Mesoblast Ltd (ASX: MSB) shares have been on fire recently.
So much so, the ASX All Ords biotech stock has risen 40% since this time last month.
Why has this ASX All Ords biotech stock stormed higher?
This strong gain has been driven by a couple of positive developments relating to the US Food and Drug Administration (FDA).
The first was that its Revascor product, which is being trialled as a treatment for children with hypoplastic left heart syndrome, was granted an Orphan-Drug Designation following the submission of results from a randomised controlled trial.
The second news is that the US FDA will support an accelerated approval pathway for its rexlemestrocel-L (R-L) product under the existing Regenerative Medicine Advanced Therapy designation.
It is Mesoblast's allogeneic mesenchymal precursor cell product for patients with end-stage ischemic heart failure with reduced ejection fraction and a left ventricular assist device.
This positive developments appear to have drowned out news that the ASX All Ords stock has been hit with a class action.
Class action
This month it was revealed that Omni Bridgeway Ltd (ASX: OBL) will be co-funding a shareholder class action on behalf of investors who acquired Mesoblast shares or related securities between 22 February 2018 and 17 December 2020 inclusive. It states:
Broadly, the Consolidated Class Action alleges that Mesoblast contravened its continuous disclosure obligations and engaged in misleading or deceptive conduct throughout the Claim Period in relation to both the SR-aGVHD application and COVID-19 application of R-L.
Participants in the class action may be entitled to compensation for losses arising out of Mesoblast's alleged breaches of its continuous disclosure obligations and/or by Mesoblast engaging in misleading and deceptive conduct.
It remains unclear how much the class action is seeking in damages but the company can ill-afford to give up much cash. At the end of the first half, Mesoblast had a cash balance of US$77.6 million after burning through US$26.6 million of cash during the six months.
