Mesoblast Limited (Nasdaq:MESO; ASX:MSB), global leader in
allogeneic cellular medicines for inflammatory diseases, today
reported operational and financial results for the first quarter
ended September 30, 2020 (FY2021).
Mesoblast has entered into an exclusive worldwide license and
collaboration agreement with Novartis for the development,
manufacture and commercialization of its lead mesenchymal stromal
cell (MSC) product candidate, remestemcel-L, with an initial focus
on the treatment of acute respiratory distress syndrome (ARDS),
including that associated with COVID-19. Details of this
transaction have been lodged in a separate announcement with the
ASX and Nasdaq today.
As foreshadowed following the capital raising in May 2020,
Mesoblast increased its investment in both clinical development and
manufacturing to facilitate the potential availability of
remestemcel-L for patients with COVID-19. These activities led to
the strategic collaboration with Novartis which will open new
opportunities in respiratory indications. This collaboration will
also provide the commercial and manufacturing strength to bring
this important cellular medicine to the many patients with COVID-19
and its life-threatening complication of ARDS.
Cash on hand at September 30, 2020 was US$108.1 million (A$152.1
million)1 and, on transaction closing,2 pro-forma cash on hand is
US$158.1 million (A$222.4 million).
Remestemcel-L for COVID-19 Complications in Adults and
Children
As cases of COVID-19 surge in the United States and globally,
deaths continue to increase from ARDS in ventilator-dependent
patients as a result of an overactive immune response in the lungs
to COVID-19. Remestemcel-L is being evaluated for its potential to
reduce 30-day mortality on top of maximal care in a Phase 3
randomized controlled trial of up to 300 ventilator-dependent
adults with moderate or severe COVID-19 ARDS. The key secondary
endpoint is the number of days off mechanical ventilator
support.
After two prior interim analyses reviewing safety and efficacy
data, the trial’s independent Data Safety Monitoring Board
(DSMB) recommended trial continuation as planned. Trial
enrollment has now surpassed 180 patients.
The trial aims to confirm pilot data where nine of 12 (75%)
ventilator-dependent adult patients with COVID-19 ARDS who received
two doses of remestemcel-L under emergency compassionate use at New
York’s Mt Sinai Hospital were successfully discharged within a
median of 10 days.
Children hospitalized with COVID-19 infection are at risk of a
life-threatening inflammatory condition called multi-system
inflammatory syndrome (MIS-C) which involves multiple critical
organs and their vasculature, is associated with COVID-19
antibodies, and is thought to be a post-viral autoimmune process.
In approximately 50% of cases this inflammation is associated with
significant cardiovascular complications resulting in decreased
heart function and dilation of coronary arteries.3-5
Mesoblast’s existing Investigational New Drug (IND) application
provides physicians with access to use remestemcel-L in COVID-19
infected children aged between two months and 17 years with MIS-C.
6 Two COVID-19 infected children with MIS-C who received
remestemcel-L for severe heart failure fully recovered heart
function and were discharged within 30 hours of the second
dose.
Remestemcel-L for Steroid-Refractory Acute Graft Versus
Host Disease
As part of the broad license and collaboration agreement with
Novartis for remestemcel-L, Mesoblast will retain full rights
and economics for graft versus host disease (GVHD).
On August 13, 2020, results from 309 children with
steroid-refractory acute graft versus host disease (SR-aGVHD)
treated with remestemcel-L were presented to the Oncologic Drugs
Advisory Committee (ODAC) of the United States Food and Drug
Administration (FDA). The ODAC panel voted 9:1 that the
available data support the efficacy of remestemcel-L in pediatric
patients with SR-aGVHD7. Despite the overwhelming ODAC vote,
on September 30, the FDA provided Mesoblast with a Complete
Response Letter.
On November 17, a Type A meeting was held with the FDA to
discuss the review of the Biologics License Application for
remestemcel-L and a potential pathway for accelerated approval with
a post-approval requirement to conduct an additional randomized
controlled study in patients 12 years and older. At the current
time it appears that the FDA review team will not agree to
accelerated approval. However, the definitive outcome of the
Type A meeting will not be known until Mesoblast receives the
formal minutes which are expected within 30 days of the
meeting. If the current review team does not agree to
accelerated approval, Mesoblast will request a further Type A
meeting to initiate the well-established FDA dispute resolution
pathway.
