Mesoblast Limited
Q1 2019 Earnings Call Transcript

Published: 16 Nov 2018

[Operator:]

Hello, and welcome to Mesoblast Financial Update and Operational Highlights Webcast for the Three Months Ended September 30, 2018. An announcement and slide presentation has been lodged with the ASX. These materials will also be available on the Investor page at www.mesoblast.com. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this conference call is being recorded. Before we begin, let me remind you that during today's conference call, the company will be making forward-looking statements that represent the company's intentions, expectations or beliefs concerning future events. These forward-looking statements are qualified by important factors set forth in today's announcement and the company's filings with the SEC, which could cause actual results to differ materially from those and such forward-looking statements. In addition, any forward-looking statements represent the company's view only as of the date of this webcast and should not be relied upon and representing the company's views of any subsequent date. The company specifically disclaims any obligations to update such statements. With that, I would now like to hand the call over to Dr. Silviu Itescu, Chief Executive of Mesoblast's. Please go ahead.

[Silviu Itescu:]

Thank you very much. Good morning and good afternoon to the operational highlights and financial results for the quarter ended September 30, 2018. If we could move straight to slide four please. Mesoblast has a disruptive technology platform, which is based on immuno-selected cellular medicines that are well characterized with respect to both the cells and the mechanisms of action. They have an extensive and robust IP estate, and we target refectory disease types. We've got industrialized, scalable manufacturing processes that allowed us to develop off the shelf delineated products, with batch-to-batch consistency and reproducibility. And we are very mature now with multiple revenue generating products and Phase 3 assets that I'll be telling you more about. On slide five, I think, the importance of understanding that the immuno-selected STRO-1, STRO-3 mesenchymal precursor cells represents the earliest precursor in the mesenchymal lineage and gives us the ability to work with homogeneous populations of cells that have got well characterized receptors, surface phenotypes and mechanism of action. Importantly, to understanding the mechanism of action is that the receptors on the surface respond to a number of prime [ph] inflammatory cytokines that are president disease tissues, resulting in the cells being activated and releasing variety of biomolecules responsible for immunomodulation and tissue repair. So inflammation is core to the mechanism of action of that cells. Slide six, speaks to the commercial translation capabilities our technologies positioned for scalable and industrialized manufacturing. We're able to produce the anticipated commercial quantities of cells necessary to achieve the numbers of products for patients in large volume diseases such as a heart failure and we have proprietary methods for scalability including media formulations and bioreactor technologies. As I mentioned earlier, on slide seven, our global IP estate provides substantial competitive advantages. It covers compositions of matter, manufacturing and therapeutic applications of our cells and allows us to protect our commercial interest for those products that are core to our business, interest and also provides us with the opportunity to work with partners, where we can provide our technology as licenses in areas that are not necessarily core to our interest. Slide eight speaks to our pipeline. And as you can see, it's a rapidly maturing pipeline. The first two products relates to -- the first two products approved in Japan and in Europe for industrialized allogeneic mesenchymal lineage product in Japan for acute graft versus host disease and in Europe for our perianal fistulae. In Japan, that product has already been sold over the last two years by our licensee JCR Pharmaceuticals and in Europe the product for perianal fistulae has been approved and is in the process of launch by commercialization partner Takeda. As you can see below is our advanced product pipeline of products in Phase 3 and in Phase 2, we have three assets that are currently in Phase 3, a product for acute graph graft versus host disease that has completed Phase 3 successfully and is in the process of being prepared for a BLA filing next year. Our product MPC-150-IM for both advanced and end-stage heart failure I'll be talking more about today. In China that product has been partnered with the Tasly Pharmaceutical Group. And our third Phase 3 asset is our MPC-06-ID product for chronic low back pain also has completed the Phase 3 trial. Our recently announced partnership with Tasly focuses on cardiovascular disease in China. We received $40 million on closing, we will receive further cash on regulatory approvals in China, as well as double-digit escalating royalties on net product sales, together with escalating milestone payments on reaching certain sales target in China. We will be meeting with our partner in the short-term to work out the specifics of the program in China the pathway towards Chinese regulatory approvals and we'll be updating the market in due course. Now, I'd like to turn the presentation over to our Chief Financial Officer, Josh Muntner, who will take you through the next few slides. Josh?

