Note 1:General information about the Company
Founded in 2012, GenSight Biologics S.A. (hereinafter referred to as \u201cGenSight Biologics\u201d or the \u201cCompany\u201d and together with its subsidiaries as the \u201cGroup\u201d) is a clinical-stage biotechnology group discovering and developing novel therapies for neurodegenerative retinal diseases and diseases of the central nervous system. GenSight Biologics\u2019 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\u2019 equity amounts to \u20ac(26,920)\u00a0K as of December\u00a031, 2024 as a result of several financing rounds (see Note 10). 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\u2019s future operations are highly dependent on a combination of factors, including: (i)\u00a0the success of its research and development; (ii)\u00a0regulatory approval and market acceptance of the Group\u2019s proposed future products; (iii)\u00a0the timely and successful completion of additional financing; and (iv)\u00a0the development of competitive therapies by other biotechnology and pharmaceutical companies.
The presented consolidated Financial Statements are expressed in thousands of euros, unless stated otherwise. For ease of presentation, numbers have been rounded. Calculations, however, are based on exact figures. Therefore, the sum of the numbers in a column of a table may not conform to the total figure displayed in the column.
The reporting date for the consolidated financial statements is December\u00a031 and covers a twelve-month period. The individual statements of the consolidated subsidiaries GenSight Biologics Inc. and GenSight Biologics France SAS are prepared at the same reporting date, i.e., December\u00a031, and cover a one-year period.
The consolidated financial statements as of December\u00a031, 2024 have been prepared under the responsibility of management of\u00a0the Group and were approved on March 18, 2025 by the Board of Directors.
The Group\u2019s future operations are highly dependent on a combination of factors, including: (i)\u00a0the success of its research and development; (ii)\u00a0regulatory approval and market acceptance of the Group\u2019s proposed future products; (iii)\u00a0the timely and successful completion of additional financing; and (iv)\u00a0the development of competitive therapies by other biotechnology and pharmaceutical companies.
2.2Going concern
These 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.
Financial Position and Recent Funding
As of December 31, 2024, the Company had \u20ac2.5\u00a0million in consolidated cash and cash equivalents compared to \u20ac2.1\u00a0million on December\u00a031, 2023. With the equity-with-warrants-attached financing announced in March\u00a02025 (approximately \u20ac0.9\u00a0million) and the anticipated collection of approximately \u20ac1.1\u00a0million in Research Tax Credit (CIR), and based on current operations, plans, and assumptions, this balance should fund operations until early May 2025. However, this funding is insufficient to cover operational requirements for the next 12\u00a0months.
The Company's financial debt includes a state-guaranteed loan, an EIB loan, and convertible notes held by Sight Again and Heights Capital, totaling \u20ac26.4 million (nominal and interest, undiscounted value).
Financial obligations
As of December 31, 2024, the Company had not met the scheduled repayment obligations for certain loans, leaving \u20ac0.5\u00a0million outstanding. The Company initiated discussions with its banking partners to extend the maturity dates of these loans. While no lender \u2013 neither the EIB, Heights Capital, nor the banks that granted the PGE \u2013 has issued a default notice or formally demanded payment of the overdue amounts as of today, non-compliance with the original repayment schedule may constitute a breach of obligations. Discussions are still ongoing.
As a result of these payment delays, financial debts have been reclassified as current liabilities on the Company balance sheet. These include a state-guaranteed loan, an EIB loan, and Heights Capital convertible notes, totaling \u20ac19.2\u00a0million (nominal and interest, undiscounted value).
Heights Capital agreed to accept payment in shares rather than cash for the December 2024 and March 2025 convertible bond installments, despite the stock price falling below the threshold that would typically require cash amortization per the original agreement.
Business update
In November 2024, the Company submitted a request to the French medicines agency ANSM to restart the Compassionate Access Program (AAC) for LUMEVOQ\u00ae. The Company received an initial set of questions on December\u00a020, 2024, and provided responses on January\u00a010, 2025. Following a second set of questions received on February\u00a017, 2025, the Company submitted its responses on March\u00a05, 2025. Based on this timeline, the Company expects the Compassionate Access Program to resume in April 2025.
Financial Outlook and Mitigation Plans
The Company expects that the AAC program, once operational, will contribute to extending the cash runway beyond the next 12\u00a0months and finance ongoing CMC, clinical and regulatory activities necessary for upcoming milestones, which includes the initiation of the new RECOVER Phase III clinical trial and UK MHRA marketing application for LUMEVOQ\u00ae.
To address the potential gap between the AAC program\u2019s resumption and receipt of the first AAC payments, the Company is in active discussions for bridge financing contingent upon ANSM approval of the AAC program. The Company has also negotiated an accounts receivable assignment agreement with a bank to receive 80% of hospital invoice values within days of billing.
The Company is scheduled to pay annual rebates on the 2025 AAC program in November 2026, amounting to approximately 45% of the AAC indemnities generated throughout 2025. Consequently, to supplement working capital requirements and fund ongoing operating expenses, the Company will need to pursue additional debt or equity financing or explore partnering or M&A opportunities before the second half of 2026.
Going Concern Assessment
The financial statements were prepared on a going concern basis as of December 31, 2024, with the following key assumptions:
\u2022Successful negotiation with banks and financial partners to extend loan maturities and address defaults of contractual obligations.
\u2022ANSM approval and resumption of the AAC program in April\u00a02025.
\u2022Implementation of bridge financing post-ANSM approval to close any payment gaps.
\u2022Raising additional funds before the end of H1 2026 to finance operations and rebate payments due in November\u00a02026.
While the Company believes in its ability to raise additional funds or realize M&A opportunities, no assurance can be given that these objectives will be achieved or that sufficient funds will be secured at acceptable terms. Failure to secure adequate funding could require the Company to severely modify its operating plans, impair its ability to realize its assets and pay its liabilities in the normal course of business, or to be forced to enter into insolvency proceedings or cease its operations in whole or in part.
Therefore, substantial doubt exists regarding the Company's ability to continue as a going concern.
The consolidated financial statements as of December\u00a031, 2024 have been prepared under the responsibility of management of\u00a0the Group and were approved on March 18, 2025 by the Board of Directors.
MAIN EVENTS OF THE FISCAL YEAR
On January 12, 2024, the Company received written feedback from the US Food and Drug Administration (FDA) on the proposed design for the Phase III trial RECOVER. This protocol had been previously shared with the European Medicines Agency (EMA) and the UK Medicines and Healthcare products Agency (MHRA).
The FDA advised the Company that replacing the double sham injection control arm with a double placebo injection control arm \u201cwould help make the study an adequate and well-controlled clinical study designed to provide the primary evidence of effectiveness to support a future marketing application.\u201d The agency also had \u201cno objection to using best corrected visual acuity (BCVA) as the primary endpoint\u201d and made additional recommendations for the Company to consider.
The Company plans to revise the RECOVER study design to incorporate the feedback received from the three regulatory agencies, aiming at launching a single global Phase III study that will support marketing authorization applications in the US and EU. GenSight Biologics may schedule further consultations with the FDA and other agencies to reach alignment on the final RECOVER study design.
On January 16, 2024, the Board of Directors of the Company has acknowledged the resignation of Mr. Bernard Gilly from his position as director. The Board of Directors also announced on the same day its decision, after consultation of the Nomination Committee, to co-opt Mrs. Laurence Rodriguez as director for the remainder of Bernard Gilly\u2019s term of office (expiring at the end of the annual shareholders meeting to be held in 2024 to approve the financial statements for the financial year ending December 31, 2023).
On February 8, 2024, the Company announced the completion of a \u20ac5 million capital increase subscribed by existing shareholders (Sofinnova Partners, Invus and UPMC Enterprises) and Heights Capital (the \u201cCapital Increase\u201c).
Gross proceeds from the transaction are \u20ac5 million gross. The net proceeds from the issuance of the New Shares will amount to approximately \u20ac4.7 million.
The Company intends to use the net proceeds from the Capital Increase to (in the following order of priority) (i) finance its general corporate needs, (ii) complete manufacturing operations and regulatory procedures in order to provide drug product both to launch the potential new RECOVER Phase III clinical trial of LUMEVOQ\u00ae\u00a0and to resume the early access program in Q3 2024 and (iii) produce additional GMP batches of LUMEVOQ\u00ae\u00a0at its manufacturing partner\u2019s facility in the United States.
On March 12, 2024, the Company announced initial results of new meta-analyses in Leber Hereditary Optic Neuropathy (LHON), which show those treated with LUMEVOQ\u00ae\u00a0(GS010; lenadogene nolparvovec) gene therapy experienced a rate of visual recovery greater than that of idebenone-treated patients and untreated (natural history) patients. The meta-analyses are\u00a0the first to focus solely on patients with the m.11778G>A\u00a0ND4\u00a0mutation, which is the most common mutation and one with a poor visual prognosis.
On March 20, 2024, the Company reported initial efficacy and safety results at 4 years\u00a0post-treatment administration in the REFLECT Phase III clinical trial with LUMEVOQ\u00ae\u00a0(GS010; lenadogene nolparvovec). The results show that four years after a one-time administration of the gene therapy, the visual acuity improvement has been sustained while maintaining a favorable safety profile. Bilateral injection provides an additional effect compared to unilateral treatment, demonstrated across all analyses of visual acuity improvement and responder rates.
The findings reinforce the results observed at 3 years post-treatment administration, which were reported in March 2023.
On May 7, 2024, the Company announced the success of its Offering, through (i) a capital increase reserved to specialized investors and (ii) a concurrent capital increase by way of a private placement, by the issuance of new shares with warrants attached, for a total gross amount of \u20ac9,282,515.80 (excluding the future net proceeds related to the exercise of the warrants). The subscription price for one ABSA is \u20ac0.395 (the \u201cOffering Price\u201d). The Offering Price is the same in the two concurrent capital increases.
On June 3, 2024, the Company announced the appointment of William Monteith to its Board of Directors. Mr. Monteith joined as an independent Director after existing Board members approved his nomination at the meeting on May 29, 2024.
On June 20, 2024, the Company announced the renegotiation of certain financial obligations, securing its financial position and improving short-term flexibility. The Company also provided operational updates.
In connection with its two recent successful capital increases in\u00a0February 2024 and May 2024, the Company initiated discussions with its creditors. As a result of these discussions, the Company and its creditors have renegotiated the terms and conditions of certain\u00a0financial obligations.
On October 24, 2024, the Company provided a business update. LUMEVOQ\u00ae drug product manufacture, which included the mixing of the 2 GMP drug substance batches produced in 2023, is now fully complete, with more than 100 vials available. The drug product has successfully passed all quality control tests required to release the product for human use. Vials are stored in France, labelled and ready to be supplied once the release is documented and the regulatory green light is obtained.
The Company is currently preparing the Good Manufacturing Practice (GMP) documentation and anticipates submitting the dossier to support the AAC resumption to the Agence Nationale de S\u00e9curit\u00e9 du M\u00e9dicament et des Produits de Sant\u00e9 (ANSM) by mid-November 2024, in accordance with the requirements formulated by the ANSM.
On October 28, 2024, the Company announced the publication of meta-analyses comparing visual outcomes among patients with Leber Hereditary Optic Neuropathy (LHON) caused by a mutation in the MT-ND4 mitochondrial gene (ND4-LHON), the most common mutation leading to the\u00a0 poorest visual prognosis. The paper, published in the peer-reviewed journal Survey of Ophthalmology, is the first to compare the efficacy of LHON treatments, approved or in development, on visual outcomes in the ND4-LHON patient population and to compare these outcomes with those in untreated (natural history) patients. The meta-analyses establish a \u201cgradient of efficacy\u201d in two measures of visual outcomes assessed in the paper, with LUMEVOQ\u00ae gene therapy having better outcomes compared to idebenone treatment and both treatments having better outcomes compared to the natural history of the disease.
As measured by the rate of Clinically Relevant Recovery (CRR)2, which is the responder rate common across the studies analyzed in the paper, the rate of visual recovery after LUMEVOQ\u00ae gene therapy is triple that in the natural evolution of ND4-LHON and substantially greater than that among idebenone-treated patients.
On November 1, 2024, the Company announced a financing through a capital increase reserved to specialized investors by the issuance of new shares with warrants attached, for a total gross amount of c. \u20ac2.8 million (excluding the future net proceeds related to the exercise of the warrants) (the \u201cReserved Offering\u201c). The subscription price for one ABSA is \u20ac0.3513 (the \u201cOffering Price\u201c).
On November 13, 2024, the Company announced the submission of the updated regulatory file for LUMEVOQ\u00ae gene therapy to the French medicines safety agency Agence Nationale de S\u00e9curit\u00e9 du M\u00e9dicament et des Produits de Sant\u00e9 (ANSM) to prepare for the restart of the early access (AAC) program in France. The submission documents the successful manufacture of LUMEVOQ\u00ae, including the blending of two GMP drug substance batches to optimize the number of vials available for clinical use and the passing of all required quality control tests. LUMEVOQ\u00ae is being developed as a treatment for Leber Hereditary Optic Neuropathy (LHON) caused by a mutated ND4 mitochondrial gene, a rare mitochondrial genetic disease that causes acute and usually irreversible loss of vision.
On December 24, 2024, The Company announced a financing through a capital increase reserved to specialized investors by the issuance of new shares with warrants attached, for a total gross amount of c. \u20ac1.5 million (excluding the future net proceeds related to the exercise of the warrants) (the \u201cReserved Offering\u201c). The subscription price for one ABSA is \u20ac0.2816 (the \u201cOffering Price\u201c).
MAIN EVENTS OF THE PREVIOUS FISCAL YEAR
On February 6, 2023, the Company announced that it has received the payment of \u20ac8\u00a0million under the first tranche (the \u201cTranche\u00a0A\u201d) of the unsecured credit facility executed with the European Investment Bank (the \u201cEIB\u201d) on November\u00a03, 2022 maturing in November 2027.
The disbursement of Tranche A was subject, among other conditions, to the issuance of warrants which have been subscribed on January 25, 2023.
The credit facility is divided into three tranches of \u20ac8 million, \u20ac12 million and \u20ac15 million, each subject to the fulfillment of certain conditions precedent and redeemable within 5\u00a0years from the date of signature of the credit facility, i.e. November\u00a03, 2027. No guarantee can be given as to the satisfaction by the Company of the condition\u2019s 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 and subsequently scheduled the manufacturing of 3 GMP batches early August, with the first results expected through September and October 2023.
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\u00a019, 2023 on LUMEVOQ\u00ae 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\u00ae 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\u00ae with the EMA, aiming at submitting a new application addressing remaining objections as soon as possible, in Europe and other countries.
On July 20, 2023, given the Company\u2019s decision to withdraw its EMA application in April\u00a02023, the Company announced 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.
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 \u20ac12\u00a0million. 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 the Bridge Financing with the Sofinnova Crossover I SLP, Invus Public Equities LP and UPMC Enterprises (together, the \"Investors\") and drew down the Tranche 1 of \u20ac6 million.
The Bridge Financing is divided into two tranches, each subject to certain conditions:
\u2022A Tranche 1 of \u20ac6 million through the issuance of 60 bonds convertible into new ordinary shares with a value of \u20ac100,000 each (the \u201c2023 OCAs\u201d), maturing in twelve\u00a0months and bearing interest at 10% per annum; and
\u2022A Tranche 2 of \u20ac4 million through the issuance of new ordinary shares.
Each tranche was subscribed for by each investor pro rata to its participation in the Bridge Financing, as follows: 35% for Sofinnova Crossover I SLP, 35% for Invus Public Equities LP 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 EIB and Heights Capital of certain waivers and agreements.
The drawdown of Tranche\u00a02 was subject, among other conditions, to the fulfillment of the following conditions at the latest on November\u00a015, 2023(7):
\u2022the production of at least two successful GMP batches (Good Manufacturing Practices), of LUMEVOQ\u00ae as demonstrated by a statement signed by a qualified person and/or representative of the quality unit documenting that the GMP batches are within specifications required (individually, a \u201cSuccessful Manufacturing\u201d) or,
\u2022in the event that the GMP batches are not produced, or only one Successful Manufacturing, with unanimous approval by all the Investors.
On September 18, 2023, the Company announced the successful manufacture of LUMEVOQ\u00ae GMP batch.
On October 26, 2023, the Company announced that, in connection with the drawdown of Tranche 1 in August 2023, the Company has obtained from the Banks, the EIB and Heights, subject to certain conditions:
\u2022a waiver by the Banks, the EIB and Heights on any provision which could trigger early repayment of their debt until January\u00a031, 2024;
\u2022an agreement of the EIB and Heights on the pari passu treatment of the 2023 OCAs with the 2022 OCAs;
\u2022a deferral of principal payments due to the Banks until January\u00a031, 2024;
\u2022the suspension of Heights\u2019 conversion rights with respect to the 2022 OCAs until January 31, 2024;
\u2022deferral of principal payments due to Heights in connection with the redemption of the 2022 OCAs until January\u00a031, 2024; and
\u2022a waiver by the EIB of any adjustment right it has under the subscription agreement relating to the Warrants in the context of the Facility signed by the Company and the EIB on December\u00a022, 2022, and in particular the anti-dilution provision contained in this subscription agreement.
On November 15, 2023, the Company announced that an independent laboratory confirmed viral genome (vg) titer from the second drug substance (DS) batch of LUMEVOQ\u00ae manufactured under conditions compliant with Good Manufacturing Practice (GMP) standards.
As a result, the Company became eligible to draw down the second tranche of the bridge financing signed in August 2023 with the Investors. The drawdown of the second tranche also triggered the automatic conversion of the convertible bonds from the \u20ac6 million first tranche at a conversion price of \u20ac0.7122.
On November 21, 2023, the Company announced the results of an offering for a total of \u20ac4.7\u00a0million carried out in two distinct but concomitant transactions:
\u2022a private placement to a category of persons satisfying determined characteristics, for approximately \u20ac4,4\u00a0million, through the issuance of 9,718,768 new ordinary shares, and
\u2022a capital increase in favor of retail investors via the PrimaryBid platform only in France, for approximately \u20ac0.3\u00a0million, through the issuance of 573,917 new ordinary shares
As a result of the drawdown of Tranche 2 in the context of the private placement, 8,680,797 new shares have been issued upon conversion of the 2023 OCAs on the settlement date of the offering, at a conversion price of \u20ac0.7122 per 2023 OCAs.
On December\u00a022, 2023, the Company announced the appointment of Mrs. Laurence Rodriguez, as new Chief Executive Officer.
(7)The deadline for the completion of the conditions has been amended pursuant to an amendment agreement dated October 31, 2023.
On February 8, 2024, the Company announced the completion of a \u20ac5 million capital increase subscribed by existing shareholders (Sofinnova Partners, Invus and UPMC Enterprises) and Heights Capital (the \u201cCapital Increase\u201c).
Gross proceeds from the transaction are \u20ac5 million gross. The net proceeds from the issuance of the New Shares will amount to approximately \u20ac4.7 million.
The Company intends to use the net proceeds from the Capital Increase to (in the following order of priority) (i) finance its general corporate needs, (ii) complete manufacturing operations and regulatory procedures in order to provide drug product both to launch the potential new RECOVER Phase III clinical trial of LUMEVOQ\u00ae\u00a0and to resume the early access program in Q3 2024 and (iii) produce additional GMP batches of LUMEVOQ\u00ae\u00a0at its manufacturing partner\u2019s facility in the United States.
On May 7, 2024, the Company announced the success of its Offering, through (i) a capital increase reserved to specialized investors and (ii) a concurrent capital increase by way of a private placement, by the issuance of new shares with warrants attached, for a total gross amount of \u20ac9,282,515.80 (excluding the future net proceeds related to the exercise of the warrants). The subscription price for one ABSA is \u20ac0.395 (the \u201cOffering Price\u201d). The Offering Price is the same in the two concurrent capital increases.
On June 20, 2024, the Company announced the renegotiation of certain financial obligations, securing its financial position and improving short-term flexibility. The Company also provided operational updates.
In connection with its two recent successful capital increases in\u00a0February 2024 and May 2024, the Company initiated discussions with its creditors. As a result of these discussions, the Company and its creditors have renegotiated the terms and conditions of certain\u00a0financial obligations.
On November 1, 2024, the Company announced a financing through a capital increase reserved to specialized investors by the issuance of new shares with warrants attached, for a total gross amount of c. \u20ac2.8 million (excluding the future net proceeds related to the exercise of the warrants) (the \u201cReserved Offering\u201c). The subscription price for one ABSA is \u20ac0.3513 (the \u201cOffering Price\u201c).
On December 24, 2024, The Company announced a financing through a capital increase reserved to specialized investors by the issuance of new shares with warrants attached, for a total gross amount of c. \u20ac1.5 million (excluding the future net proceeds related to the exercise of the warrants) (the \u201cReserved Offering\u201c). The subscription price for one ABSA is \u20ac0.2816 (the \u201cOffering Price\u201c).
On November 21, 2023, the Company announced the results of an offering for a total of \u20ac4.7\u00a0million carried out in two distinct but concomitant transactions:
\u2022a private placement to a category of persons satisfying determined characteristics, for approximately \u20ac4,4\u00a0million, through the issuance of 9,718,768 new ordinary shares, and
\u2022a capital increase in favor of retail investors via the PrimaryBid platform only in France, for approximately \u20ac0.3\u00a0million, through the issuance of 573,917 new ordinary shares
As a result of the drawdown of Tranche 2 in the context of the private placement, 8,680,797 new shares have been issued upon conversion of the 2023 OCAs on the settlement date of the offering, at a conversion price of \u20ac0.7122 per 2023 OCAs.
3.9Share capital
Ordinary shares are classified under shareholders\u2019 equity. The costs of share capital transactions that are directly attributable to the issue of new shares or options are recognized in shareholders\u2019 equity as a deduction from the revenue from the issue, net of tax.
The Company\u2019s own shares bought in the context of a brokering/liquidity agreement are presented as a reduction in shareholders\u2019 equity until their cancellation, their reissuance or their disposal.
Note 10:Capital
The share capital as of December\u00a031, 2024, amounts to \u20ac3,119,361.13. It is divided into 124,774,445 fully authorized, subscribed and paid-up ordinary shares with a nominal value of \u20ac0.025.
On July\u00a013, 2016, the Company completed its Initial Public Offering (IPO) on Euronext Paris, raising \u20ac40\u00a0million in gross proceeds, and the Company issued 5,000,000 ordinary shares with a nominal value of \u20ac0.025 and a share premium of \u20ac7.975\u00a0per share.
On August\u00a010, 2016, the Company partly exercised its overallotment option as part of its IPO on Euronext Paris, raising an additional \u20ac5.2\u00a0million in gross proceeds, and the Company issued 655,859 ordinary shares with a nominal value of \u20ac0.025 and a share premium of \u20ac7.975\u00a0per share.
On June\u00a027, 2017, the Company operated a capital increase whose gross proceeds amounted to \u20ac22.5\u00a0million, by means of a private placement reserved to a category of persons, U.S. and European institutional investors specialized in healthcare and biotechnology. The majority of the new shares were allocated to U.S. investors. This increase corresponds to 3,750,000 new shares, par value \u20ac0.025 each.
On February\u00a025, 2019, GenSight Biologics announced the completion of a capital increase of \u20ac8\u00a0million subscribed entirely by Sofinnova Crossover I SLP (\u201cSofinnova\u201d). The purpose of this capital increase is to pursue the final stages of clinical development of LUMEVOQ\u00ae, and file for marketing authorization in Europe. This increase corresponds to 3,921,568 new shares, par value \u20ac0.025 each.
On December\u00a020, 2019, GenSight Biologics announced the completion of a capital increase of \u20ac9\u00a0million subscribed for by\u00a0one of its main shareholders Sofinnova Crossover I SLP (\u201cSofinnova\u201d) and by a new strategic Chinese investor Strategic International Group Limited, a wholly owned subsidiary of\u00a03SBio\u00a0Inc. (\u201c3SBio\u201d). This increase corresponds to 3,799,071\u00a0new shares, par value \u20ac0.025 each.
On October\u00a022, 2020, GenSight completed a capital increase of \u20ac25\u00a0million. The Company has issued 5,954,650 new ordinary shares with a nominal value of \u20ac0.025 each, for total gross proceeds of approximately \u20ac25\u00a0million by means of an accelerated bookbuilding process to the benefit of categories of persons. The issue price of the New Shares is \u20ac4.20 per share, representing a 12.5% discount to the volume weighted average of the share prices on Euronext Paris for the last five trading sessions preceding the date on which the issuance price is set (i.e., October\u00a015, 16, 19, 20 and 21, 2020), in accordance with the 19th\u00a0resolution of the combined annual General Meeting of Shareholders of the Company held on April\u00a029, 2020.
On December\u00a010, 2020, GenSight received the notification by Kreos of the conversion of 50% of the convertible bonds of tranches\u00a0A and B (at a price of \u20ac2.245 per share), the conversion of 50% of the additional convertible bonds of tranche B (at a price of \u20ac2.574 per share) and the exercise of all share warrants of tranches\u00a0A and B (at a price of \u20ac2.245 per share), representing a total issuance of 1,182,953 new ordinary shares.
On March\u00a026, 2021, GenSight completed a capital increase of \u20ac30\u00a0million. The Company has issued 4,477,612\u00a0new ordinary shares with a nominal value of \u20ac0.025 each, for total gross proceeds of approximately \u20ac30\u00a0million by means of an accelerated bookbuilding process to the benefit of categories of persons. The book was largely oversubscribed, based on demand from new investors. The issue price of the new shares is \u20ac6.70 per share, representing a 9.0% discount to the last closing share price and a 12.7% discount to the volume weighted average of the share prices on Euronext Paris for the last five trading sessions preceding the date on which the issuance price is set (i.e., March\u00a019, 22, 23, 24 and 25, 2021), in accordance with the 19th\u00a0resolution of the combined annual General Meeting of Shareholders of the Company held on April\u00a029, 2020.
On November 21, 2023, the Company issued 9,718,768 new ordinary shares with a nominal value of \u20ac0.025 each at a price of \u20ac0.4527 per share in connection with a share capital increase without preferential subscription rights reserved to categories of persons satisfying determined characteristics for approximately \u20ac4.4\u00a0million and 573,917 new ordinary shares, at a same price, in\u00a0connection with a capital increase without shareholders' preferential subscription rights in favor of retail investors via the\u00a0PrimaryBid platform only in France for approximately \u20ac0.3\u00a0million. On the same date, the Company issued 8,680,797\u00a0new ordinary shares with a nominal value of \u20ac0.025 each pursuant to the automatic and full conversion of the 2023\u00a0OCA at a conversion price of \u20ac0.7122 per convertible bond.
On February 8, 2024, the Company announced the completion of a \u20ac5 million capital increase ( \u20ac4.7m net) by the issuance of 13,061,651 new shares, for a subscription price of \u20ac0.3828 each (including premium subscribed entirely by Sofinnova Crossover I SLP (\u201cSofinnova Partners\u201d) for \u20ac2 million, Invus Public Equities LP (\u201cInvus\u201d) for \u20ac1.75 million, UPMC Enterprises (\u201cUPMC\u201d) for \u20ac1 million and CVI Investments, Inc. (\u201cHeights Capital\u201d) for \u20ac0.25 million.
Under the terms of the subscription agreement entered between the Company and the Investors, the Investors have undertaken to subscribe to the Capital Increase for an aggregate amount of \u20ac5\u00a0million through the issuance of new shares at a price equal to \u20ac0.3828, representing a discount of 2.77% to the volume-weighted average price of the Company\u2019s shares on the regulated market of Euronext in Paris during the last five trading sessions before pricing (i.e., trading sessions from January\u00a031, 2024 to February\u00a06, 2024).
On May 7, 2024, the Company announced the success of its Offering through (i) a capital increase reserved to specialized investors and (ii) a concurrent capital increase by way of a private placement, by the issuance of new shares with warrants attached, for a total gross amount of \u20ac9.3m (excluding the future net proceeds related to the exercise of the warrants). The subscription price for one ABSA is \u20ac0.395 (the \u201cOffering Price\u201d). The Offering Price is the same in the two concurrent capital increases.
The Offering was carried out through the issuance of 23,500,040 ABSA (as defined below), in two distinct but concomitant transactions:
\u2022a capital increase without shareholders\u2019 preferential subscription rights reserved to a category of persons for a total of \u20ac7,8m through the issuance of new shares of a per value of \u20ac0.025 to which are attached 1 warrant for 1 new shares.
\u2022a capital increase without preferential subscription rights by way of \u201cPrivate Placement New Share\u201d for a total of \u20ac1,5m to which are attached 1 warrant for 1 new share.
The Offering Price is \u20ac0.395 for the two concurrent capital increases and the transaction price has been split between ordinary shares for \u20ac7,5m and warrants for \u20ac1,8m.
Upon settlement of the Offering, the Warrants will be exercisable for a period of thirty months from the date of issue. The exercise of a Warrant will give the right to subscribe to one\u00a0(1) Warrant Share (the \u201cExercise Ratio\u201c), it being specified that this Exercise Ratio may be adjusted following any transactions carried out by the Company on its share capital or reserves, as from the issuance date of the Warrants, in order to maintain the rights of the Warrants\u2019 holders. The exercise price of the Warrants will be equal to \u20ac0.45.
On June 28,2024, following the amendment of Heights Capital convertible Notes, the Company converted 631,560 notes into 1,930,195 new shares. This conversion was executed using the newly established price limit of \u20ac0,3272.
On August 30, 2024, following the amendment of Heights Capital convertible Notes, the Company converted 631,560\u00a0notes into 1,930,195 new shares. This conversion was executed using the newly established price limit of \u20ac0,3272.
On September 28, 2024, following the amendment of Heights Capital convertible Notes, the Company converted 631,560\u00a0notes into 1,930,195 new shares. This conversion was executed using the newly established price limit of \u20ac0,3272.
On November 1, 2024, the Company completed a financing through a capital increase reserved to specialized investors by the issuance of new shares with warrants attached, for a total gross amount of c. \u20ac2.8 million (excluding the future net proceeds related to the exercise of the warrants) (the \u201cReserved Offering\u201c). The subscription price for one ABSA is \u20ac0.3513 (the \u201cOffering Price\u201c).
The Reserved Offering was carried out through the issuance of 7,901,000 ABSA (as defined below) via a capital increase without shareholders\u2019 preferential subscription rights reserved to a category of persons through the issuance of new shares of a per value of \u20ac0.025 (the \u201cNew Shares\u201c), to which are attached 1\u00a0warrant for 1 new shares.
The Offering Price is \u20ac0.3513, equal to the volume-weighted average price of the Company\u2019s shares on Euronext Paris during the last five trading sessions preceding its setting (i.e., October\u00a025, 28, 29, 30 and 31, 2024) (the \u201cReference Price\u201c) plus a premium of 4.6%. Taking into account the estimated theoretical value of 100% of a Warrant (i.e., \u20ac0.0812, this value was obtained using the Black & Scholes method with a volatility of 35%), this would represent a discount of 19.54% compared with the Reference Price, in accordance with the 23rd\u00a0resolution of the General Meeting. Upon settlement of the Reserved Offering, the Warrants will be exercisable from April\u00a01, 2025, until the maturity of the warrants, which is sixty months from the date of issue. In no event, the Warrants will be exercisable before April\u00a01, 2025.
On December\u00a02, 2024, following the amendment of Heights Capital convertible Notes, the Company converted 631,560\u00a0notes into 1,930,195 new shares. This conversion was executed using the newly established price limit of \u20ac0,3272.
On December\u00a024, 2024, the Company completed a financing through a capital increase reserved to specialized investors by the issuance of new shares with warrants attached, for a total gross amount of c. \u20ac1.5\u00a0million (excluding the future net proceeds related to the exercise of the warrants) (the \u201cReserved Offering\u201c). The subscription price for one ABSA is \u20ac0.2816 (the \u201cOffering Price\u201c).
The Reserved Offering, was carried out through the issuance of 5,326,706 ABSA (as defined below) via a capital increase without shareholders\u2019 preferential subscription rights reserved to a category of persons through the issuance of new shares of a per value of \u20ac0.025 (the \u201cNew Shares\u201c), to which are attached 1\u00a0warrant for 1 new shares.
The Offering Price is \u20ac0.2816, equal the volume-weighted average price of the Company\u2019s shares on Euronext Paris during the last five trading sessions preceding its setting (i.e. December\u00a017, 18, 19, 20 and 23, 2024) (the \u201cReference Price\u201c) plus a premium of 3.7%. Taking into account the estimated theoretical value of 100% of a Warrant (i.e., \u20ac0.0516, this value was obtained using the Black & Scholes method with a volatility of 35%), this would represent a discount of 15.32% compared with the Reference Price, in accordance with the 23rd\u00a0resolution of the General Meeting. Upon settlement of the Reserved Offering, the Warrants will be exercisable from April\u00a01, 2025 until November\u00a06, 2029. In no event, the Warrants will be exercisable before April\u00a01, 2025.
On December\u00a027, 2024, following the amendment of Heights Capital convertible Notes, the Company converted 631,560\u00a0notes into 1,930,195 new shares. This conversion was executed using the newly established price limit of \u20ac0,3272.
The 124,774,445 outstanding shares does not include BSA, BCE, SO and AGA. BSA are granted to investors and other individual non-employees, BCE are granted to employees only, AGA and SO are granted to employees and/or executives.\u00a0
The table below shows the changes occurred in the share capital during the last two periods:
| \n In thousands of Euros, except for number of shares) | \n\n Share Capital | \n\n Share premium | \n\n Number of shares | \n
|---|---|---|---|
| \n Balance as of January\u00a01, 2023 | \n\n 1,158 | \n\n 181,211 | \n\n 46,335,591 | \n
| \n Capital increase by issuance of ordinary shares | \n\n 474 | \n\n 9,665 | \n\n 18,973,482 | \n
| \n Less cost of issuance of shares | \n\n 0 | \n\n \u00a0 | \n\n 0 | \n
| \n Issue of shares upon exercise of equity instruments (1) | \n\n 0 | \n\n 60 | \n\n 0 | \n
| \n Total as of December\u00a031, 2023 | \n\n 1,633 | \n\n 190,937 | \n\n 65,309,073 | \n
| \n (In thousands of Euros, except for number of shares) | \n\n Share Capital | \n\n Share premium | \n\n Number of shares | \n
|---|---|---|---|
| \n Balance as of January 1, 2024 | \n\n 1,633 | \n\n 190,937 | \n\n 65,309,073 | \n
| \n Capital increase by issuance of ordinary shares | \n\n 1,245 | \n\n 14,569 | \n\n 49,789,397 | \n
| \n Less cost of issuance of shares | \n\n 0 | \n\n (1,816) | \n\n 0 | \n
| \n Issue of shares upon exercise of equity instruments (1) | \n\n 242 | \n\n 2,916 | \n\n 9,675,975 | \n
| \n Total as of December\u00a031, 2024 | \n\n 3,119 | \n\n 206,606 | \n\n 124,774,445 | \n
| \n (1) | \n\n The share premium includes the subscription price of non-employee warrants and the exercise price in excess of the share nominal value for employee and non-employee warrants. | \n
|---|
All the changes relating to employee warrants, non-employee warrants and free shares, as well as their impact on the profit and loss for the period are detailed in Note\u00a019.
On February 8, 2024, the Company announced the completion of a \u20ac5 million capital increase subscribed by existing shareholders (Sofinnova Partners, Invus and UPMC Enterprises) and Heights Capital (the \u201cCapital Increase\u201c).
Gross proceeds from the transaction are \u20ac5 million gross. The net proceeds from the issuance of the New Shares will amount to approximately \u20ac4.7 million.
The Company intends to use the net proceeds from the Capital Increase to (in the following order of priority) (i) finance its general corporate needs, (ii) complete manufacturing operations and regulatory procedures in order to provide drug product both to launch the potential new RECOVER Phase III clinical trial of LUMEVOQ\u00ae\u00a0and to resume the early access program in Q3 2024 and (iii) produce additional GMP batches of LUMEVOQ\u00ae\u00a0at its manufacturing partner\u2019s facility in the United States.
On May 7, 2024, the Company announced the success of its Offering, through (i) a capital increase reserved to specialized investors and (ii) a concurrent capital increase by way of a private placement, by the issuance of new shares with warrants attached, for a total gross amount of \u20ac9,282,515.80 (excluding the future net proceeds related to the exercise of the warrants). The subscription price for one ABSA is \u20ac0.395 (the \u201cOffering Price\u201d). The Offering Price is the same in the two concurrent capital increases.
On June 20, 2024, the Company announced the renegotiation of certain financial obligations, securing its financial position and improving short-term flexibility. The Company also provided operational updates.
In connection with its two recent successful capital increases in\u00a0February 2024 and May 2024, the Company initiated discussions with its creditors. As a result of these discussions, the Company and its creditors have renegotiated the terms and conditions of certain\u00a0financial obligations.
On November 1, 2024, the Company announced a financing through a capital increase reserved to specialized investors by the issuance of new shares with warrants attached, for a total gross amount of c. \u20ac2.8 million (excluding the future net proceeds related to the exercise of the warrants) (the \u201cReserved Offering\u201c). The subscription price for one ABSA is \u20ac0.3513 (the \u201cOffering Price\u201c).
On December 24, 2024, The Company announced a financing through a capital increase reserved to specialized investors by the issuance of new shares with warrants attached, for a total gross amount of c. \u20ac1.5 million (excluding the future net proceeds related to the exercise of the warrants) (the \u201cReserved Offering\u201c). The subscription price for one ABSA is \u20ac0.2816 (the \u201cOffering Price\u201c).
On November 21, 2023, the Company announced the results of an offering for a total of \u20ac4.7\u00a0million carried out in two distinct but concomitant transactions:
\u2022a private placement to a category of persons satisfying determined characteristics, for approximately \u20ac4,4\u00a0million, through the issuance of 9,718,768 new ordinary shares, and
\u2022a capital increase in favor of retail investors via the PrimaryBid platform only in France, for approximately \u20ac0.3\u00a0million, through the issuance of 573,917 new ordinary shares
As a result of the drawdown of Tranche 2 in the context of the private placement, 8,680,797 new shares have been issued upon conversion of the 2023 OCAs on the settlement date of the offering, at a conversion price of \u20ac0.7122 per 2023 OCAs.
3.9Share capital
Ordinary shares are classified under shareholders\u2019 equity. The costs of share capital transactions that are directly attributable to the issue of new shares or options are recognized in shareholders\u2019 equity as a deduction from the revenue from the issue, net of tax.
The Company\u2019s own shares bought in the context of a brokering/liquidity agreement are presented as a reduction in shareholders\u2019 equity until their cancellation, their reissuance or their disposal.
Note 10:Capital
The share capital as of December\u00a031, 2024, amounts to \u20ac3,119,361.13. It is divided into 124,774,445 fully authorized, subscribed and paid-up ordinary shares with a nominal value of \u20ac0.025.
On July\u00a013, 2016, the Company completed its Initial Public Offering (IPO) on Euronext Paris, raising \u20ac40\u00a0million in gross proceeds, and the Company issued 5,000,000 ordinary shares with a nominal value of \u20ac0.025 and a share premium of \u20ac7.975\u00a0per share.
On August\u00a010, 2016, the Company partly exercised its overallotment option as part of its IPO on Euronext Paris, raising an additional \u20ac5.2\u00a0million in gross proceeds, and the Company issued 655,859 ordinary shares with a nominal value of \u20ac0.025 and a share premium of \u20ac7.975\u00a0per share.
On June\u00a027, 2017, the Company operated a capital increase whose gross proceeds amounted to \u20ac22.5\u00a0million, by means of a private placement reserved to a category of persons, U.S. and European institutional investors specialized in healthcare and biotechnology. The majority of the new shares were allocated to U.S. investors. This increase corresponds to 3,750,000 new shares, par value \u20ac0.025 each.
On February\u00a025, 2019, GenSight Biologics announced the completion of a capital increase of \u20ac8\u00a0million subscribed entirely by Sofinnova Crossover I SLP (\u201cSofinnova\u201d). The purpose of this capital increase is to pursue the final stages of clinical development of LUMEVOQ\u00ae, and file for marketing authorization in Europe. This increase corresponds to 3,921,568 new shares, par value \u20ac0.025 each.
On December\u00a020, 2019, GenSight Biologics announced the completion of a capital increase of \u20ac9\u00a0million subscribed for by\u00a0one of its main shareholders Sofinnova Crossover I SLP (\u201cSofinnova\u201d) and by a new strategic Chinese investor Strategic International Group Limited, a wholly owned subsidiary of\u00a03SBio\u00a0Inc. (\u201c3SBio\u201d). This increase corresponds to 3,799,071\u00a0new shares, par value \u20ac0.025 each.
On October\u00a022, 2020, GenSight completed a capital increase of \u20ac25\u00a0million. The Company has issued 5,954,650 new ordinary shares with a nominal value of \u20ac0.025 each, for total gross proceeds of approximately \u20ac25\u00a0million by means of an accelerated bookbuilding process to the benefit of categories of persons. The issue price of the New Shares is \u20ac4.20 per share, representing a 12.5% discount to the volume weighted average of the share prices on Euronext Paris for the last five trading sessions preceding the date on which the issuance price is set (i.e., October\u00a015, 16, 19, 20 and 21, 2020), in accordance with the 19th\u00a0resolution of the combined annual General Meeting of Shareholders of the Company held on April\u00a029, 2020.
On December\u00a010, 2020, GenSight received the notification by Kreos of the conversion of 50% of the convertible bonds of tranches\u00a0A and B (at a price of \u20ac2.245 per share), the conversion of 50% of the additional convertible bonds of tranche B (at a price of \u20ac2.574 per share) and the exercise of all share warrants of tranches\u00a0A and B (at a price of \u20ac2.245 per share), representing a total issuance of 1,182,953 new ordinary shares.
On March\u00a026, 2021, GenSight completed a capital increase of \u20ac30\u00a0million. The Company has issued 4,477,612\u00a0new ordinary shares with a nominal value of \u20ac0.025 each, for total gross proceeds of approximately \u20ac30\u00a0million by means of an accelerated bookbuilding process to the benefit of categories of persons. The book was largely oversubscribed, based on demand from new investors. The issue price of the new shares is \u20ac6.70 per share, representing a 9.0% discount to the last closing share price and a 12.7% discount to the volume weighted average of the share prices on Euronext Paris for the last five trading sessions preceding the date on which the issuance price is set (i.e., March\u00a019, 22, 23, 24 and 25, 2021), in accordance with the 19th\u00a0resolution of the combined annual General Meeting of Shareholders of the Company held on April\u00a029, 2020.
On November 21, 2023, the Company issued 9,718,768 new ordinary shares with a nominal value of \u20ac0.025 each at a price of \u20ac0.4527 per share in connection with a share capital increase without preferential subscription rights reserved to categories of persons satisfying determined characteristics for approximately \u20ac4.4\u00a0million and 573,917 new ordinary shares, at a same price, in\u00a0connection with a capital increase without shareholders' preferential subscription rights in favor of retail investors via the\u00a0PrimaryBid platform only in France for approximately \u20ac0.3\u00a0million. On the same date, the Company issued 8,680,797\u00a0new ordinary shares with a nominal value of \u20ac0.025 each pursuant to the automatic and full conversion of the 2023\u00a0OCA at a conversion price of \u20ac0.7122 per convertible bond.
On February 8, 2024, the Company announced the completion of a \u20ac5 million capital increase ( \u20ac4.7m net) by the issuance of 13,061,651 new shares, for a subscription price of \u20ac0.3828 each (including premium subscribed entirely by Sofinnova Crossover I SLP (\u201cSofinnova Partners\u201d) for \u20ac2 million, Invus Public Equities LP (\u201cInvus\u201d) for \u20ac1.75 million, UPMC Enterprises (\u201cUPMC\u201d) for \u20ac1 million and CVI Investments, Inc. (\u201cHeights Capital\u201d) for \u20ac0.25 million.
Under the terms of the subscription agreement entered between the Company and the Investors, the Investors have undertaken to subscribe to the Capital Increase for an aggregate amount of \u20ac5\u00a0million through the issuance of new shares at a price equal to \u20ac0.3828, representing a discount of 2.77% to the volume-weighted average price of the Company\u2019s shares on the regulated market of Euronext in Paris during the last five trading sessions before pricing (i.e., trading sessions from January\u00a031, 2024 to February\u00a06, 2024).
On May 7, 2024, the Company announced the success of its Offering through (i) a capital increase reserved to specialized investors and (ii) a concurrent capital increase by way of a private placement, by the issuance of new shares with warrants attached, for a total gross amount of \u20ac9.3m (excluding the future net proceeds related to the exercise of the warrants). The subscription price for one ABSA is \u20ac0.395 (the \u201cOffering Price\u201d). The Offering Price is the same in the two concurrent capital increases.
The Offering was carried out through the issuance of 23,500,040 ABSA (as defined below), in two distinct but concomitant transactions:
\u2022a capital increase without shareholders\u2019 preferential subscription rights reserved to a category of persons for a total of \u20ac7,8m through the issuance of new shares of a per value of \u20ac0.025 to which are attached 1 warrant for 1 new shares.
\u2022a capital increase without preferential subscription rights by way of \u201cPrivate Placement New Share\u201d for a total of \u20ac1,5m to which are attached 1 warrant for 1 new share.
The Offering Price is \u20ac0.395 for the two concurrent capital increases and the transaction price has been split between ordinary shares for \u20ac7,5m and warrants for \u20ac1,8m.
Upon settlement of the Offering, the Warrants will be exercisable for a period of thirty months from the date of issue. The exercise of a Warrant will give the right to subscribe to one\u00a0(1) Warrant Share (the \u201cExercise Ratio\u201c), it being specified that this Exercise Ratio may be adjusted following any transactions carried out by the Company on its share capital or reserves, as from the issuance date of the Warrants, in order to maintain the rights of the Warrants\u2019 holders. The exercise price of the Warrants will be equal to \u20ac0.45.
On June 28,2024, following the amendment of Heights Capital convertible Notes, the Company converted 631,560 notes into 1,930,195 new shares. This conversion was executed using the newly established price limit of \u20ac0,3272.
On August 30, 2024, following the amendment of Heights Capital convertible Notes, the Company converted 631,560\u00a0notes into 1,930,195 new shares. This conversion was executed using the newly established price limit of \u20ac0,3272.
On September 28, 2024, following the amendment of Heights Capital convertible Notes, the Company converted 631,560\u00a0notes into 1,930,195 new shares. This conversion was executed using the newly established price limit of \u20ac0,3272.
On November 1, 2024, the Company completed a financing through a capital increase reserved to specialized investors by the issuance of new shares with warrants attached, for a total gross amount of c. \u20ac2.8 million (excluding the future net proceeds related to the exercise of the warrants) (the \u201cReserved Offering\u201c). The subscription price for one ABSA is \u20ac0.3513 (the \u201cOffering Price\u201c).
The Reserved Offering was carried out through the issuance of 7,901,000 ABSA (as defined below) via a capital increase without shareholders\u2019 preferential subscription rights reserved to a category of persons through the issuance of new shares of a per value of \u20ac0.025 (the \u201cNew Shares\u201c), to which are attached 1\u00a0warrant for 1 new shares.
The Offering Price is \u20ac0.3513, equal to the volume-weighted average price of the Company\u2019s shares on Euronext Paris during the last five trading sessions preceding its setting (i.e., October\u00a025, 28, 29, 30 and 31, 2024) (the \u201cReference Price\u201c) plus a premium of 4.6%. Taking into account the estimated theoretical value of 100% of a Warrant (i.e., \u20ac0.0812, this value was obtained using the Black & Scholes method with a volatility of 35%), this would represent a discount of 19.54% compared with the Reference Price, in accordance with the 23rd\u00a0resolution of the General Meeting. Upon settlement of the Reserved Offering, the Warrants will be exercisable from April\u00a01, 2025, until the maturity of the warrants, which is sixty months from the date of issue. In no event, the Warrants will be exercisable before April\u00a01, 2025.
On December\u00a02, 2024, following the amendment of Heights Capital convertible Notes, the Company converted 631,560\u00a0notes into 1,930,195 new shares. This conversion was executed using the newly established price limit of \u20ac0,3272.
On December\u00a024, 2024, the Company completed a financing through a capital increase reserved to specialized investors by the issuance of new shares with warrants attached, for a total gross amount of c. \u20ac1.5\u00a0million (excluding the future net proceeds related to the exercise of the warrants) (the \u201cReserved Offering\u201c). The subscription price for one ABSA is \u20ac0.2816 (the \u201cOffering Price\u201c).
The Reserved Offering, was carried out through the issuance of 5,326,706 ABSA (as defined below) via a capital increase without shareholders\u2019 preferential subscription rights reserved to a category of persons through the issuance of new shares of a per value of \u20ac0.025 (the \u201cNew Shares\u201c), to which are attached 1\u00a0warrant for 1 new shares.
The Offering Price is \u20ac0.2816, equal the volume-weighted average price of the Company\u2019s shares on Euronext Paris during the last five trading sessions preceding its setting (i.e. December\u00a017, 18, 19, 20 and 23, 2024) (the \u201cReference Price\u201c) plus a premium of 3.7%. Taking into account the estimated theoretical value of 100% of a Warrant (i.e., \u20ac0.0516, this value was obtained using the Black & Scholes method with a volatility of 35%), this would represent a discount of 15.32% compared with the Reference Price, in accordance with the 23rd\u00a0resolution of the General Meeting. Upon settlement of the Reserved Offering, the Warrants will be exercisable from April\u00a01, 2025 until November\u00a06, 2029. In no event, the Warrants will be exercisable before April\u00a01, 2025.
On December\u00a027, 2024, following the amendment of Heights Capital convertible Notes, the Company converted 631,560\u00a0notes into 1,930,195 new shares. This conversion was executed using the newly established price limit of \u20ac0,3272.
The 124,774,445 outstanding shares does not include BSA, BCE, SO and AGA. BSA are granted to investors and other individual non-employees, BCE are granted to employees only, AGA and SO are granted to employees and/or executives.\u00a0
The table below shows the changes occurred in the share capital during the last two periods:
| \n In thousands of Euros, except for number of shares) | \n\n Share Capital | \n\n Share premium | \n\n Number of shares | \n
|---|---|---|---|
| \n Balance as of January\u00a01, 2023 | \n\n 1,158 | \n\n 181,211 | \n\n 46,335,591 | \n
| \n Capital increase by issuance of ordinary shares | \n\n 474 | \n\n 9,665 | \n\n 18,973,482 | \n
| \n Less cost of issuance of shares | \n\n 0 | \n\n \u00a0 | \n\n 0 | \n
| \n Issue of shares upon exercise of equity instruments (1) | \n\n 0 | \n\n 60 | \n\n 0 | \n
| \n Total as of December\u00a031, 2023 | \n\n 1,633 | \n\n 190,937 | \n\n 65,309,073 | \n
| \n (In thousands of Euros, except for number of shares) | \n\n Share Capital | \n\n Share premium | \n\n Number of shares | \n
|---|---|---|---|
| \n Balance as of January 1, 2024 | \n\n 1,633 | \n\n 190,937 | \n\n 65,309,073 | \n
| \n Capital increase by issuance of ordinary shares | \n\n 1,245 | \n\n 14,569 | \n\n 49,789,397 | \n
| \n Less cost of issuance of shares | \n\n 0 | \n\n (1,816) | \n\n 0 | \n
| \n Issue of shares upon exercise of equity instruments (1) | \n\n 242 | \n\n 2,916 | \n\n 9,675,975 | \n
| \n Total as of December\u00a031, 2024 | \n\n 3,119 | \n\n 206,606 | \n\n 124,774,445 | \n
| \n (1) | \n\n The share premium includes the subscription price of non-employee warrants and the exercise price in excess of the share nominal value for employee and non-employee warrants. | \n
|---|
All the changes relating to employee warrants, non-employee warrants and free shares, as well as their impact on the profit and loss for the period are detailed in Note\u00a019.
On June 3, 2024, the Company announced the appointment of William Monteith to its Board of Directors. Mr. Monteith joined as an independent Director after existing Board members approved his nomination at the meeting on May 29, 2024.
19.3Free shares (AGA)
Vesting schedule
In July\u00a02016, the Company\u2019s Board of Directors granted an aggregate of 766,000 free shares (AGA 2016) as follows:
\u2022546,000 AGA 2016 were fully acquired by key managers, including Mr. Bernard Gilly, the Chief Executive Officer of the Company, subject to the achievement of the following performance criteria no later than July\u00a02018:
\u2014291,000 of these free shares were acquired at the completion of enrollment in RESCUE and REVERSE clinical trials in July\u00a02017; and
\u2014255,000 free shares were acquired at the enrollment of the first patient in a Phase I/II clinical trial of GS030 in RP in July\u00a02018.
\u202256,000 AGA 2016 were fully acquired in July\u00a02017 (one year after their grant date).
The AGA 2016 were issued at their nominal value and are subject to a lock-up period of one year after their acquisition date.
In July\u00a02017 and in December\u00a02017, the Company\u2019s Board of\u00a0Directors granted an aggregate of 666,000 additional AGA\u00a02016 as follows:
\u2022544,500 AGA 2016 were acquired by key managers, including Mr. Bernard Gilly, subject to (i) a one year acquisition period from the date of grant and (ii) achievement of the performance criteria described below no later than July\u00a02019:
\u2014281,250 of these free shares were acquired upon receipt of the definitive results of the GS010 REVERSE clinical trial; and
\u2014the remaining 263,250 free shares were acquired upon completion of the enrollment of 50% of the patients of a Phase I/II clinical trial of GS030 in RP, on May\u00a017, 2019.
\u202232,500 AGA 2016 were fully acquired on July\u00a02018 (one\u00a0year after their grant date).
The AGA 2016 were issued at their nominal value and are subject to a lock-up period of one year after their acquisition date.
In September\u00a02018 and December\u00a02018, the Company\u2019s Board of Directors granted an aggregate of 515,000 additional AGA\u00a02018 as follows:
\u2022320,000 AGA\u00a02018, were fully acquired by key managers, including Mr. Bernard Gilly, subject to (i) a one\u00a0year acquisition period from the date of grant and (ii) achievement of the performance criteria described below no later than September\u00a02020:
\u2014160,000 of these free shares were acquired upon completion of the enrollment of the patients of a Phase I/II clinical trial of GS030 in RP on July\u00a029, 2020; and
\u2014the remaining 160,000 free shares were acquired upon of the production of the first PPQ Batch of GS010 on September\u00a01, 2020.
\u202240,000 AGA 2018 were fully acquired on September\u00a018, 2019 (one year after their grant date).
The AGA 2018 were issued at their nominal value and are subject to a lock-up period of one year after their acquisition date.
In July\u00a02019, the Company\u2019s Board of Directors granted an aggregate of 610,000 additional AGA\u00a02018 as follows:
\u2022547,500 AGA\u00a02018 were fully acquired by key managers, including Mr. Bernard Gilly, subject to (i) a one year acquisition period from the date of grant and (ii) achievement of the performance criteria described below no later than July\u00a02021:
\u2014273,750 of these free shares were acquired upon the filing with the European Medicines Agency (EMA) of the\u00a0application for Market Authorization (MA) at the European level of LUMEVOQ\u00ae, on September\u00a014, 2020;
\u2014the remaining 273,750 of these free shares were acquired upon completion of the enrollment of the patients of a Phase I/II clinical trial of GS030 in RP on July\u00a029, 2020; and
\u202227,500 AGA\u00a02018 were fully acquired in July\u00a02020 (one year after their grant date).
The AGA\u00a02018 were issued at their nominal value and are subject to a lock-up period of one year after their acquisition date.
With the authorization of the General Meeting of Shareholders on April\u00a012, 2018 and of the General Meeting of Shareholders on April\u00a029, 2020, the Board of Directors granted 1,007,500\u00a0free shares (AGA\u00a02020) on January\u00a028, 2020 and 85,000 (AGA\u00a02020) on September\u00a022, 2020, respectively, among which:
\u2022437,500 AGA\u00a02020 were fully acquired on January\u00a028, 2021 (one year after their grant date). The new shares were issued at their nominal value and are subject to a lock-up period of one year after their acquisition date.
\u2022As per the original plan, 652,500 (of which 347,500 were cancelled) AGA 2020 might have been fully acquired by key managers, including Mr. Gilly, subject to (i) a one year acquisition period from the date of grant and (ii)\u00a0achievement of the performance criteria described below no later than January\u00a028, 2023 as amended by the Board of Directors on September 21, 2021:
\u2014326,250 of these free shares could have been acquired upon the approval with the European Medicines Agency (EMA) of the application for market authorization (MA) at the European level of the LUMEVOQ\u00ae;
\u2014326,250 of these free shares could have been acquired upon the filing with the Food and Drug Administration (FDA) of the application for Biologics License Application (BLA) for the LUMEVOQ\u00ae.
The Group has considered that the second Performance Condition could not be achieved before the new deadline of Completion, i.e. January\u00a028, 2023 and therefore has decided to\u00a0cancel 50% of the Performance Bonus Share Plans on December\u00a031, 2021.
With the authorization of the General Meeting of Shareholders on April\u00a029, 2020, the Board of Directors granted 880,000 free shares (AGA 2021) on February\u00a025, 2021, to employees of the Company, of which:
\u2022845,000 may be fully acquired by key managers, including Mr. Gilly, subject to (i) a one year acquisition period from the date of grant and (ii) achievement of the performance criteria described below at the latest on February\u00a025, 2023:
\u201450% will be acquired upon the first commercial sale of the LUMEVOQ\u00ae; and
\u201450% will be acquired upon at the completion of the recruitment of the extension cohort of the Phase I/II clinical trial with GS030 in retinisis pigmentosa;
\u202235,000 are not subject to performance conditions and were fully acquired in February\u00a02021 (one year after their grant date).
With the authorization of the General Meeting of Shareholders on April\u00a029, 2021, the Board of Directors granted 380,000\u00a0free shares (AGA\u00a02021) on October\u00a021, 2021 to employees of the Company. They are subject to (i)\u00a0a two\u00a0years acquisition period from the date of grant and (ii) achievement of the performance criteria described below at the latest on February 25, 2023:
\u202250% will be acquired upon the first commercial sale of the LUMEVOQ\u00ae; and
\u202250% will be acquired upon at the completion of the recruitment of the extension cohort of the Phase I/II clinical trial with GS030 in retinisis pigmentosa.
Due to the manufacturing issues at the Company\u2019s partner in the United States, the performance conditions of free shares plans granted to management in 2020 and 2021 were unlikely to be met before the deadlines and these plans were entirely voided in 2021 and 2022.
With the authorization of the General Meeting of Shareholders on April\u00a029, 2021, the Board of Directors granted 1,957,500 free shares (AGA\u00a02022-1 and AGA\u00a02022-2) on May\u00a023, 2022, to employees of the Company, of which:
\u20221,892,500 may be fully acquired by key managers, including Mr. Gilly, subject to (i) a one year acquisition period from the date of grant and (ii) achievement of the performance criteria described below at the latest on May\u00a025, 2025:
\u201450% will be acquired upon the first commercial sale of the LUMEVOQ\u00ae; and
\u201450% will be acquired upon at the receipt of Topline results for all patients in the Pioneer Phase\u00a0I/II clinical trial of GS030;
\u202265,000 are not subject to performance conditions, but subject to a two-year vesting period.
With the authorization of the General Meeting of Shareholders on May\u00a025, 2022, the Board of Directors granted 290,000 free shares (AGA\u00a02022-3) on October 20, 2022, to employees of the Company, of which:
\u2022290,000 may be fully acquired by key managers, subject to (i)\u00a0a one-year acquisition period from the date of grant and (ii)\u00a0achievement of the performance criteria described below at the latest on May\u00a025, 2025:
\u201450% will be acquired upon the first commercial sale of the LUMEVOQ\u00ae; and
\u201450% will be acquired upon at the receipt of Topline results for all patients in the Pioneer Phase I/II clinical trial of GS030.
With the authorization of the General Meeting of Shareholders on May\u00a025, 2022, the Board of Directors granted 2,070,000 free shares (AGA\u00a02023-1 and AGA\u00a02023-2) on March\u00a023, 2023, to employees of the Company, of which:
\u20221,300,000 may be fully acquired by key managers, including Mr. Gilly, subject to (i) a one\u00a0year acquisition period from the date of grant and (ii) achievement of the performance criteria described below at the latest on March\u00a023, 2025:
\u201450% will be acquired upon the achievement and continued fulfillment of global and local quality requirements as holder of a marketing authorization; and
\u201450% will be acquired upon at the Completion of the examination of LUMEVOQ\u00ae by the European Medicines Agency (EMA) with a view to a decision by the Committee for Medicinal Products for Human Use (CHMP);
\u2022770,000 are not subject to performance conditions, but subject to a two-year vesting period.
With the authorization of the General Meeting of Shareholders on Juin\u00a021, 2023, the Board of Directors granted 770,000 free shares (AGA\u00a02024-1 and AGA\u00a02024-2) on March\u00a021, 2024, to employees of the Company, of which:
\u2022520,000 may be fully acquired by key managers, including Mme Rodriguez, subject to (i) a one\u00a0year acquisition period from the date of grant and (ii) achievement of the performance criteria described below at the latest on March\u00a021, 2027:
\u201450% will be acquired upon the achievement of the following condition: Ensure the going concern of GenSight as described in the 2023 URD;
\u201450% will be acquired upon the Completion of Ensure a cash runway > 6 months end of 2025;
\u2022250,000 are not subject to performance conditions, but subject to a two-year vesting period.
