Mesoblast Ltd

ASX:MSB

Earnings Call Transcript 2022-Q3

[Operator]

Thank you for standing by, and welcome to the Mesoblast Limited Operational Highlights and Financial Results for the Period Ended March 31, 2022 Conference Call. [Operator Instructions] I would now like to hand the conference over to Dr. Silviu Itescu, Chief Executive. Please go ahead.

[Silviu Itescu, executive]

Thank you very much. Good morning, and good afternoon to everybody to Mesoblast's operational highlights and financial results for the period ended March 31, 2022.

If we can go straight to Slide #4. Mesoblast has a platform technology with a well-characterized mechanism of action. Our mesenchymal precursor stromal cells respond to and are activated by multiple inflammatory cytokines through surface receptors that are well defined and which ultimately result in an orchestration of an anti-inflammatory cascade that controls the inciting stimulus in the first instance. Consequently, this mechanism of action applies to target diseases of severe inflammation that's highlighted in our late-stage portfolio of clinical assets.

If we go to the next slide, Slide 5, this summarizes the late-stage clinical pipeline derived from our remestemcel platform technology in red and rexlemestrocel platform technology in blue. Products derived from the remestemcel platform are in Phase III for acute graft versus host disease in steroid-refractory patients, acute respiratory distress syndrome initially targeting COVID-19 and in earlier-stage development for inflammatory bowel disease in patients with biologic refractory Crohn's and ulcerative colitis. Products derived from our rexlemestrocel platform technology are being developed for diseases of inflammation, locally chronic low back pain and chronic heart failure.

Now I'd like to introduce our interim Chief Financial Officer, Andrew Chaponnel, who will take you through the financial results for the period ended March 31, 2022. Andrew?

[Andrew Chaponnel, executive]

Thanks, Silviu. Now turning to Slide 7. Revenues in the quarter increased by 5% on the comparative quarter to $2 million and by 46% for the 9-month period to $8 million. Net cash usage reported for operating activities in the quarter was reduced by 40% or $10.3 million, down to $15.5 million compared with $25.8 million in the comparative quarter last year.

For the quarter, net cash usage reported for operating activities when excluding inventory was reduced by 50%, down to $11.2 million from $22.2 million in the comparative quarter last year. For the 9-month period ended March 31, net cash usage reported for operating activities was reduced by 36% or $31.2 million and by 40% when excluding inventory. Cash on hand at the end of the quarter was [ $76 million ], and we also have up to an additional $40 million available to be drawn down from existing financing facilities subject to certain milestones.

Turning to Slide 8. You can see that our reported quarterly net operating cash burn has been significantly reduced over the last 5 quarters. Turning to Slide 9, we can see the P&L results for the 3-month period. Within R&D expenditure, we saw a 34% reduction of $4.2 million as we reduced spend on clinical trial activities. We continue our steady investment in manufacturing, including production of remestemcel inventory to support the potential launch of GVHD. To date, we have manufactured $29.7 million worth of remestemcel inventory in anticipation of launch. This prelaunch inventory will be recognized on the balance sheet if we receive FDA approval.

Now I hand the call back to Silviu for the remainder of the presentation.

[Silviu Itescu, executive]

Thank you, Andrew. For the operational highlights, I'm joined by our Chief Medical Officer, Dr. Eric Rose. Let's focus on remestemcel for acute graft versus host disease.

Slide 11. Acute graft versus host disease is a serious and often fatal complication of an allogeneic bone marrow transplant. It results from T cells in the allogeneic donor graft attacking the gut, the liver and other organs, the skin, as foreign. And the end result is a cytokine storm that results in destruction of these major organs and frequently, death.

Next slide. Treatment options after steroids have failed are very limited in patients, and in fact, no drugs are approved for children under the age of 12. In Japan, Mesoblast licensee, JCR Pharma, has already received the only product approval for steroid-refractory GVHD globally in both children and adults.

