Hey all,Well that CRL sucked.I wanted to chip in though, as...

Hey all,

Well that CRL sucked.
I wanted to chip in though, as there is a good discussion going on.
I said in my previous post that if the therapy received a CRL, the wrong decision was made.
I especially stand by that statement when the reason for the CRL was based on efficacy. If it was CMC or potency-related, I would have been surprised but not in disbelief. I personally think (and hope) that patient advocacy should get involved based on what I will cover below.

Discussion on efficacy below:

• Mesoblast successfully met the pre-specified primary endpoint in their phase 3 trial, which was prospectively agreed with the FDA.
• The drug Jakafi was approved with the same trial design and worse results, although they did have a larger sample size.
• The FDA appointed an Oncology Drug Advisory Committee in September 2020, where the committee voted 9:1 in favour of the therapy's efficacy.
• Mesoblast had met with the FDA following the previous CRL, and established that if they resolved the CMC/quality aspects then CBER would re-review the BLA in full.
• The therapy was acknowledged as having a clean safety profile.
• The therapy has been made available to over 250 children through a compassionate use program/early access protocol (EAP) in the past 3 years (which is a non-insignificant proportion of the estimated annual total patient population of 750 within the US).
• Within the EAP, day 100 survival has been demonstrated to be 74% within 275 patients.
• Data comparing survival rates for Best Available Therapy (BAT) and Jakafi are shown below:

Therefore, a CRL based on efficacy means:

• The FDA is at fault for prospectively agreeing to the GVHD001 trial design.
• The FDA has broken the precedent it set when it approved Jakafi:

• The FDA should not have bothered appointing an advisory committee if the outcome of the efficacy vote was going to be disregarded regardless.
• The FDA should not have accepted the BLA resubmission if an RCT was a hardline requirement.

Therefore, I think quite clearly, the FDA has made the wrong decision in at least one of the 4 above cases.

Discussion on Silviu: Let us try and remain objective here.

Silviu said that the FDA had prohibited the performance of additional clinical trials until the CMC and potency assays had been resolved. Therefore, Silviu went into this BLA with all the data he possibly could have without performing an additional clinical trial.

The question is more: Should he have resubmitted the BLA? The answer to that question depends on the content of conversations that none of us are privy to. He states that through the dispute resolution, the FDA agreed to review the BLA and corresponding data in totality if the CMC and potency issues were resolved. The ex-FDA director who is on the board of the company bought US$75k of stock in an on-market trade. To me, it definitely seems like the FDA reneged on something at some point.

Going Forward: Decide your risk profile and invest accordingly.

The risks for this company are now linked to cash management. Make your own judgement calls on whether the company will:

• Get AA, as this is a similar model to Peter Mark's over-rule of a previous rejection of a gene therapy and he likes the AA pathway.
• Will have the trial funded by non-dilutive sources
• The duration of the trial (45 days + 100 day end point + x months to initiate + x months to recruit + x months to analyse + 6 months resubmission)
• Whether the company can be judicious to make the cash last
• Magnitude of potential dilution
• etc.

Risk reward people, do your DD, make your calls, and then stand by them.
What I will say, is that we are 3x below where we were during the TH. I estimated a conservative medium(now longer)-term company value of $19.50 per share. That has now moved from a 17.9x multiplier to a 47.6x multiplier. Weigh up your estimations of future value vs current risks, and invest accordingly.

Not financial advice.

Gang gang