View Filing Data

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Dec. 31, 2016	Feb. 07, 2017
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Dec. 31, 2016
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Trading Symbol	MEIP
Entity Registrant Name	MEI Pharma, Inc.
Entity Central Index Key	0001262104
Current Fiscal Year End Date	--06-30
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		36,772,428

Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2016	Jun. 30, 2016
Current assets:
Cash and cash equivalents	$ 15,050	$ 10,837
Short term investments	40,104	35,081
Total cash, cash equivalents and short-term investments	55,154	45,918
Prepaid expenses and other current assets	2,668	831
Total current assets	57,822	46,749
Intangible assets, net	348	366
Property and equipment, net	40	49
Total assets	58,210	47,164
Current liabilities:
Accounts payable	382	1,079
Accrued liabilities	2,938	4,433
Total current liabilities	3,320	5,512
Commitments and contingencies (Note 4)
Stockholders' equity:
Preferred stock, $0.01 par value; 100,000 shares authorized; none outstanding
Common stock, $0.00000002 par value; 113,000,000 shares authorized; 36,772,428 and 34,155,997 shares issued and outstanding at December 31, 2016 and June 30, 2016, respectively	0	0
Additional paid-in-capital	224,276	218,653
Accumulated deficit	(169,386)	(177,001)
Total stockholders' equity	54,890	41,652
Total liabilities and stockholders' equity	$ 58,210	$ 47,164

Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2016	Jun. 30, 2016
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	100,000	100,000
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.00000002	$ 0.00000002
Common stock, shares authorized	113,000,000	113,000,000
Common stock, shares issued	36,772,428	34,155,997
Common stock, shares outstanding	36,772,428	34,155,997

Statements of Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Statements of Operations - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Revenues:
License revenue	$ 17,101		$ 17,101
Research and development revenue	98		1,194
Total revenues	17,199		18,295
Operating expenses:
Cost of research and development revenue	(1,771)		(2,865)
Research and development	(1,642)	$ (3,182)	(3,288)	$ (5,998)
General and administrative	(1,970)	(1,945)	(4,650)	(3,775)
Total operating expenses	(5,383)	(5,127)	(10,803)	(9,773)
Income (loss) from operations	11,816	(5,127)	7,492	(9,773)
Other income (expense):
Interest and dividend income	69	26	124	53
Income tax expense			(1)	(1)
Net income (loss)	$ 11,885	$ (5,101)	$ 7,615	$ (9,721)
Earnings (loss) per share, basic	$ 0.32	$ (0.15)	$ 0.21	$ (0.28)
Earnings (loss) per share, diluted	$ 0.32	$ (0.15)	$ 0.21	$ (0.28)
Shares used in computing earnings (loss) per share:
Basic	37,172,428	34,422,663	36,459,898	34,378,460
Diluted	37,216,532	34,422,663	36,501,134	34,378,460

Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
Statements of Cash Flows - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Cash flows from operating activities:
Net income (loss)	$ 7,615	$ (9,721)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Share-based compensation	1,411	1,568
Depreciation and amortization	29	30
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(1,837)	(285)
Accounts payable	(697)	(415)
Accrued liabilities	(1,495)	(1,166)
Net cash provided by (used in) operating activities	5,026	(9,989)
Cash flows from investing activities:
Purchases of property and equipment	(2)
Purchases of short-term investments	(30,080)	(35,172)
Proceeds from maturity of short-term investments	25,057	40,113
Net cash (used in) provided by investing activities	(5,025)	4,941
Cash flows from financing activities:
Net proceeds from issuance of common stock	4,212
Net cash provided by financing activities	4,212
Net increase (decrease) in cash and cash equivalents	4,213	(5,048)
Cash and cash equivalents at beginning of the period	10,837	18,722
Cash and cash equivalents at end of the period	$ 15,050	$ 13,674

The Company

6 Months Ended

Dec. 31, 2016

The Company

Note 1. The Company

MEI Pharma, Inc., or “the Company”, is an oncology company focused on the clinical development of novel therapies for cancer. The Company’s common stock is listed on the Nasdaq Capital Market under the symbol “MEIP”.

