OSIRIS THERAPEUTICS, INC.

Forward‑looking statements reflect management’s current views with respect to future events and performance and are based on currently available information and management’s assumptions regarding future events. While management believes that its assumptions are reasonable, forward‑looking statements are subject to various known and unknown risks and uncertainties and actual results may differ materially from those expressed or implied herein. We note that certain factors, among others, which could cause future results to differ materially from the forward‑looking statements, expectations and assumptions expressed or implied herein are discussed in greater detail under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part I, Item 1A, “Risk Factors,” and may be discussed elsewhere herein or in other documents we file with the SEC. Examples of forward‑looking statements may include, without limitation, statements regarding: our future business and financial performance; our expectations about our customers, industry and our regulatory environment; our ability to improve our internal control over financial reporting, including our ability to remediate material weaknesses; our product development efforts; our ability to successfully navigate regulatory requirements applicable to our products and product candidates; the success of our product candidates in development; implementation of our corporate strategy; our research and development activities and projected expenditures; our anticipated timeline and commercialization strategy for our products under development; our cash needs; patents, trademarks and other proprietary rights; the safety and ability of our products to perform as intended or expected; our ability to supply a sufficient amount of our marketed products or product candidates and, if or insofar as approved or otherwise commercially available, future products to meet demand; our ability to commercialize and distribute our current and any future marketed products; our relationships with third parties with whom we contract; our ability to maintain and benefit from our arrangements with third parties; our costs to comply with governmental regulations; our plans for or success of sales and marketing; our plans regarding manufacturing; our ability to establish and maintain, the ability of our customers and end users to obtain, reimbursement for our commercially available products from Medicare and other third‑party payors; types of regulatory frameworks we expect will be applicable to our products and potential products; and results of our scientific research; uncertainties as to the timing of the proposed tender offer and the subsequent merger; the risk that the proposed tender offer or the subsequent merger may not be completed in a timely manner or at all;  the occurrence of any event, change or other circumstance or the possibility of a competing offer or acquisition proposal that could give rise to the termination of  the Merger Agreement (as defined below), including in circumstances which would require Osiris to pay a termination fee; the effect of the announcement or pendency of the transactions contemplated by the Merger Agreement on Osiris’ ability to retain and hire key personnel, its ability to maintain relationships with its customers, suppliers and others with whom it does business, or its operating results and business generally; and the risk that stockholder litigation in connection with the proposed tender offer and subsequent merger contemplated by the Merger Agreement may result in significant costs of defense, indemnification and liability.

On March 12, 2019, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Smith & Nephew plc, an English public limited liability company (“Parent Holdco”), Smith & Nephew Consolidated, Inc., a Delaware corporation (“Parent”), and Papyrus Acquisition Corp., a Maryland corporation and direct subsidiary of Parent, pursuant to which, and upon the terms and subject to the conditions described therein, Papyrus Acquisition Corp. will commence a cash tender offer (the “Offer”) to acquire all of the outstanding shares of the Company’s common stock at a purchase price of $19.00 per share (the “Offer Price”), in cash, without interest, subject to any required withholding of taxes.  The Offer will commence no earlier than five (5) and no later than fifteen (15) business days following the date of the Merger Agreement.  The Offer will expire at 12:01 a.m., New York City time, on the 21st business day following the commencement of the Offer (unless the Offer is extended).

Income tax benefit from continuing operations for 2018 was $26.0 million primarily due to the partial release of our valuation allowance and the recognition of the Orphan Drug tax credit that was reported as an uncertain tax position as of December 31, 2017. During 2018, the Company performed a detailed study to recalculate the value of the Orphan Drug tax credit based on available documentation and support. This resulted in a supportable tax credit reported in our deferred tax asset of $45.0 million, net of a reserve of $3.0 million.  As the Company is in a net cumulative income position for the past three years, the Company expects to realize some of its deferred tax assets, mainly consisting of the general business credits, which includes the Orphan Drug tax credit, and net operating loss carryforwards.  The income tax benefit from continuing operations for 2017 was $1.4 million primarily due to the release of the valuation allowance on the AMT carryforwards, offset by state tax expense where the Company did not have state credit or net operating losses available. See Note 10, “Income Taxes”, in Item 8. Financial Statements and Supplementary Data, for additional information.

Samson Tom, Ph.D., MBA, age 46, rejoined Osiris in November 2018 as President and Chief Executive Officer. Previously, Dr. Tom served as Vice President, Research & Development for Surgical Orthobiologics at Bioventus, LLC from 2016 to 2018. Prior to Bioventus, Dr. Tom served as Group Director, Biosurgery Research & Development at Ethicon, Inc. (a Johnson & Johnson company), where he was employed from 2011 to 2016. Dr. Tom worked at Osiris from 2003 to 2011 in several leadership positions spanning multiple functional areas including Quality, Operations, Clinical Development, and Product Development, culminating in a Senior Director role during his tenure. Preceding Osiris, Dr. Tom held scientific positions with increasing responsibility at Vion Pharmaceuticals, Inc., Prevalere Life Sciences, Inc., and the Bristol-Myers Squibb Company. Dr. Tom earned a Bachelor of Arts degree in Biology and Chemistry from Cornell University, a Master of Science degree and a Doctor of Philosophy degree in Biochemistry from the University of Rochester School of Medicine and Dentistry, and a Master of Business Administration degree in General Management from the Johns Hopkins University Carey Business School. He has attended executive education programs at the Harvard Business School, the Vlerick Business School, and the Raymond A. Mason School of Business at the College of William & Mary. He is a certified Project Management Professional (PMP®), Risk Management Professional (PMI-RMP®), and Strategic Project Leader (SPL®).

Following the completion of the Offer, subject to the satisfaction or waiver of certain customary conditions set forth in the Merger Agreement, Papyrus Acquisition Corp. will merge with and into the Company, with the Company surviving as a wholly owned subsidiary of Parent (the “Merger”), pursuant to the procedure provided for under Section 3-106.1 of the Maryland General Corporation Law, as amended (the “MGCL”), without any stockholder approvals. The Merger will be effected as promptly as possible following the initial acceptance for payment by Papyrus Acquisition Corp. of shares of the Company’s common stock validly tendered and not validly withdrawn in the Offer.  At the effective time of the Merger (the “Effective Time”), each issued and outstanding share of the Company’s common stock (other than shares owned by Papyrus Acquisition Corp. and any subsidiary of the Company will be converted into the right to receive the Offer Price, in cash, without interest, subject to any required withholding of taxes. Each unexercised stock option outstanding immediately prior to the Effective Time, whether or not vested, will be canceled at the Effective Time and the holder of each stock option of the Company will be entitled to receive (i) the excess, if any, of