I hope everyone has had a great end to the year and is happy with the investment choices they have made. I remember reflecting back a couple years what made me buy back into MSB after being in and out a few times. The price had dropped into the $1 - $2 zone, and Silviu was doing an interview with Alan Cohler talking about CLBP results in sheep back discs and the amazing regeneration that they observed in the discs.... and the fact that GvHD was about to go for approval and the first of what was expected to be 2 CHF trials was going to read out shortly. Alan was trying to get to the bottom of why the share price was - where it was. I did a little research on the MSB trial in sheeps for regeneration of the intervertibral discs and was blown away. this combined with the GvHD results which would likely result in approval..... for $1 - 2 this was a no brainer decision to get back in an try and invest for the results or for the FDA approval.
What happened next was a steady climb up into the $3's, then into the $4's, then briefly to $5 .... still while awaiting FDA approval, and without the CHF or CLPB results. The ODAC panel which is typically convened when the FDA does not possess the expertise to make a decision, then overwhelmingly voted for approval based on efficacy demonstrated, only for the FDA to overrule them and issue a CRL requiring Mesoblast to address a raft of issues before re-attempting GvHD approval again. Over the ensuing 12 months, CLPB results were released which included a 50% reduction in opioid use by the treated arm, along with very good pain reduction scores that lasted out to two years after only a single outpatient procedure. Then as we now know, 60% reduction in all cause death for patients that were inflamed with Class 2 or 3 Heart failure. 80% reduction in cardiac death for class 2 patients that were inflamed. Zero benefit observed in patients that were not inflamed using IL6 and CRP levels. So now the company finally has solid evidence that demonstrates their hypothisized mechanism of action. The cells reduce inflammation. Inflammation caused by anything - as Silviu has been saying all along. This means..... the potential for treatment expansion is absolutely huge. Sepsis for example, is a massive killer of people. In the USA - it is estimated that 1 in every 3 hospital deaths is caused by sepsis..... which is an inflammitory condition where the body destroys itself.... When are Mesoblasts cells activated ? In inflammatory conditions only. What do they do? They reduce the inflammation. We also had the COVID trial halted at the 66% mark, which indicated a very good response from under 65's treated, where death was reduced from 42% down to 26% mortality rate, and the over 65's showed a good improvement in lung function for the first 7 days, but then deteriorated possibly meaning they needed a longer duration of dose compared to younger and probably fitter people.
Where are MSB now 27th Dec 2021.....
Paediatric SRaGvHDThey are between the middle and the end of FDA required mediation for issues the FDA had with granting MSB the GvHD biologics license. We should be updated by Si, some time on or after the 31st December 2021. Pending what the feedback is exactly from the FDA, MSB will either re-apply with a priority review by the FDA to be completed within 6 months of application and this time hopefully MSB are granted the first biologics licence for allogenic MSC therapy in the USA that would be in my opinion approval in the second half of 2022. If that does not happen, there is likely either an ongoing issue or something unforseen has emerged, which will further delay the resubmission, probably another 6 months. Oh - and to rub salt into the wound, if OTAT do not agree on the manufacturing process or controls that mesoblast has, then there is no further covid ARDS trial until MSB fix the issue and OTAT meet again.
Covid ARDSThe Covid ARDS trial terminated prematurely, but did demonstrate huge benefits in the under 65 group. The FDA require another trial to add to the data already generated from the first trial before any approval can be granted. No doubt the big focus here will be both under 65's, and dose modification in the over 65's to see if they can find the sweatspot for treatment for the elderly. As stated above, this trial cannot commence, until the OTAT agree on the manufacturing process for GvHD - since it is the same product and the same process used in GvHD and COVID ARDS. Confirmation on OTAT agreement or disagreement could be coming in as little as 4 days time, and more than likely if successful the company will be looking to treate covid ARDS patients, and then expand into all cause ARDS treatments. The company has pivoted here, and has close to $25 million in product stockpiled that it can use to initiate the final phase 3 trial. I would expect - pending the positive OTAT meeding from the FDA, that this next trial will very likely initiate in 2022.
CLPBThe OTAT did give Mesoblast some good news regarding the follow on phase 3 trial requirements. It seems that both FDA and European regulators will accept a single trial run that includes 20% Europeans, and that they will allow Mesoblast to use Pain reduction as their primary end point, as well as only needing to see 12 months data rather than 24 months as was done for the first phase 3 trial. That should result in under half the cost to run the next trial, since a seperate European trial will not be required, and half the time to complete when compared to the first study. MSB is also set to receive approximately another US $100 million on completion of pre- commercialization milestone payments. These may include things like approval for the trial, initiation of recruitment, or succesfull passing of Data monitoring board reviews for efficacy as the trial progresses. I dare say we will be updated at some point in 2022 that this new trial has commenced.
CHFThis is a very,, very tricky one to read of exactly what will happen next . One thing is certain, they were searching for gold in that phase 3 trial, and they found diamonds. Looking at the data.... it looks pretty rock solid to me, particularly the extremely high correlation between inflammation and clinical benefit. The P value here is utterly huge 0.003 or in otherwords.... 99.7% chance that the clinical benefit observed here ( for the 54% reduction in 3 point MACE in inflamed patients ) is because of the MPC cells delivered by Mesoblast. 99.7% sure seems like some dam good odds to me
. What is the unknown here, is why did the FDA ask mesoblast to look back in the data and identify the sub group that had the biggest benefit......According to Mesoblast - it was done so that the FDA can develop a pathway to approval....but what does that mean exactly? It goes without saying that in any further trial, MSB and the FDA would agree on using 3 point MACE to prove clinical benefit.... but why are they asking the company to post hoc data mine. In my opinion there can only be one explanation. The FDA are looking... or thinking about the possibility of giving mesoblast approval based on the 1 trial where they found diamonds. this approval may obviously come with strings such as only that highly inflamed group may be approved for treatment, and there may well be further post marketing phase 4 requirements..... or maybe the 99.7% clinical benefit is enough? This could blow all the other MSB products away if the FDA come back to mesoblast and recomment they proceed to accelerated approval. If that happens - all Si's dreams have come true, and IMO we are heading to over $20 a share easily. There is no timeline for theis feedback since it appears the FDA are trying to make their minds up weather to allow this to happen, or to ask for an additional study as Mesoblast originally intended. I think if MSB do get asked for another trial - based on the outstanding results and the publicity it has generated, recruitment is going to be a lot faster, and I am certain the doctors involved in the first trial will want back in on the action after hearing about the steller results. 80% reduction in cardiac death for class 2 inflamed patients....... that is disease halting if you ask me.... at least the death rate did not increase to that of class 3 or 4 as it should have. So CHF then is probably going to be the biggest rocket, or biggest upset if they don't support accelerated approval. but it also has the biggest upsides. excluding the 3 million patients allready suffering CHF in the system. Potential maket size here conservatively could be 70,000 cases per year with 50% market penetration into the 80% reduction in cardiac death market. How much MSB will charge for this life saving treatment? It's 150 million cells. COVID ARDS was approximately 300 million cells. - and that was estimated to be $75,000 USD based on being 1/4 of the GvHD full treatment cost. So it could be $35,000. It probably won't be, but it could be - so using that number. $35,000 x 70,000 patients per year = 2.45 Billion US in revenue, or in otherwords 3.6 times the current market capitalization in revenue per year............... CHF going under the radar here big time. Hopefully we get some fantastic news here in Q1 2022, and MSB finally catch a break.
Here's hoping 2022....at least 1 good thing happens to one of the above products.
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