content.stockpr.comcontent.stockpr.com/poxelpharma/files/pages/... · English translation for information purposes only Joint stock company (société anonyme) with share capital

Englishtranslationforinformationpurposesonly

Jointstockcompany(sociétéanonyme)withsharecapitalof390.624,56€Registeredoffice:259/261,AvenueJeanJaurès,ImmeubleleSunway

69007Lyon

DOCUMENTDERÉFÉRENCE2015

PursuanttoitsGeneralRegulation,andmoreparticularytoArticle212-13,theAutoritédesMarchésFinanciershasregisteredthisregistrationdocumentonJune13,2016undernumberR.16-053.Thisdocumentmaybeused to support a financial transactiononly if completedbya transactionnoteapprouvedbytheAMF.Itwaspreparedbytheissuerandistheresponsibilityofitssignatories.

PursuanttoArticleL621-8-1-IoftheMonetaryandFinancialCode,registrationwasmadeaftertheAMF verified that the document is exhaustive and comprehensible and that the informationcontainedinitisconsistent.ItdoesnotimplythattheAutoritédesMarchésFinanciershasverifiedtheaccountingandfinancialinformationpresentedherein.

In accordance with article 28 of Commission regulation (EC) n° 809/2004, the restated IFRScorporate accounts of POXEL for the fiscal year 2014 aswell as related statutory auditors reportmentionned in sections 7 and 8.1 of the annual financial report for 2014, are incorporated byreferenceinthedocumentdereferenceandavailableontheCompanywebsite(www.poxel.com).

ThisdocumentisavailablewitjoutchargeattheregisteredofficeoftheCompany,andinelectronicformontheAMFwebsite(www.amf-france.org)andtheCompanywebsite(www.poxel.com).


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1. PERSONSRESPONSIBLE.............................................................................................................7

1.1. PERSONINCHARGEOFTHEDOCUMENTDEREFERENCE.......................................................7

1.2. CERTIFICATIONBYTHEPERSONINCHARGE..........................................................................7

1.3. PERSONINCHARGEOFTHEFINANCIALREPORTING.............................................................7

2. STATUTORYAUDITORS..............................................................................................................8

2.1. STATUTORYAUDITORS.........................................................................................................8

2.2. DEPUTYAUDITORS...............................................................................................................8

2.3. INFORMATIONONAUDITORSTHATHAVERESIGNED,HAVEBEENREMOVEDORHAVENOTBEENRENEWED..................................................................................................8

3. SELECTEDFINANCIALINFORMATION.......................................................................................10

4. RISKSFACTORS........................................................................................................................13

4.1. RISKS RELATED TO OUR FINANCIAL POSITION AND NEED FOR ADDITIONALCAPITAL.............................................................................................................................13

4.2. RISKS RELATED TO OUR PRODUCT DEVELOPMENT, REGULATORY APPROVALANDCOMMERCIALIZATION................................................................................................15

4.3. RISKSRELATEDTOOURDEPENDENCEONTHIRDPARTIES..................................................28

4.4. RISKSRELATEDTOOUROPERATIONS.................................................................................31

4.5. RISKSRELATEDTOOURINTELLECTUALPROPERTY..............................................................36

5. INFORMATIONABOUTTHEISSUER..........................................................................................45

5.1. HISTORYANDEVOLUTIONOFTHECOMPANY....................................................................45

5.2. INVESTMENTS....................................................................................................................48

6. BUSINESSOVERVIEW...............................................................................................................49

6.1. OURCOMPANY..................................................................................................................49

6.2. OURSTRATEGY...................................................................................................................52

6.3. TYPE2DIABETESOVERVIEW..............................................................................................53

6.4. CURRENTTHERAPIESANDTHEIRLIMITATIONS..................................................................55

6.5. OURMARKETOPPORTUNITY..............................................................................................58

6.6. OURDRUGCANDIDATES....................................................................................................60

6.7. PHASE2TRIALS..................................................................................................................63

6.8. PHASE1TRIALS..................................................................................................................69

6.9. OURLICENSEAGREEMENTS................................................................................................79

6.10. RESEARCHANDDEVELOPMENT..........................................................................................80

6.11. COMPETITION....................................................................................................................80

6.12. GOVERNMENTREGULATION..............................................................................................81

6.13. INTELLECTUALPROPERTY...................................................................................................88

6.14. FACILITIES...........................................................................................................................91

6.15. LEGALPROCEEDINGS..........................................................................................................91

6.16. EMPLOYEES........................................................................................................................91

7. ORGANIZATIONALSTRUCTURE................................................................................................92

7.1. LEGALORGANIZATIONCHART............................................................................................92


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7.2. COMPANIESOFTHEGROUP...............................................................................................92

7.3. CASHFLOWSOFTHEGROUP..............................................................................................92

8. PROPERTY,PLANTSANDEQUIPMENT.....................................................................................93

8.1. IMMOVABLEPROPERTYANDEQUIPMENT.........................................................................93

8.2. ENVIRONMENTALISSUES...................................................................................................93

9. OPERATINGANDFINANCIALREVIEW......................................................................................94

9.1. GENERALPRESENTATION...................................................................................................94

9.2. POST-CLOSINGEVENTS.......................................................................................................97

9.3. ANALYSISOFINTERIMFINANCIALSTATEMENTSASATMARCH31,2016............................98

9.4. COMPARISON OF THE FINANCIAL STATEMENT OF THE LAST TWO FINANCIALYEARS..............................................................................................................................102

10. CAPITALRESOURCES.............................................................................................................110

10.1. INFORMATIONONCAPITAL,LIQUIDASSETSANDFINANCINGSOURCES...........................110

10.2. CASHFLOWS....................................................................................................................117

10.3. BORROWINGREQUIREMENTSANDFUNDINGSTRUCTURE...............................................120

10.4. POSSIBLERESTRICTIONSINTHEUSEOFTHECAPITAL.......................................................120

10.5. SOURCESOFFINANCINGEXPECTEDFORFUTUREINVESTMENTS......................................120

11. RESEARCHANDDEVELOPMENT,PATENTSANDLICENCES......................................................121

11.1. RESEARCHANDDEVELOPMENT........................................................................................121

11.2. PATENTSANDPATENTSAPPLICATIONS............................................................................123

11.3. COLLABORATION, RESEARCH, SERVICES AND LICENSE AGREEMENTS GRANTEDBYTHECOMPANYORCONCEDEDTOIT...........................................................................124

11.4. OTHERELEMENTSOFTHEINTELECTUALPROPERTY..........................................................124

12. TRENDINFORMATION...........................................................................................................125

12.1. PRINCIPALTRENDSSINCETHECLOSEOFTHELASTFINANCIALYEAR.................................125

12.2. KNOWN TRENDS, UNCERTAINTIES, ENGAGEMENT REQUESTS AND EVENTSREASONABLYLIKELYTOAFFECTTHEPROSPECTSOFTHECOMPANY................................133

13. PROFITFORECASTSORESTIMATES........................................................................................134

14. ADMINISTRATIVE, MANAGEMENT AND SUPERVISORY BODIES, AND SENIORMANAGEMENT.....................................................................................................................135

14.1. GENERALINFORMATIONONFOUNDERS,MANAGEMENTANDDIRECTORS......................135

14.2. CONFLICTS OF INTEREST AT THE ADMINISTRATIVE BODIES AND EXECUTIVEMANAGEMENTLEVEL.......................................................................................................144

15. REMUNERATIONANDBENEFITS............................................................................................145

15.1. COMPENSATIONOFDIRECTORSANDOFFICERS................................................................145

15.2. PROVISIONEDORRECORDEDAMOUNTSBYTHECOMPANYFORTHEPURPOSEOF PENSION AND RETIREMENT PAYMENTS, AND OTHER BENEFITS FORDIRECTORSANDOFFICERS...............................................................................................150

15.3. SHAREWARRANTSANDFOUNDERSSHAREWARRANTS...................................................150


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15.4. ELEMENTSOF THE COMPENSATIONANDBENEFITSDUEOR LIKELY TOBEDUEOWINGTOORAFTERTHETERMINATIONOFTHEDUTIESOFDIRECTORSOFTHECOMPANY........................................................................................................................151

15.5. LOANSANDGUARANTEESGRANTEDTOEXECUTIVES.......................................................151

16. OPERATIONOFTHEADMINISTRATIVEANDMANAGEMENTBODIES......................................152

16.1. MANAGEMENTOFTHECOMPANY...................................................................................152

16.2. SERVICESAGREEMENTSBETWEENDIRECTORSANDTHECOMPANY.................................152

16.3. SPECIALIZEDCOMMITTEES...............................................................................................153

16.4. NON-VOTINGBOARDMEMBERS......................................................................................157

16.5. STATEMENTRELATEDTOCORPORATEGOVERNANCE.......................................................158

16.6. INTERNALCONTROL.........................................................................................................160

17. EMPLOYEES...........................................................................................................................163

17.1. NUMBEROFEMPLOYEESANDBREAKDOWNBYFUNCTION..............................................163

17.2. INTERESTSANDSTOCKOPTIONSFOREXECUTIVES...........................................................166

17.3. PARTICIPATIONOFTHEEMPLOYEESINTHECAPITALOFTHECOMPANY...........................166

17.4. PROFITSHARINGANDINCENTIVEAGREEMENTS..............................................................166

18. MAJORSHAREHOLDERS........................................................................................................167

18.1. SHARECAPITALANDVOTINGRIGHTDISTRIBUTION.........................................................167

18.2. SIGNIFICANTSHAREHOLDERSNOTREPRESENTEDONTHEBOARDOFDIRECTORS............168

18.3. RECENTOPERATIONONTHESHARECAPITALOFTHECOMPANY......................................168

18.4. VOTINGRIGHTSOFTHEMAINSHAREHOLDERS................................................................168

18.5. CONTROLOFTHECOMPANY............................................................................................169

18.6. AGREEMENTTHATMAYRESULTINTHECHANGEOFCONTROL........................................169

18.7. AGREEMENTS BETWEEN THE SHAREHOLDERS THAT THE COMPANY HASKNOWLEDGEOFANDTHATMAYRESULT INRESTRICTIONSONTHE TRANSFEROFSHARESANDINTHEEXERCISEOFTHEVOTINGRIGHTS...............................................169

18.8. PLEDGES...........................................................................................................................171

18.9. CROSSINGOFTHRESHOLDS..............................................................................................171

19.RELATEDPARTYTRANSACTIONS.................................................................................................172

19.1 INTRA-GROUPTRANSACTIONS.........................................................................................172

19.2 SIGNIFICANTAGREEMENTSCONCLUDEDWITHRELATEDPARTIES....................................172

19.3 SPECIAL REPORT OF THE AUDITORS ON REGULATED AGREEMENTS ANDCOMMITMENTS...............................................................................................................173

20. FINANCIAL INFORMATION CONCERNING THE ISSUER’S ASSETS AND LIABILITIES,FINANCIALPOSITIONANDPROFITSANDLOSSES..................................................................177

20.1. FINANCIALSTATEMENTSDRAWNUPUNDER IFRSFORFINANCIALYEARENDEDDECEMBER31,2015.........................................................................................................177

20.2. AUDITOFHISTORICALANNUALFINANCIALINFORMATION..............................................222

20.3. DATEOFTHELATESTFINANCIALINFORMATION...............................................................223

20.4. QUARTERLYFINANCIALINFORMATIONASOFMARCH31ST2016......................................223

20.5. DISTRIBUTIONOFDIVIDENDSPOLICY...............................................................................246


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20.6. LEGALANDARBITRATIONPROCEEDINGS.........................................................................246

20.7. SIGNIFICANTCHANGESINTHEFINANCIALORCOMMERCIALSITUATION..........................247

20.8. AUDITORS’FEES...............................................................................................................247

21. ADDITIONALINFORMATION..................................................................................................248

21.1. SHARECAPITAL................................................................................................................248

21.2. CONSTITUTIVEINSTRUMENTOFTHECOMPANYANDBYLAWS.........................................260

22. MATERIALCONTRACTS..........................................................................................................270

22.1. MERCKSERONOAGREEMENTANDRELATEDAMENDMENTS............................................270

22.2. VENTURELOANWITHKREOSCAPITALIV(UK)LIMITED....................................................271

23. THIRDPARTYINFORMATION,STATEMENTBYEXPERTSANDDECLARATIONSOFANYINTEREST..............................................................................................................................272

24. DOCUMENTSONDISPLAY.....................................................................................................273

25. INFORMATIONONHOLDINGS...............................................................................................274


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GENERALREMARKSNote

In this document de référence, unless otherwise indicated , the terms the "Company" or "Poxel"meanPoxel,alimitedcompanywithacapitalof€390,624.56,whoseregisteredofficeisat259/261AvenueJeanJaurès– Immeuble leSunway–69007Lyon,France,andwhich isregisteredwiththeLyonTradeandCompaniesRegistryundernumber510970817.

Pursuant to Article 28 of Regulation (EC) No 809/2004 of the European Commission of April 29,2004, thisdocument de référence incorporates by reference the financial statements prepared inaccordancewithIFRSstandardsasadoptedbytheEuropeanUnion,fortheyearended31December2014andthereportoftheStatutoryAuditorsrelatingto it,setoutonpages108to153andpage155,respectively,ofthe2014AnnualFinancialReport.WarningThisdocumentderéférencecontains informationrelatingtotheactivitiesoftheCompanyandthemarketinwhichitoperates.Thisinformationcomesfromstudiesattributabletointernalorexternalsources (e.g. industry publications, specialized studies, information published bymarket researchcompanies, analysts’ reports). The Company believes that as at the date of this document, thisinformationprovidesafairviewofthemarketanditscompetitivepositioninthismarket.However,such information has not been verified by an independent expert and the Company cannotguarantee that a third party using differentmethods to gather, analyze or calculatemarket datawouldobtainthesameresults.

Forward-lookingstatements

This document de référence also contains information on the objectives and the developmentpriorities of the Company. This information is sometimes identified by the use of future orconditional tense and forward-looking terms such as "estimate", "consider", "aim", "expect","intend", "should" , "wishes" and "could" or any variant or similar terminology. The reader'sattention is drawn to the fact that these objectives and development priorities are not historicaldataandmustnotbeinterpretedasaguaranteethatthefactsanddatamentionedwilloccur,thattheassumptionswillbeverifiedorthattheobjectiveswillbeachieved.Theseareobjectiveswhichbynaturemaynotbeachievedandtheinformationprovidedinthisdocumentderéférencemaybeincorrect without the Company being obliged to update it, subject to applicable regulations,includingtheGeneralRegulationoftheAutoritédesmarchésfinanciers(the"AMF").

Riskfactors

Investors are also invited to consider the risk factors described in Section 4 "Risk factors" of thisdocumentderéférencebeforemakinganyinvestmentdecision.Therealizationofanyoralloftheserisksislikelytohaveanegativeeffectonthebusiness,position,financialresultsorobjectivesoftheCompany.Inaddition,otherrisksnotyetidentifiedorconsideredimmaterialbytheCompany,couldhave the same negative effect and investors could lose all or part of their investment


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1. PERSONSRESPONSIBLE

1.1. Personinchargeofthedocumentderéférence

Mr.ThomasKuhn,ChiefExecutiveOfficer

1.2. Certificationbythepersonincharge

Icertify,afterhavingtakenallreasonablemeasurestothiseffect,thattheinformationcontainedinthis document de référence is, tomy knowledge, consistent with reality and contain no omissionlikelytoaffectitsimpact.

I obtained a letter from the Statutory Auditors, stating that they they have completed theirassignment, which included checking the information concerning the financial situation and theaccountscontainedinthisdocumentderéférenceandreadingallofthisdocumentderéférence.

ThehistoricalfinancialinformationpresentedinthedocumentderéférencewassubjecttoreportsofStatutoryAuditors.

TheannualfinancialstatementspreparedunderIFRSstandardsasadoptedbytheEuropeanUnion,publishedonavoluntarybasisandforthefinancialyearendedDecember31st,2014,incorporatedbyreferenceinthisdocumentweresubjecttoareportofStatutoryAuditors,appearingonpage155ofthe2014AnnualFinancialReport,whichcontainsanobservation:"Withoutquestioningtheopinionexpressedabove,wedrawyourattentionto:

onote11.4"LiabilitiestowardsMerckSerono"ofthefinancialstatementspreparedunderIFRSstandards,which shows the impact of the accounting treatment of the contract entered intowithMerckSerono.

o note 11.5 “Liabilities towards Kreos” of the financial statements prepared under IFRSstandards,which shows the impact of the accounting treatment of the contract entered intowithKreos.

MadeinLyon,onJune13,2016

Mr.ThomasKuhn,CEO

1.3. Personinchargeofthefinancialreporting

Mr.EricMassou,AdministrativeandfinancialdirectorAddress:259/261AvenueJeanJaurès-ImmeubleleSunway-69007LyonPhone:0033437372010Email:[email protected]


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2. STATUTORYAUDITORS

2.1. Statutoryauditors

MAZARSSA,memberoftheregionalcompanyoftheauditorsofVersailles,TOUREXALTIS-61RUEHENRIREGNAULT,92400COURBEVOIErepresentedbyFrédéricMAURELFirstappointmentdate:January29th,2016.Term:5years,correspondingtotheremainderofthetermofitspredecessorTermexpirationdate:duringthegeneralmeetingoftheshareholdersfortheapprovalofthefinancialstatementsofthefinancialyearendedDecember31st,2020

PRICEWATERHOUSECOOPERSAUDIT,memberoftheregionalcompanyoftheauditorsofVersailles,63ruedeVilliers,92208Neuilly-Sur-SeineCedexrepresentedbyElisabethL’HERMITEAppointmentdate:January31st,2014Term:6yearsTermexpirationdate:duringthegeneralmeetingoftheshareholdersfortheapprovalofthefinancialstatementsofthefinancialyearendedDecember31st,2019

2.2. DeputyAuditors

EmmanuelCHARNAVEL,memberoftheregionalcompanyoftheauditorsofLyon,LePremium,131BoulevardStalingrad,69624VilleurbanneCedexSubstituteofMAZARSSAAppointmentdate:January29th,2016.Term:5years,correspondingtotheremainderofthetermofitspredecessorTermexpirationdate:duringthegeneralmeetingoftheshareholdersfortheapprovalofthefinancialstatementsofthefinancialyearendedDecember31st,2020

Jean-ChristopheGEORGHIOU,memberoftheregionalcompanyoftheauditorsofVersailles,63ruedeVilliers,92208Neuilly-Sur-SeineCedexSubstituteofPRICEWATERHOUSECOOPERSAUDITAppointmentdate:January31st,2014Term:6yearsTermexpirationdate:duringthegeneralmeetingoftheshareholdersfortheapprovalofthefinancialstatementsofthefinancialyearendedDecember31st,2019

2.3. Information on auditors that have resigned, have been removed or have notbeenrenewed

MAZARSSA,memberoftheregionalcompanyoftheauditorsofLyon,LePremium,131BoulevardStalingrad,69624VilleurbanneCedex

RepresentedbyChristineDUBUS

Termexpirationdate:duringthegeneralmeetingoftheshareholdersfortheapprovalofthefinancialstatementsofthefinancialyearendedDecember31st,2020

Dateofresignation:January29th,2016


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and

FrédéricMAUREL,substituteofMAZARSSA,memberoftheregionalcompanyoftheauditorsofLyon,LePremium,131BoulevardStalingrad,69624VilleurbanneCedex

Termexpirationdate:duringthegeneralmeetingoftheshareholdersfortheapprovalofthefinancialstatementsofthefinancialyearendedDecember31st,2019

Dateofresignation:January29th,2016

The resignations of the auditors occurreddue to an internal reorganization ofmandatesmadebyMAZARSSA,whichledtothetransferofthemandaterelatingtotheCompanyintheLyonregiontotheParisregion.


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3. SELECTEDFINANCIALINFORMATION

TheCompany,whichdidnothaveanysubsidiariesasatDecember31st,2015,preparedinadditiontoits annual financial statements that comply with French accounting standards, restated financialstatements in accordance with IFRS standards as adopted by the European Union, in respect offinancial years 2014 and2015. These restated financial statementswerepublishedon a voluntarybasis.

Thefollowingselectedfinancialinformationisderivedfromthosefinancialstatements,appearinginsection20.1“IFRSfinancialstatementspreparedforthefinancialyearendedDecember31st,2015”of thisdocument de référence, aswell as the quarterly financial information onMarch 31st, 2016preparedunder IFRSstandardsappearing insection20.4“quarterlyfinancial informationonMarch31st,2016”ofthisdocumentderéférence.

The selected accounting and operational data below should be read regarding the informationcontainedinsections9"Reviewoffinancialsituationandresults”and10"Cashandcapital”ofthisdocumentderéférence.

SimplifiedbalancesheetineurosIFRSstandards

31/12/2015Audited

12months

31/12/2014Audited

12months

31/03/2016Unaudited3months


TOTALASSET46848113 13825900 42134

90236899626

Noncurrentassets686715 307813

741270 480208

Intangibleassets 540 910481 1136

Property,plantandequipment 152748 21335147815 20912

Othernoncurrentfinancialassets 533428 285569592974 458161

Currentassets46161396 13518086

41393632 36419417

Inventories - -- -

Tradereceivables 11580 -11580 -

Otherreceivablesandrelatedaccounts 3736414 32644514034931 3586429

Cashancashequivalents 42413402 1025363537347121 32832988

TOTALLIABILITIES46848113 13825900 42134

90236899626

Shareholder’sequity 38027817 (2547504)31647

712 27842082

Noncurrentliabilities1683884 4415465

1028308 3913204

Employeebenefitobligations 129958 97758140379 101601

Financialliabilities 1553926 4317707887929 3811603

Currentliabilities 7136411 119579399458882 5144340

Financialliabilities 2397150 85513022527195 1862430

Tradepayables 4336522 30986826441524 3093915

Taxandemployeerelatedpayables 379739 307955 436 187995


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472

Othercurrentliabilities 23000 -53691 -

(1) AsatDecember31,2015thecashandshareholder’sequityhadbeenstrengthenedasaresultofthecashincreasesduringthe

financialyear(seenote1.2tofinancialstatementspublishedonavolotntarybasispresentedinsection20.1“Financial

statementsunderIFRSforthefinancialyearendedDecember31,2015”ofthisdocumentderéférence).

SimplifiedincomestatementineurosIFRSstandard

31/12/2015Audited

12months

31/12/2014Audited

12months



Turnover 59650 - --

ResearchanddevelopmentexpensesnetofCIR (7318749) (5017534) (4543214)(1165265)

Generalandadministrtiveexpenses (4461852) (1878448) (1580579)(1243086)

Operatingloss (11720951) (6895982) (6123793)(2408350)

Financialexpenses (908575) (7258193) (170899)(254880)

Financialincome 388514 71726 4715892508

Netloss (12241013) (14082448) (6247534)(2570722)

Losspershare (0,68) (1,41) (0,32)(0,16)

Simplifiedcashflows31/12/2015Audited

12months

31/12/2014Audited

12months



Cashflowfromoperatingactivities (10061267) (6089349) (3776154) (2792777)

Beforechangeinworkingcapitalrequirements (10520376) (6060434) (5670063) (2346073)Changesinworkingcapitalrequirements 459110 (28915) 1893909 (446704)

Cashflowsfrominvestingactivies 96887 (225097) 24257 37046

Cashflowsfromfinancingactivies 42124146 8597460 (1314384) 25335085

Increase(decrease)incashandcashequivalent 32159767 2283013 (5066281) 22579354

Cashequivalentasoftheopeningdate 10253635 7970622 42413402 10253635

Cashequivalentasoftheclosingdate 42413402 10253635 37347121 32832988

Netindebtnesslevel(ineuros)IFRSstandard

31/12/2015Audited

12months

31/12/2014Audited

12months



+Financialliabilities–noncurrentportion 1553926 4317707 887929 3811603

+Financialliabilities–currentportion 2397150 8551302 2527195 1862430

-Cashandcashequivalent 42413402 10253635 37347121 32832988


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Totalnetindebtness(1) (38462328) 2615373 (33931997) (27158955)

(1) Netdebtisthesumoffinancialdebtlessnetcash(activecashlesspassivecash)


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4. RISKSFACTORS

An investment inourordinaryshares (whichmaybe in the formofADSs) involvesahighdegreeofrisk.Youshouldcarefullyconsidertherisksanduncertaintiesdescribedbelow,togetherwithalloftheinformation contained in this prospectus, includingour financial statements and the related notes,beforemakingan investmentdecision regarding theordinary shares (whichmaybe in the formofADSs).Ifanyofthefollowingrisksarerealized,ourbusiness,financialcondition,resultsofoperationsor prospects could be materially and adversely affected. In that event, the market price of ourordinaryshares (whichmaybe in the formofADSs)coulddecline,andyoucould losepartorallofyour investment.Therisksdiscussedbelowalso includeforward-lookingstatements,andouractualresults may differ substantially from those discussed in these forward-looking statements. See“CautionaryStatementRegardingForward-LookingStatements.”

4.1. RisksRelatedtoOurFinancialPositionandNeedforAdditionalCapital

4.1.1. Wehave incurred significant losses sinceour incorporationandanticipate thatwewill

continuetoincursignificantlossesintheforeseeablefuture.

We are a clinical-stage biopharmaceutical company and we have not yet generated any revenuefrom product sales. We have incurred net losses in each year since our incorporation in 2009,including net losses of €14.1million and €12.2million for the December31, 2014 and 2015 fiscalyears, respectively. These losses are principally the result of our internal and external researchexpendituresanddevelopmentcostsforconductingpreclinicalstudiesandclinicaltrials,primarilyinthe context of the development of Imeglimin. As of December31, 2015, we had an accumulateddeficitof€44.3million.

Wehavedevotedmostofourfinancialresourcestoresearchanddevelopment,includingourclinicaland preclinical development activities. Even if we obtain regulatory approval to market a drugcandidate, our future revenues will depend upon the size of any markets in which our drugcandidates have received approval and our ability to achieve sufficient market acceptance,reimbursementfromthird-partypayorsandadequatemarketshareforourdrugcandidatesinthosemarkets. There canbenoassurance thatwewill everearnany revenuesor revenues sufficient tooffset past, current and future losses or achieve profitability, which would impair our ability tosustain our operations. Moreover, even if we achieve profitability, such profitability may not besustainable.Any inability togeneratesustainedprofitscouldhaveamaterialadverseeffectonourbusiness,prospects,financialcondition,cashflowsorresultsofoperations.

We expect to continue to incur significant expenses and increasing operating losses for theforeseeablefuture.Weanticipatethatourexpenseswillincreasesubstantiallyifandaswe:

n continuethepreclinicalandclinicaldevelopmentofourdrugcandidates;

n expandthescopeofourcurrentclinicaltrialsforourdrugcandidates;

n beginnewclinicaltrialsforourdrugcandidates;

n developourcommercialmanufacturingcapabilitiesforourdrugcandidates;

n seekregulatoryandmarketingapprovalsforanydrugcandidatesthatsuccessfullycompleteclinicaltrials;

n establish a sales,marketing and distribution infrastructure to commercialize any drugs forwhichwemayobtainmarketingapprovalforwhichwehavenotenteredintoacollaborationwithathird-party;

n seektoidentifyandvalidateadditionaldrugcandidates;


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n acquireorin-licenseotherdrugcandidatesandtechnologies;

n makemilestone,royaltyorotherpaymentsunderin-licenseorcollaborationagreements;

n maintain,protectandexpandourintellectualpropertyportfolio;

n attractnewandretainexistingskilledpersonnel;and

n createadditionalinfrastructuretosupportouroperationsasaU.S.publiccompany.

Thenet losseswe incurmay fluctuate significantly fromyear toyear, such thataperiod-to-periodcomparisonofourresultsofoperationsmaynotbeagoodindicationofourfutureperformance.Inanyparticularperiodorperiods,ouroperatingresultscouldbebelowtheexpectationsofsecuritiesanalystsorinvestors,whichcouldcausethepriceoftheordinaryshares(whichmaybeintheformofADSs)todecline.4.1.2. Wemay need to raise additional funding, which may not be available on acceptable

terms,oratall,andfailuretoobtainthisnecessarycapitalwhenneededmayforceusto

delay,limitorterminateourproductdevelopmenteffortsorotheroperations.

We are currently advancing our drug candidates through clinical development and conductingpreclinical studieswith respect to other programs.Developing drug candidates is expensive, time-consuming and risky, and we expect our research and development expenses to increasesubstantially inconnectionwithourongoingactivities,particularlyasweseektoadvanceourdrugcandidatestowardcommercialization.

AsofDecember31,2015,ourcashandcashequivalentswere€42.4million.Weestimate that thenet proceeds from the global offeringwill be approximately $million, assuming an offeringpriceof€perordinaryshare(whichmaybeintheformofADSs),thelastreportedsalepriceofourordinarysharesonEuronextParison,2016,afterdeductingunderwritingdiscountsandcommissionsandestimatedofferingexpensespayablebyus.Weexpectthatthenetproceedsfrom the global offering and our existing cash and cash equivalents will be sufficient to fund ourcurrentoperationsforatleastthenextmonths.However,ouroperatingplansmaychangeasaresultofavarietyoffactors,andwemayneedtoseekadditionalfundssoonerthanplanned.Inanyevent,wewillrequireadditionalcapitaltopursuepreclinicalandclinicalactivities,obtainregulatoryapproval for and commercialize our drug candidates.More specifically, we will require additionalfunding toundertakeoneormorePhase3 clinical trialsof Imeglimin,whichareaprerequisite forobtainingmarketingapprovalforImeglimin,whichweestimatewillcostupto€300million.Further,wemay seek additional capital if market conditions are favorable or if we have specific strategicconsiderations.Inrelationtoalloftheabove,wemayseekadditionalfinancingintheformofpublicor private equity or debt financings, government or other third-party funding, marketing anddistributionarrangementsandothercollaborations,strategicalliancesandlicensingarrangementsoracombinationofthesesources.

Anyadditionalfundraisingeffortsmaydivertourmanagementfromtheirday-to-dayactivities,whichmayadverselyaffectourabilitytodevelopandcommercializeourdrugcandidates. Inaddition,wecannotguaranteethatfuturefinancingwillbeavailableinsufficientamountsorontermsacceptabletous,ifatall.Moreover,thetermsofanyfinancingmayadverselyaffecttheholdingsortherightsofour shareholders and the issuance of additional securities, whether equity or debt, by us, or thepossibilityofsuchissuance,maycausethemarketpriceofourordinaryshares(whichmaybeintheformofADSs)todecline.Thesaleofadditionalequityorconvertiblesecuritieswouldbedilutivetoour shareholders. The incurrence of indebtedness would result in increased fixed paymentobligationsandwemayberequiredtoagreetocertainrestrictivecovenants,suchaslimitationsonour ability to incur additional debt, limitations on our ability to acquire, sell or license intellectualproperty rights andotheroperating restrictions that could adversely impact our ability to conduct


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ourbusiness.Ifweareunabletoobtainadequatefinancing,wemayberequiredtodelay,reduceoreliminatethenumberorscopeofourprojectsanddrugcandidates(includingourpreclinicalstudiesand clinical trial programs).We could also be required to seek funds through arrangements withcollaborators or otherwise at an earlier stage than otherwisewould be desirable andwemay berequiredtorelinquishrights tosomeofour technologiesordrugcandidatesorotherwiseagreetotermsunfavorabletous.Ifweareunabletoobtainfundingonatimelybasis,wemayberequiredtosignificantlycurtail,delayordiscontinueoneormoreofourresearchordevelopmentprogramsorthe commercialization of any drug candidate or be unable to expand our operations or otherwisecapitalizeonourbusinessopportunities,asdesired,whichcouldimpairourprospects.

4.2. Risks Related to our Product Development, Regulatory Approval andCommercialization

4.2.1. Mostofourhuman,financialandmaterialresourcesareallocatedtodevelopingasingle

drugcandidate,Imeglimin.

Ourbusinessandfuturesuccessdependsonourabilitytocompleteclinicaldevelopmentof,obtainregulatory approval for and successfully commercialize our lead drug candidate, Imeglimin.Accordingly,weareparticularlyexposedtodelays inthedevelopmentandmarketingof Imeglimin.For example, we will need to demonstrate that Imeglimin has a beneficial impact on glucosetolerability and glucose-dependent insulin secretion, which could potentially delay cardiovascularcomplications associatedwith type 2 diabetes patients.We are preparing a Phase 3 developmentprogramthatisintendedtosatisfytherequirementsofboththeEuropeanMedicinesAgency,ortheEMA,and theU.S. FoodandDrugAdministration,or theFDA.However,wehavenot yet receivedinputfromtheEMAandourabilitytosimultaneouslymeettherequirementsofboththeEMAandFDAisuncertainatthispoint.Allofourdrugcandidates,includingImeglimin,willrequireadditionalclinical and non-clinical developments, regulatory review and approval in multiple jurisdictions,substantial investment, access to sufficient commercial manufacturing capacity and significantmarketingeffortsbeforewecangenerateanyrevenuefromproductsales.

We expect to enter into partnerships for the purposes of conducting Phase 3 clinical trials. In theevent thatwe are unable to enter into such partnerships in certain jurisdictions,wemay conductPhase3 clinical trialsof Imegliminourselves.Conducting these clinical trialswill require significantfinancialresources,whichwemaynotbeabletofundfromourowninternalcashflows.Accordingly,ourabilitytocommitsuchresourceswilldependuponourabilitytoobtainadequatefinancing.Anyshortfall,delayor inability inobtainingsuchfinancingatalloratanacceptablecostcoulddelayorimpedecompletionofourPhase3clinicaltrialsofImegliminintherelevantjurisdiction.

If we fail to successfully develop or market Imeglimin, or cause a delay in its development ormarketing,thiscouldhaveamaterialadverseeffectonourbusiness,prospects,financialcondition,cashflowsorresultsofoperations.4.2.2. Drugcandidatesunderdevelopmentmustundergocostly,rigorousandhighlyregulated

preclinical studiesand clinical trials,whose timeof completion,numberandoutcomes

areuncertain.

Weareengagedinpreclinicalstudiesandclinicaltrials,withtheprimaryobjectiveofdevelopingandmarketingdrug therapiesaimedat combating type2diabetes.Preclinical studiesandclinical trialsaregenerallyexpensive,aredifficulttodesignandimplement,cantakemanyyearstocompleteandare inherently uncertain as to outcome. We cannot guarantee that any clinical trials will beconductedasplannedorcompletedonschedule,ifatall.Itmaytakeseveralyearstocompletethepreclinicalstudiesandclinicaldevelopmentnecessarytocommercializeadrugcandidate,anddelaysor failure can occur at any stage. Interim results of clinical trials do not necessarily predict final


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results, and success inpreclinical studies andearly clinical trials doesnot ensure that later clinicaltrials will be successful. A number of companies in the pharmaceutical, biopharmaceutical andbiotechnology industries have suffered significant setbacks in advanced clinical trials even afterpromisingresultsinearliertrials,andwecannotbecertainthatwewillnotfacesimilarsetbacks.Thedesign of a clinical trial can determinewhether its resultswill support approval of a product, andflawsinthedesignofaclinicaltrialmaynotbecomeapparentuntiltheclinicaltrialiswelladvanced.Anunfavorableoutcomeinoneormoretrialswouldbeamajorsetbackforourdrugcandidatesandfor us. Due to our limited financial resources, an unfavorable outcome in one ormore trialsmayrequireustodelay,reducethescopeof,oreliminateoneormoreproductdevelopmentprograms,whichcouldhaveamaterialadverseeffectonourbusinessandfinancialconditionandonthevalueofoursecurities.

Inconnectionwithclinicaltestingandtrials,wefaceanumberofrisks,includingrisksthat:

n adrugcandidate is ineffective, inferior toexistingapprovedmedicines,unacceptably toxic,orhasunacceptablesideeffects;

n patientsmaydieorsufferotheradverseeffectsforreasonsthatmayormaynotberelatedtothedrugcandidatebeingtested;

n extensionstudiesonlong-termtolerabilitycouldinvalidatetheuseofourproduct;

n theresultsmaynotconfirmthepositiveresultsofearliertestingortrials;and

n theresultsmaynotmeetthe levelofstatisticalsignificancerequiredbytheEMA,theFDA,thePharmaceuticals andMedicalDevicesAgency, or thePMDA,orother regulatory authorities toestablishthesafetyandefficacyofourdrugcandidates.

In addition, regulatory authorities in the jurisdictions in which we intend to market our drugcandidatesmay interpretresults inamannerdifferently thanwehave.Wehave, inanyevent, thediscretiontorequirefurthertesting(includingrelatingtoresearchprotocols,patientcharacteristics,durations of treatment and post-treatment monitoring) or to impose additional and unexpectedconditions on the trials. The outcome of these trials is highly uncertain, and there can be noassurance that any of our drug candidates will successfully complete their respective trials withmarketableresultsorwithinatimeframethatpermitsprofitablemarketability.

We cannot guarantee that the results of the clinical trials will demonstrate tolerability, safety(includingtheabsenceorlimitednatureofadversesideeffectsorinteractionswithotherdrugsandtherapies) and the efficacy of one or more of our drug candidates on humans. Any failure to sodemonstrate during one or more of the various clinical phases could result in a delay in thedevelopmentandmarketingoftheproductinquestionorresultinsuspensionofitsdevelopment.

NoneofourdrugcandidatesareinPhase3.PriortoinitiatingPhase3clinicaltrialsofImeglimin,wewillneedtocompleteathoroughQT intervalstudy,whichmayrevealunacceptablecardiovasculartoxicity risks and prevent or delay further development of Imeglimin. Entry into Phase 3 exposesbroader samples of the population to a particular drug candidate, which could reveal previouslyunseen or unnoticed safety problems, adverse effects and interactions or a lack of efficacy.Moreover,Phase3clinicaltrialscanalsorevealcurrentlyunknown,butremote,effectsortriggeroraggravatecurrentlyunknownpathologies,whetherpreexistingornot,whichcoulddelayorinterruptdevelopmentofthedrugcandidate.InordertocompletecertainPhase3andotherclinicaltrials,weexpect to enter into partnerships and, accordingly, will be subject to risks associated with ourrelianceonpartnershipsandthirdparties.

Ifanyoftheforegoingmaterializes,orourdrugcandidatesotherwisefailtocomplete,oraredelayedinthecompletionof,theirrespectiveclinicaltrials,themarketingofsuchdrugscouldbedelayedorprevented, which could have a materially adverse impact on our business, prospects, financialcondition,cashflowsorresultsofoperations.


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4.2.3. Clinical trialsaresubject topriorapprovalbyregulatoryauthorities,whichmaynotbe

granted.

All of our drug candidates are in preclinical studies or clinical trial phases and none have beensubmittedforfinalapproval.Accordingly, furtherclinicaltrialswillberequired.Allclinicaltrialsaresubject topriorapprovalby the regulatoryauthoritiesof the jurisdiction inwhich the trial is tobecarriedout,aswellasbyvariousethicsandsimilarcommittees.Afailuretoobtainanapprovaloranegative opinion of a committee could delay or suspend our clinical development program.Additionally, once we have the relevant approvals, the regulatory authorities could suspend orterminate the development of our drug candidates. If any of these events occurs, it could have amaterial adverse effect on our business, prospects, financial condition, cash flows or results ofoperations.

4.2.4. Interaction with other products may delay or prohibit marketability of our drug

candidates.

Our drug candidates are intended to be used in combination with certain other products. Weundertake studies to determine any risks arising fromour drug candidates’ interactionwith otherproductsandtreatmentswhentakenincombination.Forexample,combineduseof Imegliminandmetformin may in the future show additive toxicities despite our belief of sufficient mechanisticdifferences between these drugs. These studies, by their nature, cannot cover every possiblecombination. In addition, our drug candidates may interact negatively with other products andtreatments in certain populations not covered by any of our studies. Further, such negativeinteractionsmayonlyariseonceourdrugs,ifapproved,havebeenreleasedtothemarket.Anysuchinteractionsmayhaveunacceptableorundetectedsideeffectsor reduceornegate theefficacyofour drug candidates, which could reduce the marketability of our drug candidates, delay thedevelopment of our drug candidates and, in turn, have amaterial adverse effect onour business,prospects,financialcondition,cashflowsorresultsofoperations.

4.2.5. Our drug candidatesmay cause undesirable side effects or have other properties that

could delay or prevent their regulatory approval, limit the commercial profile of an

approved label, or result in significant negative consequences following marketing

approval,ifany.

Undesirable sideeffectscausedbyourdrugcandidatescouldcauseusor regulatoryauthorities tointerrupt,delayorhaltclinicaltrialsandcouldresultinamorerestrictivelabelorthedelayordenialof regulatory approval by the EMA, FDA, PMDA or other comparable authorities in otherjurisdictions. Further, our drug candidatesmay be found to have interactionswith other drugs ortreatmentsthatarenotacceptableornotmitigated.Insuchanevent,ourtrialscouldbesuspendedorterminatedandtheEMA,FDA,PMDAorcomparableforeignregulatoryauthoritiescouldorderusto cease further development of or deny approval of our drug candidates for any or all targetedindications. Theproduct related sideeffects couldaffectpatientenrollment inour clinical trialsorthe ability of any enrolled patients to complete such trials or result in potential product liabilityclaims. Any of these occurrences may harm our business, financial condition and prospectssignificantly.

Ifoneormoreofourdrugcandidatesreceivedmarketingapproval,andweorothers later identifyundesirable side effects caused by such drugs or negative interactions with other products ortreatments (including, for example, as a result of interactions with other products once on themarketasillustratedin“—Interactionwithotherproductsmaydelayorprohibitmarketabilityofourdrugcandidates”),anumberofpotentiallysignificantnegativeconsequencescouldresult,including:

n regulatoryauthoritiesmaywithdrawapprovalsofsuchproduct;


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n regulatoryauthoritiesmayrequireadditionalwarningsontheproduct’slabel;

n wemayberequiredtocreateamedicationguideoutliningtherisksofsuchsideeffectsfordistributiontopatients;

n wecouldbesuedandheldliableforharmcausedtopatients;and

n ourreputationmaysuffer.

Any of these events could prevent us from achieving or maintaining market acceptance of theparticular drug candidate, if approved, and could have amaterial adverse effect on our business,prospects,financialcondition,cashflowsorresultsofoperations.

4.2.6. Delays,suspensionsandterminationsinourclinicaltrialscouldresultinincreasedcosts

tousanddelayorpreventourabilitytogeneraterevenues.

Human clinical trials are very expensive, time-consuming, and difficult to design, implement andcomplete. The completion of trials for Imeglimin or our other drug candidates may be delayed,suspendedorterminatedduetoanumberoffactors,including:

n lackofeffectivenessofdrugcandidatesduringclinicaltrials;

n adverse events, safety issues or side effects relating to the drug candidates or theirformulation;

n inability to raise additional capital in sufficient amounts to continue clinical trials ordevelopmentprograms,whichareveryexpensive;

n theneedtosequenceclinicaltrialsasopposedtoconductingthemconcomitantlyinordertoconserveresources;

n ourinabilitytoenterintopartnershipsrelatingtothedevelopmentandcommercializationofourdrugcandidates;

n ourfailuretoconductclinicaltrialsinaccordancewithregulatoryrequirements;

n our inability to manufacture or obtain from third parties materials sufficient for use inpreclinicalstudiesandclinicaltrials;

n governmental or regulatory delays and changes in regulatory requirements, policy andguidelines, including mandated changes in the scope or design of clinical trials or requests forsupplementalinformationwithrespecttoclinicaltrialresults;

n delays in patient enrollment, variability in the number and types of patients available forclinicaltrials,andlower-thananticipatedretentionratesforpatientsinclinicaltrials;

n difficulty in patient monitoring and data collection due to failure of patients to maintaincontactaftertreatment;and

n varying interpretationsof ourdata, and regulatory commitments and requirementsby theEMA,FDA,PMDAandotherregulatoryauthorities.

ManyofthesefactorsmayalsoultimatelyleadtodenialofourmarketingapplicationforImegliminorourotherdrugcandidates. Ifweexperiencedelay,suspensionsorterminations inaclinicaltrial,thecommercialprospectsfortherelateddrugcandidatewillbeharmed,andourabilitytogenerateproductrevenueswillbedelayedorsuchrevenuescouldbereducedorfailtomaterialize.


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4.2.7. Changes in regulatory requirements, guidance from regulatory authorities or

unanticipatedeventsduringour clinical trialsofourdrugcandidates couldnecessitate

changes toclinical trialprotocolsoradditionalclinical trial requirements,whichwould

resultinincreasedcoststousandcoulddelayourdevelopmenttimeline.

Changes in regulatory requirements, FDA guidance or guidance from the EMA, PMDA or otherregulatory authorities, or unanticipated events during our clinical trials, may force us to amendclinical trial protocols. The regulatory authorities could also impose additional clinical trialrequirements. Amendments to our clinical trial protocolswould require resubmission to the EMA,FDA, PMDA, national clinical trial regulators and institutional reviewboard, or IRB, for reviewandapproval,whichmayadversely impactthecost,timingorsuccessfulcompletionofaclinicaltrial. Ifweexperiencedelayscompleting,orifweterminate,anyofourclinicaltrials,orifwearerequiredtoconductadditionalclinicaltrials,thecommercialprospectsforourdrugcandidatesmaybeharmedandourabilitytogenerateproductrevenuewillbedelayed.

4.2.8. If we, or any future partners, experience delays or difficulties in the enrollment of

patientsinclinicaltrials,ourortheirreceiptofnecessaryregulatoryapprovalscouldbe

delayedorprevented.

We,oranyfuturepartners,maynotbeabletoinitiateorcontinueclinicaltrialsforourcurrentdrugcandidatesoranyfuturedrugcandidatesthatwe,oranyfuturepartners,maydevelopifwe,orthey,areunabletolocateandenrollasufficientnumberofeligiblepatientstoparticipateinclinicaltrials.Patient enrollment is a significant factor in the timing of clinical trials, and is affected by manyfactors,including:

n thesizeandnatureofthepatientpopulation;

n theseverityofthediseaseunderinvestigation;

n theavailabilityofapprovedtherapeuticsfortherelevantdisease;

n theproximityofpatientstoclinicalsites;

n theeligibilitycriteriaforthetrial;

n thedesignoftheclinicaltrial;

n effortstofacilitatetimelyenrollment;

n competingclinicaltrials;and

n clinicians’ and patients’ perceptions as to the potential advantages and risks of the drugsbeingstudiedinrelationtootheravailabletherapies,includinganynewdrugsthatmaybeapprovedfortheindicationsweareinvestigating.

In addition,wemay have difficulty in retaining patients to participate in clinical trials of our drugcandidates. Once recruited, patients enrolled in such trials may suspend or terminate theirparticipation at will, at any time. If too many patients withdraw from a trial, the analysis of theresultsofsuchtrialmaynothaveastatisticallysignificantscope.

Our inability, or the inability of any future partners, to enroll and retain a sufficient number ofpatientsforour,ortheir,clinicaltrialscouldresultinsignificantdelaysormayrequireusorthemtoabandononeormoreclinical trialsaltogether.Enrollmentdelays inour,ortheir,clinical trialsmayresultinincreaseddevelopmentcostsforourdrugcandidates,delayorhaltthedevelopmentofandapproval processes for our drug candidates and jeopardize our, or any future partners’, ability tocommencesalesofandgeneraterevenuesfromourdrugcandidates,whichcouldcausethevalueofourcompanytodeclineandlimitourabilitytoobtainadditionalfinancing,ifneeded.


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4.2.9. Clinical failure can occur at any stage of clinical development. The results of earlier

clinicaltrialsarenotnecessarilypredictiveoffutureresultsandanydrugcandidatewe

advance through clinical trialsmaynot have favorable results in later clinical trials or

receiveregulatoryapproval.

Clinicalfailurecanoccuratanystageofourclinicaldevelopment.Clinicaltrialsmayproducenegativeor inconclusive results, and we may decide, or regulators may require us, to conduct additionalclinical trials or preclinical studies.Moreover, success in preclinical studies and early clinical trialsdoesnotensurethatsubsequentclinicaltrialswillgeneratethesameorsimilarresultsorotherwiseprovide adequate data to demonstrate the efficacy and safety of a drug candidate. A number ofcompanies in thepharmaceuticals industry, including thosewith greater resources andexperiencethan us, have suffered significant setbacks in Phase 3 clinical trials, even after seeing promisingresults inearlier clinical trials, andwecould face similar setbacks.Thedesignofa clinical trial candeterminewhetheritsresultswillsupportapprovalofaproductandflawsinthedesignofaclinicaltrial may not become apparent until the clinical trial is well-advanced. In addition, data obtainedfrom clinical trials and preclinical studies are susceptible to varying interpretations and analyses.Many companies that believed their drug candidates performed satisfactorily in preclinical studiesandclinicaltrialshavenonethelessfailedtoobtainmarketingapprovalforthedrugcandidates.Evenifwe,oranyfuturepartners,believethattheresultsofclinicaltrialsforourdrugcandidateswarrantmarketingapproval,theEMA,FDA,PMDAorotherregulatoryauthoritiesmaydisagreeandmaynotgrantmarketingapprovalofourdrugcandidates.

In some instances, there canbe significant variation in safetyorefficacy resultsbetweendifferentclinical trials of the same drug candidate due to numerous factors, including changes in trialproceduressetforthinprotocols,differencesinthesizeandtypeofthepatientpopulations,changesin and adherence to the dosing regimen and other clinical trial protocols and the rate of dropoutamong clinical trial participants. If we fail to receive positive results in clinical trials of our drugcandidates,thedevelopmenttimelineandregulatoryapprovalandcommercializationprospectsforourmostadvanceddrugcandidates,and,correspondingly,ourbusinessandfinancialprospectswillbenegativelyimpacted.

Ifourdrugcandidatesarenotapprovedformarketingbyapplicablegovernmentauthorities,wewillbe unable to commercialize them. The European Commission (following review by the EMA) inEurope,theFDA intheUnitedStates, thePMDAinJapanandcomparableregulatoryauthorities inotherjurisdictionsmustapprovenewdrugorbiologiccandidatesbeforetheycanbecommercialized,marketed,promotedorsoldinthoseterritories.Wemustprovidetheseregulatoryauthoritieswithdata frompreclinical studies and clinical trials thatdemonstrate thatourdrug candidates are safeand effective for a defined indication before they can be approved for commercial distribution.Clinicaltestingisexpensive,difficulttodesignandimplement,cantakemanyyearstocompleteandisinherentlyuncertainastooutcome.Wemustprovidedatatoensuretheidentity,strength,qualityandpurityofthedrugsubstanceanddrugproduct.Also,wemustassuretheregulatoryauthoritiesthatthecharacteristicsandperformanceoftheclinicalbatcheswillbereplicatedconsistentlyinthecommercialbatches.Wehave focusedourdevelopmentandplannedcommercializationeffortsonEurope, the United States and Japan. However, the processes by which regulatory approvals areobtained from theEMA, FDAandPMDA tomarket and sell anewproduct are complex, require anumberof years and involve theexpenditureof substantial resources.We cannot assure you thatanyofourdrugcandidateswill receiveEMA,FDAorPMDAapproval. Even ifweobtainmarketingapprovalofanyofourdrugcandidatesinamajorpharmaceuticalmarket,suchastheUnitedStatesor Europe, we may never obtain approval or commercialize our drug candidates in other majormarkets,duetovaryingapprovalproceduresorotherwise,whichwilllimitourabilitytorealizetheirfullmarketpotential.


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Delaystoorafailuretosecuresuchapprovalsforanyorallofourmarketsforagivendrugcandidatemay result in a loss of development costs, loss in market value of the drug candidate and itsassociatedintellectualpropertyandaninabilitytowidelymarkettheproducttothepublic,which,inturn,couldhaveamaterialadverseeffectonourbusiness,prospects,financialcondition,cashflowsorresultsofoperations.

4.2.10. Even ifweobtainmarketingapprovalsforourdrugcandidates,thetermsofapprovals

andongoingregulationofourdrugsmay limithowwemarketourdrugs,whichcould

materiallyimpairourabilitytogeneraterevenue.

Evenifwereceiveregulatoryapprovalforadrugcandidate,thisapprovalmaycarryconditionsthatlimit themarket for thedrugorput thedrugata competitivedisadvantage relative toalternativetherapies.Forinstance,aregulatoryapprovalmaylimittheindicatedusesforwhichwecanmarketadrugorthepatientpopulationthatmayutilizethedrug,ormayberequiredtocarryawarninginitslabelingandonitspackaging.Drugswithboxedwarningsaresubjecttomorerestrictiveadvertisingregulations than drugs without such warnings. These restrictions could make it more difficult tomarketanydrugcandidateeffectively.Accordingly,assumingwereceivemarketingapprovalforoneormoreofourdrugcandidates,wewill continue toexpend time,moneyandeffort inallareasofregulatorycompliance.

4.2.11. Anyofourdrugcandidatesforwhichweobtainmarketingapprovalcouldbesubjectto

post-marketing restrictionsorwithdrawal from themarket,andwemaybe subject to

substantial penalties if we fail to comply with regulatory requirements or experience

unanticipatedproblemswithourdrugsfollowingapproval.

Anyofourdrug candidates forwhichweobtainmarketingapproval, aswell as themanufacturingprocesses, post-approval studies andmeasures, labeling, advertising andpromotional activities forsuchdrugs,amongotherthings,willbesubjecttocontinualrequirementsofandreviewbytheEMA,FDAandother regulatoryauthorities. These requirements include submissionsof safetyandotherpost-marketinginformationandreports,registrationandlistingrequirements,requirementsrelatingtomanufacturing,qualitycontrol,qualityassuranceandcorrespondingmaintenanceofrecordsanddocuments, requirements regarding the distribution of samples to physicians and recordkeeping.Evenifmarketingapprovalofadrugcandidateisgranted,theapprovalmaybesubjecttolimitationson the indicated uses for which the product may be marketed or to the conditions of approval,includingtheFDArequirementto implementaRiskEvaluationandMitigationStrategy,orREMStoensurethatthebenefitsofadrugorbiologicalproductoutweighitsrisks.

TheEMA,FDAandPMDAmayalsoimposerequirementsforcostlypost-marketingstudiesorclinicaltrialsandsurveillancetomonitorthesafetyorefficacyofaproduct,suchaslong-termobservationalstudies on natural exposure. The FDA and other agencies, including the Department of Justice,closelyregulateandmonitorthepost-approvalmarketingandpromotionofproductstoensurethatthey are manufactured, marketed and distributed only for the approved indications and inaccordancewith theprovisionsof theapproved labeling.Violationof theU.S. Federal Food,Drug,and Cosmetic Act, or the FDCA, and other statutes, including the False ClaimsAct, relating to thepromotion and advertising of prescription drugs may lead to investigations or allegations ofviolationsoffederalandstatehealthcarefraudandabuselawsandstateconsumerprotectionlaws.

4.2.12. Theregulatoryenvironmentforourdrugsmaychange.

Weoperateinaheavilyregulatedindustry,andregulationincertainofourkeymarkets,includinginthe United States, Europe and Japan, is subject to change. Any such changes could result in alimitationoftheindicationsforwhichwemaymarketourdrugsorpreventsuchmarketingatall.The


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costofcompliancewithapplicableregulationsissignificantandincreasing.Ifthistrendcontinues,itcouldreducetheeconomicvalueofanyofournewdrugs.

For example, certain regulatory authorities, particularly the FDA, have imposed increasinglyburdensome data provision requirements in order to prove the efficacy and safety of a drugcandidate.TheserequirementshavereducedthenumberofdrugcandidatesmeetingthecriteriaforapprovalofaNewDrugApplication,orNDA,ormarketingapprovalandaccordingly,thenumberofproductsauthorized.Marketedproductsarealsosubjecttoregularreevaluationofthebenefittoriskratioafterthegrantingofmarketingapproval.The latediscoveryofproblemsnot identifiedduringthe research stage can lead to marketing restrictions, product suspension or withdrawal and aheightenedriskoflegalaction.

Ifwe fail to complywith such regulations and changes in regulation,we could become subject tosubstantialpenalties, including fines,product recalls, restrictionson sale, temporaryorpermanentsuspensionofitsoperationsandcivilorcriminalproceedings.Ifanyoftheforegoingoccurs,itcouldhaveamaterialadverseeffectonourbusiness,prospects,financialcondition,cashflowsorresultsofoperations.

4.2.13. Even ifwesuccessfullycompleteclinicaltrialsofourdrugcandidates,thosecandidates

maynotbecommercializedsuccessfullyforotherreasons.

Even if we successfully complete clinical trials for one or more of our drug candidates, thosecandidatesmaynotbecommercializedforotherreasons,including:

n failingtoreceiveregulatoryclearancesrequiredtomarketthemasdrugs;

n beingsubjecttoproprietaryrightsheldbyothers;

n failingtoobtainclearancefromregulatoryauthoritiesonthemanufacturingofourdrugs;

n beingdifficultorexpensivetomanufactureonacommercialscale;

n havingadversesideeffectsthatmaketheiruselessdesirable;

n havingnegativeinteractionswithotherproductsortreatments;

n failingtocompeteeffectivelywithproductsortreatmentscommercializedbycompetitors;or

n failingtoshowthatthelong-termbenefitsofourdrugsexceedtheirrisks.

4.2.14. Even if any of our drug candidates are commercialized, they may fail to achieve the

degreeofmarketacceptancebyphysicians,patients,healthcareprescribers,third-party

payorsorthemedicalcommunityingeneralnecessaryforcommercialsuccess.

To date, we have never commercialized a product, and even if one of our drug candidates isapprovedbytheappropriateregulatoryauthoritiesformarketingandsale,itmayneverthelessfailtogainsufficientmarketacceptancebyphysicians,patients,healthcareprescribers,third-partypayorsandothersinthemedicalcommunity.

Even if the medical community accepts a product as safe and efficacious for its indicated use,physiciansmaychoosetorestricttheuseoftheproductifweareunabletodemonstratethat,basedonexperience, clinicaldata, side-effectprofilesandother factors,ourproduct ispreferable toanyexisting products or treatments.We cannot predict the degree ofmarket acceptance of any drugcandidatethatreceivesmarketingapproval,whichwilldependonanumberoffactors,including,butnotlimitedto:

• thedemonstrationoftheclinicalefficacyandsafetyoftheproduct;andtheperceptionofitstherapeuticbenefitbyprescribersandpatients;

• theapprovedlabelingfortheproductandanyrequiredwarnings;

• thepotentialoccurrenceofunfavorableside-effectsandinteractions;


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• theproduct’seaseofuse,inparticularinrespectofitsmethodofadministration;

• theadvantagesanddisadvantagesoftheproductcomparedtoalternativetreatments;

• our ability to educate the medical community about the safety and effectiveness of theproduct;

• themarketpriceofourproductrelativetocompetingtreatments;

• theavailabilityofcoverageandadequatereimbursementfromgovernmentsandotherthird-partypayorspertainingtotheproduct,andpatients’willingnesstopayout-of-pocketforcostsharesortheproductifthird-partypayorreimbursementislimitedornotavailable;

• theeffectiveimplementationofascientificpublicationstrategy;

• thesupportofopinionleadersinthefieldoftype2diabetes;and

• thedevelopmentofoneormorecompetingproductsforthesameindication.

Ifoneormoreofourdrugsfailstobeacceptedbythemarketforanyofthereasonssetforthaboveorforanyotherreasoninoneormorejurisdictions,thiscouldnegativelyaffecttheprofitabilityandmarketability of such drugs,which could, in turn, have amaterial adverse effect on our business,prospects,financialcondition,cashflowsorresultsofoperations.

Inaddition,themarketingofourdrugswillrequiretheenteringintoofpartnerships.

4.2.15. Wecurrentlyhavenosalesorganization.Ifweareunabletoenterintosales,marketing

and distribution arrangements with third parties, we may not be successful in

commercializingourdrugcandidatesifandwhentheyareapproved.

Wedonothaveasalesormarketinginfrastructureandhavenoexperienceinthesale,marketingordistributionofpharmaceuticalproducts.Toachievecommercial success foranydrugcandidate forwhichweobtainmarketingapproval,wewillneedtoestablishasalesandmarketingorganizationormakearrangementswiththirdpartiestoperformsalesandmarketingfunctionsandwemaynotbesuccessfulindoingso.

We intend to seek to enter into and rely on partnerships with third parties that we believemaycontributetoourabilitytoadvancedevelopmentandultimatelycommercializeourdrugcandidates.As a result of entering into arrangements with third parties to perform sales, marketing anddistributionservices,ourproductrevenuesortheprofitabilityofthesedrugrevenuesmaybelower,perhapssubstantiallylower,thanifweweretodirectlymarketandsellourdrugs.Furthermore,wemaybeunsuccessfulinenteringintothenecessaryarrangementswiththirdpartiesormaybeunabletodosoontermsthatarefavorabletous.

Evenifweareabletoenterintoacceptablepartnerships,wemayhavelittleornocontroloversuchthirdparties,andourfuturepartnersmayfailtodevotethenecessaryresourcesandattentiontoselland market our drugs effectively. For example, budgeting restrictions or strategy changes of ourfuturepartnerscoulddelayorpreventsuccessfulclinicaldevelopmentormarketingefforts.Similarly,our futurepartnerscoulddecide togivepriority to theclinicaldevelopmentormarketingofotherdrug candidates or develop or seek to develop drug candidates in competition with our drugcandidates.

Ourfailuretoestablishandmaintainsuccessfulpartnershipscouldhaveamaterialadverseeffectonourbusiness,prospects,financialcondition,cashflowsorresultsofoperations.4.2.16. There are numerous competitors in the market for type 2 diabetes therapeutic

treatments.

The biotechnology and pharmaceutical industries are highly competitive and subject to significantand rapid technological change as researchers learn more about diseases and develop newtechnologies and treatments.Numerousbiopharmaceutical laboratories, biotechnology companies,


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institutions,universitiesandotherresearchentitiesareactivelyengagedinthediscovery,research,development andmarketing of therapeutic responses to treat type 2 diabetesmaking it a highlycompetitivefield.Significantcompetitivefactorsinourindustryincludeproductefficacyandsafety,quality and breadth of an organization’s technology, skill of an organization’s employees and itsability to recruit and retain keyemployees, timingand scopeof regulatory approvals, governmentreimbursementratesfor,andtheaveragesellingpriceof,products,theavailabilityofrawmaterialsand qualifiedmanufacturing capacity,manufacturing costs, intellectual property and patent rightsand their protection and sales and marketing capabilities. Given the intense competition in ourindustry,wecannotassureyouthatanyoftheproductsthatwesuccessfullydevelopwillbeclinicallysuperiororscientificallypreferabletoproductsdevelopedorintroducedbyourcompetitors.

Inaddition,significantdelaysinthedevelopmentofourdrugcandidatescouldallowourcompetitorsto succeed in obtaining EMA, FDA, PMDA or other regulatory approvals for their drug candidatesmore rapidly than us, which could place us at a significant competitive disadvantage or deny usmarketingexclusivityrights.

Further,ourcompetitorsmaybemoreeffectiveatusing their technologies todevelopcommercialproducts.Manyoftheorganizationscompetingwithushavesignificantlygreaterfinancialresourcesand expertise in research and development,manufacturing, preclinical studies, conducting clinicaltrials,obtainingregulatoryapprovalsandmarketingapproveddrugs.Mergersandacquisitionsinthepharmaceuticalandbiotechnologyindustriesmayresultinevenmoreresourcesbeingconcentratedamongasmallernumberofourcompetitors.Smallerorearly-stagecompaniesmayalsoprovetobesignificant competitors, particularly through partnership arrangements with large and establishedcompanies.Thesecompaniesalsocompetewithusinrecruitingandretainingqualifiedscientificandmanagementpersonnelandestablishingclinical trialsitesandpatientregistrationforclinical trials,aswellasinacquiringtechnologiescomplementaryto,ornecessaryfor,ourprograms.

Inaddition,anumberofsurgicalandotheralternativetherapiestocombattype2diabetesarebeingresearchedandareinvariousstagesofdevelopment.Shouldthesetherapiesproveeffective,itcouldreducethepotentialsizeofthemarketforourdrugs.Inaddition,therecanbenoassurancethatourcompetitors will not deploy their superior resources to damage our and our drug candidates’prospects.

The occurrence of any of the foregoing could have a significant impact on our ability to generateprofits from our drugs, which could, in turn, have a material adverse effect on our business,prospects,financialcondition,cashflowsorresultsofoperations.

4.2.17. Government restrictions on pricing and reimbursement, as well as other healthcare

payor cost-containment initiatives, may negatively impact our ability to generate

revenuesifweobtainregulatoryapprovaltomarketaproduct.

The continuing efforts of the government, insurance companies,managed care organizations andotherthird-partypayorsofhealthcarecoststocontainorreducecostsofhealthcaremayadverselyaffectoneormoreofthefollowing:

n our ability or our future partners’ ability to set a pricewe believe is fair for our drugs, ifapproved;

n ourabilityorour futurepartners’ability toobtainandmaintainmarketacceptanceby themedicalcommunityandpatients;

n ourabilitytogeneraterevenuesandachieveprofitability;and

n theavailabilityofcapital.

We cannot be sure that coverage and reimbursement will be available for any potential drugcandidate that we may commercialize and, if reimbursement is available, what the level of


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reimbursementwillbe.Coverageand reimbursementmay impact thedemand for,or thepriceof,anydrugcandidateforwhichweobtainmarketingapproval.Ifcoverageandreimbursementarenotavailableorreimbursementisavailableonlytolimitedlevels,wemaynotsuccessfullycommercializeanydrugcandidateforwhichweobtainmarketingapproval.

IntheUnitedStates,thePatientProtectionandAffordableCareAct,asamendedbytheHealthCareandEducationReconciliationAct,ortogether,theACA,issignificantlyimpactingtheprovisionof,andpaymentfor,healthcare.VariousprovisionsoftheACAweredesignedtoexpandMedicaideligibility,subsidize insurance premiums, provide incentives for businesses to provide healthcare benefits,prohibitdenialsofcoverageduetopre-existingconditions,establishhealthinsuranceexchanges,andprovideadditionalsupportformedicalresearch.Withregardtopharmaceuticalproductsspecifically,the ACA, among other things, expanded and increased industry rebates for drugs covered underMedicaid programs and made changes to the coverage requirements under the Medicareprescriptiondrugbenefit.SinceitsenactmenttherehavebeenjudicialandCongressionalchallengestocertainaspectsoftheACA,andweexpecttherewillbeadditionalchallengesandamendmentstoACA inthefuture.Morerecently,boththeBudgetControlActof2011andtheAmericanTaxpayerRelief Act of 2012, or the ATRA, have instituted, among other things, mandatory reductions inMedicare payments to certain providers. Additional legislative proposals to reformhealthcare andgovernment insurance programs, along with the trend towardmanaged healthcare in the UnitedStates,couldinfluencethepurchaseofmedicinesandreducereimbursementand/orcoverageofourdrug candidates, if approved. For example, recently there has been heightened governmentalscrutiny over the manner in which manufacturers set prices for their marketed products. Forexample,therehavebeenseveralrecentU.S.Congressionalinquiriesandproposedbillsdesignedto,among other things, bring greater transparency to drug pricing, review the relationship betweenpricing and manufacturer patient programs, and reform government program reimbursementmethodologiesfordrugs.Anysuchhealthreforminitiativecouldharmourabilitytomarketanydrugcandidatesandgeneraterevenues.Costcontainmentmeasuresthathealthcarepayorsandprovidersare instituting and the effect of further healthcare reform could significantly reduce potentialrevenues from the sale of anyof our drug candidates approved in the future, and could cause anincreaseinourcompliance,manufacturing,orotheroperatingexpenses.

Weexpect that theACA,aswellasotherhealthcarereformmeasures thatmaybeadopted in thefuture,may result inmore rigorous coverage criteria and lower reimbursement, and in additionaldownwardpressureonthepricethatwereceiveforanyapproveddrugcandidate.Anyreductioninreimbursement from Medicare or other government-funded programs may result in a similarreduction in payments fromprivatepayors. The implementationof cost containmentmeasuresorotherhealthcarereformsmaypreventusfrombeingabletogeneraterevenue,attainprofitabilityorcommercializeourdrugcandidates.Moreover,wecannotpredictwhathealthcarereforminitiativesmaybeadoptedinthefuture.

In some foreign countries, the proposed pricing for a drug must be approved before it may belawfullymarketed.Inaddition,incertainforeignmarkets,thepricingofprescriptiondrugsissubjectto government control and reimbursement may in some cases be unavailable. The requirementsgoverning drug pricing vary widely from country to country. For example, the European Unionprovides options for itsmember states to restrict the range ofmedicinal products forwhich theirnational health insurance systems provide reimbursement and to control the prices of medicinalproductsforhumanuse.Amemberstatemayapproveaspecificpriceforthemedicinalproductoritmayinsteadadoptasystemofdirectorindirectcontrolsontheprofitabilityofourcompanyplacingthemedicinal product on themarket. There can be no assurance that any country that has pricecontrols or reimbursement limitations for biopharmaceutical products will allow favorablereimbursement and pricing arrangements for any of our drug candidates. Historically,biopharmaceutical products launched in the EuropeanUniondonot followprice structures of theUnitedStatesandgenerallytendtohavesignificantlylowerprices.


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We believe that pricing pressures at the federal and state levels in the United States, as well asinternationally,will continue andmay increase,whichmaymake it difficult for us to sell ourdrugcandidates that may be approved in the future at a price acceptable to us or any of our futurepartners.4.2.18. Ourfuturegrowthdepends, inpart,onourabilitytopenetrateforeignmarkets,where

wewouldbesubjecttoadditionalregulatoryburdensandotherrisksanduncertainties.

Our futureprofitabilitywilldepend, inpart,onourability tocommercializeourdrugcandidates inmarketsoutsideoftheUnitedStatesandEurope.Ifwecommercializeourdrugcandidatesinforeignmarkets,wewillbesubjecttoadditionalrisksanduncertainties,including:

n economic weakness, including inflation, or political instability in particular economies andmarkets;

n theburdenofcomplyingwithcomplexandchangingforeignregulatory,tax,accountingandlegalrequirements,manyofwhichvarybetweencountries;

n different medical practices and customs in foreign countries affecting acceptance in themarketplace;

n tariffsandtradebarriers;

n othertradeprotectionmeasures,importorexportlicensingrequirementsorotherrestrictiveactionsbyU.S.orforeigngovernments;

n longeraccountsreceivablecollectiontimes;

n longerleadtimesforshipping;

n compliance with tax, employment, immigration and labor laws for employees living ortravelingabroad;

n workforceuncertaintyincountrieswherelaborunrestiscommon;

n languagebarriersfortechnicaltraining;

n reduced protection of intellectual property rights in some foreign countries, and relatedprevalenceofgenericalternativestotherapeutics;

n foreigncurrencyexchangeratefluctuationsandcurrencycontrols;

n differingforeignreimbursementlandscapes;

n uncertainandpotentiallyinadequatereimbursementofourdrugs;and

n the interpretation of contractual provisions governed by foreign laws in the event of acontractdispute.

Foreign sales of our drugs could also be adversely affected by the imposition of governmentalcontrols,politicalandeconomicinstability,traderestrictionsandchangesintariffs.4.2.19. We are subject to healthcare laws and regulations which may require substantial

complianceeffortsandcouldexposeustocriminalsanctions,civilpenalties,contractual

damages, reputationalharmanddiminishedprofitsand futureearnings,amongother

penalties.

Healthcare providers, physicians and others will play a primary role in the recommendation andprescription of our products, if approved. Our arrangements with such persons and third-partypayorsandourgeneralbusinessoperationswillexposeustobroadlyapplicablefraudandabuseandotherhealthcarelawsandregulationsthatmayconstrainthebusinessorfinancialarrangementsandrelationships through which we research, market, sell and distribute our drugs, if we obtainmarketingapproval.RestrictionsunderapplicableU.S.federal,stateandforeignhealthcarelawsandregulationsinclude,butarenotlimitedto,thefollowing:


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n the U.S. federal Anti-Kickback Statute, which prohibits, among other things, persons orentities from knowingly and willfully soliciting, offering, receiving or providing remuneration,includinganykickback,bribeorrebate,directlyorindirectly,incashorinkind,toinduceorreward,or in return for, either the referral of an individual for, or the purchase or lease, order orrecommendation of, any item, good, facility or service, for which payment may be made underfederalhealthcareprogramssuchasMedicareandMedicaid;

n U.S. federal civil andcriminal false claims lawsandcivilmonetarypenalties laws, includingthe civil False Claims Act, which impose criminal and civil penalties, including those from civilwhistleblowerorquitamactions,against individualsorentitiesfor,amongotherthings,knowinglypresenting,orcausingtobepresented,claimsforpaymentthatarefalseorfraudulentormakingafalse statement to avoid, decrease, or conceal an obligation to pay money to the federalgovernment;

n theU.S.federalHealthInsurancePortabilityandAccountabilityActof1996,orHIPAA,whichcreatedadditional federalcriminal statutes that imposecriminalandcivil liability for,amongotherthings,executingorattemptingtoexecuteaschemetodefraudanyhealthcarebenefitprogramorknowingly and willingly falsifying, concealing or covering up a material fact or making falsestatementsrelatingtohealthcarematters;

n HIPAA,asamendedbytheHealthInformationTechnologyforEconomicandClinicalHealthAct, and its implementing regulations,which impose certain requirementson coveredentities andtheirbusiness associates, includingmandatory contractual terms,with respect to safeguarding theprivacy,securityandtransmissionofindividuallyidentifiablehealthinformation;

n U.S.federaltransparencyrequirementsunderthePhysicianPaymentsSunshineAct,enactedaspart of theACA, that require applicablemanufacturersof covereddrugs, devices, biologics andmedicalsuppliesforwhichpayment isavailableunderMedicare,MedicaidortheChildren’sHealthInsurance Program, with specific exceptions, to track and annually report to the Centers forMedicare&Medicaid Services payments and other transfers of value provided to physicians andteachinghospitals,andrequirecertainmanufacturersandgrouppurchasingorganizationstoreportannually certain ownership and investment interests held by physicians or their immediate familymembers;and

n analogousstateorforeignlawsandregulations,suchasstateanti-kickbackandfalseclaimslaws, which may apply to items or services reimbursed by any third-party payor, includingcommercial insurers, state marketing and/or transparency laws applicable to manufacturers thatmaybebroader inscopethanthe federal requirements,state lawsthat requirebiopharmaceuticalcompaniestocomplywiththebiopharmaceuticalindustry’svoluntarycomplianceguidelinesandtherelevantcomplianceguidancepromulgatedbythefederalgovernmentandstatelawsgoverningtheprivacyandsecurityofhealthinformationincertaincircumstances,manyofwhichdifferfromeachotherinsignificantwaysandmaynothavethesameeffectasHIPAA,thuscomplicatingcomplianceefforts.

Ensuring thatourbusinessarrangementswith thirdpartiescomplywithapplicablehealthcare lawsandregulationswilllikelybecostly.Itispossiblethatgovernmentalauthoritieswillconcludethatourbusinesspracticesdonot complywithcurrentor future statutes, regulationsor case law involvingapplicablefraudandabuseorotherhealthcarelawsandregulations.Ifouroperationswerefoundtobeinviolationofanyoftheselawsoranyothergovernmentalregulationsthatmayapplytous,wemay be subject to significant civil, criminal and administrative penalties, damages, fines,disgorgement, individual imprisonment, possible exclusion from government funded healthcareprograms, such as Medicare and Medicaid, contractual damages, reputational harm, diminishedprofits and future earnings and curtailment of our operations, any of which could substantiallydisruptouroperations. If thephysiciansorotherprovidersorentitieswithwhomweexpect todo


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businessarefoundnottobeincompliancewithapplicablelaws,theymaybesubjecttocriminal,civiloradministrativesanctions,includingexclusionsfromgovernmentfundedhealthcareprograms.

4.2.20. Product liability and other lawsuits could divert our resources, result in substantial

liabilitiesandreducethecommercialpotentialofourdrugcandidates.

The risk that we may be sued on product liability claims is inherent in the development andcommercializationofourdrugcandidates.Sideeffectsof,ormanufacturingdefectsin,drugsthatwedevelopcouldresultinthedeteriorationofapatient’scondition,injuryorevendeath.Forexample,our liabilitycouldbesoughtafterbypatientsparticipating intheclinicaltrials inthecontextofthedevelopment of the therapeutic products tested and unexpected side effects resulting from theadministration of these drugs. In addition, we could face liability due to undetected side-effectscausedby the interactionofourdrugswithotherdrugs followingreleaseof thedrugcandidate tothe market. Once a product is approved for sale and commercialized, the likelihood of productliability lawsuits increases. Criminal or civil proceedings might be filed against us by patients,regulatory authorities, biopharmaceutical companies and any other third party using ormarketingourdrugs.Theseactionscould includeclaimsresulting fromactionsbyourpartners, licenseesandsubcontractors,overwhichwehavelittleornocontrol.Theselawsuitsmaydivertourmanagementfrompursuingourbusinessstrategyandmaybecostlytodefend.Inaddition,ifweareheldliableinanyoftheselawsuits,wemayincursubstantialliabilitiesandmaybeforcedtolimitorforgofurthercommercializationoftheaffectedproducts.

Wemaintainproductliabilityinsurancecoverageforourclinicaltrialsatlevelswhichwebelieveareappropriate for our clinical trials. Nevertheless, our insurance coverage may be insufficient toreimburseusforanyexpensesorlosseswemaysuffer.Inaddition,inthefuture,wemaynotbeableto obtain ormaintain sufficient insurance coverage at an acceptable cost or to otherwise protectagainst potential product or other legal or administrative liability claims by us or our partners,licenseesor subcontractors,which couldpreventor inhibit the commercial productionand saleofanyofourdrugcandidatesthatreceiveregulatoryapproval.Productliabilityclaimscouldalsoharmour reputation and the marketability of our drugs, which may adversely affect our ability tocommercializeourdrugssuccessfully.4.3. RisksRelatedtoourDependenceonThirdParties

4.3.1. Weexpecttorelyonthirdpartiestoconductourclinicaltrials,whichmayresultincosts

anddelaysthatpreventusfromsuccessfullycommercializingourdrugcandidates.

Weexpecttorelyonthirdparties,suchascontractresearchorganizations,clinicaldatamanagementorganizations, medical institutions and clinical investigators, to conduct our clinical trials and, inparticular,forourPhase3clinicaltrialsofImegliminintheUnitedStates,EuropeandJapan.Wemaynot be able to locate a suitable partner and may not be able to enter into an agreement oncommerciallyreasonabletermsoratall.Evenifwearesuccessfulinenteringintosuchpartnerships,ourdevelopment activities or clinical trials conducted in relianceon thirdpartiesmaybedelayed,suspendedorterminatedif:

n the third parties do not devote a sufficient amount of time or effort to our activities orotherwisefail tosuccessfullycarryouttheircontractualdutiesortomeetregulatoryobligationsorexpecteddeadlines;

n wereplaceathirdparty;or

n the quality or accuracy of the data obtained by third parties is compromised due to theirfailuretoadheretoclinicalprotocols,regulatoryrequirementsorforotherreasons.


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Wegenerallywouldnothavetheabilitytocontroltheperformanceofthirdpartiesintheirconductof development activities. Third-party performance failures may increase our development costs,delayour ability toobtain regulatory approval, anddelayorprevent the commercializationof ourdrug candidates.While we believe that there are numerous alternative sources to provide theseservices, in the event that we seek such alternative sources, we may not be able to enter intoreplacementarrangementswithoutincurringdelaysoradditionalcosts.

4.3.2. Werelyuponasmallnumberofthirdpartysuppliers.

Wecurrentlyrely,andexpecttocontinuetorely,onasmallnumberofthird-partysuppliersforthesupplyofvariousrawmaterialsandchemicalproductsandclinicalbatchesneededforourpreclinicalstudiesandclinicaltrials,theexecutionofourpreclinicalstudiesandclinicaltrialsand,inthefuture,theproductionofourdrugcandidatesforwhichweobtainmarketingapproval.Forexample,inthefiscalyearendedDecember31,2015,ourtotalpurchasesandoutsideexpenseswereconcentratedintwosuppliers,includingHMR,whichprovidesclinicalresearchservicesandaccountedfor14.8%ofour totalpurchasesandoutsideexpenses,andMEDPACE,whichprovidesclinical research servicesand accounted for 13.0% of our total purchases and outside expenses. We may be unable toestablishanyadditionalagreementswiththird-partysuppliersortodosoonacceptableterms.

Even if we are able to establish agreements with third-party suppliers, reliance on third-partysuppliersentailsadditionalrisks,including:

n relianceonthethirdpartyforregulatorycomplianceandqualityassurance;

n thepossiblebreachofthesupplyagreementbythethirdparty;

n thepossibleterminationornonrenewaloftheagreementbythethirdpartyatatimethatiscostlyorinconvenientforus;and

n relianceonthethirdpartyforregulatorycompliance,qualityassuranceandsafety.

Third-partymanufacturersmay not be able to complywith current goodmanufacturing practices,regulationsorsimilarregulatoryrequirementsoutsidetheUnitedStates.Ourfailure,orthefailureofour third-party suppliers, to comply with applicable regulations could result in sanctions beingimposed on us, including fines, injunctions, civil penalties, delays, suspension or withdrawal ofapprovals, license revocation, seizures or recalls of drug candidates, operating restrictions andcriminal prosecutions, any of which could significantly and adversely affect the duration, cost orcontinuation of our clinical trials, which would, in turn, affect the eventual manufacturing andmarketingofourdrugsandharmourbusinessandresultsofoperations.

Any performance failure on the part of our existing or future suppliers could delay clinicaldevelopmentormarketingapproval. Ifanyoneofourcurrentsupplierscannotperformasagreed,wemaybe required to replace that supplier.Althoughwebelieve that thereare severalpotentialalternativesupplierswhocouldsupplythevariousrawmaterialsandchemicalproductsandclinicalbatchesneededforourpreclinicalstudiesandclinicaltrials,wemayincuraddedcostsanddelaysinidentifyingandqualifyinganysuchreplacement.

