MESOBLAST LTD — AGM Information 2012

Nov 28, 2012

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CONSOLIDATING OUR FUTURE

Address by Mesoblast Chairman Brian Jamieson 2012 Annual General Meeting

On behalf of the Board of Directors, I am very pleased to welcome you to the 2012 Annual General Meeting of Mesoblast Limited.

At Mesoblast we are proud of the Company’s continued capacity to move its unique adult stem cell technology to market. The potency of our proprietary Mesenchymal Precursor Cells (MPCs) and our ongoing momentum has consolidated Mesoblast’s position at the forefront of the regenerative medicine industry.

In less than eight years we have translated a bold scientific idea into a clinical reality to become the global leader in this exciting and emerging field.

This year we have further consolidated that position. We have advanced trials underway across a diverse range of intransigent diseases, including cardiovascular, diabetes, blood cancers and degenerative diseases of the spine.

In this competitive and potentially lucrative business, it is our business model and the intrinsic power of our MPCs that puts us ahead ... we remain vigilant about protecting our intellectual property.

We further continue to effectively manage corporate risk by maintaining strong cash reserves, securing strategic partnerships and ensuring manufacturing capabilities in the near and long term. Our corporate strategy to broaden the product range and market opportunities is supported by our strong financial position; approximately $190 million cash reserves at 30 September. It has allowed us to scale up manufacturing, reduce costs of goods and increase capacity for commercial supply.

We have also built an impressive capital base, and have strategically employed these funds to get our products to market as quickly as practicable, while conserving cash whenever possible. Teva Pharmaceutical Industries Ltd is an important strategic partner, particularly in its delivery of global distribution strength and Phase 3 trial capabilities. We have built a strong relationship with Teva and we are working closely with them.

Our alliance with Lonza gives us access to its top-tier biologics manufacturing strength which is underpinning our global process development and manufacturing capability. Also, our regulatory compliance with best practice, product delineation, reduced cost of goods and the development of next generation products.

Our investor base remains diverse and loyal. Our sophisticated investors appreciate the achievements of the Company to date and the development time to market imposed by the necessary regulatory framework. They well understand the potential gains on achieving clinical and commercial milestones.

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The mix of skills and international expertise of Mesoblast’s Board of Directors was boosted this year with the appointment of Dr Ben-Zion Wiener as Teva’s representative. Dr Weiner’s extensive pharmaceutical industry experience and many successful regulatory approvals in his various senior capacities at Teva, including as head of R & D, make him a very valuable and strategic addition to the Board.

To our shareholders, on behalf of the Board of Directors, I would like to record our appreciation for your loyalty and support ... and to our staff for their unswerving commitment and diligence. We are proud to have built a diverse organization with complementary skills, and continue to attract a number of women to senior roles.

I would also like to reiterate my appreciation of the wise counsel of my fellow Board members and their strict adherence to best corporate governance.

It has been another good year for Mesoblast, one of consolidation in which we take great pride.

I would now like to welcome Mesoblast’s outstanding Chief Executive, Professor Silviu Itescu, to elaborate further on the Company’s corporate strategy.

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Melbourne, Australia 29 November 2012

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CEO presentation

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Annual General Meeting Melbourne, 29 November 2012

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This presentation, including any comments made during or following the presentation, may contain forward-looking statements that are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. These statements may relate to, but are not limited to: expectations regarding the safety or efficacy of, or potential applications for, Mesoblast's adult stem cell technologies; expectations regarding the strength of Mesoblast's intellectual property, the timeline for Mesoblast's regulatory approval process, and the scalability and efficiency of manufacturing processes; expectations about Mesoblast's ability to grow its business and statements regarding its relationships with Teva, Cephalon and Lonza and future benefits of those relationships; statements concerning Mesoblast's share price or potential market capitalization; and statements concerning Mesoblast's capital requirements and ability to raise future capital, among others. Actual results may differ from the results anticipated in these forwardlooking statements, and the differences may be material and adverse. Factors and risks that may cause Mesoblast's actual results, performance or achievements to be materially different from those which may be expressed or implied by such statements, include, without limitation: risks inherent in the development and commercialization of potential products; uncertainty of clinical trial results or regulatory approvals or clearances; government regulation; the need for future capital; dependence upon collaborators; and protection of our intellectual property rights, among others. Accordingly, you should not place undue reliance on these forwardlooking statements.

