ORTHOCELL LIMITED — Interim / Quarterly Report 2017

Apr 27, 2017

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Quarterly Cash Flow Report – March 2017

Perth, Australia; 28 April 2017: Orthocell Limited’s Quarterly Cash Flow Report for the quarter ended 31 March 2017 is attached.

Orthocell is an Australian regenerative medicine company dedicated to restoring function and mobility of patients by developing innovative regenerative therapies for the musculoskeletal system. Orthocell’s portfolio of products include TGA-licensed cell therapies Autologous Tenocyte Implantation (Ortho-ATI®) and Autologous Chondrocyte Implantation (Ortho-ACI®), which aim to regenerate damaged tendon and cartilage tissue. The Company’s other major product is Celgro®, a collagen medical device which facilitates tissue repair and healing in a variety of orthopaedic, reconstructive and surgical applications with the first regulatory approval expected shortly.

During the quarter, the Company announced a research collaboration agreement with DePuy Synthes Products, Inc (“DPS”), a Johnson & Johnson Company for its Ortho-ATI® stem cell approach for the regeneration of degenerate tendons and ligaments. The study is planned to commence shortly and will be led by Professor Allan Wang, current President of the Australian Elbow and Shoulder Society, in conjunction with Professor Ming Hao Zheng, Division of Surgery, School of Medicine at the University of Western Australia.

In January 2017, the Company received a Research and Development (R&D) tax incentive cash refund of $1,947,998 for the financial year 2015/2016.

On 31 January 2017, the Company announced it has received a European patent for its pipeline ‘Cell Factory’ technology that produces tissue specific growth factors and bioactive proteins to enhance tissue repair. Current growth factor approaches are generic and often result in a mix of growth factors not specific to the tissue that is being treated. This IP for cell factory concept is now granted in two key jurisdictions – USA and EU.

On 8 February 2017, Orthocell announced submission of a 510(k) application to achieve FDA clearance of CelGro® collagen medical device, for introduction into the substantial US commercial market. Orthocell’s application for FDA clearance of CelGro® in the US follows its recent application for approval in Europe (CE Mark). Assessment of the CE Mark application is in its final stages. Both regulatory applications position CelGro® to be used as a tissue support and barrier membrane in various dental bone and soft tissue regeneration procedures.

Ph: +61 8 9360 2888 Fax: +61 8 9360 2899 www.orthocell.com.au

On 22 February 2017, the Company announced positive initial safety and tolerability results for its CelGro® collagen-based medical device, in a clinical study examining its use to augment the repair of nerve damage. This study is designed to show CelGro® can be used to guide and promote nerve regeneration in damaged peripheral nerves of the hand and upper limb and is being performed in collaboration with a leading Australian orthopaedic nerve specialist and the St John of God Hospital Group Subiaco, Perth.

On 27 February 2017, Orthocell announced the publication of 2-year data for Ortho-ATI® in degenerate hip (gluteal) tendons in the Orthopaedic Journal of Sports Medicine. The data shows positive outcomes including reduced pain and increased functionality out to 24 months following Ortho-ATI. This paper further supports Orthocell’s Ortho-ATI as a durable, long-term solution for degenerate, treatment-resistant tendons.

On 28 March 2017, Orthocell announced it has been granted a further Singapore patent for CelGro® collagen-based medical device for soft tissue regeneration applications. The patent relates to the method of manufacture of novel bio-scaffolds to aid in the surgical repair of soft tissue injuries such as tendon, nerve, cartilage and bone, as well as the delivery of stem cells to relevant surgical sites and provides important additional IP protection for the CelGro® product platform.

Orthocell is well positioned as a leader in musculoskeletal regenerative medicine with notable near term milestones for Celgro® including a CE Mark approval to market Celgro® in the EU for bone and soft tissue regeneration in a variety of dental applications.

For more information, please contact:

General enquiries Investor and Media enquiries Paul Anderson Ben Walsh Orthocell Limited, Managing Director WE Buchan P: +61 8 9360 2888 P: + 61 411 520 012 E: paulanderson@orthocell.com.au E: bwalsh@buchanwe.com.au

About Orthocell Limited

Orthocell is a commercial-stage, regenerative medicine company focused on regenerating mobility for patients by developing products for a variety of tendon, cartilage and soft tissue injuries. Orthocell’s portfolio of products include TGA-approved stem cell therapies Autologous Tenocyte Implantation (Ortho-ATI®) and Autologous Chondrocyte Implantation (Ortho-ACI®), which aim to regenerate damaged tendon and cartilage tissue. The Company’s other major product is Celgro®, a collagen medical device which facilitates tissue repair and healing in a variety of orthopaedic, reconstructive and surgical applications and is being readied for first regulatory approvals.

