Late to this, but it's surprising how blindsided many capable investors were by the resounding FDA Advisory Committee support for Ryoncil. As mentioned previously, Priority Review almost always ends up in approval (base rates, baby), and anyhow one of Mesoblast's usurers-of-last-resort had effectively made interest repayments contingent on approval (repayments only kicked in once US and European sales began). Lenders with 10%+ interest rates don't usually indulge desperate crapcos out of the goodness of their hearts. Moreover, the FDA briefing document was only about as adversarial as recent similar ones for treatments that were eventually approved.

From here, though, it's not clear to me what new buyers of the stock expect to see happen. Approval for Ryoncil’s tiny market does probably make it easier for Mesoblast to get approvals for wider applications and for other treatments too. But much of the market cap depends on a COVID treatment for which there is currently almost no evidence available. If the COVID trial goes belly-up, or the overdue Phase III trials come back with bad news, or the FDA decides to ask for more data there is plenty of downside in the current share price. An added problem is that in October - originally July but then the COVID news magically saved the day - Mesoblast needs to start paying back the very large principal to its other lender.

Disc: Sadly I sold as soon as the FDA briefing document was published, not having time that day to weight it up properly. I just couldn’t deal with the risk anymore, the latest red flag being the longstanding major shareholder selling down, a sale that has continued since. But as ever, taking profits can be where you lose the most money. Chalk this one up to bitter experience.

Yesterday and overnight Mesoblast's share price had another of its big recent spikes, going up 40% on the ASX and then 140% on NASDAQ. That's effectively another $1.4bn of market cap. The NASDAQ price is higher than it has been since 2015.  

Like the other spikes this one followed a press release. Unlike them the press release conveyed nothing of consequence. Two samples of a dozen COVID-19 patients treated with Mesoblast's remestemcel-L had sharply different outcomes from those for two samples of a few hundred COVID-19. Mesoblast's CEO called this "remarkable". Actually the remarkable thing would have been if the outcomes were in any way similar. In statistical terms this is, to quote Arrested Development, comparing apples with some fruit no one ever heard of. Never mind that almost any mortality rate would have been better than the control group's, or that "patients received a variety of experimental agents prior to remstemcel-L". The COVID-19 results were encouraging rather than "remarkable", just as other preliminary results have been encouraging for therapies that now look like duds (remdesivir, hydroxychloroquine). Might work, might not.

I don't know if management had an obligation to disclose, but if they didn't then it makes you wonder about their mentality. And they certainly didn't have call the findings "remarkable". This is a company that should be on the cusp of at least one big catalyst. The share price can take care of itself. But you'd also think the directors would be buying, and that isn't really happening either. It's puzzling. Treating COVID-19 isn't even part of any long thesis for them, so why hype something that doesn't really demonstrate they can treat it? How will all those traders and first-level MOMO/FOMO punters who have been jumping on the bandwagon like it's January again react to any kind of blip?

Full disclosure: I bought a tiny amount of Mesoblast shares earlier this week. But that's for another post.