Mesoblast Ltd
ASX:MSB
US |
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
|
US |
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
|
US |
Bank of America Corp
NYSE:BAC
|
Banking
|
|
US |
Mastercard Inc
NYSE:MA
|
Technology
|
|
US |
UnitedHealth Group Inc
NYSE:UNH
|
Health Care
|
|
US |
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
|
US |
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
|
US |
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
|
US |
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
|
US |
Visa Inc
NYSE:V
|
Technology
|
|
CN |
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
|
US |
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
|
US |
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
|
US |
Coca-Cola Co
NYSE:KO
|
Beverages
|
|
US |
Walmart Inc
NYSE:WMT
|
Retail
|
|
US |
Verizon Communications Inc
NYSE:VZ
|
Telecommunication
|
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
3.05
|
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.
Johnson & Johnson
NYSE:JNJ
|
US | |
Berkshire Hathaway Inc
NYSE:BRK.A
|
US | |
Bank of America Corp
NYSE:BAC
|
US | |
Mastercard Inc
NYSE:MA
|
US | |
UnitedHealth Group Inc
NYSE:UNH
|
US | |
Exxon Mobil Corp
NYSE:XOM
|
US | |
Pfizer Inc
NYSE:PFE
|
US | |
Palantir Technologies Inc
NYSE:PLTR
|
US | |
Nike Inc
NYSE:NKE
|
US | |
Visa Inc
NYSE:V
|
US | |
Alibaba Group Holding Ltd
NYSE:BABA
|
CN | |
3M Co
NYSE:MMM
|
US | |
JPMorgan Chase & Co
NYSE:JPM
|
US | |
Coca-Cola Co
NYSE:KO
|
US | |
Walmart Inc
NYSE:WMT
|
US | |
Verizon Communications Inc
NYSE:VZ
|
US |
This alert will be permanently deleted.
Hello, and welcome to Mesoblast's financial update and operational highlights webcast for the 3 months ended June 30, 2018, and year ended June 30, 2018.An announcement and slide presentation have been lodged with the ASX. These materials will also be available on the Investor page at www.mesoblast.com. [Operator Instructions] As a reminder, this conference call is being recorded.Before we begin, let me remind you that during 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 in 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 obligations to update such statements.With that, I would now like to turn the call over to Dr. Silviu Itescu, Chief Executive of Mesoblast. Please go ahead.
Thank you for joining us to the operational highlights and financial results for the year ending June 30, 2018. Joining me is our Chief Financial Officer, Josh Muntner.This has been a strong year. The first of our 3 Phase III programs of trial in graft versus host disease met its primary endpoint. This product candidate underpins the value of the company and puts us on track to first product launch in the United States. In addition, we've seen strong revenues from TEMCELL in Japan being marketed via licensee JCR Pharmaceuticals, and the ability to penetrate that market serves to give us great confidence in the growth trajectory and the potential for commercialization of our own product in the United States.During the year, we also entered into an important licensing arrangement with TiGenix, which serves further to validate our strong intellectual property. We also recently entered into a strategic alliance with Tasly Pharmaceutical Group, China's leading cardiovascular pharmaceutical company, which is a validation of our technology platform and of the clinical results obtained to date in our heart failure program. We've worked hard to strengthen our cash position through a combination of reduced spend, increased revenues and strategic financial transactions.If we can now move to the slide presentation please, Slide 4. Mesoblast has a disruptive technology platform, industrial-scale manufacturing and multiple revenue-generating products and Phase III assets that we'll focus on during the course of this presentation.In the next slide is a highlight summarizing our disruptive cellular medicine technology, which is based on highly potent mesenchymal lineage precursor cells and their progeny, whose mechanisms of action have been extensively characterized. Importantly, these cells target multiple pathways, which may be the basis for greater therapeutic benefits in complex and difficult-to-treat diseases.On Slide 6 is a summary of our commercial translation capabilities. Our technology is well positioned for scalable, industrialized manufacturing. We're able to scale and produce the anticipated commercial quantities in support of each of our potential launchable products. We have significant know-how in regulatory activities for product approval and commercial launch, and we've got proprietary, scalable processes and media formulations.Slide 7 speaks to our commercial products and the clinical pipeline using Mesoblast's intellectual property and technology platform. Importantly, our technology underpins the first allogeneic regenerative medicine product approved in Japan, TEMCELL, where it's commercialized by our licensee, JCR Pharmaceuticals. Our technology also underpins the first allogeneic regenerative medicine product approved in Europe, which will be commercialized by Takeda for perianal fistula. The table below shows our clinical product candidates and their stage of development. We have 3 that are in Phase III, and we will be talking in greater detail about each of those.Slide 8, I'd like to just address the recent announcement about our strategic partnership in cardiology in China. We announced that