A 20-Year Rollercoaster: The Mesoblast (ASX: MSB) Story

Good morning,

Welcome to today’s edition of The Armchair Analyst, a 5-minute daily update on the ASX life-sciences sector.

I hope that you all had a good Easter break.

Today, I’m taking a look at one of the most infamous ASX-listed biotech companies.

A company defined the theory (at least in my eyes) that: 

Timing the markets is better than time in the markets.

This stock has been around for over 20 years.

Ups, downs, ups, downs… but finally, last year got a product approved and in market.

All by itself.

Over $1.3 billion in capital raised over its lifetime.

$2.75 billion market cap today.

Of course, I’m talking about Mesoblast (ASX: MSB | MC: $2.75 billion).

The pioneering company that brought to market the world’s first FDA-approved stem cell product. 

Today, I’m also enlisting the help of a special guest of the newsletter. 

My dad.

Dad was a stockbroker for over 30 years, and has been a long-time shareholder of Mesoblast… 

So who better to tell the story.

Hi Armchair Army, it’s David Segal.

I am the father of the Armchair Analyst, and I was a stockbroker for over 30 years.

Also, I am a committed Mesoblast (ASX: MSB) shareholder. 

With 8 years of holding the stock through the ups and downs, it is one of my largest personal holdings.

So, what does it feel like to be a Mesoblast shareholder?

Think of yourself jumping from a plane, you start fumbling for the cord to open the parachute. 

You’re picking up speed, cursing and feeling ill.

As the ground starts to rush up towards you, your chute opens. 

There is this wonderful lift of air. All is good with the world, and you swear you’ll never get yourself in the same position again.

Yet next year rolls around, and you find yourself back in the rickety old aeroplane, ready to jump out again and feel the rush one more time. 

That’s the feeling.

No lame duck Tunnel of Love ride for you; this is the serious Big Dipper roller coaster.

At its core, Mesoblast is a stem cell company.

As a non-scientist, I know little about the mechanics of stem cells, but they are derived from adult bone marrow and can differentiate into specialised cell types.

My son describes it as like the Wild Card in a game of UNO.

It can become anything.

This makes them incredibly effective at repairing damaged tissue and reducing inflammation. 

Last year, Mesoblast secured FDA approval for its stem cell treatment for pediatric steroid-refractory acute graft-versus-host disease.

(it’s a bit of a mouthful, I know)

The life expectancy of those who get this disease is very low.

The patient population is small, but Mesoblast has secured reimbursement for its treatment at roughly US$194,000 per infusion (with each patient receiving up to 8 infusions).

This means potentially US$1.55 million per patient.

(Of which Mesoblast has a ~93% gross margin)

The premium pricing is due to the rarity of the disease, the fact that Mesoblast is treating paediatric patients (children), and the lack of viable options.

Mesoblast stem cells are harvested from healthy donors, cryogenically preserved, and available for universal use. 

Mesoblast has over 1000 patents protecting its technology and manufacturing process.

But it wasn’t an easy journey to get here…

Mesoblast is a story of hope clashing with disappointment… 

With hope finally starting to win out now that it has an FDA-approved product on the market after 20 years.

The success of Mesoblast is a credit to the determination and resilience (some would also throw in stubbornness) of its CEO, Silviu Itescu.

The AFR published an op-ed on Silviu’s history last October - one of the nicer mainstream media articles on the company over the years:

Silviu’s self-belief is infectious, and he passes on his glass-half-full enthusiasm to investors like me. 

Over the last two decades, he has been able to convince strategic, wealthy investors to serve as cornerstone investors in the company. 

In its first decade of existence, Thorney Investments, a vehicle associated with the Pratt Family, was the key shareholder.

Then, in the last 5  years, a US entrepreneur in the healthcare and life sciences sector called Dr Gregory George has been the Company’s main supporter and shareholder.

Dr George had made his fortune as one of the founders of Surgcentre, which was acquired by Tenet Health in 2021 for over a billion dollars. 

His unequivocal support has enabled the company to tidy up its financing arrangements and give shareholders some level of comfort going forward.

It does help when he buys US$16 million worth of shares on market.

Even amongst a sector notorious for raising capital, Mesoblast is an all-time champion.

Having had capital raisings every second year or so since its IPO in 2005.  

MSB has had 16 capital raisings, issuing 930 million shares and raising $1.3 billion over 2 decades. 

