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Quarterly report for entities subject to Listing Rule 4.7B
Introduced 31/03/00 Amended 30/09/01, 24/10/05, 17/12/10, 01/09/16
Consolidated statement of cash flows
| Current quarter | Year to date (9 months) | |||||||||
| US$ '000 | US$ '000 | |||||||||
| 1 | Cash flows from operating activities | |||||||||
| 1.1 | Receipts from customers | |||||||||
| - milestone receipts from Tasly Pharmaceutical Group | - | 20,000 | ||||||||
| milestone receipts from Takeda Pharmaceutical Company Limited | - | 5,409 | ||||||||
| milestone receipts from JCR Pharmaceuticals Co., Ltd. | - | 1,000 | ||||||||
| royalty receipts | 1,220 | 3,321 | ||||||||
| 1.2 | Payments for: | |||||||||
| (a) research and development | (13,428 | ) | (40,246 | ) | ||||||
| - includes the costs of the three Tier 1 Phase 3 programs in advanced chronic heart failure, chronic low back pain and acute graft vs host disease. | ||||||||||
| (b) manufacturing commercialisation | (2,268 | ) | (9,111 | ) | ||||||
| (c) advertising and marketing | - | - | ||||||||
| (d) leased assets | - | - | ||||||||
| (e) staff costs | (2,112 | ) | (7,701 | ) | ||||||
| (f) other expenses from ordinary activities | (3,074 | ) | (8,988 | ) | ||||||
| (g) other: | (605 | ) | (1,627 | ) | ||||||
| - intellectual property portfolio expenses | ||||||||||
| 1.3 | Dividends received (see note 3) | - | - | |||||||
| 1.4 | Interest received | 201 | 494 | |||||||
| 1.5 | Interest and other costs of finance paid | (1,123 | ) | (2,906 | ) | |||||
| 1.6 | Income taxes paid | - | (3 | ) | ||||||
| 1.7 | Government grants and tax incentives | - | 1,654 | |||||||
| 1.8 | Other provide details if material) | - | - | |||||||
| 1.9 | Net cash from / (used in) operating activities | (21,189 | ) | (38,704 | ) |
Quarterly report for entities subject to Listing Rule 4.7B
| Current quarter | Year to date (9 months) | |||||||||
| US$ '000 | US$ '000 | |||||||||
| 2 | Cash flows from investing activities | |||||||||
| 2.1 | Payment to acquire: | |||||||||
| (a) property, plant and equipment | (90 | ) | (202 | ) | ||||||
| (b) businesses (see item 10) | - | - | ||||||||
| (c) investments | - | - | ||||||||
| (d) intellectual property | - | - | ||||||||
| (e) other non-current assets | - | - | ||||||||
| 2.2 | Proceeds from disposal of: | |||||||||
| (a) property, plant and equipment | - | - | ||||||||
| (b) businesses (see item 10) | - | - | ||||||||
| (c) investments | - | - | ||||||||
| (d) intellectual property | - | - | ||||||||
| (e) other non-current assets | - | - | ||||||||
| 2.3 | Cash flows from loans to other entities | - | - | |||||||
| 2.4 | Dividends received (see note 3) | - | - | |||||||
| 2.5 | Other (provide details if material) | - | - | |||||||
| (a) Payments for contingent consideration | - | - | ||||||||
| 2.6 | Net cash from / (used in) investing activities | (90 | ) | (202 | ) |
| Current quarter | Year to date (9 months) | |||||||||
| US$ '000 | US$ '000 | |||||||||
| 3 | Cash flows related to financing activities | |||||||||
| 3.1 | Proceeds from issues of shares | |||||||||
| - NovaQuest Capital Management, L.L.C. | - | 10,000 | ||||||||
