Mesoblast (ASX:MSB) share price rockets higher on major Novartis agreement

The Mesoblast limited (ASX:MSB) share price is surging higher on Friday after announcing a major agreement with Novartis for remestemcel-L…
The post Mesoblast (ASX:MSB) share price rockets higher on major Novartis agreement appeared first on Motley Fool Australia. –

Chalk-drawn rocket shown blasting off into space

The Mesoblast limited (ASX: MSB) share price is rocketing higher on Friday morning.

In early trade, the biotechnology company’s shares are up 20% to $3.95.

What did Mesoblast announce?

Mesoblast was busy with the announcements this morning, releasing its quarterly results and revealing a new collaboration with a major pharmaceutical company.

In respect to its quarterly results, Mesoblast reported a 92.3% decline in revenue to US$1.3 million for the first quarter. This was due largely to a US$15 million milestone payment received in the prior corresponding period.

Royalty revenue on sales of TEMCELL HS in Japan decreased US$0.6 million to US$1.3 million for the quarter. This was driven by a temporary shutdown in production by JCR Pharmaceutical as it expands its facility capacity to meet increasing demand.

Research and development costs increased 55.6% to US$19.3 million, manufacturing costs lifted 340% to US$11.9 million, and management and administration costs grew 40% to US$7.7 million.

This ultimately led to Mesoblast reporting a loss after tax of US$24.5 million for the quarter, compared to a loss of US$5.5 million a year earlier.

At the end of the period, Mesoblast had cash on hand of US$108.1 million. However, this has since been boosted to pro-forma cash on hand of US$158.1 million due to the collaboration revealed below.

Novartis collaboration.

Mesoblast has entered into an exclusive worldwide license and collaboration agreement with Novartis for the development, manufacture, and commercialisation of its mesenchymal stromal cell (MSC) product remestemcel-L.

The agreement will have an initial focus on the development of a treatment for acute respiratory distress syndrome (ARDS), including that associated with COVID-19.

As part of the transaction, Novartis will make a US$50 million upfront payment, including US$25 million in equity. It will also fully fund global clinical development for all-cause ARDS and potentially other respiratory indications.

Furthermore, management revealed that Mesoblast could receive a total of US$505 million pending achievement of pre-commercialisation milestones for ARDS indications and additional payments post-commercialisation of up to US$750 million. The latter is based on achieving certain sales milestones and tiered double-digit royalties on product sales.

Mesoblast’s Chief Executive, Dr Silviu Itescu, commented: “Our collaboration with Novartis will help ensure that remestemcel-L could become available to the many patients suffering from ARDS, the principal cause of mortality in COVID-19 infection. This agreement is in line with our corporate strategy to collaborate and partner with world-leading major pharma companies in order to maximize market access for our innovative cellular medicines.”

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 June 30th

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Mesoblast (ASX:MSB) share price rockets higher on major Novartis agreement appeared first on 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!