I haven’t had time to read most of the hundreds of posts over...

I haven’t had time to read most of the hundreds of posts over recent days so apologies for any old ground I cover.

Given Mesoblast’s current difficulty gaining FDA approval for SR-aGVHD, the tie up with Novartis is clearly a major win. The market certainly agrees. But could the deal, particularly the upfront, have been even better?

It's my understanding that Jakafi has approval for three indications including one that impacts Mesoblast, that’s aGVHD. Novartis has licensed the worldwide rights for Jakafi, excluding USA, from Incyte. Incyte retains US rights and expects revenues from Jakafi sales of $1910 - $1940 million in 2020. Novartis paid Incyte $68.3 million royalties for the September quarter alone.

So despite it’s safety profile, Jakafi is unquestionably a blockbuster.

https://au.finance.yahoo.com/news/incyte-incy-q3-earnings-sales-151203457.html

Now if I think back to the public submissions to the ODAC Committee, by far the most negative imo was from Lassman Law. They very much pushed a narrative that’s been continued in the FDA’s position during the meeting, in the CRL response and it seems at Type A.

From my memory the lawyers did not disclose who they were representing. But if you consider which companies had most to lose should Remestemcel-l be approved for SR-aGVHD, imo the list would be fairly short.

In my years of investing in biotech, I’ve learned that patience is a virtue. Trials and data reviews almost always take longer than expected, and deals generally even more so.

So Novartis may very well have been in negotiation with MSB prior to the ODAC meeting. The US$50m upfront is relatively low in my view, with the big payoff at the back end. And imo its possible that the sign on fee for ARDS was linked to the FDA aGVHD result. So if Mesoblast missed out; in dollar terms it’s a win for Novartis.

Many here, and the market in general, justifiably appear to view Novartis as a white knight, with critical funding, expertise and potential to smooth the path with the FDA. And given the intransigent attitude of the FDA, of course Novartis involvement will only help.

But I think the delay MSB now faces with the FDA on aGVHD, will add millions to Jakafi revenues of Novartis and Incyte, that otherwise might have significantly impacted MSB’s balance sheet. And it’s at the expense of Remestemcel-l being a freely available, effective and safe treatment for vulnerable pediatric aGVHD patients.

How much influence the lawyers submission had on the FDA, and who paid for it, we’ll probably never know.

Bottom line, in MSB’s current situation, the Novartis deal is very good. And Novartis is playing it smart by working with MSB.

But white knight? I’ll accept beige..

One man's opinion. Usual bias.

Herro