Quarterly Report • Sep 18, 2023
Quarterly Report
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HALF-YEAR FINANCIAL REPORT JUNE 30, 2023
| 1 | CONDENSED HALF-YEAR CONSOLIDATED FINANCIAL STATEMENTS | 3 |
|---|---|---|
| 2 | ACTIVITY REPORT | 27 |
| 3 | TRANSACTIONS BETWEEN RELATED PARTIES | 33 |
| 4 | RISK FACTORS | 35 |
| 5 | STATUTORY AUDITORS' REVIEW REPORT ON THE 2023 HALF-YEAR FINANCIAL INFORMATION |
37 |
| 6 | DECLARATION BY THE PERSON RESPONSIBLE FOR THE 2023 HALF-YEAR FINANCIAL REPORT |
39 |
| As of June 30, | As of December 31, | ||
|---|---|---|---|
| In thousands of euros | Notes | 2023 | 2022 |
| ASSETS | |||
| Non-current assets | |||
| Intangible assets | 4 | 84 | 93 |
| Property, plant and equipment | 5 | 1,546 | 2,268 |
| Other non-current financial assets | 550 | 632 | |
| Total non-current assets | 2,180 | 2,994 | |
| Current assets | |||
| Trade accounts receivable | 6.1 | 39 | 0 |
| Other current assets | 6.2 | 13,491 | 12,337 |
| Cash and cash equivalents | 7 | 1,021 | 10,610 |
| Total current assets | 14,552 | 22,947 | |
| TOTAL ASSETS | 16,732 | 25,941 |
| As of June 30, | As of December 31, | ||
|---|---|---|---|
| In thousands of euros | Notes | 2023 | 2022 |
| LIABILITIES | |||
| Shareholders' equity | |||
| Share capital | 8 | 1,158 | 1,158 |
| Premiums related to the share capital | 181,263 | 181,211 | |
| Reserves | (197,531) | (170,024) | |
| of wich cumulative translation adjustment | (14) | (73) | |
| Net income (loss) | (11,962) | (27,625) | |
| Total shareholders' equity attributable to equity holders of the Company |
(27,071) | (15,279) | |
| Non-current liabilities | |||
| Corporate bonds — non-current portion | 9.1 | 0 | 7,051 |
| Derivative liabilities — non-current portion | 936 | 3,447 | |
| Borrowings from Banks — non-current portion | 9.2 | 0 | 2,195 |
| Conditional advances — non-current portion | 9.3 | 5,355 | 5,214 |
| Lease liability — non-current portion | 9.4 | 644 | 972 |
| Other liabilities — non-current portion | 10 | 6,273 | 7,678 |
| Non-current provisions | 11 | 21 | |
| Total non-current liabilities | 13,219 | 26,577 | |
| Current liabilities | |||
| Corporate bonds — current portion | 9.1 | 8,253 | 302 |
| Derivative liabilities — current portion | 9.1 | 0 | 0 |
| Borrowings from Banks — current portion | 9.2 | 6,583 | 1,233 |
| Lease liability — current portion | 9.4 | 560 | 894 |
| Trade accounts payable | 11.1 | 11,315 | 7,813 |
| Current provisions | 234 | 61 | |
| Other current liabilities | 11.2 | 3,640 | 4,339 |
| Total current liabilities | 30,584 | 14,642 | |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 16,732 | 25,941 |
| For the six-month period ended June 30, | ||||
|---|---|---|---|---|
| In thousands of euros | Notes | 2023 | 2022 | |
| Operating income | ||||
| Revenues | 13 | 1,550 | 3,058 | |
| Other income | 14 | 1,166 | 1,193 | |
| Total operating income | 2,716 | 4,251 | ||
| Operating expenses | ||||
| Research and development | 15.1 | 11,990 | 9,912 | |
| Sales and marketing | 15.2 | 4,832 | 4,048 | |
| General and administrative | 15.3 | 2,987 | 2,337 | |
| Total operating expenses | 19,809 | 16,296 | ||
| Operating profit (loss) | (17,093) | (12,046) | ||
| Financial income | 17 | 6,581 | 3,001 | |
| Financial expenses | 17 | (1,448) | (1,669) | |
| Financial income (loss) | 5,133 | 1,333 | ||
| Income tax | (2) | (1) | ||
| Net income (loss) | (11,962) | (10,714) | ||
| Basic and diluted earnings (loss) per share | 21 | (0.26) | (0.23) |
| For the six-month period ended June 30, | |||
|---|---|---|---|
| In thousands of euros | 2023 | 2022 | |
| Net income (loss) | (11,962) | (10,714) | |
| Actuarial gains and losses on employee benefits, net of income tax | 0 | 33 | |
| Foreign currency translation differences, net of income tax | 56 | (275) | |
| Total comprehensive income (loss) | (11,906) | (10,956) |
| For the six-month period ended June 30, | ||||
|---|---|---|---|---|
| In thousands of euros | Notes | 2023 | 2022 | |
| Cash flows from operating activities | ||||
| Net income (loss) | (11,962) | (10,714) | ||
| Operating activities | ||||
| Amortization and depreciation | 4-5 | 658 | 546 | |
| Retirement pension obligations | 10 | 11 | ||
| Expenses related to share-based payments | 16.5 | 166 | (1,618) | |
| Other financial items | (5,524) | (1,034) | ||
| Operating cash flows before change in working capital | (16,651) | (12,809) | ||
| Accounts receivable | (40) | 446 | ||
| Accounts payable, net of prepayments | 2,123 | (2,454) | ||
| Other receivables | 387 | (3,883) | ||
| Other current and non-current liabilities | (2,027) | 2,013 | ||
| Change in working capital | 444 | (3,877) | ||
| Net cash flows from operating activities | (16,208) | (16,687) | ||
| Acquisitions of property, plant and equipment | 5 | (0) | (149) | |
| Acquisitions of intangible assets | 4 | 0 | 0 | |
| Acquisitions/reimbursement of non-current financial assets | 0 | 242 | ||
| Acquisitions/reimbursement of current financial assets | 153 | 0 | ||
| Net cash flows from investing activities | 153 | 93 | ||
| Cash flows from financing activities | ||||
| New borrowings obtained | 9 | 8,000 | — | |
| Interests expenses | 17 | (271) | (363) | |
| Repayment of obligation under bond and bank financings | (1,129) | (2,274) | ||
| Repayment of obligation under finance leases | (453) | (414) | ||
| Subscription and exercise of share warrants | 52 | 31 | ||
| Capital increases, net of transaction costs | 8 | 1 | 0 | |
| Net cash flows from financing activities | 6,408 | (3,262) | ||
| Increase/(decrease) in cash and cash equivalents | (9,646) | (19,856) | ||
| Cash and cash equivalents at beginning of the period | 10,610 | 44,288 | ||
| Effect of changes in exchange rates on cash and cash equivalent | 57 | (286) | ||
| Cash and cash equivalents at end of period | 1,021 | 24,146 |
| Share Capital | Reserves | Net income | Total | |||
|---|---|---|---|---|---|---|
| In thousands of euros, except for number of shares |
Number of shares |
Amount | related to the share capital |
(loss) | Shareholders' Equity |
|
| Balance at January 1, 2022 | 46,300,591 | 1,158 | 181,175 | (137,726) | (28,617) | 15,989 |
| Net income (loss) for the period | — | — | — | — | (10,714) | (10,714) |
| Cumulative translation adjustment |
— | — | — | — | — | — |
| Other comprehensive income | — | — | — | (242) | — | (242) |
| Total comprehensive income (loss) |
— | — | — | (242) | (10,714) | (10,956) |
| Allocation of prior period net income (loss) |
— | — | — | (28,617) | 28,617 | — |
| Allocation to reserves | — | — | — | — | — | — |
| Capital increase by issuance of ordinary shares |
— | — | — | — | — | — |
| Capital increase transaction costs |
— | — | — | — | — | — |
| Capital increases related to acquisition of free shares |
35,000 | 1 | (1) | — | — | — |
| Exercise and subscription of equity instruments |
— | — | 31 | — | — | 31 |
| Treasury shares | — | — | — | (243) | — | (243) |
| Share-based payments | — | — | — | (1,618) | — | (1,618) |
| Balance at June 30, 2022 | 46,335,591 | 1,158 | 181,205 | (168,446) | (10,714) | 3,203 |
| Balance at January 1, 2023 | 46,335,591 | 1,158 | 181,211 | (170,024) | (27,625) | (15,279) |
| Net income (loss) for the period |
— | — | — | — | (11,962) | (11,962) |
| Cumulative translation adjustment |
— | — | — | 56 | — | 56 |
| Other comprehensive income | — | — | — | 0 | — | 0 |
| Total comprehensive income (loss) |
0 | 0 | 0 | 56 | (11,962) | (11,906) |
| Allocation of prior period net income (loss) |
— | — | — | (27,625) | 27,625 | 0 |
| Allocation to reserves | — | — | — | — | — | 0 |
| Capital increase by issuance of ordinary shares |
0 | 0 | 0 | — | — | 0 |
| Capital increase transaction costs |
— | — | 0 | — | — | 0 |
| Exercise and subscription of equity instruments |
0 | — | 52 | — | — | 52 |
| Treasury shares | — | — | — | (77) | — | (77) |
| Share-based payments | — | — | — | 166 | — | 166 |
| Other impacts | — | — | — | (28) | — | (28) |
| Balance at June 30, 2023 | 46,335,591 | 1,158 | 181,263 | (197,503) | (11,962) | (27,071) |
Founded in 2012, GenSight Biologics S . A . (hereinaf ter referred to as "GenSight Biologics" or the "Company" and together with its subsidiaries as the "Group") is a clinical-stage biotechnology group discovering and developing novel therapies for neurodegenerative retinal diseases and diseases of the central nervous system. 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 severe degenerative retinal diseases. The Group focus is in ophthalmology where it develops product candidates to restore eyesight to patients suffering from retinal diseases that would otherwise lead to blindness.
