Mesoblast Reports Half-Year 2013 Financial Results

Mesoblast Reports Half-Year 2013 Financial Results

Provides Strategic Update on Key Areas of Product Development

NEW YORK, Feb. 10, 2013 (GLOBE NEWSWIRE) -- Mesoblast Limited (ASX:MSB) (OTC
ADR:MBLTY) today provided its half-year 2013 financial results, as well as a
strategic update on the key areas of product development for its Mesenchymal
Precursor Cell (MPC) platform technology, particularly in the fields of
inflammation and immunity.

Mesoblast Chief Executive Professor Silviu Itescu said: "Our strong cash
position enables us to pursue our key areas of MPC product development in
parallel in order to most efficiently bring our products to market, either on
our own or with strategic distribution partners."

The Company reported strong cash reserves of $178.6 million for the 2013
financial half-year reporting period ended 31 December 2012. 

Cash-flow from operating activities for the current period includes a tax
refund of $3.3 million, reflecting an appropriate cash burn for operations
(net of tax) of $33.8 million for the half-year. In comparison to the previous
corresponding period, expenses from operations (excluding share-based
payments) were up $3.9 million to $35.9 million.Research & development
expenses have increased by $4.5m to $17.2 million and manufacturing
expenditures by $1 million to $8.9 million.Management and administration
costs have decreased by $1.6 million to $9.8 million. Revenue from continuing
operations for the half-year were $14.7 million, down $3.9 million from the
last corresponding period principally due to an extension of the period over
which the USD130 million upfront payment received in December 2010 is being
amortized.There was a net loss before tax of $27.8 million for the half-year,
compared with $17.6 million for the previous corresponding period.

Professor Itescu added: "The increase in expenditures during the last
half-year reflected the Group's greater investment in clinical and regulatory
activities, manufacturing, and new product development.The increased
spendwas in line with expectations given our broadening strategy for clinical
development of our intravenous product for immunomodulation as we gain greater
understanding of the broad mechanisms of action (MOA) of our unique MPCs.

"Specifically, during the period we initiated new Phase 2 clinical programs of
our intravenous product for diseases of inflammation and immunity, including
diabetes and rheumatoid arthritis,completed recruitment inthe 100-patient
Phase 2 trial for disc repair,initiated new preclinical studies in
inflammatory lung diseases, and increased product manufacturing as necessary
to support these programs," he said.

Key Areas Targeted for Mesoblast's MPC Product Development

1.Mesoblast's strategic product development focus is in three major and
    distinct areas:
2.systemic diseases of excessive inflammation and immunity which can be
    addressed by intravenous administration of our MPCs.
3.orthopedic diseases of the spine where our MPCs can be locally
    administered to generate new bone and repair intervertebral discs.
4.cardiovascular diseases where our MPC products can be locally administered
    to improve heart function.

1. Products Delivered Intravenously for Diseases of Inflammation and Immunity

  *Mesoblast's MPCs have been shown in preclinical studies to have a broad
    immunomodulatory MOA, simultaneously inhibiting multiple pathways of
    inflammation and immune activation, including T cells and monocytes.
  *Mesoblast's intravenous MPC product is being developed as an
    immunomodulatory agent to treat prevalent systemic disorders caused by
    excessive inflammation and activation of multiple immune pathways.
  *Targeted disorders include inflammatory joint diseases such as rheumatoid
    arthritis, type 2 diabetes and its complications, particularly diabetic
    kidney disease, and inflammatory lung diseases, such as asthma and
    pulmonary fibrosis.

Rheumatoid Arthritis

  *In January 2013 Mesoblast received clearance from United States Food and
    Drug Administration (FDA) to begin Phase 2 trial of proprietary
    allogeneic, or "off-the-shelf MPCs in patients with active Rheumatoid
    Arthritis (RA).
  *Trial will be randomized, double-blind placebo-controlled dose escalation
    study to evaluate the safety, tolerability and effectiveness of a single
    intravenous infusion of two MPC dose levels over an initial period of 3
    months in patients who have had poor or incomplete responses to biologic
    inhibitors of the TNF-alpha pathway.
  *In an animal model of RA, MPC treatment significantly decreased the T cell
    and monocyte derived inflammatory cytokines TNF-alpha, IL-6 and IL-17 in
    the diseased joint and reduced tissue pathology.
  *MOA provides the rationale for strategic development of MPCs in RA both in
    patients with incomplete responses to biologic inhibitors of the TNF-alpha
    pathway alone and as a first-line biologic treatment in those not
    responding to conventional anti-rheumatic agents.
  *In addition, a second Phase 2 trial of MPCs as a first-line biologic
    treatment for active RA is planned to commence in Europe in 1H 2013.

