Mesoblast Ltd

ASX:MSB

Earnings Call Transcript 2022-Q1

[Silviu Itescu]

[Audio Gap]Thank you very much, operator. And thank you, everybody, for joining us on the operational highlights and financial results for the period ended September 30, 2021. Joining me today are Chief Medical Officer, Dr. Fred Grossman; and our Interim Chief Financial Officer, Andrew Chaponnel. If we could move to Slide 4, which is our pipeline slide. We are developing product candidates derived from our mesenchymal stromal cell platform technologies, remestemcel and rexlemestrocel. Remestemcel product pipeline focuses on pediatric and adult systemic inflammatory conditions, including pediatric acute graft versus host disease, adult GVHD, acute respiratory distress syndrome and inflammatory bowel disease. Rexlemestrocel platform technology is being developed for localized inflammatory conditions, including advanced chronic heart failure and chronic inflammatory low back pain. And as you can see on this slide, we have a number of global and regional strategic partners for various of our programs.Slide 5. The platform technology has an underlying mechanism of action that is derived from the fact that these cells express on their surface a variety of receptors for inflammatory cytokines. And when the cells find themselves in the [ area ] of inflammation in various tissues, they're able to be activated. And following activation by these inflammatory cytokines, they release various factors that in concert turn off the degree of inflammation mediated by multiple arms of the immune system. Next slide, please. We have a very strong global intellectual property patent estate, which puts us in a leadership position in the mesenchymal stromal space globally with a patent portfolio of over 1,000 patents with protection extending through 2040. This provides strong protection around compositions of matter, around manufacturing and, equally as important, around every indication that we target. When -- outside of our core commercial areas, we may consider granting rights to our portfolio to third parties who require access to our patents to commercialize their particular products. And we've already entered into those type of partnerships, which results in royalties on a worldwide basis back to us. Next slide. The manufacturing is -- allows us to scale allogeneic off-the-shelf products with stringent criteria, meeting regulatory body requirements internationally for a robust quality assurance. Final product [ lots ] with batch-to-batch consistency and reproducibility. We have proprietary ownership of media that is animal free that allows us to increase our yields and output to commercial scale. And we have the ability, again, with proprietary technologies to move to 3D bioreactors to further reduce labor, improve manufacturing efficiencies and ultimately meet the commercial requirements for some of the large volume indications that we're targeting as well as significantly reduce our cost of goods. Now I'd like to move to the financial results. And Andrew Chaponnel, would you please take the next few slides.

[Andrew Chaponnel, Interim Chief Finance Officer]

Thanks, Silviu. Now turning to Slide 9. I'm very pleased to confirm that we have successfully refinanced and expanded our senior debt facility with Oaktree Capital Management. The new $90 million 5-year secured loan facility has a 3-year interest-only period after which time 40% of the principal is repayable over 2 years with the final loan repayment due no later than November 2022. Cash on hand at the end of the quarter was $116 million. In the quarter, revenues from TEMCELL royalties in Japan were $2.4 million, an increase of 22% on the previous quarter and 90% on the comparative quarter of last year. Net cash operating usage was $19.6 million for the quarter, a reduction of $8.6 million on the comparative quarter. Our loss after tax improved by $1.9 million on the comparative quarter.Now on Slide 10, I'll explain further our loss after tax results. Within commercialization revenues, we recognized $2.4 million in royalties from TEMCELL in Japan, a 90% increase on the comparative quarter. And we recognized $1.2 million of milestone revenue after Takeda received approval to manufacture and market Alofisel in Japan for the treatment of complete perianal fistulas in patients with nonactive or mildly active luminal Crohn's disease. Within R&D expenditure, we saw a 52% reduction of $10 million as clinical trial activities for our COVID ARDS, back pain and heart failure product candidate reduced given that clinical trial recruitment and data analysis is now complete. For our manufacturing expenditures, we recorded a 37% saving of $4.4 million due to a reduction in process development activities. During the quarter, we continued to build our prelaunch inventory levels of remestemcel-L to support the long-term commercial supply of GVHD and COVID ARDS. To date, we have manufactured $26 million worth of remestemcel-L prelaunch inventory in anticipation of launch. This prelaunch inventory will be recognized on the balance sheet if we receive FDA approval. Within management and administration there was a 23% saving of $1.8 million as employee compensation costs reduced. And for contingent consideration, we saw a $14.8 million reduction in gains recorded compared to the comparative period. This period-on-period reduction was due to a $15.1 million gain being recognized in the comparative period. Now I'd like to hand the call back to Silviu for the remainder of the presentation.

