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Mesoblast Reports 2019 Full Year ResultsNEW YORK and MELBOURNE, Australia, Aug. 29, 2019 (GLOBE NEWSWIRE) -- Mesoblast Limited (Nasdaq: MESO; ASX: MSB) today reported strong operational progress and financial highlights for the fourth quarter and full-year ended June 30, 2019 (FY2019). Mesoblast Chief Executive Dr Silviu Itescu stated: “The Company is well positioned to deliver substantial shareholder value in the coming year. Our expenditure over the 2019 financial year has been specifically targeted at advancing our lead cell therapy candidates towards commercialization. We are excited about the planned readouts of our major Phase 3 trials in chronic heart failure and low back pain, and are also especially pleased with the growth in revenues on graft versus host disease (GVHD) product sales in Japan as we progress the United States Food and Drug Administration (FDA) filing process to seek approval of our GVHD product in the United States market.” Continued Growth in Revenues from Japan Royalties The Company is pleased to report continued growth in revenues from royalties on sales of TEMCELL® HS. Inj.1 in Japan for steroid-refractory acute graft versus host disease (aGVHD) by Mesoblast licensee JCR Pharmaceuticals Co. Ltd. Revenues from royalties on TEMCELL sales increased by 37% to US$5.0 million for the fiscal year. In the most recent quarter, revenues from royalties increased by 54% to US$1.7 million. Total revenue was stable at US$16.7 million in FY2019 compared with US$17.3 million in FY2018. Capital Strategy Cash on hand was US$50.4 million (A$71.9 million) at June 30, 2019. In addition, Mesoblast may have access to additional sources of capital, as follows:
Graft Versus Host Disease There are more than 30,000 allogeneic bone marrow transplants performed annually worldwide3, primarily in patients being treated for blood cancers. The most severe forms of the disease, Grades C/D or III/IV, are frequently refractory to steroid therapy and associated with mortality rates as high as 90%4,5. There are no approved therapies for aGVHD in the United States for children under 12. In Mesoblast’s Phase 3 trial of 55 children with aGVHD - 89% of whom had Grade C/D disease - treatment with remestemcel-L resulted in a six-month survival of 69%. In addition, achievement of an Overall Response at Day 28, which occurred in 69% of patients, predicted highest survival at Day 100 and Day 180, which was 85% and 79%, respectively. The trial successfully met its primary endpoint of increased Day 28 Overall Response compared with a protocol-defined historical control rate of 45% (p=0.0003). These data are consistent with prior results from an Expanded Access Program in 241 children where remestemcel-L was used as salvage therapy after failure of steroids and other agents. Remestemcel-L is administered to patients in a series of intravenous infusions. Remestemcel-L has demonstrated immunomodulatory properties to counteract the inflammatory processes that are implicated in aGVHD by down-regulating the production of pro-inflammatory cytokines, increasing production of anti-inflammatory cytokines, and enabling recruitment of naturally occurring anti-inflammatory cells to involved tissues. Potential United States Market for Remestemcel-L The product adoption and reimbursement seen in the Japan GVHD market for TEMCELL informs Mesoblast’s United States commercial strategy for remestemcel-L in aGVHD. The Company believes that the United States addressable market opportunity for remestemcel-L in aGVHD in children and adults is approximately eight times larger than Japan given differences in population size, incidence of aGVHD, and relative pharmacoeconomics6,7,8,9. Mesoblast is preparing for potential product launch in the United States of remestemcel-L for aGVHD in children. Health economics and outcomes research data presented by Mesoblast at the 24th European Hematology Association Congress indicated that pediatric aGVHD may result in significant deterioration in quality of life and additional direct healthcare costs of an average of up to US$500,000 per patient. This represents a significant commercial opportunity for Mesoblast’s first potential product launch in the United States. Filing for FDA approval The rolling Biologics License Application (BLA) submission to the FDA is underway and we expect to complete the filing in CY2019. Remestemcel-L has received Fast Track designation for aGVHD and under this designation Mesoblast can request a priority review once its BLA filing is accepted by the FDA. Commercial Activities for Potential Launch in United States In line with our expected timelines for potential United States launch of remestemcel-L, Mesoblast has increased expenditure on commercial manufacturing activities