Quarter 2 Ryoncil revenue projections, page-6

@Kingtup

Have you considered the amount of hospitals on average who were onboarded during the first quarter ?

From the trading statement on the 29th April 2025, we learned that 15 infusion kits had “been purchased” and that 10 priority transplant centers onboarded of which “ five of whom have enrolled patients through the MyMesoblast hub” . Indeed the sales team of nine key account managers only started in the last week of April !

Now think what that means ? A new account manager is assigned a sales territory, normally after relocating, then has to cold call various hospital administrators and physicians. If you’re lucky they squeeze a meeting in within weeks, arrange training for hospital staff and deal with the practical issues of the cryogenic supply chain, storage and administration. The analysts are all aware of this, which is why Edward Tenthoff Senior Research Analyst at Piper Sandler (one of the top specialist biotech research cos in the USA) in a research note dated Feb 6th 2025 , forecast sales in the six months to June 25 at US$10.6 and $20.2m for the 2nd six months of 2025. From the total sales number we first need to deduct Temcell royalties, so he is working off 16 patients for calendar 25, split 5/11 1H/2H being treated at an average price of US $1.5m. Temcell royalties of over US$6.5m make up the difference. On page 9 of his report, he breaks down the workings of his forecast to 16 patients for calendar 25 , 64 pts for 26, 113 pts for 27 and 164 pts for 28 (which represents 50% penetration of the paediatric market).

I estimate that Mesoblast had an average of onlyeight hospitals available to offer Ryoncil treatment in this last three months which should climb to an average of maybe 30+ in the next quarter. Assuming they targeted the largest treatment centers first, logically Ryoncil sales achieved, will be unlikely to correlate with hospitals onboarded …but i would expect sales to almost certainly double or possibly treble the sales the following quarter as the addressable market opportunity expands. For some reason Bell Potter did not factor that progression into their note of the 7th April 2025. John Hester had consulted with the sales manager of Mesoblast at the time , but maybe Mesoblast’s did not want to set too aggressive targets ?. We now know from the Mesoblast trading statement released on June 12th, that the rate of hospital on-boarding would exceed those initial expectations and that 20 major paediatric centers would signed up by the end of the June quarter. Bell Potter opined, based on revenues from 10 paediatric patients for the three months to June25 and currently have forecast an average of only 22 patients in total for second six months of Cal 25 at an average price of US$1.32m. As regards the quarter to June 25 about to be reported , the ten patients they anticipate being enrolled are expected to have all their revenue recognised in that quarter. I think this is a bit unusual , as infusions can be purchased separately with no difference in cost and there is no way of knowing patient response at the commencement of therapy..I would have expected some revenue to accrue to the following Cal3Q25 for those starting treatment post the beginning of May ! … but what do i know ?

Forecasting sales for the next six months becomes even more complicated when you factor in another variable …the adult trial for sr aGVHD which should ? (Awaiting confirmation) be well underway by the end of the calendar year. Don’t forget this trial is planned to be undertaken in conjunction with The Blood and Marrow Transplant Clinical Trails Network (BMT CTN) , a body responsible for 80% of adult BMTs in the USA. The reason it becomes complicated is that there is an age overlap, in so far as adolescents over 12 years of age, are normally allowed to be included in enrolment of the 60/70 ? patients required for the adult trial. This reflects the age segments reported in the Reach trials for Ruxolitinb. Indeed , meta analysis suggests 3-4 % better survival rates in younger patients which extends through to the under 55s, so Mesoblast would be stupid not to benefit from the comparatively lower mortality rates reported in 12+ age group segment.


So, to recap, based on one analysts assumption that there are an average of five patients at an average Ryoncil price of US$1.5m for the six months to June 2025 , this would equate to US$7.5m of revenues for this quarter and 11 patients for the following six months to Dec 2025 before ramping up to 64 patients the next calendar year. These are the conservative assumptions that led the Piper Sandler analyst to value the company at $24 per share after they factored in other parts of the clinical programme. Bell Potter modelled on 10 patients being treated but did not allow for any accrued revenue, so their number might looks aggressive dependent on accounting treatment . Where both analysts seem to be far too conservative is with the rate of quarterly growth going forward. I would therefore expect some material upgrades post establishing a sales run rate and extrapolating growth in subsequent quarters.
Remember, we now know the onboarding is now proceeding at a faster rate, so although this is unlikely to have a material impact on the last three month sales it should potentially accelerate sales appreciably in the next quarter. Maybe the Company will have the sense to provide KPI’s which reflect number enrolled , infusions administered and total patient response with RWE efficacy statistics . The genie in the bottle ready to be popped, is offlabel sales which often average up to 50% of the treatment indication over time. I think if we achieve sales of over US$10m in the last quarter , we should be at at annualised sales rates of closer to US$ 130m by the end of October and US$150m by December. I think the analysts are well behind the curve here as Bell Potter are forecasting US$ 72.56m for the next 12 months and Piper Sandler only US$56.7 net off Temcell royalties .
If we gain approval for adult by end of 2026, Ryoncil could be looking at sales of closer to $450-600m in calendar 2027. Taking a midpoint of the latter sales , SG&A of US$110m , COGS of 10% , tax at a nominal 20% and applying a 40 post tax multiple we get to just shy of US$12bn market cap or approx AUD $ 9.44 per share. If we add on Rexlemestrocel potential sales, assuming LVAD opportunity etc., and we have progressed with our two blockbusters, HLHS, treatment refractory Crohn’s etc , you might wish to add several billion more applying a percentage Chance of Success modelling .

I appreciate some of the above numbers seem a little blue sky…but on closer examination they look increasingly like reality to me . I think Mesoblasts historic debt structure has made investors excessively cautious so the next set of sales numbers will be pivotal to share price performance. Non delivery will lead to balance sheet concerns and further shareholder dilution, whereas overachievement will set pulses racing. After the last trading statement I know which camp I am in . If the company starts to move to an operating break even , it’s a whole new ball game. The institutions will pile in, but not before the quant funds rip a few limbs off the shorters !

OP



Please do not rely on the facts or opinions expressed in the above post when making an investment decision. Beware of competitive threats and other treatment options and consider how other treatments might be fast tracked or challenges made to our IP claims.