| - Tasly Pharmaceutical Group | - | 20,000 | ||||||||
| 3.2 | Proceeds from issue of convertible notes | - | - | |||||||
| 3.3 | Proceeds from exercise of share options | - | 258 | |||||||
| 3.4 | Transaction costs related to issues of shares, convertible notes or options | - | (608 | ) | ||||||
| 3.5 | Proceeds from borrowings | |||||||||
| - NovaQuest Capital Management, L.L.C. | - | 28,950 | ||||||||
| - Hercules Capital, Inc. | 14,622 | 14,622 | ||||||||
| 3.6 | Repayment of borrowings | - | - | |||||||
| 3.7 | Transaction costs related to loans and borrowings | (37 | ) | (1,582 | ) | |||||
| 3.8 | Dividends paid | - | - | |||||||
| 3.9 | Other (provide details if material) | - | - | |||||||
| 3.10 | Net cash from / (used in) financing activities | 14,585 | 71,640 |
| Current quarter | Year to date (9 months) | |||||||||
| US$ '000 | US$ '000 | |||||||||
| 4 | Net increase / (decrease) in cash and cash equivalents for the period | |||||||||
| 4.1 | Cash and cash equivalents at beginning of quarter (January 1, 2019)/beginning of year (July 1, 2018) | 77,022 | 37,763 | |||||||
| 4.2 | Net cash from / (used in) operating activities (item 1.9 above) | (21,189 | ) | (38,704 | ) | |||||
| 4.3 | Net cash from / (used in) investing activities (item 2.6 above) | (90 | ) | (202 | ) | |||||
| 4.4 | Net cash from / (used in) financing activities (item 3.10 above) | 14,585 | 71,640 | |||||||
| 4.5 | Effect of movement in exchange rates on cash held | 57 | (112 | ) | ||||||
| 4.6 | Cash and cash equivalents at end of quarter | 70,385 | 70,385 |
+ See chapter 19 for defined terms.
01/09/2016 Appendix 4C Page 2
Quarterly report for entities subject to Listing Rule 4.7B
| Current quarter | Previous quarter | |||||||||
| US$ '000 | US$ '000 | |||||||||
| 5 | Reconciliation of cash and cash equivalents | |||||||||
| at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts | ||||||||||
| 5.1 | Bank balances | 69,961 | 76,598 | |||||||
| 5.2 | Call deposits | - | - | |||||||
| 5.3 | Bank overdrafts | - | - | |||||||
| 5.4 | Other (Term deposits) | 424 | 424 | |||||||
| 5.5 | Cash and cash equivalents at end of quarter (should equal item 4.6 above) | 70,385 | 77,022 |
| Current quarter | ||||||||
| US$ '000 | ||||||||
| 6 | Payments to directors of the entity and their associates | |||||||
| 6.1 | Aggregate amount of payments to these parties included in item 1.2 | 395 | ||||||
| 6.2 | Aggregate amount of cash flow from loans to these parties included in item 2.3 | - | ||||||
| 6.3 | Include below any explanation necessary to understand the transactions included in items 6.1 and 6.2 | |||||||
| Payment to directors (for the current quarter) = $395,000 |
| Current quarter | ||||||||
| US$ '000 | ||||||||
| 7 | Payments to related entities of the entity and their associates | |||||||
| 7.1 | Aggregate amount of payments to these parties included in item 1.2 | - | ||||||
| 7.2 | Aggregate amount of cash flow from loans to these parties included in item 2.3 | - | ||||||
| 7.3 | Include below any explanation necessary to understand the transactions included in items 7.1 and 7.2 | |||||||
| not applicable |
+ See chapter 19 for defined terms.
