MSB Trading - 2020, page-1040

I think some people look at $1.6bn and are shocked at that valuation ... but that is probably because most ASX biotechs are sub $1bn. I'd say almost 90% of them are. Those are all biotechs that are in the R&D stage.

Once a biotech/pharma company becomes commercially successful, the valuation balloons out to several billion at least. Largely due to the fact that once they make it, the industry is very very lucrative. Extremely high margins, especially if you make it in the US. And I can probably count with my fingers how many have made it that far on the ASX.

It is not easy to become a standalone biotech that survives the R&D stage and also avoid take-over... be it through sheer luck or by grand design.. Mesoblast through its volatile and sometimes ugly corporate history.. has avoided insolvency and a takeover.

Where most biotechs run out of money, or are gobbled up at a valuation far below their worth... Mesoblast may just come through as a stand-alone success story. If that is to occur, the upside is scary.

We are talking ResMed (A$9bn), Cochlear (A$14bn), Sonic (A$15bn) and Ramsay (A$16bn).

And being a global leader in stem cell treatments, addressing the industry need for an opioid replacement and treating currently untreatable diseases ... the upside is crazy scary.

We may even call CSL (A$140bn) a peer one day if all goes well... and that somewhat in my mind puts today's A$1.6bn valuation in context.