Full Press Release Details
NEW YORK and MELBOURNE, Australia, Aug. 29, 2017 (GLOBE NEWSWIRE) -- Mesoblast Limited (Nasdaq:MESO) (ASX:MSB) today reported its consolidated financial results and operational highlights for the three months ended June 30, 2017 (fourth quarter of 2017) and year ended June 30, 2017 (FY2017).
The Company has just completed an oversubscribed institutional entitlement offer for a fully underwritten capital raise of approximately A$50.7 million (US$40.0 million). At June 30, 2017, the Company had cash reserves of US$45.8 million, and US$84.0 million on a pro-forma basis after adjusting for total net proceeds from the entitlement offer.
In FY2017, cost savings of US$20.7 million (28%) were delivered in comparison with the prior financial year. These savings enabled the Company to substantially offset the incremental costs of its Phase 3 clinical program in advanced chronic heart failure (CHF).
Mesoblast’s cash reserves will be used to achieve significant outcomes in FY18 for the Phase 2b/3 trials in end-stage CHF, acute graft versus host disease (aGVHD) and chronic low back pain (CLBP). These value inflection points will provide Mesoblast with multiple commercialization options going forward, including the potential for accelerated market entry.
Key Operational Highlights for FY17
Mesoblast has prioritized its resources on those product candidates that are in Phase 3 development and have the potential to address serious and life threatening conditions or impact the use of opioids, in line with the United States 21st Century Cures Act.
The release of clinical results from several important Phase 3 and Phase 2 clinical trials during the year provided further support of safety, efficacy and durability across multiple Mesoblast product candidates.
MPC-150-IM for cardiovascular disease in adults and children
In Mesoblast’s randomized, placebo-controlled Phase 3 trial, evaluating MPC-150-IM in moderate/severe advanced CHF, a successful pre-specified interim futility analysis of the efficacy endpoint was achieved in the first 270 patients in April 2017. The trial’s Independent Data Monitoring Committee formally recommended that the trial be continued as planned.
In this Phase 3 trial over 400 of the anticipated approximately 600 total patients have been enrolled to date.
A 159-patient randomized, placebo-controlled Phase 2b trial funded by the National Institutes of Health (NIH) and the Canadian Institutes for Health Research (CIHR) evaluating MPC-150-IM in end-stage heart failure patients with left ventricular assist devices (LVAD) neared completion of enrollment.
An additional Phase 2 externally funded 24-patient trial evaluating MPC-150-IM in children under the age of 5 with hypoplastic left heart syndrome (HLHS) undergoing corrective surgery was cleared by the FDA to commence at Boston Children’s Hospital.
MSC-100-IV for steroid refractory acute Graft Versus Host Disease in children
The United States Food and Drug Administration (FDA) granted a Fast Track designation for the use of MSC-100-IV to improve overall response rate in children with steroid refractory aGVHD.
The pre-specified interim futility analysis of the overall response primary endpoint of Mesoblast’s Phase 3 aGVHD trial was successful in November 2016.
MPC-06-ID for chronic low back pain in degenerative disc disease
Results from our 100-patient randomized, placebo-controlled Phase 2 trial in patients with chronic low back pain showed that a single injection of MPC-06-ID cells resulted in meaningful improvements in both pain and function that were durable for at least 36 months.
Alignment with the FDA regarding the Phase 3 program with confirmation that the trial’s primary endpoint is acceptable for product approval.
MPC-300-IV for biologic refractory rheumatoid arthritis
Mesoblast’s 48-patient randomized, placebo-controlled Phase 2 trial in patients with biologic refractory rheumatoid arthritis (RA) showed a dose-related effect on clinical outcomes, and that a single 2m/kg injection of Mesoblast’s MPC-300-IV cells resulted in the earliest and most sustained treatment responses through 39 weeks.
MPC-75-IA for prevention of radiographic and clinical features of knee osteoarthritis after traumatic injury
Results from the Phase 2a trial of MPC-75-IA for the prevention of radiographic and clinical features of knee osteoarthritis after traumatic injury were published in the peer-reviewed journal Arthritis Research & Therapy. The results showed that a single intra-articular injection of MPC-75-IA reduced cartilage loss and bone changes by six months, and improved pain and function for over two years, when compared to controls.
