1 00:00:03,410 --> 00:00:06,960 Sean Aylmer: Welcome to the Fear and Greed Daily Interview. I'm Sean Aylmer. Regular 2 00:00:06,960 --> 00:00:10,110 Sean Aylmer: listeners will have heard me mention Mesoblast many times before. 3 00:00:10,520 --> 00:00:13,620 Sean Aylmer: The ASX- listed biotech company has a very volatile share 4 00:00:13,620 --> 00:00:17,000 Sean Aylmer: price, largely because it's tied to medical research, the approval 5 00:00:17,000 --> 00:00:20,550 Sean Aylmer: processes of the US Food and Drug Administration, and deals with 6 00:00:20,550 --> 00:00:24,180 Sean Aylmer: other pharmaceutical companies. But it's a fascinating company, doing innovative 7 00:00:24,180 --> 00:00:27,360 Sean Aylmer: research into stem cells and trying to navigate the very 8 00:00:27,360 --> 00:00:31,470 Sean Aylmer: challenging, very expensive process of bringing those products to market. 9 00:00:32,010 --> 00:00:35,680 Sean Aylmer: Silviu Itescu is the founder and CEO of Mesoblast. Silviu, welcome to 10 00:00:36,270 --> 00:00:36,960 Sean Aylmer: Fear and Greed. 11 00:00:37,200 --> 00:00:37,870 Silviu Itescu: Thanks for having me. 12 00:00:38,320 --> 00:00:42,500 Sean Aylmer: So firstly, can you give our listeners 101 on Mesoblast, 13 00:00:42,500 --> 00:00:45,050 Sean Aylmer: the products you're developing, where they're up to? In plain 14 00:00:45,050 --> 00:00:47,640 Sean Aylmer: English, of course, which is the trick, sometimes, in the 15 00:00:47,640 --> 00:00:48,440 Sean Aylmer: biotech sphere. 16 00:00:48,870 --> 00:00:53,940 Silviu Itescu: Certainly. We're developing products using a platform technology that allows 17 00:00:53,940 --> 00:00:58,160 Silviu Itescu: us to develop off- the- shelf therapeutics vials that contain 18 00:00:58,300 --> 00:01:01,300 Silviu Itescu: cells. We understand how these cells are made. They're highly 19 00:01:01,300 --> 00:01:05,270 Silviu Itescu: scalable into large quantities, and we have a supply chain 20 00:01:05,270 --> 00:01:08,550 Silviu Itescu: that from manufacturing, we can ship and provide them to 21 00:01:08,780 --> 00:01:13,160 Silviu Itescu: hospitals, to physicians, in a regulated manner. We understand how 22 00:01:13,170 --> 00:01:18,309 Silviu Itescu: these cells work: They target severe inflammatory conditions. And we've 23 00:01:18,310 --> 00:01:21,569 Silviu Itescu: been able to generate large clinical data sets as we 24 00:01:21,569 --> 00:01:25,900 Silviu Itescu: progress towards our first product approvals, particularly in the US, 25 00:01:25,900 --> 00:01:29,410 Silviu Itescu: which is the largest market and the largest unmet need. But 26 00:01:29,410 --> 00:01:32,209 Silviu Itescu: we already have a first product approved and being sold 27 00:01:32,209 --> 00:01:35,080 Silviu Itescu: in Japan, so this is the beginning of a whole 28 00:01:35,080 --> 00:01:38,850 Silviu Itescu: new industry. It's been a long time coming, but we're 29 00:01:38,850 --> 00:01:42,090 Silviu Itescu: very confident that we're going to have more products available, 30 00:01:42,160 --> 00:01:46,640 Silviu Itescu: using our proprietary scalable technology. We're the largest and most 31 00:01:46,640 --> 00:01:50,059 Silviu Itescu: advanced cell therapy company in the world, and I think 32 00:01:50,060 --> 00:01:52,140 Silviu Itescu: it's going to be an exciting next couple of years. 