[Silviu Itescu]

Thanks, Andrew. If we can turn now to Slide 12, which focuses on graft versus host disease and our approach to treating it with remestemcel. Acute GVHD is a serious and fatal complication of allogeneic bone marrow transplant, and it's due to activation of the T cells in the donor graft, recognizing the host is foreign and initiating a severe multi cytokine storm that ultimately destroys the gut and the liver and is potentially fatal. Slide 13. This is a particular problem in children who have a high risk of treatment failure and death because there are no drugs approved for treatment of pediatric GVHD under the age of 12. And these children, of whom there are more than 2,000 that undergo an allogeneic bone marrow transplant in the U.S. alone on an annual basis, if they develop steroid-refractory graft versus host disease, a condition that occurs in up to 50% of these children, mortality can approach 90% when involved in the gut and the liver and is associated with very high levels of inflammation. Slide 14. In 3 prior trials, one of which was a randomized controlled study, one of which was a salvage therapy in children who had failed all other existing therapies, and the most recent Phase III trial, Study 001, in all 3 of those trials, we have observed a very consistent day 28 overall response -- as shown in yellow -- of between 64% and 69% following 4 weeks of therapy with remestemcel. In addition, the treatment of these children across each of these 3 trials has resulted in survival rates of between 66% and 79%. In contrast, on the left 2 panels, in 2 different control groups, one of them were children within a randomized controlled study of steroid-refractory GVHD; and the other, the MAGIC cohort, children who were matched historical controls, matched for disease severity and inclusion criteria into our Phase III trial. As you can see, the day 28 response using best available therapy is of the order of 38% to 43% only and day 100 survival only of 54% to 57%. These data were all presented to the FDA last year.Next slide, please. Slide 15. As you can see here on the left-hand panel is the 2-year survival probability of a single center study published of children with steroid -- treated with steroid for graft versus host disease. At 6 months, steroid-refractory children have, in this particular study, a 49% overall survival; and by 24 months, a dismal 35% survival. In contrast, the slide on the right shows the day 180 6-month survival in children from our Phase III trial, 001/002. And as you can see, a 69% 6-month survival in those children treated with remestemcel. These results also were presented to the FDA last year, and we think are very encouraging for the potential use of remestemcel in children with this severe disease.Let's move to Slide 16. The MAGIC algorithm is an algorithm developed by investigators at Mount Sinai Medical Center in New York and has been developed and validated as a biomarker score that predicts outcomes in patients with acute graft versus host disease. In particular, the MAP score of at least 0.29, above 0.29, is a validated threshold that identifies those patients at higher risk of nonresponse to treatment and death. In these 3 figures as shown on this slide from Major-Monfried et al in the Journal Blood, you can see 3 different cohorts, all of whom validate the same algorithm. And what they show is that those patients with a MAP score above 0.29 have mortality rates of the order of up to 90% over a 12-month period of follow-up. And this biomarker score is now used routinely by clinicians who follow their patients with acute graft versus host disease. Next slide, please, Slide 17. In a recent publication in Bone Marrow Transplantation in the last 2 months, the Mount Sinai investigators performed an analysis comparing 52 children, 27 of whom came from their MAGIC cohort and 25 of them who came from the Phase III trial of remestemcel. An analysis of outcomes by stratification on a MAP score of 0.29 below and above as a risk stratification category. As you can see in the figure on the left, amongst the MAGIC cohort treated with best available therapy, and that includes the recently approved ruxolitinib, only -- in those patients with a MAP score above 0.29, only 1 out of 10 were responders to treatment through day 28. In contrast, 8 out of 12 or 67% of remestemcel-treated patients with a high MAP score were responders to remestemcel. And this was a significant difference. When they looked at survival between these 2 groups, not surprisingly, on the right-hand figure, the children in the MAGIC cohort who had MAP scores above 0.29, had a 90% mortality through 6 months. And in contrast, the remestemcel-treated children with a MAP score above 0.29, had a 64% survival through that same 6-month period, and this was significant. So this identifies that remestemcel treatment specifically provides a survival and treatment advantage in those children at highest risk for mortality and