OK first of all... MSB is a relatively small biotech in the grand scheme of things... on the ASX nonetheless, so a battler.. an underdog.. you get the drift.
Yes, Mesoblast have spent around US$680m/A$ 1 billion AU dollars over a decade (not just R&D, that's for all running costs)... BUT that's a drop in the ocean when you compare it to peers / biotechs in the US. And if you look at the big dogs, like Novartis ... on R&D alone they go through US$10bn a year, if you add all others costs its closer to US$25bn a year. Smaller biotechs like Incyte spend US$2 billion a year. Mesoblast as a clinical stage biotech, has spent US$680m/A$1bn over a decade! Yes the companies above are not like-for-like, and are generating massive revenues to offset all these costs.. but at one stage, they too had no revenues and would have gone through a decade or so of clinical development.. with no revenues to show for.. until they made it.
The point I'm trying to make is that a billion sounds like a lot of money, but in this industry.. when you are going for FDA approval for three/four separate indications (Heart, CLBP and SR-aGVHD, now add COVID-19).. its going to cost a lot of money. And when I say FDA approval, I mean proper FDA approval, none of this 510k devices clearance that PNV/OCC can get, which are not 'FDA Approved'... it's a 510k clearance. Or just look at OPT the other company you are invested in, they've managed to only get to one product to phase 3 trials and to read out that trial in the back half of 2023, they literally need to raise more capital, or get a partner or get some debt.... they've got one product at phase 3.. Mesoblast have three potential approvals in 2022 and CLBP potentially in 2024.
I'm going to stress this one more time... Mesoblast are dealing with biologics. Everything is infinitely more complex even from a pre-clinical stage when compared to synthetics. With a synthetic, you take for granted that you know what exactly it is made up and can isolate, differentiate and test. With biologics, there really is only so much you can do in animals and a petri dish... because the mechanism of action is not a simple, add X, then Y does this or that in a petri dish, bam you have your mechanism of action! WIth MSCs and MPCs, the mechanism of action is add X, and then a chain reaction is kicked off in the human body's immune system, which I hope you can appreciate, is extremely complex that nobody knows exactly how every aspect of the immune system works.
To prove my point, think of all the money used on R&D since modern medicine began. I dare say trillions have been spent. Why is there still no cure or effective treatment for ARDS? Why is there no cure or effective treatment for CHF? Why is there no cure or treatment for SR-aGVHD and why is there still no cure or effective treatment for CLBP? Synthetics can only do so much, which is why companies like Mesoblast are so important. They are stepping away from 'the old way of doing things' .. that is creating synthetic drugs that have terrible side-effects and only offer mediocre benefits.. that guess what, need continue redosing which costs a lot of money, but never actually treat the underlying condition and/or cure the underlying issue. That's big pharma for you, they don't care about your health, they just want profits and you take what they make, so long as you don't dare get cured.. because then you are no longer a customer!
You make a point about Mesoblast's benefits being so small that they needed large trials... I honestly dont' know what exactly you are referring to here. Our phase 3 CLBP trial was 404 patients, our CHF was 566 patients, and SR-aGVHD had 55 patients. What exactly are you comparing to when you say our trial size is large? compared to what? If you look at heart failure, here are some comparative studies.. FOCUS-HF had 718 patients. PRECISE trial had 2103 patients , DAPA -HF trial had 4744 patients. Our trials have if anything been on the smaller scale... so I don't know where you are coming from with that statement. But sticking with heart, typically surrogate endpoints like reduction in repeat hospitalisations are used because they are early onset, frequent and thought to be related to survival of patients. So trial designs use this to save money and time... ideally a trial for heart failure would use a three point MACE endpoint of stroke, heart attack or cardiac death.. but to do that, the number of patients you'd have to enrol would be thousands to get the required 'events' in a reasonable time-frame to get any statistical significance. So putting it into perspective, Mesoblast's trial size was actually quite small.. much smaller than a typical trial using 3 point MACE... because the benefit from previous drugs were, as you say so small, that extremely large trials needed to be run to get that statistical benefit. In fact, products with improvements of 12-14% in 3 point MACE were approved by the FDA. So contrary to what you said, Mesoblast's data was showed such outstanding clinical benefit, that with only 566 patients... they saw 33% improvement in 3 point pace across all patients, and across all patients with diabetes/ischemic and CRP > 2, there was a 54% reduction in 3 point MACE, stroke, heart attack and cardiac death. So where is this 'small' benefit you are talking about?
We are a small fish daring to swim in the ocean where there are much bigger fish. If Mesoblast had the budgets of US biotechs, they'd gladly run larger phase 2 trials... but with the money availvable, which wasn't much relative to peers.. they did the best they could, and from the limited data generated the look at the signals and results and progress with that. You do realise that most biotechs don't even make it to phase 3 trials.. they literally run out of money, or get diluted to the point of non-existence and/or get gobbled up for a fraction of their worth. So if you are crying out that AU$1bn is too much money spent... what you are suggesting would mean Mesoblast probably would have needed to spend multiples of that.
