Mesoblast Ltd
ASX:MSB
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
0.26
1.78
|
| Price Target |
|
We'll email you a reminder when the closing price reaches AUD.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Mesoblast Ltd
You don't have any saved screeners yet
Hello and welcome to the financial results for the period ended March 31, 2020, and corporate update for Mesoblast. An announcement and presentation has been lodged with the ASX and are also available on the Home and Investor pages at www.mesoblast.com. [Operator Instructions] As a reminder, this conference call is being recorded. Before we begin, let me remind you that today's conference call, the company will be making forward-looking statements that represent the company's intentions, expectations or beliefs concerning future events. These forward-looking statements are qualified by important factors set forth in today's announcement and the company's filings with the SEC, which could cause actual results to differ materially from those and such forward-looking statements. In addition, any forward-looking statements represent the company's views only as of the date of this webcast and should not be relied upon as representing the company's views of any subsequent date. The company specifically disclaims any obligation to update such statements. With that, I would like to turn the call over to Dr. Silviu Itescu, Chief Executive of Mesoblast. Please go ahead.
Thank you, operator, and welcome, everybody, to the financial and operational highlights for the third quarter ended March 31, 2020. We could go to Slide 4, please. This slide highlights the 3 pillars that underpin Mesoblast's technology platform and our product pipeline. Our innovative platform is based on allogeneic mesenchymal precursor cells and their progeny, mesenchymal stem cells, which are well-characterized immunomodulatory mechanisms of action and which allows to target the most severe and life threatening inflammatory conditions. Underpinning this is a very global, strong intellectual property estate. Our lead product candidate is Ryoncil, being developed for pediatric steroid-refractory acute graft-versus-host disease with the -- a BLA has been filed with the FDA and the FDA has designated this as under priority review with an approvable PDUFA date set for September. If approved, launch for this product will be in 2020 with an industrialized scale manufacturing in place to meet the commercial demand for the product, and we have learned greatly from the continued growth in royalty revenues from the similar product in Japan, where it's being sold by our licensee for acute graft-versus-host disease. Beyond GVHD, we have a plan in place for life cycle extension for remestemcel-L for pediatric and adult inflammatory conditions. We'll be talking a lot today about a Phase III trial that is ongoing in 300 patients using remestemcel-L in acute respiratory distress syndrome due to COVID-19. In addition, 2 additional product candidates are in Phase III trials, one for heart failure and one for chronic inflammatory back pain with both with near-term U.S. readouts. Next slide, please. This slide identifies the mechanism of action of our product candidates and our platform technology. Our cellular therapies are activated by multiple inflammatory cytokines through surface receptors. This results in orchestration of an anti-inflammatory cascade and a concomitant down-regulation of multiple arms of the immune system that are implicated in the inflammatory conditions we are targeting. Next slide. This slide shows the pipeline of our Phase III product candidates. As you can see, remestemcel-L is being developed for a range of pediatric and adult systemic inflammatory conditions, the first of which is acute pediatric graft-versus-host disease. We are also in advanced -- in a Phase III program for acute respiratory distressed syndrome due to COVID-19. And we'll be talking a lot more about that. Rexlemestrocel platform technology is being developed for localized inflammatory conditions in 2 products from that platform technology, one being developed for Phase III indications and one for chronic advanced and end-stage heart failure and the second for chronic inflammatory low back pain. Both are in Phase III and both will have readouts around the year. Next slide. We have commercial scale manufacturing capabilities in place. Our technology is able to be scaled for off-the-shelf usage, the manufacturing meets stringent criteria of international regulatory agencies. We have robust quality assurance processes in place that ensure final product and batch-to-batch consistency and reproducibility. And we have current capacity and sufficient to meet our commercial needs for the Ryoncil launch for acute GVHD. We do project an increase in capacity requirements as a pipeline of choice, including for graft-versus-host disease label extensions for remestemcel-L and for COVID-19 ARDS. Within this increase in capacity requirements as projected, we will be using proprietary xeno-free technologies to increase yields and output. We will be moving to 3-dimension bioreactors to reduce labor costs and improve manufacturing efficiencies. And these innovations will significantly reduce in the future our cost of goods. Next slide. Underpinning what we do from the products that we're developing is a very strong global intellectual property estate with patent protection extending through at least 2040 in all major markets. We have over 1,000 patents and patent applications in these major jurisdictions. Our patents cover compositions of matter, manufacturing and therapeutic applications of mesenchymal lineage cells for all of the areas that we're developing products. We -- our patents provide strong global protection to our core commercial areas of focus and allow us to grant rights to third parties who require access to our parts in order to commercialize their products and products for outside of our core commercial areas. Next slide. So with that as a backdrop, I'd like to ask our Chief Financial Officer, Josh Muntner, to present our financials.
