Appendix 4C Quarterly Activity Report for Quarter Ended December 31, 2023
NEW YORK, Jan. 30, 2024 (GLOBE NEWSWIRE) — Mesoblast Limited (Nasdaq:MESO; ASX:MSB), global leader in allogeneic cellular medicines for inflammatory diseases, today provided an activity report for the second quarter ended December 31, 2023.
Mesoblast Chief Executive Silviu Itescu said: “It has been a very busy quarter in which we have made substantial operational progress across our three lead Phase 3 assets. We have generated significant new potency and characterization data for our lead product Ryoncil® (remestemcel-L) for children with acute GVHD, as requested by FDA, and will submit these data ahead of our planned meeting with FDA this quarter.”
“Our second Phase 3 back pain trial with rexlemestrocel-L, aiming to confirm the durable pain reduction that was seen in the first Phase 3 trial, is underway. Finally, we were very pleased to have received a Rare Pediatric Disease (RPD) Designation from FDA for our cardiovascular product Revascor® in children with life-threatening congenital heart disease, and plan to discuss the trial results in the context of a regulatory approval pathway.”
Dr Itescu added: “We raised additional capital during the quarter to support these important Phase 3 programs, and I would like to thank all shareholders that participated in the placement and entitlement offer. In combination with our previously announced cost reduction strategies and operational streamlining, which are on-track, this new capital will provide added balance sheet strength.”
Graft versus Host Disease – Pediatric and Adult Phase 3 Programs
- Mesoblast has requested a meeting with FDA this quarter to provide additional potency and characterization data for its product RYONCIL which it believes demonstrate that the product used as second-line after corticosteroids in the pivotal Phase 3 trial GVHD001 in children with SR-aGVHD, which successfully met its primary endpoint of Day 28 Overall Response, was made to a standard supporting the trial as being adequate and well controlled.
- The new potency assay data show that the RYONCIL product made with the current manufacturing process that has undergone successful inspection by FDA, demonstrates greater potency than the earlier generation product, providing context to its greater impact on survival.
- Showing that the product used in the completed pediatric Phase 3 trial was standardized as to potency and characterization could provide support for approval of the pediatric indication given the absence of any approved therapies for children.
- 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.1,2 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.
- The Blood and Marrow Transplant Clinical Trials Network (BMT CTN) in the United States, a body that is funded by the National Institutes of Health (NIH) and is responsible for approximately 80% of all US allogeneic BMTs, has agreed to develop and execute a pivotal trial of RYONCIL in adults who are refractory to both corticosteroids and a second line agent such as ruxolitinib.
- Mesoblast will provide the Phase 3 trial protocol to FDA ahead of the upcoming meeting this quarter.
Cardiovascular – Program in Pediatric Congenital Heart Disease, Adult Phase 3 Program in Chronic Heart Failure with Reduced Ejection Fraction (HFrEF)
- This month FDA granted Mesoblast a Rare Pediatric Disease (RPD) Designation for Revascor® (rexlemestrocel-L) following submission of results from the randomized controlled trial in children with hypoplastic left heart syndrome (HLHS), a potentially life-threatening congenital heart condition.
- The results from the blinded, randomized, placebo-controlled prospective trial of REVASCOR conducted in the United States in children with HLHS were published in the December 2023 issue of the peer reviewed the Journal of Thoracic and Cardiovascular Surgery Open (JTCVS Open).3 In the HLHS trial, a single intramyocardial administration of REVASCOR at the time of staged surgery resulted in the desired outcome of significantly increased left ventricular (LV) end-systolic and end-diastolic volumes over 12 months compared with controls as measured by 3D echocardiography, (p=0.009 & p=0.020 respectively), facilitating life-saving biventricular surgery to be achievable in 100% of REVASCOR-treated children vs only 57% of controls.
- RPD Designation is granted by the FDA for certain serious or life-threatening diseases which primarily affect children.
- On FDA approval of a Biologics Licensing Application (BLA) for REVASCOR for the treatment of HLHS, Mesoblast may be eligible to receive a Priority Review Voucher (PRV) that can be redeemed for any subsequent marketing application or may be sold or transferred to a third party.
- REVASCOR® has shown the potential to reduce major adverse cardiac events such as heart attack and cardiovascular death in high risk patients with HFrRF. Mesoblast will meet with FDA this quarter to address potential pathways to approval for REVASCOR under our Regenerative Medicine Advanced Therapies (RMAT) designation.
