What can I say about the current share price level of MSB?
• It was a well- timed piece of propaganda to suggest that MSB was a ‘sell’, about 8 months ago by brokers fresh to the scene. .…when the share price happened to be north of $9-00. That recommendation emanated from a couple of broking houses who made unfounded adverse comments that were off the path of logic, irrelevant to the internal MSB strategy and were inconsistent with regulatory endpoints and framework. In placing a ‘sell’ on a specific stock, an analyst’s preoccupation should be to convince shareholders of fundamental concerns. I do not think this has been achieved, but rather, created limited uncertainty. On the other hand, the analysts’ greater success has been with non- shareholders. Those ‘calls’, were made as a result of broad global and domestic market negativities. I sense that their calls, were made with a ‘snigger’, off non-existent market confidence, and certainly not off MSB fundamentals, which continue to forge an exceptional commercial path. It is my belief, that this is an effective ‘cop-out’ to talk a non-shareholder selling a stock like MSB which has travelled from an IPO price of 50 cents to $9-00+ as opposed to recommending a buy at that level for future promise… and in a woeful broad macro- economic environment. The mere fact that MSB has travelled so far in a crap market is sign of immense achievement.
• I say “unfounded comments”...because the second point is that I understand that, over many months, MSB management has addressed each negative concern with regard to that which was put to print. My understanding is that full explanations have been given and were accepted by those analysts. But there has been no retraction of incorrect comments in print…. In essence, because the ‘trend is your friend’ and if the broader market significantly goes south, then there is an increased probability that MSB follows suite, despite it being defensive, exceeding all expectations and virtually ticking every box over this duration.
• Naked short selling, is manipulative, and flies in the face of genuine fund managers/investors who, not only painstakingly do their homework, but then invest in a company such as MSB, who have displayed since their IPO, utmost integrity, unsurpassed innovative progress to commerciality & in doing so, have redefined the global therapeutic space in adult stem cells. Shareholders should be elated. Bell Potter value the stock at $16-00 mainly on the back of their cardiovascular suite. Current price $ $6.
• Look, I might sound a bit ‘hot under the collar’ here…I’m not. It is what it is…. I’m more frustrated.
• It needs to be pointed out that those negative reports had target price values between $5-20 to $6-50…. Unless utterly convinced to remain short, (in which case you would be talking of a total demise of the market), then you would start to buy back your stock, post haste, around these levels. Of equal note, is that you would be mindless to initiate new short selling now…So might I suggest that the short position should greatly reduce imminently…With a far lesser volume of naked shorts, is it not logical that any covering should propel the price north? …ok, let’s now bring in some fresh buying or some topping up.. and I will come to reasons in a second.
• For all intents and purposes, the ‘short positions’ as stated on the ASIC website, have substantial inadequacies and cannot be relied upon. Who is the governing body here? How do you know shorters/ hedgefunds report their positions? Why aren’t they adhered to? I have manually monitored trades over specific periods of time and they have no correlation to the percentage reported on the ASIC website. Bloomberg short position are similarly perplexing.
• Finally, a I hear that a recent report mentioned that the stock was increasingly difficult to borrow. In late 2011, many a substantial shareholder disengaged the ability to ‘lend’ stock through their nominee company. I do not believe that has changed.
And as for the positives… the voltage continues to crank up.
• The latest series of positives can be found in the Jefferies Annual Healthcare Conference , held in New York at the end of last week. • Heaps of cash, $226 million, which as slated, will be spent on MSB non collaborative applications, to ensure earlier commercialization. • New cash injection 2013/14 from Teva, on reaching milestones ….many have forgotten this. • Teva TO FUND PHASE 3 CARDIO programme along with top shelf provision of distribution, regulatory and clinical trial experience. • Reconfirmation that Lonza is the best of breed available for manufacturing, ...low cost, high margin… but MSB retains control of all product manufacturing. • Reinforcing that MSB owns the IP for mesenchymal precursor cells. . • Individual commercial products continue to expand … We now have 4 for cardio, 2+ for diabetes, 3+ for immuno/inflammatory disease (lung and RA), Ortho, 3+ (lumber, spinal, ) BMT, wet AMD, .. • And a new thrust for 4 Neurological products… stroke, Parkinson’s disease, Huntington’s disease and MS. These are exclusive to TEVA.
• You really do need to be aware of the short endpoints… • Regulatory approvals have been received post haste. • You need to be aware that MSB has exclusively licensed Dental Pulp Stem Cells (on the basis of composition of matter) as distinct from bone marrow derived MPCs and they are on the cusp of initiating preclinical trials.
• Mesoblast is about to initiate Phase 3 CHF trials; • MSB are nearing completion of Phase 2 for spinal fusion, disc repair and type 2 diabetes…history has shown that MSB has collaborated prior to phase 3 commencement. This is quite possible but one needs to point out that the logic in doing so was that phase 3 funding was expensive. MSB now have cash. With Teva funding cardio and neurological indications, it could go either way, that MSB pursue Phase 3 funding of non- collaborative products OR could partner if deemed appropriate. • You must be cognisant that the global pharmas are in dire need for pipeline…My gut feel is that MSB will collaborate further on at least one of these phase 2 indications.
• This company’s share price deserves to be treated with the respect that MSB has from global scientists, commercial development business managers, peers, global & specialty pharmas, and the progress it has achieved because various parties are highly likely to be knocking on the door and if the door is opened, those who advocate selling MSB, might be in for a surprise.
• And an assessment of this macro picture….China’s recent approved infrastructure spend (US$445bn), their retail sales, inflation and broad growth measures still seem very positive and should underpin our resources market. • The unknown factor is Greece. As I understand it, next weekend’s vote is effectively to one to stay in Euro. I hope that will occur. It is not a vote for any political party on the basis that electoral parties are numerous , fractious and small. Any subsequent amalgamation of parties would be very diverse. My understanding is that a majority will form where an ‘external party’ (with perhaps the ECU playing a role) to assist in the impost of austerity...it may take some time to evolve. Other supranational bodies have vocalized their support for financial aid to those in need. It is what it is, but Greece gets bailed out. Spain got their first banking rescue package…so for the time being, there is appeasement. There is talk of further stimulatory mechanisms in Europe for growth. • The US has been bouncing along the bottom for a couple of months now and there are some improvements on a number of fronts. • Locally, we continue to play ball on a field with multiple goal posts .She won’t be around after the next election, so we need to hunker down and get on with it.. There is a loose framework within which we can make decisions. Sure, consumer confidence is not there, sure, banking lending to SMEs is not there, but, cash continues to build and interest rates are low. • If someone around the globe or locally could smile, you might be surprised how contagious it becomes. • Buy some Mesoblast.
MSB Price at posting:
$6.15 Sentiment: Buy Disclosure: Held
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