[Josh Muntner:]

Thanks, Silviu. Turning now to the financial slides, we're pleased to report a substantial increase in revenue and a strong cash position. Starting with revenue, as shown on slide 11, total revenue for our first quarter for our fiscal year 2019 was $11.6 million, a $10 million increase over the first quarter in the prior year. Revenue included royalties from JCR Pharmaceuticals on sales of TEMCELL for GVHT in Japan. We recorded $1 million of such royalties, up 66% from the prior year's Q1 period. We also recognized milestone payments during the period, specifically we recognized $10 million of milestone revenue from our strategic cardiovascular partnership with Tasly for China. Finally, we received a $0.5 million milestone payment from JCR based on TEMCELL achieving a certain amount of cumulative sales. JCR's ability to continue to grow TEMCELL should bode well for the commercial potential of our late-stage GVHD product. Turning to slide 12, we can look at the remainder of the income statement. While our loss after tax is larger than the amount we reported in Q1 2018. One of the primary drivers of this increase relates to a non-cash difference in the remeasurement of our contingent consideration between the two quarters. In earlier period, we remeasured this contingent consideration creating a non-cash benefit to Mesoblast. There is no such meaningful change in remeasurement in the recent quarters. For further details please refer to our current financial statements found in our Form 6-K filings. Also during the quarter operating expenses increased, including R&D as we continue to make progress in our late-stage clinical trials. Manufacturing due to pre-commercial activities related to our GVHD product. And finally we recorded finance costs during the quarter related to our interest expense on our credit facilities. Slide 13 shows our cash flows for the quarter. Our cash used in the quarter was largely similar to the cash used in Q1 of the prior year. Our cash position is shown on slide 14. We completed the quarter with just over $55 million of cash. Since the end of the quarter, we received $40 million from Tasly, $20 million as an upfront technology access fee, and $20 million as an equity investment. When taken together our pro forma cash position as of September 30, 2018 is $95 million. In addition to this cash an additional $50 million may be available under our existing arrangements with Hercules and NovaQuest. To sum up, we're proud of the quarter's financial performance and the steps we've taken to strengthen the balance sheet to achieve our upcoming milestones. I'd like to hand the presentation back to Silviu now.

[Silviu Itescu:]

