The Mesoblast Limited (ASX: MSB) share price is down 38% in early trading after the FDA’s decision about remestemcel-L.
What happened?
Mesoblast has been waiting for approval for remestemcel-L from the FDA.
The biotech business announced today that the FDA has issued a ‘complete response letter’ to its application for remestemcel-L for treating pediatric steroid-refractory acute graft versus host disease (SR-aGVHD).
While the Oncologic Drugs Advisory Commitee (ODAC) of the FDA voted 9 to 1 that the available data supported the effectiveness of of remestemcel-L in patients, the FDA has recommended that Mesoblast conduct “at least” one additional randomised, controlled study in adults and/or children to provide further evidence.
Mesoblast said it would urgently request a Type A meeting with the FDA to discuss a potential accelerated approval with a post-approval condition for an additional study considering there are no approved treatments for this condition.
The FDA also identified a need for further scientific rationale to demonstrate the relationship of potency measurements to the product’s biological activity. Mesoblast said assays (testing) measuring the potency of remestemcel-L will continue to be refined to provide further scientific rationale for its use in severe inflammatory diseases with high mortality risk.
Mesoblast CEO Dr Silviu Itescu said: “We are working tirelessly to bring remestemcel-L to patients with life threatening inflammatory conditions including SR-aGVHD and COVID-19 ARDS”.
Summary
This is disappointing news for Mesoblast and delays things for the company. However, it’s not as though the FDA denied remestemcel-L completely. I don’t know enough about the company or the sector, it seems like a binary (yes/no) outcome – which isn’t how I like to invest. With the prior 9 to 1 recommendation, I’d guess it will get through, so this could be an opportunity. But I prefer the idea of other ASX growth shares like Pushpay Holdings Ltd (ASX: PPH) which I wrote about here.
