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Stem Cell Respiratory Therapy Licensed in $1.4B Deal

Inspecting lung X-rays

(National Heart, Lung, and Blood Institute, NIH)

20 Nov. 2020. Global drug maker Novartis is acquiring a stem cell-based treatment for a serious respiratory disease associated with Covid-19 infections. The licensing and equity investment deal for remestemcel-L, an anti-inflammatory treatment derived from adult stem cells, could bring its developer Mesoblast Ltd. in Melbourne, Australia as much as $US 1.36 billion if all aspects of the agreement are fulfilled.

Mesoblast develops treatments for a range of inflammatory diseases derived from mesenchymal or adult stem cells found in bone marrow, as opposed to embryonic stem cells. These stem cells, says the company, are quite rare but respond to cell signals indicating tissue damage and in turn emit growth factors and other proteins that encourage regeneration of blood vessels, promote tissue repair, and control immune responses. Mesoblast says it receives donations of mesenchymal stem cells from young, healthy donors that can be administered “off-the-shelf” with little, if any, immune-system response.

Remestemcel-L is Mesoblast’s lead product, in late-stage trials for graft versus host disease in children and adults. As noted by the biotech industry newsletter Endpoints News, FDA turned down the company’s application for a new biologic license for remestemcel-L for pediatric graft versus host disease in the U.S. due to questions about the company’s proposed late-stage trial design, without a placebo comparison group.

However, remestemcel-L is also in a late-stage trial with 300 patients as a treatment for acute respiratory distress syndrome, or ARDS, a complication occurring in severe Covid-19 infection cases. ARDS causes inflammation and scar tissue that damage air sacs in the lungs, leading to respiratory failure, and often requiring long-term intensive care and mechanical ventilation.

Mesoblast says remestemcel-L reduces production of enzymes that promote inflammation and encourages anti-inflammatory enzymes, as well as enables natural recruitment of anti-inflammatory cells to affected areas. In April 2020, a compassionate-use allowance for remestemcel-L for 12 patients with ARDS in New York showed after five days, 10 of the 12 patients survived and nine of the 10 were able to stop using mechanical ventilators.

The agreement gives Novartis, in Basel, Switzerland, an exclusive worldwide license to remestemcel-L for treating ARDS, including further development, commercialization, and manufacturing. In addition, Novartis will conduct a late-stage trial of remestemcel-L among non-Covid-19 patients after the current trial is completed. The deal also calls for support of manufacturing scale-up by Mesoblast, and provides Novartis with an option for distributing remestemcel-L as a treatment for graft versus host disease outside Japan.

Mesoblast’s CEO Silviu Itescu says in a company statement, ““Our collaboration with Novartis will help ensure that remestemcel-L could become available to the many patients suffering from ARDS, the principal cause of mortality in COVID-19 infection.” John Tsai, Novartis’s chief medical officer says in a Novartis statement that remestemcel-L “has the potential to be the first treatment for the most critically ill ARDS patients, and it provides us with an opportunity to apply years of specialized experience directly to the work of saving lives.”

Novartis is paying Mesoblast $US 50 million up front, divided evenly between cash and an equity investment, with Novartis funding further development of remestemcel-L for ARDS from any other causes. In addition, Mesoblast is eligible for $505 million in pre-commercialization milestones of remestemcel-L for ARDS, and $750 million for milestones after commercialization, as well as royalties on product sales. And Novartis will reimburse Mesoblast up to $50 million for implementing advanced manufacturing processes, with Novartis responsible for capital expenditures to meet manufacturing capacity needs for remestemcel-L.

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