Mesoblast (ASX:MSB) is a world leader in the development, manufacture and commercialisation of biologic products in the broad field of regenerative medicine.
MSB has the worldwide exclusive rights to a series of patents and technologies developed over more than 10 years relating to the identification, extraction, culture and uses of adult Mesenchymal Precursor Cells (MPCs).
MSB’s stock has been one of the hot stocks since the start of the year on market excitement over the therapeutic power of MPCs.
A unique business
The commercialisation of MPCs allows adult stem cells to be extracted from the bone marrow of donors, grown into therapeutic quantities and administered to non-related patients.
MSB’s lead products will target cardiovascular conditions, diabetes, inflammatory conditions of lungs and joints, eye diseases, bone marrow cancers, bone fractures, cartilage degeneration and musculoskeletal conditions.
The company aims to generate a series of high margin, off-the-shelf adult stem cell products that are obtained from a single donor, commercially expanded and frozen, and subsequently used in potentially thousands of unrelated, or allogeneic, recipients at the time and place of need.
Bone marrow approval
Mesoblast recently received approval from US authorities to begin an advanced trial of a treatment that could boost the number of bone marrow transplants for patients who cannot find a matched donor.
Following the approval, MSB has commenced the Phase III trial for bone marrow regeneration in patients with blood cancers.
MSB aims to produce a product that can be used in bone marrow transplants where a perfectly matched donor cannot be found.
Another key driver for MSB will be the results of its Phase II congestive heart failure trials in November.
Clinical results have thus far been encouraging, and if the full results turn out to be positive, MSB is likely to request a Phase III trial from the US Food and Drug Administration (FDA).
We believe a positive Phase II result will help deliver a significant jolt to MSB’s share price, as it moves the group closer to receiving regulatory approval to market its product.
Moreover, given the large number of reported heart problems in the US, Phase III approval can open up a huge market for MSB.
The Lonza and short of it
On 27 September, MSB announced an alliance with Swiss-based Lonza Group for the clinical and commercial production of its MPC product.
Under the deal, Lonza will supply MSB’s product requirements, in return for MSB having exclusive access to Lonza’s Cell Therapy facilities in Singapore.
The alliance is a critical plank in Mewsoblast’s strategy to market its product, as it creates certainty in the ability of the group to manufacture its MPCs.
Another interesting aspect of the alliance was Lonza using its intellectual property to help lower MSB’s manufacturing costs.
This would be in keeping with MSB’s aims to generate higher margin products, and would also provide it with the flexibility to develop new technologies.
Whilst market excitement grows surrounding the therapeutic potential of MPCs, MSB has turned heads with its unique product innovation.
With regulatory approvals continuing to roll in and a global manufacturing alliance locked in, MSB is in a good position to bring its MPC technology to market.
The bone marrow product could be the company’s first revenue generating biologic therapy in the US and Europe.
MSB has huge revenue potential and exclusive rights to a series of patents and technologies relating to MPCs.
Furthermore, a successful outcome for MSB’s Phase II congestive heart failure trial could make MSB one of the stocks to watch in coming weeks.
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