Mesoblast (ASX:MSB) convertible notes agreement

Mesoblast Limited (ASX:MSB) has entered into a convertible note subscription agreement with its largest shareholder, Gregory George, to issue up to US$50.0 million (A$72.7 million) convertible notes upon approval by the United States Food and Drug Administration (FDA) of Mesoblast's lead product candidate Ryoncil® (remestemcel-L) for the treatment of children with steroid-refractory acute graft versus host disease (SR-aGvHD). The funding will enable the company to seamlessly implement its go-to-market commercial strategy, with a decision anticipated prior to or on the FDA's Prescription Drug User Fee Act (PDUFA) goal date of January 7, 2025.

Executive commentary on funding agreement

Mesoblast Chief Executive Silviu Itescu stated, 'We appreciate the ongoing support from our major shareholder in ensuring that the Company is well capitalized for commercial product launch and can hit the ground running immediately following approval of RYONCIL by FDA.'

Summary of Mesoblast's convertible notes agreement

Mesoblast (ASX:MSB) has secured a convertible notes agreement with its major shareholder, providing the company with up to US$50 million for the potential launch of its lead product candidate Ryoncil®. The funding, available upon FDA approval, will support Mesoblast's go-to-market commercial strategy, including hiring senior positions, pre-launch activities, and a staged post-launch approach based on centers with the highest volume and experience with the product. The convertible notes have key terms including a coupon of 5% per annum, commitment fees, and a conversion price representing a 25% premium to Mesoblast's 5-day volume weighted average share price. Mesoblast's Chief Executive expressed gratitude for the ongoing support and emphasized the importance of being well capitalized for the commercial product launch. The company's proprietary mesenchymal lineage cell therapy technology platform and extensive global intellectual property portfolio position it for the development and commercialization of allogeneic cellular medicines for severe and life-threatening inflammatory conditions. Mesoblast's ambitions and goals include advancing its manufacturing capabilities, regulatory filings and approvals, and the commercialization of its product candidates, if approved, while maintaining established strategic collaborations and defending its intellectual property rights. The company's outlook is tied to the potential FDA approval of Ryoncil® and its ability to successfully execute its commercial strategy, with a decision anticipated prior to or on the FDA's PDUFA goal date of January 7, 2025.