Mesoblast is getting interesting again

Mesoblast continues to push forward with its stem cell therapies

Around the start of the century we all started hearing about this thing called ‘stem cells’ and how important they would be to the future of medicine. A stem cell is simply a cell with the potential to form many of the different cell types found in the body. The original thinking with stem cells as medicines was that tissue that had been damaged by disease or injury could be rebuilt using stem cells.

Later on, the thought leaders in the field realised that the best kind of stem cells would be those we could harvest from adults, not from embryos, and that those cells would be useful not so much for tissue repair, as for blunting inflammation, which causes tissue damage. For a long time, it still seemed like science fiction. But now an Australian company has almost made it Science Fact and in the process became an ASX Top 200 company.

Another step closer

The Melbourne-based Mesoblast (ASX: MSB) went public on ASX in 2004 in order to develop its particular kind of stem cells, called a Mesenchymal Stem Cell, into therapies for a range of conditions from heart failure to diabetes to bone disorders.  It’s had its ups and downs over the years and raised a lot of money to get this far, but 17 years on Mesoblast remains a world leader in the stem cell field. And yesterday it went a step closer to having its first product on the market with some great Phase 3 data in heart failure, a condition that afflicts about 6 or 7 million people in America alone.

Good Phase III data just came out

In heart failure the heart doesn’t stop pumping, but it fails to sufficiently pump oxygenated blood needed by the body’s other organs. Heart failure often gets started after a heart attack and the damage to the heart the attack causes. The heart continues to pump, but not as efficiently as a healthy heart. In the beginning in ‘Class I’ heart failure, the condition can be almost asymptomatic. By the time you get to Class IV you can barely get out of bed and you’re almost at Death’s Door.

For a long time, there wasn’t much the cardiologists could do to treat heart failure. Mesoblast might be able to change all that now that it has Phase 3 data for its ‘Rexlemestrocel-L’ Mesenchymal Stem Cell product. The data just got presented at the Annual Meeting of the American Heart Association.

Significant results

Mesoblast’s clinical investigators examined 537 patients with mid-stage Class II and Class III heart failure where the ejection fraction – the percentage of blood being pumped out by each heart beat – was reduced. What they found was that a single dose of Rexlemestrocel-L, on top of ‘standard of care’ (the drugs such patients would usually get), reduced the incidence of heart attacks or strokes by 65% compared to standard of care alone.

And where those patients had high levels of inflammation in their bodies, which is common in heart failure, Rexlemestrocel-L reduced the incidence of heart attacks or stroke by 79%. In each case these results had, what is called, ‘statistical significance’ meaning it was unlikely to have happened by chance. If you count deaths as well as heart attack and strokes, the reductions were 33% and 45% respectively, again with statistical significance. Not bad, don’t you think?

Now, Mesoblast doesn’t have an approved drug yet. Its lead candidate, Ryoncil (Remestemcel-L), got rejected by the FDA in October last year for a rare condition called paediatric steroid-refractory acute Graft versus Host Disease. The rejection was not because the data wasn’t good, but because the Agency wanted more of it in order to have more confidence that the treatment effect was real.

We think today’s news on heart failure, and the other good data Mesoblast has been getting in conditions such as Inflammatory Bowel Disorder and chronic low back pain, suggests that the payday Mesoblast was expecting last year is still coming. Not quite Science Fact yet, but getting close.

Put MSB on your watchlist

Mesoblast stock has a habit of jumping all over the place, dropping on good news and rising on relatively insignificant news, like patent grants. Today is one of those down days, but it’s hard to argue with good Phase III data. If MSB trends down further to, say, to around $1.50, we think the stock will become interesting again.

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