The Company has incurred losses and negative cash flows from operations since its inception and shareholders' equity amounts to
On February 6, 2023, the Company announced that it has received the payment of€8 million under the first tranche (the "Tranche A") of the unsecured credit facility executed with the European Investment Bank (the "EIB") on November 3, 2022 maturing in November 2027.
All disbursement of the first tranche had been met, among other the issuance of warrants under Tranche A to the BEI. These warrants have been fully subscribed in January 2023.
The credit facility provides funding in three tranches of €8 million, €12 million and €15 million, each subject to the fulfillment of certain conditions precedent. All drawdowns under the terms of the credit facility that have not been completed within 5 years from the date of signature of the Credit Facility, i.e. November 3, 2027, may not be completed at a later date. No guarantee can be given as to the satisfaction by the Company of the condition's precedent and the completion of the second and third tranches.
On March 7, 2023, the Company announced that, due to the occurrence of an operational issue at its manufacturing partner in the handling of the downstream process, the GMP batch scheduled before initiating the production of the validation campaign had not been terminated. The Company subsequently started the manufacturing of 3 GMP batches early August, with €(27,071) K as of June 30, 2023. The Group anticipates incurring additional losses until such time, if ever, that it can generate significant revenue from its product candidates in development. Substantial additional financing will be needed by the Company to fund its operations and to commercially develop its product candidates.
The Group's future operations are highly dependent on a combination of factors, including: (i) the success of its research and development; (ii) regulatory approval and market acceptance of the Group's proposed future products; (iii) the timely and successful completion of additional financing; and (iv) the development of competitive therapies by other biotechnology and pharmaceutical companies.
the first results through September and October 2023. The product is expected to be fully released for human use in Q1 2024 and the Company expects to resume supply of AAC (Autorisation d'Accès Compassionnel, or Early Access Authorisation, former ATU) in France in Q1 2024.
On April 20, 2023, the Company announced that the Committee for Advanced Therapies (CAT) of the Committee Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) assessed the data presented during the oral explanation held on April 19, 2023 on LUMEVOQ®' European regulatory dossier.
Following interactions with the CAT indicating that the data provided thus far would not be sufficient to support a positive opinion of the marketing authorization of LUMEVOQ® by EMA, the Company decided to withdraw its application ahead of a final opinion by the CAT. This decision enables the Company to discuss the best possible path forward for LUMEVOQ® with the EMA, aiming at submitting a new application addressing remaining objections as soon as possible, in Europe and other countries. The Company is exploring options including generating new clinical data, which may induce material delays and additional costs.
The condensed half-year consolidated financial statements (the "Financial Statements") present the operations of GenSight Biologics as of June 30, 2023. GenSight Biologics S. A . is a public limited company whose head office is located at 74 rue du Faubourg St. Antoine, 75012 Paris.
The condensed half-year consolidated financial statements for the six months ended June 30, 2023 have been prepared under the responsibility of the management of GenSight Biologics, they have been approved on September 14, 2023 by the Board of Directors.
The presented condensed financial statements are expressed in thousands of euros, unless stated otherwise. For ease of calculation, numbers have been rounded. Calculations, however, are based on exact figures. Therefore, the sum of the numbers in one column of a table may not conform to the total figure displayed in the column.
International accounting standards include International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), as well as the interpretations issued by the Standing Interpretations Committee (SIC), and the International Financial Reporting Interpretations Committee (IFRIC).
The IFRS as adopted by the European Union differ in certain aspects with the IFRS published by the IASB. Nevertheless, the Group ensured that the financial information for the periods presented would not have been substantially different if it had applied IFRS as published by the IASB.
The notes to the condensed consolidated financial statements at June 30, 2023 were prepared in accordance with IAS 34 – Interim Financial Reporting, as endorsed by the European Union, which requires the disclosure of selected notes only. The condensed financial statements do not include all disclosures required for annual financial statements and should therefore be read in conjunction with the consolidated financial statements for year ended December 31, 2022.
All the texts adopted by the European Union are available on the European Commission's website: https://ec.europa.
The Reporting date for the condensed consolidated accounting statements is June 30 and covers a six- month period. The individual statements of the consolidated subsidiaries are prepared at the same Reporting date, i.e. June 30, and covers the same period.
eu/info/law/international-accounting-standards-regulationec-no-1606-2002/amending-and-supplementary-acts/actsadopted-basis-regulatory-procedure-scrutiny-rps\_en
The condensed consolidated financial statements were prepared in accordance with the accounting principles and methods used by the Group for the 2022 financial statements and described in note 2 to consolidated financial statements for the year ended December 31, 2022. Furthermore, the condensed consolidated financial statements were prepared in compliance with other standards and interpretations in force as of January 1, 2023, described below.
In the current year, the Group has applied a number of amendments to IFRS Standards and Interpretations issued by the IASB that are effective for an annual period that begins on or after January 1, 2023. Their adoption has not had any material impact on the disclosures or on the amounts reported in these financial statements.
| IFRS 17 (including the June 2020 and December 2021 amendments to IFRS 17) |
Insurance Contracts |
|---|---|
| Amendments to IAS 1 | Classification of Liabilities as Current or Non-Current |
| Amendments to IAS 1 and IFRS Practice Statement 2 |
Disclosure of Accounting Policies |
| Amendments to IAS 8 | Definition of Accounting Estimates |
| Amendments to IAS 12 | Deferred Tax related to Assets and Liabilities arising from a Single Transaction |
At the date of authorization of these financial statements, the Group has not applied the following new and revised IFRS Standards that have been issued but are not yet effective and in some cases had not yet been adopted by the EU:
| Amendment to IFRS 16 | Lease liability in a sale and leaseback |
|---|---|
| Amendment to IAS 1 | Classification of liabilities |
| Amendment to IAS 1 | Non-current liabilities with covenants |
The directors do not expect that the adoption of the Standards listed above will have a material impact on the financial statements of the Group in future periods.
On April 28, 2017, the Group incorporated GenSight Biologics Inc. in the United States. On December 30, 2021, the Group incorporated a second subsidiary, GenSight Biologics France SAS, registered and located in France.
As 100% of the voting rights and ownership interests are held by the Group, both subsidiaries are fully consolidated.
These Interim Consolidated Financial Statements have been prepared assuming the Company will continue as a going concern. As such, no adjustments have been made to the financial statements relating to the recoverability and classification of the asset carrying amounts or classification of liabilities that might be necessary should the Company not be able to continue as a going concern.
As of June 30, 2023, the Company had €1.0 million in cash and cash equivalents compared to €10.6 million of cash and cash equivalents as of December 31, 2022.
Since its incorporation, the Company has funded its activities through several equity and debt financings, grants, conditional advances, and Research Tax Credit. Since the end of 2019, the French National Drug Safety Agency (ANSM) granted a named patient Temporary Authorization for Use (ATU nominative) for LUMEVOQ® and the Company started to generate revenue from the supply of LUMEVOQ® in France.
In November 2022, the Company entered into a €35 million credit facility agreement with the European Investment Bank (EIB). The facility is divided into three tranches of €8 million, €12 million and €15 million, respectively, all subject to certain conditions. The Company fully met the disbursement conditions of the €8 million Tranche A of the financing with the EIB, and obtained its draw down in February 2023.
Given the Company's decision to withdraw its EMA application in April 2023, there was no immediate need for a validation (PPQ) campaign until a new Marketing Authorization Application (MAA) is submitted. Consequently, the Company decided to manufacture 3 GMP batches as planned, using the commercial process but outside the context of a validation campaign, to generate more batch data for a future MAA filing and provide more experience with the manufacturing process to operating teams, while fulfilling the immediate requirement of supplying product for a possible new clinical trial and for the resumption of an early access program for patients in Q1 2024. The Company will thus not meet the contractual condition related to PPQ production for disbursement of the tranche B of the EIB loan for an amount of €12 million. The availability of such tranche is currently suspended, until such time as a new agreement with the EIB is reached on revised conditions to the disbursement of that tranche.
In December 2022, the Company signed a €12 million financing with an entity advised by Heights Capital, subscribed at 90% of the nominal value i.e. €10.8 million, in the form of notes convertible into new shares. The proceeds have been partly used to fully repay the balance of its financing with Kreos Capital for €4.4 million. From June 2023, the notes were initially to be amortized quarterly. In August 2023, the Company and Heights have decided to defer the redemption of these notes until January 31, 2024.