Mesoblast intends to pursue RMAT designation as outlined in the 21st Century Cures Act in the United States for a number of its product candidates. The designation allows for an expedited approval path for cellular medicines designated as regenerative advanced therapies, which may help shorten clinical development time, shorten timeframes to FDA approval, reduce costs of development and increase the prospect of near-term revenue
The Phase 2b trial using MPC-150-IM in 159 end-stage CHF patients with a LVAD is expected to complete enrollment in Q3 CY17
The top-line results are expected in Q1 CY18
The Phase 3 trial using MPC-150-IM in patients with Class II/III CHF is continuing to enrol through FY18, with full enrollment expected to occur in 2H CY18
The Phase 3 trial using MSC-100-IV in children with steroid refractory acute GVHD is expected to complete enrollment with top-line data readout expected in 2H CY17
The Phase 3 trial using MPC-06-ID in patients with CLBP is expected to complete enrollment in Q4 CY17
12-month results for the Phase 2 trial using MPC-300-IV in patients with biologic-refractory RA are expected in Q3 CY17
Potential corporate partnerships for a number of Mesoblast’s product candidates
Cost containment measures remain in force
Financial Highlights
At June 30, 2017, the Company had cash reserves of US$45.8 million, and US$84.0 million on a pro-forma basis after adjusting for proceeds from the entitlement offer.
The Company successfully achieved targeted cost savings of US$20-25 million for FY2017 as a result of its operational streamlining program as previously announced in August 2016. Cost savings of US$20.7 million (28%) were delivered from R&D product support costs, manufacturing, and management & administration for the year ended FY2017 in comparison with the prior financial year. For the fourth quarter of FY2017, the Company’s cost savings for these activities were US$4.2 million (24%) compared with the fourth quarter of FY2016.
These operational streamlining savings enabled the Company to re-allocate funds for the incremental costs of the MPC-150-IM CHF Phase 3 trial through to and beyond the successful interim futility analysis of the trial’s efficacy endpoint in early April 2017. The net result of the savings from the operational streamlining program, the incremental costs of the MPC-150-IM CHF Phase 3 trial, and reduction of cash inflows in operating activities led to total net operating cash flows increasing by US$7.5 million (9%) as compared with FY2016.
The Company intends to partner one or more of its four Tier 1 product candidates in order to increase cash reserves and further reduce cash burn.
As previously announced, Mesoblast retains an equity facility for up to A$120 million/US$90 million, to be used at its discretion over the next two years to provide additional funds as required.
MPC-150-IM is being developed for advanced and end-stage chronic heart failure (CHF) in New York Heart Association (NYHA) Class II/III and Class IV patients:
Advanced CHF in patients with New York Heart Association (NYHA) Class III/IV is a major unmet medical need due to the high rates of morbidity and mortality despite existing therapies.
Intramyocardial administration of MPCs in animal models of heart failure has resulted in improved cardiac function and attenuated pathological ventricular remodelling. These effects were attributable, at least in part, to MPC secretion of biomolecules that reduce damaging inflammation and stimulate reparative processes in the failing heart including new blood vessel formation, cardiac muscle cell survival, and reduction in tissue fibrosis.
MPC-150-IM is being evaluated in two ongoing randomized placebo-controlled Phase 2b/3 trials in patients with either severe or end-stage advanced CHF.
The mechanism of action (MOA) by which MPC-150-IM is thought to exert its effects in these patient populations is through immunomodulation and cardiac repair. Positive clinical signals supporting a common underlying MOA have been previously published in Phase 2 trials of Mesoblast’s allogeneic MPC therapy in moderate/severe and end-stage heart failure.
In Phase 2 results, a single injection of MPC-150-IM by catheter into the endo-myocardium of patients with moderate to advanced CHF prevented any HF-related hospitalizations or cardiac deaths over three years of follow-up.
Under the United States 21st Century Cures Act, MPC-150-IM may be eligible for regenerative medicine advanced therapy (RMAT) designation for treatment of advanced and/or end-stage CHF in adults and children. Such designation may facilitate accelerated approval pathways for this product candidate.