The Company’s business purpose is the development of drugs for the treatment of cancer. The Company’s portfolio of drug candidates includes Pracinostat, an oral histone deacetylase (“HDAC”) inhibitor being developed in combination with azacitidine for the treatment of patients with newly diagnosed acute myeloid leukemia (“AML”) who are ³ 75 years of age or 18 – 74 years of age unfit for intensive chemotherapy, and patients with high and very high-risk myelodysplastic syndrome (“MDS”). In August 2016, the Company entered into an exclusive worldwide license, development and commercialization agreement with Helsinn Healthcare SA, a Swiss pharmaceutical corporation (“Helsinn”) for Pracinostat in AML, MDS, and other potential indications (“Helsinn License Agreement”). The Company’s clinical development portfolio also includes ME-401, an oral inhibitor of phosphatidylinositide 3-kinase (“PI3K”) delta currently in a Phase Ib study in patients with recurrent chronic lymphocytic leukemia (“CLL”) or follicular non-Hodgkin’s lymphoma (“fNHL”), and ME-344, a mitochondrial inhibitor currently in an investigator-sponsored study in combination with bevacizumab for the treatment of human epidermal growth factor receptor 2 (“HER2”)-negative breast cancer. The Company owns exclusive worldwide rights to ME-401 and ME-344.

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. The Company has evaluated subsequent events through the date the financial statements were issued.

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, 2016, included in the Company’s Annual Report on Form 10-K (“2016 Annual Report”) filed with the Securities and Exchange Commission (“SEC”) on September 9, 2016. Interim results are not necessarily indicative of results for a full year. The Company has sufficient tax loss carryforwards to offset any potential current year taxable income, therefore no provision for income taxes was recorded during the current period.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP 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. The Company uses estimates that affect the reported amounts (including assets, liabilities, revenues and expenses) and related disclosures. Actual results could materially differ from those estimates.

During the six months ended December 31, 2016, the Company recorded adjustments of $1.9 million to reduce expenses related to clinical trials that were at or near completion for Pracinostat and ME-344 to reflect revised estimated expenses for the conduct of the clinical trials.

Revenue Recognition

The Company generates revenues from licensing technology rights and from the conduct of research and development activities. The Company recognizes revenue when all of the following criteria are met: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred or services have been rendered; (iii) the Company’s price to the buyer is fixed or determinable; and (iv) collectability is reasonably assured.

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. The Company considers a variety of factors in determining the appropriate method of accounting under its license agreements, including whether the various elements can be separated and accounted for individually as separate units of accounting. Deliverables under an arrangement will be separate units of accounting, provided (i) a delivered item has value to the customer on a standalone basis; and (ii) the arrangement includes a general right of return relative to the delivered item, and delivery or performance of the undelivered item is considered probable and substantially in the Company’s control.

Multiple Element Arrangements

The Company accounts for revenue arrangements with multiple elements by separating and allocating consideration according to the relative selling price of each deliverable. If an element can be separated, an amount is allocated based upon the relative selling price of each element. The Company determines the relative selling price of a separate deliverable using the price it charges other customers when it sells that element separately. If the element is not sold separately and third party pricing evidence is not available, the Company will use its best estimate of selling price.

License Fee Revenue

The Company defers recognition of non-refundable upfront license fees if it has continuing performance obligations, without which the licensed data, technology, or product has no utility to the licensee separate and independent of its performance under the other elements of the applicable arrangement. Non-refundable, up-front fees that are not contingent on any future performance by the Company and require no consequential continuing involvement on the Company’s part are recognized as revenue when the license term commences and the licensed data, technology or product is delivered. The specific methodology for the recognition of the revenue is determined on a case-by-case basis according to the facts and circumstances of the applicable agreement.

Research and Development Revenue

Research and development revenue represents ratable recognition of fees allocated to research and development activities. The Company defers recognition of research and development revenue until the performance of the related research and development activities has occurred.

Cost of Research and Development Revenue

Cost of research and development revenue primarily includes internal compensation and related personnel expenses to support our research and development revenue and external costs paid to third-party contractors to perform research, conduct clinical trials and develop and manufacture drug materials.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers. The standard provides companies with a single model for accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific revenue guidance. The core principle of the model is to recognize revenue when control of the goods or services transfers to the customer, as opposed to recognizing revenue when the risks and rewards transfer to the customer under the existing revenue guidance. The guidance permits companies to either apply the requirements retrospectively to all prior periods presented, or apply the requirements in the year of adoption, through a cumulative adjustment. In August 2015, the FASB issued ASU 2015-14, Deferral of the Effective Date, which defers the required adoption date of ASU 2014-09 by one year. As a result of the deferred effective date, ASU 2014-09 will be effective for the Company in its first quarter of fiscal 2019. Early adoption is permitted but not before the original effective date of the new standard of the first quarter of fiscal 2018. The following ASUs were subsequently issued by the FASB to clarify the implementation guidance in some areas and add practical expedients: In March 2016, ASU 2016-08, Revenue from Contracts with Customers, Principal versus Agent Considerations; in April 2016, ASU 2016-10, Revenue from Contracts with Customers, Identifying Performance Obligations and Licensing; in May 2016, ASU 2016-11, Revenue from Contracts with Customers and Derivatives and Hedging - Rescission of SEC Guidance; and ASU 2016-12, Revenue from Contracts with Customers - Narrow Scope Improvements and Practical Expedients. The Company is in the process of evaluating the transition method that will be elected and the impact of adoption on its financial statements.

