Mesoblast Ltd (ASX: MSB) shares are down 0.36% on Tuesday to $1.385 per share.
If we take a look at the five-year history of this ASX biotech share below, we see a tonne of trouble.
But everything could change for Mesoblast shares in just a fortnight's time.
What's happening on 2 August for Mesoblast shares?
This is the 'goal date' set by the United States Food and Drug Administration, which is considering whether to approve Mesoblast's flagship drug, remestemcel-L.
Remestemcel-L is a stem-cell injectable medicine that treats steroid-refractory acute graft-versus-host disease (SR-aGVHD) in children.
Acute graft-versus-host disease is a severe immune reaction that can occur after bone marrow transplantation in kids. It has a mortality rate of up to 90%.
There are currently no FDA-approved treatments in the US for children under 12 years of age with SR-aGVHD.
Investors might remember that this is the drug that tanked the Meosblast share price back in 2020.
As shown in our chart, Mesoblast shares rose to a six-year peak of $5.43 in August 2020 in anticipation that the FDA would approve the drug.
That wasn't idle speculation either.
That month, the FDA's oncology drugs advisory committee voted 9:1 that Mesoblast's data supported the efficacy of remestemcel-L.
So, formal FDA approval seemed highly likely at that point.
But the FDA went the other way.
In October 2020, it issued its formal decision and asked Mesoblast for more evidence.
Two years later…
Now, Mesoblast shares are back riding the wave of optimistic expectation after the biotech re-filed with the FDA seeking approval for remestemcel-L, and the FDA accepted its submission.
That happened on 8 March. Since then, Mesoblast shares have risen by 50%.
In a statement, Mesoblast CEO Silviu Itescu said:
Over the last two years we have worked tirelessly to address the issues previously raised by FDA.
We look forward to working closely with the Agency over the review period…
In April, Mesoblast announced a US$40 million private capital raise at 85 cents per share to help launch and commercialise remestemcel-L, among other things.
Looking forward, the founder of Biotech Daily, David Langsam said 2 August will be a pivotal day for Mesoblast shares.
Langsam said (courtesy the Australian Financial Review (AFR)):
August 2 looks like a make-or-break inflection point for Mesoblast, but we've been at these pivotal moments with them before.
If it's not approved, it will be a serious blow to the company, which continues to have mesenchymal precursor cell products in development for cardiac as well as lower back pain and knee joint pain.
Broker backs Mesoblast shares for growth in FY24
Broker Bell Potter has a speculative buy rating on Mesoblast.
As my colleague James reports, the broker has a 12-month share price target of $2 for the company.
Bell Potter says:
The PDUFA date for remestemcel-L is now only weeks away (2 August 2023) and as expected the MSB share price has begun to rally – most likely in anticipation of approval.
The company resubmitted the Biological License Application (BLA) in January 2023 which was formally accepted for review in March.
This was followed by a pre license inspection (by 4 FDA inspectors) of the manufacturing process for remestemcel-L at the Lonza manufacturing facility in Singapore in May.
The inspection is considered to have gone well and did not result in the issuance of any form 483 (being potential violations of laws regulating drug manufacturing for use in the USA).
'Substantially stronger' evidence than in 2020
Bell Potter added:
The four year survival data for Remestemcel – L indicates a clean safety profile and a survival rate of 49% and we believe this long term survival data along with overwhelming support of physicians should be sufficient to obtain an approval.
The approval of any new class of therapy can never be taken for granted, nevertheless the data package supporting approval on this occasion is substantially stronger than in 2020.
