Hello, and welcome to Mesoblast’s Financial Update and Operational Highlights Webcast for the Full Financial Year and Fourth Quarter Ended June 30, 2019. An announcement and slide presentation have been lodged with the ASX. These materials will also be available on the Investor page at www.mesoblast.com. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this conference call is being recorded. Before we begin, let me remind you that during today’s conference call, the company will be making forward-looking statements that represent the Company’s intentions, expectations or beliefs concerning future events. These forward-looking statements are qualified by important factors set forth in today’s announcement and the Company’s filings with the SEC, which could cause actual results to differ materially from those and such forward-looking statements. In addition, any forward-looking statements represent the Company’s views only as of the date of this webcast and should not be relied upon as representing the Company’s views of any subsequent date. The company specifically disclaims any obligations to update such statements. With that, I would now like to turn the call over to Dr. Silviu Itescu, Chief Executive of Mesoblast. Please go ahead.

Thank you, operator. Good morning, good afternoon, everybody, and thank you for joining us at the operational and financial results for the fiscal year ended June 30, 2019. With me is our Chief Financial Officer, Josh Muntner. If we could go straight to Slide 4, please. This is a snapshot of our corporate history. We have over a decade of scientific, manufacturing, clinical development and corporate development experience, which target and bring to market our allogeneic off-the-shelf cellular medicines for a raft of very severe inflammatory diseases. Next slide, our company is underpinned by three major factors. We have an innovative technology platform. We have a late-stage pipeline. And we have products already commercialized and underway. Our technology platform targets some of the most severe disease states that are currently refractory to conventional therapies. We have well-characterized multimodal mechanism of action, which we understand well and position ourselves to tackle these diseases that don’t respond well to other therapies. We have already initiated filing with the U.S. FDA for approval of our lead product candidate in the U.S. for steroid refractory acute graft versus host disease and we have two Phase 3 product candidates, one in heart failure and one in chronic lower back pain with near-term U.S. trial readouts, which we look forward to in the short term. In China, our Phase 3 product candidate for heart failure is partner with a major cardiovascular partner. With respect to commercialization, we are in the midst of building out our sales force in the U.S. for the potential launch of our graft versus host disease product if approved. We have industrial scale manufacturing to meet our commercial demand. We already have the first approved products commercialized by our licensees in Japan and Europe that I’ll tell you more about and we…

Thanks, Silviu. And thanks to everyone for joining our call today. I’m pleased to provide some highlights of our yearend financial results. As Silviu mentioned, we’re today – on Slide 14, as Silviu mentioned, we’re today reporting record royalty revenue received from JCR Pharma on sales of TEMCELL to treat GVHD in Japan. As shown on Slide 14, royalties from TEMCELL increased to $5 million for FY2019, a 37% increase over the prior year. We’re most excited by the growth that we’ve seen in the recent quarter, which led to a 54% increase in royalties for the most recent quarter to $1.7 million in royalties received. We think the continued growth we were seeing from JCR with TEMCELL in Japan is an important guidepost for how we may be able to perform if our product remestemcel-L is approved in the same indication in the U.S. Even though, we’d witnessed strong initial uptake for 2018 for TEMCELL, it appears to be the sort of product that has legs as it continues its upward trajectory. In addition to TEMCELL’s approved indication of steroid refractory GVHD. As Silviu mentioned, JCR is already looking for label extensions in two more settings, EB and HIE. We would also plan on exploring such uses in our future. We maintain a very positive outlook for the future of TEMCELL. Moving to Slide 15, we’re happy to share our overall revenue, which in addition the royalties include some significant upfront payments we’ve received in strategic partnerships. In 2019, we establish a partnership with Tasly Pharmaceuticals in China for our cardiac product, which brought in $20 million of cash. As noted here, we’ve recognized $10 million from the Tasly deal and we expect to recognize the remaining amount later this fiscal year. On Slide 16, I’ll walk through the…

