HCW assumes coverage of Mesoblast at buy; PT $6.50

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H.C. Wainwright analyst Swayampakula Ramakanth assumed coverage of Mesoblast (NASDAQ:MESO) with a “buy” rating and price target of $6.50. The stock closed at $4.56 on Jan. 30.

Australia-based Mesoblast is focused on developing allogeneic regenerative medicine products through its proprietary mesenchymal lineage cells platform.

Mr. Ramakanth believes Mesoblast is an attractive investment because its platform has been validated by two commercial cellular therapy products: TEMCELL and Alofisel. They were approved in Japan in 2015 for the treatment of acute graft versus host disease, and in Europe, in 2018, for the treatment of perianal fistula, respectively.

In addition, he said the company has a mature product pipeline with seven product candidates targeting ten indications. “The start of a catalyst-rich period with one FDA approval, two Phase 3 clinical readouts, and new commercial partnerships are expected in the next 12-to-18 months,” he added.

Mesoblast shares have tumbled more than 35% since early November after the company released top-line results from a Phase 2 study of Revascor for the treatment of end-stage heart failure patients. The study did not meet the primary study endpoint of temporary weaning from full left ventricular assist device support.

“While the less than optimal study results were disappointing, we believe the stock movement was an overreaction,” Mr. Ramakanth said. “We note that the treated group in this study did achieve a significant decline in gastrointestinal bleeding, which is the major cause of hospitalization in these patients and is a clinically meaningful endpoint.”

The company plans to meet with the FDA this year to gain clarity regarding the regulatory pathway for Revascor in this indication, he added.

Abby Hardy