Hello, and welcome to the financial results for the period ended March 31, 2020, and corporate update for Mesoblast. An announcement and presentation has been lodged with the ASX and are also available on the Home and Investor pages at www.mesoblast.com. [Operator Instructions] Later, we'll conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions]. Before we begin, let me remind you that in 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 such statements. With that, I would like to turn the call over to Dr. Silviu Itescu, Chief Executive Executive of Mesoblast. Please go ahead.

Thank you, operator. And welcome everybody to the financial and operational highlights for the third quarter ended March 31, 2020. We could go to slide four, please. This slide highlights the three pillars that underpin Mesoblast's technology platform and our product pipeline. Our innovative platform is based on allogeneic mesenchymal precursor cells and their progeny, mesenchymal stem cells, which are well-characterized immunomodulatory mechanisms of action and which allows to target the most severe and life-threatening inflammatory conditions. Underpinning this is a very global strong intellectual property estate. Our lead product candidate is Ryoncil, being developed for pediatric steroid-refractory acute graft-versus-host disease. A BLA has been filed with the FDA and the FDA has designated this as under priority review with an approvable PDUFA date set for September. If approved, launch for this product will be in 2020. We have industrialized scale manufacturing in place to meet the commercial demand for the product and we have learned greatly from the continued growth in royalty revenues from the similar product in Japan where it's been sold by our licensee for acute graft-versus-host disease. Beyond GVHD, we have a plan in place for lifecycle extension for remestemcel-L for pediatric and adult inflammatory conditions. We'll be talking a lot today about a Phase III trial that is ongoing in 300 patients using remestemcel-L in acute respiratory distress syndrome due to COVID-19. In addition, two additional product candidates are in Phase III trials, one for heart failure, one for chronic inflammatory back pain with both with near-term US readouts. Next slide please. This slide identifies the mechanism of action of our product candidates and our platform technology. Our cellular therapies are activated by multiple inflammatory cytokines through surface receptors. This results in orchestration of an anti-inflammatory cascade and a concomitant down-regulation of multiple arms of…

Thanks, Silviu. It's truly an exciting time at Mesoblast. Turning to slide 10, I've highlighted items from our income statement where we've seen tremendous growth in revenue and reduction in our operating loss for the nine months ended March 31, 2020. Total revenue grew 113% to $31.5 million from $14.8 million for the year-earlier period. The key components of total revenue are commercialization revenue and milestone revenue. Commercialization revenue which is royalty revenue collected from JCR Pharma for their product TEMCELL grew 81% over the period -- in the period -- in the period over period comparison, growing to $5.9 million for the nine month period. from $3.3 million for the year-earlier period. Milestone revenue from our strategic partnerships grew 127% to $25 million from $11 million. The milestone revenue of the current nine months period reflects the $15 million upfront payment from Grunenthal received in late 2019. And also are recognizing $10 million of revenue related to our license agreement with Tasly Pharmaceuticals. Regarding nonrevenue highlights, we had a 34% reduction in loss after-tax, this was partially driven by the increased revenue, as well as due to a reduction in R&D expense, which declined by $7.5 million or 15% when compared to the year-earlier period. When looking at the three month period from March 31 -- three month period ended March 31, 2020, we observe a sharp increase in total revenue, growing tenfold from $1.2 million to $12.2 million. The increase was due to the inclusion of the Tasly upfront payment, but also 100% growth in royalty revenue to $2.1 million from JCR Pharmaceuticals for sales of their product TEMCELL used for the treatment of GVHD in Japan. Moving to slide 11. We'll pause for a moment to review our relationship with JCR, a Japanese company focused on commercializing…