In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). The standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued and provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. Certain disclosures will be required if conditions give rise to substantial doubt about an entity’s ability to continue as a going concern. ASU 2014-15 applies to all entities and is effective for annual and interim reporting periods ending after December 15, 2016. The Company adopted this standard for the quarter ended December 31, 2016, and has applied the guidance in ASU 2014-15 to assess its ability to continue as a going concern. The Company has concluded that it does not have any issues related to its ability to continue as a going concern.

In February 2016, the FASB issued ASU 2016-02, Leases, which introduces the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. The new standard is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years with early adoption permitted. We are evaluating the impact that the adoption of this standard will have on our financial statements.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of accounting for share-based payment transactions including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The new standard is effective for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years with early adoption permitted. We are evaluating the impact that the adoption of this standard will have on our financial statements.

In June 2016, the FASB issued No. 2016-13, Financial Instruments —Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Topic 326 amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, Topic 326 eliminates the probable initial recognition threshold in current U.S. GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available for sale debt securities, credit losses should be measured in a manner similar to current U.S. GAAP, however Topic 326 will require that credit losses be presented as an allowance rather than as a write-down. ASU 2016-13affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. This update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of this standard will have on its financial statements.

Helsinn License Agreement

6 Months Ended

Dec. 31, 2016

Helsinn License Agreement

Note 2. Helsinn License Agreement

In August 2016, the Company entered into the Helsinn License Agreement. Under the terms of the agreement, Helsinn has been granted a worldwide exclusive license to develop, manufacture and commercialize Pracinostat, and is primarily responsible for funding its global development and commercialization. As compensation for such grant of rights, the Company received a $15.0 million upfront payment in August 2016, and will receive a $5.0 million payment upon the earlier of (i) dosing of the first patient in the upcoming Phase III study of Pracinostat in newly diagnosed AML patients who are > 75 years of age or unfit to receive induction therapy or (ii) March 1, 2017. The Company will also receive reimbursement related to agreements entered into by MEI in anticipation of the upcoming Phase III study of Pracinostat by Helsinn as well as a Phase II study for Pracinostat in combination with azacitidine for the treatment of high and very high risk MDS, which will be conducted by MEI (the “POC Study”). The current expected external cost of the Phase II study will be shared equally by Helsinn and the Company. Enrollment in the Phase II study is anticipated to commence in the second quarter of calendar year 2017. The Company will be eligible to receive up to $444 million in potential regulatory and sales-based milestones, along with royalty payments on the net sales of Pracinostat.

The Company determined that the exclusive license, development and commercialization agreement represents a multiple-element arrangement for purposes of revenue recognition. The Company identified the following elements, based upon deliverables under the agreement: (i) worldwide license and transfer of technology and data; (ii) completion of the conduct of certain identified clinical trials related to Pracinostat; (iii) coordination of services provided by third-party vendors related to research and development activities, for which Helsinn has agreed to reimburse such third-party expenses; and (iv) the conduct of the POC study, for which Helsinn has agreed to share third-party expenses. The license was determined to represent a separate element as it has stand-alone value and is not dependent upon the performance of the research and development activities. The research and development elements, related to the conduct of clinical trials and services provided by third-party vendors, were determined to represent separate elements as they primarily represent pass through of services performed by third parties and therefore are sold separately by other vendors. The Company allocated the proceeds related to the agreement to the units of accounting using the relative selling price method. The Company determined the estimated selling price for the license using the assistance of a third-party valuation specialist, and the Company determined the estimated selling price for the research and development elements by using the prices charged by the respective third party vendors. Revenue of $17.1 million related to the license was recognized during the three months ended December 31, 2016, upon delivery of the technology and data transfer. Revenue related to the research and development elements of the arrangement are recognized based on the proportional performance of each research and development activity. Research and development revenues are recognized on a gross basis as the Company is the primary obligor and has discretion in supplier selection.

