Form 6-K MESOBLAST LTD For: Jul 31

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Mesoblast Limited

/s/ Charlie Harrison

Charlie Harrison

Company Secretary

Item

99.1

Appendix 4C of Mesoblast Ltd, dated July 31, 2019

.

•

Increased revenues⁽¹⁾ of 54%⁽²⁾ for the quarter and 37%⁽³⁾ for the year on sales of TEMCELL® HS. Inj.⁽⁴⁾ in Japan steroid-refractory acute graft versus host disease (SR-aGVHD) by Mesoblast licensee JCR Pharmaceuticals Co. Ltd.

•

Mesoblast initiated a rolling Biologics License Application (BLA) with the United States Food and Drug Administration (FDA) for remestemcel-L in the treatment of pediatric aGVHD; in preparation for product launch, focus is on inventory and commercial team ramp up.

•

The FDA has granted Orphan Drug Designation for the use of rexlemestrocel-L (Revascor) for the prevention of post implantation mucosal bleeding in heart failure patients implanted with a left ventricular assist device (LVAD).

•

In late July Mesoblast had a positive meeting with the FDA to further define the registration pathway for the use of Revascor in the treatment of heart failure in patients with an LVAD, with formal minutes expected in coming weeks.

•

Cash on hand at June 30, 2019 was US$50.4 million (A$71.9 million); additional capital of US$35.0 million may be available under existing arrangements with Hercules Capital, Inc. and NovaQuest Capital Management, L.L.C.

•

The Kentgrove Capital equity facility for up to A$120.0 million (approx. US$85.0 million), which can be used at Mesoblast’s discretion, has been extended for two years.

•

The Company remains in advanced negotiations with a number of potential commercial partners regarding potential transactions and access to non-dilutive capital.⁽⁵⁾

⁽¹⁾

Unaudited.

⁽²⁾

fourth quarter FY2019 compared to the fourth quarter FY2018.  Reported in constant currency.

⁽³⁾

FY2019 year compared to the FY2018 year.  Reported in constant currency.

⁽⁴⁾

TEMCELL HS. Inj. is a registered trademark of JCR Pharmaceuticals Co. Ltd.

⁽⁵⁾

Mesoblast does not make any representation or give any assurance that such a partnering transaction will be concluded.

Mesoblast Limited
ABN 68 109 431 870

www.mesoblast.com

Corporate Headquarters

Level 38

55 Collins Street

Melbourne 3000

Victoria Australia

T +61 3 9639 6036

F +61 3 9639 6030

United States Operations

505 Fifth Avenue

Third Floor

New York, NY 10017

USA

T +1 212 880 2060

F +1 212 880 2061

Asia

20 Biopolis Way

#05-01 Centros

Biopreneur 3

SINGAPORE 138668

T +65 6570 0635

F +65 6570 0176

o

US$20.0 million receipts from milestones received in relation to establishing a partnership with Tasly Pharmaceutical Group in China.  

o

US$5.4 million (€5 million) receipts from milestones received in relation to a patent license agreement with Takeda Pharmaceutical Company Limited.

o

US$1.0 million receipts from milestones received for JCR reaching cumulative net sales milestones for sales of TEMCELL^® in Japan.

Mesoblast Limited
ABN 68 109 431 870

www.mesoblast.com

Corporate Headquarters

Level 38

55 Collins Street

Melbourne 3000

Victoria Australia

T +61 3 9639 6036

F +61 3 9639 6030

United States Operations

505 Fifth Avenue

Third Floor

New York, NY 10017

USA

T +1 212 880 2060

F +1 212 880 2061

Asia

20 Biopolis Way

#05-01 Centros

Biopreneur 3

SINGAPORE 138668

T +65 6570 0635

F +65 6570 0176

Julie Meldrum

Schond Greenway

Corporate Communications

Investor Relations

Mesoblast

Mesoblast

T: +61 3 9639 6036

T: +1 212 880 2060

E: [email protected]

E: [email protected]

Mesoblast Limited
ABN 68 109 431 870

www.mesoblast.com

Corporate Headquarters

Level 38

55 Collins Street

Melbourne 3000

Victoria Australia

T +61 3 9639 6036

F +61 3 9639 6030

United States Operations

505 Fifth Avenue

Third Floor

New York, NY 10017

USA

T +1 212 880 2060

F +1 212 880 2061

Asia

20 Biopolis Way

#05-01 Centros

Biopreneur 3

SINGAPORE 138668

T +65 6570 0635

F +65 6570 0176

ABN

Quarter ended (“current quarter”)

68 109 431 870

30 June 2019

Current quarter

Year to date

(12 months)

US$ '000

US$ '000

1

Cash flows from operating activities

1.1

Receipts from customers

-   milestone receipts from Tasly Pharmaceutical Group

—

20,000

­   milestone receipts from Takeda Pharmaceutical Company Limited

—

5,409

­   milestone receipts from JCR Pharmaceuticals Co., Ltd.

—

1,000

­   royalty receipts

1,038

4,359

1.2

Payments for:

     (a)  research and development

(8,280

)

(48,526

)

          - includes the costs of the three Tier 1 Phase 3 programs in advanced chronic heart failure, chronic low back pain and acute graft vs host disease.

