M GROUP EQUITY RESEARCH INDUSTRY REPORT August 16, 2013 Regenerative Cell Therapy: Osiris Graffix highlights a Back Dour. Is there an Achilles heel in Cell Therapy with a KISSUtti, a simple stupid,. Companies mentioned include: Athersys, Inc. (ATHX) — $1.89 — Buy Baxter (BAX) - $72.33 - NR Capricor (private) Cardio3 Biosciences (CARD.BR) - 676.50 - NR Cytomedix (CMXI) - $0.43 - NR Cytori Therapeutics (CY7X) - $2.21 - Buy Dendreon (DNDN) - $3.15 - Sell IntelliCell Biosciences (SVFC) - $0.02 — NR Lonw (LONIV.VX)- CHF69.50 - NR Mesoblast Ltd. (MBLTY) - $26.95 - Buy NeoStem, Inc. (VBS)— $7.16— NR Osiris (OSIR) - $19.76 - NR Pfizer (PFE) - $28.80 - NR Pluristem (PSTI) - $114 - Hold RTI biologics (RTIX) -$3.52 - NR Teva Pharmaceuticals (TEVA) - $40.38 — Buy *Closing prices (8/15/2013) n K 1 O 00 Unlocking a Rich commercial Pathway through a backdoor? Source: Cartoonmock ➢This week Osiris Therapeutics Inc. (OSIR - $19.76 - NR) demonstrated the utility of Grafix, the company's allogeneic product for diabetic fool ulcers (DFU). long a graveyard of failed therapies. Grafix. is a 3D cellular matrix comprising endogenous mesenchymal stem cells (MSCs) and growth factors. It has been sold in the U.S. to treat chronic wounds, under FDA regulatory pathway 21 C.F.R. Pan 1271. We examine this regulatory pathway and try to make sense of what implications does it have in cell therapy space? > The FDA has allowed this "back door" as a pathway into the market place with no pre-market review or approval. If they are regulated solely under PHS sec. 361 and 21 C.F.R. Part 1271. To meet this criteria: I) the cells have to be minimally manipulated 2) Homologous use 3) not combined with another article (with limited exceptions) 4) Either (i) cells do not have a systemic effect and is not dependent upon the metabolic activity of living cells for its activity or (ii) does have a systemic effect or is dependent upon the metabolic activity for its prim