Mesoblast update

As usual, there’s plenty to think about for shareholders of Aussie biotech hopeful, Mesoblast. 

But before we kick off, if you are not familiar with the company’s recent history, these previous blog posts will bring you up to date:

Moving right along…


After an agonizing series of delays, Mesoblast released some of the headline results from its 400-patient phase 3 trial into chronic lower back pain (CLBP). Taking the lead from Mesoblasts other phase 3 trials, the CLBP result also missed its primary endpoint, though the result was disappointing, it was not quite the disaster some believe it to be. 


Missing a PE in a phase 3 trial almost always ensures the American FDA will not approve a product on based on the available data. This case is no different, however, there was compelling data to suggest that a single injection of the product, rexlemestrocel-L, was startlingly effective in certain patient cohorts. 

Some patients were able to achieve a 40% reduction in opioid use through to at least 24 months post treatment, others achieved reduced pain scores of 50%. These are big numbers. 

To enable complete analysis, a link to both the clinical trial, and the results press release is provided below. 


While the results were strong when it comes to the secondary endpoints, there is no way the FDA will approve this product on strong secondary results. That of course means that new clinical trials (read: expensive) will be required. 


Mesoblast has a European partner for its CLBP product, the privately owned pain specialist, Grunenthal. The partnership agreement will see Grunenthal fully fund another P3 trial in Europe, the data from which, will be used to support regulatory approval in both the US and Europe. 

Now, it’s only been a month since the CLBP results have dropped, yet in that time Grunenthal have been conspicuously silent about the results and bearing in mind the trial missed its primary endpoint, there exists some doubt that Grunenthal will continues with the partnership. 

If Grunenthal were to walk, a significant financial burden would fall upon Mesoblast if they wished to conduct further, more targeted trials into CLBP. 


There’s been no further news from Mesoblast regarding the Novartis partnership, or the hotly anticipated clinical data from the aborted COVID-19 ARDS trial. 

That data is due sometime in the next 6 weeks. Promising data will see Novartis consummate the tie up and begin preparations for a very large, all-cause ARDS trial, with recruitment likely early next year. 

It would not be lost on mesoblast shareholders that the tie up will also lead to a much needed $50M check making its way to the bank accounts of the company. 

Of course, it’s not just money that Novartis brings to the table. In the eyes of the long suffering MSB shareholders, Novartis signing on the dotted line will provide validation of Mesoblasts products from industry experts. Naturally, the reverse is true, should Novartis decide to walk. 

No news

Following on from the upbeat nature of Mesoblasts recent phase 3 results, many have been expecting, including your author, further news on new partnerships. Partnerships would provide much needed sign on payments, as well as funding for future clinical trials.  

Without the prospect of these cash inflows in the near term, Mesoblasts cash runway appeared a little short. 

Capital Raise

It came as little surprise that MSB pulled the trigger and decided to raise capital. What did come as a surprise was that the USD $110M funding came from a single group of investors – SurgCenter, and the fact that only a 6.5% discount to the prevailing price was required. 

The fact that Mesoblast raised so much cash suggests three things: 

1) Mesoblast is not confident of bringing a new partner on board in the next few months. 

2) The company has doubts surrounding the Novartis and Grunenthal partnerships 

3) It appears likely that Mesoblast is expecting to fund one or more P3 trials in the near term 


Pulling it all together, the near-term drivers of Mesoblasts share price are: 

1) The release of the COVID-19 ARDS P3 trial data. Look for strong markers of efficacy in certain cohorts of patients. Be aware of positive “spin” from Mesoblast’s PR team. 

2) Novartis’ decision on the ARDS partnership. You don’t need to be a genius to understand what this will do to the share price, good or bad. 

3) Further data on the CHF trial. 

4) Major partnership announcements. My mind has changed on this – The capital raising indicates a new partnership is unlikely to unfold in the next 6 months. 

5) Resolution of the GVHD dispute with the FDA. The company appears to be very confident of a positive outcome. Success would see cashflows beginning almost immediately, offset by the cost of running a new trial. 


The last 12 months have been a white-knuckled rollercoaster ride for Mesoblast shareholders. This time a year ago the share price crashed to around $1/share as COVID-19 fears gripped the market. During the months that followed the price surged more than 5-fold as excitement grew about the 3 near-term phase 3 trial results 

For sure, some of the gloss has been removed from the near-term prospects of the company, though for that patient enough, there’s still opportunities for Mesoblast to become a success story. 

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