Mesoblast snagged Food and Drug Administration approval for the first-ever treatment for children with a form of graft vs. host disease. The top-notch biotech stock rocketed Thursday.
The company's drug, now called Ryoncil, treats acute graft versus host disease, or GVHD, in patients at least 2 months old who don't respond to steroids. GVHD is a common complication following transplants. Of the roughly 10,000 patients who undergo a bone-marrow transplant each year, half will develop GVHD. Steroids only work in about half of them.
GVHD that doesn't respond to steroids is a "devastating condition with an extremely poor prognosis," transplant physician Dr. Joanne Kurtzberg said in a written statement. Kurtzberg is the Jerome Harris Distinguished Professor of Pathology and the director of the Marcus Center for Cellular Cures and Duke University Medical Center.
"This marks the end of a challenging multi-year saga, and further validates our position that FDA has adopted a more supportive stance on cell therapy and better understands what kind of data is needed to get an MSC (mesenchymal stromal cells) across the finish line," Maxim Group analyst Jason McCarthy said in a report to clients.
Mesoblast stock surged 36.8% to close at 16.76. The biotech stock has a perfect Relative Strength Rating of 99. This means shares rank in the leading 1% of all stocks when it comes to 12-month performance, according to IBD Digital.
Mesoblast Stock Soars
Ryoncil is also the first FDA-approved treatment to use mesenchymal stromal cells derived from bone marrow. These are stem cells that can differentiate into many cell types.
McCarthy previously called the FDA review a "key event for both Mesoblast and the cell therapy space." Now, he expects Ryoncil to launch in the coming weeks.
"Meso has sufficient inventory to support multiple years and is initially targeting high-volume centers (top 45 centers perform 77% of procedures)," he said. "Pricing/reimbursement is not finalized, but the market size and data could support premium pricing ($500K-$1M+), positioning it for a market opportunity of up to (roughly) $500M, in our view."
Ryoncil is the only product approved for patients younger than age 12 with steroid-refractory GVHD, he said. It also has a potential safety edge over Incyte's Jakafi, which is approved for people age 12 and older.
McCarthy raised his price target on the biotech stock to 30 from 18. He notes Mesoblast is also working on treatments for heart failure and chronic low back pain.
"The approval of Ryoncil marks the first approval for an MSC in the U.S. and represents a watershed moment for both Mesoblast and the broader space," he said.
Mesoblast shares broke out of a cup base with a buy point at 8.47 on Oct. 2, MarketSurge shows. Since then, shares have nearly doubled as of Thursday's close.
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