July 2, 2018 10:26am

Cash keeps the doors open but, debt blossoms after Hercules tranche

MESO opened at $5.62, is up +$0.249 or +4.54% to $5.748 after the session’s first hour

US$50 million financing from NovaQuest Capital Management, L.L.C. (NovaQuest) for the continued development and commercialization of its allogeneic product candidate remestemcel-L (MSC-100-IV) for children with steroid refractory acute Graft versus Host Disease (aGVHD).

  • NovaQuest will provide a non-dilutive US$40 million, eight (8) year term loan and purchase US$10 million of Mesoblast common shares.
  • The per share equity purchase price will represent a 5% premium to the 10-day volume weighted average price at the time of execution of the equity purchase agreement.
  • MESO will issue the shares and draw the first tranche of the loan in the amount of US$30 million on closing, with an additional US$10 million to be drawn on marketing approval of remestemcel-L by the FDA.


Prior to maturity in July 2026, the loan is only repayable from net sales of remestemcel-L in the treatment of pediatric patients who have failed to respond to steroid treatment for acute GvHD, in the United States and other geographies excluding Asia. Interest on the loan will accrue at a rate of 15% per annum with the interest only period lasting 4 years. Interest payments will be deferred until after the first commercial sale.

The financing will be subordinated to the senior creditor, Hercules Capital, Inc..

NovaQuest was formed in 2000 as a strategic investment unit within Quintiles (now IQVIA), the world’s largest clinical research organization, and became an independent firm in 2010.


Terms aren't BAD with an investment component, the financing ADDS another layer of RISK to valuation - which is LOW.

BUZZ words - it better work, the APPROVAL road is long and the risk of rock slides are HIGH!