Mesoblast reports positive trial results

Shares up 5% on the news.

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares in Mesoblast (ASX: MSB) were amongst the best performers on Wednesday, gaining 5.59% after the company announced positive interim results in its Phase 2 trial for spinal disc repair.

As a developer and manufacturer of biological therapies in the growing regenerative medicine industry, Mesoblast utilises stem cells for the treatment and potential cure for human diseases and conditions. The company's focus is to apply its adult-derived Mesenchymal Precursor Cells (MPC) product on treating diabetes, cardiovascular conditions, inflammation in the lungs and joints as well as cartilage degeneration.

Currently, the company is developing a further product to treat degenerative spinal disc injuries – targeting the US market estimated to be worth in excess of $800 million. This market is made up of over 6 million patients who have been experiencing chronic back-pain for a period of three or more months.

The interim phase 2 trial for the product was conducted when 50% of the selected patients had completed six months of follow-up. The results from this were very pleasing, with "significantly greater reduction in low back pain and improvement in function" in 71% of patients who received a safe and effective low dosage MPC injection – compared to a mere 20% and 30% of patients who felt positive effects from receiving hyaluronic acid and saline injections.

Results for the full phase 2 trial are expected to be released in the third quarter of 2013. Should final results be consistent with the interim results, Mesoblast will continue on with the Phase 3 trial, which would attract further share gains.

Over the last 12 months, Mesoblast shareholders have experienced rollercoaster-like effects with a very volatile share performance. Currently valued at $5.86, shares have lost over 21% for the year. This drop can partially be attributed to the company's $150 million capital raising in February, with funds to be used towards phase 3 of the trial should Mesoblast choose to go forth with it.

Foolish takeaway

In an expanding industry, a number of companies present as great future prospects. Companies such as Sirtex Medical (ASX: SRX) and Acrux (ASX: ACR) have provided shareholders with significant results on the back of successful trials and promising products. However, it is important to remember that the nature of the industry is risky. Should a trial fail to meet expectations or required standards, significant losses can also be realised – as was the case when Pharmaxis (ASX: PXS) received a negative recommendation on its Bronchitol product for cystic fibrosis in the US.

Whilst investors should not rely upon the data provided by the interim analysis, they certainly provide positive signs that phase 3 of the trial will proceed. Should the product receive approval from the US Food and Drug Administration, shareholders are set to benefit greatly.

In the market for high yielding ASX shares instead? Get "3 Stocks for the Great Dividend Boom" in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »