MSB Trading - 2019, page-2682

“Dear Ecoo”


@ecoool2 Thanks for the great posts and understanding. My “self ban” is over. I feel my observations were merited so there is no longer a need for a further period of self reflection. The moderators generally do an excellent job. I will certainly leave it to them to consider , whether or not , they are being “played” by certain posters . I can assure them I always intend to adhere to high standards.

Mesoblast was busy a few days ago meeting a number of institutions as part of a normal post results IR exercise. I understand SI was making his way over to the US for a prescheduled meeting so took the opportunity to spread the word a little further... more to follow shortly.
In order to avoid future ambush, I wish to make it crystal clear that I will not NECESSARILY always reference, or attribute, the basis of my “opinions” to any particular source. If posters wish to believe or ignore my observations as speculation or ill considered opinion, so be it, but I promise not to deliberately misled . We will see who is right or wrong in the fullness of time. Also, as a shareholder, my interests are aligned with the Company in most instances. ... so please bear in mind that I do not intend to compromise, or weaken the commercial position of Mesoblast ... by making indiscreet comments. Companies give the same generalised guidance to analysts and shareholders in non public forums and they expect discretion. It is understandable that the analysts ask most of their questions away from the public Q&A ... I am just trying to help the smaller shareholder keep up with the flow of information which is not deemed material or price sensitive but which is well known to experienced industry practitioners.
By way of example, I have previously speculated that MSB would reach 100% of the required MACE by September 2019 based on my analysis of generally available mortality curves of the meta data for CHF and course other relevant data such as the control group of the Phase 2 trial and the enrolment criteria for the current trial. Indeed I am dumbfounded that posters have not commented on the obvious point... how can this trial have gone on for so long without being a success? In my opinion, anyone with a basic understanding of this subject will know that each enrolled patient on average is likely to suffer between 2-3 MACE... with most succumbing to events in their last decile of their lives following diagnosis . If the total number of enrolled patients is 566 and the majority are Grade 3 presenting with NT Pro BNP levels ( an accurate biomarker for predicting severe CHF) of over 1000, ...you don’t need to be an Einstein to figure out that either the control group is either showing some amazing freak statistical divergence from its typical modelling or we are going to be very happy at the conclusion of this trial when 566 MACE have been reached.
Despite the incredible results of the Revascor Phase 2 trial which reported no MACE over a 3 year period in the 150 dosing arm, it is always dangerous to make assumptions about the behaviour of any control group... especially in the light of statistics showing that gold standard methods of CHF treatment have improved mortality rates by several percentage points over the last 20 years . Studying data from Framingham , AHA and BHF sources always leaves you questioning if your assumptions are going to be accurate.
What has brought me “off the fence” is I believe a very high hurdle rate of PPOS (posterior probability of success) was set for the successfully completed interim futility test in April 2017, when I believe approximately 25% of MACE had already occurred amongst almost half (270) of the intended study group who had received dosing at that time. To achieve such a result at the midpoint of the trial is very significant. I have it on good authority that there is a high risk that you will achieve a “false negative” and stop the trial early , unless you have performed to expectations ,when applying Bayesian methodology at the midpoint of a trial, especially when one considers the specific design and powering of the Revascor trial. In my opinion, the CHF phase 3 trial is now 75-80% likely to meet its primary endpoint. I believe MACE are correlated to Terminal Cardiac Events. IF my speculation is correct, then MSB has more than a sporting chance that the FDA will NOT require a confirmatory trial before gaining approval (but will need to undertake to do one immediately after) , because the number of deaths will have been materially reduced relative to the control group. IF, this conjecture is correct , Mesoblast will have a market cap of at least US $ 20bn within 3 years in my opinion.
Lastly , I have to refine my timetable for the ending of the Phase 3 CHF trial in the light of a better understanding of how cases are collated and verified. As I have mentioned in a previous post, Harvard review and verify all patient data from the Data Monitoring Controller which causes a delay of up to 2 months . Because of my lack of industry background I did not initially factor in my calculations that many patients drop out of trials especially when they are for an extended period of time. By way of example the recent DAPA HF trial enrolled 4,744 patients in 20 countries. In the control group, 258 discontinued treatment against 249 in the cohort receiving Dapagliflozin . There were also a total of 36 other patients who registered as having an incomplete follow up and were excluded from the trial results. Assuming a similar percentage rate of exclusion (11.45%) is applicable to the Revascor trial , we will probably need closer to 602 MACE to be verified to allow for drop outs.

I understand that we have now reached approx 95% (513) of the required 540 MACE which have been recorded and verified... but it is likely the trial will need to carry on to 600 MACE if MSB wants to be prudent and allow for incompletes . As the trial is blinded only the DMC will no the precise number of incompletes of course. The DMC have probably scheduled an update meeting with the Company in the next month or so. They have already told the Company that they could reduce enrolled numbers to 566 from 600. The DMC is of course unblinded. As the trial approaches 5 year duration and we are so close to our officially declared MACE requirement , they MIGHT even decide stop the trial at 540 or even less if there is proof of overwhelming efficacy. Just to be clear Mesoblast is still blinded (other than for the results interim futility test) so they will only take a decision to stop the trial when advised to do so.

I expected a pullback in the share price. I have bought more shares in the last 2 days. Predicting daily share price movements is a mugs game. I am sure I could finesse my position better, but in my experience (which is substantial) you need to be on board when the plane takes off... even if it takes a long for Air Traffic Control to clear you !

Good luck all. Thank you for all the messages of support. It means a lot !