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97.0¢ mesoblast limited

Great post!Just wanted to add my 2 cents regarding this comment...

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TeaBone

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29/04/20

19:54

Post #: 44333883
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Originally posted by cosair: ↑

I note that you have made a number of comments on the 4C report two were in response to comments made by 2 posters.

The first comment reads “pretty bad figures”. You did not qualify how you have drawn that conclusion. I am not sure when you began trading on MSB shares and in order to make financial comments, you cannot just go on the bottom line figures when a company is in a developing stage and the current income stream is limited to royalties received from JPR for Temcell sales. The following is the revenue for the 3 quarters: 1st. 1.73M, 2nd.1.82M 3rd. 1.97M. There has been a steady increase and perhaps the full year would be in the vicinity of 7.5M. Japan is not a big market and the US market would generate if I am not mistaken 8 times that market hence we would be looking at about 60M. We have been advised that “Mesoblast’s BLA for RYONCILTM (remestemcel-L) was accepted by the FDA for priority review for the treatment of SR-aGVHD in children. The FDA has set a Prescription Drug User Fee Act (PDUFA) action date of September 30, 2020. If approved, we plan to launch RYONCIL in the US in 2020; product inventory is in place and a targeted commercial team is being built”. The approval will allow this product to be marketed in Europe and the rest of the world, which would see a further increase in revenue.

The second comment reads “The company are entering in high usage of finance, I hope we find a partnership to fund expenses. We cannot go that way I year.” Once again this comment was made with very little understanding of the background of the company. There has been failed partnerships, hundreds of millions of dollars spent on research and development and despite such setbacks, the company has done pretty well by no going under and are on the verge of full scale commercialisation of its Tier 1 products. The Prof has had to make some big decisions tossing between capital raising and borrowing and looking at the share base I would say that he has done well on both fronts. Total borrowings are $115M or which $80M has been utilised. I did make a comment perhaps a year ago that the interest rate of 15% was high for the Nova Quest loan of $40M of which $30M has been drawn down. Looking at the terms of the loan, it has a maturity at July 2026, interest only period lasting 4 years. Interest payments will be deferred until after the first commercial sale of Ryoncil. From the first borrowing in 2018 while interest accrues they do not have to make any payments to the lender. I am sure 2 years ago it was a risk on the part of Nova Quest to accept these terms and hence we can understand the high interest rate. With the loan from Hercules, it is a 4 year credit facility with a variable interest rate and the current rate of 9.7% is lower than what the rate was initially.

The second part of the question deals with finding a partnership. After two failures to strike a partnership, I am sure you will realise that MSB has by now enough experience to get the right partner. Tasly is their partner in China and I would think there is merit when dealing in China to have a Chinese partner who knows the ins and outs of the way to operate in China. The partner has been very quiet and let’s hope this is just the lull before the storm. They have injected some money and they will be milestone payments in the future. In September 2019 MSB signed a partnership agreement with Grunenthal for rights for MPC-06-ID for Europe and America. They have received upfront payment of US$15M on signing and will get another US$20 when they receive regulatory approval is sought to begin phase 3 trial in Europe and a further US$10M when certain clinical and manufacturing outcomes are met. MSB has advised that they are in negotiations with other interesting parties and I am quite sure the closer they get the approvals for CLBP and HCF the prospective partners will have much bigger upfront fees to pay for rights. So I do not think that partnerships are a problem. You also indicated that MSB has a time frame of I year which is inaccurate. The current cash position allows operations for 4.8 quarters. This means that they have cash to last them till June 2021. You have not taken into consideration a number of important factors which will happen between now and June 2028.

1. Approval for Ryoncil for a-GVHD, we know that the PDUFA is scheduled for 30 September, hence we have a revenue stream commencing end 2020
2. MPC-06-ID for Chronic Low Back Pain.
404-patient Phase 3 trial in chronic low pain planned to read out in mid-2020.
Continued operational progress in strategic partnership for chronic lower back pain with Grünenthal GmBH in Europe, leveraging US Phase 3 trial data read out. This would result in milestone payments from Grunenthal and potential payments from American partnerships.
Revascor® for Chronic Heart Failure: Mesoblast’s 566-patient Phase 3 trial of Revascor for advanced chronic heart failure, planned to read out in mid-2020.
Remestemcel-L for Acute Respiratory Distress Syndrome in COVID-19 patients. Surely the current report on the 12 patients is not going to be different from the trial for 240 patients and I am anticipation revenue by the end of this year.

Your third comment reads “I’m looking the level of usage of third one’s capital and how much remain. Maybe you should highlight and read wording “maybe” in text that can makes big difference.” I presume that your “maybe” denotes uncertainly and hence MSB may not have income to see them operate for more than a year. With due respects to you should you look at the Tier I products, can you with any certainty say that none will be successful and the FDA will not approve any of these products. I note in your previous posts you have been optimistic about the success of MSB and it is strange that you should now paint a gloomy picture. As said earlier many of us who have invested in this company have done extensive research and will not be swayed by others who may say otherwise. Good luck to your trading and I will hold on to my shares even after June 2021.

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Great post!

Just wanted to add my 2 cents regarding this comment -

"Temcell sales. The following is the revenue for the 3 quarters: 1st. 1.73M, 2nd.1.82M 3rd. 1.97M. There has been a steady increase and perhaps the full year would be in the vicinity of 7.5M. Japan is not a big market and the US market would generate if I am not mistaken 8 times that market hence we would be looking at about 60M."

Remember we only receive royalties for TEMCELL sales in Japan, i think maybe 20-25%.

MSB Price at posting: $3.16 Sentiment: Buy Disclosure: Held
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