Under the terms of the license and collaboration agreement,
Novartis has an option to become the commercial distributor for
remestemcel-L in SR-aGVHD outside of Japan.
Remestemcel-L for Inflammatory Bowel
Disease
A randomized, controlled study of remestemcel-L delivered by an
endoscope directly to the areas of inflammation and tissue injury
in up to 48 patients with medically refractory Crohn’s or
ulcerative colitis has commenced at Cleveland Clinic. Mesoblast’s
objective is to confirm the potential for remestemcel-L to induce
luminal healing and early remission in a wider spectrum of diseases
with severe inflammation of the gut, in addition to SR-aGVHD.
Despite recent advances in the treatment of inflammatory bowel
disease, approximately 30% of patients are primarily unresponsive
to anti-TNFα agents and even among responders, up to 10% will lose
their response to the drug every year. Up to 80% of patients with
medically-refractory Crohn’s disease eventually require surgical
treatment of their disease,8 which can have a devastating impact on
quality of life. This investigator-initiated study is the first in
humans using local cell delivery directly into the gut, and will
enable Mesoblast to compare clinical outcomes using this delivery
method with results from an ongoing randomized, placebo-controlled
trial in patients with biologic-refractory Crohn’s disease where
remestemcel-L was administered intravenously.
Rexlemestrocel (REVASCOR®) for Advanced
Chronic Heart Failure
In the United States alone, of more than 6.5 million patients
with chronic heart failure, there are more than 1.3 million
patients with advanced stage of the disease.9 The objective of
treatment with Mesoblast’s allogeneic cellular product candidate
REVASCOR® is to reduce or reverse the severe inflammatory process
in the damaged heart of these patients, and thereby prevent or
delay further progression of heart failure or death.
Mesoblast’s randomized placebo-controlled Phase 3 trial in 566
patients with advanced forms of New York Heart Association Class II
or Class III disease has completed patient follow-up and all events
have been independently adjudicated. While the COVID-19 pandemic
has delayed completion of data quality review at the study sites,
the Phase 3 trial data readout is expected in the current
quarter.
In an earlier randomized placebo-controlled 60-patient Phase 2
trial, a single intra-myocardial injection of REVASCOR at the dose
administered in the subsequent Phase 3 trial prevented any
hospitalizations or deaths over three years of follow-up in
patients with advanced chronic heart failure.
Rexlemestrocel (MPC-06-ID) for Chronic Low Back
Pain
Mesoblast’s MPC-06-ID development program targets over 3.2
million patients in the United States and 4 million in the E.U.5
with chronic low back pain due to moderate to severe inflammatory
disc degeneration.10 There is a significant need for a safe,
efficacious and durable treatment in patients with chronic low back
pain due to severely inflamed degenerative disc disease.
While the COVID-19 pandemic has delayed completion of data
quality review at the study sites, data readout for the 2:1
randomized placebo-controlled US Phase 3 trial in 404 patients is
expected in the current quarter.
Mesoblast continues to collaborate closely with Grünenthal on
the clinical protocol for a confirmatory Phase 3 trial in Europe
for MPC-06-ID in chronic low back pain due to degenerative disc
disease, with the results of this and the United States Phase 3
trial expected to support both FDA and European Medicines Agency
regulatory approvals.
Financial Results for the First Quarter Ended September
30, 2020 (FY2021)
- Revenues decreased US$15.7 million to US$1.3
million for first quarter FY2021, compared to US$17.0 million for
first quarter FY2020.
- Milestone revenue
decreased by US$15.0 million due to the upfront milestone payment
of US$15.0 million received for the strategic partnership with
Grünenthal GmbH in first quarter FY2020, compared to nil milestone
income in first quarter FY2021.
