Holders of Mesoblast Limited (ASX: MSB) shares have responded positively to assurances from the company's CEO that the US Food and Drug Administration (FDA) has not halted the development program of its key drug.
According to reporting by the Australian Financial Review (AFR), the Mesoblast share price has been sliding this week on news the FDA is upping its scrutiny of remestemcel-L.
In Mesoblast's report for the financial year 2021, it stated the FDA has recently stipulated the company needs to provide potency assays before commencing a newly required additional clinical study. Only then, might the FDA approve remestemcel-L for emergency use to treat acute respiratory distress syndrome (ARDS) in COVID-19 sufferers.
The AFR quoted Mesoblast CEO, Silviu Itescu:
As Mesoblast has told the market, it is planning to meet with FDA in the coming quarter to present data on the potency assay for remestemcel-L in the treatment of children with acute GVHD.
The potency assays for remestemcel-L's trial to treat pediatric steroid refractory acute graft versus host disease (SR-aGVHD) will likely be cross-referenced in the company's submission for emergency use authorisation to treat ARDS in COVID-19 sufferers during the pandemic.
The Mesoblast share price fell 5.7% yesterday to finish the session trading at $1.57. It also dropped 15.3% on Tuesday after it released its FY21 earnings.
However, Mesoblast shares are gaining today. Right now, the Mesoblast share price is $1.61, 2.3% higher than yesterday's close.
Let's take a closer look at the assurances from the biotech company's CEO.
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Mesoblast shares gain as remestemcel-L still on FDA's cards
The company announced results from a trial of remestemcel-L's ability to treat ARDS in April. It found remestemcel-L reduced mortality in patients placed on ventilators after contracting COVID-19.
Following the positive result, the company decided to pursue emergency use authorisation to use the drug to treat ARDS.
However, the FDA thwarted Mesoblast's plan to fast track the authorisation process by requiring the company to complete an additional clinical study to support remestemcel-L's emergency use authorisation.
This week, Mesoblast announced the FDA has asked it to provide potency assays before the added clinical study begins.
Mesoblast is hoping to get FDA approval to use remestemcel-L to treat SR-aGVHD in children in the future.
The drug has also been used in a controlled study for its potential to treat inflammatory bowel conditions.
FDA negotiations may not be the only weight the Mesoblast share price is battling against.
As The Motley Fool Australia reported on Tuesday, Mesoblast lost US$98.8 million in FY21 and ended the period with just US$136.9 million left in its coffers.
