Q2 2024 Mesoblast Ltd Earnings Call
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Hello, and welcome to me said last financial results for the period ended December 31st 2023.
An announcement and presentation has been lodged with the IX Cc and also available on the Harman and Vista pages at Www don't misread last dot com.
At this time all participants are in a listen only mode.
Later, we will conduct a question and answer session and instructions will follow at that time as a reminder, this conference call is being recorded.
Before we begin let me remind you that during today's conference call. The company will be making forward looking statements that represent the company's intentions expectations or beliefs concerning future events.
These forward looking statements are qualified by important factors set forth in today's announcement and the company's filings with the S. E C, which could cause actual results to differ materially from those in such look forward looking statements.
In addition, any forward looking statements representing the company's views only as the date of this webcast and should not be relied upon as representing the companys views and any subsequent date the company specifically disclaims any obligations to update such statements.
With that I would now like to turn the call over to Doug to silver at the SKU Chief Executive of my surplus. Please go ahead.
Thank you operator.
Good morning, good afternoon to.
There's a bunch of financial results and operational update for the half year ended December 31 2023.
On this call.
Chief Medical Officer don't think Roes.
Chief Financial Officer, Andrew stepping out and one about knees.
Neither blast board members Dr. Philip Crouse.
We could go to slide four please.
A snapshot of the investment highlights mesoblast done on this slide we're developing a novel allogeneic cell therapy technology platform Tonight Truthfully, that's it makes it down to match your marine munis suppression.
The lead indications.
Well that two platforms really stem cells can be scraped. So let me stem cell is being developed for both pediatric and adult steroid refractory acute graft versus host disease for the pediatric indication.
The single arm pivotal phase III trial, which met its successfully met its primary endpoint.
Long term survival data showed durability of survival benefit for more than four years new data.
Second potency assay has been provided to the FDA and we have an upcoming meeting scheduled.
During March.
For adult student refractory acute gvhd.
We are collaborating with Bernard blood and bone marrow transplant clinical trials network body responsible for approximately 80% of all U S transplants conducted pivotal trial.
So with this condition.
Patients, who failed second lung therapies and have no approved therapy.
Therapeutics this potential market is five times larger than for pediatrics.
Extremely scarce, so second second generation immuno selected product being developed for heart disease and cemetery.
So I'm a creep back in.
In the field to inflammatory heart failure.
Low ejection fraction was completed the phase III trial.
We haven't it's S T a.
Resignation regenerative medicine advanced Therapeutics did.
Designation for the product in the in the treatment of the most severe in stage patients.
Ejection fraction low ejection fraction heart failure, and with particular assist device.
And under that Amit.
Very encouraging meeting with the S T a.
During this month.
Right.
You won't see it in this presentation.
Results from our randomized controlled trial in pediatric congenital heart disease. We've also been published so that indication.
It's a rare pediatric disease designation as well as an orphan drug designation by the FDA.
So chronic inflammatory low back pain and distress. So has completed its first phase III trial.
It received designation.
From the FDA for this indication as well because this is Jamie.
Great.
And the agreement is in place for a confirmatory phase III trial with a 12 month endpoint.
Being pain reduction that's potentially acceptable for FDA approval.
Pivotal trial.
And with its activities have now commenced.
Alright, the next slide five.
He is a summary of the gloves intellectual property estate, we are the leaders in <unk>.
In intellectual property cool zinc will scramble so.
I'm sick.
1100 patents and patent applications across all the major jurisdictions covering compositions of matter of matter of factory and therapeutic applications.
We've had.
Hey, there.
A strong track record of managing their intellectual property.
In terms of.
Our licensee.
Working with partners with collaborators in predicting out.
Territories win win win.
That's required.
Yeah.
Next slide please slide six.
We have a commercial scale manufacturing process.
That is highly scalable allogeneic off the shelf.
That allows us to deliver into in products frozen are shipped through distribution hubs ultimately to the end user.
The manufacturing process meet stringent criteria various international regulatory agencies. The USDA has as you expected and manufacturing process.
