Mesoblast Shares Surge 206% on Hopes for Its Covid-19 Treatment
Mesoblast Shares Surge 190% on Hopes for Its Covid-19 Treatment
(Bloomberg) --
A health stock that’s undertaking a U.S. coronavirus drug trial and has seen its market value more than triple since March will be added to Australia’s benchmark equity gauge next week.
Mesoblast Ltd. shares are up 206% this quarter as one of its products is being assessed as a treatment for ventilator-dependent virus patients. The Melbourne-based company, which develops cell-based medicines to treat inflammatory conditions, has added more than $1 billion in market value from its 2020 low, boosted by results from a test using its therapy in a New York hospital.
“The support of the institutional and retail investment community reflects the positive view” of Mesoblast’s virus treatment and other products, Chief Executive Officer Silviu Itescu said in an interview. Investors are recognizing that Australian health firms, particularly ones focused on the U.S., are growing revenues “in a way that more old-fashioned industries have not been able to.”
A U.S. trial of its remestemcel-L therapy to care for coronavirus patients is expected to be completed within three to four months. Mesoblast in April announced an 83% survival rate among 12 virus patients who were treated with the drug in a pilot study at Mt. Sinai hospital.
The study results spurred a 96% surge in its shares over the next two trading sessions. The company is currently worth A$2.5 billion ($1.7 billion), compared with around A$744 million at the end of March.
Even short-sellers are starting to acknowledge the performance of the Australian drugmaker, with Mesoblasts’s short interest as a percentage of equity float declining to around 5.5% as of June 11, down from almost 14% in February 2019. This comes as revenues more than doubled in the nine months to March 31, according to data compiled by Bloomberg, amid an increase in milestone payments from strategic partnerships and sales in Japan.
One of the firm’s key challenges lies in finding suitable partners to help bring products to market, according to Bell Potter Securities Ltd. A failure to reach deals would negatively impact the broker’s forecasts, analysts led by Tanushree Jain wrote in a June 5 note.
In addition to focusing on partnerships, Mesoblast has also bolstered its commercial capabilities over the last 18 months, Itescu said. The firm has built a sales team to support a product that helps treat complications that can arise when blood cancer patients get bone marrow transplants. The drug is awaiting regulatory approval in the U.S.
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