Mesoblast Shares Drop as FDA Rejects Remestemcel-L for Graft Versus Host Treatment
Mesoblast a biotechnology company investigating how to use stem cells for therapeutics, announced its flagship treatment, remestemcel-L, has suffered a regulatory setback after the US Food and Drug Administration (FDA) requested further evidence of its effectiveness before approving. While the Oncologic Drugs Advisory Committee (ODAC) of the FDA voted 9 to 1 in August that the available data backed the efficacy of the treatment in patients, the FDA has recommended that Mesoblast conduct "at least" one additional randomized, controlled study in adults and/or children to provide further evidence of its effectiveness.
Before FDA decision, investors, and analysts had expressed significant confidence that the product would be approved for use against acute graft-versus-host disease in children, a severe immune reaction in children after a bone marrow transplant. However, the "complete response letter" by the FDA, which enlists the additional steps Mesoblast must follow before approval, has cast fresh doubts over the future of remestemcel-L. Consequently, Mesoblast's shares, which went into a trading halt on Thursday in anticipation of the regulatory decision, opened 44 percent weaker at $2.87 after the ruling.
Mesoblast, valued at $1.9 billion, has been making several attempts to get approval for remestemcel-L in the US market over the last decade. It is also trialing the same product as a possible treatment for coronavirus patients experiencing severe respiratory difficulty. The potential of the coronavirus treatment has sent shares rallying in the last few months. In April, Mesoblast shares were valued at $1.46 but were at $5.08 before entering into the trading halt this week.
CEO Silviu Itescu said he believed the demand for more data would delay the firm's planned launch of the product "somewhere in the order of 3 to 5 months."
"It would have been great if they had simply took the advice of their panel and given immediate unrestricted approval. Short of that, this is the way these things evolve," he said.
Mesoblast insists it would request a 'Type A' meeting with the FDA to discuss the possibility of having an accelerated approval process with the condition of a post-approval study. If the request is approved, the meeting is expected to take place in 30 days.
Mr. Itescu said physicians are usually reluctant to enroll children in randomized studies of trial drugs.
"It is really not feasible to do a randomized control study in children," he said.
He reiterated that Mesoblast is working on further research options for remestemcel-L in adult populations, but not another trial for pediatric patients. When quizzed about the drop in the company's share price, he said he was not bothered about the drop.
"It doesn't matter. We are marching forward, and there is no question on safety here."