Thanks, Josh. Now I’m going to spend some additional time on our commercialization plans for our lead product candidate remestemcel-L for acute graft versus host disease. In Slide 19, you see the significant market opportunity for this product candidate. Acute GVHD is a life-threatening complication that occurs in about 50% of patients receiving an allogeneic bone marrow transplant and there are over 30,000 allergenic bone marrow transplants performed globally. Steroid-refractory disease is associated with very high mortality rates, up to 90% in those patients with Grade C/D disease, where in fact we have the greatest efficacy we’ve observed in all of our studies to date. This opportunity, steroid-refractory acute graft versus host disease particularly in the most severe patients across the U.S. and Europe, we believe, it represents $700 million opportunity for the company. Now, the next slide shows the patient journey in the U.S. market, particularly in children. And as you can see, the development of graft versus host disease in children is not only a terrible clinical and emotional problem, but it also has terrific pharmacoeconomic impact on healthcare economics and in fact causes up to $500,000 in additional all-cause costs of treating such patients on top of the costs of a bone marrow transplant. We’ve performed results from studies with providers and payers that indicate that our product remestemcel-L receives near maximal rating on the following product attributes. The effect at day 28 overall response rate, particularly in Grade C/D disease patients, the excellent day 100 and day 180 survival rates, again, especially in these severe patients where typically survival rates are abysmal. The safety profile of the product with no increase in infections, the large clinical data set to date, the ability to administer the drug both as an outpatient and intravenously, avoiding the problems with…

Thank you. [Operator Instructions] Your first question comes from Jeffrey Cohen with Ladenburg. Please go ahead.

Hi Josh and Silviu, can you hear me, okay?

Yes, we can. Hi.

Wonderful, how are you? So I got a handful of questions. I’ll just kind of roll through them in a specific order. The end-stage heart failure of trial that you’re talking about via Mount Sinai, when could that start? That’s the confirmatory Phase 3 that you were speaking about.

Yes. So we have a Memorandum of Understanding with InCHOIR, which is the – it’s an NIH-funded organization that manages the surgical network for various trials. It is based at Mount Sinai. And we will be meeting in very short order to complete the agreements to initiate the study. The Phase 3 trial design is already in place. It was already provided to the FDA and I would expect that it will commence over the next few months.

Okay. In how many centers, do you expect that to be added in addition to Mount Sinai?

Oh, it’s very similar to the centers that were – that participated in the 159-patient trial. Mount Sinai is really an administrative site. At least 40 surgical centers have our protocol and have the standard operating procedure and participated in the last trial. And I expect all of those sites to participate in this coming trial. And in fact, putting the trial in place and getting it up and running should be fairly straightforward given the existing relationships.

Okay. Got it. And then moving along to a MPC-06 for lower back pain, you talked about results reading out into the public form in mid-2020, will there be any other information that we’ll see prior to that time period?

No, no. We were locked in. We’re only able to disclose the full dataset as it’s collided and reads out.

Okay. Got it. And then moving over to TEMCELL with JCR, so is it trying to think about how we should model out royalty revenue for 2020 maybe this is more appropriate for Josh. Just call it 20%, 30%, 40%, is kind of a good range to think about it. And then also, could you talk about potential timelines with the JCR and lease expanded labels for EB and HIE?

So the first question was around royalty rates, Jeff?

Not necessarily rates, but when we will expect to receive during 2020?

Yes. So we – it was a product that was introduced a few years ago had strong uptake and we were happy to see that uptake continue very, very nice growth for the most recent quarter. And we do expect continued growth over the course of the year. So yes, it should be a very nice ramp going forward. I don’t know if we could annualize this quarter necessarily right now, but it’s something that we’d anticipate that becoming a run rate going forward.

Yes, I think the point is that we don’t see any evidence of plateauing and that’s the nice message in the observation and I think let’s see how the next 12 months pan out. It’s clear that there is significant market adoption and use of the product in a large unmet medical need.

Got it. And then on – well go ahead.

Yes. So these two other indications EB, JCR has already filed for approval in that indication. We don’t – we’re not giving at this time any sort of guidance on timeline towards approval. But they did get through the Japanese regulatory authorities very, very quickly when they received approval for GVHD. For HIE, they’ve just began the clinical trial in July as we note. But this is one where we believe that they have some evidence and that’s why they wanted to expand the license agreement. These are orphan indications and they should be able to be prosecuted with small datasets.

