another update - looks like phase III is a given

MELBOURNE (Dow Jones)--Regenerative medicine company Mesoblast Ltd. (MSB.AU) said Tuesday no safety issues have been identified during trials of its Revascor treatment for cardiovascular disease.

"Revascor was not associated with an increase in adverse or serious adverse events when compared to placebo," the company said in a presentation at the American Heart Association annual conference in Orlando, Florida.

Mesoblast said findings from its phase 2 trial of the treatment showed there was a 78% reduction in the rate of major adverse cardiac events in those who received the treatment, compared with the control group.

The company said those receiving Revascor had a reduced probability of cardiac death compared with those who didn't.

The phase 2 trial, aimed at patients with moderate-severe congestive heart failure, compared safety and efficacy outcomes in 45 patients who received a single injection of Revascor on top of usual care with 15 patients who received usual care alone.

Revascor is being developed as an "off-the-shelf" adult stem cell therapy. The company said it is currently being investigated for the treatment of acute and chronic cardiovascular indications, including congestive heart failure, acute myocardial infarction (heart attack) and chronic refractory angina.

Revascor, which is yet to receive regulatory approval, is set to undergo a phase 3 trial, to determine the effectiveness of the treatment compared with the current top standard, in the first half of 2012 in patients with congestive heart failure.
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www.fnarena.com/articles/6C76CC09-D589-F...C66BDCDC99525F32.pdf

Mesoblast: Undervalued Or Overvalued?

Mesoblast to release further trial results this month - Bell Potter expects good results, see stock as undervalued - In Macquarie's view the risks remain high

By Chris Shaw

In September Bell Potter highlighted two developments for stem cell biotech Mesoblast ((MSB)) that were potential
positive drivers of the stock – a new heart attack trial and a manufacturing alliance (see: News Flow For Mesoblast
Remains Positive).Results from a 60 patient Phase II trial of Mesenchymal Precursor Cell (MPC) technology for treating
heart failure are due to be released at a special session of the American heart Association's annual meeting on November
14.

As Bell Potter notes, if the trial results confirm expectations MPCs can rebuild heart muscle and improve blood flow to the heart, thereby reducing adverse coronary events and hospitalisations, Mesoblast has an entry into multi-billion dollar market opportunities.

On the numbers of Bell Potter, the current Mesoblast share price undervalues the cardiovascular applications of MPCs
alone. This is because the MPC technology works in the broker's view, as the stem cells injected appear to release soluble factors that contribute to tissue repair and regeneration.
Tests already conducted also suggest Mesoblast's MPC technology is effective, as a previous 60-patient trial registered no cardiac mortality over an average 18 months of follow up and showed a reduction in the number of patients developing any severe adverse cardiac events.
Data to date for Mesoblast shows its MPC technology is superior to other stem cell approaches, as Bell Potter notes trials by other developers have not delivered results of similar quality. The broker expects the full trial results to be presented this month will allow the company to move straight to a pivotal trial of around 1,000 patients from next year.

The other supportive factor for Mesoblast in the view of Bell Potter is the company is starting to build a valuable spinal
franchise, as Phase II trials are being conducted for applications such as posterior interbody lumbar fusion and cervical spine fusion.
For Bell Potter, this opens up Mesoblast to the possibility of being an acquisition target as any buyer would be able to
more comprehensively access a large and growing segment of the orthopaedics market.
Given the upside potential it has identified, Bell Potter rates Mesoblast as a Speculative Buy, down from a Buy rating
previously. This "downgrade" implies an upgrade to risk. Price target remains at $16.00 per share.

Not everyone has such a positive view of Mesoblast's value though, as last week Macquarie initiated coverage on the stock with an Underperform rating and $5.80 price target. This follows a series of meetings with a number of experts in the field, including cardiologists, surgeons and stem cell researchers.
Macquarie suggests while Mesoblast is making good progress with its MPCs, there remain questions as to the effectiveness of stem cells in repairing tissue. This relates in part to there being many types of stem cells with no clear winner in the field, as well as other issues such as the potential for a body's immune system to kill off donated stem cells.

Another problem is potential difficulties associated with ramping up stem cell production without having to re-run
clinical trials, as Macquarie notes no commercial production of stem cells has yet been done.

In Macquarie's view the market is currently underestimating the risks and uncertainties associated with stem cell
technology in general and with Mesoblast's product. This suggests a far more conservative assessment of Mesoblast is
appropriate, Macquarie's valuation range for the stock standing at $4.30-$7.29.

Given the uncertainties in the stem cell market Macquarie argues it is difficult to justify a material premium relative to peers for Mesoblast. Yet at present, Mesoblast has a market capitalisation five times greater than its nearest competitor and 10 times that of its second nearest competitor.
Such a premium appears far from justified as data from the heart failure trials being undertaken by Mesoblast, while
promising, was not wholly positive in Macquarie's view. The data suggested while the MPC treatment appears safe, it is
not possible to prove its efficacy on the information provided.
While Macquarie doesn't expect this will impact on the expected Phase III trial next year, it does suggest gaining
significant market share will be challenging unless the trial delivers outstanding results. There is also the risk multiple
Phase III trials will be needed before stem cell technology takes a high market share.

When all this is factored Macquarie's argument is simply while Mesoblast appears to have some promising technology,
it is simply too early to get excited about the stock given the potential for setbacks or the need for significant additional testing. This means investors need not rush to get set in what remains a risky investment.
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I paid $199 for mine
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funny looking things
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