Highlights

  • Jefferies maintains a Buy rating on Mesoblast with a target price of AUD 3.50.
  • FDA feedback confirms rexlemestrocel-L reduces pain and supports opioid-sparing potential.
  • Ryoncil sales grew 60% in the December quarter, strengthening the company’s balance sheet.

Shares of Mesoblast Ltd (ASX:MSB) have experienced a pullback in recent trading sessions. The stock has delivered a negative return of 8.63% over the past one year as on 20 January 2026, yet the stock continues to attract attention following Jefferies’ decision to maintain a buy rating with a target price of AUD 3.50. The broker’s positive stance could be due to company’s combination of regulatory progress for rexlemestrocel-L, ongoing Phase 3 trials, and favourable financial position, providing a rationale for confidence despite short-term market volatility.

FDA Feedback Supports Product Efficacy

On 19 January 2026, Mesoblast announced that it has received FDA feedback on its allogeneic cell therapy product rexlemestrocel-L for chronic discogenic low back pain (CLBP). The FDA acknowledged that outcomes from Mesoblast’s first Phase 3 trial favoured rexlemestrocel-L over placebo, confirming that a 12-month reduction in pain intensity supports product efficacy. The regulator also indicated that evidence of opioid reduction could be included in the product’s label, highlighting the potential clinical relevance of the therapy.

A second Phase 3 trial, MSB-DR004, is over 50% enrolled across 40 U.S. sites, targeting 300 patients, with primary endpoints focused on pain reduction and secondary measures assessing quality of life and functional improvements. Rexlemestrocel-L has also received RMAT designation from the FDA, providing benefits such as rolling review and eligibility for priority review of a Biologics License Application (BLA).

Ryoncil Sales Growth Boosts Balance Sheet

Mesoblast reported Ryoncil sales of USD 35.1M in the December quarter, representing a 60% increase from the prior quarter. The product, approved by the FDA for children under 12 with steroid-refractory acute graft-versus-host disease (SR-aGvHD), is being evaluated in a pivotal adult trial.

The company’s balance sheet was further supported by a new USD 125M five-year interest-only facility, which enabled repayment of prior senior secured loans and partial repayment of a subordinated royalty facility. This financing arrangement provides flexibility for potential partnerships and commercialization activities without encumbering core assets or intellectual property.

Broker Confidence Supports Buy Rating

Despite recent share price pullbacks, Jefferies has maintained a Buy rating with a target price of AUD 3.50. The combination of FDA recognition of rexlemestrocel-L efficacy, ongoing Phase 3 enrollment, Ryoncil revenue growth, and strengthened balance sheet likely to support the broker’s valuation framework, even amid short-term market volatility.