EQUITY RESEARCH INDUSTRY UPDATE

April 7, 2020 Biotechnology Therapy Could Bring COVID-19 Patients Companies mentioned: Back from the Brink – Maxim Group to Host Virtual ID Conference on May 5 CAPR Buy Target Price: $4.00 Summary Closing Price: $1.10 Market Cap (M): 9.8 • With COVID-19 cases continuing to surge in the US, with well over 360K cases Avg. Daily Volume: 783.1 and 10K+ deaths, much focus has been on the need for more testing, vaccines, MESO Buy and therapeutics. The latter is the focus of this report as a new potential Target Price: $16.00 treatment option is emerging, and its not an antiviral – it's stem cells. Closing Price: $6.16 Market Cap (M): 661.9 While antivirals will be a necessary component to fighting COVID-19, therapies Avg. Daily Volume: 188.8 • that modulate the severe immune response that is driving mortality are also PSTI Buy needed, creating a significant opportunity for the space. Target Price: $8.00 Closing Price: $3.36 • Our view has been that the cell therapy space other than T-cell therapies like Market Cap (M): 60.0 CAR-T, remains undervalued and is poised for inflection as pivotal data and Avg. Daily Volume: 308.9 potential approvals near. That said, the emerging opportunity in COVID-19 brings with it the potential not only to extend cell therapies to COVID-19, but also for several of the key players in cell therapy to be viewed on a global stage. Here, we review the cell therapy opportunity in COVID-19, including covered names Mesoblast (MESO - Buy), (Pluristem (PSTI - Buy), and Capricor (CAPR - Buy). • Maxim Group Virtual Infectious Disease (ID) Conference to be held on Tuesday, May 5, 2020. While the world is focused on COVID-19, don't forget the world has been fighting another pandemic; bacterial and fungal drug resistance. Please join us for an online event on 5/5. Click HERE to RSVP. Details Cell therapy – the opportunity. Cell therapy-focused companies, in particular those in regenerative medicine, have demonstrated that stem cells can modulate/restore immune homeostasis, including acute respiratory distress syndrome (ARDS), a severe inflammation of the lungs similar to what happens to COVID-19 patients (rapid decline to pneumonia, severe lung inflammation). COVID-19 aside, cell therapies in general have been moving through later stages of development, including potential approvals. Yet, while biotech companies in the T-cell space, like those focused on CAR-T for example, have experienced soaring valuations, pure play stem cell

Biotechnology companies, even with programs in more advanced stages of development have lagged. Why? The reasons may be multifactorial, or perhaps as we have published previously, these types of cell therapies, which are targeting indications like heart failure ALS, or critical limb (to name a few), lack the 'sizzle' of a CAR-T therapy or a gene therapy.

Nonetheless, groups like Mesoblast, Pluristem, and Brainstorm (BCLI - BUY) are heading to pivotal data in 2020 in heart failure, CLI, and ALS, respectively. BioCardia's (BCDA - Buy) P3 in heart failure is coming in 2021, as is Athersys' (ATHX - NR) stroke data for MultiStem. Capricor has compelling data in Duchenne Muscular Dystrophy (DMD), and Mesoblast has a PDUFA for 9/30 for its cell therapy Ryoncil (remestemcel-L) for GvHD.

COVID-19 could bring stem cells to a global stage. While each of the aforementioned stem cell therapies are different, there is some commonality between them and that is the ability to mitigate hyper-inflammatory responses. This Jason McCarthy, Ph.D. is the case for both autologous and allogeneic cell therapies, though for a pandemic- (212) 895-3556 sized indication like COVID-19, allogeneic may be more ideal given the inherent ability of doses to be mass produced ('cells in a bottle'). In this report, we profile [email protected] several companies in the allogeneic cell therapy space targeting COVID-19 including Anthony Vendetti Mesoblast, Pluristem, Capricor, Athersys, and Celularity (private), the latter having (212) 895-3802 the first stem cell IND cleared by the FDA for a COVID-19 trial on 4/2. This was [email protected] followed by Mesoblast on 4/6 while Pluristem has already dosed patients in .

