10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2018

OR

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to

Commission file number: 001-37693

AveXis, Inc.

(Exact name of registrant as specified in its charter)

Delaware	90-1038273
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2275 Half Day Rd, Suite 200

Bannockburn, Illinois 60015

(Address of principal executive offices, including zip code)

(847) 572-8280

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒		Accelerated filer ☐
Non-accelerated filer	☐	(Do not check if a smaller reporting company)	Smaller reporting company ☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐  No ☒

As of May 3, 2018, there were 36,816,476 shares of the registrant’s common stock outstanding.

AveXis, Inc.

Quarterly Report on Form 10-Q

For the Quarter Ended March 31, 2018

INDEX

PART 1.	FINANCIAL INFORMATION	3
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations and Comprehensive Loss	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27
PART II.	OTHER INFORMATION	27
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3.	Default Upon Senior Securities	29
Item 4.	Mine Safety Disclosures	29
Item 5.	Other Information	29
Item 6.	Exhibits	29
EXHIBIT INDEX		30
SIGNATURES		31

PART 1.FINANCIAL INFORMATION

Item 1.Financial Statements

AveXis, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except per share data)

	March 31,		December 31,
	2018		2017
Assets
Current assets:
Cash and cash equivalents	$	586,808	$	324,117
Prepaid expenses and other current assets		11,636		8,321
Total current assets		598,444		332,438
Property and equipment, net		62,864		56,174
Restricted cash		2,830		—
Other long-term assets		3,115		2,966
Total assets	$	667,253	$	391,578
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	14,118	$	10,587
Accrued expenses and other current liabilities		29,566		44,938
Short-term licensing fees payable		27,508		—
Accrued indemnification obligation		1,635		2,788
Total current liabilities		72,827		58,313
Long-term liabilities		25,100		525
Total liabilities	$	97,927	$	58,838
Commitments and contingencies
Preferred stock, par value $0.0001 per share, 10,000 shares authorized, none issued		—		—
Common stock; par value $0.0001 per share, 100,000 shares authorized, 36,810 shares issued and outstanding at March 31, 2018; 32,090 shares issued and outstanding at December 31, 2017		4		3
Additional paid-in capital		1,151,037		692,350
Accumulated deficit		(581,715)		(359,613)
Total stockholders’ equity		569,326		332,740
Total liabilities and stockholders’ equity	$	667,253	$	391,578

The accompanying notes are an integral part of these condensed consolidated financial statements.

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AveXis, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(In thousands, except per share data)

	Three Months Ended March 31,
	2018		2017
Revenue	$	—	$	—
Operating expenses:
General and administrative		22,747		9,638
Research and development		199,709		20,327
Total operating expenses		222,456		29,965
Loss from operations		(222,456)		(29,965)
Interest income, net		354		246
Net loss and comprehensive loss	$	(222,102)	$	(29,719)
Basic and diluted net loss per common share	$	(6.20)	$	(1.07)
Weighted-average basic and diluted common shares outstanding		35,842		27,734

The accompanying notes are an integral part of these condensed consolidated financial statements.

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AveXis, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

	Three Months Ended March 31,
	2018		2017
Cash flows from operating activities
Net loss	$	(222,102)	$	(29,719)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,267		244
Stock-based compensation		12,988		5,084
Changes in operating assets and liabilities
Prepaid expenses and other current assets		(3,391)		(2,533)
Other long-term assets		(149)		(642)
Accounts payable		1,706		6,526
Accrued expenses and other current liabilities		(1,884)		(7,154)
Accrued indemnification obligation		(1,153)		67
Accrued licensing fees payable		52,107		—
Net cash used in operating activities		(160,611)		(28,127)
Cash flows from investing activities
Capital expenditures		(7,921)		(8,064)
Net cash used in investing activities		(7,921)		(8,064)
Cash flows from financing activities
Proceeds from issuance of common stock		431,857		—
Proceeds from exercise of stock options		5,029		215
Taxes paid on stock-based compensation vesting and exercise		(2,833)		—
Net cash provided by financing activities		434,053		215
Net increase (decrease) in cash and cash equivalents and restricted cash		265,521		(35,976)
Cash and cash equivalents and restricted cash, Beginning of Period		324,117		240,430
Cash and cash equivalents and restricted cash, End of Period	$	589,638	$	204,454
Supplemental Disclosure of Non-cash Investing and Financing Activities
Capital expenditures in accounts payable and accrued liabilities	$	7,009	$	5,842
Shares issued in settlement with stockholder (See Note 7)		11,647		—

The accompanying notes are an integral part of these condensed consolidated financial statements.

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AveXis, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1.Background

Avexis, Inc., (“the Company”) is a clinical‑stage gene therapy company dedicated to developing and commercializing novel treatments for patients suffering from rare and life‑threatening neurological genetic diseases. The Company’s initial product candidate, AVXS‑101, is its proprietary gene therapy product candidate for the treatment of spinal muscular atrophy, (“SMA”). SMA is a severe neuromuscular disease characterized by the loss of motor neurons, leading to progressive muscle weakness and paralysis. SMA is generally divided into sub‑categories termed SMA Type 1, 2, 3 and 4.

On April 6, 2018, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Novartis AG, a company organized under the laws of Switzerland (“Parent”), and Novartis AM Merger Corporation, a Delaware corporation and a wholly owned subsidiary of Parent (“Purchaser”), pursuant to which, and upon the terms and subject to the conditions described therein, on April 17, 2018, Purchaser commenced a cash tender offer (the “Offer”) to acquire all of the outstanding shares of the Company’s common stock at a purchase price of $218.00 per share, net to the seller in cash, without interest, subject to any required withholding of taxes.  As of the date of this filing, the Offer and the merger contemplated by the Merger Agreement have not been completed (see Note 11). 

January 2018 Underwritten Public Offering

On January 22, 2018, the Company completed an underwritten public offering of 4,509,840 shares of its common stock, including the exercise in full by the underwriters of their option to purchase 588,240 shares from the Company, at a public offering price of $102.00 per share. After deducting the underwriting discounts and commissions, the net proceeds to the Company were approximately $431.9 million.

2.Summary of Significant Accounting Policies

Basis of Presentation

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and, therefore, do not include all information and footnote disclosures normally included in the annual consolidated financial statements. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year. The December 31, 2017 condensed consolidated balance sheet data contained within this Form 10-Q was derived from audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (“Annual Report on Form 10-K”), but does not include all disclosures required by GAAP.

Significant Accounting Policies

There have been no material changes in the Company’s significant accounting policies as of and for the three months ended March 31, 2018, as compared with the significant accounting policies described in the Company’s Annual Report on Form 10-K.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent

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assets and liabilities at the date of the financial statements and reported amounts of revenues, if any, and expenses during the reporting period. Actual results could differ from those estimates.

Recently Issued Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (“ASC 842”). The guidance requires lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Lessor accounting is similar to the current model, but updated to align with certain changes to the lessee model and the new revenue recognition standard. Existing sale-leaseback guidance, including guidance for real estate, is replaced with a new model applicable to both lessees and lessors. ASC 842 is effective for fiscal years beginning after December 15, 2018.  The Company is evaluating the adoption of ASC 842, but has not determined the effects it may have on the Company’s consolidated financial statements.

Recently Adopted Accounting Pronouncements

In August 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. This update is intended to reduce diversity in the presentation of restricted cash and restricted cash equivalents in the statement of cash flows. The updated standard was effective for the Company in the quarterly period ending March 31, 2018. The adoption of this updated standard resulted in restricted cash being combined with cash and cash equivalents on the cash flow statement.

3. Restricted Cash

As of March 31, 2018, restricted cash was $2.8 million and related to a letter of credit signed by the Company in the three months ended March 31, 2018.  The letter of credit was signed in conjunction with an amendment to the lease at the Libertyville, Illinois manufacturing facility. There was no restricted cash as of December 31, 2017.

The following table provides a reconciliation of cash and cash equivalents and restricted cash as reported within the condensed consolidated balance sheet to the same items as reported in the condensed consolidated statement of cash flows:

	Three Months Ended
	March 31,
	2018		2017
Cash and cash equivalents	$	586,808	$	204,454
Restricted cash		2,830		—
Cash and cash equivalents and restricted cash	$	589,638	$	204,454

4.Property and Equipment, Net

Property and equipment, net, consists of the following (in thousands):

	March 31,		December 31,
	2018		2017
Equipment	$	41,733	$	34,777
Leasehold improvements		12,513		7,123
Construction in progress		11,208		15,656
Furniture		978		919
Property and equipment, gross		66,432		58,475
Less: accumulated depreciation		(3,568)		(2,301)
Property and equipment, net	$	62,864	$	56,174

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Depreciation expense was $1.3 million and $0.2 million for the three months ended March 31, 2018 and 2017, respectively.  Advances paid towards the acquisition of property and equipment, and the cost of property and equipment not ready for use before the end of the period, are both classified as construction in progress.

5.Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):

	March 31,		December 31,
	2018		2017
Accrued manufacturing development costs	$	8,786	$	10,356
Accrued construction in progress		5,912		4,156
Accrued payroll, bonus and deferred compensation		4,413		9,589
Accrued clinical trial costs		3,277		864
Accrued professional and consulting fees		3,338		5,406
Accrued loss on settlement		—		11,647
Accrued franchise taxes and other		3,840		2,920
Accrued expenses and other current liabilities	$	29,566	$	44,938

6.Stock-Based Compensation

2014 Stock Plan (the “2014 Plan”) and 2016 Equity Incentive Plan (the “2016 Plan”)

The following table summarizes stock option activity under the 2014 Plan and the 2016 Plan (collectively, the “Plans”) for the three months ended March 31, 2018 (in thousands, except per share data):

		Weighted		Weighted Average
		Average		Remaining	Aggregate
	Number of	Exercise		Contractual	Intrinsic
	Shares	Price		Life (Years)	Value (a)
Outstanding at December 31, 2017	3,167	$	41.30	8.35	$	219,656
Granted	672	$	124.57
Exercised	(97)	$	26.49
Cancelled or forfeited	(62)	$	42.95
Outstanding at March 31, 2018	3,680	$	56.88	8.45	$	249,205
Exercisable at March 31, 2018	1,240	$	22.52	7.55	$	125,304
Exercisable and expected to vest at March 31, 2018	3,680	$	56.88	8.45	$	249,205

(a) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the estimated fair value of the common stock for the options that were in-the-money at March 31, 2018 and December 31, 2017. The intrinsic value of the outstanding stock options as of March 31, 2018 at the purchase price of $218.00 per share in the Offer is equal to $592.9 million (see Note 11).

For the three months ended March 31, 2018 and 2017, the total number of stock options exercised was 97,388 and 43,120, respectively, resulting in total proceeds of $5.0 million and $0.2 million, respectively.

As of March 31, 2018 there was $89.8 million of unrecognized stock-based compensation expense related to stock option awards that is expected to be recognized over a weighted-average period of 1.4 years.

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The Company has recorded total stock-based compensation expense related to the issuance of stock option awards under the Plans in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands):

	Three Months Ended
	March 31,
	2018		2017
Research and development	$	6,995	$	1,978
General and administrative		5,274		2,765
	$	12,269	$	4,743

Stock Options Granted

The weighted-average grant date fair value of options granted during the three months ended March 31, 2018 and 2017 was $85.55 and $47.20,  respectively on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	Three Months Ended
	March 31,		March 31,
	2018		2017
Expected volatility	77.68	%	86.88	%
Risk-free interest rate	2.53	%	1.94	%
Expected term (in years)	6.08		6.08
Expected dividend yield	0.00	%	0.00	%

Options generally expire ten years following the date of grant. Options typically vest over a period of four years, but vesting provisions can vary by award based on the discretion of the Board of Directors. Options to purchase common stock carry an exercise price equal to the estimated fair value of the Company’s common stock on the date of grant. Options to purchase shares of the Company’s common stock may be exercised by payment of the exercise price in cash, by the delivery of previously acquired shares of common stock having a fair value equal to the exercise price payable or the withholding of common shares equal to the fair value of the aggregate exercise price. Upon the termination of service of a holder of stock options awarded under the Plans, all unvested options are immediately forfeited and vested options may be exercised within three months of termination.

Service-Based Restricted Stock Units

The Company grants restricted stock units (“RSUs”) with service-based vesting terms from time to time. The outstanding RSUs vest over a period of three years. For awards that vest subject to the satisfaction of service requirements, compensation expense is measured based on the fair value of the RSUs on the date of grant and is recognized as expense on a straight-line basis over the requisite service period. All RSUs issued vest over time as stipulated in the individual RSU award agreements.

A summary of the status of the Company's RSUs at March 31, 2018 and of changes in RSUs outstanding under the 2016 Plan for the three months ended March 31, 2018 is as follows (in thousands, except per share data):

		Weighted
		Average
		Grant Date
	Number	Fair Value
	of Shares	Per Share
Outstanding at December 31, 2017	27	$	38.79
Granted	139		129.85
Vested	(10)	$	40.24
Forfeited and cancelled	(0)	$	34.90
Outstanding at March 31, 2018	156	$	119.79

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At March 31, 2018, there was $17.7 million of unrecognized compensation cost related to unvested RSUs that will be recognized as expense over a weighted-average period of 1.8 years.

The Company has recorded total stock-based compensation expense related to the issuance of service-based RSUs under the Plans in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands):

	Three Months Ended
	March 31,
	2018		2017
Research and development	$	399	$	302
General and administrative		320		39
	$	719	$	341

Performance-Based Restricted Stock Units

On March 20, 2017, the Company granted to certain employees a total of 49,332 performance-based restricted stock units (“PSUs)”. These PSUs vest upon the achievement of certain regulatory and manufacturing milestones. If the milestones do not occur on or before the three-year anniversary of the grant date, all unvested PSUs will be cancelled. As of March 31, 2018, all 49,332 of these PSUs were outstanding, none had vested and the weighted-average grant date fair value of all shares was $79.75 per share. The Company has not yet recognized any PSU-related stock-based compensation expense as regulatory and manufacturing milestones have not yet been met; however, in the event the performance conditions are met, $3.9 million of research and development compensation expense will be recognized by the Company. There were no PSUs granted during the three months ended March 31, 2018.

Warrants Granted to Non-Employees

During the three months ended March 31, 2018 and 2017, there were no warrants exercised and as a result no proceeds received by the Company. As of March 31, 2018, there were 305,775 common stock warrants vested and outstanding issued to non-employees with a weighted-average exercise price of $2.57.

7.Equity and Net Loss Per Common Share

Basic net loss per common share is computed using the weighted-average number of common shares outstanding during the period. Diluted net loss per common share is computed using the sum of the weighted-average number of common shares outstanding during the period and, if dilutive, the weighted-average number of potential shares of common stock, including the assumed exercise of stock options, stock warrants and unvested restricted common stock.

For the three months ended March 31, 2018 and 2017, the following potentially dilutive securities have been excluded from the computations of diluted weighted-average shares outstanding because the effect would be anti-dilutive (in thousands):

	Three Months Ended
	March 31,
	2018	2017
Stock options	3,680	2,734
Stock warrants	306	306
Unvested service-based restricted stock units	156	42
Unvested performance-based restricted stock units	49	49
	4,191	3,131

Amounts in the table above reflect the common stock equivalents of the noted instruments.

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The following table summarizes the calculation of the basic and diluted net loss per common share (in thousands, except per share data):

	Three Months Ended
	March 31,
	2018		2017
Numerator:
Net loss and comprehensive loss	$	222,102	$	29,719
Denominator:
Weighted-average basic and diluted common shares		35,842		27,734
Basic and diluted net loss per common share	$	6.20	$	1.07

On December 29, 2017, the Company entered into a settlement agreement and release with a stockholder to whom the Company had issued a promissory note in 2012. Under the settlement agreement, the Company was obligated to issue 105,237 shares of common stock as of December 31, 2017 and recognized a non-cash expense of $11.6 million within general and administrative expense for the year ended December 31, 2017. The Company issued the shares in January 2018.  

8.Commitments and Contingencies

Operating Leases

In March 2018, the Company entered into a lease agreement, which expires in August 2027, for approximately 9,500 square feet adjacent to the Company’s existing space in San Diego, California.  The lease agreement provides for annual escalation in rent payments during the lease term. The Company is amortizing the escalation in rental payments on a straight‑line basis over the term of the lease.

In March 2018, the Company entered into a lease agreement, which expires in July 2026, for approximately 44,000 square feet of warehouse, office and storage space in Libertyville, Illinois.

In March 2018, the Company entered into a lease agreement, which expires in July 2024, for approximately 4,700 square feet adjacent to the Company’s existing facility in Bannockburn, Illinois.  The lease agreement provides for annual escalation in rent payments during the lease term. The Company is amortizing the escalation in rental payments on a straight‑line basis over the term of the lease.

Guarantees and Indemnifications

In the normal course of business, the Company has entered into agreements that contain a variety of representations and provide for general indemnification, including indemnification agreements with the Company’s officers and directors. 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 March 31, 2018 and December 31, 2017, 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

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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 (present and former) tortiously interfered with SCF’s rights under the donation agreement by assuming sponsorship of the IND under the NCH License. There is no contractual relationship between the Company and SCF. The complaint seeks, among other relief, monetary damages of $500.0 million and equitable relief, including taking steps to designate SCF as the sponsor of the IND. On October 10, 2017, the Court granted all of the defendants’ motions to dismiss. On October 31, 2017, SCF filed a second amended complaint against all of the defendants except two of the Company’s present executives, who were dropped from the second amended complaint. The Company believes that the second amended complaint is without merit and intends to vigorously defend itself and its present and former executives from the allegations. The Company filed a new motion to dismiss on December 5, 2017. The Company views the possibility 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.

9.Taxes

Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets, including its net operating losses. Based on its history of operating losses, the Company believes that it is more likely than not that the benefit of its deferred tax assets will not be realized. Accordingly, the Company has provided a full valuation allowance for deferred tax assets as of March 31, 2018 and December 31, 2017.

On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act, or TCJA. The TCJA makes significant changes in U.S. tax law including a reduction in the corporate tax rates, changes to net operating loss carryforwards and carrybacks, and a reduction of the amount of the orphan drug credit. As a result of the TCJA, the Company remeasured its ending deferred tax assets and liabilities at December 31, 2017 to the newly enacted U.S. federal corporate tax rate of 21%. The Company recognized the provisional tax impacts related to the remeasurement of the deferred tax assets and liabilities pursuant to SEC Staff Accounting Bulletin No. 118 and included these amounts in its consolidated financial statements for the year ended December 31, 2017. The Company did not record any adjustments to this provisional amount during the three months ended March 31, 2018 and will continue to analyze and refine its calculations related to the remeasurement as the impact of TCJA is finalized.  

10.Collaboration and License Agreements

The Company has entered into three license agreements related to its SMA programs and its planned preclinical programs in Rett syndrome and amyotrophic lateral sclerosis (“ALS”) caused by mutations in the gene that produces the copper zinc superoxide dismutase 1 (“SOD1”) enzyme (“genetic ALS”).

REGENXBIO Inc.

On January 8, 2018, the Company entered into an amendment (the “Amendment”) to the License Agreement dated March 21, 2014 (as amended, the “REGENXBIO SMA License”) between the Company and REGENXBIO Inc. (“REGENXBIO”).  Under the terms of the Amendment, REGENXBIO granted the Company an exclusive, worldwide commercial license, with rights to sublicense, to all recombinant adeno-associated virus vectors in REGENXBIO’s intellectual property portfolio during the term of the license agreement for the treatment of SMA in humans by in vivo gene therapy. Additionally, the Amendment modifies the terms and conditions of the License Agreement relating to assignment. Under the amended assignment provision, the Company is permitted to transfer the License Agreement

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without REGENXBIO’s consent in connection with a change of control of the Company, subject to the transferee or successor agreeing in writing to be bound by the terms of the License Agreement.  The Amendment requires that in a change of control of the Company, the following amounts due under the license agreement, if unpaid at the time of the change in control, become immediately payable: the first and second anniversary payments of $30.0 million each and the first sales-based milestone payment of $40.0 million.

As consideration for the Amendment, the Company paid $80.0 million upon entry into the Amendment and is required to pay $30.0 million on the first anniversary of the effective date of the Amendment and $30.0 million on the second anniversary of the effective date of the Amendment.  In addition, pursuant to the Amendment, the Company agreed to pay up to $120.0 million in the aggregate of potential future sales-based milestone payments for all REGENXBIO SMA licensed products. The Company also agreed to pay a mid‑single digit to low double-digit royalty percentages on net sales of REGENXBIO SMA licensed products using adeno-associated virus serotype 9 (“AAV9”) and a low-double digit royalty percentage on net sales of any product candidate developed by the Company for the treatment of SMA using an adeno-associated virus vector other than AAV9, in each case subject to a reduction in specified circumstances.  During the three months ended March 31, 2018, $130.7 million of expenses were recognized within research and development representing the $80.0 million upfront payment made to REGENXBIO in January 2018 and the net present value of the guaranteed fixed payments due on the first and second anniversaries of the effective date of the Amendment.   As of March 31, 2018, the Company has accrued the net present value of the first anniversary payment within short-term licensing fees payable and the second anniversary payment within long-term liabilities on the balance sheet.  Additionally, the Company recognized interest expense of $1.4 million associated with the accretion of its discounted guaranteed fixed payments due to REGENXBIO in 2019 and 2020. 

The REGENXBIO SMA License term continues until the last valid patent claim expires or lapses in all countries of the world. Additionally, the Company may terminate the REGENXBIO SMA License at any time upon a specified notice period and REGENXBIO may terminate the REGENXBIO SMA License upon the breach (after notice and cure periods) or insolvency of the Company, if the Company is greater than a specified number of days late (after notice and cure periods) in paying money due under the REGENXBIO SMA License or if the Company, its affiliates, or sublicensees challenges the REGENXBIO SMA patents subject to the REGENXBIO SMA License. Either party may terminate the REGENXBIO SMA License for material breach if such breach is not cured within a specified number of days.

GÉNÉTHON

In March 2018, the Company entered into a license agreement with Généthon, acting in its own name and for its own behalf as well as in the name and on behalf of Centre National de la Recherche Scientifique (together “Généthon”), pursuant to which Généthon granted the Company an exclusive, worldwide license to certain patents for in vivo gene replacement therapy delivery of the survival motor neuron protein gene using the AAV9 vector into the central nervous system for the treatment of SMA. Under the Généthon agreement, the Company paid Généthon a one-time upfront license fee of $4.0 million. The Company is also required to pay $0.5 million for the first three years to support Généthon’s ongoing research, ongoing annual management fees of $25 thousand and up to a total of $11.0 million in development and sales-based milestone fees for licensed products. Under the terms of the Généthon agreement, the Company is also required to pay Généthon mid-single digit royalties of net sales on licensed products, subject to reduction in certain circumstances due to royalty stacking provisions and a mid-teens percentage of any sublicense fees that the Company receives from sublicensees for the licensed intellectual property rights. As of March 31, 2018,  the Company had recognized $4.5 million of research and development expenses related to the Généthon license and no royalty fees have been recognized.

