10-Q

Y

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, 2020
	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: 377-02943

PASSAGE BIO, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	82-2729751
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
Two Commerce Square 2001 Market Street, 28th Floor Philadelphia, PA	19103
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (267) 866-0311

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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit 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	⌧	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 ⌧

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock	PASG	Nasdaq Global Market

As of May 8, 2020, the registrant had 45,350,687 shares of common stock, $0.0001 par value per share, outstanding.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. All statements other than statements of historical facts contained in this Quarterly Report are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. All statements other than statements of historical fact contained in this Quarterly Report, including without limitation statements regarding our plans to develop and commercialize our product candidates, the timing of our ongoing or planned clinical trials, the timing of and our ability to obtain and maintain regulatory approvals, the clinical utility of our product candidates, our commercialization, marketing and manufacturing capabilities and strategy, our expectations about the willingness of healthcare professionals to use our product candidates, the sufficiency of our cash and cash equivalents, the expected impact of the COVID-19 pandemic on our operations, and the plans and objectives of management for future operations and capital expenditures are forward-looking statements.

The forward-looking statements in this Quarterly Report are only predictions and are based 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 speak only as of the date of this Quarterly Report and are subject to a number of known and unknown risks, uncertainties and assumptions, including those described under the sections in this Quarterly Report entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report.

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise. We intend the forward-looking statements contained in this Quarterly Report to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act.

2

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION	4
Item 1.	Interim Financial Statements (Unaudited)	4
	Balance Sheets	4
	Statements of Operations	5
	Statements of Convertible Preferred Stock and Stockholder’s Equity (Deficit)	6
	Statements of Cash Flows	7
	Notes to Unaudited Interim Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	27
PART II.	OTHER INFORMATION	28
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	79
Item 3.	Defaults Upon Senior Securities	79
Item 4.	Mine Safety Disclosures	79
Item 5.	Other Information	79
Item 6.	Exhibits	80
Signatures		82

3

PART I-FINANCIAL INFORMATION

Item 1. Financial Statements.

Passage Bio, Inc.

Balance Sheets

(Unaudited)

(in thousands, except share data)	March 31, 2020		December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	366,828	$	158,874
Prepaid expenses		2,921		156
Prepaid research and development		12,340		6,745
Total current assets		382,089		165,775
Property and equipment, net		1,137		1,087
Other assets		9,201		11,751
Total assets	$	392,427	$	178,613
Liabilities, convertible preferred stock and stockholders’ equity (deficit)
Current liabilities:
Accounts payable	$	2,532	$	629
Accrued expenses and other current liabilities		2,696		3,052
Total current liabilities		5,228		3,681
Deferred rent		489		504
Other liabilities		44		76
Total liabilities		5,761		4,261
Convertible preferred stock, $0.0001 par value:
Series A‑1 convertible preferred stock: 63,023,258 shares authorized, issued and outstanding at December 31, 2019		—		74,397
Series A‑2 convertible preferred stock: 22,209,301 shares authorized; issued and outstanding at December 31, 2019		—		46,311
Series B convertible preferred stock: 33,592,907 shares authorized, issued and outstanding at December 31, 2019		—		109,897
Total convertible preferred stock		—		230,605
Commitments and Contingencies (note 6)
Stockholders’ equity (deficit):
Common stock, $0.0001 par value: 300,000,000 shares authorized; 45,797,195 shares issued and 45,350,687 shares outstanding at March 31, 2020 and 5,194,518 shares issued and 4,293,039 shares outstanding at December 31, 2019		4		—
Additional paid‑in capital		462,910		2,410
Accumulated deficit		(76,248)		(58,663)
Total stockholders’ equity (deficit)		386,666		(56,253)
Total liabilities, convertible preferred stock and stockholders’ equity (deficit)	$	392,427	$	178,613

See accompanying notes to unaudited interim financial statements.

4

Passage Bio, Inc.

Statements of Operations

(Unaudited)

	Three Months Ended March 31,
(in thousands, except share and per share data)	2020		2019
Operating expenses:
Research and development	$	13,117	$	3,033
General and administrative		4,795		1,154
Loss from operations		(17,912)		(4,187)
Change in fair value of future tranche right liability		—		(3,482)
Interest income		327		—
Net loss	$	(17,585)	$	(7,669)
Per share information:
Net loss per share of common stock, basic and diluted	$	(1.00)	$	(1.83)
Weighted average common shares outstanding, basic and diluted		17,624,011		4,197,604

See accompanying notes to unaudited interim financial statements.

5

Passage Bio, Inc.

Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) For the Three Months Ended March 31, 2020 and 2019

(in thousands, except share data)

(Unaudited)

	Convertible preferred stock									Stockholders’ equity (deficit)
	Series A‑1			Series A‑2			Series B			Common stock			Additional		Accumulated
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		paid‑in capital		deficit		Total
Balance at January 1, 2020	63,023,258	$	74,397	22,209,301	$	46,311	33,592,907	$	109,897	4,293,039	$	—	$	2,410	$	(58,663)	$	(56,253)
Vesting of early exercise option awards	—		—	—		—	—		—	454,971		—		32		—		32
Conversion of convertible preferred stock upon initial public offering	(63,023,258)		(74,397)	(22,209,301)		(46,311)	(33,592,907)		(109,897)	26,803,777		3		230,602		—		230,605
Sale of common stock in initial public offering, net of issuance costs of $3,495	—		—	—		—	—		—	13,798,900		1		227,498		—		227,499
Share‑based compensation expense	—		—	—		—	—		—	—		—		2,368		—		2,368
Net loss	—		—	—		—	—		—	—		—	$	—		(17,585)		(17,585)
Balance at March 31, 2020	—	$	—	—	$	—	—	$	—	45,350,687	$	4		462,910	$	(76,248)	$	386,666

	Convertible preferred stock									Stockholders’ deficit
	Series A‑1			Series A‑2			Series A‑2			Common stock			Additional		Accumulated
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		paid‑in capital		deficit		Total
Balance at January 1, 2019	44,418,606	$	43,118	—	$	—	—	$	—	4,195,649	$	—	$	856	$	(13,029)	$	(12,173)
Vesting of early exercise option awards	—		—	—		—	—		—	13,538		—		13		—		13
Sale of Series A‑1 convertible preferred stock, net of issuance costs of $19	18,604,652		19,981	—		—	—		—	—		—		—		—		—
Share‑based compensation expense	—		—	—		—	—		—	—		—		231		—		231
Net loss	—		—	—		—	—		—	—		—		—		(7,669)		(7,669)
Balance at March 31, 2019	63,023,258	$	63,099	—	$	—	—	$	—	4,209,187	$	—	$	1,100	$	(20,698)	$	(19,598)

See accompanying notes to unaudited interim financial statements.

6

Passage Bio, Inc.

Statements of Cash Flows

(Unaudited)

	Three Months Ended
	March 31,
(in thousands)	2020		2019
Cash flows used in operating activities:
Net loss	$	(17,585)	$	(7,669)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of future tranche right liability		—		3,482
Depreciation and amortization		49		12
Share‑based compensation		2,368		231
Deferred rent		(15)		444
Changes in operating assets and liabilities:
Prepaid expenses and other assets		(978)		31
Prepaid research and development		(5,595)		2,925
Accounts payable		331		(47)
Accrued expenses and other current liabilities		(426)		377
Net cash used in operating activities		(21,851)		(214)
Cash flows used in investing activities:
Purchases of property and equipment		(99)		(884)
Net cash used in investing activities		(99)		(884)
Cash flows provided by financing activities:
Proceeds from issuance of common stock upon initial public offering, net of offering costs		229,904		—
Proceeds from the sale of Series A‑1 convertible preferred stock and future tranche right, net of offering costs		—		19,981
Proceeds from early exercise stock options		—		176
Net cash provided by financing activities		229,904		20,157
Net increase in cash and cash equivalents		207,954		19,059
Cash and cash equivalents at beginning of period		158,874		24,861
Cash and cash equivalents at end of period	$	366,828	$	43,920
Supplemental disclosure of non‑cash investing and financing activities:
Offering costs in accrued expenses and other current liabilities	$	70	$	—
Offering costs in accounts payable	$	1,571	$	—
Reclassification of deferred offering costs paid in a prior period	$	763	$	—
Property and equipment in accounts payable	$	—	$	134
Vesting of early exercise option awards	$	32	$	13

See accompanying notes to unaudited interim financial statements.

7

Passage Bio, Inc.

Notes to Unaudited Interim Financial Statements

1. Nature of Operations

Passage Bio, Inc. (the Company), a Delaware corporation incorporated in July 2017, is a genetic medicines company focused on advancing transformative therapies for rare monogenic central nervous system diseases. The Company has a strategic research collaboration with the Trustees of the University of Pennsylvania’s (Penn’s), Gene Therapy Program (GTP) that provides the Company with access to one of the premier research institutions in the world for the discovery and preclinical development of genetic medicine product candidates and exclusive rights to certain rare, monogenic central nervous system (CNS) indications. Under this collaboration, GTP conducts discovery and investigation new drug enabling preclinical activities and the Company conducts all clinical development, regulatory strategy, and commercialization activities under the agreement. The Company also has a collaboration agreement and a development services and clinical supply arrangement with Catalent Maryland, Inc. (Catalent) (formerly Paragon Bioservices, Inc.) for clinical scale manufacturing requirements.

2. Risks and Liquidity

The Company has incurred recurring losses and negative cash flows from operations since inception and had an accumulated deficit of $76.2 million as of March 31, 2020. The Company anticipates incurring additional losses until such time, if ever, that it can generate significant sales of its product candidates currently in development. Substantial additional capital will be needed by the Company to fund its operations and to develop its product candidates.

In March 2020, the Company closed its initial public offering (IPO) in which the Company issued and sold 13,798,900 shares of its common stock, which included shares sold pursuant to an option granted to the underwriters to purchase additional shares, at a public offering price of $18.00 per share for net proceeds of $227.5 million after deducting underwriting discounts, commissions and other offering expenses.

The Company’s operations have consisted primarily of organizing the Company, securing financing, developing licensed technology, performing research and conducting preclinical studies. The Company faces risks associated with early-stage biotechnology companies whose product candidates are in development. Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital for the Company to complete its research and development, achieve its research and development objectives, defend its intellectual property rights, and recruit and retain skilled personnel, and key members of management. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

The Company plans to seek additional funding through public or private equity offerings, debt financings, other collaborations, strategic alliances and licensing arrangements. The Company may not be able to obtain financing on acceptable terms, or at all, and the Company may not be able to enter into strategic alliances or other arrangements on favorable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of the Company’s stockholders. If the Company is unable to obtain funding, the Company could be required to delay, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, which could adversely affect its business prospects.

8

Passage Bio, Inc.

Notes to Unaudited Interim Financial Statements

3. Summary of Significant Accounting Policies

The Company’s complete summary of significant accounting policies can be found in “Note 3. Summary of Significant Accounting Policies” in the audited financial statements included in the Company’s prospectus filed with the SEC on February 27, 2020.

Basis of Presentation

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP). Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (ASC) and Accounting Standards Updates (ASU) promulgated by the Financial Accounting Standards Board (FASB).

Interim Financial Statements

The accompanying unaudited interim financial statements have been prepared from the books and records of the Company in accordance with GAAP for interim financial information and Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission (SEC), which permits reduced disclosures for interim periods. All adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the accompanying balance sheets, statements of operations, convertible preferred stock and stockholders’ equity (deficit), and cash flows have been made. Although these interim financial statements do not include all of the information and footnotes required for complete annual financial statements, management believes the disclosures are adequate to make the information presented not misleading. Unaudited interim results of operations and cash flows are not necessarily indicative of the results that may be expected for the full year. Unaudited interim financial statements and footnotes should be read in conjunction with the December 31, 2019 financial statements and footnotes included in the prospectus as filed with the SEC on February 27, 2020.

Use of Estimates

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

Estimates and assumptions are periodically reviewed and the effects of the revisions are reflected in the accompanying financial statements in the period they are determined to be necessary. Prior to the IPO, significant areas that required management’s estimates included the fair value of the Company’s future tranche right liability and its common stock. After the IPO, the most significant judgements are used in estimates to determine the fair value of stock options issued.

Fair Value of Financial Instruments

Management believes that the carrying amounts of the Company’s financial instruments, including cash equivalents, prepaid expenses, and accounts payable, approximate fair value due to the short-term nature of those instruments. The future tranche right liability was recorded at its estimated fair value.

Share-based compensation

The Company measures share-based awards at their grant-date fair value and records compensation expense on a straight-line basis over the vesting period of the awards.

9

Passage Bio, Inc.

Notes to Unaudited Interim Financial Statements

Estimating the fair value of share-based awards requires the input of subjective assumptions, including, prior to the IPO, the estimated fair value of the Company's common stock, and, for stock options, the expected life of the options and stock price volatility. The Company accounts for forfeitures for stock option awards as they occur. The Company uses the Black-Scholes option pricing model to value its stock option awards. The assumptions used in estimating the fair value of share-based awards represent management's estimate and involve inherent uncertainties and the application of management's judgment. As a result, if factors change and management uses different assumptions, share-based compensation expense could be materially different for future awards.

The expected life of the stock options is estimated using the "simplified method," as the Company has no historical information from which to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock option grants. The simplified method is the midpoint between the vesting period and the contractual term of the option. For stock price volatility, the Company uses comparable public companies as a basis for its expected volatility to calculate the fair value of option grants. The risk-free rate is based on the U.S. Treasury yield curve commensurate with the expected life of the option.

Net Loss Per Share

Basic net loss per share of common stock is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during each period. Diluted loss per share of common stock includes the effect, if any, from the potential exercise or conversion of securities, such as convertible preferred stock, which would result in the issuance of incremental shares of common stock. For diluted net loss per share, the weighted-average number of shares of common stock is the same for basic net loss per share due to the fact that when a net loss exists, dilutive securities are not included in the calculation as the impact is anti-dilutive.

The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares of common stock outstanding, as they would be anti-dilutive:

	March 31,
	2020	2019
Series A‑1 convertible preferred stock	—	14,216,333
Future tranche right	—	5,009,808
Stock options (including shares subject to repurchase)	6,359,947	736,962
Stock options vested and exercised, but subject to settlement of nonrecourse promissory notes	—	258,336
	6,359,947	20,221,439

Amounts in the above table reflect the common stock equivalents.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases, which requires a lessee to record a right-of-use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. As the Company has elected to use the extended transition period for complying with new or revised accounting standards as available under the Jobs Act, the standard is effective for the Company beginning January 1, 2021, with early adoption permitted. The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosures.

10

Passage Bio, Inc.

Notes to Unaudited Interim Financial Statements

4. Fair Value of Financial Instruments

Fair value is the price that could be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value determination in accordance with applicable accounting guidance requires that a number of significant judgments be made. Additionally, fair value is used on a nonrecurring basis to evaluate assets for impairment or as required for disclosure purposes by applicable accounting guidance on disclosures about fair value of financial instruments. Depending on the nature of the assets and liabilities, various valuation techniques and assumptions are used when estimating fair value. The carrying amounts of certain of the Company’s financial instruments, including prepaid expense and accounts payable are shown at cost, which approximates fair value due to the short-term nature of these instruments. The Company follows the provisions of FASB ASC Topic 820, Fair Value Measurement, for financial assets and liabilities measured on a recurring basis. The guidance requires fair value measurements be classified and disclosed in one of the following three categories:

● Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

● Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liabilities.

● Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

The following fair value hierarchy table presents information about the Company’s assets measured at fair value on a recurring basis:

	Fair value measurement at
	reporting date using
	Quoted prices
	in active		Significant
		markets for	other		Significant
	identical		observable			unobservable
	assets		inputs		inputs
(in thousands)	(Level 1)		(Level 2)		(Level 3)
March 31, 2020:
Assets:
Cash equivalents (Money Market Fund)	$	284,173	$	—	$	—
December 31, 2019:
Assets:
Cash equivalents (Money Market Fund)	$	155,846	$	—	$	—

The Company evaluated the future tranche right feature within the Series A-1 convertible preferred stock issued in 2018 and determined that the future tranche right was a freestanding financial instrument that was classified as a liability and was re-measured at each reporting period until the redemption feature was exercised in connection with the sale and issuance of the Series A-2 convertible preferred stock in May 2019.

11

Passage Bio, Inc.

Notes to Unaudited Interim Financial Statements

5. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

(in thousands)	March 31, 2020		December 31, 2019
Professional fees	$	344	$	997
Compensation and related benefits		1,388		1,502
Research and development		946		507
Other		18		46
	$	2,696	$	3,052

6. Commitments and Contingencies

Amended and Restated Research, Collaboration and License Arrangement with Penn

In May 2020, the Company amended and restated its research, collaboration and licensing agreement with Penn (the Penn Expansion Agreement) for research and development collaborations and exclusive license rights to patents for certain products and technologies, which supersedes the Company’s existing sponsored research, collaboration and licensing agreement with Penn, dated September 18, 2018, as amended. Under the Penn Expansion Agreement, the Company agreed to fund discovery research conducted by Penn for five years, beginning in May 2020, and will receive exclusive rights, subject to certain limitations, to technologies resulting from the discovery research for the Company’s products developed with GTP, such as novel capsids, toxicity reduction technologies and delivery and formulation improvements. This funding commitment is $5.0 million annually, with quarterly payments of $1.3 million. The Penn Expansion Agreement also increased the number of remaining options available to the Company to commence additional licensed programs for rare, monogenic CNS indications from six to eleven, and extended the option exercise window by three years. Accordingly, the window to exercise all eleven remaining options extends to May 2025. If the Company were to exercise any of these options, it would owe Penn a non-refundable upfront fee of $1.0 million per product indication.

Catalent Agreements

In June 2019, the Company entered into a collaboration agreement (the Catalent Collaboration Agreement) with Catalent. As part of the Catalent Collaboration Agreement, the Company paid Catalent an upfront fee for the commissioning, qualification, validation and equipping of a clean room suite (the Clean Room Suite). Subject to validation of the Clean Room Suite, which is expected to occur by the end of 2020, the Company will pay an annual fee for five years for the use of the Clean Room Suite and is also committed to minimum annual purchase commitments.

In April 2020, the Company entered into a development services and clinical supply agreement (the Manufacturing and Supply Agreement) with Catalent to secure clinical scale manufacturing capacity for batches of active pharmaceutical ingredients for the Company’s gene therapy product candidates. The Manufacturing and Supply Agreement confirms the terms contemplated by the Catalent Collaboration Agreement. The Catalent Collaboration Agreement continues to be in effect pursuant to its terms.

Under the terms of the Manufacturing and Supply Agreement, Catalent has agreed to manufacture batches of drug product for the Company’s gene therapy product candidates at the Clean Room Suite at a Catalent facility provided for in the Catalent Collaboration Agreement. The Manufacturing and Supply Agreement provides for a term of five years which period may be extended once, at the Company’s option, for an additional five year-period.

The Company has the right to terminate the Manufacturing and Supply Agreement for convenience or other reasons specified in the Manufacturing and Supply Agreement upon prior written notice. If the Company terminates the

12

Passage Bio, Inc.

Notes to Unaudited Interim Financial Statements

Manufacturing and Supply Agreement for convenience and certain other specified events, it will be obligated to pay an early termination fee to Catalent.

Under both the Collaboration Agreement and the Manufacturing and Supply Agreement, the Company has an annual minimum commitment of $10.6 million per year owed to Catalent for five years, subject to certain inflationary adjustments.

Operating Leases

The Company leases office space in Philadelphia, Pennsylvania under a noncancelable lease (Existing Lease Agreement), as amended. The lease is classified as an operating lease and the Company recognizes rent expense on a straight-line basis over the lease term. The Company recognized rent expense of $36,000 and $51,000 during the three months ended March 31, 2020 and 2019, respectively, related to this lease. The future minimum lease payments under the Company’s Existing Lease Agreement as of March 31, 2020 is $0.2 million for the remainder of 2020.

In April 2020, the Company entered into a new lease agreement (New Lease Agreement) for larger office space in Philadelphia to accommodate the Company’s continued growth and serve as the new corporate headquarters. The New Lease Agreement is expected to commence in January 2021 and is expected to expire in November 2031. Upon signing the New Lease Agreement, the Company amended the Existing Lease Agreement such that the Existing Lease Agreement will terminate five days after the commencement of the New Lease Agreement with no further payments due under the Existing Lease Agreement. The Company has an option to extend the term of the New Lease Agreement by up to two five-year terms. The landlord also will provide the Company with a tenant improvement allowance of up to $2.8 million. The future minimum lease payments under the Company’s New Lease Agreement are as follows:

(in thousands)
2021	$	—
2022		889
2023		1,098
2024		1,131
2025		1,165
Thereafter		7,763
	$	12,046

Employment Agreements

The Company has entered into employment agreements with key personnel providing for compensation and severance in certain circumstances, as described in the respective employment agreements.

Other Research and Development Arrangements

The Company enters into agreements with contract research organizations (CROs) to assist in the performance of research and development activities. Expenditures to CROs will represent a significant cost in clinical development for the Company. The Company could also enter into additional collaborative research, contract research, manufacturing, and supplier agreements in the future, which may require upfront payments and long-term commitments of cash.

Patent Infringement Claim

On February 18, 2020, the Company received a letter from Regenxbio Inc. (Regenx), which stated its view that the use of the Company’s AAVhu68 capsid infringes patent claims to which Regenx has an exclusive license and which expire in 2024. Regenx also stated that it has exclusive licenses to various pending patent applications regarding the use of AAV vectors administered via instar-cisterna magna injection, and that these applications may lead to issued claims that

13

Passage Bio, Inc.

