Latest news shows MSB the only near-term hope for Covid19 ARDS...

Latest news shows MSB the only near-term hope for Covid19 ARDS deaths

83% survival in ventilator dependent COVID-19 patients (10/12) with moderate/severe ARDS within first 5 days is just SPECTACULAR!

75% off ventilator support within a median of 10 days vs only 9% (38/445) of ventilator-dependent COVID-19 patients coming off ventilators with standard of care treatment and only 12% survival in ventilator-dependent COVID-19 patients at two major referral hospitals in New York during the same time period (March/April 2020).

That is, the death rate amongst these severe ARDS patients in the two NY hospitals was 88% in the same period that MSB reported 83% survival.

Some of these numbers were alluded to in previous press releases from Mount Sinai – but the combination of a the very high death rates without the MSB cells and the failure of Remdesivir and hydroxychloroquine in the past two days really make MSB the only viable short-term alternative to avoid death. I talk more about why later.

This comes the day that Gilead’s Remdesivir trial on Covid-19 patients was reported to have “failed” and two days after the Hydroxychloraquine trial was reported to have no effect vs control (and may have even killed more than died in the control group).

This will be all over the US news tonight, the failure of Gilead’s trial was one reason the US stockmarket had a big turnaround in overnight trading, falling significantly after the trial result came out, on the heels of the hydroxychloroquine trial the day before. How long before Trump tries to drum up some hope on the back of the Mesoblast results?


Top Line

I think MSB is currently the most likely to succeed ARDS treatment. It is starting a phase 3 fully funded trial in the US. It has high quality cells and the Mount Sinai doctors are already saying it is encouraging based on the results mentioned above, before the trial even starts.

This could be a game changer for MSB if successful. Just treating 200,000 patients per year for ARDS at $75,000 per treatment could generate $US15bn in revenues and MSB may gain royalties of 20-30% (ie $3bn to $4.5bn). The ARDS could originate from more sources than Covid-19, including seasonal ‘flu which already has a very high number of deaths from ARDS.

After US tax, the royalties could be $US2.37bn to $US3.55bn – on a P/E of 30 that would be worth $A112bn to $A169bn ie $A200 to $A300 per Australian MSB share. Clearly ridiculous numbers, but which is wrong – the number of potential severe cases of ARDS, the P/E, the price per treatment, or the share price potential? I don’t know! Do your own numbers – however if this trial works, it’s hard to see the share price below $A10!!!

Want to go further? How about a 50/50 jv with a big pharma instead of generating royalties??? MSB have done all the hard work – why wouldn’t they want to drive as hard a bargain as possible? The big pharma could do the sales and MSB could manufacture product. On the advanced manufacturing margins of 80% when MSB invest in the big new 3-D xeno free bioreacteurs they have developed with Lonza, do your own numbers – but that’s potentially the CSL analogue!!!

Is $US75,000 a reasonable price to save maybe 15 days in ICU? At $US10,000 per day for high care intubation ventilation, MSB cells are half the price the health system would have to pay and ventilation is currently getting a 60% to 88% negative primary outcome (death) depending on which hospitals you look at around the world. Note that the initial cost of Gilead’s Hep-C treatment was $US84,000 as a comparison. Also note that the number of cells required is (on my guesstimate 300m ie 2 infusions of 150m cells) a fraction of the dose for paediatric SR-aGvHD and that treatment will probably cost around $US200,000. NB the kids probably weigh less than half that of the people at most risk of dying of ARDS, but the kids require 4 weekly double doses whereas ARDS only requires two doses. Dosage is 2m cells per kg which is 20% of the dosage in at least one other stem cell trial due to the very high quality of MSB’s manufactured product. So MSB at $US75,000 is cost effective whichever way you look at it.


Gilead trial “failure”

The Gilead Remdesivir trial is reported to have “failed”. This follows the report two days ago that Hydroxychloroquine trials have shown no benefit in Covid19 and may have even increased the death rate from side effects. Respected virologists, specialists and experts in the field are telling us a vaccine is at least 12-18 months away.