At the London facility in Singapore, and founded that process was what was acceptable we have robust quality assurance processes in place to ensure the final product mix batch to batch consistency and reproducibility.
We've got substantial renovations that are on the right path to meet the future increasing capacity requirements improvement in yields reductions in cost of goods.
And these these are step ups and technology include three D by records for high volume indications.
Please go to slide seven.
This slide is a cartoon.
Tuna.
Yes.
Mechanism of action by which our stromal cells deliver the clinical outcomes that we've talked about across various product indications.
The.
Cells that we've developed a mythical creatures and stromal cell populations first second generations have been optimized.
To express a variety of surface receptors.
That that bind.
Planetary cytokines and when they specifically are engaged by these inflammatory cytokines that are activated and released a variety of very well characterized mediators that orchestrate the anti inflammatory responses that.
That are necessary to turn off immune mediated diseases in various tissues.
These these mechanisms and that well characterized and underpin the clinical data that we do.
Published regenerated I wish I could tell you more about in the coming slides.
Slide eight.
Here's a snapshot.
It's not short of our late stage clinical pipeline.
Let me stem cell a first generation product as I said is being developed with pediatric and adult sort of refractory graft versus host disease as well as your planetary Pal disease. The pediatric indication is in the midst of regulatory filing the adult indication is.
As a.
Pivotal trials being planned to commence our.
Next quarter.
Well rich, let me start sorry, which is our second generation.
Anybody based selected our culture.
Culture expanded struggles so has generated substantial body of clinical data in two major indications associated with inflammation.
Heart failure with reduced ejection fraction and chronic inflammatory low back pain. Both of those have completed initial phase three trials in both of them.
I mean, the final stages of development.
Slide nine is a summary of the clinical program milestones.
That had been achieved and are continuing to plan for it to be deliberate on.
The coming months.
As you can see here these milestones are linked.
For each product line.
By indication.
We set out a number of.
The deliverables that were laid out at our AGM.
And I'm pleased to say that we've achieved all of the deliverables during the first quarter of this year and we have a number of planned activities for the for the rest of the for the next quarter and the rest of the year and as you can see in particular with respect to really stem cell for adult and pediatric GBH.
G P H D. We achieved the.
Expected delivery of additional potency assay data, which was provided to the FDA, we have scheduled an upcoming meeting with the FDA.
That'll be held in March.
We've achieved completion and submission of a protocol for the adult program.
And we plan to initiate enrollment in the next quarter for adult trial with respect to cardiovascular program we achieved.
Uh huh.
I encourage you meeting with the FDA under our Amit regarding the potential pathway to approval in adults.
Based on a real bad and Dream heart failure trials.
And we further plan to meet with.
With the XT eight in the next quarter regarding congenital heart disease program.
Phone.
Results of the randomized controlled trials that have been published regarding back paint we were we achieved them.
Startup of activities with investigators trial sites and the contract research organization for a pivotal trial and the trial is active and will be screening and enrolling patients throughout.
The coming year.
Slide 10.
The regulatory status for I also in pediatric patients with steroid refractory gvhd.
We have an upcoming meeting scheduled for March.
The FDA, we have provided the agency with new data from a second potency assay.
So providing the additional product characterization as requested by the FDA.
New data showed that the right answer products made with the current manufacturing process, which has undergone successful inspection by the FDA demonstrates greater potency than the earlier generation products.
But.
Body context cause greater impact we've observed in survival.
Yes.
Next slide 11.
But the pathway to approval for island, so in adults who are refractory acute gvhd.
Bottle of adults.
With this terrible disease, who failed at least one.
One additional agents be on steroids.
Only approved agent for this disease is rock solid.
If you failed rux deliberately been other agents survival remains as low as 20 to 30 per cent by day 100.
This patient population has no other approved therapies in this dismal outcome needs needs.
Improvement.
In contrast use about improved revenue stem cell product while also.
As shown a 100 day survival of 67%.
When used under expanded access and 51 adults and children with steroid refractory gvhd, who otherwise failed to respond to.
So at least one additional agent be on steroids, including Russell isn't it.
