Mesoblast Limited (ASX:MSB) (Nasdaq:MESO) today provided the market
with an update on its corporate strategy, operational highlights,
and consolidated financial results for the three months ended
September 30, 2017 (first quarter of FY2018).
At September 30, 2017, the Company had cash reserves of US$62.9
million. Cash outflows from operating activities were reduced by
US$0.5m (2.3%) for the quarter as compared to the three months
ended September 30, 2016 (first quarter of FY2017).
Based on cumulative clinical results to date and the serious and
life-threatening nature of the diseases being targeted, the Company
believes that its Phase 3 product candidates for acute graft versus
host disease (aGVHD), chronic heart failure, and chronic low back
pain may represent a paradigm shift in the treatment of these
conditions which can lead to earlier market entry due to
opportunities afforded by the United States 21st Century Cures
Act.
The Company continues to have an active and ongoing strategy to
partner one or more of its four Tier 1 product candidates.
Fundamental to this strategy is to conclude partnership
transactions with those organizations that will deliver the best
short and long term outcomes for the company and maximize
shareholder value.
Operational Highlights
MSC-100-IV for Acute Graft Versus Host Disease
(aGVHD):
Mesoblast's proprietary allogeneic cell therapy MSC-100-IV is
being evaluated in a single, open-label Phase 3 trial in up to 60
patients for product registration. This trial continues to recruit
across multiple sites in North America and completion of enrollment
is imminent. The goal of this trial is to obtain FDA approval
in children with steroid-refractory (SR) aGVHD and then pursue
label extension to adults.
The Company’s GVHD strategy is based on:
- extensive clinical safety and efficacy data generated and
published with MSC-100-IV in children with this life-threatening
condition;
- the potential for a shortened FDA approval pathway due to the
existing fast-track designation for MSC-100-IV;
- a targeted product launch strategy requiring minimal
investment; and
- the ability to seek label extension to adults with high-risk
steroid refractory aGVHD (liver/gut disease) and product lifecycle
management to include chronic GVHD.
MPC-150-IM for Chronic Heart Failure (CHF):
Mesoblast's proprietary allogeneic cell therapy MPC-150-IM is in
late-stage clinical development in two randomized controlled trials
that target, respectively, advanced and end-stage CHF. The
Phase 3 trial in advanced heart failure continues to recruit across
multiple sites in North America, with more than 400 of the
anticipated approximately 600 NYHA Class II/III CHF patients
randomized to date.
During this current quarter, the Company was pleased to report
completion of enrollment in the 159-patient randomized,
placebo-controlled Phase 2b trial funded by the National Institutes
of Health (NIH) and the Canadian Institute for Health Research
(CIHR) evaluating the Company’s proprietary allogeneic mesenchymal
precursor cell (MPC) product candidate MPC-150-IM in end-stage
heart failure patients with left ventricular assist devices
(LVAD).
The Company believes that:
- the LVAD market may represent an early market entry opportunity
for MPC-150-IM in end-stage heart failure patients through
potential to reduce LVAD morbidity, increase survival and increase
LVAD use as destination therapy;
- targeted product launch strategy requires minimal
investment;
- by strengthening native heart muscle, Bridge to Recovery (BTR)
represents a potential high-growth market opportunity for temporary
LVAD use and explantation in end-stage or Class IV heart failure
patients; and
- there may be an opportunity to bridge to the larger Class III
heart failure population by label extension on obtaining positive
Phase 3 trial results.
MPC-06-ID for Chronic Low Back Pain (CLBP):
Mesoblast's proprietary allogeneic cell therapy MPC-06-ID is
being evaluated in a 360-patient Phase 3 trial in patients with
CLBP who have failed conservative measures. The trial is
expected to complete enrollment in early Q1 CY18.
If the Phase 2 results, which showed durable
improvement in pain and function from a single intra-discal
injection, are confirmed in the Phase 3 trial, the Company believes
that MPC-06-ID:
- has the potential to reduce and/or eliminate the need for
opioids in the treatment of CLBP; and
- is well positioned to meet the objectives of the 21st Century
Cures Act, which includes measures to combat opioid dependence and
provide accelerated approval pathways for non-opioid pain reducing
drugs.