Thanks, Silviu. It's extremely an exciting time at Mesoblast. Turning to Slide 10. I've highlighted items from our income statement where we've seen tremendous growth in revenue and reduction in our operating loss for the 9 months ended March 31, 2020. Total revenue grew 113% to $31.5 million from $14.8 million for the year-over-year period. The key components of total revenue are commercialization revenue and lost in revenue. Commercialization revenue, which is royalty revenue collected from JCR Pharma for their product TEMCELL, grew 81% over the period -- in the period-over-period comparison, growing to $5.9 million for the 9-month period from $3.3 million for the year-over-year period. Milestone revenue from our strategic partnerships grew 127% to $25 million from $11 million. The milestone revenue in the current 9 months period reflects a $15 million upfront payment from Grünenthal received in late 2019 and also are recognizing $10 million of revenue related to our license agreement with Tasly Pharmaceuticals. Regarding nonrevenue highlights, we had a 34% reduction in loss after tax. This is partially driven by the increased revenue as well as due to a reduction in R&D expense, which declined by $7.5 million or 15% when compared to the year-over-year period. When looking at the 3-month period from March 31 -- through 3-month period ended March 31, 2020, we observed a sharp increase in total revenue, growing tenfold from $1.2 million to $12.2 million. The increase is due to the inclusion of the Tasly upfront payment, but also a 100% growth in royalty revenue to $2.1 million from JCR Pharmaceuticals for sales of their product TEMCELL using the treatment of GVHD in Japan. Moving to Slide 11. We'll pause for a moment to review our relationship with JCR, a Japanese company focused on commercializing products for orphan markets. JCR has exclusive rights to our MSC technology for acute GVHD in Japan, which they commercialized TEMCELL. We introduced the product in 2016 and have steadily grown the sales leading to a consistently rising royalty paid to us. And as shown on the chart on the right part of the slide, during the last 12 months ended March 31, 2020, we recognized $7.6 million of royalty revenue from JCR. Their success in launching TEMCELL and the rapid adoption the product that's seen in Japan informs our potential for the U.S. launch of Ryoncil if approved by the FDA. We know, however, that there's some differences between the Japanese GVHD market and what we expect to see in the U.S. We estimate that the U.S. market is 8x larger than Japan. The size differences are due to population difference, of course, between the 2 countries, but also it takes into account different incidents of GVHD between the 2 regions. In Japan, there's a lower incident of GVHD due to the [indiscernible] in relation to the patient population. Finally, we expect there to be a price difference between TEMCELL pricing in Japan and Ryoncil's potential pricing in the U.S. Overall, we've enjoyed a very productive relationship with JCR and look forward to their continued success with TEMCELL and in developing the product for other therapeutic areas, including epidermolysis bullosa and HIE. Turning to Slide 12. We find the entire income statement for the 9-month period. I've already covered the growth seen when comparing the 9-month -- the recent 9-month period to the prior period with respect to revenue. I've also highlighted the reduction in our R&D expense, primarily related to reduced spend on our clinical and preclinical development activities. Cost savings here are, in part, offset, however, by increased spend on manufacturing, which you can see rose approximately 20% to $15.5 million in the recent 9-month period. Overall, however, we do see a -- as already noted, a reduction in loss after tax. Finally, on Slide 13, I'd like to mention one of the key items from our balance sheet, which is our cash position. Cash on hand at March 31, 2020, was $60.1 million. We raised $90 million earlier this month, receiving strong support from existing and new institutional investors. This results in a pro forma cash position of $150 million. The proceeds from this offering will be primarily used towards scale to manufacturing for remestemcel-L in the treatment of acute respiratory diseases -- acute respiratory distress syndrome due to COVID-19 as well as for the commercial launch of Ryoncil for acute GVHD. In addition to the pro forma cash position of $150 million, up an additional $67.5 million may be available through our existing strategic partnerships and our ongoing financing facilities over the next 12 months. We believe that this puts our cash position and available cash in a great spot to be able to maximize the value of our assets. As always, additional information regarding our financial results have been posted to the ASX and the SEC as well as to our website. I'd like to hand the call back to Silviu now to review our operational and corporate highlights.