- Royalty revenue on sales of TEMCELL HS Inj.(R)11 in Japan
decreased US$0.6 million to US$1.3 million for first quarter FY2021
compared with US$1.9 million for first quarter FY2020. The decrease
was due to a temporary shutdown in production as JCR expands its
facility capacity to meet increasing demand far in excess of its
initial forecast (as announced by JCR on July 31, 2020).
- Research and Development expenses increased by
US$6.9 million to US$19.3 million for first quarter FY2021,
compared to US$12.4 million for the first quarter FY2020. This was
due to increased clinical trial costs relating to the Phase 3 trial
for COVID-19 ARDS, non-cash share-based payments to employees and
consultants, and pre-commercial activities for
remestemcel-L.
- Manufacturing expenses increased by US$9.2
million to US$11.9 million for first quarter FY2021, compared to
US$2.7 million for first quarter FY2020 due to increased
expenditure on clinical supply for the COVID-19 ARDS Phase 3 trial
and inventory for the potential launch of RYONCIL (remestemcel-L).
- Management and Administration expenses
increased US$2.2 million to US$7.7 million for first quarter
FY2021, compared with US$5.5 million for first quarter FY2020
primary due to non-cash share-based payments to employees and
consultants and increased in other corporate overheads.
- Finance Costs for borrowing arrangements with
Hercules and NovaQuest were US$4.8 million for first quarter
FY2021, compared to US$3.5 million for first quarter FY2020.
As a result of the above, loss after tax for the first quarter
FY2021 was US$24.5 million compared to US$5.5 million for first
quarter FY2020. The net loss attributable to ordinary shareholders
was 4.21 US cents per share for first quarter FY2021, compared with
1.10 US cents per share for first quarter FY2020.
Conference Call Details There will be a
webcast today on the financial results beginning at 9.00am AEDT
(Friday, November 20); 5.00pm EST (Thursday, November 19, 2020). It
can be accessed via
https://webcast.boardroom.media/mesoblast-limited/20201119/NaN5fb59c68f297810019932232
The archived webcast will be available on the Investor page of
the Company’s website: www.mesoblast.com
References1.Cash on hand at September 30, 2020
has been translated from US$ to A$ at a spot rate of 1.407.2.The
closing of the license agreement is subject to the expiration or
termination of the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act and certain other conditions. The
pro-forma cash is inclusive of a US$25 million equity purchase at a
15% premium to the volume weighted average price calculated over 30
trading days as of today, subject to the expiration or termination
of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act and certain other conditions.
3.www.clinicaltrials.gov; NCT04456439 4.Lancet2020; May 7.
DOI: https://doi.org/10.1016/S0140-6736(20)31094-125.Lancet.
2020; (May
13) https://doi.org/10.1016/S0140-6736(20)31103-X6.https://www.nejm.org/doi/full/10.1056/NEJMoa20217567.This
vote includes a change to the original vote by one of the ODAC
panel members after electronic voting closed.8.Crohn’s and Colitis
Foundation.9.AHA’s 2017 Heart Disease and Stroke
Statistics.10.Decision Resources: Chronic Pain December
2015.11.TEMCELL HS Inj.(R) is a registered trademark of JCR
Pharmaceuticals Co. Ltd.
About MesoblastMesoblast Limited (Nasdaq:MESO;
ASX:MSB) is a world leader in developing allogeneic (off-the-shelf)
cellular medicines. The Company has leveraged its proprietary
mesenchymal lineage cell therapy technology platform to establish a
broad portfolio of commercial products and late-stage product
candidates. Mesoblast has a strong and extensive global
intellectual property (IP) portfolio with protection extending
through to at least 2040 in all major markets. The Company’s
proprietary manufacturing processes yield industrial-scale,
cryopreserved, off-the-shelf, cellular medicines. These cell
therapies, with defined pharmaceutical release criteria, are
planned to be readily available to patients worldwide.
Remestemcel-L is being developed for inflammatory diseases in
children and adults including steroid-refractory acute graft versus
host disease and moderate to severe acute respiratory distress
syndrome. Mesoblast is completing Phase 3 trials for its product
candidates for advanced heart failure and chronic low back pain.
