Mesoblast Finanical Results for the Quarter Ended September 30, 2019
November 25 2019 - 4:52PM
Mesoblast Limited (ASX:MSB; Nasdaq:MESO) today reported operational
highlights and financial results for the first quarter ended
September 30, 2019.
Mesoblast Chief Executive Dr Silviu Itescu stated: “The
Company’s financial results for the quarter reflect continued
growth in revenues from product sales in Japan and ongoing
strategic partnering activities, and a reduction in R&D
expenditures. Our balance sheet positions us well as we prepare for
first product approval and launch in the United States market.”
Financial Highlights for the First Quarter
FY2020
- 46% growth in revenues due to:
- 43% increase in milestone revenues from strategic partnerships
(US$15.0 million compared with US$10.5 million for the first
quarter of FY2019).
- 85% growth in revenues from sales of TEMCELL®1 HS. Inj. by
Mesoblast’s licensee for steroid-refractory acute graft versus host
disease (aGVHD) in Japan compared to the first quarter of
FY2019.
- 72% reduction in loss after tax compared to the first quarter
FY2019 (US$5.5 million compared with US$19.5 million) driven
by:
- 33% decrease in research and development spend (US$12.4 million
compared with US$18.5 million for the first quarter
FY2019).
- 46% increase in revenues from milestones and commercialization,
as noted above.
- At September 30, 2019, cash on hand was US$34.5 million and pro
forma cash on hand was US$100.0 million. Pro forma cash on hand has
been adjusted for US$15.0 million upfront received on October 1,
2019 from Grünenthal GmbH and US$50.5 million of gross cash
proceeds from the capital raise on October 3, 2019.
- Over the coming 12 months, Mesoblast may have access to an
additional US$65.0 million in non-dilutive capital under existing
strategic partnerships and financial arrangements.
Operational Highlights for the First Quarter
FY2020
- The continued growth in commercialization revenues reflects
successful aGVHD market adoption in Japan and provides insight into
the projected uptake of our product candidate remestemcel-L for
aGVHD in the United States.
- In October, Mesoblast entered into an agreement with Lonza for
commercial product manufacture in line with the corporate strategy
to facilitate appropriate inventory build ahead of the planned
launch of remestemcel-L.
- Mesoblast entered into a strategic partnership with Grünenthal,
a global leader in pain management, to develop and commercialize
MPC-06-ID, Mesoblast’s Phase 3 allogeneic product candidate for the
treatment of chronic low back pain due to degenerative disc
disease. Under the partnership, Grünenthal will have exclusive
commercialization rights to MPC-06-ID for Europe and Latin
America.
- Under the Grünenthal agreement, Mesoblast will receive up to
US$150 million in upfront and milestone payments prior to product
launch, as well as further commercialization milestone payments.
Cumulative milestone payments could exceed US$1 billion depending
on the outcome of Phase 3 studies and patient adoption. Mesoblast
will also receive tiered double-digit royalties on product sales.
- Mesoblast and the International Center for Health Outcomes
Innovation Research (InCHOIR) at the Icahn School of Medicine at
Mount Sinai in New York have agreed on the protocol for a
confirmatory Phase 3 trial of Revascor in the treatment of patients
with end-stage heart failure and a left ventricular assist device
(LVAD), in line with US Food and Drug Administration (FDA) guidance
on a primary endpoint of reduction in major mucosal bleeding
events, and key secondary endpoints demonstrating improvement in
various parameters of cardiovascular function.
- Revascor is being developed for these patients under existing
FDA Regenerative Medicine Advanced Therapy (RMAT) and Orphan Drug
Designations.
Key Milestones
Remestemcel-L for aGVHD
- Upcoming filing of the completed Biologic License Application
(BLA) submission to the US Food and Drug Administration
(FDA).
- Within a maximum of 60 days after receipt of the complete
application, Mesoblast will be informed by FDA of acceptance of the
filing, and whether the BLA has received Priority Review under its
existing Fast Track designation.
- If approved, the US launch of remestemcel-L is expected to
occur next year.
Revascor for advanced and end-stage heart
failure
- Full accrual of primary endpoints events in the Phase 3 trial
of Revascor for advanced heart failure around the end of this
year.
- Data read-out for this Phase 3 trial planned in H1
CY20.
- Results will be considered pivotal to support regulatory
approval in the US, as well as China through the Tasly
partnership.
- Initiation of confirmatory Phase 3 trial of Revascor for the
reduction of mucosal bleeding in end-stage heart failure patients
implanted with an LVAD.