Contemporaneously with the Helsinn License Agreement, the Company entered into a Common Stock Purchase Agreement (the “Helsinn Equity Agreement”), dated as of August 5, 2016, with Helsinn Investment Fund SA (the “Purchaser”). Pursuant to the terms of the Helsinn Equity Agreement, the Purchaser agreed to purchase and the Company agreed to issue a number of shares of the Company’s common stock determined by dividing $5,000,000 by the volume weighted-average price for shares of the Company’s common stock for the 10-trading-day-period beginning on August 1, 2016 and ending on August 12, 2016 (the “VWAP”), rounded to the nearest whole share. The VWAP was $1.911 per share. Accordingly, on August 16, 2016, the Company issued 2,616,431 shares of common stock. The multiple-element arrangements guidance contains a presumption that separate contracts entered into at or near the same time with the same entity or related parties were negotiated together and should be evaluated as a single agreement. Therefore, the difference between the VWAP price of $1.911 per share and the closing price of the Company’s common stock on August 5, 2016 of $1.61 of $788,000 has been allocated as additional consideration related to the revenue elements.

Commitments and Contingencies

6 Months Ended

Dec. 31, 2016

Commitments and Contingencies

Note 4. Commitments and Contingencies

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

As of December 31, 2016, the Company leases approximately 8,800 square feet of office space for the Company’s executive and administrative offices. The monthly rental rate is approximately $29,000 during the remaining term of the lease, plus a pro-rata share of certain building expenses. The lease expires in June 2017. Total future minimum payments under the lease are $172,000 through June 30, 2017.

Asset Purchase Agreement

In August 2012, the Company entered into a definitive asset purchase agreement with S*Bio Pte Ltd (“S*Bio”), pursuant to which the Company agreed to acquire certain assets comprised of intellectual property and technology including rights to Pracinostat, in exchange for $500,000 of common stock. In August 2012, the Company completed the asset purchase and issued 195,756 shares of common stock to S*Bio. The Company has also agreed to make certain milestone payments to S*Bio based on the achievement of certain clinical, regulatory and net sales-based milestones, as well as to make certain contingent earnout payments to S*Bio. Milestone payments will be made to S*Bio up to an aggregate amount of $75.2 million if certain U.S., E.U. and Japanese regulatory approvals are obtained and if certain net sales thresholds are met in North America, the E.U. and Japan. The first milestone payment of $200,000 payable in cash, plus $500,000 payable in cash or in shares of the Company’s common stock, will be due upon the first dosing of a patient in a Phase III clinical trial or other pivotal trial, for any indication. Subsequent milestone payments will be due upon certain regulatory approvals and sales-based events. As of December 31, 2016, the Company has accrued $700,000 for potential future payments.

CyDex License Agreement

In September 2012, the Company entered into a license agreement with CyDex Pharmaceuticals, Inc. (“CyDex”). Under the license agreement, CyDex granted to the Company an exclusive, nontransferable license to intellectual property rights relating to Captisol^® for use with the Company’s isoflavone-based drug compounds. The Company agreed to pay to CyDex a non-refundable license issuance fee, future milestone payments, and royalties at a low, single-digit percentage on future sales of the Company’s approved drugs utilizing Captisol. Contemporaneously with the license agreement, the Company and CyDex entered into a commercial supply agreement pursuant to which the Company agreed to purchase 100% of its requirements for Captisol from CyDex. The Company may terminate both the license agreement and the supply agreement for convenience at any time upon 90 days’ prior written notice. As of December 31, 2016, the Company has not accrued any amounts for potential future payments.

Stockholders' Equity

6 Months Ended

Dec. 31, 2016

Stockholders' Equity

Note 6. Stockholders’ Equity

Equity Transactions

Shelf Registration Statement

In April 2014, the Company filed a shelf registration statement on Form S-3 with the SEC (“shelf registration statement”). The shelf registration statement was declared effective by the SEC in April 2014. The shelf registration statement permits the Company to sell, from time to time, up to $150.0 million of common stock, preferred stock and warrants. As of December 31, 2016, there is $104.0 million aggregate value of securities available under the shelf registration statement. Pursuant to SEC regulations, if the market value of the Company’s public float is below $75.0 million, as of certain measurement dates, the Company cannot sell securities from the shelf registration statement which represent more than one-third of the market value of the Company’s non-affiliated public float during any 12 month period. The Company is currently not subject to such limitations.

Helsinn Equity Investment

On August 5, 2016, the Company entered into the Helsinn Equity Agreement. Pursuant to the terms of the Helsinn Equity Agreement, the Company issued 2,616,431 shares of common stock on August 16, 2016. The transaction was exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.

