MESO: Mesoblast Achieves Phase III Success, It's About Time It Enters Your Portfolio
Seeding Alpha article
Summary
Mesoblast achieves primary endpoint in phase III trial treating patients with aGVHD.
The positive results from the phase III study are so good that there is a potential to file for accelerated approval of remestemcel-L in patients with aGVHD.
Mesoblast is currently in talks with strategic partners to potentially raise cash without the need for future dilution.
Patients treated with Remestemcel-L were able to double survival rates compared to historical control.
There are no FDA approved drugs for steroid-refractory aGVHD patients.
This idea was discussed in more depth with members of my private investing community, Biotech Analysis Central.
Recently,
Mesoblast (
MESO) announced data from its phase III trial treating patients with acute graft versus host disease ((aGVHD)). It reported that the
phase III study met the primary endpoint. This is an important finding for a population that does not have adequate care. That's why it is my belief that Mesoblast is a good buy for your portfolio as a long-term investment.
Phase III Data
The phase III study recruited 55 children with aGVHD. One thing to note about this trial was that it wasn't a straightforward comparison study. Meaning that it was an open-label trial and there was no placebo comparator. Despite that, the study was highly positive and I will explain why shortly. These patients were treated with an alliogenic stem cell product known as MSC-100-IV (also known as remestemcel-L). The primary endpoint was looking for overall response at day 28. It was noted that at least 69% of patients responded with treatment of remestemcel-L. Response was considered as the patient either achieving a partial response or a complete response. Now, why is this data good if there was no placebo comparator? That's because the totality of the data was looked at based on historical control. In other words, it was based on current treatment options, and how they compared to these patients treated with remestemcel-L. In terms of historical control the best response rate observed for these patients ranges around 45%. Comparing remestemcel-L and historical control in terms of response, that gives remestemcel-L a statistically significant p-value of p = 0.0003. This data is impressive, and why I believe that Mesoblast is a good buy at its present value.
Potential For Accelerated Approval
Typically, what makes data compelling is that it hits its mark in terms of meeting the primary endpoint of the study. However, as remestemcel-L has shown it is a superior treatment option over current therapies that are offered. On top of the reported data, it was shown that long-term treatment with rememstemcel-L also produced a higher survival rate compared to those that take steroid therapy. It was shown that 50 patients in the study who completed 100 days followup, saw a survival rate of 78%. First of all, without knowing how well the historical therapy performs this number is high to begin with. But what if I was to tell you that aGVHD patients on such a 100 day followup on steroid therapy only see a survival rate of 30%. That is more than a doubling of the survival rate for those who took remestemcel-L. The best part of all, is that with this data on hand Mesoblast has the opportunity to file for accelerated approval. That's because there are currently no FDA approved drugs in the United States for the treatment of steroid-refractory aGVHD. Accelerated approval would allow for a quicker turnaround time for approval. Although, this will be discussed with the FDA to determine if Mesoblast can file for accelerated approval based on this six month safety and efficacy data from the phase 3 study. It is not guaranteed to happen, but a huge possibility.
Financials
As of December 31, 2017 Mesoblast has cash and cash equivalents of $47.4 million. This cash should be okay for 2018. The good news is that in its most recent
press release for earnings, it states that it is in talks with certain strategic partners to potentially raise cash in order to properly commercialize any assets that may be approved by the FDA. Even if it doesn't find a strategic partner immediately it has an equity facility in can tap into for $90 million that can be used over an 18 month period. That means while it looks for a strategic partner, it has the ability to get cash and therefore I don't see a major cash raise in the near future.
Conclusion
The phase 3 trial in patients with aGVHD was highly successful. I believe that given the need for a newer therapy for these patients, the FDA will likely grant accelerated approval for remestemcel-L. Mesoblst should be in your portfolio, because by passing the phase 3 it has been greatly de-risked. Of course, it still has to pass the FDA for regulatory approval, but considering the results I don't see why it won't be approved. The doubling of the survival rate is a pretty big deal in my opinion. Not only that but there is a chance to reduce the mortality rate for these patients as well. Taking all these considerations into account, I believe that remestemcel-L will be approved by the FDA to treat aGVHD. This is why I believe that this biotech is a good buy.
Authors Note: Mesoblast was discussed in more depth with members of my private investing community Biotech Analysis Central
This article is published by
Terry Chrisomalis, who runs the
Biotech Analysis Central pharmaceutical investment research service on
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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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