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ASX biotech share surges 20% higher on COVID-19 drug trial

The Mesoblast Limited (ASX: MSB) share price is surging higher today in response to news of a coronavirus drug trial. 

This morning, Mesoblast informed the ASX that it will begin formal trials for a product to treat patients suffering from COVID-19 within the coming weeks.

What trials will Mesoblast be conducting?

Mesoblast has announced that its allogeneic mesenchymal stem cell (MSC) product, remestemcel-L, will be evaluated in a randomised, placebo-controlled trial. The trial will be conducted as a private-public partnership in conjunction with the Cardiothoracic Surgical Trials Network (CTSN) on 240 patients with acute respiratory distress syndrome (ARDS) caused by COVID-19.

Commencement of the trial follows Mesoblast’s approved application for an Investigational New Drug (IND) from the US Food and Drug Administration (FDA) earlier this week. With the coronavirus pandemic moving quickly in the US, the FDA was quick to approve Mesoblast’s investigational study as the product is already in a number of clinical trials for inflammatory conditions.

How does Mesoblast’s product help patients with COVID-19?

The COVID-19 virus has a detrimental impact on the lungs of patients by initiating an overproduction of immune cells. The virus creates a ‘cytokine storm’ which results in immune cells flooding the lungs, causing substantial inflammation and a build-up of fluid that can result in death. As a result, patients suffer from ARDS and are admitted to intensive care units to receive oxygen ventilation. According to the company’s update, the mortality rate of patients with ARDS as a result of COVID-19 is as high as 80%.

Mesoblast’s remestemcel-L product is design to counteract the inflammatory process by neutralising the production of pro-inflammatory cytokines and promoting the production of anti-inflammatory cytokines.  Remestemcel-L was already in a number of other clinical trials targetted at reducing inflammatory conditions on patients with steroid-refractory acute graft versus host disease (aGVHD).

Foolish takeaway

Mesoblast is a world leader in developing regenerative medicines for inflammatory diseases and has prided itself on innovation in stem cell research. The company has used its cell therapy technology to establish a broad portfolio of commercial products and has a large pipeline of therapies in late-stage development and testing.

If proven effective against ARDS in COVID-19 patients, the product could save thousands and thousands of lives and would be monumental for medical science and biotechnology in Australia.

The Mesoblast share price has surged more than 55% since receiving approval from the FDA earlier this week and is currently trading 20.16% higher today, having hit an intra-day high of $2.21.

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Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.