Mesoblast - Earnings Call - H2 2025

Transcript

Speaker 7

Hello and welcome to the Mesoblast financial results for the full year ended June 30, 2025. An announcement and presentation have been lodged with the ASX and are also available on the home and investor pages 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 in such forward-looking statements.

In addition, any forward-looking statements represent the company's views only as of the date of this webcast and should not be relied upon as representing the company's views of any subsequent date. The company specifically disclaims any obligations to update such statements. With that, I would like to turn the call over to Dr. Silviu Itescu, Chief Executive of Mesoblast. Please go ahead.

Speaker 6

Good afternoon, good morning, to the Mesoblast financial results and operational update for the full year ended June 30, 2025. My name is Silviu Itescu. I'm Chief Executive of Mesoblast. On the line with me are Andrew Chaponnel, our Interim Chief Financial Officer, and Marcelo Santoro, our Chief Commercial Officer. We can go to slide four, please. This slide is a snapshot of our company profile. Mesoblast has an FDA-approved product, Rheoncel, which is the first and only FDA-approved mesenchymal stromal cell in the United States. We have over 1,100 patents and patent applications globally for our platform technology. We have two additional assets in phase 3 trials. We have FDA commercial scale manufacturing capabilities, and we've built out a U.S. commercial organization. Next slide, please. Our platform technology is based on a shared mechanism of action across all of our products.

Our mesenchymal lineage stromal cells respond to and are activated by multiple inflammatory cytokines through surface receptors on these cells, which result in orchestration of an anti-inflammatory cascade as a result of multiple factors that mesenchymal stromal cells secrete. That's the basis for our products, which address major diseases of inflammation. Next slide, please. On this slide is a snapshot of our mesenchymal stromal cell product portfolio. We have two platform technologies. One is called Remi Stem Cell, our first-generation technology, and our second-generation technology, which is called rexlemestrocel-L. Rheoncel, a branded product approved for pediatric steroid-refractory acute graft versus host disease and launched in the past quarter, is our lead product on the Remi Stem Cell platform technology. It is also being developed for adult steroid-refractory acute graft versus host disease and inflammatory bowel disease.

The rexlemestrocel-L platform technology, which uses monoclonal antibodies to isolate a more pure and more homogeneous cell population, is in phase 3 in two large areas: inflammatory chronic heart failure and chronic low back pain due to inflammation of the vertebral discs. More about that later. Next slide, please. This slide identifies the addressable annual market opportunity for our product portfolio. Rheoncel, the first mesenchymal stromal cell (MSC) therapy approved by the FDA, is on the market and has been launched for treatment of children with acute graft versus host disease (GVHD), with the potential for label extension in adults with acute GVHD of high severity. This addressable market is approximately $1 billion. Biologic refractory inflammatory bowel disease, which represents an extension of the label opportunity, has more than $5 billion in an addressable market.

Heart failure with reduced ejection fraction for our rexlemestrocel-L product has a more than $10 billion addressable market. Chronic low back pain is similarly positioned for more than $10 billion as an annual market opportunity. We have multiple additional multibillion opportunities from existing and future product pipeline based on our technology platforms. Next slide, please. We're very pleased with a successful commercial launch to date of Rheoncel. In December 2024, Rheoncel became the first and only FDA-approved MSC product in the United States. Rheoncel became commercially available for purchase March 28, 2025, within a quarter of receiving FDA approval. Since launch, we've onboarded 32 transplant centers across the United States. We aim to, by the end of this quarter, have onboarded the top 45 centers that account for 80% of pediatric bone marrow transplants in the United States.

Coverage for Rheoncel continues to expand with over 250 million lives in the U.S. insured by commercial and government payers. Importantly, Medicaid coverage exists for both federal and all states, and it was mandated on July 1 of this year. Next slide, please. Now I'd like to move to our financial results for the period ended June 30, 2025. Next slide. Financial highlights for this year are as follows. Revenue from our cell therapy products was $17.2 million, up 191% on the prior year. We're delighted that this growth in revenue was driven by the successful launch of Rheoncel in the final quarter of the year, with $13.2 million in gross sales and $11.3 million in reported net sales after a 14.6% gross to net adjustment.

