Mesoblast [ASX:MSB] Shares Fall On Q3 Results

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

In late afternoon trade, MSB shares were down 3%, trading for 95 cents a share.

The biotech stock is now down 50% over the past 12 months and well below its August 2020 peak of $5.20 a share:

ASX:MSB stock chart

Source: Tradingview.com

Mesoblast 2022: Financial results are in

This morning, Mesoblast provided the public with its financial and operational summary for the third quarter ending 31 March 2022.

Mesoblast reported that revenue rose 46% over the nine months ending 31 March 2022, up from US$5.5 million to US$8 million.

Quarter on quarter, MSB revenue grew a more modest 5%, reaching US$2 million. The bulk of the revenue stemmed from the US$1.9 million received from Mesoblast’s TEMCELL royalties in Japan.

MSB’s quarterly loss after tax came to US$21.3 million, down from US$26.5 million in the March 2021 quarter.

Over the nine months ending 31 March 2022, Mesoblast has accumulated a loss of US$70 million.

The reduction in this quarter’s net loss relative to the prior corresponding quarter stemmed from reduced research and development spend.

Research and development expenses fell 34% to US$8.3 million, down from US$12.4 million.

The reduction in R&D is even more pronounced when looking at the financial year to date (nine months) figures.

Mesoblast has cut its R&D spending from US$46 million to US$27.8 million.

Opertions at Mesoblast

The company expressed its remestemcel-L product’s assay results show children with SR-aGVHD could benefit from the product’s relationship with anti-inflammatory and immunomodulatory assistance processes.

This was based on a trial of 54 patients, children with the SR-aGVHD disease.

To date, Mesoblast’s research has suggested its product has returned favourable responses and survival improvements for children with some of the worst inflictions of the disease.

The company also updated the public on its ARDS trial on patients with COVID-19, in which its remestemcel-L product ‘reduced mortality by 48% of 123 patients below age 65.. but not in 97 patients over age 65, as previously reported’.

Mesoblast’s remestemcel-L has proved to aid in the healing of Inflammed Bowel Disease, while its rexlemestrocel-L product trails have shown signs of derisking heart failiure.

MSB share price outlook in a harsh market

Growth and concept stocks have been hard hit lately, as investors shy away from businesses with distant profits.

So Mesoblast finds itself in a tough spot.

As investors start to look for companies with reserves of cash and strong balance sheets, Mesoblast’s cash burn may look unappealing.

In the current quarter, Mesoblast burned through US$51.9 million in operating cash outflows.

Yet it needs to continue spending on research and development to boost its product pipeline.

Time will tell whether its R&D spending pays off.

With these current challenging market conditions, it can seem like the wrong time to be looking for buying opportunities.

But opportunities are still lurking, even in today’s market, if you know where to look.

So where do you look?

Well, our small-cap expert Callum Newman has a strategy for picking-out those ‘left-for-dead’ stocks that are most likely to bounce back.

You can find out how he does it, ‘grave-dancer’ style, here.

Regards,

Kiryll Prakapenka,

For Money Morning

About Kiryll Prakapenka

Kiryll Prakapenka is a research analyst focusing on investigating the biggest trends in investments. Kiryll brings sound analytical skills to his work, courtesy of his Philosophy degree from the University of Melbourne. A student of legendary investors and their strategies, Kiryll likes to synthesise macroeconomic narratives with a keen understanding…

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