Is the Mesoblast limited share price good value?

http://www.********.au/2017/05/25/is-the-mesoblast-limited-share-price-good-value/



Regenerative medicine hopeful Mesoblast limited (ASX: MSB) this morning reported its financial results for the nine-month period ending March 31 2017.
Below is a summary of the results with some comparisons to the prior corresponding period. All figures in U.S. dollars.

• Operating cash outflow of $72 million, compared to $70 million in pcp
• Commericalisation revenue received $1 million
• Loss before income tax for quarter ending March 31 2017 $12.9 million
• Cash reserves of $69.1 million
• Equity sale facility established to raise another $90 million at company’s discretion over next 2 years
• Phase 3 chronic heart failure trial achieved successful pre-specified interim futility analysis
• Multiple other Phase 2 and 3 regenerative medicine trials in progress including for back pain and rheumatoid arthritis
• Fast track designation granted by U.S. FDA for company’s treatment for acute graft versus host (aGVHD) disease in children

For now Mesoblast remains a company long on promise, but short on delivery, with its aGVHD treatment probably the closest to genuine commercial success thanks to its approval in Japan and progress towards commercial approval in the U.S.
The company’s flagship heart failure and chronic lower back pain trials are also both now at Phase 3 status, with the company boasting of their “blockbuster” commercial potential if they achieve clinically successful results.
The Mesoblast share price has swung wildly over the last couple of years as investor excitement collides with financial reality and the main problem with this business continues to be its giant cash burn that goes to show just how expensive clinical trials can be for hopeful biotechs.
As an investor I would prefer to watch the Mesoblast story from the sidelines, as with little in the way of revenues and no profits it’s impossible to value the business on its potential alone. However, Mesoblast on a market value around A$980 million, already looks on a big valuation to me and shareholders are likely in for a wild ride over the next 24 months ahead.