Regenerative medicine company Mesoblast has tapped into a fresh vein of capital, this time some of Melbourne's high net worth families who have agreed to invest up to $120 million via David Lamm's from Kentgrove Capital, which handles funds of the Alter family along with other investors.
Mesoblast incurred investor wrath in mid-June when it lost the backing of Israeli drugs maker Teva, which has been backing a pivotal heart trial for the Australian company, which triggered a near halving of its share price. This trial, a phase 3 trial, is due to run until the end of 2017, costing as much as $US40 million.
![Silviu Itescu, the chief executive of Mesoblast, a company developing stem-cell treatment](/web/20161106001025im_/http://www.smh.com.au/content/dam/images/g/p/w/8/n/r/image.related.articleLeadwide.620x349.gpw8wi.png/1467367327035.jpg)
The costs of concluding the trial without a partner triggered investor calls for Mesoblast to cut costs to avoid further share issues, which would continue to dilute the value of existing investors by pushing its share price lower.
On Friday, Mesoblast said it would assess interim results from the trial in the first quarter of 2017, with the trial to cost $US13 million to reach this point. Mesoblast anticipates that continued promising results may enhance any partnering talks that it may have underway at that time relating to this treatment.
At the same time it said it would cut costs by a further 25 per cent on top of the cuts of 25 per cent outlined just a few months ago.
The company refused to give details of where the axe will fall, apart from saying further details would be disclosed when it releases its full-year figures to the market in August. The latest round of cuts will ensure the company has sufficient funds in hand to continue for a further 12-15 months without needing to raise further capital.
The funding pipeline opened with Kentgrove provides for an initial $60 million, which is available over the next 18 months with the option to double that over a 36-month period. All shares placed will be at a 4.5 per cent discount to the market price. Additionally, Kentgrove has been granted "incentive rights" over 1.5 million shares in Mesoblast, which are exercised at twice the current price of Mesoblast shares.
The news sparked a quick 15 per cent share price rally to $1.22.5c.
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