Hello and welcome to the operational highlights and financial results for the period ended March 31, 2021 for Mesoblast. An announcement and presentation have been lodged with the ASX and are also available on the Home and Investor pages at www.mesoblast dotcom. 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 in 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 to update such statements. With that, I would now like to turn the call over to Doctor. Silvue Edetzkyu, Chief Executive of Mesoblast. Please go ahead.
Thank you very much, operator, and Good morning and good evening. With me today is our Chief Financial Officer, Josh Magna and our Chief Medical Officer, Doctor. Fred Grossman. Today, we will be updating you on the operational highlights and financial results for the period ended March 31, 2021. A detailed slide deck be available on the ASX website.
To remind you all, we We have 2 technology platforms, our 1st generation remestemcel platform and our 2nd generation rex remestrocel platform. Remestemcel is being developed for acute graft versus host disease in children as well as adults And for acute respiratory distress syndrome due to COVID-nineteen and potentially other causes. It is also being developed for refractory inflammatory bowel disease. In Japan, acute graft versus host disease is partnered JCR and for acute respiratory stress syndrome, other causes, There is an agreement that remains subject to certain closing conditions, including the time to analyze the results from the COVID-nineteen ARDS trial together with Novartis. With respect to our rexlimustrocel platform technology, which is being developed for advanced heart failure and end stage Ischemic heart failure as well as chronic low back pain.
The relationship with Tasly in China is for advanced heart failure. And with Grunenthal in Europe and Latin America is for chronic low back pain. Our global IP estate provides the substantial competitive advantages with over 1100 patents Patent applications across all major jurisdictions covering compositions of matter, manufacturing, and therapeutic applications of mesenchymal lineage cells. This IP provides strong global protection in the areas of our core commercial focus against cell based competitor products. And when outside of our core commercial areas, we may consider granting rights to third parties who require access to our Large patent portfolio for commercialization.
In terms of our commercial scale manufacturing capabilities, We have scalable allogeneic off the shelf cellular platforms with manufacturing that meets stringent criteria for Regulatory agencies, including FDA, EMA and others. We develop to robust quality assurance processes, Ensuring final product with batch to batch consistency and reproducibility. Now projected increase in capacity requirements for our maturing pipeline Involves proprietary technologies that are xeno free or free of animal products in order to increase yields and output As we move towards bioreactors in 3-dimensional cultures to reduce labor and improve manufacturing efficiencies, These innovations will significantly reduce cost of goods as well as meet the commercial objectives of the company. Now I'd like to move to our financial results and I'd like to ask our Chief Financial Officer, Josh Magner to take you through those please. Josh?
Thank you, Sylvia. Getting into the financials. Our cash at quarter end on March 31 was $158,000,000 This figure includes the proceeds from capital raise conducted in March. They're led by principles of surge center development.
I think we may have lost Josh.
So I take a moment to thank our new and existing investors for their ongoing support. The capital we raised provides funds As we prepare for and conduct important meetings with the U. S. FDA in the coming quarters. The funds will also support our ongoing manufacturing initiatives as we invest in commercial supply of remestemcel L Ahead of a potential approval in GBHD to treat choking as well as scale our manufacturing to be able to serve larger market opportunities in the future.
We also appreciate the ongoing support of our lender, Hercules, who have extended the interest only period of their loan to October 1. Our balance sheet cash provides us with sufficient funding through the next 12 months. And as we complete ongoing business development activities We'll make further changes to our Hercules loan. We anticipate having adequate cash that should bring us to multiple key milestones in the future. Moving to the income statement.
We saw continued recovery of our commercialization revenue returning to largely the same level of a year ago. Our commercialization revenue for the period primarily consists of royalties from JCR Pharmaceuticals for sales of TEMCELL to treat GVHD in Japan. But it also includes royalties from Takeda for sales of olapacel to treat fistulas in patients We're glad to see that our Japanese partner, JCR Pharmaceuticals, resumed robust sales of the sales of TEMCELL after instituting a temporary shutdown in production as they expanded their capacity to meet increasing demand. Total revenue was lower due to a one time milestone recognized in the quarter in the period in in the
year prior.
