Published on Livewire Markets today, covered by Claire...

Published on Livewire Markets today, covered by Claire Aitchison:

Mesoblast shares surged in March finishing the month up 88.1%. The positive momentum has continued in early April with the share price up a further 55.9% to begin the month. The enthusiasm was driven by the announcement that the FDA has informed the company that available clinical data from the Phase 3 study appears sufficient to support submission of the proposed Biologics License Application (BLA) for remestemcel-L for the treatment of pediatric patients with steroid-refractory acute graft versus host disease. The company stated that on the back this advice from the FDA, the company intends to file the resubmission for the BLA in the June quarter.

It has been a long road to this point with the company burning through a mountain of cash to get here. There is no guarantee that the company’s application will be successful, however the market appears optimistic that the chances are improved compared to previous submissions.
During the month the FDA also supported an accelerated approval pathway for rexlemestrocel-L for patients with end-stage ischemic heart failure with reduced ejection fraction and a left ventricular assist device. The feedback from the FDA followed the Type B meeting in February, in which the company presented results from the pivotal study.

The company completed the Placement and Accelerated Entitlement Offer that was announced on 4 December 2023 in March. The Entitlement Offer originally closed in December 2023, with the company raising $60.3 million through the Placement and the Entitlement Offer, falling short of the $97 million it was seeking to raise. In March, the company secured commitments for a further $36.7 million, primarily from existing shareholders, taking the total funds raised under the Placement and Entitlement Offer to $97 million. The company’s directors, including the CEO and Chief Medical Officer, showed their support for the company subscribing for a large parcel of shares. Shares under the Placement and Entitlement Offer were issued at $0.30 per share, providing subscribers a sizeable return since the issue.
The capital raised shores up the balance sheet and comes amidst cost reduction and operational streamline strategies to support the clinical program and reduce cash outflows, which were $12.3 million in the December quarter. The market will now be eagerly awaiting the results from the BLA submission with the results likely to drive significant volatility in the share price.