In August 2023, the Company signed a €10 million financing agreement with historical and new investors and drew down the first tranche of the financing of €6 million (Tranche 1), under which the Company issued 60 bonds convertible into new shares with a value of €100,000 each, maturing in twelve months and bearing interest at 10% per annum. The drawdown of the second tranche of €4 million (Tranche 2) is subject, among other conditions, to the production of at least two successive successful GMP batches (Good Manufacturing Practices), of LUMEVOQ® at the latest on October 30, 2023 or, in the event that the GMP batches are not produced, or only one successful manufacturing, with unanimous approval by all the investors. No guarantee can be given that the Company will satisfy the conditions precedent for Tranche 2.
Based on its current operations, plans and assumptions, the Company believes its current balance of cash and cash equivalents, which already include the 5.6 million net proceeds from the Tranche 1 of the financing signed in August 2023, will not be sufficient to fund its operations after October 2023, and as such will not be sufficient to fund the Company's operations for at least the next 12 months.
If, as expected, the conditions described above to obtain the second tranche of the financing signed in August 2023 (€4.0 million) are met, the Company would have sufficient net working capital to meet its obligations, as projected in its cash forecast, through December 2023.
In order to meet its obligations beyond this date, the Company needs to obtain other sources of debt or equity financing as early as the fourth quarter of 2023, in order to supplement its working capital requirements and fund its operating expenses from December 2023 onwards and for 2024, which will enable the Company to resume early access in France (Autorisation d'Accès Précoce (AAP), formerly Autorisation Temporaire d'Utilisation (ATU)) for patients in the first quarter of 2024 when LUMEVOQ® becomes available. The Company also put in place certain additional cash preservation measures, which aimed at significantly reducing its operating cash burn in 2023 and beyond, while actively discussing financing and strategic options including M&A opportunities.
Even though the Company believes in its ability to raise additional funds during 2023, no assurance can be given at this time as to whether the Company will be able to achieve these financing objectives or to obtain funds at attractive terms and conditions, which could lead the group not to be able to realize its assets and paid its liabilities in the normal course of business. Therefore, there is substantial doubt regarding its ability to continue as a going concern.
The Company's interim financial statements have been prepared on a going concern basis as of June 30, 2023, assuming that it will be successful in its financing objectives.
In the course of preparing its interim financial statements, GenSight Biologics' management made estimates, judgments and assumptions impacting the application of accounting principles and methods as well as the carrying value of assets and liabilities
The intangible assets are broken down as follows:
and income and expense items. The main sources of uncertainty with respect to key estimates and judgments made were identical to those applied in the consolidated financial statements for the year ended December 31, 2022.
| As of June 30, | As of December 31, | |
|---|---|---|
| In thousands of euros | 2023 | 2022 |
| Patents, licenses, trademarks | 275 | 275 |
| Software | 18 | 18 |
| Total historical cost | 293 | 293 |
| Accumulated amort. of patents, licenses and trademarks | (191) | (182) |
| Accumulated depreciation of software packages | (18) | (18) |
| Accumulated amortization and depreciation | (209) | (200) |
| Net total | 84 | 93 |
An intangible asset was recognized at December 31, 2013 as a result of the license agreement signed with Novartis. The initial recognition cost amounted to €275 K and was determined by reference to the fair value of the 670,588 ordinary shares, €0.41 per ordinary share, issued as consideration for the license. There has been no recognition of impairment losses in application of IAS 36 Impairment of Assets over the periods presented.
Changes in PPE gross book values and accumulated depreciation for the full year 2022 are presented in the following table:
| In thousands of euros | As of December 31, 2021 |
Increase | Decrease | Currency translation adjustment |
As of December 31, 2022 |
|---|---|---|---|---|---|
| Technical equipment and installations | 620 | — | (123) | 7 | 503 |
| IFRS 16 – Right-of-use – Building | 3,774 | 379 | 0 | 142 | 4,295 |
| Leasehold improvement | 982 | 369 | 0 | 15 | 1,366 |
| Office and computer equipment | 236 | 67 | (9) | 1 | 294 |
| IFRS 16 – Right-of-use – Others | 19 | — | — | — | 19 |
| Furniture | 505 | — | (100) | 13 | 419 |
| Total gross property, plant and equipment | 6,136 | 815 | (233) | 178 | 6,896 |
| Accumulated depreciation of technical equipment and installations |
(491) | (13) | 39 | (3) | (466) |
| IFRS 16 – Right-of-usee – Building | (1,847) | (751) | 0 | (59) | (2,656) |
| Accumulated depreciation of leasehold improvement | (576) | (349) | 0 | (4) | (930) |
| Accumulated depreciation of office and computer equipment |
(207) | (23) | 9 | (1) | (222) |
| IFRS 16 – Right-of-use – Others | (19) | 0 | 0 | 0 | (19) |
| Accumulated depreciation of furniture | (447) | 0 | 122 | (10) | (334) |
| Total accumulated depreciation | (3,587) | (1,136) | 171 | (76) | (4,628) |
| Total net property, plant and equipment | 2,549 | (320) | (62) | 102 | 2,268 |
| In thousands of euros | As of December 31, 2022 |
Increase | Decrease | Currency translation adjustment |
As of June 30, 2023 |
|---|---|---|---|---|---|
| Technical equipment and installations | 503 | 0 | 0 | 0 | 503 |
| IFRS 16 – Right-of-use – Building | 4,295 | 0 | (216) | (45) | 4,034 |
| Leasehold improvement | 1,366 | 0 | 0 | (11) | 1,355 |
| Office and computer equipment | 294 | (0) | 0 | (0) | 293 |
| IFRS 16 – Right-of-use – Others | 19 | 0 | 0 | 0 | 19 |
| Furniture | 419 | (0) | 0 | 0 | 419 |
| Total gross property, plant and equipment | 6,896 | 0 | (216) | (56) | 6,624 |
| Accumulated depreciation of technical equipment and installations |
(466) | (19) | 0 | 0 | (485) |
| IFRS 16 – Right-of-usee – Building | (2,656) | (365) | 0 | 28 | (2,993) |
| Accumulated depreciation of leasehold improvement | (930) | (76) | 0 | 7 | (999) |
| Accumulated depreciation of office and computer equipment |
(222) | (14) | 0 | 0 | (236) |
| IFRS 16 – Right-of-use – Others | (19) | 0 | 0 | 0 | (19) |
| Accumulated depreciation of furniture | (334) | (11) | 0 | 0 | (345) |
| Total accumulated depreciation | (4,628) | (486) | 0 | 36 | (5,078) |
| Total net property, plant and equipment | 2,268 | (486) | (216) | (21) | 1,546 |
Changes in PPE gross book values and accumulated depreciation as of June 30, 2023 are presented in the following table :
The account receivables as of June 2023 result from the sublease agreement for the Company's U.S.-based subsidiary offices.
The other current assets are broken down as follows:
| As of June 30, | As of December 31, | |
|---|---|---|
| In thousands of euros | 2023 | 2022 |
| Prepayments | 1,648 | 269 |
| Research tax credit | 3,342 | 2,176 |
| Other taxes receivable | 1,664 | 1,314 |
| Liquidity contract | 68 | 144 |
| Prepaid expenses | 6,486 | 8,213 |
| Other current assets | 283 | 221 |
| Total | 13,491 | 12,337 |
Other taxes receivable essentially refers to VAT receivables.
As of June 30, 2023, prepaid expenses and prepayments were primarily manufacturing costs related to LUMEVOQ® and GS030, rental costs and scientific collaborations expenses.
The following table shows the changes in the Research Tax Credit during the six-month period ended June 30, 2023:
| Amounts in K€ | |
|---|---|
| Opening balance sheet receivable as of January 1, 2023 | 2,176 |
| Other operating income | 1,166 |
| Payment received | — |
| Closing balance sheet receivable as of June 30, 2023 | 3,342 |
Cash and cash equivalents items are broken down as follows:
| As of June 30, | As of December 31, | |
|---|---|---|
| In thousands of euros | 2023 | 2022 |
| Cash | 1,021 | 10,610 |
| Cash equivalents | — | — |
| Total cash and cash equivalent as reported in the statements of financial position |
1,021 | 10,610 |
| Bank overdrafts | — | — |
| Total net cash and cash equivalents as reported in the statements of cash flows | 1,021 | 10,610 |
The Group does not hold any short-term investment and all of its cash balances are cash at hand deposits with high-credit quality financial institutions.
The share capital as of June 30, 2023 amounts to €1,158,389.78. It is divided into 46,335,591 fully authorized, subscribed and paid-up ordinary shares with a nominal value of €0.025.
As of June 30, 2023, the Company held 262,100 treasury shares for an amount of € 196,050.80.
On December 23, 2022, the Company signed a subscription agreement for a €12 million convertible notes financing from Heights Capital. These €12 million financing were subscribed at 90% of the nominal value i.e. €10.8 million, in the form of notes convertible into new shares with a 30% premium.
The Company issued the notes on December 28, 2022 at an issue price of €90,000 per note, for a period of five years, i.e. until December 28, 2027. The notes do not bear interest.
The notes may be converted into new ordinary shares of the Company exclusively at the option of the holder between the issue Date and the maturity Date.