On the expense side, we see total expenses for the 3 months coming in about $1,000,000 less than in the year earlier period. We do see a drop in R and D expenses, which may continue in near term as our key clinical trials have been completed. This reduction was offset in part by an increase And management and administration expenses related predominantly to one off expenditures in legal and professional fees associated with financing And FDA regulatory activities. The additional information as well as the deck will be able to be found with the ASX as well as the SEC. I'd like to now return the call to Silvi, who will provide an operational update.
Thank you, Josh. First, I'd like to provide an operational update on remestemcel L for the 2 lead indications acute graft versus host disease and acute respiratory distress syndrome, ARDS. I'd like to just reiterate that the Grapless host disease itself is a serious and fatal complication of an allogeneic bone marrow transplant. It's due to activation of multiple arms of the immune system leading to a so called cytokine storm due to Cytokines produced by T cells and macrophages and ultimately these cytokines result in destruction, Damage and destruction of the gut, the liver, which is a very fatal stage of the disease itself. The children with steroid refractory grapplers and host disease are extremely high risk of death.
The children, particularly under 12 years of age, have no approved therapies for steroid refractory GvHD. And in these children, once you've gone past failure to respond to steroids, Mortality rate can be as high as 70% to 90% when involving the gut and the liver. It's a devastating complication with no approved therapies in children 12. So we have established a substantial body of clinical data across 309 children From 3 different studies that have demonstrated both the safety and efficacy of remestemcel L. The three bodies of data include a randomized controlled trial in a subset Of children, 27 children where remestemcel was used as first line therapy.
2nd body of data was in an expanded access program of 241 children with still refractory GVHD, 80% of whom had Grade CD disease and had failed institutional standard of care. And the 3rd body of data, of course, was our open Phase III trial in 54 children with still refractory GvHD, 89% of whom had the most severe forms of grade CD disease. And across these each of these three trials, day 28 response, the primary endpoint was very similar and was achieved of children with the same degree of severity and who met the inclusion criteria of the Phase III trial, a cohort called the MAGIC Cohorting 30 children. The day 28 overall response was only 43%. Day 28 response is a very, very Close surrogate that reflects subsequent survival.
And in fact, we have seen good survival That comes across each of our trials with remestemcel. In the most extensive analysis of survival in children with Steward refractory acute graft versus host disease, 6 months out in the steward refractory pediatric population with best Standard of care, survival is only 49%. And by 2 years in these very sick children, survival is only 35%. In contrast in our Phase III trial with remestemcel in the 54 children who received the remestemcel treatment, Survival at 6 months was 69%, substantially higher level of survival. And we believe that this is The basis for why this product should be made available more broadly.
So let me update you all with the regulatory update on steroid refractory GVHD product for remestemcel. In August, as you all recall, the results from 3 0 9 children that I've just talked about were presented to the Oncologic Drugs Advisory Committee, ODAC, Of the FDA, ODAC panel voted 9 to 1 that the available data support the efficacy of remestemcel in pediatric patients with steroid refractory acute GvHD. Despite that overwhelming ODAC vote, On September 30, the FDA provided Mesoblast with a complete response letter. Mesoblast continues to be in discussion with the FDA Approval of remestemcel in the treatment of steroid refractory acute GVHD in children. As part of this process, Mesoblast recently met with the FDA's Center For Biologics Evaluation and Research, CEVA.
Following CEVA's recommendation after this meeting, Mesoblast as a next step will discuss with CEVA's review team at the Office of Tissue and Advanced Therapies, OTAD, Our approach to addressing certain outstanding chemistry manufacturing and control CMC items, which include potency assay validation. And we will, of course, continue to update the market as we have these meetings and as we progress the process for approval potentially of remestemcel for children with still refractory acute graft versus host disease. Moving on to the potential to use Premi stem cell for acute respiratory distress syndrome due to COVID-nineteen now. ARDS Is a major unmet need. It is a severe inflammatory lung disease that is due to a number of different including viruses such as COVID-nineteen and influenza, including bacteria Such as pneumonia, pneumococcal pneumonia or gram negative bacteria and trauma.