SEE PAGES 7 - 10 FOR IMPORTANT DISCLOSURES AND DISCLAIMERS Biotechnology

COVID-19. In early January, the World Health Organization (WHO) reported the emergence of a novel coronavirus, SARS-CoV-2, in Wuhan, China. Infection results in a respiratory disease, COVID-19, that quickly leads to pneumonia-like symptoms. Immunocompromised and elderly patients, as well those with other co-morbidities such as high blood pressure or pre-existing respiratory disease, are especially susceptible to COVID-19-associated acute respiratory distress syndrome (ARDS). What makes COVID-19 especially dangerous is the extent and ease with which it is transmitted. Both SARS and COVID-19 are caused by viruses that utilize a glycosylated spike (S) protein. The binding of the S protein to a receptor protein known as angiotensin-converting enzyme 2 (ACE2) mediates host cell invasion. A key difference between SARS virus SARS-CoV and SARS-CoV-2 is that in the latter, the S protein displays an affinity for ACE2 that is 10-20 times higher than that of the corresponding S protein in the SARS virus, possibly explaining the higher rate of transmission observed so far.1 COVID-19 update. Total infections have surpassed 1.36M so far, resulting in 76k deaths worldwide (4/6 update). Though it is still difficult to evaluate the characteristics of the disease, according to the WHO, the mortality rate is ~3.4% as of 3/4/20. Recent estimates have arrived at lower figures, but overall data collection and testing has lagged to say the least. Though initially most prevalent in Hubei Province, China, the US, Spain, and Italy are now the most affected countries with 368k, 140k, and 132k cases, respectively. Italy has been hit the hardest in terms of morality with 16.5k deaths. The issue in Italy is that hospitals have become largely overwhelmed by the number of patients requiring ventilation and ICU-care from conditions such as cytokine storm, sepsis, and acute respiratory distress syndrome. Sadly, doctors are required to make difficult triage decisions to ration resources, in particular ventilators. In the US, New York is the epicenter, with 135k cases, and hospitals are reporting a spike in ICU visits and are nearing capacity as emergency measures continue to be implemented to expand the capacity and meet rising demand. The situation in Italy served as an alarm for other countries, leading many to take drastic measures, including Canada and many Latin American countries closing their borders.

Exhibit 1. COVID-19 Global Distribution as of April 6, 2020.

Source: Johns Hopkins University COVID-19 Tracker, LINK)

Exhibit 2. Cytokine release syndrome (CRS) and acute respiratory distress syndrome (ARDS), the real killer in COVID-19. In COVID-19, the respiratory symptoms are the real killers. In patients with severe cases, there is often a hyperactive immune response in the lungs leading to cytokine storm and runaway inflammation, which damages the lung tissue. This inflammation leads to acute respiratory distress syndrome, which is the leading cause of death in COVID-19. More than 40% of patients hospitalized for severe or critical COVID-19 developed ARDS and ~50% of those patients died from the disease.2 Unfortunately, there are no approved treatments for ARDS, only supportive care such as mechanical ventilation.

1 Tang, B.; Bragazzi, N. L.; Li, Q. An updated estimation of the risk of transmission of the novel coronavirus (2019-nCov). Infect Dis Model 2020, 5, 248−255. 2 https://www.health.com/condition/infectious-diseases/coronavirus/what-is-ards

