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:

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The requirement to perform additional clinical trials.



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



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



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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.



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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:

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



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The clinical development plans we establish for these product candidates.



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



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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.

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



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



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



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The effects of competing technological and market developments.



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



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



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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.



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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:

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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.



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Our commercial efforts in launching ChondroCelect.



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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:

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



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



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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).



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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:

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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:

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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.



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



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



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Changes in our expenditures to promote our products and services.



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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 and contractual obligations with Genetrix resulting from the acquisition of Coretherapix 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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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 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.

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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 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.

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        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 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.

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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:

        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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