Tissue Regenix Group Regulatory News (TRX)

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Tissue Regenix Group plc

("Tissue Regenix" or the "Company")

Placing to Raise £25 million ("Placing")

YORK, 8 December 2011 - Tissue Regenix Group plc (AIM: TRX), the regenerative medical device company, is pleased to announce a conditional placing of 181,818,182 new Ordinary Shares of 0.5p each ("Placing Shares"), at a price of 13.75 pence per share ("Placing Price") to raise £25 million before expenses (£24.2 million net of expenses).

Highlights

·; The Placing proceeds will potentially enable the Company to progress its key programmes through a range of key value inflection points;

- fund the development of further applications of the vascular patch through a mixture of preclinical and clinical studies;

- develop the porcine heart valve product and seek regulatory approval for a decellularised version of an existing bioprosthetic heart valve;

- progress existing meniscus project towards CE approval and initiate ligament development programme targeted at anterior cruciate ligament repair;

- progress the advanced woundcare area with the development of dermis products; and

- fund expanded teams in product development, quality assurance, regulatory affairs and manufacturing as well as overheads and costs of a planned move into larger premises.

·; The Placing Price represents a discount of approximately 2.7 per cent. to the closing mid-market share price of the Company on 7 December 2011;

·; The Placing has attracted both existing and new investors and includes a significant investment in the Company by Invesco Asset Management Limited;

·; The 181,818,182 Placing Shares will represent approximately 38.6 per cent. of the existing issued share capital of the Company prior to the issue of the Placing Shares;

·; The Placing is conditional, inter alia, on Resolutions being passed at a general meeting of the Company to grant the directors of the Company authority to allot the Placing Shares and disapply pre-emption rights in connection with the allotment of the Placing Shares; and

·; The Placing has been fully underwritten by Peel Hunt LLP who are acting as sole nominated adviser and broker.

John Samuel, Executive Chairman of Tissue Regenix, said:

"We are delighted to announce this material funding round which will transform our balance sheet and gives us the firepower to leverage our innovative technology platform. As well as allowing the Company to develop a range of products simultaneously following the established medical device regulatory route, this commitment from both existing and new investors is a significant endorsement of the commercial potential of our broad product pipeline. We are also pleased to note that the planned expansion of key teams will potentially lead to the creation of up to 30 high quality medical technology jobs in Yorkshire. The Directors continue to believe that our tissue products' ability to retain biomechanical and regenerative capabilities on implantation provides us with an attractive platform from which we aim to become a significant global player in regenerative medicine."

For further information please contact:

A full copy of the Circular in connection with the Placing is available on the Company's website: www.tissueregenix.com

(All defined terms are as set out in the Circular)

1. Background to the Placing

Since the Company was admitted to AIM in June 2010, the Company has continued to use its core dCELL® Technology as a platform to develop a series of products using the established medical device regulatory pathways to deliver a range of solutions for unmet clinical needs, such as, vascular disease, heart valve replacement and knee repair. In line with the strategy outlined in the Admission Document, the Company has secured regulatory approval for the dCELL® Vascular Patch in the EU and has applied for US approval via the 510k process. The Company is in dialogue with the FDA regarding additional data requests and the Company is due to respond to the latest questions raised by the FDA by 20 January 2012. Additionally, the Company has progressed the development of the dCELL® Meniscus to the preclinical stage and its development partner NHSBT has also commenced a pilot clinical trial assessing the use of decellularised human dermis in chronic wounds.

As part of its ongoing investor relations programme, the Company has undertaken a number of meetings with a number of institutional investors and it became clear that there was significant interest in the Company's core technology and commercialisation strategy. As a result, the Directors are proceeding with the Placing, the net proceeds of which will be used to develop a range of products simultaneously rather than one at a time which will ultimately enable the Company to advance its portfolio of products and opportunities more quickly.

Key to the Company's accelerated development strategy will be the selective use of funding to assist its NHS and academic partners' (including the PUCPR in Brazil) own research programmes to speed up proof of concept/translational work into the Company's product pipeline.

2. Use of proceeds

The specific areas to which the net proceeds of the Placing and the Company's existing cash resources will be applied are listed below however, these plans may change over time as a result of regular portfolio reviews undertaken by the Directors.

The net proceeds of the Placing and the Company's existing cash resources are expected to provide the Company with sufficient working capital which potentially enables the Company to progress its key programmes through a range of key value inflection points. Further details on the Company's anticipated news flow are set out in Figure 1 shown below.

