ORTHOCELL LIMITED — Interim / Quarterly Report 2017

Jan 30, 2017

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Quarterly Cash Flow Report – December 2016

Perth, Australia; 31 January 2017: Orthocell Limited’s Quarterly Cash Flow Report for the quarter ended 31 December 2016 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 completed a $4 million capital raise via the Placement of 10,000,000 fully paid ordinary shares at an issue price of $0.40 per share. The funds raised from the Placement (after costs) will be used to progress the Company’s portfolio of products and for working capital purposes.

In October 2016, Orthocell received ethics approval and commenced patient recruitment for a human study examining the effectiveness of its Celgro® collagen medical device, to guide and promote nerve regeneration in severed peripheral nerves of the hand and upper limb. The study is being led by orthopaedic surgeon Dr Alex O’Beirne at St John of God Hospital, involving 20 patients who have suffered injury to one or more peripheral nerves. The study is designed to demonstrate the safety, tolerability and effectiveness of Celgro® when used as a conduit in the surgical repair of peripheral nerve injuries. This clinical program will support the continued demonstration of clinical safety, tolerability and efficacy of Celgro® as a unique platform technology to enhance soft tissue repair and regeneration.

The Company was very pleased to receive the Innovation Excellence Award for Celgro® at the 2016 Annual Western Australian Industry & Export Awards. The Award is, “for outstanding achievement or excellence in developing an innovative commercial product, process, service or technology. The Innovation Excellence Award recognizes business that are contributing to the advancement of the economy through their innovation.” The finalists for this award category were Austal Ltd, Proteomics International Pty and Orthocell Ltd.

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

The Company also announced the publication of data from a successful collaboration with institutes in Sweden, India and Australia. The paper further supported Orthocell’s ‘Cell Factory” technology for tissue specific Growth Factors to assist in the regeneration of damaged bone tendon and cartilage tissue.

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 guided bone regeneration and soft tissue reconstruction 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 Quarter ended (“current quarter”) 57 118 897 135 31 December 2016

Consolidated statement of cash flows	Current quarter $A’000	Year to date (6 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) advertising and marketing (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 (provide details if material) 1.9 Net cash from / (used in) operating activities	138 (454) (166) (178) (6) (698) (313) - 5 - - - -	358 (761) (267) (323) (11) (1,328) (476) - 15 - - - -
	(1,672)	(2,793)
2. Cash flows from investing activities 2.1 Payments to acquire: (a) property, plant and equipment (b) businesses (see item 10) (c) investments	(10) - -	(22) - -

• 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 (6 months) $A’000
(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	(47) - - - - - - - - -	(84) - - - - - - - - -
	(57)	(106)
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) - - - - -	4,000 - - (217) - - - - -
	3,783	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)	4,012 (1,672) (57) 3,783	5,182 (2,793) (106) 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 (6 months) $A’000
4.5 Effect of movement in exchange rates on cash held 4.6 Cash and cash equivalents at end of quarter	-	-
	6,066	6,066
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)	- - -	- - -
	6,066	6,066
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 1.2 251 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
		251
		-
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 8.1 Loan facilities 8.2 Credit standby arrangements 8.3 Other (please specify)	Total facility amount at quarter end $A’000	Amount drawn at quarter end $A’000
	-	-
	-	-
	-	-

• 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.

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	(447) (183) (180) (5) (668) (441) -
	(1,924)

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: 31 January 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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