Mesoblast (ASX:MSB) share price slides 10% following FY21 earnings

The financial year just gone has brought massive ups and downs for Mesoblast.

| More on:
laboratory workers looking disappointed

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Mesoblast Limited (ASX: MSB) share price is in the red this morning after the company released its results for financial year 2021 (FY21).

Right now, the Mesoblast share price is $1.77, 10.35% lower than its previous close.

Mesoblast share price slips on $98 million loss

The biotech company is focused on allogeneic cellular medicines for inflammatory diseases. Here's how it performed over FY21:

  • Net loss after tax of US$98.8 million, 27% greater than that of FY20
  • US$7.45 million in revenue, 77% less than that of FY20
  • US$53 million in research and development costs, a 6% drop on that of the prior financial year
  • US$32.71 million in manufacturing and commercialisation costs, a 29% increase

At the end of the period, Mesoblast had US$136.9 million of cash and US$94.2 million of debt.

What happened in FY21 for Mesoblast?

The company has been focused on its first-generation mesenchymal lineage stromal cell product platform, remestemcel-L. It's in late-stage development for the treatment of paediatric steroid refractory acute Graft versus Host Disease (SR-aGVHD), acute respiratory distress syndrome (ARDS), and biologic refractory inflammatory bowel disease.

The company is also working on rexlemestrocel-L, a second-generation mesenchymal lineage precursor cell product platform. Rexlemestrocel-L is in late-stage development for the treatment of chronic heart failure and chronic lower back pain.

In October 2020, the US Food and Drug Administration (FDA) found Mesoblast didn't have enough evidence of remestemcel-L's effectiveness in treating SR-aGVHD. The Mesoblast share price slid 37% on the back of the news.

Mesoblast's stock recovered somewhat when it released its quarterly results and announced a new agreement with Novartis in November. The agreement would see the development, manufacturing, and commercialisation of remestemcel-L.

In December, Mesoblast had another major tumble on the ASX. Firstly, it announced its trial of rexlemestrocel-L in the treatment of advanced chronic heart failure failed to meet its primary end point.

Days later, Mesoblast announced its controlled trial of remestemcel-L in patients with moderate to severe ARDS due to COVID-19. According to the company, the treatment of COVID-19 has improved over the course of the pandemic. As a result, the company found the trial was unlikely to meet its target reduction in mortality and was halted.

The Mesoblast share price slid 46% over the course of the 3 days surrounding the updates.

In March, Mesoblast completed a US$110 million private placement.

Since then, Mesoblast has released good news of its COVID-19 ARDS trial.

It also announced positive updates on its trial testing rexlemestrocel-L's ability to treat chronic lower back pain in February. This followed earlier positive news from the clinical trial in which rexlemestrocel-L's was used to treat chronic heart failure in January.

What did management say?

Mesoblast's CEO Silviu Itescu commented on the results driving the company's share price today, saying:

During this calendar year we made significant progress in both regulatory and clinical outcomes for our lead product candidate, remestemcel-L, after experiencing a disappointing set-back last year.

We are pleased with recent recommendations by FDA's CBER to meet with the review team and address remaining CMC items for remestemcel-L in the treatment of steroid-refractory acute graft versus host disease in children. Additionally, our most recent meeting with the FDA has provided clarity on the pathway towards an emergency use authorization for remestemcel-L in the treatment of COVID ARDS.

What's next for Mesoblast?

Here's what investors interested in the Mesoblast share price might want to keep an eye on in FY22:

Mesoblast is working to get remestemcel-L FDA emergency use authorisation approval to treat people with ARDS due to COVID-19. It's looking to complete a phase 3 trial the FDA has stipulated is needed to get the approval.

Additionally, the company hopes to meet with the FDA's Office of Tissue and Advanced Therapies in the final quarter of 2021 to address potency assays for remestemcel-L in relation to SR-aGvHD. It believes the potency assays are also relevant to COVID ARDS.

Mesoblast is also in talks with the FDA regarding the approval of remestemcel-L as a treatment for SR-aGVHD in children.

Finally, the company expects to receive feedback from the FDA on pathways towards receiving approval for rexlemestrocel-L after its Phase 3 trials in patients with chronic heart failure and chronic low back pain.

Mesoblast share price snapshot

Right now the Mesoblast share price has fallen 22.5% year to date. It is also 66% lower than it was this time last year.

Motley Fool contributor Brooke Cooper 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.

More on Earnings Results

Man jumps for joy in front of a background of a rising stocks graphic.
Earnings Results

Catapult shines: 20% sales growth propels ASX tech stock to new 52-week high

A strong annual result from this tech player has caught investor attention.

Read more »

A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Earnings Results

Xero share price leaps 8% on staggering earnings upheaval

A major turnaround in profitability is sending investors into a frenzy over Xero shares today.

Read more »

a construction worker sits pensively at his desk with his arm propping up his chin as he looks at his laptop computer while wearing a hard hat and visibility vest in a bunker style construction shed.
Materials Shares

Which ASX 200 stock just plunged 12% despite record full-year earnings?

It looks like an impressive report card but UBS doesn't like the FY25 guidance.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Earnings Results

ASX 200 tech stock lifts off on another record-setting half-year profit

Investors are bidding up the ASX 200 tech company following its half-year results.

Read more »

increasing rural asx share price represented by happy looking sheep
Earnings Results

Why is this ASX All Ords stock staying strong as profits crash 76%

How is this company's share price marching higher after mowing down more than three-quarters of its profits compared to a…

Read more »

Two men sit side by side on a couch with video game controls in their hands and expressive looks on their faces as they react to the action in front of them in a home setting.
Earnings Results

Guess which ASX 200 stock is surging 11% on an 'outstanding' result

This ASX gaming giant just posted a 17% jump in profits, and its shareholders are basking in the glory.

Read more »

Agricultural ASX share price on watch represented by farmer in field looking at tablet computer.
Earnings Results

Graincorp share price lifts off as dividend is maintained and debts plunge

ASX 200 investors are bidding up the Graincorp share price today. But why?

Read more »

Smiling elderly couple looking at their superannuation account, symbolising retirement.
Earnings Results

Why is this ASX 200 stock avoiding the market selloff and pushing higher?

Not all shares are falling with the market on Thursday.

Read more »