Mesoblast limited (ASX: MSB) shares rocketed 39.1% higher on Friday to pare back last week's losses. But after roaring back to life, is the Mesoblast share price back in the buy zone?
What happened to the Mesoblast share price last week?
It was a rollercoaster ride for investors last week as regulatory approvals dominated Mesoblast's share price movements.
That kicked off on Tuesday with a briefing note from the United States Food and Drug Administration (FDA). The regulator noted concerns about the effectiveness of the company's remestemcel-L treatment, Ryoncil, for paediatric steroid-resistant acute Graft Versus Host Disease (aGVHD).
It was an important signal ahead of the company's pivotal meeting with the US Oncologic Drugs Advisory Committee (ODAC) on Thursday.
The disappointing note from the FDA triggered a sell-off that saw Mesoblast shares fall 37.0% lower in just two days.
However, contrary to expectations, ODAC voted 9 to 1 in recommending the treatment's approval. That's a good sign for the Aussie biotech company with a decision on the final FDA approval expected by the end of September.
The decision took many investors by surprise and triggered a 39.1% rally in the Mesoblast share price to $4.70 per share at Friday's close.
Is the Aussie biotech in the buy zone?
Clearly, speculators who rolled the dice after the heavy share price falls have done well.
However, if you're a long-term investor like myself, you should really be buying and holding for decades to come.
I personally like Mesoblast shares and their future prospects. The company has some promising treatments in Phase 3 trials including Ryoncil for aGVHD.
I think Friday's share price rally just puts Mesoblast shares back to their initial intrinsic value.
If you're a big believer in the biotech industry, I think Mesoblast is a good option. The key with biotech companies is a strong research and development pipeline coupled with positive momentum.
Mesoblast appears to have both of these factors which makes the future outlook strong. Of course, there will be more speed bumps along the way.
If you're looking for less growth and a more mature company profile, I think CSL Limited (ASX: CSL) shares could be another strong biotech buy.