with highest inflammatory biomarker scores. If we go now to Slide 18, I'd like to give you all an update on where we are on the regulatory pathway towards approval of remestemcel for steroid-refractory GVHD. The data that I've just shown you provide further support for the proposed anti-inflammatory mechanism of action of remestemcel and its immunomodulatory activity in those patients with particularly the highest risk of steroid-refractory GVHD and evidence that the anti-inflammatory immunomodulatory activity of our cells result in improved survival outcomes. At the upcoming scheduled meeting with the U.S. FDA's Office of the Tissue and Advanced Therapies or OTAP, Mesoblast will address the appropriateness of our potency assays related to remestemcel's proposed anti-inflammatory mechanism of action, how it relates to these biomarkers, how our potency assays relate to changes and improvements in our biomarkers and ultimately, in patient outcomes, such as response and survival. These discussions could support a resubmission of the current BLA with a 6-month review -- up to a 6-month review, with the aim ultimately of achieving approval for remestemcel in the treatment of steroid-refractory GVHD in children, remembering that there are still no approved therapies in those under the age of 12, who continue to have a high mortality. If we could move now to Slide 19. An overview of where remestemcel is being developed now for ARDS, due to respiratory distress syndrome due to COVID-19. This is the #1 cause and continues to be the #1 cause of death in those patients who are infected with COVID-19 virus. And we've taken knowledge of the extensive safety database of remestemcel as it's been developed for the inflammatory components of GVHD and adapted both the protocol, the dosing strategy and accessed -- leveraged the fact that the cells intravenously hung to the lungs to address the potential for use of remestemcel in inflammatory lung disease and particularly respiratory distress syndrome due to COVID-19. Slide 20 is a very important slide about what has been learned in the last 18 months or so during this pandemic. Essentially, in the bottom-left figure, a normal individual with a normal immune system is able to eliminate the virus rapidly and the viral load goes up and then goes down as the immune system, driven by T cells, eliminates virus. The panel immediately to the right of that shows that in older individuals with defects in their T cells, the virus is not eliminated as rapidly; viral load is much higher for a lot longer. And in response to a higher viral load, the residual immune system attempts ineffectually to eliminate the virus and that results, particularly in older patients, in a very severe inflammatory process that destroys the lung. But unfortunately, it's not effective in eliminating the virus. So it has been established now that age is probably the most important predictive factor for a bad outcome following COVID-19. But whilst age over 65 is a major risk factor, it is a fairly linear relationship between age and disease severity at all ages. If we now go to Slide 21. The clinical experience with remestemcel and COVID ARDS has been informed based on a pilot study of 11 patients and a more recent Phase III study of 222 patients. In the initial 11 patients, at Mount Sinai Hospital in New York, 10 out of 11 were under the age of 65. And in these first 11 patients, we saw that 82% successfully came off ventilators and were discharged from the ICU within a median of 10 days. On that basis, the protocol of 2 infusions, 5 days apart was implemented into a randomized controlled study, which in the middle of the chaos of the pandemic changed quite significantly during the course of the initial 12-month period and progressively enrolled older patients such that whilst the median age in the first half was 59, the medium age in the second half was 67. But we were able to evaluate the outcomes by age, and we have been able to identify that using this particular dosing strategy, those patients under the age of 65 responded very favorably. Now the Slide 22 demonstrates the effect of age on mortality in our study in the control population. And as you can see here, whilst older patients had a mortality of 70% through 60 days, and that was significantly higher than younger patients. Nonetheless, younger patients under the age of 65 still had a mortality of 42%, which is extremely high for anybody of that age through 60 days. And this is despite the fact that control patients continue to receive maximal standard of care -- the only drug that is approved for this group of patients is dexamethasone or steroids. If we can now go to Slide 23, in the younger patient population in the subset analysis, what you can see on the left-hand side is that in fact, 2 doses of remestemcel reduced mortality by 46% through 60 days. And that was associated on the right with improvement in disease severity score at every time point studied. Slide 