Okay. Got it. So HIE will be your longer time frame but as far as EB, they filed already. So I guess, we would be optimistic over the coming quarters to hear about something there.

Yes.

Got it. Okay and then lastly, you were talking about revenue recognition, Josh, as far as the balance or the portion of the Tasly revenue recognition during 2020. Did you give a number or is there something that we should expect? I know what the whole agreement less what’s been received already during 2019.

Yes. So albeit of $20 million received upfront cash that came into door, the accountants had us call back some of that and so we have $10 million left to recognize that we needed to – doing that all within FY2020.

Then you’d expect that recognition comes evenly throughout the quarters?

It’ll be a lump, within the year.

Okay. Got it. And then one more, I’m just going to throw out there, no mentioned or we’ve seen nothing recently on cartilage repair. Do you expect to do any work there on that front in 2020 or is that also potentially one of the areas for perhaps a partner to carry forward?

Yes, I think we’ve got nice Phase 2 data in the two ends of osteoarthritis in patients with established osteoarthritis and meniscal repairs, who are the patients with the most accelerated risk of going onto total knee replacement. In that patient population, a published study showed a single injection of cells, allogeneic cells into the knee joint reduce the pain for at least two years significantly. And at the other end in much younger patients with traumatic knee injuries post an ACL there. Again, our published data showed that a single injection of our cells have – within a short period after surgery protected the knee for at least two years in terms of reduction in pain, and improve knee function and preservation of cartilage tissue. So we have proof-of-concept that these cells are highly effective in the knee arthritis environment. And yes, we are in discussions that we will seek to explore appropriate partnership for these the product for knee osteoarthritis, which really will require the type of partners, who have a major focus and interest in pain arthritis and tissue repair.

Okay. Silviu, Josh, thanks for taking the questions. I appreciate it.

Thank you.

Thank you. [Operator Instructions] Your next question comes from Matt Biegler with Oppenheimer. Please go ahead.

Yes. Hi, this is Kalpit on for Matt. Congrats on the progress guys. Just a quick one for me, could you provide some color on the clinical trial design for chronic GVHD? Perhaps go over the size of the trial, the end points, and then maybe what you see as the efficacy bar in this setting?

Yes. Look, we were very clear that this program will be an investigator-initiated study where the institution and investigator really is the sponsor and builds out the protocol. But I would say that – we will provide product, but I would say there is established data and literature that demonstrates that mesenchymal lineage cells have demonstrated efficacy in patients with chronic graft versus host disease, which is really an auto immune like disorder and requires likely monthly infusions for a period of let’s say six months or so. So it’s a protocol that is still to be developed and will be led by a leading investigator, Dr. Joanne Kurtzberg at Duke.

Okay, all right. Thank you.

Thank you.

Your next question comes from Swayampakula Ramakanth with H.C. Wainwright. Please go ahead.

Thank you. This is RK from HCW, and I’ve couple of questions.

Hi, RK.

Hi. So regarding the end-stage heart failure that I’m trying to prefer Revascor in that indication. Is it possible for us to get any idea of what the design could be or is it going to be something similar to what we had seen in the earlier stage study?

Yes. I think it’s going to be very closely aligned with the recent study. Really this is about confirming the data that we’ve shown in the last study. And you’ve seen the treatment benefit was of the order of I think 75% reduction in major bleeding events and 65% reduction related hospitalizations. The trial will be powered for that type of a treatment effect and whether it’s one to one or two to one randomization, et cetera, is still to be finalize. But I think those are the end points. The numbers of patients are going to be not that dissimilar from the last trial, but again, we’ll come back to the market with specifics.

And do you think there is an interim look in that study or we just have to wait for the year and a half or two years whether it takes to get the study to be completed?