Thank you, Josh. Joining us also on this call is Dr. Fred Grossman, our Chief Medical Officer and he will be available to discuss together with me any questions around our operations in the Q&A session. Let's go straight to slide 15. So acute graft-versus-host disease remains a significant problem and a market opportunity for our lead product Ryoncil. Slide 16 please. To just reemphasize, the fundamental problem here is that severe inflammatory grades C/D disease results in severe mortality risk, up to 90% mortality in grade D disease and these mortality outcomes have not changed over the past few years. Given that inflammatory therapies target the most severe degree of inflammation, we are focusing our therapies on these severe grades of the disease where mortality continues to be a problem. Next slide. In our Phase III trial, remestemcel-L in 55 children failing steroids 89% of whom grade C/D disease demonstrated significant benefit in terms of day 28 overall response and day 100 survival. And these outcomes were superior to those from a matched cohort of children -- matched grade disease severity in a contemporaneous consortium called the magic consortium across the US and Europe. Day 28 response was significantly better in our Phase III trial, as well as day 100 survival. Next slide, please. These data together with published data from two other studies, one where Ryoncil was used in an open label fashion in patients who had failed multiple biologics, again, with 80% of Grade C/D disease. And the third study where Ryoncil was used as first-line therapy in a randomized placebo-controlled Phase III trial of 260 adults and children with steroid-refractory acute graft-versus-host disease. All three studies provide the support to the BLA that has been filed for Ryoncil with the FDA and that is under priority…

Thank you. Your first question comes from Louise Chen from Cantor. Please go ahead.

Hi. Thanks for taking my questions here. So my first question for you is how fast do you think this ARDS trial will enroll? And when can we expect to see an internal readout here? Second question is, we often get asked by investors, which data set do you expect to see first, the heart failure or chronic low back pain? And if you can't say, if you could just help us think through that, that would be great. And last question here is that, you had noted that in December 2019, your Phase III heart failure trial surpassed a number of primary endpoints for completion. I'm just curious what needs to be done from that point on to the middle of this year before we can see the results. Thank you.

Thank you. So those are three sets of questions. Let's take the first question to Dr. Grossman. Fred, could you address the [Indiscernible] in ARDS trial and interim analysis, please?

Yes, Silviu. Thank you for the question, Louise. So as mentioned before, the study has started, and patients have been recruited. We're expecting, as noted before, the study to be completed in three to four months. We are carefully choosing the top medical centers and many of which are in hot spots around the country in North America, and we're recruiting up to 300 patients across 30 sites. In terms of the interim analysis, the first interim analysis will be when 30% have completed the primary efficacy variable. That should take about two months or so. And at that point, depending on how many have completed, an independent board will be reviewing the data for substantial efficacy and utility. And at that point, if there's substantial efficacy, then they may recommend that the study stops.

And then we could go to your second question, Louise. Second question was, which of the two trials really, that first hearts or back pain. And I would say we're not in control of those. And really, it's partly the same with your third question, which was, since the minimum number of events were accrued in December, how long will it take you to close the trial out. The minimum number is great that we allowed -- we needed to have all patients followed up for at least 12 months in a [half-way-trial] the last patient, 12 months follow-up could, I believe, end of January, early February. So we had a requirement for 12 months follow-up with more patients. And that meant that we weren't in a position to start closing out that trial until after the last patient had its 12-month visit. And so we will have something like 10%, 15% of primary endpoint events more than the minimum requirement by the FDA. It's really a good thing. And the team is very much in the process of cleaning up the data and interfacing with the CRO with responsibility, it is to ensure that all data are accurate and error free. And to do that, they have to verify lots of components, obviously, at the sites, at the source. And that goes with both the heart failure program and the back pain program. And that's currently being completed. Fred, do you have anything that you'd like to add to that?

No, I think that covered it. We want to make sure that the data are pristine, and we have a very robust process to make sure that all the data are clean. And that at the end of the day, when it's analyzed, the results are robust and perfect.

Thank you very much.

Thank you. Your next question comes from Jeffrey Cohen from Ladenburg Thalmann. Please go ahead.

Hi, Silviu, Josh and Fred. How are you?

All right. Thank you.