Over 33,000 people in the United States died of
prescription opioid related overdoses in 2016 and the opioid
epidemic has been recently declared a public health emergency by
the President of the United States. Given that CLBP accounts for
50% of all opioid prescriptions, a non-opioid solution to this
disease is imperative.
MPC-300-IV for Systemic, Immune-mediated
Diseases:
MPC-300-IV is our cellular product candidate that responds to
inflammatory signals with release of counter-inflammatory factors.
It has the potential to treat multiple immune-mediated
diseases.
MPC-300-IV has generated positive clinical data across three
randomized, placebo-controlled Phase 2 trials in disease states
associated with inflammation; type 2 diabetes with inadequate
glucose control, diabetic kidney disease, and biologic-refractory
rheumatoid arthritis (RA).
Results from a 48-patient randomized, placebo-controlled Phase 2
trial in patients with biologic refractory RA over 52 weeks were
recently presented at the 2017 American College of Rheumatology
Annual Meeting in San Diego, CA. The primary objective of the study
was to evaluate safety and tolerability of a single intravenous
infusion in biologic refractory RA patients through a 12-week
primary endpoint. Additional objectives were to evaluate clinical
efficacy at the 12-week endpoint and to assess the durability of
effects and safety profile over the full 52-week study.
The results showed an early and durable effect from a single
infusion of MPC-300-IV in biologic-refractory RA patients.
Specifically:
- Infusions were well-tolerated with no treatment-related serious
adverse events reported during the 52-week period, and a safety
profile over 52 weeks comparable among the placebo and two MPC
treatment groups.
- A single intravenous MPC infusion in biologic refractory RA
patients resulted in dose-related improvements in clinical
symptoms, function, disease activity and patient-reported outcomes.
Efficacy signals were observed for each of ACR 20/50/70, ACR-N,
HAQ-DI, SF-36 and DAS-28 disease activity score.
- The 2 million MPC/kg dose showed the greatest overall treatment
responses. Onset of treatment responses occurred as early as 4
weeks, peaked at 12 weeks, were maintained through 39 weeks, and
waned by 52 weeks.
- Greatest benefits over 52 weeks were seen in patients who had
failed less than three biologics (1-2 biologic sub-group) prior to
MPC treatment, identifying this as a potentially optimal target
population.
The results of this Phase 2 trial identified a dose-related
treatment effect, the earliest onset of the effect, and the
durability from a single dose. Given the excellent safety profile,
the Company intends to evaluate whether higher MPC doses can
achieve even greater rates of low disease activity or remission
within the first 12 weeks and beyond. The Company also plans
to evaluate whether the observed durable treatment responses can be
maintained for the longer term using repeat dose therapy.
Upcoming Milestones
The Company expects multiple key inflection points over the
remainder of the 2018 financial year, including:
- completion of enrollment in Q4 CY2017 in the Phase 3 trial
evaluating MSC-100-IV in children with aGVHD;
- the trial’s 28-day primary endpoint data is expected in Q1
CY2018 and the 100-day survival result is expected in Q2
CY2018;
- completion of enrollment in early Q1 CY2018 in the Phase 3
trial evaluating MPC-06-ID in patients with chronic low back
pain;
- the 6-month primary endpoint in Q1 CY2018 for the
fully-enrolled Phase 3 trial evaluating MPC-150-IM in NYHA Class IV
patients with advanced heart failure, with full 12-month study
results expected in Q3 CY2018; and
- completion of enrollment in 2H CY2018 in the Phase 3 trial
evaluating MPC-150-IM in NYHA Class III patients with advanced
heart failure.
Financial Highlights
At September 30, 2017, the Company had cash reserves of US$62.9
million, inclusive of net financing cash inflows of US$38.4 million
as a result of the entitlement offer in September 2017.
Revenues from royalties on sales of TEMCELL® HS Inj. (TEMCELL)1
by our licensee in Japan, JCR Pharmaceuticals Co., Ltd., increased
by US$0.4 million (178%) to US$0.6 million in the first quarter of
FY2018 compared with the first quarter of FY2017. In addition, the
Company recognized milestone revenue of US$0.5 million on the
cumulative sales of TEMCELL in the first quarter of FY2018.