Thank you, Josh. Joining us on this call is Dr. Fred Grossman, our Chief Medical Officer, and he'll be available to discuss, together with me, any questions around our operations in the Q&A session. Let's go straight to Slide 15. So acute graft-versus-host disease remains a significant problem and market opportunity for our product, Ryoncil. Slide 16, please. To just reemphasize, the fundamental problem here is that severe inflammatory grades C/D disease resulting in severe mortality risk up to 90% mortality in grade B disease and reasonable trial outcomes have not changed over the past few years. Given that inflammatory therapies target the most severe degree of inflammation, we are focusing our therapies in these severe grades of the disease where mortality continues to be a problem.Next slide. In our Phase III trial, remestemcel-L in 55 children [indiscernible] steroids in Ryoncil approved in grade C/D disease demonstrated significant benefit in terms of day 28 overall response and day 100 survival. And these outcomes were superior to those from a matched cohort of children -- matched grade disease severity in a contemporaneous consortium, called the MAGIC Consortium across the U.S. and Europe. And therefore, we had response was significantly better in our Phase III trial as well day 100 survival. Next slide, please. New data together with published data from 2 other studies, one where Ryoncil was used in an open-label fashion in patients who have failed multiple biologics, again, with the 80% of grade C/D disease. And the third study were Ryoncil was used as first-line therapy in a randomized placebo-controlled Phase III trial of 260 adults and children with steroid-refractory acute graft-versus-host disease. All 3 studies provide the support to the BLA that have been filed for Ryoncil with the FDA, and that is under priority review. The FDA has set a Prescription Drug User Fee Act, PDUFA, date on September 30 and if approved, Ryoncil will be launched in the U.S. in the fourth quarter. Next slide, please. This slide demonstrates life cycle extension strategy that we've put in place for remestemcel-L. Planned U.S. launch that we will see for Ryoncil in pediatrics steroid-refractory GVHD will be followed, we hope, by a subsequent launch in COVID-19 ARDS. And beyond that -- we expanded indications in chronic GVHD, adult acute GVHD and other inflammatory conditions in the other [indiscernible] should be screened [indiscernible] Let's move now to the next slide to devastating complication of the acute respiratory disease syndrome due to COVID-19. Slide 21, please. COVID-19 is a respiratory virus with a very high mortality rate due to severe inflammatory condition of the lungs, which is called acute respiratory disease syndrome, ARDS. ARDS is caused by cytokine storm due to a severe inflammatory response to the very virus that is in the lungs, and seen the primary cause of death in patients with COVID-19. We have an extensive safety data set using remestemcel-L and in inflammatory effects in patients with acute graft-versus-host disease. And those data and the shared mechanism of action makes for a compelling rationale in reading to evaluate whether remestemcel-L has a place in the treatment of COVID-19 ARDS. In addition, we have known for quite some time that intravenous delivery of remestemcel-L results in selective migration for the lungs, making inflammatory lung disease an appropriate target of this therapy. Remestemcel-L, therefore, has the potential mechanistically and for other reasons to tame the cytokine storm specific to ARDS, and may, therefore, offer a life-saving treatment to those unfortunate individuals who suffer from COVID-19 ARDS.Let's go to the next slide, 22. This slide summarizes the clinical and pathophysiological features of ARDS. And ARDS, of course, is caused by COVID-19. But traditionally, has been called by a variety of different viruses and bacterial infections. It remains a major unmet medical need. As I've mentioned, multiple triggers can cause ARDS, and typically, the immunoresponse to the inciting agent, whether it's a virus or a bacteria, results extended intensive care hospitalizations and interventions using ventilators. Mortality rates in ARDS ranges from 40% in those caused by influenza to 80% when caused by COVID-19. The pathophysiology is activation of immune cells in the lungs, particularly macrophages and T cells. And when activated, these cells secrete a range of damaging cytokines. So the whilst they're battering the deciding agent, such as COVID-19, the cytokine that they release result in by standard destruction of the lung tissue. Influx of additional new cells, aberrant secretion of fluid of the lung alveolar cells, ultimately, the patient has severe fluid and entirely filled up with fluid and inflammation and destruction.Slide 23. So more specifically, the rationale for remestemcel-L is its anti-inflammatory mode of action. The COVID-19 virus is known to stimulate a cytokine storm in the lung, resulting in the release of cytokines and biomarkers, such as TNF alpha, interleukin 6, interleukin 8, hepatocyte growth factor and interleukin-2 receptors, all of which reflect the macrophages and the T cells that are wildly activated in the lungs. The remestemcel-L arrives and improve lung. Its surface receptors are activated by very major inflammatory cytokines, including TNF and IL-6. Engagement of these receptors results in secretion by remestemcel-L of multiple, well-defined and inflammatory factors. Let's switch off multiple lines of immune system, macrophages, B cells and T cells, much as they've been showing to do in acute graph-versus-host disease. This results in reduction of the cytokine storm and reduction in the very soft runs that have initiated, such as TNF alpha, interleukin 8, hepatocyte growth factor and expression of R2 receptors. And these are the very same biomarkers that are significantly impacted and reduced by remestemcel-L in acute graft-versus-host disease. Ultimately, the anti-inflammatory and additional reparative factors that can be produced by remestemcel-L has the potential to reverse ARDS, protect the alveolar epithelial cells and improve lung function. Let's go to Slide 24, please. So what the rationale is clear and we moved quickly to obtain pilot data and an emergency IND in New York to provide clinical rationale. So moving forward with an appropriately randomized controlled trial in COVID-19 ARDS. The data from the compassionate use we previously published, 12 patients with moderate or severe ARDS, on ventilators who failed all other therapies received 2 infusions of remestemcel-L at Mt. Sinai Hospital in New York City. The choice of the 2 infusions of 2 million cells per kilogram was that the protocol we used was identical to the standard protocol we're using today in acute graft-versus-host disease. Well-established protocol with a lot of safety data behind it. Nine patients of the 12 successfully