It's easy to sit back in hindsight and say they should have done this and done that better.. but they literally spent hundreds of millions as you say in development, over a decade... but you say that should have spent more time, more money, but they spent too much .. so what exactly do you want? More data and a lot more money and time spent, or be more frugal and try and do the best with what you have before you run out of money before your products ever get a shot at getting to market? Which is it?
Their phase 2 trials, like most were smaller in scale compared to phase 3 trials. They actually took a years plan and to run, with 12-24 month follow ups for CHF and CLBP.. all to see if what their preclinical and phase 1 studies could translate to a large sample (phase 1 is even smaller). The results were so good in these phase 2 trials, they attracted partnerships paying hundreds of millions upfront .. Cephalon paid US$130m upfront non-dilutive, and US$220m in equity. so I'm not sure what failures you were talking about? If getting a US$350m injected into your company from a partner is considered a failed phase 2 trial... I honestly don't know what else to say on this front.
On primary endpoints.. the SR-aGVHD / Ryoncil trial hit its primary endpoint easily. The issues it is having is around manufacturing issues, which by in large was due to the fact that Mesoblast didn't want to intentionally kill children to get a particular data set for the FDA, so they sought to use already available data to compare against, as opposed to generating their own.
On CLBP, the composite endpoing had pain and function. Mesoblast's treatments blew the pain score out of the water, to the point where patients taking opioids (opium i.e. extremely addictive) to ease their pain, well 40% of them went off their opioid treatments, despite being told not to. The FDA just told Mesoblast that your pain score primary endpoint was sufficient, and you don't need function for approval. So from an FDA perspective, when Mesoblast take it up for approval... they will look at only one primary endpoint i.e. pain... which means Mesoblast met their primary endpoint. This is the FDA conceding ground, because they were the ones who pushed Mesoblast for a composite in pain and function... but the results were so good for pain, they are willing to ignore function and just allow approval based on the benefit to pain, and of course opioid sparing.
On Heart, I'm going to ask you this. Is it more important to meet a primary endpoint that is meant to be a surrogate to the ultimate goal of the treatment, that is to save lives... or it is more important that your treatment demonstrated that while you didn't meet the surrogate primary endpoint, you demonstrated that your treatment saved lives. That is what Mesoblast are talking to the FDA right now. You wanted lower hospitalisations... we reduced stroke, heart attacks and cardiac death. No synthetic or anything known to man, despite the billions/trillions spent generated results as good as this.. not even close.
On COVID-19, this is one where I'd agree.. the trial that was run was in fact a rushed phase 2 trial, which was treated by the FDA as a phase 3 trial (because approval was on the cards if it succeeded)... but not just a typical phase 2 trial, but an extremely rushed one. However, the data they generated was enough for the FDA to offer up an EUA if they repeated the same results, for the <65 patient population. So being critical of Mesoblast for not figuring our the perfect dose and/or patient population for this trial is being a little harsh... how much time did they have to do preclinical work, phase 1 work.. phase 2 work.. they basically dove insto a phase 2/3 whatever you want to call it, and managed to get a clinical response in a sub-group which was pre-specified, that is they had a suspicion that the results from these two sub groups may differ.. but if you recall, the pandemic was raging, and they didn't want to pick and choose without having any hard data to exclude patients... so they just recruited anyone and everyone who ended up on a ventilator.
In summary, Mesoblast have been quite frugal in their spending compared to their peers, especially those in the US who they are up against from a competitor standpoint. Mesoblast are out there trying to address some of the most difficult medical unmet needs... literally saving lives, and lots of them. With A$1bn / US$680m over a decade have managed to get three / four products to a phase 3 trial, with a chance to have three of these (CHF, Ryoncil, COVID-ARDS) in the US market in 2022 through either an EUA, BLA or accelerated approval BLA. CLBP should be in 2024.
This Aussie biotech has managed to generate data that the world has never seen before and is literally the pioneer of a new field of medicine, and the often overlooked fact that these are allogeneic biological cell therapies, where if you look at other cell thereapies like CAR-T therapy for cancer patients.. they are autologous i.e. patient specific. Mesoblast have produced an off the shelf biologic that has immense benefits to CLBP patients, CHF, SR-aGVHD and potentially COVID-19 ARDS patients, which with the data is has so far generated, have a second trial planned with a very favourable trial design, and three that are potentially going up for FDA approval in 2022. And to top it off, all these treatments have no side-effects. NONE. All for US$680m/A$1bn, spent over a decade. Novartis burns through US$25bn a year, and they still haven't been able to produce anything to rival what Mesoblast have produced, nor have any of the other big pharma companies... but they all sure have many drugs that have black labels and side-effects coming out left right and centre.. but as long as the patients keep paying up... they don't care.
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