Initially, the notes will entitle the holder, upon conversion, to a maximum of 22,884 new ordinary shares per note, i.e. a conversion price of €4.37 per Note (the "Initial Conversion Price").
The Initial Conversion Price corresponds to a premium of 30% on the volume-weighted average price of the Company's shares on the regulated market of Euronext Paris during the last trading session preceding the determination of the terms of issuance (the "Reference Price"), thus complying with the price limits set by the 24th resolution of the Company's combined general shareholders' meeting held on May 25, 2022 (the volume-weighted average of the prices of the Company's shares on the regulated market of Euronext in Paris during the last five trading sessions preceding the determination of the price, less a maximum discount of 15%, i.e. €3.07) (the "Price Limit") it being specified that the Price Limit may be modified at a future general Meeting.
Starting six months after the Issue Date, the notes will amortize quarterly in an amount of €5,263 per Note, payable either
The number of shares that may be issued under the Notes will be between 2,746,108 (in the event of conversion of all the Notes at the Initial Conversion Price) and 3,915,171 (in the event of amortization of all the Notes at the Price Limit), subject to redemption exclusively in shares.
In the event of a capital increase by the Company (excluding any offer reserved for employees) of at least €5 million within 12 months of the Issue Date, the conversion price shall be adjusted (but only if such adjusted price is lower than the Initial Conversion Price) to correspond to 130% of the price per share in this capital increase and the Reference Price, in respect of the Price Limit.
On the date of the eighteenth anniversary of the Issue Date (the "18-Month Reset Date"), the conversion price shall be adjusted (but only if such adjusted price is lower than the conversion price without taking into account such adjustment) to correspond to the share price on the 18-Month Reset Date, it being specified that the conversion price so adjusted shall be at least equal to the Reference Price and the Price Limit; and it being further specified that the conversion price may be adjusted upwards if the volumeweighted average of at least 20 out of 30 consecutive trading days in the 12-month period following the 18-month Reset Date exceeds 150% of the Initial Conversion Price.
In accordance with the terms of the Notes, customary events of default (including in the event of non-payment on a due date, breach of the terms and conditions, delisting or cessation of business) will give Heights an option to request the early redemption of the Notes in cash at an amount equal to 110% of the principal amount of Notes outstanding. The Company has also given certain customary undertakings (in particular, not to grant any security interests, other than certain customary exceptions in this respect, and not to offer any shares for 30 days following the Issue Date, subject in particular to the issuance of the Warrants to the EIB and certain customary exceptions in this regard). The Company has also undertaken to seek additional equity financing for an amount corresponding to that of the Notes.
In the event of a change of control of the Company, Heights has the right to request early redemption in cash of the Notes at an amount equal to 110% of the principal amount of the Notes.
The Notes are non-transferable, except
The financing obtained from Heights is qualified as a hybrid instrument in the Group's financial statements. The derivative instrument is, in accordance with IFRS 9, measured at fair value, with a change in fair value recognized in profit or loss. The amount remaining in debt is recognized at amortized cost using a 26% effective interest rate.
As of June 30, 2023, the Company and Heights were under discussions to temporarily suspend the redemption of the notes. According to the contractual terms and conditions and due to the suspension of the repayments, the entire debt could have become immediately repayable, at 110% of the outstanding principal amount of the notes. As such, the outstanding debt has been classified in full as current liability. Waivers to the contract have been signed in August 2023 and the debt has ceased to be payable immediately. From June 2023, the notes were initially to be amortized quarterly. The Company and Heights have decided to suspend the redemption of these notes until January 31, 2024.
The derivative instrument amounts to €0.2 million and the remaining debt to €8.3 million as of June 30, 2023.
In the absence of any event of default as of June 30, 2023, the non-current portion of debt would have amounted to €5.5 million.
The Company 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'État) (the "PGE").
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% for the first 12 months. 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. The Group has signed in June 2021 amendments to the initial agreements, including an amortization period of three years; until mid-2024, as well as effective interest rates ranging from 1.01% to 2.25%.
This benefit, resulting from the low interest is determined by applying a discount rate equal to the rate the Company would have to pay for a bank borrowing over a similar maturity. The implicit interest rate resulting from taking into account the whole repayments is used to determine the amount recognized annually as a finance cost.
In November 2022, the Company entered into a €35 million credit facility agreement with the European Investment Bank (EIB).
The Credit Facility provides funding in three tranches of €8 million, €12 million and €15 million, each subject to the fulfillment of certain conditions precedent. All drawdowns under the terms of the Credit Facility that have not been completed within 5 years from the date of signature of the Credit Facility, i.e. November 3, 2027, may not be completed at a later date. No guarantee can be given as to the satisfaction by the Company of the conditions precedent and the completion of the second and third tranches.
The Company fully met the disbursement conditions of the €8 million Tranche A of the financing with the EIB, and obtained its draw down in February 2023.
The disbursement of Tranche A (with fixed annual interest of 2% and capitalized interest of 5%) was subject to, among other conditions:
On January 25, 2023, the Company issued 1,141,096 Warrants to the EIB, in accordance with the terms of the 24th resolution of the shareholders' meeting held on May 25, 2022 and Article L.225-138 of the French Commercial Code, as a condition for the financing of Tranche A, representing 2.46% of the Company's current share capital.
The exercise price of the Warrants is equal to €3.4533 and corresponds to 95% of the volume-weighted average price of the Company's ordinary shares over the last five trading days preceding the decision of the competent body of the Company to issue the Warrants.
The Warrants have a maturity of 20 years and will be exercisable only upon the occurrence of certain events (such as upon a change of control or in the event of compulsory redemption of one or more tranches or voluntary redemption of an outstanding amount in respect of a single tranche exceeding 75% of the disbursed amount of such tranche), thus avoiding dilution for existing shareholders in the short term. The Warrants will automatically lapse if not exercised after 20 years.
The EIB also has a call option, as soon as the Warrants become exercisable, to require the Company to repurchase all or part of the exercisable but unexercised Warrants at their face value (up to a limit equal to the amount drawn under the facility). In addition, the Company has a call option on all outstanding Warrants in certain limited circumstances.
Upon exercise of all the Warrants, 1,141,096 new shares of the Company may be issued at a price of €3.4533 per new share, the Company could potentially receive gross proceeds amounting to €3,940,546. There is no guarantee that the EIB will exercise all or part of the Warrants or that the Company will receive any proceeds from the exercise of the Warrants.
The contract comprising the loan agreement and the warrant agreement is a hybrid contract, as it contains a non-derivative element (the loan) and option-based derivative elements (the warrants and the options attached to them). The loan can be qualified as a host contract, and the warrants and options warrants and attached options as embedded derivatives. Given the economic characteristics and specific risks of embedded derivatives, the Company considers that they should be accounted for separately from the host contract.
The tranche A loan of €8.0 million is classified as a financial liability measured at amortized cost. On initial recognition, i.e. February 6, 2023, the fair value of this loan includes €30 thousands in transaction costs and the €4 million fair value of the warrants (see derivative instruments below), as the warrants form part of the consideration given to the Company. The initial fair value of the loan is €4.0 million.
The loan is subsequently measured at amortized cost, with an effective interest rate of 23%.
As of June 30, 2023, the Company was under discussion with Heights Capital to suspend the redemption of the notes, which could have led to the immediate reimbursement of the outstanding debt. Due to the crossed commitments included in the EIB contractual terms and conditions, the EIB debt could also have become immediately repayable, at the nominal value plus accrued interests. As such, the outstanding debt has been classified in full as current liability. Waivers to the contract have been signed in August 2023 and the debt has ceased to be payable immediately.
The derivative instrument amounts to €0.8 million and the remaining debt to €4.3 million as of June 30, 2023.
In the absence of any event of default as of June 30, 2023, the non-current portion of debt would have amounted to €4.3 million.
The Tranche A warrants issued to the EIB in connection with the disbursement of Tranche A in the form of 1,141,096 share warrants ("BSA") are derivative instruments.
Due to the terms and conditions of the EIB's put option, the Company considers that the put option and the Tranche A warrants should be treated as a single integrated compound derivative. In view of the terms and conditions, the Company considers it highly unlikely that the call option will be exercised. Consequently, the call option has been valued at zero and is not recognized.
The " fixed for fixed" rule in IAS 32, which stipulates that derivatives should be classified as equity if they can only be settled by delivering a fixed number of shares in exchange for a fixed amount of cash or another financial asset, is not met, as there is a settlement option which may result in the exchange of a variable number of shares for a variable price in the case of the exercise of a put option.
As they are not equity instruments, the Tranche A warrants and the related put option must be classified as a financial liability and will be measured at fair value through profit or loss.
