Mesoblast Limited (Nasdaq:MESO; ASX:MSB), global leader in
allogeneic cellular medicines for inflammatory diseases, today
reported financial results and an operational update for the period
ended June 30, 2023, and provided an overview of upcoming
milestones.
Mesoblast Chief Executive Silviu Itescu said:
“We had anticipated that remestemcel-L would have been approved by
the United States Food and Drug Administration (FDA) for the
treatment of pediatric steroid-refractory acute graft versus host
disease (SR-aGVHD), a condition with a high mortality where there
are no approved therapies for children under 12 years old. During
the six-month BLA review we made substantial progress towards
bringing this cutting-edge product to market with completion of a
comprehensive FDA inspection of our manufacturing process.
Following the complete response, a Type A meeting with FDA has been
scheduled for mid-September and we will discuss the potential paths
to approval via additional potency assay data or new clinical data
in adults. We remain committed to making available this life-saving
therapy to patients suffering with this devastating disease.”
Dr Itescu continued, “We have implemented a
significant cost containment strategy and enacted substantial
payroll reduction to protect our cash reserves and ensure that we
are fiscally prudent. Leading by example, I have deferred my entire
short term incentives (STI) and reduced my annual salary by 30%,
and the same initiatives have been agreed to by our CMO Dr Eric
Rose. I am also pleased that our Non-Executive Directors have
agreed to defer all cash compensation.”
“These cost reduction strategies together with
operational streamlining will enable the company to conserve cash
while at the same time drive value as we progress our Phase 3
programs in adults with SR-aGVHD and in chronic inflammatory low
back pain.”
FINANCIAL RESULTS FOR THE PERIOD ENDED
JUNE 30, 2023 (FY2023)
- Cash
reserves at June 30, 2023 were US$71.3 million, with up to
an additional US$40 million from our existing financing facilities
subject to both certain milestones being met and the extension of
timeline to achieve them.
- Net cash
usage for operating activities was US$63.3 million for
FY2023, a 37% reduction compared with FY2021 and 4% reduction
compared with FY2022.
-
Revenues were US$7.5 million for FY2023, compared
to US$10.2 million for FY2022, a reduction primarily due to a
one-off milestone of US$1.2 million from Takeda for Japan approval
of Alofisel® (darvadstrocel) for perianal fistulas in FY2022.
-
Royalties on sales of TEMCELL® HS Inj.1 sold in
Japan by our licensee for FY2023 were, on a constant currency
basis, US$8.1 million, compared with US$8.7 million for
FY2022.2
COST CONTAINMENT PLAN FOR NEXT 12 MONTHS
AND REDUCTION IN SPEND ON OPERATIONAL ACTIVITIES AND
PAYROLL
- Net operating cash
usage in FY2023 was a 37% reduction compared with FY2021 and 4%
reduction compared with FY2022.
- Further targeted
23% reduction (US$15 million) from US$63.3 million in FY2023 to
US$48.3 million in projected FY2024 annual net operating cash spend
through reduced spend across research, sales & marketing,
commercial inventory, and payroll, which will be partially offset
by investment in our Phase 3 programs for SR-aGVHD and CLBP.
- Targeted 40%
annualized reduction in payroll by February 2024 which includes
base salaries, short-term incentives (STIs) payments and contractor
fees.
- CEO and CMO have
deferred their entire FY23 short-term incentives (STI), have
voluntarily reduced their base salaries for FY24 by 30% to preserve
cash, and will instead receive long-term non-cash incentives (LTIs)
to further align with shareholders, subject to required shareholder
approval.
- FY23 short-term
incentives (STIs) have been entirely deferred for all
employees.
- Management are
eligible to receive LTIs in lieu of a 30% reduction in salary.
- Non-Executive
Directors have voluntarily deferred 100% of the cash payment of
their director fees and agreed to receive 50% of their fees in
LTIs, subject to required shareholder approval.
REMESTEMCEL-L STRATEGY
UPDATE
- FDA provided a
complete response requiring Mesoblast to demonstrate that product
used in the phase 3 trial is similar to product intended for
commercial release, as measured by a standardized potency
assay.
- FDA indicates that
an additional clinical trial would be needed to establish this link
if the company is not able to do so via additional potency assay
work.
- Type A meeting with
US FDA scheduled to be held mid-September for SR-aGVHD
indication.
- Mesoblast proposes
providing FDA with additional potency assay data to provide link
between Phase 3 product and commercial inventory.
- Mesoblast proposes
providing FDA with new clinical trial data in adults, which could
also support the pediatric indication.
