1.) “Our CEO genuinely believes that we have 3 commercial products in the short to medium term”
I do not doubt that “your” CEO believes a lot of things, and have never once said that he doesn’t believe the things he says. I sense he could believe very passionately about what he is trying to achieve.
However, just like all CEO’s, “your” CEO is not all-knowing and all-seeing.
The very nature of his line of business – being one of predicting things that have no certainty about them - precludes him from being so.
For example, in as far back as 2010, your CEO was of the view that the company had a future in the Osteoarthritis field, specifically for the treatment of knee joint trauma, for example after damage to the Anterior Cruciate Ligament.
Today there is no mention of this program and the branded product “Replicart” has disappeared from recent company lexicon.
“Your” CEO also said on 30 April 2010 that the company was “well-funded for commercialisation” in the Spinal disease space. A month later the company raised $37m in fresh equity.
As for “commercialisation”, almost 5 years later and the company has yet to commence Phase 3 trials for lower back discongenic pain. And the other element of the spinal fusion program that existed in 2010, namely fusion of the cervial spine in the neck has also disappeared. Like, “Replicart” in the knee space, “Neofuse” is no more a feature of spinal fusion.
Bone repair, also a key plank of the portfolio some years ago, is no more, despite the following glowing endorsement from the company some years back: “Mesoblast’s potential applications for bone tissue generation continue to broaden, and include products for repair and healing of long bone fractures, treatment of bone defects, and treatment and prevention of osteoporosis-related fractures such as fractures of the hip. Mesoblast’s fracture repair product, highly effective in an Australian pilot clinical trial, is targeting the non-union fracture market, which accounts for 5%-10% of all long bone fractures. Mesoblast has applied for Australian regulatory approval of the product, and anticipates that a positive outcome will facilitate its United States registration strategy for a bone repair product. Building upon and continuing to expand a broad-based international patent portfolio is fundamental to Mesoblast’s ability to bring a bone repair product to the United States market and to consolidate strategic partnerships.”
Similarly for the Diabetes programme (“Significant preclinical trial results showing that the proprietary stem cells could be a potential treatment for diabetes”) as well as the Cancer programme (“Mesoblast announced that it is broadening the oncology applications of its “off-the-shelf” product for expansion of haematopoietic stems in patients with blood cancers, including multiple myeloma. The new uses of Mesoblast’s proprietary “off-the-shelf” cell product for bone marrow transplantation will continue to be developed under the Company’s existing United States FDA orphan drug designation for expanding haematopoietic stem and progenitor cell numbers in patients with haematologic malignancies, such as multiple myeloma.”
Both of these, having been upheld by the company as strategically important at one stage, are no longer.
As for Bone Marrow treatment, in 2010 the following was said: “The company’s product is being developed under a US Food and Drug Administration Orphan Drug Designation. This means that there is the potential for a fast track to Phase 3 and, if successful, accelerated product registration. Phase 3 meeting scheduled with FDA: Our upcoming meeting with the FDA, will enable us to provide a clear timetable to product commercialisation and early revenues.”
Well, fast forward more than four years and not only has a clear timetable to product commercialisation and early revenues NOT materialised, but this product has been relegated to Tier 2 status.
Then there is the Phase 3 CHF trial which was slated to commence over three years ago. And whose progress, it has just been announced, has been delayed further.
I could go on, but in the interests of brevity I’ll leave it there.
But with the one caveat, before the MSB tribal elders call for my head to be impaled on a stick for defaming their beloved leader, and that caveat is this:
I am not, for one minute alleging incompetence, active misrepresentation, or commercially negligent behaviour on the part of the CEO and other executives of the company.
What I am saying is that, due to the nature of the beast, some things are un-forecast-able with any degree of certainty.
Things change, rules change, technology changes, the business environment changes.
So much so that even the most effective, adept, eminently-qualified industry captain in the world can be forgiven for getting things wrong.
Which is why I – unlike you, it seems – do not take at face value what company executives say about the future.
(In fact, that you don’t do so boggles my mind, because the company’s management – in every presentation it makes that contains forward-looking statements, actively concedes that it’s opinions on the future should not be relied upon, and thereby explicitly encourages investors to corroborate or to sanitise any outlook statements independently.
So you are not even adhering to your own mantra of “taking on board and putting great reliance” on what your CEO says.
For the company’s lawyers – with the CEO’s sanction – advise you to consider that things may, in fact, not come to pass as the CEO and the rest of the board expect them to.
2.) “After 10 years – ( outside timing of trials ects) there is not one statement that our CEO has made which in substance was incorrect.”
Not true.
See response to 1.) above
3.) “Personally , I will take on board and put significant reliance on what our CEO says (particularly having strongly researched the company , getting to understand the persons character and track record in the last 10 years).” See response to 1) above
4.) I will be living in a fool’s paradise, be very ignorant and a Jelly Bean, if I chose to place more reliance on HC posters who not do not hold stock in the company – compared to statements made by the CEO that are published on the ASX.
If your sole criterion for the attaining of understanding and knowledge – outside what the company tells you – is only from people who hold stock in the company, then that is a matter for you.
Personally, when I own shares in a company I actively seek out the views of those that are different to my own, so that I may avoid making the sorts of investing mistakes brought about by the pitfalls of confirmational and recency biases, as well as emotional investing.
But, like I say, you are free to make yourself receptive only to the message that you feel comfortable hearing, and shutting out any potential alternative viewpoint, however objectively accurate it may be.
Finally, in response to your question: “Madamswer, which part of my judgment do you not understand?”,
I never said I don’t understand it. I understand it perfectly well. I just don’t subscribe to it.
(20min delay)