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As filed with the Securities and Exchange Commission on July 13, 2016.

Registration No. 333-208693


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



Amendment No. 4
to
Form F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



TiGenix
(Exact name of Registrant as specified in its charter)

Kingdom of Belgium
(State or other jurisdiction of
incorporation or organization)
  2834
(Primary Standard Industrial
Classification Code Number)
  Not Applicable
(I.R.S. Employer
Identification Number)



Romeinse straat 12, box 2
3001 Leuven
Belgium
+32 (16) 39 6060
(Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices)



CT Corporation System
111 Eighth Avenue
New York, NY 10011
+1 (212) 894-8800
(Name, address, including zip code, and telephone number, including area code, of agent for service)



Copies to:

Peter Castellon, Esq.
Proskauer Rose LLP
110 Bishopsgate
London EC2N 4AY
United Kingdom
+44 (20) 7280-2000

 

Thomas S. Levato, Esq.
Goodwin Procter LLP
The New York Times Building
620 Eighth Avenue
New York, NY 10018
United States
+1 (212) 813-8800



Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this registration statement.

        If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.    o

        If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:    o

        If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

        If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

        The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission acting pursuant to said Section 8(a) may determine.

   


Table of Contents

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

    

Subject to completion, dated July 13, 2016

Preliminary Prospectus

Ordinary Shares including Ordinary Shares
in the form of American Depositary Shares

LOGO

$          per American Depositary Share
        euros per Ordinary Share

        TiGenix, a Belgian public limited liability company, is offering          ordinary shares.

        We are offering          ordinary shares in the form of American Depositary Shares, or ADSs. Each ADS will represent ten ordinary shares with no nominal value per share. The total number of ADSs issued in the offering is subject to adjustment.

        We are offering          ordinary shares to investors outside the United States.

        This is our initial public offering in the United States. We have applied to list our ADSs on the NASDAQ Global Market under the symbol "TIG." Prior to this offering our ordinary shares have traded, and subsequent to this offering will continue to trade, on Euronext Brussels under the symbol "TIG." The latest reported closing sale price of our ordinary shares on Euronext Brussels on July 12, 2016 was 1.04 euros per share, or $1.15 per share (equivalent to a price of $        per ADS) based on the rate of exchange on that day.



This investment involves a high degree of risk. See "Risk Factors" beginning on page 13.



           
 
 
  Per ordinary
share

  Per ADS
  Total
 

Public offering price

  €                   $                   $                
 

Underwriting discounts and commissions(1)

  €                   $                   $                
 

Proceeds, before expenses, to TiGenix(2)

  €                   $                   $                

 

(1)
The underwriters will also be reimbursed for certain expenses incurred in this offering. See "Underwriting" for details.

(2)
Total gross proceeds from the offering, including the sale of ordinary shares and ordinary shares in the form of ADSs.

        The underwriters have a thirty-day option to purchase up to          additional ADSs to cover over-allotments, if any.

        We are an "emerging growth company" as that term is defined in the Jumpstart Our Business Startups Act of 2012 and, as such, will be subject to reduced public company reporting requirements for future filings. See "Prospectus Summary—Implications of Being an Emerging Growth Company."

        Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

        Delivery of the ADSs will be made against payment in New York, New York on or about                        ,         .

Joint Book-Running Managers

Canaccord Genuity   KBC Securities

Co-Manager

Chardan Capital Markets

The date of this prospectus is                        ,         .


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TABLE OF CONTENTS

 
  Page  

PROSPECTUS SUMMARY

    1  

RISK FACTORS

   
13
 

HISTORY AND ORGANIZATIONAL STRUCTURE

   
43
 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

   
45
 

EXCHANGE RATES

   
47
 

USE OF PROCEEDS

   
48
 

DIVIDEND POLICY

   
49
 

CAPITALIZATION

   
50
 

DILUTION

   
51
 

MARKET FOR OUR SHARES

   
53
 

SELECTED FINANCIAL INFORMATION

   
54
 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

   
57
 

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

   
64
 

BUSINESS

   
88
 

DESCRIPTION OF SHARE CAPITAL

   
147
 

MANAGEMENT

   
158
 

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

   
174
 

PRINCIPAL SHAREHOLDERS

   
175
 

DESCRIPTION OF AMERICAN DEPOSITARY SHARES

   
177
 

SHARES ELIGIBLE FOR FUTURE SALES

   
189
 

TAXATION

   
190
 

UNDERWRITING

   
201
 

EXPENSES RELATED TO THIS OFFERING

   
207
 

LEGAL MATTERS

   
208
 

EXPERTS

   
209
 

SERVICE OF PROCESS AND ENFORCEMENT OF CIVIL LIABILITIES

   
210
 

WHERE YOU CAN FIND MORE INFORMATION

   
212
 

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

   
F-1
 

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        You should rely only on the information contained in this prospectus and any related free-writing prospectus that we authorize to be distributed to you. We have not, and the underwriters have not, authorized any person to provide you with information different from that contained in this prospectus or any related free-writing prospectus that we authorize to be distributed to you. This prospectus is not an offer to sell, nor is it seeking an offer to buy, these securities in any jurisdiction where the offer or sale is not permitted. The information in this prospectus speaks only as of the date of this prospectus unless the information specifically indicates that another date applies, regardless of the time of delivery of this prospectus or of any sale of the securities offered hereby.

        No action is being taken in any jurisdiction outside the United States to permit a public offering of the ADSs or possession or distribution of this prospectus in that jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the United States are required to inform themselves about and to observe any restrictions as to this offering and the distribution of the prospectus applicable to that jurisdiction.

        Until                        ,                         (twenty-five days after the commencement of this offering), all dealers that buy, sell or trade our ADSs, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

        Unless otherwise indicated, information contained in this prospectus concerning our industry and the markets in which we operate, including our general expectations and market position, market opportunity and market share, is based on information from our own management estimates and research, as well as from industry and general publications and research, surveys and studies conducted by third parties. Management estimates are derived from publicly available information, our knowledge of our industry and assumptions based on such information and knowledge, which we believe to be reasonable. In addition, assumptions and estimates of our and our industry's future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in "Risk Factors." These and other factors could cause our future performance to differ materially from our assumptions and estimates. See "Special Note Regarding Forward-Looking Statements."

        Our registered trademarks, TiGenix and ChondroCelect, the TiGenix logo and other trademarks or service marks of TiGenix appearing in this prospectus are our property. This prospectus contains additional trade names, trademarks and service marks of other companies that are the property of their respective owners.

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PROSPECTUS SUMMARY

        This summary highlights selected information about us contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider in making your investment decision. Before investing in the ADSs, you should read this entire prospectus carefully, including the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes, for a more complete understanding of our business and this offering.

        Except as otherwise required by the context, references to "TiGenix," "Company," "we," "us" and "our" are to TiGenix and its subsidiaries.

        We are an advanced biopharmaceutical company focused on developing and commercializing novel therapeutics from our proprietary technology platforms of allogeneic, or donor-derived, stem cells. We have completed, and received positive data in, a single pivotal Phase III trial in Europe and Israel of our most advanced product candidate Cx601, a first-in-class injectable allogeneic stem cell therapy indicated for the treatment of complex perianal fistulas in patients suffering from Crohn's disease. A complex perianal fistula consists of abnormal tracts between the rectum and the exterior surroundings of the anus, and is commonly associated with Crohn's disease. It is a serious clinical condition affecting the anal sphincter and is potentially associated with a perianal abscess. Cx601 has been granted orphan designation by the European Medicines Agency, or EMA, in recognition of its potential application for the treatment of anal fistulas, which affect approximately 120,000 adult patients in the United States and Europe and for which existing treatment options are inadequate. The EMA grants orphan designation to medicinal products for indications that affect no more than five out of 10,000 people in the European Union. The benefits of orphan designation include a streamlined process for obtaining relevant regulatory approvals and up to ten years of exclusivity in the European market.

        Cx601 is our lead product candidate based on our platform of expanded adipose, or fat tissue, derived stem cells, known as eASCs. On July 4, 2016, we entered into a licensing agreement with Takeda, a large pharmaceutical company active in gastroenterology, under which Takeda acquired the exclusive right to commercialize Cx601 for complex perianal fistulas outside the United States.

        In the randomized, double-blind Phase III study, Cx601 met the primary endpoint of combined remission of complex perianal fistulas at twenty-four weeks. The results of the follow-up analysis after fifty-two weeks were also positive. The same endpoint of combined remission was also met at fifty-two weeks, showing that the effect of the treatment is sustained. The results also confirmed the favorable safety and tolerability profile of Cx601.

        Based on the data from our pivotal Phase III trial in Europe, we submitted a marketing authorization application to the EMA in the first quarter of 2016, and a decision by the EMA could be expected by mid-2017. If marketing authorization were to be granted by mid-2017, Takeda could start to commercialize the approved product in Europe during the second half of 2017. We also intend to initiate a pivotal Phase III trial for Cx601 for the treatment of complex perianal fistulas in the United States in the first half of 2017 and have begun the technology transfer process to Lonza, a U.S.-based contract manufacturing organization. Based on discussions with the U.S. Food and Drug Administration, or FDA, we believe that the U.S. Phase III trial, if successful, could, together with the European Phase III data, serve as supportive evidence for filing a biologics license application, or BLA, for regulatory approval with the FDA. We reached an agreement with the FDA through a special protocol assessment, or SPA, procedure for our proposed protocol in 2015. The agreed primary endpoint for the U.S. Phase III trial is the same as the one for the European Phase III trial. We intend to apply for fast track designation from the FDA, which would facilitate and expedite development and review of our U.S. Phase III trial. Fast track designation by the FDA is granted to drugs that treat serious conditions and fill an unmet medical need. It results in earlier and more frequent communication with the FDA during the drug development and review process.

 

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        Our eASC-based platform has generated other product candidates, including Cx611, for which we have completed a European Phase I trial in severe sepsis. We are currently preparing to initiate a Phase I/II clinical trial in severe sepsis in Europe in the second half of 2016.

        On July 31, 2015, we acquired Coretherapix, a Spanish biopharmaceutical company focused on developing cost-effective regenerative therapeutics to stimulate the endogenous repair capacity of the heart and mitigate the negative effects of myocardial infarction, or a heart attack. Coretherapix has developed an allogeneic platform of expanded cardiac stem cells, or CSCs, and its lead product candidate, AlloCSC-01, employs allogeneic CSCs as a potential treatment for acute ischemic heart disease. We are sponsoring a European Phase I/II trial to evaluate the safety and efficacy of the intracoronary infusion of AlloCSC-01 in patients with acute myocardial infarction. We received six-month interim exploratory data in June 2016, and final results will be available during the first half of 2017. We are also developing AlloCSC-02, the second product candidate from the CSC-based platform, which is in a preclinical proof of concept stage for a chronic cardiac indication.

        We also developed and commercialized ChondroCelect, the first cell-based medicinal product to receive marketing authorization from the EMA, which was indicated for cartilage repair in the knee. In July 2016, we requested the withdrawal of our marketing authorization for ChondroCelect.

        Our eASC-based product candidates are manufactured at our facility in Madrid that has been approved by the Spanish Medicines and Medical Devices Agency as being compliant with current Good Manufacturing Practices, or cGMP, requirements, which are the standards prescribed by regulatory agencies that control and license the manufacture and supply of pharmaceutical products, such as eASCs. Through our expansion process, we can generate up to 2,400 doses of Cx601 from cells extracted from a single healthy donor. We believe we already have the capacity to scale up the production of our eASC-based products on a late-stage clinical as well as commercial scale and have successfully obtained a manufacturing license from the Spanish Medicines and Medical Devices Agency for the commercial production of Cx601. We expect to continue producing Cx601 at our facility until Takeda assumes responsibility for manufacturing. Our CSC-based product candidates are manufactured in Spain by 3P Biopharmaceuticals, a sub-contractor, which has been approved by the Spanish Medicines and Medical Devices Agency as being compliant with cGMP requirements, based on a manufacturing process developed by Coretherapix.

        Other than our licensing agreement with Takeda, under which Takeda has the exclusive right to commercialize Cx601 outside the United States, we have retained the worldwide rights for all of our product candidates. As of March 31, 2016, we owned or co-owned twenty-nine patent families and had more than one hundred granted patents in more than twenty jurisdictions, including the United States, with expiration dates starting from 2020 for a patent relating to ChondroCelect.

Product and Product Candidates

        Our therapeutic approach is to focus on the use of living cells, rather than conventional drugs, for the treatment of inflammatory and autoimmune diseases, through our eASC-based platform, and heart disease, through our CSC-based platform. Our pipeline of stem cell programs is based on validated platforms of allogeneic stem cells. Our eASCs are extracted and cultured from fat tissue sourced from healthy consenting adult donors for clinical studies focused on the treatment of autoimmune and inflammatory diseases. Our CSCs are sourced from a small amount of myocardial tissue that would typically be discarded during a routine valvular replacement operation.

 

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        The following chart summarizes our product candidates and our marketed product in Europe:

GRAPHIC

Cx601

        Cx601, our lead product candidate, is a potential first-in-class local injectable allogeneic stem cell therapy that has completed a pivotal Phase III trial in Europe and Israel for the treatment of complex perianal fistulas in patients suffering from Crohn's disease. We have observed compelling clinical results that suggest that Cx601 has clinical utility in treating perianal fistulas in a single treatment with increased efficacy and a more favorable adverse events profile than currently available therapies in Europe and the United States, with patients having a 44.3% greater probability of achieving combined remission than placebo patients. Based on the results of our pivotal Phase III trial, we submitted a marketing authorization application to the EMA in the first quarter of 2016, and a decision by the EMA could be expected by mid-2017. If marketing authorization were to be granted by mid-2017, Takeda could start to commercialize the approved product in Europe during the second half of 2017. Moreover, Cx601 enjoys significant benefits due to its designation as an orphan drug by the EMA.

        We have also had a meeting with the FDA to discuss the adequacy of our clinical and non-clinical data to support an investigational new drug, or IND, application for a U.S.-based Phase III trial. We received positive feedback regarding our pivotal European Phase III trial design for supporting a BLA and have reached an agreement with the FDA through an SPA procedure for our proposed protocol for a Phase III trial in the United States. In addition, we intend to apply to the FDA for fast track designation. We expect to submit an IND application to the FDA by the end of 2016 and to initiate a Phase III trial in the United States in the first half of 2017.

Cx611

        Cx611, our second eASC-based product candidate, is a potential first-in-class intravenous injectable allogeneic stem cell therapy intended for the treatment of severe sepsis. We believe that Cx611, if approved for severe sepsis, would be an add-on therapy that has the potential to reduce mortality,

 

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which is estimated at up to 20% to 50% for patients suffering from severe sepsis. Following positive safety data from a European Phase I trial, we are planning to advance Cx611 in severe sepsis in a Phase I/II trial in Europe in the second half of 2016.

Cx621

        We have explored the intra-lymphatic administration of allogeneic eASCs with Cx621 and generated positive safety and feasibility information in a Phase I trial in Europe. This different route of administration has the potential to enable applications in autoimmune diseases.

AlloCSC-01

        AlloCSC-01, our lead CSC-based product candidate, is a suspension of allogeneic CSCs administered into the coronary artery of the patient. We are currently in the second stage of a two-stage Phase I/II trial in Europe to evaluate the safety and preliminary efficacy of the intracoronary infusion of AlloCSC-01 in patients with acute myocardial infarction. We received interim exploratory data in June 2016 and expect to receive final results during the first half of 2017. We believe that AlloCSC-01 has the potential to limit the extent of tissue damage caused by myocardial infarction and delay the onset, or reduce the severity of, congestive heart failure.

AlloCSC-02

        We are also developing AlloCSC-02, the second product candidate from our CSC-based platform, which is in a preclinical proof of concept stage for a chronic cardiac indication.

ChondroCelect

        ChondroCelect, our first commercial product, was the first cell-based product approved in Europe, and received centralized marketing authorization in October 2009 as an advanced therapy medicinal product. During the first six months of 2014, we discontinued our operations in connection with ChondroCelect, through the combination of the sale of our manufacturing subsidiary to PharmaCell and the entry into an agreement with Swedish Orphan Biovitrium, or Sobi, for the exclusive marketing and distribution rights with respect to ChondroCelect within the European Union (except for Finland), as well as several other countries, including the Middle East and North Africa. In July 2016, we requested the withdrawal of our marketing authorization, which we expect will be effective as of November 30, 2016. After this date, we will no longer generate any revenues from ChondroCelect.

Technology Platform

        Our development programs are based on our proprietary allogeneic stem cell-based technology platforms and focus on the treatment of both inflammatory and autoimmune diseases and the chronic and acute settings of heart disease. The cells target different pathways than conventional drugs and may be effective in patients who fail to respond to such drugs, or in indications for which there is currently no available treatment. We believe our platforms offer significant market opportunities based on the following distinguishing factors:

    Our use of allogeneic adult stem cells. This has the potential to enable efficient production of large batches of cells, does not require any biopsy or tissue procurement from the patient and results in the immediate and consistent availability of cells when required for treatment.

    Our expertise in optimizing the delivery of stem cells as required by different indications through both local and systemic routes of administration.

    Our use of eASCs extracted from human adipose tissue sourced from healthy donors. We believe that this type of cell may offer significant advantages over other mesenchymal cell types,

 

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      such as stem cells sourced from bone marrow, for the treatment of inflammatory and autoimmune diseases.

    Our use of human-derived cardiac tissue that would typically be discarded during a routine valvular replacement operation. We believe that CSCs extracted from this tissue play a role in the regulation of the regeneration process in the infarcted heart upon their administration.

    The mechanism of action of our eASC-based product candidates, which utilizes two main biological pathways that underlie the efficacy of stem cells generally in disease treatment: (i) their anti-inflammatory properties and (ii) their secretion of repair and growth promoting molecules. In clinical studies, our eASCs have exhibited broad immunomodulatory properties, including the regulation of immune cells such as B lymphocytes, T lymphocytes, natural killer cells, monocytes or macrophages and neutrophils.

    The mechanism of action of our CSC-based product candidates, which we believe relies on three potential biological pathways: (i) cardioprotection of damaged tissue, (ii) modulation of the immune response to reduce scarring and ameliorate the effects of chronic inflammation and (iii) promotion of the regeneration of new myocardial tissue.

Strategy

        Key elements of our strategy to provide innovative and safe treatment options for a broad range of inflammatory and autoimmune diseases and to leverage our cell-therapy experience by expanding into other treatment areas, such as cardiology indications, with our recent acquisition of Coretherapix, are as follows:

    Advance the clinical development of Cx601 for the treatment of complex perianal fistulas in patients with Crohn's disease and secure regulatory approval in Europe and the United States.

    Achieve global commercialization of Cx601.

    Advance our product candidates Cx611, Cx621, AlloCSC-01 and AlloCSC-02 in the United States and the rest of the world.

    Discover, develop and commercialize first-in-class novel therapeutics for areas of high unmet medical need by leveraging our proprietary allogeneic stem cell-based technology platforms and our experience in bringing stem-cell based products to market.

    Strengthen our competitive position by leveraging our experienced management team and reinforcing key opinion leader support.

Summary Risk Factors

        An investment in the ADSs involves a high degree of risk. You should consider carefully the risks discussed below and under the heading "Risk Factors" beginning on page 13 of this prospectus before purchasing the ADSs. If any of these risks actually occurs, our business, financial condition or results of operations would likely be materially adversely affected. In such case, the trading price of our ADSs would likely decline, and you may lose all or part of your investment.

        These risks include the following:

    We may experience delays or failure in the preclinical and clinical development of our product candidates.

    Regulatory approval of our product candidates may be delayed, not obtained or not maintained, and we may be affected by future changes to any pharmaceutical legislation or guidelines.

    We may need substantial additional funding, which may not be available on acceptable terms when required, if at all.

 

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    We have an accumulated deficit of 120 million euros as of December 31, 2015, and our net losses and significant cash used in operating activities have raised substantial doubt regarding our ability to continue as a going concern.

    There may be uncertainty over reimbursement from third parties for newly approved healthcare products or such reimbursement may be refused, which could affect our ability to commercialize our product candidates.

    We may not be able to protect our proprietary technology adequately or enforce any rights related thereto.

    We rely or may rely on third parties for certain of our research, clinical trials, technology, supplies, manufacturing and sales and marketing, and a failure of service by such parties could adversely affect our business and reputation.

Company Information

        TiGenix was incorporated in Belgium on February 21, 2000 as a company with limited liability under Belgian corporate law. Our principal executive and registered offices are located at Romeinse straat 12, box 2, 3001 Leuven, Belgium. Our telephone number is +32 (16) 39 60 60. We are registered with the Register of Legal Entities (Leuven) under the enterprise number 0471.340.123. Our internet website is www.tigenix.com. The information contained on, or accessible through, our website is not incorporated by reference into this prospectus and should not be considered a part of this prospectus.

        Our agent for service of process in the United States is CT Corporation System, whose registered offices are located at 111 Eighth Avenue, 13th Floor, New York, NY 10011. Their telephone number is +1 (212) 894-8800.

        For additional information regarding our Company organizational history, see "History and Organizational Structure."

Recent Developments

        On March 14, 2016, we raised 23.8 million euros in gross proceeds through a private placement of 25 million new shares at a subscription price of 0.95 euros per share.

        On July 4, 2016, we entered into a licensing agreement with Takeda, a large pharmaceutical company active in gastroenterology, under which Takeda acquired the exclusive right to commercialize Cx601 for complex perianal fistulas outside the United States for an upfront non-refundable payment of 25 million euros, a further payment of 15 million euros if and when Cx601 receives marketing authorization from the EMA and additional sales and reimbursement milestone payments up to a total of 340 million euros.

        In July 2016, we also decided to enter into a termination agreement with Sobi with respect to our distribution agreement, send a termination notice under our distribution agreement to Finnish Red Cross Blood Service and send a termination notice under our manufacturing agreement to our former subsidiary, which was acquired by PharmaCell. We also requested the withdrawal of our marketing authorization, which we expect will be effective as of November 30, 2016.

        In July 2016, we also requested the withdrawal of our marketing authorization for ChondroCelect, which we expect to be effective as of November 30, 2016, and decided to terminate our distribution agreements with Sobi and Finnish Red Cross Blood Service and our manufacturing agreement with our former subsidiary, which was acquired by PharmaCell.

Implications of Being an Emerging Growth Company and a Foreign Private Issuer

        As a company with less than $1.0 billion in revenue during its fiscal year, we qualify as an "emerging growth company" as defined in Section 2(a) of the Securities Act of 1933, as amended, as

 

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modified by the Jumpstart our Business Startups Act of 2012, or the JOBS Act. As such, we are eligible to take advantage of specified reduced reporting requirements and are relieved of certain other significant requirements that are otherwise generally applicable to public companies. As an emerging growth company:

    We are permitted to present only two years of audited consolidated financial statements and only two years of related Management's Discussion and Analysis of Financial Condition and Results of Operations in the registration statement of which this prospectus forms a part.

    We are exempt from the requirement to obtain an attestation and report from our auditors on the assessment of our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002.

    We are permitted to provide less extensive disclosure about our executive compensation arrangements.

        We expect to remain an "emerging growth company" for up to five years, or until any one of the following occurs:

    The last day of the first fiscal year in which our annual gross revenue exceeds $1 billion.

    The date on which we become a "large accelerated filer" as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, which would occur if the market value of our common equity held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter and we have been publicly reporting for at least twelve months.

    The date on which we have issued more than $1.0 billion in non-convertible debt during the preceding three-year period.

        We may choose to take advantage of some but not all of these reduced burdens. We have taken advantage of reduced reporting requirements in this prospectus. Accordingly, the information contained herein may be different from the information you receive from our competitors that are public companies, or other public companies in which you have made an investment.

        Further, as a foreign private issuer, we are not subject to the same requirements that are imposed upon U.S. domestic issuers by the Securities and Exchange Commission, or the SEC. Under the Exchange Act, we will be subject to reporting obligations that, in certain respects, are less detailed and less frequent than those of U.S. domestic reporting companies. For example, we will not be required to issue quarterly reports, proxy statements that comply with the requirements applicable to U.S. domestic reporting companies, or individual executive compensation information that is as detailed as that required of U.S. domestic reporting companies. We will also have four months after the end of each fiscal year to file our annual reports with the SEC and will not be required to file current reports as frequently or promptly as U.S. domestic reporting companies. We will also present financial statements pursuant to International Financial Reporting Standards, or IFRS, instead of pursuant to U.S. generally accepted accounting principles, or U.S. GAAP. Furthermore, although the members of our management and supervisory boards will be required to notify the Belgian Financial Markets and Services Authority of certain transactions they may undertake, including with respect to our ordinary shares, our officers, directors and principal shareholders will be exempt from the requirements to report transactions in our equity securities and from the short-swing profit liability provisions contained in Section 16 of the Exchange Act. These exemptions and leniencies will reduce the frequency and scope of information and protections available to you in comparison to those applicable to a U.S. domestic reporting companies. We intend to take advantage of the exemptions available to us as a foreign private issuer after we no longer qualify as an emerging growth company.

 

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The Offering

Issuer

  TiGenix

ADSs offered

 

      ADSs.

Ordinary shares offered

 

      ordinary shares.

Ordinary shares outstanding immediately after this offering

 

      ordinary shares.

Over-allotment option

 

      ADSs.

The ADSs

 

Each ADS represents ten ordinary shares.

 

ADSs may be evidenced by American Depositary Receipts, or ADRs. The depositary will hold the ordinary shares underlying your ADSs. You will have rights of an ADR holder as provided in the deposit agreement. You may cancel your ADSs and withdraw the underlying ordinary shares. The depositary will charge you fees for, among other acts, any cancellation. In certain limited instances described in the deposit agreement, we may amend or terminate the deposit agreement without your consent. If you continue to hold your ADSs, you agree to be bound by the terms of the deposit agreement then in effect.

 

To better understand the terms of the ADSs, you should carefully read the section in this prospectus entitled "Description of American Depositary Shares." You should also read the deposit agreement, which is an exhibit to the registration statement of which this prospectus forms a part.

Depositary for the ADSs

 

Deutsche Bank Trust Company Americas.

Custodian for the ADSs

 

Deutsche Bank AG, Amsterdam Branch.

Use of proceeds

 

We expect to receive total net proceeds from this offering of approximately $      , after deducting the underwriting discounts and commissions and estimated offering expenses, assuming a public offering price of $        (        euros) per ADS or        euros per ordinary share, the closing price of our ordinary shares on Euronext Brussels on                    ,        . We intend to use the net proceeds of this offering for (i) clinical development of our product candidates, including Cx601 in the United States, and (ii) other research and development activities, working capital and other general corporate purposes, including the costs and expenses of being a U.S.-listed public company. Pending our use of the net proceeds as described above, we may invest the net proceeds in short-term bank deposits or interest-bearing, investment-grade securities. See "Use of Proceeds."

Dividend policy

 

We do not currently pay dividends and we do not anticipate declaring or paying any dividends for the foreseeable future.

 

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Listing

 

We have applied to list our ADSs on the NASDAQ Global Market under the symbol "TIG." Prior to this offering, our ordinary shares have traded, and subsequent to this offering will continue to trade, on Euronext Brussels under the symbol "TIG," and we will timely apply for the listing and admission to trading on Euronext Brussels of the new ordinary shares, including the ordinary shares underlying the ADSs.

Risk factors

 

Investing in our ADSs involves a high degree of risk. You should carefully read the information set forth under "Risk Factors" beginning on page 13 of this prospectus and the other information set forth in this prospectus before deciding to invest in the ADSs.

        The number of our ordinary shares that will be issued and outstanding immediately after this offering is based on 202,304,587 ordinary shares outstanding as of March 31, 2016 and excludes the following:

              ordinary shares represented by the ADSs subject to the underwriters' over-allotment option to purchase additional ADSs.

    26,989,096 ordinary shares issuable upon the conversion of our 9% senior unsecured bonds due 2018, at a conversion price of 0.9263 euros per share as of March 31, 2016.

    9,645,680 ordinary shares issuable upon exercise of granted and outstanding warrants as of March 31, 2016, at a weighted-average exercise price of 1.32 euros per share.

        Unless otherwise indicated, this prospectus assumes no exercise of the underwriters' option to purchase up to an additional        ADSs from us.

