The Mesoblast limited (ASX: MSB) share price has been a very strong performer on Monday.
In afternoon trade the allogeneic cellular medicines developer's shares are surging over 8% higher to $5.32.
This leaves the Mesoblast share price trading within sight of its record high of $5.43.
Why is the Mesoblast share price surging higher today?
Investors have been scrambling to buy the company's shares on Monday ahead of a major announcement later this week.
Last month Mesoblast had a meeting with the Oncologic Drugs Advisory Committee (ODAC) of the United States Food and Drug Administration (FDA).
That meeting was to discuss its remestemcel-L (RYONCIL) product candidate as a treatment for paediatric steroid-resistance acute graft versus host disease (paediatric SR-aGvHD).
Positively for Mesoblast, the ODAC voted overwhelmingly in favour that the available data supports the efficacy of remestemcel-L in paediatric patients with SR-aGvHD.
This is important as the ODAC plays a big role in whether certain drugs get approval or not. Failure to gain the support of the ODAC would make it close to impossible to then gain FDA approval.
So with the ODAC in favour of RYONCIL, the company stands a good chance of gaining approval when the FDA reviews it on Wednesday (United States time).
If it gains approval, then it could be a very lucrative product for Mesoblast. At present there is no FDA-approved treatment options. As such, RYONCIL has the potential to fill a significant unmet medical need.
Should you invest?
Based on its current valuation, I suspect the market is pricing in a reasonably high probability that the company will be granted approval by the FDA.
In light of this, I wouldn't be in a rush to invest in Mesoblast's shares at this point.
But it certainly will be worth keeping a close eye on its progress. Especially given the other potential treatments it has in the works.
These certainly are exciting times for shareholders, but I'm just not overly excited about the current share price.