11.      Subsequent Events

On April 6, 2018, the Company entered into the Merger Agreement with Parent and Purchaser, pursuant to which, and upon the terms and subject to the conditions described therein, on April 17, 2018, Purchaser commenced the Offer to acquire all of the outstanding shares of the Company’s common stock at a purchase price of $218.00 per share (such price, as it may be increased as described in the following sentence, the “Offer Price”), net to the seller in cash, without interest, subject to any required withholding of taxes.  In the event Parent elects to extend the Outside Date (as defined in the Merger Agreement) in accordance with the terms of the Merger Agreement, the Offer Price will be increased to

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$225.00 per share, net to the seller in cash, without interest, subject to any required withholding of taxes.  The Offer will expire at 12:00 Midnight, New York City time, at the end of the day on Monday, May 14, 2018 (unless the Offer is extended).

The obligation of Purchaser to purchase shares of the Company’s common stock tendered in the Offer is subject to customary closing conditions, including (i) shares of the Company’s common stock having been validly tendered and not withdrawn that represent at least a majority of the total number of shares of the Company’s common stock then-outstanding on a fully diluted basis, (ii) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), without the imposition of a Burdensome Condition (as defined in the Merger Agreement), (iii) the absence of injunctions or other legal restraints preventing the consummation of the Offer or the Merger, as defined below, or imposing a Burdensome Condition and (iv) certain other conditions set forth in Exhibit A to the Merger Agreement.  The consummation of the Offer is not subject to any financing condition.

Following the completion of the Offer, subject to the satisfaction or waiver of certain customary conditions set forth in the Merger Agreement, Purchaser will merge with and into the Company, with the Company surviving as a wholly owned subsidiary of Parent (the “Merger”), pursuant to the procedure provided for under Section 251(h) of the Delaware General Corporation Law (the “DGCL”), without any stockholder approvals. The Merger will be effected as soon as practicable following the time of purchase by Purchaser of shares of the Company’s common stock validly tendered and not withdrawn in the Offer.  At the effective time of the Merger (the “Effective Time”), each issued and outstanding share of the Company’s common stock (other than shares owned by (i) the Company, any subsidiary of the Company, Parent, Purchaser and any other subsidiary of Parent and (ii) stockholders of the Company who have validly exercised their statutory rights of appraisal under the DGCL) will be converted into the right to receive the Offer Price, in cash, without interest, subject to any required withholding of taxes.

Until the earlier of the termination of the Merger Agreement and the Effective Time, the Company has agreed to operate its business in the ordinary course and has agreed to certain other operating covenants, as set forth more fully in the Merger Agreement.  The Merger Agreement includes customary termination provisions for both the Company and Parent and provides that, in connection with the termination of the Merger Agreement under specified circumstances, including termination by the Company to accept a Superior Company Proposal (as defined in the Merger Agreement), the Company will be required to pay a fee equal to $284 million.  The Merger Agreement also provides that, in connection with the termination of the Merger Agreement under specified antitrust related circumstances, Parent will be required to pay to the Company a “reverse termination fee” equal to $437 million, which fee increases in the event Parent elects to extend the Outside Date in accordance with the terms of the Merger Agreement.

Each of the Company and Parent filed a Premerger Notification and Report Form under the HSR Act with respect to the Offer and the Merger with the Federal Trade Commission and the Antitrust Division of the United States Department of Justice on April 13, 2018. On April 30, 2018, the waiting period under the HSR Act applicable to the Offer and the Merger expired.  Accordingly, the condition to the Offer relating to the expiration or termination of the waiting period under the HSR Act has been satisfied

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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”). Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2017 (the “Annual Report”), our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Forward-Looking Statements

This Quarterly Report contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve substantial risks and uncertainties. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions intended to identify statements about the future. These statements speak only as of the date of this Quarterly Report and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements include, without limitation, statements about the following:

· our pending acquisition by Novartis AG, including uncertainties as to the timing of the tender offer and the subsequent merger; the risk that the tender offer or the subsequent merger may not be completed in a timely manner or at all; uncertainties as to the percentage of our stockholders tendering their shares in the tender offer; the possibility that competing offers or acquisition proposals for our company will be made; the possibility that any or all of the various conditions to the consummation of the tender offer or the subsequent merger may not be satisfied or waived, including the failure to receive any required regulatory approvals from any applicable governmental entities (or any conditions, limitations or restrictions placed on such approvals); the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement dated April 6, 2018, or the “Merger Agreement”, among Novartis AG, Novartis AM Merger Corporation and us, including in circumstances which would require us to pay a termination fee; the effect of the announcement or pendency of the transactions contemplated by the Merger Agreement on our ability to retain and hire key personnel, our ability to maintain relationships with our customers, suppliers and others with whom we do business, or our operating results and business generally; risks related to diverting management’s attention from our ongoing business operations; and the risk that stockholder litigation in connection with the transactions contemplated by the Merger Agreement may result in significant costs of defense, indemnification and liability;

· the timing, progress and results of preclinical studies and clinical trials for AVXS-101 and any other product candidates, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the trials will become available and our research and development programs;

· the timing of and our ability to obtain and maintain regulatory approval of AVXS-101;

· the proposed clinical development pathway for AVXS-101 and the acceptability of the results of such trials for regulatory approval of AVXS-101 by the U.S. Food and Drug Administration, or the FDA or comparable foreign regulatory authorities;

· the proposed timing of filing investigational new drug applications with the FDA in connection with gene therapies we are developing for a genetic form of amyotrophic lateral sclerosis, or genetic ALS, and Rett syndrome;

· our expectations regarding timing for meetings with regulatory agencies;

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· our expectations regarding the size of the patient populations for our product candidates, if approved for commercial use;

· our manufacturing capabilities and strategy, including the scalability and commercial viability of our manufacturing methods and processes and our ability to establish a satisfactory potency assay for AVXS-101;

· our ability to successfully commercialize AVXS-101;

· our estimates of our expenses, ongoing losses, future revenue, capital requirements and our needs for or ability to obtain additional financing;

· our ability to identify and develop new product candidates, including our planned new programs in Rett syndrome and genetic ALS;

· our ability to identify, recruit and retain key personnel;

· our and our licensors’ ability to protect and enforce our intellectual property protection for AVXS-101, and the scope of such protection;

· our financial performance;

· the development of and projections relating to our competitors or our industry; and

· our expectations about the outcome of litigation and controversies with third parties, including the lawsuit filed by Sophia’s Cure Foundation; and the impact of laws and regulations.

You should refer to “Item 1A. Risk Factors” in our Annual Report, and the discussion in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Quarterly Report will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. The forward-looking statements in this Quarterly Report represent our views as of the date of this Quarterly Report. We anticipate that subsequent events and developments may cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report.

You should read this Quarterly Report and the documents that we reference in this Quarterly Report and have filed as exhibits to this Quarterly Report completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

Business Overview

We are a clinical‑stage gene therapy company dedicated to developing and commercializing novel treatments for patients suffering from rare and life‑threatening neurological genetic diseases. In April 2018, we announced that we had entered into an Agreement and Plan of Merger with Novartis AG, a company organized under the laws of Switzerland, or Parent, and Novartis AM Merger Corporation, or Purchaser, a Delaware corporation and a wholly owned subsidiary of Parent.

Our initial product candidate, AVXS-101, is our proprietary gene therapy product candidate for the treatment of spinal muscular atrophy, or SMA. SMA is a severe neuromuscular disease characterized by the loss of motor neurons, leading to progressive muscle weakness and paralysis. The incidence of SMA is approximately one in 10,000 live births. SMA is generally divided into sub categories termed SMA Type 1, 2, 3 and 4. We are conducting a pivotal clinical trial for AVXS-101 for the treatment of SMA Type 1, the leading genetic cause of infant mortality. SMA Type 1 is a lethal genetic disorder characterized by motor neuron loss and associated muscle deterioration, resulting in mortality or the need for permanent ventilation support before the age of two for greater than 90% of patients. In the incident population, approximately 60% of SMA patients have Type 1. In our Phase 1 trial of infants with SMA Type 1, at 24 months following gene transfer, 15 of 15 (100%) patients were alive and without need for permanent ventilation. The median age at last follow-up was 27.8 months and 30.7 months for patients in the proposed therapeutic dose cohort, or Cohort 2,

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and low-dose cohort, or Cohort 1, respectively. Natural history indicates only eight percent of untreated patients with SMA Type 1 survive event-free at 20 months of age.We observed a favorable safety profile and AVXS-101 was well tolerated. 

The survival motor neuron protein, or SMN, is a critical protein for normal motor neuron signaling and function.  SMA, and the SMA sub‑types, are diagnosed by identifying the existence of a genetic defect in the SMN1 gene, by determining the number of copies of the SMN2 backup gene, which correlates with disease onset and severity and appropriate clinical signs and symptoms of the disease. Patients with SMA Type 1 either have experienced a deletion of their SMN1 genes, which prevents them from producing adequate levels of functional SMN protein, or carry a mutation in their SMN1 gene. AVXS‑101 is designed to deliver a fully functional human SMN gene into the nuclei of target cells, including motor neurons, that then generates an increase in SMN protein levels, and we believe this will result in improved motor neuron function and patient outcomes. We believe gene therapy is well‑suited for the treatment of SMA due to the monogenic nature of the disease, meaning it is caused by mutations in or deletions of a single gene. AVXS‑101 is designed to possess the key elements of an optimal gene therapy approach to SMA, potentially enabling a one‑time dose regimen: delivery of a fully functional human SMN gene into target motor neuron cells; production of sufficient levels of SMN protein required to improve motor neuron function; and rapid onset of effect in addition to sustained SMN gene expression. AVXS‑101 utilizes a non‑integrating adeno‑associated virus, or AAV, capsid to deliver a functional copy of a human SMN gene to the patient’s own cells without modifying the existing DNA of the patient. Unlike many other capsids, the AAV9 capsid utilized in AVXS‑101 crosses the blood‑brain barrier, a tight protective barrier which regulates the passage of substances between the bloodstream and the brain, thus allowing for intravenous administration. In addition, AAV9 has been observed in preclinical studies to efficiently target motor neuron cells when delivered via either intrathecal or intravenous administration. AVXS‑101 has a self‑complementary DNA sequence that enables rapid onset of effect and a continuous promoter that is intended to allow for continuous and sustained SMN gene expression. Although the U.S. Food and Drug Administration, or FDA, approved an alternative-splicing drug for the treatment of SMA in December 2016, we believe there remains significant unmet medical need and interest in a gene replacement therapy for SMA that can act on the underlying defect in the SMN1 gene and that can provide enhanced survival and motor function benefit via a one‑time dose.

In addition to developing AVXS-101 to treat SMA, we plan to develop other novel gene therapy treatments for two additional rare neurological monogenetic diseases, Rett syndrome and a genetic form of amyotrophic lateral sclerosis caused by mutations in the superoxide dismutase 1 gene, or genetic ALS.

Regulatory Approvals

United States

The FDA has granted AVXS-101 orphan drug designation for the treatment of SMA and fast track designation for the treatment of SMA Type 1. The FDA granted breakthrough therapy designation for AVXS-101 for the treatment of SMA Type 1 in pediatric patients. The FDA established breakthrough therapy designation to facilitate dialogue between the FDA and the sponsor to provide advice on generating evidence needed to support approval of the therapy in an efficient manner with more intensive and interactive guidance on an efficient drug development program, an organizational commitment involving the FDA’s senior managers, and eligibility for rolling review and priority review.

We held an end-of-Phase 1 meeting with the FDA in December 2017. The goal of the end-of-Phase 1 meeting was to review the non-clinical, clinical and Chemistry, Manufacturing and Controls, or CMC, data that had been generated by us to that date, and to align with the FDA on next steps leading to a Biologics License Application, or BLA, submission. The FDA provided detailed information requests in each of the areas discussed, which have now been addressed through a series of information request response submissions to the investigational new drug, or IND, application.

The general purpose of the pre-BLA meeting is to outline what information is to be submitted in the BLA and how that information will be submitted. We submitted a pre-BLA meeting request and the FDA granted the pre-BLA meeting setting a date for the meeting in June 2018.  As part of a pre-BLA briefing package, whose purpose is to provide the necessary background information to FDA to enable them to make informed decisions about the AVXS-101 clinical development program, we plan to provide the available clinical data from our on-going pivotal trial of AVXS-101 in

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SMA Type 1 (STR1VE); SMA Type 1 LTFU Study; the Phase 1 trial in SMA Type 2 (STRONG); and the Phase 3 Pre- Symptomatic Trial in SMA Type 1,2 and 3 (SPRINT).

Europe

The European Medicines Agency, or EMA, has granted AVXS-101 orphan drug designation for the treatment of SMA. The EMA has also granted access into its PRIority MEdicines, or PRIME, program for AVXS-101 for the treatment of SMA Type 1. PRIME is intended to enhance support for the development of medicines—specifically those that may offer a major therapeutic advantage over existing treatments or benefit patients without treatment options—through early and proactive support by EMA to optimize the generation of robust data and development plans, and potentially expedite the assessment of the marketing authorization application so these medicines may reach patients sooner.  We have requested a pre-marketing authorization application, or MAA, meeting from EMA. The purpose of this meeting is to discuss the possible approval pathways that may be available to grant AVXS-101 Marketing Authorization in the EU and the timelines under which an MAA may be submitted. 

Japan

In March 2018, Japan’s Ministry of Health, Labour and Welfare awarded AVXS-101 SAKIGAKE designation for the treatment of SMA Type 1.  The designation was based on data from the Phase 1 clinical trial of AVXS-101.

SAKIGAKE is intended to promote research and development in Japan for innovative new medical products that satisfy certain criteria, such as the severity of the intended indication, by providing prioritized consultation review during the early stages of development and by shortening the target review period for license applications from 12 months to as few as six months.  The benefits of SAKIGAKE are similar to breakthrough therapy designation in the United States and access to the PRIME scheme in the European Union, both of which have already been granted to AVXS-101.

Clinical Trials

In addition to our ongoing trials discussed below, we intend to expand our clinical development program of AVXS-101 for the treatment of SMA by initiating additional clinical trials to further evaluate AVXS-101, including in new patient populations.  First, we intend to initiate a pivotal trial of AVXS-101 for the treatment of SMA Type 1 in Europe during the first half of 2018.   Second, we intend to initiate a multi-national pediatric “all comers” trial for approximately 50 patients between approximately six months and 18 years of age who do not qualify for other AVXS-101 trials at the time of gene therapy, to evaluate a one-time intrathecal, or IT, dose of AVXS-101 in the late fourth quarter of 2018 or early 2019.  Finally, we expect to submit investigational new drug applications for AVXS-201 for Rett syndrome (MECP2) and AVXS-301 for genetic ALS (SOD1) in late 2018/early 2019.

24-Month Follow-Up Data from Phase 1 Trial of AVXS-101 in SMA Type 1  

The Phase 1, open-label, dose-escalation trial was designed to evaluate the safety and tolerability of AVXS-101 in patients with SMA Type 1. The key measures of efficacy were the time from birth to an event and video confirmed achievement of ability to sit unassisted. Additionally, several exploratory objective measures were assessed, including a standard motor milestone development survey and the Children’s Hospital of Philadelphia Infant Test of Neuromuscular Disorders, or CHOP INTEND. In April 2018, we reported 24-month follow-up data from the Phase 1 trial of AVXS-101 for the treatment of SMA Type 1. After the 24-month follow-up, to date, 11 patients have enrolled in the LTFU, trial for ongoing evaluation.

Event-free Survival and Safety

Twenty-four months following gene transfer, 15 of 15 (100%) patients were alive and without need for permanent ventilation. The median age at last follow-up was 27.8 months and 30.7 months for patients in Cohort 2 and Cohort 1, respectively. Natural history indicates only eight percent of untreated patients with SMA Type 1 survive event-free at 20 months of age.

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AVXS-101 appeared to have a favorable safety profile and to be generally well tolerated, with no new treatment-related safety or tolerability concerns identified at the 24-month follow-up.

· A cumulative total of 319 adverse events, or AEs, (five treatment-related AEs and 314 non-treatment related AEs) were reported following monitoring and source verification. Of these, 60 were determined to be serious adverse events, or SAEs, and 259 were non-serious AEs.

· As reported in 2016, one patient in Cohort 1 had a pulmonary event that required increased use of bi-level positive airway pressure, or BiPAP, in advance of surgery related to hypersalivation, a condition experienced by some SMA patients; the event was determined by independent review to represent progression of disease and not to be related to the use of AVXS-101. Following surgery, the respiratory support needs decreased below event definition threshold.

· As has been previously reported, a total of five AEs in four patients were deemed treatment-related. Of these, two were SAEs experienced by two patients, and three were non-serious AEs experienced by two patients. All consisted of clinically asymptomatic liver enzyme elevations and were resolved with prednisolone treatment. There were no clinically significant elevations of gamma-glutamyl transferase, alkaline phosphatase or bilirubin and, as such, Hy’s Law was not met. Other non-treatment-related AEs were expected and were associated with SMA.

Treatment Durability and Motor Milestone Achievement from Long-Term Follow-Up Study

Patients in Cohort 2 continued to achieve new milestones during the LTFU trial. Detailed Cohort 2 motor milestone data is included below.

· Two additional patients achieved the ability to sit unassisted for 30 seconds or more. Eleven of 12 (92%) patients could sit unassisted.

· Two additional patients achieved the ability to stand with assistance. Four of 12 (33%) could stand with assistance.

· Three of four patients achieving these new milestones were on AVXS-101 alone (one sitting and two standing with assistance).

· The oldest child from Cohort 2 at the time of last visit in the LTFU study was 46.2 months and 40.6 months post gene therapy.

STR1VE

We are conducting a U.S. pivotal clinical trial for AVXS‑101 for the treatment of SMA Type 1.  During the first quarter of 2018, following review of safety data and early signals of efficacy from the first three patients dosed in our pivotal trial of AVXS-101 for SMA Type 1, we, with agreement from the FDA, have initiated screening for the remaining patients in the trial as per the protocol. STR1VE is designed to evaluate the efficacy and safety of a one-time intravenous infusion of AVXS-101. As of April 11, 2018, eleven patients were enrolled in the trial, and six patients were symptomatic and at least one-month post gene therapy treatment. All patients had homozygous deletion of SMN1 and two copies of SMN2; no patient had the known SMN2 gene modifier mutation (c.859G>C). The patient population and baseline characteristics are closely matched to the Phase 1 trial.

All six symptomatic patients were alive and event-free as of April 11, 2018. AVXS-101 appeared to have a favorable safety profile and to be generally well tolerated. At the time of gene transfer, the mean age was 3.2 months, with the oldest patient at 5.0 months of age. In the six patients who were at least one-month post gene transfer, a cumulative total of 25 adverse events were reported. Two patients experienced transient elevations in transaminases greater than 3x ULN that were not clinically significant and all resolved with prednisolone treatment without any clinical manifestations or sequelae. There were no serious adverse events (SAEs) reported.

CHOP-INTEND scores increased by an average of 7.8 at one month after gene transfer (in six patients) and 17.3 at three months after gene transfer (in three patients), reflecting improvement in motor function. These data correlate to CHOP-INTEND achievement by the proposed therapeutic dose cohort in the Phase 1 trial, which experienced mean increases of 9.8 points at one month and 15.4 points at three months. Early CHOP-INTEND increases have been observed to be associated with eventual motor milestone achievement.

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STRONG

We are also currently conducting a Phase 1 clinical trial of AVXS-101 for the treatment of SMA Type 2.  Following review of safety data from the first three patients dosed in Cohort 1 using the lower dose (6.0 x 1013 vg), the first patient has been dosed in Cohort 2, the higher dose cohort (1.2 X 1014 vg). Four total patients with SMA Type 2 have now been treated with AVXS-101 in the STRONG study. Three patients less than 60 months of age will be enrolled in Cohort 2 and, if safety is established according to the Data Safety Monitoring Board, an additional 21 patients will be enrolled in Cohort 2 until there are a total of 12 patients less than 24 months, and 12 patients at least 24 months but less than 60 months of age.  Therefore, as of April 11, 2018, four patients have been dosed.  SMA Type 2 typically presents between six and 18 months of age, and those affected will never walk without support and most will never stand without support. SMA Type 2 results in mortality in more than 30% of patients by the age of 25.

SPRINT

In April 2018, the first patient was dosed in a Phase 3 trial evaluating AVXS-101 in pre-symptomatic patients with SMA Types 1, 2 and 3, which we refer to as SPRINT.

SPRINT is a multi-cohort, multi-national trial expected to enroll approximately 44 pre-symptomatic patients with a bi-allelic deletion of SMN1; two, three or four copies of SMN2; and who are less than six weeks of age at the time of gene therapy. The trial is designed to evaluate appropriate clinical endpoints, including developmental milestones, survival, bulbar function and safety of a one-time intravenous infusion of AVXS-101 of 1.1 x 1014 vg/kg.

Collaboration and Licensing Agreements

We have significant collaboration and licensing agreements that support our research, development and manufacturing processes.  Refer to the 10-K for background information on these agreements.  During the quarter ended March 31, 2018 the following agreements were entered into or amended:

REGENXBIO

On January 8, 2018, we entered into an amendment, or the Amendment, to the License Agreement dated March 21, 2014, as amended, the REGENXBIO SMA License, between us and REGENXBIO Inc., or REGENXBIO, which expanded upon the exclusive, worldwide license agreement previously entered into for the development and commercialization of products to treat SMA.

Under the terms of the Amendment, we were granted exclusive, worldwide rights to all vectors in REGENXBIO’s NAV Technology Platform for the treatment of SMA in addition to adding and amending certain terms of the 2014 REGENXBIO License Agreement, including the modification of the assignment provision to permit assignment of the REGENXBIO SMA License without REGENXBIO’s consent in the event of a change of control of the company. The Amendment requires that in a change of control of the company, the following amounts due under the license agreement, if unpaid at the time of the change in control, become immediately payable: the first and second anniversary payments of $30 million each and the first sales-based milestone payment of $40 million. We paid REGENXBIO an upfront payment of $80 million in January 2018 in connection with the Amendment and agreed to make an additional payment of $30 million on the first anniversary of the effective date of the Amendment and an additional payment of $30 million on the second anniversary of the effective date of the Amendment. REGENXBIO is eligible to receive potential sales-based milestone payments of up to $120 million. For any product developed for the treatment of SMA using the NAV AAV9 vector, we will continue to pay mid-single to low double-digit royalties on net sales as defined in the original 2014 License Agreement, and for any product developed for the treatment of SMA using a NAV vector, other than NAV AAV9, we will pay REGENXBIO a low double-digit royalty on net sales.  Research and development expenses in the amount of $130.7 million were recognized during the three months ended March 31, 2018, representing the $80 million upfront payment made in January 2018 and the net present value of the payments due on the first and second anniversaries of the effective date of the Amendment.