24, moreover, shows that in an exploratory subset of patients on dexamethasone as per approved protocols -- and this accounted for, I think, about 3/4 of the overall study -- you see a significant synergy between remestemcel and dexamethasone on the left-hand panel now. The mortality rate in the younger patients is reduced from 48% to just 14% through 90 days through 3 months. And on the right-hand side, again, the combination of the 2 -- our cells plus dexamethasone -- significantly increased the proportion of patients who improved, in red, by at least one category of ARDS severity score at every time point measured. This strongly suggests to us that the combination of steroids plus remestemcel is a combination that should be explored in a confirmatory study with this preliminary data set. So if we move to Slide 25, what is the regulatory pathway to a potential emergency use authorization for COVID-19 ARDS? That's become clear, having met with the FDA very recently. And the FDA advised Mesoblast that a single additional study, if positive, could provide a data set in conjunction with the data that I've just shown you, that might be sufficient to support an EUA. The FDA indicated that the potency assays that we are in discussions with respect to GVHD and the whole GVHD BLA can be referenced. But such a potency assay should be agreed to prior to commencement of this proposed pivotal Phase III trial. And we plan to move forward with an additional Phase III program in COVID ARDS, with the next step being to obtain agreement with the FDA on the final protocol and supported by our potency assay development. Now let's move forward and talk about rexlemestrocel, some updates on our chronic heart failure program. Slide 27. Cardiovascular disease remains the leading cause of death in the U.S., even in the post-COVID era. Heart failure affects as many as 6.5 million patients in the U.S. And as the population is aging, the prevalence is increasing. It's a disease that has a mortality that is as bad as many cancers and approaches 75% after an initial hospitalization. Patients with heart failure not only develop symptomatic and recurrent hospitalizations for shortness of breath, but importantly, remain at very high risk of recurrent adverse major cardiac adverse events, including vascular occlusions or heart attacks and strokes. And whilst new therapies have been developed that are keeping patients out of the hospital for symptomatic heart failure, i.e. shortness of breath, these newer therapies do not -- have not made a material change or improvement in overall cardiac mortality or major ischemic events, including heart attacks or strokes. That's where the unmet need continues to be, and that's where we believe that rexlemestrocel has an edge over other therapies. If we go to Slide 28, this slide talks to the mechanism of action of rexlemestrocel in this disease. We -- it is well established that progressive heart failures associated with progressive inflammation within the heart as a result of macrophage secretion of inflammatory factors such as interleukin-1, TNF and interleukin 6 -- those same factors that are relevant to disease progression in inflammatory lung disease and in graft versus host disease. And when rexlemestrocel are placed within the inflamed myocardium, they are activated by these factors, resulting in a release of anti-inflammatory and immunomodulatory factors that have 2 -- ultimately 2 outcomes. One is they reduce the intracardiac inflammation, protecting heart muscle cells. And secondly, they induce a new vascular endothelial network of blood vessels, which also improves vascular flow and protects cardiac muscle cells against ischemic death. Together, we believe that these are important mechanisms that protect both the heart muscle, intracardiac -- from intracardiac damage as well as the extracardiac vascular abnormalities that are important in the complications of this disease. Slide 29. The data from the randomized controlled Phase III trial of rexlemestrocel in 565 patients with Class II and Class III heart failure were presented very recently as a late-breaking presentation by Dr. Emerson Perin at the American Heart Association Annual Scientific Session. The featured program was building on the foundations of treatment advances in heart failure therapy. Dr. Perin is the Medical Director of the Texas Heart Institute and Clinical Professor at Baylor College of Medicine. The data that were presented, as I'll show you in a minute, identified this as a landmark study showing a significant relationship in outcomes between the presence of systemic inflammation and treatment effect with rexlemestrocel on cardiovascular mortality, heart attacks or strokes. Slide 30 provides an overview of the Phase III trial itself. It was a 1:1 randomized controlled double-blinded study conducted over 55 sites in North America, using 150 million allogeneic cells of rexlemestrocel immunoselected culture-expanded cells