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Mesoblast Ltd Releases FY19 Report, Delivering Mixed Results

Jordan Baird

Jordan Baird is the head ASR Wealth Advisers client services desk and has been with the organisation since 2017. He first started investing in his early years. While he believes that investors should leave no stone unturned he has a particular interest in trading based on broad macroeconomic trends along with specific analysis of innovative up-and-coming companies.

Mesoblast Limited (ASX: MSB) is a regenerative medicine company. It provides treatments for inflammatory and cardiovascular disease and back pains. The company is based in Australia.

Mesoblast Ltd - FY19 Report
(Linkedin 2019)

What are the results from Mesoblast FY19?

Today (Friday 30th of August 2019) Mesoblast released its FY19 annual results. The main points are as follows:

  • Total Revenue for FY19 is US$16.7 million, down 3.6% from FY18.
  • Loss before Income tax for FY19 is US$98.7 million, up 50% from FY18 losses of US$66 million.
  • Net Increase in cash and equivalents for FY19 is US$12.8 million, up US$20.3 million compared with FY18.
  • Total Equity for FY19 is US$481 million, down 11.9% from FY18.
  • No reported EPS or dividend.

Specific results on company operations are as follows:

  • US$10 million in revenue in FY19 from establishment of a partnership with Tasly in China.
  • US$6 million in royalties and milestone revenues in FY19 from sales of. TEMCELL by JCR, an increase of 17.6%.

What were the drivers of this result?

Continued growth in revenues from royalties on sales of TEMCELL HS. Inj. in Japan for steroid-refractory acute graft versus host disease (aGVHD) by Mesoblast licensee JCR Pharmaceuticals Co. Ltd. Revenues from royalties on TEMCELL sales increased by 37% to US$5.0 million for FY19. In the most recent quarter, revenues from royalties increased by 54% to US$1.7 million. Thus, the Japanese market is driving positive results for Mesoblast.

However, increased costs in Manufacturing commercialization and Financial costs drove the negative result of US$98.7 million in losses, an increase of US$32.7 million from FY18 and thus pulled total revenue down.

What is the outlook for Mesoblast?

The outlook is positive for Mesoblast due to huge potential in entering the US market. Mesoblast are progressing through the United States Food and Drug Administration (FDA) filing process to seek approval of their successful GVHD product­–already available in Japan–to be available in the US

The US addressable market opportunity for medicine for aGVHD in children and adults is approximately eight times larger than Japan given differences in population size, incidence of aGVHD, and relative Pharmacoeconomics. This brings large market capitalisation opportunities for Mesoblast. GVHD may result in additional personal healthcare costs on average up to US$500,000 per patient. This represents a significant commercial opportunity for Mesoblast’s first potential product to enter the US market and could see significant revenues.

Mesoblast will look to continue to improve various medicines such as Remestemcel-L, Revascor and MPC-06-ID, going forward into FY20. They will look to build further global and regional partnerships.

What is the market reaction?

The initial market reaction to Mesoblast’s FY19 results is slightly negative. The current share price is trading at A$1.46 which represents a 0.34% decrease (11:54 am AEST).




This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

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