Type 2 Diabetes and Diabetic Kidney Disease

  *Type 2 diabetes is a disease of chronic inflammation which results in
    insulin resistance in fat tissues and vascular complications in various
    organs, including the kidneys, heart and eyes.
  *Mesoblast is in the midst of a Phase 2 clinical trial in 60 patients with
    early type 2 diabetes not adequately maintained on oral glucose-reducing
    agents. The patients are being evaluated over 12 weeks for effectiveness
    of a single intravenous MPC dose on changes in various inflammatory
    markers, including C-reactive protein (C-RP), and on blood glucose
  *We expect that this multi-center trial will set the foundation for
    evaluating MPCs in the treatment of patients with more advanced diabetes
    in order to target the life-threatening complications of the disease, such
    as renal failure and cardiovascular disease.
  *Mesoblast plans to initiate a Phase 2 trial in the second half of FY 2013
    to evaluate whether a single intravenous MPC injection can stabilize or
    reverse end-stage kidney disease in diabetics.

2. Products Delivered Locally for Orthopedic Diseases of the Spine

Spine Fusion Surgery for Advanced Intervertebral Disc Degeneration

  *For patients whose intervertebral discs have degenerated too extensively
    to contemplate repair, bony fusion of adjacent vertebra is the primary
    option to eliminate chronic and debilitating pain.
  *There is a major unmet need for new technologies to achieve fusion which
    are safe, effective, and that eliminate the need for bone autograft.
  *In January 2013, Phase 2 clinical trial results of Mesoblast's NeoFuse®
    product, comprising allogeneic MPCs used in lumbar spinal fusion surgery,
    were released.
  *In the 24-patient multi-center trial in the United States, 8 patients per
    group were randomized to one of three arms, bone autograft standard of
    care (Control), 25 million MPCs (25M), and 75 million MPCs (75M). Patients
    underwent the surgical procedure, one or two level fusions using a
    posterior approach to the spine, and were evaluated for safety and
  *MPCs were well tolerated with no cell-related serious adverse events and
    no ectopic bone formation at all.
  *MPC treated groups had 30-43% lower mean estimated blood loss during
    surgery compared to the autograft treatment group (p less than 0.05 for
    the 25M group). 
  *At 12 months, patients from all three treatment groups had similar rates
    of fusion success and all three groups had a clinically significant and
    comparable decrease in low back and leg pain, assessed on the Visual
    Analogue Scale, and in functional improvement, assessed by the Oswestry
    Disability Index questionnaire.
  *The results showed that NeoFuse® was safe and as effective for use in
    interbody lumbar fusion surgery as the gold standard, bone autograft,
    without the need for a second surgical procedure and its attendant
    morbidity risks.
  *These results support the progression of clinical development of NeoFuse®
    in a proposed Phase 3 trial in interbody lumbar fusion surgery.

Non-SurgicalRestoration of Early Intervertebral Disc Disease

  *Mesoblast is also developing a non-surgical adult stem cell treatment for
    restoration of early disc degeneration in order to reduce lower back pain
    and improve function.
  *Non-surgical restoration of early disc damage represents a much larger
    market opportunity than surgical fusion, with no existing alternative
    therapies available for this clearly defined unmet medical need.
  *Mesoblast's double-blind, placebo-controlled Phase 2 clinical trial has
    completed enrollment of 100 patients with intervertebral disc disease.
    While the primary endpoint for this study is safety, secondary efficacy
    endpoints include reduction in low back pain and improvement in function
    and quality of life that is sustained for six months.
  *Results from this trial are expected mid-2013, and, if successful, would
    underpin progression of this indication to Phase 3.

3. Products Delivered Locally for Cardiovascular Diseases

  *Mesoblast has an important strategic partnership with Teva Pharmaceutical
    Industries Ltd which focuses on thedevelopment of innovative products for
    major cardiovascular and neurologic diseases.
  *Teva provides Mesoblast with Phase 3 trial expertise, proven capability to
    obtain product regulatory approvals, and global distribution strength. The
    lead product in this alliance is for congestive heart failure (CHF), the
    leading cause of hospitalization in the industrialized world.
  *In Mesoblast's Phase 2 trial for CHF, patients treated with a single
    intra-cardiac injection of the highest dose of MPCs have to date had no
    hospitalization events for decompensated heart failure or cardiac-related
    deaths, over a mean follow-up period approaching three years.
  *On the basis of these results, Teva and Mesoblast have been working
    closely together and have had meetings with both the FDA and the European
    Medicines Agency (EMA) on a Phase 3 trial design for congestive heart
  *The trial is expected to commence during 2013 and to have an early interim
    analysis for evidence of efficacy.
  *A second indication in the alliance is the use of MPCs for prevention of
    CHF after an acute myocardial infarction, or heart attack.A
    placebo-controlled Phase 2 trial for this indication is underway in Europe
    and Australia.

Mesoblast Limited
Mesoblast Limited is a world leader in the development of biologic products
for the broad field of regenerative medicine. Mesoblast's patented Mesenchymal
Precursor Cell technology is being developed for an extensive range of major
clinical diseases, including inflammatory and immunologic conditions of the
joints and lungs, diabetes and its complications, orthopedic spine conditions,
and cardiovascular disorders.

CONTACT: Julie Meldrum
         Global Head of Corporate Communications
         T: + 61 (0) 3 9639 6036   E:
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