RISK FACTORS 4 in the United States have begun to survey acquisition cost data for Even if a potential product displays a favorable efficacy and safety the purpose of setting Medicaid reimbursement rates, and CMS profile in preclinical studies and clinical trials, market acceptance has begun making National Average Drug Acquisition Cost and of the product will not be fully known until after it is launched. National Average Retail Price data publicly available on at least a monthly basis. Therefore, it may be difficult to project the impact Negative public opinion and increased regulatory scrutiny of gene of these evolving reimbursement metrics on the willingness of therapy may damage public perception of the safety of our product payors to cover candidate products that we or our partners are candidates. able to commercialize. We expect to experience pricing pressures Gene therapy remains a novel technology, and, to date, one gene in connection with the sale of any of our product candidates due therapy product has been approved in the United States and only to the trend toward managed healthcare, the increasing influence one has current approval in the European Union. Public perception of health maintenance organizations additional legislative changes may be influenced by claims that gene therapy is unsafe, and and downward pressure on healthcare costs in general. As a gene therapy may not gain the acceptance of the public or the result, increasingly high barriers are being erected to the entry of medical community. Our success wil l depend upon physicians new products such as ours. who specialize in the treatment of genetic diseases targeted by The commercial success of any of our product candidates will our product candidates, prescribing treatments that involve the depend upon their degree of market acceptance by physicians, use of our product candidates in lieu of, or in addition to, existing patients, third-party payors and others in the medical community. treatments for which greater clinical data may be available. For example, earlier gene therapy trials led to several well-publicized Our efforts to educate the medical community and third-party adverse events, including cases of leukemia and death seen in trials payors on the benefits of our product candidates may require using other vectors. Serious adverse events in our clinical trials, or significant resources and may never be successful. Such efforts other clinical trials involving gene therapy products, even if not may require more resources than are typically required due to ultimately attributable to the relevant product candidates, could the complexity and uniqueness of our potential products. If any result in increased government regulation, unfavorable public of our product candidates is approved but fails to achieve market perception, potential regulatory delays in the testing or approval acceptance among physicians, patients or third- party payors, of our product candidates, stricter labeling requirements for any we will not be able to generate significant revenues from such approved product candidates, and a decrease in demand for any product. such product candidates. The degree of market acceptance of our product candidates, if Our research and development activities could be affected or approved for commercial sale, wil l depend on several factors, delayed as a result of possible restrictions on animal testing. including: • the potential and perceived advantages of product candidates Certain laws and regulations require us to test our product over alternative treatments; candidates on animals before initiating clinical trials involving humans. Animal testing activities have been the subject of • the cost of treatment relative to alternative treatments; controversy and adverse publicity. Animal rights groups and other • patient awareness of genotyping; organizations and individuals have attempted to stop animal- • the willingness of physicians to prescribe new therapies; testing activities by pressing for legislation and regulation in • the wil lingness of the target patient population to try new these areas and by disrupting these activities through protests therapies; and other means. To the extent the activities of these groups are successful, our research and development activities may be • the prevalence and severity of any side effects; interrupted, delayed or become more expensive. • product labeling or product insert requirements of the FDA, the EMA or other regulatory authorities, including any limitations If we obtain approval to commercialize our product candidates or warnings contained in a product’s approved labeling; outside of the United States or the European Union, we would be subject to additional risks associated with international operations. • relative convenience and ease of administration; • the strength of marketing and distribution support; Upon completion of our RESCUE and REVERSE Phase I I I clinical • the timing of market introduction of competitive products; trials of GS010 for the treatment of LHON, if successful, we intend to meet with the FDA and apply for Fast Track Designation, which, • publicity concerning our products or competing products and if granted, would allow us to file a BLA and seek an accelerated treatments; and approval pathway. In addition, we expect that the results of our • sufficient third-party payor coverage and adequate Phase I I I RESCUE and REVERSE trials, if successful, wil l be reimbursement. sufficient to support filing for marketing authorization in the 36 – GENSIGHT BIOLOGICS – 2017 Registration Document