Notes to Unaudited Interim Financial Statements

Regenx believes may, if issued, cover the Company’s planned method of administration for the Company’s lead product candidates. The Company believes it has valid defenses to the issued claims set forth by Regenx relating to AAVhu68. Further, the prosecution of pending patent applications is highly uncertain, and it is unclear whether any patents will be issued from these pending Regenx patent applications at all, much less with claims that are relevant to the administration of the Company’s product candidates. Regenx also asked for information regarding the Company’s relationship with Dr. Wilson while he was serving as an advisor to Regenx. Regenx's letter also offers to discuss licensing the applicable patent portfolios from them. In April 2020, the Company responded to Regenx indicating that it does not believe it requires a license to any of the specified Regenx patents or patent applications at this time, and that it found that Dr. Wilson’s relationship with the Company was consistent with his obligations to Regenx. The Company will continue to monitor the situation and, if necessary, take appropriate actions, which may include responding to further correspondence from Regenx, and engaging in discussions with Regenx regarding their claims. If any such patents were enforceable and such claims were ultimately successful, the Company might require a license to continue to use and sell any product candidates using such AAV vector.

7. Convertible Preferred Stock and Common Stock

Initial Public Offering

In March 2020, the Company completed its IPO in which the Company sold 13,798,900 shares of its common stock, which included shares sold pursuant to an option granted to the underwriters to purchase additional shares, at a public offering price of $18.00 per share. The Company received net proceeds of $227.5 million after deducting underwriting discounts, commissions, and other offering expenses paid by the Company. In addition, immediately prior to the initial closing of the IPO on March 3, 2020, (i) all of the Company’s outstanding shares of convertible preferred stock converted into an aggregate of 26,803,777 shares of common stock and (ii) the Company filed an amended and restated certificate of incorporation to, among other things, increase the number of authorized shares of common stock to 300.0 million.

8. Share-Based Compensation

Equity Incentive Plan

The Company has two equity incentive plans: the 2018 Equity Incentive Plan, as amended, and the 2020 Equity Incentive Plan. New awards can only be granted under the 2020 Equity Incentive Plan (the Plan). The total number of shares authorized under the Plan as of March 31, 2020 was 5,362,823. Of this amount, 4,435,181 shares were available for future grants as of March 31, 2020. The number of shares of the Company’s common stock that may be issued pursuant to rights granted under the Plan shall automatically increase on January 1st of each year, commencing on January 1, 2021 and continuing for ten years, in an amount equal to five percent of the total number of shares of the Company’s common stock outstanding on December 31st of the preceding calendar year, subject to the discretion of the board of directors or compensation committee to determine a lesser number of shares shall be added for such year. The Plan provides for the granting of common stock, incentive stock options, nonqualified stock options, restricted stock awards, and/or stock appreciation rights to employees, directors, and other persons, as determined by the Company’s board of directors. The Company’s stock options vest based on the terms in each award agreement, generally over four-year periods, and have a term of ten years.

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Passage Bio, Inc.

Notes to Unaudited Interim Financial Statements

The Company measures share-based awards at their grant-date fair value and records compensation expense on a straight-line basis over the vesting period of the awards. The Company recorded share-based compensation expense in the following expense categories in its accompanying statements of operations for the period presented:

	March 31,
(in thousands)	2020		2019
Research and development	$	1,046	$	4
General and administrative		1,322		227
	$	2,368	$	231

During the three months ended March 31, 2020, the Company modified certain awards and recognized an additional $0.7 million related to the modifications, $0.6 million of which was recognized in research and development expense and $0.1 million was recognized in general and administrative expense.

The following table summarizes stock option activity for the three months ended March 31, 2020:

				Weighted
		Weighted		average
		average		remaining
	Number of	exercise price		contractual
	shares	per share		term (years)
Outstanding at January 1, 2020	2,577,719	$	5.90	9.3
Granted	3,470,051		13.14
Forfeited	(134,331)		1.02
Outstanding at March 31, 2020	5,913,439	$	9.94	9.5
Exercisable at March 31, 2020	275,891	$	5.01	9.3
Vested or expected to vest at March 31, 2020	5,913,439	$	9.94	9.5

The weighted-average grant date fair value of options granted was $9.93 and $0.73 for the three months ended March 31, 2020 and 2019, respectively. As of March 31, 2020, the total unrecognized compensation expense related to unvested stock option awards was $41.8 million, which the Company expects to recognize over a weighted-average period of 2.53 years.

The fair value of each option was estimated on the date of grant using the weighted average assumptions in the table below:

	Three months ended March 31,
	2020		2019
Expected volatility	92.6	%	87.0	%
Risk‑free interest rate	1.4	%	2.5	%
Expected term	6.07 years		5.56 years
Expected dividend yield	—		—

The Plan provides certain holders of stock options an election to early exercise prior to vesting. The Company has the right to repurchase early exercised options without transferring any appreciation in the value of the underlying shares to the employee if the employee terminates employment before the end of the original vesting period. The repurchase price is the lesser of the original exercise price or the then fair value of the Company’s common stock. At March 31, 2020, $44,000 of proceeds from unvested early exercised options were recognized as a non-current liability in other liabilities in the accompanying balance sheet.

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Passage Bio, Inc.

Notes to Unaudited Interim Financial Statements

The 2018 Equity Incentive Plan allowed for the exercise of options to be financed with nonrecourse notes. For accounting purposes, payment of principal and interest are viewed as the exercise price of the option. Therefore, no interest income was recognized.

The following table summarizes activity relating to early exercises of stock options during the three months ended March 31, 2020:

	Number of shares
Unvested balance at January 1, 2020	494,603
Vested	(48,095)
Unvested balance at March 31, 2020	446,508

Nonrecourse Promissory Notes with Related Parties

In February 2019, the Company’s interim chief executive officer and chief operating officer elected to early exercise 688,875 and 309,994 stock options, respectively, in exchange for cash proceeds of $0.2 million and nonrecourse promissory notes (the Notes) of $0.8 million. The Notes bore interest at 2.91% and were secured by the underlying shares of common stock that were issued until January 2020, when the Company forgave the Notes and associated interest related to the early exercise of stock options by the interim chief executive officer and chief operating officer. An aggregate of 406,894 shares that were previously not considered outstanding for accounting purposes due to being secured by the Notes became outstanding upon the forgiveness of the Notes in January 2020.

Employee Stock Purchase Plan

The Company’s 2020 Employee Stock Purchase Plan (the ESPP) became effective on February 28, 2020. The ESPP authorizes the issuance of up to 434,000 shares of the Company’s common stock. The number of shares of the Company’s common stock that may be issued pursuant to rights granted under the ESPP shall automatically increase on January 1st of each year, commencing on January 1, 2021 and continuing for ten years, in an amount equal to one percent of the total number of shares of the Company’s common stock outstanding on December 31st of the preceding calendar year, subject to the discretion of the board of directors or compensation committee to determine a lesser number of shares shall be added for such year.

Under the ESPP, eligible employees can purchase the Company’s common stock through accumulated payroll deductions at such times as are established by the compensation committee. Eligible employees may purchase the Company’s common stock at 85% of the lower of the fair market value of the Company’s common stock on the first day of the offering period or on the last day of the offering period. Eligible employees may contribute up to 15% of their eligible compensation. Under the ESPP, a participant may not accrue rights to purchase more than $25,000 worth of the Company’s common stock for each calendar year in which such right is outstanding.

Effective March 3, 2020, employees who elected to participate in the ESPP commenced payroll withholdings that accumulate through November 15, 2020. In accordance with the guidance in ASC 718-50 – Compensation – Stock Compensation, the ability to purchase shares of the Company’s common stock at 85% of the lower of the price on the first day of the offering period or the last day of the offering period (i.e. the purchase date) represents an option and, therefore, the ESPP is a compensatory plan under this guidance. Accordingly, share-based compensation expense is determined based on the option’s grant-date fair value as estimated by applying the Black Scholes option-pricing model and is recognized over the withholding period. The Company recognized share-based compensation expense of $23,000 during the three months ended March 31, 2020 related to the ESPP.

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Passage Bio, Inc.

Notes to Unaudited Interim Financial Statements

9. Related-Party Transactions

Penn Agreement

Penn is a stockholder of the Company. Research and development expenses with Penn during the three months ended March 31, 2020 and 2019 were $7.7 million and $2.9 million, respectively. The Company made $12.6 million in cash payments to Penn during the three months ended March 31, 2020, and had a prepaid research and development asset of $10.7 million and $5.7 million as of March 31, 2020 and December 31, 2019, respectively, in the accompanying balance sheets.

Consulting Agreement

James M. Wilson, M.D., Ph.D., an employee of Penn and a stockholder of the Company, serves as the Company’s chief scientific advisor pursuant to a consulting agreement. The Company recognized $31,000 of expense related to these services during the three months ended March 31, 2020, including $6,000 of share-based compensation expense.

10. Subsequent Events

Outside of the items disclosed in Note 6, there are no other subsequent events that warrant disclosure.

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

You should read the following discussion of our financial condition and results of operations in conjunction with our financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and our final prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended, dated February 28, 2020, or the Prospectus. In addition to historical financial information, this discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties, such as statements of our plans, objectives, expectations, intentions and belief. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the section titled “Risk Factors” under Part II, Item 1A below.

Overview and Pipeline

We are a genetic medicines company focused on developing transformative therapies for rare, monogenic central nervous system, or CNS, disorders with limited or no approved treatment options. Our vision is to become the premier genetic medicines company by developing and ultimately commercializing therapies that dramatically and positively transform the lives of patients suffering from these life-threatening disorders. To achieve our vision, we have assembled a world-class team whose members have decades of collective experience in genetic medicines and rare disease drug development and commercialization. The field of genetic medicine is rapidly expanding and we believe we have a differentiated approach to developing treatments for rare, monogenic CNS disorders that enables us to select and advance product candidates with a higher probability of technical and regulatory success. We have a strategic research collaboration with the Trustees of the University of Pennsylvania’s, or Penn’s, Gene Therapy Program, or GTP, headed by Dr. James Wilson, a leader in the genetic medicines field. We leverage our close working relationship with the Orphan Disease Center, or the ODC, at Penn to develop historical and prospective external data for each disease for use in building comparable patient profiles of participants in interventional trials. Through these collaborations we have assembled a deep portfolio of genetic medicine product candidates all of which we retain global rights to, the details of which are outlined in the below table:

(1) Program includes ongoing natural history study of infantile and juvenile GM1 gangliosidosis patients.

PBGM01 for the Treatment of GM1

We are currently developing PBGM01 for the treatment of GM1 gangliosidosis, or GM1, which utilizes a proprietary, next-generation AAVhu68 capsid to deliver to the brain and peripheral tissues a functional GLB1 gene encoding

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lysosomal acid beta-galactosidase, or b-gal, for infantile GM1. Currently, there are no disease-modifying therapies approved for the treatment of GM1. We believe PBGM01 could provide patients with significantly improved outcomes. In preclinical models, we have observed meaningful transduction of both the CNS and critical peripheral organs for GM1 patients using our ICM method of administration in combination with our next-generation AAVhu68 capsid. ICM, or intra-cisterna magna injection, involves an injection at the craniocervical junction. We expect to submit an IND in the second quarter of 2020, initiate a Phase 1/2 trial in the fourth quarter of 2020 and anticipate initial 30-day safety and biomarker data to be available late in the first half of 2021. We are currently funding a GM1 natural history study being conducted by the ODC to collect prospective data on clinical disease progression in infantile and juvenile GM1. This data will be used to construct natural history patient profiles for use as matched case controls for comparison to the profiles of treated participants in our planned Phase 1/2 clinical trial. In April 2020, the U.S. Food and Drug Administration, or the FDA, granted Orphan Drug Designation to PBGM01. This designation represents an important recognition of the dire need for an effective treatment option for those suffering from GM1, while granting us financial incentives to support clinical development and the potential for up to seven years of market exclusivity in the U.S. upon regulatory approval.

PBFT02 for the Treatment of FTD-GRN

We are currently developing PBFT02 for the treatment of frontotemporal dementia, of FTD, which utilizes an AAV1 capsid to deliver to the brain a functional granulin, or GRN, gene encoding progranulin, for the treatment of FTD caused by a deficiency of progranulin, or FTD-GRN. Currently, there are no disease-modifying therapies approved for the treatment of FTD-GRN. We believe PBFT02 may provide patients with significantly improved outcomes. In a non-human primate, or NHP model, we observed superior transduction results of the CNS using our ICM method of administration and an AAV1 capsid compared to other AAV capsids. We expect to submit an IND in the second half of 2020 and initiate a Phase 1/2 trial in the first half of 2021 and anticipate clinical data to be available in the second half of 2021.

PBKR03 for the Treatment of Krabbe disease

We are currently developing PBKR03, which utilizes a proprietary, next-generation AAVhu68 capsid to deliver to the brain and peripheral tissues a functional GALC gene encoding the hydrolytic enzyme galactosylceramidase, for infantile Krabbe disease. Currently, there are no disease-modifying therapies approved for the treatment of Krabbe disease. We believe PBKR03 may provide patients with significantly improved outcomes. In preclinical models, we have observed meaningful transduction of both the CNS and critical peripheral organs for Krabbe patients using our ICM method of administration in combination with our next-generation AAVhu68 capsid. We expect to submit an IND in the second half of 2020 and initiate a Phase 1/2 trial in the first half of 2021 and anticipate clinical data to be available in the second half of 2021.

Discovery Programs

We also have three programs in the discovery or candidate selection stage: PBML04 for metachromatic leukodystrophy, or MLD, PBAL05 for amyotrophic lateral sclerosis, or ALS, and PBCM06 for Charcot-Marie-Tooth Type 2A, or CMT2A. We also have eleven options available to us to license programs for rare, monogenic CNS indications, along with rights and licenses to new gene therapy technologies developed by Penn.

Business Overview

We were incorporated in July 2017 under the laws of the State of Delaware. Since inception, we have devoted substantially all of our resources to acquiring and developing product and technology rights, conducting research and development, organizing and staffing our company, business planning and raising capital. We have incurred recurring losses, the majority of which are attributable to research and development activities, and negative cash flows from operations. Historically, we have funded our operations through the sale of convertible preferred stock and then, in the first quarter of 2020, we closed our IPO and received net proceeds of $227.5 million. Our net loss was $17.6 million for the three months ended March 31, 2020. As of March 31, 2020, we had an accumulated deficit of $76.2 million. Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures,

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and to a lesser extent, general and administrative expenditures. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our current or future product candidates. We expect to continue to incur significant expenses and operating losses for the foreseeable future as we advance our product candidates through all stages of development and clinical trials and, ultimately, seek regulatory approval. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution. Furthermore, we expect to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses that we did not incur as a private company. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials and our expenditures on other research and development activities.

We will need to raise substantial additional capital to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we plan to finance our operations through the sale of equity, debt financings or other capital sources, which may include collaborations with other companies or other strategic transactions. There are no assurances that we will be successful in obtaining an adequate level of financing as and when needed to finance our operations on terms acceptable to us or at all. Any failure to raise capital as and when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies. If we are unable to secure adequate additional funding, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more product candidates or delay our pursuit of potential in-licenses or acquisitions.

As of March 31, 2020, we had cash and cash equivalents of $366.8 million. We expect our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2023.

COVID-19 Impact

We are continuing to proactively monitor and assess the current coronavirus disease 2019, or COVID-19, global pandemic. Since early March we have activated a management team taskforce to assess the potential impact on our business that may result from this rapidly evolving crisis and to avoid any unnecessary potential delays to our programs. At this time, our lead programs and research activities remain on track. The safety and well-being of employees, patients and partners is our highest priority.

Financial Operations Overview

License Agreement

University of Pennsylvania

In May 2020, we entered into an amended and restated research, collaboration and licensing agreement, or the Penn Expansion Agreement, with Penn, for research and development collaborations and exclusive license rights to patents for certain products and technologies,which supersedes the Original Penn Agreement (as defined below). Under the Penn Expansion Agreement, we will fund discovery research conducted by Penn for five years, beginning in May 2020, and will receive exclusive rights, subject to certain limitations, to technologies resulting from the discovery program for Passage Bio products developed with GTP, such as novel capsids, toxicity reduction technologies and delivery and formulation improvements. Our funding commitment is $5.0 million a year for five years, with quarterly payments of $1.3 million.The Penn Expansion Agreement also increased the number of remaining options available to us to commence additional licensed programs for rare, monogenic CNS indications from six to eleven, and extended the option exercise window by three years. Accordingly, the window to exercise the eleven remaining options extends to May 2025. If we were to exercise any of these eleven options, we would owe Penn a non-refundable upfront fee of $1.0 million per product indication.

In September 2018, we entered into a sponsored research, collaboration and licensing agreement, or the Original Penn Agreement, with the Trustees of the University of Pennsylvania, or Penn, for preclinical research and development

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collaborations and exclusive license rights to patents for certain products and technologies. As part of the Original Penn Agreement, we agreed to fund certain preclinical development activities as described therein.

The Original Penn Agreement allows us to exercise options to obtain exclusive intellectual property rights for certain current and future products in specified indications for non-refundable upfront fees of $1.0 million per product indication. We have currently exercised options to license six product candidates from Penn.

The Original Penn Agreement requires that we make payments of up to $16.5 million per product candidate in aggregate upon the achievement of specific development milestone events by such licensed product for a first indication, reduced development milestone payments for the second and third indications and no development milestone payments for subsequent indications. In addition, on a product by product basis, we are obligated to make up to $55.0 million in sales milestone payments on each licensed product based on annual sales of the licensed product in excess of defined thresholds.

Upon successful commercialization of a product using the licensed technology, we are obligated to pay to Penn, on a licensed product-by-licensed product and country-by-country basis, tiered royalties (subject to customary reductions) in the mid-single digits on annual worldwide net sales of such licensed product. In addition, we are obligated to pay to Penn a percentage of sublicensing income, ranging from the mid-single digits to low double digits, for sublicenses under the Original Penn Agreement.

Collaboration and Manufacturing and Supply Agreements

Catalent

We have a collaboration agreement with Catalent Maryland, Inc. or Catalent (formerly Paragon Bioservices, Inc.), or the Catalent Collaboration Agreement. As part of the Catalent Collaboration Agreement, we paid Catalent an upfront fee for the commissioning, qualification, validation and equipping of a clean room suite. Subject to validation of the clean room suite, which is expected to occur by the end of 2020, we will pay an annual fee for five years for the use of the clean room suite.

In April 2020, we entered into a development services and clinical supply agreement, or the Manufacturing and Supply Agreement, with Catalent to secure clinical scale manufacturing capacity for batches of active pharmaceutical ingredients for our gene therapy product candidates. The Manufacturing and Supply Agreement provides for a term of five years which period may be extended once, at our option, for an additional five year-period. In consideration for the use of the clean room suite, we have agreed to a minimum amount of purchase commitments for each year in the term, subject to adjustments for inflation.

Components of Results of Operations

Research and Development and Acquired In-Process Research and Development

Research and development expenses consist primarily of costs incurred in connection with the discovery and development of our product candidates. These expenses include:

● expenses incurred to conduct the necessary preclinical studies and clinical trials required to obtain regulatory approval, including payments to Penn for preclinical development;

● costs incurred in obtaining technology licenses related to technology that has not reached technological feasibility and has no alternative future use;

● personnel expenses, including salaries, benefits and share-based compensation expense for employees engaged in research and development functions;

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● costs of funding research performed by third parties, including pursuant to agreements with CROs, as well as investigative sites and consultants that conduct our preclinical studies and clinical trials;

● expenses incurred under agreements with contract manufacturing organizations, or CMOs, including manufacturing scale-up expenses and the cost of acquiring and manufacturing preclinical study and clinical trial materials;

● fees paid to consultants who assist with research and development activities;

● expenses related to regulatory activities, including filing fees paid to regulatory agencies; and

● allocated expenses for facility costs, including rent, utilities, depreciation and maintenance.

We track outsourced development costs and other external research and development costs to specific product candidates on a program-by-program basis, such as expenses incurred under our collaboration with Penn, fees paid to CROs, CMOs and research laboratories in connection with our preclinical development, process development, manufacturing and clinical development activities. However, we do not track our internal research and development expenses on a program-by-program basis as they primarily relate to compensation, early research and other costs which are deployed across multiple projects under development.

Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect our research and development expenses to increase significantly over the next several years as we increase personnel costs, including share-based compensation, conduct our clinical trials, including later-stage clinical trials, for current and future product candidates and prepare regulatory filings for our product candidates.

Costs incurred in obtaining technology licenses are charged to research and development expense as acquired in-process research and development if the technology licensed has not reached technological feasibility and has no alternative future use.

General and Administrative Expenses

General and administrative expense consists primarily of personnel expenses, including salaries, benefits and share-based compensation expense, for employees and consultants in executive, finance, accounting, legal, and human resource functions. General and administrative expense also includes corporate facility costs, including rent, utilities, depreciation and maintenance, not otherwise included in research and development expense, as well as legal fees related to intellectual property and corporate matters and fees for accounting and consulting services.

We expect that our general and administrative expense will increase in the future to support our continued research and development activities, potential commercialization efforts and increased costs of operating as a public company. These increases will likely include increased costs related to the hiring of additional personnel and fees to outside consultants, lawyers and accountants, among other expenses. Additionally, we anticipate increased costs associated with being a public company, including expenses related to services associated with maintaining compliance with the requirements of The Nasdaq Stock Market, LLC and the SEC, insurance and investor relations costs. If any of our current or future product candidates obtains U.S. regulatory approval, we expect that we would incur significantly increased expenses associated with building a sales and marketing team.

Change in Fair Value of Future Tranche Right Liability

Our Series A-1 convertible preferred stock issued in September 2018 included a future tranche participation right permitting investors to purchase 22,209,301 shares of Series A-2 convertible preferred stock at a fixed purchase price of $2.15 per share through December 31, 2019. The future tranche right was recorded at fair value using a Black-Scholes

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option pricing model and was re-measured at each reporting period until the redemption feature was exercised in May 2019, at which time the then estimated fair value was reclassified to convertible preferred stock.

Interest Income

Interest income consists of interest earned on our cash equivalents, which consists of a commercial money market account. We expect our interest income to increase due to our investment of cash received from our IPO.

