The waiting game

Nothing happens quickly in the world of biotech, and from an investor point of view this can be the toughest part. For shareholders in Melbourne based stem cell company, Mesoblast, the waiting game has been excruciating. 

As the world ground to a halt due to the pandemic in the first few months of 2020, few people had reason for optimism due to widespread business closures and job losses seen in countries across the globe. 


Mesoblast and its shareholders bucked this trend with a raft of news due to read out (Phase 3 readouts for heart failure and back pain treatments), expected product launches (Ryoncil for GVHD), as well as unforeseen opportunities opening up as a result of the pandemic. You can read about these here.

If all of that weren’t enough, Mesoblast later inked a deal with drug behemoth, Novartis, to partner on its bone marrow derived stem-cell treatment, remestemcel-L. This tie-up was for all respiratory indications and would see Novartis kicking in US$50M to Mesoblast as well as funding some very expensive clinical trials. 


In a year that started out so promisingly, Mesoblast failed to live up to expectations and the share price was duly hammered. 

First up, Mesoblast’s treatment for pediatric GVHD was unexpectedly knocked back for FDA approval. This was despite the FDA’s own panel of experts voting to approve the treatment 9-1. In it’s statement the FDA cited issues with potency assays and the fact that the phase 3 trial was single arm, that is, it did not have a control group as the reason for the knockback. The bad news didn’t end there… 

Two weeks before Christmas news dropped that Mesoblast’s treatment for chronic heart failure (CHF) had failed to meet its primary endpoint (PE). Failure to meet a PE is always bad news though it appeared there was a silver lining to the dark clouds that were forming. 

Mesoblast 1

A number of key secondary endpoints (SE) appeared to show remarkable results that were statistically significant. A few of them are detailed below 

  • 60% reduction of Major Adverse Cardiac Events (MACE) due to heart attacks or strokes across the entire 537 patient study population, irrespective of NYHA class 1 or 2, ischemic or non-ischemic (p=0.002) 
  • 60% reduction in cardiac death in NYHA class 2 patients (p=0.037) and prevention of progression to NYHA class 3 rate of cardiac death (p=0.004) 
  • A 68% reduction in the rate of recurrent hospitalizations form non-fatal heart attacks orr strokes, with a hospitalization from of 1.9 per 100 patient-years of follow up versus 5.95 per 100 patient years of follow-up in the control arm (p=0.0002) 
  • 55% reduction in incidence of three-point MACE (cardiac death, heart attack, stroke) in NYHA class 2 patients (n=206) (p=0.009) 

Investors had no time to pause for breath as two days after it announced its missed PE in the CHF trial, Mesoblast announced that its phase 3 trial in to COVID-19 induced ARDS (Acute Respiratory Distress Syndrome) had been stopped by the independent Data Safety Monitoring Board (DSMB) due to futility. In other words, the trial was stopped because it would not meet its PE. 

In or out?

As a result of the PE failure on this trial Novartis have managed to avoid committing to their tie up with Mesoblast at the 11th hour. Novartis will now wait until it’s seen all of the data from this trial before possibly consummating the marriage. 

Once again, a silver lining accompanied the missed PE. Mesoblast’s treatment appeared to work well in patients who were under 65 years of age and received remestemcel-L combined with the common steroid dexamethasone, compared to those who received dexamethasone on its own. 

Another ouch

One final blow occurred in February 2021 when Mesoblast read out data on their phase 3 trial into chronic lower back pain (CLBP). Yet another missed PE dealt a massive blow to the company and it’s beleaguered shareholders. 

Despite the missed PE, significant and durable reductions in paid occurred across all evaluable participants (n=391) compared with the saline control group, as well as significant pain reductions among opioid users. 

This series of failures saw many investors run for the exit which resulted MSB shares recently languishing below $2.00. A lack of meaningful announcements in recent months hasn’t helped. 

The path forward

As difficult as the last 6-8 months has been for shareholders, Mesoblast management are adamant that there is reason for optimism in the months ahead. 

Recent interviews with Mesoblast CEO, Silviu Itescu, and ASX announcements indicate the company may have a path forward. 


Mesoblast plans to meet with the FDA to address the regulators GVHD concerns, including recent improvements to potency assays. This meeting is due in the next few months and the company believes it may lead to product approval. 

On the COVID-19 ARDS front, Mesoblast intends to meet with the FDA to discuss potential next steps for remestemcel-L in patients under 65 years old This may include pressing the FDA for an EUA for patients in the under 65’s. It’s unclear when this will take place. 


Of course, the Novartis deal is tied to the data from gleaned from the ARDS trial and Mesoblast claims a decision will happen in a few weeks. Novartis employs a crazy number of scientist so a positive outcome with them may point to how the approach to the FDA plays out. Naturally, the reverse is true too 


Like the COVID-19 ARDS data, Mesoblast intends to meet with the FDA to present the positive data from rexlemestrocel-L, its treatment used in the both the CHF and CLBP trials and discuss the next steps forward. 

It may take quite some convincing, but there is at least some chance that the FDA will grant accelerated approval for rexlemestrocel-L for certain subsets of CHF patients. Accelerated approval would require a confirmatory trial to be run at a later date but would allow Mesoblast to market the product in the meantime 

In the CLBP indication Mesoblast intends to meet with both the American and European regulators to discuss the design of global trial that would satisfy both agencies with a view to eventual marketing approval. Mesoblast claims these meetings will occur “in the next couple of months”. 

It’s been a long, hard road for Mesoblast shareholders, some of whom have been holding over a decade. For management, the time has come to walk the talk. 


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