Thank you, Josh. I’d like to turn now to operations turn. And if you could turn to slide 17 please. The market opportunity for acute graft versus host disease. This is a life threatening complication that occurs in about 50% of patients receiving an allogeneic bone marrow transplant. Mortality rates in those who do not respond to steroids can be as high as 95%. And there are no approved treatments for steroid-refractory graft versus host disease outside of Japan where our licensee has been very successful in penetrating the addressable market. There are about 30,000 allogeneic bone marrow transplants performed globally, of which about 20% are in children. And we have learned much from the success of our licenses access to Japanese market where the product TEMCELL is reimbursed for up to $195,000 per patient. On that basis we believe that the market opportunity in the U.S. and EU is substantial for our products candidate. So what is the operational update for this product on slide 18. The Phase 3 trial evaluated remestemcel-L in 55 children to improve overall response rate and survival. 89% of the children had the most severe form of the disease grade C/D disease, typically associated with mortality of up to 95%. The study successfully met the primary endpoint of improved overall response highly significance, demonstrated day 100 overall survival of 75% with 87% survival in those who are early responders and that response rate was maintained at 79% through day 180. The remestemcel-L infusions were well tolerated. These findings were very consistent with previous results in 241 steward refractory children with the disease under an expanded access program who also had failed to respond to multiple biologic agents. Remember that in this trial biologic agents were not co-administered. Slide 19, identifies the pathway to market for this product. Preparations are underway for a biologic license application or BLA filing. We intent to have several meetings with the FDA and be in position to file for approval sometime during the first quarter of 2019. We have a fast track designation already and that allows eligibility for priority review and a rolling DLA review process. From a commercial perspective, we will be parallel tracking planning for pricing reimbursement and product launch and we have learned much from our partner’s ability to sell stem cell in Japan and that is informing much of our commercial strategy in the U.S. Rapid adoption within two years of launch has been demonstrated and there is continuing growth in royalty income through sales in Japan, which make us feel that this is a terrific opportunity for Mesoblast in the U.S. and Europe markets. Now let's move on to our heart failure program. Slide 21 shows that the patient journey over the years from early-stage heart failure to end-stage heart failure. There were as many as 8 million patients in the U.S. alone with chronic heart failure and these patients progress over time to Class III and Class IV or advanced and end stage. Our product candidate, MPC-150-IM has been specifically developed to target those patients in those advance forms of disease in Class III, Class IV and end-stage. Those patients have very few if any alternatives and they failed all drug therapy to get through to that point in time. So let’s talk about our opportunity in end-stage heart failure patients with left ventricular assist devices or LVADs. In the U.S. alone there are about 250,000 to 300,000 patients annually who suffer from advanced disease or Class IIIb-IV disease. 50,000 of these patients are in end-stage and they have at least -- they have a 50% mortality in the absence of getting a heart transplant, which is only available in about 2,000 patients or in the absence of getting an artificial heart or an LVAD. LVAD in fact have improved survival, but morbidity remains very high with patients having at least two hospitalizations annually. The number one cause of hospitalizations in these patients is gastrointestinal bleeding. Such device related hospitalizations on average cost about $46,000 per patient per hospitalization. So we believe that a treatment that will improve the outcomes of these patients keep them out of hospitals and reduced morbidity has a substantial market opportunity. Slide 23 is a summary slide from the official Interagency Registry for Mechanically Assisted Circulation or INTERMACS, which shows you the lead causes of hospitalizations in these patients. The number one cause by far is major bleeding events. And predominantly in that is gastrointestinal bleeding. Now, the reason for gastrointestinal bleeding being a major cause of hospitalization of these patients is identified in slide 24. Heart failure generally is associated with significant inflammation. When a patient is given an LVAD, the inflammation in the heart is substantially increased because of the nature of the foreign body being the LVAD. But significant increase in inflammation doesn’t happen just in the heart, but also happens in the rest of the body and invokes the vasculature in various organs. In the gastrointestinal tract, the inflammatory response result in abnormal blood vessels that don’t behave normally, are very thin and tend to bleed very easily. These patients are also on anticoagulants permanently because of the nature of the artificial heart. That combination of abnormal blood vessels in the gut from inflammation