Mesoblast and Lung Disease

Apologies to those who have already read this post.
It was moderated for advertising, as I had a link to my personal blog.
The reasons behind why this is not allowed has been explained to me by HC admin and I am happy with their explanation.
Se let me keep it purely about MSB.


This is my second review of Mesoblast and a follow up to my post "Mesoblast and Graft Versus Host Disease (GVHD)".

Chronic Obstructive Pulmonary Disease (COPD) is a devastating, usually smoking induced disease, that affects millions worldwide. In 2012 a study was published in the peer review journal Chest; this was a randomized double blind study of Remestemcel-L versus vehicle control for the management of COPD (1). The researchers hypothesized that mesenchymal stem cells would decrease inflammation systemically (whole body) and in the lungs and hence improve quality of life and lung function. This was a methodologically solid study that followed the patients up for 2 years after 4 once monthly infusions of the active drug or vehicle. Unfortunately, there were no significant improvements in quality of life indicators or pulmonary function (primary end points) for the treatment group when compared to the vehicle group. Remesetmcel-L was well tolerated. The authors noted that there was a significant decrease in CRP (a marker of inflammation) in the treatment compared to the vehicle group.

The lethality of COVID-19 principally stems from its impacts on the lungs- a viral pneumonia that can progress to Acute Respiratory Distress Syndrome (ARDS) (2). The damage is diffuse and characterized by inflammation and subsequently scarring. In 2020, Mesoblast undertook a post-hoc analysis (after the results have been seen) of the Chest trial data, to further breakdown the impact of Remesetmcel-L by CRP (3). When they stratified patients by baseline levels of inflammation there was indeed significant improvement in lung function with Remestemcel-L for patients with higher inflammation (as measured by CRP). Reference 3 contains a breakdown of these results. A word of caution at this point, post hoc analysis of data has been criticized as data-dredging and risking spurious associations.

On the 20/3/20 Mesoblast announced to the ASX that it was going to investigate Remestemcel-L for COVID-19 ARDS, based on the above post-hoc analysis of the Chest study and a small study in China demonstrating benefit from mesenchymal stem cells for this condition.Six weeks later Mesoblast announced the results of compassionate use of Remstemcel-L in 12 patients with COVID-19 ARDS. This small study demonstrated remarkable survival rates for ventilator dependent ARDS patients. Limitations of this study were clearly its small number of patients (12), single center (Mt Sinai in New York) and the potential confounding of the patients having received a variety of other experimental agents prior to Remestemcel-L.

Nevertheless, there was sufficient support here to move forward to a phase 2/3 trial. This trial has a solid methodology. Its full details are available at the National Institute of Health's (NIH) Clinical Trials site (4). It is a randomized, double blind trial with estimated 300 participants (should be able to recruit given the increasing incidence of COVID-19 in the US). Remestemcel or placebo is infused twice during the first week (all patients in the Mt Sinai study had their treatments within the first 5 days).Patients will be followed for 90 days, with respiratory symptoms review at 6 and 12 months. Th primary outcome measure is all cause mortality within 30 days of randomization. Importantly, the study can be ceased early (i.e. well before full recruitment) if it appears that the active drug is far superior than placebo (even at the 30% recruitment). The NIH had the start date for the trial at 30/4/20.

What now?

Firstly, this is an amazing achievement for an Australian biotechnology company. Mesoblast have moved quickly to build its case (the post-hoc analysis and Mt Sinai study), plan and commence a large, quality, multi-center randomized controlled trial on the effects of Remestemcel-L on COVID-19 ARDS.

It sure has its detractors in the Financial media. I think some of this stems from the years of disappointment, equity capital raised and probably the eccentricity of its CEO Dr Silviu Itescu. Nevertheless, arguably, this is the most important year and probably few months in the history of this 16 year old company. The science makes sense; inflammation is a significant component of ARDS and mesenchymal stem cells appear to have an anti-inflammatory effect. The trial is methodologically sound. With the early break clause and the increasing number of COVID-19 cases in the US, an announcement is probably close.

Personally, it has been a while since I have invested in a company not currently making a profit. Hence the amount of time I have spent looking into this company. As investors we need to make probability assessments, it is no different here. A best guess is that the trial has about a 1 in 3 chance of success (as measured by a significant impact on mortality compared to placebo). Now the effect of success is probably a 3 fold increase in share price (impact likely buoyed by current speculative enthusiasm for success in the area of COVID-19 research), whilst failure will probably see a 50% correction in price. The emphasis is best guess; I plan on taking a small position at some point this week. Finally, it is easy to get carried away by narratives associated with a stock, ultimately, we need to be careful in sizing any single position in our portfolio.

References

1. https://pubmed.ncbi.nlm.nih.gov/23172272/

2. https://www.mja.com.au/journal/2020/covid-19-ards-clinical-features-and-differences-usual-pre-covid-ards

3. https://www.celltherapyjournal.org/action/showPdf?pii=S1465-3249%2820%2930570-3

4. https://clinicaltrials.gov/ct2/show/NCT04371393