Mesoblast (NASDAQ: MESO), a global developer of cellular medicines for inflammatory diseases, announced the completion of its latest round of financing to support the development of its COVID-19 drug candidate. The company, which is headquartered in Australia and has operations in the U.S. and Asia, successfully raised $90 million in capital through a placement of 43 million shares to both current and institutional investors. The shares were priced at a 7% discount to the closing price of Mesoblast common stock on May 8th and represent 7.4% of the new total amount of the company’s issued capital.
Most of the proceeds will be used to scale the manufacturing of Mesoblast’s main product candidate RYONCIL (remestemcel-L). The product is intended to treat critically ill patients who suffer from diseases caused by cytokine release syndromes and particularly the COVID-19 acute respiratory distress syndrome (ARDS). A smaller portion of the funds will be used for working capital and general corporate purposes.
Trial of COVID-19 patients underway after positive emergency-use results
The company’s ongoing randomized phase 2-3 trial of RYONCIL is designed to evaluate the effectiveness of the treatment in reducing high mortality in as many as 300 CVOID-19 patients in 30 U.S. locations with moderate to severe ARDS. The study began after initial results of the emergency compassionate use of RYONCIL in COVID-19 ARDS showed nine of 12 ventilator-dependent patients were able to be removed from ventilators within a median period of 10 days.
Mesoblast’s biologics license application (BLA) for RYONCIL as a treatment for steroid-refractory acute graft versus host disease (GVHD) has been granted priority review by the U.S. Food and Drug Administration (FDA). If approved, the product is expected to be available in the U.S. later this year for GVHD. The product is also being developed for advanced heart failure and chronic low back pain and both indications are being evaluated under separate phase 3 trials. RYONCIL has already been commercialized in Europe and Japan.
CEO Dr. Silviu Itescu stated, “We greatly appreciate the support shown by both our existing investors and new institutional investors, with demand for the placement far exceeding the funds raised. We look forward to updating the market as this important COVID-19 ARDS trial progresses and to its completion in the coming months.”
Mesoblast’s capital raise significantly improves its ability to pursue its current top priority of making its COVID-19 treatment available to as many people as possible and as soon as possible. The fact that demand for the offering was so strong bodes well not only for the company’s near-term prospects around RYONCIL, but also its future ability to attain additional financing. Mesoblast’s extensive intellectual property (IP) portfolio also represents a competitive advantage for the company as it has a global reach and is protected to at least 2040 across all major markets.
Settlement of the transactions is expected to be May 15th and the newly issued shares are expected to begin trading on the Australian Stock Exchange on May 18th. The dually listed Mesoblast shares trading on the Nasdaq Exchange jumped 6.7% to $12.15 on May 13th in response to the announcement.