[July 30, 2015]

GI Dynamics, Inc.: Appendix 4C Quarterly Report Quarter Ended 30 June 2015

GI Dynamics, Inc. (ASX:GID) (GI Dynamics or the Company), a medical device company developing innovative treatments for type 2 diabetes and obesity, today announced its financial results for the quarter ended 30 June 2015 (Quarter). The Appendix 4C, which has been prepared in U.S. dollars under U.S. GAAP, is attached and the results disclosed in the Appendix 4C are unaudited.

The Company plans to file its Quarterly Report on Form 10-Q (Form 10-Q) with the U.S. Securities and Exchange Commission and with the Australian Securities Exchange on or before 14 August 2015. The Form 10-Q will provide financial statements for the Quarter, along with Management's Discussion and Analysis of Financial Condition and Results of Operations for the Quarter.

Financial Review

The Company's key financial results for the Quarter and six months ended 30 June 2015 include the following:

• Revenue decreased to US$0.3 million for the Quarter compared to US$0.8 million for the same period last year, a decrease of US$0.5 million. Revenue decreased to US$0.9 million for the six months ended 30 June 2015 compared to US$1.7 million for the same period last year, a decrease of US$0.8 million. The decrease in the Company's revenue in the Quarter and six months ended 30 June 2015 compared to the same periods last year was a result of a decrease in sales across all markets.
• Cost of revenue for the Quarter was US$2.0 million compared to US$0.6 million in the same period last year, an increase of US$1.4 million. Cost of revenue for the six months ended 30 June 2015 was US$2.9 million compared to US$1.5 million for the same period last year, an increase of US$1.4 million. The primary reason for the increase in cost of revenue for the Quarter and six-month period was a charge of US$1.4 million recorded in the Quarter for sleeve inventory in excess of the Company's currently anticipated commercial requirements. At 30 June 2015, the reserve for raw material sleeve inventory was US$3.0 million. As a result, gross loss increased by US$2.0 million for the Quarter and US$2.3 million for the six-month period.

• Operating expenses decreased to US$8.5 million for the Quarter compared to US$12.9 million for the same period last year, a decrease of US$4.4 million. Operating expenses decreased to US$18.1 million for the six-month period compared to US$23.0 million for the same period last year, a decrease of US$4.9 million.
  • Research and development expenses were US$4.6 million for the Quarter compared to US$7.5 million for the same period last year, a decrease of US$2.9 million. Research and development expenses were US$10.3 million for the six months ended 30 June 2015 compared to US$12.9 million, a decrease of US$2.6 million. The decrease in research and development expenses for the Quarter and six-month period was primarily a result of decreased expenses to support the ENDO Trial as a result of the enrollment hold and a decrease in personnel related costs.
  • Sales and marketing expenses were US$1.5 million for the Quarter compared to US$3.1 million for the same period last year, a decrease of US$1.6 million. Sales and marketing expenses were US$3.1 million for the six-month period compared to US$5.6 million for the same period last year, a decrease of US$2.5 million. The decrease in sales and marketing expenses for the Quarter and six-month periods compared to the same periods last year were the result of lower personnel related expenses, including stock-based compensation expense, consulting expense and spendin on marketing related activities.
  • General and administrative expenses were US$2.4 million for the Quarter and US$2.3 million for the same period last year. General and administrative expenses were US$4.7 million for the six months ended 30 June 2015 and US$4.6 million for the same period last year. The increase in general and administrative expenses for the Quarter and six-month period was primarily due to an increase in stock-based compensation expense.
• Other income (expense) for the Quarter was US$44,000 of income compared to US$0.4 million for the same period last year, a decrease of US$0.3 million. Other income (expense) for the six months ended 30 June 2015 was a loss of US$0.4 million compared to income of US$0.8 million for the same period last year, a decrease of US$1.2 million. The decrease in the Quarter compared to the same period last year was primarily associated with a decrease in foreign exchange gain of US$0.2 million and a decrease in interest income of US$0.1 million. The decrease in the six-month period was primarily associated with a decrease in foreign exchange gain of US$0.9 million due to the depreciation of the Australian dollar versus the U.S. dollar and a decrease in the gain on remeasurement of the warrant liability of US$0.2 million.
• As a result, the Company recorded a net loss of US$10.2 million for the Quarter compared to US$12.3 million for the same period last year, a decrease of US$2.1 million. For the six months ended 30 June 2015 the Company's net loss was US$20.6 million compared to US$22.0 for the same period last year, a decrease of US$1.4 million.
• The Company had cash and cash equivalents of US$32.8 million at 30 June 2015 compared to US$51.2 million at 31 December 2014, a decrease of US$18.4 million, and US$40.0 million at 31 March 2015, a decrease of US$7.2 million.

GI Dynamics, Inc. (ASX:GID) will hold a conference call to discuss the Company's financial results for the quarter ended 30 June 2015. Michael Dale, president and chief executive officer, will host the call.

Friday, 31 July 2015 at 9:00 a.m. AEST (Thursday, 30 July 2015 at 7:00 p.m. EDT)

Accessing the Conference Call via Webcast:

A live webcast of the call will be available on the GI Dynamics website at investor.gidynamics.com. The webcast can be directly accessed at: http://edge.media-server.com/m/p/yzjmmc7c/lan/en.

Accessing the Conference Call via Telephone:

For those preferring to listen by telephone, please dial in five minutes prior to the start of the call and provide the passcode 99472983. Regional dial-in numbers are as follows:

• United States callers please dial toll free 1 (877) 280-1758
• Australia callers please dial toll free 1 800 005 989
• International callers please dial 1 678 562 4233

Replay archive:

The webcast will be archived for 30 days following the call on the GI Dynamics website at investor.gidynamics.com.

Robert Solomon
Vice President of Finance & Company Secretary

About GI Dynamics

GI Dynamics, Inc. (ASX: GID) is the developer of EndoBarrier^®, the first endoscopically-delivered device therapy approved for the treatment of obese type 2 diabetes with BMI = 30 kg/m², or obese patients with BMI = 30 kg/m² with = 1 comorbidities, or obese patients with BMI >35 kg/m². The liner is indicated for a maximum implant duration of 12 months. EndoBarrier is approved and commercially available in multiple countries outside the U.S. EndoBarrier is not approved for sale in the U.S. and is limited by federal law to investigational use only in the United States. Founded in 2003, GI Dynamics is headquartered in Lexington, Massachusetts. For more information, please visit www.gidynamics.com.

Forward-Looking Statements

This announcement contains forward-looking statements concerning: our development and commercialization plans; our potential revenues and revenue growth, costs, excess inventory, profitability and financial performance; our ability to obtain reimbursement for our products; our clinical trials, and associated regulatory submissions and approvals; the number and location of commercial centres offering the EndoBarrier^®; and our intellectual property position. These forward-looking statements are based on the current estimates and expectations of future events by the management of GI Dynamics, Inc. as of the date of this announcement and are subject to a number of 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 the consequences of terminating the ENDO Trial and the possibility that future clinical trials will not be successful or confirm earlier results; risks associated with obtaining funding from third parties; risks relating to 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, and the timing and extent of third-party reimbursement; risks associated with commercial product sales, including product performance; competition; risks related to market acceptance of products; intellectual property risks; risks related to excess inventory; risks related to assumptions regarding the size of the available market, 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, you 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, future events or otherwise, unless required by law.

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