The burden of illness is significant. 50% of patients who receive an allogeneic bone marrow transplant will have acute graft versus host disease, and about 50% of these patients will be steroid-refractory. In the steroid-refractory population, mortality rates can be as high as 90% in the highest-risk patient population. The market opportunity is substantial with over 30,000 allogeneic transplants being performed globally, and about 20% of these are pediatric.

If we can go to Slide 13. Data that has been accumulated for remestemcel in children with steroid-refractory GVHD is summarized on this slide, with efficacy and safety outcomes across a total of 309 children from 3 separate studies. As first-line therapy, remestemcel was used in a randomized controlled Phase III trial of 260 patients, which included 27 children. And as you can see in yellow, in that particular study, remestemcel resulted in 28th day overall response of 64% and day 100 survival of 79% compared with 38% response and 54% survival in the placebo-treated group.

Subsequently, in the 241-patient study under an expanded access program, 80% of whom had Grade C and D disease and had failed institutional standard of care, again, overall response with remestemcel was similar at 65% and day 100 survival was 66%. Finally, when used as first-line therapy in an open-label Phase III trial in 54 children with steroid-refractory GVHD, 89% of whom had Grade C/D disease, again, remestemcel performed similarly with a 69% day 28 response and a 74% day 100 survival. And when compared against a control group contemporaneously treated with the best available care, the so-called MAGIC cohort on the left of this table, you can see a significant benefit in terms of both day 28 response and day 100 survival.

If we can go to the next slide, Slide 14. The MAGIC Algorithm Probability biomarker score, or MAP score, with a threshold above 0.29 is a validated biomarker of disease severity. In fact, it's been shown to be a more predictive biomarker for mortality and nonresponse to treatment than a clinical criteria, such as grading by Glucksberg or IBMTR grading. And you can see on this slide that patients with a MAP score above 0.29, in light blue, across 3 different cohorts demonstrate substantially worse survival through 12 months than do patients with low MAP scores. In fact, survival levels of the order of somewhere between 10% to 30%.

If we go to Slide 15. In an investigator-initiated study at Mount Sinai where investigators compared response and survival outcomes between children in the remestemcel Phase III trial, GVHD001, and MAGIC cohort children who were matched by biomarker severity using the MAP scores, as you can see here on the left is a significantly greater day 28 response amongst remestemcel children who had a MAP score above 0.29; and on the right, a significantly greater day 100 survival in remestemcel-treated children with a MAP score above 0.29 than best available therapy in the MAGIC cohorts. And both of those responses and survival were significant, 67% versus 10% for response and 64% versus 10% for survival.

If we go to the next slide, 16, this is a Kaplan-Meier analysis of overall survival through 6 months between remestemcel-treated children with high MAP scores in blue and best available therapy in children with high MAP scores in red. And as you can see here, a very significant difference in overall survival through 6 months in children with greatest disease severity treated with remestemcel.

Slide 17. So where are we with respect to our plan for BLA resubmission? We believe that the proposed potency assay, which measures remestemcel's in vitro anti-inflammatory and immunomodulatory activity, helps establish a clear understanding of the product's mechanism of action in steroid-refractory GVHD and demonstrates the clinical relevance to the in vivo effect of the product in the 54-patient overall Phase III trial in children with steroid-refractory GVHD. In fact, the strongest correlation between our potency assay and survival is seen in those very patients who have the highest mortality risk as measured by both clinical severity or by high biomarker levels of inflammation, as I've just shown you, the MAP score.

Additionally, we have now generated substantial new data from the expanded access program, EAP 275, in 241 children, which confirm the ability of the in vitro potency assay to measure product activity relevant to survival. Our GMP contractor is now well resourced, allowing final testing of product inventory for the BLA resubmission. Additionally, we've just completed last week, in preparation for the expected FDA review, a successful mock pre-approval inspection of the GMP manufacturing facility and our process, and this mock inspection comprised both on-site and virtual inspections by external auditors.

