Why the Mesoblast (ASX:MSB) share price crashed 45% lower today

The Mesoblast limited (ASX:MSB) share price has crashed 45% lower on Friday. Here’s what you need to know…

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The Mesoblast limited (ASX: MSB) share price has returned from its trading halt and crashed significantly lower.

In early trade the biotechnology company’s shares are down a massive 45% to $2.08.

Why is the Mesoblast share price crashing lower?

Investors have been selling the company’s shares this morning after it provided an update on the randomised controlled trial of its remestemcel-L product in ventilator-dependent patients with moderate to severe acute respiratory distress syndrome (ARDS) due to COVID-19 infection.

According to the release, the Data Safety Monitoring Board (DSMB) has performed a third interim analysis on the trial’s first 180 patients.

The trial was aiming to achieve a primary endpoint of 43% reduction in mortality at 30 days for treatment with remestemcel-L on top of maximal care in a trial of 300 patients.

This target was based on pilot data observed during the initial stages of the pandemic when control mortality rates were exceedingly high. It was also prior to new evolving treatment regimens that have reduced disease mortality in ventilated patients.

While the DSMB has reported that there were no safety concerns, importantly, it noted that the trial is unlikely to meet the 30-day mortality reduction endpoint at the planned 300 patient enrolment.

In light of this, the DSMB has recommended that the trial be ended early at just 223 enrolled patients.

What now?

While the primary endpoint has not been achieved, management is pushing ahead to see if it achieves its secondary endpoints.

These include days alive off mechanical ventilation at 60 days post randomisation, overall survival, days in intensive care, duration of hospitalisation, and cardiac, neurological, and pulmonary organ damage.

What went wrong?

The company has suggested that changes in the treatment regimens for COVID-19 patients are to blame for the trial’s failure.

It explained: “During the course of the trial, as the pandemic has evolved, numerous changes in the treatment regimens for COVID-19 patients occurred, including both prior to and while on mechanical ventilation that may have an effect on the mortality endpoint in the trial.”

“These include extended management of patients prior to ventilator support, and use of experimental therapies such as dexamethasone, antivirals, and re-purposed immunomodulatory agents. All of these may have changed the natural course of ventilated patients and reduced overall mortality rates during the trial compared to the early stages of the pandemic,” it added.

What about the Novartis deal?

Readers may be aware that Mesoblast recently signed a deal with Novartis for remestemcel-L. That agreement will have an initial focus on the development of a treatment for acute respiratory distress syndrome (ARDS), including that associated with COVID-19.

It also sees Novartis pay US$50 million upfront and then upwards of US$1.25 billion in milestone payments.

This news appears to have led to concerns that this deal may now not go ahead.

Though, the release advises that “Mesoblast and Novartis will both analyse these results to identify meaningful clinical outcomes that may guide decisions on the development program for remestemcel-L in non-COVID ARDS.”

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