Shares of regenerative medicine group Mesoblast limited (ASX: MSB) have continued their impressive run today, climbing another 12.3% to trade at $1.69. That’s a 45% improvement compared to their $1.165 closing price on Monday last week.

Source: Yahoo! Finance

Source: Yahoo! Finance

While the gains from last week can mostly be attributed to a positive earnings report and successful results for its Phase 2 rheumatoid arthritis trials, this time the gain appears to have come from results showing its stem cell treatment was helping children survive bone marrow transplants.

The results reportedly showed that the use of Mesoblast’s proprietary Tier 1 mesenchymal stem cell product candidate (MSC-100-IV) demonstrated “clinically meaningful responses” and significantly increases survival in children who were suffering steroid-refractory acute Graft Versus Host Disease (aGVHD).

Basically, MSC-100-IV is intended to become a treatment for children suffering from aGVHD, which is a disease where donor cells may attack the recipient of a bone marrow transplant. The disease can then attack the skin, gut and liver and is often fatal. Mesoblast noted that: “Currently, there are no approved therapies for patients with acute steroid-refractory GVHD in the United States, and off-label options have demonstrated mixed efficacy with high toxicity.”

But based on the trial’s results, the study’s lead investigator Dr Joanne Kurtzberg said that “we are now seeing the majority of children who receive Mesoblast’s cell therapy respond and survive.”

The study observed 241 children suffering the disease and the company reported a response rate of 81% seen when MSC-100-IV was used as front-line therapy following steroid failure. Further trials will be conducted, but today’s results were certainly encouraging for investors.

Should you buy?

Shareholders of Mesoblast could be very well rewarded in the long run if it can continue to report successful trials results, and if it can continue to get by on the cash that it has (rather than raising even more capital from equity markets).

In saying that, it is also a risky bet. The development and trials of new products can be extremely time consuming and if they prove to be failures it can result in sharp falls in the share price.

As has been the case for shareholders of Sirtex Medical Limited  (ASX: SRX), Mesoblast could also be a reasonable bet for long-term investors, but those who are less tolerant to risk may want to steer clear.

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Motley Fool contributor Ryan Newman has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.