The fair value of the warrants and the put option has been estimated using the Black and Scholes approach. The assumptions and results of the warrants evaluation are detailed in the following tables:
| 01/23/2023 | 06/30/2023 | |||||
|---|---|---|---|---|---|---|
| Central | Vol +10% | Vol -10% | Central | Vol +10% | Vol -10% | |
| Number of instruments | 1,141,096 | 1,141,096 | 1,141,096 | 1,141,096 | 1,141,096 | 1,141,096 |
| Spot | 3.66 | 3.66 | 3.66 | 0.75 | 0.75 | 0.75 |
| Strike | 3.45 | 3.45 | 3.45 | 3.45 | 3.45 | 3.45 |
| Volatility | 80% | 90% | 70% | 80% | 90% | 70% |
| Risk-free rate | 2.8% | 2.8% | 2.8% | 3.1% | 3.1% | 3.1% |
| Valuation date | 01/23/2023 | 01/23/2023 | 01/23/2023 | 06/30/2023 | 06/30/2023 | 06/30/2023 |
| Expiry | 12/22/2042 | 12/22/2042 | 12/22/2042 | 12/22/2042 | 12/22/2042 | 12/22/2042 |
| Term | 19.9 | 19.9 | 19.9 | 19.5 | 19.5 | 19.5 |
| Maturity | 19.9 | 19.9 | 19.9 | 19.5 | 19.5 | 19.5 |
| Dividends | 0% | 0% | 0% | 0% | 0% | 0% |
| Unit FV (€) | 3.46 | 3.54 | 3.35 | 0.66 | 0.69 | 0.61 |
| Total FV (m€) | 4.0 | 4.0 | 3.8 | 0.8 | 0.8 | 0.7 |
The Company has carried out sensitivity analyses of expected volatility. As set forth in the tables above, the sensitivity of fair value to expected volatility is not significant.
The table below presents the changes in conditional advances that occurred during the presented periods:
| Balance as of January 1, 2022 | 4,939 |
|---|---|
| Receipts | — |
| Repayments | — |
| Accrued interest | 274 |
| Balance as of December 31, 2022 | 5,214 |
| Non-current portion | 5,214 |
| Current portion | — |
| Balance as of January 1, 2023 | 5,214 |
|---|---|
| Receipts | — |
| Repayments | — |
| Accrued interest | 142 |
| Balance as of June 30, 2023 | 5,355 |
| Non-current portion | 5,355 |
| Current portion | — |
Maturity dates of financial liabilities as of December 31, 2022 are as follows:
| In thousands of euros | Gross amount | Less than one year | One to five years | More than five years |
|---|---|---|---|---|
| Conditional advances | 5,214 | — | 3,176 | 2,037 |
| Corporate bonds | 7,353 | 302 | 7,051 | — |
| Borrowings from Banks | 3,428 | 2,195 | 1,233 | — |
| Lease Liability | 1,866 | 894 | 972 | — |
| Total financial liabilities | 17,861 | 3,391 | 12,433 | 2,037 |
Maturity dates of financial liabilities as of June 30, 2023 are as follows:
| In thousands of euros | Gross amount | Less than one year | One to five years | More than five years |
|---|---|---|---|---|
| Conditional advances | 5,355 | — | 5,355 | — |
| Corporate bonds | 8,253 | 8,253 | — | — |
| Borrowings from Banks | 6,583 | 6,583 | — | — |
| Lease Liability | 1,203 | 560 | 644 | — |
| Total financial liabilities | 21,394 | 15,396 | 5,999 | — |
GenSight Biologics recorded a refund liability, related to the potential rebates obligations resulting from the current regulatory framework of the Temporary Authorization for Use (ATU) with the Social Security and Family Allowance Contribution Collection Offices (URSSAF). In France, use of pharmaceutical products not yet approved by a Marketing Authorization (AMM) and not recruiting for a clinical trial requires first obtaining an ATU from the ANSM. The Company will be paid a preliminary price by the hospitals. Upon obtaining full marketing authorization and completing pricing negotiations, it may be required to rebate to the URSSAF the difference between the preliminary price and the final price. A discounting effect has been recognized.
The benefit resulting from the low interest of the Stateguaranteed loan (PGE) is treated as a subsidy. This amount is recognized as financial income over the applicable repayment period.
This benefit is determined by applying a discount rate equal to the rate the Company would have to pay for a bank borrowing over a similar maturity. The implicit interest rate resulting from taking into account the whole repayments is used to determine the amount recognized annually as a financial expense.
Maturity dates of accounts payables as of December 31, 2022 are as follows:
| In thousands of euros | Gross amount | Less than one year | One to five years | More than five years |
|---|---|---|---|---|
| Refund Liability and other potential rebates obligations |
7,485 | — | 7,485 | — |
| Subsidy | 225 | 32 | 193 | — |
| Other | — | |||
| Total Other liabilities | 7,711 | 32 | 7,678 | — |
Maturity dates of accounts payables as of June 30, 2023 are as follows:
| In thousands of euros | Gross amount | Less than one year | One to five years | More than five years |
|---|---|---|---|---|
| Refund Liability and other potential rebates obligations |
6,272 | — | 6,272 | — |
| Subsidy | 107 | 106 | 1 | — |
| Other | — | — | — | — |
| Total Other liabilities | 6,379 | 106 | 6,273 | — |
With respect to accounts payable and related payables, no discounting effect has been recognized to the extent that amounts did not represent payables on terms longer than one year at the end of each period presented.
Maturity dates of accounts payables as of June 30, 2023 are as follows:
| In thousands of euros | Gross amount | Less than one year | One to five years | More than five years |
|---|---|---|---|---|
| Trade accounts payable | 11,315 | 11,315 | — | — |
The following table provides the detail of other current liabilities for the presented periods:
| As of June 30, | As of December 31, | |
|---|---|---|
| In thousands of euros | 2023 | 2022 |
| Employee-related payable | 3,470 | 3,611 |
| Other taxes liabilities | 26 | 25 |
| Subsidy | 107 | 32 |
| Deferred revenue | 37 | 0 |
| Other current liabilities | 0 | 671 |
| Total | 3,640 | 4,339 |
The nature of the financial instruments as at December 31, 2022 and June 30, 2023 is as follows:
| In thousands of euros | Book value on the statement of financial position |
Fair value through profit and loss(1) |
At amortized cost(2) |
Fair Value |
|---|---|---|---|---|
| As of December 31, 2022 | ||||
| Financial assets | ||||
| Non-current financial assets | 632 | — | 632 | 632 |
| Current financial assets | 144 | 144 | — | 144 |
| Accounts receivable and related receivables | — | — | — | — |
| Cash and cash equivalents | 10,610 | — | 10,610 | 10,610 |
| Other current assets | 12,193 | — | 12,193 | 12,193 |
| Total financial assets | 23,579 | 144 | 23,435 | 23,579 |
| Financial liabilities | ||||
| Bond financing | 7,353 | — | 7,353 | 7,353 |
| Derivative liabilities | 3,447 | 3,447 | — | 3,447 |
| Borrowings from Banks | 3,428 | — | 3,428 | 3,428 |
| Conditional advances (non-current portion) | 5,214 | — | 5,214 | 5,214 |
| Refund liability | 7,485 | — | 7,485 | 7,485 |
| Lease liability – Buildings | 1,866 | — | 1,866 | 1,866 |
| Other non-current liabilities | 193 | — | 193 | 193 |
| Accounts payable and related payables | 7,813 | — | 7,813 | 7,813 |
| Other current liabilities | 4,339 | — | 4,339 | 4,339 |
| Provisions | 82 | — | 82 | 82 |
| Total financial liabilities | 41,219 | 3,447 | 37,773 | 41,219 |
(2) The book amount of financial liabilities measured at amortized cost was deemed to be a reasonable estimation of fair value.
| In thousands of euros | Book value on the statement of financial position |
Fair value through profit and loss(1) |
At amortized cost(2) |
Fair Value |
|---|---|---|---|---|
| As of June 30, 2023 | ||||
| Financial assets | ||||
| Non-current financial assets | 550 | — | 550 | 550 |
| Current financial assets | 68 | 68 | — | 68 |
| Accounts receivable and related receivables | 39 | — | — | — |
| Cash and cash equivalents | 1,021 | — | 1,021 | 1,021 |
| Other current assets | 13,491 | — | 13,491 | 13,491 |
| Total financial assets | 15,169 | 68 | 15,062 | 15,130 |
| Financial liabilities | ||||
| Bond financing | 8,253 | — | 8,253 | 8,253 |
| Derivative liabilities | 936 | 936 | — | 936 |
| Borrowings from Banks | 6,583 | — | 6,583 | 6,583 |
| Conditional advances (non-current portion) | 5,355 | — | 5,355 | 5,355 |
| Refund liaiblity | 6,272 | — | 6,272 | 6,272 |
| Lease liability – Buildings | 1,203 | — | 1,203 | 1,203 |
| Lease liability – Others | 1 | — | 1 | 1 |
| Accounts payable and related payables | 11,315 | — | 11,315 | 11,315 |
| Other current liabilities | 3,640 | — | 3,640 | 3,640 |
| Provisions | 245 | — | 245 | 245 |
| Total financial liabilities | 43,803 | 936 | 42,867 | 43,803 |
(1) The fair value of financial assets classified as fair value through profit and loss corresponds to the market value of the assets.
(2) The book amount of financial liabilities measured at amortized cost was deemed to be a reasonable estimation of fair value.
The Company started the sale of LUMEVOQ® through the named patient Temporary Authorization for Use ("ATU nominative") granted by the National Drug Safety Agency (Agence Nationale de Sécurité du Médicament or ANSM) to the CHNO of the Quinze-Vingts. Total income solely comes from those named patient ATU. The Company will be paid a preliminary price by the hospitals, ultimately fully covered by the health insurance. Upon obtaining full marketing authorization and completing pricing negotiations, it may be required to rebate to the URSSAF the difference between the preliminary price and the final price.