Mesoblast will provide these new data to the FDA and address all CMC outstanding items as required for the planned BLA resubmission in the coming quarter. If the resubmission is accepted, CBER will consider the adequacy of the clinical data in the context of these CMC-related issues.

Now let's move to remestemcel for acute respiratory distress syndrome, or ARDS, due to COVID-19. Slide 19. ARDS is caused by so-called cytokine storm in the lungs of patients infected with respiratory pathogens, such as COVID-19 or influenza. It's notable that new variants of COVID-19 continue to be emerging globally with higher-than-previous infection rates. Therefore, ARDS remains a major cause of mortality for COVID-19 patients who continue to be immunocompromised or are unvaccinated or have comorbidities as well as, of course, ARDS continues to be a cause of mortality in patients with seasonal influenza and other pathogens. Remestemcel has the potential to tame the cytokine storm in ARDS and may offer a life-saving treatment for high-risk patients. We, therefore, intend to move forward with a pivotal trial for EUA with reference to the GVHD BLA for product potency assay in place prior to trial commencement.

Let me summarize some of the data that's been generated to date that supports our focus on the younger patient population. Notably, those patients under the age of 65 continue to represent more than 50% of hospitalized patients from COVID-19. In our Phase III trial -- this is Slide 20. In our Phase III trial, which was halted after 222 patients, in a prespecified analysis of patients by age, those under the age of 65, which accounted for the majority of patients, 123, in those patients, remestemcel significantly reduced mortality relative to control with a hazard ratio of 0.53, as you can see here on the left-hand side, over 60 days of follow-up. The secondary endpoint of improvement in respiratory function, amongst other key secondary endpoints, showed trends that correlated with the improvement in survival at every time point tested, on the right.

If we go to the next slide, please, 21. These mortality benefits and improvement in respiratory function were particularly evident in the exploratory subset of patients who were on dexamethasone. And you can see on the left-hand side in this 73-patient subset, the hazard ratio is 0.23, which is highly significant, indicating synergy between the 2 therapeutic agents. And as you can see on the right, that synergy is evident also in the key secondary endpoints of respiratory function.

Finally, if we go to Slide 22, this synergistic effect on mortality, which is evident early on in the first 30 to 60 days, remains constant through 12 months of follow-up. In other words, those patients who are able to be kept alive early on ventilators and are able to be extubated subsequently do well over a 12-month period.

Let's go to Slide 23. So what is the regulatory pathway to potential EUA for COVID-19? The FDA has advised Mesoblast that an additional clinical study, if statistically positive, could provide a data set in conjunction with the data that has been completed in the 220 (sic) [ 222 ] patient study, which might together be sufficient to support an EUA, Emergency Use Authorization. FDA provided guidance that the COVID ARDS file and future submissions for this indication may cross-reference manufacturing and potency assay information in the BLA for steroid-refractory GVHD.

So we are working together with investigators from a clinical trial network -- a major clinical trial network across the U.S. that focuses on acute lung injury at over 40 sites across the U.S. affiliated with Vanderbilt University to design and implement a pivotal trial for remestemcel to reduce mortality in the highest-risk patients with ARDS and as shown in combination with dexamethasone, the standard -- the current standard of care in COVID patients.

Let's move on to the third major indication for remestemcel, inflammatory bowel disease, Slide 25. Steroid -- biologic-refractory inflammatory bowel disease continues to be a substantial unmet need. In fact, more than 30% of patients who are on anti-TNF agents as first-line are unresponsive. And on an annual basis, more than 10% who initially responded will lose their response. So there is a continued growth and need for alternative treatments in the biologic-refractory patient population. In particular, what's needed is an agent that induces early remission in these patients with severe colitis, in particular, where the alternative to medical approach, unfortunately, surgical -- is surgical, which is highly unacceptable particularly in young patients.