For pretty much its entire life, investors have bought Mesoblast shares on a come raise basis. 

But now Mesoblast has an FDA-approved stem cell product on the market, and it is set to generate US$120 million in the first 12 months, with a 93% gross margin.

This represents only 20% penetration of the addressable market for this particular condition, with label expansion into adult patients as the next milestone for the company.

The cash flow is starting to come through, and the capital raise merry-go-round may be over for now.

CSL, by contrast, was already an established company when it listed and was able to build its business with internal cash flow.

CSL has had only two capital raisings since its IPO in 1994, issuing just 73 million shares in the process.

But where CSL and Mesoblast do have common ground is that they both own 100% of their technologies. 

In Mesoblast’s case, it was more a matter of circumstance than design. 

Some of the deals that have been announced by Mesoblast over the years include:

So, MSB managed to get a product to market, capturing pretty much 100% of the upside on most of its portfolio of opportunities and without partners to cater for.

A nearly entirely shareholder-funded journey from start to finish. 

Unheard of in Australian biotech history.

The coming and going of strategic partners over the years has been a factor in the share price's oscillations. 

With partnerships creating regular rounds of euphoria, with disappointment following when those partnerships dissolve.

But the biggest whiplash in the company’s history has come in the last few years as it has sought final marketing approval from the FDA.

The final approval of the children’s product was a nightmare for shareholders. 

In August 2020, the Oncologic Advisory Committee to the FDA voted 9 to 1 that the data so far provided sufficient support to approve Mesoblast’s Ryoncil for the treatment of pediatric steroid-refractory acute graft-versus-host disease.

This sent the shares flying - reaching a high of around $5.50. 

But remember that this is MSB; its history is littered with false starts. 

The FDA, in its wisdom, sided with the lone dissenter on the advisory panel and issued a complete response letter requiring additional steps for Mesoblast.

At the time, unregulated stem cell products were a major problem for the FDA.

They were extremely cautious, wanting to ensure that the potency of each treatment was validated and uniform.

Manufacturing consistency and reproducibility were key.

In August 2023, the company resubmitted to the FDA, but a second complete response letter was issued, stating that the potency assay had improved but remained insufficient.

The price fell by more than 50% to 47c that day. 

For a company with an appetite for capital, the timing was inconvenient, to say the least, and the 30c per share capital raising announced in December 2023, with an institutional placement and entitlement offer, failed to stem the bleeding. 

During the trading period of the entitlement offer, the share price went to a low of 25c, and although the institutional component was bedded down, the shareholders were unlikely to take up their offers, leaving a shortfall.

The retail shortfall of around $21 million was eventually placed in March (when the price had recovered to around 38c).

As the saying goes, the third time is the charm.

In December 2024, Mesoblast finally secured FDA approval after satisfying the agency's requirement for potency assay standardisation.

Shares shot up from around $1.70 to a peak of $3.37. 

Timing the market versus time in the market.

Since then, volatility has continued, remaining in the $1.50 to $3.20 range, ebbing and flowing with sentiment. 

In my 8 years as a shareholder, I  have gone through the whole gamut of emotions, oscillating between “This is going to be my best ever investment “ to “ I can’t believe it’s all over.”

But now that Mesoblast has a product in the market and real cash flows underpinning the market cap, perhaps the historic volatility will subside.

 The three major triggers that are ongoing and potentially significant are

These 3 programs will provide a rich pipeline of news to titillate and excite the market, while being financially supported by early sales of its Rynocil product.

Hopefully, the MSB roller coaster is nearer the end of the ride. 

It’s been fun, but I’m ready for the Tunnel of Love style investment… 

A steady growing cash flow that can sustain the company and be reinvested into the earlier pipeline of products that ultimately grow the value of the business.

When you are a pioneer in a whole new area of endeavour, the road to success is paved with setbacks. 

But when you start to achieve the goals on your own, the rewards are big.

As a platform technology, there will be many more opportunities beyond their current programs, and, as the only stem cell company to have received FDA approval, they appear to have a few years' head start on any rivals.

Looking to the future, I am very hopeful that the whiplash I’ve experienced as a shareholder will subside, and we will see steady but strong capital appreciation.

First, thanks, Dad, for putting that together!

Dad and I were lucky enough to sit down with Silviu for lunch two weeks ago.

This was the meeting I was most looking forward to as part of my Biotech 165 Challenge because I had always heard about the infamous Mesoblast story since I was a teenager.

