This is post that OP posted at CYP forum and I found that it really relevant to us, so I reposted here.
@pfeifer1982. Apologies for my tardy response ..i try to prioritise my family on the weekends. I have always enjoyed reading your posts when i come over to check up on the progress of CYP. I am fully aware of the main benefits of iPSCs but I believe that they will not provide a realistic basis for an alternative therapy in the US for at least another five or so years. I particularly commend you for the wit and good nature expressed in your reply, which is well received. You are very resourceful having unearthed a statement in Japanese which I was not aware of. Hopefully the merits of this discussion will prevail over much of the barbed and unnecessary vitriol which accompanies far too many hostile posts on Hot Copper. You wish to challenge the points I made, which i thought they were pretty factual, but we obviously got crossed lines regarding what was intended to be communicated. Rather bizarrely, may i respectfully point out that the Japanese translation you provided, vindicates the central theme of my post... that JCR has experienced strong demand for Temcell resulting in a material upgrade being needed to production facilities to facilitate future growth ....this is not surprising since we know royalty payments to Mesoblast had almost doubled in the prior 12 months or so. In addition to the growth opportunity in acute srGVHD, I also mentioned the opportunity (subject to successful clinical trials) for chronic GVHD which meant JCR might need to plan ahead to add capacity. I also referenced label extension agreements between JCR Pharmaceuticals and Mesoblast ( link in prior post) which will presumably increase unit volumes into the future...but you rather sarcastically commented on the small size of one of the clinical trials for HIE instead. To date, JCR has made few documented changes to its original production facilities which might be considered relatively antiquated by modern standards ...so this was long overdue. When i saw the latest Bell Potter note on Mesoblast , which explained there was going to be a short term production shortfall for Temcell in the next quarter , i thought i should check the reason for myself. I went onto the JCR website and read in its annually published forward guidance for the next 12 months, which forecast that sales of Temcell were forecast to fall despite all the demand, without providing an explanation. I made subsequent enquiries though IR at Mesoblast and was advised that JCR was experiencing substantial demand for Temcell so capacity was going to be upgraded at the expense of the next few months production. I guess that despite all their carefully laid plans to meet existing stocking requirements JCR were caught out by a faulty batch during the changeover in production facilities. That is what reliable internal Quality Control is all about... and I am sure JCR was embarrassed by events because they did not have additional stock to immediately meet the shortfall... but just to be clear, they have had an excellent track record to date and these things do happen. As @Treedhas pointed out to @Sector , we have no idea what prompted this batch rejection...it could have been a fault in transit, cryopreservation issues or any number of reasons. I should point out that both JCR and Takeda have licensed our IP but do not follow exactly the same protocols..one thing for sure i that as GVHD is an orphan indication with a limited market , JCR had probably not originally envisaged having to spend a lot of money on an automated facility but need to now, because of rocketing demand. One enterprising Hot Copper poster already posted a photograph of the old manual batch production system JCR previously used...basic but it worked .
Before i move on to more interesting subjects, let me also point out that the latest analysts reports on JCR Pharmaceuticals suggest the management of JCR retain the confidence of the seven analysts i found covering the stock on Yahoo Finance.. I am sure they all read Japanese and are fully aware of what is going on to a greater degree than anyone on the CYP thread . Indeed buy recommendations have emerged in May post JCRs latest results, which makes me wonder what real negative conclusions we are supposed to draw from one bad batch of Temcell. ..After all, the latter has reportedly now gained dominant market share in Japan . Indeed when i checked the Morningstar forward earnings guidance JCR appears on a forward p/e of 65.8 ! and shareholders have seen the share price treble during the last five years. It closed just about 1% of its all time high on Friday...not exactly the picture which @Sector wants to leave in our minds.