versus control. Shared procedure in 565 patients. The primary endpoint was reduction in recurrent heart failure-related hospitalizations due to predominantly shortness of breath and volume-related complications. The key secondary points, which were all prespecified, were reduction in ischemic cardiovascular events such as heart attacks and strokes, reductions in hospitalizations from these events and reduction in overall cardiac mortality and other mortality -- noncardiac mortality. The composite of the prespecified endpoints was a post hoc that I will show you the data of. Next slide, please. So unfortunately, the primary endpoint of reduction in hospitalizations from symptomatic shortness of breath was not improved by rexlemestrocel over and above the reduction in hospitalization that one gets with maximal existing and newer standard of care therapies. This symptomatic improvement in neurohormonal symptoms is not an area that apparently rexlemestrocel has a major impact on. However, on Slide 32, we see some pretty dramatic effects of rexlemestrocel on top of maximal standard of care. First of all, we see a significantly reduced incidence of heart attacks and strokes. In the overall 537 patient population on the left, you see a 65% reduction in risk with a p-value of 0.001 across the entire patient population. And that's equally represented in New York Heart Association Class II patients, the middle panel; and New York Heart Association class III patients, the right-hand panel. If we go to the next slide, Slide 33. Looking at time to cardiac death. We see a significant impact on cardiac mortality, which is predominantly evident in the Class II patients on the left-hand panel, where we see a again, a 57% reduction in mortality. And if you look at the mineral panel, that is almost exclusively in those patients with evidence of inflammation as measured by a positive CRP level above 2-milligram per liter. And you see here that in CRP positive patients, the hazard ratio is 0.204, indicating an 80% reduction in mortality, p = 0.005. Now CRP is a well-established biomarker for risk in cardiovascular outcomes. It has been validated across many studies. It is a biomarker that predicts worse outcomes in patients with heart attacks with atherosclerotic disease and with heart failure. And it's the -- really, it's the end result of cytokine that are inflammatory cytokines made by the macrophages. And we believe that circulating CRP in these patients reflects inflammation within the myocardium itself. And what this says to us is that we can identify those patients with evidence of inflammation, and of those patients, most susceptible to death. And of these patients -- are most likely to respond to rexlemestrocel therapy in a beneficial way. If we can move to Slide 34 now. When we take into consideration the composite end point of major adverse cardiac events defined as either cardiac death or myocardial infarction or stroke. And this is an endpoint that the FDA has used to approve multiple drugs for cardiovascular diseases, particularly those patients being diabetics with higher risk for cardiovascular events. And we look at this as an endpoint. And remember that all of the -- the components of this composite endpoint were prespecified. The composite itself was post hoc. And you see on the left-hand side in 537 treated patients, this endpoint was statistically significant, p = 0.02, with a hazard ratio of 0.67, meaning a 33% reduction in the composite of the 3 endpoints. But I think what's most interesting and exciting is the middle panel, which demonstrates that in the 301 patients who had evidence of inflammation as evidenced by an elevated CRP at baseline, this is the group that was most likely to benefit from treatment. And here, the hazard ratio was 0.55, meaning we reduced the risk of this composite endpoint by 45%. And this is the target population that we will be focusing on and is the most likely to be -- where the benefit is and whether risk is greatest.So let's move to Slide 35 because -- this is the conclusion slide of Dr. Perin's presentation and gives you a sense of where we are going as a company in the heart failure program. So in conclusion, the transendocardial delivery of the cells was safe. it did not elicit any clinically meaningful immune-related responses despite the fact that these were allogeneic cells. Over a mean follow-up of 30 months, a single injection of rexlemestrocel compared or added on top of maximal standard of care significantly reduced the incidence of heart attacks or strokes, the incidence of cardiac death, particularly in Class II patients, and the composite of cardiac death, or nonfatal MI or nonfatal stroke across all patients. And these benefits were most likely to be seen in those patients who had evidence of inflammation. So we have a biomarker that can guide future therapy in this target patient population.And with that, I think I'll stop and we would welcome any questions. Thank you.

