sorry to bump this thread but left-e's take on the matter. I have bolded what he said which many still surprisingly don't seem to grasp - Novartis worry is just impatience and emotion.
9 hours ago
@Elizabeth, I'm sure there's a lot of “Novartis confusion” out there with investors who don't follow these things as closely as some of us. The recent excitement on HC related to the lack of an “#” on the Company's web site. It was an over-read by the poster, ie a stretching of reality, imho.
Here's what happened. Go to the Company's slide deck released on June 3 under the heading “Third Quarter Results Presentation”. On slide 4 there's a display of products pipeline and partnerships. You'll see “Novartis#” and at the bottom of the page the # is explained as “The agreement remains subject to certain closing conditions, including time to analyze the results from the COVID-19 ARDS trial.”
Now go to the Company's website. On the pipeline page you'll find Novartis listed without an #. Aha, said an astute observer on HC. “That must mean the deal has closed and Novartis is now a full partner”. Wrong. Aside from the absurd notion the Company would disclose market-moving news in such a cryptic way, the idea was quickly debunked by other observers who pointed out that the web page hasn't been changed in months and Novartis does not appear on the formal Partnerships tab of the website. Tempest in a teacup, it created a small stir that is of no significance.
Here's how I see things with Novartis, for each investor to draw his or her own conclusions.
The Company first announced on November 20, 2020 that it had entered into a “Global Collaboration Agreement” with Novartis for the “Development and Commercialization” of remestemcel-L. The Agreement called for Novartis to make a $50M upfront payment to Mesoblast with a potential $1.255B total value based on developmental milestones and royalties on sales. The Agreement was subject to an anti-trust waiting period and “certain other conditions”. The deal was primarily for development of rem-L for ARDS and pulmonary indications. There were additional provisions and payments if Novartis opted to participate in the commercialization of rem-L for non-pulmonary indications such as GvHD.
Before the deal could close, the Company announced on December 20, 2020 that the DSMB recommended halting further enrollments in Company's phase 3 trial of ARDS due to “unlikely to meet primary endpoint of a 43% reduction in mortality”. Blinded data collection out to 60 days would continue on patients already enrolled and the Company and Novartis would cooperate to complete the study. The PR repeated the same “certain other conditions” wording.
On April 30 the Company announced top line results from the study. The PR indicated that closing was subject to “certain closing conditions, including time to analyze the results from this COVID-19 ARDS trial”. During a live webcast just after the PR, an analyst asked for more detail on how long to closing. That's when SI said he thought Novartis would need “several weeks” to come to a decision.
So, here we are several months later and speculation and innuendo run rampant. I would point out the following based on the above facts: A formal contract between Novartis and Mesoblast has been signed. That means Novartis management scoped the competition, Novartis scientists reviewed the product, and Novartis lawyers evaluated the IP. The deal has not yet closed but a valid contract is still there. The situation is somewhat comparable to what might happen if you try to buy a house. You sign a contract that takes the house off the market. Before closing, you have a right to inspect in a timely manner and the seller has a right to repair any defects found. That's comparable to the situation we're in with Novartis. So, posts of the nature, “No contract exists” or “Novartis has walked away and the Company is shopping for a new partner” are pure speculation meant to scare. Note that 8-K rules require the Company to announce promptly any “material changes” to a contract. That would include closing on the contract or termination of the contract. The Company will make a formal announcement at the appropriate time. As opposed to removing a pound sign on its web site.
So, Novartis clearly hasn't walked. But they haven't anted up the $50M yet either. I suspect they're stretching this out as long as to contract allows... and all roads lead back to the FDA.
They're probably waiting for formal FDA guidance before making a final decision. That's my impression, for each investor to decide.
(20min delay)