Warrants

As of December 31, 2016, there were outstanding warrants to purchase 315,484 shares of the Company’s common stock at an exercise price of $7.14 per share, which expire in May 2017, issued in conjunction with the Company’s May 2012 rights offering, and warrants to purchase 3,230,202 shares of the Company’s common stock at an exercise price of $3.12 per share, which expire in December 2017, issued in conjunction with its December 2012 private placement.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
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+ Details

Share-based Compensation

6 Months Ended

Dec. 31, 2016

Share-based Compensation

Note 7. Share-based Compensation

The Company uses equity-based compensation programs to provide long-term performance incentives for its employees. These incentives consist primarily of stock options and restricted stock units (“RSUs”).

MEI Pharma’s 2008 Stock Omnibus Equity Compensation Plan (the “2008 Equity Plan”) provides for the grant of options and/or other share-based or share-denominated awards to the Company’s non-employee directors, officers, employees and advisors. The 2008 Equity Plan was initially adopted in 2008 and was amended and restated in 2011, 2013, 2014, and 2015. Effective December 1, 2016, the Company’s stockholders voted to further amend and restate the 2008 Equity Plan to increase the number of shares of common stock authorized for issuance under the plan to 10,186,000 shares, among other changes. As of December 31, 2016, there were 5,051,210 shares available for future grant under the 2008 Equity Plan.

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


	Three Months Ended December 31,				Six Months Ended December 31,
	2016		2015		2016		2015
Research and development	$	243	$	257	$	482	$	465
General and administrative		431		541		929		1,103

Total share-based compensation	$	674	$	798	$	1,411	$	1,568

Stock Options

Stock option activity for the six months ended December 31, 2016 was as follows:


	Number of Options			Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at June 30, 2016		2,827,172		$	4.29
Granted		1,527,083			1.37
Forfeited / Cancelled		(33,333	)		1.36
Expired		(39,900	)		9.98

Outstanding at December 31, 2016		4,281,022		$	3.22		7.0	$	137,680

Vested and exercisable at December 31, 2016		1,773,019		$	4.78		4.8	$	8,534

The fair value of each stock option granted during the six months ended December 31, 2016 is estimated on the grant date under the fair value method using a Black-Scholes valuation model. Stock options granted to employees during the six months ended December 31, 2016 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 six months ended December 31, 2016 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 RSU equity awards are measured using the grant date fair value of the Company’s common stock. The estimated fair values of the stock options and RSUs, 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:


	Six Months Ended December 31,
	2016			2015
Risk-free interest rate		1.2	%		1.8	%
Expected life (years)		5.9			5.7
Expected volatility		108.2	%		117.3	%
Dividend yield		0.0	%		0.0	%
Weighted-average grant date fair value	$	1.12		$	1.38

As of December 31, 2016, there was $1.8 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 1.5 years.

Restricted Stock Units

In March 2013, the Compensation Committee of the Board of Directors granted 400,000 RSUs to the Company’s Chief Executive Officer, Dr. Daniel P. Gold. Each RSU represents the contingent right to receive one share of the Company’s common stock. One-third of the RSUs vested on August 30, 2014, one-third vested on August 30, 2015, and the remaining one-third vested on August 30, 2016. The shares underlying the RSUs will be delivered to Dr. Gold on the earliest to occur of (i) March 29, 2018, (ii) Dr. Gold’s death, disability or separation from service from the Company for any reason, or (iii) a change in control involving the Company. The fair value of the RSUs on the date of grant was $3.5 million. The grant date fair value per unit was $8.63.

In June 2016, the Company granted 364,726 RSUs to employees. Each RSU represents the contingent right to receive one share of the Company’s common stock. The RSUs were subject to performance criteria that were met in August 2016. The RSUs will vest in August 2018. The fair value of the RSUs was measured at $1.61 per unit on the date the performance criteria were met. Under the terms of the 2008 Plan, each of these RSUs is calculated as 1.25 shares of common stock for purposes of determining the number of shares available for future grant. There were 363,014 unvested RSUs outstanding as of December 31, 2016.