Details and main characteristics of the AGA granted to date
| \n \n | \n\n AGA 2016 | \n\n AGA 2016 | \n\n AGA 2016 | \n\n AGA 2018 | \n\n AGA 2018 | \n\n AGA 2019 | \n\n AGA 2020 | \n\n AGA 2020 | \n
|---|---|---|---|---|---|---|---|---|
| \n Date of grant | \n\n July 26, 2016 | \n\n July 27, 2017 | \n\n December\u00a019, 2017 | \n\n September 18, 2018 | \n\n December\u00a019,2018 | \n\n July 23,2019 | \n\n January 28, 2020 | \n\n September 22, 2020 | \n
| \n Number of Share Awards initially granted | \n\n 766,000 | \n\n 593,500 | \n\n 72,500 | \n\n 380,000 | \n\n 135,000 | \n\n 610,000 | \n\n 1,007,500 | \n\n 85,000 | \n
| \n Vesting period (in Years) | \n\n 1 | \n\n 1 | \n\n 1 | \n\n 1 | \n\n 1 | \n\n 1 | \n\n 1 | \n\n 1 | \n
| \n Grant date Fair-value | \n\n \u20ac8.08 | \n\n \u20ac5.12 | \n\n \u20ac5.55 | \n\n \u20ac2.10 | \n\n \u20ac4.04 | \n\n \u20ac1.80 | \n\n \u20ac3.72 | \n\n \u20ac3.00 | \n
| \n Performance conditions (1) | \n\n Yes | \n\n Yes | \n\n Yes | \n\n Yes | \n\n Yes | \n\n Yes | \n\n Yes | \n\n Yes | \n
| \n (1) | \n\n Performance conditions concern only grants to key managers, other employees are only subject to a service condition. | \n
|---|
| \n \n | \n\n AGA 2021-1 | \n\n AGA 2021-2 | \n\n AGA 2022-1 | \n\n AGA 2022-2 | \n\n AGA 2023 | \n\n AGA 2024 | \n
|---|---|---|---|---|---|---|
| \n Date of grant | \n\n February 25, 2021 | \n\n October 21, 2021 | \n\n May 23, 2022 | \n\n October 20, 2022 | \n\n March 23, 2023 | \n\n March 21, 2024 | \n
| \n Number of Share Awards initially granted | \n\n 880,000 | \n\n 380,000 | \n\n 1,957,500 | \n\n 290,000 | \n\n 2,070,000 | \n\n 770,000 | \n
| \n Vesting period (in Years) | \n\n 1 | \n\n 1 | \n\n 1 | \n\n 1 | \n\n 1 | \n\n 1 | \n
| \n Grant date Fair-value | \n\n \u20ac8.87 | \n\n \u20ac7.16 | \n\n \u20ac2.13 | \n\n \u20ac3.43 | \n\n \u20ac2.37 | \n\n \u20ac0.44 | \n
| \n Performance conditions (1) | \n\n Yes | \n\n Yes | \n\n Yes | \n\n Yes | \n\n Yes | \n\n Yes | \n
| \n (1) | \n\n Performance conditions concern only grants to key managers, other employees are only subject to a service condition. | \n
|---|
Changes in the balances of AGA
| \n \n | \n\n AGA 2022-1 | \n\n AGA 2022-2 | \n\n AGA 2023 | \n\n AGA 2024 | \n\n TOTAL | \n
|---|---|---|---|---|---|
| \n Balance outstanding at January 1, 2024 | \n\n 772,500 | \n\n 240,000 | \n\n 1,212,500 | \n\n 0 | \n\n 2,225,000 | \n
| \n Granted during the period | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n 770,000 | \n\n 770,000 | \n
| \n Vested during the period | \n\n (25,000) | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n (25,000) | \n
| \n Forfeited during the period | \n\n (10,000) | \n\n \u2014 | \n\n (40,000) | \n\n (30,000) | \n\n (80,000) | \n
| \n Balance outstanding at December\u00a031, 2024 | \n\n 737,500 | \n\n 240,000 | \n\n 1,172,500 | \n\n 740,000 | \n\n 2,890,000 | \n
Note 23:Relationships with related parties
Key management personnel compensation
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:
| \n In thousands of Euros | \n\n As December\u00a031, | \n|
|---|---|---|
| \n 2024 | \n\n 2023 | \n|
| \n Short-term employee benefits | \n\n 455 | \n\n 1,300 | \n
| \n Share-based payments benefits | \n\n (175) | \n\n (483) | \n
| \n Total | \n\n 279 | \n\n 817 | \n
The methods and assumptions used for the measurement of share-based payments are described in Note 18.
Liabilities to key management personnel as of December\u00a031, 2023 and 2024 are set forth below:
| \n In thousands of Euros | \n\n As of December\u00a031, | \n|
|---|---|---|
| \n 2024 | \n\n 2023 | \n|
| \n Variable compensation | \n\n 50 | \n\n 65 | \n
| \n Total | \n\n 50 | \n\n \u00a065 | \n
On June 3, 2024, the Company announced the appointment of William Monteith to its Board of Directors. Mr. Monteith joined as an independent Director after existing Board members approved his nomination at the meeting on May 29, 2024.
Note 23:Relationships with related parties
Key management personnel compensation
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:
| \n In thousands of Euros | \n\n As December\u00a031, | \n|
|---|---|---|
| \n 2024 | \n\n 2023 | \n|
| \n Short-term employee benefits | \n\n 455 | \n\n 1,300 | \n
| \n Share-based payments benefits | \n\n (175) | \n\n (483) | \n
| \n Total | \n\n 279 | \n\n 817 | \n
The methods and assumptions used for the measurement of share-based payments are described in Note 18.
Liabilities to key management personnel as of December\u00a031, 2023 and 2024 are set forth below:
| \n In thousands of Euros | \n\n As of December\u00a031, | \n|
|---|---|---|
| \n 2024 | \n\n 2023 | \n|
| \n Variable compensation | \n\n 50 | \n\n 65 | \n
| \n Total | \n\n 50 | \n\n \u00a065 | \n
On June 20, 2024, the Company announced the renegotiation of certain financial obligations, securing its financial position and improving short-term flexibility. The Company also provided operational updates.
In connection with its two recent successful capital increases in\u00a0February 2024 and May 2024, the Company initiated discussions with its creditors. As a result of these discussions, the Company and its creditors have renegotiated the terms and conditions of certain\u00a0financial obligations.
On February 6, 2023, the Company announced that it has received the payment of \u20ac8\u00a0million under the first tranche (the \u201cTranche\u00a0A\u201d) of the unsecured credit facility executed with the European Investment Bank (the \u201cEIB\u201d) on November\u00a03, 2022 maturing in November 2027.
The disbursement of Tranche A was subject, among other conditions, to the issuance of warrants which have been subscribed on January 25, 2023.
The credit facility is divided into three tranches of \u20ac8 million, \u20ac12 million and \u20ac15 million, each subject to the fulfillment of certain conditions precedent and redeemable within 5\u00a0years from the date of signature of the credit facility, i.e. November\u00a03, 2027. No guarantee can be given as to the satisfaction by the Company of the condition\u2019s precedent and the completion of the second and third tranches.
On August 3, 2023, the Company announced the signing of the Bridge Financing with the Sofinnova Crossover I SLP, Invus Public Equities LP and UPMC Enterprises (together, the \"Investors\") and drew down the Tranche 1 of \u20ac6 million.
The Bridge Financing is divided into two tranches, each subject to certain conditions:
\u2022A Tranche 1 of \u20ac6 million through the issuance of 60 bonds convertible into new ordinary shares with a value of \u20ac100,000 each (the \u201c2023 OCAs\u201d), maturing in twelve\u00a0months and bearing interest at 10% per annum; and
\u2022A Tranche 2 of \u20ac4 million through the issuance of new ordinary shares.
Each tranche was subscribed for by each investor pro rata to its participation in the Bridge Financing, as follows: 35% for Sofinnova Crossover I SLP, 35% for Invus Public Equities LP 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 EIB and Heights Capital of certain waivers and agreements.
The drawdown of Tranche\u00a02 was subject, among other conditions, to the fulfillment of the following conditions at the latest on November\u00a015, 2023(7):
\u2022the production of at least two successful GMP batches (Good Manufacturing Practices), of LUMEVOQ\u00ae as demonstrated by a statement signed by a qualified person and/or representative of the quality unit documenting that the GMP batches are within specifications required (individually, a \u201cSuccessful Manufacturing\u201d) or,
\u2022in the event that the GMP batches are not produced, or only one Successful Manufacturing, with unanimous approval by all the Investors.
On October 26, 2023, the Company announced that, in connection with the drawdown of Tranche 1 in August 2023, the Company has obtained from the Banks, the EIB and Heights, subject to certain conditions:
\u2022a waiver by the Banks, the EIB and Heights on any provision which could trigger early repayment of their debt until January\u00a031, 2024;
\u2022an agreement of the EIB and Heights on the pari passu treatment of the 2023 OCAs with the 2022 OCAs;
\u2022a deferral of principal payments due to the Banks until January\u00a031, 2024;
\u2022the suspension of Heights\u2019 conversion rights with respect to the 2022 OCAs until January 31, 2024;
\u2022deferral of principal payments due to Heights in connection with the redemption of the 2022 OCAs until January\u00a031, 2024; and
\u2022a waiver by the EIB of any adjustment right it has under the subscription agreement relating to the Warrants in the context of the Facility signed by the Company and the EIB on December\u00a022, 2022, and in particular the anti-dilution provision contained in this subscription agreement.
On November 15, 2023, the Company announced that an independent laboratory confirmed viral genome (vg) titer from the second drug substance (DS) batch of LUMEVOQ\u00ae manufactured under conditions compliant with Good Manufacturing Practice (GMP) standards.
As a result, the Company became eligible to draw down the second tranche of the bridge financing signed in August 2023 with the Investors. The drawdown of the second tranche also triggered the automatic conversion of the convertible bonds from the \u20ac6 million first tranche at a conversion price of \u20ac0.7122.
3.12Financial liabilities
Borrowings and other financial liabilities, excepted for derivative financial liabilities (see upon), are measured initially at their fair value and then at amortized cost, calculated on the basis of the effective interest rate (\u201cEIR\u201d) method.
The transaction expenses that are directly attributable to the acquisition or to the issue of a financial liability reduce that financial liability. These expenses are then amortized actuarially over the lifetime of the liability, on the basis of the EIR.
The EIR is the rate that equalizes the anticipated flow of future cash outflows with the current net book value of the financial liability in order to deduct its amortized cost therefrom.
The amount resulting from the benefit of financial liabilities that do not bear interest at market rates is considered a subsidy. 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 finance cost. The subsidy is presented as a differed income which is amortized in the P&L over the same period.
Other financial liabilities include trade accounts payable, which are measured at fair value (which in most cases equates to face value) on initial recognition, and subsequently at amortized cost.
Note 11:Financial liabilities
11.1Bond financing
Heights Capital
On December 23, 2022, the Company signed a subscription agreement for a \u20ac12 million convertible notes financing from Heights Capital. These \u20ac12 million financing were subscribed at 90% of the nominal value i.e. 10.8 million euros, 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 \u20ac90,000 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 euros per Note (the \u201cInitial Conversion Price\u201d).
The Initial Conversion Price corresponds to a premium of 30% on the volume-weighted average price of the Company\u2019s shares on the regulated market of Euronext Paris during the last trading session preceding the determination of the terms of issuance (the \u201cReference Price\u201d), thus complying with the price limits set by the 24th\u00a0resolution of the Company\u2019s combined general shareholders\u2019 meeting held on May\u00a025, 2022 (the volume-weighted average of the prices of the Company\u2019s 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. \u20ac3.07) (the \u201cPrice Limit\u201d) 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 \u20ac5,263 per Note, payable either
i.in new ordinary shares issued at a 10% discount to the market value of the Company\u2019s shares at the time of amortization (it being specified that any payments in shares will be in accordance with the Price Limit) or
ii.at the Company\u2019s option, in cash at 110% of the amount to be amortized.
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 \u20ac5\u00a0million within 12\u00a0months 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 \u201c18-Month Reset Date\u201d), 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 value weighted average of at least 20\u00a0out of 30 consecutive trading days in the 12-month period following the 18-month Reset Date exceeds 150% of the Initial Conversion Price.
Following discussions in the third quarter of 2023 between the Company and Heights Capital, a modification to the price limit and other modification have been approved by the shareholders at the shareholders' general meeting held on January 10, 2024. The new price limit equals \u20ac0.4527 corresponding to the closing price of the shares on the regulated market of Euronext in Paris on the last trading day preceding the date falling three business days prior to the publication of the convening notice to the shareholders\u2019 general meeting held on January 10, 2024 in the Bulletin d\u2019Annonce L\u00e9gale Obligatoire, less a 10.36% discount.
From June 2023, the 2022 OCAs were initially to be amortized quarterly in an amount of \u20ac5,263 per 2022 OCA (or \u20ac5,266 for the amortization corresponding to the final maturity date) (the \u201cAmortization Amount\u201c), payable either (i)\u00a0in new ordinary shares issued at a 10% discount to the market value of the Company\u2019s shares at the time of amortization (it being specified that all payments in shares have to comply with the price limit) or (ii)\u00a0at our option, in cash at 110% of the amount to be amortized, being specified that redemption in cash will become mandatory in the event that the price limit is crossed downwards.
The Company and Heights Capital have first decided to suspend the redemption of the 2022 OCAs until January\u00a031, 2024. Starting from March 2024 and until the maturity date of the 2022 OCAs, Heights Capital will be entitled to trigger an additional amortization payment for each 2022 OCA between two quarterly amortization periods up to the Amortization Amount payable (i) either in new ordinary shares at an amortization price equal to the one applicable on the preceding quarterly amortization date, (ii) or in cash at 110% of the amortizable amount, it being specified that the repayment in cash will become mandatory in the event that the price limit is crossed downwards (the \u201cAdditional Amortization Right\u201c). Heights Capital may only exercise this Additional Amortization Right up to a maximum of three times per calendar year, without being able to carry over this right to the following year. This Additional Amortization Right does not alter the maximum number of shares that may be issued, and only impacts the maturity of the 2022 OCAs. When exercising the Additional Amortization Right, Heights Capital will be subject to a global trading limitation of 15% of the average daily trading volume of the Company\u2019s shares for the duration of an amortization period. These amendments have been approved by the shareholders at the shareholders' general meeting held on January\u00a010, 2024.
In the context of the February 2024 capital increase, the Company and Heights Capital have further decided to suspend the amortization of the 2022 OCAs until April 30, 2024. A new amendment to the price limit may be presented to the shareholders at the next annual shareholders general meeting if the current price limit is above the market price of the shares at the time of convening such meeting, which should reflect our share price over the period comprising the last eight trading sessions at the time of convening the annual shareholders\u2019 general meeting, subject to a maximum discount of 20%.The number of shares that may be issued under the 2022 OCAs will be between 2,746,108 (in the event of conversion of all the 2022 OCAs at the Conversion Price) and 26,507,620 (in the event of amortization of all the 2022 OCAs at the current price limit of \u20ac0.4527), subject to redemption exclusively in shares.
On May 29, 2024 the Annual General Meeting of shareholders approved the modification of the Price Limit provided for in the terms and conditions of the convertible notes. The new price limit is \u20ac0,3272. As a result of this change, the maximum number of shares that may be created upon conversion of the Notes has been adjusted to 36,674,816.
On June 27, 2024, Gensight and the Noteholders amended and restated the Terms and conditions of the Notes. This amendment modifies the price limit as approved by the shareholders and provides for the possibility of Additional Amortisation Right of the Noteholders. These Additional Amortisation Rights enable the Noteholders, from June\u00a028, 2024 up to the maturity date (unchanged - still December\u00a02027), to require partial redemption of outstanding notes by making an additional instalment payment (with a notional redemption amount per Note of \u20ac5,263 \u2013 also not modified). Such Additional Instalment Payment being payable with the same characteristics as the Scheduled instalments, which are:
\u2022by the delivery of a number of freely-tradable Shares equal to the Additional Notional Redemption Amount divided by the Instalment Share Settlement Price for the applicable Additional Instalment Date
\u2022by the payment in cash of an amount equal to 110% of the applicable Additional Notional Redemption Amount
And a maximum of:
\u2022one Additional Instalment Date may occur during any period from a Scheduled Instalment Date to the next Scheduled Instalment Date (whether or not any Additional Instalment Date occurred in any previous such periods)
\u2022and three Additional Instalment Dates may occur during any calendar year (for the avoidance of doubt, whether or not any Additional Instalment Date occurred in any previous calendar year).
These Additional Instalments correspond to the payment of the first four unpaid Scheduled Instalments as well as any future instalments that may be delayed or anticipated.
On June 28,2024, the 631,560 installment was converted into 1,930,195 new shares. Immediately before conversion, the amortized cost of the debt component and the fair value of the derivative were updated and upon conversion, the bonds converted into new shares were derecognized from the balance sheet.\u00a0
In accordance with the amendment of terms of the Notes on June\u00a027, 2024, the Company conduct an analysis of the modification and conclude that it represents a substantial modification of the terms under IFRS 9.
As of the amendment date (June\u00a027, 2024), the debt and derivative are derecognized, and a new instrument is registered. The difference between the carrying amount of the old debt/derivative and the fair value of the new instrument (calculated on the basis of market conditions at the derecognition date) are recognized in profit or loss for an total amount of \u20ac0.4m.
The new assumptions are detailed in the following tables :
| \n \u00a0 | \n\n June\u00a027, 2024 | \n
|---|---|
| \n Stock price | \n\n \u20ac0.34 | \n
| \n Volatility | \n\n 107.18% | \n
| \n Adjusted Volatility | \n\n 87.76% (20% haircut) | \n
| \n Dividend yield | \n\n 0.00% | \n
| \n Risk Free Rate | \n\n 2.56% | \n
| \n Credit Spread | \n\n (change in OAS of -68\u00a0bps using 75th percentile of CCC composite) | \n
| \n Credit Rating | \n\n \u201cCCC Composite\u201d | \n
The valuation was based on unobservable inputs (level\u00a03), using the Black & Scholes method.
Based on these new assumptions, as of June 27, 2024, the total instrument amounts to \u20ac8.85m with fair value of the derivative instrument at \u20ac0.07m and fair value of the debt component at \u20ac8.78m. The new effective interest rate of the debt component is 28 % (compared with 26% previously).
On August 30, 2024, September 28, 2024, December\u00a02, 2024 and December 28, 2024, the 631,560 installment was converted into 1,930,195 new shares each time, Immediately before conversion, the amortized cost of the debt component and the fair value of the derivative were updated and upon conversion. The bonds converted into new shares were derecognized from the balance sheet upon conversion.
The amortization plan was also revised according to the best estimates of cash flows as of December 31, 2024, and according to the new contractual clauses applicable on this date and integrate the conversion that occurred on June, August, September, November and December 2024.
The assumptions are detailed in the following tables:
| \n \u00a0 | \n\n December\u00a031, 2024 | \n
|---|---|
| \n Stock price | \n\n \u20ac 0.27 | \n
| \n Volatility | \n\n 70% | \n
| \n Dividend yield | \n\n 0.00% | \n
| \n Risk Free Rate | \n\n 2.01% | \n
| \n Credit Spread | \n\n 22.59% | \n
| \n Credit Rating | \n\n \u201cCCC Composite\u201d | \n
Considering those facts and circumstances, as of December 31, 2024, the derivative instrument amounts to \u20ac0.02 million and the remaining debt to \u20ac7 million.
In the context of renegotiation of the latest installment on the state-guaranteed loan (PGE) at the end of December 2024, the debt is considered as potentially due in full in the next 12\u00a0months. The non-current portion of debt amounts would have been \u20ac3.8 million as of December\u00a031, 2024.
Further the amendments to IAS 1, which were issued by the IASB and are effective for annual periods beginning on or after January\u00a01, 2024, clarify how to classify liabilities as current or non-current, particularly for financial instruments such as convertible bonds.
A liability is classified as current if the entity does not have an unconditional right to defer settlement for at least 12\u00a0months after the reporting date. For convertible bonds without an equity component, if the conversion option is exercisable by the bondholder within 12\u00a0months after the reporting date, the bond must be classified as current, even if the expected settlement is in shares. Therefore if the bond includes a conversion option that can be exercised by the holder within 12\u00a0months of the reporting date, the entire liability must be classified as current.
11.2Conditional advances
In 2014, we received a grant from Bpifrance Financement of both non-refundable subsidies and conditional advances in relation to the development of our optogenetics technology platform. The program would be funded according to a specified schedule set forth in the contract, subject to completion of milestones. As the program advances, we provided Bpifrance Financement with interim progress reports and a final report when the funded project would end. Based on these reports, we were entitled to conditional advances from Bpifrance Financement. Each award of an advance was made to help fund a specific development milestone. The total intended amount of the conditional advances initially granted was \u20ac5.7\u00a0million, of which of wich 4.1 million was received.
Repayment schedule of the conditional advances is as follows:
\u2022\u20ac550 K from June 30, 2026;
\u2022\u20ac1,000 K from June 30, 2027;
\u2022\u20ac1,500 K from June 30, 2028; and
\u2022\u20ac1,046 K from June 30, 2029;
Following the repayment of all of the conditional advances, the Company may be required to make additional payments over a period of two years, depending on whether the Company reaches cumulative revenues, excluding taxes, of \u20ac80.0\u00a0million. These additional repayments should correspond to the difference between 140% of the conditional advance, considering an interest rate of 1.44% and the amount already reimbursed as per the repayment schedule; and should be done within 15\u00a0years following the first year of reimbursement, i.e. 2041.
The obligation to repay these amounts is based on the technical and commercial success of the funded program, as determined by the revenues forecast or revenues deriving from direct or indirect exploitation of those products and results of its optogenetics technology platform.\u00a0In the event Bpifrance Financement determines that the program is not successful, Bpifrance Financement will meet with the Company to assess the impact on the repayments and the repayment schedule.
The Company has decided to include the future cash flows resulting from the additional payments in the calculation of the EIR, based on the first sales projections of its second product.
The current and non-current portions of the financial liability recognized in our financial statements associated with these conditional advances are determined based on the applicable reimbursement schedules at the end of each reporting period. The portion of the conditional advances for terms longer than one year are classified as non-current liabilities while the portion for terms of less than one year are classified as current liabilities.
Following the change in the estimation of the repayment schedule (especially additional payments regarding the situation of the Company and a delay needed to develop this program), the Company recalculated the present value of its debt. The impact on the December 2024 financial statements is a non cash financial gain of 1.1m, resulting from the extension of the repayment period. As at December 31, 2024, the total debt amount to \u20ac 4.7 million and is recorded in non-current liabilities.
The table below presents the details of the financial liabilities recorded on the statements of financial position:
| \n In thousands of Euros | \n\n \n | \n
|---|---|
| \n Balance as of January 1, 2024 | \n\n 5,504 | \n
| \n Receipts | \n\n \u2014 | \n
| \n Repayments | \n\n \u2014 | \n
| \n Other | \n\n (1,111) | \n
| \n Current portion | \n\n \u2014 | \n
| \n Accrued interest | \n\n 306 | \n
| \n Balance as of December\u00a031, 2024 | \n\n 4,700 | \n
| \n Non-current portion | \n\n 4,700 | \n
| \n Current portion | \n\n 0 | \n
11.3State-guaranteed loan
The Company obtained a \u20ac6.75\u00a0million loan from a bank syndicate formed with Cr\u00e9dit Industriel et Commercial (CIC), BNP Paribas and Bpifrance, in the form of a state-guaranteed loan (Pr\u00eat Garanti par l\u2019\u00c9tat) (the \u201cPGE\u201d).
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\u00a0months. 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%.
In the context of the renegotiation of financial obligations, the Company and its creditor banks (BNP Paribas, CIC and Bpifrance) (the \"Banks\"), previously agreed to suspend the payment of the principal, subject to certain conditions. The parties have now agreed to extend the maturity of the loans until December 2024 and to adopt a new payment schedule for the outstanding principal and interest, featuring 6 monthly instalments with gradual amortization (5% of outstanding principal per month over July, August and September 2024, and then 28.3% over October, November and December\u00a02024). A\u00a0new interest rate has been fixed.\u00a0
Following discussions with banks, the company has only partially settled its latest installment on the state-guaranteed loan (PGE) at the end of December and is currently negotiating with the banks to determine a revised payment schedule for this final installment.
As at December 31, 2024, the remaining debt amounts to \u20ac0,5\u00a0million and is recorded as current liabilities.
11.4European Investment Bank (\u201cEIB\u201d) credit facility
The Company entered in November 2022 into a \u20ac35\u00a0million credit facility agreement with the European Investment Bank (\u201cEIB\u201d), supported by the European Fund for Strategic Investment (EFSI).
The \u20ac35\u00a0million facility is divided into three tranches: \u20ac8\u00a0million for the first tranche (\u201cTranche\u00a0A\u201d), \u20ac12\u00a0million for the second tranche (\u201cTranche\u00a0B\u201d) and \u20ac15\u00a0million for the third tranche (\u201cTranche\u00a0C\u201d). The disbursement of each tranches, including the first disbursement of Tranche\u00a0A, is subject to certain conditions.
The disbursement of Tranche A was subject to, among other things:
\u2022the execution of a warrant agreement to be entered into with the EIB,
\u2022issue of the warrants relating to Tranche A,
\u2022the full repayment of the outstanding financing with Kreos,
\u2022the successful manufacturing of one engineering batch of LUMEVOQ\u00ae,
\u2022the decision by the Company to launch the validation batches (PPQ) manufacturing campaign, and
\u2022a cash injection of \u20ac10\u00a0million, in the form of equity, convertible bonds (to the extent that their repayment would be subordinated to the EIB\u2019s debt under the terms of a subordination agreement to be concluded) or license revenues.
The disbursement of Tranche\u00a0B is subject to, among other things:
\u2022the full drawdown of Tranche\u00a0A,
\u2022the issue of the warrants relating to Tranche\u00a0B,
\u2022the successful manufacturing campaign of several PPQ batches of LUMEVOQ\u00ae, and
\u2022the submission of responses to the Day\u00a0120 List of Questions to the European Medicines Agency (EMA) (condition satisfied in October 2022).
The disbursement of Tranche\u00a0C is subject to, among other things:
\u2022the full drawdown of Tranche\u00a0B,
\u2022the issue of the warrants relating to Tranche\u00a0C,
\u2022a cash injection of at least \u20ac20\u00a0million (in addition to the aforementioned \u20ac10\u00a0million), in the form of equity, convertible bonds (to the extent that their repayment would be subordinated to the EIB\u2019s debt under the terms of a\u00a0subordination agreement to be concluded) or license revenues,
\u2022the obtaining of EMA marketing authorization for LUMEVOQ\u00ae in Europe, and
\u2022a condition related to early access for patients.
The credit facility agreement will carry an annual fixed interest rate of 2% for all tranches and a decreasing fixed payment-in-kind (PIK) interest rate per tranche, with 5% for Tranche\u00a0A, 4% for Tranche\u00a0B and 3% for Tranche\u00a0C, and with a maturity of five years for each tranche. Such PIK interest shall be capitalized annually, payable at maturity and added to the outstanding principal amount of the credit and therefore bear interest.
The facility may, in certain circumstances, be prepaid, in whole or in part, with a prepayment fee, either at the election of the Company or upon the demand of EIB following certain prepayment events, including a change of control or a change in senior management of the Company.
Subject to certain terms and conditions, upon the occurrence of standard events of default (i.e. including payment default, misrepresentation, cross default), EIB may demand immediate repayment by the Company of all or part of the outstanding debt and/or cancel any undisbursed tranches.
The credit facility agreement is supplemented by an agreement to be concluded to issue warrants to the benefit of the EIB, pursuant to Article L.225-138 of the French Commercial Code, in varied amounts according to the relevant tranche.
The warrants will have a term of 20 years and will become exercisable upon the occurrence of certain events (such as a change of control or a repayment regarding one or several tranches), thus avoiding dilution for existing shareholders in the near term. Each warrant will entitle EIB to one ordinary share of the Company in exchange for the exercise price (subject to anti-dilution provisions). The exercise price for each warrant will be equal to 95% of the volume weighted average of the trading price of the Company\u2019s ordinary share over the last five trading days preceding the decision of the competent corporate body of the Company to issue such warrants. EIB shall be entitled to, as soon as the warrants become exercisable, a put option at its intrinsic value, (subject to a cap equal to the drawn amount under the facility agreement) requiring the Company to buy back all or part\u00a0of the warrants then exercisable, but not yet exercised. Furthermore, the Company shall be entitled to a call option on all outstanding warrants under certain limited circumstances.
On February\u00a06, 2023, as disbursement conditions for Tranche\u00a0A were met, including in particular issuance of 1,141,096\u00a0warrants to the EIB, and the Company received the payment of \u20ac8\u00a0million under Tranche A of the unsecured credit facility executed with the EIB.
No guarantee can be given as to the satisfaction by the Company of the conditions precedent and the completion of Tranche\u00a0B and Tranche\u00a0C.
The two financial instruments issued with respect to the drawdown of the \u20ac8\u00a0million Tranche\u00a0A (loans and warrants) on the date of issue are economically and intrinsically linked according to the IFRS\u00a09 criteria, thus the transaction is analyzed as a single hybrid instrument on issue in which there is a host contract representing a debt component (the loans) and a derivative (the warrants). Considering the specific and limited conditions of the transferability of the warrants, they represent an embedded derivative to the loan host contract in\u00a0accordance with IFRS 9 principles (i.e. their contractual features do not make them a separate financial instrument). Therefore, despite having two contracts - the warrants and the loan agreement - their inseparable nature means they are considered as a single unit.
The loan has been initially recognized at fair value, i.e., the issue proceeds (fair value of the consideration received) net of transaction costs incurred and the fair value at inception date of the derivative instruments of the debt concerned. Loans are subsequently measured at amortized cost, calculated using the effective interest rate method. Any difference between initial fair value and repayment value is recognized in the statement of income (loss) over the life of the loan using the effective interest rate method.
The effective interest rate is the discount rate at which the present value of all future cash flows (including transaction costs) over the expected life of the loan, or where appropriate, over a shorter period of time, is equal to the loan\u2019s initial carrying amount.
The fair value of the warrants has been estimated based on a Black & Scholes approach, including the put option and the attached cap.
The assumptions underlying the fair value estimation of the derivative instrument (Level 3)and results are detailed in the following tables:
| \n \u00a0 | \n\n 31/12/2024 | \n
|---|---|
| \n Number of instruments | \n\n 1,141,096 | \n
| \n Spot | \n\n 0.27 | \n
| \n Strike | \n\n 3.45 | \n
| \n Volatility | \n\n 70% | \n
| \n Risk free rate | \n\n 3.4% | \n
| \n Valuation date | \n\n 31/12/2024 | \n
| \n Expiration | \n\n 22/12/2042 | \n
| \n Term (years) | \n\n 18.0 | \n
| \n Maturity (years) | \n\n 18.0 | \n
| \n Unit fair value | \n\n 0% | \n
| \n Fair value | \n\n 0.21 | \n
The derivative instrument amounts to \u20ac0.2 million and the remaining debt to \u20ac5.8 million (\u20ac0.16m current and & \u20ac5.67m non-current) as of December 31, 2024.
In the context of renegotiation of the latest installment on the state-guaranteed loan (PGE) at the end of December 2024, the debt is considered as potentially due in full in the next 12\u00a0months. If the renegociation is successful, the part of the debt which is expected to be repaid within the next 12\u00a0month amounted to \u20ac0.2\u00a0million in relation with interest to be paid in the first semester 2025.
11.52024 Offering Warrant
May 2024 Offering Warrant
On May 7, 2024, the Company announced the success of its Offering, through (i) a capital increase reserved to specialized investors and (ii) a concurrent capital increase by way of a private placement, by the issuance of new shares with warrants attached, for a total gross amount of \u20ac9,282,515.80 (excluding the future net proceeds related to the exercise of the warrants). The subscription price for one ABSA is \u20ac0.395 (the \u201cOffering Price\u201d). The Offering Price is the same in the two concurrent capital increases.
The Company issued an aggregate of 23,500,040 units (the \u201cABSAs\u201d) each consisting of:
(i)one ordinary share of the Company, nominal value 0.025 per share, and
(ii)a warrant to purchase one ordinary share at the Exercise Price per Warrant Share.
The maturity of the warrants are 30\u00a0months (i.e. until November\u00a09, 2026).
In the event of a Fundamental Transaction, where a Public Offer results in shareholders tendering 50% or more of the outstanding shares in exchange for securities only (and not cash) at a per-share value below the Exercise Price (a \u201cPut Option Event\u201d), warrant holders have the option to sell their Warrants to the Company for cash. The buyback price per Warrant is determined using a Black-Scholes valuation, subject to certain conditions, including a cap at the initial valuation on the Issue Date and uniform pricing for all holders exercising the option.
Warrants may be exercised by the Holder, in whole or in part, for cash, at any time and from time to time during the period commencing on the Issue Date and ending on November\u00a09, 2026.
The exercise ratio is defined, basically, as one (1) Warrant exercisable for to one (1) Warrant Share with an exercise price set as \u20ac0,45.
The Company conducted a study to determine the appropriate accounting treatment for the warrants issued in May\u00a02024. Based on the results of this analysis, as the Terms and Condition provides for a situation in which instruments will be settled in cash: the warrants cannot be classified as equity and must be recognized as a financial liability measured at fair value on the date of issuance. Subsequently, they are required to be re-measured at fair value through profit or loss in accordance with IFRS\u00a09.
From a presentation standpoint, as per IAS 1.68 and as the derivative issued in May 2024 have a maturity of more than 12\u00a0months, hence it was considered to be classified as non-current even if the warrants can be exercised at any time, and considering the trade price and behaviors of holders cannot be anticipated.
The assumptions and results on May 7, 2024 are detailed in the following tables :
| \n \u00a0 | \n\n 05/03/2024 | \n
|---|---|
| \n Number of instruments | \n\n 23,500,040 | \n
| \n Spot | \n\n 0.40 | \n
| \n Strike | \n\n 0.45 | \n
| \n Volatility | \n\n 100.0% | \n
| \n Risk free rate | \n\n 3.1% | \n
| \n Valuation date | \n\n 05/03/2024 | \n
| \n Expiration | \n\n 09/11/2026 | \n
| \n Maturity (years) | \n\n 2.52 | \n
| \n Unit fair value | \n\n 0.22 | \n
| \n Fair value | \n\n 5,210 | \n
The assumptions and results on December 31, 2024 are detailed in the following tables :
| \n \u00a0 | \n\n 12/31/2024 | \n
|---|---|
| \n Number of instruments | \n\n 23,500,040 | \n
| \n Spot | \n\n 0.27 | \n
| \n Strike | \n\n 0.45 | \n
| \n Volatility | \n\n 70.0% | \n
| \n Risk rate | \n\n 7.3% | \n
| \n Valuation date | \n\n 12/31/2024 | \n
| \n Expiration | \n\n 09/11/2026 | \n
| \n Maturity (years) | \n\n 1.86 | \n
| \n Unit Fair value | \n\n 0.07 | \n
| \n Fair value | \n\n 1,613 | \n
As of December 31, 2024, the Company recognize a Non Current Financial Asset for \u20ac2.5 million and a non current financial liability (derivative) for \u20ac1.6 million.
November 2024 Offering Warrant
On November 1, 2024, the Company announced the success of its Offering, through (i) a capital increase reserved to specialized investors by the issuance of new shares with warrants attached, for a total gross amount of \u20ac2,775,621.30 (excluding the future net proceeds related to the exercise of the warrants). The subscription price for one ABSA is \u20ac0.3513 (the \u201cOffering Price\u201d).
The Company issued an aggregate of 7,901,000 units (the \u201cABSAs\u201d) each consisting of :
(i)one ordinary share of the Company, nominal value 0.025 per share, and
(ii)a warrant to purchase one ordinary share at the Exercise Price per Warrant Share.
The maturity of the warrants are 60\u00a0months (i.e. until November\u00a01, 2029).
In the event of a Fundamental Transaction, where a Public Offer results in shareholders tendering 50% or more of the outstanding shares in exchange for securities only (and not cash) at a per-share value below the Exercise Price (a \u201cPut Option Event\u201d), warrant holders have the option to sell their Warrants to the Company for cash. The buyback price per Warrant is determined using a Black-Scholes valuation, subject to certain conditions, including a cap at the initial valuation on the Issue Date and uniform pricing for all holders exercising the option.
Warrants may be exercised by the Holder, in whole or in part, for cash, at any time and from time to time during the period commencing on April 1, 2025 and ending on November\u00a01, 2029.
The exercise ratio is defined, basically, as one (1) Warrant exercisable for to one (1) Warrant Share with an exercise price set as \u20ac0,3513.
The Company conducted a study to determine the appropriate accounting treatment for the warrants issued in November\u00a02024. Based on the results of this analysis, as the Terms and Condition provides for a situation in which instruments will be settled in cash: the warrants cannot be classified as equity and must be recognized as a financial liability measured at fair value on the date of issuance. Subsequently, they are required to be re-measured at fair value through profit or loss in accordance with IFRS 9.
From a presentation standpoint, as per IAS 1.68 and as the derivative issued in November 2024 have a maturity of more than 12\u00a0months, hence it was considered to be classified as non-current even if the warrants can be exercised at any time after April 1, 2025, and considering the trade price and behaviors of holders cannot be anticipated.
The assumptions and results on November 1, 2024 are detailed in the following tables :
| \n \u00a0 | \n\n 11/01/2024 | \n
|---|---|
| \n Number of instruments | \n\n 7,901,000 | \n
| \n Spot | \n\n 0.31 | \n
| \n Strike | \n\n 0.35 | \n
| \n Volatility | \n\n 70.0% | \n
| \n Risk rate | \n\n 7.6% | \n
| \n Valuation date | \n\n 11/01/2024 | \n
| \n Expiration | \n\n 06/11/2029 | \n
| \n Maturity (years) | \n\n 5.01 | \n
| \n Unit Fair Value | \n\n 0.19 | \n
| \n Fair value | \n\n 1,502 | \n
The assumptions and results on December 31, 2024 are detailed in the following tables:
| \n \u00a0 | \n\n 12/31/2024 | \n
|---|---|
| \n Number of instruments | \n\n 7,901,000 | \n
| \n Spot | \n\n 0.27 | \n
| \n Strike | \n\n 0.35 | \n
| \n Volatility | \n\n 70.0% | \n
| \n Risk rate | \n\n 7.6% | \n
| \n Valuation date | \n\n 12/31/2024 | \n
| \n Expiration | \n\n 06/11/2029 | \n
| \n Maturity (years) | \n\n 4.85 | \n
| \n Unit Fair value | \n\n 0.16 | \n
| \n Fair value | \n\n 1,237 | \n
As of December 31, 2024, the Company recognize a Non Current Financial Asset for \u20ac0.8 million and a non current financial liability (derivative) for \u20ac1.2 million.
December 2024 Offering Warrant
On December 24, 2024, the Company issued an aggregate of 5,326,706 units (the \u201cABSAs\u201d) each consisting of:
(i)one ordinary share of the Company, nominal value 0.025 per share, and
(ii)a warrant to purchase one ordinary share at the Exercise Price per Warrant Share.
The maturity of the warrants is almost 58\u00a0months (i.e. until December\u00a031, 2029).
In the event of a Fundamental Transaction, where a Public Offer results in shareholders tendering 50% or more of the outstanding shares in exchange for securities only (and not cash) at a per-share value below the Exercise Price (a \u201cPut Option Event\u201d), warrant holders have the option to sell their Warrants to the Company for cash. The buyback price per Warrant is determined using a Black-Scholes valuation, subject to certain conditions, including a cap at the initial valuation on the Issue Date and uniform pricing for all holders exercising the option.
Warrants may be exercised by the Holder, in whole or in part, for cash, at any time and from time to time during the period commencing on April\u00a01, 2025 and ending on December\u00a031, 2029.
The exercise ratio is defined, basically, as one (1) Warrant exercisable for to one (1) Warrant Share with an exercise price set as \u20ac0.2816.
The Company conducted a study to determine the appropriate accounting treatment for the warrants issued in December 2024. Based on the results of this analysis, as the Terms and Condition provides for a situation in which instruments will be settled in cash: the warrants cannot be classified as equity and must be recognized as a financial liability measured at fair value on the date of issuance. Subsequently, they are required to be re-measured at fair value through profit or loss in accordance with IFRS 9.
From a presentation standpoint, as per IAS\u00a01.68 and as the derivative issued in December 2024 have a maturity of more than 12\u00a0months, hence it was considered to be classified as non-current even if the warrants can be exercised at any time after April\u00a01, 2025, and considering the trade price and behaviors of holders cannot be anticipated.
The assumptions and results on December 24, 2024 are detailed in the following tables :
| \n \u00a0 | \n\n 12/24/2024 | \n
|---|---|
| \n Number of instruments | \n\n 5,326,706 | \n
| \n Spot | \n\n 0.27 | \n
| \n Strike | \n\n 0.35 | \n
| \n Volatility | \n\n 70.0% | \n
| \n Risk rate | \n\n 7.4% | \n
| \n Valuation date | \n\n 12/24/2024 | \n
| \n Expiration | \n\n 12/31/2029 | \n
| \n Maturity (years) | \n\n 5.02 | \n
| \n Unit Fair value | \n\n 0.16 | \n
| \n Fair value | \n\n 861 | \n
The assumptions and results on December 31, 2024 are detailed in the following tables :
| \n \u00a0 | \n\n 12/31/2024 | \n
|---|---|
| \n Number of instruments | \n\n 5,326,706 | \n
| \n Spot | \n\n 0.27 | \n
| \n Strike | \n\n 0.35 | \n
| \n Volatility | \n\n 70.0% | \n
| \n Riskrate | \n\n 7.4% | \n
| \n Valuation date | \n\n 12/31/2024 | \n
| \n Expiration | \n\n 12/31/2029 | \n
| \n Maturity (years) | \n\n 5.00 | \n
| \n Unit Fair value | \n\n 0.16 | \n
| \n Fair value | \n\n 851 | \n
As of December 31, 2024, the Company recognize a Non Current Financial Asset for \u20ac0.6 million and a non current financial liability (derivative) for \u20ac0.9 million.
Impact of a \u00b120% change in volatility on the Fair Value ( level 3) of the warrants
| \n \n | \n\n Transaction Price | \n\n Initial Fair Value | \n\n Impact of the change Volatility | \n||
|---|---|---|---|---|---|
| \n -20% | \n\n 70% | \n\n +20% | \n|||
| \n Warrants May 2024 | \n\n 1.8 | \n\n 5.2 | \n\n 0.9 | \n\n 1.6 | \n\n 2.3 | \n
| \n Warrants November 2024 | \n\n 0.6 | \n\n 1.5 | \n\n 1.0 | \n\n 1.2 | \n\n 1.5 | \n
| \n Warrants December 2024 | \n\n 0.3 | \n\n 0.9 | \n\n 0.7 | \n\n 0.9 | \n\n 1.0 | \n
| \n Total | \n\n 2.7 | \n\n 7.6 | \n\n 2.6 | \n\n 3.7 | \n\n 4.8 | \n
11.6Maturity dates
Maturity dates of non-derivative financial liabilities as of December\u00a031, 2023, are as follows:
| \n In thousands of Euros | \n\n Gross amount | \n\n Less than one year | \n\n One to five years | \n\n More than five years | \n
|---|---|---|---|---|
| \n Conditional advances | \n\n 5,504 | \n\n 396 | \n\n 4,277 | \n\n 831 | \n
| \n Corporate bonds | \n\n 9,131 | \n\n 9,131 | \n\n 0 | \n\n 0 | \n
| \n Borrowings from Banks | \n\n 7,474 | \n\n 7,474 | \n\n 0 | \n\n 0 | \n
| \n Lease Liability | \n\n 1,823 | \n\n 775 | \n\n 1,048 | \n\n 0 | \n
| \n Total financial liabilities | \n\n 23,932 | \n\n 17,777 | \n\n 5,324 | \n\n 831 | \n
Maturity dates of non-derivative financial liabilities as of December\u00a031, 2024, are as follows:
| \n In thousands of Euros | \n\n Gross amount | \n\n Less than one year | \n\n One to five years | \n\n More than five years | \n
|---|---|---|---|---|
| \n Conditional advances | \n\n 4,700 | \n\n 0 | \n\n 3,379 | \n\n 1,321 | \n
| \n Corporate bonds | \n\n 6,973 | \n\n 6,973 | \n\n 0 | \n\n 0 | \n
| \n Borrowings from Banks | \n\n 6,341 | \n\n 6,341 | \n\n 0 | \n\n 0 | \n
| \n Lease Liability | \n\n 1,099 | \n\n 585 | \n\n 514 | \n\n 0 | \n
| \n Total financial liabilities | \n\n 19,113 | \n\n 13,899 | \n\n 3,892 | \n\n 1,321 | \n
The table below sets forth the changes in our liabilities arising from financing activities:
| \n \u00a0 | \n\n Note to the Consolidated financial statements | \n\n As of January\u00a01, 2024 | \n\n Financing cash flows | \n\n Non-cash changes | \n\n As of December 31, 2024 | \n||
|---|---|---|---|---|---|---|---|
| \n Derivative components | \n\n Amortized costs adjustments | \n\n Other changes | \n|||||
| \n Conditional advances | \n\n 11.2 | \n\n 5,504 | \n\n 0 | \n\n 0 | \n\n (804) | \n\n 0 | \n\n 4,700 | \n
| \n Heights convertible bonds(1) | \n\n 11.1 | \n\n 9,131 | \n\n 0 | \n\n 0 | \n\n 1,000 | \n\n (3,158) | \n\n 6,973 | \n
| \n Borrowing from banks | \n\n \u00a0 | \n\n 7,474 | \n\n (2,313) | \n\n 0 | \n\n 1,180 | \n\n 0 | \n\n 6,341 | \n
| \n o/w State-guaranteed loan | \n\n 11.3 | \n\n 2,583 | \n\n (2,153) | \n\n 0 | \n\n 67 | \n\n 0 | \n\n 496 | \n
| \n o/w EIB loan | \n\n 11.4 | \n\n 4,891 | \n\n (160) | \n\n 0 | \n\n 1,113 | \n\n 0 | \n\n 5,844 | \n
| \n Lease Liability | \n\n 6 | \n\n 1,823 | \n\n (742) | \n\n 0 | \n\n 0 | \n\n 18 | \n\n 1,099 | \n
| \n Derivative liabilities | \n\n \u00a0 | \n\n 559 | \n\n 2,745 | \n\n 656 | \n\n 0 | \n\n 0 | \n\n 3,960 | \n
| \n Total liabilities from financing activities | \n\n \u00a0 | \n\n 24,491 | \n\n (310) | \n\n 656 | \n\n 1,376 | \n\n (3,139) | \n\n 23,073 | \n
| \n (1) | \n\n \u20ac3,158m were converted on shares by reimbursement of 5 instalments in 2024. | \n
|---|
(7)The deadline for the completion of the conditions has been amended pursuant to an amendment agreement dated October 31, 2023.
On June 20, 2024, the Company announced the renegotiation of certain financial obligations, securing its financial position and improving short-term flexibility. The Company also provided operational updates.
In connection with its two recent successful capital increases in\u00a0February 2024 and May 2024, the Company initiated discussions with its creditors. As a result of these discussions, the Company and its creditors have renegotiated the terms and conditions of certain\u00a0financial obligations.
On February 6, 2023, the Company announced that it has received the payment of \u20ac8\u00a0million under the first tranche (the \u201cTranche\u00a0A\u201d) of the unsecured credit facility executed with the European Investment Bank (the \u201cEIB\u201d) on November\u00a03, 2022 maturing in November 2027.
The disbursement of Tranche A was subject, among other conditions, to the issuance of warrants which have been subscribed on January 25, 2023.
The credit facility is divided into three tranches of \u20ac8 million, \u20ac12 million and \u20ac15 million, each subject to the fulfillment of certain conditions precedent and redeemable within 5\u00a0years from the date of signature of the credit facility, i.e. November\u00a03, 2027. No guarantee can be given as to the satisfaction by the Company of the condition\u2019s precedent and the completion of the second and third tranches.
On August 3, 2023, the Company announced the signing of the Bridge Financing with the Sofinnova Crossover I SLP, Invus Public Equities LP and UPMC Enterprises (together, the \"Investors\") and drew down the Tranche 1 of \u20ac6 million.
The Bridge Financing is divided into two tranches, each subject to certain conditions:
\u2022A Tranche 1 of \u20ac6 million through the issuance of 60 bonds convertible into new ordinary shares with a value of \u20ac100,000 each (the \u201c2023 OCAs\u201d), maturing in twelve\u00a0months and bearing interest at 10% per annum; and
\u2022A Tranche 2 of \u20ac4 million through the issuance of new ordinary shares.
Each tranche was subscribed for by each investor pro rata to its participation in the Bridge Financing, as follows: 35% for Sofinnova Crossover I SLP, 35% for Invus Public Equities LP 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 EIB and Heights Capital of certain waivers and agreements.
The drawdown of Tranche\u00a02 was subject, among other conditions, to the fulfillment of the following conditions at the latest on November\u00a015, 2023(7):
\u2022the production of at least two successful GMP batches (Good Manufacturing Practices), of LUMEVOQ\u00ae as demonstrated by a statement signed by a qualified person and/or representative of the quality unit documenting that the GMP batches are within specifications required (individually, a \u201cSuccessful Manufacturing\u201d) or,
\u2022in the event that the GMP batches are not produced, or only one Successful Manufacturing, with unanimous approval by all the Investors.
On October 26, 2023, the Company announced that, in connection with the drawdown of Tranche 1 in August 2023, the Company has obtained from the Banks, the EIB and Heights, subject to certain conditions:
\u2022a waiver by the Banks, the EIB and Heights on any provision which could trigger early repayment of their debt until January\u00a031, 2024;
\u2022an agreement of the EIB and Heights on the pari passu treatment of the 2023 OCAs with the 2022 OCAs;
\u2022a deferral of principal payments due to the Banks until January\u00a031, 2024;
\u2022the suspension of Heights\u2019 conversion rights with respect to the 2022 OCAs until January 31, 2024;
\u2022deferral of principal payments due to Heights in connection with the redemption of the 2022 OCAs until January\u00a031, 2024; and
\u2022a waiver by the EIB of any adjustment right it has under the subscription agreement relating to the Warrants in the context of the Facility signed by the Company and the EIB on December\u00a022, 2022, and in particular the anti-dilution provision contained in this subscription agreement.
On November 15, 2023, the Company announced that an independent laboratory confirmed viral genome (vg) titer from the second drug substance (DS) batch of LUMEVOQ\u00ae manufactured under conditions compliant with Good Manufacturing Practice (GMP) standards.
As a result, the Company became eligible to draw down the second tranche of the bridge financing signed in August 2023 with the Investors. The drawdown of the second tranche also triggered the automatic conversion of the convertible bonds from the \u20ac6 million first tranche at a conversion price of \u20ac0.7122.
3.6Financial assets
Financial assets are initially measured at fair value plus directly attributable transaction costs in the case of instruments not measured at fair value through profit or loss. Directly attributable transaction costs of financial assets measured at fair value through profit or loss are recorded in the consolidated statement of income (loss).
Under IFRS 9, financial assets are classified in the following three categories:
\u2022Financial assets at amortized cost;
\u2022Financial assets at fair value through other comprehensive income (\u201cFVOCI\u201d); and
\u2022Financial assets at fair value through profit or loss.
The classification of financial assets depends on:
\u2022The characteristics of the contractual cash flows of the financial assets; and
\u2022The business model that the entity follows for the management of the financial asset.
Financial assets at amortized cost
Financial assets are measured at amortized cost when (i)\u00a0they are not designated as financial assets at fair value through profit or loss, (ii)\u00a0they are held within a business model whose objective is to hold assets in order to collect contractual cash flows and (iii)\u00a0they give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding (\u201cSPPI\u201d criterion). They are subsequently measured at amortized cost, determined using the effective interest method (\u201cEIR\u201d), less any expected impairment losses in relation to the credit risk. Interest income, exchange gains and losses, impairment losses and gains and losses arising on derecognition are all recorded in the consolidated statement of income (loss).
This category primarily includes trade receivables, as well as other loans and receivables. Long-term loans and receivables that are not interest-bearing or that bear interest at a below-market rate are discounted when the amounts involved are material.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income is mainly comprised is composed of debt instruments whose contractual cash flows represent payments of interest or repayments of principal, and which are managed with a view to collecting cash flows and selling the asset. Gains and losses arising from changes in fair value are recognized in equity within the statement of comprehensive income in the period in which they occur. When such assets are derecognized, the cumulative gains and losses previously recognized in equity are reclassified to profit or loss for the period within the line items Financial income or Financial expenses. The Company did not hold this type of instrument during the periods presented in these financial statements.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss is comprised of:
\u2022instruments whose contractual cash flows represent payments of interest or repayments of principal, but which are managed other than with a view to collecting cash flows and/or selling the asset; and
\u2022instruments that management has designated as \u201cfair value through profit or loss\u201d on initial recognition.
Gains and losses arising from changes in fair value are recognized in profit or loss within the line items financial income or financial expenses.
Impairment of financial assets measured at amortized cost
The main assets involved are trade receivables and others. Trade\u00a0receivables are recognized when the Company has an unconditional right to payment by the customer. Impairment losses on trade receivables and others are estimated using the expected loss method, in order to take account of the risk of payment default throughout the lifetime of the receivables. The expected credit loss is estimated collectively for all accounts receivable at each reporting date using an average expected loss rate, determined primarily on the basis of historical credit loss rates. However, that average expected loss rate may be adjusted if there are indications of a likely significant increase in credit risk. If a receivable is subject to a known credit risk, a specific impairment loss is recognized for that receivable. The amount of expected losses is recognized in the balance sheet as a reduction in the gross amount of accounts receivable. Impairment losses on accounts receivable are recognized within Operating expenses in the consolidated statement of income (loss).
3.10Derivatives
Derivatives are recorded in the statement of financial position at their fair value. Changes in fair value are recognized in profit or loss.
Transaction costs that relate to the issue of the convertible loan are included in the carrying amount of the liability component and are amortized over the lives of the convertible loan notes using the effective interest method.
Convertible Bonds
The convertible bonds are financial instruments that will be or may be settled in the entity's own equity or may be settled in equity instruments of the entity.
They include a debt component and an option component, and can be classified as :
\u2022compound instruments, including a debt component and an equity component as defined by IAS 32. An instrument is qualified as an equity instrument if it can be settled by exchanging a fixed amount of cash or another financial asset for a fixed number of the entity's own equity instruments;
\u2022or hybrid instruments in other cases, including a host contract (financial liability) and one or more embedded derivatives. The conversion option can be qualified as an embedded derivative and initially measured at fair value under IFRS 9 and subsequently measured at fair value through profit or loss.
EIB credit facility and warrants
The Company entered into a credit facility with EIB in November\u00a02022 and the \u20ac8m of the Tranche\u00a01 have been received on February 2023 after all conditions, in particular the issuance of share warrants to the EIB, had been met.
This financial instrument includes two instruments (i) a host contract representing a debt component (the loans) and (ii)\u00a0warrants. The two instruments issued (loans and warrants) on the date of issue are economically and intrinsically linked according to the IFRS\u00a09 criteria, thus the transaction is analyzed as a single hybrid instrument on issue in which there is a host contract representing a debt component (the loans) and a derivative (the warrants). The financial instrument includes different options too: a call option, a prepayment option and a put option. The prepayment option is not a separate derivative instrument.
The warrants, put option and call option are each classified as derivatives on own equity instruments, because the \u201cfixed-for-fixed\u201d rule under IAS\u00a032, which provides that derivatives will 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 (non-cash settlement option which may result in exchanging a variable number of shares, for a variable price). The derivatives are recognized at fair value through profit and loss.
The put option can only be exercised in the framework and for the purposes of a cashless exercise of the warrants, and thus cannot be exercised on a standalone basis. The put option comes into effect upon the issuance of warrants by the Issuer and remains in effect for the lifetime of the warrants. In addition, the put option is not independently transferable from the warrants. Thus, the put option is not bifurcated and it is to be considered as part of the valuation of the warrants.
The call option is exercisable by the Company, under very specific circumstances wherein the value of the warrants increase due to a takeover bid for the Company. The Company believes it is very unlikely that it will take advantage of exercising the call option. Thus, the call option has been valued at zero and does not require bifurcation. The accounting treatment and impact on the 2024 financial year is described in Note\u00a011 - Financial liabilities.
ABSA
Gensight issued in 2024 shares with warrants attached. Warrants attached to ordinary shares issued in 2024 are freely negotiable and detachable upon issue, therefore they are classified as stand-alone financial derivatives instruments and recognized initially at fair value.\u00a0
The company concluded that there is a difference between the transaction price and the fair value of the warrants which corresponds to a \u201cday-one loss\u201d:
\u2022The company uses the following valuation technique to measure the fair value of the warrants (level 3): the valuation model used is Black & Scholes and the following variables were taken into\u00a0consideration: Gensights quoted share price as well as Gensights\u2019 volatility, risk rates and Gensights\u2019 expected dividends (these inputs are further described in Note 11.5).
\u2022The transaction price for the \u201cABSA\u201d units (1 ordinary share +\u00a01\u00a0warrant) is \u20ac0.395 (May 2024 issuance), \u20ac0.3513 (November 2024 issuance), \u20ac0.2816 (December 2024 issuance) out of which \u20ac0,0778 (May 2024 issuance), \u20ac0,0812 (November 2024 issuance), \u20ac0,0516 (December 2024 issuance) is attributable to the warrants.
Since the warrant\u2019s fair value is based on unobservable inputs (level 3), the loss cannot be recognized directly in profit and loss and must be deferred such that it reaches a value of zero at the time when the entire contract can be valued using observable information.
Gensight has elected to defer such difference through the recognition of a financial asset (Recored in the financial statement line: Other non-current financial assets) rather than a deduction of the corresponding liability. In accordance with IFRS 9 accounting principles, Gensight amortizes this asset in the income statement (recorded in the financial statement line: Financial expenses \u2013 Amortization) over the horizon of observability of the valuation parameters.
If, during the life of the warrants, the warrants are derecognized (i.e. exercise and settlement of the warrants): the portion of the financial asset not yet recognized will then be accounted for in the income statement.
Warrants are subsequently measured at fair value through profit or loss at each reporting date (with the resulting gain or loss recognised in profit or loss (recorded in Financial statement line: Financial Income - Net change in Derivative Financial Instrument Fair Value. Further information with respect to the \u201cABSA\u201d are described in Note 11 - Financial liabilities (Note 11.5)
3.12Financial liabilities
Borrowings and other financial liabilities, excepted for derivative financial liabilities (see upon), are measured initially at their fair value and then at amortized cost, calculated on the basis of the effective interest rate (\u201cEIR\u201d) method.
The transaction expenses that are directly attributable to the acquisition or to the issue of a financial liability reduce that financial liability. These expenses are then amortized actuarially over the lifetime of the liability, on the basis of the EIR.
The EIR is the rate that equalizes the anticipated flow of future cash outflows with the current net book value of the financial liability in order to deduct its amortized cost therefrom.
The amount resulting from the benefit of financial liabilities that do not bear interest at market rates is considered a subsidy. 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 finance cost. The subsidy is presented as a differed income which is amortized in the P&L over the same period.
Other financial liabilities include trade accounts payable, which are measured at fair value (which in most cases equates to face value) on initial recognition, and subsequently at amortized cost.
Note 11:Financial liabilities
11.1Bond financing
Heights Capital
On December 23, 2022, the Company signed a subscription agreement for a \u20ac12 million convertible notes financing from Heights Capital. These \u20ac12 million financing were subscribed at 90% of the nominal value i.e. 10.8 million euros, 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 \u20ac90,000 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 euros per Note (the \u201cInitial Conversion Price\u201d).
The Initial Conversion Price corresponds to a premium of 30% on the volume-weighted average price of the Company\u2019s shares on the regulated market of Euronext Paris during the last trading session preceding the determination of the terms of issuance (the \u201cReference Price\u201d), thus complying with the price limits set by the 24th\u00a0resolution of the Company\u2019s combined general shareholders\u2019 meeting held on May\u00a025, 2022 (the volume-weighted average of the prices of the Company\u2019s 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. \u20ac3.07) (the \u201cPrice Limit\u201d) 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 \u20ac5,263 per Note, payable either
i.in new ordinary shares issued at a 10% discount to the market value of the Company\u2019s shares at the time of amortization (it being specified that any payments in shares will be in accordance with the Price Limit) or
ii.at the Company\u2019s option, in cash at 110% of the amount to be amortized.
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 \u20ac5\u00a0million within 12\u00a0months 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 \u201c18-Month Reset Date\u201d), 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 value weighted average of at least 20\u00a0out of 30 consecutive trading days in the 12-month period following the 18-month Reset Date exceeds 150% of the Initial Conversion Price.