came off ventilator support at a median of 10 days following the second dose -- following initiation of the first dose and were discharge from hospital. Striking to this contrast with only 9% of COVID-19 patients in the same city, in the same hospital networks being able to be extubated within the same timeframe, and only a 12% survival rate for such severe patients. And when we talk about the disease severity, we're talking about moderate to severe ARDS-style quite [indiscernible] criteria for ventilation. These are very, very severe patients with a very high mortality rate and inability to do without ventilators. Based on these very positive data, striking data, we moved rapidly to initiate a confirmatory Phase III trial in up to 300 patients, randomized 1:1 to either remestemcel-L or placebo. The primary endpoint of the trial is day 30 mortality, key secondary endpoints in days alive off ventilator support. The first patients have been randomized and dosed in early May, and this trial is currently recruiting. We expect to have up to 30 sites contracted, and we'll hear a lot more about this trial in the short term. Next slide, 25, I think, summarize again in more detail what I've just said in terms of objectives, trial design, primary, secondary endpoints. If folks would like to a lot more detail on this, I'm sure that Dr. Grossman will be happy to address any questions on the trials. Slide 26, please. This slide highlights the key milestones that we anticipate to see over the next few months, the remestemcel-L in COVID-19 ARDS. Recruitment is expected to take 3 to 4 months. A first interim analysis is planned for when 30% of patients have reached the primary endpoint of 30 days. And we will seek expedited regulatory approval subject to positive data readouts. In the interim, we need to anticipate for positive outcomes and be in a position to scale up manufacturing to meet the projected increase in capacity requirements for both COVID-19 ARDS and overall our maturing pipeline. And to do this, we will seek to increase our manufacturing footprint for capacity expansion. We will be implementing proprietary xeno-free technologies to increase yields and output, and we'll be starting to plan for the longer-term transition to 3D bioreactors in order to reduce labor and improve manufacturing efficiencies. In addition, we will be simply to establish manufacturing commercialization partnerships as these high-volume opportunities start to read out. Finally, let me conclude the operational update in regards to our heart failure and chronic low back pain products, Slide 28. For our back pain product candidate MPC-06-ID. We have a strategic partnership in place to develop and commercialized the product candidate in Europe and Latin America in [indiscernible]. For our product Revascor, for heart failure, we have a relationship in place for exclusive cardiovascular partnership with Tasly Pharmaceuticals. Both of these product candidates are in Phase III in the U.S. And at this point in time, we return 100% of the U.S. commercialized for the price. Slide 29. Revascor for advanced and end-stage heart failure. In December, the Phase III trial for advanced heart failure surpassed a number of primary endpoint events required for trial completion. The final study visits for all surviving patients have been completed. There's an ongoing quality review of all the data. It will be completed shortly at the study sites. The data readout is planned for mid-2020, and the results may support regulatory approval in the U.S. Recently, we presented results from a sub-study of 70 patients with end-stage ischemic heart failure and a left ventricular assist device of a total of 159 randomized patients who received either Revascor or saline, and these results were presented by the independent trial investigators at the American College of Cardiology Virtual Scientific Sessions end of March. The conclusions from that study whether the MPCs had a beneficial effect on the ability to wean the patients off the LVADs, beneficial for the major mucosal bleeding, serious adverse events, and a reduction in readmissions in future ischemic heart failure. The end-stage ischemic heart failure patients with LVADs are older and have co-morbidities such as diabetes and, therefore, closely resembling the majority of the patients in our 566-patient Phase III trial for Revascor for advanced chronic heart failure. These results are, therefore, very encouraging in that context. Let's move to Slide 30. Summarizing where we are with MPC-06-ID for chronic inflammatory low back pain. The Phase III trial of this product candidate is in 404 patients in the completed enrollment. And all patients had been follow-up for more than 2 years. The final study business has been included for all patients. The ongoing quality review of all data has been completed at the study sites and the data readout is planned for mid-2020. There's excellent continued operational progress in our strategic partnership for this candidate with Grünenthal in New York in order to complete that goal protocol design to obtain regulatory input and received clearance from the European regulatory agency to begin European Phase III trial that will be complementary to the U.S. Phase III trial. And the results from both trials will be considered pivotal move to support regulatory approval in both U.S. and Europe. Finally, if we can move to Slide 31. This slide highlights our major upcoming operational milestones for the next 12 months and their identified product candidates. For remestemcel-L for steroid-refractory acute graft-versus-host disease. The product Ryoncil has received priority review. We are interacting with the agency at present and a PDUFA date is set for September 30. If approved, the U.S. launch for Ryoncil is planned for shortly thereafter. And in parallel, we will be expanding investigator initiative clinical trials for chronic graft-versus-host disease and other indications of the product candidate. Specifically, with respect to remestemcel-L for acute respiratory distress syndrome due to COVID-19, as I've mentioned, the active Phase III trial is ongoing with its recruitment across up to 30 sites in North America. The trial will complete within 3 to 4 months enrollment, and we hope to establish strategic partnerships for both manufacturing and commercialization for this indication. Revascor for advanced and end-stage heart failure, the read out in the Phase III trial results in mid-2020, and we expect to initiate a confirmatory trials in end-stage heart failure in patients with LVADs.And finally, for chronic inflammatory low back pain, as I've mentioned earlier, data readout will be mid-2020 for the Phase III trial, and we will work closely with our partner to conclude the European trial for the same indication. And with that, I'd like to thank everybody and open it up now for questions to myself or Fred Grossman and Josh Muntner. Thank you.
