Mesoblast : Annual Report to shareholders

ANNUAL REPORT 2019

COMMERCIALIZING ALLOGENEIC CELLULAR MEDICINES FOR INFLAMMATORY DISEASES

CONTENTS

MESSAGE FROM THE CHAIRMAN AND CHIEF EXECUTIVE	1
FORM 20-F	3
SHAREHOLDER INFORMATION	222
CORPORATE DIRECTORY	224

CORPORATE GOVERNANCE

Mesoblast Limited and its Board of Directors are committed to implementing and achieving an effective corporate governance framework to ensure that the Company is managed effectively and in an honest and ethical way.

The Company's Corporate Governance statement for the financial year ending 30 June 2019 has been approved by the Board and is available on our website at http://www.mesoblast.com/company/corporate-governance

MESSAGE FROM THE CHAIRMAN

AND CHIEF EXECUTIVE

Dr Silviu Itescu	Joseph R. Swedish
Chief Executive	Chairman

Dear shareholders,

We are pleased to share our achievements over the past year and update you on our strategic goals and objectives for this current fiscal year.

During the past year, Mesoblast initiated a rolling submission to the United States Food and Drug Administration (US FDA) for a Biologics License Application for remestemcel-L, our proprietary allogeneic mesenchymal lineage cell therapy for the treatment of steroid-refractory acute Graft Versus Host Disease (SR-aGVHD) in children. The BLA filing is expected to be completed by the end of 2019, paving the way for a potential first FDA approval and US market launch in 2020.

We have been very encouraged by the market success and adoption of the closely related allogeneic mesenchymal cell therapy TEMCELL HS Inj.®1 commercialized in Japan by our licensee JCR Pharmaceuticals. The insight gained from the commercial success of TEMCELL in the treatment of children and adults in Japan with SR-aGVHD has informed our efforts and strategies for the US market. Based on population size and pharmacoeconomic benefits, we believe the US represents approximately an eight-fold larger commercial opportunity than Japan.

Key to commercial success of our potential first US product launch will be establishment of a targeted sales force and manufacture of sufficient product inventory. We are building a targeted commercial organization to ensure appropriate promotional activities and reimbursement arrangements are in place. In addition, we have just entered into a commercial manufacturing agreement with Lonza to facilitate inventory build ahead of the planned US market launch of remestemcel-L,

as well as commercial supply to meet our long-term market projections.

Beyond our first generation mesenchymal stem cell therapy candidate remestemcel-L, we are completing Phase 3 trials of our second generation mesenchymal precursor cell therapy product candidates for chronic low back pain and advanced heart failure. Unlike the orphan indication SR-aGVHD, for which we are bringing remestemcel-L directly to market, these are high-volume indications for multi-billion dollar markets and,

if successful, will require leveraging existing commercial channels from partner organizations.

This strategy was recently validated by a significant commercial agreement with Grünenthal GmbH, a global leader in pain management, for development and commercialization of

our Phase 3 chronic low back pain allogeneic mesenchymal lineage cell therapy product candidate MPC-06-ID for Europe and Latin America. Under this strategic partnership, Mesoblast is eligible to potentially receive upfront and milestone payments exceeding US 1 billion and tiered double-digit royalties on sales within the covered territories, while retaining rights for the rest of the world, including the United States and Japan.

In 2018, we entered into a similar regional partnership with leading China cardiovascular company Tasly Pharmaceutical Group for the development, manufacture and commercialization of our Phase 3 cardiovascular product candidate Revascor

for advanced heart failure in China. The strategic partnership also included an upfront payment, success-based milestone payments, and double-digit royalties on net product sales.

These partnerships are based on a significantly maturing clinical pipeline and a world-leading intellectual property portfolio of nearly 1,000 patents and patent applications across all major jurisdictions covering composition of matter, manufacturing, and therapeutic applications of mesenchymal

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

MESOBLAST LIMITED 2019 ANNUAL REPORT 1

lineage cells. Partnerships such as those with Grünenthal and Tasly for our own second generation products, or with Takeda Pharmaceuticals for a cell therapy product to treat Crohn's related fistulae, provide significant value accretion to Mesoblast and our shareholders while positioning us for long-term success and sustainability. A major strategic corporate objective will be to continue to enter into additional partnerships, either regional or global, for these and our other advanced product candidates.

Collectively, our portfolio of cellular medicines targeting major diseases where the therapeutic need is greatest and where standard of care fails to improve patient quality of life or longevity, provides multiple opportunities for value creation through 2020. We look forward to the planned read-outs of our Phase 3 trials of our potential blockbuster cell therapies for advanced heart failure and chronic low back pain, and to the FDA review of our BLA submission for our first cell therapy slated for potential US market launch, remestemcel-L for SR-aGVHD.

Establishing our leading allogeneic cell therapy product portfolio has been possible through the passion of our clinical investigators, the trust of the patients who participate in our trials, and the foresight and dedication of our executive team and staff. In addition, we are deeply grateful for the support of our shareholders and our major institutional investors whose continued confidence has provided us with sufficient patient capital to enable successful execution of our commercial strategies.

We truly believe in the ability of our technology to establish cellular medicines that could transform the therapeutic landscape and improve the care and outcomes of patients who today have few or no treatment options.

Thank you for your support and investment in Mesoblast.

Sincerely,

Dr Silviu Itescu	Joseph R. Swedish
Chief Executive	Chairman

Mesoblast Board of Directors

Left to right: William Burns, Donal O'Dwyer, Michael Spooner,

Shawn Cline Tomasello, Silviu Itescu, Eric Rose and Joseph Swedish.

• MESOBLAST LIMITED 2019 ANNUAL REPORT

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

• REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

• ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2019

OR

• TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

• SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

For the transition period from to

Commission file number 001-37626

MESOBLAST LIMITED

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrant's name into English)

AUSTRALIA

(Jurisdiction of incorporation or organization)

Level 38, 55 Collins Street

Melbourne, VIC, 3000, Australia

Telephone: [phone]

(Address of principal executive offices)

Silviu Itescu

Chief Executive Officer

Telephone: [phone]; Fax: [phone]

Level 38, 55 Collins Street

Melbourne, VIC, 3000, Australia

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act. None

Securities registered or to be registered pursuant to Section 12(g) of the Act.

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
American Depositary Shares, each representing five Ordinary Shares*	MESO	The NASDAQ Global Select Market

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report. 498,626,208 Ordinary Shares

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

• Yes  No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of

1934.

• Yes  No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

• Yes  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

• Yes  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or an emerging growth company. See definition of "large accelerated filer," "accelerated filer," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer		Accelerated filer		Non-accelerated filer	
				Emerging growth company	

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

		International Financial Reporting Standards as issued by the International
U.S. GAAP		Accounting Standards Board		Other	

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17  Item 18 

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  No