Chardan Starts Coverage Of Mesoblast, Sees 'Large Market Opportunities'

Chardan Capital’s Keay Nakae has initiated coverage of Mesoblast limited (ADR) (NASDAQ: MESO) with a Neutral rating and price target of $5.50.

Nakae believes that there are several positives for the company, such as its proprietary mesenchymal lineage adult stem cells (MLCs), which can be formulated into allogeneic “off-the-shelf” cell products.

MLCs are capable of commercial scale, especially if Mesoblast considers a strategic partnership with Lonza, “a global leader in biopharmaceutical manufacturing.”

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Mesoblast’s advanced clinical pipeline includes five cell therapy candidates that are either Phase 3-ready or in active Phase 3 trials.

“Most of these indications represent large market opportunities, so success in any one of them could generate significant economics for the company,” Nakae said.

On the other hand, the analyst also noted that regenerative medicine stocks have disappointed investors over the past few years. Mesoblast’s share price has also declined since 2010, with the U.S. IPO being poorly received.

“In part, we believe that this under-performance is a reflection of how the regenerative medicine space itself is evolving, which has seen a number of clinical trials producing mixed results,” Nakae added.

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