Mesoblast's Novartis-partnered COVID-19 cell therapy hits a wall as FDA requests new trial

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If Mesoblast pulls off the requested study and gets some positive data, the biotech thinks the information combined with an earlier study "might be sufficient to support an EUA." (Getty Images/Naeblys)

Mesoblast has been put on blast by the FDA yet again after the agency requested another trial for its failed, Novartis-backed COVID-19 respiratory treatment.

The Australian cell therapy biotech will have to conduct another study of remestemcel-L to have a shot at an emergency use authorization from the FDA. It's another blow to Novartis, that, subject to successful closing of an agreement, could dole out $25 million in an upfront payment, $25 million in Mesoblast equity and more than $1 billion in biobucks for a global license to the drug for acute respiratory distress syndrome (ARDS). 

The treatment failed last December in a phase 3 study in 222 ventilator-dependent COVID-19 patients with moderate to severe ARDS and was halted early for showing no signs of reducing death in patients over the age of 65. Remestemcel-L showed a 48% reduction in death for patients under 65 years old after 90 days.

That trial flop caused Mesoblast to lose more than a third of its value on the Australian Securities Exchange last December. Tuesday's news didn't help either, with the shares dipping 5.71% as the markets opened Wednesday to $1.57 apiece.

RELATED: Mesoblast craters as Novartis-backed COVID-19 drug flunks trial

If Mesoblast pulls off the requested study and gets some positive data, the biotech thinks the information combined with the earlier study "might be sufficient to support an EUA," according to a statement.

Potency assays must be established and agreed upon before Mesoblast can move forward with a trial, the FDA told the biotech. Mesoblast can also cross-reference manufacturing information in its biologics license application for the drug's indication in pediatric patients with steroid-refractory acute graft-versus-host disease (SR-aGvHD).

The FDA turned down Mesoblast's request for approval of remestemcel-L in SR-aGvHD last fall. The biotech said discussions are ongoing with the agency about the next steps for that disease.

RELATED: Novartis licenses phase 3 COVID-19 cell therapy from Mesoblast

The biotech may resubmit the SR-aGvHD application with a six-month review and will meet with the FDA's Office of Tissue and Advanced Therapies in the fourth quarter of this year to address the potency assays and outstanding questions around chemistry, manufacturing and controls.

Mesoblast is also hoping its other main asset, precursor cell therapy rexlemestrocel-L, will get somewhere after a mixed bag of results in a pair of phase 3 trials in patients with advanced chronic heart failure and chronic lower back pain due to degenerative disc disease. Mesoblast anticipates receiving feedback from the FDA this month on the regulatory pathway for those two indications.

Editor's note: This story was updated at 11 a.m. ET on Sept. 2 to clarify details of the licensing agreement with Novartis.