A shareholder is suing the biotechnology company alleging it misled the market about its remestemcel-L product.
At the time of writing, the Mesoblast share price is $1.01, 1.93% lower than its previous close.
For context, the S&P/ASX All Ordinaries Index (ASX: XAO) is currently also down 1.41%. Meanwhile, the S&P/ASX 200 Health Care Index (ASX: XHJ) is up 0.26%.
Let’s take a closer look at the details.
Mesoblast facing a new class action
The Mesoblast share price is slipping amid news a class action proceeding in the Federal Court of Australia has been served on the company.
Law firm William Roberts Lawyers has brought the action against Mesoblast. The firm is representing a person who bought shares in the company between February 2018 and December 2020.
It alleges the company engaged in unlawful conduct that misled the market about remestemcel-L.
“Mesoblast will vigorously defend against the proceeding,” the company said in a statement published to the ASX.
It also noted it resolved a similar suit in the United States for $2 million without admitting liability in April. The company’s insurer covered the cost of the settlement.
Mesoblast has reportedly faced multiple class actions in the US on similar allegations.
Previous actions claimed Mesoblast didn’t inform investors about adverse aspects of particular remestemcel-L trials, the Australian Financial Review reported in 2020.
That reportedly prompted the FDA to demand a further controlled study of the drug before it could be given the green light to treat acute graft versus host disease in children.
And it might not be the last time the market hears news of a class action against the company.
Australian law firm Phi Finney McDonald has also been looking into a class action against Mesoblast over the past few months.
Mesoblast share price snapshot
This year has been rough on the Mesoblast share price.
The stock has tumbled nearly 28% year to date. It’s also nearly 45% lower than it was this time last year.