Mesoblast awaits urgent FDA meeting as cash burn continues

Mesoblast (ASX:MSB) says it burned through $US28.2 million ($40 million) in the third quarter, leaving it with $US108.1 million ($153 million) cash on hand as it awaits several key catalysts.

The Melbourne biotech said that it expects to meet with the US Food and Drug Administration in November after requesting an urgent meeting to discuss accelerated approval of its stem cell treatment Ryoncil (remestemcel-L) for the treatment of acute graft-versus-host disease in children, which the FDA unexpectedly rejected at the start of this month.

The company also confirmed it is expecting readouts of two Phase 3 studies, for chronic heart disease and chronic low back pain, that are expected by the end of the year.

It is also expecting to hear in early November from a Data Safety Monitoring Board on whether a clinical trial testing whether Ryoncil can treat severely ill COVID-19 patients should continue or stop early. The trial has enrolled more than half of its 300 patient target across more than 20 hospitals across the United States, Mesoblast said.

Any of those catalysts could be transformational for the company, which took in just $US682,000 ($965,000) in customer receipts in the quarter – royalties for a stem cell treatment similar to Ryoncil that Mesoblast has licensed to JCR Pharmaceuticals for the treatment of acute graft-versus-host disease in Japan.

It spent $US23 million in the quarter on operating activities and $US5.2 million ($7.4 million) building commercial inventory of Ryoncil in anticipation of a product launch for either children with acute graft versus host disease or COVID-19 patients with acute respiratory distress syndrome.

Its cash balance dropped from $US129.3 million ($183 million) at the start of the quarter to leave it with $US108.1 million ($153 million) in the bank. Last year the company burned through $US77.9 million ($107.6 million).

Mesoblast said it also might have access to an additional $US67.5 million ($95.6 million) through existing financing facilities and strategic partnerships.

It has borrowed $US50 million ($70 million) from Hercules Capital (NYSE:HTGC) at 9.7 per cent interest and can draw another $US25 million ($35 million) from the specialty finance firm this year, subject to certain conditions.

Around lunchtime Mesoblast shares were up 1.3 per cent to $3.14.