Following discussions in the third quarter of 2023 between the Company and Heights Capital, a modification to the price limit and other modification have been approved by the shareholders at the shareholders' general meeting held on January 10, 2024. The new price limit equals \u20ac0.4527 corresponding to the closing price of the shares on the regulated market of Euronext in Paris on the last trading day preceding the date falling three business days prior to the publication of the convening notice to the shareholders\u2019 general meeting held on January 10, 2024 in the Bulletin d\u2019Annonce L\u00e9gale Obligatoire, less a 10.36% discount.
From June 2023, the 2022 OCAs were initially to be amortized quarterly in an amount of \u20ac5,263 per 2022 OCA (or \u20ac5,266 for the amortization corresponding to the final maturity date) (the \u201cAmortization Amount\u201c), payable either (i)\u00a0in new ordinary shares issued at a 10% discount to the market value of the Company\u2019s shares at the time of amortization (it being specified that all payments in shares have to comply with the price limit) or (ii)\u00a0at our option, in cash at 110% of the amount to be amortized, being specified that redemption in cash will become mandatory in the event that the price limit is crossed downwards.
The Company and Heights Capital have first decided to suspend the redemption of the 2022 OCAs until January\u00a031, 2024. Starting from March 2024 and until the maturity date of the 2022 OCAs, Heights Capital will be entitled to trigger an additional amortization payment for each 2022 OCA between two quarterly amortization periods up to the Amortization Amount payable (i) either in new ordinary shares at an amortization price equal to the one applicable on the preceding quarterly amortization date, (ii) or in cash at 110% of the amortizable amount, it being specified that the repayment in cash will become mandatory in the event that the price limit is crossed downwards (the \u201cAdditional Amortization Right\u201c). Heights Capital may only exercise this Additional Amortization Right up to a maximum of three times per calendar year, without being able to carry over this right to the following year. This Additional Amortization Right does not alter the maximum number of shares that may be issued, and only impacts the maturity of the 2022 OCAs. When exercising the Additional Amortization Right, Heights Capital will be subject to a global trading limitation of 15% of the average daily trading volume of the Company\u2019s shares for the duration of an amortization period. These amendments have been approved by the shareholders at the shareholders' general meeting held on January\u00a010, 2024.
In the context of the February 2024 capital increase, the Company and Heights Capital have further decided to suspend the amortization of the 2022 OCAs until April 30, 2024. A new amendment to the price limit may be presented to the shareholders at the next annual shareholders general meeting if the current price limit is above the market price of the shares at the time of convening such meeting, which should reflect our share price over the period comprising the last eight trading sessions at the time of convening the annual shareholders\u2019 general meeting, subject to a maximum discount of 20%.The number of shares that may be issued under the 2022 OCAs will be between 2,746,108 (in the event of conversion of all the 2022 OCAs at the Conversion Price) and 26,507,620 (in the event of amortization of all the 2022 OCAs at the current price limit of \u20ac0.4527), subject to redemption exclusively in shares.
On May 29, 2024 the Annual General Meeting of shareholders approved the modification of the Price Limit provided for in the terms and conditions of the convertible notes. The new price limit is \u20ac0,3272. As a result of this change, the maximum number of shares that may be created upon conversion of the Notes has been adjusted to 36,674,816.
On June 27, 2024, Gensight and the Noteholders amended and restated the Terms and conditions of the Notes. This amendment modifies the price limit as approved by the shareholders and provides for the possibility of Additional Amortisation Right of the Noteholders. These Additional Amortisation Rights enable the Noteholders, from June\u00a028, 2024 up to the maturity date (unchanged - still December\u00a02027), to require partial redemption of outstanding notes by making an additional instalment payment (with a notional redemption amount per Note of \u20ac5,263 \u2013 also not modified). Such Additional Instalment Payment being payable with the same characteristics as the Scheduled instalments, which are:
\u2022by the delivery of a number of freely-tradable Shares equal to the Additional Notional Redemption Amount divided by the Instalment Share Settlement Price for the applicable Additional Instalment Date
\u2022by the payment in cash of an amount equal to 110% of the applicable Additional Notional Redemption Amount
And a maximum of:
\u2022one Additional Instalment Date may occur during any period from a Scheduled Instalment Date to the next Scheduled Instalment Date (whether or not any Additional Instalment Date occurred in any previous such periods)
\u2022and three Additional Instalment Dates may occur during any calendar year (for the avoidance of doubt, whether or not any Additional Instalment Date occurred in any previous calendar year).
These Additional Instalments correspond to the payment of the first four unpaid Scheduled Instalments as well as any future instalments that may be delayed or anticipated.
On June 28,2024, the 631,560 installment was converted into 1,930,195 new shares. Immediately before conversion, the amortized cost of the debt component and the fair value of the derivative were updated and upon conversion, the bonds converted into new shares were derecognized from the balance sheet.\u00a0
In accordance with the amendment of terms of the Notes on June\u00a027, 2024, the Company conduct an analysis of the modification and conclude that it represents a substantial modification of the terms under IFRS 9.
As of the amendment date (June\u00a027, 2024), the debt and derivative are derecognized, and a new instrument is registered. The difference between the carrying amount of the old debt/derivative and the fair value of the new instrument (calculated on the basis of market conditions at the derecognition date) are recognized in profit or loss for an total amount of \u20ac0.4m.
The new assumptions are detailed in the following tables :
| \n \u00a0 | \n\n June\u00a027, 2024 | \n
|---|---|
| \n Stock price | \n\n \u20ac0.34 | \n
| \n Volatility | \n\n 107.18% | \n
| \n Adjusted Volatility | \n\n 87.76% (20% haircut) | \n
| \n Dividend yield | \n\n 0.00% | \n
| \n Risk Free Rate | \n\n 2.56% | \n
| \n Credit Spread | \n\n (change in OAS of -68\u00a0bps using 75th percentile of CCC composite) | \n
| \n Credit Rating | \n\n \u201cCCC Composite\u201d | \n
The valuation was based on unobservable inputs (level\u00a03), using the Black & Scholes method.
Based on these new assumptions, as of June 27, 2024, the total instrument amounts to \u20ac8.85m with fair value of the derivative instrument at \u20ac0.07m and fair value of the debt component at \u20ac8.78m. The new effective interest rate of the debt component is 28 % (compared with 26% previously).
On August 30, 2024, September 28, 2024, December\u00a02, 2024 and December 28, 2024, the 631,560 installment was converted into 1,930,195 new shares each time, Immediately before conversion, the amortized cost of the debt component and the fair value of the derivative were updated and upon conversion. The bonds converted into new shares were derecognized from the balance sheet upon conversion.
The amortization plan was also revised according to the best estimates of cash flows as of December 31, 2024, and according to the new contractual clauses applicable on this date and integrate the conversion that occurred on June, August, September, November and December 2024.
The assumptions are detailed in the following tables:
| \n \u00a0 | \n\n December\u00a031, 2024 | \n
|---|---|
| \n Stock price | \n\n \u20ac 0.27 | \n
| \n Volatility | \n\n 70% | \n
| \n Dividend yield | \n\n 0.00% | \n
| \n Risk Free Rate | \n\n 2.01% | \n
| \n Credit Spread | \n\n 22.59% | \n
| \n Credit Rating | \n\n \u201cCCC Composite\u201d | \n
Considering those facts and circumstances, as of December 31, 2024, the derivative instrument amounts to \u20ac0.02 million and the remaining debt to \u20ac7 million.
In the context of renegotiation of the latest installment on the state-guaranteed loan (PGE) at the end of December 2024, the debt is considered as potentially due in full in the next 12\u00a0months. The non-current portion of debt amounts would have been \u20ac3.8 million as of December\u00a031, 2024.
Further the amendments to IAS 1, which were issued by the IASB and are effective for annual periods beginning on or after January\u00a01, 2024, clarify how to classify liabilities as current or non-current, particularly for financial instruments such as convertible bonds.
A liability is classified as current if the entity does not have an unconditional right to defer settlement for at least 12\u00a0months after the reporting date. For convertible bonds without an equity component, if the conversion option is exercisable by the bondholder within 12\u00a0months after the reporting date, the bond must be classified as current, even if the expected settlement is in shares. Therefore if the bond includes a conversion option that can be exercised by the holder within 12\u00a0months of the reporting date, the entire liability must be classified as current.
11.2Conditional advances
In 2014, we received a grant from Bpifrance Financement of both non-refundable subsidies and conditional advances in relation to the development of our optogenetics technology platform. The program would be funded according to a specified schedule set forth in the contract, subject to completion of milestones. As the program advances, we provided Bpifrance Financement with interim progress reports and a final report when the funded project would end. Based on these reports, we were entitled to conditional advances from Bpifrance Financement. Each award of an advance was made to help fund a specific development milestone. The total intended amount of the conditional advances initially granted was \u20ac5.7\u00a0million, of which of wich 4.1 million was received.
Repayment schedule of the conditional advances is as follows:
\u2022\u20ac550 K from June 30, 2026;
\u2022\u20ac1,000 K from June 30, 2027;
\u2022\u20ac1,500 K from June 30, 2028; and
\u2022\u20ac1,046 K from June 30, 2029;
Following the repayment of all of the conditional advances, the Company may be required to make additional payments over a period of two years, depending on whether the Company reaches cumulative revenues, excluding taxes, of \u20ac80.0\u00a0million. These additional repayments should correspond to the difference between 140% of the conditional advance, considering an interest rate of 1.44% and the amount already reimbursed as per the repayment schedule; and should be done within 15\u00a0years following the first year of reimbursement, i.e. 2041.
The obligation to repay these amounts is based on the technical and commercial success of the funded program, as determined by the revenues forecast or revenues deriving from direct or indirect exploitation of those products and results of its optogenetics technology platform.\u00a0In the event Bpifrance Financement determines that the program is not successful, Bpifrance Financement will meet with the Company to assess the impact on the repayments and the repayment schedule.
The Company has decided to include the future cash flows resulting from the additional payments in the calculation of the EIR, based on the first sales projections of its second product.
The current and non-current portions of the financial liability recognized in our financial statements associated with these conditional advances are determined based on the applicable reimbursement schedules at the end of each reporting period. The portion of the conditional advances for terms longer than one year are classified as non-current liabilities while the portion for terms of less than one year are classified as current liabilities.
Following the change in the estimation of the repayment schedule (especially additional payments regarding the situation of the Company and a delay needed to develop this program), the Company recalculated the present value of its debt. The impact on the December 2024 financial statements is a non cash financial gain of 1.1m, resulting from the extension of the repayment period. As at December 31, 2024, the total debt amount to \u20ac 4.7 million and is recorded in non-current liabilities.
The table below presents the details of the financial liabilities recorded on the statements of financial position:
| \n In thousands of Euros | \n\n \n | \n
|---|---|
| \n Balance as of January 1, 2024 | \n\n 5,504 | \n
| \n Receipts | \n\n \u2014 | \n
| \n Repayments | \n\n \u2014 | \n
| \n Other | \n\n (1,111) | \n
| \n Current portion | \n\n \u2014 | \n
| \n Accrued interest | \n\n 306 | \n
| \n Balance as of December\u00a031, 2024 | \n\n 4,700 | \n
| \n Non-current portion | \n\n 4,700 | \n
| \n Current portion | \n\n 0 | \n
11.3State-guaranteed loan
The Company obtained a \u20ac6.75\u00a0million loan from a bank syndicate formed with Cr\u00e9dit Industriel et Commercial (CIC), BNP Paribas and Bpifrance, in the form of a state-guaranteed loan (Pr\u00eat Garanti par l\u2019\u00c9tat) (the \u201cPGE\u201d).
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\u00a0months. 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%.
In the context of the renegotiation of financial obligations, the Company and its creditor banks (BNP Paribas, CIC and Bpifrance) (the \"Banks\"), previously agreed to suspend the payment of the principal, subject to certain conditions. The parties have now agreed to extend the maturity of the loans until December 2024 and to adopt a new payment schedule for the outstanding principal and interest, featuring 6 monthly instalments with gradual amortization (5% of outstanding principal per month over July, August and September 2024, and then 28.3% over October, November and December\u00a02024). A\u00a0new interest rate has been fixed.\u00a0
Following discussions with banks, the company has only partially settled its latest installment on the state-guaranteed loan (PGE) at the end of December and is currently negotiating with the banks to determine a revised payment schedule for this final installment.
As at December 31, 2024, the remaining debt amounts to \u20ac0,5\u00a0million and is recorded as current liabilities.
11.4European Investment Bank (\u201cEIB\u201d) credit facility
The Company entered in November 2022 into a \u20ac35\u00a0million credit facility agreement with the European Investment Bank (\u201cEIB\u201d), supported by the European Fund for Strategic Investment (EFSI).
The \u20ac35\u00a0million facility is divided into three tranches: \u20ac8\u00a0million for the first tranche (\u201cTranche\u00a0A\u201d), \u20ac12\u00a0million for the second tranche (\u201cTranche\u00a0B\u201d) and \u20ac15\u00a0million for the third tranche (\u201cTranche\u00a0C\u201d). The disbursement of each tranches, including the first disbursement of Tranche\u00a0A, is subject to certain conditions.
The disbursement of Tranche A was subject to, among other things:
\u2022the execution of a warrant agreement to be entered into with the EIB,
\u2022issue of the warrants relating to Tranche A,
\u2022the full repayment of the outstanding financing with Kreos,
\u2022the successful manufacturing of one engineering batch of LUMEVOQ\u00ae,
\u2022the decision by the Company to launch the validation batches (PPQ) manufacturing campaign, and
\u2022a cash injection of \u20ac10\u00a0million, in the form of equity, convertible bonds (to the extent that their repayment would be subordinated to the EIB\u2019s debt under the terms of a subordination agreement to be concluded) or license revenues.
The disbursement of Tranche\u00a0B is subject to, among other things:
\u2022the full drawdown of Tranche\u00a0A,
\u2022the issue of the warrants relating to Tranche\u00a0B,
\u2022the successful manufacturing campaign of several PPQ batches of LUMEVOQ\u00ae, and
\u2022the submission of responses to the Day\u00a0120 List of Questions to the European Medicines Agency (EMA) (condition satisfied in October 2022).
The disbursement of Tranche\u00a0C is subject to, among other things:
\u2022the full drawdown of Tranche\u00a0B,
\u2022the issue of the warrants relating to Tranche\u00a0C,
\u2022a cash injection of at least \u20ac20\u00a0million (in addition to the aforementioned \u20ac10\u00a0million), in the form of equity, convertible bonds (to the extent that their repayment would be subordinated to the EIB\u2019s debt under the terms of a\u00a0subordination agreement to be concluded) or license revenues,
\u2022the obtaining of EMA marketing authorization for LUMEVOQ\u00ae in Europe, and
\u2022a condition related to early access for patients.
The credit facility agreement will carry an annual fixed interest rate of 2% for all tranches and a decreasing fixed payment-in-kind (PIK) interest rate per tranche, with 5% for Tranche\u00a0A, 4% for Tranche\u00a0B and 3% for Tranche\u00a0C, and with a maturity of five years for each tranche. Such PIK interest shall be capitalized annually, payable at maturity and added to the outstanding principal amount of the credit and therefore bear interest.
The facility may, in certain circumstances, be prepaid, in whole or in part, with a prepayment fee, either at the election of the Company or upon the demand of EIB following certain prepayment events, including a change of control or a change in senior management of the Company.
Subject to certain terms and conditions, upon the occurrence of standard events of default (i.e. including payment default, misrepresentation, cross default), EIB may demand immediate repayment by the Company of all or part of the outstanding debt and/or cancel any undisbursed tranches.
The credit facility agreement is supplemented by an agreement to be concluded to issue warrants to the benefit of the EIB, pursuant to Article L.225-138 of the French Commercial Code, in varied amounts according to the relevant tranche.
The warrants will have a term of 20 years and will become exercisable upon the occurrence of certain events (such as a change of control or a repayment regarding one or several tranches), thus avoiding dilution for existing shareholders in the near term. Each warrant will entitle EIB to one ordinary share of the Company in exchange for the exercise price (subject to anti-dilution provisions). The exercise price for each warrant will be equal to 95% of the volume weighted average of the trading price of the Company\u2019s ordinary share over the last five trading days preceding the decision of the competent corporate body of the Company to issue such warrants. EIB shall be entitled to, as soon as the warrants become exercisable, a put option at its intrinsic value, (subject to a cap equal to the drawn amount under the facility agreement) requiring the Company to buy back all or part\u00a0of the warrants then exercisable, but not yet exercised. Furthermore, the Company shall be entitled to a call option on all outstanding warrants under certain limited circumstances.
On February\u00a06, 2023, as disbursement conditions for Tranche\u00a0A were met, including in particular issuance of 1,141,096\u00a0warrants to the EIB, and the Company received the payment of \u20ac8\u00a0million under Tranche A of the unsecured credit facility executed with the EIB.
No guarantee can be given as to the satisfaction by the Company of the conditions precedent and the completion of Tranche\u00a0B and Tranche\u00a0C.
The two financial instruments issued with respect to the drawdown of the \u20ac8\u00a0million Tranche\u00a0A (loans and warrants) on the date of issue are economically and intrinsically linked according to the IFRS\u00a09 criteria, thus the transaction is analyzed as a single hybrid instrument on issue in which there is a host contract representing a debt component (the loans) and a derivative (the warrants). Considering the specific and limited conditions of the transferability of the warrants, they represent an embedded derivative to the loan host contract in\u00a0accordance with IFRS 9 principles (i.e. their contractual features do not make them a separate financial instrument). Therefore, despite having two contracts - the warrants and the loan agreement - their inseparable nature means they are considered as a single unit.
The loan has been initially recognized at fair value, i.e., the issue proceeds (fair value of the consideration received) net of transaction costs incurred and the fair value at inception date of the derivative instruments of the debt concerned. Loans are subsequently measured at amortized cost, calculated using the effective interest rate method. Any difference between initial fair value and repayment value is recognized in the statement of income (loss) over the life of the loan using the effective interest rate method.
The effective interest rate is the discount rate at which the present value of all future cash flows (including transaction costs) over the expected life of the loan, or where appropriate, over a shorter period of time, is equal to the loan\u2019s initial carrying amount.
The fair value of the warrants has been estimated based on a Black & Scholes approach, including the put option and the attached cap.
The assumptions underlying the fair value estimation of the derivative instrument (Level 3)and results are detailed in the following tables:
| \n \u00a0 | \n\n 31/12/2024 | \n
|---|---|
| \n Number of instruments | \n\n 1,141,096 | \n
| \n Spot | \n\n 0.27 | \n
| \n Strike | \n\n 3.45 | \n
| \n Volatility | \n\n 70% | \n
| \n Risk free rate | \n\n 3.4% | \n
| \n Valuation date | \n\n 31/12/2024 | \n
| \n Expiration | \n\n 22/12/2042 | \n
| \n Term (years) | \n\n 18.0 | \n
| \n Maturity (years) | \n\n 18.0 | \n
| \n Unit fair value | \n\n 0% | \n
| \n Fair value | \n\n 0.21 | \n
The derivative instrument amounts to \u20ac0.2 million and the remaining debt to \u20ac5.8 million (\u20ac0.16m current and & \u20ac5.67m non-current) as of December 31, 2024.
In the context of renegotiation of the latest installment on the state-guaranteed loan (PGE) at the end of December 2024, the debt is considered as potentially due in full in the next 12\u00a0months. If the renegociation is successful, the part of the debt which is expected to be repaid within the next 12\u00a0month amounted to \u20ac0.2\u00a0million in relation with interest to be paid in the first semester 2025.
11.52024 Offering Warrant
May 2024 Offering Warrant
On May 7, 2024, the Company announced the success of its Offering, through (i) a capital increase reserved to specialized investors and (ii) a concurrent capital increase by way of a private placement, by the issuance of new shares with warrants attached, for a total gross amount of \u20ac9,282,515.80 (excluding the future net proceeds related to the exercise of the warrants). The subscription price for one ABSA is \u20ac0.395 (the \u201cOffering Price\u201d). The Offering Price is the same in the two concurrent capital increases.
The Company issued an aggregate of 23,500,040 units (the \u201cABSAs\u201d) each consisting of:
(i)one ordinary share of the Company, nominal value 0.025 per share, and
(ii)a warrant to purchase one ordinary share at the Exercise Price per Warrant Share.
The maturity of the warrants are 30\u00a0months (i.e. until November\u00a09, 2026).
In the event of a Fundamental Transaction, where a Public Offer results in shareholders tendering 50% or more of the outstanding shares in exchange for securities only (and not cash) at a per-share value below the Exercise Price (a \u201cPut Option Event\u201d), warrant holders have the option to sell their Warrants to the Company for cash. The buyback price per Warrant is determined using a Black-Scholes valuation, subject to certain conditions, including a cap at the initial valuation on the Issue Date and uniform pricing for all holders exercising the option.
Warrants may be exercised by the Holder, in whole or in part, for cash, at any time and from time to time during the period commencing on the Issue Date and ending on November\u00a09, 2026.
The exercise ratio is defined, basically, as one (1) Warrant exercisable for to one (1) Warrant Share with an exercise price set as \u20ac0,45.
The Company conducted a study to determine the appropriate accounting treatment for the warrants issued in May\u00a02024. Based on the results of this analysis, as the Terms and Condition provides for a situation in which instruments will be settled in cash: the warrants cannot be classified as equity and must be recognized as a financial liability measured at fair value on the date of issuance. Subsequently, they are required to be re-measured at fair value through profit or loss in accordance with IFRS\u00a09.
From a presentation standpoint, as per IAS 1.68 and as the derivative issued in May 2024 have a maturity of more than 12\u00a0months, hence it was considered to be classified as non-current even if the warrants can be exercised at any time, and considering the trade price and behaviors of holders cannot be anticipated.
The assumptions and results on May 7, 2024 are detailed in the following tables :
| \n \u00a0 | \n\n 05/03/2024 | \n
|---|---|
| \n Number of instruments | \n\n 23,500,040 | \n
| \n Spot | \n\n 0.40 | \n
| \n Strike | \n\n 0.45 | \n
| \n Volatility | \n\n 100.0% | \n
| \n Risk free rate | \n\n 3.1% | \n
| \n Valuation date | \n\n 05/03/2024 | \n
| \n Expiration | \n\n 09/11/2026 | \n
| \n Maturity (years) | \n\n 2.52 | \n
| \n Unit fair value | \n\n 0.22 | \n
| \n Fair value | \n\n 5,210 | \n
The assumptions and results on December 31, 2024 are detailed in the following tables :
| \n \u00a0 | \n\n 12/31/2024 | \n
|---|---|
| \n Number of instruments | \n\n 23,500,040 | \n
| \n Spot | \n\n 0.27 | \n
| \n Strike | \n\n 0.45 | \n
| \n Volatility | \n\n 70.0% | \n
| \n Risk rate | \n\n 7.3% | \n
| \n Valuation date | \n\n 12/31/2024 | \n
| \n Expiration | \n\n 09/11/2026 | \n
| \n Maturity (years) | \n\n 1.86 | \n
| \n Unit Fair value | \n\n 0.07 | \n
| \n Fair value | \n\n 1,613 | \n
As of December 31, 2024, the Company recognize a Non Current Financial Asset for \u20ac2.5 million and a non current financial liability (derivative) for \u20ac1.6 million.
November 2024 Offering Warrant
On November 1, 2024, the Company announced the success of its Offering, through (i) a capital increase reserved to specialized investors by the issuance of new shares with warrants attached, for a total gross amount of \u20ac2,775,621.30 (excluding the future net proceeds related to the exercise of the warrants). The subscription price for one ABSA is \u20ac0.3513 (the \u201cOffering Price\u201d).
The Company issued an aggregate of 7,901,000 units (the \u201cABSAs\u201d) each consisting of :
(i)one ordinary share of the Company, nominal value 0.025 per share, and
(ii)a warrant to purchase one ordinary share at the Exercise Price per Warrant Share.
The maturity of the warrants are 60\u00a0months (i.e. until November\u00a01, 2029).
In the event of a Fundamental Transaction, where a Public Offer results in shareholders tendering 50% or more of the outstanding shares in exchange for securities only (and not cash) at a per-share value below the Exercise Price (a \u201cPut Option Event\u201d), warrant holders have the option to sell their Warrants to the Company for cash. The buyback price per Warrant is determined using a Black-Scholes valuation, subject to certain conditions, including a cap at the initial valuation on the Issue Date and uniform pricing for all holders exercising the option.
Warrants may be exercised by the Holder, in whole or in part, for cash, at any time and from time to time during the period commencing on April 1, 2025 and ending on November\u00a01, 2029.
The exercise ratio is defined, basically, as one (1) Warrant exercisable for to one (1) Warrant Share with an exercise price set as \u20ac0,3513.
The Company conducted a study to determine the appropriate accounting treatment for the warrants issued in November\u00a02024. Based on the results of this analysis, as the Terms and Condition provides for a situation in which instruments will be settled in cash: the warrants cannot be classified as equity and must be recognized as a financial liability measured at fair value on the date of issuance. Subsequently, they are required to be re-measured at fair value through profit or loss in accordance with IFRS 9.
From a presentation standpoint, as per IAS 1.68 and as the derivative issued in November 2024 have a maturity of more than 12\u00a0months, hence it was considered to be classified as non-current even if the warrants can be exercised at any time after April 1, 2025, and considering the trade price and behaviors of holders cannot be anticipated.
The assumptions and results on November 1, 2024 are detailed in the following tables :
| \n \u00a0 | \n\n 11/01/2024 | \n
|---|---|
| \n Number of instruments | \n\n 7,901,000 | \n
| \n Spot | \n\n 0.31 | \n
| \n Strike | \n\n 0.35 | \n
| \n Volatility | \n\n 70.0% | \n
| \n Risk rate | \n\n 7.6% | \n
| \n Valuation date | \n\n 11/01/2024 | \n
| \n Expiration | \n\n 06/11/2029 | \n
| \n Maturity (years) | \n\n 5.01 | \n
| \n Unit Fair Value | \n\n 0.19 | \n
| \n Fair value | \n\n 1,502 | \n
The assumptions and results on December 31, 2024 are detailed in the following tables:
| \n \u00a0 | \n\n 12/31/2024 | \n
|---|---|
| \n Number of instruments | \n\n 7,901,000 | \n
| \n Spot | \n\n 0.27 | \n
| \n Strike | \n\n 0.35 | \n
| \n Volatility | \n\n 70.0% | \n
| \n Risk rate | \n\n 7.6% | \n
| \n Valuation date | \n\n 12/31/2024 | \n
| \n Expiration | \n\n 06/11/2029 | \n
| \n Maturity (years) | \n\n 4.85 | \n
| \n Unit Fair value | \n\n 0.16 | \n
| \n Fair value | \n\n 1,237 | \n
As of December 31, 2024, the Company recognize a Non Current Financial Asset for \u20ac0.8 million and a non current financial liability (derivative) for \u20ac1.2 million.
December 2024 Offering Warrant
On December 24, 2024, the Company issued an aggregate of 5,326,706 units (the \u201cABSAs\u201d) each consisting of:
(i)one ordinary share of the Company, nominal value 0.025 per share, and
(ii)a warrant to purchase one ordinary share at the Exercise Price per Warrant Share.
The maturity of the warrants is almost 58\u00a0months (i.e. until December\u00a031, 2029).
In the event of a Fundamental Transaction, where a Public Offer results in shareholders tendering 50% or more of the outstanding shares in exchange for securities only (and not cash) at a per-share value below the Exercise Price (a \u201cPut Option Event\u201d), warrant holders have the option to sell their Warrants to the Company for cash. The buyback price per Warrant is determined using a Black-Scholes valuation, subject to certain conditions, including a cap at the initial valuation on the Issue Date and uniform pricing for all holders exercising the option.
Warrants may be exercised by the Holder, in whole or in part, for cash, at any time and from time to time during the period commencing on April\u00a01, 2025 and ending on December\u00a031, 2029.
The exercise ratio is defined, basically, as one (1) Warrant exercisable for to one (1) Warrant Share with an exercise price set as \u20ac0.2816.
The Company conducted a study to determine the appropriate accounting treatment for the warrants issued in December 2024. Based on the results of this analysis, as the Terms and Condition provides for a situation in which instruments will be settled in cash: the warrants cannot be classified as equity and must be recognized as a financial liability measured at fair value on the date of issuance. Subsequently, they are required to be re-measured at fair value through profit or loss in accordance with IFRS 9.
From a presentation standpoint, as per IAS\u00a01.68 and as the derivative issued in December 2024 have a maturity of more than 12\u00a0months, hence it was considered to be classified as non-current even if the warrants can be exercised at any time after April\u00a01, 2025, and considering the trade price and behaviors of holders cannot be anticipated.
The assumptions and results on December 24, 2024 are detailed in the following tables :
| \n \u00a0 | \n\n 12/24/2024 | \n
|---|---|
| \n Number of instruments | \n\n 5,326,706 | \n
| \n Spot | \n\n 0.27 | \n
| \n Strike | \n\n 0.35 | \n
| \n Volatility | \n\n 70.0% | \n
| \n Risk rate | \n\n 7.4% | \n
| \n Valuation date | \n\n 12/24/2024 | \n
| \n Expiration | \n\n 12/31/2029 | \n
| \n Maturity (years) | \n\n 5.02 | \n
| \n Unit Fair value | \n\n 0.16 | \n
| \n Fair value | \n\n 861 | \n
The assumptions and results on December 31, 2024 are detailed in the following tables :
| \n \u00a0 | \n\n 12/31/2024 | \n
|---|---|
| \n Number of instruments | \n\n 5,326,706 | \n
| \n Spot | \n\n 0.27 | \n
| \n Strike | \n\n 0.35 | \n
| \n Volatility | \n\n 70.0% | \n
| \n Riskrate | \n\n 7.4% | \n
| \n Valuation date | \n\n 12/31/2024 | \n
| \n Expiration | \n\n 12/31/2029 | \n
| \n Maturity (years) | \n\n 5.00 | \n
| \n Unit Fair value | \n\n 0.16 | \n
| \n Fair value | \n\n 851 | \n
As of December 31, 2024, the Company recognize a Non Current Financial Asset for \u20ac0.6 million and a non current financial liability (derivative) for \u20ac0.9 million.
Impact of a \u00b120% change in volatility on the Fair Value ( level 3) of the warrants
| \n \n | \n\n Transaction Price | \n\n Initial Fair Value | \n\n Impact of the change Volatility | \n||
|---|---|---|---|---|---|
| \n -20% | \n\n 70% | \n\n +20% | \n|||
| \n Warrants May 2024 | \n\n 1.8 | \n\n 5.2 | \n\n 0.9 | \n\n 1.6 | \n\n 2.3 | \n
| \n Warrants November 2024 | \n\n 0.6 | \n\n 1.5 | \n\n 1.0 | \n\n 1.2 | \n\n 1.5 | \n
| \n Warrants December 2024 | \n\n 0.3 | \n\n 0.9 | \n\n 0.7 | \n\n 0.9 | \n\n 1.0 | \n
| \n Total | \n\n 2.7 | \n\n 7.6 | \n\n 2.6 | \n\n 3.7 | \n\n 4.8 | \n
11.6Maturity dates
Maturity dates of non-derivative financial liabilities as of December\u00a031, 2023, are as follows:
| \n In thousands of Euros | \n\n Gross amount | \n\n Less than one year | \n\n One to five years | \n\n More than five years | \n
|---|---|---|---|---|
| \n Conditional advances | \n\n 5,504 | \n\n 396 | \n\n 4,277 | \n\n 831 | \n
| \n Corporate bonds | \n\n 9,131 | \n\n 9,131 | \n\n 0 | \n\n 0 | \n
| \n Borrowings from Banks | \n\n 7,474 | \n\n 7,474 | \n\n 0 | \n\n 0 | \n
| \n Lease Liability | \n\n 1,823 | \n\n 775 | \n\n 1,048 | \n\n 0 | \n
| \n Total financial liabilities | \n\n 23,932 | \n\n 17,777 | \n\n 5,324 | \n\n 831 | \n
Maturity dates of non-derivative financial liabilities as of December\u00a031, 2024, are as follows:
| \n In thousands of Euros | \n\n Gross amount | \n\n Less than one year | \n\n One to five years | \n\n More than five years | \n
|---|---|---|---|---|
| \n Conditional advances | \n\n 4,700 | \n\n 0 | \n\n 3,379 | \n\n 1,321 | \n
| \n Corporate bonds | \n\n 6,973 | \n\n 6,973 | \n\n 0 | \n\n 0 | \n
| \n Borrowings from Banks | \n\n 6,341 | \n\n 6,341 | \n\n 0 | \n\n 0 | \n
| \n Lease Liability | \n\n 1,099 | \n\n 585 | \n\n 514 | \n\n 0 | \n
| \n Total financial liabilities | \n\n 19,113 | \n\n 13,899 | \n\n 3,892 | \n\n 1,321 | \n
The table below sets forth the changes in our liabilities arising from financing activities:
| \n \u00a0 | \n\n Note to the Consolidated financial statements | \n\n As of January\u00a01, 2024 | \n\n Financing cash flows | \n\n Non-cash changes | \n\n As of December 31, 2024 | \n||
|---|---|---|---|---|---|---|---|
| \n Derivative components | \n\n Amortized costs adjustments | \n\n Other changes | \n|||||
| \n Conditional advances | \n\n 11.2 | \n\n 5,504 | \n\n 0 | \n\n 0 | \n\n (804) | \n\n 0 | \n\n 4,700 | \n
| \n Heights convertible bonds(1) | \n\n 11.1 | \n\n 9,131 | \n\n 0 | \n\n 0 | \n\n 1,000 | \n\n (3,158) | \n\n 6,973 | \n
| \n Borrowing from banks | \n\n \u00a0 | \n\n 7,474 | \n\n (2,313) | \n\n 0 | \n\n 1,180 | \n\n 0 | \n\n 6,341 | \n
| \n o/w State-guaranteed loan | \n\n 11.3 | \n\n 2,583 | \n\n (2,153) | \n\n 0 | \n\n 67 | \n\n 0 | \n\n 496 | \n
| \n o/w EIB loan | \n\n 11.4 | \n\n 4,891 | \n\n (160) | \n\n 0 | \n\n 1,113 | \n\n 0 | \n\n 5,844 | \n
| \n Lease Liability | \n\n 6 | \n\n 1,823 | \n\n (742) | \n\n 0 | \n\n 0 | \n\n 18 | \n\n 1,099 | \n
| \n Derivative liabilities | \n\n \u00a0 | \n\n 559 | \n\n 2,745 | \n\n 656 | \n\n 0 | \n\n 0 | \n\n 3,960 | \n
| \n Total liabilities from financing activities | \n\n \u00a0 | \n\n 24,491 | \n\n (310) | \n\n 656 | \n\n 1,376 | \n\n (3,139) | \n\n 23,073 | \n
| \n (1) | \n\n \u20ac3,158m were converted on shares by reimbursement of 5 instalments in 2024. | \n
|---|
Note 15:Financial instruments recognized in the consolidated statements of financial position and related effect on the\u00a0consolidated statement of income (loss)
| \n In thousands of euros | \n\n Book value on | \n\n Fair value | \n\n At amortized | \n\n Fair Value | \n
|---|---|---|---|---|
| \n As of December\u00a031, 2023 | \n\n \u00a0 | \n\n \u00a0 | \n\n \u00a0 | \n\n \u00a0 | \n
| \n Financial assets | \n\n \u00a0 | \n\n \u00a0 | \n\n \u00a0 | \n\n \u00a0 | \n
| \n Non-current financial assets | \n\n 502 | \n\n \u2014 | \n\n 502 | \n\n 502 | \n
| \n Current financial assets | \n\n 45 | \n\n 45 | \n\n \u2014 | \n\n 45 | \n
| \n Accounts receivable and related receivables | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n
| \n Cash and cash equivalents | \n\n 2,134 | \n\n \u2014 | \n\n 2,134 | \n\n 2,134 | \n
| \n Other current assets | \n\n 4,349 | \n\n \u2014 | \n\n 4,349 | \n\n 4,349 | \n
| \n Total financial assets | \n\n 7,030 | \n\n 45 | \n\n 6,985 | \n\n 7,030 | \n
| \n Financial liabilities | \n\n \u00a0 | \n\n \u00a0 | \n\n \u00a0 | \n\n \u00a0 | \n
| \n Bond financing | \n\n 9,131 | \n\n \u2014 | \n\n 9,131 | \n\n 9,131 | \n
| \n Derivative liabilities | \n\n 559 | \n\n 559 | \n\n \u2014 | \n\n 559 | \n
| \n Borrowings from Banks | \n\n 7,474 | \n\n \u2014 | \n\n 7,474 | \n\n 7,474 | \n
| \n Conditional advances (non-current portion) | \n\n 5,504 | \n\n \u2014 | \n\n 5,504 | \n\n 5,504 | \n
| \n Refund liability | \n\n 6,572 | \n\n \u2014 | \n\n 6,572 | \n\n 6,572 | \n
| \n Lease liability \u2013 Buildings | \n\n 1,823 | \n\n \u2014 | \n\n 1,823 | \n\n 1,823 | \n
| \n Other non-current liabilities | \n\n 0 | \n\n \u2014 | \n\n 0 | \n\n 0 | \n
| \n Accounts payable and related payables | \n\n 5,634 | \n\n \u2014 | \n\n 5,634 | \n\n 5,634 | \n
| \n Other current liabilities | \n\n 1,880 | \n\n \u2014 | \n\n 1,880 | \n\n 1,880 | \n
| \n Provisions | \n\n 1,258 | \n\n \u2014 | \n\n 1,258 | \n\n 1,258 | \n
| \n Total financial liabilities | \n\n 39,834 | \n\n 559 | \n\n 39,275 | \n\n 39,834 | \n
| \n (1) | \n\n The fair value of financial assets classified as fair value through profit and loss corresponds to the market value of the assets (level 3 instrument under the IFRS\u00a013 fair value hierarchy). | \n
|---|---|
| \n (2) | \n\n The book amount of financial liabilities measured at amortized cost was deemed to be a reasonable estimation of fair value. | \n
| \n In thousands of euros | \n\n Book value on | \n\n Fair value | \n\n At amortized | \n\n Fair Value | \n
|---|---|---|---|---|
| \n As of December\u00a031, 2024 | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n Financial assets | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n Non-current financial assets | \n\n 4 424 | \n\n 3 897 | \n\n 527 | \n\n 4 424 | \n
| \n Current financial assets | \n\n 19 | \n\n 19 | \n\n \u2014 | \n\n 19 | \n
| \n Accounts receivable and related receivables | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n
| \n Cash and cash equivalents | \n\n 2 464 | \n\n \u2014 | \n\n 2 464 | \n\n 2 464 | \n
| \n Other current assets | \n\n 2 860 | \n\n \u2014 | \n\n 2 860 | \n\n 2 860 | \n
| \n Total financial assets | \n\n 9 766 | \n\n 3 915 | \n\n 5 850 | \n\n 9 766 | \n
| \n Financial liabilities | \n\n \u00a0 | \n\n \u00a0 | \n\n \u00a0 | \n\n \u00a0 | \n
| \n Bond financing | \n\n 6 973 | \n\n \u2014 | \n\n 6 973 | \n\n 6 973 | \n
| \n Derivative liabilities | \n\n 3 960 | \n\n 3 960 | \n\n \u2014 | \n\n 3 960 | \n
| \n Borrowings from Banks | \n\n 6 341 | \n\n \u2014 | \n\n 6 341 | \n\n 6 341 | \n
| \n Conditional advances | \n\n 4 700 | \n\n \u2014 | \n\n 4 700 | \n\n 4 700 | \n
| \n Refund liability | \n\n 4 718 | \n\n \u2014 | \n\n 4 718 | \n\n 4 718 | \n
| \n Lease liability \u2013 Buildings | \n\n 1 099 | \n\n \u2014 | \n\n 1 099 | \n\n 1 099 | \n
| \n Other non-current liabilities | \n\n 0 | \n\n \u2014 | \n\n 0 | \n\n 0 | \n
| \n Accounts payable and related payables | \n\n 6 357 | \n\n \u2014 | \n\n 6 357 | \n\n 6 357 | \n
| \n Other current liabilities | \n\n 2 362 | \n\n \u2014 | \n\n 2 362 | \n\n 2 362 | \n
| \n Provisions | \n\n 1 166 | \n\n \u2014 | \n\n 1 166 | \n\n 1 166 | \n
| \n Total financial liabilities | \n\n 37 676 | \n\n 3 960 | \n\n 33 716 | \n\n 37 676 | \n
| \n (1) | \n\n The fair value of financial assets and Financial Liabilities classified as fair value through profit and loss corresponds to the market value of the assets (level 3 instrument under the IFRS 13 fair value hierarchy). | \n
|---|---|
| \n (2) | \n\n The book amount of financial liabilities measured at amortized cost was deemed to be a reasonable estimation of fair value. | \n
Note 25:Management of financial risks
The principal financial instruments held by the Group are cash and cash equivalents. The purpose of holding these instruments is to finance the ongoing business activities of the Group. It is not the Group\u2019s policy to invest in financial instruments for speculative purposes. The Group does not utilize derivatives.
For more information on financial risks, see Section 3.1 \u201cFinancial risks\u201d.
The principal risks to which the Group is exposed are liquidity risk, foreign currency exchange risk, interest rate risk and credit risk.
Liquidity risk
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has established an appropriate liquidity risk management framework for management of the Group\u2019s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.
The note\u00a011.6 details the Group\u2019s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods.
The Company\u2019s current financial debt consists of (i) tranche A of the EIB loan for \u20ac8.9 million (nominal amount and financial interests as of December 31, 2024), (ii) bonds convertible into new shares in favor of Heights Capital for a nominal amount of \u20ac8.8\u00a0million (\u20ac9,7 million in case of full redemption in cash), (iii)\u00a0state guaranteed loans from the Banks for a total outstanding amount of \u20ac0.5 million
| \n In thousands of Euros | \n\n 2024 | \n|||
|---|---|---|---|---|
| \n Total | \n\n Less than one year | \n\n One to five years | \n\n More than five years | \n|
| \n Conditional advances | \n\n 7,247 | \n\n \u2014 | \n\n 4,096 | \n\n 3,151 | \n
| \n Corporate bonds | \n\n 9,726 | \n\n 9,726 | \n\n \u2014 | \n\n \u2014 | \n
| \n Borrowings from Banks | \n\n 9,425 | \n\n 9,425 | \n\n \u2014 | \n\n \u2014 | \n
| \n o/w state-guaranteed loan | \n\n 496 | \n\n 496 | \n\n \u2014 | \n\n \u2014 | \n
| \n o/w EIB loan | \n\n 8,929 | \n\n 8,929 | \n\n \u2014 | \n\n \u2014 | \n
| \n Sub Total | \n\n 26 399 | \n\n 19 151 | \n\n 4 096 | \n\n 3 151 | \n
| \n Leases | \n\n 1 099 | \n\n 585 | \n\n 514 | \n\n \u2014 | \n
| \n Total | \n\n 27,498 | \n\n 19,737 | \n\n 4,610 | \n\n 3,151 | \n
Given the information presented in notes 2.2 Going concern and 11 Financial liabilities, financial liabilities excluding the effect of discounting amounts to 19.7 million euros at less than one year and 7.7 million euros at more than one year, based on contractual maturities.
As of December\u00a031, 2024, the Group has not sufficient net working capital to meet its obligations during the next 12\u00a0months. See Note\u00a02.2 Going Concern.
Foreign currency exchange risk
The Group is exposed to foreign exchange risk inherent in certain services provided in the United States, which have been invoiced in U.S. dollars. The Group does not currently have revenues in dollars nor in any other currency. Due to the relatively low level of these expenditures, the exposure to foreign exchange risk is unlikely to have a material adverse impact on the results of operations or financial position of the Group. The Group\u2019s exposure to currencies other than the U.S. dollar is negligible. For the years ended December\u00a031,2023 and\u00a02024, approximately 34% and 28%, respectively, of its purchases and other external expenses were made in U.S. dollars, generating a net foreign exchange gains of \u20ac213\u00a0K in 2023 and a net foreign exchange loss of \u20ac186\u00a0K in 2024. In light of these insignificant amounts, the Group has not adopted, at this stage, a hedging mechanism in order to protect its business activity against fluctuations in exchange rates. As the Group further increases its business, particularly in the United States, the Group expects to face greater exposure to exchange rate risk and would then consider adopting an appropriate policy for hedging against these risks.
Interest rate risk
The Company has low exposure to interest rate risk. The Group borrow funds at fixed interest rates. The repayment flows of the advances from Banque Publique d\u2019Investissement (\u201cBPI France\u201d) and the borrowings are not subject to interest rate risk.
Credit risk
In order to minimize credit risk, the Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group\u2019s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.
The credit risk related to the Group\u2019s cash and cash equivalents is not significant in light of the quality of the co-contracting financial institutions.
The Group does not have significant credit risk exposure to any single customer or any group of counterparties having similar characteristics.
Fair value
The fair value of financial instruments traded on an active market is based on the market rate as of December\u00a031, 2024. The market prices used for the financial assets owned by the Company are the bid prices in effect on the market as of the valuation date.
The nominal value, less the provisions for depreciation, of the accounts receivable and current debts, is presumed to approximate the fair value of those items.
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximizing the return to shareholders through the optimization of the debt and equity balance. The Group\u2019s overall strategy remains unchanged from 2023.
The capital structure of the Group consists of net debt (borrowings disclosed in Note 11 after deducting cash and bank balances) and equity of the Group (comprising issued capital, reserves and retained earnings and non-controlling interests as disclosed in Note\u00a010).
The Group is not subject to any externally imposed capital requirements.
(7)The deadline for the completion of the conditions has been amended pursuant to an amendment agreement dated October 31, 2023.
2.1Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). As the shares of the Company are listed on Euronext Paris, in compliance with European regulation n\u00b0\u00a01606 / 2002 adopted on July\u00a019, 2002 by the European Parliament and the European Council, the Group's consolidated financial statements for the year ended December\u00a031, 2024 were prepared in accordance with IFRS, as endorsed by the European Union on the date of preparation.
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 is not substantially different between IFRS published by the IASB and IFRS as adopted by the European Union. International accounting standards include IFRS, International Accounting Standards (IAS), as well as the interpretations issued by the Standing Interpretations Committee (SIC), and\u00a0the International Financial Reporting Interpretations Committee (IFRIC).
New standards, amendments and interpretations that became applicable to the Group from January\u00a01,\u00a02024
The new standards, amendments and interpretations adopted by the European Commission and effective from January\u00a01, 2024 are presented below:
\u2022Amendment to IFRS 16 \u201cLeases: Lease Liability in a Sale and Leaseback\u201d, published by the EU in November 2023;
\u2022Amendment to IAS 1 \u201cPresentation of Financial Statements: Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants\u201d, published by the EU in December 2023;
\u2022Amendment to IFRS 7 \u201cFinancial Instruments: Disclosures: Supplier Finance Arrangements\u201d, published by the EU in May\u00a02024;
\u2022IFRIC interpretation of March 2024 regarding the impact of greenhouse gas reduction commitments on the recognition and estimation of provisions (IAS 37).
These amendments were not applicable to, nor did they impact the Group\u2019s consolidated financial statements at December\u00a031, 2024.
New standards, amendments and interpretations that became applicable to the Group from January\u00a01,\u00a02024
The new standards, amendments and interpretations adopted by the European Commission and effective from January\u00a01, 2024 are presented below:
\u2022Amendment to IFRS 16 \u201cLeases: Lease Liability in a Sale and Leaseback\u201d, published by the EU in November 2023;
\u2022Amendment to IAS 1 \u201cPresentation of Financial Statements: Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants\u201d, published by the EU in December 2023;
\u2022Amendment to IFRS 7 \u201cFinancial Instruments: Disclosures: Supplier Finance Arrangements\u201d, published by the EU in May\u00a02024;
\u2022IFRIC interpretation of March 2024 regarding the impact of greenhouse gas reduction commitments on the recognition and estimation of provisions (IAS 37).
These amendments were not applicable to, nor did they impact the Group\u2019s consolidated financial statements at December\u00a031, 2024.
Note 3:Accounting principles
3.1Consolidation scope and methods
On April\u00a028, 2017, the Group incorporated GenSight Biologics Inc. in the United States. On December\u00a030, 2021, the Company created 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.
3.2Functional currency and translation of financial statements in foreign currency
The Financial Statements are presented in thousands of euros (\u201cKEuros\u201d), which is also the functional currency of the parent Company GenSight Biologics S.A. The statements of financial position of GenSight Biologics Inc. having a functional currency different from the euro are translated into euros at the closing exchange rate (spot exchange rate at the statement of financial position date), and the statements of income, statements of comprehensive income and statement of cash flow of GenSight Biologics Inc. are translated at the average period to date exchange rate. The resulting translation adjustments are included in equity under the caption \u201cCumulative translation adjustment\u201d in the Consolidated Statement of Changes in Shareholders\u2019 Equity.
3.3Intangible assets
Pursuant to IAS 38 Intangible Assets (\u201cIAS\u00a038\u201d), intangible assets acquired are recognized as assets on the Consolidated Statement of Financial Position at their acquisition cost.
Research and development
Research costs are recorded in the Financial Statements as expenses.
In accordance with IAS 38, development costs are recognized in the Financial Statements as intangible assets only if all of the following criteria are met:
(a)it is technically feasible to complete the development of the project;
(b)intention on the part of the Company to complete the project and to utilize it;
(c)capacity to utilize the intangible asset;
(d)proof of the probability of future economic benefits associated with the asset;
(e)availability of the technical, financial and other resources for completing the project; and
(f)reliable evaluation of the development expenses.
Because of the risks and uncertainties related to regulatory authorizations and to the research and development process, the Company believes that the six criteria stipulated by IAS 38 have not been fulfilled to date and the application of this principle has resulted in all development costs to be expensed as incurred in all periods presented.
Software
The costs related to the acquisition of licenses for software are recognized as assets on the basis of the costs incurred to acquire and to implement the software. They are amortized using the straight-line method over a period of one to three years depending on the anticipated period of use.
License
In February\u00a02013, the Company entered into a partnership agreement with Novartis Pharma AG (\u201cNovartis\u201d) which provides for exclusive in-licenses for two patent families. The Company issued 670,588 ordinary shares as consideration paid for the exclusive licenses. Given that the fair value of the licenses cannot be reliably estimated, in accordance with IFRS 2, the amount of the intangible asset being recognized has been determined by reference to the fair value of the ordinary shares that were granted by the Company, based on an independent valuation. The licenses are amortized over 15 years from the date the agreement was signed, which corresponds to the expected useful life of the licenses.
3.4Property, plant and equipment
Property, plant and equipment are recorded at their acquisition cost or, if applicable, at their production cost.
Property, plant and equipment are depreciated using the straight-line method over the estimated useful period of the property. Rented fixtures are depreciated over the term of their lifetime or over the term of the rental agreement, whichever is shorter.
The depreciation periods used are the following:
| \n Property, plant and equipment item | \n\n Depreciation\u00a0period | \n
|---|---|
| \n Fixtures and improvements in structures | \n\n 5 to 9\u00a0years | \n
| \n Research and development / production tools | \n\n 3 to 10 years | \n
| \n Computer equipment | \n\n 3 to 5 years | \n
| \n Office equipment and furniture | \n\n 5 years | \n
3.5Inventories
Inventories are measured at the lower of cost or net realizable value at production costs calculated using the\u00a0first-in, first-out\u00a0method. It includes acquisition costs, processing costs and other costs incurred in bringing the inventories to their present location and condition.
Inventories are exclusively composed of work in progress relating to the production of the first batches that may be used for the commercialization.
During the launch phase of a new product, any inventories of that product are written down to zero pending regulatory approval.
As at December 31, 2024, the Company holds vials following Good Manufacturing Practices (GMP) operations in 2024. Management considers that GMP inventories can be the continuation of research and development activities to define an optimal production process and provide data for obtaining marketing authorization in France, UK and US. They are therefore R&D expenses, and the net value of inventories can therefore be considered as zero, even if they could be used for the resumption of AAC program once ANSM review will be finalized.
3.6Financial assets
Financial assets are initially measured at fair value plus directly attributable transaction costs in the case of instruments not measured at fair value through profit or loss. Directly attributable transaction costs of financial assets measured at fair value through profit or loss are recorded in the consolidated statement of income (loss).
Under IFRS 9, financial assets are classified in the following three categories:
\u2022Financial assets at amortized cost;
\u2022Financial assets at fair value through other comprehensive income (\u201cFVOCI\u201d); and
\u2022Financial assets at fair value through profit or loss.
The classification of financial assets depends on:
\u2022The characteristics of the contractual cash flows of the financial assets; and
\u2022The business model that the entity follows for the management of the financial asset.
Financial assets at amortized cost
Financial assets are measured at amortized cost when (i)\u00a0they are not designated as financial assets at fair value through profit or loss, (ii)\u00a0they are held within a business model whose objective is to hold assets in order to collect contractual cash flows and (iii)\u00a0they give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding (\u201cSPPI\u201d criterion). They are subsequently measured at amortized cost, determined using the effective interest method (\u201cEIR\u201d), less any expected impairment losses in relation to the credit risk. Interest income, exchange gains and losses, impairment losses and gains and losses arising on derecognition are all recorded in the consolidated statement of income (loss).
This category primarily includes trade receivables, as well as other loans and receivables. Long-term loans and receivables that are not interest-bearing or that bear interest at a below-market rate are discounted when the amounts involved are material.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income is mainly comprised is composed of debt instruments whose contractual cash flows represent payments of interest or repayments of principal, and which are managed with a view to collecting cash flows and selling the asset. Gains and losses arising from changes in fair value are recognized in equity within the statement of comprehensive income in the period in which they occur. When such assets are derecognized, the cumulative gains and losses previously recognized in equity are reclassified to profit or loss for the period within the line items Financial income or Financial expenses. The Company did not hold this type of instrument during the periods presented in these financial statements.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss is comprised of:
\u2022instruments whose contractual cash flows represent payments of interest or repayments of principal, but which are managed other than with a view to collecting cash flows and/or selling the asset; and
\u2022instruments that management has designated as \u201cfair value through profit or loss\u201d on initial recognition.
Gains and losses arising from changes in fair value are recognized in profit or loss within the line items financial income or financial expenses.
Impairment of financial assets measured at amortized cost
The main assets involved are trade receivables and others. Trade\u00a0receivables are recognized when the Company has an unconditional right to payment by the customer. Impairment losses on trade receivables and others are estimated using the expected loss method, in order to take account of the risk of payment default throughout the lifetime of the receivables. The expected credit loss is estimated collectively for all accounts receivable at each reporting date using an average expected loss rate, determined primarily on the basis of historical credit loss rates. However, that average expected loss rate may be adjusted if there are indications of a likely significant increase in credit risk. If a receivable is subject to a known credit risk, a specific impairment loss is recognized for that receivable. The amount of expected losses is recognized in the balance sheet as a reduction in the gross amount of accounts receivable. Impairment losses on accounts receivable are recognized within Operating expenses in the consolidated statement of income (loss).
3.7Recoverable amount of the intangible assets and property, plant and equipment
The property, plant and equipment and intangible assets that have an established lifetime are subject to an impairment test when the recoverability of their book value is called into question by the existence of indications of impairment. An impairment is recognized in the Financial Statements up to the amount of the excess of the book value over the recoverable value of the asset. The recoverable value of an asset corresponds to its fair value minus the costs of sale or its use value, whichever is higher.
3.8Cash and cash equivalents
Cash equivalents are short-term, highly liquid investments, that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Cash and cash equivalents comprise the cash that is held at the bank and petty cash as well as the short-term fixed deposits for which the maturity is less than three months.
For the purpose of establishing the statement of cash flows, cash and cash equivalents include cash in hand, demand deposits and short fixed-term deposits with banks and short-term highly liquid investments with original maturities of three months or less, net of bank overdrafts.
Cash and cash equivalents are initially recognized at their purchase costs on the transaction date, and are subsequently measured at fair value. Changes in fair value are recognized in profit or loss.
3.9Share capital
Ordinary shares are classified under shareholders\u2019 equity. The costs of share capital transactions that are directly attributable to the issue of new shares or options are recognized in shareholders\u2019 equity as a deduction from the revenue from the issue, net of tax.
The Company\u2019s own shares bought in the context of a brokering/liquidity agreement are presented as a reduction in shareholders\u2019 equity until their cancellation, their reissuance or their disposal.
3.10Derivatives
Derivatives are recorded in the statement of financial position at their fair value. Changes in fair value are recognized in profit or loss.
Transaction costs that relate to the issue of the convertible loan are included in the carrying amount of the liability component and are amortized over the lives of the convertible loan notes using the effective interest method.
Convertible Bonds
The convertible bonds are financial instruments that will be or may be settled in the entity's own equity or may be settled in equity instruments of the entity.
They include a debt component and an option component, and can be classified as :
\u2022compound instruments, including a debt component and an equity component as defined by IAS 32. An instrument is qualified as an equity instrument if it can be settled by exchanging a fixed amount of cash or another financial asset for a fixed number of the entity's own equity instruments;
\u2022or hybrid instruments in other cases, including a host contract (financial liability) and one or more embedded derivatives. The conversion option can be qualified as an embedded derivative and initially measured at fair value under IFRS 9 and subsequently measured at fair value through profit or loss.
EIB credit facility and warrants
The Company entered into a credit facility with EIB in November\u00a02022 and the \u20ac8m of the Tranche\u00a01 have been received on February 2023 after all conditions, in particular the issuance of share warrants to the EIB, had been met.
This financial instrument includes two instruments (i) a host contract representing a debt component (the loans) and (ii)\u00a0warrants. The two instruments issued (loans and warrants) on the date of issue are economically and intrinsically linked according to the IFRS\u00a09 criteria, thus the transaction is analyzed as a single hybrid instrument on issue in which there is a host contract representing a debt component (the loans) and a derivative (the warrants). The financial instrument includes different options too: a call option, a prepayment option and a put option. The prepayment option is not a separate derivative instrument.
The warrants, put option and call option are each classified as derivatives on own equity instruments, because the \u201cfixed-for-fixed\u201d rule under IAS\u00a032, which provides that derivatives will 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 (non-cash settlement option which may result in exchanging a variable number of shares, for a variable price). The derivatives are recognized at fair value through profit and loss.
The put option can only be exercised in the framework and for the purposes of a cashless exercise of the warrants, and thus cannot be exercised on a standalone basis. The put option comes into effect upon the issuance of warrants by the Issuer and remains in effect for the lifetime of the warrants. In addition, the put option is not independently transferable from the warrants. Thus, the put option is not bifurcated and it is to be considered as part of the valuation of the warrants.
The call option is exercisable by the Company, under very specific circumstances wherein the value of the warrants increase due to a takeover bid for the Company. The Company believes it is very unlikely that it will take advantage of exercising the call option. Thus, the call option has been valued at zero and does not require bifurcation. The accounting treatment and impact on the 2024 financial year is described in Note\u00a011 - Financial liabilities.
ABSA
Gensight issued in 2024 shares with warrants attached. Warrants attached to ordinary shares issued in 2024 are freely negotiable and detachable upon issue, therefore they are classified as stand-alone financial derivatives instruments and recognized initially at fair value.\u00a0
The company concluded that there is a difference between the transaction price and the fair value of the warrants which corresponds to a \u201cday-one loss\u201d:
\u2022The company uses the following valuation technique to measure the fair value of the warrants (level 3): the valuation model used is Black & Scholes and the following variables were taken into\u00a0consideration: Gensights quoted share price as well as Gensights\u2019 volatility, risk rates and Gensights\u2019 expected dividends (these inputs are further described in Note 11.5).
\u2022The transaction price for the \u201cABSA\u201d units (1 ordinary share +\u00a01\u00a0warrant) is \u20ac0.395 (May 2024 issuance), \u20ac0.3513 (November 2024 issuance), \u20ac0.2816 (December 2024 issuance) out of which \u20ac0,0778 (May 2024 issuance), \u20ac0,0812 (November 2024 issuance), \u20ac0,0516 (December 2024 issuance) is attributable to the warrants.
Since the warrant\u2019s fair value is based on unobservable inputs (level 3), the loss cannot be recognized directly in profit and loss and must be deferred such that it reaches a value of zero at the time when the entire contract can be valued using observable information.
Gensight has elected to defer such difference through the recognition of a financial asset (Recored in the financial statement line: Other non-current financial assets) rather than a deduction of the corresponding liability. In accordance with IFRS 9 accounting principles, Gensight amortizes this asset in the income statement (recorded in the financial statement line: Financial expenses \u2013 Amortization) over the horizon of observability of the valuation parameters.
If, during the life of the warrants, the warrants are derecognized (i.e. exercise and settlement of the warrants): the portion of the financial asset not yet recognized will then be accounted for in the income statement.
