Cash Burn

Maybe MSB has made some nervous and sold out. Medical companies are like miners. You will keep consuming cash until you have a marketable product for sale. I must say this MSB also caught me by surprise. I was fortunate to buy in at 20 cents and sold above $3, the stck then raced away to over $5 per share. My gut feel is; if MSB pulls of the CR it would also benefit BOT.

Cash-strapped biotech Mesoblast is keeping brokers close for its last ditch capital raising.Mesoblast shares went on a tear last year but have since come off, trading down 53 per cent to $2.46 over the past six months. Fund manager sources told Street Talk they expected brokers Bell Potter and Aitken Murray Capital Partners – which have worked for the company in the past – would be in Mesoblast’s corner for its private funding round.The company has been working over the weekend to stitch together a private placement to a “targeted industry investor”, which is expected to come in around the $100 million mark. And it sounds like an all-or-nothing type deal.Mesoblast went into a trading halt for the raising on Friday morning, and subsequently released its half year accounts to the market that evening.In those accounts, the company’s auditor PwC said “the ability of the Group to continue as a going concern and realise its assets and discharge its liabilities in the normal course of business are dependent on cash inflows from successfully completing the private placement, as well as from existing strategic and financing partnerships which are subject to the Group meeting future milestones and other performance conditions”.AdvertisementIn other words, if this placement doesn’t get stitched up, Mesoblast is at risk of no longer being a going concern.Cash-hungryWhile it was unclear who the mystery investor would be, fund managers reckoned the money would be coming from offshore. If that was the case, it would signal the first time a major strategic backer had put money into the company since Israeli drug giant Teva sold out in 2017.Funds also said it wasn’t clear if the entire placement would be going to the strategic, or if there’d be a chance institutions could get in on the action.The cash-hungry regenerative medicine company has incurred losses from its operations since it started business in 2004, according to its half year accounts.The company had accumulated a $US599 million deficit since inception as of December 31, 2020, and posted $US60.1 million net cash outflows for the first half of fiscal 2021.Mesoblast shares went on a tear last year but have since come off, trading down 53 per cent to $2.46 over the past six months.Jefferies Australia is in Mesoblast’s corner as defence adviser.