Mesoblast Shares Soar 23% as Ryoncil Revenue Jumps 44% and Cash Burn Plunges 86% in Upbeat Quarterly Update

Mesoblast Ltd shares jumped more than 23% on Thursday, leading the Australian market. The cell therapy developer reported a 44% rise in quarterly revenue from its flagship drug Ryoncil and a sharp drop in cash spending.

The stock closed at A$2.32, up 44 cents, or 23.4%, after reaching an intraday high of A$2.38. More than 13.5 million shares changed hands, and the gain lifted Mesoblast's market value to about A$3 billion.

The rally was one of the biggest single-day moves for the Melbourne-based company this year. Even so, the stock is still down about 7.6% over the past 12 months.

Ryoncil gaining traction

Mesoblast posted its update for the quarter ended Sept. 30 to the Australian Securities Exchange before trading opened. Net revenue from Ryoncil was US$28 million, up 44% from a year earlier.

Ryoncil is approved in the United States to treat steroid-refractory acute graft-versus-host disease in children. The condition is a potentially life-threatening complication of bone marrow transplants.

According to the company, September brought the highest number of new patients starting Ryoncil in any month so far. That followed an expected seasonal slowdown in July and August, when patient starts usually fall during the Northern Hemisphere summer.

The company has also begun a registration trial that aims to extend Ryoncil's use to adults. It expects to activate up to 40 sites across the United States this year. Those sites would cover about 60% of the estimated 8,500 adults in the US who receive donor bone marrow transplants each year.

Cash burn falls sharply

The cash figures drew as much attention as the revenue. Net operational cash spending fell 86% to US$2.1 million for the quarter, down from US$14.9 million a year earlier.

Mesoblast had about US$99 million in cash at the end of September. Cash burn has long worried investors in the company, which spent years developing its stem-cell platform before getting a commercial product to market. The smaller quarterly outflow suggests Ryoncil sales are covering a much larger share of operating costs.

Key figures from the quarter:

Ryoncil net revenue: US$28 million, up 44% year on year Net operational cash spend: US$2.1 million, down 86% Cash on hand: about US$99 million as of Sept. 30 New patient starts: record monthly high in September Adult trial sites: up to 40 planned across the US this year

Pipeline progress

Mesoblast also reported progress on its second major product candidate, rexlemestrocel-L.

The company said it had completed treatment of all 350 patients in its final large-scale Phase 3 trial of the therapy for chronic low back pain caused by degenerative disc disease.

It also reported a positive meeting with the U.S. Food and Drug Administration about how it plans to file rexlemestrocel-L for patients with end-stage heart failure who have a left ventricular assist device implanted. According to a Reuters-linked market summary, the FDA confirmed that a biologics license application for the therapy, aimed at preventing gastrointestinal bleeding in those patients, may proceed.

Approval in heart failure or chronic back pain would greatly expand Mesoblast's addressable market beyond the relatively small pediatric graft-versus-host disease population.

Analysts remain bullish

Analyst sentiment on the stock has been strongly positive. According to TradingView data cited by The Motley Fool Australia, all seven analysts covering the company rate it a strong buy, with an average price target of A$4.33. That is nearly double Thursday's closing price.

The most optimistic target among those analysts is A$5.55.

Some forecasts had been higher than the quarter delivered. Pre-result estimates cited in market commentary put Ryoncil sales as high as US$40 million, and at least one broker has since trimmed its fiscal 2027 revenue forecast while keeping a buy rating. Investors on Thursday appeared to focus on the improving trend in patient starts and the much lower cash burn rather than the gap to those estimates.

One-month high

Reuters reported earlier in the session that the stock had climbed as much as 17% to A$2.20, its highest level since Sept. 25 and its biggest intraday percentage gain since July 18. The rally then gathered pace through the afternoon.

The stock had already risen about 20% over the past week before the update, as investors positioned for the quarterly report.

Mesoblast is also listed on the Nasdaq, where the result will be tested by U.S. investors when that market opens.

What comes next

Investors will be watching whether Ryoncil's patient growth continues into the December quarter and how quickly adult trial sites come online. They will also follow the timing of any FDA filing for rexlemestrocel-L in heart failure.

Market reports also indicate the company has scheduled a shareholder meeting for Nov. 10.

For now, Thursday's surge suggests investors are giving more weight to Mesoblast's progress toward becoming a self-funding commercial biotech company than to the long, costly development history that weighed on its shares for years.