Mesoblast (ASX:MSB) signed a convertible note subscription agreement with its largest shareholder, Gregory George, to raise up to $50 million for the commercialization of Ryoncil, according to a Monday filing with the Australian bourse.

The funding option is contingent on the approval of the US Food and Drug Administration of Mesoblast's Ryoncil, a product candidate for use as a treatment for children with steroid-refractory acute graft versus host disease.

Mesoblast expects a decision on or before the FDA's Prescription Drug User Fee Act goal date of Jan. 7, 2025, the filing said.

The notes will be issued in tranches of $10 million following an FDA approval and bear a coupon of 5% per annum. The conversion price will be $9.06 per American depository receipt, equivalent to AU$1.32 per ASX-listed share, representing a 25% premium to Mesoblast's five-day volume-weighted average share price, the filing stated. The notes will mature four years after the first issuance.

Mesoblast's shares were up 3% in recent trade.

Price (AUD): $1.16, Change: $+0.030, Percent Change: +2.67%