We intend to commence a phase III trial brown, so in adults and adolescence.
Who are refractory to steroids and to a second line agents, such as Russia, where there is no other approved therapy.
Neither blanca collaborating with the blood and marrow transplant clinical trials network.
Body responsible for approximately 80% of all U S transplant to conduct this trial.
We expect to initiate the program next quarter.
Slide 12.
Yeah.
What is that playing cool for a possible approval now in patients.
With chronic heart failure with reduced ejection fraction.
Including in stage patients with a left ventricular assist device.
We had a very encouraging meeting with the FDA regarding the regulatory path to approval and that was based on.
Multiple elements of data for that school.
As shown the potential to reduce major adverse cardiac events mace, such as heart attack and cardiovascular mortality and harvest cushions with this disease.
I'll start with Egypt, Luckily, just additional collection and with inflammation.
<unk> was also shown the potential to improve major outcomes in harvest cushions with.
The most severe end stage disease, where there's excessive inflammation and crazy so look for particular assist devices.
We met with the FDA this quarter addressing potential conflicts to bring this clock to approval under a regenerative medicine.
The other piece because the emotion.
Discussion covered both class 234.
Ischemic patients with inflammation from the 565 patient green.
As well as those patients with insights disease nobody plant.
With the formation from the 159 patient study, we discussed with FDA.
Of action by which will that score was able to improve the major outcomes, including mortality across the continuum of heart failure with inflammation.
Hum follow up to the ecology, meaning we expect to receive the minutes of the meeting.
From the FDA in the coming months.
Slide 30.
What about pediatric congenital heart disease in particular.
Disease called Hypoplastic lift heart syndrome.
During the quarter FDA granted mesoblast product go Bad school, both rare pediatric disease designation and orphan drug status.
It's followed submission of the results.
From a randomized control trial in children with Hypoplastic left heart syndrome.
Which is a potentially life threatening congenital heart condition the resort.
Else from this investigator initiated study.
Some surgeons at Boston Children's Hospital.
Oh It was a blinded randomized placebo controlled study were published in the December 2023 issue.
All the peer reviewed journal of thoracic and cardiovascular surgery open.
As noted in this application.
There appear to be an increase in the proportion of children following treatment with revenge school, who have an enhancement in the gross.
The left ventricle at least by size and and are able to better tolerate.
Recruitment surgery.
We intend to have a discussion with the FDA in the next quarter around the potential regulatory path.
For these children.
Now, let's move to the financial results for the Huh.
Andrew would you. Please take the next few slides.
Yes, I think so.
Please turn to the financial highlights for the half.
On slide 15.
At December 31, 2023 cashiers.
Cash reserve was 77.6, mainly in U S dollars.
The completion of an institutional placement and taught them in all five of $60 3 million Australian dollars in the period.
Yeah.
During the period, we also delivered on that plan cost containment strategies.
Which reduced our cash burn for a Friday.
And the three month period ended December 2023, Oh.
Our cash balance or operating activities was 12 3 million U S dollars.
Which is a 25% reduction on the comparative three month period in FY 'twenty to 'twenty three.
In the six month period ended December 'twenty 'twenty right.
Cash burn was achieved by 14%.
Any six month period in FY 2020.
We are also pleased to report a 21% reduction in our loss after tax of 38 5 million U S dollars.
Turning to slide 16.
You'll see we averaged 20 a reduction in all our key categories of expenditure.
The improved loss after tax for the half year ended December 2023.
Our revenue of $3.4 million is predominantly from royalties on sales up to sell in Japan.
And our manufacturing expenditure reduced by 6 million U S dollars or 47%.
For the six months ended December 2023.
The costs being incurred in the current periods for manufacturing relate to generating the type C and characterization data.
Yeah, really stem cell L product to children huge graft versus host disease.
This data has been submitted ahead of the upcoming meeting with the FDA next month.
Finance costs declined.
$6 9 million in U S dollars at non cash expenditure.
Six months ended December 'twenty 'twenty right.
I'll now hand, the call back to Silviu.
Thanks Sylvia.
Thank you Andrew.