Results of Operations

Comparison of the Three Months Ended March 31, 2020 and 2019

The following table sets forth our results of operations for the three months ended March 31, 2020 and 2019.

	Three months ended
	March 31,
(in thousands)	2020		2019		Change
Operating expenses:
Research and development	$	13,117	$	3,033	$	10,084
General and administrative		4,795		1,154		3,641
Loss from operations		(17,912)		(4,187)		13,725
Change in fair value of future tranche right liability		—		(3,482)		3,482
Interest income		327		—		327
Net loss	$	(17,585)	$	(7,669)	$	(9,916)

Research and Development Expenses

Research and development expenses increased by $10.1 million to $13.1 million for the three months ended March 31, 2020 from $3.0 million for the three months ended March 31, 2019. The increase was primarily due to an increase of $4.8 million in research and development costs incurred with Penn in preparation for several IND filings as well as an increase in other research costs of $2.9 million as we prepare for our clinical trials to begin in the second half of 2020 and early 2021. We also had a $2.3 million increase in personnel-related costs and a $0.2 million increase in facility and other costs due to increases in employee headcount in the research and development function.

We track outsourced development, outsourced personnel costs and other external research and development costs of specific programs. We do not track our internal research and development costs on a program-by-program basis. Research and development expenses are summarized by program in the table below:

	Three months ended
	March 31,
(in thousands)	2020		2019
GM1	$	2,410	$	541
FTD‑GRN		3,456		1,670
Krabbe		2,252		264
MLD		890		233
ALS		249		153
CMT2A		211		—
Internal costs, including personnel related		3,649		172
	$	13,117	$	3,033

General and Administrative Expenses

General and administrative expenses increased by $3.6 million to $4.8 million for the three months ended March 31, 2020 from $1.2 million for the three months ended March 31, 2019. The increase was primarily due to a $2.2 million

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increase in personnel-related and share-based compensation expense due to increases in employee headcount. Our professional fees and facility costs also increased by $0.6 million and $0.8 million, respectively, as we expanded our operations to support our research and development efforts.

Change in Fair Value of Future Tranche Right Liability

The change in fair value of our future tranche right liability related to our Series A-1 preferred stock was primarily due to the increase in the estimated fair value of our Series A-2 convertible preferred stock. The future tranche right liability was settled in May 2019.

Interest Income

We recognized interest income of $0.3 million during the three months ended March 31, 2020, primarily due to the investment of cash proceeds.

Liquidity and Capital Resources

Overview

From inception through December 31, 2019, we funded our operations through the sale of convertible preferred stock, receiving aggregate net proceeds of $222.1 million. Upon the completion of our IPO, we received net proceeds of $227.5 million. As of March 31, 2020, we had $366.8 million in cash and cash equivalents and had an accumulated deficit of $76.2 million. We expect our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2023.

Funding Requirements

Our primary use of cash is to fund operating expenses, most significantly research and development expenditures. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable, accrued expenses and prepaid expenses.

Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical products, we are unable to estimate the exact amount of our operating capital requirements. Our future funding requirements will depend on many factors, including, but not limited to:

● the scope, timing, progress and results of discovery, preclinical development, laboratory testing and clinical trials for our product candidates;

● the costs of manufacturing our product candidates for clinical trials and in preparation for marketing approval and commercialization;

● the extent to which we enter into collaborations or other arrangements with additional third parties in order to further develop our product candidates;

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

● the costs and fees associated with the discovery, acquisition or in-license of additional product candidates or technologies;

● our ability to establish additional collaborations on favorable terms, if at all;

● the costs required to scale up our clinical, regulatory and manufacturing capabilities;

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● the costs of future commercialization activities, if any, including establishing sales, marketing, manufacturing and distribution capabilities, for any of our product candidates for which we receive marketing approval; and

● revenue, if any, received from commercial sales of our product candidates, should any of our product candidates receive marketing approval.

We will need additional funds to meet operational needs and capital requirements for clinical trials, other research and development expenditures, and business development activities. We currently have no credit facility or committed sources of capital. Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated clinical studies.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or drug candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our research, product development or future commercialization efforts, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Cash Flows

The following table shows a summary of our cash flows for the periods indicated:

	Three months ended
	March 31,
(in thousands)	2020		2019
Cash used in operating activities	$	(21,851)	$	(214)
Cash used in investing activities		(99)		(884)
Cash provided by financing activities		229,904		20,157
Net increase in cash and cash equivalents	$	207,954	$	19,059

Net Cash Used in Operating Activities

During the three months ended March 31, 2020, we used $21.1 million of net cash in operating activities. Cash used in operating activities reflected a net loss of $17.6 million and a $5.9 million net increase in our operating assets and liabilities. The primary use of cash was to fund our operations related to the development of our product candidates. Cash used in these activities was partially offset by noncash charges of $2.4 million related to share-based compensation, deprecation and changes in deferred rent.

During the three months ended March 31, 2019, we used $0.2 million of net cash in operating activities. Cash used in operating activities reflected a net loss of $7.7 million. Cash used was partially offset by net decrease in our operating assets and liabilities of $3.3 million, noncash charges of $4.2 million, consisting of $3.5 million for the loss on the change in fair value of our future tranche right liability, $0.2 million in share-based compensation, and a $0.5 million change in our deferred rent balance.

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Net Cash Used in Investing Activities

During the three months ended March 31, 2020 and 2019, we used $0.1 million and $0.9 million, respectively, for the purchase of property and equipment.

Net Cash Provided by Financing Activities

During the three months ended March 31, 2020 and 2019, financing activities provided $229.9 million and $20.0 million, respectively, from the sale of our common stock and convertible preferred stock, respectively. During the three months ended March 31, 2019, we received $0.2 million from the exercise of stock options.

Off-Balance Sheet Arrangements

During the periods presented, we did not have, nor do we currently have, any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. We do not engage in off-balance sheet financing arrangements. In addition, we do not engage in trading activities involving non-exchange traded contracts. We therefore believe that we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these relationships.

Critical Accounting Policies and Estimates

During the three months ended March 31, 2020, there were no material changes to our critical accounting policies and estimates from those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in the Prospectus.

JOBS Act Accounting Election

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.

We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

We will remain an emerging growth company until the earliest of (1) the last day of our first fiscal year (a) in which we have total annual gross revenues of at least $1.07 billion, or (b) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the prior June 30^th, (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period and (3) December 31, 2025.

Recent Accounting Pronouncements

See Note 2 to our interim financial statements included elsewhere in this Quarterly Report on Form 10-Q for a description of recent accounting pronouncements applicable to our financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

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Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As of March 31, 2020, management, with the participation of our Principal Executive Officer and Principal Financial and Accounting Officer, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including the Principal Executive Officer and the Principal Financial and Accounting Officer, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on this evaluation, our Principal Executive Officer and Principal Financial and Accounting Officer concluded that, as of March 31, 2020, the design and operation of our disclosure controls and procedures were effective at a reasonable assurance level.

Changes in Internal Control over Financial Reporting

Management determined that, as of March 31, 2020, there were no changes in our internal control over financial reporting that occurred during the fiscal quarter then ended that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II-OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may be involved in legal proceedings arising in the ordinary course of our business. We are not presently a party to any legal proceedings that, in the opinion of management, would have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity and reputational harm, and other factors.

Item 1A. Risk Factors.

Investing in our common stock involves a high degree of risk. Before making your decision to invest in shares of our common stock, you should carefully consider the risks and uncertainties described below, together with the other information contained in this quarterly report, including our financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that affect us. We cannot assure you that any of the events discussed below will not occur. These events could have a material and adverse impact on our business, financial condition, results of operations and prospects. If that were to happen, the trading price of our common stock could decline, and you could lose all or part of your investment.

Risks Related to Our Financial Position and Need for Additional Capital

We are a preclinical stage biotechnology company with a history of operating losses, and we may not achieve or sustain profitability. We anticipate that we will continue to incur losses for the foreseeable future. Our limited operating history may make it difficult for you to evaluate the success of our business to date and to assess our future viability.

We are a preclinical stage genetic medicines company with a limited operating history on which to base your investment decision. Biotechnology product development is a highly speculative undertaking and involves a substantial degree of risk. Our operations to date have been limited primarily to organizing and staffing our company, business planning, raising capital and entering into collaboration agreements for conducting preclinical research and development activities for our product candidates. All of our lead product candidates are still in the preclinical testing stage. We have no products in clinical development or approved for commercial sale and have not generated any revenue from commercial product sales, and we will continue to incur significant research and development and other expenses related to our clinical development and ongoing operations. We have funded our operations to date through proceeds from sales of our convertible preferred stock, and the completion of our initial public offering, or IPO, and do not expect to receive revenue for many years, if ever.

We have incurred net losses since our inception in 2017. We incurred net losses of $17.6 million and $45.6 million for the three months ended March 31, 2020 and the year ended December 31, 2019, respectively. As of March 31, 2020, we had an accumulated deficit of $76.2 million. Substantially all of our operating losses have resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations. We expect to continue to incur significant expenses and operating losses over the next several years and for the foreseeable future as we intend to continue to conduct research and development, clinical testing, regulatory compliance activities, manufacturing activities, and, if any of our product candidates is approved, sales and marketing activities that, together with anticipated general and administrative expenses, will likely result in us incurring significant losses for the foreseeable future. Our prior losses, combined with expected future losses, have had and will continue to have an adverse effect on our stockholders’ deficit and working capital.

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We expect that it will be several years, if ever, before we have a commercialized product. We anticipate that our expenses will increase substantially if, and as, we:

• continue to advance the preclinical and clinical development of our existing product candidates and discovery stage programs;

• seek regulatory approvals for any product candidates that successfully complete clinical trials;

• hire additional clinical, quality control, regulatory, manufacturing, scientific and administrative personnel;

• expand our operational, financial and management systems and increase personnel, including personnel to support our clinical development, manufacturing and commercialization efforts and our operations as a public company;

• maintain, expand and protect our intellectual property portfolio; and

• incur additional legal, accounting or other expenses in operating our business, including the additional costs associated with operating as a public company.

In addition, as a new business, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors. We expect to transition rapidly from a small start-up company with a focus on hiring employees, establishing key collaborations and financing to a more fully-integrated company that is capable of supporting clinical development, manufacturing and commercial activities. We may not be successful in such a transition.

We have never generated revenue from product sales and may never achieve or maintain profitability.

We have no products in clinical development or approved for commercial sale and have not generated any revenue from commercial product sales. To become and remain profitable, we must develop and eventually commercialize product candidates with significant market potential, which will require us to be successful in a range of challenging activities. These activities can include completing preclinical studies and initiating and completing clinical trials of our product candidates, obtaining marketing approval for these product candidates, manufacturing, marketing and selling those products that are approved and satisfying any post marketing requirements. We may never succeed in any or all of these activities and, even if we do, we may never generate revenues that are significant or large enough to achieve profitability. Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve profitability.

Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would decrease the value of our company and could impair our ability to raise capital, maintain our research and development efforts, expand our business or continue our operations. A decline in the value of our company also could cause you to lose all or part of your investment.

We will need to raise additional funding before we can expect to become profitable from any potential future sales of our products. This additional financing may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit, or terminate our product development efforts or other operations.

We will require substantial future capital in order to complete planned and future preclinical and clinical development for PBGM01, PBFT02, PBKR03 and any other product candidates, if any, and potentially commercialize these product candidates, if approved. We expect our spending levels to significantly increase in connection with our preclinical studies and planned clinical trials, if any, of our lead product candidates. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant expenses related to product sales, medical affairs, marketing, manufacturing and distribution. Furthermore, we expect to incur additional costs associated with operating as a public company. Accordingly, we will need to obtain substantial additional funding in connection with our continuing

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operations. If we are unable to raise capital when needed or on acceptable terms, we would be forced to delay, reduce or eliminate certain of our licensing activities, our research and development programs or other operations.

Our operations have consumed significant amounts of cash since inception. As of March 31, 2020, our cash and cash equivalents were $366.8 million. We expect that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2023. However, we have based this estimate on assumptions that may prove to be wrong, and our operating plan may change as a result of factors currently unknown to us. As a result, we could deplete our capital resources sooner than we currently expect.

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

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

• the costs of manufacturing our product candidates for clinical trials and in preparation for marketing approval and commercialization;

• the extent to which we enter into collaborations or other arrangements with additional third parties in order to further develop our product candidates;

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

• the costs and fees associated with the discovery, acquisition or in-license of additional product candidates or technologies;

• our ability to establish collaborations on favorable terms, if at all;

• the costs required to scale up our clinical, regulatory and manufacturing capabilities;

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

• revenue, if any, received from commercial sales of our product candidates, should any of our product candidates receive marketing approval.

Accordingly, we will need to continue to rely on additional financing to achieve our business objectives, which may not be available to us on acceptable terms, or at all. We may seek additional capital due to favorable market conditions or strategic considerations, even if we believe we have sufficient funds for our current or future operating plans. If adequate funds are not available to us on a timely basis or on terms acceptable to us, we may be required to delay, limit, reduce or terminate preclinical studies, clinical trials or other development activities for one or more product candidates or discovery stage programs or delay, limit, reduce or terminate our establishment of sales and marketing capabilities or other activities that may be necessary to commercialize any product candidates, if approved.

Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. We do not have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or securities convertible into equity, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include covenants

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limiting or restricting our ability to take specific actions, such as incurring additional debt, selling or licensing our assets, making capital expenditures or declaring dividends.

If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed or on terms acceptable to us, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Risks Related to Product Development and Regulatory Approval

The outbreak of the novel strain of coronavirus, SARS-CoV-2, which causes COVID-19, could adversely impact our business, including our preclinical development activities and planned clinical trials.

Public health crises such as pandemics or similar outbreaks could adversely impact our business. In December 2019, a novel strain of coronavirus, SARS-CoV-2, which causes COVID-19, surfaced in Wuhan, China. Since then, COVID-19 has spread to multiple countries, including the United States. As a result of the COVID-19 outbreak, or similar pandemics, we may experience disruptions that could severely impact our business, manufacturing, preclinical development activities, preclinical studies and planned clinical trials, including:

● delays or disruptions in preclinical development activities, particularly at Penn, including non-clinical experiments and investigational new drug application-enabling good laboratory practice standard toxicology studies due to unforeseen circumstances in supply chain;

● interruption or delays in the operations of the U.S. Food and Drug Administration and comparable foreign regulatory agencies, which may impact timelines for regulatory submission and review, trial initiation and regulatory approval;

● interruption or delays in our CROs and collaborators meeting expected deadlines or complying with regulatory requirements related to preclinical development activities, preclinical studies and planned clinical trials;

● interruptions of, or delays in receiving, supplies of our product candidates from our CMOs, particularly at Catalent, due to staffing shortages, productions slowdowns or stoppages and disruptions in delivery systems;

● delays or difficulties in any planned clinical site initiation, including difficulties in obtaining IRB approvals, recruiting clinical site investigators and clinical site staff;

● delays or difficulties in enrolling patients in clinical trials;

● increased rates of patients withdrawing from any planned clinical trials following enrollment as a result of contracting COVID-19 or being forced to quarantine;

● diversion of healthcare resources away from the conduct of our preclinical development activities, preclinical studies and planned clinical trials, including the diversion of hospitals serving as any potential clinical trial sites and hospital staff supporting the conduct of our planned clinical trials;

● interruption of planned key clinical trial activities, such as clinical trial site data monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others or interruption of clinical trial subject visits and study procedures (particularly any procedures that may be deemed non-essential), which may impact the integrity of subject data and planned clinical study endpoints;

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● limitations on employee or collaborator resources that would otherwise be focused on the conduct of our preclinical development activities, preclinical studies and planned clinical trials, including because of sickness of employees or their families, the desire of employees to avoid contact with large groups of people, an increased reliance on working from home or mass transit disruptions; and

● reduced ability to engage with the medical and investor communities due to the cancellation of conferences scheduled throughout the year.

These and other factors arising from the COVID-19 pandemic could worsen in countries that are already afflicted with COVID-19, could continue to spread to additional countries, or could return to countries where the pandemic has been partially contained, each of which could further adversely impact our ability to conduct preclinical development activities, preclinical studies and planned clinical trials and our business generally, and could have a material adverse impact on our operations and financial condition and results.

In addition, the trading prices for our common stock and other biopharmaceutical companies, as well as the broader equity and debt markets, have been highly volatile as a result of the COVID-19 pandemic and the resulting impact on economic activity. As a result, we may face difficulties raising capital when needed, and any such sales may be on unfavorable terms to us. Further, to the extent we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of existing stockholders will be diluted.

The COVID-19 outbreak continues to rapidly evolve. The extent to which the outbreak may impact our business, manufacturing, preclinical development activities, preclinical studies and planned clinical trials will depend on future developments, which are highly uncertain and cannot be predicted with confidence. Such developments include the ultimate geographic spread of COVID-19, the duration of the outbreak, travel restrictions and actions to contain the outbreak or treat its impact, such as social distancing and quarantines or lock-downs in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.

We are very early in our development efforts. Our business is dependent on our ability to advance our current and future product candidates through preclinical studies and clinical trials, obtain marketing approval and ultimately commercialize them. If we are unable, or experience significant delays in doing so, our business will be materially harmed.

We are very early in our development efforts and all of our product candidates are still in preclinical development. Additionally, we have a portfolio of programs that are in earlier stages of preclinical development and may never advance to clinical-stage development. Our ability to generate product revenue, which we do not expect will occur for many years, if ever, will depend heavily on the successful development and eventual commercialization of our product candidates, which may never occur. We currently generate no revenue from sales of any product and we may never be able to develop or commercialize a marketable product.

Each of our programs and product candidates will require additional preclinical and/or clinical development, regulatory approval in multiple jurisdictions, obtaining manufacturing supply, capacity and expertise, building a commercial organization or successfully outsourcing commercialization, substantial investment and significant marketing efforts before we generate any revenue from product sales. Our product candidates must be authorized for marketing by the U.S. Food and Drug Administration, or the FDA, or certain other ex-U.S. regulatory agencies before we may commercialize our product candidates.

The clinical and commercial success of our product candidates will depend on several factors, including the following:

• timely and successful completion of preclinical studies, including toxicology studies, biodistribution studies and minimally efficacious dose studies in animals, where applicable;

• effective INDs or comparable foreign applications that allow commencement of our planned clinical trials or future clinical trials for our product candidates;

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• successful enrollment and completion of clinical trials, including under the FDA’s current Good Clinical Practices, or cGCPs, and current Good Laboratory Practices, or cGLP;

• positive results from our future clinical programs that support a finding of safety and effectiveness and an acceptable risk-benefit profile of our product candidates in the intended populations;

• receipt of marketing approvals from applicable regulatory authorities;

• establishment of arrangements with third-party manufacturers for clinical supply and, where applicable, commercial manufacturing capabilities;

• establishment and maintenance of patent and trade secret protection or regulatory exclusivity for our product candidates;

• commercial launch of our product candidates, if approved, whether alone or in collaboration with others;

• acceptance of the benefits and use of our product candidates, including method of administration, if and when approved, by patients, the medical community and third-party payors;

• effective competition with other therapies;

• establishment and maintenance of healthcare coverage and adequate reimbursement and patients’ willingness to pay out-of-pocket in the absence of such coverage and adequate reimbursement;

• establishment of a physician training system and network for administration of our product candidates by injection into the ICM;

• enforcement and defense of intellectual property rights and claims; and

• maintenance of a continued acceptable safety, tolerability and efficacy profile of our product candidates following approval.

If we do not succeed in one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize our product candidates, which would materially harm our business. If we are unable to advance our product candidates to clinical development, obtain regulatory approval and ultimately commercialize our product candidates, or experience significant delays in doing so, our business will be materially harmed.

Preclinical and clinical development involve a lengthy and expensive process with an uncertain outcome. We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our current product candidates or any future product candidates.

All of our product candidates are in preclinical development and their risk of failure is high. We currently rely exclusively on GTP for our preclinical and IND-enabling studies. It is impossible to predict when or if any of our product candidates will receive regulatory approval. To obtain the requisite regulatory approvals to commercialize any product candidates, we must demonstrate through extensive preclinical studies and lengthy, complex and expensive clinical trials that our product candidates are safe and effective in humans. Clinical testing can take many years to complete, and its outcome is inherently uncertain. We will rely on CROs for the clinical development of our lead candidates. Failure can occur at any time during the clinical trial process. The results of preclinical studies and early clinical trials or early cohorts of our clinical trials of our product candidates may not be predictive of the results of later-stage clinical trials or later cohorts of our clinical trials. Early clinical trials and in particular initial cohorts of early clinical trials often enroll significantly fewer patients than later stage clinical trials or later cohorts of the same clinical trial and may not be as predictive as larger trials. We may be unable to establish clinical endpoints that applicable regulatory authorities would consider clinically meaningful, and a clinical trial can fail at any stage of testing.

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Differences in trial design between early-stage clinical trials and later-stage clinical trials make it difficult to extrapolate the results of earlier clinical trials to later clinical trials. Moreover, clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in clinical trials have nonetheless failed to obtain marketing approval of their products. A number of companies in the biotechnology industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or to unfavorable safety profiles, notwithstanding promising results in earlier trials. There is typically a high rate of failure of product candidates proceeding through clinical trials. Most product candidates that commence clinical trials are never approved as products and there can be no assurance that any of our future clinical trials will ultimately be successful or support clinical development of our current or any of our future product candidates.