Ourcurrentandanticipatedfuturedependenceuponothersforthesupplyandmanufactureofourdrugcandidatesmayadverselyaffectourfutureprofitmarginsandourabilitytocommercializeanydrugcandidatesthatreceivemarketingapprovalonatimelyandcompetitivebasis.

4.3.3. Weexpecttoseektoestablishpartnershipsand,ifwearenotabletoestablishthemon

commercially reasonable terms, we may have to alter our development and

commercializationplans.

Weexpecttoseekoneormorepartnersforthedevelopmentandcommercializationofoneormoreof our drug candidates. Likely partners in the United States may include large- and mid-size


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pharmaceutical companies, regional and national pharmaceutical companies and biotechnologycompanies. In addition, ifwe are able to obtainmarketing approval for drug candidates from theEMAandother regulatory authorities,weexpect to seek toenter into strategic relationshipswithoneormoreinternationalbiotechnologyorpharmaceuticalcompaniesforthecommercializationofsuchdrugcandidatesoutsideoftheUnitedStates.

We face significant competition in seeking appropriate partners. Whether we reach a definitiveagreement for a collaboration will depend, among other things, upon our assessment of thecollaborator’sresourcesandexpertise,thetermsandconditionsoftheproposedcollaboration,andthe proposed collaborator’s evaluation of a number of factors. Those factors may include thepotentialdifferentiationofourdrugcandidatefromcompetingdrugcandidates,designorresultsofclinicaltrials,thelikelihoodofapprovalbytheEMA,FDA,PMDAorotherregulatoryauthoritiesandtheregulatorypathwayforanysuchapproval,thepotentialmarketforthedrugcandidate,thecostsand complexities of manufacturing and delivering the product to patients and the potential ofcompetingproducts.Thecollaboratormayalsoconsideralternativedrugcandidatesortechnologiesforsimilarindicationsthatmaybeavailableforcollaborationandwhethersuchacollaborationcouldbe more attractive than the one with us for our drug candidate. If we elect to increase ourexpenditures to fund development or commercialization activities on our own, we may need toobtainadditionalcapital,whichmaynotbeavailabletousonacceptabletermsoratall.Ifwedonothavesufficientfunds,wemaynotbeabletofurtherdevelopourdrugcandidatesorbringthemtomarketandgenerateproductrevenue.4.3.4. If we enter into collaborations with third parties for the development and

commercialization of any drug candidates, our prospects with respect to those drug

candidateswilldependinsignificantpartonthesuccessofthosepartnerships.

Weexpecttoenterintocollaborationswiththirdpartiesforthedevelopmentandcommercializationofoneormoredrugcandidateswemaydevelop.Wehavenotenteredintoanysuchpartnershipstodate.Ifweenterintosuchcollaborations,wewillhavelimitedcontrolovertheamountandtimingofresourcesthatourcollaboratorswilldedicatetothedevelopmentorcommercializationofourdrugcandidates. Our ability to generate revenues from these arrangementswill depend on any futurepartners’abilitiestosuccessfullyperformthefunctionsassignedtotheminthesearrangements. Inaddition,anyfuturepartnersmayhavetherighttoabandonresearchordevelopmentprojectsandterminateapplicableagreements,includingfundingobligations,priortoorupontheexpirationoftheagreeduponterms.

Collaborationsinvolvingourdrugcandidatesposeanumberofrisks,includingthefollowing:

n collaboratorshave significantdiscretion indetermining theeffortsand resources that theywillapplytotheseparnerships;

n collaboratorsmaynotperformtheirobligationsasexpected;

n collaboratorsmaynotpursuedevelopmentandcommercializationofourdrugcandidatesormayelectnottocontinueorrenewdevelopmentorcommercializationprograms,basedonclinicaltrialresults,changesinthecollaborators’strategicfocusoravailablefundingorexternalfactors,suchasanacquisition,thatdivertresourcesorcreatecompetingpriorities;

n collaboratorsmaydelayclinicaltrials,provideinsufficientfundingforaclinicaltrialprogram,stopaclinicaltrialorabandonadrugcandidate,repeatorconductnewclinicaltrialsorrequireanewformulationofadrugcandidateforclinicaltesting;

n collaborators could independently develop, or develop with third parties, products thatcompetedirectlyorindirectlywithourdrugcandidates;

n a collaborator with marketing and distribution rights to one or more products may notcommitsufficientresourcestothemarketinganddistributionofsuchproductorproducts;


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n disagreementswithcollaborators, includingdisagreementsoverproprietaryrights,contractinterpretation or the preferred course of development, might cause delays or termination of theresearch, development or commercialization of drug candidates, might lead to additionalresponsibilitiesforuswithrespecttodrugcandidates,ormightresultinlitigationorarbitration,anyofwhichwouldbetimeconsumingandexpensive;

n collaboratorsmay not properlymaintain or defend our intellectual property rights ormayuse our proprietary information in such a way as to invite litigation that could jeopardize orinvalidateourintellectualpropertyorproprietaryinformationorexposeustopotentiallitigation;

n collaboratorsmayinfringetheintellectualpropertyrightsofthirdparties,whichmayexposeustolitigationandpotentialliability;and

n collaborations may be terminated and, if terminated, may result in a need for additionalcapitaltopursuefurtherdevelopmentorcommercializationoftheapplicabledrugcandidates.

Collaborationagreementsmaynotleadtodevelopmentorcommercializationofourdrugcandidatesin themost efficientmanner or at all. If any future collaborator of ours is involved in a businesscombination,itcoulddecidetodelay,diminishorterminatethedevelopmentorcommercializationofanydrugcandidatelicensedtoitbyus.

4.4. RisksRelatedtoourOperations

4.4.1. Weexpecttoexpandourorganization,andasaresult,wemayencounterdifficultiesin

managingourgrowth,whichcoulddisruptouroperations.

AsofFebruary29,2016,wehad18employees.Weexpect toexperience significantgrowth in thenumberofouremployeesandthescopeofouroperations,particularlyintheareasofleaddiscoveryand product development, regulatory affairs, clinical affairs andmanufacturing and, if any of ourdrugcandidatesreceivesmarketingapproval,sales,marketinganddistribution.

In order to manage our anticipated development and expansion, including the potentialcommercialization of our drug candidates in Europe and the United States we must continue toimplementandimproveourmanagerial,operationalandfinancialsystems,expandourfacilitiesandcontinue to recruit and train additional qualified personnel.Due to our limited financial resourcesand the limited experience of ourmanagement team inmanaging a companywith such expectedgrowth,wemaynotbeable toeffectivelymanage theexpansionofouroperationsor recruit andtrain additional qualified personnel. The expansion of our operationsmay lead to significant costsand may divert our management and business development resources. Any inability to managegrowthcoulddelaytheexecutionofourbusinessplansordisruptouroperations.Ifourmanagementis unable to effectively manage our expected development and expansion, our expenses mayincreasemorethanexpected,ourabilitytogenerateorincreaseourrevenuecouldbereducedandwemaynotbeableto implementourbusinessstrategy.Ourfuturefinancialperformanceandourability to commercialize our drug candidates, if approved, and compete effectivelywill depend, inpart,onourabilitytoeffectivelymanagethefuturedevelopmentandexpansionofourcompany.

4.4.2. Our future success depends onour ability to retain our key executives and to attract,

retainandmotivatequalifiedpersonnel.

Oursuccessdependstoasignificantdegreeuponthework,expertiseandtechnicalandmanagementskills of our senior management team, including, in particular, those of Thomas Kuhn, our ChiefExecutiveOfficer.Any temporaryorpermanent lossof the servicesofanyof thesekey individualswouldhaveamaterialadverseeffectonus.

Recruitingandretainingadditionalqualifiedmanagementandscientific,clinical,manufacturingandsalesandmarketingpersonnelwillalsobecriticaltooursuccess,particularlyasweexpandinorder


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to acquire additional skills, such as manufacturing, quality assurance and regulatory and medicalaffairs. The loss of the services of our senior management team or other key employees couldimpede the achievement of our research, development and commercialization objectives andseriously harmour ability to successfully implement our business strategy. Furthermore, replacingexecutive officers and key employees may be difficult and may take an extended period of timebecauseofthelimitednumberofindividualsinourindustrywiththebreadthofskillsandexperiencerequired to successfully develop, gain regulatory approval of and commercialize drug candidates.Competitiontohirefromthislimitedpoolisintense,andwemaybeunabletohire,train,retainormotivate these key personnel on acceptable terms given the competition among numerouspharmaceuticalandbiotechnologycompaniesforsimilarpersonnel.

Wealsoexperienceintensecompetitionforthehiringofscientificandclinicalpersonnelfromothercompanies,universities and research institutions. In addition,we relyon consultants andadvisors,includingscientificandclinicaladvisors,toassistusinformulatingourresearchanddevelopmentandcommercializationstrategy.Ourconsultantsandadvisorsmaybeemployedbyemployersotherthanusandmayhavecommitmentsunderconsultingoradvisorycontractswithotherentitiesthatmaylimittheiravailabilitytous.Ifweareunabletocontinuetoattractandretainhighqualitypersonnel,themarketingandproductionofourdrugscouldbedelayedorprevented,whichcould,inturn,havea material adverse effect on our business, prospects, financial condition, cash flows or results ofoperations.

4.4.3. Our employees may engage in misconduct or other improper activities, including

violating applicable regulatory standards and requirements or engaging in insider

trading,whichcouldsignificantlyharmourbusiness.

Weareexposedtotheriskofemployeefraudorothermisconduct.Misconductbyemployeescouldincludeintentionalfailuresto:

n comply with legal requirements or the regulations of the EMA, FDA, PMDA and othergovernmentregulators;

n provideaccurateinformationtotheEMA,FDA,PMDAandothergovernmentregulators;

n comply with fraud and abuse and other healthcare laws and regulations in Europe, theUnitedStatesandabroad;

n reportfinancialinformationordataaccurately;or

n discloseunauthorizedactivitiestous.

Inparticular, sales,marketingandbusinessarrangements in thehealthcare industryare subject toextensive laws and regulations intended to prevent fraud,misconduct, kickbacks, self-dealing andother abusive practices. These laws and regulations restrict or prohibit a wide range of pricing,discounting,marketing and promotion, sales commission, customer incentive programs and otherbusiness arrangements. Employee misconduct could also involve the improper use of, includingtrading on, information obtained in the course of clinical trials, which could result in regulatorysanctionsandseriousharmtoour reputation. Inconnectionwith theglobaloffering,we intendtoadopt a Code of Business Conduct and Ethics, but it is not always possible to identify and deteremployee misconduct, and the precautions we take to detect and prevent this activity may beineffective in controlling unknown or unmanaged risks or losses or in protecting us fromgovernmental investigations or other actions or lawsuits stemming from a failure to comply withtheselawsorregulations.Ifanysuchactionsareinstitutedagainstus,andwearenotsuccessful indefending ourselves or asserting our rights, those actions could have a significant impact on ourbusiness,includingtheimpositionofsignificantfinesorothersanctions.


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4.4.4. Weareexposedtoliabilitythroughourcontractorsandsubcontractors.

Werelyandwillcontinuetorelyoncontractorsandsubcontractorsineveryaspectofourbusiness.Such reliance exposes us to potential claims relating to the performance and activities of suchcontractors and subcontractors, over which we can exert limited, if any, control. For example,contractorsandsubcontractorsusecertainregulatedmaterials intheactivitiestheyconductundercontracts with us. If our contractors and subcontractors do not properly and safely handle suchregulatedmaterials,wemaybeheldliablefortheiractions.

Additionally, although we maintain workers’ compensation insurance to cover us for costs andexpenseswemayincurduetoanyaccidentsinvolvingourcontractorsandsubcontractorsresultingin damage, injury or death, this insurance may not provide adequate coverage against potentialliabilities.Anysuchliability,whetherornotadequatelycoveredbyourinsurancepolicies,couldhavea material adverse effect on our business, prospects, financial condition, cash flows or results ofoperations.4.4.5. Ourtaxstatusisconditionalandmayberevoked.

Wequalifyasan“InnovativeYoungEnterprise”(JeuneEntrepriseInnovante),orJEI,asprovidedforinArticle44sexies-0AoftheFrenchGeneralTaxCode(CodeGénéraldesImpôtsorCGI).JEIstatusprovidescertaintaxandsocialsecurityadvantages,includingacorporatetaxexemptiononnet incomeearnedduring the first fiscal year of the grant of JEI status, followedby a 50%partialexemption on net income earned during the following fiscal year, a seven-year exemption on thebuildingtax,theEnterprisePropertyTaxContribution(ContributionFoncièredesEntreprises)andanexemption, limited to a specific ceiling, on employer social security contributions based on thecompensationofresearchers,technicians,researchanddevelopmentprojectmanagers,legalexpertsassigned to industrial protectionand technologyagreements relating to theproject andpersonnelresponsible for pre-competitive testing. This exemption also applies to senior management whoprimarilyparticipateinourresearchanddevelopmentprojects.

Our JEI status is conditional and the benefits it confers may be removed by the French taxauthorities. In addition, the French tax authoritiesmay call intoquestionour compliancewith theeligibility conditions for JEI status, or that JEI statusmay be terminated by a change in applicableFrenchtaxregulation.

OurJEIstatusisduetoexpireinDecember2016ifitisnotrevokedpriortothatdatebytheFrenchtaxauthorities.ThelossofourJEIstatusforanyreason,includingduetoourfailuretosatisfyanyofthe above conditions,will principally result in our becoming liable to pay employer social securitycontributionsatahigher rate,whichcouldhaveamaximumfinancial impactof€386,000peryear(basedonthenumberoffull-timeequivalentemployeesasofMarch31,2016),aswellasapotentiallossofsubsidiesreceivedasaresultofourJEIstatus(whichwere€167,141and€130,611for2014and 2015, respectively). This could, in turn, have a material adverse effect on our business,prospects,financialcondition,cashflowsorresultsofoperations.

4.4.6. Our failure to maintain certain tax benefits applicable to French biopharmaceutical

companiesmayadverselyaffectourresultsofoperations.

AsaFrenchbiopharmaceuticalcompany,wehavebenefitedfromcertaintaxadvantages,including,for example, the Research and Development Tax Credit (crédit impôt recherche), or Research TaxCredit,whichisaFrenchtaxcreditaimedatstimulatingresearchanddevelopment.TheResearchTaxCreditcanbeoffsetagainstFrenchcorporateincometaxdueandtheportioninexcess,ifany,mayberefunded.TheResearchTaxCreditiscalculatedbasedonourclaimedamountofeligibleresearchand development expenditures in France and represented €2.0million and €1.9million, for theDecember31, 2014 and 2015 fiscal years. The French tax authorities, with the assistance of the


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Higher Education and Research Ministry, may audit each research and development program inrespectofwhichaResearchTaxCreditbenefithasbeenclaimedandassesswhethersuchprogramqualifiesinitsviewfortheResearchTaxCreditbenefit.TheFrenchtaxauthoritiesmaychallengeoureligibility for,orour calculationof, certain tax reductionsordeductions in respectofour researchanddevelopmentactivitiesand,shouldtheFrenchtaxauthoritiesbesuccessful,ourcreditsmaybereduced,whichwouldhaveanegativeimpactonourresultsofoperationsandfuturecashflows.Inaddition,duetoourJEIstatus,wereceivetheResearchTaxCreditpromptly,ratherthanthreeyearsfollowing the request. There can also be no assurance that our JEI status will not be challenged.Furthermore,theFrenchParliamentmaydecidetoeliminate,ortoreducethescopeortherateof,theResearchTaxCreditbenefit,eitherofwhichitcoulddecidetodoatanytime.IfwefailtoreceivefutureResearchTaxCreditamountsorifourcalculationsorJEIstatusarechallenged,ourbusiness,prospects,financialcondition,cashflowsorresultsofoperationscouldbeadverselyaffected.

4.4.7. Wemaybeunabletocarryforwardexistingtaxlosses.

For the fiscal year ended December31, 2015, we generated a tax loss totaling €20.7million andcarried forward tax losses totaling €43.8million resulting in total tax losses of €64.5million as ofDecember31,2015.

ApplicableFrenchlawprovidesthat,forfiscalyearsendingafterDecember31,2012,theallocationof these losses is subject to a maximum of €1million, plus 50% of the portion of net earningsexceedingthisamount.Theunusedbalanceofthelossremainsdeferrableinfuturefiscalyears,andmaybedeferredunderthesameconditionswithoutrestrictionastotime.

Therecanbenoassurancethatfuturechangestoapplicabletaxlawandregulationwillnoteliminateoraltertheseorotherprovisionsinamannerunfavorabletous,whichcouldhaveamaterialadverseeffectonourbusiness,prospects,financialcondition,cashflowsorresultsofoperations.

4.4.8. Wehaveenteredintopubliccashadvanceswhoserepaymentmaybeaccelerated.

Overthepastthreefiscalyears,wehavereceivedmultipleconditionaladvancestotaling€935,225,forinnovationgrantedbyBPIFranceInnovation.Wehaverepaid€62,500todate.Ifwefailtocomplywith the repayment schedule set in the relevant agreements, payment of all sums due could beaccelerated. Such premature repayment could adversely affect our ability to finance our researchand development projects. In addition, we cannot ensure that we will then have the additionalfinancialmeansneeded,thetimeortheabilitytoreplacethesefinancialresourceswithother.Thiscould, in turn, have amaterial adverse effect onour business, prospects, financial condition, cashflowsorresultsofoperations.

4.4.9. Wemaybeexposedtosignificantforeignexchangerisk.Exchangeratefluctuationsmay

adverselyaffecttheforeigncurrencyvalueofourordinaryshares(whichmaybeinthe

formofADSs).

Weincursomeofourexpenses,andmayinthefuturederiverevenues,incurrenciesotherthantheeuro.Asweexpandintonewmarketsandourdrugcandidatesapproachadvancedclinicaltrialsandmarketability, it is likely that non-euro-denominated arrangements will increase in number andvalue.Inparticular,asweexpandouroperationsandconductclinicaltrialsintheUnitedStates,wewill incurexpenses inU.S.dollars.Asaresult,weareexposedtoforeigncurrencyexchangeriskasour results of operations and cash flows are subject to fluctuations in foreign currency exchangerates.Wecurrentlydonotengage inhedging transactions toprotect againstuncertainty in futureexchange rates between particular foreign currencies and the euro. Therefore, for example, anincreaseinthevalueoftheeuroagainsttheU.S.dollarcouldhaveanegativeimpactonourrevenueand earnings growth as U.S. dollar revenue and earnings, if any, are translated into euros at areducedvalue.Wecannotpredicttheimpactofforeigncurrencyfluctuations,andforeigncurrency


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fluctuationsinthefuturemayadverselyaffectourfinancialcondition,resultsofoperationsandcashflows.Theordinaryshares(whichmaybeintheformofADSs)beingsoldintheglobalofferingwillbequotedinU.S.dollarsontheNasdaqGlobalMarket,whileourordinarysharesincludingthosesoldintheglobalofferingaretraded ineurosonEuronextParis.Our financial statementsareprepared ineuros. Therefore, fluctuations in the exchange rate between the euro and theU.S. dollarwill alsoaffect,amongothermatters,thevalueofourordinaryshares(whichmaybeintheformofADSs).

4.4.10. Our internal computer systems, or those of our collaborators or other contractors or

consultants, may fail or suffer security breaches, which could result in a material

disruptionofourproductdevelopmentprograms.

Our internal computer systems and those of our current and any future collaborators and othercontractors or consultants are vulnerable to damage from computer viruses, unauthorized access,natural disasters, terrorism, war and telecommunication and electrical failures. While we do notbelieve thatwehaveexperiencedany suchmaterial system failure, accidentor security breach todate, if suchaneventwere tooccurandcause interruptions inouroperations, it could result inamaterialdisruptionofourdevelopmentprogramsandourbusinessoperations,whetherduetoalossofourtradesecretsorotherproprietary informationorothersimilardisruptions.Forexample,thelossofclinicaltrialdataforourdrugcandidatesfromcompletedorfutureclinicaltrialscouldresultindelaysinourregulatoryapprovaleffortsandsignificantlyincreaseourcoststorecoverorreproducethedata.Totheextentthatanydisruptionorsecuritybreachweretoresultinalossof,ordamageto, our data or applications or other data or applications relating to our technology or drugcandidates, or inappropriate disclosure of confidential or proprietary information, we could incurliabilities, our competitive position could be harmed and the further development andcommercializationofourdrugcandidatescouldbedelayed.

4.4.11. Wemayacquirebusinessesorproducts,orformstrategicalliances,inthefuture,andwe

maynotrealizethebenefitsofsuchacquisitions.

Atthisstage,ourstrategydoesnotinvolveplanstoacquirecompaniesortechnologiesfacilitatingorenabling us to access to new medicines, new research projects or new geographical areas, orenablingustoexpresssynergieswithourexistingoperations.However,ifsuchacquisitionsweretobecomenecessaryinfuture,wemaynotbeabletoidentifyappropriatetargetsormakeacquisitionsunder satisfactory conditions, in particular, satisfactory price conditions. In addition, we may beunabletoobtainthefinancingfortheseacquisitionsunderfavorableconditions,andcouldbeledtofinance these acquisitions using cash that could be allocated to other purposes in the context ofexistingoperations.Ifweacquirebusinesseswithpromisingmarketsortechnologies,wemaynotbeable to realize the benefit of acquiring such businesses if we are unable to successfully integratethemwithourexistingoperationsandcompanyculture.Wemayencounternumerousdifficultiesindeveloping,manufacturing andmarketing any new products resulting from a strategic alliance oracquisitionthatdelayorpreventusfromrealizingtheirexpectedbenefitsorenhancingourbusiness.Wecannotassureyouthat,followinganysuchacquisition,wewillachievetheexpectedsynergiestojustify the transaction, which could have a material adverse effect on our business, financialconditions,earningsandprospects.

4.4.12. Ourequitymaybediluted.

Sinceourincorporation,wehaveissuedorallocatedsharewarrants(bonsdesouscriptiond’actionsorBSAs),founder’ssharewarrants(bonsdesouscriptiondepartsdecréateurd’entrepriseorBSPCEs)andstockoptions.AsofMarch31,2016,theexerciseofallissuedequityandequity-linkedsecuritieswould allow for the issuance and subscription for 954,500 new ordinary shares (after taking into


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accountthe20:1sharesplitapprovedonMarch28,2014),resultinginadilutionrepresenting4.7%ofoursharecapitalonafullydilutedcapitalbasis.

Aspartofourpolicy tomotivateourmanagementandemployeessoas toattractcomplementaryskills,wemay,inthefuture,undertaketheissuanceorallocationofsharesornewequitysecurities,which could result in additional, potentially significant dilution for our current and futureshareholders.Dilutionof theequityownershipof shareholdersmay cause themarketpriceofourordinaryshares(whichmaybeintheformofADSs)todecline.

4.5. RisksRelatedtoourIntellectualProperty

4.5.1. Ourabilitytocompetemaydeclineifweareunabletoordonotadequatelyprotectour

intellectualproperty rightsor ifour intellectualproperty rightsare inadequate forour

technologyanddrugcandidates.

OurcommercialsuccessandviabilitydependsonourabilitytoobtainandmaintainpatentprotectionintheUnitedStates,Europe,Japanandothercountrieswithrespecttodrugcandidatesownedbyorlicensed to us, as well as to successfully defend these rights against third-party challenges. Ourstrategy and future prospects are based, in particular, on our patent portfolio, including thoserelatingtoImegliminandPXL770.Wewillonlybeabletoprotectourdrugcandidatesandtheirusesfromunauthorizedusebythirdpartiestotheextentthatvalidandenforceablepatents,oreffectivelyprotected trade secrets, cover them. Also, intellectual property rights have limitations and do notnecessarilyaddressallpotential threats toourcompetitiveadvantage.Ourability toobtainpatentprotectionforourdrugcandidatesisuncertainandthedegreeoffutureprotectionaffordedbyourintellectualpropertyrightsisuncertainduetoanumberoffactors,including,butnotlimitedto:

n weorour licensormaynothavebeenthefirsttomakethe inventionscoveredbypendingpatentapplicationsorissuedpatents;

n we or our licensor may not have been the first to file patent applications for our drugcandidatesorthecompositionswedevelopedorfortheiruses;

n othersmayindependentlydevelopidentical,similaroralternativeproductsorcompositionsandusesthereof;

n our or our licensors’ disclosures in patent applicationsmay not be sufficient tomeet thestatutoryrequirementsforpatentability;

n any or all of our or our licensors’ pending patent applications may not result in issuedpatents;

n weorourlicensormaynotseekorobtainpatentprotectionincountriesthatmayeventuallyprovideusasignificantbusinessopportunity;

n any patents issued to us or our licensor may not provide a basis for commercially viableproducts,maynotprovideanycompetitiveadvantages,ormaybesuccessfullychallengedby thirdparties;

n ourorourlicensors’compositionsandmethodsmaynotbepatentable;

n others may design around our patent claims to produce competitive products which falloutsideofthescopeofourpatents;

n others may identify prior art or other bases which could invalidate our or our licensorspatents;

n ourcompetitorsmightconductresearchanddevelopmentactivitiesintheUnitedStatesandothercountriesthatprovideasafeharborfrompatentinfringementclaimsforcertainresearchanddevelopmentactivities,aswellasincountrieswherewedonothavepatentrights,andthenusethe


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information learned from such activities to develop competitive products for sale in our majorcommercialmarkets;or

n wemaynotdevelopadditionalproprietarytechnologiesthatarepatentable.

Even if we have or obtain patents covering our drug candidates or compositions,wemay still bebarred frommaking, using and selling our drug candidates or technologies because of the patentrights of others. Others may have filed, and in the future may file, patent applications coveringcompositionsorproductsthataresimilaroridenticaltoours.TherearemanyissuedU.S.andforeignpatents relating to therapeutic drugs, and some of these relate to compounds we intend tocommercialize.NumerousU.S.- and foreign-issuedpatentsandpendingpatentapplicationsownedbyothersexistinthetype2diabetesfieldinwhichwearedevelopingdrugcandidates.Thesecouldmateriallyaffectourability todevelopourdrugcandidatesor sellourdrugs, if approved.Becausepatent applications can take many years to issue, there may be currently pending applicationsunknowntousthatmaylaterresultinissuedpatentsthatourdrugcandidatesorcompositionsmayinfringe.Thesepatentapplicationsmayhavepriorityoverpatentapplicationsfiledbyus.

Obtainingandmaintainingapatentportfolioentails significantexpenseand resources.Partof theexpenseincludesperiodicmaintenancefees,renewalfees,annuityfees,variousothergovernmentalfeesonpatentsorapplicationsdueinseveralstagesoverthelifetimeofpatentsorapplications,aswellas thecostassociatedwithcomplyingwithnumerousproceduralprovisionsduring thepatentapplicationprocess.Wemaynotchoosetopursueormaintainprotectionforparticularinventions.Inaddition, there are situations in which failure to make certain payments or noncompliance withcertainrequirementsinthepatentprocesscanresultinabandonmentorlapseofapatentorpatentapplication, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Ifwechoose to forgopatentprotectionor allowapatentapplicationorpatent to lapsepurposefullyorinadvertently,ourcompetitivepositioncouldsuffer.

Legal actions to enforce our patent rights can be expensive and may involve the diversion ofsignificantmanagement time. Inaddition, these legalactionscouldbeunsuccessfulandcouldalsoresultintheinvalidationofourpatentsorafindingthattheyareunenforceable.Wemayormaynotchoosetopursuelitigationorotheractionsagainstthosethathaveinfringedonourpatents,orusedthem without authorization, due to the associated expense and time commitment of monitoringthese activities. Ifwe fail toprotect or to enforceour intellectual property rights successfully, ourcompetitivepositioncouldsuffer,whichcouldharmourresultsofoperations.

4.5.2. Biopharmaceutical patents and patent applications involve highly complex legal and

factual questions, which, if determined adversely to us, could negatively impact our

patentposition.

Thepatentpositionsofbiopharmaceuticalcompaniescanbehighlyuncertainand involvecomplexlegal and factual questions. The interpretation and breadth of claims allowed in some patentscoveringbiopharmaceuticalcompositionsmaybeuncertainanddifficulttodetermine,andareoftenaffectedmateriallybythefactsandcircumstancesthatpertaintothepatentedcompositionsandtherelatedpatentclaims.ThestandardsoftheU.S.PatentandTrademarkOffice,orUSPTO,areevolvingandcouldchangeinthefuture.Consequently,wecannotpredicttheissuanceandscopeofpatentswithcertainty.Patents, if issued,maybechallenged, invalidatedorcircumvented.U.S.patentsandpatentapplicationsmayalsobesubjecttointerferenceproceedings,andU.S.patentsmaybesubjectto reexamination proceedings, post-grant review and/or inter partes review in the USPTO. Theissuanceofapatentisnotconclusiveastoitsinventorship,scope,validityorenforceabilityandourpatents or pending patent applications may be challenged in the courts or patent offices in theUnitedStatesandabroad.Thereisnoassurancethatallofthepotentiallyrelevantpriorartrelatingtoourpatentsandpatentapplicationshasbeen found.Forexample,publicationsofdiscoveries inthescientificliteratureoftenlagbehindtheactualdiscoveries,andpatentapplicationsintheUnited


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Statesandotherjurisdictionsaretypicallynotpublisheduntil18monthsafterfiling,orinsomecasesnot at all. Therefore, we cannot know with certainty whether we were the first to make theinventions claimed in our owned and licensed patents or pending patent applications, or thatwewerethefirsttofileforpatentprotectionofsuchinventions.Ifsuchpriorartexists,itmaybeusedtoinvalidate a patent, ormay prevent a patent from issuing from a pending patent application. Forexample,suchpatentfilingsmaybesubjecttoathird-partypre-issuancesubmissionofpriorarttothe USPTO or to other patent offices around theworld. As a result, the issuance, scope, validity,enforceabilityandcommercialvalueofourpatentrightsmaybeuncertain.Ourpendingandfuturepatentapplicationsmaynotresultinpatentsbeingissuedthatprotectourtechnologyorproducts,inwhole or in part, or may not effectively prevent others from commercializing competitivetechnologies and products. For example, such patent filings may be subject to a third-partypreissuance submission of prior art to the USPTO to other patent offices around the world.Alternatelyoradditionally,wemaybecome involved inpost-grant reviewprocedures,oppositions,derivations, proceedings, reexaminations, inter partes review or interference proceedings, in theUnited States or elsewhere, challenging patents or patent applications in which we have rights,includingpatentsonwhichwe rely toprotectourbusiness.Anadversedetermination inany suchchallengesmay result in lossofexclusivityor inpatent claimsbeingnarrowed, invalidatedorheldunenforceable, in whole or in part, which could limit our ability to stop others from using orcommercializing similar or identical technology and products, or limit the duration of the patentprotection of our technology and products. Foreign patentsmay be subject also to opposition orcomparableproceedingsinthecorrespondingforeignpatentoffice,whichcouldresultineitherlossofthepatentordenialofthepatentapplicationorlossorreductioninthescopeofoneormoreoftheclaimsof thepatentorpatentapplication. Inaddition, such interference, reexamination,post-grantreview,interpartesreviewandoppositionproceedingsmaybecostly.Also,giventheamountoftimerequiredforthedevelopment,testingandregulatoryreviewofnewdrugcandidates,patentsprotectingsuchcandidatesmightexpirebeforeorshortlyaftersuchcandidatesarecommercialized.Accordingly, rights under any issuedpatentsmaynot provideuswith sufficient protection againstcompetitiveproductsorprocesses.

Inaddition, changes inordifferent interpretationsofpatent laws in theUnitedStatesand foreigncountriesmay diminish the value of our owned and licensed patents or narrow the scope of ourpatent protection while patent reform legislation could increase the uncertainties and costssurroundingtheprosecutionofourpatentapplicationsandtheenforcementordefenseofourissuedpatents.Forexample,changesinordifferentinterpretationsofpatentlawsintheUnitedStatesandforeign countries may permit others to use our or our licensors’ discoveries or to develop andcommercializeourtechnologyandproductswithoutprovidinganycompensationtous,ormaylimitthe number of patents or claims we can obtain. The laws of some countries may not protectintellectualpropertyrightstothesameextentasU.S. laws,andthosecountriesmaylackadequaterulesandproceduresfordefendingourintellectualpropertyrights,orviceversa.

If we fail to obtain and maintain patent protection and trade secret protection for our drugcandidates, we could lose our competitive advantage and competition we face would increase,reducinganypotentialrevenuesandadverselyaffectingourabilitytoattainormaintainprofitability.

4.5.3. Ifweareunable toprotect the confidentialityofour trade secretsandknow-how,our

businessandcompetitivepositionwouldbeharmed.

In addition to seeking patent protection for our drug candidates, we also rely on trade secrets,including unpatented know-how, technology and other proprietary information, to maintain ourcompetitiveposition.Weseektoprotectthesetradesecrets,inpart,byenteringintonon-disclosureand confidentiality agreements with parties who have access to them, such as our employees,collaborators, consultants, advisors, university and/or institutional researchers and other thirdparties. We also have entered or seek to enter into confidentiality and invention or patent


39

assignmentagreementswithouremployees,advisorsandconsultants.Despitetheseefforts,anyofthese partiesmay breach the agreements and disclose our proprietary information, including ourtrade secrets, andwemaynotbeable toobtain adequate remedies for suchbreaches.Our tradesecretsmayalsobeobtainedby thirdpartiesbyothermeans, suchasbreachesofourphysicalorcomputer security systems. Enforcing a claim that a party illegally disclosed ormisappropriated atrade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. Inaddition, some courts inside and outside theUnited States are lesswilling or unwilling to protecttradesecrets.Moreover, ifanyofour tradesecretsweretobe lawfullyobtainedor independentlydeveloped by a competitor, we would have no right to prevent them, or those to whom theycommunicate it, fromusingthattechnologyor informationtocompetewithus. Ifanyofourtradesecrets were to be disclosed to, or independently developed by, a competitor, our competitivepositionwouldbeharmed.

4.5.4. Wewillnotseektoprotectourintellectualpropertyrightsinalljurisdictionsthroughout

theworldandwemaynotbeabletoadequatelyenforceourintellectualpropertyrights

eveninthejurisdictionswhereweseekprotection.

Filing, prosecuting and defending patents on our drug candidates in all countries and jurisdictionsthroughouttheworldwouldbeprohibitivelyexpensive,andourintellectualpropertyrightsinsomecountriesoutsidetheUnitedStatescouldbelessextensivethanthoseintheUnitedStates,assumingthatrightsareobtainedintheUnitedStates.Competitorsmayuseourtechnologies injurisdictionswherewedonotpursueandobtainpatentprotection todevelop theirownproductsand further,may export otherwise infringing products to territories where we have patent protection, butenforcement is not as strong as that in theUnited States. These productsmay competewith ourdrugs and our patents or other intellectual property rights may not be effective or sufficient toprevent them from competing. Even if we pursue and obtain issued patents in particularjurisdictions,ourpatentclaimsorotherintellectualpropertyrightsmaynotbeeffectiveorsufficienttopreventthirdpartiesfromsocompeting.

Inaddition,thelawsofsomeforeigncountriesdonotprotectintellectualpropertyrightstothesameextent as the federal and state laws in the United States. Many companies have encounteredsignificant problems in protecting and defending intellectual property rights in certain foreignjurisdictions.Thelegalsystemsofsomecountries,particularlydevelopingcountries,donotfavortheenforcement of patents and other intellectual property protection, especially those relating tobiopharmaceuticalsorbiotechnologies.Thiscouldmakeitdifficultforustostoptheinfringementofour patents, if obtained, or the misappropriation of our other intellectual property rights. Forexample,manyforeigncountrieshavecompulsorylicensinglawsunderwhichapatentownermustgrantlicensestothirdparties.Inaddition,manycountrieslimittheenforceabilityofpatentsagainstthirdparties,includinggovernmentagenciesorgovernmentcontractors.Inthesecountries,patentsmay provide limited or no benefit. Patent protectionmust ultimately be sought on a country-by-country basis, which is an expensive and time-consuming process with uncertain outcomes.Accordingly,wemaychoosenottoseekpatentprotectionincertaincountries,andwewillnothavethebenefitofpatentprotectioninsuchcountries.

Proceedingstoenforceourpatentrightsinforeignjurisdictionscouldresultinsubstantialcostsanddivertoureffortsandattentionfromotheraspectsofourbusiness,couldputourpatentsatriskofbeing invalidated or interpreted narrowly, could put our patent applications at risk of not beingissuedandcouldprovokethirdpartiestoassertclaimsagainstus.Wemaynotprevailinanylawsuitsthat we initiate and the damages or other remedies awarded, if any, may not be commerciallymeaningful. In addition, changes in the lawand legal decisionsby courts in theUnited States andforeign countriesmay affect our ability to obtain adequate protection for our technology and theenforcement of intellectual property. Accordingly, our efforts to enforce our intellectual property


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rightsaroundtheworldmaybe inadequatetoobtainasignificantcommercialadvantage fromtheintellectualpropertythatwedeveloporlicense.

4.5.5. Patenttermsmaybeinadequatetoprotectourcompetitivepositiononourdrugsforan

adequateamountoftime.

Giventheamountoftimerequiredforthedevelopment,testingandregulatoryreviewofnewdrugcandidates,patentsprotectingsuchcandidatesmightexpirebeforeorshortlyaftersuchcandidatesare commercialized. We expect to seek extensions of patent terms in the United States and, ifavailable,inothercountrieswhereweareprosecutingpatents.IntheUnitedStates,theDrugPriceCompetitionandPatentTermRestorationActof1984permitsapatenttermextensionofuptofiveyearsbeyondthenormalexpirationofthepatent,whichislimitedtotheapprovedindication(oranyadditionalindicationsapprovedduringtheperiodofextension).However,theapplicableauthorities,including the FDA and theUSPTO in theUnited States, and any equivalent regulatory authority inothercountries,maynotagreewithourassessmentofwhethersuchextensionsareavailable,andmay refuse to grant extensions to our patents, or may grant more limited extensions than werequest.

4.5.6. Thirdpartiesmaychallengetheinventorshipofourpatentfilingsandotherintellectual

property,ormayassertownershiporcommercialrightstoinventionswedevelop.

Third parties may in the future make claims challenging the inventorship or ownership of ourintellectualproperty.Weorourlicensorhavewrittenagreementswithcollaboratorsthatprovidefortheownershipofintellectualpropertyarisingfromcollaborations.Theseagreementsprovidethatweor our licensor must negotiate certain commercial rights with collaborators with respect to jointinventionsorinventionsmadebyourorourlicensor’scollaboratorsthatarisefromtheresultsofthecollaboration.Insomeinstances,theremaynotbeadequatewrittenprovisionstoaddressclearlytheresolution of intellectual property rights that may arise from collaboration. If we or our licensorcannot successfully negotiate sufficient ownership and commercial rights to the inventions thatresultfromouruseofathird-partycollaborator’smaterialswhererequired,orifdisputesotherwisearisewithrespecttotheintellectualpropertydevelopedwiththeuseofacollaborator’ssamples,wemaybelimitedinourabilitytocapitalizeonthemarketpotentialoftheseinventions.Inaddition,wemay face claims by third parties that our agreements with employees, contractors or consultantsobligating them to assign intellectual property to us are ineffective, or in conflict with prior orcompetingcontractualobligationsofassignment,whichcouldresultinownershipdisputesregardingintellectualpropertywehavedevelopedorwilldevelopandinterferewithourabilitytocapturethecommercialvalueofsuch inventions.Litigationmaybenecessary to resolveanownershipdispute,andifwearenotsuccessful,wemaybeprecludedfromusingcertain intellectualproperty,ormayloseourexclusiverightsinthatintellectualproperty.Eitheroutcomecouldhaveanadverseimpactonourbusiness.

4.5.7. Third parties may assert that our licensors, employees or consultants or we have

wrongfullyusedordisclosedconfidential informationormisappropriatedtradesecrets,

orclaimownershipofwhatweregardasourownintellectualproperty.

We and our licensor employ individuals who were previously employed at universities or otherbiotechnology or pharmaceutical companies, including our competitors or potential competitors.Although we try to ensure that our employees and consultants do not use the proprietaryinformationorknow-howofothersintheirworkforus,andnosuchclaimsagainstusarecurrentlypending, we may be subject to claims that we or our licensors, employees, consultants orindependent contractors have used or disclosed intellectual property, including trade secrets orother proprietary information, of a former employer or other third parties. Litigation may be


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necessarytodefendagainsttheseclaims.Ifwefailindefendinganysuchclaims,inadditiontopayingmonetarydamages,wemay lose valuable intellectualproperty rightsorpersonnel. Even ifwearesuccessful in defending against such claims, litigation could result in substantial costs and be adistractiontomanagementandotheremployees.

4.5.8. We may become involved in lawsuits to protect or enforce our patents or other

intellectual property,which could be expensive, time consuming and unsuccessful and

haveamaterialadverseeffectonthesuccessofourbusiness.

Competitors may infringe our patents, trademarks, copyrights or other intellectual property. Tocounterinfringementorunauthorizeduse,wemayberequiredtofileinfringementclaims,whichcanbe expensive and time consuming and divert the time and attention of our management andscientificpersonnel.Anyclaimsweassertagainstperceivedinfringerscouldprovokethesepartiestoassertcounterclaimsagainstusallegingthatwe infringetheirpatents, inadditiontocounterclaimsasserting that our patents are invalid or unenforceable, or both. In any patent infringementproceeding,thereisariskthatacourtwilldecidethatapatentofoursisinvalidorunenforceable,inwholeorinpart,andthatwedonothavetherighttostoptheotherpartyfromusingtheinventionatissue.Thereisalsoariskthat,evenifthevalidityofsuchpatentsisupheld,thecourtwillconstruethepatent’sclaimsnarrowlyordecide thatwedonothave the right tostop theotherparty fromusing the inventionat issueon thegrounds thatourpatent claimsdonot cover the invention.Anadverseoutcome ina litigationorproceeding involvingoneormoreofourpatentscould limitourabilitytoassertthosepatentsagainstthosepartiesorothercompetitors,andmaycurtailorprecludeourabilitytoexcludethirdpartiesfrommakingandsellingsimilarorcompetitiveproducts.Similarly,ifweasserttrademarkinfringementclaims,acourtmaydeterminethatthemarkswehaveassertedare invalid or unenforceable, or that the party against whom we have asserted trademarkinfringementhassuperiorrightstothemarksinquestion.Inthiscase,wecouldultimatelybeforcedtoceaseuseofsuchtrademarks.

Even ifweestablish infringement, the courtmaydecidenot to grant an injunctionagainst furtherinfringingactivityandinsteadawardonlymonetarydamages,whichmayormaynotbeanadequateremedy.Furthermore,becauseof thesubstantialamountofdiscovery required inconnectionwithintellectual property litigation, there is a risk that some of our confidential information could becompromised by disclosure during litigation. There could also be public announcements of theresultsofhearings,motionsorother interimproceedingsordevelopments. Ifsecuritiesanalystsorinvestorsperceivetheseresultstobenegative,itcouldadverselyaffectthemarketpriceofourADSsorordinaryshares(whichmaybeintheformofADSs).Moreover,therecanbenoassurancethatwewill have sufficient financial orother resources to file andpursue such infringement claims,whichtypically last for yearsbefore theyare concluded. Even ifweultimatelyprevail in such claims, themonetarycostofsuchlitigationandthediversionoftheattentionofourmanagementandscientificpersonnelcouldoutweighanybenefitwereceiveasaresultoftheproceedings.

4.5.9. Wemaybesuedforinfringingintellectualpropertyrightsofthirdparties,andifweare,

such litigationcouldbecostlyandtimeconsumingandcouldpreventordelayus from

developingorcommercializingourdrugcandidates.

Ourcommercialsuccessdepends,inpart,onourabilitytodevelop,manufacture,marketandsellourdrug candidates without infringing the intellectual property and other proprietary rights of thirdparties. Third partiesmay have U.S. and non-U.S. issued patents and pending patent applicationsrelatingtocompoundsandmethodsofuseforthetreatmentofthediseaseindicationsforwhichweare developing our drug candidates. If any third-party patents or patent applications are found tocoverourdrugcandidatesortheirmethodsofuse,wemaynotbefreetomanufactureormarketourdrugcandidatesasplannedwithoutobtainingalicense,whichmaynotbeavailableoncommerciallyreasonableterms,oratall.


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There is a substantial amount of intellectual property litigation in the biopharmaceutical industry,and we may become party to, or threatened with, litigation or other adversarial proceedingsregarding intellectual property rights with respect to our drug candidates, including interferenceproceedingsbeforetheUSPTO.Theremaybethird-partypatentsorpatentapplicationswithclaimstomaterials,formulations,methodsofmanufactureormethodsfortreatmentrelatedtotheuseormanufactureofourdrugcandidates.Becausepatentapplicationscantakemanyyearstoissue,theremaybecurrentlypendingpatentapplicationswhichmaylaterresultinissuedpatentsthatourdrugcandidatesmaybeaccusedof infringing. Inaddition,thirdpartiesmayobtainpatents inthefutureandclaimthatuseofourtechnologies infringesuponthesepatents.Accordingly,thirdpartiesmayassert infringement claims against us based on existing or future intellectual property rights. Theoutcome of intellectual property litigation is subject to uncertainties that cannot be adequatelyquantifiedinadvance.Thebiopharmaceuticalindustryhasproducedasignificantnumberofpatents,and itmay not always be clear to industry participants, including us,which patents cover varioustypes of products ormethods of use. The coverage of patents is subject to interpretation by thecourts, and the interpretation is not alwaysuniform. Ifwewere sued forpatent infringement,wewouldneedtodemonstratethatourdrugcandidates,productsormethodseitherdonotinfringethepatentclaimsoftherelevantpatentorthatthepatentclaimsareinvalidorunenforceable,andwemaynotbeabletodothis.Proving invalidity isdifficult.Forexample, intheUnitedStates,provinginvalidity requires a showing of clear and convincing evidence to overcome the presumption ofvalidity enjoyed by issued patents. Even if we are successful in these proceedings, wemay incursubstantial costsand the timeandattentionofourmanagementandscientificpersonnelcouldbediverted inpursuing theseproceedings,which could significantlyharmourbusiness andoperatingresults. In addition, we may not have sufficient resources to bring these actions to a successfulconclusion.

Ifwearefoundtoinfringeathirdparty’sintellectualpropertyrights,wecouldbeforced,includingbycourtorder,toceasedeveloping,manufacturingorcommercializingtheinfringingdrugcandidateorproductinoneormorejurisdictions.Alternatively,wemayberequiredtoobtainalicensefromsuchthird party in order to use the infringing technology and continue developing, manufacturing ormarketing the infringing drug candidate or product. However, wemay not be able to obtain anyrequiredlicenseoncommerciallyreasonabletermsoratall.Evenifweareabletoobtainalicense,itcouldbenon-exclusive,therebygivingourcompetitorsaccesstothesametechnologieslicensedtous.Alternativelyoradditionally,itcouldincludetermsthatimpedeordestroyourabilitytocompetesuccessfully in the commercial marketplace. In addition, we could be found liable for monetarydamages, includingtrebledamagesandattorneys’ fees ifwearefoundtohavewillfully infringedapatent. We may also be required to develop or obtain alternative technologies, review productdesign or, in the case of claims concerning registered trademarks, renameour drugs. A finding ofinfringementcouldpreventusfromcommercializingourdrugcandidatesorforceustoceasesomeofourbusinessoperations,whichcouldharmourbusiness.Claimsthatwehavemisappropriatedtheconfidentialinformationortradesecretsofthirdpartiescouldhaveasimilarnegativeimpactonourbusiness.4.5.10. Ifour trademarksandtradenamesarenotadequatelyprotected, thenwemaynotbe

able to build name recognition in our markets of interest and our business may be

adverselyaffected.

Our registered or unregistered trademarks and trade names may be challenged, infringed,circumvented or declared generic or determined to be infringing on othermarks.Wemay not beable to protect our rights to these trademarks and trade names, which we need to build namerecognitionamongpotentialpartnersorcustomersinourmarketsofinterest.Attimes,competitorsmayadopttrademarksandtradenamessimilartoours,therebyimpedingourabilitytobuildbrandidentity andpossibly leading tomarket confusion. In addition, there could bepotential trademark


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infringement claims brought by owners of other registered trademarks or trademarks thatincorporate variationsofour registeredorunregistered trademarks.Over the long term, ifweareunabletoestablishnamerecognitionbasedonourtrademarks,thenwemaynotbeabletocompeteeffectivelyandourbusinessmaybeadverselyaffected.

4.5.11. Obtaining and maintaining patent protection depends on compliance with various

procedural, document submission, fee payment and other requirements imposed by

governmental patent agencies, and our patent protection could be reduced or

eliminatedfornon-compliancewiththeserequirements.

Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees onpatents and applications are required to be paid to the USPTO and various governmental patentagencies outside of the United States in several stages over the lifetime of the patents andapplications.TheUSPTOandvariousnon-U.S.governmentalpatentagenciesrequirecompliancewithanumberofprocedural,documentary, feepaymentandothersimilarprovisionsduringthepatentapplicationprocessandafterapatenthasissued.Therearesituationsinwhichnon-compliancecanresult inabandonmentor lapseofthepatentorpatentapplication,resultinginpartialorcompletelossofpatentrightsintherelevantjurisdiction.

4.5.12. Ifwe fail to complywithourobligationsunderourexistingandany future intellectual

property licenseswith thirdparties,we could lose license rights that are important to

ourbusiness.

Ourbusinessdepends, inpart,onanassignmentand licensingagreemententered intowithMerckSerono, or the MS Agreement, under which we were transferred certain patents and granted alicense in relation to certain other patents and know-how for the research, development andmarketing of pharmaceutical products. Merck Serono may terminate the MS Agreement if wemateriallybreachanyofitsprovisions.IfMerckSeronoterminatestheMSAgreement,ourinabilitytouse the intellectual propertyunder thepatentspursuant to theMSAgreement could adverselyaffectourbusiness,prospects,financialcondition,cashflowsorresultsofoperations.

Wemayenterintoadditionallicenseagreementsinthefuture.Ourlicenseagreementsimpose,andweexpectthatfuturelicenseagreementswillimposevariousdiligence,milestonepayment,royalty,insuranceandotherobligationsonus.Ifwefailtocomplywithourobligationsundertheselicenses,ourlicensorsmayhavetherighttoterminatetheselicenseagreements,inwhicheventwemightnotbeabletomarketanyproductthatiscoveredbytheseagreements,orourlicensorsmayconvertthelicensetoanon-exclusivelicense,whichcouldadverselyaffectthevalueofthedrugcandidatebeingdevelopedunderthelicenseagreement.Terminationoftheselicenseagreementsorareductionorelimination of our licensed rights may also result in our having to negotiate new or reinstatedlicenseswithlessfavorableterms.

4.5.13. Wehavegrantedapledgeonpartofourintellectualpropertyrights.

InJuly2014,weenteredintoaventureloanagreement,ortheVentureLoanAgreement,withKreosCapital IV (UK)Ltd,orKreos.Wegrantedapledgeofcertain intellectualpropertyrightsrelatingtopatents and trademarks to Kreos for our obligations under the Venture Loan Agreement. As theVentureLoanAgreementdoesnotprovideforearlyredemption inthecaseofaneventofdefault,wewillnotbeexposedtoan immediate liquidityrisk.Thispledge includesnineofourpatentsandpatentapplications(twoFrenchpatents,oneGermanpatent,oneUnitedKingdompatent,oneU.S.patent, one European patent application, one U.S. patent application and two Japanese patentapplications)relatingtoImegliminandonePCTapplication(nownationalized)relatingtoadenosinemonophosphate-activatedproteinkinase,orAMPK.


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IfwedonotrepayorotherwisedefaultundertheVentureLoanAgreement,thepledgedintellectualpropertywilltransfertoKreosandwewillnothavecontinueduseofsuchintellectualproperty.

IfthepledgedintellectualpropertyistransferredtoKreos,ourabilitytolicenseanddevelopourdrugcandidatescouldbeimpairedordelayed,whichcould,inturn,haveamaterialadverseeffectonourbusiness,prospects,financialcondition,cashflowsorresultsofoperations.


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5. INFORMATIONABOUTTHEISSUER

5.1. HistoryandevolutionoftheCompany

5.1.1. NameoftheCompany

ThenameoftheCompanyis:Poxel.

5.1.2. PlaceofregistrationandregistrationnumberoftheCompany

The Company is regsitered with the Lyon Trade and Company Register (RCS) under the number510970817.

TheNAFcodeoftheCompanyis7219Z.

5.1.3. Dateofincorporationandduration

TheCompanywasincorporatedonMarch11th,2009,foratermof99yearsexpiringonMarch11th,2018,saveintheeventofearlydissolutionoranextension.

5.1.4. RegisteredOfficeoftheCompany,legalformandapplicablelaw

TheregisteredofficeoftheCompanyis:259/261AvenueJeanJaurès–ImmeubleleSunway–69007LyonPhone:0033437372010Fax:0437708815Email:[email protected]:www.poxel.com

TheCompanyisapubliclimitedcompanywithaBoardofDirectors.

TheCompany,governedbyFrench law, isprimarily subject toarticle L.225-1and followingof theFrenchcommercialcode.

5.1.5. HistoryoftheCompany

2009

• March,incorporationoftheCompany,aspartofaspin-offoftheresearchanddevelopmentactivitiesofMerckSeronointhecardiometabolicfield.Aspartofthisspin-off,MerckSeronotransferredacertainnumberofpreclinicalandclinicalresearchprogramstoPoxel(includingthe drug candidate Imeglemin for which Merck Serono conducted all the preclinicalprerequisites to its standards, certain phase 1 and phase 2 studies as well as theindustrialization of themanufacturing process) aswell as the related intellectual propertyrights. Poxel also hired key employees of Merck Serono taking part in the programstransferred.InordertoaccompanyitsresearchanddevelopmentactivitiesandregardingtheeconomicinterestofMerckSeronoinPoxel’sdevelopment,MerckSeronogavePoxelanon-repayable sum of €7.2million (see sections 22.1 “Significant agreements” and 10.1.5 “Offbalancesheetagreements”ofthisdocumentderéférence);

• Recruitmentofthemanagementteam;


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• September,obtainedasubsidyfromFEDERandtheGrandLyonofanamountof€437,000aspart of the “New therapeutic approaches in the treatment of chronic infections by thehepatitis B virus (Natheb project)”. Poxel contributed to this approach by providing itsknowledgeofthetarget(whichismobilizedintype2diabetesaswellashepatitisB).

2010

• The Company opted for the status of “Innovative Young Enterprise” (Jeune EntrepriseInnovante)(JEI)andobtainedafavorableopinionaftertherescriptrequestedandobtainedfromtheauthorities;

• July, raisedfundsof€16million, released inseveralstages(€10.8million in2010and€5.2millionin2011)fromfundsmanagedbyEdmonddeRothschildInvestmentPartners,OMNESCAPITAL (formerly Crédit Agricole Private Equity) and Bpifrance Investissement (FormerlyCDCEnterprises);

• August,launchedamulticenterphase2clinicalstudyinEuropeinrespectofthecombinationofImegliminandmetformin;

• September, communicated the effectiveness of Imeglimin at the European DiabetesCongress(EuropeanAssociationoftheStudyofDiabetes-EASD)

2011

• April, launched a multicenter phase 2 clinical study in Europe on the combination ofImegliminandsitagliptin;

• May,publicationrelatedtoImegliminactionmechanism(JournalofDiabetes&Metabolism);• October, positive results announced in relation to the phase 2 clinical study on the

associationofImegliminwithmetformin;• October, obtained state aid of € 1.45 million, in the form of subsidies and repayable

advances:o €950,000repayableadvanceundertheset-upofanewformulationofImegliminfor

thetreatmentofdiabetes;o €250,000repayableadvancefromOSEO/FEDERinthedevelopmentandselectionof

anewcandidatefordevelopmentAMPKactivatorforthetreatmentofdiabetes;o €250,000 OSEO/FEDER grant in the development and selection of a new

developmentcandidateAMPKactivatorforthetreatmentofdiabetes.

2012

• June, communication on the effectiveness of Imeglimin in combinationwithmetformin attheUSDiabetesCongress(AmericanDiabetesAssociation-ADA);

• October, signed a convertible bond issuance agreement on a pro-rata basiswith historicalshareholders,foratotalamountof€13million,ofwhich€3.3millionwassubscribedfor in2012and€9.7millionwassubscribedforin2013;

• November,positiveresultsannouncedinrelationtothephase2studyontheassociationofImegleminwithsitagliptin.

2013

• February,appointmentofMohammedKhosoBaluchasindependentdirector;• March,launchedthemulticenterphase2clinicalstudyintheUnitedStatesandinEuropein

respectofImeglemininmonotherapy;• October,favorableresultsannouncedinrelationtothephase2clinicalstudyonImeglemin

demonstratingtheactivityofthedrugcandidateoninsulinsecretioninresponsetoglucose.


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2014

• January,finalizationoftheselectionofpatientsforthephase2bstudy(Imeglimin);• April, finalizationoftheselectionofpatientsforthecomplementarystudyofmonotherapy

(Imeglimin);• July,capital increasesubscribedbyBpifranceParticipationsofanamountof€5millionand

concomitantconversionofallconvertiblebondsissuedin2012and2013;• Creation of a Venture Loan with Kreos Capital IV (Expert Fund), up to a maximum of €8

million,intwotranches.Thefirsttranche,releasedinJuly2014,amountedto€5million;• December, first positive results announced in relation to the new oral antidiabetic

(Imeglimin)inaphase2bstudy.

2015

• January,appointmentofRichKenderasindependentdirector;• February, listing on Euronext Paris, Compartment C. The gross amount raised was €26.8

million. Concomitantly, the Company recognized the exercise by Merck Serono of its1,088,531sharewarrantsinasmanynewsharesforanexercisepriceof€4,354,000;

• March,appointmentofPascaleBoisselasindependentdirector;• May, positive results announced in relation to the Imeglimin phase 1 study on Japanese

subjects;• May, Poxel and ENYO Pharma enter into a first license agreement in respect of the FXR

agonistprogramofPoxel;• June,positiveresultsannouncedinrelationtothenewphase2trialofImeglimin;• June,PoxelintegratedtheCACSmall,CACMid&SmallandCACAll-TradableEuronext• July,Poxelraised€20millionaspartofaprivateplacementconductedbyUSinvestors(91%)

andEuropeaninvestors;• September,relocationoftheLyonheadquartersto259/261AvenueJeanJaurès–Immeuble

leSunway–69007Lyon;• December,initiationofphase2binJapanforImeglimin;• December,endofphase2meetingwiththeFDAinrespectofImeglimin;• December,initiationofphase1ofPXL770.

2016

• January,appointmentofPierreLegaultandJaniceBourqueasindependentdirectors;• March, appointment of Jonae R. Barnes as Senior Vice-President, Investors Relations and

PublicRelations,basedinBoston;• March,U.S.approvalofthepatentcoveringthePXL770,adirectactivatorofAMPKinasefor

thetreatmentoftype2diabetesandassociateddiseases;• March, resignation of Thierry Hercend as Chairman of the Board of Directors and

appointmentofPierreLegaultasChairmanoftheBoardofDirectorsoftheCompany.


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5.2. Investments

5.2.1. Principalinvestmentsmadeoverthelasttwofinancialyears

The principal investmentsmade since 2009 relate to the acquisition of laboratory, computer andoffice equipment, especially following the relocation of the office of the Company in Lyon inSeptember 2015 (refer toNote 4 of the annexure to the IFRS financial statements publishedon avoluntarybasis,providedinsection20.1"IFRSAccountsestablishedforthefinancialyearclosedonDecember31st,2015"ofthisdocumentderéférence).

Principalinvestmentsduringthelasttwofinancialyears

Amountineuros 12/31/2015 12/31/2014

Intangibleassets 706 1050

Capitalizationofresearchanddevelopmentcosts

Tangibleassets 153311 12826

Hardware 128549 12826

5.2.2. Principalinvestmentsinprogress

NosignificantinvestmenthasbeenmadesinceJanuary1st,2016.

5.2.3. Principalplannedinvestments

TheCompanydoes not currently intend tomake significant investments for the coming years, forwhichthemanagementbodiesoftheCompanywouldberequiredtomakefirmcommitments.

However, for intangible investments, the Company has a projected commitment corresponding totheongoingclinicalstudies.Thisshort-termcommitmentisestimatedatatotalof€12million.


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6. BUSINESSOVERVIEW

6.1. OurCompany

Weareaclinical-stagebiopharmaceuticalcompanyfocusedonthedevelopmentofnoveltreatmentsfor type 2 diabetes and metabolic disease. Our two leading drug candidates—Imeglimin andPXL770—are intendedtocomplementandaugmentexistingtype2diabetestherapies, including inpatients who no longer fully respond to such therapies, with the goal of helping patients bettercontrol their type2diabetesand reducepotentiallydisablingor fatal complications.Whilecurrenttreatmentsare initiallyeffective in facilitatingblood sugar regulationor glucosehomeostasis, theypresentavarietyof safety issuesandare limited in theirability toaddressallpatients, sufficientlydelay disease progressionor prevent complications of type 2 diabetes, such as cardiovascular andmetabolic disease. Accordingly, we are focused on addressing the unmet need for new diabetesdrugs thatpreservepancreatic function, reduce insulin resistanceanddecreasecardiovascularandmetabolicdiseaseriskfactors,suchasheightenedbloodlipidlevelsandexcessbodyweight.6.1.1. OurPrincipalDrugCandidates

The table below sets forth details relating to the current stages of development of our type 2diabetesclinicaldrugcandidates:

Imegliminisafirst-in-classoraldrugcandidatethattargetstwocriticalmetabolicdefectsattherootof type2 diabetes, low insulin secretion and elevated insulin resistance. The U.S. Food and DrugAdministration,orFDA,usestheterm“first-in-class”torefertodrugswhichuseanewanduniquemechanismofaction.WebelievethatourdrugcandidateshaveauniquemechanismofactionandImegliminwasgrantedthefirst“glimin”therapeuticagentstatusbytheWorldHealthOrganization.We believe that it is themost advanced drug candidate targetingmitochondrial dysfunction. Themitochondriaisthepowercenterofthecell,anditsdysfunction,whichhasbeenexaminedinover200scientificpublicationsperyearineachofthelastfiveyearsisimplicatedinthepathophysiologyof type 2 diabetes. By targeting themitochondria, Imeglimin can simultaneously triggermetaboliceffects in the liver for the treatmentofdiabetes, the threekeyorgans involved in type2diabetespathophysiology—theliver,musclesandpancreas.Imegliminhasbeeninvestigatedin16completedclinical trials,which includedanaggregateofapproximately850subjects. In thesetrials, Imegliminwasobservedtohaveafavorablesafetyandtolerabilityprofileforadrugcandidateatthisstageofclinicaldevelopmentandwasobservedtohaveaglucoseloweringeffectinbothmonotherapyandcombinationtherapies.

n AttheAmericanDiabetesAssociationconventioninJune2015,wereportedpositiveresultsof our Phase 2b multi-center, placebo-controlled, double-blind, randomized clinical trial for


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Imeglimin,whichincluded382patients.Inparticular,inthisPhase2btrialweobservedthatpatientstreated with Imeglimin experienced a dose-dependent and statistically significant (attaining aprobability thatrandomchancecausedtheresult,orP-value,of<0.05,acommonlyusedcriterionfor statistical significance) reduction in hemoglobin A1c, or A1c, versus placebo (p<0.001). A1crepresents the universal clinical endpoint for diabetes studies and is the basis on which all priorapproved drugs for diabetes have been evaluated.We expect that A1c levels will be the primaryendpointofourPhase3trials.WebelievethattheobservedsignificantreductionofA1clevelsinourPhase 2b trial, the more favorable safety profile for a drug candidate at this stage of clinicaldevelopment, as compared to existing medications and the differentiated mechanism of actionposition Imegliminasahighlyattractivedrugcandidate for type2diabetes. Inaddition, Imegliminwas also observed to demonstrate comparable A1c reduction levels in patients who no longerrespond tometforminor sitagliptin, the current first and second line standards of care for type 2diabetes,whichcollectivelygeneratedapproximately$8billionofsalesandwereprescribedto36.4millionpeopleintheUnitedStates,Japan,Germany,Italy,theUnitedKingdom,FranceandSpainin2014.

n GiventhesuccessfulcompletionofourPhase2bclinicaltrialintheUnitedStatesandEuropeand our End-of-Phase-2meetingwith the or FDA inDecember 2015,we are planning to launch aPhase3program.WearecurrentlyevaluatingvariouspartnershipstructurestoenablethelaunchofthisPhase3program.WearealsoworkingwiththeEuropeanMedicinesAgency,orEMA,inordertoprepare a Phase 3 development program thatwill suit both the FDA and EMA. In parallel,we aredevelopingImeglimininAsia,particularlyinJapan.APhase2btrialinvolvingJapaneseparticipantsisongoing,withread-outanticipatedinthesecondquarterof2017.PriortothelaunchofourcurrentPhase2btrial,wehelddiscussionswiththeJapanesePharmaceuticalsandMedicalDevicesAgency,orPMDA,topermitinitiationofthetrial.WehavealsoheldpreliminarydiscussionswiththePMDAtomakearrangementsforthesubsequentPhase3program,whichweexpecttoinitiateattheendof2017.WeintendtosubmitaNewDrugApplication,orNDA,inJapanand,potentially,severalotherAsiancountriesin2019.

Our second drug candidate, PXL770, is a first-in-class oral, direct activator of adenosinemonophosphate-activated protein kinase, or AMPK, an enzyme that acts as an energy sensor andregulatormaintaining cellularhomeostasis, ornormalizedglucose and lipid levels.AMPKhasbeentermedan“exerciseenzyme,”andwebelievethatPXL770 iscurrentlythemostadvancedexercisemimetic drug candidate. In preclinical studies, PXL770 was observed to have positive effects onvarious metabolic parameters. These effects include an increase in glucose utilization and lipidoxidationandareductionininsulinresistanceandglucoseandlipidproduction.Asaresultofthesebroad effects and given that AMPK is activated during physical activity. Based on the favorabletoxicityprofileandefficacyresultsforadrugcandidateatthisstageofclinicaldevelopmentobservedinourpreclinicalstudies,weinitiatedaPhase1trialofPXL770andexpecttheresultstobeavailablebytheendof2016.

We also plan to initiate a Phase 2a program in 2017 to assess PXL770’s safety and efficacy withrespecttocardiovascularriskfactors,includingA1clevels,glucoselevels,lipid-relatedabnormalitiesandexcessweight.

6.1.2. DiabetesMarketOverview

AccordingtotheInternationalDiabetesFederation,orIDF,in2015anestimated415millionpeoplebetween the ages of 20 and 79were affected by diabetes globally,withmore than 90%of thoseaffectedhavingtype2diabetes.TheIDFalsoestimatedthatasof2015,intheUnitedStatesalone,29.3million individuals,or9.2%of thepopulation,haddiabetes.According toDecisionResources,over 70million people over the age of 20 in theUnited States, Japan,Germany, Italy, theUnitedKingdom,FranceandSpainsufferedfromtype2diabetesin2014.


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Accordingtothe IDF,diabetes-relatedexpenditures in2015totalled$521billion inNorthAmerica,theCaribbeanandEuropealone.DecisionResourcesestimatesthatdiabetestreatmentsgeneratedsales of over $35 billion in 2014 in theUnited States, Japan,Germany, Italy, theUnited Kingdom,FranceandSpain,and that sales in thesemarketsareprojected toapproximatelydoubleby2024.Further, according to the IDF, aggregate diabetes-related expenditures in theUnited States, Chinaand Germany, the three highest spending countries, amounted to 60% of the total globalexpenditures on diabetes, even though these countries only accounted for 35.1% of the globaldiabetes population. In addition, the IDF estimates theaggregate diabetes-related expendituresinthethreehighestspendingregionsofWesternPacific,MiddleEastandNorthAfricaandSouthandCentralAmericaamountedto$157.7billion in2015andexpectstheseexpendituresto increaseby39%by2040.

6.1.3. OurHistory

We were founded in 2009 as the diabetes spin-off from Merck Serono, as part of a strategicrealignmentfollowingtheacquisitionofSeronobyMerck.Aspartofthisspin-off,weassumedallofthe key diabetes personnel and assets from Merck Serono, which includes Imeglimin, the directAMPKactivatorprogramwhichledtoourdiscoveryofPXL770,andfouradditionalprogramsatthediscovery or early development stage that target type 2 diabetes. Prior to 2009, Merck investedsubstantialamountsinthedevelopmentoftheprogramsthatweassumedandhadbeenamongtheleadersindiabetesdrugdevelopment,initiallybringingmetformintothemarket.Inaddition,severalof our team members have experience from large pharmaceutical companies, including Eli Lilly,Solvay (acquiredbyAbbott) and Servier, andhaveworked to bring several products tomarket. InFebruary2015,we completedan initial publicofferingonEuronextParis raisinggrossproceedsof€26.8million.Todate,wehavereliedprimarilyon theprivateandpublic salesofequitysecuritiesand convertible bonds, conditional advances and subsidies, and reimbursements of research taxcredit claims to fund our ongoing cash needs, raising over €107 million in funding. Our ordinarysharesarelistedonEuronextParisunderthetradingsymbol,“POXEL.PA.”

6.1.4. OurStrengths

Webelievethatwehavethepotentialtobecometheleaderinthedevelopmentofnoveltreatmentsfortype2diabetesandmetabolicdisease.Webelievethatourstrengthsinclude:

n First-in-class diabetes treatment with a dual mechanism. Our leading drug candidate,Imeglimin,isanovel,first-in-classdiabetestreatmentwithpositivePhase2bresultsand,webelieve,istheonlyoralcompoundwithadualmechanismthatisdesignedtoincreaseinsulinsecretionandreduceinsulinresistance.Imegliminhasauniquemechanismofactionthatworksatthelevelofthemitochondria, and we believe that it has the potential to slow disease progression, providetherapeuticoptionstopatientswhonolongerrespondtocurrenttreatments,complementexistingtreatmentsanddecreasecardiovascularriskfactors.

n Imeglimin is ready for late stage development worldwide.Following our End-of-Phase-2meetingwiththeFDAinDecember2015,wearepreparingthePhase3programforImegliminintheUnited States and Europe, which we anticipate initiating in early 2017. In Japan, Imeglimin iscurrentlyinaPhase2btrial,andweexpecttobeginthePhase3programin2017,pendingpositiveresultsoftheongoingtrial.

n Imeglimin targets a large addressable market with significant unmet treatment needs.

Type2diabetesisamajorglobalepidemic,andtheIDFestimatesthat415millionindividualsgloballybetween the ages of 20 and 79were affected by diabetes in 2015,withmore than 90% of theseindividuals having type2diabetes.Further, the IDF estimates that by 2040, thenumberof peopleglobally affected by diabetes will increase by 55% to 642 million. While current treatments areinitially effective inmanaging glucosehomeostasis, theypresent a varietyof safety issues and are


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limited in their ability to sufficiently delay disease progression or prevent complications of type 2diabetes, such as cardiovascular and metabolic disease. Due to the unique product profile ofImeglimin,webelievethatImegliminiswell-positionedtoaddressthelargeunmetneedswithinthetype2diabetesmarket.

n UnencumberedopportunityandacompellingvaluepropositionforImeglimin.WeholdallcommercialrightsforImeglimin.Duetothesignificantunmettreatmentneedsfortype2diabetes,webelievethatthereishighdemandfrompharmaceuticalcompaniesforinnovativediabetesdrugs,andweareexploringpotentialpartnershipopportunities for Imeglimin.Webelieve thatdue to itsuniqueproductprofile, the strengthof the clinicaldataproduced todateand the late stageof itsdevelopment,Imegliminpresentsacompellingvaluepropositionforapotentialpartner.

n PXL770representsanoveldirectAMPKactivator.WebelievethatPXL770representsanewclassofexercisemimeticdrugcandidatesandthereforerepresentsauniqueopportunitytoaddressatargetpopulationoftype2diabetespatientswithcardiovascularriskfactors.Asafirst-in-classoraldirect activatorofAMPK,PXL770hasbeenobserved tohavepositiveeffectsonvariousmetabolicparameters. These effects include an increase in glucose utilization and lipid oxidation and areductionininsulinresistanceandglucoseandlipidproductionobservedinpreclinicalstudies.Basedon the favorable toxicity profile and efficacy results for a drug candidate at this stage of clinicaldevelopment from our preclinical studies, we initiated a Phase 1 trial of PXL770 and expect theresultstobeavailablebytheendof2016.

n Leading diabetes clinical development expertise.Our management team, which mainlyoriginated fromMerck Serono, is composed of experts in type 2 diabetes and related metabolicdiseaseswithacumulative125yearsofexperienceindrugdevelopment.Keymembersofourteamwere involved in the clinical study designs and regulatory approvals of the metformin franchise,whichgeneratedpeakworldwidesalesof$2.7billion in2001, theyearbeforegenericcompetitorsentered the U.S. market. New members have strengthened our management team, which nowcombinesextensiveexperienceindiabetesclinicalresearchanddevelopmentwiththebusinessandfinancial expertise needed for drug development. In addition, our Scientific Advisory Board iscomprisedofkeydiabetesexpertsandissupportedbyourboardofdirectors,whichincludesglobalexpertsinthepharmaceuticalindustry.

6.2. OurStrategy

Ourgoalistodevelopandcommercializeinnovativetherapiesforthetreatmentoftype2diabetesandmetabolicdisease.Weintendtopursuethefollowingstrategies:

n Advance Imeglimin to Phase3 trials in theUnited States and Europe and gather further

datadifferentiatingImegliminfromitscompetitors.Asnoted,Imegliminhasbeenobservedtohaveafavorablesafetyandtolerabilityprofileforadrugcandidateatthisstageofclinicaldevelopmentin16completedclinicaltrials,whichincludedanaggregateofapproximately850participants,andwasobserved to demonstrate a blood glucose lowering effect in both monotherapy and combinationtherapies.Additionalpreclinical studiesandPhase2clinical trialsareunderwayorbeingprepared,with the goal to further investigate Imeglimin’s clinical properties and further demonstrateImeglimin’s potential todelaydiabetesprogression anddecrease theoccurrenceof cardiovascularand metabolic complications in type 2 diabetes patients. We are currently evaluating variouspartnershipstructurestoenablethelaunchofthePhase3program.

n Independently develop Imeglimin in Asia, with an initial focus on the Japanese

market.Japan is the second-largest diabetes market after the United States and has establishedguidelines thatwe believe enable a less capital intensive regulatory path for approval of diabetesdrugcandidates.UponcompletionoftheongoingPhase2btrialinJapan,weexpecttocommenceaPhase3program,whichwill includethreetrialscurrentlyanticipatedtosupportNDAsubmissionin


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Japan and other Asian countries.We expect to ultimately commercialize Imeglimin in Asia with apartner.

n Progress the clinical development of PXL770. In preclinical studies, PXL770 has beenobserved to have positive effects on variousmetabolic parameters and reduce cardiovascular riskfactors.UponcompletionofourongoingPhase1study,whichisdesignedtoassessPXL770’ssafety,pharmacokineticprofile andAMPKactivation (i.e.,activating the “exerciseenzyme”),we intend tolaunchaPhase2programtoconfirmour findingsandgatheradditionalefficacyandsafetydata intype2diabetespatients.

n Expandourpipelinewithadditionaldrugcandidates.Givenourexpertiseintype2diabetesand more broadly in metabolic diseases, as well as our management team’s experience in drugdevelopment,we intend to develop additional compounds,whichwemay derive either from ourexisting programs, which were originated by Merck Serono, or which we may source externallythroughbusinessdevelopmentefforts.

6.3. Type2DiabetesOverview

Glucose isa simple sugarusedbycells toproduceenergy.Digestionof foodservesas theprimarymeansthroughwhichthehumanbodyreceivesglucose.Inafastingstate,theliverproducesglucose.Theproductionofglucosebytheliverandtheutilizationofdigestedglucoseismanagedbyinsulin,apeptide hormone produced by the pancreas. Insulin secreted by beta cell islets in the pancreas,stimulatescellstouptakeandprocessglucosetherebyregulatingbloodglucoselevels.

Diabetesisadiseasecharacterizedbyabnormallyhighlevelsofbloodglucoseandinadequatelevelsof insulin. There are two primary types of diabetes: type 1 and type 2. In type 1 diabetes, thepancreasproducesno insulin. In type2diabetes, although thepancreasproduces insulin, it eitherfailstodosoatsufficientlevelsorthebodyignorestheinsulinthatisproduced,aconditionknownasinsulinresistance.AccordingtotheIDF,type2diabetesisthemoreprevalentformofthedisease,affectingapproximately90%ofallpeoplediagnosedwithdiabetes.

Inhealthy individuals, thepancreasreleasesanaturalspikeof insulinat thestartofameal,whichservesbothtoprocesstheglucoseproducedthroughdigestionandsignalthelivertostopproducingglucose while digestion is taking place. This allows healthy individuals to remain in glucosehomeostasis.Bycontrast,inpatientswithtype2diabetes,theliverdoesnotreceiveasignaltostopmaking glucose, thereby resulting in excess blood glucose after eating, a condition known ashyperglycemia.Highlevelsofbloodglucoseleadstoattachmentofglucosetocertainproteinsintheblood, interfering with such proteins’ ability to perform their normal function of maintaining theintegrity of the small blood vessels. Over time, these small blood vessels break down and leak,resulting in adverse and sometimes fatal events including retinopathy leading toblindness, lossofkidney function,nervedamageand lossof sensation,poor circulation in theperiphery,potentiallyrequiringamputationoftheextremities,andmacrovascularcomplicationsintheheartandthebrain.AccordingtotheAmericanDiabetesAssociation,66%ofdeathsamongdiabetespatientsareduetocardiovascularevents.

Several hours after ameal, blood glucose levels in an untreated type 2 diabetes patient becomesufficientlyelevatedthatthepancreasreleasesaninordinatelylargeamountofinsulin.However,thisoccursatatimewhenthedigestionprocessisnearlycompleteand,accordingly,whenbloodglucoselevelsshouldfall.Thisexcessreleaseofinsulinplacesunduedemandonthepancreas.Thismayleadto its more rapid deterioration and eventually result in failure of beta cell islets, rendering thepancreasunabletoproduceinsulin.Thisalsoleadstoweightgain,whichmayfurtherexacerbatethediseaseconditionleadingtoeventualrelianceoninjectableinsulin.

Thediagrambelowsetsforththedevelopmentandprogressionoftype2diabetes:


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(A)Insulin-resistance:Resistancetoinsulindevelopsamongcertainsubjectswhenachronicexcessoffattyfoodslargelyexceedsenergyneedsandgraduallyleadstoobesitywiththeaccumulationoffat in theabdomen.The increasedcirculationof free fattyacids, theircompetitiveutilizationasanenergy source in place of glucose and their excessive storage among metabolically active organs(e.g., the liver and muscles) contribute to the gradual development of insulin-resistance amonginsulin-dependent tissues. In turn, resistance to insulin prevents the decrease in production ofglucosebytheliver,whichisimportantduringperiodsoffastingtomaintainglycemia,butnormallyslows down after a meal. This increase in production of glucose by the liver contributes to theincreaseofglycemia.

(B)Hyper-insulinism:theamountofinsulinproducedbythepancreasincreasesinhighproportionssoastopermitthetransportofglucosetoinsulin-dependenttissuesdespiteinsulin-resistance.Thishyperinsulinismmaybeprolongedfor10to20years,andthusallowglycemiatoremainpracticallynormal.Hyperinsulinismisconsideredapre-diabeticstate.

(C) Relative insulinopenia (or shortage of insulin): the initial increase in insulin production inresponse to insulin-resistance associated with the accumulation of excessive concentrations ofcirculating fatty acids in the beta islets leads to the gradual exhaustion of the pancreas amongpatients – who are now classified as type 2 diabetes patients. The pancreas is no longer able tosecretethequantitiesofinsulinneededtoregulateglycemia.Itisatthispointthatpharmacologicalinterventionshouldbegin.

Source:DeFronzoRAetal.DiabetesCare(1992),15:318-368Although the causes of type 2 diabetes are not fully understood, risk factors for type 2 diabetesinclude:excessbodyweight;poordiet, includingexcessconsumptionofhigh-fatandsugary foods;physical inactivity; aging; familyhistory; andethnicity.Type2diabetesgenerallyaffects individualsovertheageof40,althoughitisbecomingmorecommoninyoungerpeople,includingchildren.

6.3.1. RoleoftheMitochondriainType2Diabetes

Recentscientificadvances,reflectedinnumerouspublishedstudiesperyearineachofthelastfiveyears, have highlighted the role of mitochondrial dysfunction in the pathophysiology of type 2diabetes, associating insulin resistance with changes inmitochondrial function and its capacity totransformnutrientsintoenergy,alsoknownasoxidativecapacity.

The mitochondria is the power center of the cell, generating energy through the production ofadenosine triphosphate, orATP, theprimaryunit of cellular energy, byoxidizingnutrients such asglucose and lipids. Reactive oxygen species, or ROS, are molecular compounds formed naturallyduring mitochondrial ATP production and play a crucial role in cell signaling andhomeostasis.However,chronicexposuretohighconcentrationsofglucoseandlipidsasaresultofa


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highcaloriedietand/orasedentarylifestyleleadtoinsufficientnutrientoxidationandalowratioofATPproductiontooxygenconsumption,whichareassociatedwithexcessROSformation.ExcessROSformationcancontributetomitochondrialdysfunctionandcausecellulardamagetotissuesincriticalorgansincludingthemuscles,lung,heart,liver,brainandeyes.ExcessROSformationisalsobelievedto damage the endothelial cells that coat blood vessel walls and inactivate enzymes that protectagainstarteriosclerosis,whichcanresultinmicrovascularandmacrovascularcomplicationsthatareoften associatedwith type 2 diabetes.Further,within pancreatic beta cell islets, the formation ofexcess ROS has been shown to lead to a decline in both cellular insulin content and secretion ofinsulininresponsetoglucose.

