Ann: Remestemcel-L FDA Fast Track Designation for COVID-19 ARDS, page-189

BELL POTTER FLASH NOTE  -
Mesoblast (MSB) has announced today that the
FDA has granted fast Track designation for remestemcel-L for the treatment of COVID-19 ARDS (Acute respiratory Distress Syndrome), based on the positive

data from the pilot study under emergency compassionate use at Mt Sinai hospital conducted in March/April’20.


Under Fast Track, remestemcel-L will be eligible for certain benefits which would shorten the FDA review time. These include priority review (which shortens the review time to 6 months vs. standard 10 months) and a rolling BLA submission and review process (which enables MSB to submit sections of the BLA when completed rather than waiting for all sections to complete).


Implications for MSB – BP view

We note that MSB will be applying for an EUA (Emergency Use Authorization) to the FDA for initial approval of remestemcel-L for COVID-19 ARDS subject to positive results from the ongoing 300 patients Phase 3 trial which is now ~two-thirds enrolled and has passed two interim analyses by the independent Data Safety Monitoring Board (DSMB). A third interim analysis when 180 patients have completed 30 day follow up is expected later this month, with completion of enrollment and Top-line results from the trial expected in 1QCY21.


However, as we have seen with Gilead’s remdesivir which was the first drug to be granted EUA for COVID-19, FDA expects companies in parallel to the EUA process to file a BLA to obtain subsequent full approval for the drug. The Fast Track designation granted by the FDA today will help in accelerating the subsequent BLA process for remestemcel-L for COVID-19 ARDS. Hence, we view the grant of this designation by the FDA as very encouraging.


We also note that remestemcel-L for COVID-19 ARDS is now partnered with Novartis in a worldwide licensing deal. We estimate that US$105m of the pre-commercialization milestones under the deal are linked to positive results and subsequent EUA approval by the FDA for remestemcel-L for COVID-19 ARDS which we expect to be received by MSB if everything goes to plan in 1HCY21.


No change to our estimates. We retain Buy (spec.) and $7.40/sh valuation on MSB.