The company said in their initial blueprint for manufacturing expansions, that they expected to treat the first 10,000 patients within 6 months of FDA approval. That is the only figure that has been mentioned regarding manufacturing ramp up that I am aware of. Annualized this gives them at least 20,000 per annum, and I'm just working off known company releases to come up with these figures. Ramp up over 6 months takes time, so I fully would expect the number of treatments in the second half of the year to be higher than 10,000..... but this figure was never released, where as 10,000 was released.
The 60,000 is purely hospitalized and below 65 and expected to be on a ventilator. What I think is obvious is that if the company manufactures 20,000 doses, they are going to get used.
Figures for the cost of Remestemcel are around 5 years old and are based on TEMCEL price in Japan. It does vary though because the treatment is per KG. So if most covid ARDS patients are overweight, then they may need 50% - 100% more cells than a normal BMI person, and charge is per cell effectively.
I used USD $75,000 per treatment as an average. ( I calculated previously that GvHD was likely around $300,000 USD per completed treatment, and this is 1/4 of the dose )
Regarding the novartis deal.... I am assuming that Novartis are funding commercialization, manufacturing and distribution, while mesoblast will received a 15% royalty on sale price ( assumption here, it could be as low as 10%). I can't see mesoblast having any more costs here other than receiving royalties....similar to TEMCEL which they receive royalties for, but it doesn't "cost" them.
NOVARTIS AGREEMENT: Under the terms of the deal, Novartis acquires exclusive worldwide rights to develop, commercialize and manufacture remestemcel-L for ARDS. They are paying Mesoblast $25 million up front and will invest $25 million in Mesoblast equity along with additional pre-commercialization milestone payments that could total $505 million and post-commercialization milestones up to $750 million. They are also eligible for royalties. Novartis will offer support for commercial manufacturing scale-up. Novartis also has an option to distribute the drug for graft versus host disease (GVHD) outside Japan. Both companies have rights to co-fund development and commercialization for other non-respiratory indications.In addition, Novartis will reimburse Mesoblast up to $50 million on hitting specific milestones associated with the next-generation manufacturing processes using its proprietary media and three-dimensional bioreactors. Novartis will handle any capital expenditures needed to meet increased capacity for manufacturing.
On the CSL front, they had total revenue of around 10 Billion USD, for 2.8 Billion profit, or 2.2 Billion after tax profit
With mesoblast set to receive large recurring revenues in the form of Royalties, I would expect them to have a much higher profit margins than CSL. If Mesoblast ever got to 10 Billion USD in sales, I could not imagine a world where they spend 7 Billion every year to do it if working off royalties.
The flip side of MSB receiving $225 million , is that total sales revenue would be 1.5 Billion USD for those 20,000 doses
Or 15% of CSL's total yearly revenue for comparison sakes......... off just 20,000 doses
MSB Price at posting:
$1.86 Sentiment: Buy Disclosure: Held
(20min delay)