MPC-150-IM, injected by catheter into the endo-myocardium, is being evaluated in a Phase 3 trial targeting predominantly advanced CHF patients who have severe left ventricular systolic dysfunction. In April 2017, the pre-specified interim futility analysis of the efficacy endpoint was successful in the trial's first 270 patients. After notifying the Company of the interim analysis results, the trial’s Independent Data Monitoring Committee formally recommended the trial be continued as planned
More than 400 of the anticipated approximately 600 NYHA Class II/III CHF patients have been randomized to date
The trial’s primary efficacy endpoint is a comparison of recurrent non-fatal HF-related major adverse cardiac events (HF-MACE) between either MPC-treated patients or sham-treated controls
MPC-150-IM, injected directly into the epicardium, is being evaluated in a Phase 2b trial in patients with NYHA Class IV/end-stage heart failure who have received a LVAD. The study is being conducted in North America by a team of researchers within the NIH-funded Cardiothoracic Surgical Trials Network. The trial is also supported by the National Institute of Neurological Disorders and Stroke and the CIHR
The trial is evaluating the safety and efficacy of MPC-150-IM injected into the native heart muscle of end-stage CHF patients whose circulation is being supported by a LVAD
Given that high rates of mortality and recurrent hospitalizations continue to be seen in end-stage CHF patients even with LVAD implants, this trial has the potential to support an accelerated approval pathway for MPC-150-IM
The primary efficacy endpoint of the study is the number of temporary weans from LVAD tolerated over the 6 months post-randomization, indicating strengthening of the native heart muscle. Additional efficacy endpoints include patient survival, adverse events and rehospitalization rates over 12 months
Enrollment of this trial is expected to be completed shortly with top-line results for the trial’s primary endpoint expected in Q1 CY2018
MPC-150-IM has also been cleared by the FDA to be evaluated in a 24-patient trial combining MPCs with corrective heart surgery in children under the age of 5 with HLHS. The trial is sponsored and funded by the Boston Children’s Hospital, the pediatric teaching hospital of Harvard University, with support from Bulens and Capozzi Foundation and the Ethan Lindberg Foundation.
MSC-100-IV is being developed for Steroid-Refractory Acute Graft Versus Host Disease (aGVHD):
Currently there are no approved therapies for patients with aGVHD in the United States and off-label options have demonstrated mixed efficacy with high toxicity. As such, there is a significant need for an effective treatment with a favorable risk/benefit profile. We are developing our allogeneic mesenchymal stem cell (MSC) product candidate MSC-100-IV for children and adults with steroid-refractory aGVHD.
In Japan, our licensee JCR Pharmaceuticals Ltd. has already obtained regulatory approval and launched the MSC-based product TEMCELL® HS Inj. for the treatment of aGVHD in children and adults1.
In the United States, Canada and several European countries MSC-100-IV has been used for the treatment of aGVHD in children under an expanded access program. This program enrolled more than 240 patients suffering from aGVHD and MSC-100-IV was used either as front-line or as salvage therapy.
In line with guidance from the FDA, we are currently completing an open-label trial in up to 60 children with steroid-refractory aGVHD to evaluate MSC-100-IV as front-line therapy in these children.
This Phase 3 is expected to complete enrollment in 2H CY 2017.
The pre-specified interim futility analysis of the primary endpoint of the ongoing trial was successful in November 2016.
The FDA has granted a Fast Track designation for the use of MSC-100-IV to achieve improved overall response rate in children with steroid-refractory aGVHD. Fast Track designation has the potential to shorten the time to FDA approval of MSC-100-IV for this indication through priority review (shortened FDA review process from 10 to 6 months) and a streamlined rolling review process (completed modules of the Biologics License Application, BLA, can be submitted to FDA when available, instead of waiting for all to be completed and submitted together)
The product candidate's existing Orphan Indication designation may additionally lead to potential commercial benefits following FDA approval
Based on guidance from the FDA, Mesoblast believes that data from this Phase 3 trial may be sufficient for filing for accelerated conditional approval of MSC-100-IV in the United States.
Mesoblast plans to broaden the use of its technology platform with a Phase 3 trial in adult patients with high-risk steroid-refractory acute GVHD.
In December 2016, Mesoblast and Mallinckrodt Pharmaceuticals entered into an agreement to exclusively negotiate a commercial and development partnership for MSC-100-IV in the treatment of acute GVHD.
