Body blow 


Last Friday the US Food and Drug Administration (FDA) delivered a body blow to the near-term ambitions of Australian biotech hopeful, Mesoblast, with its decision to issue a Complete Response Letter (CRL) for the company’s treatment for pediatric patients with steroid-refractory graft versus host disease (GVHD), Remestemcel-L.  

A CRL is one way the FDA communicates to an applicant that the agency cannot approve an applicant’s product in its present form. This can be issued for a number of reasons and those reasons will be communicated to the applicant, along with recommended actions the applicant might take to place the product in condition for future approval. 

FDA’s concerns 

In the case of the CRL for Remestemcel-L, it appears the FDA has mostly taken issue with the fact that Mesoblast’s Phase 3 trial was not placebo-controlled. The FDA recommended that Mesoblast conduct at least one additional randomized, controlled trial in adults and/or children to provide further evidence of the efficacy of Remestemcel-L for GVHD. In other words, the FDA is saying, Mesoblast have not proven, to the satisfaction of the FDA, that Remestemcel-L is effective. 

Additionally, the FDA also identified the need for further scientific rationale to demonstrate the relationship of potency measurements to the product’s biologic activity. This may be tough to achieve. There is still much that is not known about the properties of Remestemcel and the FDA offered no guidance to how these outcomes could be achieved in a state-of-the-art product. 

Mesoblast’s point of view 

Mesoblast appears to have been blindsided by the FDA’s decision. In their press release, they quite rightly pointed out that there are currently no FDA-approved treatments for the life-threatening condition in children under 12, meaning there is a significant unmet need. Mesoblast also pointed out that the FDA’s Oncologic Drugs Advisory Committee (ODAC) which met in August to discuss Remstemcel-L for pediatric patients voted to approve the product 9-1.  

The company further indicated that they will appeal the decision via what’s called at Type A meeting with the FDA. In that meeting, they will argue the points mentioned above and discuss a potential accelerated approval along with a condition that there will be a post-approval trial in adults with GVHD.  

In my opinion, Mesoblast may be clutching at straws in pursuing a Type A meeting. The FDA has made their decision and even gave hints of its concerns during the ODAC meeting. It’s likely the FDA already considered the possibility of requesting a post-approval study from Mesoblast so I’d be surprised if they acquiesce to the suggestion from the company. 

Down, but not out 

Another reason not to pursue a Type A meeting is because it is a significant distraction for management when they have a massive workload already. Let’s not forget, in the next couple of weeks/months Mesoblast have results due for 3 potential blockbuster products: 

  • Revascor, for advanced heart failure 
  • MPC-06-ID, for chronic lower back pain        
  • Remestemcel-L, for Covid-19 induced Acute Respiratory Distress Syndrome 

Each of these products represents a multi-billion-dollar opportunity, and in the case of the

ARDS and heart failure product, a strong result could see them approved for use in 2021.  These products are pivotal to the future of Mesoblast and I’d argue, require the full attention of management. Give the FDA its extra trial in adults and move on. 



Investing in biotech companies is not for the faint-hearted or the poorly researched. There are significant risks involved, a reminder of those risks was delivered by the FDA on Friday.  

Many short-term traders (and newbies) had entered Mesoblast’s share register in recent weeks hoping for easy gains, buoyed by the upward momentum in the share price.  Unfortunately for many of them, some thought they were betting on close to a sure thing which left them heavily exposed when the bad news came in.  

The market’s reaction to the news was savage. In the first 5 minutes of trading post-announcement, the MSB share price tanked 42% before recovering slightly to close down 37% to close at $3.19AUD.  The massive volume involved indicated many recent MSB arrivals jumped ship, minus a significant portion for their capital. 

So, if there’s one thing that can be learned from this experience, it’s that there is never a sure thing in biotech. 






For general information about clinical trials, including terms such as placebo-controlled, I have compiled some explanations here: 


General info about graft versus host disease and it’s gradings can be found here: 


The ODAC meeting back in August provides much information about Mesoblast’s application and the concerns the FDA had with the product. I’ve provided links to the meeting archive but be warned, they go for a number of hours. Anybody who is considering an investment in Mesoblast would find vital information here:          


A few weeks back I penned a blog post about Mesoblast’s near-term prospects. There are specific references to the products to treat heart failure, lower back pain, and ARDS. You can find it here: 


More info about Complete Response Letters can be found straight from the horse’s mouth: 




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