MSB 12.1% 55.5¢ mesoblast limited

My take on todays placement

  1. 5,455 Posts.
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    Firstly I'd like to preface my view with a few facts:
    27th Feb 2017, sp was $1.66
    20th March 2017, sp was $2.12
    Last closing price, $2.39
    MNK exclusivity ends Aug/Sept, MSB had enough cash to last until approx. June/July
    CHF P3 interim due this week or next

    Gold fish memory
    Not too long ago, in fact just a month .. we were trading at $1.66, the recent run up to $2.39 is just that .. a recent run up in the past two weeks, largely thought to be due to the impending P3 CHF interim. Before that we traded at or below $2 for a few weeks.

    Why not wait until CHF interim is announced before raising capital
    This is a matter of prudence. The company may be confident, but they do not know for sure if the interim will read out positively or negatively.. or somewhere in between. If they raise capital after the announcement, either they get it at a much higher, the same or much lower price ... its a gamble, and boards don't like taking gambles when it comes to capital raisings. US$40m at $2 looks a lot better than US$40m at $1.5 which is what they would have gotten just a month ago. MNK US$20m was at $1.47 in Dec16.

    Placement myth busted
    It turns out Silviu's promise of non-dilutive placements made in June 2016 can be scrapped. So we can stop trying to hang out hats on this from now on ... institutional funding is a source of funding and although retail investors would like to take a bite on the cherry - the main reason for insto funding would be that it is much quicker to get the funding, and the money is stickier i.e. if retail investors got those shares today, they'd offload them all at a profit almost immediately. Instos are more likely to hold for longer.

    Kentgrove facility not needed
    There has been much said about this facility and although some tried to pigeon hole MSB (who did it to themselves) into only two sources of funding i.e. partnership or kentgrove ... the fact that instos are now back in play, means that I wouldn't expect the kentgrove facility to be utilised any time soon, if ever. It is as most have eluded to, a last resort.

    Its all about the negotiation table
    There is no doubt in my mind that entering into an agreement on CHF/RA/backpain/aGVHD with only $US20m in the bank would be commercial suicide. It would make MSB's position so fragile at the table, that we would have to rush and compromise to get things done quick enough to ensure the company remains solvent. Having US$60m+ in the bank gives us enough cash to operate until the end of the calendar year ... and most importantly, enter into negotiations without the need to rush or compromise unnecessarily.

    Now the cash issue has again been deferred until the end of the calendar year... let the clinical trials do the talking...
 
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