     (b)  manufacturing commercialisation

(4,330

)

(13,441

)

     (c)  advertising and marketing

—

—

     (d)  leased assets

—

—

     (e)  staff costs

(1,795

)

(9,496

)

     (f)  other expenses from ordinary activities

(3,215

)

(12,203

)

     (g)  other:

          - intellectual property portfolio expenses

(1,000

)

(2,627

)

1.3

Dividends received (see note 3)

—

—

1.4

Interest received

232

726

1.5

Interest and other costs of finance paid

(1,735

)

(4,641

)

1.6

Income taxes paid

—

(3

)

1.7

Government grants and tax incentives

—

1,654

1.8

Other provide details if material)

—

—

1.9

Net cash from / (used in) operating activities

(19,085

)

(57,789

)

Current quarter

Year to date

(12 months)

US$ '000

US$ '000

2

Cash flows from investing activities

2.1

Payment to acquire:

     (a)  property, plant and equipment

(77

)

(279

)

     (b)  businesses (see item 10)

—

—

     (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)

—

—

     (a)  Payments for contingent consideration

(721

)

(721

)

2.6

Net cash from / (used in) investing activities

(798

)

(1,000

)

Current quarter

Year to date

(12 months)

US$ '000

US$ '000

3

Cash flows related to financing activities

3.1

Proceeds from issues of shares

-   NovaQuest Capital Management, L.L.C.

—

10,000

-   Tasly Pharmaceutical Group

—

20,000

3.2

Proceeds from issue of convertible notes

—

—

3.3

Proceeds from exercise of share options

—

258

3.4

Transaction costs related to issues of shares, convertible notes or options

—

(608

)

3.5

Proceeds from borrowings

-   NovaQuest Capital Management, L.L.C.

—

28,950

-   Hercules Capital, Inc.

—

14,622

3.6

Repayment of borrowings

—

—

3.7

Transaction costs related to loans and borrowings

(32

)

(1,614

)

3.8

Dividends paid

—

—

3.9

Other (provide details if material)

—

—

3.10

Net cash from / (used in) financing activities

(32

)

71,608

Current quarter

Year to date

(12 months)

US$ '000

US$ '000

4

Net increase / (decrease) in cash and cash equivalents for the period

4.1

Cash and cash equivalents at beginning of quarter (January 1, 2019)/beginning of year (July 1, 2018)

70,385

37,763

4.2

Net cash from / (used in) operating activities (item 1.9 above)

(19,085

)

(57,789

)

4.3

Net cash from / (used in) investing activities (item 2.6 above)

(798

)

(1,000

)

4.4

Net cash from / (used in) financing activities (item 3.10 above)

(32

)

71,608

4.5

Effect of movement in exchange rates on cash held

(44

)

(156

)

4.6

Cash and cash equivalents at end of quarter

50,426

50,426

Current quarter

Previous quarter

US$ '000

US$ '000

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

5.1

Bank balances

50,002

69,961

5.2

Call deposits

—

—

5.3

Bank overdrafts

—

—

5.4

Other (Term deposits)

424

424

5.5

Cash and cash equivalents at end of quarter (should equal item 4.6 above)

50,426

70,385

Current quarter

US$ '000

6

Payments to directors of the entity and their associates

6.1

Aggregate amount of payments to these parties included in item 1.2

381

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

Payment to directors (for the current quarter) = $381,000

Current quarter

US$ '000

7

Payments to related entities of the entity and their associates

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

not applicable

Total facility amount

at quarter end

Amount drawn

at quarter end

US$ '000

US$ '000

8

Financing facilities available

Add notes as necessary for an understanding of the position

8.1

Loan facilities

115,000*

80,000*

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.

*Loan facility with Hercules Capital, Inc.

On March 6, 2018, Mesoblast entered into a Loan and Security Agreement with Hercules Capital, Inc. (“Hercules Capital”) for a US$75.0 million secured four-year credit facility. Mesoblast drew the first tranche of US$35.0 million on closing. An additional US$15.0 million was drawn during Q1 CY2019, and a further US$25.0 million may be drawn on or before Q4 CY2019, as certain milestones are met.

As at June 30, 2019, the interest rate remains at 10.45% as reported in the last quarter there was no change in the U.S prime rate in the quarter.

*Loan facility with NovaQuest Capital Management, L.L.C.

On June 29, 2018, Mesoblast entered into a Loan and Security Agreement with NovaQuest Capital Management, L.L.C. (“NovaQuest”) for a non-dilutive US$40.0 million secured eight-year term loan. Mesoblast drew the first tranche of US$30.0 million of the loan on closing. An additional US$10.0 million from the loan will be drawn on marketing approval of remestemcel-L by the United States Food and Drug Administration (FDA).

Prior to maturity in July 2026, the loan is only repayable from net sales of remestemcel-L (MSC-100-IV) in the treatment of pediatric patients who have failed to respond to steroid treatment for acute Graft versus Host Disease (aGvHD), in the United States and other geographies excluding Asia. Interest on the loan will accrue at a rate of 15% per annum with the interest only period lasting 4 years. Interest payments will be deferred until after the first commercial sale. The financing is subordinated to the senior creditor, Hercules Capital.

US$ '000

9

Estimated cash outflows for next quarter

9.1

Research and development

(6,317

)

9.2

Prouct Manufacturing and operating costs

(2,031

)

9.3

Manufacturing commercialisation

(3,362

)

9.4

Advertising and marketing

(684

)

9.5

Leased assets

—

9.6

Staff costs

(1,759

)

9.7

Other expenses from ordinary activities

(3,658

)

9.8

Other (provide details if material):

(a) Intellectual property portfolio expenses

(636

)

(b) Interest expenses

(1,341

)

9.9

Total estimated cash outflows

(19,788)*

•

R&D tax incentive (US$1.5 million was received from the Australian Government in July 2019).

•

royalty receipts earned on sales of TEMCELL® HS Inj. ¹ in Japan; and

•

interest income receipts.

Acquisitions

Disposals

US$ '000

US$ '000

10

Acquisitions and disposals of business entities

(items 2.1(b) and 2.2(b) above)

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

—

—

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.

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.