Msb

This analysis was why I sold (too soon I confess) as the stock went crazy later but hey i made a profit


We intend to cease coverage of no-moat Mesoblast in February 2020. We periodically adjust our coverage as necessary based on stock outlook, client demand, and investor interest.Our view on the company is unchanged following the release of its quarterly cash flow report today. As expected, operational activities are set to consume between USD 80,000 and USD 100,000 of cash which the company funds through a combination of expensive debt and the sale of its intellectual property for development and commercialization outside of the U.S. This effectively trades off upfront cash for long-term profit potential. In addition, the debt is secured against the cash flows of Mesoblast's first product expected to be approved in the U.S. and as such no benefits flow to shareholders. Based on the company's product pipeline and licence agreements in place, we maintain our AUD 1.60 fair value estimate.There is very high uncertainty in possible investment outcomes for Mesoblast. We view product approval as a first step, as commercial success depends on gaining reimbursement and the ability to gain share in what is set to become an increasingly competitive biotech space.We don't see the company's cash flow challenges being alleviated in the near term. Mesoblast has issued debt which rolls up between 10% and 15% per year, completed multiple rounds of equity issuances and licenced-out its intellectual property. We forecast that further capital will be required before the business is financially sustainable and it has indicated it continues to look for partners to develop and commercialise its intellectual property outside of the U.S. Overall funding tightness has seen the company suspend R&D on earlier stage product trials.

The main money earner by potential will be if its trials for disc degenerative disease prove superior to surgery this is as yet unproven but as the analyst pointed not much profit will accrue to shareholders from GVHD I still hold a few and am not writing off MSB but won't be buying back in yet