Let's continue with our operational.
Great.
Slide 19 please.
Sure refractory acute graft versus host disease is a devastating complications of the bone marrow transplant.
Hmm.
More than 30000, allogeneic bone marrow transplants performed globally.
For the year of.
Of which approximately 10000.
Formed in the U S.
<unk> thousand 500 of these 2000 are in children.
And children there are no approved therapies at all.
For adults adolescents and adults over the age of 12 resolutely.
The only approved therapy and 45% of those who.
Receive rux Loopnet unknown responders and non responders there are no approved therapies.
If you go to slide 20 please.
This slide summarizes the three studies.
Have been provided to the FDA.
On the outcomes for Remy stem cell.
Children with steroid refractory acute gvhd.
And at least three strategy, you'll note that day 100 survival.
Ranged from 66% in the most severe conditions under an expanded access.
74% and 79% in both.
A randomized controlled study and in the open label study 001, Great C D disease accounted for 89%.
In contrast in each of these last two studies control arms.
The randomized control or an external control Oh.
Well matched patients.
Patients demonstrated substantially lower survival outcomes of 54 and 57% respectively.
Go to the next slide.
Graphically shows.
A comparison.
Survival on the right hand side, you know phase III trial.
001, whereas six months, we see 69% survival by two years, 51% survival children because.
As I mentioned earlier, almost 90% had the worst horrible disease, great C. D disease. In contrast on the left hand side you see two years survival outcomes in mm 128 children with steroid refractory gvhd treated.
At major central across the U S and you see it a dismal 35% survival.
At two years in this patient population.
Excellent.
Slide 22 shows our long term survival outcomes from the children's you know pivotal study 001 of these 51 children.
Oh, who almost.
90% of what Great C. D disease, you can see that that by the end of the fourth year and two year five.
Almost 50% of children maintained.
Survival and really survival through year five indicates.
Curative outcomes.
Those children, who along with your fiber really living normal lives.
And we have we have children, who are now medical students for example, thriving in the community.
In contrast to this long term outcome with Rami stem cell.
The outcomes five publications.
In children and adults who.
Food alternative therapies, including Brooks of Loopnet.
And you see that across the board in each of these studies.
Great.
Year, one survival is in the 40% range Youtube's survival is in the 20% to 30% range and there are no reports of survival outcomes beyond year two.
We think the long term survival outcomes with really stem cell from our pivotal phase III trial is unparalleled.
With other therapies that are available today.
Slide 23, so what is the regulatory status and pathway for island so in children.
As I've mentioned earlier, we have an FDA meeting scheduled and upcoming for much with the FDA.
Where we have provided the agency with a substantial amount of new data from our second potency assay for our product. We're also providing additional product characterization as as requested by the FDA.
The new data show that their own product.
<unk> is an improved brown, so product made with the current manufacturing process.
The gone successful inspection by the FDA demonstrates greater card and see them the earlier generation products.
It used to be called the early generation part of whats called proton.
Which provides context for the greater impact on survival improves.
Improved product Brownsville.
Yeah.
And for adults as I've mentioned earlier.
Commercial strategies to progress as rapidly as possible to adults who felt both steroids in a first line agent such as route slipping it which accounts for about 45% of all patients currently on Rux Lipnick. These patients' mortality is dismal only 20% to 30% of our lives by 100 days and we've seen at <unk>.
7% survival in this patient population was round. So we are collaborating with the B M. P. C. P N to initiate and conduct a pivotal trial in this patient population.
In the second half of this year.
Let's move to heart failure.
Slide 26.
Congestive heart failure remains a major cause of mortality in.
The rest of the world with 50% patient dead, it's five years after diagnosis.
We have a substantial amount of promising initial data, including data from over 500 patients in the dream home started phase III trial, which demonstrated.
Really strengthening the left ventricle on measurement.
Less electrical sexual function and more importantly, long term reduction in major.
Cause cardiac events, including heart attacks strokes and mortality.
With key.
Finding that inflammation, which is seen in about 50% of these patients is both a predictor of severe outcomes.
