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HotCopper favourite Mesoblast (ASX:MSB) has begun treating the first three children with skin graft-versus-host disease in the U.S., at the same time the company received Medicare (U.S.) and Medicaid coverage.
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That coverage, under the way it works in the States, now means – quoting Mesoblast – “that the U.S. Government now provides inpatient and outpatient access for a treatment course of Ryoncil to the approximately 40% of U.S. children covered by Medicaid who have steroid-refractory acute graft versus host disease.”
Estimated patient numbers weren’t provided, but seeing as it’s the U.S., and that Mesoblast is the first company to receive an FDA greenlight to use mesenchymal stem cells, you can bet the medications are expensive.
In fact, Ryoncil treatments can easily run into the millions, and that’s in USD. That’s why any U.S. Medicare-Medicaid coverage is important.
Worth noting is 60% of children with the graft-versus-host disease Mesoblast seeks to treat are under private health insurance.
(This also only includes children suffering from that condition who have not responded to steroids.)
Anyway – this should be good news. But, it isn’t – shares were down nearly -2% at lunchtime to $1.99/sh.
It’s only fair to note MSB is still posting +260% 1Y returns, even with Monday’s price action.
And that price action is the result of a market-wide sell-off – not particularly anything Mesoblast has done wrong, though, some investors are surely wanting more clarity around specific revenue projections.
That sell-off was triggered by a weak Friday US session on Wall Street, and given that the weekend comes right after, the Aussie markets are just going off whatever happened on Friday night.
Quite a few times in 2024, it looked like the ASX was diverging from Wall Street at some critical junctures. Typically, whatever the U.S. does, we follow. And that’s still the rule, but YTD, there haven’t been any of those divergences.
That’s because, as far as world markets can figure out, Trump’s managerial style is not one steeped in the waters of reflection. And in an environment where anything can change at any moment, you’ve got no certainty.
So now, Mesoblast launching its stem cell drug on the first three children in the U.S. eligible to receive it just hasn’t been enough to flip the stock into the green.
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And with Mesoblast’s somewhat recent FDA approval seeing the company rapidly develop a market cap of $2.5B, it may take more than a batch of 3 patients to push the price back to the $3/sh mark.
That’s if the market perceives the stock wasn’t run too hard.
MSB last traded at $1.99/sh.
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