- In line with our
overall commercial strategy to progress to adult patient
populations, which make up approximately 5-fold larger numbers than
children,3 Mesoblast intends to conduct a targeted, controlled
study in adults with high mortality risk.
- Survival in adults
with SR-aGVHD who have failed at least one additional agent, such
as ruxolitinib, remains as low as 20-30% by 100 days.4,5
- In contrast,
100-day survival was 63% after remestemcel-L treatment was used
under expanded access in 71 patients aged 12 and older with
SR-aGVHD who failed to respond to at least one additional agent,
such as ruxolitinib.
- Mesoblast is in
discussions with world-leading investigators at the Blood and
Marrow Clinical Trials Network (BM CTN), a body responsible for 80%
of all US transplants, to conduct the new clinical trial.
- The costs of this
targeted study are expected to be covered by the spending reduction
described above.
REXLEMESTROCEL-L STRATEGY
UPDATE
- Product has been
manufactured for use in a pivotal study recruiting patients across
the United States to support potential marketing approval of
rexlemestrocel-L in chronic low back pain (CLBP) due to
degenerative disc disease.
- Pivotal trial
start-up activities have commenced and recruitment is expected to
begin next quarter.
- Primary endpoint is
reduction in pain at 12 months compared to placebo.
- Rexlemestrocel-L
has received Regenerative Medicine Advanced Therapy (RMAT)
designation for CLBP.
- Rexlemestrocel-L
has additionally received RMAT designation for treatment of heart
failure in patients with Left Ventricular Assist Devices
(LVADs).
- Mesoblast to meet
with FDA to seek to extend RMAT to HFrEF patients without LVADs
based on common mechanism of action, and potential pathway to
marketing approval.
DETAILS OF FINANCIAL RESULTS FOR THE
PERIOD ENDED JUNE 30, 2023 (FY2023)
- Research
& Development expenses reduced by US$5.6 million
(17%), down to US$27.2 million for FY2023 compared to US$32.8
million for FY2022. R&D expenses primarily supported
preparations for the remestemcel-L BLA re-submission and
preparations for pivotal studies for rexlemestrocel-L, as clinical
trial activities for our product candidates are reduced since
clinical trial recruitment and data analysis are now complete.
-
Manufacturing expenses reduced by US$3.0 million
(10%), down to US$27.7 million for FY2023 compared to US$30.7
million for FY2022. During the year we continued pre-launch
manufacturing activities and product testing for
remestemcel-L.
- Management
and Administration expenses reduced by US$1.8 million
(7%), down to US$25.4 million for FY2023 compared to US$27.2
million for FY2022 primarily due to a one-off adjustment in legal
expenses in FY2023 and increased professional fees associated with
a one-off corporate activity incurred in FY2022.
-
Remeasurement of Contingent Consideration
recognized gains of US$8.8 million in FY2023 reflecting a reduction
in future third party payments compared to a gain of US$0.9 million
in FY2022 primarily as a result of revaluing future third party
payments.
- Fair value
movement of warrants recognized a loss of US$2.2 million
in FY2023 compared to a gain of US$5.9 million in FY2022.
- Other
operating income in FY2023 includes R&D tax incentive
income of US$3.5 million. The income recorded in this period
pertains to the eligible expenditure refundable under the
Australian governments incentive program for the years ended June
30, 2021, 2022 and 2023.
- Finance
Costs for borrowing arrangements include US$15.2 million
of non-cash expenditure for FY2023 comprising accruing interest and
borrowing costs.
Loss after tax for FY2023 was
US$81.9 million compared to US$91.3 million for FY2022. The net
loss attributable to ordinary shareholders was 11.08 US cents per
share for FY2023, compared with 14.08 US cents per share for
FY2022.
Conference CallThere will be a
webcast today, beginning at 8.30am AEST (Thursday, August 31);
6.30pm EDT (Wednesday, August 30). It can be accessed via:
https://webcast.openbriefing.com/msb-fyr-2023/
The archived webcast will be available on the
Investor page of the Company’s website: www.mesoblast.com
About Mesoblast Mesoblast (the
Company) is a world leader in developing allogeneic (off-the-shelf)
cellular medicines for the treatment of severe and life-threatening
inflammatory conditions. The Company has leveraged its proprietary
mesenchymal lineage cell therapy technology platform to establish a
broad portfolio of late-stage product candidates which respond to
severe inflammation by releasing anti-inflammatory factors that
counter and modulate multiple effector arms of the immune system,
resulting in significant reduction of the damaging inflammatory
process.
Mesoblast has a strong and extensive global
intellectual property portfolio with protection extending through
to at least 2041 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.
