RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES 11 11.1 research programs. In addition, we allocate personnel-related OVERVIEW costs, depreciation and other indirect costs to specific programs. We engage in substantial research and development efforts Research and development activities are central to our business. to develop innovative product candidates. Research and Product candidates in later stages of clinical development development expense consists primarily of: generally have higher development costs than those in earlier • sub-contracting, collaboration and consultant expenses, that stages of clinical development, primarily due to the increased primarily include the cost of third-party contractors such as size and duration of later-stage clinical trials. We expect that CROs, who conduct our non-clinical studies and clinical trials; our research and development expenses wil l continue to increase in the foreseeable future as we initiate clinical trials for • personnel costs, including salaries, related benefits and share- certain product candidates and pursue later stages of clinical based compensation, for our employees engaged in scientific development of other product candidates. research and development functions; • licensing and intel lectual property costs, including upfront A change in the outcome of any of these variables with respect to payment for exclusive licensing; the development of GS010, GS030 or any other product candidate • purchases, real-estate leasing costs and rental income received that we are developing could mean a significant change in the from sublease agreements, as well as conferences and travel costs and timing associated with the development of such product costs; and candidates. For example, if the FDA, the EMA or other regulatory authority were to require us to conduct non-clinical and clinical • depreciation and amortization. studies beyond those which we currently anticipate will be required Our research and development expenses in the periods for the completion of clinical development, or if we experience presented, and for the current period to date, mainly relate to the significant delays in enrollment in any clinical trials, we could be following activities: required to spend significant additional financial resources and • GS010:Our Phase I/I I dose-escalation safety study for GS010 time on the completion of clinical development. For a discussion nitiated in 2014, recruitment was completed i April2015 on the risks associated with completing the development projects was i n on schedule, see Section 4.2, “Risks Related to the Discovery and a follow-up study is currently ongoing. GS010 entered into and Development of and Obtaining Regulatory Approval for Our two parallel Phase I I I trials, RESCUE and REVERSE, in the fourth Product Candidates” of this Registration Document. quarter of 2015, following the release of our IND, application by the FDA. The trials are designed as a double-masked, sham- controlled, multi-center, multi-country clinical trial in Europe and the United States. We completed enrollment of all 36 patients 11.2 for REVERSE in February 2017, and completed the enrollment RESEARCH AND DEVELOPMENT EXPENDITURES of 37 patients for RESCUE in July 2017. A hird Phase I I I trialt From 2016 to 2017, the total amount spent by us for research and was initiated in the fourth quarter of 2017, REFLECT. This trial development activity remained steady, from €18.5 million in 2016 is designed as a randomized, double masked, placebo-controlled, to €18.7 million as at December 2017. multi-center clinical trial. We plan to enroll 90 subjects, first subject is expected in the first quarter of 2018. Our research and development expenses for the periods • GS030: In 2015, we conducted preclinical, proof-of-concept presented, and for the current period to date, mainly relate to studies with different molecules that led to the definition of GS010 and GS030, see Section 9.3, “Results of Operations – GS030. We initiated GLP, toxicology studies on non-human Comparisons for the Twelve months Ended December 31, 2016 primates. We obtained the approval to initiate Phase I/I I and 2017 – Research and Development Expenditures” of this PIONEER clinical trials from MHRA in December 2017. We Registration Document. expect to treat the first patient in the United Kingdom in the Our research and development expenses consist principally of second quarter of 2018. external costs, such as manufacturing expenses, non-clinical Our direct research and development expenses consist principally studies, startup fees paid to investigators, consultants, central of external costs, such as manufacturing expenses, non-clinical laboratories and CROs in connection with our clinical studies, studies, startup fees paid to investigators, consultants, central costs related to acquiring and manufacturing clinical study laboratories and CROs in connection with our clinical studies, materials and costs related to collaborations, which we allocate to acquiring and manufacturing clinical study materials and costs our specific research programs. In addition, we allocate personnel- related to col laborations, which we al locate to our specific related costs and other indirect costs to specific programs. 130– GENSIGHT BIOLOGICS – 2017 Registration Document