The Motley Fool

Are Mesoblast shares ready to shoot higher?

Shares in regenerative stem cell medicine business Mesoblast limited (ASX: MSB) are trading flat at $1.42 today after the group revealed its financial results for the quarter ending September 30 2018. Below is a summary of the results with comparisons to relevant prior corresponding periods.

  • Revenue of US$11.6 million, compared to US$1.2 million in prior corresponding quarter (pcq)
  • Loss after tax increased by US$12.5m compared to pcq, in part due to US$10.1 million non-cash adjustment made in pcq
  • Total loss of US$19.5 million recorded for quarter
  • Finance costs for the quarter rose to US$2.6 million
  • Research and development costs for the quarter were US$18.5 million
  • Phase 3 trails to treat chronic lower back pain & heart failure ongoing
  • Completed deal with Tasly to establish cardiovascular partnership in China, which saw it receive US$40 million
  • Has pro forma cash on hand of US$95.1 million, including funds from Tasly

This quarter is reasonably standard for the company in that it burned through a lot of cash conducting multiple clinical trials to try and commercialise its products.

The top line revenue result looks impressive at first glance, but of the US$11.6 million received only US$1 million was from the result of commercialised products. In fact US$10 million of it was received as “milestone revenue” in relation to it agreeing a partnership with Chinese stem cell and healthcare business Tasly.

So far in total Mesoblast has two commercial products approved in Japan and Europe, with three more product candidates in US phase 3 trials. Unfortunately, it’s approved products have not taken in much in the way of revenue as yet.

In fact Mesoblast claims it has the potential to disrupt large amounts of the traditional healthcare markets thanks to its stem cell regeneration treatments, but so far it has delivered little.

It’s also an example of the high costs and risks associated with the biotech space where companies can dramatically plunge after just a single announcement. The likes of Acrux Limited (ASX: ACR) and ResApp Health Ltd (ASX: RAP) are others in the new healthcare space that have disappointed investors.

The Disruptors: 3 Revolutionary Aussie Companies to Back for 2018

We’re living in one of the most exciting times in investing history. Innovation and a booming culture of entrepreneurship are constantly creating new companies with the potential to make forward-thinking investors very rich. Now more than ever, one small, smart investment could make a huge difference to your wealth.

That’s why at The Motley Fool we’ve been scrutinizing the ASX to uncover the kinds of companies that we believe could turn into the next Atlassian.

We’ve found three exciting companies that we believe re poised to perform in the new year. Click here to uncover these ideas!

Motley Fool contributor Yulia Mosaleva 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.

NEW. Five Cheap and Good Stocks to Buy in 2019…

Our Motley Fool experts have just released a brand new 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 2.8% 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.

CLICK HERE FOR YOUR FREE REPORT!