What stands out most is the level of resilience required to get a product approved and into the market.

There is no straight line. No shortcuts. Just through.

Mesoblast's story is proof of that.

What I found interesting from our conversation with Silviu is that while the company is well represented by US institutional investors, Australian institutions are not yet at the party.

I think that years of being jaded from capital raise after capital raise have made the street shy.

But when the CEO Silviu goes on the next roadshow, it will be the first time in the company’s history not to be hat in hand.

Given the history, I think that it will take time for the Australian institutional investor community to realise this, but this is where I see the opportunity in the stock.

Mesoblast has emerged from 20 years of ups and downs, still owning all of its IP.

No royalties, no kickbacks, every dollar that they make can go back into their pipeline programs.

This flywheel is what biotech companies dream of, and I think it will define the next chapter in the Mesoblast story.

A big thank you to Dad for putting this together and to Silviu for sharing the Mesoblast story with us.

See you all tomorrow, 

The Armchair Analyst

Amplia Therapeutics (ASX: ATX) halts recruitment in the AMPLICITY trial after three chemotherapy-related toxicities; narmafotinib safety remains unaffected. (ATX)

🪑 After such good results last month, it is a shame that Amplia has had to halt recruitment on the AMPLICTY trial due to the more aggressive chemotherapy being too toxic.

The AMPLICITY trial was the next major catalyst for the company.

It’s important to note that the toxic issues have nothing to do with ATX’s product; it does, however, take them back a step as they evaluate the next clinical program.

AFT Pharmaceuticals (ASX: AFP) reaffirms operating earnings guidance between $20M-$24M for FY26 and announces a distribution partnership with Mark Cuban’s Cost Plus for one of its products in the US. (AFP)

Nexsen Limited (ASX: NXN) completes Stage 1 of the ISO 13485 audit, confirming that its Quality Management System for the StrepSure rapid point-of-care test for GBS. (NXN)

🪑 Milestone ticked. The next stage is ISO certification.

CSL (ASX: CSL) announces that U.S. tariffs on pharmaceuticals are unlikely to affect most of its U.S. sales, with plasma therapies exempt. (CSL)

🪑 A few other stocks made “nothing to see here” announcements like this, including Memphasys (ASX: MEM) and Mayne Pharma (ASX: MYX).

Telix Pharmaceuticals (ASX: TLX) reports Q1 2026 revenue of US$230M, up 11% QoQ, reaffirming FY 2026 guidance of US$950-970M. (TLX)

Radiopharm Theranostics (ASX: RAD) signs a U.S. clinical supply agreement to ensure a sufficient supply of its RAD101 product for a Phase 3 registration trial. (RAD)

🪑 Fail to prepare = prepare to fail.

I like that RAD is getting ahead of Phase 3, even though the final Phase 2 results are yet to be published.

ImpediMed (ASX: IPD) appoints Erik Anderson as CEO effective 7 April 2026. (IPD)

🪑 All about the sales now.

I missed a couple of days because my brother was getting married. 

Here is the news that I missed from last week…

Bioxyne (ASX: BXN) signs a GMP manufacturing agreement with Aurora Cannabis (NASDAQ/TSX: ACB) for cannabis oils in Australia, with plans to expand into vapes for Australia, the UK, and Germany. Expected $3M - $5M in 12 months. (BXN, BXN)

🪑 Aurora Cannabis already has GMP capabilities in Canada, but has chosen to use Bioxyne as a GMP manufacturer to enter the Australian market for cannabis oils and an Australian/European partner for vapes. So this news is big.

I wrote about Bioxyne as part of my Biotech 165 Challenge last week: How to win the cannabis game: The Bioxyne (ASX: BXN) Story

Actinogen Medical (ASX: ACW) begins open-label extension phase of the XanaMIA Alzheimer’s trial, offering up to 25 months of Xanamem treatment to participants. (ACW)

🪑  This will provide important long-term safety data, which will be important for registration.

Enlitic (ASX: ENL) secures a US$1.2M imaging data migration contract with Parkland Health. (ENL)

🪑 When it rains, it pours. That’s three deals in two weeks for Enlitic.

AdAlta (ASX:1AD) reports 50% tumour shrinkage and a 20% complete response rate in patients with its licensed CAR-T therapy for blood cancer. (1AD)

🪑 These trials are not being run by AdAlta, but rather by the company it licensed the asset from, Shanghai Cell Therapy Group, in China.

