$1 Billion Distribution Deal for Disruptive Back Pain Therapy

We’ve been tracking this cell-based pain treatment for discogenic back pain for nearly ten years.

It is within six months of key two-year Phase 3 follow-up milestone.

And one of the largest pain management distribution companies in the world (Grünenthal in Germany) just plunked down $1 billion to get distribution rights for the EU and Latin America.

Why?

Because, based on the clinical data so far, this cellular treatment for discogenic back pain appears to not only relieve pain for at least 36 months, it may also regenerate the disc.

How potentially disruptive is that?

MPC-06-ID

Over four million patients in the United States alone suffer from chronic low back pain. Treating this chronic disease, which is caused by damage to the disc as a result of aging, genetics, and injuries, is a double-digit billion dollar a year industry.

This chronic disease compromises the disc’s capacity to act as a fluid-filled cushion between vertebrae and to provide anatomical stability. It also triggers an inflammatory response that results in chronic, often debilitating pain.

Surgery, specifically spine fusion surgery, which removes the pain generator and implants a structure to restore and sustain proper spine lordosis and biomechanics is often the only effective treatment.

MPC-06-ID, the pre-branding name of this cell-based spine injection, consists of a unit dose of 6 million mesenchymal precursor cells (MPCs). It is injected by syringe directly into a targeted damaged disc in an office or outpatient procedure.

Mechanism of Action

The manufacturer is Australia- and U.S.-based Mesoblast, Ltd. Based on the company’s extensive preclinical studies, MPC-06-ID delivers to the disc an anti-inflammatory effect while, at the same time, secreting multiple paracrine factors that stimulate new proteoglycan and collagen synthesis by chondrocytes in vitro and by resident cells in the nucleus and annulus in vivo.

Mesenchymal precursor cells have been shown in, literally, hundreds of confirmatory studies to produce anti-inflammation factors.

MPC-06-ID, so far, has provided evidence of the ability to strengthen the load bearing function of the disc by increasing its water content, improving disc anatomy and stability, while also reducing inflammation and pain.

Phase 3 Trial

Enrollment is done for Mesoblast’s MPC-06-ID Phase 3 clinical study of 404 patients. This study’s primary endpoints are pain relief and improved function, specifically a 50% reduction in lower back pain as measured by Visual Analog Score (VAS) and a 15-point improvement in Oswestry Disability Index (ODI), with no additional interventions.

Details about the study: “A Prospective, Multicenter, Randomized, Double-blind, Placebo-controlled Study to Evaluate the Efficacy and Safety of a Single Injection of Rexlemestrocel-L Alone or Combined With Hyaluronic Acid (HA) in Subjects With Chronic Low Back Pain” are available here.

Again, the two-year follow-up milestone is expected to occur in March 2020 with interim results released by mid-year.

Phase 2 Trial

Two and a half years ago, Mesoblast released the results of MPC-06-ID’s Phase 2 study. That was also a randomized, placebo and active controlled trial. The number of enrolled patients was 100 patients and they were people who’d experienced chronic low back pain for more than 6 months due to disc degeneration.

At the 36-month follow-up mark, Mesoblast reported that a single intra-discal injection of 6 million MPCs resulted in meaningful improvements in both pain and function that were durable for at least 3 years. Previously, Mesoblast had presented 24-month results from the same study at the 24th Annual Scientific Meeting of the Spine Intervention Society in July 2016 and received the 2016 Best Basic Science Abstract award.

$1 Billion to Distribute MPC-06-ID

You know this is an important new treatment when a pain therapy supplier agrees to pay $1 billion for the rights to distribute the product in less than a third of the global market.

Distribution rights are still available in the U.S., North America, China, India and Japan and, say Wall Street analysts, the $1 billion price tag seems about right for the U.S., although the upfront payment will likely exceed Grünenthal’s pre-commercialization down payment to Mesoblast.

Grünenthal is paying for exclusive rights to develop and commercialize MPC-06-ID for discogenic chronic low back pain in Europe and Latin America.

The deal gives Mesoblast a $150 million pre-commercialization staged-payment plus a commitment of up to $850 million in commercial milestones AND tiered double-digit royalties on sales (analysts are estimating that those undisclosed royalties could be as high as 25%-30% of sales).

As part of the deal, Mesoblast agreed to start a Phase 3 confirmatory trial for back pain in the EU before the second half of 2020. That confirmatory study will satisfy approval requirements for both the EU and U.S. regulatory authorities.

Most importantly, however, this deal provides independent and, presumably, steely eyed business validation of MPC-06-ID’s potentially disruptive effect in the back pain treatment market.

Grünenthal, by the way, has 1,600 sales people on the ground in both the EU and Latin America.

The Confirmatory MPC-06-ID Trial in Europe

Both Mesoblast and Grünenthal are still working out the details of the confirmatory Phase 3 trial to be conducted in Europe but Wall Street analysts have written that Mesoblast should be able to get that study up and running within by mid-2020 and that it will satisfy regulators at both the U.S. Food and Drug Administration (FDA) and European Medicines Agency.

Furthermore, the speculation on Wall Street is that the confirmatory Phase 3 study will have a 24-month follow-up duration so MPC-06-ID will not likely be on the market before 2023.

Mesoblast’s founder and CEO, Dr. Silviu Itescu, did comment to analysts that the confirmatory study may only have one active arm, unlike the current Phase 3 trial.

Wall Street’s Reaction

Wall Street is excited. Elemer Piros, Ph.D., Cantor Fitzgerald’s top pharma analyst, probably said it best when he wrote to clients in a recent report: “Grünenthal checks off all the boxes as a partner. We believe that Grünenthal could be a strong partner for Mesoblast, given the company is ranked first in Latin America and second in Europe, as defined by corporate sales in the area of major centrally acting analgesics. With a field force of ~1,600 people and a track record of visiting a target market of ~300,000 professionals, the company has a strong presence in the pain markets, which could lead to more robust revenue opportunities.”

Implications for the Treatment of Discogenic Disc Disease

We’ve been writing and saying for some time that the most impactful new technologies in orthopedics have been innovative pain management products.

Exparel, for example, transformed large joint arthroplasty. For just a few hundred dollars of bupivacaine in a new formulation, patients are getting out of bed faster, reducing hospital stays and recovering more completely.

Zilretta, a time release corticosteroid which has now been used in more than 100,000 patients, is changing the frame of reference for knee pain treatment. Opioids, for example, move out of the picture for most patients once Zilretta is in the clinic.

MPC-06-ID has shown to extend pain relief for patients with chronic discogenic pain by at least two years and it may even be disease modifying for some patients. There is a very large market sector available for any office-based, outpatient back pain injection therapy that ticks off those boxes.

Also, MPC-06-ID is aiming for a full FDA approval.

If the Phase 2 and 3 results turn out to be predictive of actual outcomes in the hands of rank and file spine pain clinics, then the implications of MPC-06-ID for the treatment of discogenic back pain could be profound.

Stay tuned, for sure.