In addition to excess ROS formation, genetic factors, aging and reduced formation of newmitochondria inthecellcontributetomitochondrialdysfunction,aswellasto insulinresistance. Inturn,insulinresistanceemanatingfrommitochondrialdysfunctionmaycontributetometabolicandcardiovascular abnormalities and subsequent deterioration in cardiovascular disease. Further,interventionsthatimprovemitochondrialfunctionhavebeenshowntoimproveinsulinresistance.

Mitochondrialdysfunctionisalsoassociatedwithincreases inmatrixcalcium(Ca2+),whichtogetherwithexcessROSformationinducesthemitochondrialpermeabilitytransitionpore,ormPTP,toopen.Inturn,mPTPopeningtriggersprogrammedcelldeath,orapoptosis

Takentogether,theseobservationssuggestthatmitochondrialdysfunctionmaybeacentralcauseofinsulinresistanceandassociatedcomplications.

6.3.2. RoleofAMPKinType2Diabetes

AMPK is an enzyme thatacts as an energy sensor and regulatormaintaining cellular homeostasis.Activation of AMPK is associated with increased glucose utilization and lipid oxidation as well asreduced insulin resistance and glucose and lipid production. Further, studies of AMPK havedemonstratedalinkbetweenAMPKactivationandalowerincidencerateofmetabolicdiseases,suchas type 2 diabetes. AMPK is naturally activated bymuscular contractions associatedwith physicalactivity.AsaresultofthesebroadeffectsandgiventhatAMPKisactivatedduringphysicalactivity,AMPKhasbeentermedan“exerciseenzyme.”

6.4. CurrentTherapiesandtheirLimitations

Treatments for type 2 diabetes are intended to reestablish glucose homeostasis. Initially, patientsmay be placed on an exercise regime and diabetes-friendly diet that limits the intake of simplecarbohydratesandhigh-fatfoods,whichareassociatedwithincreasedbloodglucoseandlipidlevels.However,exerciseanddietarychangesarealonegenerallyinsufficienttocontrolpatients’glycemiclevels, and type 2 diabetes patients are often prescribedmetformin, an orally-administered smallmoleculedrug,thatlimitsglucoseproductionintheliver,decreasesintestinalabsorptionofglucoseandimprovesinsulinsensitivitybyincreasingperipheralglucoseuptakeandutilization.Metforminisalsoan indirectactivatorofAMPK. Ifandwhen thecombinationofexercise,diabetes-friendlydietand metformin as a monotherapy are insufficient to facilitate glucose homeostasis for patients,physicians may prescribe additional medications to the treatment regimen, including: (i) oralsulfonylureas,whichtriggerpancreaticbetacellstoreleasemoreinsulin;(ii)oralthiazolidinediones,whichhelpmuscleandfattissueuptakeandprocessinsulinmoreeffectivelyandreducetheamountof glucose released by the liver, while also acting as indirect activators of AMPK; (iii) oral DPP-4inhibitors, which increase gut-derived hormone levels and insulin levels in order to reduce bloodglucose levels; (iv) GLP-1 receptor agonists, injectable synthetic hormones that help lower bloodglucose levels through increased glucose-dependent insulin secretion; (v) SGLT-2 inhibitors, whichcause excess glucose to be removed from the body in urine; (vi) oral alpha-glucosidase inhibitors,whichslowtherise inbloodsugaraftermealsbystoppingthebreakdownofsimplecarbohydratesandother typesof sugar in thedigestiveprocess; and (vii) amylin analogs, injectable formsof the


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hormoneamylin,whichmodulatesA1c levels.Patientsunable tomaintainglucosehomeostasisonthese therapies may be prescribed injectable insulin. Many type 2 diabetes patients are alsoprescribedstatinsinordertoreduceheartdiseaserisk.

While current treatments are often initially effective in helping patients maintain glucosehomeostasis, they present a variety of safety issues.For example, metformin can cause lacticacidosis,adangerousbuildupofacidintheblood,inpatientswithliverandkidneydisordersandis,therefore, not a viable option for such patients, although it rarely results in hypoglycemia.Bycontrast, oral sulfonylureas and alpha-glucosidase inhibitors increase the risk of hypoglycemia andweightgain.Oralthiazolidinedioneshavebeenassociatedwithfluidretention,whichcanaggravatecongestiveheart failure,aswellashepatotoxicityand increasedriskofheartattack.Further,manyfrequently prescribed treatments, including metformin, alpha-glucosidase inhibitors, oral DPP-4inhibitors, GLP-1 receptor agonists and amylin analogs, are also associatedwith nausea, vomiting,gas,diarrhea,dizzinessandweakness.

Moreover, many current treatments are limited in their ability to sufficiently delay diseaseprogressionorpreventcomplicationsoftype2diabetes.Evenwhenexistingtreatmentsareeffectiveinbloodglucosecontrol, theyoftenfail tocontrol theevolutionofthediseaseanddonotaddressassociated co-morbidities.For example, according to Decision Resources, over half of patientsbecomerefractorytometforminwithinthreeyears,representingapproximately20millionpatientsintheUnitedStates,Japan,France,Germany,Italy,SpainandtheUnitedKingdomwhichwerefertoastheG7countries.Thisshortcomingisofparticularimportanceinlightofthefactthatthemortalityofdiabetespatients isprimarily linkedtocardiovasculardisease.Further,webelievethattherearenocurrently-approveddirectactivatorsofAMPK.Finally,certainnewertype2diabetestherapiesaredeliveredininjectableform,whichisassociatedwithpoorerpatientcomplianceandincreasedcost.

Thetablebelowcomparesattributesofkeycurrenttherapies.

Class

KeyDrug(s)

KeyAttributes

Key Toxicities/Limitations

DrugSales(2014)(1)

Biguanides n metformin

n First-linetherapy

n Limitsglucoseproduction

n Somecardiovascularbenefit

n Lacticacidosis

n GIupset

n Contraindicated for patientswith liver andkidneydisorder

n Limitedimpact on diseaseprogression

n 56% ofmetformin-treated

n Biguanies: over$1bn


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Class

KeyDrug(s)

KeyAttributes


DrugSales(2014)(1)

patients becomerefractory withinthreeyears

Sulfonylureas n glyburide

n glimepiride

n glipizide

n Increasedinsulinsecretion

n Increasedrisk ofhypoglycemia

n Weightgain

n Contraindicated for somepatients with liverandkidneydisorder

n sulfonylureas: over$250m

Thiazolidinediones

n pioglitazone

n rosiglitazone

n Improvesglucose uptakeand processing bymuscle and fattissue

n Someimpact on diseaseprogression

n Weightgain,fluidretentionandrelatedCHF

n Hepatotoxicity

n Increasedriskofheartattack

n thiazolidinediones:over$400m

DPP-4inhibitorsn sitagliptin

n saxagliptin

n linagliptin

n Increasedinsulinsecretion

n Somecardiovascularbenefit

n GIupset

n Mildurinary andrespiratoryinfections

n Limitedimpact on diseaseprogression

n DPP-4 inhibitors:approx.$11bn

GLP-1 receptoragonists

n liraglutide

n Increasedglucose-dependent insulin

n GIupset

n GLP-1 receptoragonists:over$3bn


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Class

KeyDrug(s)

KeyAttributes


DrugSales(2014)(1)

n vildagliptin

n exenatide

secretion

n Inhibitsweightgain

n Cardiovascularbenefits

n Pancreatitis

n Potentialincreased risk ofthyroidcancer

SGLT-2inhibitors

n empagliflozin

n canagliflozin

n dapagliflozin

n Increasedglucoseexcretion

n Cardiovascularbenefits

n Urinarytractinfections

n Increasedrisk of diabeticketoacidosis

n SGLT-2inhibitors:over$1bn

(1) DecisionResources,September2014.

6.5. OurMarketOpportunity

AccordingtotheIDF,itisestimatedthatglobally415millionindividualsbetweentheagesof20and79wereaffectedbydiabetesin2015,withmorethan90%theseindividualshavingtype2diabetes.IntheUnitedStatesalone,29.3millionindividuals,or9.2%ofthepopulation,sufferedfromdiabetesin2015,accordingthe IDF.Further, the IDFestimatesthatby2040, thenumberofpeoplegloballyaffectedbydiabeteswillincreasebyapproximately55%to642million.

Withincertaindevelopingregionsof theworld, the IDFprojectsdiabetesprevalenceto increaseateven higher rates.For example, in China there were approximately 110 million patients in 2015,which the IDF estimateswill increase to 151million by 2040. In theMiddle East andNorthAfricaregion,therewereapproximately35millionpatientswithdiabetesin2015,whichtheIDFestimates.InsoutheastAsia,theIDFestimatesthat140.2million individualswillsufferfromdiabetes in2040,anincreaseof79%over2015.

Thediagrambelowdepictstheestimatednumberofpeoplewithdiabetesworldwideandperregionin2015and2040(aged20–79years).


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Source:IDFReport2015Despite the limitationsof current non-insulin therapies for diabetes,DecisionResources estimatesthat these treatments generated sales of over $35 billion in 2014 in the United States, Japan,Germany,Italy,theUnitedKingdom,FranceandSpainandthatsalesinthesemarketsareprojectedtogrow toover$71billionby2024.The totaleconomic consequencesofdiabetesareeven largerwith2015diabetes-relatedexpenditures totaling$521billion inNorthAmerica, theCaribbeanandEurope,accordingtotheIDF.Further,accordingtotheIDF,aggregatediabetes-relatedexpendituresintheUnitedStates,ChinaandGermany,thethreehighestspendingcountries,amountedto60%ofthetotalglobalexpendituresondiabetes,eventhoughthesecountriesonlyaccountedfor35.1%ofthe global diabetes population. According to Decision Resources, the diabetes monotherapytreatmentmarketintheG7countriesisworthapproximately$1billion(withthecurrentstandardofcare,metformin,usedforthetreatmentofapproximately60%oftype2diabetespatientsintheG7countries)whiletheneworalcombinationtherapiesmarketisworthapproximately$13billion(withsitagliptinaccountingfora68%marketsharewithinitsclass).

TheU.S.diabetesmarketisthelargestdiabetesmarketworldwide,accordingtoDecisionResources.The Japanese market is the second largest diabetes market worldwide, according to DecisionResources. According to IMS Health, the Japanese diabetes market grew by a compound annualgrowthrateofmorethan18%between2008and2012.Additionally,webelievethattheJapanesediabetesmarkethaspricingandreimbursementcharacteristicssimilartotheUnitedStatesandhasshown a rapid market uptake for new innovative products. This has been supported by a cleardevelopment path defined by the PMDA.We believe that the strength of the Japanese diabetesmarket has been shown in sales of sitagliptin reaching in excess of $1.4billion in three years,accordingtoIMSHealth.

We believe that there is significant market potential for non-insulin therapies that preservepancreaticfunction,reduceinsulinresistanceanddecreasecardiovascularandmetabolicdiseaseriskfactors, such as heightened blood lipid levels and excess body weight, either acting alone or incombination with existing types 2 diabetes treatments. Based on figures published by DecisionResources, we believe that the potential market opportunity in the United States and the EU isapproximately$32billionandthepotentialmarketopportunityinJapanisapproximately$4billion.


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Further, given the importanceofphysical activity inpreventing theprogressionof type2diabetesandthebenefitsofphysicalactivityoncardiovascularhealth,webelievethatthereisalsosignificantmarketpotentialforanoralAMPKactivator,suchasPXL770thatcanactincombinationwithexistingtype2diabetestreatments.

6.6. OurDrugCandidates

6.6.1. Imeglimin

Imeglimin is a first-in-classoraldrug candidate that targets the twomainmetabolicdefectsat theroot of type2 diabetes—low insulin secretion and elevated insulin resistance—by counteractingmitochondrialdysfunction.OurprimaryfocusisondevelopingImeglimintoaddresstheunmetneedfor a type 2 diabetes treatment that improves pancreatic beta cell function, reduces insulinresistanceanddecreasescardiovascularandmetabolicdiseaseriskfactors,suchasheightenedbloodlipidlevelsandexcessbodyweight.

Imegliminwas discovered atMerck Serono and has been further developed by us. Since the late1990s,MerckSeronowasinterestedintheroleofmitochondriainthepathophysiologyofdiabetes,asithasbeensuggestedthatmetformincouldactonthemitochondria.Inordertocapitalizeonthisunderstandingoftheroleofmitochondria,MerckSeronoworkedwithanacademicteamtoidentifynewchemicalstructuresthatcouldrestorenormalfunctioningofthemitochondriarespiratorychain,which is impaired in type 2 diabetes patients. This initial partnership formed the basis for thedevelopmentofImeglimin.

Merck Serono filed an InvestigationalNewDrug application, or IND, for lmeglimin onOctober 18,2006withatype2diabetesindication.MerckSeronotransferredthisINDtousin2009.

WebelievethatImegliministhemostadvancedtype2diabetesdrugcandidateofitsclass.Certainlargepharmaceuticalcompanieshavesimilarprogramsandhaveenteredintopartnershipsaimedatidentifying products similar to Imeglimin. We believe, however, that these programs are not asadvancedinclinicaldevelopmentasImeglimin.SummaryofImeglimin’smechanismofactionWebelievethatImegliminisabletoregulatemitochondrialenergyproductionbycounteractingthemitochondrialdysfunctionassociatedwith thediabetespathologyand its associatedmicrovascularandmacrovascularcomplications.

ThemitochondriaisthepowercenterofthecellgeneratingenergythroughtheproductionofATP,theprimaryunitofcellularenergy,byoxidizingnutrientssuchasglucoseandlipids,andcontributingtotheregulationofenergybalanceand,therefore,improvesmetabolicfunction.

Inthepathophysiologyofdiabetes,excessfoodandasedentarylifestyleleadtoadisequilibriumintheenergybalanceandarelinkedtothefactthatthesupplyofnutrientsishigherthanthedemandforenergy.Thisdisequilibriumcausesan increase intheproductionofROSfromthemitochondrialrespiratory chain,which further impairs the functioningof the chain, leading to insufficient insulinsecretioninresponsetoglucoseandtoimpairedinsulinsensitivity.

WebelievethatImegliminimprovesmitochondrialfunctionbymodulatingmitochondrialrespiratorychain complexactivities andbydecreasingROSoverproduction in thisunhealthy context. Throughthismitochondrialaction,Imegliminhasbeenobservedtorestoretheorgans’sensitivitytoglucoseandinsulin,andcause:

n anincreaseinglucose-dependentinsulinsecretionbythepancreas;

n adecreaseintheexcessproductionofglucosebytheliver;and

n anincreaseintheuptakeanduseofglucosebythemuscles.


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ImegliminhasalsobeenobservedtopreventthemPTPfromopeningandtopreventcelldeathinthepancreas’ beta cells and in human endothelial cells. Imeglimin’s beneficial effect on the pancreas’beta cell mass preservation is expected to lead to delaying the disease progression. Imeglimin’seffectonimprovingendothelialdysfunctionleadsustobelievethattheImegliminmayhaveanearlyvascularprotectiveeffectthatmaypotentiallydelaytheoccurrenceordecreasetheprogressionofvascularcomplicationsinthetype2diabetespopulation.

ThediagramsbelowsetfortharepresentationofImeglimin’smechanismofaction:

6.6.2. Clinicaltrials

To date, Imeglimin has been evaluated in 16 clinical trials and is currently being investigated in astudy in Japan. Imegliminhasbeenadministered toanaggregateof246non-diabetic subjectsand611 type2diabetespatients at dosages ranging from100mg to 8,000mgper day, over a periodrangingfromonedayto24weeks.

ThetablebelowsetsforthsummaryinformationregardingclinicaltrialsforImeglimin:

Phase

StudyNo.

NumberofPatients(1)

Treatmentduration

PrimaryEndPoint

Dose

P-value(2)

Region

PhaseI

EML017008-001(3)

73Upto9Days

Safety/Pharmacokinetics

Upto4,000mg

—Europe


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Phase

StudyNo.

NumberofPatients(1)

Treatmentduration

PrimaryEndPoint

Dose

P-value(2)

Region

PhaseI

EML017008-002(3)

6Singledose

Safety /Pharmacokinetics

1,000mg —Europe

PhaseI

EML017008-005(3)

51 8DaysSafety /Pharmacokinetics

1,000 mgQD / 500mg

—Europe

PhaseI

PXL008-001 15 6DaysSafety /Pharmacokinetics

1,500mg —Europe

PhaseI

PXL008-003 16 6DaysSafety /Pharmacokinetics

1,500mg —Europe

PhaseI

PXL008-007 14Singledose


750 mg /1,500mg

—Europe

PhaseI

PXL008-010 14Singledose


750 mg /1,500mg

—Europe

PhaseI

PXL008-011 48Singledoseor10Days


500mg/1,000mg/1,500 mg /2,000 mgRD 4,000mg / 6,000mg / 8,000mgSD

—Europe

PhaseI

PXL008-012 9Up to 7Days


Up to8,000mg

—Europe

PhaseII

EML017008-003(3)

40 4WeeksChange in AUCGlucose versusPlacebo

1,000 mg /2,000 mgQD

p<0.0001/p=0.0305

Europe

PhaseII

EML017008-004(3)

62 8WeeksChange in AUCGlucose versusPlacebo

500 mg /1,500mg

p =0.086 / p=0.003

Europe

PhaseII

PXL008-002 78 12WeeksChange in A1cversusPlacebo

1,500mg p<0.001Europe

PhaseII


1,500mg p<0.001Europe

PhaseII

PXL008-006 18 7DaysChange in AUCInsulin versusPlacebo

1,500mg p=0.035Europe

PhaseII


500 mg /1,000 mg /1,500 mg /2,000mg

n.s. / n.s. / p<0.001 /p=0.006

U.S.&Europe


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Phase

StudyNo.

NumberofPatients(1)

Treatmentduration

PrimaryEndPoint

Dose

P-value(2)

Region

PhaseII

PXL008-009 30 18WeeksChange in AUCGlucose versusPlacebo

1,500mg p=0.001Europe

PhaseII

PXL008-014(4)target225

24WeeksChange in A1cversusPlacebo

500 mg /1,000 mg /1,500mg

—Japan

(1) ThiscolumnindicatesthenumberofpatientstreatedwithImegliminduringthestudies.(2) P-value is a conventional statistical method for measuring the statistical significance ofclinicalresults.(3) ClinicalstudieswereconceivedandconductedbyMerckSeronopriortothefoundingofourcompanyin2009asaspin-offfromMerckSerono.(4) Thisstudyisongoingandiscurrentlyenrollingpatients.Wearetargetingenrollmentofupto225patients.

6.7. Phase2Trials

6.7.1. PXL008-008

We initiated a double-blind, placebo-controlled Phase 2b dose-finding trial in March 2013. TheprimaryendpointofthistrialwastoassessthechangeofA1clevelsversusplacebo.Thestudyacrossmultiple sites in the United States and Europe, included 382 randomized subjects (including 301patients administered Imeglimin and 81 administered placebo), who were either previouslyuntreatedorhadpreviouslybeen treatedwithamonotherapy. Thepatientswereplaced into fivegroups, with four groups treated with Imeglimin and one group treated with a placebo over24weeks.Thepreviouslyuntreatedpatientstookaplaceboduringathree-weekstabilizationperiod,andthesubjectswhohadbeentreatedusingmonotherapywereaskedtointerrupttheirtreatmentforaperiodofsixweekspriortodosing,inordertowashoutanyresidualplaceboormonotherapybeforerandomization.WereportedtheresultsofthisstudyinJune2015attheAmericanDiabetesAssociationconference.

ThediagrambelowsetsforththePhase2bstudydesign(PXL008-008).


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DuringthePhase2bstudy,A1cwasmeasuredtoassesstheeffectthateachdoseofImegliminhadon controlling glycemic levels. After 24weeksof treatment, decreases of 0.63%and0.50% inA1clevels were observed in the groups that received the 1,500 mg dose and the 2,000 mg doses,respectively, as compared to the group that received the placebo. In this trial, we observed amoderate change in A1c levels at the lowest dose (500 mg) and that the change in A1c levelsincreaseduntiladoseof1,500mgwasreached.Asanticipated,the2,000mgdosewasobservedtoprovide no additional benefit as compared to the 1,500 mg dose. As a result, we consider the1,500mg dose to be the optimal dose to achieve efficacy of Imeglimin, while preserving acomparabletolerabilityprofiletotheplacebo.

ThediagramsbelowsetforththePhase2bmonotherapyresults:

The diagram below sets forth the retrospective comparison of the optimal dose identified in thePhase2bdose-rangingstudiesofImegliminandvariousDPP4andSGLT2inhibitors.


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The 0.63% glucose lowering effect observed in patients who received a 1,500 mg bid dose ofImeglimin is comparable to the historical results of studies involving oral pharmacological agentsapprovedinthepasttenyears.

Imegliminwasobservedtohaveafavorabletolerabilityprofileforadrugcandidateatthisstageofclinicaldevelopmentatalldoselevelsassessedinthestudyand,inparticular,attheoptimalefficacydose of 1,500 mg. The frequency of adverse events in patients administered Imeglimin wascomparable to the frequency of such adverse events reported in the placebo group.Most of theadverse events identified were mild and were considered by the investigator to not be directlyrelated to the treatment. The small number of adverse events considered to be related to thetreatmentwithImegliminmainlyrelatedtothegastrointestinalsystem.Fiveseriousadverseeventscomprising instancesof, (i) incisionalhernia; (ii) lungdisorder; (iii)orchitis (inflammationofoneorboth testicles); (iv) sciatica (leg pain radiating along the sciatic nerve); and (v) gangrene, werereportedtohaveoccurredduringthetrial,buttheseeventswereconsideredtobeunrelatedtothetreatment and were balanced among the groups administered Imeglimin and the placebo. Inaddition, there were no hypoglycemia or cardiovascular events considered to be related to thetreatmentinthistrial.

In addition to safety and tolerability, a numberof additional secondaryendpointswere assessed,includingfastingplasmaglucose,thenumberofpatientsrequiringrescuetherapyandthenumberofpatientsreachingA1ctargetsbelow7%.

6.7.2. PXL008-009

InparalleltothePhase2dose-rangingstudydescribedabove,weinitiatedaPhase2bdose-rangingtrialtoassessthecharacteristicsofImegliminovervariousefficacyparameters,includingfastingandpost-prandial glycemia (the levelofbloodglucoseaftereating), and the contributionof those twoeffectsonthedeclineinA1clevels.Thestudyincluded59randomizedpatientswhohadpreviouslybeen treated with a monotherapy across multiple study sites in Europe. 30 patients wereadministeredImegliminattheoptimaldoseof1,500mgand29patientsweretreatedwithaplaceboover 18weeks. Subjects in the studywho had previously been treatedwith amonotherapywereaskedtointerrupttheirtreatmentforaperiodoffourweekstowashoutanyresidualmonotherapybefore participating in the study.We reported the results of this study in November 2015 at theWorldCongressonInsulinResistance,Diabetes&CardiovascularDisease.

Weobserveda significant improvement inpatientglucose tolerance,asevidencedbya430mmolperliterdecreaseintheareaundertheglucosecurveduringthethreehoursaftertheglucoseload(p<0.001), togetherwitha1.22mmolper literdecrease in fastingplasmaglucose(p<0.022).These


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effectsresultinasignificantdecreaseinA1clevelsof0.62%(p<0.013),whichisconsistentwiththedecreaseobservedduringthePhase2bdoserangingstudyforthesamedose.

ThediagramsbelowsetforththeresultsobtainedduringthePhase2trial.

Duringtheglucosetolerancetest,theinsulinandC-Peptide(abyproductoftheinsulinsynthesisanda universal measure of insulin secretion) secretions were increased as compared to placebo andmathematical modelisation of C-Peptide secretion increased in response to glucose. Thisdemonstratedthattheimprovementininsulinsecretioncanbepartlyexplainedbyanimprovementin theglucosesensingof thebetacells in thepancreas,orand improvement inglucosesensitivity.TheseresultssupportedthepositiveeffectofImegliminoninsulinsecretionobservedduringanotherphase 2 clinical trial, using a euglycemic hyperglycemic clamp technique (PXL008-006). Similarly,mathematical modeling of the glucose, insulin or C-Peptide curves showed that Imegliminsignificantlyimprovedseveralsurrogatemarkersofinsulinsensitivity,includingtheMastudaindexortheStumvollindex,thathavebeencorrelatedtotheresultobtainedusingthereferencemethodofthehyperinsulinemicclamp.

The results from this trial therefore support the dualmechanism of Imeglimin in type 2 diabetespatients, improving both glucose dependent insulin secretion (by improving the beta cell glucosesensitivity)andinsulinsensitivity,assetforthinthediagrambelow.


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Inaddition, Imegliminwasobserved tohavea favorable tolerabilityprofile foradrugcandidateatthis stageof clinicaldevelopmentduring this trialwith27%of treated subjectspresentingat leastone treatment-emergent adverse event, as compared to 59% in the placebo group. The onlytreatmentrelatedadverseeventsreportedinthetrialwereeventsofhyperglycemia(3%ofpatientstreatedwithImegliminascomparedto14%ofpatientstreatedwithplacebo).

PXL008-002andPXL008-004

WeinitiatedthesePhase2efficacyandsafetystudiesof Imeglimin incombinationwithmetforminandwithaDPP4inhibitor,sitagliptin, inAugust2010andJuly2011,respectively.Wepublishedtheresultsof thesestudies inthepeerreview journal,DiabetesCare,Fouquerayetal.,2013;36:565–568andFouquerayetal.,2014;37:1924–1930.The first study (PXL008-002) assessed the benefit of combining metformin with Imeglimin, ascomparedtoaplacebo,insubjectsforwhommonotherapybymetforminalonewasnotsufficienttocontrol their glycemiaandassessed the safetyof this combinationafter12weeksof treatment.Atotalof156type2diabetespatientswererandomizedinthisstudy.Duringthisstudy,weobserveda0.44% decrease in A1c levels (p = 0.001) after 12 weeks of treatment in the group administeredmetforminandImeglimin,ascomparedtothoseadministeredmetforminandplacebo.Anumberofsecondary endpointswere assessed, primarily fastingplasmaglucose and thenumberof patientswhoseA1cvaluedecreasedby0.5%ormorebytheendofthetreatment.Overall,theincidenceofadverse events was comparable in the two groups. The adverse events rate was 23.1% in thecombinedmetformin and Imeglimin group and19.2% in the group administered a combinationofmetforminandplacebo.

ThediagrambelowsetsforthdetailsontheefficacyofImegliminasanadd-ontometformin:


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The second study (PXL008-004) assessed the benefit of combining Imeglimin with sitagliptin, ascomparedtoaplacebo,insubjectsforwhommonotherapybysitagliptinhadfailedandthesafetyofthiscombination.Atotalof170type2diabetespatientswererandomizedinthisstudy.Duringthisstudy,weobservedadecreaseof0.72%inA1c levels(p<0.001)after12weeksoftreatment intheImeglimin group, as compared to the placebo group. A number of secondary end points wereassessed,primarilyfastingplasmaglucoseandthenumberofpatientswhoseA1cvaluedecreasedby0.5%ormorebytheendofthetreatment.Theincidenceofadverseeventswascomparableinthetwogroupswithanadverseeventrateof14.6%inthegroupadministeredsitagliptinandImegliminand22.7% in the group administered sitagliptin in combinationwithplacebo.Webelieve that thepercentage of adverse events, which was slightly higher in the placebo group, can be partiallyexplainedbytheoccurrenceofhyperglycemialinkedtolowerbloodglucosecontrolinpatientswhowere given the placebo instead of Imeglimin. In the Imeglimin group, no adverse events wereconsideredtoberelatedtothetreatment.Inaddition,noepisodesofhypoglycemiawerereportedduringthetreatmentperiodamongthoseadministeredwithImegliminandsitagliptin.

ThediagrambelowsetsforthdetailsontheefficacyofImegliminasanadd-ontositagliptin.

The reduction inA1c levels observed in these studieswith the 1,500mg Imeglimin dose comparefavorably to the results obtained with other approved drugs, in particular DPP-4 inhibitors. Theresults of these studies showed greater decreases in A1c versus baseline in those administered acombinationofImegliminandmetforminoracombinationofImegliminandsitagliptinthaninthoseadministeredmetforminorsitagliptinalone.


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6.7.3. PXL008-006

WeinitiatedaPhase2efficacystudyofImeglimin’seffectonpancreaticbetacellfunctionindiabetespatientsinApril2012.Thestudytookplaceoveraseven-dayperiod.EighteenpatientsweretreatedwithImegliminatthedoseof1,500mgand15patientsweretreatedwithaplacebo,foratotalof33patients in the study. The primary endpoint of the studywas insulin secretion as defined by totalinsulinresponse(whichisreflectedinthechartbelowasincrementalareaunderthecurve,oriAUC,measuredin0–45minperiods)andinsulinsecretionrate,orISR.WeobservedthatImegliminraisedinsulin secretory response to glucose by 112% (p=0.035), first-phase ISR by 110% (p=0.034) andsecond-phase ISRby29%(p=0.031).Thestudy’ssecondaryendpointofbetacellglucosesensitivitywasalsomet.Imegliminwasnotobservedtoaffectglucagonsecretionandwasobservedtohaveafavorable tolerability profile for a drug candidate at this stage of clinical development during thisstudy.

Thediagrambelowsetsforthinsulinsecretionobservedduringthehyperglycemicclamp.

Source:Pacinietal.,Diabetes,ObesityandMetabolism2015,17:541545

6.7.4. EML017008-003andEML017008-004

Twoexploratorystudies,EML017008-003(four-weekstudy)andEML017008-004(eight-weekstudy),conductedbyMerckSerono,assessedtheefficacyandtolerabilityof Imeglimin inmonotherapy. Ineachstudy,subjectsweretreatedwitheitherImeglimin,metforminoraplacebo.

Imegliminwasobserved inbothstudies tohaveanefficacycomparable tometforminon themainparameters for the assessment of type 2 diabetes. In addition, the incidence of adverse events inboth studies was twice as low in subjects administered Imeglimin (between 15% and 35%), ascomparedtothegroupadministeredmetformin(between39%and68%).ThemainadverseeventsthatwereobservedintheEML017008-003four-weekstudyrelatedtothedigestivesystem(20%and10%insubjectstreatedwithImeglimin,ascomparedto68%insubjectstreatedwithmetformin)andthecentralnervoussystem(5%and30%insubjectsadministeredImeglimin,ascomparedto21%insubjectsadministeredmetformin).Therewerenoadverseeventsrelatedtotheinvestigationaldrugreported in subjects in the Imeglimin1,500mg treatmentgroupduring theEML017008-004eight-weekstudy,andtherewerenohypoglycemicepisodesreportedduringeitherstudy.

6.8. Phase1Trials

We conducted nine Phase 1 studies of Imegliminwith an aggregate of 246 subjects. Our Phase 1studiesassessedsafety,tolerabilityandpharmacokineticsofImegliminindosesrangingfrom100mgto 8,000mg per day. In these studies,we observed that Imegliminwas observed to have a good


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pharmacokinetic profile with a low risk of drug interactions both alone and in combination withmetforminandsitagliptin.Inthesestudies,afavorabletolerabilityprofileforadrugcandidateatthisstageofclinicaldevelopmentwasobserved,includingamongpatientswithrenalimpairments.

We completed a separate Phase 1 clinical study in the United Kingdom in healthy subjects ofJapaneseoriginwhohadlivedoutsideofJapanfornolongerthanfiveyears.ThestudywasintendedtoassessthetolerabilityprofileandpharmacokineticsofImeglimininsubjectsofJapansesoriginandtouse thedataobtained to comparewith clinical study results in subjectsofnon-Japaneseorigin.Duringthisstudy,oneofsixdoses(500mg,1,000mg,1,500mg,2,000mg,4,000mgand6,000mg)wasadministered todifferentgroupsofhealthymaleand femalesubjectsof Japaneseorigin,withmostsubjectspergroupreceivingImegliminandsomesubjectsreceivingaplacebo.Thesafetyandtolerability of Imeglimin observed in this study was comparable to that observed in studies insubjectsofnon-Japaneseorigin.Alladverseeventswereofamildormoderate intensityandwereresolvedpriortotheendofthestudy.Noneoftheadverseeventsweresevereorserious.Themostfrequentlyreportedadverseeventswereheadacheandnausea.

6.8.1. PreclinicalStudies

Imeglimin’s mechanism of action has been demonstrated through in vitro and in vivo studies(preclinicalstudiesandclinicaltrials),whichwereinitiallydesignedandconductedatMerckSeronountil2007andsubsequentlybyus from2009and2014.ThesestudieswerecarriedoutbyvariousacademicandClinicalResearchOrganizations,orCROs.

Mitochondrialfunction.Imegliminwasobservedtohavebeneficialeffectsonmitochondrialfunction,asobservedinamodelof16-weekHighFatHighSucrose,orHFHS,dietinduceddiabeticmice.Inthismodel,Imeglimintreatmentwasobservedtosignificantlydecreaseglycemia,restorenormalglucosetolerability and improve insulin sensitivity. This beneficial effect on glucose homeostasis wasassociatedwith:

n anincreasedfattyacidoxidationandreducedinfiltrationofthelivercellswithfat;

n asubtleenergywaste;

n adecreaseintheproductionofROS;

n anincreasedmitochondrialDNAcontentsuggestinganeffectonmitochondrialturnoverandpreservation;and

n amodifiedphospholipidcomposition.

AlthoughImegliminhasbeenobservedtoactonthemitochondria,because itdoesnotreducethetotal oxygen consumption rate, Imeglimin has not been observed to increases plasma lactate norinducelacticacidosisinspecificanimalmodels,asdemonstratedinaratmodelofacuterenalfailureorafterintradigestiveadministrationofhighdoses(upto1,000mg/kg)innormaldogs,incontrasttometformin.

Imegliminhasalsobeenobserved topreventhyperglycemia-inducedapoptosisofhumanbeta celland human endothelial cells, or HMEC 1. HMEC 1 cellswere incubated in several oxidative stressenvironments (exposure tohighglucoseandoxidizing agent tert-butylhydroperoxide)which led tomPTPopening,cytochromecreleaseandcelldeathImeglimin’seffectoncelldeathoccurredwithoutanaccompanyingeffectonoxygenconsumptionrate,on lactateproductionandoncytosolicredoxor phosphate potentials. Imeglimin was also observed to decrease ROS production, inhibitingspecifically reverse electron transfer through complex I. Imeglimin appears to preventhyperglycemia-inducedcelldeathinHMEC-1throughinhibitionofmPTPopeningwithoutinhibitingmitochondrialrespirationnoraffectingcellularenergystatus.

ThediagrambelowsetsforththeeffectofImegliminonhyperglycemia-inducedcelldeath:


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Increasedglucose-inducedinsulinsecretion.Imeglimin’sabilitytoincreaseglucosestimulatedinsulinsecretion,orGSIS,wasexploredinisolateddiabeticGKratislets.Imeglimin(100µM)wasobservedtorapidly induce a 31% increase in NAD content (p<0.05), NAD being pivotal for mitochondrialfunctions.WecharacterizedtheoriginofNADcontentincreaseinducedbyImeglimin,observingthatthe salvagepathwayofNADsynthesishasamajor role in ImegliminactiononGSIS.We thereforeexpect Imeglimin to increaseNADsynthesis fromnicotinamide,akeycomponentofmitochondrialwell-functioning, leading to increase Ca2+ mobilization and insulin secretion. All these resultsdemonstratethat Imeglimin’smechanismofaction leadstoapotentiationofGSIS indiabetic isletsthatisnovelanddifferentiatedfromknowninsulinsecretagoguecompounds.

Oral acute treatmentwith Imeglimin (200mg/kg) on insulin secretion in response to glucosewasstudiedinneonatalSTZratsusingthehyperglycemicclampmethod,thereferencemethodtoassessinsulinsecretion.Imegliminwasobservedtoincreaseinsulinsecretionversuscontrolsatallglycemiclevels,producinga48%increaseatT0(glycemia:10.8mmol·L-1);a62%increaseatthefirststageofhyperglycemia(glycemia:19.5mmol·L-1);anda68%increaseatthesecondstageofhyperglycemia(glycemia: 24.7 mmol·L-1). At first-stage hyperglycemia and second-stage hyperglycemia, theseincreases were observed to be comparatively higher than those produced by either referenceproducts tested in study, sitagliptin (34%, and 39% respectively) or repaglinide (8%, and 37%respectively).

Increasedinsulinsensitivityinliverandmuscle.Imeglimin’sbeneficialeffectoninsulinsensitivitywasfirstobserved inan insulin tolerance test inaHFHSdietmousemodel. Imegliminwasobserved toalsoimprovedimpairedinsulinsignalingpathwaysbothintheliverandinthemuscle.

Imeglimin’seffecton insulinsensitivitywasalsostudied inaeuglycemichyperinsulinemicclamp inSTZrats.NosignificantchangesofGPRandGURwereobservedinthebasalstate.Duringtheclamp,atsimilar levelsofeuglycemiaandhyperinsulinemia,steadystateglucose infusionrate,or (SSGIR),was increased by 209% in STZ rats after Imeglimin treatment compared to controls (p<0.01).Imeglimin treatmentwas observed to decrease hepaticGPRby 40% (p<0.05).GURwas increased,althoughnot significantly, in the Imeglimin-treatedgroup. In thismodelofdeep insulinopenia,weobservedthatImegliminimprovedhepaticinsulinsensitivityduringtheeuglycemichyperinsulinemicclamp.

Beta cell function preservation and cardiovascular risks benefits. By delaying mPTP opening,Imegliminhasbeenobservedinvitrotoprotectmice,ratsorhumanbetacellsfromapoptoticdeathwhensubmittedtoacutestress,suchashighglucose,chemicaloxidativestressorcytokinecocktail.Webelievethatthiswilltranslateintobeneficialeffectonbetacellmasspreservation,asupto60%ofthebetacellmassmaybelostwhendiabetesisdiagnosed.

By delayingmPTPopening, Imeglimin has beenobserved in vitro to protect endothelial cells fromapoptotic death when submitted to acute stress (high glucose or chemical oxidative stress). As


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endothelialdysfunctionisthefirststepinthevasculardiseaseoftype2diabetespatients,webelievethatImegliminwillhaveanearlyvascularprotectiveeffectandmaypotentiallydelaytheoccurrenceordecreasetheprogressionofvascularcomplicationsinthispopulation.

Toxicologyandpreclinicalpharmacokinetics.WehaveconductedallpreclinicalstudiesinsupportofImeglimin, including primary pharmacology, safety pharmacology, absorption, distribution,metabolismandexcretionandtoxicologystudiesinaccordancewithrelevantqualitystandards,suchas Good Laboratory Practices, Good Clinical Practices, Good Manufacturing Practices and theregulatory requirements of the FDA and the EMA, as well as the standards adopted by theInternational Committee of Harmonization, or ICH. All studies carried out on animals havedemonstratedthetolerabilityofImeglimininsingledosesandafterrepeatedadministrationofdoseswithnosignificantsignsoftoxicity.

No signsof toxicitywereobservedon the centralnervous systems, cardiac functionor respiratoryfunctions,apartfromaslightdeclineinheartrateamongthreeoutofsixdogsatadoseofImegliminof 500mg/kg, during safety pharmacological studies. At this dose, the plasmatic exposure ofImegliminindogsisapproximately30timesgreaterthanthatobservedinhumans.

OraltreatmentwithveryhighdosesofImegliminof1,000and1,500mg/kghasbeenshownnottoaffectfertilityinmaleorfemalerats.Embryo-fetaltoxicitystudieshavebeencarriedoutonratsuptoadoseof1,500mg/kgandonrabbitsuptoadoseof300mg/kg.ThesestudieshaveshownnosignofteratogenicityofImeglimin.Inaddition,Imegliminhasnotshownanymutagenicpotentialininvitroandinvivostudies.Further,therehasbeennoevidenceofhypersensitivityoftheskinoreyesinthetrials.

PharmacokineticstudieshaveshownthattheabsolutebioavailabilityofImegliminrangesfrom26%to 70% inmonkeys, rats and dogs. Imeglimin isweakly bound to plasma proteins and is primarilydistributedintheliver,kidneys,intestinaltractandglandulartissues.

ImegliminisprimarilyexcretedunchangedintheurineandisnotmetabolizedbycytochromesP450.Imegliminisalsonotaninhibitororinduceroftheseenzymes,whichareinvolvedinthemetabolismofotherdrugsthatmightbegivensimultaneouslywiththeproduct.Theprobabilityofdrug-to-druginteractionsis,therefore,low.

Imeglimin is a substrate and a weak inhibitor of the human organic cations transporters 1 and 2expressedintheliverandkidneys,respectively.Basedontheabsenceofclinicalinteractionobservedbetween Imegliminandmetformin,webelieve there tobea lowerriskofdrug-to-drug interactionwithasubstrateoraninhibitorofOCT1andOCT2transporters.6.8.2. Ongoingstudies

Wearecurrentlypreparingorconductingthefollowingclinicaltrials:

n QT/QTc trial (PXL008-016)—Europe—We are finalizing the preparation of a QT/QTc trialaimingtoassesstheeffectofImegliminontheQT/QTcintervalsafteradministrationofatwosingledoses(1,500mgand6,000mg)comparedtoplacebo,inastudyof32to50healthyvolunteers.Theprotocol will be reviewed by a dedicated committee of the FDA. This trial is part of the clinicaldevelopmentofanynewdiabetesproduct.

n Phase2bDose-rangingTrial (PXL008-014)—Japan—Followingon fromourPhase1 trial ofImeglimininthecontextofsubjectsofJapaneseorigin,weenteredintodiscussionswiththePMDAinrelation to the clinical development plan for Imeglimin. During these discussions, we agreed tocompleteonePhase2bdoseescalatingdose-rangingtrial.ThistrialisreplicatingthePhase2bdose-rangingtrialperformedintheUnitedStatesandEurope(PXL008-008),exceptthatthe2,000mgdoseisnotbeingtested,asitwasnotobservedtoresultinadditionalefficacyversusthe1,500mgdose.This study is a double-blind, placebo-controlled study, with the primary endpoint being theassessment of the change of A1c levels versus placebo. The study includes approximately 300


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randomized patients. The patients are placed into four groups, with three groups treated withImegliminandonegrouptreatedwithaplaceboover24weeks.Thepreviouslyuntreatedsubjectstakeaplaceboduringasix-weekstabilizationperiod,andthesubjectswhohavebeentreatedusingamonotherapy are asked to interrupt their treatment for a period of ten weeks to wash out anyresidualplaceboormonotherapybeforerandomization.Thistrial isexpectedtobefullyenrolledinthesecondhalfof2016.

Thediagrambelowsetsforththestudydesignforthistrial:

Thistrialisongoingwithread-outscheduledforthesecondquarterof2017.6.8.3. Plannedstudies

Phase3PrograminJapan,SouthKorea,SingaporeandTaiwan.FollowingourdiscussionswithPMDAin 2015, we expect to conduct three Phase 3 trials that would be required to support the NDAsubmissioninJapan,pendingPhase2bresults:

n onesix-monthPhase3monotherapytrial,placebocontrolled,in300subjects;and

n twoopenlabelsafetyPhase3trials,asamonotherapyandincombinationwiththestandardofcare,in100and600subjects,respectively,ofoneyearduration.

Thus, we expect that a total of 1,000 patients are needed in Phase 3 clinical trials to receivemarketingapproval for Imeglimin in Japan.Further,weexpect that interactionswithPMDAwillbeorganizedinthecourseofthePhase2bandPhase3trialstoverifythatdatagenerated,aswellasdevelopment studies, are adequate to support an NDA submission by 2019. A small number ofpatients fromSouthKorea,SingaporeandTaiwanwillalsoberandomized in theabovementionedPhase3trialswiththegoalofallowingregistration inthesecountries.Accordingly,webelievethatwe will be able to conduct our development plans for Imeglimin independently in Japan, SouthKorea,SingaporeandTaiwanuntilwereceivemarketingapproval.

ThetimetablebelowsetsforthourcurrentdevelopmentstrategyforImeglimininJapan.


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Phase3ProgramintheUnitedStatesandEurope.WehavediscussedourproposedPhase3programwith theFDAandexpect todiscuss itwith theEMA in the firsthalfof2016.Followingdiscussionswith the FDA, we expect to conduct six placebo-controlled Phase 3 trials on an estimated 6,700patients,asfollows:

n amonotherapy trial for 24weeks (with a 54week-extension) in 308 subjectswith type 2diabetes;

n anadd-ontothemetformincombinationtherapytrialfor24weeksin308subjectswithtype2diabetes;

n anadd-ontotheglimepiridetrialfor24weeksin308subjectswithtype2diabetes;

n anadd-oninsulintrialfor24weeksin308subjectswithtype2diabetes;

n anadd-on trial in subjectswith renal impairment for52weeks in383subjectswith type2diabetesandrenalimpairment;and

n a CardioVascularOutcome Trial, or CVOT, in 3,878 subjectswith type2 diabetes andwithestablished,orathighriskof,cardiovasculardisease.

Wemayalsoconductanadditionaltrial(anadd-ontothemetforminversussitagliptincombinationtherapytrialfor52weeksandwitha52weeksextensionin900subjectswithtype2diabetes)afterconsultationswiththeEMA.

Weexpecttousea1,500mgbiddose inthePhase3trialsforsubjectswithnormalrenalfunctionandadjustthedoseforpatientswithrenalimpairment,subjecttoapprovalbyregulatorybodies.

ThetimetablebelowsetsforthourcurrentU.S.andEuropeanPhase3developmentandregulatoryapprovalplanforImeglimin.

Inparallel,weareexpectingtoconductvariousfurtherpreclinicalstudiesandclinicaltrialsinordertofurtherdemonstrateImeglimin’sbenefitsdiscussedfurtherbelow.TheresultsofthesestudieswillbeimportanttodemonstratekeyattributesofImegliminversusthestandardofcare.Weexpectthatthese results will also be used to increase our bargaining position during future partnershipnegotiationswithpharmaceuticalcompanies.

n Carcinogenicitystudies—inearly2017,weplantoconducttwo-yearstudiesinratsandmicedesignedtoidentifytumorigenicpotentialinanimalsandtoassesstherelevantriskinhumans.


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n Reinforcement of the effects of Imeglimin on prevention of cardiovascular complicationslinkedtotype2diabetes—followingread-outoftheresultsofourpreclinicalstudiesinvestigatingtheeffectofImegliminonendothelialdysfunction,weexpecttocarryoutamechanisticstudyinhealthysubjects to evaluate the effect of Imeglimin on endothelial dysfunction. This study is expected toinvestigate the effect of a short term treatment of Imeglimin (seven days) on smoking-inducedendothelialdysfunctionsubjects.Theprimaryendpointisexpectedtobethebloodflowmeasuredintheforearmbyplethysmographybeforeandaftersmokingacigarette,atbaseline,afteronedoseofImeglimin (1,500 mg) and after seven days of treatment with Imeglimin (1,500 mg). Secondaryendpointsareexpectedtoincludeinflammatorymarkers(hsCRP)andmarkersofoxidativestress,aspreviouslydescribed,withbetablockers.

n Reinforcement of the protective effects of Imeglimin that delay the progression ofpathology—the aim of this study to compare Imeglimin to Sitagliptin as an add-on therapy tometformin.However,thisstudywillalsoallowustoinvestigatethepotentialeffectof Imeglimininbetacellpreservationduringislettransplantation(isletshaveapoorsurvivalrateduringthecriticalperiod between removal and transplantation). This study is expected to randomize 900 type 2diabetic subjects, with the primary endpoint being the change in A1c from baseline to end oftreatment.20%ofthepatientsareexpectedgothroughaglucosetolerancetesttoassesstheimpactof Imeglimin on glucose tolerability and insulin secretion as well as surrogate markers of insulinsensitivity.Thisinvestigationwillbeperformedatbaselineandafter52and104weeksoftreatmentandwillprovideinformationontheeffectofImegliminonbetacellhealth.Theresultsofthestudyonbetacell functionpreservationandonendothelialdysfunctionimprovementareexpectedtobereported at the 52nd annual meeting of the European Association for the Study of Diabetes inSeptember2016.6.8.4. ManufacturingandSupply

Imeglimin ismanufactured using standard rawmaterials over a three step process.Merck SeronooriginallydevelopedandoptimizedthesynthesisprocessforthemanufactureofImeglimin,basedona 500mg dosage, on an industrial scale and in compliance with standards imposed by the GoodManufacturingPracticeRegulations.Aspecializedsubcontractornowmanages thisprocess,aswellas the analytical methods of controls and batch release, and can manufacture batches of up to800,000tablets(withamassof400kg).

Imeglimin is formulated as a coated, oblong-shaped tablet with immediate release. We havedevelopedthreedifferentdosestrengths:250mg;500mg;and750mg.Imegliminisastableactiveingredientand, ifkeptbelow25ºC,hasashelf lifeofupto60months (dependingontheprimarypackagingused). Imeglimin’s long shelf lifehasbeenobservedduring long-termstability studies inaccordancewithICHrecommendations.

Themanufacturingprocessforimmediate-releasetabletscanallowforthemanufacturingofbatchesofsufficientsizetocarryoutPhase3studiesandforamarketlaunch.

6.8.5. PXL770

OriginPXL770representsanewclassofexercisemimeticdrugcandidatesandisanoraldirectactivatorofAMPK,which is an enzyme that leads to an increase in glucose utilization and lipid oxidation andreducesinsulinresistanceandglucoseandlipidproduction.Itiscurrentlywellknownthatmuscularcontractions lead to activation of AMPK. Therefore, it is believed that a portion of the short-termbeneficialeffectsofexerciseoninsulinsensitivityandthetransportofglucoseinskeletalmusclesaremediatedthroughtheactivationofAMPK.TheactivationofAMPKalsomimics theeffectsof long-termexercise through the inductionof genes linked tooxidativemetabolism.Anumberof factorsalso confirm that AMPK, through its role asmetabolic sensor, plays a key role in the coordinated


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regulation of energy metabolism, food intake and tissue sensitivity to numerous metabolic andhormonal signals. These properties therefore give this enzyme a pharmacological target role fromboth a metabolic standpoint (diabetes, insulin resistance, obesity) and a cardiological standpoint(cardiacischemia,complicationsrelatedtodiabetes)

We believe that there is an unmet need for an orally-administered product that directly activatesAMPKwithsufficientpotencyandademonstratedsafetyprofileandthatPXL770hasthepotentialtomeetthisneedinthetreatmentoftype2diabetes.

PXL770originatedfromaprocessdesigningnewdirectAMPKactivatorsbasedonthedevelopmentofAMPKstructure-activityrelationshipandascreeningcascadeincludingfunctionalcellulartestsandstudiesonphysiopathologicalrodentmodels.ThisresearchprocesswasoriginallyinitiatedatMerckSeronobefore itscompletionbyPoxel.PXL770wasdiscoveredandiscurrentlybeingdevelopedbyPoxel.

AsPXL770 isbeingdevelopedoutsideof theUnitedStates,wehavenot filedan IND in respectofPXL770.

ProductdescriptionPXL770isadirectactivatoroftheAMPK,aproteinkinasethatisactivatedbyAMPandPXL770isanoraldrugtobeadministeredasamonotherapyorincombinationwithotherdiabetesagents.

In vitro, PXL770 activates AMPK isoforms in a dose-dependent manner allosterically and/or byprotectingtheenzymefromitsdephosphorylationsbyproteinphosphatases(PP2a,PP2c).AsPXL770bindinginvolvesß1andß2subunits,PXL770shouldactivateall12AMPKcomplexes.

In primary rat hepatocytes, PXL770 induces a concentration-related inhibition in gluconeogenesis.PXL770 increases glucose uptake in H2K muscle cells and in human myotubes independently ofinsulin.PXL770 also induces in primary mouse hepatocytes a concentration-related decrease inlipogenesisandthiseffectisabolishedinhepatocyteslackingAMPKa1anda2catalyticsubunits.Thepotency of PXL770 inhibitory effect on de novo lipogenesis is comparable in mouse and humanhepatocytes.

ThediagramsbelowsetforththeeffectofPXL770onlipogenesis:


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PXL770,invariousinvivorodentmodels,wasobservedto:

n decrease lipogenesis and to induce a shift in themetabolic profilewith an increase in fatoxidationandadecreaseincarbohydrateoxidation.This leadstoadecreaseoffataccumulationintissues(liver)andtherebyadecreaseininsulinresistance;

n decreaseplasmatriglyceridesandfreefattyacids;

n increaseglucoseutilizationindependentlyofinsulin;and

n improveobesephenotypebydecreasingbodyweight.

Webelieveallthesebeneficialmetaboliceffects inducedbyadirectAMPKactivationcontributetoimprovingglycemic control (fastingglycemia, glucose tolerability,A1c), to reducing the threemaincardiovascular risk factors (hyperlipidemia, hyperglycemia and weight) and to improving non-alcoholicfattyliverdisease.

Thediagramsbelow set forth the improvements to glycemic control (glucose tolerability andA1c)andtriglyceridesobservedamongobese,diabeticanddyslipidemicmice(ob/obmicevs.normalnon-obeseob/+mice)afteroraladministrationofincreasingdosesofPXL770:


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PXL770wasobservedtoincreaseP-AMPKlevelsinliverandmuscletissueofob/obmiceassetforthinthediagrambelow:

The preclinical development program for PXL770 included 13 safety pharmacology and toxicologystudies.Duringthesestudies,PXL770wasadministeredorallytoratsanddogsovera28-dayperiodandwasobservedtohaveafavorabletolerabilityprofileforadrugcandidateatthisstageofclinicaldevelopmentafterbothasingledoseandrepeateddoses,withnosignificantsignsoftoxicity.Dosesof1,000mg/kg/dforratsandbetween100mg/kg/dand300mg/kg/dfordogswerenotobservedtoresultinadverseevents.AnticipatedclinicaldevelopmentplanWe initiated a Phase 1 dose-escalation clinical trial of PXL770 in early 2016 and expect to reportpreliminaryresultsfromthistrialbytheendof2016.WeexpecttoinitiateaPhase2atrialin2017.

n ThePhase1trialconsistsofassessingthepharmacokinetic,tolerabilityandsafetyprofileofPXL770 inhumansafterdose-escalation.This trial isbeingconducted in twostages: the first stagewillevaluate thesafety, tolerabilityandpharmacokineticsof singleascendingdosesofPXL770andthesecondstagewillevaluatethesafety,tolerabilityandpharmacokineticsaftermultipleascendingdoses. The first dose administered to humans has been determined based on the efficacy andtoxicologydataobtained inanimalsandbyfollowingtherecommendations issuedbytheEMAandFDA.WealsoexpecttoassesstheefficacyofPXL770inactivatingAMPKpresentinbloodcellsaswellastheeffectonhepaticdenovolipogenesisandonwhole-bodyfattyacidsoxidationinhealthymalesubjects.Datafromthisassessmentisexpectedtobereportedinthesecondhalfof2017.

n The Phase 2a trial is expected to aim to demonstrate the beneficial effect of PXL770 oninsulinresistanceduringahyperinsuliniceuglycemicclamp.ThistrialisintendedtodemonstratetheefficacyofPXL770inthetargetpopulation,thebeneficialeffectsofPXL770onhepaticsteatosisandthetolerabilityoftheproductcandidateindiabetespatientsafter12weeksoftreatment.Thetrialisexpected to be carried out on diabetes patientswith insulin resistance andwho are confirmed tohavehepaticsteatosis.Thesepatientsareexpectedtobetreatedfor12weekswithadoseofeitherPXL770ormetforminandtheeffectsofeachareexpectedtobecompared.

ThetimetablebelowsetsforthourcurrentdevelopmentplanforPXL770.


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We are also pursuing toxicology and metabolism studies, particularly in relation to chronictreatment.Thesestudiesareexpectedtoinitiallylastforthreemonthsandthen9to12monthsandstudytheeffectsinratsanddogs.ManufacturingandSupplyPXL770capsuleshavebeendevelopedforuseinPhase1clinicaltrials.ThePXL770synthesisprocessis intheprocessofbeingoptimizedas inadditiontodevelopingPXL770’sclinicaldevelopment,weintendtodevelopPXL770’spharmaceuticalproperties.WeexpectthatpatientswillreceiveasingledoseofPXL770daily.

6.9. OurLicenseAgreements

6.9.1. MerckSerono

OnMarch19,2009,weenteredintoanassignmentandlicensingagreementwithMerckSerono,aspart ofMerck Serono’s spin-off of its research and development activities in the cardiometabolicfield.TheMSAgreementwasamendedonJuly30,2009toincludeanadditionalpatentapplicationtothelistofpatentsassignedtousbyMerckSerono.UndertheMSAgreement,MerckSeronopaidusanon-refundabletotalamountof€7.2milliontosupportourresearchanddevelopmentactivitiesandasareflectionofMerckSerono’seconomicinterestinourdevelopment.

InJune2010,anumberofourinvestorsparticipatedinaroundofequityfinancing,ortheFinancingRound,pursuanttowhichourby-lawswereamendedtocreateanewclassofsharesdesignatedasPreferred A Shares, which provided investors participating in the Financing Round, with certainrights, in particular, in the event our Company was sold. The MS Agreement was subsequentlyamended and restated on June 22, 2010 to facilitate the Financing Round, or the Amended andRestatedMSAgreement.

Under thetermsof theMSAgreement,weacquiredcertainpatents fromMerckSerono.Wewerealsograntedanon-exclusive,worldwiderightandlicensetospecifiedpatents,aswellasknow-howtoresearchanddeveloppharmaceuticalproductsusingthepatentsassignedand licensedtousby


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Merck Serono. Pursuant to the MS Agreement we had an option to convert the license to anexclusive,worldwiderightandlicenseinrespectof25drugcandidates,perresearchprogram,suchdrug candidates to be selected by us. We exercised this option on July 23, 2009. For furtherinformationinrelationtoourpatentportfolio,see“Business—IntellectualProperty.”

InexchangefortherightsthatweregrantedundertheMSAgreement,MerckSeronowasentitledtothefollowingcompensation:

n royalties on net sales of the products covered by the patents granted or granted underlicensebyMerckSeronoatarateequivalenttoahighsingledigitinthehigherportionoftherangeforImeglimin,andatalowsingledigitrateinthelowerpartoftherangefortheotherproducts;

n apercentageoftherevenuefromanypartnershipagreementrelatingtothedrugcandidatescoveredbythepatents,grantedorgrantedunderlicense,soldorlicensed,atalowdouble-digitratenear thebottomof the range. Forother compounds, ifweenter intoapartneringagreement,wewouldoweapercentageofpartneringrevenueswithrespecttoproductscoveredbyMerckSerono’sassigned or licensed patents depending on the product and its stage of development when it ispartnered.

n anamountcorrespondingtoapercentageofsalespriceofoursharesintheeventthatourCompanyissold.Thisamountwillbepaidbyusandnotbyourshareholders.

InpreparationfortheCompany’sinitialpublicoffering,onMay23,2014,Merckagreedtowaiveitsrightsrelativetothethird itemdescribedabove,butonly intheeventthe initialpublicofferingonEuronextParisissuccessful,andinexchangereceivedfromtheCompany1,088,531ordinarysharesrepresenting7.69%oftheCompany’ssharecapitalonafully-dilutedbasispriortotheinitialpublicoffering.

The term of the Amended and Restated MS Agreement continues on a country-by-country, andproduct-by-productbasisuntilthelaterof:(i)thefinalexpirationdateofanypatentrightrelatingtoour pharmaceutical products that contain or comprise substances covered by patents assigned orlicensed tousbyMerckSerono in suchcountry (the lastofwhichexpires in June2023);or (ii)tenyears from the first sale formonetary value for useor consumptionby the general public of suchpharmaceutical product in such country following regulatory approval for such product in suchcountry.

6.10. ResearchandDevelopment

Sinceourincorporationin2009,themajorityofourresourceshavebeenallocatedtoresearchanddevelopment activities. We are conducting development activities to expand the commercialpotentialofourdrugcandidates,ImegliminandPXL770.InthefinalyearsendedDecember31,2014and 2015, we incurred €7.0million and €9.2million, respectively, of research and developmentexpenses.

6.11. Competition

Wecompetewithallcompaniesthathavedrugsonthemarketoraredevelopingdrugcandidatesfordiabetes. The biotechnology and pharmaceutical industries are highly competitive and subject tosignificant and rapid technological change as researchers learnmore about diseases and developnew technologies and treatments. Significant competitive factors in our industry include productefficacy and safety; quality and breadth of an organization’s technology; skill of an organization’semployees and its ability to recruit and retain key employees; timing and scope of regulatoryapprovals; government reimbursement rates for, and the average selling price of, products; theavailabilityof rawmaterialsandqualifiedmanufacturingcapacity;manufacturingcosts; intellectualproperty and patent rights and their protection; and sales and marketing capabilities. Given theintense competition in our industry, we cannot assure you that any of the products that we


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successfully developwill be clinically superior or scientifically preferable to products developedorintroducedbyourcompetitors.

Our competitors in the type 2 diabetes space are primarily large pharmaceuticals companiesincluding, but not limited to, Merck & Co, AstraZeneca, GlaxoSmithKline, Eli Lilly, Sanofi, NovoNordisk, Johnson & Johnson and Boehringer Ingelheim. Our competitors may also succeed inobtaining EMA, FDAor other regulatory approvals for their drug candidatesmore rapidly thanus,which could place us at a significant competitive disadvantage or deny us marketing exclusivityrights.Marketacceptanceofourdrugcandidateswilldependonanumberoffactors,including:

n potentialadvantagesoverexistingoralternativetherapiesortests;

n theactualorperceivedsafetyofsimilarclassesofproducts;

n theeffectivenessofoursales,marketing,anddistributioncapabilities;and

n thescopeofanyapprovalprovidedbytheFDAorforeignregulatoryauthorities.

While our competitors are developing new, or have on themarket, type 2 diabetes therapieswebelieve that the unique mechanism of action of Imeglimin (e.g., a mitochondrial bioenergeticsenhancer)positionsthedrugcandidateasapotentialcomplementarytherapy.

Althoughwebelieveour drug candidates possess attractive attributes,we cannot ensure that ourdrug candidateswill achieve regulatoryormarket acceptance, or thatwewill be able to competeeffectively in the biopharmaceutical drug markets. If our drug candidates fail to gain regulatoryapprovalsandacceptance intheir intendedmarkets,wemaynotgeneratemeaningfulrevenuesorachieveprofitability.

Inaddition,manyofourcompetitorshavesignificantlygreater financial resourcesandexpertise inresearch and development, manufacturing, preclinical studies, conducting clinical trials, obtainingregulatoryapprovalsandmarketingapproveddrugs.Mergersandacquisitionsinthepharmaceuticalandbiotechnologyindustriesmayresultinevenmoreresourcesbeingconcentratedamongasmallernumber of our competitors.Smaller or early-stage companies may also prove to be significantcompetitors, particularly through partnership arrangements with large and establishedcompanies.Thesecompaniesalsocompetewithusinrecruitingandretainingqualifiedscientificandmanagementpersonnelandestablishingclinical trialsitesandpatientregistrationforclinical trials,aswellasinacquiringtechnologiescomplementaryto,ornecessaryfor,ourprograms.

6.12. GovernmentRegulation

TheFDAandcomparableregulatoryauthoritiesinstateandlocaljurisdictionsandinothercountriesimpose substantial and burdensome requirements upon companies involved in the clinicaldevelopment,manufacture,marketinganddistributionofdrugs, suchas thosewearedeveloping.Theseagenciesandotherfederal,stateandlocalentitiesregulate,amongotherthings,theresearchand development, testing, manufacture, quality control, safety, effectiveness, labeling, storage,record keeping, approval, advertising and promotion, distribution, post-approval monitoring andreporting,samplingandexportandimportofourdrugcandidates.

6.12.1. U.S.GovernmentRegulation

In theUnited States, the FDA regulatesdrugsunder the Federal Food,Drug, andCosmeticAct, orFDCA, and its implementing regulations. The process of obtaining regulatory approvals and thesubsequent compliance with applicable federal, state, local and foreign statutes and regulationsrequires the expenditure of substantial time and financial resources. Failure to comply with theapplicableU.S.requirementsatanytimeduringtheproductdevelopmentprocess,approvalprocessorafterapproval,maysubjectanapplicanttoavarietyofadministrativeorjudicialsanctions,suchastheFDA’srefusaltoapprovependingNDAs,withdrawalofanapproval,impositionofaclinicalhold,


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issuance of warning letters, product recalls, product seizures, total or partial suspension ofproduction or distribution, injunctions, fines, refusals of government contracts, restitution,disgorgementorcivilorcriminalpenalties.

The process required by the FDA before a drug may be marketed in the United States generallyinvolvesthefollowing:

n completion of preclinical laboratory studies, animal studies and formulation studies incompliancewiththeFDA’sgoodlaboratorypractice,orGLP,regulations;

n submission to the FDA of an investigational new drug, or IND, application, which mustbecomeeffectivebeforehumanclinicaltrialsmaybegin;

n approvalbytheIRB,ateachclinicalsitebeforeeachtrialmaybeinitiated;

n performanceofadequateandwell-controlledhumanclinicaltrials inaccordancewithgoodclinical practice, or GCP, requirements to establish the safety and efficacy of the proposed drugproductforeachindication;

n submissiontotheFDAofanNDA;

n satisfactorycompletionofanFDAadvisorycommitteereview,ifapplicable;

n satisfactory completion of an FDA inspection of the manufacturing facility or facilities atwhich theproduct is produced to assess compliancewith current goodmanufacturingpractice, orcGMP,requirementsandtoassurethatthefacilities,methodsandcontrolsareadequatetopreservethedrug’sidentity,strength,qualityandpurity;and

n FDAreviewandapprovaloftheNDA.

6.12.2. PreclinicalStudies

Preclinical studies include laboratory evaluation of product chemistry, toxicity and formulation, aswellasanimalstudiestoassesspotentialsafetyandefficacy.AnINDsponsormustsubmittheresultsofthepreclinicalstudies,togetherwithmanufacturinginformation,analyticaldataandanyavailableclinicaldataorliterature,amongotherthings,totheFDAaspartofanIND.SomepreclinicalstudiesmaycontinueevenaftertheINDissubmitted.AnINDautomaticallybecomeseffective30daysafterreceiptbytheFDA,unlessbeforethattimetheFDAraisesconcernsorquestionsrelatedtooneormore proposed clinical trials andplaces the clinical trial on a clinical hold.In such a case, the INDsponsorandtheFDAmustresolveanyoutstandingconcernsbeforetheclinicaltrialcanbegin.Asaresult,submissionofanINDmaynotresultintheFDAallowingclinicaltrialstocommence.

6.12.3. ClinicalTrials

Clinicaltrialsinvolvetheadministrationoftheinvestigationalnewdrugtohumanpatientsunderthesupervision of qualified investigators in accordance with GCP requirements, which include therequirement that all research patients provide their informed consent in writing for theirparticipationinanyclinicaltrial.Clinicaltrialsareconductedunderprotocolsdetailing,amongotherthings, the objectives of the trial, the parameters to be used in monitoring safety and theeffectivenesscriteriatobeevaluated.AprotocolforeachclinicaltrialandanysubsequentprotocolamendmentsmustbesubmittedtotheFDAaspartoftheIND.Inaddition,anIRBateachinstitutionparticipating in the clinical trial must review and approve the plan for any clinical trial before itcommences at that institution. Information about certain clinical trials must be submitted withinspecific timeframes to the National Institutes of Health, or NIH, for public dissemination on theirwww.clinicaltrials.govwebsite.

Human clinical trials are typically conducted in three sequential phases,whichmay overlap or becombined:


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n Phase1clinicaltrial:Thedrugisinitiallyintroducedintohealthyhumanpatientsorpatientswith the target disease or condition and tested for safety, dosage tolerability, absorption,metabolism,distribution,excretionand,ifpossible,togainanearlyindicationofitseffectiveness.

n Phase 2 clinical trial: The drug is administered to a limited patient population to identifypossible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product forspecifictargeteddiseasesandtodeterminedosagetolerabilityandoptimaldosage.

n Phase3clinicaltrial:Thedrugisadministeredtoanexpandedpatientpopulation,generallyatgeographicallydispersedclinicaltrialsites,inwell-controlledclinicaltrialstogenerateenoughdatatostatisticallyevaluate theefficacyandsafetyof theproduct forapproval, toestablish theoverallrisk-benefit profile of the product, and to provide adequate information for the labeling of theproduct.

ProgressreportsdetailingtheresultsoftheclinicaltrialsmustbesubmittedatleastannuallytotheFDA andmore frequently if serious adverse events occur. Each of Phase 1, Phase 2 and Phase 3clinicaltrialsmaynotbecompletedsuccessfullywithinanyspecifiedperiod,oratall.Furthermore,the FDA or the sponsormay suspend or terminate a clinical trial at any time on various grounds,including a finding that the research patients are being exposed to an unacceptable health risk.Similarly,an IRBcansuspendor terminateapprovalofaclinical trialat its institution if theclinicaltrial is not being conducted in accordance with the IRB’s requirements or if the drug has beenassociatedwithunexpectedseriousharmtopatients.

6.12.4. MarketingApproval

Assumingsuccessfulcompletionoftherequiredclinicaltesting,theresultsofthepreclinicalstudiesand clinical trials, together with detailed information relating to the product’s chemistry,manufacture,controlsandproposedlabeling,amongotherthings,aresubmittedtotheFDAaspartofanNDArequestingapprovaltomarkettheproductforoneormoreindications.Inmostcases,thesubmissionof anNDA is subject toa substantial applicationuser fee.Under thePrescriptionDrugUserFeeAct,orPDUFA,guidelinesthatarecurrentlyineffect,theFDAhasagoaloftenmonthsfromthe date of “filing” of a standard NDA for a new molecular entity to review and act on thesubmission. This review typically takes twelvemonths from thedate theNDA is submitted toFDAbecausetheFDAhasapproximatelytwomonthstomakea“filing”decision.

Inaddition,underthePediatricResearchEquityActof2003,orPREA,asamendedandreauthorized,certainNDAsor supplements toanNDAmust containdata thatareadequate toassess the safetyandeffectivenessofthedrugfortheclaimedindicationsinallrelevantpediatricsubpopulations,andtosupportdosingandadministrationforeachpediatricsubpopulationforwhichtheproductissafeandeffective.TheFDAmay,onitsowninitiativeorattherequestoftheapplicant,grantdeferralsforsubmissionofsomeorallpediatricdatauntilafterapprovaloftheproductforuseinadults,orfullorpartialwaiversfromthepediatricdatarequirements.

The FDA also may require submission of an REMS plan to ensure that the benefits of the drugoutweighitsrisks.TheREMSplancouldincludemedicationguides,physiciancommunicationplans,assessmentplans, or elements to assure safeuse, such as restricteddistributionmethods, patientregistries,orotherriskminimizationtools.

TheFDAconductsapreliminaryreviewofallNDAswithinthefirst60daysaftersubmission,beforeacceptingthemforfiling,todeterminewhethertheyaresufficientlycompletetopermitsubstantivereview. The FDAmay request additional information rather than accept an NDA for filing. In thisevent, the application must be resubmitted with the additional information. The resubmittedapplication is also subject to review before the FDA accepts it for filing. Once the submission isaccepted for filing, the FDA begins an in-depth substantive review. The FDA reviews an NDA todetermine, amongother things,whether thedrug is safe andeffective andwhether the facility in


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which it is manufactured, processed, packaged or held meets standards designed to assure theproduct’scontinuedsafety,qualityandpurity.

TheFDAmayreferanapplicationforanoveldrugtoanadvisorycommittee.Anadvisorycommitteeis a panel of independent experts, including clinicians and other scientific experts, that reviews,evaluates and provides a recommendation as towhether the application should be approved andunderwhat conditions. TheFDA isnotboundby the recommendationsof anadvisory committee,butitconsiderssuchrecommendationscarefullywhenmakingdecisions.

BeforeapprovinganNDA,theFDAtypicallywillinspectthefacilityorfacilitieswheretheproductismanufactured.TheFDAwillnotapproveanapplicationunlessitdeterminesthatthemanufacturingprocesses and facilities are in compliance with cGMP requirements and adequate to assureconsistentproductionof theproductwithin required specifications.Additionally, before approvingan NDA, the FDA may inspect one or more clinical trial sites to assure compliance with GCPrequirements.

After evaluating the NDA and all related information, including the advisory committeerecommendation, if any, and inspection reports regarding themanufacturing facilities and clinicaltrial sites, the FDAmay issue an approval letter, or, in some cases, a complete response letter. Acompleteresponse lettergenerallycontainsastatementofspecificconditionsthatmustbemet inordertosecurefinalapprovaloftheNDAandmayrequireadditionalclinicalorpreclinicaltestinginorderforFDAtoreconsidertheapplication.Evenwithsubmissionofthisadditionalinformation,theFDAultimatelymaydecidethattheapplicationdoesnotsatisfytheregulatorycriteriaforapproval.IfandwhenthoseconditionshavebeenmettotheFDA’ssatisfaction, theFDAwill typically issueanapproval letter. An approval letter authorizes commercial marketing of the drug with specificprescribinginformationforspecificindications.

Even if the FDA approves a product, itmay limit the approved indications for use of the product,requirethatcontraindications,warningsorprecautionsbe includedintheproduct labeling,requirethatpost-approval studies, includingPhase4clinical trials,beconducted to furtherassessadrug’ssafety after approval, require testing and surveillance programs to monitor the product aftercommercialization, or impose other conditions, including distribution and use restrictions or otherriskmanagementmechanismsunderaREMS,whichcanmateriallyaffectthepotentialmarketandprofitabilityof theproduct.TheFDAmaypreventor limit furthermarketingofaproductbasedonthe results of post-marketing studies or surveillance programs. After approval, some types ofchanges to the approved product, such as adding new indications, manufacturing changes, andadditionallabelingclaims,aresubjecttofurthertestingrequirementsandFDAreviewandapproval.

6.12.5. Post-ApprovalRequirements

Drugs manufactured or distributed pursuant to FDA approvals are subject to pervasive andcontinuing regulation by the FDA, including, among other things, requirements relating torecordkeeping,periodicreporting,productsamplinganddistribution,advertisingandpromotionandreporting of adverse experienceswith the product. After approval,most changes to the approvedproduct,suchasaddingnewindicationsorotherlabelingclaimsaresubjecttopriorFDAreviewandapproval. There also are continuing, annual user fee requirements for anymarketedproducts andthe establishments atwhich such products aremanufactured, aswell as new application fees forsupplementalapplicationswithclinicaldata.

TheFDAmayimposeanumberofpost-approvalrequirementsasaconditionofapprovalofanNDA.For example, the FDA may require post-marketing testing, including Phase 4 clinical trials, andsurveillance to further assess and monitor the product’s safety and effectiveness aftercommercialization.


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Inaddition,drugmanufacturersandotherentities involved in themanufactureanddistributionofapproveddrugsare requiredto register theirestablishmentswith theFDAandstateagencies,andaresubjecttoperiodicunannouncedinspectionsbytheFDAandthesestateagenciesforcompliancewith cGMP requirements. Changes to the manufacturing process are strictly regulated and oftenrequirepriorFDAapprovalbeforebeingimplemented.FDAregulationsalsorequireinvestigationandcorrection of any deviations from cGMP requirements and impose reporting and documentationrequirementsuponthesponsorandanythird-partymanufacturersthatthesponsormaydecidetouse. Accordingly, manufacturersmust continue to expend time,money, and effort in the area ofproductionandqualitycontroltomaintaincGMPcompliance.

Once an approval is granted, the FDA may withdraw the approval if compliance with regulatoryrequirements and standards is notmaintained or if problems occur after the product reaches themarket.Laterdiscoveryofpreviouslyunknownproblemswithaproduct,includingadverseeventsofunanticipated severity or frequency, or with manufacturing processes, or failure to comply withregulatory requirements, may result inmandatory revisions to the approved labeling to add newsafety information; impositionofpost-marketstudiesorclinical trials toassessnewsafetyrisks;orimpositionofdistributionorotherrestrictionsunderaREMSprogram.Otherpotentialconsequencesinclude,amongotherthings:

n restrictionsonthemarketingormanufacturingoftheproduct,completewithdrawaloftheproductfromthemarketorproductrecalls;

n fines,warninglettersorholdsonpost-approvalclinicaltrials;

n refusal of the FDA to approve pending NDAs or supplements to approved NDAs, orsuspensionorrevocationofproductapprovals;

n productseizureordetention,orrefusaltopermittheimportorexportofproducts;or

n injunctionsortheimpositionofcivilorcriminalpenalties.

TheFDAstrictlyregulatesmarketing,labeling,advertisingandpromotionofproductsthatareplacedonthemarket.Drugsmaybepromotedonlyfortheapprovedindicationsandinaccordancewiththeprovisions of the approved label. The FDA and other agencies actively enforce the laws andregulations prohibiting the promotion of off-label uses, and a company that is found to haveimproperlypromotedoff-labelusesmaybesubjecttosignificantliability.

6.12.6. CoverageandReimbursement

Salesofourdrugcandidates,ifapproved,willdepend,inpart,ontheextenttowhichsuchproductswill be covered by third-party payors, such as government health care programs, commercialinsuranceandmanagedhealthcareorganizations.These third-partypayorsare increasingly limitingcoverage or reducing reimbursements formedical products and services. In theUnited States, nouniform policy of coverage and reimbursement for products exists among third-party payors.Therefore,coverageandreimbursementforproductscandiffersignificantlyfrompayortopayor.Inaddition, the U.S. government, state legislatures and foreign governments have continuedimplementing cost-containment programs, including price controls, restrictions on reimbursementand requirements for substitution of generic products. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existingcontrols and measures, could further limit our net revenue and results. Decreases in third-partyreimbursement forourdrug candidatesoradecisionbya third-partypayor tonot coverourdrugcandidatescouldreducephysicianusageofourdrugcandidates,onceapproved,andhaveamaterialadverseeffectonoursales,resultsofoperationsandfinancialcondition.


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6.12.7. OtherHealthcareLaws

Wewill also be subject to healthcare regulation and enforcement by theU.S. federal governmentand the states and foreign governments in which we will conduct our business once our drugcandidates are approved. Failure to comply with these laws, where applicable, can result in theimposition of significant civil penalties, criminal penalties, or both. The laws that may affect ourabilitytooperateintheUnitedStatesinclude:

n HIPAA,asamendedbytheHealthInformationTechnologyforEconomicandClinicalHealthAct, which governs the conduct of certain electronic healthcare transactions and protects thesecurityandprivacyofprotectedhealthinformation;

n certain state laws governing the privacy and security of health information in certaincircumstances, someofwhicharemore stringent thanHIPAAandmanyofwhichdiffer fromeachotherinsignificantwaysandmaynothavethesameeffect,thuscomplicatingcomplianceefforts;

n thefederalhealthcareprograms’Anti-KickbackStatute,whichprohibits,amongotherthings,personsfromknowinglyandwillfullysoliciting,receiving,offeringorpayingremuneration,directlyorindirectly,inexchangeforortoinduceeitherthereferralofanindividualfor,orthepurchase,orderor recommendation of, any good or service for which payment may be made under federalhealthcareprogramssuchastheMedicareandMedicaidprograms;

n federal false claims and civilmonetary penalties laws, including the civil False Claims Act,whichprohibit,amongotherthings,individualsorentitiesfromknowinglypresenting,orcausingtobepresented,claimsforpaymentfromMedicare,Medicaid,orotherthird-partypayorsthatarefalseor fraudulent; federal criminal laws that prohibit executing a scheme to defraud any healthcarebenefitprogramormakingfalsestatementsrelatingtohealthcarematters;and

n the Physician Payments Sunshine Act, which requires manufacturers of drugs, devices,biologics, and medical supplies to report annually to the U.S. Department of Health and HumanServices information related to payments and other transfers of value to physicians (defined toinclude doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, andownership and investment interests held by physicians and their immediate familymembers; andstatelawequivalentsofeachoftheabovefederal laws,suchasanti-kickbackandfalseclaimslawswhich may apply to items or services reimbursed by any third-party payor, including commercialinsurers.

Inaddition,manystateshavesimilarlawsandregulations,suchasanti-kickbackandfalseclaimslawsthatmaybebroader inscopeandmayapplyregardlessofpayor, inadditionto itemsandservicesreimbursed under Medicaid and other state programs. Further, certain states maintainpharmaceuticalmarketing,transparency,complianceand/orhealthinformationprivacyandsecuritylaws.Additionally,totheextentthatourproductissoldinaforeigncountry,wemaybesubjecttosimilarforeignlaws.

6.12.8. HealthcareReform

Currentandfuturelegislativeproposalstofurtherreformhealthcareorreducehealthcarecostsmayresultinlowerreimbursementforourdrugs,ifandwhenapproved.Thecostcontainmentmeasuresthat payors and providers are instituting and the effect of any healthcare reform initiativeimplementedinthefuturecouldsignificantlyreduceourrevenuesfromthesaleofourdrugs,ifandwhenapproved.

