Medical research and drug manufacturing company Mesoblast entered into $150 million partnership with German company Grünenthal to develop and commercialise stem cell technology to treat chronic lower back pain on Tuesday.

The partnership deal embarking on Phase III allogeneic cell therapy for the treatment of chronic low back pain from disc degeneration, triggered Mesoblasts’ stocks to sore 21 per cent higher to $1.76 .

Mesoblast chief exective officer Silviu Itescu said the drug will be available for commercial use in two to three years once trials conclude in Europe.

The partnership will see Mesoblast receive up to $US150 million up front, milestone payments proper to product launch and commercialisation milestone payments.

“These payments include commitments up to $US45 million within the first year comprising $US15 million on signing, $US20 million on receiving regulatory approval to begin a confirmatory Phase III trial in Europe, and $US10 million on certain clinical and manufacturing outcomes,” the companies said in a joint release.

Chairman of the Thorney Investment Group and long term Mesoblast investor Alex Waislitz said this partnership with one of the world’s leading pain management company endorsed Mesoblast’s stem cell technology.

Thorney Investment Group’s Alex Waislitz. Peter Braig

“The global market potential for non-opiate based low back pain relief could easily be valued at many billions of dollars annually,” Mr Waislitz said.

“This deal, together with Mesoblast’s platform of other cell based therapies, is in my view, a further indication that Mesoblast will not only reach a multi unicorn company valuation but could eventually become one of Australia’s largest and most successful medical technology export companies”.

Mr Itescu said half of patients with lower back pain use opioids with limited success but “just one injection of 6 million cells the patient will get substantial relief.”

This kind of treatment is unlike opioids which need to be taken daily or steroid injections which wear off. This requires just one injection. The market size is huge because there’s about 3-4 million people with moderate to severe disc disease not responding to therapy in the EU.

Mr Itescu says Mesoblast will share the commercial rights to the EU but will retain full rights when it enters the US market



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