ated: 02-Oct-2019)Iagree that GVHD rx will not be a huge money...

ated: 02-Oct-2019)

Iagree that GVHD rx will not be a huge money spinner due to smallnumber of patient cohort, and prior commitment of earnings but I amwaiting on big money item results ie MPC-06

Iread morninsgtar N Quinns analysis and her comment that 50% 24 monthimprovement in pain and function was required by FDA from mpc but MSBpreface states 30% improvement is FDA requirement for discreplacement So is MPC-06 being held to a higher standard ?which iscorrect

Furthermore12 month studies seemed toshow an improvement in disc structural integrity so is this analysissimply a prudent commentary or unduly pessimistic Can any orthopodsor statisticians enlighten me

Seereports

MesoblastGains a Partner but Risk Remains; Maintain AUD 1.50 FVEMorningstarAnalyst -- Nicolette Quinn

No-moatMesoblast entered into a strategic partnership with Grunenthal todevelop and commercialise MPC-06-ID, a cell therapy for degenerativedisc disease, across Europe and Latin America. This involvesinitiating a confirmatory phase III trial in Europe, which along withthe current U.S. phase III trial, the company hopes to meet both U.S.FDA and European EMA regulatory requirements. The agreed paymentsfrom Grunenthal will alleviate cash outflow, but doesn't alter therisk the ongoing U.S. trial continues to carry, and we make nochanges to our expected 40% likelihood of success for this celltherapy or our AUD 1.50 fair value estimate.

Mesoblastwill receive up to USD 150 million in upfront and milestone paymentsprior to product launch, as well as further commercialisationmilestone payments and tiered double-digit royalties on productsales. Importantly, at least USD 35 million of the commitments withinthe first year are not contingent on clinical outcomes or the U.S.phase III trial readout which is expected mid-calendar year-2020.Assuming regulatory approval, Grunenthal will also deliver commercialmanufacturing, sales and marketing, and distribution in Latin Americaand Europe where multiple reimbursement geographies add complexity.Mesoblast will still retain the commercialisation rights outside ofthese regions, and intends to find additional partneringopportunities.

Thecompany also indicated the U.S. phase III trial is progressing well,and although the European trial will likely be similar in design, itmight not need to be a three-arm study. Nonetheless, the primaryendpoint of the U.S. trial remains the same: to achieve at least a50% reduction from baseline in the Visual Analogue Scale pain scoreand at least a 15 point decrease from baseline in the OswestryDisability Index function score at both 12 and 24 monthspost-treatment. Although the phase II trial resulted in meaningfulimprovement and durability, it was significantly smaller.

TrialResults: MPC-06-ID Phase 2 Chronic Low Back Pain Due to DiscDegeneration Clinical Trial

Withrespect to the primary endpoint, allogeneic MPC treatment, includingMPC-06-ID, was well tolerated with the most frequently reportedadverse event, back pain, occurring across all patient groups.

Withrespect to primary efficacy endpoints, the FDA has providedguidelines on how to evaluate patient response, utilizing a compositeendpoint based on achieving minimally important clinical differences,or MICD, in both pain and function from baseline. Such a compositeendpoint for restorative or replacement disc therapies is differentthan that typically used by pharmacologic agents developed solely forpalliative improvement in symptoms, such as analgesics, where shortterm improvement in mean pain scores between groups is sufficient tosupport a label for short term pain reduction. The FDA and keyopinion leaders, or KOLs, have deemed that for restorative orreplacement disc therapies the MICD for pain reduction should be atleast a 30% improvement from baseline and for functional improvementat least a 30% improvement or 10 point improvement from baselineusing a 100-point functional scale. We believe that achieving successin long-term improvement in both pain and function using even higherthreshold levels than the MICD with durable outcomes for up to twoyears from a single dose should support a broad label for discrestoration and attractive pricing and reimbursement from payors.

Wehave utilized this composite-based endpoint and associatedguidelines, among other measures, in the evaluation of our Phase 2results.

