Health Check: Long-suffering Mesoblast investors dare to dream

Mesoblast expects FDA stem cell drug approval by the first week of January ‘if not earlier’
FDA to Somnomed: ‘do you want the good news or bad news first?’
Neurotech mulls its US options after FDA’s orphan drug decision
Orthocell says revenue gained 8% in the September quarter

Health Check is renowned biotech journo Tim Boreham’s daily wrap covering morning movers and shakers of note in the ASX Healthcare sector, Monday through Thursday.

After years of setbacks, patient Mesoblast (ASX:MSB) investors are confident the stem-cell leader will deliver the goods.

Mesoblast shares have surged by 65% over the past month and are trading at three-year highs, on expectations the US Food & Drug Administration (FDA) will approve at least one of its therapies.

Mesoblast founder and CEO Silviu Itescu expects the agency to approve the company’s drug Ryoncil for paediatric steroid-resistant graft-versus-host disease (GvHD) “no later than the first week of January and possibly sooner”.

Approval would mark a long-awaited breakthrough for Mesoblast, given its rebuffed entreaties to the FDA in the past. To date, the company’s only approved drug is in Japan, also for GvHD.

The result of bone marrow transplant, GvHD causes the donor tissue to reject the body. If the FDA approves Ryoncil, it will be the first time the agency has approved an allogeneic stem cell treatment derived from healthy human donor cells.

Unlike using patient-own cells, allogeneic drugs can be mass produced and used over-the-shelf when needed.

Last August Mesoblast shares plunged 56% after the FDA issued a ‘complete response’ letter in response to the company’s marketing application for Ryoncil.

In effect these letters mean ‘ go and do some more work’.

Itescu says he is optimistic because the company now has had extensive feedback from the FDA, which has also inspected – and green-lit – the company’s Singapore manufacturing plant.

Unusually, Mesoblast has no fewer than six programs in phase III trial stage: for adult GvHD, end-stage and class II/III heart failure, chronic lower back pain, inflammatory bowel disease/Crohn’s disease and the childhood hypoplastic left-heart syndrome.

“First approval of Ryoncil opens the door for multiple new indications.” Itescu says.

The company is enrolling patients in a second back-pain study and later this year will meet with the FDA to discuss its children and adult heart-failure programs.

While GvHD is a relatively niche area, 30,000 bone marrow transplants take place annually, half of them in the US. The paediatric market accounts for about one in five, with high mortality rates.

“If steroids don’t fix it there really is no alternative,” Itescu says.

Mesoblast shares this morning gained a further 2% to $1.52 – still a long way off their historic peak of $9.50 in 2011.

FDA gives Somnomed something to sleep on

Meanwhile, the FDA has conferred both good and bad news on sleep-related breathing disorders house Somnomed (ASX:SOM) .

The agency has approved Somnomed’s Rest Assure, a mouthguard-type device with inbuilt compliance monitoring. Somnomed’s devices treat obstructive sleep apnoea as a cheaper alternative to Resmed-style continuous positive airway pressure (CPAP) therapy.

But the FDA knocked back an additional feature of a cloud-based monitoring tool and the company evidently was keen on including this modality in its planned 2025 launch of Rest Assure.

“Whilst encouraged by the FDA’s decision, Somnomed is currently reviewing the requirements of a subsequent submission for the efficacy algorithm and the commercialisation pathway of the product over the medium term,” the company says.

“Somnomed’s Rest Assure strategy was predicated on both compliance (usage of device) and efficacy to enable clinical validation of the therapy and align with data currently available from most CPAP therapies.”

Somnomed reported revenue of $91.7 million for the year to June 30 2024, with one third derived from the US and half from Europe.

Somnomed shares lost 2.5% to 38 cents.

Neurotech mulls options after FDA setback

Sorry for this morning’s FDA obsession, but the agency has given Neurotech (ASX:NTI) 12 months to mull its options after rejecting the company’s request for orphan drug status for its proposed cannabis-based treatment for the neuro-psychiatric disorder Pandas/Pans.

The agency said Pandas/Pans might “not constitute the definition of a rare disease” in the US, on account of it being not quite rare enough.

The disease affects one in 200 children, compared with the ‘orphan disease’ benchmark of fewer than 200,000 occurrences in the US.

‘Pandas’ stands for ‘paediatric autoimmune neuro-psychiatric disorders associated with streptococcal infections’ and Pans stands for ‘paediatric acute-onset neuro psychiatric syndrome.’

The disease is manifested in children going to bed but waking up with heightened anxiety and depression and obsessive compulsive behaviour.

The FDA wasn’t convinced that Pans could be treated as a separate disease and has requested supportive data from the company.

But the company notes the FDA had no truck with the clinical and preclinical data supporting the application.

Last year, a 15-patient phase1/2 trial reached its primary endpoint of a 30% reduction in anxiety and depression at 12 weeks, with follow-up results at 52 weeks showing a “highly significant and clinically meaningful” 45% improvement.

Neurotech is thus forging ahead with the Pandas/Pans program, which is less advanced than its effort with Rett Syndrome (the same disorder that elevated Neuren Pharmaceutics to biotech hero status).

The company has also applied for orphan drug status for this one and expects a response by the end of calendar 2024. Meanwhile, the agency has given the company 12 months’ “abeyance” to revise its Pandas/Pans entreaty.

Orphan drug status confers goodies including seven years’ marketing exclusivity, tax breaks and exemption from FDA user fees.

Neurotech shares fell 15.5% on Friday but this morning gained 2% to 5 cents.

Orthocell chalks up record quarterly revenue

Tissue repair and nerve regeneration specialist Orthocell (ASX:OCC) has reported revenue of $2.03 million for the September stanza, 7.8% higher than the June quarter and a second consecutive record.

The company cites stronger sales of its Striate+ product for dental surgery, approved in geographies including the US, Canada and Europe; and for its peripheral nerve-repair product Remplir (Australia and New Zealand).

“Multiple new markets are pending as the Company continues to accelerate its program of regulatory approvals into new jurisdictions,” Orthocell says.

Management expects “near term” US approval of Remplir, which will open up a US$1.6 billion nerve-repair market.

The company expects to file its 510k application to the FDA – sorry, that name again – in the current quarter, with approval expected in the March 2025 quarter. And the company estimates a global opportunity for both products of around US$4 billion a year.

Orthocell shares gained 3% to 47.5 cents.

At Stockhead, we tell it like it is. While Neurotech and Orthocell are Stockhead advertisers, they did not sponsor this article.