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Généthon

In March 2018, we entered into a license agreement with Généthon, acting in its own name and for its own behalf as well as in the name and on behalf of Centre National de la Recherche Scientifique, pursuant to which Généthon granted us an exclusive, worldwide license to certain patents for in vivo gene replacement therapy delivery of the SMN gene using the AAV9 vector into the central nervous system for the treatment of SMA. This agreement strengthens the AVXS-101 intellectual property estate by providing greater freedom to operate in U.S., Europe and Japan. Under the Généthon agreement, we paid Généthon a one-time upfront license fee of $4.0 million. We are also required to pay $0.5 million for the first three years to support Généthon’s ongoing research, ongoing annual management fees of $25 thousand and up to a total of $11.0 million in milestone fees for licensed products. Under the terms of the Généthon agreement, we are also required to pay Généthon mid-single digit royalties of net sales on licensed products, subject to reduction in certain circumstances due to royalty stacking provisions, and a mid-teens percentage of any sublicense fees that we receive from sublicensees for the licensed intellectual property rights. These royalty rates are subject to potential reduction in other specified circumstances. As of March 31, 2018, we have paid $4.5 million under the Généthon license representing the one-time up-front license fee and the first of three $0.5 million research fees.

Financing

To date, we have funded our research and development and operating activities primarily through private and public equity financings totaling $1,025.9 million of net proceeds, including $431.9 million in net proceeds from a public equity financing during the three months ended March 31, 2018. We have not generated any revenue from sales of gene therapy products to date. We have incurred significant annual net operating losses in every year since our inception and expect to continue to incur net operating losses for the foreseeable future. As of March 31, 2018, we had an accumulated deficit of $581.7 million. We expect to continue to incur significant expenses and operating losses for the next several years. Our net losses may fluctuate significantly from quarter to quarter and year to year. We anticipate that our expenses will increase significantly if and as we continue to develop and conduct clinical trials with respect to AVXS‑101; develop our planned new programs for Rett syndrome and genetic amyotrophic lateral sclerosis, or ALS; maintain, expand and protect our intellectual property portfolio; establish a commercial infrastructure to support the manufacture, marketing and sale of AVXS‑101 if it receives regulatory approval; and hire additional personnel, such as clinical, regulatory, manufacturing, quality control and scientific personnel.

Financial Operations Overview

Revenue

To date, we have not generated any revenue from the commercial sale of gene therapy products. In the future, we will seek to generate revenue primarily from product sales and, potentially, collaborations with strategic partners.

Operating Expenses

We classify our operating expenses into two categories: research and development and general and administrative expenses. Personnel costs including salaries, benefits, bonuses and stock-based compensation expense, comprise a significant component of each of these expense categories. We allocate expenses associated with personnel costs based on the nature of work associated with these resources.

Research and Development Expenses

Research and development expense consists of expenses incurred while performing research and development activities to discover and develop potential gene therapy treatments. This includes conducting preclinical studies and clinical trials, investment in our manufacturing facility, manufacturing equipment and manufacturing development efforts and activities related to regulatory filings for product candidates. We recognize research and development expenses as they are incurred. Up-front fees incurred in obtaining technology licenses for research and development activities are

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expensed as incurred if the technology licensed has no alternative future use. Our research and development expense primarily consists of:

· salaries and personnel-related costs, including benefits and any employee stock-based compensation, for our scientific personnel performing research and development activities;

· stock-based compensation expense related to restricted common stock grants and stock warrant issuances to consultants assisting us in the research and development of our product candidate;

· costs related to executing preclinical studies and clinical trials;

· costs related to acquiring, developing and manufacturing materials for preclinical studies and clinical trials;

· costs related to developing processes and analytical methods to manufacture and test product from a significant number of small scale and full scale engineering runs;

· fees paid to consultants and other third parties who support our product candidate development;

· other costs incurred in seeking regulatory approval of our product candidates; and

· allocated facility-related costs and overhead.

We typically utilize our employee, consultant and infrastructure resources across our development programs. To date, substantially all of our research and development expenses have been associated with AVXS-101.

We plan to increase our research and development expense for the foreseeable future as we continue our effort to develop and manufacture AVXS-101 and to advance the development of future product candidates, subject to the availability of sufficient funding.

The successful development of product candidates is highly uncertain. At this time, we cannot reasonably estimate the nature, timing or costs required to complete the remaining development of AVXS-101 or any future product candidates. This is due to the numerous risks and uncertainties associated with the development of product candidates.

General and Administrative Expense

General and administrative expense consists primarily of salaries and personnel-related costs, including employee benefits and any stock-based compensation, for employees performing functions other than research and development. This includes personnel in executive, business operations, finance and administrative support functions. Other general and administrative expenses include marketing expenses, facility-related costs not otherwise allocated to research and development expense, professional fees for auditing, tax and legal services, expenses associated with obtaining and maintaining patents and costs of our information systems.

We expect that our general and administrative expense will increase as we continue to operate as a public reporting company and continue to develop and potentially commercialize AVXS-101 and our future product candidates. We believe that these increases likely will include increased costs for director and officer liability insurance, costs related to the hiring of additional personnel and increased fees for outside consultants, lawyers and accountants. We also expect to continue to incur increased costs to comply with corporate governance, internal controls, investor relations, disclosure and similar requirements applicable to public reporting companies.

Interest Income, net

Interest income primarily consists of $1.8 million of interest income earned on our cash and cash equivalents, net of interest expense of $1.4 million associated with the accretion of our discounted guaranteed fixed payments due to REGENXBIO in 2019 and 2020.

Income Taxes

To date, we have not been required to pay U.S. federal or state income taxes because we have not generated taxable income.

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Critical Accounting Policies and Significant Judgments and Estimates

Our critical accounting policies are described in Note 2 to our consolidated financial statements for the year ended December 31, 2017, included in our Annual Report on Form 10-K. There were no material changes to our critical accounting policies during the three months ended March 31, 2018.

Recent Accounting Pronouncements

See Note 2 to the Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report for disclosure of recent accounting pronouncements.

Results of Operations

Comparison of the Three Months ended March 31, 2018 and 2017

The following table summarizes our results of operations for the three months ended March 31, 2018 and 2017, together with the dollar increase or decrease in those items (in thousands):

	Three Months Ended March 31,				Period-to-Period
	2018		2017		Change
Revenue	$	—	$	—	$	—
Operating expenses:
General and administrative		22,747		9,638		13,109
Research and development		199,709		20,327		179,382
Total operating expenses		222,456		29,965		192,491
Loss from operations		(222,456)		(29,965)		(192,491)
Interest income, net		354		246		108
Net loss	$	(222,102)	$	(29,719)	$	(192,383)

General and Administrative Expense

General and administrative expense increased from $9.6 million for the three months ended March 31, 2017, to $22.7 million for the three months ended March 31, 2018. This $13.1 million increase included increases of $3.8 million in salaries and personnel-related costs, $2.8 million of market research expenses, $2.8 million in non-cash stock-based compensation expense, $2.8 million in legal, professional and consulting fees and $1.9 million in other administrative costs driven by increased headcount across all general and administrative functions to support our overall growth. In addition, we incurred increased franchise taxes of $0.5 million. 

Research and Development Expense

Research and development expense increased from $20.3 million for the three months ended March 31, 2017, to $199.7 million for the three months ended March 31, 2018. The $179.4 million increase was primarily attributable to $135.2 of expenses recognized pursuant to the REGENXBIO SMA License and the Généthon agreement described above in “—Collaboration and Licensing Agreements.” Research and development expenses also increased due to increased spending at our manufacturing facility, which specifically included increases of $13.8 million on materials and supplies for the facility, $12.8 million on salary and personnel expenses resulting from increased headcount, $7.6 million on process development, primarily lab testing, $5.1 million in non-cash stock-based compensation expense, $1.0 million of fixed asset depreciation, payments made to support third party research of $0.9 million and rent expense and utilities of $0.5 million.  Furthermore, expenses related to clinical trials increased $4.0 million.  

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Interest Income, net

Interest income for the three months ended March 31, 2018 consisted of interest earned of $1.8 on our cash and cash equivalents offset by interest expense of $1.4 million associated with the accretion of our discounted guaranteed fixed payments due to REGENXBIO in 2019 and 2020.  Interest income for the three months ended March 31, 2017 consisted of interest earned of $0.2 million on our cash and cash equivalents.

Liquidity and Capital Resources

Sources of Liquidity

To date, we have funded our research and development and operating activities primarily through private and public equity financings totaling $1,025.9 million of net proceeds.  This includes an underwritten public offering during the three months ended March 31, 2018 of 4,509,840 shares of our common stock, which, after deducting the underwriting discounts and commissions and other offering costs, resulted in net proceeds of approximately $431.9 million. 

As of March 31, 2018, we had cash and cash equivalents of $586.8 million and had no debt outstanding.  As of March 31, 2018, we had $2.8 million of restricted cash related to a lease agreement entered into to expand our manufacturing facility in Libertyville, Illinois.

Cash Flows

The following table provides information regarding our cash flows for the three months ended March 31, 2018 and 2017 (in thousands):

	Three Months Ended March 31,
	2018		2017
Net cash used in operating activities	$	(160,611)	$	(28,127)
Net cash used in investing activities		(7,921)		(8,064)
Net cash provided by financing activities		434,053		215
Net increase / (decrease) in cash and cash equivalents and restricted cash	$	265,521	$	(35,976)

Operating Activities

For the three months ended March 31, 2018, our net cash used in operating activities of $160.6 million primarily consisted of a net loss of $222.1 million, primarily attributable to our spending on research and development, manufacturing and general and administrative expenses.  The net loss of $222.1 million was partially offset by changes in working capital of $47.2 million, which was primarily due to increases in licensing fees payable and $14.3 million in adjustments for non-cash items, primarily stock-based compensation.

For the three months ended March 31, 2017, our net cash used in operating activities of $28.1 million primarily consisted of a net loss of $29.7 million, primarily attributable to our spending on research and development, manufacturing and general and administrative expenses and $3.7 million in net cash used in changes in working capital items, which was partially offset by $5.3 million in adjustments for non-cash items. The $3.7 million in net cash used in changes in working capital represents primarily a $3.2 million increase in prepaid expenses and other current assets and other long-term assets and a $7.1 million decrease in accrued expenses, partially offset by a $6.5 million increase in accounts payable. Adjustments for non-cash items consisted of $5.1 million of stock-based compensation expense and $0.2 million of depreciation and amortization.

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Investing Activities

For the three months ended March 31, 2018, net cash used in investing activities consisted of $7.9 million of capital expenditures, primarily related to our manufacturing facility and purchases of property and equipment.    For the three months ended March 31, 2017, net cash used in investing activities consisted of $8.1 million of capital expenditures, primarily related to our manufacturing facility and purchases of property and equipment.

Financing Activities

For the three months ended March 31, 2018, net cash provided by financing activities of $434.1 million consisted primarily of funds raised from our January 2018 underwritten public offering, proceeds from stock option exercises of $5.0 million, partially offset by taxes paid on stock-based compensation earnings of $2.8 million. For the three months ended March 31, 2017, net cash provided by financing activities of $0.2 million consisted of proceeds from the exercise of employee stock options.

Future Funding Requirements

To date, we have not generated any revenues from the commercial sale of approved gene therapy products or drug therapies. If we fail to complete the development of our product candidates in a timely manner or fail to obtain their regulatory approval, our ability to generate future revenue will be compromised. We do not know when, or if, we will generate any revenue from our gene therapy core business. We do not expect to generate significant revenue unless and until we obtain regulatory approval of and commercialize AVXS-101. In addition, we expect our expenses to increase in connection with our ongoing development activities, particularly as we continue the research, development and clinical trials of, and seek regulatory approval for, product candidates, including with respect to development of AVXS-101 for other types of SMA and other product candidates for other diseases. We also expect to continue to incur costs associated with operating as a public company. In addition, subject to obtaining regulatory approval of product candidates, we expect to incur significant commercialization expenses for product sales, marketing, manufacturing and distribution. We anticipate that we will need additional funding in connection with our continuing operations. If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts.

Based upon our current operating plan, we believe that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements into 2020. We intend to devote the majority of our capital resources for clinical development and regulatory approval of AVXS-101. We have based our estimates on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect. Because of the numerous risks and uncertainties associated with the development and commercialization of product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures necessary to complete the development of product candidates.

Our future capital requirements will depend on many factors, including:

• the consummation of the Merger;

• the progress and results of our studies and clinical trials for AVXS-101;

• the scope, progress, results and costs of preclinical development, laboratory testing and clinical trials for our other product candidates;

• the number and development requirements of other product candidates that we may pursue;

• the costs, timing and outcome of regulatory review of our product candidates;

• the cost and timing of establishing and validating manufacturing processes and facilities, including our own, for development and commercialization of our product candidates, if approved;

• the efforts necessary to institute post-approval regulatory compliance requirements;

• the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive marketing approval;

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• the revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval, which may be affected by market conditions, including obtaining coverage and adequate reimbursement of our product candidates from third-party payors, including government programs and managed care organizations, and competition within the therapeutic class to which our product candidates are assigned;

• the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; and

• the extent to which we acquire or in-license other product candidates and technologies.

Our future commercial revenue, if any, will be derived from sales of therapy products. Accordingly, we may need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the terms of these equity securities or this debt may restrict our ability to operate. Any future debt financing and equity financing, if available, may involve agreements that include covenants limiting and restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, entering into profit-sharing or other arrangements or declaring dividends. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may be required to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us.

Contractual Obligations, Commitments and Contingencies

We lease an approximately 20,700 square foot facility for our corporate headquarters in Bannockburn, Illinois, pursuant to a lease that expires in July 2024. The lease agreement provides for annual escalation in rent payments during the lease term. We also lease a 1,318 square foot facility in Columbus, Ohio for research and development activities, pursuant to a lease that expires in March 2019.  In March 2016, we entered into a lease agreement, which expires in August 2026, for approximately 48,529 square feet of manufacturing, warehouse and office space in Libertyville, Illinois. The lease agreement provides for annual escalation in rent payments during the lease term. In March 2014, we entered into a lease agreement, which expired in April 2017, for approximately 2,418 square feet of office space in Dallas, Texas. In May 2017, we entered into two month-to-month lease agreements to add an additional 4,582 square feet of office space in Libertyville, Illinois which has subsequently been reduced to one month-to-month lease agreement. In September 2017, the Company entered into a lease agreement that commences in January 2018 and expires in August 2026 for approximately 12,539 square feet of warehouse and office space in Libertyville, Illinois adjacent to our manufacturing facility. In July 2017, we entered into a lease agreement which expires in June 2027, for approximately 16,808 square feet in San Diego, California for research and development activities. The lease agreement provides for annual escalation in rent payments during the lease term.  In March 2018, we entered into a lease agreement, which expires in August 2027, for approximately 9,500 square feet adjacent to our existing space in San Diego, California.  The lease agreement provides for annual escalation in rent payments during the lease term. We are amortizing the escalation in rental payments on a straight‑line basis over the term of the lease. In March 2018, we entered into a lease agreement, which expires in July 2026, for approximately 44,000 square feet of warehouse, office and storage space in Libertyville, Illinois.

We may be required to make certain royalty payments under our licensing and supply agreements, as described in “—Collaboration and Licensing Agreements;” however, the amount and timing of when these payments will actually be made is uncertain, and the payments are contingent upon the initiation and completion of future activities.

Other than the amendment to the REGENXBIO SMA License and the Généthon agreement described above in “—Collaboration and Licensing Agreements,” there were no other material changes outside the ordinary course of our business to the contractual obligations specified in the table of contractual obligations included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report.

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Off-Balance Sheet Arrangements

During the periods presented, we did not have, nor do we currently have, any off-balance sheet arrangements as defined under SEC rules.

Item 3.Quantitative and Qualitative Disclosures About Market Risk.

Our primary exposure to market risk for our cash and cash equivalents is interest income sensitivity, which is affected by changes in the general level of U.S interest rates. As of March 31, 2018, we had cash and cash equivalents totaling $586.8 million. Cash and cash equivalents consist of cash, deposits with banks and short term highly liquid money market instruments with remaining maturities at the date of purchase of 90 days or less. These instruments are exposed to the impact of interest rate changes which may result in fluctuations to our interest income. The primary objective of our investment activity is to preserve capital to fund our operations. We also seek to maximize income from our investments without assuming significant risk. To achieve our objectives, we maintain a portfolio of investments in a variety of securities of high credit quality. We do not believe a sudden change in the interest rates would have a material impact on our financial condition or results of operations. A hypothetical 10% change in interest rates during any of the periods presented would not have had a material impact on our consolidated financial statements.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the rules and forms, and that such information is accumulated and communicated to us, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by Rule 13a‑15(b) under the Exchange Act, an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a‑15(e) under the Exchange Act) as of March 31, 2018 was conducted under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2018.

Changes in Internal Control over Financial Reporting

There were no changes to our internal control over financial reporting identified in connection with the evaluation required by Rule 13a‑15(d) and 15d‑15(d) of the Exchange Act that occurred during the quarter ended March 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II.OTHER INFORMATION

Item 1.Legal Proceedings

For this item, please refer to Note 8 to the Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report.

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Item 1A.Risk Factors    

The discussion of our business and operations discussed in this report should be read together with the risk factors contained in Item 1A of our Annual Report, as filed with the SEC on February 28, 2018, and as amended on April 30, 2018, which describe various risks and uncertainties to which we are or may become subject. These risks and uncertainties have the potential to affect our business, financial condition, results of operations, cash flows, strategies, or prospects in a material and adverse manner. There are no material changes from the risk factors as previously disclosed in our Annual Report, except as noted below:

Risk Factors Related to the Merger

The announcement and pendency of our acquisition by Novartis AG could adversely affect our business, financial condition, results and operations.

On April 6, 2018, the company entered into an Agreement and Plan of Merger, or the Merger Agreement, with Novartis AG, a company organized under the laws of Switzerland, or Parent, and Novartis AM Merger Corporation, a Delaware corporation and a wholly owned subsidiary of Parent, or Purchaser, pursuant to which, and upon the terms and subject to the conditions described therein, on April 17, 2018 Purchaser commenced a cash tender offer, or the Offer, to acquire all of the outstanding shares of the company’s common stock at a purchase price of $218.00 per share, net to the seller in cash, without interest, subject to any required withholding of taxes.  Following the completion of the Offer, subject to the satisfaction or waiver of certain customary conditions set forth in the Merger Agreement, Purchaser will merge with and into the company, with the company surviving as a wholly owned subsidiary of Parent. We refer to this as the Merger, and the Offer and the other transactions contemplated by the Merger Agreement as the Transaction.

The announcement and pendency of the Transaction could cause disruptions in and create uncertainty surrounding our business, which could have an adverse effect on our business, financial condition, results and operations, regardless of whether the Transaction is completed. These risks to our business include the following, all of which could be exacerbated by a delay in the completion of the Transaction:

• the diversion of significant management time and resources towards the completion of the Transaction;

• the impairment of our ability to attract, retain, and motivate key personnel, including our senior management;

• difficulties maintaining relationships with customers, suppliers, and other business partners;

• the inability to pursue alternative business opportunities or make appropriate changes to our business because of requirements in the Merger Agreement that we conduct our business in the ordinary course and not engage in certain kinds of transactions prior to the completion of the Merger; and

• litigation relating to the Transaction and the costs and distractions related thereto.

The Transaction may not be completed within the expected timeframe, or at all, and the failure to complete the Transaction could adversely affect our business and the market price of our common stock.

The completion of the Transaction is subject to a number of conditions, including (i) the Company’s stockholders tendering a sufficient number of shares of the Company’s common stock in the Offer, (ii) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, without the imposition of a Burdensome Condition (as defined in the Merger Agreement), (iii) the absence of injunctions or other legal restraints preventing the consummation of the Offer or the Merger, or imposing a Burdensome Condition and (iv) certain other conditions set forth in Exhibit A to the Merger Agreement.

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Many of the conditions to consummation of the Transaction are not within our control or the control of Parent or Purchaser, and none of us can predict when or if these conditions will be satisfied. There can be no assurance that our business, our relationships or our financial condition will not be adversely affected, as compared to the condition prior to the announcement of the Transaction, if the Transaction is not consummated. Failure to complete the Transaction could adversely affect our business and the market price of our common stock in a number of ways, including the following:

• if the Merger is not completed, the share price of our common stock will change to the extent that the current market price of our stock reflects an assumption that the Transaction will be completed;

• we have incurred, and will continue to incur, significant costs, expenses and fees for professional services and other costs in connection with the Transaction, for which we may receive little or no benefit if the Transaction is not completed. Many of these fees and costs will be payable by us even if the Transaction is not completed and may relate to activities that we would not have undertaken other than to complete the Transaction;

• a failed Merger may result in negative publicity and a negative impression of us in the investment community; and

• upon termination of the Merger Agreement by us or Parent under specified circumstances, we would be required to pay a termination fee of $284 million.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

In January 2018, we issued 105,237 shares of common stock for non-cash consideration in a transaction that was exempt from registration under Section 4(a)(2) of the Securities Act.

Item 3.Default Upon Senior Securities

None.

Item 4.Mine Safety Disclosures

None.

Item 5.Other Information

None.

Item 6.Exhibits

See the Exhibit Index for a list of exhibits filed or furnished with this report, which Exhibit Index is incorporated herein by reference.

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EXHIBIT INDEX 

Exhibit Number	Description of Exhibit
2.1	Agreement and Plan of Merger dated as of April 6, 2018 among Novartis AG, Novartis AM Merger Corporation and the Registrant (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed on April 9, 2018).
3.1	Fifth Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on February 17, 2016).
3.2	Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed on February 17, 2016).
3.3	Amendment to the Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on April 9, 2018).
4.1	Specimen Stock Certificate evidencing the shares of common stock (incorporated by reference to Exhibit 4.1 to Amendment No. 2 to the Registration Statement on Form S-1 filed on February 9, 2016).
10.1	License Agreement dated March 9, 2018 by and between the Registrant and Généthon.
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

*     These certifications are being furnished solely to accompany this Quarterly Report pursuant to 18 U.S.C. Section 1350, and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated by reference into any filing of the registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing. 

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	AVEXIS, INC.
Date: May 4, 2018	By:	/s/ Phillip B. Donenberg
		Phillip B. Donenberg
		Senior Vice President, Chief Financial Officer
		(Principal Financial and Principal Accounting Officer)

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EX-10.1

Exhibit 10.1

CONFIDENTIAL TREATMENT REQUESTED

EXECUTION VERSION

LICENSE AGREEMENT

By and between

Généthon

and

AveXis, Inc.