MPC-06-ID for chronic low back pain
- Last patient last visit at 24-months of follow up in the Phase
3 trial of MPC-06-ID for chronic low back pain H1 CY20, with the
primary endpoint being a composite outcome of pain and function at
12 and 24 months.
- Results will be considered pivotal to support regulatory
approval in the US, as well as Europe through the Grünenthal
partnership.
Strategic partnerships
- In active discussions to enter into further global and regional
strategic partnering transactions.2
Financial Results for the Three Months Ended September
30, 2019 (first quarter FY2020)
Loss after tax reduced by US$14.0 million to
US$5.5 million for the first quarter FY2020 compared to US$19.5
million for the first quarter FY2019 as detailed below:
- Revenues increased US$5.4 million to US$17.0
million for the first quarter FY2020, compared to US$11.6 million
for the first quarter FY2019.
- Milestone revenues increased by US$4.5 million as we recognized
the up-front milestone payment of US$15.0 million for the strategic
partnership with Grünenthal in first quarter FY2020. In the first
quarter of FY2019 we recognized US$10.0 million of milestone
revenue in relation to establishing a partnership with Tasly in
China and US$0.5 million of cumulative sales milestones for sales
of TEMCELL in Japan.
- Royalty revenue on sales of TEMCELL in Japan increased US$0.9
million (85%) to US$1.9 million for the first quarter FY2020
compared with US$1.0 million for the first quarter FY2019.
- Research and Development expenses decreased by
US$6.1 million to US$12.4 million for the first quarter FY2020,
compared to US$18.5 million for the first quarter FY2019. This
US$6.1 million decrease was due to a reduction in third party costs
for our Phase 3 clinical trials as enrollment is now complete and
activities are decreasing.
- Manufacturing expenses decreased by US$1.6
million to US$2.7 million for the first quarter FY2020, compared to
US$4.3 million for the first quarter FY2019 due to a reduction in
manufacturing activities related to filing the Biologics License
Application (BLA) for remestemcel-L.
- Management and Administration expenses
decreased US$0.1 million to US$5.5 million for the first quarter
FY2020, compared with US$5.6 million for the first quarter
FY2019.
- Finance Costs for our borrowing arrangements
with Hercules and NovaQuest were US$3.5 million for the first
quarter FY2020, compared to US$2.7 million for the first quarter
FY2019, an increase of US$0.8 million.
- Income tax benefit increased
by US$1.2 million to US$1.9 million in the first quarter FY2020,
compared with US$0.7 million in the first quarter FY2019 in
relation to deferred tax liabilities recognized on the balance
sheet during the period.
The net loss attributable to ordinary shareholders was 1.10
cents per share for the first quarter FY2020, compared with 4.07
cents for the first quarter FY2019.
Cash on hand was US$34.5 million at September
30, 2019, pro forma cash on hand was US$100.0 million after
adjusting for US$15.0 million upfront received on October 1, 2019
from Grünenthal GmbH and US$50.5 million of gross cash proceeds
from the capital raise on October 3, 2019.
Webcast
There will be a webcast today on the financial results beginning
at 8.30am on Tuesday November 26, 2019 AEDT;
4.30pm Monday November 25, 2019 EST.
The live webcast can be accessed via
https://webcasting.boardroom.media/broadcast/5dcdf529dbec873524b6116b
The archived webcast will be available on the Investor page of
the Company’s website: www.mesoblast.com
1. TEMCELL HS. Inj.® is a registered trademark of JCR
Pharmaceuticals Co. Ltd.2. Mesoblast does not make any
representation or give any assurance that such partnering
transactions will be concluded
About MesoblastMesoblast Limited (ASX: MSB;
Nasdaq: MESO) is a world leader in developing allogeneic
(off-the-shelf) cellular medicines. The Company has leveraged its
proprietary cell therapy technology platform to establish a broad
portfolio of commercial products and late-stage product candidates.
