9.Commitments and Contingencies

Operating Lease

In March 2016, the Company entered into a lease agreement, which expires in September 2026, for approximately 48,529 square feet of warehouse and office space Libertyville, Illinois. A portion of the warehouse space will house the Company’s manufacturing operations. The lease agreement provides for annual escalation in rent payments during the lease term. The lease agreement provides the Company with a one-time right to terminate the lease effective as of the last day of the ninety-sixth full calendar month of the lease subject to a termination fee. The Company is amortizing the escalation in rental payments on a straight-line basis over the term of the lease.

Future minimum lease payments are as follows:

Year ending December 31,
2016	$	62,481
2017	251,486
2018	257,774
2019	264,218
2020	270,823
Thereafter	1,693,216

Total	$	2,799,998

In July 2015, the Company entered into a lease agreement for 4,795 square feet of office space for its headquarters in Bannockburn, Illinois. In August 2016, the Company amended the lease agreement to relocate the leased premises to 15,688 square feet in the same building and terminate the existing lease with respect to the 4,795 square feet at no cost to the Company. The amended lease term expires May 2024. The amended lease agreement provides for annual escalation in rent payments during the lease term and provides the Company with a one-time right to terminate the lease effective as of the last day of the sixty-fifth full calendar month of the lease subject to a termination fee. The Company is amortizing the escalation in rental payments on a straight-line basis over the term of the lease.

Future minimum lease payments are as follows:

Year ending December 31,
2016	$	20,379
2017	260,903
2018	403,451
2019	411,285
2020	419,119
Thereafter	1,490,419

Total	$	3,005,556

License Agreements

The Company has entered into license agreements, which may require the Company to make future payments relating to sublicense fees, milestone fees and royalties on future sales, if any, of the product candidate.

Guarantees and Indemnifications

The Company has accrued $4,216,000 and $4,080,500 at September 30, 2016 and December 31, 2015, respectively, representing the Company’s best estimate of the ultimate tax indemnification and gross-up payment to be made to a former consultant pursuant to a tax indemnification granted to such consultant in connection with a restricted common stock grant.

Additionally, in the normal course of business, the Company has entered into agreements that contain a variety of representations and provide for general indemnification. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future. To date, the Company has not paid any claims or been required to defend any action related to these indemnification obligations. As of September 30, 2016 and December 31, 2015, the Company did not have any material indemnification claims related to these agreements that were probable or reasonably possible and consequently has not recorded any related liabilities.

Litigation

On September 8, 2016, Sophia’s Cure Foundation (“SCF”), a non-profit 501(c)(3) public charity, filed a complaint in U.S. District Court, Southern District of Ohio, naming as defendants Nationwide Children’s Hospital (“NCH”) and other entities affiliated with NCH, the Company and certain of the Company’s present and former executives (the “Complaint”). According to the Complaint, in 2012, SCF and Nationwide Children’s Hospital Foundation (“NCH Foundation”) entered into a donation agreement under which SCF provided NCH a gift of $550,000 to fund clinical work associated with the study of the product candidate that the Company now refers to as AVXS-101 for SMA Type 1 patients, and NCH Foundation agreed in such donation agreement to reference SCF as the “primary sponsor” of such clinical work in all publications issued by NCH Foundation. The Complaint also alleges that NCH breached the donation agreement by not naming SCF as the sponsor of the investigational new drug application (the “IND”) that it filed for AVXS-101. Additionally, the Complaint alleges that the Company and the named Company executives tortiously interfered with SCF’s rights under the donation agreement by assuming sponsorship of the IND under the Company’s exclusive license agreement with NCH. There is no contractual relationship between the Company and SCF. The complaint seeks, among other relief, monetary damages of $500 million and equitable relief, including taking steps to designate SCF as the sponsor of the IND. The Company filed a motion to dismiss this action on October 28, 2016, and the court has yet to rule on this motion. The Company believes that the Complaint is without merit and intends to vigorously defend itself and its current executives from the allegations. The Company views the probability of loss in this matter to be remote.

Lawsuits may be asserted against the Company in the normal course of business. Based on information currently available, management believes that the disposition of any matters, including the matter involving SCF described above, will not have a material adverse effect on the financial position, results of operations or cash flows of the Company.