The bears are out today, espousing their usual crap. They...

The bears are out today, espousing their usual crap. They believe all they need to do is to keep the price down until the next refinancing to cash in. SI has already pulled many rabbits out of the hat to date, with Tasly, Tigenix, Kentgrove and non dilutive facilities with Hercules and Novaquest. Mesoblast’s strategy would appear to be, wait for upfront payments from a partnering deal, or, reach a development milestone before passing the hat around at a higher share price. So long as the Kentgrove facility is in place, the directors appear to be able to fulfil their fiduciary duty.
Whilst the above might appear a high risk strategy in normal circumstances, none of us is party to the pre BLA discussions the Company has had with the FDA. The simple fact is any Company would be crazy to submit an application without “the nod” from the regulator. Mesoblast has been given rolling BLA status (where the FDA actually allows part submissions in advance (after receiving their active support in its preparation) so that most issues are done and dusted before the official submission). We should receive an acceptance of our application within 60 days and normally 6 months to be approved under new guidance notes.Amazingly, I have read of a listed company with an oesteo arthritis of the knee treatment, which attempted to submit a BLA application without undertaking a blinded trial and was rejected by the FDA, but this is a rare occurrence. Most BLA submissions fail because they have post approval adverse events or fail confirmatory trials. MSB has the advantage of its expanded access programme in the US for aGVHD and the years of clinical data from JCR. Indeed the EAP results are particularly good !
The note from Bell Potter places only a small value on aGVHD. Other analysts, disagree. One thing is for certain. An approved product leads to commercialisation which leads to sales and reduces cash burn. More importantly perhaps, is that the FDA will approve the first stem cell treatment in the US. The mechanism of action and manufacturing processes, such as achieving batch consistency, potency, storage life and toxicity etc., will have been validated which will have implications for a whole family of MSB treatments still in clinical trials. On reflection I would expect analysts to reduce their risk assumptions on the latter treatments and apply lower discount rates based on probability of success (POS) modelling. Next week will probably see the BLA filing submission. This share price is a joke. Revascor could well be worth A$10-20 per share alone, if an average global licensing deal is concluded. Whilst their is still a reasonable percentage risk of failure the shares should trade nearer to $3-4 on a risked basis in my opinion. The current Revascor Phase 3 trial has had 300 patients enrolled now for about 3 years. During that time futility tests have been carried out by the DMC successfully on many occasions. The Company suggested that it would try to ask the FDA for some interim read outs in its last earnings call Q&A , which it might be able to share with us on the next quarterly ( which I believe is in a few weeks! ).
The reason for my optimism is simple. Listen to the last conference call. Then take the total number of patients in the double blinded trial and take the average number of patient days the trial has lasted for. Then allow for a standardised hospitalisation and morbidity rate for the specially screened control group ( 85%, probably experience 1-2 hospitalisations per annum and a large percentage die within 3 years because they were chosen for the trial by their biomarker determined risk category ). Simple maths determines that the longer the trial continues the impact of Mesoblasts treatment on its cohort group in this trial must be extremely significant in reducing MACE numbers. SI also clearly states at the end of the call that a reduction in MACE has historically been correlated to a reduction in deaths which is important for achieving the secondary endpoint of the Phase 3 trial . If my argument is valid we have a blockbuster . Assuming standard 20% royalties and milestone payments this should be worth a fortune.