Warrants are subsequently measured at fair value through profit or loss at each reporting date (with the resulting gain or loss recognised in profit or loss (recorded in Financial statement line: Financial Income - Net change in Derivative Financial Instrument Fair Value. Further information with respect to the \u201cABSA\u201d are described in Note 11 - Financial liabilities (Note 11.5)
3.11Share-based payment
Free shares (Attributions Gratuites d\u2019Actions, or \u201cAGA\u201d), stock-options (Options de souscription et/ou d\u2019achat d\u2019actions, or \u201cSO\u201d) and employee warrants (Bons de souscription de parts de cr\u00e9ateur d\u2019entreprise, or \u201cBCE\u201d) are awarded to employees or executives. Non-employee warrants (Bons de souscription d\u2019actions, or \u201cBSA\u201d) are primarily awarded to directors and scientific consultants. Pursuant to IFRS\u00a02, these awards are measured at their fair value on the date of grant. The fair value is calculated with the most relevant formula regarding the settlement and the conditions of each plan. The fair value is recorded in personnel expenses (allocated by function in the Consolidated Statement of Income) on a straight-line basis over each milestone composing the vesting period with a corresponding increase in shareholders\u2019 equity.
At each closing date, we re-examine the number of options likely to become exercisable. If applicable, the impact of the review of the estimate is recognized in the Consolidated Statement of Income with a corresponding adjustment in equity.
3.12Financial liabilities
Borrowings and other financial liabilities, excepted for derivative financial liabilities (see upon), are measured initially at their fair value and then at amortized cost, calculated on the basis of the effective interest rate (\u201cEIR\u201d) method.
The transaction expenses that are directly attributable to the acquisition or to the issue of a financial liability reduce that financial liability. These expenses are then amortized actuarially over the lifetime of the liability, on the basis of the EIR.
The EIR is the rate that equalizes the anticipated flow of future cash outflows with the current net book value of the financial liability in order to deduct its amortized cost therefrom.
The amount resulting from the benefit of financial liabilities that do not bear interest at market rates is considered a subsidy. 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 finance cost. The subsidy is presented as a differed income which is amortized in the P&L over the same period.
Other financial liabilities include trade accounts payable, which are measured at fair value (which in most cases equates to face value) on initial recognition, and subsequently at amortized cost.
3.13Research tax credit, subsidies and conditional advances
Research tax credit
The research tax credit (Cr\u00e9dit d\u2019Imp\u00f4t Recherche, or \u201cCIR\u201d) (the \u201cResearch Tax Credit\u201d) is granted to companies by the French tax authorities in order to encourage them to conduct technical and scientific research. Companies that prove that they have\u00a0expenditures that meet the required criteria (research expenditures located in France or, since January\u00a01, 2005, within the European Community or in another State that is a party to\u00a0the Agreement on the European Economic Area that has\u00a0concluded a tax treaty with France that contains an administrative assistance clause) receive a tax credit that can be used for the payment of the corporate tax due for the fiscal year in which the expenditures were made and the next three fiscal years, or, as applicable, can be reimbursed in cash. The expenditures taken into account for the calculation of the Research Tax Credit involve only research expenses.
The Company has received the Research Tax Credit since its inception.
The Company received the reimbursement of the Research Tax Credit for the year 2023 in April\u00a02024 for an amount of \u20ac1,737\u00a0K. It will request the reimbursement of the 2024 Research Tax Credit in 2025 under the Community tax rules for small and medium firms in compliance with the regulatory texts in effect for the amount of \u20ac1,084\u00a0K.
The CIR is presented under other income in the Consolidated Statement of Income (Loss) as it meets the definition of government grant as defined in IAS\u00a020 Accounting for Government Grants and Disclosure of Government Assistance.
Subsidies and conditional advances
Due to the innovative nature of its product candidate development programs, the Company has benefited from certain sources of financial assistance from Bpifrance Financement whose mission is to provide financial assistance and support to emerging French enterprises to facilitate the development and commercialization of innovative technologies.
The funds received by the Company are intended to finance its research and development efforts and the recruitment of specific personnel. The Company has received such funding in the form of non-refundable subsidies and conditional advances.
Subsidies
Subsidies received are grants that are not repayable by the Company and are recognized in the Financial Statements where there exists reasonable assurance that the Company will comply with the conditions attached to the subsidies and the subsidies will be received.
Subsidies that are upfront payments are presented as deferred revenue and recognized ratably through income over the duration of the research program to which the subsidy relates.
A public subsidy that is to be received either as compensation for expenses or for losses already incurred, or for immediate financial support of the Company without associated future costs, is recognized in the Financial Statements as other income for the period in which the grant is classified as a receivable.
The amount resulting from the benefit of financial liabilities that do not bear interest at market rates is considered a subsidy. 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 finance cost. This finance cost is netted with the impact of the amortization of the subsidy in the P&L.
Conditional advances
Funds received from Bpifrance Financement in the form of conditional advances are recognized as financial liabilities, as the Company has a contractual obligation to reimburse Bpifrance Financement based on a repayment schedule. Each advance is made to fund a specific development milestone. Details concerning conditional advances are provided in Note\u00a011. Receipts and reimbursements of conditional advances are reflected as cash flows from financing activities in the Consolidated Statement of Cash Flows.
The rate used to determine the amount recognized annually as a finance cost, the EIR takes into account the estimated future cash flows.
In the event of a change in payment schedule of the stipulated repayments of the conditional advances, the Company recalculates the net book value of the debt resulting from the discounting of the anticipated new future cash flows at the initial EIR. The adjustment that results therefrom is recognized in the Consolidated Statement of Income (Loss) for the period during which the modification is recognized.
The conditional advance that can be subject to this type of\u00a0modification is the advance received from Bpifrance Financement, presented in Note\u00a011.2.
3.14Retirement pension obligations
The employees of the Company receive the retirement benefits stipulated by law in France:
\u2022compensation paid by the Company to employees upon their retirement (defined-benefit plan) and;
\u2022a payment of retirement pensions by the Social Security agencies, which are financed by the contributions made by companies and employees (defined-contribution plans).
For the defined-benefit plans, the costs of the retirement benefits are estimated by using the projected credit unit method. According to this method, the cost of the retirement benefit is recognized in the Consolidated Statement of Income (Loss) so that it is distributed uniformly over the term of the services of the employees. The retirement benefit commitments are valued at the current value of the future payments estimated using, for discounting, the market rate for high quality corporate bonds with a term that corresponds to that estimated for the payment of the benefits.
The difference between the amount of the provision at the beginning of a period and at the close of that period is recognized through profit or loss for the portion representing the costs of services rendered and the net interest costs, and\u00a0through other comprehensive income for the portion representing the actuarial gains and losses.
The Company\u2019s payments for the defined-contribution plans are recognized as expenses on the Consolidated Statement of Income (Loss) of the period during which they become payable.
In April 2021, the IFRIC (\u201cIFRS Interpretations Committee\u201d) or addressed to the IAS Board (International Accounting Standards Board), for decision (approval or refusal or intermediate position), a \u201cTAD\u201d (\u201cTentative Agenda Decision\u201d or \u201cProvisional Decision\u201d) by which it proposes to modify the way of calculating the commitments relating to certain defined benefit plans. The IAS Board validated this position in early June\u00a02021, while specifying that there was no need to modify anything in IAS\u00a019 which already allows this interpretation.
By its new position, the IFRIC considers that, from the moment when, on the one hand, no right is acquired in the event of departure before retirement age and, on the other hand, the rights are capped after a certain number of years of seniority (N), it would be the last N years of the employee\u2019s career in the company that confer rights upon departure.
In addition, according to the consensus, it is also mandatory to modify the valuation method for Companies using collective agreements whose rights are defined by age bracket. Indeed, they consider that, given the fact that the rights are defined in stages, a certain number of years of service performed by a given employee does not give rise to the allocation of rights. It is then necessary, for the evaluation, to linearize the rights over the last N years, N representing the number of years which gives rise to the allocation of rights and therefore the last level that the employee will reach at the time of his departure in retirement.
The Company implemented the changes of interpretation starting with the 2021 financial statements.
3.15Provisions for risks and expenses
The provisions for risks and lawsuits correspond to the commitments resulting from lawsuits and various risks whose due dates and amounts are uncertain.
A provision is recognized in the Financial Statements when the Group has a legal or implicit obligation to a third party resulting from a past event, which is likely or certain to cause an outflow of resources to that third party, and provided that the future outflows of liquid assets can be estimated reliably.
The amount recognized in the Financial Statements as a provision is the best estimate of the expenses necessary to extinguish the obligation.
3.16Leases
The Group applies the definition of a lease and related guidance set out in IFRS 16 to all contracts entered into or changed on or after January\u00a01, 2019.
Applying IFRS\u00a016, for all leases (except as noted below), the Group:
(a)Recognizes right-of-use assets and lease liabilities in the consolidated statement of financial position, initially measured at the present value of the future lease payments;
(b)Recognizes depreciation of right-of-use assets and interest on lease liabilities in profit or loss;
(c)Separates the total amount of cash paid into a principal portion (presented within financing activities) and interest (presented within financing activities) in the consolidated statement of cash flows.
Lease incentives (e.g. rent-free period) are recognized as part of the measurement of the right-of-use assets and lease liabilities whereas under IAS 17 they resulted in the recognition of a lease incentive, amortized as a reduction of rental expenses generally on a straight-line basis.
Under IFRS 16, right-of-use assets are tested for impairment in accordance with IAS\u00a036.
For short-term leases (lease term of 12\u00a0months or less) and leases of low-value assets (such as tablet and personal computers, small items of office furniture and telephones), the Group has opted to recognize a lease expense on a straight-line basis as permitted by IFRS\u00a016. This expense is presented within \u2018other expenses\u2019 in profit or loss.
The Company defines contracts\u2019 terms as the non-cancellable period during which the Company has the right to use the underlying asset, plus any termination options that the lessee is reasonably certain not to exercise.
Lease terms used are consistent with the depreciation periods of fixtures and improvements in structures and are in line, as at 31/12 and before the closing date, with the management best estimates of the lease terms.
3.17Revenue
The core principle of this revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:
\u2022Step 1: Identify the contract with the customer,
\u2022Step 2: Identify the performance obligations in the contract,
\u2022Step 3: Determine the transaction price,
\u2022Step 4: Allocate the transaction price to the performance obligations in the contract,
\u2022Step 5: Recognize revenue when the company satisfies a performance obligation.
In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or\u00a0service that is distinct. A performance obligation meets IFRS\u00a015\u2019s definition of a \u201cdistinct\u201d good or service (or bundle of goods or services) if both of the following criteria are met:
\u2022a good or service (or bundle of goods or services) that is distinct; or
\u2022a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer.
In accordance with IFRS\u00a015, variable considerations cannot be included in the estimated transaction price as long as it not highly probable that the related revenue will not reversed in the future. According to the level of uncertainty relating to the results of preclinical and clinical trials and the decisions relating to the regulatory approvals, variable considerations depending on these events are excluded from the transaction price as long as the trigger event is not highly probable. When the trigger event occurs, the corresponding milestone is added to the transaction price. Such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and net income (loss) in the period of adjustment.
The Company started the sale of LUMEVOQ\u00ae through the named patient Temporary Authorization for Use (\u201cATU nominative\u201d) granted by the National Drug Safety Agency (Agence Nationale de S\u00e9curit\u00e9 du M\u00e9dicament 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\u00a0the 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.
Management determined that the agreement with the CHNO of the Quinze-Vingts includes a variable amount. At contract inception, the variable consideration is estimated based on the expected value amount of consideration expected from the transaction and constrained to the extent it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with respect the variable consideration is subsequently resolved.
The methodology and assumptions used to estimate rebates are monitored and adjusted regularly in the light of contractual and legal obligations, historical trends, past experience and projected market conditions. In 2021, in the light of changes in\u00a0legal obligations, and projected market conditions, the Company adjusted the variable considerations for which it\u2019s highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur.
Net revenue is recorded, net of variable consideration related to certain allowances and accruals, at the time the customer obtains control of the product.
We record 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.
As of December\u00a031, 2024, the discounted value of the refund liability amounted to \u20ac4.7m. A 10% decrease or increase in the final price estimation would have an impact of +\u20ac0.6m and \u20ac(0.6)m respectively on the discounted refund liability amount and therefore the cumulated revenue recognized.
A new delay of one year in the repayment to the Urssaf, according to the date the Company could obtain the full marketing authorization and complete pricing negotiations, would have an impact of \u20ac 0.4m.
3.18Income tax
Deferred taxes are recognized for all the temporary differences arising from the difference between the tax basis and the accounting basis of the assets and liabilities that appear in the Financial Statements. The primary temporary differences are related to the tax losses that can be carried forward or backward. The legal tax rates as of the closing date are utilized to determine the deferred taxes.
The deferred tax assets are recognized in the Financial Statements only to the extent that it is likely that the future profits will be sufficient to absorb the losses that can be carried forward or backward. Considering its stage of development, which precludes the income projections from being sufficiently reliable to be made, the Group has not recognized deferred tax assets in relation to tax loss carryforward in the Consolidated Statement of Financial Position.
3.19Segment information
The Company operates in a single operating segment: the conducting of research and development of novel therapies for mitochondrial and neurodegenerative diseases of the eye and central nervous system in order to market them in the future. The assets, liabilities and operating loss realized are located mainly in France.
3.20Presentation of financial assets and financial liabilities measured at fair value
In accordance with IFRS\u00a07 Financial Statements: Disclosures, financial instruments are presented in three categories based on a hierarchical method used to determine their fair value:
\u2022level\u00a01: fair value calculated using quoted prices in an active market for identical assets and liabilities;
\u2022level\u00a02: fair value calculated using valuation techniques based on observable market data such as prices of similar assets and liabilities or parameters quoted in an active market; and
\u2022level\u00a03: fair value calculated using valuation techniques based wholly or partly on unobservable inputs such as prices in an inactive market or a valuation based on multiples for unlisted securities.
3.21Use of estimates
The Financial Statements are prepared in accordance with IFRS. The preparation of the Financial Statements requires management to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, income and expenses during the reporting period. The Group bases estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. The Group\u2019s actual results may differ from these estimates under different assumptions or conditions.
The full extent to which the global macro-economic context will directly or indirectly impact our business, results of operations and financial condition, including sales, expenses, reserves and allowances, the supply of our products and product candidates, clinical trials and research and development costs, will depend on future developments that are highly uncertain. We have made estimates of the impact of the global macro-economic context within our financial statements and there may be changes to those estimates in future periods. Actual results may differ from these estimates.
These estimates and judgments involve mainly:
\u2022the estimate of the repayments of the conditional advances obtained by the Company from public institutions, such as Bpifrance Financement. The anticipated repayments of the conditional advances are analyzed at each reporting period (see Note\u00a011), and the measurement of the conditional advances classified as financial liabilities based on the effective rate method;
\u2022the measurement of the fair value of the various equity instruments granted to employees, executives or non-employee members of the Board of Directors as well as scientific consultants and service providers, such as AGA, SO, BCE or BSA, which is performed on the basis of actuarial models; these models require the use by the Company of certain calculation assumptions such as the expected volatility of the underlying security (see Note\u00a019);
\u2022research and development expenses include estimates of the amount recognized over the year for subcontracts. At year-end closing, an analysis of the services already performed but not invoiced and / or already invoiced but not performed is carried out by the project managers and validated by the company\u2019s management (see Note\u00a018);
\u2022the measurement of the liability component of the convertible bond, calculated on the basis of the contractually agreed interest and amortization payments discounted at market interest rates (see Note\u00a011);
\u2022the measurement of the fair value of the derivatives directly linked with the convertible bonds and warrants, calculated on the basis of financial mathematic models (see Note\u00a011);
\u2022the estimate of the selling price for LUMEVOQ\u00ae to the CHNO of the Quinze-Vingts. The National Drug Safety Agency, granted to GenSight Biologics several Temporary Authorizations for Use (\u201cATU nominative\u201d). Variable consideration under IFRS\u00a015 are required to be estimated at contract inception. The Group assessed individual contracts to determine the estimated variable consideration and related constraints. In 2021, in the light of changes in legal obligations, and projected market conditions, the Company adjusted the variable considerations for which it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur. The valuation assumptions of variable considerations remained unchanged in 2024 compared with 2023. The total revenue presented in our financial statements as of December\u00a02023 and 2024 is therefore net from those variable considerations (see Note\u00a016);
\u2022the estimate of contingencies reserves related to ongoing confidential social and operational litigations.
3.1Consolidation scope and methods
On April\u00a028, 2017, the Group incorporated GenSight Biologics Inc. in the United States. On December\u00a030, 2021, the Company created 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.
3.2Functional currency and translation of financial statements in foreign currency
The Financial Statements are presented in thousands of euros (\u201cKEuros\u201d), which is also the functional currency of the parent Company GenSight Biologics S.A. The statements of financial position of GenSight Biologics Inc. having a functional currency different from the euro are translated into euros at the closing exchange rate (spot exchange rate at the statement of financial position date), and the statements of income, statements of comprehensive income and statement of cash flow of GenSight Biologics Inc. are translated at the average period to date exchange rate. The resulting translation adjustments are included in equity under the caption \u201cCumulative translation adjustment\u201d in the Consolidated Statement of Changes in Shareholders\u2019 Equity.
3.2Functional currency and translation of financial statements in foreign currency
The Financial Statements are presented in thousands of euros (\u201cKEuros\u201d), which is also the functional currency of the parent Company GenSight Biologics S.A. The statements of financial position of GenSight Biologics Inc. having a functional currency different from the euro are translated into euros at the closing exchange rate (spot exchange rate at the statement of financial position date), and the statements of income, statements of comprehensive income and statement of cash flow of GenSight Biologics Inc. are translated at the average period to date exchange rate. The resulting translation adjustments are included in equity under the caption \u201cCumulative translation adjustment\u201d in the Consolidated Statement of Changes in Shareholders\u2019 Equity.
3.3Intangible assets
Pursuant to IAS 38 Intangible Assets (\u201cIAS\u00a038\u201d), intangible assets acquired are recognized as assets on the Consolidated Statement of Financial Position at their acquisition cost.
Research and development
Research costs are recorded in the Financial Statements as expenses.
In accordance with IAS 38, development costs are recognized in the Financial Statements as intangible assets only if all of the following criteria are met:
(a)it is technically feasible to complete the development of the project;
(b)intention on the part of the Company to complete the project and to utilize it;
(c)capacity to utilize the intangible asset;
(d)proof of the probability of future economic benefits associated with the asset;
(e)availability of the technical, financial and other resources for completing the project; and
(f)reliable evaluation of the development expenses.
Because of the risks and uncertainties related to regulatory authorizations and to the research and development process, the Company believes that the six criteria stipulated by IAS 38 have not been fulfilled to date and the application of this principle has resulted in all development costs to be expensed as incurred in all periods presented.
Software
The costs related to the acquisition of licenses for software are recognized as assets on the basis of the costs incurred to acquire and to implement the software. They are amortized using the straight-line method over a period of one to three years depending on the anticipated period of use.
License
In February\u00a02013, the Company entered into a partnership agreement with Novartis Pharma AG (\u201cNovartis\u201d) which provides for exclusive in-licenses for two patent families. The Company issued 670,588 ordinary shares as consideration paid for the exclusive licenses. Given that the fair value of the licenses cannot be reliably estimated, in accordance with IFRS 2, the amount of the intangible asset being recognized has been determined by reference to the fair value of the ordinary shares that were granted by the Company, based on an independent valuation. The licenses are amortized over 15 years from the date the agreement was signed, which corresponds to the expected useful life of the licenses.
3.3Intangible assets
Pursuant to IAS 38 Intangible Assets (\u201cIAS\u00a038\u201d), intangible assets acquired are recognized as assets on the Consolidated Statement of Financial Position at their acquisition cost.
Research and development
Research costs are recorded in the Financial Statements as expenses.
In accordance with IAS 38, development costs are recognized in the Financial Statements as intangible assets only if all of the following criteria are met:
(a)it is technically feasible to complete the development of the project;
(b)intention on the part of the Company to complete the project and to utilize it;
(c)capacity to utilize the intangible asset;
(d)proof of the probability of future economic benefits associated with the asset;
(e)availability of the technical, financial and other resources for completing the project; and
(f)reliable evaluation of the development expenses.
Because of the risks and uncertainties related to regulatory authorizations and to the research and development process, the Company believes that the six criteria stipulated by IAS 38 have not been fulfilled to date and the application of this principle has resulted in all development costs to be expensed as incurred in all periods presented.
Software
The costs related to the acquisition of licenses for software are recognized as assets on the basis of the costs incurred to acquire and to implement the software. They are amortized using the straight-line method over a period of one to three years depending on the anticipated period of use.
License
In February\u00a02013, the Company entered into a partnership agreement with Novartis Pharma AG (\u201cNovartis\u201d) which provides for exclusive in-licenses for two patent families. The Company issued 670,588 ordinary shares as consideration paid for the exclusive licenses. Given that the fair value of the licenses cannot be reliably estimated, in accordance with IFRS 2, the amount of the intangible asset being recognized has been determined by reference to the fair value of the ordinary shares that were granted by the Company, based on an independent valuation. The licenses are amortized over 15 years from the date the agreement was signed, which corresponds to the expected useful life of the licenses.
Note 4:Intangible assets
The intangible assets are broken down as follows:
| \n (in thousands of Euros) | \n\n As of December\u00a031, | \n|
|---|---|---|
| \n 2024 | \n\n 2023 | \n|
| \n Patents, licenses, trademarks | \n\n 275 | \n\n 275 | \n
| \n Software | \n\n 18 | \n\n 18 | \n
| \n Total historical cost | \n\n 293 | \n\n 293 | \n
| \n Accumulated amort. of patents, licenses and trademarks | \n\n (218) | \n\n (200) | \n
| \n Accumulated depreciation of software packages | \n\n (18) | \n\n (18) | \n
| \n Accumulated amortization and depreciation | \n\n (236) | \n\n (218) | \n
| \n Net total | \n\n 57 | \n\n 75 | \n
An intangible asset was recognized at December\u00a031, 2013 as a result of the license agreement signed with Novartis. The initial recognition cost amounted to \u20ac275\u00a0K and was determined by reference to the fair value of the 670,588 ordinary shares, \u20ac0.41\u00a0per ordinary share, issued as consideration for the license.
There has been no recognition of impairment losses in application of IAS\u00a036 Impairment of Assets over the periods presented.
3.3Intangible assets
Pursuant to IAS 38 Intangible Assets (\u201cIAS\u00a038\u201d), intangible assets acquired are recognized as assets on the Consolidated Statement of Financial Position at their acquisition cost.
Research and development
Research costs are recorded in the Financial Statements as expenses.
In accordance with IAS 38, development costs are recognized in the Financial Statements as intangible assets only if all of the following criteria are met:
(a)it is technically feasible to complete the development of the project;
(b)intention on the part of the Company to complete the project and to utilize it;
(c)capacity to utilize the intangible asset;
(d)proof of the probability of future economic benefits associated with the asset;
(e)availability of the technical, financial and other resources for completing the project; and
(f)reliable evaluation of the development expenses.
Because of the risks and uncertainties related to regulatory authorizations and to the research and development process, the Company believes that the six criteria stipulated by IAS 38 have not been fulfilled to date and the application of this principle has resulted in all development costs to be expensed as incurred in all periods presented.
Software
The costs related to the acquisition of licenses for software are recognized as assets on the basis of the costs incurred to acquire and to implement the software. They are amortized using the straight-line method over a period of one to three years depending on the anticipated period of use.
License
In February\u00a02013, the Company entered into a partnership agreement with Novartis Pharma AG (\u201cNovartis\u201d) which provides for exclusive in-licenses for two patent families. The Company issued 670,588 ordinary shares as consideration paid for the exclusive licenses. Given that the fair value of the licenses cannot be reliably estimated, in accordance with IFRS 2, the amount of the intangible asset being recognized has been determined by reference to the fair value of the ordinary shares that were granted by the Company, based on an independent valuation. The licenses are amortized over 15 years from the date the agreement was signed, which corresponds to the expected useful life of the licenses.
Note 4:Intangible assets
The intangible assets are broken down as follows:
| \n (in thousands of Euros) | \n\n As of December\u00a031, | \n|
|---|---|---|
| \n 2024 | \n\n 2023 | \n|
| \n Patents, licenses, trademarks | \n\n 275 | \n\n 275 | \n
| \n Software | \n\n 18 | \n\n 18 | \n
| \n Total historical cost | \n\n 293 | \n\n 293 | \n
| \n Accumulated amort. of patents, licenses and trademarks | \n\n (218) | \n\n (200) | \n
| \n Accumulated depreciation of software packages | \n\n (18) | \n\n (18) | \n
| \n Accumulated amortization and depreciation | \n\n (236) | \n\n (218) | \n
| \n Net total | \n\n 57 | \n\n 75 | \n
An intangible asset was recognized at December\u00a031, 2013 as a result of the license agreement signed with Novartis. The initial recognition cost amounted to \u20ac275\u00a0K and was determined by reference to the fair value of the 670,588 ordinary shares, \u20ac0.41\u00a0per ordinary share, issued as consideration for the license.
There has been no recognition of impairment losses in application of IAS\u00a036 Impairment of Assets over the periods presented.
3.3Intangible assets
Pursuant to IAS 38 Intangible Assets (\u201cIAS\u00a038\u201d), intangible assets acquired are recognized as assets on the Consolidated Statement of Financial Position at their acquisition cost.
Research and development
Research costs are recorded in the Financial Statements as expenses.
In accordance with IAS 38, development costs are recognized in the Financial Statements as intangible assets only if all of the following criteria are met:
(a)it is technically feasible to complete the development of the project;
(b)intention on the part of the Company to complete the project and to utilize it;
(c)capacity to utilize the intangible asset;
(d)proof of the probability of future economic benefits associated with the asset;
(e)availability of the technical, financial and other resources for completing the project; and
(f)reliable evaluation of the development expenses.
Because of the risks and uncertainties related to regulatory authorizations and to the research and development process, the Company believes that the six criteria stipulated by IAS 38 have not been fulfilled to date and the application of this principle has resulted in all development costs to be expensed as incurred in all periods presented.
Software
The costs related to the acquisition of licenses for software are recognized as assets on the basis of the costs incurred to acquire and to implement the software. They are amortized using the straight-line method over a period of one to three years depending on the anticipated period of use.
License
In February\u00a02013, the Company entered into a partnership agreement with Novartis Pharma AG (\u201cNovartis\u201d) which provides for exclusive in-licenses for two patent families. The Company issued 670,588 ordinary shares as consideration paid for the exclusive licenses. Given that the fair value of the licenses cannot be reliably estimated, in accordance with IFRS 2, the amount of the intangible asset being recognized has been determined by reference to the fair value of the ordinary shares that were granted by the Company, based on an independent valuation. The licenses are amortized over 15 years from the date the agreement was signed, which corresponds to the expected useful life of the licenses.
Research and development
Research costs are recorded in the Financial Statements as expenses.
In accordance with IAS 38, development costs are recognized in the Financial Statements as intangible assets only if all of the following criteria are met:
(a)it is technically feasible to complete the development of the project;
(b)intention on the part of the Company to complete the project and to utilize it;
(c)capacity to utilize the intangible asset;
(d)proof of the probability of future economic benefits associated with the asset;
(e)availability of the technical, financial and other resources for completing the project; and
(f)reliable evaluation of the development expenses.
Because of the risks and uncertainties related to regulatory authorizations and to the research and development process, the Company believes that the six criteria stipulated by IAS 38 have not been fulfilled to date and the application of this principle has resulted in all development costs to be expensed as incurred in all periods presented.
Research and development
Research costs are recorded in the Financial Statements as expenses.
In accordance with IAS 38, development costs are recognized in the Financial Statements as intangible assets only if all of the following criteria are met:
(a)it is technically feasible to complete the development of the project;
(b)intention on the part of the Company to complete the project and to utilize it;
(c)capacity to utilize the intangible asset;
(d)proof of the probability of future economic benefits associated with the asset;
(e)availability of the technical, financial and other resources for completing the project; and
(f)reliable evaluation of the development expenses.
Because of the risks and uncertainties related to regulatory authorizations and to the research and development process, the Company believes that the six criteria stipulated by IAS 38 have not been fulfilled to date and the application of this principle has resulted in all development costs to be expensed as incurred in all periods presented.
18.1Research and development expenses
The table below shows the breakdown of research and development expenses by cost nature for the periods presented:
| \n In thousands of Euros | \n\n As of December\u00a031, | \n|
|---|---|---|
| \n 2024 | \n\n 2023 | \n|
| \n Personnel expenses (1) | \n\n 2,818 | \n\n 3,741 | \n
| \n Sub-contracting, collaboration and consultants | \n\n 8,119 | \n\n 11,988 | \n
| \n Licensing and intellectual property | \n\n 280 | \n\n 341 | \n
| \n Travel and entertainment expenses | \n\n 104 | \n\n 193 | \n
| \n Depreciation and amortization expense | \n\n 972 | \n\n 2,757 | \n
| \n Other | \n\n 76 | \n\n 339 | \n
| \n Total R&D expenses | \n\n 12,368 | \n\n 19,360 | \n
| \n (1) | \n\n Includes \u20ac157 thousands and \u20ac596 thousands related to share-based compensation expense as of December\u00a031, 2023 and 2024 respectively. | \n
|---|
3.4Property, plant and equipment
Property, plant and equipment are recorded at their acquisition cost or, if applicable, at their production cost.
Property, plant and equipment are depreciated using the straight-line method over the estimated useful period of the property. Rented fixtures are depreciated over the term of their lifetime or over the term of the rental agreement, whichever is shorter.
The depreciation periods used are the following:
| \n Property, plant and equipment item | \n\n Depreciation\u00a0period | \n
|---|---|
| \n Fixtures and improvements in structures | \n\n 5 to 9\u00a0years | \n
| \n Research and development / production tools | \n\n 3 to 10 years | \n
| \n Computer equipment | \n\n 3 to 5 years | \n
| \n Office equipment and furniture | \n\n 5 years | \n
3.4Property, plant and equipment
Property, plant and equipment are recorded at their acquisition cost or, if applicable, at their production cost.
Property, plant and equipment are depreciated using the straight-line method over the estimated useful period of the property. Rented fixtures are depreciated over the term of their lifetime or over the term of the rental agreement, whichever is shorter.
The depreciation periods used are the following:
| \n Property, plant and equipment item | \n\n Depreciation\u00a0period | \n
|---|---|
| \n Fixtures and improvements in structures | \n\n 5 to 9\u00a0years | \n
| \n Research and development / production tools | \n\n 3 to 10 years | \n
| \n Computer equipment | \n\n 3 to 5 years | \n
| \n Office equipment and furniture | \n\n 5 years | \n
3.4Property, plant and equipment
Property, plant and equipment are recorded at their acquisition cost or, if applicable, at their production cost.
Property, plant and equipment are depreciated using the straight-line method over the estimated useful period of the property. Rented fixtures are depreciated over the term of their lifetime or over the term of the rental agreement, whichever is shorter.
The depreciation periods used are the following:
| \n Property, plant and equipment item | \n\n Depreciation\u00a0period | \n
|---|---|
| \n Fixtures and improvements in structures | \n\n 5 to 9\u00a0years | \n
| \n Research and development / production tools | \n\n 3 to 10 years | \n
| \n Computer equipment | \n\n 3 to 5 years | \n
| \n Office equipment and furniture | \n\n 5 years | \n
Note 5:Property, plant and equipment
Changes in property, plant and equipment gross book values and accumulated depreciation are presented in the following table:
| \n (in thousands of Euros) | \n\n As of December\u00a031, 2023 | \n\n Increase | \n\n Decrease | \n\n Currency translation adjustment | \n\n As of December\u00a031, 2024 | \n
|---|---|---|---|---|---|
| \n Gross values | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n Technical equipment and installations | \n\n 503 | \n\n 0 | \n\n 0 | \n\n 0 | \n\n 503 | \n
| \n IFRS 16 \u2013 Right of use \u2013 Building | \n\n 3,572 | \n\n 4 | \n\n (217) | \n\n 76 | \n\n 3,436 | \n
| \n Leasehold improvement | \n\n 1,345 | \n\n 0 | \n\n 0 | \n\n 38 | \n\n 1,383 | \n
| \n Office and Computer equipment | \n\n 299 | \n\n 1 | \n\n 0 | \n\n 1 | \n\n 301 | \n
| \n IFRS 16 \u2013 Right of use \u2013 Other | \n\n 19 | \n\n 0 | \n\n 0 | \n\n 0 | \n\n 19 | \n
| \n Furniture | \n\n 423 | \n\n 0 | \n\n 0 | \n\n 0 | \n\n 423 | \n
| \n Total gross property, plant and equipment | \n\n 6,161 | \n\n 6 | \n\n (217) | \n\n 114 | \n\n 6,065 | \n
| \n Accumulated depreciation | \n\n \u00a0 | \n\n \u00a0 | \n\n \u00a0 | \n\n \u00a0 | \n\n \u00a0 | \n
| \n Technical equipment and installations | \n\n (493) | \n\n (4) | \n\n 0 | \n\n 0 | \n\n (496) | \n
| \n IFRS 16 \u2013 Right of use \u2013 Building | \n\n (1,965) | \n\n (899) | \n\n 216 | \n\n (60) | \n\n (2,707) | \n
| \n Leasehold improvement | \n\n (1,053) | \n\n (171) | \n\n 0 | \n\n (32) | \n\n (1,256) | \n
| \n Office and computer equipment | \n\n (250) | \n\n (26) | \n\n 0 | \n\n (1) | \n\n (278) | \n
| \n IFRS 16 \u2013 Right of use \u2013 Other | \n\n (19) | \n\n 0 | \n\n 0 | \n\n 0 | \n\n (19) | \n
| \n Furniture | \n\n (356) | \n\n (20) | \n\n 0 | \n\n 0 | \n\n (376) | \n
| \n Total accumulated depreciation | \n\n (4,136) | \n\n (1,120) | \n\n 216 | \n\n (93) | \n\n (5,132) | \n
| \n Total net property, plant and equipment | \n\n 2,025 | \n\n (1,114) | \n\n (0) | \n\n 21 | \n\n 933 | \n
3.4Property, plant and equipment
Property, plant and equipment are recorded at their acquisition cost or, if applicable, at their production cost.
Property, plant and equipment are depreciated using the straight-line method over the estimated useful period of the property. Rented fixtures are depreciated over the term of their lifetime or over the term of the rental agreement, whichever is shorter.
The depreciation periods used are the following:
| \n Property, plant and equipment item | \n\n Depreciation\u00a0period | \n
|---|---|
| \n Fixtures and improvements in structures | \n\n 5 to 9\u00a0years | \n
| \n Research and development / production tools | \n\n 3 to 10 years | \n
| \n Computer equipment | \n\n 3 to 5 years | \n
| \n Office equipment and furniture | \n\n 5 years | \n
3.5Inventories
Inventories are measured at the lower of cost or net realizable value at production costs calculated using the\u00a0first-in, first-out\u00a0method. It includes acquisition costs, processing costs and other costs incurred in bringing the inventories to their present location and condition.
Inventories are exclusively composed of work in progress relating to the production of the first batches that may be used for the commercialization.
During the launch phase of a new product, any inventories of that product are written down to zero pending regulatory approval.
As at December 31, 2024, the Company holds vials following Good Manufacturing Practices (GMP) operations in 2024. Management considers that GMP inventories can be the continuation of research and development activities to define an optimal production process and provide data for obtaining marketing authorization in France, UK and US. They are therefore R&D expenses, and the net value of inventories can therefore be considered as zero, even if they could be used for the resumption of AAC program once ANSM review will be finalized.
3.5Inventories
Inventories are measured at the lower of cost or net realizable value at production costs calculated using the\u00a0first-in, first-out\u00a0method. It includes acquisition costs, processing costs and other costs incurred in bringing the inventories to their present location and condition.
Inventories are exclusively composed of work in progress relating to the production of the first batches that may be used for the commercialization.
During the launch phase of a new product, any inventories of that product are written down to zero pending regulatory approval.
As at December 31, 2024, the Company holds vials following Good Manufacturing Practices (GMP) operations in 2024. Management considers that GMP inventories can be the continuation of research and development activities to define an optimal production process and provide data for obtaining marketing authorization in France, UK and US. They are therefore R&D expenses, and the net value of inventories can therefore be considered as zero, even if they could be used for the resumption of AAC program once ANSM review will be finalized.
3.6Financial assets
Financial assets are initially measured at fair value plus directly attributable transaction costs in the case of instruments not measured at fair value through profit or loss. Directly attributable transaction costs of financial assets measured at fair value through profit or loss are recorded in the consolidated statement of income (loss).
Under IFRS 9, financial assets are classified in the following three categories:
\u2022Financial assets at amortized cost;
\u2022Financial assets at fair value through other comprehensive income (\u201cFVOCI\u201d); and
\u2022Financial assets at fair value through profit or loss.
The classification of financial assets depends on:
\u2022The characteristics of the contractual cash flows of the financial assets; and
\u2022The business model that the entity follows for the management of the financial asset.
Financial assets at amortized cost
Financial assets are measured at amortized cost when (i)\u00a0they are not designated as financial assets at fair value through profit or loss, (ii)\u00a0they are held within a business model whose objective is to hold assets in order to collect contractual cash flows and (iii)\u00a0they give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding (\u201cSPPI\u201d criterion). They are subsequently measured at amortized cost, determined using the effective interest method (\u201cEIR\u201d), less any expected impairment losses in relation to the credit risk. Interest income, exchange gains and losses, impairment losses and gains and losses arising on derecognition are all recorded in the consolidated statement of income (loss).
This category primarily includes trade receivables, as well as other loans and receivables. Long-term loans and receivables that are not interest-bearing or that bear interest at a below-market rate are discounted when the amounts involved are material.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income is mainly comprised is composed of debt instruments whose contractual cash flows represent payments of interest or repayments of principal, and which are managed with a view to collecting cash flows and selling the asset. Gains and losses arising from changes in fair value are recognized in equity within the statement of comprehensive income in the period in which they occur. When such assets are derecognized, the cumulative gains and losses previously recognized in equity are reclassified to profit or loss for the period within the line items Financial income or Financial expenses. The Company did not hold this type of instrument during the periods presented in these financial statements.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss is comprised of:
\u2022instruments whose contractual cash flows represent payments of interest or repayments of principal, but which are managed other than with a view to collecting cash flows and/or selling the asset; and
\u2022instruments that management has designated as \u201cfair value through profit or loss\u201d on initial recognition.
Gains and losses arising from changes in fair value are recognized in profit or loss within the line items financial income or financial expenses.
Impairment of financial assets measured at amortized cost
The main assets involved are trade receivables and others. Trade\u00a0receivables are recognized when the Company has an unconditional right to payment by the customer. Impairment losses on trade receivables and others are estimated using the expected loss method, in order to take account of the risk of payment default throughout the lifetime of the receivables. The expected credit loss is estimated collectively for all accounts receivable at each reporting date using an average expected loss rate, determined primarily on the basis of historical credit loss rates. However, that average expected loss rate may be adjusted if there are indications of a likely significant increase in credit risk. If a receivable is subject to a known credit risk, a specific impairment loss is recognized for that receivable. The amount of expected losses is recognized in the balance sheet as a reduction in the gross amount of accounts receivable. Impairment losses on accounts receivable are recognized within Operating expenses in the consolidated statement of income (loss).
3.6Financial assets
Financial assets are initially measured at fair value plus directly attributable transaction costs in the case of instruments not measured at fair value through profit or loss. Directly attributable transaction costs of financial assets measured at fair value through profit or loss are recorded in the consolidated statement of income (loss).
Under IFRS 9, financial assets are classified in the following three categories:
\u2022Financial assets at amortized cost;
\u2022Financial assets at fair value through other comprehensive income (\u201cFVOCI\u201d); and
\u2022Financial assets at fair value through profit or loss.
The classification of financial assets depends on:
\u2022The characteristics of the contractual cash flows of the financial assets; and
\u2022The business model that the entity follows for the management of the financial asset.
Financial assets at amortized cost
Financial assets are measured at amortized cost when (i)\u00a0they are not designated as financial assets at fair value through profit or loss, (ii)\u00a0they are held within a business model whose objective is to hold assets in order to collect contractual cash flows and (iii)\u00a0they give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding (\u201cSPPI\u201d criterion). They are subsequently measured at amortized cost, determined using the effective interest method (\u201cEIR\u201d), less any expected impairment losses in relation to the credit risk. Interest income, exchange gains and losses, impairment losses and gains and losses arising on derecognition are all recorded in the consolidated statement of income (loss).
This category primarily includes trade receivables, as well as other loans and receivables. Long-term loans and receivables that are not interest-bearing or that bear interest at a below-market rate are discounted when the amounts involved are material.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income is mainly comprised is composed of debt instruments whose contractual cash flows represent payments of interest or repayments of principal, and which are managed with a view to collecting cash flows and selling the asset. Gains and losses arising from changes in fair value are recognized in equity within the statement of comprehensive income in the period in which they occur. When such assets are derecognized, the cumulative gains and losses previously recognized in equity are reclassified to profit or loss for the period within the line items Financial income or Financial expenses. The Company did not hold this type of instrument during the periods presented in these financial statements.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss is comprised of:
\u2022instruments whose contractual cash flows represent payments of interest or repayments of principal, but which are managed other than with a view to collecting cash flows and/or selling the asset; and
\u2022instruments that management has designated as \u201cfair value through profit or loss\u201d on initial recognition.
Gains and losses arising from changes in fair value are recognized in profit or loss within the line items financial income or financial expenses.
Impairment of financial assets measured at amortized cost
The main assets involved are trade receivables and others. Trade\u00a0receivables are recognized when the Company has an unconditional right to payment by the customer. Impairment losses on trade receivables and others are estimated using the expected loss method, in order to take account of the risk of payment default throughout the lifetime of the receivables. The expected credit loss is estimated collectively for all accounts receivable at each reporting date using an average expected loss rate, determined primarily on the basis of historical credit loss rates. However, that average expected loss rate may be adjusted if there are indications of a likely significant increase in credit risk. If a receivable is subject to a known credit risk, a specific impairment loss is recognized for that receivable. The amount of expected losses is recognized in the balance sheet as a reduction in the gross amount of accounts receivable. Impairment losses on accounts receivable are recognized within Operating expenses in the consolidated statement of income (loss).
3.10Derivatives
Derivatives are recorded in the statement of financial position at their fair value. Changes in fair value are recognized in profit or loss.
Transaction costs that relate to the issue of the convertible loan are included in the carrying amount of the liability component and are amortized over the lives of the convertible loan notes using the effective interest method.
Convertible Bonds
The convertible bonds are financial instruments that will be or may be settled in the entity's own equity or may be settled in equity instruments of the entity.
They include a debt component and an option component, and can be classified as :
\u2022compound instruments, including a debt component and an equity component as defined by IAS 32. An instrument is qualified as an equity instrument if it can be settled by exchanging a fixed amount of cash or another financial asset for a fixed number of the entity's own equity instruments;
\u2022or hybrid instruments in other cases, including a host contract (financial liability) and one or more embedded derivatives. The conversion option can be qualified as an embedded derivative and initially measured at fair value under IFRS 9 and subsequently measured at fair value through profit or loss.
EIB credit facility and warrants
The Company entered into a credit facility with EIB in November\u00a02022 and the \u20ac8m of the Tranche\u00a01 have been received on February 2023 after all conditions, in particular the issuance of share warrants to the EIB, had been met.
This financial instrument includes two instruments (i) a host contract representing a debt component (the loans) and (ii)\u00a0warrants. The two instruments issued (loans and warrants) on the date of issue are economically and intrinsically linked according to the IFRS\u00a09 criteria, thus the transaction is analyzed as a single hybrid instrument on issue in which there is a host contract representing a debt component (the loans) and a derivative (the warrants). The financial instrument includes different options too: a call option, a prepayment option and a put option. The prepayment option is not a separate derivative instrument.
The warrants, put option and call option are each classified as derivatives on own equity instruments, because the \u201cfixed-for-fixed\u201d rule under IAS\u00a032, which provides that derivatives will 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 (non-cash settlement option which may result in exchanging a variable number of shares, for a variable price). The derivatives are recognized at fair value through profit and loss.
The put option can only be exercised in the framework and for the purposes of a cashless exercise of the warrants, and thus cannot be exercised on a standalone basis. The put option comes into effect upon the issuance of warrants by the Issuer and remains in effect for the lifetime of the warrants. In addition, the put option is not independently transferable from the warrants. Thus, the put option is not bifurcated and it is to be considered as part of the valuation of the warrants.
The call option is exercisable by the Company, under very specific circumstances wherein the value of the warrants increase due to a takeover bid for the Company. The Company believes it is very unlikely that it will take advantage of exercising the call option. Thus, the call option has been valued at zero and does not require bifurcation. The accounting treatment and impact on the 2024 financial year is described in Note\u00a011 - Financial liabilities.
ABSA
Gensight issued in 2024 shares with warrants attached. Warrants attached to ordinary shares issued in 2024 are freely negotiable and detachable upon issue, therefore they are classified as stand-alone financial derivatives instruments and recognized initially at fair value.\u00a0
The company concluded that there is a difference between the transaction price and the fair value of the warrants which corresponds to a \u201cday-one loss\u201d:
\u2022The company uses the following valuation technique to measure the fair value of the warrants (level 3): the valuation model used is Black & Scholes and the following variables were taken into\u00a0consideration: Gensights quoted share price as well as Gensights\u2019 volatility, risk rates and Gensights\u2019 expected dividends (these inputs are further described in Note 11.5).
\u2022The transaction price for the \u201cABSA\u201d units (1 ordinary share +\u00a01\u00a0warrant) is \u20ac0.395 (May 2024 issuance), \u20ac0.3513 (November 2024 issuance), \u20ac0.2816 (December 2024 issuance) out of which \u20ac0,0778 (May 2024 issuance), \u20ac0,0812 (November 2024 issuance), \u20ac0,0516 (December 2024 issuance) is attributable to the warrants.
Since the warrant\u2019s fair value is based on unobservable inputs (level 3), the loss cannot be recognized directly in profit and loss and must be deferred such that it reaches a value of zero at the time when the entire contract can be valued using observable information.
Gensight has elected to defer such difference through the recognition of a financial asset (Recored in the financial statement line: Other non-current financial assets) rather than a deduction of the corresponding liability. In accordance with IFRS 9 accounting principles, Gensight amortizes this asset in the income statement (recorded in the financial statement line: Financial expenses \u2013 Amortization) over the horizon of observability of the valuation parameters.
If, during the life of the warrants, the warrants are derecognized (i.e. exercise and settlement of the warrants): the portion of the financial asset not yet recognized will then be accounted for in the income statement.
Warrants are subsequently measured at fair value through profit or loss at each reporting date (with the resulting gain or loss recognised in profit or loss (recorded in Financial statement line: Financial Income - Net change in Derivative Financial Instrument Fair Value. Further information with respect to the \u201cABSA\u201d are described in Note 11 - Financial liabilities (Note 11.5)
3.12Financial liabilities
Borrowings and other financial liabilities, excepted for derivative financial liabilities (see upon), are measured initially at their fair value and then at amortized cost, calculated on the basis of the effective interest rate (\u201cEIR\u201d) method.
The transaction expenses that are directly attributable to the acquisition or to the issue of a financial liability reduce that financial liability. These expenses are then amortized actuarially over the lifetime of the liability, on the basis of the EIR.
The EIR is the rate that equalizes the anticipated flow of future cash outflows with the current net book value of the financial liability in order to deduct its amortized cost therefrom.
The amount resulting from the benefit of financial liabilities that do not bear interest at market rates is considered a subsidy. 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 finance cost. The subsidy is presented as a differed income which is amortized in the P&L over the same period.
Other financial liabilities include trade accounts payable, which are measured at fair value (which in most cases equates to face value) on initial recognition, and subsequently at amortized cost.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss is comprised of:
\u2022instruments whose contractual cash flows represent payments of interest or repayments of principal, but which are managed other than with a view to collecting cash flows and/or selling the asset; and
\u2022instruments that management has designated as \u201cfair value through profit or loss\u201d on initial recognition.
Gains and losses arising from changes in fair value are recognized in profit or loss within the line items financial income or financial expenses.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss is comprised of:
\u2022instruments whose contractual cash flows represent payments of interest or repayments of principal, but which are managed other than with a view to collecting cash flows and/or selling the asset; and
\u2022instruments that management has designated as \u201cfair value through profit or loss\u201d on initial recognition.
Gains and losses arising from changes in fair value are recognized in profit or loss within the line items financial income or financial expenses.
Note 15:Financial instruments recognized in the consolidated statements of financial position and related effect on the\u00a0consolidated statement of income (loss)
| \n In thousands of euros | \n\n Book value on | \n\n Fair value | \n\n At amortized | \n\n Fair Value | \n
|---|---|---|---|---|
| \n As of December\u00a031, 2023 | \n\n \u00a0 | \n\n \u00a0 | \n\n \u00a0 | \n\n \u00a0 | \n
| \n Financial assets | \n\n \u00a0 | \n\n \u00a0 | \n\n \u00a0 | \n\n \u00a0 | \n
| \n Non-current financial assets | \n\n 502 | \n\n \u2014 | \n\n 502 | \n\n 502 | \n
| \n Current financial assets | \n\n 45 | \n\n 45 | \n\n \u2014 | \n\n 45 | \n
| \n Accounts receivable and related receivables | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n
| \n Cash and cash equivalents | \n\n 2,134 | \n\n \u2014 | \n\n 2,134 | \n\n 2,134 | \n
| \n Other current assets | \n\n 4,349 | \n\n \u2014 | \n\n 4,349 | \n\n 4,349 | \n
| \n Total financial assets | \n\n 7,030 | \n\n 45 | \n\n 6,985 | \n\n 7,030 | \n
| \n Financial liabilities | \n\n \u00a0 | \n\n \u00a0 | \n\n \u00a0 | \n\n \u00a0 | \n
| \n Bond financing | \n\n 9,131 | \n\n \u2014 | \n\n 9,131 | \n\n 9,131 | \n
| \n Derivative liabilities | \n\n 559 | \n\n 559 | \n\n \u2014 | \n\n 559 | \n
| \n Borrowings from Banks | \n\n 7,474 | \n\n \u2014 | \n\n 7,474 | \n\n 7,474 | \n
| \n Conditional advances (non-current portion) | \n\n 5,504 | \n\n \u2014 | \n\n 5,504 | \n\n 5,504 | \n
| \n Refund liability | \n\n 6,572 | \n\n \u2014 | \n\n 6,572 | \n\n 6,572 | \n
| \n Lease liability \u2013 Buildings | \n\n 1,823 | \n\n \u2014 | \n\n 1,823 | \n\n 1,823 | \n
| \n Other non-current liabilities | \n\n 0 | \n\n \u2014 | \n\n 0 | \n\n 0 | \n
| \n Accounts payable and related payables | \n\n 5,634 | \n\n \u2014 | \n\n 5,634 | \n\n 5,634 | \n
| \n Other current liabilities | \n\n 1,880 | \n\n \u2014 | \n\n 1,880 | \n\n 1,880 | \n
| \n Provisions | \n\n 1,258 | \n\n \u2014 | \n\n 1,258 | \n\n 1,258 | \n
| \n Total financial liabilities | \n\n 39,834 | \n\n 559 | \n\n 39,275 | \n\n 39,834 | \n
| \n (1) | \n\n The fair value of financial assets classified as fair value through profit and loss corresponds to the market value of the assets (level 3 instrument under the IFRS\u00a013 fair value hierarchy). | \n
|---|---|
| \n (2) | \n\n The book amount of financial liabilities measured at amortized cost was deemed to be a reasonable estimation of fair value. | \n
| \n In thousands of euros | \n\n Book value on | \n\n Fair value | \n\n At amortized | \n\n Fair Value | \n
|---|---|---|---|---|
| \n As of December\u00a031, 2024 | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n Financial assets | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n Non-current financial assets | \n\n 4 424 | \n\n 3 897 | \n\n 527 | \n\n 4 424 | \n
| \n Current financial assets | \n\n 19 | \n\n 19 | \n\n \u2014 | \n\n 19 | \n
| \n Accounts receivable and related receivables | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n
| \n Cash and cash equivalents | \n\n 2 464 | \n\n \u2014 | \n\n 2 464 | \n\n 2 464 | \n
| \n Other current assets | \n\n 2 860 | \n\n \u2014 | \n\n 2 860 | \n\n 2 860 | \n
| \n Total financial assets | \n\n 9 766 | \n\n 3 915 | \n\n 5 850 | \n\n 9 766 | \n
| \n Financial liabilities | \n\n \u00a0 | \n\n \u00a0 | \n\n \u00a0 | \n\n \u00a0 | \n
| \n Bond financing | \n\n 6 973 | \n\n \u2014 | \n\n 6 973 | \n\n 6 973 | \n
| \n Derivative liabilities | \n\n 3 960 | \n\n 3 960 | \n\n \u2014 | \n\n 3 960 | \n
| \n Borrowings from Banks | \n\n 6 341 | \n\n \u2014 | \n\n 6 341 | \n\n 6 341 | \n
| \n Conditional advances | \n\n 4 700 | \n\n \u2014 | \n\n 4 700 | \n\n 4 700 | \n
| \n Refund liability | \n\n 4 718 | \n\n \u2014 | \n\n 4 718 | \n\n 4 718 | \n
| \n Lease liability \u2013 Buildings | \n\n 1 099 | \n\n \u2014 | \n\n 1 099 | \n\n 1 099 | \n
| \n Other non-current liabilities | \n\n 0 | \n\n \u2014 | \n\n 0 | \n\n 0 | \n
| \n Accounts payable and related payables | \n\n 6 357 | \n\n \u2014 | \n\n 6 357 | \n\n 6 357 | \n
| \n Other current liabilities | \n\n 2 362 | \n\n \u2014 | \n\n 2 362 | \n\n 2 362 | \n
| \n Provisions | \n\n 1 166 | \n\n \u2014 | \n\n 1 166 | \n\n 1 166 | \n
| \n Total financial liabilities | \n\n 37 676 | \n\n 3 960 | \n\n 33 716 | \n\n 37 676 | \n
| \n (1) | \n\n The fair value of financial assets and Financial Liabilities classified as fair value through profit and loss corresponds to the market value of the assets (level 3 instrument under the IFRS 13 fair value hierarchy). | \n
|---|---|
| \n (2) | \n\n The book amount of financial liabilities measured at amortized cost was deemed to be a reasonable estimation of fair value. | \n
3.7Recoverable amount of the intangible assets and property, plant and equipment
The property, plant and equipment and intangible assets that have an established lifetime are subject to an impairment test when the recoverability of their book value is called into question by the existence of indications of impairment. An impairment is recognized in the Financial Statements up to the amount of the excess of the book value over the recoverable value of the asset. The recoverable value of an asset corresponds to its fair value minus the costs of sale or its use value, whichever is higher.
3.7Recoverable amount of the intangible assets and property, plant and equipment
The property, plant and equipment and intangible assets that have an established lifetime are subject to an impairment test when the recoverability of their book value is called into question by the existence of indications of impairment. An impairment is recognized in the Financial Statements up to the amount of the excess of the book value over the recoverable value of the asset. The recoverable value of an asset corresponds to its fair value minus the costs of sale or its use value, whichever is higher.
3.7Recoverable amount of the intangible assets and property, plant and equipment
The property, plant and equipment and intangible assets that have an established lifetime are subject to an impairment test when the recoverability of their book value is called into question by the existence of indications of impairment. An impairment is recognized in the Financial Statements up to the amount of the excess of the book value over the recoverable value of the asset. The recoverable value of an asset corresponds to its fair value minus the costs of sale or its use value, whichever is higher.
3.8Cash and cash equivalents
Cash equivalents are short-term, highly liquid investments, that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Cash and cash equivalents comprise the cash that is held at the bank and petty cash as well as the short-term fixed deposits for which the maturity is less than three months.
For the purpose of establishing the statement of cash flows, cash and cash equivalents include cash in hand, demand deposits and short fixed-term deposits with banks and short-term highly liquid investments with original maturities of three months or less, net of bank overdrafts.
Cash and cash equivalents are initially recognized at their purchase costs on the transaction date, and are subsequently measured at fair value. Changes in fair value are recognized in profit or loss.
Note 9:Cash and cash equivalents
Cash and cash equivalents items are broken down as follows:
| \n (in thousands of Euros) | \n\n As of December\u00a031, | \n|
|---|---|---|
| \n 2024 | \n\n 2023 | \n|
| \n Total cash and cash equivalent as reported in the statements of financial position | \n\n 2,464 | \n\n 2,134 | \n
| \n Total net cash and cash equivalents as reported in the statements of cash flows | \n\n 2,464 | \n\n 2,134 | \n
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.
3.8Cash and cash equivalents
Cash equivalents are short-term, highly liquid investments, that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Cash and cash equivalents comprise the cash that is held at the bank and petty cash as well as the short-term fixed deposits for which the maturity is less than three months.
For the purpose of establishing the statement of cash flows, cash and cash equivalents include cash in hand, demand deposits and short fixed-term deposits with banks and short-term highly liquid investments with original maturities of three months or less, net of bank overdrafts.
Cash and cash equivalents are initially recognized at their purchase costs on the transaction date, and are subsequently measured at fair value. Changes in fair value are recognized in profit or loss.
3.10Derivatives
Derivatives are recorded in the statement of financial position at their fair value. Changes in fair value are recognized in profit or loss.
Transaction costs that relate to the issue of the convertible loan are included in the carrying amount of the liability component and are amortized over the lives of the convertible loan notes using the effective interest method.
Convertible Bonds
The convertible bonds are financial instruments that will be or may be settled in the entity's own equity or may be settled in equity instruments of the entity.
They include a debt component and an option component, and can be classified as :
\u2022compound instruments, including a debt component and an equity component as defined by IAS 32. An instrument is qualified as an equity instrument if it can be settled by exchanging a fixed amount of cash or another financial asset for a fixed number of the entity's own equity instruments;
\u2022or hybrid instruments in other cases, including a host contract (financial liability) and one or more embedded derivatives. The conversion option can be qualified as an embedded derivative and initially measured at fair value under IFRS 9 and subsequently measured at fair value through profit or loss.
EIB credit facility and warrants
The Company entered into a credit facility with EIB in November\u00a02022 and the \u20ac8m of the Tranche\u00a01 have been received on February 2023 after all conditions, in particular the issuance of share warrants to the EIB, had been met.
This financial instrument includes two instruments (i) a host contract representing a debt component (the loans) and (ii)\u00a0warrants. The two instruments issued (loans and warrants) on the date of issue are economically and intrinsically linked according to the IFRS\u00a09 criteria, thus the transaction is analyzed as a single hybrid instrument on issue in which there is a host contract representing a debt component (the loans) and a derivative (the warrants). The financial instrument includes different options too: a call option, a prepayment option and a put option. The prepayment option is not a separate derivative instrument.
The warrants, put option and call option are each classified as derivatives on own equity instruments, because the \u201cfixed-for-fixed\u201d rule under IAS\u00a032, which provides that derivatives will 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 (non-cash settlement option which may result in exchanging a variable number of shares, for a variable price). The derivatives are recognized at fair value through profit and loss.
The put option can only be exercised in the framework and for the purposes of a cashless exercise of the warrants, and thus cannot be exercised on a standalone basis. The put option comes into effect upon the issuance of warrants by the Issuer and remains in effect for the lifetime of the warrants. In addition, the put option is not independently transferable from the warrants. Thus, the put option is not bifurcated and it is to be considered as part of the valuation of the warrants.
The call option is exercisable by the Company, under very specific circumstances wherein the value of the warrants increase due to a takeover bid for the Company. The Company believes it is very unlikely that it will take advantage of exercising the call option. Thus, the call option has been valued at zero and does not require bifurcation. The accounting treatment and impact on the 2024 financial year is described in Note\u00a011 - Financial liabilities.
ABSA
Gensight issued in 2024 shares with warrants attached. Warrants attached to ordinary shares issued in 2024 are freely negotiable and detachable upon issue, therefore they are classified as stand-alone financial derivatives instruments and recognized initially at fair value.\u00a0
The company concluded that there is a difference between the transaction price and the fair value of the warrants which corresponds to a \u201cday-one loss\u201d:
\u2022The company uses the following valuation technique to measure the fair value of the warrants (level 3): the valuation model used is Black & Scholes and the following variables were taken into\u00a0consideration: Gensights quoted share price as well as Gensights\u2019 volatility, risk rates and Gensights\u2019 expected dividends (these inputs are further described in Note 11.5).
\u2022The transaction price for the \u201cABSA\u201d units (1 ordinary share +\u00a01\u00a0warrant) is \u20ac0.395 (May 2024 issuance), \u20ac0.3513 (November 2024 issuance), \u20ac0.2816 (December 2024 issuance) out of which \u20ac0,0778 (May 2024 issuance), \u20ac0,0812 (November 2024 issuance), \u20ac0,0516 (December 2024 issuance) is attributable to the warrants.
Since the warrant\u2019s fair value is based on unobservable inputs (level 3), the loss cannot be recognized directly in profit and loss and must be deferred such that it reaches a value of zero at the time when the entire contract can be valued using observable information.
Gensight has elected to defer such difference through the recognition of a financial asset (Recored in the financial statement line: Other non-current financial assets) rather than a deduction of the corresponding liability. In accordance with IFRS 9 accounting principles, Gensight amortizes this asset in the income statement (recorded in the financial statement line: Financial expenses \u2013 Amortization) over the horizon of observability of the valuation parameters.
