meso-6k_20190331.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 6-K

 

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

under the Securities Exchange Act of 1934

Filed in the month of May 2019 for the period ended March 31, 2019

Commission File Number 001-37626

 

Mesoblast Limited

(Exact name of Registrant as specified in its charter)

 

Not Applicable

(Translation of Registrant’s name into English)

Australia

(Jurisdiction of incorporation or organization)

Silviu Itescu

Chief Executive Officer and Executive Director

Level 38

55 Collins Street

Melbourne 3000

Australia

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F:

Form 20-F  Form 40-F 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes   No 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes   No 

 

 

 

 


 

TABLE OF CONTENTS

 

 

 

Page

Currency of Presentation and Certain Defined Terms

 

3

Forward-Looking Statements

 

3

Financial Statements

 

5

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

36

Risk Factors

 

65

Signatures

 

99

 

Page 2


 

QUARTERLY REPORT ON FORM 6-K

FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2019

 

Currency Presentation and Certain Defined Terms

In this Quarterly Report on Form 6-K, references to “U.S.” or “United States” are to the United States of America, its territories and its possessions.  References to “US$” or “dollars” or “U.S. dollars” are to the legal currency of the United States, references to “€” or “Euro” are to the legal currency of the European Union and references to “A$” or “Australian Dollars” are to the legal currency of Australia. Our financial statements are presented in U.S. dollars and are prepared in accordance with the International Financial Reporting Standards as issued by the International Accounting Standards Board, or “IFRS”. References to a particular “fiscal” year are to our fiscal year ended June 30 of such year.

All references to “we”, “us”, “our”, “Mesoblast” or “the Group” shall mean Mesoblast Limited (ABN 68 109 431 870) and its subsidiaries. We own or have rights to trademarks and trade names that we use in connection with the operation of our business, including our corporate name, logos, product names and website names. Other trademarks and trade names appearing in this Quarterly Report are the property of their respective owners.  

Forward-Looking Statements

This Quarterly Report on Form 6-K includes forward-looking statements that relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Words such as, but not limited to, “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “targets,” “likely,” “will,” “would,” “could,” and similar expressions or phrases identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and future events and financial trends that we believe may affect our financial condition, results of operation, business strategy and financial needs. Forward-looking statements include, but are not limited to, statements about:

 

the initiation, timing, progress and results of our preclinical and clinical studies, and our research and development programs;

 

our ability to advance product candidates into, enroll and successfully complete, clinical studies, including multi-national clinical trials;

 

our ability to advance our manufacturing capabilities;

 

the timing or likelihood of regulatory filings and approvals, manufacturing activities and product marketing activities, if any;

 

the commercialization of our product candidates, if approved;

 

regulatory or public perceptions and market acceptance surrounding the use of stem-cell based therapies;

 

the potential for our product candidates, if they are approved, to be withdrawn from the market due to patient adverse events or deaths;

 

the potential benefits of strategic collaboration agreements and our ability to enter into and maintain established strategic collaborations;

 

our ability to establish and maintain intellectual property on our product candidates and our ability to successfully defend these in cases of alleged infringement;

 

the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates and technology;

 

our ability to obtain additional financing;

 

estimates of our expenses, future revenues, capital requirements and our needs for additional financing;

 

our financial performance;

 

developments relating to our competitors and our industry;

Page 3


 

 

the pricing and reimbursement of our product candidates, if approved; and

 

other risks and uncertainties, including those listed under the caption “Risk Factors” included elsewhere in this Quarterly Report on Form 6-K.

You should read thoroughly this Quarterly Report on Form 6-K and the documents that we refer to herein with the understanding that our actual future results may be materially different from and/or worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements. Other sections of this Quarterly Report on Form 6-K include additional factors which could adversely impact our business and financial performance. Moreover, we operate in an evolving environment. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. The forward-looking statements made in this Quarterly Report on Form 6-K relate only to events or information as of the date on which the statements are made in this Quarterly Report on Form 6-K. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Page 4


 

Consolidated Income Statement

(unaudited)

 

 

 

 

 

Three Months Ended

March 31,

 

Nine Months Ended

March 31,

 

(in U.S. dollars, in thousands, except per share amount)

 

Note

 

2019

 

 

2018

 

2019

 

 

2018

 

Revenue

 

3

 

 

1,249

 

 

 

1,070

 

 

14,755

 

 

 

15,641

 

Research & development

 

 

 

 

(14,407

)

 

 

