MSB 2022 - The road to commercialisation

Happy new year - may 2022 bring happiness, heath and a prosperous year to all MSB’ers

SP wise, the last two years have been lousy.

So let’s leave that behind us and start the new year with a new thread

@dachopper did a brilliant job to summarise all our outstanding indications here https://hotcopper.com.au/posts/58532320/single

I won’t cover these again, I’ll just discuss a few different topics.

OTAT and Ryoncil

Firstly, let’s recap on the confusing announcement made on 31/12/2021 .

Option 1

"Mesoblast will provide these new data to OTAT, and address other outstanding items as required for the Biologics License Application (BLA) resubmission"

This reads like another meeting with OTAT is a pre-requisite, that is required, prior to the (BLA) resubmission

VS

Option 2

"Mesoblast continues to be in a well-established process with FDA’s Center for Biologics Evaluation and Research (CBER), and if the resubmission is accepted, CBER will consider the adequacy of the clinical data in the context of the related CMC issues noted above"

This reads like the CBER will evaluate the CMC issues as part of the (BLA) resubmission

I’m going with the conservative approach and assume that Mesoblast is referring to Option 1.

OTAT has agreed on the potency essay (the process) and now OTAT will need to review the P3 data, which will eliminate a need for an additional trial.

Refer to @stockrock post for more details here https://hotcopper.com.au/posts/58593439/single

Ryoncil path

A bit of Déjà vu, but this time we are going into this process with open eyes.

Assuming that OTAT agrees with Mesoblast – what is the road to commercialisation for Ryoncil?

1. BLA resubmission – given that this is a resubmission, most of the original paperwork can be leveraged with the additional data, such as potency essays to satisfy the previous CMC issues. A part from that this process should be rather straight forward and a rolling review is not required.

2. ODAC – there’s no need for ODAC as the same product has been voted previously and got a 9-1 approval recommendation. Also, it is hard to justify to the members as the FDA have overridden the previous 9-1 votes anyway

3. PDUFA – with RMAT designation, this should be within 6 months. Given that ODAC is not required, this can be reduced to 3-4 months IMO. BTW do we still have priority review on for this indication?

4. Sales team – I haven’t heard otherwise, but I’d think there are still be some sales people from the previous production readiness exercise

5. Insurance reimbursement – most of the heavy lifting has been done. This will be just the activation of some of those previously signed-off reimbursement agreements

6. Manufacturing – nothing has changed. Lonza will still be Mesoblast manufacturing partner for Ryoncil. Remember this is a niche market and we have more than enough in stock to service Ryoncil demands for several years

I’m going to have some wild guesses here:

· 2-3 months for OTAT agreement on the data

· 3-4 months for BLA resubmission. This can start in parallel with the OTAT discussion

· 4-5 months for PDUFA

· So, all up 7-9 months, Q3 2022 for commercialisation?

Other catalysts

In the meantime what other catalysts can we look forward to?

1. OTAT P3 data analysis

2. CHF pathway (and NEJM too)

3. Potential partnering deal for CHF

4. Potential partnering deal for CLBP, in the US

5. Potential partnering deal for Covid-19 ARDS & trial (NIH again?)

6. Increase in royalties from TEMCELL

7. Grunenthal updates

8. Tasly updates

9. The MSC-100-IV for the expanded indication

10. Takeda updates

11. 1,000+ patents and other left field partnerships

12. Additional trials (e.g. Crohn’s)

13. Other jurisdictions (e.g. EU)

The Sharts

With the sharts, I’m referring to institutional shorters only, as they are the main players here.

The sharts have lots of outstanding short positions, but against that I look at SI, T20 and T100 - have they been selling out? NO - Most of these large holders have held and/ or built on their positions.

Conversely, when a decent announcement is made – i.e. either partnership $$$ or a whiff of FDA approval; the bulk of the ~60m outstanding short positions will need to be closed and that would lead to more demand = short squeezes!

What is their exit strategy anyway?

Let’s go through them:

· Novartis exit – ok they’ve got that, but this has been priced in already so the SP is not getting lower because of this

· Negative news from OTAT – we’ve just got news on this and OTAT just gave their initial tick

· CR – we are unlikely to need a CR for a while. Cash on hand at September 30, 2021, the most recent balance sheet date, was US$116.0 million. Net operating cash usage was US$19.6 million, which may likely to be reduced again. Where are the big expenses coming from anyway? We are not running any more trials. The potency essays have been done. The inventory of Rem-L stock was built for both Ryoncil and Covid-19 ARDS. With the Covid-19 ARDS parked for now. Rem-L is well over stocked for the niche market for Ryoncil for many years

· ASX200 exit – the Dec 2020 quarter has passed and we are still in. So the next one is due in late Feb/ early March. Will the SP likely to rise or fall by then?

I believe the compounding effect of the recent announcements will be enough to lift the SP upwards, even before the next set of catalysts. But, now go back and look at the catalysts above. What happens when each of these come through?

When will the first few of these sharts break ranks and start to close their short positions?

Summary

From recent interactions with the FDA, Mesoblast now seem to have more of a “collegial” relationship, which is important given that everything that Mesoblast does need to get through the FDA gates. These FDA hurdles will hopefully translate to a bigger MOAT.

I'm very bullish and bias on MSB.

So when you look at the paradigm shift in treatment, once it starts the snowball effect will be a lot larger than expected.

I'm excited by what 2022 got installed for us MSB’ers

At these low SP levels; the rewards vs risks ratio is simply outstanding.

Bring on 2022 and commercialisation of our first product Ryoncil!

Although, Ryoncil is the smallest of our indications, it is the most important as Mesoblast will be going from a research-based company into commercialisation – finally!

And thank you all in advance for your valuable contribution and banter.

GL MSB’ers and stay strong

Onwards and upwards

Disclaimer:

Like a few here, I'm investing into MSB with conviction, as it is a major part of my early retirement plan

But, I understand that we all have different size pockets and risk appetite

So please DYOR, I'm just musing out loud here, so please do not invest base on anything I've written

A new year, a new resolution – play nice everyone!

New trading thread

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