If, during the life of the warrants, the warrants are derecognized (i.e. exercise and settlement of the warrants): the portion of the financial asset not yet recognized will then be accounted for in the income statement.
Warrants are subsequently measured at fair value through profit or loss at each reporting date (with the resulting gain or loss recognised in profit or loss (recorded in Financial statement line: Financial Income - Net change in Derivative Financial Instrument Fair Value. Further information with respect to the \u201cABSA\u201d are described in Note 11 - Financial liabilities (Note 11.5)
11.6Maturity dates
Maturity dates of non-derivative financial liabilities as of December\u00a031, 2023, are as follows:
| \n In thousands of Euros | \n\n Gross amount | \n\n Less than one year | \n\n One to five years | \n\n More than five years | \n
|---|---|---|---|---|
| \n Conditional advances | \n\n 5,504 | \n\n 396 | \n\n 4,277 | \n\n 831 | \n
| \n Corporate bonds | \n\n 9,131 | \n\n 9,131 | \n\n 0 | \n\n 0 | \n
| \n Borrowings from Banks | \n\n 7,474 | \n\n 7,474 | \n\n 0 | \n\n 0 | \n
| \n Lease Liability | \n\n 1,823 | \n\n 775 | \n\n 1,048 | \n\n 0 | \n
| \n Total financial liabilities | \n\n 23,932 | \n\n 17,777 | \n\n 5,324 | \n\n 831 | \n
Maturity dates of non-derivative financial liabilities as of December\u00a031, 2024, are as follows:
| \n In thousands of Euros | \n\n Gross amount | \n\n Less than one year | \n\n One to five years | \n\n More than five years | \n
|---|---|---|---|---|
| \n Conditional advances | \n\n 4,700 | \n\n 0 | \n\n 3,379 | \n\n 1,321 | \n
| \n Corporate bonds | \n\n 6,973 | \n\n 6,973 | \n\n 0 | \n\n 0 | \n
| \n Borrowings from Banks | \n\n 6,341 | \n\n 6,341 | \n\n 0 | \n\n 0 | \n
| \n Lease Liability | \n\n 1,099 | \n\n 585 | \n\n 514 | \n\n 0 | \n
| \n Total financial liabilities | \n\n 19,113 | \n\n 13,899 | \n\n 3,892 | \n\n 1,321 | \n
The table below sets forth the changes in our liabilities arising from financing activities:
| \n \u00a0 | \n\n Note to the Consolidated financial statements | \n\n As of January\u00a01, 2024 | \n\n Financing cash flows | \n\n Non-cash changes | \n\n As of December 31, 2024 | \n||
|---|---|---|---|---|---|---|---|
| \n Derivative components | \n\n Amortized costs adjustments | \n\n Other changes | \n|||||
| \n Conditional advances | \n\n 11.2 | \n\n 5,504 | \n\n 0 | \n\n 0 | \n\n (804) | \n\n 0 | \n\n 4,700 | \n
| \n Heights convertible bonds(1) | \n\n 11.1 | \n\n 9,131 | \n\n 0 | \n\n 0 | \n\n 1,000 | \n\n (3,158) | \n\n 6,973 | \n
| \n Borrowing from banks | \n\n \u00a0 | \n\n 7,474 | \n\n (2,313) | \n\n 0 | \n\n 1,180 | \n\n 0 | \n\n 6,341 | \n
| \n o/w State-guaranteed loan | \n\n 11.3 | \n\n 2,583 | \n\n (2,153) | \n\n 0 | \n\n 67 | \n\n 0 | \n\n 496 | \n
| \n o/w EIB loan | \n\n 11.4 | \n\n 4,891 | \n\n (160) | \n\n 0 | \n\n 1,113 | \n\n 0 | \n\n 5,844 | \n
| \n Lease Liability | \n\n 6 | \n\n 1,823 | \n\n (742) | \n\n 0 | \n\n 0 | \n\n 18 | \n\n 1,099 | \n
| \n Derivative liabilities | \n\n \u00a0 | \n\n 559 | \n\n 2,745 | \n\n 656 | \n\n 0 | \n\n 0 | \n\n 3,960 | \n
| \n Total liabilities from financing activities | \n\n \u00a0 | \n\n 24,491 | \n\n (310) | \n\n 656 | \n\n 1,376 | \n\n (3,139) | \n\n 23,073 | \n
| \n (1) | \n\n \u20ac3,158m were converted on shares by reimbursement of 5 instalments in 2024. | \n
|---|
3.10Derivatives
Derivatives are recorded in the statement of financial position at their fair value. Changes in fair value are recognized in profit or loss.
Transaction costs that relate to the issue of the convertible loan are included in the carrying amount of the liability component and are amortized over the lives of the convertible loan notes using the effective interest method.
Convertible Bonds
The convertible bonds are financial instruments that will be or may be settled in the entity's own equity or may be settled in equity instruments of the entity.
They include a debt component and an option component, and can be classified as :
\u2022compound instruments, including a debt component and an equity component as defined by IAS 32. An instrument is qualified as an equity instrument if it can be settled by exchanging a fixed amount of cash or another financial asset for a fixed number of the entity's own equity instruments;
\u2022or hybrid instruments in other cases, including a host contract (financial liability) and one or more embedded derivatives. The conversion option can be qualified as an embedded derivative and initially measured at fair value under IFRS 9 and subsequently measured at fair value through profit or loss.
EIB credit facility and warrants
The Company entered into a credit facility with EIB in November\u00a02022 and the \u20ac8m of the Tranche\u00a01 have been received on February 2023 after all conditions, in particular the issuance of share warrants to the EIB, had been met.
This financial instrument includes two instruments (i) a host contract representing a debt component (the loans) and (ii)\u00a0warrants. The two instruments issued (loans and warrants) on the date of issue are economically and intrinsically linked according to the IFRS\u00a09 criteria, thus the transaction is analyzed as a single hybrid instrument on issue in which there is a host contract representing a debt component (the loans) and a derivative (the warrants). The financial instrument includes different options too: a call option, a prepayment option and a put option. The prepayment option is not a separate derivative instrument.
The warrants, put option and call option are each classified as derivatives on own equity instruments, because the \u201cfixed-for-fixed\u201d rule under IAS\u00a032, which provides that derivatives will 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 (non-cash settlement option which may result in exchanging a variable number of shares, for a variable price). The derivatives are recognized at fair value through profit and loss.
The put option can only be exercised in the framework and for the purposes of a cashless exercise of the warrants, and thus cannot be exercised on a standalone basis. The put option comes into effect upon the issuance of warrants by the Issuer and remains in effect for the lifetime of the warrants. In addition, the put option is not independently transferable from the warrants. Thus, the put option is not bifurcated and it is to be considered as part of the valuation of the warrants.
The call option is exercisable by the Company, under very specific circumstances wherein the value of the warrants increase due to a takeover bid for the Company. The Company believes it is very unlikely that it will take advantage of exercising the call option. Thus, the call option has been valued at zero and does not require bifurcation. The accounting treatment and impact on the 2024 financial year is described in Note\u00a011 - Financial liabilities.
ABSA
Gensight issued in 2024 shares with warrants attached. Warrants attached to ordinary shares issued in 2024 are freely negotiable and detachable upon issue, therefore they are classified as stand-alone financial derivatives instruments and recognized initially at fair value.\u00a0
The company concluded that there is a difference between the transaction price and the fair value of the warrants which corresponds to a \u201cday-one loss\u201d:
\u2022The company uses the following valuation technique to measure the fair value of the warrants (level 3): the valuation model used is Black & Scholes and the following variables were taken into\u00a0consideration: Gensights quoted share price as well as Gensights\u2019 volatility, risk rates and Gensights\u2019 expected dividends (these inputs are further described in Note 11.5).
\u2022The transaction price for the \u201cABSA\u201d units (1 ordinary share +\u00a01\u00a0warrant) is \u20ac0.395 (May 2024 issuance), \u20ac0.3513 (November 2024 issuance), \u20ac0.2816 (December 2024 issuance) out of which \u20ac0,0778 (May 2024 issuance), \u20ac0,0812 (November 2024 issuance), \u20ac0,0516 (December 2024 issuance) is attributable to the warrants.
Since the warrant\u2019s fair value is based on unobservable inputs (level 3), the loss cannot be recognized directly in profit and loss and must be deferred such that it reaches a value of zero at the time when the entire contract can be valued using observable information.
Gensight has elected to defer such difference through the recognition of a financial asset (Recored in the financial statement line: Other non-current financial assets) rather than a deduction of the corresponding liability. In accordance with IFRS 9 accounting principles, Gensight amortizes this asset in the income statement (recorded in the financial statement line: Financial expenses \u2013 Amortization) over the horizon of observability of the valuation parameters.
If, during the life of the warrants, the warrants are derecognized (i.e. exercise and settlement of the warrants): the portion of the financial asset not yet recognized will then be accounted for in the income statement.
Warrants are subsequently measured at fair value through profit or loss at each reporting date (with the resulting gain or loss recognised in profit or loss (recorded in Financial statement line: Financial Income - Net change in Derivative Financial Instrument Fair Value. Further information with respect to the \u201cABSA\u201d are described in Note 11 - Financial liabilities (Note 11.5)
3.11Share-based payment
Free shares (Attributions Gratuites d\u2019Actions, or \u201cAGA\u201d), stock-options (Options de souscription et/ou d\u2019achat d\u2019actions, or \u201cSO\u201d) and employee warrants (Bons de souscription de parts de cr\u00e9ateur d\u2019entreprise, or \u201cBCE\u201d) are awarded to employees or executives. Non-employee warrants (Bons de souscription d\u2019actions, or \u201cBSA\u201d) are primarily awarded to directors and scientific consultants. Pursuant to IFRS\u00a02, these awards are measured at their fair value on the date of grant. The fair value is calculated with the most relevant formula regarding the settlement and the conditions of each plan. The fair value is recorded in personnel expenses (allocated by function in the Consolidated Statement of Income) on a straight-line basis over each milestone composing the vesting period with a corresponding increase in shareholders\u2019 equity.
At each closing date, we re-examine the number of options likely to become exercisable. If applicable, the impact of the review of the estimate is recognized in the Consolidated Statement of Income with a corresponding adjustment in equity.
Note 19:Share-based payments
The Board of Directors has been authorized by the general meeting of the shareholders to grant to employees BCE, BSA, AGA and SO and to implement share options plans as follows:
\u2022with the authorization of the General Meeting of Shareholders on February\u00a05, 2013, the Board of Directors issued:
\u2014892,000 employee warrants (BCE\u00a02013-02) on July\u00a08, 2013.
\u2014328,000 non-employee warrants (BSA\u00a02013-02) on July\u00a08, 2013.
\u2014193,800 employee warrants (BCE\u00a02013-02) on April\u00a09, 2014.
\u201433,000 non-employee warrants (BSA\u00a02013-02) on April\u00a09, 2014.
\u2022with the authorization of the General Meeting of Shareholders on June\u00a025, 2014, the Board of Directors issued 60,000 employee warrants (BCE\u00a02014-06) on December\u00a03, 2014.
\u2022with the authorization of the General Meeting of Shareholders on June\u00a029, 2015, the Board of Directors issued:
\u2014121,000 non-employee warrants (BSA\u00a02015-06) on July\u00a07, 2015.
\u2014733,298 employee warrants (BCE\u00a02015-06) on July\u00a07, 2015.
\u2022with the authorization of the General Meeting of Shareholders on May\u00a019, 2016, the Board of Directors issued:
\u2014205,000 non-employee warrants (BSA\u00a02016) on July\u00a026, 2016.
\u2014766,000 free shares (AGA\u00a02016) on July\u00a026, 2016.
\u2014593,500 free shares (AGA\u00a02016) on July\u00a027, 2017.
\u201472,500 free shares (AGA\u00a02016) on December\u00a019, 2017.
\u2014165,000 non-employee warrants (BSA\u00a02016) on July\u00a027, 2017.
\u2014220,000 stock options (SO\u00a02017) on July\u00a027, 2017.
\u2014300,000 stock options (SO\u00a02017) on December\u00a019, 2017.
\u2014175,000 stock options (SO\u00a02018) on March\u00a014, 2018.
\u2022with the authorization of the General Meeting of Shareholders on April\u00a012, 2018, the Board of Directors issued:
\u2014380,000 free shares (AGA\u00a02018) on September\u00a018, 2018.
\u201420,000 non-employee warrants (BSA\u00a02018) on September\u00a018, 2018.
\u201430,000 stock options (SO\u00a02018-1) on September\u00a018, 2018.
\u2014135,000 free shares (AGA\u00a02018) on December\u00a019, 2018.
\u2014610,000 free shares (AGA\u00a02018) on July\u00a023, 2019.
\u20141,007,500 free shares (AGA\u00a02020) on January\u00a028, 2020.
\u2014155,000 stock options (SO\u00a02018-2) on September\u00a022, 2020.
\u201420,000 stock options (SO\u00a02018-3) on February\u00a025, 2021.
\u2022with the authorization of the General Meeting of Shareholders on June\u00a011, 2019, the Board of Directors issued:
\u2014105,000 non-employee warrants (BSA\u00a02019) on July\u00a023, 2019.
\u201440,000 non-employee warrants (BSA\u00a02019) on January\u00a028, 2020.
\u2022with the authorization of the General Meeting of Shareholders on April\u00a029, 2020, the Board of Directors issued:
\u201485,000 free shares (AGA\u00a02020) on September\u00a022, 2020.
\u201480,000 non-employee warrants (BSA\u00a02020) on November\u00a02, 2020.
\u201440,000 non-employee warrants (BSA\u00a02021) on February\u00a025, 2021.
\u2014880,000 free shares (AGA\u00a02021) on February\u00a025, 2021.
\u2022with the authorization of the General Meeting of Shareholders on April\u00a029, 2021, the Board of Directors issued:
\u201430,000 non-employee warrants (BSA\u00a02021-2) on October\u00a021, 2021.
\u2014380,000 free shares (AGA\u00a02021) on October\u00a021, 2021.
\u201480,000 non-employee warrants (BSA\u00a02021-3) on December\u00a014, 2021.
\u20141,957,500 free shares (AGA\u00a02022-1 et AGA\u00a02022-2) on May\u00a023, 2022.
\u201440,000 non-employee warrants (BSA 2022-1) on May\u00a023, 2022.
\u2014250,000 stock-options (SO\u00a02022-1) on May\u00a023, 2022.
\u2022with the authorization of the General Meeting of Shareholders on May\u00a025, 2022, the Board of Directors issued:
\u2014290,000 free shares (AGA\u00a02022-3) on October\u00a020,2022.
\u201495,000 non-employee warrants (BSA\u00a02022-2) on October\u00a020, 2022. These warrants have not yet been subscribed by the beneficiaries as of December\u00a031, 2022. These non-employee warrants were not yet subscribed as of December\u00a031, 2022.
\u2022with the authorization of the General Meeting of Shareholders on May\u00a025, 2022, the Board of Directors issued:
\u20141,141,096 warrants to the EIB as condition precedent to the drawdown of the first tranche of the credit facility signed in December\u00a02022.
\u201440,000 non-employee warrants (BSA\u00a02023) on March\u00a023, 2023.
\u20142,070,000 free shares (AGA\u00a02023) on March\u00a023, 2023.
\u2014310,000 stock-options (SO\u00a02023) on March\u00a023,2023.
\u2022with the authorization of the General Meeting of Shareholders on January 10, 2024, the Board of Directors issued:
\u201423,500,040 warrants to specialized investors on May 9, 2024 (see Note 11.5).
\u2022with the authorization of the General Meeting of Shareholders on June 21, 2023, the Board of Directors issued:
\u2014770,000 free shares (AGA\u00a02024-1 and AGA 2024-2) on March\u00a021, 2024.
\u2022with the authorization of the General Meeting of Shareholders on April 29, 2021, the Board of Directors issued:
\u2014300,000 stock-options (SO\u00a02024) on May 14, 2024.
\u2022with the authorization of the General Meeting of Shareholders on May 10, 2024, the Board of Directors issued:
\u20147,901,000 warrants to specialized investors on November\u00a06, 2024 (see Note 11.5).
\u2022with the authorization of the General Meeting of Shareholders on May 10, 2024, the Board of Directors issued:
19.2Non-employee warrants (BSA)
Vesting schedule
BSA 2013-02 and BSA 2015-06 granted may be exercised by the beneficiary on the basis of the following vesting schedule:
\u2022up to 1/4\u00a0on the first anniversary of the date of grant;
\u2022the remaining 75% becoming exercisable up to 1/36\u00a0per month from the first anniversary of the date of grant; and
\u2022at the latest within 10\u00a0years from the date of grant.
BSA 2016 granted may be exercised by the beneficiary on the basis of the following vesting schedule:
\u2022up to 100%\u00a0on the first anniversary of the date of grant; and
\u2022at the latest within 10\u00a0years from the date of grant.
BSA 2017, 2018, 2019 and 2020 granted may be exercised by the beneficiary on the basis of the following vesting schedule:
\u2022up to 1/4\u00a0on the date of the grant;
\u2022the remaining 75% becoming exercisable up to 1/36\u00a0per month from the date of grant; and
\u2022at the latest within 7\u00a0years from the date of grant.
BSA 2021, 2022-1, 2022-2 and 2023 granted may be exercised by the by the beneficiary on the basis of the following vesting schedule:
\u20221/3 as from the first anniversary of the allotment date;
\u20221/3 as from the second anniversary of the allotment date; and
\u20221/3 as from the third anniversary of the allotment date.
BSA 2024-1 granted on May 9, 2024may be exercised by the Holder, in whole or in part, for cash, at any time and from time to time during the period commencing on the Issue Date and ending on November 9, 2026.
BSA 2024-2 granted on November 6, 2024 may be exercised by the Holder, in whole or in part, for cash, at any time and from time to time during the period commencing on April 1, 2025 and ending on November 1, 2029.
BSA 2024-3 granted on December 31, 2024 may be exercised by the Holder, in whole or in part, for cash, at any time and from time to time during the period commencing on April 1, 2025 and ending on December 31, 2029.
Details and main characteristics of the BSA granted to date
| \n \n | \n\n BSA 2013 | \n\n BSA 2013 | \n\n BSA 2015 | \n\n BSA 2016 | \n\n BSA 2017 | \n\n BSA 2018 | \n\n BSA 2019 | \n\n BSA 2020-1 | \n\n BSA 2020-2 | \n
|---|---|---|---|---|---|---|---|---|---|
| \n Date of grant | \n\n July 8, 2013 | \n\n April 9, 2014 | \n\n July 8, 2015 | \n\n July 26, 2016 | \n\n July 27, 2017 | \n\n September 18, 2018 | \n\n July 23, 2019 | \n\n January 28, 2020 | \n\n November 2, 2020 | \n
| \n Plan expiration date | \n\n July 7, 2023 | \n\n April 8, 2024 | \n\n July 7, 2025 | \n\n July 25, 2023 | \n\n July 26, 2024 | \n\n September 17, 2025 | \n\n July 22, 2026 | \n\n January 27, 2027 | \n\n November 1, 2027 | \n
| \n Number of warrants initially granted | \n\n 328,000 | \n\n 33,000 | \n\n 121,000 | \n\n 205,000 | \n\n 165,000 | \n\n 20,000 | \n\n 105,000 | \n\n 40,000 | \n\n 80,000 | \n
| \n Exercise price | \n\n \u20ac0.025 | \n\n \u20ac0.025 | \n\n \u20ac3.275 | \n\n \u20ac8.08 | \n\n \u20ac5.04 | \n\n \u20ac2.22 | \n\n \u20ac1.45 | \n\n \u20ac3.48 | \n\n \u20ac3.99 | \n
| \n Share entitlement per warrant | \n\n 1 | \n\n 1 | \n\n 1 | \n\n 1 | \n\n 1 | \n\n 1 | \n\n 1 | \n\n 1 | \n\n 1 | \n
| \n Valuation method | \n\n Black & Scholes | \n||||||||
| \n Expected volatility | \n\n 42.50% | \n\n 42.50% | \n\n 76.49% | \n\n 62.46% | \n\n 49,37% | \n\n 58.02% | \n\n 78.5% | \n\n 85.7% | \n\n 83.6% | \n
| \n Expected dividend | \n\n 0.00% | \n\n 0.00% | \n\n 0.00% | \n\n 0.00% | \n\n 0.00% | \n\n 0.00% | \n\n 0.00% | \n\n 0.00% | \n\n 0.00% | \n
| \n Subscription price per warrant | \n\n \u20ac0.08 | \n\n \u20ac0.08 | \n\n \u20ac0.25 | \n\n \u20ac0.65 | \n\n \u20ac0.40 | \n\n \u20ac0.18 | \n\n \u20ac0.13 | \n\n \u20ac0.30 | \n\n \u20ac0.13 | \n
| \n Fair value per warrant (subscription price deducted) | \n\n \u20ac0.36 | \n\n \u20ac0.36 | \n\n \u20ac5.31 | \n\n \u20ac2.94 | \n\n \u20ac1.64 | \n\n \u20ac2.02 | \n\n \u20ac1.83 | \n\n \u20ac1.84 | \n\n \u20ac5.09 | \n
| \n \n | \n\n BSA 2021-1 | \n\n BSA 2021-2 | \n\n BSA 2021-3 | \n\n BSA 2022-1 | \n\n BSA 2022-2 | \n\n BSA 2023-1 | \n\n BSA 2023-2 | \n
|---|---|---|---|---|---|---|---|
| \n Date of grant | \n\n February 25, 2021 | \n\n October 21, 2021 | \n\n December\u00a014, 2021 | \n\n May 23, 2022 | \n\n October 20, 2022 | \n\n January 23, 2023 | \n\n March 23, 2023 | \n
| \n Plan expiration date | \n\n February 24, 2028 | \n\n October 20, 2028 | \n\n December\u00a013, 2028 | \n\n May 22, 2029 | \n\n October 19, 2029 | \n\n January 22, 2043 | \n\n March 22, 2030 | \n
| \n Number of warrants initially granted | \n\n 40,000 | \n\n 30,000 | \n\n 65,000 | \n\n 40,000 | \n\n 80,000 | \n\n 1,141,096 | \n\n 40,000 | \n
| \n Exercise price | \n\n \u20ac7.19 | \n\n \u20ac6.80 | \n\n \u20ac 5.47 | \n\n \u20ac1.85 | \n\n \u20ac3.32 | \n\n \u20ac3.43 | \n\n \u20ac2.65 | \n
| \n Share entitlement per warrant | \n\n 1 | \n\n 1 | \n\n 1 | \n\n 1 | \n\n 1 | \n\n 1 | \n\n 1 | \n
| \n Valuation method | \n\n Black & Scholes | \n\n Black & Scholes | \n\n Black & Scholes | \n||||
| \n Expected volatility | \n\n 83.7% | \n\n 92.4% | \n\n 92.5% | \n\n 92.4% | \n\n 91.5% | \n\n 78.1% | \n\n 75.3% | \n
| \n Expected dividend | \n\n 0.00% | \n\n 0.00% | \n\n 0.00% | \n\n 0.00% | \n\n 0.00% | \n\n 0.00% | \n\n 0.00% | \n
| \n Subscription price per warrant | \n\n \u20ac0.63 | \n\n \u20ac0.59 | \n\n \u20ac2.16 | \n\n \u20ac0.16 | \n\n \u20ac0.29 | \n\n \u20ac0.03 | \n\n \u20ac0.21 | \n
| \n Fair value per warrant (subscription price deducted) | \n\n \u20ac5.61 | \n\n \u20ac3.46 | \n\n \u20ac1.03 | \n\n \u20ac1.01 | \n\n \u20ac2.25 | \n\n \u20ac2.99 | \n\n \u20ac1.22 | \n
| \n \n | \n\n BSA 2024-1 | \n\n BSA 2024-2 | \n\n BSA 2024-3 | \n
|---|---|---|---|
| \n Date of grant | \n\n May 9,2024 | \n\n November 6, 2024 | \n\n December 31, 2024 | \n
| \n Plan expiration date | \n\n November 9, 2026 | \n\n November 6, 2029 | \n\n December 31, 2029 | \n
| \n Number of warrants initially granted | \n\n 23,500,040 | \n\n 7,901,000 | \n\n 5,326,706 | \n
| \n Exercise price | \n\n \u20ac0.45 | \n\n \u20ac0.35 | \n\n \u20ac0.35 | \n
| \n Share entitlement per warrant | \n\n 1 | \n\n 1 | \n\n 1 | \n
| \n Valuation method | \n\n Black & Scholes | \n||
| \n Expected volatility | \n\n 70.0% | \n\n 70.0% | \n\n 70.0% | \n
| \n Expected dividend | \n\n 0.00% | \n\n 0.00% | \n\n 0.00% | \n
| \n Subscription price per warrant | \n\n \u20ac0.08 | \n\n \u20ac0.08 | \n\n \u20ac0.05 | \n
| \n Fair value per warrant (subscription price deducted) | \n\n \u20ac0.22 | \n\n \u20ac0.19 | \n\n \u20ac0.16 | \n
\u00a0
Changes in the balances of BSA
| \n \n | \n\n BSA 2015 | \n\n BSA 2017 | \n\n BSA 2018 | \n\n BSA 2019 | \n\n BSA 2020-1 | \n\n BSA 2020-2 | \n\n BSA 2021-1 | \n
|---|---|---|---|---|---|---|---|
| \n Balance outstanding at January 1, 2024 | \n\n 121,000 | \n\n 125,000 | \n\n 15,000 | \n\n 83,333 | \n\n 40,000 | \n\n 80,000 | \n\n 40,000 | \n
| \n Granted during the period | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n
| \n Exercised during the period | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n
| \n Forfeited during the period | \n\n (7,000) | \n\n (125,000) | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n
| \n Balance outstanding at December\u00a031, 2024 | \n\n 114,000 | \n\n 0 | \n\n 15,000 | \n\n 83,333 | \n\n 40,000 | \n\n 80,000 | \n\n 40,000 | \n
| \n Of which exercisable | \n\n 114,000 | \n\n 0 | \n\n 15,000 | \n\n 83,333 | \n\n 40,000 | \n\n 80,000 | \n\n 40,000 | \n
| \n \n | \n\n BSA 2021-2 | \n\n BSA 2021-3 | \n\n BSA 2022-1 | \n\n BSA 2022-2 | \n\n BSA 2023-1 | \n\n BSA 2023-2 | \n
|---|---|---|---|---|---|---|
| \n Balance outstanding at January 1, 2024 | \n\n 30,000 | \n\n 65,000 | \n\n 40,000 | \n\n 80 000 | \n\n 1,141,096 | \n\n 40,000 | \n
| \n Granted during the period | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n
| \n Exercised during the period | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n
| \n Forfeited during the period | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n
| \n Balance outstanding at December\u00a031, 2024 | \n\n 30,000 | \n\n 65,000 | \n\n 40,000 | \n\n 80,000 | \n\n 1,141,096 | \n\n 40,000 | \n
| \n Of which exercisable | \n\n 30,000 | \n\n 65,000 | \n\n 26,667 | \n\n 53,333 | \n\n 0 | \n\n 13,333 | \n
| \n \n | \n\n BSA 2024-1 | \n\n BSA 2024-2 | \n\n BSA 2024-3 | \n\n TOTAL | \n
|---|---|---|---|---|
| \n Balance outstanding at January 1, 2024 | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n 1,900,429 | \n
| \n Granted during the period | \n\n 23,500,040 | \n\n 7,901,000 | \n\n 5,326,706 | \n\n 36,727,746 | \n
| \n Exercised during the period | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n 0 | \n
| \n Forfeited during the period | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n 0 | \n
| \n Balance outstanding at December\u00a031, 2024 | \n\n 23,500,040 | \n\n 7,901,000 | \n\n 5,326,706 | \n\n 38,496,175 | \n
| \n Of which exercisable | \n\n 23,500,040 | \n\n 0 | \n\n 0 | \n\n 24,060,706 | \n
19.3Free shares (AGA)
Vesting schedule
In July\u00a02016, the Company\u2019s Board of Directors granted an aggregate of 766,000 free shares (AGA 2016) as follows:
\u2022546,000 AGA 2016 were fully acquired by key managers, including Mr. Bernard Gilly, the Chief Executive Officer of the Company, subject to the achievement of the following performance criteria no later than July\u00a02018:
\u2014291,000 of these free shares were acquired at the completion of enrollment in RESCUE and REVERSE clinical trials in July\u00a02017; and
\u2014255,000 free shares were acquired at the enrollment of the first patient in a Phase I/II clinical trial of GS030 in RP in July\u00a02018.
\u202256,000 AGA 2016 were fully acquired in July\u00a02017 (one year after their grant date).
The AGA 2016 were issued at their nominal value and are subject to a lock-up period of one year after their acquisition date.
In July\u00a02017 and in December\u00a02017, the Company\u2019s Board of\u00a0Directors granted an aggregate of 666,000 additional AGA\u00a02016 as follows:
\u2022544,500 AGA 2016 were acquired by key managers, including Mr. Bernard Gilly, subject to (i) a one year acquisition period from the date of grant and (ii) achievement of the performance criteria described below no later than July\u00a02019:
\u2014281,250 of these free shares were acquired upon receipt of the definitive results of the GS010 REVERSE clinical trial; and
\u2014the remaining 263,250 free shares were acquired upon completion of the enrollment of 50% of the patients of a Phase I/II clinical trial of GS030 in RP, on May\u00a017, 2019.
\u202232,500 AGA 2016 were fully acquired on July\u00a02018 (one\u00a0year after their grant date).
The AGA 2016 were issued at their nominal value and are subject to a lock-up period of one year after their acquisition date.
In September\u00a02018 and December\u00a02018, the Company\u2019s Board of Directors granted an aggregate of 515,000 additional AGA\u00a02018 as follows:
\u2022320,000 AGA\u00a02018, were fully acquired by key managers, including Mr. Bernard Gilly, subject to (i) a one\u00a0year acquisition period from the date of grant and (ii) achievement of the performance criteria described below no later than September\u00a02020:
\u2014160,000 of these free shares were acquired upon completion of the enrollment of the patients of a Phase I/II clinical trial of GS030 in RP on July\u00a029, 2020; and
\u2014the remaining 160,000 free shares were acquired upon of the production of the first PPQ Batch of GS010 on September\u00a01, 2020.
\u202240,000 AGA 2018 were fully acquired on September\u00a018, 2019 (one year after their grant date).
The AGA 2018 were issued at their nominal value and are subject to a lock-up period of one year after their acquisition date.
In July\u00a02019, the Company\u2019s Board of Directors granted an aggregate of 610,000 additional AGA\u00a02018 as follows:
\u2022547,500 AGA\u00a02018 were fully acquired by key managers, including Mr. Bernard Gilly, subject to (i) a one year acquisition period from the date of grant and (ii) achievement of the performance criteria described below no later than July\u00a02021:
\u2014273,750 of these free shares were acquired upon the filing with the European Medicines Agency (EMA) of the\u00a0application for Market Authorization (MA) at the European level of LUMEVOQ\u00ae, on September\u00a014, 2020;
\u2014the remaining 273,750 of these free shares were acquired upon completion of the enrollment of the patients of a Phase I/II clinical trial of GS030 in RP on July\u00a029, 2020; and
\u202227,500 AGA\u00a02018 were fully acquired in July\u00a02020 (one year after their grant date).
The AGA\u00a02018 were issued at their nominal value and are subject to a lock-up period of one year after their acquisition date.
With the authorization of the General Meeting of Shareholders on April\u00a012, 2018 and of the General Meeting of Shareholders on April\u00a029, 2020, the Board of Directors granted 1,007,500\u00a0free shares (AGA\u00a02020) on January\u00a028, 2020 and 85,000 (AGA\u00a02020) on September\u00a022, 2020, respectively, among which:
\u2022437,500 AGA\u00a02020 were fully acquired on January\u00a028, 2021 (one year after their grant date). The new shares were issued at their nominal value and are subject to a lock-up period of one year after their acquisition date.
\u2022As per the original plan, 652,500 (of which 347,500 were cancelled) AGA 2020 might have been fully acquired by key managers, including Mr. Gilly, subject to (i) a one year acquisition period from the date of grant and (ii)\u00a0achievement of the performance criteria described below no later than January\u00a028, 2023 as amended by the Board of Directors on September 21, 2021:
\u2014326,250 of these free shares could have been acquired upon the approval with the European Medicines Agency (EMA) of the application for market authorization (MA) at the European level of the LUMEVOQ\u00ae;
\u2014326,250 of these free shares could have been acquired upon the filing with the Food and Drug Administration (FDA) of the application for Biologics License Application (BLA) for the LUMEVOQ\u00ae.
The Group has considered that the second Performance Condition could not be achieved before the new deadline of Completion, i.e. January\u00a028, 2023 and therefore has decided to\u00a0cancel 50% of the Performance Bonus Share Plans on December\u00a031, 2021.
With the authorization of the General Meeting of Shareholders on April\u00a029, 2020, the Board of Directors granted 880,000 free shares (AGA 2021) on February\u00a025, 2021, to employees of the Company, of which:
\u2022845,000 may be fully acquired by key managers, including Mr. Gilly, subject to (i) a one year acquisition period from the date of grant and (ii) achievement of the performance criteria described below at the latest on February\u00a025, 2023:
\u201450% will be acquired upon the first commercial sale of the LUMEVOQ\u00ae; and
\u201450% will be acquired upon at the completion of the recruitment of the extension cohort of the Phase I/II clinical trial with GS030 in retinisis pigmentosa;
\u202235,000 are not subject to performance conditions and were fully acquired in February\u00a02021 (one year after their grant date).
With the authorization of the General Meeting of Shareholders on April\u00a029, 2021, the Board of Directors granted 380,000\u00a0free shares (AGA\u00a02021) on October\u00a021, 2021 to employees of the Company. They are subject to (i)\u00a0a two\u00a0years acquisition period from the date of grant and (ii) achievement of the performance criteria described below at the latest on February 25, 2023:
\u202250% will be acquired upon the first commercial sale of the LUMEVOQ\u00ae; and
\u202250% will be acquired upon at the completion of the recruitment of the extension cohort of the Phase I/II clinical trial with GS030 in retinisis pigmentosa.
Due to the manufacturing issues at the Company\u2019s partner in the United States, the performance conditions of free shares plans granted to management in 2020 and 2021 were unlikely to be met before the deadlines and these plans were entirely voided in 2021 and 2022.
With the authorization of the General Meeting of Shareholders on April\u00a029, 2021, the Board of Directors granted 1,957,500 free shares (AGA\u00a02022-1 and AGA\u00a02022-2) on May\u00a023, 2022, to employees of the Company, of which:
\u20221,892,500 may be fully acquired by key managers, including Mr. Gilly, subject to (i) a one year acquisition period from the date of grant and (ii) achievement of the performance criteria described below at the latest on May\u00a025, 2025:
\u201450% will be acquired upon the first commercial sale of the LUMEVOQ\u00ae; and
\u201450% will be acquired upon at the receipt of Topline results for all patients in the Pioneer Phase\u00a0I/II clinical trial of GS030;
\u202265,000 are not subject to performance conditions, but subject to a two-year vesting period.
With the authorization of the General Meeting of Shareholders on May\u00a025, 2022, the Board of Directors granted 290,000 free shares (AGA\u00a02022-3) on October 20, 2022, to employees of the Company, of which:
\u2022290,000 may be fully acquired by key managers, subject to (i)\u00a0a one-year acquisition period from the date of grant and (ii)\u00a0achievement of the performance criteria described below at the latest on May\u00a025, 2025:
\u201450% will be acquired upon the first commercial sale of the LUMEVOQ\u00ae; and
\u201450% will be acquired upon at the receipt of Topline results for all patients in the Pioneer Phase I/II clinical trial of GS030.
With the authorization of the General Meeting of Shareholders on May\u00a025, 2022, the Board of Directors granted 2,070,000 free shares (AGA\u00a02023-1 and AGA\u00a02023-2) on March\u00a023, 2023, to employees of the Company, of which:
\u20221,300,000 may be fully acquired by key managers, including Mr. Gilly, subject to (i) a one\u00a0year acquisition period from the date of grant and (ii) achievement of the performance criteria described below at the latest on March\u00a023, 2025:
\u201450% will be acquired upon the achievement and continued fulfillment of global and local quality requirements as holder of a marketing authorization; and
\u201450% will be acquired upon at the Completion of the examination of LUMEVOQ\u00ae by the European Medicines Agency (EMA) with a view to a decision by the Committee for Medicinal Products for Human Use (CHMP);
\u2022770,000 are not subject to performance conditions, but subject to a two-year vesting period.
With the authorization of the General Meeting of Shareholders on Juin\u00a021, 2023, the Board of Directors granted 770,000 free shares (AGA\u00a02024-1 and AGA\u00a02024-2) on March\u00a021, 2024, to employees of the Company, of which:
\u2022520,000 may be fully acquired by key managers, including Mme Rodriguez, subject to (i) a one\u00a0year acquisition period from the date of grant and (ii) achievement of the performance criteria described below at the latest on March\u00a021, 2027:
\u201450% will be acquired upon the achievement of the following condition: Ensure the going concern of GenSight as described in the 2023 URD;
\u201450% will be acquired upon the Completion of Ensure a cash runway > 6 months end of 2025;
\u2022250,000 are not subject to performance conditions, but subject to a two-year vesting period.
Details and main characteristics of the AGA granted to date
| \n \n | \n\n AGA 2016 | \n\n AGA 2016 | \n\n AGA 2016 | \n\n AGA 2018 | \n\n AGA 2018 | \n\n AGA 2019 | \n\n AGA 2020 | \n\n AGA 2020 | \n
|---|---|---|---|---|---|---|---|---|
| \n Date of grant | \n\n July 26, 2016 | \n\n July 27, 2017 | \n\n December\u00a019, 2017 | \n\n September 18, 2018 | \n\n December\u00a019,2018 | \n\n July 23,2019 | \n\n January 28, 2020 | \n\n September 22, 2020 | \n
| \n Number of Share Awards initially granted | \n\n 766,000 | \n\n 593,500 | \n\n 72,500 | \n\n 380,000 | \n\n 135,000 | \n\n 610,000 | \n\n 1,007,500 | \n\n 85,000 | \n
| \n Vesting period (in Years) | \n\n 1 | \n\n 1 | \n\n 1 | \n\n 1 | \n\n 1 | \n\n 1 | \n\n 1 | \n\n 1 | \n
| \n Grant date Fair-value | \n\n \u20ac8.08 | \n\n \u20ac5.12 | \n\n \u20ac5.55 | \n\n \u20ac2.10 | \n\n \u20ac4.04 | \n\n \u20ac1.80 | \n\n \u20ac3.72 | \n\n \u20ac3.00 | \n
| \n Performance conditions (1) | \n\n Yes | \n\n Yes | \n\n Yes | \n\n Yes | \n\n Yes | \n\n Yes | \n\n Yes | \n\n Yes | \n
| \n (1) | \n\n Performance conditions concern only grants to key managers, other employees are only subject to a service condition. | \n
|---|
| \n \n | \n\n AGA 2021-1 | \n\n AGA 2021-2 | \n\n AGA 2022-1 | \n\n AGA 2022-2 | \n\n AGA 2023 | \n\n AGA 2024 | \n
|---|---|---|---|---|---|---|
| \n Date of grant | \n\n February 25, 2021 | \n\n October 21, 2021 | \n\n May 23, 2022 | \n\n October 20, 2022 | \n\n March 23, 2023 | \n\n March 21, 2024 | \n
| \n Number of Share Awards initially granted | \n\n 880,000 | \n\n 380,000 | \n\n 1,957,500 | \n\n 290,000 | \n\n 2,070,000 | \n\n 770,000 | \n
| \n Vesting period (in Years) | \n\n 1 | \n\n 1 | \n\n 1 | \n\n 1 | \n\n 1 | \n\n 1 | \n
| \n Grant date Fair-value | \n\n \u20ac8.87 | \n\n \u20ac7.16 | \n\n \u20ac2.13 | \n\n \u20ac3.43 | \n\n \u20ac2.37 | \n\n \u20ac0.44 | \n
| \n Performance conditions (1) | \n\n Yes | \n\n Yes | \n\n Yes | \n\n Yes | \n\n Yes | \n\n Yes | \n
| \n (1) | \n\n Performance conditions concern only grants to key managers, other employees are only subject to a service condition. | \n
|---|
Changes in the balances of AGA
| \n \n | \n\n AGA 2022-1 | \n\n AGA 2022-2 | \n\n AGA 2023 | \n\n AGA 2024 | \n\n TOTAL | \n
|---|---|---|---|---|---|
| \n Balance outstanding at January 1, 2024 | \n\n 772,500 | \n\n 240,000 | \n\n 1,212,500 | \n\n 0 | \n\n 2,225,000 | \n
| \n Granted during the period | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n 770,000 | \n\n 770,000 | \n
| \n Vested during the period | \n\n (25,000) | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n (25,000) | \n
| \n Forfeited during the period | \n\n (10,000) | \n\n \u2014 | \n\n (40,000) | \n\n (30,000) | \n\n (80,000) | \n
| \n Balance outstanding at December\u00a031, 2024 | \n\n 737,500 | \n\n 240,000 | \n\n 1,172,500 | \n\n 740,000 | \n\n 2,890,000 | \n
19.4Stock options (SO)
Vesting schedule
The SO\u00a02017 granted on July\u00a027, 2017, may be exercised by the beneficiary on the basis of the following vesting schedule:
\u2022up to \u00bc on the date of the grant;
\u2022the remaining 75% becoming exercisable up to 1/36\u00a0per month from the date of grant; and
\u2022at the latest within seven\u00a0years from the date of grant.
The SO\u00a02017 granted on December\u00a019, 2017, may be exercised by the beneficiary on the basis of the following vesting schedule:
\u2022up to \u00bc on the date of the grant;
\u2022the remaining 75% becoming exercisable up to 1/36\u00a0per month from the date of grant; and
\u2022at the latest within seven\u00a0years from the date of grant.
The SO\u00a02018 granted on March\u00a014, 2018, may be exercised by the beneficiary on the basis of the following vesting schedule:
\u202225% of the Options shall vest on the first anniversary of the Vesting Commencement Date;
\u2022the remaining 75% becoming exercisable up to 1/36\u00a0per month from the date of grant; and
\u2022t the latest within seven\u00a0years from the date of grant.
The SO\u00a02018 granted on December\u00a019, 2018, may be exercised by the beneficiary on the basis of the following vesting schedule:
\u202225% of the Options shall vest on the first anniversary of the Vesting Commencement Date;
\u2022the remaining 75% becoming exercisable up to 1/36\u00a0per month from the date of grant; and
\u2022at the latest within seven\u00a0years from the date of grant.
The SO\u00a02020 granted on September\u00a022, 2020, may be exercised by the beneficiary on the basis of the following vesting schedule:
\u202225% of the Options shall vest on the first anniversary of the Vesting Commencement Date;
\u2022the remaining 75% becoming exercisable up to 1/36\u00a0per month from the date of grant; and
\u2022at the latest within seven\u00a0years from the date of grant.
The SO\u00a02021 granted on February\u00a025, 2021, may be exercised by the beneficiary on the basis of the following vesting schedule:
\u2022up to 1/3 of the SO\u00a02021 on the first anniversary of the date of grant;
\u20221/3 of the SO\u00a02021 will become exercisable on the second anniversary of the date of grant and
\u2022the remaining 1/3 will become exercisable on the third anniversary of the date of grant; and
\u2022at the latest within 7 years from the date of grant.
The SO\u00a02022 granted on May\u00a023, 2022, may be exercised by the beneficiary on the basis of the following vesting schedule:
\u202225% of the Options shall vest on the first anniversary of the Vesting Commencement Date;
\u2022the remaining 75% becoming exercisable up to 1/36\u00a0per month as from the first anniversary of the grant date; and
\u2022at the latest within 7 years from the date of grant.
The SO\u00a02023 granted on March\u00a023, 2023, may be exercised by the beneficiary on the basis of the following vesting schedule:
\u202225% of the Options shall vest on the first anniversary of the Vesting Commencement Date;
\u2022the remaining 75% becoming exercisable up to 1/36\u00a0per month as from the first anniversary of the grant date, and
\u2022at the latest within 7\u00a0years from the date of grant.
The SO\u00a02024 granted on May 14, 202\u2019, may be exercised by the beneficiary on the basis of the following vesting schedule:
\u202225% of the Options shall vest on the first anniversary of the Vesting Commencement Date;
\u2022the remaining 75% becoming exercisable up to 1/36\u00a0per month as from the first anniversary of the grant date, and
\u2022at the latest within 7\u00a0years from the date of grant.
Details and main characteristics of the SO granted to date
| \n \n | \n\n SO 2017 | \n\n SO 2017 | \n\n SO 2017 | \n\n SO 2018 | \n
|---|---|---|---|---|
| \n Date of grant | \n\n July 27, 2017 | \n\n December\u00a019, 2017 | \n\n March 14, 2018 | \n\n September 18, 2018 | \n
| \n Plan expiration date | \n\n July 26, 2024 | \n\n December\u00a018, 2024 | \n\n March 13, 2025 | \n\n September 17, 2025 | \n
| \n Number of warrants initially granted | \n\n 220,000 | \n\n 300,000 | \n\n 175,000 | \n\n 30,000 | \n
| \n Exercise price | \n\n \u20ac 5.04 | \n\n \u20ac 5.55 | \n\n \u20ac 6.98 | \n\n \u20ac 2.19 | \n
| \n Share entitlement per stock option | \n\n 1 | \n\n 1 | \n\n 1 | \n\n 1 | \n
| \n Valuation method | \n\n Black - Scholes | \n|||
| \n Expected volatility | \n\n 51.09% | \n\n 50.36% | \n\n 48.75% | \n\n 58.02% | \n
| \n Expected dividend | \n\n 0.00% | \n\n 0.00% | \n\n 0.00% | \n\n 0.00% | \n
| \n Fair value per option | \n\n \u20ac2.09 | \n\n \u20ac2.20 | \n\n \u20ac2.63 | \n\n \u20ac0.91 | \n
| \n \n | \n\n SO 2020 | \n\n SO 2021 | \n\n SO 2022 | \n\n SO 2023 | \n
|---|---|---|---|---|
| \n Date of grant | \n\n September 22, 2020 | \n\n February 25, 2021 | \n\n May 23, 2022 | \n\n March 23, 2023 | \n
| \n Plan expiration date | \n\n September 21, 2027 | \n\n February 24, 2028 | \n\n May 22, 2029 | \n\n March 22, 2030 | \n
| \n Number of warrants initially granted | \n\n 155,000 | \n\n 20,000 | \n\n 250,000 | \n\n 310,000 | \n
| \n Exercise price | \n\n \u20ac 2.82 | \n\n \u20ac 7.51 | \n\n \u20ac 1.99 | \n\n \u20ac 2.65 | \n
| \n Share entitlement per stock option | \n\n 1 | \n\n 1 | \n\n 1 | \n\n 1 | \n
| \n Valuation method | \n\n Black - Scholes | \n|||
| \n Expected volatility | \n\n 83.82% | \n\n 83.70% | \n\n 92.14% | \n\n 75.35% | \n
| \n Expected dividend | \n\n 0.00% | \n\n 0.00% | \n\n 0.00% | \n\n 0.00% | \n
| \n Fair value per option | \n\n \u20ac1.91 | \n\n \u20ac5.77 | \n\n \u20ac1.43 | \n\n \u20ac1.38 | \n
| \n \n | \n\n SO 2024 | \n
|---|---|
| \n Date of grant | \n\n May 14, 2024 | \n
| \n Plan expiration date | \n\n May 14, 2031 | \n
| \n Number of warrants initially granted | \n\n 300 000 | \n
| \n Exercise price | \n\n \u20ac 0,41 | \n
| \n Share entitlement per stock option | \n\n 1 | \n
| \n Valuation method | \n\n Black - Scholes | \n
| \n Expected volatility | \n\n 108.04% | \n
| \n Expected dividend | \n\n 0.00% | \n
| \n Fair value per option | \n\n \u20ac0.30 | \n
Changes in the balances of SO
| \n \n | \n\n SO 2022 | \n\n SO 2023 | \n\n SO 2023 | \n\n TOTAL | \n
|---|---|---|---|---|
| \n Balance outstanding at January 1, 2024 | \n\n 230,000 | \n\n 300,000 | \n\n 0 | \n\n 530,000 | \n
| \n Granted during the period | \n\n \u2014 | \n\n \u2014 | \n\n 300,000 | \n\n 300,000 | \n
| \n Exercised during the period | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n 0 | \n
| \n Forfeited during the period | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n 0 | \n
| \n Balance outstanding at December\u00a031, 2024 | \n\n 230,000 | \n\n 300,000 | \n\n 300,000 | \n\n 830,000 | \n
| \n Of which exercisable | \n\n 148,542 | \n\n 131,250 | \n\n \u2014 | \n\n 279,792 | \n
19.5Reconciliation with P&L share-based expenses
| \n In thousands of Euros | \n\n As of December\u00a031, 2024 | \n\n As of December\u00a031, 2023 | \n||||||
|---|---|---|---|---|---|---|---|---|
| \n R&D | \n\n G&A | \n\n S&M | \n\n TOTAL | \n\n R&D | \n\n G&A | \n\n S&M | \n\n TOTAL | \n|
| \n Non-Employee Warrants (BSA) | \n\n 30 | \n\n 55 | \n\n 0 | \n\n 85 | \n\n 107 | \n\n 183 | \n\n 0 | \n\n 290 | \n
| \n Employee Warrants (BCE) | \n\n 0 | \n\n 0 | \n\n 0 | \n\n 0 | \n\n 0 | \n\n 0 | \n\n 0 | \n\n 0 | \n
| \n Free Shares (AGA) | \n\n 292 | \n\n 98 | \n\n 35 | \n\n 425 | \n\n 52 | \n\n (625) | \n\n 596 | \n\n 23 | \n
| \n Stock-Options (SO) | \n\n 274 | \n\n 0 | \n\n 0 | \n\n 274 | \n\n (2) | \n\n 277 | \n\n 0 | \n\n 274 | \n
| \n Share-based payment expense | \n\n 596 | \n\n 154 | \n\n 35 | \n\n 784 | \n\n 157 | \n\n (165) | \n\n 596 | \n\n 587 | \n
3.11Share-based payment
Free shares (Attributions Gratuites d\u2019Actions, or \u201cAGA\u201d), stock-options (Options de souscription et/ou d\u2019achat d\u2019actions, or \u201cSO\u201d) and employee warrants (Bons de souscription de parts de cr\u00e9ateur d\u2019entreprise, or \u201cBCE\u201d) are awarded to employees or executives. Non-employee warrants (Bons de souscription d\u2019actions, or \u201cBSA\u201d) are primarily awarded to directors and scientific consultants. Pursuant to IFRS\u00a02, these awards are measured at their fair value on the date of grant. The fair value is calculated with the most relevant formula regarding the settlement and the conditions of each plan. The fair value is recorded in personnel expenses (allocated by function in the Consolidated Statement of Income) on a straight-line basis over each milestone composing the vesting period with a corresponding increase in shareholders\u2019 equity.
At each closing date, we re-examine the number of options likely to become exercisable. If applicable, the impact of the review of the estimate is recognized in the Consolidated Statement of Income with a corresponding adjustment in equity.
3.12Financial liabilities
Borrowings and other financial liabilities, excepted for derivative financial liabilities (see upon), are measured initially at their fair value and then at amortized cost, calculated on the basis of the effective interest rate (\u201cEIR\u201d) method.
The transaction expenses that are directly attributable to the acquisition or to the issue of a financial liability reduce that financial liability. These expenses are then amortized actuarially over the lifetime of the liability, on the basis of the EIR.
The EIR is the rate that equalizes the anticipated flow of future cash outflows with the current net book value of the financial liability in order to deduct its amortized cost therefrom.
The amount resulting from the benefit of financial liabilities that do not bear interest at market rates is considered a subsidy. 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 finance cost. The subsidy is presented as a differed income which is amortized in the P&L over the same period.
Other financial liabilities include trade accounts payable, which are measured at fair value (which in most cases equates to face value) on initial recognition, and subsequently at amortized cost.
3.12Financial liabilities
Borrowings and other financial liabilities, excepted for derivative financial liabilities (see upon), are measured initially at their fair value and then at amortized cost, calculated on the basis of the effective interest rate (\u201cEIR\u201d) method.
The transaction expenses that are directly attributable to the acquisition or to the issue of a financial liability reduce that financial liability. These expenses are then amortized actuarially over the lifetime of the liability, on the basis of the EIR.
The EIR is the rate that equalizes the anticipated flow of future cash outflows with the current net book value of the financial liability in order to deduct its amortized cost therefrom.
The amount resulting from the benefit of financial liabilities that do not bear interest at market rates is considered a subsidy. 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 finance cost. The subsidy is presented as a differed income which is amortized in the P&L over the same period.
Other financial liabilities include trade accounts payable, which are measured at fair value (which in most cases equates to face value) on initial recognition, and subsequently at amortized cost.
3.13Research tax credit, subsidies and conditional advances
Research tax credit
The research tax credit (Cr\u00e9dit d\u2019Imp\u00f4t Recherche, or \u201cCIR\u201d) (the \u201cResearch Tax Credit\u201d) is granted to companies by the French tax authorities in order to encourage them to conduct technical and scientific research. Companies that prove that they have\u00a0expenditures that meet the required criteria (research expenditures located in France or, since January\u00a01, 2005, within the European Community or in another State that is a party to\u00a0the Agreement on the European Economic Area that has\u00a0concluded a tax treaty with France that contains an administrative assistance clause) receive a tax credit that can be used for the payment of the corporate tax due for the fiscal year in which the expenditures were made and the next three fiscal years, or, as applicable, can be reimbursed in cash. The expenditures taken into account for the calculation of the Research Tax Credit involve only research expenses.
The Company has received the Research Tax Credit since its inception.
The Company received the reimbursement of the Research Tax Credit for the year 2023 in April\u00a02024 for an amount of \u20ac1,737\u00a0K. It will request the reimbursement of the 2024 Research Tax Credit in 2025 under the Community tax rules for small and medium firms in compliance with the regulatory texts in effect for the amount of \u20ac1,084\u00a0K.
The CIR is presented under other income in the Consolidated Statement of Income (Loss) as it meets the definition of government grant as defined in IAS\u00a020 Accounting for Government Grants and Disclosure of Government Assistance.
Subsidies and conditional advances
Due to the innovative nature of its product candidate development programs, the Company has benefited from certain sources of financial assistance from Bpifrance Financement whose mission is to provide financial assistance and support to emerging French enterprises to facilitate the development and commercialization of innovative technologies.
The funds received by the Company are intended to finance its research and development efforts and the recruitment of specific personnel. The Company has received such funding in the form of non-refundable subsidies and conditional advances.
Subsidies
Subsidies received are grants that are not repayable by the Company and are recognized in the Financial Statements where there exists reasonable assurance that the Company will comply with the conditions attached to the subsidies and the subsidies will be received.
Subsidies that are upfront payments are presented as deferred revenue and recognized ratably through income over the duration of the research program to which the subsidy relates.
A public subsidy that is to be received either as compensation for expenses or for losses already incurred, or for immediate financial support of the Company without associated future costs, is recognized in the Financial Statements as other income for the period in which the grant is classified as a receivable.
The amount resulting from the benefit of financial liabilities that do not bear interest at market rates is considered a subsidy. 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 finance cost. This finance cost is netted with the impact of the amortization of the subsidy in the P&L.
Conditional advances
Funds received from Bpifrance Financement in the form of conditional advances are recognized as financial liabilities, as the Company has a contractual obligation to reimburse Bpifrance Financement based on a repayment schedule. Each advance is made to fund a specific development milestone. Details concerning conditional advances are provided in Note\u00a011. Receipts and reimbursements of conditional advances are reflected as cash flows from financing activities in the Consolidated Statement of Cash Flows.
The rate used to determine the amount recognized annually as a finance cost, the EIR takes into account the estimated future cash flows.
In the event of a change in payment schedule of the stipulated repayments of the conditional advances, the Company recalculates the net book value of the debt resulting from the discounting of the anticipated new future cash flows at the initial EIR. The adjustment that results therefrom is recognized in the Consolidated Statement of Income (Loss) for the period during which the modification is recognized.
The conditional advance that can be subject to this type of\u00a0modification is the advance received from Bpifrance Financement, presented in Note\u00a011.2.
11.3State-guaranteed loan
The Company obtained a \u20ac6.75\u00a0million loan from a bank syndicate formed with Cr\u00e9dit Industriel et Commercial (CIC), BNP Paribas and Bpifrance, in the form of a state-guaranteed loan (Pr\u00eat Garanti par l\u2019\u00c9tat) (the \u201cPGE\u201d).
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\u00a0months. 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%.
In the context of the renegotiation of financial obligations, the Company and its creditor banks (BNP Paribas, CIC and Bpifrance) (the \"Banks\"), previously agreed to suspend the payment of the principal, subject to certain conditions. The parties have now agreed to extend the maturity of the loans until December 2024 and to adopt a new payment schedule for the outstanding principal and interest, featuring 6 monthly instalments with gradual amortization (5% of outstanding principal per month over July, August and September 2024, and then 28.3% over October, November and December\u00a02024). A\u00a0new interest rate has been fixed.\u00a0
Following discussions with banks, the company has only partially settled its latest installment on the state-guaranteed loan (PGE) at the end of December and is currently negotiating with the banks to determine a revised payment schedule for this final installment.
As at December 31, 2024, the remaining debt amounts to \u20ac0,5\u00a0million and is recorded as current liabilities.
3.13Research tax credit, subsidies and conditional advances
Research tax credit
The research tax credit (Cr\u00e9dit d\u2019Imp\u00f4t Recherche, or \u201cCIR\u201d) (the \u201cResearch Tax Credit\u201d) is granted to companies by the French tax authorities in order to encourage them to conduct technical and scientific research. Companies that prove that they have\u00a0expenditures that meet the required criteria (research expenditures located in France or, since January\u00a01, 2005, within the European Community or in another State that is a party to\u00a0the Agreement on the European Economic Area that has\u00a0concluded a tax treaty with France that contains an administrative assistance clause) receive a tax credit that can be used for the payment of the corporate tax due for the fiscal year in which the expenditures were made and the next three fiscal years, or, as applicable, can be reimbursed in cash. The expenditures taken into account for the calculation of the Research Tax Credit involve only research expenses.
The Company has received the Research Tax Credit since its inception.
The Company received the reimbursement of the Research Tax Credit for the year 2023 in April\u00a02024 for an amount of \u20ac1,737\u00a0K. It will request the reimbursement of the 2024 Research Tax Credit in 2025 under the Community tax rules for small and medium firms in compliance with the regulatory texts in effect for the amount of \u20ac1,084\u00a0K.
The CIR is presented under other income in the Consolidated Statement of Income (Loss) as it meets the definition of government grant as defined in IAS\u00a020 Accounting for Government Grants and Disclosure of Government Assistance.
Subsidies and conditional advances
Due to the innovative nature of its product candidate development programs, the Company has benefited from certain sources of financial assistance from Bpifrance Financement whose mission is to provide financial assistance and support to emerging French enterprises to facilitate the development and commercialization of innovative technologies.
The funds received by the Company are intended to finance its research and development efforts and the recruitment of specific personnel. The Company has received such funding in the form of non-refundable subsidies and conditional advances.
Subsidies
Subsidies received are grants that are not repayable by the Company and are recognized in the Financial Statements where there exists reasonable assurance that the Company will comply with the conditions attached to the subsidies and the subsidies will be received.
Subsidies that are upfront payments are presented as deferred revenue and recognized ratably through income over the duration of the research program to which the subsidy relates.
A public subsidy that is to be received either as compensation for expenses or for losses already incurred, or for immediate financial support of the Company without associated future costs, is recognized in the Financial Statements as other income for the period in which the grant is classified as a receivable.
The amount resulting from the benefit of financial liabilities that do not bear interest at market rates is considered a subsidy. 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 finance cost. This finance cost is netted with the impact of the amortization of the subsidy in the P&L.
Conditional advances
Funds received from Bpifrance Financement in the form of conditional advances are recognized as financial liabilities, as the Company has a contractual obligation to reimburse Bpifrance Financement based on a repayment schedule. Each advance is made to fund a specific development milestone. Details concerning conditional advances are provided in Note\u00a011. Receipts and reimbursements of conditional advances are reflected as cash flows from financing activities in the Consolidated Statement of Cash Flows.
The rate used to determine the amount recognized annually as a finance cost, the EIR takes into account the estimated future cash flows.
In the event of a change in payment schedule of the stipulated repayments of the conditional advances, the Company recalculates the net book value of the debt resulting from the discounting of the anticipated new future cash flows at the initial EIR. The adjustment that results therefrom is recognized in the Consolidated Statement of Income (Loss) for the period during which the modification is recognized.
The conditional advance that can be subject to this type of\u00a0modification is the advance received from Bpifrance Financement, presented in Note\u00a011.2.