Maxim Group LLC 2 Biotechnology

Source: Athersys Corporate Presentation

Tackling COVID-19. Addressing COVID-19 is likely to require three components: vaccines, therapies, and testing. Vaccines are important to prevent new patients from getting the disease and avoid recurrent outbreaks. Therapies are going to be necessary to reduce the course of the disease and ease the burden on the health systems. Testing, in particular rapid and point-of-care testing, is needed to fully understand the extent of the virus and adequately address cases. While this is not to be considered a comp to influenza and is by no means just another “flu”, we can use influenza as the model…Rapid test via nose/throat swab in the doctor office with results in minutes, treat with oseltamivir (“Tamiflu”) or other antiviral option, and get the annual flu vaccine. This is exactly what the world needs for COVID-19 and lack of any one of these three components, combined with the aforementioned drivers of the ongoing pandemic, is what is so alarming. Ventilators are in focus for New York’s COVID-19 response. New York City is currently the epicenter of the US COVID outbreak with more than 130k cases in the city alone and 14k+ hospitalizations. Thus far, need for ventilators has not exceeded capacity, but supplies are short. On Sunday 4/5, Mayor DeBlasio reported that the city had only 135 available ventilators, and that 1k more are needed immediately as the disease approaches its apex. By the time that the outbreak is over, estimates suggest that an additionally 15k ventilators will be required. Additionally, even with the USNS Comfort Navy hospital ship and the conversion of the Javits Center to the country’s largest hospital with 2,500 beds, NYC hospitals are approaching capacity. While preventing further infection and increasing the supply of hospital beds and ventilators is necessary to address the capacity constraint, there is also another approach in the use of therapies, which could reduce the time on ventilators and in the hospital, which could also alleviate the burden. The case for supportive care in COVID-19. Development on the therapeutic side of COVID-19 was initially focused on antivirals such as Gilead's (GILD - Hold) remdesivir, with several P3s ongoing and data from a Chinese study expected in April. While antivirals are certainly needed, they are not perfect and there is also a need for supportive care in the most severe patients, particularly as it relates to reducing days on ventilator and in the ICU. According to statistics from China, 81% of cases are mild; while 14% are severe, requiring hospitalization; and 5% are critical, requiring intensive care. Italy, which was initially the most severe outbreak outside China, has seen its healthcare system overwhelmed by the outbreak, with reports that the country has to triage care to treat patients with the best chance of therapeutic success. One of the key factors driving the crisis was the lack of ventilators and ICU beds. Many COVID-19 patients require ventilation for extended periods, which not only increases the burden on the healthcare system, but also increases the likelihood of complications and decreases survival rates. As such, therapies that reduce ventilator and ICU days are likely to become an important component of COVID-19 care. Bellerophon’s (BLPH - Buy) INOpulse was among the first therapeutics to receive emergency use authorization for COVID-19. The small, portable device improves arterial oxygenation and in the case of COVID, has been shown to reduce the need for ventilation in SARS patients, which is likely transferrable due to the similarities between the diseases. Another supportive treatment is being developed by Genentech (Roche, ROG.SW - NR). Tocilizumab is an approved IL-6 inhibitor which is indicated for several inflammatory diseases, and importantly, is also approved for cytokine release syndrome, which is a contributing factor to mortality and ARDS in COVID-19. Tocilizumab is currently in a P3 trial for COVID. Cell therapy has also emerged as a potential supportive care treatment to reduce the severity of symptoms in COVID-19. Cell therapy. Cell therapy employs stem cells in order to impact the body’s natural repair and regenerative mechanisms. Stem cells such as Pluristem's PLX cells and Mesoblast’s mesenchymal stem cells (MSCs) have an anti-inflammatory/immunomodulatory impact, which may provide therapeutic relief to the hyperactive immune response that leads to ARDS, the leading cause of COVID-19 related fatalities. Athersys is also in this space with MultiStem as is Celularity, a small private company, that actually had the first clearance for a cell therapy trial for COVID- 19 in the US on 4/2. This was quickly followed by Mesoblast on 4/6. There are two types of cell therapies: allogeneic and autologous. Allogeneic therapy means that the cells are from a third-party donor, while autologous indicates that the cells are from one’s own body. In the case of COVID-19 allogeneic cells are more advantageous due to their off-

Maxim Group LLC 3 Biotechnology the-shelf nature. Though still relatively early stage, stem cells are safe, and have demonstrated efficacy in similar conditions, as well as COVID- 19 related pneumonia, and could reduce mortality and the burden on healthcare systems. Why Cell therapy? Mesoblast was one of the first to start developing stem cells for COVID-19, followed shortly by Pluristem, as well as Athersys and Celularity. The question is, can cell therapy help with the COVID-19 pandemic? In our view, it has a chance for the following reasons:  Anti-inflammatory properties. Stem cells exert their effects largely by releasing anti-inflammatory/immunomodulatory effects. The main cause of ARDS is immune overreaction in the lungs.  Treating ARDS could reduce mortality and healthcare burden. COVID-19 results in pneumonia in severe cases and seems to do so very quickly. ARDS is the leading cause of COVID-19 related death. Many patients require respiratory support, which is placing strain on healthcare systems, particularly in Italy and the US, with Spain and France not far behind.  Efficacy in respiratory disease. Stem cells have demonstrated efficacy in COVID-19 pneumonia, reducing time in the ICU. Supportive care that can reduce the healthcare burden could be invaluable in dealing with COVID-19.  Safety. Safety profiles for stem cells continue to be positive. Chinese study demonstrated improved respiratory outcomes from MSCs in COVID-19 pneumonia patients. There is already some data for stem cells in treatment of COVID-related pneumonia. A Chinese study (Abstract LINK) performed in Beijing on N=7 patients with COVID-19 pneumonia demonstrated that MSCs could cure or significantly improve functional outcomes in all 7 patients. Pulmonary function was improved within 2 days and N=3 patients were able to be released after 10 days. The study also found a reduction in overactivated cytokine-secreting immune cells and that MSCs were safe in patients with COVID-19 pneumonia. While it’s a small N value, the data are in-line with what has been observed with larger studies in similar inflammatory settings conducted by groups like Mesoblast, Athersys, and others. Below we profile several companies in the cell therapy space with allogeneic options that may be applicable to COVID-19.