and anticoagulation, results in a heart frequency of severe gastrointestinal bleeding and hospitalizations. We believe that a therapy that targets central major inflammation in the heart in the setting of LVAD implantation will have a benefit not only in the heart itself, but in the vasculature in the gastrointestinal tract. So this was tested in a post-talk analysis of 30 patient trial performed several years ago in collaboration with the National Institutes of Health. Slide 25 demonstrates in those 30 patients, 20 of whom received one injection into myocardial of MPCs, 10 of whom received the sham control. And what you see here is a significant reduction in the proportion of patients undergoing major gastrointestinal bleeding and hospitalizations. The majority of these events in the control population occurred within the first 100 days and they were significantly reduced in the MPC-treated patients. In addition, there was an overall reduction through the six months of hospitalizations and the rate of bleeding was significantly reduced. On the basis of these and other preliminary data from this part of the study, we submitted for approval under the 21st Century Cures Act in October of last year for a regenerative medicine advanced therapy designation. This is a new path for approval of cellular medicines, which are intended to tread, modify or reverse, or even cure a serious or life threatening disease or condition. We were fortunate to receive RMAT designation for the product in treating complications of patients with LVAD and the designation was based on the pilot data. The key benefit of this designation are very similar to breakthrough designation. In that they include potential eligibility for priority review and accelerated approval potential to utilize surrogate data endpoints for accelerated approval and potential to utilize patient registry data a source of real world evidence for post approval studies. So together with our partners at the NIH, a second study commenced after the first pilot study. And the second study was in 159 patients 2 to 1 randomized to either cells will sham in patients with end-stage heart failure and an LVAD placement. Let's turn to slide 27. Here you can see now prospectively defund endpoints of bleeding was significantly achieved in this trial. In the Kaplan Meier analysis on the right, you see again a significant reduction of about 75% in overall incidence of bleeding episodes relating to hospitalization in the cell treated compared to the control patients. On the left hand side, you see the overall rate of major GI bleeding was reduced by approximately four fold in the MPC treated patients compared to controls over the six month period of follow-up. On Slide 28, you see the causes of -- all causes of hospitalizations in these patients. And importantly hospitalizations from GI bleeding was significantly reduced by about three fold in the MPC treated patients compared to the controls. Whilst overall all hospitalizations were numerically decreased in the cell treated patients, they were not significantly decreased. And that's because other causes of hospitalizations such as infections, device malfunction, neurologic dysfunction, all of which are related to the device itself obviously would not be expected to be impacted by our cells. Now when we look on slide 29 at the trial’s primary endpoint of temporary weaning, temporary winning meaning over 20-minute period if the LVAD is turned down, not off, but turned down is the patient able to tolerate. What you see in fact is that cell treated patients were not significantly better than controls overall. However, what is clear is the control right of weaning somewhere between 59% and 66% was about 3 times higher than was seen in controls in the pilot study. What that implies is that the patient populations that were recruited were not the same. And in fact, we know that there was an over representation in this trial of bridge to transplant patients relative to the pilot trial. Those patients in general are about a decade younger than destination therapy patients, are more robust and presumably are somewhat easier to wean. Nonetheless if we go to slide 30. When patients were stratified on the basis of pre-specified, major subgroups. What we saw was that the ischemic heart failure population, which is predominantly older, predominantly gets a destination therapy device for permanent implant. We saw that in this patient population cell therapy -- our cell therapy significantly increase the proportion of patients who were successfully weaned. And indeed the control patients here had a much lower weaning rate than control patients who had bridge to transplants, indicating that these are the hardest to treat patients and it is the same patient population that predominant in the pilot trial where the MPC therapy was successful overall. Most importantly, this patient population ischemic heart failure is the predominant patient population that's represented in our ongoing 600 patients Phase 3 trial that is 85% percent already enrolled. And on that basis we feel that this is a very important signal that we've seen in this particular trial. So if we go to slide 31, the conclusions of this trial, the results of which were recently presented at the American Heart Association are as follows. The trial succeeded in achieving the clinically meaningful outcome of a reduction in