RISK FACTORS 4 Our current and future shareholders may experience dilution. our technology and products in the future. In particular, there may be unforeseen areas of technology over which the licensed Since incorporation, we have issued or allotted share warrants for rights, or any patents that issue from our pending applications, founders (Bons de souscription de parts de créateur d’entreprise, or may not extend and for which we may be unable to obtain rights BCE), share warrants (Bons de souscription d’actions, or BSA), free in the future. To the extent our licenses do not cover a relevant shares (Attributions gratuites d’actions, or AGA), and (Options de field or territory, the third-party licensor of applicable intellectual souscription ou d’achat d’actions, or SO). As of December 31, 2017, property rights may block our ability to develop or commercialize 703,303 BCE, 737,040 BSA, 957,000 AGA and 364,166 SO our technology and products in such field or territory unless we have been allotted (giving the right to subscribe for or acquire, are able to extend our license to cover such field or territory. respectively, 703,303, 737,040, 957,000 and 364,166 new Further, our licenses may not provide us with exclusive rights to shares) See Section 21.1.5.1, “Warrants” of this Registration use such intellectual property in all relevant fields of use and in all Document. territories in which we may wish to develop or commercialize our As of December 31, 2017, the exercise of all BCE, all BSA and technology and products in the future. As a result, we may not be al l SO and the definitive acquisition of al l AGA al lotted and able to prevent competitors from developing and commercializing outstanding wil l thus al low for a subscription or acquisition of competitive products in fields and/or territories included in our 2,761,509 new ordinary shares, generating a dilution of 10.23% licenses. based on fully diluted capital. In some circumstances, we may not have the right to control the Moreover, the exercise of delegations of authority granted to preparation, filing and prosecution of patent applications, or to the Board of Directors by the mixed general meeting of April 12, maintain or enforce the patents, covering technology that we 2018 to carry out one or more capital increases could lead to license from third parties. For example, pursuant to our intellectual additional dilution. See Section 21.1.5, “Other Securities Giving property license agreement with Adverum Biotechnologies, Inc., Access to Share Capital” of this Registration Document. or Adverum, Adverum retains control of such activities. Therefore, we cannot be certain that the Adverum patent applications will be As part of our policy to provide incentives for our executive prosecuted, maintained and enforced in a manner consistent with officers and employees, and in order to attract additional the best interests of our business. If our licensors fail to prepare, expertise, we may in the future issue or al lot shares or new file, maintain or enforce such patents or patent applications, or financial instruments giving access to our share capital, which lose rights to such patents or patent applications, the rights we could result in additional, potentially significant, dilution for our have licensed may be reduced or eliminated and our right to current and future shareholders. develop and commercialize any of our product candidates that are the subject of such licensed rights could be adversely affected. In addition, we face similar risks and uncertainties regarding our 4.8 pending patent applications and any other patent rights that we LEGAL RISKS AND RISKS RELATED TO OUR may own in the future. INTELLECTUAL PROPERTY In some circumstances, our license agreements provide that we We do not own any issued patents and our rights to develop and must grant, on a non-exclusive royalty-free basis, a license to the commercialize our product candidates are subject to the terms and licensor to exploit technological improvements we have made to conditions of intellectual property licenses granted to us by others. the licensed technology. Such “grant-back” provisions may limit our exclusive rights in technology we develop in-house, and so Although in 2016 we filed one patent application in the United may limit the extent to which we can prevent competitors from States and two patent applications in the European Union, we developing and commercializing competitive products relating to do not currently own any issued patents, and we are heavily those technologies. reliant upon licenses to certain patent rights and other intellectual property from third parties that are important or necessary to We also in-license certain patents owned by the Regents of the development and commercialization of our technology and the University of California pursuant to our license agreement products, including technology related to our manufacturing with Adverum and we in-license certain patent rights from the process and our gene therapy product candidates. Any of our Massachusetts Institute of Technology, or M.I.T. Under applicable patent applications may not be approved, and these intellectual law, to the extent that the research giving rise to the patents or property licenses and any patents that issue from these technology that we license was funded by the U.S. government, applications may not provide us with rights to use such intellectual the U.S. government may have certain rights, including (1) a property and technology in al l relevant fields of use and in al l non-exclusive, irrevocable, paid-up license to practice or have territories in which we may wish to develop or commercialize practiced such patents or technology on behalf of the United 44 – GENSIGHT BIOLOGICS – 2017 Registration Document