we've entered into a strategic partnership with Tasly Pharmaceutical Group, who have received exclusive rights and will fund development, manufacturing and commercialization activities for our product candidate MPC-150-IM in the treatment and prevention of chronic heart failure and for our product candidate MPC-25-IC in the treatment or prevention of acute myocardial infarction in China. In consideration, Mesoblast will receive $40 million on closing, comprising a $20 million upfront technology access fee and a $20 million equity purchase at a premium per share.Mesoblast will also receive substantial milestone payments on product regulatory approvals and sales-related targets in China. In addition, Mesoblast will receive double-digit escalating royalties on net product sales. Importantly, each of the partners will leverage each other's clinical trial results in order to support their respective regulatory submissions in both the U.S. and China. This transaction has received certain government approvals and is subject to filing now with the State Administration of Foreign Exchange.I'd like to now turn to Josh, who will update you on the financials.
Thanks, Silviu. I'm pleased to join the call today as the CFO for Mesoblast. Since I joined the company just over 3 months ago, my belief in the extraordinary potential of Mesoblast technology platform has been greatly validated. As you said earlier, we made strong progress towards seeking FDA approval and eventual launch of our first product, remestemcel-L, a treatment which is badly needed for kids suffering from life-threatening graft versus host disease. Anyway, now turning to the financial slides.As shown on Slide 10, Mesoblast had a significant increase in revenue in our fiscal year ended June 30. Total revenue was $17.3 million, an increase of nearly $15 million more than the prior year. Revenue included royalties -- revenue included royalties received from JCR Pharmaceuticals on sales of TEMCELL for GVHD in Japan, up 152% to $3.6 million for the reporting year. We also received a $1.5 million in milestones from JCR based on their cumulative sales of TEMCELL for GVHD in Japan. We believe that JCR's ability to rapidly penetrate the Japanese GVHD market with a product that's based on our technology will be indicative of our commercial potential.Beyond our milestones and royalties from JCR, the bulk of revenue was due to a milestone stemming from our license agreement with TiGenix, now owned by Takeda. The strength of our IP was demonstrated by licensing of certain of our patents to TiGenix in order for them and now Takeda to commercialize Alofisel, their mesenchymal stem cell product approved for the local treatment of fistula. As consideration, Mesoblast is recognizing upfront license fee in fiscal year 2018 of EUR 10 million. Mesoblast is also eligible to receive additional milestone payments as well as single-digit royalties on sales of Alofisel.Please turn to Slide 11 to look at the remainder of the P&L. We've seen significant improvement in our loss after tax in the fiscal year ending June 30, 2018. We had an increase in R&D spend as we continue to make progress in our late-stage clinical trials, but this was nearly offset by a reduction in manufacturing spend as sufficient clinical product was manufactured in 2017. We also had a benefit of the P&L from a couple of noncash items including a gain due to the remeasurement of contingent consideration and an increase in our income tax expense benefit as a result of the recent changes in U.S. corporate tax rates. The overall impact of these changes was a 54% improvement in our loss after tax, which decreased to $35 million.Slide 12 shows our cash flows for fiscal year 2018. We had a substantial reduction in operating cash outflow in 2018 due to the increased revenue discussed as well as the lower expenses. This is a trend that we fully intend to maintain.Turning to Slide 13. Today, we have a significantly strengthened cash position. We completed the year with just under $38 million of cash. However, a strategic transaction with NovaQuest brought in an additional $39 million in January -- in July. Since the end of the reporting year, we also signed agreements with Tasly, one of China's largest pharmacists, which will bring in an additional $40 million to our balance sheet at closing. Importantly, our facilities at NovaQuest, along with the one we've put in place with Hercules earlier this year, include up to an additional $50 million we can access upon achieving certain milestones.Turning to Slide 14. Let's look more closely at our nondilutive transactions with Hercules and NovaQuest, each of which involve deep diligence by their investment teams. We entered a $75 million nondilutive, 4-year credit facility with Hercules in March 2018 and to date have drawn $35 million. Our transaction with NovaQuest includes a $40 million nondilutive, 8-year credit facility, of which our initial drawdown was $30 million. At closing, NovaQuest also purchased $10 million of Mesoblast's common stock. The credit facility has an interest-only period of 4 years, with interest and principal repayments deferred until after first commercial sale of remestemcel-L for children. To sum up, we're proud of this year's financial performance and the steps we've taken to strengthen the balance sheet to achieve our upcoming milestones. I'd like to now hand this call back to Silviu to continue the presentation.