Look, I think it’s a little bit early. The most important thing is that this should be a seamless initiation of this trial. All the sites and investigators pretty much are in place. And so I think recruitment is going to be fast. And then really it’s a question of how long the follow-up needs to be for. And if there is a rationale and a justification for an interim, we’ll consider it.

And regarding the advanced heart failure indication, I know you’ve stated that, the day – I mean the study could end by year end 2019. So can you give us a little bit color on how we would get to know about the results and also what is the current thinking about the regulatory pathway there?

Look there is a certain number of primary events that need to be accrued and that’s what we say that we’ve achieved 90% of them. So we are confident that we will meet the total number of necessary events by year’s end. And then we, of course have to go into data lock and the trial results will be then announced as soon as we can after that. The key primary endpoint is reduction in heart failure rate and hospitalizations. The key secondary endpoint is a reduction in terminal events, primarily mortality, that they’re a very well defined regulatory pathways for products that have a benefit on mortality in severe diseases like end-stage or advanced heart failure, just like that they are in oncology diseases. So let’s see what the results look like and then the strength of the data will inform on the regulatory pathway.

Thank you. I think that’s it. I think you’ve answered all my questions. Thank you.

Thank you.

Thanks, RK.

Your next question comes from Tanushree Jain with Bell Potter Securities. Please go ahead.

Hi Silviu and Josh, thanks for taking my questions. Just a couple from me. Silviu, can you confirm that InCHOIR is funding the confirmatory LVAD trial and I guess versus the last time, how much control would we have with regard to the timelines for our results from this trial?

Well. This is a company sponsored IND. We have the obligation with respect to the FDA and the regulatory documentation to ensure that the trial is run at the best possible way to meet our regulatory needs. We’ve already manufactured product. Product is ready to go for all the patients in the trial. And I think with respect to funding, the NIH, this is an NIH sponsored program today and I think the details of that, we’ll have to wait the final contractual arrangements between the parties.

Right. And second question, given that this is essentially the same product, which is your advanced heart failure trials, and that’s we’re expecting data, you said, in first quarter 2020, is there any chance given that the LVAD product could potentially reach the market for that you could look at this second product as potentially a label extension rather than a separate product approval?

Well, I think it’s very early days, right, to say that. And it really depends on the totality of the outcomes data from both studies. In an ideal world, if the safety data are there in very, very sick patients and if both programs provide the kind of efficacy that we’re looking for both in terms of meeting primary end points and more importantly, I think reducing mortality, then I think the data sets can absolutely be used to support each other submissions.

Great, thank you.

Your next question comes from Nicolette Quinn with Morningstar. Please go ahead.

Good morning. My first question is about how your view is of the Jakafi and product indication extension and how the pricing of that impact and the payers view in the U.S. market?

I think this is a great question and really important. So Jakafi was recently approved for its label extension into patients with acute graft versus host disease, on the basis of relatively small open label uncontrolled study. In that dataset that supported their submission to the FDA, those terrific efficacy seen in Grade B patients. But in fact, in Grade C/D disease, which is the severe disease, had seen in about half of the GVHD patients. Overall responses were half as good and survival really was not very different from what has been reported in the literature. In contrast, our entire focus pediatric study for example, 89% of that children were Grade C/D disease. Our expanded access program was predominantly Grade C/D disease, and efficacy in earlier studies was evidenced in Grade C/D disease. So our whole focus is in those very severe patients with C/D disease, where we’ve seen responder rates of something of the order of 70% and in those responder survival rates approaching 85%. So I’ll just remind you that in Grade D disease, in fact, survival can be as low as 10%. So these are substantial differences in our treatment versus published data and versus where Jakafi is establishing its market. So we see very segmented markets, early stage disease. Jakafi will establish its beachhead severe disease, we believe Mesoblast will be the product of choice both in adults and of course in children, because in children under 12, Jakafi is not approved and in fact has a very high toxicity. So we’re very clear about where the market potential and opportunity is for us in the U.S. market, both in all children as well as in the severe adult population, where there continues to be an unmet need mortality and where reimbursement is likely to remain at a premium.

Thanks very much for that. And my second question is on just, little unclear on the Revascor timelines. And maybe if you could just expand a little on the market size, not for end stage, but for actually for the addressable market for advanced heart failure.

