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Mesoblast Limited(MESO - NASDAQ - $4.95 )

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Revascor to go Pivotal in End-Stage Heart Failure

Jason McCarthy, Ph.D.
MAXIM GROUP...

Summary:

• Mesoblast announced the outcome from its discussions with the FDA to determine the clinical path forward for Revascor in end-stage heart failure (ESHF) patients with LVAD (Left Ventricular Assist Device) devices.
• The FDA reiterated that reduction in GI bleeding events is a clinically important outcome in patients with LVAD devices and that the data from the P2b study of Revascor (N=159) could support a BLA, provided the company runs a P3 confirmatory trial.
• The FDA agreed on a confirmatory P3 trial in LVAD patients with the primary endpoint of reduction in major mucosal bleeding events and key secondary endpoints in measures of cardiac function. Recall that reduction in major GI bleeding events was one of the secondary endpoints in the P2b and a significant reduction of 76% was observed (p<0.001).
• Conclusion: The result of this meeting is a positive for Mesoblast, in our view, and sets the stage for the company to advance into a pivotal program in ESHF (Class IV). In addition, we are awaiting the P3 readout in advanced heart failure (Class II, III). Recall the trial completed enrollment in 1Q19 and is expected to report data in 2019/20, representing a significant catalyst for MESO shares.

Details:

Revascor in heart failure - key takeaways. The P2b trial in Class IV heart failure with LVAD (November 2018) missed its primary endpoint of temporary weaning from full LVAD support. Class IV HF is a small market (4-5K LVAD implants per year), we believe the pullback in valuation is due to a misinterpretation of the data (which in our view was actually positive, i.e. reduced GI bleeding), as well as a negative read through to the P3 trial in advanced HF (a much larger market). First, the difference in patient populations between Class IV (end stage, can't survive without mechanical assistance) and Class II-III (advanced) make a cross-trial comparison difficult. Additionally, the trials had different treatment goals altogether, LVAD-weaning (P2b) vs. reduction in cardiovascular events (P3). However, a more in-depth analysis does show some potential read-through, in our view. The P2b trial demonstrated a significant number of temporary weans in the 44% of patients with ischemic HF (p=0.02), which is more representative of the P3 advanced HF population. Furthermore, the incidence of Major GI Bleeding (76% reduction p<0.001) as well as GI bleeding-related hospitalizations (61% reduction, P=0.03) were significantly reduced with MPC treatment. This is believed to be a direct result of Revascor treatment, through reduction of intracardiac inflammation, causing improved functioning of peripheral blood vessels. This is an important observation for the ongoing P3 as peripheral vascular dysfunction and intracardiac inflammation are thought to directly contribute to recurrent hospitalization and death.

Remestemcel-L in acute and now chronic GvHD. The rolling BLA in pediatric steroid refractory (SR) acute GvHD is now underway (we expect completion in 2H19 and approval/launch in 2020) positioning for Meso's first potential US approval. On 8/13, Mesoblast announced an investigator-initiated IND for remestemcel-L in pediatric SR chronic GvHD. Chronic GvHD occurs in 30-70% of bone-marrow transplant recipients and there is no approved therapy in the US for the 50% of children who fail steroids. Mesenchymal stem cells have already demonstrated some success in SR chronic GvHD with results reporting durable response rates as high as 75%.