The global orthopedics market generated revenues of USD19.2 billion in 2008. Spinal and knee implants accounted for 61 per cent of revenue, with North America the main geographic contributor.
Common types of orthopedic problems are degenerative intervertebral disc disease, spinal fusion, chronic cartilage degeneration and segmental bone defects.
Mesoblast aims to produce therapies for all of these debilitating conditions.
Intervertebral Disc Repair Product
Frost & Sullivan reports that approximately 30 million people in the United States suffer from back pain. While physical therapy and medication provide a solution in most cases, a subset of approximately 15%, about 4.5 million people, still experience chronic back pain. The next level of treatment is spinal surgery involving either total disc replacement or spinal fusion.
Degenerative intervertebral disc disease is the principal cause of low back pain and can result in severe disability and incapacitation.
The intervertebral disc is a cartilage that cushions the stress forces on the spine and enables the normal rotation of the spine. With advancing age, there is progressive loss of the proteoglycan material that gives the disc its properties, and a consequent increased risk of damage to the spine. This process, termed degenerative disc disease (DDD), affects between 15 and 45% of the population.
Preclinical trials showed that a single, low dose of Mesoblast’s allogeneic adult stem cells into severely damaged intervertebral discs resulted in dramatic reversal of the degenerative process, regrowth of disc cartilage and sustained normalization of disc pathology, anatomy and function.
Since spinal surgery is advocated only in severe cases of DDD, out of the 4.5 million people only 500,000 would be considered candidates for surgery. This creates a gap of about 4 million people who are currently left untreated. These patients experiencing mild to moderate DDD are normally treated with conservative procedures with significant associated morbidity and reduced productivity, until the condition worsens to a degree that warrants spinal surgery.
Since MPCs produce the proteoglycan materials found in discs, Mesoblast envisages that the injection of MPCs into a degenerated intervertebral disc will lead to replacement of the proteoglycan of cartilage. This approach, with its anticipated ease of application and lack of side-effects, should offer a relatively non-invasive and cost-effective therapy for patients with moderate or severe degenerative disc disease.
Mesoblast is targeting the two ends of the spectrum – the bulk of patients with discogenic chronic back pain but who are not sick enough to warrant a spinal fusion procedure; and the patients who get discectomies, or other surgical interventions, where the cell procedure would be adjunctive to prevent the 50-60% of surgeries that are followed by loss of disc height after this procedure.
Mesoblast will build on outstanding preclinical trial results which showed that a single low dose of Mesoblast’s allogeneic adult stem cells into severely damaged intervertebral discs resulted in dramatic reversal of the degenerative process, regrowth of disc cartilage and sustained normalisation of disc pathology, anatomy and function.
Lumbar and cervical spinal fusion product
With around 30 million Americans suffering from back pain, anti-inflammatory medications, exercise, physiotherapy etc. are usually given a timeframe of up to three months to effectively work. However, when disc degeneration is severe, these conservative treatments can be rendered ineffective quickly.
The elimination of motion through fusion has been the gold-standard solution to a variety of degenerative disc diseases but continues to be reserved for patients with severe degenerative disc disease.
Spinal fusion, in which two or more spinal segments are fused or mechanically locked to each other, is performed in patients with severe degenerative disc disease. It is a major surgical procedure often associated with serious complications including infection, permanent nerve damage, and recurrence or worsening of pain.
In the United States there are about 240,000 cervical and 280,000 lumbar spinal fusion procedures performed annually. Fusion failure continues to pose a significant challenge to spine surgeons, and it is estimated that up to 40% of all surgeries result in non-union.
Biomet, Inc. estimates the 2008 market for the United States spinal products market is US$6.2 billion. Approximately 85% of revenues in this market are generated from tools used to perform procedures, rather than implants or biologics.
Current hospital reimbursement DRG (Medicare) for cervical spinal fusion is US$24,000 per procedure in FY 2009 and US$33,000 per procedure for a lumbar spinal fusion. The price of lumbar fusion implants (included in the Lumbar DRG) is $10,000. One State health department estimated the of cost spinal fusion at approximately $45,000. In comparison to these figures, Mesoblast’s MPC product, NeoFuse™, will be highly cost effective.
For patients whose discs have degenerated too extensively for repair, bony fusion is the only viable option to eliminate pain. Mesoblast is in clinical trials with its bone fusion product NeoFuse™, in minimally invasive surgery for fusion of the spine.
Positive and well tolerated outcomes are expected to enable the company to compete effectively in the United States market where over 500,000 fusion procedures are performed annually. Currently BMP-2 marketed by Medtronic is a biologic that has approximately $1B/year in sales, however its market share is primarily attributed to off-label usage and has more recently been associated with a number of FDA safety warnings suggesting an opportunity for Mesoblast’s MPCs to quickly gain market share if superior and safer outcomes result from the clinical studies.
Fracture Repair Product
More than one million of the 5.6 million fractures occurring annually in the United States are associated with healing difficulties in which repair processes stop before the break is completely repaired. Around 10% of fractures that heal poorly require bone grafting using either the patient’s own bone tissue or that from a donor. Bone grafting is limited by a lack of blood supply to the new bone and by the limited number of regenerating bone cells in the grafted tissue.
Mesoblast’s MPC technology can generate both new bone and new blood vessels, enabling greater bone regeneration.
Mesoblast has completed a pilot clinical trial for non-healing, long bone fractures in the legs. The successful results showed that bony union and healing was achieved within a median time of approximately four months after stem cell implantation, compared with what otherwise would have been permanent non-healing of the fractures in the absence of cell therapy.
The Australian Therapeutic Goods Administration (TGA) has issued a licence to Mesoblast to commercially manufacture and distribute patient specific or autologous adult stem cell products to hospitals and clinicians across Australia. Mesoblast will initially target major bone repair markets, including long bone fractures after trauma and stress fractures following sporting injury.
Osteoarthritis is a major degenerative disease of cartilage in joints, with the knee being the most commonly affected. The prevalence of painful disabling knee osteoarthritis (OA) in people over 55 years is 10%, of whom one quarter is severely disabled. Risk factors adding to the growing incidence include obesity and aging of the population.
Approximately 800,000 patients undergo arthroscopic knee surgery annually in the United States. This procedure can temporarily relieve acute knee pain and/or instability, but it does not improve knee condition due to the lack of cartilage. The majority of arthroscopies go to reconstruction within ten years.
In severe cases of OA, total knee reconstruction is indicated with 542,000 primary knee arthroplasties in the United States in 2006. Over the period 1997 to 2005, the volume of knee arthroplasties rose by about 69% from 328,800 to 555,800 procedures. The aggregate cost in the United States for knee arthroplasty was US$6.3 billion.
The actual cost of knee reconstruction is in the range US$26,000 to US$35,000 per operation.
Other forms of treatment for knee OA include hyaluronic acid injections with two courses often required each year. There were over 1.2 million treatments given in the United States in 2006.
The exceptional results of preclinical cartilage trials have shown that a single injection of Mesoblast’s allogeneic cell product, RepliCart™, into knee joints damaged by osteoarthritis can prevent further deterioration and regenerate and regrow cartilage tissue lining the damaged joint. Mesoblast’s clinical trials are ongoing.