3.14Retirement pension obligations
The employees of the Company receive the retirement benefits stipulated by law in France:
\u2022compensation paid by the Company to employees upon their retirement (defined-benefit plan) and;
\u2022a payment of retirement pensions by the Social Security agencies, which are financed by the contributions made by companies and employees (defined-contribution plans).
For the defined-benefit plans, the costs of the retirement benefits are estimated by using the projected credit unit method. According to this method, the cost of the retirement benefit is recognized in the Consolidated Statement of Income (Loss) so that it is distributed uniformly over the term of the services of the employees. The retirement benefit commitments are valued at the current value of the future payments estimated using, for discounting, the market rate for high quality corporate bonds with a term that corresponds to that estimated for the payment of the benefits.
The difference between the amount of the provision at the beginning of a period and at the close of that period is recognized through profit or loss for the portion representing the costs of services rendered and the net interest costs, and\u00a0through other comprehensive income for the portion representing the actuarial gains and losses.
The Company\u2019s payments for the defined-contribution plans are recognized as expenses on the Consolidated Statement of Income (Loss) of the period during which they become payable.
In April 2021, the IFRIC (\u201cIFRS Interpretations Committee\u201d) or addressed to the IAS Board (International Accounting Standards Board), for decision (approval or refusal or intermediate position), a \u201cTAD\u201d (\u201cTentative Agenda Decision\u201d or \u201cProvisional Decision\u201d) by which it proposes to modify the way of calculating the commitments relating to certain defined benefit plans. The IAS Board validated this position in early June\u00a02021, while specifying that there was no need to modify anything in IAS\u00a019 which already allows this interpretation.
By its new position, the IFRIC considers that, from the moment when, on the one hand, no right is acquired in the event of departure before retirement age and, on the other hand, the rights are capped after a certain number of years of seniority (N), it would be the last N years of the employee\u2019s career in the company that confer rights upon departure.
In addition, according to the consensus, it is also mandatory to modify the valuation method for Companies using collective agreements whose rights are defined by age bracket. Indeed, they consider that, given the fact that the rights are defined in stages, a certain number of years of service performed by a given employee does not give rise to the allocation of rights. It is then necessary, for the evaluation, to linearize the rights over the last N years, N representing the number of years which gives rise to the allocation of rights and therefore the last level that the employee will reach at the time of his departure in retirement.
The Company implemented the changes of interpretation starting with the 2021 financial statements.
3.15Provisions for risks and expenses
The provisions for risks and lawsuits correspond to the commitments resulting from lawsuits and various risks whose due dates and amounts are uncertain.
A provision is recognized in the Financial Statements when the Group has a legal or implicit obligation to a third party resulting from a past event, which is likely or certain to cause an outflow of resources to that third party, and provided that the future outflows of liquid assets can be estimated reliably.
The amount recognized in the Financial Statements as a provision is the best estimate of the expenses necessary to extinguish the obligation.
3.14Retirement pension obligations
The employees of the Company receive the retirement benefits stipulated by law in France:
\u2022compensation paid by the Company to employees upon their retirement (defined-benefit plan) and;
\u2022a payment of retirement pensions by the Social Security agencies, which are financed by the contributions made by companies and employees (defined-contribution plans).
For the defined-benefit plans, the costs of the retirement benefits are estimated by using the projected credit unit method. According to this method, the cost of the retirement benefit is recognized in the Consolidated Statement of Income (Loss) so that it is distributed uniformly over the term of the services of the employees. The retirement benefit commitments are valued at the current value of the future payments estimated using, for discounting, the market rate for high quality corporate bonds with a term that corresponds to that estimated for the payment of the benefits.
The difference between the amount of the provision at the beginning of a period and at the close of that period is recognized through profit or loss for the portion representing the costs of services rendered and the net interest costs, and\u00a0through other comprehensive income for the portion representing the actuarial gains and losses.
The Company\u2019s payments for the defined-contribution plans are recognized as expenses on the Consolidated Statement of Income (Loss) of the period during which they become payable.
In April 2021, the IFRIC (\u201cIFRS Interpretations Committee\u201d) or addressed to the IAS Board (International Accounting Standards Board), for decision (approval or refusal or intermediate position), a \u201cTAD\u201d (\u201cTentative Agenda Decision\u201d or \u201cProvisional Decision\u201d) by which it proposes to modify the way of calculating the commitments relating to certain defined benefit plans. The IAS Board validated this position in early June\u00a02021, while specifying that there was no need to modify anything in IAS\u00a019 which already allows this interpretation.
By its new position, the IFRIC considers that, from the moment when, on the one hand, no right is acquired in the event of departure before retirement age and, on the other hand, the rights are capped after a certain number of years of seniority (N), it would be the last N years of the employee\u2019s career in the company that confer rights upon departure.
In addition, according to the consensus, it is also mandatory to modify the valuation method for Companies using collective agreements whose rights are defined by age bracket. Indeed, they consider that, given the fact that the rights are defined in stages, a certain number of years of service performed by a given employee does not give rise to the allocation of rights. It is then necessary, for the evaluation, to linearize the rights over the last N years, N representing the number of years which gives rise to the allocation of rights and therefore the last level that the employee will reach at the time of his departure in retirement.
The Company implemented the changes of interpretation starting with the 2021 financial statements.
3.15Provisions for risks and expenses
The provisions for risks and lawsuits correspond to the commitments resulting from lawsuits and various risks whose due dates and amounts are uncertain.
A provision is recognized in the Financial Statements when the Group has a legal or implicit obligation to a third party resulting from a past event, which is likely or certain to cause an outflow of resources to that third party, and provided that the future outflows of liquid assets can be estimated reliably.
The amount recognized in the Financial Statements as a provision is the best estimate of the expenses necessary to extinguish the obligation.
Note 12:Non-current provisions
Non-current provisions are composed of employee benefits relating to a compensation payable to French employees upon their retirement \u2013 Indemnit\u00e9s de Fin de Carri\u00e8re (\u201cIFC\u201d) for \u20ac48k and non-current provision for contingencies and losses for \u20ac1.1 million.
The following tables show the changes in the IFC during the last two periods:
| \n In thousands of Euros | \n\n \n | \n
|---|---|
| \n As of January 1, 2023 | \n\n 21 | \n
| \n Cost of services rendered (operating expense) | \n\n 24 | \n
| \n Interest expense | \n\n 1 | \n
| \n Benefits paid | \n\n \u2014 | \n
| \n Actuarial gain (loss) | \n\n (6) | \n
| \n As of December\u00a031, 2023 | \n\n \u20ac39 K | \n
| \n As of January 1, 2024 | \n\n 39 | \n
| \n Cost of services rendered (operating expense) | \n\n 21 | \n
| \n Interest expense | \n\n 2 | \n
| \n Benefits paid | \n\n \u2014 | \n
| \n Actuarial gain (loss) | \n\n (14) | \n
| \n As of December\u00a031, 2024 | \n\n \u20ac48 K | \n
The main assumptions used for the purposes of actuarial valuations are listed below:
\u2022Social security contribution: 45% in 2023 and 2024;
\u2022Salary increase: 3% in 2023 and 2024;
\u2022Discount rate: iBoxx Corporates AA+ index, 3.17% and 3.38% in 2023 and 2024, respectively:
\u2022Retirement age: 67;
\u2022Terms of retirement: voluntary retirement;
\u2022Life table: TGHF 2005;
\u2022Collective agreement: Convention Collective Nationale des Ing\u00e9nieurs et des Cadres de la M\u00e9tallurgie (National Collective Agreement for Engineers and Executives in the Metalworking Industry); and
\u2022Personnel turn-over: 10% (20-49), 0% above 50.
The other non-current provisions primarily relate to several ongoing social and operational litigations. In accordance to IAS\u00a037, given the sensitivity of the matters, management cannot provide detailed information on the nature of each dispute.
3.14Retirement pension obligations
The employees of the Company receive the retirement benefits stipulated by law in France:
\u2022compensation paid by the Company to employees upon their retirement (defined-benefit plan) and;
\u2022a payment of retirement pensions by the Social Security agencies, which are financed by the contributions made by companies and employees (defined-contribution plans).
For the defined-benefit plans, the costs of the retirement benefits are estimated by using the projected credit unit method. According to this method, the cost of the retirement benefit is recognized in the Consolidated Statement of Income (Loss) so that it is distributed uniformly over the term of the services of the employees. The retirement benefit commitments are valued at the current value of the future payments estimated using, for discounting, the market rate for high quality corporate bonds with a term that corresponds to that estimated for the payment of the benefits.
The difference between the amount of the provision at the beginning of a period and at the close of that period is recognized through profit or loss for the portion representing the costs of services rendered and the net interest costs, and\u00a0through other comprehensive income for the portion representing the actuarial gains and losses.
The Company\u2019s payments for the defined-contribution plans are recognized as expenses on the Consolidated Statement of Income (Loss) of the period during which they become payable.
In April 2021, the IFRIC (\u201cIFRS Interpretations Committee\u201d) or addressed to the IAS Board (International Accounting Standards Board), for decision (approval or refusal or intermediate position), a \u201cTAD\u201d (\u201cTentative Agenda Decision\u201d or \u201cProvisional Decision\u201d) by which it proposes to modify the way of calculating the commitments relating to certain defined benefit plans. The IAS Board validated this position in early June\u00a02021, while specifying that there was no need to modify anything in IAS\u00a019 which already allows this interpretation.
By its new position, the IFRIC considers that, from the moment when, on the one hand, no right is acquired in the event of departure before retirement age and, on the other hand, the rights are capped after a certain number of years of seniority (N), it would be the last N years of the employee\u2019s career in the company that confer rights upon departure.
In addition, according to the consensus, it is also mandatory to modify the valuation method for Companies using collective agreements whose rights are defined by age bracket. Indeed, they consider that, given the fact that the rights are defined in stages, a certain number of years of service performed by a given employee does not give rise to the allocation of rights. It is then necessary, for the evaluation, to linearize the rights over the last N years, N representing the number of years which gives rise to the allocation of rights and therefore the last level that the employee will reach at the time of his departure in retirement.
The Company implemented the changes of interpretation starting with the 2021 financial statements.
18.4Personnel expenses
The Group was employing 13 people on permanent contract as of December\u00a031, 2024, compared to 17 as of December\u00a02023.
The following table shows the nature of costs included in personnel expenses:
| \n In thousands of Euros | \n\n As of December\u00a031, 2024 | \n\n As of December\u00a031, 2023 | \n||||||
|---|---|---|---|---|---|---|---|---|
| \n R&D | \n\n G&A | \n\n S&M | \n\n TOTAL | \n\n R&D | \n\n G&A | \n\n S&M | \n\n TOTAL | \n|
| \n Wages and salaries | \n\n 1,612 | \n\n 1,002 | \n\n 301 | \n\n 2,915 | \n\n 2,459 | \n\n 1,934 | \n\n 1,926 | \n\n 6,319 | \n
| \n Social contributions | \n\n 596 | \n\n 618 | \n\n 133 | \n\n 1,347 | \n\n 1,111 | \n\n 463 | \n\n 993 | \n\n 2,567 | \n
| \n Service cost (employee benefit) | \n\n 14 | \n\n 1 | \n\n 6 | \n\n 21 | \n\n 14 | \n\n 4 | \n\n 6 | \n\n 24 | \n
| \n Share-based payments | \n\n 596 | \n\n 154 | \n\n 35 | \n\n 784 | \n\n 157 | \n\n (165) | \n\n 596 | \n\n 587 | \n
| \n Total | \n\n 2,818 | \n\n 1,775 | \n\n 475 | \n\n 5,067 | \n\n 3,741 | \n\n 2,235 | \n\n 3,521 | \n\n 9,497 | \n
As of December\u00a031, 2023, the reversal of the share-based expenses mainly relates to the forfeiture of free shares plans granted between 2020 and 2023 for which performance criteria were not or unlikely to be met before the achievement deadline. As of December\u00a031, 2023, the reversals on the R&D and S&M share-based related expenses are offset by the accelerated vesting of plans for which the presence condition has been waived by the Board for specific employees.
19.1Employee warrants (BCE)
Vesting schedule
All BCE granted may be exercised by the beneficiary on the basis of the following vesting schedule:
\u2022up to 1/4\u00a0on the first anniversary of the date of grant;
\u2022the remaining 75% becoming exercisable up to 1/36\u00a0per month from the first anniversary of the date of grant; and
\u2022at the latest within 10\u00a0years from the date of grant.
Details and main characteristics of the BCE granted to date
| \n \n | \n\n BCE 2013-02 | \n\n BCE 2015-06 | \n
|---|---|---|
| \n Date of grant | \n\n July 8, 2013 | \n\n July 8, 2015 | \n
| \n Plan expiration date | \n\n July 7, 2023 | \n\n July 7, 2025 | \n
| \n Number of warrants initially granted | \n\n 892,000 | \n\n 733,298 | \n
| \n Share entitlement per warrant | \n\n 1 | \n\n 1 | \n
| \n Exercise price | \n\n \u20ac0.025 | \n\n \u20ac3.275 | \n
| \n Valuation method | \n\n Black - Scholes | \n|
| \n Expected volatility | \n\n 42.50% | \n\n 76.49% | \n
| \n Expected dividend | \n\n 0.00% | \n\n 0.00% | \n
| \n Fair value per warrant | \n\n \u20ac0.44 | \n\n \u20ac5.56 | \n
Changes in the balances of BCE
| \n \n | \n\n BCE 2015-06 | \n\n Total | \n
|---|---|---|
| \n Balance outstanding at January 1, 2024 | \n\n 454 582 | \n\n 454,582 | \n
| \n Granted during the period | \n\n \u2014 | \n\n \u2014 | \n
| \n Exercised during the period | \n\n \u2014 | \n\n \u2014 | \n
| \n Forfeited during the period | \n\n (321,000) | \n\n (321,000) | \n
| \n Balance outstanding at December\u00a031, 2024 | \n\n 133,582 | \n\n 133,582 | \n
| \n Of which exercisable | \n\n 133,582 | \n\n 133,582 | \n
3.14Retirement pension obligations
The employees of the Company receive the retirement benefits stipulated by law in France:
\u2022compensation paid by the Company to employees upon their retirement (defined-benefit plan) and;
\u2022a payment of retirement pensions by the Social Security agencies, which are financed by the contributions made by companies and employees (defined-contribution plans).
For the defined-benefit plans, the costs of the retirement benefits are estimated by using the projected credit unit method. According to this method, the cost of the retirement benefit is recognized in the Consolidated Statement of Income (Loss) so that it is distributed uniformly over the term of the services of the employees. The retirement benefit commitments are valued at the current value of the future payments estimated using, for discounting, the market rate for high quality corporate bonds with a term that corresponds to that estimated for the payment of the benefits.
The difference between the amount of the provision at the beginning of a period and at the close of that period is recognized through profit or loss for the portion representing the costs of services rendered and the net interest costs, and\u00a0through other comprehensive income for the portion representing the actuarial gains and losses.
The Company\u2019s payments for the defined-contribution plans are recognized as expenses on the Consolidated Statement of Income (Loss) of the period during which they become payable.
In April 2021, the IFRIC (\u201cIFRS Interpretations Committee\u201d) or addressed to the IAS Board (International Accounting Standards Board), for decision (approval or refusal or intermediate position), a \u201cTAD\u201d (\u201cTentative Agenda Decision\u201d or \u201cProvisional Decision\u201d) by which it proposes to modify the way of calculating the commitments relating to certain defined benefit plans. The IAS Board validated this position in early June\u00a02021, while specifying that there was no need to modify anything in IAS\u00a019 which already allows this interpretation.
By its new position, the IFRIC considers that, from the moment when, on the one hand, no right is acquired in the event of departure before retirement age and, on the other hand, the rights are capped after a certain number of years of seniority (N), it would be the last N years of the employee\u2019s career in the company that confer rights upon departure.
In addition, according to the consensus, it is also mandatory to modify the valuation method for Companies using collective agreements whose rights are defined by age bracket. Indeed, they consider that, given the fact that the rights are defined in stages, a certain number of years of service performed by a given employee does not give rise to the allocation of rights. It is then necessary, for the evaluation, to linearize the rights over the last N years, N representing the number of years which gives rise to the allocation of rights and therefore the last level that the employee will reach at the time of his departure in retirement.
The Company implemented the changes of interpretation starting with the 2021 financial statements.
3.16Leases
The Group applies the definition of a lease and related guidance set out in IFRS 16 to all contracts entered into or changed on or after January\u00a01, 2019.
Applying IFRS\u00a016, for all leases (except as noted below), the Group:
(a)Recognizes right-of-use assets and lease liabilities in the consolidated statement of financial position, initially measured at the present value of the future lease payments;
(b)Recognizes depreciation of right-of-use assets and interest on lease liabilities in profit or loss;
(c)Separates the total amount of cash paid into a principal portion (presented within financing activities) and interest (presented within financing activities) in the consolidated statement of cash flows.
Lease incentives (e.g. rent-free period) are recognized as part of the measurement of the right-of-use assets and lease liabilities whereas under IAS 17 they resulted in the recognition of a lease incentive, amortized as a reduction of rental expenses generally on a straight-line basis.
Under IFRS 16, right-of-use assets are tested for impairment in accordance with IAS\u00a036.
For short-term leases (lease term of 12\u00a0months or less) and leases of low-value assets (such as tablet and personal computers, small items of office furniture and telephones), the Group has opted to recognize a lease expense on a straight-line basis as permitted by IFRS\u00a016. This expense is presented within \u2018other expenses\u2019 in profit or loss.
The Company defines contracts\u2019 terms as the non-cancellable period during which the Company has the right to use the underlying asset, plus any termination options that the lessee is reasonably certain not to exercise.
Lease terms used are consistent with the depreciation periods of fixtures and improvements in structures and are in line, as at 31/12 and before the closing date, with the management best estimates of the lease terms.
3.16Leases
The Group applies the definition of a lease and related guidance set out in IFRS 16 to all contracts entered into or changed on or after January\u00a01, 2019.
Applying IFRS\u00a016, for all leases (except as noted below), the Group:
(a)Recognizes right-of-use assets and lease liabilities in the consolidated statement of financial position, initially measured at the present value of the future lease payments;
(b)Recognizes depreciation of right-of-use assets and interest on lease liabilities in profit or loss;
(c)Separates the total amount of cash paid into a principal portion (presented within financing activities) and interest (presented within financing activities) in the consolidated statement of cash flows.
Lease incentives (e.g. rent-free period) are recognized as part of the measurement of the right-of-use assets and lease liabilities whereas under IAS 17 they resulted in the recognition of a lease incentive, amortized as a reduction of rental expenses generally on a straight-line basis.
Under IFRS 16, right-of-use assets are tested for impairment in accordance with IAS\u00a036.
For short-term leases (lease term of 12\u00a0months or less) and leases of low-value assets (such as tablet and personal computers, small items of office furniture and telephones), the Group has opted to recognize a lease expense on a straight-line basis as permitted by IFRS\u00a016. This expense is presented within \u2018other expenses\u2019 in profit or loss.
The Company defines contracts\u2019 terms as the non-cancellable period during which the Company has the right to use the underlying asset, plus any termination options that the lessee is reasonably certain not to exercise.
Lease terms used are consistent with the depreciation periods of fixtures and improvements in structures and are in line, as at 31/12 and before the closing date, with the management best estimates of the lease terms.
Note 6:IFRS\u00a016 \u2013 Leases
The main impacts on the balance sheet resulting from the application of the IFRS\u00a016 on the financial year ending December\u00a031, 2024 are the following:
Balance sheet
Right-of-use
| \n (in thousands of Euros) | \n\n As of December\u00a031, 2023 | \n\n Change in scope | \n\n Amortization | \n\n Currency translation adjutments | \n\n As of December\u00a031, 2024 | \n
|---|---|---|---|---|---|
| \n Right-of-use \u2013 Buildings | \n\n 1,608 | \n\n 4 | \n\n (899) | \n\n 16 | \n\n 729 | \n
| \n Right-of-use \u2013 Others | \n\n 0 | \n\n 0 | \n\n 0 | \n\n 0 | \n\n 0 | \n
| \n Net value of the righ-of-use | \n\n 1,608 | \n\n 4 | \n\n (899) | \n\n 16 | \n\n 729 | \n
As of December\u00a031, 2024, following renegotiation, the maturity of US lease and sublease has been aligned but the rent received from the sublessee has been decreased. Therefore, the company recorded an impairment of the right of use for \u20ac0.2\u00a0million in addition to the annual amortization.
Lease liability
| \n (in thousands of Euros) | \n\n December\u00a031, 2023 | \n\n Change in\u00a0scope | \n\n Repayments | \n\n Currency translation adjutments | \n\n Reclassification non-current / current | \n\n December\u00a031, 2024 | \n
|---|---|---|---|---|---|---|
| \n Lease liability \u2013 Buildings | \n\n 1,048 | \n\n 0 | \n\n 0 | \n\n 10 | \n\n (543) | \n\n 514 | \n
| \n Lease liability \u2013 Others | \n\n 0 | \n\n 0 | \n\n 0 | \n\n 0 | \n\n 0 | \n\n 0 | \n
| \n Total non-current | \n\n 1,048 | \n\n 0 | \n\n 0 | \n\n 10 | \n\n (543) | \n\n 514 | \n
| \n Lease liability \u2013 Buildings | \n\n 775 | \n\n 4 | \n\n (742) | \n\n 4 | \n\n 543 | \n\n 585 | \n
| \n Lease liability \u2013 Others | \n\n 0 | \n\n 0 | \n\n 0 | \n\n 0 | \n\n 0 | \n\n 0 | \n
| \n Total current | \n\n 775 | \n\n 4 | \n\n (742) | \n\n 4 | \n\n 543 | \n\n 585 | \n
| \n Total | \n\n 1,823 | \n\n 4 | \n\n (742) | \n\n 14 | \n\n 0 | \n\n 1,099 | \n
Commitments under the scope of IFRS\u00a016
Agreement with Passage de l\u2019Innovation
On January\u00a01, 2015, we entered into a lease agreement for our\u00a0headquarters premises in Paris, France with Passage de l\u2019Innovation, which was amended on October\u00a01, 2015, January\u00a01, 2016, May\u00a01, 2017, January\u00a08, 2018, July\u00a01, 2018, October\u00a01, 2018, November\u00a01, 2019, October\u00a01, 2021, January\u00a01, 2022 and July\u00a01, 2023. As the company pursued its development, additional spaces were included in the contract. The lease for our main premises ended in 2023 and was tacitly renewed for an indefinite term, while leases for smaller spaces at the same location will expire in 2025 and 2027.\".The agreement includes expenses for rent, rental charges and other services provided by the lessor.
The cost of associated services (e.g., reception, printers and information technology and access to meeting rooms) is proportional to the office space rented and amended accordingly at each amendment\u2019s signature.
The commitment terms used in 2024 correspond to the management best estimates of the lease terms as of December\u00a031, 2024.
U.S.- based subsidiary
The Group entered into a binding office lease agreement in New\u00a0York for its U.S.-based subsidiary on September\u00a06, 2017. The lease commencement was based upon substantial completion of the landlord\u2019s work and delivery of possession of the premises and occurred on April\u00a018, 2018. The lease term is 7 years and 5 months.
3.17Revenue
The core principle of this revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:
\u2022Step 1: Identify the contract with the customer,
\u2022Step 2: Identify the performance obligations in the contract,
\u2022Step 3: Determine the transaction price,
\u2022Step 4: Allocate the transaction price to the performance obligations in the contract,
\u2022Step 5: Recognize revenue when the company satisfies a performance obligation.
In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or\u00a0service that is distinct. A performance obligation meets IFRS\u00a015\u2019s definition of a \u201cdistinct\u201d good or service (or bundle of goods or services) if both of the following criteria are met:
\u2022a good or service (or bundle of goods or services) that is distinct; or
\u2022a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer.
In accordance with IFRS\u00a015, variable considerations cannot be included in the estimated transaction price as long as it not highly probable that the related revenue will not reversed in the future. According to the level of uncertainty relating to the results of preclinical and clinical trials and the decisions relating to the regulatory approvals, variable considerations depending on these events are excluded from the transaction price as long as the trigger event is not highly probable. When the trigger event occurs, the corresponding milestone is added to the transaction price. Such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and net income (loss) in the period of adjustment.
The Company started the sale of LUMEVOQ\u00ae through the named patient Temporary Authorization for Use (\u201cATU nominative\u201d) granted by the National Drug Safety Agency (Agence Nationale de S\u00e9curit\u00e9 du M\u00e9dicament 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\u00a0the 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.
Management determined that the agreement with the CHNO of the Quinze-Vingts includes a variable amount. At contract inception, the variable consideration is estimated based on the expected value amount of consideration expected from the transaction and constrained to the extent it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with respect the variable consideration is subsequently resolved.
The methodology and assumptions used to estimate rebates are monitored and adjusted regularly in the light of contractual and legal obligations, historical trends, past experience and projected market conditions. In 2021, in the light of changes in\u00a0legal obligations, and projected market conditions, the Company adjusted the variable considerations for which it\u2019s highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur.
Net revenue is recorded, net of variable consideration related to certain allowances and accruals, at the time the customer obtains control of the product.
We record 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.
As of December\u00a031, 2024, the discounted value of the refund liability amounted to \u20ac4.7m. A 10% decrease or increase in the final price estimation would have an impact of +\u20ac0.6m and \u20ac(0.6)m respectively on the discounted refund liability amount and therefore the cumulated revenue recognized.
A new delay of one year in the repayment to the Urssaf, according to the date the Company could obtain the full marketing authorization and complete pricing negotiations, would have an impact of \u20ac 0.4m.
3.17Revenue
The core principle of this revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:
\u2022Step 1: Identify the contract with the customer,
\u2022Step 2: Identify the performance obligations in the contract,
\u2022Step 3: Determine the transaction price,
\u2022Step 4: Allocate the transaction price to the performance obligations in the contract,
\u2022Step 5: Recognize revenue when the company satisfies a performance obligation.
In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or\u00a0service that is distinct. A performance obligation meets IFRS\u00a015\u2019s definition of a \u201cdistinct\u201d good or service (or bundle of goods or services) if both of the following criteria are met:
\u2022a good or service (or bundle of goods or services) that is distinct; or
\u2022a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer.
In accordance with IFRS\u00a015, variable considerations cannot be included in the estimated transaction price as long as it not highly probable that the related revenue will not reversed in the future. According to the level of uncertainty relating to the results of preclinical and clinical trials and the decisions relating to the regulatory approvals, variable considerations depending on these events are excluded from the transaction price as long as the trigger event is not highly probable. When the trigger event occurs, the corresponding milestone is added to the transaction price. Such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and net income (loss) in the period of adjustment.
The Company started the sale of LUMEVOQ\u00ae through the named patient Temporary Authorization for Use (\u201cATU nominative\u201d) granted by the National Drug Safety Agency (Agence Nationale de S\u00e9curit\u00e9 du M\u00e9dicament 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\u00a0the 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.
Management determined that the agreement with the CHNO of the Quinze-Vingts includes a variable amount. At contract inception, the variable consideration is estimated based on the expected value amount of consideration expected from the transaction and constrained to the extent it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with respect the variable consideration is subsequently resolved.
The methodology and assumptions used to estimate rebates are monitored and adjusted regularly in the light of contractual and legal obligations, historical trends, past experience and projected market conditions. In 2021, in the light of changes in\u00a0legal obligations, and projected market conditions, the Company adjusted the variable considerations for which it\u2019s highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur.
Net revenue is recorded, net of variable consideration related to certain allowances and accruals, at the time the customer obtains control of the product.
We record 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.
As of December\u00a031, 2024, the discounted value of the refund liability amounted to \u20ac4.7m. A 10% decrease or increase in the final price estimation would have an impact of +\u20ac0.6m and \u20ac(0.6)m respectively on the discounted refund liability amount and therefore the cumulated revenue recognized.
A new delay of one year in the repayment to the Urssaf, according to the date the Company could obtain the full marketing authorization and complete pricing negotiations, would have an impact of \u20ac 0.4m.
Note 16:Income
The Company started the sale of LUMEVOQ\u00ae through the named patient Temporary Authorization for Use (\u201cATU nominative\u201d) granted by the National Drug Safety Agency (Agence Nationale de S\u00e9curit\u00e9 du M\u00e9dicament 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\u00a0the 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.
\u2022Management determined that the agreement with the CHNO of the Quinze Vingts includes a variable amount. At contract inception, the variable consideration is estimated based on the expected value amount of consideration expected from the transaction and constrained to the extent it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with respect the variable consideration is subsequently resolved.
\u2022The methodology and assumptions used to estimate rebates are monitored and adjusted regularly in the light of contractual and legal obligations, historical trends, past experience and projected market conditions.
\u2022Net revenue is recorded, net of variable consideration related to certain allowances and accruals, at the time the customer obtains control of the product i.e. after acceptance of the delivery by the customer.
During the period ended December 31, 2024, the revenue recognized relates solely to the change in valuation of the refund liability and the potential rebate obligations arising from the current regulatory framework for ATUs, following the Company\u2019s decision to withdraw its EMA application in April\u00a02023. The adjustment to the discounting results from rescheduling the date of the final reimbursement negotiation. This update was implemented as of December\u00a031, 2024.
The increase in revenue reflects the accretion of the discounted liability over time, as the present value of the future payment increased due to the passage of time (compound interest effect). No other transactions or changes related to variable consideration or revenue recognition occurred during this reporting period.
3.17Revenue
The core principle of this revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:
\u2022Step 1: Identify the contract with the customer,
\u2022Step 2: Identify the performance obligations in the contract,
\u2022Step 3: Determine the transaction price,
\u2022Step 4: Allocate the transaction price to the performance obligations in the contract,
\u2022Step 5: Recognize revenue when the company satisfies a performance obligation.
In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or\u00a0service that is distinct. A performance obligation meets IFRS\u00a015\u2019s definition of a \u201cdistinct\u201d good or service (or bundle of goods or services) if both of the following criteria are met:
\u2022a good or service (or bundle of goods or services) that is distinct; or
\u2022a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer.
In accordance with IFRS\u00a015, variable considerations cannot be included in the estimated transaction price as long as it not highly probable that the related revenue will not reversed in the future. According to the level of uncertainty relating to the results of preclinical and clinical trials and the decisions relating to the regulatory approvals, variable considerations depending on these events are excluded from the transaction price as long as the trigger event is not highly probable. When the trigger event occurs, the corresponding milestone is added to the transaction price. Such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and net income (loss) in the period of adjustment.
The Company started the sale of LUMEVOQ\u00ae through the named patient Temporary Authorization for Use (\u201cATU nominative\u201d) granted by the National Drug Safety Agency (Agence Nationale de S\u00e9curit\u00e9 du M\u00e9dicament 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\u00a0the 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.
Management determined that the agreement with the CHNO of the Quinze-Vingts includes a variable amount. At contract inception, the variable consideration is estimated based on the expected value amount of consideration expected from the transaction and constrained to the extent it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with respect the variable consideration is subsequently resolved.
The methodology and assumptions used to estimate rebates are monitored and adjusted regularly in the light of contractual and legal obligations, historical trends, past experience and projected market conditions. In 2021, in the light of changes in\u00a0legal obligations, and projected market conditions, the Company adjusted the variable considerations for which it\u2019s highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur.
Net revenue is recorded, net of variable consideration related to certain allowances and accruals, at the time the customer obtains control of the product.
We record 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.
As of December\u00a031, 2024, the discounted value of the refund liability amounted to \u20ac4.7m. A 10% decrease or increase in the final price estimation would have an impact of +\u20ac0.6m and \u20ac(0.6)m respectively on the discounted refund liability amount and therefore the cumulated revenue recognized.
A new delay of one year in the repayment to the Urssaf, according to the date the Company could obtain the full marketing authorization and complete pricing negotiations, would have an impact of \u20ac 0.4m.
Note 16:Income
The Company started the sale of LUMEVOQ\u00ae through the named patient Temporary Authorization for Use (\u201cATU nominative\u201d) granted by the National Drug Safety Agency (Agence Nationale de S\u00e9curit\u00e9 du M\u00e9dicament 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\u00a0the 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.
\u2022Management determined that the agreement with the CHNO of the Quinze Vingts includes a variable amount. At contract inception, the variable consideration is estimated based on the expected value amount of consideration expected from the transaction and constrained to the extent it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with respect the variable consideration is subsequently resolved.
\u2022The methodology and assumptions used to estimate rebates are monitored and adjusted regularly in the light of contractual and legal obligations, historical trends, past experience and projected market conditions.
\u2022Net revenue is recorded, net of variable consideration related to certain allowances and accruals, at the time the customer obtains control of the product i.e. after acceptance of the delivery by the customer.
During the period ended December 31, 2024, the revenue recognized relates solely to the change in valuation of the refund liability and the potential rebate obligations arising from the current regulatory framework for ATUs, following the Company\u2019s decision to withdraw its EMA application in April\u00a02023. The adjustment to the discounting results from rescheduling the date of the final reimbursement negotiation. This update was implemented as of December\u00a031, 2024.
The increase in revenue reflects the accretion of the discounted liability over time, as the present value of the future payment increased due to the passage of time (compound interest effect). No other transactions or changes related to variable consideration or revenue recognition occurred during this reporting period.
3.18Income tax
Deferred taxes are recognized for all the temporary differences arising from the difference between the tax basis and the accounting basis of the assets and liabilities that appear in the Financial Statements. The primary temporary differences are related to the tax losses that can be carried forward or backward. The legal tax rates as of the closing date are utilized to determine the deferred taxes.
The deferred tax assets are recognized in the Financial Statements only to the extent that it is likely that the future profits will be sufficient to absorb the losses that can be carried forward or backward. Considering its stage of development, which precludes the income projections from being sufficiently reliable to be made, the Group has not recognized deferred tax assets in relation to tax loss carryforward in the Consolidated Statement of Financial Position.
3.18Income tax
Deferred taxes are recognized for all the temporary differences arising from the difference between the tax basis and the accounting basis of the assets and liabilities that appear in the Financial Statements. The primary temporary differences are related to the tax losses that can be carried forward or backward. The legal tax rates as of the closing date are utilized to determine the deferred taxes.
The deferred tax assets are recognized in the Financial Statements only to the extent that it is likely that the future profits will be sufficient to absorb the losses that can be carried forward or backward. Considering its stage of development, which precludes the income projections from being sufficiently reliable to be made, the Group has not recognized deferred tax assets in relation to tax loss carryforward in the Consolidated Statement of Financial Position.
Note 21:Income tax expense
As mentioned in Note 3.12 \u2013 Accounting Principles \u2013 Research Tax Credit, subsidies and conditional advances, the French Research Tax Credit is not included in the line item income taxes but included in the line item other income.
As the Group is generating tax losses, no income tax expense has been recognized. Moreover, in accordance with the principles described in Note\u00a03.17, and with respect to the stage of development of the Company, no deferred tax assets have been recognized in the Financial Statements.
Since the second quarter of this year, the company has been undergoing a tax audit covering the last three years. While we do not currently anticipate any significant adjustments, the outcome of the audit remains uncertain until its conclusion.
As of December\u00a031, 2024, accumulated tax loss carryforwards since inception amounted to \u20ac288 million. This tax loss can be carried forward indefinitely and charged against future profits, in accordance with current French tax laws (CGI art.\u00a0209, I-al.\u00a03 et BIC-XIV-2000s).
Reconciliation between the effective and nominal income tax expense.
The following table shows the reconciliation between the effective and nominal tax expense at the statutory French rate of 25.00% as of December\u00a031, 2023 and 2024, excluding additional contributions:
| \n In thousands of Euros | \n\n As of December\u00a031, | \n|
|---|---|---|
| \n 2024 | \n\n 2023 | \n|
| \n Income before taxes | \n\n (14,001) | \n\n (26,220) | \n
| \n Statutory tax rate | \n\n 25% | \n\n 25% | \n
| \n Nominal tax expense | \n\n 3,500 | \n\n 6,555 | \n
| \n Increase/decrease in tax expense arising from: | \n\n \u00a0 | \n\n \u00a0 | \n
| \n \u2022Research tax credit | \n\n (271) | \n\n (424) | \n
| \n \u2022Share-based compensation | \n\n 196 | \n\n 147 | \n
| \n \u2022Non-recognition of deferred tax assets related to tax losses and temporary differences | \n\n (3,405) | \n\n (6,278) | \n
| \n \u2022Other differences | \n\n \u2014 | \n\n \u2014 | \n
| \n Income tax expense | \n\n (21) | \n\n 0 | \n
| \n Effective tax rate | \n\n 0% | \n\n 0% | \n
3.19Segment information
The Company operates in a single operating segment: the conducting of research and development of novel therapies for mitochondrial and neurodegenerative diseases of the eye and central nervous system in order to market them in the future. The assets, liabilities and operating loss realized are located mainly in France.
3.19Segment information
The Company operates in a single operating segment: the conducting of research and development of novel therapies for mitochondrial and neurodegenerative diseases of the eye and central nervous system in order to market them in the future. The assets, liabilities and operating loss realized are located mainly in France.
3.20Presentation of financial assets and financial liabilities measured at fair value
In accordance with IFRS\u00a07 Financial Statements: Disclosures, financial instruments are presented in three categories based on a hierarchical method used to determine their fair value:
\u2022level\u00a01: fair value calculated using quoted prices in an active market for identical assets and liabilities;
\u2022level\u00a02: fair value calculated using valuation techniques based on observable market data such as prices of similar assets and liabilities or parameters quoted in an active market; and
\u2022level\u00a03: fair value calculated using valuation techniques based wholly or partly on unobservable inputs such as prices in an inactive market or a valuation based on multiples for unlisted securities.
3.20Presentation of financial assets and financial liabilities measured at fair value
In accordance with IFRS\u00a07 Financial Statements: Disclosures, financial instruments are presented in three categories based on a hierarchical method used to determine their fair value:
\u2022level\u00a01: fair value calculated using quoted prices in an active market for identical assets and liabilities;
\u2022level\u00a02: fair value calculated using valuation techniques based on observable market data such as prices of similar assets and liabilities or parameters quoted in an active market; and
\u2022level\u00a03: fair value calculated using valuation techniques based wholly or partly on unobservable inputs such as prices in an inactive market or a valuation based on multiples for unlisted securities.
11.4European Investment Bank (\u201cEIB\u201d) credit facility
The Company entered in November 2022 into a \u20ac35\u00a0million credit facility agreement with the European Investment Bank (\u201cEIB\u201d), supported by the European Fund for Strategic Investment (EFSI).
The \u20ac35\u00a0million facility is divided into three tranches: \u20ac8\u00a0million for the first tranche (\u201cTranche\u00a0A\u201d), \u20ac12\u00a0million for the second tranche (\u201cTranche\u00a0B\u201d) and \u20ac15\u00a0million for the third tranche (\u201cTranche\u00a0C\u201d). The disbursement of each tranches, including the first disbursement of Tranche\u00a0A, is subject to certain conditions.
The disbursement of Tranche A was subject to, among other things:
\u2022the execution of a warrant agreement to be entered into with the EIB,
\u2022issue of the warrants relating to Tranche A,
\u2022the full repayment of the outstanding financing with Kreos,
\u2022the successful manufacturing of one engineering batch of LUMEVOQ\u00ae,
\u2022the decision by the Company to launch the validation batches (PPQ) manufacturing campaign, and
\u2022a cash injection of \u20ac10\u00a0million, in the form of equity, convertible bonds (to the extent that their repayment would be subordinated to the EIB\u2019s debt under the terms of a subordination agreement to be concluded) or license revenues.
The disbursement of Tranche\u00a0B is subject to, among other things:
\u2022the full drawdown of Tranche\u00a0A,
\u2022the issue of the warrants relating to Tranche\u00a0B,
\u2022the successful manufacturing campaign of several PPQ batches of LUMEVOQ\u00ae, and
\u2022the submission of responses to the Day\u00a0120 List of Questions to the European Medicines Agency (EMA) (condition satisfied in October 2022).
The disbursement of Tranche\u00a0C is subject to, among other things:
\u2022the full drawdown of Tranche\u00a0B,
\u2022the issue of the warrants relating to Tranche\u00a0C,
\u2022a cash injection of at least \u20ac20\u00a0million (in addition to the aforementioned \u20ac10\u00a0million), in the form of equity, convertible bonds (to the extent that their repayment would be subordinated to the EIB\u2019s debt under the terms of a\u00a0subordination agreement to be concluded) or license revenues,
\u2022the obtaining of EMA marketing authorization for LUMEVOQ\u00ae in Europe, and
\u2022a condition related to early access for patients.
The credit facility agreement will carry an annual fixed interest rate of 2% for all tranches and a decreasing fixed payment-in-kind (PIK) interest rate per tranche, with 5% for Tranche\u00a0A, 4% for Tranche\u00a0B and 3% for Tranche\u00a0C, and with a maturity of five years for each tranche. Such PIK interest shall be capitalized annually, payable at maturity and added to the outstanding principal amount of the credit and therefore bear interest.
The facility may, in certain circumstances, be prepaid, in whole or in part, with a prepayment fee, either at the election of the Company or upon the demand of EIB following certain prepayment events, including a change of control or a change in senior management of the Company.
Subject to certain terms and conditions, upon the occurrence of standard events of default (i.e. including payment default, misrepresentation, cross default), EIB may demand immediate repayment by the Company of all or part of the outstanding debt and/or cancel any undisbursed tranches.
The credit facility agreement is supplemented by an agreement to be concluded to issue warrants to the benefit of the EIB, pursuant to Article L.225-138 of the French Commercial Code, in varied amounts according to the relevant tranche.
The warrants will have a term of 20 years and will become exercisable upon the occurrence of certain events (such as a change of control or a repayment regarding one or several tranches), thus avoiding dilution for existing shareholders in the near term. Each warrant will entitle EIB to one ordinary share of the Company in exchange for the exercise price (subject to anti-dilution provisions). The exercise price for each warrant will be equal to 95% of the volume weighted average of the trading price of the Company\u2019s ordinary share over the last five trading days preceding the decision of the competent corporate body of the Company to issue such warrants. EIB shall be entitled to, as soon as the warrants become exercisable, a put option at its intrinsic value, (subject to a cap equal to the drawn amount under the facility agreement) requiring the Company to buy back all or part\u00a0of the warrants then exercisable, but not yet exercised. Furthermore, the Company shall be entitled to a call option on all outstanding warrants under certain limited circumstances.
On February\u00a06, 2023, as disbursement conditions for Tranche\u00a0A were met, including in particular issuance of 1,141,096\u00a0warrants to the EIB, and the Company received the payment of \u20ac8\u00a0million under Tranche A of the unsecured credit facility executed with the EIB.
No guarantee can be given as to the satisfaction by the Company of the conditions precedent and the completion of Tranche\u00a0B and Tranche\u00a0C.
The two financial instruments issued with respect to the drawdown of the \u20ac8\u00a0million Tranche\u00a0A (loans and warrants) on the date of issue are economically and intrinsically linked according to the IFRS\u00a09 criteria, thus the transaction is analyzed as a single hybrid instrument on issue in which there is a host contract representing a debt component (the loans) and a derivative (the warrants). Considering the specific and limited conditions of the transferability of the warrants, they represent an embedded derivative to the loan host contract in\u00a0accordance with IFRS 9 principles (i.e. their contractual features do not make them a separate financial instrument). Therefore, despite having two contracts - the warrants and the loan agreement - their inseparable nature means they are considered as a single unit.
The loan has been initially recognized at fair value, i.e., the issue proceeds (fair value of the consideration received) net of transaction costs incurred and the fair value at inception date of the derivative instruments of the debt concerned. Loans are subsequently measured at amortized cost, calculated using the effective interest rate method. Any difference between initial fair value and repayment value is recognized in the statement of income (loss) over the life of the loan using the effective interest rate method.
The effective interest rate is the discount rate at which the present value of all future cash flows (including transaction costs) over the expected life of the loan, or where appropriate, over a shorter period of time, is equal to the loan\u2019s initial carrying amount.
The fair value of the warrants has been estimated based on a Black & Scholes approach, including the put option and the attached cap.
The assumptions underlying the fair value estimation of the derivative instrument (Level 3)and results are detailed in the following tables:
| \n \u00a0 | \n\n 31/12/2024 | \n
|---|---|
| \n Number of instruments | \n\n 1,141,096 | \n
| \n Spot | \n\n 0.27 | \n
| \n Strike | \n\n 3.45 | \n
| \n Volatility | \n\n 70% | \n
| \n Risk free rate | \n\n 3.4% | \n
| \n Valuation date | \n\n 31/12/2024 | \n
| \n Expiration | \n\n 22/12/2042 | \n
| \n Term (years) | \n\n 18.0 | \n
| \n Maturity (years) | \n\n 18.0 | \n
| \n Unit fair value | \n\n 0% | \n
| \n Fair value | \n\n 0.21 | \n
The derivative instrument amounts to \u20ac0.2 million and the remaining debt to \u20ac5.8 million (\u20ac0.16m current and & \u20ac5.67m non-current) as of December 31, 2024.
In the context of renegotiation of the latest installment on the state-guaranteed loan (PGE) at the end of December 2024, the debt is considered as potentially due in full in the next 12\u00a0months. If the renegociation is successful, the part of the debt which is expected to be repaid within the next 12\u00a0month amounted to \u20ac0.2\u00a0million in relation with interest to be paid in the first semester 2025.
11.52024 Offering Warrant
May 2024 Offering Warrant
On May 7, 2024, the Company announced the success of its Offering, through (i) a capital increase reserved to specialized investors and (ii) a concurrent capital increase by way of a private placement, by the issuance of new shares with warrants attached, for a total gross amount of \u20ac9,282,515.80 (excluding the future net proceeds related to the exercise of the warrants). The subscription price for one ABSA is \u20ac0.395 (the \u201cOffering Price\u201d). The Offering Price is the same in the two concurrent capital increases.
The Company issued an aggregate of 23,500,040 units (the \u201cABSAs\u201d) each consisting of:
(i)one ordinary share of the Company, nominal value 0.025 per share, and
(ii)a warrant to purchase one ordinary share at the Exercise Price per Warrant Share.
The maturity of the warrants are 30\u00a0months (i.e. until November\u00a09, 2026).
In the event of a Fundamental Transaction, where a Public Offer results in shareholders tendering 50% or more of the outstanding shares in exchange for securities only (and not cash) at a per-share value below the Exercise Price (a \u201cPut Option Event\u201d), warrant holders have the option to sell their Warrants to the Company for cash. The buyback price per Warrant is determined using a Black-Scholes valuation, subject to certain conditions, including a cap at the initial valuation on the Issue Date and uniform pricing for all holders exercising the option.
Warrants may be exercised by the Holder, in whole or in part, for cash, at any time and from time to time during the period commencing on the Issue Date and ending on November\u00a09, 2026.
The exercise ratio is defined, basically, as one (1) Warrant exercisable for to one (1) Warrant Share with an exercise price set as \u20ac0,45.
The Company conducted a study to determine the appropriate accounting treatment for the warrants issued in May\u00a02024. Based on the results of this analysis, as the Terms and Condition provides for a situation in which instruments will be settled in cash: the warrants cannot be classified as equity and must be recognized as a financial liability measured at fair value on the date of issuance. Subsequently, they are required to be re-measured at fair value through profit or loss in accordance with IFRS\u00a09.
From a presentation standpoint, as per IAS 1.68 and as the derivative issued in May 2024 have a maturity of more than 12\u00a0months, hence it was considered to be classified as non-current even if the warrants can be exercised at any time, and considering the trade price and behaviors of holders cannot be anticipated.
The assumptions and results on May 7, 2024 are detailed in the following tables :
| \n \u00a0 | \n\n 05/03/2024 | \n
|---|---|
| \n Number of instruments | \n\n 23,500,040 | \n
| \n Spot | \n\n 0.40 | \n
| \n Strike | \n\n 0.45 | \n
| \n Volatility | \n\n 100.0% | \n
| \n Risk free rate | \n\n 3.1% | \n
| \n Valuation date | \n\n 05/03/2024 | \n
| \n Expiration | \n\n 09/11/2026 | \n
| \n Maturity (years) | \n\n 2.52 | \n
| \n Unit fair value | \n\n 0.22 | \n
| \n Fair value | \n\n 5,210 | \n
The assumptions and results on December 31, 2024 are detailed in the following tables :
| \n \u00a0 | \n\n 12/31/2024 | \n
|---|---|
| \n Number of instruments | \n\n 23,500,040 | \n
| \n Spot | \n\n 0.27 | \n
| \n Strike | \n\n 0.45 | \n
| \n Volatility | \n\n 70.0% | \n
| \n Risk rate | \n\n 7.3% | \n
| \n Valuation date | \n\n 12/31/2024 | \n
| \n Expiration | \n\n 09/11/2026 | \n
| \n Maturity (years) | \n\n 1.86 | \n
| \n Unit Fair value | \n\n 0.07 | \n
| \n Fair value | \n\n 1,613 | \n
As of December 31, 2024, the Company recognize a Non Current Financial Asset for \u20ac2.5 million and a non current financial liability (derivative) for \u20ac1.6 million.
November 2024 Offering Warrant
On November 1, 2024, the Company announced the success of its Offering, through (i) a capital increase reserved to specialized investors by the issuance of new shares with warrants attached, for a total gross amount of \u20ac2,775,621.30 (excluding the future net proceeds related to the exercise of the warrants). The subscription price for one ABSA is \u20ac0.3513 (the \u201cOffering Price\u201d).
The Company issued an aggregate of 7,901,000 units (the \u201cABSAs\u201d) each consisting of :
(i)one ordinary share of the Company, nominal value 0.025 per share, and
(ii)a warrant to purchase one ordinary share at the Exercise Price per Warrant Share.
The maturity of the warrants are 60\u00a0months (i.e. until November\u00a01, 2029).
In the event of a Fundamental Transaction, where a Public Offer results in shareholders tendering 50% or more of the outstanding shares in exchange for securities only (and not cash) at a per-share value below the Exercise Price (a \u201cPut Option Event\u201d), warrant holders have the option to sell their Warrants to the Company for cash. The buyback price per Warrant is determined using a Black-Scholes valuation, subject to certain conditions, including a cap at the initial valuation on the Issue Date and uniform pricing for all holders exercising the option.
Warrants may be exercised by the Holder, in whole or in part, for cash, at any time and from time to time during the period commencing on April 1, 2025 and ending on November\u00a01, 2029.
The exercise ratio is defined, basically, as one (1) Warrant exercisable for to one (1) Warrant Share with an exercise price set as \u20ac0,3513.
The Company conducted a study to determine the appropriate accounting treatment for the warrants issued in November\u00a02024. Based on the results of this analysis, as the Terms and Condition provides for a situation in which instruments will be settled in cash: the warrants cannot be classified as equity and must be recognized as a financial liability measured at fair value on the date of issuance. Subsequently, they are required to be re-measured at fair value through profit or loss in accordance with IFRS 9.
From a presentation standpoint, as per IAS 1.68 and as the derivative issued in November 2024 have a maturity of more than 12\u00a0months, hence it was considered to be classified as non-current even if the warrants can be exercised at any time after April 1, 2025, and considering the trade price and behaviors of holders cannot be anticipated.
The assumptions and results on November 1, 2024 are detailed in the following tables :
| \n \u00a0 | \n\n 11/01/2024 | \n
|---|---|
| \n Number of instruments | \n\n 7,901,000 | \n
| \n Spot | \n\n 0.31 | \n
| \n Strike | \n\n 0.35 | \n
| \n Volatility | \n\n 70.0% | \n
| \n Risk rate | \n\n 7.6% | \n
| \n Valuation date | \n\n 11/01/2024 | \n
| \n Expiration | \n\n 06/11/2029 | \n
| \n Maturity (years) | \n\n 5.01 | \n
| \n Unit Fair Value | \n\n 0.19 | \n
| \n Fair value | \n\n 1,502 | \n
The assumptions and results on December 31, 2024 are detailed in the following tables:
| \n \u00a0 | \n\n 12/31/2024 | \n
|---|---|
| \n Number of instruments | \n\n 7,901,000 | \n
| \n Spot | \n\n 0.27 | \n
| \n Strike | \n\n 0.35 | \n
| \n Volatility | \n\n 70.0% | \n
| \n Risk rate | \n\n 7.6% | \n
| \n Valuation date | \n\n 12/31/2024 | \n
| \n Expiration | \n\n 06/11/2029 | \n
| \n Maturity (years) | \n\n 4.85 | \n
| \n Unit Fair value | \n\n 0.16 | \n
| \n Fair value | \n\n 1,237 | \n
As of December 31, 2024, the Company recognize a Non Current Financial Asset for \u20ac0.8 million and a non current financial liability (derivative) for \u20ac1.2 million.
December 2024 Offering Warrant
On December 24, 2024, the Company issued an aggregate of 5,326,706 units (the \u201cABSAs\u201d) each consisting of:
(i)one ordinary share of the Company, nominal value 0.025 per share, and
(ii)a warrant to purchase one ordinary share at the Exercise Price per Warrant Share.
The maturity of the warrants is almost 58\u00a0months (i.e. until December\u00a031, 2029).
In the event of a Fundamental Transaction, where a Public Offer results in shareholders tendering 50% or more of the outstanding shares in exchange for securities only (and not cash) at a per-share value below the Exercise Price (a \u201cPut Option Event\u201d), warrant holders have the option to sell their Warrants to the Company for cash. The buyback price per Warrant is determined using a Black-Scholes valuation, subject to certain conditions, including a cap at the initial valuation on the Issue Date and uniform pricing for all holders exercising the option.
Warrants may be exercised by the Holder, in whole or in part, for cash, at any time and from time to time during the period commencing on April\u00a01, 2025 and ending on December\u00a031, 2029.
The exercise ratio is defined, basically, as one (1) Warrant exercisable for to one (1) Warrant Share with an exercise price set as \u20ac0.2816.
The Company conducted a study to determine the appropriate accounting treatment for the warrants issued in December 2024. Based on the results of this analysis, as the Terms and Condition provides for a situation in which instruments will be settled in cash: the warrants cannot be classified as equity and must be recognized as a financial liability measured at fair value on the date of issuance. Subsequently, they are required to be re-measured at fair value through profit or loss in accordance with IFRS 9.
From a presentation standpoint, as per IAS\u00a01.68 and as the derivative issued in December 2024 have a maturity of more than 12\u00a0months, hence it was considered to be classified as non-current even if the warrants can be exercised at any time after April\u00a01, 2025, and considering the trade price and behaviors of holders cannot be anticipated.
The assumptions and results on December 24, 2024 are detailed in the following tables :
| \n \u00a0 | \n\n 12/24/2024 | \n
|---|---|
| \n Number of instruments | \n\n 5,326,706 | \n
| \n Spot | \n\n 0.27 | \n
| \n Strike | \n\n 0.35 | \n
| \n Volatility | \n\n 70.0% | \n
| \n Risk rate | \n\n 7.4% | \n
| \n Valuation date | \n\n 12/24/2024 | \n
| \n Expiration | \n\n 12/31/2029 | \n
| \n Maturity (years) | \n\n 5.02 | \n
| \n Unit Fair value | \n\n 0.16 | \n
| \n Fair value | \n\n 861 | \n
The assumptions and results on December 31, 2024 are detailed in the following tables :
| \n \u00a0 | \n\n 12/31/2024 | \n
|---|---|
| \n Number of instruments | \n\n 5,326,706 | \n
| \n Spot | \n\n 0.27 | \n
| \n Strike | \n\n 0.35 | \n
| \n Volatility | \n\n 70.0% | \n
| \n Riskrate | \n\n 7.4% | \n
| \n Valuation date | \n\n 12/31/2024 | \n
| \n Expiration | \n\n 12/31/2029 | \n
| \n Maturity (years) | \n\n 5.00 | \n
| \n Unit Fair value | \n\n 0.16 | \n
| \n Fair value | \n\n 851 | \n
As of December 31, 2024, the Company recognize a Non Current Financial Asset for \u20ac0.6 million and a non current financial liability (derivative) for \u20ac0.9 million.
Impact of a \u00b120% change in volatility on the Fair Value ( level 3) of the warrants
| \n \n | \n\n Transaction Price | \n\n Initial Fair Value | \n\n Impact of the change Volatility | \n||
|---|---|---|---|---|---|
| \n -20% | \n\n 70% | \n\n +20% | \n|||
| \n Warrants May 2024 | \n\n 1.8 | \n\n 5.2 | \n\n 0.9 | \n\n 1.6 | \n\n 2.3 | \n
| \n Warrants November 2024 | \n\n 0.6 | \n\n 1.5 | \n\n 1.0 | \n\n 1.2 | \n\n 1.5 | \n
| \n Warrants December 2024 | \n\n 0.3 | \n\n 0.9 | \n\n 0.7 | \n\n 0.9 | \n\n 1.0 | \n
| \n Total | \n\n 2.7 | \n\n 7.6 | \n\n 2.6 | \n\n 3.7 | \n\n 4.8 | \n
11.6Maturity dates
Maturity dates of non-derivative financial liabilities as of December\u00a031, 2023, are as follows:
| \n In thousands of Euros | \n\n Gross amount | \n\n Less than one year | \n\n One to five years | \n\n More than five years | \n
|---|---|---|---|---|
| \n Conditional advances | \n\n 5,504 | \n\n 396 | \n\n 4,277 | \n\n 831 | \n
| \n Corporate bonds | \n\n 9,131 | \n\n 9,131 | \n\n 0 | \n\n 0 | \n
| \n Borrowings from Banks | \n\n 7,474 | \n\n 7,474 | \n\n 0 | \n\n 0 | \n
| \n Lease Liability | \n\n 1,823 | \n\n 775 | \n\n 1,048 | \n\n 0 | \n
| \n Total financial liabilities | \n\n 23,932 | \n\n 17,777 | \n\n 5,324 | \n\n 831 | \n
Maturity dates of non-derivative financial liabilities as of December\u00a031, 2024, are as follows:
| \n In thousands of Euros | \n\n Gross amount | \n\n Less than one year | \n\n One to five years | \n\n More than five years | \n
|---|---|---|---|---|
| \n Conditional advances | \n\n 4,700 | \n\n 0 | \n\n 3,379 | \n\n 1,321 | \n
| \n Corporate bonds | \n\n 6,973 | \n\n 6,973 | \n\n 0 | \n\n 0 | \n
| \n Borrowings from Banks | \n\n 6,341 | \n\n 6,341 | \n\n 0 | \n\n 0 | \n
| \n Lease Liability | \n\n 1,099 | \n\n 585 | \n\n 514 | \n\n 0 | \n
| \n Total financial liabilities | \n\n 19,113 | \n\n 13,899 | \n\n 3,892 | \n\n 1,321 | \n
The table below sets forth the changes in our liabilities arising from financing activities:
| \n \u00a0 | \n\n Note to the Consolidated financial statements | \n\n As of January\u00a01, 2024 | \n\n Financing cash flows | \n\n Non-cash changes | \n\n As of December 31, 2024 | \n||
|---|---|---|---|---|---|---|---|
| \n Derivative components | \n\n Amortized costs adjustments | \n\n Other changes | \n|||||
| \n Conditional advances | \n\n 11.2 | \n\n 5,504 | \n\n 0 | \n\n 0 | \n\n (804) | \n\n 0 | \n\n 4,700 | \n
| \n Heights convertible bonds(1) | \n\n 11.1 | \n\n 9,131 | \n\n 0 | \n\n 0 | \n\n 1,000 | \n\n (3,158) | \n\n 6,973 | \n
| \n Borrowing from banks | \n\n \u00a0 | \n\n 7,474 | \n\n (2,313) | \n\n 0 | \n\n 1,180 | \n\n 0 | \n\n 6,341 | \n
| \n o/w State-guaranteed loan | \n\n 11.3 | \n\n 2,583 | \n\n (2,153) | \n\n 0 | \n\n 67 | \n\n 0 | \n\n 496 | \n
| \n o/w EIB loan | \n\n 11.4 | \n\n 4,891 | \n\n (160) | \n\n 0 | \n\n 1,113 | \n\n 0 | \n\n 5,844 | \n
| \n Lease Liability | \n\n 6 | \n\n 1,823 | \n\n (742) | \n\n 0 | \n\n 0 | \n\n 18 | \n\n 1,099 | \n
| \n Derivative liabilities | \n\n \u00a0 | \n\n 559 | \n\n 2,745 | \n\n 656 | \n\n 0 | \n\n 0 | \n\n 3,960 | \n
| \n Total liabilities from financing activities | \n\n \u00a0 | \n\n 24,491 | \n\n (310) | \n\n 656 | \n\n 1,376 | \n\n (3,139) | \n\n 23,073 | \n
| \n (1) | \n\n \u20ac3,158m were converted on shares by reimbursement of 5 instalments in 2024. | \n
|---|
Fair value
The fair value of financial instruments traded on an active market is based on the market rate as of December\u00a031, 2024. The market prices used for the financial assets owned by the Company are the bid prices in effect on the market as of the valuation date.
The nominal value, less the provisions for depreciation, of the accounts receivable and current debts, is presumed to approximate the fair value of those items.
3.21Use of estimates
The Financial Statements are prepared in accordance with IFRS. The preparation of the Financial Statements requires management to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, income and expenses during the reporting period. The Group bases estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. The Group\u2019s actual results may differ from these estimates under different assumptions or conditions.