[Operator Instructions] Your first question comes from Louise Chen from Cantor.
So my first question for you is how fast do you think this ARDS trial will enroll? And when can we expect to see an internal readout here? Second question is we often get asked by investors, which data set do you expect to see first, the heart failure or chronic low back pain? And if you can't say, if you could just help us think through that, that would be great. And last question here is that you had noted that in December 2019, your Phase III heart failure trial surpassed a number of primary endpoints for completion. I'm just curious what needs to be done from that point on to the middle of this year before we can see the results.
So those are 3 sets of questions. Let's take the first question to Dr. Grossman. Fred, could you address the [indiscernible] in ARDS trial and interim analysis, please?
Yes. Yes, Silviu. Thank you for the question, Louise. So as mentioned before, the study has started, and patients have been recruited. We're expecting, as noted before, the study to be completed in 3 to 4 months. We are carefully choosing the top medical centers and many of which are in hot spots around the country in North America, and we're recruiting up to 300 patients across 30 sites. In terms of the interim analysis, the first interim analysis will be when 30% have completed the primary efficacy variable. That should take about 2 months or so. And at that point, depending on how many have completed, an independent board will be reviewing the data for substantial efficacy and utility. And at that point, if there's substantial efficacy, then they may recommend that the study stops.
And then we could go to your second question, Louise. Second question was, which of the 2 trials really, that first hearts or back pain. And I would say we're not in control of those. And really, it's partly the same with your third question, which was, since the minimum number of events were accrued in December, how long will it take you to close the trial out. The minimum number is great that we allowed -- we needed to have all patients followed up for at least 12 months in a [ half-way trial ]. The last patient, 12 months follow-up could, I believe, end of January, early February. So we had a requirement for 12 months follow-up with more patients. And that meant that we weren't in a position to start closing out that trial until after the last patient had its 12-month visit. And so we will have something like 10%, 15% of primary endpoint events more than the minimum requirement by the FDA. It's really a good thing. And the team is very much in the process of cleaning up the data and interfacing with the CRO with responsibility, it is to ensure that all they are accurate and error free. And to do that, they have to verify lots of components, obviously, at the sites, at the source. And that provides the heart failure program and the back pain program. And that's currently being completed. Fred, do you have anything that you'd like to add to that?
No, I think that covered it. We want to make sure that the data are pristine, and we have a very robust process to make sure that all the data are clean. And that at the end of the day, when it's analyzed, the results are robust and perfect.
Your next question comes from Jeffrey Cohen from Ladenburg Thalmann.
So few questions. Fred, can you talk to us a little bit about the [ EDGE ] trial and just a sense of the size of the subset that we want out there, obviously in the United States as far as the one subset from [indiscernible] the total patient population or the sort of [indiscernible] population. Can you remind us of the data of the trial between the 2 infusions, at least maybe on a short trial and [indiscernible] and talk to us about the number of sites, which you currently have, I think you stated that you have up to 30. And the kind of time frame you think we will see. I think you said 3 to 4 months and what kind of look might you get to look at or you're going to look at?