33 00:01:52,510 --> 00:01:57,700 Sean Aylmer: Okay, so the competitive advantage of Mesoblast is that scalability 34 00:01:57,810 --> 00:01:59,180 Sean Aylmer: and process? Is that right? 35 00:02:00,280 --> 00:02:04,180 Silviu Itescu: There are multiple advantages, but certainly, scalability and being able 36 00:02:04,180 --> 00:02:08,620 Silviu Itescu: to create a uniform process that ensures that each product 37 00:02:09,000 --> 00:02:13,150 Silviu Itescu: meets the exact same requirements as the next product, so 38 00:02:13,150 --> 00:02:16,710 Silviu Itescu: that we can provide, with certainty, outcomes to patients. That's 39 00:02:16,710 --> 00:02:19,960 Silviu Itescu: a major advantage. But secondly, we have over a thousand 40 00:02:19,960 --> 00:02:24,100 Silviu Itescu: patents, and the other commercial advantage is that we have very strong 41 00:02:24,450 --> 00:02:27,649 Silviu Itescu: patent position and intellectual property profile that creates a barrier 42 00:02:27,650 --> 00:02:31,480 Silviu Itescu: to entry into the space. And the combination of patents, 43 00:02:31,690 --> 00:02:35,639 Silviu Itescu: plus the scalable technologies, is a very powerful combination, together 44 00:02:35,639 --> 00:02:39,500 Silviu Itescu: with many years of Phase III clinical trials that demonstrated 45 00:02:39,500 --> 00:02:42,270 Silviu Itescu: the clinical value and the success of the technology. 46 00:02:42,550 --> 00:02:46,470 Sean Aylmer: Okay, so some of the illnesses that you are addressing: 47 00:02:46,770 --> 00:02:49,390 Sean Aylmer: What are they, and how would most of us know them? 48 00:02:49,700 --> 00:02:52,400 Silviu Itescu: Yeah, so I've said that core to the mechanism of 49 00:02:52,400 --> 00:02:56,120 Silviu Itescu: the cells is the ability to tackle severe inflammation. So 50 00:02:56,120 --> 00:03:00,450 Silviu Itescu: we are targeting diseases where inflammation is a primary driver 51 00:03:00,450 --> 00:03:04,850 Silviu Itescu: of a bad outcome, including death, and where other traditional 52 00:03:04,850 --> 00:03:10,079 Silviu Itescu: medicines, pills, antibodies don't work very well. So a first 53 00:03:10,080 --> 00:03:14,210 Silviu Itescu: disease is a very severe inflammatory condition called graft- versus- 54 00:03:14,210 --> 00:03:18,450 Silviu Itescu: host disease, caused by bone marrow transplant in patients who 55 00:03:18,450 --> 00:03:22,030 Silviu Itescu: are otherwise cured of the underlying leukemia with drugs but 56 00:03:22,030 --> 00:03:25,070 Silviu Itescu: need to have their bone marrow rebuilt. And when you 57 00:03:25,070 --> 00:03:28,589 Silviu Itescu: use another person's bone marrow to rebuild your own, it 58 00:03:28,590 --> 00:03:32,540 Silviu Itescu: often thinks you're foreign. It attacks your body and creates 59 00:03:32,540 --> 00:03:36,370 Silviu Itescu: this graft- versus- host disease that has up to a 60 00:03:36,370 --> 00:03:39,980 Silviu Itescu: 90% fatality rate within a couple of months. So other 61 00:03:39,980 --> 00:03:44,280 Silviu Itescu: drugs have failed miserably, and particularly in children, where there 62 00:03:44,280 --> 00:03:48,010 Silviu Itescu: is nothing approved. We have shown, through multiple studies, that 63 00:03:48,010 --> 00:03:52,730 Silviu Itescu: we get a very substantial curative rate and survival benefit 64 00:03:53,320 --> 00:03:56,960 Silviu Itescu: in children