Cash outflows from operating activities for the quarter were
reduced by US$0.5m (2.3%), compared to the first quarter of
FY2017.
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.
______________________1 TEMCELL® HS. Inj. is a registered
trademark of JCR Pharmaceuticals Co., Ltd.
Financial Results for the Three Months Ended September
30, 2017 (first quarter) (in U.S. Dollars)
The Company contained spend whilst increasing its R&D
investment in Tier 1 clinical programs by constraining
manufacturing production, and management and administration costs.
Research and development expenses increased by US$1.4 million
(10%), this increase was offset by cost savings of US$2.4 million
(73%) for manufacturing and US$0.4 million (8%) for management
& administration for the first quarter of FY2018, compared with
the first quarter of FY2017.
There was a decrease of US$13.0 million (57%) in the loss before
income tax for the first quarter of FY2018, compared with the first
quarter of FY2017. 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 royalties on sales of TEMCELL
increased by US$0.4 million (178%) in the first quarter of FY2018
compared with the first quarter of FY2017 and the Company
recognized milestone revenue of US$0.5 million on the cumulative
sales of TEMCELL in the first quarter of FY2018 compared with
US$Nil in the first quarter of FY2017.
- Research and Development expenses were US$15.4
million for the first quarter of FY2018, compared with US$14.0
million for the first quarter of FY2017, an increase of US$1.4
million (10%) as the Company invested in Tier 1 clinical programs.
- Manufacturing expenses were US$0.9 million for
the first quarter of FY2018, compared with US$3.3 million for the
first quarter of FY2017, a decrease of US$2.4 million (73%) due to
a reduction in manufacturing activity because sufficient quantities
of clinical grade product were previously manufactured for all
ongoing clinical trials.
- Management and Administration: expenses were
US$5.0 million for the first quarter FY2018, compared with US$5.4
million for the first quarter of FY2017, a decrease of US$0.4
million (8%) primarily due to a decrease of US$0.5 million in
corporate overhead expenses such as rent and IT costs.
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, and foreign exchange movements within other
operating income and expenses. The net loss attributable to
ordinary shareholders was US$7.0 million, or 1.60 cents per share,
for the first quarter of FY2018, compared with US$19.8 million, or
5.24 cents per share, for the first quarter of FY2017.
Conference Call Details
Mesoblast will be hosting a conference call beginning at 8.30am
AEDT on Wednesday November 15, 2017 / 4.30pm ET on Tuesday November
14, 2017. The conference identification code is
303705.
The live webcast can be accessed
via: http://webcasting.boardroom.media/broadcast/59ff897e6afa4a0577a982bb
To access the call, please dial:
Australia Toll
Free |
|
1 800 558 698 |
Australia
Alternate |
|
1 800 809 971 |
United States |
|
1 855 881 1339 |
United Kingdom |
|
0800 051 8245 |
Japan |
|
0053 116 1281 |
Singapore |
|
800 101 2785 |
Hong Kong |
|
800 966 806 |
International |
|
+61 2 9007 3187 |
|
|
|
Forward-Looking StatementsThis press release
includes forward-looking statements that relate to future events or
our future financial performance and involve known and unknown
risks, uncertainties and other factors that may cause our actual
results, levels of activity, performance or achievements to differ
materially from any future results, levels of activity, performance
or achievements expressed or implied by these forward-looking
statements. We make such forward-looking statements pursuant to the
safe harbor provisions of the Private Securities Litigation Reform
Act of 1995 and other federal securities laws. Forward-looking
statements should not be read as a guarantee of future performance
or results, and actual results may differ from the results
anticipated in these forward-looking statements, and the
differences may be material and adverse. Forward- looking
statements include, but are not limited to, statements about: the
initiation, timing, progress and results of Mesoblast’s preclinical
and clinical studies, and Mesoblast’s research and development
programs; Mesoblast’s ability to advance product candidates into,
enroll and successfully complete, clinical studies, including
multi-national clinical trials; Mesoblast’s ability to advance its
manufacturing capabilities; the timing or likelihood of regulatory
filings and approvals, manufacturing activities and product
marketing activities, if any; the commercialization of Mesoblast’s
product candidates, if approved; regulatory or public perceptions
and market acceptance surrounding the use of stem-cell based
therapies; the potential for Mesoblast’s product candidates, if any
are approved, to be withdrawn from the market due to patient
adverse events or deaths; the potential benefits of strategic
collaboration agreements and Mesoblast’s ability to enter into and
maintain established strategic collaborations; Mesoblast’s ability
to establish and maintain intellectual property on its product
candidates and Mesoblast’s ability to successfully defend these in
cases of alleged infringement; the scope of protection Mesoblast is
able to establish and maintain for intellectual property rights
covering its product candidates and technology; estimates of
Mesoblast’s expenses, future revenues, capital requirements and its
needs for additional financing; Mesoblast’s financial performance;
developments relating to Mesoblast’s competitors and industry; and
the pricing and reimbursement of Mesoblast’s product candidates, if
approved. You should read this press release together with our risk
factors, in our most recently filed reports with the SEC or on our
website. Uncertainties and risks that may cause Mesoblast’s actual
results, performance or achievements to be materially different
from those which may be expressed or implied by such statements,
and accordingly, you should not place undue reliance on these
forward-looking statements. We do not undertake any obligations to
publicly update or revise any forward-looking statements, whether
as a result of new information, future developments or
otherwise.
