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This Company Made Back Pain Therapies. Now It's Out For A COVID-19 Drug.

This Company Made Back Pain Therapies. Now It's Out For A COVID-19 Drug.

Last week, Mesoblast Limited (NASDAQ: MESO) was plugging away at therapies for heart failure, chronic back pain and rheumatoid arthritis. This week, it’s tackling the pandemic.

COVID-19 may seem like a leap from back pain, but Mesoblast doesn’t see it that way. The disease pathways share a similar mechanism — one Mesoblast has targeted for some time.

The Australian biotech’s proprietary platform uses allogeneic mesenchymal lineage stem cells to fight inflammation. Inflammation causes a variety of health issues, including arthritis, heart failure and the inflammatory lung disease that's complicating COVID-19 infections.

Mesoblast has already spoken with a number of international collaborators and government regulators about a potential coronavirus therapy, and it plans to launch a random controlled trial in 48 patients “in the next few weeks,” said CEO Silviu Itescu.

The biotech is trying to avoid being another casualty of the fatal virus. Its stock has plummeted more than 62% since mid-January, a fall Itescu attributes to the pandemic. 

“Markets will settle down as soon as people feel comfortable that the coronavirus issue is coming under control,” Itescu said in an interview with Benzinga. “It will come under control, and in that context, we believe that one of our products has the ability to be one of the mainline products for [high risk] patients.”

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Mesoblast’s Mechanism

Mesoblast uses mesenchymal stem cells from a single donor to create a bank of products that are easily replicated and shaped into reproducible candidates. Mesoblast values the approach for its industrial scalability, applicability across indications and discriminating mechanism that broadly targets inflammatory agents without activating unwanted reactions in non-targeted cells.

The candidates can respond to diverse inflammatory cytokines at once to attack extreme inflammatory diseases, and their allogeneic property prevents rejection of the therapies as foreign, according to the company.

“Treatments using single-pathway inhibitors don’t have a chance of switching off the cytokines storm where many cytokines are responsible,” Itescu said of the mechanism’s advantage.

Mesoblast's Lead Candidate

Mesoblast first targeted its platform toward Graft vs. Host Disease because the indication involves various activated cytokines that no other drugs have successfully shut off.

It submitted to the FDA positive Phase 3 results for Ryoncil in pediatric GVHD and hopes for approval to launch this year. Itsecu said he expects a positive U.S. reception given that the product is already “doing very well” in Japan.

“Its uptake continues to increase [and] revenue for us continues to increase quarter on quarter,” he said, noting expectations for similar regulatory response, uptake, pricing and reimbursement in the U.S.

Mesoblast's Secondary Indications

Mesoblast anticipates readouts for the Phase 3 trials of Revascor for heart failure and MPC-06-ID for chronic low back pain in next few months. It's also continuing early trials in rheumatoid arthritis, Crohn’s disease, diabetic nephropathy (kidney disease), hypoxic ischemic encephalopathy (lack of oxygen to the brain) and epidermolysis bullosa (blistering).

“Each product has its own substantial market opportunity,” Itescu said. “Each one, with its suite of indications, has $1-billion-plus market opportunities in the U.S. market [alone].”

Mesoblast's CEO On The Regulatory Environment

The upcoming presidential election may bring leadership change to the FDA, but Mesoblast is unconcerned about any regulatory volatility.

“I don’t see any relationship between elections and the regulatory environment,” Itescu said.

“The FDA is very responsive. They are appropriately reviewing dossiers related to high need indications. I couldn’t speak more highly of the FDA and our interactions with the FDA.”

Mesoblast's Financial Health

Itescu said he feels comfortable with Mesoblast’s balance sheet.

“[There's] no need for any capital raises,” he said, citing “a reasonable amount of cash,” access to various financing lines and support from the existing investor base.

“We are working on several transactions that we hope will bring [more cash],” he said, adding that they're “transactions that may be related to commercialization partnerships.”

The company is in talks with a number of prospective partners to navigate the complex regulations for cardiovascular indications and back pain in Europe and the U.S.

“Given the size of the markets in the U.S., both of those programs will be partnered with a strategic partner that has a commercial and distribution channels,” Itescu said.

Mesoblast plans to manage the distribution and commercialization of its orphan drugs in the U.S. “Our targeted salesforce is easily able to handle that, so we will do that ourselves,” Itescu said.


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