Chronic Low Back Pain – Phase 3 Program
- Second Phase 3 trial underway for rexlemestrocel-L in the treatment of chronic low back pain (CLBP) due to inflammatory disc degeneration– a condition affecting at least seven million people in both the US and Europe alone.
- Phase 3 trial activities, investigators and trial sites across the United States are being managed by a leading contract research organisation (CRO) specializing in pain trials.
- The trial’s primary endpoint is reduction in pain at 12 months after a single intra-discal injection of rexlemestrocel-L.
- First Phase 3 trial showed significant pain reduction at 12 and 24 months, and confirmation of these results will provide FDA with a clinical data package that may result in product approval.
Strengthened Balance Sheet
Institutional Placement and Entitlement Offer completed raising A$60.3 million at an issue price of A$0.30 per share, including the completed retail component and top-up facility of the Entitlement Offer. The offer was well supported by existing shareholders, new institutional investors, and by Directors. Mesoblast Founder and Chief Executive Officer, Dr Silviu Itescu strongly supported the Entitlement Offer subscribing for A$3.0 million.
Cash balance at the end of the quarter was A$113.4 million (US$77.6 million).4
Cost containment strategy on-track
Cost containment strategies and payroll reductions have been enacted by management and the Board enabling continuation of Phase 3 programs for SR-aGVHD and CLBP in the quarter whilst still achieving reductions in net operating cash spend:
- Net operating cash spend of US$12.3 million for the quarter.
- 25% reduction in net operating cash spend from the comparative quarter in FY2023.
- 32% reduction in net operating cash spend from the comparative quarter in FY2022.
- On target to achieve a 23% ($15m) reduction in net operating spend in FY2024 compared to FY2023 which will be partially offset by investment in our Phase 3 programs for SR-aGVHD and CLBP.
We will maintain our focus on cutting costs and preserving cash in the remainder of the year whilst complimenting that with initiatives currently underway to increase cash inflows which would by design enable us to prudently invest in our Phase 3 programs for SR-aGVHD and CLBP. In this regard, we are working on corporate initiatives to strengthen our balance sheet, including royalty monetization and strategic partnerships to both access existing commercial distribution channels and supplement costs of development.
Revenue from royalties on sales of TEMCELL® HS Inj.5 sold in Japan by our licensee for the quarter were US$1.5 million. On a constant currency basis, royalties on sales were US$3.3 million for the six-month period ended December 31, 2023, a growth of 3% compared with US$3.2 million in the comparative period in FY2023.6
Fees to Non-Executive Directors were nil, consulting payments to Non-Executive Directors were US$144,700 and salary payments to full-time Executive Directors were US$226,288, detailed in Item 6 of the Appendix 4C cash flow report for the quarter.7 From 1 August 2023, Non-Executive directors have voluntarily deferred 50% cash payment of their director fees and agreed to receive the remaining 50% of their fees in equity-based incentives and Executive Directors (our Chief Executive and Chief Medical Officers) have voluntarily reduced their base salaries for FY24 by 30% in lieu of accepting equity-based incentives.
A copy of the Appendix 4C – Quarterly Cash Flow Report for the second quarter FY2024 is available on the investor page of the company’s website www.mesoblast.com.
Mesoblast 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
- 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.
- Wittenberg RE, Gauvreau K, Leighton J, Moleon-Shea M, Borow KM, Marx GR, Emani SM, Prospective randomized controlled trial of the safety and feasibility of a novel mesenchymal precursor cell therapy in hypoplastic left heart syndrome, JTCVS Open Volume 16, Dec 2023, doi: https://doi.org/10.1016/j.xjon.2023.09.031
- Using Reserve Bank of Australia (RBA) published exchange rate from December 31, 2023 of 1A$:0.6840US$.
- 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:133.70 Yen for the 6 months ended December 31, 2022 to 1USD:142.82 Yen for the 6 months ended December, 2023.
- As required by ASX listing rule 4.7 and reported in Item 6 of the Appendix 4C, reported are the aggregated total payments to related parties being Executive Directors and Non-Executive Directors.
This 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, 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
|T: +61 3 9639 6036
|E: [email protected]
|T: +61 419 880 486
|E: [email protected]