And predictor of therapeutic benefit in response to Rick's.
Brooks, let me stroke so.
Uh huh.
We met with the S T a.
Very recently and had a very encouraging meeting our existing AMR division.
Nation to discuss the potential pathway to approval for patients with its current state and complication.
We expect to have actually a couple of minutes later.
Later in March.
But I think if you look at slide 27.
The message is we're targeting the continuum of disease.
Patients with the most severe forms of inflammatory heart failure low ejection fraction.
It is these patients who are.
Hum class III class for us.
As well as end stage will ultimately end up on artificial heart devices or requiring transplant or die.
In the continuum of this disease.
It reflects.
In large part on.
Boeing severe inflammation, we've identified precisely those patients who are most likely to respond to a therapy based on it on a on a mechanism of action that we think is.
It is critical to the ability of these cells to make a difference who lives and outcomes of this patient population.
And just as a reminder, on slide 28.
Some of these outcomes data have been published this this slide is from.
A paper in journal of American College of Cardiology published last year.
You can see on the right hand side across.
The 301 patients out of the 560 patients who had severe inflammation.
But the impact on heart attacks demonstrated an 88% reduction in the incidence of heart attacks.
A flatline in blue the patients who received <unk>.
A single injection of Rexam stroke, so compared to even read progressively increasing incidence of heart attacks and of course.
Having heart attacks on top of severe heart failure is a recipe for progression.
And ultimately death.
Yeah.
And if we can move on to slide 29.
Which brings that the same mechanism of action.
By which injection event, so has the potential to reduce inflammation to improve blood vessels and prevent scarring that same mechanism.
Was the impetus for a study of mm.
These cells in little children with congenital heart disease. In this case Hypoplastic left heart syndrome. This was initiated study by investigators at Boston Children's Hospital.
With the hypothesis that the injection of the cells might increase the size and the pumping function.
On the left ventricle there was it.
Those congenitally small.
And the results.
But were very encouraging and were published by the investigators in December in a journalist.
Generally the cardio thoracic surgery.
The results showed that we can go to slide 30 that a single injection into the left ventricle.
All of these children at the time of surgical anatomy restructuring.
Crude.
At 12 months.
The left ventricle.
And it improved the ability of the surgeon to perform a definitive procedure.
Hum allows the.
The heart to pump more effectively bought around around the entire circulatory system.
On the basis of these results, we filed with the FDA for a pediatric rare disease designation and orphan drug designation and received both of those.
And we will continue to interface with the FDA over the coming.
Monks.
Discuss the potential pathway to approval for this ultra rare orphan indication.
It's important to note that the benefits of having a pediatric rare disease designation has got an FDA approval.
Hum.
The reverse school for other vascular for the indication.
We may be eligible to receive a priority review voucher that can be redeemed for any subsequent marketing applications may be sold or transferred to a third party.
Finally, let's move to the <unk>.
Other blockbuster opportunity they use of Rick's lending stroke, so for treatment of chronic low back pain due to inflammatory degenerative disc disease.
Slide 32.
This is another very large unmet.
Okay unmet needs over 7 million patients across the U S are estimated to suffer from inflammatory.
Inflammatory.
Chronic low back pain due to degenerative disc disease.
And really these patients we can go to slide 33.
Patient journey.
Is it really very very limited all of them.
Non steroidal anti inflammatory anti inflammatory drugs and and opioids.
Only other options for these unfortunate crushers are Uh huh.
<unk> that.
Invasive and that are involved with either are they.
Clients or surgery.
We have alignment with the FDA on the appropriate pivotal phase III study that if positive would support and confirmed results in the first phase III trial, which is to reduce substantially reduce pain to a 12 months period.
12 month reduction of pain.
Normally endpoint of the pivotal trial and we have agreement with the FDA, but that could support a label claim.
Reduction in these patients.
In addition, we've.
<unk> manufacturing and potency assays that are in place with product release, the pivotal trial is now underway.
Underway across multiple sites with a CRO engaged to recruit patients across the U S.
We have an ominous designation when you go to slide 34, we Havent Amit designation for this indication as well.
