Implanet launches a share capital increase with shareholders’ preferential subscription rights for approximately €6.9 million

Regulatory News:

Not for distribution or release, directly or indirectly, in the United States of America, Canada, Australia or Japan.

IMPLANET (Paris:IMPL) (OTCQX:IMPZY) (Euronext: IMPL, FR0010458729, PEA-PME eligible, hereinafter the "Company”), a medical technology company specializing in vertebral and knee-surgery implants, announces today the launch of a capital increase with shareholders’ preferential subscription rights ("PSRs”) for gross proceeds of €6,883,173.50, issue premium included (the "Rights Issue”). These gross proceeds may be increased to a maximum of €7,502,658.80 should the extension clause be exercised in full.

Purpose of the Rights Increase

The issue of new shares by the Company is intended to provide the Implanet group with additional financial resources to fund its activities, and more specifically, to:

• continue ramping up adoption of the Jazz platform for major (pediatric and adult) deformities with the roll-out of a global database for monitoring scoliosis treated by hybrid construction ("Worldwide Sub-laminar Study Group”) for an amount of around €0.7 million;
• expand and strengthen for an amount of around €1.8 million the clinical trial in degenerative indications and corrections of simple spinal deformities in adults in partnership with TFS International, a highly regarded CRO (Contract Research Organization). This company, specialized in running clinical trials, will conduct a forward-looking and multi-centric study to:
  • support the promising results already achieved in osteo-degenerative conditions affecting the spine in ex vivo tests (Mayo Clinic, Rochester) and initial patient follow-up in Europe (Dr. Cavagna, Clinique mutualiste in Lorient) and in the United States (Dr. Fahradi, Ohio State University);
  • bring use of the Jazz technology platform into the mainstream for degenerative spinal surgeries (elderly patients); and
  • assess and document the benefits of the Jazz platform in a new indication – protecting adjacent disks (PJK syndrome);
• continue the R&D drive at a cost of around €0.9 million, primarily to extend the Jazz range and facilitate the use of this technology platform in new surgical procedures to meet demand from surgeons for a stable fusion solution not employing pedicular screws for certain degenerative conditions they have to treat;
• finance ongoing sales and marketing efforts in the United States. This includes a budget of around €1.1 million to increase the number of regional sales managers to accelerate the recruitment and oversight of staff. It also covers loan repayments and other financial commitments amounting to around €1.5 million.

Should the offering not be fully subscribed (only up to 75%), the Company will have to review its priorities for the use of these funds and scale down the projected spending on clinical trials and the scientific committee by around €0.6 million, research and development costs by €0.4 million and sales development spending by around €0.6 million.

Should the Company proceed with a capital increase reserved for A Investors, to enable them to invest a total amount equal to 100% of their subscription commitments (the "Capital Increase”), these proceeds will provide the Company with around €0.4 million in additional resources to expand the scope of the clinical trials, around €0.7 million to step up the R&D efforts focused on the treatment of degenerative spinal conditions and around €0.9 million to ramp up sales and marketing efforts through the recruitment of new sales managers.

Subscription commitments and intentions

Three qualified investors (the "A Investors”), not currently shareholders in the Company and having no relationship to date with the Company other than the commitments described hereinafter, have undertaken to subscribe through irrevocable entitlement ("à titre irréductible”) and subject to reduction ("à titre réductible”) for €2,049,999 in shares via the Rights Issue, representing a total of 29.78% of the new shares.

The A Investors will purchase the PSRs at a price of one euro cent per block of PSRs from EDRIP and Seventure Partners, which are shareholders in the Company and are to be allotted 481,004 PSRs and 391,013 PSRs respectively.

The following table shows a breakdown by amount and number of shares of the subscription commitments received from A Investors:

Furthermore, should the A Investors be unable to invest the full amount they had wished to invest via the Rights Issue with PSRs, a Capital Increase reserved for A Investors would take place enabling them to invest a total amount equivalent to 100% of their subscription commitments. The Capital Increase would take place concurrently with the Rights Issue, and the subscription price per share of the new shares to be issued by means of the Capital Increase would be the same as that of the new shares issued in the Rights Issue. The maximum number of shares to be issued in the potential Capital Increase is 2,928,570¹.

Four qualified investors ("B Investors”), who are not shareholders in the Company², have undertaken to subscribe in cash for any new shares not subscribed by the holders of PSRs through irrevocable entitlement ("à titre irréductible”) and subject to reduction ("à titre réductible”). These commitments represent a total amount of €3,420,000, or a total of 49.69% of the new shares.

¹ Given the acquisition of PSRs by the Investors A from two existing shareholders of the Company and the subscription by irrevocable entitlement by such Investors A based on such PSRs and assuming the Investors A would be served, through their subscription subject to reduction only as part of the extension clause, for a number of new shares in proportion to the PSRs they own, this number of shares should be reduced to 2,113,858.
² Including L1 Capital with which the Company entered into an agreement in October 2015 to issue bonds convertible into shares with attached equity warrants - BEOCABSA notes.

The following table shows a breakdown by amount and number of shares of the subscription commitments received from B Investors:

B Investors will receive a 5% commission based on the size of their commitment. This commission is payable regardless of the actual subscription by B Investors.

The subscription commitments do not represent a performance guarantee ("garantie de bonne fin”) as defined in Article L. 225-145 of French Commercial Code.

The commitments received from A Investors and B Investors cover a total of 7,814,283 shares for a total value of €5.47 million, or 79.47% of the new shares.

Main terms of the Rights Issue

The Company will issue 9,833,105 new shares. This number may be increased by 884,979 additional shares should the extension clause be exercised in full. A total of 2,928,570 additional new shares may be issued to A Investors though the Capital Increase. The subscription price of the new shares via the Rights Issue and, as the case may be, the Capital Increase, stands at €0.70 per share.

