Quarterly Cash Flow Report June 2016 Perth, Australia; 29 April 2016: Orthocell Limited s Quarterly Cash Flow Report for the quarter ended 30 June 2016 is attached. Orthocell is a commercial-stage, regenerative medicine company focused on delivering products for the repair and regeneration of a variety of bone, tendon, cartilage and soft tissue defects. Orthocell s portfolio of products include TGA-licensed cell therapies Autologous Tenocyte Implantation (Ortho-ATI ) and Autologous Chondrocyte Implantation (Ortho-ACI ), which aim to regenerate damaged tendon and cartilage tissue. The Company s other major product is Celgro TM, a collagen medical device which facilitates tissue repair and healing in a variety of orthopaedic, reconstructive and surgical applications and is being readied for first regulatory approvals. During the quarter, Orthocell received human ethics approval for the use of Celgro TM in a clinical trial for the treatment and augmentation of hip articular cartilages surgeries (Celgro TM Hip Study). The study is to be conducted in collaboration with a leading Australian orthopaedic surgeon and the St Vincent Hospital, Melbourne involving 25 patients and aims to demonstrate that Celgro TM can be used as an augment to hip cartilage surgery and is a safe and tolerable treatment. Orthocell is currently undertaking other clinical trials using Celgro TM to augment repair of the rotator cuff tendon (Celgro TM Rotator Cuff Tendon Study) and assist in guided bone regeneration in various dental implant procedures (Celgro TM Dental Study). The Celgro TM Hip Study is the third strategic clinical trial to be awarded human ethics approval and forms part of a comprehensive program to demonstrate the unique characteristics of CelGro and its competitive advantages of cell compatibility, high tensile strength and promotion of superior tissue ingrowth and repair. The company believes Celgro TM represents a breakthrough in regenerative medicine and a significant nearterm commercial opportunity in a global orthopaedic soft tissue repair market expected to be worth more than $US10 billion by 2020. In April 2016, the Company also announced the publication of a study in a respected journal further validating the Company s exciting pipeline Cell Factory concept and the production of off the shelf tissue specific growth factors to aid in the healing and regeneration of bone, tendon and cartilage. In May 2016, Orthocell received an R&D tax incentive cash refund of $1,507,774 for the financial year 2014/2015 further strengthening the Company s balance sheet. In June 2016, the Company released positive safety and tolerability results for its CelGro TM Rotator Cuff Tendon Clinical Study examining the use of CelGro TM to augment the repair of full thickness tears of the rotator cuff tendon in the shoulder. Also in June 2016, the Company announced the grant of key patents protecting the method of manufacturing of CelGro TM in China and the process of combining tendon stem cells seeded onto collagen based scaffolds for the repair of torn rotator cuff tendons within the shoulder in the US. Ph: +61 8 9360 2888 Fax: +61 8 9360 2899 www.orthocell.com.au
The Company is well positioned as a leader in musculoskeletal regenerative medicine with notable near term milestones for Celgro TM including a CE Mark submission, targeting approval in 2016 for the approval and sell CelgroTM in the EU to enhance guided bone regeneration within the jaw. For more information, please contact: General enquiries Paul Anderson Orthocell Limited, Managing Director P: (08) 9360 2888 E: paulanderson@orthocell.com.au to market Media enquiries Gavin Lower Buchan Consulting P: (03) 8866 1215 M: 0414 796 726 E: glower@buchanwe.com.au Investor Relations Ben Walsh Buchan Consulting P: + 61 468 422 865 E: bwalsh@buchanwe.com.au Ph: +61 8 9360 2888 Fax: +61 8 9360 2899 www.orthocell.com.au
Quarterly report for entities admitted on the basis of commitments Rule 4.7B Introduced 31/3/2000. Amended 30/9/2001, 24/10/2005. Name of entity ORTHOCELL LIMITED ABN Quarter ended ( current quarter ) 57 118 897 135 30 JUNE 2016 Consolidated statement of cash flows Current quarter Year to date Cash flows related to operating activities (12 months) 1.1 Receipts from customers inclusive of GST 77,904 923,722 1.2 Payments for suppliers and employees inclusive of GST (1,531,674) (5,938,693) 1.3 R&D tax rebate 1,507,774 1,507,774 1.4 Export Market Development Grant received 119,926 119,926 1.5 License fees received 4,309 4,309 1.6 Interest received 15,625 61,844 Net operating cash flows 193,864 (3,321,118) Cash flows related to investing activities 1.5 Payment for acquisition of: (a) intellectual property (b) property, plant & equipment (59,439) (873) (287,316) (40,958) Net investing cash flows (60,312) (328,274) 1.6 Total operating and investing cash flows 133,552 (3,649,391) Cash flows related to financing activities 1.7 Proceeds from issues of shares - 4,426,862 1.8 Payments for share equity costs - (369,766) Net financing cash flows - 4,057,096 Net increase (decrease) in cash held 133,552 407,704 1.9 Cash at beginning of quarter/year to date 5,048,260 4,774,108 1.10 Cash at end of quarter 5,181,812 5,181,812 Page 1
Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities Current quarter 1.11 Aggregate amount of payments to parties included in item 1.2 282,266 1.12 Aggregate amount of loans to the parties included in item 1.2-1.13 Explanation necessary for an understanding of the transactions Executive remuneration and non-executive director fees and consulting fees 282,266 Non-cash financing and investing activities 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows Not applicable 2.2 Details of outlays made by other entities to establish or increase their share in businesses in which the reporting entity has an interest Not applicable Financing facilities available Add notes as necessary for an understanding of the position. (See AASB 1026 paragraph 12.2). Amount available Amount used 3.1 Loan facilities - - 3.2 Credit standby arrangements - - Reconciliation of cash Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows. Current quarter Previous quarter 4.1 Cash on hand and at bank 5,181,812 5,048,260 4.2 Deposits at call - - 4.3 Bank overdraft - - 4.4 Other (Term deposit) - - Total: cash at end of quarter (item 1.23) 5,181,812 5,048,260 Page 2
