MSB 12.1% 55.5¢ mesoblast limited

"Nope, that's PWC - MSB's auditors. 12 months from bankruptcy is...

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    "Nope, that's PWC - MSB's auditors. 12 months from bankruptcy is pretty close if you have neither revenue nor a partner?"

    @hottuna ,


    I'm not too sure who you are quoting who said, "Regardless, you've charged ahead and as usual, slurred MSB with wild accusations of bankruptcy or death spiral fundingwithout foundation", but your response involving a reference to "12 months from bankruptcy" is, I think, a bit irresponsible because it is somewhat misleading.

    The best way to clear this up is, as is almost always the case, by looking at the facts.

    1. MSB had $80.9m of cash @ 30 June, 2016.

    2. Based on management guidance of a 25% reduction in the rate of cash burn compared to
    FY2015, the company will utilise $18m of that net cash during the current quarter.

    3. So, by the end of the current quarter (i.e., in 10 business days' time) the cash holdings will be around $63m, ceteris paribus.

    4. To satisfy going concern tests on a best practice basis, the company should have at least enough cash on hand at any time to satisfy its Current Liabilities.

    5. Last reported Current Liabilities are $29.4m

    6. This means that effective remaining cash available is $63m less $29m = $33m

    7. Extrapolating 3 months forward (i.e., to 30 December 2016) and the net available cash figure becomes $17m

    8. By the end of March 2017, the figure will - in theory - have a negative value, meaning that, on the basis of the information publicly available, MSB will run out of cash within 6 months' time.


    So, @hottuna, your "12-month" reference is reckless because you are over-stating MSB's financial position which risks lulling people into a false sense of security.


    Of course, all of this is purely theoretical: what could happen in practice before 30 March 2017 is that the company could:

    A) successfully arrange a partnership deal, or
    B) instruct Kentgrove to start hitting whatever bids are in the screen.

    Those two outcomes, in terms of their impact on ensuing share price performance, are binary.
 
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