COVID-19 Stem Cell Therapies

Mesoblast Limited (MESO – Buy) Product: Remestemcel - L Type of Therapeutic: Stem cell therapy Status: Under BLA review for aGvHD, IND clearance for COVID-19.

Mesoblast develops cell-based therapies for the treatment of various diseases including cardiovascular, immunologic, inflammatory, orthopedic, as well as oncologic and hematologic disorders. The company recently announced that it will be developing its (MSC) therapy, remestemcel-L (currently under BLA review in acute Graft versus Host disease, aGvHD, as Ryoncil), as a treatment for acute respiratory distress syndrome (ARDS) in COVID-19, the primary contributor to patient fatalities. MSCs have been used in an investigator clinical study in China to treat COVID-19 patients, and demonstrated resolved or significantly improved functional outcomes. Remestemcel-L has also demonstrated efficacy in another inflammatory lung condition, COPD. A post-hoc analysis of N=60 COPD patients with inflammatory biomarkers, demonstrated a significant improvement in pulmonary function and a reduction in inflammatory markers. Since the same markers are elevated in COVID-19, the data suggest remestemcel-L may have an effect in reducing ARDS in COVID-19 as well. Cell therapy represents a safe option, which has demonstrated efficacy in inflammatory conditions, and could represent an important option for the most severe COVID-19 patients. It is important to note that Mesoblast already has a partner in China, Tasly (600535.SH - NR). Tasly is a major player in the Chinese market, and though the partnership presently only extends to the cardiovascular franchise (MPC-150-IM for heart failure and MPC-25-IC for acute myocardial infarction), having a presence on the ground is a positive, especially for navigating the Chinese regulatory environment. Additionally, Remestemcel-L has been cleared under an IND to advance development in COVID-19 related pneumonia.

Maxim Group LLC 4 Biotechnology

Pluristem Therapeutics (PSTI – Buy) Product: PLX-PAD Type of Therapeutic: Stem cell therapy Status: Phase 3 in critical limb ischemia and hip fracture, Phase 2 intermittent claudication. Emergency Use Authorization in Israel for COVID-19

Pluristem Therapeutics is a cell therapy-focused company developing treatments for multiple ischemic, hematologic, and inflammatory diseases, based on its PLX-PAD stem cell platform. PLX-PAD stem cells can be administered without the need for HLA-matching, and work by modulating the concentration of certain bioactive molecules, leading to the increase of angiogenesis and muscle regeneration, as well as inflammation reduction. Importantly, due to the challenges for global supply chains related to COVID-19, Pluristem is among the only major players in cell therapy with its own large-scale manufacturing capability. Pluristem recently entered into a collaborative agreement with the BIH Center for Regenerative Therapy (BCRT) and the Berlin Center for Advanced Therapies (BeCAT) at Charité University of Medicine Berlin to evaluate PLX cells in treating respiratory and inflammatory symptoms of COVID-19. A few days later, the company announced that the Israeli Ministry of Health approved a pathway for the company to treat COVID- 19 patients under the country’s per-patient compassionate use protocol. Stem cells such as Pluristem's PLX have an anti- inflammatory/immunomodulatory impact, which may provide therapeutic relief to the hyperactive immune response that leads to ARDS, the leading cause of COVID-19 related fatalities. The company has already started treating patients with COVID-19 related respiratory failure who are on ventilators. PLX cells have demonstrated preclinical efficacy in other respiratory conditions in line with efficacy demonstrated by stem cells in treating COVID-19 associated pneumonia. Providing supportive respiratory care may help ease the burden on a healthcare system that is likely to be overwhelmed in handling the onslaught of COVID-19 cases. Stem cells have exhibited a favorable safety profile in COVID-19 pneumonia patients; PLX's safety profile, established across hundreds of patients, could make emergency implementation easier.

