Nothing wrong with the points you make but hopefully you will permit me to add some flavour. So let’s try and really open our eyes to the complexities involved. Sarge17 is right to point out that this deal is data dependent...but remember the saying “be careful who you get into bed with”...guilt be association can be terminal in the pharmaceutical business. https://accountingweekly.com/lessons-from-kpmg-be-careful-who-you-get-into-bed-with/ It is difficult to underplay the significance of a global partnership, where one of the most prestigious global Pharma companies, risks its reputation by aligning its interests with a newcomer on the scene , it is not a decision the Novartis board would take lightly. Post a successful ARDS trial, Novartis has made commitments for potentially BILLIONS of investment ...they have even ceded control over manufacturing to Mesoblast ! As far as I am aware , our Covid ARDS trial is powered so that we must achieve a 20% improvement over best standard of care. If Mesoblast achieves the relevant endpoints Novartis, will in theory, be on the hook for huge expenditure..... even if a subsequent therapy emerges with greater efficacy post our trial .
Furthermore, how about considering the elephant in the room ? IP
Has anyone on this thread actually considered the fact, that achieving efficacy in its trial, does not of itself, confer any IP rights to Mesoblast. After undertaking approx seven months of painstaking due diligence, Novartis has in essence, validated the one thing as investors, we have little ability to seek full expert opinion on ...the enforceability of Mesoblast’s patent portfolio ! If mesenchymal cells ,OR THEIR LINEAGE OF PROGENY (note for Sector) are the basis for successful treatments for inflammatory diseases, the longer term value of the IP estate will be of undeniable value. This is the main reason why I believe Mesoblast acquired Osiris in the first place ....for the foundational patents . What many posters may not be aware of, is that Rexlemostrocel is superior, in virtually all respects, to Remestemcel-L, other than perhaps the current availability of historic clinical data sets to assist product approval. Post a successful clinical trial , Novartis has entered into binding financial commitments to conduct new clinical trials, help build out infrastructure for ramping up production of a proprietary process, jointly fund new ventures, help fund initial speculative inventory build (potentially costing hundreds of millions) AND even pay for 3D bioreactor development , etc etc.
When a regulatory body grants an emergency authorisation it must be convinced that the candidate has the ability to fulfil its role in meeting demand for its products in a timely manner and satisfying a whole host of other regulatory considerations or requirements for confirmatory trials . Imagine the front end loaded capital that Mesoblast would have had to raise, to support such an application for emergency use. All of this is now available , in a practically non dilutive form, to Mesoblast shareholders from a credible counterparts. By the way, helping Mesoblast develop new scalable manufacturing protocols which can then be exploit in its non respiratory franchises might also be worth a “few bob” (as they used to say).
In my opinion , this partnership sends a clear message to all other suitors for our technology in chronic heart failure and chronic lower back pain. Mesoblast can choose who it wants post successful trials. If you want to guarantee a seat at the table .....you best get a move on. Mesoblast has now developed a potentially multi billion respiratory franchise in the space of about nine months... that did not even form part of analysts forecasts ! When you consider that we are close to read outs for our more mature franchises..the future looks amazing. I must point out ,however, that it is binary in nature. Place your bets ...or “faites vos jeux “ as they say in France .
Lastly, why Mesoblast ? Why not someone else’s therapy ? Novartis has been wooing Mesoblast a long time...way before the results of the interim futility results for its Covid ARDS phase 3 trials were available .....they could have chosen from hundreds of other competing therapies . Why not Athersys, why not Pluristem ,etc ....and why did Novartis finally sign on the dotted line. Why were they not scared off by the “current” CEBR team objections to Ryoncil or the speculative law suits against the Company? ....I think the answer is obvious ...they know what they are doing...more so than the retard shorters who plunge stock prices to take out stops from nervous holders. For those of you who want to look at established dispute resolution processes with the FDA...you may wish to look up case notes for the successful appeals of Portola Pharmaceuticals or Sarepta Therapeutics..although personally i think our case is much stronger ! ..but then again WTFDIK . @stockrock is right to point out the low success rate on appeals...but none of those cases are directly comparable..Mesoblast have a very strong case for accelerated approval. Don’t argue efficacy with me...argue with the opinion of the experts on the ODAC panel. The CEBR team have conceded on safety .... they will have to find a “volte face” ,face saving way, out of this mess....a successful Covid ARDS trial with parallel approvals is the Hollywood script i am backing.
So SARGE17 is right. It is a data dependent trial which can only cost Novartis ,$50m of upfronts...$20-30m of due diligence fees?....$1.25bn of potential conditional milestones ....a few billion of further clinical trials and law suits if the IP is not theirs to exploit.......and their virtually unrivalled reputation in the Pharma industry....
On second thoughts, i think the next two months will be the most eventful in Mesoblast’s history.
”FAITES VOS JEUX”
Please do not rely ,on any facts or opinions expressed in the above post, when making an investment decision. Biotech investment is speculative in nature and often binary in outcome....which means to say..you can win or lose big ! OP
MSB Price at posting:
$4.07 Sentiment: Buy Disclosure: Held
(20min delay)