MPC-06-ID is being developed for chronic low back pain (CLBP) due to degenerative disc disease (DDD):
In 2016, over 7 million people in the United States alone were estimated to suffer from CLBP caused by DDD, of which 3.2 million patients have moderate disease. After failure of conservative measures (medication, injections, epidural steroid physical therapy, etc.), there is no treatment that prevents progression of disc degeneration, reduces pain and improves function over a sustained period of 6 to 12 months.
The United States 21st Century Cures Act includes a focus on reducing the growing opioid epidemic. In 2017 it is thought that more than 30,000 Americans will die as a result of opioid overdoses2. We believe that MPC-06-ID may have the potential to reduce and/or eliminate the need for the use of opioids in the treatment of this disease, and accordingly are evaluating the product in this light in our Phase 3 program.
The ongoing 360-patient Phase 3 trial for MPC-06-ID in patients with CLBP due to intervertebral disc degeneration is actively recruiting across U.S. and Australian sites with enrollment targeted to complete this year. The primary endpoint composite is a 50% reduction in the Visual Analog Scale (VAS) pain score and a 15-point reduction in the Oswestry disability index (ODI), with no additional intervention, at both 12 and 24 months.
The Phase 3 trial using MPC-06-ID in patients with CLBP is expected to complete enrollment Q4 CY17.
In line with FDA guidance, the Phase 3 trial’s 24-month primary endpoint composite is being analyzed using an intent to treat (ITT) population.
The 36-month analysis from March 2017 of the randomized, placebo-controlled, 100-patient Phase 2 trial of MPC-06-ID aimed to determine the proportion of patients who maintained treatment success beyond the 24-month primary evaluation. Key trial results using the ITT analysis were: 38% of the 6 million MPC group achieved the primary endpoint composite over 24 months compared with 10% of the saline group (p<0.05)
82% of the 6 million MPC group who achieved the primary endpoint composite over 24 months maintained treatment success using this composite endpoint at 36 months
86% of the 6 million MPC group who successfully met the pain responder criteria (50% pain reduction with no additional intervention at both 12 and 24 months) remained pain responders through 36 months
92% of the 6 million MPC group who met the functional responder criteria (15-point reduction in ODI and no additional intervention at both 12 and 24 months) remained functional responders through 36 months
there were no significant differences in measurements of safety between cell-treated patients and controls over 36 months
The 36-month Phase 2 trial results support the ongoing 360-patient Phase 3 trial of Mesoblast's product candidate MPC-06-ID for CLBP by reinforcing the rationale for MPC dose selection, use of saline control, and the trial's primary endpoint composite over 24 months. If similar clinical durability is seen in the Phase 3 program, it is anticipated such data will translate into meaningful health economic benefits including increased productivity that may support attractive product reimbursement.
In December 2016, Mesoblast and Mallinckrodt Pharmaceuticals entered into an agreement to exclusively negotiate a commercial and development partnership for MPC-06-ID in the treatment of CLBP.
MPC-300-IV is being developed for biologic refractory rheumatoid arthritis (RA):
Major advances in the treatment of RA using biologic agents have resulted in a $19 billion global market in 2016, predominantly Tumor Necrosis Factor (TNF)-inhibitors. Despite these advances, approximately one third of patients either do not respond sufficiently to TNF-inhibitors or other biologic agents, or cannot tolerate them due to infectious or other complications. In the United States, the anti-TNF refractory population is the fastest growing branded market segment, projected to increase by 8% annually and potentially higher with the expected market entry and greater availability of anti-TNF biosimilars.
Mesoblast’s Phase 2 trial recruited a total of 48 patients with active RA who were on a stable regimen of methotrexate and had an inadequate prior clinical response to at least one anti-TNF agent.
Results of a study were published in the peer-reviewed journal Stem Cell Research & Therapy in February 2017, showing that a single intravenous infusion of 150 million of the Company’s proprietary allogeneic “off-the-shelf” STRO-3 immunoselected MPCs significantly improved clinical disease severity, reduced joint cartilage erosions, and improved synovial inflammation and histopathology in a large animal model of early RA.
This study provides mechanistic and translational support for the clinical outcomes reported in the ongoing Phase 2 trial of MPC-300-IV for biologic refractory RA.