Celularity, Inc. (private) Product: CYNK-001 Type of Therapeutic: Natural killer cell therapy Status: Phase 2 for multiple myeloma and acute myeloid leukemia, Phase 1 for glioblastoma, IND clearance for COVID-10

Celularity is a cell therapy company developing therapies from human placenta in cancer immunotherapy and functional regeneration. The company is the only player developing natural killer (NK) cells from human placenta. The company’s lead immunotherapy candidate, CYNK-001, is currently under development for several types of hematological cancers and solid tumors. Unlike other cell therapies, which are aimed at reducing the inflammatory response and promoting healing, Celularity’s NK cell therapy is actually targeted at fighting the disease. Evidence suggests that NK cells are robustly activated in viral infections, regardless of the viral class. CYNK-001 has a range of biological activities, which could help fight COVID-19 infection expression of activating receptors such as NKG2D, DNAM-1 and the natural cytotoxicity receptors NKp30, NKp44 and NKp46, which bind to stress ligands and viral antigens on infected cells. They also demonstrate expression of cytolytic molecules perforin and granzyme B, which kill infected cells. A Phase 1/2 is planned for COVID-19 and will enroll N=86 patients.

Athersys (ATHX – NR) Product: MultiStem Type of Therapeutic: Stem cell therapy Status: Phase 3 for ARDS, Ischemic Stroke, GvHD and Phase 2 for Acute Myocardial Infarction. TBD for COVID-19

Athersys is a cell therapy company developing MultiStem, a cell therapy derived from multipotent adult progenitor cells. The drug acts similarly to other cell therapy approaches in protecting tissue from damage by mitigating inflammatory response, as well as promoting repair mechanisms. One of the key advantages of MultiStem is that it was already being developed for ARDS prior to COVID-19, so there is data in a highly relevant population for COVID-19 as was recently highlighted by BARDA. In the company’s exploratory Phase 2 ARDS study (n=30), patients were given MultiStem or placebo at a 2:1 ratio. The study had a 28-day endpoint as well as a 1-year follow-up. Overall, MultiStem was demonstrated to reduce mortality to 25% vs. 40% for placebo, increase ventilator- free days by 40% (12.9 days vs. 9.2 days for placebo), increase ICU-free days by 27% (10.3 days vs. 9.2 days for placebo), and resulted in rapid improvement in pulmonary function, with 45% of patients achieving ventilator independence by day 7 vs. only 20% for placebo. In the most severe cases, the difference was even greater with mortality of 25% vs. 50% for placebo, 14.6 ventilator-free days vs. 8 days for placebo, and 11.4 ICU-free days vs. 5.9 days for placebo.

Maxim Group LLC 5 Biotechnology

Capricor Therapeutics, Inc. (CAPR – Buy) Product: Exosome Platform Type of Therapeutic: “Cell-free” cell therapy. The company is considering an exosome COVID-19 vaccine program, possible therapeutic as well. Status: Development-Preclinical

Capricor Therapeutics is focused on developing biological therapeutics for the treatment of rare disorders. The company’s lead candidate, CAP- 1002, is a cardiosphere-derived cell line being developed for the treatment of Duchenne muscular dystrophy (DMD). Cardiospheres are self- assembling molecular clusters of primitive proliferating cells with an outer layer of mesenchymal cells and differentiating cells. CAP-1002 utilizes the progenitor cells found in cardiospheres, which have been shown to have immunomodulatory properties. The company is also developing an exosome platform for “cell-free” cell therapy and is focused on engineering exosomes for drug delivery, including vaccines. The latter could come into play for a COVID-19 vaccine, which was mentioned on the 4Q19 earnings call on 3/18/20. Exosomes are extracellular vesicles that carry bioactive compounds such as RNAs and proteins that can get to the cell nuclei and induce immunomodulatory effects, among other functions. Exosomes, typically 30nm-150nm in size, are naturally occurring, and thus, are less likely to induce the toxicity-related adverse events that lipid nanoparticle-like delivery approaches can cause. They can be either autologous or allogeneic-derived, and can be engineered to deliver essentially anything from RNA and microRNAs to proteins, growth factors, and signaling molecules. In preclinical studies of inflammation and intense immune activation, exosomes have demonstrated utility in DMD, graft vs. host disease, and trauma. Adding further credence to the company’s efforts to develop an exosome-based vaccine, Capricor recently on-boarded Dr. Stephen Gould, Professor of Biological Chemistry at Johns Hopkins University and internationally recognized expert in exosomes and exosome engineering. The company is considering a move toward leveraging the exosome platform to develop a COVID-19 vaccine.

