Mesoblast raises $170m for stem cell trials

Mesoblast (ASX:MSB) has raised $170 million in a placement in order to raise funds for its adult stem cell development programs.

The regenerative medicine company announced the closure of a private placement to a group of institutional investors, including M & G Investment Management and Capital Research.

The capital raising brings Mesoblast’s total cash reserves up to $332 million.

Mesoblast placed nearly 27 million shares at a price of $6.30 per share - a 2% discount to its closing price on 1 March - increasing its total shares on issue by nearly 10%.

The company said the placement has increased its free float by around 16.5%, which could improve its position on the S&P/ASX 200.

Proceeds from the placement will be used to help fund development of Mesoblast’s mesenchymal precursor cell (MPC) adult stem cell technology platform.

These include phase III trials of spinal fusion treatment NeoFuse (due to commence this year); phase II trials of intravenous delivery of MPCs to treat inflammatory conditions including rheumatoid arthritis; and improving MPC production to support these trials.

“Our strengthened financial position ensures that we can drive our independent programs to commercial outcomes, particularly in the areas of degenerative disease of the lumbar spine and the treatment of inflammatory and immune-related conditions,” Mesoblast CEO Silviu Itescu said.

MPCs are also at the trial stage for congestive heart failure and Mesoblast is exploring their use in a wide range of clinical conditions.

Mesoblast shares were trading at $5.99 as of 3.00 pm on Thursday.