Shares in Mesoblast dropped on the last day of August 2021 after the Melbourne-based biotech was told that its investigational respiratory treatment for COVID-19 needs to undergo another trial in order to receive emergency use authorization (EUA) from U.S. Food and Drug Administration (FDA).
In its 2021 full year financial results, the company stated that it met with the U.S. Food & Drug Administration in June as it sought an EUA designation for remestemcel-L (Ryoncil). The drug is intended to treat COVID-19 patients who suffer from moderate or severe acute respiratory distress syndrome (ARDS) and are dependent on mechanical ventilators.
This is the second time that the FDA has asked Mesoblast to provide more evidence to support the commercial use of the drug. In October 2020, the company was asked to provide more data on the efficacy of the treatment before it could secure any approvals.
In its latest guidance, the regulator said Mesoblast should establish and improve the potency and consistency of manufacturing across different remestemcel-L batches before commencing its planned Phase III clinical trial. In specific, an additional clinical study in COVID ARDS is needed. If this turns out to be statistically positive, data from this research could be combined with the earlier trial covering 222 patients to support its bid for an EUA.
Ongoing potency assays seem to provide positive and well-established in-vitro results, although these findings and how the product would perform in actuality remain theoretical.
Mesoblast also plans to schedule a meeting with the FDA’s Office of Tissue and Advanced Therapies (OTAT) in the fourth quarter of this year to address potency issues or remestemcel-L in relation to pediatric steroid-refractory acute graft versus host disease (SR-aGVHD). This test is relevant as it could also relate to finding a viable therapy for COVID ARDS.
The setback led the company to reevaluate its assets and liabilities for the entire year, which eventually translated to a loss of $98.8 million after-tax, from $77.9 million in the fiscal year 2020. As a result, shares declined. According to industry reports, the company’s shares were the worst-performing stock of the day.
“In August, we entered into a contractual amendment to extend the interest-only period of its current senior debt facility to at least January 2022, and as a result, no loan repayments will be required prior to January 2022. Mesoblast is in active discussions to refinance the facility,” the company said in a statement.
Manufacturing expenses have shot up by $7.4 million to $32.7 million in 2021, from $25.3 million in the previous year, 92% of which is attributable to remestemcel-L related spending.