2023-07-25 10:00:00 ET
Summary
- Mesoblast Limited has a PDUFA from a resubmitted BLA in two weeks.
- The previous adcomm, held over 2 years ago, voted 9-1 for approval on efficacy.
- The FDA did not agree because it had a problem with manufacturing homogeneity.
I haven’t covered Mesoblast Limited ( MESO ) in years, my last coverage being on Dec 24, 2020. Interestingly, there have only been two more articles on MESO in the past 30 months. I used to cover MESO a lot in those days, and even had it in my Top Ideas list. That investment was actually very good while it lasted, however, after the FDA handed them a CRL for remestemcel-L in aGVHD, despite a 9-1 Advisory Committee vote, the stock lost ground.
There were other issues; known troublemaker that it is, Meso’s second asset, rexlemestrocel-L (REVASCOR®), failed to meet the primary endpoint in a large Phase 3 trial in 537 patients with advanced chronic heart failure. And then, in the same month, what today looks like an unnecessary segue but was in those days a common thing, Meso’s venture into treating covid-19 using remestemcel-L also failed. The stock tanked, I escaped after selling my few remaining shares, and never looked back… until now.
Meso’s current pipeline looks like this:
So we have the same two products, and some of the lead programs look similar to what we saw 3 years ago - and in almost the same stages of development.
But there is a major change, reflected in this piece of news. More than 2 years after rejection, Meso resubmitted its BLA for remestemcel-L to treat children with steroid-refractory acute graft versus host disease (SR-aGVHD), and the FDA accepted it, with a review date of August 2 or earlier. Here’s what we see on our proprietary tool, TickerBay.com:
The new submission contains new long-term survival data through at least four years for children enrolled in a phase 3 trial, among other information. However, there was no new trial. Compare that with what they had before, and what the FDA requested:
In its CRL or Complete Response Letter, the FDA recommended that the Company “conduct at least 1 additional randomized, clinical study in adults and/or children to provide further evidence of the efficacy of remestemcel-L for SR-aGVHD.” This despite the company having conducted multiple phase 3 trials and an open label trial on the product candidate in pediatric GVHD showing 69% of Ryoncil patients had a complete or partial response to the treatment after 28 days. That last datapoint was from a single-arm study, Protocol MSB-GVHD001. Protocols 265 and 280, the two randomized trials, were not as successful.
As discussed in their May earnings call , summary data from these old studies in early survival metric is as follows:
What you can see here is that in each of the three studies there is a substantial early survival benefit from 66% in the sickest children where remestemcel-L was used as salvage therapy to 79% in the randomized controlled subgroup study. And the comparators for each of these outcomes showed substantially lower survival outcomes at day 100 from 54% to 57%. In the EAP 275 study, a subset analysis comparing outcomes in Grade D disease, the most severe form of the disease against survival in the database at the International Bone Marrow Transplant Registry showed a significant survival benefit of 51% in those who received remestemcel-L versus just 31% in those who received best available therapy.
While the data just now presented to the FDA, consisting of survival beyond 3 months, showed that among the control children who received the best available therapy, the survival rate beyond three months was merely 10%. In stark contrast, those who were treated with remestemcel-L showed a significantly higher survival rate, with 67% of them still alive beyond the same three-month period.
Data also showed that the survival rates for the remestemcel-L group were encouraging, with 63% of patients surviving one year, 51% surviving two years, and maintaining this level for at least four years and beyond. This means that around 50% of children afflicted with this severe and life-threatening disease, of which almost 90% had Grade C/D disease, not only survived up to two years but also continued to live for the entire duration of the follow-up period during which we assessed the outcomes.
So, recall that Mesoblast’s product consists of mesenchymal stem cells or MSCs, and although these are called “homogenous” by those who develop them, years of research has shown that they can have significant variation from batch to batch. As a 2014 paper by the FDA’s own people said:
Many stakeholders portray MSCs as well understood, homogeneous cell types with predictable properties. However, there is significant diversity in how sponsors have defined, manufactured, and described MSCs in regulatory submissions to the FDA. This diversity is apparent for tissue sourcing, product manufacturing, cell surface marker expression, and other in vitro and in vivo MSC-based product characteristics reported by sponsors.
This was the FDA’s principal concern at that time in 2020. Mesoblast defined certain CQAs or critical quality attributes for remestemcel, however, the FDA was concerned whether the company demonstrated evidence that these CQAs across different batches consistently produce the same clinical output. This is the key question the company needs to address in its resubmission. Thus, the key statement about this data is as follows:
Additional data that the FDA is reviewing shows that the valid data potency assay has low variability and can adequately demonstrate manufactured consistency and reproducibility.
The FDA also concluded their manufacturing inspection and no Form 483 was issued, a form that is generally issued if there are manufacturing issues.
Other indications in which remestemcel-L is also being developed include adult steroid refractory graft-versus-host disease, acute respiratory distress syndrome, and inflammatory bowel disease. The second asset, Rexlemestrocel-L, is being developed for chronic inflammatory low back pain, discogenic low back pain and inflammatory heart failure. These last two indications have Regenerative Medicine Advanced Therapy designations.
Financials
MESO has a market cap of $759mn and a cash balance of $49mn. They also did a $40mn private placement, with the option to draw another $40mn. They had revenues of $1.8mn from the sale of a legacy product in Japan. Research & Development expenses were US$7.0 million, manufacturing expenses were US$6.2 million, and G&A was US$6.4 million. The company has $31mn worth of manufactured products in inventory, which they will add to their balance sheet if they receive approval. Thus, while the cash position is not exactly superlative, it is more than enough for approval and launch, as well as progressing other programs through to the regulator.
The company has a heavy retail presence of 52%, followed by 32% of institutional ownership. Insiders own 16% of the stock.
Bottom Line
MESO stock chart is showing bullish trends in the last few weeks. What worries me is that this late in the game, the upcoming PDUFA catalyst must be all played out and accounted for in the stock price. Approval seems likely given the old adcomm vote, the new data which appears robust, and the FDA’s key issue in the past being manufacturing homogeneity, which is probably amply demonstrated by long term OS data.
Mesoblast Limited stock may go up a little on approval, so maybe people should consider taking up a small position. But I would keep it small, because of the high price of the stock, and the relative lack of enthusiasm in the market.
For further details see:
Mesoblast: PDUFA In Less Than 2 Weeks