Can Mesoblast Sustain Growth Amid Convertible Debt and Clinical Risks?

Strong Revenue Growth Driven by Market Adoption

Mesoblast Limited has reported a significant 69% increase in net revenues from its flagship cell therapy product, Ryoncil, for the quarter ended September 30, 2025. Net sales rose to US$19.1 million, up from US$11.3 million in the previous quarter, reflecting growing physician adoption and expanded reimbursement coverage. This surge marks a more than tenfold increase compared to the same quarter last year, underscoring the rapid commercial traction of this novel therapy.

Regulatory and Reimbursement Milestones Catalyse Uptake

A key driver behind this growth is the assignment of a permanent Healthcare Common Procedure Coding System (HCPCS) J-Code (J3402) by the US Centers for Medicare and Medicaid Services (CMS), effective October 1, 2025. This coding milestone simplifies billing and reimbursement processes, making Ryoncil more accessible to patients and healthcare providers. Mesoblast’s CEO, Dr. Silviu Itescu, highlighted that this formal CMS recognition is expected to further accelerate product adoption across commercial and government payers.

Robust Financial Position and Capital Strategy

Mesoblast ended the quarter with a strong cash position of US$145 million and reduced net operating cash spend by US$1.7 million compared to the prior quarter. The company also entered into convertible note subscription agreements to raise up to US$50 million, subject to shareholder approval at the upcoming annual general meeting. These unsecured convertible notes, with a 5% coupon and a five-year maturity, provide financial flexibility to repay existing secured debt or support general working capital needs.

Expanding Clinical Development and Market Reach

Operationally, Ryoncil remains the only FDA-approved mesenchymal stromal cell therapy for pediatric patients with steroid-refractory acute graft-versus-host disease (SR-aGvHD). Mesoblast has onboarded 40 transplant centers and identified 45 priority centers responsible for 80% of US pediatric transplants. Coverage now extends to over 260 million insured lives, including mandatory Medicaid fee-for-service coverage nationwide.

Looking ahead, Mesoblast plans a pivotal clinical trial in adults with severe SR-aGvHD, aiming to extend Ryoncil’s label to a patient population approximately three times larger than the pediatric group. This trial will be conducted in collaboration with the NIH-funded Bone Marrow Transplant Clinical Trials Network, reflecting Mesoblast’s commitment to addressing significant unmet medical needs.

Strong Intellectual Property and Manufacturing Foundations

Mesoblast’s extensive intellectual property portfolio, with over 1,000 patents and applications, provides commercial protection through at least 2044 in major markets. The company’s proprietary manufacturing processes enable industrial-scale production of off-the-shelf cellular medicines, positioning it well for global distribution and patient access.