DearHolders,
Nicesummary from BP.
Haven’tstopped smiling since Friday !
AnotherBIG month coming up.
GLTAH.
Anjo.
BELLPOTTER INCERASES VALUATION BY 22% TO $7.30
HEALTHCARE
Mesoblast (MSB)
Ryoncil speeds towards USapproval with 9-1 Panel Vote
Last week FDA’s Oncology Drugs AdvisoryCommittee met to discuss the BLA application for Ryoncil for paediatricSR-aGvHD. We are pleased to report that despite the bearish FDA documentsreleased earlier, after a whole day of intense discussions and deliberations,the panel voted overwhelmingly in favour (9-1) that the available data supportthe efficacy of Ryoncil in paediatric SR-aGVHD. Panel was swayed by the robusttreatment effect seen in MSB’s Phase 3 trial, compelling biomarker data, lackof safety issues and the unmet medical need. While they acknowledged thelimitation of a single arm, non-randomised trial as potentially giving rise tobias, they concluded that a randomised control trial was not practical inpaediatric SR-aGvHD patients. On manufacturing FDA and panel acknowledged thatthe process is complicated, it’s not perfect, but state of art as of today andcontinued learning and patient experience will help in making this perfect infuture.
Too soon to celebrate – we don’t think so
This is a great way to kick off a catalyst richperiod for MSB in our view. We note that FDA usually follows the recommendationof its advisory panels when the vote is strong or unanimous. The strong vote bythe panel has paved the way for Ryoncil to become the first FDA-approvedallogeneic stem cell product. In our view, MSB and the FDA will discussrequirements around a post market study in adults, which the FDA is likely towant a commitment to. We expect the agency to grant an accelerated approval to Ryoncilfor paediatric SR-aGvHD ahead of the 30th Sep. PDUFA date.
Valuation lifted to $7.30/sh, Retain Buy (spec)
Revisions to our model led to a 19% increase inour FY21 NPAT and a large decrease in our FY22 Net loss est. driven by anincrease in our revenue forecasts (increase in POS of Ryoncil for paediatricSR-aGvHD to 100%, and increase in remestemcel-L COVID-19 ARDS revenues due toincrease in est. COVID-19 confirmed cases in US during our forecast period).There was no change to our FY20 est. Near term earning changes, adjusting ourDCF for time creep and reducing our WACC to 18% (was 19%), has led to a ~22% liftin our valuation to A$7.30/sh (was A$6.00/sh). MSB remains our Top Pick for theyear with several other near term catalysts.
Disclosure: Bell Potter Securities acted aslead manager for MSB’s A$75m capital raise in Oct’19 and A$138m capital raisein May’20 and received fees for that service.
| 1 | | Recommendation: | Buy, Speculative | Previous close: | .91 | Valuation: | .30 (was .00) |
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