Greetings Australia, Today is Memorial Day in the US and markets are closed. Spring is in the air; Americans are venturing out after 6-7 weeks of mostly voluntary lock up; vehicles are back circulating on the street; a visit to a near-by park shows that only about 10% still sport voluntary masks in the wide outdoors, down from just a couple of days ago. But physical distancing is still the norm for anyone outside the immediate family/friends group. A street musician plays and solo dancing is making a come back. The ducks are paired up on a nearby lake, dodging the occasional plastic debris some idiot has cast into their living room. Cars congregate under a nearby bridge. Known reputation and a faint waft of burning hemp suggest various pain-relieving products might be procured there for ready cash.
A nation in pain celebrates its soldiers in pain and mourns those no longer in pain.
It's a day that makes me think about pain. Pain and the FDA.
It must be strange to invest in a company whose future rests in part with decisions made by a bureaucracy on the other side of the globe. (I, for one, hear the grass is greener in the Land of Oz, where there was an early Corona-case blip that seems to have dissipated). Mesoblast just released info on 3 GvHD studies that are being carefully analyzed on another thread, there's a new post from ecool2 (thanks), a BLA sits on the FDA's desk, so today seems like a good day to look more carefully at the FDA and try to get a better handle on what it's all about. After all, they are the ones who authorized the EAP we've been analyzing on this thread. Again, no intention to talk down to experts, please skip over if FDA basics are too elementary.
On May 10, an opinion piece by a Ph.D. lawyer named A. Rahman Ford, talking about pain and calling for greater FDA flexibility on stem cells, was widely circulated on message boards including this one. It specifically mentions Mesoblast and remestemcel-L, so it's a good piece to analyze for better understanding. You can find it here:
https://www.painnewsnetwork.org/stories/2020/5/11/the-fdas-stem-cell-reformation-must-proceed-beyond-covid-19I've been wanting to comment on it but haven't found the occasion. I don't know how things are in the Land of Oz, but this nation has been living an opioid crisis. With the virus pain is UP, as are overdoses, suicides, spousal abuse, child abuse, divorce, and other social ills. Bloggers posting long-winded message are up. We are reminded that the the pain and suffering inflicted by the virus is ADDITIVE to all the other societal problems. It doesn't replace them. Mr Ford is in pain and calls for the FDA to take action. Today I'm going to try to argue Mr. Ford's position and tomorrow the FDA's. Perhaps we can learn something about Mesoblast's situation, maybe of use since there are new MPC products in the pipeline for back and knee pain... As investors, what stance should we take on a letter like Mr. Ford's?
I'll start by saying that I have no affiliation with the FDA though I do know people who work there. I'm an observer, even a student, of the FDA and support the agency's position on most matters, particularly in the fight against quackery in its many forms. I also know that "pain" is the most common reason patients seek medical care. Unfortunately, medicine has no direct test to measure pain. No lab test, no pain-o-meter. Patients must be taken at their word. And often legitimate evidence-based medicine doesn't have a good solution for pain, which is why quackery is able to flourish at an alternative practitioner, health food store, aroma therapy shop, whatever, near you. So, I'll start by saying I take Mr. Ford at his word. It must be hell to go all the way to China for a stem cell treatment - that's further away for Americans than the Land of Oz - and to come back still on a liquid diet... so I'm sympathetic, but his illness claims don't shield against careful scrutiny of his request for "Stem Cell Reformation". What's it all about? and what in the world, you might ask, does Mr Ford's letter have to do with Mesoblast and analysis of the EAP authorized by the FDA ??
I'll get to my opinion on that, but first a little history. What's referred to as the "modern FDA" got its start based on a very specific event. The year was 1937, my four grandparents were growing up in the great depression, there were laws against things like murder, even a Food and Drug Act was on the books, but pharmaceutical entrepreneurs could launch new treatments pretty easily. Animal testing and clinical trials were unheard of. The respected Massengill Company decided to launch a new product riding the wave of the latest craze, something called antibiotics. The Chief Pharmacist mixed up a sulfa antibiotic, Elixir Sulfanilamide, and it was shipped in corked flasks to pharmacies/doctors around the nation. Reports of death began to trickle in, eventually over 100. Acute renal failure was not a good thing to suffer in 1938. One family wrote to President Franklin Roosevelt describing the agonizingly painful death of their little girl, Joan, and how they had nothing left in their life but a daily visit to her little grave. The nation was outraged. And justice was served. The chief pharmacist, who had chosen to prepare the elixir using the solvent DEG (can be found in radiator fluid) in place of the standard ethyl alcohol, committed suicide when he learned toxicity warnings unbeknownst to him were in the medical literature. And the company? The company ended up paying a small fine for having broken the law. They had labeled their product "Elixir" when it didn't even contain alcohol. Post Prohabition. That was prohibited by law.
The laws were changed and the FDA was established on this foundation of "safety first" founded on a bedrock of public pain. Sulfaniliamide, by the way, is still available in the USA by prescription. And my grandparents all survived a close call.
