TiGenix, from IP to IPO

Leuven

20 November 2008

Gil BeyenCo-founder & CEOTiGenix NV

Michael van EenoDirector

ING Corporate Finance

2

2000 , spin-off K.U.Leuven and U.Gent

Regenerating motion. Innovative local treatments for damaged and osteoarthritic joints.

ChondroCelect®, autologous cell-based medicinal product for cartilage regeneration; Phase III trial successfully completed; in registration phase in EU

Biological Implants: next generation products for repair of musculoskeletal tissues

Leuven (Belgium), New York & Memphis (US)

2000-2006: 29 million EUR venture capitalMarch 22, 2007: 46 million EUR via IPO

TiGenix

Founded

Focus

Lead product

Pipeline

Locations

Finance

3

Cartilage defects > 2 million articular cartilage

defects diagnosedper year*

Ca. 130.000 grade 3-4 fullthickness defects*

Meniscus trauma 2.2 million menisci removed

or partially removed per year*

Osteoarthritis2.5 to 5% of

adult population in Western world has symptomatic knee

osteoarthritis

* Europe and US

femur

articular cartilage

tibia

inner meniscus

outer meniscus

Clear focus: joint function

4

Lead product: ChondroCelect

5

Proprietary molecular profile of stable cartilage forming cells

Comparison of cell populations that pass and fail proprietary in-vivo assay on gene expression profiles

150positivemarkers

pos2

pos1

pos3

pos4

neg1

neg2

pos1

pos3

neg1

neg2

pos2

pos4

60negativemarkers

Stable cartilage

Non-stable cartilage

ChondroCelectmarkers

F. Dell’Accio, C. De Bari and F.P. Luyten., Arthritis & Rheumatism , 2001

6

Interaction science - IP

7

Proof: clinical trials

Prospective Randomized Controlled Trial of ChondroCelect versus Microfracture in the Repair of Symptomatic Cartilage Defects of the Knee

Study objective: demonstrate superiority on structural repair at 12 months as precursor of long term clinical benefit

118 patients treated in nine Belgian and three international centers

5 year patient follow-up to confirm long term clinical benefit

State-of-the-art trial management and monitoring

8

Superior structural repair at 12 m

ChondroCelect

Microfracture

9

Superior clinical outcome at 36m

0

10

20

30

BL 6M 12M 18M 24M 30M 36M

Overall KOOS* - FAS**

CC N: 51 51 51 43 44 41 39

MF N: 59 59 57 49 49 46 43

0.035ADL

0.028Pain

0.018Overall*

P-valueKOOS

0.035ADL

0.028Pain

0.018Overall*

P-valueKOOS

Longitudinal analysis:

treatment effect at 36m

(Mixed Linear Model)

Treatment failures(reinterventions)CC: 2 MF: 7

* Average of all KOOS domains, except Sports ** FAS without imputation for missing data or failures

10

Regulatory approvals

EU-EMEA: MAA filed in 2007 First cell-based product to go for central approval at EMEA as

somatic cell therapy/advanced therapy medicinal product (ATMP) CHMP opinion: H1 09

US-FDA: BLA filing targeted H1 09

11

GMP Production

12

Adult stem cells

Meniscus repair (TGX003)

Pipeline development

Increase ease of use and patient friendliness

Bro

aden

indi

catio

n

Next Generation-3D (TGX002-TGXFAB002)

Combination product (TIG-FAB)

ChondroCelect (TGX001)

13

Adequate financial means needed

Long time to market

Clinical trial GMP facility

R&D and IP Marketing & sales

14

Seed financing (2000-2001)

Initial seed funding: EUR 1.000.000 Gemma Frisius Fonds Founders K.U.Leuven R&D & UZ Leuven

Research grant: EUR 1.000.000 IWT

Bridge loan: EUR 800.000 Use of proceeds:

Research & validation of patents Preparation of clinical trial

15

Series A round (2003)

EUR 12,000,000

Investors ING Private Equity, Capricorn Venture Partners, Auriga Partners, Fagus

(Fortis) Conversion of bridge loan (GFF, U Gent)

Use of proceeds: clinical development of lead product development and expansion of product pipeline and IP position setting up of in-house research laboratory strengthening the team