 

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Summary Historical Consolidated Financial Data

TiGenix

        The tables below present our summary historical consolidated financial data. Our summary historical consolidated financial data as of December 31, 2015 and 2014 and for the years ended December 31, 2015 and 2014 have been derived from our consolidated financial statements, which are included elsewhere in this prospectus. The consolidated financial statements have been prepared and presented in accordance with IFRS as issued by the International Accounting Standards Board, or IASB. As an emerging growth company, we are not required to present, and have not presented, selected financial data for any period prior to our most recently completed two fiscal years.

        Our consolidated financial statements are prepared and presented in euros, our presentation currency. Solely for the convenience of the reader our consolidated financial statements as at and for the year ended December 31, 2015 have been translated into U.S. dollars at 1.00 euro=$1.0859 on December 31, 2015 based on the certified foreign exchange rates published by the Federal Reserve Bank of New York. Such translation should not be construed as a representation that the euro amounts have been or could be converted into U.S. dollars at these or at any other rate of exchange, or at all.

        The following summary historical consolidated financial data should be read in conjunction with our historical consolidated financial statements and the related notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations," included elsewhere in this prospectus. The historical results for any prior period are not necessarily indicative of results to be expected for any future period.

 

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Consolidated Income Statement Data

 
   
   
   
 
 
  Years ended December 31,  
 
  2015   2014   2015  
 
  In thousands of
euros, except
per share data

  In thousands of
euros, except
per share data

  In thousands of
U.S. dollars, except
per share data

 
 
   
   
  (unaudited)
 

CONTINUING OPERATIONS

                   

Revenues

                   

Royalties

    537     338     583  

Grants and other operating income

    1,703     5,948     1,849  
               

Total revenues

    2,240     6,286     2,432  

Research and development expenses

    (19,633 )   (11,443 )   (21,319 )

General and administrative expenses

    (6,683 )   (7,406 )   (7,257 )

Total operating charges

    (26,316 )   (18,849 )   (28,577 )
               

Operating Loss

    (24,076 )   (12,563 )   (26,144 )

Financial income

    148     115     161  

Interest on borrowings and other finance costs

    (6,651 )   (1,026 )   (7,222 )

Fair value gains / (losses)

    (6,654 )   60     (7,226 )

Impairment and gains/(losses) on disposal of financial instruments

    (161 )       (175 )

Foreign exchange differences, net

    1,000     1,101     1,086  
               

Loss before taxes

    (36,394 )   (12,313 )   (39,520 )

Income tax benefits

    1,325     927     1,439  
               

Loss for the year from continuing operations

    (35,069 )   (11,386 )   (38,081 )

DISCONTINUED OPERATIONS

                   

Loss for the year from discontinued operations

        (1,605 )    
               

Loss for the year

    (35,069 )   (12,990 )   (38,081 )
               
               

Attributable to equity holders of TiGenix

    (35,069 )   (12,990 )   (38,081 )

Basic and diluted loss per share

    (0.21 )   (0.08 )   (0.23 )

Basic and diluted loss per share from continuing operations

    (0.21 )   (0.07 )   (0.23 )

Basic and diluted loss per share from discontinued operations

        (0.01 )    

 

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Consolidated Statement of Financial Position Data—Summary

 
   
   
   
 
 
  As at December 31,  
 
  2015   2014   2015  
 
  In thousands of
euros

  In thousands of
euros

  In thousands of
U.S. dollars

 
 
   
   
  (unaudited)
 

ASSETS

                   

Non-current assets

    54,241     36,808     58,900  

Current assets

    24,930     17,113     27,071  
               
               

TOTAL ASSETS

    79,171     53,921     85,972  
               
               

EQUITY AND LIABILITIES

                   

Equity attributable to equity holders

    13,145     34,757     14,274  

Total equity

    13,145     34,757     14,274  

Non-current liabilities

    52,137     10,681     56,616  

Current liabilities

    13,889     8,483     15,082  

TOTAL EQUITY AND LIABILITIES

    79,171     53,921     85,972  
               
               

Consolidated Statement of Cash Flows Data—Summary

 
   
   
   
 
 
  Years ended December 31,  
 
  2015   2014   2015  
 
  In thousands of
euros

  In thousands of
U.S. dollars

 
 
   
   
  (unaudited)
 

Net cash used in operating activities

    (19,574 )   (13,367 )   (21,255 )
               

Net cash (used) in / provided by investing activities

    (4,434 )   3,307     (4,815 )
               

Net cash provided by financing activities

    28,523     7,969     30,973  
               

Cash and cash equivalents at end of period

    17,982     13,471     19,527  
               
               

 

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RISK FACTORS

        Investing in the ADSs involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with other information contained in this prospectus, before making an investment decision. Any of the following risks and uncertainties could have a material adverse effect on our business, prospects, results of operations and financial condition. The market price of our ADSs could decline due to any of these risks and uncertainties, and you could lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations.

Risks Related to the Clinical Development and Regulatory Approval of Our Product Candidates

We may experience delays or failure in the preclinical and clinical development of our product candidates.

        As part of the regulatory approval process, we conduct preclinical studies and clinical trials for each of our unapproved product candidates to demonstrate safety and efficacy. The number of required preclinical studies and clinical trials varies depending on the product, the indication being evaluated, the trial results and the applicable regulations. Clinical testing is expensive and can take many years to be completed, and its outcome is inherently uncertain. Failure can occur at any time during the clinical trial process. The results of preclinical studies and initial clinical trials do not necessarily predict the results of later-stage clinical trials, and products may fail to show the desired safety, efficacy and quality despite having progressed through initial clinical trials. The data collected from preclinical studies and clinical trials may not be sufficient to support the U.S. Food and Drug Administration, or FDA, the European Medicines Agency, or EMA, or other regulatory approval or approval by ethics committees in various jurisdictions. In addition, the review of a study by an independent data safety monitoring board or review body does not necessarily indicate that the clinical trial will ultimately be successfully completed.

        We cannot accurately predict when our current preclinical studies and clinical trials or future clinical trials will be completed, if at all, nor when planned preclinical studies and clinical trials will begin or be completed. Successful and timely completion of clinical trials will require us to recruit a sufficient number of patient candidates, locate or develop manufacturing facilities with regulatory approval sufficient for production of the product to be tested and enter into agreements with third party contract research organizations to conduct the trials. We may need to engage or further engage in preclinical studies and clinical trials with partners, which may reduce any future revenues from any future products.

        Our products may cause unexpected side effects or serious adverse events that could interrupt, delay or halt the clinical trials and could result in the FDA, the EMA or other regulatory authorities denying approval of our products for any or all targeted indications. An institutional review board or ethics board, the FDA, the EMA, any other regulatory authorities or we ourselves, based on the recommendation of an independent data safety review board or otherwise, may suspend or terminate clinical trials at any time, and none of our product candidates may ultimately prove to be safe and effective for human use.

        In addition, even if the data from our clinical trials is sufficient to support an application for marketing authorization, detailed analysis of such data, including analysis of secondary end-points and follow-up data from later periods, and the interpretation of such data by the regulatory authorities, prescribing physicians and others, including potential partners, could have a significant impact on the value of the asset and our ability to realize its full value.

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Regulatory approval of our product candidates may be delayed, not obtained or not maintained.

        In the United States, all of our cell-based product candidates are subject to a biologics license application, or BLA, issued by the FDA. In Europe, all of our product candidates require regulatory approval through the centralized marketing authorization procedure coordinated by the EMA for advanced therapy medicinal products.

        Besides the marketing authorization, we also need to obtain and maintain specific national licenses to perform our commercial operations, including manufacturing and distribution licenses, as well as authorizations to obtain and handle human cells and tissues.

        Regulatory approval may be delayed, limited or denied for a number of reasons, most of which are beyond our control, including the following:

    The requirement to perform additional clinical trials.

    The failure of the product to meet the safety or efficacy requirements.

    Our ability to successfully conclude the transfer of our technology to our contract manufacturers.

    Our ability to scale up manufacturing processes to the level required to successfully run the clinical trials for our product candidates and to commercialize them.

    The failure of the relevant manufacturing processes or facilities to meet the applicable requirements.

Any delay or denial of regulatory approval of our product candidates or any failure to comply with post-approval regulatory policies is likely to have a significant impact on our operations and prospects, in particular on our expected revenues.

        Regulatory authorities, including the FDA and the EMA, may disagree with our interpretations of data from preclinical studies and clinical trials, our interpretation of applicable regulations including, without limitations, regulations relating to patent term extensions or restorations. They may also approve a product for narrower spectrum of indications than requested or may grant approval subject to the performance of post-marketing studies for a product. Such post-approval studies, if required, may not corroborate the results of earlier trials. Furthermore, the general use of such products may result in either or both of the safety and efficacy profiles differing from those demonstrated in the trials on which marketing approval was based, which could lead to the withdrawal or suspension of marketing approval for the product. In addition, regulatory authorities may not approve the labelling claims that are necessary or desirable for the successful commercialization of our products.

        In addition, a marketed product continues to be subject to strict regulation after approval. Changes in applicable legislation or regulatory policies or discovery of problems with the product, production process, site or manufacturer may result in delays in bringing products to the market, the imposition of restrictions on the product's sale or manufacture, including the possible withdrawal of the product from the market, or may otherwise have an adverse effect on our business.

        The failure to comply with applicable regulatory requirements may, among other things, result in criminal and civil proceedings and lead to imprisonment, fines, injunctions, damages, total or partial suspension of regulatory approvals, refusal to approve pending applications, recalls or seizures of products and operating and production restrictions.

        We may not receive regulatory clearance for trials at each stage and approval for our products and product candidates still in development without delay or at all. If we fail to obtain or maintain regulatory approval for our products, we will be unable to market and sell such products, and such failure or any delay could prevent us from ever generating meaningful revenues or achieving profitability.

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We work in a strict regulatory environment, and future changes in any pharmaceutical legislation or guidelines, or unexpected events or new scientific insights occurring within the field of cell therapy, could affect our business.

        Regulatory guidelines may change during the course of a product development and approval process, making the chosen development strategy suboptimal. This may delay development, necessitate additional clinical trials or result in failure of a future product to obtain marketing authorization or the targeted price levels and could ultimately adversely impact commercialization of the authorized product. Market conditions may change, resulting in the emergence of new competitors or new treatment guidelines, which may require alterations in our development strategy. This may result in significant delays, increased trial costs, significant changes in commercial assumptions or the failure of future product candidates to obtain marketing authorization.

        In the past, the regulatory environment in Europe and certain EU member states has negatively affected our ChondroCelect business. In accordance with applicable advanced therapy medicinal product regulations, after January 1, 2013, in principle, all advanced therapy medicinal products required central marketing authorization from the EMA. This should have been beneficial for ChondroCelect, which was the first advanced therapy medicinal product to have obtained such central marketing authorization. However, the advanced therapy medicinal product regulation provided for an exemption for hospitals, which allowed EU member states to permit the non-routine production of advanced therapy medicinal product in their markets without central marketing authorization from the EMA. The implementation of this exemption by certain EU member states, notably Spain and Germany, which had very developed markets for autologous chondrocyte implantation procedures, has allowed such countries to keep local products in the market without central marketing authorization from the EMA even after January 1, 2013, thereby significantly reducing the market potential for ChondroCelect.

        Although the basic regulatory frameworks appear to be in place in the United States and in Europe for cell-based products, at present regulators have limited experience with such products and the interpretation of these frameworks is sometimes difficult to predict. Moreover, the regulatory frameworks themselves will continue to evolve as the FDA and the EMA issue new guidelines. The interpretation of existing rules or the issuance of new regulations may impose additional constraints on the research, development, regulatory approval, manufacturing or distribution processes of future and existing product candidates, and could prevent us from generating revenues or achieving profitability and force us to withdraw our products from the market.

        Unexpected events may occur in the cell therapy field, in particular unforeseen safety issues of any cell therapy product. Moreover, scientific progress might yield new insights on the biology of stem cells which might in turn impact the requirements of safety and efficacy demonstration for stem cell or other cell therapies. Such events or new insights might change the regulatory requirements and framework, in particular strengthening the required clinical research package and increasing the amount of data required to be provided. This could result in additional constraints on our product development process and lead to significant delays, which could prevent us from ever generating meaningful revenues or achieving profitability.

Fast track designation for Cx601, if obtained, may not lead to a faster development or review process.

        We intend to seek a fast track designation for Cx601 in the United States. The fast track program is intended to expedite or facilitate the process for reviewing new drugs and biologics that meet certain criteria. Specifically, new drugs and biologics are eligible for fast track designation if they are intended, alone or in combination with one or more drugs or biologics, to treat a serious or life-threatening disease or condition and demonstrate the potential to address unmet medical needs for the disease or condition. Fast track designation applies to the combination of the product candidate and the specific

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indication for which it is being studied. The FDA has broad discretion is determining whether to grant a fast track designation for a drug or biologic. Obtaining a fast track designation does not change the standards for product approval, but may expedite the development or approval process. There is no assurance that the FDA will grant such designation. Even if the FDA does grant such designation for Cx601, it may not actually result in faster clinical development or regulatory review or approval. Furthermore, such a designation does not increase the likelihood that Cx601 will receive marketing approval in the United States.

The results of the United Kingdom's referendum on leaving the European Union may have a negative effect on our business.

        In June 2016, a majority of voters in the United Kingdom voted to leave the European Union in a referendum. The terms of any withdrawal are subject to a negotiation period that could last up to two years after the United Kingdom formally initiates a withdrawal process. The referendum has created significant uncertainty about the future relationship between the United Kingdom and the European Union, including with respect to the laws and regulations that will apply in the future. These developments have had and may continue to have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global market liquidity and restrict the ability of key market participants to operate in certain financial markets. Any of these factors could depress economic activity and restrict our access to capital. In addition, it is uncertain whether our EMA approvals, if granted, will cover the United Kingdom. If not, it is not yet known what the new U.K. approval process will involve.

Risks Related to Our Financial Condition and Capital Requirements

If we fail to obtain additional financing, we may be unable to complete the development and commercialization of our product candidates.

        Our operations have consumed substantial amounts of cash since inception. We expect to continue to spend substantial amounts to continue the clinical development of our product candidates. If our product candidates are approved, we will require significant additional funds in order to launch and commercialize such product candidates in the United States and internationally. We may also need to spend substantial amounts to expand our manufacturing infrastructure.

        As at December 31, 2015, we had cash and cash equivalents of 18.0 million euros, and we believe that this amount, together with the net proceeds from our March 2016 private placement and the upfront non-refundable payment of 25 million euros from Takeda in connection with the licensing agreement, will be sufficient to fund our operations through August 2017. However, changing circumstances may cause us to consume capital significantly faster than we currently anticipate, and we may need to spend more money than currently expected because of circumstances beyond our control. As a result, we may require additional capital for the further development and commercialization of our product candidates.

        Our future funding requirements, both near and long-term, will depend on many factors, including, but not limited to, the following:

    The initiation, progress, timing, costs and results of clinical trials for our product candidates.

    The clinical development plans we establish for these product candidates.

    The number and characteristics of the product candidates that we develop and for which we seek regulatory approval.

    The outcome, timing and cost of regulatory approvals by the FDA, the EMA and any other comparable foreign regulatory authorities, including the potential for the FDA, the EMA or any

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      other comparable foreign regulatory authorities to require that we perform more studies than those that we currently expect.

    The expenditure in connection with integrating our recently acquired subsidiary, Coretherapix, and bringing its products to market.

    The ability to enter into licensing agreements with appropriate partners and to negotiate favorable terms with such partners.

    The cost of preparing, filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights.

    The effects of competing technological and market developments.

    The cost and timing of completing the technology transfer to contract manufacturing organizations in the United States and other international markets.

    The ability to scale up manufacturing activities for our product candidates and approved products to a commercial scale.

    The cost and timing of completion of commercial-scale manufacturing activities.

    The cost of establishing sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval in regions where we choose to commercialize our products on our own.

    The cost of obtaining favorable reimbursement terms from public and private payors for our products.

        Additional funding may not be available on a timely basis, on favorable terms, or at all, and such funds, if raised, may not be sufficient to enable us to continue to implement our business strategy. Our ability to borrow may also be affected by the conditions under our financing agreements, including our 9% senior unsecured bonds due 2018 for 25.0 million euros in total principal amount, convertible into our ordinary shares, that we issued on March 6, 2015. If we are unable to raise additional funds through equity or debt financing, we may need to delay, scale back or eliminate expenditures for some of our research, development and commercialization plans, or grant rights to develop and market products that we would otherwise prefer to develop and market ourselves, thereby reducing their ultimate value to us.

We have a history of operating losses and an accumulated deficit and may never become profitable.

        We have experienced operating losses since our founding in February 2000. We experienced net losses of 13.0 million euros for the year ended December 31, 2014 and 35.1 million euros for the year ended December 31, 2015. As of December 31, 2015, we had an accumulated deficit of 120.0 million euros. These losses resulted mainly from the following:

    Preclinical, clinical, manufacturing and regulatory efforts we undertook to advance the product candidates in our pipeline and to obtain marketing authorization from the EMA with respect to ChondroCelect and Cx601.

    Our commercial efforts in launching ChondroCelect.

    General and administrative costs associated with our operations.

        Our costs have always exceeded our revenues, which have been historically generated mainly through grants and income from the sale of ChondroCelect.

        Our ability to become profitable depends on our ability to develop and commercialize our product candidates, and we do not know when, or if, we will generate significant revenues from their sale in the

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future. Our revenues from sales of ChondroCelect, our approved and commercialized product, including royalties received under the distribution agreement with Sobi, have been limited and we requested the withdrawal of our marketing authorization in July 2016.

        Even if we do generate sales from our product candidates in the future, we may never achieve or sustain profitability. We anticipate that our operating losses will substantially increase over the next several years as we execute our plan to expand our research, development and commercialization activities, including the clinical development and planned commercialization of our product candidates, and incur the additional costs of operating as a U.S.-listed public company. In addition, if we obtain regulatory approval of our product candidates, we may incur significant sales and marketing expenses. Because of the numerous risks and uncertainties associated with developing pharmaceutical products, we are unable to predict the extent of any future losses or when we will become profitable, if ever.

Our net losses and significant cash used in operating activities have raised substantial doubt regarding our ability to continue as a going concern.

        We have a limited operating history and have experienced net losses and significant cash used in operating activities in each period since inception. We expect to continue to incur net losses and have significant cash outflows for at least the next year and have an accumulated deficit of 120.0 million euros as of December 31, 2015. In addition, we have debt service obligations under our convertible bonds and the loan facility agreement with Kreos Capital IV (UK), which have an impact on our cash flow. These conditions, among others, raise substantial doubt about our ability to continue as a going concern. As a result, our independent registered public accounting firm included an explanatory paragraph in its report on our financial statements as of and for the year ended December 31, 2015 with respect to this uncertainty. Our ability to continue as a going concern could materially limit our ability to raise additional funds through the issuance of new debt or equity securities or otherwise. Future reports on our financial statements may include an explanatory paragraph with respect to our ability to continue as a going concern. We have not been profitable since inception, and it is possible we will never achieve profitability. None of our product candidates can be marketed until governmental approvals have been obtained. Accordingly, there is no substantial source of revenues, much less profits, to sustain our present activities, and no substantial revenues will likely be available until, and unless, our product candidates are approved by the EMA, FDA or comparable regulatory agencies in other countries and successfully marketed, either by us or a partner, an outcome which may not occur. Based upon our currently expected level of operating expenditures, we expect to be able to fund our operations through August 2017, but we will require significant additional cash resources to launch new development phases of existing projects in our pipeline. In addition, this period could be shortened if there are any significant increases in planned spending on development programs or more rapid progress of development programs than anticipated. Other financing may not be available when needed to allow us to continue as a going concern. The perception that we may not be able to continue as a going concern may cause others to choose not to deal with us due to concerns about our ability to meet our contractual obligations.

Our revenues and operating results may fluctuate and may not be sufficient to cover our fixed costs.

        Our revenues and operating results have fluctuated in the past and are likely to do so in the future due to a number of factors, many of which are not under our control. Some of the factors that could cause our operating results to fluctuate include, but are not limited to, those listed below and identified throughout this prospectus:

    The (positive or negative) success rate of our development efforts.

    Our ability to manage future clinical trials, given the regulatory environment.

    The timing of approval, if any, of our products by the appropriate regulatory bodies.

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    Our ability to commercialize our products whether by ourselves or in conjunction with licensing partners (including our ability to obtain reimbursement from public and private payors for our products).

    Our ability to scale up manufacturing activities for our product candidates and approved products to a commercial scale.

        There is no direct link between the level of our expenses in connection with developing our pipeline of expanded adipose-derived stem cell-based, or eASC-based, product candidates or our newly acquired pipeline of cardiac stem cell-based, or CSC-based, product candidates and our revenues, which will primarily consist of royalties from sales of Cx601 under our licensing agreement with Takeda, once the product comes to market until we are able to bring another product to market. Accordingly, if revenues decline or do not grow as we expect, we may not be able to reduce our operating expenses correspondingly and may suffer losses accordingly.

Our ability to borrow and maintain outstanding borrowings is subject to certain restrictions under our convertible bonds.

        On March 6, 2015, we issued 9% senior unsecured bonds due 2018 for 25.0 million euros in total principal amount, convertible into our ordinary shares. Under the terms of the convertible bonds, we are restricted from creating any security interests over any of our assets, including any part of our business, unless certain conditions are met. We may not be able to meet the conditions imposed by the trustee under the notes or the bondholders, which may restrict our ability to borrow and maintain outstanding borrowings. In addition, a breach of the covenant or other provisions of the bonds could result in an event of default, which, if not cured or waived, could result in outstanding borrowings becoming immediately due and payable.

The allocation of available resources could affect our ability to carry out our business plan.

        We have significant flexibility and broad discretion to allocate and use our available resources. If such resources are not wisely allocated, our ability to carry out our business plan could be threatened. Our board of directors and management will determine, in their sole discretion and without the need for approval from the holders of our ordinary shares and ADSs, the amounts and timing of our actual expenditures, which will depend upon numerous factors, including the status of our product development and commercialization efforts, if any, and the amount of cash received resulting from partnerships and out-licensing activities.

        For example, after our acquisition of Coretherapix, we decided to prioritize the ongoing Phase I/II clinical trial of AlloCSC-01, our newly acquired product candidate, in acute myocardial infarction, which resulted in our decision to put our planned Phase IIb trial for Cx611 in early rheumatoid arthritis on hold. Likewise, in prior years, we did not have sufficient resources to both pursue the clinical development of the products coming from the allogeneic eASC platform while simultaneously aggressively commercializing ChondroCelect. As a result, our board of directors decided to license ChondroCelect to Sobi in order to concentrate our existing human and capital resources on the clinical development of product candidates from the eASC-based platform, which we perceived to be of more value than commercializing ChondroCelect.

        More generally, before the launch of ChondroCelect, we were expecting the product to be approved in both Europe and the United States. In order to approve the product in the United States, the FDA would have required us to perform a second Phase III trial in the United States, and the costs associated with such a trial made it impossible for us to launch the product into the United States, which we perceive to be our most important market. In Europe, we had anticipated that reimbursement would be approved more rapidly in Spain and in the United Kingdom, that reimbursement would be approved on an unrestricted basis in Germany, and that reimbursement would

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be approved in France (see also "—There may be uncertainty over reimbursement from third parties for newly approved healthcare products or such reimbursement may be refused, which could affect our ability to commercialize our product candidates" below). We had also expected that the advanced therapy medicinal product regulation would be more strictly enforced (see "—We work in a strict regulatory environment, and future changes in any pharmaceutical legislation or guidelines, or unexpected events or new scientific insights occurring within the field of cell therapy, could affect our business" above), which would have forced all existing autologous chondrocyte implantation products that had not been approved through the advanced therapy medicinal product regulation to exit the market. Therefore, our expectations in respect of the potential market and the uptake of the product were higher than the results that were effectively obtained.

        In addition, we constantly evaluate opportunities to acquire businesses and technologies that we believe are complementary to our business activities, such as our recent acquisition of Coretherapix, which has a platform of allogeneic cardiac stem cell products, and we also expend our human and capital resources on the integration of such acquired businesses and the development of their technologies, which may affect our ability to develop our own product candidates.

Our international operations pose currency risks, which may adversely affect our operating results and net income.

        Our operating results may be affected by volatility in currency exchange rates and our ability to manage effectively our currency transaction risks. We use the euro as our currency for financial reporting purposes. In the future, a significant portion of our operating costs may be in U.S. dollars, because we have entered into an agreement with Lonza, a U.S.-based contract manufacturing organization, to manufacture our lead product candidate, in the United States, and will enter into research and development collaborations, trial collaborations, and professional services contracts in the United States. We also expect a share of our future revenues to be in U.S. dollars. Our exposure to currency risks could increase over time. We do not currently manage our foreign currency exposure in a manner that would eliminate the effects of changes in foreign exchange rates. For example, we have not engaged in any active hedging techniques, and we have not employed any derivative instruments to date. Therefore, unfavorable fluctuations in the exchange rate between the euro and U.S. dollars could have a negative impact on our financial results.

Risks Related to Our Business

The manufacturing facilities where our product candidates are made are subject to regulatory requirements that may affect the development of our product candidates and the successful commercialization of our product candidates.

        Our product candidates must be manufactured to high standards in compliance with regulatory requirements. The manufacture of such product candidates is subject to regulatory authorization and to requirements of the current good manufacturing practice, or cGMP, requirements prescribed in the relevant country or territory of manufacture or supply.

        The cGMP requirements govern quality control of the manufacturing process and require written documentation of policies and procedures. Compliance with such procedures requires record keeping and quality control to ensure that the product meets applicable specifications and other requirements including audits of vendors, contract laboratories and suppliers. Manufacturing facilities are subject to inspection by regulatory authorities at any time. If an inspection by a regulatory authority indicates that there are deficiencies, we or our contract manufactuer could be required to take remedial actions, stop production or close the relevant facility. If we fail to comply with these requirements, we also may be required to curtail the relevant clinical trials, might not be permitted to sell our product candidates or may be limited as to the countries or territories in which we are permitted to sell them.

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        Our eASC-based development and clinical stage product candidates are manufactured in our facilities in Madrid, Spain, which have been certified by the Spanish Medicines and Medical Devices Agency under cGMP requirements. Cx601 will be manufactured by Lonza, a U.S.-based contract manufacturing organization, at its facility in Walkersville, Maryland, for our expected Phase III trial following the completion of technology transfer. Outside the United States, under our licensing agreement, we expect Takeda to assume responsibility for manufacturing Cx601 following the completion of technology transfer no later than January 1, 2021. AlloCSC-01, the CSC-based product candidate developed by our newly acquired subsidiary Coretherapix, is manufactured by 3P Biopharmaceuticals, which has been certified as cGMP-compliant by the Spanish Medicines and Medical Devices Agency, based on a process developed by Coretherapix. However, the certification may be interrupted, suspended or discontinued because of a failure to maintain compliance or for any other reason. In addition, the regulations or policies applied by the relevant authorities may change, and any such change would require us to undertake additional work, which may not be sufficient for us to comply with the revised standards.

        Any failure to comply with applicable cGMP requirements and other regulations may result in fines and civil penalties, suspension of production, product seizure or recall, import ban or detention, imposition of a consent decree, or withdrawal of product approval, and may limit the availability of our product candidates. Any manufacturing defect or error discovered after our product candidates have been produced and distributed also could result in significant consequences, including adverse health consequences, injury or death to patients, costly recall procedures, damage to our reputation and potential for product liability claims. An inability to continue manufacturing adequate supplies of our product candidates at our facilities in Madrid, Spain, or elsewhere could result in a disruption in the supply of our product candidates.

There may be uncertainty over reimbursement from third parties for newly approved healthcare products or such reimbursement may be refused, which could affect our ability to commercialize our product candidates.

        Our ability to commercialize future product candidates will depend, in part, on the availability of reimbursement from government and health administration authorities, private health insurers, managed care programs and other third-party payers. Significant uncertainty exists as to the reimbursement status of newly approved healthcare products. In many countries, medicinal products are subject to a regime of reimbursement by government health authorities, private health insurers or other organizations. Such organizations are under significant pressure to limit healthcare costs by restricting the availability and level of reimbursement. For example, we have not been successful in obtaining certain forms of reimbursement with respect to ChondroCelect, such as the decision of the French Haute Autorité de la Santé that ChondroCelect will not be reimbursed in France, the delays in obtaining reimbursement in Spain and the United Kingdom, the decision to grant limited reimbursement in Germany, and the reversal of the decision to reimburse ChondroCelect in Belgium. Negative decisions or reversals of reimbursement decisions by certain authorities or third-party payers may have an unfavorable spillover effect on pending or future reimbursement applications.

