What on Earth is happening with Mesoblast shares today?

First it was jumping and then it was sinking. What's going on?

| More on:
A woman in her late 30s holds her hands out either side with the palms up as if indicating she doesn't know the answer to a question. She has a quizzical look on her face.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Mesoblast Ltd (ASX: MSB) shares are having a volatile session on Thursday.

At one stage, the biotechnology company's shares were up over 6% to a 52-week high of $1.87.

It has now given back these gains and dropped 6% to $1.65.

Why are Mesoblast shares falling?

Investors were buying and then selling the company's shares today after the allogeneic cellular medicines developer made a major announcement.

According to the release, the United States Food and Drug Administration (FDA) has granted its second generation allogeneic, STRO3-immunoselected, and industrially manufactured stromal cell therapy Revascor Regenerative Medicine Advanced Therapy (RMAT) designation.

This follows the submission of results from a randomised controlled trial in children with hypoplastic left heart syndrome (HLHS).

HLHS is a severe congenital heart disease in which the left side of the heart does not fully develop and effective pumping of oxygenated blood by the left ventricle to the rest of the body is reduced.

Mesoblast notes that without immediate surgery after birth, the prognosis is dismal with HLHS overall being responsible for 25% to 40% of all neonatal cardiac mortality.

Earlier this year, FDA granted Revascor both Rare Pediatric Disease Designation (RPDD) and OrphanDrug Designation (ODD) for treatment of children with HLHS.

What is RMAT designation?

The release notes that RMAT designations aim to expedite the development of regenerative medicine therapies that aim to treat, modify, reverse, or cure a serious or life-threatening disease or condition where preliminary clinical evidence indicates that the drug has the potential to address unmet medical needs for the disease or condition.

The company highlights that an RMAT designation for Revascor -L provides all the benefits of Breakthrough and Fast Track designations, including rolling review and eligibility for priority review on filing of a Biologics License Application (BLA).

Furthermore, on FDA approval of a BLA for Revascor for the treatment of HLHS, Mesoblast may be eligible to receive a Priority Review Voucher (PRV). This can be redeemed for any subsequent marketing application or may be sold or transferred to a third party.

PRVs are regularly sold for more than US$100 million.

Commenting on the news, Mesoblast's chief executive Silviu Itescu, revealed that he was pleased with the news. He said:

We appreciate FDA's support in designating REVASCOR both RMAT and RPD status, a recognition of the potential impact of our therapy on the long-term adverse outcomes of these desperately ill children. Under the RMAT designation, we plan to meet with FDA to discuss a potential approval pathway in this indication.

It seems that today's decline has been a case of 'buy the rumour and sell the news'.

Should you invest $1,000 in Altium right now?

Before you buy Altium shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Altium wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 6 March 2025

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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.

More on Healthcare Shares

a young woman holds her hand to her ear and leans sideways as if to listen to something that's surprising her as her eyes and her mouth are wide open.
Healthcare Shares

How are Cochlear shares impacted by Trump's tariffs?

Will the company escape from the tariffs? Let's find out.

Read more »

A man with a wide, eager smile on his face holds up three fingers.
Healthcare Shares

3 reasons to buy this surging ASX All Ords healthcare share today

A top expert forecasts more outperformance from this rocketing ASX healthcare stock.

Read more »

A woman reclines in a comfortable chair while she donates blood holding a pumping toy in one hand and giving the thumbs up in the other as she is attached to a medical machine to collect her blood donation.
Healthcare Shares

Down 11% in 2025, are CSL shares a good buy right now?

Are CSL shares likely to go up from here?

Read more »

Three healthcare workers look and point at at medical image
Healthcare Shares

Pro Medicus to buyback 10.4 million shares. What does this mean?

Is this a sign to buy?

Read more »

A elder man and woman lean over their balcony with a cuppa, indicating share rpice movement for ASX retirement shares
Healthcare Shares

Why I think this ASX small-cap stock is a bargain at 40 cents

Here’s why this business has a compelling outlook...

Read more »

Two doctors give the thumbs up to an x-ray
Healthcare Shares

One likely reason the market has soured on Pro Medicus

Is there opportunity for brave investors?

Read more »

Three health professionals at a hospital smile for the camera.
Healthcare Shares

Hedge the rise in your health insurance premium with these 2 ASX stocks

Sick of price rises? Get on the other side of the transaction.

Read more »

Scientists working in the laboratory and examining results.
Healthcare Shares

2 ASX 200 biotech stocks announcing big news today

Let's see how the market has responded to these announcements.

Read more »