Mesoblast share price dumps 10% as excitement simmers on FDA submission

After yesterday’s explosive session, the Mesoblast Ltd (ASX: MSB) share price is retreating today.

As we tip past midday, shares in the clinical-stage drug developer are down 10% to 85.5 cents apiece. The move paints a vastly different scene from what was portrayed yesterday, with the Mesoblast share price blazing 71% higher as $58.4 million worth of shares changed hands.

Here’s a refresher if you’re wondering what’s behind this heightened volatility.

Another chance

Back in August last year, the Mesoblast share price suffered a crippling blow.

The US Food and Drug Administration (FDA) informed the company that it required more data to support marketing approval for remestemcel-L to treat pediatric steroid-refractory acute graft versus host disease (SR-aGVHD).

The consequence of this outcome on Mesoblast shares is patently clear on a 1-year price chart, as shown below. Shares quickly caved from $1.09 to 38 cents in a week, erasing almost $600 million of market capitalisation in the process.

The setback prompted Mesoblast to raise $97 million of capital at a time when it would be most dilutive (due to the reduced share price). To say the past eight months, or thereabouts, have been a harrowing time for Mesoblast investors would be putting it lightly.

However, last week produced a spark of hope. The FDA informed Mesoblast that its phase 3 study data now appeared adequate for submission of its Biologics License Application (BLA). In turn, management is confident in refiling its application for remestemcel-L in children with SR-aGVHD.

Mesoblast aims to submit its application to the FDA in the next quarter.

The turnaround corresponds with a 177% rise in the Mesoblast share price this year. With shares trading 10.5% lower today, there’s a possibility shareholders are taking some profits off the table.

Is the Mesoblast share price outperforming ASX 300 peers?

The S&P/ASX 300 Index (ASX: XKO) is the baseline for outperformance. As of today, the index is up 2.4% year-to-date, which means Mesoblast has beaten the benchmark by a staggering 174.6% in 2024.

But what about when compared to the top-performing ASX 300 shares?

Well, as it turns out, Mesoblast is also the top of that bunch. The next closest is Zip Co Ltd (ASX: ZIP), with its sizeable 107% gain this year.

The post Mesoblast share price dumps 10% as excitement simmers on FDA submission appeared first on The Motley Fool Australia.

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More reading

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Zip Co. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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