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MESOBLAST OPERATIONAL HIGHLIGHTS AND FINANCIAL RESULTS FOR THE FIRST QUARTER ENDED SEPTEMBER 30, 2017

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Tuesday, November 14, 2017

Melbourne, Australia; and New York, USA, November: Mesoblast Limited
(ASX: MSB; Nasdaq: MESO) provided the market with an update on its corporate strategy, operational
highlights, and consolidated financial results for the three months ended September 30, 2017 (first quarter of
FY2018).
At September 30, 2017, the Company had cash reserves of US$62.9 million. Cash outflows from operating
activities were reduced by US$0.5m (2.3%) for the quarter as compared to the three months ended September 30,
2016 (first quarter of FY2017).
Based on cumulative clinical results to date and the serious and life-threatening nature of the diseases being
targeted, the Company believes that its Phase 3 product candidates for acute graft versus host disease (aGVHD),
chronic heart failure, and chronic low back pain may represent a paradigm shift in the treatment of these
conditions which can lead to earlier market entry due to opportunities afforded by the United States 21st Century
Cures Act.
The Company continues to have an active and ongoing strategy to partner one or more of its four Tier 1 product
candidates. Fundamental to this strategy is to conclude partnership transactions with those organizations that will
deliver the best short and long term outcomes for the company and maximize shareholder value.
Operational Highlights
MSC-100-IV for Acute Graft Versus Host Disease (aGVHD):
Mesoblast's proprietary allogeneic cell therapy MSC-100-IV is being evaluated in a single, open-label Phase 3 trial
in up to 60 patients for product registration. This trial continues to recruit across multiple sites in North America

and completion of enrollment is imminent. The goal of this trial is to obtain FDA approval in children with steroid-
refractory (SR) aGVHD and then pursue label extension to adults.

The Company's GVHD strategy is based on:
• extensive clinical safety and efficacy data generated and published with MSC-100-IV in children with this
life-threatening condition;
• the potential for a shortened FDA approval pathway due to the existing fast-track designation for MSC-
100-IV;
• a targeted product launch strategy requiring minimal investment; and
• the ability to seek label extension to adults with high-risk steroid refractory aGVHD (liver/gut disease)
and product lifecycle management to include chronic GVHD.
MPC-150-IM for Chronic Heart Failure (CHF):
Mesoblast's proprietary allogeneic cell therapy MPC-150-IM is in late-stage clinical development in two randomized
controlled trials that target, respectively, advanced and end-stage CHF. The Phase 3 trial in advanced heart
failure continues to recruit across multiple sites in North America, with more than 400 of the anticipated
approximately 600 NYHA Class II/III CHF patients randomized to date.

Institute for Health Research (CIHR) evaluating the Company’s proprietary allogeneic mesenchymal precursor cell
(MPC) product candidate MPC-150-IM in end-stage heart failure patients with left ventricular assist devices (LVAD).
The Company believes that:
• the LVAD market may represent an early market entry opportunity for MPC-150-IM in end-stage heart
failure patients through potential to reduce LVAD morbidity, increase survival and increase LVAD use as
destination therapy;
• targeted product launch strategy requires minimal investment;
• by strengthening native heart muscle, Bridge to Recovery (BTR) represents a potential high-growth
market opportunity for temporary LVAD use and explantation in end-stage or Class IV heart failure
patients; and
• there may be an opportunity to bridge to the larger Class III heart failure population by label extension
on obtaining positive Phase 3 trial results.
MPC-06-ID for Chronic Low Back Pain (CLBP):
Mesoblast's proprietary allogeneic cell therapy MPC-06-ID is being evaluated in a 360-patient Phase 3 trial in
patients with CLBP who have failed conservative measures. The trial is expected to complete enrollment in early
Q1 CY18.
If the Phase 2 results, which showed durable improvement in pain and function from a single intra-discal injection,
are confirmed in the Phase 3 trial, the Company believes that MPC-06-ID:
• has the potential to reduce and/or eliminate the need for opioids in the treatment of CLBP; and
• is well positioned to meet the objectives of the 21st Century Cures Act, which includes measures to
combat opioid dependence and provide accelerated approval pathways for non-opioid pain reducing drugs.
Over 33,000 people in the United States died of prescription opioid related overdoses in 2016 and the opioid
epidemic has been recently declared a public health emergency by the President of the United States. Given that
CLBP accounts for 50% of all opioid prescriptions, a non-opioid solution to this disease is imperative.
MPC-300-IV for Systemic, Immune-mediated Diseases:

MPC-300-IV is our cellular product candidate that responds to inflammatory signals with release of counter-
inflammatory factors. It has the potential to treat multiple immune-mediated diseases.

MPC-300-IV has generated positive clinical data across three randomized, placebo-controlled Phase 2 trials in
disease states associated with inflammation; type 2 diabetes with inadequate glucose control, diabetic kidney
disease, and biologic-refractory rheumatoid arthritis (RA).
Results from a 48-patient randomized, placebo-controlled Phase 2 trial in patients with biologic refractory RA over
52 weeks were recently presented at the 2017 American College of Rheumatology Annual Meeting in San Diego,
CA. The primary objective of the study was to evaluate safety and tolerability of a single intravenous infusion in
biologic refractory RA patients through a 12-week primary endpoint. Additional objectives were to evaluate clinical
efficacy at the 12-week endpoint and to assess the durability of effects and safety profile over the full 52-week
study.
The results showed an early and durable effect from a single infusion of MPC-300-IV in biologic-refractory RA
patients. Specifically:

o Infusions were well-tolerated with no treatment-related serious adverse events reported during the
52-week period, and a safety profile over 52 weeks comparable among the placebo and two MPC
treatment groups.
o A single intravenous MPC infusion in biologic refractory RA patients resulted in dose-related
improvements in clinical symptoms, function, disease activity and patient-reported outcomes.
Efficacy signals were observed for each of ACR 20/50/70, ACR-N, HAQ-DI, SF-36 and DAS-28
disease activity score.

Institute for Health Research (CIHR) evaluating the Company’s proprietary allogeneic mesenchymal precursor cell
(MPC) product candidate MPC-150-IM in end-stage heart failure patients with left ventricular assist devices (LVAD).
The Company believes that:
• the LVAD market may represent an early market entry opportunity for MPC-150-IM in end-stage heart
failure patients through potential to reduce LVAD morbidity, increase survival and increase LVAD use as
destination therapy;
• targeted product launch strategy requires minimal investment;
• by strengthening native heart muscle, Bridge to Recovery (BTR) represents a potential high-growth
market opportunity for temporary LVAD use and explantation in end-stage or Class IV heart failure
patients; and
• there may be an opportunity to bridge to the larger Class III heart failure population by label extension
on obtaining positive Phase 3 trial results.
MPC-06-ID for Chronic Low Back Pain (CLBP):
Mesoblast's proprietary allogeneic cell therapy MPC-06-ID is being evaluated in a 360-patient Phase 3 trial in
patients with CLBP who have failed conservative measures. The trial is expected to complete enrollment in early
Q1 CY18.
If the Phase 2 results, which showed durable improvement in pain and function from a single intra-discal injection,
are confirmed in the Phase 3 trial, the Company believes that MPC-06-ID:
• has the potential to reduce and/or eliminate the need for opioids in the treatment of CLBP; and
• is well positioned to meet the objectives of the 21st Century Cures Act, which includes measures to
combat opioid dependence and provide accelerated approval pathways for non-opioid pain reducing drugs.
Over 33,000 people in the United States died of prescription opioid related overdoses in 2016 and the opioid
epidemic has been recently declared a public health emergency by the President of the United States. Given that
CLBP accounts for 50% of all opioid prescriptions, a non-opioid solution to this disease is imperative.
MPC-300-IV for Systemic, Immune-mediated Diseases:

MPC-300-IV is our cellular product candidate that responds to inflammatory signals with release of counter-
inflammatory factors. It has the potential to treat multiple immune-mediated diseases.

MPC-300-IV has generated positive clinical data across three randomized, placebo-controlled Phase 2 trials in
disease states associated with inflammation; type 2 diabetes with inadequate glucose control, diabetic kidney
disease, and biologic-refractory rheumatoid arthritis (RA).
Results from a 48-patient randomized, placebo-controlled Phase 2 trial in patients with biologic refractory RA over
52 weeks were recently presented at the 2017 American College of Rheumatology Annual Meeting in San Diego,
CA. The primary objective of the study was to evaluate safety and tolerability of a single intravenous infusion in
biologic refractory RA patients through a 12-week primary endpoint. Additional objectives were to evaluate clinical
efficacy at the 12-week endpoint and to assess the durability of effects and safety profile over the full 52-week
study.
The results showed an early and durable effect from a single infusion of MPC-300-IV in biologic-refractory RA
patients. Specifically:

o Infusions were well-tolerated with no treatment-related serious adverse events reported during the
52-week period, and a safety profile over 52 weeks comparable among the placebo and two MPC
treatment groups.
o A single intravenous MPC infusion in biologic refractory RA patients resulted in dose-related
improvements in clinical symptoms, function, disease activity and patient-reported outcomes.
Efficacy signals were observed for each of ACR 20/50/70, ACR-N, HAQ-DI, SF-36 and DAS-28
disease activity score.

Financial Results for the Three Months Ended September 30, 2017 (first quarter) (in U.S.
Dollars)
The Company contained spend whilst increasing its R&D investment in Tier 1 clinical programs by constraining
manufacturing production, and management and administration costs. Research and development expenses
increased by US$1.4 million (10%), this increase was offset by cost savings of US$2.4 million (73%) for
manufacturing and US$0.4 million (8%) for management & administration for the first quarter of FY2018,
compared with the first quarter of FY2017.
There was a decrease of US$13.0 million (57%) in the loss before income tax for the first quarter of FY2018,
compared with the first quarter of FY2017. This overall decrease in loss before income tax was primarily due to
non-cash items that do not affect cash reserves.
The main items which impacted the loss before income tax movement were:
• Revenues from royalties on sales of TEMCELL increased by US$0.4 million (178%) in the first quarter of
FY2018 compared with the first quarter of FY2017 and the Company recognized milestone revenue of
US$0.5 million on the cumulative sales of TEMCELL in the first quarter of FY2018 compared with US$Nil in
the first quarter of FY2017.
• Research and Development expenses were US$15.4 million for the first quarter of FY2018, compared
with US$14.0 million for the first quarter of FY2017, an increase of US$1.4 million (10%) as the Company
invested in Tier 1 clinical programs.
• Manufacturing expenses were US$0.9 million for the first quarter of FY2018, compared with US$3.3
million for the first quarter of FY2017, a decrease of US$2.4 million (73%) due to a reduction in
manufacturing activity because sufficient quantities of clinical grade product were previously manufactured
for all ongoing clinical trials.
• Management and Administration: expenses were US$5.0 million for the first quarter FY2018,
compared with US$5.4 million for the first quarter of FY2017, a decrease of US$0.4 million (8%) primarily
due to a decrease of US$0.5 million in corporate overhead expenses such as rent and IT costs.
The overall decrease in loss before income tax also includes movements in other items which did not impact
current cash reserves, such as: fair value remeasurement of contingent consideration, and foreign exchange
movements within other operating income and expenses. The net loss attributable to ordinary shareholders was
US$7.0 million, or 1.60 cents per share, for the first quarter of FY2018, compared with US$19.8 million, or 5.24
cents per share, for the first quarter of FY2017.

Contacts:
Julie Meldrum
Corporate Communications
Mesoblast
T: +61 3 9639 6036
E: julie.meldrum@mesoblast.com
Schond Greenway
Investor Relations
Mesoblast
T: +1 212 880 2060
E: schond.greenway@mesoblast.co

Source: Mesoblast Limited
2.5
2.5 from 2 votes
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