GenSight Biologics obtains a €7m non-dilutive loan and renegotiates the bond agreement with Kreos Capital extending runway to mid-2021

Paris, France, July 9, 2020, 7.30 am CEST – GenSight Biologics (Euronext: SIGHT, ISIN: FR0013183985, PEA-PME eligible) (“GenSight” or the “Company“), a biopharma company focused on discovering and developing innovative gene therapies for retinal neurodegenerative diseases and central nervous system disorders, today announced that it obtained a €6.75 million loan from a bank syndicate formed with Crédit Industriel et Commercial (CIC), BNP Paribas and Bpifrance, in the form of a state-guaranteed loan (Prêt Garanti par l’Etat) (the “PGE“).

“The PGE loan and the second tranche of Kreos bonds will provide us with over €10 million of aggregated cash with practically no dilution to existing shareholders,” commented Thomas Gidoin, Chief Financial Officer of GenSight Biologics. “Together with anticipated revenues from the Temporary Authorization for Use of LUMEVOQ^® in France, we expect to be financed until at least mid-2021.”

Initiated by the French Government to support companies during the COVID-19 crisis, the PGE is a bank loan with a fixed interest rate ranging from 0.25% and 1.75%. After an initial interest-only term of one year, the loan can be amortized over up to five years at the option of the Company. The French government guarantees 90% of the borrowed amount.

In parallel with this financing, GenSight has amended certain terms and conditions of the bond agreement with Kreos Capital which was announced by the Company on December 20, 2019 and which included two main tranches (the “Kreos Transaction“). The first tranche of €6 million in straight and convertible bonds was drawn in December 2019 (“Tranche A“). The second tranche of €4 million in straight and convertible bonds was available to be drawn through September 2020, conditioned on GenSight obtaining a qualifying financing (“Tranche B“). Following the grant of the PGE and the amount of revenues anticipated to be generated from Autorisations Temporaires d’Utilisation payantes (“ATUs“), the parties have agreed that Tranche B may be drawn in the coming weeks under more flexible conditions and no longer conditioned to the initial qualifying financing. Although the total amount of €4 million for Tranche B remains unchanged, the proportion between straight bonds and convertible bonds has been amended to include additional convertible bonds B and fewer straight bonds B, as further described below. Kreos also agreed to extend the interest-only period to December 2020. The Kreos Transaction also provided for a possible third tranche of €2 million which could be made available at a later date.

Key characteristics of the amended Tranche B of the Kreos Transaction

Tranche A of the Kreos Transaction comprised of 420,000,000 straight bonds with a nominal value of €0.01, 1,800,000 convertible bonds with a nominal value of €1 and 534,521 warrants, was drawn on December 23, 2019. With an unchanged 45-month maturity, the 420,000,000 straight bonds featured a nine-month interest-only period which has now been extended to twelve months. To date, the convertible bonds and the warrants issued under Tranche A are still outstanding and exercisable in light of market conditions.

Tranche B, which was to be composed initially of either 400,000,000 straight bonds with nominal value of €0.01 (the “Straight Bonds B“), or, at Kreos’ option, a combination of 280,000,000 Straight Bonds B, 1,200,000 convertible bonds with a nominal value of €1 (to be deducted from the amount of the straight bonds) (the “Original Convertible Bonds B“) and 133,630 warrants (the “Warrants B“), was subject to the realization of certain conditions precedent, including the completion of a qualifying financing. Following the grant of the PGE and an expected increase in revenue from the ATUs, the parties have agreed that Tranche B may be drawn as soon as the 5^th ATU is granted in the coming weeks.

In addition, the Company and Kreos have agreed that Kreos would have the option that Tranche B consist of 250,000,000 Straight Bonds B, 1,200,000 Original Convertible Bonds B, 133,630 Warrants B and an additional 300,000 convertible bonds with a nominal value of €1 (the “Additional Convertible Bonds B“), which would be issued pursuant to the 19^th resolution of the combined general meeting held on April 29, 2020.

