I am not a fan of the rocket pics, but here is an interesting...

I am not a fan of the rocket pics, but here is an interesting insight into investing from an article about the world's most successful investors by Anthony Keane in The Australian yesterday:

"Bill Miller bought 15 per cent of Amazon after the stock tumbled from $90 to $6 and looked headed for the scrap heap. He has studied philosophy and reasoned that there was a 50-50 chance Amazon would go to zero, but if he was right it would make 50 times his money. He made the money."

An understanding of probabilities is very helpful for successful investors. This certainly applies to Mesoblast. What is the probability of complete failure for Mesoblast? Bear in mind that even if it fails to continue financing its operation as it is currently structured, its assets will still have considerable value for a future partner or an acquirer. My view is that the probability of going to zero is less than 20% even if they go another two years without any new approvals.

Then we should ask, what is the upside if Mesoblast succeeds in taking a significant slice of the TAM over the next decade for several of their post Phase 3 indications and in several major markets? Others have previously posted on the possibilities here, particularly for the blockbuster indications of heart and back, so I won't get into predictions now. However, the probability profile is not that dissimilar to that of Amazon when Bill Miller invested in it. Are you prepared for a low probability of losing all your invested money on the prospect of all going right for Mesoblast over the next 10 years?

I am very comfortable with the current probability profile.