So few questions. Fred, can you talk to us a little bit about the ARDS trial and give us a sense of the size of the subset that we know about there, at least in the United States as far as the ARDS subset from the total patient population or the total hospitalized population. And then, can you remind us of the date or the time between the two infusions, at least in the short trial among 12 patients and talk to us about the number of sites which you currently have, I think you stated that you have up to 30. And the kind of time frame you think we will see. I think you said three to four months and what kind of look might you get to look at or you're going to look at? Thank you.

Yes. Thank you for that question. So let me start with the dosing first. So the dosing and the criteria that we used for the 12 patients is the same dosing and criteria that we're using for the randomized placebo-controlled trial. Patients receive two doses of remestemcel-L separated by three to five days in the first week. So the first week, they will have received two doses, both in the 12-patient emergency IND, as well as in the randomized clinical trial. The clinical trial -- the randomized clinical trial, as mentioned before, is across 30 sites. Many of these sites are in hotspot areas. So, as you know, across the country there are some states where the number of hospitalizations are flat or going down somewhat, others where it's going up. It's certainly predicted that none of the country is opening up, that there's going to be some spikes. So we're making sure that we're covering most of the country so that we can hopefully get those patients enrolled in our study. It's very hard to determine what the total number of COVID ARDS patients there are. But obviously, it's very substantial. We're hearing now that in Alabama, for example, the ICUs are full. So this is a very substantial population. I'll point out that we're focusing on the severe cases. We're focusing on those with moderate to severe ARDS. There's no one in that space. There's no competition in that space, and hence, there's a tremendous medical need to come up with treatments that reduce the mortality because, as mentioned by Silviu before, the mortality is quite high. So depending on the pace of enrollment, as we noted before, we expect the enrollment to complete in three to four months. And then allowing for another month after that for the last patient to get to the 30-day period, that's about the time that the study will complete, analyze the data, we have both primary and secondary outcomes measures in that trial. As noted before, we are including interim analysis. And the first interim will be when 30% of the subjects have met or completed the primary efficacy variable. That said, that would be about 90 to 100 patients. And depending on the enrollment, I'm anticipating anywhere from two months or so. Again, it depends on the enrollment for the first interim look, and that will be by an independent committee. If they determine based on general criteria of efficacy and futility, that the studies would stopped for efficacy, then that will be their recommendation. And at that point, we will make a decision to perhaps stop the trial and move forward with our discussions for a potential approval in COVID ARDS. Did I answer your question?

That's very helpful. Yes. It's very helpful. A couple more follow-ons. One, is second interim look at 60% or 70%? And then in addition, could you give us a sense of how many IRBs are locked in as of today?

We have three interim looks during this trial. So the interim looks are going to occur at 30%, 45% and 60%. So there's quite a few periods where the independent board is going to look this data. And the reason that we've built this into it, it was based on the signal, the strong signal we saw in the 12 patients. If it holds up, then it's quite possible that this study could start early. However, we're planning for the study to go to completion and cover those 300 patients. But again, we can hear very early that the study is to be stopped. I'm sorry, what was the second question that you asked?

Can you give us a sense of the number of IRBs?

Yes. I mean we're recruiting sites very quickly. We started fast, there's tremendous interest in the study. So we're getting calls from many sites around the country who want to take part in this, because, as I noted before, there's no one in the space. Most of the other studies, whether they are antivirals or other treatments, are including milder patients as well as those who are critical. We're focusing purely on those that are on ventilators, who are moderate to severe ARDS. And therefore, there are many sites that are engaged. We have quite a few sites already signed up. We have many patients who are in the trial, and we look forward to continuing this pace.

Okay. Got it. So one more question, if I may, on a different topic. I guess for Silviu on the VAS score. Could you talk to us a little bit about if the data comes out positive mid year, is that going to be enough to file within your opinion to the agency here? And could we also, just to contrast in greater detail, what stage you'd be going after with the available as far as the heart failure stage and any IMAT classifications? Thank you.