As of December 31, 2016, unrecognized compensation expense related to the unvested portion of the Company’s RSUs was approximately $0.5 million and is expected to be recognized over approximately 1.6 years.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References + Details

The Company (Policies)	6 Months Ended
The Company (Policies)	Dec. 31, 2016
Basis of Presentation	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. The Company has evaluated subsequent events through the date the financial statements were issued. 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, 2016, included in the Company’s Annual Report on Form 10-K (“2016 Annual Report”) filed with the Securities and Exchange Commission (“SEC”) on September 9, 2016. Interim results are not necessarily indicative of results for a full year. The Company has sufficient tax loss carryforwards to offset any potential current year taxable income, therefore no provision for income taxes was recorded during the current period.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with U.S. GAAP 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. The Company uses estimates that affect the reported amounts (including assets, liabilities, revenues and expenses) and related disclosures. Actual results could materially differ from those estimates. During the six months ended December 31, 2016, the Company recorded adjustments of $1.9 million to reduce expenses related to clinical trials that were at or near completion for Pracinostat and ME-344 to reflect revised estimated expenses for the conduct of the clinical trials.
Revenue Recognition	Revenue Recognition The Company generates revenues from licensing technology rights and from the conduct of research and development activities. The Company recognizes revenue when all of the following criteria are met: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred or services have been rendered; (iii) the Company’s price to the buyer is fixed or determinable; and (iv) collectability is reasonably assured. 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. The Company considers a variety of factors in determining the appropriate method of accounting under its license agreements, including whether the various elements can be separated and accounted for individually as separate units of accounting. Deliverables under an arrangement will be separate units of accounting, provided (i) a delivered item has value to the customer on a standalone basis; and (ii) the arrangement includes a general right of return relative to the delivered item, and delivery or performance of the undelivered item is considered probable and substantially in the Company’s control. Multiple Element Arrangements The Company accounts for revenue arrangements with multiple elements by separating and allocating consideration according to the relative selling price of each deliverable. If an element can be separated, an amount is allocated based upon the relative selling price of each element. The Company determines the relative selling price of a separate deliverable using the price it charges other customers when it sells that element separately. If the element is not sold separately and third party pricing evidence is not available, the Company will use its best estimate of selling price. License Fee Revenue The Company defers recognition of non-refundable upfront license fees if it has continuing performance obligations, without which the licensed data, technology, or product has no utility to the licensee separate and independent of its performance under the other elements of the applicable arrangement. Non-refundable, up-front fees that are not contingent on any future performance by the Company and require no consequential continuing involvement on the Company’s part are recognized as revenue when the license term commences and the licensed data, technology or product is delivered. The specific methodology for the recognition of the revenue is determined on a case-by-case basis according to the facts and circumstances of the applicable agreement. Research and Development Revenue Research and development revenue represents ratable recognition of fees allocated to research and development activities. The Company defers recognition of research and development revenue until the performance of the related research and development activities has occurred. Cost of Research and Development Revenue Cost of research and development revenue primarily includes internal compensation and related personnel expenses to support our research and development revenue and external costs paid to third-party contractors to perform research, conduct clinical trials and develop and manufacture drug materials.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers. The standard provides companies with a single model for accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific revenue guidance. The core principle of the model is to recognize revenue when control of the goods or services transfers to the customer, as opposed to recognizing revenue when the risks and rewards transfer to the customer under the existing revenue guidance. The guidance permits companies to either apply the requirements retrospectively to all prior periods presented, or apply the requirements in the year of adoption, through a cumulative adjustment. In August 2015, the FASB issued ASU 2015-14, Deferral of the Effective Date, which defers the required adoption date of ASU 2014-09 by one year. As a result of the deferred effective date, ASU 2014-09 will be effective for the Company in its first quarter of fiscal 2019. Early adoption is permitted but not before the original effective date of the new standard of the first quarter of fiscal 2018. The following ASUs were subsequently issued by the FASB to clarify the implementation guidance in some areas and add practical expedients: In March 2016, ASU 2016-08, Revenue from Contracts with Customers, Principal versus Agent Considerations; in April 2016, ASU 2016-10, Revenue from Contracts with Customers, Identifying Performance Obligations and Licensing; in May 2016, ASU 2016-11, Revenue from Contracts with Customers and Derivatives and Hedging - Rescission of SEC Guidance; and ASU 2016-12, Revenue from Contracts with Customers - Narrow Scope Improvements and Practical Expedients. The Company is in the process of evaluating the transition method that will be elected and the impact of adoption on its financial statements. In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). The standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued and provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. Certain disclosures will be required if conditions give rise to substantial doubt about an entity’s ability to continue as a going concern. ASU 2014-15 applies to all entities and is effective for annual and interim reporting periods ending after December 15, 2016. The Company adopted this standard for the quarter ended December 31, 2016, and has applied the guidance in ASU 2014-15 to assess its ability to continue as a going concern. The Company has concluded that it does not have any issues related to its ability to continue as a going concern. In February 2016, the FASB issued ASU 2016-02, Leases, which introduces the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. The new standard is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years with early adoption permitted. We are evaluating the impact that the adoption of this standard will have on our financial statements. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of accounting for share-based payment transactions including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The new standard is effective for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years with early adoption permitted. We are evaluating the impact that the adoption of this standard will have on our financial statements. In June 2016, the FASB issued No. 2016-13, Financial Instruments —Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Topic 326 amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, Topic 326 eliminates the probable initial recognition threshold in current U.S. GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available for sale debt securities, credit losses should be measured in a manner similar to current U.S. GAAP, however Topic 326 will require that credit losses be presented as an allowance rather than as a write-down. ASU 2016-13 affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. This update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of this standard will have on its financial statements.