(16,798

)

 

(48,380

)

 

 

(48,388

)

Manufacturing commercialization

 

 

 

 

(3,193

)

 

 

(1,709

)

 

(12,910

)

 

 

(3,387

)

Management and administration

 

 

 

 

(5,256

)

 

 

(6,033

)

 

(15,998

)

 

 

(16,688

)

Fair value remeasurement of contingent consideration

 

3

 

 

(2,718

)

 

 

(822

)

 

(3,352

)

 

 

7,880

 

Other operating income and expenses

 

3

 

 

(82

)

 

 

152

 

 

(1,060

)

 

 

1,243

 

Finance costs

 

3

 

 

(2,768

)

 

 

(423

)

 

(7,906

)

 

 

(423

)

Loss before income tax

 

3

 

 

(27,175

)

 

 

(24,563

)

 

(74,851

)

 

 

(44,122

)

Income tax benefit

 

4

 

 

2,205

 

 

 

3,426

 

 

5,778

 

 

 

29,666

 

Loss attributable to the owners of Mesoblast Limited

 

 

 

 

(24,970

)

 

 

(21,137

)

 

(69,073

)

 

 

(14,456

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Losses per share from continuing operations attributable

   to the ordinary equity holders of the Group:

 

 

 

Cents

 

 

Cents

 

Cents

 

 

Cents

 

Basic - losses per share

 

10

 

 

(5.00

)

 

 

(4.47

)

 

(14.02

)

 

 

(3.12

)

Diluted - losses per share

 

10

 

 

(5.00

)

 

 

(4.47

)

 

(14.02

)

 

 

(3.12

)

 

The above consolidated income statement should be read in conjunction with the accompanying Notes.

Page 5


 

Consolidated Statement of Comprehensive Income

(unaudited)

 

 

 

 

 

Three Months Ended

March 31,

 

Nine Months Ended

March 31,

 

(in U.S. dollars, in thousands)

 

Note

 

2019

 

 

2018

 

2019

 

 

2018

 

Loss for the period

 

 

 

 

(24,970

)

 

 

(21,137

)

 

(69,073

)

 

 

(14,456

)

Other comprehensive (loss)/income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Items that may be reclassified to profit and loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Changes in the fair value of financial assets

 

 

 

 

85

 

 

 

74

 

 

280

 

 

 

141

 

Exchange differences on translation of foreign operations

 

 

 

 

79

 

 

 

(69

)

 

(104

)

 

 

(569

)

Other comprehensive (loss)/income for the period,

   net of tax

 

 

 

 

164

 

 

 

5

 

 

176

 

 

 

(428

)

Total comprehensive losses attributable to the

   owners of Mesoblast Limited

 

 

 

 

(24,806

)

 

 

(21,132

)

 

(68,897

)

 

 

(14,884

)

 

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying Notes.

Page 6


 

Consolidated Statement of Changes in Equity

(unaudited)

 

(in U.S. dollars, in thousands)

 

Note

 

Issued Capital

 

 

Share Option

Reserve

 

 

Investment

Revaluation

Reserve

 

 

Foreign

Currency

Translation Reserve

 

 

Retained

Earnings

 

 

Total

 

Balance as of July 1, 2017

 

 

 

 

830,425

 

 

 

69,919

 

 

 

(303

)

 

 

(38,373

)

 

 

(344,902

)

 

 

516,766

 

Profit/(loss) for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,456

)

 

 

(14,456

)

Other comprehensive income/(loss)

 

 

 

 

 

 

 

 

 

 

141

 

 

 

(569

)

 

 

 

 

 

(428

)

Total comprehensive profit/(loss) for the period

 

 

 

 

 

 

 

 

 

 

141

 

 

 

(569

)

 

 

(14,456

)

 

 

(14,884

)

Transactions with owners in their

   capacity as owners:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contributions of equity net of transaction costs

 

 

 

 

49,019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

49,019

 

 

 

8

 

 

49,019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

49,019

 

Transfer of exercised options

 

 

 

 

38

 

 

 

(38

)

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of share-based payments

 

 

 

 

 

 

 

5,109

 

 

 

 

 

 

 

 

 

 

 

 

5,109

 

Reclassification of modified options to liability

 

 

 

 

 

 

 

125

 

 

 

 

 

 

 

 

 

 

 

 

125

 

 

 

 

 

 

38

 

 

 

5,196

 

 

 

 

 

 

 

 

 

 

 

 

5,234

 