Yes. Thank you for that question. So let me start with the dosing first. So the dosing and the criteria that we used for the 12 patients is the same dosing and criteria that we're using for the randomized placebo-controlled trial. Patients receive 2 doses of remestemcel-L separated by 3 to 5 days in the first week. So the first week, they will have received 2 doses, both in the 12-patient emergency IND as well as in the randomized clinical trial. The clinical trial, the randomized clinical trial, as mentioned before, is across 30 sites. Many of these sites are in hotspot areas. As you know, across the country, there are some states where the number of hospitalizations are flat or going down somewhat, others where it's going up. It's certainly predicted that now that the country is opening up that there's going to be some spikes. So we're making sure that we're covering most of the country so that we can hopefully get those patients enrolled in our study. It's very hard to determine what the total number of COVID ARDS patients there are. But obviously, it's very substantial. We're hearing now that in Alabama, for example, the ICUs are full. So this is a very substantial population. I would point out that we're focusing on the severe cases. We're focusing on those with moderate to severe ARDS. There's no one in that space. There's no competition in that space, and hence, there's a tremendous medical need to come up with treatments that reduce the mortality because, as mentioned by Silviu before, the net -- even the mortality is quite high. So depending on the pace of enrollment, as we noted before, we expect the enrollment to complete in 3 to 4 months. And then allowing for another month after that for the last patient to get to the 30-day period, that's about the time that the study will complete, analyze the data, we have both primary and secondary outcomes measures in that trial. As noted before, we are including interim analysis. And the first interim will be when 30% of the subjects have met or completed the primary efficacy variable. That -- so that would be about 90 to 100 patients. And depending on the enrollment, I'm anticipating anywhere from 2 months or so. Again, it depends on the enrollment for the first interim look, and that will be by an independent committee. If they determine based on general criteria of efficacy and futility, that the studies would stopped for efficacy, then that will be their recommendation. And at that point, we will make a decision to perhaps stop the trial and move forward with our discussions for a potential approval in COVID ARDS. Did I answer your question?
That's very helpful. Yes. It's very helpful. A couple more follow-ons. One, is second interim look at 60% or 70%? And then in addition, could you give us a sense of how many IRBs are locked in as of today?
We have 3 interim looks during this trial. So the interim looks are going to occur at 30%, 45% and 60%. So there's quite a few periods where the independent board is going to put this data. And the reason that we've built this into -- based on the signal, the strong signal we saw in the 12 patients. If it holds up, then it's quite possible that this study could start early. However, we're planning for the study to go to completion and cover those 300 patients. But again, we can hear very early that the study is to be stopped. I'm sorry, what was the second question that you asked?
Can you give us a sense of the number of IRBs?
Yes. I mean we're recruiting sites very quickly. We started fast. There's tremendous interest in the study. So we're getting calls from many sites around the country who want to take part in this because, as I noted before, there's no one the space. Most of the other studies, whether they are antivirals or other treatments, are including milder patients as well as those who are critical. We're focusing purely on those that are on ventilators, who are moderate to severe ARDS. And therefore, there are many sites that are engaged. We have quite a few sites already signed up. We have many patients who are in the trial, and we look forward to continuing this pace.
Okay. Got it. So one more question, if I may, on a different topic. I guess for Silviu on the VAS score. Could you talk to us a little bit about if the data comes out positive, the review of, is that going to be enough to file within your opinion to the agency here? And could we also, just to contrast in greater detail, what stage you'd be going after with the available as far as the [indiscernible] and the [ IMAT ] classifications?
Sure. Thank you. See the common theme of what we're targeting in terms of each disease area, requiring the most severe patients where alternatives don't exist. We've done that with severe end-stage and severe advanced grades GVHD, severe disease. We're doing that with COVID-19 ARDS, severe ARDS with a very high mortality rate. And we're also doing that with severe heart failure. And the patient that is enrolled, and those patients have somewhere between 30% to 85% got very severe, very large [indiscernible] and a substantial risk of mortality over an 18- to 24-month period, very much the mortality risk that resembles in many ways in certain cancers. And these patients have progressed to this advanced stage despite our maximum existing standard of care therapies. We've even gone beyond this group of patients in patients who are otherwise know about it but being capitalized really on unofficial mechanical devices and retentive [indiscernible] devices. I mean that said, again, we've seen strong signal of efficacy to that state of area. So we -- I think we've seen a significant benefit in mortality in this 566-person trial, together with the available already seen in the ischemic end-stage heart failure patients with elders, it's the totality of the data that will potentially allow us to have a very meaningful discussion with the agency.
Your next question comes from Jason Folger (sic) [ Kolbert ] from Dawson James Securities.
Really appreciate all your hard work. It's been a terrible pandemic. With that said, there's a couple of questions I have. I know that you guys are highly connected, and some of your Board members are highly connected to DoD and BARDA. And I'm just trying to understand what the interest level might be for a BARDA procurement. What -- at the end of data and how long does the U.S. government wait to get data? This is not -- do they wait for a completion of the clinical trials? Do they get good interim data and make a procurement effort? How much time are you spending in Washington? How active is that process?
