Ann: Mesoblast Submits Completed BLA for Ryoncil to US FDA, page-38

Bell  Potter ....
Mesoblast (MSB) has announced today the completion of its BLA filing for product Ryoncil to treat SR-aGvHD (steroid refractory GvHD) in children to the FDA. The last module covering quality control and manufacturing under the rolling BLA submission was filed on 31st January ‘20.


MSB has also requested Priority Review of the BLA by the FDA under Ryoncil’s existing Fast Track designation for SR-aGvHD.


We view this as a very important milestone in the history of the company as it gets it one step closer to having its first product commercialised in the US.


FDA now has a 60 day window to confirm acceptance and eligibility for priority review with a PDUFA date. If the product will also be put in front of an advisory committee (ADCOM), then FDA will also advise MSB of the ADCOM date. We note that the ADCOM is generally held 1-2 months before the PDUFA date.


Assuming MSB gets priority review, we expect approval and launch is likely in 4QCY20 (given that the the 6 month review clock generally starts from the day FDA confirms the PDUFA date to MSB).


In preparation, MSB is building inventory with Lonza (US$15.1m minimum commitment) and building targeted sales force of ~15 to target 15 sites that treat >50% of patients with aGvHD in US.


We note that the adoption curve for MSB’s GvHD product temcell in Japan has been very strong (royalties for 2QFY20 were up 61% y/y, market penetration over 30% of addressable market in 4 years) and we continue to believe it has important read throughs for Ryoncil in the US market, which we believe will have even a faster growth trajectory. We expect Ryoncil could reach 35% penetration in US within 3 years. The US GvHD opportunity for Ryoncil is larger both in terms of value (double pricing vs. Japan) and addressable market size (adult + children is 4x of Japan). At peak penetration of 50% we forecast in-market sales in US in the paediatric GvHD population alone at US$117m, which is more than 2x of our assumptions for JCR’s in-market sales in Japan at peak.


Apart from the US launch of its first product, we also expect results from key Phase 3 trials in mid-CY20 for back-pain and heart failure to act as significant inflexion points for the stock.


MSB remains one of key stock picks for the year.


We retain Buy (spec) with A$5.15/sh valuation.