Balance as of March 31, 2018

 

8

 

 

879,482

 

 

 

75,115

 

 

 

(162

)

 

 

(38,942

)

 

 

(359,358

)

 

 

556,135

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of July 1, 2018

 

 

 

 

889,481

 

 

 

75,974

 

 

 

21

 

 

 

(39,276

)

 

 

(380,192

)

 

 

546,008

 

Profit/(loss) for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(69,073

)

 

 

(69,073

)

Other comprehensive income/(loss)

 

 

 

 

 

 

 

 

 

 

280

 

 

 

(104

)

 

 

 

 

 

176

 

Total comprehensive profit/(loss) for the period

 

 

 

 

 

 

 

 

 

 

280

 

 

 

(104

)

 

 

(69,073

)

 

 

(68,897

)

Transactions with owners in their

   capacity as owners:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contributions of equity net of transaction costs

 

 

 

 

19,441

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19,441

 

 

 

8

 

 

19,441

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19,441

 

Transfer of services rendered in shares

 

 

 

 

1,170

 

 

 

(1,170

)

 

 

 

 

 

 

 

 

 

 

 

 

Transfer of exercised options

 

 

 

 

313

 

 

 

(313

)

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of share-based payments

 

 

 

 

 

 

 

4,386

 

 

 

 

 

 

 

 

 

 

 

 

4,386

 

Reclassification of modified options to liability

 

 

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

 

 

 

1,483

 

 

 

2,907

 

 

 

 

 

 

 

 

 

 

 

 

4,390

 

Balance as of March 31, 2019

 

8

 

 

910,405

 

 

 

78,881

 

 

 

301

 

 

 

(39,380

)

 

 

(449,265

)

 

 

500,942

 

 

The above consolidated statement of changes in equity should be read in conjunction with the accompanying Notes.

Page 7


 

 

(in U.S. dollars, in thousands)

 

Note

 

Issued Capital

 

 

Share Option

Reserve

 

 

Investment

Revaluation

Reserve

 

 

Foreign

Currency

Translation Reserve

 

 

Retained

Earnings

 

 

Total

 

Balance as of January 1, 2018

 

 

 

 

878,989

 

 

 

73,946

 

 

 

(236

)

 

 

(38,873

)

 

 

(338,221

)

 

 

575,605

 

Profit/(loss) for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(21,137

)

 

 

(21,137

)

Other comprehensive income/(loss)

 

 

 

 

 

 

 

 

 

 

74

 

 

 

(69

)

 

 

 

 

 

5

 

Total comprehensive profit/(loss) for the period

 

 

 

 

 

 

 

 

 

 

74

 

 

 

(69

)

 

 

(21,137

)

 

 

(21,132

)

Transactions with owners in their

   capacity as owners:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contributions of equity net of transaction costs

 

 

 

 

455

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

455

 

 

 

 

 

 

455

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

455

 

Transfer of exercised options

 

 

 

 

38

 

 

 

(38

)

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of share-based payments

 

 

 

 

 

 

 

1,200

 

 

 

 

 

 

 

 

 

 

 

 

1,200

 

Reclassification of modified options to liability

 

 

 

 

 

 

 

7

 

 

 

 

 

 

 

 

 

 

 

 

7

 

 

 

 

 

 

38

 

 

 

1,169

 

 

 

 

 

 

 

 

 

 

 

 

1,207

 

Balance as of March 31, 2018

 

8

 

 

879,482

 

 

 

75,115

 

 

 

(162

)

 

 

(38,942

)

 

 

(359,358

)

 

 

556,135

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of January 1, 2019

 

 

 

 

909,235

 

 

 

78,860

 

 

 

216

 

 

 

(39,459

)

 

 

(424,295

)

 

 

524,557

 

Profit/(loss) for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(24,970

)

 

 

(24,970

)

Other comprehensive income/(loss)

 

 

 

 

 

 

 

 

 

 

85

 

 

 

79

 

 

 

 

 

 

164

 

Total comprehensive profit/(loss) for the period

 

 

 

 

 

 

 

 

 

 

85

 

 

 

79

 

 

 

(24,970

)

 

 

(24,806

)

Transactions with owners in their

   capacity as owners:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transfer of services rendered in shares

 

 

 

 

1,170

 

 

 

(1,170

)

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of share-based payments

 

 

 

 

 

 

 

1,191

 

 

 

 

 

 

 

 

 

 

 

 

1,191

 

 

 

 

 

 

1,170

 

 

 

21

 

 

 

 

 

 

 

 

 

 

 

 

1,191

 

Balance as of March 31, 2019

 

8

 

 

910,405

 

 

 

78,881

 

 

 

301

 

 

 

(39,380

)

 

 

(449,265

)

 

 

500,942

 

 

The above consolidated statement of changes in equity should be read in conjunction with the accompanying Notes.