Net operating cash spend for the year was $50 million, very similar to the prior year, and this is despite the fact that we've invested in costs related to the commercial team build-out and activities around product launch. Our cash on hand as of June 30 was $162 million U.S. or $247 million Australian. Now I'd like to have Andrew take us through some details on the financial results.

Speaker 4

Thanks, Phil.

Speaker 6

Next slide.

Speaker 4

Turning to slide 11, we have the financial results for the year ended June 30, 2025. All numbers are reported in U.S. dollars. Total revenues on cell therapy products are up 191% on the prior year. Cost of revenues related to product sales were $1.2 million, which is 10% of net product sales and a gross margin of 90%. Additionally, cost of revenues also included $3.9 million of expenses related to non-cash amortization of the intangible value of our prior MSC asset acquisition. Selling, general, and admin expenses were $39.3 million for FY 2025, an increase of $14.3 million on FY 2024. This increase related to our commercial team build and product launch. For revaluation of contingent consideration, we recognized a loss of $14.9 million in FY 2025 at non-cash revaluation of potential future third-party payments.

The revaluation of warrant liability as a result of FDA approval of Rheoncel and the consequential share price appreciation resulted in us recognizing a warrant remeasurement loss of $5 million in FY 2025 compared to a gain of $0.8 million for FY 2024. Back to you, Silvi.

Speaker 6

Thank you. Next slide. Let me take you through where we are with Rheoncel for children with acute graft versus host disease. This is the first and only mesenchymal stromal cell therapy approved by the FDA. Next slide. More than 30,000 allogeneic bone marrow transplants are performed globally, of which 10,000 to 12,000 are performed in the U.S. About 20% of these transplants are pediatric, and about 40% to 50% of transplants, whether in children or adults, result in a devastating disease called acute graft versus host disease, which, when it occurs, involves the skin, the gut, and the liver. In the more severe forms, involving severe liver and gut disease, it can be associated with 70% to 90% mortality.

About 50% overall of acute graft versus host disease patients do not respond to steroids, and for these in the pediatric age group, Rheoncel is the only FDA-approved product for these children. Next slide, please. The results from our pivotal phase 3 trial that underpinned the successful approval of the product, Rheoncel, is highlighted in this slide. In a 54-patient single-arm, multicenter phase 3 trial across the U.S., the overall day 28 response rate, the primary endpoint of the trial, was 70%. This study enrolled almost 90% of patients with the most severe forms of disease, grade C and grade D, which typically does not respond to other agents and is associated with high mortality. Next slide, please.

In fact, the long-term survival in a follow-up study from the International Blood and Bone Marrow Transplant Research Registry showed that despite the severity of the grade in most patients at baseline, as many as almost 50% of patients were alive at four and five years out, and only 14% had died due to acute graft versus host disease. In other words, the early response that we saw in the majority of patients translated into durable long-term survival and essentially cure of the underlying disease, GVHD. Next slide, please. Importantly to understand is that in patients with GVHD who ultimately die of this disease, the cost of treatment, inclusive of intensive care use, is very high.

In fact, the child who has acute GVHD and is treated well with our therapy and is able to be discharged from the hospital costs about $1.8 million less than a child with acute GVHD who is untreated and ultimately dies. A substantial cost saving per patient. Next slide. These benefits are even more pronounced when one considers that this is a long-term cure of these patients. The total benefits of patient outcomes using Rheoncel range from $3.2 million to $4.1 million when comprising long-term survival benefit, cost offsets, and cost savings. This uses a quality of life years gained analysis. Next slide. Beyond pediatric GVHD, we actually have a very clear label extension strategy to expand the use of Rheoncel in adult patients with GVHD. Most of the sites that have already onboarded Rheoncel for use in children with the disease also perform adult bone marrow transplants.

In fact, we have an active compassionate care program to provide Rheoncel to adults with steroid-refractory acute GVHD who have failed other therapies. Adults with this disease have a high rate of non-responsiveness to second-line agents such as ruxolitinib. Survival in those with GVHD who have failed at least one additional agent, such as ruxolitinib, remains as low as 20% to 30% by 100 days. In contrast, in our compassionate care program, in 25 patients aged 12 and older with steroid-refractory GVHD who failed ruxolitinib or other second-line agents, survival at 100 days was 76% when Rheoncel treatment was used under expanded access.