Two products have been commercialized in Japan and Europe by its
licensees, and it has established commercial partnerships in Europe
and China for certain Phase 3 assets. In the United States,
Mesoblast has initiated submission of a rolling Biologics License
Application to the FDA to seek approval of its product candidate
for acute graft versus host disease following a successful Phase 3
trial, and is completing Phase 3 trials for its advanced heart
failure and chronic low back pain product candidates. Mesoblast’s
proprietary manufacturing process yields industrial-scale, frozen,
off-the-shelf, cellular medicines based on its mesenchymal lineage
cell platform technology. These cell therapies, with defined
pharmaceutical release criteria, are planned to be readily
available to patients worldwide. Mesoblast has locations in
Melbourne, New York, Singapore and Texas and is listed on the
Australian Securities Exchange (MSB) and on the Nasdaq (MESO). For
more information, please see www.mesoblast.com, LinkedIn: Mesoblast
Limited and Twitter: @Mesoblast
Forward-Looking StatementsThis announcement
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. Forward- looking
statements include, but are not limited to, statements about: the
initiation, timing, progress and results of Mesoblast’s preclinical
and clinical studies, and Mesoblast’s research and development
programs; Mesoblast’s ability to advance product candidates into,
enroll and successfully complete, clinical studies, including
multi-national clinical trials; Mesoblast’s ability to advance its
manufacturing capabilities; the timing or likelihood of regulatory
filings and approvals, manufacturing activities and product
marketing activities, if any; the commercialization of Mesoblast’s
product candidates, if approved; regulatory or public perceptions
and market acceptance surrounding the use of stem-cell based
therapies; the potential for Mesoblast’s product candidates, if any
are approved, to be withdrawn from the market due to patient
adverse events or deaths; the potential benefits of strategic
collaboration agreements and Mesoblast’s ability to enter into and
maintain established strategic collaborations; Mesoblast’s ability
to establish and maintain intellectual property on its product
candidates and Mesoblast’s ability to successfully defend these in
cases of alleged infringement; the scope of protection Mesoblast is
able to establish and maintain for intellectual property rights
covering its product candidates and technology; estimates of
Mesoblast’s expenses, future revenues, capital requirements and its
needs for additional financing; Mesoblast’s financial performance;
developments relating to Mesoblast’s competitors and industry; and
the pricing and reimbursement of Mesoblast’s product candidates, if
approved. 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.
For further information, please contact:
Julie Meldrum |
Schond Greenway |
Corporate Communications |
Investor Relations |
Mesoblast |
Mesoblast |
T: +61 3 9639 6036 |
T: +1 212 880 2060 |
E:
julie.meldrum@mesoblast.com |
E:
schond.greenway@mesoblast.com |
Consolidated Income Statement
|
Three Months EndedSeptember
30, |
|
(in U.S. dollars, in
thousands, except per share amount) |
2019 |
|
|
2018 |
|
Revenue |
|
17,048 |
|
|
|
11,637 |
|
Research & development |
|
(12,389 |
) |
|
|
(18,489 |
) |
Manufacturing
commercialization |
|
(2,698 |
) |
|
|
(4,317 |
) |
Management and
administration |
|
(5,463 |
) |
|
|
(5,614 |
) |
Fair value remeasurement of
contingent consideration |
|
(288 |
) |
|
|
(622 |
) |
Other operating income and
expenses |
|
(169 |
) |
|
|
(151 |
) |
Finance costs |
|
(3,457 |
) |
|
|
(2,653 |
) |
Loss before income
tax |
|
(7,416 |
) |
|
|
(20,209 |
) |
Income tax benefit |
|
1,932 |
|
|
|
711 |
|
Loss attributable to the
owners of Mesoblast Limited |
|
(5,484 |
) |
|
|
(19,498 |
) |
|
|
|
|
|
|
|
|
Losses per share from
continuing operations attributable to the
ordinary equity holders of the Group: |
Cents |
|
|
Cents |
|
Basic - losses per share |
|
(1.10 |
) |
|
|
(4.07 |
) |
Diluted - losses per share |
|
(1.10 |
) |
|
|
(4.07 |
) |
Consolidated Statement of Comprehensive Income
|
