CRASH! Mesoblast limited shares plunge 42%

This is what can happen when things go wrong in the biotech space…

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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.

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.

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