        We may not be able to obtain or maintain prices for products sufficient to realize an appropriate return on investment if adequate public health service or health insurance coverage is not available. In addition, rules and regulations regarding reimbursement may change, in some cases at short notice, especially in light of the global cost pressures on healthcare and pharmaceutical markets. Such changes could affect whether reimbursement is available at adequate levels or at all.

Our cell therapy product candidates may not be accepted by patients or medical practitioners.

        Our ability to commercialize future product candidates and the ability of our distributors to further commercialize ChondroCelect will depend, in part, on market acceptance, including the willingness of medical practitioners to invest in training programs to use the products. Cell therapy products are a

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novel treatment, and such products may not be immediately accepted as complementary or alternative treatments to the current standards of care. We may not be able to obtain or maintain recommendations and endorsements from influential physicians, which are an essential factor for market acceptance of our product candidates, or our product candidates may not gain sufficient market recognition in spite of favorable opinions from key leaders.

        The public perception of ethical and social issues surrounding the use of tissue-engineered products or stem cells may limit or discourage the use of our product candidates. The use of human cells, such as differentiated cartilage cells, eASCs, CSCs and other adult stem cells, as starting material for the development of our product candidates could generate negative public perceptions of our product candidates and public expressions of concern could result in stricter governmental regulation, which may, in turn, increase the cost of manufacturing and marketing our product or impede market acceptance of our product candidates.

We face competition and technological change, which could limit or eliminate the market opportunity for our product candidates.

        The pharmaceutical industry is characterized by intense competition and rapid innovation. Our product candidates will compete against a variety of therapies in development for inflammatory and autoimmune diseases that use therapeutic modalities such as biologics and cell therapy, including products under development by Anterogen, Delenex Therapeutics, Novartis, Takeda, Celgene, Bristol Myers Squibb, Sanofi/Regeneron, Johnson & Johnson, GlaxoSmithKline and others, including various hospitals and research centers. Finally, with respect to the product candidates of our newly acquired subsidiary Coretherapix, there are a variety of cell therapy treatments in development for acute myocardial infarction, including products under development by Pharmicell, Caladrius, Athersys, Mesoblast and Capricor.

        Our competitors may be able to develop other products that are able to achieve similar or better results than our product candidates. Our potential competitors include established and emerging pharmaceutical and biotechnology companies and universities and other research institutions. Many of our competitors have substantially greater financial, technical and other resources, such as larger research and development staff and experienced marketing and manufacturing organizations and well-established sales forces. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated in our competitors. Competition may increase further as a result of advances in the commercial applicability of technologies and greater availability of capital for investment in these industries. Our competitors may succeed in developing, acquiring or licensing on an exclusive basis products that are more effective or less costly than our product candidates. We believe the key competitive factors that will affect the development and commercial success of our product candidates are efficacy, safety and tolerability profile, reliability, price and reimbursement.

Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.

        We are exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional failures to comply with EMA or FDA regulations, to provide accurate information to the EMA or FDA, to comply with manufacturing standards we have established, to comply with federal and state healthcare fraud and abuse laws and regulations, to report financial information or data accurately or to disclose unauthorized activities to us. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent off-label promotion, fraud, kickbacks, self-dealing and other abusive practices in the United States and in jurisdictions outside of the United States where we conduct our

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business. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Employee misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. If governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant fines or other sanctions, up to and including criminal prosecution, fines and imprisonment.

We could face product liability claims, resulting in damages against which we are uninsured or underinsured.

        Our business exposes us to potential product liability and professional indemnity risks, which are inherent in the research, development, manufacturing, marketing and use of medical treatments. It is impossible to predict the potential adverse effects that our product candidates may have on humans. The use of our product candidates in human clinical trials may result in adverse effects, and long-term adverse effects may only be identified following clinical trials and approval for commercial sale. In addition, physicians and patients may not comply with any warnings that identify the known potential adverse effects and the types of patients who should not receive our product candidates. We may not be able to obtain necessary insurance at an acceptable cost or at all. We currently carry 10 million euros of liability insurance. In the event of any claim, the level of insurance we carry now or in the future may not be adequate, and a product liability or other claim may materially and adversely affect our business. If we cannot adequately protect ourselves against potential liability claims, we may find it difficult or impossible to commercialize our product candidates. Moreover, such claims may require significant financial and managerial resources, may harm our reputation if the market perceives our drugs or drug candidates to be unsafe or ineffective due to unforeseen side effects, and may limit or prevent the further development or commercialization of our product candidates and future product candidates.

        We use various chemical and biological products to conduct our research and to manufacture our medicines. Despite the existence of strict internal controls, these chemical and biological products could be the object of unauthorized use or could be involved in an accident that could cause personal injury to people or damage to the environment, which could result in a claim against us. Our activities are subject to specific environmental regulations that impose obligations which, if not complied with, could give rise to third party or administrative claims and could even result in fines being imposed or, in the worst case scenario, to our operations being suspended or shut down.

Our international operations subject us to various risks, and our failure to manage these risks could adversely affect our results of operations.

        We face significant operational risks as a result of doing business internationally, such as the following:

    fluctuations in foreign currency exchange rates;

    potentially adverse and/or unexpected tax consequences, including penalties due to the failure of tax planning or due to the challenge by tax authorities on the basis of transfer pricing and liabilities imposed from inconsistent enforcement;

    potential changes to the accounting standards, which may influence our financial situation and results;

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    becoming subject to the different, complex and changing laws, regulations and court systems of multiple jurisdictions and compliance with a wide variety of foreign laws, treaties and regulations;

    difficulties in attracting and retaining qualified personnel;

    rapid changes in global government, economic and political policies and conditions, political or civil unrest or instability, terrorism or epidemics and other similar outbreaks or events, and potential failure in confidence of our suppliers or customers due to such changes or events; and

    tariffs, trade protection measures, import or export licensing requirements, trade embargoes and other trade barriers.

Risks Related to Our Acquisition of Coretherapix

Our inability to manage our expansion, both internally and externally, could have a material adverse effect on its business.

        In 2015, we acquired a new subsidiary Coretherapix and may in the future acquire other businesses, companies with complementary technologies or products to expand our activities. As a consequence, intangible assets, including goodwill, may account for a larger part of the balance sheet total than is currently the case. Despite the fact that we carefully investigate every acquisition, the risk remains, amongst others, that corporate cultures may not match, expected synergies may not be not fully realized, restructurings may prove to be more costly than initially anticipated and that acquired companies may prove to be more difficult to integrate than foreseen. We can therefore not guarantee that we will successfully be able to integrate Coretherapix or any other acquired companies.

        Our ability to manage our growth effectively will require us to continue to improve our operations, financial and management controls, reporting systems and procedures, and to train, motivate and manage our employees and, as required, to install new management information and control systems. We may not be able to implement improvements to our management information and control systems in an efficient and timely manner or such improvements, if implemented, may not be adequate to support our operations.

We have made certain assumptions relating to the Coretherapix acquisition in our forecasts that may prove to be materially inaccurate.

        The Coretherapix acquisition is the largest acquisition we have undertaken in recent years and we are committing a significant amount of capital to this opportunity. We have made certain assumptions relating to the forecast level of future revenues and earnings and associated costs of the Coretherapix acquisition. The acquisition also represents the entry by us into a new area of cell therapy and there may be factors that affect this technology platform with which we are not as familiar as with our existing platform. In addition, under the contribution agreement with Genetrix, which was the sole shareholder of Coretherapix prior to the acquisition, we will be required to make significant payments, either in cash or in shares, to Genetrix upon the realization of certain milestones with respect to the product candidates under development by Coretherapix, including upon the completion of the ongoing Phase I/II trial for AlloCSC-01, its lead product candidate, which is well before we will have the opportunity to commercialize the product. Our assumptions relating to the forecast level of future critical development plans and earnings, cost savings, synergies and associated costs of the acquisition may be inaccurate, including as a result of the failure to realize the expected benefits of the acquisition, higher than expected transaction and integration costs and unknown liabilities as well as general economic and business conditions that adversely affect the combined company following the completion of the acquisition.

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The Coretherapix acquisition could cause disruptions in our business or the business of Coretherapix, which could have a material adverse effect on the business prospects and financial results of the combined company.

        The Coretherapix acquisition could cause disruptions in our business or the business of Coretherapix. Specifically, some current and prospective employees may experience uncertainty about their future roles within the combined company, which may adversely affect our ability to retain or recruit key employees following the acquisition, including those with knowledge of the cardiac stem cell platform and the operations of Coretherapix. The diversion of our management's attention away from our core business and any difficulties encountered in the integration process could adversely affect our results of operations. We may experience disruptions in relationships with current and new employees, customers and suppliers. If we fail to manage these risks effectively, the business and financial results of the combined company could be adversely affected.

We may incur higher than expected integration, transaction and acquisition-related costs.

        We intend, to the extent possible, to integrate our operations with those of Coretherapix. Our goal in integrating these operations is to increase future revenues by expanding our pipeline into cardiology indications and achieve cost savings by taking advantage of the anticipated synergies of consolidation. To achieve this goal, we have incurred legal, accounting and transaction fees and other costs related to the Coretherapix acquisition. In addition, we expect to incur a number of non-recurring costs associated with combining the operations of the two companies. Some of these may be higher than anticipated. We may also incur unanticipated costs, including expenditures to maintain employee morale, retain key employees and successfully integrate the two businesses.

Risks Related to Our Intellectual Property

We may not be able to protect adequately our proprietary technology or enforce any rights related thereto.

        Our ability to compete effectively with other companies depends, among other things, on the exploitation of our technology. In addition, filing, prosecuting and defending patents on all of our product candidates throughout the world would be prohibitively expensive. Our competitors may, therefore, develop equivalent technologies or otherwise gain access to our technology, particularly in jurisdictions in which we have not obtained patent protection or in which enforcement of such protection is not as strong as it is in the United States.

        Patents might not be issued with respect to our pending or future applications. The lack of any such patents may have a material adverse effect on our ability to develop and market our proposed product candidates. We may not be able to develop product candidates that are patentable, or our current or future patents may not be sufficiently broad in their scope to provide commercially meaningful protection against competition from third parties. The validity or scope of any of our patents may be insufficient, claims relating to our patents may be asserted by other parties and, if challenged, our patents may be revoked. Even if competitors do not successfully challenge our patents, they might be able to design around such patents or develop unique technologies or products providing effects similar to our product candidates.

        If our intellectual property rights, trade secrets and know-how are infringed, litigation may be necessary to protect our intellectual property rights, trade secrets and know-how, which could result in substantial costs and diversion of efforts with no guarantee of success. Our attempts to obtain patent or other protection for certain of our product candidates or technologies may also be subject to opposition. We may need to incur substantial costs to overcome such opposition with no guarantee of success. From time to time, we engage in opposition or interference proceedings to prevent third parties from obtaining relevant patent or other protection, which may be expensive and time-consuming again with no guarantee of success.

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Developments in U.S. patent law may prevent us from obtaining or enforcing patents directed to our stem cell technologies, which could have a material adverse effect on our business.

        U.S. courts have recently issued decisions limiting the patent eligibility of natural products and natural correlations. On June 13, 2013, in Association for Molecular Pathology v. Myriad Genetics, the U.S. Supreme Court held that claims to isolated genomic DNA are not patentable subject matter, but claims to complementary DNA molecules are patentable subject matter. On May 8, 2014, the U.S. Court of Appeals for the Federal Circuit held that claims to cloned animals are not patentable subject matter. Furthermore, on March 20, 2012, in Mayo Collaborative Services v. Prometheus Laboratories, the U.S. Supreme Court held that several claims drawn to measuring drug metabolite levels from patient samples and correlating them to drug doses are not patentable subject matter. On June 19, 2004, in Alice Corporation Pty. Ltd. v. CLS Bank International, et al., a case involving patent claims directed to a method for mitigating settlement risk, the Court held that the patent eligibility of claims directed to abstract ideas, products of nature, and laws of nature should be determined using the same framework set forth in Prometheus.

        The Patent and Trademark Office has issued guidelines setting forth procedures for determining subject matter eligibility of claims directed to abstract ideas, product of nature and laws of nature in line with the Prometheus, Myriad, and Alice decisions. The guidelines indicate that a claim reciting any natural phenomenon or natural product will be treated as ineligible for patenting, unless the claim as a whole recites something significantly different from the natural product. The effect of these decisions on patents for inventions relating to other natural phenomena and natural products, such as stem cells, is uncertain. Because our patent portfolio is largely directed to stem cells and their use, as well as to uses of naturally-occurring biomarkers, these developments in U.S. patent law could affect our ability to obtain new U.S. patents or to enforce our existing patents. In some of our pending U.S. patent applications the Patent and Trademark Office has questioned whether certain of our claims are eligible for patenting. If we are unable to procure additional U.S. patents or to enforce our existing U.S. patents, we would be vulnerable to competition in the United States.

Third-party claims of intellectual property infringement may prevent or delay our product discovery and development efforts.

        Our commercial success depends in part on avoiding infringement of the patents and proprietary rights of third parties. There is a substantial amount of litigation involving patents and other intellectual property rights in the biotechnology and pharmaceutical industries, as well as administrative proceedings for challenging patents, including interference and reexamination proceedings before the Patent and Trademark Office or oppositions and other comparable proceedings in foreign jurisdictions. Recently, under U.S. patent reform, new procedures including inter partes review and post grant review have been implemented. This reform is untried and untested and will bring uncertainty to the possibility of challenge to our patents in the future. Numerous U.S. and non-U.S. issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are developing our product candidates. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that our product candidates may give rise to claims of infringement of the patent rights of others.

        Third parties may assert that we are employing their proprietary technology without authorization. There may be third-party patents of which we are currently unaware with claims to materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of our product candidates. Because patent applications can take many years, there may be currently pending patent applications that may later result in issued patents that our product candidates may infringe. In addition, third parties may obtain patents in the future and claim that the use of our technologies infringes upon these patents. If any third-party patents were held by a court of competent

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jurisdiction to cover the manufacturing process of our product candidates, any molecules formed during the manufacturing process or any final product itself, the holders of any such patents might be able to block our ability to commercialize the product candidate, unless we were to obtain a license under the applicable patents, or until such patents expired or they were finally determined to be invalid or unenforceable. Similarly, if any third-party patent were held by a court of competent jurisdiction to cover aspects of our formulations, processes for manufacture or methods of use, the holders of any such patent might be able to block our ability to develop and commercialize our product candidate unless we were to obtain a license or until such patent expired or was finally determined to be invalid or unenforceable. In either case, such a license might not be available on commercially reasonable terms or at all. If we are unable to obtain a necessary license to a third-party patent on commercially reasonable terms, or at all, our ability to commercialize our product candidates might be impaired or delayed, which could in turn significantly harm our business.

        Parties making claims against us may seek and obtain injunctive or other equitable relief, which could effectively block our ability to develop further and commercialize our product candidates. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business. In the event of a successful claim of infringement against us, we might have to pay substantial damages, including treble damages and attorneys' fees for willful infringement, obtain one or more licenses from third parties, pay royalties or redesign our infringing products, which might be impossible or require substantial time and monetary expenditure. We cannot predict whether any such license would be available at all or whether it would be available on commercially reasonable terms. Furthermore, even in the absence of litigation, we might need to obtain licenses from third parties to advance our research or allow commercialization of our product candidates. We may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all.

Our future development may depend on our ability to obtain and maintain licenses to certain technologies.

        We might further expand our activities in the future by in-licensing certain technologies. Collaboration and integration may have an important impact on the success of our expansion strategy. In such a case, we might not own the patents or supplementary protection certificates on the basis of which these licenses may be granted. These licenses may generally be terminated by the licensor if we breach certain of our obligations under the license and in other specified circumstances. If any of our license agreements were to be terminated, the further development and commercialization of some of our product candidates could be prevented or delayed, reducing their potential revenues. The scope of our rights under such licenses may be subject to dispute by licensors or third parties. We might not control the filing or the prosecution of all the patents to which we hold licenses and may need to rely upon our licensors to enforce the patents and to prevent or to challenge possible infringement by third parties. We might not be able to obtain licenses for the technologies that we require in the future.

We may be involved in lawsuits to protect or enforce our patents, which could be expensive, time-consuming and unsuccessful.

        Competitors may infringe our patents. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time-consuming. In addition, in an infringement proceeding, a court may decide that one or more of our patents is not valid or is unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation or defense proceedings could expose one or more of our patents to the risk of being invalidated, held unenforceable, or interpreted narrowly and could put our patent applications at risk of not issuing. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business. In the event of a successful

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claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys' fees for willful infringement, obtain one or more licenses from third parties, pay royalties or redesign our infringing products, which may be impossible or require substantial time and monetary expenditure.

        Interference proceedings provoked by third parties or brought by the Patent and Trademark Office may be necessary to determine the priority of inventions with respect to our patents or patent applications. An unfavorable outcome could require us to cease using the related technology or to attempt to license rights to it from the prevailing party. Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms. Litigation or interference proceedings may fail and, even if successful, may result in substantial costs and distract our management and other employees. We may not be able to prevent misappropriation of our confidential information, particularly in countries where the laws may not protect those rights as fully as in the United States and in Europe.

        Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our ADSs.

We are currently engaged in proceedings challenging a patent owned by the University of Pittsburgh and may choose to delay the launch of our eASC-based products in the United States until the expiration of the patent on March 10, 2020 due to the risk of patent infringement or further litigation.

        On April 1, 2011, Cellerix (the predecessor entity of our subsidiary TiGenix SAU) filed an inter partes re-examination request with the Patent and Trademark Office regarding the patent US6777231, owned by the University of Pittsburgh. The Patent and Trademark Office examiner issued a decision concluding that all ten originally issued and all eighteen newly submitted claims of the patent granted to the University of Pittsburgh were invalid. The University of Pittsburgh then appealed the examiner's decision, but only with respect to two of the newly submitted claims. We cross-appealed the examiner's refusal to reject those two newly submitted claims as anticipated by the prior art. The Patent Trial and Appeal Board issued a decision simultaneously granting both appeals, thus confirming that all claims of the patent were invalid, but with respect to the newly submitted claims, on different grounds than those cited in the decision by the initial examiner. On this basis, the University of Pittsburgh filed a request to reopen prosecution and submitted claim amendments to those newly submitted claims to the Patent and Trademark Office for further consideration in an attempt to overcome the Patent Trial and Appeal Board's institution of a new ground for rejection as anticipated by the prior art. We submitted comments to the Patent and Trademark Office arguing that these claim amendments did not overcome the anticipated rejection. On March 16, 2015, the examiner issued her determination that the claim amendments did not overcome the anticipated rejection and further adopted our proposed anticipated rejections over two additional prior art references and two proposed indefiniteness rejections. We and the University of Pittsburgh have submitted comments on the examiner's determination and replied to each other's comments. The comments and replies have been entered into the record, and the proceedings were forwarded to the Patent Trial and Appeal Board on December 18, 2015. We do not know when a final decision can be expected, and at this stage, we are not in a position to assess the probable outcome of these proceedings.

        This proceeding may take longer than expected and may not ultimately succeed, which may result in unexpected additional costs and may have a material adverse effect on our future business, financial condition, operating results and cash flow. If the re-examination is not successful, we may be required

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to obtain a license on unfavorable terms, or may not be able to obtain a license at all in order to commercialize our adipose-derived stem cell products in the United States. We would potentially be susceptible to patent infringement or litigation regarding patent infringement while commercializing our eASC products in the United States. We may, therefore, choose to delay the launch of our adipose-derived stem cell products in the U.S. market until the expiration of the patent US6777231 on March 10, 2020. To avoid infringing granted patents equivalent to US6777231 in other countries, we may at any given point in time be forced to develop and utilize alternative technology, to exploit our current technology and products under a royalty-bearing license with respect to the intellectual property rights of other parties or to delay the launch of our adipose-derived stem cell products in the relevant market until patent expiration.

Risks Related to Our Dependence on Third Parties

In the future, we may rely on third parties to manufacture our product candidates in Spain and the United States; a failure of service by such parties could adversely affect our business and reputation.

        We have entered into an agreement with Lonza, a leading U.S.-based contract manufacturing organization active in biological and cell therapy manufacturing, to produce Cx601 in the United States in connection with the proposed Phase III clinical trial for Cx601 in the United States. Outside the United States, under our licensing agreement, we expect Takeda to assume responsibility for manufacturing Cx601 following the completion of technology transfer no later than January 1, 2021. Our CSC-based product candidates are manufactured by 3P Biopharmaceuticals in Spain. We are, therefore, exposed to risks relating to the conduct of business of such parties, including the following:

    Their ability to employ and retain suitably qualified staff and maintain good labor relations with their workforce.

    Their ability to meet the required legal, regulatory or quality control standards, including the cGMP requirements prescribed in the relevant country or territory of manufacture or supply.

    Their level of investment in their facilities and equipment and their ability to consistently manufacture our product candidates to the required standard.

        In addition, we may face challenges in communicating with such third parties, which could potentially lead to mistakes and difficulties in coordinating activities. We could also face unexpected cost increases that are beyond our control.

        Any failure by such parties to meet the required standards could have a materially adverse effect on our reputation or expose us to legal liability, with respect to which we may have limited recourse to the defaulting party. If such a party were to breach its contractual commitments to us, our only option might be to seek a legal remedy, which could be costly or time-consuming and, even if successful, may not fully compensate us for our damages. If we have to terminate our relationship with such a party due to problems with the timeliness or quality of their work, we may not be able to replace them on commercially acceptable terms, or at all, which could delay or threaten our ability to generate meaningful revenue from product sales as a result of which we may have insufficient capital resources to support our operations.

We may need to rely on distributors and other third parties to commercialize our product candidates, and such distributors may not succeed in commercializing our product candidates effectively or at all or maintain favorable reimbursement decisions by private and public insurers.

        For some market opportunities, we may need to enter into co-development, co-promotion or other licensing arrangements with larger pharmaceutical firms to increase the chances of commercial success of our product candidates. For example, with respect to Cx601, we have entered into a licensing

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agreement with Takeda, a large pharmaceutical company active in gastroenterology, under which Takeda acquired the exclusive right to commercialize Cx601 outside the United States. Previously, with respect to ChondroCelect, we entered into an exclusive distribution agreement with Sobi for the European Union (excluding Finland, where we had a pre-existing distribution agreement with Finnish Red Cross Blood Service) as well as several other countries. In the future, we may enter into additional distribution agreements in other territories. We may not be able to establish sales, marketing and distribution, pricing, reimbursement and market access capabilities of our own or to enter into arrangements with contract sales organizations or larger pharmaceutical firms in a timely manner or on acceptable terms. Additionally, building marketing and distribution capabilities may be more expensive than we anticipate and may require us to divert funds from other intended purposes or prevent us from building our own marketing and distribution capabilities to desired levels.

        Therefore, the performance of our product candidates will depend in part on our ability to attract and retain suitable partners that will be able to market and support our products effectively. We may lose one or more of our distributors or might not be able to recruit additional or replacement distributors.

        Our dependence on third parties may also reduce our profit margins and delay or limit our ability to develop and commercialize our products on a timely and competitive basis.

        Our distributors may be faced with hurdles in reimbursement, market acceptance, distribution and competition that delay or even prevent the commercialization of our product candidates or result in the early termination of licensing agreements. The ability of our distributors to commercialize our product candidates also depends, in part, on the extent to which our competition will react.

We rely on third parties to conduct our clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to obtain regulatory approval for, or commercialize, our product candidates.

        We rely on third-party contract research organizations to conduct clinical trials for our product candidates, and we control only certain aspects of their activities. Nevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with applicable protocol, regulatory and scientific standards, and our reliance on our contract research organizations does not relieve us of our regulatory responsibilities. We and our contract research organizations will be required to comply with good clinical practices, or GCP, requirements, which are a collection of regulations enforced by the FDA, the EMA and comparable foreign regulatory authorities for product candidates in clinical development. These GCP requirements are intended to protect the health, safety and welfare of study subjects through requirements such as informed consent and to ensure data integrity, among other things. Regulatory authorities enforce these GCP requirements through periodic inspections of trial sponsors, contract research organizations, principal investigators and study sites. If we or any of our contract research organizations fail to comply with applicable GCP regulations, the clinical data generated in our clinical trials may be deemed unreliable and the FDA, the EMA or a comparable foreign regulatory authority may require us to perform additional clinical trials before approving our marketing applications. Upon inspection, such regulatory authorities might determine that any of our clinical trials do not comply with GCP regulations. In addition, for biological products, our clinical trials must be conducted with products made under cGMP regulations and will require a large number of test subjects. Our failure or any failure by our contract research organizations to comply with these regulations or to recruit a sufficient number of patients may require us to repeat clinical trials, which would delay the regulatory approval process. Moreover, we may be implicated or subject to civil or criminal liability if any of our contract research organizations violates fraud and abuse or false claims laws and regulations or healthcare privacy and security laws in any jurisdiction in which we conduct our trials.

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        The contract research organizations will not be employed directly by us and, except for remedies available to us under our agreements with such contract research organizations, we cannot control whether they devote sufficient time and resources to our ongoing preclinical and clinical programs. These contract research organizations may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical studies or other product development activities, which could affect their performance on our behalf. If these contract research organizations do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated or be deemed unreliable, and we may not be able to complete development of, obtain regulatory approval for, or commercialize our product candidates.

        Switching or adding contract research organizations involves substantial cost and requires extensive management time and focus. In addition, there is a natural transition period when a new contract research organization commences work. As a result, delays may occur, which could materially affect our ability to meet our desired clinical development timelines, and the quality of work may be affected. We may encounter challenges in our relationships with our contract research organizations or delays in the future.

We may form or seek strategic alliances in the future, and we might not realize the benefits of such alliances.

        We may form or seek strategic alliances, create joint ventures or collaborations or enter into licensing arrangements with third parties that we believe will complement or augment our development and commercialization efforts with respect to our product candidates and any future products that we may develop. Any of these relationships may require us to incur non-recurring and other charges, increase our near and long-term expenditures, issue securities that dilute our existing shareholders or disrupt our management and business. In addition, we face significant competition in seeking appropriate strategic partners, and the negotiation process is time-consuming and complex. Moreover, we may not be successful in our efforts to establish a strategic partnership or other alternative arrangements for our product candidates, because they may be deemed to be at too early of a stage of development for collaborative effort and third parties may not view our product candidates as having the requisite potential to demonstrate safety and efficacy. If we license products or businesses, we may not be able to realize the benefit of such transactions if we are unable to integrate them with our existing operations and company culture. Following a strategic transaction or license, we might not be able to achieve the revenues or specific net income that justifies such transaction. Any delays in entering into new strategic partnership agreements related to our product candidates could delay the development and commercialization of our product candidates in certain geographies for certain indications.

Risks Related to the ADSs and this Offering

There is no established trading market for the ADSs.

        This offering constitutes our initial public offering of ADSs, and no public market for the ADSs currently exists. We have applied to list the ADSs on the NASDAQ Global Market, subject to completion of customary procedures in the United States. Any delay in the commencement of trading of the ADSs on the NASDAQ Global Market would impair the liquidity of the market for the ADSs and make it more difficult for holders to sell the ADSs.

        Even if the ADSs are listed on the NASDAQ Global Market, there is a risk that an active trading market for the ADSs may not develop or be sustained after this offering is completed. The initial offering price will be based, in part, on the price of our ordinary shares on Euronext Brussels, and

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determined by negotiations among the lead underwriters and us. Among the factors considered in determining the initial offering price are our future prospects and the prospects of our industry in general, our revenue, net income and certain other financial and operating information in recent periods, and the financial ratios, market prices of securities and certain financial and operating information of companies engaged in activities similar to ours. Following this offering, the ADSs may not trade at a price equal to or greater than the offering price.

The ADSs may experience price and volume fluctuations.

