Mesoblast hammered as Covid trial fails

Mesoblast stock plummeted as much 45 per cent on Friday.

Mesoblast stock plummeted as much 45 per cent on Friday amid disappointing news for its COVID acute respiratory distress syndrome trials. Picture: Jenny Evans/Getty Images)

The rollercoaster ride of $2bn biotech high-flyer Mesoblast has once again taken the downward track after the stock plummeted as much 45 per cent on Friday amid disappointing news for its COVID acute respiratory distress syndrome trials.

Two months ago Mesoblast suffered a major US regulatory setback for its Remestemcel-L application for treating children for the disease, which has a similar immune response to severe coronavirus complications, and its shares slumped from $5 to $2.81.

Since then the shares, among the most volatile on the market, began to recover towards $5, but adverse findings for its US trials once again triggered a collapse.

On Friday Mesoblast shares dived 45 per cent to as low as $2.10 but later clawed back some lost ground in late trade to be down 36 per cent at $2.41.

Mesoblast initially had some positive reaction to its drug Remestemcel-L, which had helped patients with serious COVID-19 complications recover because it was targeting acute respiratory distress syndrome (ARDS).

­The company initially developed the drug to treat children with steroid-refractory acute graft versus host disease.

In a statement, Mesoblast said the US Data Safety Monitoring Board had performed a third interim analysis of the trial’s first 180 patients.

The trial was designed to achieve a primary endpoint of 43 per cent reduction in mortality at 30 days for treatment with Remestemcel-L on top of maximal care in a trial of 300 patients.

The DSMB reported that while there were no safety concerns, “the trial is not likely to meet the 30-day mortality reduction endpoint at the planned 300 patient enrolment”.

The DSMB recommended that the trial complete with the currently enrolled 223 patients, and that all be followed up as planned.

Mesoblast noted that during the course of the trial and as the pandemic has evolved, numerous changes in the treatment regimes for COVID-19 patients had occurred, including both before and while on mechanical ventilation, that may have an effect on the mortality endpoint in the trial.

“These include extended management of patients prior to ventilator support, and use of experimental therapies such as dexamethasone, anti-virals, and repurposed immunomodulatory agents.

“All of these may have changed the natural course of ventilated patients and reduced overall mortality rates during the trial compared to the early stages of the pandemic,” Mesoblast said.

The company had entered into a licence and collaboration agreement with Novartis in November for the development, manufacture and commercialisation of Remestemcel-L, with an initial focus on the treatment of ARDS, including that associated with COVID-19, and other indications.

The closing of the agreement is subject to the expiration or termination of the waiting period under the Hart-Scott Rodino Antitrust Improvements Act and certain other conditions.

Mesoblast re-entered the ASX 200 in June. Its major investors include billionaire stock picker Alex Waislitz‘s Thorney Investment Group, with the high-profile investor a long-time friend of Mesoblast founder and shareholder Silviu Itescu.

The company has also been in talks with the federal government about launching local ­clinical trials of its COVID-19 experimental treatment.