Mesoblast Limited

MSB Details

ODAC Votes in Favor of RYONCIL^TM: Mesoblast Limited (ASX: MSB) is a biotechnology company involved in the development of innovative allogeneic cellular medicines that are used in the treatment of complex inflammatory diseases resistant to a conventional standard of care. The company’s lead product candidate, RYONCIL^TM (remestemcel-L), was recently accepted for priority review by the United States Food and Drug Administration (FDA). The Oncologic Drugs Advisory Committee (ODAC) of FDA recently evaluated efficacy and safety of data related to remestemcel-L and it has come to the conclusion that the available data support the efficacy of remestemcel-L in pediatric patients with steroid-refractory acute graft versus host disease (SR-aGVHD). Although FDA will give the final decision regarding the approval of the product, it will consider the recommendation of ODAC. The action date of FDA priority review is 30 September 2020. If MSB gets the approval from FDA, it expects to launch RYONCIL in the United States in 2020.

Remestemcel-L Phase 3 Trial for COVID-19 ARDS: In September 2020, there is going to be a Phase 3 trial of remestemcel-L in ventilator-dependent COVID-19 patients with moderate to severe acute respiratory distress syndrome (ARDS). It is expected that 30 leading medical centers across the United States will participate in this trial. It is worth noting that currently there no approved treatments for COVID-19 ARDS.

June Quarter Update: During the June 2020 quarter, the company completed a US$90 million capital raise from global institutional investors. Over the quarter, the company spent US$6.7 million on research and development activities, primarily for its Phase 3 programs. Net cash outflow for operating activities stood at US$19.58 million. At the end of the quarter, the company had cash on hand of US$129.3 million.

Operating Cash Outflow (Source: Company Reports)

Key Risks: The company’s future revenues are dependent upon the size of any markets in which its product candidates may receive approval, and its ability to achieve and maintain sufficient market acceptance, pricing, reimbursement from third-party payors, and adequate market share for its product candidates in those markets.

Valuation Methodology: P/BV Multiple Based Relative Valuation (Illustrative)

P/BV Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)

Note: All forecasted figures have been taken from Thomson Reuters, NTM: Next Twelve Months

Stock Recommendation: Following the release of the company’s latest update related to support from ODAC, the company stock price has risen sharply by ~39% on 14 August 2020. The stock is currently inclined towards its 52-week high. The company expects to release its FY20 results on 27^th August 2020. On technical analysis front, the stock of the company has a support level of ~A$3.2 and a resistance level at ~A$5.2. We have valued the stock using the price to book value multiple based illustrative relative valuation method and arrived at a target price of a correction of low single-digit (in percentage terms). For the purpose, we have taken peers like Avita Therapeutics Inc (ASX: AVH), Paradigm Biopharmaceuticals Ltd (ASX: PAR) and Clinuvel Pharmaceuticals Ltd (ASX: CUV). Considering the company’s current trading levels and the recent increase in share price, we suggest investors to book profits and give a “Sell” recommendation on the stock at the market price of A$4.70, up by 39.053% on 14 August 2020. 

MSB Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Disclaimer  

The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as personalised advice.