Cantor Update - MSC's and COVID-19, page-79

Part 2 of My previous post.... Cantor Fitzgerald ...
On February 23, 2020, MESO presented aggregated results of 309 children treated with Ryoncil, the new commercial name of remestemcel-L for the U.S. market, and concluded that treatment across three separate trials resulted in consistent treatment responses and survival outcomes in children with SR-aGVHD. Key findings from this study noted consistent safety and efficacy across the continuum from first-line treatment after steroid failure through most- challenging patients who received Ryoncil as salvage after exhausting all other options. Of the 309 (66%) patients, 204 achieved an overall response at Day 28 following a 4-week course of Ryoncil, and the most severe patients (Grade C/D; 82% of all treated patients) had a Day 28 overall response of 65%. The positive overall response rate achieved at Day 28 is noted to be strongly predictive of survival at Day 100 and Day 180, providing a more-than-twice-as-likely chance of survival than non-responders (84% vs. 39% at Day 100, and 83% vs. 38% at Day 180).
JCR Pharmaceuticals Partnership
After MESO acquired the MSC technology from Osiris Therapeutics (Not Covered) in 2013, MESO licensed the technology to JCR Pharmaceuticals (Not Covered) to develop and gain approval in Japan. JCR received full product approval on September 18, 2015, from the Japanese Ministry of Health, Labor and Welfare for Temcell HS Inj. (JR-031) as the first allogeneic regenerative medicine product approved in Japan using MESO’s MSC technology. Temcell launched on February 24, 2016, to treat children and adults with aGVHD in Japan.
The Japanese Government’s National Health Insurance set reimbursement for Temcell at ¥868,680 (~$8,000 as of 3/5/20 exchange rates) per bag of 72MM cells. In Japan, the average adult patient is expected to receive at least 16 or up to 24 bags of 72MM cells. On this basis, MESO expects a treatment course of Temcell in an adult Japanese patient to be reimbursed at a minimum of ¥13,898,880 (~$130,000 as of 3/5/20 exchange rates) or up to ¥20,848,320 (~$195,000 as of 3/5/20 exchange rates). Under the agreement with JCR, MESO is entitled to receive royalties and other payments at predefined thresholds of cumulative net sales, and is expected to have rate increases based on increasing cumulative sales. As of the YE19 Financial and Operational highlight presentation on February 26, 2020, JCR reimbursed up to ~$195,000 (based on a ¥ = $0.009375 spot exchange rate on market close .


More specifically, sequential quarterly growth has been in the low-to-mid-single-digit percentage range and year-over- year (YoY) growth at a double-digit percentage. The royalty rate is currently expected to be in the high-20% range, and is expected to increase with additional sales milestones. According to our most recent MESO model, we expect a peak U.S. market for SR-aGVHD to be ~$400MM for pediatric and adult population.
Market opportunity in Japan is ~3,700 allogeneic BMTs performed each year, and of those patients, ~50% develop aGVHD (Grades B-D). This makes Japan the second-largest country for allogeneic transplants performed. Product adoption in Japan and reimbursement rates have informed MESO on the anticipated U.S. commercial strategy for Ryoncil in aGVHD. The U.S. addressable market for aGVHD in children and adults is 8x larger than the Japan market due to greater patient numbers, incidence and pharmacoeconomics. The SR-aGVHD indication represents a >$700MM U.S./EU market opportunity. Additionally, the collaboration with JCR has expanded to additional indications. On October 24, 2018, MESO announced the expanded partnership with JCR for the wound-healing indication for patients with Epidermolysis Bullosa (EB). JCR received Orphan Designation for the allogenic MSC product Temcell HS Inj. for the treatment of EB based on promising results from an investigator-initiated trial in Japan. Most important, MESO has the right to use safety and
efficacy data generated by JCR in Japan in support of development and commercialization of its MSC product candidate remestemcel-L for EB and other non-healing wound indications in the U.S. and other major healthcare markets. Additionally, on June 11, 2019, MESO announced the expanded partnership with JCR on the use of MSCs for treatment of newborns with neonatal hypoxic ischemic encephalopathy (HIE), in which MESO has the same right to utilize data generated by JCR. Although JCR suspended the EB development program as of September 2019, we expect further development in the MSC program once a formulation is determined by JCR (IV or subcutaneous injection)....