Acquisitions and disposals of business entities Acquisitions (Item 1.9(a)) Disposals (Item 1.10(a)) 5.1 Name of entity Not applicable Not applicable 5.2 Place of incorporation or registration - - 5.3 Consideration for acquisition or disposal - - 5.4 Total net assets - - 5.5 Nature of business - - Compliance statement 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act (except to the extent that information is not required because of note 2) or other standards acceptable to ASX. 2 This statement does give a true and fair view of the matters disclosed. Sign here: Date: 29 July 2016 Print name: Simon Robertson Company Secretary Notes 1. The quarterly report provides a basis for informing the market how the entity s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report. 2. The definitions in, and provisions of, AASB 1026: Statement of Cash Flows apply to this report except for the paragraphs of the Standard set out below. 6.2 - reconciliation of cash flows arising from operating activities to operating profit or loss 9.2 - itemised disclosure relating to acquisitions 9.4 - itemised disclosure relating to disposals 12.1(a) - policy for classification of cash items 12.3 - disclosure of restrictions on use of cash 13.1 - comparative information 3. Accounting Standards. ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with. Page 3
SUMMARY OF KEY ACTIVITIES DURING THE QUARTER During the quarter the Company continued to progress the development of its lead products and pipeline opportunities with the following milestones noted: CelGro TM is a biological medical device developed and manufactured by Orthocell in Australia to address unmet clinical needs in the orthopaedic and general surgical soft tissue repair market. The global orthopaedic soft tissue repair market was worth approximately $US7 billion in 2013 and is expected to be worth more than $US10 billion by 2020. Orthocell received human ethics approval to conduct a clinical trial for the use of CelGro TM in the treatment and augmentation of articular cartilages surgeries (CelGro TM Hip Study) The study is to be conducted in collaboration with a leading Australian orthopaedic surgeon and the St Vincent Hospital, Melbourne. The study involves 25 patients and aims to demonstrate that CelGro TM can be used as an augment to hip cartilage surgery and is a safe and tolerable treatment. Orthocell is currently undertaking other clinical trials using CelGro TM to augment repair of the rotator cuff tendon (CelGro TM Rotator Cuff Tendon Study) and assist in guided bone regeneration in various dental implant procedures (CelGro TM Dental Study). The CelGro TM Hip Study is the third strategic clinical trial to be awarded human ethics approval and forms part of a comprehensive program to demonstrate that the collagen medical device has unique characteristics and competitive advantages of cell compatibility, tensile strength and promotion of quality tissue ingrowth and repair. In April 2016, the Company announced the publication of a study undertaken by leading researchers in the respected Journal ACS Applied Materials and Interfaces verifying that cell factory derived bioactive molecules in combination with a scaffold promotes bone healing. The publication further validates the Company s exciting pipeline product of generating tissue specific growth factors to aid in the healing and regeneration of bone, tendon and cartilage. This is another step towards the potential for an off the shelf product for doctors and patients seeking out cost effective treatments to alleviate symptoms that affect their mobility and quality of life. In May 2016, Orthocell received an R&D tax incentive cash refund of $1,507,774 for the financial year 2014/2015. The R&D refund strengthened the Company s balance sheet and increased the operational runway during a very active clinical trial program for its collagen platform technology, CelGro TM and cellular therapy for tendon regeneration, Ortho-ATI TM. In June 2016, the Company released positive safety and tolerability results for its CelGro TM Rotator Cuff Tendon Study examining the use of CelGro TM to augment the repair of full thickness tears of the rotator cuff tendon in the shoulder. The interim review included the first 3 patients at 42 days post operation and showed no complications demonstrating that the scaffold is safe and has been well tolerated with no inflammatory reactions or complications. Also in June 2016, the Company announced the grant of two international patents: 1. A Chinese patent for CelGro TM relating to the method of manufacture of novel bio-scaffolds to aid in the surgical repair of soft tissue injuries such as tendon, cartilage, bone and soft tissue, as well as the delivery of stem cells to relevant surgical sites and is entitled: Method for Producing a Collagen Membrane and Uses Thereof. 2. A key US patent for CelGro TM that protects the process of combining tendon stem cells seeded onto collagen based scaffolds for the repair of torn rotator cuff tendons within the shoulder and is entitled Tenocyte containing Bio-scaffolds and treatments using the same. The patent follows granted patents in Australia, Canada, Singapore, China and New Zealand which together provides a solid IP foundation for both Orthocell s tendon cellular therapy (Ortho-ATI TM ) and collagen based medical device platform CelGro TM. Page 4