Mesoblast cuts costs to fund heart trial

The stem cell firm has narrowed its annual loss as it cuts costs to help pay for a trial of its heart failure technology.

Mesoblast boss Silviu Itescu.

Stem cell company Mesoblast has narrowed its annual loss as it increases cost cutting initiatives to fund a crucial trial of its heart failure technology.

The Australian-listed company (MSB) reported today that its annual loss before income tax had reduced by 6 per cent, on the prior year, to $US90.8 million.

The net loss attributable to ordinary shareholders was $US4.1m, or US1.14c-per-share, for the 12 months of 2016, compared with US29.99c-per-share last year.

Shares in the company traded lower today after the release of the annual results, recording a 1.8 per cent decline to $1.38.

The company’s share price, which traded as high as $10 a few years’ ago, collapsed earlier this year after its partner, Israeli pharmaceutical giant Teva, walked away from funding a phase three trial of the heart failure drug.

That decision, announced in June, wiped around a third of Mesoblast’s value at that time as the market saw it as a vote of no confidence in the outcome of the trials.

The company has since focused on cutting its costs and conserving cash to fund the start of the trial. It also announced in July it would receive an earlier update than originally thought on the drug trial and that it had secured an equity facility, should it need to source extra funds to progress the trial.

Anticipated total trial costs for the heart failure program, MPC-150-IM, are approximately $US13m.

Mesoblast said in its results today that it had reduced its annual operating and investing cash outflows by 15 per cent to $US89.7m compared to the prior year. It said that target was hit by decreasing Tier 2 expenditure, lower payments to third parties and reduced employee costs.

The company added that it would further reduce cash burn by up to $US25m in 2017 to help absorb the incremental costs of the heart failure program. At the end of 2016 it had cash reserves of $US80.9m.

Mesoblast chief executive Silviu Itescu said during the past financial year the company had made a concerted effort to significantly reduce its cash burn and to apply its resources prudently to advance its Tier 1 product candidates towards major upcoming value inflection points.

“Consistent signals of efficacy using our cells in the hardest to treat patient segments across multiple disease states continue to validate the disruptive potential of our platform technology,” he said.