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by
Sarah Thompson
Anthony Macdonald
Joyce Moullakis
How long before Mesoblast is cap in hand in front of shareholders?
While the dual-listed cell therapies company may have a fresh focus on cash preservation, including reductions in cash outflows for manufacturing and administration purposes, its bank balance continues to shrink.
The company had $US69 million cash as at March 31, and analysts reckon it would have burnt through $US88 million at the operations line in the full financial year, to take that number closer to $US50 million come June 30.
It is clear Mesoblast will have to re-stock its balance sheet this year. Credit Suisse analysts, for example, are tipping a $US150 million injection in the coming 11½ months. The question for shareholders is when, and in what form.
Interestingly, Mesoblast has recently filed a $US180 million shelf company in the United States, which sharp eyes reckon is the first step in preparing a raising in that market.
And then there was a bullish initiation by US stockbroker Cantor Fitzgerald, which started covering the stock on June 7 with a $US20 price target. Mesoblast's US stock was trading at $US7.75 at the time.
While there are a few dots to join, it would not surprise to see Mesoblast act sooner rather than later. Of course the company has a $120 million/$US90 million equity facility to be used at its discretion in the coming two years, although that seems unlikely to be enough.
Mesoblast is a seasoned equity raiser, and last tapped equity markets for $US40 million in March via Bell Potter Securities.
Elsewhere in the health sector, shares in the rejuvenated Capitol Health are on a tear thanks to a timely equity raising, chunky asset sale, plans for restated dividends and even a share buyback.
Fund manager attention, though, has turned to Capitol's 20 per cent stake in US deep learning play Enlitic.
Street Talk can reveal that Enlitic management has been doing the rounds with local fundies with the help of Shaw and Partners in recent weeks, sparking thoughts of a potential ASX listing of its own.
Enlitic last raised funds at a $50 million valuation about 12-months ago, and there is a view it could be worth $100 million or more should it be spun off in the next six months. That would represent a tidy profit for Capitol.
Should it happen as the bulls reckon, then Capitol's run has only just begun.
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