Mesoblast Provides Corporate Update and Financial Results for the First Quarter Ended September 30, 2016
November 14 2016 - 4:52PM
Mesoblast Limited (ASX:MSB) (Nasdaq:MESO) today provided a
quarterly corporate update on its operational highlights, including
its key milestone achieved in its acute graft versus host disease
Phase 3 clinical trial. Mesoblast also reported its consolidated
financial results for the three months ended September 30, 2016.
In line with previous guidance, the Company
implemented operational streamlining measures during the quarter
while achieving, and continuing to maintain progress towards, key
milestones in its Tier 1 clinical programs.
In recognition of the Company’s continued
clinical achievements, it was recently awarded the Frost &
Sullivan Asia Pacific 2016 Cell Therapy Company of the Year award.
The Frost & Sullivan awards identify and honor the
best-in-class companies that have demonstrated excellence in their
industry.
Financial Highlights
At September 30, 2016, the Company had cash reserves of $60.4
million. As previously announced, a fully discretionary
equity facility has been established for up to $A120 million/$US90
million over 36 months.
In order to absorb the incremental costs of the MPC-150-IM
program in advanced heart failure in FY17, the Company has executed
its planned operational streamlining and re-prioritization of
projects. Cash outflows for Q1 FY17 were $21.2 million, a
reduction of 28% from $29.4 million in the comparable FY16 quarter.
This was achieved principally through reduced spend on commercial
manufacturing, deprioritized Tier 2 clinical projects and reduced
labor costs.
Operational Highlights
MSC-100-IV for steroid-refractory acute graft versus
host disease (aGVHD):
- The Phase 3 trial of Mesoblast’s intravenous product candidate
MSC-100-IV, used as front-line therapy in children with
steroid-resistant aGVHD, was successful in a pre-specified interim
futility analysis conducted by the independent Data Safety
Monitoring Board (DSMB).
- The interim analysis showed that the predefined Bayesian
futility rule used to determine the probability of the trial’s
success using the trial’s primary endpoint of Day 28 overall
response had been passed. The analysis method determined the
likelihood of obtaining a statistically significant treatment
effect at study completion, based on the data observed at this
interim time point.
- Enrollment in the 60-patient open label Phase 3 trial is
ongoing across multiple sites in the United States, trial
completion is expected in the first half of 2017, and commercial
launch activities are underway.
- Based on guidance from the United States Food and Drug
Administration, Mesoblast believes that positive data from this
Phase 3 trial may be sufficient for filing for accelerated approval
of MSC-100-IV in the United States.
- Mesoblast plans to broaden its use in adult patients with
high-risk steroid-refractory aGVHD.
MPC-300-IV for biologic refractory rheumatoid arthritis
(RA):
- The Phase 2 trial of Mesoblast’s intravenous product candidate,
MPC-300-IV, in biologic refractory rheumatoid arthritis has
completed enrollment and results of the 12 week primary endpoint
were released in August 2016. An intravenous infusion of allogeneic
MPCs was well tolerated in biologic refractory RA patients, without
serious adverse events over 12 weeks.
- A single intravenous MPC infusion in biologic refractory RA
patients resulted in dose-related improvements in clinical
symptoms, function, and disease activity, with the 2 million
MPCs/kg dose providing the greatest benefit.
- The responses to date in this 48-patient, randomized,
placebo-controlled Phase 2 trial provide support for the potential
of Mesoblast’s allogeneic MPCs to be positioned early as a
treatment option in RA patients who have previously received a
prior anti-TNF or other biologic agent.
- Given the large market opportunity, the Company believes that
MPC-300-IV is well-positioned to advance through a strategic
partnership into Phase 3 development for biologic refractory
rheumatoid arthritis.
- With respect to other indications of the MPC-300-IV product
candidate, positive results from the randomized, placebo-controlled
Phase 2 trial of MPC-300-IV in patients with diabetic nephropathy
were published in the peer-reviewed journal EBioMedicine.
MPC-150-IM
for advanced chronic heart failure (CHF):
- More than 300 patients have been enrolled to date in the Phase
3 trial evaluating MPC-150-IM in advanced CHF patients. After
reviewing patient data in April and October 2016, the trial’s DSMB
has maintained its recommendation that the study should continue as
planned.
