MESO

Business Context and Reporting Period

Mesoblast Limited (Mesoblast) is a commercial-stage biotechnology company focused on developing allogeneic cellular medicines for inflammatory diseases. The company is incorporated in Australia and dual-listed on the Australian Securities Exchange (ASX) and the Nasdaq Global Select Market (ADS symbol: MESO). This summary covers the fiscal year ended June 30, 2026.

Key business developments during the period include the commercial launch of Ryoncil® (remestemcel-L) in the United States in March 2025, the first FDA-approved mesenchymal stromal cell (MSC) therapy. The company also advanced its pipeline, completing patient treatment in the Phase 3 trial for rexlemestrocel-L for chronic low back pain and receiving a Biologics License Application (BLA) filing number for rexlemestrocel-L in end-stage heart failure patients with left ventricular assist devices (LVAD).

Key Financial Metrics

Debt and Liquidity: As of June 30, 2026, the company held $102.9 million in cash. In December 2025 and June 2026, Mesoblast drew down a full $125.0 million five-year non-dilutive credit facility (8.00% fixed interest, interest-only through December 2030) to extinguish prior debt arrangements with Oaktree Capital and NovaQuest Capital. The company reports sufficient liquidity to fund operations for the next twelve months.

Material Changes vs. Prior Period

• Revenue Surge: Total revenue increased by 599% to $120.3 million, driven primarily by a $103.9 million increase in net product sales of Ryoncil® following its March 2025 launch. Royalty revenue decreased slightly by 14% due to lower sales of licensed products in Japan and Europe.
• Reduced Net Loss: The net loss narrowed by 44% to $57.5 million, despite significant increases in operating expenses. This improvement was aided by a $12.1 million gain from the fair value remeasurement of contingent consideration (compared to a $14.9 million loss in the prior year).
• Expense Growth: Research and Development (R&D) expenses surged 180% to $97.5 million, reflecting higher clinical trial costs, platform technology investments, and BLA filing preparations. Selling, General, and Administration (SG&A) expenses rose 46% to $57.3 million due to the build-out of the commercial organization for Ryoncil®.
• Debt Refinancing: The company successfully refinanced its debt, replacing higher-cost facilities with a lower-cost, longer-term credit line, reducing interest expense by 9% year-over-year.

Guidance, Outlook, and Risks

Outlook and Management Commentary: Management expects to continue incurring losses for the foreseeable future as it scales commercialization of Ryoncil® and advances late-stage product candidates. The company anticipates that existing cash reserves and Ryoncil® revenue will fund operations for the next 12 months. Strategic priorities include expanding Ryoncil® label indications (adult SR-aGvHD, Duchenne Muscular Dystrophy, IBD) and advancing rexlemestrocel-L for chronic low back pain and heart failure.

Key Risks and Contingencies:

• Profitability: The company has incurred accumulated losses of $1.07 billion since inception and may never achieve profitability.
• Capital Requirements: Additional financing will be required beyond the next 12 months to fund operations, which could result in shareholder dilution or restrictive debt covenants.
• Commercialization Execution: Success depends on market acceptance, reimbursement rates, and the ability to scale manufacturing and distribution for Ryoncil®.
• Regulatory and Clinical: Risks include failure to meet clinical endpoints for pipeline candidates, regulatory delays, or adverse safety findings post-approval.
• Supply Chain: Reliance on third-party manufacturers (Lonza) and single-source suppliers for critical materials (e.g., fetal bovine serum) poses supply disruption risks.

Investor Verification Checklist

• Cash Runway: Verify the sufficiency of the $102.9 million cash balance against the projected operating burn rate beyond the 12-month horizon.
• Ryoncil® Commercialization: Monitor the rate of patient enrollment, payer coverage expansion, and gross-to-net adjustments to assess revenue sustainability.
• Pipeline Milestones: Track the top-line results of the Phase 3 trial for rexlemestrocel-L in chronic low back pain (expected mid-2027) and the status of the BLA for the LVAD indication.
• Debt Covenants: Review the terms of the $125 million credit facility, specifically the interest-only period ending in 2030 and any potential triggers for additional financing.
• Manufacturing Capacity: Assess the scalability of the contract manufacturing agreement with Lonza to meet potential demand for Ryoncil® and future products.