Thank you, Josh. Let's talk about each of our Phase III programs. Slide 16 speaks to the market opportunity for remestemcel-L in acute graft versus host disease. This is a devastating condition that affects approximately 50% of patients receiving an allogeneic bone marrow transplant. In the more severe forms of the disease, mortality rates may be as high as 95%. There are no approved treatments for this condition outside of Japan, where the only approved therapy is TEMCELL, commercialized by our licensee, JCR Pharma. There are a total of more than 30,000 allogeneic bone marrow transplants performed globally, and on that basis, we believe that there is a market opportunity for Mesoblast of approximately $700 million across the U.S. and the EU5.Slide 17 summarizes the operational update for this program. Phase III trial evaluated remestemcel-L in 55 children with steroid-refractory grade C/D disease, predominantly graft versus host disease. Almost 90% of the children had grade C/D disease, the most severe form and historically associated with the highest mortality. The study successfully met the primary endpoint of improved day 28 overall response with a 69% responder rate versus 45% protocol-defined historical control rate, P-value 0.0003. As we recently reported, the day 100 overall survival is 75% and in day 28 responders, 87%. The day 180 survival results are expected shortly. Remestemcel-L is safe and the infusions have been well tolerated. And these findings are very consistent with previous results in 241 steroid-refractory GVHD children treated under expanded access with remestemcel-L, who had otherwise failed to respond to multiple biologic agents.Slide 18 updates you on the way we see the pathway to market in the U.S. We're in active discussions with the FDA, and final preparations for Biologics License Application filing are underway by our team. We expect to have a pre-BLA meeting in the fourth quarter of this calendar year, and a fast track designation for the product allows eligibility for priority review and a rolling BLA review process.In parallel, our commercial team is planning for pricing, reimbursement and product launch. Here, we will be using real-world sales data of TEMCELL in Japan to inform our commercial strategy for the U.S. And as we've just reported, we're very pleased by the 152% increase in annual royalty income on TEMCELL that we've seen on sales in Japan, demonstrating rapid penetration of the addressable market within just 2 years of product launch.Let's move on to our heart failure program, Slide 20. Slide 20 shows you the patient journey and the general treatment pathway for patients with progressive heart failure. On the left-hand side, those patients with early-stage heart failure, Class I and Class II, are well treated today with a variety of both generic and new oral therapies. However, most patients progress to advanced and ultimately end-stage heart failure, at which point there are very limited therapeutic options. Our product candidate MPC-150-IM specifically targets those patients with end-stage and advanced heart failure, and that's where our clinical programs are focused.Slide 21 talks to the market opportunity we see for our product in end-stage heart failure. More than 50,000 patients -- new patients every year in the United States alone progress to end-stage heart failure. The 1-year mortality of these patients exceeds 50%, and the options for treatment of these patients are extremely limited. No more than 2,000 heart transplants are performed in the U.S. annually due to limited donors, and artificial heart left ventricular assist devices are used in under 5,000 patients today. And even though they improve survival, the quality of life and complications associated with LVAD implantation remain a major obstacle to widespread use. We believe that there's a potential to use our cells as an adjunct to elevate therapy and increase -- and improve outcomes in these patients. And as a result, we think there's a potential for greater than $500 million U.S. market opportunity for our product.Slide 22 speaks to the clinical strategy for our product in end-stage heart failure. A prior 30-patient pilot study published in circulation several years ago first demonstrated that there was a positive signal injecting a low dose of our cells in patients with end-stage heart failure receiving an LVAD. On the basis of that trial, the National Institutes of Health funded a 159-patient, double-blind, placebo-controlled 2:1 randomized Phase IIb trial, evaluating the safety and efficacy of a single high-dose injection, 150 million cells, into the native myocardium of patients receiving an LVAD.The study endpoints include safety, particularly seeking to impact on GI bleeding, a major complication due to inflammation in these patients, as well as evaluating the ability to switch off the LVAD over a 6-month period, reflective of potentially strengthening of the native myocardium. In addition, major endpoints include rehospitalization rates over 12 months and survival over 12 months.Full enrollment of this trial was completed