RARE Daily

Mesoblast Raises $110 Million

March 2, 2021

Rare Daily Staff

Australian biotech Mesoblast raised $110 million in a private placement of 60 million shares as the company moves to gain U.S. approval of its lead allogeneic stem cell candidate for the treatment of pediatric and adult graft-versus-host disease.

Acute graft-versus host disease (GVHD) occurs in approximately 50 percent of patients who receive an allogeneic bone marrow transplant. More than 30,000 patients worldwide undergo an allogeneic bone marrow transplant annually, primarily during treatment for blood cancers, and these numbers are increasing. In patients with the most severe form of acute GVHD mortality is as high as 90 percent despite optimal institutional standard of care. There are currently no FDA-approved treatments in the United States for children under 12 with SR-aGVHD, a potentially life-threatening complication of an allogeneic bone marrow transplant for blood cancer.

Mesoblast’s lead allogeneic cell therapy product candidate, remestemcel-L, is an investigational therapy comprising culture-expanded mesenchymal stem cells derived from the bone marrow of an unrelated donor. Remestemcel-L is thought to have immunomodulatory properties to counteract the cytokine storms that are implicated in various inflammatory conditions by down-regulating the production of pro-inflammatory cytokines, increasing production of anti-inflammatory cytokines, and enabling recruitment of naturally occurring anti-inflammatory cells to involved tissues.

Mesoblast sold the shares to U.S. investor group SurgCenter Development, which partners with facilities performing complex spine surgery and outpatient joint replacement, at a 6.5 percent discount to their price at the close of trading on February 25, 2021. SurgCenter also received warrants to acquire a further 15 million shares at a 25 percent premium to the placement price on or before March 15, 2028.

Mesoblast plans to use proceeds from the financing to increase the supply of its lead candidate remestemcel-L before meeting with the U.S. Food and Drug Administration in the second and third quarters of 2021 to discuss moving forward toward approval of its lead candidate remestemcel-L for the treatment of pediatric GvHD.

In October 2020, the FDA refused to approve remestemcel-L for the treatment of pediatric steroid-refractory acute graft versus host disease despite an advisory panel’s 9-1 vote in favor of approval. In a complete response letter, the FDA recommended that Mesoblast conduct at least one additional randomized, controlled study in adults and/or children to provide further evidence of the effectiveness of remestemcel-L for steroid-refractory acute graft versus host disease (SR-aGVHD). The FDA also identified a need for further scientific rationale to demonstrate the relationship of potency measurements to the product’s biologic activity.

Proceeds from the financing will also invest in optimizing manufacturing for larger market opportunities, as well as advancing the manufacturing and development of its rexlemestrocel-L platform to meet commercial objectives for chronic heart failure and chronic low back pain due to degenerative disc disease following the recent completion of phase 3 trials in these indications.

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