who have up to a 90% mortality from 65 00:03:56,960 --> 00:04:00,630 Silviu Itescu: this devastating condition. And so we completed a Phase III 66 00:04:00,630 --> 00:04:03,460 Silviu Itescu: program. We presented the data to the FDA about a 67 00:04:03,460 --> 00:04:06,830 Silviu Itescu: year ago. The experts who were asked by the FDA 68 00:04:06,830 --> 00:04:09,850 Silviu Itescu: to opine on the results voted nine to one that the 69 00:04:09,850 --> 00:04:14,260 Silviu Itescu: results were sufficient for approval. And the FDA delayed us, 70 00:04:14,260 --> 00:04:17,450 Silviu Itescu: at that point, and has asked us to just improve 71 00:04:17,830 --> 00:04:21,779 Silviu Itescu: certain aspects of the manufacturing process called potency assays, that 72 00:04:21,779 --> 00:04:23,500 Silviu Itescu: we've now put in place. And we expect to be 73 00:04:23,500 --> 00:04:26,870 Silviu Itescu: going back to the FDA shortly to present the new 74 00:04:26,870 --> 00:04:30,529 Silviu Itescu: data, which we think will be sufficient to support moving 75 00:04:30,529 --> 00:04:33,610 Silviu Itescu: forward towards approval. That same product, as I said earlier, 76 00:04:33,890 --> 00:04:37,230 Silviu Itescu: has already been approved and is being sold in Japan 77 00:04:37,630 --> 00:04:41,940 Silviu Itescu: for the last four years. Very safe. Very effective. And 78 00:04:41,940 --> 00:04:45,650 Silviu Itescu: I think that provides a strong impetus and insight as 79 00:04:45,650 --> 00:04:47,770 Silviu Itescu: to how this product would be received in the US 80 00:04:47,770 --> 00:04:51,250 Silviu Itescu: market and hopefully would be available to children with this 81 00:04:51,250 --> 00:04:55,469 Silviu Itescu: devastating complication. Beyond graft- versus- host disease, we're also targeting 82 00:04:55,839 --> 00:05:01,040 Silviu Itescu: inflammatory conditions that affect back pain, for example, that destroys 83 00:05:01,190 --> 00:05:06,060 Silviu Itescu: intervertebral disc and causes severe pain and suffering in large 84 00:05:06,060 --> 00:05:10,960 Silviu Itescu: numbers of patients. In fact, inflammatory back pain is the number- 85 00:05:10,960 --> 00:05:15,310 Silviu Itescu: one cause of opioid prescriptions. It accounts for 50% of 86 00:05:15,310 --> 00:05:18,719 Silviu Itescu: prescriptions in the US market, and likely to be a 87 00:05:18,720 --> 00:05:22,960 Silviu Itescu: major cause of opioid usage in Australia, as well. And 88 00:05:23,850 --> 00:05:26,950 Silviu Itescu: a single injection of our cells in Phase III trials 89 00:05:27,339 --> 00:05:32,279 Silviu Itescu: has demonstrated a very substantial reduction in pain for 12 90 00:05:32,279 --> 00:05:35,630 Silviu Itescu: months, 24 months, and even up to 36 months, without 91 00:05:35,630 --> 00:05:39,919 Silviu Itescu: any adverse events. So we have again spoken extensively with 92 00:05:39,920 --> 00:05:44,410 Silviu Itescu: the US FDA, who reviewed our data and agreed with 93 00:05:44,410 --> 00:05:48,360 Silviu Itescu: us about how a second study, if confirmatory of the 94 00:05:48,360 --> 00:05:53,790 Silviu Itescu: first, would likely lead to FDA approval. And we're embarking 95 00:05:53,790 --> 00:05:57,110 Silviu Itescu: on that program to target, again, those patients with severe 96 00:05:57,110 --> 00:06:01,830 Silviu Itescu: inflammation of the disc, who failed all existing alternative therapies, 97 00:06:01,830 --> 00:06:04,790 Silviu Itescu: in order to prevent the need to progress towards something 98 00:06:04,790 --> 00:06:07,960 Silviu Itescu: much more invasive, like surgery. Or to avoid the opioid 99 00:06:08,029 --> 00:06:11,300 Silviu Itescu: overdose risks that come along with this kind of devastating problem. 