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Corporate overview

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Shareholder value and ownership

Market valuation
Issued shares	287 million
Current share price*	$5.74
Market capitalization (approx)	$1,647 million

Shareholder ownership

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19%
26%
45%
10%
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Institutions/sophisticatediInvestors Retail investors Management Strategic Investors

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* 28 November 2012

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Cash and development spend

Cash 30 September 2012 = $190 million

Cash spend for FY 2012		$ million
Clinical programs		19.9
• Clinical trials • Cell production	10.0 9.9
Research & development		13.0
• Manufacturing processes • Research & translational programs	7.7 5.3
People (labour)		19.4
Support (overheads) & I.P.		12.9
Total cash spend on operations (before tax and interest)		65.2
Cash on hand (30 June)		206.7

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Our people … the most valuable asset

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69
50 Growth 163%
29
US 19
19 Growth 90%
Australia 10
30-Jun-2011 30-Jun-2012
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Major accomplishments – highlights of 2012

1. Clinical and preclinical development of intravenous product formulation for a wide range of systemic diseases

2. generated positive preclinical results in primate model of type 2 diabetes

3. commenced Phase 2 trial for type 2 diabetes and its complications

4. generated positive preclinical results in large animal model of inflammatory arthritis, showing concomitant effects on multiple pathways of joint inflammation

5. plans underway to initiate Phase 2 clinical program in rheumatoid arthritis

6. additional planned applications, including diabetic kidney disease, lung diseases

7. Completed enrollment in the Phase 2 trials for non-surgical treatment of degenerative lumbar disc disease and for spinal fusion surgery

Continued

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Major accomplishments – highlights of 2012

1. Completed Phase 2 trial in congestive heart failure (CHF), identifying an MPC dose which prevented any hospitalization or death for a mean follow-up period approaching three years

2. Held positive meetings, together with Teva, with FDA and EMA to discuss a proposed Phase 3 clinical trial protocol for CHF with primary endpoint of reduction in hospitalization or death

3. Implemented product manufacturing strategy to facilitate scale-up, meet regulatory compliance for Phase 3, and provide commercial supply

4. Reached agreement with FDA on the manufacturing process to supply MPCs for use in the upcoming Phase 3 trial for congestive heart failure, in Phase 3 trials for other indications, and on path forward for commercial supply

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Corporate partnerships manage execution risk – Teva alliance

• Partnership focus on neurologic, cardiovascular diseases

• Lead product for congestive heart failure – number 1 cause of hospitalization in industrialized world

• Provides Phase 3 clinical and regulatory expertise

• Provides funding for partnered programs

• Provides global distribution strength

• Allows Mesoblast to focus on manufacturing optimization

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Corporate partnerships manage execution risk – Lonza alliance

• Lonza partnership provides global process development and manufacturing capability

• Exclusive access to state-of-the-art Lonza Singapore facility for allogeneic cell manufacture

• New Singapore site will support clinical trial and early commercial supply

• Partnership alleviates need for Mesoblast internal spend on manufacturing facility, and will provide significantly larger facility for commercial supply on first product approval

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Mesenchymal Precursor Cell (MPC) technology

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Our proprietary MPC technology platform

1. Patented adult stem cell technology platform for Stro-1/Stro-3 cells

2. Highly purified populations of earliest precursors of mesenchymal lineage cells present in multiple tissue sites, e.g. bone marrow, adipose, dental pulp

3. Scientific advantages based on high degree of potency and effectiveness of this purified cell type across multiple disease targets

4. Commercial advantages derive from high degree of expansion potential and relative non-immunogenicity…allogeneic cell therapy

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Leveraging our proprietary MPC technology platform

• Products specifically target major medical conditions where proprietary technology offers unique scientific and clinical advantages

• Multiple products developed in parallel to increase probability of success

• Strong cash position enables simultaneous product development

• Probability of success enhanced through strategic partnerships

• Potential to deliver significant and sustainable revenues via either direct product sales or through profitable manufacturing operations

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MPC technology platform delivers product diversity

1. Products in partnership with Teva, primarily in cardiovascular and neurological diseases

2. Products for intravenous delivery in type 2 diabetes and its complications including kidney disease

3. Products delivered intravenously for immunologic/inflammatory conditions, such as lung and joint diseases

4. Products locally administered for orthopedic diseases of the spine, and vascular and inflammatory eye conditions

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Product manufacturing

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Product manufacturing strategy

Our objectives are to ensure:

• Regulatory compliance with best practice

• Product delineation supporting partnering/reimbursement

• New product development

• Commercial scale-up

• Capacity for commercial product supply

• Reduced COGS

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Regulatory compliance with best manufacturing practice

Agreement reached with United States Food and Drug Administration (FDA) for supply of MPCs in Phase 3 clinical trials and on a clear pathway for commercial manufacturing supply

The FDA agreed:

• That Mesoblast’s extensive characterization and testing of its MPC technology platform was acceptable and consistent with expectations for Phase 3 clinical supplies

• With Mesoblast’s proposed assays to demonstrate potency for its MPC product, a key requirement for entry into Phase 3 trials

• With the scope of product comparability studies needed to support manufacturing optimization and scale-up as clinical and commercial supply demands increase

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Control of manufacturing ensures product delineation

Mesoblast can delineate products to support and separate partner markets, optimize reimbursement strategies, and manage product lifecycles.

