These are my back of the envelope calculations. Of course they come with major health warnings (see disclaimer ) so by all means test the logic behind their assumptions.
9000 US Transplants 1500 Paediatric Incidence of acute GVHD in paediatric patients 0-12 years (1000 ) approx 35% =350 of which Grades B-D at maximum Grade approx 75% =262 Approx 50% of which are steroid refractory 131 patients Incidence of acute GVHD in paediatric patients 12-18 (500) approx 50%=250 of which Grades B-D at maximum Grade approx 75%=187 Approx 50% of which are steroid refractory = 93 patients Total paediatric patients pop with Grade B-D sr aGVHD =224 65% market penetration by 2028 = 145 Year 1 2025 67 patients pricing of US$750,000 = $50.25m Year 2 2026 100 patients $75.0m Year 3 2027 134 patients $100.5m Year 4m 2028 145patients $108.75m
Adult 5 X by number of transplants = 7500 incidence of acute GVHD 50% for 18+ yrs (versus 40% blended paediatric) = 3750 50% steroid refractory = 1875 of which 75% Grades B-D at maximum grade 1406. 1406 of which 45% are treatment refractory= population 632 70% market penetration of treatment refractory by 2028 = 442 Off Label Opportuinity assuming paediatric approval Year 1 130 patients @ US $1.1m. = $143m Year 2. 284 patients. $312,4m Year 3 379 patients $416.9m Year4. 442 patients $486.2m
So, based on a paediatric sr aGVHD BLA resubmission late May/June 2024. FDA responds 30 days later with PDUFA date say between 2-6 months = Sept 2024 until Jan 25. My best guess approval granted risked at 90% end Sept 24 because labelling and potency assay issues on CRL are last parts to be formally agreed.
Within 12 months stock market may attribute a value based of sr aGVHD based on 2026 projected revenues of US$ 387.4m if it believes the adult population will use Ryoncil off label . It is worth noting the Ruxolitinib achieved major off label sales in CGVHD before even submission of it’s SNDA for a label extension.Remember that CSL just wrote off $10bn of its market cap when its heart treatment failed after recruiting 17000 patients and spending almost $1bn on development..not to mention the $11.7bn spent on Vifor in anticipation of building a major franchise in heart.
Mesoblast probably has sufficient stocks for the first 400 paediatric patients (which they have written off their balance sheet) but normal Cost of Goods 10% plus blended tiered royalties of say 5% on first $1bn of sales to Osiris IP holders plus attributable costs of $25m for fulfilment and marketing . Sales $387.4m - $31.2m COGS- Royalties approx $19.37m -$25m Sales and Mktg =$311.83m less Corporate Overhead $70m=$241.83m Pre Tax risked 90% Chance of Success $217.65m …less 30% tax $54.41=$163.24m after tax times 40.
If these numbers seem high may I remind you that Rezurock owner Kadmon was purchased for almost $2bn by Sanofi having just got approval for its third line treatment for adult CGVHD, I note Sanofi achieved 4Q Calender sales of $88m for Rezurock in 2023 from a standing start 18 months ago. Makes you think doesn’t it !
High multiples exist for newly approved first in class treatments with an IP moat. Based on label extension opportunities into Chronic GVHD Treatment for refractory / 3rd line label extension , refractory Crohns Colitis, Ulcerative Colitis, etc European sr aGVHD approval to add in 2026. Pricing in Europe should be 1/3 of US pricing. It is slightly larger market with added cost. Likely to be royalty based sales . Adult confirmatory trial for sr aGVHD will be necessary if a non refractory patient market is targeted.
So if we exclude territories outside the USA . Based on 2026 multiple of 40 for Remestemcel only, over the next 12 months it is possible to arrive at a valuation of US $6.52bn (close to A$9 share ) after absorbing costs of all other divisions without allowing for CLBP and CHF franchise worth considerably more post approval . If CHF initial indication gets accelerated approval and the CLBP trials has a good interim readout, in the next 18 months you might want to add another US$ 20bn
Rexlemestrocel
LVAD market . Submission of BLA Feb 2025 under Accelerated Approval Pathway . PDUFA August 2025….likely treatment price of $120k for 150m cells First year sales in 2026 assuming distributor margin of 35% approx $80k to MESO price for 800 patients rising to 4000 in 2027 from off label CABG rising to 10000 patients in 2028. Hypoplastic 50% possibility ? of Acccelerated approval or investigator open label Phase 2 trial ? 20m cells for an unmet need. 2000 patients with condition each year in USA . Sales price US$ 400K-$800k ? Based on mortality benefit,QUALY and hospitalisation ( No pricing guidance yet ).
CLBP Peak sales $3bn plus in 5 years based on $15k treatment price and CHF ischemic population (one of , if not the biggest cause of death in the USA )! Pricing might easily be $25k when alternative treatments durability of effect and hospitalisation costs are taken into account . Only 6m cells required but 1/3 of patient treatment population would benefit from a 12 month booster. Discogenic back pain market 7m people in USA. To be targeted at those who have spent over 6 months on conservative treatment options and physio.
PLEASE DO NOT RELY ON THE FACTS OR OPINIONS EXPRESSED IN THE ABOVE POST WHEN MAKING AN INVESTMENT DECISION . Do your own due diligence. I have been buying both shares and long dated options over the last week. A significant proportion of value in this valuation is based on off label sales. The FDA may restrict sales of these products dependent on the label agreed . New products are constantly being approved . Incyte has a PDUFA date of August 2024 for Axatilimab in Chronic GVHD (MSB is ACUTE ) for example in children over 6 and adults which is likely to improve Ruxolitinib efficacy but is still a monoclonal antibody solution, I believe that the excellent efficacy and adverse treatment profile of MSCs will hold them in good stead. One of the most positive aspects of using MSCS is the durability of effect. Some treatments can match our short term efficacy by down regulating various inflammatory pathways but fail to restore the body to a state of hemostasis. The durability of effect achieved in both heart back is testimony to the long term efficacy provided . In sr aGVHD not only are patients with complete responses, effectively cured but there is now suggestions of very low incidence of Chronic GVHD is our surviving treated population against the normal 30-50% expected. OP
MSB Price at posting:
77.5¢ Sentiment: Buy Disclosure: Held
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