worth the ride

Stem-cell developer Mesoblast worth the wild ride

· THE AUSTRALIAN
· MARCH 3, 2016 12:00AM
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· Tim Boreham


Banking reporter
Melbourne

Mesoblast
Mesoblast (MSB) $2.82
The out-of-favour stem-cell developer is on a share price roll, one theory being founder and CEO Silviu Itescu will return from a US jaunt with more than a snow dome and I Love New York T-shirt.
Given the recent doubts about Mesoblast’s commercialisation strategy, now would be an ideal time to deliver.
Spurred by robust trading in its US scrip on Tuesday night, Mesoblast shares bounced 28 per cent yesterday.
The stock has doubled from its $1.16-a-share nadir in mid-February, when the company announced that a phase two rheumatoid arthritis trial delivered “early and sustained clinical responses’’.
Mesoblast then reported success with treating children acute graft versus host disease (aGvHD), a life-threatening complication from receiving transplanted tissue.
In its first commercial deal, Mesoblast has also begun selling its aGvHD treatment in Japan.
A more quotidian explanation for the bounce is that Mesoblast had been severely oversold after last November’s poorly received $100 million Nasdaq raising.
Another factor is that Mesoblast was one of the bourse’s most heavily short-sold stocks, with 20 per cent of the register outstanding, but this proportion has declined to 4 per cent.
Symbolically, yesterday’s surge takes Mesoblast’s market cap over the $1 billion mark.
We plonked a speculative buy call on this one at $1.35 on February 17 and will hang on for the wild ride.
“Mesoblast remains an attractive story, with multiple shots on goal and meaningful potential for upside,’’ says Bell Potter biowatcher Tanu Jain.
Another says: “It’s still only worth half a billion at best.’’

(ENDS) Vin