ANNEX 1 27 3.NOTES TO THE FINANCIAL STATEMENTS On August 1, 2017, GenSight Biologics announced that enrollment in RESCUE, a Phase I I I clinical trial of GS010 in the The annual financial statements for the year ended December 31, treatment of Leber’s Hereditary Optic Neuropathy (LHON), has 2017 have been prepared in accordance with French accounting been successfully completed. rules in compliance with the principle of prudence and independence of exercises, and assuming the going concern. On December 5, 2017, GenSight Biologics reported positive long- term visual acuity gains and safetyresults from Phase I/I I Study of The financial statements have been prepared in accordance with GS010 for the treatment of Leber Hereditary Optic Neuropathy the France’s accounting standard Authority (Autorité des Normes (LHON) – sustained clinically significant improvement of visual Comptables– ANC) Regulation n°2016-07 relating to the French acuity at 2.5 years of follow-up in LHON patients with less than general chart of accounts, defined by ministerial decree dated on 2 years of onset of visual loss prior to treatment and confirmation December 26, 2016, in accordance with Articles L.123-12 and of the favorable long-term safety profile of GS010. seq. of the French Commercial Code (Code de Commerce and) On December 22, 2017, the Company received MHRA (UK pursuant to the provisions of the accounting regulations revising Medicines and Healthcare Regulatory Agency) approval to the French general chart of accounts established by the France’s accounting standards Authority. initiate Phase I/I I PIONEER clinical trial of GS030 gene therapy in Retinitis Pigmentosa. MAIN EVENTS OF THE FISCAL YEAR EVENTS AFTER THE CLOSE OF THE FISCAL YEAR On January 31, 2017, GenSight Biologics announced that the U.S. None. Food and Drug Administration (FDA) has granted orphan drug designation (ODD) to the Company’s product candidate GS030 for the treatment of retinitis pigmentosa. ACCOUNTING PRINCIPLES Non-current assets On February 21, 2017, GenSight Biologics announced that enrollment in REVERSE, a Phase I I I clinical trial of GS010 in the Tangible and intangible assets are recorded at the contribution treatment of Leber’s Hereditary Optic Neuropathy (LHON), has value or at their original purchase price. been successfully completed. Depreciation of tangible assets is calculated using the straight-line On April 28, 2017, GenSight Biologics created its first subsidiary, method to take into account the economic depreciation of fixed GenSight Biologics Inc., registered and located in the United assets. States of America. At the closing of the accounts, whenever events or market developments suggest the need for impairment of intangible On June 14, 2017, GenSight Biologics reported additional and tangible assets, expected future revenues of the activity promising clinical trial results with GS010 after 96 weeks of are compared to the net value of its assets. If applicable, the follow-up in its Phase I/I I study. These results confirm the long- corresponding assets are written down to bring them to their fair term positive sustained visual acuity gain after 2 years with a value. single intravitreal injection of GS010 in patients with Leber’s Hereditary Optic Neuropathy (LHON), especially in those with Intangible assets less than 2 years of disease onset. Research costs are recorded in the financial statements as On June 27, 2017, GenSight Biologics operated a capital increase expenses. whose gross proceeds amounted to €22.5 million, by means of Development costs are recognized in the financial statements as a private placement reserved to a category of persons, US and intangible assets only if all the following criteria are met: European institutional investors specialized in healthcare and • It is technically feasible to complete the development of the biotechnology. The majority of the new shares were al located project; to US investors. This increase corresponds to 3,750,000 new • Intention of the Company to complete the project and to utilize it; shares, par value €0.025 each. • Capacity to utilize the intangible asset; The funds raised will be allocated to prepare for the commercial launch of GS010 in Europe and the United States, notably • Proof of the probability of future economic benefits associated initiating marketing and market access activities, as well as the with the asset; establishment of a marketing infrastructure. The funds wil l • Availability of the technical, financial and other resources for strengthen the cash position of the Company and enhance the completing the project; and Company’s financial visibility until Q1 2019. • Reliable evaluation of the development expenses. GENSIGHT BIOLOGICS – 2017 Registration Document – 247