- The trial’s primary endpoint is a comparison of recurrent heart
failure-related major adverse cardiovascular events (HF-MACE) in
advanced CHF patients receiving either MPC-150-IM by catheter
injection into the left ventricular heart muscle, or
control.
- Based on observed HF-MACE event rates in the trial to date, the
Company has decided to bring forward to Q1 CY2017 a previously
planned Interim Analysis to assess the trial’s primary
endpoint.
MPC-06-ID for chronic low back pain:
- The current 360 patient Phase 3 trial is actively recruiting
across US sites.
- The 24-month results from the Company’s 100-patient Phase 2
trial of MPC-06-ID for treatment of chronic low back pain were
presented at the 24th Annual Scientific Meeting of the Spine
Intervention Society and received the 2016 Best Basic Science
Abstract award.
Vice Chair: Mr William (Bill) A. Burns, former
CEO of Roche Pharmaceuticals was appointed Vice Chair of Mesoblast
after serving as a Mesoblast Non-Executive Director since 2014. In
this new role, he will focus his considerable pharmaceutical
industry expertise on activities relating to execution of major
strategic partnerships and corporate transactions.
Intellectual Property: The Company’s
intellectual property portfolio was further strengthened by the
granting of a key patent by the United States Patent and Trademark
Office covering the use of its MPCs in the treatment of rheumatic
diseases.
Upcoming Milestones
- During the first half of CY2017, the Company expects to have
interim analyses from its Phase 3 trials in advanced heart failure
and chronic low back pain trials, and to complete enrollment in the
Phase 3 acute graft versus host disease trial.
- The Company is in advanced discussions to establish potential
strategic partnerships to commercialize its lead
products.
Financial Results for the Three Months Ended September
30, 2016 (first quarter) (in U.S. Dollars)
The main items which impacted the loss before
income tax movement were as follows:
- Research and Development: Research and
development (R&D) expenses increased by $2.9 million. This
increase was driven by increased costs for the MPC-150-IM chronic
heart failure product. Within R&D expenses, labor costs have
been reduced through a 28% reduction in FTEs from a labor
restructure, as well as additional cost reductions in consultancy
and travel. Additionally there has been a reduction in
certain clinical trial costs due to the completion of enrollment
for the Company’s heart attack study using MPC-25-IC, and the
deprioritization of the previously-specified Tier 2 clinical
programs.
- Manufacturing Commercialization: Manufacturing
commercialization expenses were $3.3 million for the first quarter
of FY2017 compared with $6.2 million for the first quarter of
FY2016, a decrease of $2.9 million as the Company had sufficient
clinical grade product on hand to enable it to manage costs by
reducing the number of production runs in the period.
- Revenue: The decrease in revenue for the first
quarter of FY2017 compared with the first quarter of FY2016 was due
to a decrease in non-cash commercialization revenue, as the Company
had fully recognized its remaining deferred revenue balance for its
MPC-150-IM product in June 2016, and to having received a one-time
milestone payment for TEMCELL® HS Inj. in the first quarter of
FY2016.
The overall increase in loss before income tax also includes
movements in other items which did not impact the Company’s current
cash reserves, such as: remeasurement of contingent consideration,
R&D tax incentive revenue and foreign exchange movements within
other operating income and expenses.
Conference Call Details
Australia: 9:00 am AEDT on Tuesday,
November 15, 2016
T: 1800 558 698 and 1800 809 971 (toll-free Australia)
USA: 5:00 pm ET on Monday, November 14,
2016 T: 1855 881 1339 (toll-free US)
Ex USA and Australia: +612 9007 3187
Passcode: 912575
The live webcast can be accessed via
http://webcasting.boardroom.media/broadcast/58214386d5f1311b35bd36a6
The archived webcast will be available in the Events and
Presentations section of the Investor page in the Mesoblast
website.
About MesoblastMesoblast Limited (ASX:MSB)
(Nasdaq:MESO) is a global leader in developing innovative
cell-based medicines. The Company has leveraged its proprietary
technology platform, which is based on specialized cells known as
mesenchymal lineage adult stem cells, to establish a broad
portfolio of late-stage product candidates. Mesoblast’s allogeneic,
‘off-the-shelf’ cell product candidates target advanced stages of
diseases with high, unmet medical needs including cardiovascular
conditions, orthopedic disorders, immunologic and inflammatory
disorders and oncologic/hematologic conditions.