Estimated rebates are considered to be variable consideration and include significant estimates.
The Company records a related liability, for components related to product sold during the reporting period. The discounted value of this liability is booked in the Financial Statements.
Following the withdrawal of the Company's EMA application in April 2023, the assumptions used to estimate rebates have been revised, in particular the maturity of the debt. As of June 30, 2023, the revenue recognized only relates to the change in the valuation of the refund liability and the potential rebates obligations resulting from the current regulatory framework of the Temporary Authorization for Use (ATU).
As of June 30, 2023, the discounted value of the refund liability amounted to €5.9m. A 10% decrease or increase in the final price estimation would have an impact of +€0.7m and
€(0.7)m respectively on the discounted refund liability amount and therefore the cumulated revenue recognized.
Other income is detailed in the table below:
| As of June 30, | ||
|---|---|---|
| In thousands of euros | 2023 | 2022 |
| Research tax credit | 1,166 | 1,193 |
| Subsidies | — | — |
| Total | 1,166 | 1,193 |
The table below shows the breakdown of research and development expenses by cost nature for the periods presented:
| As of June 30, | ||
|---|---|---|
| In thousands of euros | 2023 | 2022 |
| Personnel expenses(1) | 2,462 | 1,538 |
| Sub-contracting, collaboration and consultants | 8,928 | 7,271 |
| Licensing and intellectual property | 82 | 351 |
| Travel and entertainment expenses | 114 | 233 |
| Depreciation and amortization expense | 369 | 247 |
| Other | 35 | 273 |
| Total R&D expenses | 11,990 | 9,913 |
(1) Includes €(564) K and €(20) K related to share-based compensation expense (income) as of June 30, 2022 and 2023 respectively.
The table below shows the breakdown of sales and marketing expenses by cost nature for the periods presented:
| As of June 30, | ||
|---|---|---|
| In thousands of euros | 2023 | 2022 |
| Personnel expenses(1) | 2,802 | 2,057 |
| Professional Fees | 1,449 | 1,712 |
| Communication and travel expenses | 42 | 92 |
| Depreciation and amortization expense | 70 | 57 |
| Others | 470 | 128 |
| Total S&M expenses | 4,832 | 4,048 |
(1) Includes €6 K and €572 K related to share-based compensation expense as of June 30, 2022 and 2023, respectively.
The table below shows the breakdown of general and administrative expenses by cost nature for the periods presented:
| As of June 30, | ||
|---|---|---|
| In thousands of euros | 2023 | 2022 |
| Personnel expenses(1) | 1,280 | 149 |
| Professional Fees | 820 | 1,404 |
| Communication and travel expenses | 612 | 231 |
| Depreciation and amortization expense | 56 | 180 |
| Attendance fees | 128 | 128 |
| Others | 91 | 244 |
| Total G&A expenses | 2,987 | 2,337 |
(1) Includes €(1,060) K and €(386) K related to share-based compensation expense (income) as of June 30, 2022 and 2023 respectively.
The Group was employing 23 people on permanent contract as of June 30, 2023 compared with 44 as of June 30, 2022.
The following table shows the nature of costs included in personnel expenses:
| As of June 30, 2023 | As of June 30, 2022 | |||||||
|---|---|---|---|---|---|---|---|---|
| In thousands of euros | R&D | G&A | S&M | TOTAL | R&D | G&A | S&M | TOTAL |
| Wages and salaries | 1,740 | 1,338 | 1,479 | 4,557 | 1,610 | 1,095 | 1,630 | 4,336 |
| Social contributions | 579 | 288 | 600 | 1,468 | 352 | 29 | 386 | 767 |
| Service cost (employee benefit) | 163 | 41 | 159 | 363 | 133 | 83 | 33 | 249 |
| Pensions – IAS 19 Service cost | (1) | (2) | (8) | (10) | 6 | 2 | 2 | 11 |
| Share-based payments | (20) | (386) | 572 | 166 | (564) | (1,060) | 6 | (1,618) |
| Total | 2,462 | 1,280 | 2,802 | 6,544 | 1,538 | 149 | 2,057 | 3,744 |
The Board of Directors has been authorized by the general meeting of the shareholders to grant employee warrants (Bons de Souscription de Parts de Créateur d'Entreprise or "BCE"), nonemployee warrants (Bons de Souscription d'Actions or "BSA") and performance shares (Attributions Gratuites d'Actions or "AGA").
The Board has not granted any BCE during the period presented.
W With the authorization of the General Meeting of the Shareholders on May 25, 2022, the Board of Directors granted 95,000 BSA 2022-2 on October 20, 2022. Those BSA 2022-2 which may be exercised by the beneficiaries based on the following vesting schedule, were subscribed in January and February 2023.
• 1/3 from the first anniversary date of the date of grant,
Details regarding the main characteristics of employee warrants (BCE), non-employee warrants (BSA), performance shares (AGA), and stock options (SO) granted before January 1, 2023 are presented in Note 19 of the 2022 Consolidated Financial Statements.
With the authorization of the General Meeting of Shareholders on May 25, 2022, the Board of Directors granted 2,070,000 free shares (AGA 2023-1 and AGA 2023-2) on March 20, 2023, to employees of the Company, of which:
| In thousands of euros | AGA 2020 | AGA 2021 | AGA 2022 | AGA 2023 | TOTAL |
|---|---|---|---|---|---|
| Balance outstanding at January 1, 2023 | — | — | 2,057,500 | — | 2,057,500 |
| Granted during the period | — | — | — | 2,070,000 | 2,070,000 |
| Vested during the period | — | — | — | 0 | |
| Forfeited during the period | — | — | -12,500 | -12,500 | -25,000 |
| Balance outstanding at June 30, 2023 | — | — | 2,045,000 | 2,057,500 | 4,102,500 |
With the authorization of the General Meeting of Shareholders on May 25, 2022, the Board of Directors issued 310,000 SO 2023-1, with an exercise price of €2.65 per share on March 20, 2023.
The SO 2023-1 may be exercised by the beneficiary on the basis of the following vesting schedule:
In addition, 30,000 stock Options from the 2022 and 2023 SO plans have been cancelled over the period.
| As of June 30, 2023 | As of June 30, 2022 | |||||||
|---|---|---|---|---|---|---|---|---|
| In thousands of euros | R&D | G&A | S&M | TOTAL | R&D | G&A | S&M | TOTAL |
| Non-Employee Warrants (BSA) | 46 | 115 | — | 160 | 54 | 95 | — | 150 |
| Performance Shares (AGA) | (229) | (664) | (341) | (1,234) | (554) | (1,171) | 6 | (1,719) |
| Free Share (AGA) | 165 | 27 | 913 | 1,106 | 39 | 16 | — | 55 |
| Stock Options (SO) | (2) | 137 | — | 135 | (104) | — | — | 104 |
| Share-based payments expense |
(20) | (386) | 572 | 166 | (564) | (1,060) | 6 | (1,618) |
The financial income and expenses are broken down as follows:
| As of June 30, | ||
|---|---|---|
| In thousands of euros | 2023 | 2022 |
| Foreign exchange gains | 0 | 1,034 |
| Net change in Derivative Financial Instrument Fair Value | 6,464 | 1,968 |
| Other | 117 | — |
| Financial income | 6,581 | 3,001 |
| Foreign exchange losses | (105) | (734) |
| Interest expenses from borrowings and amortized costs | (1,306) | (868) |
| Interest expenses from Lease | (37) | (63) |
| Other financial expenses | 0 | (3) |
| Financial expenses | (1,448) | (1,669) |
| Financial income (loss) | 5,133 | 1,333 |
Financial income is composed of non-cash income, primarily the change in the fair value of the convertible option of our bond financing with Heights Capital for €3.3 million and of share warrants attached to our bank financing with EIB for €3.2 million. Derivative Financial Instruments are measured at fair-value through profit.The fair value is calculated based on financial mathematic models using observable market data as of June 30, 2023.
Amortized cost (Effective Interest Method) represents the calculated interests expenses of the bond Financing with Heights
Taking into account its stage of development which prevents management from making sufficiently financial forecasts, the Group does not recognize deferred tax assets.
as well as the interests calculated on the borrowings from banks (PGE and EIB).
Interest expenses from lease reflect interest on the lease liability deriving from the application of IFRS 16 standard.
Foreign exchange gains and losses primarily arise from the purchase of services labeled in U.S. dollars.
The accrued interests on conditional advances received from Bpifrance Financement have been calculated on the basis of a rate of 5.56%/year.
Taking into account the tax regulations, the Company had tax losses to be carried forward with no time limit for a total amount of approximately €234 million at December 31, 2022.
Commitments existing as of December 31, 2022 have not changed significantly at the end of the reporting period.
The Group did not conclude any new significant transactions with related parties during the period.
The compensation amounts presented below, which were awarded to key management personnel which are members of the board of directors of the Group, were recognized as expenses during the period presented:
| As of June 30, | ||
|---|---|---|
| In thousands of Euros | 2023 | 2022 |
| Short-term employee benefits | 892 | 616 |
| Share-based payments benefits | 408 | (610) |
| Total | 1,300 | 6 |
The share-based payments income recognized as of June 2023 derives from the share based expense reversal for plans whose performance conditions were unlikely to be met.
