Mesoblast Limited (MSB) Earnings Call Transcript & Summary

Hello. And welcome to a corporate update from Mesoblast. An announcement has been lodged with the ASX and is also available on the Home and Investor pages at www.mesoblast.com. [Operator Instructions] Before we begin, let me remind you that during today's conference call, the company will be making forward-looking statements that represent the company's intentions, expectations or beliefs concerning future events. These forward-looking statements are qualified by important factors set forth in today's announcement and the company's filings with the SEC, which could cause actual results to differ materially from those and such forward-looking statements. In addition, any forward-looking statements represent the company's views only as of the date of this webcast and should not be relied upon as representing the company's views of any subsequent date. The company specifically disclaims any obligations to update such statements. With that, I would like to hand the conference over to Dr. Silviu Itescu, Chief Executive of Mesoblast. Please go ahead.

Thank you, and thank you for joining us today. With me today is Dr. Fred Grossman, our Chief Medical Officer. The U.S. FDA's Oncologic Drugs Advisory Committee, or ODAC, convened today to review data supporting our Biologics License Application, or BLA, filing for approval of RYONCIL for the treatment of steroid-refractory acute graft versus host disease in children. This is a devastating, often fatal disease. We welcome the advisory committee's positive vote of confidence, 9:1, that the available data support the efficacy of remestemcel in pediatric patients with steroid-refractory acute graft versus host disease. We will continue to be in close contact with the FDA in the lead up to the PDUFA action date of September 30. In the meantime, we will continue with our commercial launch plans for RYONCIL in the United States. We would like to thank patients, advocacy groups, physicians, researchers and others who expressed overwhelming support for RYONCIL through their written and live comments at the advisory committee meeting. In particular, we are very appreciative of Dr. Joanne Kurtzberg for taking time away from her patients at Duke University Medical Center and acknowledge her unswerving commitment to securing the best treatment for children suffering from this terrible disease. We also recognize the contributions of the hundreds of patients and their families who participated in the clinical trials of RYONCIL as well as the many professionals who contributed to these results. And finally, I want to acknowledge our terrific team here at Mesoblast, who are dedicated to advancing our allogeneic cellular medicines to potentially deliver safe and effective therapies to patients with significant unmet medical needs. I'd like to now ask Dr. Grossman to provide you with his perspective of the highlights from the ODAC panel meeting.

Thank you, Dr. Itescu. I think it's clear that there is an urgent need in children with steroid-refractory acute GVHD, which has a very high mortality rate, with no treatment available for children under 12 years of age, and the treatments that are available for those older have high toxicity. The 9:1 vote today by the panel clearly showed that they agreed with the -- that the pivotal trial showed efficacy. There was no -- there were no safety issues. And as Dr. Itescu mentioned, we look forward to further discussions with the FDA as we approach our PDUFA date, September 30.

Great. Thank you. I'd like to also provide a bit of an update on where we are with our program. We have built a targeted commercial sales force that's in preparation for potential launch of the product. It's led by Eric Strati, our Head of Commercial, and he will be working very closely with our new Chief Commercial Officer, Dagmar Bjorkeson, who's just joined and has extensive experience from her pharmaceutical history with respect to multiple successful launches. We, in addition, have made substantial investment in manufacturing, and we have built out inventory that is -- has put us in good stead that we're able to meet the expected commercial targets should the product be approved by the FDA. I think with that as a backdrop, we would like to open this to Q&A, and we would welcome questions from the folks on this line. Thank you.

The first question today comes from Louise Chen from Cantor.

Congratulations on the positive AdCom vote. So based on the comments made by the AdCom, are you expecting approval on the PDUFA date or potentially even earlier? And do you think this label will include adults or just children?

Well it's very -- it's a little bit early to say, but we're working very closely with the FDA. This is a process that's been ongoing since early this year. There have been many interactions, and we're really heading towards the final stretch. I think it was very important that the FDA received the advisory committee's confidence today, and we expect that we'll be working closely in order to complete the remaining areas of documentation, et cetera. I think it's also too early to be able to confidently state what specifically the label is going to say, but we are certainly committed to working with the key opinion leaders and with the FDA in seeking to have further data from an adult program to broaden the label from beyond pediatrics to those adults with severe graft versus host disease, where outcomes continue to require better therapies. I might ask Dr. Grossman to add his perspectives on further expansion into the adult market.

Yes. That's clearly a significant unmet need because, as Dr. Itescu mentioned, the current agents have significant AEs and toxicities associated with them, and they don't do very well even the one approved treatment, in those with the most severe steroid-refractory acute GVHD. So we already have in place a plan to move forward with our adult protocol, and that should be underway in the very near future.

The next question comes from Tanushree Jain from Bell Potter Securities.

Congratulations to the entire team. I thought it was a great night, and all your presentations were really, really on the mark. Now I have a couple of quick questions. One is around a lot of the discussion in the panel, I think, especially in the afternoon session, was around how ethical or not practical it is to technically do a randomized controlled trial in -- especially in children. So I think, thinking about that, if you were to do a randomized controlled trial in adults, can you maybe just talk about what -- whether it would be a superiority trial or a non-inferiority trial with standard of care? And do you foresee that there will be recruitment problems given what was heavily discussed in the panel?

Dr. Grossman?