Maxim Group LLC 6 Biotechnology

DISCLOSURES

Capricor Therapeutics, Inc. Rating History as of 04/06/2020 powered by: BlueMatrix Buy:$7.00 I:Buy:$7.00 Buy:$4.00 Hold:NA Buy:$4.00 05/15/18 05/16/18 10/30/18 12/26/18 02/03/20 $35

$30

$25

$20

$15

$10

$5

$0 Jul 17 Oct 17 Jan 18 Apr 18 Jul 18 Oct 18 Jan 19 Apr 19 Jul 19 Oct 19 Jan 20 Apr 20

Closing Price Target Price

Mesoblast Limited Rating History as of 04/06/2020 powered by: BlueMatrix Buy:$16.00 07/18/18 $18 $16 $14 $12 $10 $8 $6 $4 $2 Jul 17 Oct 17 Jan 18 Apr 18 Jul 18 Oct 18 Jan 19 Apr 19 Jul 19 Oct 19 Jan 20 Apr 20

Closing Price Target Price

Pluristem Therapeutics Inc. Rating History as of 04/06/2020 powered by: BlueMatrix Buy:$20.00 Buy:$30.00 Buy:$15.00 Buy:$8.00 06/19/17 10/26/17 07/18/19 10/30/19 $35

$30

$25

$20

$15

$10

$5

$0 Jul 17 Oct 17 Jan 18 Apr 18 Jul 18 Oct 18 Jan 19 Apr 19 Jul 19 Oct 19 Jan 20 Apr 20

Closing Price Target Price

Maxim Group LLC 7 Biotechnology

Maxim Group LLC Ratings Distribution As of: 04/06/20 % of Rating for which Firm % of Coverage Provided Banking Services Universe with Rating in the Last 12 months Fundamental metrics and/or identifiable catalysts exist such that we Buy 87% 51% expect the stock to outperform its relevant index over the next 12 months. Fundamental metrics are currently at, or approaching, industry averages. Hold Therefore, we expect this stock to neither outperform nor underperform 13% 52% its relevant index over the next 12 months. Fundamental metrics and/or identifiable catalysts exist such that we Sell expect the stock to underperform its relevant index over the next 12 0% 0% months. *See valuation section for company specific relevant indices

I, Jason McCarthy, Ph.D., attest that the views expressed in this research report accurately reflect my personal views about the subject security and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report.

I, Anthony Vendetti, attest that the views expressed in this research report accurately reflect my personal views about the subject security and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report.

The research analyst(s) primarily responsible for the preparation of this research report have received compensation based upon various factors, including the firm’s total revenues, a portion of which is generated by investment banking activities.

Maxim Group provides non-investment banking securities-related services to Capricor Therapeutics, Inc. for the execution of its employee stock purchase plan.

Maxim Group makes a market in Capricor Therapeutics, Inc., Mesoblast Limited and Pluristem Therapeutics Inc.

Maxim Group received compensation for investment banking services from Capricor Therapeutics, Inc., Mesoblast Limited and Pluristem Therapeutics Inc. in the past 12 months.

Maxim Group expects to receive or intends to seek compensation for investment banking services from Capricor Therapeutics, Inc., Mesoblast Limited and Pluristem Therapeutics Inc. in the next 3 months.