For further information, please
contact:
Julie MeldrumCorporate CommunicationsMesoblast T: +61 3 9639 6036
E: julie.meldrum@mesoblast.com
Schond GreenwayInvestor RelationsMesoblastT: +1 212 880 2060E:
schond.greenway@mesoblast.com
Consolidated Income Statement
|
|
Three Months Ended |
|
|
|
|
September 30, |
|
|
(in U.S.
dollars, in thousands, except per share amount) |
|
2017 |
|
|
2016 |
|
|
Revenue |
|
|
1,174 |
|
|
|
395 |
|
|
Research &
development |
|
|
(15,368 |
) |
|
|
(14,004 |
) |
|
Manufacturing
commercialization |
|
|
(877 |
) |
|
|
(3,295 |
) |
|
Management and
administration |
|
|
(5,012 |
) |
|
|
(5,459 |
) |
|
Fair value
remeasurement of contingent consideration |
|
|
9,495 |
|
|
|
(1,013 |
) |
|
Other operating income
and expenses |
|
|
668 |
|
|
|
473 |
|
|
Loss before
income tax |
|
|
(9,920 |
) |
|
|
(22,903 |
) |
|
Income tax
benefit/(expense) |
|
|
2,898 |
|
|
|
3,105 |
|
|
Loss
attributable to the owners of Mesoblast Limited |
|
|
(7,022 |
) |
|
|
(19,798 |
) |
|
|
|
|
|
|
|
|
|
|
|
Losses per
share from continuing operations attributable to
the ordinary equity holders of the
Group: |
|
Cents |
|
|
Cents |
|
|
|
|
|
|
|
|
|
|
|
|
Basic - losses per
share |
|
|
(1.60 |
) |
|
|
(5.24 |
) |
|
Diluted - losses per
share |
|
|
(1.60 |
) |
|
|
(5.24 |
) |
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statement of Comprehensive Income
|
|
Three Months EndedSeptember
30, |
|
|
(in U.S.
dollars, in thousands) |
|
2017 |
|
|
2016 |
|
|
Loss for the
year |
|
|
(7,022 |
) |
|
|
(19,798 |
) |
|
Other
comprehensive (loss)/income |
|
|
|
|
|
|
|
|
|
Items that may be
reclassified to profit and loss |
|
|
|
|
|
|
|
|
|
Changes in the fair
value of available-for-sale financial assets |
|
|
20 |
|
|
|
31 |
|
|
Exchange differences on
translation of foreign operations |
|
|
(358 |
) |
|
|
703 |
|
|
Other comprehensive
(loss)/income for the period, net of tax |
|
|
(338 |
) |
|
|
734 |
|
|
Total
comprehensive loss attributable to the
owners of Mesoblast Limited |
|
|
(7,360 |
) |
|
|
(19,064 |
) |
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statement of Balance Sheet
(in U.S.