And I guess.
Given this is not an orphan indication I think it is.
It gives you a sense of the importance of this disease both in terms of the.
Morbidity that's associated with it but also with the fact that it's the number one cause of opioid usage in the western world, 50% of opioid prescriptions are for patients with chronic low back pain.
You have shown in the first phase III trial, a reduction in opioid usage.
In patients who are responders and we showed a substantial reduction in pain through as long as 36 months of follow up.
Based on these data the FDA granted us beyond that which I think.
He is an indicator of the importance they place on products are being developed for this patient population.
Slide 35 shows the data that was generated in the first phase III trial, which shows in red.
The reduction in pain at 12 months.
18 months 24 months, and 36 months and in all of those time points.
Abstention difference between Sina.
Single injection of themselves with the high Runyon cancer.
Carrier is evident versus green.
Having the injection.
If we can replicate these data in the car.
Pivotal phase III trial. This is an approval endpoint.
12 months post injection.
And I think on that basis I'll leave it there.
If there are questions.
I'd be happy to take them, Andrew I'd be happy to address any questions related to finance and Chief Medical Officer. Dr. Raj can address any of the clinical questions you might have in any regulatory questions Oh, Dr crowds, we'd be happy to address as well. Thank you.
Thank you if you wish to ask a question. Please press star one on your telephone and wait for your name to be announced if.
If you wish to come to your request. Please press star two if you want a speaker phone. Please pick up the handset to ask your question.
Your first question comes from Louise Chen with Cantor Fitzgerald. Please go ahead.
Hi, congratulations on all the progress and thanks for taking my question. So I wanted to ask you on the pricing for the pediatric opportunity for them is that is all I think last time I spoke with you in the pipe.
It's actually better than I had anticipated. So just curious what you're thinking there and then I also wanted to ask you about cash runway I know you gave the cash balance how are you thinking about the question Paul and then lastly, just opex for the remainder of the year.
Is this first half of the year a good proxy for that or is there something else happening in the second half that we should consider.
Okay.
Okay. Thanks, Thanks Louise.
So with respect to.
The pricing.
As you can imagine, we're not able to disclose publicly what we.
Expect to charge for the product for pediatric graft versus host disease, but you know I would I would point you in the direction of the car T cell therapies as a precedent.
For similar patient populations.
And <unk>.
You know you wanted to look at the.
Totality of the disease in terms of.
Morbidity and mortality and the durability of the effect was demonstrated at least five years of of survival outcomes and I think when you see.
Some of the gene therapies that are.
Providing that kind of curative outcomes.
Charge.
Some some pretty pretty remarkable prices outside of what we would say that the proxy for this product is somewhere between a car T products and the security.
Security of gene therapy products.
With respect to our.
The burn right and and I think our I think runway.
We've we've indicated that in the last quarter of our our financial spend in our burn.
It was reduced 25% relative to the comparative.
Period end and I think we're very comfortable that what we're going to maintain that kind of.
Quarterly burn, perhaps even tighten our belts further beyond that.
On that and how that.
It allows us to.
Complete both the.
The adult Gvhd program, but we are planning to do with the with a B M. T C T and group as well as the.
It'll back pain trial, so the current spend anticipates those programs being funded.
Internally.
We on that basis, we think we've got it about.
At least 12 months of cash.
You know, we we expect and are currently in discussions with strategic partners for some of these indications where we are.
If we.
Enter into strategic partnerships, particularly in the U S market, we would expect that our cash flow.
Cash balance would be substantially altered.
And I would extend that runway well beyond that.
Does that does that address your questions Louise.
Yeah. It does thank you very much.
Okay.
That brings us to the end of today's call I'll now hand, it back to Dr. Eddy SKU for closing remarks.
Right well, we hope that we have given a good a good update on our operational activities, which have been substantial at least over the past quarter, we will continue to update them.
Market as we deliver on.
On the on the near term and midterm.
Catalyst as we've laid them out and thank you very much for participating.
That does conclude our conference for today. Thank you for participating you may now disconnect.
Okay.
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Yeah.