Ann: Update on Novartis Agreement, page-593

Hey there

My initial reaction was that Novartis pulled the pin because the OTAT meeting was either non conclusive or negative, either way meaning the COVID ARDs trial was probably going to be delayed until Mesoblast could get OTAT over the line with the potency assays.

But that is assuming the outcome of that meeting had taken place, and the outcome had been shared with Novartis.

The counter argument is that if that were the case, the Novartis termination announcement would have been the best time to dislose a bad OTAT outcome... why hit the market with two lots of bad news, one more complete update would have been better.

If however Novartis made the decision based on the 'totality of the data' from the phase 3 trial, then that is their prerogative and like Teva, their internal leadership no longer saw the product as part of their long term strategy and decided to pull the pin.

Having that war chest probably meant that Novartis leadership sat down and mapped out their pipeline and potential areas of interest that fit within their long term strategy. And if Mesoblast's play at COVID ARDS and broader ARDS was seen to be too high risk, or not within their long term strategy.. it didn't matter how good the data was.. it was likely going to be dropped unless they were already well down the path or had already signed up.

In terms of overall confidence with the OTAT outcome? All I can say is that I'm hopeful, but a little concerned given Novartis has pulled out. But that may just be a red herring and I could be wrong about why Novartis pulled out.. so lets just wait and see. We'll know in weeks.