CAPR: For Capricor Therapeutics Inc we use the BTK, Biotechnology Index as the relevant index. MESO: For Mesoblast Ltd, we use the BTK (NYSE Biotechnology Index) as the relevant index. PSTI: For PSTI, we use the BTK (NYSE Biotechnology Index) as the relevant index. Valuation Methods CAPR: We model commercial launch of CAP-1002 for Duchenne Muscular Dystrophy (DMD) in the US and EU in 2023. A risk adjustment of 80% is factored in to the therapeutic model based on stage of development and trial risk. A modest platform value for the exosomes is also factored in. A 30% discount is then applied to the free cash flow, discounted EPS, and sum-of-the-parts models, which are equally weighted to derive a price target. MESO: Our 12-month price target for Mesoblast Ltd is based on a triangulation of three metrics, all equally weighted: free-cash-flow (FCF), discounted-EPS, and sum-of-the-parts (SOP) models. We use a 30% discount rate. Our key assumption is that Mesoblast's stem cell products for congestive heart failure in 2021 in the US and 2022 in EU, for degenerative disc disease in 2023 in the US and EU, TemCell from 2017 in Japan, remestemcel in GvHD in the US in 2020 and royalties for China cell products beginning in 2023. PSTI: We use three valuation metrics – FCF, discounted EPS, and sum of the parts – and are modeling PSTI out to 2028. This derives a 2028 EPS estimate, which we discount at 30%, after equally weighting and averaging the three metrics to derive a price target. Price Target and Investment Risks CAPR: Aside from general market and other economic risks, risks particular to our price target and rating for Capricor Therapeutics include: (1) the regulatory and clinical risk associated with product development; (2) the ability to access capital and the very high likelihood that company will need to raise additional capital, the terms of which may not be favorable based on the outcome of clinical data and other factors; (3) the rate and degree of progress of product development; (4) the rate of regulatory approval and timelines to potential commercialization of products; (5) the requirements for marketing authorization from regulatory bodies in the United States and other countries; (6) the liquidity and market volatility of the company’s equity securities; (7) regulatory and manufacturing requirements and uncertainties; (8) Product and technology developments by competitors; (9) Inability, if product(s) is approved to gain adequate market share; (10) the ability of the company to maintain its exchange listing;

Maxim Group LLC 8 Biotechnology

(11) The DMD program will not advance beyond the final P2 readout in 2Q20 without a partner, which Capricor may not be able to obtain and if ot does so, may not have favorable conditions/terms. MESO: Aside from general market and other economic risks, risks particular to our price target and rating for Mesoblast Ltd include: (1) the regulatory and clinical risk associated with the pivotal trial in bone marrow transplant, diabetes, heart failure, heart attack, AMD, degenerative disc disease, orthopedic fracture, GvHD and other clinical programs; (2) the rate and degree of progress of product development; (3) the rate of regulatory approval to proceed with clinical trial programs; (4) the level of success achieved in clinical trials; (5) the requirements for marketing authorization from regulatory bodies in the United States and other countries; (6) the liquidity and market volatility of Mesoblast’s equity securities; (7) the ability to access capital to finance operations; (8) regulatory and manufacturing requirements and uncertainties; (9) technological developments by competitors; (10) critically important will be the company's cash balance which requires multiple additional capital raises (in our opinion) and as such, should be considered a key risk to the stock price. Capital raises can be dilutive causing the share price to fall. Mesoblast typically operates with under a year's worth of capital and the balance sheet based on our model suggests the company now has under six months of operating capital. While multiple catalysts are ahead, there are no assurances that the outcome will be positive and even if the outcome is positive and the company raises capital around the "event," the effect of the raise could put pressure on the share price. PSTI: Aside from general market and other economic risks, risks particular to Pluristem Therapeutics include: (1) clinical trial – failure to show safety or efficacy; (2) developmental – maintaining multiple clinical trials and the length of those trials; (3) regulatory; (4) commercial; (5) competitive landscape – PSTI is not alone in the indications it tends to pursue; (6) IP – competition is in current indications; (7) The inability to access capital to maintain operations; (8) potentially high volatility of its stock price.