And effectively, the primary cause of ARDS is an unbridled Immune response to these inciting agents, multiple arms of the immune system are activated, a sea of cytokines Is initiated and the end result is damage to the lung tissue, flooding with fluid and end result is Failure of respiratory failure and death, high degree of mortality. The clinical experience that we have Established with remestemcel in ARDS, in particular, COVID-nineteen is twofold. 1 is the pilot data Under an emergency IND that was established about 12 months ago. And second is the data that has been generated from a Phase 3 randomized controlled trial across the U. S.
With regard to the emergency IND pilot data established about 12 months ago, 11 patients, 10 of whom were under the age of 65, with moderate severe ARDS on ventilators, Received 2 infusions of remestampsil, 2 medium cells per kilogram within 5 days at New York's Mount Sinai Hospital. This was in the midst of the pandemic March of last year. 9 of these patients successfully came on ventilators and were discharged from the ICU. And the experience under the emergency IND informed on the dosing regimen that we moved forward within the randomized controlled trial. Notably, the data that was generated in patients who were predominantly under 65 years of age, 10 out of 11 patients.
The dosing regimen was based on the dosing that we're using in GvHD patients, where 2 doses of 2 Per week for 4 weeks are generally given. Here in the patients with COVID-nineteen, we established a dosing regimen of a quarter Of that dose, 2 doses within the 1st 3 to 5 days only. The Phase III trial was a multicenter randomized Controlled double blind trial in moderate to severe ARDS patients on ventilator with ventilator dependency. It was intended to enroll up to 300 patients. However, it was stopped early after 2 22 patients were enrolled Since the Data Safety Monitoring Board, after the 3rd interim analysis, decided that the primary endpoint Of 43% overall mortality reduction was unlikely to be met.
The median age notably of this trial During the pandemic increased substantially from 59 in the first half of the trial to 67, Almost a decade older in the second half of the trial. And that was a highly significant difference. So that was part of the Change in the type of patients who are enrolled, together with the fact that there were many changes to standard of care during this Period, which meant that the patient population had shifted quite dramatically from the first half to the second half of the trial and the type of drugs They had been exposed to and that potentially had failed had also changed. Importantly, a pre specified Analysis of results stratified by age less than or greater than 65 was initiated because age is the Number one risk factor for mortality in patients with COVID-nineteen And particularly a threshold of 65 and above has been shown to be major predictor of severe mortality. In fact, In meta analyses of many studies, as many as I think 69 studies across the U.
S. And globally, age as a predictor of mortality has been the single Principal factor that predicts outcome once a patient has ARDS on ventilators. And mortality in patients over 65 Approaches 71% to 85%, whereas mortality below age 65 is of the order of about 48% to 59%, Still very high, but clearly demarcated by age. Notably, in periods of epidemics From influenza over the past 10, 15 years, majority of patients in ICUs On ventilators are under the age of 65, although mortality rates are highest in those above 65. And in a steady state situation with COVID, as we Believe as being seen now across the U.
S, the majority of patients now are under the age of 65 In the ICUs on ventilators. Now when we looked at mortality in this study at day 60, In the control population, older or younger than age 65, we saw hardly significant difference Being 0.005 with the older patients above 65 having a mortality rate of about 70% Compared to those under 65 having a mortality rate of 42% through 60 days, and this was highly significant And confirms the robustness of this study and its consistency with other trials looking at ventilated COVID-nineteen patients. Overall, the trial did not meet its primary endpoint of reduction in mortality of 43%. In We saw a positive trend with a hazard ratio of 0.86, But this did not meet statistical significance in terms of mortality through 60 days. However, when looking at the outcomes by Age less than or greater than 65 years old.
