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Mesoblast limited’s medical treatment passes Phase III trials

The Mesoblast limited (ASX: MSB) share price is still volatile as the company continues to report progress in its clinical trials at the same time as burning through its cash reserves at prodigious rates.

Recently the regenerative medicine pioneer announced that Phase III trials designed to test the efficacy of its stem cell medicine in treating children suffering from acute Graft Versus Host Disease (aGVHD) had met their primary endpoint of “day 28 overall response rate”.

The company now hopes it can finally secure approval from the U.S. healthcare regulator the FDA to commercially sell its aGVHD treatment in the lucrative US market. It already sells a treatment for aGVHD in children in Japan and recognised revenues around US$1.6 million over the most recent half year as a result of Japanese sales.

The company also has a number of other treatments at advanced clinical trial stages to treat back pain and chronic heart failure in patients with hopes that these too could open the door to big commercial sales growth.

While the potential is exciting, the financials remain weak with a cash outflow of US$11.2 million from operating activities for the most recent half-year period. Over the period the company also signed a significant commercialisation partnership with TiGenix that produced US$11.8 million in revenues.

Investors can expect this stock to remain volatile in 2018.

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Motley Fool contributor Tom Richardson has no position in any of the 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 Scott Phillips.

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