We or our collaborators may experience delays in initiating or completing clinical trials. We or our collaborators also may experience numerous unforeseen events during, or as a result of, any future clinical trials that we could conduct that could delay or prevent our ability to receive marketing approval or commercialize our lead product candidates or any future product candidates, including:

• regulators or institutional review boards, or IRBs, the FDA or ethics committees may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site;

• we may experience delays in reaching, or fail to reach, agreement on acceptable terms with prospective trial sites and prospective contract research organizations, or CROs the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;

• clinical trial sites deviating from trial protocol or dropping out of a trial;

• clinical trials of any product candidates may fail to show safety or efficacy, produce negative or inconclusive results and we may decide, or regulators may require us, to conduct additional preclinical studies or clinical trials or we may decide to abandon product development programs;

• the number of subjects required for clinical trials of any product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate or subjects may drop out of these clinical trials or fail to return for post-treatment follow-up at a higher rate than we anticipate;

• our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all, or may deviate from the clinical trial protocol or drop out of the trial, which may require that we add new clinical trial sites or investigators;

• we may elect to, or regulators, IRBs, or ethics committees may require that we or our investigators, suspend or terminate clinical research or trials for various reasons, including noncompliance with regulatory requirements or a finding that the participants in our trials are being exposed to unacceptable health risks;

• the cost of clinical trials of any of our product candidates may be greater than we anticipate;

• the quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be inadequate to initiate or complete a given clinical trial;

• our inability to manufacture sufficient quantities of our product candidates for use in clinical trials;

• reports from clinical testing of other therapies may raise safety or efficacy concerns about our product candidates;

• our failure to establish an appropriate safety profile for a product candidate based on clinical or preclinical data for such product candidate as well as data emerging from other molecules in the same class as our product candidate; and

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• the FDA or ex-U.S. regulatory agencies may require us to submit additional data such as long-term toxicology studies, or impose other requirements before permitting us to initiate a clinical trial.

Patient enrollment, a significant factor in the timing of clinical trials, is affected by many factors including the size and nature of the patient population, the number and location of clinical sites we enroll, the proximity of patients to clinical sites, the eligibility and exclusion criteria for the trial, the design of the clinical trial, the inability to obtain and maintain patient consents, the risk that enrolled participants will drop out before completion, competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages of the product candidate being studied in relation to other available therapies, including any new drugs or therapeutic biologics that may be approved for the indications being investigated by us. Furthermore, we expect to rely on our collaborators, CROs and clinical trial sites to ensure the proper and timely conduct of our future clinical trials, including the patient enrollment process, and we have limited influence over their performance. Additionally, we could encounter delays if treating physicians encounter unresolved ethical issues associated with enrolling patients in future clinical trials of our product candidates in lieu of prescribing existing treatments that have established safety and efficacy profiles.

We could also encounter delays if a clinical trial is suspended or terminated by us, the IRBs of the institutions in which such trials are being conducted, or the FDA or other regulatory authorities, or if a clinical trial is recommended for suspension or termination by the Data Safety Monitoring Board for such trial. A suspension or termination may be imposed due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a product or treatment, failure to establish or achieve clinically meaningful trial endpoints, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. Clinical studies may also be delayed or terminated as a result of ambiguous or negative interim results. Many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates. Further, the FDA or other regulatory authorities may disagree with our clinical trial design and our interpretation of data from clinical trials, or may change the requirements for approval even after they have reviewed and commented on the design for our clinical trials.

Our product development costs will increase if we experience delays in clinical testing or marketing approvals. We do not know whether any of our clinical trials will begin as planned, will need to be restructured or will be completed on schedule, or at all. Significant clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our product candidates and may allow our competitors to bring products to market before we do, potentially impairing our ability to successfully commercialize our product candidates and harming our business and results of operations. Any delays in our clinical development programs may harm our business, financial condition and results of operations significantly.

We have not tested any of our product candidates in clinical trials. Success in early preclinical studies or clinical trials may not be indicative of results obtained in later preclinical studies and clinical trials.

All of our product candidates are in the preclinical discovery stage. Conducting preclinical testing is a lengthy, time-consuming and expensive process. The length of time of such testing may vary substantially according to the type, complexity and novelty of the program, and often can be several years or more per program. Delays associated with programs for which we are conducting preclinical testing and studies may cause us to incur additional operating expenses. Though gene therapy product candidates like ours have been evaluated by others in clinical trials, our product candidates have never been evaluated in human clinical trials, and we may experience unexpected or adverse results in the future. We will be required to demonstrate through adequate and well-controlled clinical trials that our product candidates are safe and effective, with a favorable benefit-risk profile, for use in their target indications before we can seek regulatory approvals for their commercial sale. Our initial clinical trials will begin with relatively small cohorts before expanding in size in subsequent cohorts. If safety issues arise in an early cohort, we may be delayed or prevented from subsequently expanding into larger trial cohorts. Earlier gene therapy clinical trials conducted by others also utilized adeno-associated viral, or AAV, vectors. However, these studies should not be relied upon as evidence that our planned clinical trials will succeed. Trial designs and results from previous trials are not necessarily predictive of our future clinical trial designs or results, and initial positive results we may observe may not be confirmed upon full

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analysis of the complete trial data. In addition, the positive results we have observed for our product candidates in preclinical animal models may not be predictive of our future clinical trials in humans. Our product candidates may also fail to show the desired safety and efficacy in later stages of clinical development even if they successfully advance through initial clinical trials.

Interim “top-line” and preliminary data from our clinical trials that we or our partners announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

From time to time, we may make public interim topline or preliminary data from our clinical trials. Interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Preliminary or topline data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary or topline data that were previously made public. As a result, interim and preliminary data should be viewed with caution until the final data are available. Adverse differences between interim or preliminary or topline data and final data could significantly harm our reputation and business prospects.

If we do not achieve our projected development goals in the time frames we announce and expect, the commercialization of our products may be delayed.

From time to time, we estimate the timing of the accomplishment of various scientific, clinical, regulatory, manufacturing and other product development goals, which we sometimes refer to as milestones. These milestones may include the commencement or completion of preclinical studies and clinical trials and the submission of regulatory filings, including IND submissions. From time to time, we may publicly announce the expected timing of some of these milestones. All of these milestones are, and will be, based on a variety of assumptions. The actual timing of these milestones can vary significantly compared to our estimates, in some cases for reasons beyond our control. We may experience numerous unforeseen events during, or as a result of, any future clinical trials that we conduct that could delay or prevent our ability to receive marketing approval or commercialize our product candidates.

Gene therapy is a novel technology, which makes it difficult to predict the time and cost of product candidate development and subsequently obtaining regulatory approval. Currently, only a limited number of gene therapy products have been approved in the United States and in foreign countries.

Our current product candidates are based on gene therapy technology and our future success depends on the successful development of this novel therapeutic approach. The regulatory requirements that govern any novel gene therapy product candidates we develop are not entirely clear and are subject to change. The clinical study requirements of the FDA and ex-U.S. regulatory agencies and the criteria these regulators use to determine the safety and efficacy of a product candidate vary substantially according to the type, complexity, novelty and intended use and market of the potential products. The regulatory approval process for novel product candidates such as ours can be more expensive and take longer than for other, better known or extensively studied product candidates. Further, as we are developing novel treatments for diseases in which there is little clinical experience with new endpoints and methodologies, there is heightened risk that the FDA or comparable foreign regulatory bodies may not consider the clinical trial endpoints to provide clinically meaningful results, and the resulting clinical data and results may be more difficult to analyze. To date, only a limited number of gene therapy products have been approved in the United States and foreign countries, which makes it difficult to determine how long it will take or how much it will cost to obtain regulatory approvals for our product candidates in the United States or other jurisdictions. Further, approvals by an ex-U.S. regulatory agency may not be indicative of what the FDA may require for approval, or vice versa.

Our product candidates may cause undesirable and unforeseen side effects, which could delay or prevent their advancement into clinical trials or regulatory approval, limit the commercial potential or result in significant negative consequences.

While new AAV vectors have been developed to reduce side effects previously reported in third-party gene therapy treatments, gene therapy is still a relatively new approach to disease treatment and additional adverse side effects could

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develop. There also is the potential risk of delayed adverse events following exposure to gene therapy products due to persistent biologic activity of the genetic material or other components of products used to carry the genetic material.

Possible adverse side effects that could occur with treatment with gene therapy products include an immunologic reaction early after administration which, while not necessarily adverse to the patient’s health, could substantially limit the effectiveness of the treatment. For example, in previous third-party clinical trials involving AAV vectors for gene therapy, some subjects experienced the development of a T-cell antibody response, whereby after the vector is within the target cells, the cellular immune response system triggers the removal of transduced cells by activated T-cells. Further, following administration of any AAV vector, patients are likely to develop neutralizing antibodies specific to the vector administered. Other preclinical studies have suggested that high dosages of AAV administration may result in toxicity due to degeneration of the dorsal root ganglia. Preliminary results of our NHP toxicology studies for our PBGM01 and PBFT02 product candidates have demonstrated trigeminal ganglia and dorsal root ganglia toxicity. Based on these results, and if our vectors demonstrate a similar effect in other programs, we may decide or be required to perform additional preclinical studies or to halt or delay further clinical development of our product candidates.

In addition to side effects caused by the product candidate, the administration process or related procedures also can cause adverse side effects. Each of our lead product candidates are expected to be administered by injection into the ICM. While this method of administration has been available for decades, its use for therapies is relatively new, no therapies are currently approved using ICM administration, and it may be perceived as having greater risk than more common methods of administration, such as intravenous injection. If any such adverse events occur, our clinical trials could be suspended or terminated. If we cannot demonstrate that any adverse events were not caused by the drug or administration process or related procedures, the FDA or ex-U.S. regulatory authorities could order us to cease further development of, or deny approval of, our product candidates for any or all targeted indications. Even if we are able to demonstrate that all future serious adverse events are not product-related, such occurrences could affect patient recruitment or the ability of enrolled patients to complete the trial. Moreover, if we elect, or are required, to not initiate, delay, suspend or terminate any future clinical trial of any of our product candidates, the commercial prospects of such product candidates may be harmed and our ability to generate product revenues from any of these product candidates may be delayed or eliminated. Any of these occurrences may harm our ability to develop other product candidates, and may harm our business, financial condition and prospects significantly.

Additionally, if any of our product candidates receives marketing approval, the FDA could require us to adopt a Risk Evaluation and Mitigation Strategies, or REMS, to ensure that the benefits of the product outweigh its risks, which may include, among other things, a Medication Guide outlining the risks of the product for distribution to patients and a communication plan to health care practitioners. Furthermore, if we or others later identify undesirable side effects caused by our product candidate, several potentially significant negative consequences could result, including:

• regulatory authorities may suspend or withdraw approvals of such product candidate;

• regulatory authorities may require additional warnings on the label;

• we may be required to change the way a product candidate is administered or conduct additional clinical trials;

• we could be sued and held liable for harm caused to patients; and

• our reputation may suffer.

Any of these occurrences may harm our business, financial condition and prospects significantly.

Adverse public perception of genetic medicines may negatively impact regulatory approval of, and/or demand for, our potential products.

Regulatory approval of and/or demand for our potential products will depend in part on public acceptance of the use of genetic medicine for the prevention or treatment of human diseases. Public attitudes may be influenced by claims that genetic medicines are unsafe, unethical or immoral, and consequently, our products may not gain the acceptance of the

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public or the medical community. Adverse public attitudes may adversely impact our ability to enroll clinical trials. Moreover, our success will depend upon physicians prescribing, and their patients being willing to receive, treatments that involve the use of product candidates we may develop.

There have been several significant adverse side effects reported in genetic medicine treatments in the past. For example, in 1999, there was public backlash against gene therapy following the death of a clinical trial subject in a gene therapy clinical trial that utilized an adenovirus vector. It was later discovered that adenoviruses could generate an extreme immune system reaction that can be life-threatening. Dr. Wilson, our Chief Scientific Advisor, was a co-investigator of the 1999 trial while he was Director of the Institute for Human Gene Therapy of Penn. Serious adverse events in our clinical trials, or other clinical trials involving gene therapy by us or our competitors, even if not ultimately attributable to the relevant product candidates, and the resulting publicity, could result in increased government regulation, unfavorable public perception and potential regulatory delays in the clinical testing or approval of our product candidates.

As an organization, we have limited experience designing and no experience implementing clinical trials and we have never conducted pivotal clinical trials. Failure to adequately design a trial, or incorrect assumptions about the design of the trial, could adversely affect the ability to initiate the trial, enroll patients, complete the trial, or obtain regulatory approval on the basis of the trial results, as well as lead to increased or unexpected costs.

The design and implementation of clinical trials is a complex process. As an organization, we have limited experience designing and no experience implementing clinical trials, and we may not successfully or cost-effectively design and implement clinical trials that achieve our desired clinical endpoints efficiently, or at all. A clinical trial that is not well designed may delay or even prevent initiation of the trial, can lead to increased difficulty in enrolling patients, may make it more difficult to obtain regulatory approval for the product candidate on the basis of the study results, or, even if a product candidate is approved, could make it more difficult to commercialize the product successfully or obtain reimbursement from third-party payors. Additionally, a trial that is not well-designed could be inefficient or more expensive than it otherwise would have been, or we may incorrectly estimate the costs to implement the clinical trial, which could lead to a shortfall in funding.

The disorders we seek to treat have low prevalence and it may be difficult to identify patients with these disorders, which may lead to delays in enrollment for our trials or slower commercial revenue if approved.

Genetically defined disorders generally, and especially those for which our current product candidates are targeted, have low incidence and prevalence. For example, we estimate incidence of infantile GM1 is approximately 1.4 in 100,000 live births, that the incidence of Krabbe disease is approximately 2.6 in 100,000 births and that there are approximately 3,000 to 6,000 people in the United States with FTD-GRN. While certain states currently have mandatory newborn genetic screening for Krabbe disease, there is no mandatory screening for GM1. Without mandatory screening, it may be difficult for us to identify a sufficient number of eligible patients to conduct our clinical trials. These could be significant obstacles to the timely recruitment and enrollment of a sufficient number of eligible patients into our trials. Further, we expect to rely in part on our relationships with the Orphan Disease Center and other patient advocacy groups to assist in identifying eligible patients, and any deterioration of those relationships could impede our ability to successfully enroll patients. Patient enrollment may be affected by other factors including:

• the severity of the disease under investigation;

• design of the study protocol;

• the eligibility criteria for the trial;

• the perceived risks, benefits and convenience of administration of the product candidate being studied;

• our efforts to facilitate timely enrollment in clinical trials;

• the availability of other clinical trials being conducted for the same indication;

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• the patient referral practices of physicians; and

• the proximity and availability of clinical trial sites to prospective patients.

Our inability to enroll a sufficient number of patients with these diseases for our planned clinical trials would result in significant delays and could require us to not initiate or abandon one or more clinical trials altogether. Enrollment delays in our clinical trials may result in increased development costs for our product candidates, which would cause the value of our company to decline and limit our ability to obtain additional financing.

Additionally, our projections of both the number of people who have GM1, FTD, Krabbe disease and our other product candidates, as well as the people with these diseases who have the potential to benefit from treatment with our product candidates, are based on estimates, including third party analyses commissioned by us. The total addressable market opportunity for our product candidates will ultimately depend upon, among other things, the final approved product labeling for each of our product candidates, if our product candidates are approved for sale in our target indications, acceptance by the medical community and patient access, drug pricing and reimbursement. The number of patients globally may turn out to be lower than expected, patients may not be otherwise amenable to treatment with our products, or new patients may become increasingly difficult to identify or gain access to, all of which would adversely affect our results of operations and our business. Our products may potentially be dosed on a one-time basis, which means that patients who enroll in our clinical trials may not be eligible to receive our products on a commercial basis if they are approved, leading to lower revenue potential.

Even if we complete the necessary clinical trials, we cannot predict when, or if, we will receive regulatory approval to commercialize a product candidate and the approval may be for a more narrow indication than we seek.

Prior to commercialization, our product candidates must be approved by the FDA pursuant to a biologics license application, or BLA, in the United States and by similar regulatory authorities outside the United States. The process of obtaining marketing approvals, both in the United States and abroad, is expensive and takes many years, if approval is obtained at all, and can vary substantially based upon a variety of factors, including the type, complexity and novelty of the product candidates involved. Failure to obtain marketing approval for a product candidate will prevent us from commercializing the product candidate. We have not received approval to market any of our product candidates from regulatory authorities in any jurisdiction. Our company does not have experience in submitting and supporting the applications necessary to gain marketing approvals. Securing marketing approval requires the submission of extensive preclinical and clinical data and supporting information to regulatory authorities for each therapeutic indication to establish the product candidate’s safety and efficacy. Securing marketing approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the regulatory authorities. Our product candidates may not be effective, may be only moderately effective or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude our obtaining marketing approval or prevent or limit commercial use. Regulatory authorities have substantial discretion in the approval process and may refuse to accept any application or may decide that our data are insufficient for approval and require additional preclinical, clinical or other studies. In addition, varying interpretations of the data obtained from preclinical and clinical testing could delay, limit or prevent marketing approval of a product candidate.

Approval of our product candidates may be delayed or refused for many reasons, including the following:

• the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials, including the lack of a placebo control;

• the FDA may not agree that the efficacy endpoints used in our clinical trials are appropriate to establish clinical benefit in the intended populations;

• we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that our product candidates are safe and effective for any of their proposed indications;

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• the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval;

• we may be unable to demonstrate that our product candidates’ clinical and other benefits outweigh their safety risks;

• the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical programs or clinical trials;

• the data collected from clinical trials of our product candidates may not be sufficient to support the submission of a BLA or other comparable submission in foreign jurisdictions or to obtain regulatory approval in the United States or elsewhere;

• the facilities of the third-party manufacturers with which we contract may not be adequate to support approval of our product candidates; and

• the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.

• Even if our product candidates meet their safety and efficacy endpoints in clinical trials, the regulatory authorities may not complete their review processes in a timely manner, or we may not be able to obtain regulatory approval. Additional delays may result if an FDA Advisory Committee or other regulatory authority recommends non-approval or restrictions on approval. In addition, we may experience delays or rejections based upon additional government regulation from future legislation or administrative action, or changes in regulatory authority policy during the period of product development, clinical trials and the review process.

Regulatory authorities also may approve a product candidate for more limited indications than requested or they may impose significant limitations in the form of narrow indications, warnings or REMS. These regulatory authorities may require precautions or contra-indications with respect to conditions of use or they may grant approval subject to the performance of costly post-marketing clinical trials. In addition, regulatory authorities may not approve the product labeling claims that are necessary or desirable for the successful commercialization of our product candidates. Any of the foregoing scenarios could materially harm the commercial prospects for our product candidates and materially and adversely affect our business, financial condition, results of operations and prospects.

The FDA and other ex-U.S. regulatory agencies have demonstrated caution in their regulation of gene therapy treatments. Ethical and legal concerns about gene therapy and genetic testing may result in additional regulations or restrictions on the development and commercialization of our product candidates, which may be difficult to predict.

The FDA and other ex-U.S. regulatory agencies at both the federal and state level in the United States, U.S. congressional committees, and foreign governments, have expressed interest in further regulating the biotechnology industry, including gene therapy and genetic testing. Any such further regulation may delay or prevent commercialization of some or all of our product candidates.

Regulatory requirements in the United States and abroad governing gene therapy products have changed frequently and may continue to change in the future. In addition to the FDA, the Institutional Biosafety Committee and IRB of each institution at which we conduct our planned clinical trials, would need to review the proposed clinical trial to assess the safety of the trial. Within the FDA, the Office of Cellular, Tissue and Gene Therapies, within the Center for Biologics Evaluation and Research, or CBER, consolidates the review of gene therapy and related products, and the Cellular, Tissue and Gene Therapies Advisory Committee advises CBER on its review. Adverse developments in clinical trials of gene therapy products conducted by others may cause the FDA or other oversight bodies to change the requirements for approval of any of our product candidates.

These regulatory review committees and advisory groups and the new guidelines they promulgate may lengthen the regulatory review process, require us to perform additional studies or trials, increase our development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of our product

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candidates or lead to significant post-approval limitations or restrictions. As we advance our product candidates, we will be required to consult with these regulatory and advisory groups and comply with applicable guidelines. If we fail to do so, we may be required to delay or discontinue development of such product candidates. These additional processes may result in a review and approval process that is longer than we otherwise would have expected. Delays as a result of an increased or lengthier regulatory approval process or further restrictions on the development of our product candidates can be costly and could negatively impact our ability to complete clinical trials and commercialize our current and future product candidates in a timely manner, if at all.

Changes in funding for the FDA and other government agencies could hinder their ability to hire and retain key leadership and other personnel, or otherwise prevent new products and services from being developed or commercialized in a timely manner, which could negatively impact our business.

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory, and policy changes. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.

Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, over the last several years, including for 35 days beginning on December 22, 2018, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop important activities. If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

Failure to obtain marketing approval in foreign jurisdictions would prevent our product candidates from being marketed abroad and will limit our ability to realize their full market potential.

In order to eventually market any of our product candidates in any particular foreign jurisdiction, we must establish and comply with numerous and varying regulatory requirements on a jurisdiction-by-jurisdiction basis regarding safety and efficacy. Approval by the FDA in the United States, if obtained, does not ensure approval by regulatory authorities in other countries or jurisdictions. In addition, clinical trials conducted in one country may not be accepted by regulatory authorities in other countries, and regulatory approval in one country does not guarantee regulatory approval in any other country. Approval processes vary among countries and can involve additional product testing and validation and additional administrative review periods. Seeking foreign regulatory approval could result in difficulties and costs for us and require additional preclinical studies or clinical trials which could be costly and time-consuming. Regulatory requirements can vary widely from country to country and could delay or prevent the introduction of our products in those countries. The foreign regulatory approval process involves all of the risks associated with FDA approval. In addition, gene therapy products are considered genetically-modified organism, or GMO, products and are regulated as such in each country. Designation of the type of GMO product and subsequent handling and disposal requirements can vary across countries and is variable throughout the European Union. Addressing each specific country requirement and obtaining approval to commence a clinical trial in these countries could result in delays in starting, conducting, or completing a clinical trial. We do not have any product candidates approved for sale in any jurisdiction, including international markets, and we do not have experience in obtaining regulatory approval in international markets and expect to rely on third-party consultants. If we fail to comply with regulatory requirements in international markets or to obtain and maintain required approvals, or if regulatory approvals in international markets are delayed, our target market will be reduced and our ability to realize the full market potential of our products will be unrealized.