We recently met with FDA to discuss a pivotal trial design for Rheoncel in adults with severe acute GVHD, and we intend to conduct a pivotal study of Rheoncel on top of approved second-line therapy such as ruxolitinib in patients with severe steroid-refractory GVHD, such as grade C/D or other characterization of severity. This trial will be conducted with the NIH-funded Bone Marrow Transplant Clinical Trials Network, the BMTCTN. The objective is to extend the product's label from children to adults with this devastating disease, enabling Rheoncel to be used in a population approximately three times larger than the pediatric population that it's currently approved for. Next slide, please. Beyond adults with acute GVHD, we intend to expand the label into other indications of inflammation. Next slide, please. Inflammatory bowel disease, notably ulcerative colitis and Crohn's disease, are two areas that we believe Rheoncel has a place.

More than 3 million people across the U.S. alone have inflammatory bowel disease. Amongst these patients, 38,000 new cases of ulcerative colitis and 33,000 new cases of Crohn's disease are diagnosed every year. There is a substantial unmet need of about 30% of patients who remain unresponsive to biologic agents such as anti-TNF agents or some of the newer monoclonal antibodies. Up to 80% of patients with medically refractory Crohn's disease, 20% of patients with ulcerative colitis that's non-responsive eventually require surgical treatment of their disease. What is really needed right now is early and durable remission, which remains a major objective for new therapies in order to avoid the longer-term complications and ultimately surgery in these patients. Next slide, please. Mesenchymal stromal cells have had a long history of being evaluated as potential therapeutic uses in patients with inflammatory bowel disease.

More recently, local administration of mesenchymal stromal cells has been shown to be safe and to improve outcomes in diseases such as ulcerative colitis and proctitis. On this slide, I show you the summary of a pilot study performed in Europe using mesenchymal stromal cells in patients with ulcerative proctitis, which occurs in about 30% of patients in isolated conditions in ulcerative colitis. In these 13 adult patients with biologic refractory inflammation, local administration into the rectal mucosa of 20 to 80 million allogeneic bone marrow-derived mesenchymal stromal cells was performed under endoscopic injection. As you can see on this slide, by six weeks, mean clinical and endoscopic scores significantly improved. The objective is to achieve remission as early as six weeks. Next slide, please. More recently, local administration of Rheoncel was shown to improve outcomes in patients with biologic refractory extensive colitis.

In a 12-patient pilot study of biologic refractory inflammation of the colon, local administration of Rheoncel, a single dose, resulted in clinical and endoscopic responses and remission by six weeks. As you can see in the pictures on the right, in panels A and B, significant inflammation of the mucosa in a patient with ulcerative colitis extensively involving the colon is clearly evident. In contrast, six weeks later, panels C and D, you can see that the inflammatory protrusions have disappeared. This is endoscopic evidence of remission. In addition, in patients with Crohn's colitis of the large bowel, the improvement in endoscopic and clinical outcomes was accompanied by reduced serum biomarker of inflammation called calprotectin. The calprotectin levels are consistent with rapid mucosal healing and disease remission.

You can see in the pathologic figure at the bottom, on the left-hand side, the colonic mucosa in active disease is full of inflammatory cells and destruction of the crypts. Six months later, on the right, a repeat endoscopy and biopsy showed total resolution and healing of the mucosa in the patient with refractory colitis. On the basis of these results and the fact that we've previously shown that intravenous Remi stem cell resulted in early remission within four weeks following multiple intravenous infusions in patients who had failed a prior biologic, we plan to initiate a pivotal study of Rheoncel for early remission in patients with medically refractory inflammatory colitis, and we'll be updating the market in due course. Next slide, please. Now let me move to our second-generation product, rexlemestrocel-L. This is based on monoclonal antibody isolation and extraction from bone marrow.

Chronic low back pain due to degenerative disc disease is a major problem. It impacts more than 7 million people across the United States. There are minimal treatment options for patients who do not respond early to conservative treatments or to anti-inflammatory drugs. In fact, 50% of opioid prescriptions across the United States are for chronic low back pain, exactly this patient population. We are very much aware of the opioid epidemic and the many patients who are dying because of opioid abuse and overuse. There's an urgent need to have a durable improvement in pain and avoid the opioid use that is currently causing terrible pain and suffering across the United States. Next slide, please. Slide 25. This slide identifies the patient journey of patients with chronic low back pain refractory to standard treatment. As I've highlighted, there are minimal options available for these patients.