in the third quarter of 2017, and 12-month database lock is expected imminently. The National Institutes of Health investigators will be presenting these results as they come to hand, and full trial results are expected to be presented at an upcoming international cardiovascular conference. Mesoblast is in active discussions with the FDA on the proposed regulatory pathway for this product under the Regenerative Medicine Advanced Therapies designation, which was granted to us for the product in December 2017.Slide 23 addresses the potential market opportunity for the same product candidate in patients with advanced heart failure rather than end stage. Heart failure is an epidemic today. More than 8 million patients with chronic heart failure are expected to be treated in the U.S. alone by 2030. The majority of these patients will be dead within 5 years, so the mortality of these patients is very similar to the mortality seen in many cancers. This is despite recent advances with newly-approved drugs. The greatest need is in Class III and Class IV heart failure, where the recurrent hospitalization rate is highest. As a result, if our treatment is effective, we believe that there is a multibillion-dollar annual market opportunity in the U.S. alone for our treatments.Slide 24 summarizes the current trial being performed for patients with advanced heart failure. To date, approximately 85% of the targeted patient population has been enrolled in this events-driven Phase III trial. Enrollment completion is being targeted for the end of this calendar year. Recall, please, that a prespecified interim futility analysis of the trial's primary efficacy endpoint was performed in April 2017 in the first 270 patients, and it was successfully achieved.In addition, earlier this year, the trial's first 465 patients were reviewed by the Data Monitoring Committee who, on the basis of reviewing primary and secondary endpoints of recurrent hospitalization, terminal cardiac events and all safety data, recommended the trial continue without any modification. Our plan is to leverage the results of this Phase III trial with additional clinical data from other global Phase III trials, which will be performed in conjunction with our strategic partners, both regionally and globally.Slide 26 addresses the market potential for our product in chronic low back pain, our product candidate MPC-06-ID. Treatment options for patients with degenerative disc disease and chronic low back pain, once they fail conservative therapy, are extremely limited. And they include predominantly opioids and surgery. In fact, 50% of opioid prescriptions are for chronic low back pain. There is a major need to develop a disease-modifying therapy for durable improvement in pain and function and the potential to prevent progression to opioid usage or surgical intervention. We believe that if our treatment for this disease is positive and confirms the data that we have seen in Phase II, there is a potential market opportunity in the U.S. alone of more than $1 billion per year.Our Phase III trial in patients with chronic low back pain completed enrollment in the first quarter of this year. It's enrolled over 400 patients across 48 sites in the U.S. and Australia. Patients were randomized 2:1 to receive either cells or carrier alone. And the primary efficacy endpoint aims to confirm the data we've seen in Phase II and to evaluate whether there's a treatment-related reduction in pain and improvement in function over a 24-month period.If we could now move to the final slide, Slide 29, which highlights the corporate milestones that have been achieved in the calendar year and that are upcoming in the near term and their reflected byproduct. So for our product candidate MPC-100-IV for acute graft versus host disease, as I've mentioned earlier, we've been successfully meeting our day 28 primary endpoint in the Phase III trial. We've demonstrated survival benefit at day 100 in the second quarter, and we expect to be presenting the day 180 survival data shortly. As a result, we intend to have a pre-BLA meeting in the fourth quarter of this year.Our product candidate MPC-150-IM for advanced and end-stage heart failure, we expect that the 12-month database lock will be imminent for the Phase IIb trial in patients with end-stage heart failure. Results should be presented shortly thereafter, including at an expected major cardiovascular conference upcoming in the fourth quarter and a Phase III trial in advanced heart failure completed enrollment, of course, in the second half of last year -- towards the second half of this year.The back pain product, MPC-06-ID, has completed enrollment. And we expect to be reporting on timelines for this trial over the next few months. In addition, we've completed nondilutive transactions for commercialization of MPC-100-IV for GVHD. We've established regional commercial partnerships, and we continue to be in significant discussions with quite a number of global partners for each of our major programs.And on that basis, I think we'll stop. And I would like to open to questions, please.