Page 1 / 31

Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions

TABLE OF CONTENTS

		Page
BACKGROUND			3
ARTICLE 1.	DEFINITIONS AND INTERPRETATION	4
ARTICLE 2.	GRANT OF RIGHTS	8
ARTICLE 3.	SUBLICENSING	9
ARTICLE 4.	LICENSEE UNDERTAKINGS AND PERFORMANCE	9
ARTICLE 5.	FINANCIAL CONSIDERATION	10
ARTICLE 6.	INTELLECTUAL PROPERTY	13
ARTICLE 7.	CONFIDENTIALITY	14
ARTICLE 8.	RECORD KEEPING – AUDIT	15
ARTICLE 9.	REPORTS ON PROGRESS, SALES AND PAYMENTS	16
ARTICLE 10.	PROSECUTION AND MAINTENANCE	16
ARTICLE 11.	INFRINGEMENT AND ENFORCEMENT	17
ARTICLE 12.	TERM, TERMINATION AND MODIFICATION OF RIGHTS	18
ARTICLE 13.	REPRESENTATION AND WARRANTIES	20
ARTICLE 14.	INDEMNIFICATION, INSURANCE AND LIABILITY	21
ARTICLE 15.	PUBLICATION AND PUBLICITY	22
ARTICLE 16.	DISPUTE RESOLUTION	23
ARTICLE 17.	MISCELLANEOUS	23
Exhibit A		28
Exhibit B		29

Page 2 / 31

Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions

This license agreement (“Agreement”) is effective as of March 9, 2018 (“Effective Date”) made by and between AveXis, Inc., a corporation organized under the laws of the State of Delaware, having its principal place of business at 2275 Half Day Road, Suite 200, Bannockburn, IL 60015 (“AveXis” or “Licensee”) and Genethon, a French non-profit organization organized under the French law of July 1, 1901, having its principal place of business at 1 bis rue de l’Internationale, 91002 Evry Cedex, France (“Genethon”), acting in its own name and for its own behalf as well as in the name and on behalf of Centre National de la Recherche Scientifique (Scientific and Technological Public Institute), having its principal place of business at 3 rue Michel-Ange, 75794 Paris Cedex 16 France, and for business identification (SIRET) number: 180089013 04033 (“CNRS”).

Each of Genethon and CNRS may be referred to in this Agreement as “Licensor”. All rights and obligations set forth in this Agreement shall be performed by Genethon, acting in its own name and for its own behalf as well as in the name and on behalf of CNRS.

Each of Licensor and Licensee may be referred to in this Agreement individually as a “Party” or together as the “Parties.”

BACKGROUND

WHEREAS, Genethon is a leading center for the development of gene therapies for rare diseases.

WHEREAS, AveXis is a clinical-stage gene therapy company focused on bringing gene therapy out of the lab and into the clinical setting for patients and families suffering from rare and orphan neurological genetic diseases.

WHEREAS, AveXis is currently developing a treatment for spinal muscular atrophy (SMA).

WHEREAS, Genethon is co-owner of the Licensed Patents as attached in Exhibit A that are necessary for the administration of such treatment.

WHEREAS, Licensor desires to grant rights under the Licensed Patents to Licensee through a license to enable the commercial Development of gene therapies in the Field.

WHEREAS, Licensee desires to obtain a license under the Licensed Patents, in order to Develop gene therapies in the Field and, if such efforts are successful, to Develop and Commercialize resulting gene therapy products.

NOW, THEREFORE, the Parties hereby agree as follows:

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ARTICLE 1.DEFINITIONS AND INTERPRETATION

1.1.     Definitions

Unless the context otherwise requires, the terms in this Agreement, when used with initial capital letters, shall have the meanings set forth below or at their first use in this Agreement:

“AAV Vector” means the recombinant adeno-associated virus vector as defined in the Licensed Patents.

“AAV9” means (a) the recombinant adeno-associated virus serotype 9 vector with the specified sequence set forth in GenBank (protein id AAS99264.1) and (b) any recombinant adeno-associated virus derivatives of such serotype 9 vector covered by a Licensed Patent.

“Abandon” (or “Abandonment”) means, with respect to a Licensed Product and a country in the Territory:

(a) a failure from Licensee and/or its Affiliates and/or sublicensees to initiate or conduct material Development activities or Commercial activities with respect to particular Licensed Product in any country of the  Territory during any consecutivetwelve (12) monthperiod;  provided, that such twelve (12) month period shall automatically be extended if any failure to start or conduct material Development activities is a result of any Force Majeure event or any clinical or regulatory hold imposed by the applicable Regulatory Authority or is otherwise outside the reasonable control of Licensee and/or its Affiliates and/or sublicensees; or

(b) an affirmative decision by Licensee and/or its Affiliates and/or sublicensees (which shall be provided in writing to Licensor) to permanently discontinue all Commercialization activities with respect to a particular Licensed Product in such country; provided, that such decision shall not constitute notice of Abandonment if any decision to discontinue Commercialization activities is a result of any Force Majeure event or any clinical or regulatory hold imposed by the applicable Regulatory Authority or is otherwise outside the reasonable control of Licensee and/or its Affiliates and/or sublicensees.

“Abandonment Cure Period” means the hundred twenty (120) days period after the date of the written notice of Abandon, as provided under paragraph (a) above, from Licensor to Licensee.

“Affiliate” means, with respect to a Party, any person, corporation, firm, joint venture or other entity which directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Party. As used in this definition, “control” means the possession of the majority of the ownership, or the power to direct or cause the direction of the management of policies, of an entity, whether through the ownership of the outstanding voting securities thereof, by contract or otherwise.

“AFM-Téléthon” means the French Association against Myopathies (Association Française contre les Myopathies) which is Licensor’s founder and principal funder.

“Background IP” means, with respect to one Party, all Patents, Know-How and other intellectual property rights (a) owned or possessed though a license agreement by such Party as of Effective Date or (b) owned or possessed through a license agreement by such Party on or after Effective Date. Background IP does not include Licensed Patents.

“BLA” means a Biologics License Application, as defined in the U.S Public Health Service Act and the regulations promulgated thereunder.

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“Clinical Trial” means any study of a product in human subjects.

“Commercialization” means activities directed to marketing, promoting, distributing or selling a Licensed Product, including all activities directed to obtaining pricing approval in the Territory; and excluding Development, Manufacturing and supply of such product. “Commercialize” and “Commercialized” shall have correlative meanings.

“Confidential Information” means any confidential or proprietary information disclosed or made available in any form whatsoever by one Party (the “Disclosing Party”) to the other Party (the “Receiving Party”), including this Agreement, the content of the transactions contemplated herein, all technology belonging to the Disclosing Party and any improvements thereto, any information relating to a Party’s interests, business, finances, products, operations, sales, marketing, customers, suppliers and suppliers’ bills of materials, trade secrets, know-how, data, processes, methods, protocols, techniques, specifications, formulas, test data, calibration information, presentations, analyses, studies, regulatory communications, patent applications (as long as unpublished and/or undisclosed), financial data, product development, assays, strategic and market research information, other relevant marketing information, clinical data and any other information, whether developed in connection with this Agreement or not and whether marked as confidential or not.

“Development” means, with respect to a product, research and any and all processes and activities conducted to obtain and maintain Marketing Authorization for a product, including pre- and post-marketing approval clinical studies and activities relating to development or preparation of such product for Commercialization. Development includes performance of Clinical Trials. “Develop” shall have the correlative meaning.

“Effective Date” shall have the meaning in the third page.

“Expert” has the definition set forth in Section 5.3.3.

“Field” means the treatment based on in vivo gene replacement therapy using an AAV9 Vector to deliver the SMN gene addressing and restricted to Spinal Muscular Atrophy (“SMA”) in humans.

“First Commercial Sale” means, with respect to a Licensed Product and a country, the first sale for monetary value for use or consumption by the end user, within a country of the Territory, of such Licensed Product while covered by at least one Valid Claim of a Licensed Patent in such country after regulatory approval for commercialization (including pricing and reimbursement if applicable) has been obtained for such Licensed Product in such country. Treatment IND sales and compassionate use sales shall not be construed as First Commercial Sale. First Commercial Sale may occur directly from Licensee or through any of its Affiliates or sublicensees.

“Force Majeure” has the definition set forth in Section 17.5.

“Invention” means any new and useful process, article of manufacture, compound, composition of matter, formulation, or apparatus, or any improvement thereof, discovery or finding, whether or not patentable created, generated or Developed by or on behalf of one Party using the Licensed Patents, during the Term. Invention does not include Background IP and Licensed Patents.

“Know-How” means any tangible and intangible information, data, results (including pharmacological, research and development data and reports), and trade secrets, rights in data, materials, discoveries,

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improvements, compositions of matter, cell lines, assays, sequences, processes, methods, knowledge, protocols, formulas, utility, formulations, Inventions, and all other scientific, pre-clinical information or data.

“Licensed Patents” mean the Patents that are listed in Exhibit A. For the avoidance of doubt, the Licensed Patents’ status as stated in Exhibit A will include any rights listed in the definition of Patents derived from the Licensed Patents.

“Licensed Product(s)” means any human therapeutic product in the Field using or having used at least one Valid Claim of the Licensed Patents whether this product is Developed, Manufactured or Commercialized by AveXis, AveXis’ Affiliates and/or AveXis’ sublicensees.

“Licensee Publication” means any public announcement, public presentation, medical communication related to the Licensed Product, where Licensee believes it is appropriate and reasonable to do so and in all cases where Licensee includes the names of its other licensing partners.

“Losses” means any liability or expense (including reasonable legal expenses, costs of litigation and attorneys’ fees), damages, or judgments, whether for money or equitable relief.

“Manufacture” means activities directed to the manufacture, receipt, incoming inspections, storage and handling of raw materials and the manufacture, processing, formulation, packaging, labeling, warehousing, quality control testing (including in-process release and stability testing), supplying, shipping and release of a product, as the case may be and to the extent applicable, including manufacturing process development, scale-up and validation. “Manufacturing” and “Manufactured” shall have the correlative meaning.

“Marketing Authorization” means the technical, medical and scientific licenses, registrations, authorizations and approvals (including supplements and amendments, pre and post-approvals, pricing approvals and labeling approvals) of any Regulatory Authority necessary for the Commercialization of a product in the Field in such Regulatory Authority’s jurisdiction in the Territory.

“Marketing Authorization Application” or “MAA” means an application for regulatory approval in order to market and/or sell a Licensed Product in any country other than the U.S.

“Net Sales”: means the total gross receipts from sales or other dispositions of Licensed Products by or on behalf of Licensee or its Affiliates or any sublicensee to unaffiliated Third Parties for end use, less the following deductions that are documented as attributable to the Licensed Products: (a) costs actually incurred for transportation, including packing costs, freight out and insurance costs; (b) rebates, trade, quantity and wholesaler and cash discounts in amounts customary in the trade to the extent actually granted; (c) returns, chargebacks, credits and allowances actually granted; and (d) sales, taxes or excise duties actually paid. No deductions shall be made for commissions paid to individuals, whether they are with independent sales agencies or regularly employed by Licensee, or sublicensees and on its payroll, or for the cost of collections. Sales between or among Licensee and its Affiliates or any sublicensees shall be excluded from the computation of Net Sales, except where such Affiliates or sublicenses are end users, but Net Sales shall include the subsequent final sales to unaffiliated Third Parties by such Affiliates or sublicensees. In the event consideration other than cash is paid to Licensee, its Affiliates or any sublicensees, for purposes of determining Net Sales, the Parties shall use the cash consideration that Licensee, its Affiliates or any sublicensees would realize from an unrelated buyer in an arm’s length sale of an identical item sold in the same quantity and at the time and place of transaction, as determined jointly by the Parties based on transactions of a similar type and standard industry practice, if any. Notwithstanding anything to the contrary herein, the computation of Net Sales shall not include sales of

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Licensed Products for early access programs, named patient programs, compassionate use programs or similar uses.

“Patent” means (a) any patent, re-examination, reissue, renewal, extension, supplementary protection certificate and term restoration, any confirmation patent or registration patent or patent of addition based on any such patent, (b) any pending application for patents, including provisional, converted provisional, continuations, continuations-in-part, divisional and substitute applications, and inventors’ certificates, (c) all foreign counterparts of any of the foregoing, and (d) all applications claiming priority to any of the foregoing.

“Pivotal Clinical Trial” means: (a) a Clinical Trial that would satisfy the requirements for a Phase 3 study as defined in 21 CFR § 312.21(c) (or successor regulation); or (b) any other Clinical Trial that the applicable Regulatory Authority has agreed is sufficient to form the primary basis of an efficacy claim in an MAA submission, including any such study that is determined to have become pivotal after its commencement.

“Reasonable Efforts” means the efforts and resources normally used by a company in the biopharmaceutical industry of similar size and resources as Licensee for a product that is of similar market potential at a similar stage in its development (before Market Authorization) or product life (after Market Authorization), taking into account all relevant factors, including the potential profitability of the Licensed Products, the costs and risks of Developing, Manufacturing and Commercializing the Licensed Product, scientific, safety and regulatory concerns, product profile, the competitiveness of the marketplace and the proprietary position of the Licensed Products.

“Regulatory Authority” means, in a particular country or jurisdiction in the Territory, any applicable governmental authority involved in granting (a) approval to initiate or conduct clinical testing in humans,

(b) the authorizations, approvals, licenses, permits, consents, registrations and filings necessary for the Commercialization of a product in a country in the Territory including Marketing Authorizations and manufacturing licenses, or (c) to the extent applicable in such country or jurisdiction, pricing approval for a product in such country or jurisdiction.

“Term” has the definition set forth in the Section 12.1.

“Territory” means worldwide.

“Third Party” means any party other than a Party.

“Treatment IND” means an Investigational New Drug treatment used for Clinical Trial before the drug has been approved.

“Valid Claim” means, with respect to any country, a claim of (a) an issued/granted and unexpired patent (as may be extended through supplementary protection certificate or patent term extension or the like); and/or (b) a pending patent application that has not been pending for more than five (5) years from the Effective Date, in each case of (a) and (b) to the extent such claim has not been revoked, held invalid or unenforceable by a patent office, court or other governmental agency of competent jurisdiction in a final and non-appealable judgment (or judgment from which no appeal was taken within the allowable time period) and which claim has not been disclaimed, denied or admitted to be invalid or unenforceable through reissue, re-examination or disclaimer or otherwise.

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1.2.     Interpretation

The captions and headings to this Agreement are for convenience only, and are to be of no force or effect in construing or interpreting any of the provisions of this Agreement. Unless specified to the contrary, references to Sections or Exhibits shall refer to the particular Sections or Exhibits of or to this Agreement and references to this Agreement include all Exhibits hereto. Unless context otherwise clearly requires, whenever used in this Agreement:

a. the words “include” or “including” shall be construed as incorporating, also, “but not limited to” or “without limitation;”

b. the word “day,” “quarter” or “year” (and derivatives thereof, e.g., “quarterly”) shall mean a calendar day, calendar quarter or calendar year unless otherwise specified (and “annual” or “annually” refer to a calendar year);

c. the word “notice” shall mean notice in writing (whether or not specifically stated) and shall include notices, consents, approvals and other written communications contemplated under this Agreement;

d. the word “hereof,” “herein,” “hereby” and derivative or similar word refers to this Agreement (including any Exhibits);

e. the word “or” shall have its inclusive meaning identified with the phrase “and/or;”

f. the words “will” and “shall” shall have the same obligatory meaning;

g. provisions that require that a party or the parties hereunder “agree,” “consent” or “approve” or the like shall require that such agreement, consent or approval be specific and in writing, whether by written agreement, letter, approved minutes or otherwise;

h. words using the singular or plural number also include the plural or singular number, respectively.

ARTICLE 2.GRANT OF RIGHTS

2.1.     Licensor hereby grants to Licensee, subject to the terms and conditions of this Agreement, an exclusive, sub-licensable, non-transferable (except in accordance with Section 17.3), royalty and milestone bearing license under the Licensed Patents to Develop, to Manufacture, to Commercialize or to import any Licensed Products for such purpose in the Territory, solely in the Field.

2.2.     Nothing in this Agreement shall be interpreted as a transfer of Licensor ownership rights in the Licensed Patents to Licensee or any of Licensee’s Affiliates or Licensee’s sublicensees. Licensor shall remain the sole owner of the Licensed Patents.

2.3.     Notwithstanding anything to the contrary in this License Agreement, Licensor may use and permit any Third Party to use the Licensed Patents for (a) noncommercial-research or teaching purposes in the Field limited to a collaboration with another academic or not-for-profit research organization or on its own; and (b) any purposes outside of the Field, particularly but not restricted to other therapeutic indications and commercial purposes.

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ARTICLE 3.SUBLICENSING

3.1.     Licensee may enter into non-sublicensable sublicensing agreements under the Licensed Patents with a Third Party, subject to prior information of Licensor of the identity of said Third Party and of the business terms of such sublicensing agreement.

3.2.     Licensee agrees that any sublicenses granted by it under the Licensed Patents shall contain terms and conditions in compliance with the terms of this Agreement, and any obligations of this Agreement applicable to sublicensees. In particular, each sublicense agreement shall have a provision providing that, in the event of termination of this Agreement for any reason, Licensor and sublicensee shall enter into good faith negotiations to conclude a direct license under the terms of this Agreement so long as such termination did not arise directly or indirectly as a result of such sublicensee.

Licensee guarantees performance and acceptance of the obligations and commitments set forth in this Agreement and in the sublicense agreement of each and any of its sub-licensees.

3.3.     Licensee agrees to forward to Licensor (and to obtain agreement of sub-licensee to do so) a complete copy of each fully executed sublicense agreement postmarked within thirty (30) days of the execution of the sublicense agreement. To the extent permitted by law, Licensor agrees to maintain such sublicense agreement in confidence.

ARTICLE 4.LICENSEE UNDERTAKINGS AND PERFORMANCE

4.1.     Diligence. Licensee shall use its Reasonable Efforts to Develop and Commercialize, in the European Union (including the UK), in particular in France, and the USA, a Licensed Product in the Field.

4.2.     Manufacture and Commercialization of Licensed Products. Licensee shall be responsible for the Manufacture and Commercialization of the Licensed Products.

4.3.     Clinical Trials. Licensee agrees to make in France Clinical Trials on patients suffering from Spinal Muscle Atrophy and to retain “Association Institut De Myologie” (whose founders are the AFM-Téléthon and Genethon) as an investigative site to the extent it is regulatory possible. The clinical trial agreement shall be negotiated on commercially reasonable terms, directly by and between the “Association Institut De Myologie” and Licensee, and the parties shall execute such agreement before December 31th, 2019.

4.4.     Approval from Regulatory Authorities. Licensee shall have the responsibility to prepare and file all requested documentation to obtain and maintain approval from the Regulatory Authorities (including Marketing Authorizations) necessary for the Development and Commercialization of the Licensed Products in the Field and the Territory, and otherwise interact with the relevant authorities as appropriate with respect to the Licensed Products. This includes in particular (i) the drafting of a protocol, application for clinical trial approval, interviewing and identifying clinical centers, appointing a CRO or recruiting patients ; (ii) the analysis of data generated from any trial or manufacturing; (iii) the preparation of regulatory filings for the Licensed Product or preparing briefings for such regulatory filings; and (iv) meetings with regulatory authorities.

4.5.     French  Patient  Access.  Following  the  appropriate  regulatory  approvals,  Licensee  will  use

Reasonable Efforts to make available within France all the Licensed Products indicated for SMA at prices that would allow appropriate reimbursement scheme and that would not constitute an obstacle for patients

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to have access to the therapy. Licensee shall be solely responsible for designing and conducting all Commercialization activities necessary to fulfill its obligations under this Section 4.5.

4.6.     Process Development. Upon Licensor’s request, Licensee agrees to discuss in good faith with Licensor regarding a collaboration concerning the Development of cells in suspension process, in or outside the Field.

4.7.     License with ReGenX Biosciences. Upon Licensor’s request, Licensee will provide either to Licensor or to its Affiliates a worldwide, royalty-bearing, non-exclusive license under the AAV9 Patents controlled by Licensee for the SMArd indication under its current license with ReGenX Biosciences, LLC (“ReGenX”; such agreement, the “ReGenX Agreement”). This license agreement shall be subject to the terms of the existing license with ReGenX, including but not limited to the royalty obligations and milestone obligations to ReGenX and the prohibition on further sublicensing.

4.8.     Licensee  agree  to provide Licensor with with five hundred thousand US dollars ($500,000) on an annual basis, for three (3) years, to support the conduct of novel gene therapy research by Licensor in the field of SMA. Such payment shall be made on the signing date of this Agreement and thereafter upon each anniversary date of the Agreement. Licensor will provide annual report on the R&D work performed. In consideration of such compensation, should the conduct of such novel gene therapy research by Licensor in the field of SMA results in a Patent, Licensor shall first propose to Licensee a license on such patent, provided that Licensee is in compliance with the terms of this Agreement. Licensee shall have a time limit of thirty (30) calendar days from receiving the request from Licensor, giving details of the proposed license, to notify its acceptance or refusal of the license. If Licensee declines such license or does not respond to Licensor in due time, Licensor shall be free to propose and conclude such license with any third party of its choice, without any further notification to be given to Licensee.

ARTICLE 5.FINANCIAL CONSIDERATION

In consideration for the exclusive license granted to Licensee and Licensor’s commitments pursuant to this Agreement, Licensee shall pay Licensor the following:

5.1.License Fees

In consideration for the license rights granted to Licensee under this Agreement, Licensee shall pay Licensor:

(i) a one-time, non-refundable, non-creditable amount offour million US dollars ($4,000,000 USD), which shall be paid to Licensor at signing of this Agreement.

(ii) a  nonrefundable, ongoing annual fee oftwenty-five thousand US dollars ($25,000 USD)upon each anniversary date of the Agreement to cover Licensor’s management fees of this Agreement.

5.2.Milestone Payments

Licensee agrees to pay to Licensor during the Term, the one-time, non-refundable, non-creditable Milestone Payments set forth in the table below, upon first achievement, by Licensee alone or together with its Affiliates and/or a sublicensees of the applicable milestones with respect to the Licensed Product which first achieves such applicable milestone:

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* 1st Milestone: 1st treatment in EU Pivotal Clinical Trial		Two million US dollars ($2,000,000 USD)
* 2nd Milestone: 1st US BLA or EU MAA submission		Two million US dollars ($2,000,000 USD)
* 3rd Milestone: 1st USA BLA or EU MAA approval		Two million US dollars ($2,000,000 USD)
* 4th Milestone: annual world-wide net sales equal	five hundred million US dollars ($500,000,000 USD)	Two million US dollars ($2,000,000 USD)
* 5th Milestone: annual world-wide net sales equal	one billion US dollars ($1 000 000 000 USD)	Three million US dollars ($3,000,000 USD)
Total		Eleven million US dollars ($11,000,000 USD)

For purpose of the above the terms “net sales” shall have similar meaning as the definition of “Net Sales” but shall include the sales of Licensed Products and the sales of identical products not covered by a Valid Claim in a given country of the Territory (hereinafter referred to as “Identical Products”).

