Mesoblast Ltd (ASX: MSB) shares have been sluggish in 2026, falling around 12% so far. However, the ASX biotech stock is showing signs of life, with shares up around 1% to $2.40 in early Friday afternoon trading. This is taking their monthly gain to 15% and their 12-month return to 25%.
Could another leg higher be coming?
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Ryoncil is turning Mesoblast commercial
Mesoblast develops and commercialises allogeneic cellular medicines for complex diseases. The big change for the ASX biotech stock is that it is no longer simply a clinical-stage biotech, with its Ryoncil product now approved in the US and generating meaningful revenue.
Ryoncil treats children with steroid-refractory acute graft-versus-host disease, a serious complication that can occur after a stem cell transplant. The product generated US$115 million in net revenue during FY 2026, its first full year following launch, with fourth-quarter revenue reaching US$36 million, up 20% from the previous quarter.
Mesoblast is now working to expand Ryoncil into adults with the same condition, potentially opening up a market around three times larger than the paediatric opportunity. The company has commenced its registration trial and is planning a broad US clinical program.
There are further opportunities in the pipeline. Mesoblast is developing Ryoncil for Duchenne muscular dystrophy, with the US Food and Drug Administration having cleared the company to proceed with a registrational trial.
More catalysts in the making
The company also has potentially significant catalysts beyond Ryoncil. Its rexlemestrocel-L therapy is being developed for chronic lower back pain. The opportunity is what makes this trial particularly interesting for the ASX biotech stock.
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.
Brokers see plenty more upside
That pipeline is helping fuel optimism among brokers.
TradingView data shows all six analysts covering the ASX biotech stock rate it a strong buy. Their average price target of $4.27 implies approximately 78% upside from $2.40. The most bullish forecast is $5.46, representing around 128% upside, while the most pessimistic is $2.90.
Bell Potter is particularly bullish. The broker retained its buy rating and $4.45 price target following Mesoblast's latest results. It expects continued double-digit growth from Ryoncil, alongside major potential catalysts from rexlemestrocel-L in heart failure and chronic lower back pain.
At $4.45, Bell Potter's price target implies approximately 85% upside from the current $2.40 share price.
For investors comfortable with biotech risk, Mesoblast offers an increasingly compelling proposition: a commercial product generating meaningful revenue, an expanding pipeline, and significant upside if its key clinical programs continue to progress.
