Mesoblast (ASX:MSB) share price tumbles 32% lower on update

The Mesoblast share price is plummeting after the company announced it has received an update from the US Food and Drug Administration (FDA).

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It has been a disappointing day for Mesoblast Limited (ASX: MSB) shareholders as they flee for the hills. Before the opening bell, Mesoblast announced it had received an update from the United States Food and Drug Administration (FDA) on its remestemcel-L product. At the time of writing, the Mesoblast share price is down an astonishing 32.49% to $3.45. At one point, the Mesoblast share price reached as low as $2.81.

Let’s take a look at Mesoblast and find out what happened.

What is remestemcel-L?

Mesoblast’s lead drug candidate, remestemcel-L, is a cellular therapy product that consists of cultured, cryopreserved mesenchymal stem cells derived from the bone marrow of healthy donors.

Remestemcel-L is being developed to treat steroid-refractory acute graft versus host disease (SR-aGVHD). However, Mesoblast has been also experimenting with remestemcel-L to treat patients infected with COVID-19.

FDA response letter

The Mesoblast share price fell of a cliff this morning after the company provided an update on the progress of its remestemcel-L drug with the FDA. Mesoblast advised that it had received a complete response letter to its Biologics Licence Application. Despite, the Oncologic Drugs Advisory Committee (ODAC) voting in favour of the efficacy of remestemcel-L in September, the FDA has recommended an additional randomised controlled study.

Mesoblast noted that there is no approved treatment for pediatric SR-aGVHD. The company said it will urgently request a Type A meeting with the FDA to discuss the potential accelerated approval, pending the success of its additional study.

It is expected that this will be completed within 30 days.

Management said it remained upbeat on remestemcel-L. Professor Joanne Kurtzberg, Director of the Pediatric Blood and Marrow Transplant Program at Duke University Medical Centre commented, “The Phase 3 trial results showed that remestemcel-L provides a meaningful treatment for children with SR-aGVHD who have a very dismal prognosis. I look forward to having this much-needed therapy available to our patients.”

In addition, Mesoblast CEO, Dr Silviu Itescu, stated, “We are working tirelessly to bring remestemcel-L to patients with life threatening inflammatory conditions, including SR-aGVHD and COVID-19 ARDS.”

Current phase III trial

Mesoblast is currently conducting a phase III trial which is further evaluating the effectiveness of its flagship remestemcel-L drug. The control study involves 300 ventilator-dependent adults with moderate to severe acute respiratory distress syndrome (ARDS) caused by COVID-19.

A second interim analysis by the trial’s independent Data Safety Monitoring Board is due in early November. Completion of patient enrolment will conclude in the month of December.

Is the Mesoblast share price a buy?

I think that while Mesoblast has strong potential to commercialise its remestemcel-L drug, there are still many hurdles to overcome. Personally, I will be staying away from the Mesoblast share price for now, even after today’s fall. I believe there is still too much risk associated with the FDA not approving remestemcel-L.

I also think there are much safer opportunities on the market to invest in.

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Motley Fool contributor Aaron Teboneras 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.

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