Yes. No, I don't see any recruitment problems whatsoever. We held a significant advisory board a few weeks ago with the top transplant oncologists in the United States and globally. There was a lot of enthusiasm for our trial, and we discussed in detail the design moving forward. And they're embracing the study, and they think that it'll recruit well. And we look forward to continuing to work with them and completing the design and moving forward. The study is clearly going to address areas of unmet medical need and will be very important as we move forward in extending the life cycle of RYONCIL.

Dr. Grossman, I think just as a follow-up on that on my question around what standard of care would you be using. I mean now we've got ruxolitinib in the U.S. in this adult patient population, but in their REACH2 trial, they obviously used unapproved -- normally used 8 or 9 different products. So what do you think is likely to be your choice of standard of care?

It's likely that it's just going to be the best available standard -- the best available treatment, and we'll probably be running a head to head against that.

[Operator Instructions] The next question comes from Jeffrey Cohen from Ladenburg Thalmann.

[ I think you gave ] a tremendous amount of data. A couple of questions on the voting, right? I saw on the screen 8:2 with Hinrichs and Pearl thumbs down. What was the one flip or the one change? And I would have assumed that Dr. Bunin and Dr. Walters would have been the 2 that would be leaning more negative than the others. Any comments there?

The only negative was Hinrichs. Everybody else voted positively.

Okay. Okay. Got it. And then could you walk us through or talk us through how U.S. commercial efforts may roll out as far as your launch plans, assuming that you do get the approval in the coming 6 weeks as far as FTEs, number of centers and plans in hand? Can you talk about that a little bit for us?

Sure. So we expect to have a team of about 20 people, that sort of size, on the ground to cover 3 major regions, East Coast, West Coast and the mid, just remembering that about 50% of pediatric transplants are done in the 15 major sites across the U.S. So we think that this team is appropriately sized and empowered to work with the payers, with the key opinion leaders and with the centers. And so that team is onboard. The leadership is onboard, and I think we're very excited to be marching forward.

Okay. And then lastly for me, could you talk a little bit about the payer environment? Is it going to be 1 by 1 by 1 petitions to each of the carriers for each of the patients? Or is this something where some pricing will fall under the payer DRGs?

No, I think this will be outside of the DRGs, but the details of that remain to be discussed and negotiated. I think several payers already have us on their list. But we'll have more to say about that in the short term with our leadership team that's leading the commercial launch.

The next question comes from Swayampakula from H.C. Wainwright.

Congratulations on the successful AdCom meeting yesterday.

Thank you. Thank you.

A quick question on the critical quality attributes, which was the subject of this morning's session. Certainly, there's a lot of discussion around it by the FDA, by the panel, but in the end, nobody could come up with anything specific for you to do. But at the same time, you have RYONCIL in additional indications, including the COVID-19-associated ARDS. So how do you and your team approach this going forward so that you don't need to be discussing something like this at a similar topic in terms of talking about quality and the CMC if that's not normally an issue that they see? How do you see yourself handling that for future indications?

Sure. Well I think the most important thing to consider here is that this is a single product, and this product has critical quality attributes that are linked to both its mechanism of action, its potency and its reproducibility through the manufacturing process. And therefore, linking those things together means that we are able to understand where best to use the product in what kind of disease states or kind of patient populations. And we spoke a lot about the 2 key attributes of the product. One is the -- at the front end, meaning the sensor system. TNFR1 as a receptor for TNF-alpha has been shown through our long development process -- program to be a very, very good quantitative measurement of the potency and the quality of the product and more importantly, to be correlated with survival outcome in patients with severe inflammatory condition associated with the cytokine storm and acute graft versus host disease. And so we've learned that, over our development, that threshold levels and high levels of TNF receptor allow the cell to sense high levels of TNF-alpha and then become activated to secrete multiple factors that serve to switch off TNF production by those cells that make it and switch off the inflamed microenvironment when the cell is in the middle of the cytokine storm. And that has broad implications beyond graft versus host disease. That is part and parcel of the reason that we actually moved into evaluating remestemcel for COVID-19 inflammatory lung disease where, again, the major mediator of disease pathology is the inflamed activated macrophage that's in the lung that is secreting high levels of TNF and other cytokines that cause the destruction -- bystander destruction of tissue. And so we used exactly the rationale of understanding how our cells respond to the inflammatory microenvironment in the cytokine storm and then is able to respond by modulating that storm. That was the rationale for why we went into the disease. We performed a pilot study in the initial 12 patients under compassionate care at Mount Sinai Hospital in New York. And on the basis of very exciting pilot data, we moved into a randomized controlled Phase III trial that is currently ongoing. All of that is underpinned by a robust manufacturing process and understanding of the mechanism of action and the critical quality attributes that underpin the product. I think that was really evident in the discussion this morning where, really, the FDA wanted to just have an open discussion about what additional attributes could we look at, and we were quite open and beyond the attributes that we've already defined in large patient-based population studies. We're quite open to continuing to evaluate other markers and other bioassays as we refine and optimize our product manufacturing. We will be working closely with the FDA and their advisers in doing that. But fundamentally, there was agreement at the advisory panel that the approach taken by us makes a lot of sense.

At this time, we're showing no further questions. I'll hand the conference back to Dr. Itescu for closing remarks.

Thank you. Today, Mesoblast achieved a very important step in potentially bringing a product to help children suffering from the most severe form of this devastating disease, acute graft versus host disease. There are no approved therapies for this disease in children under 12 in the U.S., and we firmly believe that RYONCIL is positioned to be the first approved treatment for these patients. Thank you very much.

Thank you. That does conclude our conference for today. Thank you for your participation. You may now disconnect.