Sure. Thank you. See, it's a common theme of what we're targeting in terms of each disease area, requiring the most severe patients where alternatives don't exist. We've done that with severe end-stage and severe advanced grades GVHD C/D disease. We're doing that with COVID-19 ARDS, severe ARDS with a very high mortality rate. And we're also doing that with severe heart failure. The patient groups we have enrolled are those patients somewhere between 80% to 85% who has got very severe, very large [Indiscernible] and a substantial risk of mortality over an 18 to 24 month period, very much the mortality risk that resembles in many ways in certain cancers. And these patients have progressed through this advanced stage despite our maximum existing standard of care therapies. We've even gone beyond this group of patients in patients who are otherwise know about it but being capitalized really on unofficial mechanical devices and retentive devices. And in that setting, again, we've seen strong signal of efficacy as I stated earlier. So we -- I think we've seen a significant benefit in mortality in this 566-person trial, together with the date that we have already seen in the ischemic end-stage heart failure patients with LVAD, it's the totality of the data that will potentially allow us to have a really meaningful discussion with the agency.

Okay. That's it from me. Thanks very much for taking the questions.

Thank you.

Thank you. Your next question comes from Jason Folger from Dawson James Securities. Please go ahead.

Hi, guys. Thank you so much. Really appreciate all your hard work. It's been a terrible pandemic. With that said, there's a couple of questions I have. I know that you guys are highly connected, and some of your Board members are highly connected to DoD and BARDA. And I'm just trying to understand what the interest level might be for a BARDA procurement. What -- at the end of data? And how long does the US government wait to get data? This is not -- do they wait for a completion of a clinical trials? Do they get good interim data and make a procurement effort? How much time are you spending in Washington? How active is that process?

It's a fairly complex question there, Jason. I would start out by saying, clearly, data drive any discussions with BARDA and procurement. And I think we have those discussions ongoing. But I think the disease needs to be looked at in various ways. COVID-19 and ARDS is clearly the major focus for us and for regulators, ultimately, for the government at large. If we can make a meaningful impact on mortality and get these patients off ventilators and out of ICU, that will have a tremendous impact on the healthcare utilization as well as patient well-being, of course, and outcomes. Beyond that, there's the opportunity to use the product for not just to COVID-19 but in Influenza ARDS and more broader causes of ARDS including, sepsis, bacterial sepsis, etc. So this is the beginning of a discussion and whether the right approach is stockpiling, which is what you're referring to, versus our ability to manufacture sufficient product through capacity expansion, that is the commercial initiative, together with strategic commercial parties or a combination of both, a partnership with commercial pharmaceutical companies in the space, together with the US government. It's a combination of all those thing is may be the way to go. But I think it's -- we are in discussions with parties that are both global, commercial and government. And I think the clinical data will underpin those outcomes. We are well financed now to put in place the initial manufacturing requirements that will underpin the capacity. Initially, it's required for meeting the outcome [indiscernible] positive.

Yes. Silviu, I mean, your answer makes perfect sense, and that's exactly how I would answer the question as a scientist or as a clinician. But I also know, these are unusual times and politically, things can move very, very rapidly. Let me ask a slightly different question to Dr. Grossman. One of the really interesting things that's becoming understood is that many of these patients who do come out of ventilators and induced comas have many, many other after effects. So it would be really, really interesting to be able to not only analyze mortality, but the many, many secondary endpoints that will determine, not only if patients recover faster and are not necessarily as acute and whether they recover more completely and fully. And so can you touch a little bit in terms of the things that you're tracking, even if they're not kind of the primary endpoint and top of mind?

