UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Mesoblast Limited

/s/ Charlie Harrison

Charlie Harrison

Company Secretary

Item

99.1

Appendix 4C of Mesoblast Ltd, dated April 30, 2019

.

ABN

Quarter ended (“current quarter”)

68 109 431 870

31 March 2019

Current quarter

Year to date

(9 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

1,220

3,321

1.2

Payments for:

     (a)  research and development

(13,428

)

(40,246

)

          - 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

(2,268

)

(9,111

)

     (c)  advertising and marketing

—

—

     (d)  leased assets

—

—

     (e)  staff costs

(2,112

)

(7,701

)

     (f)  other expenses from ordinary activities

(3,074

)

(8,988

)

     (g)  other:

(605

)

(1,627

)

          - intellectual property portfolio expenses

1.3

Dividends received (see note 3)

—

—

1.4

Interest received

201

494

1.5

Interest and other costs of finance paid

(1,123

)

(2,906

)

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

(21,189

)

(38,704

)

Current quarter

Year to date

(9 months)

US$ '000

US$ '000

2

Cash flows from investing activities

2.1

Payment to acquire:

     (a)  property, plant and equipment

(90

)

(202

)

     (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

—

—

2.6

Net cash from / (used in) investing activities

(90

)

(202

)

Current quarter

Year to date

(9 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

14,622

3.6

Repayment of borrowings

—

—

3.7

Transaction costs related to loans and borrowings

(37

)

(1,582

)

3.8

Dividends paid

—

—

3.9

Other (provide details if material)

—

—

3.10

Net cash from / (used in) financing activities

14,585

71,640

Current quarter

Year to date

(9 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)

77,022

37,763

4.2

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

(21,189

)

(38,704

)

4.3

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

(90

)

(202

)

4.4

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

14,585

71,640

4.5

Effect of movement in exchange rates on cash held

57

(112

)

4.6

Cash and cash equivalents at end of quarter

70,385

70,385

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

69,961

76,598

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)

70,385

77,022

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

395

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) = $395,000

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 March 31, 2019, the interest rate remains unchanged at 10.45%, as no changes in the U.S prime rate occurred 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

(10,288

)

9.2

Manufacturing commercialisation

(4,451

)

9.3

Advertising and marketing

—

9.4

Leased assets

—

9.5

Staff costs

(1,865

)

9.6

Other expenses from ordinary activities

(3,159

)

9.7

Other (provide details if material):

(a) Intellectual property portfolio expenses

(833

)

(b) Interest expenses

(1,335

)

9.8

Total estimated cash outflows

(21,931)*

•

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.