gastrointestinal bleeding and related hospitalizations. The results confirm the previous pilot trial, which also demonstrated significant reduction in GI bleeding and hospitalizations in these cell treated patients. The pilot trial results had formed the basis for the FDA RMAT designation, which was granted to us in December of 2017. And recall that the RMAT designation aims to expedite the development of regenerative therapies intended for the treatment of serious and life threatening conditions. The company as a result intends to meet with the FDA during the first half of this coming year 2019 to provide full study data and discuss the pathway to potential BLA filing using reduction in GI bleeding and related hospitalizations as an approvable regulatory endpoint. While the trial did not meet the overall primary endpoint of temporary weaning MPC-150-IM treatment did significantly improve weaning in the 44% of patients who had chronic ischemia heart failure. These patients very closely resemble the majority of the patients enrolled in the ongoing Phase 3 trial of approximately 600 patients with moderate and advanced heart failure. Now let's move on to the third of our Phase 3 programs, MPC-150-IM for moderate and advanced heart failure market. This is a much bigger market of course than end-stage heart failure. Majority of these patients die within five years despite having access to all other approved drugs. The greatest need is in class three heart failure where the event rate is highest and we believe this is a tremendous opportunity for the company and everything that we have learned to-date gives us great confidence in this target opportunity. Where are we with our Phase 3 program in advanced heart failure patients. More than 85% of the patients enrolled in this trial have been achieved. Recall that this is an events driven trial overall. And whilst we target about 600 patients more important is that -- is obtaining the total number of events that the FDA deems appropriate, a pre-specified interim futility analysis of the trial's efficacy primary endpoint in the first 270 patients were successfully achieved in April 2017. And as recently as last month 2018 the data monitoring committee reviewed all of this they reviewed safety and efficacy data in this trial and recommended continuation of the trial without modification having seen data from the first 526 randomized patients and that includes the primary and secondary endpoints of major hospitalizations, terminal cardiac events and all safety data. As I said earlier using all of the information we have to-date, we'll be meeting with Tasly in short order to plan and map out what a Phase 3 program in China would look like. Using a very similar patient population as this is in our current Phase 3 trial. And our plan is to leverage U.S. and global Phase 3 trial results, including trials that we will be performing with Tasly for global regulatory submissions. Now, I'd like to move to slide 35, which is our final product in Phase 3 MPC-06-ID being developed for chronic low back pain due to degenerative disc disease. And this program takes on even greater emphasis now given the opioid crisis that is evolving before us. The burden of illness is substantial as we're all familiar with, in particular this is in relatively young patients in their 40s and 50s who have a significant impact on their work, work abilities. There are minimal treatment options for patients who fail conservative therapy and today opioids for surgery represent the only alternatives. The unmet need is great and we believe that if we're successful this represents a substantial multi-billion dollar opportunity. Our Phase 3 study completed enrollment in March of this year over 400 patients were enrolled across 48 sites predominantly U.S. as well as Australia, patients were randomized to receive either sailing saline or 6 million cells with hyaluronic acid as the formulation was in Phase 2 or 6 million cells without hyaluronic acid to demonstrate whether or not the additive is necessary or not. The primary efficacy composite is looking to achieve a durable improvement in pain and function without any additional intervention. And we'll be updating the market in due course. Finally, I'd like to go to slide 38, which speaks to the upcoming corporate milestones. For our product for graft versus host disease. I’ve mentioned earlier we successfully met all of our clinical endpoints that were required for FDA filing. We will be having as I mentioned additional meetings in pre-BLA confirmatory meetings with the FDA and have a plan in place for a filing during the first quarter of 2019. With respect to our product for advanced and end-stage heat failure MPC-150-IM, we've talked about the data results as presented at the American Heart Association for end-stage heart failure patients and the events driven trial continues to enroll coming to completion in relatively short order. The back pain program we've talked about, we've completed non-dilutive transactions for commercialization of remestemcel-L, which has strengthen our balance sheet. We've established regional strategic partnership with Tasly on cardiovascular asset and we are working significantly to enter into additional global partnerships for back pain in cardiovascular assets in particular. And with that note, I think, I'd like to open this to any questions you may have. Thank you.

