Mesoblast shares tank after Novartis abandons a partnership for the biotech's potential Covid-19 treatment
Novartis offered up $25 million in cash last November for the rights to Mesoblast’s potential cell therapy for Covid-19. But after a Phase III flunk, the Big Pharma’s now getting cold feet — and Mesoblast’s stock is suffering big time.
Mesoblast shares $MESO tanked more than 17% on Tuesday morning after announcing that Novartis has walked out on its partnership for remestemcel-L. And because the termination occurred before closing, Mesoblast missed out on upfront payments of $25 million cash and a $25 million equity investment.
The reason? Subpar data, according to Novartis.
“After assessing additional data, the totality of evidence from the Phase III trial is not sufficient to continue with the collaboration agreement. No safety concerns have been identified,” the company said in a statement to Endpoints News.
Novartis was drawn to remestemcel-L after an open-label compassionate use program suggested an 83% survival rate in patients on ventilators who were treated with the experimental cell therapy last March. Then in December, Mesoblast cut a 300-person Phase III trial short after a data safety monitoring board concluded the therapy was “not likely” to reach its primary endpoint, a 43% reduction in mortality at 30 days.
That October, the FDA issued a complete response letter for the same candidate in a different indication, pediatric acute graft-versus-host disease, over issues with trial design. Mesoblast had submitted its application on the basis of one single-arm, open-label study rather than a randomized trial, even though the drug demonstrated a statistically significant benefit in its primary endpoint against the historical control rate.
The company also suffered a miss for its second candidate, rexlemestrocel-L, in heart failure last December. While the experimental cell therapy did not significantly reduce hospitalizations over placebo in individuals with recurring heart failure, Mesoblast says the program managed to hit secondaries in mortality-rate reduction for earlier stages of the disease.
US investor group SurgCenter Development threw Mesoblast a lifeline in March, leading a $110 million private placement.
Despite the setbacks, Mesoblast still thinks there’s a path forward for remestemcel-L in acute respiratory distress syndrome due to Covid-19.
“The observed mortality reduction with remestemcel-L in patients aged under 65 in the completed COVID ARDS trial, despite having missed the primary endpoint, is considered by Mesoblast to be a sufficiently strong signal to support pursuing an emergency use authorization (EUA), the most direct path to market,” the company said in a statement.
Mesoblast was unavailable for comment as of press time, but Endpoints will update the story as it develops. The company said in a statement that it’s preparing to initiate another Phase III trial that may support an EUA in Covid-associated ARDS.
“Variants including Omicron present a growing threat due to increased infectivity and immune evasion from vaccines and monoclonal antibodies, increasing the urgent need for therapeutics to prevent the likely high mortality of those progressing to ICU and ARDS,” the company said.
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