Subscription of the new shares will be reserved in priority for the holders of record of existing shares in their securities account at the close of the trading session on October 25, 2016, to whom PSRs will be allotted, and for those selling the PSRs.

The PSRs give a shareholder the right to subscribe in priority for a number of new shares proportional to the number of shares that they own, such that their holding in the Company’s share capital is not diluted. The PSRs may also be sold throughout the subscription period by shareholders who do not wish to take part in the issue. The holders of PSRs may subscribe:

• by irrevocable entitlement ("à titre irréductible), based on a ratio of 6 new shares for 7 existing shares (7 PSRs will entitle the holders to subscribe for 6 new shares at a price of €0.70 per share), and
• subject to reduction ("à titre réductible”), the number of new shares that they wish to subscribe for in addition to the number of shares allotted to them through the irrevocable entitlement.

The PSRs will be listed and traded on Euronext’s regulated market in Paris as from October 24, 2016 until November 7, 2016 under ISIN code FR0013215100.

Theoretical value of the PSRs and ex-rights value of Implanet shares

Based on the closing price of Implanet shares on October 18, 2016, that is €1.39:

• the issue price of €0.70 applicable to the new shares represents a discount of 49.64%,
• the theoretical value of the PSRs stands at €0.318,
• the theoretical ex-rights value of the share stands at €1.072,
• the issue price of the new shares stands at a discount of 34.67% to the theoretical ex-rights value of the share.

These values do not pre-judge the value of the PSRs during the subscription period or the ex-rights value of the shares. Nor do they pre-judge the discount to be applied on the market.

The offer will be open to the public in France only.

SwissLife Banque Privée will be the Lead Manager and Bookrunner, and Maxim Group LLC is acting as the U.S. placement agent.

Indicative timetable

To exercise their PSRs, holders must place a request with their authorized financial intermediary at any time between October 26, 2016 and November 9, 2016 inclusive and pay the corresponding subscription price. Any unexercised PSRs will automatically become null and void at the end of the subscription period, that is at the close of the trading session on November 9, 2016.

Information for investors

The prospectus approved by Autorité des marchés financiers’ ("AMF”) on October 19, 2016 under no. 16-493 consists of Implanet’s registration document filed on April 28, 2016 under no. R.16-035, a securities note and a summary prospectus (included in the securities note).

Availability of the prospectus – Copies of the prospectus may be obtained free of charge from Implanet, Technopole Bordeaux Montesquieu, Allée François Magendie, 33650 Martillac, France (www.implanet.com) and from the AMF (www.amf-france.org).

Risk factors – Implanet draws investors’ attention to chapter 4 "Risk factors” of the registration document filed with the AMF and section 2 "Risk factors” of the securities note.

About IMPLANET

Founded in 2007, IMPLANET is a medical technology company that manufactures high-quality implants for orthopedic surgery. Its flagship product, the JAZZ latest-generation implant, aims to treat spinal pathologies requiring vertebral fusion surgery. Protected by four families of international patents, JAZZ has obtained 510(k) regulatory clearance from the Food and Drug Administration (FDA) in the United States and the CE mark. IMPLANET employs 48 staff and recorded 2015 sales of €6.7 million. For further information, please visit www.implanet.com.

Based near Bordeaux in France, IMPLANET established a US subsidiary in Boston in 2013.

IMPLANET is listed on Compartment C of the Euronext™ regulated market in Paris.

Disclaimer

The distribution of this press release may be subject to legal or regulatory restrictions in certain jurisdictions. Any person who comes into possession of this press release must inform him or herself of and comply with any such restrictions.

This announcement is an advertisement and not a prospectus within the meaning of Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003, as amended (the "Prospectus Directive”).

With respect to Member States of the European Economic Area that have transposed the Prospectus Directive, no action has been taken or will be taken to permit a public offering of the securities referred to in this press release requiring the publication of a prospectus in any Member State other than France. Therefore, such securities may not be and shall not be offered in any Member State (other than in France) other than in accordance with the exemptions of Article 3(2) of the Prospectus Directive to the extent they have been transposed by the relevant Member State or, otherwise, in cases not requiring the publication of a prospectus by Implanet under Article 3(2) of the Prospective Directive and/or the applicable regulations in such Member State.

This press release and the information it contains are being distributed to and are only intended for persons who are (i) outside the United Kingdom, (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order”), (iii) high net worth entities and other such persons falling within Article 49(2)(a) to (d) of the Order ("high net worth companies”, "unincorporated associations”, etc.) or (iv) other persons to whom an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Market Act 2000) may otherwise lawfully be communicated or caused to be communicated (all such persons in (i), (ii), (iii) and (iv) together being referred to as "Relevant Persons”). Any invitation, offer or agreement to subscribe, purchase or otherwise acquire securities to which this press release relates will only be engaged with Relevant Persons. Any person who is not a Relevant Person should not act or rely on this press release or any of its contents.

This press release and the information it contains do not, and will not, constitute an offer to subscribe for or sell, nor the solicitation of an offer to subscribe for or buy, securities of Implanet in the United States of America or any other jurisdiction where restrictions may apply. Securities may not be offered or sold in the United States of America absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act”), it being specified that the securities of Implanet have not been and will not be registered within the US Securities Act. Implanet does not intend to register securities or conduct a public offering in the United States of America.

Any decision to subscribe for or purchase the shares or other securities of Implanet must be made solely based on information publicly available about Implanet. Such information is not the responsibility of SwissLife Banque Privée and has not been independently verified by SwissLife Banque Privée.

Not for distribution or release, directly or indirectly, in the United States of America, Canada, Australia or Japan.

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