Page 8


 

Consolidated Balance Sheet

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

(in U.S. dollars, in thousands)

 

Note

 

As of

March 31,

2019

 

 

As of

June 30,

2018

 

Assets

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

 

 

Cash & cash equivalents

 

5(a)

 

 

70,385

 

 

 

37,763

 

Trade & other receivables

 

5(b)

 

 

3,508

 

 

 

50,366

 

Prepayments

 

5(b)

 

 

11,634

 

 

 

12,942

 

Total Current Assets

 

 

 

 

85,527

 

 

 

101,071

 

 

 

 

 

 

 

 

 

 

 

 

Non-Current Assets

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

 

 

825

 

 

 

1,084

 

Financial assets at fair value through other comprehensive income

 

 

 

 

2,601

 

 

 

2,321

 

Other non-current assets

 

 

 

 

3,331

 

 

 

3,361

 

Intangible assets

 

6(a)

 

 

583,421

 

 

 

584,606

 

Total Non-Current Assets

 

 

 

 

590,178

 

 

 

591,372

 

Total Assets

 

 

 

 

675,705

 

 

 

692,443

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

 

 

Trade and other payables

 

5(c)

 

 

18,551

 

 

 

18,921

 

Provisions

 

 

 

 

6,592

 

 

 

5,082

 

Borrowings

 

5(d)

 

 

9,359

 

 

 

 

Deferred consideration

 

6(c)

 

 

10,000

 

 

 

 

Total Current Liabilities

 

 

 

 

44,502

 

 

 

24,003

 

 

 

 

 

 

 

 

 

 

 

 

Non-Current Liabilities

 

 

 

 

 

 

 

 

 

 

Deferred tax liability

 

6(b)

 

 

14,301

 

 

 

20,079

 

Provisions

 

 

 

 

45,742

 

 

 

42,956

 

Borrowings

 

5(d)

 

 

70,218

 

 

 

59,397

 

Total Non-Current Liabilities

 

 

 

 

130,261

 

 

 

122,432

 

Total Liabilities

 

 

 

 

174,763

 

 

 

146,435

 

Net Assets

 

 

 

 

500,942

 

 

 

546,008

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

 

 

Issued Capital

 

8

 

 

910,405

 

 

 

889,481

 

Reserves

 

 

 

 

39,802

 

 

 

36,719

 

(Accumulated losses)/retained earnings

 

 

 

 

(449,265

)

 

 

(380,192

)

Total Equity

 

 

 

 

500,942

 

 

 

546,008

 

 

The above consolidated balance sheet should be read in conjunction with the accompanying Notes.

Page 9


 

Consolidated Statement of Cash Flows

(unaudited)

 

 

 

 

 

Nine months ended

March 31,

 

(in U.S. dollars, in thousands)

 

Note

 

2019

 

 

2018

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

 

 

Commercialization revenue received

 

 

 

 

3,321

 

 

 

2,529

 

Milestone payment received

 

 

 

 

26,409

 

 

 

6,125

 

Research and development tax incentive received

 

 

 

 

1,654

 

 

 

 

Payments to suppliers and employees (inclusive of goods and

   services tax)

 

 

 

 

(67,672

)

 

 

(63,719

)

Interest received

 

 

 

 

493

 

 

 

266

 

Interest paid

 

 

 

 

(2,906

)

 

 

 

Income taxes (paid)

 

 

 

 

(3

)

 

 

(25

)

Net cash (outflows) in operating activities

 

7(b)

 

 

(38,704

)

 

 

(54,824

)

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

 

 

Investment in fixed assets

 

 

 

 

(202

)

 

 

(174

)

Payments for contingent consideration

 

 

 

 

 

 

 

(543

)

Net cash (outflows) in investing activities

 

 

 

 

(202

)

 

 

(717

)

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

 

 

Proceeds from borrowings

 

 

 

 

43,572

 

 

 

31,704

 

Payments of transaction costs from borrowings

 

 

 

 

(1,582

)

 

 

(40

)

Proceeds from issue of shares

 

 

 

 

30,258

 

 

 

40,566

 

Payments for share issue costs