Half Year Results- Conference Call, page-7

Hi All,
Following is extract from Bell Potter update.

Bell Potter update 27^thFebruary 2020

Mesoblast (MSB) 1H20Results broadly in-line, timelines for key catalysts reaffirmed andRecommendation Buy (unchanged) Price $2.44 Valuation $5.15 (unchanged) RiskSpeculative Analyst

Speculative See Key risks on Page 8 & Biotechnology Risk Warning on Page 10 Speculative securities may not be suitable for Retail clients

GICS SectorPharmaceuticals & Biotechnology

Expected Return Capital growth 111.1%

Dividend yield 0.0%

Total expected return 111.1%

Company Data &Ratios

Enterprise value $1.31bn

Market cap $1.31bn

Issued capital 537.1m

Free float 83.9%

Avg. daily val. (52wk) $3.07m

12 month price range $1.18- $3.21 Price Performance

BELL POTTER SECURITIES LIMITED ABN 25 006 390 7721 AFSL 243480 DISCLAIMER: THIS REPORT MUST BE READ WITH THE DISCLAIMER ON PAGE 10 THAT FORM PART OF IT INCLUDING THE FOLLOWING DISCLOSURE. DISCLOSURE: BELL POTTER SECURITIES ACTED AS LEAD MANAGER FOR MSB'S A$75M CAPITAL RAISE IN OCT'19 AND RECEIVED FEES FOR THAT SERVICE.

1H20 Results werebroadly in-line

Underlying Net loss of US$34.3m was modestly higher than our forecast loss of US$32.6m and was impacted by MSB deferring revenue recognition of US$2.5m milestone received from Grunenthal in Dec’19. Revenue of US$18.8m grew 42% over pcp driven by both higher royalty revenue from Japan for Temcell GvHD product and higher milestone revenue from partners. Temcell revenues continue to grow steadily each quarter and in 1H20 were up 73% over pcp. Operating costs were close to in-line with our forecasts and were 16% below pcp. Both R&D and manufacturing commercialisation spend decreased over pcp. MSB is funded through key inflexion points over next 12 months and beyond into 2HCY21 (1H20 cash of US$81.3m plus access to additional US$62.5m in debt financing and milestones from Grunenthal).

With 3 late stageassets approaching key inflexion points and a strong balance sheet, we believeCY20 could be a transformational year for MSB. Key catalysts:

a) approval and launch of Ryoncil for paediatric SR-aGvHD in US is expected in 2HCY20. An update on grant of priority review and a PDUFA date from FDA is expected by 3rd Apr ’20. Preparations for launch is ongoing (sales force is liaising with hospitals and payors and inventory is being built up with Lonza); b) Top line results from Revascor’s Phase 3 trial in advanced CHF patients is on track to report in midCY20 (final visits for all surviving patients has been initiated) and c) low back pain Phase 3 trial in US is also on track to report in mid-CY20 (with 24 month follow up to complete in Mar’20). We also believe there is high likelihood of additional cash injection through strategic partnerships over next 12 months given two major Phase 3 trials are expected to read out by mid-year. MSB remains in our Top-picks for the year. Revisions to our model resulted in a 9% increase in our Net Loss forecast for FY20 and a 9% decrease in our FY21 Net loss forecast, driven primarily by shifting US$5m revenue recognition of Grunenthal milestones from FY20 to FY21. Changes to our Net loss forecasts for FY22 was not material. Near term earning adjustments were offset by adjusting our DCF for time creep. Our valuation (rounded off) for MSB is unchanged at A$5.15/sh. We retain Buy (spec.).