Three Months EndedSeptember
30, |
|
(in U.S. dollars, in
thousands) |
2019 |
|
|
2018 |
|
Loss for the period |
|
(5,484 |
) |
|
|
(19,498 |
) |
Other comprehensive
(loss)/income |
|
|
|
|
|
|
|
Items that may be reclassified to
profit and loss |
|
|
|
|
|
|
|
Changes in the fair value of
financial assets |
|
(365 |
) |
|
|
87 |
|
Exchange differences on
translation of foreign operations |
|
(332 |
) |
|
|
(23 |
) |
Other comprehensive income/(loss)
for the period, net of tax |
|
(697 |
) |
|
|
64 |
|
Total comprehensive
losses attributable to the owners of
Mesoblast Limited |
|
(6,181 |
) |
|
|
(19,434 |
) |
Consolidated Balance Sheet
(in U.S. dollars, in
thousands) |
As ofSeptember 30, 2019 |
|
|
As ofJune
30,2019 |
|
Assets |
|
|
|
|
|
|
|
Current
Assets |
|
|
|
|
|
|
|
Cash & cash equivalents |
|
34,536 |
|
|
|
50,426 |
|
Trade & other
receivables |
|
17,857 |
|
|
|
4,060 |
|
Prepayments |
|
8,200 |
|
|
|
8,036 |
|
Total Current
Assets |
|
60,593 |
|
|
|
62,522 |
|
|
|
|
|
|
|
|
|
Non-Current
Assets |
|
|
|
|
|
|
|
Property, plant and
equipment |
|
978 |
|
|
|
826 |
|
Right-of-use assets |
|
4,233 |
|
|
|
— |
|
Financial assets at fair value
through other comprehensive income |
|
1,952 |
|
|
|
2,317 |
|
Other non-current assets |
|
3,299 |
|
|
|
3,324 |
|
Intangible assets |
|
582,731 |
|
|
|
583,126 |
|
Total Non-Current
Assets |
|
593,193 |
|
|
|
589,593 |
|
Total
Assets |
|
653,786 |
|
|
|
652,115 |
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
Current
Liabilities |
|
|
|
|
|
|
|
Trade and other payables |
|
12,740 |
|
|
|
13,060 |
|
Provisions |
|
26,977 |
|
|
|
7,264 |
|
Borrowings |
|
18,851 |
|
|
|
14,007 |
|
Lease liabilities |
|
1,524 |
|
|
|
— |
|
Deferred consideration |
|
10,000 |
|
|
|
10,000 |
|
Total Current
Liabilities |
|
70,092 |
|
|
|
44,331 |
|
|
|
|
|
|
|
|
|
Non-Current
Liabilities |
|
|
|
|
|
|
|
Deferred tax liability |
|
9,195 |
|
|
|
11,124 |
|
Provisions |
|
30,555 |
|
|
|
48,329 |
|
Borrowings |
|
64,881 |
|
|
|
67,279 |
|
Lease liabilities |
|
3,916 |
|
|
|
— |
|
Total Non-Current
Liabilities |
|
108,547 |
|
|
|
126,732 |
|
Total
Liabilities |
|
178,639 |
|
|
|
171,063 |
|
Net Assets |
|
475,147 |
|
|
|
481,052 |
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
Issued Capital |
|
910,942 |
|
|
|
910,405 |
|
Reserves |
|
40,507 |
|
|
|
40,638 |
|
(Accumulated losses)/retained
earnings |
|
(476,302 |
) |
|
|
(469,991 |
) |
Total
Equity |
|
475,147 |
|
|
|
481,052 |
|
Consolidated Statement of Cash Flows
|
Three months endedSeptember
30, |
|
(in U.S. dollars, in
thousands) |
2019 |
|
|
2018 |
|
Cash
flows from operating activities |
|
|
|
|
|
|
|
Commercialization revenue received |
|
1,739 |
|
|
|
1,095 |
|
Milestone payment received |
|
— |
|
|
|
500 |
|
Research and development tax incentive received |
|
1,499 |
|
|
|
1,654 |
|
Payments to suppliers and employees (inclusive of goods
and services tax) |
|
(17,539 |
) |
|
|
(22,039 |
) |
Interest received |
|
173 |
|
|
|
136 |
|
Interest and other costs of finance paid |
|
(1,427 |
) |
|
|
(887 |
) |
Income taxes (paid)/refunded |
|
(3 |
) |
|
|
(3 |
) |
Net cash (outflows) in operating
activities |
|
(15,558 |
) |
|
|
(19,544 |
) |
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
Investment in fixed assets |
|
(153 |
) |
|
|
(39 |
) |
Payments for licenses |
|
(100 |
) |
|
|
— |
|
Net cash (outflows)/inflows in investing
activities |
|
(253 |
) |
|
|
(39 |
) |
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
Proceeds from borrowings |
|
— |
|
|
|
28,950 |
|
Payments of transaction costs from borrowings |
|
— |
|
|
|
(1,534 |
) |
Proceeds from issue of shares |
|
299 |
|
|
|
10,048 |
|
Payments for share issue costs |
|
— |
|
|
|
(358 |
) |
Payment of lease liabilities |
|
(335 |
) |
|
|
— |
|
Net cash inflows by financing activities |
|
(36 |
) |
|
|
37,106 |
|
|
|
|
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents |
|
(15,847 |
) |
|
|
17,523 |
|
Cash and cash equivalents at beginning of period |
|
50,426 |
|
|
|
37,763 |
|
FX (losses)/gains on the translation of foreign bank
accounts |
|
(43 |
) |
|
|
(143 |
) |
Cash and cash equivalents at end of
period |
|
34,536 |
|
|
|
55,143 |
|
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