Two products have been commercialized in Japan and Europe by
Mesoblast’s licensees, and the Company has established commercial
partnerships in Europe and China for certain Phase 3
assets.
Mesoblast has locations in Australia, the United States and
Singapore 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.
Release authorized by the Board.
For further information, please contact:
MediaJulie MeldrumT: +61 3 9639
6036E:julie.meldrum@mesoblast.com |
Kristen BothwellT: +1 917 613 5434E:kbothwell@rubenstein.com
|
InvestorsSchond
GreenwayT: +212 880 2060E: schond.greenway@mesoblast.com |
Paul Hughes T:
+61 3 9639 6036E: paul.hughes@mesoblast.com
|
Consolidated Income Statement
|
|
Three Months EndedSeptember
30, |
|
(in U.S. dollars, in
thousands, except per share amount) |
|
2020 |
|
|
2019 |
|
Revenue |
|
|
1,305 |
|
|
|
17,048 |
|
Research & development |
|
|
(19,278 |
) |
|
|
(12,389 |
) |
Manufacturing
commercialization |
|
|
(11,924 |
) |
|
|
(2,698 |
) |
Management and
administration |
|
|
(7,680 |
) |
|
|
(5,463 |
) |
Fair value remeasurement of
contingent consideration |
|
|
15,107 |
|
|
|
(288 |
) |
Other operating income and
expenses |
|
|
2,018 |
|
|
|
(169 |
) |
Finance costs |
|
|
(4,822 |
) |
|
|
(3,457 |
) |
Loss before income
tax |
|
|
(25,274 |
) |
|
|
(7,416 |
) |
Income tax benefit |
|
|
730 |
|
|
|
1,932 |
|
Loss attributable to the
owners of Mesoblast Limited |
|
|
(24,544 |
) |
|
|
(5,484 |
) |
|
|
|
|
|
|
|
|
|
Losses per share from
continuing operations attributable to the
ordinary equity holders of the Group: |
|
Cents |
|
|
Cents |
|
Basic - losses per share |
|
|
(4.21 |
) |
|
|
(1.10 |
) |
Diluted - losses per share |
|
|
(4.21 |
) |
|
|
(1.10 |
) |
Consolidated Statement of Comprehensive Income
|
|
Three Months EndedSeptember
30, |
(in U.S. dollars, in
thousands) |
|
2020 |
|
|
2019 |
|
|
Loss for the period |
|
|
(24,544 |
) |
|
|
(5,484 |
) |
|
Other comprehensive
(loss)/income |
|
|
|
|
|
|
|
|
|
Items that may be reclassified to
profit and loss |
|
|
|
|
|
|
|
|
|
Financial assets at fair value
through other comprehensive income |
|
|
81 |
|
|
|
(365 |
) |
|
Exchange differences on
translation of foreign operations |
|
|
408 |
|
|
|
(332 |
) |
|
Other comprehensive (loss)/income
for the period, net of tax |
|
|
489 |
|
|
|
(697 |
) |
|
Total comprehensive
losses attributable to the owners of
Mesoblast Limited |
|
|
(24,055 |
) |
|
|
(6,181 |
) |
|
Consolidated Balance Sheet
|
|
As ofSeptember 30, |
|
|
As ofJune 30, |
|
(in U.S. dollars, in
thousands) |
|
2020 |
|
|
2020 |
|
Assets |
|
|
|
|
|
|
|
|
Current
Assets |
|
|
|
|
|
|
|
|
Cash & cash equivalents |
|
|
108,123 |
|
|
|
129,328 |
|
Trade & other
receivables |
|
|
2,446 |
|
|
|
1,574 |
|
Prepayments |
|
|
5,168 |
|
|
|
5,646 |
|
Total Current
Assets |
|
|
115,737 |
|
|
|
136,548 |
|
|
|
|
|
|
|
|
|
|
Non-Current
Assets |
|
|
|
|
|
|
|
|
Property, plant and
equipment |
|
|
2,294 |
|
|
|
2,293 |
|
Right-of-use assets |
|
|
8,038 |
|
|
|
7,978 |
|
Financial assets at fair value