Forexample,implementationoftheACAhassubstantiallychangedhealthcarefinancinganddeliverybybothgovernmentalandprivateinsurers,andsignificantly impactedthepharmaceutical industry.The ACA, among other things, established an annual, nondeductible fee on any entity thatmanufactures or imports certain specified branded prescription drugs and biologic agents, revised


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themethodologybywhichrebatesowedbymanufacturerstothestateandfederalgovernmentforcovered outpatient drugs under theMedicaid Drug Rebate Program are calculated, increased theminimumMedicaidrebatesowedbymostmanufacturersundertheMedicaidDrugRebateProgram,extendedtheMedicaidDrugRebateprogramtoutilizationofprescriptionsofindividualsenrolledinMedicaidmanagedcareorganizations,andprovidedincentivestoprogramsthatincreasethefederalgovernment’scomparativeeffectivenessresearch.SinceitsenactmenttherehavebeenjudicialandCongressional challenges to certain aspects of the ACA, and we expect there will be additionalchallengesandamendmentstoitinthefuture.

Inaddition,otherlegislativechangeshavebeenproposedandadoptedsincetheACAwasenacted.InAugust 2011, the President signed into law the Budget Control Act of 2011, which, among otherthings,createdtheJointSelectCommitteeonDeficitReductiontorecommendtoCongressproposalsinspendingreductions.TheJointSelectCommitteedidnotachieveatargeteddeficitreductionofatleast$1.2trillionfortheyears2013through2021,triggeringthelegislation’sautomaticreductiontoseveralgovernmentprograms.ThisincludesreductionstoMedicarepaymentstoprovidersof2%perfiscalyear,whichwentintoeffectinApril2013and,duetosubsequentlegislativeamendments,willremainineffectthrough2025unlessadditionalCongressionalactionistaken.Additionally,inJanuary2013, President Obama signed into law the American Taxpayer Relief Act of 2012, which, amongother things, reduced Medicare payments to several providers and increased the statute oflimitationsperiodforthegovernmenttorecoveroverpaymentstoprovidersfromthreetofiveyears.Morerecently,therehasbeenheightenedgovernmentalscrutinyrecentlyoverthemannerinwhichmanufacturerssetpricesfortheirmarketedproducts.Forexample,therehavebeenseveralrecentCongressionalinquiriesandproposedbillsdesignedto,amongotherthings,bringmoretransparencyto drug pricing, review the relationship between pricing andmanufacturer patient programs, andreformgovernmentprogramreimbursementmethodologiesfordrugproducts.

WeexpectthatadditionalU.S.federalandstate,aswellasforeign,healthcarereformmeasureswillbeadopted in the future,anyofwhichcouldresult in reduceddemandforourdrugs, ifandwhenapproved,oradditionalpricingpressure.

6.12.9. PharmaceuticalApprovalintheEuropeanUnion

Outside theUnitedStates,our ability tomarket aproduct is contingentuponobtainingmarketingauthorization from the appropriate regulatory authorities. The requirements governing marketingauthorization,orMA,pricingandreimbursementvarywidelyfromcountry-to-country.

IntheEEA(whichiscomprisedofthe28MemberStatesoftheEuropeanUnion,plusNorway,IcelandandLiechtenstein),medicinalproductscanonlybecommercializedafterobtaininganMA.Therearethreetypesofmarketingauthorizations:

n theCommunityMA,which is issuedby the EuropeanCommission through theCentralizedProcedure,basedontheopinionoftheCommitteeforMedicinalProductsforHumanUse,orCHMP,oftheEMA,andwhichisvalidthroughouttheentireterritoryoftheEEA.TheCentralizedProcedureis mandatory for certain types of products, such as biotechnology medicinal products, orphanmedicinal products, and medicinal products containing a new active substance indicated for thetreatmentofAIDS, cancer, neurodegenerativedisorders, diabetes, autoimmuneand viral diseases.The Centralized Procedure is optional for products containing a new active substance not yetauthorizedintheEEA,orforproductsthatconstituteasignificanttherapeutic,scientificortechnicalinnovationorwhichareintheinterestofpublichealthintheEuropeanUnion.

n Decentralized Procedure, or DCP, MAs are available for products not falling within themandatoryscopeof theCentralizedProcedure.An identicaldossier is submittedto thecompetentauthoritiesofeachoftheMemberStatesinwhichtheMAissought,oneofwhichisselectedbytheapplicant as theRMS. The competent authority of theRMSprepares a draft assessment report, adraftsummaryoftheproductcharacteristics,orSPC,andadraftofthelabelingandpackageleaflet,


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whicharesenttotheotherMemberStates(referredtoastheConcernedMemberStates,orCMS,fortheirapproval.IftheCMSraisenoobjections,basedonapotentialseriousrisktopublichealth,tothe assessment, SPC, labeling, or packaging proposed by the RMS, the product is subsequentlygrantedanationalMAinalloftheselectedMemberStates(i.e.,intheRMSandtheselectedCMS).WhereaproducthasalreadybeenauthorizedformarketinginaMemberStateoftheEEA,thisDCPapprovalcanberecognized inotherMemberStatesthroughtheMutualRecognitionProcedure,orMRP.

n NationalProcedureMAs,whichare issuedbyasinglecompetentauthorityof theMemberStatesoftheEEAandonlycoverstheirrespectiveterritory,arealsoavailableforproductsnotfallingwithinthemandatoryscopeof theCentralizedProcedure.Onceaproducthasbeenauthorizedformarketing in aMember Stateof the EEA through theNational Procedure, thisNational ProcedureMAcanalsoberecognizedinotherMemberStatesthroughtheMRP.

Under the procedures described above, before granting the MA, the EMA or the competentauthority(ies)oftheMemberState(s)oftheEEAmakeanassessmentoftherisk-benefitbalanceoftheproductonthebasisofscientificcriteriaconcerningitsquality,safetyandefficacy.

TheholderofaCommunityMAorNationalMAissubjecttovariousobligationsunderapplicableEEAregulations, suchaspharmacovigilanceobligations, requiring it to, amongother things, report andmaintaindetailedrecordsofadversereactions,andtosubmitperiodicsafetyupdatereportstothecompetentauthorities.Theholdermustalsoensurethatthemanufacturingandbatchreleaseofitsproduct is in compliancewith the applicable requirements. TheMA holder is further obligated toensurethattheadvertisingandpromotionofitsproductscomplieswithapplicablelaws,whichcandifferfromMemberStatetoMemberStateoftheEEA.

6.12.10. PharmaceuticalApprovalinJapan

In Japan, applications are filed with the PMDA. An inspection is done in conjunction with a datareliability survey by a team from the Organization for Pharmaceutical Safety and Research.Afterwards, the evaluation process is passed on to the Central Pharmaceuticals Affairs Council, orCPAC,whoseexecutivecommitteemembersissueareporttothePMDA.Afterfurtherevaluationafinalreport isdistributedtotheMinistryofHealth,LaborandWelfare,orMHLW,whichmakesthefinaldecisionon thedrug’soutcome.Once theMHLWhasapproved theapplication, theapplicantmaymarketandsellthedrug.

6.13. IntellectualProperty

AsofMarch21,2016,weown17familiesofpatentsandpatentapplicationscoveringourtwomainprograms, Imeglimin and AMPK activators. We also hold an exclusive, worldwide license for 6familiesofpatentsandpatentapplicationsownedbyMerckSeronocoveringourtwomainprograms,aswellasanexclusive,worldwidelicensefor16familiesofpatentsandpatentapplicationsownedbyMerckSeronocoveringourotherdiabetestreatmentprograms.Theexclusive,worldwidelicenseforthepatentsandpatentapplicationsownedbyMerckSeronoisgrantedtousforthedurationofthepatents,subjecttoperformanceofourobligationsundertheMSAgreement.

OurpatentportfolioasofMarch21,2016canbesummarizedandseparatedintothefollowingthreegroups:

n Imeglimin;

n AMPKactivators;and

n otherdiabetesprograms, includingGLP-1agonists,FxRagonists,glucokinaseactivatorsand11-beta-hydroxysteroiddehydrogenaseinhibitors,whicharestillintheresearchphase.


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The patents and patent applications in these three groups include those covering drug products,manufacturingprocedures,combinationtherapiesandnewtherapeuticapplications.

6.13.1. Imeglimin

The intellectual property portfolio for Imeglimin contains 15 families of patents and patentapplicationsdirectedtovariousaspectsofthatcompound,manufacturingprocedures,combinationtherapiesandmethodsofusefortreatingdiabetes.AsofMarch21,2016,allthe14familiesoftheownedpatentsandpatentapplicationsdirectedtothisprogramareeither inforceorpending inanumberofjurisdictions,e.g.,Australia,Brazil,Canada,China,Europe,India,Indonesia,Japan,Korea,Mexico, Russia, Singapore, Taiwan, the United States, and South Africa.The owned patents andpatent applications have statutory expiration dates between 2023 and 2031.In addition, we areexclusively licensed toone familyofpatentsandpatentapplicationsdirected to thisprogram, inanumberof jurisdictions,e.g.,Argentina,Australia,Brazil,Canada,China,Europe,HongKong, India,Indonesia,Japan,Korea,Mexico,Russia,Singapore,SouthAfricaandtheUnitedStates.Thelicensedpatents and patent applications are either in force or are pending and have statutory expirationdatesbetween2020and2021.Patent termadjustmentsorpatent termextensionscould result inlaterexpirationdatesforeachofthesepatents.

6.13.2. AMPKactivators

TheintellectualpropertyportfolioforourAMPKactivatorsprogramcontainseightfamiliesofpatentsandpatentapplicationsdirectedtocompositionsofmatterforPXL770andanalogs,compositionsofmatterforAMPKactivatorshavingdifferentstructuralfeatures(i.e.,differentcompoundclasses),aswellasmethodsofuseforthesenovelcompounds.AsofMarch21,2016,weownthreefamiliesofpatents and patent applications directed to this program.One family of the owned patents andpatent applications are directed to PXL770, comprising a number of jurisdictions, i.e., Australia,Brazil, Canada, China, Eurasia, Europe, Israel, India, Japan, Korea, Mexico, South Africa and theUnitedStates.ThefamilydirectedtoPXL770,includingthePXL770compositionofmatterpatent,hasstatutoryexpirationdates in2033.Theother two familiesweownhave statutoryexpirationdatesbetween2029 and2030.In addition,we are exclusively, onlywith respect to a limitednumberofcompounds,licensedtofivefamiliesofpatentsandpatentapplicationsdirectedtothisprogram,inanumberofjurisdictions,e.g.,Argentina,Australia,Brazil,Canada,China,Eurasia,Europe,HongKong,Israel, India, Indonesia, Japan, Korea,Mexico, Philippines, Russia, Singapore, South Africa and theUnitedStates.Thelicensedpatentsandpatentapplicationshavestatutoryexpirationdatesbetween2026and2029.Patent termadjustmentsorpatent termextensionscouldresult in laterexpirationdates.

6.13.3. OtherPrograms

The intellectualpropertyportfolioforourotherprogramscontainspatentsandpatentapplicationsdirectedtocompositionsofmatter forGLP-1agonists,FxRagonists,glucokinaseactivatorsand11-beta-hydroxysteroid dehydrogenase inhibitors, manufacturing procedures, and methods of usingthem for treating various diseases including diabetes.As of March 21, 2016, we are exclusivelylicensedtofourfamiliesofpatentsandpatentapplicationsdirectedtoGLP-1agonistsprogram,onefamilydirectedtoFxRagonistsprogram,sixfamiliesdirectedtoglucokinaseactivatorsprogram,andfive families directed to 11-beta-hydroxysteroid dehydrogenase inhibitors program. The licensedpatents and patent applications have statutory expiration dates between 2026 and 2029. Patenttermadjustmentsorpatenttermextensionscouldresultinlaterexpirationdates.

Thetermofindividualpatentsdependsuponthelegaltermforpatentsinthecountriesinwhichtheyareobtained. Inmost countries, including theUnited States, thepatent term is 20years from theearliestfilingdateofanon-provisionalpatentapplication.IntheUnitedStates,apatent’stermmay


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belengthenedbypatenttermadjustment,whichcompensatesapatenteeforadministrativedelaysby the USPTO, in examining and granting a patent, ormay be shortened if a patent is terminallydisclaimedoveranotherpatentwhichhasanearlierstatutoryexpirationdate.Thetermofapatentthat covers a drugor biological productmay also be eligible for patent termextensionwhen FDAapproval is granted, provided statutory and regulatory requirements are met. See “Business—GovernmentRegulation—”foradditionalinformationonsuchexclusivity.Inthefuture,ifandwhenour drug candidates receive approval by the FDA or foreign regulatory authorities, we expect toapplyforpatenttermextensionsonissuedpatentscoveringthosedrugs,dependinguponthelengthoftheclinicaltrialsforeachdrugandotherfactors.However,therecanbenoassurancethatanyofourpendingpatentapplicationswillissueorthatwewillbenefitfromanypatenttermextensionorfavorableadjustmenttothetermofanyofourpatents.

Aswithotherbiotechnologyandpharmaceuticalcompanies,ourabilitytomaintainandsolidifyourproprietaryandintellectualpropertypositionforourdrugcandidatesandtechnologieswilldependonoursuccess inobtainingeffectivepatentclaimsandenforcingthoseclaimsifgranted.However,ourpendingpatentapplications,andanypatentapplicationsthatwemayinthefuturefileorlicensefromthirdpartiesmaynotresultintheissuanceofpatents.Forexample,publicationsofdiscoveriesin the scientific literature often lag behind the actual discoveries, and patent applications in theUnited States and other jurisdictions are typically not published until 18months after filing, or insomecasesnotatall.Therefore,wecannotknowwithcertaintywhetherwewerethefirsttomaketheinventionsclaimedinourownedandlicensedpatentsorpendingpatentapplications,orthatwewerethefirsttofileforpatentprotectionofsuchinventions.Wealsocannotpredictthebreadthofclaimsthatmaybeallowedorenforcedinourpatents.Anyissuedpatentsthatwemayreceiveinthefuturemay be challenged, invalidated or circumvented. For example,we cannot be certain of thepriority of inventions covered by pending third-party patent applications. If third parties had filedpatentapplicationsintheUnitedStatesthatalsoclaimtechnologyortherapeuticstowhichwehaverights,wemayhavetoparticipateininterferenceproceedingsintheUSPTOtodeterminepriorityofinvention,whichcouldresultinsubstantialcoststous,eveniftheeventualoutcomeisfavorabletous, which is highly unpredictable.In addition, because of the extensive time required for clinicaldevelopmentandregulatoryreviewofadrugcandidatewemaydevelop, it ispossiblethat,beforeanyofourdrugcandidatescanbecommercialized,anyrelatedpatentmayexpireorremaininforceforonlya shortperiod followingcommercialization, thereby limitingprotection suchpatentwouldaffordtherespectiveproductandanycompetitiveadvantagesuchpatentmayprovide.

In addition to patents, we rely upon unpatented trade secrets and know-how and continuingtechnological innovationtodevelopandmaintainourcompetitiveposition.Weseektoprotectourproprietary information, in part, by executing confidentiality agreements with our partners andscientific advisors, andnon-competition,non-solicitation, confidentiality, and inventionassignmentagreements with our employees and consultants. We have also executed agreements requiringassignment of inventions with selected scientific advisors and partners. The confidentialityagreementsweenter intoaredesignedtoprotectourproprietary informationandtheagreementsor clauses requiring assignment of inventions to us are designed to grant us ownership oftechnologies that are developed through our relationship with the respective counterparty. Wecannot guarantee, however, that these agreements will afford us adequate protection of ourintellectualpropertyandproprietaryinformationrights.

6.13.4. TrademarksandDomainNames

Inaddition,weowncertaintrademarksanddomainnames, includingour logoandtheURLforourwebsite.Poxel®isaregisteredtrademarkofourcompanyinFrance,EuropeanUnionandtheUnitedStates.Poxel®withoursemi-figurativecolorlogoisaregisteredtrademarkofourcompanyinFranceandEuropeanUnion.


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6.13.5. PledgeonCertainIntellectualPropertyRights

In July 2014, we agreed to issue up to €8.0 million in non-convertible bonds to Kreos. Asconsideration for the loan, we granted Kreos various security interests, including a pledge of ourbankaccountsandreceivablesandapledgeofcertainofourpatentsandtrademarks.Notably,thepledgeonourintellectualpropertyincludesnineofourpatentsandpatentapplications(twoFrenchpatents, one German patent, one United Kingdom patent, one U.S. patent one European patentapplication,oneU.S.patentapplicationandtwoJapanesepatentapplications)relatingtoImegliminandonePCTapplication(nownationalized)relatingtoAMPK.6.14. Facilities

We lease 400 squaremeters of office space in Lyon, France under a lease that expires in August2024. We also occupy additional office space in Paris under a 12-month sublease, which isautomaticallyrenewableeachyearuntiltheexpirationdateofthemainleaseinJune2021.6.15. LegalProceedings

Fromtimeto time,wemaybeaparty to legal,administrativeorarbitrationproceedingsarising inthe ordinary course of our business. As of the date of this prospectus,we are not a party to anymaterial legal,administrativeorarbitrationproceedings that, ifdeterminedadversely tous,wouldindividually or taken together have amaterial adverse effect on our business, financial condition,resultsofoperationsorcashflows.Regardlessoftheoutcome,litigationcanhaveanadverseimpacton us because of defense and settlement costs, diversion of management resources and otherfactors.6.16. Employees

Formoreinformationaboutouremployees,see“ManagementandEmployees.”


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7. ORGANIZATIONALSTRUCTURE

7.1. Legalorganizationchart

None,theCompanydoesnotownanysubsidiaryorequityinterest.

7.2. CompaniesoftheGroup

None.

7.3. CashflowsoftheGroup

Nonavailable.


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8. PROPERTY,PLANTSANDEQUIPMENT

8.1. Immovablepropertyandequipment

8.1.1. Rentedimmovableproperty

TheregisteredofficeofthecompanyislocatedinLyon,France,underacommerciallease,tohostitsclinicaldevelopmentteam.

Address 259/261AvenueJeanJaurès,ImmeubleleSunway,69007Lyon,France.Surfacearea 400squaremeters,1parkingspaceDuration July1st,2015–June30th2024(withanoptiontoterminateeverythreeyearperiod)Annualrent €86,075fortheoffice,and€1,500fortheparkingspace

Thecompanyalsohasanofficeundera12monthsub-leaseagreement,tacitlyrenewableeveryyear.

Address 47ruedeLiège,75008ParisSurfacearea 17squaremetersDuration January1st2015–December31st2015Annualrent €14,457

8.1.2. Otherimmovableproperty

ThemaincapitalassetsownedbytheCompagnyaresetout inthe4thnoteoftheappendixtotheaccounts IFRS, in section20.1 “IFRSaccountsprepared for theyearendedDecember31st, 2015ofthisdocumentderéférence”.

8.2. Environmentalissues

8.2.1. Socialandenvironmentalinformation

ThenatureoftheactivitiesoftheCompanydoesnotresultinanysignificantrisktotheenvironment.


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9. OPERATINGANDFINANCIALREVIEW

TheCompanywhichdidnothaveanysubsidiariesorholdingsasatDecember31st2015,establishedinadditiontotheannualaccounts,incompliancewithFrenchaccountingstandards,annualaccountsin compliancewith IFRS standards, as approved by the EuropeanUnion, for the financial years of2013,2014and2015.Theseannualaccountsarepublishedonavoluntarybasis.

The reader is invited to read the following information relative to the financial situation and theresults of the company, in thisdocument de référence and in particular the financial state of theCompanyestablishedincompliancewiththeIFRSstandards,insection20.1“IFRSaccountspreparedfor the year ended December 31st, 2015 of this document de référence” and also the quarterlyfinancialinformationasofMarch31st,2016establishedincompliancewithIFRSstandards,insection20.4“QuarterlyfinancialinformationasofMarch31st2016”ofthisdocumentderéférence.

9.1. Generalpresentation

9.1.1. Generalpresentation

The Company was incorporated on March 11th 2009, and has as its object the research anddevelopmentofnewtherapeuticstrategies,andnewpharmaceuticalspecialties.Itsresearchworkisfocusedonthetreatmentoftype2diabetes.

TheactivitiespursuedbytheCompanyoverthecourseofseveralfinancialyearscanbegroupedintoauniquesection:developmentofinnovativemoleculesandfirst-in-classforthetreatmentoftype2diabetes.

At this stage, theCompanydoesnotmakeany recurrent turnover, anddevotes a largepartof itsoperatingcoststoresearch.TheCompanyreliesonlowfixedcostsandwidelyusessub-contractors,inparticularforpre-clinicalandclinicaltrials,whileprotectingintellectualpropertyrights.

Sinceitscreation,theCompanywasfinancedby:

• increasesincapital,inparticulartheinitialpublicoffering(IPO)oftheCompanyinthebeginningof2015,aswellastheprivateplacementmadeinJuly2015byinvestorsintheUnitedStates;

• bondissueconvertibleintoshares; • reimbursementreceivedundertheresearchtaxcredit; • grantgivenbyMerckSeronowhentheCompanywascreated • InnovationandgrantsbyBpifranceFinancement • ventureloanagreementwithKreosand • subsidybyFEDERfromGrandLyon

The costs and delays in research and development of the Company’s products together withcontinuing the clinical development program are in part out of the Company’s control, and willcontinuetocreatesignificantfinancingneeds.Thecompanywillcontinuetoincuroperationallosses.

Significantrevenue isnotexpectedfromthesaleof thedrugcandidatesof theCompany,until thedevelopment program that is currently underway achieves success and the Company obtainsauthorisation to put them on the market, which would take several years and is subject touncertainty.Asaresult, theCompanyanticipatesthat itwillneedadditional fundingtoensurethe


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development of its drug candidates, which could be obtained through a combination of capital[operations/raising],debt,partnershipsorlicenses,theabsenceofwhichcouldaffectallorpartofitsactivities(seesection4“Riskfactors”ofthisdocumentdereferenceforfurtherinformation).

9.1.2. Salesrevenueandoperatingincome

AstheCompanyisn’tcurrentlyinasaleperiod,theCompanydoesnotcurrentlyhaveanysignificantrecurrentturnover. In2015theCompanyneverthelesshadaturnoverof€60,000asaresultofthesignature of its first partnership contractswith ENYO Pharma SA. The Company did not have anyturnoverduringthefirstquarterof2016.

Pursuant to this first contract signed inMay2015,ENYOgainedaccess toPoxel’sFXR (farnesoidXreceptor) agonist compoundsfor therapeutic indications in infectiology,while conserving its rightsforPOXELforindicationsincludingcardiovasculardiseasesandmetabolism.TheCompanybenefitedfrom a fee of €50,000 under this contract, which as been accounted for in its turnover. The FXRmolecule belongs to Merck Serono, the Company must give back 90% of the license earnings toMerckSerono(amountof€45,000tobepaidon12/31/2016).

InNovember2015,theCompanysignedasecondlicenseagreementwithENYOPharmaSAtogainaccesstoakeypatenttoexploittheFXRtechnology,whichaimstodeveloptreatmentforHepatitisB.Pursuanttothis,theCompanyrecordedincomeof€10,000asatDecember31st,2015.

TheCompany’soperating income isprimarily linked to thesubsidies receivedandtheresearch taxcredit(CIR).

TheCompanyhasbenefitedfromCIRsinceitscreation.TheCIRisataxcreditawardedtocompaniesthat significantly invest in research and development (the eligible expenses include in particularsalaries and treatments, consumables, expenses for sub-contracting with certified bodies andexpensesfor intellectualproperty).Thecompaniesmust justifyuponrequestbythetaxauthoritiestheamountofthetaxcreditgivenbytheCIRandtheeligibilityoftheactivitiestakenintoaccounttobenefitfromthismeasure.

TheCIR is recognisedasprofit for the financialyearconcernedandrecordedasa reductionof theresearch and development expenses in the profit and loss account, according to the IAS 20requirements.

In2014and2015theCompanybenefitedfromtwosubsidiesbytheFEDER/GreaterLyon/RégionRhône-Alpesrespectivelyof€1,455and€1,000.

9.1.3. Researchanddevelopment–Subcontracting

Research and development is the core activity of the Company. The costs of research anddevelopmentgenerally increasealongsidetheprogressof theclinicaldevelopment,becauseof thesize and the lengthexpansionof the last stagesof clinical trials and thepotential demandsof theregulatorybodies (FDA,EMA).TheCompany thereforeexpectsagrowth in itsclinical trials for thefuture. TheCompany cannot determinewith certainty the length and the costs for future clinicaltrialsandortheincomethattheseprojectscouldmake(seesection4“Riskfactors”ofthisdocumentderéférenceformoreinformation).


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Becauseoftherisksanduncertaintieslinkedtoregulatoryapprovals,andtheprocessofresearchanddevelopment, the six capital criteria established by the IAS 38 rule to activate the funds fordevelopment are not considered satisfied until the marketing authorization (AMM) is obtained.Therefore, the internal funds fordevelopment involvedbeforeobtainingthisauthorization(AMM),mostlyexpensesfortheclinicaltrials (oftensubcontracted)aretaken intoaccountascosts, inthe“researchanddevelopment”section,iftheyareincurred.

Themainexpensesforresearchanddevelopmentare:

• costsinsub-contracting,studiesandresearchesforpre-clinicalstudiesandclinicalstudiesonImegliminandpre-clinicalstudiesonPXL770

• employeeexpensesforthe14membersoftheresearchanddevelopmentteam.Theseexpensesincludesalariesandsocialchargestogetherwithpotentialshare-basedpaymentsfortheassociatesintheresearchanddevelopmentteam;

• thepurchaseofbiologicalrawmaterial,operatingcostsfortheresearchanddevelopmentteam(premises,specificmaterial),expensesforconferencesandtravel;and

• intellectualproperty,includingexpensesforpatentprotection.

In2015,theCompanydedicated€9,2milliontodevelopitstwomainprojects,ImegliminandPKL770as compared to €7,0 million in 2014 (see section 6 “Overview of Business” of this document deréférenceformoreinformation).

TheCompanyalsodedicates a sizeablepart of its resources toprotecting its intellectual property:filing patents or applying for patents on an international scale (see section 11 “Research anddevelopment, patents, licences, and other intellectual property rights” of this document deréférence).

The internal structure of research and development in the Company includes 14 highly qualifiedpeople.Theperformanceoftestsandclinicalstudiesareallsubcontractedtoexternallaboratories.

9.1.4. Generalandadministrativeexpenses

TheCompanyorganizeditselftominimizegeneralandadministrativeexpenses,inordertofocusitsresources on research and development. The general and administrative expenses are mostcommonlycomposedof:

• salariesoftheadministrativeteam,• lawyer’sfeesandexternalcounsel,• travelexpenses,• shareexpenses.

In2014and2015,theCompanyhadnon-recurrentcostsduetoitsinitialpublicoffering,amountingto€3,140.Theseexpenseswere included in thegeneralandadministrativeexpenses,andalso thedeductionoftheinsurancepremiumsforthesharedirectly linkedtotheincreaseincapital,onthebasis of a reasonable allocation. The share accounted for as an operational charge respectivelyamountsto€288,000and€558,000.


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The Company expects its general and administrative expenses to increase to sustain thedevelopmentofitsresearchanddevelopmentactivities.

9.1.5. Financialexpensesandincome:

Financial income ismostly composedof interest related tocashandcashequivalent in short termdepositsandinmonetaryfunds.

Financialexpensesaremostlycomposedof:

• in2014and2015,interestontheloanwithKreos,(seenote11.5oftheappendixtotheIFRSfinancialstatementsinsection20.1“IFRSaccountspreparedfortheyearendedDecember31st,2015ofthisdocumentderéférence”

• in2014,(seenote11.3oftheappendixtotheIFRSfinancialstatementsinsection20.1“IFRSaccountspreparedfortheyearendedDecember31st,2015ofthisdocumentderéférence”

• in2014,(seenote11.4oftheappendixtotheIFRSfinancialstatementsinsection20.1“IFRSaccountspreparedfortheyearendedDecember31st,2015ofthisdocumentderéférence”

• interestscalculatedasrepayableadvances;and

• exchangeslossesduetothepurchaseofservicesdenominatedinUSdollarsandinyens.

9.1.6. Mainfactorsaffectingthebusiness

The outcome of such research and the commercial development of the results of such are longlasting, the historical results of the Company primarily reflect the expenses in research anddevelopment.

Considering the state of development of the Company, the key factors that have influence on itsactivity,itsfinancialstate,itsdevelopmentandprospectsare:

• themagnitudeoftheprogramsinresearchanddevelopmentandthecompliancewiththetimeline;

• obtainingsubsidiesandbenefittingfromrepayableadvances;and• taxincentivemeasuresforcompaniesthatimplementactivitiesabouttechnicalandscientific

researches(researchtaxcreditandtaxexemption).

9.2. Post-closingevents

Theprincipal post-closingevent is theexercicebyKreosCapital IV (UK) Ltd, on February9th 2016,45.834 of its stock option (BSA), with an exercise price of €4 for each BSA, resulting in a capitalincreaseof€916,68,aswellaspremiumsamountingto€182,419.

OnFebruary17th2016,anemployeeexercisedits150BSPCEoptionsforamountingto3,000ordinaryshares,with an exercise price of €3,2 resulting in a capital increase of €60 pairedwith premiumsamountingto€9,540.

Thesharecapital increased to€390,624.56€divided in19.531.228shareswithanominalvalueof€0,02.


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9.3. AnalysisofinterimfinancialstatementsasatMarch31,2016

9.3.1. Operatingincomeandnetincome

Operatingincome

TheCompanyhadnosalesprofitsduringthefirstquarterof2016.Itsoperatingincomeisasfollows:

TURNOVERANDOPERATIONALINCOME(Amountineuros)

31/03/2016Unaudited

31/03/2015Unaudited

Turnover 0 0

Researchanddevelopment

Taxcreditforresearchanddevelopment 1046457 467206

SubsidiesfromFEDER/GreaterLyon/RégionRhône-Alpes 0 1000

Otherincome 0 0

Totalturnoverandoperatingincome 1046457 468206

TheCompanyledclinicaltrialsoutsideoftheEuropeanUnion(inparticularintheUnitedStatesandtoa lesserextent in Japan).Theseexpensescannotbe included in the taxcredit for researchanddevelopment calculation, which explains that the value of this category grew at a slower rate(+124%)between2015and2016thanthevalueofresearchexpenses(+242%)overthesameperiodoftime.

OperatingincomeislinkedtotheresearchactivityoftheCompany,andtheanalysisoftheirvariationisnotrelevantwhenconsideringtheactivityoftheCompany.Thesubsidiesreceivedarenotsetoutinsection10.1.3“Financingbyrepayableadvancesandsubsidies”ofthisdocumentderéférence.

Operatingexpenses

Thecompanycontinuedwithitseffortintermsofresearchanddevelopmentduringthefirstquarterof 2016, on the global change to Imeglimin and PXL770 projects (see section 6 “Overview ofBusiness”ofthisdocumentderéférenceformoreinformation).

Theresearchanddevelopmentexpensesintherelevantyearsaredividedasfollows:

RESEARCHANDDEVELOPMENT(Amountineuros)

31/03/2016Unaudited

31/03/2015Unaudited

Personnelexpenses 491540 104086


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Share-basedpayments 48467 0

Subcontracting,studies,researches 4747880 1212045

Intellectualpropertyfees 104298 231972

Paymentstointermediariesandprofessionalfees 142100 51777

PurchaseofactivepharmaceuticalingredientsforCROs 8262 3552

Insurancepremiums 20138 14461

Royalties,licenses 21608 11968

Rents 134 0

Depreciationoffixedassets 5243 3609

ExpensesinResearchandDevelopement 5589671 1633471

The increase inpaymentsbasedonsharescomes fromsharewarrantsdecidedduring thisquarter(see section 21.1.4 “Convertible or exchangeable securities or securities with warrants” of thisdocumentderéférenceformoreinformation).

In thepersonnelexpenses, theamountofbenefits linkedtotheJEIstatusonMarch31st2015and2016,ontwoestablishments,respectivelyamountsto€40,036and€44,598,theyareconsideredasresearchanddevelopmentexpensesupto€29,517and€31,156 in2014and2015.TheCICE isnotsignificant

ExcludingthesubsidiesandtheCIR(taxcreditforresearchanddevelopment)receivedanddeductedfromresearchanddevelopmentexpenses,theseexpansesrespectivelyamountto68%and91%oftheoperatingcostsonMarch31st2015and2016.This increase is relatedtotheriseof theclinicaltrialsexpenses.

Thegeneralandadministrativeexpensesintherelevantyearsaredividedasfollows:

GENERALANDADMINISTRATIVEEXPENSES(Amountineuros)

31/03/2016Unaudited

31/03/2015Unaudited

Personnelexpenses 333930 67845


Rent 9322 4265

Travel,andEntertainmentexpenses 154568 62614

Maintenanceandrepair 5503 5798

Postageandtelecommunicationsexpenses 8285 5731


Advertising,Publicrelations 53649 303557


Documentation,training 159 338

Bankingservicesandsimilarservices 2710 1800

Depreciationoffixedassets 7080 2677

Othertaxes 12512 1286

Others 4569 8407

Generalandadministrativeexpenses 1580579 1243086


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Generalandadministrativeexpensesincreasedby€0.3million(+27%)between2015and2016.Thisincrease is primarily due to the raise in personnel expenses, €0,3million and expenses related toshare-based payments (+€0.4 million), partially offset by the decrease in advertising and publicrelationsexpenses(-€0.3million),assetoutinthetableabove.

Financialresult

FINANCIALINCOMEANDEXPENSES(Amountineuros)

31/03/2016Unaudited

31/03/2015Unaudited

Changesinthefairvalueoffinancialliabilities 0 52214

InterestexpenserelatedtotheKreosliability -163206 -225517

Otherfinancialexpenses -7692 -29362

Financialincome 86471 40175

(Foreigncurrencyexchangegains(losses) -39313 120

Totalfinancialincomeandexpenses (123741) (162371)

ThefinancialresultsasatMarch31st2015and2016wereprimarilyaffectedbytheinterestrelatedtotheagreementwithKreos.In2015,italsoincludedthechangeinthefairvalueofthedebtvis-à-visMerckSerono,whichwasnonrecurrent,thecorrespondingdebthavingexpiredintheprocessoftheinitialpublicofferingofthecompany.

Theotherfinancialexpensesareprimarilyaresultoftheundiscoutingofrepayableadvances.

The Company’s investment policy first and foremost favors the absence of risk, and to the extentpossible,theguaranteeofminimalperformance.Incomefrominterestwas€40,000asatMarch31st2015(ascomparedto€86,000asatMarch31st2016).

Corporatetax

Takingintoaccountpreviousdeficitsandcurrentincomebeforenegativequarterlytax,theCompanydid not have any tax expenses in the first quarter of 2015 or in the first quarter of 2016. TheCompanyhas,sinceMarch31st2016,ataxdeficitthatcanbecarriedforwardindefinitelyinFrance,amountingto€64,526,000beforetakingintoaccountthelossesofthefirstquarterof2016.

Biannualresults

Quarterly losses amountedas at €6,248,000onMarch31st 2016as compared€571,000onMarch31st2015.

9.3.2. BalanceSheetAnalysis

Non-currentassets

Fixedassetsprimarilyincludefixtures,officesupplies,computerequipment,thedecreaseofthenetvalueisduetoannualdepreciation.

Thefinanciallongtermsassetsarecomposedof:

• thecashoftheliquiditycontract(€213,000in2016against€200,000in2015)underwrittenbyOddoCorporateFinance;

• theadvanceprovidedpursuanttotheagreementwithKreos;and


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• theguaranteesontheoperatingleaseofthebusinesspremises.

TheCompanydidnotmakeanysignificantinvestmentduringthefirstquarterof2016.

Currentassets

Currentassets(Amountineuros)

31/03/2016Unaudited

31/12/2015Audited

Customersandrelatedaccounts 11580 11580

Otherreceivablesandrelatedaccounts 4034931 3736414

Cashandcashequivalents 37347121 42413402

Totalcurrentassets 41393632 46161396

The customer receivables correspond to the receivable balance in connection with ENYO PharmaSA’scontract.

Theincreaseintheotherreceivablesisduetotheincreaseintheresearchtaxcredit.

Equity

Equityamounted to€31,648,000asatMarch31st2016ascompared to€38,028,000onDecember31st2015.

Thisdecreasewasprincipallydueto:

• thelossrecordedinthefirstquarterof2016(€6,248,000);andthedecreaseinthesharepremiumaccountofthecostsincurredbythecompanyduringthatperiodof€800,000aspartofthecapitalincrease.

ThisdecreasewasoffsetbytheincreaseincapitallinkedtotheconversionofsomeBSAbyKreos(€183million)andanemployee(€10,000).

Non-currentliabilities

Thenon-currentliabilitiesaremostlycomposedof:

• therepayableadvancesreceived(whichdidnotchangesignificantlyinthefirstquarterof2016);and

• theKreosdebt,includingnon-currentdecrease(finalmaturityinApril2017).

Currentliabilities

Current liabilities increased during this period by €2.3 million, mostly due to the increase of thesupplier’sdebt(€2,1million).ThisincreaseisaresultofthesecondphaseofclinicalstudiesinJapan,inthebeginningof2016.


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9.4. Comparisonofthefinancialstatementofthelasttwofinancialyears

9.4.1. Operatingincomeandnetincome

9.4.1.1. Salesbenefitsandoperatingincome

TheCompanyhad income fromsalesof €60,000 in2015 in connectionwith the signingof its firstpartnership contractswith ENYO Pharma SA. Its operating income for the years ended December31st,2014andDecember31st,2015areasfollows:

TURNOVERANDOPERATINGINCOME(Amountineuros)

31/12/2015Audited

31/12/2014Audited

Turnover 59650 0


Taxcreditresearch 1918071 1977120

SubsidiesbyFEDER/GreaterLyon/RégionRhône-Alpes 1000 1455

Totalturnoverandoperatingincome 1978721 1978575

TheCompanyconductedclinicalstudiesoutsideoftheEuropeanUnion,(inparticular intheUnitedStatesandtoalesserextentinJapan).ThetaxresearchcreditgrantedtotheCompanyfortheyearended2015wassimilartothetaxresearchcreditgrantedtotheCompanyfortheyearended2014eventhoughthevolumeofresearchexpensesroseby32%overthesameperiodoftime,asaresultofthefactthatexpensesrelatedtotheclinicalstudiescarriedoutsidetheEuropeanUnioncannotbeincludedinthecalculationforthetaxresearchcredit,.

Theoperating income is linked to the researchanddevelopmentactivityof theCompany,and theassessment of its variation is not relevant in the view of the Company’s activity. The subsidiesreceivedaresetoutinsection10.1.3“Financingbyrepayableadvancesandsubsidies”.

9.4.1.2. Operatingexpensesbyfunction

Expensesinresearchanddevelopment

In2015,theCompanydevotedalargepartofitseffortsinresearchanddevelopmentonImegliminandPXL770projects (seesection6“Overviewofbusiness”of thisdocumentderéférence formoreinformation).

Researchanddevelopmentexpensesintherelevantyearsareasfollows:


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RESEARCHANDDEVELOPMENT(Amountineuros)

31/12/2015Audité

31/12/2014Audité

Personnelexpenses(2) 1115618 998664


Sub-contracting,studiesandresearches(1) 6126711 4785060

Feesforintellectualproperty 526586 393494


PurchaseofactivepharmaceuticalingredientsforCROs 385000 0


Royalties,licenses 137298 64325

Rents 65514 47948

Documentationandtraining 1754 6312


Researchanddevelopmentexpenses 9237820 6996109

(1) Theincreaseinsub-contractingexpenses,studiesandresearchislinkedtothePXL770’sproject(1,3M€).(2) Inthepersonnelcharges,theamountofbenefitsrelatedtotheYoungInnovativeEnterprise(JeuneEntrepriseInnovante)status

in2014and2015amountedto€167,141and€130,611respectively,andisrecognizedasareductionofresearchanddevelopmentexpensesfor€117,784and€86,639for2014and2015respectively.Thetaxcreditforcompetitivenessandemployment(Créditd’ImpôtpourlaCompétitivitéetl’Emploi),orCICE,isimmaterialfortheperiodspresented.

Excluding subsidies received which are classified as a reduction of expenses, research anddevelopmentexpenses,represented101%and78%ofgrossoperatingexpenses,respectively,forthefinancial years endedDecember31st, 2014 and 2015. This increase is due to the significant rise ingeneralandadministrativeexpenses,assetoutinthedocumentderéférence.

Theincreaseinresearchanddevelopmentexpensesbetween2014and2015of€2.2millionor32%,onagrossbasis,isprimarilyduetostudiesandclinicaltrialsfortheCompany’sdrugcandidates.

Generalandadministrativeexpenses

General and administrative expenses increased by €2.6million or 138%, between 2014 and 2015.Such increase is largely attributable toan increase inpayments to intermediaries andprofessionalfees,aportionofwhichhasbeenincurredasaresultofthecompletionofourinitialpublicofferingon Euronext Paris in February 2015 (€288,000 and €558,000 in the 2014 and 2015 financial yearsrespectively).

Personnel costs and expenses associatedwith share-based payments have also increased in 2015comparedto2014asshowninthetablebelow:

GENERALANDADMINISTRATIVEEXPENSES(Amountineuros)

31/12/2015Audited

31/12/2014Audited

Personnelcosts(²) 740134 418966


Rent 33249 17620


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TravelandEntertainmentexpenses 474965 260449

Maintenanceandrepairs 25188 23211

Postageandtelecommunicationsexpenses 29319 26467


Advertisingandpublicrelations(1) 519852 20672

Paymentstointermediariesandprofessionalfees(1) 1591910 594535

Documentation,training 766 2117

Bankingservicesandsimilarservices 10259 6703

Depreciationofsoftwareandproperty,plantandequipment 22975 12343


Othergeneralandadministrativeexpenses 31246 19137

Generalandadministrativeexpenses 4461852 1878447

(1) In relation to our initial public offering completed on February 2015, we incurred various costs (e.g., professional fees foradvisors, lawyers, accountants, as well as advertising and public relations costs) which represent an aggregate amount of€3,140,000in2014and2015.Suchcostshavebeenallocatedtogeneralandadministrativeexpensesanddeductionofequitytothe extent that they are incremental costs directly attributable to the equity transaction that otherwise would have beenavoided,inaccordancewithIAS32paragraphs27and28.Tothecaseinpoint,forcostsincurredinrelationtotheinitialpublicoffering,wehaveusedabasisofallocationthat isrationalandreasonable.Coststhatareclearlyassociatedwiththeissueofshares (suchasshareregistrationandotherregulatory feesrelatingto the issuanceofshares)havebeenconsidereddirectlyattributable costs of the share issue and, therefore, have been recognized as a deduction in equity. Promotional and otherdirect listing expenses or allocated expenses (e.g., promotional expenses, general advertising expenses, fees paid to publicrelationsfirmstopromotetheimageandbrandingoftheCompany)havebeenrecognizedasoperatingexpenses.Forcoststhatrelate jointly to both components of the transaction (i.e., to obtaining a listing and to issuing shares), expenses have beenallocatedusinganappropriatebasisofallocation,consideringtheextenttowhichthecostscanbeconsideredtobeincrementalcostsdirectlyattributabletotheequitytransaction.

(2) The amount of benefits related to the Young Innovative Enterprise (Jeune Entreprise Innovante) status in 2014 and 2015amountedto€167,141and€130,611,respectively,andisrecognizedasareductionofgeneralandadministrativeexpensesof€49,357and€43,971for2014and2015,respectively.Thetaxcreditforcompetitivenessandemployment(CICE)isimmaterialfortheperiodspresented.

Operatingexpensesbynature

Operatingexpensesbynatureduringtherelevantyearsaredividedasfollows:

OPERATINGEXPENSESPARNATURE(Amountineuros)

31/12/2015 31/12/2014

Sub-contracting,studiesandresearch 6126711 4785060


Personnelcosts 1855752 1417629


Travelandhospitalityexpenses 474965 260449

Intellectualpropertyfees 526586 393494Non-recurrentpurchaseofactivepharmaceuticalingredientsforCROs 385000 0

Otheroperatingexpenses 966277 351501

Researchanddevelopmentexpenses 13699672 8874556

Expenses related to sub-contracting, studies and research include sub-contracting costs involvingresearchexpenses,andpreclinicalandclinicaldevelopmentexpensesdelegatedtothirdparties.


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The travel and entertainment expenses correspond to expenses incurred for travel of associatesparticipatingatscientific,medicalorfinancialconferences,orarelinkedtobusinessdevelopment.

The “scientific” fees correspond to external consultant fees; who participate in research anddevelopment studies for drug candidates, together with fees paid to members of the scientificcommittee.The“nonscientific”feescorrespondtocostsinlegalaudit,accountingandlegalwork.

The advertising and public relations expenses correspond to consultant fees together with thedevelopmentofcommunicationtools(inparticularthewebsiteandbusinessreports).

Personnelcostsincluderemuneration(otherthanshares-basedcompensation)oftheassociatesandconsultants.AsatDecember31st2015,theCompanyemployed16associates.

9.4.1.3. Financialresults

Financialincome(loss)(Amountineuros)

31/12/2015Audité

31/12/2014Audité

Changesinthefairvalueoffinancialliabilities 124236 (6858141)

InterestexpenserelatedtotheKreosliability (856556) (371376)

Otherfinancialexpenses (52019) -28677

Financialincome 293939 71938

(Foreigncurrencyexchangegains(losses) (29662) -212

Financialincome(loss) (520061) (7186467)In2015,financialincomewascomposedof:

• InterestexpenserelatedtotheKreosliability(seeNote11.5intheappendixtotheaccountsIFRS,insection20.1“IFRSaccountspreparedfortheyearendedDecember31st,2015ofthisdocumentderéférence”).

• Incomefromcashinvestment

ForthefinancialyearendedDecember31st,2014,theCompany’sfinancialexpensewassignificantlyaffected by the changes in the fair value of financial liabilities such as the convertible bond (€2million)andtheliabilityduetoMerckSerono(€4,7million).

TheCompany’scashinvestmentpolicyfavorstheabsenceofriskonprincipaland,whereverpossible,guaranteedminimumperformance.Thebalanceofcashandcashequivalentswas€10.2millionand€42.4million as at December 31, 2014 and 2015, respectively, thus resulting in a higher financialincomeduetoreturnoninvestingtheCompany’scashsurplus(€0.1millionand€0.3millionforthefinancialyearsendedDecember31,2014and2015,respectively).


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9.4.1.4. Corporatetax

TheCompanydoesnotpayanycorporatetax.

AsatDecember31,2015, theamountofaccumulated tax losscarried forwardsince incorporationwas €64.526million with no expiration date. French law provides that, for financial years endingafterDecember31,2012, theallocationof these losses issubjecttoamaximumof€1million,plus50%oftheportionofnetearningsexceedingthisamount.Theunusedbalanceofthe lossremainsdeferrable in future financial years, and may be deferred under the same conditions withoutrestrictionastotime.

ThetaxrateapplicabletotheCompanyisthetaxratecurrentlyinforceinFrance,33.33%.

DeferredtaxassetsarerecordedastaxlosscarryforwardwhenitisprobablethattheCompanywillhavefuturetaxableincometowhichtheunusedtaxlossescanbeoffset.Applyingthisconcept,nodeferred tax asset can be accounted by the Company in its accounts beyond the deferred taxliabilities.

9.4.1.5. Losspershare

ThelosspershareiscalculatedbydividingincomeattributabletoequityholdersoftheCompanybytheweightedaveragenumberofoutstandingordinarysharesfortheyear.

BASICPERLOSSSHARE(Amountineuros)

31/12/2015Audited

31/12/2014Audited

Netlossfortheyear (12241013) (14082448)

Weightedaveragenumberofoutstandingshares 17918891 9976856

Basiclosspershare(€/share) (0,68) (1,41)

Dilutedlosspershare(€/share) (0,68) (1,41)

9.4.2. Balancesheetanalysis

9.4.2.1. Non-currentassets

NON-CURRENTASSETS(Amountineuros)

31/12/2015Audited

31/12/2014Audited

Intangibleassets 540 910

Fixedassets 152748 21335

Otherfinancialassets 533428 285569

Totalnon-currentassets 686715 307813

Thefixedassetsaremostlycomposedofofficeandcomputingequipment. InSeptember2015,theCompanymoved its corporateheadquarters inorder to expand its office lease capacity. The2015investmentsreflectthelayoutinthenewpremises.


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Non-currentfinancialassetsarerecordedforthedepositspaidfor:

• cashpaidtoOddoCorporateFinanceinrelationtotheliquidityagreement(€200.000);• theadvancepaymentintheKreosagreement(€231,000);• depositspaidinrelationtooperatingleases,forthepremisesofourcorporateheadquarters,

forfinancialyearsendingafterDecember31st2014and2015.

9.4.2.2. Currentasset

CURRENTASSETS(Amountineuros)

31/12/2015Audited

31/12/2014Audited

Tradereceivables 11580 0

Otherreceivablesandrelatedaccounts 3736414 3264451

Cashandcashequivalents 42413402 10253635

Totalcurrentassets 46161396 13518086

ThecustomerreceivablesarerelatedtothecontractssignedwithENYOPHARMASA.

Theotherreceivablesinclude:

• researchtaxcreditawardedduringthe2014and2015financialyears,(€1,918,000in2015,€1977,000in2014)andforwhichtherefundoccurred(2014)orwilloccur(2014)duringthenextfinancialyear;

• DeductibleVATorVATreceivables;• Prepaidexpenses(€1.2million)includingapproximately€1.0millioninrelationtothePhase

2bclinicaltriallaunchedinJapaninDecember2015.Otherprepaidexpensesareprimarilyrelatedtorentalandinsuranceexpenses.

Cashandcashequivalentsascomposedofshorttermbankdepositsandmonetaryfunds.

9.4.2.3. Equity

SHARECAPITAL(Amountineuros)

31/12/2015Audited

31/12/2014Audited

Capital 389648 250163

Premiumsrelatedtosharecapital 81923707 30366675

Reserves–group’sshare (32044525) (19081894)

Netloss–group’sshare (12241013) (14082448)

Sharecapital,group’sshare 38027817 (2547504)

Noncontrollinginterests

Totalsharecapital 38027817 (2547504)

Sharecapitalissetat€389,648.AsatDecember31,2015,itisdividedinto19,482,394fullypaidupordinaryshares.


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ThenetchangesintheCompany’sequityduringthefinancialyearsof2014and2015aremostlytheresultof:

• annuallossescorrespondingtotheCompany’seffortsinparticularinworksofresearchanddevelopment;

• positivevariationsrelatedtofundraisingsin2014and2015.

9.4.2.4. Non-currentliabilities

NON-CURRENTLIABILITIES(Amountineuros)

31/12/2015Audited

31/12/2014Audited

Employeebenefitobligations 129958 97758

Financialliabilities 1553926 4317707

Non-currentliabilities 1683884 4415465

Thenon-currentliabilitiescorrespondto:

• thenon-currentportionofthefinancialdebtunderwrittenbyKreos(seenote11.5oftheappendixtotheaccountsIFRS,insection20.1“IFRSaccountspreparedfortheyearendedDecember31st,2015ofthisdocumentderéférence”.

• thenon-currentportionoftherepayableadvancesgrantedbypublicbodies.

Since 2011, the Company has benefited from two repayable advance programs, with amaximumamountof€250,000 for the first and€950,000 for the second;withdrawingsdonebetween2011and2013(seesection10.1.3“Financingbyrepayableadvancesandsubsidies”of thisdocumentderéférence).

Theemployeebenefitobligationsareformedbyprovisionforretirementindmenities.

9.4.2.5. Currentliabilities

CURRENTLIABILITIES(Amountineuros)

31/12/2015Audited

31/12/2014Audited

Financialliabilities 2397150 8551302

Tradepayablesandrelatedaccounts 4336522 3098682

Fiscalandsocialliabilities 379739 307955

Othercreditorandvariousliabilities 23000 0

Currentliabilities 7136411 11957939

Thecurrentliabilitiesarecomposedof:


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• ThecurrentpartofthefinancialdebtunderwrittenbyKreos(seenote11.5oftheappendixontheIFRSfinancialstate,detailedinsection20.11“IFRSaccountspreparedfortheyearendedDecember31st,2015”ofthisdocumentderéférence”.

• ThedebtrelatedtoMerckSerono(seeNote11.4oftheappendixon“IFRSaccountspreparedfortheyearendedDecember31st2015”detailedinsection20.1and10.1.5.2ofthisdocumentderéférence),assessedforthe2014closingtoanamountof€7,3millionandextinctin2015.

• Thecurrentpartoftherepayableadvancesgrantedbypublicbodies(seesection10.1.3“Financingbyrepayableadvancesandsubsidies”ofthisdocumentderéférence).

• Bankoverdrafts.


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10. CAPITALRESOURCES

Thereadershouldalsorefertonotes7,9and11oftheappendixtotheannualaccountsestablishedincompliancewithIFRSstandardsandthequarterlyaccountsmentionedrespectivelyinSection20.1"IFRS Accounts established for the year endedDecember 31, 2015" and 20.4 " quarterly financialInformationMarch31,2016"ofthisdocumentderéférence.

10.1. Informationoncapital,liquidassetsandfinancingsources

OnMarch31,2016, thenetcashandcashequivalentsheldby theCompany (thesumofcashandcashequivalentassetsandbankoverdrafts liabilities)amountedto€37.347millionascomparedto€42.413millionat31December2015.

Sinceitscreation,theCompanyhasbeenfundedby:

• capitalincreases,includingtheIPOoftheCompanyinearly2015andtheprivateplacementinJuly2015toinvestorsintheUnitedStates;

• abondissueconvertibleintoshares;

• reimbursementsreceivedundertheresearchtaxcredit;

• thegrantprovidedbyMerckSeronoduringthecreationoftheCompany(seesection22.1"AgreementwithMerckSerono"ofthisdocumentderéférence);

• innovationsupportandgrantsfromBpiFranceFinancement;

• aventureloanagreementKreos;and

• anERDFgrantfromGrandLyon.

10.1.1. Capitalfinancing

The Company received a total of €85,789,000 (before deducting expenses related to the capitalincreases)throughthecontributionofthefoundersandcapitalincreasesbetween2009and2015.

Overthepast3years,theCompanyhasraisedover€50millionduetothefollowingevents:


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DateGrossamountraisedin

€Operations

Apr-14 2,438,000 Conversionof30472convertiblebonds(excludingcapitalizedinterest)

Jul-14 10,562,000 Conversionoftheremainderoftheconvertiblebonds

(132,028CBexcludingcapitalizedinterest)

Jul-14 5,000,000 CapitalincreasesubscribedbyBpifranceParticipations,byissuanceof1,250,000sharesforasubscriptionpriceof4€pershare.

Feb-15 26,800,000 IPOofPoxel,issuanceof4,031,248newsharesforapriceof

€6.66pershare

Feb-15 4,354,000 ExercisebyMerckSeronoofits1,088,531sharewarrants

Jul-15 20,000,000 Privateplacementleadingtothecreationof1,762,793newsharesissuedforapriceof€11.35pershare

Oct-15 183,000 Conversionof45,833sharewarrantsbyKreos

Nov-15 183,000 Conversionof45,833sharewarrantsbyKreos

Feb-16 183,000 Conversionof45,833sharewarrantsbyKreos

Feb-16 10,000 Conversionof150foundersharewarrantsbyanemployee

AsatMarch31,2016 85,789,000

10.1.2. Debtfinancing

10.1.2.1. Convertiblebonds

The General Meeting of October 31st, 2012 issued to certain funds managed by historicalshareholdersabondconvertibleintosharesamounting€13million,madeupof162,500convertiblebonds(OC)withanominalvalueof€80,dividedinto3tranches.

Theannualinterestratewassetat5%,capitalizeduntilmaturityofthebondsandwiththepossibilityofcapitalization,upontheconversionofthebonds.TheconversiondatewasoriginallysetasJanuary31,2014,but ithasbeenextended toMarch31st,2014.TheGeneralMeetingofMarch28th,2014furtherextendedtheconversiondeadlinetoJune30th,2014freezingtheinterestonApril30th,2014iftheconversionwasrealizedbeforeMay31st,2014or,otherwise,onMay31st,2014.Theconversionof thesebondsgavetheright tosubscribe forsharesatapriceof four (€4)pershare (after takingintoaccountthedivisionofthenominalsharevalueper20,whichwasmadefollowingtheGeneralMeetingofMarch28th,2014).


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• InMay2014,30,472convertiblebondswhich,aftertakingintoaccountcapitalizedinterestandthedivisionofthenominalsharevalueper20,resultedinthecreationof645,722newshares;

• InJuly2014,forthebalanceoftheconvertiblebonds(or132,028bonds)which,aftertakingintoaccountcapitalizedinterestandthedivisionofthenominalsharevalueper20,resultedinthecreationof2,812,634newshares.InthefinancialstatementsonJune30th,2014presentedinaccordancewithIFRSstandards,thedebtrelatedtotheconvertiblebondsisrecordedatfairvalue,withchangesrecordedinthefinancialincome(seesection9.4.1.3"financialincome"ofthisdocumentderéférence).

Thefollowingtableshowschangesinfairvaluebetween2014and2015:

TOTAL BOND

As at December 31, 2013 ........................................................................................................... 24,059,574

(+) Payment received ................................................................................................................... — (-)Repayment — (-) Change in fair value ................................................................................................................. 2,049,160 (+/-) Conversion ............................................................................................................................ (26,108,735)

As at December 31, 2014 ........................................................................................................... —

Seenote11.3totheIFRSfinancialstatementspresentedinSection20.1"IFRSAccountsestablishedforthefinancialyearendedDecember31,2015"ofthisdocumentderéférenceformoreinformationonconvertiblebonds.

10.1.2.2. Overdraftfacility

TheCompanybenefitsfroma€1.7millionoverdraftfacilityprovidedapledgedtermdepositaccountofthesameamount

10.1.2.3. Non-mandatory convertible loan for the benefit of Kreos Capital IV (UK) Limited

On July 25, 2014, the Company entered into a venture loan agreement (the “Venture LoanAgreement”)intendedtoallowtheCompanytobenefitfromfinancingintheformofnon-convertiblebonds representing a loan for a maximum amount of €8 million for which Kreos Capital IV (UK)Limited,orKreos,agreedtosubscribeintwotranchesasfollows:

• €5million(“TrancheA”)subscribedasofJuly25,2014,repayableover33months(norepaymentofcapitalforthefirst9months);and

• €3million (“TrancheB”), inoneor several drawdowns, subject to the conditionthattheCompanyobtainsadditionalfinancingofatleast€12million(incapital,bythe issue of convertible bonds, a subordinated shareholders loan or a licenseagreement with a pharmaceutical company) by March 31, 2015 and repayableover36months.IthasnotbeendrawndownbytheCompany.

Thebondshaveafixed11.25%couponandincludevariousfeestobepaidbytheCompany.


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UndertheVentureLoanAgreement,theCompaanymustalsoissuetoKreosCapitalIV(ExpertFund)Limited,thesubsidiaryofKreos,amaximumof220,000shareswarrantsforclassApreferredshares,137,000ofwhichwereissuedatthetimeTrancheAwasreleasedandamaximum82,500ofwhichshouldhavebeenissuedatthetimeTrancheBwasreleasedinitsentirety(seenote4ofthesection21.1.4.1“Warrantsplan”ofthisdocumentderéférenceforamoredetaileddescriptionoftheoftheproceduresforexercisingthesesharewarrants.

Finally,toguaranteealloftheundertakingsoftheCompanyrelatingtotheVentureLoanAgreement,the Company grantd various security over its intellectual property and its cash: pledge of bankaccounts, pledge of debts and pledge of some intellectual property rights (see sections 11.2.4“Patents subject to a pledge” and 11.4 “Other intellectual property elements” for details on thispledge).

AsatMarch31st,2016,thebalanceofthedebtwas€2,620,000repayablewithinlessthanayear.

LIABILITY TO KREOS

As at December 31, 2013 ............................................................................................................ —

(+) Payment received .................................................................................................................... 4,855,000 (+) Effect of unwinding the discount .............................................................................................. 137,001 (-) Repayment ............................................................................................................................... — (-) Equity component ..................................................................................................................... (632,334)

As at December 31, 2014 ............................................................................................................ 4,359,666

(+) Payment received .................................................................................................................... — (+) Effect of unwinding the discount .............................................................................................. 362,401 (-) Repayment ............................................................................................................................... (1,576,010) (-) Equity component ..................................................................................................................... —

As at December 31, 2015 ............................................................................................................ 3,146,057

(+) Payment received .................................................................................................................... — (+) Effect of unwinding the discount .............................................................................................. 77,155 (-) Repayment ............................................................................................................................... (603,675) (-) Equity component ..................................................................................................................... —

As at March 31, 2016 ................................................................................................................... 2,619,537

10.1.3. Financingbyrepayableadvancesandsubsidies

Repayableadvance:

Since 2011, the Company has benefited from two repayable advance programs,with amaximumamount of €250,000 for the first (PXL770) and €950,000 (Imeglimin – New Formulation) for thesecond,withmoresignificantdrawingsin2012and2013.

Thetablebelowsetsforthmovementsrelatingtothosetwoadvancesbetween2014and2016andsetsouttheirprecisebreakdownperproductconcerned:


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OSÉO/FEDER PXL770

OSÉO INNOVATION IMEGLIMIN

(NEW FORMULATION)

TOTAL

As at December 31, 2013 .................................................................. 202,234 546,317 748,551

(+) Increase ......................................................................................... — — — (-) Decrease......................................................................................... (22,500) — (22,500) Financial expenses .............................................................................. 7,682 20,995 28,677 Other movements ................................................................................ — — —

As at December 31, 2014 .................................................................. 187,416 567,312 754,728

(+) Increase ......................................................................................... — — — (-) Decrease......................................................................................... (35,000) — (35,000) Subsidies — — — Financial expenses .............................................................................. 7,577 44,441 52,019 Other movements ................................................................................ — — —

As at December 31, 2015 .................................................................. 159,993 611,754 771,746

(+) Increase ......................................................................................... — — — (-) Decrease......................................................................................... (12,500) — (12,500) Subsidies — — — Financial expenses .............................................................................. 1,938 5,713 7,650 Other movements ................................................................................ — — —

As at March 31, 2016 ......................................................................... 149,430 617,466 766,897

The repayment schedules for these advances is described innote11.2 to the financial statementsestablished according to IFRS standards mentioned in section 20.1 “IFRS financial statementsestablished for the financial year endedDecember31st,2015”ofdocumentde référence. BasedonthebalanceasatMarch31st,2016,itissummarizedasfollows:

CONDITIONAL ADVANCES

PXL770

IMEGLIMIN (NEW FORMULATION)

TOTAL

As at March 31, 2016 ............................................................................. 149,430 617,466 766,897

Portion less than 1 year ........................................................................... 58,749 46,991 105,741 From 1 year to 5 years ............................................................................ 90,681 570,475 661,156 Portion above 5 years ............................................................................. — — —


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Subsidies

TheCompanyreceived:

• ERDF and Grand Lyon non-repayable innovation support grant, two grants of amaximumamountof€218,000each,oratotalof€437,000aspartof“newtherapeuticapproachesinthetreatmentofinfectionscausedbyhepatitisBvirus(Nathebproject)”program,ofwhich€218,000hasbeenrecognizedasincome;Poxelcontributedtothisapproachbyprovidingitsknowledgeofthetargetwhichismobilizedintype2diabetesaswellasinhepatitisB.

• non-repayableOSEOinnovationsupportgrantaspartofthe“developmentandselectionofanewAMPKactivatordrugforthetreatmentofdiabetes”program.

Thetablebelowsummarizesthecashflowsgeneratedbythesegrants:

SubsidyAmountreceivedortobereceived

(unaudited)

FEDER/GrandLyonsubsidy(NATHEBproject)

€281,000totalreceivedbetween2011and2016

OSEOsubsidy(PXL770) €233,000receivedin2012

10.1.4. Financingbyresearchtaxcredit

(amounts in euros) Opening balance sheet receivable as of January 1, 2014 ................................................................. 2,913,064 Subsidy recognized as a reduction of “Research and development” expenses ...................................... 1,977,120 Payment received .................................................................................................................................... (2,913,064)

Closing balance sheet receivable as of December 31, 2014 ............................................................. 1,977,120

(amounts in euros) Opening balance sheet receivable as of January 1, 2015 ................................................................. 1,977,120 Subsidy recognized as a reduction of “Research and development” expenses ...................................... 1,918,071 Payment received .................................................................................................................................... (1,977,120)

Closing balance sheet receivable as of December 31, 2015 ............................................................. 1,918,071

(amounts in euros) Opening balance sheet receivable as of January 1, 2016 ................................................................. 1,918,071 Subsidy recognized as a reduction of “Research and development” expenses ...................................... 1,046,457 Payment received .................................................................................................................................... —

Closing balance sheet receivable as of March 31, 2016 .................................................................... 2,964,528

TheCompanyhasbenefitedfromtheCIR(researchtaxcredit)sinceitsincorporation.ThoseamountsrepresentaCIRdebtatthecloseofeachfinancialyear.


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Since2008,thecalculationoftheCIRisbasedonarateof30%oftheeligibleexpensesoftheyear.Whereitcannotbeimputedtothetaxpayable,theCIRisrefundedbythetaxauthoritiesduringthefourth financial year following the period towhich it relates. Since 2010, small andmedium-sizedenterprisescangetimmediaterefund.Thus,theCompanyobtainedtherefundofthe2013and2014CIRin2014and2015andwillrequesttherefundof2015CIRin2016.

Since 2009, the cumulative amount of CIR is €16.6 M (excluding 2016 CIR, which amounted€1,046,000asatMarch31st,2016).

10.1.5. Off-balance-sheetcommitments

10.1.5.1. Propertyrentals

In2015,aspartof itsactivities,theCompanyrelocateditsregisteredofficeandenteredintoarealestateleaseinLyon,takingtheformofacommerciallease,effectivefromJuly1st,2015.Foratermofninefullandconsecutiveyears,oruntilJune30th,2024,theCompanyretainstherighttoprovidenoticeundertheleaseeverythreeyears.OnJanuary1st,2013,theCompanyalsoenteredintoasub-leaseforanofficeinParis,fora12yearterm(renewableannually).

AsatDecember31st,2015,theamountofthefuturerentsandexpensesrelatingtotheleaseoftheregisteredofficeandthesub-leaseoftheParisofficeuntilnexttriennialperiodis€493,000(seenote22.2totheIFRSfinancialstatementspresentedinsection20.1"IFRSfinancialstatementsestablishedforthefinancialyearclosedonDecember31st,2015"ofthisdocumentderéférence).

10.1.5.2. ObligationsundertheMerckSeronoagreement(the“MSAgreement”)

CommitmentinrespectoftheagreementwithMerckSerono

In accordance with the MS Agreement signed with Merck Serono on March 19, 2009 and sinceamended,Merck Serono transferred certain patents and granted theCompany a license for otherpatents and know-how for the research, development andmarketing of pharmaceutical products.This license is exclusive and covers a list of 25 molecules by program, each by the Company’sselection.

In order to support its research and development activities and, givenMerck Serono’s economicinterest in the development of Poxel at its inception, Merck Serono provided Poxel with a non-repayablesumof€7.2million.


- royaltiesonnetsalesoftheproductscoveredbythepatentsgrantedorgrantedunderlicensebyMerckSeronoatarateequivalenttoahighsingledigitinthehigherportionoftherangeforImeglimin,andatalowsingledigitrateinthelowerpartoftherangefortheotherproducts;

- apercentageoftherevenuefromanypartnershipagreementrelatingtothedrugcandidatescoveredbythepatents,grantedorgrantedunderlicense,soldorlicensed,atalowdouble-digitratenearthebottomoftherange.

In caseof saleof theCompany,Poxel agreed topayMerckSeronoanamount corresponding toa


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percentageofthesalepriceofthesharesofPoxelatarateinadecliningfigurebasedonsaidsaleprices.

This commitment is valued in the financial statements presented in accordance with IFRS as atDecember31,2014and2015 (seeNote11.4 to the IFRS financial statementspresented inSection20.1 "IFRS Accounts established for the financial year closed on December 31, 2015" of thisdocumentderéférence).

However,undertheamendmenttotheMSAgreementsignedonMay23,2014andinanticipationoftheIPOoftheCompany,thepartiesagreed,inreturnforthesurrenderbyMerckSeronoofitsrightsincaseofsaleoftheCompany,thelatterwillreceive(i)1,088,531warrantsofsharesentitlinghim,aspartoftheIPO,tosubscribefor1,088,531commonsharesatapriceof€4persharerepresenting7.69%ofthesharecapitaloftheCompanyonafullydilutedbasispriortothepublicofferingand(ii)a claim against the Company for the release of the shares issued by exercise of the MS sharewarrants.ThiscommitmentisvaluedinthefinancialstatementspresentedinaccordancewithIFRSstandards on December 31st, 2014 (see note 11.4 of the notes to the IFRS financial statementspresentedinSection20.1"AccountspreparedunderIFRSforthefinancialyearclosedonDecember31,2015"ofthisdocumentderéférence).

ThedebttowardsMerckSeronowasextinguishedwiththecompletionoftheIPOoftheCompany.Indeed, as of February 6th, 2015, the Company recognized the exercise by Merck Serono of its1,088,531 BSA MS in as many new ordinary shares. This price was paid by offsetting the debtrecognizedintheaccountsoftheCompany.Thedifferencebetweenthedebtvaluedatfairvalueandtheexercisepriceofthewarrantsisregisteredinequity.

10.1.5.3. ObligationsundertheKreosagreement

Finally,toguaranteealltheobligationstakenbytheCompanyundertheVentureLoanAgreement,the Company granted various security over its intellectual property and its cash: pledge of bankaccounts,pledgeofreceivablesandpledgeofcertainintellectualpropertyrights.

10.1.5.4. Obligationsunderotheragreements

Othercommitmentsrelatedtoresearchandcollaborationarrangements

In theordinary courseofbusiness, theCompany regularlyuses the servicesof subcontractors andentersintoresearchandcollaborationarrangementswithvariouscontractresearchorganizations,orCROs,whoconductclinicaltrialsandstudies inrelationtothedrugcandidates,primarily Imegliminandtoalesserextent,PXL770.ThecostofservicesperformedbyCROsisrecognizedasanoperatingexpense. Under these arrangements, no reciprocal commitment binds the Company and itssubcontractors. There is no other commitment related to research and development agreementsthattheCompanyhasenteredinto.

10.2. Cashflows

Cashflows(Amountsineuros)

31/12/2015 31/12/2014

31/03/2016 31/03/2015

Cashflowsfromoperatingactivitiesbeforechangeinworkingcapitalrequirements (10520376) (6060434) (5670063) (2346073)

(-)Changesinworkingcapitalrequirements

(459110) 28915 1893909 (446704)

Cashflowsfromoperatingactivities (10061267) (6089349) (7563972) (1899368)


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Cashflowsfrom/(usedin)investingactivities 96887 (225097) 24257 37046

Cashflowsfrom/(usedin)financingactivities 42124146 8597460 (1314384) 25335085

Increase(decrease)incashandcashequivalents 32159766 2283014 (8854099) 23472763

Cashandcashequivalentsasoftheopeningdate

10253635 7970622 42413402 10253635

Cashandcashequivalentsasoftheclosingdate 42413402 10253635 37347121 32832988

Theannualchangeincashduringthefinancialyearspresentedismainlyaresultof:

• operationallossesrelatedtoresearchexpenditures;

• levelofinvestmentflows,interestreceivedoninvestments,partiallyoffsetbytheacquisitionpropertyaspartoftherelocationoftheheadquarters.

• financingactivities(capitalincreases,issuanceofconvertiblebond).

10.2.1. Cashflowsusedinoperatingactivities

OurcashflowsusedinoperatingactivitiesforthefinancialyearsendedDecember31,2014and2015amountedto€6.1millionand€10.1millionrespectively,anincreaseof66%.Thisincreaseisprimarilyaresultofourincreasedeffortsinresearchanddevelopmentactivities.

Our cash flowsused inoperatingactivities for the three-monthperiodendedMarch31,2015and2016 amounted to €2.8million and €3.8million, respectively, an increase of 35%. This increase isprimarilya resultofour increasedefforts in researchanddevelopmentactivitiesasa resultof theongoingPhase2btrialsinJapan.

10.2.2. CashFlowsUsedinInvestingActivities

TheCompanyengagedsubcontractorsfortheperformanceofmanyoperationsrelatedtoresearch,andinternalizedthemanagementandprojectmanagementonly.Therefore,themodelchosendoesnotrequiremuchinvestment.In2015,investmentflows:

- correspondtotheinterestreceivedoncashinvestments(€288,000);

- partially offset by the acquisition of property (fittings, €143,000) and the security deposit(€48,000)aspartoftherelocationoftheheadquarters.

The consumption of cash from tangible and intangible investments for the financial years endedDecember31st,2014andDecember31st,2015amountedrespectivelyto-€225,000and+€97,000.Itamounted+€24,000onMarch31st,2016.


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10.2.3. Cashflowsfromfinancingactivities

Thedetailsonthecashflowsfromfinancingactivitiesaresetoutbelow.

(amountsineuros)

31/12/2015Audited

31/12/2014Audited

31/03/2016UnAudited

31/03/2015Unudited

Sharecapitalincrease,includingpremium,netofexpenses 44361476 3969334

(607533)

25708572

Subscriptionofsharewarrants(BSA) 85425 30001

-

25500

ExpensesrelatedtotheprojectofIPO (250000) -

-

(250000)

Interestpaid (461745) (235237)

(90675)

(141487)

Repaymentofloansandconditionaladvances (1611010) (22500)

(616176)

(7500)

Issuanceofbonds 4855000

Cashflowsfromfinancingactivities42124146 8596598

(1314384)

25335085

The increase of cash in 2015 is primarily due to operations on capital, described in section 18.3“RecentoperationsonthecapitaloftheCompany”ofthisdocumentderéférence.

TheCompanyconsidersthatthenetamountsraised,combinedwithexistingcash,shouldallowittofinanceitsshorttermactivities,knowingthattheCompanyanticipatesitsneedforadditionalfundsforfuturedevelopment.PresentandfuturefinancingneedsoftheCompanydependonanumberoffactors,including:

• theprogressofclinicalstudiesforitsdrugcandidates;

• thepotentialnumberofnewdrugcandidatesthatcouldbeidentified;

• costsrelatedtotheprotectionofintellectualproperty;

• thetimeandcostrequiredtoobtainthenecessaryregulatoryapprovalsfordrugcandidates;

• the anticipation of the organization ofmarketing and sales activities for current or futuredrugcandidates,ifany;and

• the amount of income that could be generated, directly or indirectly, by a possiblepartnershipofoneormoredrugcandidatesoftheCompany.

Formore information about the associated risks, see section4 "Risk Factors" of thisdocument deréférenceformoredetails.)


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10.3. Borrowingrequirementsandfundingstructure

Informationrelated to the financingof theactivitiesof theCompanyarecontained insection10.1"Informationoncapital,liquidityandcapitalresources"ofthisdocumentderéférence.

10.4. Possiblerestrictionsintheuseofthecapital

None

10.5. Sourcesoffinancingexpectedforfutureinvestments

TheCompanyintendstorealizeashortormid-termcapitalincrease.Thisshouldallowittocontinuetokeeponfinancingitsfutureactivities.

Ifmarket conditions do not permit such a realization, the Companywill seek alternative financingsources.

Nodecisionhasbeenformalizedasofthisdate.


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11. RESEARCHANDDEVELOPMENT,PATENTSANDLICENCES

11.1. Researchanddevelopment

Researchanddevelopment(R&D)activitiesareatthecenteroftheCompany’sactivities.Sinceitsincorporation in 2009, the majority of the Company’s resources have been devoted to R & DactivitiesallowingtheCompanytohavetwodrugcandidates innovative indevelopment, ImegliminandPXL770,firstrepresentativesoftheirrespectivetherapeuticclass,GliminsandAMPKactivators.

TobesuccessfulinitsR&Dactivities,theCompanyreliesonseveralkeyfactors:

• Ateamprimarilymadeofresearchersanddevelopers,whoallhaveasignificantexperiencein the pharmaceutical industry. Eachmember of this team is encouraged to develop andinnovatewithintheCompany,sothattheymaycontributepositivelytothedevelopmentofthe Company. This concerns not only the inventions of newdrug candidates, but also anyimprovement to an existing product (by a new formulation for example), a method ofsynthesisofthisproduct,ortoaclinicalstudydesign.EveryinnovationdiscoveredwithintheCompanybelongstoit,inreturnforfairremunerationofinventors.

• Abusiness-orientedR&Dstrategy:fromthebeginningoftheelaborationofthestrategy,aqualitativemarket analysis is performed to confirm that the innovation,whichwill be theresult of the strategy,willmeet anunmetneedof thatmarket andpresent an interestingprofitability profile (industrial scale-up studies withMerck Serono before the spin-off). OfcoursethishasbeenimplementedattheinitiationofthetwoImegliminprogramsanddirectAMPKactivatorswithin theCompany,and thisanalysis is regularlyupdated toensure thatinnovationcontinuestomeetthemarketneed.

• Qualified and experienced subcontractors: once the R & D strategy is developed, arequirements specification is developed toenable theR&D strategy’s implementationbyone or more subcontractors (Contract Research Organization, Academic, Centre Hospital-Universitaires).Severalsubcontractorswhohaverecognizedexpertiseintheconcernedfieldare contacted and a selection is made based on previously defined objective criteria(integrating quality aspects, successful experience, cost and timing). If necessary, severalmeetingswith the subcontractor, audits canalsobemade toensure the realizationof theconcernedactivitymeetstherequirementspecifications.

• Relianceonscientificcounselmadeupofrecognizedexperts,toanalyzetheresultsobtainedanddiscussR&Dnextsteps.

TheCompanyhasestablishedthreecommitteesofexperts:

i. A Scientific Committee composed of 6 members , diabetologists and opinion leadersrecognized in the United States and Europe, who are involved in the analysis of theclinicalresultsobtainedsincetheoriginoftheCompanyandmakerecommendationsonfuturestudiestoachieve.Thesemembersare:

- Professor Harold Lebovitz: Harold is currently professor of medicine at SUNYHealth Science Center in Brooklyn (USA) , where he also previously served aschief of the Division of Endocrinology and Director of the Clinical ResearchCenter


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- Professor Michaela Diamant Michaela is currently an Associate Professor ofEndocrinologyandscientificdirectoroftheDiabetesCenter,UniversityMedicalCenter(VUMC)inAmsterdam,Netherlands.

- ProfessorMichael Roden:Michael is an endocrinologist, Professor ofMedicineandDirectoroftheMetabolicDiseasesDepartmentHeinrichHeineinDüsseldorf,Germany.HeisalsoscientificdirectoroftheGermanDiabetesCentre(DDZ),anddirectorof theKarlLandsteiner InstituteforEndocrinologyandMetabolism, inVienna,Austria.

- Professor Silvio Inzucchi: Silvio is currently professor of medicine at YaleUniversity of Medicine in New Haven (USA), where he serves as Director ofClinicalEndocrinologyofthesection,andattendingphysicianatYale-NewHavenHospital,whereheisdirectorofthediabetesCentre.

- ProfessorGuntramSchernthaner:GuntramservesasheadoftheDepartmentofMedicineattheRudolfstiftunghospitalinVienna,Austria.

- Professor Clifford Bailey: Clifford is professor and director of the research ondiabetesatAstonUniversityinBirmingham(England).

ii. A committee of clinical experts 'Japan' that will eventually be composed of at least 6members, diabetologists and opinion leaders recognized in Japan, who makerecommendations on product development strategy in Japan andwill take part in theanalysisofclinicalresultsofstudiesconductedinJapan.WhenKoreanpatientswillalsoberecruitedinthetrialsconductedbytheCompany,diabetologistsandKoreanopinionleaderswillbeincludedintheScientificCommittee.Asatthedateofthisdocumentderéférence, this committee has two members, who aim at strengthening it with newexperts:

- ProfessorKasuga:MasatoiscurrentlyPresidentoftheNationalCenterforGlobalHealthandMedicine,basedinTokyo,Japan.

- ProfessorUeki:KohjiroiscurrentlyProfessorattheUniversityofTokyo,Japan,inthediabetologydepartment.

iii. A committee of experts "new formulation" 4 members, experts in pharmaceuticaldevelopment, participating in the development of a new innovative formulation ofImeglimin.Thesemembersare:

- ProfessorAlainDufour:AssociateProfessorofBiopharmaceuticsandBiodynamicPharmacokineticsatRenéDescartesUniversityFacultyofPharmacyParis5andformercoordinatorofgalenicdevelopmentatSanofi;

- Jean-RenéKichel:formerheadofpharmaceuticaldevelopmentofAventis;

- LucGrislain:headofpharmaceuticaldevelopmentandindustrialmanufacturingofhealthproductsforBertinPharma;and

- Xavier Salancon: former head of pharmaceutical development of FournierPharma.


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Finally, ad hoc experts are frequently mobilized for the development of the products of theCompany:

- Expertinbio-energy:ProfessorEricFontaine;

- Expertintoxicology:ProfessorGerdBode;

- RegulatoryExpert:MarkCerpial;and

- Qualityexpert:ClaireCastello-Bridoux.

11.2. Patentsandpatentsapplications

11.2.1. Generalpresentation

Intellectual property is amajor issue for Poxel as it helps to protect and promote the discoveriesmadeby theCompanyand thus toplacePoxelasmajoractor in the treatmentof type2diabetesamongallpharmaceuticalgroups.

Poxel owns 17 patent families, which concern its two main programs, Imeglimin and AMPKactivators,whosemostadvanceddrugcandidate isPXL770. Inaddition,theCompanyhasa licenseon23familiesofpatentsownedbyMerckSerono(including22stillinforce)concerningboththetwomainprogramsofPoxel,butalsootherprogramsforthetreatmentofdiabetes.The licenseonthepatentsheldbyMerckSeronoisgrantedtotheCompanyforthedurationofpatents,subjecttotheexecutionbytheCompanyofitscontractualobligations.