5.3.Royalties on Net Sales

5.3.1.  As of the  First Commercial Sale, a five percent (5%) Royalty shall be paid on Net Sales on a country-by-country and Licensed Product-by-Licensed Product basis. For each country and each Licensed Product, such Royalties shall start as of the First Commercial Sale of the Licensed Product in the country and shall end at the later of: (a) expiration of the last Valid Claim of an issued Licensed Patent covering such Licensed Product inside the Field in in such country or (b) ten years from First Commercial Sale of such Licensed Product in the Country (the “Royalty Term”).

Notwithstanding the foregoing:

· Royalties shall be reduced by 50%, on a Licensed Product-by-Licensed Product and country- by-country basis, should a Licensed Product not be covered anymore by a Valid Claim in the concerned country of the Territory during the Royalty Term provided above. Such reduction shall only apply to the sales of such Licensed Product concluded after the expiration of the last Valid Claim of an issued Licensed Patent covering such Licensed Product inside the Field in such country.

· In addition, Royalties shall not be payable in the event that a Licensed Product is not covered by a Valid Claim in the country of its sale at the time of First Commercial Sale of such Licensed Product in such country of the Territory, and for so long as a Valid Claim continues not to exist.

· In addition and notwithstanding the foregoing, should the Licensed Patent No15/713,347 filed on September 22, 2017 (the US continuation) referred in the Exhibit A as being still “pending” at the Effective Date, be refused by the US patent office before the first commercial sale of a product using Licensor intellectual property rights that were intended to be protected by Licensed Patent application No15/713,347, Licensee shall pay to Licensor a fee amounting to two and a half percent (2.5%) of the net sales of such products in the USA for a duration of ten years from such first commercial sale of such product in the USA. For the purpose of the above, the terms “first commercial sale” and “net sales” shall have similar meaning as the definition of these terms when applied to Licensed Products.

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5.3.2.  Royalty Monetization ROFR. In the event Licensor seeks to monetize a portion or the entirety of its royalty obligation under this Agreement, Licensor shall inform Licensee to allow the Licensee to make an offer. Licensor shall give Licensee a thirty (30) days period to submit an offer prior to make a decision with respect to such royalty monetization.

5.3.3.  The Parties will seek to negotiate any dispute between them about Net Sales in good faith. Any dispute between the Parties about Net Sales in any instance, which has not been resolved by the Parties with twenty (20) Business Days, may, at the request of either Party, be referred to an expert. The expert will be a single, independent chartered accountant to be agreed between the Parties, or in default of agreement between the Parties within five (5) Business Days, to be selected at the request of either of them by the Brussels (Belgium) Court (“Expert”). Any dispute to be referred to the Expert will be decided upon in a final and binding manner by the Expert acting as a technical expert and not as an arbitrator. Any actions, decisions, awards or payments to be made or taken pursuant to the determination of the Expert will be made or taken within thirty (30) Business Days of notification of the same to the relevant Parties. The costs of the Expert will be borne by the Parties as determined by the Expert.

5.4.Sublicense Fees

5.4.1.  In addition to milestones that Licensee shall pay to Licensor as per Section 5.2 in case of achievement of such milestones by Licensee (together with its Affiliates and its sublicensees) and in addition to the royalties that Licensee shall pay to the Licensor as per Section 5.3, Licensee shall pay to Licensor a percentage of any non-royalty sublicense fee (including upfront payments, milestone payments and profit share payments) received by Licensee from any sublicensee following execution of a sublicense agreement for a Licensed Patents, after deducting any non-royalty fee mentioned above from milestone payments that Licensee owes Licensor pursuant to Section 5.2 for the same milestone event.

5.4.2.  The applicable percentage due to Licensor for each sublicense shall be fifteen percent (15%).

5.5.Royalty Stacking

5.5.1.  If, in connection with the Manufacture, use, or Commercialization of a Licensed Product, Licensee is obligated to pay royalties to Licensor and any Third Parties that, in the aggregate, exceed fifteen percent (15%) of Net Sales for any Licensed Product, then the royalty owed to Licensor for that Licensed Product will be reduced by an amount calculated as follows:

R = (C*(A/(A+B)))

Where:

R = Reduction of Licensor royalty, A = Unreduced Licensor royalty,

B = sum (in percentage) of all Third Party royalties, and C = increment of projected total royalty above 15%.

5.5.2.     Notwithstanding the foregoing, Licensee will pay to Licensor no less than 75% of the royalties that Licensee would otherwise pay to Licensor if there were no royalties due to Third Parties.

5.6.Payment Method

Payments under this Agreement shall be paid in US Dollar by wire transfer, or electronic funds transfer (EFT) of immediately available funds to:

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Account owner:	Généthon
Bank name & address:	BNP Paribas, 37-39 rue d’Anjou, 75008 Paris, France
Bank Code:	30004
Agency Code:	02837
Account No.:	00000006928
Key:	56
IBAN:	FR76 3000 4028 3700 0000 0692 856
BIC:	BNPAFRPPXXX

Any value, taxes, or other expenses incurred in the transfer shall be paid entirely by Licensee.

All sums due under this Agreement are exclusive of any value added tax which will be payable in addition by Licensee on the issuing by Licensor of an appropriate value added tax invoice.

5.7.Late payment

Should Licensee fail to make any royalties and other payments, including patent expense reimbursements, required to be paid by Licensee pursuant to this Agreement, on the due date, Licensor reserves the right, without any further notification being given by Licensor:

(a) to suspend and/or cancel any of its obligations; and/or

(b) to charge interest calculated on a day by day basis, as from the due date of payment, and equal to higher of (i) three (3) times the French legal interest and (ii) the last European Central Bank rate plus ten (10) points; and/or

(c) to terminate the Agreement by right in accordance with Section 12.2.1.

The interest payment shall be due from the day the original payment (or portion thereof) was due until the day that such payment was received by Licensor. The payment of such interest shall not restrict Licensor from exercising any other rights it may have because any payment is overdue.

ARTICLE 6.INTELLECTUAL PROPERTY

6.1.Background IP

As between the Parties, Licensor and Licensee shall remain sole owners of their respective Background IP. For the avoidance of doubt, this Agreement does not confer any rights, titles or interests of a Party’s Background IP to the other Party.

6.2.Inventions

As between the Parties, Licensor and Licensee shall remain sole owners of their respective Inventions. For the avoidance of doubt, this Agreement does not confer any rights, titles or interests of a Party’s Invention to the other Party.

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ARTICLE 7.CONFIDENTIALITY

7.1.Confidentiality; Exceptions

Except to the extent expressly authorized by this Agreement or otherwise agreed by the Parties in writing, during the term of this Agreement and for ten (10) years thereafter (except that with respect to Confidential Information that constitutes a trade secret, the Recipient’s obligations under this Agreement will continue with respect to such trade secret for as long as such information remains a trade secret), the Parties agree that the Receiving Party shall keep confidential and shall not publish or otherwise disclose or use for any purpose other than as provided for in this Agreement any Confidential Information furnished to it by the other Party pursuant to this Agreement, regardless of whether such information is specifically designated as confidential and regardless of whether such information is in oral, written, electronic or other form.

Notwithstanding the foregoing, Confidential Information shall not be deemed to include information or materials to the extent that it can be established by written documentation by the Receiving Party that such information or material:

(a) was already known to or possessed by the Receiving Party or any of its Affiliates, other than under an obligation of confidentiality (except to the extent such obligation has expired or an exception is applicable under the relevant agreement pursuant to which such obligation is established), at the time of disclosure;

(b) was generally available to the public or otherwise part of the public domain at the time of its first disclosure to the Receiving Party or any of its Affiliates, except by breach of this Agreement;

(c) became generally available to the public or otherwise part of the public domain after its disclosure and other than through any act or omission of the Receiving Party or any of its Affiliates in breach of this Agreement;

(d) was independently developed by the Receiving Party or any of its Affiliates as demonstrated by documented evidence prepared contemporaneously with such independent development; or

(e) was disclosed to the Receiving Party or any of its Affiliates, other than under an obligation of confidentiality, by a Third Party who had no obligation to the Disclosing Party not to disclose such information to others.

7.2.Authorized Use and Disclosure

The Receiving Party shall receive, maintain, and hold the Confidential Information in strict confidence; and exercise the same degree of care as it shall exercises to safeguard its own information but in no event less than reasonable care. Each Party may use and disclose Confidential Information of the other Party as follows:

(a) under appropriate confidentiality provisions substantially equivalent to those in this Agreement, in connection with the performance of its obligations or exercise of rights granted to such Party in this Agreement; however, the Receiving Party will be responsible for any disclosure or use of Confidential Information of the Disclosing Party made by any person to

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whom the Receiving Party disclosed such Confidential Information as though such disclosure or use was conducted by the Receiving Party; and

(b) to the extent such disclosure is reasonably necessary in prosecuting and maintaining Patents (including applications therefor) in accordance with this Agreement, prosecuting or defending litigation, complying with applicable governmental regulations, conducting Development or Commercialization hereunder, obtaining and maintaining Marketing Authorizations, or otherwise required by law applicable to such Party or a Party’s disclosure under regulations promulgated by applicable security exchanges; provided however, that if a Party is required by applicable law or under security exchange rules it will, except where prohibited by applicable law or impracticable, give reasonable advance notice to other Party of such disclosure requirement and, where practicable, will use its reasonable efforts to secure confidential treatment of such Confidential Information required to be disclosed.

Either Party may disclose to bona fide potential investors, lenders and acquirors/acquirees, and to such Party’s consultants and advisors, the existence and terms of this Agreement to the extent necessary in connection with a proposed equity or debt financing of such Party, or a proposed acquisition or business combination, or to bona fide potential sublicensees, so long as such recipients are bound in writing to maintain the confidentiality of such information in accordance with the terms of this Agreement.

Notwithstanding the forgoing, Licensor may disclose any Licensee Confidential Information to the CNRS as co-owner of the Licensed Patents, subject to obligations of confidentiality and non-use at least as restrictive as those set forth in this Section 7.

ARTICLE 8.RECORD KEEPING – AUDIT

8.1.     Licensee agrees to keep, and will ensure that each of its Affiliates and sub-licensees keeps, accurate and correct records of Licensed Products Developed, Manufactured and Commercialized under this Agreement appropriate to determine the amount of royalties due to Licensor. These records shall be retained for at least five (5) years following a given reporting period.

8.2.     Records shall be made available by Licensee, its Affiliates and sub-licensees during normal business hours for inspection, by an accountant or other designated auditor selected by Licensor for the sole purpose of verifying reports, milestones achievements and royalty payments hereunder. The accountant or auditor shall only disclose to Licensor information relating to the accuracy of reports, milestones achievements and royalty payments made under this Agreement or under the agreement concluded between Licensee and its Affiliates or sub-licensees for the purpose of the Development, Manufacture or Commercialization of the Licensed Product.

8.3.     Subject to Section 8.1 and 8.2, Licensor can demand at any time to access the elements of the special accounting allowing the evaluation of the commercial transactions made under the present Agreement.

8.4.     Audit shall be made at the expense of Licensor, except when an inspection shows an underreporting or underpayment in  excess of three percent (3%) for any twelve (12) month period. In such case, Licensee shall reimburse Licensor for the cost of the audit at the time Licensee pays the unreported milestones or the unreported royalties, including any additional payment and interest as required by Section 5.7.

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8.5.     All payments required under this ARTICLE 8 shall be due within forty five (45) days of the date Licensor provides Licensee notice of the payment due.

ARTICLE 9.REPORTS ON PROGRESS, SALES AND PAYMENTS

9.1.     Licensee shall provide written annual reports on its Licensed Products Development progress or efforts to Manufacture or Commercialize for the Field within sixty (60) days after December 31 of each calendar year. These progress reports shall include, but not be limited to: progress on research and Development, status of applications for regulatory approvals, Manufacture and status of sublicensing, marketing, importing, and sales during the preceding calendar year, as well as, plans for the present calendar year.

9.2.     If reported progress differs from that projected between the Parties and in Milestones, Licensee shall explain the reasons for such differences. Licensee agrees to provide any additional information reasonably required by Licensor to evaluate Licensee’s performance under this Agreement.

9.3.     Licensee shall report to Licensor the dates for achieving milestones, the First Commercial Sale of each Licensed Product and the first commercial sale of each Identical Product in each country of the Territory within thirty (30) days of such occurrences.

9.4.     Licensee shall submit to Licensor, within forty (40) days after each calendar half year ending June 30 and December 31, a royalty report setting forth for the preceding half year period the amount of the Licensed Products and Identical Products sold by or on behalf of Licensee in each country within the Territory, the Net Sales and net sales of Identical Products, and the amount of royalty accordingly due.

9.5.     With each royalty report, Licensee shall submit payment of earned royalties due, in conformity with Section 5.3 and Section 5.5. If no earned royalties are due to Licensor for any reporting period, the written report shall so state. The royalty report shall be certified as correct by an authorized officer of Licensee and shall include a detailed listing of all deductions made to determine Net Sales made under ARTICLE 5 to determine royalties due.

9.6.     Licensee agrees to forward semi-annually to Licensor a copy of these reports received by Licensee from its sublicensees during the preceding half year period as shall be relevant to a royalty accounting to Licensor by Licensee for activities under the sublicense.

ARTICLE 10.PROSECUTION AND MAINTENANCE

10.1.     Each Party shall have the right, but not the obligation, at its sole expense, to prosecute and maintain Patents solely owned by such Party, including its own Background IP and its own Invention. Licensor shall notify Licensee in writing of material aspects of the prosecution of Licensed Patents related to the Field, and shall reasonably consider Licensee’s comments with respect thereto in good faith.

10.2.     Subject to Section 10.3, Licensee shall reimburse Licensor for all Third Party patent costs incurred for each Patent of the Licensed Patents as from the Effective Date and until termination of the Agreement or expiry of the last Valid Claim of the Licensed Patents. The sum reimbursed shall be creditable on an annual basis against the annual fee provided in Section 5.1(ii).

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10.3.     If the Licensed Patents are licensed by Licensor to Third Parties, outside of the Field, the Third Party Patent costs incurred for the Licensed Patents as from the effective date of such additional licenses will be divided by the number of licensees, including Licensee.

10.4.     Patent costs shall include all Third Party costs relating to the Licensed Patents drafting, filing, prosecution, and maintenance in all countries, including ex parte re-examination, grant, re-issuance and validation in all countries.

ARTICLE 11.INFRINGEMENT AND ENFORCEMENT

11.1.Validity challenge against Licensed Patent

11.1.1.  In the event a Third Party initiate an action challenging the validity of any of the Licensed Patents (“Third Party Challenge”), Licensor agrees to notify Licensee of such an action. Third Party Challenge shall include but not be limited to declaratory judgment action, opposition, post-grant proceedings, interferences, inter-partes review, inter-partes re-examination and patent validity challenges against national or regional courts.

11.1.2.  Unless the Parties otherwise agree in writing, Licensor shall have the right, but not the obligation, to defend any Third Party challenge related to the Licensed Patents, and Licensee shall reasonably assist Licensor and cooperate in any such litigation at Licensor’s request and at Licensee’s expenses. Licensor shall keep Licensee reasonably informed with respect to the progress of any such litigation.

11.1.3.  If Licensor does not exercise its right to defend any Third Party challenge related to the Licensed Patents within the Field within a commercially reasonable period of time, then Licensee shall have such right to defend such Third Party challenge that would limit Licensee’s rights in the Field, and Licensee agrees to keep Licensor reasonably informed of all material developments in connection with such Third Party challenge. Licensee shall not settle or otherwise make any admissions in connection with such Third Party challenge that would materially adversely affect Licensor’s rights or interests, without Licensor’s prior written consent.

11.1.4.  Licensee shall reimburse Licensor for all Third Party costs incurred due to Third Party Challenges related to the Field.

11.2.Infringement of Licensed Patents by Third Parties

11.2.1.  Licensor and Licensee agree to notify each other promptly of each infringement or possible infringement of the Licensed Patents, as well as of any facts which may affect the validity, scope, or enforceability of the Licensed Patents of which either Party becomes aware.

11.2.2.  Licensor may enforce any Licensed Patents with respect to Third Party infringements, at its sole discretion and at its sole expense. Licensor shall inform Licensee of its decision regarding such enforcement.

· In case of such enforcement action brought by Licensor, Licensee shall be entitled to join such action at its own costs and expenses. Licensor shall remain free to withdraw its action at any time during the procedure.

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· In case Licensor does not bring such enforcement action, Licensee may enforce any Licensed Patents with respect to Third Party infringements at its own costs and expenses only after having obtained Licensor’s written approval which shall not be unreasonably withheld with regards to Licensor own interests. Licensor shall be entitled to join such action at its own costs and expenses.

11.2.3.  Licensee shall reimburse Licensor for all costs incurred due to such action if the infringement related to the Licensed Patents by Third Parties relates to the Field.

11.2.4.  Any damages or other compensation, monetary or not, shall be collected by Licensor. In case Licensee joins any action to enforce Licensed Patents initiated by Licensor, it may request and collect damages or other compensation for its own prejudice.

ARTICLE 12.TERM, TERMINATION AND MODIFICATION OF RIGHTS

12.1.Term

This Agreement commences on the Effective Date and shall continue on a Licensed Product-by-Licensed Product and country-by-country basis until the expiration of the Royalty Term with respect to such Licensed Product in such country (the “Term”).

12.2.Termination

12.2.1.Termination for cause

12.2.1.1     Either Party may terminate this Agreement entirely, effective upon written notice to the other Party, if the other Party materially breaches this Agreement and fails to cure such breach within ninety

(90) days after receiving written notice thereof.

12.2.1.2  While the following list cannot be construed to limit Licensor’s right to terminate the Agreement entirely in case of a material breach by Licensee of the Agreement under Sections 12.2, Licensor shall in particular have the right to terminate this Agreement on a country-by-country basis and Licensed Product- by-Licensed Product basis or in its entirety, effective upon written notice to Licensee, if Licensee fails to cure such breach within ninety (90) days after receiving written notice thereof:

(a) if Licensor determines that Licensee has willfully made a false statement of, or omitted, a material fact in any report required by this Agreement, including under Article 9;

(b) if Licensor determines that Licensee is not keeping Licensed Products reasonably available to the public after commercial use commences in application of Section 4.5;

(c) if Licensor determines that Licensee cannot reasonably justify a failure to comply with undertakings provided for in Section 4.5;

(d) if Licensee does not enter into the clinical trial agreement mentioned in Section 4.3;

(e) if the Clinical Trial contemplated in such clinical trial agreement mentioned in Section 4.3 is not entirely performed for reason attributable to Licensee;

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(f) if Licensee fails to make any royalties and other payments, including patent expense reimbursements, required to be paid by Licensee on the due date pursuant to ARTICLE 5.

12.2.1.3  Notwithstanding the foregoing, in the event that a breach by Licensee pursuant to Section 12.2.1.1 or 12.2.1.2 would reasonably require more than ninety (90) days to cure, and Licensee provides Licensor with a reasonable plan for diligently curing such breach, such ninety (90)-day cure period shall be extended for the amount of time set forth in the plan not to exceed an additional ninety (90) days.

12.2.2.Abandonment

12.2.2.1   On a Licensed Product-by-Licensed Product and country-by-country basis, Licensor may terminate the license under Section 2.1 with respect to a Licensed Product in a given country in the event of Abandonment by Licensee with respect to such Licensed Product in such country by giving written notice to Licensee. If such Abandonment has been cured by Licensee within the Abandonment Cure Period, such termination shall not occur. If such Abandonment has not been cured by Licensee within the Abandonment Cure Period then Licensor shall be entitled at its own discretion to (i) terminate the license under Section 2.1 entirely with respect to such Licensed Product in such country, with immediate effect upon delivery to Licensee of a written notice, or to (ii) modify the license grant in removing the exclusivity granted by Licensor to Licensee under the Licensed Patents in the Field with respect to such Licensed Product in such country, with immediate effect upon delivery to Licensee of a written notice.

12.2.2.2   Notwithstanding anything in this Section 12.2, in the event Licensee fails to achieve a First Commercial Sale in EU or in the USA before December 31th, 2020, Licensor may (i) terminate this Agreement in its entirety with immediate effect upon delivery to Licensee of a written notice, or (ii) modify the license under Section 2.1, in removing the exclusivity granted by Licensor to Licensee under the Licensed Patents in the Field with respect to any or all Licensed Products in any or all countries, with immediate effect upon delivery to Licensee of a written notice.

12.2.3.Action against the Licensed Patents

By giving notification to Licensee, Licensor may terminate immediately the Agreement without any further financial or other obligations to Licensee, in the event that Licensee, its Affiliates or its sublicensees brings an action against Licensor or against the Licensed Patents, in any country of the Territory, in each case, challenging the validity, enforceability or scope of any Licensed Patent, in particular if Licensee, its Affiliates or its sublicensees, directly or indirectly, files an opposition to the Licensed Patents before any patent office in the Territory.

12.2.4.Commercialization of a Licensed Product outside the Field

By giving written notification to Licensee, Licensor may terminate immediately the Agreement without any further financial or other obligations to Licensee, in the event that Licensee, on its own or on its behalf, Commercializes a Licensed Product outside the Field.

12.2.5.Insolvency / Bankruptcy

Either Party may terminate the Agreement in the event that the other Party becomes insolvent, files a petition in bankruptcy, has such a petition filed against it, determines to file a petition in bankruptcy, or receives notice of a Third Party’s intention to file an involuntary petition in bankruptcy, and such proceeding or action remains un-dismissed or un-stayed for a period of sixty (60) days, to the extent permitted by applicable law.

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Each Party shall inform the other Party within thirty (30) days of occurrence of any such event.

12.3.Consequences of Termination

12.3.1.Accrued Obligations

Expiration or termination of this Agreement for any reason shall not release any Party of any obligation or liability which, at the time of such expiration or termination, has already accrued or which is attributable to a period prior to such expiration or termination.

12.3.2.Consequence in Case of Termination of the Agreement in its Entirety

In the event of termination of this Agreement in its entirety by Licensor under Section 12.2, all license rights granted to Licensee pursuant to Article 2 shall terminate and any Development and Commercialization of the Licensed Product by Licensee should cease in all the Territory.

12.3.3.  Within ninety (90) days of expiration or termination of this Agreement under this Article 12, a final report shall be submitted by Licensee to Licensor. Any royalty payments, including those incurred but not yet paid, and those related to patent expense, due to Licensor shall become immediately due and payable upon termination or expiration. Unless otherwise specifically provided for under this Agreement, upon termination of this Agreement, Licensee shall provide Licensor with written certification of the destruction of the Licensed Products (i.e. destruction of the products integrating patented vectors as detailed in Licensed Patents).

12.4.Non-Exclusive Remedy

Termination of this Agreement by a Party shall be without prejudice to other remedies such Party may have at law or equity.