100 00:06:11,589 --> 00:06:13,770 Sean Aylmer: Okay, I'm going to get confused here. Is that Remestemcel? 101 00:06:15,320 --> 00:06:18,420 Silviu Itescu: Remestemcel is our lead product for graft- versus- host disease 102 00:06:18,450 --> 00:06:23,010 Silviu Itescu: and also for inflammatory bowel disease that involves the colon, 103 00:06:23,070 --> 00:06:26,010 Silviu Itescu: ulcerative colitis and Crohn's Disease. The product for the back 104 00:06:26,360 --> 00:06:30,529 Silviu Itescu: is called Rexlemestrocel, so that's our second lead product, and that's 105 00:06:30,529 --> 00:06:33,760 Silviu Itescu: being developed for both back and for heart disease. But 106 00:06:33,860 --> 00:06:37,560 Silviu Itescu: you are quite correct that Remestemcel, the lead product that 107 00:06:37,560 --> 00:06:41,650 Silviu Itescu: we're developing for GVHD, also is being developed for a 108 00:06:41,650 --> 00:06:46,940 Silviu Itescu: second indication, which is inflammation of the colon, in ulcerative 109 00:06:46,940 --> 00:06:51,060 Silviu Itescu: colitis and Crohn's Disease. And we just announced some pretty 110 00:06:51,060 --> 00:06:55,580 Silviu Itescu: exciting data about a week ago, data that was generated in 111 00:06:55,580 --> 00:06:59,809 Silviu Itescu: a study at Cleveland Clinic, by one of the world's 112 00:06:59,810 --> 00:07:05,080 Silviu Itescu: leading gastroenterology surgeons in this field. Dr. Amy Lightner presented 113 00:07:05,080 --> 00:07:08,920 Silviu Itescu: data at the major European Congress, showing that a single 114 00:07:08,920 --> 00:07:13,760 Silviu Itescu: injection of Remestemcel into the inflamed colon, in patients with 115 00:07:13,760 --> 00:07:17,850 Silviu Itescu: ulcerative colitis or Crohn's Disease, resulted within six weeks in 116 00:07:17,850 --> 00:07:20,920 Silviu Itescu: remission, which is a very, very exciting finding. 117 00:07:21,310 --> 00:07:23,600 Sean Aylmer: I have family members who have had Crohn's Disease, and 118 00:07:23,600 --> 00:07:24,380 Sean Aylmer: it's not a good thing. 119 00:07:24,660 --> 00:07:29,010 Silviu Itescu: It's a terrible disease, and particularly in those patients who 120 00:07:29,070 --> 00:07:32,750 Silviu Itescu: have not responded to other anti- inflammatory drugs out there, 121 00:07:32,880 --> 00:07:36,830 Silviu Itescu: including the monoclonal antibodies against TNF. For those patients, if 122 00:07:36,830 --> 00:07:40,980 Silviu Itescu: they have continued inflammation of the large bowel, the only 123 00:07:41,400 --> 00:07:45,010 Silviu Itescu: alternative is colectomy, which is a terrible outcome. And so 124 00:07:45,390 --> 00:07:48,640 Silviu Itescu: we are very, very focused on this as a potential 125 00:07:48,980 --> 00:07:53,540 Silviu Itescu: next indication for Remestemcel, and we'll be updating the market 126 00:07:53,750 --> 00:07:56,360 Silviu Itescu: in short order with more data from that study. And 127 00:07:56,440 --> 00:07:59,400 Silviu Itescu: we expect to be then moving to have discussions with 128 00:07:59,400 --> 00:08:04,510 Silviu Itescu: the FDA around further approval, potentially after GVHD, for Remestemcel, 129 00:08:04,510 --> 00:08:06,440 Silviu Itescu: in the area of inflammatory bowel disease. 