Phi Finney McDonald has commenced a class action in the Federal Court of Australia against Mesoblast Limited (ASX: MSB; NASDAQ: MESO; OTC: MEOBF) (Mesoblast) on behalf of investors who, during the period from 22 February 2018 until the close of trading on 17 December 2020 (inclusive) (claim period), acquired:
- An interest in fully paid ordinary shares in Mesoblast listed on the ASX as “MSB” (MSB Shares);
- An interest in American Depository Receipts traded on the NASDAQ exchange under the symbol “MESO” (MESO ADRs);
- An interest in securities traded over the counter in the United States with the symbol “MEOBF” (MEOBF OTCs); and/or
- Long exposure to MSB Shares by entering into equity swap confirmations in respect of MSB Shares (MSB Equity Swaps).
(MSB Securities)
The class action is funded by Omni Bridgeway as a managed investment scheme named The Mesoblast Shareholder Litigation Funding Scheme (ARSN 656 647 586) (Scheme), which has been registered with ASIC.
Background
The class action arises in relation to Mesoblast’s statements to the market regarding the potential application of its Remestemcel-L (R-L) product for:
- children with steroid refractory acute Graft versus Host Disease (SR-aGVHD), and
- patients with acute respiratory distress syndrome caused by COVID-19 (COVID-19 ARDS).
On 11 August 2020, following the US Food and Drug Admission’s (FDA) release of information for the FDA’s Oncologic Drugs Advisory Committee meeting to discuss the use of R-L for SR-aGVHD, MSB’s share price fell by approximately 31%.
On 2 October, following the announcement by the company that it had received a complete response letter from the FDA regarding its marketing application for R-L as a treatment for SR-aGVHD recommending it conduct at least one additional study to provide evidence of effectiveness and identifying a need for further scientific rationale to demonstrate the relationship of potency measurements to the product’s biological activity, MSB’s share price fell by approximately 37%.
On 18 December 2020, following the announcement that the Data Safety Monitoring Board had advised that the Phase 3 COVID-19 ARDS trial for the use of R-L was not likely to meet its mortality reduction endpoint, MSB’s share price fell by approximately 36%.
Allegations
The proceeding alleges that Mesoblast breached its continuous disclosure obligations, and engaged in misleading and deceptive conduct, by:
- misrepresenting the efficacy and potential benefit of treating patients suffering from SR-aGVHD or COVID-19 ARDS with R-L;
- misrepresenting the significance of trial results, including the relevance of earlier studies, post hoc analysis and data collated for controls and contrast;
- misrepresenting to the market that Mesoblast was on schedule for launch of R-L during Q4 2020;
- not disclosing to the market material information, including the deficiencies in the study design and statistics presented; and
- not disclosing all information required for investors to be able to reasonably assess the likelihood of whether R-L would be shown to be effective in treating SR-aGVHD or COVID-19 ARDS, and then be commercialised on that basis.
The class action alleges that the price of MSB Securities were artificially inflated during the Claim Period by the above conduct and that investors suffered loss and damage by reason of the acquisition of MSB Securities at those inflated prices.