Share-based Compensation (Tables)

6 Months Ended

Dec. 31, 2016

Share-Based Compensation Expense for Stock Awards

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


	Three Months Ended December 31,				Six Months Ended December 31,
	2016		2015		2016		2015
Research and development	$	243	$	257	$	482	$	465
General and administrative		431		541		929		1,103

Total share-based compensation	$	674	$	798	$	1,411	$	1,568

Summary of Stock Option Activity

Stock option activity for the six months ended December 31, 2016 was as follows:


	Number of Options			Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at June 30, 2016		2,827,172		$	4.29
Granted		1,527,083			1.37
Forfeited / Cancelled		(33,333	)		1.36
Expired		(39,900	)		9.98

Outstanding at December 31, 2016		4,281,022		$	3.22		7.0	$	137,680

Vested and exercisable at December 31, 2016		1,773,019		$	4.78		4.8	$	8,534

Fair Value of Stock Options Weighted-Average Assumptions Used

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


	Six Months Ended December 31,
	2016			2015
Risk-free interest rate		1.2	%		1.8	%
Expected life (years)		5.9			5.7
Expected volatility		108.2	%		117.3	%
Dividend yield		0.0	%		0.0	%
Weighted-average grant date fair value	$	1.12		$	1.38

Helsinn License Agreement - Additional Information (Detail) - USD ($)			3 Months Ended	6 Months Ended
	Aug. 16, 2016	Aug. 05, 2016	Dec. 31, 2016	Dec. 31, 2016	Aug. 31, 2016
Related Party Transaction [Line Items]
License revenue			$ 17,101,000	$ 17,101,000
Potential Regulatory and Sales-Based Milestone Payment \| Maximum
Related Party Transaction [Line Items]
Milestone payment receivable amount					$ 444,000,000
Helsinn License Agreement \| Helsinn \| Up Front Payment
Related Party Transaction [Line Items]
Compensation receivable for grant of rights					15,000,000
Helsinn License Agreement \| Helsinn \| Balance Payment
Related Party Transaction [Line Items]
Compensation receivable for grant of rights					$ 5,000,000
Helsinn Equity Agreement \| Helsinn Investment Fund SA
Related Party Transaction [Line Items]
Proceeds from sale of equity method investment		$ 5,000,000
Volume weighted average price period		10 days
Volume weighted average price period beginning date		Aug. 01, 2016
Volume weighted average price period ending date		Aug. 12, 2016
Sale of stock, number of common stock issued	2,616,431
Sale of common stock, price per share		$ 1.911
Closing price of common stock		$ 1.61
Revenue recognized		$ 788,000

Calculation of Weighted Average Shares Used to Calculate Basic and Diluted Earnings (Loss) Per Share (Detail) - shares	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Weighted average shares outstanding	37,172,428	34,422,663	36,459,898	34,378,460
Effect of potentially dilutive common shares from equity awards	44,104		41,236
Weighted average shares used in calculating diluted earnings per share	37,216,532	34,422,663	36,501,134	34,378,460
Potentially dilutive shares shares excluded from calculation due to anti-dilutive effect	7,915,440	6,575,964	7,714,902	6,484,200

Commitments and Contingencies - Additional Information (Detail)	1 Months Ended		6 Months Ended
	Sep. 30, 2012	Aug. 31, 2012 USD ($) shares	Dec. 31, 2016 USD ($) ft²	Jun. 30, 2016 USD ($)
Purchase Commitment, Excluding Long-term Commitment [Line Items]
Lease expiration month and year			2017-06
Lease arrangement rent area, square feet \| ft²			8,800
Lease rental rate			$ 29,000
Future minimum payment, remainder of fiscal year			172,000
Issuance of common stock to acquire intellectual property and technology rights		$ 500,000
Issuance of common stock to purchase asset, shares \| shares		195,756
Future aggregate milestone payments		$ 75,200,000
First milestone payment		200,000
Common stock value			0	$ 0
Accrued potential future payments			$ 700,000
Percentage of Purchase Requirement	100.00%
License and supply agreement notice period	90 days
Phase Three Clinical Trial
Purchase Commitment, Excluding Long-term Commitment [Line Items]
Common stock value		$ 500,000