In the 123 patients Who were the majority of the trial, who were under the age of 65, we saw a significant mortality benefit of approximately 46%. The controls had a 42% mortality through day 60, whereas The remestemcel treated patients had a 26% mortality. The hazard ratio was 0.54. In contrast, No benefit on mortality was seen in those patients above 65 years old. The hazard ratio there was 1.05.
Our interpretation is that there are age related differences in the older population that mean potentially that the dosage that was chosen Was insufficient to achieve the mortality reduction. And in the future, we will certainly be exploring Potentially higher doses or more prolonged dosing regimen for those patients So we're older than 65 with higher viral loads and poor immune systems. Now in exploratory analyses, We were extremely intrigued about of combining remestemcel with dexamethasone. Whilst in the first 50 patients in this study, dexamethasone was used in only 2% of patients, Midway through the study in the subsequent 150 odd patients, dexamethasone was used in 84% of patients and it is now Standard of care in patients in the intensive care units. When we looked in the exploratory analysis in just those patients who were on dexamethasone, In fact, we saw what appears to be a highly synergistic effect where remestemcel on top of dexamethasone resulted in a 75% reduction in mortality with a hazard ratio of 0.25.
Overall mortality on dexamethasone alone was 45% Day 60. Whilst the combination of remestemcelforce dexamethasone resulted in only 14% mortality, These are striking results and warrant confirmation as we move forward. So the conclusion for our next steps For the COVID-nineteen program, is that addition of remestemcel to dexamethasone appears to be synergistic In those patients under the age of 65 and our plan is to meet with the FDA to discuss potential steps including a confirmatory Phase 3 trial In patients under 65 years of age combining dexamethasone with remestemcel in on reduction of mortality. Now moving to the 2 other lead programs, heart failure and back pain. Our chronic heart failure program Focuses on the leading cause of death from cardiovascular disease, heart failure, low ejection fraction.
This is a severe disease that's increasing in incidence with a mortality that approaches 50% at 5 years. And whilst new therapies for chronic heart failure reduced recurrent hospitalizations due to volume overload. They do not materially improve mortality from Cardiac disease or major ischemic events such as heart attacks and strokes. The inflammatory the anti inflammatory Effect of the cells in the myocardium as well as on the peripheral vasculature, we believe have a unique benefit in terms of reducing Both cardiac mortality and reduction in major vascular events outside of the heart. When you look at the results that we 537 patients in a randomized controlled trial.
We see that we reduced Large vascular events, heart attacks, recurrent heart attacks, recurrent strokes by 60% From 13% to 5% over a 3 to 4 year follow-up period. And we reduced The 3 point MACE, an endpoint that is used by the FDA to approve drugs in parallel conditions, 3 point MACE being A composite of cardiac death, heart attack or stroke. We see a 30% reduction, a significant reduction Between rexelenstruosol treated patients versus controls. The greatest benefit Was in the Class II patients where we see a 55% reduction in the 3.MACE, P equals 0.009, Indicating that the earlier we use the therapy, the greater the treatment benefit. And we believe that a single delivery Our cells in advanced Class II patients may be a very significant addition to the albumin perium in these very sick patients with advanced heart failure.
In combination with existing therapies That will include secubrutrolvalsartan or SGLT2 inhibitors. With respect to our back pain program, We the randomized Phase 3 trial achieved significant and durable reductions Through 24 months in back pain across the entire evaluable study population with greatest pain reduction observed in those patients We had shorter duration than the median for the study, 68 months. Again, indicating that the earlier that We can intervene with our therapy, the greater the treatment benefit. There's a very interesting parallel between this observation in both back pain and heart failure patients. In addition, there was significantly greater pain reduction in the pre specified subset of opioid users at all time points compared with saline controls.