01/09/2016Appendix 4C Page 3
Quarterly report for entities subject to Listing Rule 4.7B
| Total facility amount at quarter end | Amount drawn at quarter end | |||||||||
| US$ '000 | US$ '000 | |||||||||
| 8 | Financing facilities available | |||||||||
| Add notes as necessary for an understanding of the position | ||||||||||
| 8.1 | Loan facilities | 115,000* | 80,000* | |||||||
| 8.2 | Credit standby arrangements | - | - | |||||||
| 8.3 | Other (please specify) | - | - | |||||||
| 8.4 | Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well. | |||||||||
| *Loan facility with Hercules Capital, Inc. On March 6, 2018, Mesoblast entered into a Loan and Security Agreement with Hercules Capital, Inc. ("Hercules Capital") for a US$75.0 million secured four-year credit facility. Mesoblast drew the first tranche of US$35.0 million on closing. An additional US$15.0 million was drawn during Q1 CY2019, and a further US$25.0 million may be drawn on or before Q4 CY2019, as certain milestones are met. As at March 31, 2019, the interest rate remains unchanged at 10.45%, as no changes in the U.S prime rate occurred in the quarter. *Loan facility with NovaQuest Capital Management, L.L.C. On June 29, 2018, Mesoblast entered into a Loan and Security Agreement with NovaQuest Capital Management, L.L.C. ("NovaQuest") for a non-dilutive US$40.0 million secured eight-year term loan. Mesoblast drew the first tranche of US$30.0 million of the loan on closing. An additional US$10.0 million from the loan will be drawn on marketing approval of remestemcel-L by the United States Food and Drug Administration (FDA). Prior to maturity in July 2026, the loan is only repayable from net sales of remestemcel-L (MSC-100-IV) in the treatment of pediatric patients who have failed to respond to steroid treatment for acute Graft versus Host Disease (aGvHD), in the United States and other geographies excluding Asia. Interest on the loan will accrue at a rate of 15% per annum with the interest only period lasting 4 years. Interest payments will be deferred until after the first commercial sale. The financing is subordinated to the senior creditor, Hercules Capital. |
| US$ '000 | ||||||||
| 9 | Estimated cash outflows for next quarter | |||||||
| 9.1 | Research and development | (10,288 | ) | |||||
| 9.2 | Manufacturing commercialisation | (4,451 | ) | |||||
| 9.3 | Advertising and marketing | - | ||||||
| 9.4 | Leased assets | - | ||||||
| 9.5 | Staff costs | (1,865 | ) | |||||
| 9.6 | Other expenses from ordinary activities | (3,159 | ) | |||||
| 9.7 | Other (provide details if material): | |||||||
| (a) Intellectual property portfolio expenses | (833 | ) | ||||||
| (b) Interest expenses | (1,335 | ) | ||||||
| 9.8 | Total estimated cash outflows | (21,931)* |
* In the next quarter, Mesoblast's cash and cash equivalents will be augmented by the following cash receipts:
The company remains in advanced negotiations with a number of potential commercial partners
+ See chapter 19 for defined terms.
01/09/2016 Appendix 4C Page 4
Quarterly report for entities subject to Listing Rule 4.7B
regarding potential transactions and access to non-dilutive capital. Mesoblast does not make any representation or give any assurance that such a partnering transaction will be concluded.
Up to an additional US$35.0 million is available to Mesoblast subject to achievement of certain milestones, under the financing arrangements with Hercules Capital and NovaQuest. Refer to 8.4 for further details.
Mesoblast established an equity facility in 2016 with Kentgrove Capital for up to A$120.0 million/US$90.0 million over the next 3 months to be used at its discretion to provide additional funds as required.
1 TEMCELL HS. Inj. is a registered trademark of JCR Pharmaceuticals Co. Ltd.
| Acquisitions | Disposals | |||||||||
| US$ '000 | US$ '000 | |||||||||
| 10 | Acquisitions and disposals of business entities | |||||||||
| (items 2.1(b) and 2.2(b) above) | ||||||||||
| 10.1 | Name of entity | - | - | |||||||
| 10.2 | Place of incorporation or registration | - | - | |||||||
| 10.3 | Consideration for acquisition or disposal | - | - | |||||||
| 10.4 | Total net assets | - | - | |||||||
| 10.5 | Nature of business | - | - |
Compliance statement
Sign here:/s/ Charlie HarrisonDate: 30 April 2019
Print name:Charlie Harrison
+ See chapter 19 for defined terms.
01/09/2016Appendix 4C Page 5