through other comprehensive income |
|
|
1,952 |
|
|
|
1,871 |
|
Other non-current assets |
|
|
3,334 |
|
|
|
3,311 |
|
Intangible assets |
|
|
581,217 |
|
|
|
581,601 |
|
Total Non-Current
Assets |
|
|
596,835 |
|
|
|
597,054 |
|
Total
Assets |
|
|
712,572 |
|
|
|
733,602 |
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Current
Liabilities |
|
|
|
|
|
|
|
|
Trade and other payables |
|
|
27,602 |
|
|
|
24,972 |
|
Provisions |
|
|
22,218 |
|
|
|
29,197 |
|
Borrowings |
|
|
34,893 |
|
|
|
32,455 |
|
Lease liabilities |
|
|
2,984 |
|
|
|
3,519 |
|
Total Current
Liabilities |
|
|
87,697 |
|
|
|
90,143 |
|
|
|
|
|
|
|
|
|
|
Non-Current
Liabilities |
|
|
|
|
|
|
|
|
Deferred tax liability |
|
|
— |
|
|
|
730 |
|
Provisions |
|
|
20,723 |
|
|
|
27,563 |
|
Borrowings |
|
|
56,098 |
|
|
|
57,023 |
|
Lease liabilities |
|
|
7,048 |
|
|
|
6,317 |
|
Deferred consideration |
|
|
2,500 |
|
|
|
2,500 |
|
Total Non-Current
Liabilities |
|
|
86,369 |
|
|
|
94,133 |
|
Total
Liabilities |
|
|
174,066 |
|
|
|
184,276 |
|
Net Assets |
|
|
538,506 |
|
|
|
549,326 |
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
Issued Capital |
|
|
1,063,005 |
|
|
|
1,051,450 |
|
Reserves |
|
|
48,803 |
|
|
|
46,634 |
|
(Accumulated losses)/retained
earnings |
|
|
(573,302 |
) |
|
|
(548,758 |
) |
Total
Equity |
|
|
538,506 |
|
|
|
549,326 |
|
Consolidated Statement of Cash Flows
|
|
Three Months EndedSeptember
30, |
|
(in U.S. dollars, in
thousands) |
|
2020 |
|
|
2019 |
|
Cash
flows from operating activities |
|
|
|
|
|
|
|
|
Commercialization revenue received |
|
|
682 |
|
|
|
1,739 |
|
Upfront and milestone payments received |
|
|
— |
|
|
|
— |
|
Government grants and tax incentives received |
|
|
17 |
|
|
|
1,499 |
|
Payments to suppliers and employees (inclusive of goods and
services tax) |
|
|
(27,484 |
) |
|
|
(17,539 |
) |
Interest received |
|
|
13 |
|
|
|
173 |
|
Interest and other costs of finance paid |
|
|
(1,389 |
) |
|
|
(1,427 |
) |
Income taxes (paid) |
|
|
(6 |
) |
|
|
(3 |
) |
Net cash (outflows) in operating
activities |
|
|
(28,167 |
) |
|
|
(15,558 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
Investment in fixed assets |
|
|
(81 |
) |
|
|
(153 |
) |
Payments for licenses |
|
|
— |
|
|
|
(100 |
) |
Net cash (outflows) in investing
activities |
|
|
(81 |
) |
|
|
(253 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
Proceeds from issue of shares |
|
|
8,134 |
|
|
|
299 |
|
Payments for share issue costs |
|
|
(897 |
) |
|
|
— |
|
Payments for lease liabilities |
|
|
(695 |
) |
|
|
(335 |
) |
Net cash inflows by financing activities |
|
|
6,542 |
|
|
|
(36 |
) |
|
|
|
|
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents |
|
|
(21,706 |
) |
|
|
(15,847 |
) |
Cash and cash equivalents at beginning of period |
|
|
129,328 |
|
|
|
50,426 |
|
FX gain/(losses) on the translation of foreign bank
accounts |
|
|
501 |
|
|
|
(43 |
) |
Cash and cash equivalents at end of
period |
|
|
108,123 |
|
|
|
34,536 |
|
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