RISK FACTORS 4 and regulations, which have tended to become more stringent effect on global economic conditions and the stability of global over time. These current or future laws and regulations may financial markets, and could significantly reduce global market impair our research, development or production efforts. Failure liquidity and restrict the ability of key market participants to to comply with these laws and regulations also may result in operate in certain financial markets. In particular, it could also substantial fines, penalties or other sanctions or liabilities, which lead to a period of considerable uncertainty in relation to the could materially adversely affect our business, financial condition, U.K. financial and banking markets, as well as on the regulatory results of operations and prospects. process in Europe. As a result of this uncertainty, global financial Unfavorable global economic conditions could adversely affect our markets could experience significant volatility, which could business, financial condition or results of operations. adversely affect the market price of our ordinary shares. Asset valuations, currency exchange rates and credit ratings may also be Our results of operations could be adversely affected by general subject to increased market volatility. Lack of clarity about future conditions in the global economy and in the global financial U.K. laws and regulations as the United Kingdom determines markets. The most recent global financial crisis caused extreme which European Union rules and regulations to replace or volatility and disruptions in the capital and credit markets. A severe replicate in the event of a withdrawal, including financial laws or prolonged economic downturn, such as the most recent global and regulations, tax and free trade agreements, intel lectual financial crisis, could result in a variety of risks to our business, property rights, supply chain logistics, environmental, health and including weakened demand for our product candidates and our safety laws and regulations, immigration laws and employment ability to raise additional capital when needed on acceptable laws, could decrease foreign direct investment in the United terms, if at al l. This is particularly true in the European Union, Kingdom, increase costs, depress economic activity and restrict which is undergoing a continued severe economic crisis. This our access to capital. If the United Kingdom and the European could lead to a period of considerable uncertainty, particularly in Union are unable to negotiate acceptable withdrawal terms or if relation to global financial markets which in turn could adversely other EU MemberStates pursue withdrawal, barrier-free access affect our ability to raise additional capital. A weak or declining between the United Kingdom and other EU Member States or economy could strain our suppliers, possibly resulting in supply among the European Economic Area overall could be diminished disruption, or cause delays in payments for our services by third- or eliminated. party payors or our collaborators. Any of the foregoing could harm We may also face new regulatory costs and challenges that could our business and we cannot anticipate all of the ways in which the have an adverse effect on our operations. Depending on the current economic climate and financial market conditions could terms of Brexit, the United Kingdom could lose the benefits of adversely impact our business. global trade agreements negotiated by the European Union The United Kingdom’s vote in favor of withdrawing from the on behalf of its members, which may result in increased trade European Union may have a negative effect on global economic barriers that could make our doing business in Europe more conditions, financial markets and our business and make it more difficult. In addition, currency exchange rates in the euro and the difficult to do business in Europe. pound sterling with respect to each other and the U.S. dollar have In June 2016, a majority of the eligible members of the electorate already been adversely affected by Brexit. in the United Kingdom voted to withdraw from the European We and our third-party collaborators may be adversely affected by Union in a national referendum (commonly referred to as “Brexit”). natural disasters and our business continuity and disaster recovery The withdrawal of the United Kingdom from the European Union plans may not adequately protect us from a serious disaster. wil l take effect either on the effective date of the withdrawal agreement or, in the absence of agreement, two years after the Natural disasters could severely disrupt our operations or the United Kingdom provides a notice of withdrawal pursuant to operations of our suppliers’ manufacturing facilities and have Article 50 of the EU Treaty, unless the European Council, in a material adverse effect on our business, financial condition, agreement with the United Kingdom, unanimously decides to results of operations and prospects. If a natural disaster, power extend this period. On March 29, 2017, the U.K. Prime Minister outage or other event occurred that prevented us from using all formally delivered the notice of withdrawal. It appears likely that or a significant portion of our headquarters, that damaged critical this withdrawal wil l involve a process of lengthy negotiations infrastructure, such as our suppliers’ manufacturing facilities, between the United Kingdom and EU Member States to or that otherwise disrupted operations, it may be difficult or, in determine the future terms of the United Kingdom’s relationship certain cases, impossible for us to continue our business for a with the European Union. substantial period of time. The disaster recovery and business continuity plans we or our collaborators have in place currently These developments, or the perception that any of them could are limited and may not prove adequate in the event of a serious occur, have had and may continue to have a significant adverse disaster or similar event. We may incur substantial expenses as a 42 – GENSIGHT BIOLOGICS – 2017 Registration Document