Mesoblast Limited (ASX:MSB) And Cephalon, Inc. (NASDAQ:CEPH) Enter Into Strategic Alliance To Commercialize Novel Therapeutic Products For Regenerative Medicine

Melbourne, Dec 8, 2010 AEST (ABN Newswire) - Australian regenerative medicine company, Mesoblast Limited (ASX:MSB) (PINK:MBLTY) and global biopharmaceutical company, Cephalon, Inc. (NASDAQ:CEPH), today announced they have entered into a strategic alliance to develop and commercialize novel adult stem cell therapeutics for degenerative conditions of the central nervous and cardiovascular systems. These conditions include Parkinson's disease, Alzheimer's Disease, Congestive Heart Failure and Acute Myocardial Infarction. The alliance also extends to products for augmenting bone marrow transplantation in cancer patients.

Under the terms of the Development and Commercialization Agreement between the companies, in exchange for exclusive world-wide rights to commercialize specific products based on Mesoblast's proprietary adult stem cell technology platform, Cephalon will make an upfront payment to Mesoblast totaling US$130 million (US$30 million upon Mesoblast shareholder approval) and regulatory milestone payments of up to US$1.7 billion. Mesoblast will be responsible for the conduct and expenses of certain Phase IIa clinical trials and commercial supply of the products. Cephalon will be responsible for the conduct and expenses of all Phase IIb and III clinical trials and subsequent commercialization of the products. Mesoblast will retain all manufacturing rights and will share significantly in the net product sales.

In addition, under the terms of a Stock Purchase Agreement and a Subscription Deed, Cephalon will make an equity investment to purchase a 19.99% stake in Mesoblast at A$4.35 per share, totaling approximately US$220 million or A$223 million. This price represents a 45% premium to the last 30 days' volume weighted average price for Mesoblast shares. Cephalon has entered into a standstill agreement to limit its investment to 19.99% of Mesoblast common stock for the next 12 months, with a right to maintain its equity stake on a top up basis, subject to the Australian Securities Exchange. Cephalon Chief Operating Officer J. Kevin Buchi will join the Mesoblast Board of Directors, effective immediately.

"This global licensing agreement positions Cephalon as a leader in regenerative medicine while further strengthening our late stage pipeline with another innovative biologic platform," said J. Kevin Buchi, Chief Operating Officer, Cephalon. "Mesoblast has done an outstanding job of developing Phase II clinical data in congestive heart failure and hematopoietic stem cell transplants, plus preclinical data in acute myocardial infarction. We are excited to have the opportunity to develop potentially the world's first stem cell therapy for indications that could serve millions of patients globally."

Mesoblast Chief Executive Professor Silviu Itescu said: "Cephalon's demonstrated strength in late-stage product development and commercialization, and proven expertise in developing products for neurological diseases make Cephalon an ideal strategic partner for Mesoblast. We are therefore very pleased to partner with Cephalon in one of the largest biotechnology transactions of the past 12 months, and the largest ever in the regenerative medicine sector. We look forward to working with the Cephalon team to commercialize and deliver these products to physicians and the patients who will ultimately benefit from an arsenal of new innovative approaches for degenerative diseases."

Mesoblast will separately and with its own resources continue to develop, manufacture and commercialize the rest of its suite of adult stem cell products for bone and cartilage applications, diabetes, eye diseases, and inflammatory and immunological conditions.

Mesoblast will convene a shareholder meeting to consider the approval of the issue of shares to Cephalon in accordance with the terms of the Subscription Deed. The shareholder meeting is expected to take place in early 2011.

Mesoblast also advises that it has finalized the acquisition of its United States associate company, Angioblast Systems Inc.

Contact

Julie Meldrum Vice President, Corporate Communications Mesoblast Limited Tel: +61-3-9639-6036 Mob: +61-419-228-128 Email: julie.meldrum@mesoblast.com http://www.mesoblast.com