Novartis has canceled an agreement with Mesoblast on a failed COVID-19 cell therapy just as the Australian biotech tries to get a new phase 3 trial off the ground in the hopes the FDA will give the candidate another shot.
The Swiss Big Pharma linked arms with the small biotech in November 2020 for a global license to remestemcel-L. Novartis hoped the drug, which was already rejected by the FDA for graft-versus-host disease in October 2020, would help treat patients with acute respiratory distress syndrome, or ARDS, due to the disease caused by the coronavirus.
But the cell therapy failed a phase 3 trial just four weeks later. That was a blow to both companies, as Novartis would've been closer to entering the COVID-19 treatment arena. And, for Mesoblast, it would've meant $25 million in an upfront payment, $25 million in equity and potentially more than $1 billion in biobucks.
Now, none of that will be paid out as Novartis steps away (PDF) from the partnership.
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The news sent Mesoblast's shares cratering 30% to $4.01 a piece as of 12:49 p.m. ET on Tuesday.
"After assessing additional data, the totality of evidence from the Phase 3 trial is not sufficient to continue with the collaboration agreement," a Novartis spokesperson said in a statement Tuesday afternoon.
Mesoblast intends to go it alone now. After the phase 3 failure, the treatment remained in limbo for multiple quarters, until Mesoblast said the FDA requested another trial if it wanted to move forward with a potential emergency use authorization filing. That was Aug. 30. The biotech is now "preparing to initiate" such a trial, a pivotal phase 3 study.
The Australian biotech reaffirmed its commitment to seeing the treatment through to fruition as it thinks COVID-19 will remain a "serious global problem." Even with vaccines and antiviral treatments available today, Mesoblast said its ARDS treatment could have a "major commercial opportunity" given the levels of intensive care unit patients.
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And don't forget about the latest variant, omicron. Mesoblast says the variant could increase the need for ARDS therapeutics—that is if remestemcel-L can put up some data showing it works to curb the COVID-19 complication.
In the failed phase 3 trial, Mesoblast found the treatment wasn't effective at reducing death in patients over the age of 65 who were ventilator-dependent.
Mesoblast is among a heap of biotechs that have failed to deliver a successful COVID-19 treatment. Others include RedHill Biopharma, CytoDyn and Laurent Pharmaceuticals.