[Operator:]

Thank you. [Operator Instructions] Your first question comes from Mark Breidenbach with Oppenheimer.

[Mark Breidenbach:]

Hey, good morning and thanks for taking the questions. Just two quick ones for me, with regard to enrollment in the Phase 3 heart failure trial, it sounds like we're getting really close to completion of enrollment. Is it too early to project when top-line data will be available from the study?

[Silviu Itescu:]

Remember, it's an events driven trial. So there is a minimum number of events that the FDA requires the trial to achieve. It's not so much the total number of patients it's how many events occur and of course it has a therapeutic benefit and those events rates will be somewhat slower than would be seen normally. We need to review the total number of events and be able to update the market in due course, but we’re certainly very close to achieving the pre-specified minimum number of patients.

[Mark Breidenbach:]

Okay. And with regard to product registration in Class IV heart failure, let’s assume that the FDA goes along with an accelerated approval pathway with GI bleeds as a surrogate endpoint. What do you imagine they would ask for as a confirmatory trial following an initial approval?

[Silviu Itescu:]

Yes, Mark, first of all GI bleeding and hospitalization is not a surrogate endpoint. It is a key clinically meaningful endpoint that the FDA has identified as very important and a major unmet need in these patients. So the real question is whether we have sufficient data in two trials that have been confirmatory of each other. One with a post talk analysis the 30 patient study. And one with a pre-specified analysis in 159 patients. We'll be sitting down with the FDA and have exactly that discussion with a full dataset in front of us. I think the key elements here are that it is a major unmet need it's probably the number one cause of morbidity in this patient population. The patient population per se is an orphan one. And so it is not easy to reproduce these large trials in such an orphan population. And the results have been very confirmatory and very similar in nature. And so I think that will be the argument. The question then will become what kind of -- if we're fortunate enough to have a positive outcome from the discussion with the FDA, what kind of post-marketing obligations would we have. It could very well be another confirmatory study or it could a registry study. And those are all options under the RMAT designation.

[Mark Breidenbach:]

Okay, got it. Thanks for taking the questions.

[Operator:]

Your next question comes from Jeffrey Cohen with Ladenburg Thalmann.

[Jeffrey Cohen:]

Hi, Silviu and Josh. Thanks for taking the questions. Just a couple if I may. So first off, Josh, could you clarify the $10 million recognized this quarter from Tasly. So the total was $20 million in the form of cash plus $20 million in the form of equity. Could you clarify the price and time with the equity and also was the $10 million representative of the first half of the cash portion?

[Josh Muntner:]

Sure. So the $10 million is representative of a portion of that upfront milestone payment, the rest will be recognized over time. And the $20 million of equity that came in, I believe that prices $1.86. We have had it in the deck, but we pulled it out of the deck just to try to simplify things. I’m pretty sure it’s $1.86.

[Jeffrey Cohen:]

Okay. And the additional shares were represented in this quarter?

[Josh Muntner:]

We can provide the share count immediately after the call. I believe it’s in the 6-K that’s filed as well.

[Jeffrey Cohen:]

Okay, got it. And Silviu, can we talk a little bit about lower back pain, so the MPC trial. So could you talk about just hypothesize with us as far as in actual practice for our degenerative disc disease. How do you pursue this reading out as far as real world and treatment paradigms prior to or after or in combo with artificial disc?

[Silviu Itescu:]

Sure, thanks for asking that question. The target patient population is very different from patients who require an artificial disc. We are at the other end of this extreme. So entry criteria into this Phase 3 trial required patients to have severe pain, have failed conservative therapy including steroid injection, but have no more than 30% loss in described by X-ray. Now as you know, an artificial disc requires much more severe structural loss. So, an artificial disc with Spinal Fusion for example are offered at the other extreme, the end-stage. We’re positioning this product in the much earlier framework. And in fact, we would like to see this product used before anybody offers opioids to patients. That’s where I think it’s going to fit. And if you look at our Phase 2 data, as many as 50% of patients who get a single injection into the intervertebral disc have no pain for up to two years. That kind of durability in pain is -- really has never been seen with any other kind of treatment. When we’re talking about the effects of opioids or non-steroidal drugs, they are reported in terms of three to four months of follow up at best and the levels of improvement in pain are fairly modest. Certainly nowhere near the levels of pain improvement that we see with a single injection of ourselves. So if we’re successful in this Phase 3 program, we have the chance to position in the patient journey relatively early, ahead of opioids and well ahead of any artificial devices or other such technologies.

[Jeffrey Cohen:]

Okay. Is there some imaging being done along with trial that may give some clues or suggestions as far as if the disc is actually being regenerative over time throughout the 24 month period?

