Whilst a large number of shares are trading lower today following a market selloff, the Mesoblast limited (ASX: MSB) share price has been a particularly poor performer.
In morning trade the regenerative medicine company’s shares fell as much as 10% to $1.92.
Why is the Mesoblast share price under pressure?
Investors have been selling the company’s shares today after they returned from a trading halt following the completion of a $75 million capital raising.
According to the release, the company raised the funds via a placement to existing and new Australian and global institutional investors through the issue of 37.5 million new fully paid ordinary shares at a price of $2.00 per share. This was a discount of 6.5% to its last close price.
The net proceeds from the capital raising will principally be used to build product inventory and a targeted United States sales force in preparation for the potential United States commercial launch of remestemcel-L in the treatment of pediatric steroid-refractory acute graft versus host disease.
In addition to this, proceeds will also be used to complete Phase 3 trials for chronic low back pain and advanced heart failure, and for working capital and general corporate purposes.
Mesoblast’s chief executive, Dr Silviu Itescu, appeared to be very pleased with the response for its capital raising from institutional investors.
He said: “We are very pleased with the significant broadening of our institutional register and the strong continued support from our existing shareholders, with demand exceeding the funds raised. Mesoblast is well funded to execute the commercial strategy for potential launch of its first allogeneic cell therapy in the United States.”
Unfortunately for retail investors, the company doesn’t appear to have any plans for a retail entitlement offer on this occasion. This may mean that some disgruntled shareholders have been selling their shares today, driving the share price below the capital raising offer price.
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