Yes. First of all, I agree with you. I think that many of these patients, in fact, when they come off a ventilator, have sequela for quite some time. One of the reasons that in our trial and in the 12 patients, we have a treatment initiated with remestemcel-L within 72 hours of being on a ventilator is because we want rapid resolution of treatment. And as you heard before, there was a median number of days of 10 days off of a ventilator. But longer you're on the ventilator, the greater the chance of having long-term effects, such as fibrosis. So we're gearing our treatment early in the process of patients being on a ventilator. Also in our randomized clinical trial, we have a whole variety of secondary outcome measures, including 60 and 90 days post ventilation, beyond just mortality. We're looking at a variety of factors. We're also looking at biomarkers, which are really critical here because as you heard before, these cells are stimulated by cytokines and they release anti-inflammatory factors. And we want to measure what they are, and we're doing so in the study. So I agree fully with you. It's very important to look at the long-term effects, but we're trying to get to these patients early so that we can have complete resolution beyond just reducing mortality, which, in and of itself, is important.

Understood. Thank you Dr. Grossman. And the last question, Silviu. And I'm gritting my teeth to ask that, but I think I should ask it, and I think you should address it. U.S.-China relations right now are pretty tenuous. There's a lot of crazy stuff going on, whether it's Hong Kong or whether it's US trade or whether it's source of COVID. How could this or might this affect you and your relationship with Tasly? And I did hear you say that you realized the milestone from Tasly, I think that's positive. How is Mesoblast protecting this deal and protecting its intellectual property going forward?

Look, we have an excellent relationship with Tasly. And I certainly don't want to discuss politics in this call one way or the other, but our relationship with Tasly is a commercial one and it's an excellent relationship. In terms of intellectual property, our arrangement with respect to the initial phase of at least to provide products on a commercial arms length basis in terms of supply. Over time, we will work out our arrangements with respect to commercial manufacturing and distribution. And certainly, protection of intellectual property is a critical aspect of the relationship, and I have no reason to think that this relationship will continue to be anything but strong and growth areas at over time.

Okay. Good. And one last question. And first of all, congratulations to you and Josh on raising capital. I think that made a lot of sense given that we live in the stock price. When I look at the risk and the reward in the stock, I'm very excited about what I believe is going to be very powerful results in COVID. But what -- and I know you've kind of addressed this, but I'd like to put it specifically in the frame of reference of what -- we're going to see COVID degenerative discontinued in congestive heart failure. We're going to see that data all coming together in about the same time. It would be really interesting to know what data might come when in terms of the sequence. But I guess that's not really up to you. But how do you look at that?

Well, I think the most important thing to look at in the short term is Mesoblast's go-to-market strategy, right? So our remestemcel-L product for steroids indication, GVHD, with a brand name Ryoncil is first and foremost the value drive for the company. We are in advanced discussions with the agency. We're under a priority review. The team is led by Dr. Grossman, he's [Indiscernible] to make interactions, discussions, responses. And the focus for the company is to get this product approved and success when we launch it. And we've invested in a targeted commercial sales force led by Eric Strati in our organization. That sales force will be focused on at least the 50% of transplant centers -- sorry, the 15 sites in the US that do 50% of the pediatric transplants. We have invested in inventory to support the successful launch. And that's clearly the short-term value driver for the company. And then the value driver beyond that will be ensuring that there's appropriate data to support label extensions for the product. And broadening of the indications, and COVID-19 ARDS is an example of that. Our ability to leverage the many uses of safety and efficacy data generated with remestemcel-L, not just for GVHD, but in other areas like Crohn's disease and inflammatory lung disease will allow us to move to new indications. And as you've seen, our partner in Japan have moved into areas like HIE, otherwise known as [new baby] syndrome and epidermolysis bullosa data to which we will have access and use for the US market. We intend to move hard to work with investigator, with the leaders in this space to generate the kind of data that will support label expansions for the product, underpinning all of that will have to be our manufacturing strategy. And that's a major rationale for why we raise capital recently. We have to be able to invest in capacity enlargement and contractual discussions are under way, and we have to be in a position to anticipate positive readouts and not skip a beat with respect to the ability to have inventory to launch products for indications beyond the [Indiscernible]. And that includes, of course, COVID-19 ARDS. With respect to readouts in the Phase III trials, as we said, they're not under our control. What is under our control is successful launch, successful presentations to the agency, the successful ability to commercialize products and build them out into new areas and make sure that we generate the sort of revenue that this platform technology can deliver to -- for our stakeholders.

