The Mesoblast limited (ASX: MSB) share price is rocketing higher on Friday morning.
In early trade, the biotechnology company's shares are up 20% to $3.95.
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What did Mesoblast announce?
Mesoblast was busy with the announcements this morning, releasing its quarterly results and revealing a new collaboration with a major pharmaceutical company.
In respect to its quarterly results, Mesoblast reported a 92.3% decline in revenue to US$1.3 million for the first quarter. This was due largely to a US$15 million milestone payment received in the prior corresponding period.
Royalty revenue on sales of TEMCELL HS in Japan decreased US$0.6 million to US$1.3 million for the quarter. This was driven by a temporary shutdown in production by JCR Pharmaceutical as it expands its facility capacity to meet increasing demand.
Research and development costs increased 55.6% to US$19.3 million, manufacturing costs lifted 340% to US$11.9 million, and management and administration costs grew 40% to US$7.7 million.
This ultimately led to Mesoblast reporting a loss after tax of US$24.5 million for the quarter, compared to a loss of US$5.5 million a year earlier.
At the end of the period, Mesoblast had cash on hand of US$108.1 million. However, this has since been boosted to pro-forma cash on hand of US$158.1 million due to the collaboration revealed below.
Novartis collaboration.
Mesoblast has entered into an exclusive worldwide license and collaboration agreement with Novartis for the development, manufacture, and commercialisation of its mesenchymal stromal cell (MSC) product remestemcel-L.
The agreement will have an initial focus on the development of a treatment for acute respiratory distress syndrome (ARDS), including that associated with COVID-19.
As part of the transaction, Novartis will make a US$50 million upfront payment, including US$25 million in equity. It will also fully fund global clinical development for all-cause ARDS and potentially other respiratory indications.
Furthermore, management revealed that Mesoblast could receive a total of US$505 million pending achievement of pre-commercialisation milestones for ARDS indications and additional payments post-commercialisation of up to US$750 million. The latter is based on achieving certain sales milestones and tiered double-digit royalties on product sales.
Mesoblast's Chief Executive, Dr Silviu Itescu, commented: "Our collaboration with Novartis will help ensure that remestemcel-L could become available to the many patients suffering from ARDS, the principal cause of mortality in COVID-19 infection. This agreement is in line with our corporate strategy to collaborate and partner with world-leading major pharma companies in order to maximize market access for our innovative cellular medicines."