        Stock markets have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of listed companies. Broad market and industry factors may negatively affect the market price of the ADSs, regardless of our actual operating performance. The market price and liquidity of the market for the ADSs that will prevail in the market after this offering may be higher or lower than the price you pay and may be significantly affected by numerous factors, some of which are beyond our control. These factors include:

    Significant volatility in the market price and trading volume of securities of companies in our sector, which is not necessarily related to the operating performance of these companies.

    Delays between our expenditures to develop and market new products and the generation of sales from those products.

    Changes in the amount that we spend to develop, acquire or license new products, technologies or businesses.

    Changes in our expenditures to promote our products and services.

    Success or failure of research and development projects of us or our competitors.

    Announcements of acquisitions by us or one of our competitors.

    The general tendency towards volatility in the market prices of shares of companies that rely on technology and innovation.

    Changes in regulatory policies or tax guidelines.

    Changes or perceived changes in earnings or variations in operating results.

    Any shortfall in revenue or net income from levels expected by investors or securities analysts.

    Disputes or other developments relating to proprietary rights, including patents, and our ability to obtain patent protection for our technologies.

    Departures of key scientific or management personnel.

    Significant lawsuits, including patent litigation.

    General economic trends and other external factors, many of which are beyond our control.

        In addition, the stock market in general, and the NASDAQ Global Market and pharmaceutical companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. If the market price of our ADSs after this offering does not exceed the initial public offering price, you may not realize any return on your investment and may lose some or all of your investment. In the past, securities class action litigation has often been instituted against companies following periods of volatility in the market price of a company's securities. This type of litigation, if instituted, could result in substantial costs and a diversion of management's attention and resources.

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As a new investor, you will experience substantial dilution as a result of this offering.

        The public offering price per ADS will be substantially higher than the net tangible book value per ADS prior to this offering. Consequently, if you purchase ADSs in this offering at an assumed public offering price of $        (        euros), based on the closing price of our ordinary shares on Euronext Brussels on                        ,        , you will incur immediate dilution of $        (        euros) per ADS. For further information regarding the dilution resulting from this offering, please see the section entitled "Dilution" in this prospectus. This dilution is due in large part to the fact that our earlier investors paid substantially less than the assumed initial public offering price when they purchased their ordinary shares.

Raising additional capital may cause additional dilution of the percentage ownership of our shareholders, restrict our operations, require us to relinquish rights to our technologies, products or product candidates and could cause our share price to fall.

        We expect that significant additional capital may be needed in the future to continue our planned operations, including conducting clinical trials, commercialization efforts, expanded research and development activities and costs associated with operating as a U.S.-listed public company. To raise capital, we may issue new ordinary shares, ADSs, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. If we issue new ordinary shares, ADSs, convertible securities or other equity securities, investors may be materially diluted by subsequent sales. Such issuances or sales may also result in material dilution to our existing shareholders, and new investors could gain rights, preferences and privileges senior to the holders of our ordinary shares or ADSs, including ADSs sold in this offering. The incurrence of indebtedness could result in increased fixed payment obligations and could involve certain restrictive covenants, such as limitations on our ability to incur additional debt and other operating restrictions that could adversely impact our ability to conduct our business. If we raise additional funds through strategic partnerships and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, products or product candidates, or grant licenses on terms unfavorable to us.

Conversion of the 25.0 million euros senior unsecured convertible bonds due 2018, contractual obligations with Genetrix resulting from the acquisition of Coretherapix and the anticipated equity investment by Takeda may result in a dilution of existing shareholders.

        We have issued 25.0 million euros of senior unsecured convertible bonds due 2018. The bonds were issued on March 6, 2015 at 100 per cent of their principal amount (100,000 euros per bond) and have a coupon of 9% per annum. On March 14, 2016, the conversion price was adjusted downwards to 0.9263 euros. The conversion price is subject to customary adjustment mechanisms. At the current conversion price, the bonds will be convertible into 26,989,096 fully paid ordinary shares. If the bonds are converted into new shares, and assuming that the conversion price will be lower than the then prevailing market price of the shares, the conversion will entail a financial dilution of the existing shareholders.

        On July 31, 2015, we acquired Coretherapix from Genetrix for an upfront payment of 1.2 million euros in cash and 7.7 million new shares issued in connection with the acquisition. Additionally, Genetrix may receive up to 15.0 million euros in new TiGenix shares depending on the results of the ongoing clinical trial of Coretherapix, which would result in a dilution of existing shareholders. The issue price for these new TiGenix shares will be calculated on the basis of the average closing share price of the Company's shares on Euronext Brussels over the ninety day period immediately preceding the date of completion of the clinical trial.

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        On July 4, 2016, we entered into a licensing agreement with Takeda, a large pharmaceutical company active in gastroenterology, under which Takeda acquired the exclusive right to commercialize Cx601 for complex perianal fistulas outside the United States. Under the agreement, Takeda has agreed to invest 10 million euros in equity within one year of the effective date of the agreement, which would result in a dilution of existing shareholders. The issue price for these new TiGenix shares will be calculated on the basis of the average closing share price of the Company's shares on Euronext Brussels over the thirty-day period immediately preceding the issuance of the new shares.

Fluctuations in the exchange rate between the U.S. dollar and the euro may increase the risk of holding our ADSs and shares.

        Our shares currently trade on Euronext Brussels in euros, and our ADSs will trade on the NASDAQ Global Market in U.S. dollars. Fluctuations in the exchange rate between the U.S. dollar and the euro may result in temporary differences between the value of our ADSs and the value of our ordinary shares, which may result in heavy trading by investors seeking to exploit such differences.

        In addition, as a result of fluctuations in the exchange rate between the U.S. dollar and the euro, the U.S. dollar equivalent of the proceeds that a holder of our ADSs would receive upon the sale in Belgium of any shares withdrawn from the depositary and the U.S. dollar equivalent of any cash dividends paid in euros on our shares represented by the ADSs could also decline.

Holders of ADSs are not treated as shareholders of our Company.

        By participating in this offering you will become a holder of ADSs with underlying shares in a Belgian limited liability company. Holders of ADSs are not treated as shareholders of our Company, unless they withdraw our ordinary shares underlying the ADSs. The depositary is the holder of the ordinary shares underlying the ADSs. Holders of ADSs therefore do not have any rights as shareholders of our Company, other than the rights that they have pursuant to the deposit agreement.

You will not have the same voting rights as the holders of our ordinary shares and may not receive voting materials in time to be able to exercise your right to vote.

        Except as described in this prospectus and the deposit agreement, holders of ADSs will not be able to exercise voting rights attaching to the ordinary shares evidenced by the ADSs on an individual basis. Under the terms of the deposit agreement, holders of ADSs may instruct the depositary to vote the ordinary shares underlying their ADSs, but only if we ask the depositary to ask for their instructions. Otherwise, holders of ADSs will not be able to exercise their right to vote unless they withdraw ordinary shares underlying their ADSs to vote them in person or by proxy in accordance with Belgian corporate law and our articles of association. Even so, holders of ADSs may not know about a meeting far enough in advance to withdraw those ordinary shares. If we ask for the instructions of holders of ADSs, the depositary, upon timely notice from us, will notify holders of ADSs of the upcoming vote and arrange to deliver our voting materials to them. Upon our request, the depositary will mail to holders of ADSs a shareholder meeting notice that contains, among other things, a statement as to the manner in which voting instructions may be given, including an express indication that such instructions may be given or deemed given to the depositary to give a discretionary proxy to a person designated by us if no instructions are received by the depositary from holders of ADSs on or before the response date established by the depositary. No voting instruction shall be deemed given and no such discretionary proxy shall be given with respect to any matter as to which we inform the depositary that (i) substantial opposition exists, or (ii) such matter materially and adversely affects the rights of shareholders. We cannot guarantee that holders of ADSs will receive the voting materials in time to ensure that they can instruct the depositary to vote their shares. A shareholder is only entitled to participate in, and vote at, the meeting of shareholders, provided that its shares are recorded in its name at midnight (Central European Time) at the end of the fourteenth day preceding the date of the

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meeting of shareholders. Failure by the depositary to record your shares by the record date, could result in the inability to participate and vote at the relevant meeting of shareholders. In addition, the depositary's liability to holders of ADSs for failing to execute voting instructions or for the manner of executing voting instructions is limited by the deposit agreement. As a result, holders of ADSs may not be able to exercise their right to give voting instructions or to vote in person or by proxy and they may not have any recourse against the depositary or our Company if their shares are not voted as they have requested or if their shares cannot be voted.

We have no present intention to pay dividends on our ordinary shares in the foreseeable future and, consequently, your only opportunity to achieve a return on your investment during that time is if the price of the ADSs appreciates.

        We have no present intention to pay dividends in the foreseeable future. Any recommendation by our board of directors to pay dividends will depend on many factors, including our financial condition, results of operations, legal requirements and other factors. Furthermore, pursuant to Belgian law, the calculation of amounts available for distribution to shareholders, as dividends or otherwise, must be determined on the basis of our non-consolidated statutory accounts prepared in accordance with Belgian accounting rules. In addition, in accordance with Belgian law and our articles of association, we must allocate each year an amount of at least 5% of our annual net profit under our non-consolidated statutory accounts to a legal reserve until the reserve equals 10% of our share capital. Therefore, we are unlikely to pay dividends or other distributions in the foreseeable future. If the price of the ADSs or the underlying ordinary shares declines before we pay dividends, you will incur a loss on your investment, without the likelihood that this loss will be offset in part or at all by potential future cash dividends.

As a foreign private issuer, we are exempt from a number of rules under the U.S. securities laws and are permitted to file less information with the SEC than U.S. domestic issuers. This may limit the information available to holders of ADSs.

        We are a "foreign private issuer," as defined in the SEC rules and regulations, and, consequently, we are not subject to all of the disclosure requirements applicable to U.S. domestic issuers. For example, we are exempt from certain rules under the Exchange Act that regulate disclosure obligations and procedural requirements related to the solicitation of proxies, consents or authorizations applicable to a security registered under the Exchange Act. In addition, our officers, directors and principal shareholders are exempt from the reporting and "short-swing" profit recovery provisions of Section 16 of the Exchange Act and related rules with respect to their purchases and sales of our securities. Moreover, we are not required to file periodic reports and consolidated financial statements with the SEC as frequently or as promptly as U.S. domestic issuers. Accordingly, there may be less publicly available information concerning our Company than there is for U.S. public companies. As a foreign private issuer, we will file an annual report on Form 20-F within four months of the close of each year ended December 31 and furnish reports on Form 6-K relating to certain material events promptly after we publicly announce these events. However, we are not required to publish quarterly financial information, and, therefore, our shareholders will not be afforded the same information generally available to investors holding shares in public companies organized in the United States.

We are an "emerging growth company," and we intend to take advantage of reduced disclosure and governance requirements applicable to emerging growth companies, which could result in the ADSs being less attractive to investors.

        We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. For as long as we continue to be an emerging growth company, we may take

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advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including the following:

    Exemption from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002.

    Reduced disclosure obligations regarding executive compensation in this prospectus and our periodic reports and proxy statements.

    Exemptions from the requirements to hold nonbinding advisory votes on executive compensation and to seek shareholder approval of any golden parachute payments not previously approved.

        We could be an emerging growth company for up to five years following the year in which we complete this offering, although circumstances could cause us to lose that status earlier, including if the market value of our ordinary shares held by non-affiliates exceeds $700.0 million as of any June 30 before that time or if we have total annual gross revenue of $1.0 billion or more during any fiscal year before that time, in which cases we would no longer be an emerging growth company as of the following December 31 or, if we issue more than $1.0 billion in non-convertible debt during any three-year period before that time, we would cease to be an emerging growth company immediately. We cannot predict if investors will find our ADSs less attractive because we may rely on these exemptions. If some investors find our ADSs less attractive as a result, there may be a less active trading market for our ADSs, and our share price may be more volatile.

If we fail to maintain an effective system of internal control over financial reporting in the future, we may not be able to report accurately our financial condition, results of operations or cash flows, which may adversely affect investor confidence in us.

        The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal control over financial reporting and disclosure controls and procedures. In particular, in the future, we will be required, under Section 404 of the Sarbanes-Oxley Act, to perform system and process evaluations and testing of our internal controls over financial reporting to allow management and our independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting. This assessment will need to include disclosure of any material weaknesses in our internal control over financial reporting identified by our management or our independent registered public accounting firm. Section 404 of the Sarbanes-Oxley Act also generally requires an attestation from our independent registered public accounting firm on the effectiveness of our internal control over financial reporting. However, for as long as we remain an emerging growth company as defined in the JOBS Act, we intend to take advantage of the exemption permitting us not to comply with the independent registered public accounting firm attestation requirement. At the time when we are no longer an emerging growth company, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating. Our remediation efforts may not enable us to avoid a material weakness in the future.

        Our compliance with Section 404 will require that we incur substantial accounting expense and expend significant management efforts. We currently do not have an internal audit group, and we may need to hire additional accounting and financial staff or a third-party service provider with the appropriate experience, as well as understanding of internal control processes around supervision and monitoring of our accounting and reporting functions and technical accounting knowledge and application, and compile the system and process documentation necessary to perform the evaluation needed to comply with Section 404.

        We may not be able to complete our evaluation, testing and any required remediation in a timely fashion. During the evaluation and testing process, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal control over

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financial reporting is effective. We cannot assure you that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting in the future. If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of the ADSs could decline, and we could be subject to sanctions or investigations by the NASDAQ Stock Market, the SEC or other regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.

We will incur significant increased costs as a result of operating as a company whose ADSs are publicly traded in the United States, and our management will be required to devote substantial time to new compliance initiatives.

        As a company whose ADSs will be publicly traded in the United States, we will incur significant legal, accounting, insurance and other expenses that we have not previously incurred. In addition, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act and related rules implemented by the SEC and the NASDAQ Stock Market have imposed various requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls. These costs will increase at the time when we are no longer an emerging growth company eligible to rely on exemptions under the JOBS Act from certain disclosure and governance requirements. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to incur substantial costs to maintain the same or similar coverage. These laws and regulations could also make it more difficult and expensive for us to attract and retain qualified persons to serve on our board of directors or its committees. Furthermore, if we are unable to satisfy our obligations as a U.S.-listed public company, we could be subject to delisting of the ADSs, fines, sanctions and other regulatory action and potentially civil litigation.

You may be subject to limitations on the transfer of your ADSs.

        Your ADSs are transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time when it deems doing so expedient in connection with the performance of its duties. The depositary may close its books from time to time for a number of reasons, including in connection with corporate events such as a rights offering, during which time the depositary needs to maintain an exact number of ADS holders on its books for a specified period. The depositary may also close its books in emergencies and on weekends and public holidays. The depositary may refuse to deliver, transfer or register transfers of the ADSs generally when our share register or the books of the depositary are closed, or at any time if we or the depositary thinks that it is advisable to do so because of any requirement of law or of any government or governmental body or of any regulatory authority, or under any provision of the deposit agreement, or for any other reason in accordance with the terms of the deposit agreement.

You may not receive distributions on our ordinary shares represented by the ADSs or any value for them if it is illegal or impractical to make them available to holders of ADSs.

        Under the terms of the deposit agreement, the depositary for the ADSs has agreed to pay to you the cash dividends or other distributions it or the custodian receives on our ordinary shares or other deposited securities after deducting its fees and expenses. You will receive these distributions in proportion to the number of our ordinary shares your ADSs represent. However, it may be unlawful or impractical to make a distribution available to holders of ADSs. We have no obligation to take any other action to permit the distribution of the ADSs, ordinary shares, rights or anything else to holders of the ADSs. This means that you may not receive the distributions we make on our ordinary shares or any value from them if it is unlawful or impractical to make them available to you. These restrictions may have a material adverse effect on the value of your ADSs.

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If securities or industry analysts do not publish research or reports about our business, or if they adversely change their recommendations regarding the ADSs, the market price for the ADSs and trading volume could decline.

        The trading market for the ADSs will be influenced by research or reports that industry or securities analysts publish about our business. If one or more analysts who cover us downgrade the ADSs, the market price for the ADSs would likely decline. If one or more of these analysts cease to cover us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which, in turn, could cause the market price or trading volume for the ADSs to decline.

It may be difficult for investors outside Belgium to serve process on, or enforce foreign judgments against, us or our directors and senior management.

        We are a Belgian public limited liability company. Only one member of our board of directors and no member of our executive management is a resident of the United States. All or a substantial portion of the assets of such non-resident persons and most of our assets are located outside the United States. As a result, it may not be possible for investors to effect service of process upon such persons or on us or to enforce against them or us a judgment obtained in U.S. courts. Original actions or actions for the enforcement of judgments of U.S. courts relating to the civil liability provisions of the federal or state securities laws of the United States are not directly enforceable in Belgium. The United States and Belgium do not currently have a multilateral or bilateral treaty providing for reciprocal recognition and enforcement of judgments, other than arbitral awards, in civil and commercial matters. In order for a final judgment for the payment of money rendered by U.S. courts based on civil liability to produce any effect on Belgian soil, it is accordingly required that this judgment be recognized or be declared enforceable by a Belgian court in accordance with Articles 22 to 25 of the 2004 Belgian Code of Private International Law. Recognition or enforcement does not imply a review of the merits of the case and is irrespective of any reciprocity requirement. A U.S. judgment will, however, not be recognized or declared enforceable in Belgium if it infringes upon one or more of the grounds for refusal that are exhaustively listed in Article 25 of the Belgian Code of Private International Law. These grounds mainly require that the recognition or enforcement of the foreign judgment should not be a manifest violation of public policy, that the foreign courts must have respected the rights of the defense, that the foreign judgment should be final, and that the assumption of jurisdiction by the foreign court may not have breached certain principles of Belgian law. In addition to recognition or enforcement, a judgment by a federal or state court in the United States against us may also serve as evidence in a similar action in a Belgian court if it meets the conditions required for the authenticity of judgments according to the law of the state where it was rendered. The findings of a federal or state court in the United States will not, however, be taken into account to the extent they appear incompatible with Belgian public policy.

We could be subject to securities class action litigation.

        In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us, because pharmaceutical companies have experienced significant share price volatility in recent years. If we face such litigation, it could result in substantial costs and a diversion of management's attention and resources.

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We believe that our shares or ADSs should not be treated as stock of a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for the 2015 taxable year and should not be treated as such for subsequent taxable years, but this conclusion is a factual determination that is made annually and thus may be subject to change. If we were to qualify as a PFIC, this could result in adverse U.S. federal income tax consequences to U.S. investors.

        Based on the composition of our assets and the nature of our income, we believe that our shares or ADSs should not be treated as stock of a PFIC for U.S. federal income tax purposes for the 2015 taxable year and should not be treated as such for subsequent taxable years, but this conclusion is a factual determination that is made annually and thus may be subject to change. Because PFIC status must be determined annually based on factual tests, our PFIC status in future taxable years will depend on our income, assets and activities in those years. Furthermore, because the value of our gross assets is likely to be determined in large part by reference to our market capitalization and the value of our goodwill, a decline in the value of our shares or ADSs could affect the determination of whether we are PFIC. In general, we will be treated as a PFIC for any taxable year in which either of the following is true:

    At least 75% of our gross income (looking through certain corporate subsidiaries) for the taxable year is "passive income."

    At least 50% of the value, determined on the basis of a quarterly average, of our gross assets (looking through certain corporate subsidiaries) is attributable to assets that produce or are held for the production of "passive income."

        Passive income generally includes dividends, interest, royalties, rents (other than certain rents and royalties derived in the active conduct of a trade or business), annuities and gains from assets that produce passive income. If we are treated as a PFIC, and you are a U.S. Holder as defined in "Taxation—U.S. Taxation" that did not make a "mark-to-market election," as described below, you will be subject to potentially adverse U.S. federal income tax consequences in the taxable year in which the share or ADSs are sold or upon receipt of an "excess distribution" with respect to the shares or ADSs. In general, a U.S. Holder would receive an "excess distribution" if the amount of any distribution for U.S. federal income tax purposes in respect of the shares or ADSs is more than 125% of the average distributions made with respect to the shares or ADSs within the three preceding taxable years (or shorter period in which such U.S. Holder held the shares or ADSs). In general, a U.S. Holder would be subject to an additional tax that is equivalent to an interest charge on U.S. taxes that are deemed due during the period the U.S. Holder owned the shares or ADSs computed by assuming that the gain (in the case of a sale) or the "excess distribution" in respect of the shares or ADSs was taxed in equal portions at the highest applicable tax rate throughout the period in which such U.S. Holder owned such shares or ADSs. A "mark-to-market election," if available to and made by a U.S. Holder generally would result in such U.S. Holder taking into account ordinary income or loss in respect of such U.S. Holder's investment in the shares or ADSs by marking the shares or ADSs to market on an annual basis. In addition, as a PFIC, dividends on the shares or ADSs would not be eligible for the special tax rate available to non-corporate U.S. Holders applicable to "qualified dividend income." Prospective U.S. Holders of shares or ADSs should consult their own U.S. tax advisors regarding the potential application of the PFIC rules. See "Taxation—U.S. Taxation—Passive Foreign Investment Company Considerations."

We are a Belgian public limited liability company, and shareholders of our Company may have different and in some cases more limited shareholder rights than shareholders of a U.S. listed corporation.

        We are a public limited liability company incorporated under the laws of Belgium. Our corporate affairs are governed by Belgian corporate law. The rights provided to our shareholders under Belgian

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corporate law and our articles of association differ in certain respects from the rights that you would typically enjoy as a shareholder of a U.S. corporation under applicable U.S. federal and state laws.

        Under Belgian corporate law, other than certain limited information that we must make public and except in certain limited circumstances, our shareholders may not ask for an inspection of our corporate records, while under Delaware corporate law any shareholder, irrespective of the size of its shareholdings, may do so. Shareholders of a Belgian corporation are also unable to initiate a derivative action, a remedy typically available to shareholders of U.S. companies, in order to enforce a right of our Company, in case we fail to enforce such right ourselves, other than in certain cases of director liability under limited circumstances. In addition, a majority of our shareholders present or represented at our meeting of shareholders may release a director from any claim of liability we may have, including if he or she has acted in bad faith or has breached his or her duty of loyalty, provided, in some cases, that the relevant acts were specifically mentioned in the convening notice to the meeting of shareholders deliberating on the discharge. In contrast, most U.S. federal and state laws prohibit a company or its shareholders from releasing a director from liability altogether if he or she has acted in bad faith or has breached his or her duty of loyalty to the company. Finally, Belgian corporate law does not provide any form of appraisal rights in the case of a business combination.

        As a result of these differences between Belgian corporate law and our articles of association, on the one hand, and the U.S. federal and state laws, on the other hand, in certain instances, you could receive less protection as a shareholder of our Company than you would as a shareholder of a listed U.S. company.

Because we are a foreign private issuer and intend to follow certain home country corporate governance practices, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all NASDAQ Global Market corporate governance requirements.

        As a foreign private issuer, we have the option to follow Belgian corporate law and the Belgian Corporate Governance Code rather than the corporate governance practices of the NASDAQ Global Market, except to the extent that such laws would be contrary to U.S. securities laws, and provided that we disclose the requirements we are not following and describe the home country practices we follow instead. As a result, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all the NASDAQ Global Market corporate governance requirements. See "Management—Differences between Our Corporate Governance Practices and the Listing Rules of the NASDAQ Stock Market."

Holders of ADSs or ordinary shares have limited rights to call meetings of shareholders or to submit shareholder proposals.

        Except under limited circumstances, only the board of directors or the statutory auditor may call a meeting of shareholders. Shareholders that collectively own at least 20% of the share capital of our Company may require the board of directors or the statutory auditor to convene a special or an extraordinary general meeting of shareholders. Provided that certain conditions are satisfied, one or more shareholders holding at least 3% of our share capital may request for items to be added to the agenda of any convened meeting and submit proposed resolutions in relation to existing agenda items or new items to be added to the agenda. As a result, the ability of holders of the ADSs or ordinary shares to participate in and influence the governance of our Company is limited.

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Holders or beneficial owners of the ADSs have limited recourse if we or the depositary fail to meet our respective obligations under the deposit agreement or if they wish us or the depositary to participate in legal proceedings.

        The deposit agreement expressly limits the obligations and liability of us and the depositary. Neither we nor the depositary will be liable to the extent that liability results from the fact that we:

    Are prevented, forbidden from or delayed in doing or performing any obligation under the terms of the deposit agreement by reason of any provision of any present or future law or regulation of the United States, any state thereof, Belgium or any other country, or governmental or regulatory authority or stock exchange, or on account of possible civil or criminal liabilities or by reason of any provision of our constitutional documents or any other provision governing the ordinary shares or by reason of any act of God, war or other circumstances beyond our or their control.

    Exercise or fail to exercise discretion under the deposit agreement or our constitutional documents or any other provision governing the ordinary shares.

    Perform our obligations without gross negligence or willful misconduct or bad faith.

    Take any action or fail to take any action based upon advice of or information from legal counsel, accountants, any person presenting shares for deposit, any holder of the ADSs or any other person believed in good faith to be competent to give such advice or information.

    Rely on any documents we believe to be genuine and properly executed.

        In addition, neither we nor the depositary has any obligation to participate in any action, suit or other proceeding in respect of the ADSs which may involve it in expense or liability unless it is indemnified to its satisfaction. Additionally, neither we nor the depositary will incur any liability for any special, consequential, indirect or punitive damages for any breach of the deposit agreement or otherwise. These provisions of the deposit agreement will limit the ability of holders or beneficial owners of the ADSs to obtain recourse if we or the depositary fail to meet our respective obligations under the deposit agreement or if they wish us or the depositary to participate in a legal proceeding.

Investors may not be able to participate in equity offerings, and ADS holders may not receive any value for rights that we may grant.

        In accordance with Belgian corporate law, our articles of association provide for preferential subscription rights to be granted to our existing shareholders to subscribe on a pro rata basis for any issue for cash of new shares, convertible bonds or warrants that are exercisable for cash, unless such rights are canceled or limited by resolution of our meeting of shareholders or the board of directors. Our meeting of shareholders or board of directors may cancel or restrict such rights in future equity offerings. In addition, certain shareholders (including those in the United States, Australia, Canada or Japan) may not be entitled to exercise such rights even if they are not canceled unless the rights and related shares are registered or qualified for sale under the relevant legislation or regulatory framework. As a result, there is the risk that investors may suffer dilution of their shareholding should they not be permitted to participate in preference right equity or other offerings that we may conduct in the future.

        If rights are granted to our shareholders, as the case may be, but the depositary is unable to sell rights corresponding to shares represented by ADSs that are not exercised by, or distributed to, ADS holders, or if the sale of such rights is not lawful or reasonably practicable, the depositary may allow the rights to lapse, in which case ADS holders will receive no value for such rights.

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We have broad discretion to determine how to use the net proceeds from this offering and may use them in ways that may not enhance our results of operations or the price of the ADSs.

        Our management will have broad discretion over the use of net proceeds from this offering, and we could spend the net proceeds from this offering in ways the holders of the ADSs may not agree with or that do not yield a favorable return. We intend to use the net proceeds of this offering for the following purposes:

    Funding new and ongoing clinical trials of multiple product candidates.

    Commercialization activities, including market access and reimbursement activities.

    Establishing commercial-scale manufacturing activities.

    Funding research and development activities and working capital.

    Other general corporate purposes, including the costs and expenses of being a U.S.-listed public company.

        Because of the number and variability of factors that will determine our use of the net proceeds from this offering, our use of these proceeds may differ substantially from our current plans. You will not have the opportunity, as part of your investment decision, to assess whether proceeds are being used appropriately. You must rely on the judgment of our management regarding the application of the net proceeds of this offering.

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HISTORY AND ORGANIZATIONAL STRUCTURE

        We were incorporated in Belgium on February 21, 2000, initially to capitalize on technology developed at the universities of Leuven and Ghent for the regeneration of cartilage, bone and other musculoskeletal tissues.

        The following chart illustrates our corporate structure as of the date of this prospectus:

GRAPHIC

        Coretherapix SLU.    On July 31, 2015, we acquired Coretherapix, a cardiology-focused cell therapy company based in Madrid, Spain, from Genetrix. Coretherapix's lead product candidate is AlloCSC-01, an allogeneic cardiac stem cell product in a Phase I/II clinical trial in acute myocardial infarction. The Coretherapix team and facilities have been completely integrated into our organization.

