BOSTON and SYDNEY —  20 June 2017 — GI Dynamics® Inc. (ASX:GID), a medical device company that has commercialized EndoBarrier® in Europe, the Middle East and South America for patients with type 2 diabetes and obesity announced additional members of the GI Dynamics Scientific Advisory Board (SAB), bringing together distinguished physicians and scientists specializing in endocrinology, gastroenterology and bariatric/metabolic surgery. Francesco Rubino, MD, and Philip Schauer, MD have joined the GI Dynamics SAB.

The GI Dynamics SAB was designed to advance the body of evidence and state of patient care through EndoBarrier utilization. The SAB will serve as a key resource to GI Dynamics during its Investigational Device Exemption clinical trial in the United States and will support ongoing clinical studies and commercialization in the United Kingdom, Germany, the Middle East and select European countries.

“We are delighted to have Dr. Rubino and Dr. Schauer join the GI Dynamics SAB and we look forward to collaborating with them,” said Scott Schorer, GI Dynamics president and chief executive officer. “Dr. Rubino is a pioneer in the field and has helped lead the evolution of bariatric surgery towards metabolic surgery, created the thought process regarding GI tract involvement in the pathophysiology of type 2 diabetes, and independently developed the animal model proof of the EndoBarrier mechanism of action.  Dr. Schauer brings a focus on severe obesity and the pathophysiology of type 2 diabetes, is a leading researcher in the disease state, and has performed over 7,000 procedures for type 2 diabetes and obesity.”

Dr. Rubino is internationally recognized as one of the world leaders in the research, education, and practice of metabolic and weight-loss surgery. He received his MD and completed his residency in general surgery at the Catholic University in Rome, Italy. Dr. Rubino completed fellowships in laparoscopic surgery at the European Institute of Telesurgery in Strasbourg, France, at Mount Sinai Medical Center, New York, and at the Cleveland Clinic.

A member of many professional organizations, Dr. Rubino is the recipient of numerous awards, has given hundreds of presentations throughout the world, and is the author of over 100 articles in peer-reviewed journals as well as numerous book chapters. His experimental studies provided the first evidence of a direct effect of gastrointestinal surgery on glucose metabolism independent of weight loss, uncovering a biological link between the gut and diabetes. Dr. Rubino was the main organizer and co-director with Dr. Lee Kaplan and GI Dynamics SAB members Dr. Cummings and Dr. Schauer of the Diabetes Surgery Summit (DSS), an influential consensus conference. The recently released DSS guidelines have been adopted by the American Diabetes Association, and have been endorsed by over 50 scientific societies around the world. Dr. Rubino also served as Congress Director and organizer of the first three editions of the World Congress on Interventional Therapies for Type 2 Diabetes, an international forum for discussion of both conventional surgical interventions and novel endoluminal approaches.

“The potential impact of EndoBarrier for the treatment of both type 2 diabetes and obesity in less obese patients is truly exciting,” says Dr. Rubino. “I look forward to working with the GI Dynamics SAB to further study EndoBarrier and its many benefits for patients.”

Dr. Schauer is the past president of the American Society for Metabolic and Bariatric Surgery and immediate past chair of Obesity Week. He has also served as a co-director of the DSS with Drs. Cummings, Kaplan and Rubino. His clinical areas of expertise include laparoscopic and gastrointestinal surgery. Dr. Schauer received his medical degree from the Baylor College of Medicine, completed his residency in surgery at The University of Texas at San Antonio, and completed his fellowship in laparoscopic surgery at Duke University Medical Center.
Dr. Schauer is board certified in surgery by the American Board of Surgery. He has been the principal investigator or co-investigator on numerous research grants and has published numerous papers, abstracts, and book chapters related to gastrointestinal and laparoscopic surgery. His memberships in professional and scientific societies include the American College of Surgeons, Association of Academic Surgery, Society of University Surgeons, Society of Laparoendoscopic Surgeons, American Society of Bariatric Surgery, Society of American Gastrointestinal and Endoscopic Surgeons (SAGES), and Society for Surgery of the Alimentary Tract.

“EndoBarrier is bridging the gap in care for patients struggling to control their HbA1c levels with ever-increasing doses of insulin but do not meet the criteria for gastric bypass surgery”, says Dr. Schauer. “I am excited to help advance the tools that will provide a powerful treatment option for this patient population.”

 

About GI Dynamics

GI Dynamics, Inc. (ASX:GID) is the developer of EndoBarrier, the first endoscopically-delivered device approved for the treatment of type 2 diabetes and obesity. EndoBarrier is not approved for sale in the United States and is limited by federal law to investigational use only in the United States. Founded in 2003, GI Dynamics is headquartered in Boston, Massachusetts. For more information, please visit www.gidynamics.com.

