Biotech stock Mesoblast [ASX:MSB] plunged 12% on Tuesday after updating the market on a second class action lawsuit lodged against it.
With today’s fall, Mesoblast shares are now down 65% over the past 12 months, hitting a new 52-week low:
Source: Tradingview.com
Mesoblast’s litigation update
On Tuesday, Mesoblast sought to update investors on two of its most recent lawsuits concerning misrepresentation claims served by law firms William Roberts Lawyers and Phi Finney McDonald.
In a statement, Phi Finney McDonald told the Australian Financial Review:
‘Mesoblast reported the progress of clinical trials in a manner which was likely to mislead the market.
‘We intend to allege Mesoblast made claims regarding the success of trials that did not compare apples to apples in terms of clinical outcomes.’
The most recent class action lawsuit accuses the medical research company of misleading investors as to the shortcomings of in its Remestemcel-L product’s R-aGVHD disease trails in treating children with COVID-19.
Mesoblast aimed to reassure investors that it will ‘vigorously defend both proceedings’.
The company acknowledged that it recently experienced another litigation of similar assertions, resulting in a $2 million settlement fee, and with no admission of liability.
Mesoblast’s insurer paid the settlement, excluding policy-bound excess.
Preliminary approval for settlement was granted by the courts on 9 April, with a final hearing booked for 15 August.
MSB share price outlook — challenging times for laying foundations
Mesoblast has accumulated a loss of US$70 million across the nine months ending in March and US$717.5 million since the company’s start-up.
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For Money Morning