dollars, in thousands) |
|
As ofSeptember 30,
2017 |
|
|
As ofJune 30,
2017 |
|
Assets |
|
|
|
|
|
|
|
|
Current
Assets |
|
|
|
|
|
|
|
|
Cash & cash
equivalents |
|
|
62,941 |
|
|
|
45,761 |
|
Trade & other
receivables |
|
|
4,590 |
|
|
|
3,743 |
|
Prepayments |
|
|
12,796 |
|
|
|
14,105 |
|
Total Current
Assets |
|
|
80,327 |
|
|
|
63,609 |
|
|
|
|
|
|
|
|
|
|
Non-Current
Assets |
|
|
|
|
|
|
|
|
Property, plant and
equipment |
|
|
1,636 |
|
|
|
1,814 |
|
Available-for-sale
financial assets |
|
|
2,018 |
|
|
|
1,997 |
|
Other non-current
assets |
|
|
1,930 |
|
|
|
1,916 |
|
Intangible assets |
|
|
585,987 |
|
|
|
586,350 |
|
Total
Non-Current Assets |
|
|
591,571 |
|
|
|
592,077 |
|
Total
Assets |
|
|
671,898 |
|
|
|
655,686 |
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Current
Liabilities |
|
|
|
|
|
|
|
|
Trade and other
payables |
|
|
20,323 |
|
|
|
21,805 |
|
Provisions |
|
|
2,447 |
|
|
|
14,865 |
|
Total Current
Liabilities |
|
|
22,770 |
|
|
|
36,670 |
|
|
|
|
|
|
|
|
|
|
Non-Current
Liabilities |
|
|
|
|
|
|
|
|
Deferred tax
liability |
|
|
46,395 |
|
|
|
49,293 |
|
Provisions |
|
|
43,143 |
|
|
|
52,957 |
|
Total
Non-Current Liabilities |
|
|
89,538 |
|
|
|
102,250 |
|
Total
Liabilities |
|
|
112,308 |
|
|
|
138,920 |
|
Net
Assets |
|
|
559,590 |
|
|
|
516,766 |
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
Issued Capital |
|
|
878,669 |
|
|
|
830,425 |
|
Reserves |
|
|
32,845 |
|
|
|
31,243 |
|
(Accumulated
losses)/retained earnings |
|
|
(351,924 |
) |
|
|
(344,902 |
) |
Total
Equity |
|
|
559,590 |
|
|
|
516,766 |
|
|
|
|
|
|
|
|
|
|
Consolidated Statement of Cash Flows
|
|
Three months endedSeptember
30, |
|
(in U.S.
dollars, in thousands) |
|
2017 |
|
|
2016 |
|
Cash flows from
operating activities |
|
|
|
|
|
|
|
|
Commercialization
revenue received |
|
|
474 |
|
|
|
361 |
|
Payments to suppliers
and employees (inclusive of goods and services tax) |
|
|
(20,892 |
) |
|
|
(21,369 |
) |
Interest received |
|
|
63 |
|
|
|
181 |
|
Income taxes
(paid)/refunded |
|
|
(1 |
) |
|
|
— |
|
Net cash
(outflows) in operating activities |
|
|
(20,356 |
) |
|
|
(20,827 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities |
|
|
|
|
|
|
|
|
Payments for contingent
consideration |
|
|
(543 |
) |
|
|
— |
|
Investment in fixed
assets |
|
|
(83 |
) |
|
|
(290 |
) |
Net cash
(outflows) in investing activities |
|
|
(626 |
) |
|
|
(290 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities |
|
|
|
|
|
|
|
|
Proceeds from issue of
shares |
|
|
40,449 |
|
|
|
— |
|
Payments for share
issue costs |
|
|
(2,001 |
) |
|
|
(55 |
) |
Net cash
inflows/(outflows) by financing activities |
|
|
38,448 |
|
|
|
(55 |
) |
|
|
|
|
|
|
|
|
|
Net increase/(decrease)
in cash and cash equivalents |
|
|
17,466 |
|
|
|
(21,172 |
) |
Cash and cash
equivalents at beginning of period |
|
|
45,761 |
|
|
|
80,937 |
|
FX (losses)/gains on
the translation of foreign bank accounts |
|
|
(286 |
) |
|
|
590 |
|
Cash and cash
equivalents at end of period |
|
|
62,941 |
|
|
|
60,355 |
|
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