Mesoblast and GVHD

I am a health professional and prompted by an article in the AFR over the weekend I have recently undertaken a review of MSB. The overall gist of the AFR article, I must say, was negative. Nevertheless, after a focused review, I have a much more positive impression of the company. I specifically examined the role of the companies therapeutics for GVHD, as this will be the most significant near term driver of the share price.

I was prompted to review Mesoblast (MSB:ASX) after a full page article on this stock appeared in last weekend's Australian Financial Review. With what sounds like a flamboyant founder/CEO and with fund managers on the long and short side, it all sounded like a thriller.

Mesoblast and the FDA

Mesoblast describes itself as a world leader in developing innovative allogenic cellular medicines. It has product candidates in four therapeutic areas: pediatric and adult rare diseases (including GVHD), cardiovascular, pain and inflammatory. Ryoncil (Remestemcel-L), for acute steroid refractory GVHD in children, is closest to commercialization, as it awaits a FDA (US Food and Drug Administration) consideration. Importantly, the FDA has allocated it a priority review (6 months rather than normal 10 months waiting period). Furthermore, the real "kicker" with this drug, for this indication, is that MSB has exclusive commercial rights to this product for the world (ex-Japan).

For MSB, this FDA decision is a BIG deal.

What then does the FDA consider in approval and rejection of pharmaceuticals? The principal item of consideration is that the benefits of the drug outweigh any potential risk (1). The FDA considers the target condition and available treatments. A drug targeting a life threatening illness, with limited other treatment options, may get approval even if it causes significant toxicity. The FDA will examine trial data, and usually at least 2 late phase trials. Finally, the FDA requires that the company concerned outline their strategies for managing risk.

What is GVHD?

GVHD is the possible consequence of stem cell transplantation, in which the donor's white cells attack the recipient's healthy tissues. Sites that may be impacted include not only the skin (usually less serious) but also the gastrointestinal tract and the liver (potentially more serious), However, many of the complications of GVHD are the result of the treatments. The treatments historically involved immunosuppression, as an attempt to "dull down" the overactive immune response. Corticosteroids (steroids) often form the "backbone" of treatment. These agents and the other immunosuppresives used for this condition are rife with both early and late onset side effects.

Last year the FDA approved the first drug for pediatric and adult steroid refractory (steroids no longer work) acute GVHD- Ruxolitinib (Jakafi) (2). Jakafi was approved based on the results of a single phase 2 trial- REACH1 (3). Primary end point was overall response rate (ORR) at day 28. In this trial Jakafi had an ORR of 55% and a complete response rate (CRR) of 28%. Jakafi was well tolerated with the main adverse effects being cytopaenias (low platelets and low red cells).

The Ryoncil data

Two phase 3 trials have been published in peer reviewed publications concerning Ryoncil for steroid refractory acute GVHD. The first trial (4) examined 260 adult and pediatric patients and used durable complete response (DCR), defined as no symptoms of GVHD for at least 28 days after commencing treatment, as the primary end point. No significant differences were found between placebo and Ryoncil with respect to DCR. However, among pediatric patients and those with more severe GVHD, Ryoncil's overall response was better than placebo. It is important to note that this study was carried out more than a decade ago and hence the use of DCR rather than the more standard ORR for GVHD trials. Additionally, the authors note issues with study design that risk confounding. The second phase 3 trial examined Ryoncil in the pediatric population (5). In this study of 54 pediatric patients Ryoncil day 28 ORR (70%) was significantly higher than a pre-specified control rate (45%). Once again, as in the first trial Ryoncil was well tolerated.

A third study (study 275) examined Ryoncil in steroid (and other immunosuppresives) refractory pediatric acute GVHD (6). The majority of patients had higher grade GVHD. Overall Response Rate was 65% (60% in the most severe grade). The drug was well tolerated.Limitations as specified by the authors, include the lack of a placebo group and the concomitant use of other immunosuppressives (was it Ryoncil or the other drugs that worked?).

Where does this leave the investor?

Well, there are sparse minimally toxic options for the treatment of pediatric steroid refractory acute GVHD. Jakafi, is the principal competition for Ryoncil. With respect to toxicity, both are superior to the "old fashioned" immunosuppresives. Jakafi, has the advantage in terms of mode of administration (oral versus intravenous). Nevertheless, given the considerations the FDA examine, I can see a world where Ryoncil is added to the hematologists armamentarium for this condition.

This review was posted on my blog (www.burnsavenuecapital.com) earlier today.

References

1. https://www.fda.gov/drugs/development-approval-process-drugs#:~:text=FDA%20approval%20of%20a%20drug,risks%20for%20the%20intended%20population.

2. https://www.hematologyandoncology.net/archives/september-2019/new-treatment-options-for-the-management-of-acute-graft-versus-host-disease/

3. https://pubmed.ncbi.nlm.nih.gov/32160294/

4. https://pubmed.ncbi.nlm.nih.gov/31505228/

5. https://pubmed.ncbi.nlm.nih.gov/32018062/

6. https://pubmed.ncbi.nlm.nih.gov/32044400/