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Why the Mesoblast Limited (ASX:MSB) share price is crashing lower today

One of the worst performers on the Australian share market on Monday has been the Mesoblast Limited (ASX: MSB) share price.

In afternoon trade the regenerative medicine company’s shares have crashed 33.5% lower to $1.45.

Why are Mesoblast’s shares crashing lower?

This morning Mesoblast announced the results from a 159-patient randomised, sham-controlled Phase 2 trial in end-stage heart failure patients implanted with a left ventricular assist device (LVAD).

The results showed that its allogeneic cell therapy candidate MPC-150- IM achieved significant reduction in major gastrointestinal (GI) bleeding episodes and related hospitalisations, which are a complication affecting up to 40% of LVAD recipients.

According to the release, the company received specific guidance from the U.S. FDA that reduction in major GI bleeding episodes and related hospitalisations in the current trial is a clinically meaningful outcome. It was also advised that it has a high unmet need that could meet requirements for an approvable regulatory endpoint.

However, it wasn’t all good. The U.S. FDA also advised that the primary endpoint in the current trial of temporary weaning from full LVAD support is considered a biomarker and is not a clinically meaningful outcome in and of itself. Management advised that the high rate of pump thrombosis reduced the number of evaluable wean attempts.

Should you be selling?

While the latter is disappointing it is worth noting that although the target for temporary weaning from full left ventricular assist device support was not achieved, this was not because of its allogeneic cell therapy candidate, but rather a high rate of pump thrombosis which reduced the possible attempts.

Whereas management notes a significant beneficial effect from the analysis of a pre-determined subgroup. So this could mean that investors are panicking over nothing today.

Mesoblast’s CEO, Dr Silviu Itescu, certainly appeared pleased with the results.

He said: “We are very pleased by the results of this independently conducted trial. The clinically meaningful outcome achieved in these very high-risk patients provides a potential pathway to bring our heart failure product candidate MPC-150-IM to market sooner for these patients in great need.”

While I’m not a buyer of its shares, I’ll be keeping an eye on its progress over the next 12 months.

In the meantime, I think industry peers CSL Limited (ASX: CSL) and Mayne Pharma Group Ltd (ASX: MYX) could be great alternatives for investors.

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Motley Fool contributor James Mickleboro has no position in any of the 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 Scott Phillips.

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