You also appear to question, by means of an amusing quasi Trump meme parody, the batch to batch consistencies and reproducibility of mesenchymal cell production (although you have no clue what made the Temcell batch get rejected) . I could refer you to slides supplied by Mesoblast showing they have cracked this issue completely a long time ago. But rather than take my word for it ...i ask you to listen to many of the world’s experts at the forthcoming panel review meeting for Ryoncil scheduled for late July/August 2020. The BLA application for Ryoncil for treating acute srGVHD is accompanied by several years of production data and the results of the Expanded Access Programme. I am sure it will also include recent production runs certified by Lonza ( arguably the premier biologics supplier in the world who have a purpose built facility in Singapore) in the CMC module of Mesoblast’s application. I am sure the evidence will be unequivocal...so please lets not try to pull the wool over anyone’s eyes about unsolved problems.
https://www.fda.gov/media/113760/download
If any readers have time to digest the information in the above link, you should be in no doubt that the FDA undertakes the most vigorous testing procedures in ensuring batch consistencies , reproducibility and many other safety issues relating to the screening of master cell banks. I would venture to say, that the importance of Mesoblast’s recent disclosure, that they are moving to a xeno free culture medium to facilitate increased yields , has probably passed most investors by. It is hugely important. In my opinion, they would not have been able to say such a statement without the tacit support and encouragement of the FDA, who are no doubt relieved to replace animal derived culture medium with a suitable alternative . Mesoblast knew it would have been very difficult to source the necessary supplies of Fetal Bovine Serum...a crucial factor in achieving large scale production of MSCs. FBS represented one of the largest component costs of manufacture . If you understand the process you will be aware that the additional washing and drying to remove any FBS residue (which slightly raises HLA 1 antigen response) is a timely and costly process since it also has the potential to damage some surface cell receptors slightly reducing potency. Hopefully the FDA will also shortly give the all clear to their planned 3D bioreactor technology (which has been in development for at least the last 5 years). Mesoblast spent almost $10m on manufacturing last year alone. Please remember that Mesoblast has a very promising therapy currrently undertaking a RCT in the US for Covid 19 . Plans to scale up production capacity into the hundreds of thousands of per annum will dramatically lower the COGS percentage ...which I contend might fall about to about the same percentage as Cynata’s percentage royalty obligation to WHARF for using Cymerus IP. Furthermore Prof Itescu’s latest interview in the AFR strongly suggested that partnership discussions are well advanced to rapidly support an expansion of production should it be required post results of its phase 3 trials.
Lastly, as i said i am intrigued by the implied benefits of an iPSC solution for stem cell replication championed by Cynata . I am also cautious of the risks following the clinical review papers i have read, which include contributions from authorities such as the Yale School of Medicine, etc,. I have enclosed a representative sample of some of the peer reviewed papers highlighting why a move to iPSC based treatments is too early because of safety issues regarding the parental cell, risk of terratomas, etc., amongst others. I personally think that reliance on a single cell master bank source is dangerous until it has passed the test of time. Indeed the new proposals of Yamanaka regarding MHC matching appear much more interesting and you should review the experiences of Lonza and the Riken Institute in their research findings.
I suspect that by the time the FDA finally authorises iPSC production that doctors will realise that bypassing cells altogether and using a “cell free exosome based approach” will yield the benefits without the risk. This approach is already being pursued by a number of companies such as Capricor Therapeutics in the US . Recent studies have shown that only about 2% of mesenchymal cells actually achieve direct contact with targeted cells and that much of the therapeutic affects are exosome based. Until the half lives and potency of the microvesicles can be lengthened and verified further, I view our mesenchymal cell solution as a form of allogenic DeathStar (think Star Wars)...sneaking up past the innate immune system guarding all those badly behaved cytokines! Submit to our intermodulation or its apoptosis for you !
I believe the panel review meeting for Ryoncil (Remestemcel) which is held a month before the PDUFA date of 30th September 2020, will finally put paid to the more ill considered comments emanating from certain more excitable posters, about the proliferative and potency capabilities of Mesoblast’s therapies. When investors understand the implications of using xeno free mediums and fycosylation homing technology which trebles the accuracy of payload delivery ... in combination with 3D bioreactors, you will realise that Cynata ,Athersys & Pluristem may have an uphill struggle commercialising their respective technologies .....if they survive the patent challenges ! Documented safety concerns regarding induced pluripotent stem cells, may look less traumatic after comprehensive testing.....but only time will tell. Does anyone want to remind Cynata shareholders that our clinical trial results for GVHD were undertaken long before we upgraded all our technical processes...all those benefits may substantially improve efficacy and pharmacoeconomic appraisal.
Please do not rely on any of the facts and opinions contained in the above post when making an investment decision. OP
(20min delay)