130 00:08:06,600 --> 00:08:08,700 Sean Aylmer: Stay with me, Silviu. We'll be back in a minute. 131 00:08:08,700 --> 00:08:16,989 Sean Aylmer: My guest this morning is Silviu Itescu, founder and CEO of 132 00:08:17,000 --> 00:08:21,270 Sean Aylmer: Mesoblast. Okay, talking to you, it's exciting, thinking about what 133 00:08:21,270 --> 00:08:26,040 Sean Aylmer: you can do, and hopefully, this can be proven. The 134 00:08:26,040 --> 00:08:30,140 Sean Aylmer: process of actually bringing to market the Phase I, II, 135 00:08:30,140 --> 00:08:32,610 Sean Aylmer: III, IV trials in the US: How long does that 136 00:08:32,610 --> 00:08:34,520 Sean Aylmer: take? How expensive is it? I'm trying to get my 137 00:08:34,520 --> 00:08:36,179 Sean Aylmer: head around that sort of information. 138 00:08:36,460 --> 00:08:41,170 Silviu Itescu: Well, look, this is a great question, and I think it's important for investors 139 00:08:41,170 --> 00:08:44,790 Silviu Itescu: in the biotech space to have a reality check and 140 00:08:45,040 --> 00:08:48,010 Silviu Itescu: a view on the time and the cost of drug 141 00:08:48,010 --> 00:08:53,940 Silviu Itescu: development. Traditionally, small molecules developed by the pharmaceutical industry cost 142 00:08:53,940 --> 00:08:57,630 Silviu Itescu: up to two billion dollars. Two billion per successful new 143 00:08:57,630 --> 00:09:02,260 Silviu Itescu: drug launched. So it's very expensive, and very few companies 144 00:09:02,260 --> 00:09:05,240 Silviu Itescu: are successful in doing it. I think we've raised a 145 00:09:05,240 --> 00:09:08,449 Silviu Itescu: substantial amount of capital, and we now have the potential 146 00:09:08,450 --> 00:09:12,610 Silviu Itescu: to bring four new indications to the marketplace. We think 147 00:09:12,610 --> 00:09:15,910 Silviu Itescu: that we've done it in a relatively efficient way, but 148 00:09:15,910 --> 00:09:20,250 Silviu Itescu: time is something that you can't get around. Time is 149 00:09:20,520 --> 00:09:24,670 Silviu Itescu: the requirement by the regulatory bodies, like the FDA or 150 00:09:24,670 --> 00:09:27,770 Silviu Itescu: like the TGA in Australia, to require you to do 151 00:09:27,770 --> 00:09:32,439 Silviu Itescu: large Phase III trials. And they just take two, three, 152 00:09:32,679 --> 00:09:36,100 Silviu Itescu: four years, sometimes, depending on the indications and the size. 153 00:09:36,400 --> 00:09:39,050 Silviu Itescu: And there's no substitute for that; there's no short circuits. 154 00:09:39,660 --> 00:09:43,199 Silviu Itescu: And I think people need to understand that things look 155 00:09:43,200 --> 00:09:47,150 Silviu Itescu: promising early on, but then there's often a fair amount 156 00:09:47,150 --> 00:09:49,920 Silviu Itescu: of time that goes by, when you don't hear anything 157 00:09:49,920 --> 00:09:54,199 Silviu Itescu: until the trials finish. And the strength of Mesoblast is 158 00:09:54,200 --> 00:09:56,429 Silviu Itescu: that we have a platform technology, and we're not a one- 159 00:09:56,429 --> 00:10:00,390 Silviu Itescu: trick pony, and therefore, we have four programs in Phase 160 