Mesoblast is developing product candidates for
distinct indications based on its remestemcel-L and
rexlemestrocel-L allogeneic stromal cell technology platforms.
Remestemcel-L is being developed for inflammatory diseases in
children and adults including steroid refractory acute graft versus
host disease, biologic-resistant inflammatory bowel disease, and
acute respiratory distress syndrome. Rexlemestrocel-L is in
development for advanced chronic 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
References / Footnotes
- TEMCELL® HS Inj. is a registered trademark of JCR
Pharmaceuticals Co. Ltd.
- TEMCELL sales by our Licensee are
recorded in Japanese Yen before being translated into USD for the
purposes of calculating the royalty paid to Mesoblast. Results have
been adjusted for the movement of the USD to Japanese Yen exchange
rate from 1USD:122.14 Yen for the year ended June 30, 2022 to
1USD:139.76 Yen for the year ended June 30, 2023.
- HRSA Transplant Activity Report,
CIBMTR, 2020
- Jagasia M et al. Ruxolitinib for
the treatment of steroid-refractory acute GVHD (REACH1): a
multicenter, open-label phase 2 trial. Blood. 2020 May 14; 135(20):
1739–1749
- Abedin S, et al. Ruxolitinib
resistance or intolerance in steroid-refractory acute graft
versus-host disease — a real-world outcomes analysis. British
Journal of Haematology, 2021;195:429–43.
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. 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 (including our request to have a Type A
meeting with the FDA, the outcome of such a meeting, and any future
decision that the FDA may make on the BLA for remestemcel-L for
pediatric patients with SR-aGVHD), 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 Chief Executive.
For more information, please contact:
|
Corporate Communications / Investors |
Media |
|
Paul Hughes |
BlueDot Media |
|
T: +61 3 9639 6036 |
Steve Dabkowski |
|
E: investors@mesoblast.com |
T: +61 419 880 486 |
|
|
E: steve@bluedot.net.au |
|
|
|
Consolidated Income Statement
| |
Year Ended June 30, |
|
(in U.S. dollars, in thousands, except per share
amount) |
2023 |
|
|
2022 |
|
| Revenue |
7,501 |
|
|
10,211 |
|
| Research &
development |
(27,189 |
) |
|
(32,815 |
) |
| Manufacturing
commercialization |
(27,733 |
) |
|
(30,757 |
) |
| Management and
administration |
(25,374 |
) |
|
(27,210 |
) |
| Fair value remeasurement of
contingent consideration |
8,771 |
|
|
913 |
|
| Fair value remeasurement of
warrant liability |
(2,205 |
) |
|
5,896 |
|
| Other operating income and
expenses |
4,250 |
|
|
(536 |
) |
| Finance costs |
(20,122 |
) |
|
(17,288 |
) |
| Loss before income
tax |
(82,101 |
) |
|
(91,586 |
) |
| Income tax
benefit/(expense) |
212 |
|
|
239 |
|
| Loss attributable to
the owners of Mesoblast Limited |
(81,889 |
) |
|
(91,347 |
) |
| |
|
|
|
| Losses per share from
continuing operations attributable to the ordinary equity holders
of the Group: |
Cents |
|
Cents |
| Basic - losses per share |
(11.08 |
) |
|
(14.08 |
) |
| Diluted - losses per
share |
(11.08 |
) |
|
(14.08 |
) |
| |
|
|
|
|
|
Consolidated Statement of Comprehensive
Income
| |
Year Ended June 30, |
|
(in U.S. dollars, in thousands) |
2023 |
|
|
2022 |
|
| Loss for the
period |
(81,889 |
) |
|
(91,347 |
) |
| Other comprehensive
(loss)/income |
|
|
|
| Items that may be reclassified
to profit and loss |
|
|
|
| Exchange differences on
translation of foreign operations |
(573 |
) |
|
91 |
|
| Items that will not be
reclassified to profit and loss |
|
|
|
| Financial assets at fair value
through other comprehensive income |
(1 |
) |
|
(322 |
) |
| Other comprehensive
(loss)/income for the period, net of tax |