Part of the Company's cash balances post the Placing will be used to fund the development of further applications of the vascular patch through a mixture of both preclinical and clinical studies, both of these being contingent on discussions with regulators and the Company's advisors. The proposed applications to be progressed are for neurosurgical, cardiac and general surgical uses the estimated cost of these programmes is approximately £6 million.

Following on from the Company's announcement of the licence agreement with PUCPR in April 2011, the Company entered the cardiac market and intends to build on this by developing a porcine heart valve product as well as seeking regulatory approval for a decellularised version of an existing bioprosthetic heart valve currently marketed by its development partner Cardioprotese Ltda. This programme is estimated to cost in the region of £5 million, the majority of which is to be applied to the porcine product.

Within the orthopaedic portion of the Company's programme the progression of the existing meniscus project towards CE approval and initiation of the ligament development targeted at anterior cruciate ligament repair will account for approximately £5 million of the Company's cash balances post the Placing.

Additional expenditure is envisaged in the advanced woundcare area with the development of the dermis products costing around £3 million. The current programme addresses chronic wounds with future applications such as burns being the secondary target.

US FDA trials in more complex opportunities such as cardiac and orthopaedics will not be funded from the Company's cash resources following the Placing. The Company proposes to reserve its options in terms of how to take such opportunities forward.

Finally, approximately £9 million will be used to fund expanded teams in product development, quality assurance, regulatory affairs and manufacturing as well as funding general corporate overhead and also to cover the costs of a planned move into larger premises and the Company is assessing both leasehold and freehold options.

Figure 1 - NEWSFLOW

3. Regulatory approvals

The Company has already completed development and achieved regulatory approval for one of its products. The rest of its portfolio as detailed above is at an early stage of development and there can be no assurance that any of the Company's current or proposed products will be successfully developed or commercialised.

Regulatory approval timelines can be affected by a number of factors such as trial recruitment rates, clinical results and changes to regulatory requirements which are substantially outside the control of the Company. The regulatory approval of Tissue Regenix's lead product in Europe is no guarantee for approval in the US. The FDA assesses each submission under its own criteria and there is no guarantee that it will approve the Company's application for approval of the dCELL® Vascular Patch. Similarly, in relation to the Company's discussions with the notified body in respect of the bioprosthetic heart valve no assumption of success can be made.

4. Details of the Placing

The Company has entered into the Placing Agreement with Peel Hunt and Peel Hunt has agreed (as the Company's agent) to use reasonable endeavours to procure placees for the Placing Shares at the Placing Price, and failing that, to subscribe for Placing Shares as principal. The Placing Price represents a discount of approximately 2.7 per cent. from the closing mid-market price on 7 December 2011, being the latest practicable date prior to the publication of this document.

The Placing, is conditional on, inter alia:

• the approval of the Resolutions at the GM;

• the Placing Agreement becoming unconditional in all respects and not having been terminated in

accordance with its terms; and

• Admission.

The Placing Shares will be issued credited as fully paid and will be identical to and rank pari passu in all respects with the existing Ordinary Shares, including the right to receive all future distributions, declared, paid or made in respect of the Ordinary Shares from the date of Admission. The Placing Shares represent approximately 27.9 per cent. of the enlarged issued ordinary share capital of the Company following the Placing.

The terms and conditions applicable to the Placing are set out in the Placing Agreement. The Placing Agreement contains certain warranties given by the Company concerning the accuracy of information given in this circular and other matters relating to the Group and its business. The Placing Agreement is terminable by Peel Hunt in certain circumstances up until the time of Admission, including, inter alia, should there be a material breach of a warranty contained in the Placing Agreement or a force majeure event takes place or a material adverse change occurs to the business of the Company or the Group.

The Company has also agreed to indemnify Peel Hunt against all losses, costs, charges and expenses which Peel Hunt may suffer or incur as a result of, occasioned by or attributable to the carrying out of its duties under the Placing Agreement.

In order to broaden Tissue Regenix' institutional shareholder base and to minimise the time and transaction costs of the Placing, the Placing Shares are only being offered to a limited number of existing and new institutional shareholders. The Placing Shares are not being made available to the public.

The Placing has attracted the support of both existing and new investors and includes a significant investment in the Company by Invesco Asset Management Limited ("Invesco") which has agreed to subscribe for 153,257,019 Placing Shares which, upon Admission, will result in Invesco holding approximately 23.5 per cent. of the Company's enlarged issued share capital. Existing investors, the University of Leeds and Techtran Group Limited (a subsidiary of IP Group plc), are also participating in the Placing.

Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. Admission is expected to become effective, and dealings in the Placing Shares to commence, on 29 December 2011.

It is expected that CREST accounts of the placees who hold their Ordinary Shares in CREST will be credited with their Placing Shares on 29 December 2011. In the case of placees holding Ordinary Shares in certificated form it is expected that certificates will be despatched on 17 January 2012. Pending despatch of the share certificates or the crediting of CREST accounts, the Registrar will certify any instruments of transfer against the register.

5. General Meeting

The Company is convening a General Meeting, to be held at the offices of DLA Piper UK LLP at Princes Exchange, Princes Square, Leeds LS1 4BY at 10.00 a.m. on 28 December 2011. At this meeting, the Resolutions will be proposed as set out in the Notice of GM which will be sent to shareholders later today.

Following the passing of the Resolutions referred to above, following the Placing and taking into account the Placing Shares being issued, the Directors will have the authority to allot, in aggregate, relevant securities up to a nominal amount of £781,831 (other than in respect of a rights issue), representing approximately 24.0 per cent. of the Company's then issued share capital.

The Directors do not, at present, intend to issue any share capital other than in connection with the Placing and, for the purposes of the share option schemes, the issue of Ordinary Shares to holders of options.

6. Overseas shareholders

The Placing Shares have not been and will not be registered under the Securities Act or under the securities laws of any state of the US and, subject to certain exceptions, may not be offered, sold, transferred, taken up or delivered, directly or indirectly, in the US.

7. Related party transaction

As at 7 December 2011 (the last practicable date prior to publication of this document), the Related Parties held the interests in the Ordinary Shares as set out in the table below representing in aggregate 24.2 per cent. of the Ordinary Shares in issue prior to the Placing. The Related Parties have agreed to subscribe for the number of Placing Shares set against their respective names in the table below. The Related Parties are related parties in accordance with the AIM Rules and the subscription by them for Placing Shares constitutes a related party transaction. Where a company enters into a related party transaction, under the AIM Rules, the independent directors of the company are required, after consulting with the company's nominated advisor, to state whether, in their opinion, the transaction is fair and reasonable in so far as its shareholders are concerned. Having consulted with Peel Hunt, the Company's nominated adviser, the Independent Directors believe that the participation by the Related Parties in the Placing is fair and reasonable in so far as Shareholders are concerned.

The AIM Rules do not prohibit the Related Parties from exercising the voting rights attached to their respective holdings of Ordinary Shares at the GM.

Save for the options set out above, neither Ian Jefferson nor John Samuel hold any options to subscribe for, nor warrants exercisable into, Ordinary Shares.

* Includes Techtran Group Limited, IP Venture Fund and IP2IPO Nominees Limited.

8. Recommendations and irrevocable undertakings

As the Related Parties are participating in the Placing and are related parties (as defined in the AIM Rules) (and because Alan Aubrey is a director of IP Group plc of which Techtran Group Limited and IP2IPO Nominees Limited are wholly owned subsidiaries and IP Venture Fund is managed by another wholly owned subsidiary), Alan Aubrey, Ian Jefferson and John Samuel are not independent directors for the purpose of the related party statement below.

The Directors consider that the Placing is in the best interests of the Company and its Shareholders as a whole. The Independent Directors, having consulted Peel Hunt, the nominated adviser to the Company, consider that the participation in the Placing by the Related Parties is fair and reasonable in so far as Shareholders are concerned.

The Directors recommend that you vote in favour of the Resolutions to be proposed at the General Meeting, as they have irrevocably undertaken to do in respect of their own beneficial holdings amounting to 34,408,643 Ordinary Shares representing approximately 7.3 per cent. of the existing issued ordinary share capital of the Company.

In addition to the Directors, certain other Shareholders have irrevocably undertaken to vote in favour of the Resolutions in respect of the Ordinary Shares in which they are interested, amounting, in aggregate to 322,269,022 Ordinary Shares, representing 68.5 per cent. of the existing issued ordinary share capital of the Company.

Copies of the circular will be available free of charge from the Company's website (www.tissueregenix.com) and at the offices of Peel Hunt, Moor House, 120 London Wall, London EC2Y 5ET during normal business hours on any weekday (public holidays excepted) up to and including 28 December 2011.