Novartis Invests in Stem Cell Therapy for Covid

Mesoblast Ltd. soars after getting a vote of confidence from large pharmaceutical backer Novartis AG on a stem cell medicine that was panned by U.S regulators just a month before.

Novartis will pay an initial $25 million and invest another $25 million in Mesoblast stock in a deal securing global rights for remestemcel-L. The stem cell therapy is being developed to treat acute respiratory distress syndrome, a complication often seen in advanced Covid-19 patients.

The deal comes on the heels of the U.S. Food and Drug Administration telling the Australian drug developer in October that further study was needed before the agency would consider an approval in another ailment, graft-versus-host disease. Mesoblast’s American depository receipts jumped 18% in Friday premarket trading and are on track to open at the highest since Sept. 30, the day before the company revealed it wasn’t getting FDA approval.

The stock surged more than 200% in June when Mesoblast revealed that it was pursuing a Covid-19 treatment. Novartis plans to run a late-stage study of remestemcel-L in non-Covid respiratory illnesses.

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