If we go to Slide 26, the company is working together with lead investigators at the Cleveland Clinic in an investigator-initiated study evaluating in a randomized controlled manner a single endoscopic delivery of remestemcel into areas of inflammation due to ulcerative colitis or Crohn's colitis versus control injection in the study randomized in a 2:1 fashion, patients to receive a single intervention with remestemcel or placebo. The data from the initial cohort were recently published in the Journal of Crohn's and Colitis.

The key results of the interim analysis, Slide 27, in the first 12 patients were as follows: all those with ulcerative colitis treated with remestemcel improved both clinically and by endoscopy scores within 2 weeks and all achieved clinical and endoscopic remission by 6 weeks; all Crohn's colitis patients treated with remestemcel showed remissions or responses by 3 months, as defined by endoscopy score and by clinical score. In addition, remestemcel treatment resulted in reduction of fecal calprotectin, a validated biomarker of disease activity, which was significant and indicative of remission. Whereas in controls with either ulcerative colitis or Crohn's colitis over a 3-month period, endoscopy scores increased, fecal calprotectin levels increased and clinical responses were not improved. We expect that over the next few months, our lead investigators at the Cleveland Clinic will have more data to report as patients are recruited.

Now let's move to our second platform technology, rexlemestrocel. The lead indication for this product is chronic inflammatory back pain due to degenerative disc disease. The potential paradigm here is outlined in Slide 29. The burden of illness remains substantial in inflammatory back pain causes severe disability and inflicts substantial direct and indirect costs on the health care system. There are minimal treatment options for patients with inflammatory chronic low back pain after they fail conservative therapy. Indeed, 50% of opioid prescriptions are for patients with chronic low back pain in the U.S., which is a major problem for, obviously, for patients and for health care providers. The market opportunity is huge with over 7 million patients across the U.S. estimated to suffer from this degenerative condition, which is really inflammatory condition. Similar patient populations is seen also in 5 major European geographies.

Slide 30 shows the algorithm of the patient treatment journey. And as I've said, after conservative treatments, which include nonsteroidal anti-inflammatory drugs and a variety of other agents such as anticonvulsant therapy, the only alternative is opioid analgesics and beyond that, interventional approaches, such as spinal cord stimulation and intrathecal pumps. Ultimately, surgery is the last resort for these patients. There's a real need and opportunity for our therapy rexlemestrocel to target moderate-to-severe discogenic back pain ahead of opioid analgesics and of course, way ahead of interventional therapies.

Slide 31 goes to the mechanism by which inflammation results in severe inflammatory back pain. In the middle of the disc, [ stresses ] result in inflammation, cytokine release, ingrowth of nerves and ultimately, both chronic pain and longer-term destruction and replacement of the damaged disc. That's what we're targeting with a single injection of rexlemestrocel. Slide 32 highlights some of the proposed mechanisms of action by which rexlemestrocel does 2 things. It appears to have a direct analgesic effect, and secondly, it directly reduces the inflammatory process that is the stimulus for severe pain.

Now Phase III outcomes in Slide 33 are summarized here. Overall, a single treatment of MPC -- a single injection of rexlemestrocel of 6 million cells plus hyaluronic acid as a carrier resulted in significant and durable reductions in chronic low back pain through 36 months across the entire study. Greatest pain reduction was observed in those patients in a prespecified analysis who had pain for less than the median duration of 68 months, and significantly greater pain reduction was seen in a prespecified patient subset on opioids at baseline at all time points compared with saline controls.

Let me show you some of the data. On Slide 34 is the overall analysis of change in pain across a 404-patient study. And as you can see here in red, patients who received a single injection of rexlemestrocel together with hyaluronic acid carrier demonstrated the greatest pain reduction, significantly greater than green -- saline-treated patients in green at 12 months and at 24 months.

If we move to Slide 35, this is the analysis prespecified in patients who had pain duration below the median for the entire study, which was 68 months. And as you can see, the treatment effect is even greater, substantially greater, here relative to the placebo patients in green. And we see very significant reductions in pain at every time point measured in those who received a single injection of rexlemestrocel plus the hyaluronic acid carrier. The cells alone without carrier are indicated in blue, and they represent a reduction in pain midway between those who received the cells plus carrier versus the saline controls.