And by 24 months, there was a 40% reduction in opioid use. So we conclude that rexelime stroestrel may provide a safe, durable and effective Opioid sparing therapy for patients with chronic inflammatory back pain due to degenerative disc disease. Our key initiatives and upcoming milestones for the next two quarters are significant. And they divide In terms of those milestones for remestemcel and those for rexemestrocel. For remestemcel in the treatment of steroid refractory GBSD in children, plan to discuss with CEVA's review team at the OTAP our approach to addressing certain outstanding CMC items, including potency assay validation.
In the regulatory pathway for remestemcel in patients with COVID-nineteen, we intend to meet with FDA to discuss potential next steps Based on the observed reduction in mortality in patients under 65 in the recently completed trial. In addition, we continue to work closely Novartis in the license and collaboration agreement for development, manufacturing and commercialization of remestemcel with an initial focus on the development of the treatment for ARDS. The collaboration remains subject to certain closing conditions, including time during this period to analyze all the results from the COVID trial. For rex lemestrosel, we intend to meet with FDA and EMA to discuss the potential pathway for approval of rex lemestrosel In patients with chronic discogenic lower back pain based on the Phase 3 trial results and to meet with FDA to discuss the potential next steps The regulatory pathway in patients with chronic heart failure based on the observed reduction in mortality as well as morbidity in the Phase III trial. So on that note, I think I'll stop.
And operator, if you could open the call for any questions, please.
Thank Your first question is from the line of Chen with Cantor. Please go ahead.
Hi, thanks for taking my questions here. So first question I have for you is when will you have an update on your Novartis agreement and the go forward strategy for ARDS? And then secondly, what does the ARDS COVID-nineteen data mean for your broader ARDS program, what is the read through there? And then do you have any update on your bowel disease franchise or pipeline that you're working on there? Thank you.
Sure. Thank you. Look, as I noted, we're in very close discussions with Novartis, the Novartis team. And as we analyze the data from the COVID-nineteen trial, they analyze it with us or they receive Both our analyses and our detailed data sets. And We remain in very close discussions, and I would expect that in the very short Term, we will be able to update the market on exactly the time lines around that collaboration.
With respect to the read through on non COVID-nineteen, I think those Items become clearer as we see more and more data. So first and foremost, as I mentioned earlier, the majority of patients, As many as 70% to 80% of ventilated patients with influenza hearts, Even in epidemic times are under the age of 65. And so the fact that we have seen such a striking mortality benefit in COVID-nineteen patients under the age 65, I think, speaks to the target population for us In other viral ideologies of ours as well as we start to look at bacterial Including caused by pneumococcal pneumonia or gram negative sepsis. So I think age is a very important predictor of both who is in the intensive care and The likely outcome and I think it's a reflection of strength of the immune response of the individual. And I think we've learned a lot in terms of dosing Strategies from this trial that we can apply to the broader infectious odds patient population.
I think secondly, the potential To understand the mechanism of action based on biomarker data, which It's currently coming through to us. It will allow us to make Some translational conclusions about the relevance of inhibition of cytokines, inhibition of various damaging Factors that more broadly the population in general.
And then what about the
bowel? And then what about the bowel update, yes. Chris, We'll be reviewing very soon the initial pilot data with the initial cohort of patients, Crohn's and ulcerative colitis, who had direct application of the MSCs. And based on that evaluation, we'll determine the next steps. We're enthusiastic about this.
This is an area of very significant Unmet need. And we're really looking forward to reviewing that pilot data to determine our next steps.
Thank you.
Thank you. Your next question comes from Kennen MacKay with RBC C Capital Markets. Please go ahead.
Hi, thanks for the update and taking the questions. Hoping for a little bit more color on the anticipated dialogue With the OTAD division of the FDA here, specifically on the Sort of manufacturing control, are those protein assays directed more sort of batch to batch Variability or is that more relating to extension
of the manufacturing process? Thank you. Yes. No, I think it's very important. So really what we're talking about is, and as we said as part of the CRL Letter.