Poxel’spatentportfoliocanbeseparatedintothreegroups:

- patentstoprotectImeglimin;

- patentsrelatingtoAMPKactivators;

- patentstoprotectPoxel’sotherprograms:GLP-1agonists,FXRagonists,Glucokinaseactivatorsandinhibitorsof11-beta-HydroxysteroidDehydrogenaseType1.Theseprogramsarestillintheresearchphase.

Among these three groups, several subgroups exist: products patents, synthesis process patents,associationpatentsandnewtherapeuticapplicationspatents.

The patents portfolio of Poxel includes patents that the Company owns, license patents held byPoxel,aswellasjointlyownedpatents.

ThecompanyholdsseveralpatentsaloneorjointlyorhasbeenleasedbyMerckSeronotherighttouse patents in order to conduct its activities. Details of such patents are available on public databases.


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11.3. COLLABORATION,RESEARCH,SERVICESANDLICENSEAGREEMENTSGRANTEDBYTHECOMPANYORCONCEDEDTOIT

See section 22.1 “Agreement with Merck Serono” of this document de reference for a detaileddescriptionoftheagreemententerdintowithMerckSerono.

11.4. Otherelementsoftheintelectualproperty

TheCompanyholdsthefollowingPoxelwordmarks:

• Markn°3718962registeredinFrance;

• Markn°3964725registeredintheUnitedStates;

• Internationalmarkn°1036175,designatingSwitzerlandandJapan.

The logo and the attached slogan of Poxel are protected in France under the figurative markn°3719440:

PoxelhastheURLofitswebsite:www.poxelpharma.com.

Moreover,Poxelalsohasthefollowingdomainnames:

poxel.com imeglimin.beimeglimin.bizimeglimin.euimeglimin.frimeglimin.infoimeglimin.netimeglimin.org

Imeglimin.beImeglimin.bizImeglimin.euImeglimin.frImeglimin.infoImeglimin.netImeglimin.org

The marks n°3718962 registered in France, n°3964725 registered in the United States and thefigurativemarkn°3719440(logoandattachedsloganofPoxel)aresubjecttoapledgeasaguaranteeof theamountsdueunder theVenture LoanAgreemententered intowithKreos (see section22.2«Venture Loan with Kreos Capital IV (UK) Limited» of this document de référence for a detaileddescriptionofthesaidagreement).


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12. TRENDINFORMATION

12.1. Principaltrendssincethecloseofthelastfinancialyear

During2016firstmonths,thefollowinginformationwereprovidedbythecompany:

12.1.1. PressreleaseofJanuary5,2016:theCompanypresentsthehalf-yearreportofliquiditycontractenteredintowithODDOCorporateFinance

UndertheliquiditycontractgrantedbyPoxeltoODDOCorporateFinance,onDecember31st,2015,thefollowingassetsappearedontheliquidityaccount:

- Numberofshares:6,351securities

- Cashbalanceoftheliquidityaccount:€200,172.66

Duringthelastbiannualreview,thefollowingassetsappearedontheliquidityaccount:

- Numberofshares:12,116securities

- Cashbalanceoftheliquidityaccount:€126,570.97

Duringtheimplementationofthisagreement,thefollowingassetsappearedontheliquidityaccount:

- Numberofshares:0securities

- Cashbalanceoftheliquidityaccount:€250,000

12.1.2. Press release of January 28, 2016: the Company announces its cash position and itsturnoverin2015

POXELtodayannounceditscashpositionanditsturnoverforthefiscalyear2015.

AsofDecember31st,2015,thecashandcashequivalentsamountedto€42.4million*comparedto€10.3milliononDecember31st,2014.

Asexpected,Poxeldidnotgeneratesignificantrevenuesin2015.

ThesefiguresareconsistentwiththeCompany’sexpectationsanditsgrowthstrategy,whichremainsfocusedontheclinicaldevelopmentofitsdiabetesdrugcandidatesImegliminandPXL770.

*unaudited

12.1.3. PressreleaseofFebruary1,2016:theCompanyannouncestheappointmentofJacquesBourqueandPierreLegaulttotheBoardofDirectors

Poxel todayannounced theadditionof JaniceBourque,ManagingDirectorofHerculesTechnologyGrowthCapital,andPierreLegault,PresidentandCEOofNephrogenexInc,toitsBoardofDirectors.


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BothappointmentswereapprovedbyPoxel’sshareholdersattheAnnualShareholderMeetingheldinParislastFriday,January29,2016.

“WewelcomebothJaniceandPierreasNorthAmericanbiotechnologyindustryleaderswhowillhelpusexpandourstrategicvisionforPoxel’scorporatedevelopment,”saidThomasKuhn,CEOofPoxel.“Poxel benefits from an outstanding network of scientific, financial and pharmaceutical expertsacross the EU, Japan and US who support us in moving our type 2 diabetes product candidatestowardscommercialization.”

JaniceBourquehasbeenManagingDirector,LifeSciencesatHerculesTechnologyGrowthCapital,atechnologyandlifesciencespecialtyfinancecompany,since2010.Duringthistimeshehelpedearlyandexpansion stagebiotechnology companies to secure financingswith investments ranging from$10 million to $60 million per company. Prior to this, she was a consultant at Commons Capitalwheresheadvisedandprovidedstrategiccorporateinvestorfundraising.From2005to2009shewastheSeniorVicePresidentandGroupHead-LifeSciencesatComericaBankinDallas,Texas.JanicewasalsoPresidentandCEOoftheMassachusettsBiotechnologyCouncil,theoldestbiotechnologytradeassociationintheworld,whereshewasinstrumentalinitsgrowthsince1992.ShecurrentlyservesasBoardmemberandAuditCommitteeChairatTheVillageBankandisanEmeritusmemberoftheLeadershipCouncilforMITKochInstituteforIntegrativeCancerResearch.JanicegraduatedfromtheUniversityofNewHampshirewithanMBAinFinanceandAccounting.

Pierre Legault joins Poxel with over 35 years of experience working in the pharmaceutical andbiotechnologyindustry.Since2012,hehasbeentheExecutiveChairmanandlaterbecamePresidentand CEO of NephroGenex, a North Carolina-based biotechnology company focused on diabeticnephropathy and acute kidney injury.Hewas responsible for the company’s successful IPO to theNasdaqin2014aswellastheinititationofaPhase3developmentprogram.From2010to2012,hewasPresidentandCEOofProsidionLtd,whichspecializedinthetreatmentofdiabetesandobesity.In 2009/2010, he was Executive Vice President, Chief Financial Officer and Treasurer of OSIPharmaceuticals.From2006to2007,PierrewasPresidentofEckerdPharmacies.Between1989and2005 he held various roles at legacy companies of Sanofi-Aventis, leading up to the position asWorldwide President Dermatology/Dermick which he held from 2003 to 2005. Pierre studiedInternationalFinance,Business&CommerceandearnedanMBAinMarketingfromMcGillUniversityinMontreal,Canada.Additionally,hecompletedtheExecutiveMastersProgramforInfoTechnology&ServicesatHavardBusinessSchoolandheisaCPA.

12.1.4. PressreleaseofMarch4,2016:theCompanyannounceditsinvitationtothe28thannualconferenceoftheROTHbank

POXEL today announced that the Company will make a presentation at the 28th Annual ROTHConferencetobeheldonMarch13-16,2016attheRitzCarltonHotel,DanaPoint,California.

TheCompany’smanagementwillpresentonTuesday,March15,2016at12:00p.m.PT/3:00p.m.EST/9:00p.m.CET.

The simultaneous live webcast, including a slide presentation, can be accessed by logging ontohttp://wsw.com/webcast/roth30/register.aspx?conf=roth30&page=poxel.pa&url=http://wsw.com/webcast/roth30/poxel.pa/index.aspxoronthePoxelwebsiteatwww.poxel.com.

Areplayof thewebcastwillbeavailableonPoxel’swebsiteshortlyafter theconclusionof thecallandwillbearchivedtherefor30daysfollowingthecall.


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12.1.5. PressreleaseofMarch9,2016:theCompanyreaffirmsitseligibilityforthePEA–PMEfor2016-2017

POXEL réaffirme aujourd’hui son éligibilité au dispositif PEA-PME pour les 12 mois à venir,conformémentauDécretn°2014-283du4mars2014prispourl'applicationdel'article70delaloin°2013-1278 du 29 décembre 2013 de finances pour 2014, fixant les critères d'éligibilité desentreprisesauPEA-PME.

Les investisseurspeuventcontinuerà intégrer lesactionsdePOXELauseindescomptesPEA-PME,dispositif dédié à l’investissement dans les petites et moyennes valeurs, bénéficiant des mêmesavantagesfiscauxquelePEAclassique.

12.1.6. PressreleaseofMarch14,2016:theCompanyannouncestheappointmentofJonaeR.BarnesasSeniorVicePresident,InvestorRelationsandPublicRelations,basedinBoston

POXEL today announced that Jonae R. Barnes has joined the Company as Senior Vice President,InvestorRelationsandPublicRelations.Ms.BarneswillbebasedintheBostonarea,aleadingareaindrugdevelopmentandinnovation.

“WearedelightedtowelcomeJonaetoPoxelinaseniorleadershiproleaswecontinuetoadvancetheCompanyandbuildourUSpresence,”saidThomasKuhn,CEOofPoxel.“Jonaehasastrongtrackrecord of raising the visibility and helping to build successful pharmaceutical and biotechnologycompaniesintheUS,andhasalonghistoryofworkingwiththefinancialcommunity.JonaewillbeteamingupwithNoahBeermantohelpbuildourfootprintintheUSandwillworkcloselywiththeleadershipteamheadquarteredinFrance.”

“Poxel is at an inflection point as the Company continues to advance its lead drug candidateImeglimin, for the treatment of type 2 diabetes, into late-stage trials and move forward with itsPhase1program forPXL770,another first-in-classdrugcandidate,” commentedMs.Barnes. “I amexcitedtoworkwiththeexperiencedteamatPoxelastheCompanyapproachesmultiplekeydatareadoutsanticipatedoverthenext12to18months.”

Ms. Barnes has 20 years of experience in the pharmaceutical and biotechnology industry. Herexperience in strategic investor and corporate communications spans the full life cycle of drugdevelopment and commercialization. She began her career at Sepracor (now SunovionPharmaceuticals;acquiredbyDainipponSumitomoPharmaCo.forapproximately$3billionin2009),a specialty pharmaceutical company, where she held a series of progressively responsiblemanagement and executive roles over a 14-year period and most recently served as Senior VicePresident, InvestorRelations,CorporateCommunicationsandInternalCommunications.Ms.Barneshas also served in senior leadership roles at Agenus, an immuno-oncology company and VisionMedicines, anophthalmology-focused company. In addition to her corporate appointments, Jonaehas advised privately held and publicly traded biotech companies through her investor relationsconsultingpracticeinthetherapeuticareasofrespiratorydisorders,infectiousdiseases,IBS,diabetesand oncology. Jonae holds a bachelor’s degree in political science from Suffolk University andmaster’sdegreesinfinancialeconomicsandmultinationalcommercefromBostonUniversity.


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12.1.7. Press release ofMarch 29, 2016: the Company announces the US certification of thepatent covering PXL770, a direct activator of AMPKinase for the treatment of type 2diabetesandrelateddiseases

Poxel todayannouncedthat theU.S.PatentandTrademarkOffice (USPTO)hasgrantedthepatent(US patent number US- 9,284,329) filed by Poxel covering direct AMPK activators. This patentincludesPoxel’ssecondleadproductcandidatePXL770forthetreatmentoftype2diabetesaswellasotherindications.PXL770isafirst-in-classproductcandidateandiscurrentlyinaPhase1trial.

AMPK, or adenosine monophosphate-activated protein kinase, is a well established sensor andregulator of cellular energyhomeostasis andplays an important role in livermetabolism,which isimplicatedintype2diabetes.PoxelpresentedpromisingpreclinicalresultsforPXL770attheWorldCongress on Insulin Resistance, Diabetes and Cardiovascular Diseases in Los Angeles in November2015,inwhichanimprovementinglycemiccontrolandlipidprofilewasobserved.APhase1trialisunderway with the aim of evaluating safety, pharmacokinetics, target engagement and efficacybiomarkers. Preliminary results from this study are expected to be available in the second half of2016.

“ThisadditiontoourIPportfolioisanimportantstepforwardforoursecondleadproductcandidate,PXL770, and further strengthensourpositionwith respect to type2diabetes,” saidThomasKuhn,CEO of Poxel. “We believe that AMPK activation is an importantmechanism for the treatment ofmetabolicdisorders,suchastype2diabetes,andwearefocusedonadvancingourPXL770programtobenefitpatients.”

The patent includes 10 claims covering the new AMPK activating compounds, the compositionscontainingthemaswellasthepotentialindications,andisvalidthrough2033.Withtheadditionofthis new patent, Poxel has broadened its overall patent portfolio to include 39 patent familiesworldwide.

12.1.8. Press release of April 1, 2016: the Company announces its 2015 annual results andpresentsitslatestperspectives

Poxel today announced the results for its fiscal year ended December 31, 2015 and provided acorporateupdate.Asofyear-end,thecashandcashequivalentsamountedto€42.4million.

“We achieved significant clinical, regulatory, financial and corporate milestones during 2015,including additional mechanistic and Phase 2 efficacy and safety data for Imeglimin, which werepresentedtokeyregulatoryauthorities inanticipationof launchingourPhase3programs.Wealsobroadenedourclinicalportfoliointype2diabetesbyadvancingourdirectAMPKactivator,PXL770,intoaPhase1study,”saidThomasKuhn,CEOofPoxel.“Additionally,wehavecontinuedtobuildastrongmanagementteamandboardofdirectors,andstrengthenedourbalancesheetbycompletingtwomajorfinancingevents.Welookforwardto2016aswecontinuetoadvancetheCompanyandthedevelopmentofourtwofirst-in-classdrugcandidates.”

Highlights2015:

Imeglimin


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• Over the course of 2015, Imeglimin, Poxel’s lead drug candidate successfully completedseveralPhase2andPhase2bclinical trials, furthersupporting Imeglimin’s favorablesafetyprofileandprovidingadditionalefficacydata.The resultsof these trialswerepresentedatmajormedicalmeetings, supporting the competitive profile of this novel first-in-class oraldrug candidate for the treatmentof type2diabetes.These resultswerealsopresented tokeyregulatoryauthorities, includingtheUnitedStatesFoodandDrugAdministration (FDA)and the Japanese Pharmaceuticals and Medical Devices Agency (PMDA), providing theCompany with additional visibility into the design of Phase 3 programs to support futureregulatorysubmissionsintheUSandJapan.

• The clinical data as well as additional preclinical data presented in 2015 furtherdemonstratedImeglimin’sdualmechanism-of-action,increasinginsulinsecretioninresponsetoglucoseandimprovinginsulinaction.

o Duringclinicaltrials,Imegliminwasobservedtorestorethemitochondriarespiratorychaindysfunctionresultingintheimprovementofinsulinandglucosesensinginthetargettissue.

o DuringaPhase2btrialastatisticallysignificantreductionwasobserved inglycatedhemoglobinlevels,indicatingapromisingrisk/benefitratio.

• TheCompanyachievedseveral importantmilestones indeveloping Imeglimin for theAsian

market.o DuringaPhase1trial in Japanesesubjects, Imegliminwasobservedtobesafeand

well-toleratedwithapharmacokineticprofilethatwascomparabletoresultsshownin Caucasians, enabling the potential for accelerated development of Imeglimin inAsia.

o Poxel initiated a Phase 2b trial, which is being supported by a Japanese ScientificAdvisory Board, helping to guide the ongoing regulatory interactions and clinicaldevelopmentplans.

PXL770

• Poxel made significant progress with its direct AMPK activator drug candidate, PXL770,during2015.PXL770directlyactivatesAMPK,anenzymethatactsasanenergysensorandregulator, maintains cellular homeostasis, and therefore has the potential to play animportantroleinthemanagementofdiabetes.InNovember2015,Poxelpresentedthefirstpreclinical data for PXL770 at the World Congress on Insulin Resistance, Diabetes andCardiovascularDiseasesinLosAngeles.

o Inanobesetype2diabetesmousemodel,PXL770wasobservedtoimproveglucosetoleranceandnormalizedplasmaandlivertriglycerides.

o ThedatashowedthatincreasedAMPKactivitycouldbemeasuredinbothliverandmuscle,furtherdemonstratingtargetengagementinvivo.

o Together, the results elucidate PXL770’smechanism-of-action and demonstrate itspotential as a novel oral agent for the treatment of type 2 diabetic patients withaddedbenefitsonlipidabnormalities.

• In early 2016, the Company initiated a Phase 1 study in healthy volunteers. The singleascendingdosetrialwillenrollhealthymalesubjectswhowillreceiveplacebooroneoftheeightplanneddose levelsofPXL770.Thestudy ison trackandovera thirdof thesubjectshavebeenenrolled.

• Most recently, Poxel announced that the U.S. Patent and Trademark Office (USPTO) hasgranted the patent (US patent number US-9,284,329) filed by Poxel covering direct AMPK


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activators. This patent includes Poxel’s second lead product candidate PXL770 for thetreatmentoftype2diabetesaswellasotherindications.

Corporate

• Poxelraised€26.8millionthroughitsIPOontheEuronextParisinFebruary2015.• The Company raised an additional €20 million through a successful international private

placementinJuly2015,whichincludedpredominantlyhealthcare-focusedinvestorsbasedintheUnitedStatesandEurope.

• Poxel signed a licensing agreement with ENYO Pharma, a biopharmaceutical companyfocusedondevelopingtreatmentsforacuteandchronicviralinfections.Underthetermsofthe agreement, ENYO will have access to Poxel’s FXR (farnesoid X receptor) agonistcompounds for infectious disease with therapeutic indications such as hepatitis B, whilePoxelretainsrightsforotherindicationsincludingcardiovascularandmetabolicdiseases.

• TheCompanyfurtherstrengtheneditsmanagementteamthroughtheappointmentofNoahD.BeermanasExecutiveVicePresident,BusinessDevelopmentandPresidentofPoxel’sUSOperations and Dr. Yohjiro Itoh to lead clinical and regulatory operations in Asia. TheCompany alsowelcomed Jonae R. Barnes as Senior Vice President, Investor Relations andPublicRelations,basedintheUS.

• The Company expanded its Board ofDirectors by appointing four new independent BoardmemberswelcomingRichardKender(US),PascaleBoissel(France),JaniceBourque(US)andPierreLegault(US).Levéede26,8M€lorsd’uneintroductionen

FinancialStatementsforthe2015FinancialYear(IFRSstandards)

Poxel’s revenues for 2015 were €59 thousand (2014: no revenues). Poxel devotes the bulk of itsresources to researchanddevelopment (R&D).ThecorrespondingR&Dcostspresentedbelowarenetof theR&DTaxCredit (CIR) that resulted in incomeof€1.9million in2015.Thevariance from2014to2015ismainlydrivenbytheincreasedR&DcostsforPXL770(approximately€1.3million),aswellasclinicalactivitiesinrespecttoImeglimin,particularlyinJapan.

The increase in general and administrative (G&A) costs mainly resulted from non-recurrent costsdirectlyrelatedtotheEuronextIPOandincreasedpersonnelcostsrelatedtotheCompany’songoingR&Dprograms,particularlyinJapanandintheUS.

In2015,financialchargesweremainlydrivenbyinterestexpenseslinkedtothe,whereas2014wasimpacted by the fair value of Merck Serono debt. This Merck Serono debt has now been offsetagainstadedicatedsharecapitalincreaseattheIPOinFebruary2015.ThenetresultforthefinancialperiodendingDecember31,2015showedanetlossof€12.2million,asexpected,comparedtoanetloss of €14.1million in the previous year. On December 31, 2015, the cash and cash equivalentsamountedto€42.4million(comparedto€10.3milliononDecember31,2014).


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12.1.9. Press release of April 18, 2016: the Company announces the appointment of PierreLegaultasChairmanoftheBoardofDirectors

Poxel todayannounced thatPierre Legaulthasbeenappointed thenewChairmanof theBoardofDirectors.Mr.LegaultjoinedPoxel’sBoardofDirectorsinFebruary2016andwillsucceedDr.ThierryHercend,whowillcontinuetosupportPoxelasamemberofitsBoard.

“WearedelightedtowelcomePierreasournewChairmanoftheBoard.Hisdiverseexperienceandexpertisewillbeinstrumentalasweseektoadvancetolate-stagedevelopmentwithour leaddrugcandidate Imeglimin in type2diabetes,and furtherexpandour strategic vision for theCompany,”saidThomasKuhn,CEOofPoxel. “Iwouldalso like to thankThierry forhis supportandnumerouscontributionsoverthelastsevenyears,servingasChairmansincePoxel’sinceptionin2009.ThierryhasbeenatremendousleaderofourBoardandweareverypleasedthathewillremainasamemberoftheBoardduringtheCompany’snextphase.WiththerecentadditionofnewBoardmembers,itwastherighttimetopassthetorchovertoPierre.”

“IampleasedtobecomeChairmanoftheBoardduringanexcitingandtransformationaltime.ThemanagementteamandBoardofDirectorsarededicatedtodevelopingnovel,first-in-classtherapies


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for patients. I am looking forward to working closely with Poxel’s management and Board as wecontinuetoadvancethecompany,”saidMr.Legault.

“Poxelhastransitionedfromearly-stageresearchtolater-stagedevelopment.Overthepastyear,therecentadditions to themanagement teamandBoardaredesignedtostrengthenandbroadentheindustryexperienceastheCompanyadvancestoitsnextphase.Wearedelightedtohaveattractedsuchtalentedandseasonedprofessionals,”saidDr.Hercend.

Mr. Legault has over 35 years of experience working in the pharmaceutical and biotechnologyindustry.HeisamemberoftheBoardofTobiraTherapeutics(Chairmanofauditcommittee),IrokoPharmaceuticals and NephroGenex. Over the cause of his career, Mr. Legault served as chiefexecutiveofficer,presidentandchief financialofficerof severalpublic companies includingEckerdPharmacies,NephroGenex,OSIPharmaceuticalsandRiteAidandheldseveralseniorpositionswithSanofi-Aventis and predecessor companies. Mr. Legault studied International Finance, Business &Commerce and earned an MBA in Marketing from McGill University in Montreal, Canada.Additionally,hecompletedtheExecutiveMastersProgramforInfoTechnology&ServicesatHavardBusinessSchoolandheisaCPA.

12.1.10. PressreleaseofMay4,2016:theCompanyannouncesitisconsideringanIPOintheUS

Poxel today announced that it plans to conduct a registered initial public offering in the UnitedStates.Thetiming,numberofsecuritiesandpriceoftheproposedofferinghavenotyetbeendetermined.ThisannouncementisbeingmadepursuanttoandinaccordancewithRule135undertheSecuritiesActof1933.As requiredbyRule135, thispress releasedoesnot constituteanoffer to sellor thesolicitationofanoffertobuysecurities,andshallnotconstituteanoffer,solicitationorsale inanyjurisdiction in which such offer, solicitation or sale would be unlawful prior to registration orqualificationunderthesecuritieslawsofthatjurisdiction.

12.1.11. Press release of May 5, 2016: the Company announces its cash position for the firstquarterof2016

Poxeltodayannounceditscashpositionforthefirstquarter2016.AsofMarch31,2016,unauditedcashandcashequivalentswere€37.3million,ascomparedto€32.8millionasofMarch31,2015.Asexpected,Poxeldidnotgeneratesignificantrevenuesineitherthefirstquarterof2016or2015.ThesefiguresareconsistentwiththeCompany’sexpectationsanditsgrowthstrategy,whichremainsfocusedontheclinicaldevelopmentofitsdiabetesdrugcandidatesImegliminandPXL770.


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12.1.12. Press releaseofMay17, 2016: theCompanyannounces that itwill presentpreclinicaldataonImegliminduringthe76thCongressoftheAmericanDiabetesAssociation(ADA)

Poxel today announced that two abstracts have been accepted for poster presentations, whichincludeamoderatedposterdiscussionsession,attheAmericanDiabetesAssociation’s76thScientificSessions,heldJune10–14inNewOrleans,Louisiana.

PosterInformation

Abstract#1197-P Title:“ImegliminImprovesInsulinSensitivityinanAdultSTZRatModel” SessionName:12-EClinicalTherapeutics/NewTechnology–OralAgents Date,Time&Location:Sunday,June12,2016,12:00PM-2:00PM,thePosterHall

Abstract#1081-P Title:“ImegliminIncreasesInsulinSecretioninResponsetoGlucoseasaUniqueMechanismofActionDependingonNADSynthesis” SessionName:12-EClinicalTherapeutics/NewTechnology–OralAgents Date,Time&Location:Sunday,June12,2016,12:00PM-2:00PM,thePosterHall. Inaddition,thisposterhasalsobeenselectedtobeshowcasedinthemoderatedposterdiscussionsession“TheOralAgentPipeline–WhichWillBetheNextNewClassofTherapies?”onMonday,June13,20161:00PM-2:00PM.

Poxelwillannouncetheresultsthroughapressreleaserightafterthedatapresentations.

12.2. Knowntrends,uncertainties,engagementrequestsandeventsreasonablylikelytoaffecttheprospectsoftheCompany

None


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13. PROFITFORECASTSORESTIMATES

TheCompanydoesnotcommunicateanyprofitforecastorestimates.


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14. ADMINISTRATIVE, MANAGEMENT AND SUPERVISORY BODIES, ANDSENIORMANAGEMENT

14.1. Generalinformationonfounders,managementanddirectors

Until23June2010,theCompanywasincorporatedasaFrenchlimitedliabilitycompany(sociétéparactionssimplifiée).

Attheshareholders’meetingonJune23,2010,itwasresolvedtoconverttheCompanytoaFrenchsociétéanonymewithaboardofdirectorsandfortheCompanytoadoptnewrulesofgovernance.

AdescriptivesummaryofthemainprovisionsofthebylawsoftheCompanyandtheinternalrulesofthe Board of Directors and specialized Committees are set out respectively in Sections 21.2"Incorporationactandbylaws"and16.3"SpecializedCommittees"ofthisdocumentderéférence.

14.1.1. ExecutiveOfficersandDirectors

Atthedateofthisdocumentderéférence,theBoardofDirectorsoftheCompanyiscomposedassetfothinthetablebelow:

NAME AGE POSITION(S)

Executive Officers

Thomas Kuhn, Pharm.D. 42 Chief Executive Officer and Director Eric Massou 45 Chief Financial Officer Sébastien Bolze, Ph.D.,

Pharm.D. 43 Executive Vice President, Early Development and

Pharmacometrics Pascale Fouqueray, Ph.D. 53 Executive Vice President, Clinical Development and Regulatory

Affairs Pascale Malgouyres 54 Executive Vice President, Commercialization Development and

Corporate Communication Noah Beerman 54 Executive Vice President, Business Development and President,

U.S. Operations Non-Employee Directors

Pierre Legault (1)(2) 55 Director and chairman of the Board Thierry Hercend, Ph.D. (2) 63 Director Mohammed Khoso Baluch (2) 58 Director and chairman of the Remuneration Committee Pascale Boissel (1) 49 Director and chairman of the Audit Committee Richard Kender 60 Director and chairman of the Business Development Committee Janice Bourque (1) 59 Director Olivier Martinez, Ph.D., (1)(3) 45 Director Bruno Montanari, Pharm.D. (1)(4) 42 Director Raphaël Wisniewski (2)(5) 45 Director

(1) Member of the Audit Committee. (2) Member of the Remuneration Committee. (3) As a representative of Bpifrance Investissement, the legal entity that holds this Board seat. (4) As a representative of Omnes Capital, the legal entity that holds this Board seat. (5) As a representative of Edmond de Rothschild Investment Partners, the legal entity that holds this Board seat. Directors are appointed for a renewable period of 3 years. The Chairman is appointed for thedurationofhisdirectorship.

ThebusinessaddressoftheChairmanoftheBoardofDirectorsandtheCEOistheregisteredofficeoftheCompany.

ThebusinessaddressoftheotherDirectorsare:


136

• Mr.ThierryHercend:13,rueLobineau-75006Paris;

• EdmonddeRothschildInvestmentPartners:47,rueduFaubourgSaint-Honoré–75008Paris;

• OMNES CAPITAL (formerly Crédit Agricole Private Equity): 37-41, rue du Rocher – 75008Paris;

• Bpifrance Investissement (anciennement CDC Entreprises): 6-8 boulevard Haussmann –75009Paris;

• Mr.MohammedKhosoBaluch:Gemslaan6Overijse3090,Belgium;

• MsPascaleBoissel:19rueLaBoétie-Paris(75008);

• Mr.RichKender:951KimballAvenueWestfield,NJ07090USA;

• Ms Janice Bourque: Hercules Technology Growth Capital 31 St. James Avenue, Suite 790Boston,MA02116(USA).

The expertise and experience in the management of these people results from the differentemployees andmanagement functions they perform and have previously performed (see section14.1.4ofthisdocumentderéférence).

Therearenofamilytiesbetweenthepeoplelistedabove.

Overthelast5years,noneofthesepeople:

• hasbeenconvictedoffraud;

• hasbeenassociatedinhiscapacityasofficerordirectorinabankruptcy,receivershiporliquidation;

• hasbeensubjecttoaprohibitiontomanage;or• hasbeensubjecttoincriminationsorofficialpublicsanctionsfromstatutoryor

regulatoryauthorities.14.1.2. Othercurrentcorporateoffices

At the date of this document de référence, the other current corporate positions held by themembersoftheBoardofdirectorsare:

Names Companies Natureofthemandateortheduties

PierreLegault NephroGenex

IrokoPharmaceuticals

TobiraPharmaceuticals

StoneManagementInc.

CEOandMemberoftheBoardofDirectors

MemberoftheBoardofDirectors


CEO

ThomasKuhn None


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ThierryHercend

Oncoethix

Edmond de RothschildInvestmentPartners


VenturePartner


Représentant permanentRaphaëlWisniewski

Genticel

CellnovoGroupSA/CellnovoLtd

AxonicsInc

AxonincsEuropeSAS

ChasePharmaceuticalsInc

ReViralLtd






CEO


Partner

OMNESCAPITAL

Représentant permanentBrunoMontanari

EyeTechCareSA

GeckoBiomedicalSAS

iTeosTherapeuticsSA

NovateMedicalLtd.

ThemisBioscienceGmbH

XentionLtd.

XentionPharmaLtd.

ComplixNV

EnteromeSA

BioGenerationVenturesBV

OMNESCAPITAL





MemberoftheSupervisoryBoard



CensoroftheBoardofDirectors


MemberoftheAdvisorycommittee

Partner

BpifranceInvestissement

Représentant permanentOlivierMartinez

Genticel

FabPharma

InnatePharma

CerenisTherapeutics

AlizéPharma

Adocia

BpifranceParticipations


MemberoftheExcecutiveCommittee

CensoroftheSupervisoryBoard




InvestmentManagerforthefollowingfunds:InnobioandBioamforBPIFranceInvestissements

MohammedKhosoBaluch None

RichardKender SeresTherapeutics

AbideTherapeutics




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INCResearch MemberoftheBoardofDirectors

PascaleBoissel Bioaster

French Technology InstituteAssociation

Deputy CEO – Head of Finance andAdministration

Treasurer

JaniceBourque HerculesCapital

TheVillageBank

SpringboardEnterprises

TBSTechnologiesLLC

Koch Institute for IntegrativeCancerResearch,MIT

ForsythInstitute

CrystalLakeConservancy

HydeCommunityCenter

173LincolnStCondoAssociation

CommodoreBuilders

ManagingDirector,LifeSciences


MemberoftheLifeScienceCommittee

MemberoftheAdvisorycommittee

MemberoftheLeadershipCounsel


Co-Chairman


Trustee


14.1.3. Othercorporateofficesheldduringthelast5financialyearsbuthavingcometoanend

Atthedateofthisdocumentderéférence,theothercurrentcorporateofficesheldbythemembersoftheBoardofdirectorsduringthelastfivefinancialyearsbuthavingcometoanendare:


PierreLegault ProsidionLtd

OSIPharmaceuticals,Inc.

ForestLaboratories

NPSPharmaceuticals

RegadoBiosciences

OreoRealEstate

Semprae

CEOandChairmanoftheBoardofDirectors

Vice president, Chief FinancialOfficer &Treasurer






ThomasKuhn None


139


ThierryHercend

Cytomics

U3

Genticel

Complix

Inotrem

Gamamabs



ChairmanoftheSupervisoryBoard


ChairmanoftheBoardofDirectors


Raphaël Wisniewski asrepresentativeofEdmonddeRothschild InvestmentPartners

Personally

Novagali

BiospaceLab

MDXHealth

Pamgene

Pangenetics

VessixVascular

VessixVascularEurope

EOSimaging

Implanet

RegadoBiosciencesInc.

CellnovoLtd








President





MemberoftheManagementBoard

BrunoMontanarientantquereprésentant d’OMNESCAPITAL

Personally:

EOSImagingS.A.

CytherisS.A.

Ario Pharma Ltd. (ex. ProvesicaLtd.)

Amakem

MedisseBV

OphthakemNV

OpsonaTherapeuticsLtd.

Directorthencensor


Censor


Observer


Observer

Olivier Martinez asrepresentative of BpifranceInvestissement

Personally

CerenisTherapeutics

Cytheris


ChairmanoftheSupervisoryBoard


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MohammedKhosoBaluch VedimPharmaS.A.(Espagne)

UCBPharmaS.A.(Espagne)

UCBInc.(Etats-Unis)

UCBPharmaAb(Suède)

UCBA.E(Grèce)

UCBPharmaA.S(Norvège)

UCBPharmaSp.z.o.o.(Pologne)

UCBPharmaLtd

UCB

Manager

Manager

Member of the Board of Directors, Seniorvice President and President of theEuropeanregion




ChairmanoftheManagementCommittee


Vice president and president of the EMEAUCBregion

RichardKender Merck&Co.,Inc.

SeniorVice-President

PascaleBoissel Ipsogen ChiefFinancialOfficer

JaniceBourque None

14.1.4. BiographiesoftheDirectors

PierreLegaultChairmanoftheBoardofDirectorsPierreLegaulthasservedasamemberofourboardofdirectorssinceJanuary2016and became chairman on March 31, 2016. He has over 35 years of experienceworking in the pharmaceutical and biotechnology industry. Since 2012, he hasservedastheExecutivechairmanand,since2013,hasservedasthechairmanand

ChiefExecutiveOfficerofNephroGenex,abiotechnologycompany.From2010to2012,heservedasthe chairman and Chief Executive Officer of Prosidion Ltd., which specialized in the treatment ofdiabetesandobesity.From2009to2010,heservedastheExecutiveVicePresident,ChiefFinancialOfficer and Treasurer of OSI Pharmaceuticals. From 2006 to 2007, Mr. Legault served as thePresident of EckerdPharmacies. Between1989 and2005, heheld various roles, such as chairmanand Chief Financial Officer, at legacy companies of Sanofi-Aventis.Mr. Legault holds anM.B.A. inMarketingfromMcGillUniversityandaBachelorfromHEC(France)andisalsoaC.P.A.

ThomasKUHNChiefExecutive,Director


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ThomasKuhn, Pharm.D., has served as our Chief ExecutiveOfficer and amemberof our boardofdirectors since 2010.Mr. Kuhn began his careerwithMerck KGaA in 2000where he held variouspositions in clinical development, largely in the area of diabetes and was responsible for forgingpartnershipswithJapanesepharmaceuticalcompanies.Between2004and2007,Mr.KuhndirectedMerck’sglobalresearchanddevelopmentprojectswithtwoproductsinPhase2clinicaltrialsandlifecyclemanagementprojectsincludingforGlucophage®,thecurrentreferenceindiabetestreatment.FollowingMerck’sacquisitionofSeronoin2007,hewasinvolvedinrefiningMerckSerono’sstrategywhereheledtheprojecttotransferthediabetesassetstoPoxelS.A.

Mr. Kuhn holds a pharmacy degree from the University of Lyon I (France) and an M.B.A. fromAshridgeBusinessSchool(UnitedKingdom).

ThierryHERCENDDirector

Thierry Hercend, Ph.D., has served as a member of our board of directors since2010. Dr. Hercend has over 30years of experience in both academia and thepharmaceutical industry, in various therapeutic areas including oncology andinflammatorydiseases. Since2006,hehasheld thepositionof venturepartner at

EdmonddeRothschild InvestmentPartners.From2002to2005,Dr.Hercendwasvicepresident incharge of the oncology therapeutic area at Aventis. From1998 to 2002, hewas Vice President ofResearch, Europe at Vertex Pharmaceuticals. Previously, Dr. Hercend was Head of Research andDevelopment for theLaboratoryofPlasmaFractionationandBiotechnology (LFB)andheldvariousexecutiveresearchanddevelopmentpositionswithRoussel-Uclaf.

Priortojoiningthepharmaceuticalindustry,Dr.HercendwasHeadoftheHemato-ImmunologyUnitoftheGustaveRoussyCancerInstitute,Villejuif,France,DirectorofInsermUnitU333withafocusontumorimmunologyandProfessorofImmunologyattheMedicalFacultyofParisXIUniversity.

Hehasauthoredmorethan120publicationsinoncology,autoimmunediseasesandtransplantation.

RaphaëlWISNIEWSKIPermanent representative of Edmond de Rothschild Investment Partners,Director

RaphaëlWisniewskihasservedasamemberofourboardofdirectorssince2010.HehasbeenatEdmonddeRothschildInvestmentPartnerssince2001andisapartnerin

thelifesciencesventureteam.HecurrentlyservesontheboardofdirectorsofseveralEuropeanandU.S.lifesciencescompaniesonbehalfofEdmonddeRothschildInvestmentPartners.PriortojoiningEdmonddeRothschild InvestmentPartners in2001,Mr.Wisniewski spent several years in Londonworking for thehospitalgroupGeneralHealthcareGroupand in thecorporate financepracticesofSalomonSmithBarneyandGoldmanSachs.

Mr.Wisniewski holds aMaster in Economics from the Institut d’Etudes Politiques de Paris and aMasterinManagementfromHEC(Paris).


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BrunoMONTANARIPermanent representative of OMNESCAPITAL, (formely Crédit Agricole PrivateEquity)Director

BrunoMontanari,Pharm.D.,hasservedasamemberofourboardofdirectorssince2010.Since2010,hehasworkedontheOmnesCapitalventurecapitalteam.From2004to2009,Mr.MontanariservedasaPrincipalatAtlasVentureand,from2002to2003,asanInvestmentDirectorat CDP Capital Technology Ventures. Dr.Montanari began his career in 1999 in London withDeutscheBankand laterMerrillLynchasamemberof the InvestmentBankingteamscoveringtheEuropeanpharmaceuticalandbiotechsectors.

Mr.MontanariholdsaPharm.D.fromParisVandaMasterfromHEC(Paris).

OlivierMARTINEZPermanentrepresentativeofBpifranceInvestissement,(formelyCDCEntreprises)Director

Olivier Martinez, Ph.D., has served as a member of our board of directors since2010.HehasservedasaSeniorInvestmentDirectorintheLifeSciencesDivisionof

Bpifrancesince2013.From2010to2013,Dr.MartinezservedasanInvestmentDirectorwithinCDCEntreprises.From2000to2010,heservedasaPartneratBioamGestion.

Priorto joiningBioamGestion,Dr.Martinezspenttwoyearsworkingonhealthcareprojects intheLifeScienceGroupofGeminiConsulting.From1992to1997,hepursuedhisdoctoralstudiesincellbiologyatthePasteurandCurieInstitutesinParis.

Dr.MartinezisanalumnusoftheEcoleNormaleSupérieureandheholdsaPh.D.incellbiologyfromtheUniversityofParisXIandanM.B.A.fromtheCollègedesIngénieurs.

MohammedKHOSOBALUCHIndependantdirector

MohammedKhosoBaluchhas served as amemberof ourboardof directors since2012. He recently retired from UCB, Inc., a global biopharmaceutical company,having served since 2008.His most recent positionwas Senior Vice President and

President,Europe,MiddleEastandAfriaregion.From1984to2008,Mr.BaluchworkedforEliLilly&Co. for 24 years, holding international positions spanning Europe, theMiddle East and theUnitedStates in general management, business development, market access and product leadership.From2002to2008,Mr.BaluchservedasVicePresidentofU.S.DiabetesandFamilyHealthBusinessduringhistenureatEliLilly.Mr.BaluchpreviouslyservedasamemberoftheboardoftheJuvenileDiabetesResearchFoundation,IndianaChapter,theAmericanDiabetesAssociationNationalIndustryAdvisory Board and theWorld Federation of AdvertisersExecutive Committee.Mr. Baluch holds aB.S.fromCityUniversityLondonandanM.B.A.fromCranfieldUniversity.


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RichKenderIndependantdirectorRichKenderhasservedasamemberofourboardofdirectorssince2015.Mr.KenderjoinedMerck&Co., Inc. in1978,andservedasMerck’sVicePresidentofCorporateDevelopment from1996 to2000. In 2000, he was promoted to Sr. Vice President and his responsibilities were expanded toinclude Corporate Licensing and Worldwide Business Development, where he managed Merck’sMergers and Acquisitions, Licensing, Financial Evaluation and Analysis and Global CompetitiveIntelligence.Mr.KenderretiredfromMerckinSeptember2013.Mr.KendercurrentlyservesontheboardofdirectorsandauditcommitteesofSeresTherapeuticsandINCResearch,andontheboardofdirectorsofAbideTherapeutics.Heholds aB.S. inAccounting fromVillanovaUniversity andanM.B.A.fromFairleighDickinsonUniversity.

PascaleBoisselIndependantdirectorPascaleBoisselhasservedasamemberofourboardofdirectorssince2015.SheistheDeputy-ChiefExecutiveOfficerandHeadofFinanceandAdministrationofBIOASTER,aFrenchtechnologyresearchinstitute, a position she has held since 2012. From 2009 to 2012,Ms. Boissel served as the ChiefFinancialOfficerof Ipsogen,amoleculardiagnosticcompany.SheholdsanM.B.A. fromHEC(Paris)andisalsoaFrenchC.P.A.

JaniceBourqueIndependantdirectorJaniceBourquehasservedasamemberofourboardofdirectorssinceJanuary2016.ShehasservedastheManagingDirector,LifeSciencesofHerculesTechnologyGrowthCapital,atechnologyandlifescience specialty finance company, since 2010. From2009 to 2010, Ms. Bourque served as aconsultant to Commons Capital, where she advised and provided strategic corporate investorfundraising. From 2005 to 2009, she served as the Senior Vice President and Group Head-LifeSciencesatComericaBankinBoston,Massachusetts.Ms.BourquealsoheldthepositionofPresidentand Chief ExecutiveOfficer of theMassachusetts Biotechnology Council, the oldest biotechnologytrade association in the world, where she was instrumental in its growth from 1992-2004.Ms.BourquecurrentlyservesontheboardofdirectorsandauditcommitteeofTheVillageBank.Ms.BourqueholdsanM.B.A.inFinanceandAccountingfromtheUniversityofNewHampshire.


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14.2. Conflicts of interest at the administrative bodies and executive managementlevel

The Chairman, the Chief Executive and the majoriy of Directors are shareholders, directly orinderctly,oftheCompany,and/orholdersofsecuiritiesgrantingaccesstocapital(seesections15.3“Shareswarrantsandfoundershareswarrants”and18“principalshareholders”ofthisdocumentderéférence).

There are related parties agreements described in section 16.2 “service agreements betweenDirectors and the Company” and 19.3 “Special report of the Statutory Auditors on the regulatedagreements”ofthisdocumentderéférence.

AsfarastheCompanyisawareandsubjecttopersonalinterestspresentedinsection16.2“ServiceagreementbetweenDirectorsandtheCompany”ofthisdocumentderéférence,thereisnoexistingor potential conflict of interest between the duties in respect of the Company, and the privateinterests and/or other duties of themembers of the administration,management and executivemanagement bodies, as referred to in section 14.1 “General information relating to founders,executivesanddirectors”inthisdocumentderéférence.

AsfarastheCompanyisaware,thereisnootherdealoragreemententeredintowithshareholders,clients, suppliersorotherspursuant towhichoneof theDirectorsoroneof theExecutivesof theCompany has been appointed, or providing a restriction applicable to the persons referred to insection14.1“generalinformationrelatedtofounders,executivesandDirectors”ofthisdocumentderéférenceconcerningthedisposaloftheirinterestinthecapitaloftheCompany.


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15. REMUNERATIONANDBENEFITS

15.1. Compensationofdirectorsandofficers

TheinformationisestablishedbyreferencetothecorporategovernanceCodeforsmallandmidcapsasitwaspublishedonDecember2009byMiddlenextandvalidatedasareferencecodebytheAMF(AutoritédesMarchésFinaciers).

Thetablesunderthe“AMFPosition–Recommendationn°2009-16”ofApril13th,2015arepresentedbelow.

The following tablesetsout thecompensationandbenefitsof theDirectors for the financialyears2014and2015.Thechangeof theChairmanof theBoardofDirectorshavinghappenedonMarch31st, 2016, the elements related to the compensation of Mr Legault are not mentioned in thisdocumentderéférence,neitherarethoserelatingtothecompensationofMrsBourque,appointedasindependentdirectorbythegeneralmeetingoftheshareholdersonJanuary29th,2016.

Tables1:Tablessummarizingthecompensationandthesharewarrants(BSA)andthefoundersharewarrants(BSPCE)grantedtoeachexecutivedirector.

YEAR ENDED DECEMBER 31,

2014

2015

(€) (€)

Thierry Hercend(1) Fees owed over the fiscal year ......................................................................................... 50,000 50,000 Value of multi-year variable compensation allocated during the fiscal year ..................... — — Value of options allocated over the fiscal year ................................................................. 170,886 — Value of bonus stock allocated ......................................................................................... — —

Total ................................................................................................................................. 220,886 50,000

Thomas Kuhn Compensation owed over the fiscal year ......................................................................... 147,356 160,933 Value of multi-year variable compensation allocated during the fiscal year ..................... — — Value of options allocated over the fiscal year ................................................................. — — Value of bonus stock allocated ......................................................................................... — —

Total ................................................................................................................................. 147,356 160,933


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Tables2:Tablesummarizingthecompensationofeachexecutivedirector

Thefollowingtablesshowthecompensationduetoexecutivedirectorsinrespectofthefinancial

yearsendedDecember31st,2014and2015andtheremunerationreceivedbythesepeopleduring

thesefinancialyears.

2014

2015

Amounts owed (1)

€

Amount paid (2)

€

Amounts owed (1)

€

Amount paid (2)

€

Mr. Thomas Kuhn, CEO Fixed compensation .................................................................................................................. 121,992 121,992 131,752 131,752 Variable compensation (4) ........................................................................................................ 20,165 19,102 24,032 24,108 Contributions in-kind (5) ............................................................................................................ 5,199 5,199 5,149 5,149 Exceptionnal compensation ......................................................................................................

Attendance fees ........................................................................................................................

Total .......................................................................................................................................... 147,356 146,293 160,933 161,009 Mr. Thierrey Hercend, Chairman of the Board of Directors

Fixed compensation (3) ............................................................................................................. 121,992 121,992 131,752 131,752 Variable compensation .............................................................................................................. 20,165 19,102 24,032 24,108 Contributions in-kind .................................................................................................................. 5,199 5,199 5,149 5,149 Exceptionnal compensation ......................................................................................................

Attendance fees ........................................................................................................................

Total .......................................................................................................................................... 147,356 146,293 160,933 161,009

(1) Inrespectofthefinancialyear(2) Duringthefinancialyear(3) ThecompensationofMr.Hercend in respectof its consultingagreementamounted€12,500

excludingVATperquarter in2014and2015(seesections16.2.2“consultingagreementwithThierryHercend,DirectorandChairmanoftheBoardofDirectors”and19.3“SpecialReportoftheStatutoryAuditorsontheregulatedconventions”ofthisdocumentderéférence).

(4) The remuneration ofMr. Kuhn is provided under hismanagement agreement (see sections16.2.1 "Management agreement with Thomas Kuhn, Director and CEO," 19.2 "significantagreements entered into with related parties" and 19.3 "Special Report of the StatutoryAuditorsonregulatedconventions"ofthisdocumentderéférence)Mr.Kuhn’sbonus(variablecompensation) isbasedonaspecificobjectivesplan(quantitativecriteriaandqualitativecriteria),ofwhich85%correspondstogoalscommontoallemployeesand15%topersonalgoals.Thesegoalsaremostlybasedonthetimelinessofthecompletionofsomeclinicaltrialsandtheobtainingdilutiveandnon-dilutivefinancings.

(5) Benefitsinkindcorrespondtothebenefitofuseofavehicle.


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Table3:Tableofattendancefeesandothercompensationsreceivedbynon-executivedirectors

AMOUNTS PAID DURING YEAR ENDED DECEMBER 31,

2014 (1)

2015 (1)

(€) (€)

Raphael Wisniewski, a representative designated by Edmond de Rothschild Investment Partners

Attendance fees ............................................................................................................... — — Other ................................................................................................................................ — — Bruno Montanari, a representative designated by Omnes Capital Attendance fees ............................................................................................................... — — Other ................................................................................................................................ — — Olivier Martinez, a representative designated by Bpifrance Investissement Attendance fees ............................................................................................................... — — Other ................................................................................................................................ — — Mohammed Khoso Baluch Attendance fees ............................................................................................................... 22,500 25,000 Other ................................................................................................................................ 65,066 — Pascale Boissel Attendance fees ............................................................................................................... — 30,000 Other ................................................................................................................................ — 95,198 Richard Kender Attendance fees ............................................................................................................... — 39,000 Other ................................................................................................................................ — 146,955

(1)TheGeneralMeetingofApril15th,2014decided tograntanallocationofattendance fees.Thesame day, the Board of Directors decided to grant toMuhammad Khoso Baluch attendances feesamountingto€22,500inrespectofthe2014financialyear,subjecttohisactiveparticipationintheBusinessDevelopmentCommittee.

TheGeneralMeetingofJanuary8th,2015hasdecidedtograntanallocationofattendancefees.Thesame day, the Board of Directors decided to grant to Rich Kender attendance fees amounting to€52,000inrespectoffinancialyear2015aswellasMohammedKhosoBaluch,amounting€7,500perquarter until the general meeting of 2016, subject to his active participation in the BusinessDevelopmentCommittee.

OnMarch5th,2015theBoardofDirectorsdecidedthegrantofattendancefeestoPascaleBoissel,amounting7,500€perquarteruntilthegeneralmeetingof2016,subjecttoheractiveparticipationintheAuditCommittee.

OnApril29th,2015theBoardofDirectorsdecidedthegrantofattendancefeestoMohammedKhosoBaluch,amounting€40,000fromJuly1st,2015 inrespectof financialyear2015asChairmanoftheRemunerationCommitteeandmemberoftheBusinessDevelopmentCommittee.

TheamountsduebytheCompanypursuantto“Othercompensations”toMohammedKhosoBaluch,forthefinancialyear2014arerelatedtoaservicesagreementbetweentheCompanyandMr.Baluchdescribedinsection19.2“Significantagreementsenteredintowithrelatedparties”.ThisagreementwasterminateduponappointmentofMohammedKhosoBaluchasDirectoroftheCompany.


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Theamountsdueby theCompanypursuant to“Othercompensations” toPascaleBoisselandRichKenderforthefinancialyear2015arerelatedtothevaluationofsharewarrantswhichweregrantedtothemduringthefinancialyearandwhicharedescribedinsection21.1.4.1“sharewarrantsplan”.

Mohammed Khoso Baluch, Pascale Boissel and Rich Kender will receive only attendance fees forfinancialyear2016.

Table 4: Share warrants (BSA) or founder shares warrants (BSPCE) granted to each executivedirector by the Company or any company of its Group during the financial years closed onDecember31st,2014and2015.

EXECUTIVE DIRECTOR

ALLOCATION DATE

TYPE OF WARRANT

VALUE OF WARRANTS ACCORDING TO BLACK

& SCHOLES METHOD

NUMBER OF WARRANTS ALLOCATED

SUBSCRIPTION PRICE PER SHARE

EXPIRATION DATE

Thierry Hercend .............

Mar-12-2014 BSA

€91.14 1,875 €80.00 Oct-31-2022

Total .............................. 7,375

Table 5: Share warrants (BSA) or founder shares warrants (BSPCE) exercised by each corporatedirectorduringthefinancialyearsendedonDecember31st,2014and2015

None

Table 6: Shares granted for free to each executive director during the financial years ended onDecember31st,2014and2015

None

Table 7: Shares granted for free that became available to each executive director during thefinancialyearsendedonDecember31st,2014and2015

None

Table 8: History of the allocations of share warrants (BSA) or founder shares warrants (BSPCE)grantedtoexecutivedirectors.

Seetablesinsections21.1.4.1“Sharewarrantsplan”and21.1.4.2“BSPCEplan”ofthisdocumentderéférence.


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Table9:Sharewarrants (BSA)and founders sharewarrants (BSPCE)allocated to the first10noncorporateofficersrecipientemployeesandwarrantsexercisedbythem.

2015 2014

BSA**€

BSPCE€

BSA€

BSPCE*€

DateoftheBoardofDirectors May-07-15 March-12-15

Weightedaverageprice 9,62 64,00

Numberofwarrantsgrantedduringeachofthosefinancialyearstothe ten employees of the Group receiving the largest number ofrightsthusgrantedasofDecember31,2015

240000 0 0 5000

Numberofwarrants exercisedduringeachof those financial yearsby the tenemployeesof theGroup receiving the largestnumberofrightsthusgrantedasofDecember31,2015

0 0 0 0

*Beforetakinginaccountthedivisionofthenominalvalueoftheshare**Concernstwonon-employedforeigncollaborators,withinthemeaningofFrenchlaborlaw

150BSPCE31102012havebeenexercisedbyanemployeeduring2016firstquarter.

Table10:Previousallotmentsoffreeshares.

None.


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Table11

The following table provides details about the conditions of compensation and other benefitsgrantedtoexecutivedirectors.

15.2. Provisioned or recorded amounts by the Company for the purpose of pensionandretirementpayments,andotherbenefitsfordirectorsandofficers.

The Company did not take into account amounts for the purpose of pensions and retirementspayments,noranyotherbenefitsforcorporateofficers.

Thecompanydidnotgranthiringnorseverancebonustoanycorporateofficer.

15.3. Sharewarrantsandfounderssharewarrants

DirectorStockwarrantsto

directors

stockwarrants

october31,2012

stockwarrantsjuly25,2014

stockwarrantsjune16,2015

numberofsharesremaining

ThierryHercend 4500 2875

147500ChairmanoftheBoard

MohammedKhosoBaluch

2125

42500IndependentDirector

RichardKender

42500

42500

IndependentDirector

PascaleBoissel

42500 42500IndependentDirector

TOTAL 4500 5000 42500 42500 275000

Executiveofficers

EmploymentcontractSupplementarypensionplan

Compensationorbenefitsdueorlikelytobedueonterminationorchangeoffunction

Compensationunderanon-competeclause

Yes No Yes No Yes No Yes No

Mr.ThierryHercend,ChairmanoftheBoardofDirectorsandDirector

X X X X

Dateofstartofterm:GeneralMeetingofMarch28,2014(renewal)

Dateofendofterm:GeneralMeetingapprovingthefinancialstatementsonDecember31,2016

Mr.ThomasKuhn,CEOandDirector

X X X X

Dateofstartofterm:GeneralMeetingofMarch28,2014(renewal)

Dateofendofterm:GeneralMeetingapprovingthefinancialstatementsonDecember31,2016


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Note:seesections21.1.4.1"ShareWarrantsPlan"and21.1.4.2"BSPCEPlan"ofthisdocumentderéférencefordetailsofthetermsandconditionstoexercisethedifferentcategoriesofBSAandBSPCE.

Thenumberofshares,thatmaybeissuedattheresultof itsrights, ispresentedafterdivisionofthenominalvalueoftheshareby20,decidedonMarch2014bytheGeneralAssembly.

15.4. Elementsofthecompensationandbenefitsdueor likelytobedueowingtooraftertheterminationofthedutiesofdirectorsoftheCompany

None

15.5. Loansandguaranteesgrantedtoexecutives

None


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16. OPERATIONOFTHEADMINISTRATIVEANDMANAGEMENTBODIES16.1. ManagementoftheCompanyTheCompanyisapubliclimitedcompanywithBoardofDirectors.

By a decisiondated23 June2010, theBoard separated the functionsof ChairmanandCEO. Sincethen, theBoardofDirectorshasbeenchairedbyThierryHercend.Atameetingof theCompany'sBoardofDirectorson31March2016,Mr.HercendresignedasChairmanoftheBoardandremainsadirectoroftheCompany.BoardmembersappointedMr.PierreLegaultasthenewChairmanoftheBoardasofthatdate.

ThomasKuhnrepresentstheCompanyvis-a-visthirdpartiesinhiscapacityasManagingDirector.

Details regarding thecompositionof theBoardandof theexpirationof terms formembersof theBoardarecontained insection14.1.1"CompositionoftheBoardofDirectors"ofthisdocumentderéférence. During the year ended 31 December 2015, Rich and Kender Pascale Boissel wereappointed as independent directors of the Company. Furthermore, at the GeneralMeeting of 29January2016,JaniceBourquewasappointedindependentdirectoroftheCompany.

Duringtheyearended31December2015,theBoardofDirectorsoftheCompanymet16times.TheaverageoftheDirectorsattendancerateis92.19%.

16.2. ServicesagreementsbetweendirectorsandtheCompany

TheCompanyisconnectedtocertainexecutivedirectorspursuanttothefollowingagreements(seealsosection19“Significantagreemententeredintowithrelatedparties”).

16.2.1. ManagementagreementwithThomasKuhn,DirectorandCEO

Thisagreement,previouslyauthorizedbythemeetingoftheBoardofDirectorsonMarch28,2014,wasentered intoonMarch28,2014. It setsout theconditions forThomasKuhn inhiscapacityasCEOofPoxelbyprovidingnotably:

- limitationsofpowers;

- conditionsrelatedtotheterminationofduties,includingbysettingfortha4monthadvancenoticethatmaybeliftedbytheBoardofDirectorsinreturnforremuneration;and

- conditionsofhisremunerationdecidedbytheBoardofDirectorsontherecommendationsoftheRemunerationsCommittee.

TheagreementwasenteredintoforthetermofofficeofThomasKuhnasCEO,withoutprejudicetotherightofrevocationvestedintheBoard.Therefore,theBoardwillnotdecideontherenewalofthisagreementaslongasthetermofofficeofThomasKuhncontinues.

ThomasKuhnreceivedbenefitsof€161,009inrespectof2015.

16.2.2. ConsultingagreementwithThierryHercend,DirectorandChairmanoftheBoardofDirectorsuntilMarch31,2016

Thisagreement,authorizedatameetingoftheBoardofDirectorsonJuly5,2010wasenteredintoonJuly1,2010andamendedbyamendmentn°1datedFebruary20,2013.ItsetsouttheconditionsunderwhichThierryHercendprovides,uponarequestbytheCompany,consultingonpreclinicalandclinicaldevelopmentstrategyandbusinessdevelopmentactivities,withtheobjectiveofpromoting


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thegrowthoftheCompany.ThierryHercendabstainedfromvotinginthedeliberationsoftheBoardofDirectorshavingapprovedthisagreement.

Thisagreementwasenteredintoforaninitialtermoftwelvemonthstacitlyrenewableforidenticalperiods.

The services of Thierry Hercend are remunerated on the basis of a quarterly fixed lump sum of€12,500.

Theamendmentn°1concludedonFebruary20,2013, foraperiodof tenmonthsandelevendaysending on December 31, 2013 provided that Thierry Hercendwas to advise the Company on thedefinitionand implementationof its financing strategy, for aperiodof 8days coveredby the saidamendment.Inconsiderationfortheseservices,ThierryHercendwaspaidalumpsum.

16.3. SpecializedCommitteesAt itsmeeting of September 24, 2010 the Board of Directors decided to establish two specializedCommitteesinordertoassisttheBoardofDirectorsinitswork.TheroleandoperatingproceduresoftheseCommitteeswereclarifiedbyBoardofDirectorsonMarch12,2014andarecontained in itsinternal regulations adoptedonMarch 12, 2014. Furthermore, theBoardofDirectors onApril 15,2014decidedtoestablishathirdspecializedCommittee,theBusinessDevelopmentCommittee.

16.3.1. AuditCommittee

16.3.1.1. Objectives–Powers

TheAuditCommitteemonitorsissuesrelatingtothepreparationandthecontrolofaccountingandfinancialinformationandisresponsibleformakingrecommendationstotheBoardofDirectorsinitspermanentmissionofcontrolofthemanagementoftheCompanyasrequiredbylawandthebylawsof theCompany. Italso issuesrecommendations inrelationtotheStatutoryAuditorsproposedforappointmentbythegeneralmeetingorthebodyexercisingasimilarfunction.

WithoutprejudicetothepowersoftheBoardofDirectors,theAuditCommitteeisresponsiblefor:

• thepreparationoffinancialinformation;

• theeffectivenessofinternalcontrolandriskmanagementsystems;

• theproperlegaloversightofthepreparationoftheannualfinancialstatementsandconsolidatedfinancialstatementsbythestatutoryauditors;and

• theindependenceofthestatutoryauditors.

TheobjectiveoftheAuditCommitteeis lessaboutgoingintothedetailsoftheaccountsandmoreabout monitoring of the process for their preparation and assessing the validity of the methodschosenforprocessingsignificantoperations.

Inthiscontext,theAuditCommitteemayexaminetheannualfinancialstatementsoftheCompanyinthe form that they are presented to the Board of Directors, hear the opinions of the StatutoryAuditorsandthefinancedirectorandreceivecommunicationsinrelationtotheiranalysis,workandtheir conclusions. The Audit Committee also reviews the press releases presenting the financialinformation.

AuditCommitteemembershavethesamerightsof informationas thoseofDirectorsandmayuseexternal experts at the expense of the Company, having informed the Chairman of the Board ofDirectorsortheAuditCommittee,andmustrenderanyexpertreportstotheBoardofDirectors.


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16.3.1.2. Composition–Remuneration

TheAuditCommitteeiscomposedofat leasttwomembers.ThemembersoftheAuditCommitteeare appointedby theBoardofDirectors frommembersof theBoardofDirectors or thirdparties,excludingcorporatedirectors.MembersoftheAuditCommitteeareappointedforafixedperiodoftime,whichmaynotexceedthedurationoftheirtermsofofficeasDirectorandmayberevokedbytheBoardofDirectors.Appointmentsarerenewablewithoutlimitation.

TheAuditCommitteemayinviteanyperson,internalorexternaltotheCompany,totakepartinitsmeetingsanditsworks.

MembersoftheAuditCommitteemusthavefinanceoraccountingskills.

TheChairmanoftheAuditCommitteemustbeappointedbytheBoardofDirectors.

MembersoftheAuditCommitteereceivenocompensationotherthanattendancefees.TheirdutiesontheAuditCommitteemaybetakenintoaccountindeterminingtheallocationofsuchattendancefees.

Asatthedayofregistrationofthisdocument,themembersoftheauditCommitteeare:

• MrsPascaleBoissel(ChairmanoftheAuditCommittee);

• Mr.PierreLegault;

• MrsJaniceBourque;

• BpifranceInvestissement,representedbyMr.OlivierMartinez;and

• OmnesCapital,representedbyMr.BrunoMontanari.

Bpifrance Investissement and Omnes Capital were appointed during themeeting of the Board ofDirectors on September 24, 2010 and confirmed in their duties by the meeting of the Board ofDirectorsonMarch12,2014.

TheAuditCommitteemetthreetimesduringthe2015financialyear.

16.3.1.3. OperatingproceduresTheAuditCommitteemeetswhentheChairmanoftheAuditCommitteeoroftheBoardofDirectorsconsidersitusefulandinanycase,atleasttwiceperyear,particularlybeforethepublicationofthefinancialstatements.TheCommitteemaybeconvenedbyanymeans24hoursbeforethemeetingbytheChairmanoftheAuditCommitteeoroftheBoardofDirectorsoranyindividualtowhomoneofthemshallhavedelegatedthenecessaryauthority.

Meetingsarechairedby theChairmanof theAuditCommitteeand, ifabsent,byanothermemberdesignatedbytheAuditCommittee.

OnememberoftheAuditCommitteemayberepresentedbyanotherAuditCommitteemember.

The Chairman of the Audit Committee regularly reports to the Board of Directors on the AuditCommittee’sworkandimmediatelyreportsanydifficultyencountered.

The Audit Committee’s recommendations are adopted by simplemajority; in the event of a splitvote,theChairmanoftheAuditCommitteehasacastingvote

Upon completion of each meeting, if the members deem it necessary, meeting minutes may beprepared.MinutesaresignedbytheChairmanofthemeetingandatleastoneAuditCommittee.


155

16.3.2. RemunerationCommittee16.3.2.1. Objectives–PowersTheRemunerationCommitteemakesrecommendationstotheBoardofDirectors inrelationtotheappointment of, and compensation for, corporate directors and seniormanagers, operational andfunctionalmanagementandinternalprofitsharing.Inparticular,theRemunerationCommittee:

a) provides to theBoardofDirectorswithrecommendations in relationtogenderbalanceontheBoardofDirectors,compensation,theretirementandsocialsecuritysystem,retirementbenefits,benefitsinkind,pecuniaryrightsofmanagementandcorporatedirectors,allocationofBSPCE,bonusshares,stockwarrants,stockoptionstoemployees,management,consultantsorotherpartners,andwhereapplicablewithoneoftheCompany’ssubsidiaries,inaccordancewithapplicablelaw;

b) definesthemethodsusedtosetthevariableportionofthecompensationoftheexecutivedirectors,andensuresthatthesemethodsareapplied;

c) proposesageneralpolicy forawardingBSPCE, freeorperformance shares, sharewarrantsanddeterminesthefrequencyforeachcategoryofbeneficiaries;

d) reviewstheproceduresfordividingattendancefeesamongBoardmembers;

e) expresses its opinion to the General management about the compensations of the mainseniorexecutives;and

f) discusseseachindependentdirector’squalificationsuponhisorherappointmentandduringtheexerciseofhisorhertermofoffice,asapplicable.

Remunerationcommitteemembershavethesameinformationrightsasthoseofthedirectors.

16.3.2.2. Composition–CompensationThe Remuneration Committee is composed of at least two members. The Chairman of theRemunerationCommitteeand theCommittee’smembers are appointedby theBoardofDirectorsfrommembersoftheBoardofDirectorsorthirdparties.Membersareappointedforafixedperiodoftime,whichmaynotexceed,theirtermofofficeandmayberevokedbytheBoardofDirectors.Their appointments are renewablewithout limitation. Corporate directorsmay also be appointed,however,individualcorporatedirectorsmaynottakepartindeliberationsconcerningthemselves.

TheRemunerationCommitteemayinviteanypersoninternalorexternaltotheCompany,toattenditsmeetingsandparticipateinitswork.TheCommitteeChairmanisappointedbytheBoardofDirectors.

If they are also directors, Remuneration Committeemembers shall not receive any compensationother than attendance fees. Their duties on the Remuneration Committee may be taken intoconsideration in determining the allocation of such attendance fees. If they are not directors,Remuneration Committee members may receive such compensation as may be approved by theBoardofDirectors.

As at the date of registration of this document de référence, the members of the RemunerationCommitteeare:

• EdmonddeRothschildInvestmentPartner,representedbyMr.RaphaelWisniewski;


156

• BpifranceInvestissement,representedbyMr.OlivierMartinez;• Mr.ThierryHercend;and• Mr.PierreLegault.

TheRemunerationCommitteemetfourtimesduringtheyearendedDecember31,2015.

16.3.2.3. OperatingproceduresThe Remuneration Committee meets when the Chairman of the Committee or of the Board ofDirectors considers it useful and in any case, at least twice per year, particularly before thepublication of the financial statements. The Committeemay be convened by anymeans 24 hoursbeforethemeetingbytheChairmanoftheRemunerationCommitteeoroftheBoardofDirectorsoranyindividualtowhomoneofthemshallhavedelegatedthenecessaryauthority.

Meetingsare chairedby theChairmanof theRemunerationCommitteeand, if absent,byanothermemberdesignatedbytheRemunerationCommittee.

One member of the Remuneration Committee may be represented by another RemunerationCommitteemember.

The Chairman of the Remuneration Committee regularly reports to the Board of Directors on theCommittee’sworkandimmediatelyreportsanydifficultyencountered.

TheRemunerationCommittee’srecommendationsareadoptedbysimplemajority;intheeventofasplitvote,theChairmanoftheRemunerationCommitteehasacastingvote

Upon completion of each meeting, if the members deem it necessary, meeting minutes may beprepared.MinutesaresignedbythemeetingchairmanandatleastoneRemunerationCommittee.

16.3.3. BusinessDevelopmentCommittee

16.3.3.1. –Objectives–Powers

The Business Development Committee prepares recommendations for the board of directorsregardingcustomerdevelopment.Inparticular,

a) itmakesrecommendationsconcerningthemajorfocusesofbusinessdevelopmentfortheboardofdirectors,

b) assiststheChiefExecutiveOfficerinimplementingthispolicy,

c) analyzesthecompetitiveenvironment,targetmarketsanddevelopmentopportunities,bothinFranceandabroadand

d) analyzesouroperationsandpreparesrecommendationsfortheiroptimization.

16.3.3.2. Composition–compensation

The Business Development Committee is composed of at least two members. The BusinessDevelopment Committee Chairman and members are appointed by the Board of Directors frommembersof theBoardofDirectorsor thirdparties.Theyareappointed fora fixedperiodof time,which may not exceed, the term as director, and may be revoked by the Board of Directors.Corporatedirectorsmayalsobeappointed.

TheBusinessDevelopmentCommitteemay invite any individual to participate in itsmeetings andworks.


157

TheChairmanoftheBusinessDevelopmentCommitteeisappointedbytheBoardofdirectors.

If they are also directors, Business Development Committee members shall not receive anycompensation other than attendance fees. Their duties on the Business Development Committeemaybe taken intoconsideration indetermining theallocationof suchattendance fees. If theyarenotdirectors,BusinessDevelopmentCommitteemembersmay receive suchcompensationasmaybeapprovedbytheBoardofDirectors.

As at the date of registration of this document de référence, the members of this BusinessDevelopmentCommitteeare:

• ThomasKuhn,ChiefExecutingOfficer• ThierryHercend,ChairmanoftheBoardofDirectors• KhosoBaluch,IndependentDirector• RichardKender,IndependentDirector

TheBusinessDevelopmentCommitteemettentimesduringthe2015financialyear.

16.3.3.3. Operatingprocedures

The Business Development Committee meets when the Chairman of the Business DevelopmentCommitteeoroftheBoardofDirectorsdeemsusefulandatleastfourtimesperyear.TheBusinessDevelopment Committee may be convened by any means 24hours before the meeting, by theChairmanoftheBusinessDevelopmentCommitteeoroftheboardofdirectors,oranyindividualtowhomoneofthemshallhavedelegatedtheauthoritynecessaryfortheconvocation.

MeetingsarechairedbytheBusinessDevelopmentCommitteechairmanand,ifabsent,byanothermemberdesignatedbytheCommitteetochairthemeeting.

One member of the Business Development Committee may be represented by another BusinessDevelopmentCommitteemember.

TheChairmanoftheBusinessDevelopmentCommitteereportsregularlytotheboardofdirectorsonthe Business Development Committee’s work and shall immediately report any difficultyencountered.

TheBusinessDevelopmentCommittee’s recommendations are adoptedby simplemajority and, intheeventofasplitvote,theChairmanoftheBusinessDevelopmentCommitteehasthecastingvote.

Upon completion of each meeting, if the members deem it necessary, meeting minutes may beprepared. These shall be signed by the Chairman of the meeting and at least one BusinessDevelopmentCommitteemember.

16.4. Non-votingboardmembersTheCompanyhastwonon-votingboardmembers:

• ThibautRoulon,appointedonMarch28th,2014forathree-yearterm• BpifranceParticipations,appointedonJuly25th,2014forathree-yearterm


158

In accordance with the Company’s by-laws, the Company has an advisory board composed of amaximum of five non-voting boardmembers,whomay be appointed or dismissed at an ordinaryshareholders’meeting,foradurationofthreeyears.Theirtermofappointmentendsattheendoftheshareholders’meetingcalledtoapprovethefinancialstatementsfromthepreviousfinancialyearandheldduringtheyearinwhichthetermexpires.

Non-votingboardmembersmayberemovedbyadecisionoftheordinarygeneralmeeting.

Non-votingboardmembersarecalledtoattendallofthemeetingsoftheBoardofDirectorsinthesamewayasdirectorsandparticipateinthemeetingsoftheBoardofDirectorsinanadvisory,non-voting,capacity.TheyhavethesamerighttoinformationasDirectors.

TheytakeparttomeetingsoftheBoardofDirectorsoftheCompany,withanadvisorycapacity,notavotingright.

16.5. StatementrelatedtocorporategovernanceForthesakeoftransparencyandpublicinformation,theCompanyconductedanoverallreflectiononcorporategovernancepractices,particularlyinviewofthesharestotradingontheEuronextmarketofParis.

In particular,we refer to the Code of CorporateGovernance for small andmedium-sized firms aspublishedinDecember2009byMiddlenextandapprovedasthereferencecodebytheAMF,astheprinciples contained in the Code are applicable to the organization, the size, the means and theshareholderstructureoftheCompany.ParticularlyforthedraftingofthereportoftheChairmanoftheBoard,providedbyarticle227-37oftheFrenchcommercialcode.

The items listed below are part of a descriptive approach of thework already carried out by theCompany.TheBoardofDirectorsconsistsoftenmembers,includingtheChiefExecutiveOfficer.Thecomposition of the Board of Directors is set out in section 14.1.1 “Membership of the board ofdirector”ofthedocumentderéférence"

The Company currently has five independent directors, as defined by the Middlenext Code ofCorporateGovernance,includingMohammedKhosoBaluch,PascaleBoissel,JaniceBourque,RichardKenderandPierreLegault.Thesedirectorsareconsideredindependentbecausethey:

• arenotemployedbynoranexecutivedirectoroftheCompany,andhavenotbeensointhepastthreeyears,

• arenotimportantclients,suppliers,orbankersoftheCompanyanddonotrepresentalargepartoftheactivityoftheCompany;

• arenotreferenceshareholdersoftheCompany,• donothaveanyfamilyconnectionstoanyexecutivedirectororreferenceshareholdersof

theCompany;• havenotbeenanauditoroftheCompanyinthelastthreeyears.

The Company considers that Mr. Pierre Legault fulfils the requirements to be an independentdirector,withinthemeaningoftheCompanies’GovernanceCodeofMiddlenextdespitethefactthatheiscurrentlyChairmanoftheBoardofDirectors.


159

The internalregulationsof theBoardofDirectorssetouttheprinciplesguidingthecompositionoftheBoard.ThisdocumentwasadoptedbytheBoardofDirectorsonMarch12,2014.

The internal regulations of the Board of Directors together with the specialized Committee itdescribes,meet the legislativeand regulatoryprovisions, in the respectof theCode thecommerceandoftheCompanies’GovernanceCode’ofMiddlenext.

TheBoardofDirectorshasestablishedthreeCommitteestoassisttheBoardofDirectorsinitswork:theAuditCommittee,theRemunerationCommitteeandtheBusinessDevelopmentCommittee,eachofwhichisdescribedinsection16.3“SpecializedCommittee”ofthisdocumentderéférence.

TheCompanyalreadyengagedorwillengageshortlyareflectionprocesson:

• thenecessitytocontinuetocomplywiththerulesregardingthecompositionoftheBoardofDirectors,andtoapplytheprincipalofequalrepresentationbetweenmenandwomen;and

• theimprovementoftheinternalcontrolproceduresthatwereimplementedfortheworkoftheBoardofDirectors.

The followingchartsummarizes thepositionof theCompanyoneachof therecommendationssetoutintheCompanies’GovernanceCodeofMiddlenext:

RecommandationsoftheMiddlenextCode AdoptedWillbe

adoptedasappropriate

Willnotbeadoptedasappropriate

Executivepower

R2Definitionandtransparencyoftheexecutivesandcorporateofficers

X

R3Severancepay(Note1)

X

R4Supplementarypensionplans(Note2)

X

R5Stock-optionsandfreeshares(Note3)

X

Spervisorypower

R6Implementationofaninternalregulation(Note4) X

R7EthicsofBoardMembers X

R8 Composition of Board members , presence ofindependentmembers

X

R9ChoiceofDirectors X

R10TermsofofficeofBoardmembers X


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R11InformationoftheBoardmembers X

R12Establishmentofcommittees X

R13Boardandcommitteesmeetings X

R14RemunerationofDirectors X

R15 Establishment of an evaluation of work of theBoard(Note5)

X

Note1:NodirectoroftheCompanycurrentlyhasanyseverancepay.Ifsuchacompensationweretobeimplemented,theR3recommendationwouldbefollowed.

Note 2: Even if currently no additional pension plans are implemented, the R4 recommendation aiming for a bettertransparencyforshareholderswouldbefollowedifitwasthecase,iftheCompanyweretoimplementsuchregimes.

Notes 3: The R5 recommendation will be adopted together with the allocation of stock-options or free shares to thedirectorsoftheCompany(notscheduledatthemoment).

Note 4: As at the date of the financial report, the Company did notmake public its bylaws that the Board of Directorscreated,butisconsideringpublishingtheseontheCompany’swebsite.

Note5:Asatthedateofthisdocument,theBoardofDirectorsoftheCompanyhasnotevaluateditsworkingmethodsandits operation. This will be included in the Board’s work plan during year 2016 as a self-assessment in accordance withinternalregulations(paragraph1.7).TheresultswillbedebatedbytheBoardandwillresultinanactionplan.

16.6. Internalcontrol

TheCompanyadopted thedefinitionof internal controlproposedby theAMF, according towhichtheinternalcontrolisasystemimplementedbytheCompanyaimedatensuring:

• compliancewithlawsandregulations;

• applicationoftheinstructionsandguidelinessetbytheExecutiveManagement;

• properfunctioningoftheCompany’sinternalprocesses;

• reliabilityofthefinancialinformation;and,

• generally,contributestothecontrolofitsactivities,theeffectivenessofitsoperationandtheefficientuseofitsresources.

TheCompanycontinuedtheimplementationduringthefinancialyearofaninternalcontrolprocessdesigned to “guarantee internally the relevance and reliability of the information used anddisseminatedintheactivitiesoftheCompany”.

However, all the internal control cannot provide an absolute insurance that the objectives of theCompanywillbeachieved,orthattheriskoferrororfraudwillbetotallycontrolledoreliminated.

Componentsofinternalcontrol

The internal controlmechanism reliesonanorganization that clearly identifys the responsibilities,accountingstandards,resourcesandprocedureimplemented.Sinceits incorporation,theCompanyhas been formulating anAssuranceQuality system, in order to collect the documents and control


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already in place, update them, ensure their consistency and strengthen them when needed.Processes of all the fields of activity are described by procedures, operating modes, notices andforms. These written documents describe the activities, define the means and liabilities of thestakeholders, indicate the know-how of the Company and give precise instructions in order toexecuteanoperation.

AllstakeholdersoftheCompanyareinvolvedintheinternalcontrolsystem.

Proceduresrelatedtotheoperatingprocess

All of the documentation related to quality control is registered on a specially-dedicated intranet,which facilitates improved access to documents and permanent adaptation to the changes in theactivity (life-cyclemanagementofdocuments).Theobjective isa continuousquality improvement,operating,managementandsupportprocessoftheCompanyandtheGroup.

Thequalityassurancesystemcoversthefollowingfields:

• qualityassurance,healthandsafety,riskmanagement;

• administrative, legal, social and financial fields, including internal controls. It isplanned toalso includecommunicationand rules related to theEuronext listingoftheCompany;and

• pharmaceutical,pre-clinicalandclinicalresearchanddevelopment.

Organizationofthefinanceandaccountingdepartment

The finance function is internally managed by the Chief Financial Officer.Theaccountingfunctionisperformedwiththeassistanceofacharteredaccountant.TheCompanyiscommittedtomaintainingaseparationbetween itsproductionsupervisionactivitiesof its financialstatementandengagesindependentexpertforthevaluationofcomplexaccountingitems(pensionobligations,valuationofthesharewarrants/founder’ssharewarrants)and/orrequiringsubjectiveassumptions.

Payrollandtaxauditsarecarriedoutbyacharteredaccountant.

ThefinancialstatementspreparedinaccordancewithFrenchandIFRSstandardswiththeassistanceofanaccountingfirm,aresubjecttoanauditbytheauditorsoftheCompany.

ThefinancedepartmentreportsdirectlytotheChiefExecutiveOfficer.

Budgetprocessand“monthlyreporting”

TheaccountingsystemimplementedbytheCompany isbasedonFrenchaccountingstandards.Anannual budget is drawn up by the Company, as well as “monthly reporting”, that includes anoperatingaccount,abalancesheetandcashflowforecasts.ThesecomponentsarepresentedtotheExecutive Committee and to each of the Board of Directors. The Company monitors the budgetprecisely.

Delegationofpower

Each executive responsible for an activity has a delegation to develop and negotiate purchases ofgoods or services. The actual signing of the order is by the General Management (or the Chief


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Financial Officer, on instruction form the General Management). Requests for the purchase ofgoods/servicesor pre-clinical or clinical studies agreements (which are treated as requests for thepurchaseofgoods,becausetheyarespecifictoeachstudy)arethenreconciledwiththeinvoicesandthedeliverynotesforthegoodsbeforeapprovalforpayment.

Bankpaymentsaresystematicallycounter-signedbytwopeople.Mostofthepaymentsaretransfersvalidated by a double electronic signature. This system ensures a systematic archiving of thetransactionsandallowsthetrackingofthesignatories,thebankcontactdetailsofthesuppliersandacomprehensiveex-postauditifneeded.


