TiGenix, from IP to IPO

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TiGenix, from IP to IPO

• Leuven
• 20 November 2008

Gil Beyen Co-founder CEO TiGenix NV
Michael van Eeno Director ING Corporate Finance
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TiGenix
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 capital March 22, 2007 46 million EUR
via IPO

• Founded
• Focus
• Lead product
• Pipeline
• Locations
• Finance

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Clear focus joint function

• Osteoarthritis
• 2.5 to 5 ofadult population in Western world
  has symptomatic knee osteoarthritis

• Cartilage defects
• gt 2 million articular cartilage defects
  diagnosedper year
• Ca. 130.000
• grade 3-4 full
• thickness defects

femur
articular cartilage
tibia

• Meniscus trauma
• 2.2 million menisci removed
• or partially removed per year

outer meniscus
inner meniscus
Europe and US
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Lead product ChondroCelect
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Proprietary molecular profile of stable cartilage
forming cells
F. DellAccio, C. De Bari and F.P. Luyten.,
Arthritis Rheumatism , 2001
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Interaction science - IP
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Proof clinical trialsProspective 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

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Superior structural repair at 12 m
Microfracture
ChondroCelect
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Superior clinical outcome at 36m
Average of all KOOS domains, except Sports
FAS without imputation for missing data or
failures
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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

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GMP Production
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Pipeline development
Adult stem cells
Meniscus repair (TGX003)
Next Generation-3D (TGX002-TGXFAB002) Combination
product (TIG-FAB)
Broaden indication
ChondroCelect (TGX001)
Increase ease of use and patient
friendliness
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Adequate financial means needed
Long time to market
Clinical trial
GMP facility
RD and IP
Marketing sales
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Seed financing (2000-2001)

• Initial seed funding EUR 1.000.000
• Gemma Frisius Fonds
• Founders
• K.U.Leuven RD 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

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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

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Financing life cycle
Secondary

• Knowledge-Based Companies

Offerings
VCs
Strategic Alliances
Angels, FFF
Later Stage
Seed Capital
Early Stage
Public
Market
CASH-IN
Operating Cash Flow
Mezzanine
IPO
3rd
2nd
Public Company
1st
TIME
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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 its 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)

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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

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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_at_Venture, e.a

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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

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and important milestones to come

• 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

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Next steps
IPO
Sale of the Company

• Public market
• Broader investor base

• Industrial party
• Financial party

Company
Private Placement existing investors
Private Placement new investors
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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 companys 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

MA Sales Process

• 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

Private Placement

• Premium valuation to earlier rounds
• Specialised investors
• Track record

• Further delays exit of the founders
• Valuation discussion
• Dilution for initial investors

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When is a company a feasible IPO candidate?
Characteristic
Criteria

• 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

Earnings
Strong and clear investment case
Growth prospects
Commitment Management
Timing
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Advantages of an IPO vs Private placement
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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

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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

Syndicate
Lock-up standstill
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Last 12 months as a public company
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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

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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

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Concluding

• Exciting journey
• Innovation and entrepreneurship
• Thanks to excellent interaction support
• Pre-start
• At initial stages
• At later stages
• And continuing