[Operator Instructions] Your first question comes from Mark Breidenbach from Oppenheimer.
This is Matt on for Mark. Congrats on the progress. So a couple for me, if I may. First off, I'd just wanted to circle back on the NIH-sponsored heart failure trial. Do you know which scientific meeting in particular we should expect these results to be presented? And do you know if the abstract has been submitted to any of those yet?
I can't speak to any of that. The NIH investigators are running this program. It's their trial. We are quite independent. Our focus is very much on the interface with the FDA.
Okay. That's fair, Silviu. So also in terms of that data, do you -- and you may not know the answer to this, but should we also expect to see traditional endpoints like MACE as maybe a secondary endpoint? I'm just wondering if there might be any way to read through from this trial to the larger DREAM HF trial.
I think the primary endpoints is on the ability to switch off the device and focus on the native heart's ability to maintain circulation, which will measure things like systolic volume, ejection fractions. They'll be functional, hence the ability to exercise with the device, et cetera, et cetera. All of those endpoints will have specific read-throughs into the ability of the cells to strengthen the native myocardium, not just in end-stage heart failure but also in patients with advanced heart failure. So I think there will be directional conclusions that can be made between the 2 programs. Of course, one target population is much, much sicker than the other. So that remains the caveat. Look, in addition to that, there are specific complications of the left ventricular assist device that aggravates the inflammation associated with heart failure. And to the extent that we are able to reduce the inflammation-related complications, then I think you will also be able to extrapolate to -- the probability of these cells having an impact on inflammation associated with earlier-stage heart failure.
Got it. That's helpful. And then maybe just turning to the Phase III trial in back pain. There was some discussion in the past as to whether we might see an interim 12-month readout. Do you know if that might still be on the books? Or should we expect to wait until the full 24-month data?
I think we'll be updating the market over the next quarter or so as to our plans on interims or otherwise for this program.
Your next question comes from Nathan Kolbert (sic) [ Jason Kolbert ] from H.C. Wainwright.
Jason Kolbert. Congratulations on so much progress. Can you talk a little bit about what TEMCELL is doing or the relationship in Japan? And can you talk a little bit about what you think the market opportunity would look like for the launch of that in the U.S.? Congratulations, you have a lot of cash on the balance sheet. Can you talk a little bit about how long you expect that cash to last, on a pro forma basis, of course?
Okay. Let me see if I can address each of those questions -- complex questions. Our relationship with JCR in Japan is very good. And of course, we share a lot of information between the 2 companies, both in terms of uptake, penetration, use of product and exchange of safety data. And I think not only have we been very helpful with our U.S. data in terms of, as you recall, their ability to get initial approval. But I think their real-world data is kind of extremely helpful to our plans, both for FDA filing, registration and ultimately our commercial plans in the U.S. I think this is still relatively early days. We're only about 2 years out on product sales in Japan, but we've been very pleased by what we've seen so far. We've seen no evidence of any plateauing. We continue to see robust growth quarter-on-quarter, and we have every expectation that will continue over the next 12-month period. And as we watch this closely, I think it will give us great information on how we expect to have product rollout in the U.S., remembering, of course, that we already have an established Expanded Access Program in the U.S., where our product is well known to the investigators. It already is stocked in many hospitals. And I think that the way this is unfolding in Japan is reflective of the unmet need. It's reflective of the strength of the results with the product, and I would expect that we will see a similar sort of benefit in the U.S. We believe that something like 50% of pediatric transplants are done in the top 15 centers in the U.S. And so therefore, building out a sales and marketing team is going to be relatively inexpensive.