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17. EMPLOYEES

17.1. Numberofemployeesandbreakdownbyfunction

17.1.1. Organizationchart

OrganizationchartasatMarch31st,2016

Theaverageworkforcereached14employees in2015,ascomparedto12employees in2014. It ispresented innote17 to the financial statementsprepared inaccordancewith IFRS inSection20.1"IFRS fiancial statements prepared for the financial year ended on December 31, 2015"of thisdocumentderéférence.

17.1.2. A lean structure, led by an experienced executive committee composed of highlyqualifiedpersonnel

Toensurethedevelopmentofitsproducts,theCompanyreliesonadynamic,highlyqualifiedteam,withsignificantexperienceinlargepharmaceuticalgroups.

Asatthedateofthisdocument,theCompanyemploys18people,includingacorporateofficerthreeundercontractand14permanentcontracts.Morethan80%oftheworkforceisallocatedtoresearchanddevelopmentactivities,theremaining20%beingallocatedtobusinessdevelopmentoperationsand the administrative and financial management. The workforce includes one doctor, 5pharmacists,4PhD(someofwhomarealsodoctorsorpharmacists),twoscientists,anaccountancygraduateandanadministrativemanager.Theteamiscomposedof7menand11women.

An executive committee of 6 people runs the Company. Members of the executive committeecollectively have an expertise that covers the value chain necessary to the development of a new

Early Development & Pharmacometrics

Headed by Sebastien Bolze - EVP

ExecutiveManagement

Thomas Kuhn - CEO

PharmacologySophie Bozec

SVP R&D Pharmacology

Clinical Development &Regulatory Affairs

Headed by Pascale Fouqueray - EVP

Business Development & US Operations

Headed by Noah Beerman - EVP

Finance & Administration

Headed by Eric Massou - EVP

Clinical PK & Phase 1

Sandrine DauchyDirector

Clinical Operations

Rodica OrzaDirector

Béatrice MaffeiClinical Project Manager

Pierre ParmantierClinical Project Manager

Administration & Project Management

Isabelle TronelSenior Manager

Julie CherlonneixExecutive Assistant

Pharmaceutical DevelopmentMaxime Laugier

VP

Preclinical PK & SafetyHerve Giorgi

Director

CommercialDevelopment & Corporate

Communication

Headed by Pascale Malgouyres - EVP

Carole ThangClinical Project Manager

Asia Regulatory & Development

Yohjiro ItohVP

Clinical Development

XXDirector

Pharmacometrics

Sandrine DauchyCarole Thang

Jonae BarnesSVP Investor Relations and

Public Relation


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drug.Theyallhaveheldseniorresponsibilitypositionsinlargegroups,with,formostofthem,akeyexperienceinthediabetesfranchiseofrenownedpharmaceuticallaboratories.

ThomasKUHN,Co-FounderandCEO

Pharm.D.(Lyon–France)&MBA(Ashridge–UK)

15 years of experience in the pharmaceutical industry (Generics UK andMerckSerono)

Directed the Diabetes strategy and development in Merck Serono(developing products and marketed), before directing the divestment ofR&D assets, leading to the creation of Poxel on the basis of a licensingagreementwithMerckSerono.

EricMASSOU,AdministrativeandFinancialDirector

Graduate accountancy & EM Strasbourg Business School (Finance) &BusinessEconomicsandSocialStudies(TrinityCollegeDublin-Erasmus)

21yearsofexperienceinmanagementandcorporatefinance

10yearsofexperienceatE&YandMazarsinlegalandfinancialauditand7yearsinthefinancialdepartmentofaEuropeanindustrialgroupspecializingintheproductionofplasticpackaging.

PascaleFOUQUERAY,Co-FounderandMedicalDirector

Doctor of Medicine (Angers,France), Endocrinologist (Paris - France) &DoctorofSciences(Paris,France)

14yearsexperienceinthepharmaceuticalindustry(MerckSerono)

Headofexploratoryclinicaldevelopmentofmolecules indiabetes,obesityandgoutatMerckSerono,especiallystrategiestoimproveunderstandingofthe mechanisms of action and to achieve proof of concept in terms ofefficacy.

SebastienBOLZE,Co-FounderandScientificDirector

Doctor of Pharmacy (Lyon - France) & PhD in pharmacokinetics andmetabolism

15yearsexperienceinthepharmaceuticalindustry(MerckSerono;FournierPharma,SolvayPharmaceuticals)

Head of several departments: ADME, global multidisciplinary unit ofpreclinicalcandidatesselection(upto120ETPin3countries)

Contributedtomanyresearchprojectsandnumerousproductdevelopmentinmetabolicdiseases(type2diabetes,dyslipidemia,atherosclerosis).

PascaleMALGOUYRES,Co-FounderandDirectorofBusiness

Doctor of Pharmacy (Lyon - France) & clinical pharmacokinetic DEA(IndustrialPharmacyInstitute-Lyon-France)

28yearsexperienceinthepharmaceuticalindustry(EliLilly&Co.,Procter&GamblePharmaceuticals,Anphar-RolandandMerckSerono)

LedthedeductibleDiabetesfranchiseofMerckSerono(marketing&sales)


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havingachievedaglobalturnoverof€350millionbeforedivesting

Has developed an international network around major pharmaceuticalLaboratories (licensing, business development & alliances) and opinionleaders.

SophieBOZEC,Co-FounderandDirectorDiabetesResearch

DoctorinBiology(Paris7-France)

16yearsexperienceinthepharmaceuticalindustry(Lipha/MerckSerono)

Head of a diabetes research team and managed transversal researchprojects at Merck Serono before becoming involved in the creation anddevelopmentofPoxel.

This team is supporter by scientific advisors including renowned experts in diabetology, clinicaldevelopmentandnewformulationsinordertogathertheirviewsontheresultsobtainedduringthedevelopmentoftheproductsoftheCompany,aswellasthenextR&Dsteps.Thecompositionandtheroleof thesescientificadvisorsaresetout insection11.1"Researchanddevelopment"of thisdocumentderéférence.

17.1.3. Organizationofoperations

FourdepartmentsmanagetheoperationsoftheCompany:

ExecutiveManagement

ScientificDepartment MedicalDepartment BusinessDepartment AdministrativeandFinancialDepartment

• ScientificDepartment:Composedof3people,thescientificdepartmentdefinesthestrategyfornon-clinicalresearchanddevelopment,definesthedesignofstudiestobeperformedandthenorganizesandmanagesthesubcontractingofthesestudies.Thedepartmentreliesonanetwork of subcontractors and academic teams for these studies. The departmentcontinuallydevelopsandmaintainsthenetworkinordertohaveacloserelationshipwiththeteamsandgoodreactivity.Thescientificdirectionalsostrivestoensurealevelofqualityadhoc for thestudiesconducted (GLP,GMP,GCP). Ithasall thenecessary skills inchemistry,manufacturing, analytical, packaging, pharmacology, pharmacokinetics and toxicology,internallyorthroughexternalconsultants.Italsousesanetworkofinternationalexpertstochallengeitsstrategyanddesignofherstudies.Itworkscloselywiththemedicaldirectiontoprovide it with the necessary support in the design and completion of clinical trials,pharmacokinetic and/or mechanistic, in order also to ensure a good transition frompreclinicaltoclinical.


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• Medical Department:Composed of 5 people, themedical department defines the clinicaldevelopment strategy in partnership with the scientific and business directions. Thedepartment establishes the design of studies to be performed, taking into account theobjectives and constraintswhilemaking sure of the feasibility. The department selects allsubcontractors and control their activities during the completion of clinical studies, bymakingsure that theyareconducted incompliancewiththegoodclinicalpractices.Finallythe medical department analyzes in detail the results, which will then be submitted to acommittee of international experts selected by the Company for discussion and validationbeforeanyexternalexploitation.

• Business Department: Pascale Malgouyres has extensive knowledge of all global andregionalactorsinthetype2diabetesmarket.Shereliesonathirdpartycompanyspecializedin business development relationships and takes part in all of the partnership fairs. She isalsoinchargeofcorporatecommunicationsoftheCompanyandscientificcommunicationinconnectionwithapressreleasecompanyandamedicalpublishingcompany.

• Administrative and Financial Department:Composed of 2 people, the administrative andfinancial departmentmanages the routine accounting and financial transactions, forecastsand anticipates cash needs by seeking adequate resources for the realization of projectsundertakenbytheCompany,controlsthecostsandstructuresadministrativeprocedurestominimizethefinancialriskfactorsdetailedinsection4ofthisdocumentderéférence.

17.2. Interestsandstockoptionsforexecutives

Referenceismadetosection15“REMUNERATIONANDBENEFITS”ofthisdocumentderéférence.

17.3. ParticipationoftheemployeesinthecapitaloftheCompany

Some employees hold BSPCE that can grant them a 1.19% interest in the capital in case of fullexercise(seesection21.1.4.1"ShareWarrantsPlan"and21.1.4.2"BSPCEPlan"ofthisdocumentderéférence).

17.4. Profitsharingandincentiveagreements

None.


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18. MAJORSHAREHOLDERS

18.1. Sharecapitalandvotingrightdistribution

Asatthedateofthisdocumentderéférence,andinaccordancewithArticleL.233-13oftheFrenchcommercialcode,asfarasthecompanyisaware,thestructureoftheownershipandtheidentityofshareholdersdirectlyorindirectlyholdingmorethanonetwentieth,onetenth,threetwentieths,onefifth, one quarter, one third, half, two thirds, eighteen twentieths or nineteen twentieths of thecapitalorvotingrightsatgeneralmeetingsisasfollows:

Shareholders Sharestotal Votingrights %Capital %Votingrights

ThomasKuhn 1.500.080 1.500.080 7,68% 7,68%

Fonds Edmond de Rothschild InvestmentPartners1

4.401.406 4.401.406 22,54% 22,54%

BPIfranceInvestissement(FCPRInnobio) 2.481.263 2.481.263 12,70% 12,70%

BPIfranceParticipations 1.696.976 1.696.976 8,69% 8,69%

Sub-totalBPI 4.178.239 4.178.239 21,39% 21,39%

FondsOMNESCAPITAL 1.627.456 1.627.456 8,33% 8,334%

MerckSerono 1.088.531 1.088.531 5,57% 5,57%

Subtotal of the shareholders holding morethan5%ofthecapital

12.795.712 12.795.712 65,51% 65,514%

Othermanagers 1.499.920 1.499.920 7,68% 7,68%

JPMorganAssetManagement(UK)Limited 924.725 924.725 4,73% 4,74%

Familyshares 6.351 0 0,03% -

Public 4.304.520 4.304.520 22,04% 22,05%

Total 19.531.228 19.524.877 100% 100%1 FCPRBiodiscovery3holdsa17.63%stake.

AsfarastheCompanyisaware,therearenoothershareholdersholdingdirectlyorindirectly,aloneorinconcertmorethan5%ofthecapitalorvotingrightsatthedateofthisreport.

See section21.1.4 "Convertible or exchangeable securities orwithwarrants attached to it" of thisdocumentderéférencefordetailsonconditionsforconversionoftheconvertiblebondsandexerciseof the BSA and BSPCE and in section 21.1.7.1 “Table of evolution of the capital over the last twofinancialyears”foradetailedpresentationoftheincreaseincapital.


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18.2. SignificantshareholdersnotrepresentedontheBoardofdirectors

Asatthedateofthisdocumentderéférence,MerckSeronoisasignificantshareholdernon-memberoftheBoardofDirectorsoftheCompanyasindicatedabove.

18.3. RecentoperationonthesharecapitaloftheCompany

During2015financialyear,severaltransactionsmodifyingthecapitaloccurred:

- OnFebruary6,2015,theCompanywaslistedonEuronextParis,incompartmentC.Thegrossprofit of the issuance was approximately €26.8million. The resulting capital increase was€80,624.96correspondingtothecreationof4,031,248newsharesof€0.02parvalue.

- OnFebruary6,2015,theCompanyrecognizedtheexercisebyMerckSeronoofits1,088,531sharewarrants(BSAMS)inasmanynewordinarysharesatanexercisepriceof€4.00.ThispricewaspaidbyoffsettingthedebtrecognizedintheaccountsoftheCompany.Itresultedinacapitalincreaseof€21,770.62,correspondingtothecreationof1,088,531newsharesof€0.02parvalue,whichnewamountthenstoodat€271,933.74.

- On July 24th, 2015, the Companymade a private placement of €20million to institutionalinvestors in the United States and Europe. US investors accounted for 91% of thisinvestment. The offering price was set at €11.35, reflecting a discount of 10.9% on theweightedaveragepriceofthelasttwentytradingsessionsonEuronextParis.Followingtheprivateplacement,1,762,793newshareswereissuedwithaparvalueof€0.02,representing10%ofthecapitaloftheCompany,withacapitalincreaseof€35,000andasharepremiumof €19,972,000. The costs of the transaction were €1,598,000 and were recognized as areduction of the share premium as at December 31st, 2015. The capital of Poxel was€387,814.56followingthisoperation.

- On October 28th, 2015, Kreos Capital IV (UK) Ltd exercised 45,833 share warrants at anexercise price of €4 per warrant, representing a capital increase of €916.66 with a sharepremiumof€182,415.ThecapitalofPoxelwas€388,731.22followingthisoperation.

- On November 6th, 2015, Kreos Capital IV (UK) Ltd exercised 45,833 share warrants at anexercise price of €4 per warrant, representing a capital increase of €916.66 with a sharepremium of €182,415. The capital of Poxel amounted to €389,647.88 following thisoperation.

Sincethecloseofthefinancialyear,thefollowingoperationsmodifyingthecapitaloccurred:

- On February 9th, 2016, Kreos Capital IV (UK) Ltd exercised 45,834 share warrants at anexercise price of €4 per warrant, representing a capital increase of €916.68 with a sharepremiumof€182,419.ThecapitalofPoxelwas€390,564.56followingthisoperation.

- OnFebruary17th,2016,anemployeeexercised150foundersharewarrantscorrespondingto3,000commonsharesatanexercisepriceof€3.2,representingacapitalincreaseof€60withasharepremiumof€9,540.ThecapitalofPoxelwas€390,624.56followingthisoperation.

18.4. Votingrightsofthemainshareholders

Asatthedateofthisdocumentderéférence,thevotingrightsofeachshareholderareequaltothenumberofsharesheldbyeachofthem.


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The GeneralMeeting of January 8th, 2015 decided to delete the automatic double voting right asprovidedbythelawNo.2014-384ofMarch29th,2014toregaintherealeconomy(called"Florange"law).

18.5. ControloftheCompany

Asat thedateof thisdocumentderéférence,noshareholder individuallyhaseitherthecontroloftheCompany,norapercentagelikelytoassumecontroloftheCompanywithinthemeaningoftheprovisionsofArticleL.233-3oftheFrenchcommercialcode.

18.6. Agreementthatmayresultinthechangeofcontrol

No particular provision of the bylaws, any chart or any rules of the issuermay result in delaying,deferringorpreventingachangeofcontrol.

18.7. AgreementsbetweentheshareholdersthattheCompanyhasknowledgeofandthatmayresultinrestrictionsonthetransferofsharesandintheexerciseofthevotingrights

Conservationcommitmentofthefoundersandkeymanagersand/ordirectorsoftheCompany

OnJanuary21st,2015,allmanagersand/ordirectorsoftheCompany,holdersofsharesand/orsharewarrantsand/orfoundersharewarrantsirrevocablyundertooktoSociétéGénéraleandOddo&Cienottodoanyofthefollowing,withoutthepriorwrittenandjointconsentofSociétéGénéraleandOddo&Cie:

1) offer,grantapledge,aprivilege,asecurityorotherrightsofanykindonthesecurities,loan (except for the share loan, if any,made for the purposes of the over-allocation –greenshoes–aspartoftheIPO),sell,transfer,committosellortransfer,acquire,grantanoption or a right to sell or otherwise transfer or dispose of, in anyway or in any formwhatsoever, (including through amarket transaction, private placement to investors orprivatesale),directlyorindirectly,anyshareoranysecuritygrantingaccess,immediatelyorinthefuture,toshares,uponexercise,conversion,exchange,reimbursementorbyanyotherway;or

2) makeanyshortsale,enterintoanyfinancialagreementorotheragreementdesignedto,or reasonably likely to result in or lead to the sale or the transfer of any share or anysecurity granting access, immediately or in the future, to shares upon exercise,conversion,exchange,redemptionorbyanyotherway;or

3) enterintoanyfinancialagreementorotheragreementthepurposeoreffectofwhichistotransfertoanyone,inwholeorinpart,anyeconomicattributeoftheownershipoftheshares or any security or right granting access, immediately or in the future, to sharesuponexercise,conversion,exchange,reimbursementorbyanyotherway;or

4) enterintoanytransaction,ofanyformandanykind,withaneconomiceffectequivalenttothetransactionsdescribedinparagraphs1),2)or3)above;or

5) publiclyannounceitsintentiontorealizeanyofthetransactionsdescribedinparagraphs1),2),3)or4)above,

until theexpirationofaperiodof360calendardaysfromthesettlementdateofthesharesoftheCompanyaspartofitsIPO,for100%oftheirsharesheld;including,ineachcase,thesharesthatmaybeissuedpriortotheIPO,pursuanttotheconversionofallpreferenceshares intoordinarysharesand,ifapplicable,thesharesthatmaybeissueduponexerciseorconversionofanysecurityorright


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(includingsharewarrantsandfoundersharewarrants);itispointedoutthatasanexceptiontowhatwasstatedabove,eachofthemanagersand/ordirectorsoftheCompanymayfreely:

- bringhissharestoatakeoverbidonthesharesoftheCompany;and

- transfer any new share he may obtain pursuant to the IPO or acquire any share of theCompanyonthemarketafterthesettlementdateoftheIPO.

ThosecommitmentsexpiredonFebruary5th,2016.

ConservationcommitmentofthefinancialshareholdersoftheCompany

On January 21, 2015, eachof the financial shareholders of theCompany irrevocablyundertook toSociété Générale and Oddo & Cie not to do any of the following, as at the signing date of theconservation commitment, including, in each case, shares that may be issued prior to the IPO,pursuant to the conversion of all preference shares into ordinary shares and, if applicable, sharesthatmaybeissueduponexerciseorconversionofanysecurityorright(includingsharewarrantsandfoundersharewarrants)andduringeachoftheperiodssetoutbelow,withoutthepriorwrittenandjointconsentofSociétéGénéraleandOddo&Cie:

1) offer,grantpledge,privilege,securityorotherrightofanykindonshares,loan(exceptforany shares loan referred to in the exceptions below), sell, transfer, commit to sell ortransfer, acquire,grantanoptionorarighttotransferorotherwisetransferordisposeof, in any way or in any form whatsoever (including by market transaction, privateplacementtoinvestorsorprivatesale),directlyorindirectly,anyshareoranysecurityorrightgrantingaccess, immediatelyor inthefuture,toshares,uponexercise,conversion,exchange,reimbursementorbyanyotherway;or

2) makeanyshortsale,enterintoanyfinancialagreementorotheragreementdesignedto,or reasonably likely to result in or lead to the sale or the transfer of any share or anysecurity granting access, immediately or in the future, to shares upon exercise,conversion,exchange,redemptionorbyanyotherway;or

3) enter into any financial agreement or other agreement whose purpose or effect is totransfertoanyone, inwholeorinpart,anyeconomicattributesoftheownershipoftheshares or any security or right granting access, immediately or in the future, to sharesuponexercise,conversion,exchange,reimbursementorbyanyotherway;or

4) enterintoanytransaction,ofanyformandanykind,withaneconomiceffectequivalenttothetransactionsdescribedinparagraphs1),2)or3)above;or

5) publiclyannounceitsintentiontorealizeanyofthetransactionsdescribedinparagraphs1),2),3)or4)above,

whetherthesaidtransactionismadeorenteredintoforapricepaidinshares,incashorotherwise;itisnotedthattheconservationcommitmentwillcover:

- 100% of the shares until the expiry of a period of 180 calendar days following the date ofsettlementofsharesaspartoftheIPO;

- 66.66% of shares until the expiry of a period of 270 calendar days following the date ofsettlementofsharesaspartoftheIPO;and

- 33.33%of shareshelduntil theexpirationofaperiodof360calendardays fromthedateofsettlement-deliveryofsharesundertheIPO.


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Itbeingspecifiedthat,asanexceptiontowhatwasstatedabove,eachofthefinancialshareholdersmayfreely:

- tenderthesharesheldtoatakeoverbidonthesharesoftheCompany;

- saleanysharesthattheysubscribeforaspartoftheIPOoracquireanysharesoftheCompanyonthemarketafterthedateofsettlementoftheIPO;

- transfer any share or any securities or rights giving access, immediately or in the future, tosharestoaninvestmentfundmanagedbythesamemanagementcompanyasthetransferor,providedthatthesaidfundsignsandaddresstoSociétéGénéraleandOddo&Cie,priortothesaidtransfer,aletterunderwhichitundertakestosubscribetotheconservationcommitmentfortheremainingperiodofthesaidcommitment;and

- lend shares toSociétéGénérale, actingonbehalf and for theaccountof the LeadManagersandJointBookrunners,tocoveranyover-allotmentsinthecontextoftheIPO.

ThesecommitmentsexpiredonFebruary5,2016.

18.8. Pledges

TotheknowledgeoftheCompany,thereisnopledgeonthesecuritiesoftheCompany

18.9. Crossingofthresholds

OnJuly30,2015,theCaissedesdépôtsetconsignationsstateditcrossed,onJuly28,2015indirectlythroughBPIGroupeSA, thethresholdof25%of thecapitalandvotingrightsof theCompany,andthatitholds4,601,277sharesoftheCompanyrepresentingasmanyvotingrights,or23.73%ofthecapitalandthevotingrightsoftheCompany.

OnJuly30,2015,BPIGroupestateditcrossed,onJuly28,2015indirectlythroughBPIGroupeSA,thethresholdof25%of thecapitalandvotingrightsof theCompany,and itholds4,601,277sharesoftheCompanyrepresentingasmanyvotingrights,or23.73%ofthecapitalandthevotingrightsoftheCompany.

On July30,2015,EdmonddeRotschild InvestmentPartners,actingonbehalfof funds itmanages,stated it crossed, on July 29, 2015, the threshold of 10% of the capital and voting rights of theCompany, and it holds, onbehalf of said funds, 1,786,899 shares of theCompany representing asmanyvotingrights,or9.22%ofthecapitalandthevotingrightsoftheCompany.

OnJuly31,2015,OmnesCapital,actingonbehalfoffundsitmanages,statedithadcrossed,onJuly29, 2015, the threshold of 25% of the capital and voting rights of the Company, and it holds, onbehalfofsaidfunds,4,832,617sharesoftheCompanyrepresentingasmanyvotingrights,or24.92%ofthecapitalandthevotingrightsoftheCompany.

OnFebruary8,2016, JPMorganAssetManagement (UK)Limitedactingonbehalfof clientsundermandate,stateditcrossed,onFebruary3,2016,thethresholdof5%ofthecapitalandvotingrightsof theCompany,and that itholds,onbehalfof the said clients,1,000,000 sharesof theCompanyrepresentingasmanyvotingrights,or5.13%ofthecapitalandthevotingrightsoftheCompany.

On April 21, 2016, JP Morgan Asset Management (UK) Limited acting on behalf of clients undermandate,statedithadcrossed,onApril20,2016,thethresholdof5%ofthecapitalandvotingrightsof the Company, and that it holds, on behalf of said clients, 946,725 shares of the Companyrepresentingasmanyvotingrights,or4.86%ofthecapitalandthevotingrightsoftheCompany.


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19.RELATEDPARTYTRANSACTIONS

19.1 Intra-grouptransactions

TheCompanydoesnothaveanyholdingasatthedateofthisdocumentderéférence.

19.2 Significantagreementsconcludedwithrelatedparties

a) In2010 theCompanyentered intoa servicesagreementwithMr.ThierryHercend, (see section16.2.2"ConsultingcontractwithThierryHercend,DirectorandChairmanoftheBoardofDirectors"ofthisdocumentderéférence).ThisagreementwasratifiedbythegeneralmeetingofshareholdersoftheCompanyonJune22,2011andincludedinthespecialreportofthestatutoryauditoroftheCompany (seeSection19.3"Special reportof theAuditoron regulatedagreementsestablished fortheyearendedDecember31,2015"ofthisdocumentderéférence)annually.

The services of Thierry Hercend are remunerated on the basis of a quarterly fixed lump sum of€12,500excludingtax.TheCompanypaidThierryHercendfeesamountingto€50,000excludingtaxunderthisagreementinrespectofthefinancialyears2014and2015.

b) The Company entered into a services agreement with Mr. Khoso Baluch. This agreement wasauthorized by the Board of Directors on February 20, 2013. This agreement was terminated onMarch31,2014.Theserviceswereprovidedbasedonaquarterlyremunerationof€7,500excludingtax.Inrespectofthe2014financialyear,thosefeesamountedto€7,500.

TheCompanyalsoenteredintoanindemnificationagreementwithMr.MohammedKhosoBaluchtoindemnify him for the legal costs and convictions he may incur in the event that any liability isimposedagainsthim inhis capacityasadirectorof theCompany.Thisagreementwill continue inforceforaperiodof10yearsfollowingtheterminationofhisdirectorship,andifnecessary,foroneyear from the end of any proceedings that may still be ongoing after this 10 year period. Thisagreementwillbesubjecttotheapprovalofthenextannualgeneralmeeting.

c)TheCompanyentered intoamanagementagreementwithThomasKuhn,CEOof theCompany.Theagreement,previouslyauthorizedbytheBoardofDirectorsonMarch28,2014,wasconcludedonMarch28,2014. It setsout theconditions forThomasKuhn inhiscapacityasCEOofPoxelbyproviding limitationsontheexerciseofpowers (article3)andconditions for theterminationofhisduties(article4),inparticularbyrequiring4months’advancenotice.Thisagreementwasratifiedbythegeneralmeetingof shareholdersof theCompanyon June16,2015and included in thespecialreportof theStatutoryAuditorof theCompany (seeSection19.3 "SpecialReportof theStatutoryAuditor on agreements established for the year endedDecember 31, 2015 " of thisdocument deréférence)annually.

TheagreementwasenteredintoforthetermofofficeofCEOofThomasKuhn,withoutprejudicetotherightofrevocationthatisvestedintheBoardofDirectors.Therefore,theBoardwillnotdecideontherenewalofthisagreementaslongasthetermofofficeofThomasKuhncontinues.Underthisagreement for the financial years 2014 and 2015, an amount of respectively €146,293 gross and€161,009grossisincludedintheexpensesforthefinancialyear.

d)OnDecember12,2014,theCompanyenteredintoanindemnificationagreementwithMr.RichardKenderinordertoindemnifyhimforthelegalcostsandconvictionshemayincurintheeventthatany liability is imposed on him, in his capacity as a director of the Company. This agreementwasenteredintofollowingtheappointmentofMr.RichKenderasadirectorofPoxelonJanuary,8,2015.


173

Theagreementwillcontinuetobeeffectiveforaperiodof10yearsfollowingtheterminationofhisduties as director and, if necessary, for a period of one year following the termination of anyproceedingsstillongoingafterthis10yearperiod. ThisagreementwillbesubmittedtotheapprovalofthenextOrdinaryGeneralMeeting.

e) OnMarch 31, 2016, the Company entered into an indemnification agreement withMr. PierreLegaultinordertoindemnifyhimforanylegalcostsandconvictionshemayincurintheeventthatany liability is imposed on him, in his capacity as a director of the Company. This agreementwasentered intofollowingtheappointmentofMr.PierreLegaultasadirectoronMarch31,2016.Theaim of the agreement is to provide a guarantee in consideration for the duties performed. Theagreementwillcontinueinforceforaperiodof10yearsfollowingtheterminationofhisdutiesasadirectorand,ifnecessary,foraperiodofoneyearfollowingtheterminationofanyproceedingsstillongoingafterthis10yearperiod.

ThisagreementwillbesubmittedtotheapprovalofthenextOrdinaryGeneralMeeting.

f) OnMarch 31, 2016, the Company entered into an indemnification agreement withMrs JaniceBourqueinordertoindemnifyherforanylegalcostsandconvictionsshemayincurintheeventthatany liability is imposed on her, in her capacity as a director of the Company. This agreementwasenteredintofollowingtheappointmentofMrsJaniceBourqueasadirectoronMarch31,2016.Theaim of the agreement is to provide a guarantee in consideration for the duties performed. Theagreementwillcontinueinforceforaperiodof10yearsfollowingtheterminationofherdutiesasadirectorand,ifnecessary,foraperiodofoneyearfollowingtheterminationofanyproceedingsstillongoingafterthis10yearperiod.

ThisagreementwillbesubmittedtotheapprovalofthenextOrdinaryGeneralMeeting.

19.3 SpecialreportoftheAuditorsonregulatedagreementsandcommitments

TotheShareholders,

Inourcapacityasauditorsofyourcompany,wepresentourreportonregulatedagreementsand

commitments.

It isourdutytoinformyou,onthebasisof informationprovidedtous,ofthecharacteristics,the

essential terms and the reasons justifying the interest for the company of agreements andcommitmentsofwhichwehavebeenadvisedor thatwediscoveredduringourmission,without

commenting on their usefulness and appropriateness or identifying such other agreements andcommitmentsexist.Itisyourresponsibility,pursuanttoArticleR.225-31oftheFrenchcommercial

code,toassesstheinterestinconcludingtheseagreementswithaviewtotheirapproval.

Furthermore, it is our responsibility, if any, to provide youwith the information provided for in

ArticleR.225-31of theFrenchcommercial code relating to theexecution,during thepast finicalyear,ofagreementsandcommitmentsalreadyapprovedbygeneralmeetingoftheshareholders.

We performed the due diligence that we considered necessary regarding the professionalguidelines of the National Company of Auditors relating to this engagement. This due diligence

consistedinverifyingtheconsistencyoftheinformationprovidedtouswiththesourcedocumentsfromwhichitisderived.


174

AGREEMENTSANDCOMMITMENTSSUBJECTTOTHEAPPROVALOFTHEGENERALMEETING

Agreementsandcommitmentsauthorizedduringthepastfinancialyear

Pursuant to article L. 225-10 of the French commercial code, we were advised of the following

agreements and commitments that were subject to the prior authorization of your Board ofDirectors:

- IndemnificationagreementwithMr.RichardKender

Personconcerned:RichardKender,director.

Purpose:agreemententeredintoonDecember12,2014withMr.RichKendertoindemnifyhimfor

legal costs and convictions hemay incur in the event that any liability is imposed on him, in hiscapacityasadirectoroftheCompany.Thisagreementwasenteredintofollowinghisappointment

asdirectorofPoxelonJanuary8,2015.

At itsmeeting onMarch 31, 2016, the Board of Directors of your company confirmed that this

agreementcontinuestomeettherequirementpursuanttowhichitgaveitsapprovalandindicatedthatitmaintainstheauthorizationpreviouslygiven.

Agreementsandcommitmentsnotpreviouslyauthorized

PursuanttoarticlesL.225-42andL.823-12oftheFrenchcommercialcode,weinformyouthatthe

followingagreementswerenotsubjecttopriorauthorizatonbytheBoard.

Itisourresponsibilitytoinformyouofthecircumstancesinwhichtheauthorizationprocedurewas

notfollowed.

- IndemnificationagreementwithMr.MohammedKhosoBaluch

Personconcerned:MohammedKhosoBaluch,director.

Purpose: agreement entered into on December 12, 2014withMr.Mohammed Khoso Baluch toindemnifyhimforlegalcostsandconvictionshemayincurintheeventthatanyliabilityisimposed

onhim,inhiscapacityasadirectoroftheCompany.

Theauthorizationprocedurewasnotfollowedbysimpleomission.

Agreementsandcommitmentsauthorizedsincetheendofthefinancialyear

Wehavebeenadvisedofagreementsandcommitments,authorizedsincetheendofthefinancial

year,whichweresubjecttopriorauthorizationofyourBoardofDirectors.

- IndemnificationagreementwithMr.PierreLegault

Personconcerned:PierreLegault,director.


175

Purpose:agreemententeredintoonMarch31,2016,withMr.PierreLegaulttoindemnifyhimfor

legal costs and convictions hemay incur in the event that any liability is imposed on him in hiscapacityasadirectoroftheCompany.

Reason: this agreement was entered into following the appointment of Mr. Pierre Legault as adirector. The aim of the agreement is to provide a guarantee in consideration for the duties

performed.

- IndemnificationagreementwithMrsJaniceBourque

Personconcerned:JaniceBourque,director.

Purpose:agreemententeredintoonMarch31,2016,withMrsJaniceBourquetoindemnifyherfor

legal costsandconvictions shemay incur in theevent thatany liability is imposedonher, inhercapacityasadirectoroftheCompany

Reason: thisagreementwasentered into followingto theappointmentofMrs JaniceBourqueasdirector. The aim of the agreement is to provide a guarantee in consideration for the duties

performed.

AGREEMENTS AND COMMITMENTS ALREADY APPROVED BY THE GENERAL MEETING

Agreements and commitments approved during prior financial years and whose executioncontinuedduringthepastyear

PursuanttoArticleR.225-30oftheFrenchcommercialcode,wewereinformedthatthefollowingagreementsandcommitments,alreadyapprovedby theGeneralMeeting inprior financialyears,

continuedduringthepastyear.

- ConsultingagreementwithMr.ThierryHercend

Personconcerned:ThierryHercend,director.

Purpose:consultingagreementwithMr.ThierryHercendenteredintoJuly1,2010forthedefinitionandimplementationofpreclinicalandclinicaldevelopmentstrategy,andforbusinessdevelopment

activitieswiththeaimofpromotingthegrowthofthecompany.Theagreementhadaninitialtermof12months fromJuly1,2010, renewablebytacitconsentper12monthperiod, foraquarterly

compensationofEUR12,500excludingtax.

Compensation:anamountofEUR50,000excludingtaxismentionedinthechargeofthefinancial

yearinthisregard.

At itsmeeting onMarch 31, 2016, the Board of Directors of your company confirmed that this

agreement continues tomeet the requirements pursuant to which it gave its authorization andstatedthatitmaintainstheauthorizationpreviouslygiven.


176

- ManagementagreementwithMr.ThomasKuhn

Personconcerned:Mr.ThomasKuhn,CEO.

Purpose:managementagreementwithMr.ThomasKuhnenteredintoonMarch28,2014providingamissionofmanagement for the companywith a limitationon thepowers applicable and for a

term equivalent to that of hismandate as CEO. This agreement also sets out the conditions fordetermininghisgrossannualremuneration.

Remuneration: inrespectofthismission,asumof€161,009gross is included intheexpensesforthatthefinancialyear.

At itsmeeting onMarch 31, 2016, the Board of Directors of your Company confirmed that thisagreement continues tomeet the requirements pursuant to which it gave its authorization and

statedthatitmaintainstheauthorizationpreviouslygiven.

MadeinLyonandCourbevoie,onMarch31,2016

TheStatutoryAuditors

MAZARS PricewaterhouseCoopersAudit

FrédéricMAUREL ElisabethL’HERMITE


177

19. FINANCIAL INFORMATION CONCERNING THE ISSUER’S ASSETS ANDLIABILITIES,FINANCIALPOSITIONANDPROFITSANDLOSSES

19.1. FinancialstatementsdrawnupunderIFRSforfinancialyearendedDecember31,2015

19.1.1. Statementoffinancialposition

POXEL Notes

12/31/2015

12/31/2014

Statementoffinancialposition

€

€

Assets

Intangibleassets 3

540

910

Property,plantandequipment 4

152,748

21,335

Otherfinancialassets 5

533,428

285,569

Deferredtaxassets 19

-

-

Totalnon-currentassets

686,715

307,813

-

-

Tradereceivables 6

11,580

-

Otherreceivablesandrelatedaccounts 6

3,736,414

3,264,451

Currenttaxassets 19

-

-

Cashandcashequivalents 7

42,413,402

10,253,635

Totalcurrentassets 46,161,396

13,518,086

Totalassets 46,848,112 13,825,899

LIABILITIESANDSHAREHOLDERS’EQUITY

Shareholders’equity Sharecapital 9

389,648

250,163

Premiumsrelatedtosharecapital 981,923,707

30,366,675

Reserves 9(32,044,525)

(19,081,894)

Netloss 9(12,241,013)

(14,082,448)

Totalshareholders’equity 38,027,817

(2,547,504)

Non-currentliabilities Employeebenefitobligations 12

129958

97,758

Financialliabilities 111553926

4,317,707

Totalnon-currentliabilities 1683884

4,415,465

Currentliabilities Financialliabilities 11

2,397,150

8,551,302

Provisions 13-

-

Tradepayables 14.14,336,522

3,098,682

Taxandemployee-relatedpayablesandothercurrentliabilities 14.2379,739

307,955

Othercreditorsandotherliabilities 14.223,000

-

Totalcurrentliabilities

7,136,411

11,957,939

Totalliabilitiesandshareholders’equity 46,848,112 13,825,899


178

19.1.2. Statementofloss

POXEL Notes

12/31/2015

12/31/2014

Statementofloss

€

€Revenue 15

59,650

-

Costofsales

-

-

Grossmargin 59,650

-

Researchanddevelopment,net Researchanddevelopmentexpenses 16.1

(9,237,820)

(6,996,109)

Subsidies 16.11,919,071

1,978,575

Generalandadministrative 16.2(4,461,852)

(1,878,448)

Otherincome

-

-

Otherexpenses

(0)

-

Operatingloss

(11,720,952)

(6,895,982)

Financialexpenses 18(908,575)

(7,258,193)

Financialincome 18418,176

71,938

Foreigncurrencyexchangeloss 18(29,662)

(212)

Netlossbeforetax

(12,241,013)

(14,082,448)

Incometaxes 19-

-

Netloss

(12,241,013)

(14,082,448)

Earningslosspershare Notes 12/31/2015 12/31/2014(1)

Weightedaverageofsharesincirculation

17,918,891

9,976,856

Basiclosspershare(€/action) 20(0.68)

(1.41)

Dilutedlosspershare(€/share) 20(0.68)

(1.41)

(1)Afterthe20-to-1sharesplitthatoccurredonMarch28,2014

19.1.3. Statementofcomprehensiveloss

POXEL-IFRS Notes

12/31/2015

12/31/2014

Statementofcomprehensiveloss

€

€

Netlossfortheyear

(12,241,013)

(14,082,448)

Actuarialgainsandlosses

(9,546)

12,228

Effectsoftaxesrelatingtotheseitems

Othercomprehensiveincome(loss)

(9,546)

12,228

Totalcomprehensiveloss

(12,250,559)

(14,070,220)


179

19.1.4. Changesinequity

Numberof

shares

Sharecapital

Premiumsrelatedtosharecapital

Reservesandnetloss(1)(5)

Ecartsdeconversion

Accumulatedcomprehensive

loss

Totalshareholders’

equity

POXEL Changesinequity

€ € € € € €AsofDecember31,2013 389990 194997 352773 (20532859) (25132) (20010221)

Netlossfortheperiod

(14082448)

(14082448)

Othercomprehensiveincome

12228 12228

Totalcomprehensiveincome(loss) -

- (14082448)

- 12228 (14070219)

Dividends

-

Effectofa20-for-1sharesplit 7409810

-

Issuanceofshares 4708356 94167 31014568

31108735

Subscriptionofsharewarrants(BSA)

30001

30001

Equity-settledshare-basedpayment

792533

792533

Capitaldecrease (39001)

39001

-Cost incurred in relation to equitytransactions(2)

(1030667)

(1030667)

Others(3)

632334

632334

AsofDecember31,2014 12508156 250163 30366675 (33151439)- (12904) (2547504)

Netlossfortheperiod

(12241013)

(12241013)

Othercomprehensiveloss

(9546) (9546)

Totalcomprehensiveincome(loss) (12241013) (9546) (12250559)

Dividends

-

20-for-1sharesplit

-

Issuanceofshares 6974238139485 54332608

54472093

Subscriptionofsharewarrants(BSA)

85425

85425

Equity-settledshare-basedpayment

1179190

1179190

Capitaldecrease -

-

-

Treasurysharesheld

(49826)

(49826)Costs incurred in relation to equitytransactions(4)

(2861000)

(2861000)

Others

-

-

AsofDecember31,2015 19482394 389648 81923707 (44263088)- (22450) 38027817

(1) As we only operates in France and does not have foreign subsidiaries, there is no foreign currency translation adjustment included in the reserves.

(2) Costs have been incurred in relation to the initial public offering on Euronext Paris completed in February 2015 for €1,030,667.

(3) The amount recognized in shareholders’ equity is related to the equity component in relation to the agreement with Kreos (cf. note 11.5)

(4) Costs have been incurred in relation to (i) the initial public offering on Euronext Paris completed in February 2015 and (ii) the private placement with investors completed in July 2015 for €1,263,000 and €1,598,000 respectively.

(5) Including the legal statutory reserve of €97,699


180

19.1.5. Tableofcashflow

POXEL-IFRS Notes

12/31/2015

12/31/2014Cashflows

€

€

Cashflowsfromoperatingactivites Netlossfromcontinuingoperations

(12,241,013)

(14,082,448)

Netlossfromdiscontinuedoperations Netlossfortheperiod

(12,241,013)(14,082,448)

(+)Amortizatonofintangibleassets 3(1,077)

(285)

(+)Amortizationofproperty,plantandequipment 4(21,898)

(12,057)

(-)Changeinprovisions 12(22,654)

(24,676)

(-)Expensesassociatedwithshare-basedpayments 10(1,179,190)

(792,533)

(+)Interestexpense

(494,155)(234,375)

(-)Interestincome

288,52065,729

(-)Changesinthefairvalueoffinancialliabilities(convertiblebonds) 11.3-

(2,049,160)

(-)ChangesinthefairvalueofthefinancialliabilityrelatedtoMerckSerono 11.4

52,214

(4,736,958)

(-)ChangesinthefairvalueofthederivativeandeffectofunwindingthediscountrelatedtoKreos 11.5

(290,379)

(209,023)

(-)Grantstransferredtoincome 11.2(52,019)

(28,677)

Cashflowsfromoperatingactivitiesbeforechangeinworkingcapitalrequirements

(10,520,376)

(6,060,434)


(459,110)28,915

Cashflowsfromoperatingactivities

(10061,267)

(6,089,349)

Cashflowsfrominvestingactivities Acquisitionofintangibleassets 3(706)

(1,050)

Acquisitionsofproperty,plantandequipment 4(143,243)

(12,826)

Interestreceived

288,52065,729

Othercashflowsfrominvestingactivities 5(47,684)

(276,950)

Cashflowsfrominvestingactivities 96,887

(225,097)

Cashflowsfromfinancingactivities Sharecapitalincrease,includingpremium,netandexpenses(1) 1044,361,476

3,969,334

Subscriptionofsharewarrants(BSA) 1085,425

30,001

Liquidityagreement

(250,000)-

Interestpaid

(461,745)(234,375)

Repaymentofloansandconditionaladvances 11.2(1,611,010)

(22,500)

Issuanceofbonds 11.3-

4,855,000

Cashflowsfromfinancingactivities 42,124,146

8,597,460

Impactofforeigncurrencyexchangefluctuations

-

Increase(decrease)incashandcashequivalents 32,159,766

2,283,013

Cashandcashequivalentsasoftheopenngdate(includingshort-termbankoverdrafts) 10,253,6357,970,622

Cashandcashequivalentsasoftheclosingdate(includingshort-termbankowerdrafts)

42,413,402

10,253,635

Increase(decrease)incashandcashequivalents 32,159,767

2,283,013

(1) 2015 “Share capital increase, includingpremium,netofexpenses” (€44,361,476) reconcileswith “issuanceof shares” (€54,472,093) in the statementofchangesinshareholders’equityafterdeductionof“Costsincurredinrelationtoequitytransactions”(€2,861,000)aswellasnon-cashactivitiessuchasexerciseofMSShareWarrants(€7,249,616),withnoimpactoncash.


181

2014Sharecapitalincrease,includingpremium,netofexpenses”(€3,969,334)reconcileswith“issuanceofshares”(€31,108,735)inthestatementofchangesinshareholders’equityafterdeductionof“Costsincurredinrelationtoequitytransactions”(€1,030,667)aswellasnon-cashactivitiessuchasconversionofconvertiblebonds(€26,108,735).

19.1.6. Detailedanalysisofthechangesinworkingcapitalrequirements(BFR)

Detailofthechangesinworkingcapital

12/31/2015

12/31/2014

Receivablesandrelatedaccounts(netofdepreciationoftradereceivables)

11,580

-

Otherreceivables(1)

851,866

(1,381,388)

Tradepayables

(1,227,772)

1,380,498

Taxandsocialsecurityliability

(71,785)

29,806

Othercreditorsandotherliabilities

(23,000)

-

Totalchangesinworkingcapital

(459,110)

28,915

19.1.7. NotestotheIFRSfinancialstatements

Note1:Presentationoftheactivityandmajorevents

ThefollowinginformationistheAnnexoftheIFRSfinancialstatementsandisanintegralpartofthefinancial statements for the financial years ended December 31, 2015 and 2014. Each of thesefinancialyearscoversaperiodoftwelvemonthsfromJanuary1sttoDecember31.

1.1GeneralinformationtheCompany

IncorporatedinMarch2009asaresultofaspin-offoftheMerckSeronopharmaceuticalcompany,PoxelS.A.isaFrenchjointstockcompany(sociétéanonyme)governedbyFrenchlawanddevelopingmoleculesforthepotentialtreatmentoftype2diabetes.

TheCompanyhasincurredlossesandnegativecashflowsfromoperationssinceits inception.Suchlosses result principally from internal and external research and development expenses forconducting numerous pre-clinical and clinical trials, primarily as part of the development ofImeglimin.

TheCompany’sfutureoperationsarehighlydependentonacombinationoffactors,including:(i)thesuccess of its research and development; (ii) regulatory approval and market acceptance of theCompany’s proposed future products; (iii) the timely and successful completion of additionalfinancing; and (iv) the development of competitive therapies by other biotechnology andpharmaceutical companies. As a result, the Company is and should continue, in the short tomid-term,tobefinancedthroughpartnershipagreementsforthedevelopmentandcommercializationofitsdrugcandidatesandthroughtheissuanceofnewequityinstruments.

Headofficeaddress:

259/261AvenueJeanJaurès–ImmeubleleSunway–69007Lyon

Numberunderwhich theCompany is registeredwith theRegistreduCommerceetdesSociétés:510970817RCSdeLYON

POXELSAishereinafterreferredtoasthe“Company”.

TheCompanyhadnosubsidiariesorholdingsasatDecember31,2015.


182

1.2Significantevents

ContractswithMerckSeronoandamendments

TheCompanyenteredintoatransferandlicenseagreementwithMerckSeronoonMarch19,2009,amendedon July30,2009, June22,2010andMay23,2014 (the“MSAgreement”),aspartof thespin-offofMerckSerono’sresearchanddevelopmentactivitiesinthecardiometabolicfield.In order to support its research and development activities and given Merck Serono’s economicinterest inthedevelopmentoftheCompany,at inceptionoftheCompany,MerckSeronoprovidedtheCompanywithatotalnon-repayableamountof€7.2million.In accordance with this MS Agreement, Merck Serono transferred certain patents and granted alicenseforotherpatentsandknow-howtotheCompanyfortheresearchanddevelopment,andthemarketing of pharmaceutical products. This license is exclusive covering a list of 25molecules, byprogram,selectedbytheCompany.InexchangefortherightsthatweregrantedundertheMSAgreement,MerckSeronowasentitledtothefollowingcompensation:

• royalties on net sales of the products covered by the patents granted or granted underlicensebyMerckSeronoatarateequivalenttoahighsingledigitinthehigherportionoftherangeforImeglimin,andatalowsingledigitrateinthelowerpartoftherangefortheotherproducts;

• apercentageoftherevenuefromanypartnershipagreementrelatingtothedrugcandidatescoveredbythepatents,grantedorgrantedunderlicense,soldorlicensed,atalowdouble-digitratenearthebottomoftherange.Forothercompounds,iftheCompanywouldenterintoapartneringagreement,theCompanywouldoweapercentageofpartneringrevenueswithrespecttoproductscoveredbyMerckSerono’sassignedorlicensedpatentsdependingontheproductanditsstageofdevelopmentwhenitispartnered.

• anamountcorrespondingtoapercentageofsalespriceoftheCompany’ssharesintheeventthat the Company is sold. This amount will be paid by the Company and not by itsshareholders.

Thethirditemhasbeenrecognizedatfairvaluethroughprofitandloss,andclassifiedasafinancialliabilityinthestatementoffinancialposition.

Inpreparation for theCompany’s initialpublicofferingonEuronextParis,onMay23,2014,MerckSeronoagreedtowaiveitsrightsrelativetothethirditemdescribedabove,butonlyintheeventtheinitialpublicofferingonEuronextPariswassuccessful,andinexchangefor1,088,531ordinarysharesfromtheCompanyrepresenting7.69%oftheCompany’ssharecapitalonafully-dilutedbasispriortotheinitialpublicoffering.

However, in the context of the preparation of the IPO of the Company and pursuant to theamendmentstothecontractsignedMay23,2014andNovember28,2014,thepartiesagreedintheonlyassumingthecompletionoftheIPO,inreturnforthesurrenderMerckSerono'srightsincaseofsaleoftheCompany,thelatterwillreceive(i)1,088,531warrantsofsharesentitlingitaspartofIPO,thesubscriptionof1,088,531commonsharesatapriceof€4pershare,representing7.69%oftheshare capital of the Company on a fully diluted basis prior to the public offering and (ii) a claimagainsttheCompanyforuseinthepaymentofthesharesissuedbyexerciseofthewarrantsMS.

However,InpreparationfortheCompany’sinitialpublicofferingonEuronextParis,onMay23,2014andNovember28,2014,Merckagreedtowaiveitsrightsrelativetothethirditemdescribedabove,but only in the event the initial public offering on Euronext Paris is successful, and in exchange


183

receivedfromtheCompany(i)1,088,531ordinarysharesrepresenting7.69%oftheCompany’ssharecapitalonafully-dilutedbasispriortotheinitialpublicofferingand(ii)areceivableontheCompanytopayfortheshareissuedbyexerciseoftheBSAMS.

ThisamendmentresultedinthefinancialliabilitybeingpotentiallyconvertibleintoafixedamountofordinarysharesoftheCompany.BecausetheconversionratiobetweenthefinancialliabilityandthesharestobeissueddidnotmeetthefixedamountofcashforafixedamountofownsharesIAS32rule, the conversion option met the definition of an embedded derivative that needed to bebifurcated. To avoid having to split the embeddedderivative, theCompany continued tomeasurethatfinancial liability, includingthecontingentconversionoftheliability intoitsownshares,atfairvaluethroughprofitand loss,consistentwith IAS39paragraph11A.Thisamendmentresulted inasignificantchangeinthefairvalueofthefinancialliabilityasofDecember31,2014(seeNote12.4).

OnFebruary6,2015,followingtheinitialpublicoffering,thefinancialliabilitywasrecalculatedatfairvalue being the fair value on the basis of an issuance price of €6.66 for each share and has beenreclassifiedintoequityforatotalamountof€7,249,000(seeNote11.4).

InitialpublicofferingonEuronextmarketinParis

Inordertofinance itsvariousresearchanddevelopmentprojects,theCompany launchedits initialpublicofferingonCompartmentC(smallcaps)oftheEuronextregulatedmarketinParisonFebruary6,2015.Followingthefullexerciseoftheover-allotmentoptionrelatingto281,249additionalnewsharesattheofferprice,i.e.,€6.66pershare,thetotalnumberofsharesofferedbytheCompanyforthe initialpublicofferingamounted to4,031,248newordinary shares.Total grossproceedsof theissue amounted to approximately €26.8 million. The costs associated with the issuance of theseequity instruments representanaggregateamountofapproximately€3,140,000.Thesecostshavebeen recognized as general and administrative expenses and indeductionof thepremium for thepartdirectlyrelatedtothecapitalincrease(Note16.2).

Sharecapitalincrease

- OnFebruary6,2015,1,088,531sharewarrantswereexercisedbyMerckSerono,resultingintheissuanceofthesameamountofsharesforapriceof€4.ThispricewassetbyoffsettingthedebtrecognizedintheaccountsoftheCompany.Pursuanttothistransaction,therewasacapital increaseof€21,770.62correspondingtothe issueof1,088,531newshareswithaparvalueof€0.02each.ThesharecapitaloftheCompanywasthensetat€271,833.74.

- OnJuly24,2015,theCompanyannouncedthatithadraisedatotalof€20millionthroughaprivateplacementtoUSandEuropeaninvestors.LeadingUShealthcareinvestorsrepresent91% of the private placement. As a result of the transaction, the Company recognized anincreaseinsharecapitalandpremiumsrelatedtosharecapitalof€35,000and€19,972,000respectively, corresponding to the creation of 1,762,793 new ordinary shares with a parvalueof€0.02perordinaryshare(seeNote9).Thenewordinarysharesissuedweresoldtoinvestorsatapriceof€11.35pershare,reflectingadiscountof10.9%basedonthelast20tradingdaysweighted-averageprice,orVWAP,precedingtheclosingdate.Inrelationtothisequity transaction, total transaction costs were €1,598,000 and has been recognized as areduction of equity in accordance with IAS 32 for the year ended December 31, 2015.Pursuanttothistransaction,thesharecapitaloftheCompanywassetat€387,814.56.

- OnOctober28,2015,45,833sharewarrantswereexercisedbyKreosCapitalIV(UK)Ltdforastrike price of €4, representing a capital increase of €916.66 plus a premiumof €182,415.Pursuanttothistransaction,thesharecapitaloftheCompanywassetat€388,731.22.


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- OnNovember6,2015,45,833sharewarrantswereexercisedbyKreosCapitalIV(UK)Ltdforastrikepriceof€4,representingacapital increaseof€916.66plusapremiumof€182,415.Pursuanttothistransaction,thesharecapitaloftheCompanywassetat€389,647.88.

As a result of each of these decisions, the share capital of the Company is €389,647.88dividedinto19,482,394shareswithaparvalueof€0.02each.

Firstlicenseagreement

InMay2015, theCompanysigneda licenseagreementwithEnyoPharmaSAS,orEnyo,—anewly-established company focused on the treatment of acute and chronic viral infection—pursuant towhich Enyo gains access to Poxel’s FXR (farnesoid X receptor) agonist compounds for infection-related indicationswith the Company retaining rights for cardiovascular andmetabolic indicationsamong others. The agreement provides the Company with €50,000 recognized in revenuerepresenting the cash consideration received in exchange for the license granted to Enyo. As therightsoftheFXRmoleculearethepropertyofMerckSerono,theCompanywillhavetopaytoMerckSerono90%oftheamountreceivedaslicensingrights.Asaresult,anamountof€45,000hasbeenrecognizedasanaccruedliabilityasatDecember31,2015inthestatementoffinancialposition.

InNovember2015,theCompanysignedanotherlicenseagreementwithEnyo,givingEnyoaccesstoa keypatenton theuseof FXR technology todevelop treatments forhepatitisB. TheFXRagonisttechnologywasdiscoveredandpatentedbytheCompany incollaborationwithacademicpartners,representedbyInsermTransfertandLyonnaisecompanyEDELRIS.InsermTransfertwasmandatedtorepresentallthepartiesofthispatentlicensingagreementwithENYOPharmaSA.

Inrelationtothisagreement,theCompanyrecorded€10,000inrevenueforthefinancialyearendedDecember31,2015.

Liquidityagreement

A liquidityagreementwasentered intowithOddoeffectiveasofMarch26,2015 fora renewableperiodofoneyear.ThiscontractentitlesOddototransactonEuronext,ontheCompany’sbehalf,inordertoenhancetheliquidityoftransactionsandregularityofquotationoftheCompany’sordinaryshares.

Therelatedsharesrepurchasedareincludedastreasurysharesindeductionofequity.

The initial advance payment made to Oddo for the purpose of making transactions under thiscontractwas€250,000.Thebalanceispresentedinthelineitem“Othernon-currentfinancialassets”inthestatementsoffinancialposition.

1.3Post-balance-sheetevents

On February9, 2016, Kreos Capital IV (UK) exercised 45,834 warrants at an exercise price of€4.00perwarrantrepresentingacapitalincreaseof€916.68plusapremiumof€182,419.

OnFebruary17,2016,anemployeeexercised150BSPCEcorrespondingto3,000ordinarysharesatanexercisepriceof€3.20representingacapitalincreaseof€60plusapremiumof€9,540.

As consequence, the share capital of the Company is €390,624.56 divided into 19,531,228 shareswithaparvalueof€0.02.


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Note2:Principles,rulesandaccountingpolicies

TheFinancialStatementsarepresentedineurosunlessstatedotherwise

2.1Principlesusedfordrawingupfinancialstatements

Declarationofconformity

TheCompanyprepared itsFinancialStatementsdrawnupbytheBoardofdirectors, inaccordancewith International Financial Reporting Standards (IFRS), as issued by the International AccountingStandardsboard(IASB)andadoptedbytheEuropeanUnion.

These accounting standards, available on the European Commission’s website(http://ec.europa.eu/internal_market/accounting/ias_fr.htm),includetheIASandIFRSinternationalaccountingstandards,theinterpretationsfromtheStandingInterpretationsCommittee(SIC)andtheinterpretationsfromtheInternationalFinancialReportingInterpretationsCommittee(IFRIC).

TheprinciplesandaccountingmethodsandoptionschosenbytheCompanyaredescribedbelow.Insome cases, IFRS provides an option between the application of a standard treatment or otherauthorizedtreatment.

Principleforthepreparationofthefinancialstatement

The Financial Statements were prepared on a historical costs basis except for certain assets andliabilities,asallowedbyIFRS.Thecategoriesofassetsandliabilitiesnotmeasuredathistoricalcostaredisclosedinthefollowingnotes.

Continuityofoperation

Theassumptionof going concernwasusedgiven theCompany’s financialpositionand liquidity tomeetitsfinancingneedsforthenext12monthsfollowingthereportingdate.

Accountingpolicy

TheaccountingpoliciesandmeasurementprinciplesadoptedforthefinancialstatementsasofandfortheyearendedDecember31,2015arethesameforthecomparativeperiodpresented,exceptfor the application of new standards and interpretations adopted by the European Union andmandatoryasatJanuary1,2015.

Standards,amendmentstostandardsandinterpretationsapplicableasofJanuary1st2015

TheCompanyadoptedthefollowingnewstandardsandinterpretationsasofandfortheyearendedDecember31,2015:

• IFRIC21:Taxes• ImprovementtoIFRS(2011-2013)

Noneof theseamendmentsand interpretationshashadan impacton theFinancial StatementsoftheCompany.


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Standardsandinterpretationsissuedbutnotyeteffective

• AmendmentstoIAS19:DefinedBenefitPlans:EmployeeContributions• AmendmentstoIAS16andtoIAS41:Bearerplants• AmendmentstoIFRS11:Acquisitionofaninterestinajointoperation• Amendments to IAS 16 and to IAS 38: Clarification of acceptable methods of

depreciationandamortization• AmendmentstoIAS1:Disclosureinitiative• ImprovementstoIFRS(cycle2010-2012)• ImprovementstoIFRS(cycle2012-2014)

TheCompanyhasconsideredannualimprovementstoIFRSwithoutidentifyinganysignificantimpactontheFinancialStatements.

2.2Useofjudgementsandestimates

In order to prepare financial statements in accordance with IFRS, estimates, judgments andassumptionsweremadebytheCompany’smanagementwhichcouldaffectthereportedamountsofassets,liabilities,contingentliabilities,incomeandexpenses.

TheseestimatesarebasedontheassumptionoftheCompanycontinuingasagoingconcernandarepreparedinaccordancewithinformationavailableatthedateoftheUnauditedInterimConsolidatedFinancialStatementswereprepared.Theyare reviewedonanongoingbasisusingpastexperienceandvariousotherfactorsconsideredtobereasonableasthebasistomeasurethecarryingamountofassetsandliabilities.Estimatesmayberevisedduetochangesintheunderlyingcircumstancesorsubsequent tonew information.Actual resultsmaydiffer significantly from theseestimates in linewithassumptionsordifferentconditions.

The main estimates or significant judgments made by the Company’s management impact thefollowingitems:

• Grant of share-based compensation in the form of share warrants (bons desouscription d’actions, or BSAs) or in the form of founder’s share warrants (bons desouscription de parts de créateur d’entreprise, or BSPCEs) to employees, executives andscientificconsultants(Note10);

• Measurement of the financial liabilities such as those related to Merck Serono,convertiblebondsandKreos(Notes11.3,11.4and11.5below);

• Recognitionofdeferredtaxassets(Note19andNote2.21below).

2.3Changesintheaccountingpolicy

Asidefromthenewstandards,amendmentsandinterpretationsmentionedabove,theCompanydidnotchangeanyaccountingmethodsfortheyearendedDecember31,2015.

2.4Functionalcurrencyusedinthepresentation

TheFinancialStatementsarepreparedineuroswhichistheCompany’spresentationandfunctionalcurrency.


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2.5Foreigncurrency

Transactions in foreigncurrencyare translated into theCompany’s functionalcurrencybyapplyingthe foreign exchange rate in effect at the transaction date. Monetary assets and liabilitiesdenominatedinaforeigncurrencyaretranslatedintothefunctionalcurrencyattheyear-endclosingexchangerate.

Any resulting foreign exchange gains and losses onmonetary assets correspond to the differencebetweentheamortizedcostinthefunctionalcurrencyattheopeningoftheperiod,adjustedfortheimpact of the effective interest rate and payments for the period, and the amortized cost in theforeigncurrencytranslatedattheyear-endclosingexchangerate.

Non-monetary assets and liabilities denominated in a foreign currency that are measured at fairvaluearetranslated intothe functionalcurrencyusingtheexchangerateat thedateonwhich fairvalue was determined. Any resulting translation differences are recorded in income, with theexceptionof translationdifferences resulting fromavailable-for-saleequity instruments,a financialliability designated as a hedgeof a net investment in a foreignoperation, or instruments that arequalifiedascashflowhedges,whicharerecordeddirectlyinshareholders’equity.

Receivables andpayablesdenominated in a foreign currencyare recordedat theexchange rate ineffectattheinitialtransaction.Atyear-end,theaccountscorrespondingtoassetsandliabilitiesarevaluedattheclosingexchangerate.

2.6Distinctionbetweencurrentandnon-current

Companypresentsitsbalancesheetdistinguishingcurrentandnon-currentassetsandliabilities.

Thefollowingruleswereappliedinordermakethedistinction:

• Assets and liabilities which constitute the working capital in the normal businesscyclearerecognizedas“current”;

• Assets and liabilities, outside of the normal business cycle, are presented as“current”or“non-current”,accordingtowhethertheirmaturityisofmoreorlessthanoneyearorinaccordancewiththespecificcasesreferredtobyIAS1.

2.7Intangibleassets

Intangibleassetsareprimarilycomposedofacquiredsoftware.

Researchanddevelopmentexpenses

Researchanddevelopmentcostsaresystematicallyrecognizedasexpenses.

UnderIAS38,developmentcostsareonlyrecognizedasintangibleassetsifthefollowingcriteriaaredemonstrated:

• thetechnicalfeasibilityofcompletingtheintangibleassetsothatitwillbeavailableforuseorsale;

• theCompany’sintentiontocompletetheintangibleassetanduseorsellit;

• itsabilitytouseorselltheintangibleasset;


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• howtheintangibleassetwillgenerateprobablefutureeconomicbenefits;

• theavailabilityofadequatetechnical,financialandotherresourcestocompletethedevelopmentandtouseorselltheintangibleasset;

• its ability to measure reliably the expenditure attributable to the intangible assetduringitsdevelopment.

The following costs that aredirectly attributable to theproductionof the intangible assetmaybecapitalized:

• costsofmaterialsandservicesusedorconsumedingeneratingtheintangibleasset;

• costsofemployeebenefitsarisingfromthegenerationoftheintangibleasset.

Expensesarecapitalizedbeforethecompletionoftheactivationconditionsoftheintangibleassets.Expenses cease to be capitalizedwhen intangible assets are ready to beused.Development costscapitalizedareamortizedonastraight-linebasisover5years,theirusefullife.

Softwares

Costs related to the acquisition of software licenses are recognized as assets based on the costsincurredtoacquireandsetuptherelatedsoftware.

Otherintangibleassets

In accordance with IAS 38 criteria, intangible assets acquired are recognized in the financialstatementatpurchaseprice.

Lengthanddepreciationexpense

Intangibleassetswithafiniteusefullifeareamortizedusingthestraight-linemethodoveraperiodofonetothreeyearsdependingontheanticipatedperiodofuse:

Items Depreciationperiod

Licensesandsoftwaredevelopment 1to3years

Depreciation expense of the intangible assets is recognized in the income statement in“Administrativecost”categoryconsideringthenatureofthesoftware.

2.8Property,plantandequipment

Property, plant and equipment is recognized at its acquisition cost (purchase price and directlyattributablecosts)oratitsproductioncostbytheCompany,asapplicable.

Thedepreciationscheduleoftheassetsisdeterminedusingactualusefullife.

Thedepreciationperiodsandmethodsusedareprimarilythefollowing:


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Items Depreciationperiod

Installationsandfittings 5to10years–Straight-line

ITequipment 1to3years–Straight-line

Furniture 5years–Straight-line

Depreciationexpensesforfixedassetsarerecognizedintheincomestatementinthe“Administrativecost”category,consideringthenatureoftheassets.

2.9Lease

Leases, underwhich substantially all of the risks and rewardsof ownership aremaintainedby thelessor, are classified as operating leases. Payments for operating leases, net of any incentives, areexpensedonastraight-linebasisoverthetermofthelease.

Assets financed by way of finance leases within the meaning of IAS 17 Leases, under whichsubstantially all of the risks and rewards of ownership are transferred to the Company, arerecognizedasassetswithacorrespondingliabilityrecordedin“Financialliabilities.”

2.10Impairmentofassets

Assetswithanindefiniteusefullifearenotamortizedbutaretestedannuallyforimpairment.

Amortizedassetsaretestedforimpairmentwheneverinternalorexternaleventsindicateariskthatanassetmaybeimpaired.

Impairmenttestingconsistsofcomparingthecarryingamountofanassettoitsrecoverableamount.The test is performed at the level of the cash-generating unit, or CGU, which is the smallestidentifiable group of assets that generates cash inflows that are largely independent of the cashinflowsfromotherassetsorgroupsofassets.

Impairment is recorded in theevent that the carryingamountexceeds the recoverableamountoftheasset.Therecoverableamountofanassetisthehigherofitsfairvaluelesscostsofdisposalanditsvalueinuse.

Fair value is the price that would be received on the sale of an asset in an orderly transactionbetweenmarketparticipantsatthemeasurementdate.

Valueinuseisthepresentvalueofestimatedfuturecashflowsexpectedtobederivedfromtheuseof an asset and from its disposal at the end of its useful life. Value in use is determined fromestimatedcashflowsfromplansorprojectionsoverfiveyears,thecashflowsbeyondthisperiodareextrapolatedbyapplyingasteadyordeclininggrowthrate,anddiscountedbythelong-termmarketrates before tax reflecting themarket estimates of the time value ofmoney and risks specific toassets. The terminal value was determined based on the test’s last cash flow discounted toperpetuity.


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AsatDecember31,2015:

• TheCompanydidnothaveanyintangibleassetswithanindefiniteusefullife;

• TheCompanyconsistsofonlyoneCGU;

• Non-currentassetsdonotpresentanyindicationofimpairment.

2.11Financialassets

The Company’s financial assets are classified in two categories according to their nature and theintentionofmanagement:

• financialassetsatfairvaluethroughprofitandloss;

• loansandreceivables.

All financial assets are initially recorded at cost corresponding to the price paid increased bytransaction costs.Marketable securities arepresented as cash and cash equivalents.All purchasesandstandardizedfinancialassetssalesarerecordedatthesettlementdate.

Financialassetsatfairvaluethroughprofitorloss

Thiscategoryincludesmarketablesecurities.

Theyrepresentfinancialassetsheldfortradingpurposes,i.e.,assetsacquiredbytheCompanytobesold in theshort-term.Theyaremeasuredat fairvalueandchanges in fairvaluearerecognized inthestatementoflossasfinancialincomeorexpense,asapplicable.Somefinancialassetsmayalsobevoluntarilyclassifiedinthiscategory.

Loansandreceivables

Thiscategoryincludesotherloansandreceivablesandtradereceivables.

Non-current financialassets includeadvancesanddepositsgrantedtothirdpartiesaswellas termdeposits which are not considered as cash equivalents. Advances and deposits are non-derivativefinancialassetswithfixedordeterminablepaymentsthatarenotlistedonanactivemarket.

Suchassetsarerecognizedatamortizedcostsusingtheeffectiveinterestmethod.Gainsandlossesarerecordedintheincomestatementwhenloansandreceivablesarederecognizedorimpaired.

2.12Cash,cashequivalentsandsecurities

Cashandshort-termdepositaremainlycomprisedofcashathandandfixedtermdepositswithaninitialmaturityoflessthanthreemonths.

Cash equivalents are comprised of marketable securities (money market funds) held for trading,easily convertible inaknownamountof cashandare subject toan insignificant riskof changes invalue.Theyaremeasuredat fair valueand subsequent changes in fair valueare recognized in thefinancialstatement.

Forthepurposesofthecashflowstatement,netcashcomprisecashandcashequivalentsasdefinedabove.


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2.13Fairvalueoffinancialinstruments

Securitiesclassifiedascashequivalentsattheendofthefinancialyeararerecognizedatfairvalueinthestatementofloss,withfairvaluecorrespondingtomarketvalue.

Borrowings and financial liabilities are recognized at amortized cost, calculated using the effectiveinterestrateorthefairvalueoptioninthestatementofloss.

Thefairvalueoftradereceivablesandtradepayables isequivalenttotheircarryingamount,giventheshortsettlementtimes.Thesameappliestoothercurrentreceivablesandpayables.

The Company uses the following three-level hierarchy for financial instruments according to theconsequencesthattheircharacteristicshaveontheirvaluationmethodandusesthisclassificationtopresentcertaindisclosuresrequestedinIFRS7:

• Level1:financialinstrumentsthatreflectquotedpricesinactivemarkets;

• Level2: financial instrumentsmeasuredusingobservablemarket inputsother thanLevel1inputs;

• Level 3: inputs not based on observable market data. Unobservable inputs aredefinedasaninputwhosevalueresultsfromassumptionsorcorrelationsthatarenotbasedon transaction prices on the observable market, on the same instrument at themeasurementdate,oronobservablemarketdataavailableatthesamedate.

InstrumentsrecognizedatfairvalueinthestatementoflossheldbytheCompanyinclude:

• cashandcashequivalents,usinglevel1measurementsforcashathandandmoneymarketfunds;

• fixedtermdeposits,usinglevel2measurements;

• Thefairvalueofconvertiblebonds,theliabilityduetoMerckSeronoandthebondsissuedtoKreos(TrancheA),usinglevel3measurements.

2.14Conditionaladvancesandsubsidies

Conditionaladvances

The Company receives several public subsidies and conditional advances. Further information is provided in Note 11.2.

The Company receives interest-free, conditional advances to finance research and developmentprojects.Thedifferencebetweenthepresentvalueoftheadvanceatmarketrate(i.e.,capitalrepaidatmaturitywithoutinterest,discountedtothemarketrate)andtheamountreceivedascashfromtheFrenchpublicinvestmentbankconstitutesasubsidywithinthemeaningofIAS20.Thisdifferencemustberecognizedasasubsidythroughincome,sinceresearchanddevelopmentcostsgeneratedinthe context of the project are immediately expensed and recognized as revenue in the financialstatement.

Financialcostofconditionaladvancesiscalculatedatmarketinterestrateandrecognizedasfinancialexpense.


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Subsidiesarepresentedinthestatementof lossasadeductionofthe“Researchanddevelopmentexpenses”sincetheycorrespondtoinnovationaidandfundingforresearchactivities.

Inthestatementoffinancialposition,theseadvancesarerecordedin“Financialliabilities”ascurrentor non-current portion depending on theirmaturity. In the event the Company fails to achieve aparticular milestone this would trigger reimbursement of the conditional advance, the remainingliabilityisrecognizedasasubsidyinthestatementofloss.

Subsidies

Subsidies received are recognized in the Financial Statements where there exists reasonableassurance that the Company will comply with the conditions attached to the subsidies and thesubsidieswillbereceived.

Operating subsidies are recognized in the Financial Statements as current revenue, taking intoconsideration,whereapplicable,thepaceofcorrespondingexpendituresinordertocomplywiththeconceptofmatchingrevenuesandexpenses.

Researchtaxcredit

The Research Tax Credit (Crédit d’Impôt Recherche) is granted to companies by the Frenchgovernment to promote technical and scientific research. Companies that prove that they haveexpenditurethatmeetstherequiredcriteriareceiveataxcreditthatcanbeusedforthepaymentofthecorporatetaxdueforthefinancialyearinwhichtheexpenditurewasmadeandthenextthreefinancialyears,or,asapplicable,canbereimbursedincash.

TheResearchTaxCreditispresentedasareductionof“Researchanddevelopmentexpenses”inthestatementofloss.

TheCompanyhasreceivedtheResearchTaxCreditsinceitsincorporation.

YoungInnovativeEnterprise(“Jeuneentrepriseinnovante”)

The Company is eligible to qualify as a Young Innovative Enterprise that carries out research anddevelopment projects. In this respect, the Company benefits primarily from a reduction of socialsecuritychargesoncompensationpaidtocertaintypesofemployees.Thissubsidyisdeductedfromtheexpenseitemstowhichitrelates.

2.15Receivables

Receivables aremeasured at nominal value. An impairment is recognized, where applicable, on acase–by–casebasistotakeintoaccountcollectiondifficultieswhicharelikelytooccur.

Receivables and related accounts include the nominal value of the Research Tax Credit which isrecognized as a receivable for the period corresponding to the current financial year inwhich theeligibleexpensesthatgaverisetothetaxcreditwereincurred.

2.16Sharecapital

The ranking of equity depends on the specific analysis of the characteristics of each instrumentissued.Basedonthisanalysis,ordinarysharesandpreferredsharesissuedbytheCompanysinceitsincorporationhavethereforebeenclassifiedasequityinstruments.


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TheCompany’sownsharesboughtinthecontextofabrokering/liquidityagreement(Note1.2)arepresentedasareductioninequity.

Transactioncostsdirectlyattributabletotheissuanceofsharesorsharewarrantsarerecognizedasadeductionfromshareholders’equity.Furthermore,intheabsenceofclarificationofIAS32standardstheCompanychosetoaccountforthesecostsasadeductioninequitybeforethecompletionofthetransaction if the financial year ends between the date of the benefits and the date of thetransaction.Intheeventthatthetransactionwouldnothappen,thesecostswouldberecognizedasexpensesthefollowingyear.

2.17Share-basedpayments

Since itsincorporation,, theCompanyhasestablishedseveralplans forcompensationpaid inequityinstrumentsintheformofsharewarrants(Bonsdesouscriptiond’actions,orBSAs)orintheformoffounder’ssharewarrants(Bonsdesouscriptiondepartsdecréateurd’entreprise,orBSPCEs)grantedtoemployees,executives,scientificconsultantsandmembersoftheboardofdirectors.

Pursuant to IFRS 2, the cost of the transactions paid with equity instruments is recognized as anexpense in exchange for an increase in the shareholders’ equity over theperiodduringwhich therightstoexercisethewarrantsarevested.

TheCompanyhasappliedIFRS2toallequityinstrumentsgranted,sincetheCompanywascreated,toemployees,membersoftheboardofdirectorsandtootherpersonsthatprovideservicessuchasexternalconsultants.

ThefairvalueofwarrantsgrantedtoemployeesisdeterminedbyapplyingtheBlack-Scholesoptionvaluation model. The same method is applied for options granted to persons providing similarservices,asthefairvalueoftheirservicescannotbereliablyestimated.

CharacteristicsoftheseplansandassumptionsusedtovaluethemaredescribedinNote10.

2.18Provisions

Provisionscorrespondtocommitments resulting from litigationandvarious risks, thematurityandamountofwhichareuncertain,towhichtheCompanymayfaceinthecontextofitsoperations.

Aprovision is recordedwhentheCompanyhasanobligationtoa thirdparty resulting fromapastevent that will likely result in an outflow of resources to the third party, with no equivalentconsiderationexpected,andforwhichfuturecashoutflowsmaybeestimatedreliably.Theamountrecorded as a provision is an estimate of the expenditure required to settle the obligation,discountedwherenecessaryatyear-end.

2.19Employeebenefits

TheCompany’semployeesinFrancebenefitfromretirementbenefitsprovidedunderFrenchlaw:

• obtainingacompensationpaidbytheCompanytoemployeesupontheirretirement(definedbenefitplan);

• paymentofretirementpensionsbytheSocialSecurityagencies,whicharefinancedbythecontributionsmadebythecompaniesandemployees(definedcontributionplan).


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Retirement pensions, related benefits and other social benefits that are recognized as defined-benefitplans (forwhich theCompanyagrees toprovideaspecificamountor levelofbenefits)arerecognized as assets on the basis of an actuarial valuation of the commitments at the end of thefinancialyear.

Thecostsoftheretirementbenefitsareestimatedbyusingtheprojectedcreditunitmethod,takingintoaccountthestaffturnoverandprobablemortalityrates.Actuarialgainsorlossesarerecordedin“Otherelementsofcomprehensiveincome”.

The Company’s payments for the defined-contribution plan are recognized as expenses on theincome statement of the periodwithwhich they are associated. They amounted to €111,000 and€124,000forfinancialyearsendedDecember31,2014and2015,respectively.

2.20Financialliabilities

Financialliabilitiesareclassifiedatamortizedcostoratfairvaluethroughprofitorloss.

Financialliabilitiesmeasuredatamortizedcost

Borrowingsandotherfinancialliabilities,suchasconditionaladvances,arerecognizedatamortizedcostcalculatedusingtheeffectiveinterestrate.Financialliabilitiesthataredueinlessthanoneyeararepresentedin“Financialliabilities—currentportion”inthestatementoffinancialposition.

Financialliabilitiesatfairvaluethroughprofitorloss

Whereapplicable,especially if theexistenceofahybrid instrument is reported,a financial liabilitymayberecognizedatfairvalueintheincomestatement.

2.21Corporatetaxes

Taxassetsandliabilitiespayableforthefinancialyearandpreviousyearsarerecordedattheamountthatisexpectedtoberecoveredfromorpaidtothetaxauthorities.

Thetaxrateandregulationsusedtodeterminetheseamountsarethosewhichhavebeenenactedorsubstantivelyenactedatyear-end.

Deferred taxesare recordedusing thebalancesheet liabilitymethod, for temporarydifferencesatyear-endbetweenthecarryingamountofassetsandliabilitiesandtheirtaxbasis,andlossescarriedforward.

Themaintemporarydifferencesarerelatedtotaxlosscarriedforwards.

DeferredtaxassetsarerecordedastaxlosscarriedforwardswhenitisprobablethattheCompanywillhavefuturetaxable incometowhichtheunusedtax lossescanbeoffset.Themeasurementoftheamountofdeferredtaxassetsmayrequiremanagementtomakeestimatesregardingtheperiodduringwhichthetaxlosscarriedforwardsaretobeusedandontheleveloffuturetaxableincome,asregardsstrategiesintermsoftaxmanagement.

2.22Revenue

RevenuecorrespondstothefairvalueoftheconsiderationreceivedortobereceivedforgoodsandservicessoldinthecontextoftheCompany’sordinaryactivities.Revenueispresentednetofvalueaddedtax,returnsofmerchandise,rebatesandreductions.


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IntheCompany’sordinaryactivities,itmayenterintocommercialagreementswithpharmaceuticalcompanies.Thecompensationreceivedinrelationtotheseagreementsisgenerallybasedon:

• paymentofapremiumuponsigning(i.e.,upfrontfees);

• specificdevelopmentsontheachievementoftechnicalmilestones;

• researchanddevelopmentefforts;

• percentageofsales(i.e.,royaltyrates).

2.23Segmentinformation

TheCompanyoperatesinonesegment:thedevelopmentofmoleculesforthepotentialtreatmentoftype2diabetes.

The assets, liabilities and operating loss realized are located in France and the Company does nothaveanysubsidiaries.

Accordingly,theCompany’sperformanceiscurrentlyanalyzedattheCompanylevel.

2.24Presentationofthestatementofincome

TheCompanypresentsitsfinancialstatementbydestination.

DestinationofchargesisgivenbyNote16intheAnnex.

Financialincome(expense)

Financialincome(expense)includes:

• changesinthefairvalueofliabilitiesrecognizedatfairvaluethroughprofitorloss;

• changesinthefairvalueofderivativefinancialinstruments(assetsorliabilities);

• expensesrelatedto interest incurredandunwindingof thediscountonconditionaladvancesandfi1nancialliabilities(Note11.2);

• incomerelatedtointerestreceivedoncashandcashequivalents.

Foreigncurrencyexchangegainsorlossesarealsorecordedinfinancialincome(loss).

2.25Losspershare

BasiclosspershareiscalculatedbydividingincomeattributabletoequityholdersoftheCompanybytheweightedaveragenumberofoutstandingordinarysharesfortheperiod.

Diluted lossper share ismeasuredbyadjusting the incomeattributable to theholdersofordinarysharesandtheweightedaveragenumberofoutstandingordinarysharesbyallthedilutivepotentialordinaryshares.

If in the calculation of diluted loss per share instruments giving deferred rights to capital such aswarrants (BSAs or BSPCEs) generates an antidilutive effect, these instruments are not taken intoaccount.


