Stem cell treatments maker Mesoblast faces a new hurdle with the US medicines regulator advising the company it will need to run another trial of its COVID-19 treatment before it can apply for emergency approvals.
Shares in the Melbourne biotech fell by as much as 12 per cent in early trade after Mesoblast unveiled an annual loss of $US98.8 million ($135 million).
Mesoblast shares dropped 12 per cent at Tuesday’s open. Credit:
The company wants to get its flagship product remestemcel-L approved to treat an acute immune reaction called graft-versus-host disease in children, as well as using this same drug to treat severe respiratory distress caused by COVID-19.
Mesoblast experienced a shock setback last October when the US Food and Drug Administration asked it to provide more data on the treatment before it could secure approvals.
Chief executive Silviu Itescu told investors on a call on Tuesday morning that the company will meet with the FDA’s Office of Tissues and Advanced Therapies in the last three months of this year to discuss outstanding manufacturing issues. Mesoblast may resubmit its entire application for the treatment.
Mesoblast also confirmed that the US regulator has said it will need to run an additional trial of its COVID-19 treatment if it wants to apply for emergency use approvals.
The business ran a phase 3 study of the drug last year, but it was cut short after an independent data and safety monitoring board predicted it would not hit its goal of reducing patient mortality by 43 per cent.
However, those phase 3 trial results showed the treatment did have an impact on reducing deaths in patients under 65 and the company believes it will still prove itself useful as a tool to help those who continue to become very sick due to the virus.
“There is a very significant urgency to move forward as quickly as we can – there are surges occurring, particularly in the US right now – vaccinated people with breakthrough infections,” Mesoblast’s chief medical officer Fred Grossman said.
The business had $US136 million in cash on hand but Mesoblast’s full-year report notes it will need cash inflows in the near future to meet its debt obligations and continue as a going concern.
It has drawn down $US50 million from a $US75 million credit facility with financing provider Hercules, and amended the agreement in August to extend the interest-only to January of next year.
“Over the next twelve months in order to meet our forecast expenditure, including repayment of the Hercules debt facility, cash inflows will be required. Management and the directors believe the group will achieve this given plans to complete either one or more strategic partnerships or restructure existing loan agreements, and have prepared the financial report on a going concern basis,” management said in its report documents.
Auditors PwC also highlighted that the group needed more cash or to renegotiate its loans in order to continue as a going concern.
“The dependency on these planned events indicate that a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern,” they said.
Mesoblast shares were 9.9 per cent lower to $1.78 at 10.45am AEST.
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