Severe joint synovial inflammation with cartilage loss and bony erosions, characteristic of human RA, occurs in sheep injected with collagen. In a pilot study, significant numbers of allogeneic MPCs were detected in involved joints or lymph nodes of arthritic sheep at 24 hours after a single intravenous injection, but not in normal sheep, indicating that MPCs selectively migrate to sites of immune-mediated inflammation.A randomized, placebo-controlled study was next performed in 30 sheep with established collagen-induced arthritis, comparing a single intravenous injection of allogeneic MPCs at one of three doses (0.3, 1 and 2 million MPCs/kg) to saline. Thirty days later, joint synovial tissues from arthritic sheep were examined. In comparison with saline treated controls, synovial tissue from arthritic sheep receiving a single intravenous injection of 2 million MPCs/kg showed 88% mean reduction in IL-6 levels (p=0.029), 83% mean reduction in TNF-alpha levels (p=0.049), 53% mean reduction in IL-17 levels (p=0.005), and 52% mean reduction in infiltrating monocytes/macrophages (p=0.009). MPC-treated animals had a 31% mean reduction in histopathology severity scores compared with controls (p=0.025). Intermediate effects were seen with 1 million MPCs/kg, and the lowest MPC dose was least effective. These findings demonstrate that MPCs are immunoregulatory and concomitantly suppress the activation and proliferation of T-cells, monocytes, and synoviocytes seen in active Rheumatoid Arthritis. Mechanistically, the data suggest that MPCs inhibit the Th17 CD4 T cell subset, with the subsequent simultaneous reduction in the key cytokines, IL-17, IL-6, and TNF-alpha. Mesoblast has an upcoming scheduled meeting with the United States Food and Drug Administration (FDA) to discuss its Phase 2 clinical program in patients with RA. Subject to FDA clearance, the Company intends to commence a randomized, placebo-controlled Phase 2 trial in the fourth quarter of 2012. "Rheumatoid Arthritis represents the second indication, after Type 2 diabetes, in a growing list of major market segments that will be targeted by Mesoblast's intravenous product formulation," Professor Itescu added.