Novartis Terminates Collaboration with Mesoblast Over Poor Trial Data for COVID-19 Drug Remestemcel-L

Compiled by Fan Dongdong

This week, Novartis announced the termination of its collaboration deal with Mesoblast for the development of the COVID-19 drug remestemcel-L, citing poor trial data as the reason. Following this negative news, Mesoblast's stock price plummeted by more than 15%.

In November last year, Novartis signed a global exclusive licensing and collaboration agreement with Australia-based Mesoblast to develop, commercialize, and manufacture remestemcel-L for acute respiratory distress syndrome (ARDS), including drugs related to COVID-19. At that time, Novartis described the cooperation with Mesoblast as "an important addition to the product pipeline."

According to the terms of the agreement, Novartis will pay an upfront payment of $50 million, which includes $25 million in equity. Novartis will also fully fund the global clinical development for all-cause ARDS and potentially other respiratory indications. However, more than a year later, this deal was never completed. It was reported that Mesoblast never received the promised $50 million in upfront cash and equity investment.

A spokesperson for Novartis stated, "After evaluating additional trial data for remestemcel-L, the full body of evidence from the Phase 3 trial is insufficient to warrant continued collaboration," adding that "no safety issues were identified in the trials." Notably, the Phase 3 trial in question was initiated following highly positive results from an earlier open-label trial, which showed that remestemcel-L achieved an 83% survival rate in ventilator-dependent patients treated with the cell therapy.

However, in December this year, after the Data Safety Monitoring Board concluded that the therapy was "unlikely" to achieve its primary endpoint (a 43% reduction in 30-day mortality), Mesoblast shortened the Phase 3 trial. In addition, a few weeks ago, the therapy was rejected by the U.S. Food and Drug Administration (FDA) for the treatment of pediatric acute graft-versus-host disease on the grounds that the company's trial data came from a single-arm, open-label study rather than a randomized trial.

Despite numerous setbacks in trials and collaborations, Mesoblast has expressed its determination to bring the cell therapy remestemcel-L to market for patients with acute respiratory distress syndrome (ARDS) caused by COVID-19. Observations from the completed ARDS trial showed that the use of remestemcel-L in patients under 65 reduced mortality, and although it did not meet the primary endpoint, Mesoblast believes this is a sufficiently strong positive signal to support seeking Emergency Use Authorization (EUA) for remestemcel-L, which is the most direct pathway for the therapy to enter the market.

With the termination of this agreement, Mesoblast faces the impact of potential revenue loss. Mesoblast touts itself as "the world leader in developing allogeneic (off-the-shelf) cell medicines for the treatment of severe and life-threatening inflammatory conditions." The company primarily focuses on leveraging its proprietary mesenchymal lineage cell therapy technology platform to develop drug candidates that respond to severe inflammation by releasing anti-inflammatory factors, thereby reducing the damage caused by inflammatory processes to patients.

Mesoblast stated that the company will continue to focus heavily on executing short-term goals, bringing remestemcel-L to market for the treatment of patients with Acute Respiratory Distress Syndrome (ARDS) caused by COVID-19. In addition, the company is preparing to launch a pivotal Phase 3 trial that may support the therapy in obtaining Emergency Use Authorization (EUA). The company noted that COVID-19 may remain a significant global issue, presenting Mesoblast with a major commercial opportunity. Regardless of vaccines and antiviral treatments, there will be a steady population of ICU patients with ARDS.

Reference Source: Novartis pulls out of Mesoblast deal