ANNUAL FINANCIAL REPORT 2010 2010 - TiGenix

1. The year in briefThe Company has reached its financial targets and most of itsstrategic milestones for 2010 on schedule, both in Spain andinternationally.The Company’s Capital and Reserves have been strengthenedwith the disbursement of a new tranche of 4 million euroswithin the latest “Series C” financing round (established inlate 2009 for a total of 27 million euros to be disbursed inseveral tranches, the first of which, worth 5 million euros, wasdisbursed during the last financial year).Progress with respect to clinical trials can be broken downacross two platforms, the autologous platform and theallogeneic platform:Autologous platformOntaril (*): The results of the phase III clinical trials for theproduct Ontaril did not meet expectations in terms of efficacycompared with the treatment used in the control arm of thetrial. At the end of 2009, therefore, the Company’s Board ofDirectors decided not to go ahead with clinical development ofthis product for the time being.Note (*): Ontaril is the name of the product conceived as analternative for treatment of complex perianal fistulas in patientswith and without Crohn’s disease. This product was the firstcellular therapy product to be designated an Orphan Drug bythe European Medicines Agency (EMA) in July 2005.Cx501(**): Once the results of the clinical trials were known,the need to evaluate its use on ulcers (of various types:burns, diabetic, etc.) became clear, requiring a structuredDevelopment Plan. Cellerix has decided not to carry out thismeasure itself but to seek a dermatology specialist to do thework.Note (**): Cx501 is an innovative chimeric skin graft that combines expandedcutaneous cells taken from the patient (autologous) and from a donor(allogeneic) to create a dermic matrix that is less likely to be rejected by thepatient, making it suitable as a long-term cutaneous repair treatment forsufferers of Epidermolysis Bullosa Dystrophica Recessiva (EBDR). EBDR is anextremely debilitating hereditary skin disease that produces severe damage andblistering to the skin, and, in extreme cases, causes the fingers to join together, acondition known as syndactylia.Allogeneic platformCx601: (Gastroenterology -- Complex perianal fistula). This isthe allogeneic version of Ontaril (from stem cells taken froma donor other than the recipient). It is being developed asan alternative to Ontaril (FATT 1 autologous platform). Themolecule, presently known as Cx601, has been designated anOrphan Drug by the European Medicines Agency. Phase II ofthe clinical development (obtaining preliminary informationon the effectiveness of the drug) was completed at the end of2010.Cx611: Programme aimed at developing an intravenoustreatment for rheumatoid arthritis. Phase II clinical trialswere about to begin at the end of 2010 (which will provideinformation on the efficacy of the drug).Cx-621. Allogeneic product aimed at providing an intralymphatictreatment for certain autoimmune and inflammatorydisorders as rheumatoid arthritis. Phase I trials on healthypatients are expected to take place in 2011.Cx-602. Allogeneic product for the treatment of autoimmuneand inflammatory disorders, as ulcerative colitis, in pre-clinicaldevelopment phase.Cx911 T-regs: Product aimed at the treatment of autoimmunedisorders based on the use of regulatory T cells. In pre-clinicalphase at the close of 2010.Having decided to abandon the autologous platform, Cellerixhas had to reformulate its business plan, involving a number ofdecisions which have had a major impact on the Company:Staffing cuts: A workforce adjustment plan (ERE) wasimplemented in the first quarter of 2010, affecting 31employees.Two clinical trials which were in progress were abandoned:Ontaril FATT2 (same indications as Ontaril but aimed at Crohn’sdisease sufferers) and an additional clinical trial on this productto analyse the data from the first trial over the long term.This change of strategy to focus on the allogeneic platform hasresulted in lower operating costs in 2010 than in 2009.EBITDA in 2010 was negative, as in previous financial years,as the Company is currently in the development phase. As insimilar companies, the figures for previous financial years arenot comparable.The Company has decided to develop a number of productsbased on the allogeneic platform:3 •