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Note3:Intangibleassets

GROSSVALUE(Amountsineuros) Software Other

Total

StatementoffinancialpositionasatDecember31,2013 9,121 0 9121

Capitalizationofdevelopmentcosts 0

Acquisition 1,050 1050

Disposals 0

Transfer 0StatementoffinancialpositionasofDecember31,2014 10,171 0 10171


Acquisition 706 706

Disposals (595) -595

Transfer 0StatementoffinancialpositionasatDecember31,2015 10,283 0 10283

ACCUMULATEDEPRECIATION StatementoffinancialpositionasatDecember31,2013 8,976 0 8976

Increase 285 285Decrease 0StatementoffinancialpositionasatDecember31,2014 9,261 0 9261

Increase 1,077 1077Decrease (595) -595StatementoffinancialpositionasatDecember31,2015 9,743 0 9743

NETBOOKVALUE

AsofDecember31,2014 910 0 910AsofDecember31,2015 540 0 540

Duetotherisksanduncertaintiesrelatedtotheresearchanddevelopmentprocess,thesixcapitalcriteriafor intangibleassetswerenotconsideredtobefulfilledforanydevelopmentprojectunderway.Consequently,alldevelopmentcostsincurredbytheCompanyarerecordedasexpenses.

Note4:Property,plantandequipment

GROSSVALUE(Amountsineuros)

Installations&fixtures

Computerhardware

Furniture

Total

StatementoffinancialpositionasatDecember31,2013 22,097 46,610 11,730 80,437

Acquisition 3,490 9,336 12,826

Disposals 0

Transfer 0


Acquisition 109,157 24,762 19,392 153,311

Disposals (25,587) (20,633) -46,220

Transfer 0



197

ACCUMULATEDDEPRECIATION


Increase 2,812 5,544 3,701 12,057

Decrease 0


Increase 13,327 7,143 1,428 21,898

Decrease (25,587) (20,633) -46,220


NETBOOKVALUES

AsatDecemberr31,2014 11,246 7,321 2,768 21,335

AsatDecember31,2015 107,076 24,940 20,732 152,748

In September 2015, the Company moved its corporate headquarters in Lyon, France in order toexpanditsofficeleasecapacity.Asaresult,theincreaseinproperty,plantandequipmentintheyearendedDecember31,2015reflectstheacquisitionoffixedassetsandthedisposalofcertainexistingfixedassets.

TheCompanydoesnothaveanyfinanceleases.

There has been no recognition of impairment losses in application of IAS 36 over the periodspresented.


198

Note5:Othernoncurrentfinancialassets

Non-currentfinancialassetsarerecordedforthedepositspaidfor:

• cashpaidtoOddoCorporateFinanceinrelationtotheliquidityagreement(€200,171);

• theKreosagreement(€231,000);

• deposits paid in relation to operating leases, mainly for the premises of our corporateheadquartersinLyon,France.

Note6:Otherreceivables

Customer receivables (€12,000) corresponds the balance to be received in relation with ENYOPharmaSAagreement.

Otherreceivablesandrelatedaccountsarepresentedbelow:

OTHERRECEIVABLESANDRELATEDACCOUNTS(Amountsineuros)

12/31/2015 12/31/2014

Researchtaxcredit 1,918,071 1,977,120

Valuedaddedtax,orVAT 586,984 747,525

FinancialassetinrelationtotheKreosLoan(TrancheB) 0 379,900

Creditnotetobereceived 26,321 105,414

Prepaidexpenses 1,203,786 51,698

Receivablesfromsuppliers 226 2,794

Other 1,026 0

Totalofotherreceivablesandrelatedaccounts 3,736,414 3,264,451

VATreceivablesprimarilyrelatetodeductibleVATaswellastotherefundofrequestedVAT.

Prepaid expenses include approximately €1.0 million in relation to the Phase 2b clinical trialconductedbycontractresearchorganizations,orCROs,namelyfor Imeglimin, launched inJapan inDecember2015.Otherprepaidexpensesareprimarilyrelatedtorentalandinsuranceexpenses.

Financialassets recognized inrelationtothesecondtranche(i.e.,TrancheB)of the liabilityduetoKreoshavebeenderecognizedasofDecember31,2015(Note11.5)

Researchtaxcredit(“CIR”)

TheCompanybenefits from theprovisionsofarticles244quaterBand49 septies Fof theFrenchGeneral Tax Code relating to Research Tax Credits. In accordancewith the principles described inNote 2.14, Research Tax Credits are deducted from research expenses for the year to which theeligibleresearchexpensesrelate.ResearchTaxCreditsarepresentedasasubsidyin“Researchanddevelopmentcosts.”

Intheabsenceofanytaxableincome,thereceivablefromtheFrenchgovernmentfortheResearchTaxCredit isrefundabletheyearafter it isreported.ChangesintheResearchTaxCreditover2014and2015arepresentedasfollows:


199

ResearchTaxCredit IneurosOpeningbalancesheetreceivableasatJanuary1,2014 2913064

Subsidyrecognizedasareductionof““Researchanddevelopment”expenses 1977120

Paymentreceived (2913064)

ClosingbalancesheetreceivableasatDecember31,2014 1977120

OpeningbalancesheetreceivableasatJanuary1,2015 1977120

Subsidyrecognizedasareductionof““Researchanddevelopment”expenses 1918071

Paymentreceived (1977120)

ClosingbalancesheetreceivableasatDecember31,2015 1918071

Note7:Cashandcashequivalents

Cashandcashequivalentsaresetoutbelow:

CASHANDCASHEQUIVALENTS(Amountsineuros)

12/31/2015 12/31/2014

Bankaccounts(cashinhand) 1,787,516 540,458

Fixedtermdeposits 35,477,148 8,771,031

Moneymarketfunds 5,148,738 942,146

Totalcashandcashequivalents42,413,402

10,253,635

Note8:Financialassetsandliabilitiesandeffectsonincome

TheCompany’sassetsandliabilitiesarevaluedasfollowsforeachyear:

(Amountsineuros)

12/31/2015Value–statementoffinancialpositionin

applicationofIAS39

Nonfinancial

instruments

Amountrecognizedin

thestatementoffinancialposition

Fairvalue(3)

Fairvaluethroughprofitand

loss

Loansandreceivables

(2)

Liabilitiesatamortizedcost(1)

Non-currentfinancialassets 533,428 533,428 533,428

Receivableandrelatedaccounts 11,580 11,580 11,580

Otherreceivables 3,736,414 3,736,414 3,736,414

Cashandcashequivalents 42,413402 42,413402 5,148738 37,264664

Totalfinancialassets 46,694,824 46,694,824 5,148,738 41,546,086 0 0

Financialliabilities–currentportion 2,397,150 2,397,150 2397,150

Financialliabilities–non-currentportion 1,553,926 1,553,926 1553,926

Tradepayablesandrelatedaccounts 4,336,522 4,336,522 4336,522

Othercreditorsandotherliabilities 23,000 23,000 23,000

Totalfinancialliabilities 8,310,598 8,310,598 0 0 8,310,598 0


200

(Amountsineuros)


applicationofIAS39Non

financialinstrument

s

Amountrecognizedin

thestatementoffinancialposition

Fairvalue(3)

Fairvaluethroughprofitand

loss

Loansandreceivables

(2)


Non-currentfinancialassets 285,569 285,569 285,569

Receivableandrelatedaccounts 3,264,451 3,264,451 3,264,451

Cashandcashequivalents 10,253,635 10,253,635 942,146 9,311,489

Totalfinancialassets 13,803,654 13,803,654 942,146 12,861,508 0 0

Financialliabilities–currentportion 8,551,302 8,551,302 7,301,831 1,249,471

Derivativeliability 451,922 451,922 451,922

Financialliabilities–non-currentportion 3,865,785 3,865,785 3,865,785

Tradepayables 3,098,682 3,098,682 3,098,682

Totalfinancialliabilities 15,967,691 15,967,691 7,753,753 0 8,213,938 0

(1)Thecarryingamountoffinancialliabilitiesmeasuredatamortizedcostwasdeemedtobeareasonableestimationoffairvalue.(2)Thefairvalueof“loansandreceivables”correspondstothevaluereportedinthestatementoffinancialposition(valueatthetransactiondateandthentestedforimpairmentoneachreportingdate).(3) The fair value of financial assets held for trading (such as cash at hand andmoneymarket funds in cash and cashequivalents)isdeterminedbasedonLevel1fairvaluemeasurementsandcorrespondstothemarketvalueoftheassets.

(Amountsineuros)

Impactonfinancialincome(expense)asofDecember31,

2014

Impactonfinancialincome(expense)asofDecember31,

2015

Interests

Changesinfairvalue

InterestsChangesinfair

value

Financialassets Assetsatfairvaluethroughprofitorloss

Loansandreceivables

Cashandcashequivalents 199 (4,060)

Financialliabilities

Liabilitiesatfairvaluethroughprofitorloss 124,236 6,858,141

Liabilitiesmeasuredatamortizedcost 804,538 165,677

LiabilitiesatfairvaluethroughprofitorlossarepresentedinNote11.

Note9:Sharecapital

Capitalshareissued

Sharecapital is€389,648.AsatDecember31,2015, itwasdivided into19,482,394ordinarysharesthatarefullysubscribedandpaidupwithaparvalueof€0.02each.ClassApreferredsharesexistingin 2014 have been completely converted, on a 1:1 basis, into ordinary shares following the initialpublicofferingoftheCompanyinFebruary2015.

The19,482,394outstandingsharesdonotincludesharewarrants(Bonsdesouscriptiond’actionsorBSAs) and founder’s sharewarrants (Bons de souscription de parts de créateur d’entreprise orBSPCEs),whichhavenotbeenexercised.


201

COMPOSITIONOFSHARECAPITAL 12/31/2015 12/31/2014

Capital(ineuros) 389648 250163

Numberofshares 19482394 12508156

Ofwhichordinaryshares 19482394 3000000

OfwhichclassApreferredshares 0 9508156

Nominalvalue(ineuros) €0,02 €0,02

In2015,variousequity transactionsoccurred thatmodified theCompany’s sharecapitalwhicharefurtherdescribedinparagraph1.2:

• Issuance of 4,031,248 shares following completion of an initial public offering onEuronextParisonFebruary2015,foragrossamountof€26.8million.

• Issuanceof1,088,531sharesfollowingexerciseofsharewarrantsbyMerckSerono,generating a capital increase of €7.2million recognized as a compensation of debt of thesameamountthatwasduetoMerckSerono.

• Issuance of 1,762,793 shares following completion of a private placement in July2015,foranamountof€20million.

• Issuance of 91,666 shares following exercise by Kreos de 91,666 share warrants(45,833inOctober2015and45,833inNovember2015).

Capitalmanagement

The Company’s policy is tomaintain a solid base of capital, in order to preserve the trust of theinvestors,thecreditorsandtosupportfuturedevelopmentoftheactivity.

Tableofchangesinthecapitalshare

Date Natureoftransactions

Movementsonthesharecapital

Premiumrelatedtosharecapital

Numberofsharesissued

Numberofshares

Nominalvalue

Sharecapital

Au31décembre2013 194,997 352773 389990 194997

March2014 Capitaldecrease(March2014) -39,001 155,996

March2014 20-to-1sharesplit(March2014) 7,409,810 155,996

March2014 Capitalincrease(conversionoftheconvertiblebonds) 12,914 5,141,589 645,722 168,910

July2014 CapitalincreasetoBpifranceParticipations(July2014) 25,000 4,975,000 1,250,000 1,250,000 193,910

July2014 Capitalincrease(conversionoftheconvertiblebonds) 56,253 20,897,979 2,812,634 2,812,634 250,163

Costsincurredinrelationtoequitytransactions -1,030,667

Subscriptionofsharewarrants 30,001

TotalasatDecember31,2014 250,163 30,366,675 4,062,634 12,508,156 0.02 250,163

February2015CapitalincreaseinrelationtotheinitialpublicofferingonEuronextParis(February2015) 80,625 26,767,487 4,031,248 16,539,404 330,788

February2015CapitalincreaseinrelationtotheexercisebyMerckSeronoofitsMSShareWarrants(February2015) 21,771 7,227,845 1,088,531 17,627,935 352,559

July2015 Capitalincrease,july2015 35,256 19,972,445 1,762,793 19,390,728

387,815

October2015 ExerciseofBSAKreos,October2015 917 182,415 45,833 19,436,561

388,731

November2015 ExerciseofBSAKreos,November2015 917 182,415 45,833 19,482,394

389,648

Costsincurredinrelationtoequitytransactions

-2,861,000

Subscriptionofsharewarrants

85,424


202


Distributionofdividends

TheCompanydidnotdistributeanydividendsfortheyearsendedDecember31,2014and2015.

Note10:Sharewarrants

Sharepurchasewarrants“(“Bonsdesouscriptiond’actions””or““BSA””)

The following table summarizes the data relating to share purchase warrants as well as theassumptionsusedforthemeasurementthereofinaccordancewithIFRS2:

Hypothèsesretenues-calculdelajustevaleurselonIFRS2

Grantdate Type

Numberof

warrantsissued

Numberof

lapsed

warrants

Numberof

warrantsoutstand

ing

Nombremaximu

md'action

sàémettre

*

Fairwalueoftheunderlyingshare*

Fairwalueofthewarrants*

Expectedterm

Strikeprice(ineuros)*

Duration

Volatility

Riskfreerate

TotalValueIFRS2

(Black&Scholes)

BoardofJuly5,2010

BSAdirectors 4500 0 4500 90000

€3,33 €1,50 5years €3,33 10years 45% 3,5% €135125

AsatDecember31,2010 4500 0 4500 90000

AsatDecember31,2011 4500 0 4500 90000

AsatDecember31,2012 4500 0 4500 90000

BoardofFebruary20,2013

BSA10/31/2012 2500 0 2500 50000

€4,23 €2,04 5years €4,00 10years 52% 2,2% €71843

AsatJune30,2013andDecember31,2013 7000 0 7000 140000

BoardofMarch12,2014

BSA10/31/2012 2500 0 2500 50000

€8,00 €5,16

4,5years €4,00 10years 55% 1,8% €227848

AsatDecember31,2014 9500 0 9500 190000

BoardofJanuary8,2015

BSA07-25-2014 42500 0 42500 42500

€8,20 €5,76 6years €4,00 10years 57% 0,0% €219468

BoardofApril29,2015

BSA06-16-2015 42500 0 42500 42500

€13,57 €8,17 6years €9,37 10years 57% 0,0% €287591

BoardofMay7,2015

BSA06-16-2015 240000 0 240000 240000

€13,57 €7,91 6years €9,62 10years 57% 0,1% €1550959

AsatDecember31,2015 334500 0 334500 515000

*after the 1:20 share split

Forwarrants issued before the 1:20 share split thatwas effective inMarch 2014, eachwarrant isconvertible into20ordinary shares. As a result, fair valuesof theunderlying shares,warrants andstrikepriceshavebeenadjustedaccordingly.

ThestrikepriceforgrantsaftertheinitialpublicofferingonEuronextParis isbasedontheaverageclosingpriceofourordinarysharesforthe20tradingdaysprecedingthedateofgrant.

Theexercise rights for the“BSAdirectors”grantedduring theperiodareacquiredannuallyon thegrantdateinincrementsofone-third.


203

The exercise rights for the “BSA 10/31/2012” are acquired immediately on the grant date by thegeneralmeeting of the shareholders. The subscription pricewas €12 each, for a total of €30,000recognizedbytheCompanyasissuepremiumin2013.

Exerciceisnotsubjecttoperformanceconditionsbutitissubjecttoanattendancecondition.

Theexerciserightsforthe“BSA07/25/2014”grantedduringtheperiodareacquiredannuallyonthegrantdateinincrementsofone-third.

The exercise rights for the share purchase warrants issued during the first quarter of 2016 areacquiredannuallyonthegrantdateinincrementsofone-third.

Theseplansarequalifiedas“equitysettled”underIFRS2.TheCompanydoesnothaveanobligationtopurchasetheseinstrumentsfromemployeesintheeventofdepartureorifaspecificeventdoesnotoccur.

Furthermore, the Company also issued sharewarrants to the benefit of Kreos, and forwhich theaccountingtreatmentisdetailedinparagraph11.5.

Employeesharewarrants(“Bonsdesouscriptiondepartsdecréateurd’entreprise”ou“BSCPEs”)

The following table summarizes the data relating to the employee share warrants as well as theassumptionsusedforthemeasurementthereofinaccordancewithIFRS2:

UnderlyingassumptionsusedforthemeasurementofthecompensationexpenseunderIFRS2

Grantdate Type

Numberof

warrantsissued

Numberof

lapsedoptions

Numberof

optionsoutstanding

Maximumnumberofsharestobeissued*

Fairvalueofthe

underlyingshare*

Fairvalueofthe

warrants*

Expectedterm

Strikeprice

(ineuros)*Duration

VolatilityRisk-freerate

TotalvalueIFRS2

(Black&Scholes)

BoardofJune20,2010

BCE06-10-2010-1 5000 2750 2250 45000

€3,33 €1,77 5years €2,50 10years 45% 3,5% €176537

BoardofDecember17,2010

BCE06-10-2010-2 3000 0 3000 60000

€3,33 €1,72 4,5years €2,50 10years 45% 3,7% €102951

AsatDecember31,2010 8000 2750 5250 105000

BoardofSeptember20,2011

BCE06-10-2010-2 1500 0 1500 30000

€3,74 €2,00 3,5years €2,50 10years 50% 4,0% €59996

AsatDecember31,2011 9500 2750 6750 135000

AsatDecember31,2012 9500 2750 6750 135000

AsatJune30,2013andDecember31,2013 9500 2750 6750 135000

BoardofMarch12,2014

BCE10-31-2012 5000 0 5000 100000

€8,00 €5,58 4,5years €3,20 10years 55,00% 1,80% €558351

AsatDecember31,2014 14500 2750 11750 235000

AsatDecember31,2015 14500 2750 11750 235000



204

Forwarrants issued before the 1:20 share split thatwas effective inMarch 2014, eachwarrant isconvertible into20ordinary shares. As a result, fair valuesof theunderlying shares,warrants andstrikepriceshavebeenadjustedaccordingly.


Theexerciserightsfortheemployeeshareoptionsgrantedduringtheperiodareacquiredannuallyonthegrantdateinincrementsofone-third.

Exerciseisnotsubjecttoperformanceconditionsbutitissubjecttoanattendancecondition.

Theseplansarequalifiedas“equitysettled”.TheCompanydoesnothaveanobligationtopurchasetheseinstrumentsfromemployeesintheeventofdepartureorifaspecificeventdoesnotoccur.

ValuationmethodsofBSAandBSPCEs

ThefairvalueofwarrantswasdeterminedusingtheBlackandScholesmodel.Thevaluationmethodsusedtoestimatethefairvalueofthewarrantsarepresentedbelow:

• forgrantspriortoourinitialpublicofferingonEuronextParis,thesharepriceusedisequaltotheinvestors’subscriptionpriceorbyapplyinginternalvaluations;forgrantsafterour initialpublicofferingonEuronextParis, theshareprice isbasedon theclosingquotedpriceoftheordinaryshares;

• therisk-freerateisdeterminedbasedontheaveragelifetimeofthesecurities;

• the volatility is determined based on a sample of listed companies in thebiotechnologiessector,atthesubscriptiondateoftheinstrumentsoveraperiodequaltothelifetimeoftheoption.

Breakdownofthecompensationaccountedforunder IFRS2fortheyearsendedDecember2014and2015financialyears:

AsatDecember31,2014 AsatDecember31,2015

TypeDateofawardbytheBoardofdirectors

Numberofwarrants

outstanding

IFRS2costoftheplan

Accumulatedcompensationexpenseat

thebeginningoftheperiod

Compensationexpensed

recognizedasatDecember31,2014

AccumulatedcompensationexpenseasatDecember31,

2014

Numberofwarrants

outstanding

IFRS2costoftheplan






2015BSAdirectors July5,2010 4,500 €135,125 €135,125 €0 €135,125 4,500 €135,125 €135,125 €0 €135,125

BSA31/10/2012 February20,2013 2,500 €71,843 €71,843 €0 €71,843 2,500 €71,843 €71,843 €0 €71,843

BSA31/10/2012 March12,2014 2,500 €227,848 €0 €227,848 €227,848 2,500 €227,848 €227,848 €0 €227,848BSA25-07-

2014 January8,2015 0 €0 €0 €0 €0 42,500 €219,468 €0 €146,955 €146,955BSA16-06- April29,2015 0 €0 €0 €0 €0 42,500 €287,591 €0 €95,198 €95,198


205

AsatDecember31,2015,thetotalauthorizationstoissueBSAsandBSPCEsgrantedtotheboardofdirectors by the June 16, 2015 shareholders’ meetings and not used by the board of directorsamountedto833,370.

The total share-based compensation expense amounts to €792,553 (€331,647 in “Research anddevelopment”and€460,886in“Generalandadministrativeexpense,”respectively)forthefinancialyear ended December 31, 2014 and €1,179,190 (€244,259 in “Research and development” and

2015BSA16-06-

2015 May7,2015 0 €0 €0 €0 €0 240,000 €1,550,959 €0 €937,038 €937,038

Total-BSA 9,500 €434,817 €206,968 €227,848 €434,817 334,500 €2,492,834 €434,817 €1,179,190 €1,614,006

AsatDecember31,2014 AsatDecember31,2015


Numberofwarrants

outstanding

IFRS2costoftheplan






2014

Numberofwarrants

outstanding

IFRS2costoftheplan






2015BCE10-06-2010-

1 June20,2010 2250 €176537 €176537 €0 €176,537 2,250 €176,537 €176,537 €0 €176,537BCE10-06-2010-

2 December17,2010 3000 €102951 €102951 €0 €102,951 3,000 €102,951 €102,951 €0 €102,951BCE10-06-2010-

2 September20,2011 1500 €59996 €53663 €0 €59,996 1,500 €59,996 €59,996 €0 €59,996BCE31-10-2012 March12,2014 5000 €558351 €0 €0 €558,351 5,000 €558,351 €558,351 €0 €558,351

Total-BSPCE 11,750 €897,835 €333,151 €0 €897,935 11,750 €897,835 €897,835 €0 €897,835


206

€944,931 in “General and administrative expense,” respectively) for the financial year endedDecember 31, 2015.

Page207

Note11:Borrowingsandfinancialliabilities

FINANCIALLIABILITIES(amountineuros)

12/31/2015 12/31/2014

Conditionaladvances 682,841 719,728

Derivativefinancialliability(KreosTrancheB) 0 451,922

Kreosdebt(TrancheA) 871,085 3,146,057

Financialliabilities-Non-currentportion 1,553,925 4,317,707

Conditionaladvances 88,906 35,000

LiabilityinrelationtotheMerckSeronoagreement 0 7,301,831

Kreosdebt(TrancheA) 2,274,972 1,213,609

InterestaccruedonKreosDebt 31,064 0

Interestaccruedonbankoverdrafts 2,209 862

Financialliabilities-Currentportion 2,397,151 8,551,302

Totalfinancialliabilities 3,951,076 12,869,008

Breakdownoffinancialliabilitiesbymaturity

Thematuritiesoffinancialliabilitiesarepresentedbelowfor2014and2015:

CURRENTANDNON-CURRENTFINANCIALLIABILITIES(montanteneuros)

12/31/2015Grossamount

Lessthan1year

From1to5years

Longerthan5years

Conditionaladvances 771,746 88906 682841 0Interestaccruedonbankoverdrafts 2,209 2209 0 0InterestaccruedonKreosdebt 31,064 31064 0 0Kreosdebt(TrancheA) 3,146,057 2274972 871085 0Totalfinancialliabilities 3,951,076 2397151 1553925 0

CURRENTANDNON-CURRENTFINANCIALLIABILITIES(amountsineuros)

12/31/2014

GrossamountLessthan1

yearFrom1to5

yearsLongerthan

5yearsConditionaladvances 754,728 35,000 602,032 117,696Interestaccruedonbankoverdrafts 862 862 0 0Kreosdebt(TrancheA) 4,359,666 1,213,609 3,146,057 0Derivativefinancialliability(TrancheB) 451,922 0 451,922 0MerckSeronoagreement 7,301,831 7,301,831 0 0Totalfinancialliabilities 12,869,008 8,551,302 4,200,011 117,696

Page208

11.1Liabilitywithfinancialinstitutions

TheCompanydidnothaveanybankloansin2014and2015.

TheCompanybenefitsfroma€1.7millionoverdraftfacilityaswellasapledgedtermdepositaccountofthesameamountwithafinancialservicesinstitution.

11.2Conditionaladvances

Thefollowingtablepresentschangesinconditionaladvances:

PXL770Imeglimin(NewFormulation)

Total

AsatDecember31,2013 202234 546317

748551

(+)Increase

(-)Decrease (22500)

(22500)

Financialexpenses 7682 20995

28677

(+/-)Othermovements

AsatDecember31,2014 187416 567312

754728

(+)Increase

(-)Decrease (35000)

(35000)

Subsidies

Financialexpenses 7577 44441

52019

(+/-)Othermovements

AsatDecember31,2015 159993 611754

771746

“Othermovements” changesare related to thedefinitiveallocationof the subsidies transferred inthestatementofincome.

Breakdownofconditionaladvancesandsubsidiesbymaturity

PXL770

Imeglimin(NewFormulation)

Total

AsatDecember31,2015 159993 611754 771746

Portionlessthan1year 52863 36043 88906

From1yearto5years 107130 575711 682841

Portionabove5years

BpifranceFinancement/FEDER—PXL770conditionaladvance

On August 31, 2011, the Company obtained a conditional, interest-free aid from BpifranceFinancement (formerlyOséo) aspartof theFonds européendedéveloppement regional, or FEDERfund,foramaximumamountof€250,000inthecontextofthe“developmentandselectionofanewAMPKactivatordrugforthetreatmentofdiabetes.”

Following the technical success of the project, the repayment of this innovation aid started asfollows:

Page209

• €5,000forthelastquarterof2013;• €5,000forthefirstthreequartersof2014and€7,500forthelastquarter;• €7,500forthefirstthreequartersof2015and€12,500forthelastquarter;• €12,500forthefirstthreequartersof2016and€17,500forthelastquarter;• €17,500forthefirstthreequartersof2017and€20,000forthelastquarter;• thebalancein2018.

The portion of advances received that is due in more than one year is recorded in “Financialliabilities—non-current portion,” and the portion that is due in less than one year is recorded in“Financialliabilities—currentportion”inthestatementoffinancialposition.

The fair value of this conditional advance is determined on the basis of market interest rateestimated at 4.04% per year. The difference between the amount of the conditional advance athistorical cost and the discounted amount at the market rate is recognized in the statement ofincomeasasubsidyreceivedfromtheFrenchgovernment.

BpifranceFinancement—Imeglimin(newformulation)conditionaladvance

InOctober2011, theCompanyobtained€950,000 in conditional, interest-free innovationaid fromBpifranceFinancement(formerlyOséo)forthedevelopmentofanewformulationof Imegliminforthetreatmentofdiabetes.

Payments from Bpifrance Financement were made in installments between the signature of thecontractandtheendoftheproject,themainstagesofwhichwereasfollows:

• firstpaymentof€700,000onJanuary16,2012;• the balance on the completion of work, at the latest on July 31, 2014, representing an

amountof€250,000hasnotbeenreceivedasatDecember31,2015

CompletionoftheworkhasnotyetbeendeclaredtoBpifranceFinancement,duetoadministrativereasons.Asaconsequence,thebalanceoftheadvance(i.e€250,000),hasnotyetbeenreceived.

Given that the technical milestone has been achieved for the project, the repayment of thisconditionaladvancewillbeasfollows:

• €12,000forthefirstthreequartersof2016;• €12000forthefirstquarterof2017and€22,500forthefollowingthreequarters;• €22,500forthefirstquarterof2018and€48,750forthefollowingthreequarters;• €48,750forthefirstquarterof2019and€71,250forthefollowingthreequarters;• €71,250forthefirstquarterof2020and€83,000forthefollowingthreequarters;• theremainingbalancein2021.

The fair value of this conditional advance is determined on the basis of market interest rateestimatedat3.84%peryear.Thedifferencebetweentheamountof theadvanceathistoricalcostandthediscountedamountatthemarketrateisrecognizedinincomeasasubsidyreceivedfromtheFrenchgovernment.

11.3Convertiblebonds

Page210

The shareholders’ meeting of October 31, 2012 approved the issuance of bonds convertible intosharestocertainshareholdersforanamountof€13millioncomposedof162,500convertiblebondswithaparvalueof€80,dividedintothreetranches,presentedinthetablebelow.

AlloftheseconvertiblebondshavebeenconvertedinMarchandJuly2014resultinginthecreationofanaggregateamountof3,458,356newshares(645,722newsharesinMarch2014and2,812,634newsharesinJuly2014).

CHANGESINTHECONVERTIBLEBONDS(Amountinthousandofeuros)

Totalconvertiblebonds

AsatDecember31,2013 24,059,574

(+)Paymentreceived 0

(-)Repayment 0

(-)Changeinfairvalue 2,049,160

(+/-)Conversion (26,108,735)

AsatDecember31,2014 0

11.4LiabilitytoMerckSerono

CHANGESINTHEMerckSeronoLIABILITY(Amountinthousandofeuros)

MerckSeronoLiability

AsatDecember31,2013 2,564,873(+)Paymentreceived 0(-)Repayment 0(-)ChangeinfairvalueoftheliabilityasaresultoftheamendmentoftheagreementwithMerckSerono

4,736,958

AsatDecember31,2014 7,301,831(+)Paymentreceived 0(-)Repayment (7,249,616)(-)Changeinfairvalueoftheliability (52,214)AsatDecember31,2015 0

LiabilitytoMerckSeronoexpiredfollowingtheinitialpublicofferingoftheCompany(SeeNote1.2).

11.5LiabilitytoKreos

On July 25, 2014, the Company entered into a venture loan agreement intended to allow theCompany tobenefit from financing in the formofnon-convertiblebonds representinga loan foramaximumamountof€8millionforwhichKreosCapitalIV(UK)Limited,orKreos,adebtfundagreedtosubscribeintwotranchesasfollows:

- 5million (TrancheA) subscribedasof July25,2014, repayableover33monthsuntilApril2017(norepaymentofcapitalforthefirst9months);and

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- €3million (Tranche B), in one or several drawdowns, subject to the conditionthattheCompanyobtainsadditionalfinancingofatleast€12million(incapital,bytheissueofconvertiblebonds,asubordinatedshareholdersloanoralicenseagreementwith a pharmaceutical company) byMarch 31, 2015 and repayableover36months.

Thistranche2couldbesubscribeduntilApril30,2015.ItisnotyetusedbytheCompany.


UndertheVentureLoanAgreement,theCompanymustalsoissuetoKreosCapitalIV(ExpertFund)Limited,a subsidiaryofKreos, amaximumof220,000 sharewarrants for classApreferred shares,137,500ofwhichwereissuedatthetimeTrancheAwasreleased(exerciseprice:€4pershare)andamaximumof82,500shallbeissueduponthefullreleaseoftheTrancheB.

Finally,inordertoguaranteeallobligationsenteredintobytheCompanyinrespectoftheVentureLoanAgreement,ithasgrantedvarioussecurityrightsrelatingtoitsintellectualpropertyanditscashposition such as pledges of bank accounts, receivables and certain intellectual property rights ascollateral.

Liabilitychangedasfollows:

CHANGESINTHELIABILITYTOKREOS(TrancheA)(Amountinthousandofeuros) LiabilitytoKreos

AsatDecember31,2013 0(+)Paymentreceived 4,855,000(+)Effectofunwindingthediscount 137,001(-)Repayment 0(-)Equitycomponent (632,334)AsatDecember31,2014 4,359,666(+)Paymentreceived 0(+)Effectofunwindingthediscount 362,401(-)Repayment (1,576,010)(-)Equitycomponent 0AsatDecember31,2015 3,146,057

Accountingprincipleschosen

Eachofthesetwotrancheswasanalyzedseparately.

The first tranche (Tranche A) provides for a fixed number of shares (one share) to be providedfollowing the exercise of a share warrant. In accordance with IAS 32, this is considered to be anequity instrument since theconversion ratiowas fixedat inception. TheTrancheA sharewarrantsare recorded as an increase to equity and consequently, such warrants do not need to berecalculated.

Inrespectofthesecondtranche(TrancheB),theCompanyrecognizedaderivativeasatDecember31,2014becauseofitscommitment,intheeventofadrawdown,toissueTrancheBsharewarrants.

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Afinancialassethadbeenrecognizedasacounterpart.IntheabsenceofexercisefortheTrancheB,thisderivatewasterminatedin2015.

Measurementoftheliabilityatfairvalue

During the implementation of the venture loan agreement with Kreos, the Company incurred€145,000inlegalandconsultingfeesand€37,500atthematurityoftheloan.Thesecostsweretakenintoaccounttomeasuretheamortizationoftheloanusingtheamortizedcostmethod.Aftertakinginto account the issue costs and the discount related to Tranche A share warrants, the effectiveinterestrateofbondsamountedto23.5%.

Tranche A warrants are recognized as equity and evaluated at fair value. The fair value wasdeterminedusingtheBlackandScholesmodel.

Mainassumptionsarethefollowing:

Expectedterm: 5yearsincaseofanIPO/10yearsifnot.

Volatility: 54%

Risk-freerate: 1,3%

Theequityinstrumentamountsto€632,334.

TrancheBsharewarrantswerevalued€451,922asatDecember31,2014.Correspondingderivativeandfinancialassetswereterminated in2015,generatinga financial incomeof€72,022(whichwasthedifferencebetweenthevalueoftheassetandthevalueofthederivative).

Note12:Employeebenefits

Employeebenefitsobligationsincludetheprovisionforthedefinedbenefitplan,measuredbasedontheprovisionsstipulatedundertheapplicablecollectiveagreements,i.e.,theFrenchpharmaceuticalindustry’scollectiveagreement.

ThiscommitmentonlyappliestoemployeessubjecttoFrenchlaw.Themainactuarialassumptionsusedtomeasurethepost-employmentbenefitsareasfollows:

ACTUARIALASSUMPTIONS 31/12/2015 31/12/2014

Retirementage Voluntaryretirementat65/67yearsoldCollectiveagreements Pharmaceuticalindustry

DiscountRate(IBoxxCorporatesAA) 2,03% 1,49%

Mortalityratetable INSEE2014 INSEE2014Salaryincreaserate 2% 2%Turnoverrate Low LowEmployeecontributionrate 53% 53%

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Changesintheprojectedbenefitobligationfortheperiodspresentedwereasfollows:

EMPLOYEEBENEFIT(Amountsineuros)

Post-employmentbenefits

AsatDecember31,2013 85,310

Servicecost 22,117

Interestcost 2,559

Actuarialgainsandlosses (12,228)

AsatDecember31,2014 97,758

Servicecost 21,197

Financialcost 1,457

Actuarialgainsandlosses 9,546

AstatDecember31,2015 129,958

Note13:Provisions

The Company may be involved in legal, administrative or regulatory proceedings in the normalcourse of its business. A provision is recorded by the Company as soon as it is probable that theoutcomeofthelitigationwillresultinanexpensefortheCompany.

NoprovisionhasbeenrecognizedfortheyearsendedDecember31,2014and2015.

Note14:Payablesandothercurrentliabilities

14.1.Tradepayables

Nodiscountwasappliedtopayablesandrelatedaccountssincetheamountsdidnothaveamaturityoveroneyearattheendofthecurrentfinancialyear.

PAYABLESANDRELATEDACCOUNTS(Amountsineuros) 12/31/2015 12/31/2014

Accountpayable 2,824,481 1,112,074

Accruedinvoices 1,512,041 1,986,608

Totaltradepayables 4,336,522 3,098,682

TheincreaseinaccountspayableisduetothepostinginDecember2015ofaninvoiceof€1millionrelatedtothecostsofthephase2bclinicalstudylaunchedinJapanthesamemonthandforwhichthecounterpartisrecognizedasprepaidexpenses.

14.2Taxandemployee-relatedpayablesandothercurrentliabilities

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Taxandemployee-relatedpayablesarepresentedbelow:

TAXANDEMPLOYEE-RELATEDPAYABLES(Amountsineuros) 12/31/2015 12/31/2014

Accruedpersonnelcosts 154,277 154,202

Socialsecurityandothersocialagencies 165,545 93,740

Othertaxandrelatedpayments 59,917 60,013Totaltaxandemployee-relatedpayablesandothercurrentliabilities

379,739 307,955

Othercurrentliabilities(€23,000)areattendancefeesfortheBoardofdirectors.

Note15:Operatingloss

TheCompanydid not generate any revenue in 2014. For the year endedDecember 31, 2015, theCompanygenerated€59,650ofrevenuecorrespondingto:

- €50,000 for the revenue in relation to the licenseagreementswithENYOPHARMASA (seeNote1.2“SignificantEvents”);

- €10,000fortherevenueinrelationtothesecondagreementwithENYOPHARMASA.

Inthesameperiod,operatingincomewasasfollows:

REVENUEANDOPERATINGINCOME(Amountsineuros) 12/31/2015 12/31/2014

Revenue 59.650 0


ResearchTaxCredit 1.918.071 1.977.120

SubsidiesFEDER/GrandLyon/RégionRhône-Alpes 1.000 1.455

Otherincomes 0 0

Totalrevenueandoperatingincome 1.978.721 1.978.575

Outside of revenue recognized from licensed andpartnership arrangements, operating loss is alsocomprisedofthesubsidiespresentedinthetableabove,whichhavebeenclassifiedasareductionofoperatingexpenses.

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Note16:Detailofoperatingexpensesbyfunction

16.1Researchanddevelopment

RESEARCHANDDEVELOPMENT(Amountsineuros)

12/31/2015 12/31/2014

Personnelcosts 1,115,618 998,664Share-basedpayments 234,259 331,647Sub-contracting,studiesandresearch 6,126,711 4,785,060Intellectualpropertyfees 526,586 393,494Paymentstointermediariesandprofessonalfees 593,282 279,354PurchaseofactivepharmaceuticalingredientsforCROs 385,000 0Insurancepremiums 21,985 80,146Licensingfees 137,298 64,325Rent 65,514 47,948Documentation,training 1,754 6,312Depreciationofassets 0 0Othertaxes 29,813 9,158Various 0 0Researchanddevelopmentexpenses(excludingsubsidiesreceived)

9,237,820 6,996109

ResearchTaxCredit 1,918,071 1,977,120Othersubsidies 1,000 1,455Subsidies 1,919,071 1,978,575

Research and development expensesmainly relate to studies and clinical trials for Imeglimin andPXL770.TheCompanyconducteditsstudiesthroughitsnetworkofsubcontractedserviceproviders.Compensation related to these contracts constitutes the majority of the Company’s operatingexpensesintermsofresearch.MostexpensesareeligiblefortheResearchTaxCredit.Theamountofthe Research Tax Credit was stable between 2014 and 2015 despite an increase in researchexpenditure.Thisisduetothefactthatsomeexpensesarenoteligiblefortheresearchtaxcredit,forexample,becauseoftheirgeographiclocation.

The amount of benefits related to the Young Innovative Enterprise (Jeune Entreprise Innovante)status in 2014 and 2015 amounted to €167,141 and €130,611 respectively, and recognized as areduction of research and development expenses for €117,784 and €86,639 for 2014 and 2015respectively,andasareductionofgeneralandadministrativeexpensesfor€49,357and€43,971for2014 and 2015 respectively). The tax credit for competitiveness and employment (Crédit d’ImpôtpourlaCompétitivitéetl’Emploi),orCICE,isimmaterialfortheperiodspresented.

16.2Generalandadministrativeexpenses

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GENERALANDADMINISTRATIVEEXPENSES(Amountsineuros)

12/31/2015 12/31/2014

Personnelcosts 740,134 418,966Share-basedpayments 944,931 460,886Rents 33,249 17,620Travelandentertainmentexpenses 474,965 260,449Maintenanceandrepairs 25,188 23,211Postageandtelecomunicationsexpenses 29,319 26,467Insurancepremiums 21,529 11,503Advertisingandpublicrelations 519,852 20,672Paymentstointermediariesandprofessionalfees 1,591,910 594,535Documentation,training 766 2,117Bankingservicesandsimilarservices 10,259 6,703Subcontracting,studiesandresearches 0 0Depreciationofsoftwareandintangibleassets 22,975 12,343Othertaxes 15,530 3,838Othergeneralandadministrativeexpenses 31,246 19,137

Generalandadministrativeexpenses 4,461,852 1,878,447

In relation to the initial public offering been completed in February 2015, the Company incurredvariouscostswhichrepresentanaggregateamountofapproximately€3,140,000.Thesecostshavebeenallocatedtogeneralandadministrativeexpensesandadeductionofequitytotheextentthattheyareincrementalcostsdirectlyattributabletotheequitytransaction,onabasisofallocationthatisrationalandreasonable.

Costs that are clearly associated with the issue of shares (such as share registration and otherregulatoryfeesrelatingtotheissuanceofshares)havebeenrecognizedasadeductioninequity.

Promotional and other direct listing expenses or allocated expenses have been recognized asoperatingexpenses.

Forcoststhatrelatejointlytobothcomponentsofthetransaction(i.e.,toobtainingalistingandtoissuing shares), expenseshavebeenallocatedusinganappropriatebasisof allocation, consideringtheextenttowhichthecostscanbeconsideredtobeincrementalcostsdirectlyattributabletotheequitytransaction,inaccordancewithIAS32paragraphs27and28.

Based on these principles, out of the €3,140,000 incurred (€1,320,000 and €1,820,000 for thefinancial years ended December 31, 2014 and 2015, respectively), €2,294,000 (€1,031,000 and€1,263,000fortheyearsendedDecember31,2014and2015,respectively)havebeenrecognizedasareductionofequityinaccordancewithIAS32.Theremainingamountfor€846thousandhasbeenrecognized as general and administrative expense (€288,000 and €558,000 for the years endedDecember31,2014and2015,respectively).

TheCICEtaxcreditforcompetitivenessandemploymentwasnotsignificant(<€1,000).

Note17:Employees

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The Company’s average workforce during the years ended December 31, 2014 and 2015 was asfollows:

AVERAGEHEADCOUNS 2015 2014

Executives 13 12

Non-executives 1 0

Total 14 12

Note18:Financialincome(loss)

FINANCIALINCOME(LOSS)(Amountsineuros) 12/31/2015 12/31/2014

Changesinthefairvalueoffinancialliabilities 124,236 (6,858,141)

Ofwhichconvertiblebonds 0 (2,049,160)

Ofwhichderivativefinancialinstrument 72,022 (72,022)

OfwhichMerckSeronofinancialliability 52,214 (4,736,958)InterestexpenserelatedtotheKreosliability (856,556) (371,376)Otherfinancialexpenses (52,019) (28,677)Financialincome 29,939 71,938Foreigncurrencyexchangegains(losses) (29,662) (212)Financialincome(loss) (520,061) (7,186,467)

Financial income(loss)fortheyearendedDecember31,2015,ismainlyduetointerestincurredinrelationtotheKreos liability (Note11.5).For theyearendedDecember31,2014, financial income(loss)wasmainlyduetochangesinthefairvalueoftheliabilitiesrelatingtoconvertiblebondsandtheMerckSeronoagreement.These liabilitiesexpiredfollowingthecompletionofthe initialpublicofferingoftheCompany.

Otherfinancialexpensesprimarilyreflectthediscountingimpactofconditionaladvances.

Note19:Incometaxe

AsatDecember31,2015, theamountofaccumulated tax loss carried forwardsince incorporationwas€64,526,902withnoexpirationdate.

ThetaxrateapplicabletotheCompany istheapplicablerate inFrance, i.e.,33.33%. Inaccordancewith the principle described inNote 2.21, the Company has not recognized deferred tax assets inadditiontothedeferredtaxliabilitiesinthefinancialstatementsoftheCompany.

Reconciliationbetweenthetheoreticalandtheeffectivetax

Page218

12/31/2015 12/31/2014

Netincome(loss)

(12241013) (14082448)

Consolidatedtax 0 0Income(loss)beforetaxe (12241013) (14082448)StatutorytaxrateinFrance

33,33% 33,33%Nominal income tax expense (benefit) under statutory Frenchtaxrate (4080334) (4694145)Permanentdifferences -1885170 69516Share-basedpayment 393063 264177Unrecognizeddeferredtaxassetsontaxlossescarryforwards 5572441 4360451Consolidatedincome/expensetax 0 0Effectivetaxrate 0,0% 0,0%

ThepermanentdifferencesprimarilyincludetheimpactoftheResearchTaxCredit(whichisanon-taxableoperatingincome).

Natureofdeferredtaxes

Deferredtaxesbalancesbynature12/31/2015 12/31/2014

Temporarydifferencesrelatedtoliabilitiesmeasuredatfairvalue 0 1468778Othertemporarydifference(asset) 43319 28138Taxlossescarryforwards 21508946 14597844Total 21552265 16094760 Temporarydifferencesrelatedtoconditionalgrants 33660 50999Othertemporarydifference(liability) 92886 21341Total 126545 72340 Deferredtaxassets,net 21425720 16022420Unrecognizeddeferredtaxes (21425720) (16022420)Totaldeferredtaxes,netrecognizedinthestatementoffinancialposition 0 0

Note20:Losspershare

Basicloss

LosspershareiscalculatedbydividingincomeattributabletoequityholdersoftheCompanybytheweightedaveragenumberofoutstandingordinarysharesfortheyear.

Allexistinginstrumentsgivingdeferredrightstocapital(e.g.,BSAs,BSPCEsorconvertiblebonds)areconsideredtohaveanantidilutiveeffectastheyreducelosspershare.Accordingly,dilutedlosspershareisidenticaltoBasicLosspershare.

Page219

BASICLOSSPERSHARE(Amountsineuros)

31/12/2015 31/12/2014*

Weightedaveragenumberofoutstandingshares 17,918,891 9,976,856Netlossfortheyear (12,241,013) (14,082,448)Basiclosspershare(€/share) (0.68) (1.41)Dilutedlosspershare(€/share) (0.68) (1.41)*afterthe20-to-1sharesplitthatoccurredonMarch28,2014

Note21:Relatedparties

Nopost-employmentbenefitisgrantedtothemembersoftheboardofdirectors.

Compensationtodirectorsispresentedbelow(ineuros):

Corporatedirectorscompensation

12/31/2015 12/31/2014

Fixedcompensationowed 131,752 121992Variablecompensationowed 24,108 20,165Contributionsin-kind 5,149 5,199Employercontributions 45,684 39,961Attendancefees(Board) 109,500 22,500Share-basedpayments 242,152 227,848Consultingfees 50,000 58,104

TOTAL 608,345 495,769

Termsfortheallocationofvariablecompensationaredefinedbasedonqualitativeobjectivessetat85%forCompany-levelobjectivesand15%forindividualobjectives.

Themethodsforassessingbenefitsrelatingtoshare-basedpaymentsispresentedinNote10.

Note22:Commitments

22.1Pledges

TheCompanybenefitsfroma€1.7millionoverdraftfacilityaswellasapledgedtermdepositaccountof the same amount. However the Company has not drawn down on these facilities at bothDecember31,2014andDecember31,2015.

22.2Commitmentsrelatedtoleasesagreements

Realestateleases

TheCompanyentered intoanoperating lease for its registeredoffice in Lyonon January15,2009underacommerciallease.Asaresultofmovingtonewpremises,theCompanyenteredintoanewleasewithaneffectivedateofJuly1,2015.Itsdurationisninecompleteandconsecutiveyears,untilJune 30, 2024 and the Company has the possibility to provide notice to terminate the lease onlyeverythreeyears.

TheCompanyalsosubletanofficeinParisfora12-monthtermthatisrenewableannually,effectiveJanuary1,2013.

Contractualobligationsandcommitments

Page220

The followingtablesummarizesourcommitments tosettlecontractualobligationsasatDecember31,2015:

Contractualobligationsandcommitments

Lessthan1

year

1to3year

3to5years

Morethan5years

Total

Kreosloanpayable €2274972 €871085 __ __ €3146057Conditionaladvances €88906 €330179 €352662 __ €771746Operatingleases(1) €102032 €390710 __ __ €492742Total €2465910 €1591974 €352662 __ €4410545

(1)WeleaseofficespaceinLyon,Franceunderanon-cancelableoperatingleasethatexpiresinAugust2024,subjecttoourearlierrightofterminationeverythreeyears.WealsoleaseofficespaceinParis,FrancepursuanttoaleasethatisrenewableannuallyuntiltheexpirationofthemainleaseonJune2021.

22.3CommitmentinrespectoftheagreementwithMerckSeronoatthecreationoftheCompany

In accordance with the MS Agreement, Merck Serono transferred certain patents and granted alicenseforotherpatentsandknow-howtotheCompanyfortheresearchanddevelopment,andthemarketing of pharmaceutical products. This license is exclusive covering a list of 25molecules, byprogram,selectedbytheCompany.

In order to support its research and development activities and given Merck Serono’s economicinterest in thedevelopmentof theCompany, at the incorporationof theCompany,Merck SeronoprovidedtheCompanywithatotalnon-repayableamountof€7.2million.

In exchange for the rights that were granted under the MS Agreement, the Company agreed toprovideMerckSeronowith:

• royalties on net sales of the products covered by the patents granted or grantedunderlicensebyMerckSerono;

• a percentage of the earnings from any partnership agreement relating to theproductscoveredbythepatentsgrantedorgrantedunderlicense.

22.4ObligationunderKreoscontract

In order to guarantee all obligations entered intoby theCompany in respect of theVenture LoanAgreement (see paragraph 1.2), the Company has granted various security rights relating to itsintellectual property and its cash position: pledges of bank accounts, receivables and certainintellectualpropertyrightsascollateral.

22.5Obligationunderothercontracts

In theordinary courseofbusiness, theCompany regularlyuses the servicesof subcontractors andentersintoresearchandpartnershiparrangementswithvariouscontractresearchorganizations,orCROs,whoconductclinicaltrialsandstudies inrelationtothedrugcandidates,primarily Imegliminandtoalesserextent,PXL770.ThecostofservicesperformedbyCROsisrecognizedasanoperatingexpenseasincurred.Underthesearrangements,noreciprocalcommitmentbindstheCompanyanditssubcontractors.ThereisnoothercommitmentrelatedtoresearchanddevelopmentagreementsthattheCompanyhasenteredinto.

Note23:Managementandassessmentofthefinancialrisks

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TheprincipalfinancialinstrumentsheldbytheCompanyarecashandcashequivalents.Thepurposeof holding these instruments is to finance the ongoing business activities of the Company. TheprincipalriskstowhichtheCompanyisexposedtoareliquidityrisk,foreigncurrencyexchangerisk,interestrateriskandcreditrisk.Whenappropriate,theCompanyusessimplewaysproportionatetoitssizeinordertominimizepotentiallyadverseeffectoftheserisksonthefinancialperformance.ItisnottheCompany’spolicytoinvestinfinancialinstrumentsforspeculativepurposes.

Interestraterisk

TheCompanyhasaverylowexposuretointerestraterisk,consideringthat:

• investmentsecuritiesconsistingofshort-termmoneymarketfunds;

• Liquidassetsincludetermdeposits;

• theconditionaladvancesarenotsubjecttointerestraterisk;

• noliabilityatavariableinterestratewastaken.

Creditrisk

Thecredit risk related to theCompany’s cashandcashequivalents isnot significant in lightof thequalityoftheco-contractingfinancialinstitutions.

Foreigncurrencyrisk

TheCompanyhasgenerateda limitedamountof revenue todate (€59,650 in2015)anddoesnotcurrently have revenue in any currency other than the euro. The Company is exposed to foreignexchangerisk inherentincertainserviceswhicharedenominatedinforeigncurrenciessuchasU.S.dollar, Singapore dollar, Japanese Yen and British pound. However, the Company’s exposure tocurrenciesotherthantheeuroisnegligible.Duetotherelativelylowleveloftheseexpenditures,theexposuretoforeignexchangeriskdidnothaveamaterialadverseimpactontheresultsofoperationsorfinancialpositionoftheCompanyforeitheroftheyearsendedDecember31,2014or2015.

In light of these insignificant amounts, the Company has not adopted, at this stage, a hedgingmechanism in order to protect its business activity against fluctuations in exchange rates. TheCompanyenters only, from time to time, into forwardpurchasesof foreign currencies in order tomeetitscommitmentinrelationtoservicespurchasedanddenominatedinforeigncurrencies.

AstheCompanyfurtherincreasesitsbusiness,particularlyintheUnitedStates,theCompanyexpectsto face greater exposure to exchange rate risk andwould then consider adopting an appropriatepolicyforhedgingagainsttheserisks.

Equityrisk

TheCompanydoesnotholdanyequityinvestmentsormarketablesecuritiesonaregulatedmarket.

Liquidityrisk

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TheCompanydoesnotbelievethatitisexposedtoshort-termliquidityrisk,consideringthecashandcash equivalents of €42.4 million that it had available as of December 31, 2015. Managementbelieves that thisamount is sufficient to fundtheCompany’splannedoperations throughthenexttwelvemonths.

Note24:Auditors’fees

AUDITOR’SFEES

2015FinancialYear 2014FinancialYear

Mazars Pwc Mazars Pwc

(Amountsin€thousand)

Amount(excluding

tax)%

Amount(excluding

tax)%

Amount(excluding

tax)%

Amount(excluding

tax)%

Auditors 20.8 57% 20.8 57% 103.5 74% 106.8 75%

Due diligence directly relatedtothemissionoftheAuditors

15.5 43% 15.5 43% 36.5 26% 36.5 25%

Otherduediligence 0% 0% 0,0 0% 0,0 0% Totalfees 36.3 100% 36.3 100% 140.0 100% 143.3 100%

19.2. Auditofhistoricalannualfinancialinformation

Auditors’reportontheaccountsestablishedinaccordancewithIFRSstandardasadoptedbytheEuropeanUnion

TotheChairmanoftheBoardofDirectors

Sir,

In our capacity as Auditors of Poxel S.A. and in response to your request, we have audited the

financial statements of Poxel S.A. drawn up under IFRS standards, as adopted by the EuropeanUnion, related to theyearendedDecember31,2015 (“the financial statements”),asattachedto

thisreport.

ThesefinancialstatementswerepreparedundertheresponsibilityofyourBoardofDirectors.Our

roleistoexpressanopinionontheseannualaccounts,basedonouraudit.

We carried out our audit according to the professional rules applicable in France; these rules

requirethe implementationofduediligence inordertoobtainthereasonable insurancethattheannualstatementsdonotincludesignificantanomalies.Anauditincludesexamining,onatestbasis

or through other selection methods, evidence supporting the amounts and disclosures in thefinancialstatements.Anauditalsoinvolvesassessingtheaccountingprinciplesused,anysignificant

estimatesmadeandtheoverallpresentationofthefinancialstatements.Webelievethatouraudithasprovideduswithsufficientrelevantinformationonwhichtobaseouropinion.

Page223

In our opinion, the financial statements give a true and fair viewof the financial position of the

CompanyasatDecember31,2015andof the resultof itsoperations for theyear thenended inaccordancewithIFRS,asadoptedintheEuropeanUnion.

DoneatLyonandCourbevoieonMarch31,2016

TheAuditors

MAZARS PricewaterhouseCoopersAudit

FrédéricMAUREL ElisabethL’HERMITE

19.3. Dateofthelatestfinancialinformation

ThelatestfinancialinformationisdatedMarch31,2016.

19.4. QuarterlyfinancialinformationasofMarch31st2016

19.4.1. Statementoffinancialsituation

POXEL Notes

03/31/2016

12/31/2015

Statementsoffinancialposition

€

€

ASSETS Intangibleassets 3

481

540

Property,plantandequipment 4

147,815

152,748

Otherfinancialassets 5

592,974

533,428

Defferedtaxassets 19

-

-

Totalnon-currentassets

741,270

686,715

Tradereceivables 6

11,580

11,580

Otherreceivablesandrelatedaccounts 6

4,034,931

3,736,414

Cashandcashequivalents 7

37,347,121

42,413,402

Totalcurrentassets 41,393,632

46,161,396

Totalassets 42,134,902 46,848,112

LIABILITIESANDEQUITY

Page224

Equity Sharecapital 9

390,625

389,648

Premiumsrelatedtosharecapital 981,315,198

81,923,707

Reserves 9(43,810,577)

(32,044,525)

Netloss 9(6,247,534)

(12,241,013)

Totalshareholders’equity 31,647,712

38,027,817

Non-currentliabilities Employeebenefitobligations 12

140,379

129,958

Financialliabilities 11887,929

1,553,926

Totalnon-currentliabilities 1,028,308

1,683,884

Currentliabilities Financialliabilities 11

2,527,195

2397,150

Provisions 13-

-

Tradepayablesandrelatedaccounts 14.16441,524

4336,522

Taxandemployee-relatedpayablesandothercurrentliabilities 14.2

436,472

379,739

Othercreditorsandotherliabilities 14.353,691

23,000

Totalcurrentliabilities

9,458,882

7,136,411

Totalliabilitiesandequity 42,134,902 46,848,112

19.4.2. Statementofcomprehensiveincome

POXEL Notes

03/31/2016

03/31/2015

Statementsofloss

€

€

Revenue 15-

-

Costofsales

-

-

Grossmargin -

-

Researchanddevelopment Researchanddevelopmentexpenses 16.1

(5,589,671)

(1,633,471)

Subsidies 16.11,046,457

468,206

Generalandadministrative 16.2(1,580,579)

(1,243,086)

Operatingloss

(6,123,793)

(2,408,350)

Financialexpenses 18(170,899)

(254,880)

Financialincome 1886,471

92,388

Foreigncurrencyexchangeloss 18(39,313)

120

Netlossbeforetax

(6,247,534)

(2,570,722)

Incometaxes 19-

-

Netloss

(6,247,534)

(2,570,722)

Earningslosspershare Notes 03/31/2016

03/31/2015

Page225

Weightedaverageofsharesincirculation

19,509,499

15,727,011

Basiclosspershare(€/share) 20(0.32)

(0.16)

Dilutedlosspershare(€/share) 20(0.32)

(0.16)

19.4.3. Othercomprehensiveincome

POXEL–IFRSStatementsofloss

Notes 03/31/2016€

03/31/2015€

Netlossfortheperiod (6247534) (2570722)

Actuarialgainsandlosses (3301) 1820

Effectsoftaxesrelatingtotheseitems

Othercomprehensiveincome(loss) (3301) 1820

Totalcomprehensiveloss (6250835) (2568902)

19.4.4. Changesinequity

Numberofshares

Sharecapital

Premiumrelatedto

sharecapital

Reservesandnetincome

Accumulatedcomprehensive

loss

Shareholdersequity

POXELStatementofchangesinshareholders’equity

€

€

€

€

€

AtDecember31,2014 12508156 250163 30366675 (33151439) (12904) (2547504)Netlossfortheperiod (2570722) (2570722)Othercomprehensiveincome 1820 1820Totalcomprehensiveincome(loss) (2570722) 1820 (2568902)Dividends 1-to-20sharesplit Issuanceofshares(1) 5119779 102396 33995333 34097728Subscriptionofsharewarrants(BSA) 25500 25500Equity-settledshare-basedpayment 52214 52214Capitaldecrease Treasurysharesheld (77415) (77415)Costs incurred in relation to equitytransactions(1)

(1139540) (1139540)

AtMarch31,2015 17627935 352559 63247967 (35747360) (11084) 27842082 AtDecember31,2015 19482394 389648 81923707 (44263088) (22450) 38027817Netlossfortheperiod (6247354) (6247354)Othercomprehensiveloss (3301) (3301)Totalcomprehensiveincome(loss) (6247534) (3301) (6250835)Dividends Issuanceofshares(2) 48834 977 191959 192936Subscriptionofshare-warrants(BSA) Equity-settledshare-basedpayment 465299 465299Capitaldecrease Treasurysharesheld 12963 12963Costs incurred in relation to equitytransactions(3)

(800469) (800469)

AtMarch31,2016 19531228 390625 81315198 (50032360) (25751) 31647712

(1) During the three-month period endedMarch31, 2015, shares have been issued for total gross proceeds of €33,995,333 in

relation to (i)the initial public offering of the Companyon Euronext Paris completed in February 2015 (€26,767,487)and to

(ii)the exercise ofMerck Serono warrants (€7,249,616). Costs incurred in relation to these equity transactions amounts to

€1,139,540

Page226

(2) During the three-month period ended March31, 2016, shares have been issued for in relation to the exercise of 45,834

warrantsissuedtoKreosCapitalIVUKandexerciseof150Founders’sharewarrants(Bonsdesouscriptiondepartsdecréateurd’entreprise,orBSPCE)byanemployee(seeNote1.2)

(3) Duringthethree-monthperiodendedMarch31,2016,costshavebeenincurredinrelationtoacapitalincreasethatisexpected

tohappenduringthesecondquarterof2016.ThesecostshavebeenrecognizedasadeductioninequityasatMarch31,2016

foratotalamountof€800,469(seeNote16).

19.4.5. Cashflowstatements

Cashflowsfromoperatingactivities Netlossfromcontinuingoperations

(6,247,534)

(2,570,722)

Netlossfromdiscontinuedoperations Netlossfortheperiod

(6,247,534)

(2,570,722)

(+)Amortizatonofintangibleassets 359

279

(+)Amortizationofproperty,plantandequipment 47,021

2,398

(+)Changeinemployeebenefits 127,120

5,663

(+)Expensesassociatedwithshare-basedpayments 10465,299

52,214

(+)Interestexpense

86,051

140,625(-)Interestincome

(85,891)

(39,531)

(+)ChangesinthefairvalueofthefinancialliabilityrelatedtoMerckSerono 11.4

(52,214)

(+)ChangesinthefairvalueofthederivativeandeffectofunwindingthediscountrelatedtoKreos 11.5

77,155

84,892

(+)Grantstransferredtoincome 11.27,650

29,362

Other

13,006

961Cashflowsfromoperatingactivitiesbeforechangeinworkingcapitalrequirements

(5,670,063)

(2,346,073)


1,893,909

(446,704)

Cashflowsfromoperatingactivities

(3,776,154)

(2,792,777)

Cashflowsfrominvestingactivities Acquisitionofintangibleassets 3-

(504)


-

Acquisitionsofproperty,plantandequipment 4(2,088)

(1,975)

Interestreceived

85,891

39,531Othercashflowsfrominvestingactivities 5

(59,546)

(6)

Cashflowsfrominvestingactivities 24,257

37,046

Cashflowsfromfinancingactivities Sharecapitalincrease,includingpremium,netandexpenses(1) 10(607,533)

25,708,572

Subscriptionofsharewarrants(BSA) 10

25,500Liquidityagreement

(250,000)

Interestpaid

(90,675)

(141,487)Conditionaladvancesandgrants 11.2

0

Issuanceofbonds

0Repaymentofloansandconditionaladvances 11.2

(616,176)

(7,500)

Cashflowsfromfinancingactivities (1,314,384)

25,335,085

Impactofforeigncurrencyexchangefluctuations

Increase(decrease)incashandcashequivalents (5,066,282)

22,579,354

Cashandcashequivalentsasoftheopeningdate(includingshort-termbankoverdrafts) 42,413,402

10,253,635Cashandcashequivalentsasoftheclosingdate(includingshort-termbankoverdrafts)

37,347,121

32,832,988

Increase(decrease)incashandcashequivalents (5,066,281)

22,579,354

(1)“Sharecapitalincrease,includingpremium,netofexpenses”forthethree-monthperiodendedMarch31,2015(€25,708,572)reconcileswith “issuance of shares” (€34,097,729)in the statement of changes in equity after deduction of “Costs incurred in relation to equitytransactions”(€1,139,540)aswellasnon-cashactivitiessuchastheexerciseofMSSharePurchaseWarrants(€7,249,616)

Page227

“Sharecapitalincrease,includingpremium,netofexpenses”forthethree-monthperiodendedMarch31,2016(€607,533)reconcileswiththeexerciseof 45,834warrants issued toKreosCapital IVUK (€183,336)and theexerciseof 150BSPCEby anemployee (€9,600)afterdeducting“Costsincurredinrelationtoequitytransactions”(€800,469)relatedtoacapitalincreasethatisexpectedtohappenduringthesecondquarterof2016

19.4.6. Detailedanalysisofthechangesinworkingcapital(BFR)

Detailofthechangesinworkingcapital

03/31/2016

03/31/2015

Otherreceivables

(298,517)

(321,978)

Tradepayablesandrelatedaccounts

2105,002

(4,767)

Taxandsocialsecurityliability

56,733

(119,959)

Othercreditorsandotherliabilities

30,691

-

Totalchangesinworkingcapital

1,893,909

(446,704)

19.4.7. NotestotheIFRSfinancialstatements

Note1:Presentationoftheactivityandmajorevents

SummarizedfinancialstatementsunderIFRSfortheperiodfromJanuary1sttoMarch31,2016weredrawnupbytheBoardofDirectorsofMay11,2016andauthorizedforissue.

1.1GeneralinformationabouttheCompany

IncorporatedinMarch2009asaresultofaspin-offoftheMerckSeronopharmaceuticalcompany,PoxelS.A.isaFrenchjointstockcompany(sociétéanonyme)governedbyFrenchlawanddevelopingmoleculesforthepotentialtreatmentoftype2diabetes.

TheCompanyhasincurredlossesandnegativecashflowsfromoperationssinceits inception.Suchlosses result principally from internal and external research and development expenses forconducting numerous pre-clinical and clinical trials, primarily as part of the development ofImeglimin.

TheCompany’sfutureoperationsarehighlydependentonacombinationoffactors,including:(i)thesuccess of its research and development; (ii) regulatory approval and market acceptance of theCompany’s proposed future products; (iii) the timely and successful completion of additionalfinancing; and (iv) the development of competitive therapies by other biotechnology andpharmaceutical companies. As a result, the Company is and should continue, in the short tomid-term,tobefinancedthroughpartnershipagreementsforthedevelopmentandcommercializationofitsdrugcandidatesandthroughtheissuanceofnewequityinstruments.

Headofficeaddress:

259/261AvenueJeanJaurès–ImmeubleleSunway–69007Lyon

Numberunderwhich theCompany is registeredwith theRegistreduCommerceetdesSociétés:510970817RCSdeLYON

POXELS.Aishereinafterreferredtoasthe“Company”.

Page228

TheCompanyhadnosubsidiaryorholdingsasatDecember31,2015.

1.2Significanteventsofthefirstquarterof2016

Capitalincreases

On February9, 2016, Kreos Capital IV (UK) exercised 45,834 warrants at an exercise price of€4.00perwarrantrepresentingacapitalincreaseof€916.68plusapremiumof€182,419.

OnFebruary17,2016,anemployeeexercised150BSPCEwhichcorrespondsto3,000ordinarysharesatanexercisepriceof€3.20representingacapitalincreaseof€60plusapremiumof€9,540.

As atMarch31, 2016, share capital of theCompany is set at €390,624.56divided into 19,531,228ordinaryshareswithaparvalueof€0.02.

1.3Post-balance-sheetevents

None.

Note2:Principles,rulesandaccountingpolicies

TheFinancialstatementsarepresentedineuros,unlessstatedotherwise.

2.1Statementofcomplianceandsignificantaccountingpolicies

Statementofcompliance

TheCompanyprepared itsFinancialStatementsdrawnupbytheBoardofDirectors, inaccordancewith International Financial Reporting Standards (IFRS), as issued by the International AccountingStandardsboard (IASB)andadoptedby theEuropeanUnionon thedateof thepreparationof thefinancialstatementsandforallperiodspresented.

These accounting standards, available on the European Commission’s website(http://ec.europa.eu/internal_market/accounting/ias_fr.htm),includetheIASandIFRSinternationalaccountingstandards,theinterpretationsfromtheStandingInterpretationsCommittee(SIC)andtheinterpretationsfromtheInternationalFinancialReportingInterpretationsCommittee(IFRIC).

TheprinciplesandaccountingmethodsandoptionschosenbytheCompanyaredescribedbelow.Insome cases, IFRS provides an option between the application of a standard treatment or otherauthorizedtreatment.

PrincipleforthepreparationoftheUnauditedInterimCondensedFinancialStatements

Thequarterlyfinancialstatements,presentedinaconsolidatedformat,werepreparedinaccordancewithIAS34(“Interimfinancialreporting”).

The quarterly financial statements do not incorporate all the information and appendices aspresentedintheannualfinancialstatements.Asaresult,theymustbereadinconjunctionwiththefinancialstatementsoftheCompanydrawnupunderIFRSonDecember31,2015,exceptforcertaininterimreportingtreatmentsasdescribedbelow.

The financial statements were prepared on a historical cost basis except for certain assets andliabilities,asallowedbyIFRS.Thecategoriesofassetsandliabilitiesnotmeasuredathistoricalcostaredisclosedinthefollowingnotes.

Page229

Goingconcern

Theassumptionof going concernwasusedgiven theCompany’s financialpositionand liquidity tomeetitsfinancingneedsforthenext12monthsfollowingthebalancesheetdate.

Accountingpolicies

TheaccountingpoliciesandmeasurementprinciplesadoptedarethesameusedfortheyearendedDecember31,2015,withtheexceptionoftheapplicationofthefollowingnewaccountingstandards,amendmentsof standardsand interpretationsadoptedby theEuropeanUnion,mandatory for theCompanyasofJanuary1st,2016:

Standards,amendmentstostandardsandinterpretationsmandatoryasofJanuary1st2016

The Company complied with the new standards, amendments to standards and interpretationsmandatoryasofJanuary1st,2016.Therewasnosignificantimpactfollowingtheapplicationofthesenewtexts.

Standardsandinterpretationsissuedbutnotyeteffectivefor2016quaterlyaccounts

• IFRS9:Financialinstruments

• IFRS14:Regulatorydeferralaccounts

• IFRS15:Revenuefromcontractswithcustomers

• IFRS16:Leases

The Company is evaluating the impact of the application of the new standards, amendments ofstandards and interpretations issued. There is no significant impact expected on the financialstatements.

2.2Useofjudgementsandestimates

In order to prepare financial statements in accordance with IFRS, estimates, judgments andassumptionsweremadebytheCompany’smanagementwhichcouldaffectthereportedamountsofassets,liabilities,contingentliabilities,incomeandexpenses.

TheseestimatesarebasedontheassumptionoftheCompanycontinuingasagoingconcernandarepreparedinaccordancewithinformationavailableatthedateoftheUnauditedInterimConsolidatedFinancialStatementswereprepared.Theyare reviewedonanongoingbasisusingpastexperienceandvariousotherfactorsconsideredtobereasonableasthebasistomeasurethecarryingamountofassetsandliabilities.Estimatesmayberevisedduetochangesintheunderlyingcircumstancesorsubsequent tonew information.Actual resultsmaydiffer significantly from theseestimates in linewithassumptionsordifferentconditions.

Themainestimatesor significant judgmentsmadeby theCompany’smanagement toprepare theUnaudited Interim Consolidated Financial Statements are the same as the estimates or significantjudgments used for the year ended December31, 2015, which are described in Note 3 to theFinancialStatementsfortheyearendedDecember31,2015.

2.3Changeinaccountingpolicy

Page230

Except for the new texts identified above, the Company has not perform any changes in itsaccountingpolicyduringthefirstquarterof2016.

Note3:Intangibleassets

GROSSVALUEOFINTANGIBLEASSETS(Amountseneuros) Softwares Other

Total

StatementoffinancialpositionasofDecember31,2014 10,171 0 10,171

Capitalizationofdevelopmentcosts 0 0 0

Acquisition 504 0 504

Scrapping 0 0 0

Transfer 0 0 0

StatementoffinancialpositionasofMarch31,2015 10,675 0 10,675



Acquisition 0

Scrapping 0

Transfer 0


DEPRECIATION


Increase 279 0 279

Decrease 0 0 0



Increase 59 59

Decrease 0

StatementoffinancialpositionasofMarch31,2016 9,802 0 9,802NETBOOKVALUES

AsofMarch31,2015 1,135 0 1,135

AsofMarch31,2016 481 0 481

Duetotherisksanduncertaintiesrelatedtotheresearchanddevelopmentprocess,thesixcapitalcriteriafor intangibleassetswerenotconsideredtobefulfilledforanydevelopmentprojectunderway.Consequently,alldevelopmentcostsincurredbytheCompanyarerecordedasexpenses.

Note4:Property,planandequipmentGROSSVALUE(Amountsineuros)

Installationsandfixtures

Computerhardware

Furniture

Total

StatementoffinancialpositionasofDecember31,2014 25,587 46,610 21,066 93,263

Acquisition 1,975 1,975

Scrapping 0

Transfer 0StatementoffinancialpositionasofMarch31,2015 25,587 48,585 21,066 95,238StatementoffinancialpositionasofDecember31,2015 109,157 50,739 40,458 200,354

Page231

Acquisition 2,088 2,088Scrapping 0

Transfer 0StatementoffinancialpositionasofMarch31,2016 109,157 52,827 40,458 202,442ACCUMULATEDDEPRECIATION StatementoffinancialpositionasofDecember31,2014 14,341 39,289 18,298 71,928

Increase 711 1,458 229 2,398

Decrease 0StatementoffinancialpositionasofMarch31,2015 15,052 40,747 18527 74,326StatementoffinancialpositionasofDecember31,2015 2,081 25,799 19,726 47,606

Increase 3,033 2,859 1,129 7,021

Decrease 0StatementoffinancialpositionasofMarch31,2016 5,114 28,658 20,855 54,627NETBOOKVALUES

AsofMarch31,2015 10,535 7,838 2,539 20,912

AsofMarch31,2016 104,043 24,169 19,603 147,815

TheCompanydoesnothaveanyfinanceleases.

TherehasbeennorecognitionofimpairmentlossesinapplicationofIAS36.

Note5:Othernon-currentfinancialassets

Noncurrentfinancialassetsarepresentedbelow:

03/31/2016 12/31/2015

Kreosagreement 278,325 278,325

Cashpaidinrelationtotheliquidityagreement 213,135 200,171

Depositspaidinrelationtopoperatingleases 28,267 28,267

Otherdepositspaid 73,247 26,665

Othernon-currentfinancialassets 592,974 533,428

Note6:Otherreceivables

Otherreceivablesandrelatedaccounts(Amountsineuros) 03/31/2016 12/31/2015

Researchtaxcredit 2,964,528 1,918,071

Valueaddedtax(“VAT”) 884,034 586,984

Creditnotetobereceived 518 26,321

Prepaidexpenses 183,090 1,203,786

Receivablesfromsuppliers 0 226

Other 2,761 1,026

Totalotherreceivablesandrelatedaccounts 4,034,931 3,736,414

Page232

Alltradereceivables,otherreceivablesandrelatedaccountshaveamaturitybelowoneyear. Research tax credit (Credit d’impôt recherche or “CIR”) include balance as at December31, 2015(€1.9million) plus the CIR for the three-month period endedMarch31, 2016 (€1.1million). As atMarch31,2016,Creditisestimatedonabasisoftheexpensesincurredandeligibleforthetaxcredit.

Prepaidexpensesarerelatedcurrentexpenses.

Note7:Cashandcashequivalents

Cashandcashequivalentsarepresentedbelow:

CASHANDCASHEQUIVALENTS(amountsineuros)

03/31/2016 12/31/2015

Bankaccounts(cashathand) 3,697,106 1,787,516

Fixedtermdeposits 33,515,069 35,477,148

Moneymarketfunds 134,946 5,148,738

Totalcashandcashequivalents 37,347,121 42,413,402

Note8:Financialassetsandliabilitiesandeffectsonincome

TheCompany’sassetsandliabilitiesarevaluedasfollowsasatDecember31,2015andasatMarch31,2016:

(Montantseneuros)


applicationofIAS39Non

financialinstruments

Amountrecognizedinthestatementoffinancialposition

Fairvalue(3)Fairvalue

throughprofitandloss

Loansandreceivables

(2)


Non-currentfinancialassets 592,974 592,974 592,974 Receivablesandrelatedaccounts 11,580 11,580 11,580 Otherreceivables 4,034,931 4,034,931 4,034,931 Cashandcashequivalents 37,347,121 37,347,121 134,946 37,212,175

Totalfinancialassets 41,986,606 41,986,606 134,946 41,851,660 0 0

Financialliabilities–currentportion 2,527,195 2,527,195 2,527,195 Financialliabilities–non-currentportion 887,929 887,929 887,929 Tradepayablesandrelatedaccounts 6,441,524 6,441,524 6,441,524 Autrecreditorsandotherliabilities 53,691 53,691 53,691 Totalfinancialliabilities 9,910,339 9,910,339 0 0 9,910,339 0

(Amountsineuros)


applicationofIAS39

Nonfinancial

instruments

Amountrecognizedinthestatementoffinancialposition

Fairvalue(3)Fairvalue

throughprofitandloss

Loansandreceivables

(2)


Non-currentfinancialassets 533,428 533,428 533,428 Receivablesandrelatedaccounts 11,580 11,580 11,580 Otherreceivables 3,736,414 3,736,414 3,736,414 Cashandcashequivalents 42,413,402 42,413,402 5,148,738 37,264,664 Totalfinancialassets 46,694,824 46,694,824 5,148,738 41,546,086 0 0Financialliabilities–currentportion 2,397,150 2,397,150 2,397,150 Financialliabilities–non-currentportion 1,553,926 1,553,926 1553,926 Tradepayablesandrelatedaccounts 4,336,522 4,336,522 4,336,522 Autrecreditorsandotherliabilities 23,000 23,000 23,000

Totalfinancialliabilities 8,310,598 8,310,598 0 0 8,310,598 0

Page233

(1)Thecarryingamountoffinancialliabilitiesmeasuredatamortizedcostwasdeemedtobeareasonableestimationoffairvalue.(2)Thefairvalueof“loansandreceivables”correspondstothevaluereportedinthestatementoffinancialposition(valueatthetransactiondateandthentestedforimpairmentoneachyear-enddate).(3) The fair value of financial assets held for trading (such as cash at hand andmoneymarket funds in cash and cashequivalents)isdeterminedbasedonLevel1fairvaluemeasurementsandcorrespondstothemarketvalueoftheassets.

Note9:Capital

Sharecapitalissued

SharecapitaloftheCompanyissetat€390,624.56dividedinto19,531,228ordinarysharesthatarefullysubscribedandpaidupwithaparvalueof€0.02each,aftertakingintoconsiderationthetwocapitaltransactionsofthefirstquarterof2016(seeparagraph1.2).

Distributionofdividends

TheCompanydidnotdistributeanydividendsduringthefirstquarterof2016.

Note10:Sharewarrants

Sharepurchasewarrants(«Bonsdesouscriptiond’actions»or«BSAs»)

The following table summarizes the data relating to share purchase warrants as well as theassumptionsusedforthemeasurementthereofinaccordancewithIFRS2:


Grantdate Type

Numberof

warrantsissued

Numberof

lapsedwarrants

Numberof

warrantsoutstanding


Fairvalueofthe

underlyingshare*

Fairvalueofthe

warrants*

Expectedterm


Duration VolatilityRisk-freerate

TotalvalueIFRS2

(Black&Scholes)

BoardofJuly5,2010 BSAdirectors 4500 0 4500 90000

€3,33 €1,50 5years €3,33 10years 45% 3,5% €135125

AsatDecember31,2010 4500 0 4500 90000

AsatDecember31,2011 4500 0 4500 90000

AsatDecember31,2012 4500 0 4500 90000

CAdu20février2013

BSA31/10/2012 2500 0 2500 50000

€4,23 €2,04 5years €4,00 10years 52% 2,2% €71843

Au30juin2013et31décembre2013 7000 0 7000 140000

CAdu12mars2014

BSA31/10/2012 2500 0 2500 50000

€8,00 €5,16 4,5years €4,00 10years 55% 1,8% €227848

AsatDecember31,2014 9500 0 9500 190000


BSA25-07-2014 42500 0 42500 42500

€8,20 €5,76 6years €4,00 10years 57% 0,0% €219468

BoardofApril29,2015

BSA16-06-2015 42500 0 42500 42500

€13,57 €8,17 6years €9,37 10years 57% 0,0% €287591

BoardofMay7,2015

BSA16-06-2015 240000 0 240000 240000

€13,57 €7,91 6years €9,62 10years 57% 0,1% €1550959

AsatDecember31,2015 334500 0 334500 515000

Page234

BoardofJanuary29,2016BoardofJanuary29,2016BoardofMarch31,2016

BSA01-29-2016BSA01-29-2016BSA01-29-2016

42500

42500

42500

0

0

0

42500

42500

42500

42500

42500

42500

€9,07€9,07€12,23

€4,44E4,44E5,19

6years

6years

6years

€9,05€9,05€9,26

10years

10years

10years

53%53%53%

0,2%0,2%0,0%

€120779€120779€220460

AsatMarch31,2016 462000 0 462000 642000


Forwarrants issued before the 1:20 share split thatwas effective inMarch 2014, eachwarrant isconvertible into20ordinary shares.As a result, fair valuesof theunderlying shares,warrants andstrikepriceshavebeenadjustedaccordingly.


Theexercise rights for the“BSAdirectors”grantedduring theperiodareacquiredannuallyon thegrantdateinincrementsofone-third.

The exercise rights for the “BSA 10/31/2012” are acquired immediatly on the grant date by thegneral meeting of the shareholders. The subscription price was €12 each, for a total of €30,000recognizedbytheCompanyasissuepremiumin2013.


Theexerciserightsforthe“BSA07/25/2014”grantedduringtheperiodareacquiredannuallyonthegrantdateinincrementsofone-third.

The exercise rights for the share purchase warrants issued during the first quarter of 2016 areacquiredannuallyonthegrantdateinincrementsofone-third.


Furthermore, the Company also issued sharewarrants to the benefit of Kreos, and forwhich theaccountingtreatmentisdetailedinparagraph11.3.