The FDA is looking for us to demonstrate that our potency assay Can show not can show that the consistency of the product that we have in the Phase III trial Continues to demonstrate consistency going forward into the commercialization phase. In other words, A potency assay that is reliable, that measures a consistent product is obviously Critical when you're making large, large lots for commercial use. And so I think that's really the issue at hand that we need to be aligned with OTAT, That potency assay measures reproducibly the consistency of the product. And we're obviously very confident that we'll be able to come to agreement on that.
Thank you. And just a follow-up on that. Obviously, as it relates to CRL the CRL and the letter following that and the follow-up meeting, very clear Sort of regulated processes there, regimented processes. As it relates to the follow-up conversation, do you have any sense of timelines there? Yes.
Yes. We expect to be meeting with OTAP in the next couple of months relatively short order. I think it's clear to us what the discussion is to focus on. And it's primarily aimed at Getting agreement on the approach and then moving forward with what potentially would be a resolution. Got it.
Thank you.
Thank you. Your next question comes from Tanushree Jain with Bell Potter Securities. Please go ahead.
Hi, Silviu. Thanks for taking my questions Thanks for the update. Just a couple of quick ones for me. Just after GVHD process, I think You mentioned that this could be a resubmission with the 6 month review timeline. Would that resubmission be under a formal accelerated pathway?
Has that been clarified during your discussions with the FDA?
Well, we have a Priority review, ready for the product. So it would fall under that process.
Right. Okay. And in terms of time line with your discussions with OTAD, are we looking at that haptic over the next quarter?
That's the plan.
All right. And then just moving on to the back pain product with The European trial and getting a protocol approved there with discussions with Goodenthal and the EMA. Could you give us an update on What we are waiting for on that before we have those discussions with the EMA?
Certainly. 1st and foremost, we need to have agreement with the FDA on endpoints. And the plan is to meet with the FDA, get agreement on the endpoints and then take those To EMA subsequently. There's no point in doing things independently. The 2 regulatory bodies have to be aligned.
Right. Now just a quick question on that. So Obviously, the opioid reduction that we saw in the in your U. S. Phase 3 trial, which was quite profound, That's more applicable, I guess, in the U.
S. Kind of scenario and not so much in the European scenario. So I guess thinking forward as to having an With both the FDA and EMA on the next approvable trial, how would that kind of play in terms of differentiation?
Well, again, I think the first bar to get agreement with is FDA. And as you say, the opioid The opioid reduction component was a very important one, and it may have greater import To the FDA, but I think it also has importance to EMA. But I think that the driver of the Proposal to EMA will be based on how FDA reviews the data. And so I think the sequence is clear to us. First the FDA maybe.
Right. And then just lastly, with regards to Duvatis, I think as part of your collaboration with them, I think one of the advantages there that we had seen was their expertise in the Cardi therapy space, which could kind of help you guys in dealing with addressing some of those potency assay Questions on the GvHD product. Could you maybe perhaps shed some light on whether They have been actually helpful in that regard.
I think we are very clear in Discussions with the FDA, what needs what we would need to propose. And as a team, We feel comfortable that we've got the appropriate approach and we've got the data that gives us confidence To meet with OTAT and discuss the appropriate potency assay. And I think you can imagine that those discussions and data being shared With the Novartis team, the next question is how appropriate are these data and potency assets for the product in general, how do they relate to the In general, how do they relate to the ARDS application and indication? And that's an area that, of course, we would be working closely together Novartis moving forward.
Great. Thank you. Thank you. Your next question comes from Jason
Can you talk just a little bit about heart failure and maybe walk us through the time that that trial had started so many years ago And what was expected of approved or then subsequently approved heart failure medications on volume reduction Versus mortality because there's a very key difference between what your cell therapy does and those drugs that you found in December. And I'm wondering if you'll take that data And that argument to the FDA to plot out your path forward?