Intriguingly, on Slide 36, despite the fact that patients and their physicians were told not to change medications during the entirety of the trial, at 36 months, 27% of patients who received a single injection of cells plus hyaluronic acid were able to fully come off opioids, and these are patients who had been on opioids at baseline, compared with only 7%, in green, of patients who received the saline injection. These results are highly encouraging and suggest that this treatment may result in an opioid-sparing outcome.

So what are the next steps for rexlemestrocel in chronic low back pain? Slide 37. We met with the FDA Office of Tissues and Advanced Therapies several months ago, and they agreed with Mesoblast's proposal for using mean pain reduction at 12 months as the primary endpoint of the pivotal trial, with mean functional improvement and reduction in opioid use as appropriate secondary endpoints. A key objective is to demonstrate durable reduction in pain and position rexlemestrocel as a potential opioid-sparing agent. The planned upcoming U.S. trial will include sites also in the EU to support submissions to both FDA and EMA in support of our strategic partnership in Europe. Our discussions are active and ongoing right now with key investigators and our external advisers on the final protocol design before it goes to the FDA for review.

Let's move on to Slide 38, rexlemestrocel for the other major indication, which is chronic inflammatory heart failure in patients with reduced ejection fraction. The mechanism of action here, in Slide 39, is complex. Progressive heart failure is a disease of inflammation caused by or associated with inflammatory immune cells macrophages that secrete inflammatory cytokines. Our cells, as I've mentioned earlier, have receptors for these cytokines and when placed in that inflammatory environment are activated by the cytokines to release various factors that simultaneously turn off the inciting inflammatory stimulus and also induce a new blood vessel capillary formation that is critical for improving oxygenation and functional contractility in the myocytes in the heart. We believe that these are the mechanisms by which rexlemestrocel potentially improves clinical outcomes in these very sick patients.

Now remembering that heart failure is a disease that has a mortality over 5 years that approaches 50% and has an outcome that is as bad in terms of survival as many cancers, if we go to Slide 40, the overall result using a composite endpoint of cardiovascular death, nonfatal MI or nonfatal stroke, the so-called 3-point composite MACE, which was a post-hoc endpoint comprising of prespecified endpoints within the trial, demonstrated quite a striking reduction of 33% in those who received a single injection of rexlemestrocel relative to controls over a median period of 3 years of follow-up. Many patients were followed for as long as 5 years from a single injection and showed durable effects.

But most importantly, if we look at Slide 41, these effects were most pronounced in patients with ischemic or diabetic vascular disease. These patients account for over 70% of our Phase III trial and a major risk factor for poor outcomes -- poor vascular outcomes in heart failure patients. And as you can see here on the left-hand panel, 3-point MACE in ischemic or diabetic patients, who accounted for 385 patients, was reduced by about 37% with a single injection of rexlemestrocel. And on the right-hand side, in those patients who had evidence of inflammation as measured by a simple blood test, CRP, the reduction in 3-point MACE in diabetics or ischemics improved -- increased to 54%, which is -- this is extremely high reduction in ischemic MACE on top of maximal standard of care and identifies inflammation as a biomarker that can be used to select for patients and enrich for patients who are most likely to respond to this therapy.

Slide 42 summarizes the treatment effect from a single injection of rexlemestrocel, dark blue at the bottom of this table. As I've just shown you, overall in patients at high risk for adverse events, ischemic or diabetics, and overall in patients with evidence of inflammation as measured by CRP and compare that to the various studies that have looked at similar patient populations with risk reductions not anywhere near the numbers that I've just shown you but of the order of anywhere between 6% to 13%, the 3-point MACE that we're talking about here is an acceptable endpoint for approval has been used by the FDA to result in approvals of GLP-1 agonist for diabetic patient groups. And again, I must emphasize that in the study that we just completed, this reduction in MACE outcomes was on top of existing drugs that are used in these high-risk patient populations.

