Tissue Regenix Group Regulatory News (TRX)

Tissue Regenix Group plc

Preliminary results for the year ended 31 January 2015

Successful launch of DermaPure®

EU approval for start of OrthoPure™ XM clinical trial

Continued strong cash position

YORK, 11th May 2015 - Tissue Regenix Group plc (AIM:TRX) ("Tissue Regenix" or "the Group"), the regenerative medical devices company, today announces its unaudited preliminary results for the year ended 31 January 2015.

Operational Highlights

During the year, the Group:

· Launched DermaPure® (decellularised human dermis) in June into the US acute care chronic wound market.

o Outstanding clinical results from DermaPure® from initial US clinical use

o Secured 'Q' code as a preliminary to obtaining Medicare reimbursement for non-acute care

o Deployed direct salesforce to work alongside distributor network

o Peer-reviewed paper published showing superior healing compared to competition in acute (surgical) wounds

o Clinical trials for DermaPure® in other geographies continue to be encouraging

· Gained approval to start OrthoPure™ XM (porcine meniscus) clinical trial in the EU

· Secured grant of several important patents including meniscus in the US

· Board and Company structure reflects growing commercial focus

Financial Highlights

· Strong cash position with a balance of £10.3m at the year-end (2014: £18.5m)

· Operating loss for the year of £8.4m as expected (2014: £6.6m) reflecting the ramp up of infrastructure to support US commercial activities and progression of product development

· Ongoing submission of enhanced research and development tax claims - expected refund for the year of £620k (2014: £710k)

· £19.0m, net of expenses, raised post year-end via share placing

Antony Odell, Tissue Regenix's Chief Executive Officer, commented:

"The year ended 31 January 2015 was a year of real progress for Tissue Regenix. We are delighted, not only with the continued drive towards the commercialisation of DermaPure®, but also the highly encouraging early-stage results from our portfolio of other products.

These developments validate our strong belief that our dCELL® technology has the capacity and capability to address significant markets and improve the treatment and recovery of millions of patients per year.

We have continued this strong momentum into the new financial year, with approval from Novitas for usage and reimbursement of DermaPure® for Medicare patients in the post-acute and outpatient setting being a significant development in the US. Similarly the commencement of the UK arm of the EU clinical trial for OrthoPure™ XTrepresents an important step in bringing our tendon and meniscus products to market.

I look forward to the coming year with real confidence. DermaPure® looks set to repay the considerable financial & intellectual capital investment that has been made in its development, and current progress give us confidence that our pipeline of other products will progress successfully through clinical trials."

Enquiries

About Tissue Regenix

Tissue Regenix is a leading medical devices company in the field of regenerative medicine. The company's patented decellularisation ('dCELL®') technology removes DNA and other cellular material from animal and human tissue leaving an acellular tissue scaffold which is not rejected by the patient's body and can then be used to repair diseased or worn out body parts. The potential applications of this process are diverse and address many diverse critical clinical needs of which vascular disease, heart valve replacement and knee repair are only the first.

Tissue Regenix was formed in 2006 when it was spun-out from the University of Leeds. The company commercialises academic research conducted by our partners around the World.

In November 2012 Tissue Regenix Group plc set up a subsidiary company in the United States- 'Tissue Regenix Wound Care Inc.', as part of its commercialisation strategy for its dCELL® technology platform.

Chairman's Statement

Overview

FY15 was an important year for Tissue Regenix, during which the Group launched its first product, DermaPure®, into the US market, backed by strong results from the UK clinical trial and supported by an experienced team of dedicated sales & marketing personnel across the US.

Further products using our proprietary dCELL® technology are in advanced stages of development and are proceeding through/towards human clinical trials. Our strategy to commercialise our patented technology by finding multiple clinical applications for them is on track, and we expect early revenues in calendar 2016.

In short, FY15 has taken us a step closer to reaching our ambition to become a world leader in regenerative medicine, with a range of products addressing existing markets that are already of very significant scale and which are growing.

More details of our product pipeline, and the markets they address, are included in the Chief Executive's review below.

dCELL® Technology

At the heart of Tissue Regenix lies our patented dCELL® process which removes all DNA and cellular material from animal or human tissue which is similar or identical to the treatment needed. Once the dCELL® process is completed, we are left with a tissue 'scaffold' which can be used in a variety of ways to repair damage - sustained through injury or degeneration - to various parts of the human body. The scaffold we produce allows the patient's body to heal successfully by attracting the patient's own stem cells to populate it since it's almost identical to the tissue to be replaced. Because of the dCELL® process the elements of the source that could cause rejection have been removed before the tissue is applied. Our products can be stored at room temperature, have good shelf lives and are developed so the clinician can use existing methods to apply to their patients.

