Australian pharmaceutical company Mesoblast (ASX: MSB) has penned an exclusive worldwide licence and collaboration agreement with Novartis for the manufacture and commercialisation of proposed COVID-19 treatment remestemcel-L.
As part of the deal Switzerland-based Novartis will make a US$50 million (AUD$68.7 million) upfront payment to Mesoblast.
Following the initiation of a Phase 3 clinical trial, Novartis will fully fund the global clinical development of the drug.
In addition, Mesoblast may receive a total of US$505 million (AUD$694 million) pending achievement of pre-commercialisation milestones for remestemcel-L and a further US$750 million (AUD$1 billion) based on achieving certain sales milestones.
Mesoblast will retain full rights for the use of remestemcel-L for treatment of graft versus host disease.
Over the course of this year Mesoblast has been developing the drug for the treatment of acute respiratory distress syndrome (ARDS) the principal cause of death for COVID-19 patients.
Mesoblast chief executive Dr Silviu Itescu said the partnership with Novatis will make remestemcel-L available for patients suffering from the condition.
"Our collaboration with Novartis will help ensure that remestemcel-L could become available to the many patients suffering from ARDS, the principal cause of mortality in COVID-19 infection," Dr Itescu said.
"This agreement is in line with our corporate strategy to collaborate and partner with world-leading major pharma companies in order to maximise market access for our innovative cellular medicines."
Remestemcel-L is currently being studied in COVID-19 related ARDS in an ongoing 300-patient Phase 3 study.
Novartis intends to initiate a Phase 3 study in non-COVID-related ARDS after the anticipated closing of the licence agreement and successful completion and outcome of the current study.
MSB shares rose by 12.5 per cer cent to $3.68 each during morning trading.
Updated at 10.53am AEDT on 20 November 2020.