Stem cell researcher Mesoblast (MSB) has been granted ethics approval for a trial of its remestemcel-L therapy in Australian COVID-19 patients.

Participating hospitals in Melbourne and Sydney will join 17 other facilities across the U.S. in the phase three trial in ventilator-dependent COVID-19 patients with acute respiratory distress syndrome (ARDS).

ARDS is the leading cause of death associated with COVID-19. It occurs when the body's immune response gets caught in a runaway feedback loop which can cause organ and tissue damage.

Mesoblast's stem cell treatment has shown positive indications of reducing the inflammatory response in COVID-19 patients.

If the phase three trial is successful, remestemcel-L will be a step closer to being added to the growing arsenal medical practitioners have at their disposal to combat the disease.

Mesoblast CEO, Dr Silviu Itescu says it's important to gather as much data as possible as the pandemic continues unabated.

"As an Australian company developing a potential treatment for COVID-19 ARDS, the primary cause of death in patients infected with COVID-19, we have a responsibility to evaluate remestemcel-L in Australian patients as the country continues to grapple with COVID-19," Dr Itescu said.

The phase three trial was given the go-ahead based on results from a pilot study using remestemcel-L in patients under emergency compassionate care at Mt Sinai Hospital in New York.

Nine of the 12 patients with moderate-to-severe ARDS were successfully taken off a ventilator and discharged from hospital within a median of 10 days.

The new trial will test the treatment in ventilator-dependent patients in intensive care units with moderate-to-severe COVID-19 ARDS.

The trial will be randomised meaning some patients will receive a placebo instead of the remestemcel-L therapy. The results will consider mortality from all causes 30 days after the beginning of treatment.

The number of patients taken off ventilators in the trial period will also be considered in assessing the treatment's efficacy.

The independent Data Safety Monitoring Board (DSMB) plans to complete an interim analysis this month in the trials first 90 patients in the U.S. after they have completed 30 days of follow up.

Once that analysis is complete, the DSMB will make recommendations as to whether the trial should continue as planned or stop early.

Mesoblast is trading 0.38 per cent lower at $5.22 per share as at 12:27 pm AEST.

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Mesoblast (ASX:MSB) granted ethics approval to treat COVID-19 patients in Australia - The Market Herald