarily due to increased personnel costs ($1.0 million), external professional services and legal costs ($0.8 million), and as well as share-based compensation ($0.1 million) associated with increased headcount to support our activities, including preparation for commercial launch of zandelisib, and corporate overhead costs ($0.1 million).

Other income or expense: We recorded a non-cash gain of $2.6 million during the three months ended September 30, 2021 due to a change in the fair value of our warrant liability. The change in the warrant liability is primarily due to changes in our stock price. Additionally, we received interest and dividend income of $8,000 for the three months ended September 30, 2021 compared to $0.3 million for the three months ended September 30, 2020. The decrease was primarily due to lower yields during the three months ended September 30, 2021 compared to the three months ended September 30, 2020.

Liquidity and Capital Resources

We have accumulated losses of $339.7 million since inception and expect to incur operating losses and generate negative cash flows from operations for the foreseeable future. As of September 30, 2021, we had $145.5 million in cash and cash equivalents, and short-term investments. We believe that these resources will be sufficient to fund our operations for at least 12 months from the issuance of this Quarterly Report. Our current business operations are focused on continuing the clinical development of our drug candidates. Changes to our research and development plans or other changes affecting our operating expenses may affect actual future use of existing cash resources. Our research and development expenses are expected to increase in the foreseeable future. We cannot determine with certainty costs associated with ongoing and future clinical trials or the regulatory approval process. The duration, costs and timing associated with the development of our product candidates will depend on a variety of factors, including uncertainties associated with the results of our clinical trials.

To date, we have obtained cash and funded our operations primarily through equity financings and license agreements. In order to continue the development of our drug candidates, at some point in the future we expect to pursue one or more capital transactions, whether through the sale of equity securities, debt financing, license agreements or entry into strategic partnerships. There can be no assurance that we will be able to continue to raise additional capital in the future.

Sources and Uses of Our Cash

Net cash used in operating activities for the three months ended September 30, 2021 was $7.7 million. Net cash used in operating activities for the three months ended September 30, 2020 was $9.1 million. The decrease in cash used in operating activities year over year reflects the receipt of $10.0 million milestone in September 2021 related to the KKC Commercialization Agreement, as well as other changes in working capital.

Net cash provided by investing activities for the three months ended September 30, 2021 was $15.0 million compared to $4.5 million provided by investing activities for the three months ended September 30, 2020. The change was primarily due to increased maturities of short-term investments in 2021, net of purchases.

Net cash used in financing activities during the three months ended September 30, 2021 was $0.2 million compared with $3.3 million provided by financing activities during the three months ended September 30, 2020. Cash raised during the three months ended September 30, 2020 reflected $3.1 million of net proceeds from the issuance of common stock.

Contractual Obligations

We have contracted with various consultants and third parties to assist us in pre-clinical research and development and clinical trials work for our leading drug compounds. The contracts are terminable at any time, but obligate us to reimburse the providers for any time or costs incurred through the date of termination. Additionally, we have employment agreements with certain of our current employees that provide for severance payments and accelerated vesting for share-based awards if their employment is terminated under specified circumstances.

We have leased approximately 32,800 square feet of office space in San Diego, California. The contractual lease term is from July 2020 through March 2028. The average annual lease payment over the remaining term of the lease is $1.6 million, plus a pro rata share of certain building expenses. Our total contractual obligation over the remaining term of the lease is $10.3 million.

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Presage License Agreement

In September 2017, we entered into the Presage License Agreement. Under the terms of the Presage License Agreement, Presage granted to us exclusive worldwide rights to develop, manufacture and commercialize voruciclib, a clinical-stage, oral and selective CDK inhibitor, and related compounds. In exchange, we paid Presage $2.9 million. With respect to the first indication, an incremental $2.0 million payment, due upon dosing the first subject in the first registration trial will be owed to Presage, for total payments of $4.9 million prior to receipt of marketing approval of the first indication in the U.S., E.U. or Japan. Additional potential payments of up to $179 million will be due upon the achievement of certain development, regulatory and commercial milestones. We will also pay mid-single-digit tiered royalties on the net sales of any product successfully developed. As an alternative to milestone and royalty payments related to countries in which we sublicense product rights, we will pay to Presage a tiered percent (which decreases as product development progresses) of amounts received from such sublicensees. As of September 30, 2021, we had not accrued any amounts for potential future payments.

COVID-19

As a result of the ongoing and rapidly evolving COVID-19 pandemic, various public health orders and guidance measures have been implemented across much of the United States, and across the globe, including in the locations of our office, clinical trial sites, key vendors and partners. Despite the relaxation of many governmental orders earlier this year, COVID-19 still impacts the normal conduct of business. In addition, although the FDA authorized vaccines for the treatment of COVID-19, and although a significant portion of the U.S. population has been vaccinated, the vaccination rate of the population and the effectiveness of the vaccines, particularly with respect to the COVID-19 Delta variant, as well as other variants, continues to create uncertainty. Furthermore, the COVID-19 virus may continue to mutate into different strains, which could be more contagious or severe or for which current vaccines and treatments are not effective or available.