12.5.Survival

Notwithstanding the expiry of the term or prior termination of this Agreement the provisions of Articles 1 (as applicable), 6 (Intellectual Property), 7 (Confidentiality), 8 (Record Keeping - Audit), 14 (Indemnification, Insurance and Liability), 15 (Publication and Publicity), 16 (Dispute Resolution) and 17 (Miscellaneous) and Sections 5.3.3, 5.6 (Payment Method), 5.7 (Late Payment), 12.3 (Consequences of Termination), 12.4 (Non-Exclusive Remedy) and 12.5 (Survival), and any other provisions that by their nature or intent are intended to survive post expiration or termination, shall remain in full force and effect.

ARTICLE 13.REPRESENTATION AND WARRANTIES

13.1.     Licensor represents and warrants to Licensee, as of the Effective Date, that: (a) the information on the Licensed Patents listed in Exhibit A is accurate; (b) the Licensed Patents constitute all of the Patents owned or controlled by Licensor that are related to the construction of a self-complementary AAV9-SMN and AAV9-SMN systemic administration; (c) Licensor has the right to grant to Licensee the rights and licenses in and to the Licensed Patents set forth in this Agreement; (d) Licensor has not received any notice of infringement of any Licensed Patents other those described in Exhibit A at the Effective Date, and to Licensor’s knowledge, no third party is infringing, or challenging the inventorship, ownership or enforceability of, any Licensed Patents in the Field; and (e) Licensor has not entered, and

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shall not enter, into any agreement with any Third Party (including any related party agreements) that is in conflict with the rights granted to Licensee under this Agreement.

13.2.     Except as expressly set forth in Section 13.1 of this Agreement, Licensor does not warrant the validity of the Licensed Patents and makes no representations whatsoever with regard to the scope of the Licensed Patents, or that the Licensed Patents may be exploited without infringing other patents or other intellectual property rights of Third Parties. Licensee acknowledges that the status of the Licensed Patents are available to the public and that Licensee has been provided with all reasonable information regarding the Licensed Patents available at the Effective Date and that Licensee is full aware of the filing procedures and the status of the Licensed Patents.

13.3.     Except as expressly set forth in Section 13.1 of this Agreement, Licensor makes no warranties, expressed or implied, of merchantability or fitness for a particular purpose of any subject matter defined by the claims of the Licensed Patents or tangible materials related thereto.

13.4.     Subject to Section 14.1.1, Licensee shall indemnify and hold Licensor, its directors, employees, students, agents, and consultants harmless from and against all liability, demands, damages, expenses, and losses, including but not limited to death, personal injury, illness, or property damage in connection with or arising out of the Development, Manufacture, Commercialization, or use of any Licensed Patents or Licensed Products by Licensee, its Affiliates or sublicensees.

13.5.     If data passed on for the purpose of use of one Party (the “receiving Party”) contain personal data, the other Party guarantees to the receiving Party that he complied with all the obligations imposed under the term of the January 6th, 1978 law "Computing and Liberties" and of the Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 “on the protection of individuals with regard to the processing of personal data and on the free movement of such data” that will be repealed, as from the May 25, 2018, by the regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 “on the protection of natural persons with regard to the processing of personal data and on the free movement of such data”, and that he informed the concerned physical persons of use which is made of the aforementioned personal data. As such, each Party guarantees the other Party against any appeal, complaint or demand from a person whose personal data would be reproduced and host via Licensee.

ARTICLE 14.INDEMNIFICATION, INSURANCE AND LIABILITY

14.1.Indemnification

14.1.1.  Indemnity.

a. Subject to the Section 14.1.1.b) below, the defaulting Party (the “Indemnifying Party”) will indemnify, defend, and hold harmless the other Party (the “Indemnified Party”) and its Affiliates, its sublicensees and its directors, officers, employees, agents (collectively the “Indemnitees”), against any Losses incurred by or imposed upon any of the Indemnitees in connection with any Third Party claims, suits, investigations, actions, judgments or demands arising out of or related to :

i. any  breach  of  this  Agreement  by  the  Indemnifying  Party,  its Indemnitees, Affiliates or sublicensees; or

ii. the wrongful intentional acts or omissions of the Indemnifying Party, its Indemnitees, Affiliates or sub-licensees, in connection with the performance of its obligations or exercise of its rights under this Agreement;

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b. Except, in each case, to the extent that the respective Losses are caused by the negligence or willful misconduct of, or breach of this Agreement or violation of law by, the Indemnified Party, Indemnitees, its Affiliates, sublicensees.

14.1.2.  Settlement. Notwithstanding anything to the contrary in this Agreement, neither Party will enter into any settlement, consent judgment, or other voluntary final disposition of any claim that has an adverse effect on the rights of the other Party, or admits any wrongdoing or fault by the other Party, or imposes on the other Party any payment or other liability, without the prior written consent of such other Party, except when Licensor defends the Licensed Patents in application of Article 11.

14.2.Insurance. The Licensee agrees to maintain a liability insurance program consistent with sound business practice.

14.3.Liability. Notwithstanding anything in this Agreement or otherwise, neither Party, their directors, employees, students, agents, and consultants as applicable, will be liable to the other with respect to any subject matter of this Agreement for any indirect, punitive, special or consequential damages, including incidental, or lost profits, even if such Party has been informed, should have known or in fact knew of the possibility of such damages.

ARTICLE 15.PUBLICATION AND PUBLICITY

15.1.     Scientific Publication

Licensee and its Affiliates shall have the right to publish or publicly disclose, as part of scientific publications or scientific presentations, the results generated in the course of performing by Licensee any research related to the Licensed Products. Licensor may publish or publicly disclose any information or results generated in the course of performing any research related to the Licensed Patents without the prior written consent of Licensee.

15.2.     Press Release and Public Communication

15.2.1   The Parties shall issue the initial press release set forth on Exhibit B hereto following the Effective Date.

15.2.2     Except as required by law, neither Licensor nor Licensee (or its Affiliates or sublicensees) shall issue or cause the publication of any other press release or public announcement (orally or in writing) regarding the existence or terms of this Agreement without the express prior written approval of the other Party, which approval shall not be unreasonably withheld, conditioned or delayed. The Licensor or the Licensee (or its Affiliates or sublicensees) shall reasonably consider, timely comments from the other Party on such publication or press release.

15.2.3   Unless prohibited by law and unless otherwise requested by Licensor, Licensee shall include the words “Developed in partnership with Genethon” in any press release, public presentation, or medical communication related to the Licensed Product where Licensee believes it is appropriate and reasonable to do so and in all cases where Licensee includes the names of its other licensing partners. In addition, Licensee would include the words “Developed in partnership with Genethon” in significant global press releases announcing initiation of a Clinical Trial, results of a Clinical Trial, submission for regulatory approval and the receipt of regulatory approvals. In France, Licensee would help promote Licensor’s

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branding by including the wording when announcing any joint advocacy communication, local advisory board and local conference/presentation.

15.2.4   The Parties acknowledge that the French Association against Myopathies (AFM-Téléthon, Association Française contre les Myopathies), which is Genethon’s founder and principal funder, in view of accomplishing its recognized role of working in the public interest, that is, by curing rare diseases and reducing the disabilities to which they give rise, has an obligation to provide the general public with information on the research programs and work to which it provides a financial contribution, in order to facilitate, directly or indirectly, an understanding of these diseases, the development of treatments, and the prevention of disabilities.

Subject to Licensee’s prior approval which should not be unreasonably withheld, each Party agrees that AFM-Telethon may use its name and report thereon, orally and/or in writing, to the general public, notably during fundraising campaigns and during the Telethon and annual general meeting, without releasing details which may be detrimental to such Party’s intellectual property rights or Confidential Information.

ARTICLE 16.DISPUTE RESOLUTION

16.1.     In the event of any dispute arising out of or relating to this Agreement, the Parties will use all reasonable efforts to arrive at a mutually acceptable resolution.

16.2.     If a dispute is not resolved within sixty (60) days from the date that the other Party receives notice of the dispute, the matter will be referred to the CEOs of both Parties (or their designees) for resolution within thirty (30) days after such escalation to such officers.

16.3.     If an agreement is not reached within such thirty (30) day period, then the dispute will be resolved consistent with Section 17.2.

16.4.     The provisions of this Article 16 shall survive for five (5) years from the date of termination or expiration of this Agreement.

16.5.     Subject to the non-terminating Party’s right to seek an injunction or protective order, the provisions of this Article 16 shall not affect the right of either Party to terminate this Agreement pursuant to Section 12.2 of this Agreement.

ARTICLE 17.MISCELLANEOUS

17.1.Governing Law

This Agreement and all disputes arising out of or related to this Agreement, or the performance, enforcement, breach or termination hereof, and any remedies relating thereto, will be construed, governed, interpreted and applied in accordance with the laws of Belgium, without regard to conflict of laws principles, except that questions affecting the construction and effect of any patent will be determined by the law of the country in which the patent will have been granted.

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17.2.Attribution of Jurisdiction

Any dispute arising out of or relating to this Agreement, any terms of this Agreement or any breach of this Agreement (in particular with regard to the negotiation, performance or termination of the Agreement) that is not resolved pursuant to Article 16 will be resolved by the courts of Brussels (Belgium) which will have exclusive jurisdiction, without regard to conflict of jurisdiction principles thereof. The Parties hereby expressly exclude the application of the United National Convention on Contracts for the International Sales of Goods.

17.3.Assignment of Rights and Obligations

This Agreement and its rights or obligations may not be assigned or otherwise transferred by Licensee without the prior written consent of Licensor; provided that, Licensee may make such an assignment or transfer without Licensor’s consent, but with notice promptly following such assignment or transfer, to its Affiliates or to a Third Party successor to all or substantially all of the business of Licensee to which this Agreement relates, whether in a merger, sale of stock, sale of assets or other transaction.

17.4.Further Actions

Each Party agrees to execute, acknowledge and deliver such further instruments, and to do all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of the Agreement.

17.5.Force Majeure

Except with respect to payment of money, no Party shall be liable to the other Party for failure or delay in the performance of any of its obligations under this Agreement for the time and to the extent such failure or delay is caused by earthquake, riot, civil commotion, war, terrorist acts, strike, flood, or governmental acts or restriction, or other cause that is beyond the reasonable control of the respective Party (“Force Majeure”). The Party affected by such Force Majeure will provide the other Party with full particulars thereof as soon as it becomes aware of the same (including its best estimate of the likely extent and duration of the interference with its activities), and will use reasonable efforts to overcome the difficulties created thereby and to resume performance of its obligations as soon as practicable. If the performance of any such obligation under this Agreement is delayed owing to an event of Force Majeure for any continuous period of more than ninety (90) days, the Parties will consult with respect to an equitable solution, including the possibility of the termination of this Agreement in accordance with Section 12.2.

17.6.Representation by Legal Counsel

Each Party hereto represents that it has been represented by legal counsel in connection with this Agreement and acknowledges that it has participated in the drafting hereof. In interpreting and applying the terms and provisions of this Agreement, the Parties agree that no presumption shall exist or be implied against the Party which drafted such terms and provisions.

17.7.Notices

Any notice, request, delivery, approval or consent required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been sufficiently given if delivered in person, transmitted by facsimile (receipt verified) or by express courier service (signature required) or five (5) days after it was sent by registered letter, return receipt requested (or its equivalent), provided that no postal strike or

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other disruption is then in effect or comes into effect within two (2) days after such mailing, to the Party to which it is directed at its address or facsimile number shown below or such other address or facsimile number as such Party will have last given by notice to the other Party.

If to Licensor:

1bis, Rue de l’Internationale - 91000 EVRY, FRANCE

Attention: Alexandre LEMOALLE

Tel:	+33 1 69 47 25 87
Mail:	alemoalle@genethon.fr

If to Licensee:

2275 Half Day Road, Suite 200

Bannockburn, IL 60015

Attention: General Counsel

Fax:	847-510-0775
Mail:	mjohannesen521@avexis.com

17.8.Entire Agreement

This Agreement, together with the exhibits A to B attached hereto, set forth the entire agreement and understanding of the Parties hereto as to the subject matter hereof, and supersedes all prior and contemporaneous discussions, agreements and writings in respect.

17.9.Amendment

No amendment, modification or supplement of any provision of this Agreement shall be valid or effective unless made in writing and signed by a duly authorized officer of each Party.

17.10.Waiver

No provision of the Agreement shall be waived by any act, omission or knowledge of a Party or its agents or employees except by an instrument in writing expressly waiving such provision and signed by a duly authorized officer of the waiving Party. The waiver by any of the Parties of any breach of any provision hereof by another Party shall not be construed to be a waiver of any succeeding breach of such provision or a waiver of the provision itself.

17.11.Severability

If any clause or portion thereof in this Agreement is for any reason held to be invalid, illegal or unenforceable, the same shall not affect any other portion of this Agreement, as it is the intent of the Parties that this Agreement shall be construed in such fashion as to maintain its existence, validity and enforceability to the greatest extent possible. In any such event, this Agreement shall be construed as if such clause of portion thereof had never been contained in this Agreement, and there shall be deemed substituted therefor such provision as will most nearly carry out the intent of the Parties as expressed in this Agreement to the fullest extent permitted by Law.

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17.12.Relationship of the Parties

Nothing herein will be deemed to establish a relationship of principal and agent between Licensor and Licensee, nor any of their agents or employees, nor will this Agreement be construed as creating any form of legal association or arrangement which would impose liability upon one Party for the act or failure to act of the other Party. Nothing in this Agreement, express or implied, is intended to confer on any person other than the Parties or their permitted assigns any benefits, rights or remedies.

17.13.Third Party Beneficiaries

All rights, benefits and remedies under this Agreement are solely intended for the benefit of the Parties (including any successor in interest or permitted assigns), and no Third Party shall have any rights whatsoever to (a) enforce any obligation contained in this Agreement, (b) seek a benefit or remedy for any breach of this Agreement, or (c) take any other action relating to this Agreement under any legal theory, including actions in contract, tort (including negligence, gross negligence and strict liability), or as a defense, setoff or counterclaim to any action or claim brought or made by the Parties.

17.14.Counterparts

This Agreement may be executed in any number of counterparts, each of which need not contain the signature of more than one Party but all such counterparts taken together shall constitute one and the same agreement.

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Executed in two originals, one for each Party

For AVEXISFor GENETHON

at Bannockburn, ILat Evry

the 9th of March, 2018the 9th of March, 2018

/s/ RA Session II/s/ Frederic REVAH

Name: RA Session II       Name : Frederic REVAH

Title: Senior Vice President Corporate Title : Chief Executive Officer
Strategy and Business Development

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Exhibit A

Licensed Patents at the Effective Date

Country	Filing date	Administration	Product*	Filing number	Publication number
“CNS gene delivery using peripheral administration of AAV vectors”  GENETHON [B00701 MB],  CNRS [DI 02300-01]
Europe	23/07/2007	N/A (withdrawn)	N/A (withdrawn)	EP 07301263.5	EP 2019143
PCT	22/07/2008	N/A (expired)	N/A (expired)	PCT/EP2008/059595	WO 2009/013290
Europe	22/07/2008	All	scAAV9-SMN	EP 08786331.2	EP2185712
Europe	22/07/2008	N/A (other serotype)**	N/A            (other serotype**	EP 12 172 848.9	EP2514827
USA	22/07/2008	Intravascular or Intraperitoneal	scAAV9-SMN	12/452,789	US 2010/0130594
Canada	22/07/2008	Intravascular, intraperitoneal, intramuscular	scAAV9-SMN	CA20082694241	CA 2694241
“Widespread Gene Delivery to Motor Neurons Using Peripheral Injection of AAV Vectors”  GENETHON [B00703 MB],  CNRS [DI 02300- 02]
Europe	05/10/2007	N/A (withdrawn)	N/A (withdrawn)	EP 07301435.9	EP2058401
PCT	03/10/2008	N/A (expired)	N/A (expired)	PCT/EP2008/063297	W02009/043936
Canada	03/10/2008	Intravascular, intraperitoneal, intramuscular	scAAV9-SMN	CA20082701561	CA 2701561
China	03/10/2008	N/A (rejected)	N/A (rejected)	CN20088117413	CN 101883859
China	03/10/2008	Peripheral	scAAV9-SMN	CN201510438197.1	CN 105087650
Europe	03/10/2008	Intravenous, Intraperitoneal  or intramuscular	scAAV9-SMN	EP 08836776.8	EP 2212424
Europe	03/10/2008	Peripheral	ssAAV9-SMN	EP 12 180 951.1	EP 2527457
USA	03/10/2008	Intravenous        or intra-arterial	scAAV9-SMN	12/734,016	US 2010/0240739
USA	22/09/2017	All	scAAV9-SMN	15/713,347
Japan	03/10/2008	Peripheral	scAAV9-SMN	JP20100527467T	JP 2010540598
Japan	01/07/2014	Peripheral	ssAAV9-SMN	2014-136031	JP2014221789

*: By product we mean the Licensed Product constructions covered by the Licensed Patents in the Field of the license granted under section 2.1, i.e. restricted to AAV9.

**: The European divisional with the publication number EP2514827 covers a serotype that is not included in the Field of the License.

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Exhibit B
Press Release

Media Inquiries:

Lauren Barbiero W2O Group 646-564-2156

lbarbiero@w2ogroup.com

Investor Inquiries:

Jim Goff AveXis, Inc. 650-862-4134

jgoff@avexis.com

AFM-Telethon Press Contact:

Stéphanie Bardon

+330169471278

presse@afm.genethon.fr

AveXis Enters into Licensing Agreement with Genethon

Includes exclusive worldwide rights to AAV9-SMN product and route of administration

Chicago, Ill. and Evry, France (March XX, 2018) – AveXis, Inc. (NASDAQ:AVXS) and Genethon today announced they have entered into an exclusive, worldwide license agreement for in vivo gene therapy delivery of AAV9 vector into the central nervous system (CNS) for the treatment of spinal muscular atrophy (SMA).

“Adding to our robust intellectual property estate, this agreement further strengthens our position by providing freedom to operate when using intravenous or intrathecal routes of administration to deliver the AAV9 vector into the CNS for the treatment of SMA,” said Sean Nolan, President and Chief Executive Officer of AveXis. “With our proprietary gene therapy, AVXS-101, currently being evaluated in patients with SMA in ongoing clinical trials in the U.S., and soon in Europe, we are pleased to have this exclusive worldwide agreement in place.”

Under the terms of the agreement, Genethon granted AveXis a license to patents in the U.S., Europe and Japan, for the AAV9 SMN product and in vivo gene therapy delivery of AAV9 vector into the CNS using intrathecal or intravenous routes of administration for the treatment of SMA.

“Genethon is pleased to enter into this agreement with AveXis and to contribute to the efforts for the development of treatments for SMA patients who have urgent medical needs,” said Frédéric Revah, Chief Executive Officer of Genethon. “It demonstrates Genethon’s capability

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to develop effective first-in-class technologies and the excellence of our translational research driven by the commitment to treat patients living with rare diseases.”

About SMA

SMA is a severe neuromuscular disease characterized by the loss of motor neurons leading to progressive muscle weakness and paralysis. SMA is caused by a genetic defect in the SMN1 gene that codes SMN, a protein necessary for survival of motor neurons. The incidence of SMA is approximately one in 10,000 live births and is the leading genetic cause of infant mortality.

The most severe form of SMA is Type 1, a lethal genetic disorder characterized by motor neuron loss and associated muscle deterioration, which results in mortality or the need for permanent ventilation support before the age of two for greater than 90 percent of patients. SMA Type 2 typically presents between six and 18 months of age, and those affected will never walk without support and most will never stand without support. SMA Type 2 results in mortality in more than 30 percent of patients by the age of 25.

About AVXS-101

AveXis’ initial product candidate, AVXS-101, is its proprietary gene therapy currently in development for the one-time treatment of SMA Types 1 and 2, designed to address the monogenic root cause of SMA and prevent further muscle degeneration by addressing the defective and/or loss of the primary SMN gene. AVXS-101 also targets motor neurons, providing rapid onset of effect and crossing the blood brain barrier to allow effective targeting of both central and systemic features.

About AveXis, Inc.

AveXis, Inc. is a clinical-stage gene therapy company, dedicated to developing and commercializing novel treatments for patients suffering from rare and life-threatening neurological genetic diseases. Our initial product candidate, AVXS-101, is our proprietary gene therapy currently in development for the treatment of spinal muscular atrophy, or SMA, Type 1, the leading genetic cause of infant mortality, and SMA Type 2. The U.S. Food and Drug Administration, or FDA, has granted AVXS-101 Orphan Drug Designation for the treatment of all types of SMA and Breakthrough Therapy Designation, as well as Fast Track Designation for the treatment of SMA Type 1. In addition to developing AVXS-101 to treat SMA Type 1 and Type 2, we also plan to develop other novel treatments for rare neurological diseases, including Rett syndrome and a genetic form of amyotrophic lateral sclerosis caused by mutations in the superoxide dismutase 1 (SOD1) gene.

About Genethon

Created by the AFM-Telethon, the French Muscular Dystrophy Association (AFM), Genethon, located in Evry, France, is a non-profit R&D organization dedicated to the development of biotherapies for orphan genetic diseases, from the research to clinical validation. Genethon is specialized in the discovery and development of gene therapy drugs and has multiple ongoing programs at clinical, preclinical and research stage for neuromuscular, blood, immune system, and liver diseases.

AveXis Forward-Looking Statements

This press release contains "forward-looking statements," within the meaning of the Private Securities Litigation Reform Act of 1995, regarding, among other things, AveXis’ freedom to operate afforded by the license agreement with Genethon and AveXis’ research, development and regulatory plans for AVXS-101. Such forward-looking statements are based on current

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expectations and involve inherent risks and uncertainties, including factors that could delay, divert or change any of them, and could cause actual results to differ materially from those projected in its forward-looking statements. Meaningful factors which could cause actual results to differ include, but are not limited to, the scope, progress, expansion, and costs of developing and commercializing AveXis’ product candidates; regulatory developments in the U.S. and EU, as well as other factors discussed in the "Risk Factors" and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of AveXis’ Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 28, 2018. In addition to the risks described above and in the Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the SEC, other unknown or unpredictable factors also could affect AveXis’ results. There can be no assurance that the actual results or developments anticipated by AveXis will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, AveXis. Therefore, no assurance can be given that the outcomes stated in such forward- looking statements and estimates will be achieved.

