The Mesoblast Limited (ASX: MSB) share price is under scrutiny today after making an announcement about a strategic investor and the placement.
What is happening with Mesoblast?
Mesoblast, which is involved in allogeneic cellular medicines for inflammatory diseases, announced it has entered into subscription agreements for a total of US$110 million for the issue of 60 million shares in a private placement led by a strategic US investor group at A$2.30 per share, which was a 6.5% discount to the price at the closing share price on 25 February 2021.
After this US$110 million placement, it would have had pro forma cash of US$187.5 million at 31 December 2020. The investors also received warrants to acquire a further 15 million shares at a price of A$2.88 per share, a premium to the placement price, which could raise up to A$43.2 million.
Since inception in 1993, SurgCenter has partnered in over 230 facilities with a current portfolio of 80 operational facilities, located in over 20 states throughout the US. SurgCenter is an industry leader in the performance of complex spine surgery and outpatient joint replacement, and has partnered with thousands of surgeons over its 30-year history.
Management comments
Mesoblast CEO Dr Silviu Itescu said: “We are pleased to receive a strategic investment from the principals of SurgCenter Development, one of the largest private operators of ambulatory surgical centers in the US specialising in spine, orthopaedic and total joint procedures. We expect the deep healthcare knowledge and expertise of this investor group will be of great benefit to the company. The network and infrastructure of surgeons and ambulatory centers operated by SurgCenter may provide unique synergies to facilitate development and market access for rexlemestrocel, if approved, in patients with chronic lower back.”
What will the money be used for?
Mesoblast said that the raised capital will provide financial strength for operational and regulatory initiatives across multiple products as the company undertakes important meetings with the US FDA in the second and third quarters of the 2021 calendar year.
The money will also be used in the investment in commercial supply of remestemcel-L ahead of potential approval for graft versus host disease in children in optimised manufacturing for larger market opportunities.
It also said the money would be used for advancing manufacturing and development of rexlemestrocel-L platform to meet commercial objectives following the recent completion of phase 3 trials.
The final reason is for working capital general corporate purposes.
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