        TiGenix SAU.    On May 3, 2011, we acquired Cellerix, a cell-therapy company based in Madrid, Spain. Cellerix, which was later renamed TiGenix SAU, had an eASC-based technology platform for indications of inflammatory and autoimmune origin that are the basis of our eASC-based pipeline. The Cellerix team and facilities have been completely integrated into our organization.

        Arcarios B.V.    On July 8, 2010, we spun off certain drug discovery assets to the Dutch company Arcarios B.V. (formerly named Therosteon B.V.) in which we hold a 3.53% equity stake as of December 31, 2015.

        TiGenix Inc.    We incorporated TiGenix Inc., a wholly-owned U.S. subsidiary, on February 7, 2006, and on May 8, 2007, TiGenix Inc. and Cognate BioServices entered into a fifty-fifty joint venture with respect to TC CEF LLC, an asset management company. TC CEF LLC subsequently acquired the assets of a fully equipped cell expansion facility from Cell Genesys, Inc., for the manufacture of ChrondroCelect for clinical trials required by the FDA and to serve the U.S. market after obtaining marketing approval for ChondroCelect in the United States. However, after we abandoned our plans to introduce ChondroCelect into the U.S. market independently due to the associated costs and the required time, we withdrew from the joint venture as of November 23, 2010 and terminated our membership interests in TC CEF LLC. As of the date of this prospectus, TiGenix Inc. is a dormant subsidiary.

        Other Historical Subsidiaries.    On September 24, 2009, we established TiGenix B.V., a wholly-owned Dutch subsidiary. TiGenix B.V. constructed a new European human cell expansion facility in Geleen to increase the manufacturing capacity of ChondroCelect in Europe. On May 30, 2014, we completed the sale of all of the shares of TiGenix B.V. to PharmaCell. ChondroCelect continues to be manufactured in that facility under a long-term manufacturing agreement with our former subsidiary.

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        On November 30, 2009, we acquired Orthomimetics Limited, a biomaterials company that was later renamed TiGenix Ltd. TiGenix Ltd. designed, developed and manufactured novel, bioresorbable implants for the regenerative repair of articular joint damage resulting from sports injuries and other trauma, including ChondroMimetic, an off-the-shelf biomaterial scaffold for the treatment of small osteochondral defects and small focal chondral lesions with possible underlying subchondral bone plate damage. In view of our exclusive focus on cell therapy since the Cellerix acquisition in 2011, we decided to shut down TiGenix Ltd. The intellectual property related to TiGenix Ltd., which was recognized as part of our intangible assets, was fully impaired in our consolidated financial statements as of December 31, 2011. TiGenix Ltd. was dissolved in May 2014.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

        This prospectus contains forward-looking statements and our estimates with respect to our anticipated future performance and the market in which we operate. Certain of these statements, forecasts and estimates can be recognized by the use of words such as, without limitation, "believes," "anticipates," "expects," "intends," "plans," "seeks," "estimates," "may," "will," "predicts," "projects" and "continue" and similar expressions. Such statements, forecasts and estimates are based on various assumptions and assessments of known and unknown risks, uncertainties and other factors, which may or may not prove to be correct. Actual events are difficult to predict and may depend upon factors that are beyond our control. Therefore, our actual results, financial condition or performance may turn out to be materially different from such statements, forecasts and estimates. Factors that might cause such a difference include, but are not limited to, those discussed in the section "Risk Factors" included elsewhere in this prospectus.

        By their nature, forward-looking statements involve risks and uncertainties because they relate to events, competitive dynamics and industry change, and depend on economic circumstances that may or may not occur in the future or may occur on longer or shorter timelines than anticipated. Although we believe that we have a reasonable basis for each forward-looking statement contained in this prospectus, we caution you that forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control. All of our forward-looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from our expectations.

        Actual results could differ materially from our forward-looking statements due to a number of factors, including, without limitation, the following:

    We may experience delays or failure in the preclinical and clinical development of our product pipeline.

    Regulatory approval of our products may be delayed, not obtained or not maintained.

    We work in a strict regulatory environment, and future changes to any pharmaceutical legislation or guidelines or unexpected events or new scientific insights occurring within the field of cell therapy, could affect our business.

    If we fail to obtain additional financing, we may be unable to complete the development and commercialization of our product candidates.

    We have a history of operating losses and an accumulated deficit and may never become profitable.

    We have an accumulated deficit of 120.0 million euros as of December 31, 2015 and our net losses and significant cash used in operating activities have raised substantial doubt about our ability to continue as a going concern.

    The manufacturing facilities at which our product candidates are made are subject to regulatory requirements, which may affect the development of our product pipeline and the successful commercialization of our products.

    The Coretherapix acquisition could cause disruptions in our business or the business of Coretherapix, which could have a material adverse effect on the business prospects and financial results of the combined company.

    We may not be able to adequately protect our proprietary technology or enforce any rights related thereto.

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    Third party claims of intellectual property infringement may prevent or delay our product discovery and development efforts.

    We may need to rely on distributors and other third parties to commercialize our product candidates, and such distributors may not succeed in commercializing our product candidates effectively or at all.

    We rely on third parties to conduct our clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our product candidates.

    The allocation of available resources could affect our ability to carry out our business plan.

        The preceding list is not intended to be an exhaustive list of all of our forward-looking statements. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this prospectus or to conform these statements to actual results or to changes in our expectations.

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EXCHANGE RATES

        The following tables set forth the high, low, average and period end Bloomberg Generic Composite Rate expressed in U.S. dollars per euro. The Bloomberg Generic Composite Rate is a best market calculation, in which, at any point in time, the bid rate is equal to the highest bid rate of all contributing bank indications and the ask rate is set to the lowest ask rate offered by these banks. The Bloomberg Generic Composite Rate is a mid-value rate between the applied highest bid rate and the lowest ask rate.

Year (U.S. dollar per euro)
  High   Low   Average
Rate(1)
  Period
End
 

2011

    1.4874     1.2925     1.3922     1.2960  

2012

    1.3463     1.2053     1.2859     1.3197  

2013

    1.3802     1.2780     1.3285     1.3743  

2014

    1.3934     1.2098     1.3285     1.2098  

2015

    1.2104     1.0496     1.1102     1.0862  

(1)
The average rate for a year means the average of the Bloomberg Generic Composite Rates on the last day of each month during a year.

Month (U.S. dollar per euro)
  High   Low   Average
Rate(1)
  Period
End
 

January, 2016

    1.0940     1.0748     1.0866     1.0831  

February, 2016

    1.1323     1.0888     1.1116     1.1158  

March, 2016

    1.1380     1.0868     1.1142     1.1156  

April, 2016

    1.1451     1.1222     1.1340     1.1451  

May, 2016

    1.1534     1.1115     1.1298     1.1132  

June, 2016

    1.1395     1.1025     1.1242     1.1106  

(1)
The average rate for a month, means the average of the daily Bloomberg Generic Composite Rates during that month.

        The Bloomberg Generic Composite Rate on July 12, 2016 was $1.1063 per euro.

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USE OF PROCEEDS

        We estimate that the net proceeds to us from this offering, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately $      , at the assumed public offering price of $      (       euros) per ADS or        euros per ordinary share, the closing price of our ordinary shares on Euronext Brussels on                  ,        .

        A $1.00 increase (decrease) in the assumed initial public offering price of $      per ADS or        euros per ordinary share would increase (decrease) the net proceeds from this offering to us by approximately $      , assuming no change to the number of ordinary shares, including ordinary shares in the form of ADSs offered as set forth on the cover page of this prospectus. An increase (decrease) of 500,000 ADSs and ordinary shares in the aggregate number of ADSs and ordinary shares offered by us would increase (decrease) the net proceeds to us by approximately $      , assuming the initial public offering price remains the same.

        We intend to use the net proceeds of this offering for the following purposes:

    With respect to Cx601 in the United States, to complete the process of technology transfer to Lonza, a U.S.-based contract manufacturing organization, to file an investigational new drug application to conduct a pivotal Phase III trial in the United States supporting a biologics license application with the FDA and to commence recruitment of patients for the Phase III trial (approximately $       million).

    To advance the Phase II clinical development of Cx611 in severe sepsis until well into the stage of recruitment (approximately $       million).

    To advance the development of AlloCSC-01 in acute myocardial infarction until the end of PhaseI/II clinical development (approximately $       million).

    The remainder for general corporate purposes, including research and development and working capital requirements.

        The foregoing represents our current intentions with respect to the use and allocation of the net proceeds of this offering based upon our present plans and business conditions, but our management will have significant flexibility and discretion in applying the net proceeds. The occurrence of unforeseen events or changed business conditions could result in the application of the net proceeds of this offering in a manner other than as described above. Pending our use of the net proceeds as described above, we intend to invest the net proceeds in short-term bank deposits or interest-bearing, investment-grade securities.

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DIVIDEND POLICY

        We do not currently pay dividends, and we do not anticipate declaring or paying any dividends for the foreseeable future.

        All of the ordinary shares represented by the ADSs offered by this prospectus will have the same dividend rights as all of our other outstanding ordinary shares. In general, distributions of dividends proposed by our board of directors require the approval of our shareholders at a meeting of shareholders with a simple majority vote, although our board of directors may declare interim dividends without shareholder approval, subject to the terms and conditions of the Belgian Company Code. See "Description of Share Capital."

        Pursuant to Belgian law, the calculation of amounts available for distribution to shareholders, as dividends or otherwise, must be determined on the basis of our non-consolidated statutory financial accounts. In addition, under the Belgian Company Code, we may declare or pay dividends only if, following the declaration and issuance of the dividends, the amount of our net assets on the date of the closing of the last financial year according to our statutory annual accounts (i.e., the amount of the assets as shown in the balance sheet, decreased with provisions and liabilities, all as prepared in accordance with Belgian accounting rules), decreased with the non-amortized costs of incorporation and expansion and the non-amortized costs for research and development, does not fall below the amount of the paid-up capital (or, if higher, the called capital), increased with the amount of non-distributable reserves. Finally, prior to distributing dividends, we must allocate at least 5% of our annual net profits (under our non-consolidated statutory accounts prepared in accordance with Belgian accounting rules) to a legal reserve, until the reserve amounts to 10% of our share capital.

        For information regarding the Belgian withholding tax applicable to dividends and related U.S. reimbursement procedures, see "Taxation—Belgian Taxation."

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CAPITALIZATION

        The following table sets forth our capitalization as of December 31, 2015:

    on an actual basis.

    on a pro forma basis for the private placement conducted on March 14, 2016.

    on a pro forma basis as adjusted to reflect the sale by us of      ordinary shares including ordinary shares in the form of ADSs in this offering at the assumed public offering price of $       (      euros) per ADS or         euros per ordinary share, the closing price of our ordinary shares on Euronext Brussels on                        ,        , and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

        The pro forma as adjusted information below is for illustrative purposes only. Our capitalization following the closing of this offering will be adjusted based on the actual initial public offering price and other terms of this offering determined at pricing.

        Solely for the convenience of the reader our pro forma and pro forma as adjusted capitalization has been translated into U.S. dollars at 1.00 euro=$1.0859 on December 31, 2015 based on the certified foreign exchange rate published by the Federal Reserve Bank of New York. Such translation should not be construed as a representation that the euro amounts have been or could be converted into U.S. dollars at this or at any other rate of exchange, or at all.

        This table should be read in conjunction with "Use of Proceeds," "Selected Financial Information," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the accompanying notes thereto appearing elsewhere in this prospectus.

 
   
  Pro Forma
Private
Placement
  Pro Forma
As Adjusted(1)
  Pro Forma
As Adjusted(1)
 
 
  In thousands
of euros

  In thousands
of euros
(Unaudited)

  In thousands
of euros
(Unaudited)

  In thousands
of U.S. dollars
(Unaudited)

 

Cash and cash equivalents

    17,982     40,096              
                   
                   

Financial loans and other payables

    40,084     40,084              

Total equity:

                         

Share capital

    17,730     20,230              

Share premium

    112,750     132,364              

Accumulated deficit

    (120,002 )   (120,002 )            

Other reserves

    2,667     2,667              
                   

Total equity

    13,145     35,259              
                   

Total capitalization

    53,229     75,343              
                   
                   

(1)
A $1.00 (            euro) increase (decrease) in the assumed public offering price of $             (            euros) per ADS or          euros per ordinary share would increase (decrease) each of pro forma as adjusted cash and cash equivalents, total equity and total capitalization by approximately                         euros ($            ), assuming that the number of ordinary shares including ordinary shares in the form of ADSs offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. Each increase (decrease) of 500,000 ADSs or 5 million ordinary shares in the number of ADSs or ordinary shares offered by us would increase (decrease) each of pro forma as adjusted cash and cash equivalents, total equity and total capitalization by approximately                        euros ($            ), if the assumed initial public offering price remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

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DILUTION

        If you invest in the ordinary shares or ADSs in this offering, your interest will be diluted immediately to the extent of the difference between the initial public offering price per ordinary share or ADS and the pro forma net tangible book value per ordinary share or ADS after this offering. Dilution results from the fact that the initial public offering price per ordinary share or ADS is substantially in excess of the net tangible book value per ordinary share or ADS attributable to our existing shareholders for our ordinary shares that will be outstanding immediately prior to the closing of this offering. We calculate net tangible book value per ordinary share by dividing the net tangible book value (total assets less intangible assets and total liabilities) by the number of outstanding ordinary shares. Dilution is determined by subtracting net tangible book value per ordinary share or ADS from the initial public offering price per ordinary share or ADS.

        Our net tangible book value as of December 31, 2015 was negative 35.8 million euros (negative $38.9 million), or negative 0.20 euros (negative $0.22) per ordinary share and $      per ADS. Investors participating in this offering will incur immediate and substantial dilution.

        After giving effect to the issuance of 25 million ordinary shares in a private placement in March 2016, our pro forma net tangible book value as of December 31, 2015 would have been negative 13.7 million euros (negative $14.9 million), or negative 0.07 euros (negative $0.08) per ordinary share and $      per ADS.

        Upon the closing of this offering and the sale by us of the ADSs or ordinary shares in this offering at the assumed public offering price of $      (      euros) per ADS or         euros per ordinary share, the closing price of our ordinary shares on Euronext Brussels on                        ,        , and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma net tangible book value as of December 31, 2015 would have been approximately            euros ($      ), or      euros ($      ) per ordinary share and $ per ADS. This amount represents an immediate increase in our pro forma net tangible book value of       euros ($      ) per share and $      per ADS to our existing shareholders and an immediate dilution of      euros ($      ) per ordinary share and $      per ADS to new investors purchasing the ADSs in this offering at the initial public offering price.

        The following table illustrates this dilution per ordinary share or ADS:

 
  Per ADS  

Assumed initial public offering price per ordinary share or ADS

       

Historical net tangible book value per ordinary share or ADS as of December 31, 2015

       

Change in net tangible book value per ordinary share or ADS attributable to the adjustment transaction described above

       

Pro forma net tangible book value per ordinary share or ADS

       

Increase in pro forma net tangible book value per ordinary share or ADS attributable to investors purchasing ordinary shares or ADSs in this offering

       

Pro forma as adjusted net tangible book value per ordinary share or ADS after giving effect to this offering

       

Dilution per ordinary share or ADS to new investors purchasing in this offering

       

        A $1.00 (        euro) increase (decrease) in the assumed public offering price of $      (        euros) per ADS or         euros per ordinary share would increase (decrease) our pro forma net tangible book value after this offering by      euros ($      ) per share and $      per ADS, and decrease (increase) the dilution in pro forma net tangible book value to new investors by $      per ADS or         euros per ordinary share, assuming that the number of ordinary shares or ADSs offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. Each increase (decrease) of 500,000 ADSs

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or 5 million ordinary shares in the number of ADSs or ordinary shares offered by us would increase (decrease) our pro forma net tangible book value after this offering by      euros ($      ) per ordinary share and $      per ADS and decrease (increase) the dilution to investors participating in this offering by approximately         euros per ordinary share $      per ADS, assuming that the assumed initial public offering price remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

        The following table summarizes on a pro forma basis, as of December 31, 2015, the differences between the shareholders as of December 31, 2015 and the new investors with respect to the number of ordinary shares purchased from us, the total consideration paid and the average price per ordinary share paid by existing shareholders and by investors participating in this offering at the assumed public offering price of $      (        euros) per ADS or         euros per ordinary share, before deducting the underwriting discounts and commissions and estimated offering expenses payable by us:

 
  Ordinary Shares
Purchased
  Total
Consideration
   
   
   
 
 
  Average
Price per
Ordinary Share
  Average
Price per
ADS
 
 
  Number   Percent   Amount   Amount   Percent  
 
   
   
  (in euros)
  (in U.S. dollars)
   
  (in euros)
  (in U.S. dollars)
  (in euros)
 

Existing shareholders

                                                          %                                

New investors

                              %                  
                                   

Total

                            100.0 %                  
                                   
                                   

        A $1.00 (        euro) increase (decrease) in the assumed public offering price of $      (        euros) per ADS or         euros per ordinary share, would increase (decrease) total consideration paid by new investors by $       million (        million euros), assuming that the number of ADSs and ordinary shares offered, as set forth on the cover page of this prospectus, remains the same, and before deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

        If the underwriters exercise their over-allotment option in full, our existing shareholders would own      ordinary shares, or      %, in the aggregate, of our total outstanding share capital and our new investors would own      ordinary shares including ordinary shares in the form of ADSs, or      %, in the aggregate, of our total outstanding share capital after this offering. If the underwriters exercise their over-allotment option in full, our pro forma net tangible book value would be      euros ($ ) per ordinary share and $      per ADS and the dilution to investors participating in this offering would be         euros per ordinary share and $      per ADS.

        The tables and calculations above are based on the number of ordinary shares outstanding as at December 31, 2015 as adjusted for the transactions described above and exclude the following:

    26,556,192 ordinary shares issuable upon the conversion of our 9% senior unsecured bonds due 2018, at a conversion price of 0.9414 euros per share as of December 31, 2015.

    9,673,621 ordinary shares issuable upon exercise of granted and outstanding warrants as of December 31, 2015, at a weighted average exercise price of 1.32 euros per share.

        To the extent that we grant warrants or other equity awards to our directors, executive management or employees in the future, and those warrants or other equity awards are exercised or other issuances of our ordinary shares are made, there will be further dilution to investors participating in this offering. In addition, there will be further dilution to investors participating in this offering in the case of any future capital increase with cancellation of the preferential subscription rights of our existing shareholders and any future offering where U.S. investors are excluded from participation.

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MARKET FOR OUR SHARES

        Our ordinary shares began trading on Euronext Brussels in 2007. The current trading symbol on Euronext Brussels is "TIG."

        Our ordinary shares will continue trading on Euronext Brussels under the symbol "TIG" and we expect that our ADSs will trade on the NASDAQ Global Market under the symbol "TIG" after the effective date of the registration statement to which this prospectus relates.

        The following table lists the high and low sales prices and the average daily trading volume on Euronext Brussels for our ordinary shares on a monthly basis for the last six full months, a quarterly basis for the last two full fiscal years and the subsequent period and an annual basis for the last five full fiscal years. Prices indicated below with respect to our ordinary share price include interdealer prices, without retail mark up, mark down or commission and may not necessarily represent actual transactions. All prices are quoted in euros and U.S. dollars using the Bloomberg Generic Composite Rate on the applicable trading date.

 
  Euros   U.S. Dollars    
 
 
  Average Daily
Trading Volume
 
Period
  High   Low   High   Low  

Monthly

                               

June 30, 2016

    1.03     0.82     1.14     0.91     455,178  

May 31, 2016

    0.95     0.91     1.06     1.01     184,705  

April 30, 2016

    0.97     0.91     1.11     1.04     271,620  

March 31, 2016

    1.12     0.95     1.28     1.09     578,487  

February 29, 2016

    1.15     0.91     1.25     0.99     456,106  

January 31, 2016

    1.21     1.01     1.30     1.10     824,502  

Quarterly

   
 
   
 
   
 
   
 
   
 
 

June 30, 2016

    1.03     0.82     1.14     0.91     330,893  

March 31, 2016

    1.21     0.91     1.38     1.04     619,698  

December 31, 2015

    1.19     0.88     1.29     0.96     618,357  

September 30, 2015

    1.01     0.86     1.13     0.96     947,382  

June 30, 2015

    1.31     0.65     1.46     0.72     1,995,827  

March 31, 2015

    0.82     0.60     0.88     0.64     431,061  

December 31, 2014

    0.84     0.52     1.02     0.63     905,858  

September 30, 2014

    0.59     0.48     0.75     0.61     246,507  

June 30, 2014

    0.66     0.49     0.88     0.66     288,165  

March 31, 2014

    0.85     0.54     1.17     0.75     799,349  

Yearly

   
 
   
 
   
 
   
 
   
 
 

December 31, 2015

    1.28     0.52     1.39     0.56     999,430  

December 31, 2014

    1.03     0.48     1.25     0.58     1,215,133  

December 31, 2013

    1.05     0.19     1.44     0.26     1,254,614  

December 31, 2012

    1.02     0.43     1.35     0.57     314,278  

December 31, 2011

    1.45     0.57     1.88     0.74     55,974  

        On July 12, 2016, the last reported sale price of our ordinary shares on Euronext Brussels was 1.04 euros per share, or $1.15 per share based on the rate of exchange on that day.

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SELECTED FINANCIAL INFORMATION

        The tables below present our summary historical consolidated financial data. Our summary historical consolidated financial data as of December 31, 2015 and 2014 and for the years ended December 31, 2015 and 2014 has been derived from our consolidated financial statements, which are included elsewhere in this prospectus. The consolidated financial statements have been prepared and presented in accordance with IFRS as issued by the IASB. As an emerging growth company, we are not required to present, and have not presented, selected financial data for any period prior to our most recently completed two fiscal years.

        Our consolidated financial statements are prepared and presented in euros, our presentation currency. Solely for the convenience of the reader our consolidated financial statements as at and for the year ended December 31, 2015 have been translated into U.S. dollars at 1.00 euro=$1.0859 on December 31, 2015, based on the certified foreign exchange rates published by the Federal Reserve Bank of New York. Such translation should not be construed as a representation that the euro amounts have been or could be converted into U.S. dollars at these or at any other rate of exchange, or at all.

        The following summary historical consolidated financial data should be read in conjunction with our historical consolidated financial statements and the related notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations," included elsewhere in this prospectus. The historical results for any prior period are not necessarily indicative of results to be expected for any future period.

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Consolidated Income Statement Data:

 
  Years ended December 31,  
 
  2015   2014   2015  
 
  In thousands of
euros, except
per share data

  In thousands of
euros, except
per share data

  In thousands of
U.S. dollars, except
per share data
(unaudited)

 

CONTINUING OPERATIONS

                   

Revenues

                   

Royalties

    537     338     583  

Grants and other operating income

    1,703     5,948     1,849  
               

Total revenues

    2,240     6,286     2,432  

Research and development expenses

    (19,633 )   (11,443 )   (21,319 )

General and administrative expenses

    (6,683 )   (7,406 )   (7,257 )

Total operating charges

    (26,316 )   (18,849 )   (28,577 )
               

Operating Loss

    (24,076 )   (12,563 )   (26,144 )

Financial income

    148     115     161  

Interest on borrowing and other finance costs

    (6,651 )   (1,026 )   (7,222 )

Fair value gains / (losses)

    (6,654 )   60     (7,226 )

Impairment and gains/(losses) on disposal of financial instruments

    (161 )       (175 )

Foreign exchange differences, net

    1,000     1,101     1,086  
               

Loss before taxes

    (36,394 )   (12,313 )   (39,520 )

Income tax benefits

    1,325     927     1,439  
               

Loss for the year from continuing operations

    (35,069 )   (11,386 )   (38,081 )

DISCONTINUED OPERATIONS

                   

Loss for the year from discontinued operations

        (1,605 )    
               

Loss for the year

    (35,069 )   (12,990 )   (38,081 )
               
               

Attributable to equity holders of TiGenix

    (35,069 )   (12,990 )   (38,081 )

Basic and diluted loss per share

    (0.21 )   (0.08 )   (0.23 )

Basic and diluted loss per share from continuing operations

    (0.21 )   (0.07 )   (0.23 )

Basic and diluted loss per share from discontinued operations

        (0.01 )    

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Consolidated Statements of Financial Position Data—Summary

 
  As at December 31,  
 
  2015   2014   2015  
 
  In thousands of
euros

  In thousands of
euros

  In thousands of
U.S. dollars
(unaudited)

 

ASSETS

                   

Non-current assets

    54,241     36,808     58,900  

Current assets

    24,930     17,113     27,071  
               

TOTAL ASSETS

    79,171     53,921     85,972  
               
               

EQUITY AND LIABILITIES

                   

Equity attributable to equity holders

    13,145     34,757     14,274  

Total equity

    13,145     34,757     14,274  

Non-current liabilities

    52,137     10,681     56,616  

Current liabilities

    13,889     8,483     15,082  

TOTAL EQUITY AND LIABILITIES

    79,171     53,921     85,972  
               
               

Consolidated Statements of Cash Flows Data—Summary

 
  Years ended December 31,  
 
  2015   2014   2015  
 
  In thousands of
euros

  In thousands of
euros

  In thousands of
U.S. dollars
(unaudited)

 

Net cash used in operating activities

    (19,574 )   (13,367 )   (21,255 )

Net cash (used) in / provided by investing activities

    (4,434 )   3,307     (4,815 )

Net cash provided by financing activities

    28,523     7,969     30,973  

Cash and cash equivalents at end of period

    17,982     13,471     19,527  

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

        On July 31, 2015, we acquired 100% of the shares of Coretherapix from its sole shareholder Genetrix, as well as certain receivables Genetrix had with Coretherapix on that date, pursuant to a contribution agreement regarding the contribution of shares in, and the contribution and the transfer and assignment of receivables with, Coretherapix dated July 29, 2015. Genetrix contributed 100% of the shares of Coretherapix and part of the receivables Genetrix had with Coretherapix on July 31, 2015 (for a nominal value of 2.2 million euros) in return for the issuance of 7.7 million of our shares (6.1 million euros). Part of the receivables Genetrix had with Coretherapix on July 31, 2015 (for a nominal value of 1.2 million euros) were transferred and assigned to us by Genetrix. Pursuant to the terms of the contribution agreement, we made a cash payment of 1.2 million euros at closing and issued new shares to Genetrix with a value of 6.1 million euros, which Genetrix subsequently distributed to its shareholders as a dividend in kind.

        Coretherapix is a Spanish biopharmaceutical company focused on developing cost-effective regenerative therapeutics to stimulate the endogenous repair capacity of the heart and mitigate the negative effects of myocardial infarction, or a heart attack.

        On March 14, 2016, we raised gross proceeds of 23.8 million euros through a private placement of 25 million new shares at a subscription price of 0.95 euros per share.

        The unaudited pro forma condensed combined financial information gives effect to the acquisition and the equity transaction as if they had been completed on January 1, 2015 for purposes of the income statement and on December 31, 2015 for purposes of the statement of financial position. Our historical consolidated financial information and that of Coretherapix have been adjusted in the unaudited pro forma condensed combined financial information to give effect to events that are:

    (1)
    directly attributable to the acquisition,

    (2)
    factually supportable, and

    (3)
    with respect to the income statement, expected to have a continuing impact on the combined results.

        The unaudited pro forma adjustments are based upon currently available information and assumptions that we believe to be reasonable. The pro forma adjustments and related assumptions are described in the notes accompanying the unaudited pro forma condensed combined financial information below.

        The pro forma financial information and adjustments are preliminary and have been made solely for purposes of providing the unaudited pro forma condensed combined income statement. The actual results reported in future periods may differ significantly from that reflected in this pro forma financial information for a number of reasons, including but not limited to, differences between the assumptions used to prepare this pro forma financial information and actual amounts, as well as cost savings from operating and expense efficiencies and potential income enhancements.

        The unaudited pro forma condensed combined income statement does not reflect any prospective income enhancements or operating synergies that the combined company may achieve as a result of the acquisition or the costs to integrate the operations or the costs necessary to achieve these income enhancements and operating synergies. In addition, the unaudited pro forma condensed combined income statement does not give effect to the consummation of this offering. As a result, the pro forma information does not purport to be indicative of what the financial condition or results of operations would have been had the transactions been completed on the applicable dates of this pro forma financial information. The unaudited pro forma condensed combined income statement and statement of financial position are for informational purposes only and do not purport to project the future financial condition and results of operations after giving effect to the transactions.