Let's jump to 2015. The FDA is struggling with its mandate to protect the public and ensure medications are efficacious. But where to draw the line with biologicals? Stem cell therapies have caused some issues. They were not envisioned in 1938. But things like blood transfusions certainly were. Those had been around since the 1600's. And if a doctor wants to administer a blood transfusion to a patient in critical need, we certainly don't want to have to go through 15 years of animal testing followed by clinical trials. So, "HCT/P exemptions" (Human Cells, Tissues, and cell/tissue-based Products) were created. If you have a product like a unit of whole blood to be transfused from one human to another .... or even a packed red cell or white cell transfusion where you spin the blood in a centrifuge and skim off the white cells... or a platelet transfusion.... or one step further even a kidney transplant.... or a heart transplant from one human to another, or a piece of placenta transplanted to a patient's foot ulcer... for things like that the FDA will grant you an exemption. The FDA doesn't regulate blood transfusions, per se. That's up to the patient and the doctor and the blood bank. Or the doctor and the tissue bank... So why not stem cells? Haven't we said stem cells are sort of like a blood transfusion? You're taking cells from one human and transfusing them into another through an IV line. Check. The cells don't graft, they're gone after a relatively short period of time. Check. And aren't they safe? Blood transfusions on the other hand can cause problems such as a transfusion reaction. Organ transplants can be rejected. And with an organ transplant the cells are even grafting, sticking around maybe for the life of the patient. If she can order a HEART transplant, shouldn't a doctor be able to use her judgement and say this patient needs a stem cell transplant? Shouldn't SI be able to go to the FDA and get an exemption on remestemcel-L? Did he burn over $500M of investor capital when all he had to do was to fill out an easy-breezy exemption form? Is the FDA saying that a matched bone marrow transplant in our patient with leukemia above can be done with just doctor discretion, but the second bone marrow transplant, the one with MSC's that can correct the GvHD caused by the first transplant that can kill the child... that second one that saves the life, that's the transplant that requires FDA permission??
Yes, says the FDA. The first bone marrow transplant is under doctor discretion, but that second one is under FDA purview. If you want to administer MSC's you need to prove to us that it's safe and effective. That means you need a BL. And to get a BL you need to file a BLA and pay us a big $$PDUFA fee. And to file a BLA you need to do a couple of phase 3 tests with preceding phase 2 and 1 tests and animal tests, and come back when you've done all that. And here's the CHERRY on top that drives people like Mr. Ford crazy. If you go to a doctor and she takes YOUR OWN stem cells from some fat that she liposuctions... or from your own bone marrow, or from a piece of your knee cartilage to be grown into a brand new piece of your own cartilage to repair your knee that HURTS like crap, all done under your doctor's orders in the privacy of her clinic... Even just for that the FDA says you need a BLA. For your own cells that belong to you. Can anyone understand why Mr Ford, a lawyer living in what is supposed to be the land of liberty, might be just a little upset, having had to go all the way to China to get a stem cell treatment?? I want to present his side as fairly as possible before I present the FDA side against it... and suggest the side we as investors - and potential patients - might take.
The stem cell rule had been there since 1998, but it wasn't entirely clear and a lot of clinics tried to skirt it and sometimes got away with it for years. In 2008 the FDA brought action against Regenxx in Colorado... essentially, they shut down it's stem cell operation in the US which involved expanding and transplanting a patient's own stem cells for orthopedic purposes. To treat painful orthopedic conditions. It's not always clear why the FDA takes actions like this, but somewhere we might suspect there was a problem with patients. A complaint. Some reports. An FDA order comes down. Stop that. Regenxx fought back and the case went to court in 2010. In 2012 the FDA won the case against Regenxx, and shut down its use of autologous stem cells in the US. The popular clinic was forced to move its "Regenxx-C" treatment to the Cayman Islands. There are other stories, but bottom line the US courts have generally sided with the FDA on issues involving stem cells. They are treated like a medication, like a drug. In 2014 the FDA began a formal process to clarify the rules with public hearings and meetings with industry and academia. Leading experts in the field of stem cells gave testimony. You can find information on it here, some of those testimonies are fascinating, click on sub-links to get them:
https://www.fda.gov/vaccines-blood-biologics/workshops-meetings-conferences-biologics/public-workshop-scientific-evidence-development-human-cells-tissues-and-cellular-and-tissue-based-0 in November of 2017 the FDA issued a new set of HCT/P regulations. You can see them here:
https://www.fda.gov/media/124138/downloadThey begin with these very personable words, "We, FDA, are providing you... (HCT/P) manufacturers, healthcare providers, and FDA staff, with our CURRENT thinking..." (emphasis added by me, to give Mr Ford hope). I particularly like the part, "We FDA are providing you FDA staff...", almost like a voice from above telling itself what to do...
So, I think that's enough for this evening, I'll give you time to review Mr Ford's letter and some of the links above. I'll come back in a day or so to talk about "Minimal Manipulation" and "Homologous Use" and other key concepts Mesoblast investors should know about and issues you raise.... but before I leave.
Some of you will have noticed that the FDA rule-making process I describe above started in 2014 when President Obama was in office and carried into late 2017 well after President Trump took office. I followed the process throughout that period because it impacted OSIR and I had already begun investing in MESO. So, again, this is NOT a political thread, but NO Federal agency operates in a vacuum. To understand what's going on in the FDA we have to talk a little about Washington and MAGA and Drain the Swamp, and the deep undercurrents across the nation that carried the new President to office. And how the "Swamp" ie Washington, DC and its 3-letter Agencies resist change... and sometimes even fights back. I seek only to explain, not take sides. Please pose questions and make observations. In the next day or so I'll discuss more, depending on your feedback, and how it all might impact us as investors in a company that's headquartered in the Land of Oz, but doing business, conducting trials, and seeking approvals in a Land of Pain...
(20min delay)