So where are we with this program? If we go to Slide 43, over a mean -- as I mentioned, over a mean follow-up of 30 months, a single injection of rexlemestrocel resulted in reduced -- significantly reduced composite of cardiovascular death or heart attack or stroke across the entire patient population of 537 patients. It was maximal in those with vascular disease, and it was even more enhanced in patients with evidence of systemic inflammation. We've had several interactions with the FDA and have provided a full data set to the FDA and expect to receive guidance shortly on a potential approval pathway following the FDA's detailed review of the outcomes that I've just highlighted.

And I think on that note, I'll stop and thank you very much for listening to us, and I think we're ready to take some questions.

[Operator]

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

[Louise Chen, analyst]

Congratulations on all the progress this quarter. First question I have for you is on the ARDS opportunity, are you looking for a path forward outside of COVID, or is COVID your main priority right now for that opportunity? And then secondly, on remestemcel, can you comment on how soon you could launch your product after an approval for acute graft versus host disease? And when do you expect a potential approval?

[Silviu Itescu, executive]

Thank you, Louise. Those are great -- all great questions. So let's take the ARDS question first. So it's quite clear that nobody really knows what the next 3 to 6 months are going to hold across the U.S. with these new variants -- highly infectious variants. Mutations continue. And I think it's clear that even though severe disease has been reduced substantially by vaccines, large numbers of patients continue to be hospitalized and continue to be in ICU. Over 50% of patients are younger patients under the age of 65. So we are clearly focused on addressing and confirming the data that we've seen in ongoing COVID-19 patients.

Having said that, there's obviously a continued unmet need for other pathogens including influenza, which obviously is seasonal but on an ongoing basis, continues to represent a major problem with ARDS and high mortality; as well as pneumonias, bacterial pneumonias. We are in discussions with the most prominent network of physicians across the U.S. that focus on acute lung injury. And we're working together to construct an appropriate pivotal trial design that, first and foremost, will target the younger ARDS population with COVID-19 but also will focus on other pathogens like influenza. And we'll have a lot more to say about that in due course, but we think that we have an immunomodulatory treatment approach that is important not just for COVID but beyond -- well beyond COVID to other pathogens.

The second question, I think, you asked was are we prepared for a commercial launch, when do we think we will get approval for remestemcel for GVHD and how are we approaching the commercial launch process. We're working on the assumption that after filing, there will be a period of somewhere between 2 to 6 months for -- to gain approval. We're working under a priority review that's in -- that exists today. And so we're working towards a Tier 1 launch next year. And to that end, our commercial leadership has put in place a commercial team, a strategic focus on pricing and reimbursement and outreach to the appropriate reimbursement folks that understand the data and the strength of the data. And a commercial team is already in place.

The footprint across the U.S., particularly for pediatric GVHD, is relatively small. 50% of transplants are done in around 12 transplant centers. So we're able to address the patient population with a relatively small but targeted sales team. And I think the intention is to build that out over the next year. Much is being learned from the insights gained from our partner in Japan who, over a 3-year period since the product was launched, has penetrated about 30% of the addressable market in both children and adults. So we will, of course, in a stepwise fashion expand from pediatric to adult with a view to a confirmatory study in adults -- in high-risk adults to support the evidence of efficacy that we're seeing in children.

[Operator]

[Operator Instructions] Your next question comes from John Hester with Mesoblast (sic) [ Bell Potter ].

[John Hester, analyst]

Just, Silviu, following up on that last question and your comment in relation to Japan. 30% market penetration after a few years. Where is that sort of headed? And what do you think have been the barriers to sort of more full adoption in Japan?

[Silviu Itescu, executive]

I think it's -- I think the principal lessons from Japan have been the safety of the product and the rapid adoption and acceptance by physicians who are otherwise very conservative. The Japanese market is extremely conservative in general, but they have adopted the product because of its evident activity in patients who are high risk and who don't respond to conventional therapies after they failed steroids. And so I think that's become more and more evident in a real-world experience, and that, I think, has helped the rapid uptake of the product.

