I think I could help some people who just don't seem to get it yet. Lets try another way . Mesoblast is undergoing a chrysalis...it has retired to its silk woven cocoon......expectant calm decends upon the stock. There is however, frenetic activity. The larva has been eating shareholders cash for some time now and has shed its skin 4 to 6 times as it gets bigger and bigger, but now within the cocoon the caterpillars body is reorganised into the adult structures of the butterfly. Within a few weeks, by the end of February, will be the larva’s final molt....and a magnificent butterfly will emerge with the interim results. Then all the fund managers who find all forms of larvae are indistinguishable but know they all consume large amounts of cash , will suddenly realise they have a Palos Verdes Blue, one of the rarest butterflies in the world and they all want one for their collection..meanwhile the shorters will discover that they are Lepidopterophobic and will quietly disappear into some darkened corner of obscurity because no responsible adult would ever let them own one of nature’s miracles .
OK , OK , i am getting a little carried away...but be not in any doubt. Mesoblast is about to transition . It has been enclosed in its cocoon of clinical trial protocols at the behest of an all powerful FDA ..whose laws must be meticulously obeyed. GVHD is one of the most severe auto immune reactions found in medicine. Unless something completely untoward occurs, in my view, the approval of Ryoncil for steroid refractory aGVHD is a slam dunk. Within two months institutions will have a clear understanding of timings and shortly after the FDA will opine on the label which will be allowed. That decision will be key in determining pricing for the therapy. On a pharmacoeconomic basis alone there is every reason to suggest that analysts pricing models might be conservative. Let’s remember Ryoncil, post FDA approval , will be the only paediatric therapy for children under 12 years old ....but its clinical superiority in Grade C/D multi organ/liver/GI patients will mean that off label use will be inevitable. Now experienced investors will know it is illegal for Mesoblast to market their therapy for non designated market segments..but Jakafi/Incyte is really no match for anything other than mild skin only conditions which are a comparatively small part of the market by treatment cost. I am also very encouraged by prospects for curing the chronic form of the disease...remember it often takes approximately 4 weeks for most sufferers of sr aGVHD to be cured using our therapy.
So what are the competitors charging just to put things into perspective ?
“Meta-analysis for overall and organ system–specific GVHD response (overall response [ORR], complete response [CR], and partial response [PR]) was conducted for each intervention. Cost per CR and cost per CR + PR were calculated as the quotient of the 6-month direct treatment cost by CR and CR + PR. Forty-one studies involving 1047 patients were included. CR rates ranged from 7% to 30% with rituximab and methotrexate, respectively, and ORR ranged from 30% to 85% with tacrolimus and ruxolitinib, respectively. Cost per CR ranged from US$1,187,657 with ruxolitinib to US$680 with methotrexate. Cost per ORR ranged from US$453 for methotrexate to US$242,236 for ibrutinib. “
But hang on a minute, is it true that the only FDA approved therapy for chronic GVHD ( imbruvica) is associated with almost 80% grade 3 adverse events side effects in some patient groups ? ....and people are paying up to US$1,187,657 for a gold standard therapy which has none of the safety profile and efficacy which we achieve in arguably the more difficult srGVHD paediatric segmentation of the market. So @maxybro, please remember this is a treatment which is expected, post a successful BLA application, to be on the market this year generating substantial sales on healthy margins. I cannot predict what off label usage will be but I have every reason to believe it will be massive.
I also want to bring to everyone’s attention the incredible production economics which Mesoblast is now guiding analysts to. If I remember rightly an analyst has already mentioned that the COS of sale of one of Mesoblast’s next generation xeno free allogenic therapies will be around $1,000 compared to up to $375,000 for many autologous CAR-T therapies .
How has Mesoblast achieved such low production costs ? I believe it has formulated and mastered its own proprietary media . This is a massive competitive advantage since most labs use either fetal bovine serum or human platelet lysates as a serum substitute.
I believe that , shortly , the market will appreciate, that the use of MSC’s in inflammatory and auto immune diseases, represents a medical breakthrough of epic proportions in regenerative medicine ....then the focus will then move to efficient production methods so that treatments can be made universally available. Silviu is way ahead of the game. I understand that even world leaders such as Lonza were until recently blissfully unaware of Mesoblast’s expertise in this area. I have heard it whispered that this manufacturing production expertise will turn out to be the Crown Jewels of the Company when other therapies attempt to reverse model in future years to reduce costs.
Lastly, regarding the headline results for the current heart trial for Revascor. I note that Amarin (AMRN NASDAQ) conducted a trial on approx 8,000 patients for cardiovascular disease involving many similar secondary endpoints in 2018. I believe the time taken from interviewing last patient to announcement of the headline numbers was 11 weeks in total . In the JP MORGAN conference Silviu confirmed that patient data was already being cleansed (this happens just before the database is locked so that the results can be determined) I appreciate that Mesoblast will need to be guided and advised by the FDA in relation to the final results...but i just want to put it out there , that a much smaller patient trial (Revascor) should be perfectly capable of having confirmed headline results out by this April. Furthermore, Amarin paid consultancy services to a certain Dr Kenneth Borow .....who just happens to be running Mesoblast’s current trial.....just sayin !
So my message is to be patient. The trial results and new partnership agreements will be the language that fund managers finally understand . Stocks like Mesoblast are like a Palos Verdes Blue, only far rarer. A successful heart trial showing overwhelming efficacy will hopefully be announced over the next few months....and if not , a proven therapy for aGVHD will probably be generating over US $500m of sales within the next 3 years with 80% long term margins .
Did I mention chronic lower back pain, Crohns , diabetes , rheumatoid arthritis...or maybe the upcoming March update from Catherics for its joint venture project with Mesoblast for an allogenic treatment for metastatic bone cancer ? Thought not. OP
MSB Price at posting:
$2.91 Sentiment: Buy Disclosure: Held
(20min delay)