GI Dynamics : Appendix 3B Options - SPP

Boston, United States Sydney, Australia January 23, 2017 AEDT

Appendix 3B Grant of Director and Employee Equity Awards and Issuance of CDI's under Security Purchase Plan

BOSTON and SYDNEY - 24 January 2017 - GI Dynamics, Inc., (ASX:GID), a medical device company that has commercialized EndoBarrier® in Europe for patients with type 2 diabetes and obesity, today announced the following grants of options to GI Dynamics Director and employees and the issuance of shares under a Security Purchase Plan.

On 5, January 2017 the Board of Directors of GI Dynamics granted Dr. Oern Stuge a non- qualified stock option (the "Option") to purchase 30,000 shares of the Company's common stock, at an exercise price equal to the fair market value per share on that date of $0.76 per share (A$ 0.21 per CDI). The Option shall vest over three years from the Grant Date in (i) one installment of 33% of the shares on the first anniversary of the Grant Date and (ii) eight equal quarterly installments thereafter, subject to Dr. Stuge's continued service on the Board. Such Options are subject to approval by GI Dynamics shareholders. In the event of a change of control of the Company, the Option shall become vested in full.

On 13, January 2017 the Board of Directors of GI Dynamics granted Scott Schorer, President and CEO of GI Dynamics an incentive stock option (the "Option") to purchase 176,600 shares of the Company's common stock and Brian Callahan, Chief Compliance Officer of GI Dynamics an incentive stock option (the "Option") to purchase 97,535 shares of the Company's common stock, each at an exercise price equal to the fair market value per share on that date of

$0.78 per share (A$ 0.021 per CDI). The Options shall vests in equal amounts on a quarterly basis over four (4) years until January 12, 2021, subject to each employees continued service at the Company. In the event of a change of control of the Company, the Option shall become vested in full.

On 23, January 2017 GI Dynamics completed a Security Purchase Plan under which 12,481,600 CDIs (quoted) will be issued on 24 January 2017 (equivalent to 249,632 Shares

Boston, United States Sydney, Australia January 23, 2017 AEDT

(unquoted)). The CDIs were issued under a Security Purchase Plan announced to the ASX on 14 December 2016 (SPP), at a price of A$ 0.022 per CDI and on the same terms as the Company's existing CDIs (with fifty CDIs being equivalent to one Share).

James Murphy CFO & 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 type 2 diabetes and obesity. EndoBarrier is approved and commercially available in multiple countries outside the United States.

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 our development and commercialization plans, potential revenues and revenue growth, costs, excess inventory, profitability and financial performance, ability to obtain reimbursement for our products, clinical trials and associated regulatory submissions and approvals, the number and location of commercial centers offering the EndoBarrier, and our intellectual property position. 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 the consequences of terminating the ENDO trial and the possibility that future clinical trials will not be successful or confirm earlier results. Further risks are associated with obtaining funding from third parties; the timing and costs of clinical trials; the timing of regulatory submissions; and the timing, receipt and maintenance of regulatory approvals. The timing and amount of other expenses and

Boston, United States Sydney, Australia January 23, 2017 AEDT

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 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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Appendix 3B

Rule 2.7, 3.10.3, 3.10.4, 3.10.5

New issue announcement, application for quotation of additional securities and agreement

Information or documents not available now must be given to ASX as soon as available. Information and documents given to ASX become ASX's property and may be made public.

Introduced 01/07/96 Origin: Appendix 5 Amended 01/07/98, 01/09/99, 01/07/00, 30/09/01, 11/03/02, 01/01/03, 24/10/05, 01/08/12, 04/03/13

Name of entity

GI Dynamics, Inc

ABN

151 239 388

We (the entity) give ASX the following information.

Part 1 - All issues

You must complete the relevant sections (attach sheets if there is not enough space).

Options to purchase shares of common stock (unquoted) and;

CHESS depositary interests (CDIs) (quoted) representing shares of common stock of the Company (unquoted) (Shares)

1 +Class of +securities issued or to be issued

+ See chapter 19 for defined terms.

04/03/2013 Appendix 3B Page 1