OPERATING AND FINANCIAL REVIEW 9 are deposited primarily in savings and money market and time funded according to a specified schedule set forth in the contract, deposit accounts with original maturities of three months or less. subject to completion of milestones. As the program advances, we We expect our savings and deposit accounts and marketable will provide Bpifrance Financement with interim progress reports securities to generate a modest amount of interest income. and a final report when the funded project ends. Based on these reports, we are entitled to conditional advances from Bpifrance 9.2.5 CRITICAL ACCOUNTING POLICIES AND Financement. ESTIMATES Each award of an advance is made to help fund a specific Our consolidated financial statements are prepared in accordance development milestone. The total amount of the conditional with IFRS. Some of the accounting methods and policies used advances granted was €5.7 million, of which €678 K was received in preparing our financial statements under IFRS are based on in December 2014 and €2.3 million was received in July 2016 and complex and subjective assessments by our management or on recognized as non-current liabilities in our statement of financial estimates based on past experience and assumptions deemed position, as this conditional advance is repayable by us according realistic and reasonable based on the circumstances concerned. to a repayment schedule. The actual value of our assets, liabilities and shareholders’ equity Our contract with Bpifrance Financement sets forth a repayment and of our earnings could differ from the value derived from these schedule that totals €6.5 million. Following the repayment of the estimates if conditions change and these changes had an impact conditional advances, we may be required to make additional on the assumptions adopted. We believe that the most significant payments over a period of two years of up to €2.7 mil lion management judgments and assumptions in the preparation (€1.2 mil lion the first year and €1.6 mil lion the second year), of our financial statements are described below. See Note 3 depending on whether we reach cumulative revenues, excluding to our consolidated financial statements for the period ended taxes, of €80.0 mil lion by 2037. Our obligation to repay these December 31, 2017 for a description of our other significant amounts is based on the technical and commercial success of accounting policies. the funded program, as determined by the revenue forecasts Licenses Recognized as Intangible Assets or revenues deriving from direct or indirect exploitation of the As of December 31, 2013, we recorded an intangible asset products and results of our optogenetics technology platform. In relating to exclusive in-licenses for two patent families from the event Bpifrance Financement determines that the program is Novartis Pharma AG. We issued 670,588 ordinary shares as not successful, Bpifrance Financement will meet with us to assess consideration paid for the exclusive licenses. Given that the fair the impact on the repayments and the repayment schedule. value of the licenses cannot be reliably estimated, in accordance Actual results related to the development of these programs with IFRS2 Share-based Payment, or IFRS2, the amount of the may differ from these estimates in which case the financial intangible asset being recognized was determined by reference liability reflected in our consolidated financial statements for to the fair value of the ordinary shares that we issued based on the conditional advances may be reduced. The current and an independent valuation. The licenses are being amortized over non-current portions of the financial liability recognized in 15 years from February 2013, the date the licenses was entered our consolidated financial statements associated with these into, which corresponds to the expected useful life of the licenses. conditional advances are determined based on the applicable Conditional Advances reimbursement schedules at the end of each reporting period and measured using the effective rate method. The portion of the In 2014, we received a grant from Bpifrance Financement of both conditional advances for terms longer than one year are classified subsidies and conditional advances in relation to the development as non-current liabilities while the portion for terms of less than of our optogenetics technology platform. The program will be one year are classified as current liabilities. GENSIGHT BIOLOGICS – 2017 Registration Document– 117