banter and General Discussion, page-17604

My favourite term for the month: Asymmetry. It's a beautiful word when applied to Mesoblast, as you will see:

What I mean by it is that the probability of Mesoblast's share price going down significantly from here is minimal, whereas the probability of the share price going up very significantly is very high. All in my opinion of course.

Downside:

• Following the concerted short campaign since January, and the share price declining by about half, I contend that the current price is fully underpinned by the approved indication of pediatric acute GvHD. We don't yet know how quickly this revenue is going to fully ramp up, but whether it is 6 months, 12 months or 24 months, I am convinced it will reach several hundred million USD by then.
• Keep in mind that without Ryoncil, mortality rates as high as 90% have been reported in adults and pediatric patients with SR aGVHD, who fail to respond to initial steroid therapy. There are approximately 375 children each year with SR aGVHD. When these are nearly all covered by insurance including Medicaid, and after all required administrative procedures are fully in place, there is no plausible reason why health practitioners would not prescribe Ryoncil and why insurers would not provide cover.
• We also now know that Mesoblast has been granted orphan-drug status. This means that the FDA will not approve another mesenchymal stromal or stem cell (MSC) product for this indication during the 7-year period from the approval of Ryoncil. Separately, Mesoblast has biologic exclusivity preventing another sponsor from referencing the Ryoncil biologic license application (BLA) until December 2036, twelve years from its first approval which would prevent market entry by a biosimilar.
• I wish that all the other companies I have shares in had this level of revenue growth certainty. Given all of the above, it is very difficult to see how Mesoblast could possibly go much below its current market cap (approx AUD 2B).

Upside:

· As others have pointed out, the upside in share price could be 50 or even 100 x if all of the following plays out over the next 2 to 5 years or so.

· Label extension for Ryoncil to treat adults with SR aGVHD. This is about 5 x the market size of pediatric.

· Accelerated approval of Revascor for the treatment of patients with ischemic chronic heart failure with reduced ejection fraction (HFrEF) and inflammation. There are 800,000 heart attacks in the US per year, many of which would include these symptoms. There are 1 million patients with inflammatory heart failure with reduced EF, which is about 1/6 of the total number of patients with heart failure in the US.

· Accelerated approval of Rexlemestrocel-L in patients with chronic low back pain (CLBP) due to inflammatory degenerative disc disease (DDD), providing the current Phase 3 trial is successful (based on the previous results of the last Phase 3 trial, this is highly likely). Over four million patients in the United States alone suffer from CLBP, which is caused by damage to the disc as a result of aging, genetics, and injuries.

· Label extension to Ryoncil for the treatment of Inflammatory bowel disease (including Crohn's Disease and Ulcerative Colitis). In 2015, an estimated 1.3% of US adults (3 million) reported being diagnosed with IBD (either Crohn’s disease or ulcerative colitis).

· There are undoubtedly many other inflammatory diseases that Mesoblasts pipeline of products could successfully treat, but these would likely take a longer timeline than 5 years.

· Then there are the additional markets outside of the US that Mesoblast may be able to supply with the assistance of a partner.