Sure, sure. Advanced heart failure represents really predominantly grade three, grade four disease and very sick grade two the Class II disease. These patients have very large dilated left ventricles. They represent about 15% of the total heart failure pool, maybe as many as 1.3 million patients in the U.S. So that’s we’re targeting. We’re targeting patients with severe disease as large numbers of these patients and they’ve already fully maxed out on their existing therapy ACE inhibitors, beta blockers and even the new drug ENTRESTO from Novartis. These patients are now on the slippery slope, where they have mortality rates approaching 20%, if they’re in class three, four and 50% at one year, if they’re end stage. These patients need something to address the severe inflammation that happens in their myocardium, the inflammatory process is what we believe drives the severe progression of this disease from class three to class four to end stage to death. And this is exactly where we’ve seen a strong signal of efficacy in Phase 2 in a previously published manuscript in circulation research and the patient population that has been recruited in that 566 patients, in fact demonstrated very severe disease by systolic volume requirements. We believe that’s exactly, where ourselves are most likely to be effective. We had a positive readout on efficacy in the futility analysis earlier in the first 270 patients and look the strongest outcome that we possibly hopeful here is a reduction in mortality. If we see a reduction in mortality in this high mortality risk patient population, this becomes a potential blockbuster product.

Thank you.

Your next question comes from Marc Sinatra with Lodge Partners. Please go ahead.

Good morning, Silviu and Josh. Most of my questions have been asked. So I’m going to ask a fairly specific question, and more probably academic than anything else. In terms of end stage heart failure, you’ve been talking relatively about major GI bleeds in the most recent announcement. We’ve switched into talking about mucosal bleeding, which of course can occur in a number of areas. Do we see bleeding in other areas other than the GI, any other patients and how is that likely? How is the change in sort of that specific view to a macro view of bleeding, likely the influence study design and those sorts of things?

Thanks for that question. No. So the cause of mucosal bleeding in these patients is an abnormal vascular network called angiodysplasia that occurs throughout the entire mucosal gastrointestinal tract, meaning from the nose to the mouth to the throat to the gut. And it’s the same process throughout. What’s driving these abnormal blood vessels is the inflammation, systemic inflammation in these patients, the lack of blood flow to these organs and the response in these places by abnormal blood vessels that are then friable and because they’re heavily anticoagulated these patients, these blood vessels bleed heavily. And these patients require transfusions and hospitalization when they bleed. And that’s irrespective of whether they bleed in the gastrointestinal tract or in the nose. This is not small time nosebleeds. This is massive nosebleeds. Now the majority of patients get gastrointestinal bleeds, small minority get massive nosebleeds. But you combine them all into the term major mucosal bleeding, and I can tell you that in the last trial, the 159 patient trial, there were a handful of patients that had major nosebleeds, but these were major requiring transfusions. And the reduction in hospitalization that was seen was across all aggregated patients. So it is the endpoint that we want to address. It’s the endpoint of the FDA that we were already successful in and if the endpoint of the FDA sees as an approval primary endpoint.

Excellent, excellent, however, nosebleeds. And just one last question, I can’t remember whether it’s been asked, do you have an expected trial size? What is the indication yet or is that something that’s still – you’re still waiting?

Yes, I think that that’s the basis of the final discussions we will have with the InCHOIR Group in the NIH. We expect that the trial size will be a little bit larger than the last 159-patient trial, but in the same order of magnitude, using appropriate powering based on the treatment effect that we’ve just seen.

Beautiful. Thank you very much for that.

Terrific. Thank you very much. Operator, any other questions?

There are no further questions at this time. I’ll now hand back to Dr. Itescu for closing remarks.

Great. Look, thank you very much everybody for attending this call. We are very, very pleased with the financial results and with a strong progress that we’ve made operationally. And we have some very important upcoming milestones that I think will position the company to deliver tremendous returns and results in the coming fiscal year. Thank you, everybody.

That does conclude our conference for today. Thank you for participating. You may now disconnect.