Mesoblasted !
22/12/2020
In a tumultuous few days for biotech hopeful, Mesoblast, a series of poor results has seen the share price smashed down by over 50% in less than a week.
This all came on top an earlier failure by Mesoblast to gain approval for their treatment for pediatric, graft versus host disease (GVHD)
Chronic Heart Failure
The week started with the topline results for their DREAM-HF phase 3 trial into chronic heart failure (CHF).
Mesoblast’s product, rexlemestrocel-L (REVASCOR), failed to reach its primary endpoint of a reduction in non-fatal decompensated heart failure events (Non-fatal cardiac events).
Hundreds of millions of dollars were slashed from the value of Mesoblast stock in the hours after the news hit the market.
It was not all bad news on this trial, however, REVASCOR produced statistically significant results in a couple of secondary endpoints.
- A 60% reduction in non-fatal ischemic major adverse cardiac events (MACE) due to heart attack or stroke across the total population of 537 patients, compared to the control group (p-0.002). This was evident in both NYHA** class 2 or 3 patients irrespective of whether the underlying cause of heart failure was ischemic or non-ischemic.
- A 60% reduction in death from all cardiac causes (CV death) in the 206 patients with NYHA class 2 disease relative to the control group (p=0.037). This was evident in ischemic and non-ischemic sub groups.
- Prevention of NYHA class 2 patients progressing to CV death rates of NYHA class 3 patients (p=0.004). Control group patients progressed from class 2 to 3 after a mean period of 20 months of disease stability.
** https://www.heartonline.org.au/media/DRL/New_York_Heart_Association_(NYHA)_classification.pdf
In other words, REVASCOR, reduced mortality from heart attack or stroke but did not reduce recurrent hospitalization from cardiac causes.
While these secondary outcomes show a great deal of promise, there’s no denying the fact that failing to meet the trials primary endpoint will almost certainly mean another phase 3 trial will be required by the FDA.
COVID-19 ARDS
Mesoblast shareholders copped another pounding later the same week when the company disclosed that its phase 3 trial into COVID-19 induced, Acute Respiratory Distress Syndrome (ARDS) would not meet its primary endpoint of a 43% reduction in “all-cause mortality”.
https://clinicaltrials.gov/ct2/show/NCT04371393?term=mesoblast%2C+ards&draw=2&rank=2
Not meeting a primary endpoint for any emerging biotech company will always be bruising, failing to meet 2 in under a week is devastating.
Management and shareholders have a nervous wait to see if recently signed up partner, the deep pocketed Novartis, decides to stay with their partnership in light of the failure. The deal is yet to complete.
If a silver lining were to be found in the ARDS trial it was that there were no safety concerns and that the trial will be allowed to complete with the currently enrolled 223 patients and that all be followed up as planned.
This will allow for the evaluation of the dozens of secondary endpoints. It’s likely these secondary endpoints will contain crucial data which can determine the viability, and trial design of a future phase 3 trial into “all cause” ARDS.
Any future trials for either CHF or ARDS are likely to take years to complete, as well as being very costly. Let’s hope Novartis sticks around.
In other news...
The fortunes of Mesoblast may receive a welcome boost in the coming days, or, unbelievably, they could reach further, crushing lows.
Due any day now, Mesoblast has a third phase 3 trial due to read out its topline results, a trial for chronic lower back pain (CLBP).
Success in this trial would go some way toward restoring some level of confidence in battered shareholders. Even with stunning results in this trial, a confirmatory trial will be required, but will be funded by a European partner, Grunenthal.
Failure is not an option
It probably goes without saying that failure in the CLBP trial will leave many question marks on the medium-term future of Mesoblast.
Repeated failures in phase 3 trials are likely to erode the confidence of both mums/dads as well as institutional investors, making future capital raisings tough.
Clinical trials take years and lots of money to complete. Mesoblast has already consumed an awful lot of both.
The way forward
In the best-case scenario, a strong result in the CLBP trial would ensure Grunenthal sicks around.
If CLBP fails, there is still a glimmer of hope left in GVHD. Mesoblast are appealing the FDA decision not to grant accelerated approval for its treatment, RYONCIL.
Should the appeal be successful, Mesoblast would see near term revenues, but would also be obligated to pay for another randomized, controlled trial for GVHD.
Assuming neither of those two are successful, the best bet for Mesoblast would be to find a strong partner for REVASCOR who is willing to fund another large phase 3 trial. This is a real possibility in light of the strong secondary outcomes of that trial
Conclusion
Considering the difficulties faced by Mesoblast and its shareholders last week, it’s probably easy to fear the worst.
Cash will be squeezed and I’m expecting a round of significant layoffs in an effort to reduce monthly cash burn.
But all is not lost. Mesoblast is a pioneer in their field and, despite the setbacks, there are still numerous, strong indications that their cells actually do work. This will be well known among big pharma companies, and there is every possibility that they start looking for a piece of the action.
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