Well, that was a hell of a week. Not the Christmas present we were all wanting. It sounds to me like the DSMB and NIH were expecting MSB's cells to resurrect the dead toward the end. They're good, but they're not that good!
However, all is not lost, far from it. My thoughts for what they are worth.
As frustrating as it is for all LT holders, this is still a process of discovery. What we learned this week was where (and maybe how) the cells are most effective; the "sweet spot" as SI put it. This is important for future trials, approvals and partnerships (maybe in reverse order
.) This week has narrowed down the best patient populations for MSB's treatments - the target markets - and they are huge. Some are unmet needs, others complementary to existing treatments, or superior to SOC. Either way, there is a lot of valuable data to get through, and I can guarantee Big Pharma is watching. They will not be put off by technicalities, statistical anomalies, or poor trial design when the science is coming through loud and clear and the financial opportunity so huge. Quite the opposite.
I think the difficulty investing in MSB is navigating between different time horizons. The market moves fast, but biotehcs don't. After such a long wait, we all want something we can at least bank now, and have more confidence in the pipeline and future approvals. Three perceived "fails" rattles the market, but I think MSB has also been a little unlucky.
Firstly, I don't think the COVID trial has been a fail. Others have covered this, but the cells were clearly effective early on. Without having the data to analyse, my feeling is that the trial just became too convoluted to draw any clear conclusions from, for all the reasons already discussed. It's not that the cells failed necesarily, but it sounds like they were increasingly pushed back behind other (ineffective) treatments (such as those spruiked by Trump and other vested interests, despite warnings from WHO and others,) as the SOC evolved, around multiple overwhelmed recruitment sites, until the cells became akin to salvage therapy. No longer comparing apples with apples, and short of cadavers just getting up and walking out, maybe it was the trial that became futile, rather than the treatment?
Nonetheless, there will be plenty of valuable data to sift through, and Novartis are no fools. It's the all-cause ARDS they are after, not just COVID, and if the data supports the treatment, they are not going to just walk away and let a competitor step into their place. The science will speak for itself, and a trial of their own design will bear this out.
Secondly, the CHF trial looks like a resounding success, despite missing the endpoint - which is a technicality (and maybe a statistical anomaly) rather than a fail. Again, Big Pharma is watching. Nobody is going to ignore a 60% mortality reduction in a huge patient population, alongside all the other related health benefits, which can be achieved with a complimentary treatment. MSB isn't eating anybody's lunch on this one. So the question again here is, who wants to miss out on this opportunity?
There is also a huge irony with this "fail" as the hospitalization endpoint was meant as a "read-through" for mortality. Instead, MSB goes and knocks mortality out of the park. To use an (English) football analogy, the coach is screaming at the winger to put the ball in the box, but instead, he puts it in the back of the net and wins the game. A fail?
And then, thirdly, there's AGVHD. The trial, the ODC vote, and the KOLs in this space indicate that this is a successful treatment addressing an unmet need in children under 12. It's only a matter of time before it becomes first in class, but it also demonstrates why this indication was so important as a potential first approval for MSB. If the FDA isn't going to approve it given the above, how will they view a subsequent trial that has missed its endpoint, or been stopped early for the same reason?
And this is where MSB have been a little unlucky, (notwithstanding politics.) The FDA now wants a gold standard double-blinded trial for AGVHD, rather than the single-arm open-label trial MSB conducted for the correct ethical reasons (with FDA backing,) which demonstrated the life-saving potential the cells have. When MSB DID run a gold standard double-blinded trial for CHF, they hit the "wrong" endpoint by saving 60% of lives.
And now with the COVID trial, (which was a fortuitous bonus with potential near-term revenues,) it has created a perception that somehow the cells "don't work" at all and we've all been investing in a dream.
Poor trial design may have contributed to this perception, but these decisions are made years in advance for a science that is still not fully understood (hence some of the FDA reservations and the ongoing process of discovery,) and as we've all seen, the goalposts can move at any time. The COVID trial is a good example; things changed so quickly it was virtually impossible to conduct without compromising the design. Nonetheless, the trial (which MSB didn't fund) brought Novartis to the table with a potential $2B+ deal and will now deliver a wealth of valuable information.
The data will take some time to analyse, but my feeling is that this year has firmed the science. Maybe CLBP will deliver us a nice surprise and we (or the market) can finally bank it's first "success," or maybe the FDA will allow MSB to switch the CHF endpoints around, but I personally think the partnerships will come first (and soon) and the approvals will follow with the backing of Big Pharma.
As always, my opinion only and not financial advice.
(20min delay)