Mesoblast (MSB) No surprises in 52 week follow up data from Phase 2 Rheumatoid Arthritis Trial
Mesoblast reports positive 52 weeks data from the Phase 2 RA trial at ACR MSB has reported additional 52 weeks data from its Phase 2 trial with MPC-300-IV in 48 patients with biologic refractory rheumatoid arthritis (RA). Data builds on the impressive clinical benefit seen with the drug at 12 weeks and 39 weeks and further increases our confidence in the potential of MPC-300-IV to be used as an early treatment option for biologic refractory RA patients. Longer term data on safety and tolerability continue to be positive, with no drug-related serious adverse events (SAEs). Given this was the first in man trial, we are pleased that the favourable safety profile of MPC-300-IV observed at 12 weeks has been maintained out to 52 weeks. The 52 weeks data also confirmed that the clinical benefit seen with MPC-300-IV is durable and the key observations made at 12 weeks and 39 weeks were re-confirmed at 52 weeks which is encouraging.
Key highlights from the result
No treatment related serious adverse events (SAEs) at either the low dose or the high dose at 52 weeks. Adverse events (AEs) were similar between the drug treated groups and the placebo (control) group.
Consistent with the findings at the 12 week and 39 weeks, the high (2 million MPC/kg) dose continued to show overall better treatment responses than the low dose. The dose dependent relation in efficacy identified at all time points supports and justifies MSB’s rationale as previously flagged to consider exploring a higher dose in a subsequent trial with the aim to increase early remission rates. The fact that there was no dose-dependent trend seen in safety also supports this further.
In the trial it was observed that response to treatment with MPC-300-IV was seen as early as 4 weeks, which peaked at 12 weeks (the time point for primary analysis). We saw the clinical benefit from a single dose of the drug being sustained out to 39 weeks at which point we continued to see a significant separation between the MPC high dose group and placebo. We then see the responses start to wane between 39 weeks and 52 weeks.
We note that though the treatment responses started to wane between 9-12 months, the 2 million MPC/kg group outperformed placebo for ACR-N Area under the curve (AUC) (p=0.008) at 52 weeks. This suggests to us that even with waning responses there was still separation between placebo and the individual ACR20/50/70 responses, however the separation was less pronounced at 52 weeks than it was at 39 weeks. In our view this confirms the durability of the clinical benefit seen from a single dose of MPC-300-IV and supports the company’s rationale as previously flagged to consider exploring repeat dosing in a subsequent trial, to further extend this out to a longer time point. We also note that most of the current RA biologic therapies have either daily or monthly dosing regimens.
Results also confirmed that at 52 weeks, the subgroup who had failed 1-2 biologics prior to MPC treatment showed the greatest benefit, further re-iterating this subgroup to be the likely optimal target population for MPC-300-IV. This observation is consistent with the 12 weeks and 39 weeks data and further points to MPC’s being more effective the earlier a biologic refractory patient is treated with it and supports MPC-300-IV’s positioning as an early treatment option for biologic refractory RA patients.
In summary, there were no surprises in the 52 week follow up data from the Phase 2 RA trial. Trends and observations at earlier time points were all re-confirmed on safety, dose-related response and potential positioning as early treatment for biologic refractory RA patients. It also provides support and justification for MSB’s previously flagged strategy to pursue both higher dose than the 2mg/kg dose used in the current Phase 2 trial to increase early remission rates and a repeat dose to maintain those earlier benefits out to a longer time point. We continue to believe that the focus and priority of MSB from allocation of its resources as well as business development (i.e. partnering) will remain on its advanced Phase 3 Tier 1 assets in the near term including GvHD (Graft vs. Host Disease), chronic low back pain (CLBP) and Chronic Heart failure (CHF). Further trials for RA are likely to be pursued either with a partner or when Tier 1 assets are partnered and resources allow MSB to progress the next stage of candidates including RA.
Tier 1 pipeline approaching key inflexion points Key upcoming clinical milestones include a) completion of enrolment and Top-line results from Phase 3 paediatric GvHD trial in 4QCY17; b) completion of enrolment in Phase 3 chronic low back pain (CLBP) trial in 4QCY17 and c) Top-line results from Phase 2B end stage CHF trial in 1QCY18. MSB remain in active discussions with several potential partners including Mallinckrodt (MNK) for its Tier 1 Phase 3 assets, with GvHD and chronic low back pain in the most advanced discussions. We continue to believe the prospects for a deal in the near term are encouraging. A deal would not only serve to ameliorate MSB’s cash burn but also provide external validation from a commercial partner.
Retain Buy (speculative) and Valuation of $3.69 No changes to our estimates. We retain Buy (speculative) and valuation of $3.69/sh. We also note that MSB’s previous partner Teva Pharmaceuticals who inherited their stake in MSB from Cephalon when they acquired the company, have now sold out of MSB completely, which removes an overhang from the stock.
Disclosure: Bell Potter Securities acted as lead manager and underwriter in the March and September 2017 placement and received fees for that service.
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Recommendation:
Buy, Speculative
Current price:
$1.37
Valuation:
$3.69
MSB Price at posting:
$1.37 Sentiment: Buy Disclosure: Held
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