MSB Trading - 2020, page-5942

@stockrock The current market capitalisation of Mesoblast is, in my opinion, bordering on a farce....no doubt predicated by the usual bear raid to take out all the stops after a well deserved rise following some key announcements . It is well documented that the event driven DREAM CHF trial has had its last outcome driven event and the “last patient interview” in January. If a full read out was to occur mid year, it is normal to expect a headline number months earlier. If i have one criticism to make of the Company, it is the lack of transparency relating to timelines (which serves no purpose) with regards to this heart trial. As i have pointed out previously, AMRN: NASADAQ was able to read out in 11 weeks (from final endpoint) with several thousand enrolled patients in a cardiovascular trial run by the same consultant we are using. Furthermore,AMRN guided its shareholders throughout the process as to the status of the trial. I trust Silviu has good reasons for taking his time with the “headline read outs”.but the sloppy presentation or should i say, obfuscation, of our current status in relation to this blockbuster trial is as disappointing, as it is deliberate. We have no idea where we are in proceedings....which is absurd bearing in mind it is the largest potential treatment in our portfolio. I find it incredulous that despite having a very high prospect of successful outcome , which might propel this share price tenfold, we have to languish at current prices because of the uncertainty.
Let me be clear. When I first invested in Mesoblast I thought this was a very binary outcome stock...with a few key trials determining its success or failure. Much to my surprise , the management has made so much progress , in so many areas, I find myself constantly revising upwards my view of future cash flows and opportunities. My enthusiasm for the stock had to always be tempered by the weakness of the balance sheet ,but the recent equity placing and the Grunenthal deal put Mesoblast on a much more secure footing . Any uncertainty as to our first sustainable cash flows has been brushed away with our “priority review” status for Ryoncil. Unless the board are incompetent , which i do not believe they are, they should be able to refinance their existing financing facilities on much more commercial terms post recent events . I believe that paying a 15% compounded interest rate To NovaQuest, however soft and generous the repayment terms, is sending the wrong message to the market...especially as there are no repayment penalties.

I commend Bell Potter on their constant updates ...but I have to say that I strongly disagree with sum of the parts valuation . The reason i read their research so avidly is that they often are used by the Company to inform the market of new developments. The latest Covid 19 update contains the gem that “we assume that MSB will partner the product, with the partner assuming all manufacturing and commercialisation costs”....and “we do not model any costs for Mesoblast (in relation to the clinical trial) apart from the drug cost”... Whilst they do not model any upfronts or milestones from the deal the analyst Tanushree Jain has been guided ? to assume a 30% royalty on Remestemcel sales for Covid 19. That’s pretty punchy Tanushree ...and I dont think that is a description which most would associate with her research.
The simple facts are that Bell Potter do not recognise any off label potential for GVHD and they have even removed the sales opportunity for Europe and the ROW from their numbers. They have ignored Crohn’s disease completely despite the Company clearly staying in its last presentation that it was an obvious candidate for a label extension. Would Mesoblast have stated such a thing without knowing they had positive phase three clinical data which has still not been released to the market ? As if this wasn’t enough, Bell Potters “Probability Weighted Sum of the Parts Valuation Summary” included a CHARGE of US $263m for Other Pipeline/Non Allocated Assets. WTF is that?. If the Company has assets that are worthless they must be impaired . For an analyst to assume that a Company will blow $263m with no accompanying footnote is a little indulgent don’t you think? A bit like saying that Mesoblast is going to go and waste $263m in the future for no return !
Furthermore, i think their logic on pricing for Covid 19 is deeply flawed...but i suspect it is Mesoblast spinning a “per dosage” costing..because dosing obese Covid patients on a per kilo basis will use up a lot more stem cells than a child taking Ryoncil ...believe me !

I could go on ...but i won’t...in case i lose the will to live . The fact is Bell Potter has shown a much better understanding of the Company than the recent Jeffries report which was even more flawed in my opinion.

Mesoblast, in terms of risk versus reward, is quite simply the most amazing opportunity I have ever laid eyes on. I am not aware that we currently have one decent specialist biotech fund on the share register. Prepare for the mad rush as reality sets in . Silviu has cried wolf so many times in relation to timelines.. that most have dismissed his incredible progress. That are about to realise that Mesoblast is the real deal.