The only treatment which has shown promise for saving lives from death from severe Covid19-related ARDS so far is MSCs – and those results have been in a tiny 7 person group in China (7 recovered and were taken off ventilators, with 3 controls listed as “dead, ARDS or stable” and the 12 person compassionate use group at Mount Sinai with “dismal” prognoses reported today (with partial numbers a week ago). However the Mount Sinai group was not an official trial and did not have a control group. The official trial starts “soon”.

The Gilead trial’s draft report (undergoing peer review and published in error) was reported as having a death rate after a month of 13.9% for patients on Remdesivir, versus 12.8% for patients in the control group.

Those death rates are nowhere near the severity (88% reported in 2 New York hospitals and 80% mortality reported in China) of death rates from severe ARDS, or “dismal” prognoses which the MSB trial is targeting.

I have seen three reports from different parts of the world and all were 60% or higher death rates in severe ARDS – the difference may be quality of care or definitional, but MSB and the Mount Sinai led trial are clearly targeting a much more severe form of disease than Gilead. Note that Gilead’s trial was for “severe Covid-19” NOT “Severe ARDS” – very very different.

Gilead claims that the trial was terminated early due to low enrolment was therefore inconclusive and statistically not meaningful, and that Remdesivir data suggest a “potential benefit, particularly among patients treated early in the disease”. This may be true, however the point remains that they are clearly not targeting the “severe ARDS” of the MSB trial.

Another stem cell trial (h-MSC) which has a chance of success is the 120 patient phase 2B trial led by Michael Mathey MD at the University of California-San Francisco, which has had some publicity after the first patient was enrolled at the UT Health Texas site on 16 April. Bela Patel who is co-principal investigator quoted a mortality rate of up to 60% from ARDS – so this study appears to be targeting the severe ARDS cases with stem cells. However the dosage in this study is 10m cells per kilogram – up to 5x the typical dosage for MSB – depending on the number of doses. So, any treatment derived should be significantly more than the cost of MSB’s cells.

The reason for the high dosage in the “h-MSC” trial (human-MSC), in my view, is that they would be using research stem cells. Research stem cells generally are highly variable in quality and with poor viability (35-80%), which reflects the difference between research grade and MSB’s commercial quality product. MSB’s manufacturing has already been reviewed and accepted by the FDA in the aGvHD trial as the modules were submitted. MSB has previously spoken of variability of less than 5%.

All MS Cells for ARDS are covered by MSB’s patents and these include the home brewed ones from these researchers, the Athersys cells and the Pluristem cells. Athersys and Pluristem were well covered in the note yesterday.

CYP is on its knees financially (had to discount the share price by more than 20% in its recent capital raising hopes to raise $A5.5m – which would just address its annual cash burn and is not anywhere enough to stage a proper US based phase 3 trial.

Also, MSB have a phase 3 trial that is statistically robust for FDA approval if positive. The smaller ones do not.

MSB is the only trial, in my view, which is capable of delivering an approvable outcome in the near term, which will save lives from “dismal” ARDS. MSB’s trial is phase 3 and has double the number of patients of the Michael Mathey trial. And MSB’s results in the early non-controlled group are already “encouraging” according to Mt Sinai doctors. MSB’s trial is funded by the US NAIAD (Nat. Inst. of Allergy and Infectious Diseases) – and I believe a trial of this size would cost around $US50m to run (maybe more). MSB will just supply cells – and that could cost around $US5m (my guesstimate).



How does the Gilead Remdesivir trial affect Mesoblast?

1. I don't think it overlaps MSB's treatment of severe ARDS (or only in a minor way given the low death rate in the reported control group).

1. It would actually be a good thing if Gilead or someone else could treat these less severe cases and leave MSB to treat the severe ARDS cases. MSB cannot possibly treat all of the people who may enter ICU with severe or dismal ARDS. The numbers are enormous when you include those suffering from ARDS from seasonal 'flu. Note that 61,000 people died in the US alone in a bad 'flu season from ARDS (2017-18), and the CDC confidence interval goes as high as 95,000 deaths. These are just the people who die, and seasonal 'flu ARDS has a death rate of 50%, so over 200,000 people are admitted in a bad seasonal 'flu year with severe ARDS. For MSB to treat all of these patients, a major government or pharmaceutical partner would be required.

