What happened

Shares of Mesoblast (NASDAQ:MESO) rose as much as 18.1% today after the company announced its experimental stem cell treatment, remestemcel-L, will be available under an expanded-access protocol for children with COVID-19 in the United States. 

More specifically, the company filed the protocol with the Food and Drug Administration to treat individuals between the ages of two months and 17 years old suffering from multisystem inflammatory syndrome (MIS-C). It could signify a major step in the availability of the drug candidate to treat severe cases of COVID-19 that don't require mechanical ventilator support, which doctors are increasingly avoiding.

At the close on Monday, the small-cap stock had settled to a 9.1% gain.

A scientist looking through a microscope.

Image source: Getty Images.

So what

Mesoblast is conducting a 300-patient placebo-controlled study of remestemcel-L as a treatment for acute respiratory distress syndrome (ARDS) in COVID-19 patients who require ventilator support. If promising results from a 12-patient study are replicated in the larger patient population, then the cell therapy could become an important tool for doctors across the globe. 

There's just one major issue for the Australian biopharma, which turns out to be great news for the overall trajectory of the coronavirus pandemic: Doctors have learned that placing COVID-19 patients on ventilators increases the fatality rate of the disease. In other words, ventilators are increasingly being avoided at this point in the health crisis, which appears to be reducing the fatality rate.

That observation could significantly reduce the need for remestemcel-L as it's being used in the ongoing 300-patient study -- unless Mesoblast can expand the use of the experimental cell therapy in severe cases of COVID-19 that don't require ventilator support. The science around the immune-system-modulating effects of remestemcel-L supports its use in such cases, but today's news is the first step (albeit a small and early one) in that direction.

Now what

The announcement of an expanded-access protocol for remestemcel-L in children with MIS-C will expand the use of the cell therapy in treating severe cases of COVID-19 -- even those that don't involve mechanical ventilators. If Mesoblast can prove its experimental therapy is safe and effective in reducing the severity of the immune response resulting from the viral infection, then remestemcel-L could emerge as one of the most important non-vaccine treatments in the health crisis.  

First things first, of course: The company must deliver successful results in the ongoing 300-patient study of COVID-19 associated ARDS requiring ventilator support. If successful, then it will help to prove the safety and efficacy of the cell therapy in reducing severe immune responses. Those results would also make it easier to persuade regulators and doctors to expand the drug's use in severe cases that don't require mechanical ventilators.