# # #

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EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Sean P. Nolan, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of AveXis, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 4, 2018	/s/ Sean P. Nolan
	Sean P. Nolan
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

I, Phillip B. Donenberg, certify that:

1. I have reviewed this quarterly report on Form 10-Q of AveXis, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 4, 2018	/s/ Phillip B. Donenberg
	Phillip B. Donenberg
	Senior Vice President, Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer and Chief Financial Officer

Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), Sean P. Nolan, President and Chief Executive Officer, and Phillip B. Donenberg, Senior Vice President, Chief Financial Officer, of AveXis, Inc. (the “Company”), each hereby certifies that, to the best of his knowledge:

1. The Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2018 (the “Quarterly Report”), to which this Certification is attached as Exhibit 32.1, fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and

2. The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 4, 2018	/s/ Sean P. Nolan
	Sean P. Nolan
	President and Chief Executive Officer
Date: May 4, 2018	/s/ Phillip B. Donenberg
	Phillip B. Donenberg
	Senior Vice President, Chief Financial Officer

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of AveXis, Inc. under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2018	May 03, 2018
Document and Entity Information [Abstract]
Entity Registrant Name	AveXis, Inc.
Entity Central Index Key	0001652923
Document Type	10-Q
Document Period End Date	Mar. 31, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		36,816,476
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 586,808	$ 324,117
Prepaid expenses and other current assets	11,636	8,321
Total current assets	598,444	332,438
Property and equipment, net	62,864	56,174
Restricted cash	2,830
Other long-term assets	3,115	2,966
Total assets	667,253	391,578
Current liabilities:
Accounts payable	14,118	10,587
Accrued expenses and other current liabilities	29,566	44,938
Short-term licensing fees payable	27,508
Accrued indemnification obligation	1,635	2,788
Total current liabilities	72,827	58,313
Long-term liabilities	25,100	525
Total liabilities	97,927	58,838
Preferred stock, par value $0.0001 per share, 10,000 shares authorized, none issued
Common stock; par value $0.0001 per share, 100,000 shares authorized, 36,810 shares issued and outstanding at March 31, 2018; 32,090 shares issued and outstanding at December 31, 2017	4	3
Additional paid-in capital	1,151,037	692,350
Accumulated deficit	(581,715)	(359,613)
Total stockholders’ equity	569,326	332,740
Total liabilities and stockholders’ equity	$ 667,253	$ 391,578

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands	Mar. 31, 2018	Dec. 31, 2017
Preferred stock
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized (in shares)	10,000	10,000
Common stock
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	100,000	100,000
Common stock, shares issued (in shares)	36,810	32,090
Common stock, shares outstanding (in shares)	36,810	32,090

XML

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Operating expenses:
General and administrative	$ 22,747	$ 9,638
Research and development expenses	199,709	20,327
Total operating expenses	222,456	29,965
Loss from operations	(222,456)	(29,965)
Interest income, net	354	246
Net loss and comprehensive loss	$ (222,102)	$ (29,719)
Basic and diluted net loss per common share (in dollars per share)	$ (6.20)	$ (1.07)
Weighted-average basic and diluted common shares outstanding (in shares)	35,842	27,734

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cash flows from operating activities
Net loss	$ (222,102)	$ (29,719)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	1,267	244
Stock-based compensation	12,988	5,084
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(3,391)	(2,533)
Other long-term assets	(149)	(642)
Accounts payable	1,706	6,526
Accrued expenses and other current liabilities	(1,884)	(7,154)
Accrued indemnification obligation	(1,153)	67
Accrued licensing fees payable	52,107
Net cash used in operating activities	(160,611)	(28,127)
Cash flows from investing activities
Capital expenditures	(7,921)	(8,064)
Net cash used in investing activities	(7,921)	(8,064)
Cash flows from financing activities
Proceeds from issuance of common stock	431,857
Proceeds from exercise of stock options	5,029	215
Taxes paid on stock-based compensation vesting and exercise	(2,833)
Net cash provided by financing activities	434,053	215
Net increase (decrease) in cash and cash equivalents and restricted cash	265,521	(35,976)
Cash and cash equivalents and restricted cash, Beginning of Period	324,117	240,430
Cash and cash equivalents and restricted cash, End of Period	589,638	204,454
Supplemental Disclosure of Non-cash Investing and Financing Activities
Capital expenditures in accounts payable and accrued liabilities	7,009	$ 5,842
Shares issued in settlement with stockholder (See Note 9)	$ 11,647

XML

Background

3 Months Ended

Mar. 31, 2018

Background

Background

1.Background

Avexis, Inc., (“the Company”) is a clinical‑stage gene therapy company dedicated to developing and commercializing novel treatments for patients suffering from rare and life‑threatening neurological genetic diseases. The Company’s initial product candidate, AVXS‑101, is its proprietary gene therapy product candidate for the treatment of spinal muscular atrophy, (“SMA”). SMA is a severe neuromuscular disease characterized by the loss of motor neurons, leading to progressive muscle weakness and paralysis. SMA is generally divided into sub‑categories termed SMA Type 1, 2, 3 and 4.

On April 6, 2018, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Novartis AG, a company organized under the laws of Switzerland (“Parent”), and Novartis AM Merger Corporation, a Delaware corporation and a wholly owned subsidiary of Parent (“Purchaser”), pursuant to which, and upon the terms and subject to the conditions described therein, on April 17, 2018, Purchaser commenced a cash tender offer (the “Offer”) to acquire all of the outstanding shares of the Company’s common stock at a purchase price of $218.00 per share, net to the seller in cash, without interest, subject to any required withholding of taxes.  As of the date of this filing, the Offer and the merger contemplated by the Merger Agreement have not been completed (see Note 11). 

January 2018 Underwritten Public Offering

On January 22, 2018, the Company completed an underwritten public offering of 4,509,840 shares of its common stock, including the exercise in full by the underwriters of their option to purchase 588,240 shares from the Company, at a public offering price of $102.00 per share. After deducting the underwriting discounts and commissions, the net proceeds to the Company were approximately $431.9 million.

XML

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2018

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2.Summary of Significant Accounting Policies

Basis of Presentation

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and, therefore, do not include all information and footnote disclosures normally included in the annual consolidated financial statements. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year. The December 31, 2017 condensed consolidated balance sheet data contained within this Form 10-Q was derived from audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (“Annual Report on Form 10-K”), but does not include all disclosures required by GAAP.

Significant Accounting Policies

There have been no material changes in the Company’s significant accounting policies as of and for the three months ended March 31, 2018, as compared with the significant accounting policies described in the Company’s Annual Report on Form 10-K.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues, if any, and expenses during the reporting period. Actual results could differ from those estimates.

Recently Issued Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (“ASC 842”). The guidance requires lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Lessor accounting is similar to the current model, but updated to align with certain changes to the lessee model and the new revenue recognition standard. Existing sale-leaseback guidance, including guidance for real estate, is replaced with a new model applicable to both lessees and lessors. ASC 842 is effective for fiscal years beginning after December 15, 2018.  The Company is evaluating the adoption of ASC 842, but has not determined the effects it may have on the Company’s consolidated financial statements.

Recently Adopted Accounting Pronouncements

In August 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. This update is intended to reduce diversity in the presentation of restricted cash and restricted cash equivalents in the statement of cash flows. The updated standard was effective for the Company in the quarterly period ending March 31, 2018. The adoption of this updated standard resulted in restricted cash being combined with cash and cash equivalents on the cash flow statement.

XML

Restricted Cash

3 Months Ended

Mar. 31, 2018

Restricted Cash

Restricted Cash

3. Restricted Cash

As of March 31, 2018, restricted cash was $2.8 million and related to a letter of credit signed by the Company in the three months ended March 31, 2018.  The letter of credit was signed in conjunction with an amendment to the lease at the Libertyville, Illinois manufacturing facility. There was no restricted cash as of December 31, 2017.

The following table provides a reconciliation of cash and cash equivalents and restricted cash as reported within the condensed consolidated balance sheet to the same items as reported in the condensed consolidated statement of cash flows:

	Three Months Ended
	March 31,
	2018		2017
Cash and cash equivalents	$	586,808	$	204,454
Restricted cash		2,830		—
Cash and cash equivalents and restricted cash	$	589,638	$	204,454

XML

Property and Equipment, Net

3 Months Ended

Mar. 31, 2018

Property and Equipment, Net

Property and Equipment, Net

4.Property and Equipment, Net

Property and equipment, net, consists of the following (in thousands):

	March 31,		December 31,
	2018		2017
Equipment	$	41,733	$	34,777
Leasehold improvements		12,513		7,123
Construction in progress		11,208		15,656
Furniture		978		919
Property and equipment, gross		66,432		58,475
Less: accumulated depreciation		(3,568)		(2,301)
Property and equipment, net	$	62,864	$	56,174

Depreciation expense was $1.3 million and $0.2 million for the three months ended March 31, 2018 and 2017, respectively.  Advances paid towards the acquisition of property and equipment, and the cost of property and equipment not ready for use before the end of the period, are both classified as construction in progress.

XML

Accrued Expenses and Other Current Liabilities

3 Months Ended

Mar. 31, 2018

Accrued Expenses and Other Current Liabilities

Accrued Expenses and Other Current Liabilities

5.Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):

	March 31,		December 31,
	2018		2017
Accrued manufacturing development costs	$	8,786	$	10,356
Accrued construction in progress		5,912		4,156
Accrued payroll, bonus and deferred compensation		4,413		9,589
Accrued clinical trial costs		3,277		864
Accrued professional and consulting fees		3,338		5,406
Accrued loss on settlement		—		11,647
Accrued franchise taxes and other		3,840		2,920
Accrued expenses and other current liabilities	$	29,566	$	44,938

XML

Stock-Based Compensation

3 Months Ended

Mar. 31, 2018

Stock-Based Compensation

Stock-Based Compensation

6.Stock-Based Compensation

2014 Stock Plan (the “2014 Plan”) and 2016 Equity Incentive Plan (the “2016 Plan”)

The following table summarizes stock option activity under the 2014 Plan and the 2016 Plan (collectively, the “Plans”) for the three months ended March 31, 2018 (in thousands, except per share data):

		Weighted		Weighted Average
		Average		Remaining	Aggregate
	Number of	Exercise		Contractual	Intrinsic
	Shares	Price		Life (Years)	Value (a)
Outstanding at December 31, 2017	3,167	$	41.30	8.35	$	219,656
Granted	672	$	124.57
Exercised	(97)	$	26.49
Cancelled or forfeited	(62)	$	42.95
Outstanding at March 31, 2018	3,680	$	56.88	8.45	$	249,205
Exercisable at March 31, 2018	1,240	$	22.52	7.55	$	125,304
Exercisable and expected to vest at March 31, 2018	3,680	$	56.88	8.45	$	249,205

(a) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the estimated fair value of the common stock for the options that were in-the-money at March 31, 2018 and December 31, 2017. The intrinsic value of the outstanding stock options as of March 31, 2018 at the purchase price of $218.00 per share in the Offer is equal to $592.9 million (see Note 11). 

For the three months ended March 31, 2018 and 2017, the total number of stock options exercised was 97,388 and 43,120, respectively, resulting in total proceeds of $5.0 million and $0.2 million, respectively.

As of March 31, 2018 there was $89.8 million of unrecognized stock-based compensation expense related to stock option awards that is expected to be recognized over a weighted-average period of 1.4 years.

The Company has recorded total stock-based compensation expense related to the issuance of stock option awards under the Plans in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands):

	Three Months Ended
	March 31,
	2018		2017
Research and development	$	6,995	$	1,978
General and administrative		5,274		2,765
	$	12,269	$	4,743

Stock Options Granted

The weighted-average grant date fair value of options granted during the three months ended March 31, 2018 and 2017 was $85.55 and $47.20,  respectively on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	Three Months Ended
	March 31,		March 31,
	2018		2017
Expected volatility	77.68	%	86.88	%
Risk-free interest rate	2.53	%	1.94	%
Expected term (in years)	6.08		6.08
Expected dividend yield	0.00	%	0.00	%

Options generally expire ten years following the date of grant. Options typically vest over a period of four years, but vesting provisions can vary by award based on the discretion of the Board of Directors. Options to purchase common stock carry an exercise price equal to the estimated fair value of the Company’s common stock on the date of grant. Options to purchase shares of the Company’s common stock may be exercised by payment of the exercise price in cash, by the delivery of previously acquired shares of common stock having a fair value equal to the exercise price payable or the withholding of common shares equal to the fair value of the aggregate exercise price. Upon the termination of service of a holder of stock options awarded under the Plans, all unvested options are immediately forfeited and vested options may be exercised within three months of termination.

Service-Based Restricted Stock Units

The Company grants restricted stock units (“RSUs”) with service-based vesting terms from time to time. The outstanding RSUs vest over a period of three years. For awards that vest subject to the satisfaction of service requirements, compensation expense is measured based on the fair value of the RSUs on the date of grant and is recognized as expense on a straight-line basis over the requisite service period. All RSUs issued vest over time as stipulated in the individual RSU award agreements.

A summary of the status of the Company's RSUs at March 31, 2018 and of changes in RSUs outstanding under the 2016 Plan for the three months ended March 31, 2018 is as follows (in thousands, except per share data):

		Weighted
		Average
		Grant Date
	Number	Fair Value
	of Shares	Per Share
Outstanding at December 31, 2017	27	$	38.79
Granted	139		129.85
Vested	(10)	$	40.24
Forfeited and cancelled	(0)	$	34.90
Outstanding at March 31, 2018	156	$	119.79

At March 31, 2018, there was $17.7 million of unrecognized compensation cost related to unvested RSUs that will be recognized as expense over a weighted-average period of 1.8 years.

The Company has recorded total stock-based compensation expense related to the issuance of service-based RSUs under the Plans in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands):

	Three Months Ended
	March 31,
	2018		2017
Research and development	$	399	$	302
General and administrative		320		39
	$	719	$	341

Performance-Based Restricted Stock Units

On March 20, 2017, the Company granted to certain employees a total of 49,332 performance-based restricted stock units (“PSUs)”. These PSUs vest upon the achievement of certain regulatory and manufacturing milestones. If the milestones do not occur on or before the three-year anniversary of the grant date, all unvested PSUs will be cancelled. As of March 31, 2018, all 49,332 of these PSUs were outstanding, none had vested and the weighted-average grant date fair value of all shares was $79.75 per share. The Company has not yet recognized any PSU-related stock-based compensation expense as regulatory and manufacturing milestones have not yet been met; however, in the event the performance conditions are met, $3.9 million of research and development compensation expense will be recognized by the Company. There were no PSUs granted during the three months ended March 31, 2018.

Warrants Granted to Non-Employees

During the three months ended March 31, 2018 and 2017, there were no warrants exercised and as a result no proceeds received by the Company. As of March 31, 2018, there were 305,775 common stock warrants vested and outstanding issued to non-employees with a weighted-average exercise price of $2.57.

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Equity and Net Loss Per Common Share

3 Months Ended

Mar. 31, 2018

Equity and Net Loss Per Common Share

Equity and Net Loss Per Common Share

7.Equity and Net Loss Per Common Share

Basic net loss per common share is computed using the weighted-average number of common shares outstanding during the period. Diluted net loss per common share is computed using the sum of the weighted-average number of common shares outstanding during the period and, if dilutive, the weighted-average number of potential shares of common stock, including the assumed exercise of stock options, stock warrants and unvested restricted common stock.

For the three months ended March 31, 2018 and 2017, the following potentially dilutive securities have been excluded from the computations of diluted weighted-average shares outstanding because the effect would be anti-dilutive (in thousands):

	Three Months Ended
	March 31,
	2018	2017
Stock options	3,680	2,734
Stock warrants	306	306
Unvested service-based restricted stock units	156	42
Unvested performance-based restricted stock units	49	49
	4,191	3,131

Amounts in the table above reflect the common stock equivalents of the noted instruments.

The following table summarizes the calculation of the basic and diluted net loss per common share (in thousands, except per share data):

	Three Months Ended
	March 31,
	2018		2017
Numerator:
Net loss and comprehensive loss	$	222,102	$	29,719
Denominator:
Weighted-average basic and diluted common shares		35,842		27,734
Basic and diluted net loss per common share	$	6.20	$	1.07

On December 29, 2017, the Company entered into a settlement agreement and release with a stockholder to whom the Company had issued a promissory note in 2012. Under the settlement agreement, the Company was obligated to issue 105,237 shares of common stock as of December 31, 2017 and recognized a non-cash expense of $11.6 million within general and administrative expense for the year ended December 31, 2017. The Company issued the shares in January 2018.  

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2018

Commitments and Contingencies

Commitments and Contingencies

8.Commitments and Contingencies

Operating Leases

In March 2018, the Company entered into a lease agreement, which expires in August 2027, for approximately 9,500 square feet adjacent to the Company’s existing space in San Diego, California.  The lease agreement provides for annual escalation in rent payments during the lease term. The Company is amortizing the escalation in rental payments on a straight‑line basis over the term of the lease.

In March 2018, the Company entered into a lease agreement, which expires in July 2026, for approximately 44,000 square feet of warehouse, office and storage space in Libertyville, Illinois.

In March 2018, the Company entered into a lease agreement, which expires in July 2024, for approximately 4,700 square feet adjacent to the Company’s existing facility in Bannockburn, Illinois.  The lease agreement provides for annual escalation in rent payments during the lease term. The Company is amortizing the escalation in rental payments on a straight‑line basis over the term of the lease.

Guarantees and Indemnifications

In the normal course of business, the Company has entered into agreements that contain a variety of representations and provide for general indemnification, including indemnification agreements with the Company’s officers and directors. 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 March 31, 2018 and December 31, 2017, 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 (present and former) tortiously interfered with SCF’s rights under the donation agreement by assuming sponsorship of the IND under the NCH License. There is no contractual relationship between the Company and SCF. The complaint seeks, among other relief, monetary damages of $500.0 million and equitable relief, including taking steps to designate SCF as the sponsor of the IND. On October 10, 2017, the Court granted all of the defendants’ motions to dismiss. On October 31, 2017, SCF filed a second amended complaint against all of the defendants except two of the Company’s present executives, who were dropped from the second amended complaint. The Company believes that the second amended complaint is without merit and intends to vigorously defend itself and its present and former executives from the allegations. The Company filed a new motion to dismiss on December 5, 2017. The Company views the possibility 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.

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Taxes

3 Months Ended

Mar. 31, 2018

Taxes

Taxes

9.Taxes

Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets, including its net operating losses. Based on its history of operating losses, the Company believes that it is more likely than not that the benefit of its deferred tax assets will not be realized. Accordingly, the Company has provided a full valuation allowance for deferred tax assets as of March 31, 2018 and December 31, 2017.

On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act, or TCJA. The TCJA makes significant changes in U.S. tax law including a reduction in the corporate tax rates, changes to net operating loss carryforwards and carrybacks, and a reduction of the amount of the orphan drug credit. As a result of the TCJA, the Company remeasured its ending deferred tax assets and liabilities at December 31, 2017 to the newly enacted U.S. federal corporate tax rate of 21%. The Company recognized the provisional tax impacts related to the remeasurement of the deferred tax assets and liabilities pursuant to SEC Staff Accounting Bulletin No. 118 and included these amounts in its consolidated financial statements for the year ended December 31, 2017. The Company did not record any adjustments to this provisional amount during the three months ended March 31, 2018 and will continue to analyze and refine its calculations related to the remeasurement as the impact of TCJA is finalized. 

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Collaboration and License Agreements

3 Months Ended

Mar. 31, 2018

Collaboration and License Agreements

Collaboration and License Agreements

10.Collaboration and License Agreements

The Company has entered into three license agreements related to its SMA programs and its planned preclinical programs in Rett syndrome and amyotrophic lateral sclerosis (“ALS”) caused by mutations in the gene that produces the copper zinc superoxide dismutase 1 (“SOD1”) enzyme (“genetic ALS”).

REGENXBIO Inc.

On January 8, 2018, the Company entered into an amendment (the “Amendment”) to the License Agreement dated March 21, 2014 (as amended, the “REGENXBIO SMA License”) between the Company and REGENXBIO Inc. (“REGENXBIO”).  Under the terms of the Amendment, REGENXBIO granted the Company an exclusive, worldwide commercial license, with rights to sublicense, to all recombinant adeno-associated virus vectors in REGENXBIO’s intellectual property portfolio during the term of the license agreement for the treatment of SMA in humans by in vivo gene therapy. Additionally, the Amendment modifies the terms and conditions of the License Agreement relating to assignment. Under the amended assignment provision, the Company is permitted to transfer the License Agreement without REGENXBIO’s consent in connection with a change of control of the Company, subject to the transferee or successor agreeing in writing to be bound by the terms of the License Agreement.  The Amendment requires that in a change of control of the Company, the following amounts due under the license agreement, if unpaid at the time of the change in control, become immediately payable: the first and second anniversary payments of $30.0 million each and the first sales-based milestone payment of $40.0 million.

As consideration for the Amendment, the Company paid $80.0 million upon entry into the Amendment and is required to pay $30.0 million on the first anniversary of the effective date of the Amendment and $30.0 million on the second anniversary of the effective date of the Amendment.  In addition, pursuant to the Amendment, the Company agreed to pay up to $120.0 million in the aggregate of potential future sales-based milestone payments for all REGENXBIO SMA licensed products. The Company also agreed to pay a mid‑single digit to low double-digit royalty percentages on net sales of REGENXBIO SMA licensed products using adeno-associated virus serotype 9 (“AAV9”) and a low-double digit royalty percentage on net sales of any product candidate developed by the Company for the treatment of SMA using an adeno-associated virus vector other than AAV9, in each case subject to a reduction in specified circumstances.  During the three months ended March 31, 2018, $130.7 million of expenses were recognized within research and development representing the $80.0 million upfront payment made to REGENXBIO in January 2018 and the net present value of the guaranteed fixed payments due on the first and second anniversaries of the effective date of the Amendment.   As of March 31, 2018, the Company has accrued the net present value of the first anniversary payment within short-term licensing fees payable and the second anniversary payment within long-term liabilities on the balance sheet.  Additionally, the Company recognized interest expense of $1.4 million associated with the accretion of its discounted guaranteed fixed payments due to REGENXBIO in 2019 and 2020. 

The REGENXBIO SMA License term continues until the last valid patent claim expires or lapses in all countries of the world. Additionally, the Company may terminate the REGENXBIO SMA License at any time upon a specified notice period and REGENXBIO may terminate the REGENXBIO SMA License upon the breach (after notice and cure periods) or insolvency of the Company, if the Company is greater than a specified number of days late (after notice and cure periods) in paying money due under the REGENXBIO SMA License or if the Company, its affiliates, or sublicensees challenges the REGENXBIO SMA patents subject to the REGENXBIO SMA License. Either party may terminate the REGENXBIO SMA License for material breach if such breach is not cured within a specified number of days.

GÉNÉTHON

In March 2018, the Company entered into a license agreement with Généthon, acting in its own name and for its own behalf as well as in the name and on behalf of Centre National de la Recherche Scientifique (together “Généthon”), pursuant to which Généthon granted the Company an exclusive, worldwide license to certain patents for in vivo gene replacement therapy delivery of the survival motor neuron protein gene using the AAV9 vector into the central nervous system for the treatment of SMA. Under the Généthon agreement, the Company paid Généthon a one-time upfront license fee of $4.0 million. The Company is also required to pay $0.5 million for the first three years to support Généthon’s ongoing research, ongoing annual management fees of $25 thousand and up to a total of $11.0 million in development and sales-based milestone fees for licensed products. Under the terms of the Généthon agreement, the Company is also required to pay Généthon mid-single digit royalties of net sales on licensed products, subject to reduction in certain circumstances due to royalty stacking provisions and a mid-teens percentage of any sublicense fees that the Company receives from sublicensees for the licensed intellectual property rights. As of March 31, 2018,  the Company had recognized $4.5 million of research and development expenses related to the Généthon license and no royalty fees have been recognized.