1. There is the possibility that Gilead (or someone else) will come up with a total cure for Covid-19 and therefore there would be no ARDS related cases. To give Gilead their due, they beat Hep-C with Sovaldi, a treatment which cost $US1,000 a pill, or $US84,000 over 12 weeks. Those costs have now dropped, with other treatments being developed. That compares favourably with costs I have seen people estimate for MSB at around $US75,000.

However, even if Covid-19 is completely eradicated, I doubt seasonal 'flu will be eradicated in the next few years, and so ARDS will continue to be a large unmet need - very expensive to treat in ICU and horrible ongoing injuries from VILI and fibrosis.

1. The Gilead study is likely to be more like Covid pneumonia than severe ARDS. There is no definition ratio in the Gilead study to define the stage of the disease (that I have seen). Most are likely to be pre-intubation as nothing is mentioned about these more severe ARDS conditions, and if they were successful against severe ARDS you would think that would be a major part of the info released.

Another Step Forward For Mesoblast - another boost to scientific credentials

The announcement that MSB has been selected for oral presentation at the 2020 International Society of Cell and Gene Therapy (ISCT) annual meeting shows the brilliance of the Prof and his team.

The original trial was run by Osiris a decade ago and shows to me that Osiris really didn't know what they were looking for at best, and at worst didn't really know how to design a trial in the emerging field related to inflammation and stem cells. Maybe it was just all too early and nobody really understood the mechanism of action at the time.

This announcement also shows the value of the data that MSB acquired in 2013 when it bought the Osiris Prochymal product. The Prof has run a statistical post-hoc analysis of the trial conducted between around 2008 and 2011. He knows what to look for - ie the improvement in the biomarkers showing severity of disease and how it can translate into treating ARDS etc.

It is a real tribute that the re-examined results of a decade-old study have been selected for an oral presentation (ie not just submitted as a paper) at the prestigious 2020 International Society of Cell and Gene Therapy (ISCT) annual meeting being held May 28-29, 2020. It demonstrates how much credibility the Prof and MSB have.

The title of the presentation says it all:
‘Mesenchymal Stem Cell Therapy Improves Pulmonary Function and Exercise Tolerance in Patients with Chronic Obstructive Pulmonary Disease (COPD) and High Baseline Inflammation’. And that's what I believe Osiris missed, or was not looking for, or failed to follow up in their earlier randomized, placebo-controlled 60-patient Phase 2 trial in patients with COPD.

The new analysis in patients with COPD showed that "remestemcel-L significantly improved respiratory and functional clinical outcomes in patients with elevated levels of the inflammatory biomarker C-reactive protein (CRP). Significantly elevated CRP levels are also observed in patients with various acute lung diseases, including acute respiratory distress syndrome (ARDS), a life-threatening complication of COVID-19."

These data formed part of the clinical justification in support of Mesoblast’s submission to the United States Food and Drug Administration (FDA) for an Investigational New Drug (IND) application evaluating remestemcel-L in the treatment of patients with COVID-19 ARDS. Under this IND, the FDA cleared Mesoblast to proceed with the expanded access compassionate use program and a randomized controlled trial in patients with moderate to severe ARDS from COVID 19.

This information was not as clear in MSB's earlier announcement about the FDA's granting of the IND. Some may have questioned the basis for re-cutting data from an old study and thought that the FDA may just be rushing to grant IND to anyone. The fact that the ISCT has selected the post-hoc analysis for an oral presentation at their annual meeting gives it real credibility.


Mount Sinai led ARDS trial in dismal patients has been designed and is starting “soon”

Four days ago, Annetine Gelijns, PhD, the Edmond A. Guggenheim Professor of Health Policy at the Icahn School of Medicine at Mount Sinai, said in a press release, “The coronavirus pandemic has caused exponential increases of people suffering with acute respiratory distress syndrome, requiring intubation and mechanical ventilation with many dying.”

She says, “We have designed a clinical trial that will expeditiously determine whether the stem cell therapy will offer a life-saving therapy for a group of patients with a dismal prognosis.”

