Appendix 4C Quarterly Activity Report for Quarter Ended September 30, 2023
NEW YORK, Oct. 30, 2023 (GLOBE NEWSWIRE) -- Mesoblast Limited (Nasdaq:MESO; ASX:MSB), global leader in allogeneic cellular medicines for inflammatory diseases, today provided an activity report for the first quarter ended September 30, 2023.
Mesoblast Chief Executive Silviu Itescu said: “During the period we had a very productive meeting with the United States Food and Drug Administration (FDA), which has allowed us to establish the path forward for potential pediatric and adult approvals of Ryoncil® (remestemcel-L) in steroid-refractory acute graft versus host disease (SR-aGVHD).”
Dr Itescu added: “I am very confident that the cost reduction strategies we have implemented, together with operational streamlining and access to additional sources of capital, will facilitate the balance sheet strength needed to complete our Phase 3 programs for adults with SR-aGVHD and for chronic inflammatory low back pain through to product approvals and commercialization.”
ACTIVITY REPORT
At the Type A meeting in September, Mesoblast presented clinical data indicating that treatment with the improved RYONCIL product version of remestemcel-L, manufactured using the current process inspected by FDA, resulted in consistently high survival rates in children with SR-aGVHD, whether using product made for the Phase 3 clinical trial MSB-GVHD001 between 2015-2018 or made with the validated manufacturing process proposed for commercial release and used under Emergency Investigational New Drug (EIND) protocol through 2023. Mesoblast believes that the totality of these clinical studies, together with additional data using the IL-2R alpha inhibition potency assay in place during the pediatric Phase 3 trial, will both support approval for the pediatric indication and provide a link between the RYONCIL product that was used in the pediatric Phase 3 trial and available commercial inventory.
In its September 2023 draft guidance to industry for development of agents to treat aGVHD,1 the FDA stated that a marketing application in a population with refractory aGVHD where there are no available therapies might be supported by positive results from a single-arm trial. Mesoblast intends to commence a Phase 3 trial of RYONCIL in adults and adolescents, a market 5-fold larger than pediatric, who are refractory to both corticosteroids and a second line agent such as ruxolitinib, for whom there are no approved therapies. The trial is expected to be conducted by the Blood and Marrow Transplant Clinical Trials Network (BMT CTN), a body responsible for approximately 80% of all US transplants, at a fraction of the cost of a traditional contract research organization (CRO).
FIANANCIAL REPORT
Management and the Board have undertaken a detailed review of expenditures and have put in place a plan that focuses on preservation of cash by implementing significant cost containment strategies and enacting substantial payroll reductions. We have already managed to reduce net operating cash usage over the past two years by 37%, and the cost containment that we have now put in place ensure that we will be operating in an even more fiscally prudent manner which is expected to reduce spend by a further 23% year on year.
These activities to preserve cash are complemented by initiatives currently underway to increase cash inflows which would by design enable us to prudently invest in our Phase 3 programs for SR-aGVHD and back pain. In this regard, we are working on corporate initiatives to strengthen our balance sheet, including royalty monetization and strategic partnerships to both access existing commercial distribution channels and supplement costs of development.
Cash balance at the end of the quarter was US$53.2 million, with net operating cash spend of US$14.2 million. We have implemented a cost containment plan to achieve a targeted 23% reduction (US$15 million) in projected FY2024 annual net operating cash spend compared with FY2023, which will be partially offset by investment in our Phase 3 programs for SR-aGVHD and CLBP.
Revenue from royalties on sales of TEMCELL® HS Inj.2 sold in Japan by our licensee for the quarter were US$1.6 million. On a constant currency basis, royalties on sales were US$1.7 million for the quarter ended September 30, 2023, a growth of 24% compared with US$1.4 million in the comparative quarter in FY2023.3
Other
Fees to Non-Executive Directors were US$83,121, consulting payments to Non-Executive Directors were US$76,200 and salary payments to full-time Executive Directors were US$293,834, detailed in Item 6 of the Appendix 4C cash flow report for the quarter.4 From 1 August 2023, Non-Executive directors have voluntarily deferred 50% cash payment of their director fees and agreed to receive the remaining 50% of their fees in equity-based incentives and Executive Directors (our Chief Executive and Chief Medical Officers) have voluntarily reduced their base salaries for FY24 by 30% in lieu of accepting equity-based incentives.
A copy of the Appendix 4C – Quarterly Cash Flow Report for the first quarter FY2024 is available on the investor page of the company’s website www.mesoblast.com.
About Mesoblast
Mesoblast is a world leader in developing allogeneic (off-the-shelf) cellular medicines for the treatment of severe and life-threatening inflammatory conditions. The Company has leveraged its proprietary mesenchymal lineage cell therapy technology platform to establish a broad portfolio of late-stage product candidates which respond to severe inflammation by releasing anti-inflammatory factors that counter and modulate multiple effector arms of the immune system, resulting in significant reduction of the damaging inflammatory process.
Mesoblast has a strong and extensive global intellectual property portfolio with protection extending through to at least 2041 in all major markets. The Company’s proprietary manufacturing processes yield industrial-scale, cryopreserved, off-the-shelf, cellular medicines. These cell therapies, with defined pharmaceutical release criteria, are planned to be readily available to patients worldwide.
Mesoblast is developing product candidates for distinct indications based on its remestemcel-L and rexlemestrocel-L allogeneic stromal cell technology platforms. Remestemcel-L is being developed for inflammatory diseases in children and adults including steroid refractory acute graft versus host disease, biologic-resistant inflammatory bowel disease, and acute respiratory distress syndrome. Rexlemestrocel-L is in development for advanced chronic heart failure and chronic low back pain. Two products have been commercialized in Japan and Europe by Mesoblast’s licensees, and the Company has established commercial partnerships in Europe and China for certain Phase 3 assets.
Mesoblast has locations in Australia, the United States and Singapore and is listed on the Australian Securities Exchange (MSB) and on the Nasdaq (MESO). For more information, please see www.mesoblast.com, LinkedIn: Mesoblast Limited and Twitter: @Mesoblast
References / Footnotes
United States Food & Drug Administration. Graft-versus-Host Diseases: Developing Drugs, Biological Products, and Certain Devices for Prevention or Treatment Guidance for Industry. Draft Guidance. September 2023.
TEMCELL® HS Inj. is a registered trademark of JCR Pharmaceuticals Co. Ltd.
TEMCELL sales by our Licensee are recorded in Japanese Yen before being translated into USD for the purposes of calculating the royalty paid to Mesoblast. Results have been adjusted for the movement of the USD to Japanese Yen exchange rate from 1USD:145.81 Yen for the 3 months ended September 30, 2022 to 1USD:150.58 Yen for the 3 months ended September 30, 2023.
As required by ASX listing rule 4.7 and reported in Item 6 of the Appendix 4C, reported are the aggregated total payments to related parties being Executive Directors and Non-Executive Directors.
Forward-Looking Statements
This 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.
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