This is the benefit of the East-to-West strategy. 1AD can publish early efficacy and safety data from these results in China without incurring the costs of developing the asset itself.

They will eventually need to raise money to validate these results in their own Australian trial, but in the meantime, AdAlta can de-risk the development on someone else’s dime.

Arovella Therapeutics (ASX: ALA) reported test-tube (in vitro) trial results for its armoured iNKT cells. Elimination of over 97% of pancreatic and 82% of gastric cancer cells, and strong durability and tumour control. (ALA)

Lumos Diagnostics (ASX: LDX) announces a first US$1.3M order for its point-of-care FebriDx test following the US FDA’s 510(k) clearance with a CLIA waiver. (LDX)

🪑 That’s a good first order. Let’s see how long it takes to refill.

Paragon Care (ASX: PGC) completes the acquisition of 100% of Haju Medical, expanding its healthcare presence in Asia. (PGC)

Emyria (ASX: EMD) launches a NSW workforce recruitment campaign for therapists and psychiatrists to support its fourth clinical operation for psychedelic-assisted therapies. (EMD)

🪑  This was an important update for me. EMD is in the “scale up” mode. Demand is not its a limiting factor right now, access to trained staff is. So this is an important initiative.

Algorae Pharmaceuticals (ASX: 1AI) announces the TGA has received the initial registration dossier for the first of seven generic medications that 1AI has licenced to sell in Australia. (1AI)

🪑  1AI has hired a “dream team” of ex-EBOS sales guns. 

When TGA approval is granted, those hires can finally be unleashed to build out the AlgoraeRx generic medicine business.

Vitura Health (ASX: VIT) appoints Justin James as CEO. James was the CEO of Health Insurance Fund of Australia from 2020 to 2025. (VIT)

🪑  Justin James looks to be one of those “turnaround” CEOs. 

It will be interesting to see how he translates his skills managing health insurance into the evolving cannabis distribution industry.

US-based Vericel wins BARDA award of up to US$197M for NexoBrid wound-healing product. (PR Newswire)

🪑  Interesting benchmark for the various wound healing companies on the ASX (Polynovo, ReNerve, etc…)

Report: OpenAI, Microsoft, Amazon, and Perplexity all want to be your health assistant. (Healthy Innovations) 

Report: Trump will put a 100% tariff on pharmaceutical products not made inside of the US. (AFR) 

🪑  The AFR went to great lengths to explain that CLS will not be included in this tariff.

However, companies will need to pay much more attention to where they produce and manufacture their pharmaceutical products.

Speaking to the Mesoblast CEO two weeks ago, this has been a big consideration for him as the company moves into selling its cell therapy products.

Politics is now an important factor for pharma companies with products on the market.

(Interestingly, in a previous life, Mesoblast’s CEO Silviu Itescu and Dr Oz, the head of the US Medicaid, were colleagues together at Columbia University).

Algorae Pharmaceuticals (ASX: 1AI)  raises $3.9 million from the exercise of 242 million $0.012 options and 89 million shortfall placement on the same terms. (1AI)

🪑 I wrote about the options arbitrage on this stock a few months back, so I was watching closely.

How did it play out? 

The options tripled, as the stock climbed to 24 cents, but unfortunately, 1AI couldn’t sustain the momentum. The options still expired in-the-money.

A worthwhile trade if you got out at the right time… otherwise, a small discount on the 1AI shares if you exercised them on expiry day.

Share price down to $0.012 today, back to the placement/options price.

Eli Lilly has agreed to acquire narcolepsy/neuroscience Centessa Pharmaceuticals in a deal valued at US$6.3 billion upfront, with up to an additional $1.5 billion in milestone payments. (Fierce Biotech)

Neurocrine acquires Soleno for US$2.9B, including its approved Prader-Willi syndrome medicine. (Fierce Biotech)

🪑  Soleno’s drug has just been approved by the FDA, and this deal shows the liquidity potential when a company finally gets a product to market.

Neurocrine is not buying hope; it's buying revenue.

Biogen to buy Apellis in a US$5.6B rare-disease franchise push. (Reuters)

Anthropic acquires Coefficient Bio for US$400M to expand AI-driven drug research and development capabilities. (Biospace)

Merck adds antibody discovery optionality in up to US$838M Infinimmune deal. (Fierce Biotech)