That's a fairly complex question there, Jason. I would start out by saying, clearly, data drive any discussions with BARDA and procurement. And I think we have those discussions ongoing. But I think the disease needs to be looked at in various ways. COVID-19 and ARDS is clearly the major focus for us and for regulators, ultimately, for the government of large. If we can make a meaningful impact on mortality and get these patients off ventilators and out of ICU, that will have a tremendous impact on the health care utilization as well as patient well-being, of course, and outcomes. Beyond that, there's the opportunity to use the product for not just to COVID-19 but [indiscernible] and more broader COVID without including, sepsis, bacterial sepsis, et cetera. So this is the beginning of a discussion and whether the right approach is stockpiling, which is what you're referring to, versus our ability to manufacture sufficient product capacity expansion, that is the commercial initiative, together with strategic commercial parties or a combination of both, a partnership with commercial pharmaceutical companies in the space, together with the U.S. government. It's a combination of all those things may be the way to go. But I think it's -- we are in discussions with parties that are both global commercial and government. And I think the clinical data will underpin those outcomes. We are well financed now to put in place the initial manufacturing requirements that will underpin the capacity. Initially, it's required for really the outcome if it goes [ to qualify ] with it.
Yes. Silviu, I mean, your answer makes perfect sense, and that's exactly how I would answer the question as a scientist or as a clinician. But I also know, these are unusual times and politically, things can move very, very rapidly. Let me ask a slightly different question to Dr. Grossman. One of the really interesting things that's becoming understood is that many of these patients who do come out of ventilators and induced comas have many, many other after effects. So it would be really, really interesting to be able to not only analyze mortality but the many, many secondary endpoints that will determine, not only if patients recover faster and are not necessarily as acute and whether they recover more completely and fully. And so can you touch a little bit in terms of the things that you're tracking, even if they're not kind of the primary endpoint and top of mind?
Yes. First of all, I agree with you. I think that many of these patients, in fact, when they come off a ventilator, have sequela for quite some time. One of the reasons that in our trial and in the 12 patients, we have a treatment initiated with remestemcel-L within 72 hours of being on a ventilator is because we want rapid resolution of treatment. And as you heard before, there was a median number of days of 10 days off of a ventilator. The longer you're on the ventilator, the greater the chance of having long-term effects, such as fibrosis. So we're gearing our treatment early in the process of patients being on a ventilator. Also in our randomized clinical trial, we have a whole variety of secondary outcome measures, including 60 and 90 days post ventilation, beyond just mortality. We're looking at a variety of factors. We're also looking at biomarkers, which are really critical here because as you heard before, these cells are stimulated by cytokines and they release anti-inflammatory factors. And we want to measure what they are, and we're doing so in the study. So I agree fully with you. It's very important to look at the long-term effects, but we're trying to get to these patients early so that we can have complete resolution beyond just reducing mortality, which, in and of itself, is important.
Understood. The last question for you, and I'm gritting my teeth to assets, but I think I should ask it, and I think we should address it. U.S.-China relations right now are pretty tenuous. There's a lot of crazy stuff going on, whether it's Hong Kong or whether it's U.S. trade or whether it's source of COVID. How could this or might this affect you and your relationship with Tasly? And I did hear you say that you realized the milestone from Tasly, I think that's positive. How is Mesoblast protecting this deal and protecting its intellectual property going forward?
Look, we have an excellent relationship with Tasly. And I certainly don't want to discuss politics in this call one way or the other, but our relationship with Tasly is a commercial one and it's an excellent relationship. In terms of intellectual property, our arrangement with respect to the initial phase of at least to provide products on a commercial arm [ 10 ] places in terms of supply. Over time, we will work out our arrangements with respect to commercial manufacturing and distribution. And certainly, protection of intellectual property is a critical aspect of the relationship, and I have no reason to think that this relationship will continue to be anything but strong and growth areas at over time.
Okay. Good. And one last question. And first of all, congratulations to you and Josh on raising capital. I think that made a lot of sense given that we live in the stock price. When I look at the risk and the reward in the stock, I'm very excited about what I believe is going to be very powerful results in COVID. But what -- and I know you've kind of addressed this, but I'd like to put it specifically in the frame of reference of what -- we're going to see COVID degenerative discontinued in congestive heart failure. We're going to see that data all coming together in about the same time. It would be really interesting to know what data might come when in terms of the sequence. But I guess that's not really up to you. But how do you look at that?
