The Mesoblast limited (ASX: MSB) share price is having another year to forget in 2021.
Since the turn of the year, the biotechnology company's shares have fallen 27% to $1.69.
Is the Mesoblast share price good value now?
The good news for investors and the company's long-suffering shareholders is that one leading broker believes the Mesoblast share price could be very good value.
According to a note out of Bell Potter, its analysts have retained their speculative buy rating but trimmed their price target slightly to $3.45.
Based on the current Mesoblast share price, this price target implies potential upside of greater than 100% over the next 12 months.
Why is the broker bullish?
Bell Potter remains positive on Mesoblast due to the belief that its remestemcel-L product is approaching a key inflection point in the fourth quarter of calendar year 2021.
It notes that the company was hit with an unexpected request for more information from the US Food and Drug Agency (FDA) last year for remestemcel-L's use in paediatric GvHD. While this has delayed the time to first revenues from the product, Bell Potter is encouraged with recent developments.
The broker explained: "Based on recent discussions with FDA's CBER, there is no further talk about a confirmatory adult trial, which is a key positive and reflects that the efficacy of this life saving therapy is undeniable. The OTAT meeting to be held in 4QCY21 to discuss critical aspects of the manufacturing and quality control process including potency assays is now the gating event to a potential BLA resubmission with a 6 month review clock."
What else?
Bell Potter notes that those potency assays are also key for label expansion into treating COVID-19 ARDS.
Pleasingly, the broker highlights that "initial FDA feedback is that the assays currently in development appear to be reasonable based on in vitro data."
Furthermore, with the next trial likely to be focused on patients <65 years of age, where there was strong survival benefit observed, Bell Potter believes this increases the chances of a positive outcome.
Another reason the broker is bullish on the Mesoblast share price is that, based on the above, it believes the company's game-changing deal with Novartis will go ahead.
It commented: "We continue to believe there is strong likelihood of closure in 2HCY21 (however timing could be pushed from 3QCY21 to 4QCY21 in our view) based on the survival benefit observed in the recent trial. As a reminder closing of this deal will provide US$50m to MSB (US$25m in cash and balance in equity) and will be a key catalyst for the stock."
