@col69The charts and the fundamentals are coinciding. This is a strong volume uptick and the lodgement of the BLA is likely before the end of December given the Chairman's comments at the AGM that he is hoping for approval in the first half of 2023. That means submission of the BLA before Dec 31st.
The $ value of trade on the ASX today was around 10x that of yesterday. A huge 4.3m MSB shares traded on ASX and another 447k traded on CBOE. The buying started just after the opening and continued right into the final match, with the price closing on its high, up 11.6% to $1.105. We appear to have broken the $1 barrier in fine fashion, though I'd still like to see it hold over the next two or three days.
There will be a series of annual healthcare conferences in the next month or two, kicking off with Piper Sandler today see [*] below and then the big JP Morgan annual conference in January. I reckon that Dr Itescu will be likely to appear in person at the JP Morgan conference if the BLA has been lodged by then and it should generate enormous interest among US instos. MSB appear at the JPM conference every year, but the past two years have been by video link.
As I have noted in recent posts, the Golden Cross is highly likely to happen next week. There would have to be some sort of calamity to stop it happening, especially after the strong price rise today. It is possible that it could happen on Monday if the share price holds over $1.10 over the next 3 days - but at present I think Tuesday is the earliest likely day for the Cross, and that allows for a pullback. A lot of technical traders pay attention to the Cross - and it is highly significant that it looks like happening with the share price over $1. A consolidation over $1 for a few days is likely to provide a solid level of support into the future and likely form a new base in the long term trading range given the positive underlying fundamentals of the upcoming BLA lodgement.
If you are an insto trying to build a position in front of the BLA lodgement and the interest likely to be generated from the US healthcare conferences then there isn't much time, especially given the still low trading volumes compared to the high activity levels of two years ago when US investors last saw MSB as a "story stock".
The following graph just shows monthly volumes on the ASX market (not including CBOE and not adjusted for $ value of trades):
Even more dramatic, the recent $ value of turnover is a tiny fraction, only 1.2% of tof the high back in August 2020, when the share price was over $5. So, even though there are currently more shares on issue than back in 2020, it is much harder now for instos to get set in $ value if they want to buy stock now.
Added to that, there is hardly any shorting activity at present, so selling volumes have dried up. In the past two weeks, the shorts have actually reduced their net position by around 400k shares i.e. they have been net buyers at the same time that new buyers are trying to get set.
Note that in August 2020 the $A value of MSB traded on the ASX was around $A1.3 billion on total turnover of 300m shares. In the month of November 2022, the $A value was around $A18.2m on volume of 18.5m shares. Note that 4.3m shares went through ASX today out of the 18.5m for the entire month!
[*] Piper Sandler
Piper Sandler served as sole US placement agent for Mesoblast Limited on its August 2022 PIPE offering - so Piper Sandler would have arranged for some of their clients to gain access to the placement at $A0.75, though big holdings were given to existing holders M&G, principals of SurgCenter and some of the shorts.
Piper Sandler analyst Edward (Ted) Tenthoff ("The Hoff") initiated coverage on Mesolast Limited (NASDAQ: MESO) with an Overweight rating and a price target of $US7.00.
I would note that the Piper Sandler 34th Annual Healthcare Conference is from November 29 - December 1, 2022 in New York, NY.
Ted Tenthoff is a managing director and senior research analyst at Piper Sandler, focused on the drug discovery sector of the biotech industry. In April 2013 and 2015, Tenthoff moderated panels at the International Adult Stem Cell Conference at the Vatican. He was ranked No. 2 stock picker in biotechnology by the 2012 Wall Street Journal "Best on the Street" survey and was ranked No. 1 stock picker for the life science tools and services sector in the 2006 Starmine Analyst Awards.
Note also that Professor Silviu Itescu received the inaugural ‘Key Innovation Award 2013’ from the Pontifical Council for Culture and The Stem for Life Foundation. This unique recognition was announced during the Second International Vatican Adult Stem Cell Conference currently being held in Vatican City. So the link between The Hoff and The Prof goes back 10 years or more.
Here's the Q&A from the last conference call with the questions from Ted Tenthoff so you can see the ares he's most interested in, and areas on which that his clients may want to focus:
Edward Tenthoff
...So Silviu not to split hairs, but I really want to just understand the exact process under the new survival data that you included in the IND, does that constitute the response to the CRL? And does this 2- to 6-month clock kind of start ticking from October 3rd. And then I have a follow-up there.
Dr. Silviu Itescu
No. The survival data we've just provided today has just become available to us. So today's announcement is the new data that has been generated by CIBMTR completely independently. That has not yet been provided to the FDA and will now be filed with the FDA. So the clock is not ticking until these data are in the hands of the FDA.
Edward Tenthoff
And how long that will take weeks or something like that pretty short term.
Dr. Silviu Itescu
Yes. Very short term.
Edward Tenthoff
Okay. Excellent. Just with respect to launching the lower back pain study. What are plans to advance that into Phase III? And kind of, I guess, similar question for heart failure. Is the goal still to partner heart failure and develop chronic lower back pain on your own? Or what's the kind of latest on that.
Dr. Silviu Itescu
So I'll take -- I'll give the question on heart failure, and then I'll have -- I'll ask Eric Rose to talk about the back pain program. So with respect to the heart failure, you're quite correct. As soon as we've had our meetings with the FDA and pathways clarified. We intend to work with partners to complete the commercialisation of the heart failure program. Eric, do you want to talk about our plans for confirmatory Phase III trial in back pain?
Edward Tenthoff
Silviu. Sorry to interrupt, Eric, sorry to interrupt before you start on lower back pain. But Silviu, have the FDA meetings regarding FRAP been scheduled phase.
Dr. Silviu Itescu
We're waiting for specific dates.
Dr. Eric Rose
With regard to back pain, our expectation is to do two trials, which we will begin -- we hope in the second quarter, the third quarter of '23. We're finalizing that trial design with pain as the primary endpoint at a year. As a secondary, we'll be using a scale and quality of life, but it will not be a co-primary. It will be secondary endpoint. We believe that we will show a quality of life benefit using this scale as well. It's a scale which we have familiarity with, and we expect to finalize the design with the agency in the next few weeks, actually. So the final trial design will be submitted to them in accordance with the discussion that we had on what it should be in the past. But again, with that, we expect to start that trial in the second quarter of 2023.
Dr. Silviu Itescu
Ted, I might add. So the U.S. trial will start rapidly. A second trial is likely to be a European-focused study so that we can get potentially in front of both FDA and EMA concurrently.
So, very low selling, shorts buying back, and some insto buying all returning just at the time that MSB breaks the $1 barrier and is highly likely to have a Golden Cross by Tuesday next week. Also just at the time that MSB's new US supporters are having their healthcare conference and with the BLA likely to be filed this month (implied guidance from the AGM). Then we have the big industry wide JP Morgan conference in January. If Dr Itescu appears in person, he'll probably do other presentations to US brokers and instos who support the stock. If that generates anywhere near the excitement of mid 2020, the trading values could explode to the upside. Those 2020 trading values were during the excitement of MSB being involved in the periphery of the Covid-19 ARDS crisis, but also during the FDA's ODAC meeting which voted 9:1 in favour of Mesoblast and was expected to lead to the first ever allogeneic stem cell approval at the time. The recent excellent 4-year survival data for kids with aGvHD and Dr Itescu's statement that Mesoblast was a cure for these kids, likely giving them a normal lifespan, will add to the potential excitement this time.
It appears that $1 could now form long term support and that we have plenty of blue sky above us, depending on announcements which are likely later this month and possibilities over the following six months of FDA approvals and potential partnering deals.
(20min delay)