Well, I think the most important thing to look at in the short term is use of our go-to-market strategy, right? Our remestemcel-L product for steroids indication, GVHD, with a brand name Ryoncil is, first and foremost, the value drive for the company. We are in advanced discussions with the agency. We're under a priority review. The team is led by Dr. Grossman. He's in [indiscernible] to make interactions, discussions, responses. And the focus for the company is to get this product approved that's a [ trich ] we launched, and we've invested in a targeted commercial sales force led by Eric Strati, in our organization. That sales force will be focused on at least the 50% of transplant centers to -- sorry, the 15 sites in the U.S. that do [ 15% ] of the pediatric transplants. We have invested in inventory to support the successful launch. And that's clearly the short-term value driver for the company. And then the value driver beyond that will be ensuring that there's appropriate data to support label extensions for the product. And broadening of the indications, and COVID-19 ARDS is an example of that. Our ability to leverage the many uses of safety and efficacy data generated with remestemcel-L, not just for GVHD, but in other areas like Crohn's disease and some inflammatory lung disease will allow us to move on to new indications. And as you've seen, our partner in Japan have moved into areas like HIE, otherwise known as [ new baby syndrome ] and epidermolysis bullosa data to which we will have access and use for the U.S. market. We intend to move hard to work with investigator with the leaders in this space to generate the kind of data that will support label expansions for the product, underpinning all of that will have to be our manufacturing strategy. And that's a major rationale for why we raise capital recently. We have to be able to invest in the capacity enlargement and contractual discussions are underway, and we have to be in a position to anticipate positive readouts and one is not skip a beat with respect to the ability to have inventory to launch products for indications beyond the Q2 [indiscernible]. And that includes, of course, COVID-19 ARDS. With respect to readouts in the Phase III trials, as we said, they're not under our control. What is under our control is successful launch, successful presentations to the agency, the successful ability to commercialize products and build them out into new areas and make sure that we generate the sort of revenue that this platform technology can deliver to -- for our stakeholders.
Your last question comes from Tanushree Jain from Bell Potter Securities.
Just a couple of ones from me. Just on the GVHD, did you have any visibility about the advisory committee date of yet? And then just on the second one, given remestemcel-L approved in Japan for GVHD, is there any plans or discussions with JCR to pursue the COVID-19 ARDS opportunity for Japan? And then my last question is just on the manufacturing. Over the next 2 quarters, I guess, Josh, this is more for you, before we see the ARDS trials [indiscernible] connecting [indiscernible] for [indiscernible] that there is a possibility that the trial could be stopped early for efficacy on an interim analysis. I guess, how should we be looking at these spend on increasing the manufacturing capacity over the next 2 quarters?
So can I have Fred to address the first question, please?
Yes. The advisory committee is planned for August. We're in discussions right now with the FDA regarding format and content. And we're really looking forward to presenting to the committee.
Josh, could you address the spend over the next period, please?
Sure. I think I'll echo some of Silviu's comments from earlier. It's important to make sure that we have the capacity to meet the requirements of our maturing pipeline, including this opportunity to treat ARDS in COVID-19 patients. At this point, we don't have any contractual arrangements, but we're working on putting them in place, and we'll provide updates to the market as we do so.
Tanu, did that address those questions?
Just the JCR one as well, and I think then I'll just have a follow-up for Josh with respect to the contractual obligations. Are we just going to look at adding, I guess, another manufacturing [ sweep way loans ] now? Or are you also going to be considering other self manufacturers?
Maybe I can address that, Tanu, for you first. So there's obviously ability to build that capacity in Singapore with the existing arrangements with Lonza. But we're -- given the -- in accordance with COVID-19 in the U.S., we are looking at having expansion capabilities for production in the U.S. And so we're in discussions with multiple parties, including Lonza, of course, in the U.S. to access those facilities, existing and otherwise for increased production for remestemcel-L and its applications as well as the track for other of our important products with high volumes. So those discussions are underway and we're evaluating other options. The question with JCR, we have a very strong relation with JCR. They are primarily focused on orphan indications for the company strategically. And that has driven so far the interest in acute GVHD, epidermolysis bullosa and hypoxic ischemic encephalopathy, which [indiscernible]. COVID-19 is not an orphan disease, obviously. And we've had initial discussions with JCR, but we're also having those discussions more broadly. And I think we'll update folks over time as to our strategic initiatives in Japan and the U.S., in Europe, et cetera, with respect to COVID-19.
That brings us to the end of today's call. I'll now hand back to Dr. Itescu for closing remarks.
Thank you very much. We really appreciate everybody's interest today. Clearly, the last 3 months have been incredibly busy and a strong quarter for us as a company. I think it puts Mesoblast well and truly at the forefront of providing a potential therapy to combat this devastating disease, COVID-19. And I think it speaks greatly to the strength of the underlying technology that Mesoblast was developing as well as the more than a decade of clinical data, which are being generated in terms of both safety and efficacy and understanding the mechanism of action, that allow it at a time of devastation. It's really the only word I can use that has been caused by COVID-19 pandemic. But we're able to exhibit and use all of our know-how and expertise and worked diligently and feverishly, really, to attempt to provide a therapeutic solution to the many, many, many patients who are affected by this virus and have a very high risk of death due to this terrible inflammatory condition of the lungs. And we hope to update the market as soon as we possibly can. Thank you very much.
That does conclude our conference for today. Thank you for participating. You may now disconnect.