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

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.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of August 16th 2021

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