Ph: +61 8 9360 2888 Fax: +61 8 9360 2899 www.orthocell.com.au

Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

+Rule 4.7B

Appendix 4C

Quarterly report for entities subject to Listing Rule 4.7B

Introduced 31/03/00 Amended 30/09/01, 24/10/05, 17/12/10, 01/09/16

Name of entity

Orthocell Limited

ABN

57 118 897 135

Quarter ended (“current quarter”)

31 March 2017

Consolidated statement of cash flows	Current quarter $A’000	Year to date (9 months) $A’000
1. Cash flows from operating activities 1.1 Receipts from customers 1.2 Payments for (a) research & development (b) product manufacturing & operating costs (c) Marketing, business development & investor relations (d) leased assets (e) staff costs (research & development, production, administration) (f) administration & corporate costs 1.3 Dividends received (see note 3) 1.4 Interest received 1.5 Interest & other costs of finance paid 1.6 Income taxes paid 1.7 Government grants & tax incentives 1.8 Other (collaboration contribution) 1.9 Net cash from / (used in) operating activities	151 (520) (119) (184) (5) (691) (212) 12 - - 1,948 364	509 (1,488) (339) (508) (16) (2,019) (527) 27 - - 1,948 364
	744	(2,049)
2. Cash flows from investing activities 2.1 Payments to acquire: (a) property, plant and equipment (b) businesses (see item 10)	(68) -	(90) -

• See chapter 19 for defined terms 1 September 2016

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Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

Consolidated statement of cash flows	Current quarter $A’000	Year to date (9 months) $A’000
(c) investments (d) intellectual property (e) other non-current assets 2.2 Proceeds from disposal of: (a) property, plant and equipment (b) businesses (see item 10) (c) investments (d) intellectual property (e) other non-current assets 2.3 Cash flows from loans to other entities 2.4 Dividends received (see note 3) 2.5 Other (provide details if material) 2.6 Net cash from / (used in) investing activities	- (13) - - - - - - - - -	- (97) - - - - - - - - -
	(81)	(187)
3. Cash flows from financing activities 3.1 Proceeds from issues of shares 3.2 Proceeds from issue of convertible notes 3.3 Proceeds from exercise of share options 3.4 Transaction costs related to issues of shares, convertible notes or options 3.5 Proceeds from borrowings 3.6 Repayment of borrowings 3.7 Transaction costs related to loans and borrowings 3.8 Dividends paid 3.9 Other (provide details if material) 3.10 Net cash from / (used in) financing activities	- - - - - - - - -	4,000 - - (217) - - - - -
	-	3,783
4. Net increase / (decrease) in cash and cash equivalents for the period 4.1 Cash and cash equivalents at beginning of quarter/year to date 4.2 Net cash from / (used in) operating activities (item 1.9 above) 4.3 Net cash from / (used in) investing activities (item 2.6 above) 4.4 Net cash from / (used in) financing activities (item 3.10 above)	6,066 744 (81) -	5,182 (2,049) (187) 3,783

• See chapter 19 for defined terms

1 September 2016

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Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

Consolidated statement of cash flows	Current quarter $A’000	Year to date (9 months) $A’000
4.5 Effect of movement in exchange rates on cash held 4.6 Cash and cash equivalents at end of quarter	-	-
	6,729	6,729
5. Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts	Current quarter $A’000	Previous quarter $A’000
5.1 Bank balances 5.2 Call deposits 5.3 Bank overdrafts 5.4 Other (provide details) 5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above)	6,729 - - -	6,729 - - -
	6,729	6,729
6. Payments to directors of the entity and their associates Current quarter $A'000 6.1 Aggregate amount of payments to these parties included in item 1.2 250 6.2 Aggregate amount of cash flow from loans to these parties included in item 2.3 - 6.3 Include below any explanation necessary to understand the transactions included in items 6.1 and 6.2
		Current quarter $A'000
		250
		-
Executive remuneration and non-executive director fees and consulting fees

7.	Payments to related entities of the entity and their	Current quarter
	associates	$A'000
7.1	Aggregate amount of payments to these parties included in item 1.2		-
7.2	Aggregate amount of cash flow from loans to these parties included		-
	in item 2.3
7.3	Include below any explanation necessary to understand the transactions included in
	items 7.1 and 7.2

• See chapter 19 for defined terms 1 September 2016

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Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

	8. Financing facilities available Add notes as necessary for an understanding of the position Total facility amount at quarter end $A’000 Amount drawn at quarter end $A’000 8.1 Loan facilities - - 8.2 Credit standby arrangements - - 8.3 Other (please specify) - - 8.4 Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well.	Total facility amount at quarter end $A’000	Amount drawn at quarter end $A’000
		-	-
		-	-
		-	-

9. Estimated cash outflows for next quarter	$A’000
9.1 Research & development 9.2 Product manufacturing & operating costs 9.3 Advertising & marketing 9.4 Leased assets 9.5 Staff costs (research & development, production, administration) 9.6 Administration and corporate costs 9.7 Other (provide details if material) 9.8 Total estimated cash outflows	560 120 160 5 685 180 -
	1,710

10. Acquisitions and disposals of business entities (items 2.1(b) and 2.2(b) above)	Acquisitions	Disposals
10.1 Name of entity
10.2 Place of incorporation or registration
10.3 Consideration for acquisition or disposal
10.4 Total net assets
10.5 Nature of business

Compliance statement

• 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

• 2 This statement gives a true and fair view of the matters disclosed.

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Sign here:

............................................................ Date: 28 April 2017 (Director/Company secretary)

Print name: Simon Robertson

• See chapter 19 for defined terms

1 September 2016

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Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

Notes

1. The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report.

2. If this quarterly report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 107: Statement of Cash Flows apply to this report. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standard applies to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

4. See chapter 19 for defined terms 1 September 2016

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