The world needs a vaccine. Because people want their quality of life to return to normal. People do not want to continue entertaining the idea of COVID-19 taking away their loved ones. Our demand for a cure is sparking a drug development frenzy in the biotech sphere.
A tsunami of biotechs are now in the COVID-19 vaccine race. Because, if a biotech can create a viable cure, then the government will pump an unimaginable amount of money into the business. Also, biotechs, being altruistic in nature, want to eradicate the coronavirus. Because ‘when pain is gone, life takes its place.’
The COVID-19 companies we have covered so far include Ibio (NYSE: IBIO), Biomerica (NASDAQ: BMRA), Hoth Therapeutics (NASDAQ: HOTH) and recently Gilead Sciences Inc (NASDAQ: GILD). However, today we are uncovering the potential behind ASX biotech Mesoblast (ASX: MSB) (NASDAQ: MESO)
Mesoblasts COVID-19 development so far?
Price Sensitive Event (PSE’s) one: Initial evaluation of Remestemcel – L for COVID-19 Treatment – 10th March 2020
- Mesoblast is evaluating whether its stem cell product Remestemcel-L can treat COVID-19 patients with Acute Respiratory Distress Syndrome (ARDS). Furthermore, COVID-19 causes ARDS.
- The mortality rate in COVID-19 infected patients with ARDS is nearly 50%.
- The current therapeutic solutions for ARDS remain ineffective.
- Remestemcel – L could be a viable therapeutic solution in treating ARDS.
- An investigator-initiated clinical study in China claimed Mesenchymal Stem Cells (MSC) cured seven patients. Therefore supporting the hypothesis that Remestemcel- L could cure COVID-19 patients with ARDS.
- Mesoblatsts announcement around Remestemcel-L triggered a 20% surge on the 10th.
PSE two: FDA clears investigational new drug application for REMESTEMCEL-L to be used in COVID-19 patients with (ARDS) – 6th April 2020
- The FDA gave MSB the green light to start treating COVID-19 patients with ARDS in the US.
- MSB will treat COVID-19 patients with ARDS immediately and in a randomized controlled environment.
- Mesoblasts FDA announcement sparked a 30% surge on the 6th of April.
PSE three: Mesoblast announces a randomised controlled trial of 240 patients – 9th April 2020
- MSB is partnering up with the Cardiothoracic Surgical Trials Network (CTSN) to test the efficacy of Remestemcel – L in COVID-19 patients.
- The partnership allows MSB to leverage the US government’s resources. Therefore, MSB can treat COVID-19 patients with ARDS in an efficient manner.
- The test results of 240 patients will provide compelling clinical data on the safety, efficacy, and survival benefits of Remestemcel-L in COVID-19 patients.
- MSB’s human trial announcement triggered an explosive 36% rise last Thursday.
The investment strategy behind MSB
Before I start, I am obliged to remind our viewers that this is not advice only general commentary from my extensive research in this area.
Now that you are caught up to speed, you probably want to know whether MSB is worth investing in?
Personally, MSB is an enticing investment. However, I would not pounce on the biotech immediately. Below are the two investing strategies I would employ.
1) Riding the wave
Without a doubt, MSB will release another PSE in the imminent future. For instance, the test results of the 240 patients will inevitably be published. Providing investors with a chance to make a quick return.
Based on the previous three announcements, a PSE can produce an upwards return of 30%.
Personally, I am waiting for a dip (sell-off) during the week. Once I am in, I will wait for MSB to release another PSE. In which, I will either sell the entire investment or sell a portion and leave the rest in for the long term.
Thus, if you want to ride the MSB wave, you must be in control of your surfboard. Do not invest when someone tells you to invest. Make sure you have done your own research first.
2) Dynamic short term
However, let’s say you tried to reap the rewards of a short term investment, but it did not go to plan. Instead of selling, you can opt-out for a long term investment. – Dynamic short term
Mesoblast is a global leader in producing off-the-shelf drugs for inflammatory diseases. Mesoblast has a range of products that are approaching FDA approval. Thus, it should come as no surprise that MSB reported a 75% return for 2019.
If we add a potential COVID-19 vaccine to MSB’s product pipeline, then a long term investment becomes appealing. Because an injection of government funding would drastically improve the roll-out of MSB’s products.
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The information above should not be taken as financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
Written by Patrick McLoughlin, Senior Manager of YIG.