Forward-Looking StatementsThis press release
includes forward-looking statements that relate to future events or
our future financial performance and involve known and unknown
risks, uncertainties and other factors that may cause our actual
results, levels of activity, performance or achievements to differ
materially from any future results, levels of activity, performance
or achievements expressed or implied by these forward-looking
statements. We make such forward-looking statements pursuant to the
safe harbor provisions of the Private Securities Litigation Reform
Act of 1995 and other federal securities laws. Forward-looking
statements should not be read as a guarantee of future performance
or results, and actual results may differ from the results
anticipated in these forward-looking statements, and the
differences may be material and adverse. You should read this press
release together with our risk factors, in our most recently filed
reports with the SEC or on our website. Uncertainties and
risks that may cause Mesoblast's actual results, performance or
achievements to be materially different from those which may be
expressed or implied by such statements, and accordingly, you
should not place undue reliance on these forward-looking
statements. We do not undertake any obligations to publicly update
or revise any forward-looking statements, whether as a result of
new information, future developments or otherwise.
Consolidated Income Statement
|
|
|
|
Three Months Ended |
|
|
|
|
|
September 30, |
|
(in thousands,
except per share amount) |
|
Note |
|
2016 |
|
|
2015 |
|
Revenue |
|
3 |
|
|
395 |
|
|
|
7,513 |
|
Research &
development |
|
|
|
|
(14,004 |
) |
|
|
(11,089 |
) |
Manufacturing
commercialization |
|
|
|
|
(3,295 |
) |
|
|
(6,203 |
) |
Management and
administration |
|
|
|
|
(5,459 |
) |
|
|
(5,535 |
) |
Fair value remeasurement
of contingent consideration |
|
|
|
|
24 |
|
|
|
3,729 |
|
Other operating income and
expenses |
|
|
|
|
473 |
|
|
|
849 |
|
Finance costs |
|
|
|
|
(1,037 |
) |
|
|
(2,424 |
) |
Loss before income
tax |
|
3 |
|
|
(22,903 |
) |
|
|
(13,160 |
) |
Income tax
benefit/(expense) |
|
4 |
|
|
3,105 |
|
|
|
— |
|
Loss attributable
to the owners of Mesoblast Limited |
|
|
|
|
(19,798 |
) |
|
|
(13,160 |
) |
|
|
|
|
|
|
|
|
|
|
|
Losses per share
from continuing operations attributable to
the ordinary equity holders of the
Group: |
|
|
|
Cents |
|
|
Cents |
|
Basic - losses per
share |
|
|
|
|
(5.24 |
) |
|
|
(3.94 |
) |
Diluted - losses per
share |
|
|
|
|
(5.24 |
) |
|
|
(3.94 |
) |
Consolidated Statement of Comprehensive Income
|
|
|
|
Three Months Ended |
|
|
|
|
|
September 30, |
|
(in
thousands) |
|
Note |
|
2016 |
|
|
2015 |
|
(Loss)/profit for
the year |
|
|
|
|
(19,798 |
) |
|
|
(13,160 |
) |
Other
comprehensive income |
|
|
|
|
|
|
|
|
|
|
Items that may be
reclassified to profit and loss |
|
|
|
|
|
|
|
|
|
|
Changes in the fair value
of available-for-sale financial assets |
|
|
|
|
31 |
|
|
|
— |
|
Exchange differences on
translation of foreign operations |
|
|
|
|
703 |
|
|
|
(3,593 |
) |
Other comprehensive
(loss)/income for the period, net of tax |
|
|
|
|
734 |
|
|
|
(3,593 |
) |
Total
comprehensive (loss)/income is attributable to
the owners of Mesoblast
Limited |
|
|
|
|
(19,064 |
) |
|
|
(16,753 |
) |
Consolidated Statement of Balance Sheet
|
|
|
|
As of |
|
|
As of |
|
(in
thousands) |
|
Note |
|
September 30, 2016 |
|
|
June 30, 2016 |
|
Assets |
|
|
|
|
|
|
|
|
|
|
Current
