MESOBLAST LIMITED (MSB)



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General Information
Company Name: Mesoblast Limited
Stock Code: MSB
Website: www.mesoblast.com
GICS Sub-Industry: Biotechnology
Market Cap ($M): 1,590
Equiv. Shares (M): 321

Current Price Data+
Current Price Open High Low Last Close Volume Price Movement
 $ 4.950 $ 4.970 $ 4.970 $ 4.850 $ 4.830 311,369 $ 0.120  2.484 %

Current Broker Consensus Recommendation more
Recommendation: Sell
Recommendation Date: 27th Feb 2014
12 Month Target Price (average): $5.55
Brokers Surveyed: 3

Company Overview

Business Description:
Mesoblast Limited (MSB) is an Australian company engaging in the development of biologic products for the broad field of regenerative medicine. The key focus is on research and development of adult Mesenchymal Precursor Cells (MPCs).

Strategy Analysis:
MSB is developing a proprietary stem cell technology for the treatment of orthopaedic conditions such as bone fractures, degenerated knee cartilage and vertebral disc degeneration. Through an investment in and subsequent merger with Angioblast Systems, Inc. MSB is also developing stem cell treatments for cardiac and vascular diseases, and other degenerative conditions. MSB's strategy is to maximise shareholder value through both corporate partnerships and the rapid and successful completion of pre-clinical and clinical milestones to commercialise the technology. The firm already has TGA approval to manufacture and distribute patient-specific adult stem cell products to hospitals and physicians across Australia; this is the first culture-expanded adult stem cell product to receive manufacturing approval anywhere in the world. Mesoblast reported a net loss of $27.79m for the half-year ended 31 December 2012 (31 Dec 2011: $17.6m). The increased loss was driven by a reduction in revenue from continuing operations and other income of $4.3m and an increase in expenses from continuing operations of $5.9m. Revenues from ordinary activities were $14.73m, down 22% from the same period last year. Diluted EPS was (9.69) cents compared to (15.52) cents last year. The net operating cash outflow was $30.52m compared to an outflow of $36.89m in the pcp. No dividend was declared. In the second half of the financial year, the Company expects to continue to report on clinical outcomes from a number of Phase 2 programs and to initiate new programs in line with the overall corporate strategy.


Financial Summary
Year to Jun NPAT EPS EPS chg (%) PER DPS Yield (%) Franking (%)
2015  F -66.3 -19.3 -- -25.6 0.0 0.0 0.0
2014  F -35.0 -10.6 -- -46.7 0.0 0.0 0.0
2013  A -61.6 -21.0 -- -28.7 -- -- 0.0
Source: Morningstar analyst estimates.

Peer Comparison
EPS Growth (%) P/E (%) Dividend Yield (%)
Company Mkt Cap 2013 A 2014 F 2015 F 2013 A 2014 F 2015 F 2013 A 2014 F 2015 F
Bionomics (BNO) $196 M -- -- 3.8041 -- 48.4536 10.0858 0.0000 0.0000 0.0000
CSL (CSL) $32,769 M 0.3878 -0.0521 0.1274 25.9367 27.3627 24.2716 0.0162 0.0154 0.0176
Mesoblast (MSB) $1,551 M -- -- -- -- -- -- 0.0000 0.0000 0.0000
Starpharma (SPL) $212 M -- -- -- -- -- 11.9775 0.0000 0.0000 0.0000
Sirtex Medical (SRX) $876 M 0.0596 0.3669 0.3208 48.7813 35.6882 27.0209 0.0000 0.0091 0.0114

Market Comparison
Earnings P/E Ratio P/B Ratio P/E Growth P/S Ratio
MSB -- -- 2.46 10.00 79.3
Market 1.07 16.0 1.27 1.98 1.72
Sector 0.65 18.8 3.95 1.53 9.42

Directors
Name Position Start Date
Dr Silviu Itescu Executive Director 08 June 2004
Mr Brian Jamieson Non-Executive Chairman 22 November 2007
Mr Donal O'Dwyer Non-Executive Deputy Chairman,Non-Executive Director 29 September 2004
Mr Michael Robert Spooner Non-Executive Director 15 August 2005
Dr Ben-Zion Weiner Non-Executive Director 09 May 2012
Dr Eric A Rose Non-Executive Director 15 April 2013
Mr William M Burns Non-Executive Director 06 March 2014

Management
Name Position
Jenni Pilcher Company Secretary

Substantial Shareholders
Holding Name
68,244,642 (21.56%) Silviu Itescu
32,018,195 (10.11%) M&G Investment Funds
55,785,806 (17.62%) Cephalon International Holdings Inc
17,600,000 (5.56%) Thorney Holdings Pty Ltd and Thorney Pty Ltd and associated entities

Calendar of Events
Date Event
25 February 2015 Report (Interim)
10 October 2014 Report (Annual)
28 August 2014 Report (Prelim)
© 2011 Morningstar, Inc. All rights reserved. The data and content contained herein are not guaranteed to be accurate, complete or timely. Neither Morningstar, nor its affiliates nor their content providers will have any liability for use or distribution of any of this information. To the extent that any of the content above constitutes advice, it is general advice that has been prepared by Morningstar Australasia Pty Ltd ABN: 95 090 665 544, AFSL: 240892 (a subsidiary of Morningstar, Inc.), without reference to your objectives, financial situation or needs. Before acting on any advice, you should consider the appropriateness of the advice and we recommend you obtain financial, legal and taxation advice before making any financial investment decision. If applicable investors should obtain the relevant product disclosure statement and consider it before making any decision to invest. Some material is copyright and published under licence from ASX Operations Pty Limited ACN 004 523 782 ("ASXO"). DISCLOSURE: Employees may have an interest in the securities discussed in this report. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/fsg.asp.

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