The Motley Fool

Why the Mesoblast limited share price is taking off

Shares in regenerative medicine business Mesoblast limited (ASX: MSB) have been climbing recently after it announced it has raised $29.4 million by selling an equity stake in itself to global pharmaceutical company Malinckrodt.

Mesoblast will issue 20.04 million shares to Malinckrodt under a 12-month voluntary escrow agreement and in return Malinckrodt has been granted an exclusive period of up to nine months to strike agreements to market and sell Mesoblast’s potential treatments for back pain and acute graft versus host disease.

This deal seems like excellent news for Mesoblast as it continues on its mission to deliver on what some investors consider to be its blockbuster potential. Cellular medicine is often described as the next great frontier in healthcare by treating, modifying, or reversing common diseases via stem cell regeneration that have a large unmet clinical need.

As at September 30 2016, Mesoblast had a cash war chest of $US60.4 million (prior to Malinckrodt’s investment) to funds its multiple clinical trials, although cash outflows for the most recent quarter were $20.8 million, with just $361,000 in cash receipts.

Evidently, while the story and potential is exciting, Mesoblast remains a very high-risk investment as it is burning through cash with several expensive clinical trials it has in progress yet to complete.

If the company can transfer the science of stem cell regenerative medicine into commercial reality it is likely to handsomely reward today’s investors, although given the cash flows I would suggest you keep it on the watch list for now.

Why would you take a risk on Mesoblast shares when you could buy the market-leading, profit growing, real deal in the shape of CSL Limited (ASX: CSL)?

You could also consider companies growing profits like clockwork that offer BIG dividends.


Attention investors: The Motley Fool’s dividend expert Andrew Page has just released his #1 dividend stock for 2017. Chances are you’ve never heard of this little company, yet it’s a fast-growing consumer favourite – with the shares up 155% in just the last five years! Even better, it’s throwing off loads of cold, hard cash. As we speak, these shares are trading on 4.2% dividend yield, fully franked (6.0% gross). Making it a ‘best bet’ for growth AND income... No credit card required.

Simply click here to discover the name, code and a full investment analysis in our brand-new FREE report, "The Motley Fool’s Top Dividend Stock for 2017."

Motley Fool contributor Tom Richardson owns shares of CSL Ltd.

You can find Tom on Twitter @tommyr345

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.

FREE REPORT: Five Cheap and Good Stocks to Buy now…

Our Motley Fool experts have FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.7% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.