[Silviu Itescu:]

Yes. So we’re certainly getting MRIs and X-rays. In the Phase 2 trial we saw evidence that over a three year period there was a stabilization if you will or less of a decline in X-ray disc height loss in the cell treated than the cell in controls. We hope to see the same pattern in this Phase 3 program. I would say that as you know, MRI is not a validated technology here. We probably go one of the largest databases of the natural history over a three year period of what the discs look like in these patients. And remember that that these patients have relatively early degeneration. What I can tell you is that in control patients over a three year period MRIs don't seem to change much. So whether we see a substantial difference by MRI I don't know, but X-ray disc height is certainly something that I hope to see a difference in. In addition to that, I think, what is notable is a severe degree of pain despite the relatively moderate degree of structural disease, which goes to the heart of the mechanism of action. Why does such patients have such severe pain. Most likely because they have severe inflammation in the middle of their disc. The inflammatory process in the disc activates nerves, activates blood vessels and that results in acceleration and prolongation of the severity of pain. And while we have seen in phase two over three years is quite a dramatic and durable reduction in pain. Even with that the terrible structural deformity that didn't exist in these patient in the first place. So fundamental to where I think the cells are working is by switching off severe inflammation and having an effect on the effect of pain for a prolonged period.

[Jeffrey Cohen:]

Okay, perfect. Thanks, Silviu, I appreciate it.

[Silviu Itescu:]

Thank you.

[Operator:]

Your next question comes from Tanushree Jain with Bell securities.

[Tanushree Jain:]

Hi, Silviu and Josh thanks for taking my questions. Josh a quick one for you first, you were supposed to receive EUR 5 million payment from Takeda, is that still slated for this half?

[Josh Muntner:]

It’s expected in December.

[Tanushree Jain:]

In December. Great. And so just on GVHD, could you talk a little bit about the label expansion with the adult subset who are lever and got fit and what's the plan there. What are the timelines then, what do you expect would be the natural course to develop the product for that?

[Silviu Itescu:]

Yes, so obviously the definitive trial design requires agreement with the FDA. And those are part of the discussions that we'll be having this month and next month as part of the overall pediatric approval process. But you are quite right, we plan to be targeting the high risk adult population meaning steroid refractory with predominantly liver and gut disease. One thought process is an open label registry study.

[Tanushree Jain:]

Yes, thank you.

[Operator:]

[Operator instructions] Your next question comes from Jason McCarthy with Maxim Group.

[Michael Okunewitch:]

Hey guys, Michael Okunewitch on for Jason, thanks for taking my question. So I figured some discussion of MPC-06 to be topical considering the 2018 FDA meeting on analgesic drugs is occurring today. In the briefing documents they actually focused on opioid sparing and replacing analgesics. But one of the key concerns was under management of pain as a result. So what I was wondering could MPC-06 potentially enable the use of these less effective opioid sparing painkillers, while managing pain to the same or even greater degree? And then do you think considering that regulators may take a more positive view especially when lower back pain is responsible for so many opioid prescription.

[Silviu Itescu:]

Thanks for that question. And I think I totally agree with you. The kind of pain management that we're seeing with a single injection of our cells is quite -- is very impressive actually. And I think that the question is where these treatment will be positioned overall in the armamentarium. Obviously opioid sparing agents of the non-steroidal class or other novel classes would be cheaper and would be used earlier. I think that we would see our cells as being used initially in those who failed those kind of more conservative approaches. And then you'd have our cells as the next in line as an opioid sparing agent with potency. And I think there are additional agents that approved already as opioid sparing agents than I could imagine combinations of those together with our cells to really enable complete avoidance of opioids.

[Michael Okunewitch:]

Thank you. And then just do you think you could give us an update as trial and help us understand the timelines considering that next March all the patients who have been enrolled for 12 months?

[Silviu Itescu:]

Yes, absolutely. We are having ongoing dialogue with the FDA around precisely this, how much data, how long a follow up do we need, particularly given the new environment with the opioid crisis. And, I think, I have to be frank this is an evolving discussion. And I'd like to sort of leave at that, we will update the market when we have further clarity from the FDA.

[Michael Okunewitch:]

All right, thank you very much.

[Operator:]

That brings us to the end of today's call. I'll now hand back to Dr. Itescu for closing remarks.

[Silviu Itescu:]

I’d like to thank everybody for being on this call. And we thank you all.

[Operator:]

That does conclude our conference for today. Thank you for participating. You may now disconnect.