AllanHU the call answers lots of questions ...but are people paying attention ? I cannot believe how little warning the investment community is given before the last couple of webcasts. Mesoblast is off the radar screen and will not get on the radar screen unless someone pulls their finger out. My sound feed cut out about every 30 seconds and my slides had to be manually refreshed whist there was so much background noise I almost stopped listening in frustration.
But you have to admit....Remestemcel-L looks a thoroughbred winner !
Will someone point out to Morningstar that the Commercial Launch was given as 2020 in the presentation ! ..not 2021 which they are using. Not doubt our friends at Morningstar will say that after years of failing to keep timelines they are erring on the side of caution....so let's not quibble over 6 months here or there. The main question that needs to be answered is does Remestemcel-L represent the best treatment on the block for steroid refractory aGVHD in every segment of the market ? Well not quite. In the paediatric market it wins hands down. From the clinical data presented . Jakafi achieved very poor trial results in comparison to Remestemcel-L in the 13 patients which form the basis of their paediatric trials.
In the adult segment we know that, leaving aside horrible side effects, Jakafi has only demonstrated greater efficacy in one segment....single organ skin conditions.... but in the higher cost burden GI, hepatic and multi organ segments there is again one winner...Mesoblast !!!
Mesoblast also has the largest clinical data set with 300 patients and has been sold commercially in Japan since 2016 to treat all market segments.
Which just brings us to timing and pricing . Remestemcel-L is addressing more acute conditions which require longer periods of hospitalisation . Jakafi is priced at $170k + but with slower response rates, lower efficacy and side effects which incur additional costs to be considered. Infections 55%, Cytopenias 65%, Edema 51% and Sepsis 12.7% are just some of the conditions you might expect when using Jakafi. Total treatment cost is the key.
So what pricing guidance has Mesoblast given us ? There was nothing definitive provided in this presentation, but the Company has laid out its pricing strategy in previous conference calls. To quote Silviu Itescu from the Q3. 2018 results meeting :
"as a rule of thumb, I would say U.S. prices would be 60% higher than Japan for most drugs, including orphan drugs, orphan drugs perhaps even higher than that. We’ve tested the market. We’ve done commercial testing. And given that the cost of a bone marrow transplant in the U.S. is significantly higher than in other jurisdictions and given that the cost of treating a patient with graft-versus-host disease doubles or triples the cost of the bone marrow transplant, we think probably a reimbursement of about $300,000 per patient is appropriate and it is probably conservative."This statement was then backed up by disbursement advice on provided by Anthem ,which had calculated existing current treatment costs up to $500,000...for the more complex grade C and D conditions.MARKET OPPORTUNITYThis was addressed in page 45 of the presentation. In the paediatric market, 900 patients a year in paediatric aGVHD in the EU and US..on regulatory approval , with no other products even approved for sale in the Under 12 market.
It was clearly stated that an adult label extension for Remestemcel-L would be pursued almost immediately following paediatric approval. The adult market was profiled as 18,800 patients with 9,400 suffering aGVHD and 2900 having gut and liver disorders. Based on numbers provided by Incyte in a recent conference call, chronic and acute would be a further 3000 patients each with maybe 2000 being targeted by Mesoblast ...but let's ignore this for the moment.
Based on 60% market share in paediatric which is plainly conservative (as there is no other treatment option) and allowing for 25% discounting for tight fisted European buying groups this represents $130m of sales per annum.
900 times 0.6 =540 times $240k = $129,600,000.
In another 12 months it should be realistic to target 40% of adult GI and Liver representing 1160 patients.
2900 times 0.4 =1160 patients times $240k =$278,400,000.
I think, we can all agree, that just in all paediatric and adult grade C and D aGVHD, a sales target of $408m is not a particularly unrealistic target...before we add on chronic and acute segments !
So the current market cap is just over 1 times my estimated sales for calendar 2022. If I were an Oxford Finance LLC, a Clarus (recently bought by Blackstone), or a Royalty Pharma, I would just be waiting for the completed BLA submission for Remestemcel-L, before offering a highly competitive royalty share deal ,which should be no way near as dilutive as using the equity markets or selling out to a global pharma ...but this is just my humble opinion....Madamswer knows best !
https://www.blackstone.com/media/press-releases/article/blackstone-announces-agreement-to-acquire-clarus-a-leading-life-sciences-investment-firmGLA.
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