What a great post,
@Diane325. Thanks for sharing. I note that in the 6 years following Regeneron's first approval in 2008, the share price went up around 15x.
The main question in my mind is can Mesoblast do something similar, and if they do, will it be quicker or slower than Regeneron?
My initial opinion, not yet based on a full analysis, is that Mesoblast can grow faster than Regeneron in the next 6 years. To explain my preliminary analysis in stages:
Stage 1 - Ryoncil is approved and sold in the US to children with GVHD.
Mesoblast has confirmed that annually in the United States approximately 10,000 patients undergo an allogeneic bone marrow transplant, 1,500 of whom are children. Approximately 50% develop aGvHD and almost half of those do not respond to steroids, the recognized first-line treatment. Therefore, in the United States, the number of children potentially needing Ryoncil amounts to around 350 each year. To be conservative, I assume about 200 children are treated with Ryoncil each year by 2026. I recall a recent post by
@otherperspective in which it appears that the revenue per total average paediatric dose could be around the $800K. So during this Stage 1, total revenue could easily be $160M per annum.
Stage 2 - Ryoncil is either approved for adults or is selling widely to adults off label.
According to the Center for International Blood and Marrow Transplant Research, there are approximately 30,000 allogeneic BMTs globally per year for diseases including hematological cancers, with 25% of all cases in the pediatric population. Nearly 50% of all allogeneic BMT patients develop aGVHD. Liver or gastrointestinal involvement occur in up to 40% of all patients with aGVHD and are associated with the greatest risk of death, with mortality rates of up to 85%. Once again to be conservative, I assume that treating adults represents 3x the market opportunity compared to paediatric. During Stage 2, this group should earn an additional $480M revenue per annum for a total of $640M ($1B AUD!).
Stage 3 - REVASCOR is approved and sold in the US for children with HLHS
About 1 out of every 3,955 babies in the United States are born with HLHS. This means that about 929 babies are born with HLHS each year. With current treatments, these babies have very arduous and costly treatment options and a poor prognosis. Soon after a baby with HLHS is born, multiple surgeries done in a particular order are needed. Surgical repairs for HLHS are not a cure. Infants with HLHS may have lifelong complications. If the HLHS defect is very complex, or the heart becomes weak after the surgeries, a heart transplant may be needed. Survival to the age of 5 years (including Fontan) has ranged from 50% to 69%, but current expectations are that 70% of newborns born today with HLHS may reach adulthood. REVASCOR appears in trials to result in clinically important growth of the small left ventricle, facilitating the ability to have a successful surgical correction, known as full biventricular (BiV) conversion, which allows for a normal two ventricle circulation with the surgically repaired left ventricle taking over circulatory support to the body. Without full BiV conversion the right heart chamber is under excessive strain with increased risk of heart failure, liver failure, and death. Given that REVASCOR appears to repair the heart, it could become the first treatment for all 929 babies each year, rather than to subject the babies to all the existing treatments. It would be surprising to me if the reimbursement for this indication was not similar to that for Ryoncil in GVHD. But to be conservative again, I will assume revenue of $500,000 per treatment for a total of 500 babies and children each year. During Stage 3, this group should earn an additional $250M per annum for a total of $890M.
As for timing, in early December 2024, the FDA granted Mesoblast Regenerative Medicine Advanced Therapy (RMAT) for this indication. Earlier in 2024, the FDA has also granted Rare Pediatric Disease Designation (RPDD) and Orphan Drug Designation (ODD) for this very indication. All the signals are there for an early approval for this indication.
I therefore see Stages 1, 2 and 3 all commencing within the next 2-3 years with total revenue approaching $1B ($1.6B AUD) per annum.
I have not yet touched on the real big ones: Chronic Heart Failure for adults and Degenerative Disk Disease, or the very many other inflammatory conditions likely to be treated by Mesoblast over the next 5-10 years.
(20min delay)