Thank you Silviu, Josh and Dr. Grossman. Thank you so much. Really appreciate the time today and really look forward to the interim analysis in ARDS related to COVID. It could be a real breakthrough for the globe. Thank you.

Thank you.

Thank you. Your last question comes from Tanushree Jain from Bell Potter Securities. Please go ahead.

Hi, Silviu, Josh and Fred. Thank for taking my questions. Just a couple of ones from me. Just on the GVHD, do you have any visibility about the advisory committee date of yet? And then just on the second one, given TEMCELL approved in Japan for GVHD, is there any plans or discussions with JCR to pursue the COVID-19 ARDS opportunity for Japan? And then my last question is just on the manufacturing. Over the next two quarters, I guess, Josh, this is more for you, before we see the ARDS trial results and I think also assuming that there is possibility that the trial could be stopped early for efficacy on an interim analysis. I guess, how should we be looking at these spend on increasing the manufacturing capacity over the next two quarters?

So can I have Fred to address the first question, please?

Yes. The advisory committee is planned for August. We're in discussions right now with the FDA regarding format and content. And we're really looking forward to presenting to the committee.

Josh, could you address the spend over the next period, please?

Sure. I think I'll echo some of Silviu's comments from earlier. It's important to make sure that we have the capacity to meet the requirements of our maturing pipeline, including this opportunity to treat ARDS in COVID-19 patients. At this point, we don't have any contractual arrangements, but we're working on putting them in place, and we'll provide updates to the market as we do so.

Tanu, did that address those questions?

Just the JCR one as well, and I think then I'll just have a follow-up for Josh with respect to the contractual obligations. Are we just going to look at adding, I guess, another manufacturing sweep way loans? Or are you also going to be considering other self manufacturers?

Maybe I can address that, Tanu, for you first. So there's obviously ability to build that capacity in Singapore with the existing arrangements with Lonza. But we're -- given the importance of COVID-19 in the US, we are looking at having expansion capabilities for production in the US. And so we're in discussions with multiple parties, including Lonza, of course, in the US to access those facilities, existing and otherwise for increased production for remestemcel-L and its applications as well as down the track for other of our important products with high volumes. So those discussions are under way and we're evaluating other options. The question with JCR, we have a very strong relation with JCR. They are primarily focused on orphan indication as a company strategically. And that has driven so far the interest in acute GVHD, epidermolysis bullosa and hypoxic ischemic encephalopathy, which [Indiscernible]. COVID-19 is not an orphan disease, obviously. And we've had initial discussions with JCR, but we're also having those discussions more broadly. And I think we'll update folks over time as to our strategic initiatives in Japan and the US, in Europe, etc, with respect to COVID-19.

That brings us to the end of today's call. I'll now hand back to Dr. Itescu for closing remarks.

Thank you very much. We really appreciate everybody's interest today. Clearly, the last three months have been incredibly busy and a strong quarter for us as a company. I think it puts Mesoblast well and truly at the forefront of providing a potential therapy to combat this devastating disease, COVID-19. And I think it speaks greatly to the strength of the underlying technology that Mesoblast was developing as well as the more than a decade of clinical data, which are being generated in terms of both safety and efficacy and understanding the mechanism of action, that allow it at a time of devastation. It's really the only word I can use that has been caused by COVID-19 pandemic. But we're able to exhibit and use all of our know-how and expertise and worked diligently and feverishly, really, to attempt to provide a therapeutic solution to the many, many, many patients who are affected by this virus and have a very high risk of death due to this terrible inflammatory condition of the lungs. And we hope to update the market as soon as we possibly can. Thank you very much.