In addition, the United Kingdom’s exit from the European Union, or the EU, which is referred to as “Brexit,” continues to create political and economic uncertainty, particularly in the United Kingdom and the EU. Since a significant proportion of the regulatory framework in the United Kingdom is derived from EU directives and regulations, the withdrawal of the United Kingdom from the EU could materially impact the regulatory regime with respect to the approval of our product candidates in the United Kingdom or the EU.

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We may not be successful in our efforts to build a pipeline of additional product candidates.

Our business model is centered on developing therapies for patients with rare, monogenic CNS disorders by establishing focused selection criteria to select, develop and advance product candidates that we believe will have a high probability of technical and regulatory success through development into commercialization. We may not be able to continue to identify and develop new product candidates in addition to the pipeline of product candidates that we have established through our collaboration with Penn’s GTP. Even if we are successful in continuing to build our pipeline, the potential product candidates that we identify may not be suitable for clinical development. For example, they may be shown to have harmful side effects or other characteristics that indicate that they are unlikely to be drugs that will receive marketing approval and achieve market acceptance. If we do not successfully develop and commercialize product candidates based upon our approach, we will not be able to obtain product revenue in future periods, which likely would result in significant harm to our financial position and adversely affect our stock price.

Risks Related to Our Reliance on Third Parties

We currently rely exclusively on our collaboration with Penn for our preclinical research and development programs, including for discovering, preclinically developing and conducting all IND-enabling studies for our lead product candidates and our near-term future pipeline. Failure or delay of Penn to fulfil all or part of its obligations to us under the agreement, a breakdown in collaboration between the parties or a complete or partial loss of this relationship would materially harm our business.

Our collaboration with Penn is critical to our business. We entered into a Research, Collaboration & License Agreement dated September 18, 2018, or the Penn Expansion Agreement, with Penn to discover and develop certain AAV vector based therapeutics, and the products developed under such collaboration currently represent all of our product pipeline and discovery programs. We recently entered into an amendment and restatement of the Penn License Agreement to expand the collaboration to include discovery research, or the Penn Expansion Agreement. We currently rely exclusively on Penn for all of our preclinical research and development capabilities, and in particular GTP under the direction of Dr. Wilson. Pursuant to the Penn Expansion Agreement, Penn is responsible for discovery, preclinical development activities, including all IND-enabling non-clinical studies and research grade manufacturing, and other collaborative activities set forth in the plan for the funded research. Either party has the right in certain circumstances to terminate the collaboration pursuant to the terms of the Penn Expansion Agreement. If Penn delays or fails to perform its obligations under the Penn Expansion Agreement, disagrees with our interpretation of the terms of the collaboration or our discovery plan or terminates our existing agreement, our pipeline of product candidates would be significantly adversely affected and our prospects will be materially harmed.

The term of the research funding portion of the Penn Expansion Agreement, under which we have the ability to acquire exclusive rights to additional gene therapy products for rare, monogenic CNS indications, expires in May 2025. In addition, the discovery program, under which we have rights to new technologies for our product candidates is currently also set to expire in May 2025. If we seek to extend our collaboration, we will need to negotiate a new or amended agreement, which may not be available to us on equally favorable terms, if at all. Penn has also entered into collaborations with third parties, including certain of our competitors, addressing targets and disease indications outside the scope of our collaboration. As a result, Penn may have competing interests with respect to their priorities and resources. We may have disagreements with Penn with respect to the interpretation of the Penn Expansion Agreement, use of resources or otherwise that could cause our relationship with Penn to deteriorate. As a result, Penn may reduce their focus on, and resources allocated to, our programs, potentially delaying or terminating our ability to advance product candidates through preclinical studies. Additionally, if Dr. Wilson were to leave Penn or to otherwise no longer be meaningfully involved with us, our preclinical research and development capabilities may be substantially reduced.

Further, under the Penn Expansion Agreement, Penn is primarily responsible for prosecuting and maintaining our licensed intellectual property, and it may fail to properly prosecute, maintain or defend such intellectual property. In such event, if we are unable to otherwise maintain or defend such intellectual property, we could face the potential invalidation of the intellectual property or be subjected to litigation or arbitration, any of which would be time-consuming and expensive. To enforce the licensed intellectual property rights under the Penn Expansion Agreement, we will need to coordinate with Penn, which could slow down or hamper our ability to enforce our licensed

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intellectual property rights. In such event, we could face increased competition that could materially and adversely affect our business.

We rely on third parties to conduct our preclinical studies, will rely on them to conduct clinical trials and rely on them to perform other tasks for us. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or comply with regulatory requirements, we may not be able to obtain regulatory approval for or commercialize our product candidates and our business could be substantially harmed.

Although we have recruited a team that has experience with clinical trials, as a company we have no experience in conducting clinical trials. Moreover, we currently rely exclusively on Penn for our discovery and preclinical research and will continue to rely upon medical institutions, clinical investigators, contract laboratories and other third parties, or our CROs, to conduct future clinical trials for our product candidates. We expect to rely heavily on these parties for execution of preclinical and future clinical trials for our product candidates and control only certain aspects of their activities. If these parties reduce the levels of efforts and resources to our product candidate activities, prioritize work with a competitor of ours or if a dispute were to arise between us and these parties, they may not meet our expected deadlines or provide us with sufficient materials for our regulatory filings. Nevertheless, we will be responsible for ensuring that each of our preclinical and clinical trials is conducted in accordance with the applicable protocol, legal and regulatory requirements and scientific standards and our reliance on CROs will not relieve us of our regulatory responsibilities. For any violations of laws and regulations during the conduct of our preclinical studies and clinical trials, we could be subject to warning letters or enforcement action that may include civil penalties up to and including criminal prosecution.

We, Penn and our CROs will be required to comply with regulations, including cGCPs for conducting, monitoring, recording and reporting the results of preclinical and clinical trials to ensure that the data and results are scientifically credible and accurate and that the trial patients are adequately informed of the potential risks of participating in clinical trials and their rights are protected. These regulations are enforced by the FDA, the Competent Authorities of the Member States of the European Economic Area and comparable foreign regulatory authorities for any drugs in clinical development. The FDA enforces cGCP regulations through periodic inspections of clinical trial sponsors, principal investigators and trial sites. If we or our CROs fail to comply with applicable cGCPs, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications. We cannot assure you that, upon inspection, the FDA will determine that any of our future clinical trials will comply with cGCPs. In addition, our clinical trials must be conducted with product candidates produced in accordance with the requirements in cGMP regulations. Our failure or the failure of our CROs to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory approval process and could also subject us to enforcement action.

Although we currently design and intend to continue designing our planned clinical trials for our product candidates, for the foreseeable future CROs will conduct all of our planned clinical trials. As a result, many important aspects of our development programs, including their conduct and timing, will be outside of our direct control. Our reliance on third parties to conduct future preclinical studies and clinical trials will also result in less day-to-day control over the management of data developed through preclinical studies and clinical trials than would be the case if we were relying entirely upon our own staff.

If any of our relationships with these third-party CROs terminate, we may not be able to enter into arrangements with alternative CROs. If CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols, regulatory requirements or for other reasons, any preclinical studies or clinical trials with which such CROs are associated with may be extended, delayed or terminated. In such cases, we may not be able to obtain regulatory approval for or successfully commercialize our product candidates. As a result, our financial results and the commercial prospects for our product candidates in the subject indication could be harmed, our costs could increase and our ability to generate revenue could be delayed.

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We expect to rely on third parties to conduct our clinical trials. If those third parties do not perform as contractually required, fail to satisfy legal or regulatory requirements, miss expected deadlines or terminate the relationship, our development program could be delayed with potentially material and adverse effects on our business, financial condition, results of operations and prospects.

We expect to rely on third-party clinical investigators, CROs, clinical data management organizations and consultants to assist or provide the design, conduct, supervision and monitoring of clinical trials of our product candidates. Because we intend to rely on these third parties and will not have the ability to conduct all clinical trials independently, we will have less control over the timing, quality and other aspects of clinical trials than we would have had we conducted them on our own. These investigators, CROs and consultants will not be our employees and we will have limited control over the amount of time and resources that they dedicate to our programs. These third parties may have contractual relationships with other entities, some of which may be our competitors, which may draw time and resources from our programs. The third parties with which we may contract might not be diligent, careful or timely in conducting our clinical trials, resulting in the clinical trials being delayed or unsuccessful.

If we cannot contract with acceptable third parties on commercially reasonable terms, or at all, or if these third parties do not carry out their contractual duties, satisfy legal and regulatory requirements for the conduct of preclinical studies or clinical trials or meet expected deadlines, our clinical development programs could be delayed and otherwise adversely affected. In all events, we will be responsible for ensuring that each of our preclinical studies and clinical trials are conducted in accordance with the general investigational plan and protocols for the trial as well as applicable legal and regulatory requirements. The FDA generally requires preclinical studies to be conducted in accordance with good laboratory practices and clinical trials to be conducted in accordance with good clinical practices, including for designing, conducting, recording and reporting the results of preclinical studies and clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of clinical trial participants are protected. Our reliance on third parties that we do not control will not relieve us of these responsibilities and requirements. Any adverse development or delay in our preclinical studies or clinical trials as a result of our reliance on third parties could have a material and adverse effect on our business, financial condition, results of operations and prospects.

If any of our relationships with these third-party CROs or others terminate, we may not be able to enter into alternative arrangements or to do so on commercially reasonable terms. Switching or adding additional CROs involves additional cost and requires management time and focus. In addition, there is a natural transition period when a new CRO begins work. As a result, delays may occur, which can materially adversely impact our ability to meet our desired clinical development timelines.

We may in the future enter into collaborations with other third parties for the discovery, development and commercialization of our product candidates. If any of our current or future collaborators cease development efforts under our collaboration agreements, or if any of those agreements are terminated, these collaborations may fail to lead to commercial products and we may never receive milestone payments or future royalties under these agreements.

We may in the future enter into third-party collaborations for research, development and commercialization of other therapeutic technologies or product candidates. Biotechnology companies are our likely future collaborators for any marketing, distribution, development, licensing or broader collaboration arrangements.

With any future collaboration agreements, we expect to have limited control over the amount and timing of resources that our collaborators dedicate to the development or commercialization of our product candidates. Moreover, our ability to generate revenues from these arrangements will depend on our collaborators’ abilities to successfully perform the functions assigned to them in these arrangements.

Our potential future collaborations involving our product candidates may pose the following risks to us:

• collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations;

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• collaborators may not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs based on preclinical studies or clinical trial results, changes in the collaborators’ strategic focus or available funding, or external factors such as an acquisition that diverts resources or creates competing priorities;

• collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing;

• collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours;

• collaborators with marketing and distribution rights to one or more products may not commit sufficient resources to the marketing and distribution of such product or products;

• collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to litigation or potential liability;

• collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation, indemnification obligations and potential liability;

• disputes may arise between the collaborators and us that result in the delay or termination of the research, development or commercialization of our product candidates or that result in costly litigation or arbitration that diverts management attention and resources; collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates;

• if a present or future collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our product development or commercialization program under such collaboration could be delayed, diminished or terminated; and

• collaboration agreements may restrict our right to independently pursue new product candidates.

As a result of the foregoing, any future collaboration agreements may not lead to development or commercialization of our product candidates in the most efficient manner or at all. If a collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our product development or commercialization program could be delayed, diminished or terminated. Any failure to successfully develop or commercialize our product candidates pursuant to our current or any future collaboration agreements could have a material and adverse effect on our business, financial condition, results of operations and prospects.

Moreover, to the extent that any of our existing or future collaborators were to terminate a collaboration agreement, we may be forced to independently develop our product candidates and discovery programs, including funding preclinical studies or clinical trials, assuming marketing and distribution costs and maintaining and defending intellectual property rights, or, in certain instances, abandon product candidates altogether, any of which could result in a change to our business plan and have a material adverse effect on our business, financial condition, results of operations and prospects.

We may not be successful in finding additional collaborators for continuing development of certain of our product candidates or successfully commercializing or competing in the market for certain indications.

We may decide to pursue collaborations with additional pharmaceutical and biotechnology companies for the development and potential commercialization of some of our product candidates. We face significant competition in seeking appropriate collaborators. Any new collaboration may be on terms that are not optimal for us, and we may not be able to maintain any new collaboration if, for example, development or approval of a product candidate is delayed,

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sales of an approved product candidate do not meet expectations or the collaborator terminates the collaboration. In addition, a significant number of recent business combinations among large pharmaceutical companies has resulted in a reduced number of potential future collaborators. Whether we reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors. Those factors may include the design or results of clinical trials, the likelihood of approval by the FDA or similar regulatory authorities outside the United States, the potential market for the subject product candidate, the costs and complexities of manufacturing and delivering such product candidate to patients, the potential of competing drugs, the existence of uncertainty with respect to our ownership of technology, which can exist if there is a challenge to such ownership without regard to the merits of the challenge and industry and market conditions generally. The collaborator may also consider alternative product candidates or technologies for similar indications that may be available to collaborate on and whether such a collaboration could be more attractive than the one with us for our product candidate. The terms of any additional collaborations or other arrangements that we may establish may not be favorable to us.

We may also be restricted under existing collaboration agreements from entering into future agreements on certain terms with potential collaborators. Collaborations are complex and time-consuming to negotiate and document. In addition, there have been a significant number of recent business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future collaborators.

We may not be able to negotiate additional collaborations on a timely basis, on acceptable terms, or at all. If we are unable to do so, we may have to curtail the development of the product candidate for which we are seeking to collaborate, reduce or delay its development program or one or more of our other development programs, delay its potential commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense. If we elect to increase our expenditures to fund development or commercialization activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms or at all. If we do not have sufficient funds, we may not be able to further develop our product candidates or bring them to market and generate product revenue.

We may have conflicts with our collaborators that could delay or prevent the development or commercialization of our product candidates.

We may have conflicts with our collaborators, including Penn, such as conflicts concerning the interpretation of preclinical or clinical data, the achievement of milestones, the interpretation of contractual obligations, payments for services, development obligations or the ownership of intellectual property developed during our collaboration. If any conflicts arise with any of our collaborators, including Penn, such collaborator may act in a manner that is adverse to our best interests. Any such disagreement could result in one or more of the following, each of which could delay or prevent the development or commercialization of our product candidates, and in turn prevent us from generating revenues: unwillingness on the part of a collaborator to pay us milestone payments or royalties we believe are due to us under a collaboration, which could require us to raise additional capital; uncertainty regarding ownership of intellectual property rights arising from our collaborative activities, which could prevent us from entering into additional collaborations; unwillingness by the collaborator to cooperate in the development or manufacture of the product, including providing us with product data or materials; unwillingness on the part of a collaborator to keep us informed regarding the progress of its development and commercialization activities or to permit public disclosure of the results of those activities; initiating of litigation or alternative dispute resolution options by either party to resolve the dispute; or attempts by either

We may in the future seek to engage in strategic transactions to acquire or in-license new products, product candidates or technologies. If we are unable to successfully complete, or realize the benefits from, such transactions it may adversely affect our ability to develop and commercialize product candidates, impact our cash position, increase our expenses and present significant distractions to our management.

From time to time, we may consider strategic transactions, such as additional collaborations, acquisitions of companies, asset purchases, joint ventures and in-licensing of new products, product candidates or technologies that we believe will complement or augment our existing business. If we acquire assets with promising markets or technologies, we may not be able to realize the benefit of acquiring such assets if we are not able to successfully integrate them with our existing

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technologies. We may encounter numerous difficulties in developing, testing, manufacturing and marketing any new products resulting from a strategic acquisition that delay or prevent us from realizing their expected benefits or enhancing our business.

We cannot assure you that following any such strategic transaction, we will achieve the expected synergies to justify the transaction. For example, such transactions may require us to incur non-recurring or other charges, increase our near- and long-term expenditures and pose significant integration or implementation challenges or disrupt our management or business. These transactions would entail numerous operational and financial risks, including exposure to unknown liabilities, disruption of our business and diversion of our management’s time and attention in order to manage a collaboration or develop acquired products, product candidates or technologies, incurrence of substantial debt or dilutive issuances of equity securities to pay transaction consideration or costs, higher than expected acquisition or integration costs, write-downs of assets or goodwill or impairment charges, increased amortization expenses, difficulty and cost in facilitating the transaction or combining the operations and personnel of any acquired business, impairment of relationships with key suppliers, manufacturers or customers of any acquired business due to changes in management and ownership and the inability to retain key employees of any acquired business.

Accordingly, although there can be no assurance that we will undertake or successfully complete any transactions of the nature described above, any transactions that we do complete may be subject to the foregoing or other risks and would have a material and adverse effect on our business, financial condition, results of operations and prospects. Conversely, any failure to enter any strategic transaction that would be beneficial to us could delay the development and potential commercialization of our product candidates and have a negative impact on the competitiveness of any product candidate that reaches market.

Risks Related to Manufacturing

Gene therapies are novel, complex and difficult to manufacture. We could experience manufacturing problems that result in delays in our development or commercialization programs or otherwise harm our business.

We currently rely on third parties to develop, manufacture and test clinical supplies of our product candidates. For our initial clinical trials, we will rely on the manufacturing facility of Catalent Maryland (formerly Paragon Bioscience), or Catalent, for supply of our product candidates, and on Penn to manage the transfer of technology to Catalent that is necessary for production. We expect to establish our own manufacturing facility for long-term commercial market supply. However, we have limited experience as a company in developing manufacturing facilities. We may face delays in constructing our facilities and transferring technology to our facilities or have difficulty hiring experts to staff and operate our own manufacturing facility and, accordingly, our production capacity could be limited. The manufacturing processes used to produce our product candidates are complex, novel and have not been validated for commercial use. Many factors could cause production interruptions, including equipment malfunctions, facility contamination, raw material shortages or contamination, natural disasters, disruption in utility services, human error or disruptions in the operations of our suppliers.

Our product candidates require processing steps that are more complex than those required for most small molecule drugs. Moreover, unlike small molecules, the physical and chemical properties of a biologic such as ours generally cannot be fully characterized. As a result, assays of the finished product may not be sufficient to ensure that the product is consistent from lot-to-lot or will perform in the intended manner. Accordingly, we employ multiple steps to control the manufacturing process to assure that the process works consistently and the product candidate is made strictly and consistently in compliance with the process. Problems with the manufacturing process, even minor deviations from the normal process, could result in product defects or manufacturing failures that result in lot failures, low lot yields, product recalls, product liability claims or insufficient inventory. As a result, we may encounter problems achieving adequate quantities and quality of clinical-grade materials that meet the FDA or other applicable standards or specifications with consistent and acceptable production yields and costs.

In addition, the FDA and ex-U.S. regulatory authorities may require us to submit samples of any lot of any approved product together with the protocols showing the results of applicable tests at any time. Under some circumstances, the FDA or ex-U.S. regulatory authorities may require that we not distribute a lot until the agency authorizes its release.

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Slight deviations in the manufacturing process, including those affecting quality attributes and stability, may result in unacceptable changes in the product that could result in lot failures, low lot yields or product recalls. Lot failures, low lot yields or product recalls could cause us to delay product launches or clinical trials, which could be costly to us and otherwise harm our business, financial condition, results of operations and prospects.

We, or our third-party collaborators, also may encounter problems hiring and retaining the experienced scientific, quality-control and manufacturing personnel needed to operate our manufacturing processes, which could result in delays in production or difficulties in maintaining compliance with applicable regulatory requirements.

Any problems in our, or our third-party collaborators’, manufacturing process or facilities could result in delays in our planned clinical trials and increased costs, and could make us a less attractive collaborator for potential partners, including larger biotechnology companies and academic research institutions, which could limit our access to additional attractive development programs. It could also require us to find alternative manufacturing processes, which may be unavailable to us on attractive terms, or at all. Problems in our manufacturing process could restrict our ability to meet potential future market demand for our products.

Changes in methods of product candidate manufacturing or formulation may result in additional costs or delay.

As product candidates proceed through preclinical studies to late-stage clinical trials towards potential approval and commercialization, it is common that various aspects of the development program, such as manufacturing methods and formulation, are altered along the way in an effort to optimize processes and results. Such changes carry the risk that they will not achieve these intended objectives. Any of these changes could cause our product candidates to perform differently and affect the results of planned clinical trials or other future clinical trials conducted with the materials manufactured using altered processes. Such changes may also require additional testing, FDA notification or FDA approval. This could delay completion of clinical trials, require the conduct of bridging clinical trials or the repetition of one or more clinical trials, increase clinical trial costs, delay approval of our product candidates and jeopardize our ability to commence sales and generate revenue.

We currently rely and expect to continue to rely on third-party manufacturers to produce clinical supply of our product candidates, and we have not entered into binding agreements with any such manufacturers to support commercialization. The competition for gene therapy contract development, manufacturing and testing services is intense. Additionally, these manufacturers do not have experience producing our product candidates at commercial levels and may not achieve the necessary regulatory approvals or produce our product candidates at the quality, quantities, locations and timing needed to support commercialization.

We do not currently plan to independently manufacture most of the material for our planned clinical programs. We currently rely, and expect to continue to rely, on third parties for the production of our preclinical study and planned clinical trial materials and, therefore, we can control only certain aspects of their activities. The competition for gene therapy contract development, manufacturing and testing is intense. Reliance on third-party manufacturers may expose us to different risks than if we were to manufacture product candidates ourselves, including but not limited to potential competition from other genetic biotechnology companies for the use of such third-party manufacturers.

While we have secured an agreement with Catalent to manufacture clinical supply of our product candidates, we have not yet secured manufacturing capabilities for commercial quantities of our product candidates. Although we intend to establish our own manufacturing facility for long-term commercial market supply, we may need to rely on third-party manufacturers for commercialization of our product candidates if regulatory approval is achieved. To date, while we have a collaboration agreement with Catalent for a dedicated clean room suite, we have only entered into agreements with such manufacturer to support our clinical studies. We may be unable to negotiate binding agreements with the manufacturers to support our potential commercialization activities at commercially reasonable terms.