[Operator]

[Operator Instructions] Your first question comes from Louise Chen with Cantor.

[Suowei Wu, Research Analyst]

Team, congrats on the progress. This is Wayne on for Louise. Just one question from us. On the remestemcel. So has the FDA indicated how big the additional clinical study needs to be? And what do they expect to see in addition to the potency assays?

[Silviu Itescu]

Thank you for that question. As we have said over the past few months, we do not believe we will have to do any further clinical studies with remestemcel for GVHD. The discussions that we are having shortly are all about CMC and potency data. We do not believe we need any further studies; as I've shown you, we had a positive Phase III trial. We've demonstrated further studies of evidence of efficacy in high-risk children and the discussions we're having are solely around potency and manufacturing.

[Suowei Wu, Research Analyst]

Sorry, I mean for the COVID ARDS -- sorry about that, I appreciate it.

[Silviu Itescu]

I see. I'm glad you clarified. So yes. So for the COVID ARDS study, we believe that the target patient population is as we have defined it, i.e., patients who are younger, under the age of 65, which -- and this is obviously a shifting demographic depending on country, state, et cetera. But predominantly, the new infections are happening in younger people, predominantly those who continue to be unvaccinated and at risk of ICU and later related deaths are younger people. So it's an appropriate target population. It's where we saw a positive result. And it's where we've proposed to the FDA that our pivotal trial would focus on. The size of the study, I think it will be very similar to the study that we've just completely given powering, but really, let me ask Dr. Grossman to address that, please.

[Fred Grossman, Chief Medical Officer]

Yes, that's correct. We are currently in discussions, and we'll be sharing our protocol with the FDA to have agreement on the step forward. But as Silviu just mentioned, it will probably be very similar in terms of size and scope, focusing on those younger than 64. We also plan to study those older than 65 as well with a different dose because we do believe that those patients could potentially respond to a different dose pattern.

[Operator]

Your next question comes from Kennen MacKay with RBC Capital Markets.

[Yichuan Yan, Senior Associate]

This is Jackie Yan on for Kennen MacKay. Maybe just on the recent heart failure data presented at AHA. You know that subgroup data you presented, wondering what prompts that subgroup analysis and what's the plan for the potential regulatory path forward? And have you presented this data set to the FDA yet?

[Silviu Itescu]

Yes, that's a critical question, and I appreciate you asking it. And that is precisely the basis of our active and ongoing discussions with the FDA. The data have been presented and we are waiting on feedback and we clearly have a view that the high-risk population in this study can be identified and responds most effectively to our therapy. We think that we've identified the highest risk population where there was a benefit on the 3-point MACE, which is an FDA approvable endpoint.

[Yichuan Yan, Senior Associate]

Got it. I just want to confirm I heard that -- so you will meet with the FDA in December to address the potency assay. And then once I assume it's been resolved, for that ARDS trial, you can just go ahead and initiate a Phase III without like meeting with the FDA again, right?