Yes. Thanks, Jess. That's a really important observation. I think very much like in the COVID-nineteen pandemic era where So many new drugs or repurposed drugs were thrown at the patients and outcomes evolved over time. In the same way, I think during the course of our Phase III trial, there were some new drugs that were introduced.
And notably, there were drugs around SGLT2 inhibitors and The secubitrol drug that had an impact on recurrent hospitalizations from volume overload, as you pointed out. And those drugs got approved during the course of our trial. They're now some of them in any event are becoming the standard of care. And Nonetheless, those drugs have minimal, if any, impact on cardiac mortality or on the major vascular events, all of which are And what we found is that despite the introduction of these new drugs, we had a major impact on those outcomes, less so, of course, on the volume related hospitalizations, but outcomes that are extremely important Perhaps more so important given that no other therapies address cardiac mortality in the way that we've addressed it or the vascular Large vascular events like recurrent heart attack. And so those form the basis now of the way we will be Seeing the discussions with the agency.
And Fred, maybe you could speak to how you see interactions with the FDA on this product?
Yes. I think as you mentioned, What's critical here is what we saw in our trial on the 3 point MACE, the composite of cardiac DEF, MI or stroke. That really is a critical endpoint. And the durability that we saw over 3 or 4 years after a single application, we believe is very significant and is hitting an area Of unmet medical need. And that's going to be the basis of the discussion that we have with the FDA.
We have a large number of patients where we saw this significant effect and reduction in the 3 point MACE. The 3 point MACE is a well accepted and understood endpoint, particularly by the FDA and other health authorities. And that's going to be the basis of the discussion. We're really enthusiastically embracing this because this is important data Moving forward, that can have a big impact. And we believe the FDA will agree with that approach and will come up with a plan To move this forward because of these results.
And there are still continued plans to move forward In Class IV using GI bleeds or another secondary endpoint that looked like it had really good data In the prior trial or is focus going to be on Class II and III and maybe doing another pivotal study or both?
I think, Jason, look, we've got a number of shots on goal right now. I mean, the last three 4 months has really been a very busy period for us to analyze the data across each of our products in the portfolio. And In a sense, we've seen strong data emanating out of each of our programs. So In the short term, we need to prioritize our cash position, be very clear about what we allocate to which programs in terms of Near term to approval, market launch, commercialization, etcetera. And then think about broadening out.
I think with respect to We had to focus whether we go 1st and foremost for the largest market opportunity, which is Class II, III heart failure Or whether we focus on the more niche opportunities like end stage Class IV with the bleeding. But I think before we commit to those programs, We need to have discussions with the agency. We need to focus on the nearest opportunities such as GVHD to market, Okay, etcetera. So I think the prioritization is the next step in the Mesoblast review. Great.
And just lastly, I would add that. Go
ahead. Yes. I was just going
to add that We're at an exciting nexus point right now. In the next several months, we're going to have clarity On potential GvHD pathway towards approval, we're going to have clarity On our COVID ARDS program and as mentioned, clarity on chronic low back pain and heart failure. So we're hoping to have regulatory paths for all of them in the next several months. So this is a real nexus This point for this company and we're really excited about this.
And just briefly and I don't know if I can actually get an answer for this, but I know all the focus of Novartis is on ARDS and that cell therapy. But just given that the company's presence in Heart failure, is there an opportunity to work with them in that space as well as you start looking forward to what comes next in the heart failure program?
We look forward to building a strong partnership with Novartis. And moving forward Into the respiratory and pulmonary space, it would be a first step as we build out that relationship over time. So but we'll update the market in short order.
Great. Thank you, fellas.
Thank you.
Thank you. Your next question comes from John Hester with Bell Potter Securities. Please go ahead.
Good morning, Silvio, and good afternoon, Fred.
Thank you for your
time this morning. I just want to come back to the upcoming meetings with CEBA And the assays that are going to be developed for the consistency of The remestemcel product.
If you can just
how do the Japanese regulators approach this problem? And Why do you think that the FDA is so concerned about the potency of the product Relative to what the Japanese regulators have determined?