While we continue to enroll and dose patients in our clinical trials, our clinical development program timelines may continue to be subject to potential negative impacts from the ongoing pandemic in the U.S. and globally. The extent to which the ongoing pandemic continues to impact our business, including our preclinical studies, CMC studies, manufacturing, and clinical trials, will depend on future developments, which are highly uncertain and cannot be predicted with confidence.

We may experience enrollment delays and suspensions, patient withdrawals, postponement of planned clinical or preclinical studies, redirection of site resources from studies, and study deviations or noncompliance. We may also need to maintain or implement study modifications, suspensions, or terminations, the introduction of additional remote study procedures and modified informed consent procedures, study site changes, direct delivery of investigational products to patient homes or alternative sites, which may require state licensing, and changes or delays in site monitoring. The foregoing may require that we consult with relevant review and ethics committees, Institutional Review Boards (“IRBs”), and the FDA. The foregoing may also impact the integrity of our study data. The COVID-19 outbreak may further increase the need for clinical trial patient monitoring and regulatory reporting of adverse effects, and may delay regulatory authority meetings, inspections, or the regulatory review of marketing or investigational applications or submissions.

The COVID-19 pandemic may also impact our ability to procure the necessary supply of our investigational drug products, as well as any ancillary supplies necessary for the conduct of our studies. Third party manufacturers may also need to implement measures and changes, or deviate from typical manufacturing requirements that may otherwise adversely impact our product candidates.

In light of the COVID-19 outbreak, the FDA issued a number of new guidance documents. Specifically, as a result of the potential effect of the COVID-19 outbreak on many clinical trial programs in the U.S. and globally, the FDA issued guidance concerning potential impacts on clinical trial programs, which guidance FDA has continually updated. In addition, the European Medicines Agency (“EMA”) as well as various country regulatory authorities (EU and UK) have issued similar guidance. We have adapted the FDA and EMA/UK guidance for study procedures, data collection, and oversight resulting from the pandemic.

Critical Accounting Policies and Management Estimates

We describe our significant accounting policies in Note 1, The Company and Summary of Significant Accounting Policies, of the notes to the financial statements included in our 2021 Annual Report. We discuss our critical accounting estimates in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our 2021 Annual Report. There have been no changes in our significant accounting policies or critical accounting estimates since June 30, 2021.

Recent Accounting Pronouncements

There are no recent accounting pronouncements that we anticipate adopting.

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Item 3: Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

Our exposure to market interest rates relates primarily to the investments of cash balances and short-term investments. We have cash reserves held in U.S. dollars and we place funds on deposit with financial institutions, which are readily available. Our short-term investments consist solely of U.S. government securities with a maturity of three to twelve months.

We place our cash deposits with high credit quality financial institutions and by policy limit the amount of credit exposure to any one corporation or bank. These deposits are in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. We are adverse to principal loss and we ensure the safety and preservation of our invested funds by limiting default risk, market risk and reinvestment risk. We seek to mitigate default risk by depositing funds with high credit quality financial institutions, by limiting the amount of credit exposure to any one corporation or bank, by purchasing short-term investments consisting of U.S. government securities, and by positioning our portfolio to respond appropriately to a significant reduction in a credit rating of any such financial institution.

We do not consider the effects of interest rate movements to be a material risk to our financial condition.

Item 4: Controls and Procedures

At the end of the period covered by this Quarterly Report on Form 10-Q, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective to ensure that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

There were no changes in our internal control over financial reporting during the period covered by this Quarterly Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II OTHER INFORMATION

Item 1: Legal Proceedings

None.

Item 1A: Risk Factors

There have been no material changes in our risk factors from those included in our 2021 Annual Report.

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3: Defaults upon Senior Securities

None.

Item 4: Mine Safety Disclosures

Not applicable.

Item 5: Other Information

None.

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Item 6: Exhibits

Exhibit Index

Exhibits
10.1	Transition and Retirement Agreement between Brian G. Drazba and MEI Pharma, Inc., dated as of August 2, 2021. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on August 5, 2021 (File No. 000-50484)).
31.1	Rule 13a-14(a) or Rule 15d-14(a) Certification of Principal Executive Officer.
31.2	Rule 13a-14(a) or Rule 15d-14(a) Certification of Principal Financial Officer.
32.1	Certification of Principal Executive Officer and Principal Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C 1350).
101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Quarterly Report to be signed on its behalf by the undersigned, thereunto duly authorized.

MEI Pharma, Inc.

/s/ Daniel P. Gold

Daniel P. Gold

President and Chief Executive Officer

Date: November 10, 2021

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