CRASH! Mesoblast limited shares plunge 42%

Credit: Alon

It’s been a terrible day for investors with the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) tumbling 1.7% on concerns of a potential Brexit. However, no share on the ASX 200 index has fallen as hard as Mesoblast limited (ASX: MSB).

Following a nearly two-week suspension, Mesoblast’s shares reopened for normal trade this morning before collapsing as much as 42%. Ouch.

Shareholders may want to look away now:

Source: Yahoo! Finance

Source: Yahoo! Finance

The shares collapsed after the regenerative medicine business confirmed that its Israeli partner Teva had quit its partnership, removing a key source of funding for the business and introducing a huge element of doubt for investors.

Mesoblast did try to put a positive spin on the news, although investors saw right through it, pummelling the shares instead.

Mesoblast isn’t the first company in the biotech space to have its shares clobbered. Sirtex Medical Limited (ASX: SRX) has been on the receiving end of a huge selloff in the past for disappointing clinical trial results, while others such as Orthocell Limited (ASX: OCC) have also been prone to extreme volatility.

Investors with a low tolerance for risk may want to avoid this sector altogether and focus instead on some of the ASX's more stable, dividend-paying businesses instead.

Why retirees LOVE these 5 ASX stocks

Discover The Motley Fool's top 5 ASX dividend stock ideas for 2016 to get you started building a more diversified income portfolio that is paying you back! Click here to learn more.

The report is free! No credit card required.

Motley Fool contributor Ryan Newman has no position in any stocks mentioned. 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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.