An overview I picked up from Vincent Dyer Mesoblast partnership with Novartis:
(1) Huge news. MESO secured its financials for the next years with this deal. Positive results on the covid ARDS trial , will mean big money flowing in (besides the 50M$ already due upon signing with Novartis). It did it without diluting its share holders. People forget that research companies need lots of money to operate such huge trials and possibilities.
(2) The deal seems good to me. Large upfront and milestone sums (50M$ then additional ~500M$ then additional ~750M$ post approvals + covering the production prices (MESO will do the production) with some small profit I suppose + double digit royalties on sales related to respiratory (let's say 15%) + 50% royalties on any indication that is not respiratory (say IBD for example) + Novartis will finance the phase 3 trial for non covid ARDS. So... yes, they give away a lot of the royalties for respiratory, but get huge sums in return that will be able to finance anything else, plus they get royalties , plus Novartis takes the expensive sides of marketing and sales and studies needed. I have to say it's one the deals with better terms I've seen in the industry. Really. This is the very good side of how deals of biotechs with big pharma look like
(3) FDA and GvHD : Looks like FDA insists on a two armed trial. I can truly understand that, but as I said before FDA should have said that to MESO 2-3 years ago. Not now. Not after a 9:1 vote. Anyway - with the huge Novartis deal the financial importance of this diminishes. The key now turns to the ARDS results. Good results there equals secured financial future from the Novartis deal. Yes, there's still a small chance of filing a dispute, etc. It's very hard to overturn a decision with a dispute process. Maybe... we'll see
(4) Now here's the interesting part: MESO gets to keep its CHF and LBP programs for itself, as they are now. So the plan is getting money from the rem-L Novartis deal to finance the mega market projects for CHF and LBP. This is smart. They kept these 2 mega blockbuster US markets for themselves, and secured the financing for them. Smart
(5) They reiterated the CHF results will be in Q4. They explained the delays of data collection (as expected). I found it interesting they mentioned the good sides of the phase 2 results on the same page... It may be reading into the lines. If they have a bad indication... they could have chosen not to do it... yet they did. Interesting. But now it is clear we will get the results in the next 4 weeks more or less. Before Christmas. They reiterated that this trial result may allow for a US approval. That news would dwarf the Novartis deal several times if it happens
(6) They reiterated the LBP results in Q4, and the fact a Euro phase 3 trial is in planning. That's even a bigger marker. Somehow here... reading between the lines gives the feeling they estimate they will need that Euro trial as well in order to get approval, however, they will get serious money from the EU collaborator if that happens, so its some compensation for what could be a delay in final approval of LBP. Anyway - good results here are huge huge news as well, and you never know, it may be good enough to go for approval as is. It's all in the numbers
(7) ARDS positive + CHF positive is the rocket path. If this happens - this jumps to the sky. LBP too of course
(8) Novartis does not sign such deals every day, and has the best of scientists under its umbrella to go over every little detail regarding the rem-L projects. They checked everything to the last detail. Production. IP. Clinical results. And somehow are betting on the ARDS trial... it's most certainly a very reassuring move
(9) MESO took projects that represent ~10% of its potential (the rem-L projects, that are currently big but much smaller than CHF and LBP), made some compromise on it, and secured funding to do its big huge markets deals. Smart. And I think they believe in the CHF and LBP potential if they chose this path.
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