(574 |
) |
|
(231 |
) |
| Total comprehensive
losses attributable to the owners of Mesoblast
Limited |
(82,463 |
) |
|
(91,578 |
) |
| |
Consolidated Balance Sheet
| |
As of June 30, |
|
(in U.S. dollars, in thousands) |
2023 |
|
|
2022 |
|
| Assets |
|
|
|
| Current
Assets |
|
|
|
| Cash & cash
equivalents |
71,318 |
|
|
60,447 |
|
| Trade & other
receivables |
6,998 |
|
|
4,403 |
|
| Prepayments |
3,342 |
|
|
4,987 |
|
| Total Current
Assets |
81,658 |
|
|
69,837 |
|
| |
|
|
|
| Non-Current
Assets |
|
|
|
| Property, plant and
equipment |
1,357 |
|
|
2,045 |
|
| Right-of-use assets |
5,134 |
|
|
7,920 |
|
| Financial assets at fair value
through other comprehensive income |
1,757 |
|
|
1,758 |
|
| Other non-current assets |
2,326 |
|
|
1,930 |
|
| Intangible assets |
577,183 |
|
|
578,652 |
|
| Total Non-Current
Assets |
587,757 |
|
|
592,305 |
|
| Total
Assets |
669,415 |
|
|
662,142 |
|
| |
|
|
|
|
Liabilities |
|
|
|
| Current
Liabilities |
|
|
|
| Trade and other payables |
20,145 |
|
|
23,079 |
|
| Provisions |
6,399 |
|
|
17,906 |
|
| Borrowings |
5,952 |
|
|
5,017 |
|
| Lease liabilities |
4,060 |
|
|
3,186 |
|
| Warrant liability |
5,426 |
|
|
2,185 |
|
| Total Current
Liabilities |
41,982 |
|
|
51,373 |
|
| |
|
|
|
| Non-Current
Liabilities |
|
|
|
| Provisions |
16,612 |
|
|
12,523 |
|
| Borrowings |
102,811 |
|
|
91,617 |
|
| Lease liabilities |
3,672 |
|
|
7,085 |
|
| Deferred consideration |
2,500 |
|
|
2,500 |
|
| Total Non-Current
Liabilities |
125,595 |
|
|
113,725 |
|
| Total
Liabilities |
167,577 |
|
|
165,098 |
|
| Net
Assets |
501,838 |
|
|
497,044 |
|
| |
|
|
|
| Equity |
|
|
|
| Issued Capital |
1,249,123 |
|
|
1,165,309 |
|
| Reserves |
73,520 |
|
|
70,651 |
|
| Accumulated losses |
(820,805 |
) |
|
(738,916 |
) |
| Total
Equity |
501,838 |
|
|
497,044 |
|
| |
Consolidated Statement of Cash Flow
| |
Year Ended June 30, |
|
(in U.S. dollars, in thousands) |
2023 |
|
|
2022 |
|
| Cash flows from
operating activities |
|
|
|
| Commercialization revenue
received |
7,480 |
|
|
9,980 |
|
| Government grants and tax
incentives received |
1,118 |
|
|
24 |
|
| Payments to suppliers and
employees (inclusive of goods and services tax) |
(72,683 |
) |
|
(75,769 |
) |
| Interest received |
796 |
|
|
7 |
|
| Income taxes received
/(paid) |
20 |
|
|
(24 |
) |
| Net cash (outflows) in
operating activities |
(63,269 |
) |
|
(65,782 |
) |
| |
|
|
|
| Cash flows from
investing activities |
|
|
|
| Investment in fixed
assets |
(264 |
) |
|
(157 |
) |
| Receipts from investment in
sublease |
120 |
|
|
— |
|
| Payments for licenses |
(50 |
) |
|
(75 |
) |
| Net cash (outflows) in
investing activities |
(194 |
) |
|
(232 |
) |
| |
|
|
|
| Cash flows from
financing activities |
|
|
|
| Proceeds from borrowings |
— |
|
|
51,919 |
|
| Repayment of borrowings |
— |
|
|
(55,458 |
) |
| Payment of transaction costs
from borrowings |
(574 |
) |
|
(5,527 |
) |
| Interest and other costs of
finance paid |
(6,014 |
) |
|
(6,084 |
) |
| Proceeds from issue of
shares |
88,635 |
|
|
209 |
|
| Proceeds from issue of
warrants |
— |
|
|
8,081 |
|
| Payments for share issue
costs |
(4,889 |
) |
|
(222 |
) |
| Payments for lease
liabilities |
(2,656 |
) |
|
(2,788 |
) |
| Net cash
inflows/(outflows) by financing activities |
74,502 |
|
|
(9,870 |
) |
| |
|
|
|
| Net increase/(decrease) in
cash and cash equivalents |
11,039 |
|
|
(75,884 |
) |
| Cash and cash equivalents at
beginning of period |
60,447 |
|
|
136,881 |
|
| FX (loss)/gain on the
translation of foreign bank accounts |
(168 |
) |
|
(550 |
) |
| Cash and cash
equivalents at end of period |
71,318 |
|
|
60,447 |
|
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