Cash position.
I think you asked about the cash position as well. Look, we're in a much stronger position than we've been for quite a long time, and I think we've got sufficient cash for at least the next 12 months.
Assuming [ Tasly closes calendar year ].
Yes.
Your next question comes from Tanushree Jain from Bell Potter Securities.
Congratulations, I echo Jason's sentiment. It's great to see such a strong balance sheet and so much progress and coming up, I guess, with key inflection points in the near future. Just a quick few ones for me. Just in terms of the GVHD product, when do you expect to file the BLA? Do we have a time line for that?
Well, as I said, our pre-BLA meeting will be happening late fourth quarter. Assuming that there are no surprises, then really the filing of the BLA is relatively mechanical, where -- the whole point of the pre-BLA meeting is to get alignment and agreement from the FDA that the modules in the filing are as they should be. And remember that we have a Fast Track designation for the program, which allows us to file in a rolling manner. So each module as we complete will be filed in a rolling BLA, which means that we can have an interactive ongoing dialogue with the FDA rather than having to wait to the end of the 6-month period before we get any comments.
Right. And just on the commercial plans around this product, you mentioned you are going to use a lot of the available data from TEMCELL. Obviously, we know that TEMCELL is being reimbursed in Japan for quite a significant dollar value, and the U.S. is expected to be higher. Would you be willing to talk a little bit about what your expectations are for reimbursement in that market?
Yes, I mean, look, there's 2 ways of looking at this, right? One is a bottom-up approach, which is the way the Japanese typically see reimbursement. And the other one is based on pharmacoeconomics, which is typically the way the U.S. sees reimbursement. And so we know that in the U.S. what the potential impact of the therapy is going to be based on the costs of intensive care, et cetera, and keeping children out of intensive care. And if we use the real-world data in Japan, we'll be able to apply the savings according to U.S. numbers, for example. And so obviously, we have our internal projections on pricing reimbursement in the U.S. But I think as a very different rule of thumb, most medicines in Japan, where there's a centralized reimbursement agency, are typically discounted by a factor of 50% or so from the U.S. counterpart. So you can look at this from a number of different ways and conclude what the likely pricing per therapeutic cost is likely to be in the U.S. given that this is an ultra-orphan indication and a potentially highly-lethal disease.
Your next question comes from Chris Kallos from Morningstar.
Silviu, I just got a couple of questions on the partnering side. You haven't mentioned anything about that going forward. In terms of the MSC-100-IV product, the near-term opportunity, are we in discussions with potential partners at this stage?
Well, MSC-100-IV is a product that underpins the value of Mesoblast today. We've specifically sought out financial transactions to allow us to put in place the kind of relatively-inexpensive sales and marketing commercial teams in order to retain full value for the asset. So we don't see any short-term need for a partnership unless somebody were to consider this as a multiproduct relationship together with some of our other lead assets. But as a stand-alone asset, this is a -- clearly underpins the growth and the value driver for Mesoblast today in the near term. With respect to other partnering discussions, I think we're very pleased by the transaction we've just entered into with Tasly. Tasly is a major cardiovascular force. They're #1 or #2 in China in the space. I think the diligence that they perform in assessing the technology platform, the specific cardiovascular results generated to date, I think, speak to the strength of where Mesoblast is poised. And you would expect that we're in very significant discussions with a number of partners for cardiovascular rights in the U.S. and in Europe, where the markets are substantial. But having completed the end-stage heart failure program, it is obviously pertinent and most prudent from Mesoblast's perspective to read out those results. And the fact that we've got a strengthened balance sheet allows us to be in the appropriate selection process with the right strategic partner for the cardiovascular space.