Before any of our third-party manufacturers and suppliers can begin to commercially manufacture our product candidates, they must demonstrate to regulatory authorities that the planned chemistry, manufacturing and controls for our gene therapy product candidates meet certain requirements. Manufacturing of product candidates for clinical and commercial purposes must comply with the cGMP and applicable ex-U.S. regulatory requirements. The cGMP

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requirements govern quality control and documentation policies and procedures. Complying with cGMP and ex-U.S. regulatory requirements will require that we expend time, money and effort in production, recordkeeping and quality control to assure that our product candidates meet applicable specifications and other requirements. Our third-party manufacturers’ also must demonstrate to the FDA that they can make the product candidate in accordance with the cGMP requirements as part of a pre-approval inspection prior to FDA approval of the product candidate. Failure to pass a pre-approval inspection might significantly delay FDA approval of our product candidates. If any of our third-party manufacturers fail to comply with these requirements, we would be subject to possible regulatory action, which could limit the jurisdictions in which we are permitted to sell our products. As a result, our business, financial condition and results of operations may be materially harmed.

In addition, our third-party manufacturers may fail to comply with cGMP regulations or similar regulatory requirements outside the United States. Our failure, or the failure of our third-party manufacturers, to comply with applicable regulations could result in sanctions being imposed on us, including clinical holds, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or products, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our product candidates.

Even if our third-party manufacturers comply with applicable regulatory requirements, we cannot assure you that they will be able to successfully manufacture additional product candidates at a larger scale in a timely or economical manner, or at all. If they are unable to successfully increase our manufacturing scale or capacity, the development, testing, and clinical trials of our product candidates may be delayed or infeasible, and regulatory approval or commercial launch of any resulting product may be delayed or not obtained, which could significantly harm our business.

Our third-party manufacturers and suppliers use biological materials and may use hazardous materials, and any claims relating to improper handling, storage or disposal of these materials could be time consuming or costly.

Our third-party manufacturers and suppliers may use hazardous materials, including chemicals and biological agents and compounds that could be dangerous to human health and safety or the environment. The operations of our third-party manufacturers and suppliers also produce hazardous waste products. Federal, state and local laws and regulations govern the use, generation, manufacture, storage, handling and disposal of these materials and wastes. Compliance with applicable environmental laws and regulations may be expensive, and current or future environmental laws and regulations may impair our product development efforts. In addition, we cannot entirely eliminate the risk of accidental injury or contamination from these materials or wastes. We do not carry specific biological or hazardous waste insurance coverage, and our property, casualty and general liability insurance policies specifically exclude coverage for damages and fines arising from biological or hazardous waste exposure or contamination. Accordingly, in the event of contamination or injury, we could be held liable for damages or be penalized with fines in an amount exceeding our resources, and our clinical trials or regulatory approvals could be suspended.

Any contamination in our third parties’ manufacturing process, shortages of raw materials, labor or reagents or failure of any of our key suppliers to deliver necessary components of our platform could result in delays in our clinical development or marketing schedules.

Given the nature of biologics manufacturing, there is a risk of contamination. Any contamination could materially adversely affect our or our third-party vendor’s ability to produce our gene therapies on schedule and could therefore harm our results of operations and cause reputational damage.

The raw materials required in our third-party vendors manufacturing processes are derived from biological sources. We cannot assure you that our third-party vendors have, or will be able to obtain on commercially reasonable terms, or at all, sufficient rights to these materials derived from biological sources. Such raw materials are difficult to procure and may also be subject to contamination or recall. A material shortage, contamination, recall, or restriction on the use of biologically derived substances in the manufacture of our product candidates could adversely impact or disrupt the clinical and commercial manufacturing of our product candidates, which could materially and adversely affect our operating results and development timelines.

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We rely on third-party suppliers for the supply and manufacture of certain components of our technology. Should our ability to procure these material components from our suppliers be compromised, our ability to continuously operate would be impaired until an alternative supplier is sourced, qualified and tested, which could limit our ability to produce a clinical and commercial supply of our product candidates and harm our business.

We depend on third-party suppliers for materials used in the manufacture of our product candidates, and the loss of these third-party suppliers or their inability to supply us with adequate materials could harm our business.

We rely on third-party suppliers for certain materials and components required for the production of our product candidates. Our dependence on these third-party suppliers and the challenges we may face in obtaining adequate supplies of materials involve several risks, including limited control over pricing, availability, and quality and delivery schedules. There is substantial demand and limited supply for certain of the raw materials used to manufacture gene therapy products. As a small company, our negotiation leverage is limited and we are likely to get lower priority than our competitors that are larger than we are. We cannot be certain that our suppliers will continue to provide us with the quantities of these raw materials that we require or satisfy our anticipated specifications and quality requirements. Any supply interruption in limited or sole sourced raw materials could materially harm our ability to manufacture our product candidates until a new source of supply, if any, could be identified and qualified. We may be unable to find a sufficient alternative supply channel in a reasonable time or on commercially reasonable terms. Any performance failure on the part of our suppliers could delay the development and potential commercialization of our product candidates, including limiting supplies necessary for clinical trials and regulatory approvals, which would have a material adverse effect on our business.

Risks Related to Commercialization

We face significant competition in an environment of rapid technological change and the possibility that our competitors may achieve regulatory approval before us or develop therapies or technologies that are more advanced or effective than ours, which may harm our business and financial condition, and our ability to successfully market or commercialize our product candidates.

The biotechnology and pharmaceutical industries, including the genetic medicines field, are characterized by rapidly changing technologies, competition and a strong emphasis on intellectual property. We are aware of several companies focused on developing gene therapies in various indications as well as several companies addressing methods for modifying genes and regulating gene expression. We may also face competition from large and specialty pharmaceutical and biotechnology companies, academic research institutions, government agencies and public and private research institutions.

For the treatment of GM1, there are no approved disease-modifying therapies. We consider our most direct competitors with respect to PBGM01 for the treatment of GM1 to be Axovant Gene Therapies, Ltd., which began its clinical trial for a gene therapy treatment for juvenile GM1 in May 2019, and Lysogene, S.A., which is expected to submit an IND in the first half of 2020 for a gene therapy treatment for GM1.

For the treatment of FTD, there are no approved disease-modifying therapies. We consider our most direct competitors with respect to PBFT02 for the treatment of FTD-GRN to be Alector, Inc., which is conducting a Phase 2 clinical trial immune-neurology treatment for FTD-GRN and Prevail Therapeutics Inc., which is expected to initiate soon a clinical trial for a gene therapy treatment for FTD-GRN. Alkermes plc and Arkuda Therapeutics, Inc. are conducting preclinical research into small molecule approaches targeting specific histone deacetylase treat FTD-GRN patients. We are also aware of other therapeutic approaches in preclinical development that may target FTD-GRN patients.

For the treatment of Krabbe disease, there are no approved disease-modifying therapies. We are not aware of any companies with clinical stage gene therapy product candidates for the treatment of Krabbe disease. We are aware of an ongoing disease progression study being conducted by the Children’s Hospital of Pittsburgh and certain academic studies. There is some evidence that human stem cell transplant is beneficial for pre-symptomatic infants with Krabbe disease.

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Many of our potential competitors, alone or with their strategic partners, have substantially greater financial, technical, and other resources than we do, such as larger research and development, clinical, marketing and manufacturing organizations. Mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated among a smaller number of competitors. Our commercial opportunity could be reduced or eliminated if competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any product candidates that we may develop. Competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market, if ever. Additionally, new or advanced technologies developed by our competitors may render our current or future product candidates uneconomical or obsolete, and we may not be successful in marketing our product candidates against competitors.

The commercial success of any of our product candidates will depend upon its degree of market acceptance by physicians, patients, third-party payors and others in the medical community.

Ethical, social and legal concerns about gene therapy could result in additional regulations restricting or prohibiting our products. Even with the requisite approvals from the FDA in the United States and other regulatory authorities internationally, the commercial success of our product candidates will depend, in part, on the acceptance of physicians, patients and health care payors of gene therapy products in general, and our product candidates in particular, as medically necessary, cost-effective and safe. Any product that we commercialize may not gain acceptance by physicians, patients, health care payors and others in the medical community. If these products do not achieve an adequate level of acceptance, we may not generate significant product revenue and may not become profitable. The degree of market acceptance of gene therapy products and, in particular, our product candidates, if approved for commercial sale, will depend on several factors, including:

• the efficacy, durability and safety of such product candidates as demonstrated in clinical trials;

• the potential and perceived advantages of product candidates over alternative treatments;

• the cost of treatment relative to alternative treatments;

• the clinical indications for which the product candidate is approved by the FDA or ex-U.S. regulatory authorities;

• the willingness of physicians to prescribe new therapies and use ICM administration;

• our ability to successfully train neurosurgeons and interventional radiologists in ICM administration of our product candidates;

• the willingness of the target patient population to try new therapies;

• the prevalence and severity of any side effects;

• product labeling or product insert requirements of the FDA or ex-U.S. regulatory authorities, including any limitations or warnings contained in a product’s approved labeling;

• relative convenience and ease of administration;

• the strength of marketing and distribution support;

• the timing of market introduction of competitive products;

• publicity concerning our products or competing products and treatments; and

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• sufficient third-party payor coverage and adequate reimbursement and patients’ willingness to pay out-of-pocket in the absence of such coverage and adequate reimbursement.

Even if a potential product displays a favorable efficacy and safety profile in preclinical studies and clinical trials, market acceptance of the product will not be fully known until after it is launched.

If in the future we are unable to establish U.S. or global sales and marketing capabilities or enter into agreements with third parties to sell and market our product candidates, we may not be successful in commercializing our product candidates if they are approved and we may not be able to generate any revenue.

We currently do not have a marketing or sales team for the marketing, sales and distribution of any of our product candidates that may receive regulatory approval. In order to commercialize any product candidates after approval, we must build on a territory-by-territory basis marketing, sales, distribution, managerial and other non-technical capabilities or make arrangements with third parties to perform these services, and we may not be successful in doing so. If our product candidates receive regulatory approval, we may decide to establish an internal sales or marketing team with technical expertise and supporting distribution capabilities to commercialize our product candidates, which will be expensive and time-consuming and will require significant attention of our executive officers to manage. Any failure or delay in the development of our internal sales, marketing and distribution capabilities would adversely impact the commercialization of any of our product candidates that we obtain approval to market.

With respect to the commercialization of all or certain of our product candidates, we may choose to collaborate, either globally or on a territory-by-territory basis, with third parties that have direct sales forces and established distribution systems, either to augment our own sales force and distribution systems or in lieu of our own sales force and distribution systems. If we are unable to enter into such arrangements when needed on acceptable terms, or at all, we may not be able to successfully commercialize any of our product candidates that receive regulatory approval or any such commercialization may experience delays or limitations. If we are not successful in commercializing our product candidates, either on our own or through collaborations with one or more third parties, our future product revenue will suffer and we may incur significant additional losses.

We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.

Because we have limited financial and managerial resources, we focus on research programs and product candidates that we identify for specific indications. As a result, we may forego or delay pursuit of opportunities with other product candidates or for other indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to timely capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and development programs and product candidates for specific indications may not yield any commercially viable products. The development of our three lead product candidates and three ongoing discovery programs require significant resources. If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate.

Risks Related to Intellectual Property

If we are unable to obtain and maintain patent protection or other necessary rights for our products and technology, or if the scope of the patent protection obtained is not sufficiently broad or our rights under licensed patents is not sufficiently broad, our competitors could develop and commercialize products and technology similar or identical to ours, and our ability to successfully commercialize our products and technology may be adversely affected.

Our commercial success depends in part on our ability to obtain and maintain proprietary or intellectual property protection in the United States and other countries for our current product candidates and future products, as well as our core technologies, including our manufacturing know-how. We strive to protect and enhance the proprietary technology, inventions and improvements that are commercially important to the development of our business by seeking,

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maintaining and defending our intellectual property, whether developed internally or licensed from third parties. We also rely on trade secrets, know-how, continuing technological innovation and in-licensing opportunities to develop, strengthen and maintain our proprietary position in the field of gene therapy. Additionally, we intend to rely on regulatory protection afforded through rare drug designations, data exclusivity and market exclusivity as well as patent term extensions, where available.

Currently, our intellectual property protection consists solely of patent applications that we have in-licensed from Penn under the Penn Expansion Agreement. The in-licensed patent applications are directed to certain new AAV capsids, to recombinant AAV viruses, or rAAV, capable of delivering certain genes into human cells to treat monogenic disorders of the CNS, to methods of treating those monogenic diseases with rAAV, as well as to certain aspects of our manufacturing capabilities and related technologies.

We also have options under the Penn Expansion Agreement to add additional intellectual property to our existing license. To date, we have exercised the option with respect to Charcot-Marie Tooth disease. At present, there are no patent families directed to this newly licensed indication.

The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions, and has in recent years been the subject of much litigation. The degree of patent protection we require to successfully compete in the marketplace may be unavailable or severely limited in some cases and may not adequately protect our rights or permit us to gain or keep any competitive advantage. We cannot provide any assurances that any of our licensed patent applications will mature into issued patents, and cannot provide any assurances that any such patents, if issued, will include claims with a scope sufficient to protect our current and future product candidates or otherwise provide any competitive advantage. Additionally, patents can be enforced only in those jurisdictions in which the patent has issued. Furthermore, patents have a limited lifespan. In the United States, the natural expiration of a patent is generally twenty years after its first nonprovisional U.S. filing. The natural expiration of a patent outside of the United States varies in accordance with provisions of applicable local law, but is generally 20 years from the earliest local filing date. Various extensions may be available; however, the life of a patent, and the protection it affords, is limited. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized.

Moreover, our exclusive license is subject to field restrictions and retained rights, which may adversely impact our competitive position. Our licensed patent portfolio may not provide us with adequate and continuing patent protection sufficient to exclude others from commercializing products similar to our product candidates, including biosimilar versions of such products. In addition, the patent portfolio licensed to us is, or may be, licensed to third parties outside our licensed field, and such third parties may have certain enforcement rights. Thus, patents licensed to us could be put at risk of being invalidated or interpreted narrowly in litigation filed by or against another licensee or in administrative proceedings brought by or against another licensee in response to such litigation or for other reasons.

Other parties have developed technologies that may be related or competitive to our own and such parties may have filed or may file patent applications, or may have received or may receive patents, claiming inventions that may overlap or conflict with those claimed in our own patent applications or issued patents. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and in other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore, we cannot know with certainty whether the inventors of our licensed patents and applications were the first to make the inventions claimed in those patents or pending patent applications, or that they were the first to file for patent protection of such inventions. Further, we cannot assure you that all of the potentially relevant prior art relating to our licensed patents and patent applications has been found. If such prior art exists, it can invalidate a patent or prevent a patent from issuing from a pending patent application. As a result, the issuance, scope, validity and commercial value of our patent rights cannot be predicted with any certainty. Further, if the breadth or strength of protection provided by our patents and patent applications is threatened, regardless of the outcome, it could dissuade companies from collaborating with us to license, develop or commercialize current or future product candidates.

In addition, the patent prosecution process is expensive and time-consuming, and we or our licensors may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. In addition,

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the scope of the claims initially submitted for examination may be significantly narrowed by the time they issue, if at all. It is also possible that we or our licensors will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. We cannot provide any assurances that we will be able to pursue or obtain additional patent protection based on our research and development efforts, or that any such patents or other intellectual property we generate will provide any competitive advantage. Moreover, we do not have the right to control the preparation, filing and prosecution of patent applications, or to control the maintenance of the patents, covering technology that we license from third parties. Therefore, these patents and applications may not be filed, prosecuted or maintained in a manner consistent with the best interests of our business.

Even if we acquire patent protection that we expect should enable us to maintain competitive advantage, the issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability. Third parties, including competitors, may challenge the inventorship, scope, validity, or enforceability thereof, which may result in such patents being narrowed, invalidated or held unenforceable. If issued, our licensed patents may be challenged in patent offices in the United States and abroad, or in court. For example, we may be subject to a third-party submission of prior art to the U.S. Patent and Trademark Office, or USPTO, challenging the validity of one or more claims of our licensed patents, once issued. Such submissions may also be made prior to a patent’s issuance, precluding the granting of a patent based on one of our pending licensed patent applications. We may become involved in opposition, reexamination, inter partes review, post-grant review, derivation, interference, or similar proceedings in the United States or abroad challenging the claims of patents that we have licensed, once issued. Furthermore, patents that we have licensed may be challenged in court, once issued. Competitors may claim that they invented the inventions claimed in such patents or patent applications prior to the inventors of our licensed patents, or may have filed patent applications before the inventors of our licensed patents did. A competitor may also claim that we are infringing its patents and that we therefore cannot practice our technology as claimed under our licensed patent applications and patents, if issued. As a result, one or more claims of our licensed patents may be narrowed or invalidated. In litigation, a competitor could claim that our patents, if issued, are not valid for a number of reasons. If a court agrees, we would lose our rights to those challenged patents.

Even if they are unchallenged, our licensed patents and pending patent applications, if issued, may not provide us with any meaningful protection or prevent competitors from designing around our patent claims to circumvent our licensed patents by developing similar or alternative technologies or therapeutics in a non-infringing manner. For example, even if we have a valid and enforceable patent, we may not be able to exclude others from practicing our invention if the other party can show that they used the invention in commerce before our filing date or the other party benefits from a compulsory license. Moreover, a third party may develop a competitive product that provides benefits similar to one or more of our product candidates but that uses a vector or an expression construct that falls outside the scope of our patent protection or license rights. If the patent protection provided by the patents and patent applications we hold or pursue with respect to our product candidates is not sufficiently broad to impede such competition, our ability to successfully commercialize our product candidates could be negatively affected, which would harm our business.

Although currently all of our patent applications are in-licensed, similar risks would apply to any patents or patent applications that we may own or in-license in the future.

In addition to patent protection, if any of our product candidates are approved by the FDA as a biological product under a BLA in the United States, we believe the product would qualify for a 12-year period of exclusivity. Other regulatory exclusivities may be available, such as Orphan Drug exclusivity, with analogous data, marketing, and orphan exclusivities in various foreign countries. However, the scope of such regulatory exclusivities is subject to change, and may not provide us with adequate and continuing protection sufficient to exclude others from commercializing products similar to our product candidates.

All of our current product candidates and discovery programs are licensed from or based upon licenses from a third party and are field limited to certain indications. If this license agreement is terminated or interpreted to narrow our rights, our ability to advance our current product candidates or develop new product candidates based on these technologies will be materially adversely affected.

We now depend on Penn, and will continue to depend on Penn and on licenses and sublicenses from other third parties, as well as potentially on other strategic relationships with third parties, for the research, development, manufacturing and

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commercialization of our current product candidates. If any of our licenses or relationships or any in-licenses on which our licenses are based are terminated or breached, we may:

• lose our rights to develop and market our current product candidates;

• lose patent or trade secret protection for our current product candidates;

• experience significant delays in the development or commercialization of our current product candidates;

• not be able to obtain any other licenses on acceptable terms, if at all; or

• incur liability for damages.

Additionally, even if not terminated or breached, our intellectual property licenses or sublicenses may be subject to disagreements over contract interpretation which could narrow the scope of our rights to the relevant intellectual property or technology or increase our financial or other obligations.

If we experience any of the foregoing, it could have a materially adverse effect on our business and could force us to cease operations which could cause you to lose all of your investment.

If we breach our license agreements it could have a material adverse effect on our commercialization efforts for our product candidates.

If we breach any of the agreements under which we license the use, development and commercialization rights to our product candidates or technology from third parties, we could lose license rights that are important to our business. Our current lead product candidates and pipeline are and our anticipated near term pipeline will be, licensed from Penn.

Under the Penn Expansion Agreement, we are subject to various obligations, including diligence obligations such as development and commercialization obligations, as well as potential royalty payments and other obligations. If we fail to comply with any of these obligations or otherwise breach our license agreements, our licensors may have the right to terminate the applicable license in whole or in part. Generally, the loss of any one of our current licenses, or any other license we may acquire in the future, could harm our business, prospects, financial condition and results of operations.

Licensing of intellectual property is of critical importance to our business and involves complex legal, business and scientific issues. Disputes may arise between us and our licensors regarding intellectual property subject to a license agreement, including:

• the scope of rights granted under the license agreement and other interpretation-related issues;

• whether and the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement;

• our right to sublicense patent and other intellectual property rights to third parties under collaborative development relationships;

• our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of our product candidates, and what activities satisfy those diligence obligations;

• the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners; and

• whether and the extent to which inventors are able to contest the assignment of their rights to our licensors.

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If disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable terms or at all, we may be unable to successfully develop and commercialize the affected product candidates. In addition, if disputes arise as to ownership of licensed intellectual property, our ability to pursue or enforce the licensed patent rights may be jeopardized. If we or our licensors fail to adequately protect this intellectual property, our ability to commercialize our products could suffer.

Our strategy of obtaining rights to key technologies through in-licenses may not be successful.

We seek to expand our product candidate pipeline in part by in-licensing the rights to key technologies. The future growth of our business will depend in part on our ability to in-license or otherwise acquire the rights to additional product candidates or technologies. We cannot assure you that we will be able to in-license or acquire the rights to any product candidates or technologies from third parties on acceptable terms or at all.

The in-licensing and acquisition of these technologies is a competitive area, and a number of more established companies are also pursuing strategies to license or acquire product candidates or technologies that we may consider attractive. These established companies may have a competitive advantage over us due to their size, cash resources and greater clinical development and commercialization capabilities. In addition, companies that perceive us to be a competitor may be unwilling to license rights to us. Furthermore, we may be unable to identify suitable product candidates or technologies within our area of focus. If we are unable to successfully obtain rights to suitable product candidates or technologies, our business, financial condition and prospects could suffer.

