MENU

Is the Mesoblast limited share price good value?

Regenerative medicine hopeful Mesoblast limited (ASX: MSB) this morning reported its financial results for the nine-month period ending March 31 2017.

Below is a summary of the results with some comparisons to the prior corresponding period. All figures in U.S. dollars.

  • Operating cash outflow of $72 million, compared to $70 million in pcp
  • Commericalisation revenue received $1 million
  • Loss before income tax for quarter ending March 31 2017 $12.9 million
  • Cash reserves of $69.1 million
  • Equity sale facility established to raise another $90 million at company’s discretion over next 2 years
  • Phase 3 chronic heart failure trial achieved successful pre-specified interim futility analysis
  • Multiple other Phase 2 and 3 regenerative medicine trials in progress including for back pain and rheumatoid arthritis
  • Fast track designation granted by U.S. FDA for company’s treatment for acute graft versus host (aGVHD) disease in children

For now Mesoblast remains a company long on promise, but short on delivery, with its aGVHD treatment probably the closest to genuine commercial success thanks to its approval in Japan and progress towards commercial approval in the U.S.

The company’s flagship heart failure and chronic lower back pain trials are also both now at Phase 3 status, with the company boasting of their “blockbuster” commercial potential if they achieve clinically successful results.

The Mesoblast share price has swung wildly over the last couple of years as investor excitement collides with financial reality and the main problem with this business continues to be its giant cash burn that goes to show just how expensive clinical trials can be for hopeful biotechs.

As an investor I would prefer to watch the Mesoblast story from the sidelines, as with little in the way of revenues and no profits it’s impossible to value the business on its potential alone. However, Mesoblast on a market value around A$980 million, already looks on a big valuation to me and shareholders are likely in for a wild ride over the next 24 months ahead.

If you prefer fully franked dividend income to punting on biotechs it might be worth checking out This Massive Dividend Stock to Buy Today (6.7% Current Gross Yield!)

FREE REPORT! Click here to discover the Motley Fool's #1 ASX dividend recommendation - currently paying a 6.7% gross yield!

Even better, this 'under the radar' consumer play is growing like gangbusters. Shares have rocketed 100% in the last 5 years, DOUBLING shareholders' investment. So what's not to like?

Simply click here to grab your free copy of this up-to-the-minute research report right now.

Motley Fool contributor Tom Richardson has no position in any stocks mentioned.

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.

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.