After you've gone through physical therapy, chiropractic, acupuncture, and non-steroidal anti-inflammatory drugs, there's only opioids. Other than opioids, the other potential treatments are interventional therapies that involve interventions with radiofrequency ablation, spinal cord stimulation, etc. Epidural steroids typically have short-term benefit only. Ultimately, these patients, after many years of suffering, come to spinal fusion or disc replacement surgery. We believe that rexlemestrocel-L can target these patients very early, usually as early as six months after failure of conservative treatments, although, of course, in our clinical trials, patients have been referred after years of struggling with severe pain. Slide 26, please. This slide summarizes the outcomes in our previous phase 3 trial based on a single injection of rexlemestrocel-L together with a hyaluronic acid carrier to maintain the cells within the disc space.

If you just focus on the green at the top, it is the mean change in pain from baseline in patients who received placebo at 6, 12, 18, and 24 months, relatively static. In contrast, if you look at the red line at the bottom, you see quite a dramatic reduction in pain at 12 months and then maintenance of that significant difference in pain modulation for as long as 36 months from a single injection. Next slide, please. Let me move to rexlemestrocel-L for heart failure. Again, a snapshot of this in this space. Slide 28. Heart failure with reduced ejection fraction also continues to be a major problem, increasing in prevalence and risk of mortality and heart attacks and strokes.

Over 60% of patients with chronic heart failure have underlying ischemia, and these patients are at highest risk of recurrent major adverse events involving the large vessels such as hearts and strokes. Slide 29. This complex slide really just focuses on, again, the patient journey. Patients progress from early stage disease, class one, moderate disease, class two, and then to class three and class four. We target the most severe patients where inflammation progresses to class three and class four and ultimately death. In these patients, we've completed two phase 3 trials, both randomized controlled trials with endpoints that have demonstrated that in patients with inflammation, we can reduce the endpoints of severity and reduce mortality. Next slide, please.

Slide 30 demonstrates on the left-hand side that compared to controls, we significantly reduced in a pivotal phase 3 trial, both in patients with inflammation on the left-hand side as measured by CRP, on the right-hand side as measured by IL-6, the severe risk of mortality quite dramatically over a five-year period of follow-up. Next slide, please, 31. In this slide, we summarize the overall results in a 500-patient randomized controlled study where you see that on the left-hand side, the two-point MACE, heart attack or stroke, and on the right-hand side, heart attack, stroke, or death are progressively decreased as you move from all patients to those patients at highest risk, those with ischemia and inflammation.

What this essentially tells you is that the patients who are at the greatest risk of mortality are precisely those patients who are most likely to respond to a single injection of rexlemestrocel-L into the left side of the heart. On the basis of these data, we met with the FDA last year. We met with the FDA again most recently this year in type B meetings, and the FDA stated the totality of the trial results from these two studies could support an accelerated approval pathway under the existing RMAT designation of the program. We met recently and aligned on items required for filing a biologic license application for Revascor regarding chemistry, manufacturing controls, potency assays, and the proposed design and primary endpoint for a confirmatory trial should approval be obtained. If we could now go to the final slide, slide 34.

This identifies our corporate milestones and updates on expected deliverables in the coming 12-month period. For pediatric and adult inflammatory diseases, Rheoncel will commence a registration trial for label expansion in adults with GVHD and will initiate a study for inflammatory colitis. For chronic heart failure in adults with low ejection fraction, we're preparing for an accelerated approval filing for Revascor. Finally, for rexlemestrocel-L in chronic low back pain, a confirmatory phase 3 trial is actively enrolling across multiple sites in the U.S. to confirm the data that we showed in the first trial, which is to reduce pain at 12 months as the trial's primary endpoint. It is a placebo-controlled trial with a 12-month follow-up following the completion of the last patient enrolled, which we expect to happen toward the end of this year or during the first quarter of next year.

On that basis, I think I'll say thank you for listening to us, and I'd like to open this call to questions.

Speaker 7

Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're using a speaker phone, please pick up the handset to ask your question. Your first question today comes from Edward Tenthoff with Piper Sandler. Please go ahead.

Speaker 3

Okay. Thank you very much. It's a great one on the progress. I'm really excited to see Rheoncel sales coming off. I wanted to get a sense from you guys. You laid out how the opportunity in that proposal is. How long do you think it might take for label expansion under one that seems to have failed? Thank you.