Assets |
|
|
|
|
|
|
|
|
|
|
Cash & cash
equivalents |
|
5(a) |
|
|
60,355 |
|
|
|
80,937 |
|
Trade & other
receivables |
|
5(b) |
|
|
4,583 |
|
|
|
4,054 |
|
Prepayments |
|
5(b) |
|
|
5,759 |
|
|
|
3,832 |
|
Total Current
Assets |
|
|
|
|
70,697 |
|
|
|
88,823 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-Current
Assets |
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment |
|
|
|
|
2,925 |
|
|
|
3,063 |
|
Available-for-sale
financial assets |
|
5(d) |
|
|
1,997 |
|
|
|
1,966 |
|
Other non-current
assets |
|
|
|
|
2,362 |
|
|
|
2,343 |
|
Intangible assets |
|
6(a) |
|
|
587,463 |
|
|
|
587,823 |
|
Total Non-Current
Assets |
|
|
|
|
594,747 |
|
|
|
595,195 |
|
Total
Assets |
|
|
|
|
665,444 |
|
|
|
684,018 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
Current
Liabilities |
|
|
|
|
|
|
|
|
|
|
Trade and other
payables |
|
5(c) |
|
|
28,119 |
|
|
|
27,155 |
|
Provisions |
|
|
|
|
3,202 |
|
|
|
2,260 |
|
Total Current
Liabilities |
|
|
|
|
31,321 |
|
|
|
29,415 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-Current
Liabilities |
|
|
|
|
|
|
|
|
|
|
Deferred tax
liability |
|
6(b) |
|
|
59,588 |
|
|
|
62,693 |
|
Provisions |
|
|
|
|
64,663 |
|
|
|
63,749 |
|
Total Non-Current
Liabilities |
|
|
|
|
124,251 |
|
|
|
126,442 |
|
Total
Liabilities |
|
|
|
|
155,572 |
|
|
|
155,857 |
|
Net
Assets |
|
|
|
|
509,872 |
|
|
|
528,161 |
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
Issued Capital |
|
8 |
|
|
770,289 |
|
|
|
770,272 |
|
Reserves |
|
|
|
|
27,468 |
|
|
|
25,976 |
|
(Accumulated
losses)/retained earnings |
|
|
|
|
(287,885 |
) |
|
|
(268,087 |
) |
Total
Equity |
|
|
|
|
509,872 |
|
|
|
528,161 |
|
Consolidated Statement of Cash Flows
|
|
|
|
Three months endedSeptember
30, |
|
(in
thousands) |
|
Note |
|
2016 |
|
|
2015 |
|
Cash flows from operating
activities |
|
|
|
|
|
|
|
|
|
|
Commercialization revenue received |
|
|
|
|
361 |
|
|
|
— |
|
Payments to suppliers and employees (inclusive of
goods and services tax) |
|
|
|
|
(21,369 |
) |
|
|
(28,355 |
) |
Interest received |
|
|
|
|
181 |
|
|
|
288 |
|
Net cash (outflows) in operating
activities |
|
7(b) |
|
|
(20,827 |
) |
|
|
(28,067 |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing
activities |
|
|
|
|
|
|
|
|
|
|
Payments for investments |
|
|
|
|
— |
|
|
|
(805 |
) |
Payments for licenses |
|
|
|
|
— |
|
|
|
(200 |
) |
Investment in fixed assets |
|
|
|
|
(290 |
) |
|
|
(502 |
) |
Net cash (outflows) in investing
activities |
|
|
|
|
(290 |
) |
|
|
(1,507 |
) |
|
|
|
|
|
— |
|
|
|
|
|
Cash flows from financing
activities |
|
|
|
|
|
|
|
|
|
|
Proceeds from issue of shares |
|
|
|
|
— |
|
|
|
169 |
|
Payments for share issue costs |
|
8 |
|
|
(55 |
) |
|
|
— |
|
Net cash (outflows) / inflows by
financing activities |
|
|
|
|
(55 |
) |
|
|
169 |
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease)/increase in cash and cash
equivalents |
|
|
|
|
(21,172 |
) |
|
|
(29,405 |
) |
Cash and cash equivalents at beginning of
period |
|
|
|
|
80,937 |
|
|
|
110,701 |
|
FX (losses)/gains on the translation of foreign
bank accounts |
|
|
|
|
590 |
|
|
|
(3,535 |
) |
Cash and cash equivalents at end of
period |
|
7(a) |
|
|
60,355 |
|
|
|
77,761 |
|
For further information, please contact:
Schond Greenway
Investor Relations
Mesoblast
T: +1 212 880 2060
E: schond.greenway@mesoblast.com
Julie Meldrum
Corporate Communications
Mesoblast
T: +61 3 9639 6036
E: julie.meldrum@mesoblast.com
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