Mesoblast Share Price Down — Secures a Dire Cash Injection (ASX:MSB)

By ,

Seven months ago Mesoblast Ltd [ASX:MSB] was on a tear.

This high-flying biotech looked like it had the makings of something great. Perhaps even a trajectory similar to that of heavyweight superstar CSL.

Today though, that couldn’t be further from the truth.

The company has come within inches of becoming insolvent. A situation that could have left shareholders high and dry.

And even now despite a much-needed lifeline, the company’s future is uncertain.

Vital cash

Mesoblast has announced the successful completion of a $138 million capital raise. A placement that will see the company issue 60 million shares today, and an option for a further 15 million shares that are eligible for exercise up until March 2028.

And while some of the terms may have some shareholders a little miffed, they can’t really argue against them. This research-intensive business means they burn through cash very quickly, and with hardly any meaningful revenue (US$2.2 million in the last quarter), they were desperate for a top up.

Fortunately, they’ve got it.

But only just.

Earlier in the day this news actually helped lift the MSB share price above its previous close. Putting it briefly in the green for the day — but it didn’t last long.

As of time of writing the MSB share price is down 5.08%. With the reality and future of this cash-strapped company now a huge unknown for all.

So, while they may have bought a little more time for themselves, Mesoblast certainly isn’t out of the woods yet. Granted, CEO Dr Silviu Itescu is still putting on a brave face, as he comments:

We are pleased to receive a strategic investment from the principals of SurgCenter Development, one of the largest private operators of ambulatory surgical centers in the US  specializing in spine, orthopaedic and total joint procedures.

We expect the deep healthcare knowledge and expertise of this investor group will be of great benefit to the company. The network and infrastructure of surgeons and ambulatory centers operated by SurgCenter may provide unique synergies to facilitate development and market access for rexlemestrocel, if approved, in patients with chronic lower back pain.

Needless to say, it’s an optimistic outlook, but fails to address the pressing financial issues…

Should Mesoblast shareholders be worried?

Like I said, Mesoblast needs to find a way to start making meaningful revenues, and fast.

R&D is great, but investors will only be able to tolerate it for so long. Especially if it continues to be as fruitless as it has been recently.

That’s not to say that Mesoblast can’t turn their fortunes around, it’s just going to be tough.

Therefore, investors will need to weigh up their options carefully. Because despite their decent mid-cap valuation, Mesoblast is still a biotech stock. The kind that carries a whole lot of risk.

However, if you’re looking for tips and tricks to handle these kinds of risky investments, we can help. Our resident trading expert, Murray Dawes, has put together a fantastic guide on how he manages and trades around risk. Helping him extract the best possible returns from even the most volatile of stocks.

Check out the full guide, right here.


Ryan Clarkson-Ledward,
For Money Morning

About Ryan Clarkson-Ledward

Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

Ryan is also the Editor…

Mesoblast [ASX:MSB] Shares Fall 12% On Litigation Update

Biotech stock Mesoblast [ASX:MSB] plunged 12% on Tuesday after updating the market on a second class action lawsuit lodged against it.

Mesoblast [ASX:MSB] Shares Fall On Q3 Results

Biotech company Mesoblast [ASX:MSB] released its third quarter results today with MSB shares trading down following the update.

MSB Share Price Up — Trial Drug Helps Against Heart Attacks (ASX:MSB)

Up-and-coming biotech player Mesoblast [ASX:MSB] is on the up today. The regenerative medicine company announced some promising results from a Phase III drug trial from data that was shared at the American Heart Association’s annual ‘Scientific Sessions’, an exhibition of the latest findings and insights into all things heart health related.

Mesoblast Shares Tumble as Losses Widen (ASX:MSB)

The MSB share price down 14%. The Mesoblast [ASX:MSB] posted a FY21 net loss of $98.8 million as the FDA asks for further trials of MSB’s emergency COVID treatment…  

Mesoblast Share Price Bounce Back on Positive Trial Data (ASX:MSB)

It seems 2021 continues to be a tough year for the ever-volatile Mesoblast Ltd [ASX:MSB]. Thankfully though, today has brought some relief to shareholders. The MSB share price is up 7.38%…

Mesoblast Share Price Crushed as Clinical Trial is Brought to a Halt

The Mesoblast Ltd [ASX:MSB] share price has been absolutely hammered today, trading 32.63% lower at time of writing. The result comes as the company shared some disheartening news. The trial of its remestemcel-L therapy…