Mesoblast stock down as William Blair downgrades on FDA snub

May 28, 2023

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Mesoblast Limited (NASDAQ:MESO) continued to trade lower in the morning hours Friday as William Blair downgraded the Australia-based biotech to Market Perform from Outperform on the FDA’s decision to reject its cell therapy remestemcel-L.

The second regulatory snub in less than three years for remestemcel-L, targeted at pediatric steroid-refractory acute graft versus host disease (aGVHD), led to a selloff of company ADRs in the pre-market.

Commenting on the FDA decision, William Blair analyst Sami Corwin argues that the regulator asked the company to conduct another clinical trial for remestemcel-L to confirm its clinical benefit even though it found no issues with the MESO’s resubmitted clinical data or the drug’s manufacturing.

While the company plans to conduct a Type A meeting within 45 days to discuss the additional trial, Corwin remains uncertain about its key components, such as duration, and doubts if the company has the resources to complete it.

With Mesoblast (MESO) forced to prioritize remestemcel-L, the company is unlikely to develop its pain therapy candidate rexlemestrocel-L, which has a large market opportunity and dominates the company’s investment narrative, the analyst added.

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