ANNUAL FINANCIAL REPORT 2010 2010 - TiGenix

In this context, we would like to stress that our engagement includesan opinion about the description, valuation and compensation ofthe contribution in kind and not about the legitimacy and eligibilityof the transaction.This report has been drawn up in accordance with article 602 of theBelgian Company Code and should not be used for other purposesthan the contribution in kind subject to this report.Zaventem, March 3, 2011BDO Réviseurs d’Entreprises Soc. Civ. SCRLRepresented byGert ClaesStatutory auditor”3.1.2 Reasons for the Offering and the use ofproceedsThe principal purposes of the Offering are to support theCompany’s growth, to increase the Company’s capitalisationand financial flexibility.The Company intends to use the net proceeds of theOffering for sales and marketing, clinical trials, research anddevelopment, working capital, capital expenditure, acquisitionsif and when they present themselves, and other generalcorporate purposes.More specifically, the Company intends to use the net proceedsof the Offering as follows (in order of priority):• To ensure market access, pricing & reimbursement ofChondroCelect and ChondroMimetic in Europe;• To complete the commercial launch and European marketroll out of ChondroCelect and ChondroMimetic andmaximize product sales;• To promote the clinical development of stem cell-basedproducts, in particular:• finalize Phase I/II in Rheumatoid Arthritis,• initiate clinical studies for Cx621 (intra-lymphaticadministration of eASCs)• initiate clinical studies with stem cell-based products forosteoarthritis and• To complete manufacturing capacity expansion as plannedwith the Sittard-Geleen facility.The Company constantly evaluates opportunities toacquire businesses and technologies that it believes maybe complementary to its business activities and negotiatepartnering agreements in relation to its developmentalpipeline, including partnering of the phase III of Cx601 andopportunities in the areas of biomaterials, Cx501 and potentiallyother areas.The amounts and timing of the Company’s actual expenditureswill depend upon numerous factors, including the status ofthe Company’s product development and commercialisationefforts, the amount of cash received resulting from grants, etc.The Company has not determined the amounts it plans tospend on any of the areas listed above or the timing of theseexpenditures. The Company intends to hold the proceedsit receives in connection with the Offering at banks and inshort-term, interest-bearing, investment grade securities,including governmental obligations and other money marketinstruments, until the Company will use them.3.2 Key information3.2.1 Qualified working capital statementOn the date of this prospectus, the Company is of the opinionthat, taking into account its available cash and cash equivalentsand considering the equity investment made by the Cellerixshareholders and other investors, by way of a capital increasein cash, in the amount of €18,155,669.74 but not taking intoaccount the proceeds of the Offering, it does not have sufficientworking capital to meet its present requirements and cover theworking capital needs for a period of at least 12 months as ofthe date of this prospectus. In case the Company would not beable to attract any extra funds, it expects to run out of workingcapital at the earliest as of October 2011.However, the Company is confident that the proceeds of theOffering will provide the Company with sufficient workingcapital to meet its present requirements and cover the workingcapital needs for a period of at least 12 months as of the dateof this prospectus. In case the Offering will not generatesufficient cash, the Company intends to make efforts to timelyrealise additional cost savings or other measures to fill upthe shortfall.58 • TiGenix • Rights Offering