Why the Mesoblast share price gained 58% in the first half of 2020

The Mesoblast limited (ASX: MSB) share price performed exceptionally well during the first half of 2020. This is not entirely surprising given Mesoblast is engaging in the development of biologic products for regenerative medicine during a global pandemic.

Across the first half of the year, the Mesoblast share price rose from $2.05 to $3.25 on 30 June. That represents a rise of 58.5% which is pretty impressive considering the time frame. The Mesoblast share price spiked as high as $4.45 and fell as low as $1.02 in what was an incredibly volatile 6 months for the biotech stock.

What does Mesoblast do?

Mesoblast uses its proprietary technology platform to develop and commercialise innovative allogeneic cellular medicines to treat complex diseases. The company targets diseases that are resistant to a conventional standard of care and where inflammation plays a central role.

Mesoblast has four phase 3 products nearing registration:

• Revascor for advanced chronic heart failure
• MPC-06-ID for chronic low back pain due to degenerative disc disease
• Remestemcel-L for moderate to severe acute respiratory distress syndrome (ARDS) due to COVID-19 infection
• Ryoncil for use in steroid-refractory acute host disease

What’s been moving the Mesoblast share price this year?

With COVID-19 still rampant across the globe, it is likely that the rise of the Mesoblast share price is largely due to the promising news regarding Remestemcel’s ability to treat patients suffereing with the disease. In early May, the Mesoblast share price jumped 13% as it commenced trials of its COVID-19 treatment. The trial achieved an 83% survival rate and reported that 75% of patients managed to come off ventilator support within a ten day period.

Furthermore, Mesoblast’s recent financial performance has also been strong. The company recorded a 113% increase in overall revenues to US$31.5 million for the first 9 months of FY 2020, compared to the prior corresponding period. Mesoblast also completed a $138million fund raising in May, adding to the strength of its balance sheet.

In a highlight for the company, it is currently awaiting a priority review of Ryoncil by the United States FDA for the treatment of children with steroid-refractory acute host disease.  The action date is 30 September 2020 and, if approved, Mesoblast will make Ryoncil immediately available in the US market.

Foolish takeaway

The Mesoblast share price has soared a huge 124% in the last year alone, pushing it into the S&P/ASX 200 Index (ASX: XJO). The company has been well placed to benefit from the onset of the pandemic which has been instrumental in fuelling its share price growth this year. Furthermore, since Ryoncil is awaiting registration later this year, and the decision is expected to have huge ramifications for the company’s share price, I believe Mesoblast definitely deserves a place on your watchlist. 

More reading

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• Why these 9 ASX shares have doubled in value in the past year
• ASX 200 Weekly Wrap: Blue chip shares pull ASX 200 back over 6,000 points
• These were the worst performing ASX 200 shares last week
• Why these are the top performing ASX 200 shares over the past year

Motley Fool contributor Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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