As a result of these changes, Tranche B will be available for drawdown for a total amount remaining at €4 million (as further described in the table below). As disclosed in December 2019 and restated in the table below, the conversion price of the Original Convertible Bonds B and the exercise price of the Warrants B were set based on the 3-day VWAP prior to the board pricing meeting (i.e., December 16, 17 and 18, 2019).

The Original Convertible Bonds B and the Warrants B terms and conditions and the rest of the Kreos Transaction remain as described in the prospectus approved by the Autorité des marchés financiers (AMF) on December 20, 2019 under number 19-583 (the “Prospectus“).

Gross proceeds from Tranche B of the Kreos Transaction remain the same, i.e., €4 million.

Taking into account the net proceeds from Tranche B, and including additional expected income related to the ATUs in France and the funds available under the PGE, the Company has sufficient net working capital to meet its obligations until mid-2021.

The shares to be issued upon conversion of the Additional Convertible Bonds B will carry dividend rights as from their issuance date and be immediately fungible in all respects with the Company’s existing shares. They will be admitted to trading under the same code as the existing shares (ISIN FR0013183985) on the regulated market of Euronext in Paris.

The Additional Convertible Bonds B will be secured by the same pledge agreements as the whole Tranche A and Tranche B (i.e., on GenSight’s bank accounts, business assets, owned intellectual property rights (trademarks, patents, software, and domain names) and any future receivables).

Impact of the amended Tranche B on the share capital

On an indicative basis, the following table reflects the maximum dilution on the share capital of the Company after the issuance of the shares to be issued upon the conversion of the maximum number of convertible bonds and warrants under the transaction with Kreos before and after amending the Tranche B (calculation based on the issue of 111,524 new shares resulting from the exercise of the Additional Convertible Bonds B, assuming a conversion price of 2.690 € based on the 5dvwap of the Company’s share price prior to July 8, 2020, discounted by 15%).

On an indicative basis, the impact of the issue of the shares resulting from the conversion of the Original Convertible Bonds and the exercise of the Warrants B and the Additional Convertible Bonds B under Tranche B on the ownership interest of a shareholder holding 1% of the Company’s share capital prior to the issue and not subscribing to it (calculation based on consolidated shareholders’ equity on December 31, 2019 and the number of the Company’s shares as of December 31, 2019,) is as follows:

1. The calculations are based on the assumption of the exercise of all the convertible obligations, share warrants, founders share warrants, free shares outstanding or in the course of acquisition as of June 30, 2020, giving access to a maximum of 4,814,644 shares.
2. Assuming of a conversion price of 2.690 € based on the 5dvwap of the Company’s share price prior to July 8, 2020, discounted by 15%.

On an indicative basis, the impact of the issue of the shares resulting from the conversion of the Original Convertible Bonds B and the exercise of the Warrants B and the Additional Convertible Bonds B under Tranche B on the share of the Company’s shareholders’ equity per share (calculation based on consolidated  shareholders’ equity on December 31, 2019 and the number of the Company’s shares as of December 31, 2019) is as follows:

1. The calculations are based on the assumption of the exercise of all the convertible obligations, share warrants, founders share warrants, free shares and stock options outstanding as of June 30, 2020, giving access to a maximum of 4,814,644 shares.
2. Assuming of a conversion price of 2.690 € based on the 5dvwap of the Company’s share price prior to July 8, 2020, discounted by 15%.

About GenSight Biologics

GenSight Biologics S.A. is a clinical-stage biopharma company focused on discovering and developing innovative gene therapies for retinal neurodegenerative diseases and central nervous system disorders. GenSight Biologics’ pipeline leverages two core technology platforms, the Mitochondrial Targeting Sequence (MTS) and optogenetics to help preserve or restore vision in patients suffering from blinding retinal diseases. GenSight Biologics’ lead product candidate, LUMEVOQ^® (GS010; lenadogene nolparvovec), is in Phase III trials in Leber Hereditary Optic Neuropathy (LHON), a rare mitochondrial disease that leads to irreversible blindness in teens and young adults. Using its gene therapy-based approach, GenSight Biologics’ product candidates are designed to be administered in a single treatment to the eye by intravitreal injection to offer patients a sustainable functional visual recovery.

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