Mesoblast (MESO) AI Stock Analysis

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Mesoblast

(NASDAQ:MESO)

49Neutral

Mesoblast's stock is currently under pressure due to significant financial challenges, including consistent losses and liquidity issues. While recent FDA approval and fundraising provide a positive outlook, ongoing operational hurdles and a negative valuation perspective limit the overall score. The technical analysis further suggests bearish momentum, emphasizing the need for strategic improvements to enhance financial stability.

Positive Factors

Earnings

The potential pricing for Ryoncil in excess of $1.5M for a full course supports a significant market opportunity, validating the view that the GvHD opportunity alone could support Mesoblast's current valuation.

Market Opportunity

Ryoncil's approval as the only drug for patients under 12 could provide a competitive advantage, especially in the 12-18 year-old segment where it overlaps with Jakafi.

Regulatory Approval

Ryoncil gains approval in the US for pediatric steroid refractory acute graft vs host disease, marking a significant milestone for Mesoblast and validating FDA's supportive stance on cell therapy.

Negative Factors

Competition

The market for adult 2L SR-aGvHD could be twice the size of the pediatric market, as MESO targets patients who fail Jakafi treatment.

Financial Performance

Significant potential for Mesoblast in its late-stage pipeline, including heart failure (HF), with potentially two near-term filings, as well as the ongoing P3 in chronic lower back pain (CLBP).

Mesoblast (MESO) vs. S&P 500 (SPY)

Market Cap

$1.32B

Dividend YieldN/A

Average Volume (3M)268.17K

Price to Earnings (P/E)―

Beta (1Y)1.67

Revenue GrowthN/A

EPS GrowthN/A

CountryUS

Employees73

SectorHealthcare

Sector Strength64

IndustryBiotechnology

Share Statistics

EPS (TTM)-0.93

Shares Outstanding127,778,220

10 Day Avg. Volume228,778

30 Day Avg. Volume268,165

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)269.68

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$27.00

Price Target Upside162.65% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering2

Mesoblast Business Overview & Revenue Model

Company DescriptionMesoblast Limited is a biopharmaceutical company focused on developing and commercializing innovative cellular medicines. It specializes in regenerative medicine, utilizing its proprietary mesenchymal lineage cell technology platform to treat complex diseases resistant to conventional therapies. The company operates primarily in the biotechnology sector, with a focus on developing treatments for conditions such as chronic heart failure, acute respiratory distress syndrome, chronic low back pain, and inflammatory conditions.

How the Company Makes MoneyMesoblast makes money primarily through the development and commercialization of its cell-based therapies. Revenue is generated through partnerships and licensing agreements with pharmaceutical companies, which can include upfront payments, milestone payments, and royalties on product sales. The company also aims to earn revenue from the direct sale of its proprietary therapies once they gain regulatory approval. Additionally, Mesoblast may receive government grants or funding for its research and development efforts, contributing to its revenue streams. Strategic collaborations and partnerships are significant factors that enhance Mesoblast's ability to commercialize its products and achieve market penetration.

Mesoblast Financial Statement Overview

Summary

Mesoblast faces substantial financial challenges, including consistent losses and negative cash flows. While the company maintains a reasonable equity ratio, the ongoing losses and liquidity issues pose significant risks to financial stability. Strategic improvements are necessary to enhance profitability and cash flow generation.

Income Statement

Negative

Mesoblast has faced declining revenues over the past years, with a revenue drop in TTM compared to previous periods. The gross profit margin and net profit margin are negative, indicating high costs relative to revenue and significant net losses. EBIT and EBITDA margins are also negative, showing ongoing operational challenges.

Balance Sheet

Neutral

The company's debt-to-equity ratio indicates moderate leverage, which is typical for the biotechnology sector. However, the return on equity is negative due to consistent net losses. The equity ratio suggests a good proportion of the company's assets are funded by equity, providing some financial stability.

Cash Flow

Negative

Cash flow analysis reveals negative operating cash flow and free cash flow, highlighting liquidity challenges. The company's free cash flow to net income ratio is not favorable, as both metrics are negative, indicating a need for improved cash management.

TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Breakdown
Income Statement		Total Revenue
5.67M	5.90M	7.50M	10.21M	7.46M	32.16M
	Gross Profit
-22.57M	-35.17M	-47.42M	-53.36M	-78.28M	-49.34M
	EBIT
-85.25M	-84.15M	-69.29M	-80.57M	-109.10M	-74.87M
	EBITDA
-49.42M	-56.08M	-58.55M	-76.57M	-107.60M	-75.41M
	Net Income Common Stockholders
-103.35M	-87.96M	-81.89M	-91.35M	-98.81M	-77.94M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
178.23M	62.56M	70.92M	60.03M	136.88M	129.33M
	Total Assets
680.41M	669.15M	669.41M	662.14M	744.72M	733.60M
	Total Debt
0.00	118.92M	116.50M	106.91M	105.50M	99.31M
	Net Debt
-178.23M	56.36M	45.58M	46.87M	-31.39M	-30.01M
	Total Liabilities
226.89M	188.80M	167.58M	165.10M	163.32M	184.28M
	Stockholders Equity
453.52M	480.36M	501.84M	497.04M	581.40M	549.33M
Cash Flow		Free Cash Flow
-21.07M	-48.79M	-63.58M	-66.01M	-108.33M	-58.61M
	Operating Cash Flow
-20.66M	-48.46M	-63.27M	-65.78M	-106.68M	-56.37M
	Investing Cash Flow
327.50K	-97.00K	-194.00K	-232.00K	-1.65M	-3.27M
	Financing Cash Flow
4.58M	40.25M	74.50M	-9.87M	114.47M	137.04M

