Mesoblast Limited (MSB) Earnings Call Transcript & Summary

Thank you, everybody. Joining me today is Dr. Eric Rose, Chief Medical Officer; and Geraldine Storton, our Head of Quality and Regulatory Affairs. Today, we received a complete response from the U.S. FDA for BLA steroid-refractory acute graft versus host disease in children. The FDA has informed us that they require more data to support marketing approval. To obtain the data that is required, Mesoblast will conduct a targeted -- a very targeted controlled study in the highest-risk adults with the greatest mortality. This adult study is in line with our overall commercial strategy, which has envisioned a sequenced progression from pediatric to the adult steroid-refractory GVHD indication. It is important to note that adults comprise the vast majority of patients with this devastating disease, 80% of the GVHD market. Importantly, FDA's inspection of our manufacturing process resulted in no observed concerns. The agency raised no safety issues across more than 1,300 patients who've received remestemcel to date and acknowledged that improvements to our potency assay are in place. We remain steadfast in making remestemcel available to both children and adults suffering from this devastating disease and have received substantial clarity in how to bring this much needed product to these patients. We intend to enroll adult patients at the highest mortality risk with steroid-refractory GVHD, where existing therapy has not improved outcomes and where 90-day survival remains as low as 20% to 30%. Mesoblast has already generated pilot data through our emergency IND program in adults, showing a survival benefit with remestemcel in this target population. In line with our overall commercial strategy to expand into the adult GVHD indication, Mesoblast has already been working with leading investigators across the United States, multiple academic centers of excellence, to establish the adult follow-on study protocol, potentially utilizing established clinical trials networks and their existing infrastructure. The company will seek alignment with the FDA on the trial design for the adult study at a Type A meeting within the next 45 days. Important to note that prior to the resubmission, FDA guided Mesoblast to resolve outstanding chemistry manufacturing and control, CMC, issues before initiating any clinical trial. FDA completed the prelicense inspection of the manufacturing facility during this review and did not issue any Form 483 and found no objectionable conditions. In addition, FDA acknowledged in the resubmission review the changes implemented appear to have improved assay performance relative to the original version of potency assay used in the pediatric Phase III trial. Important to remember that Mesoblast has successfully met the prespecified primary endpoint prospectively agreed with FDA of a single-arm Phase III trial in 54 children with steroid-refractory GVHD. While the Oncologic Drugs Advisory Committee, ODAC, of FDA in August 2020 voted 9:1 in favor of remestemcel's efficacy in a pediatric patient population, in September of that year, FDA recommended that further steps be undertaken to obtain approval. The BLA resubmission earlier this year included long-term follow-up data from the Phase III trial by the Center for International Blood and Bone Marrow Transplant Research, CIBMTR, which showed that 50% of children survived through more than 4 years of follow-up for remestemcel from the Phase III trial for whom, given the severity of the disease, less than 20% survival at 2 years was expected. The resubmission also included a post-hoc propensity match study showing 6-month survival was 67% with remestemcel in the highest-risk children versus 10% with other unapproved therapies. These pediatric data provide further support and provide confidence in the use of remestemcel in the proposed study in high-risk adults with steroid-refractory GVHD. On that note, I'd like to open it up now for Q&A, please.

[Operator Instructions] Your first question comes from Louise Chen from Cantor.

So I wanted to ask you a few questions here on the adult trial. How many patients are you planning to enroll? How long do you think it will take? How much will it cost? And then when will you have a sort of more definitive next steps on the rest of the pipeline?

Sure. So as I mentioned earlier, we will be having a Type A meeting with the FDA over the next 45 days. And the precise protocol design, number of patients, and the primary endpoints, it will be discussed at that meeting. We're targeting the most serious patients who are refractory to all existing drugs or any approved drugs. And for these adult patients, there is nothing approved. And the mortality is as high as 70% to 80% within a 2- to 3-month period. So we already have data from our EIND program that shows that we have a substantial survival benefit in these very patients. So we have the approach statistically to predict the delta, the difference between treated and expected outcomes. We expect that this study will be a relatively small and relatively easy to enroll. But the exact numbers, I'll come back to you with. In terms of funding, we are working with our academic partners across established GVHD bone marrow transplant networks. And so we expect this to be funded very much as an academic study. We already have inventory that is able to be used, and more detail around this, I think, will be forthcoming in the next 45 days plus.

Your next question comes from Edward Tenthoff from Piper Sandler.

I'm a little confused why you have to do a study in adults if this BLA submission was for children. Would a future potential approval be for adult and kids? Would it be just for adults? Any clarity that you have on that?