Liabilities to key management personnel as of June 30, 2022 and 2023 are set forth below:
| As of June 30, | ||
|---|---|---|
| In thousands of Euros | 2023 | 2022 |
| Variable compensation | 217 | 150 |
| Total | 217 | 150 |
The basic earnings per share is calculated by dividing the net income for the period attributable to the shareholders of the Company by the weighted average number of common shares outstanding during the period. All outstanding ordinary shares have been taken into consideration for purposes of calculating basic earnings per share. The weighted average number of shares was 46,324,897 and 46,335,591 in June 2022 and June 2023 respectively.
The diluted earnings per share is calculated by dividing the net income for the period attributable to shareholders of the Company by the weighted average number of shares outstanding plus any potentially dilutive shares not yet issued from sharebased compensation plans (see Note 16).
Dilution is defined as a reduction of earnings per share or an increase of loss per share. When the exercise of outstanding share options and warrants decreases loss per share, they are considered to be anti-dilutive and excluded from the calculation of loss per share. Thus, basic and diluted earnings (loss) per share are equal as all equity instruments issued, representing 11,151,282 potential additional ordinary shares, have been considered anti-dilutive.
| As of June 30, | ||
|---|---|---|
| In thousands of Euros, except for earning (loss) per share | 2023 | 2022 |
| Net income (loss) of the reporting period | (11,962) | (10,714) |
| Adjusted weighted average number of outstanding shares | 46,073,491 | 46,324,897 |
| Basic and diluted earnings (loss) per share in euros | (0.26) | (0.23) |
The assessment of risks has not substantially changed since the Company filed its 2022 Universal Registration Document. The document is available on the company's website: GENSIGHT URD 2022\_ANGLAIS (gensight-biologics.com)
On July 20, 2023, given the Company's decision to withdraw its EMA application in April 2023, the Company announced there is no immediate need for a validation (PPQ) campaign until a new Marketing Authorization Application (MAA) is submitted. Consequently, the Company decided to manufacture 3 GMP batches as planned, using the commercial process but outside the context of a validation campaign, to generate more batch data for a future MAA filing and provide more experience with the manufacturing process to operating teams, while fulfilling the immediate requirement of supplying product for a possible new clinical trial and for the resumption of an early access program for patients in Q1 2024.
The Company will thus not meet the contractual condition related to PPQ production for disbursement of the tranche B of the EIB loan for an amount of €12 million. The Company acknowledges that the availability of such tranche is currently suspended, until such time as a new agreement with the EIB is reached on revised conditions to the disbursement of that tranche. Discussions with the EIB on this matter are still ongoing.
On August 3, 2023, the Company announced the signing of a €10 million financing agreement with Sofinnova Partners, Invus and UPMC Enterprises (the "Investors") (the "Financing") and drew down the first tranche of the Financing of €6 million ("Tranche 1").
The Financing is divided into two tranches, each subject to certain conditions:
• A first tranche ("Tranche 1") of €6 million, under which the Company issued 60 bonds convertible into new shares with a value of €100,000 each (the "OCAs"), maturing in twelve months and bearing interest at 10% per annum; and
• A second tranche of €4 million, under which the Company will issue new ordinary shares (the "Tranche 2").
Each tranche will be subscribed for by each investor pro rata to its participation in the Financing, as follows: 35% for Sofinnova Partners, 35% for Invus and 30% for UPMC Enterprises.
The drawdown of Tranche 1 was subject to, among other conditions, the approval of the Company, the Investors, the Company's creditor banks (notably BNP Paribas, CIC and Bpifrance) (the "Banks"), the European Investment Bank (the "EIB") and CVI Investments, Inc. ("Heights") with respect to:
suspension of Heights' conversion rights with respect to the convertible bonds issued on December 28, 2022 (the "2022 OCAs") until January 31, 2024;
deferral of principal payments due to Heights in connection with the redemption of the 2022 OCAs until January 31, 2024; and
The drawdown of Tranche 2 is subject, among other conditions, to the fulfillment of the following conditions at the latest October 30, 2023:
No guarantee can be given that the Company will satisfy the conditions precedent for Tranche 2.
This activity report discussed hereafter the main operations of GenSight Biologics as of June 30, 2023.
The interim condensed financial statements the Company as of June 30, 2023 have been prepared by the Management as a going concern regarding assumptions and hypothesis mentioned in the Note 3.4 "Going concern" of the interim condensed consolidated financial statements.
Our operating income consists of revenues and other income.
We started the sale of LUMEVOQ® through the named patient Temporary Authorization for Use ("ATU nominative") granted by the National Drug Safety Agency (Agence Nationale de Sécurité du Médicament or ANSM) to the CHNO of the Quinze-Vingts on December 2019. Total income as of June 30, 2022 solely comes from those named patient ATU.
Our net product revenues are recognized, net of variable consideration related to certain allowances and accruals, at the time the customer obtains control of our product, i.e. after acceptance of the delivery by the customer.
The sole component of variable consideration related to product revenues is related to the potential obligations resulting from the current regulatory framework of the Temporary Authorization for Use (ATU) with the Social Security and Family Allowance Contribution Collection Offices (URSSAF). In France, use of pharmaceutical products not yet approved by a Marketing Authorization (AMM) and not recruiting for a clinical trial requires first obtaining an ATU from the ANSM. The Company will be paid a preliminary price by the hospitals. Upon obtaining full marketing authorization and completing pricing negotiations, it may be required to rebate to the URSSAF the difference between the preliminary price and the final price.
Following the withdrawal of our EMA application in April 2023, the assumptions used to estimate rebates, in particular the term of the debt, have been revised. As of June 30, 2023, the revenue recognized only relates to the change in the valuation of the refund liability and the potential rebates obligations resulting from the current regulatory framework of the Temporary Authorization for Use (ATU).
The other income is composed of Research Tax Credit. The expenditures taken into account for the calculation of the credit tax research only involve research expenses.
This credit meets the definition of a government grant as defined in IAS 20 Accounting for Government Grants and Disclosure of Government Assistance. As no research and development expenditure is capitalized before obtaining a marketing authorization, this credit related to a research program is entirely recorded as operating income.
We have requested the reimbursement of the 2022 Research tax credit in the amount of €2,176 K which has been received in July 2023.
| As of June 30, | ||
|---|---|---|
| In thousands of euros | 2023 | 2022 |
| Research tax credit | 1,166 | 1,193 |
| Subsidies | 0 | — |
| Total | 1,166 | 1,193 |
Our research and development expenses consist principally of external costs, such as manufacturing expenses, startup fees paid to investigators, consultants, central laboratories and CROs in connection with our clinical studies, costs related to acquiring and manufacturing clinical study materials and costs related to collaborations.
| As of June 30, | ||
|---|---|---|
| In thousands of euros | 2023 | 20221 |
| Personnel expenses | 2,462 | 1,538 |
| o/w share-based payment expense (income) | (20) | (564) |
| Sub-contracting, collaboration and consultants | 8,928 | 7,271 |
| Licensing and intellectual property | 82 | 351 |
| Travel and entertainment expenses | 114 | 233 |
| Depreciation and amortization expense | 369 | 247 |
| Other | 35 | 273 |
| Total R&D expenses | 11,990 | 9,913 |
From the first half of 2022 to the first half of 2023, the total amount spent by the group for research and development activity increased from €9.9 million to €12.0 million, or an increase of 21.0%. The rise has been primarily driven by:
For the 6 months ended June 30, 2023, the average workforce dedicated to research and development decreased in comparison to the first half of 2022, from 22.8 employees to 19.2.
During the period presented, our sales and marketing expenses significantly increased from €4.0 million as of June 30, 2022 to €4.8 million as of June 30, 2023, or +19.4%.
| As of June 30, | ||
|---|---|---|
| In thousands of euros | 2023 | 2022 |
| Personnel expenses | 2,802 | 2,057 |
| o/w share-based payment expense | 572 | 6 |
| Professional Fees | 1,449 | 1,712 |
| Communication and travel expenses | 42 | 92 |
| Depreciation and amortization expense | 70 | 57 |
| Others | 470 | 128 |
| Total S&M expenses | 4,832 | 4,048 |
Sales and marketing expenses primarily include payroll for the commercial and marketing workforce in France and in the European Union, as well as fees related to pre-commercialization activities.
The increase in personnel expenses for the first half of 2023 compared with the first half of 2022 is primarily driven by the increase in share-based payment expense for €0.6 million.
For the 6 months ended June 30, 2023, the average workforce dedicated to sales and marketing increased in comparison to the first half of 2022, from 7.7 employees to 11.6 people.
Our general and administrative expenses consist primarily of salaries and related costs for personnel and travel expenses for our employees in executive, operational, finance, legal and human resources functions, facility-related costs, as well as audit, legal, regulatory and tax-related services associated with maintaining compliance with Euronext Paris listing and AMF
Our general and administrative expenses are broken down as follows:
Given the Company's decision to withdraw its EMA application in April 2023, sales and marketing expenses are expected to decrease drastically from the second half of 2023 onwards.
requirements, director and officer insurance premiums, and corporate communications and investor relations costs.
