Mesoblast (ASX:MSB) share price crashes 16% to 52-week low on cash concerns

It has been another bad day for Mesoblast shares…

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The Mesoblast limited (ASX: MSB) share price has come under significant pressure on Tuesday.

In afternoon trade, the biotechnology company’s shares are down almost 16% to a 52-week low of $1.67.

This means the Mesoblast share price is now down 68% over the last 12 months.

Why is the Mesoblast share price crashing lower?

Investors have been selling down the Mesoblast share price today following the release of its full year results.

For the 12 months ended 30 June, Mesoblast reported revenue of US$7.45 million, down 77% year on year. Things were even worse on the bottom line, with the company posting a loss after tax of US$98.8 million for the year.

This left the company with cash on hand of US$136.9 million at the end of the period.

What else happened?

Another thing that appears to be weighing heavily on the Mesoblast share price was news that it will have to run another Remestemcel-L COVID-19 ARDS trial in the US before being considered for emergency use approval.

This is a big blow as, not only does it push things back further, the trial comes at a significant cost to the company.

It also adds to uncertainty over the major license and collaboration agreement it has signed with Novartis. Almost a year after signing the agreement, it remains subject to certain closing conditions, including time to analyse the results from the COVID-19 ARDS trial.

Does Mesoblast have the cash to survive another year?

Perhaps the biggest weight on the Mesoblast share price are concerns that the company will need to raise funds again.

Management advised that this will depend on whether it can form strategic partnerships or restructure existing loan agreements.

In the company’s report, it commented: “Over the next twelve months in order to meet our forecast expenditure, including repayment of the Hercules debt facility, cash inflows will be required. Management and the directors believe we will achieve this given plans to complete either one or more strategic partnerships or restructure existing loan agreements, and have prepared the financial report on a going concern basis.”

“The dependency on these planned objectives indicates material uncertainty which may cast significant doubt on our ability to continue as a going concern and that we may be unable to realize our assets and discharge our liabilities in the normal course of business,” it added.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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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