Third parties may initiate legal proceedings alleging claims of intellectual property infringement, the outcome of which would be uncertain and could have a material adverse effect on the success of our business.

Our commercial success depends upon our ability and the ability of our collaborators to develop, manufacture, market and sell our product candidates and future products and use our proprietary technologies without infringing the proprietary rights and intellectual property of third parties. The biotechnology and pharmaceutical industries are characterized by extensive and frequent litigation regarding patents and other intellectual property rights. We may in the future become party to, or threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to our product candidates, future products and technology. Our competitors or other third parties may assert infringement or misappropriation claims against us, alleging that our therapeutics, manufacturing methods, formulations or administration methods are covered by their patents. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are pursuing product candidates. For example, in connection with our formation, we were indirectly informed of claims that third parties may potentially raise against us or our collaborators regarding our AAVhu68 capsid. We believe that we would have valid defenses to these and any other such claims; however, if any such claims were ultimately successful, we might require a license to continue to use and sell any product candidates using such AAV vector. Such licenses may not be available on commercially reasonable terms, or at all.

On February 18, 2020, we received a letter from Regenxbio Inc., or Regenx, which stated its view that the use of our AAVhu68 capsid infringes patent claims to which Regenx has an exclusive license and which expire in 2024. Regenx also stated that it has exclusive licenses to various pending patent applications regarding the use of AAV vectors administered via ICM, and that these applications may lead to issued claims that Regenx believes may, if issued, cover our planned method of administration for our lead product candidates. We believe we have valid defenses to the issued claims set forth by Regenx relating to AAVhu68. Further, the prosecution of pending patent applications is highly uncertain, and it is unclear whether any patents will issue from these pending Regenx patent applications at all, much less with claims that are relevant to the administration of our product candidates. Regenx also asked for information regarding our relationship with Dr. Wilson while he was serving as an advisor to Regenx. Regenx’s letter also offers to discuss licensing the applicable patent portfolios from them. In April 2020, the Company responded to Regenx indicating that it does not believe it requires a license to any of the specified Regenx patents or patent applications at this time, and that it found that Dr. Wilson’s relationship with the Company was consistent with his obligations to Regenx. The Company will continue to monitor the situation and, if necessary, take appropriate actions, which may include responding to further correspondence from Regenx, and engaging in discussions with Regenx regarding their claims. If

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any such patents were enforceable and such claims were ultimately successful, we might require a license to continue to use and sell any product candidates using such AAV vector.

Further, we do not know which processes we will use for commercial manufacture of our future products, or which technologies owned or controlled by third parties may prove important or essential to those processes. Given the vast number of patents in our field of technology, we cannot be certain or guarantee that we do not or will not infringe existing patents or that we will not infringe patents that may be granted in the future. Many companies have filed, and continue to file, patent applications related to gene therapy and orphan diseases. Some of these patent applications have already been allowed or issued and others may issue in the future. Since this area is competitive and of strong interest to pharmaceutical and biotechnology companies, there will likely be additional patent applications filed and additional patents granted in the future, as well as additional research and development programs expected in the future. Furthermore, because patent applications can take many years to issue, may be confidential for 18 months or more after filing and can be revised before issuance, there may be applications now pending which may later result in issued patents that may be infringed by the manufacture, use, sale or importation of our product candidates or future products. If a patent holder believes the manufacture, use, sale, offer for sale or importation of one of our product candidates or future products infringes its patent, the patent holder may sue us even if we have licensed other patent protection for our technology. Moreover, we may face patent infringement claims from non-practicing entities that have no relevant product revenue and against whom our licensed patent portfolio may therefore have no deterrent effect.

It is also possible that we have failed to identify relevant third-party patents or applications. For example, applications filed before November 29, 2000 and certain applications filed after that date that will not be filed outside the United States remain confidential until patents issue. Moreover, it is difficult for industry participants, including us, to identify all third-party patent rights that may be relevant to our product candidates and technologies because patent searching is imperfect due to differences in terminology among patents, incomplete databases and the difficulty in assessing the meaning of patent claims. We may fail to identify relevant patents or patent applications or may identify pending patent applications of potential interest but incorrectly predict the likelihood that such patent applications may issue with claims of relevance to our technology. In addition, we may be unaware of one or more issued patents that would be infringed by the manufacture, sale, importation or use of a current or future product candidate, or we may incorrectly conclude that a third-party patent is invalid, unenforceable or not infringed by our activities. Additionally, pending patent applications that have been published can, subject to certain limitations, be later amended in a manner that could cover our technologies, our future products or the manufacture or use of our future products.

Third parties may assert infringement claims against us based on existing intellectual property rights and intellectual property rights that may be granted in the future. If we were to challenge the validity of an issued U.S. patent in court, such as an issued U.S. patent of potential relevance to some of our product candidates or future products or manufacture or methods of use, we would need to overcome a statutory presumption of validity that attaches to every U.S. patent. This means that in order to prevail, we would have to present clear and convincing evidence as to the invalidity of the patent’s claims. There is no assurance that a court would find in our favor on questions of infringement or validity.

Patent and other types of intellectual property litigation can involve complex factual and legal questions, and their outcome is uncertain. If we are found, or believe there is a risk we may be found, to infringe a third party’s intellectual property rights, we could be required or may choose to obtain a license from such third party to continue developing and marketing our products and technology. However, we may not be able to obtain any such license on commercially reasonable terms, or at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. Without such a license, we could be forced, including by court order, to cease commercializing the infringing technology or product. In addition, we could be found liable for monetary damages, including treble damages and attorneys’ fees if we are found to have willfully infringed a patent. A finding of infringement could prevent us from commercializing our future products or force us to cease some of our business operations, which could materially harm our business. Alternatively, we may need to redesign our infringing products, which may be impossible or require substantial time and monetary expenditure. If we lose a foreign patent lawsuit alleging our infringement of a competitor’s patents, we could be prevented from marketing our therapeutics in one or more foreign countries and/or be required to pay monetary damages for infringement or royalties in order to continue marketing. Claims that we have misappropriated the confidential information, trade secrets or other intellectual

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property of third parties could have a similar negative impact on our business. Any of these outcomes would have a materially adverse effect on our business.

Even if we are successful in these proceedings, we may incur substantial costs and divert management time and attention in pursuing these proceedings, which could have a material adverse effect on us. If we are unable to avoid infringing the patent rights of others, we may be required to seek a license, defend an infringement action or challenge the validity of the patents in court, or redesign our future products or processes. Patent litigation is costly and time-consuming, and some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. We may not have sufficient resources to bring these actions to a successful conclusion. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation or administrative proceedings, there is a risk that some of our confidential information could be compromised by disclosure. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could delay our research and development efforts, adversely affect our ability to raise additional funds, and could limit our ability to continue our operations.

If we are unable to protect the confidentiality of our trade secrets, our business and competitive position may be harmed.

In addition to the protection afforded by patents, we rely upon unpatented trade secret protection, unpatented know-how and continuing technological innovation to develop and maintain our competitive position. We seek to protect our proprietary technology and processes, in part, by entering into confidentiality agreements with our contractors, collaborators, scientific advisors, employees and consultants and invention assignment agreements with our consultants and employees. We may not be able to prevent the unauthorized disclosure or use of our technical know-how or other trade secrets by the parties to these agreements, however, despite the existence generally of confidentiality agreements and other contractual restrictions. Monitoring unauthorized uses and disclosures is difficult and we do not know whether the steps we have taken to protect our proprietary technologies will be effective. If any of the contractors, collaborators, scientific advisors, employees and consultants who are parties to these agreements breaches or violates the terms of any of these agreements, we may not have adequate remedies for any such breach or violation. As a result, we could lose our trade secrets. Enforcing a claim that a third party illegally obtained and is using our trade secrets, like patent litigation, is expensive and time consuming and the outcome is unpredictable. In addition, courts outside the United States are sometimes less willing or unwilling to protect trade secrets.

Our trade secrets could otherwise become known or be independently discovered by our competitors. Competitors could purchase our product candidates and attempt to replicate some or all of the competitive advantages we derive from our development efforts, willfully infringe our intellectual property rights, design around our protected technology or develop their own competitive technologies that fall outside of our intellectual property rights. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent them, or those to whom they communicate it, from using that technology or information to compete with us. If our trade secrets are not adequately protected or sufficient to provide an advantage over our competitors, our competitive position could be adversely affected, as could our business. Additionally, if the steps taken to maintain our trade secrets are deemed inadequate, we may have insufficient recourse against third parties for misappropriating our trade secrets.

Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies and our patent protection could be reduced or eliminated for non-compliance with these requirements.

The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. In addition, periodic maintenance fees on issued patents often must be paid to the USPTO and foreign patent agencies over the lifetime of the patent. While an unintentional lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in premature abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure

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to properly legalize and submit formal documents. If we or our licensors fail to maintain the patents and patent applications covering our product candidates, we may not be able to stop a competitor from marketing drugs that are the same as or similar to our product candidates, which would have a material adverse effect on our business.

We may not be able to protect our intellectual property rights throughout the world.

Filing, prosecuting and defending patents on product candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States can be less extensive than those in the United States. The requirements for patentability may differ in certain countries, particularly in developing countries. Moreover, our ability to protect and enforce our intellectual property rights may be adversely affected by unforeseen changes in foreign intellectual property laws. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Further, licensing partners may not prosecute patents in certain jurisdictions in which we may obtain commercial rights, thereby precluding the possibility of later obtaining patent protection in these countries. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and may also export infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States. These products may compete with our products and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Our in-licensed patent family drawn to AAVhu68 capsids is pending in major pharmaceutical markets including the United States, Canada, Europe, Japan, Korea, and China, as well as in 19 other jurisdictions; we will not be able to enforce the patent in any jurisdictions in which the application has not been filed. The four additional licensed patent families can still be filed in all jurisdictions; however, filing, prosecuting and defending patents on product candidates in all countries throughout the world would be prohibitively expensive, and we or our licensor may be unable to predict and may fail to seek patent protection in jurisdictions in which protection may ultimately be desired.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets, and other intellectual property protection, particularly those relating to biotechnology products, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally. For example, many foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties. Proceedings to enforce our patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time consuming and unsuccessful.

Competitors may infringe our patents, trademarks, copyrights or other intellectual property. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time consuming and divert the time and attention of our management and scientific personnel. Any claims we assert against perceived infringers could provoke these parties to assert counterclaims against us alleging that we infringe their patents, in addition to counterclaims asserting that our patents are invalid or unenforceable, or both. The outcome following legal assertions of invalidity and unenforceability is unpredictable. In any patent infringement proceeding, there is a risk that a court will decide that a patent of ours is invalid or unenforceable, in whole or in part, and that we do not have the right to stop the other party from using the invention at issue. There is also a risk that, even if the validity of such patents is upheld, the court will construe the patent’s claims narrowly or decide that we do not have the right to stop the other party from using the invention at issue on the grounds that our patent claims do not cover the invention. An adverse outcome in a litigation or proceeding involving our patents could limit our ability to assert our patents against those parties or

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other competitors, and may curtail or preclude our ability to exclude third parties from making and selling similar or competitive products. Any of these occurrences could adversely affect our competitive business position, business prospects and financial condition. Similarly, if we assert trademark infringement claims, a court may determine that the marks we have asserted are invalid or unenforceable, or that the party against whom we have asserted trademark infringement has superior rights to the marks in question. In this case, we could ultimately be forced to cease use of such trademarks.

Even if we establish infringement, the court may decide not to grant an injunction against further infringing activity and instead award only monetary damages, which may or may not be an adequate remedy. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of shares of our common stock. Moreover, there can be no assurance that we will have sufficient financial or other resources to file and pursue such infringement claims, which typically last for years before they are concluded. Even if we ultimately prevail in such claims, the monetary cost of such litigation and the diversion of the attention of our management and scientific personnel could outweigh any benefit we receive as a result of the proceedings.

Changes in patent law in the United States and in non-U.S. jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our product candidates.

As is the case with other biotechnology companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the biotechnology industry involve both technological and legal complexity, and is therefore costly, time-consuming and inherently uncertain.

Past or future patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents. For example, in March 2013, under the Leahy-Smith America Invents Act, or America Invents Act, the United States moved from a “first to invent” to a “first-inventor-to-file” patent system. Under a “first-inventor-to-file” system, assuming the other requirements for patentability are met, the first inventor to file a patent application generally will be entitled to a patent on the invention regardless of whether another inventor had made the invention earlier. The America Invents Act includes a number of other significant changes to U.S. patent law, including provisions that affect the way patent applications are prosecuted, redefine prior art and establish a new post-grant review system. The effects of these changes are currently unclear as the USPTO continues to promulgate new regulations and procedures in connection with the America Invents Act and many of the substantive changes to patent law, including the “first-inventor-to-file” provisions, only became effective in March 2013. In addition, the courts have yet to address many of these provisions and the applicability of the act and new regulations on the specific patents discussed in this filing have not been determined and would need to be reviewed. However, the America Invents Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents.

Additionally, recent U.S. Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the federal courts and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future. For example, in the case, Assoc. for Molecular Pathology v. Myriad Genetics, Inc., the U.S. Supreme Court held that certain claims to DNA molecules are not eligible for patent protection. We cannot predict how future decisions by the courts, the U.S. Congress or the USPTO may impact the value of our patents. Any similar adverse changes in the patent laws of other jurisdictions could also have a material adverse effect on our business, financial condition, results of operations and prospects.

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We may be subject to claims asserting that our employees, consultants, advisors or collaborators have wrongfully used or disclosed alleged trade secrets of their current or former employers or claims asserting ownership of or other rights to what we regard as our own or licensed intellectual property.

Many of our employees, consultants or advisors, and the employees, consultants or advisors of our licensors, are currently, or were previously, employed at or affiliated with universities, hospitals or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although we try to ensure that our employees, consultants and advisors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that these individuals or we have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such individual’s current or former employer. Moreover, some of our licensors, and our or our licensors’ employees, consultants or advisors are or have been affiliated or have a contractual relationship with multiple institutions and companies including our competitors and may have or have had an obligation to them. Such institutions and companies could challenge our license rights or our licensors’ intellectual property ownership rights. Litigation may be necessary to defend against these claims and we may be obligated to indemnify our employees, consultants, advisors or collaborators in certain instances. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management.

In addition, while it is our policy to require our employees and contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that we regard as our own. The assignment of intellectual property rights may not be self-executing or the assignment agreements may be breached, and we may be forced to bring claims against third parties, or defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual property.

Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time.

Patents have a limited lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S. non-provisional filing date. Various extensions may be available, but the life of a patent, and the protection it affords, is limited. Even if patents covering our product candidates are obtained, once the patent life has expired, we may be open to competition from competitive products, including generics. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting our product candidates might expire before or shortly after we or our partners commercialize those candidates. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.

If we do not obtain patent term extension for any product candidates we may develop, our business may be materially harmed.

Depending upon the timing, duration and specifics of any FDA marketing approval of any product candidates we may develop, one or more of our U.S. patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, or the Hatch-Waxman Amendments. The Hatch-Waxman Amendments permit a patent extension term of up to five years as compensation for patent term lost during the FDA regulatory review process. A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, only one patent per product may be extended and only those claims covering the approved drug, a method for using it, or a method for manufacturing it may be extended. However, even if we were to seek a patent term extension, it may not be granted because of, for example, the failure to exercise due diligence during the testing phase or regulatory review process, the failure to apply within applicable deadlines, the failure to apply prior to expiration of relevant patents, or any other failure to satisfy applicable requirements. Moreover, the applicable time period or the scope of patent protection afforded could be less than we request. If we are unable to obtain patent term extension or term of any such extension is less than we request, our competitors may obtain approval of competing products following our patent expiration, and our business, financial condition, results of operations, and prospects could be materially harmed.

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Some intellectual property that we have in-licensed may have been discovered through government funded programs and thus may be subject to federal regulations such as “march-in” rights, certain reporting requirements and a preference for U.S.-based companies. Compliance with such regulations may limit our exclusive rights, and limit our ability to contract with non-U.S. manufacturers.

Many of the intellectual property rights we have licensed are generated through the use of U.S. government funding and are therefore subject to certain federal regulations. As a result, the U.S. government may have certain rights to intellectual property embodied in our current or future product candidates pursuant to the Bayh-Dole Act of 1980, or Bayh-Dole Act, and implementing regulations. These U.S. government rights in certain inventions developed under a government-funded program include a non-exclusive, non-transferable, irrevocable worldwide license to use inventions for any governmental purpose. In addition, the U.S. government has the right to require us or our licensors to grant exclusive, partially exclusive, or non-exclusive licenses to any of these inventions to a third party if it determines that: (i) adequate steps have not been taken to commercialize the invention; (ii) government action is necessary to meet public health or safety needs; or (iii) government action is necessary to meet requirements for public use under federal regulations (also referred to as “march-in rights”). The U.S. government also has the right to take title to these inventions if we, or the applicable licensor, fail to disclose the invention to the government and fail to file an application to register the intellectual property within specified time limits. These time limits have recently been changed by regulation, and may change in the future. Intellectual property generated under a government funded program is also subject to certain reporting requirements, compliance with which may require us or the applicable licensor to expend substantial resources. In addition, the U.S. government requires that any products embodying the subject invention or produced through the use of the subject invention be manufactured substantially in the United States. The manufacturing preference requirement can be waived if the owner of the intellectual property can show that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not commercially feasible. This preference for U.S. manufacturers may limit our ability to contract with non-U.S. product manufacturers for products covered by such intellectual property. To the extent any of our current or future intellectual property is generated through the use of U.S. government funding, the provisions of the Bayh-Dole Act may similarly apply.

Risks Related to Government Regulation

The pricing, insurance coverage and reimbursement status of newly approved products is uncertain. Failure to obtain or maintain adequate coverage and reimbursement for our product candidates, if approved, could limit our ability to market those products and decrease our ability to generate product revenue.

Our lead product target indications are indications with small patient populations. In order for products that are designed to treat smaller patient populations to be commercially viable, the reimbursement for such products must be higher, on a relative basis, to account for the lack of volume. Accordingly, we will need to implement a coverage and reimbursement strategy for any approved product candidate that accounts for the smaller potential market size. If we are unable to establish or sustain coverage and adequate reimbursement for any future product candidates from third-party payors, the adoption of those products and sales revenue will be adversely affected, which, in turn, could adversely affect the ability to market or sell those product candidates, if approved.

We expect the cost of a single administration of gene therapy products, such as those we are developing, to be substantial when and if they achieve regulatory approval. Therefore, we expect that coverage and reimbursement by government and private payors will be essential for most patients to be able to afford these treatments. Accordingly, sales of any of our product candidates will depend substantially, both domestically and internationally, on the extent to which the costs of our product candidates will be paid by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or will be reimbursed by government authorities, private health coverage insurers and other third-party payors. Even if coverage is provided, the approved reimbursement amount may not be high enough to allow us to establish or maintain pricing sufficient to realize a sufficient return on our investment.

There is significant uncertainty related to the insurance coverage and reimbursement of newly approved products. In the United States, the principal decisions about reimbursement for new products are typically made by the Centers for Medicare & Medicaid Services, or CMS, an agency within the U.S. Department of Health and Human Services, since

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CMS decides whether and to what extent a new product will be covered and reimbursed under Medicare. Private payors tend to follow CMS to a substantial degree. However, one payor’s determination to provide coverage for a drug product does not assure that other payors will also provide coverage for the drug product. Further, a payor’s decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved. It is difficult to predict what CMS will decide with respect to reimbursement for novel products such as ours since there is no body of established practices and precedents for these new products. Reimbursement agencies in Europe may be more conservative than CMS.

Outside the United States, international operations are generally subject to extensive governmental price controls and other market regulations, and we believe the increasing emphasis on cost-containment initiatives in Europe, Canada and other countries has and will continue to put pressure on the pricing and usage of therapeutics such as our product candidates. In many countries, particularly the countries of the EU, the prices of medical products are subject to varying price control mechanisms as part of national health systems. In these countries, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a product. To obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our product candidate to other available therapies. In general, the prices of products under such systems are substantially lower than in the United States. Other countries allow companies to fix their own prices for products, but monitor and control company profits. Additional foreign price controls or other changes in pricing regulation could restrict the amount that we are able to charge for our product candidates. Accordingly, in markets outside the United States, the reimbursement for our product candidates may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenues and profits.

Moreover, increasing efforts by governmental and third-party payors, in the United States and internationally, to cap or reduce healthcare costs may cause such organizations to limit both coverage and level of reimbursement for new products approved and, as a result, they may not cover or provide adequate payment for our product candidates. We expect to experience pricing pressures in connection with the sale of any of our product candidates due to the trend toward managed healthcare, the increasing influence of certain third-party payors, such as health maintenance organizations, and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription drugs and surgical procedures and other treatments, has become very intense. As a result, increasingly high barriers are being erected to the entry of new products into the healthcare market.

In addition to CMS and private payors, professional organizations such as the American Medical Association can influence decisions about reimbursement for new products by determining standards for care. In addition, many private payors contract with commercial vendors who sell software that provide guidelines that attempt to limit utilization of, and therefore reimbursement for, certain products deemed to provide limited benefit to existing alternatives. Such organizations may set guidelines that limit reimbursement or utilization of our product candidates. Even if favorable coverage and reimbursement status is attained for one or more products for which we or our collaborators receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.

A Breakthrough Therapy Designation by the FDA, even if granted for any of our product candidates, may not lead to a faster development or regulatory review or approval process and it does not increase the likelihood that our product candidates will receive marketing approval.

We may seek a Breakthrough Therapy Designation for our product candidates if the clinical data support such a designation for one or more product candidates. A breakthrough therapy is defined as a drug or biologic that is intended, alone or in combination with one or more other drugs or biologics, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the drug, or biologic in our case, may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. For product candidates that have been designated as breakthrough therapies, interaction and communication between the FDA and the sponsor of the trial can help to identify the most efficient path for clinical development while minimizing the number of patients placed in ineffective control regimens. Biologics designated as breakthrough therapies by the FDA may also be eligible for accelerated approval.

