Mesoblast’s CEO will “lead by example” and take a 30% pay cut as the biotech continues to reel from another FDA rejection of its off-the-shelf cell therapy.
The Australian company had “anticipated that remestemcel-L would have been approved by the FDA for the treatment of pediatric steroid-refractory acute graft versus host disease (SR-aGVHD),” CEO Silviu Itescu said in a second-quarter earnings release yesterday.
Mesoblast had asked the FDA back in February to reconsider approval of remestemcel-L for children with SR-aGVHD. The reworked application contained what the company described as “substantial new information,” including efficacy and biomarker data, some of which were compared to a database of patients with aGVHD that the Mount Sinai medical system maintains.
But the biotech revealed earlier in August that it had received another complete response from the regulator, requiring yet more data. Despite previously pushing back againt the FDA’s request to conduct a fresh trial, the company seems to have now accepted the inevitable.
“Following the complete response, a Type A meeting with FDA has been scheduled for mid-September and we will discuss the potential paths to approval via additional potency assay data or new clinical data in adults,” Itescu said in yesterday’s release.
In the meantime, the company has “implemented a significant cost containment strategy and enacted substantial payroll reduction to protect our cash reserves and ensure that we are fiscally prudent,” the CEO added. “Leading by example, I have deferred my entire short term incentives (STI) and reduced my annual salary by 30%, and the same initiatives have been agreed to by our CMO Dr Eric Rose.”
In place of their STIs, Itescu and Rose will receive long-term noncash incentives (LTIs) “to further align with shareholders,” the company explained, adding that all Mesoblast employees would see their STIs deferred. The rest of the biotech’s management have the option of receiving LTIs “in lieu of a 30% reduction in salary.”
Itescu said he was “pleased” that Mesoblast’s nonexecutive directors have agreed to “defer all cash compensation.” They have also signed up to receiving 50% of their fees in LTIs, subject to shareholder approval.
In total, the company is aiming for a 40% annualized reduction in payroll by February 2024 when taking account of base salaries, STI payments and contractor fees. The release makes no mention of any layoffs, and Fierce Biotech has contacted the company to confirm this is the case.
The savings are expected to cover a new trial to try to finally get remestemcel-L over the line. Mesoblast said it’s in discussions with the Blood and Marrow Clinical Trials Network to “conduct a targeted, controlled study in adults with high mortality risk.”
The company was sitting on $71.3 million in cash and equivalents as of the end of June, according to the release.