Mesoblast Ltd (ASX: MSB) shares opened the week with a bang, jumping 11% to $2.45 after the ASX biotech announced a major clinical milestone.
Despite the surge, Mesoblast shares remain down 10% year to date and 0.4% over the past 12 months. So, with the latest news already priced in, do brokers still see plenty of upside?
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Could this milestone change Mesoblast's future?
Mesoblast has completed patient treatment in its pivotal Phase 3 trial of rexlemestrocel-L, an experimental cell therapy for chronic lower back pain linked to degenerative disc disease.
The trial has now treated 350 patients, who received either rexlemestrocel-L or a placebo-like sham injection. That's significant because Mesoblast originally planned to treat 300 patients. Strong demand from investigators prompted the company to expand the trial.
Mesoblast believes the larger patient group should give the study enough statistical power to determine whether its treatment provides a meaningful benefit over the control group.
Researchers will also assess whether the treatment improves physical function and quality of life, while reducing patients' reliance on pain medication, including opioids.
A potentially huge market
The opportunity is what makes this trial particularly interesting for Mesoblast shares.
The company estimates that chronic lower back pain associated with inflammation and degenerative disc disease affects more than 7 million people in the US.
Even single-digit market penetration could potentially generate peak annual revenue of more than US$10 billion, according to Mesoblast.
However, investors will have to wait. Top-line results are expected around the middle of 2027, after the final patient completes 12 months of follow-up.
Mesoblast CEO Silviu Itescu said:
Completing treatment of 350 patients in our pivotal low back pain trial is a momentous milestone for the company as we now count down to the 12-month read-out for what we hope will be the basis of our first blockbuster product.
Do brokers still see upside?
So far, the broker community appears extremely bullish on Mesoblast shares.
TradingView data shows all analysts covering the stock have a strong buy rating. The average price target is $3.97, implying potential upside of around 62% from the current share price.
Even the most cautious forecast sits at around $3, representing roughly 22% upside over the next 12 months. The most bullish analyst sees Mesoblast shares climbing to almost $4.96, more than double their current level.
Is Mesoblast still undervalued?
The latest milestone doesn't prove rexlemestrocel-L will work. That remains the key risk.
But completing treatment for all 350 patients removes an important hurdle and brings investors closer to the potentially transformational 2027 results.
If the trial succeeds, Mesoblast could have a blockbuster opportunity on its hands.
For now, Mesoblast shares remain a high-risk, high-reward investment, but brokers clearly believe the upside could be substantial.