Later stage financing – pre-IPO

Key investor view (Venture Capital, Cross-over investors, Private and public equity funds, hedge funds,…)

Strong scientific foundation/ strong IP

Leader in it’s market

Access to a global market

Validation of the product / commercialisation

Management team

Progress after last round

Valuation

Too early, too late stage (risk, return)

Later stage financing – pre-IPO

Preparation of the next steps

- Appointment of further professional management

- Corporate Governance – professional/independent board members

- IFRS figures

- Work on business plan and equity story

- Commercial role out of product

- Increase corporate communication - professional marketing

- …

19

Series B (pre-IPO) round (2005)

EUR 16.000.000

Use of proceeds: Drive regulatory process for ChondroCelect at FDA and EMEA Set up network of key opinion leaders in EU and US Develop pipeline & next generation ChondroCelect products Prepare TiGenix’ entry in the US

Investors Existing investors Broader base: HSS Ventures (US), ITX (Japan), BIP, SRIW,

Partners@Venture, e.a

20

End 2006: important achievements…

ChondroCelect Phase III trial results positive

Deal on second generation product in the making

Strong technology base in major indication areas (OA, meniscus)

Experienced management team

Strong and broad shareholder base

US presence (TiGenix Inc & NY office)

Network of key opinion leaders in EU and US

21

File for market authorizations

Set up manufacturing capability

Prepare and execute the launch of ChondroCelect®

Launch clinical study next generation product

Broaden indication to osteoarthritis

Develop product for meniscus repair

Prepare for next financing…

… and important milestones to come

Next steps

Company

IPO Sale of the Company

Private Placement existing investors

Private Placement new investors

• Public market• Broader investor base

• Industrial party• Financial party

Strategic options available

Strategic rationale Possible issues

IPO

• Longer term exit for financial shareholders

• Continue to benefit from longer term potential upside

• Ongoing control of company’s destiny

• Acquisition currency

• Management incentive

• Visibility

• Funding and future access to markets

• Specialist business

• Unproven long term growth prospects for the business

• No listed comparables

• Likely to suffer an important initial discount on valuation compared to a sale of whole business

• Delays full exit of the founders

• Realise whole value immediately

• Complex business will be understood by buyers with sector knowledge

• Identified interest of some industrial players

• Future role and ambitions of management

• Future upside

• Premium valuation to earlier rounds

• Specialised investors

• Track record

• Further delays exit of the founders

• Valuation discussion

• Dilution for initial investors

M&ASales

Process

Private Placement

When is a company a feasible IPO candidate?

Timing

Commitment Management

Growth prospects

Strong and clear investment case

Earnings

Characteristic

• Good visibility of earnings or future earnings

• Proven track record

• Focused business strategy

• Strong IP portfolio/technology

• Market position

• Growth opportunities

• Increasing market share

• Product diversification and innovation

• Solid track record in achieving growth strategy

• Management composition and commitment going forward

• IPO window

Criteria

26

Key decision factors

Partnering or alone? Added value of partner for business (or part of business)

Importance of independence for value creation

Exit considerations

Private or public financing? Access to capital & cost of capital

Exit & liquidity

Timing

Image & visibility

27

IPO: Offering Summary

Base deal of up to €40 million new shares plus 15% greenshoe of new shares

Public offer in Belgium, institutional private placement in Europe

Listing on Eurolist by Euronext Brussels

Joint-Lead managers: ING and Piper Jaffray –

Petercam is Co-lead manager

12 month lock-up for the pre-IPO security holders and standstill for the company

Offering

Listing

Syndicate

Lock-up & standstill

28

Last 12 months as a public company

29

Business Highlights – Q3 Update

Further data analysis confirms clinical superiority of ChondroCelect

ChondroCelect registration procedure progressing

European cell expansion facility obtained GMP status

TiGenix’ core patent granted in the US

Cash position of EUR 29 million on September 30, 2008

30

Business Highlights – Outlook

CHMP opinion and EU approval of ChondroCelect

Launch of ChondroCelect in selected EU countries

Submission of the Biological License Application at the US FDA

Start of clinical trial with TGX002

31

Concluding

Exciting journey

Innovation and entrepreneurship

Thanks to excellent interaction & support Pre-start

At initial stages

At later stages

And continuing…