No. I don't think there's any difference So the product in Japan, 10cell, is measures a particular factor that the cells make As its potency assay could determine both bioactivity as well as consistency. And we will be proposing a very similar Potency assay measuring a single factor that describes both the activity And the consistency of our process. And I think we've had initial discussions with the agency around The proposed potency are saying we generally had alignment, and we'll be more specific about A proposal when we meet in the coming months.
Okay.
Again then on the potency asset, is that do you
think the number one roadblock to Or I recall, is there going to be a requirement for a randomized trial? I mean, that's where it sort of comes down
Well, we believe that our clinical data has and Supported by the conclusion of the ODAC panel has already demonstrated that there is clinical effectiveness of the product in children with steroid So we are planning to meet with the review team To discuss really the plan of the potency assay. And assuming that we have Alignment has been our approach and what they consider to be sufficient, Then we would resubmit the documentation.
Okay. Yes. I would underline the fact, I think you used the word roadblock. I don't we don't see it as a roadblock. I think potency assays, It's not uncommon for any health authority, particularly the FDA, to focus on this.
And we welcome that focus and We'll work with them to move this forward.
Well, especially that this would be the first approval for Nezankamol needs cell therapy of any type for any indication. So it is understandable that the FDA wants to ensure that our manufacturing demonstrates consistency Beyond what we showed just in our Phase 3 program that all of our commercial batches continue to show exactly the same potency and activity. I think that's natural, and we welcome it. And we are working towards documentation that supports that.
And Just with that documentation, so have you got to generate new data for that to prove your case? Or is it really just are you reworking the data from The existing data that you already have?
We have generated new data, and we will be Presenting the new data together with data that had previously been in place that supports The critical attributes of the product. So it's a combination of existing data plus new data that has been generated and will continue to be generated.
Okay. All right then. Well, thank you very much.
Thanks.
Thank you. Your next question comes from Tanushree Jain with Bell Potter Securities. Please go ahead.
Hi. Just a quick follow-up for Josh. Josh, just on the Hercules Capital contractual amendment, Can you just remind me the extension that we spoke in the last quarter, if I recall, was supposed to be period till the loan maturity, which was at March 2022. So we're talking about an interest only period extension till October 2021. Can you just clarify that for me, please?
Sure, Tanu. I think it's the last Time we had a call like this, the extension may have gone to July of 2021 With the potential to extend to March 2022. And the potential to extend to March 22, 2022 still exists. But at the time and if you check our disclosure, it was to July at that time? And now it's extended to October?
Right. With the potential still there to extend it to March 2020.
Got it. Yes.
Right. Okay. And then just quickly on On the OpEx side of things, obviously, R and D expenses are coming down and you did highlight that we could see a decrease moving forward In that, just on the manufacturing and G and A expenses side, how should we look at costs moving forward?
Sure. So keeping in mind that manufacturing is an investment that we continue to make Predictably towards potential commercial product for remesencel for potential launch, as well as the other manufacturing that I discussed. So that will continue apace. It's a little bit lower this quarter, but that's just due to slight fluctuations in payments. Management and administration, as I mentioned, did pick up a little bit.
And That is largely due to some one off expenditures and legal and professional fees associated with regulatory activities around the FDA as well as some of the financing activities.
And how much was this 1
of the expenses? We're not
going to break down Tanya, we're not going to break down each line through here. But there were a number of one offs in there that otherwise would have put it Largely in line with what it was a year ago, the
clarification. Okay. Okay, cool. Great. Thank you.
You're welcome.
That brings us
to the end of today's call. I'll now hand back to Doctor. Itescu for closing remarks.
Great. Thank you very much, Fred, and thank you, everybody, for joining us on this call. We're very excited about, as Fred said, The next is that we're at right now. With the regular discussions that have taken place and will continue to take place in the Shorter term as well as with our strategic collaborations. We look forward to updating the market in due course.
Thank you very much everybody.