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        You should read this unaudited pro forma condensed combined financial information in conjunction with the accompanying notes, our financial statements and those of Coretherapix and "Management's Discussion and Analysis of Financial Condition and Results of Operations", each of which are included elsewhere in this prospectus.

        The unaudited pro forma combined condensed financial information has been prepared from, and should be read in conjunction with, our historical consolidated financial statements and those of Coretherapix, prepared in accordance with IFRS as issued by the IASB. Our historical consolidated financial statements for the year ended December 31, 2015 are included in this prospectus. Coretherapix's historical consolidated financial statements for the year ended December 31, 2014 and the six-months period ended June 30, 2015 are also included in this prospectus. The unaudited pro forma results for the year ended December 31, 2015 also include the results of operations for Coretherapix for the period July 1, 2015 to July 31, 2015, which are not included in this prospectus.

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TiGenix

Unaudited Pro Forma Condensed Combined Income Statement
For the year ended December 31, 2015
(in thousands of euros, except share and per share data)

 
  TiGenix   Coretherapix
January 1 to
June 30, 2015
  Coretherapix
July 1 to July 31, 2015
  Proforma
Adjustment
(Note 3)
   
  TiGenix
Proforma
Combined
 

Revenues

                                   

Royalties

    537                     537  

Grants and other operating income

    1,703     719     9             2,431  
                           

Total revenues

    2,240     719     9             2,968  

Research and development expenses

    (19,633 )   (717 )   (211 )           (20,561 )

General and administrative expenses

    (6,683 )   (802 )   (111 )           (7,596 )

Total operating charges

    (26,316 )   (1,519 )   (322 )           (28,157 )
                           

Operating Loss

    (24,076 )   (800 )   (313 )           (25,189 )

Financial income

    148                     148  

Interest on borrowings and other finance costs

    (6,651 )   (152 )   (188 )           (6,991 )

Fair value gains (losses)

    (6,654 )                   (6,654 )

Impairment and gains/(losses) on disposal of financial instruments

    (161 )                   (161 )

Foreign exchange differences, net

    1,000                     1,000  
                             

Loss before taxes

    (36,394 )   (952 )   (501 )           (37,847 )

Income tax benefits

    1,325         279       b     1,604  
                             

Loss for the period

    (35,069 )   (952 )   (222 )           (36,243 )
                             
                             

Basic and diluted loss per share (euro)

    (0.21 )                         (0.21 )
                                 
                                 

Weighted average shares outstanding

    164,487,813                     c,d     168,958,669  
                                 
                                 

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TiGenix

Unaudited Pro Forma Condensed Combined Statement of Financial Position
As at December 31, 2015
(in thousands of euros)

 
  TiGenix   Proforma
Adjustment
(Note 3)
   
  Proforma
Combined
As at
December 31, 2015
 

ASSETS

                       

Intangible assets

    48,993       a     48,993  

Property, plant and equipment

    484             484  

Other non current assets

    4,764             4,764  
                   

Non-current assets

    54,241             54,241  

Inventories

    365             365  

Trade and other receivables

    3,033             3,033  

Current tax assets

    1,147             1,147  

Other current financial assets

    2,403             2,403  

Cash and cash equivalents

    17,982     22,114   d     40,096  
                   

Current assets

    24,930     22,114         47,045  
                   
                   

TOTAL ASSETS

    79,171     22,114         101,285  
                   
                   

Equity (deficit)

    13,145     22,114   d     35,259  

Financial loans and other payables

    40,084             40,084  

Deferred tax liability

    24             24  

Other non-current liabilities and contingent consideration liabilities

    12,029             12,029  
                   

Non-current liabilities

    52,137             52,137  

Current portion of financial loan

    4,611             4,611  

Other financial liabilities

    985             985  

Trade and other payables

    3,349             3,349  

Other current liabilities

    4,944             4,944  
                   

Current liabilities

    13,889             13,889  
                   
                   

TOTAL EQUITY AND LIABILITIES

    79,171     22,114         101,285  
                   
                   

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Notes to Unaudited Pro Forma Condensed Combined Financial Information
(in thousands of euro, except share and per share data)

Note 1. Basis of preparation

        The acquisition is accounted for in accordance with the acquisition method of accounting for business combinations with us as the acquiring entity. The unaudited pro forma condensed combined financial information is based on our historical audited consolidated income statement of TiGenix for the year ended December 31, 2015, after giving effect to the acquisition. In accordance with the acquisition method of accounting for business combinations, tangible and intangible assets acquired and liabilities assumed are required to be recorded at their respective fair market values as of the date of the acquisition, with any excess purchase price allocated to goodwill.

        The fair values assigned to the intangible assets acquired in the transaction are based on management's estimates and assumptions with the assistance of an independent valuation specialist. We believe that the information provides a reasonable basis for estimating the fair values of assets acquired; however, the measurements of fair value are subject to change. We expect to finalize the valuation of the intangible assets as soon as practicable, but not later than one year from the acquisition date.

        Under the acquisition method, acquisition-related transaction costs (such us advisory, legal, valuation and other professional fees) are not included as consideration transferred but are accounted for as expenses in the periods in which the costs are incurred. We consider the total acquisition-related costs of the combined company to be insignificant.

Note 2. Calculation of Estimated Consideration Transferred and Preliminary Allocation of Consideration to Net Assets Acquired

        The following table summarizes the preliminary reconciliation of upfront payments in accordance with the Contribution Agreement, and the total purchase price is as follows:

 
  (in thousands of euros)
 

Cash Consideration payable

    1,154  

Issuance of ordinary shares of the Group according to the Contribution Agreement

    6,093  

Estimate of fair value of contingent consideration

    11,344  
       

Total Purchase Price

    18,591  
       
       

        The value of the 7.7 million of ordinary shares issued as part of the consideration paid for 100% of Coretherapix shares and certain receivables from Genetrix was based on a share price of 0.79 euros, our share price at the date of the acquisition.

        The fair value of the contingent deferred elements of the purchase price of 11.3 million euros was computed as the sum of the probability-weighted values of the fair values of the purchase prices associated with each of the nine product development routes. The fair value of each route was in turn computed as the sum of the survival probability-discounted present values of the contingent payments in each such route including the milestone and commercialization payments. The discount rate used in the model was 15%.

        The fair value of the contingent consideration was determined at the date of acquisition in our audited consolidated financial statements and revalued at December 31, 2015, with any changes in fair value being charged to income statement and reflected in the fair value gains and losses line item. The fair values are reviewed on a regular basis, at least at each balance sheet date and at each interim reporting date, and any changes are reflected in the income statement. The fair value of contingent

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consideration increased from 11.3 million euros at the acquisition date to 12.0 million euros at December 31, 2015. The increase was due to the update of discounting future cash flows to December 31, 2015 and resulted in an increase of 0.7 million euros in the fair value gains and losses line item in our audited consolidated income statement for the year ended December 31, 2015.

        The unaudited pro forma condensed combined financial information gives effect to the acquisition as if it had been completed on January 1, 2015. For the purposes of these pro forma financial statements, we have assumed no change in the fair value of contingent consideration from January 1, 2015 through July 31, 2015. If we had taken into account the discount effect on this liability only, assuming that all other variables remain constant, the fair value gains and losses line item would have increased by a further 0.9 million euros.

        The discount and probability of survival rates used were the same for the valuation of the underlying intangible assets and contingent deferred elements of the purchase price.

        Under the terms of the contribution agreement, upon successful development of the lead product Allo-CSC-01, Genetrix could receive up to 15 million euros in new ordinary shares depending on the results of the ongoing clinical trial. Based on and subject to future sales milestones, Genetrix may receive in addition up to 245 million euros plus certain percentages of the direct net sales of the first product, or certain percentages of any third-party royalties and sales milestones for the first product. Sales milestones start when annual net sales reach 150 million euros and the last one will be payable once annual net sales are above 750 million euros. Also, Genetrix will receive a 25 million euro milestone payment for each additional product based on the acquired pipeline reaching the market.

        For purposes of these unaudited pro forma condensed financial statements, any consideration paid to Genetrix will be assigned to the fair value of acquired assets and liabilities assumed and is based on preliminary estimates and is subject to change. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as if the transaction occurred on June 30, 2015:

 
  (in thousands of euros)
 

In process research and development

    17,374  

Accounts receivable (received from Genetrix)

    3,306  

Other net asset acquired:

       

Other intangible assets

    278  

Property, plant and equipment

    113  

Other current assets

    1,039  

Cash

    94  

Financial loans

    (3,617 )

Trade & other payables

    (491 )
       

Total net asset acquired

    18,096  
       
       

Total consideration

    18,591  
       

Goodwill on acquisition

    495  
       
       

        No deferred tax liability has been recorded on the fair value of the intangible assets acquired. We have tax losses carryforward not recognized in financial statements that are sufficient to absorb the impact of this deferred tax liability.

        The fair value of the acquired assets and liabilities assumed was determined on a provisional basis.

        The provisional fair value of acquired assets and liabilities assumed can change when the final fair value of the acquired assets and liabilities assumed is established.

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Note 3. Pro Forma Notes Adjustments

    a)
    The acquired asset (in-process research & development) has been recognized at an estimated fair value. This asset is not yet available for use; therefore, it will not be amortized until the necessary market authorization from EMA is obtained.

    b)
    A deferred tax liability of 1.5 million euros, created as a consequence of the increase in fair value of intangibles in the consolidated financial statements of 6.3 million euros from the value capitalized in the statutory accounts for tax purposes of 11.0 million euros, has been offset by applicable net operating losses available to us.

    c)
    This reflects the issuance of 7,712,757 shares on the acquisition of Coretherapix as if the acquisition occurred on January 1, 2015.

    d)
    Net proceeds of 22.1 million euros from the issuance of the new shares in March 2016 will be used for general corporate purposes, and therefore such new shares have not been used in computing earnings per share.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

        You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the section entitled "Selected Financial Information" and our consolidated financial statements and accompanying notes included elsewhere in this prospectus. In addition to historical consolidated financial information, this section contains forward-looking statements that reflect our plans, estimates and opinions. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences, include, without limitation, those discussed in the sections entitled "Risk Factors," "Special Note Regarding Forward-Looking Statements," "Business" and elsewhere in this prospectus.

Overview

        We are an advanced biopharmaceutical company focused on developing and commercializing novel therapeutics from our proprietary technology platforms of allogeneic, or donor-derived, stem cells. We have completed, and received positive data in, a single pivotal Phase III trial in Europe and Israel of our most advanced product candidate Cx601, a first-in-class injectable allogeneic stem cell therapy indicated for the treatment of complex perianal fistulas in patients suffering from Crohn's disease. A complex perianal fistula consists of abnormal tracts between the rectum and the exterior surroundings of the anus, and is commonly associated with Crohn's disease. It is a serious clinical condition affecting the anal sphincter and is potentially associated with a perianal abscess. Cx601 has been granted orphan designation by the European Medicines Agency, or EMA, in recognition of its potential application for the treatment of anal fistulas, which affect approximately 120,000 adult patients in the United States and Europe and for which existing treatment options are inadequate.

        Cx601 is our lead product candidate based on our platform of expanded adipose, or fat tissue, derived stem cells, known as eASCs. On July 4, 2016, we entered into a licensing agreement with Takeda, a large pharmaceutical company active in gastroenterology, under which Takeda acquired the exclusive right to commercialize Cx601 for complex perianal fistulas outside the United States.

        In the randomized, double-blind Phase III study, Cx601 met the primary endpoint of combined remission of complex perianal fistulas at twenty four weeks. The results of the follow-up analysis after fifty-two weeks were also positive in terms of efficacy and confirmed the favorable safety and tolerability profile of Cx601.

        Based on the data from our pivotal Phase III trial in Europe, we submitted a marketing authorization application to the EMA in the first quarter of 2016, and a decision by the EMA could be expected by mid-2017. If marketing authorization were to be granted by mid-2017, Takeda could start to commercialize the approved product in Europe during the second half of 2017. We also intend to initiate a pivotal Phase III trial for Cx601 for the treatment of complex perianal fistulas in the United States in the first half of 2017 and have begun the technology transfer process to Lonza, a U.S.-based contract manufacturing organization. Based on discussions with the U.S. Food and Drug Administration, or FDA, we believe that the U.S. Phase III trial, if successful, could, together with the European Phase III data, serve as supportive evidence for filing a biologics license application, or BLA, for regulatory approval with the FDA. We reached an agreement with the FDA through a special protocol assessment, or SPA, procedure for our proposed protocol. The agreed primary endpoint for the U.S. Phase III trial is the same as the one for the European Phase III trial. We intend to apply for fast-track designation from the FDA, which would facilitate and expedite development and review of our U.S. Phase III trial.

        Our eASC-based platform has generated other product candidates, including Cx611, for which we have completed a European Phase I trial in severe sepsis. We are currently preparing to initiate a Phase II clinical trial in severe sepsis in Europe in the second half of 2016.

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        On July 31, 2015, we acquired Coretherapix, a Spanish biopharmaceutical company focused on developing cost-effective regenerative therapeutics to stimulate the endogenous repair capacity of the heart and mitigate the negative effects of myocardial infarction, or a heart attack. Coretherapix has developed an allogeneic platform of expanded cardiac stem cells, or CSCs, and its lead product candidate, AlloCSC-01, employs allogeneic CSCs as a potential treatment for acute ischemic heart disease. We are sponsoring a European Phase I/II trial to evaluate the safety and efficacy of the intracoronary infusion of AlloCSC-01 in patients with acute myocardial infarction. We received six-month interim exploratory data during the second half of 2016, and final results are expected to be available during the first half of 2017. We are also developing AlloCSC-02, the second product candidate from the CSC-based platform, which is in a preclinical proof of concept stage for a chronic cardiac indication.

        We also developed and commercialized ChondroCelect, the first cell-based medicinal product to receive marketing authorization from the EMA, which was indicated for cartilage repair in the knee. In July 2016, we requested the withdrawal of marketing authorization for ChondroCelect.

Recent Developments

        On March 14, 2016, we raised 23.8 million euros in gross proceeds through a private placement of 25 million new shares at a subscription price of 0.95 euros per share.

        On July 4, 2016, we entered into a licensing agreement with Takeda, a large pharmaceutical company active in gastroenterology, under which Takeda acquired the exclusive right to commercialize Cx601 for complex perianal fistulas outside the United States for an upfront non-refundable payment of 25 million euros, a further payment of 15 million euros if and when Cx601 receives marketing authorization from the EMA and additional sales and reimbursement milestone payments up to a total of 340 million euros.

        In July 2016, we also requested the withdrawal of our marketing authorization for ChondroCelect, which we expect to be effective as of November 30, 2016, and decided to terminate our distribution agreements with Sobi and Finnish Red Cross Blood Service and our manufacturing agreement with our former subsidiary, which was acquired by PharmaCell.

Key Income Statement Items

Revenues

        Historically, we have generated revenues from sales of ChondroCelect, our commercialized product, for which we received marketing authorization from the EMA in 2009. During the first half of 2014, we transformed our operations to focus fully on realizing the value of our eASC platform and pipeline by discontinuing our operations in connection with ChondroCelect.

        Effective June 1, 2014, we entered into an agreement with Swedish Orphan Biovitrium, or Sobi, for the exclusive marketing and distribution rights with respect to ChondroCelect within the European Union (excluding Finland, where we have a pre-existing distribution agreement with Finnish Red Cross Blood Service), Switzerland, Norway, Russia, Turkey and the Middle East and North Africa region. We also completed the sale of TiGenix B.V., our Dutch subsidiary, which held our manufacturing facility for ChondroCelect, to PharmaCell, a leading European contract manufacturing organization active in the area of cell therapy, for an upfront payment of 3.5 million euros when the sale became effective on May 30, 2014. We will receive a payment of 0.8 million euros on May 30, 2017 for a total consideration of 4.3 million euros.

        In July 2016, we decided to terminate our distribution agreements with Sobi and Finnish Red Cross Blood Service and our manufacturing agreement with our former subsidiary. We also requested

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the withdrawal of our marketing authorization, which we expect will be effective as of November 30, 2016. After this date, we will no longer generate any revenues from ChondroCelect.

        As a result of the discontinuation of our operations related to ChondroCelect, we reclassified all ChondroCelect operations as discontinued in our consolidated financial statements for all periods presented, which are included elsewhere in this prospectus.

        On July 4, 2016, we entered into a licensing agreement with Takeda, in connection with which we will receive revenues of 25 million euros as an upfront non-refundable payment, a further payment of 15 million euros if and when Cx601 receives marketing authorization from the EMA and additional revenues of up to a total of 340 million euros in connection with various sales and reimbursement-related milestones.

Royalties

        Going forward, we expect to receive ongoing royalty payments from Takeda and other partners with whom we may enter into distribution agreements or license agreements. Until July 2016, we received the majority of our revenues from royalty payments generated from the sale of ChondroCelect by Sobi. Such income is presented in our consolidated financial statements in revenues under the line item "royalties."

Grants and Other Operating Income

        We also receive a portion of our revenues in the form of government grants directly related to our research and development efforts, which are presented in our consolidated income statement under the line item "grants and other operating income."

        We do not recognize government grants until we have reasonable assurance that we will be able to comply with their terms and that the grants will be received. Government grants are recognized as income on a systematic basis over the periods in which we recognize expenses related to the costs for which the grants are intended to compensate. Specifically, for grants whose primary condition is the purchase, construction or acquisition of non-current assets, we recognize the grants as deferred revenue in our consolidated balance sheet and transfer them to the income statement on a systematic and rational basis over the useful life of the related assets. Grants that are receivable as compensation for expenses or losses already incurred or for immediate financial support with no related costs are recognized in the period in which they are received. We also treat the benefit of government loans, which we receive at below-market rates of interest, as government grants (measured as the difference between the proceeds received and the fair value of the loan based on prevailing market conditions), only when we have sufficient assurance that we will be able to comply with the terms and conditions of the loan and will not be required to return the funds prematurely. We recognize these loans as grants in our income statement under the line item "grants and other operating income."

        In addition, we present any payments we receive with respect to ChondroCelect other than royalties from Sobi, for example from Finnish Red Cross Blood Service, and any revenues from Sobi that we occasionally receive from certain non-recurring items in our income statement under the line item "grants and other operating income."

Research and Development Expenses

        Our research and development activities primarily consist of preclinical research; Phase I, Phase II and Phase III of various clinical studies; the production of eASCs and CSCs used in our preclinical and clinical studies; regulatory activities and intellectual property activities to protect our know how. Research and development expenses include, among others, employee compensation, including salary, fringe benefits and share-based compensation; expenses related to our manufacturing facilities,

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including operating costs for such facilities; and regulatory expenses and activities related to the development of our product pipeline, including reimbursement, market access, general and administrative expenses and amortization of intangible assets related to our research programs.

        Our eASC-based product candidates are derived from the technology platform we acquired as part of our acquisition of Cellerix in May 2011 and our CSC-based product candidates are derived from the technology platform we acquired as part of our acquisition of Coretherapix in July 2015.

        Since May 2011, we have spent a total of 60.7 million euros on research and development expenses as of December 31, 2015, of which 17.7 million euros were incurred in connection with Cx601; 6.5 million euros were incurred in connection with Cx611; 0.9 million euros were incurred in connection with AlloCSC-01 since July 2015 and the remaining 35.7 million euros were non-allocated research and development expenses.

        We recognize expenditure on research activities as an expense in the period in which it is incurred.

        An internally-generated intangible asset arising from development is capitalized to the extent that all the following can be demonstrated:

    The technical feasibility of completing the intangible asset so that the asset will be available for use or sale.

    The intention to complete and the ability to use or sell the asset.

    How the asset will generate future economic benefits.

    The availability of resources to complete the asset.

    The ability to measure reliably the expenditure during development.

        Accordingly, during 2010 and 2011 we capitalized the development costs related to ChondroCelect with a useful life of ten years.

        The amount initially recognized for internally-generated intangible assets is the sum of the various expenses needed to generate the related intangible assets. Amortization starts from the date that the intangible asset first meets the recognition criteria. These intangible assets are amortized on a straight-line basis over their estimated useful life of between five to ten years from the moment they are available for use. Where no internally-generated intangible asset can be recognized, development expenditure is recognized in the income statement in the period in which it is incurred.

        Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets that are acquired. In 2015, we recognized an impairment loss of 1.1 million euros in relation to the capitalized development costs of ChondroCelect.

General and Administrative Expenses

        Our general and administrative expenses are costs to support our operations and consist of employee compensation, including salary, fringe benefits and share-based compensation for our core corporate supporting functions including, among others, finance, human resources, legal, information technology, business development and investor relations. Other significant expenses include external corporate costs consisting of outside legal counsel, independent auditors and other outside consultants, insurance, facilities and depreciation.

Interest on Borrowings and Other Finance Costs

        Interest on borrowings include both cash financial expenditures and non-cash financial expenditures resulting from the recording of financial liabilities under our debt instruments, including

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government loans (or so-called "soft" loans), our loan facility with Kreos Capital IV (UK) and our 9% senior unsecured convertible bonds due 2018 issued in March 2015 at amortized cost.

Fair Value Gains and Losses

        Our fair value gains and losses are non-cash financial expenditures, resulting from the change in fair value of the warrant component of our 9% senior unsecured convertible bonds due 2018, the warrants issued for the Kreos loan and the contingent components of the consideration for the acquisition of Coretherapix, which are subject to certain milestones connected to the results of the ongoing clinical trial and the receipt of marketing authorization, as well as royalty payments based on sales of products derived from our CSC-based platform.

Discontinued Operations

        The results of operations discontinued during the year are included in our consolidated income statements up to the date of discontinuation.

        A discontinued operation is a component of our business that represents a separate major line of business or geographical area of operations or is a subsidiary acquired exclusively with a view to resale, that has been discontinued, has been abandoned or that meets the criteria to be classified as held for sale.

        Discontinued operations are presented in our consolidated income statements as a single line item that is comprised of the post-tax profit or loss of the discontinued operation along with the post-tax gain or loss recognized on the re-measurement to fair values less costs to sell or on disposal of the assets or disposal groups constituting discontinued operations.

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Result of Operations

Comparison of the Years Ended December 31, 2015 and 2014

        The following table summarizes the results of our operations for the years ended December 31, 2015 and 2014:

 
  Years ended
December 31,
   
 
 
  2015   2014   % Change  
 
  Thousands of euros
   
 

CONTINUING OPERATIONS

                   

Revenues

                   

Royalties

    537     338     59 %

Grants and other operating income

    1,703     5,948     (71 )%
               

Total revenues

    2,240     6,286     (64 )%

Research and development expenses

    (19,633 )   (11,443 )   72 %

General and administrative expenses

    (6,683 )   (7,406 )   (10 )%

Total operating charges

    (26,316 )   (18,849 )   40 %
               

Operating loss

    (24,076 )   (12,563 )   92 %

Financial income

    148     115     29 %

Interest on borrowings and other finance costs

    (6,651 )   (1,026 )   *  

Fair value gains and losses

    (6,654 )   60     *  
                   

Impairment and gains/(losses) on disposal of financial instruments

    (161 )       *  
                   

Foreign exchange differences net

    1,000     1,101     (9 )%
               

Loss before taxes

    (36,394 )   (12,313 )   196 %

Income taxes benefit

    1,325     927     43 %
               

Loss for the year from continuing operations

    (35,069 )   (11,386 )   208 %

DISCONTINUED OPERATIONS

                   

Loss for the year from discontinued operations

        (1,605 )   *  
               

Loss for the year

    (35,069 )   (12,990 )   170 %
               
               

*
Not meaningful

        Royalties.    In the year ended December 31, 2015, we earned 0.5 million euros in royalties on net sales of ChondroCelect by Sobi, compared to 0.3 million euros in royalties in the year ended December 31, 2014, which were earned after we entered into the license agreement with Sobi in June 2014. Income generated from sales of ChondroCelect prior to June 2014 is reflected under loss for the period from discontinued operations. Units of ChondroCelect sold dropped by 54% in the second half of 2015 compared to the same period in 2014, after the authorities in Belgium decided to reverse their decision to reimburse ChondroCelect in April 2015.

        Grants and Other Operating Income.    Revenue from grants and other operating income decreased from 6.0 million euros in the year ended December 31, 2014 to 1.7 million euros in the year ended

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December 31, 2015. The following table provides a breakdown between grant revenues and other operating income:

 
  Years ended
December 31,
 
 
  2015   2014  
 
  Thousands of euros
 

Grant revenues

    855     5,522  

Other operating income

    848     426  
           

Total Grants and other operating income

    1,703     5,948  
           
           

        For 2015, grant revenue had the following components:

    Income of 0.5 million euros from a grant from the EU Seventh Framework Program for research in connection with Cx611, a decrease of 55% from 1.1 million euros in 2014. The project lasted from January 2012 to December 2014, and all related activities and expenses were recognized in two reporting periods in June 30, 2013 and December 31, 2014, when we received the bulk of the grant. As our justified costs in relation to the project were higher than our initial grant allowance, in 2015, we received an additional part of the grant that was initially allocated to our partner institutions in the project that did not spend the entire amount of their respective authorized grants to recoup some of our costs.

    Income of 0.3 million euros related to a so-called "soft" loan of 0.7 million euros from the Spanish Ministry of Science. At December 31, 2015, we completed all the activities related to this loan, and, therefore, fully recognized as grant income the benefit received by borrowing these sums at a below-market rate of interest (measured as the difference between the proceeds received and the fair value of the loan based on prevailing market interest rates), in an amount of 0.3 million euros.

        For 2014, grant revenue had the following components:

    Income of 3.4 million euros related to two so-called "soft" loans from Madrid Network, of 5.0 million euros and 1.0 million euros respectively. At December 31, 2014, we completed all the activities related to these loans, and, therefore, fully recognized as grant income the benefit received by borrowing these sums at a below-market rate of interest (measured as the difference between the proceeds received and the fair value of the loan based on prevailing market interest rates), in an amount of 2.8 million euros for the first loan and 0.6 million euros for the second loan.

    Income of 1.1 million euros from a grant from the EU Seventh Framework Program for research in connection with Cx611 in 2014.

    Income of 1.0 million euros related to six different "soft" loans for various projects from the Spanish Ministry of Science. At December 31, 2014, we completed all the activities related to these loans and the period for inspection for compliance with the terms of the loans had elapsed for all of these loans. We believed that there was sufficient assurance of the grant of the loans and recognized as grant income the benefit received by being able to borrow at a below-market rate of interest.

        Other operating income increased by 0.4 million euros in 2015. In 2014, this income was related to reimbursement for certain regulatory and pharmacovigilance activities that we performed on behalf of Sobi under the license agreement. In 2015, in addition to the reimbursement from Sobi, we received 0.2 million euros from the sale of a database of information related to our research in connection with ChondroCelect.

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        Research and Development Expenses.    Our research and development expenses increased by 72%, from 11.4 million euros for the year ended December 31, 2014 to 19.6 million euros for the year ended December 31, 2015. The increased expenses were in connection with the conclusion of the Phase III clinical trial for Cx601 and the Phase I sepsis challenge trial for Cx611, other activities in connection with the filing for marketing authorization for Cx601 in Europe, as well as 0.9 million euros in research and development expenses in connection with AlloCSC-01, the product candidate we acquired through the acquisition of Coretherapix in July 2015. As a result of an impairment test in the fourth quarter of 2015, we also recognized an impairment charge of 1.1 million euros in connection with the capitalized development costs related to ChondroCelect in 2010 and 2011. The following table provides a breakdown of our research and development expenses for Cx601, Cx611 and AlloCSC-01 (the three product candidates we currently have in clinical development) as well as the impairment charge for ChondroCelect and our non-allocated research and development expenses, which primarily include personnel and facility costs that are not related to specific projects:

 
  Years ended
December 31,
 
 
  2015   2014  
 
  Thousands of euros
 

Non-allocated research and development expenses

    7,081     6,580  

ChondroCelect impairment

    1,121      

Cx601

    8,380     4,144  

Cx611

    2,155     719  

AlloCSC-01

    896      
           

Total

    19,633     11,443  
           
           

        General and Administrative Expenses.    General and administrative costs decreased by 10%, from 7.4 million euros for the year ended December 31, 2014 to 6.7 million euros for the year ended December 31, 2015. The decrease was related to lower expenses to obtain additional funding during 2015 as compared to 2014 as well as lower employee benefits costs, due to a reduction in the number of our staff in Belgium by approximately 60%, which was partially offset by additional staff joining as a result of the Coretherapix acquisition.