Board of Directors

Although the composition of the Board of Directors has not changed during the year, the focus of those on the Board has shifted from Research and Development towards implementing a successful commercialisation strategy. Our primary focus is on DermaPure® which is now being aggressively marketed across the US. A similar strategy for marketing our OrthoPure™ products in Europe, once CE marks have been granted, is also in development under the stewardship of the Board.

In February we announced the resignation from the Board of Dr Alison Fielding. I would like to put on record my thanks to Alison for her contribution to the development of Tissue Regenix over the past decade, including her two years on the Board. She leaves the Company with our very best wishes. We are currently actively seeking a replacement.

Outlook

Since the year end, the company raised net proceeds of £19 million in February 2015 from existing and new investors via a share placing, which represents a significant endorsement of our products and strategy by our shareholders.

It is intended that the new money we have raised will be used to allow the development and launch of our human meniscus and ligament products in the US, the further expansion of our salesforce for DermaPure® in the US and the continued development and commercialisation of the Group's porcine-derived products in Europe.

We expect FY16 to be another exciting year for Tissue Regenix in which the ground work from our commercialisation strategy for DermaPure® begins to be reflected in sales from a diverse range of customers. In particular, DermaPure® will benefit from our investment in an expanded direct salesforce to work alongside third party distributors, and we are anticipating seeing customer relationships convert into orders in the near future.

Our drive to commercialise OrthoPure™ based products will continue. We anticipate applying for a CE mark for OrthoPure™ XM in H1 calendar 2016 to allow the launch in the EU later that year.

Similarly, the EU trial for our ligament product will commence shortly with a plan to recruit 40 patients in the UK, Spain and Germany. The application for a CE mark, which will allow us to market this product across Europe, will take place soon after the patients have been recruited. Under this timetable, our plan is to roll out both the Porcine Meniscus and Ligament products following approval.

Tissue Regenix benefits from having a range of therapeutic uses for its core technology. With encouraging initial responses from customers to our first commercial wound care product and further strong clinical data coming through for our decellularised human heart valves in Cardiac, we look forward to the future with confidence.

John Samuel

Chairman

11 May 2015

Chief Executive's Review

Overview

During the year to 31st January 2015 Tissue Regenix made significant strides in bringing a number of products towards commercialisation. We are deliberately phasing the trial and commercial launch of these products in order to ensure that we can give enough management focus and investment to ensure that they address their markets successfully.

Financial Review

We ended the financial year in a strong position, with cash balances of £10.3m (2014: £18.5m). Post year-end a further cash injection of £19.0m (net of expenses) was received via the placing of new shares completed during February 2015. Our cash balances give us sufficient headroom to drive the commercialisation of our first product, DermaPure®, in the US, while investing in additional products across a range of clinical applications in the US and Europe. As expected we made a loss after tax of £7.6m (2014: £5.6m) for the year as we continued to invest heavily in development as well as into building the necessary infrastructure to market our products in the US. We continue to anticipate losses in the coming year as we invest more in our future.

The Group continues to manage its cash resources to maximise interest income whilst at the same time minimising any risk to these funds. A balance of working capital and short to medium term deposits are maintained.

The Group continues to submit enhanced research and development tax claims and elects to exchange tax losses for a cash refund. The refund expected for the year to 31 January 2015 is £620k (2014: £710k).

DermaPure®

Sales Pipeline Progress

As anticipated, we launched our first product of scale - DermaPure® - at the end of June 2014. Although we expect a 6-18 month sales cycle to achieve the hospital approval that will allow DermaPure® into clinical supply chains, initial responses from hospital groups, driven by the direct sales force in the US, have been encouraging.

Code + Coverage = ReimbursementWe have also made significant headway with regulatory approvals and clinical trials for DermaPure®, which have allowed us to commercialise it further. We successfully secured a 'Q' code which is a step that allows us the potential to offer DermaPure® to non-acute wound patients in the US - a far larger pool of potential beneficiaries than we are addressing currently. The 'Q' code allows us to apply for coverage for DermaPure® for Medicare. This is the final piece needed for reimbursement, especially in outpatient facilities, unlocking the largest potential group of US patients who would be unable to access our products without it.