Chronic Heart Failure (CHF)
CHF is characterized by an enlarged heart and insufficient blood flow to the organs and extremities of the body. The condition, which affects 2% of the adult population of the U.S., is progressive and can be caused by many factors that put an excess demand on the heart muscle such as high blood pressure, faulty valves, infections or congenital heart problems. CHF prevalence is expected to grow 46% by 2030, affecting more than 8MM Americans. CHF is classified in relation to the severity of the symptoms experienced by the patient. The most commonly used classification system was established by the New York Heart Association (NYHA) and ranges from Class I (mild) to Class IV or end stage (severe). Patients that suffer from advanced (Class II/III) heart failure continue to represent an unmet medical need.
There are more than 26MM people worldwide living with heart failure, with 8.5MM patients in the U.S. alone expected by 2030. 17-45% of patients die within one year of hospital admission. Advanced and End-Stage HF (Class III-IV) constitute ~30% of all HF patients, with advanced HF patients having the highest hospital readmission rate of any diagnosis-related group, due to limited treatment options. The majority of Advanced HF patients die within 5 years. This large clinical unmet need in the U.S. alone is a potential blockbuster opportunity.
Revascor
Revascor (MPC-150-IM, rexlemestrocel-L) consists of 150MM MPCs administered by direct injection into the heart muscle in patients suffering from CHF and progressive loss of heart function. Revascor is designed for local delivery to damaged heart muscle and to allow the MLCs to secrete biomolecules involved in myocardial neovascularization, cardiomyocyte survival, cardiomyocyte precursor migration and proliferation, and reduction in fibrosis and myocardial scarring. Biomolecules include stromal cell-derived factor 1, Angiopoietin-1, vascular endothelial growth factor (VEGF), hepatocyte growth factor, and matrix metalloproteinases. The MPCs release a range of factors when triggered by specific receptor-ligand interactions within damaged tissue. Based on preclinical data, it is believed that these factors induce functional cardiac recovery by simultaneous activation of multiple pathways, including induction of endogenous vascular network formation, reduction in harmful inflammation, reduction in cardiac scarring and fibrosis, and regeneration of heart muscle through activation of tissue precursors.
MESO is aiming to treat advanced and end-stage heart failure patients that currently have limited therapeutic options after oral therapies. Refer to Exhibit 9 for the current treatment paradigm and the potential impact MESO will have on this ailment with Revascor.
CLBP is caused by damage to the intervertebral disc as a result of aging, genetic predisposition, and injuries. This compromises the disc’s capacity to act as a fluid-filled cushion between vertebrae and provide stability. An inflammatory response to damage will result in an ingrowth of nerves and result in chronic pain. Disc degeneration can progress to a point at which the pain and loss of functionality cannot be managed or improved, even with spinal fusion surgery. Current treatment options treat symptoms of the disease but not the underlying cause. Over 7MM patients are estimated to suffer from CLBP due to degenerative disc disease (DDD) in each of the U.S. and EU5.
MPC-06-ID
MPC-06-ID is a product candidate consisting of a unit dose of 6MM MPCs injected by syringe directly into a targeted damaged disc in an outpatient procedure. MPC-06-ID administered by local delivery to degenerating intervertebral discs allow MLCs to secrete biomolecules involved in enhanced migration and proliferation of intervertebral disc progenitor cells, and in enhanced proteoglycan and collagen synthesis in the disc nucleus and annulus. These biomolecules include Angiopoietin-1 and transforming growth factor beta.
Preclinical outcomes and Phase 2 trial of MPC-06-ID support the initiation of the ongoing Phase 3 trial. 100 patients with >6 months of CLBP due to DDD and unresponsive to conservative therapies (including opioids and epidural steroids) were evaluated in a randomized, placebo-controlled Phase 2 trial. A Visual Analog Score (VAS) scored from 0-100 evaluated at 1, 3, 6, 12 and 24 months with the minimal clinical importance difference (MCID) in VAS of >30% improvement and required >50% pain reduction. The Oswestry Disability Index (ODI) standardized measure of function was also evaluated at the same time points. In March 2017, 36-month results were released and showed that a single intra-discal injection of 6MM MPCs resulted in meaningful improvements in both pain and function that were durable for at least three years.