and commercial team ramp up in parallel with its FDA filing activities. Life Cycle Strategy for Remestemcel-L Mesoblast intends to expand its clinical program into the adult aGVHD segment. In addition, an investigator-initiated study evaluating remestemcel-L in children is planned in the United States for chronic GVHD. Mesoblast has the right to use all safety and efficacy data generated by JCR in Japan for TEMCELL to support its life cycle strategy for remestemcel-L in the United States and other major healthcare markets. JCR has filed to extend marketing approval for TEMCELL in wound healing in patients with Epidermolysis Bullosa, and is evaluating the use of TEMCELL for the treatment of newborns who lack sufficient blood supply and oxygen to the brain, a condition termed hypoxic ischemic encephalopathy. Chronic Heart Failure Advanced Heart Failure In the United States alone, of more than 6.5 million patients with chronic heart failure, there are more than 1.3 million patients with advanced stage of the disease who have high rates of morbidity and mortality despite maximal existing therapies10. This well-defined major treatment gap in these needy patients is a potential multi-billion dollar market opportunity for Mesoblast. The objective of treatment with Mesoblast’s allogeneic cell therapy Revascor is to prevent or delay further progression of heart failure or death. The American Heart Association journal Circulation Research11 recently published a Special Article highlighting the important potential clinical benefits of Revascor as an immunotherapy in patients with advanced chronic heart failure, stating that there is a biologic rationale for the use of Revascor in targeting cardiac inflammation in order to improve heart failure outcomes. In a post-hoc analysis of an earlier Phase 2 trial published in Circulation Research12, it was found that control patients with very enlarged hearts (left ventricular end systolic volume >100ml) deteriorated most rapidly, while similar patients receiving Revascor were protected against disease progression. These Phase 2 findings identified the patient population most likely to benefit from Revascor and guided the clinical trial design for the subsequent Phase 3 study. In Mesoblast’s randomized, placebo-controlled Phase 3 trial, enrollment of 566 patients has been completed across 55 centers in North America. The trial’s primary endpoint is reduction in heart failure-related hospital admissions, and the key secondary endpoint is reduction in terminal cardiac events. Revascor was successful in April 2017 in a pre-specified futility analysis of the Phase 3 trial’s primary efficacy endpoint in the first 270 patients enrolled in the trial. Currently, approximately 90% of events in this Phase 3 trial have been accrued and validated. Mesoblast expects the trial to accrue all the requisite primary events by the end of CY2019 with readouts planned during the first half of CY2020. End-stage Heart Failure In the United States, over 60,000 patients annually suffer from end-stage heart failure13, and despite optimal medical therapy these patients have a one-year mortality exceeding 50%14. The only options to increase survival in these patients are the use of heart transplants or left ventricular assist devices (LVADs). The use of LVADs is gaining momentum, with approximately 5,500 LVADs implanted annually in the United States15,16,17. In patients implanted with an LVAD, endothelial dysfunction and reduced blood flow caused by severe inflammation result in a compensatory abnormal network of blood vessels in the gastrointestinal tract, with potentially life-threatening bleeding in up to 40% of patients17,18. Mesoblast believes that Revascor may address the severe inflammation that leads to these major bleeding complications. In November 2018, United States National Institutes of Health investigators presented results of a 159-patient randomized placebo-controlled Phase 2 clinical trial at the American Heart Association Scientific Sessions. In the Phase 2 trial, a single intra-myocardial injection of Revascor at the time of LVAD implantation resulted in a 76% reduction in major GI bleeding events and 65% reduction in related hospitalizations in the overall patient population studied. In a post-hoc analysis in patients with an ischemic cause of their heart failure, these effects of Revascor were even greater, as well as an observed significant increase in the ability to wean off device support, suggesting strengthening of the native heart muscle. The FDA recently provided guidance on the pathway for marketing authorization of Revascor in this indication. Key outcomes were:
Revascor is being developed for these patients under existing FDA Regenerative Medicine Advanced Therapy (RMAT) and Orphan Drug designations. The confirmatory trial is planned to be conducted with the International Center for Health Outcomes Innovation Research (InCHOIR) at the Icahn School of Medicine at Mount Sinai in New York, in line with an existing Memorandum of Understanding. It is expected to be initiated before the end of CY2019. Approximately 3.2 million patients in the United States alone suffer from chronic low back pain due to moderate degenerative disc disease19. After failure of conservative measures (medication, injections, epidural steroid, physical therapy etc.), there is a need for treatments that both reduce pain and improve function over a sustained period of time. In post-hoc results from an earlier randomized, placebo-controlled Phase 2 trial in 100 patients, data showed that a single intra-discal injection of MPC-06-ID resulted in over a three-fold increase relative to saline controls in successfully achieving a composite endpoint consisting of 50% improvement in low back pain and 15 point improvement in function at both 12 and 24 months with no treatment or surgical interventions at the treated level through 24 months. In this study, 37% of patients treated with MPC-06-ID compared with 10% in the control group achieved this composite endpoint over two years. This composite endpoint is the primary endpoint in the Phase 3 clinical trial for chronic low back pain which completed enrollment in March 2018 with 404 patients randomized 2:1 to receive either MPC-06-ID or saline control. Follow-up of patients in the Phase 3 trial of MPC-06-ID is continuing to a 24-month assessment of safety and efficacy. All patients will have completed 24 months of follow-up by the first quarter of CY 2020, with readouts planned mid-CY2020. Board and Senior Executive Appointments in Line with Commercialization Plans As Mesoblast transitions to a commercial stage company, there have been two key additions to its Board of Directors and the appointment of a new Chief Medical Officer. Joseph R. Swedish has been appointed as Mesoblast’s non-executive Chairman and Shawn Tomasello as a non-executive Director. Mr Swedish most recently served as Chairman, President and CEO of Anthem Inc., a Fortune 29 company and the leading health benefits provider in the U.S. He also serves on the boards of IBM Corporation, CDW Corporation, Proteus Digital Health, and Centrexion Therapeutics. Ms Tomasello was Chief Commercial Officer at leading immuno-oncology cell therapy company Kite Pharma, where she played a pivotal role in its acquisition in 2017 by Gilead Sciences. Prior to this she served as Chief Commercial Officer at Pharmacyclics, Inc., which was acquired in 2015 by AbbVie, Inc. Ms Tomasello previously was President of the Americas, Hematology and Oncology at Celgene Corporation. Ms Tomasello currently serves on the Board of Directors of Centrexion Therapeutics, Oxford BioTherapeutics and Diplomat Rx. Mesoblast’s new Chief Medical Officer, Dr Fred Grossman, brings a wealth of commercial experience gained from numerous leadership roles at global pharmaceutical companies. He has over 20 years of industry experience, and has held key leadership positions at major global pharmaceutical companies, including Eli Lilly, Johnson & Johnson (J&J), Bristol-Myers Squibb (BMS), Sunovion, and Glenmark. During his career, he has managed global clinical development, pharmacovigilance, medical affairs and clinical operations for innovative product development, as well as FDA approvals and post-market support for numerous blockbuster, specialty and generic products. Dr Grossman has led and built teams in the United States, Europe and Japan with responsibility for global medical affairs, global clinical development, health economics and outcomes research and global drug safety. Manufacturing Mesoblast is developing patent-protected product candidates for a range of inflammatory and immune-mediated conditions using a scalable, allogeneic (off-the-shelf) cellular medicine platform technology. The Company’s manufacturing activities meet stringent criteria set by international regulatory agencies, including the FDA and EMA. Mesoblast’s product candidates contain well-characterized cell populations, and our robust quality assurance processes ensures final product with batch-to-batch consistency and reproducibility as measured by well-established product release assays. Mesoblast has proprietary technology that facilitates the increase in yields necessary for the long-term commercial supply of our product candidates, and next generation manufacturing processes using three-dimensional bioreactors to reduce labour and drive down cost of goods. Intellectual Property Mesoblast continues to protect and expand its extensive estate of patent rights and intellectual property with approximately 995 patents and patent applications across 68 patent