ASX-listed Mesoblast Ltd (AU:MSB) shares spiked over 25% this morning on receiving the Rare Pediatric Disease (RPD) designation from the U.S. Food and Drug Administration (FDA) for its Revascor drug. Revascor is a potential candidate for treating children with a congenital condition of a specific heart disease.
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Mesoblast is an Australian-based biopharmaceutical company. It focuses on developing allogeneic (off-the-shelf) cellular medicines for treating severe and life-threatening inflammatory conditions. MSB shares have lost nearly 66% of their value over the past year.
Here’s How the RPD Status Will Help MSB
The FDA’s RPD status means Mesoblast can receive priority status and fast-tracked reviews. This, in turn, will increase Mesoblast’s chances of accelerated commercialization of Revascor. The FDA’s approval of a Biologics Licensing Application (BLA) for Revascor for the treatment of HLHS will make Mesoblast eligible for a Priority Review Voucher (PRV). This voucher can be redeemed for any subsequent marketing application or may be sold or transferred to a third party.
The disease in question is hypoplastic left heart syndrome (HLHS), a condition in which the heart’s left chamber is not formed adequately in the womb. Mesoblast’s trial results showed that 100% of Revascor-treated children had large enough left ventricles (LVs) to accommodate the full biventricular (BiV) conversion post-surgery compared to only 57% of the control group.
Revascor’s trial showed that it could enlarge the left chamber adequately after surgery. Plus, it has anti-inflammatory qualities that show better surgery outcomes. The tests were conducted in the U.S. on 19 children under a placebo-controlled environment and the results were submitted in December 2023.
Is Mesoblast a Good Stock to Buy?
With only one Buy rating received during the past three months on TipRanks, MSB stock has a Moderate Buy consensus rating. The Mesoblast Ltd share price target of AU$0.61 implies 102.5% upside potential from current levels. Importantly, this rating was given before the FDA approval. Thus, analysts could revisit their views and give fresh ratings.
