Mesoblast Ltd. Q3 FY2023 earnings call

• Investment Highlights: Novel allogeneic cell therapy platform with remestemcel-L and rexlemestrocel-L as lead candidates, both platforms for multiple products and indications.
• Clinical Pipeline: Remestemcel-L is most advanced for pediatric steroid refractory GVHD, with BLA before FDA (PDUFA goal date August 2, 2023) and manufacturing inspection completed. Rexlemestrocel-L has RMAT designations for chronic low back pain and inflammatory heart failure.
• Financials: Cash on hand $48.8M, pro-forma cash $88.8M after private placement. Revenue from royalties, R&D spend reduced, manufacturing preparation for remestemcel-L launch.
• Clinical Data: Remestemcel-L survival data from studies showing early and long-term survival benefits, potency correlations with survival. Rexlemestrocel-L Phase 3 trial details and cardiac program data.
• Go-to-Market: Pre-launch activities for remestemcel-L including payer engagement and commercial team hiring. Post-approval plans for staged launch targeting high transplant volume centers.

For the quarter ended March 31, 2023, revenue from royalties on the sales of TEMCELL in Japan by the licensee was $1.8 million. On a constant currency basis, royalties grew 4% to $2 million for the quarter, and over 12 months, revenue from royalties on product sales was $7.6 million. R&D expenditure was reduced by 14% for the quarter. The company has substantial cash on hand, with $48.8 million as of March 31, 2023, and pro-forma cash of $88.8 million after the April private placement. The revenue is predominantly from royalties on TEMCELL sales in Japan, and R&D spend was focused on supporting remestemcel-L BLA re-submission and rexlemestrocel-L pivotal studies.

• Remestemcel-L PDUFA date is August 2, 2023. Rexlemestrocel-L expects to commence patient enrollment in the third quarter of 2023.
• Pre-launch inventory of $31 million for remestemcel-L. Plans to build commercial team and target high volume transplant centers post-approval.

• Uncertainty regarding the FDA's Establishment Inspection Report (EIR) outcomes from the manufacturing inspection.
• Variability in designing clinical trials for steroid-refractory aGVHD in adults, including choice of trial design (randomized control vs. propensity matched control).
• Dependence on successful PDUFA outcome for remestemcel-L to proceed with commercialization.

Q: What still has to be done ahead of the NDA for remestemcel-L?

A: The major remaining item is a discussion around the specifics of the label.

Q: How quickly can Mesoblast commercialize remestemcel-L if approved?

A: The commercial team is in place, with a targeted launch focusing on highest volume transplant centers, expecting to launch as soon as approved.

Q: Any other possible outcomes for the EIR besides the FDA giving a thumbs up?

A: No 483 Form was provided, but the EIR may have small issues, but major concerns from 483 won't be there.

Q: How could the adult steroid-refractory aGVHD trial differ from pediatric studies?

A: Design and endpoints are still under discussion, including randomized control vs. propensity matched control.

Q: Does Mesoblast have enough cash for near-term milestones?

A: Yes, through collaborations, financial groups, and pre-arranged debt structures post FDA approval.