Phi Finney McDonald has investigated and is proposing to commence a class action against Mesoblast Limited (ASX: MSB; NASDAQ: MESO; OTC: MEOBF) (Mesoblast) on behalf of investors who acquired shares in Mesoblast (traded on the Australian Securities Exchange), as well as American Depository Receipts (ADRs) traded on the New York Stock Exchange and over the counter between 22 February 2018 and 17 December 2020 (inclusive) (claim period).

The proposed 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 statements to the market regarding the potential application of its Remestemcel-L (R-L) product for:

  1. children with steroid refractory acute Graft versus Host Disease (SR-aGVHD), and
  2. 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 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 proposed proceeding will allege that Mesoblast breached its continuous disclosure obligations, and engaged in misleading and deceptive conduct, by:

  1. misrepresenting the efficacy and potential benefit of treating patients suffering from SR-aGVHD or COVID-19 ARDS with R-L;
  2. misrepresenting the significance of trial results, including the relevance of earlier studies, post hoc analysis and data collated for controls and contrast;
  3. not disclosing to the market material information, including the deficiencies in the study design and statistics presented; and
  4. 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 proposed class action will allege that during the claim period Mesoblast’s security price was artificially inflated by the above conduct, and that investors suffered loss and damage by the acquisition of Mesoblast shares and ADRs at inflated prices.