Speaker 6

Thanks, Ted. I think you asked how long it might take for label extension to occur in adults. Look.

Speaker 3

Yeah, sorry for the background noise. Thanks.

Speaker 6

The objective is to commence an adult acute graft versus host disease (GVHD) trial this quarter. We are working with the Bone Marrow Transplant Clinical Trials Network, which is an NIH-funded organization. They will conduct the trial under their auspices. We'll provide product, and we will contribute to funding. The objective is to add our product on top of existing second-line agents, ruxolitinib being the only approved therapy in patients with severe disease. Those patients with grade CD disease where ruxolitinib does not adequately address the requirement of these patients, we think that our product will substantially add to the early responses and overall survival. We expect to initiate this study this year, and we'll come back with specific dates and duration.

Speaker 3

Great, thank you. Can you give us a little more color on how the back trial, the phase 3 chronic low back pain trial, is coming?

Speaker 6

Sure. This is a huge opportunity for us and a tremendous unmet need, both from the point of view of disability, chronicity, and the ability to generate a product that reduces or completely abolishes any pain in these patients for at least two to three years from a single injection. As important is the fact that as many as 40% of patients in this category are forced to take opioids as the only alternative. If we can result in opioid avoidance, it's incredibly important at this moment in time. In fact, in our first phase 3 trial, we saw three times as many patients able to come off opioids in the treated patients as in the controls, despite being told not to change their medication during that trial.

We are very optimistic that we will see the same sort of outcomes in this study. We have been ramping up the study over the past few months in terms of increasing the number of sites. We are now at almost 40 sites enrolling across the U.S. As we increase sites, enrollment picks up. We have made various adjustments to the protocol design so that we are able to tweak the enrollment criteria. To date, we are enrolling well. There are no safety signals. Obviously, the trial is double-blind, so we do not know really how it's coming along. We are confident that we will complete enrollment either by the end of the year or sometime in the first quarter of next year. We are very keen to accelerate the study as fast as we can.

Following the last patient in, there will be a 12-month period of follow-up in order to read out the trial's primary endpoint of pain at 12 months.

Speaker 3

That's very helpful, Silviu. Thank you.

Speaker 7

The next question comes from Olivia Simone Brayer with Canaccord Genuity Corp. Please go ahead.

Speaker 5

Hi guys. Congratulations on a really strong start to the launch, and thank you for the questions. Are you guys able to disclose how many monthly treatment kits have been administered to date? What can you tell us about inventory dynamics here? Was any of this net revenue actually related to inventory? As you think about going forward with the launch, what level of inventory will you typically have to maintain going forward? I've got a couple of follow-up questions if you don't mind.

Speaker 6

Sure. The way we treat the kits is on a weight band basis. We have infusion kits that are all priced at the same price, but they have progressively greater product per kit. Our inventory is constantly stocked to meet the needs of children at every weight band. As we treat kids that might be a 20-kilogram child, then that gets replenished. If it's a 50-kilogram, a larger child, then that kit gets replenished. We continue with each child that gets treated. They would be treated typically for 8 to 12 kits for infusions. As each infusion goes out, we replenish. Typically, we send two kits per week per child. That's how we keep stocking our inventory, if that makes sense. Does that make sense, Olivia?

Speaker 5

Yeah, that does. Can you disclose how many treatment kits you guys have actually administered so far?

Speaker 6

You can, it's very easy. We're very transparent, right? Each kit costs, so we know what each kit costs. You know what it costs. We've told you what our gross-to-net discount, gross-to-net adjustments are. You can divide the total gross-to-net by the price per kit, and you can figure out how many kits we've sold.

Speaker 5

Okay. That's perfect. Helpful. You mentioned the gross-to-net dynamics. How do you expect those to evolve as the launch progresses, or should they be pretty stagnant? One final question, just maybe a follow-up on the adult GVHD trial design. Will there be a subset of JAK5 naive patients, or will the entire study really be JAK5 refractory patient population for the adults?

Speaker 6

Yeah. With respect to gross-to-net, we expect that to be pretty stagnant, pretty flat. That's the sort of number that we've given you today, is what we expect it to stay at. With respect to the adult trial, we've decided not to go to JAK5 refractory patients, but rather on top of JAK5. The reason for that is that it provides us with the largest possible market entry. In second line, in other words, straight after steroids, where JAK5 is currently approved in patients with grade CD disease or grade 3-4 disease, which is about 50% of the JAK5 treated patients, day 28 response is only about 50%. In other words, 50% of patients do not respond to JAK5. That's the market opportunity.

