Under the terms of the agreement, Grunenthal will have exclusive rights to commercialize the treatment in Europe and Latin America.

Mesoblast (ASX:MSB,NASDAQ:MESO) — an Australia-based company developing regenerative medicine — disclosed on Tuesday (September 10) a partnership with Germany-based Grunenthal to develop and market Mesoblast’s stem cell therapy to treat chronic lower back pain.

The treatment, called MPC-06-ID, helps ease pain in patients with degenerative disc disease, discogenic chronic back pain or a functional disability who have not responded to other treatment options.

As part of the partnership, Grunenthal will have exclusive rights to commercialize MPC-06-ID in Europe and Latin America.

Under the terms of the agreement, Mesoblast will receive as much as US$150 million up front as well as milestone payments before the product launches and additional commercialisation milestone payments.

Breaking that down, should a Phase 3 confirmatory trial go ahead in Europe, and depending on those results cumulative milestone payments for Mesoblast could potentially exceed US$1 billion.

In a conference call with investors on Tuesday, Dr. Silviu Itescu, CEO of Mesoblast, said that the partnership will help advance the approval process for the company’s product and that the two entities will collaborate on the study design of the Phase 3 trial in Europe.

“The confirmatory European (trial) and the currently ongoing US Phase 3 trials are expected to support regulatory approvals of the product in both Europe and the US,” Itescu said on the call.

The press release says that the company is currently conducting a Phase 3 trial in the US for MPC-06-ID and should have data read out sometime in 2020.

In MPC-06-ID’s Phase 2 trial, the treatment demonstrated an improvement in chronic low back pain at the 12 month mark and an improvement in overall functionality for at least three years on single intradiscal injection.

“By teaming up with Mesoblast for the next generation of pain therapies for chronic low back pain due to degenerative disc disease we are diligently executing our strategy: leveraging promising new therapeutic modalities and addressing patients with high unmet medical needs,” Gabriel Baertschi, CEO of Grunenthal, said in the joint press release.

According to the North American Spine Society, low back pain becomes chronic if the condition persists for longer than three months. Chronic back pain can stem from injury, illnesses, stress or the overall makeup of one’s body. It ranges in what type of pain it is, from bone pain to nerve pain to muscle pain.

In Europe alone, an estimated seven million people live with chronic low back pain as a result of a degenerative disc disease.

When it comes to treating these conditions, Baertschi said that patients of cell-based treatments can benefit from long-lasting improvements beyond symptomatic treatment and that physiological capabilities can even be restored thanks to this treatment method.

“Together with Grunenthal we plan to bring an important new class of therapy for pain management to the many patients suffering with degenerative disc disease,” Itescu said in the release.

While the collaboration is a positive step forward in treating such conditions based on stem cell therapy, earlier this month the US Food and Drug Administration (FDA) issued a warning letter on this overarching method of treatment.

While the agency acknowledged that stem cell treatments can provide treatment options for conditions for which there are little to no treatments, it claims that some patients looking for a cure could be at risk of using treatments that are illegal or harmful.

As such, the FDA said it will be boosting its efforts in enforcing and protecting patients from untrustworthy stem cell clinics.

Currently, the only stem cell-based products approved by the agency in the US are blood-forming stem cells that come from cord blood.

Following the announcement, shares of Mesoblast on the ASX increased 22.34 percent to close the trading session at AUD$1.78. On the NASDAQ, the company’s share price rose nearly 21 percent to US$6.08 as of market close on Tuesday.

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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.



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