Results from this 48-patient placebo-controlled, randomized Phase 2 trial evaluating two dosing regimens against placebo in RA patients resistant to anti-TNF agents showed that single intravenous infusion of MPC-300-IV resulted in durable responses through nine months (39 weeks). All three cohorts (2m MPCs/KG; 1m/MPCs/KG and placebo) were well matched for disease activity and other demographics at baseline. The results showed that:
The safety profile over 39 weeks was comparable among the placebo and both MPC treatment groups, with no cell-related serious adverse events reported
Both MPC doses outperformed placebo at the week 39 follow-up in each of ACR20/50/70 responses, as well as by median ACR-N analysis
The 2 million MPC/kg dose showed the earliest and most sustained treatment responses in this Phase 2 trial in the period assessed
52-week results are expected in Q3 CY17.
Financial Results for the Three Months Ended June 30, 2017 (fourth quarter) (in U.S. Dollars)
The Company continued to execute its planned operational streamlining and re-prioritization of projects to offset the incremental costs of the MPC-150-IM Phase 3 program in CHF. Due to these measures, the Company had cost savings of $4.2 million (24%) for R&D product support costs, manufacturing, and management & administration for the fourth quarter of FY2017, compared with the fourth quarter of FY2016. This cost savings comprised: $6.6 million within manufacturing which was offset by non-cash increases of $1.0 million within R&D product support costs and $1.3 million within management & administration.
There was an improvement of $3.0 million (9%) in the loss before income tax for the fourth quarter of FY2017, compared with the fourth quarter of FY2016. This overall decrease in loss before income tax was primarily due to non-cash items that do not affect cash reserves.
The main items which impacted the loss before income tax movement were:
Revenues from sales of TEMCELL increased by $0.1 million in the fourth quarter of FY2017 compared with the fourth quarter of FY2016 and the Company also received its first sales milestone on sales of TEMCELL in the fourth quarter of FY2017. There was a non-cash decrease of $26.3 million in total revenues for the fourth quarter of FY2017 compared with the fourth quarter of FY2016, primarily due to a significant deferred revenue item of $22.5 million being recognized in FY2016 related to regaining control of the Company’s MPC-150-IM product.
Manufacturing expenses were $1.2 million for the fourth quarter of FY2017, compared with $7.7 million for the fourth quarter of FY2016, a decrease of $6.6 million primarily due to a reduction in manufacturing activity because sufficient quantities of clinical grade product were previously manufactured for ongoing clinical trials.
Research and Development: After absorbing the incremental R&D costs associated with the CHF program, total R&D costs were $15.9 million, an increase of $1.5 million versus the comparative quarter in FY2016.
Management and Administration expenses were $7.1 million for the fourth quarter of FY2017, compared with $5.8 million for the fourth quarter of FY2016, an increase of $1.3 million primarily due to a non-cash increase of $1.0 million in share-based payment expenses.
The overall decrease in loss before income tax also includes movements in other items which did not impact current cash reserves, such as: fair value remeasurement of contingent consideration, impairment of intangible assets and foreign exchange movements within other operating income and expenses. The net loss attributable to ordinary shareholders was $27.2 million, or 6.40 cents losses per share, for the fourth quarter of FY2017, compared with a net profit of $48.3 million, or 12.78 cents earnings per share, for the fourth quarter of FY2016.
Financial Results for the Year Ended June 30, 2017 (in U.S. Dollars)
The Company successfully achieved targeted savings of US$20-25 million for FY2017 as a result of its operational streamlining program as previously announced in August 2016. Cost savings of US$20.7 million (28%) were delivered from R&D product support costs, manufacturing, and management & administration for the year ended FY2017 in comparison with the prior financial year. For the fourth quarter of FY2017, the Company’s cost savings for these activities were US$4.2 million (24%) compared with the fourth quarter of FY2016. These cost savings comprised: $17.7 million in manufacturing, $3.5 million within R&D product support costs offset by a non-cash increase of $0.5 million within management & administration.
These operational streamlining savings enabled the Company to re-allocate funds for the incremental costs of the MPC-150-IM CHF Phase 3 trial through to and beyond the successful interim futility analysis of the trial’s efficacy endpoint in early April 2017. The net result of the savings from the operational streamlining program, the incremental costs of the MPC-150-IM CHF Phase 3 trial, and reduction of cash inflows in operating activities led to total net operating cashflows increasing by US$7.5 million (9%) as compared with FY2016.