        Financial Income.    Financial income remained broadly stable at 0.1 million euros for the years ended December 31, 2014 and 2015. Financial income consists of interest income and varies based on the cash balances in our bank deposits.

        Interest on borrowings and other finance costs.    Interest on borrowings increased from 1.0 million euros for the year ended December 31, 2014 to 6.7 million euros for the year ended December 31, 2015. This significant increase was primarily driven by interest expense in connection with our borrowings, of 3.9 million euros (with respect to the convertible bonds issued on March 6, 2015), 1.7 million euros (with respect to the Kreos loans) and 0.9 million euros (with respect to various government loans). Financial expenses in 2014 related mainly to the interest expense under the Kreos loans of 1.0 million euros.

        Fair value gains and losses.    Fair value gains and losses changed from a gain of 60,000 euros for the year ended December 31, 2014 to a loss of 6.7 million euros for the year ended December 31, 2015. This was due to the evolution of the fair value of the embedded derivatives in connection with our borrowings, of which 5.5 million euros related to the fair value of our 9% senior unsecured convertible bonds due 2018 and 0.5 million euros related to the fair value of the Kreos loans, as well as a change in the value of the contingent deferred elements of the purchase price for the Coretherapix acquisition, amounting to 0.7 million euros.

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        Impairment and gains/(losses) on disposal of financial instruments.    In the year ended December 31, 2015, we recognized an impairment loss of 0.2 million euros in connection with our investment in Arcarios, our Dutch spin-off, due to continuing losses, representing a total impairment of our investment.

        Foreign Exchange Differences.    Foreign exchange differences remained stable at approximately 1 million euros during the years ended December 31, 2015 and 2014. The differences are related to the intercompany loan (expressed in U.S. dollars) incurred by our subsidiary. We have an intercompany receivable in U.S. dollars against TiGenix Inc. As of December 31, 2015 and due to the appreciation of the U.S. dollar against the euro in 2015, the balance of the receivable in euros has been updated with the new closing exchange rate, generating a foreign exchange difference in TiGenix NV.

        Income Taxes.    Income taxes changed from a benefit of 0.9 million euros for the year ended December 31, 2014 to a benefit of 1.3 million euros for the year ended December 31, 2015. These benefits resulted from the enactment in September 2013 of a new law for entrepreneurial enterprises in Spain under which our subsidiary TiGenix SAU recognized a cash tax credit as a result of research and development activities performed during 2013 and 2014.

        As of December 31, 2014, we had a tax loss carried forward of 143.4 million euros compared to 180.7 million euros as of December 31, 2015. These tax losses generate a potential deferred tax asset of 55.7 million euros, and do not have an expiration date. Because we are uncertain whether we will be able to realize taxable profits in the near future, we did not recognize any deferred tax assets in our balance sheet. In addition to these tax losses, we have unused tax credits amounting to 15.0 million euros as of December 31, 2014 compared to 20.1 million euros as of December 31, 2015, consisting of approximately 3 million euros in tax credits resulting from the Coretherapix acquisition, as well as additional tax credits generated during 2015.

        Loss for the Period from Discontinued Operations.    During 2015, we had no gain or loss from discontinued operations. Our loss from discontinued operations for the year ended December 31, 2014 was 1.6 million euros.

        The following table provides a breakdown of the loss from discontinued operations during 2014:

 
  Years ended
December 31,
 
 
  2014  
 
  Thousands of euros,
except per share
data

 

Revenue

    3,527  

Expenses

    (4,991 )

Operating expenses

    (3,875 )

Impairment losses

     

Loss on disposal

    (1,116 )

Other income and expenses

    (141 )
       

Loss before taxes

    (1,605 )
       

Attributable income tax expense

     
       

Total

    (1,605 )
       
       

Basic and diluted loss per share from discontinued operations (in euros)

    (0.01 )

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        The loss on disposal included in the discontinued operations at December 31, 2014 of 1.1 million euros is composed of the following (thousands of euros):

Consideration received in cash

    3,490  

Deferred consideration

    534  

Net assets disposed of

    (5,139 )
       

Loss on disposal

    (1,116 )
       
       

        These costs were incurred in connection with the discontinuation during the first six months of 2014 of our operations in connection with ChondroCelect, our commercialized product, through the combination of the sale of TiGenix B.V., our Dutch subsidiary that held our production facility for ChondroCelect, to PharmaCell for a total consideration of 4.3 million euros and the entry into an agreement with Sobi for the exclusive marketing and distribution rights for ChondroCelect. Under the terms of the share purchase agreement with PharmaCell, we received an upfront payment of 3.5 million euros when the sale became effective on May 30, 2014 and will receive a final payment of 0.8 million euros on May 30, 2017, which we have recognized at the net present value of 0.6 million euros at December 31, 2015. At the end of 2013, we conducted an impairment test with respect to the disposal of our Dutch subsidiary and recognized a loss of 0.7 million euros. After the completion of the disposal of the Dutch subsidiary and as a result of entering into the distribution agreement with Sobi, we recognized an additional loss on disposal of 1.1 million euros at June 30, 2014.

        On June 1, 2014, we entered into an agreement with Sobi for the exclusive marketing and distribution rights with respect to ChondroCelect. Sobi will market and distribute the product within the European Union (excluding Finland), Switzerland, Norway, Russia, Turkey and the Middle East and North Africa region. We will receive royalties on the net sales of ChondroCelect, and Sobi will reimburse nearly all of our costs in connection with the product. The agreements with our former subsidiary, now owned by PharmaCell, and Sobi both include commitments for minimum quantities of ChondroCelect that are required to be purchased by us and from us under the respective contracts. If Sobi's actual purchases were to be lower than the required minimum, we would nevertheless be entitled to receive payment from Sobi up to a maximum undiscounted amount of 8.8 million euros and would be required to pass on such payment to PharmaCell over a three-year period from June 2014.

        The sale of our Dutch subsidiary also included cost relief of up to 1.5 million euros on future purchases of ChondroCelect under the conditions of the long-term manufacturing agreement with our former subsidiary, which is now owned by PharmaCell. We pass on this cost relief on a like-for-like basis to Sobi, which purchases ChondroCelect from us at cost.

        As a result of these transactions, for the year ended December 31, 2014, all ChondroCelect operations, including revenues, production costs, sale and marketing expenses, have been presented as discontinued operations in the consolidated financial statements.

Critical Accounting Policies

        Our financial statements are prepared in accordance with IFRS as issued by the IASB. The preparation of our financial statements in accordance with IFRS as issued by the IASB requires us to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, cost of sales, operating expenses and related disclosures. We consider an accounting policy to be critical if it is important to our financial condition or results of operations, and if it requires significant judgment and estimates on the part of management in its application. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, and we evaluate our estimates on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions. If actual results or events differ materially

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from the judgments and estimates that we have made in reporting our financial position and results of operations, our financial position and results of operations could be materially affected.

        The summary of significant accounting policies and critical accounting judgments and key sources of estimation uncertainty can be found in notes 2 and 3 respectively in the Consolidated Financial Statements included elsewhere in this prospectus.

Going Concern

        We have experienced net losses and significant cash used in operating activities since our inception in 2000 and as of December 31, 2015, had an accumulated deficit of 120.0 million euros, a net loss of 35.1 million euros and net cash used in operating activities of 19.6 million euros and as of December 31, 2014 had an accumulated deficit of 87.0 million euros, a net loss of 13.0 million euros and net cash used in operating activities of 13.4 million euros. Our management expects us to continue to incur net losses and have significant cash outflows for at least the next twelve months. These conditions, among others, raise substantial doubt about our ability to continue as a going concern. The consolidated financial statements included elsewhere in this prospectus have been prepared assuming that we will continue as a going concern. This basis of accounting contemplates the recovery of our assets and the satisfaction of liabilities in the normal course of business. A successful transition to attaining profitable operations is dependent upon achieving a level of positive cash flows adequate to support our cost structure.

        As at December 31, 2015, we had cash and cash equivalents of 18.0 million euros, compared to 13.5 million euros at the beginning of the year. In March 2015, we issued senior unsecured convertible bonds due 2018 for a total principal amount of 25.0 million euros.

        Our board of directors is of the opinion that this cash position, together with the proceeds of the private placement in March 2016 and the upfront non-refundable payment of 25 million euros from Takeda in connection with the licensing agreement, is sufficient to continue operating through August 2017, but will require significant additional cash resources to launch new development phases of existing projects in its pipeline.

        In order to be able to launch such new development phases, we intend timely to obtain additional non-dilutive funding, such as from partnering, and/or dilutive funding. In addition, a successful transition to attaining profitable operations is dependent upon achieving a level of positive cash flows adequate to support the our cost structure.

Business Combinations and Goodwill

        We account for business combinations using the acquisition method of accounting, which requires that the assets acquired and liabilities assumed be recorded at the date of acquisition at their respective fair values. Any excess of the fair value of consideration given over the fair values of the identifiable assets and liabilities acquired is recorded as goodwill. The determination of estimated fair values of acquired intangible assets, as well as the useful economic life ascribed to finite lived intangible assets, requires the use of significant judgment. The use of different estimates and assumptions to those we use could result in a materially different valuation of acquired intangible assets, which could have a material effect on our results of operations.

        Several methods may be used to determine the estimated fair value of intangible assets acquired in a business combination, all of which require multiple assumptions.

        We used the relief from royalty method, which is a variant of the income valuation approach, to determine the fair value of the intangibles related to the acquisition of TiGenix SAU. It is based on the principle that ownership of the intangible asset relieves the owner of the need to pay a royalty to another party in exchange for rights to use the asset.

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        We determined the fair value of assets related to the acquisition of Coretherapix by taking into account the sum of the survival probability discounted present values of Coretherapix's projected cash flows in each year of its key product's development and commercialization life.

        Goodwill is capitalized. Any impairment in carrying amount is charged to the consolidated income statement. Where the fair value of identifiable assets and liabilities exceeds the fair value of consideration paid, the excess is credited in full to the consolidated income statement on the acquisition date.

        The fair value of any contingent consideration at the date of acquisition is computed as the sum of the probability weighted values of the fair values of the purchase prices associated with each of the potential product development routes. The fair value of each route is in turn computed as the sum of the survival probability discounted present values of the contingent payments in each such route including the milestone and commercialization payments.

        The nine routes considered in the development process of Coretherapix are the result of combining multiple variables. The structure of these routes and the probability assigned to each route are the best estimate of management as at December 2015. This assessment will be varied or modified when the development process reaches a milestone.

        Any contingent consideration included in the consideration payable for a business combination is recorded at fair value at the date of acquisition. The fair values are reviewed on a regular basis, and at least at each reporting date, and any changes are reflected in the income statement.

        Acquisition costs incurred are expensed and included in general and administrative expenses.

Recognition of Government Grants

        We do not recognize government grants until there is reasonable assurance that we will comply with the conditions attaching to them and that the grants will be received.

        The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates. Only when there is sufficient assurance that we will comply with the conditions attached to the grant, the grant is recognized in profit or loss (under "other operating income"). Determination of the appropriate amount of grant income to recognize involves judgments and estimates that we believe to be reasonable, but it is possible that actual results may differ from our estimates. When we receive the final written reports confirming that we have satisfied the requirements of the grantor, to the extent these are not received within a reasonable time frame following the end of the period, we record any differences between estimated grant income and actual grant income in the next reporting period once we determine the final amounts. During the period that these benefits cannot be considered as grants due to the insufficient assurance that all the conditions have been met, these grants are included in the liabilities as financial loans and other payables.

Discontinued Operations

        The results of operations disposed during the year are included in our consolidated statement of comprehensive income up to the date of disposal.

        A discontinued operation is a component of our business that represents a separate major line of business or geographical area of operations or is a subsidiary acquired exclusively with a view to resale, that has been disposed of, has been abandoned or that meets the criteria to be classified as held for sale.

        Discontinued operations are presented in our consolidated statement of comprehensive income as a single line item that is comprised of the post-tax profit or loss of the discontinued operation along

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with the post-tax gain or loss recognized on the re measurement to fair value less costs to sell or on disposal of the assets or disposal groups constituting discontinued operations.

        At the end of 2013, our board of directors decided to withdraw from the ChondroCelect business and to focus on the development of its platform and pipeline of allogeneic treatments, using expanded adipose-derived stem cells (eASCs) for the benefit of patients suffering from a range of inflammatory and immunological conditions.

        Consequently, we developed a single, coordinated plan under which discussions were entered into with one potential purchaser for the manufacturing facility and with another for the sales and marketing activities. Both of these transactions were discussed in parallel with Pharmacell (for the manufacturing facility) and Sobi (for the sales and marketing activities). The arrangement with Pharmacell initially progressed faster, but ultimately both transactions completed at almost the same time (May 30 and June 1, 2014).

        The transaction with Pharmacell included a supply contract under which we purchased the ChondroCelect product; a mirror image sales contract was entered into with Sobi. The purchase agreement with Pharmacell included a discounted price for the first three years of supply, and exactly the same prices were included in the sales contract with Sobi.

        The agreement with Sobi for the sales and marketing activities has a term of ten years and includes the European Union (excluding Finland, where the Group has a pre-existing distribution agreement with Finnish Red Cross Blood Service), Switzerland, Norway, Russia, Turkey and the Middle East and North Africa region. The agreement includes the transfer of staff previously employed by us to carry out those activities to Sobi and involves the payment of a licence fee by Sobi which is calculated as a percentage of the net sales generated by Sobi of ChondroCelect. At the end of the ten-year term of the agreement with Sobi, no further development costs for ChondroCelect will be left to be amortized.

        Consequently, during 2014, all activities relating to the manufacture, marketing and sale of ChondroCelect were transferred to Pharmacell and Sobi through contractual arrangements that were entered into at almost the same time and were made in contemplation of each other. The effect of the arrangements is that we receive a licence fee from Sobi but, other than acting as a 'pass through' intermediary for ChondroCelect (which is purchased from Pharmacell and sold to Sobi through back to back, identical contractual arrangements), we have no involvement in activities relating to that product.

        In July 2016, we decided to terminate our distribution agreements with Sobi and Finnish Red Cross Blood Service and our manufacturing agreement with our former subsidiary, which was acquired by PharmaCell. We will cease to generate any revenues from ChondroCelect by November 30, 2016.

        We have accounted for the ChondroCelect activities as discontinued operations in accordance with IFRS 5.

Impairment of Assets

        We review the carrying value of intangible assets with indefinite lives for potential impairment on a periodic basis and also whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. We review the carrying value of tangible assets and intangible assets with definitive lives for potential impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. We determine impairment by comparing the recoverable amount to its carrying value. If impairment is identified, a loss is recorded equal to the excess of the asset's carrying amount over its recoverable amount.

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        The recoverable amount for Cx601 as at December 31, 2015 has been determined based on the fair value of Cx601, calculated using cash flow projections from financial expectations approved by senior management covering a fifteen-year period, less the cost of selling the asset.

        On July 31, 2015, we acquired 100% of the issued share capital of Coretherapix. The most significant part of the purchase price has been allocated to in-process research and development (17.4 million euros) as well as certain other intangible assets (277,000 euros). The difference between the fair values of the assets acquired and liabilities assumed and the purchase price comprises the value of expected synergies arising from the acquisition and has been recorded as goodwill (717,000 euros).

        For impaired assets, we recognize a loss equal to the difference between the carrying value of the asset and its estimated recoverable amount. The recoverable amount is based on discounted future cash flows of the asset using a discounted rate commensurate with the risk. Estimates of future costs savings, based on what we believe to be reasonable and supportable assumptions and projections, require management's judgment. Actual results could vary from these estimates. When it is not possible to estimate the recoverable amount of an individual asset, we estimate the recoverable amount of the cash generating unit to which the asset belongs.

        Based on the analysis involved, there was no impairment through December 31, 2015.

Recognition and Measurement of Internally-Generated Intangible Assets

        An internally-generated intangible asset is recognized if it can be documented with sufficient certainty that the future benefits from the development project will exceed the aggregate cost of production, development and the sale and administration of the product. A development project involves a single product candidate undergoing a high number of tests to illustrate its safety profile and the effect on human beings prior to obtaining the necessary approval of the product from the appropriate authorities. The future economic benefits associated with the individual development projects are dependent on obtaining such approval. Considering the significant risk and duration of the development period related to the development of our products, our management has concluded that the future economic benefits associated with a particular project cannot be estimated with sufficient certainty until the project has been finalized and the necessary regulatory final approval of the product has been obtained.

        Accordingly, we have capitalized such intangible assets for the development costs related to ChondroCelect with a useful life of ten years. In 2015, we recognized an impairment in relation to the asset for an amount of 1.1 million euros (corresponding to its net carrying amount prior to its impairment).

Research and Development Costs

        Research and development costs are charged to expense as incurred and are typically made up of salaries and benefits, clinical and preclinical activities, drug development and manufacturing costs, and third-party service fees, including for clinical research organizations and investigative sites. Costs for certain development activities, such as clinical trials, are periodically recognized based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations, or information provided by vendors on their actual costs incurred. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the financial statements as prepaid or accrued expenses.

Foreign Exchange Differences

        Foreign exchange differences are related to the intercompany loan (expressed in U.S. dollars) granted by us to our subsidiary, TiGenix Inc. The exchange difference arises as a result of the

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translation of the intercompany loan in TiGenix NV. As the dollar appreciated during the year, the receivable granted to our subsidiary Tigenix Inc. has increased recognizing an exchange difference.

        Management is of the opinion that under the strategy of Cx601 in the United States, where we currently expect TiGenix Inc. to play a role, TiGenix Inc. will be able to settle the intercompany loan in the foreseeable future. As a consequence, the arisen exchange difference is recognized in financial results in the consolidated income statements, instead of recognizing it in the consolidated statements of comprehensive income.

Deferred Taxes

        Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

        At December 31, 2015, we had 203.8 million euros of tax losses carry forward and other tax credits such as investment tax credits and notional interest deduction. This compared to 163.6 million euros in 2014.

        These tax deductions relate both to us and our subsidiaries, all of which have a history of losses. Our tax deductions do not expire, except for the investment tax credits and the notional interest deduction of 23.1 million euros. These tax deductions may not be used to offset taxable income elsewhere in our group.

        With respect to our net operating losses, no deferred tax assets have been recognized, given that there is uncertainty as to the extent to which these tax losses will be used in future years.

Derivative Financial Instruments

        Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are subsequently re-measured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately, unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

        Pursuant to the terms and conditions of the loan facility agreement that we entered into with Kreos, on April 22, 2014, an extraordinary meeting of our shareholders issued and granted 1,994,302 new cash-settled warrants, including a put option to Kreos Capital IV (Expert Fund). These warrants have been designated at fair value through profit or loss. We recognize the warrants, including the put option, as one instrument, because we believe that the put option is unconditionally linked to the warrant. Because the issued warrants can be settled in cash, the instrument is considered as a financial derivative liability measured at fair value with changes in fair value recognized immediately in profit or loss.

        The measurement of the warrant (and the put option) at fair value is based on the Black-Scholes option pricing model taking into account the following variables:

    The share price.

    The strike price.

    The volatility of the share, which has been determined based on historical stock prices of our shares.

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    The dividend yield, which has been estimated as zero, as we have never paid a dividend due to the past experience of losses.

    The duration, which has been estimated as the difference between the valuation date of the warrant plans and final exercise date.

    The risk free interest rate, which has been calculated based on the discount curve composed based on liquid euro deposit rates for periods shorter than one year, futures typically for maturities between one and six years and interbank euro swap rates for periods longer than six years.

        We will continue to use judgment in evaluating the risk-free interest rate, dividend yield, duration and volatility related to our cash-settled warrant plan on a prospective basis and incorporating these factors into the Black-Scholes option pricing model. If in the future we determine that other methods are more reasonable and provide better results, or other methods for calculating these assumptions are prescribed by authoritative guidance, we may change or refine our approach, and our share based payment expense in future periods could change significantly.

        Pursuant to the terms and conditions of the convertible bonds issued on March 6, 2015, the warrant is reflected at any reporting period at its fair value. Measurement of the fair value is determined using methodologies such as Black-Scholes, binominal lattices or Monte Carlo simulations. The conversion features of the 9% senior unsecured convertible bonds due 2018 are complex and render Black-Scholes and binominal trees inapplicable. The measurement of the warrant at fair value is based on a Monte Carlo valuation model.

        The resetting and the early redemption clauses embedded in the instrument result in the conversion price being dependent upon an unknown share price path.

        Such conversion features cannot be factored into a fixed conversion price continuous or discrete model, such as Black-Scholes or binomial lattices, respectively. However, they can be incorporated in a Monte Carlo model.

        The value of the warrant in the event of a change of control was determined using the same Monte Carlo model but with a deterministic and pre-defined change of control date estimated by us.

        The final value of the warrant was then calculated as the probability-weighted values derived from the valuation of the warrant in (i) the non-change of control and (ii) in the change of control scenarios. The probabilities assigned to the non-change of control and change of control scenarios were 20% and 80%, respectively. We performed a sensitivity analysis, changing probabilities assigned to non-change of control and change of control scenarios. There is no significant impact in the valuation of the warrant when changing these scenarios.

Share-Based Payment Arrangements

        We used the Black-Scholes model to estimate the fair value of the share-based payment transactions. Using this model requires our management to make assumptions with regard to volatility and expected life of the equity instruments. The assumptions used for estimating fair value for share-based payment transactions are estimated as follows:

    Volatility is estimated based on the average annualized volatility of our share price.

    The estimated life of the warrant is until the first exercise period.

    The dividend return is estimated by reference to our historical dividend payment. Currently, this is estimated to be zero, because no dividend has been paid since our inception.

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Liquidity and Capital Resources

        We have historically funded our operations principally from equity financing, borrowings, grants and subsidies and cash generated from operations. As we continue to grow our business, we expect to fund our operations through multiple sources, possibly including the expected proceeds from this offering; short and long term investments; loans or collaborative agreements with corporate partners, such as our licensing agreement with Takeda; revenues from potential licensing arrangements future earnings and cash flow from operations and borrowings. This expectation could change depending on how much we spend on our development programs, potential licenses or acquisitions of complementary technologies, products or companies. We may in the future supplement our funding with further debt or equity offerings or commercial borrowings.

        In July 2016, we will receive an upfront non-refundable payment of 25 million euros from Takeda in connection with our licensing agreement for the right to commercialize Cx601 outside of the United States.

        On March 14, 2016, we raised 23.8 million euros in gross proceeds through a private placement of 25 million new shares.

        On November 27 and December 3, 2015, we raised a total of 8.7 million euros through a private placement of 9.1 million new shares.

        During 2015 we were awarded a 1.3 million euros grant from the European Commission under Horizon 2020, the European Union's framework program for research and innovation to conduct a clinical Phase I/II trial of Cx611 in patients with severe sepsis secondary to severe community-acquired pneumonia. In October 2015 we received 0.6 million euros in advance of the activities needed to initiate the trial.

        On March 6, 2015, we issued 9% senior unsecured bonds due 2018 for 25.0 million euros in total principal amount, convertible into our ordinary shares. On March 14, 2016, as a result of the private placement, the conversion price for the 9% senior unsecured convertible bonds due 2018 was adjusted from its previous level of 0.9414 euros to the new level of 0.9263 euros per share.

        The bonds are guaranteed by our subsidiary TiGenix SAU. We account for the bonds as two instruments: the host contract and the embedded derivative. We determined the fair value of the host contract to be 18.8 million euros and the embedded derivative to be 13.3 million euros at December 31, 2015, based on a discounted rate of 28.06%. The evolution of the fair value of this derivative is dependent on the share price (a 10% increase or decrease would have an impact of 2.2 million euros to negative 2.1 million euros) and volatility of the shares (a 10% increase or decrease would have an impact of 0.7 million euros to negative 0.7 million euros).

        On December 20, 2013, we entered into a loan facility agreement of up to 10.0 million euros with Kreos Capital IV (UK), under which we borrowed 7.5 million euros during the first half of 2014. On September 30, 2014, we borrowed the final installment of 2.5 million euros under the facility.

        The terms of the loan facility agreement are as follows:

    Term: four years from the date of each drawdown.

    Repayment schedule: repayment of principal amount starts at first anniversary.

    Interest: 12.5% fixed annual interest rate.

    Structure: security over certain of our assets (including a pledge over certain intellectual property and bank accounts and a pledge of all of the outstanding capital stock of TiGenix S.A.U.); no financial covenants.

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        In addition, pursuant to the terms of the loan facility agreement, on April 22, 2014, an extraordinary meeting of shareholders issued and granted 1,994,302 new warrants to Kreos Capital IV (Expert Fund). Kreos exercised its put option with respect to one-third of these warrants on May 5, 2015.

        Our borrowings also include government loans from public and semi public entities, such as Madrid Network. These loans have an extended repayment period of ten to fifteen years, and are interest free or have very low interest rates, if all the terms and conditions are met. In addition, there is a grace period of three to five years before any repayment is required under such loans.

        On September 30, 2011, our subsidiary TiGenix SAU entered into a loan facility for a total value of 5.0 million euros with Madrid Network, the terms of which were as follows:

    Term: until December 31, 2026.

    Repayment schedule: repayment of interest and principal amount starts at June 30, 2015.

    Effective interest: 1.46% fixed annual interest rate.

    Structure: joint and several guarantee from us.

        The loan was granted to finance in part our ongoing Phase III trial for Cx601 and also to cover some research and development expenses related to Cx601 from 2012 until the end of 2014. The specific activities covered for this period were agreed with Madrid Network at the time of the grant of the loan, and any change to this plan requires approval from Madrid Network on a semi-annual basis.

        On July 30, 2013, our subsidiary TiGenix SAU entered into a second loan facility for a total value of 1.0 million euros with Madrid Network, the terms of which were as follows:

    Term: until December 31, 2025.

    Repayment schedule: repayment of interest and principal amount starts at June 30, 2016.

    Effective interest: 1.46% fixed annual interest rate.

    Structure: first demand bank guarantee for the full amount of the loan provided by Bankinter, where we maintain our primary bank accounts in Spain.

        This loan was granted to finance our preparatory work to determine which new indications we should pursue with respect to Cx611, our second product candidate, the development of the clinical protocol for such new indications and the initial expenses of the clinical trials for such indications from July 2013 until the end of 2014. The specific activities covered for this period were agreed with Madrid Network at the time of the grant of the loan and any change to this plan requires approval from Madrid Network on a semi-annual basis. We completed the activities agreed with Madrid Network under both loans by December 31, 2014, and therefore fully recognized as grant income on our income statement the benefit received by being able to borrow these sums at a below-market rate of interest (measured as the difference between the proceeds received and the fair value of the loan based on prevailing market interest rates), in an amount of 2.8 million euros for the first loan and 0.6 million euros for the second loan.

        We have experienced net losses and significant cash used in operating activities in each period since inception. As of December 31, 2015, we had an accumulated deficit of 120.0 million euros, a net loss of 35.1 million euros and net cash used in operating activities of 19.6 million euros. We have only one commercial product that generates limited revenues through royalties and several product candidates in clinical development. We, therefore, expect to incur net losses and have significant cash outflows for at least the next year.

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        These conditions, among others, raise substantial doubt about our ability to continue as a going concern. The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern. This basis of accounting contemplates the recovery of our assets and the satisfaction of our liabilities in the normal course of business.

        As at December 31, 2015, we had cash and cash equivalents of 18.0 million euros. On March 14, 2016, we raised 23.8 million euros through a private placement of 25 million new shares. In July 2016, we will receive an upfront non-refundable payment of 25 million euros from Takeda in connection with the licensing agreement. Our board of directors is of the opinion that this cash position is sufficient to continue operating through August 2017 but that we will require significant additional cash resources to launch new development phases of existing projects in our pipeline.

        In order to be able to launch such new development phases, we intend to obtain on a timely basis either or both of additional non-dilutive, funding such as from establishing commercial relationships, and dilutive funding. In addition a successful transition to attaining profitable operations is dependent upon achieving a level of positive cash flows adequate to support our cost structure.

        Our future viability is dependent on the following:

    Our ability to generate cash from operating activities.

    Our ability to raise additional capital to finance our operations.

    Our ability successfully to obtain regulatory approval to allow marketing of our products.

