Here’s why the Mesoblast (ASX:MSB) share price is tumbling lower today

The Mesoblast limited (ASX:MSB) share price is back from its trading halt and trading lower on Tuesday. Here’s why its shares are falling…
The post Here’s why the Mesoblast (ASX:MSB) share price is tumbling lower today appeared first on The Motley Fool Australia. –

A businessman holds his glasses in concern, indicating uncertainly in the ASX share price

The Mesoblast limited (ASX: MSB) share price has returned from its trading halt and tumbled lower.

At the time of writing, the biotech company’s shares are down 4.5% to $2.35.

This latest decline means the Mesoblast share price is now down 59% from its 52-week high of $5.70.

Why is the Mesoblast share price tumbling lower today?

Investors have been selling Mesoblast shares after it announced a US$110 million private placement led by a strategic US investor group. This includes one of the largest private operators of ambulatory surgical centres, SurgCenter Development.

According to the release, the company raised the funds via the issue of 60 million shares at $2.30 per share. This represents a 6.5% discount to the Mesoblast share price prior to its trading halt.

Following the completion of the private placement, Mesoblast will have pro-forma cash-on-hand of US$187.5 million.

In addition to the shares, the investors have also received warrants to acquire a further 15 million shares at a price of A$2.88 per share. This could raise a further A$43.2 million (US$34 million) on or before 15 March 2028.

The company also has a right to call on the funds at any time during the term. This is subject to the Mesoblast share price trading at $4.32 or higher for at least 45 consecutive days.

Management commentary

Mesoblast’s Chief Executive, Dr Silviu Itescu, was pleased with the investment.

He said “We are pleased to receive a strategic investment from the principals of SurgCenter Development, one of the largest private operators of ambulatory surgical centers in the US specializing in spine, orthopaedic and total joint procedures.”

“We expect the deep healthcare knowledge and expertise of this investor group will be of great benefit to the company. The network and infrastructure of surgeons and ambulatory centers operated by SurgCenter may provide unique synergies to facilitate development and market access for rexlemestrocel, if approved, in patients with chronic lower back pain.”

What will the proceeds be used for?

The release explains that private placement will provide financial strength for operational and regulatory initiatives across multiple products. This comes at a time when the company undertakes important late-stage meetings with the United States Food & Drug Administration (FDA) in the second and third quarters of this calendar year.

In addition, funds will be used to invest in the commercial supply of remestemcel-L ahead of potential approval for graft versus host disease in children and in optimised manufacturing for larger market opportunities.

Management also intends to use some of the proceeds for advancing manufacturing and the development of the rexlemestrocel-L platform to meet commercial objectives. This is for chronic heart failure and chronic low back pain due to degenerative disc disease.

Where to 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 are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of February 15th 2021

More reading

Motley Fool contributor James Mickleboro 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.

The post Here’s why the Mesoblast (ASX:MSB) share price is tumbling lower today appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!