ANNUAL FINANCIAL REPORT 2010 2010 - TiGenix

Recent developmentsAcquisition of CellerixOn February 25, 2011 TiGenix NV and Cellerix announcedthat the two cell therapy-focused biotechnology companies,Cellerix’ shareholders and certain other investors of Cellerixentered into a Contribution Agreement to combine theoperations of both companies by means of a share for shareexchange.Shareholders and investors of Cellerix committed to make acash contribution of €18,155, 669.74 in Cellerix before the closingof the proposed Contribution.The Company also announced its intention to raiseadditional funds through a public rights offering, of which€10,012,000.00 has already been secured via commitments fromcertain existing shareholders and new investors.ReimbursementIn Belgium TiGenix NV has received on February 24, 2011 thenotification by the Minister of Social Affairs of the approval of aconvention agreement between the RIZIV/INAMI and TiGenixfor the reimbursement of ChondroCelect for well-indicatedpatients in specialised treatment centres. This conventioncovers a period of three years and defines the specifictreatment criteria and follow-up measures the company has toconduct.In France a positive advice has now been issued by the “HautCollège” of the “Haut Autorité de Santé” recommending theconditional reimbursement of the combination of culturedautologous chondrocytes, membrane and surgical procedureunder a special reimbursement scheme (“Remboursementdérogatoire” Art. 165-1-1). Since ChondroCelect is the onlyapproved medicinal product for autologous chondrocytetransplantation in France, this decision opens the perspective toobtain controlled access to the French market.In the Netherlands, the procedure for reimbursement ofChondroCelect under a special reimbursement schemefor innovative new medicines (“Beleidsregel DureGeneesmiddelen”) is still ongoing. A decision is now expectedin the second quarter of 2011.In Germany, thirty-six German hospitals filed for NUB approvalat the end of 2010. These hospitals were recently informed byInEK that the product obtained this year NUB Status 4 meaningthat ChondroCelect is eligible for reimbursement on a case bycase basis.In Spain, a decision on the national level is expected in thesecond quarter of 2011. Discussions at the regional level willfollow and are currently being prepared.Details on the admission to tradingof the Contribution SharesBackground of the ContributionOn February 24, 2011, TiGenix made an offer to each individualshareholder of Cellerix to contribute its shares in Cellerix intothe share capital of TiGenix in exchange for newly issuedShares (the “Contribution Offer”). Following the review byeach of the shareholders of Cellerix of the Contribution Offer,ultimately all shareholders of Cellerix - deciding individually anddiscretionarily - accepted and adhered to the Contribution Offer(the “Contribution Agreement”). Under the ContributionAgreement and subject to certain terms and conditions setout in the Contribution Agreement, the Cellerix shareholdersundertook to contribute, through a contribution in kind(“inbreng in natura” / “apport en nature”), into the Companyall of their shares in Cellerix as at the date of completion ofsuch contribution (the “Contribution”). The ContributionAgreement also envisaged that, prior to the Contribution andsubject to certain conditions, certain Cellerix investors wouldcollectively make an equity investment in Cellerix, by way ofa capital increase in cash, in the amount of €18,155,669.74 inaccordance with shareholders’ and investment agreementsexecuted between Cellerix shareholders in 2009, as amendedfrom time to time, and certain related agreements (the“Cellerix Shareholders Investment”).Within the framework of the Contribution Agreement, Cellerixwas valued at €40,000,000 prior to the Cellerix ShareholdersInvestment. Taking into account the amount of the CellerixShareholders Investment, 100% of the Cellerix shares wasvalued at €58,155,669.74. The €40,000,000 valuation of Cellerixprior to the Cellerix Shareholders Investment was based onan assessment of the technology value of Cellerix using threedifferent methods: (a) the pre-money valuation of Cellerix in itslast financing rounds, (b) an analysis of comparable companiesand transactions, and (c) a “sum of the parts” net present valueanalysis of Cellerix’ lead programmes. The €18,155,669.74 cashthat would be invested in Cellerix prior to the Contributionpursuant to the Cellerix Shareholders Investment was valued ona euro for euro basis. The Cellerix Shareholders Investment hasbeen completed between April 26, 2011 and the ContributionDate.13 •