TiGenix announces spin-out of its targeted drug discovery activities in newco Arcarios

Leuven (BELGIUM) - August 25, 2010 - TiGenix (NYSE EURONEXT: TIG) has entered into an agreement with its academic partners, the Catholic University Leuven (KULeuven) and Ghent University(UGent), the Dutch company Therosteon and a consortium of investors for the creation of a new small molecule drug development company, Arcarios, that will focus on the discovery and development of innovative, disease modifying drugs that target bone and joint diseases. TiGenix has a significant equity stake in this new company and retains the rights to drug candidates developed by Arcarios for local treatment of arthritic diseases.

TiGenix has developed a high-content screening platform, ChondroBOOSTT based on human joint chondrocytes and stem cells to assess the effect of small molecules and biologicals on the different aspects of cartilage biology. The use of this screening platform enables intelligent biological screening and identification of therapeutic compounds that could be used to slow or prevent progression of joint diseases in particular osteoarthritis.
Based on this platform and in collaboration with its academic partners KULeuven (the Laboratory of Rheumatology and CD3, the Centre for Drug Design and Discovery) and UGent, TiGenix has identified and validated a set of potential osteoarthritis targets and drug development candidates.
The progression of these therapeutic programs requires the application of complementary technologies and skills that fall outside of TiGenix' focus and expertise such as medicinal chemistry, rational drug design and small molecule development. With the spin-out of these activities into a new company, TiGenix will maximally leverage its small molecule drug
discovery assets without deviating from its core cell therapy focus.

KULeuven will contribute complementary know-how and intellectual property rights relating to a number of possible drug targets as well as new potential small molecule drugs and drug discovery expertise. UGent will contribute know-how and intellectual property rights relating to a class of preclinically validated compounds that have demonstrated cartilage anabolic activities in the joint. These assets will be merged with the Dutch drug discovery company Therosteon that has developed a similar high-content screening platform, OsteoBLASTT for the identification of compounds that have an effect on bone metabolism.
Therosteon's lead compound, follistatin is in advanced preclinical development. As such, Arcarios will start with a broad and balanced, preclinical stage pipeline of innovative products with disease modifying activity targeting joint and bone diseases.

The company will set-up R&D facilities in Diepenbeek, Belgium and is financially supported by a consortium of experienced early stage life science investors. The seed financing round was led by BioGeneration Ventures. Other investors include Erasmus Biomedical Fund, Gemma Frisius Fund, CD3, Baekeland Fund II, Credit Agricole and VINNOF.

Gil Beyen, CEO of TiGenix, comments 'This strong scientific and financial consortium forms the basis of a truly innovative drug discovery company that brings leading science in the field of bone and joint biology together. It's an excellent opportunity for TiGenix to maximize the long-term value of our expertise and know-how in cartilage biology outside our core competence in regenerative medicine.'

Tolleiv Trimborn, CEO of Arcarios commented 'By joining forces with TiGenix, UGent and KULeuven, Therosteon will be morphed into an innovative and powerful drug development company. Our unique approach is to develop new disease modifying therapeutics for diseases with high unmet medical need, based on true understanding of the underlying biology. The close involvement of the leading academic centers in Belgium and the Netherlands will ensure the rapid development of our lead molecules to a proof-of-concept stage in humans.'

For more information, please contact:
Gil Beyen
Chief Executive Officer TiGenix

Kris Motmans
TiGenix Corporate Development and Communication

T: +32 16 39 60 60

Tolleiv Trimborn
Chief Executive Officer Arcarios
T: +32 620 543 382

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