The full extent to which the global macro-economic context will directly or indirectly impact our business, results of operations and financial condition, including sales, expenses, reserves and allowances, the supply of our products and product candidates, clinical trials and research and development costs, will depend on future developments that are highly uncertain. We have made estimates of the impact of the global macro-economic context within our financial statements and there may be changes to those estimates in future periods. Actual results may differ from these estimates.
These estimates and judgments involve mainly:
\u2022the estimate of the repayments of the conditional advances obtained by the Company from public institutions, such as Bpifrance Financement. The anticipated repayments of the conditional advances are analyzed at each reporting period (see Note\u00a011), and the measurement of the conditional advances classified as financial liabilities based on the effective rate method;
\u2022the measurement of the fair value of the various equity instruments granted to employees, executives or non-employee members of the Board of Directors as well as scientific consultants and service providers, such as AGA, SO, BCE or BSA, which is performed on the basis of actuarial models; these models require the use by the Company of certain calculation assumptions such as the expected volatility of the underlying security (see Note\u00a019);
\u2022research and development expenses include estimates of the amount recognized over the year for subcontracts. At year-end closing, an analysis of the services already performed but not invoiced and / or already invoiced but not performed is carried out by the project managers and validated by the company\u2019s management (see Note\u00a018);
\u2022the measurement of the liability component of the convertible bond, calculated on the basis of the contractually agreed interest and amortization payments discounted at market interest rates (see Note\u00a011);
\u2022the measurement of the fair value of the derivatives directly linked with the convertible bonds and warrants, calculated on the basis of financial mathematic models (see Note\u00a011);
\u2022the estimate of the selling price for LUMEVOQ\u00ae to the CHNO of the Quinze-Vingts. The National Drug Safety Agency, granted to GenSight Biologics several Temporary Authorizations for Use (\u201cATU nominative\u201d). Variable consideration under IFRS\u00a015 are required to be estimated at contract inception. The Group assessed individual contracts to determine the estimated variable consideration and related constraints. In 2021, in the light of changes in legal obligations, and projected market conditions, the Company adjusted the variable considerations for which it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur. The valuation assumptions of variable considerations remained unchanged in 2024 compared with 2023. The total revenue presented in our financial statements as of December\u00a02023 and 2024 is therefore net from those variable considerations (see Note\u00a016);
\u2022the estimate of contingencies reserves related to ongoing confidential social and operational litigations.
Note 7:Other non-current financial assets
| \n (in thousands of Euros) | \n\n As of December\u00a031, | \n|
|---|---|---|
| \n 2024 | \n\n 2023 | \n|
| \n Guarantee deposits | \n\n 527 | \n\n 502 | \n
| \n Other Non-current financial assets | \n\n 3,897 | \n\n 0 | \n
| \n Total non-current financial assets | \n\n 4,424 | \n\n 502 | \n
The non-current financial assets correspond to the deposits paid to the lessors for the registered offices of the Group in Paris and New York and deposits paid to the CRO\u2019s in charge of the management of the long term follow up of several of our clinical trials.
The other Non current financial assets is linked to the recognition of a Day One loss related to the issuance of warrants in May\u00a02024, November 2024 and December 2024 (See Note\u00a011.5).
| \n (in thousands of Euros) | \n\n As of December\u00a031, | \n|
|---|---|---|
| \n 2024 | \n\n 2023 | \n|
| \n Balance at beginning of year | \n\n \u2014 | \n\n \u2014 | \n
| \n New transactions | \n\n 4,829 | \n\n \u2014 | \n
| \n Amounts recognised in profit and loss during the year | \n\n (932) | \n\n \u2014 | \n
| \n Other increases | \n\n \u2014 | \n\n \u2014 | \n
| \n Other decreases | \n\n \u2014 | \n\n \u2014 | \n
| \n Balance at end of year | \n\n 3,897 | \n\n \u2014 | \n
Note 7:Other non-current financial assets
| \n (in thousands of Euros) | \n\n As of December\u00a031, | \n|
|---|---|---|
| \n 2024 | \n\n 2023 | \n|
| \n Guarantee deposits | \n\n 527 | \n\n 502 | \n
| \n Other Non-current financial assets | \n\n 3,897 | \n\n 0 | \n
| \n Total non-current financial assets | \n\n 4,424 | \n\n 502 | \n
The non-current financial assets correspond to the deposits paid to the lessors for the registered offices of the Group in Paris and New York and deposits paid to the CRO\u2019s in charge of the management of the long term follow up of several of our clinical trials.
The other Non current financial assets is linked to the recognition of a Day One loss related to the issuance of warrants in May\u00a02024, November 2024 and December 2024 (See Note\u00a011.5).
| \n (in thousands of Euros) | \n\n As of December\u00a031, | \n|
|---|---|---|
| \n 2024 | \n\n 2023 | \n|
| \n Balance at beginning of year | \n\n \u2014 | \n\n \u2014 | \n
| \n New transactions | \n\n 4,829 | \n\n \u2014 | \n
| \n Amounts recognised in profit and loss during the year | \n\n (932) | \n\n \u2014 | \n
| \n Other increases | \n\n \u2014 | \n\n \u2014 | \n
| \n Other decreases | \n\n \u2014 | \n\n \u2014 | \n
| \n Balance at end of year | \n\n 3,897 | \n\n \u2014 | \n
Note 8:Other current assets
The other current assets are broken down as follows:
| \n (in thousands of Euros) | \n\n As of December\u00a031, | \n|
|---|---|---|
| \n 2024 | \n\n 2023 | \n|
| \n Prepayments | \n\n 563 | \n\n 326 | \n
| \n Research tax credit | \n\n 1,084 | \n\n 1,697 | \n
| \n Other tax receivables | \n\n 901 | \n\n 699 | \n
| \n Liquidity contract | \n\n 19 | \n\n 45 | \n
| \n Prepaid expenses | \n\n 280 | \n\n 1,625 | \n
| \n Other current assets | \n\n 31 | \n\n 3 | \n
| \n Total | \n\n 2,878 | \n\n 4,394 | \n
Prepayments are made of advances to suppliers.
Other tax receivables essentially refers to VAT receivables.
As of December\u00a031, 2024, prepaid expenses were primarily manufacturing costs, rental and scientific and marketing collaborations.
Research Tax Credit
The Company benefits from the provisions in Articles\u00a0244 quater B and 49 septies F of the French Tax Code related to the Research Tax Credit. In compliance with the principles described in Note\u00a03.11, the Research Tax Credit is recognized in the Consolidated Statement of Income (Loss) in \u201cother income\u201d during the year in which the eligible research expenditures are incurred.
Changes in the Research Tax Credit over the last two periods are presented as follows:
| \n Opening balance sheet receivable as of January\u00a01, 2023 | \n\n 2,176 | \n
|---|---|
| \n Other operating income | \n\n 1,697 | \n
| \n Payment received | \n\n (2,176) | \n
| \n Closing balance sheet receivable as of December\u00a031, 2023 | \n\n 1,697 | \n
| \n Other operating income | \n\n 1,125 | \n
| \n Payment received | \n\n (1,737) | \n
| \n Closing balance sheet receivable as of December\u00a031, 2024 | \n\n 1,084 | \n
Note 8:Other current assets
The other current assets are broken down as follows:
| \n (in thousands of Euros) | \n\n As of December\u00a031, | \n|
|---|---|---|
| \n 2024 | \n\n 2023 | \n|
| \n Prepayments | \n\n 563 | \n\n 326 | \n
| \n Research tax credit | \n\n 1,084 | \n\n 1,697 | \n
| \n Other tax receivables | \n\n 901 | \n\n 699 | \n
| \n Liquidity contract | \n\n 19 | \n\n 45 | \n
| \n Prepaid expenses | \n\n 280 | \n\n 1,625 | \n
| \n Other current assets | \n\n 31 | \n\n 3 | \n
| \n Total | \n\n 2,878 | \n\n 4,394 | \n
Prepayments are made of advances to suppliers.
Other tax receivables essentially refers to VAT receivables.
As of December\u00a031, 2024, prepaid expenses were primarily manufacturing costs, rental and scientific and marketing collaborations.
Research Tax Credit
The Company benefits from the provisions in Articles\u00a0244 quater B and 49 septies F of the French Tax Code related to the Research Tax Credit. In compliance with the principles described in Note\u00a03.11, the Research Tax Credit is recognized in the Consolidated Statement of Income (Loss) in \u201cother income\u201d during the year in which the eligible research expenditures are incurred.
Changes in the Research Tax Credit over the last two periods are presented as follows:
| \n Opening balance sheet receivable as of January\u00a01, 2023 | \n\n 2,176 | \n
|---|---|
| \n Other operating income | \n\n 1,697 | \n
| \n Payment received | \n\n (2,176) | \n
| \n Closing balance sheet receivable as of December\u00a031, 2023 | \n\n 1,697 | \n
| \n Other operating income | \n\n 1,125 | \n
| \n Payment received | \n\n (1,737) | \n
| \n Closing balance sheet receivable as of December\u00a031, 2024 | \n\n 1,084 | \n
Note 11:Financial liabilities
11.1Bond financing
Heights Capital
On December 23, 2022, the Company signed a subscription agreement for a \u20ac12 million convertible notes financing from Heights Capital. These \u20ac12 million financing were subscribed at 90% of the nominal value i.e. 10.8 million euros, 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 \u20ac90,000 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 euros per Note (the \u201cInitial Conversion Price\u201d).
The Initial Conversion Price corresponds to a premium of 30% on the volume-weighted average price of the Company\u2019s shares on the regulated market of Euronext Paris during the last trading session preceding the determination of the terms of issuance (the \u201cReference Price\u201d), thus complying with the price limits set by the 24th\u00a0resolution of the Company\u2019s combined general shareholders\u2019 meeting held on May\u00a025, 2022 (the volume-weighted average of the prices of the Company\u2019s 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. \u20ac3.07) (the \u201cPrice Limit\u201d) 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 \u20ac5,263 per Note, payable either
i.in new ordinary shares issued at a 10% discount to the market value of the Company\u2019s shares at the time of amortization (it being specified that any payments in shares will be in accordance with the Price Limit) or
ii.at the Company\u2019s option, in cash at 110% of the amount to be amortized.
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 \u20ac5\u00a0million within 12\u00a0months 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 \u201c18-Month Reset Date\u201d), 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 value weighted average of at least 20\u00a0out of 30 consecutive trading days in the 12-month period following the 18-month Reset Date exceeds 150% of the Initial Conversion Price.
Following discussions in the third quarter of 2023 between the Company and Heights Capital, a modification to the price limit and other modification have been approved by the shareholders at the shareholders' general meeting held on January 10, 2024. The new price limit equals \u20ac0.4527 corresponding to the closing price of the shares on the regulated market of Euronext in Paris on the last trading day preceding the date falling three business days prior to the publication of the convening notice to the shareholders\u2019 general meeting held on January 10, 2024 in the Bulletin d\u2019Annonce L\u00e9gale Obligatoire, less a 10.36% discount.
From June 2023, the 2022 OCAs were initially to be amortized quarterly in an amount of \u20ac5,263 per 2022 OCA (or \u20ac5,266 for the amortization corresponding to the final maturity date) (the \u201cAmortization Amount\u201c), payable either (i)\u00a0in new ordinary shares issued at a 10% discount to the market value of the Company\u2019s shares at the time of amortization (it being specified that all payments in shares have to comply with the price limit) or (ii)\u00a0at our option, in cash at 110% of the amount to be amortized, being specified that redemption in cash will become mandatory in the event that the price limit is crossed downwards.
The Company and Heights Capital have first decided to suspend the redemption of the 2022 OCAs until January\u00a031, 2024. Starting from March 2024 and until the maturity date of the 2022 OCAs, Heights Capital will be entitled to trigger an additional amortization payment for each 2022 OCA between two quarterly amortization periods up to the Amortization Amount payable (i) either in new ordinary shares at an amortization price equal to the one applicable on the preceding quarterly amortization date, (ii) or in cash at 110% of the amortizable amount, it being specified that the repayment in cash will become mandatory in the event that the price limit is crossed downwards (the \u201cAdditional Amortization Right\u201c). Heights Capital may only exercise this Additional Amortization Right up to a maximum of three times per calendar year, without being able to carry over this right to the following year. This Additional Amortization Right does not alter the maximum number of shares that may be issued, and only impacts the maturity of the 2022 OCAs. When exercising the Additional Amortization Right, Heights Capital will be subject to a global trading limitation of 15% of the average daily trading volume of the Company\u2019s shares for the duration of an amortization period. These amendments have been approved by the shareholders at the shareholders' general meeting held on January\u00a010, 2024.
In the context of the February 2024 capital increase, the Company and Heights Capital have further decided to suspend the amortization of the 2022 OCAs until April 30, 2024. A new amendment to the price limit may be presented to the shareholders at the next annual shareholders general meeting if the current price limit is above the market price of the shares at the time of convening such meeting, which should reflect our share price over the period comprising the last eight trading sessions at the time of convening the annual shareholders\u2019 general meeting, subject to a maximum discount of 20%.The number of shares that may be issued under the 2022 OCAs will be between 2,746,108 (in the event of conversion of all the 2022 OCAs at the Conversion Price) and 26,507,620 (in the event of amortization of all the 2022 OCAs at the current price limit of \u20ac0.4527), subject to redemption exclusively in shares.
On May 29, 2024 the Annual General Meeting of shareholders approved the modification of the Price Limit provided for in the terms and conditions of the convertible notes. The new price limit is \u20ac0,3272. As a result of this change, the maximum number of shares that may be created upon conversion of the Notes has been adjusted to 36,674,816.
On June 27, 2024, Gensight and the Noteholders amended and restated the Terms and conditions of the Notes. This amendment modifies the price limit as approved by the shareholders and provides for the possibility of Additional Amortisation Right of the Noteholders. These Additional Amortisation Rights enable the Noteholders, from June\u00a028, 2024 up to the maturity date (unchanged - still December\u00a02027), to require partial redemption of outstanding notes by making an additional instalment payment (with a notional redemption amount per Note of \u20ac5,263 \u2013 also not modified). Such Additional Instalment Payment being payable with the same characteristics as the Scheduled instalments, which are:
\u2022by the delivery of a number of freely-tradable Shares equal to the Additional Notional Redemption Amount divided by the Instalment Share Settlement Price for the applicable Additional Instalment Date
\u2022by the payment in cash of an amount equal to 110% of the applicable Additional Notional Redemption Amount
And a maximum of:
\u2022one Additional Instalment Date may occur during any period from a Scheduled Instalment Date to the next Scheduled Instalment Date (whether or not any Additional Instalment Date occurred in any previous such periods)
\u2022and three Additional Instalment Dates may occur during any calendar year (for the avoidance of doubt, whether or not any Additional Instalment Date occurred in any previous calendar year).
These Additional Instalments correspond to the payment of the first four unpaid Scheduled Instalments as well as any future instalments that may be delayed or anticipated.
On June 28,2024, the 631,560 installment was converted into 1,930,195 new shares. Immediately before conversion, the amortized cost of the debt component and the fair value of the derivative were updated and upon conversion, the bonds converted into new shares were derecognized from the balance sheet.\u00a0
In accordance with the amendment of terms of the Notes on June\u00a027, 2024, the Company conduct an analysis of the modification and conclude that it represents a substantial modification of the terms under IFRS 9.
As of the amendment date (June\u00a027, 2024), the debt and derivative are derecognized, and a new instrument is registered. The difference between the carrying amount of the old debt/derivative and the fair value of the new instrument (calculated on the basis of market conditions at the derecognition date) are recognized in profit or loss for an total amount of \u20ac0.4m.
The new assumptions are detailed in the following tables :
| \n \u00a0 | \n\n June\u00a027, 2024 | \n
|---|---|
| \n Stock price | \n\n \u20ac0.34 | \n
| \n Volatility | \n\n 107.18% | \n
| \n Adjusted Volatility | \n\n 87.76% (20% haircut) | \n
| \n Dividend yield | \n\n 0.00% | \n
| \n Risk Free Rate | \n\n 2.56% | \n
| \n Credit Spread | \n\n (change in OAS of -68\u00a0bps using 75th percentile of CCC composite) | \n
| \n Credit Rating | \n\n \u201cCCC Composite\u201d | \n
The valuation was based on unobservable inputs (level\u00a03), using the Black & Scholes method.
Based on these new assumptions, as of June 27, 2024, the total instrument amounts to \u20ac8.85m with fair value of the derivative instrument at \u20ac0.07m and fair value of the debt component at \u20ac8.78m. The new effective interest rate of the debt component is 28 % (compared with 26% previously).
On August 30, 2024, September 28, 2024, December\u00a02, 2024 and December 28, 2024, the 631,560 installment was converted into 1,930,195 new shares each time, Immediately before conversion, the amortized cost of the debt component and the fair value of the derivative were updated and upon conversion. The bonds converted into new shares were derecognized from the balance sheet upon conversion.
The amortization plan was also revised according to the best estimates of cash flows as of December 31, 2024, and according to the new contractual clauses applicable on this date and integrate the conversion that occurred on June, August, September, November and December 2024.
The assumptions are detailed in the following tables:
| \n \u00a0 | \n\n December\u00a031, 2024 | \n
|---|---|
| \n Stock price | \n\n \u20ac 0.27 | \n
| \n Volatility | \n\n 70% | \n
| \n Dividend yield | \n\n 0.00% | \n
| \n Risk Free Rate | \n\n 2.01% | \n
| \n Credit Spread | \n\n 22.59% | \n
| \n Credit Rating | \n\n \u201cCCC Composite\u201d | \n
Considering those facts and circumstances, as of December 31, 2024, the derivative instrument amounts to \u20ac0.02 million and the remaining debt to \u20ac7 million.
In the context of renegotiation of the latest installment on the state-guaranteed loan (PGE) at the end of December 2024, the debt is considered as potentially due in full in the next 12\u00a0months. The non-current portion of debt amounts would have been \u20ac3.8 million as of December\u00a031, 2024.
Further the amendments to IAS 1, which were issued by the IASB and are effective for annual periods beginning on or after January\u00a01, 2024, clarify how to classify liabilities as current or non-current, particularly for financial instruments such as convertible bonds.
A liability is classified as current if the entity does not have an unconditional right to defer settlement for at least 12\u00a0months after the reporting date. For convertible bonds without an equity component, if the conversion option is exercisable by the bondholder within 12\u00a0months after the reporting date, the bond must be classified as current, even if the expected settlement is in shares. Therefore if the bond includes a conversion option that can be exercised by the holder within 12\u00a0months of the reporting date, the entire liability must be classified as current.
11.2Conditional advances
In 2014, we received a grant from Bpifrance Financement of both non-refundable subsidies and conditional advances in relation to the development of our optogenetics technology platform. The program would be funded according to a specified schedule set forth in the contract, subject to completion of milestones. As the program advances, we provided Bpifrance Financement with interim progress reports and a final report when the funded project would end. Based on these reports, we were entitled to conditional advances from Bpifrance Financement. Each award of an advance was made to help fund a specific development milestone. The total intended amount of the conditional advances initially granted was \u20ac5.7\u00a0million, of which of wich 4.1 million was received.
Repayment schedule of the conditional advances is as follows:
\u2022\u20ac550 K from June 30, 2026;
\u2022\u20ac1,000 K from June 30, 2027;
\u2022\u20ac1,500 K from June 30, 2028; and
\u2022\u20ac1,046 K from June 30, 2029;
Following the repayment of all of the conditional advances, the Company may be required to make additional payments over a period of two years, depending on whether the Company reaches cumulative revenues, excluding taxes, of \u20ac80.0\u00a0million. These additional repayments should correspond to the difference between 140% of the conditional advance, considering an interest rate of 1.44% and the amount already reimbursed as per the repayment schedule; and should be done within 15\u00a0years following the first year of reimbursement, i.e. 2041.
The obligation to repay these amounts is based on the technical and commercial success of the funded program, as determined by the revenues forecast or revenues deriving from direct or indirect exploitation of those products and results of its optogenetics technology platform.\u00a0In the event Bpifrance Financement determines that the program is not successful, Bpifrance Financement will meet with the Company to assess the impact on the repayments and the repayment schedule.
The Company has decided to include the future cash flows resulting from the additional payments in the calculation of the EIR, based on the first sales projections of its second product.
The current and non-current portions of the financial liability recognized in our financial statements associated with these conditional advances are determined based on the applicable reimbursement schedules at the end of each reporting period. The portion of the conditional advances for terms longer than one year are classified as non-current liabilities while the portion for terms of less than one year are classified as current liabilities.
Following the change in the estimation of the repayment schedule (especially additional payments regarding the situation of the Company and a delay needed to develop this program), the Company recalculated the present value of its debt. The impact on the December 2024 financial statements is a non cash financial gain of 1.1m, resulting from the extension of the repayment period. As at December 31, 2024, the total debt amount to \u20ac 4.7 million and is recorded in non-current liabilities.
The table below presents the details of the financial liabilities recorded on the statements of financial position:
| \n In thousands of Euros | \n\n \n | \n
|---|---|
| \n Balance as of January 1, 2024 | \n\n 5,504 | \n
| \n Receipts | \n\n \u2014 | \n
| \n Repayments | \n\n \u2014 | \n
| \n Other | \n\n (1,111) | \n
| \n Current portion | \n\n \u2014 | \n
| \n Accrued interest | \n\n 306 | \n
| \n Balance as of December\u00a031, 2024 | \n\n 4,700 | \n
| \n Non-current portion | \n\n 4,700 | \n
| \n Current portion | \n\n 0 | \n
11.3State-guaranteed loan
The Company obtained a \u20ac6.75\u00a0million loan from a bank syndicate formed with Cr\u00e9dit Industriel et Commercial (CIC), BNP Paribas and Bpifrance, in the form of a state-guaranteed loan (Pr\u00eat Garanti par l\u2019\u00c9tat) (the \u201cPGE\u201d).
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\u00a0months. 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%.
In the context of the renegotiation of financial obligations, the Company and its creditor banks (BNP Paribas, CIC and Bpifrance) (the \"Banks\"), previously agreed to suspend the payment of the principal, subject to certain conditions. The parties have now agreed to extend the maturity of the loans until December 2024 and to adopt a new payment schedule for the outstanding principal and interest, featuring 6 monthly instalments with gradual amortization (5% of outstanding principal per month over July, August and September 2024, and then 28.3% over October, November and December\u00a02024). A\u00a0new interest rate has been fixed.\u00a0
Following discussions with banks, the company has only partially settled its latest installment on the state-guaranteed loan (PGE) at the end of December and is currently negotiating with the banks to determine a revised payment schedule for this final installment.
As at December 31, 2024, the remaining debt amounts to \u20ac0,5\u00a0million and is recorded as current liabilities.
11.4European Investment Bank (\u201cEIB\u201d) credit facility
The Company entered in November 2022 into a \u20ac35\u00a0million credit facility agreement with the European Investment Bank (\u201cEIB\u201d), supported by the European Fund for Strategic Investment (EFSI).
The \u20ac35\u00a0million facility is divided into three tranches: \u20ac8\u00a0million for the first tranche (\u201cTranche\u00a0A\u201d), \u20ac12\u00a0million for the second tranche (\u201cTranche\u00a0B\u201d) and \u20ac15\u00a0million for the third tranche (\u201cTranche\u00a0C\u201d). The disbursement of each tranches, including the first disbursement of Tranche\u00a0A, is subject to certain conditions.
The disbursement of Tranche A was subject to, among other things:
\u2022the execution of a warrant agreement to be entered into with the EIB,
\u2022issue of the warrants relating to Tranche A,
\u2022the full repayment of the outstanding financing with Kreos,
\u2022the successful manufacturing of one engineering batch of LUMEVOQ\u00ae,
\u2022the decision by the Company to launch the validation batches (PPQ) manufacturing campaign, and
\u2022a cash injection of \u20ac10\u00a0million, in the form of equity, convertible bonds (to the extent that their repayment would be subordinated to the EIB\u2019s debt under the terms of a subordination agreement to be concluded) or license revenues.
The disbursement of Tranche\u00a0B is subject to, among other things:
\u2022the full drawdown of Tranche\u00a0A,
\u2022the issue of the warrants relating to Tranche\u00a0B,
\u2022the successful manufacturing campaign of several PPQ batches of LUMEVOQ\u00ae, and
\u2022the submission of responses to the Day\u00a0120 List of Questions to the European Medicines Agency (EMA) (condition satisfied in October 2022).
The disbursement of Tranche\u00a0C is subject to, among other things:
\u2022the full drawdown of Tranche\u00a0B,
\u2022the issue of the warrants relating to Tranche\u00a0C,
\u2022a cash injection of at least \u20ac20\u00a0million (in addition to the aforementioned \u20ac10\u00a0million), in the form of equity, convertible bonds (to the extent that their repayment would be subordinated to the EIB\u2019s debt under the terms of a\u00a0subordination agreement to be concluded) or license revenues,
\u2022the obtaining of EMA marketing authorization for LUMEVOQ\u00ae in Europe, and
\u2022a condition related to early access for patients.
The credit facility agreement will carry an annual fixed interest rate of 2% for all tranches and a decreasing fixed payment-in-kind (PIK) interest rate per tranche, with 5% for Tranche\u00a0A, 4% for Tranche\u00a0B and 3% for Tranche\u00a0C, and with a maturity of five years for each tranche. Such PIK interest shall be capitalized annually, payable at maturity and added to the outstanding principal amount of the credit and therefore bear interest.
The facility may, in certain circumstances, be prepaid, in whole or in part, with a prepayment fee, either at the election of the Company or upon the demand of EIB following certain prepayment events, including a change of control or a change in senior management of the Company.
Subject to certain terms and conditions, upon the occurrence of standard events of default (i.e. including payment default, misrepresentation, cross default), EIB may demand immediate repayment by the Company of all or part of the outstanding debt and/or cancel any undisbursed tranches.
The credit facility agreement is supplemented by an agreement to be concluded to issue warrants to the benefit of the EIB, pursuant to Article L.225-138 of the French Commercial Code, in varied amounts according to the relevant tranche.
The warrants will have a term of 20 years and will become exercisable upon the occurrence of certain events (such as a change of control or a repayment regarding one or several tranches), thus avoiding dilution for existing shareholders in the near term. Each warrant will entitle EIB to one ordinary share of the Company in exchange for the exercise price (subject to anti-dilution provisions). The exercise price for each warrant will be equal to 95% of the volume weighted average of the trading price of the Company\u2019s ordinary share over the last five trading days preceding the decision of the competent corporate body of the Company to issue such warrants. EIB shall be entitled to, as soon as the warrants become exercisable, a put option at its intrinsic value, (subject to a cap equal to the drawn amount under the facility agreement) requiring the Company to buy back all or part\u00a0of the warrants then exercisable, but not yet exercised. Furthermore, the Company shall be entitled to a call option on all outstanding warrants under certain limited circumstances.
On February\u00a06, 2023, as disbursement conditions for Tranche\u00a0A were met, including in particular issuance of 1,141,096\u00a0warrants to the EIB, and the Company received the payment of \u20ac8\u00a0million under Tranche A of the unsecured credit facility executed with the EIB.
No guarantee can be given as to the satisfaction by the Company of the conditions precedent and the completion of Tranche\u00a0B and Tranche\u00a0C.
The two financial instruments issued with respect to the drawdown of the \u20ac8\u00a0million Tranche\u00a0A (loans and warrants) on the date of issue are economically and intrinsically linked according to the IFRS\u00a09 criteria, thus the transaction is analyzed as a single hybrid instrument on issue in which there is a host contract representing a debt component (the loans) and a derivative (the warrants). Considering the specific and limited conditions of the transferability of the warrants, they represent an embedded derivative to the loan host contract in\u00a0accordance with IFRS 9 principles (i.e. their contractual features do not make them a separate financial instrument). Therefore, despite having two contracts - the warrants and the loan agreement - their inseparable nature means they are considered as a single unit.
The loan has been initially recognized at fair value, i.e., the issue proceeds (fair value of the consideration received) net of transaction costs incurred and the fair value at inception date of the derivative instruments of the debt concerned. Loans are subsequently measured at amortized cost, calculated using the effective interest rate method. Any difference between initial fair value and repayment value is recognized in the statement of income (loss) over the life of the loan using the effective interest rate method.
The effective interest rate is the discount rate at which the present value of all future cash flows (including transaction costs) over the expected life of the loan, or where appropriate, over a shorter period of time, is equal to the loan\u2019s initial carrying amount.
The fair value of the warrants has been estimated based on a Black & Scholes approach, including the put option and the attached cap.
The assumptions underlying the fair value estimation of the derivative instrument (Level 3)and results are detailed in the following tables:
| \n \u00a0 | \n\n 31/12/2024 | \n
|---|---|
| \n Number of instruments | \n\n 1,141,096 | \n
| \n Spot | \n\n 0.27 | \n
| \n Strike | \n\n 3.45 | \n
| \n Volatility | \n\n 70% | \n
| \n Risk free rate | \n\n 3.4% | \n
| \n Valuation date | \n\n 31/12/2024 | \n
| \n Expiration | \n\n 22/12/2042 | \n
| \n Term (years) | \n\n 18.0 | \n
| \n Maturity (years) | \n\n 18.0 | \n
| \n Unit fair value | \n\n 0% | \n
| \n Fair value | \n\n 0.21 | \n
The derivative instrument amounts to \u20ac0.2 million and the remaining debt to \u20ac5.8 million (\u20ac0.16m current and & \u20ac5.67m non-current) as of December 31, 2024.
In the context of renegotiation of the latest installment on the state-guaranteed loan (PGE) at the end of December 2024, the debt is considered as potentially due in full in the next 12\u00a0months. If the renegociation is successful, the part of the debt which is expected to be repaid within the next 12\u00a0month amounted to \u20ac0.2\u00a0million in relation with interest to be paid in the first semester 2025.
11.52024 Offering Warrant
May 2024 Offering Warrant
On May 7, 2024, the Company announced the success of its Offering, through (i) a capital increase reserved to specialized investors and (ii) a concurrent capital increase by way of a private placement, by the issuance of new shares with warrants attached, for a total gross amount of \u20ac9,282,515.80 (excluding the future net proceeds related to the exercise of the warrants). The subscription price for one ABSA is \u20ac0.395 (the \u201cOffering Price\u201d). The Offering Price is the same in the two concurrent capital increases.
The Company issued an aggregate of 23,500,040 units (the \u201cABSAs\u201d) each consisting of:
(i)one ordinary share of the Company, nominal value 0.025 per share, and
(ii)a warrant to purchase one ordinary share at the Exercise Price per Warrant Share.
The maturity of the warrants are 30\u00a0months (i.e. until November\u00a09, 2026).
In the event of a Fundamental Transaction, where a Public Offer results in shareholders tendering 50% or more of the outstanding shares in exchange for securities only (and not cash) at a per-share value below the Exercise Price (a \u201cPut Option Event\u201d), warrant holders have the option to sell their Warrants to the Company for cash. The buyback price per Warrant is determined using a Black-Scholes valuation, subject to certain conditions, including a cap at the initial valuation on the Issue Date and uniform pricing for all holders exercising the option.
Warrants may be exercised by the Holder, in whole or in part, for cash, at any time and from time to time during the period commencing on the Issue Date and ending on November\u00a09, 2026.
The exercise ratio is defined, basically, as one (1) Warrant exercisable for to one (1) Warrant Share with an exercise price set as \u20ac0,45.
The Company conducted a study to determine the appropriate accounting treatment for the warrants issued in May\u00a02024. Based on the results of this analysis, as the Terms and Condition provides for a situation in which instruments will be settled in cash: the warrants cannot be classified as equity and must be recognized as a financial liability measured at fair value on the date of issuance. Subsequently, they are required to be re-measured at fair value through profit or loss in accordance with IFRS\u00a09.
From a presentation standpoint, as per IAS 1.68 and as the derivative issued in May 2024 have a maturity of more than 12\u00a0months, hence it was considered to be classified as non-current even if the warrants can be exercised at any time, and considering the trade price and behaviors of holders cannot be anticipated.
The assumptions and results on May 7, 2024 are detailed in the following tables :
| \n \u00a0 | \n\n 05/03/2024 | \n
|---|---|
| \n Number of instruments | \n\n 23,500,040 | \n
| \n Spot | \n\n 0.40 | \n
| \n Strike | \n\n 0.45 | \n
| \n Volatility | \n\n 100.0% | \n
| \n Risk free rate | \n\n 3.1% | \n
| \n Valuation date | \n\n 05/03/2024 | \n
| \n Expiration | \n\n 09/11/2026 | \n
| \n Maturity (years) | \n\n 2.52 | \n
| \n Unit fair value | \n\n 0.22 | \n
| \n Fair value | \n\n 5,210 | \n
The assumptions and results on December 31, 2024 are detailed in the following tables :
| \n \u00a0 | \n\n 12/31/2024 | \n
|---|---|
| \n Number of instruments | \n\n 23,500,040 | \n
| \n Spot | \n\n 0.27 | \n
| \n Strike | \n\n 0.45 | \n
| \n Volatility | \n\n 70.0% | \n
| \n Risk rate | \n\n 7.3% | \n
| \n Valuation date | \n\n 12/31/2024 | \n
| \n Expiration | \n\n 09/11/2026 | \n
| \n Maturity (years) | \n\n 1.86 | \n
| \n Unit Fair value | \n\n 0.07 | \n
| \n Fair value | \n\n 1,613 | \n
As of December 31, 2024, the Company recognize a Non Current Financial Asset for \u20ac2.5 million and a non current financial liability (derivative) for \u20ac1.6 million.
November 2024 Offering Warrant
On November 1, 2024, the Company announced the success of its Offering, through (i) a capital increase reserved to specialized investors by the issuance of new shares with warrants attached, for a total gross amount of \u20ac2,775,621.30 (excluding the future net proceeds related to the exercise of the warrants). The subscription price for one ABSA is \u20ac0.3513 (the \u201cOffering Price\u201d).
The Company issued an aggregate of 7,901,000 units (the \u201cABSAs\u201d) each consisting of :
(i)one ordinary share of the Company, nominal value 0.025 per share, and
(ii)a warrant to purchase one ordinary share at the Exercise Price per Warrant Share.
The maturity of the warrants are 60\u00a0months (i.e. until November\u00a01, 2029).
In the event of a Fundamental Transaction, where a Public Offer results in shareholders tendering 50% or more of the outstanding shares in exchange for securities only (and not cash) at a per-share value below the Exercise Price (a \u201cPut Option Event\u201d), warrant holders have the option to sell their Warrants to the Company for cash. The buyback price per Warrant is determined using a Black-Scholes valuation, subject to certain conditions, including a cap at the initial valuation on the Issue Date and uniform pricing for all holders exercising the option.
Warrants may be exercised by the Holder, in whole or in part, for cash, at any time and from time to time during the period commencing on April 1, 2025 and ending on November\u00a01, 2029.
The exercise ratio is defined, basically, as one (1) Warrant exercisable for to one (1) Warrant Share with an exercise price set as \u20ac0,3513.
The Company conducted a study to determine the appropriate accounting treatment for the warrants issued in November\u00a02024. Based on the results of this analysis, as the Terms and Condition provides for a situation in which instruments will be settled in cash: the warrants cannot be classified as equity and must be recognized as a financial liability measured at fair value on the date of issuance. Subsequently, they are required to be re-measured at fair value through profit or loss in accordance with IFRS 9.
From a presentation standpoint, as per IAS 1.68 and as the derivative issued in November 2024 have a maturity of more than 12\u00a0months, hence it was considered to be classified as non-current even if the warrants can be exercised at any time after April 1, 2025, and considering the trade price and behaviors of holders cannot be anticipated.
The assumptions and results on November 1, 2024 are detailed in the following tables :
| \n \u00a0 | \n\n 11/01/2024 | \n
|---|---|
| \n Number of instruments | \n\n 7,901,000 | \n
| \n Spot | \n\n 0.31 | \n
| \n Strike | \n\n 0.35 | \n
| \n Volatility | \n\n 70.0% | \n
| \n Risk rate | \n\n 7.6% | \n
| \n Valuation date | \n\n 11/01/2024 | \n
| \n Expiration | \n\n 06/11/2029 | \n
| \n Maturity (years) | \n\n 5.01 | \n
| \n Unit Fair Value | \n\n 0.19 | \n
| \n Fair value | \n\n 1,502 | \n
The assumptions and results on December 31, 2024 are detailed in the following tables:
| \n \u00a0 | \n\n 12/31/2024 | \n
|---|---|
| \n Number of instruments | \n\n 7,901,000 | \n
| \n Spot | \n\n 0.27 | \n
| \n Strike | \n\n 0.35 | \n
| \n Volatility | \n\n 70.0% | \n
| \n Risk rate | \n\n 7.6% | \n
| \n Valuation date | \n\n 12/31/2024 | \n
| \n Expiration | \n\n 06/11/2029 | \n
| \n Maturity (years) | \n\n 4.85 | \n
| \n Unit Fair value | \n\n 0.16 | \n
| \n Fair value | \n\n 1,237 | \n
As of December 31, 2024, the Company recognize a Non Current Financial Asset for \u20ac0.8 million and a non current financial liability (derivative) for \u20ac1.2 million.
December 2024 Offering Warrant
On December 24, 2024, the Company issued an aggregate of 5,326,706 units (the \u201cABSAs\u201d) each consisting of:
(i)one ordinary share of the Company, nominal value 0.025 per share, and
(ii)a warrant to purchase one ordinary share at the Exercise Price per Warrant Share.
The maturity of the warrants is almost 58\u00a0months (i.e. until December\u00a031, 2029).
In the event of a Fundamental Transaction, where a Public Offer results in shareholders tendering 50% or more of the outstanding shares in exchange for securities only (and not cash) at a per-share value below the Exercise Price (a \u201cPut Option Event\u201d), warrant holders have the option to sell their Warrants to the Company for cash. The buyback price per Warrant is determined using a Black-Scholes valuation, subject to certain conditions, including a cap at the initial valuation on the Issue Date and uniform pricing for all holders exercising the option.
Warrants may be exercised by the Holder, in whole or in part, for cash, at any time and from time to time during the period commencing on April\u00a01, 2025 and ending on December\u00a031, 2029.
The exercise ratio is defined, basically, as one (1) Warrant exercisable for to one (1) Warrant Share with an exercise price set as \u20ac0.2816.
The Company conducted a study to determine the appropriate accounting treatment for the warrants issued in December 2024. Based on the results of this analysis, as the Terms and Condition provides for a situation in which instruments will be settled in cash: the warrants cannot be classified as equity and must be recognized as a financial liability measured at fair value on the date of issuance. Subsequently, they are required to be re-measured at fair value through profit or loss in accordance with IFRS 9.
From a presentation standpoint, as per IAS\u00a01.68 and as the derivative issued in December 2024 have a maturity of more than 12\u00a0months, hence it was considered to be classified as non-current even if the warrants can be exercised at any time after April\u00a01, 2025, and considering the trade price and behaviors of holders cannot be anticipated.
The assumptions and results on December 24, 2024 are detailed in the following tables :
| \n \u00a0 | \n\n 12/24/2024 | \n
|---|---|
| \n Number of instruments | \n\n 5,326,706 | \n
| \n Spot | \n\n 0.27 | \n
| \n Strike | \n\n 0.35 | \n
| \n Volatility | \n\n 70.0% | \n
| \n Risk rate | \n\n 7.4% | \n
| \n Valuation date | \n\n 12/24/2024 | \n
| \n Expiration | \n\n 12/31/2029 | \n
| \n Maturity (years) | \n\n 5.02 | \n
| \n Unit Fair value | \n\n 0.16 | \n
| \n Fair value | \n\n 861 | \n
The assumptions and results on December 31, 2024 are detailed in the following tables :
| \n \u00a0 | \n\n 12/31/2024 | \n
|---|---|
| \n Number of instruments | \n\n 5,326,706 | \n
| \n Spot | \n\n 0.27 | \n
| \n Strike | \n\n 0.35 | \n
| \n Volatility | \n\n 70.0% | \n
| \n Riskrate | \n\n 7.4% | \n
| \n Valuation date | \n\n 12/31/2024 | \n
| \n Expiration | \n\n 12/31/2029 | \n
| \n Maturity (years) | \n\n 5.00 | \n
| \n Unit Fair value | \n\n 0.16 | \n
| \n Fair value | \n\n 851 | \n
As of December 31, 2024, the Company recognize a Non Current Financial Asset for \u20ac0.6 million and a non current financial liability (derivative) for \u20ac0.9 million.
Impact of a \u00b120% change in volatility on the Fair Value ( level 3) of the warrants
| \n \n | \n\n Transaction Price | \n\n Initial Fair Value | \n\n Impact of the change Volatility | \n||
|---|---|---|---|---|---|
| \n -20% | \n\n 70% | \n\n +20% | \n|||
| \n Warrants May 2024 | \n\n 1.8 | \n\n 5.2 | \n\n 0.9 | \n\n 1.6 | \n\n 2.3 | \n
| \n Warrants November 2024 | \n\n 0.6 | \n\n 1.5 | \n\n 1.0 | \n\n 1.2 | \n\n 1.5 | \n
| \n Warrants December 2024 | \n\n 0.3 | \n\n 0.9 | \n\n 0.7 | \n\n 0.9 | \n\n 1.0 | \n
| \n Total | \n\n 2.7 | \n\n 7.6 | \n\n 2.6 | \n\n 3.7 | \n\n 4.8 | \n
11.6Maturity dates
Maturity dates of non-derivative financial liabilities as of December\u00a031, 2023, are as follows:
| \n In thousands of Euros | \n\n Gross amount | \n\n Less than one year | \n\n One to five years | \n\n More than five years | \n
|---|---|---|---|---|
| \n Conditional advances | \n\n 5,504 | \n\n 396 | \n\n 4,277 | \n\n 831 | \n
| \n Corporate bonds | \n\n 9,131 | \n\n 9,131 | \n\n 0 | \n\n 0 | \n
| \n Borrowings from Banks | \n\n 7,474 | \n\n 7,474 | \n\n 0 | \n\n 0 | \n
| \n Lease Liability | \n\n 1,823 | \n\n 775 | \n\n 1,048 | \n\n 0 | \n
| \n Total financial liabilities | \n\n 23,932 | \n\n 17,777 | \n\n 5,324 | \n\n 831 | \n
Maturity dates of non-derivative financial liabilities as of December\u00a031, 2024, are as follows:
| \n In thousands of Euros | \n\n Gross amount | \n\n Less than one year | \n\n One to five years | \n\n More than five years | \n
|---|---|---|---|---|
| \n Conditional advances | \n\n 4,700 | \n\n 0 | \n\n 3,379 | \n\n 1,321 | \n
| \n Corporate bonds | \n\n 6,973 | \n\n 6,973 | \n\n 0 | \n\n 0 | \n
| \n Borrowings from Banks | \n\n 6,341 | \n\n 6,341 | \n\n 0 | \n\n 0 | \n
| \n Lease Liability | \n\n 1,099 | \n\n 585 | \n\n 514 | \n\n 0 | \n
| \n Total financial liabilities | \n\n 19,113 | \n\n 13,899 | \n\n 3,892 | \n\n 1,321 | \n
The table below sets forth the changes in our liabilities arising from financing activities:
| \n \u00a0 | \n\n Note to the Consolidated financial statements | \n\n As of January\u00a01, 2024 | \n\n Financing cash flows | \n\n Non-cash changes | \n\n As of December 31, 2024 | \n||
|---|---|---|---|---|---|---|---|
| \n Derivative components | \n\n Amortized costs adjustments | \n\n Other changes | \n|||||
| \n Conditional advances | \n\n 11.2 | \n\n 5,504 | \n\n 0 | \n\n 0 | \n\n (804) | \n\n 0 | \n\n 4,700 | \n
| \n Heights convertible bonds(1) | \n\n 11.1 | \n\n 9,131 | \n\n 0 | \n\n 0 | \n\n 1,000 | \n\n (3,158) | \n\n 6,973 | \n
| \n Borrowing from banks | \n\n \u00a0 | \n\n 7,474 | \n\n (2,313) | \n\n 0 | \n\n 1,180 | \n\n 0 | \n\n 6,341 | \n
| \n o/w State-guaranteed loan | \n\n 11.3 | \n\n 2,583 | \n\n (2,153) | \n\n 0 | \n\n 67 | \n\n 0 | \n\n 496 | \n
| \n o/w EIB loan | \n\n 11.4 | \n\n 4,891 | \n\n (160) | \n\n 0 | \n\n 1,113 | \n\n 0 | \n\n 5,844 | \n
| \n Lease Liability | \n\n 6 | \n\n 1,823 | \n\n (742) | \n\n 0 | \n\n 0 | \n\n 18 | \n\n 1,099 | \n
| \n Derivative liabilities | \n\n \u00a0 | \n\n 559 | \n\n 2,745 | \n\n 656 | \n\n 0 | \n\n 0 | \n\n 3,960 | \n
| \n Total liabilities from financing activities | \n\n \u00a0 | \n\n 24,491 | \n\n (310) | \n\n 656 | \n\n 1,376 | \n\n (3,139) | \n\n 23,073 | \n
| \n (1) | \n\n \u20ac3,158m were converted on shares by reimbursement of 5 instalments in 2024. | \n
|---|
11.4European Investment Bank (\u201cEIB\u201d) credit facility
The Company entered in November 2022 into a \u20ac35\u00a0million credit facility agreement with the European Investment Bank (\u201cEIB\u201d), supported by the European Fund for Strategic Investment (EFSI).
The \u20ac35\u00a0million facility is divided into three tranches: \u20ac8\u00a0million for the first tranche (\u201cTranche\u00a0A\u201d), \u20ac12\u00a0million for the second tranche (\u201cTranche\u00a0B\u201d) and \u20ac15\u00a0million for the third tranche (\u201cTranche\u00a0C\u201d). The disbursement of each tranches, including the first disbursement of Tranche\u00a0A, is subject to certain conditions.
The disbursement of Tranche A was subject to, among other things:
\u2022the execution of a warrant agreement to be entered into with the EIB,
\u2022issue of the warrants relating to Tranche A,
\u2022the full repayment of the outstanding financing with Kreos,
\u2022the successful manufacturing of one engineering batch of LUMEVOQ\u00ae,
\u2022the decision by the Company to launch the validation batches (PPQ) manufacturing campaign, and
\u2022a cash injection of \u20ac10\u00a0million, in the form of equity, convertible bonds (to the extent that their repayment would be subordinated to the EIB\u2019s debt under the terms of a subordination agreement to be concluded) or license revenues.
The disbursement of Tranche\u00a0B is subject to, among other things:
\u2022the full drawdown of Tranche\u00a0A,
\u2022the issue of the warrants relating to Tranche\u00a0B,
\u2022the successful manufacturing campaign of several PPQ batches of LUMEVOQ\u00ae, and
\u2022the submission of responses to the Day\u00a0120 List of Questions to the European Medicines Agency (EMA) (condition satisfied in October 2022).
The disbursement of Tranche\u00a0C is subject to, among other things:
\u2022the full drawdown of Tranche\u00a0B,
\u2022the issue of the warrants relating to Tranche\u00a0C,
\u2022a cash injection of at least \u20ac20\u00a0million (in addition to the aforementioned \u20ac10\u00a0million), in the form of equity, convertible bonds (to the extent that their repayment would be subordinated to the EIB\u2019s debt under the terms of a\u00a0subordination agreement to be concluded) or license revenues,
\u2022the obtaining of EMA marketing authorization for LUMEVOQ\u00ae in Europe, and
\u2022a condition related to early access for patients.
The credit facility agreement will carry an annual fixed interest rate of 2% for all tranches and a decreasing fixed payment-in-kind (PIK) interest rate per tranche, with 5% for Tranche\u00a0A, 4% for Tranche\u00a0B and 3% for Tranche\u00a0C, and with a maturity of five years for each tranche. Such PIK interest shall be capitalized annually, payable at maturity and added to the outstanding principal amount of the credit and therefore bear interest.
The facility may, in certain circumstances, be prepaid, in whole or in part, with a prepayment fee, either at the election of the Company or upon the demand of EIB following certain prepayment events, including a change of control or a change in senior management of the Company.
Subject to certain terms and conditions, upon the occurrence of standard events of default (i.e. including payment default, misrepresentation, cross default), EIB may demand immediate repayment by the Company of all or part of the outstanding debt and/or cancel any undisbursed tranches.
The credit facility agreement is supplemented by an agreement to be concluded to issue warrants to the benefit of the EIB, pursuant to Article L.225-138 of the French Commercial Code, in varied amounts according to the relevant tranche.
The warrants will have a term of 20 years and will become exercisable upon the occurrence of certain events (such as a change of control or a repayment regarding one or several tranches), thus avoiding dilution for existing shareholders in the near term. Each warrant will entitle EIB to one ordinary share of the Company in exchange for the exercise price (subject to anti-dilution provisions). The exercise price for each warrant will be equal to 95% of the volume weighted average of the trading price of the Company\u2019s ordinary share over the last five trading days preceding the decision of the competent corporate body of the Company to issue such warrants. EIB shall be entitled to, as soon as the warrants become exercisable, a put option at its intrinsic value, (subject to a cap equal to the drawn amount under the facility agreement) requiring the Company to buy back all or part\u00a0of the warrants then exercisable, but not yet exercised. Furthermore, the Company shall be entitled to a call option on all outstanding warrants under certain limited circumstances.
On February\u00a06, 2023, as disbursement conditions for Tranche\u00a0A were met, including in particular issuance of 1,141,096\u00a0warrants to the EIB, and the Company received the payment of \u20ac8\u00a0million under Tranche A of the unsecured credit facility executed with the EIB.
No guarantee can be given as to the satisfaction by the Company of the conditions precedent and the completion of Tranche\u00a0B and Tranche\u00a0C.
The two financial instruments issued with respect to the drawdown of the \u20ac8\u00a0million Tranche\u00a0A (loans and warrants) on the date of issue are economically and intrinsically linked according to the IFRS\u00a09 criteria, thus the transaction is analyzed as a single hybrid instrument on issue in which there is a host contract representing a debt component (the loans) and a derivative (the warrants). Considering the specific and limited conditions of the transferability of the warrants, they represent an embedded derivative to the loan host contract in\u00a0accordance with IFRS 9 principles (i.e. their contractual features do not make them a separate financial instrument). Therefore, despite having two contracts - the warrants and the loan agreement - their inseparable nature means they are considered as a single unit.
The loan has been initially recognized at fair value, i.e., the issue proceeds (fair value of the consideration received) net of transaction costs incurred and the fair value at inception date of the derivative instruments of the debt concerned. Loans are subsequently measured at amortized cost, calculated using the effective interest rate method. Any difference between initial fair value and repayment value is recognized in the statement of income (loss) over the life of the loan using the effective interest rate method.
The effective interest rate is the discount rate at which the present value of all future cash flows (including transaction costs) over the expected life of the loan, or where appropriate, over a shorter period of time, is equal to the loan\u2019s initial carrying amount.
The fair value of the warrants has been estimated based on a Black & Scholes approach, including the put option and the attached cap.
The assumptions underlying the fair value estimation of the derivative instrument (Level 3)and results are detailed in the following tables:
| \n \u00a0 | \n\n 31/12/2024 | \n
|---|---|
| \n Number of instruments | \n\n 1,141,096 | \n
| \n Spot | \n\n 0.27 | \n
| \n Strike | \n\n 3.45 | \n
| \n Volatility | \n\n 70% | \n
| \n Risk free rate | \n\n 3.4% | \n
| \n Valuation date | \n\n 31/12/2024 | \n
| \n Expiration | \n\n 22/12/2042 | \n
| \n Term (years) | \n\n 18.0 | \n
| \n Maturity (years) | \n\n 18.0 | \n
| \n Unit fair value | \n\n 0% | \n
| \n Fair value | \n\n 0.21 | \n
The derivative instrument amounts to \u20ac0.2 million and the remaining debt to \u20ac5.8 million (\u20ac0.16m current and & \u20ac5.67m non-current) as of December 31, 2024.
In the context of renegotiation of the latest installment on the state-guaranteed loan (PGE) at the end of December 2024, the debt is considered as potentially due in full in the next 12\u00a0months. If the renegociation is successful, the part of the debt which is expected to be repaid within the next 12\u00a0month amounted to \u20ac0.2\u00a0million in relation with interest to be paid in the first semester 2025.
11.52024 Offering Warrant
May 2024 Offering Warrant
On May 7, 2024, the Company announced the success of its Offering, through (i) a capital increase reserved to specialized investors and (ii) a concurrent capital increase by way of a private placement, by the issuance of new shares with warrants attached, for a total gross amount of \u20ac9,282,515.80 (excluding the future net proceeds related to the exercise of the warrants). The subscription price for one ABSA is \u20ac0.395 (the \u201cOffering Price\u201d). The Offering Price is the same in the two concurrent capital increases.
The Company issued an aggregate of 23,500,040 units (the \u201cABSAs\u201d) each consisting of:
(i)one ordinary share of the Company, nominal value 0.025 per share, and
(ii)a warrant to purchase one ordinary share at the Exercise Price per Warrant Share.
The maturity of the warrants are 30\u00a0months (i.e. until November\u00a09, 2026).
In the event of a Fundamental Transaction, where a Public Offer results in shareholders tendering 50% or more of the outstanding shares in exchange for securities only (and not cash) at a per-share value below the Exercise Price (a \u201cPut Option Event\u201d), warrant holders have the option to sell their Warrants to the Company for cash. The buyback price per Warrant is determined using a Black-Scholes valuation, subject to certain conditions, including a cap at the initial valuation on the Issue Date and uniform pricing for all holders exercising the option.
Warrants may be exercised by the Holder, in whole or in part, for cash, at any time and from time to time during the period commencing on the Issue Date and ending on November\u00a09, 2026.
The exercise ratio is defined, basically, as one (1) Warrant exercisable for to one (1) Warrant Share with an exercise price set as \u20ac0,45.
The Company conducted a study to determine the appropriate accounting treatment for the warrants issued in May\u00a02024. Based on the results of this analysis, as the Terms and Condition provides for a situation in which instruments will be settled in cash: the warrants cannot be classified as equity and must be recognized as a financial liability measured at fair value on the date of issuance. Subsequently, they are required to be re-measured at fair value through profit or loss in accordance with IFRS\u00a09.
From a presentation standpoint, as per IAS 1.68 and as the derivative issued in May 2024 have a maturity of more than 12\u00a0months, hence it was considered to be classified as non-current even if the warrants can be exercised at any time, and considering the trade price and behaviors of holders cannot be anticipated.
The assumptions and results on May 7, 2024 are detailed in the following tables :
| \n \u00a0 | \n\n 05/03/2024 | \n
|---|---|
| \n Number of instruments | \n\n 23,500,040 | \n
| \n Spot | \n\n 0.40 | \n
| \n Strike | \n\n 0.45 | \n
| \n Volatility | \n\n 100.0% | \n
| \n Risk free rate | \n\n 3.1% | \n
| \n Valuation date | \n\n 05/03/2024 | \n
| \n Expiration | \n\n 09/11/2026 | \n
| \n Maturity (years) | \n\n 2.52 | \n
| \n Unit fair value | \n\n 0.22 | \n
| \n Fair value | \n\n 5,210 | \n
The assumptions and results on December 31, 2024 are detailed in the following tables :
| \n \u00a0 | \n\n 12/31/2024 | \n
|---|---|
| \n Number of instruments | \n\n 23,500,040 | \n
| \n Spot | \n\n 0.27 | \n
| \n Strike | \n\n 0.45 | \n
| \n Volatility | \n\n 70.0% | \n
| \n Risk rate | \n\n 7.3% | \n
| \n Valuation date | \n\n 12/31/2024 | \n
| \n Expiration | \n\n 09/11/2026 | \n
| \n Maturity (years) | \n\n 1.86 | \n
| \n Unit Fair value | \n\n 0.07 | \n
| \n Fair value | \n\n 1,613 | \n
As of December 31, 2024, the Company recognize a Non Current Financial Asset for \u20ac2.5 million and a non current financial liability (derivative) for \u20ac1.6 million.
November 2024 Offering Warrant
On November 1, 2024, the Company announced the success of its Offering, through (i) a capital increase reserved to specialized investors by the issuance of new shares with warrants attached, for a total gross amount of \u20ac2,775,621.30 (excluding the future net proceeds related to the exercise of the warrants). The subscription price for one ABSA is \u20ac0.3513 (the \u201cOffering Price\u201d).
The Company issued an aggregate of 7,901,000 units (the \u201cABSAs\u201d) each consisting of :
(i)one ordinary share of the Company, nominal value 0.025 per share, and
(ii)a warrant to purchase one ordinary share at the Exercise Price per Warrant Share.
The maturity of the warrants are 60\u00a0months (i.e. until November\u00a01, 2029).
In the event of a Fundamental Transaction, where a Public Offer results in shareholders tendering 50% or more of the outstanding shares in exchange for securities only (and not cash) at a per-share value below the Exercise Price (a \u201cPut Option Event\u201d), warrant holders have the option to sell their Warrants to the Company for cash. The buyback price per Warrant is determined using a Black-Scholes valuation, subject to certain conditions, including a cap at the initial valuation on the Issue Date and uniform pricing for all holders exercising the option.
Warrants may be exercised by the Holder, in whole or in part, for cash, at any time and from time to time during the period commencing on April 1, 2025 and ending on November\u00a01, 2029.
The exercise ratio is defined, basically, as one (1) Warrant exercisable for to one (1) Warrant Share with an exercise price set as \u20ac0,3513.
The Company conducted a study to determine the appropriate accounting treatment for the warrants issued in November\u00a02024. Based on the results of this analysis, as the Terms and Condition provides for a situation in which instruments will be settled in cash: the warrants cannot be classified as equity and must be recognized as a financial liability measured at fair value on the date of issuance. Subsequently, they are required to be re-measured at fair value through profit or loss in accordance with IFRS 9.
From a presentation standpoint, as per IAS 1.68 and as the derivative issued in November 2024 have a maturity of more than 12\u00a0months, hence it was considered to be classified as non-current even if the warrants can be exercised at any time after April 1, 2025, and considering the trade price and behaviors of holders cannot be anticipated.
The assumptions and results on November 1, 2024 are detailed in the following tables :
| \n \u00a0 | \n\n 11/01/2024 | \n
|---|---|
| \n Number of instruments | \n\n 7,901,000 | \n
| \n Spot | \n\n 0.31 | \n
| \n Strike | \n\n 0.35 | \n
| \n Volatility | \n\n 70.0% | \n
| \n Risk rate | \n\n 7.6% | \n
| \n Valuation date | \n\n 11/01/2024 | \n
| \n Expiration | \n\n 06/11/2029 | \n
| \n Maturity (years) | \n\n 5.01 | \n
| \n Unit Fair Value | \n\n 0.19 | \n
| \n Fair value | \n\n 1,502 | \n
The assumptions and results on December 31, 2024 are detailed in the following tables:
| \n \u00a0 | \n\n 12/31/2024 | \n
|---|---|
| \n Number of instruments | \n\n 7,901,000 | \n
| \n Spot | \n\n 0.27 | \n
| \n Strike | \n\n 0.35 | \n
| \n Volatility | \n\n 70.0% | \n
| \n Risk rate | \n\n 7.6% | \n
| \n Valuation date | \n\n 12/31/2024 | \n
| \n Expiration | \n\n 06/11/2029 | \n
| \n Maturity (years) | \n\n 4.85 | \n
| \n Unit Fair value | \n\n 0.16 | \n
| \n Fair value | \n\n 1,237 | \n
As of December 31, 2024, the Company recognize a Non Current Financial Asset for \u20ac0.8 million and a non current financial liability (derivative) for \u20ac1.2 million.
December 2024 Offering Warrant
On December 24, 2024, the Company issued an aggregate of 5,326,706 units (the \u201cABSAs\u201d) each consisting of:
(i)one ordinary share of the Company, nominal value 0.025 per share, and
(ii)a warrant to purchase one ordinary share at the Exercise Price per Warrant Share.
The maturity of the warrants is almost 58\u00a0months (i.e. until December\u00a031, 2029).
In the event of a Fundamental Transaction, where a Public Offer results in shareholders tendering 50% or more of the outstanding shares in exchange for securities only (and not cash) at a per-share value below the Exercise Price (a \u201cPut Option Event\u201d), warrant holders have the option to sell their Warrants to the Company for cash. The buyback price per Warrant is determined using a Black-Scholes valuation, subject to certain conditions, including a cap at the initial valuation on the Issue Date and uniform pricing for all holders exercising the option.
Warrants may be exercised by the Holder, in whole or in part, for cash, at any time and from time to time during the period commencing on April\u00a01, 2025 and ending on December\u00a031, 2029.
The exercise ratio is defined, basically, as one (1) Warrant exercisable for to one (1) Warrant Share with an exercise price set as \u20ac0.2816.
The Company conducted a study to determine the appropriate accounting treatment for the warrants issued in December 2024. Based on the results of this analysis, as the Terms and Condition provides for a situation in which instruments will be settled in cash: the warrants cannot be classified as equity and must be recognized as a financial liability measured at fair value on the date of issuance. Subsequently, they are required to be re-measured at fair value through profit or loss in accordance with IFRS 9.