Excellent US Clinical Outcomes

Clinical results for DermaPure® continue to be extremely encouraging, with very strong clinical results from our KOL's (Key Opinion Leaders) and a number of individual case studies. We presented initial data from a clinical trial conducted with the University Hospital of South Manchester NHS Foundation Trust at the Symposium on Advanced Wound Care in Las Vegas. This demonstrated improved healing over control patients in a new application for acute wounds, which showed DermaPure® outperforming the current market leading approaches. We initiated a US randomised clinical trial at the end of the year with a focus on patients with diabetic foot ulcers which we expect, once completed, to give further evidence of the clinical strength of our product.

Other Products

At a time when the commercialisation of DermaPure® has started to achieve traction, we have continued to develop other therapeutic applications of our core dCELL® technology.

Our OrthoPure™ category, which applies the technology into orthopaedic applications, is in advanced development. OrthoPure™ XM, our porcine meniscus product, which will be used to repair damage from 'tears' in the meniscus knee cartilage as a result of acute injury or degeneration, has seen further progress towards our goal of commercialisation.

The patent portfolio also strengthened over the period with notices of allowance for the meniscus patent being received from the People's Republic of China in April 2014 and from the US in November 2014. In July 2014 we announced that we had received approval from the Medicines and Healthcare Products Regulatory Agency to start the UK arm of the EU clinical trial of this technology. Recruitment for the 60 patients who will make up this study, which will take place in the UK and Poland, is well underway. This clinical study represents a significant milestone in the process towards gaining EU approval (signified by a CE Mark) which will enable full commercialisation of the product and allow it to be used by clinics and doctors to address a substantial clinical need across the EU.

Orthopure™ XT, our tendon product, is aimed at the significant market for anterior cruciate ligament repairs. We have initiated applications to conduct a clinical study with patients recruited in the UK, Spain and Germany. We hope that this study will lead to a CE mark application and commercialisation. Orthopure™ XT and Orthopure™ XM are complementary products, which may well ultimately be used to treat the same patient who is suffering from complex knee injuries. Once CE Marks have been obtained we will be able to market them together, providing useful synergies.

The CardioPure™ HV product has also seen significant progress during the year. This product takes donor heart valves and uses the dCELL® process to remove the donor's DNA to produce an inert scaffold which can be re-populated by the recipient's own cells. It provides a more durable repair in heart valve replacement surgery and brings significantly reduced risk of rejection and infection.

In September 2014 we presented the findings of a study into the performance of this product in clinical trials at the 6th Biennial Heart Valve and Tissue Engineering Meeting in London. The findings of this study showed no reoperations necessary in the study group, better valve performance, and no calcification. We presented an update on the trial at the 28th Annual Meeting of the European Association of Cardio Thoracic Surgery in Milan in October of this year. This showed that after 7 years of the trial's commencement, freedom from reoperation in the high risk group that constituted the trial sample was as high as 94% - a dramatic improvement on the performance of the artificial valves which are the current preferred route to treat patients in this category. Although evaluations, conducted with our long-term clinical collaborator Professor Francisco da Costa are continuing, we believe these results show great promise for the CardioPure™ HV technology.

Overall we have an extensive programme of commercial development activities at various stages that will enable the full potential of the wound care & sports medicine products to be more visible in the coming months. TR's multiple market approach means we are addressing significant opportunities with products that redefine the clinical approach and outcomes for patients.

Current trading and outlook

Tissue Regenix has made progress in several respects in the period since year-end. In particular we were very pleased to achieve Local Coverage Determination from the Medicare Administrative Contractor, Novitas, in March.

The Medicare programme in the United States is administered by bodies such as Novitas, each one with their own jurisdiction of states. When coverage is approved it allows the product to be purchased by medical establishments and to be used to treat post-acute and outpatients who are beneficiaries of the Medicare initiative. The Novitas jurisdiction covers the states of Colorado, New Mexico, Oklahoma, Texas, Louisiana, Mississippi, Arkansas, Washington DC, Delaware, Maryland, New Jersey and Pennsylvania with total health care coverage of 8.9 million people. While the approval process takes some time to complete, being granted Novitas coverage gives the Board confidence that similar outcomes can be achieved across the 7 other jurisdictions, covering the approximately 28 million people across the country who are covered by Medicare; a significant potential market.