Great. And I guess the strength of the abstract that we expect to see in this conference coming up could be a catalyst for any negotiations that are coming up?
Well, you would certainly assume that positive results are going to be a major value driver for the asset. And similarly, our back pain program is -- having completed the Phase III enrollment and given the serious nature of the opioid crisis and the lack of alternatives is the other major program that I think you are likely to see significant partnering activity [ around it ].
Great. And just lastly, just to clarify, I think Josh mentioned a 12-month run rate based on the cash on hand at the moment.
No. I think what we're saying is that we have at least 12 months of cash. We don't -- we have at least 12 months of cash, and we're very comfortable.
Your next question comes from Michael Gerges from Blue Ocean Equities.
Well done on progress so far. Just firstly on GVHD. It seems logical to me that there'd be an opportunity for label extension for MSC-100 to the chronic and adult market. I'm just wondering if that's something you're considering and whether there's a similar market opportunity that exists there and then perhaps the level of difficulty into penetrating that market.
Look, I think you're absolutely correct. And I think that's part of our discussions with the FDA, how to think about a post-marketing study in adults that will allow us to have appropriate label extension and generate the kind of data that both the FDA and payers would want to see in adults. And that also applies to not just the U.S. but to Europe.
Right. And in terms of the market opportunity that exists both from perhaps an economic standpoint and a therapeutic offering standpoint, is it the same as what we see in the pediatric market?
The adult market is probably 3x the size of the pediatric. Pricing per patient -- again, when I say 3x the size, we would be targeting, again, the most severe forms of the adult disease, right? So it'll be patients who are otherwise refractory and who have no alternatives. And so it's the same sort of logic, but the market opportunity is threefold.
Right. Okay. That's good. So I mean, second question is just in regards to what's happening with Tasly. Could you just provide a bit of color in terms of the sequence of events and just an understanding of the time line related with the progress in the China market. And what degree can you leverage the data in the U.S. to facilitate progress over there?
Yes. I mean, we're establishing a very, very close working relationship with the Tasly group at multiple levels, all the way into operations and manufacturing and regulatory. And over the next couple of months, we will have multiple working groups that will allow us to map out the regulatory requirement for approval in China, how they can leverage our existing Phase III data and how we establish trials in China that allow both parties to leverage the trials for regulatory purposes. So that really the objective will be to have complementary trials with similar patient populations with similar endpoints, similar statistics and similar manufacturing and regulatory criteria so that the data are ultimately usable across jurisdictions.
Okay, great. That makes sense. And just finally, there's been quite a few questions in regards to regulatory and clinical-related questions. So I might perhaps direct a question to the manufacturing process. Manufacturing in the context of batch consistency and senescence has obviously been an issue in the past in the space and may or may not have contributed to the unsuccessful progress of Osiris. You mention on Page 4 that you have industrial-scale manufacturing. Could you perhaps talk at a high level as to how that might overcome those historical issues?
Yes, absolutely. Look, I think the results in the pediatric GVHD trial speak for themselves. The reason that we were successful in that trial, given that the technology was very similar to the old Osiris technology, was in the next-generation manufacturing processes that we put in place. So we are able to scalably and reproducibly generate batch-to-batch consistent product that meets release criteria that are very stringent and held to very high standards. And I think the reproducibility from batch to batch is a major reason why our Phase III was positive and the prior data failed. Having said that, we've got proprietary media, serum-free media. We have proprietary technology for use in 3-dimensional bioreactors that allows us to now scale up to an even greater level with reproducibility and consistency and make the large yield of product necessary for commercial quantities and the kind of penetration that's going to be needed for clinical use more broadly. And I think we're very well aware of problems that others have with senescence and with poor quality of cells. We don't see that in our manufacturing process precisely because we focus very much on optimizing manufacturing. So the xeno-free media formulations, the bioreactors, the rigor with which we test and have potency assays, all go towards a quality of manufacturing that I think underpins the clinical results that we seem to be delivering in each of our products.
