Why are Mesoblast shares rocketing 28% today?

The US FDA has given this biotech a major boost

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Mesoblast Ltd (ASX: MSB) shares are ending the week with an almighty bang.

In morning trade, the allogeneic cellular medicines developer's shares are up 28% to 34 cents.

Why are Mesoblast shares rocketing?

Investors have been scrambling to buy the company's shares today after it received a major boost from regulators in the United States.

According to the release, the United States Food and Drug Administration (FDA) has granted its allogeneic cell therapy Revascor (rexlemestrocel-L) a Rare Pediatric Disease (RPD) Designation.

This follows the submission of results from the randomised controlled trial in children with hypoplastic left heart syndrome (HLHS). It is a potentially life-threatening congenital heart condition.

What does this mean?

The US FDA grants RPD Designation for certain serious or life-threatening diseases which primarily affect children.

This designation comes with the added benefit of a potentially valuable voucher down the line.

For example, upon FDA approval of a Biologics Licensing Application (BLA) for Revascor for the treatment of HLHS, Mesoblast may be eligible to receive a Priority Review Voucher (PRV).

This voucher can then be redeemed for any subsequent marketing application. It may also be sold or transferred to a third party.

Trial results

The release notes that the company's stem cell treatment delivered promising results.

It was conducted in 19 children with a single intramyocardial administration of Revascor at the time of staged surgery. This action resulted in the desired outcome of significantly larger increases in left ventricular (LV) end-systolic and end-diastolic volumes over 12 months compared with controls as measured by 3D echocardiography.

Management notes that these changes are indicative of clinically important growth of the small left ventricle. This facilitates the ability to have a successful surgical correction, known as full biventricular (BiV) conversion. Without a full BiV conversion the right heart chamber is under excessive strain with increased risk of heart failure and death.

Mesoblast's Chief Executive, Silviu Itescu, was pleased with the trial results. He said:

Given the impressive enlargement of the left chamber we have seen in these children treated with REVASCOR in the randomized controlled trial and the increased ability to successfully accomplish life-saving surgery, we plan to meet with FDA to discuss the potential for this trial to support accelerated approval in this indication.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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 Scott Phillips.

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