Morning from the Tron, BlastersI would like to raise some...

Morning from the Tron, Blasters

I would like to raise some awareness of what we - yes, including you - are when we invest in Mesoblast, what the recent 9-1 ODAC approval means both in terms of share price valuation and commercial realities as well as revisiting one of my earlier ARDS valuations (the conservative model) and discussing where we may be heading in the coming months and years. Given the new posters and some investors who may not be as well informed as others, I would also like to raise some risks and what it means to invest in Mesoblast i.e. speculating.

Please remember none of what I say is financial advice (or advise).

Background & Awareness
We have several new interested parties on these threads so I'll start by providing a little background on my 'investor type'. Keep this in the back of your mind if you choose to read the remainder of my post:

- On 18 June I posted, truthfully, I walked six kilometres to avoid a $15 Uber (that's how invested I am);
- In one of my more recent posts I stated "diversification is a cop-out"; and
- I think dollar-cost averaging is a waste of time. I cannot imagine how livid I would have been if I dollar-costed my investment over the years / months.

So yes, I'm bullish - with almost everything in life. As such, my views - not advice - are also bullish.

I also admit I am a speculator when I pour my funds into Mesoblast. Make no mistake, with the traditional definitions of "investment" VS "speculation" and even more recent definitions, investing in Mesoblast is by all definitions, speculation. If you disagree, you are kidding yourself and are an example of a major risk to yourself as defined in legendary The Intelligent Investor (a book I largely do not adhere to as it does not fit my investment profile - but I am aware of speculation and of the related risks). If you have anything more than 3-5% of your net wealth invested in Mesoblast, you are not a "Defensive Investor", per The Intelligent Investor's definition. There is nothing wrong with this, just be aware of your profile and ensure you will be OK if things do not turn out as I / we forecast.

Thanks

To the scientists and other subject-matter experts in this field. This is not my speciality and your posts leading up to the ODAC and live during the ODAC were very useful to me and I am sure many others. You are one third of the reason I post on these threads (to try and repay the favour with my indicative valuations and hopefully rational / commercial posts), the other thirds being doing my bit to inform less-informed investors and finally penning my thoughts helps me ponder where my own head is at.

Socially Responsible Investing

There have been strong assertions that people only invested in Mesoblast for money and can be no other "do good" reason - this cannot be further from the truth. Of course I would like to make a profit but if I had the choice of a business saving lives VS another with a slightly higher projected return of course I would go for the former. I also avoid "do bad" stocks - I did an analysis of SKC with a friend a few months ago and I avoid casino stocks so I didn't buy in, but safe to say my friend is sitting on very healthy bags with his SKC investment.

Point is, do not expect everyone is as dark (or angelic) as your own.

Now, let's discuss why my username may no longer be true in relation to my investment in Mesoblast in the near-future.

SR-aGVHD - A Reality Check
Going back to my 'Gym Bro' from my earlier post who only bought in due to the conversations we had while working out, he and to be fair, several others on these threads, expected the share price to touch $10 on the SR-aGVHD approval news.



"Pure wisdom". Do. Not. Be. Like. Gym. Bro.

In his defence, he said his due diligence and research was based on the fact that he knows I am obsessive with my diligence, so he did not see any reason to do his own. This is all well and good when things are rosy, when they aren't - weak hands. You cannot borrow conviction.

If you were also somebody who expected or believed to touch $10 on the back of a positive ODAC recommendation to the FDA re Ryoncil for SR-aGVHD, you may benefit by reviewing your research methodologies and managing your expectations accordingly.

I estimated the share price to reach $5.88 (because I like 8s, it should really be closer to $5.50 leading up to FDA approval and / or the ARDS' 30% interim readout) following a positive ODAC recommendation. This was based on a valuation I gave SR-aGVHD of $2.20 to $2.50 in the short-to-mid-term. Of course, it's difficult to know which share price to add the valuation to - certainly not $4.87 + 2.20 = $7.07 because as I said earlier the $4.87 before the ODAC meeting was an unwarranted increase in price.

I expect we will be bouncing (yes, bouncing) within a dollar or dollar-fifty range until we get further announcements, be it FDA approval or the 30% interim ARDS read-out. Left-field, we may also receive updates of additional applications of Remestemcel-L.