Your next question comes from Kevin DeGeeter from Ladenburg Thalmann & Co.
I guess maybe 2, if I may. Silviu, as we think about the upcoming heart failure data readout, can you talk, in more granularity, with regards to the importance of GI bleeding in these patients? And as we think about a potential accelerated regulatory review under RMAT in the U.S., do you think GI bleed is a potential surrogate endpoint that would be robust enough for sort of surrogate under RMAT? Or do you think more traditional cardiovascular endpoints are still appropriate in this LVAD population?
Thanks for that, Kevin. Well, first and foremost, this is an ultra-orphan disease. It's LVAD-related morbidity and mortality. And it is a complication of the LVAD itself, meaning putting an LVAD into patients results in various complications such as GI bleeding. And in fact, GI bleeding is seen in as many as 40% of LVAD-treated patients due to severe systemic inflammation that aggravates the underlying inflammation that is already present in the heart. And what happens is there are abnormal leaky blood vessels in the gut that, on top of the requirement for anticoagulation, results in very severe bleeding that can be life-threatening. In our pilot study, we saw a significant reduction in GI bleeding in these patients. And so we are -- as part of the safety review, we are certainly hopeful that we could see a significant reduction in GI bleeding. And if so, that would be a very, very important movement forward in the management of these patients. It's a very clinically-meaningful endpoint in this patient population specifically. In terms of cardiac-related endpoints, those are more difficult to ascertain in this patient population because, of course, they're on LVADs. And so we're focusing on measuring endpoints related to strengthening of the native myocardium when the LVAD is switched off, the only way you can actually measure them. And those are important, and they're important in the sense that they will inform on the efficacy of the cells and potentially the reversibility of end-stage heart failure back towards an earlier-stage heart failure if successful. But I think your point is a very good one, that if we're successful in reducing the frequency of GI bleeding on a proportion of patients who undergo GI bleeding as a result of immunomodulatory effects of the cells, that is a very important clinical outcome -- endpoint that we will measure in this patient population.
Great. And then maybe one more for me, and then I'll get back in the queue. With regard to the 180-day pediatric acute graft versus host disease data, do you anticipate publicly disclosing that data? Or is perhaps a more prudent way of thinking about that data an update on decision to move forward from a regulatory filing and perhaps saving more of the details of that data for publication or another format that may support commercial launch?
Look, day 180 survival data are particularly important. They're important from the point of view that many other drugs and agents, which have shown early survival benefits, have fallen over by day 180 because of unanticipated safety concerns such as emergence of viral infections, recurrent bacterial infections or even tumor relapse. And so from the FDA point of view, day 180 is a very important endpoint to demonstrate sustainability of effect without any safety compromise between day 100 and day 180. So it is an important bar, and we are measuring it. And we, of course, expect to disclose it publicly because it is material.
Your next question comes from Dennis Hulme from Edison.
Can you talk to us a little about your plans for graft versus host disease in Europe?
Sure. As you know, Europe has similar but not necessarily the same regulatory environment as the U.S. for regenerative medicine. And we've had multiple discussions with EMA prior to initiating this study. We will be going back and having discussions with EMA in parallel with the FDA. And we'll be presenting not just the EAP data, which previously was well known to European agencies, but now this new pediatric data. And we would expect to fully outline to the market over the next couple of months our European strategy.
Do you anticipate that you'd be able to file for approval in 2019 in the U.S.? Or is it still uncertain?
I'm sorry. Can your repeat that, please?
Do you anticipate being able to file for approval in Europe in 2019? Or is that still up in the air?
I think that, again, the European strategy will become clear as soon as we've completed our day 180 and we're able to have more detailed discussions with EMA. And we'll make that publicly available to the market.
Thank you. That brings us to the end of today's call. I'll now hand back to Dr. Itescu for closing remarks.
Thank you all very much for participating on this call. We're very excited. It's been a good year for us. We've recently delivered on a number of important commercial and strategic transactions, and we expect that the rest of the year is going to be as busy as well as in some very important clinical inflection points. Thank you very much.