Mesoblast Chief Executive Silviu Itescu said: "It has been a very busy quarter in which we have made substantial operational progress across our three lead Phase 3 assets. We have generated significant new potency and characterization data for our lead product Ryoncil (remestemcel-L) for children with acute GVHD, as requested by FDA, and will submit these data ahead of our planned meeting with FDA this quarter."

"Our second Phase 3 back pain trial with rexlemestrocel-L, aiming to confirm the durable pain reduction that was seen in the first Phase 3 trial, is underway. Finally, we were very pleased to have received a Rare Pediatric Disease (RPD) Designation from FDA for our cardiovascular product Revascor in children with life-threatening congenital heart disease, and plan to discuss the trial results in the context of a regulatory approval pathway."

FIANANCIAL REPORT

Strengthened Balance Sheet
Institutional Placement and Entitlement Offer completed raising A$60.3 million at an issue price of A$0.30 per share, including the completed retail component and top-up facility of the Entitlement Offer. The offer was well supported by existing shareholders, new institutional investors, and by Directors. Mesoblast Founder and Chief Executive Officer, Dr Silviu Itescu strongly supported the Entitlement Offer subscribing for A$3.0 million.

Cash balance at the end of the quarter was A$113.4 million (US$77.6 million).4

Cost containment strategy on-track
Cost containment strategies and payroll reductions have been enacted by management and the Board enabling continuation of Phase 3 programs for SR-aGVHD and CLBP in the quarter whilst still achieving reductions in net operating cash spend:

• Net operating cash spend of US$12.3 million for the quarter.
• 25% reduction in net operating cash spend from the comparative quarter in FY2023.
• 32% reduction in net operating cash spend from the comparative quarter in FY2022.
• On target to achieve a 23% ($15m) reduction in net operating spend in FY2024 compared to FY2023 which will be partially offset by investment in our Phase 3 programs for SR-aGVHD and CLBP.

We will maintain our focus on cutting costs and preserving cash in the remainder of the year whilst complimenting that with initiatives currently underway to increase cash inflows which would by design enable us to prudently invest in our Phase 3 programs for SR-aGVHD and CLBP. In this regard, we are working on corporate initiatives to strengthen our balance sheet, including royalty monetization and strategic partnerships to both access existing commercial distribution channels and supplement costs of development.

Revenues
Revenue from royalties on sales of TEMCELL HS Inj.5 sold in Japan by our licensee for the quarter were US$1.5 million. On a constant currency basis, royalties on sales were US$3.3 million for the six-month period ended December 31, 2023, a growth of 3% compared with US$3.2 million in the comparative period in FY2023.6