The Mesoblast Limited (ASX: MSB) share price jumped as high as 12% today on results for the third quarter (Q3). What else is rocketing the Mesoblast share price upwards?
Mesoblast is an Australian-based regenerative medicine company. It seeks to provide treatments for inflammatory ailments, cardiovascular disease and back pain.
MSB share price
New drug proves effective in trial
Mesoblast’s new drug, Remestemcel-L has been proven to be effective in a 60-day trial on 222 patients. They are ventilator-dependent COVID-19 patients with moderate/severe acute respiratory distress syndrome (ARDS).
The results of the trial found the use of the drug reduced mortality by 46% in the pre-specified group below age 65, but not in patients aged 65 or older.
Also, when this drug was combined with dexamethasone, Remestemcel-L reduced mortality by 75% and increased days alive off mechanical ventilation in patients under 65.
The Chief Medical Officer of Mesoblast, Dr Fred Grossman said, “As cases continue to surge in younger patients across the US, we plan to meet with the FDA to discuss next steps in the regulatory process.”
Mesoblast Q3 update
The company bolstered its capital through a US$110 million private placement led by a US strategic investor group. As a result, cash on hand at the end of Q3 was US$158.3 million.
Mesoblast recorded a net cash outflow of US$25.8 million with nearly half stemming from an investment in Remestemcel-L (US$11.5 million). It also forked out US$5.9 million in product manufacturing and operating costs with the majority relating to the anticipation of the product launch of Remestemcel-L.
In relation to sales of TEMCELL HS Inj. in Japan, this is still recovering due to a pause in production to enhance its capability to meet rising demand.
The royalties received from TEMCELL dropped by US$1 million this quarter.
My take on Mesoblast
As with a lot of biotech companies, significant capital is required to be deployed up front for research and development.
Money is made once ground-breaking drugs are developed and approved by the FDA.
I tend to stay within my circle of competence to mitigate my risk exposure as part of the Rask Investment Philosophy. However, if you have knowledge in this space, you may possess an analytical edge.
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