00:10:00,770 --> 00:10:04,559 Silviu Itescu: III. With GVHD, we've completed Phase III, and that means 161 00:10:04,559 --> 00:10:08,609 Silviu Itescu: that for investors who are knowledgeable and understand the risks 162 00:10:08,950 --> 00:10:13,350 Silviu Itescu: around single- product companies, we represent the ability to move 163 00:10:13,350 --> 00:10:19,450 Silviu Itescu: into commercial sphere, with multiple products, with potentially multiple revenue 164 00:10:19,450 --> 00:10:22,660 Silviu Itescu: streams. And that's how we're building Mesoblast, and we hope to 165 00:10:22,660 --> 00:10:24,630 Silviu Itescu: be there in the very short term, in terms of 166 00:10:24,910 --> 00:10:26,920 Silviu Itescu: revenues from our first approved product in the US. 167 00:10:27,210 --> 00:10:29,800 Sean Aylmer: Do you ever get frustrated? You probably need the market, 168 00:10:29,800 --> 00:10:31,880 Sean Aylmer: because you need to raise money. It's a very costly 169 00:10:31,929 --> 00:10:36,800 Sean Aylmer: business, developing drugs, as you just mentioned. You're spreading that 170 00:10:36,800 --> 00:10:40,270 Sean Aylmer: risk somewhat, because of your platform. Is it, though, frustrating 171 00:10:40,300 --> 00:10:42,429 Sean Aylmer: about the ups and downs of the share price, at 172 00:10:42,429 --> 00:10:46,439 Sean Aylmer: times? Simply on news which to you may well be 173 00:10:46,480 --> 00:10:50,190 Sean Aylmer: expected, but of course, to investors who are waiting on 174 00:10:50,190 --> 00:10:53,410 Sean Aylmer: every word that Mesoblast mentions, it can send you share 175 00:10:53,410 --> 00:10:56,010 Sean Aylmer: price up and down 20 or 30%? Is it frustrating, 176 00:10:56,080 --> 00:10:57,160 Sean Aylmer: or is it just part of the gig? 177 00:10:57,550 --> 00:10:59,830 Silviu Itescu: Look, I've learned to accept it as part of the 178 00:10:59,830 --> 00:11:03,929 Silviu Itescu: gig, as you say. The frustration comes more from a 179 00:11:03,929 --> 00:11:09,360 Silviu Itescu: lack of understanding of the detailed pathway to approval and 180 00:11:09,360 --> 00:11:13,400 Silviu Itescu: revenues, and that just comes with success, really. But I 181 00:11:13,400 --> 00:11:16,190 Silviu Itescu: think share price is not something that I should be 182 00:11:16,190 --> 00:11:21,590 Silviu Itescu: focusing on. My focus is on deliverables, on approvals, on 183 00:11:21,730 --> 00:11:25,559 Silviu Itescu: products in the marketplace, and revenues. That's really what I 184 00:11:25,559 --> 00:11:29,910 Silviu Itescu: focus most of my time on, and the vagaries of 185 00:11:29,910 --> 00:11:33,000 Silviu Itescu: the market will look after themselves when we deliver and 186 00:11:33,000 --> 00:11:35,150 Silviu Itescu: as we deliver. And I firmly believe that. 187 00:11:35,660 --> 00:11:37,111 Sean Aylmer: Silviu, thank you for talking to Fear and Greed. 188 00:11:37,111 --> 00:11:37,112 Silviu Itescu: Thank you very much. 189 00:11:37,112 --> 00:11:44,160 Sean Aylmer: That was Silviu Itescu, founder and CEO of Mesoblast. This is the Fear and Greed 190 00:11:44,160 --> 00:11:46,640 Sean Aylmer: Daily Interview. Join me every morning for the full Fear 191 00:11:46,640 --> 00:11:48,840 Sean Aylmer: and Greed Podcast, with all the business news you need 192 00:11:48,840 --> 00:11:51,100 Sean Aylmer: to know. I'm Sean Aylmer. Enjoy your day.