Keren Osman, MD at Mount Sinai says, “We are encouraged by what we have seen so far and look forward to participating in the randomized controlled trial starting soon that would better indicate whether this is an effective therapy for patients in severe respiratory distress from COVID-19.”

So, this tells us the trial is starting “soon”, they are “encouraged by what they have seen so far”, the trial has already been designed and that it is for patients with a “dismal prognosis” due to severe respiratory distress (ie severe ARDS) from Covid-19.

That inherently answers many of the questions people have been asking about the trial.

If other recent trials are any guide, there are likely to be announcements when the first patients are enrolled and that could be in days, not weeks. Note that the other stem cell h-MSC trial design calls for a DSMB (Data & Safety Monitoring Board) review after 60 patients are enrolled and have received the study product (half of the 120 patient trial) and that study will be stopped if there are “pre-specified clinically important events or unexpected serious advers events, except death, since death will be common in this critically ill population with ARDS”.

I still believe the Mount Sinai MSB 240 patient trial will take around 3-4 months, but that we may get a couple of interim readouts on the way through, especially if the results are as spectacular as have been registered so far in the Chinese MSC and in the Mount Sinai patients who have been given MSB’s cells on compassionate grounds outside of the trial.




Is Covid-19 likely to be eradicated? Not on present indications

I think there’s a strong risk that there will be an ongoing need for MSC’s to treat severe ARDS related to Covid-19 for some years to come.

Covid-19 infections may pick up in the Southern Hemisphere from May to November with the normal ‘flu season, and it is feared that it will then re-emerge in the Northern Hemisphere when the seasonal ‘flu season traditionally kicks off again in November/December this year.

Despite hopes that hydroxychloroquine or one of the anti-viral drugs (like Remdesivir) being tested will eradicate Covid-19, the trials to date are inconclusive and a vaccine is probably 12-18 months away, if we ever get one. The only partial indicators of treatment for severe ARDS I have seen come from MSC’s.

NB THE VAST BULK OF THE CURRENT TRIALS ARE DIRECTED TO TREATING COVID-19, NOT SEVERE ARDS.

Here are some of the most current expert comments, as of April 21^st:
Anthony Fauci, the director of the US National Institute of Allergy and Infectious Diseases, said that the novel coronavirus “might keep coming back” year after year. “The ultimate game changer in this will be a vaccine…but that could take 12 to 18 months.”

“The four seasonal coronaviruses do not seem to induce long-term immunity…We can speculate, but not dogmatically” according to Gregory Poland, who studies the immunogenetics of vaccine response in adults and children at the Mayo Clinic in Rochester, Minn. “We will not have a vaccine by next winter. The Southern Hemisphere is just starting their fall and winter. They will have a severe course of this disease due to less preparedness, less medical infrastructure and less public infrastructure.”
Coronavirus immunity differs from other diseases.
Immunizations against smallpox, measles or Hepatitis B should last a lifetime, Poland said. Coronaviruses, first discovered in the 1960s, interact with our immune system in unique and different ways.
How do other coronaviruses compare to SARS-CoV-2?

People infected by SARS-CoV, an outbreak that centred in southern China and Hong Kong from 2002 to 2004, had immunity for roughly two years; studies suggest the antibodies disappear six years after the infection.

For MERS-CoV, a coronavirus that has caused hundreds of cases in the Middle East, people retain immunity for approximately 18 months — although the long-term response to being exposed to the virus again may depend on the severity of the original infection.
The world, Poland said, should brace itself for round two: “We will start moving into our summer when they’re moving into their winter,” he said. “If, as is likely, we don’t restrict all travel, cases will start coming back into the Northern Hemisphere and we’ll have another outbreak this fall.”
It’s too early for ‘herd immunity’ to be effective
Without a vaccine, “herd immunity” is another option. That theory, briefly considered in the U.K. as an alternative to closing businesses and practicing social distancing, was deemed too risky. Ultimately, enough people would need to be immune to shield the most vulnerable.
“There’s no chance that immunity is going to be high enough to reach herd immunity,” Poland said. “With influenza, you need herd immunity of 60% to 70%. With measles, you need about 95%. With COVID-19, it’s somewhere in the middle.”
In the absence of a vaccine, Poland said several conditions are necessary for herd immunity to work: a very high level of population immunity, for that immunity to be durable, and for the virus to not mutate. “None of those seem to be operational at present,” he said.
Just over 4.1 million people have been tested in the U.S. for SARS-CoV-2, there are 824,147 confirmed cases, and nearly 45,000 deaths. Testing has been delayed by shortages of reliable tests nationwide. A recent Reuters poll suggested 2.3% were diagnosed with COVID-19. The US has a population around 330m – so “confirmed cases” are only 0.25% of the total population, way below the proportion required for herd immunity.

