MSB (ASX) News: MSB Mesoblast Ltd Files For Shelf Of Up To $180 Mln ADS Representing Ordinary Shares

Originally posted by Pharmagang: ↑

"A shelf offering is a Securities and Exchange Commission (SEC) provision that allows an equityissuer(such as a corporation) to register a new issue of securities without having to sell the entire issue at once. The issuer can instead sell portions of the issue over a three-year period without re-registering the security or incurring penalties.1"

Disclaimer, I had to read into this today as I wasn't really familiar with this either, but here's where I'm sitting:

In short, MSB has a bunch of private equity shares that they can distribute at short notice in a quickly actionable way at a time that suits them.

Trusting@RUWM's post, the last time they did something like this was in August last year - 3 month prior to the partnership announcement with Novartis. Those two things could be related or they could not be, was interesting to not regardless.

MSB is in a really strong cash position following the capital raise, with a cash runway of around 1.5 years. This means that they are unlikely to be requesting any cash.

I had wondered if this had something to do with Surg Centre too, but that's $110M + $43M in warrants. I could be wrong here, but I think this has all been accounted for? Regardless, $110M + 43M is not $180M, maybe they just chose to do a bit extra for some reason? Perhaps the $25M Novartis equity? Because mathematically that adds up to $178M, which is close enough to be plausible.

IF the Surg Centre equity has already been sorted, then this is $155M in fast transacting equity that is unaccounted for.

So with regards to MSB, if this isn't Surg Centre money, then I read that this could indicate two things:

1) MSB believe they are significantly undervalued currently, so they have a bunch of shares built up for distribution at short notice when there is a more flattering SP. If they thought they were accurately valued or overvalued, they would issue at the current SP.

2) That there are extensive and promising partnering discussions occurring.

Keeping in mind what a Novartis deal looked like - $25M equity, $25M cash, $500M positive results, $750M milestones, double-digit royalties, commercial scale-up, and an all-cause ARDS trial. This is >$2B partnership deal, that only had a $25M equity stake, what could MSB be planning to do with $180M of equity (~20M shares) at a potentially higher share price?

Example of a Shelf OfferingSafeStitch Medical Inc. (formerly TransEnterix), a manufacturer of robotic surgical technology, used shelf offering to prepare new offerings to correspond with launch plans of a new product. When shelf registrations were expanded pursuant to the release of a new product line, the market responded with a 10% increase in share value. Even though the risk of share dilution was present, the market responded to the favorable news regarding the pending technological advancement.

The wet dream is that
1) MSB puts shares on a shelf
2) MSB gets accepted for priority review of CHF/CLBP
3) (Being greedy) MSB gets approval for CHF or CLBP Q4 2021
4) Shares spike
5) MSB takedown shares to issue to an equity partner at a much higher SP.

All speculation, but this is a pretty exciting place to be. I can't see a way where this could be a negative thing, it's either a non-event because of Surg Centre transactions or a pretty big positive signal.

Expand

I hope you are right, but I've read it differently.

I've read this event as simply an admin function to facilitate a conversion of MSB shares into MESO ADRs, just for more liquidity on MESO - no money is being exchanged as such...

Someone can correct me (@dplane corporate law?), but I believe that Mesoblast must seek SHs approval if they were to issue anything more than 15% of MC/ EV.
$180m is a bit over 15% so they would not be allowed to do this without SHs approval, but sure they can do the paper works with the SEC to prepare for it

Classic Mesoblast - leave us hanging and open to interpretations & speculations

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Last 96.0¢		Change 0.025(2.67%)		Mkt cap ! $1.096B

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95.0¢	96.5¢	94.0¢	$1.231M	1.291M

News: MSB Mesoblast Ltd Files For Shelf Of Up To $180 Mln ADS Representing Ordinary Shares, page-77

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