MESOBLAST OPERATIONAL HIGHLIGHTS AND FINANCIAL RESULTS FOR THE PERIOD ENDED MARCH 31, 2017 Melbourne, Australia

MESOBLAST OPERATIONAL HIGHLIGHTS AND FINANCIAL RESULTS

FOR THE PERIOD ENDED MARCH 31, 2017

Melbourne, Australia; May 25, 2017; and New York, USA, May 24, 2017: Mesoblast Limited (ASX: MSB; Nasdaq: MESO) today provided the market with operational highlights and financial results for the three and nine month reporting periods ended March 31, 2017. During the reporting period, the Company achieved a major milestone in its valuable heart failure Phase 3 program, maintained momentum in its additional Phase 3 trials, and continued to reduce spend.

During the first nine months of FY2017, the Company executed its planned operational streamlining and re-prioritization of projects to successfully absorb the incremental costs of the MPC-150-IM Phase 3 program in advanced chronic heart failure (CHF). Due to these measures, cash outflows for R&D product support costs, manufacturing, and management & administration were reduced for the nine months of FY2017 by US$16.4 million (24%), compared with the nine months of FY2016. For the third quarter of FY2017, cash outflows for the same operational activities were reduced by US$5.1 million (23%) compared with the third quarter of FY2016.

These savings enabled the Company to allocate sufficient funds for the CHF Phase 3 trial through to the successful interim futility analysis of the trial's efficacy endpoint in early April 2017.

After absorbing the incremental R&D costs associated with the CHF Phase 3 trial, together with increased spend on advancing the other Tier 1 product candidates in Phase 3 trials, total operating cash outflows were reduced by US$0.8 million as compared to the first nine months of FY2016.

As of March 31, 2017, the Company had cash reserves of US$69.1 million following a capital raising of approximately US$40 million. As previously announced, Mesoblast has established an equity facility for up to A$120 million/US$90 million, to be used at its discretion over the next two years to provide additional funds as required.

The Company intends to partner one or more of its four Tier 1 product candidates in order to increase cash reserves and further reduce cash burn. As previously announced, the Company is in exclusive negotiations with Mallinckrodt Pharmaceuticals in regard to a potential commercial and development partnership for two of its lead product candidates.

Key operational highlights for the quarter with respect to the Company's four Tier 1 product candidates were:

MPC-150-IM is being developed for advanced and end-stage chronic heart failure (CHF) in New York Heart Association (NYHA) Class II/III and Class IV patients:

MPC-300-IV is being developed for biologic refractory rheumatoid arthritis (RA):

MPC-06-ID is being developed for chronic low back pain (CLBP) due to disc degeneration:

MSC-100-IV is being developed for Acute Graft Versus Host Disease (aGVHD):

Financial Results for the Three Months Ended March 31, 2017 (third quarter) (in U.S. Dollars)

The Company continued to execute its planned operational streamlining and re-prioritization of projects to successfully absorb the incremental costs of the MPC-150-IM Phase 3 program in CHF. Due to these measures, cash outflows for R&D product support costs, manufacturing, and management & administration were reduced by $5.1 million (23%) for the third quarter of FY2017, compared with the third quarter of FY2016. These reductions comprised: $3.9 million within manufacturing and $1.2 million within R&D product support costs.

There was an improvement of $8.2 million (39%) in the loss before income tax for the third quarter of FY2017, compared with the third quarter of FY2016. This was primarily due to non-cash items that do not affect our cash reserves, such as remeasurement of contingent consideration, finance costs and foreign exchange movements within other operating income and expenses. Additional items which impacted the loss before income tax movement were:

Our net loss attributable to ordinary shareholders was $9.8 million, or 2.46 cents per share, for the third quarter of FY2017, compared with $16.9 million, or 4.49 cents per share, for the third quarter of FY2016.

Financial Results for the Nine Months Ended March 31, 2017 (the nine months) (in U.S. Dollars)

The Company continued to execute its planned operational streamlining and re-prioritization of projects to successfully absorb the incremental costs of the MPC-150-IM Phase 3 program in CHF. Due to these measures, cash outflows for R&D product support costs, manufacturing, and management & administration were reduced by $16.4 million (24%), compared with the nine months of FY2016. These reductions comprised: $11.1 million in manufacturing, $4.5 million within R&D product support costs and $0.8 million within management & administration.

There was an increase of $2.3 million (4%) in the loss before income tax for the nine months of FY2017, compared with the nine months of FY2016. This was primarily due to non-cash items that do not affect our cash reserves, such as remeasurement of contingent consideration, finance costs and foreign exchange movements within other operating income and expenses. Additional items which impacted the loss before income tax movement were:

Our net loss attributable to ordinary shareholders was $49.6 million, or 12.87 cents per share, for the nine months of FY2017, compared with $52.4 million, or 14.76 cents per share, for the nine months of FY2016.

Conference Call Details

Mesoblast will be hosting a conference call beginning at 8am AEST on May 25, 2017 / 6pm EST on May 24, 2017. The conference identification code is 528910.

The live webcast can be accessed via:

To access the call, please dial:

Forward-Looking Statements

This press release includes forward-looking statements that relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Forward-looking statements should not be read as a guarantee of future performance or results, and actual results may differ from the results anticipated in these forward-looking statements, and the differences may be material and adverse. You should read this press release together with our risk factors, in our most recently filed reports with the SEC or on our website. Uncertainties and risks that may cause Mesoblast's actual results, performance or achievements to be materially different from those which may be expressed or implied by such statements, and accordingly, you should not place undue reliance on these forward-looking statements. We do not undertake any obligations to publicly update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

For further information, please contact:

Corporate Communications

E: julie.meldrum@mesoblast.com

E: schond.greenway@mesoblast.com

Consolidated Income Statement

Consolidated Statement of Comprehensive Income

Consolidated Statement of Balance Sheet

Consolidated Statement of Cash Flows