Forward-Looking Statements

This announcement contains forward-looking statements concerning the potential for EndoBarrier as an important treatment option for patients with type 2 diabetes and obesity. These forward-looking statements are based on GI Dynamics management’s current estimates and expectations of future events as of the date of this announcement. Furthermore, the estimates are subject to several risks and uncertainties that could cause actual results to differ materially and adversely from those indicated in or implied by such forward-looking statements. These risks and uncertainties include but are not limited to, risks associated with obtaining funding from third parties; the consequences of stopping the ENDO trial and the possibility that future clinical trials will not be successful or confirm earlier results; the timing and costs of clinical trials; the timing of regulatory submissions; the timing, receipt and maintenance of regulatory approvals; the timing and amount of other expenses; the timing and extent of third-party reimbursement; risks associated with commercial product sales, including product performance, competition, market acceptance of products, intellectual-property risk; risks related to excess inventory; and risks related to assumptions regarding the size of the available market, the benefits of our products, product pricing, timing of product launches, future financial results and other factors, including those described in our filings with the U.S. Securities and Exchange Commission. Given these uncertainties, one should not place undue reliance on these forward-looking statements. We do not assume any obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events or otherwise, unless we are required to do so by law.

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ATTACHMENT 1

Financing Terms

The key terms of the financing are as follows:

  1. Borrower / Issuer:  GI Dynamics, Inc.
  2. Lender / Holder:  Crystal Amber Fund Limited
  3. Principal Amount / Face Value:  US $5,000,000
  4. Interest:  5% per annum, compounded annually
  5. Conversion: Subject to the receipt of shareholder approval (for the purposes of, among others, ASX Listing Rule 10.11), the Principal Amount is convertible into CHESS Depositary Interests (CDIs) (i) at the option of the Lender (based on a 5-day VWAP) or (ii) automatically on the occurrence of a “qualified financing” (essentially a further equity raising of at least US $10 million). If shareholder approval of the right of conversion is not obtained the loan will not be convertible into CDIs. In the event that the Borrower issues additional CDIs in a subsequent equity raising at a price per CDI that is less than the then-effective optional conversion price (based on a 5-day VWAP), the Lender has a 30-day option to convert (if the abovementioned shareholder approval of the right of conversion has been/is obtained) at an adjusted conversion price reflecting, on a weighted average basis, the lower price per CDI. The number of CDIs that the Lender may acquire upon conversion of the loan at this adjusted conversion price is limited to the number that maintains the Lender’s fully-diluted ownership percentage of GI Dynamics at the same level as existed immediately preceding the applicable subsequent equity raising.
  6. Security: All of the Borrower’s right, title and interest in, to and under all of GID’s assets
  7. Maturity / Repayment:  31 December 2018 or if shareholder approval in relation to the right of conversion (referred to in paragraph (e) above) is not obtained then the earlier of 31 December 2018 and the date 6 months after the date on which shareholder approval of the right of conversion is not obtained.  If shareholder approval is not obtained, the Lender is entitled to receive 110% of the unpaid principal plus unpaid interest (by way of repayment)
  8. Change of Control of GID:  Where GID shareholders receive cash consideration on completion of a change of control transaction, the Lender is entitled to receive 110% of the unpaid principal plus unpaid interest.  Where GID shareholders receive scrip consideration on completion of a change of control transaction, the Lender is entitled (subject to the shareholder approval referred to in paragraph (e) above being obtained) to exercise the conversion option
  9. Prepayments:  Not permitted without the Lender’s consent
  10. Transferability / Assignability: The convertible note is not transferrable / assignable within 12 months after its issue, except as permitted by the Corporations Act 2001 (Cth)
  11. Transfer of CDIs issued on conversion: Any CDIs issued on a conversion are not transferrable within 12 months after their issue (and the CDIs will be subject to a holding lock), except as permitted by the Corporations Act 2001 (Cth)
  12. Events of Default:  On the occurrence of an event of default, all unpaid principal plus unpaid interest generally becomes immediately due and payable
  13. Use of Funds:  General corporate purposes

 

ATTACHMENT 2

ASX Waiver

The terms of the waiver granted by ASX from ASX Listing Rule 10.1 are as follows:

“Based solely on the information provided, ASX grants GI Dynamics, Inc. (the “Company”) a waiver from listing rule 10.1 to the extent necessary to permit the Company to grant security over the assets of the Company in favor of Crystal Amber Fund Limited (the “Lender”) (the “Security”) to secure the Company’s obligations under a secured term loan facility of US $5,000,000 (the “Loan Facility”) provided by the Lender without obtaining shareholder approval, on the following conditions:

 

  1. The Security includes a term that if an event of default occurs and the Lender exercises its rights under the Security, neither the Lender nor any of their associates can acquire any legal or beneficial interest in an asset of the Company or its subsidiaries in full or part satisfaction of the Company’s obligations under the Security, or otherwise deal with the assets of the Company or its subsidiaries, without the Company first having complied with any applicable listing rules, including listing rule 10.1, other than as required by law or through a receiver, or receiver or manager (or analogous person) appointed by the Lender exercising their power of sale under the Security and selling the assets to an unrelated third party on arm’s length commercial terms and conditions and distributing the cash proceeds to the Lender or any of its associates in accordance with their legal entitlements.
  2. A summary of the material terms of the Security is made in each annual report of the Company during the term of the Security.
  3. Any variations to the terms of the Security which is not a minor change or inconsistent with the terms of the waiver must be subject to shareholder approval.
  4. The Company and the Lender must seek to discharge the Security when the funds advanced to the Company are repaid, or if it is not discharged, seek shareholder approval for the continuation of the Security for any further period.
  5. The Company immediately releases to the market an announcement which sets out the terms of the waiver, and the Company’s plans with respect to the (i) repayment of the funds advanced under the Loan Facility, and (ii) discharge of the Security, including the time-frame within which it expects the repayment and discharge to occur.”