We believe that adding ourselves on top of JAK5 in all patients with severe disease will have a major impact and a major increase in the proportion of patients who achieve response at day 28. As you know, if you're a responder at day 28, you're likely to be a long-term survivor with ourselves. This is an opportunity to really make a major impact on severe patients as early as possible and make ourselves available to the largest possible patients who need it.

Speaker 5

Okay, great. Thank you. Very helpful context.

Speaker 7

Your next question comes from Elyse Miriam Shapiro with Canaccord Genuity Corp. Please go ahead.

Speaker 5

Hi guys, thanks for taking the questions. Just on the adult study, are you planning on disclosing a bit more details from your FDA minutes now that you've probably gotten them? Do you have any, are there any kind of surprises around trial design, or will it be similar to what we've seen with the JAK5 trials?

Speaker 6

I think we updated through our release today in our slides a summary of our discussions with the FDA. The FDA and Mesoblast are aligned. We are in agreement that we want to see the product used as early as possible in the most severe adult population. That is the patient population who is on JAK5 with grade CD disease, where JAK5 only helps around 50% of patients, and the other 50% don't respond. Rather than waiting for these patients to fail JAK5, where the survival is an abysmal 20%, the best way to provide ourselves is in combination with JAK5 in these patients as soon as they're diagnosed so that we would like to increase the responder rate from, say, 50% to 80% or more. That would be the objective, right?

That allows our product to be used as early as possible in the most severe patients, which is a market size that's about three times the current pediatric addressable population. That's where we'll be going into in the pivotal trial.

Speaker 5

Got it. Understood. Good to see a bit more of a focus on inflammatory bowel disease. I guess, you know, what are the timelines to more detail on what a trial would look like? Do you need to do any additional kind of dose-finding work before commencing a pivotal registrational study?

Speaker 6

We have a KOL group that's been assembled. These are experts in trial design, and they've managed and run trials of the latest innovative therapies for ulcerative colitis and Crohn's disease, both in the U.S. and in Europe. These key opinion leaders are putting together right now the best possible trial design. We may very well use both local delivery of Rheoncel as well as intravenous delivery in order to aim to achieve rapid remission as early as week six to week eight in patients who are otherwise refractory to other biologics. Remission remains the challenge. Remission remains a target that is not well addressed by any of the biologics. In fact, the best available therapy in ulcerative colitis achieves a remission rate of only about 20%. There is a very large unmet medical need. Our trial design is being worked on, and we'll update the market this quarter.

Speaker 5

Great. Thanks. Just one more, if I may, kind of stepping back, looking at the number of kits that have been sold, are they, to your knowledge, are they all being used in pediatric GVHD, or could that be inclusive of some additional indications too?

Speaker 6

Yeah, we have no way of knowing specifically how much of the product is used for acute graft versus host disease (GVHD) versus for other indications because really physicians and their licenses enable them to make their own judgments as to which patients are best and most suitable for Rheoncel treatment. Of course, we work closely with institutions. Our commercial group works very closely with the institutions as they enroll patients. We're certainly aware of patients with acute GVHD that are being treated throughout the country. There have been certain situations where children with acute GVHD who've fallen between the cracks and have not been domiciled, have not had insurance. For those children, we provide product obviously free of charge. We also have a compassionate care use program for adults and again make our product available on an as-needed basis on a case-by-case basis.

In general, our product is being used predominantly on label for pediatric acute GVHD where it's reimbursed federally and at every state level by Medicaid, and it's reimbursed by the vast majority of commercial carriers. More transparency than that, we don't really have on how it's being used by individual physicians.

Speaker 5

Great, thank you.

Speaker 7

The next question comes from Michael Okunewitch with Maxim Group LLC. Please go ahead.

Speaker 0

Hi, Silviu. Thank you so much for taking my question today. Congrats on the great start to the launch. I guess to start off, I'd just like to see if you could give us a sense of how the initial sales were distributed over the period, were they weighted more towards the back end. I'm trying to get a sense of what sort of revenue trajectory we can expect going into the second half of calendar year 2025.