    Our ability to enter into licensing arrangements to distribute our products or product candidates.

        Our failure to raise capital as and when needed could have a negative impact on our financial condition and ability to pursue our business strategies.

        We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, and the extent to which we may enter into collaborations with third parties for development and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenses associated with completing the development of our current product candidates. Our future capital requirements will depend on many factors, including the following:

    The progress of our application for marketing authorization for Cx601, our lead product candidate, in Europe and the progress and results of the clinical trials for Cx601 in the United States and for Cx611 in Europe and the United States.

    The expenditure in connection with integrating our recently acquired subsidiary Coretherapix and bringing its products to market.

    The scope, progress, results and costs of pre-clinical development, laboratory testing and clinical trials for our other product candidates.

    The extent to which we acquire or in-license other products and technologies.

    Our ability successfully to out-license our products or product candidates in certain markets.

    The cost, timing and outcome of regulatory review of our product candidates in the United States, Europe or elsewhere.

    The cost and timing of completing the technology transfer to contract manufacturing organizations in the United States and other international markets.

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    The costs of future commercialization activities, including product sales, marketing, manufacturing and distribution, for any of our product candidates for which we receive marketing authorization.

    Any additional revenue received from commercial sales of our products, should any of our product candidates receive marketing approval.

    The cost of preparing, filing, prosecuting, defending and enforcing patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims.

    The cost of obtaining favorable reimbursement terms from public and private insurers for our products.

    Our ability to establish any future collaboration arrangements on favorable terms, if at all.

        We will also incur costs as a U.S.-listed public company that we have not previously incurred, including, but not limited to, costs and expenses for increased personnel costs, audit and legal fees, expenses related to compliance with the Sarbanes-Oxley Act of 2002 and the rules implemented by the SEC and NASDAQ and various other costs.

        These factors raise uncertainty about our ability to continue as a going concern. The consolidated financial statements included elsewhere in this prospectus have been prepared assuming that we will continue as a going concern. This basis of accounting contemplates the recovery of our assets and the satisfaction of liabilities in the normal course of business. A successful transition to attaining profitable operations is dependent upon achieving a level of positive cash flows adequate to support our cost structure. To improve our financial performance, we discontinued our ChondroCelect operations through two initiatives:

    The sale of our subsidiary TiGenix B.V. to PharmaCell, for which we received an upfront payment of 3.5 million euros when the sale became effective on May 30, 2014 and will receive a final payment of 0.8 million euros on May 30, 2017.

    Our entry into a distribution agreement with Sobi for the marketing and distribution rights with respect to ChondroCelect, effective June 1, 2014, which will bring us future royalty earnings and allow us to focus on our eASC-based platform of product candidates in inflammatory and autoimmune diseases and our newly acquired CSC-based platform of product candidates in cardiac indications.

        In July 2016, we decided to terminate our distribution agreements with Sobi and Finnish Red Cross Blood Service and our manufacturing agreement with our former subsidiary, which was acquired by PharmaCell. We will cease to generate any revenues from ChondroCelect by November 30, 2016.

        The consolidated financial statements included elsewhere in this prospectus do not include any adjustments due to this uncertainty relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should we be forced to take any actions.

        Our liquidity plans are subject to a number of risks and uncertainties, including those described in the section of this prospectus entitled "Risk Factors," some of which are outside of our control.

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Cash Flows

        The following table summarizes the results of our cash flows for the years ended December 31, 2015 and 2014:

 
  Years ended
December 31,
 
 
  2015   2014  
 
  Thousands of euros
 

Net cash generated from (used in):

             

Operating activities

    (19,574 )   (13,367 )

Investing activities

    (4,434 )   3,307  

Financing activities

    28,523     7,969  
           

Net increase (decrease) in cash and cash equivalents

    4,515     (2,091 )

Cash and cash equivalents

    17,982     13,471  

Comparison of Years Ended December 31, 2015 and 2014

        Net cash outflow from operating activities was 19.6 million euros for the year ended December 31, 2015 compared to net cash outflow of 13.4 million euros for the year ended December 31, 2014. This increase is mainly due to an increase in research and development activities and the consolidation of Coretherapix in the consolidation scope.

        Net cash outflow from investing activities amounted to 4.4 million euros for the year ended December 31, 2015 compared to net cash inflow of 3.3 million euros for the year ended December 31, 2014. The principal outflows during 2015 related to the acquisition of Coretherapix, for which we paid 1.2 million euros in cash, and the allocation of future interest payments in connection with the 9% senior unsecured convertible bonds due 2018 into an escrow amount in the amount of 3.4 million euros. In 2014, we sold our Dutch manufacturing facility for 3.5 million euros.

        Net cash inflow from financing activities was 28.5 million euros for the year ended December 31, 2015 compared to net cash inflow of 8.0 million euros for the year ended December 31, 2014. Inflow from financing activities in 2015 derived from the issuance of convertible bonds in March 2015, for an amount of 25.0 million euros, and the private placement in November and December 2015, which raised 8.7 million euros in gross proceeds. These inflows were partially offset by costs of 1.6 million euros relating to the issuance of the convertible bonds and the private placements, interest expense of 2.2 million euros and 2.7 million euros in the repayment of principal on outstanding loans. In 2014, the cash inflow of 8.0 million euros mainly corresponded to the drawdown of the Kreos loan.

Contractual Obligations

        The following table details the remaining contractual maturity for our financial liabilities with agreed repayment periods, including both interest and principal cash flows as at December 31, 2015:

 
  Within
one year
  1 - 3 years   3 - 5 years   After
5 years
  Total  
 
  Thousands of euros
 

Financial loans and other payables(1)

    7,294     35,777     2,292     4,404     49,767  

Operating lease commitments

    590     781     570         1,941  
                       

Total

    7,884     36,558     2,862     4,404     51,708  
                       
                       

(1)
Includes the interest payable on financial loans and other payables.

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        On July 31, 2015, we acquired Coretherapix from Genetrix for an upfront payment of 7.3 million euros, of which 1.2 million euros was paid in cash and 6.1 million euros was paid in the form of 7.7 million of our ordinary shares. In addition, we may be obligated to issue to Genetrix up to 15 million euros in new ordinary shares depending on the results of the ongoing clinical trial of the Coretherapix lead product candidate. Genetrix may also receive up to 245 million euros plus certain percentages of net sales or royalties for the first product sold. Finally, Genetrix may receive a 25 million euro milestone payment for each additional product based on any of the acquired Coretherapix product candidates reaching the market. These future contingent payments are not reflected in the table above.

        TiGenix Inc., our wholly owned subsidiary, guarantees the operating lease payments of Cognate BioServices for the building leased in the United States. Cognate BioServices was the party with whom we entered into a joint venture in 2007.

Off-Balance Sheet Arrangements

        We do not have any special purpose or limited purpose entity that provides off-balance sheet financing, liquidity or market or credit risk support, and we have not engaged in hedging or other relationships that expose us to liability that is not reflected in our consolidated financial statements.

Quantitative and Qualitative Disclosure about Financial Risk

        We co-ordinate our access to financial markets and monitor and manage the financial risks relating to our operations through internal risk reports analyzing our exposures by the degree and magnitude of the relevant risk. These risks include currency risk, interest rate risk, liquidity risk and credit risk.

        Our risk management policies are more fully described in Note 4 in the notes to our consolidated financial statements included elsewhere in this prospectus.

Currency Risk

        We are subject to limited currency risk. Our reporting currency is the euro, in addition to which we are exposed to the U.S. dollar. We currently have no commercial revenues denominated in U.S. dollars. We try to match foreign currency cash inflows with foreign currency cash outflows. We have not engaged in hedging of the foreign currency risk via derivative instruments. Despite our limited external currency exposure, our income statement presents a significant amount in foreign exchange differences that are mainly related to the intercompany balances in foreign currencies with our subsidiary in the United States, TiGenix Inc.

Interest Rate Risk

        We are exposed to very limited interest rate risk, because the vast majority of our borrowings are at fixed interest rates and only a very limited part is at floating interest rates.

        We have one outstanding rollover credit facility denominated at a floating rate. We entered into the facility in 2007 to acquire manufacturing equipment in the United States for an original amount of 0.4 million euros. The borrowing matures on June 30, 2017 and carries a floating interest rate of three-month Euribor plus 1.40%. The outstanding amount for this borrowing at December 31, 2015 was 60,000 euros compared to 0.1 million euros at December 31, 2014.

Liquidity Risk

        We manage our liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

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Credit Risk Management

        Credit risk refers to the risk that one of our counterparty will default on its contractual obligations resulting in financial loss to us. We have adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. We continuously monitor our obligations and ensure that we spread the aggregate value of transactions concluded among approved counterparties.

        Most of our counterparties are established public health care facilities, and we believe we are exposed to a limited risk of counterparty default. The maximum exposure to credit risk at the reporting date is the carrying amount of each class of financial asset. We do not hold any collateral as security.

Market risk

        We are exposed to market risk. Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk (as described above) and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include the derivative instruments linked to the finance agreement with Kreos and those embedded in the convertible bonds issued on March 6, 2015.

        The measurement of the Kreos warrants at December 31, 2015 at fair value is based on a Black-Scholes valuation model taking into account the following inputs: share price (1.19 euros), strike price (0.74 euros), volatility of the share (66.7%), duration (3.31 years) and risk free interest rate (0.10%).

        The inputs with the most significant effect on the fair value calculation of the Kreos warrants are the value and volatility of our shares. The potential effect of using reasonable assumptions (under the Black-Scholes formula) for these inputs are the following: (i) share price (a 10% increase or decrease would have an impact of 126,000 euros to negative 121,000 euros) and (ii) volatility of the shares (a 10% increase or decrease would have an impact of 58,000 to negative 59,000 euros).

        Pursuant to the terms and conditions of the convertible bonds issued on March 6, 2015, the measurement of the warrant at fair value shall be reflected at any time at its fair value as determined by direct observation.

        The inputs with the most significant effect on the fair value calculation are the value and volatility of our shares. The potential effect of using reasonable assumptions (under the Black-Scholes formula) for these inputs are the following: (i) share price (a 10% increase or decrease would have an impact of 2.2 million euros to negative 2.1 million euros) and (ii) volatility of the shares (a 10% increase or decrease would have an impact of 0.7 million euros to negative 0.7 million euros)

Jumpstart Our Business Startups Act of 2012

        As a company with less than $1.0 billion in revenue during our last fiscal year, we qualify as an "emerging growth company" as defined in Section 2(a) of the Securities Act of 1933, as amended, as modified by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As such, we are eligible to take advantage of specified reduced reporting requirements and are relieved of certain other significant requirements that are otherwise generally applicable to public companies. As an emerging growth company:

    We are permitted to present only two years of audited consolidated financial statements and only two years of related Management's Discussion and Analysis of Financial Condition and Results of Operations in the registration statement of which this prospectus forms a part.

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    We are exempt from the requirement to obtain an attestation and report from our auditors on the assessment of our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002.

    We are permitted to provide less extensive disclosure about our executive compensation arrangements.

        We expect to remain an "emerging growth company" for up to five years, or until any one of the following occurs:

    The last day of the first fiscal year in which our annual gross revenue exceeds $1 billion.

    The date on which we become a "large accelerated filer" as defined in Rule 12b 2 under the Securities Exchange Act of 1934, as amended, which would occur if the market value of our common equity held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter and we have been publicly reporting for at least twelve months.

    The date on which we have issued more than $1.0 billion in non-convertible debt during the preceding three-year period.

        Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided for under the JOBS Act.

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BUSINESS

Our Company

        We are an advanced biopharmaceutical company focused on developing and commercializing novel therapeutics from our proprietary technology platforms of allogeneic, or donor-derived, stem cells. We have completed, and received positive data in, a single pivotal Phase III trial in Europe of our most advanced product candidate Cx601, a potential first-in-class injectable allogeneic stem cell therapy indicated for the treatment of complex perianal fistulas in patients suffering from Crohn's disease. A complex perianal fistula consists of abnormal tracts between the rectum and the exterior surroundings of the anus, and is commonly associated with Crohn's disease. It is a serious clinical condition affecting the anal sphincter and is potentially associated with a perianal abscess. Cx601 has been granted orphan designation by the European Medicines Agency, or EMA, in recognition of its potential application for the treatment of anal fistulas, which affect approximately 120,000 adult patients in the United States and Europe and for which existing treatment options are inadequate. The EMA grants orphan designation to medicinal products for indications that affect no more than five out of 10,000 people in the European Union. The benefits of orphan designation include a streamlined process for obtaining relevant regulatory approvals and up to ten years of exclusivity in the European market.

        Cx601 is our lead product candidate based on our platform of expanded adipose, or fat tissue, derived stem cells, known as eASCs. On July 4, 2016, we entered into a licensing agreement with Takeda, a large pharmaceutical company active in gastroenterology, under which Takeda acquired the exclusive right to commercialize Cx601 for complex perianal fistulas outside the United States.

        In the randomized, double-blind Phase III study in Europe and Israel with a single treatment of Cx601 the rate of combined remission in patients treated with Cx601 compared with patients who received placebo was statistically significant, meeting the primary endpoint of combined remission of complex perianal fistulas at twenty four weeks. In the 'intention to treat,' or ITT, population, which was comprised of 212 Crohn's disease patients with inadequate response to previous therapies, 49.5% of patients treated with Cx601 had combined remission compared to 34.3% in the placebo arm. The trial's results indicated that patients receiving Cx601 had a 44.3% greater probability of achieving combined remission than placebo patients. The efficacy results had a p-value, the statistical measure used to indicate the strength of a trial's observations, of 0.024. (A p-value of 0.024 is equivalent to a probability of an effect happening by chance alone being less than 2.4%.) A p-value less than 0.05 is a commonly used criterion for statistical significance. Moreover, the trial confirmed a favorable safety and tolerability profile, and treatment-emergent adverse events (non-serious and serious) and discontinuations due to adverse events were comparable between the Cx601 and placebo arms.

        The results of the follow up analysis after fifty-two weeks were also positive. A single injection of Cx601 was statistically superior to placebo in achieving combined remission in 54.2% of patients treated with Cx601 compared to 37.1% of patients in the placebo arm. The result had a p-value of 0.012, indicating high statistical significance. In addition, after fifty-two weeks, the rate of sustained closure in patients treated with Cx601 who were in combined remission at week twenty four was 75.0%, compared to 55.9% for patients in the placebo arm who were in combined remission at week twenty-four. The results also confirmed the favorable safety and tolerability profile of Cx601.

        Based on the data from our pivotal Phase III trial in Europe and Israel, we submitted a marketing authorization application to the EMA in the first quarter of 2016, and a decision by the EMA could be expected by mid-2017. If marketing authorization were to be granted by mid-2017, Takeda could start to commercialize the approved product in Europe during the second half of 2017. We also intend to initiate a pivotal Phase III trial for Cx601 for the treatment of complex perianal fistulas in the United States in the first half of 2017 and have begun the technology transfer process to Lonza, U.S.-based contract manufacturing organization. Based on discussions with the U.S. Food and Drug Administration, or FDA, we believe that the U.S. Phase III trial, if successful, could, together with the European Phase III data, serve as supportive evidence for filing a biologics license application, or BLA,

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for regulatory approval with the FDA. We reached an agreement with the FDA through a special protocol assessment, or SPA, procedure for our proposed protocol in 2015. The agreed primary endpoint for the U.S. Phase III trial is the same as the one for the European Phase III trial. In addition, the required p-value is less than 0.05 for the U.S. trial, compared to the more stringent threshold of less than 0.025 that Cx601 was successfully able to meet in the European trial. We intend to apply for fast track designation from the FDA, which would facilitate and expedite development and review of our U.S. Phase III trial. Fast track designation by the FDA is granted to drugs that treat serious conditions and fill an unmet medical need. It results in earlier and more frequent communication with the FDA during the drug development and review process.

        Our eASC-based platform has generated other product candidates, including Cx611, for which we have completed a European Phase I trial in severe sepsis. We are currently preparing to initiate a Phase II clinical trial in severe sepsis in Europe in the second half of 2016.

        On July 31, 2015, we acquired Coretherapix, a Spanish biopharmaceutical company focused on developing cost-effective regenerative therapeutics to stimulate the endogenous repair capacity of the heart and mitigate the negative effects of myocardial infarction, or a heart attack. Coretherapix has developed an allogeneic platform of expanded cardiac stem cells, or CSCs, and its lead product candidate, AlloCSC-01, employs allogeneic CSCs as a potential treatment for acute ischemic heart disease. We are sponsoring a European Phase I/II trial to evaluate the safety and efficacy of the intracoronary infusion of AlloCSC-01 in patients with acute myocardial infarction. We received six-month interim exploratory data in June 2016, and final results will be available during the first half of 2017. We are also developing AlloCSC-02, the second product candidate from the CSC-based platform, which is in a preclinical proof of concept stage for a chronic cardiac indication.

        Our eASC-based product candidates are manufactured at our facility in Madrid which has been approved by the Spanish Medicines and Medical Devices Agency as being compliant with current Good Manufacturing Practices, or cGMP, requirements, which are the standards prescribed by regulatory agencies that control and license the manufacture and supply of pharmaceutical products, such as eASCs. Through our expansion process, we can generate up to 2,400 doses of Cx601 from cells extracted from a single healthy donor. Our CSC-based product candidates are manufactured in Spain by 3P Biopharmaceuticals, a sub-contractor, which has been approved by the Spanish Medicines and Medical Devices Agency as being compliant with cGMP requirements, based on a manufacturing process developed by Coretherapix. We expect to continue producing Cx601 at our facility until Takeda assumes responsibility for manufacturing. Other than our licensing agreement with Takeda, under which Takeda has the exclusive right to commercialize Cx601 outside the United States, we currently hold the worldwide rights for all of the product candidates we have developed.

        Our therapeutic approach is to focus on the use of living cells, rather than conventional drugs, for the treatment of inflammatory and autoimmune diseases, through our eASC-based platform, and heart disease, through our CSC-based platform. Cells target different pathways than conventional drugs and may be effective in patients who fail to respond to such drugs, including the biologics currently used to treat inflammatory and autoimmune conditions. Our pipeline is based on proprietary platforms of allogeneic stem cells, which are extracted from human adipose tissue from healthy adult donors or myocardial tissue that would typically be discarded during a routine valvular replacement operation. We have conducted a full spectrum of studies analyzing various routes of administration and indications to further the preclinical and clinical development of our platform. We have also had extensive discussions with the EMA regarding our eASC platform through their established procedures for scientific advice regarding chemistry, manufacturing and control packages and preclinical packages as well as a scientific advice meeting with respect to Cx601 that has allowed us to pursue an expedited route to clinical development. In addition, we have had a meeting with the Center for Biologics Evaluation and Research within the FDA on the clinical development of Cx601 in the United States. We believe we already have the capacity to scale up the production of our eASC-based products on a late-stage

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clinical as well as commercial scale and have successfully obtained a manufacturing license from the Spanish Medicines and Medical Devices Agency for the commercial production of Cx601.

        As of March 31, 2016, our pipeline portfolio was the most advanced cell therapy platform in Europe, with positive pivotal Phase III data for our lead product candidate and three further product candidates in Phases II and I and preclinical development.

        The following chart summarizes our product candidates and our marketed product in Europe:

GRAPHIC

    Cx601.  Cx601, our lead product candidate, is a potential first-in-class local injectable allogeneic stem cell therapy that has completed a pivotal Phase III trial in Europe and Israel for the treatment of complex perianal fistulas in patients suffering from Crohn's disease. We have observed compelling clinical results that suggest that Cx601 has clinical utility in treating perianal fistulas in one injectable dose with increased efficacy and a more favorable adverse events profile than currently available therapies in Europe and the United States. Based on the results of our successful pivotal Phase III trial, we submitted a marketing authorization application to the EMA in the first quarter of 2016, and a decision by the EMA could be expected by mid-2017. Moreover, Cx601 enjoys significant benefits due to its designation as an orphan drug by the EMA.

      We have also had a meeting with the FDA to discuss the adequacy of our clinical and non-clinical data to support an investigational new drug, or IND, application for a U.S.-based Phase III trial. We received positive feedback regarding our current pivotal European Phase III trial design for supporting a BLA and have reached an agreement with the FDA through an SPA procedure for our proposed protocol for a Phase III trial in the United States. In addition, we intend to apply for fast-track designation. We expect to submit an IND application to the FDA by the end of 2016 and to initiate a Phase III trial in the United States in the first half of 2017. Current therapies have limited efficacy, and there is currently no commercially available cell-based therapy for this indication in the United States or Europe. We believe Cx601, if approved, would fulfill a significant unmet need in the market.

    Cx611.  Cx611, our second eASC-based product candidate, is a potential first-in-class intravenous injectable allogeneic stem cell therapy intended for the treatment of severe sepsis. We believe that Cx611, if approved for severe sepsis, would be an add-on therapy that has the potential to reduce mortality. Following positive data from a Phase I trial in Europe, we are planning to advance Cx611 in severe sepsis in a Phase I/II trial in Europe in the second half of 2016.

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    Cx621.  We have also explored the intra-lymphatic administration of allogeneic eASCs with Cx621 and generated positive safety and feasibility information in a Phase I trial in Europe. This different route of administration has the potential to enable applications in autoimmune diseases.

    AlloCSC-01.  AlloCSC-01, our first product candidate from the CSC-based platform, is a suspension of allogeneic CSCs administered into the coronary artery of the patient. We are currently in the second stage of a two-stage Phase I/II trial in Europe to evaluate the safety and preliminary efficacy of the intracoronary infusion of AlloCSC-01 in patients with acute myocardial infarction. We received six-month interim exploratory data in June 2016, and final results will be available during the first half of 2017. We believe that AlloCSC-01, if approved, would limit the extent of tissue damage caused by myocardial infarction and delay the onset or reduce the severity of congestive heart failure.

    AlloCSC-02.  AlloCSC-02, our second product candidate from the CSC-based platform, is in a preclinical proof of concept stage for a chronic cardiac indication.

        ChondroCelect, our commercial product, was the first cell-based product to receive centralized marketing authorization from the EMA in October 2009 as an advanced therapy medicinal product, a new medical product category regulated by the EMA that includes products based on gene therapy, cell therapy or tissue engineering. ChondroCelect, which is indicated for cartilage repair in the knee, is also the first advanced therapy medicinal product to have been approved for reimbursement in the Netherlands and Spain and was previously approved in Belgium. During the first six months of 2014, we discontinued our operations in connection with ChondroCelect, through the combination of the sale of TiGenix B.V., our Dutch subsidiary that held our production facility for ChondroCelect, to PharmaCell, a leading European contract manufacturing organization active in the area of cell therapy, for a total consideration of 4.3 million euros and the entry into an agreement with Swedish Orphan Biovitrium, or Sobi, for the exclusive marketing and distribution rights with respect to ChondroCelect within the European Union (except for Finland), as well as several other countries, including the Middle East and North Africa. In July 2016, we requested the withdrawal of our marketing authorization, which we expect will be effective as of November 30, 2016. After this date, we will no longer generate any revenues from ChondroCelect.

        As of March 31, 2016, we owned or co-owned twenty-nine patent families and had more than one hundred granted patents in more than twenty jurisdictions, including the United States, with expiration dates starting from 2020, for a patent relating to ChondroCelect.

Our Strategy

        Our objective is to use our eASC-based technology platform to develop innovative and safe treatment options for a broad range of inflammatory and autoimmune diseases and to leverage our cell-therapy experience by expanding into other treatment areas, such as cardiology indications, with our recent acquisition of Coretherapix and the CSC-based technology platform. Key elements of our strategy for achieving this objective are as follows:

    Advance the clinical development of Cx601 and secure regulatory approval in Europe and the United States.  Leveraging our experience with ChondroCelect, the first cell-based product to be granted centralized marketing authorization in Europe as an advanced therapy medicinal product, we intend to secure regulatory approval for our eASC-based product candidates, starting with Cx601.

    Europe.    Based on the results of our successful pivotal Phase III trial in Europe, we filed for marketing authorization in Europe in the first quarter of 2016.

    United States.    We received positive feedback in our meeting with the Center for Biologics Evaluation and Research within the FDA, which has agreed to review the results of the

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        recently completed European Phase III trial as supportive evidence for filing for regulatory approval in the United States. The FDA has agreed with the design of our proposed single pivotal trial in the United States through the SPA procedure and we intend to apply for fast-track designation. We have started the process of technology transfer to Lonza, a U.S.-based contract manufacturing organization. We therefore have all the elements in place in preparation for an IND application for a Phase III trial in the United States, which, if successful and together with positive Phase III data from the European trial, would enable us to file a BLA with the FDA. We expect to initiate the Phase III trial in the United States in the first half of 2017.

    Achieve global commercialization of Cx601.  On July 4, 2016, we entered into a licensing agreement with Takeda, a large pharmaceutical company active in gastroenterology, under which Takeda acquired the exclusive right to commercialize Cx601 for complex perianal fistulas outside the United States. We will follow a commercial strategy to increase the probability of Cx601's ultimate success and may consider other partnerships in the United States. Complex perianal fistula in patients with Crohn's disease, for which Cx601 is being developed, is a debilitating condition with a well-defined patient population managed by a limited number of medical specialists, which we believe will allow us to rely on a relatively small and effective commercialization structure to manage the relevant reference centers. Based on the positive Phase III data in Europe and a standard regulatory pathway for advanced therapy medicinal products, we anticipate generating our first revenues from Cx601 within the next two years.

    Advance our product candidates Cx611, Cx621, AlloCSC-01 and AlloCSC-02 in the United States and the rest of the world.  As with Cx601, we are focusing on a well-defined patient population with respect to Cx611 and have selected a subgroup of patients suffering from severe sepsis within the otherwise relatively large indications in inflammatory disease. We successfully concluded a Phase I trial in severe sepsis in the first quarter of 2015, and expect to enroll the first patient for a Phase I/II trial in the second half of 2016. We believe that if Cx611 were approved, it would supplement existing therapies and would have the potential to reduce mortality in patients with severe sepsis. With Cx621, we have explored the intra-lymphatic administration of allogeneic eASCs and have generated positive safety and feasibility information in a Phase I trial in Europe. With our newly acquired product candidate, AlloCSC-01, we are targeting patients who have suffered from acute myocardial infarction and we believe that it can limit the extent of tissue damage if used within a few days after the treatment of the initial infarction. AlloCSC-01 is currently in a Phase I/II trial. We are also developing AlloCSC-02, the second product candidate from the CSC-based platform, which is in a preclinical proof of concept stage for a chronic cardiac indication.

    Discover, develop and commercialize first-in-class novel therapeutics for areas of high unmet medical need by leveraging our proprietary allogeneic stem cell-based technology platforms and our experience in bringing stem-cell based products to market.  We intend to advance our position through the continuing discovery and development of new product candidates for multiple indications. We believe that our technology platforms as well as our in-house expertise allow us to achieve candidate selection and proof-of-concept in an efficient manner. Our product candidates use novel mechanisms of action offering benefits that are expected to be superior to existing treatment options in terms of efficacy and safety in the selected indications, and we believe that they have the potential to be effective in a broad range of indications. We will continue to invest in our eASC and CSC-based platforms, and identify, develop and manufacture additional product candidates from them. As our subsequent product candidates advance in their development for more prevalent indications, we aim to achieve substantial growth.

    Strengthen our competitive position by leveraging our experienced management team and reinforcing key opinion leader support.  Our management team is comprised of highly experienced professionals with track records in the biomedical and pharmaceutical fields. The team has

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      demonstrated its ability to create value by bringing the first cell therapy-based medicinal product in Europe to market and achieving key value enhancing milestones in all other areas of pharmaceutical development, including clinical development, regulatory, manufacturing and commercialization. In doing so, our team has acquired a unique expertise in the field of cell therapy. As a cell therapy pioneer, we have developed and will continue to capitalize on our strong relationships with key opinion leaders who have collaborated and consulted with us in developing our product candidates. As a result, we have established strong scientific advisory boards that share our belief in the therapeutic potential of cell therapies. With respect to Cx601, we have advisory boards in Europe and in the United States. For Cx611, we have an advisory board in Europe for severe sepsis, and for AlloCSC-01, we have an advisory board in Europe for cardiology.

Technology Platforms

        Our product candidates are based on our proprietary allogeneic stem cell-based platforms, which offer significant market opportunities in both i