Improvementin chronic low back pain. At 12 months, a responder analysis showedthat there was clear separation between both treatment groups andboth control groups at every decile increase in response beyond theMICD of 30% reduction in pain from baseline. In line with guidancefrom KOLs and from payers, a responder analysis was performedtargeting at least 50% reduction in pain from baseline. At both 6 and12 months, a reduction in pain from baseline of 50% or more, withoutany additional intervention, was seen in 59.3% of the MPC-06-IDgroup, 44.8% of the 18 million MPC group, 18.8% of the saline group,and 15.8% of the HA group, as measured by visual analog scale, or VAS(p = 0.006 across all four groups, p=0.023 for 6 million MPC againstsaline and p=0.006 against HA). Statistical significance denotes themathematical likelihood that the results observed are real and notdue to chance.

Improvementin function: At 12 months, a responder analysis showed that there wasclear separation between both treatment groups and both controlgroups at every decile increase in response at or beyond the MICD of30% improvement in function from baseline. In line with historicalFDA preference for spine fusion and artificial disc replacementmarketing application approvals, a responder analysis was performedtargeting at least a 15 point improvement in function through 24months from baseline. At both 6 and 12 months, an improvement infunction from baseline of 15 points or more, as measured by OswestryDisability Index, or ODI, without any additional intervention, wasseen in 50.0% of the MPC-06-ID group. 48.3% of the 18 million MPCgroup, 31.6% of the HA group, and 17.7% of the saline group (p=0.05MPC-06-ID versus saline, p=0.06 18 million MPC versus saline).

Reducedneed for additional surgical and non-surgical interventions:MPC-treated patients had a significantly reduced need for additionalinterventions at the treated disc level, including surgicalintervention (spinal fusion, discectomy or artificial discreplacement) or injection (epidural steroid injection, rhizotomy ortransforaminal injections), than saline controls. By 12 months, 25%of patients in the saline control group had undergone an additionalintervention, compared with 15% of patients in the HA control group,6.9% of patients in the MPC-06-ID group and only 3.3% of patients whoreceived 6 or 18 million MPCs. By Kaplan-Meier analysis of time to afirst additional treatment intervention, treatment with eitherMPC-06-ID or 18 million MPC significantly reduced the need foradditional interventions compared with saline treatment (p=0.024 andp=0.010, respectively).

Radiographicmeasurements: In patients with early disc degeneration (Pfirrmann MRIdegenerative grades below 5), increased translational movement of thedisc is a potential indicator of instability associated with earlydisc degeneration and annular fissures seen on MRI and pathologicexamination. This is an FDA validated measurement that has previouslybeen used in Phase 3 trials of surgical devices for discogenic backpain. At 12 months, MPC-treated patients demonstrated a reduction inradiographically-determined translational movement of the disc,suggesting a treatment effect on disc degeneration, anatomy, andimproved disc stability. The 18 million MPC group had a meantranslational movement of only 1.3%, the MPC-06-ID group 2.0%, the HAgroup 2.5%, and the saline group 3.5% (p=0.021 between groups). Inthis study, 85% of patients had early disc degeneration as evidencedby Pfirrmann grade <5 on MRI. At 12 months, no significantdifferences were seen between groups in overall Pfirrmann grade byMRI.

Compositeendpoint: Based on precedent and FDA feedback from our end-of-Phase 2meeting, we developed a composite endpoint requiring at least a 50%improvement in low back pain, 15 point improvement in ODI and notreatment intervention (surgical or injection) that we believe wouldbe sufficient to meet FDA’s requirements for approval. Utilizingthis composite endpoint in a post-hoc analysis of Phase 2 data,separation between treatment and control arms was first seen at 3months, maximal at 6 months, and sustained for at least 12 months.More specifically, the MPC-06-ID group, the 18 million MPC group, theHA control and the saline control groups had 44.4%, 37.9%, 15.8% and11.8% of subjects meet the composite endpoint criteria at both 6 and12 months. (MPC-06-ID vs. saline p<0.05). Moreover, the MPC-06-IDgroup had three times (3x) the proportion of patients achievingtreatment success at both 12 and 24 months compared with salinecontrols (37.0% versus 11.8%, p=0.09).

Anyoneclarify this for me?