No. FDA wanted to see more data to confirm the results that we've outlined in the pediatric population. They have given us the choice whether we want to go into an adult study or another pediatric study. And the objective, of course, is to do an adult study in very sick patients that would provide us approval in both adults and children.

Yes. That makes sense. And then would this be a placebo-controlled study? Or what would be the control? Or would it be single-arm?

Well, there's no point in having placebo. These are patients who failed all available therapies. So that's the discussion to have with the FDA, what is the appropriate control for the treatment arm.

Your next question comes from Sami Corwin from William Blair.

Did the FDA provide any color as to why the long-term data from the pediatric cohort wasn't sufficient or why the comparison to the MAGIC cohort wasn't sufficient? And then I guess what are the implications now for your other pipeline programs, such as your chronic lower back pain program?

FDA would like to see controlled data to confirm the observations both in the highest-risk patients with high MAP scores in children as well as the long-term survival data. So I think it's clear that they would like additional data to get comfort that the product continues to demonstrate survival benefit in the hardest-to-treat, highest-risk patients. And obviously, we have to ensure that we are substantially financially robust in order to ensure that we focus on the adult GVHD opportunity that is near term before us. And we will have to sequence our other programs appropriately and manage our resources appropriately. And we're doing our internal reviews as we speak. But it's fair to say that the adult program remains our #1 priority after the adult GVHD program.

Your next question comes from David Stanton from Jefferies.

You've talked to the adult trial, and you said that it's a relatively small and might be easy to enroll. I mean given you've got a 40 days -- 45 days before you start getting feedback on that trial, I mean when might we start to -- when might the trial start? And approximately how long will the trial take? Is it an 18-month trail to a 2-year trial? Can you sort of give us some color around that, please? That's my first question.

I think it was substantially shorter than what you're suggesting, but I think to be more precise, I need to come back to you as soon as I've had the meeting with the agency. We're talking about patients who, having failed all available therapies, have a mortality of 70%, 80% at 90 days. So these patients are not hard to enroll because there aren't alternatives. And it's really dependent on how many sites we bring up to speed as rapidly as possible across a network that could potentially have as many as 40 sites in and across the U.S.

Understood. And I just want to confirm in the answer to a previous question. So you had feedback from the regulatory authorities that an adult trial could lead to an approval, if it's positive in both adults and children, please?

Yes. That's why we would be doing an adult trial.

The next question comes from John Hester from Bell Potter.

Yes. So I just want to go back to the October 2020 complete response letter. I mean in that letter, the FDA had required you to do -- or Mesoblast to do an additional study. And it's my understanding, it was market understanding that an additional study has since been negotiated was off the table. So what's changed to the FDA that they now require this additional study?

That's a very good question. We went through a dispute resolution process where the outcome of that was that the potency assays needed to be improved. And on completion of the assay development work, the pediatric data would be reconsidered in totality. That was the whole basis of the resubmission. The improvement in the potency assays has been acknowledged. The manufacturing process has been reviewed with no issues raised. And we had fully anticipated that the additional clinical data, including long-term survival benefit would be sufficient to allow a sequenced approach to the market with the product being immediately made available to children who have nothing approved and continue to have a very high mortality whilst we moved forward with an adult program. At all times, we had planned to initiate, around this time, an adult program with the improved potency and with manufacturing being vetted effectively. In fact, FDA had told us that we couldn't begin a further trial until we have those things signed off. So the review process has allowed us to have both manufacturing through the inspection and the potency assays in alignment with the agency. And we're now able to move into another trial, but we had hoped, of course, that the pediatric population would have the product made available earlier than the adult population.

Yes. Well, it just seems that the FDA keeps moving the goalpost here, which is incredibly hard to -- for you, our own analysts to deal with, I suppose, but it's frustrating. In terms of other stuff, are you going to allow the Expanded Access Program for pediatrics to continue in the U.S.? Or do you plan on curtailing that?

That remains an item to discuss with the agency when we meet with them over the next 45 days. We still want to see whether we can get a product to children in a faster time frame than the completion of the adult trial. And I think those discussions will continue.

Is that a piece of leverage that you have with the FDA?

Let's see how those discussions go when we meet. But we clearly would like to make this product available as quickly as possible for children, and that should not be impacted by the adult trial.

Yes. And finally, you've got $71.3 million of cash in the bank and that sort of plus or some undrawn debt...

Yes. So I think we were just disconnected. John, if you dial back in, please come back. Hello, operator?

The media participant has disconnected. There are no further questions at this time. That brings us to the end of today's call. I'll hand over to Dr. Itescu for closing remarks.

Thank you very much. I appreciate everybody coming on this call in such a short amount of time. And we look forward to updating the market shortly after we've had our next meeting and discussions with the FDA. Thank you, everybody.