Going by the adage that success is not final and failure is not fatal, one ASX 300 stock kept on pursuing its goal. Presenting ASX investors a compelling investment opportunity, Mesoblast Limited underpinned by its innovative approach to mesenchymal stem cell therapies and its strong position in the rapidly growing regenerative medicine market, resubmitted BLA for remestemcel-L.
Mesoblast Limited (ASX: MSB), capitalising on the booming healthcare industry is potentially unlocking substantial value upon approval. Additionally, Mesoblast's strategic partnerships and licensing agreements enhance its market reach and provide a layer of financial stability, which is particularly valuable in the volatile biotech sector.
Mesoblast Limited in its FY24 annual results for the period ended 30 June 2024, reported a cash balance of $63.3 million USD (or $95.0 million AUD), with an additional $10.0 million USD set to become available if the FDA approves RYONCIL. Net cash usage for operating activities decreased by 23% to US$48.5 million in FY2024 from US$63.3 million in FY2023, and Q4 FY2024 usage was down 37% to US$10.2 million compared to US$16.3 million in Q4 FY2023, primarily due to reduced manufacturing costs and payroll. Cost management initiatives, including a payroll reduction strategy, led to a significant decrease in cash usage and will continue into FY2025. Manufacturing expenditure dropped by 43% to US$12.0 million, driven by reduced inventory and one-time FDA inspection costs. Finance costs included US$17.3 million of non-cash expenses. The revaluation of contingent consideration improved due to a higher likelihood of GVHD approval. The company reported a loss after tax of US$88.0 million for FY2024, which adjusts to US$78.3 million after accounting for contingent consideration revaluation, representing a US$12.4 million improvement from FY2023.
As of June 30, 2024, Mesoblast Limited reported total assets of $669.2 million, with current assets increasing to $86.5 million, primarily driven by $63.0 million in cash and cash equivalents. Non-current assets slightly declined to $582.7 million, with intangible assets remaining the largest component at $575.7 million. Total liabilities rose to $188.8 million, reflecting a significant increase in current liabilities to $73.2 million, largely due to higher borrowings. Non-current liabilities decreased to $115.6 million, with borrowings accounting for $100.5 million. The company's equity fell to $480.4 million, influenced by accumulated losses of $908.8 million, despite an issued capital of $1.31 billion.
MSB’s platform technology leverages mesenchymal precursor/stromal cells that are activated by multiple inflammatory cytokines through surface receptors, triggering a coordinated anti-inflammatory response. This shared mechanism of action underpins the efficacy of its products across various inflammatory conditions.
Looking ahead, Mesoblast, suited for long term holding, is positioned for pivotal developments in FY2025. The resubmitted BLA for RYONCIL, targeting acute graft versus host disease in children, is under active FDA review with a decision anticipated by January 7, 2025.
Among the best ASX healthcare stocks, MSB is also preparing for a targeted commercial launch strategy, focusing on high-volume centers. For RYONCIL in adults, Mesoblast plans a label extension following pediatric approval, collaborating with BMT CTN for a pivotal trial. The Phase 3 trial for rexlemestrocel-L in chronic low back pain is underway, with RMAT designation enhancing its development prospects. REVASCOR received Rare Pediatric Disease and Orphan-Drug Designations for hypoplastic left heart syndrome, showing promising results in trials. Additionally, REVASCOR demonstrated efficacy in reducing major adverse cardiac events in heart failure patients with reduced ejection fraction and has received support for an accelerated approval pathway from the FDA.
With a robust pipeline and potential for significant growth following regulatory approvals, the stock could see substantial appreciation. A key focus is the development of rexlemestrocel-L (Revascor®) to address the treatment gap in chronic heart failure (CHF), a condition with high unmet need. With CHF prevalence projected to rise by 46% by 2030, imposing significant economic burdens, Revascor® targets high-risk patients, delivering mesenchymal precursor cells directly to the heart to promote recovery through multiple pathways.
Source: Company’s Report
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