Shareoptions

Thefollowingtablesummarizesthedatarelatingtoshareoptionsaswellas theassumptionsusedforthemeasurementthereofinaccordancewithIFRS2:


Grantdate Type

Numberof

warrantsissued

Numberof

lapsedwarrants

Numberof

warrantsoutstanding


Fairvalueofthe

underlyingshare*

Fairvalueofthe

warrants*

Expectedterm


Duration VolatilityRisk-freerate

TotalvalueIFRS2

(Black&Scholes)

BoardofMarch31,2016 Stock-options 80000 0 80000 80000

€12,55 €5,88 5,5years €12,55 10years 53% 0,0% €470616

Page235

The exercise rights for the share options granted during the period are acquired annually on thegrantdateinincrementsofone-third.


Employee share warrants («Bons de souscription de parts de créateur d’entreprise» ou«BSCPEs»)

The following table summarizes the data relating to the employee share warrants as well as theassumptionsusedforthemeasurementthereofinaccordancewithIFRS2:

Date Transactiontype Capitalin€Share

premiumin€

Numberofsharescreated

Numberofsharesmakin

upthecapital

Nominalvaluein€

Sharecapitalin€

AsofDecember31,2013 194997 352773 389990 194997

March2014 Capitalreduction(March2014) -39001 155996March2014 Divisionofthenominalvalue(March2014) 7409810 155996

March2014Capital increase (conversion of the CB,march2014) 12914 5141589 645722 168910

July2014Capital increase (Bpifrance Participations,July2014) 25000 4975000 1250000 1250000 193910

July2014 Capitalincrease(conversionoftheCB) 56253 20897979 2812634 2812634 250163 Costsrelatedtocapitalincrease -1030667 SubscriptiontoBSA/BSPCE 30001

AsofDecember31,2014 250163 30366675 4062634 12508156 0,02 250163

February2015Capital increase (initial public offering,February2015) 80625 26767487 4031248 16539404 330788

February2015Capitalincrease(conversionoftheBSAMS,February2015) 21771 7227845 1088531 17627935 352559

July2015 Capitalincrease,July2015 35256 19972445 1762793 19390728

387815October2015 ExerciseofBSAKreos,October2015 917 182415 45833 19436561

388731

November2015 ExerciseofBSAKreos,November2015 917 182415 45833 19482394

389648 Costsrelatedtocapitalincrease

-2861000

SubscriptiontoBSA/BSPCE

85424

AsofDecember31,2015 389648 81923707 6974238 19482394 0,02 389648

Forwarrants issued before the 1:20 share split thatwas effective inMarch 2014, eachwarrant isconvertible into20ordinary shares.As a result, fair valuesof theunderlying shares,warrants andstrikepriceshavebeenadjustedaccordingly.


Theexerciserightsfortheemployeeshareoptionsgrantedduringtheperiodareacquiredannuallyonthegrantdateinincrementsofone-third.


Page236


Breakdown of the compensation expenses accounted for under IFRS 2 for the three month period ended March 31, 2015 and 2016

The total share-based compensation expense amounts to €52,214 (recognized in “General andadministrativeexpense”)forthethree-monthperiodendedMarch31,2015and€465,299(€48,467in“Researchanddevelopment”and€416,832in“Generalandadministrativeexpense”,respectively)forthethreemonthperiodendedMarch31,2016andbreaksdownbynatureofequityinstrumentgrantedasfollows:

Page237

AsatMarch31,2015 AsatMarch31,2016


Numberofwarrants

outstanding

IFRS2costoftheplan

Accumulatedcompensationexpenseatthebeginningofthe

period


recognizedasatMarch31,2015

AccumulatedcompensationexpenseasatMarch31,2015

Numberofwarrants

outstanding

IFRS2costoftheplan


period




BSAadministrateurs July5,2010 4,500 €135,125 €135,125 €0 €135,125 4,500 €135,125 €135,125 €0 €135,125BSA31/10/2012 February20,2013 2,500 €71,843 €71,843 €0 €71,843 2,500 €71,843 €71,843 €0 €71,843BSA31/10/2012 March12,2014 2,500 €227,848 €0 €0 €0 2,500 €227,848 €227,848 €0 €227,848BSA25-07-2014 January8,2015 42,500 €219,468 €0 €52,214 €52,214 42,500 €219,468 €146,955 €18,842 €165,797BSA16-06-2015 April29,2015 0 €0 €0 €0 €0 42,500 €287,591 €95,198 €43,937 €139,135BSA16-06-2015 May7,2015 0 €0 €0 €0 €0 240,000 €1,550,959 €702,778 €193,870 €896,648BSA29-01-2016 January29,2016 0 €0 €0 €0 €0 42,500 €120,779 €0 €30,112 €30,112BSA29-01-2016 January29,2016 0 €0 €0 €0 €0 42,500 €120,779 €0 €20,516 €20,516BSA29-01-2016 March31,2016 0 €0 €0 €0 €0 42,500 €220,460 €0 €582 €582

Total-BSA 52,000 €654,285 €206,968 €52,214 €259,182 462,000 €2,954,852 €1,379,747 €307,859 €1,687,607


Page238

TypeDateofawardbytheBoard

ofdirectors

Numberofwarrants

outstanding

IFRS2costoftheplan


period




Numberofwarrants

outstanding

IFRS2costoftheplan


period




ShareOptions March31,2016 0 €0 €0 €0 €0 80,000 €470,616 €0 €157,440 €157,440



Numberofwarrants

outstanding

IFRS2costoftheplan


period




Numberofwarrants

outstanding

IFRS2costoftheplan


period




BCE10-06-2010-1 June20,2010 2250 €176537 €176537 €0 €176,537 2,250 €176,537 €176,537 €0 €176,537BCE10-06-2010-2 December17,2010 3000 €102951 €102951 €0 €102,951 3,000 €102,951 €102,951 €0 €102,951BCE10-06-2010-2 September20,2011 1500 €59996 €59996 €0 €59,996 1,500 €59,996 €59,996 €0 €59,996BCE31-10-2012 March12,2014 5000 €558351 €0 €0 €0 5,000 €558,351 €558,351 €0 €558,351

Total-BSPCE 11,750 €897,835 €339,484 €0 €339,484 11,750 €897,835 €897,835 €0 €897,835

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Note11:Borrowingsandfinancialliabilities

CURRENTANDNON-CURRENTFINANCIALLIABILITIES(amountineuros)

03/31/2016 12/31/2015

Conditionaladvances 661,156 682,841Kreosdebt(TrancheA) 226,773 871,085Financialliabilities–Non-currentportion 887,929 1,553,925

Conditionaladvances 105,741 88,906Kreosdebt(TrancheA) 2,392,764 2,274,972InterestaccruedonKreosdebt 26,482 31,064Interestaccruedonbankoverdrafts 2,208 2,209Financialliabilities–Currentportion 2,527,195 2,397,151 Totalfinancialliabilities 3,415,124 3,951,076

Breakdownoffinancialliabilitiesbymaturity

Thematuritiesoffinancialliabilitiesarepresentedbelowfortheperiodpresented:



Lessthan1year

From1to5years

Longerthan5year

Conditionaladvances 766,897 105,741 661,156 0Interestaccruedonbankoverdrafts 2,208 2,208 0 0InterestaccruedonKreosDebt 26,482 26,482 0 0Kreosdebt(TrancheA) 2,619,537 2,392,764 226,773 0Totalfinancialliabilities 3,415,124 2,527,195 887,929 0



Lessthan1year

From1to5years

Longerthan5year

Conditionaladvances 771,746 88,906 682,841 0Interestaccruedonbankoverdrafts 2,209 2,209 0 0InterestaccruedonKreosDebt 31,064 31,064 0 0Kreosdebt(TrancheA) 3,146,057 2,274,972 871,085 0Totalfinancialliabilities 3,951,076 2,397,151 1,553,925 0

11.1Liabilitywithfinancialinstitutions

TheCompanydidnotsubscribetoanybankloansinthefirstquarterof2016.

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The Company benefits from a €1.7million overdraft facility as well as a pledged term depositaccountofthesameamountwithafinancialservicesinstitution.ThisoverdrafthasnotbeenusedbytheCompanyasatMarch31,2015,norasatMarch31,2016.

11.2Conditionaladvancesandsubsidies

Thefollowingtablepresentschangesinconditionaladvancesandsubsidies:

Changes in conditionaladvancesOSEO/FEDER(amountsineuros)

PXL770 Imeglimin(NewFormulation)

Total

AsatDecember31,2015 159993 611754 771746(+)Increase

(-)Decrease (12500) (12500)Subsidies Financialexpenses 1938 5713 7650(+/-)Othermovements

AsatMarch31,2016 149430 617466

766897

Breakdownofconditionaladvancesandsubsidiesbymaturity

PXL770 Imeglimin(New

Formulation)

Total

AsofMarch31,2016 149430 617466 766897Portionlessthan1year 58749 46991 105741From1yearto5years 90681 570475 661156Portionabove5years

The Companydid not receive new conditional advances or additional amounts related to existingconditionaladvancesduringthethree-monthperiodendedMarch31,2016.

11.3LiabilitytoKreos

ChangesintheliabilitytoKreossinceDecember31,2015areasfollows:

ChangesintheliabilitytoKREOS(TrancheA)(Amountinthousandeuros) LiabilitytoKreos

AsatDecember31,2015 3146057(+)Paymentreceived 0(+)Effectofunwindingthediscount 77155(-)Repayment (603675)(-)Equitycomponent 0

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AsatMarch31,2016 2619537

Additional informationrelatedto themeasurementof the liability toKreos, includingassumptionsused,isprovidedinNote11.5totheFinancialStatementsfortheyearendedDecember31,2015.

11.4LiabilitytoMerckSerono

OnFebruary6,2015, followingthe initialpublicoffering,the liabilitytoMerckSeronoexpiredandwasrecalculatedatfairvalueonthebasisoftheissuancepriceof€6.66andithasbeenreclassifiedatthatdateintoequityforatotalamountof€7,249,000.

Note12:EmployeebenefitsEmployeebenefitsobligationsincludetheprovisionforthedefinedbenefitplan,measuredbasedontheprovisionsstipulatedundertheapplicablecollectiveagreements,i.e.theFrenchpharmaceuticalindustry’s collective agreement. The main actuarial assumptions used to measure the post-employmentbenefitsareasfollows:

ACTUARIALASSUMPTIONS 03/31/2016 12/31/2015 03/31/2015

Retirementage Voluntaryretirementat65/67yearsoldCollectiveagreements PharmaceuticalindustryDiscountrate(IBOXXCorporatesAA) 1,59% 2,03% 1,56%

Mortalitytable INSEE2014 INSEE2014 INSEE2012Salaryadjustmentrate 2% 2% 2%Turnoverrate Low Low LowRateforsocialsecurityexpenses 50% 50% 50%

Changesintheprojectedbenefitobligationfortheperiodpresentedwereasfollows:

EMPLOYEEBENEFIT(Amountseneuros)

Post-employmentbenefits

AsatDecember31,2015 129958

Servicecost 6461Interestcost 660Actuarialgainsandlosses 3301AsatMarch31,2016 140379

Note13:ProvisionsThe Company may be involved in legal, administrative or regulatory proceedings in the normalcourse of its business. A provision is recorded by the Company as soon as it is probable that theoutcomeofthelitigationwillresultinanexpensefortheCompany.

Noprovisionhasbeenrecognizedforthethree-monthperiodendedMarch31,2016.

Note14:Payablesandothercurrentliabilities

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14.1.TradepayablesTRADEPAYABLES(Amountsineuros) 03/31/2016 12/31/2015

Accountspayable 4109270 2824481Accruedinvoices 2332254 1512041Totaltradepayables 6441524 4336522

NodiscountwasappliedtopayablesandrelatedaccountssincetheamountsdidnothaveamaturityexceedingoneyearasatMarch31,2016.

14.2Taxandemployee-relatedpayablesandothercurrentliabilities

Taxandemployee-relatedpayablesarepresentedbelow:

TAXANDEMPLOYEE-RELATEDPAYABLES(Amountsineuros) 03/31/2016 12/31/2015

Accruedpersonnelcosts 135452 154277Socialsecurityandothersocialagencies 262770 165545Othertaxandrelatedpayments 38250 59917Totaltaxandemployeerelatedpayables 436472 379739

14.3.Othercurrentliabilities

AsatMarch31,2016,othercurrentliabilitiesprimarilyincludesboardattendancefeestobepaidtothedirectorsoftheCompany.

Note15:OperatinglossOPERATINGREVENUESANDINCOME(Amountsineuros) 03/31/2016 03/31/2015

Revenue 0 0Researchanddevelopment

ResearchTaxCredit 1046457 467206FEDER/GrandLyon/RégionRhône-Alpessubsidies 0 1000

Otherincome 0 0Totalrevenueandincome 1046457 468206

TheCompanydidnotgenerateanyrevenueforthethree-monthperiodsendedMarch31,2015and2016.

Besidespatent income,operating incomealso includestheabovedetailedsubsidies, recognized indeductionoftheresearchanddevelopmentexpenses.

Note16Detailofoperatingexpensesbyfunction16.1Researchanddevelopment

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RESEARCHANDDEVELOPMENT(amountsineuros) 03/31/2016 03/31/2015

Personnelcosts 491540 104086Share-basedpayments 48467 0Sub-contracting,studiesandresearch 4747880 1212045Intellectualpropertyfees 104298 231972Paymentstointermediariesandprofessionalfees 142100 51777PurchaseofactivepharmaceuticalingredientsforCROs 8262 3552Insurancepremiums 20138 14461Licensingfees 21608 11968Rents 134 0Documentation,training 0 0Depreciation 5243 3609Researchanddevelopmentexpenses 5589671 1633471ResearchTaxCredit 1046457 467206FEDER/GrandLyon/RégionRhône-Alpessubsidies 0 1000OSEOsubsidy 0 0OSEOsubsidies/advances 0 0Subsidies 1046457 468206

Research and development expensesmainly relate to studies and clinical trials for Imeglimin andPXL770.TheCompanyconducteditsstudiesthroughitsnetworkofsubcontractedserviceproviders.Compensation of these contracts constitutes the majority of its operating expenses in terms ofresearch.TheincreaseintheperiodendedMarch31,2016relatesprimarilytotheconductofPhaseII clinical trials in Japan,which are not eligible for the Research Tax Credit. As a portion of theseexpenses have not been paid as at March31, 2016, there is a corresponding increase in tradepayablesasnotedinNote14.1.

16.2Generalandadministrativeexpenses

GENERALANDADMINISTRATIVEEXPENSES(Amountsineuros) 03/31/2016 03/31/2015

Personnelcosts 333930 67845Share-basedpayments 416832 52214Rents 9322 4265Travelandentertainmentexpenses 154568 62614Maintenanceandrepairs 5503 5798Postageandtelecommunicationsexpenses 8285 5731Insurancepremiums 6214 6115Advertisingandpublicrelations 53649 303557Paymenttointermediariesandprofessionalfees 565247 720439Documentation,training 159 338Bankingservicesandsimilarservices 2710 1800

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Depreciationoftangibleanduntangibleassets 7080 2677Othertaxes 12512 1286Othergeneralandadministrativeexpenses 4569 8407Generalandadministrativeexpenses 1580579 1243086

In relation to the initial public offering on Euronext Paris, the Company incurred various costs in2015, which represent an aggregate amount of approximately €3,007thousand as at March31,2015. These costs have been recognized as general and administrative expenses as well as adeductioninequityfortheproportionatepartdirectlylinkedtothecapitalincrease,onareasonableallocationbasis.

Costs that are clearly associated with the issue of shares (such as share registration and otherregulatoryfeesrelatingtotheissuanceofshares)havebeenrecognizedasadeductioninequity.

Costs such as promotional and other direct listing expenses have been recognized as operatingexpenses.

For costs that relate jointly tobothcomponentsof the transaction,expenseshavebeenallocatedusinganappropriatebasisofallocation,consideringtheextenttowhichthecostscanbeconsideredto be incremental costs directly attributable to the equity transaction, in accordancewith IAS 32FinancialInstruments:Presentation(“IAS32”)(seeparagraphs27and28).

Basedontheseprinciples,outofthe€3,007thousandofaggregatecostsincurred(€1,661thousandin2015),€2,195thousand(€1,139thousandin2015)havebeenrecognizedasareductionofequityinaccordancewithIAS32.Theremainingamountof€812thousandhasbeenrecognizedasgeneralandadministrativeexpenses(€522thousandin2015).

During the three-month period ended March31, 2016, the Company incurred €800thousand ofcosts in order to prepare an equity offering that is expected to be completed during the secondquarterof2016.Allcostsincurredhavebeenrecognizedasareductioninshareholders’equityasatMarch31,2016.

Note17:EmployeesTheCompany’saverageworkforceasatMarch31,2015andasatMarch31,2016wasasfollows:

AVERAGEHEADCOUNTS 03/31/2016 03/31/2015

Executives 16 11Non-executives 1 0Total 17 11

Note18:Financialincome(loss)FINANCIALINCOME(LOSS)(Amountsineuros) 03/31/2016 03/31/2015

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Changesinthefairvalueoffinancialliabilities 0 52214OfwhichMerckSeronofinancialliability 0 52214

InterestexpenserelatedtotheKreosliability (163206) (225517)Otherfinancialexpenses (7692) (29362)Financialincome 86471 40175Foreigncurrencyexchangegains(losses) (39313) 120Totalproduitset(chargesfinanciers) (123741) (162371)

Financial income (loss) as atMarch 31, 2015 and 2016 ismainly impacted by interest related toKreos (note 11.3). In 2015, it was also impacted by changes in the fair value of Merck Seronofinancialliability,whichhasbeenextinguishedfollowingthecompletionoftheinitialpublicofferingoftheCompanyonEuronextParis.

Otherfinancialexpensesprimarilyreflectthediscountingimpactofconditionaladvances.

Note19:IncometaxesAsatDecember31,2015andMarch31,2016,theCompanydidnotrecognizedeferredtaxassetsinrelationtotax losscarriedforward.Considering itsstageofdevelopment,theCompany isnot inaposition topresenta taxable incomeprojection fromwhichunused tax losses couldbededucted.Thereisnotaxableincomeinanyoftheperiodspresented.

Note20:LosspershareBasiclosspershare

Basic losspershareiscalculatedbydividingincomeattributabletoequityholdersoftheCompanybytheweightedaveragenumberofoutstandingordinarysharesfortheyear.

All existing instruments giving deferred rights to capital (e.g. BSAs, BSPCEs, share options orconvertible bonds) are considered to have an antidilutive effect as they reduce loss per share.Accordingly,dilutedearningspershareisidenticaltobasicearningspershare.

BASICLOSSPERSHARE(Amountsineuros) 03/31/2016 03/31/2015

Weightedaveragenumberofoutstandingshares 19509499 15727011Netlossfortheyear (6247534) (2570722)Basiclosspershare(€/share) (0,32) (0,16)Dilutedlosspershare(€/action) (0,32) (0,16)

Note21:Relatedparties

Nopost-employmentbenefitisgrantedtothemembersoftheBoardofDirectors.

Compensationtodirectorsispresentedbelow(ineuros):

Corporatedirectorscompensation 03/31/2016 03/31/2015

Fixedcompensationowed 35012 30498

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Variablecompensationowed 33727 0Contributionsin-kind 1417 1300Employerscontributions 27370 8083Attendancefees(Board) 61190 22750Share-basedpayments 113407 52214Consultingfees 12500 12500TOTAL 284624 127344

Termsfortheallocationofvariablecompensationaredefinedbasedonqualitativeandquantitativeobjectivessetat85%forCompany-levelobjectivesand15%forindividualobjectives.

Themethodsforassessingbenefitsrelatingtoshare-basedpaymentsispresentedinNote10.

Note22:SegmentinformationTheCompanyoperatesinonesegment:thedevelopmentofmoleculesforthepotentialtreatmentoftype2diabetes.

Theassets, liabilities andoperating loss realizedare located in Franceand theCompanydoesnothaveanysubsidiaries.

Accordingly,theCompany’sperformanceiscurrentlyanalyzedattheCompanylevel.

Note23:Off-balance-sheetcommitmentsFromDecember31,2015, therehasbeennosignificantchange inoff-balancesheetcommitmentsexistingonMarch31,2016.

19.5. Distributionofdividendspolicy

19.5.1. DistributionofdividendsandreservesbytheCompanyoverthelasttwofinancialyears

None

19.5.2. Distributionpolicy

Thereisnopresentplantopayanycashdividendsonourequitysecuritiesintheforeseeablefuture,astheCompanyisnotinasufficientlyadvancedstageofdevelopment.

19.6. Legalandarbitrationproceedings

Asof thedateof thisdocumentde référence, there isnoothergovernmental, legalorarbitrationprocedure,oranyprocedureofwhich theCompany isaware,which isunresolvedoroutstanding,

Page247

which might have, or has had over the last twelve months, a significant effect on the financialsituationorprofitabilityoftheCompany.

19.7. Significantchangesinthefinancialorcommercialsituation

AsfarastheCompanyisaware,therewerenosignificantchangesinthefinancialorthecommercialsituationoftheCompanysinceMarch31,2016.

19.8. Auditors’fees

AUDITOR’SFEES

2015FinancialYear 2014FinancialYear

Mazars Pwc Mazars Pwc

(Amountsin€thousand)

Amount(excluding

tax)%

Amount(excluding

tax)%

Amount(excluding

tax)%

Amount(excluding

tax)%

Auditors 20.8 57% 20.8 57% 103.5 74% 106.8 75%

Due diligence directly relatedtothemissionoftheAuditors 15.5 43% 15.5 43% 36.5 26% 36.5 25%

Otherduediligence 0% 0% 0,0 0% 0,0 0% Totalfees 36.3 100% 36.3 100% 140.0 100% 143.3 100%

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20. ADDITIONALINFORMATION

20.1. Sharecapital

20.1.1. Amountofthesharecapital

Asat thedateof thisdocumentde référence, the share capital is €390,624.56 and is divided into19,531,228sharesof€0.02parvalueeach,fullypaid.

AsatthedateofopeningoftheyearendedDecember31,2015,thesharecapitalwas€250,163.12andwasdivdedin12,508,156sharesof€0.02parvalueeach,fullypaid.

20.1.2. Securitiesnonrepresentingcapital

None

20.1.3. Number, book value and nominal value of the shares held by the Company or on itsbehalf

On June 16, 2015, the general meeting of the shareholders authorized, for a period of eighteenmonthsfromthedateofthemeeting,theBoardofDirectorstoputintomotionabuy-backprogramin accordance with the provisions of Article L. 225-209 of the French commercial code and inaccordancewiththisgeneralregulationsoftheAMF,undertheconditionsdescribedbelow:

Maximumnumberofsharesthatcanberepurchased:10%ofthesharecapitalonthedateoftherepurchase.Whensharesareacquiredinordertopromotetheliquidityofthesecurities,thenumberofsharestakenintoconsiderationtocalculatetheaboveprovided10%limitwillcorrespondtothenumberofsharespurchased,afterdeductionofthenumberofsharesresoldduringthetermofthisauthorization.

Sharebuy-backobjectives:

• promotionofanactiveandliquidmarketoftheCompany’ssecuritiespursuanttoaliquidityagreement to conclude with an independent investment services provider, in accordancewith the AMAFI code of ethics ofMarch 8, 2011, recognized by a decision of the FrenchFinancialMarketsAuthority(AMF)ofMarch21,2011;and/or

• tohonorobligationsunder thestockoptionprograms,allocationof freeshares,employeesavings or other allocations of shares to employees of the Company or an associatedcompany,including(i)theimplementationofanyplanofoptionstopurchasesharesoftheCompanyundertheprovisionsofarticlesL.225-177etseqoftheFrenchcommercialcode,(ii) the allocation of shares to employees as part of their participation in the Company'sprofit-sharingandthe implementationofanycompanysavingsplanasprovidedby law, inparticular Articles L. 3332-1 to L. 3332-8 and following of the Labour Code, or (iii) theallocationof freesharesunder theprovisionsofArticlesL.225-197-1etseqof theFrenchcommercialcode;and/or

Page249

• deliver sharesuponexerciseof rightsattached tosecuritiesgivingaccess to thecapitalbyredemption, conversion, exchange, presentation of a warrant or any other manner, incompliancewithcurrentregulations;and/or

• purchase shares for retention and subsequent remittance in exchange or as payment forpotentialfuturemergers,divisions,transfersoracquisitions;and/or

• cancellationofallorpartofthesharespurchased.

Maximum purchase price: €19.98 (excluding acquisition costs), to take into account, subject toadjustments,theimpactofnewtransactionsinthecapitaloftheCompany,includingmodificationofthenominalsharecapital increasebyincorporationofreserves,thefreeallocationofshares,stocksplitsor reversestocksplit,distributionof reservesorotherassets,amortizationofcapital,oranyothertransactioninvolvingequity.

Maximumamountoffundsthatcanbeallocatedtotherepurchase:€10,000,000

ThenumberofsharesacquiredbytheCompanytobeheldandsubsequentlydeliveredinpaymentorexchangeinrelationwithamerger,splitorcontributionmaynotexceed5%ofitscapital.

Repurchasedsharesmaybecancelled.

The implementation of the share repurchase programwill be the subject of communications inaccordancewithlawsandregulations.

Furthermore, on the basis of a resolution of the shareholders meeting of April 15, 2014, theCompanyenteredintoaliquiditycontractdatedMarch16,2015withOddoetCieBank.Anamountof€250,000wasinitiallyallocatedtotheliquiditycontract.

At March 31, 2016, 6,267 shares were in the liquidity account for a remaining cash balance of€213,138.59.

20.1.4. Convertibleorexchangeablesecuritiesorsecuritieswithwarrants

Asofthedateofthisdocumentderéférence,securitiesconferringaccesstothesharecapitalareaspresentedbelow:

20.1.4.1. Stockoptionplan

DirectorsBSA1

BSA10.31.20122 BSA07.25.20143

BSA06.16.20155 BSA01.29.2016

Date ofshareholders’meeting

06/23/2010 10/31/2012 07/25/2014 06/16/2015 01/29/2016

Date of board ofdirectors

07/05/2010 02/20/2013 03/12/2014 01/08/2015 04/29/2015 05/07/2015 01/29/2016 03/31/2016

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DirectorsBSA1

BSA10.31.20122 BSA07.25.20143

BSA06.16.20155 BSA01.29.2016

meeting

Number of BSAauthorized

6,200 5,000 (4) (6) (7)

Number of BSAissued

4,500 2,500 2,500 42,500

42,500 240,000 85,000 42,500

Beneficialowner:

- ThierryHercend

4,500

1,000

1,875

- MohammedKhosoBaluch

1,500625

- RichardKender

42,500

- PascaleBoissel

42,500

- NoahBeerman

180,000

- YohijoItoh- Janice

Bourque- Pierre

Legault

60,000

42,500

42,500

42,500

Beginning ofexerciseperiod 06/23/2011 02/20/2013 03/12/2014 07/25/2015 06/16/2016 01/29/2017 01/29/2017 03/31/2017

Expirationdate 06/23/2020 10/31/2022 07/25/2024 06/16/2025 01/29/2026 01/29/2026

Exerciseprice €3.335 €4.00 €4.00 €9.37 €9.62 €9.05 €9.26

BSAexercised 0 0 0 0 0 0 0

BSAcancelled 0 0 0 0 0 0 0

Number of BSAcurrentlyexisting

4,500 2,500 2,500 42,500 42,500 240,000 85,000 42,500

Number ofsharesrepresented bytheBSA

90,000 50,000 50,000 42,500 42,500 240,000 85,000 42,500

1AttachedtoeachDirectorsBSAistherighttosubscribeincashfortwenty(20)sharesatastrikepriceof€3.3335.

TheDirectorsBSAsareexercisablebytheholderatanytimefromthedateofpurchase,subjecttotherequirementthattheholderisonthe

BoardofDirectorsoftheCompanyandhasnot,atthedateofexerciseofthewarrants,expressedtotheCompanyhiswilltoresignorbe

subject to its revocation procedure. Notwithstanding the foregoing, the Board of Directorsmay determine that the Directors BSAmay

remainexercisableforaperiodoftime,whichmaynotexceed6monthsfromthedateonwhichtheholderceasestobeamemberofthe

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BoardofDirectors.Thisdecisionmustbemadeatleast3monthsfromthedateonwhichtheholderceasestobeamemberoftheBoardof

DirectorsandwillbenotifiedbytheCompanytothebeneficiarybyregisteredletterorbyahanddeliveredletter.

2AttachedtoeachBSA10312012istherighttosubscribeincashfortwenty(20)sharesatastrikepriceof€4.00.

TheBSA10312012are exercisable at any timeafter their subscription, subject to the requirement that theholder is on theBoardof

DirectorsoftheCompanyandhasnot,atthedateofexerciseofthewarrants,expressedtotheCompanyhiswilltoresignorbesubjectto

its revocation procedure. Notwithstanding the foregoing, the Board of Directors may decide that the BSA 10 31 2012 may remain

exercisableforaperiodoftime,whichmaynotexceed6monthsfromthedateonwhichtheholderceasestobeamemberoftheBoardof

Directors.Thisdecisionmustbemadeatleast3monthsfromthedateonwhichtheholderceasestobeamemberoftheBoardofDirectors

andwillbenotifiedbytheCompanytothebeneficiarybyregisteredletterorbyahanddeliveredletter.

3AttachedtoeachBSA07252014istherighttosubscribeincashforone(1)share.

TheBSA25.07.2014areexercisablebytheholderatanytimefromthedateofpurchase,subjecttotherequirementthattheholderison

theBoardofDirectorsoftheCompanyandhasnot,atthedateofexerciseofthewarrants,expressedtotheCompanyhiswilltoresignor

besubject to its revocationprocedure.Notwithstanding the foregoing, theBoardofDirectorsmaydecide that theBSA07.25.2014may

remainexercisableforaperiodoftime,whichmaynotexceed6monthsfromthedateonwhichtheholderceasestobeamemberofthe

BoardofDirectors.Thisdecisionmustbemadeatleast3monthsfromthedateonwhichtheholderceasestobeamemberoftheBoardof

DirectorsandwillbenotifiedbytheCompanytothebeneficiarybyregisteredletterorbyahanddeliveredletter.

4Themaximumnominalamountofcapitalincreasesthatmayberealizedimmediatelyorinthefuturepursuanttothedelegationwillbe(i)

15,500eurosand(ii)maynotexceed,withthesecuritiesthatmaybeissuedbyexerciseofwarrantsSubscriptionentrepreneurssharesand

warrantsofexistingsharesubscriptionJuly25,2014,dateoftheGeneralmeetinghavingauthorizedthedelegation,5%ofcapitalonafully

dilutedbasis,provided that themaximumnominalamountglobalcapital increases likely tobeperformedunder this resolutionshallbe

includedautomaticallyontheoverallcap;beingspecifiedthatthismaximumnominalamountabovewillbeincreasedsecuritiesissuedto

preservetherightsofholdersofsecuritiesgivingaccesstocapitalpursuanttotheprovisionsoftheFrenchcommercialcode.

5TheBSA06162015wereissuedunderconditionthattheshareholders'meetingof16June2015voteforthedelegationofauthorityin

favoroftheBoard.Thisauthorizationwasgivenbytheshareholders'meetinginits18thresolution.

AttachedtoeachBSA06162015istherighttosubscribeforincashtoone(1)share

TheBSA06162015areexercisableby theholderatany time from thedateofpurchase, subject to (i)Mrs.Boissel ison theBoardof

DirectorsoftheCompanyandhasnot,atthedateofexerciseofthewarrants,expressedtotheCompanyofherintentiontoresignorbe

subjecttoitsrevocationprocedure.Notwithstandingtheforegoing,theBoardofDirectorsmaydecidethattheBSA06162015mayremain

exercisableforaperiodoftime,whichmaynotexceed6monthsfromthedateonwhichtheholderceasestobeamemberoftheBoardof

Directors.Thisdecisionmustbemadeatleast3monthsfromthedateonwhichtheholderceasestobeamemberoftheBoardofDirectors

andwillbenotifiedbytheCompanytotheBeneficiarybyregisteredletterorbyahanddeliveredletter;and(ii)Mr.BeermanandMr.Itoh

beingemployedbytheCompanyandactinginaccordancewiththeirnon-competiteandconfidentialityobligations.

6Themaximumnominalamountofcapitalincreasesthatmayberealizedimmediatelyorinthefuturepursuanttothedelegationwillbe(i)

€15,000and(ii)maynotexceed,withthesecuritiesthatmaybeissuedbyexerciseofBSPCEandexistingsharewarrantsatJune16,2015,

date of the Generalmeeting having authorized the delegation, 7.5% of the capital on a fully diluted basis, provided that the amount

nominalaggregatemaximumofsharecapitalincreaseslikelytobeperformedunderthisresolutionshallbeincludedautomaticallyonthe

overallcap;beingspecifiedthatthismaximumnominalamountabovewillbeincreasedsecuritiesissuedtopreservetherightsofholdersof

securitiesgivingaccesstocapitalpursuanttotheprovisionsoftheFrenchcommercialcode.

7Themaximumnominalamountof capital increases thatmaybe realized immediatelyor in the futurepursuant to thedelegationand

delegationsfortheissuanceofwarrantstosharesofentrepreneurs,stockoptionsandfreeshares,will(i)€15,000and(ii)maynotexceed,

withthesecuritiesthatmaybeissuedbyexerciseoftheBSPCE,BSA,subscriptionoptionsandfreesharesthatmaybegranted,7.5%ofthe

share capital on a fully diluted basis recognized at the date of the decision to award vouchers; it being specified that the maximum

amountsreferredto in(i)and(ii)abovewillbe increasedsecurities issuedtopreservetherightsofholdersofsecuritiesgivingaccessto

capitalpursuanttotheprovisionsoftheFrenchcommercialcode.

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20.1.4.2. Warrantsforsubscriptionforfoundershares(BSPCE)plan

BSPCE06.10.20101 BSPCE06.10.2010-21 BSPCE10.31.20122

Dateofshareholders’meeting 10/06/2010 10/06/2010 31/10/2012

Dateofboardofdirectorsmeeting N/A 17/12/2010 20/09/2011 12/03/2014

NumberofBSCPCEauthorized 5.000 5.200 5.000

NumberofBSCPEissued 5.000 3.000 1.500 5.000

Beginningofexerciseperiod10/06/2011 10/06/2011 10/06/2012 N/A

Expirationdate 10/06/2020 10/06/2020 31/10/2022

Exerciseprice 2,50€ 2,50€ 3,20€

Sharessubscribed 0 0 0 3.000

BSPCEexpired 2.750 0 0 0

BSPCEexercised 0 0 0 150

Number of BSPCE currentlyexisting

2.250 3.000 1.500 4.850

Number of shares represented bytheBSPCE

45.000 60.000 30.000 97.000

1EachBSPCE06102010entitlestheholdertosubscribefortwenty(20)commonsharesatapriceof€2.50.AsofJune10,2011,onethird

oftheholder’sBSPCE06102010canbeexercised,byholderswhoareemployeesatthedateofexercise.

BSPCE06102010areexercisableasof their subscription,byemployeesorofficer submitted toemployee tax treatmentat thedateof

exercise of such warrants, subject to the requirement that the holder has not at the exercise date, informed the Company of his/her

intentiontoresignorbeunderaprocedureofdismissalorremoval.

Notwithstandingtheforegoing,theBoardofDirectorsmaydecidethattheBSPCE06102010remainexercisableduringtheperioditshall

determineandwhichmaynotexceed6monthsfromthedatethebeneficiaryceasestobeaCompanyemployeeorofficersubmittedtothe

taxationof employees. This decisionmust bemadeno later than threemonths from thedate thebeneficiary ceases to beaCompany

employeeorofficer submitted to the tax treatmentofemployeesandshallbenotifiedby theCompany to thebeneficiaryby registered

letterorbyahanddeliveredletter.

2EachBSPCE10312012entitlestheholdertosubscribefortwenty(20)commonsharesatthepriceof€3.20.TheBSPCE10312012canbe

exercisedatanytime,subjecttotherequirementthattheholderisanemployeeattheexercisedate.

The BSPCE 10 31 2012 are exercisable as of their subscription, subject to the requirement that always Company employee or officer

submittedtothetaxtreatmentofemployeesatthedateofexerciseofsuchwarrants,andnothaving,intheexercisedate,informedthe

Companyofhisintentiontoresignorbeunderaprocedureofdismissalorremoval.

Notwithstandingtheforegoing,theBoardofDirectorsmaydecidethattheBSPCE10312012remainexercisableduringtheperioditshall

determine,whichmaynotexceed6monthsfromthedatethebeneficiaryceasestobeemployedbytheCompanyortheofficersubmitted

toemployeetaxtreatment.ThisdecisionmustbemadenolaterthanthreemonthsfromthedatethebeneficiaryceasestobeaCompany

employeeorofficerissubjecttoemployeetaxtreatmentandshallbenotifiedbytheCompanytothebeneficiarybyregisteredletterorbya

handdeliveredletter.

20.1.4.3. Stockoptionsplan

SO29.01.2016

Page253

SO29.01.2016

Dateofshareholder’smeeting 01/29/2016

DateofBoardofdirectorsmeeting 03/31/2016

Numberofstockoptionsissued 80000

Beginningofexerciseperiod 03/31/2016

Expirationdate 03/31/2026

Exerciseprice 12,55euros

StockOptionsexercised 0

StockOptionsexpired 0

NumberofStockOptionscurrentlyexisting

80000

Number of shares represented bytheStockOptions

80000

1 Themaximumnominal amount of capital increases thatmay be realized immediately or in the future pursuant to the delegation on

optionsanddelegationsfortheissuanceofwarrantstosharesofentrepreneurs,ofwarrantssharesandbonusshareswillbe(i)€15,000

and(ii)maynotexceed,withthesecuritiesthatmaybeissuedbyexerciseoftheBSPCE,BSA,stockoptionsandfreesharesthatmaybe

granted,7.5%ofthesharecapitalonafullydilutedbasisrecognizedatthedateoftheoptiongrantdecision; itbeingspecifiedthatthe

maximumamountsreferredtoin(i)and(ii)abovewillbeincreasedsecuritiesissuedtopreservetherightsofholdersofsecuritiesgiving

accesstocapitalinaccordancewiththeCommercialCode.

20.1.4.4. Summaryofdilutiveinstrumentsasof31march2016

BSA BSPCE SO

NumberofBSA/BSPCE/SOallocated 462000 14500 80000

Potential total number of sharesthat could be subscribed for orpurchased by exercise of theBSA/BSPCE/SOallocated

642500 290000* 80000

NumberofBSA/BSPCE/SOcancelledorobsolete

0 2750 0

NumberofBSA/BSPCE/SOexercised 0 150 0

NumberofBSA/BSPCE/SOremaining 462000 11600 80000

Potential total number of sharesthat could be subscribed for byexercise of the BSA/BSPCE/SOremaining

642500 232000* 80000

*After the 20:1 stock split approved on March 28, 2014.

Page254

Dilutionmayariseasaresultoftheexerciseofallofthesecuritiesconferringaccesstothesharecapital(i.e.the exercise of 553,600 BSA/BSPCE/SO conferring the right to 954,500 of the Company’s shares),correspondingtoasharecapitalof€409,714.56onafullydilutedbasis.

20.1.5. Acquisitionrightsand/orobligationsattachedtothecapital issuedbutnotpaid-inandcapitalincreasecommitment

Theresolutionsoftheextraordinarygeneralmeetingsoftheshareholdersapprovingthe issuancesofsharecapital,datedApril15,2014,June16,2015andJanuary29,2016,aresummarizedbelow:

Dateoftheshareholdersmeeting

Purpose,contentandscopeofthedelegation

Duration Cap(innominalvaluewhenineuros)

DateandmethodofutilizationbytheBoardofdirectors

15/04/2014

AuthorizationtotheBoardofdirectorstorepurchaseitsownshares(8thrésolution)

18months 10% of the sharecapitalasat thedateof the repurchase bytheCompany

BoardofMarch5,2015

Use of the delegation through aliquidity contract with BanqueOddo et Cie with an allocatedamountof€250000.

16/06/2015 Delegation of authority to theBoard of Directors to carry out acapital increase, up to a limit of20% of the share capital per year,by issuing shares and/or securitiesconferringaccesstotheCompany’scapitaland/oranissueofsecuritiesconferringtherighttoanallotmentof debt securities, cancellingpreferred subscription rights, bymaking an offer to qualifiedinvestors or a restricted group ofinvestors, within the meaning ofArticleL.411-2,paragraphII,oftheMonetaryandFinancialCode(Codemonétaire et financier) (privateplacement)(14thrésolution)

Replaced bydelegation oftheshareholdersmeeting of01/29/2016

€175000(sharesandsecurities givingaccess to the sharecapital)

and

100.000.000 € (debtsecurities)

BoardofJuly23,2015

Useofthedelegationtoincreasesharecapital,cancellingpreferredsubscriptionrights,bymakinganoffertoqualifiedinvestorsorarestrictedgroupofinvestors,withinthemeaningofArticleL.411-2,paragraphII,oftheMonetaryandFinancialCode(Codemonétaireetfinancier)(privateplacement)ofanominalamountof€35255,86byissuanceof1762793sharesofaparvalueof€0,02eachatthepriceof€11,35each.

16/06/2015 Delegation of authority to theBoardofDirectorstoissueandallotordinary share warrants(“Warrants”), cancelling preferredsubscription rights in favor of aclassofpersons(18thrésolution)

Replaced bydelegation oftheshareholdersmeeting of01/29/2016

€15,000and7.5%ofthesharecapitalonafullydilutedbasis

BoardofApril29,2015

Useofthedelegation,subjecttotheauthorizationoftheshareholdersmeeting,fortheallocationof42500BSAtobesubcribedforacapitalincreaseof€850infavorofMrsBoissel,Director.

BoardofMay7,2015

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Use of the delegation, subject tothe authorization of theshareholders meeting, for theallocation of 240,000 BSA to besubcribedforacapital increaseof€4,800 in favor of Mr. BeermanandMr.Itoh.

01/29/2016 Delegation of authority to theBoardofDirectors to reduce sharecapital by cancelling treasuryshares(2ndresolution)

18months 10% of the sharecapital by 24monthsperiod

None

01/29/2016 Delegation of authority to theBoard of Directors to carry out acapital increase by issuing sharesand/or securities conferring accesstotheCompany’scapitaland/ortoissuesecuritiesconferringtherightto an allotment of debt securities,maintaining preferred subscriptionrights(3rdresolution)

26months €1800001,

€2750002

and

€1000000003

None

01/29/2016 Delegation of authority to theBoard of Directors to carry out acapital increase by issuing sharesand/or securities conferring accesstotheCompany’scapitaland/ortoissuesecuritiesconferringtherightto an allotment of debt securities,cancelling preferred subscriptionrights, by making a public offering(4thresolution)5

26months €2000001,

€2750002

and

€1000000003

None

01/29/2016 Delegation of authority to theBoard of Directors to increasecapital by capitalizing premiums,reserves,profitsorotheritems(5thresolution)

26months €2750002 None

01/29/2016 Delegation of authority to theBoard of Directors to carry out acapital increase by issuing sharesand/or securities conferring accesstotheCompany’scapitaland/ortoissuesecuritiesconferringtherightto an allotment of debt securities,cancelling preferred subscriptionrights in favorofa specific classofpersons (defined as : (1)French orforeign individuals or legal entitiesorUCITS(i)whocustomarily invest(a)inthepharmaceuticalsector,or(b) in growth securities that arelisted on a regulated market or

18months €200,0001,

€275,0002

and

€100,000,0003

None

Page256





multilateraltradingfacility (suchasAlternext), considered as“Community SMEs” within themeaning of Annex I to EuropeanCommission Regulation (EU) No.651/2014ofJune17,2014,(ii)foraunit subscription amount greaterthan €50,000 (issue premiumincluded) for legal entities andUCITS, and greater than €10,000(issue premium included) forindividuals;and/or(2)oneormorestrategicpartnersof theCompany,located in France or abroad, whohas (have) entered into or willenterintooneormorepartnershipagreements (development, co-development, distribution,manufacturing,etc.)orcommercialagreements with the Company (ora subsidiary) and/or companiesthey control, that control them orare controlled by the sameperson(s), directly or indirectly,within the meaning of Article L.233-3 of the Commercial Code;and/or (3) any credit institution orinvestmentserviceproviderwithanauthorization to provide theinvestment services set forth inparagraph 6 of Article L. 321-1 oftheFrenchMonetaryandFinancialCode)(6thresolution)6

01/29/2016 Delegation of authority to theBoard of Directors to carry out acapital increase,within the limitof20% of the share capital per year,by issuing shares and/or securitiesconferringaccesstotheCompany’scapitaland/oranissueofsecuritiesconferringtherighttoanallotmentof debt securities, cancellingpreferred subscription rights, bymaking an offer to qualifiedinvestors or a restricted group ofinvestors, within the meaning ofArticleL.411-2,paragraphII,oftheMonetaryandFinancialCode(Codemonétaire et financier) (privateplacement)(7thresolution)5

26months €200,0001,

€275,0002

and

€100,000,0003

Ina20%ofthesharecapital limitperyear,appreciatedasof thedayofthedecisionofthe Board ofdirectors using thedelegation

None

Page257





01/29/2016 Authorization to be granted to theBoardofDirectors pursuant to theprovisions of Article L. 225-136 1°,paragraph2,andR.225-119oftheCommercial Code to set the issueprice of securities to be issued,cancelling preferred subscriptionrights, under the delegations ofauthoritythatarethesubjectofthe4th and 7th resolutions (8thresolution)

26months 10% of the sharecapital per yearappreciatedasof thedayofthedecisionofthe Board ofdirectors using thedelegation

None

01/29/2016 Delegation of authority to theBoard of Directors to increase thenumber of shares to be issued intheeventofacapitalincreasewithor without preferred subscriptionrights(9thresolution)

26months 15% of the initialissuance

and

€2750002

None

01/29/2016 Delegation of authority to to theBoard of Directors to increase thenumberofshares throughan issueof shares and securities as acompensation of contributions inkind(10thresolution)

26months €30 000 or 10% ofthe share capital oftheCompanyexistingas of the date of thetransaction

and

€18000 000 for thedebt securities thatmay be issuedpursuan to thedelegation

None

01/29/2016 Delegation of authority to theBoard of Directors to issue sharesandsecuritiescarryingoutacapitalincrease in the event of a publicexchange offer initiated by theCompany(11thresolution)

26months €1250001

€2750002

and

€100000000

None

01/29/2016 Authorization to the Board ofDirectors to grant sharesubscription and/or purchaseoptions (“Options”), cancellingshareholders’ preferredsubscription rights in favor of aclass of persons (defined as:employees and/or corporateofficers (or some of them) of theCompany or of companies orgroups affiliated with it inaccordancewith theconditions setoutinArticleL.225-180,paragraph1, of the Commercial Code) (12thresolution)7

38months €150004and7.5%ofthesharecapitalonafullydilutedbasis

None

01/29/2016 Authorization to the Board ofDirectorstoissueandallotordinary

18months €150004and7.5%ofthesharecapitalona


Page258





share warrants (“Warrants”),cancelling preferred subscriptionrights infavorofaclassofpersons(defined as: (i) individuals or legalentities who are strategic partnersof the Company, industrial orcommercial entities in thepharmaceutical sector, or personswhohaveenteredintoaserviceorconsulting contract with theCompanyoranyofitssubsidiaries;(ii) the shareholders, executives oremployees of such persons in thecase of legal entities; (iii) theexecutives, corporate officers oremployees of the Company or itssubsidiaries)(13thresolution)7

fullydilutedbasis Use of the delegation for theallocation of 85 000 BSA to besubcribedforacapital increaseof€1 700 in favor of Mrs BourqueandMr.Legaultdirectors.

01/29/2016 Delegation of authority to theBoardofDirectorstoissueandallotfounder warrants (“FounderWarrants”), cancelling preferredsubscription rights in favor of aclass of persons (defined as:employees and executives subjectto the tax regime applicable toemployees of the Company inoffice on the date the FounderWarrantsaregranted,aswellas infavor of any other beneficiariesthat areormaybe allowedby thelaws in force on the date thisdelegation of authority isimplemented)(14thresolution)7


None

01/29/2016 Authorization to the Board ofDirectors to allot free shares,whether existing or to be issued(“Free Shares”), cancellingpreferred subscription rights infavor of a specific class of persons(defined as: employees, or certaincategoriesofthem,oftheCompanyand/orentitiesdirectlyorindirectlyaffiliatedwithitwithinthemeaningof Article L. 225-197-2 of theCommercial Code, as well ascorporate officers of theaforementioned companies orentities, as determined by theBoard of Directors in accordancewith the provisions of Article L.225-197-1 et seq. of theCommercial Code, or some ofthem, and who, in addition, meetthe conditions and, if applicable,the allotment criteria that mayhave been set by the Board ofDirectors)(15thresolution)


None

Page259

1.Maximumnominalcapoftheconcerningresolution.2.Globalnominalcapofthecapitalincreasesthatmaybecarriedoutpursuantto3thto7th,10thand11thresolutions.3.Globalnominalcapofthedebtsecuritiesthatmaybecarriedoutpursuantto3th,4th,6th,7thand10thresolutions.4.Globalnominalcapofthecapitalincreasesthatmaybecarriedoutpursuantto12thto15thresolutions.5.TheissuepriceofthesecuritiesthatmaybeissuedpursuanttothisdelegationofauthorityshallbedeterminedbytheBoardofDirectorsinaccordancewith the followingprovisions: thesumthat theCompany receivesor should receive foreachshare issuedorcreatedbysubscription, conversion, exchange, redemption, exerciseofwarrantsorotherwise shall beat leastequal toanamountdetermined inaccordancewiththelawsapplicableontheissuedate(asofthisdate,theweightedaverageofthesharepriceoverthelastthreetradingdayspriortothedatethepriceisset, lessapossiblediscountofnomorethan5%,inaccordancewithArticleR.225-119oftheFrenchcommercialcode),subjecttotheexceptionsetoutinthe8thresolution,thatauthorizestheBoardofDirectorstosettheissuepriceofthesecuritiesissuedpursuanttothedelegationsofauthoritythatarethesubjectofthe4thand7thresolutions,anduptothelimitof10%ofthe share capital per year as determinedon the date of theBoard ofDirectors’ decision, as adjusted basedon transactions thatmaysubsequentlyaffectthisresolution,atthepriceitshalldeterminebasedonamulti-criteriamethod,providedthesubscriptionpriceisnotlessthan70%oftheweightedaverageofthesharepriceoverthefive(5)tradingdaysprecedingthedateonwhichtheissuepriceisset,andthattheissuepriceofsecuritiesconferringaccesstocapitalissuchthatthesumreceivedimmediatelybytheCompanyatthetimeofsuchissue,plus,ifapplicable,anysumitmaysubsequentlyreceiveforeachshareissuedasaresultofissuingsuchsecurities,isnotlessthan70%oftheweightedaverageofthesharepriceoverthefive(5)tradingdaysprecedingthedateonwhichtheissuepriceissetandthattheissuepriceofsecuritiesconferringaccesstocapitalissuchthatthesumreceivedimmediatelybytheCompanyatthetimeofsuchissue,plus,ifapplicable,anysumitmaysubsequentlyreceiveforeachshareissuedasaresultofissuingsuchsecurities,isnotlessthan70%oftheweightedaverageofthesharepriceoverthefive(5)tradingdaysprecedingthedateonwhichtheissuepriceisset.6.ResolvesthattheissuepriceofthesecuritiesissuedpursuanttothisdelegationofauthorityshallbesetbytheBoardofDirectorsusingamulti-criteriamethod, provided the share subscription price is not less than 80%of theweighted average of the share price over thetwenty(20)tradingdaysprecedingthedatetheissuepriceisset,andtheissuepriceofsecuritiesconferringaccesstocapitalissuchthatthesumimmediatelyreceivedbytheCompanyatthetimeofthisissue,plus,ifapplicable,anysumthatitmaysubsequentlyreceiveforeachshareissuedasaresultoftheissueofsuchsecurities,isnotlessthan80%oftheweightedaverageofthesharepriceoverthetwenty(20)tradingdaysprecedingthedatetheissuepriceisset.7.ThesubscriptionorpurchasepriceofsharesresultingfromexercisingtheOptionsshallbedeterminedbytheBoardofDirectorsonthedatethattheOptionswillbegranted,asfollows:

o in thecaseofoptions tosubscribe fornewshares, thepriceshallnotbe less than80%of theaverageof thesharepricesquotedoverthetwenty(20)tradingdaysprecedingthedateonwhichtheOptionisgranted;

o in thecaseofoptions topurchaseexisting shares, theprice shallnotbe less than80%of theaverageof the sharepricesquotedoverthetwenty(20)tradingdaysprecedingthedateonwhichtheOption isgranted,noroftheaveragepurchasepriceofsharesheldbytheCompanyinaccordancewithArticlesL.225-208andL.225-209oftheCommercialCode

SharewarrantsandFounderwarrantspricewillbesetthesamewayprovidedtheprovisionsofArticle163bisGoftheGeneralTaxCodearecompliedwith.

20.1.6. InformationrelatingtothesharecapitaloftheGroupcompanieswhichisthesubjectofanoptionoraconditionalagreementconsideringitsplacementunderoption

AsfarastheCompanyisaware,therearenocalloptions,putoptionsorothercommitmentsowedtotheshareholdersoftheCompanyormadebythemontheCompany’sshares.

20.1.7. Changesinsharecapital

20.1.7.1. Tableshowingchangesinsharecapitaloverthelasttwofinancialyears

NatureoftransactionsMovementsonthesharecapitalin€

Premiumrelatedto

sharecapitalin€

Numberofsharesissued

Numberofshares

Nominalvaluein€

Sharecapitalin€

Au31décembre2013 194,997 352773 389990 194997

Capitaldecrease(March2014) -39,001 155,99620-to-1sharesplit(March2014) 7,409,810 155,996Capitalincrease(conversionoftheconvertiblebonds) 12,914 5,141,589 645,722 168,910

Page260

CapitalincreasetoBpifranceParticipations(July2014) 25,000 4,975,000 1,250,000 1,250,000 193,910Capitalincrease(conversionoftheconvertiblebonds) 56,253 20,897,979 2,812,634 2,812,634 250,163Costsincurredinrelationtoequitytransactions -1,030,667 Subscriptionofsharewarrants 30,001

TotalasatDecember31,2014 250,163 30,366,675 4,062,634 12,508,156 0.02 250,163CapitalincreaseinrelationtotheinitialpublicofferingonEuronextParis(February2015) 80,625 26,767,487 4,031,248 16,539,404 330,788CapitalincreaseinrelationtotheexercisebyMerckSeronoofitsMSShareWarrants(February2015) 21,771 7,227,845 1,088,531 17,627,935 352,559Capitalincrease,july2015 35,256 19,972,445 1,762,793 19,390,728

387,815

ExerciseofBSAKreos,October2015 917 182,415 45,833 19,436,561

388,731ExerciseofBSAKreos,November2015 917 182,415 45,833 19,482,394

389,648

Costsincurredinrelationtoequitytransactions

-2,861,000

Subscriptionofsharewarrants

85,424


20.1.7.2. Company’ssharesownershipoverthelastthreefinancialyears

Shareholders 31/12/2013 31/12/2014 31/12/2015

ThomasKuhn 19,23% 11,99% 7,68%

Othermanagers 19,23% 11,99% 7,68%

TotalManagement 38,46% 23,98% 15,36%

BPIfranceInvestissement(FCPRInnobio) 19,23% 20,63% 12,71%

BPIfranceParticipations - 9,99% 8,69%

SubtotalBPI 19,23% 30,62% 21,40%

FondsOMNESCAPITAL 11,54% 12,36% 8,33%

FondsEdmonddeRothschildInvestmentPartners 30,77% 33,03% 22,54%

MerckSerono - - 5,57%

JPMorganAssetManagement(UK)Limited - - 5,12%

Treasuryshare - - 0,03%

Publicfloat - - 21,69%

Total 100% 100% 100%

20.2. ConstitutiveinstrumentoftheCompanyandbylaws

20.2.1. Corporatepurpose(article2oftheCompany’sbylaws)

ThepurposeoftheCompany,inFranceandanyothercountry,isasfollows:

Page261

• Research and development of new therapeutic strategies for humans, contractmanufacturing and sale and marketing in all its forms of specialty pharmaceuticalspreviouslytestedinpre-clinicalandclinicaltrials,aswellasallappliedresearchandmedicaldevelopment activities, filing and acquisition of all patents, trademarks and industrialpropertyrights;

• Consultation and conduct of market surveys and studies relating to pharmaceuticalregulationsandpharmaceuticalandclinicaldevelopment;

• Participationof theCompany,by anymeans, directlyor indirectly, in all operationswhichmay be related to its purpose through the incorporation of new companies, contribution,subscription or purchase of shares or share rights, merger or otherwise, creation,acquisition, rental, or taking of a lease over any businesses or establishments; the taking,acquisition,exploitationortransferofallprocessesandpatentsrelatedtosuchactivities.

And generally, all industrial, commercial, financial or non-trading transactions, in movable orimmovable property, that may be directly or indirectly related to the corporate purpose or anysimilarorrelatedpurpose.

20.2.2. Statutory provisions and other provisions relating to members of administrative andexecutivebodies

20.2.2.1. Boardofdirectors

20.2.2.1.1. AppointmentoftheBoardofdirectors’smembers

TheCompany ismanagedbyaBoardofDirectors composedofbetween3and18members,whomaybenaturalpersonsorlegalentities,subjecttothederogationprovidedforbylawincaseofamerger.

Any legal entitymust, at the time of its appointment, appoint a natural person as its permanentrepresentative on the Board of Directors. The length of the term of office of the permanentrepresentativeisthesameasthatofthelegalentitythatisadirectorthatitrepresents.Whenthelegal entity removes its permanent representative from office, it must immediately arrange toreplace him/her. The same provisions apply in the event of the death or resignation of thepermanentrepresentative.

Noonemaybeadirectorifhe/sheisovertheageof70.Whendirectorsexceedthisagelimitduringthecourseoftheirtermofoffice,thusbringingthenumberofdirectorsagedover70tomorethanone-third,thentheoldestdirectorisdeemedtohaveautomaticallyresigned.

DirectorsmayormaynotbeshareholdersoftheCompany.

During the lifeof theCompany, thedirectors are appointedbyadecisionof theordinary generalmeetingofshareholders.Thelengthofthetermofofficeofthedirectorsisthree(3)years;itendsat

Page262

thecloseoftheordinarygeneralmeetingcalledtoapprovethefinancialstatementsforthepreviousfinancialyearandheldintheyearduringwhichtheirtermofofficeexpires.

Intheeventofavacancyduetodeathorresignationofoneormoreseats,theBoardofDirectorsmay make provisional appointments by co-optation between two collective decisions of theshareholders. These appointments are then submitted to the next ordinary general meeting ofshareholders for ratification. A director appointed to replace another director performs his/herdutiesfortheremainderofhis/herpredecessor’stermofoffice.

Directorsareeligibleforre-election.Theycanberemovedfromofficeatanytimebyadecisionoftheordinarygeneralmeetingofshareholders.

20.2.2.1.2. DeliberationsoftheBoardofDirectors

The Board of Directorsmeets as often as the interest of the Company requires and at least fourtimesayear,whenameeting iscalledby itsChairman.TheChiefExecutiveOfficeratanytime,orone-thirdofthedirectorsiftheBoardofDirectorshasnotheldameetingforovertwomonths,mayasktheChairmantoconveneaboardmeetingwithregardtoaspecifiedagenda.

Noticesofthemeetingaresentinwriting(byfax,ordinaryletter,e-mail)atleastfivebusinessdayspriortotheBoardofDirectors’meetingwhenitiscalledforthefirsttimeortwobusinessdayspriortotheboard’smeetingwhenthemeetingiscalledforthesecondtime.Intheeventofanemergencyorifallthedirectorsagree,theabove-mentionedperiodsforcallingthemeetingmaybeshortened.

Meetings shall be held at the registered office or in any other place mentioned in the meetingnotice.Withinthelimitsprovidedforbylaw,theBoardofDirectorsmaymeetanddeliberatebyanymeans, including in particular video, telex, fax, telephone conference, videoconference, via theInternetorbyanyothermeans.TheDirectorsparticipatingintheBoardmeetingbyvideoconferenceorothermeansoftelecommunicationallowingthe identificationofparticipantsandensuringtheireffectiveparticipation inaccordancewiththeconditionsdefinedbythe internal regulationsof theBoardofDirectorsaredeemedtobepresentforthecalculationofthequorumandmajority.

Thepresenceofatleasthalfthemembersinofficeisnecessaryforthevalidityofthedeliberations.Anattendanceregisteriskeptandsignedbythedirectorsattendingthemeeting.

Decisions are made by a majority of the votes of the members present or represented. TheChairmanoftheBoardofDirectorshasacastingvote.

Thedeliberations of theBoardofDirectors are recorded inminutes included in a specialminute-bookandsignedbytheChairmanofthemeetingandatleastonedirectoror,intheeventthattheChairmanisunabletodoso,byatleasttwodirectors.

Copiesorextractsof theminutesof thedeliberationsare validly certifiedby theChairmanof theBoardofDirectors,theChiefExecutiveOfficer,oradulyempoweredrepresentativeauthorizedforsuchpurpose.

Page263

20.2.2.1.3. PowersoftheBoardofdirectors

TheBoardofDirectorsdeterminesthedirectionoftheCompany’sbusinessactivitiesandoverseestheimplementationthereof.

Subjecttothepowersexpresslyattributedtogeneralmeetingsofshareholdersandwithinthelimitofthecorporatepurpose,itaddressesanymattersaffectingthepropergovernanceoftheCompanyandsettlesthemattersthatconcernitthroughitsdeliberations.

TheBoardofDirectorsperformsthechecksandverificationsthatitconsidersappropriate.

EachDirectormustreceivethenecessaryinformationfortheperformanceofhis/herdutiesandcanobtainallthedocumentshe/sheconsidersusefulfromtheGeneralManagement.

Indealingswiththirdparties,theCompanyisboundevenbytheactsoftheBoardofDirectorswhichdo not fall within the scope of the corporate purpose or exceed the limitations on the powersprovidedfor inthebylawsandarticlesof incorporationapplicableto it, if itcannotprovethatthethirdpartywasawarethattheactexceededsuchpurposeorlimitations,orthatitcouldnotfailtobeawareofitgiventhecircumstances.

The Chairman represents the Board of Directors. He/She organizes and directs the Board ofDirectors’work onwhich he/she reports to the generalmeeting of shareholders and executes itsdecisions.

He/ShemakessurethattheBoardofDirectorsfunctionsproperlyandensuresthatthedirectorsareinapositiontocarryouttheirduties.

Security, endorsements and guarantees given by the Company are mandatorily subject toauthorizationbytheBoardofDirectors.

TheBoardofDirectorshasthecapacitytodecideontheissuanceofbonds.

TheprovisionsofArticleL.225-38oftheFrenchcommercialcodeapplytoagreementsenteredinto,directly or via an intermediary, between the Company andone of its directors or chief executiveofficers.

20.2.2.2. Generalmanagement

20.2.2.2.1. Chiefexecutiveofficer(DirecteurGénéral)

Appointment-Dismissal

Dependingon the choicemadeby theBoardofDirectors, thegeneralmanagement is carriedouteitherbytheChairmanorbyanaturalpersonappointedbytheBoardofDirectorsandwiththetitleofChiefExecutiveOfficer,whomaybeadirectorornot.

If theBoardofDirectorschoose toseparate thedutiesofChairman fromthoseofChiefExecutiveOfficer, it shall proceed with the appointment of the Chief Executive Officer, set the length of

Page264

his/her term of office, determine his/her remuneration and, where applicable, the limitations onhis/herpowers.

Fortheperformanceofhis/herduties,theChiefExecutiveOfficermustbelessthan65yearsofage.Whenthisagelimitisreachedduringthecourseofhis/herduties,theChiefExecutiveOfficerwillbedeemedtohaveautomaticallyresigned.

TheChiefExecutiveOfficermayberemovedfromofficeatanytimebytheBoardofDirectors.Whenthe Chief Executive Officer does not perform the duties of Chairman of the Board of Directors,his/herremovalfromofficemaygiverisetodamages,ifitisdecidedwithoutduecause.

Powers

When the general management of the Company is carried out by the Chairman of the Board ofDirectors,theprovisionsapplytohim.

TheChiefExecutiveOfficerhasthebroadestpowerstoactinanycircumstancesinthenameoftheCompany.He/Sheexercisesthesepowerswithinthe limitofthecorporatepurposeandsubjecttothe powers that the law, the bylaws and articles of incorporation expressly attribute to generalmeetingsofshareholdersandtotheBoardofDirectorsandanylimitationsonthepowersthatareimposedonhimbytheBoardofDirectors.

TheChiefExecutiveOfficerrepresentstheCompanyinitsdealingswiththirdparties.TheCompanyisboundevenby theactsof theChiefExecutiveOfficerwhichdonot fallwithin the scopeof thecorporate purpose, unless it proves that the third party was aware that the act exceeded suchpurposeorthatitcouldnotfailtobeawareofitgiventhecircumstances,itbeingspecifiedthatthepublication of the bylaws and articles of incorporation alone is not sufficient to constitute suchproof.

20.2.2.3. DeputyChiefExecutiveOfficers(Directeursgénérauxdélégués)

OntheproposaloftheChiefExecutiveOfficer,whethersuchdutiesarecarriedoutbytheChairmanof theBoardofDirectors or by another person, theBoardofDirectorsmay appoint oneormorenatural persons responsible for assisting theChief ExecutiveOfficerwith the title ofDeputyChiefExecutiveOfficer(Directeurgénéraldélégué).

WithregardtothirdpartiestheDeputyChiefExecutiveOfficer(s)havethesamepowersastheChiefExecutive Officer subject, where applicable, to the specific limitations on powers that may beimposedonthembytheBoardofDirectors.

IntheeventofterminationorthedutiesoftheChiefExecutiveOfficerorhis/herinabilitytoact,theDeputy Chief Executive Officers shall retain their duties and their responsibilities until theappointmentofanewChiefExecutiveOfficerunlessotherwisedecidedbytheBoardofDirectors.

20.2.2.4. Rulesofprocedure

The rule of procedure of the Board of directors has been adopted by the Board of directors onMarch12,2014andupdatedonApril15,2014.

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The ruleofprocedureof theBoardofdirectors,aswellas thespecializedCommittes itdescribes,completeslegalandregulatoryprovisions,incompliancewiththeFrenchcommercialcodeandthecorporategovernancecodeMiddlenext.

Itsetsouttherole,thepowers,thecompositionfunctioningoftheBoardofdirectors,deontologicalduties and obligations of its members, the conditions of their compensation and of their goodinformaiton.

20.2.3. Rights,privilegesandlimitsattachedtotheCompany’sshares

20.2.3.1. Formsofthesecurities

The shares shall be in registered or bearer form, at the option of the shareholder, subject to theprovisions of laws and regulations in force. Shares that have not been paid up in full shall be inregisteredform.

20.2.3.2. Votingrights

The voting right attached to shares is proportionate to the capital representedby the shares andeachsharescaritestherighttoatleastonevote,subjecttocompliancewiththelegalandregulatoryprovisionsinforce.

20.2.3.3. Dividendsandprofitsrights

Eachshareentitlestheholdertoownershipofthecorporateassets,toashareoftheprofitsandtheliquidatingdividendproratatothepercentageofthesharecapitalthatitrepresents.

20.2.3.4. Preferentialsubscriptionrights

All of the Company's shares carry preferential subscription rights in the event of any capitalincreases.

20.2.3.5. Limitsonvotingrights

None.

20.2.3.6. Identificationoftheshareholders

TheCompanyisentitled,underlegalandregulatoryprovisionsinforce,torequestatanytime,atitsowncost, fromthecentraldepositorywhich isresponsibleforkeeping itsshare issueaccount,thename or corporate name, nationality, year of birth or year of incorporation, and address of theholdersofsecuritiesgrantingvotingrightsatitsowngeneralmeetingsofshareholdersimmediatelyorinfuture,togetherwiththequantityofsecuritiesheldbyeachofthem,andwhereapplicable,therestrictions to which the securities may be subject and, more generally, to make use of theprovisions of Article L. 228-2 of the French commercial code with regard to identification of the

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holdersofsecuritiesgrantingvotingrightsatitsowngeneralmeetingsofshareholdersimmediatelyorinfuture.

20.2.3.7. Company’srepurchaseofitsownshares

Refertosection21.1.3“Number,bookvalueandnominalvalueofthesharesheldbytheCompanyoronitsbehalf”ofthisdocumentderéférence.

20.2.4. Changesintheshareholders’rights

Onlytheextraordinarygeneralmeetingisempoweredtomakedecisionswiththeeffectofchangingtherightsoftheshareholdersprovidedbythebylaws.

20.2.5. Generalmeetingsofshareholders

20.2.5.1. Commonrulesthatapplytoallgeneralmeetingsofshareholders

Generalmeetingsofshareholdersarecalledundertheconditionsprovidedforbylaw.

Generalmeetingsofshareholdersareheldattheregisteredofficeorinanyotherlocationindicatedinthenoticesorletterscallingthemtothemeeting,inFranceorinanyothercountry.

Theagendaissetinaccordancewiththeprovisionsoflawsandregulationsinforce.

Participation in general meetings, in any form whatsoever, shall be subject to registering orrecording shares under the conditions andwithin the time periods provided for by regulations ineffect.

A shareholdermaygiveaproxy inorder tobe representedat anygeneralmeeting in accordancewiththelegalprovisionsinforce.Thespecificproxyforeachgeneralmeetingissignedbythepersongrantingtheproxywhostateshis/herlastname,firstnamesandaddress.

For any proxy from a shareholder without an indication of the proxy, the chair of the generalmeeting casts a vote in favor of adoption of the draft resolutions presented or approved by theBoardofDirectorsandavoteagainsttheadoptionofallotherdraftresolutions.

Correspondence voting takes place in accordance with the terms and conditions set by theprovisionsof the lawsand regulations. Legalentitiesparticipate ingeneralmeetings through theirlegalrepresentativesoranyotherpersondulyandproperlyauthorizedbythem.

Generalmeetings are chaired by the Chairman of the Board of Directors. In his/her absence, thegeneralmeetingelectsitschairitself.

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Thedutiesofvote-tellersarecarriedoutbythetwomembersofthegeneralmeetingpresentandacceptingsuchdutieswhohold the largestnumberofvoteseither in theirownnameorasproxyholders.Iftheydonotaccept,thegeneralmeetingelectsitsvote-tellersitself.

Theofficersofthemeetingappointthesecretary,whocanbechosenfromoutsidetheshareholders.

Anattendancesheetiskeptundertheconditionsprovidedforbylaw.

The deliberations of the general meeting are recorded in minutes signed by the officers of themeeting; these minutes must be included in a minute-book kept in accordance with regulatoryprovisions.

20.2.5.2. Specialprovisionsapplicabletoordinarygeneralmeetings

The ordinary general meeting is composed of all the shareholders regardless of the number ofsharestheyhold,onconditionthatalltheamountsduethereonhavebeenpaidup.

Inordertovalidlydeliberatewhencalledforthefirsttime,thegeneralmeetingmustbecomposedofanumberofshareholdersrepresentingatleastone-fifthoftheshareswithvotingrights.

Ifthisconditionisnotmet,thegeneralmeetingisadjournedandcalledagaininaccordancewiththeaboveprovidedforms.Atthissecondmeetingand,whereapplicable,anysubsequentmeetings,thedeliberationsmadewithregardtothesameagendaasthepreviousmeetingarevalidregardlessofthenumberofsharesrepresented

The deliberations of the ordinary general meeting are taken by a majority of the votes of theshareholderspresentorrepresented.

Theordinarygeneralmeetingcanmakeanydecisionsotherthanthosewiththeeffectofamendingthebylawsandarticlesofincorporationeitherdirectlyorindirectly.

Itisheldatleastonceayear,withinsixmonthsoftheendoftheCompany’sfiscalyear,toapprovetheannualfinancialstatements,unlessthistimeperiodisextendedbyanorderofthePresidentoftheCommercialCourtdecidinguponanapplicationbytheBoardofDirectors.

20.2.5.3. Specialprovisionswithregardtoextraordinarygeneralmeetings

Only the extraordinary general meeting is empowered to make decisions with the effect ofamendingthebylawsandarticlesofincorporationeitherdirectlyorindirectly.

The extraordinary general meeting is composed of all shareholders regardless of the number ofsharestheyhold,onconditionthatalltheamountsduethereonhavebeenpaidup.

Inordertovalidlydeliberatewhencalledforthefirsttime,thegeneralmeetingmustbecomposedofanumberofshareholdersrepresentingatleastone-fourthoftheshareswithvotingrights.

Ifthiscondition isnotmet,thegeneralmeetingshallbeadjournedandcalledagain inaccordancewith the above provided forms. At this second meeting and, where applicable, any subsequent

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meetings,thedeliberationsmadewithregardtothesameagendaasthepreviousmeetingarevalidif thegeneralmeeting is composedofanumberof shareholders representingat leastone-fifthoftheshareswithvotingrights.Ifnoquorumisreached,thesecondgeneralmeetingmaybeextendeduntiladatenomorethantwomonthslaterthanthatonwhichitwascalled.

Thedeliberationsoftheextraordinarygeneralmeetingaretakenbyamajorityoftwo-thirdsofthevotesoftheshareholderspresentorrepresented.

Bywayofexception,theextraordinarygeneralmeetingmaydecideunderthequorumandmajorityrequirementsprovidedforordinarygeneralmeetingswhentheincreaseincapitaltakesplaceviathecapitalizationofreserves,profitsorissuepremiums.

20.2.6. Mechanismsallowingtodelay,deferorpreventachangeofcontrol

TheCompany’sbylawsdonotprovideanymechanismthatmaydelay,deferorpreventachangeofcontrol.

20.2.7. Crossingofownershipthresholds

In addition to the legal obligations of declaration of crossing of thresholds, any natural personorlegalentity,actingaloneorinconcert,whobecomestheholder,inanymannerwhatsoeverwithinthemeaningofArticlesL.233-7etseq.oftheFrenchcommercialcode,ofafractionequalto2%ofthesharecapitalorvotingrights,oranymultipleof thispercentage,must informtheCompanyofthe total number of shares and voting rights of the Company that it owns (or that it maysubsequently own in accordance with the meaning of Article L. 233-7 of the French commercialcode),beforeandafterthetransactionthatledtothecrossingofsuchthreshold,andthenatureofthistransaction.Thisdeclarationshallbemadeviaaregisteredletterwithreturnreceiptrequested(or by any equivalentmeans for personswho are resident outside France) sent to the registeredoffice,atthelatest,priortothecloseoftradeonthefourthtradingdayfollowingthedayonwhichtheshareholdingthresholdiscrossed.

Thisobligationappliesunderthesameconditionsasthoseprovidedforinthefirstparagraphofthissection,wheneverthefractionofthecapitalorvotingrightsheldfallsbelowoneofthethresholdsprovidedforintheaboveparagraph.

In the event of non-compliance with the above provisions, a shareholder who has not duly andproperly made the declaration shall be deprived of the voting rights attached to the sharesexceedingthefractionthathasnotbeendulydeclaredforanygeneralmeetingoftheshareholdersthatmaybeheld,untiltheexpirationofthetimeperiodprovidedforbyFrenchlawandregulationsinforcefollowingthedateonwhichthenotificationisdulymade.Thissanctionwillonlybeappliedupon a request, recorded in the minutes of the general meeting, of one or more shareholdersholdingatleastthreepercent(3%)oftheCompany’scapital.

20.2.8. Specificconditionsgoverningchangestothesharecapital

IntheCompany’sbylaws,thereisnospecificprovisiongoverningthechangeinitssharecapitalthatwouldbestricterthanthelegalprovisions.

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21. MATERIALCONTRACTS

Except for the contractdescribedbelow, theCompanyonlyentered into contracts thatare insidethenormalframeworkofitsaffairs.

21.1. MerckSeronoagreementandrelatedamendments

TheCompanyenteredintoatransferandlicenseagreementwithMerckSeronoonMarch19,2009,amendedonJuly30,2009, June22,2010andMay23,2014(the“MSAgreement”),aspartofthespin-offofMerckSerono’sresearchanddevelopmentactivitiesinthecardiometabolicfield.TheMSAgreementwas amended on July 30, 2009, in order to include an additional patent to the list ofpatentsforwhichMerckSeronograntedalicensetotheCompany.

In accordance with thisMS Agreement,Merck Serono transferred certain patents and granted alicenseforotherpatentsandknow-howtotheCompanyfortheresearchanddevelopment,andthemarketingof pharmaceutical products. This license is exclusive covering a list of 25molecules, byprogram,selectedbytheCompany.

In order to support its research and development activities and given Merck Serono’s economicinterestinthedevelopmentoftheCompany,atinceptionoftheCompany,MerckSeronoprovidedtheCompanywithatotalnon-repayableamountof€7.2million.


a. royalties on net sales of the products covered by the patents granted or grantedunderlicensebyMerckSeronoatarateequivalenttoahighsingledigitinthehigherportionoftherangeforImeglimin,andatalowsingledigitrateinthelowerpartoftherangefortheotherproducts;

b. apercentageof the revenue fromanypartnershipagreement relating to thedrugcandidates covered by the patents, granted or granted under license, sold orlicensed,atalowdouble-digitratenearthebottomoftherange.

In the event that the Company would be sold, Merck Serono was entitled to an amountcorrespondingtoapercentageofsalespriceoftheCompany’sshares.ThiscommitmentisvaluedinthefinancialstatementpresentedinaccordancewithIFRSstandards(cf.note11.4ofappendicestotheIFRSfinancialstatementspresentedinsection20.1“IFRSfinancialstatementsdrawnupfortheyearsendingDecember312014andDecember312015”ofthisdocumentdereference).

InpreparationfortheCompany’s initialpublicofferingonEuronextParis,onMay23,2014,Merckagreed towaive its rights in thecaseof thesaleof theCompany,butonly in theevent the initialpublic offering on Euronext Paris is successful, and in exchange received from the Company1,088,531ordinarysharesrepresenting7.69%oftheCompany’ssharecapitalonafully-dilutedbasispriortotheinitialpublicoffering.

The termof theMSAgreement continues on a country-by-country, and product-by-product basisuntil the later of: (i) the final expiration date of any patent right relating to our pharmaceutical

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products that contain or comprise substances covered by patents assigned or licensed to us byMerckSeronoinsuchcountry(thelastofwhichexpiresinJune2023);or(ii)tenyearsfromthefirstsale for monetary value for use or consumption by the general public of such pharmaceuticalproductinsuchcountryfollowingregulatoryapprovalforsuchproductinsuchcountry.

21.2. VentureLoanwithKreosCapitalIV(UK)Limited

IssueofbondstoKreos

On July 25, 2014, the Company entered into a venture loan agreement (the “Venture LoanAgreement”) intended to allow the Company to benefit from financing in the form of non-convertiblebondsrepresentingaloanforamaximumamountof€8millionforwhichKreosCapitalIV(UK)Limited,orKreos,agreedtosubscribeintwotranchesasfollows:

- €5million(TrancheA)subscribedasofJuly25,2014,repayableover33months(norepaymentofcapitalforthefirst9months);and

- €3million (Tranche B), in one or several drawdowns, subject to the conditionthattheCompanyobtainsadditionalfinancingofatleast€12million(incapital,bytheissueofconvertiblebonds,asubordinatedshareholdersloanoralicenseagreementwithapharmaceutical company)byMarch31,2015and repayableover36months.


UndertheVentureLoanAgreement,theCompanymustalsoissuetoKreosCapitalIV(ExpertFund)Limited,asubsidiaryofKreos,amaximumof220,000sharewarrants forclassApreferredshares,137,500ofwhichwereissuedatthetimeTrancheAwasreleased,andamaximumof82,500shallbeissued upon the full release of Tranche B (Note 4 in section 21.1.4.1 “Stock option plan” of thisdocument de référence for a detailed description of the procedure for the exercise of this sharewarrants).

Finally,inordertoguaranteeallobligationsenteredintobytheCompanyinrespectoftheVentureLoan Agreement, it has granted various security rights relating to its intellectual property and itscashpositionsuchaspledgesofbankaccounts,receivablesandcertain intellectualpropertyrightsascollateral (Section11.2.4“Patentssubjecttoapledge”andsection11.4“Otherelementsoftheintellectualproperty”ofthisdocumentderéférenceforthedetailofthispledges).

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22. THIRD PARTY INFORMATION, STATEMENT BY EXPERTS ANDDECLARATIONSOFANYINTEREST

None.

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23. DOCUMENTSONDISPLAY

Copies of thisdocument de référence are availablewithout charge at the registered office of theCompany,259/261AvenueJeanJaurès–ImmeubleleSunway–69007Lyon.

Thisdocumentderéférence isalsoavailable thetheCompany’swebsite (www.poxel.com)andthewebsiteoftheAMF(www.amf-france.org).

The Company's articles of incorporation and bylaws, the minutes of shareholders' meetings andother corporate documents, as well as past financial statements and all expert valuations andstatementsissuedattheCompany'srequestandwhichmustbemadeavailabletoitsshareholdersunderapplicablelawscanbeexaminedwithoutchargeattheregisteredofficeoftheCompany.

From the date of inscription of the shares on the Company on the Euronext market in Paris,regulatedinformationwithinthemeaningoftheprovisionsoftheRèglementgénéraldel'AMFwillalsobeavailableontheCompany’swebsite(www.poxel.com).

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24. INFORMATIONONHOLDINGS

Asofthedateofthisdocumentderéférence,theCompanydoesnotholdanyinterestinthesharecapitalofanyotherCompany.

Documents

content.stockpr.comcontent.stockpr.com/poxelpharma/files/pages/... · English translation for information purposes only Joint stock company (société anonyme) with share capital