The August 27, 2010 EGM notice filed with the ASX, which contains Deloitte’s IER for shareholders dated July 22, 2010, references under section 6.3 that Mr Itescu would receive 50 million to 58.8 million shares in Mesoblast for his 905,050 Angioblast shares, with his total holding to be between 87.1 million to 95.9 million shares on completion of the Angioblast deal.
Angioblast holders had the option to receive 100 per cent Mesoblast shares or 85 per cent shares and 15 per cent cash under the offer. According to a December 23 announcement, no former Angioblast holders elected to receive the cash component.
‘All above board’
Resolution one of the EGM notice for the approval of the acquisition of Angioblast by Mesoblast shareholders also proposes 85 per cent of any Mesoblast shares issued to any Angioblast stockholders from the date of issue be subject to a minimum six-month escrow period.
Grant Titmus, a media spokesman for Mr Itescu, said the Mesoblast boss would not answer any questions and declined an interview request as he preferred to see what was published first. Mr Titmus also said the chief executive had his lawyers look at the deal and they had advised it was all above board.
Mr Itescu also refused to answer the question of whether he has ever sold a financial interest in Mesoblast or Angioblast to US biotech Cephalon, which according to a December 23, 2010, ASX notice acquired 31.08 million shares in Mesoblast pursuant to the issue of such shares by Mesoblast to Cephalon as the former holder of shares in Angioblast.
A January 7, 2011, ASX EGM notice states that, before the completion of Mesoblast’s Angioblast merger, Cephalon acquired stock in Angioblast from existing Angioblast holders. As a result of that acquisition and completion of the merger of Angioblast and Mesoblast on December 7, 2010, Cephalon was entitled to 12.2 per cent of issued Mesoblast share capital.
The notice goes on to disclose under section 1.3 (e) and ASX listing rule 7.5 that 31.08 million shares were allotted to Cephalon at a cost of $4.35 each with no cash funds raised by Mesoblast for the allotment of these shares, rather the allotment took place in accordance with the merger agreement in consideration for the exchange of Angioblast stock by Cephalon for Mesoblast shares.
Cephalon would have paid $135 million for the 31.08 million shares as part of its December 2010 deal to acquire a total 19.99 per cent stake (55.8 million shares) in Mesoblast for more than $223 million.
The latest July 14, 2021, regulatory filing disclosed that Mr Itescu was awarded 1.2 million share options to take his direct shareholding to 68.96 million. This is marginally above the holding of 68.24 million disclosed on Christmas Eve 2010.
Since 2010, Mesoblast has relied on raising money from investors to keep funding losses that accumulated to $US548.8 million ($745 million) since inception by June 30, 2020, with an additional operating cash loss of $US76.8 million for the nine months to March 31, taking total losses to around $850 million.
The $1.3 billion biotech has not had a commercial product approved by the US healthcare regulator, the FDA, in 17 years.
Mr Itescu’s basic annual salary in 2020 was $1.01 million, with a short-term cash bonus of $555,500 and other entitlements taking total remuneration to $2.7 million.
Its share count has ballooned from 216.8 million in June 2011 to 648.7 million today, with an additional 37.2 million unquoted share options. Shares reached as high as $9.57 in October 2011, but have lost around 80 per cent since to last close at $1.925.
In April Australian law firm Phi Finney McDonald flagged a potential class action against Mesoblast for allegedly misrepresenting the significance of clinical trial results and not disclosing to the market material information related to a treatment for aGVHD. In the US law firm Bragar Eagel & Squire filed a class action against Mesoblast on October 8 alleging false statements and poor disclosure related to the same clinical trials.
Read More: Mesoblast boss won’t answer share deal questions