The market shrugged at Mesoblast’s latest FDA win. Is it just another Droneshield?

Mesoblast (ASX:MSB) has revealed the US FDA has given its flagship drug a 7 year exclusivity period blocking off competing registrations – but the market has reacted with net disinterest, as far as share price action is evidence of that.

For the uninitiated, that drug Remestemcel-L (branded Ryoncil) is more or less a stem cell treatment treating graft versus host disease.

Ryoncil has been the key value prop driving Mesoblast forward and a perhaps more meaningful FDA approval last year ultimately saw the Mesoblast share price juice to above $3.00/sh.

But that was then, and this is now. Here’s a chronology of Mesoblast’s share price YTD:

• On Jan 2 2025, MSB was worth $3.35/sh.
• On 14 March 2025, it was worth $2.07/sh.
• On 15 May 2025, it’s worth $1.78/sh.

So what’s going on? The first thing to note is that when Mesoblast was above $3.00/sh, its market cap far outsized its fundamental value, at least on paper. Second, short sellers moved in.

But neither of those are particularly unusual, and there’s more going on.

The company, dual-listed on the NASDAQ, has been to some extent a victim of global uncertainty, and its exposure to the US market has had a different flavour since the world was reminded of Trump’s governance style.

But it appears shareholders are principally hungry for revenue. While Mesoblast undoubtedly has potential (and let’s remember that biotech investors are notoriously unforgiving,) in short, one could argue the company has been slow in delivering on sales.

Not helping matters for investors whose calculus reflects the above view, the company recently announced a boost in US operational activity that included the sum total of 3 children (Mesoblast’s intended patients for Ryoncil.)

That, perhaps, cemented perceptions of a slow-moving company – or at least one that wasn’t going to make a billion overnight.

All of that put together, it’s perhaps not surprising today’s news from Mesoblast on Thursday – that it has secured an exclusive ‘right’ over Ryoncil for 7 years under the FDA’s orphan drug authority – hardly moved the dial.

In fact, shares fell -0.5% in late morning trades to $1.77/sh. While that isn’t particularly dramatic, it’s far off the mood in the room leading into 2025 when any news from Mesoblast was good news.

Still: biotech companies staging shock comebacks aren’t unheard of.

MSB last traded at $1.82/sh.

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