Mesoblast Ltd (ASX: MSB) shares are having a strong session on Wednesday.
In afternoon trade, the biotechnology company's shares are up 9% to $2.91.
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Why are Mesoblast shares rising?
The catalyst for this could be a broker note out of Bell Potter this morning which spoke very positively about the company.
According to the note, Bell Potter was pleased to see that Mesoblast has been given a specific Healthcare Common Procedure Coding System (HCPCS) J-Code for its recently approved Ryoncil stem cell therapy from the United States Centers for Medicare & Medicaid Services (CMS).
The broker feels that this could be the key to increasing adoption and lifting sales. It said:
The CMS in the US has announced a specific Healthcare Common Procedure Coding System (HCPCS) J-Code for Ryoncil (remestemcel) effective for billing and reimbursement from October 1, 2025. The new permanent J-Code, J3402, provides a standardised, clear, permanent, and specific billing pathway for Ryoncil by Medicaid, facilitating reimbursement and broader patient access.
The availability of the J-code represents the removal of one further obstacle to hospital adoption in this complex billing system. Hospitals in the US may now order the product and be confident of reimbursement provided the use is on label, irrespective of whether the patient is medicare or private. Private patients may be subject to a co-pay in some instances.
Time to buy
In response to the news, the broker has reaffirmed its speculative buy rating with an improved price target of $4.00 (from $3.50).
Based on its current share price of $2.91, this implies potential upside of almost 40% for investors over the next 12 months.
That's great news for longer term shareholders which have seen its shares already rise 100% since this time last year.
Commenting on its buy recommendation, Bell Potter said:
Next catalyst for MSB – September quarter revenue due to be published at the end of the month. We expect Ryoncil revenues of ~US$13m, however, the December quarter is now shaping up as the breakout period following announcement of the J-Code. We retain our Buy (Speculative) recommendation increasing the valuation to $4.00 (from $3.50). The quarterly cash flow is also expected to show a large reduction in cash burn as cash inflows from product sales of Ryoncil commence.
Overall, this could be one for investors with a high tolerance for risk to consider if they are wanting exposure to this side of the market.