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Subsequent Events

3 Months Ended

Mar. 31, 2018

Subsequent Events

Subsequent Events

11.      Subsequent Events

On April 6, 2018, the Company entered into the Merger Agreement with Parent and Purchaser, pursuant to which, and upon the terms and subject to the conditions described therein, on April 17, 2018, Purchaser commenced the Offer to acquire all of the outstanding shares of the Company’s common stock at a purchase price of $218.00 per share (such price, as it may be increased as described in the following sentence, the “Offer Price”), net to the seller in cash, without interest, subject to any required withholding of taxes.  In the event Parent elects to extend the Outside Date (as defined in the Merger Agreement) in accordance with the terms of the Merger Agreement, the Offer Price will be increased to $225.00 per share, net to the seller in cash, without interest, subject to any required withholding of taxes.  The Offer will expire at 12:00 Midnight, New York City time, at the end of the day on Monday, May 14, 2018 (unless the Offer is extended).

The obligation of Purchaser to purchase shares of the Company’s common stock tendered in the Offer is subject to customary closing conditions, including (i) shares of the Company’s common stock having been validly tendered and not withdrawn that represent at least a majority of the total number of shares of the Company’s common stock then-outstanding on a fully diluted basis, (ii) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), without the imposition of a Burdensome Condition (as defined in the Merger Agreement), (iii) the absence of injunctions or other legal restraints preventing the consummation of the Offer or the Merger, as defined below, or imposing a Burdensome Condition and (iv) certain other conditions set forth in Exhibit A to the Merger Agreement.  The consummation of the Offer is not subject to any financing condition.

Following the completion of the Offer, subject to the satisfaction or waiver of certain customary conditions set forth in the Merger Agreement, Purchaser will merge with and into the Company, with the Company surviving as a wholly owned subsidiary of Parent (the “Merger”), pursuant to the procedure provided for under Section 251(h) of the Delaware General Corporation Law (the “DGCL”), without any stockholder approvals. The Merger will be effected as soon as practicable following the time of purchase by Purchaser of shares of the Company’s common stock validly tendered and not withdrawn in the Offer.  At the effective time of the Merger (the “Effective Time”), each issued and outstanding share of the Company’s common stock (other than shares owned by (i) the Company, any subsidiary of the Company, Parent, Purchaser and any other subsidiary of Parent and (ii) stockholders of the Company who have validly exercised their statutory rights of appraisal under the DGCL) will be converted into the right to receive the Offer Price, in cash, without interest, subject to any required withholding of taxes.

Until the earlier of the termination of the Merger Agreement and the Effective Time, the Company has agreed to operate its business in the ordinary course and has agreed to certain other operating covenants, as set forth more fully in the Merger Agreement.  The Merger Agreement includes customary termination provisions for both the Company and Parent and provides that, in connection with the termination of the Merger Agreement under specified circumstances, including termination by the Company to accept a Superior Company Proposal (as defined in the Merger Agreement), the Company will be required to pay a fee equal to $284 million.  The Merger Agreement also provides that, in connection with the termination of the Merger Agreement under specified antitrust related circumstances, Parent will be required to pay to the Company a “reverse termination fee” equal to $437 million, which fee increases in the event Parent elects to extend the Outside Date in accordance with the terms of the Merger Agreement.

Each of the Company and Parent filed a Premerger Notification and Report Form under the HSR Act with respect to the Offer and the Merger with the Federal Trade Commission and the Antitrust Division of the United States Department of Justice on April 13, 2018. On April 30, 2018, the waiting period under the HSR Act applicable to the Offer and the Merger expired.  Accordingly, the condition to the Offer relating to the expiration or termination of the waiting period under the HSR Act has been satisfied

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2018

Summary of Significant Accounting Policies

Basis of Presentation

Basis of Presentation

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and, therefore, do not include all information and footnote disclosures normally included in the annual consolidated financial statements. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year. The December 31, 2017 condensed consolidated balance sheet data contained within this Form 10-Q was derived from audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (“Annual Report on Form 10-K”), but does not include all disclosures required by GAAP.

Use of Estimates

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues, if any, and expenses during the reporting period. Actual results could differ from those estimates.

Recent Accounting Pronouncements

Recently Issued Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (“ASC 842”). The guidance requires lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Lessor accounting is similar to the current model, but updated to align with certain changes to the lessee model and the new revenue recognition standard. Existing sale-leaseback guidance, including guidance for real estate, is replaced with a new model applicable to both lessees and lessors. ASC 842 is effective for fiscal years beginning after December 15, 2018.  The Company is evaluating the adoption of ASC 842, but has not determined the effects it may have on the Company’s consolidated financial statements.

Recently Adopted Accounting Pronouncements

In August 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. This update is intended to reduce diversity in the presentation of restricted cash and restricted cash equivalents in the statement of cash flows. The updated standard was effective for the Company in the quarterly period ending March 31, 2018. The adoption of this updated standard resulted in restricted cash being combined with cash and cash equivalents on the cash flow statement.

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Restricted Cash (Tables)

3 Months Ended

Mar. 31, 2018

Restricted Cash

Reconciliation of cash and cash equivalents and restricted cash

	Three Months Ended
	March 31,
	2018		2017
Cash and cash equivalents	$	586,808	$	204,454
Restricted cash		2,830		—
Cash and cash equivalents and restricted cash	$	589,638	$	204,454

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Property and Equipment, Net (Tables)

3 Months Ended

Mar. 31, 2018

Property and Equipment, Net

Summary of property and equipment, net

	March 31,		December 31,
	2018		2017
Equipment	$	41,733	$	34,777
Leasehold improvements		12,513		7,123
Construction in progress		11,208		15,656
Furniture		978		919
Property and equipment, gross		66,432		58,475
Less: accumulated depreciation		(3,568)		(2,301)
Property and equipment, net	$	62,864	$	56,174

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Accrued Expenses and Other Current Liabilities (Tables)

3 Months Ended

Mar. 31, 2018

Accrued Expenses and Other Current Liabilities

Schedule of accrued expenses

	March 31,		December 31,
	2018		2017
Accrued manufacturing development costs	$	8,786	$	10,356
Accrued construction in progress		5,912		4,156
Accrued payroll, bonus and deferred compensation		4,413		9,589
Accrued clinical trial costs		3,277		864
Accrued professional and consulting fees		3,338		5,406
Accrued loss on settlement		—		11,647
Accrued franchise taxes and other		3,840		2,920
Accrued expenses and other current liabilities	$	29,566	$	44,938

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Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2018

Summary of stock option activity

The following table summarizes stock option activity under the 2014 Plan and the 2016 Plan (collectively, the “Plans”) for the three months ended March 31, 2018 (in thousands, except per share data):

		Weighted		Weighted Average
		Average		Remaining	Aggregate
	Number of	Exercise		Contractual	Intrinsic
	Shares	Price		Life (Years)	Value (a)
Outstanding at December 31, 2017	3,167	$	41.30	8.35	$	219,656
Granted	672	$	124.57
Exercised	(97)	$	26.49
Cancelled or forfeited	(62)	$	42.95
Outstanding at March 31, 2018	3,680	$	56.88	8.45	$	249,205
Exercisable at March 31, 2018	1,240	$	22.52	7.55	$	125,304
Exercisable and expected to vest at March 31, 2018	3,680	$	56.88	8.45	$	249,205

(a) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the estimated fair value of the common stock for the options that were in-the-money at March 31, 2018 and December 31, 2017. The intrinsic value of the outstanding stock options as of March 31, 2018 at the purchase price of $218.00 per share in the Offer is equal to $592.9 million (see Note 11).

Summary of stock-based compensation expense by classification in the Statement of Operations and Comprehensive Loss

The Company has recorded total stock-based compensation expense related to the issuance of stock option awards under the Plans in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands):

	Three Months Ended
	March 31,
	2018		2017
Research and development	$	6,995	$	1,978
General and administrative		5,274		2,765
	$	12,269	$	4,743

Summary of weighted-average assumptions used in determining fair value of stock options

	Three Months Ended
	March 31,		March 31,
	2018		2017
Expected volatility	77.68	%	86.88	%
Risk-free interest rate	2.53	%	1.94	%
Expected term (in years)	6.08		6.08
Expected dividend yield	0.00	%	0.00	%

Summary of service-based restricted stock units activity

A summary of the status of the Company's RSUs at March 31, 2018 and of changes in RSUs outstanding under the 2016 Plan for the three months ended March 31, 2018 is as follows (in thousands, except per share data):

		Weighted
		Average
		Grant Date
	Number	Fair Value
	of Shares	Per Share
Outstanding at December 31, 2017	27	$	38.79
Granted	139		129.85
Vested	(10)	$	40.24
Forfeited and cancelled	(0)	$	34.90
Outstanding at March 31, 2018	156	$	119.79

Service Based RSUs

Summary of stock-based compensation expense by classification in the Statement of Operations and Comprehensive Loss

The Company has recorded total stock-based compensation expense related to the issuance of service-based RSUs under the Plans in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands):

	Three Months Ended
	March 31,
	2018		2017
Research and development	$	399	$	302
General and administrative		320		39
	$	719	$	341

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Equity and Net Loss Per Common Share (Tables)

3 Months Ended

Mar. 31, 2018

Equity and Net Loss Per Common Share

Schedule of potentially dilutive securities excluded from computations of diluted weighted-average shares outstanding

For the three months ended March 31, 2018 and 2017, the following potentially dilutive securities have been excluded from the computations of diluted weighted-average shares outstanding because the effect would be anti-dilutive (in thousands):

	Three Months Ended
	March 31,
	2018	2017
Stock options	3,680	2,734
Stock warrants	306	306
Unvested service-based restricted stock units	156	42
Unvested performance-based restricted stock units	49	49
	4,191	3,131

Summary of the basic and diluted net loss per common share

The following table summarizes the calculation of the basic and diluted net loss per common share (in thousands, except per share data):

	Three Months Ended
	March 31,
	2018		2017
Numerator:
Net loss and comprehensive loss	$	222,102	$	29,719
Denominator:
Weighted-average basic and diluted common shares		35,842		27,734
Basic and diluted net loss per common share	$	6.20	$	1.07

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Background (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended
	Jan. 22, 2018	Mar. 31, 2018	Apr. 06, 2018
Liquidity and Risks
Net proceeds from issuance of common stock	$ 431,900	$ 431,857
Merger Agreement
Public Offering
Purchase price per share		$ 218.00
Subsequent Event | Merger Agreement
Public Offering
Purchase price per share			$ 218.00
IPO
Public Offering
Shares issued (in shares)	4,509,840
Share price (in dollars per share)	$ 102.00
Over-Allotment Option
Public Offering
Shares issued (in shares)	588,240

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Restricted Cash (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017	Dec. 31, 2016
Restricted Cash
Cash and cash equivalents	$ 586,808	$ 324,117	$ 204,454
Restricted cash	2,830
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Total	$ 589,638	$ 324,117	$ 204,454	$ 240,430

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Property and Equipment, Net (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Property and Equipment, Net
Property and equipment, gross	$ 66,432		$ 58,475
Less: accumulated depreciation	(3,568)		(2,301)
Property and equipment, net	62,864		56,174
Depreciation expense
Depreciation and amortization	1,267	$ 244
Equipment
Property and Equipment, Net
Property and equipment, gross	41,733		34,777
Leasehold improvement
Property and Equipment, Net
Property and equipment, gross	12,513		7,123
Construction in progress
Property and Equipment, Net
Property and equipment, gross	11,208		15,656
Furniture
Property and Equipment, Net
Property and equipment, gross	$ 978		$ 919

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Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Accrued Expenses and Other Current Liabilities
Accrued manufacturing development costs	$ 8,786	$ 10,356
Accrued construction in progress	5,912	4,156
Accrued payroll, bonus and deferred compensation	4,413	9,589
Accrued clinical trial costs	3,277	864
Accrued professional fees	3,338	5,406
Accrued loss on settlement		11,647
Accrued franchise taxes and other	3,840	2,920
Accrued expenses and other current liabilities	$ 29,566	$ 44,938

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Stock-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Number of Shares
Outstanding at the beginning of the period (in shares)	3,167,000
Granted (in shares)	672,000
Exercised (in shares)	(97,000)
Cancelled or forfeited (in shares)	(62,000)
Outstanding at the end of the period (in shares)	3,680,000		3,167,000
Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)	$ 41.30
Granted (in dollars per share)	124.57
Exercised (in dollars per share)	26.49
Cancelled or forfeited (in dollars per share)	42.95
Outstanding at the end of the period (in dollars per share)	$ 56.88		$ 41.30
Weighted Average
Remaining Contractual Life (Years)	8 years 5 months 12 days		8 years 4 months 6 days
Aggregate Intrinsic Value (in dollars)	$ 249,205		$ 219,656
Exercisable and Vested and Expected to Vest
Number of Shares - exercisable (in shares)	1,240,000
Weighted Average Exercise Price - exercisable (in dollars per share)	$ 22.52
Remaining Contractual Life (Years) - exercisable	7 years 6 months 18 days
Aggregate Intrinsic Value - exercisable (in dollars)	$ 125,304
Number of Shares - vested and expected to vest (in shares)	3,680,000
Weighted Average Exercise Price - vested and expected to vest (in dollars per share)	$ 56.88
Remaining Contractual Life (Years) - vested and expected to vest	8 years 5 months 12 days
Aggregate Intrinsic Value - vested and expected to vest (in dollars)	$ 249,205
Employee Stock Options
Number of Shares
Exercised (in shares)	(97,388)	(43,120)

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Stock-Based Compensation - Stock Options Exercised (Details) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Stock Options Granted to Non-Employees
Aggregate Intrinsic Value (in dollars)	$ 249,205,000		$ 219,656,000
Exercised (in shares)	97,000
Proceeds from exercise of stock options	$ 5,029,000	$ 215,000
Employee Stock Options
Stock Options Granted to Non-Employees
Exercised (in shares)	97,388	43,120
Proceeds from exercise of stock options	$ 5.0	$ 200,000
Unrecognized stock-based compensation expense
Unrecognized stock-based compensation expense	$ 89,800,000
Weighted-average period expected to recognize stock-based compensation expense	1 year 4 months 24 days
Aggregate stock-based compensation expense by category
Aggregate stock-based compensation expense	$ 12,269,000	4,743,000
Research and development expenses | Employee Stock Options
Aggregate stock-based compensation expense by category
Aggregate stock-based compensation expense	6,995,000	1,978,000
General and administrative expenses | Employee Stock Options
Aggregate stock-based compensation expense by category
Aggregate stock-based compensation expense	$ 5,274,000	$ 2,765,000
Merger Agreement
Stock Options Granted to Non-Employees
Purchase price per share	$ 218.00
Aggregate Intrinsic Value (in dollars)	$ 592,900,000

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Stock-Based Compensation - Weighted-average Assumptions (Details) - Employee Stock Options - $ / shares	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Weighted-average grant date fair value
Weighted-average grant date fair value of options granted during the period (in dollars per share)	$ 85.55	$ 47.20
Weighted-average fair value assumptions
Expected volatility (as a percent)	77.68%	86.88%
Risk-free interest rate (as a percent)	2.53%	1.94%
Expected term (in years)	6 years 29 days	6 years 29 days
Expected dividend yield (as a percent)	0.00%	0.00%
2016 Equity Incentive Plan
Vesting and expiration of stock options
Expiration period (in years)	10 years
Period during which vested options may be exercised after termination of service	3 months
2016 Equity Incentive Plan | Maximum
Vesting and expiration of stock options
Vesting period (in years)	4 years

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Stock-Based Compensation - Restricted Stock Units - General Information (Details) - Service Based RSUs - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Stock Options Granted to Non-Employees
Vesting period (in years)	3 years
Stock-based compensation expense	$ 719	$ 341
Unrecognized compensation cost	$ 17,700
Weighted-average period expected to recognize stock-based compensation expense	1 year 9 months 18 days
Research and development expenses
Stock Options Granted to Non-Employees
Stock-based compensation expense	$ 399	302
General and administrative expenses
Stock Options Granted to Non-Employees
Stock-based compensation expense	$ 320	$ 39

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Stock-Based Compensation - Restricted Stock Units - Activity (Details) - Service Based RSUs - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Number of Shares
Outstanding at the beginning of the period (in shares)	27
Granted (in shares)	139
Vested (in shares)	(10)
Forfeited and cancelled (in shares)	0
Outstanding at the end of the period (in shares)	156
Weighted Average Grant Date Fair Value Per Share
Outstanding at the beginning of the period (in dollars per share)	$ 38.79
Granted (in dollars per share)	129.85
Vested (in dollars per share)	40.24
Forfeited and cancelled (in dollars per share)	34.90
Outstanding at the end of the period (in dollars per share)	$ 119.79
Aggregate stock-based compensation expense	$ 719	$ 341
Research and development expenses
Weighted Average Grant Date Fair Value Per Share
Aggregate stock-based compensation expense	399	302
General and administrative expenses
Weighted Average Grant Date Fair Value Per Share
Aggregate stock-based compensation expense	$ 320	$ 39

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Stock-Based Compensation - Performance-Based Restricted Stock Units (Details) - Performance Based RSU - USD ($) $ / shares in Units, $ in Millions		3 Months Ended
	Mar. 20, 2017	Mar. 31, 2018
Stock Options Granted to Non-Employees
Shares granted (in shares)	49,332	0
Period from grant date during which unvested PSUs will be cancelled if milestones do not occur	3 years
Shares outstanding (in shares)		49,332
Shares vested (in shares)		0
Weighted average grant date fair value		$ 79.75
Research and development expenses
Stock Options Granted to Non-Employees
Amount of share based compensation expense to be recognized if performance conditions are met		$ 3.9

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Stock-Based Compensation - Warrants Granted to Non-Employees - General Information (Details) - Stock warrants	3 Months Ended
	Mar. 31, 2018 USD ($) $ / shares shares
Warrant information
Stock warrants exercised (in shares)	0
Proceeds from exercise of stock warrants | $	$ 0
Non-Employee
Warrant information
Stock warrants vested ( in shares)	305,775
Stock warrants outstanding (in shares)	305,775
Warrants, exercise price (in dollars per share) | $ / shares	$ 2.57

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Equity and Net Loss Per Common Share - Dilutive Securities (Details) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Antidilutive securities not included:
Antidilutive securities	4,191	3,131
Employee Stock Options
Antidilutive securities not included:
Antidilutive securities	3,680	2,734
Stock warrants
Antidilutive securities not included:
Antidilutive securities	306	306
Service Based RSUs
Antidilutive securities not included:
Antidilutive securities	156	42
Performance Based RSU
Antidilutive securities not included:
Antidilutive securities	49	49

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Equity and Net Loss Per Common Share - Calculation (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Numerator:
Net loss and comprehensive loss	$ 222,102	$ 29,719
Denominator:
Weighted-average basic and diluted common shares (in shares)	35,842	27,734
Basic and diluted net loss per common share (in dollars per share)	$ 6.20	$ 1.07

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Equity and Net Loss Per Common Share - Additional information (Details) - USD ($) $ in Millions		12 Months Ended
	Dec. 29, 2017	Dec. 31, 2017
Public Offering
General and Administrative Expense		$ 11.6
Common Stock
Public Offering
Shares to be issued per settlement agreement	105,237

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Commitments and Contingencies - Operating Lease (Details)	Mar. 31, 2018 ft²
Research And Development Space In San Diego California [Member]
Operating Leases
Approximate size of leased space (in square feet)	9,500
Office and warehouse space in Libertyville, Illinois
Operating Leases
Approximate size of leased space (in square feet)	44,000
Facility for corporate headquarters Bannockburn, Illinois
Operating Leases
Approximate size of leased space (in square feet)	4,700

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Commitments and Contingencies - Guarantees and Indemnifications (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Accrued Indemnification Obligation
Accrued indemnification obligation	$ 1,635	$ 2,788

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Commitments and Contingencies - Litigation (Details) - Sophia's Cure Foundation - NCH - Breach of donation agreement - USD ($)		12 Months Ended
	Sep. 08, 2016	Dec. 31, 2012
Litigation
Gift received under donation agreement		$ 550,000
Monetary damages sought	$ 500,000,000

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Income Taxes - Tax Cuts and Jobs Act (Details)	Jan. 01, 2018
Effect of Tax Cuts and Jobs Act
Federal statutory rate (as a percent)	21.00%

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Collaboration and License Agreements - RegenxBio License (Details) $ in Millions		3 Months Ended
	Jan. 08, 2018 USD ($)	Mar. 31, 2018 USD ($) item
Collaboration and License Agreements
Number of license agreements | item		3
ReGenX
Collaboration and License Agreements
Interest expense		$ 1.4
License Agreement | ReGenX
Collaboration and License Agreements
Consideration paid or payable per license agreement amendment	$ 80.0
License Agreement | ReGenX | First Anniversary Of Amendment
Collaboration and License Agreements
Consideration paid or payable per license agreement amendment	30.0
License Agreement | ReGenX | Second Anniversary Of Amendment
Collaboration and License Agreements
Consideration paid or payable per license agreement amendment	30.0
License Agreement | ReGenX | Sales-based milestone
Collaboration and License Agreements
Potential milestone payments to be paid	40.0
License Agreement | ReGenX | Sales-based milestone | Maximum
Collaboration and License Agreements
Potential milestone payments to be paid	$ 120.0
Research and development expenses | License Agreement | ReGenX
Collaboration and License Agreements
Licensing costs		$ 130.7

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Collaboration and License Agreements - Genethon (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2018	Mar. 31, 2017
Collaboration and License Agreements
Research and development expenses		$ 199,709	$ 20,327
License Agreement | GENETHON
Collaboration and License Agreements
Consideration paid or payable per license agreement amendment	$ 4,000
Ongoing research support payments	500
Annual management fees	25
Research and development expenses		4,500
RoyaltyExpense		$ 0
Development and sales-based milestones | License Agreement | GENETHON | Maximum
Collaboration and License Agreements
Potential milestone payments to be paid	$ 11,000

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Subsequent Events (Details) - Merger Agreement - USD ($) $ / shares in Units, $ in Millions	Apr. 06, 2018	Mar. 31, 2018
Subsequent Event [Line Items]
Purchase price per share		$ 218.00
Subsequent Event
Subsequent Event [Line Items]
Purchase price per share	$ 218.00
Termination fee payable on contract	$ 284
Reverse termination fee receivable from parent	$ 437
Subsequent Event | Maximum
Subsequent Event [Line Items]
Purchase price per share	$ 225.00