Stockholders' Equity - Additional Information (Detail) - USD ($)		1 Months Ended	6 Months Ended
	Aug. 16, 2016	Apr. 30, 2014	Dec. 31, 2016
Class of Stock [Line Items]
Public float maximum market value		$ 75,000,000
Aggregate value of securities available under shelf registration statement			$ 104,000,000
Helsinn Investment Fund SA \| Helsinn Equity Agreement
Class of Stock [Line Items]
Sale of stock, number of common stock issued	2,616,431
Rights Offering
Class of Stock [Line Items]
Warrants outstanding			315,484
Exercise price			$ 7.14
Warrants expiration date			2017-05
Maximum
Class of Stock [Line Items]
Sale of shares and warrants under agreement		$ 150,000,000
December 2012 Private Placement
Class of Stock [Line Items]
Warrants outstanding			3,230,202
Exercise price			$ 3.12
Warrants expiration date			2017-12

Share-based Compensation - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions	1 Months Ended		6 Months Ended
	Jun. 30, 2016	Mar. 31, 2013	Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense related to unvested stock options			$ 1.8
Expected weighted average period for recognition of compensation expense			1 year 6 months
Directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period			12 months
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period			10 years
2008 Omnibus Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock authorized			10,186,000
Shares available for future grant			5,051,210
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected weighted average period for recognition of compensation expense			1 year 7 months 6 days
Fair value of RSUs on the date of grant		$ 3.5
RSUs grant date fair value per unit		$ 8.63
Unrecognized compensation expense related to non-vested RSUs			$ 0.5
Restricted Stock Units (RSUs) \| Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
RSUs granted	364,726
Number of common stock to be received for each RSUs	1
RSUs grant date fair value per unit	$ 1.61
RSUs outstanding			363,014
Restricted Stock Units (RSUs) \| Chief Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
RSUs granted		400,000
Number of common stock to be received for each RSUs		1
Restricted Stock Units (RSUs) \| Chief Executive Officer \| Vested on August 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
RSUs vested percentage		33.33%
Restricted Stock Units (RSUs) \| Chief Executive Officer \| Vested on August 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
RSUs vested percentage		33.33%
Restricted Stock Units (RSUs) \| Chief Executive Officer \| Vested on August 30, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
RSUs vested percentage		33.33%
Restricted Stock Units (RSUs) \| 2008 Omnibus Plan \| Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of common stock considered per unit in determining shares for future grant	1.25
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period			36 months
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period			10 years
Employee Stock Option \| Vesting one year from the date of grant
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
RSUs vested percentage			25.00%

Summary of Stock Option Activity (Detail)	6 Months Ended
Summary of Stock Option Activity (Detail)	Dec. 31, 2016 USD ($) $ / shares shares
Number of Options
Beginning Balance \| shares	2,827,172
Granted \| shares	1,527,083
Forfeited / Cancelled \| shares	(33,333)
Expired \| shares	(39,900)
Ending balance \| shares	4,281,022
Vested and exercisable at end of period \| shares	1,773,019
Weighted- Average Exercise Price
Beginning Balance \| $ / shares	$ 4.29
Granted \| $ / shares	1.37
Forfeited / Cancelled \| $ / shares	1.36
Expired \| $ / shares	9.98
Ending balance \| $ / shares	3.22
Vested and exercisable at end of period \| $ / shares	$ 4.78
Weighted Average Remaining Contractual Term (in years)
Outstanding at end of period	7 years
Vested and exercisable at end of period	4 years 9 months 18 days
Aggregate Intrinsic Value
Outstanding at end of period \| $	$ 137,680
Vested and exercisable at end of period \| $	$ 8,534

Fair Value of Stock Options Weighted-Average Assumptions Used (Detail) - $ / shares	6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	1.20%	1.80%
Expected life (years)	5 years 10 months 24 days	5 years 8 months 12 days
Expected volatility	108.20%	117.30%
Dividend yield	0.00%	0.00%
Weighted-average grant date fair value	$ 1.12	$ 1.38

The Company - Additional Information (Detail) $ in Millions	6 Months Ended
The Company - Additional Information (Detail) $ in Millions	Dec. 31, 2016 USD ($)
Clinical Trials
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Reduction of expenses	$ (1.9)

Short-Term Investments - Additional Information (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Jun. 30, 2016
Schedule of Equity Method Investments [Line Items]
Short term investments	$ 40,104	$ 35,081