Why the Mesoblast (ASX:MSB) share price is sinking 11% lower

The Mesoblast limited (ASX:MSB) share price is sinking lower on Tuesday. Here’s what you need to know…

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The Mesoblast limited (ASX: MSB) share price has come under pressure on Tuesday after the release of an announcement.

At the time of writing the allogeneic cellular medicines developer’s shares are down 11% to $4.03.

What did Mesoblast announce?

This morning Mesoblast announced the top-line results from the landmark DREAM-HF Phase 3 randomised controlled trial of its allogeneic cell therapy rexlemestrocel-L (REVASCOR) in 537 patients with advanced chronic heart failure.

According to the release, after a 30-month follow-up, patients with advanced chronic heart failure who received a single endomyocardial treatment with rexlemestrocel-L on top of maximal therapies had a 60% reduction in the incidence of heart attacks or strokes and a 60% reduction in death from cardiac causes when treated at an earlier stage in the progressive disease process.

However, despite this reduction in the pre-specified endpoint of cardiac death, there was no reduction in the recurrent non-fatal decompensated heart failure events. This was the trial’s primary endpoint.

Management believes this suggests that rexlemestrocel-L reduces mortality by mechanisms that are distinct from those of existing drugs that reduce hospitalisation rates but do not significantly impact cardiac mortality.

Mesoblast’s Chief Executive, Dr Silviu Itescu, commented: “There is an urgent need for new therapies that can reduce the high death rates in heart failure patients by different modes of action from existing drugs which reduce hospitalization rates but have not significantly reduced mortality rates.”

“The reduction in mortality seen with rexlemestrocel-L in advanced chronic heart failure underlines the power of this technology and the commitment of Mesoblast to address diseases in patients with high unmet need which are refractory to existing therapies,” he added.

What now?

While the primary endpoint may not have been achieved, management still sees potential for the therapy.

Mesoblast’s Chief Medical Officer, Dr Fred Grossman, explained: “We expect the mortality benefit observed in this seminal Phase 3 trial will support a potential path for approval of rexlemestrocel-L in patients with advanced chronic heart failure. We are planning to meet and discuss potential pathways to approval based on mortality reduction with the United States Food and Drug Administration.”

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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