Note: unsure if people have checked; however, we have an additional study location for our ARDS trial (WakeMed, in North Carolina):

The positive of the ODAC decision (and very likely FDA approval) is now in my opinion increases the share price floor from $1 to about $3.30. If your average price for Mesoblast is below $3.30, I think you are in a very good place.

Where is the Share Price Going?
Here is my conservative view (mid-to-long-term) I posted on 18 June in relation to Mod-Severe ARDS in America only:



The following table is updated for increased deaths:


As you can see, the TAM is unfortunately growing - and obviously this is related to the share price. For humanity's benefit, I genuinely hope our TAM slows or ceases to increase completely. However, my valuations are for the American market only. COVID is global. As I'm writing this in my quarantined room in the Tron, an hour north (Auckland) has had a breakout over the last few days after 102 days without any community transmissions across all of New Zealand. ARDS is global. Keeping this in mind, the ODAC positive recommendation of Ryoncil adds a couple of bucks to the share price, but does a lot more than that in reality.

The ODAC's decision clearly indicated the willingness to recommend the FDA to approve a stem-cell treatment of this type - the first in the USA. What does this mean commercially? The FDA is the world's 'gold standard'. I have even more faith now of a successful FDA approval of our ARDS trial (if successful). This means the TGA will very likely follow. Europe will follow. New Zealand will follow. Think about the TAM then, and yes, the corresponding share price. Note the above increase in indicative share prices was due to TAM increasing by only ~35,000. Imagine what the market outside of the USA will do to TAM and share price.

Make no mistake, Ryoncil being approved is a couple of bucks or "a slice" of the pie. But this is absolutely monumental. It's step one to not only a slice of the pie or the whole pie itself. This is Mesoblast calmly on its way to take over the entire kitchen - and replace the chef.

I expect within six-months, my username will be as false as water (apologies, I am currently reading very old books so am in the mood). I will no longer be speculating but rather investing in Mesoblast. I do not think "smartinvest" has the same ring to it, though... Intelligentinvest? Anyway.

Concluding Remarks

Many of our posters liked the seed analogy I wrote on 28 June:

"When you buy the right fertiliser, ensure sufficient moisture, nutrients, sunlight and plant your seed - you do not dig it up every other day to check whether it is sprouting. MSB's radicle has already emerged, and it is not long for the hypocotyl to surface. Trust yourself."

The above holds true now as it did then. Imagine if you dug your seed up following the release of the infamous Briefing Notes. Woosa. The other thing to add to my quote is there is more than one hypocotyl. What we have seen so far (Ryoncil, SR-aGVHD) is by far the smallest in comparison to the other upcoming three (heart, back and ARDS). The SR-aGVHD's hypocotyl has stuck its head out, now it's up to the FDA to let it grow and I only see a negligible risk that they will not do so.

A note on the naysayers and the shorters. No, they will not leave. We will always have shorters and trolls. Albeit, new batches. We had trolls between $1-$2. And all the way up now to $5 - but they do churn, as will shorters. The new shorters take on positions relative to the increased share price - substituting in for their failed predecessors from the $2 mark. We will also have shorters at $10. And $50. To expect MSB not to be shorted is farcical.

It was Blaise Pascal who, in the 1600s, said "all of humanity's problems stem from man's inability to sit quietly in a room alone". It was Sir Isaac Newton who said "I can calculate the motions of heavenly bodies, but not the madness of people" in relation to astrology and then investing in the sharemarket. I previously said it was not my thinking that made me significant returns but rather my sitting and doing nothing. I repeat these because as I have always maintained, Mesoblast is volatile and will continue being volatile at least for another six months. Do not dig up your seed unnecessarily:

*No offense to traders. The reason I consider trading gambling may be because I do not completely understand it and there have not been sufficient successful case-studies.

Before someone pulls my posting history, yes, I traded on Tuesday when the carnage began. This was not because I questioned my investment but rather my trust in the market to unnecessarily overreact. As I disclosed, I also bought back in (more shares due to the cheaper price) later on the same day.

This is likely my last time (I've told my girl this maybe three times already) topping and averaging up my Mesoblast investment. Was paid on Friday and the funds are doing their usual various border-runs before I buy more tomorrow / this week. Locked in. However! If the 30% read-out is not done before 18 September, then I will likely be buying more... Again.

Finally, in relation to "MSB getting Sue". This questions should not be laughed at or responded with memes as some people have done on the other thread. It is an important question and I suppose it depends. Is Sue cute?


Kia kaha
AM.