However, we know that only 1.25% of the population has been tested, and that a large number of cases are asymptomatic. For example, a New England Journal of Medicine study published this month found that 29 (or 14%) of 210 pregnant women arriving at New York–Presbyterian Allen Hospital and Columbia University Irving Medical Center tested positive for COVID-19, yet displayed no symptoms. Even if New York were indicative of the whole country, that is still only a maximum of 14% of the population infected – still way below herd immunity.

So what will happen if or when SARS-CoV-2 returns?
“We’re just 14 weeks into this, so no one knows,” Poland said. If it has a slight mutation, he added, the response of our antibodies will be “moderately irrelevant.”
We can’t expect to have the same “herd immunity” or “original antigenic sin” — the ability of our immune systems to remember a virus that is similar, but not the same, as a previous version — as influenza. Influenza, after all, has been around for 500, if not 1,000 years.
“During the great influenza pandemic of 1918, the age group that disproportionately died were young people, not older adults,” Poland said. “Older adults had seen previews of this virus in earlier years, probably in the late 1800s, so they had immunological memory.”
There are similarities between influenza and SARS-CoV-2, but they come from two different virus families — and ongoing research to develop a universal vaccine for influenza shows how tricky both influenza viruses and coronaviruses can be.
“The 1918 Spanish flu’s second wave was even more devastating than the first wave,” Ravina Kullar, an infectious-disease expert with the Infectious Diseases Society of America and adjunct faculty member at the University of California, Los Angeles.
This risk is why it is so important to be ready with MSC’s to treat the potential Northern Hemisphere second wave, potentially starting in November.

Bottom line

The potential numbers of a successful cure are astronomical for MSB and you can mount an argument that the company could be worth $A200 to $A300 per share. This is way above my current thinking - and the trial has not even started yet.

I would think a price of $A5 per MSB share is possible in the near term. This is still below the average analyst price guide and I note that those analysts use very low probabilities of success for major prodcust (only 25-30% probabilities for back pain and heart products).

A quick approval for Covid-19 would probably see those valuations increase dramatically (ie they could multiply by 3-4x for the major product candidates) and the discount rate used would probably also be reduced. An increase in the price targets to $A10-$A20 per MSB share would therefore be fairly easily done - just change the probability discounts! And that's before you include anything for Covid-19.

This is very exciting - wait for the storm of publicity when the US and Trump wake up to the implications. I don't think it has even started yet - Trends.google.com only registers US searches on "Mesoblast" as 4% of the number of searches in Australia- that's going to change soon! Worldwide searches are currently the highest ever - at 100, and that compares with 76 in June 2016 (the previous all-time high - but most of those searches still come from Australia. Interestingly searches for Remestemcel-L in the US are up to 30% of those in Australia - I think this is because most of Mount Sinai's releases mention Remestemcel-L rather than Mesoblast. That is likely to change as this becomes a big deal in the US.

Share price is still 25% below the highs of January - RIDICULOUS!!! Price fell on redemptions at small cap funds (which have now finished) and general global nervousness - none of that has anything to do with MSB's spectacular prospects if this Covid-19 ARDS trial works - and MSB has not been affected by Corona Virus economic shutdowns as they are currently a research organisation which has not yet commercialised their own product. Conversely, Corona Virus presents the biggest opportunity this company has ever seen if the trial succeeds.

None of this is a recommendation to buy, sell or anything else. I have not included other people's research, all views are my own, I am not a licensed financial adviser, I am not a scientist. I am retired - so do your own research and make your own decisions, but this is the best opportunity I have ever seen in terms of risk vs reward.