During the period presented, our general and administrative expenses increased from €2.3 million as of June 30, 2022, to €3.0 million as of June 30, 2023, or a increase of 27.8%.
| As of June 30, | |
|---|---|
| 2023 | 2022 |
| 1,280 | 149 |
| (386) | (1,060) |
| 820 | 1,404 |
| 612 | 231 |
| 56 | 180 |
| 128 | 128 |
| 91 | 244 |
| 2,987 | 2,337 |
The decrease in our general and administrative expenses from year to year mainly results primarily from the increase of €1.1 million in personnel expenses, mainly resulting from the decrease in share-based compensation income of €0.7 million. For the first half of 2022 and 2023, the share-based payment incomes are primarily linked to reversal of the share-based expenses of free shares plans for which performance criteria were not or unlikely to be met.
The personnel expenses increase in partially offset by a decrease in professional expenses in the first semester of 2023 compared with the first semester of 2022. The level of professional fees as of June 30, 2022 is primarily linked with the fees of the external counsels involved in the financing and strategic operations driven throughout the year 2022.
For the 6 months ended June 30, 2023, the average workforce dedicated to general and administrative activities increased in compared to the first half of 2022, from 7.9 employees to 8.2 people.
Our net financial income significantly increased to €5.1 million as of June 30, 2023 from €1.1 million as of June 30, 2022.
Our financial income increased from €3.0 million to €6.6 million. This increase is directly explained by the change in derivative financial instrument fair value booked for an amount of €6.5 million as of June 30, 2023 versus €2.0 million as of June 2022. These financial incomes are non-cash and represent primarily the change in the fair value of the convertible option of our bond financing with Heights Capital for €3.3 million and of share warrants attached to our bank financing with EIB for €3.2 million. The fair value is calculated based on financial mathematic models using observable market data as of June 30, 2023.
€(1,4) million. The Company has booked interest expenses attached to our bond financing with Heights Capital, our bank financing with EIB, as well as our state-guaranteed loan for €(1,1) million based on the effective interest rate, versus €(0.7) million as of June 2022. The interest expenses corresponding to accrued interests of conditional advances amounts remained steady and amount to €(0.2) million. We also booked interest expenses deriving from the application of the standard IFRS 16 for €(37) K.
Our financial expenses slightly decreased from €(1,7) to
The net financial expense arising from the foreign exchange gains and losses amount to €(0.1) million as of June 30, 2023.
The net loss amounts to €(12.0) million as of June 30, 2022 from €(10.7) million as of June 30, 2022. The basic and diluted loss per share (calculated with the adjusted weighted average number of outstanding shares during the period) amounted to €0.23 and €0.26 as of June 30, 2022 and 2023 respectively.
Non-current assets are composed of intangible, tangible assets and non-current financial assets. They slightly decreased over the period from €3.0 million as of December 31, 2022 to €2.2 million
Current assets amounted to €22.9 million as of December 31, 2022 and €14.6 million as of June 30, 2023. The decrease is essentially due to the decrease in cash and cash equivalents during the first half of 2023.
The other current assets amount to €13.5 million as of June 30, 2022 and are primarily composed of
• €6 .5 million prepaid expenses, mostly deriving from manufacturing costs related to LUMEVOQ® and GS030, and
The changes in shareholder's equity are primarily due to the loss of the half-year period in the amount of €(12.0) million. as of June 30, 2022, primarily from the decrease of our office space in Paris and the amortization of fixed assets over the period.
• €5.0 million in taxes receivables, corresponding primarily to the 2022 Research Tax Credit amount, the 2023 research tax credit accrued receivable, as well as VAT accrued receivable. The 2022 research tax credit has been reimbursed in July 2023 for €2.2 million.
Thus, shareholder's equity amounted to €(15.3) million as of December 31, 2022 and €(27.1) million as of June 30, 2022.
| As of June 30, | ||
|---|---|---|
| In thousands of euros | 2023 | 2022 |
| Net cash flows from operating activities | (16,208) | (16,687) |
| Net cash flows from investment activities | 153 | 93 |
| Net cash flows from financing activities | 6,408 | (3,262) |
Our net cash flows from operating activities were €(16.7) million and €(16.2) million for June 2022 and 2023, respectively. During the first half-year of 2023, we have mainly focused on the ramp up of key strategic marketing and market access activities in preparation for commercial launch of LUMEVOQ® in Europe, the implementation of targeted corrective actions together with its manufacturing partner, around enhanced process control and more rigorous supervision inside the manufacturing suites. In addition, we continued to conduct the 5-years follow-up of patients post-injection with LUMEVOQ® in the REFLECT Phase III clinical trial in the treatment of Leber Hereditary Optic Neuropathy, as well as the PIONEER Phase I/II trial of GS030 in the treatment of Retinitis Pigmentosa.
The Company also recorded €1.5 million revenues corresponding to the periodic revision of the variable consideration in accordance with IFRS 15. The sale of LUMEVOQ® under a Temporary Authorization for Use (ATU) in France (amounting to a net total of €3.1 million as of June 2022) is expected to resume early 2024 once batches become available.
Our net cash from operating activities for the 6 months ended June 30, 2023 consisted primarily of a net loss of €(12.0) million adjusted of non-cash items, including the change in derivative financial instrument fair value of €(6.5) million, share-based payments of €0.2 million, amortization and depreciation of €0.7 million, and other financials items of €10 thousands.
Changes in working capital amounted to €(3,9) million and €0.4 million for June 2022 and 2023, respectively. The material items in the change in working capital as at June 2023 include a decrease of the other receivables of €0.3 million, primarily composed of a €(1.5) million increase in tax receivables offset by a €1.7 million decrease in prepaid expenses. The change in wording capital also includes a €2.1 increase in trade payables net of prepayments, offset by a €(2.0) decrease in other current and non-current liabilities, primarily related to the change of the refund liability and the potential rebates obligations resulting from the current regulatory framework of the Temporary Authorization for Use (ATU).
Our net cash flows from investment activities were €93 K and €153 K in June 2022 and 2023, respectively. The positive cash flows are due primarily to the sale of own shares as part of the liquidity contract.
Our net cash flows from financing activities strongly increased from €(3.3) million in June 2022 to €6.4 million in June 2023. The positive cash flows from financing activities as of June 2023 is mainly related to the net proceeds from the €8.0 million from the Tranche A of the EIB financing received in February 2023, primarily offset by the reimbursement of the capital and payment of interests of our state guaranteed loan for €(1.2) million and the €(0.5) million reimbursement related to finance leases and the application of the IFRS 16 standard.
The Group did not conclude any new significant transactions with related parties during the period.
Please see Note 20 of the 2023 condensed half-year consolidated financial statements for more information.
Risk factors are similar to those presented in the section 3 of the 2022 Universal Registration Document (pages 15 to 42) and did not change significantly during the first half-year of 2023.
This document is available on the Company's website: www.gensight-biologics.com.
34, rue de Liège 75008 Paris S.A.S. au capital de 309 700 € 323 470 427 RCS Angers
6, place de la Pyramide 92908 Paris La Défense cedex S.A.S. au capital de 2 188 160 € 572 028 041 RCS Nanterre
GenSight Biologics S.A. Société anonyme 74, rue du faubourg Saint-Antoine 75012 PARIS
For the period from January 1 to June 30, 2023
To the Shareholders,
In compliance with the assignment entrusted to us by your bylaws and your Shareholders' Meeting and in accordance with the requirements of article L.451-1-2-III of the French Monetary and Financial Code ("code monétaire et financier"), we hereby report to you on:
These condensed half-yearly consolidated financial statements are the responsibility of Board of directors. Our role is to express a conclusion on these financial statements based on our review.
We conducted our review in accordance with professional standards applicable in France. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with professional standards applicable in France and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed half-yearly consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34 – standard of the IFRSs as adopted by the European Union applicable to interim financial information.
Without qualifying our conclusion, we draw your attention to the matter set out in note 3.4 "Going concern" to the condensed half-yearly consolidated financial statements which raise substantial doubt about the ability of the Company to continue as a going concern.
We have also verified the information presented in the half-yearly management report on the condensed half-yearly consolidated financial statements subject to our review.
We have no matters to report as to its fair presentation and consistency with the condensed half-yearly consolidated financial statements.
Angers and Bordeaux, September 18, 2023
The Statutory Auditors
BECOUZE DELOITTE & ASSOCIÉS Rémi SOURICE Jean-Baptiste BARRAS Partner Partner
"I declare that, to the best of my knowledge, the summary consolidated financial statements for the ending semester have been prepared in accordance with applicable accounting standards and give a true and fair view of the assets and liabilities, financial position and profit and loss of the Company and all the other companies included in the scope of consolidation, and that this Half-year Activity Report includes a fair review of the important events which occurred during the first six months of the year, their impact on the half-year financial statements and the main transactions between related parties, together with a description of the principal risks and uncertainties that they face in the remaining six months of the year."
Paris, September 18, 2023
Bernard Gilly Chief Executive Officer
74, rue du Faubourg Saint-Antoine 75012 Paris, France
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