families. These patents relate principally to compositions of matter, methods of manufacture, and uses/indications of mesenchymal lineage cells. More specifically, the Company’s patent estate includes issued patent and patent applications in major markets, including, but not limited to, the United States, Europe, Japan and China. The patents that Mesoblast has obtained, and continue to apply for, cover mesenchymal lineage cell technologies and product candidates derived from these technologies, irrespective of the tissue source, including bone marrow, adipose, placenta, umbilical cord and dental pulp. Among the indication-specific issued or pending patents covering product candidates derived from the Company’s mesenchymal lineage cells are those which are directed to its lead product candidates for aGVHD, advanced heart failure, chronic low back pain, as well as chronic auto-immune conditions such as rheumatoid arthritis. Mesoblast also has issued and pending patents covering other pipeline indications, including diabetic kidney disease, inflammatory bowel disease (e.g. Crohn’s disease), neurologic diseases, eye diseases and additional orthopedic diseases. In addition, the Company has in-licensed patents covering complementary technologies, such as other types of mesenchymal lineage cells, cell surface modification technologies, pay-loading technology and protein and gene technologies, as part of its strategy to expand its targeted disease applications and manage the life cycle of its current lead programs. Licensing agreements with JCR, Tasly and Takeda highlight the strength of Mesoblast's extensive intellectual property portfolio covering mesenchymal lineage cells. Mesoblast will continue to use its patents to prosecute its commercial rights as they relate to its core strategic product portfolio. When consistent with the Company’s strategic objectives, it may consider providing third parties with commercial access to its patent portfolio. Detailed Financial Results for the Year Ended June 30, 2019
Additional components of loss after income tax also include movements in other items which did not impact current cash reserves, such as income tax benefits, fair value remeasurement of contingent consideration, remeasurement of borrowing arrangements and foreign exchange movements within other operating income and expenses. In FY2019, the net loss attributable to ordinary shareholders was 18.16 cents per share for FY2019, compared with a loss per share of 7.58 cents for FY2018. There was an after tax loss of US$89.8 million in FY2019, compared to US$35.3 million for FY2018. The increase in the loss is primarily due to commercial manufacturing investment of US$9.9 million to support potential launch of remestemcel-L, and an increase of US$9.5 million in finance costs. Additionally, in the FY2018 comparative period, the Company recognized a one-off non-cash income tax benefit of US$23.0 million primarily due to a revaluation of tax liabilities given changes in tax rates and a non-cash US$10.5 million gain on remeasurement of contingent consideration for reduction of future payments to third parties. Conference Call Details There will be a webcast today on the financial results beginning at 8am AEST (Friday August 30, 2019); 6pm EDT (Thursday August 29, 2019). It can be accessed via https://s1.c-conf.com/diamondpass/mesoblast-10001891-invite.html To access the call only, dial 1800 558 698 (toll-free Australia), 1 855 881 1339 (toll-free U.S.), or +61 2 9007 3187 (outside of the U.S. and Australia). The conference identification code is 10001891. The archived webcast will be available on the Investor page of the Company’s website: www.mesoblast.com About Mesoblast Mesoblast Limited (Nasdaq: MESO; ASX:MSB) is a world leader in developing allogeneic (off-the-shelf) cellular medicines. The Company has leveraged its proprietary technology platform to establish a broad portfolio of late-stage product candidates with three product candidates in Phase 3 trials – acute graft versus host disease, chronic heart failure and chronic low back pain due to degenerative disc disease. Through a proprietary process, Mesoblast selects rare mesenchymal lineage precursor and stem cells from the bone marrow of healthy adults and creates master cell banks, which can be industrially expanded to produce thousands of doses from each donor that meet stringent release criteria, have lot to lot consistency, and can be used off-the-shelf without the need for tissue matching. Mesoblast has facilities in Melbourne, New York, Singapore and Texas and is listed on the Australian Securities Exchange (MSB) and on the Nasdaq (MESO). www.mesoblast.com References Forward-Looking Statements
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
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