From a presentation standpoint, as per IAS\u00a01.68 and as the derivative issued in December 2024 have a maturity of more than 12\u00a0months, hence it was considered to be classified as non-current even if the warrants can be exercised at any time after April\u00a01, 2025, and considering the trade price and behaviors of holders cannot be anticipated.
The assumptions and results on December 24, 2024 are detailed in the following tables :
| \n \u00a0 | \n\n 12/24/2024 | \n
|---|---|
| \n Number of instruments | \n\n 5,326,706 | \n
| \n Spot | \n\n 0.27 | \n
| \n Strike | \n\n 0.35 | \n
| \n Volatility | \n\n 70.0% | \n
| \n Risk rate | \n\n 7.4% | \n
| \n Valuation date | \n\n 12/24/2024 | \n
| \n Expiration | \n\n 12/31/2029 | \n
| \n Maturity (years) | \n\n 5.02 | \n
| \n Unit Fair value | \n\n 0.16 | \n
| \n Fair value | \n\n 861 | \n
The assumptions and results on December 31, 2024 are detailed in the following tables :
| \n \u00a0 | \n\n 12/31/2024 | \n
|---|---|
| \n Number of instruments | \n\n 5,326,706 | \n
| \n Spot | \n\n 0.27 | \n
| \n Strike | \n\n 0.35 | \n
| \n Volatility | \n\n 70.0% | \n
| \n Riskrate | \n\n 7.4% | \n
| \n Valuation date | \n\n 12/31/2024 | \n
| \n Expiration | \n\n 12/31/2029 | \n
| \n Maturity (years) | \n\n 5.00 | \n
| \n Unit Fair value | \n\n 0.16 | \n
| \n Fair value | \n\n 851 | \n
As of December 31, 2024, the Company recognize a Non Current Financial Asset for \u20ac0.6 million and a non current financial liability (derivative) for \u20ac0.9 million.
Impact of a \u00b120% change in volatility on the Fair Value ( level 3) of the warrants
| \n \n | \n\n Transaction Price | \n\n Initial Fair Value | \n\n Impact of the change Volatility | \n||
|---|---|---|---|---|---|
| \n -20% | \n\n 70% | \n\n +20% | \n|||
| \n Warrants May 2024 | \n\n 1.8 | \n\n 5.2 | \n\n 0.9 | \n\n 1.6 | \n\n 2.3 | \n
| \n Warrants November 2024 | \n\n 0.6 | \n\n 1.5 | \n\n 1.0 | \n\n 1.2 | \n\n 1.5 | \n
| \n Warrants December 2024 | \n\n 0.3 | \n\n 0.9 | \n\n 0.7 | \n\n 0.9 | \n\n 1.0 | \n
| \n Total | \n\n 2.7 | \n\n 7.6 | \n\n 2.6 | \n\n 3.7 | \n\n 4.8 | \n
11.6Maturity dates
Maturity dates of non-derivative financial liabilities as of December\u00a031, 2023, are as follows:
| \n In thousands of Euros | \n\n Gross amount | \n\n Less than one year | \n\n One to five years | \n\n More than five years | \n
|---|---|---|---|---|
| \n Conditional advances | \n\n 5,504 | \n\n 396 | \n\n 4,277 | \n\n 831 | \n
| \n Corporate bonds | \n\n 9,131 | \n\n 9,131 | \n\n 0 | \n\n 0 | \n
| \n Borrowings from Banks | \n\n 7,474 | \n\n 7,474 | \n\n 0 | \n\n 0 | \n
| \n Lease Liability | \n\n 1,823 | \n\n 775 | \n\n 1,048 | \n\n 0 | \n
| \n Total financial liabilities | \n\n 23,932 | \n\n 17,777 | \n\n 5,324 | \n\n 831 | \n
Maturity dates of non-derivative financial liabilities as of December\u00a031, 2024, are as follows:
| \n In thousands of Euros | \n\n Gross amount | \n\n Less than one year | \n\n One to five years | \n\n More than five years | \n
|---|---|---|---|---|
| \n Conditional advances | \n\n 4,700 | \n\n 0 | \n\n 3,379 | \n\n 1,321 | \n
| \n Corporate bonds | \n\n 6,973 | \n\n 6,973 | \n\n 0 | \n\n 0 | \n
| \n Borrowings from Banks | \n\n 6,341 | \n\n 6,341 | \n\n 0 | \n\n 0 | \n
| \n Lease Liability | \n\n 1,099 | \n\n 585 | \n\n 514 | \n\n 0 | \n
| \n Total financial liabilities | \n\n 19,113 | \n\n 13,899 | \n\n 3,892 | \n\n 1,321 | \n
The table below sets forth the changes in our liabilities arising from financing activities:
| \n \u00a0 | \n\n Note to the Consolidated financial statements | \n\n As of January\u00a01, 2024 | \n\n Financing cash flows | \n\n Non-cash changes | \n\n As of December 31, 2024 | \n||
|---|---|---|---|---|---|---|---|
| \n Derivative components | \n\n Amortized costs adjustments | \n\n Other changes | \n|||||
| \n Conditional advances | \n\n 11.2 | \n\n 5,504 | \n\n 0 | \n\n 0 | \n\n (804) | \n\n 0 | \n\n 4,700 | \n
| \n Heights convertible bonds(1) | \n\n 11.1 | \n\n 9,131 | \n\n 0 | \n\n 0 | \n\n 1,000 | \n\n (3,158) | \n\n 6,973 | \n
| \n Borrowing from banks | \n\n \u00a0 | \n\n 7,474 | \n\n (2,313) | \n\n 0 | \n\n 1,180 | \n\n 0 | \n\n 6,341 | \n
| \n o/w State-guaranteed loan | \n\n 11.3 | \n\n 2,583 | \n\n (2,153) | \n\n 0 | \n\n 67 | \n\n 0 | \n\n 496 | \n
| \n o/w EIB loan | \n\n 11.4 | \n\n 4,891 | \n\n (160) | \n\n 0 | \n\n 1,113 | \n\n 0 | \n\n 5,844 | \n
| \n Lease Liability | \n\n 6 | \n\n 1,823 | \n\n (742) | \n\n 0 | \n\n 0 | \n\n 18 | \n\n 1,099 | \n
| \n Derivative liabilities | \n\n \u00a0 | \n\n 559 | \n\n 2,745 | \n\n 656 | \n\n 0 | \n\n 0 | \n\n 3,960 | \n
| \n Total liabilities from financing activities | \n\n \u00a0 | \n\n 24,491 | \n\n (310) | \n\n 656 | \n\n 1,376 | \n\n (3,139) | \n\n 23,073 | \n
| \n (1) | \n\n \u20ac3,158m were converted on shares by reimbursement of 5 instalments in 2024. | \n
|---|
11.6Maturity dates
Maturity dates of non-derivative financial liabilities as of December\u00a031, 2023, are as follows:
| \n In thousands of Euros | \n\n Gross amount | \n\n Less than one year | \n\n One to five years | \n\n More than five years | \n
|---|---|---|---|---|
| \n Conditional advances | \n\n 5,504 | \n\n 396 | \n\n 4,277 | \n\n 831 | \n
| \n Corporate bonds | \n\n 9,131 | \n\n 9,131 | \n\n 0 | \n\n 0 | \n
| \n Borrowings from Banks | \n\n 7,474 | \n\n 7,474 | \n\n 0 | \n\n 0 | \n
| \n Lease Liability | \n\n 1,823 | \n\n 775 | \n\n 1,048 | \n\n 0 | \n
| \n Total financial liabilities | \n\n 23,932 | \n\n 17,777 | \n\n 5,324 | \n\n 831 | \n
Maturity dates of non-derivative financial liabilities as of December\u00a031, 2024, are as follows:
| \n In thousands of Euros | \n\n Gross amount | \n\n Less than one year | \n\n One to five years | \n\n More than five years | \n
|---|---|---|---|---|
| \n Conditional advances | \n\n 4,700 | \n\n 0 | \n\n 3,379 | \n\n 1,321 | \n
| \n Corporate bonds | \n\n 6,973 | \n\n 6,973 | \n\n 0 | \n\n 0 | \n
| \n Borrowings from Banks | \n\n 6,341 | \n\n 6,341 | \n\n 0 | \n\n 0 | \n
| \n Lease Liability | \n\n 1,099 | \n\n 585 | \n\n 514 | \n\n 0 | \n
| \n Total financial liabilities | \n\n 19,113 | \n\n 13,899 | \n\n 3,892 | \n\n 1,321 | \n
The table below sets forth the changes in our liabilities arising from financing activities:
| \n \u00a0 | \n\n Note to the Consolidated financial statements | \n\n As of January\u00a01, 2024 | \n\n Financing cash flows | \n\n Non-cash changes | \n\n As of December 31, 2024 | \n||
|---|---|---|---|---|---|---|---|
| \n Derivative components | \n\n Amortized costs adjustments | \n\n Other changes | \n|||||
| \n Conditional advances | \n\n 11.2 | \n\n 5,504 | \n\n 0 | \n\n 0 | \n\n (804) | \n\n 0 | \n\n 4,700 | \n
| \n Heights convertible bonds(1) | \n\n 11.1 | \n\n 9,131 | \n\n 0 | \n\n 0 | \n\n 1,000 | \n\n (3,158) | \n\n 6,973 | \n
| \n Borrowing from banks | \n\n \u00a0 | \n\n 7,474 | \n\n (2,313) | \n\n 0 | \n\n 1,180 | \n\n 0 | \n\n 6,341 | \n
| \n o/w State-guaranteed loan | \n\n 11.3 | \n\n 2,583 | \n\n (2,153) | \n\n 0 | \n\n 67 | \n\n 0 | \n\n 496 | \n
| \n o/w EIB loan | \n\n 11.4 | \n\n 4,891 | \n\n (160) | \n\n 0 | \n\n 1,113 | \n\n 0 | \n\n 5,844 | \n
| \n Lease Liability | \n\n 6 | \n\n 1,823 | \n\n (742) | \n\n 0 | \n\n 0 | \n\n 18 | \n\n 1,099 | \n
| \n Derivative liabilities | \n\n \u00a0 | \n\n 559 | \n\n 2,745 | \n\n 656 | \n\n 0 | \n\n 0 | \n\n 3,960 | \n
| \n Total liabilities from financing activities | \n\n \u00a0 | \n\n 24,491 | \n\n (310) | \n\n 656 | \n\n 1,376 | \n\n (3,139) | \n\n 23,073 | \n
| \n (1) | \n\n \u20ac3,158m were converted on shares by reimbursement of 5 instalments in 2024. | \n
|---|
11.6Maturity dates
Maturity dates of non-derivative financial liabilities as of December\u00a031, 2023, are as follows:
| \n In thousands of Euros | \n\n Gross amount | \n\n Less than one year | \n\n One to five years | \n\n More than five years | \n
|---|---|---|---|---|
| \n Conditional advances | \n\n 5,504 | \n\n 396 | \n\n 4,277 | \n\n 831 | \n
| \n Corporate bonds | \n\n 9,131 | \n\n 9,131 | \n\n 0 | \n\n 0 | \n
| \n Borrowings from Banks | \n\n 7,474 | \n\n 7,474 | \n\n 0 | \n\n 0 | \n
| \n Lease Liability | \n\n 1,823 | \n\n 775 | \n\n 1,048 | \n\n 0 | \n
| \n Total financial liabilities | \n\n 23,932 | \n\n 17,777 | \n\n 5,324 | \n\n 831 | \n
Maturity dates of non-derivative financial liabilities as of December\u00a031, 2024, are as follows:
| \n In thousands of Euros | \n\n Gross amount | \n\n Less than one year | \n\n One to five years | \n\n More than five years | \n
|---|---|---|---|---|
| \n Conditional advances | \n\n 4,700 | \n\n 0 | \n\n 3,379 | \n\n 1,321 | \n
| \n Corporate bonds | \n\n 6,973 | \n\n 6,973 | \n\n 0 | \n\n 0 | \n
| \n Borrowings from Banks | \n\n 6,341 | \n\n 6,341 | \n\n 0 | \n\n 0 | \n
| \n Lease Liability | \n\n 1,099 | \n\n 585 | \n\n 514 | \n\n 0 | \n
| \n Total financial liabilities | \n\n 19,113 | \n\n 13,899 | \n\n 3,892 | \n\n 1,321 | \n
The table below sets forth the changes in our liabilities arising from financing activities:
| \n \u00a0 | \n\n Note to the Consolidated financial statements | \n\n As of January\u00a01, 2024 | \n\n Financing cash flows | \n\n Non-cash changes | \n\n As of December 31, 2024 | \n||
|---|---|---|---|---|---|---|---|
| \n Derivative components | \n\n Amortized costs adjustments | \n\n Other changes | \n|||||
| \n Conditional advances | \n\n 11.2 | \n\n 5,504 | \n\n 0 | \n\n 0 | \n\n (804) | \n\n 0 | \n\n 4,700 | \n
| \n Heights convertible bonds(1) | \n\n 11.1 | \n\n 9,131 | \n\n 0 | \n\n 0 | \n\n 1,000 | \n\n (3,158) | \n\n 6,973 | \n
| \n Borrowing from banks | \n\n \u00a0 | \n\n 7,474 | \n\n (2,313) | \n\n 0 | \n\n 1,180 | \n\n 0 | \n\n 6,341 | \n
| \n o/w State-guaranteed loan | \n\n 11.3 | \n\n 2,583 | \n\n (2,153) | \n\n 0 | \n\n 67 | \n\n 0 | \n\n 496 | \n
| \n o/w EIB loan | \n\n 11.4 | \n\n 4,891 | \n\n (160) | \n\n 0 | \n\n 1,113 | \n\n 0 | \n\n 5,844 | \n
| \n Lease Liability | \n\n 6 | \n\n 1,823 | \n\n (742) | \n\n 0 | \n\n 0 | \n\n 18 | \n\n 1,099 | \n
| \n Derivative liabilities | \n\n \u00a0 | \n\n 559 | \n\n 2,745 | \n\n 656 | \n\n 0 | \n\n 0 | \n\n 3,960 | \n
| \n Total liabilities from financing activities | \n\n \u00a0 | \n\n 24,491 | \n\n (310) | \n\n 656 | \n\n 1,376 | \n\n (3,139) | \n\n 23,073 | \n
| \n (1) | \n\n \u20ac3,158m were converted on shares by reimbursement of 5 instalments in 2024. | \n
|---|
Credit risk
In order to minimize credit risk, the Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group\u2019s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.
The credit risk related to the Group\u2019s cash and cash equivalents is not significant in light of the quality of the co-contracting financial institutions.
The Group does not have significant credit risk exposure to any single customer or any group of counterparties having similar characteristics.
Note 12:Non-current provisions
Non-current provisions are composed of employee benefits relating to a compensation payable to French employees upon their retirement \u2013 Indemnit\u00e9s de Fin de Carri\u00e8re (\u201cIFC\u201d) for \u20ac48k and non-current provision for contingencies and losses for \u20ac1.1 million.
The following tables show the changes in the IFC during the last two periods:
| \n In thousands of Euros | \n\n \n | \n
|---|---|
| \n As of January 1, 2023 | \n\n 21 | \n
| \n Cost of services rendered (operating expense) | \n\n 24 | \n
| \n Interest expense | \n\n 1 | \n
| \n Benefits paid | \n\n \u2014 | \n
| \n Actuarial gain (loss) | \n\n (6) | \n
| \n As of December\u00a031, 2023 | \n\n \u20ac39 K | \n
| \n As of January 1, 2024 | \n\n 39 | \n
| \n Cost of services rendered (operating expense) | \n\n 21 | \n
| \n Interest expense | \n\n 2 | \n
| \n Benefits paid | \n\n \u2014 | \n
| \n Actuarial gain (loss) | \n\n (14) | \n
| \n As of December\u00a031, 2024 | \n\n \u20ac48 K | \n
The main assumptions used for the purposes of actuarial valuations are listed below:
\u2022Social security contribution: 45% in 2023 and 2024;
\u2022Salary increase: 3% in 2023 and 2024;
\u2022Discount rate: iBoxx Corporates AA+ index, 3.17% and 3.38% in 2023 and 2024, respectively:
\u2022Retirement age: 67;
\u2022Terms of retirement: voluntary retirement;
\u2022Life table: TGHF 2005;
\u2022Collective agreement: Convention Collective Nationale des Ing\u00e9nieurs et des Cadres de la M\u00e9tallurgie (National Collective Agreement for Engineers and Executives in the Metalworking Industry); and
\u2022Personnel turn-over: 10% (20-49), 0% above 50.
The other non-current provisions primarily relate to several ongoing social and operational litigations. In accordance to IAS\u00a037, given the sensitivity of the matters, management cannot provide detailed information on the nature of each dispute.
Note 13:Other non-current liabilities
13.1Refund liability
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 with 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.
13.2Subsidy
In December 2023, the benefit resulting from the low interest of the State-guaranteed loan (PGE) was treated as a subsidy. This amount was recognized as financial income over the applicable repayment period.
Following the renegotiation process in June\u00a02024, we reassessed our state-guaranteed loans and established a new payment schedule for the outstanding principal and interest until the end of the year. As a result, the economic benefit from the state-guaranteed loan, which was previously recorded as a subsidy, has been reversed in the accounts, leaving only the loans outstanding.
13.3Maturity dates
Maturity dates of other liabilities as of December\u00a031, 2023 are as follows:
| \n In thousands of Euros | \n\n Gross amount | \n\n Less than one year | \n\n One to five years | \n\n More than five years | \n
|---|---|---|---|---|
| \n Refund Liability | \n\n 6,572 | \n\n \u2014 | \n\n 6,572 | \n\n 0 | \n
| \n Subsidy | \n\n 67 | \n\n 67 | \n\n \u2014 | \n\n 0 | \n
| \n Total Other non-current liabilities | \n\n 6,639 | \n\n 67 | \n\n 6,572 | \n\n 0 | \n
Maturity dates of other liabilities as of December\u00a031, 2024 are as follows:
| \n In thousands of Euros | \n\n Gross amount | \n\n Less than one year | \n\n One to five years | \n\n More than five years | \n
|---|---|---|---|---|
| \n Refund Liability | \n\n 4,718 | \n\n \u2014 | \n\n \u2014 | \n\n 4,718 | \n
| \n Subsidy | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n
| \n Total Other non-current liabilities | \n\n 4,718 | \n\n \u2014 | \n\n \u2014 | \n\n 4,718 | \n
Note 13:Other non-current liabilities
13.1Refund liability
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 with 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.
13.2Subsidy
In December 2023, the benefit resulting from the low interest of the State-guaranteed loan (PGE) was treated as a subsidy. This amount was recognized as financial income over the applicable repayment period.
Following the renegotiation process in June\u00a02024, we reassessed our state-guaranteed loans and established a new payment schedule for the outstanding principal and interest until the end of the year. As a result, the economic benefit from the state-guaranteed loan, which was previously recorded as a subsidy, has been reversed in the accounts, leaving only the loans outstanding.
13.3Maturity dates
Maturity dates of other liabilities as of December\u00a031, 2023 are as follows:
| \n In thousands of Euros | \n\n Gross amount | \n\n Less than one year | \n\n One to five years | \n\n More than five years | \n
|---|---|---|---|---|
| \n Refund Liability | \n\n 6,572 | \n\n \u2014 | \n\n 6,572 | \n\n 0 | \n
| \n Subsidy | \n\n 67 | \n\n 67 | \n\n \u2014 | \n\n 0 | \n
| \n Total Other non-current liabilities | \n\n 6,639 | \n\n 67 | \n\n 6,572 | \n\n 0 | \n
Maturity dates of other liabilities as of December\u00a031, 2024 are as follows:
| \n In thousands of Euros | \n\n Gross amount | \n\n Less than one year | \n\n One to five years | \n\n More than five years | \n
|---|---|---|---|---|
| \n Refund Liability | \n\n 4,718 | \n\n \u2014 | \n\n \u2014 | \n\n 4,718 | \n
| \n Subsidy | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n\n \u2014 | \n
| \n Total Other non-current liabilities | \n\n 4,718 | \n\n \u2014 | \n\n \u2014 | \n\n 4,718 | \n
Note 14:Accounts payable and other current liabilities
14.1Accounts payable and related payables
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 December\u00a031, 2024, are as follows:
| \n In thousands of Euros | \n\n Gross amount | \n\n Less than one year | \n\n One to five years | \n\n More than five years | \n
|---|---|---|---|---|
| \n Trade accounts payable | \n\n 6,357 | \n\n 6,357 | \n\n \u2014 | \n\n \u2014 | \n
14.2Other current liabilities
The following table provides the detail of other current liabilities for the presented periods:
| \n In thousands of Euros | \n\n As of December\u00a031, | \n|
|---|---|---|
| \n 2024 | \n\n 2023 | \n|
| \n Employee-related payable | \n\n 1,732 | \n\n 1,789 | \n
| \n Other taxes liabilities | \n\n 171 | \n\n 25 | \n
| \n Subsidy | \n\n 0 | \n\n 67 | \n
| \n Deferred Revenue | \n\n 0 | \n\n 0 | \n
| \n Other current liabilities | \n\n 458 | \n\n (0) | \n
| \n Total | \n\n 2,362 | \n\n 1,880 | \n
Note 17:Other income
Other income is detailed in the table below:
| \n In thousands of Euros | \n\n As of December\u00a031, | \n|
|---|---|---|
| \n 2024 | \n\n 2023 | \n|
| \n Research tax credit (see Note 8) | \n\n 1,125 | \n\n 1,697 | \n
| \n Subsidies | \n\n 0 | \n\n 0 | \n
| \n Others | \n\n 0 | \n\n 0 | \n
| \n Total | \n\n 1,125 | \n\n 1,697 | \n
Note 18:Operating expenses
18.1Research and development expenses
The table below shows the breakdown of research and development expenses by cost nature for the periods presented:
| \n In thousands of Euros | \n\n As of December\u00a031, | \n|
|---|---|---|
| \n 2024 | \n\n 2023 | \n|
| \n Personnel expenses (1) | \n\n 2,818 | \n\n 3,741 | \n
| \n Sub-contracting, collaboration and consultants | \n\n 8,119 | \n\n 11,988 | \n
| \n Licensing and intellectual property | \n\n 280 | \n\n 341 | \n
| \n Travel and entertainment expenses | \n\n 104 | \n\n 193 | \n
| \n Depreciation and amortization expense | \n\n 972 | \n\n 2,757 | \n
| \n Other | \n\n 76 | \n\n 339 | \n
| \n Total R&D expenses | \n\n 12,368 | \n\n 19,360 | \n
| \n (1) | \n\n Includes \u20ac157 thousands and \u20ac596 thousands related to share-based compensation expense as of December\u00a031, 2023 and 2024 respectively. | \n
|---|
18.2General and administrative expenses
The table below shows the breakdown of general and administrative expenses by cost nature for the periods presented:
| \n In thousands of Euros | \n\n As of December\u00a031, | \n|
|---|---|---|
| \n 2024 | \n\n 2023 | \n|
| \n Personnel expenses (1) | \n\n 1,775 | \n\n 2,235 | \n
| \n Professional Fees | \n\n 2,787 | \n\n 1,028 | \n
| \n Communication and travel expenses | \n\n 45 | \n\n 625 | \n
| \n Postal and telecommunication expenses | \n\n 14 | \n\n 6 | \n
| \n Depreciation and amortization expense | \n\n 170 | \n\n 123 | \n
| \n Attendance fees | \n\n 251 | \n\n 191 | \n
| \n Insurance | \n\n 103 | \n\n 6 | \n
| \n Others | \n\n 240 | \n\n 1,138 | \n
| \n Total G&A expenses | \n\n 5,386 | \n\n 5,352 | \n
| \n (1) | \n\n Includes \u20ac(165) thousands and \u20ac154 thousands related to share-based compensation expense as of December\u00a031, 2023 and 2024 respectively. | \n
|---|
18.3Sales and Marketing expenses
The table below shows the breakdown of sales and marketing expenses by cost nature for the periods presented:
| \n In thousands of Euros | \n\n As of December\u00a031, | \n|
|---|---|---|
| \n 2024 | \n\n 2023 | \n|
| \n Personnel expenses (1) | \n\n 475 | \n\n 3,521 | \n
| \n Professional Fees | \n\n 141 | \n\n 3,437 | \n
| \n Communication and travel expenses | \n\n 2 | \n\n 68 | \n
| \n Depreciation and amortization expense | \n\n 39 | \n\n 154 | \n
| \n Others | \n\n 28 | \n\n 768 | \n
| \n Total S&M expenses | \n\n 685 | \n\n 7,947 | \n
| \n (1) | \n\n Includes \u20ac596 thousands and \u20ac35 thousands related to share-based compensation expense as of December\u00a031, 2023 and 2024 respectively. | \n
|---|
18.4Personnel expenses
The Group was employing 13 people on permanent contract as of December\u00a031, 2024, compared to 17 as of December\u00a02023.
The following table shows the nature of costs included in personnel expenses:
| \n In thousands of Euros | \n\n As of December\u00a031, 2024 | \n\n As of December\u00a031, 2023 | \n||||||
|---|---|---|---|---|---|---|---|---|
| \n R&D | \n\n G&A | \n\n S&M | \n\n TOTAL | \n\n R&D | \n\n G&A | \n\n S&M | \n\n TOTAL | \n|
| \n Wages and salaries | \n\n 1,612 | \n\n 1,002 | \n\n 301 | \n\n 2,915 | \n\n 2,459 | \n\n 1,934 | \n\n 1,926 | \n\n 6,319 | \n
| \n Social contributions | \n\n 596 | \n\n 618 | \n\n 133 | \n\n 1,347 | \n\n 1,111 | \n\n 463 | \n\n 993 | \n\n 2,567 | \n
| \n Service cost (employee benefit) | \n\n 14 | \n\n 1 | \n\n 6 | \n\n 21 | \n\n 14 | \n\n 4 | \n\n 6 | \n\n 24 | \n
| \n Share-based payments | \n\n 596 | \n\n 154 | \n\n 35 | \n\n 784 | \n\n 157 | \n\n (165) | \n\n 596 | \n\n 587 | \n
| \n Total | \n\n 2,818 | \n\n 1,775 | \n\n 475 | \n\n 5,067 | \n\n 3,741 | \n\n 2,235 | \n\n 3,521 | \n\n 9,497 | \n
As of December\u00a031, 2023, the reversal of the share-based expenses mainly relates to the forfeiture of free shares plans granted between 2020 and 2023 for which performance criteria were not or unlikely to be met before the achievement deadline. As of December\u00a031, 2023, the reversals on the R&D and S&M share-based related expenses are offset by the accelerated vesting of plans for which the presence condition has been waived by the Board for specific employees.
Note 17:Other income
Other income is detailed in the table below:
| \n In thousands of Euros | \n\n As of December\u00a031, | \n|
|---|---|---|
| \n 2024 | \n\n 2023 | \n|
| \n Research tax credit (see Note 8) | \n\n 1,125 | \n\n 1,697 | \n
| \n Subsidies | \n\n 0 | \n\n 0 | \n
| \n Others | \n\n 0 | \n\n 0 | \n
| \n Total | \n\n 1,125 | \n\n 1,697 | \n
Note 18:Operating expenses
18.1Research and development expenses
The table below shows the breakdown of research and development expenses by cost nature for the periods presented:
| \n In thousands of Euros | \n\n As of December\u00a031, | \n|
|---|---|---|
| \n 2024 | \n\n 2023 | \n|
| \n Personnel expenses (1) | \n\n 2,818 | \n\n 3,741 | \n
| \n Sub-contracting, collaboration and consultants | \n\n 8,119 | \n\n 11,988 | \n
| \n Licensing and intellectual property | \n\n 280 | \n\n 341 | \n
| \n Travel and entertainment expenses | \n\n 104 | \n\n 193 | \n
| \n Depreciation and amortization expense | \n\n 972 | \n\n 2,757 | \n
| \n Other | \n\n 76 | \n\n 339 | \n
| \n Total R&D expenses | \n\n 12,368 | \n\n 19,360 | \n
| \n (1) | \n\n Includes \u20ac157 thousands and \u20ac596 thousands related to share-based compensation expense as of December\u00a031, 2023 and 2024 respectively. | \n
|---|
18.2General and administrative expenses
The table below shows the breakdown of general and administrative expenses by cost nature for the periods presented:
| \n In thousands of Euros | \n\n As of December\u00a031, | \n|
|---|---|---|
| \n 2024 | \n\n 2023 | \n|
| \n Personnel expenses (1) | \n\n 1,775 | \n\n 2,235 | \n
| \n Professional Fees | \n\n 2,787 | \n\n 1,028 | \n
| \n Communication and travel expenses | \n\n 45 | \n\n 625 | \n
| \n Postal and telecommunication expenses | \n\n 14 | \n\n 6 | \n
| \n Depreciation and amortization expense | \n\n 170 | \n\n 123 | \n
| \n Attendance fees | \n\n 251 | \n\n 191 | \n
| \n Insurance | \n\n 103 | \n\n 6 | \n
| \n Others | \n\n 240 | \n\n 1,138 | \n
| \n Total G&A expenses | \n\n 5,386 | \n\n 5,352 | \n
| \n (1) | \n\n Includes \u20ac(165) thousands and \u20ac154 thousands related to share-based compensation expense as of December\u00a031, 2023 and 2024 respectively. | \n
|---|
18.3Sales and Marketing expenses
The table below shows the breakdown of sales and marketing expenses by cost nature for the periods presented:
| \n In thousands of Euros | \n\n As of December\u00a031, | \n|
|---|---|---|
| \n 2024 | \n\n 2023 | \n|
| \n Personnel expenses (1) | \n\n 475 | \n\n 3,521 | \n
| \n Professional Fees | \n\n 141 | \n\n 3,437 | \n
| \n Communication and travel expenses | \n\n 2 | \n\n 68 | \n
| \n Depreciation and amortization expense | \n\n 39 | \n\n 154 | \n
| \n Others | \n\n 28 | \n\n 768 | \n
| \n Total S&M expenses | \n\n 685 | \n\n 7,947 | \n
| \n (1) | \n\n Includes \u20ac596 thousands and \u20ac35 thousands related to share-based compensation expense as of December\u00a031, 2023 and 2024 respectively. | \n
|---|
18.4Personnel expenses
The Group was employing 13 people on permanent contract as of December\u00a031, 2024, compared to 17 as of December\u00a02023.
The following table shows the nature of costs included in personnel expenses:
| \n In thousands of Euros | \n\n As of December\u00a031, 2024 | \n\n As of December\u00a031, 2023 | \n||||||
|---|---|---|---|---|---|---|---|---|
| \n R&D | \n\n G&A | \n\n S&M | \n\n TOTAL | \n\n R&D | \n\n G&A | \n\n S&M | \n\n TOTAL | \n|
| \n Wages and salaries | \n\n 1,612 | \n\n 1,002 | \n\n 301 | \n\n 2,915 | \n\n 2,459 | \n\n 1,934 | \n\n 1,926 | \n\n 6,319 | \n
| \n Social contributions | \n\n 596 | \n\n 618 | \n\n 133 | \n\n 1,347 | \n\n 1,111 | \n\n 463 | \n\n 993 | \n\n 2,567 | \n
| \n Service cost (employee benefit) | \n\n 14 | \n\n 1 | \n\n 6 | \n\n 21 | \n\n 14 | \n\n 4 | \n\n 6 | \n\n 24 | \n
| \n Share-based payments | \n\n 596 | \n\n 154 | \n\n 35 | \n\n 784 | \n\n 157 | \n\n (165) | \n\n 596 | \n\n 587 | \n
| \n Total | \n\n 2,818 | \n\n 1,775 | \n\n 475 | \n\n 5,067 | \n\n 3,741 | \n\n 2,235 | \n\n 3,521 | \n\n 9,497 | \n
As of December\u00a031, 2023, the reversal of the share-based expenses mainly relates to the forfeiture of free shares plans granted between 2020 and 2023 for which performance criteria were not or unlikely to be met before the achievement deadline. As of December\u00a031, 2023, the reversals on the R&D and S&M share-based related expenses are offset by the accelerated vesting of plans for which the presence condition has been waived by the Board for specific employees.
18.2General and administrative expenses
The table below shows the breakdown of general and administrative expenses by cost nature for the periods presented:
| \n In thousands of Euros | \n\n As of December\u00a031, | \n|
|---|---|---|
| \n 2024 | \n\n 2023 | \n|
| \n Personnel expenses (1) | \n\n 1,775 | \n\n 2,235 | \n
| \n Professional Fees | \n\n 2,787 | \n\n 1,028 | \n
| \n Communication and travel expenses | \n\n 45 | \n\n 625 | \n
| \n Postal and telecommunication expenses | \n\n 14 | \n\n 6 | \n
| \n Depreciation and amortization expense | \n\n 170 | \n\n 123 | \n
| \n Attendance fees | \n\n 251 | \n\n 191 | \n
| \n Insurance | \n\n 103 | \n\n 6 | \n
| \n Others | \n\n 240 | \n\n 1,138 | \n
| \n Total G&A expenses | \n\n 5,386 | \n\n 5,352 | \n
| \n (1) | \n\n Includes \u20ac(165) thousands and \u20ac154 thousands related to share-based compensation expense as of December\u00a031, 2023 and 2024 respectively. | \n
|---|
Note 20:Financial income and expenses
The financial income and expenses are broken down as follows:
| \n In thousands of Euros | \n\n As of December\u00a031, | \n|
|---|---|---|
| \n 2024 | \n\n 2023 | \n|
| \n Foreign exchange gains | \n\n 662 | \n\n 35 | \n
| \n Net change in Derivative Financial Instrument Fair Value | \n\n 4,132 | \n\n 6,841 | \n
| \n Other | \n\n 1 | \n\n 0 | \n
| \n Financial income | \n\n 4,795 | \n\n 6,876 | \n
| \n Foreign exchange losses | \n\n (476) | \n\n (248) | \n
| \n Interest expenses from borrowings and amortized costs | \n\n (1,476) | \n\n (3,039) | \n
| \n Interest expenses from Lease | \n\n (77) | \n\n (113) | \n
| \n Financial Amortization | \n\n (932) | \n\n 0 | \n
| \n Other | \n\n (2) | \n\n (1) | \n
| \n Financial expenses | \n\n (2,963) | \n\n (3,401) | \n
| \n TOTAL | \n\n 1,833 | \n\n 3,475 | \n
Foreign exchange gains and losses primarily arise from the purchase of services labeled in U.S. dollars as well as exchange gain and losses on open balance sheet positions.
Derivative financial instruments are measured at fair-value through profit and loss. The fair value is calculated based on financial mathematic models using observable market data as of December\u00a031, 2024 and 2023.
Interest expenses from lease reflect interest on the lease liability deriving from the application of IFRS 16 standard.
Interest expenses from amortized cost (Effective Interest Method) represents the calculated interests expenses of the outstanding financial debts: Heights Capital convertible bonds, EIB loan, state-guaranteed loan and conditional advances (refer to Note 11 \u2013 Financial liabilities).
Financial Amortization refers to the gradual recognition of the\u00a0non-current financial asset arising from the \u201cDay-1 loss\u201d resulting from the warrant valuation ( see Note 11.5).
Note 22:Commitments and contingencies
22.1Commitments given
Agreement with Passage de l\u2019Innovation
Services included in the lease agreement
On January\u00a01, 2015, we entered into a lease agreement for our\u00a0headquarters premises in Paris, France with Passage de l\u2019Innovation, which was amended on October\u00a01, 2015, January\u00a01, 2016, May\u00a01, 2017, January\u00a08, 2018, July\u00a01, 2018, October\u00a01, 2018, November\u00a01, 2019, October\u00a01, 2021, January\u00a01, 2022 and July 2023. The agreement includes other services provided by the lessor, among which the general management of the building, office cleaning, maintenance, electricity, reception, access to meeting rooms.
The amount for 2024 is a fixed amount of \u20ac102\u00a0K to cover for the related services expenses.
Commitments under service agreement \u2013 G&A operations
The Group entered into a services contract with Passage de l\u2019Innovation in connection with human resources, legal and intellectual property services on May\u00a01, 2017, which was amended on December\u00a015, 2017, January\u00a031, 2018, December\u00a018, 2018, January\u00a01, 2020, January\u00a01, 2021. According to the last amendment terms and conditions, the annual cost is fixed at \u20ac304\u00a0K and each party can terminate the contract after a six-month notice period.
The following table discloses information about the period in which payments are due as of December\u00a031, 2024:
| \n In thousands of Euros | \n\n Total | \n\n Less than one\u00a0year | \n\n One to three\u00a0years | \n\n Four to five\u00a0years | \n\n More than five\u00a0years | \n
|---|---|---|---|---|---|
| \n Agreements with Passage de l\u2019Innovation | \n\n 741 | \n\n 370 | \n\n 370 | \n\n \u2014 | \n\n \u2014 | \n
Commitments related to R&D operations
A The Company has signed various licensing and collaboration agreements:
\u2022In October\u00a02012, the Group entered into a license agreement with Inserm Transfert S.A. (\u201cInserm\u201d), a French public scientific and technological institute. The Group paid a license fee of \u20ac40\u00a0K in 2013 upon the execution of the agreement, which has been recognized as research and development expenses in the statement of income. Upon completion of development milestones, the Group has to pay non-refundable fees up to \u20ac2,750\u00a0K in the aggregate. Upon commercialization of any product covered by the licensed patents, the Group will be obligated to pay a percentage of net sales as a royalty. The royalty rate varies depending on the amount of net sales.
\u2022In December\u00a02013, the Group entered into a license agreement for use of scientific data with the Association Fran\u00e7aise contre les Myopathies, (\u201cAFM\u201d), a non-profit association, the French Muscular Dystrophy Association, Genethon and Inserm Transfert, acting as a delegate of Inserm, a French public scientific and technological institute and the Universit\u00e9 Pierre et Marie Curie, (\u201cUPMC\u201d), a French university. The Group paid a license fee of \u20ac10\u00a0K upon the execution of the agreement, which has been recognized as research and development expenses in the Consolidated Statement of Income. Upon completion of development milestones, the Group has to pay non-refundable fees up to \u20ac688\u00a0K. Upon commercialization of any product covered by the license patents, the Group will be obligated to pay an annual royalty of 1% of net sales.
\u2022In February\u00a02013, the Group entered into a license agreement with Novartis. The Company issued 670,588 ordinary shares as consideration paid for the licenses. The amount of the intangible asset recognized was \u20ac275\u00a0K (see Note\u00a04) and determined by reference to the fair value of the ordinary shares that were granted by the Company in exchange for the licenses. Upon commercialization of any product covered by the licenses, the Company will be obligated to pay a royalty of 5% of net sales.
\u2022In February\u00a02014, the Company entered into a non-exclusive license, development and commercialization agreement with Avalanche Technologies (\u201cAvalanche\u201d renamed \u201cAdverum Biotechnologies\u201d), a biotechnology company. The annual license fee payable by the Group is $30\u00a0K, which was a \u20ac26\u00a0K payment each year from 2014 to 2018 recognized as research and development expenses in the statement of income. Upon completion of development milestones, the Group has to pay specified non-refundable fees of up to\u00a0$5,900\u00a0K. As of December\u00a031, 2024, the residual commitments amount to $5,500 K. Upon commercialization of any product covered by the license patents, the Group will be obligated to pay a percentage of net sales as a royalty. The royalty rate varies depending on the amount of net sales.
\u2022In January\u00a02016, the Group entered into a license agreement with M.I.T., upon exercising an option right granted under the patent option agreement between M.I.T. and the Group, dated January\u00a09, 2015. Under the terms of this license agreement, the Group recognized as a research and development expense and agreed to pay a license issue fee of $45\u00a0K, license maintenance fees up to $100\u00a0K per year and variable payments up to $7,300\u00a0K depending on the achievement of milestone events. The contract terms have been amended in May\u00a02021, where the Company agreed to pay a license issue fee of $85\u00a0K per year in 2021 and 2022 and $75 K for the subsequent years, license maintenance fees up to $100\u00a0K per year and variable payments up to $8,890\u00a0K depending on the achievement of milestone events. As of December\u00a031, 2024 the residual commitments amount to $8,050\u00a0K. The Company will also pay running mid-single-digit royalties on future net sales.
\u2022In 2019, the Company entered into a non-exclusive license agreement with President and Fellows of Harvard College. Under the terms of this license agreement, we agreed to pay a non-refundable license issuance fee of $25\u00a0K. In addition, we agreed to pay an annual license maintenance fee as from the first commercial sale of a licensed product ranging from $25\u00a0K to $75\u00a0K (creditable against running royalties), a milestone payment of $25\u00a0K upon achievement of marketing authorization for the first licensed product in any country, and a running royalty of less than 1% on net sales for a period of 15\u00a0years from the date of the first commercial sale (on a licensed product by licensed product basis).
\u2022In 2019, GenSight Biologics entered into an exclusive license agreement with Sorbonne University, Centre National de la Recherche Scientifique (\u201cCNSR\u201d), Institut National de la Sant\u00e9 et de la Recherche M\u00e9dicale\u00a0and Satt Lutech. Under this license agreement, the Company paid the licensors a one-time license upfront payment of \u20ac30\u00a0K. The Company is also obliged to pay milestone payments upon achievement of certain development and regulatory milestone events. After the grant of a MA or BLA for the product, the Company is required to pay a fixed royalty fee for each first use of a product on a patient who has received the associated gene therapy treatment. In addition, the Company required to pay an annual license maintenance fee creditable against the total paid amount of fixed royalty fee due on the same year.
For each of these licensing and collaboration agreements, based on the significant uncertainties in the development of the product candidates as well as the Group having sole discretion to decide whether it would like to proceed with the research and development activities, the Group has concluded, based on the stage of development of its product candidates, that it is remote that a payment will be made by the Group to the parties under these licensing and collaboration agreements.
22.2Commitments received
The Group entered into a sublease agreement in New York for its U.S.-based subsidiary offices in August 2022. Sublessee delivered to the Group, an unconditional, irrevocable, self-renewing and transferable letter of credit for a total amount of $117\u00a0K. This sublease agreement and transferable letter of credit was extended until end of August 2025.
Note 22:Commitments and contingencies
22.1Commitments given
Agreement with Passage de l\u2019Innovation
Services included in the lease agreement
On January\u00a01, 2015, we entered into a lease agreement for our\u00a0headquarters premises in Paris, France with Passage de l\u2019Innovation, which was amended on October\u00a01, 2015, January\u00a01, 2016, May\u00a01, 2017, January\u00a08, 2018, July\u00a01, 2018, October\u00a01, 2018, November\u00a01, 2019, October\u00a01, 2021, January\u00a01, 2022 and July 2023. The agreement includes other services provided by the lessor, among which the general management of the building, office cleaning, maintenance, electricity, reception, access to meeting rooms.
The amount for 2024 is a fixed amount of \u20ac102\u00a0K to cover for the related services expenses.
Commitments under service agreement \u2013 G&A operations
The Group entered into a services contract with Passage de l\u2019Innovation in connection with human resources, legal and intellectual property services on May\u00a01, 2017, which was amended on December\u00a015, 2017, January\u00a031, 2018, December\u00a018, 2018, January\u00a01, 2020, January\u00a01, 2021. According to the last amendment terms and conditions, the annual cost is fixed at \u20ac304\u00a0K and each party can terminate the contract after a six-month notice period.
The following table discloses information about the period in which payments are due as of December\u00a031, 2024:
| \n In thousands of Euros | \n\n Total | \n\n Less than one\u00a0year | \n\n One to three\u00a0years | \n\n Four to five\u00a0years | \n\n More than five\u00a0years | \n
|---|---|---|---|---|---|
| \n Agreements with Passage de l\u2019Innovation | \n\n 741 | \n\n 370 | \n\n 370 | \n\n \u2014 | \n\n \u2014 | \n
Commitments related to R&D operations
A The Company has signed various licensing and collaboration agreements:
\u2022In October\u00a02012, the Group entered into a license agreement with Inserm Transfert S.A. (\u201cInserm\u201d), a French public scientific and technological institute. The Group paid a license fee of \u20ac40\u00a0K in 2013 upon the execution of the agreement, which has been recognized as research and development expenses in the statement of income. Upon completion of development milestones, the Group has to pay non-refundable fees up to \u20ac2,750\u00a0K in the aggregate. Upon commercialization of any product covered by the licensed patents, the Group will be obligated to pay a percentage of net sales as a royalty. The royalty rate varies depending on the amount of net sales.
\u2022In December\u00a02013, the Group entered into a license agreement for use of scientific data with the Association Fran\u00e7aise contre les Myopathies, (\u201cAFM\u201d), a non-profit association, the French Muscular Dystrophy Association, Genethon and Inserm Transfert, acting as a delegate of Inserm, a French public scientific and technological institute and the Universit\u00e9 Pierre et Marie Curie, (\u201cUPMC\u201d), a French university. The Group paid a license fee of \u20ac10\u00a0K upon the execution of the agreement, which has been recognized as research and development expenses in the Consolidated Statement of Income. Upon completion of development milestones, the Group has to pay non-refundable fees up to \u20ac688\u00a0K. Upon commercialization of any product covered by the license patents, the Group will be obligated to pay an annual royalty of 1% of net sales.
\u2022In February\u00a02013, the Group entered into a license agreement with Novartis. The Company issued 670,588 ordinary shares as consideration paid for the licenses. The amount of the intangible asset recognized was \u20ac275\u00a0K (see Note\u00a04) and determined by reference to the fair value of the ordinary shares that were granted by the Company in exchange for the licenses. Upon commercialization of any product covered by the licenses, the Company will be obligated to pay a royalty of 5% of net sales.
\u2022In February\u00a02014, the Company entered into a non-exclusive license, development and commercialization agreement with Avalanche Technologies (\u201cAvalanche\u201d renamed \u201cAdverum Biotechnologies\u201d), a biotechnology company. The annual license fee payable by the Group is $30\u00a0K, which was a \u20ac26\u00a0K payment each year from 2014 to 2018 recognized as research and development expenses in the statement of income. Upon completion of development milestones, the Group has to pay specified non-refundable fees of up to\u00a0$5,900\u00a0K. As of December\u00a031, 2024, the residual commitments amount to $5,500 K. Upon commercialization of any product covered by the license patents, the Group will be obligated to pay a percentage of net sales as a royalty. The royalty rate varies depending on the amount of net sales.
\u2022In January\u00a02016, the Group entered into a license agreement with M.I.T., upon exercising an option right granted under the patent option agreement between M.I.T. and the Group, dated January\u00a09, 2015. Under the terms of this license agreement, the Group recognized as a research and development expense and agreed to pay a license issue fee of $45\u00a0K, license maintenance fees up to $100\u00a0K per year and variable payments up to $7,300\u00a0K depending on the achievement of milestone events. The contract terms have been amended in May\u00a02021, where the Company agreed to pay a license issue fee of $85\u00a0K per year in 2021 and 2022 and $75 K for the subsequent years, license maintenance fees up to $100\u00a0K per year and variable payments up to $8,890\u00a0K depending on the achievement of milestone events. As of December\u00a031, 2024 the residual commitments amount to $8,050\u00a0K. The Company will also pay running mid-single-digit royalties on future net sales.
\u2022In 2019, the Company entered into a non-exclusive license agreement with President and Fellows of Harvard College. Under the terms of this license agreement, we agreed to pay a non-refundable license issuance fee of $25\u00a0K. In addition, we agreed to pay an annual license maintenance fee as from the first commercial sale of a licensed product ranging from $25\u00a0K to $75\u00a0K (creditable against running royalties), a milestone payment of $25\u00a0K upon achievement of marketing authorization for the first licensed product in any country, and a running royalty of less than 1% on net sales for a period of 15\u00a0years from the date of the first commercial sale (on a licensed product by licensed product basis).
\u2022In 2019, GenSight Biologics entered into an exclusive license agreement with Sorbonne University, Centre National de la Recherche Scientifique (\u201cCNSR\u201d), Institut National de la Sant\u00e9 et de la Recherche M\u00e9dicale\u00a0and Satt Lutech. Under this license agreement, the Company paid the licensors a one-time license upfront payment of \u20ac30\u00a0K. The Company is also obliged to pay milestone payments upon achievement of certain development and regulatory milestone events. After the grant of a MA or BLA for the product, the Company is required to pay a fixed royalty fee for each first use of a product on a patient who has received the associated gene therapy treatment. In addition, the Company required to pay an annual license maintenance fee creditable against the total paid amount of fixed royalty fee due on the same year.
For each of these licensing and collaboration agreements, based on the significant uncertainties in the development of the product candidates as well as the Group having sole discretion to decide whether it would like to proceed with the research and development activities, the Group has concluded, based on the stage of development of its product candidates, that it is remote that a payment will be made by the Group to the parties under these licensing and collaboration agreements.
22.2Commitments received
The Group entered into a sublease agreement in New York for its U.S.-based subsidiary offices in August 2022. Sublessee delivered to the Group, an unconditional, irrevocable, self-renewing and transferable letter of credit for a total amount of $117\u00a0K. This sublease agreement and transferable letter of credit was extended until end of August 2025.
Note 24:Earnings per share
The basic earnings per share is calculated by dividing the net income for the period attributable to the shareholders of the Group by the weighted average number of ordinary shares outstanding during the period. Preferred shares had the same rights and dividends as ordinary shares for purposes of calculating earnings per share. All preferred shares were converted on a one-for-one basis into ordinary shares upon completion of the IPO on Euronext Paris in July\u00a02016.
All outstanding ordinary shares have been taken into consideration for purposes of calculating basic earnings per share. The weighted average number of ordinary shares was 48,316,339 and 95 755\u00a0463 for the years ended December\u00a031, 2023 and 2024, respectively.
The diluted earnings per share is calculated by dividing the net income for the period attributable to shareholders of the Group by the weighted average number of shares outstanding plus any potentially dilutive shares not yet issued from share-based compensation plans (see Note\u00a018).
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 9,818,182 and 46,697,090 potential additional ordinary shares, for the years ended December\u00a031, 2023 and 2024, respectively, have been considered anti-dilutive.
| \n In thousands of Euros, except for earning (loss) per share | \n\n 2024 | \n\n 2023 | \n
|---|---|---|
| \n Net income (loss) of the reporting period | \n\n (14,001) | \n\n (26,220) | \n
| \n Adjusted weighted average number of outstanding shares | \n\n 95,755,463 | \n\n 48,316,339 | \n
| \n Basic and diluted earnings (loss) per share | \n\n (0.15) | \n\n (0.54) | \n
Note 25:Management of financial risks
The principal financial instruments held by the Group are cash and cash equivalents. The purpose of holding these instruments is to finance the ongoing business activities of the Group. It is not the Group\u2019s policy to invest in financial instruments for speculative purposes. The Group does not utilize derivatives.
For more information on financial risks, see Section 3.1 \u201cFinancial risks\u201d.
The principal risks to which the Group is exposed are liquidity risk, foreign currency exchange risk, interest rate risk and credit risk.
Liquidity risk
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has established an appropriate liquidity risk management framework for management of the Group\u2019s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.
The note\u00a011.6 details the Group\u2019s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods.
The Company\u2019s current financial debt consists of (i) tranche A of the EIB loan for \u20ac8.9 million (nominal amount and financial interests as of December 31, 2024), (ii) bonds convertible into new shares in favor of Heights Capital for a nominal amount of \u20ac8.8\u00a0million (\u20ac9,7 million in case of full redemption in cash), (iii)\u00a0state guaranteed loans from the Banks for a total outstanding amount of \u20ac0.5 million
| \n In thousands of Euros | \n\n 2024 | \n|||
|---|---|---|---|---|
| \n Total | \n\n Less than one year | \n\n One to five years | \n\n More than five years | \n|
| \n Conditional advances | \n\n 7,247 | \n\n \u2014 | \n\n 4,096 | \n\n 3,151 | \n
| \n Corporate bonds | \n\n 9,726 | \n\n 9,726 | \n\n \u2014 | \n\n \u2014 | \n
| \n Borrowings from Banks | \n\n 9,425 | \n\n 9,425 | \n\n \u2014 | \n\n \u2014 | \n
| \n o/w state-guaranteed loan | \n\n 496 | \n\n 496 | \n\n \u2014 | \n\n \u2014 | \n
| \n o/w EIB loan | \n\n 8,929 | \n\n 8,929 | \n\n \u2014 | \n\n \u2014 | \n
| \n Sub Total | \n\n 26 399 | \n\n 19 151 | \n\n 4 096 | \n\n 3 151 | \n
| \n Leases | \n\n 1 099 | \n\n 585 | \n\n 514 | \n\n \u2014 | \n
| \n Total | \n\n 27,498 | \n\n 19,737 | \n\n 4,610 | \n\n 3,151 | \n
Given the information presented in notes 2.2 Going concern and 11 Financial liabilities, financial liabilities excluding the effect of discounting amounts to 19.7 million euros at less than one year and 7.7 million euros at more than one year, based on contractual maturities.
As of December\u00a031, 2024, the Group has not sufficient net working capital to meet its obligations during the next 12\u00a0months. See Note\u00a02.2 Going Concern.
Foreign currency exchange risk
The Group is exposed to foreign exchange risk inherent in certain services provided in the United States, which have been invoiced in U.S. dollars. The Group does not currently have revenues in dollars nor in any other currency. Due to the relatively low level of these expenditures, the exposure to foreign exchange risk is unlikely to have a material adverse impact on the results of operations or financial position of the Group. The Group\u2019s exposure to currencies other than the U.S. dollar is negligible. For the years ended December\u00a031,2023 and\u00a02024, approximately 34% and 28%, respectively, of its purchases and other external expenses were made in U.S. dollars, generating a net foreign exchange gains of \u20ac213\u00a0K in 2023 and a net foreign exchange loss of \u20ac186\u00a0K in 2024. In light of these insignificant amounts, the Group has not adopted, at this stage, a hedging mechanism in order to protect its business activity against fluctuations in exchange rates. As the Group further increases its business, particularly in the United States, the Group expects to face greater exposure to exchange rate risk and would then consider adopting an appropriate policy for hedging against these risks.
Interest rate risk
The Company has low exposure to interest rate risk. The Group borrow funds at fixed interest rates. The repayment flows of the advances from Banque Publique d\u2019Investissement (\u201cBPI France\u201d) and the borrowings are not subject to interest rate risk.
Credit risk
In order to minimize credit risk, the Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group\u2019s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.
The credit risk related to the Group\u2019s cash and cash equivalents is not significant in light of the quality of the co-contracting financial institutions.
The Group does not have significant credit risk exposure to any single customer or any group of counterparties having similar characteristics.
Fair value
The fair value of financial instruments traded on an active market is based on the market rate as of December\u00a031, 2024. The market prices used for the financial assets owned by the Company are the bid prices in effect on the market as of the valuation date.
The nominal value, less the provisions for depreciation, of the accounts receivable and current debts, is presumed to approximate the fair value of those items.
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximizing the return to shareholders through the optimization of the debt and equity balance. The Group\u2019s overall strategy remains unchanged from 2023.
The capital structure of the Group consists of net debt (borrowings disclosed in Note 11 after deducting cash and bank balances) and equity of the Group (comprising issued capital, reserves and retained earnings and non-controlling interests as disclosed in Note\u00a010).
The Group is not subject to any externally imposed capital requirements.
Liquidity risk
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has established an appropriate liquidity risk management framework for management of the Group\u2019s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.
The note\u00a011.6 details the Group\u2019s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods.
The Company\u2019s current financial debt consists of (i) tranche A of the EIB loan for \u20ac8.9 million (nominal amount and financial interests as of December 31, 2024), (ii) bonds convertible into new shares in favor of Heights Capital for a nominal amount of \u20ac8.8\u00a0million (\u20ac9,7 million in case of full redemption in cash), (iii)\u00a0state guaranteed loans from the Banks for a total outstanding amount of \u20ac0.5 million
| \n In thousands of Euros | \n\n 2024 | \n|||
|---|---|---|---|---|
| \n Total | \n\n Less than one year | \n\n One to five years | \n\n More than five years | \n|
| \n Conditional advances | \n\n 7,247 | \n\n \u2014 | \n\n 4,096 | \n\n 3,151 | \n
| \n Corporate bonds | \n\n 9,726 | \n\n 9,726 | \n\n \u2014 | \n\n \u2014 | \n
| \n Borrowings from Banks | \n\n 9,425 | \n\n 9,425 | \n\n \u2014 | \n\n \u2014 | \n
| \n o/w state-guaranteed loan | \n\n 496 | \n\n 496 | \n\n \u2014 | \n\n \u2014 | \n
| \n o/w EIB loan | \n\n 8,929 | \n\n 8,929 | \n\n \u2014 | \n\n \u2014 | \n
| \n Sub Total | \n\n 26 399 | \n\n 19 151 | \n\n 4 096 | \n\n 3 151 | \n
| \n Leases | \n\n 1 099 | \n\n 585 | \n\n 514 | \n\n \u2014 | \n
| \n Total | \n\n 27,498 | \n\n 19,737 | \n\n 4,610 | \n\n 3,151 | \n
Given the information presented in notes 2.2 Going concern and 11 Financial liabilities, financial liabilities excluding the effect of discounting amounts to 19.7 million euros at less than one year and 7.7 million euros at more than one year, based on contractual maturities.
As of December\u00a031, 2024, the Group has not sufficient net working capital to meet its obligations during the next 12\u00a0months. See Note\u00a02.2 Going Concern.
Foreign currency exchange risk
The Group is exposed to foreign exchange risk inherent in certain services provided in the United States, which have been invoiced in U.S. dollars. The Group does not currently have revenues in dollars nor in any other currency. Due to the relatively low level of these expenditures, the exposure to foreign exchange risk is unlikely to have a material adverse impact on the results of operations or financial position of the Group. The Group\u2019s exposure to currencies other than the U.S. dollar is negligible. For the years ended December\u00a031,2023 and\u00a02024, approximately 34% and 28%, respectively, of its purchases and other external expenses were made in U.S. dollars, generating a net foreign exchange gains of \u20ac213\u00a0K in 2023 and a net foreign exchange loss of \u20ac186\u00a0K in 2024. In light of these insignificant amounts, the Group has not adopted, at this stage, a hedging mechanism in order to protect its business activity against fluctuations in exchange rates. As the Group further increases its business, particularly in the United States, the Group expects to face greater exposure to exchange rate risk and would then consider adopting an appropriate policy for hedging against these risks.
Interest rate risk
The Company has low exposure to interest rate risk. The Group borrow funds at fixed interest rates. The repayment flows of the advances from Banque Publique d\u2019Investissement (\u201cBPI France\u201d) and the borrowings are not subject to interest rate risk.
Note 26:Auditor\u2019s fees
The auditors\u2019 fees paid by the Group in 2024 amounted to \u20ac398\u00a0K.
| \n In thousands of Euros | \n\n 2024 | \n|||
|---|---|---|---|---|
| \n Becouze | \n\n Deloitte & Associ\u00e9s | \n|||
| \n Amount | \n\n % | \n\n Amount | \n\n % | \n|
| \n Audit certification | \n\n 147 | \n\n 77% | \n\n 163 | \n\n 79% | \n
| \n Reports and diligences related to Financing Operations | \n\n 35 | \n\n 18% | \n\n 35 | \n\n 17% | \n
| \n Other reports (incl. for French legal purposes) | \n\n 9 | \n\n 5% | \n\n 9 | \n\n 4% | \n
| \n Total | \n\n 191 | \n\n 100% | \n\n 207 | \n\n 100% | \n
Other reports relate to contractual diligences and reports released in relation with financing and strategic operations driven by the Company throughout the year 2024.
Note 27:Subsequent events
On January 15, 2025, the Company announced the publication of outcomes data from five years\u2019 follow-up of patients treated unilaterally with LUMEVOQ\u00ae, the company\u2019s investigational gene therapy for Leber Hereditary Optic Neuropathy (LHON) due to a mutated ND4 mitochondrial gene. The patients had all participated in the Phase III trials RESCUE and REVERSE and accepted enrolling into the long-term study RESTORE at the end of the RESCUE and REVERSE studies. The paper, published online by the leading journal JAMA Ophthalmology in December 2024, found that patients \u201cdemonstrated a sustained bilateral improvement in BCVA [Best-Corrected Visual Acuity] and a good safety profile over 5 years after treatment\u201d. The \u201cpersistent benefit\u201d continues the durable effect observed at earlier time points and represents a significant addition to the body of evidence on the benefit-risk ratio of LUMEVOQ\u00ae gene therapy in ND4 LHON patients.
On February 12, 2025, the Company reported final efficacy and safety results at the conclusion of the REFLECT Phase III clinical trial with LUMEVOQ\u00ae (GS010; lenadogene nolparvovec). The results show that five years after a one-time administration of the gene therapy, the visual acuity improvement among patients with LHON (Leber Hereditary Optic Neuropathy) was sustained while maintaining a favorable safety profile. Bilateral injections provided an additional effect compared to unilateral treatment, demonstrated in some of the responder rate analyses.
\u00a0On March 7, 2025, the Company announced a new round of financing reserved to specialized investors and funded by the issuance of new shares with warrants attached, for a total gross amount of approximately \u20ac0.9 million (excluding the future net proceeds related to the exercise of the warrants) (the \u201cReserved Offering\u201d). The subscription price for one ABSA is \u20ac0.2248 (the \u201cOffering Price\u201c).