RISK RATINGS

Risk ratings take into account both fundamental criteria and price volatility. Speculative – Fundamental Criteria: This is a risk rating assigned to early-stage companies with minimal to no revenues, lack of earnings, balance sheet concerns, and/or a short operating history. Accordingly, fundamental risk is expected to be significantly above the industry. Price Volatility: Because of the inherent fundamental criteria of the companies falling within this risk category, the price volatility is expected to be significant with the possibility that the investment could eventually be worthless. Speculative stocks may not be suitable for a significant class of individual investors. High – Fundamental Criteria: This is a risk rating assigned to companies having below-average revenue and earnings visibility, negative cash flow, and low market cap or public float. Accordingly, fundamental risk is expected to be above the industry. Price Volatility: The price volatility of companies falling within this category is expected to be above the industry. High-risk stocks may not be suitable for a significant class of individual investors. Medium – Fundamental Criteria: This is a risk rating assigned to companies that may have average revenue and earnings visibility, positive cash flow, and is fairly liquid. Accordingly, both price volatility and fundamental risk are expected to approximate the industry average. Low – Fundamental Criteria: This is a risk rating assigned to companies that may have above-average revenue and earnings visibility, positive cash flow, and is fairly liquid. Accordingly, both price volatility and fundamental risk are expected to be below the industry.

DISCLAIMERS

Some companies that Maxim Group LLC follows are emerging growth companies whose securities typically involve a higher degree of risk and more volatility than the securities of more established companies. The securities discussed in Maxim Group LLC research reports may not be suitable for some investors. Investors must make their own determination as to the appropriateness of an investment in any securities referred to herein, based on their specific investment objectives, financial status and risk tolerance. This communication is neither an offer to sell nor a solicitation of an offer to buy any securities mentioned herein. This publication is confidential for the information of the addressee only and may not be reproduced in whole or in part, copies circulated, or disclosed to another party, without the prior written consent of Maxim Group, LLC (“Maxim”). Information and opinions presented in this report have been obtained or derived from sources believed by Maxim to be reliable, but Maxim makes no representation as to their accuracy or completeness. The aforementioned sentence does not apply to the disclosures required by FINRA Rule 2241. Maxim accepts no liability for loss arising from the use of the material presented in this report, except that this exclusion of liability does not apply to the extent that such liability arises under specific statutes or regulations applicable to Maxim. This report is not to be relied upon in substitution for the exercise of independent judgment. Maxim may have issued, and may in the future issue, other reports that are inconsistent with, and reach different conclusions from, the information presented in this report. Those reports reflect the different assumptions, views and analytical methods of the analysts who prepared them and Maxim is under no obligation to ensure that such other reports are brought to the attention of any recipient of this report. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance. Information, opinions and estimates contained in this report reflect a judgment at its original date of publication by Maxim and are subject to change without notice. The price, value of and income from any of the securities mentioned in this report can fall as well as rise. The value of securities is subject to exchange rate fluctuation that may have a positive or adverse effect on the price or income of such securities. Investors in securities such as ADRs, the values of which are influenced by currency volatility, effectively assume this risk. Securities recommended, offered or sold by Maxim: (1) are not insured by the Federal Deposit Insurance Company; (2) are not deposits or other obligations of any insured depository institution; and (3) are subject to investment risks, including the possible loss of principal invested. Indeed, in the case

Maxim Group LLC 9 Biotechnology of some investments, the potential losses may exceed the amount of initial investment and, in such circumstances, you may be required to pay more money to support these losses.

ADDITIONAL INFORMATION IS AVAILABLE UPON REQUEST

Maxim Group LLC 10

Corporate Headquarters The Chrysler Building 405 Lexington Ave., 2nd FL New York, NY 10174 Tel: 212-895-3500

Capital Markets/Syndicate: 212-895-3695 Global Equity Trading: 212-895-3623 Corporate Finance: 212-895-3811 Institutional Sales: 212-895-3873 Corporate Services: 212-895-3631 Institutional Sales Trading: 212-895-3873 Equity/Options Trading: 212-895-3790 Portfolio/Transition Trading: 212-895-3567 Equity Research: 212-895-3736 Prime Brokerage: 212-895-3723 Fixed Income Trading: 212-895-3875 Wealth Management: 212-895-3624

Woodbury, Long Island Red Bank, New Jersey 20 Crossways Park Drive North 246 Maple Avenue Suite 304 Red Bank, NJ 07701 Woodbury, NY 11797 Tel: 732-784-1900 Tel: 516-393-8300

Florida Offices San Rafael, California 105 South Narcissus Avenue 4040 Civic Center Drive Suite 222 Suite 200 West Palm Beach, FL 33401 San Rafael, CA 94903 Tel: 561-508-4433 Tel: 212-895-3670

20801 Biscayne Blvd Suite 432 / 433 Aventura, FL 33180 Tel: 516-396-3120