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Quick take: Why Mesoblast has rallied 17% in the last 5 sessions

We unpack Mesoblast’s first quarter results in under 2 minutes.

Investors continued to bid Mesoblast (MSB) higher on Monday – with the stock up 6.59% to $3.88 by noon – building on the gains the company witnessed following the release of its Q1, FY21 update last Friday.

Mesoblast share price: Understanding what drove the rally in under 2 minutes

In particular, investors look enthused by the announcement of a global license and collaboration agreement between Novartis and Mesoblast. Under this agreement, it was noted that the companies would join forces to develop, 'manufacture and commercialization of Mesoblast’s mesenchymal stromal cell (MSC) product resentence-L.'

Commenting on this partnership, Mesoblast's CEO, Dr Silviu Itescu, said 'Our collaboration with Novartis will help ensure that remestemcel-L could become available to the many patients suffering from ARDS, the principal cause of mortality in COVID-19 infection.'

Despite renewed investor confidence, MSB posted Q1 revenues of just US$1.3 million, down significantly from Q1 FY20 revenues of US$17.0 million.

Research and development and manufacturing expenses also rose during the quarter, increasing by US$6.9 million and US$9.2 million, respectively. Increased research and development costs were driven by 'increased clinical trial costs relating to the Phase 3 trial for COVID-19 ARDS, non-cash share-based payments to employees and consultants and pre-commercial activities for remestemcel-L,' the company said.

Overall, these results culminated in MSB reporting a post-tax Q1 loss of US$24.5 million.

Despite that loss, investors appear particularly pleased with the Novartis partnership; the stock, after all, was bid 16.2% higher during last Friday’s session.

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