There is a lot of speculation about when the next biggest 'future' partnership will announce following the recent phase 3 readouts, but not too much talk about the deals already signed. Most of these deals have been waiting for milestones to move them into the next phases. Here are some of the details:
Tasly Deal ( Heart Failure )
Mesoblast has received US$40 million (AUD$57 million) from Tasly, comprising an upfront technology access fee of US$20 million and an equity purchase of US$20 million for which Mesoblast Limited has issued 14,464,259 fully paid ordinary shares to Tasly. As consideration, Tasly has received exclusive rights and will fund all development, manufacturing and commercialization activities in China for MPC-150-IM for the treatment and prevention of chronic heart failure and MPC-25-IC for the prevention and treatment of acute myocardial infarction. Mesoblast will receive US$25 million on achievement of product regulatory approvals in China, double-digit escalating royalties on net product sales, and six additional escalating milestone payments upon the product candidates reaching certain salesthresholds. Mesoblast and Tasly will establish a joint steering committee, with equal representation from both parties, to oversee, review and coordinate the development, manufacturing and commercialization activities for the cardiovascular product candidates in China. The parties, through the joint steering committee, plan to expedite development and commercialization of these cardiovascular product candidates by leveraging each other’s clinical trial results in China, and the United States and other major jurisdictions respectively to support their respective regulatory submissions for MPC-150-IM and MPC-25-IC.
Comment from Tasly on Mesoblasts Heart Failure Trial....... None seen yet, although they don't appear to release much in terms of company news on their website either. I'm expecting Meso to initiate post phase 3 talks this year if not already with Tasly. They may be awaiting a US partner announcement first however - since further trial results need to be shared between partners.
Grünenthal ( Chronic Lower Back Pain )
Mesoblast will receive up to US$150 million in upfront and milestone payments prior to product launch, as well as further commercialisation milestone payments. These payments include commitments up to US$45 million within the first year comprising US$15 million on signing, US$20 million on receiving regulatory approval to begin a confirmatory Phase III trial in Europe, and US$10 million on certain clinical and manufacturing outcomes. Cumulative milestone payments could exceed US$1 billion depending on the final outcome of Phase III studies and patient adoption. Mesoblast will also receive tiered double digit royalties on product sales. Grünenthal and Mesoblast have agreed on an overall development plan for MPC-06-ID to meet European regulatory requirements. As part of this plan, the companies will collaborate on the study design for a confirmatory Phase III trial in Europe. The results of the two Phase III trials are expected to support both U.S. FDA and European EMA regulatory approvals for MPC-06-ID in chronic low back pain due to degenerative disc disease.
I would expect the European trial to be applied for this year given both the results have read out and MSB focus now on partnerships. Expecting a US 20Million payment if the Euro trial is approved. Meso and Grunenthal both planned for no FDA approval on the current CLBP results as part of this deal.
JCR Pharma ( GvHD, EB and now HIE )
Under the terms of the partnership, Mesoblast receives royalties on TEMCELL( Launched for sale Feb 2016 in Japan ) product sales for all licensed indications. The license agreement was previously expanded for use in wound healing in patients with Epidermolysis Bullosa (EB - which has been suspended after discussions with the regulatory agency ), and JCR filed to extend marketing approval of TEMCELL in Japan for this indication in March 2019. The license agreement has now been further expanded to provide JCR with rights to sell TEMCELL for HIE and to access Mesoblast’s broad patent portfolio for this indication. JCR initiated a clinical trial ( phase 1/2 - currently in last stages of recruitment)of TEMCELL in newborns with HIE in July 2019 ( called JR-031HIE ) in order to further extend the label in this indication - expected to file at end of 2022. Mesoblast has the right to use all safety and efficacy data generated by JCR in Japan to support its development and commercialization plans for its MSC product candidate remestemcel-L in the United States and other major healthcare markets, including for GVHD, wound healing, and now HIE. In the United States there are approximately 6,000 new patients annually with moderate-severe HIE2 who could potentially benefit from treatment with remestemcel-L.
