Mesoblast reaffirms Teva partnership following share slump

Mesoblast (ASX:MSB) has moved to stem a resurgence in rumours that its main ally, Teva Pharmaceutical Industries, may exit the stem cell partnership between the two companis.

The regenerative medicine company has in the last three business days made two ASX announcements asserting that both companies are “committed to jointly developing innovative products for major cardiovascular and neurologic markets.”

The first announcement was filed in response to an ASX price query questioning why the company's share price had fallen from $5.36 last Wednesday to a low of $4.33 on Thursday.

Some reports suggest investors may have acted due to fears Teva Pharmaceuticals may not be committed to the alliance, due to it scaling back its own R&D activities, and due to alleged uncertainty over the clinical data coming out of the lead congestive heart failure (CHF) project.

But in its response to the price query, Mesoblast said phase II data from a clinical trial of mesenchymal precursor cells (MPCs) in CHF patients “support and extend” the findings from previous trials, and that joint planning for a phase III trial is under way.

The company speculated that the share price decline was down to short selling from high frequency computer generated trading patterns.

It notes that there has historically been a high rate of share lending in Mesoblast stock, “which means at some point traders who have “borrowed” Mesoblast shares may seek to position themselves to be able to cover that short trading.”

In a second ASX announcement posted today Mesoblast added a quote from Teva Chief Medical Officer Dr Jonathan Isaacssohn:

“We are working closely with Mesoblast on the congestive heart failure trial, and are in detailed discussions on a phase III design which will involve an early interim analysis to evaluate evidence of efficacy,” it states.

This is not the first time Mesoblast has had to reassure the market about its relationship with Teva. In an earlier ASX price query in June, the company blamed that month's share price decline on “unfounded speculation... that Teva Pharmaceutiacals is not committed to the partnership.”

Teva is Mesoblast's largest shareholder.

Mesoblast (ASX:MSB) shares grew 2.33% in Monday's trading to $5.26, but this remains down from a September peak above $7.26.