Innovative R&D delivers product delineation through:

• Changes in formulation or dosage

• Products derived from different tissue sources

• (e.g. bone marrow, adipose, dental pulp)

• Combination therapies using different modes of delivery or devices

• Biologic modifications of cells

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Product pipeline

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Platform delivers multi-product pipeline

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Products for intravenous administration

Intravenous products to treat prevalent systemic disorders affecting the metabolic, inflammatory and immune systems

• type 2 early diabetes

• kidney failure and cardiovascular complications

• liver fibrosis

Inflammatory/immune mediated diseases

• inflammatory joint diseases - rheumatoid arthritis

• lung diseases - asthma, pulmonary fibrosis

Intravenous formulation of MPCs can be delivered once or multiple times for disorders that affect multiple organs

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Integrated metabolic mechanisms of action of MPCs

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Intravenous delivery – Type 2 diabetes

• Randomized, placebo-controlled Phase 2 trial in 60 patients with type 2 diabetes actively recruiting under FDA guidance

• Patients evaluated over 12 weeks for blood glucose control and inflammatory markers such as C-reactive protein (C-RP)

• Objective to find optimal dose for both glucose control and reduction in inflammation parameters

Trial will set foundation for evaluating MPCs in treating patients with advanced diabetes and life-threatening complications such as renal failure and cardiovascular disease

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Intravenous delivery – renal complications of diabetes

• Plan to evaluate whether single dose of MPCs can stabilize or reverse end-stage kidney disease

• Nearly 10% annual rate of cardiovascular disease and death in diabetic patients with end-stage kidney disease

• Non-human primate study showed circulating C-RP levels significantly reduced after single MPC dose (C-RP is major predictor of cardiovascular risk in diabetes)

Plan to evaluate whether intravenous MPC therapy has potential to offer cardioprotective and renal benefits in these patients

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Intravenous delivery – immune-mediated diseases

• Preclinical data indicate MPCs have immunomodulatory properties

• Single intravenous injection may provide sustained benefits for immunemediated diseases

• Mechanism of action (MOA) may be unique, shutting down multiple cytokine pathways simultaneously:

• TNF-alpha, IL-6, IL-17 are mediators that drive autoimmune diseases such as rheumatoid arthritis, Crohn’s disease, multiple sclerosis existing treatments require chronic administrations; may cause unacceptable infectious adverse events

Initial targets are inflammatory joint and lung diseases

Randomized, placebo-controlled Phase 2 trials of MPCs for patients with RA planned as either first line treatment or rescue after failure with other biologics

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Products for local administration – cardiovascular

With Teva, developing therapies for cardiovascular diseases including congestive heart failure (CHF) and acute myocardial infarction (AMI)

• Phase 2 trial for CHF showed patients treated with single intra-cardiac injection of highest dose of MPCs have had no hospitalization for decompensated heart failure or cardiac-related deaths over nearly 3 years of follow-up

• Teva and Mesoblast met with FDA and European Medicines Association to discuss aligned Phase 3 trial with endpoint of reduction in hospitalization and death

• Teva and Mesoblast are working closely on a detailed Phase 3 trial design involving an early interim analysis to evaluate evidence of efficacy

• Phase 2 AMI trial ongoing in Europe and Australia

• Additional potential areas include chronic refractory angina

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Products for local administration – spine disease

Diseases of the spine represent largest growing market segment in orthopedics

• Spinal fusion product for patients with advanced disc degeneration who need surgery

• Phase 2 spinal fusion trials completed enrollment

• 12-month follow-up results for lumbar fusion to be announced shortly

• Larger market for restoration of early disc damage

• Phase 2 study completed enrollment of 100 patients with intervertebral disc disease

• results expected mid 2013

Spinal franchise will likely be optimized with one strategic partner, leveraging distribution and market strengths

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Other products – eye diseases and bone marrow transplantation

Developing stem cell therapeutic product for treating various vascular and inflammatory diseases of the eye including wet and dry age-related macular degeneration (AMD)

• Wet and dry AMD are the major causes of blindness in the elderly

• Phase 2 trial wet AMD study currently enrolling patients at sites in Singapore and Australia

Developing stem cell therapeutic product to improve bone marrow transplant outcomes and provide a therapy for patients who cannot find a donor and may otherwise die

• Ongoing Phase 3 clinical trial using MPCs to expand hematopoietic precursors from cord blood for transplantation in cancer patients whose bone marrow has been destroyed by high dose chemotherapy

• Aim is to increase 3-4 fold the number of unrelated donor transplants

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The year ahead, what we expect:

• Commencement of Phase 3 trial for congestive heart failure involving an early interim analysis to evaluate evidence of efficacy

• Clinical results in Phase 2 trials with early type 2 diabetes, spinal fusion and intervertebral disc repair

• Ongoing Phase 2 trial for AMI and Phase 3 for BMT

• Expand focus on intravenous product franchise with commencement of Phase 2 trials for

• diabetic kidney disease

• rheumatoid arthritis

• lung diseases

• Additional partnering opportunities – optimal timing

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Leading the world in novel adult stem cell therapies