What we do know about JCR is that their production factory was at the limit and supply had to be restricted in H1 2020 to allow expansion to meet demand with sales reducing to about 50% of previous in 2020. The supply restriction was lifted in August 2020, so I would expect normalization of sales from Sep 2020 onwards. Sales in 2019 of TEMCELL in Japan prior to the restrictions were growing consistently year on year and were approximately 30 Million USD per annum at that stage according to the financials.
TiGenix - then taken over by Takeda ( Crohns' disease ) Mesoblast has granted TiGenix exclusive access to certain of its patents to support global commercialization of the adipose-derived mesenchymal stem cell product Cx601 for the local treatment of fistulae. The agreement includes the right for TiGenix to grant sub-licenses to affiliates and third parties, including TiGenix's current development and commercialization partner ex-United States. As consideration, Mesoblast will receive up to €20 million (approximately USD$24 million) in payments, with €5 million upfront, €5 million within 12 months, and up to €10 million in product regulatory milestones. Additionally, Mesoblast will receive single digit royalties on net sales of Cx601.
Cx601 was then re-branded Alofisel / Darvadstrocel, approved in Europe in March 2018 for treatment of complex perianal fistulas. In 2019 it received RMAT designation in the USA. Last week Feb 10th 2021, Takeda submitted application to the Japanese Ministry of Health to manufacture and market Alofisel / Darvadstrocel in Japan - following the Primary completion of their own Japanese phase 3 study in July 2020. They appear to be have also identified the US market as an expansion group - although this appears against the original TiGenix agreement which was ex-USA...... so expect this year mesoblast may announce further changes to the agreement in the USA. It's hard to see what that might be since mesoblast currently has it's own trial running in the USA looking at direct site injection vs IV injection Crohns - to compare efficacy for the patients. Would they allow another company to sell when it appears they are heavily investing themselves..... on the other hand would it be beneficial for 2 companies to be offering approved stem cell treatments for Crohns to raise adoption / market impression?
Currently in Japan 180,000 patients suffer from Ulcerative colitis, and 40,000 suffer from Crohns disease. I would Expect that any approval in Japan would result in much faster growth than Temcell had in Japan - due to almost 10 times the number of patients. Unsure what timeline the Japanese Ministry of Health has to approve it.
Novartis (ARDS )
Novartis will make an upfront payment worth $50m, including $25m in equity to Mesoblast, which is also eligible for a total of $505m on achieving pre-commercialisation milestones for ARDS indications. Mesoblast may receive up to $750m as post-commercialisation payments on achieving certain sales milestones as well as tiered double-digit royalties on product sales. Under the deal, Novartis will fully fund global clinical development for all-cause ARDS and other respiratory indications which includes initiation of a Phase III trial in all-cause ARDS.
This deal came out of no-where, and was only possible because of the Covid-19 pandemic, and the funding of the Covid trial by the USA. It still has the potential to be an absolute block buster - but we have to wait and see another month if Novartis sign the dotted line or not. If they do Meso will have a $50 million USD injection next month, a follow on phase 3 ARDS trial paid for with a very strong indication of who to treat for the most benefit from the results of the Covid ARDS trial, and a partner in the 4th Largest pharma company on earth - who have agreed to allow mesoblast a 50/50 profit share on any other indications.
The elephant in the room currently is that mesoblast do not appear to have any partnership deals in the USA market for anything, and the US market is the biggest market by a large margin. They may well be better off taking some of the products to market themselves at a slower rate, than piggybacking on big pharma for a 10-20 % share.
The 50% profit share deal from Novartis sounds much more promising of what other USA deals should sound like. I would rather dilute holders to raise capital to retain a 50% profit share, than accept being stuck with 10% royalties forever.
Good luck, and the above is not financial advice - please do your own research before making expensive decisions !
(20min delay)