William Blair Initiates Mesoblast Soon After Its Lead Product Goes Under FDA Review In Pediatric Indication

William Blair has initiated coverage on Mesoblast Ltd MESO with an Outperform rating and a price target of $8.
Mesoblast's lead product, remestemcel-L, has shown transformative efficacy in pediatric steroid-refractory (SR) acute graft-versus-host disease (aGvHD), where no approved therapies exist for children under the age of 12.
In a Phase 3 trial, 69% of pediatric SR-aGvHD patients treated with remestemcel-L were alive at day 180, and 51% were alive two years after treatment vs. 49% and 35%, respectively, in the natural history study.
The analyst notes that the total addressable market for SR-aGvHD is limited. Still, it views it as a foundational program for the company that, if approved, could de-risk its platform and manufacturing.
In contrast, the U.S.'s socioeconomic impact of chronic lower back pain (CLBP), including direct and indirect costs, is estimated to be over $100 billion annually.
If successful, even in a subset of the discogenic CLPB population, the company's discogenic CLBP program could be transformational for Mesoblast.
The analyst also notes encouraging data in chronic heart failure with reduced ejection fraction and acute respiratory distress syndrome.
William Blair writes that the continued development of these programs via an industry partnership could provide additional value to Mesoblast.
Wednesday, the FDA agreed to review the company's remestemcel-L, on a priority basis, more than two years after first rejecting it.
The product is under priority review for children suffering from SR-aGVHD.
Price Action: MESO shares are down 3.60% at $3.62 on the last check Thursday.
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