And here is another one - from Bernstein in the US, for...

And here is another one - from Bernstein in the US, for TEVA.

November 15, 2011

Quick Take - TEVA's/Mesoblast Revascor Reports Decent pII, Now a Legitimate Shot on Goal?

Teva acquisition of Cephalon brought in its partnership with Mesoblast on the use of its mesenchymal stem cell Revascor in cardiovascular indication. The program reported phase II data in heart failure patients at AHA yesterday.

· The trial included 60 patient and showed statistical significant for cardiac mortality and MACE (major adverse cardiac events) composite. This is very impressive given the small size of the trial (60 patients, and not designed to show significance) on the FDA's preferred clinical endpoint. The weaknesses in the data were some baseline imbalances, lack of consistent dose response and miss on surrogate endpoints.

· The trial studied three cell concentrations over three arms and a placebo arm. The study was single blinded, 60 patient trial with four arms, including placebo in very sick heart failure patients (left ventricular ejection fraction under 40%). Subjects received either 25M, 75M or 150M cells while the placebo group went through a sham procedure, minus puncturing the heart wall. The placebo group had a worse NYHA classes rating (sicker) but all patients had similar ejection fractions (30%) and the treatment groups had worse metrics (6 minute walk, systolic volume) at the beginning of the study.

· Mesoblast is in discussions with FDA on the sizing and design of the Phase III study, though did not disclose when they believe the study will start. The Phase III will likely be moderately sized, in the 100's – not thousands – of patients. If the MACE results are replicated in Phase III, we believe the drug is surely approvable.

· Our view: Hitting the MACE endpoint with statistical significance is impressive, especially given the small study size. It would have even better (and significantly de-risk the phase III) if there was a good correlation with the surrogate end point. However, this is an edge-of-medicine approach and within these confines – a very solid result. We previously reviewed the details of the therapy in our note Cephalon: From Pipe Dream to Pipeline; Reviewing the Mesoblast Opportunity.


Investment Conclusion

The promise of cardiac stem cells to extend life for the sickest heart failure patients became a half step closer with these results. There is, however, a long road ahead. The regulatory pathway is anything but simple, especially the manufacturing and release process. That said, if the clinical results hold-up in Phase III (which is by far not certain – see Osiris / Genzyme Phase III disappointment), Teva could still have the next Copaxone in its pipeline (see you in 2015).

Teva is rated Outperform, PT $55.