In an Aug. 30 research note, Ladenburg Thalmann analyst Jeffrey Cohen reported Mesoblast Ltd.'s (MESO:NASDAQ; MSB:ASX) financial results for Q4/19 and fiscal year 2019 (FY19).
As for Q4/19, revenue came in at $2 million, above Ladenburg's $1.9 million estimate but below consensus' $2.3 million projection. Of the total $2 million, $0.3 million came from interest, the remainder from royalties. Royalty revenue increased about 54% during the quarter from sales of TEMCELL HS Inj. in Japan. Operating expenses were $19.5 million.
Mesoblast posted a Q4/19 net loss of $20.7 million, less than both Ladenburg and the Street's projections of $25.2 million and $37.4 million, respectively.
Regarding FY19, the regenerative medicine company generated $16.7 million in revenue. Of that, $11 million came from milestones, $5 million from commercialization and $0.7 million from interest.
FY19 opex totaled $97 million, composed of $21.6 million for general and administrative (G&A) expenses, $59.8 million for research and development and $15.4 million for manufacturing and commercialization. As expected, G&A and manufacturing expenses drove the higher FY19 opex.
For the year, Mesoblast had a net loss of $90 million.
Cohen presented some of the company's recent highlights that management mentioned in the earnings conference call.
One, Mesoblast submitted an investigational new drug application to the U.S. Food and Drug Administration (FDA) for remestemcel-L in children with graft versus host disease (GvHD). Management reiterated it intends to further expand its remestemcel-L clinical program to include adults with GvHD.
Also, in a meeting with the FDA, the agency outlined the most efficient pathway for Mesoblast to get marketing authorization for Revascor. Because reduced major GI bleeding events is an important clinical outcome for patients with a left ventricular assist device, data from the placebo-controlled Revascor trial that demonstrated that outcome could support marketing authorization through a biologics license application.
Cohen highlighted that Mesoblast is "set up for a robust 2020 with multiple late-stage data readouts." For instance, readout of 24-month data from its trial evaluating MPC-06-ID is expected by mid-calendar year 2020.
Ladenburg Thalmann has a Buy rating and an $11.25 per share price target on Mesoblast, whose stock is now trading at around $4.88 per share.
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Disclosures from Ladenburg Thalmann, Mesoblast Ltd., August 30, 2019
ANALYST CERTIFICATION: I, Jeffrey S. Cohen, attest that the views expressed in this research report accurately reflect my personal views about the subject security and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report, provided, however, that:
The research analyst primarily responsible for the preparation of this research report has or will receive compensation based upon various factors, including the volume of trading at the firm in the subject security, as well as the firm’s total revenues, a portion of which is generated by investment banking activities.
COMPANY SPECIFIC DISCLOSURES:
Ladenburg Thalmann & Co. Inc. intends to seek compensation for investment banking and/or advisory services from Mesoblast Ltd. and Vericel Corporation within the next 3 months.
Ladenburg Thalmann & Co. Inc. makes a market in Vericel Corporation.
Ladenburg Thalmann & Co. Inc. has managed or co-managed a public offering for Vericel Corporation within the past 12 months.
Ladenburg Thalmann & Co. Inc received compensation for investment banking services from Vericel Corporation within the past 12 months.
Ladenburg Thalmann & Co. Inc had an investment banking relationship with Vericel Corporation within the last 12 months.