[Silviu Itescu]

That's exactly right. We have a discussion with the agency in very short order about the potency assay for the product. We expect that they will be comfortable with the data that we're putting in front of them. At that point, the clinical group will move forward with an IND proposal for a pivotal trial.

[Operator]

Your next question comes from Tanu Jain with Bell Potter Securities.

[Tanushree Jain, Healthcare and Biotech Analyst]

Silviu, Dr. Grossman and Andrew, thanks for taking my questions. And really happy with the progress so far. Just one question from me on the recent late breaker data for the heart failure. Before this data came out, we were kind of focusing on the Class II patients because they were earlier in the disease with, I guess, better heart muscle, et cetera. And I guess the correlation that was presented in terms of higher levels of inflammation. That's kind of negated I guess, this class difference between Class II and Class III in your therapy working. Can you perhaps talk a little bit about how this high levels of inflammation is compensating for the fact that these Class III patients don't have a lot of heart muscle, but this therapy is still able to work?

[Silviu Itescu]

That is a great question, Tanu. Thank you for that question. Very, very important question. So the high levels of inflammation, in this particular case, measured by CRP but not only CRP, right, the other cytokines go along with CRP, have predictive value on both loss of viable heart muscle and also a major vascular occlusions, particularly coronary arteries, which is right next to the source of the inflammation within the heart. And it is clear from looking at our own data that the Class II patients are at greater risk of what can be helped sooner in terms of reduction in cardiac death because they have more heart muscle left to salvage. Whilst the Class III patients are more advanced in this disease, but they're at a higher risk really of coronary artery disease and death or progression to death following an occlusion in the coronaries. So the stratification based on severity allows us to look at the spectrum, the continuum really, across Class II and Class III patients using inflammation as a biomarker for treatment effect more broadly speaking. Does that address the question? Inflammation is at the core of the cardiovascular complications in all of these patients, all of which are major outcomes that will reduce -- that will cause death that contribute to the high rates of mortality in this population. And so we -- it is apparent that a single injection into the myocardium with our cells reduces the inflammatory risk both in the muscle on the heart as well as the extracardiac vasculature. And so it's appropriate to target both in the patient population at risk, which is that patient population with inflammation.

[Tanushree Jain, Healthcare and Biotech Analyst]

Right. So -- but you had a slide where you've actually just shown Class II patients with high levels of inflammation. How does it -- how does Class III patients with high levels of inflammation, how does that group compare to Class II with high levels of inflammation?

[Silviu Itescu]

When we look at composite of cardiac death or MI or stroke, we see similar directionality in Class IIs and Class IIIs, but the contributions to those -- the 3-point MACE within each is slightly different so that the contribution of reduction in cardiac mortality is more evident in Class II. The contribution of reduction in myocardial infarction is seen in both groups, but perhaps a greater risk reduction in Class III. So both groups are improved in the composite endpoint using the cells and therefore, as we move forward, I think we're going to be looking at the risk factor of inflammation as a predictor overall of treatment effect without having to sub-stratify by class.

[Tanushree Jain, Healthcare and Biotech Analyst]

Right, so you will focus on Class II and Class III both, rather than just Class II [indiscernible] inflammation.

[Silviu Itescu]

Yes. This continues to be an active discussion with the FDA. So I think it's premature to make definitive statements, but that's the direction, based on the data, that we're going towards, where we're looking more broadly at the inflammatory population across all patients.

[Operator]

That brings us to the end of today's call. I'll now hand back to Dr. Itescu for closing remarks.

[Silviu Itescu]

Well, I'd like to say thank you to everybody for joining us today. We're very excited by the progress that we're making as a company in our technology as we're moving towards our first product for potential approval and launch. And we're very pleased to have entered into a strategic financial alliance with Oaktree Capital Management that shores up our existing balance sheet, and we look forward to updating you shortly on some other very important key milestones. Thank you all. [Audio Gap]