Why is the Mesoblast (ASX:MSB) share price frozen?

The Mesobalst (ASX: MSB) share price won’t be going anywhere today after the company requested a trading halt pending a capital raise.

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asx share price trading halt represented by stop sign

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Mesoblast Limited (ASX: MSB) shares have been halted in their tracks on Friday. On a day when it is likely fortunate to be missing the action, the Mesoblast share price won’t be going anywhere after the company requested the trading halt prior to market open this morning.

Let’s take a look at why the biotech company requested the pause in trading.

Why did Mesoblast request a trading halt?

Mesoblast shares are on hiatus today as the junior healthcare company prepares to raise capital via a private placement to a “targeted industry investor”.

The Mesoblast share price is expected to remain in a trading halt until such time as the company makes a further announcement or, at the latest, Tuesday next week.

The company did not provide any insights into why it is seeking to raise capital.

Mesoblast share price soars on study results

Earlier this month, the Mesoblast share price surged after the company released promising results from a phase-3 clinical trial.

Prior to the announcement, the stem-cell research company had been conducting a six-year clinical trial on treatment to reduce lower back pain.  

According to Mesoblast, patients who had a single injection of its rexlemestrocel-L reported a reduction in their back pain. These patients, who suffered from inflammatory disc disease, reported no pain for at least two years and were compared to patients treated with a placebo.

Management has advised it intends to meet with the United States Food and Drug Administration to discuss potential approval pathways for rexlemestrocel-L.

How have Mesoblast shares been performing?

Mesoblast describes itself as a world leader in the development of regenerative medicines for inflammatory diseases. 

The company was a favourite among retail investors last year after it announced promising results for its Remestemcel-L (Ryonsil) treatment for COVID-19.

After hitting a six-year peak of $5.50 in September last year, the Mesoblast share price has more than halved. Mesoblast shares crashed from their highs late last year after the company reported a setback to its COVID-19 treatment trial.

Mesoblast cited that changes in the treatment regimens for COVID-19 patients were to blame for the trial’s failure.

Shares in Mesoblast have returned to being one of the most shorted on the ASX, with an 8.8% short interest. 

The Mesoblast share price last traded at $2.46, marking a 6.5% increase for the year to date.

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Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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