Biotech company Mesoblast (ASX:MSB) has entered into a strategic partnership to develop and commercialise a stem cell treatment for chronic lower back pain.

As part of the deal, Mesoblast said it could receive up to $150m ($218.6m) in up-front and milestone payments prior to launch.

MSB will develop the technology in conjunction with Grünenthal, a German company which specialises in pain management treatment.

Shares in Mesoblast jumped more than 15 per cent in morning trade.

Compact discs

Both companies will work together to commercialise the MPC-06-ID treatment — a phase III allogeneic stem cell therapy used to treat chronic low back caused by degenerative disc disease.

Mesoblast said the therapy would be applicable for patients who have “exhausted conservative treatment options”.

The company is currently completing a phase III trial for MPC-06-ID in the US, the results of which will be received in 2020.

In an earlier phase II trial, the company said it demonstrated that a single intra-discal injection “resulted in meaningful and durable improvements for patients in pain intensity and functionality for at least three years”.

Phase III trials are typically carried out to confirm the safety and effectiveness of a given treatment on a larger group of people.

Under the terms of the agreement, Grünenthal will have “exclusive commercialisation rights to MPC-06-ID for Europe and Latin America”.

Mesoblast said it will receive up to $US150m in upfront payments prior to product launch. The company is targeting receipt of around $45m of that in the next 12 months, which includes a $20m payment upon “regulatory approval to begin a confirmatory phase III trial in Europe”.

“If clinical trial results from phase II are confirmed, MPC-06-ID could offer a new treatment option to patients otherwise considered unresponsive to conservative therapy,” the company said.

Read more about Mesoblast:

Mesoblast spruiks “blockbuster” assets to claw back 2018 losses

Stem cell biotech companies welcome $150 million in decade-long funding


In other ASX biotech news today:

Medical tech company Proteomics International Laboratories (ASX:PIQ) announced that clinically-validated study results for its PromarkerD treatment — used to predict the onset of diabetic kidney diesease — have been published in a peer-reviewed journal.

The study of 447 patients showed PromarkerD “correctly predicted 86 per cent of those who went on to develop chronic kidney disease (CKD) within four years”.