Mesoblast shares tank after Novartis abandons a partnership for the biotech’s potential Covid-19 treatment

Silviu Itescu, Mesoblast CEO

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.

For a look at all End­points News coro­n­avirus sto­ries, check out our spe­cial news chan­nel.

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Rob Califf, the famous cardiologist from Duke University, is likely to return to the top of the FDA, this time under the Biden administration.

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SmartLabs, a company with labs in three different neighborhoods in the Boston area, will open a new research and manufacturing center that will be located in the heart of the South San Francisco biotech corridor. The site will support end-to-end drug development and include 500L manufacturing bioreactors that can support allogeneic and autologous cell therapies.

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Harpreet Singh, Immatics CEO (Credit: Allogeneic Cell Therapies Summit)

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