MSB trading, page-2351

Why all the negativity?

2018 has been a groundbreaking year for MSB:

1. Shares are up 22% YTD (vs ASX200 down 7%)

2. First stem cell company to meet FDA primary endpoint in a phase 3 trial (aGVHD). Fast track approval likely in 2019 - product already has 50% market share in Japan. No other treatment in a disease where up to 95% of kids die if they don't respond to steroids.
WE ARE SAVING LIVES - THAT'S WORTH CELEBRATING!

3. Finance backing from Hercules and NovaQuest - both very experienced funders of biotech. NovaQuest is full of PhD's who understand the technology and they were prepared to lend 8-year money and allowed themselves to be subordinated to Hercules and buy equity at a premium - that's confidence (and their former parent company is running MSB's trials).

4. Partnering deal with Tasly to pay $US20m upfront plus take $US20m in equity to run trials in China, share data for FDA trials, Tasly to pay for the trials and also pay a further 6 milestone payments and "double digit royalties". This is just for heart in China and could eventually move into other licensing deals. None of this is in analyst valuations or cash flows.

5. Small partnership (so far) with Cartherics - could become a large deal in future if they are successful in CAR-T space (I view this as a sleeper) - not in anyone's numbers

6. Extension of JCR partnership to treat EB - a killer skin disease - with the intention to extend this into other skin wounds later and share trial data with FDA - this could be a huge market if they extend it into old people and diabetics. This is not in anyone's numbers.

7. NIH phase 2b Heart trial for patients with Left Ventricular Assist Devices results due in just over 2 weeks. This will also get FDA fast track approval if successful as it fills unmet need for dying patients.

And results due to be released at premier heart conference in US as a late breaking paper - if the results mirror results in earlier trials this could drive a partnering deal with a big US pharma

8. Cash burn reduced and cash position secure until at least September quarter 2019

9. Board strengthened and new CFO Josh Muntner appointed. Mr Muntner has 20 years’ experience in healthcare investment banking and corporate finance, and has been involved in a wide range of healthcare-related transactions with approximately $11 billion in value. Most recently, he led corporate development and financial transactions at Nasdaq-listed biotechnology company, ContraFect Corporation. Previously, Mr Muntner served as Managing Director and Co-Head of Healthcare Investment Banking at Janney Montgomery Scott, and spent nine years at Oppenheimer & Co. etc. That tells you something about the direction MSB is heading!

10. US analysts are backing the shares with valuations of $5 on average ($A equivalent). These valuations are deeply discounted and have a high probability of rising as MSB serials

If all those achievements in 2018 aren't enough, there's plenty more to come!

1. More phase 3 trial results to come:
Phase 3 heart trial completed over 85% of enrolments, readout in Q4 and Chronic Lower Back Pain trial is a focus of US regulators trying to limit opioid abuse.

These are big high profile diseases with unmet needs

2. More Tier 2 products to come in very high demand areas of rheumatoid arthritis and diabetes.

Nothing goes up in a straight line, but MSB bottomed earlier this year and is already a big outperformer in 2018. It has made dramatic strides forward with big potential for further good results in the short and medium term.

It has exceeded my expectations for achievements in 2018 and the share price is likely to continue to follow valuations higher