Up goes the MSB price - confirmation of BLA date, endorsement...

Up goes the MSB price - confirmation of BLA date, endorsement from Lonza, price retracement completed

1. It is relatively unusual for MSB to say "Price sensitive: Yes" unless something is important

2. The Lonza announcement shows that MSB are at least confident the BLA filing will be completed soon. The announcement says "by the end of this year" which is consistent with recent announcements and shows no slippage in the Q4 expectation of completing filing. That's important for confidence, because MSB announcements have slipped past "deadlines" in the past, yet almost always been achieved.

3. Lonza are one of the leading producers of cells (I've met them formally and informally and attended their presentations at global stem cell conferences). When they say "Mesoblast is a true trailblazer, leading the way in developing life-changing cell therapies" you can believe all the claims that MSB make to be a global leader.

4. Lonza say MSB are "working hard to soon make them available to large numbers of patients" - Lonza know MSB's plans - they are telling us it's happening soon - they must also be confident that BLA filing is in final stages and that FDA is then likely to make its decision by June 2020 - meanwhile Lonza are going to be working to churn out cells so MSB are ready to hit the ground running for aGvHD.

5. Lonza says other companies they work with on one side are "early stage" and MSB shows the "path to commercialization" on the other side. Other companies need Lonza to manufacture cells for testing etc, but my understanding from previous releases in the past couple of years is that Lonza is purpose building this facility for MSB and that the advanced 3D manufacturing technology and process improvements is patent protected by MSB, this will result in "significant improvement in yields and efficiencies". Lonza thinks MSB is years ahead.

6. This is probably why MSB thought it was prudent to have the recent capital raising - it allows Lonza the comfort to know MSB can pay for the cells and for the expansion. Side benefits are that it also gives confidence to other proposed partnering agreements that MSB has a solid balance sheet. Also the price was at a high and instos were banging on the door for stock.

7. I've never made glib predictions about where the MSB price might be going in the short term, apart from pointing out possibilities for bigger moves, both up and down, eg the possibility of a 61.8% retracement after the last announcement. That retracement was met yesterday, and the same thing happened in the US last night at $6, then a bounce to $6.08. It's no great surprise that both happened at the same time, because the $A/$US rate has been fairly steady since the Grunenthal announcement.

Bottom line

It was almost exactly a 61.8% retracement in both cases. In the absence of any other announcement, you would allow that low may be tested again over the next few days - however, this announcement is very positive to my mind.

As people have been pointing out, there have been doubts about MSB's technology and balance sheet since the Teva debacle. Well the balance sheet is sorted for at least 2 years after the placement and now the technology has been endorsed by Lonza (leading global stem cell manufacturer), Grunenthal (Europe's second biggest pain company and Latam's number 1), FDA through orphan drug designation on aGvHD and LVAD, partners JCR, Tigenix, and Tasly (all signed in past two years and already paying royalties), specialist biotech lending firms Hercules and NovaQuest (who have teams of PhDs prepared to advance 8 year debt, defer interest payments and take equity in MSB at a premium price), leading global stem cell researchers such as Dr Joanne Kurzburg from Duke University (who led the aGvHD trial and has publicly announced how dramatic the results have been, and who is already extending research into new areas).

If all those experts are wrong, then I'll be surprised! The only thing that MSB had to overcome in the short-term was profit taking after the Grünenthal announcement. A number of new instos have just entered the share register and shorts are covering (over 4m covered already, with 22m to go). The retracement level was hit yesterday, and there is big volume - those instos and shorts have taken advantage of a technical share price drop and profit taking to get some more cheap stock on board. They always try to get the lowest price but now that the fall is over I expect to see more decent buying pushing the price higher.

That last fall from $2.23 was nothing to do with company fundamentals it was purely a reaction to a fast share price rise - Grunenthal justifies the broker forecasts of a $A5 share price, and more big partnering deals like that could each add at least as much to the share price.