Mesoblast Technical Analysis

Technical Analysis Sentiment

Negative

Last Price10.28

Price Trends

50DMA

13.79

Negative

100DMA

14.88

Negative

200DMA

11.37

Negative

Market Momentum

MACD

-0.95

Negative

RSI

41.50

Neutral

STOCH

57.75

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MESO, the sentiment is Negative. The current price of 10.28 is below the 20-day moving average (MA) of 11.37, below the 50-day MA of 13.79, and below the 200-day MA of 11.37, indicating a bearish trend. The MACD of -0.95 indicates Negative momentum. The RSI at 41.50 is Neutral, neither overbought nor oversold. The STOCH value of 57.75 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MESO.

Mesoblast Risk Analysis

Mesoblast disclosed 81 risk factors in its most recent earnings report. Mesoblast reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Mesoblast Peers Comparison

Overall Rating

UnderperformOutperform

Sector (51)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
IMCR	62 Neutral	$1.48B	―	-13.92%	―	24.19%	10.51%
KYMR	52 Neutral	$1.87B	―	-36.38%	―	-40.11%	-17.79%
Sector *	51 Neutral	$5.20B	3.18	-40.80%	2.96%	17.66%	1.94%
MESO	49 Neutral	$1.32B	―	-21.26%	―	―	―
TVTX	41 Neutral	$1.41B	―	-246.75%	―	17.27%	10.01%
VERA	39 Underperform	$1.36B	―	-44.83%	―	―	-20.03%
IRON	37 Underperform	$1.52B	―	-27.73%	―	―	-14.19%

* Healthcare Sector Average

Performance Comparison

MESO

Mesoblast

11.10

4.88

78.46%

TVTX

Travere Therapeutics

15.88

10.43

191.38%

IRON

Disc Medicine

45.15

17.85

65.38%

KYMR

Kymera Therapeutics

30.70

-4.51

-12.81%

IMCR

Immunocore Holdings

29.52

-28.95

-49.51%

VERA

Vera Therapeutics

21.39

-18.56

-46.46%

Mesoblast Earnings Call Summary

Earnings Call Date: Feb 26, 2025 | % Change Since: -34.61% | Next Earnings Date: May 28, 2025

Earnings Call Sentiment Positive

The earnings call reflects a positive outlook with significant advancements including the FDA approval of RYONCIL, successful fundraising, and promising clinical trial results. However, the company faces some challenges such as non-cash balance sheet impacts and ongoing trial enrollments.

Highlights

FDA Approval and Launch of RYONCIL

RYONCIL, a mesenchymal stromal cell therapy, has been FDA approved as the first off-the-shelf therapy for children aged two months and older with steroid-refractory acute GVHD. The product is set to be made available in March.

Successful Private Placement

The company successfully completed a global private placement, raising USD 161 million, increasing the pro forma cash balance to approximately USD 200 million.

Reduction in Operating Cash Spend

Net operating cash spend was USD 20.7 million for the first half of FY 2025, a 22% reduction from the first half of FY 2024.

High Response Rates in Clinical Trials

In Phase 3 trials, RYONCIL delivered high overall response rates of 70% at day 28 for children with severe disease, significantly higher than other therapies.

Potential for Label Expansion

Strategies are in place to expand RYONCIL’s use to include inflammatory bowel disease and adult GVHD, with ongoing trials showing promise.

Lowlights

Non-Cash Adjustments Leading to Loss

Non-cash balance sheet adjustments drove a loss after tax of USD 47.9 million for the half year.

Challenges in Enrollment for Phase III Trials

The company is actively working to increase enrollment rates for the Phase III trial for chronic low back pain, indicating current challenges in participant recruitment.

Dependency on FDA Guidance

The approval pathway for Revascor in ischemic heart failure depends on further FDA meetings to clarify study designs and confirmatory trial requirements.

Company Guidance

In the recent call, Mesoblast provided comprehensive guidance on multiple financial and operational metrics. For the fiscal period ended December 31, 2024, the company reported a cash balance of USD 38 million, with a pro forma cash of approximately USD 200 million following a successful USD 161 million global private placement. Net operating cash spend was USD 20.7 million, marking a 22% reduction from the previous year. The FDA's approval of RYONCIL resulted in a USD 23 million provision reversal, now recognized as inventory on the balance sheet. The company's loss after tax stood at USD 47.9 million, influenced by non-cash balance sheet adjustments post-FDA approval. RYONCIL's wholesale acquisition cost is USD 194,000 per infusion, with a potential addressable market in the U.S. of 375 new pediatric patients annually for steroid-refractory acute GVHD. The launch strategy includes targeting high-volume transplant centers, with a sales force of nine key account managers. For the chronic low back pain trial, the company plans to expand site numbers from 15 to 40, anticipating ramped-up enrollment and a potential U.S. partnership for distribution.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.