Subsequent to the achievement of the Local Coverage Determination we signed a new regional distribution agreement for DermaPure®. This major new contract has been signed with an experienced surgical and wound care distribution network; the contract covers two of the twelve states that comprise the region covered by the Novitas reimbursement Local Coverage Determination notice and represents approximately 11% of the Medicare patients addressed by the notice. The contract is expected to be worth a minimum of $600k over the next 12 months and provides for additional areas to be covered by mutual agreement.

In addition, we recently announced approval for the first clinical trial of our decellularised tendon device, OrthoPure™ XT, for surgical reconstruction of a torn Anterior Cruciate Ligament in the knee. This is an important step in bringing this device to a market that affects 900,000 people per year globally and which is growing at a CAGR of 7%. We were delighted that this followed so swiftly after our March announcement that, for the first time, a patient had received a partial knee meniscal replacement using Tissue Regenix's OrthoPure™ XM. Both achievements are crucial steps towards being granted CE Marks.

This continued progress demonstrates the speed at which our portfolio is developing and I look forward to updating the market on further achievements in due course.

Antony Odell

Chief Executive Officer

11 May 2015

The loss for the period arises from the Group's continuing operations.

Approved by the Board and authorised for issue on 11 May 2015

John Samuel (Chairman) Ian Jefferson (Chief Financial Officer)

The Company's annual report and accounts for the year ended 31 January 2015 have been published today and will be posted to shareholders shortly. The annual report and accounts are also available in electronic form for download on the Company's website, www.tissueregenix.com.

NOTES TO THE FINANCIAL STATEMENTS

1. Basis of preparation

The preliminary results of the year ended 31 January 2015 have been extracted from audited accounts which have not yet been delivered to the Registrar of Companies. The Financial Statements set out in this announcement do not constitute statutory accounts for the year ended 31 January 2015. The report of the auditors on the statutory accounts for the year ended 31 January 2015 was unqualified and did not contain a statement under Section 498 of the Companies Act 2006. The Financial Statements for the year ended 31 January 2015 included in this announcement were authorised for issue in accordance with a resolution of the Board of Directors on 11 May 2015.

The Company is a limited liability company incorporated and domiciled in England & Wales and whose shares are quoted on AIM, a market operated by The London Stock Exchange.

2. Significant accounting policies

The Group's financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union as they apply to the financial statements of the Group for the year ended 31 January 2015 and applied in accordance with the Companies Act 2006.

The accounting policies adopted are consistent with those followed in the preparation of the audited financial statements of Tissue Regenix Group Plc for the year ended 31 January 2015 and are disclosed in those statements.

3. Segmental reporting

At 31 January 2015, the Group operated in one business segment, that of the development and commercialisation of innovative platform technologies in the field of tissue engineering and regenerative medicine.

The Group operates in two geographic sectors, the UK and the USA. A split of the expenses and assets is included below:

*Expenses of £1,725k incurred in USA recharged to UK parent

**Expenses of £962k incurred in USA recharged to UK parent

NOTES TO THE FINANCIAL STATEMENTS continued

4. Taxation

The Group has accumulated losses available to carry forward against future trading profits of £16,121k (2014: £10,226k). No deferred tax asset has been recognised in respect of tax losses as their recoverability is uncertain. The unrecognised deferred tax asset would equate to £3,224k (2014: £2,045k).

5. Loss per share (basic and diluted)

Basic loss per share is calculated by dividing the loss attributable to equity holders of the parent by the weighted average number of ordinary shares in issue during the year excluding own shares held jointly by the Tissue Regenix Employee Benefit Trust and certain employees. Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares in issue during the year to assume conversion of all dilutive potential ordinary shares.

The Company has issued employee options over 21,956,458 ordinary shares and there are 16,940,386 jointly owned shares which are potentially dilutive. There is however, no dilutive effect of these issued options as there is a loss for each of the years concerned.

6. Share Capital

NOTES TO THE FINANCIAL STATEMENTS continued

7. Movement in retained earnings and reserve for own shares

8. Annual report and accounts

The Company's annual report and accounts for the year ended 31 January 2015 have been published today and will be posted to shareholders shortly. The annual report and accounts are also available in electronic form for download on the Company's website, www.tissueregenix.com.