I think pricing and reimbursement in Japan is obviously done in a very different way to the way it's done in the U.S. It's a bottom-up approach based on manufacturing, innovation, et cetera in the U.S. for a product that achieves the kind of survival benefits that I've outlined in the highest-risk patient population where alternatives don't exist then has its own value proposition. And I think you need to look at the U.S. market in a very different way where comparables might be CAR-T therapies, for example, in similar patient populations. But I think other than reimbursement, which is quite different, I think the adoption by the physician population in Japan and the U.S. is quite similar, and I think there's a lot to be learned there.

[John Hester, analyst]

So what does that mean for -- what does all that mean for U.S. adoption rates...

[Silviu Itescu, executive]

Well, for children, for example, assuming we get approval, that there is no other therapy, so we would expect that this product would be used in the majority of children relatively rapidly with the label that we're seeking in patients with Grade B to D disease with severe clinical manifestations, which is the majority of children with steroid-refractory GVHD. We intend to initiate a confirmatory study in adults in similar high-risk populations. And there, the growth in the adult segment would depend, of course, on a positive confirmatory study. But should we be successful in adults with similar degrees of severity, as we've shown to be the case in children, we would probably bifurcate and target 50% of the adult market, those patients with the high-risk disease with very high mortality rates. We would expect to be the preferred treatment for that patient population.

[John Hester, analyst]

Okay. Okay. And perhaps just a question for Dr. Rose, who is on the call. Dr. Rose, just a couple of comments perhaps in relation to the progress or the progression of the BLA resubmission and sort of what are you seeing there and what level of involvement has Eric Krause (sic) [ Philip Krause ] has had with that documentation as well.

[Eric Rose, executive]

Could you just say the end of that question? Say that again?

[John Hester, analyst]

Just any participation by Dr. Krause...

[Silviu Itescu, executive]

John, maybe I could reframe the question to Eric. Eric, I think your experience with interactions with the FDA, a key to our BLA filing and the recent appointment of Phil Krause to the Board and his experience inside the biologics group, maybe you could comment on how we are building a dossier and how you would lead the interactions and where you see -- how you see Phil's input.

[Eric Rose, executive]

I think, ultimately, approval will be based on a totality of the evidence. And we, as shown at the panel, the clinical data are quite convincing. The potency assay that we originally proposed had problems, and we've reverted to a new potency assay that speaks to the mechanism of action of the cells as an anti-T cell entity. And we've also been able to demonstrate a clinical correlation between the potency assay and outcomes when measured by disease severity measured by stage or by MAP score. And lastly, we've overcome some supply chain issues that have been required to finish the potency assay for the inventory that we've already built for the commercial product that we're in the process now of validating. And those 3 things, clinical effectiveness, potency assay and reagents to actually do the potency assay on our existing inventory, we think, will carry the day. And as a totality of the evidence, particularly for a patient group that is this sick and then has this high mortality and this high morbidity, we feel confident in the product.

[John Hester, analyst]

Okay. All right. And so you -- that's going to be done this quarter, I gather? So presumably, that will be a big day...

[Silviu Itescu, executive]

It's key that we do this right. You can see that the pieces are coming in place, and it's critical that we do it right thoroughly and get it approved.

[Operator]

There are no further questions at this time. I'll now hand back to Dr. Itescu for closing remarks.

[Silviu Itescu, executive]

Terrific. Thank you, everybody, for joining us. It's been a very strong quarter for us. We're focusing very much on our BLA resubmission, which is critical for the company, and it's on the horizon and it's imminent, whilst at the same time, maintaining a very strong control of our spend and our cash burn and making sure that we continue to reduce our spend and be very judicious in how we execute our operational focus. Thank you, everybody.

[Operator]

That does conclude our conference for today. Thank you for participating. You may now disconnect.