Speaker 6

Yeah. Look, I think it's a little bit early to make projections right now. We've only had really one quarter of sales that we're reporting. It's early. The commercial team has done a fantastic job in terms of getting insurance coverage, getting sites onboarded, getting us on formulary. I certainly expect that over the coming quarters, we're going to see continued strengthening of sales. To provide guidance is a little bit early. Marcelo, would you like to add?

Speaker 1

Yeah, no, Silviu, I think it's a good question, and thank you. I think you mentioned that, right? We're very pleased with the feedback that we've received so far from multiple treatment centers and the healthcare providers we serve, right? Rheoncel is certainly already making a meaningful impact in the treatment of these children, right? The performance today, especially for the first quarter alone from launch, has been outstanding, I would consider, not only compared to our own expectations, but also when you benchmark that against other successful rare disease launches, right? Of course, I mean, I think we're all focused on building the infrastructure you mentioned that in terms of payers, in terms of onboarding, that is needed to ensure that we continue to reach our full potential.

Yes, I mean, while we do expect growth, we also recognize that this baseline work is super important for our future performance.

Speaker 0

All right. Thank you. One more for me, and I'll hop back into the queue. I wanted to get a sense, in particular in the context of the changes that we've seen at the FDA over the past 6 to 12 months. What sort of feedback have you gotten on the potential for a filing in heart failure based on your existing body of data? Have you gotten any additional follow-up since you last disclosed to the market?

Speaker 6

Yeah, we had a terrific meeting. Clearly, those agreements on all of our manufacturing, our potency assays, which are really important given all of the learnings that we had with Rheoncel, I think getting alignment on that is really important ahead of a filing. The other important issue is that we have total alignment on what a confirmatory study of somewhere between 250 to 350 patients would look like, with an endpoint that aims to, in patients with the greatest risk for MACE events, reduce MACE events and mortality. We're very pleased with the interactions with the FDA, and we're working diligently to get our documents in.

Speaker 0

Thank you. I appreciate the update and looking forward to future progress.

Speaker 6

Thank you.

Speaker 7

Your next question comes from John Hester with Bell Potter Securities Limited. Please go ahead.

Speaker 2

Yeah, good morning, Silviu. Just a quick question there on market access, and this might be one for Marcelo. What work is left to do with market access in terms of Medicare in the various states across the U.S.? Are you sort of halfway there, or can you give us some sort of sense of your remaining market access activities?

Speaker 6

Marcelo, would you like to address that? I think the short answer.

Speaker 2

Yeah, you're not very happy already, right?

Speaker 6

Yeah.

Speaker 2

Yeah. Yeah, I'm very happy to do it. The short answer, yes, we're already there for sure. I think on the payer side, we've made excellent progress thanks to the tireless efforts of our team. We've engaged with more than 97 payers around clinical and value discussions. Rheoncel is now covered by insurance plans representing over 250 million lives across both the commercial and government payers. I think importantly, Medicaid is covered and is in place everywhere in all states as of July 1, right? In addition to that, which I think addresses your part of the question, the commercial payer support has also been strong. All of the major players, and that includes Aetna, Cigna, United, Anthem, Humana, Pride, which is the Blue Cross Blue Shields, right? They have issued favorable coverage policies for Rheoncel, right?

Notably, these policies do not require stat therapy, which simplifies patient access significantly, right? All of this has occurred within the first six months post-launch. To further support the reimbursement, a specific J-code for Rheoncel is already in place. It goes into effect on October 1, allowing for more efficient billing from our clients or from our customers and payers, along with CMS publish rates, right? That will be very important as we move forward. October is around the corner, and that will be important not only for us, but also for our clients.

Speaker 6

All right. Thank you.

Speaker 7

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

Speaker 6

Thank you, everybody, for being on this call. We are extremely, extremely excited and pleased. By the way, things have gone this whole year, actually. The fact that this has been a banner year for the company. We've received approval. We are the only company that has an FDA-approved mesenchymal stromal cell therapy in the U.S., and we're extremely pleased by the first quarter results. We will continue to work hard. We've got a growing commercial team in the United States, and we hope to continue to provide sales and updates to the market that continues to give the confidence as we transform this company from an R&D company to a fleet-footed commercial biotech organization. Thank you very much, everybody.

Speaker 7

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