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Designation as a breakthrough therapy is within the discretion of the FDA. Accordingly, even if we believe one of our product candidates meets the criteria for designation as a breakthrough therapy, the FDA may disagree and instead determine not to make such designation. In any event, the receipt of a Breakthrough Therapy Designation for a product candidate may not result in a faster development process, review or approval compared to drugs considered for approval under non-expedited the FDA review procedures and does not assure ultimate approval by the FDA. In addition, even if one or more of our product candidates qualify as breakthrough therapies, the FDA may later decide that the product no longer meets the conditions for qualification.

A Regenerative Medicine Advanced Therapy, or RMAT, Designation by the FDA, even if granted for any of our product candidates, may not lead to a faster development or regulatory review or approval process and it does not increase the likelihood that our product candidates will receive marketing approval.

We plan to seek RMAT Designations if the clinical data support such a designation for one or more product candidates. RMAT Designation is an expedited program for the advancement and approval of regenerative medicine products where preliminary clinical evidence indicates the potential to address unmet medical needs for life-threatening diseases or conditions. Similar to Breakthrough Therapy Designation, the RMAT Designation allows companies developing regenerative medicine therapies to work more closely and frequently with the FDA, and RMAT-designated products may be eligible for priority review and accelerated approval. FDA has confirmed that gene therapies, including genetically modified cells, that lead to a sustained effect on cells or tissues may meet the definition of a regenerative medicine therapy. For product candidates that have received an RMAT Designation, interaction and communication between the FDA and the sponsor of the trial can help to identify the most efficient path for clinical development while minimizing the number of patients placed in ineffective control regimens.

RMAT Designation is within the discretion of the FDA. Accordingly, even if we believe one of our product candidates meets the criteria for RMAT Designation, the FDA may disagree and instead determine not to make such designation. In any event, the receipt of RMAT Designation for a product candidate may not result in a faster development process, review or approval compared to drugs considered for approval under non-expedited FDA review procedures and does not assure ultimate approval by the FDA. In addition, even if a product candidate qualifies as an RMAT therapy, the FDA may later decide that the product candidate no longer meets the conditions for qualification.

If we decide to pursue a Fast Track Designation by the FDA, it may not lead to a faster development or regulatory review or approval process.

We may seek Fast Track Designation for one or more of our product candidates. If a drug is intended for the treatment of a serious or life-threatening condition and the drug demonstrates the potential to address unmet medical needs for this condition, the product sponsor may apply for FDA Fast Track Designation. The FDA has broad discretion whether or not to grant this designation, so even if we believe a particular product candidate is eligible for this designation, we cannot assure you that the FDA would decide to grant it. Even if we do receive Fast Track Designation, we may not experience a faster development process, review or approval compared to conventional FDA procedures. The FDA may withdraw Fast Track Designation if it believes that the designation is no longer supported by data from our clinical development program.

If we decide to seek Orphan Drug Designation for some of our product candidates, we may be unsuccessful or may be unable to maintain the benefits associated with Orphan Drug Designation, including the potential for supplemental market exclusivity.

As part of our business strategy, we have sought and may continue to seek Orphan Drug Designation for one or more of our product candidates, and we may be unsuccessful. Regulatory authorities in some jurisdictions, including the United States and Europe, may designate drugs for relatively small patient populations as orphan drugs. Under the Orphan Drug Act, the FDA may designate a drug as an orphan drug if it is a drug intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals in the United States, or a patient population greater than 200,000 in the United States where there is no reasonable expectation that the cost of developing the drug will be recovered from sales in the United States. In the United States, Orphan Drug Designation entitles a party to financial incentives such as tax advantages and user fee waivers. Opportunities for grant funding toward clinical trial

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costs may also be available for clinical trials of drugs for rare diseases, regardless of whether the drugs are designated for the orphan use. In addition, if a product that has Orphan Drug Designation subsequently receives the first FDA approval for the disease for which it has such designation, the product is entitled to orphan drug exclusivity, which means that the FDA may not approve any other applications to market the same product for the same indication for seven years, except in limited circumstances. For large molecule drugs, including gene therapies, sameness is determined based on principal molecular structural features of a product. As applied to gene therapies, the FDA has recently issued draft guidance in which it stated it would consider certain key features, such as the transgenes expressed by the gene therapy and the vectors used to deliver the transgene, to be principal molecular structural features. With regard to vectors, the FDA intends to consider whether two vectors from the same viral class are the same or different on a case-by-case basis. The FDA does not intend to consider minor differences between transgenes and vectors to be different principal molecular structural features. The FDA also intends to consider whether additional features of the final gene therapy product, such as regulatory elements and the cell type that is transduced (for genetically modified cells), should also be considered to be principal molecular structural features.

Even if we obtain Orphan Drug Designation for our product candidates in specific indications, we may not be the first to obtain marketing approval of these product candidates for the orphan-designated indication due to the uncertainties associated with developing pharmaceutical products. If a competitor with a product that is determined by the FDA to be the same as one of our product candidates obtains marketing approval before us for the same indication we are pursuing and obtains orphan drug exclusivity, our product candidate may not be approved until the period of exclusivity ends unless we are able to demonstrate that our product candidate is clinically superior. Even after obtaining approval, we may be limited in our ability to market our product. In addition, exclusive marketing rights in the United States may be limited if we seek approval for an indication broader than the orphan-designated indication or may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition. Further, even if we obtain orphan drug exclusivity for a product, that exclusivity may not effectively protect the product from competition because different drugs with different principal molecular structural features can be approved for the same condition. Even after an orphan product is approved, the FDA can subsequently approve the same drug with the same principal molecular structural features for the same condition if the FDA concludes that the later drug is safer, more effective or makes a major contribution to patient care. Orphan Drug Designation neither shortens the development time or regulatory review time of a drug nor gives the drug any advantage in the regulatory review or approval process. In addition, while we may seek Orphan Drug Designation for some of our product candidates, we may never receive such designations.

The recent tax reform legislation, which was signed into law on December 22, 2017 reduced the amount of the qualified clinical research costs for a designated orphan product that a sponsor may claim as a credit from 50% to 25%. Thus, further limiting the advantage and may impact our future business strategy of seeking the Orphan Drug Designation.

Any product candidate for which we obtain marketing approval will be subject to extensive post-marketing regulatory requirements and could be subject to post-marketing restrictions or withdrawal from the market, and we may be subject to penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our product candidates, when and if any of them are approved.

Our product candidates and the activities associated with their development and potential commercialization, including their testing, manufacture, recordkeeping, labeling, storage, approval, advertising, promotion, sale and distribution, are subject to comprehensive regulation by the FDA and other regulatory authorities. These requirements include submissions of safety and other post-marketing information and reports, registration and listing requirements, cGMPs, requirements relating to manufacturing, quality control, quality assurance and corresponding maintenance of records and documents, including periodic inspections by the FDA and other regulatory authorities and requirements regarding the distribution of samples to physicians and recordkeeping.

The FDA may also impose requirements for costly post-marketing studies or clinical trials and surveillance to monitor the safety or efficacy of any approved product. The FDA closely regulates the post-approval marketing and promotion of drugs and biologics to ensure drugs and biologics are marketed only for the approved indications and in accordance with the provisions of the approved product labeling. The FDA imposes stringent restrictions on manufacturers’

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communications regarding use of their products. If we promote our product candidates beyond their potentially approved indications, we may be subject to enforcement action for off-label promotion. Violations of the Federal Food, Drug, and Cosmetic Act relating to the promotion of prescription drugs may lead to investigations alleging violations of federal and state healthcare fraud and abuse laws, as well as state consumer protection laws.

In addition, later discovery of previously unknown adverse events or other problems with our product candidates, manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may yield various results, including:

• restrictions on such product candidates, manufacturers or manufacturing processes;

• restrictions on the labeling or marketing of a product;

• restrictions on product distribution or use;

• requirements to conduct post-marketing studies or clinical trials;

• warning or untitled letters;

• withdrawal of any approved product from the market;

• refusal to approve pending applications or supplements to approved applications that we submit;

• recall of product candidates;

• fines, restitution or disgorgement of profits or revenues;

• suspension or withdrawal of marketing approvals;

• refusal to permit the import or export of our product candidates;

• product seizure; or

• injunctions or the imposition of civil or criminal penalties.

Non-compliance with European requirements regarding safety monitoring or pharmacovigilance, and with requirements related to the development of products for the pediatric population, can also result in significant financial penalties. Similarly, failure to comply with requirements regarding the protection of personal information can also lead to significant penalties and sanctions.

Our product candidates for which we intend to seek approval may face competition from biosimilars sooner than anticipated.

With the enactment of the Biologics Price Competition and Innovation Act of 2009, or BPCIA, an abbreviated pathway for the approval of biosimilar and interchangeable biological products was created. The abbreviated regulatory pathway establishes legal authority for the FDA to review and approve biosimilar biologics, including the possible designation of a biosimilar as interchangeable based on its similarity to an existing reference product. Under the BPCIA, an application for a biosimilar product cannot be approved by the FDA until 12 years after the original branded product is approved under a BLA. The law is complex and is still being interpreted and implemented by the FDA. As a result, its ultimate impact, implementation, and meaning are subject to uncertainty. While it is uncertain when such processes intended to implement BPCIA may be fully adopted by the FDA, any such processes could have a material adverse effect on the future commercial prospects for our biological products.

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We believe that if any of our product candidates is approved as a biological product under a BLA, it should qualify for the 12-year period of exclusivity. However, there is a risk that the FDA will not consider any of our product candidates to be reference products for competing products, potentially creating the opportunity for biosimilar competition sooner than anticipated. Additionally, this period of regulatory exclusivity does not apply to companies pursuing regulatory approval via their own traditional BLA, rather than via the abbreviated pathway. Moreover, the extent to which a biosimilar, once approved, will be substituted for any one of our reference products in a way that is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing. Finally, there has been public discussion of potentially decreasing the period of exclusivity from the current 12 years. If such a change were to be enacted, our product candidates, if approved, could have a shorter period of exclusivity than anticipated.

Enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates and may affect the prices we may set.

In the United States and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system that could, among other things, prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities and affect our ability to profitably sell any products for which we obtain marketing approval.

For example, in March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or collectively the Affordable Care Act, or the ACA, was enacted to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for health care and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms. As implementation of the ACA is ongoing, the law appears likely to continue the downward pressure on pharmaceutical pricing, especially under the Medicare program, and may also increase our regulatory burdens and operating costs.

Moreover, the Drug Supply Chain Security Act imposes new obligations on manufacturers of pharmaceutical products related to product tracking and tracing. Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical products. We are not sure whether additional legislative changes will be enacted, or whether the current regulations, guidance or interpretations will be changed, or what the impact of such changes on our business, if any, may be.

Our operations and relationships with customers and third-party payors will be subject to applicable anti-kickback, fraud and abuse and other healthcare laws and regulations, which could expose us to penalties including criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings.

Healthcare providers and third-party payors will play a primary role in the recommendation and prescription of any product candidates for which we obtain marketing approval. Our future arrangements with providers, third-party payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell and distribute any product candidates for which we obtain marketing approval.

Restrictions under applicable U.S. federal and state healthcare laws and regulations may include the following:

• the federal Anti-Kickback Statute prohibits, among other things, persons and entities from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under federal healthcare programs such as Medicare and Medicaid;

• federal false claims laws, including the federal False Claims Act, imposes criminal and civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;

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• the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for, among other things, knowingly and willfully executing or attempting to execute a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

• HIPAA, as amended by the Health Information Technology for Economic and Clinical Health, or HITECH, Act and its implementing regulations, also imposes obligations, including mandatory contractual terms, on certain types of people and entities with respect to safeguarding the privacy, security and transmission of individually identifiable health information;

• the federal Physician Payment Sunshine Act requires applicable manufacturers of covered drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program, with specific exceptions, to report payments and other transfers of value to physicians and teaching hospitals, as well as certain ownership and investment interests held by physicians and their immediate family, which includes annual data collection and reporting obligations; and

• analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers.

Some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government and may require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures. Other state laws require reporting of certain pricing information, including price increases. State and foreign laws also govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.

Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, imprisonment, exclusion of product candidates from government-funded healthcare programs, such as Medicare and Medicaid, disgorgement, oversight monitoring, contractual damages, reputational harm, diminished profits and future earnings, and the curtailment or restructuring of our operations. If any of the physicians or other healthcare providers or entities with whom we expect to do business is found to be not in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government-funded healthcare programs.

Risks Related to Employee Matters, Managing Growth and Other Risks Related to Our Business

We expect to rapidly expand our manufacturing, development and regulatory capabilities, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.

We expect to experience significant growth in the number of our employees and the scope of our operations, particularly in the areas of manufacturing and clinical strategy, and growing our capability to conduct clinical trials. To manage our current development programs and anticipated future growth, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel. Due to our limited financial resources and the limited experience of our management team in managing a company with such anticipated growth, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel. The expansion of our operations may lead to significant costs and may divert our management and business development resources. Any inability to manage growth could delay the execution of our business plans or disrupt our operations.

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Our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel.

We are highly dependent on the research and development, clinical and business development expertise of our management, scientific and clinical team. We also benefit from the research expertise of Dr. Wilson, our Chief Scientific Advisor. Although we have entered into a consulting agreement with Dr. Wilson, he may terminate his relationship with us at any time. Although we have entered into employment letter agreements or employment agreements with our executive officers, each of them may terminate their employment with us at any time. We do not maintain “key person” insurance for any of our executives or other employees. In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development and manufacturing strategy. Our consultants and advisors may be employed by employers other than us and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us. If we are unable to continue to attract and retain high quality personnel, our ability to pursue our growth strategy will be limited.

Recruiting and retaining qualified scientific, clinical, manufacturing and, if needed, sales and marketing personnel will also be critical to our success. The loss of the services of our executive officers or other key employees could impede the achievement of our research, development and commercialization objectives and seriously harm our ability to successfully implement our business strategy. Furthermore, replacing executive officers and key employees may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to successfully develop, gain regulatory approval of and commercialize drugs, particularly within the gene therapy space. Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain or motivate these key personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel. We also experience competition for the hiring of scientific and clinical personnel from universities and research institutions. Failure to succeed in clinical trials may make it more challenging to recruit and retain qualified scientific personnel.

Our internal computer systems, or those of our third-party collaborators or other contractors, may fail or suffer security breaches, which could result in a material disruption of our development programs.

We believe that we take reasonable steps that are designed to protect the security, integrity and confidentiality of the information we collect, use, store, and disclose, but inadvertent or unauthorized data access may occur despite our efforts. For example, our system protections may be ineffective or inadequate, or we could be impacted by software bugs or other technical malfunctions, as well as employee error or malfeasance. While we have not experienced any such material system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations, whether due to a loss of our trade secrets or other proprietary information or other similar disruptions. For example, the loss of clinical trial data from completed or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. In addition, while we believe we have adequate insurance coverage to compensate for any losses associated with such events, the coverage may in fact not be adequate to cover all potential losses. The development and maintenance of these systems, controls and processes is costly and requires ongoing monitoring and updating as technologies change and efforts to overcome security measures become increasingly sophisticated.

To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of personal, confidential or proprietary information, we could incur liability, our competitive position could be harmed and the further development and commercialization of our product candidates could be delayed.

We are subject to a variety of privacy and data security laws, and our failure to comply with them could harm our business.

We maintain a large quantity of sensitive information, including confidential business and personal information in connection with our preclinical studies and our employees, and are subject to laws and regulations governing the privacy and security of such information. In the United States, there are numerous federal and state privacy and data security

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laws and regulations governing the collection, use, disclosure and protection of personal information, including federal and state health information privacy laws, federal and state security breach notification laws, and federal and state consumer protection laws. Each of these constantly evolving laws can be subject to varying interpretations. In May 2018, a new privacy regime, the General Data Protection Regulation or the GDPR, took effect in the European Economic Area, or the EEA. The GDPR governs the collection, use, disclosure, transfer or other processing of personal data of European persons. Among other things, the GDPR imposes requirements regarding the security of personal data and notification of data processing obligations to the competent national data processing authorities, changes the lawful bases on which personal data can be processed, expands the definition of personal data and requires changes to informed consent practices, as well as more detailed notices for clinical trial subjects and investigators. In addition, the GDPR increases the scrutiny of transfers of personal data from clinical trial sites located in the EEA to the United States and other jurisdictions that the European Commission does not recognize as having “adequate” data protection laws, and imposes substantial fines for breaches and violations (up to the greater of €20 million or 4% of our consolidated annual worldwide gross revenue). The GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies and obtain compensation for damages resulting from violations of the GDPR.

Compliance with these and any other applicable privacy and data security laws and regulations is a rigorous and time-intensive process, and we may be required to put in place additional mechanisms ensuring compliance with the new data protection rules. If we fail to comply with any such laws or regulations, we may face significant fines and penalties that could adversely affect our business, financial condition and results of operations. Furthermore, the laws are not consistent, and compliance in the event of a widespread data breach is costly. In addition, states are constantly adopting new laws or amending existing laws, requiring attention to frequently changing regulatory requirements. For example, California enacted the California Consumer Privacy Act, or the CCPA, on June 28, 2018, which takes effect on January 1, 2020 and has been dubbed the first “GDPR-like” law in the United States. The CCPA gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing and receive detailed information about how their personal information is used by requiring covered companies to provide new disclosures to California consumers (as that term is broadly defined) and provide such consumers new ways to opt-out of certain sales of personal information. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. The CCPA may increase our compliance costs and potential liability. Some observers have noted that the CCPA could mark the beginning of a trend toward more stringent privacy legislation in the United States. Other states are beginning to pass similar laws. For example, an amendment to Nevada’s privacy laws, which went into effect October 1, 2019, requires us to offer to consumers the right to opt-out of the sale of their personal information.

Our ability to utilize our net operating loss carryforwards may be subject to limitation.

As of December 31, 2019, we had federal state and city net operating loss carryforwards, or NOLs, of $44.0 million, $44.0 million and $43.8 million, respectively; an aggregate of $0.3 million of the federal and state NOLs will begin to expire in 2037, if unused, and the remainder will carryforward indefinitely. To the extent that we continue to generate taxable losses, unused losses will carry forward to offset future taxable income, if any. Under legislative changes made by U.S. federal tax legislation, commonly referred to as the Tax Cuts and Jobs Act, or the TCJA, U.S. federal net operating losses incurred in 2018 and in future years may be carried forward indefinitely, but the ability to utilize such federal net operating losses to offset taxable income is limited to 80% of our taxable income before the deduction for such net operating loss carryovers. It is uncertain if and to what extent various states will conform to the TCJA.

Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the IRC, if a corporation undergoes an “ownership change,” generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period, the corporation’s ability to use its pre-change NOLs and other pre-change tax attributes (such as research tax credits) to offset its post-change income may be limited. We have not undertaken a Section 382 study, and it is possible that we have previously undergone one or more ownership changes so that our use of net operating losses is subject to limitation. We may experience ownership changes in the future as a result of subsequent shifts in our stock ownership. As a result, if we earn net taxable income, our ability to use our pre-change NOLs to offset U.S. federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us. In

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addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.

U.S. federal income tax reform and changes in other tax laws could adversely affect us.

In December 2017 the TCJA was signed into law, significantly reforming the IRC. The TCJA, among other things, includes changes to U.S. federal tax rates, imposes significant additional limitations on the deductibility of business interest, allows for the expensing of capital expenditures, taxes certain foreign earnings on a current basis, and modifies or repeals many business deductions and credits.

We are still awaiting guidance from the IRS and other tax authorities on some of the TCJA changes that may affect us, and components of the TCJA could be repealed or modified in future legislation. Furthermore, it is uncertain if and to what extent various states will conform to the TCJA or any newly enacted federal legislation. In addition, new legislation or regulation which could affect our tax burden could be enacted by any governmental authority. We cannot predict the timing or extent of such tax-related developments which could have a negative impact on our financial results. Additionally, we use our best judgment in attempting to quantify and reserve for these tax obligations. However, a challenge by a taxing authority, our ability to utilize tax benefits such as carryforwards or tax credits, or a deviation from other tax-related assumptions could have a material adverse effect on our business, results of operations, or financial condition.

Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations.

Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets. For example, the global financial crisis caused extreme volatility and disruptions in the capital and credit markets. A severe or prolonged economic downturn, such as the global financial crisis, could result in a variety of risks to our business, including, weakened demand for our product candidates and our ability to raise additional capital when needed on acceptable terms, if at all. A weak or declining economy could also strain our suppliers, possibly resulting in supply disruption, or cause our customers to delay making payments for our services. Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our business.

We or the third parties upon whom we depend may be adversely affected by natural disasters and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster.

Natural disasters could severely disrupt our operations and have a material adverse effect on our business, results of operations, financial condition and prospects. If a natural disaster, power outage or other event occurred that prevented us from using all or a significant portion of our headquarters, that damaged critical infrastructure, such as our manufacturing facilities, or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible for us to continue our business for a substantial period of time. The disaster recovery and business continuity plans we have in place may prove inadequate in the event of a serious disaster or similar event. We may incur substantial expenses as a result of the limited nature of our disaster recovery and business continuity plans, which could have a material adverse effect on our business.

Our employees, principal investigators, CROs and consultants may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements and insider trading.

We are exposed to the risk of fraud or other misconduct by our employees, principal investigators, consultants and commercial partners. Misconduct by these parties could include intentional failures to comply with the regulations of FDA and non-U.S. regulators, provide accurate information to the FDA and non-U.S. regulators, comply with healthcare fraud and abuse laws and regulations in the United States and abroad, report financial information or data accurately or disclose unauthorized activities to us. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing

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and promotion, sales commission, customer incentive programs and other business arrangements. Such misconduct could also involve the improper use of information obtained in the course of clinical studies, which could result in regulatory sanctions and cause serious harm to our reputation. We have adopted a code of conduct applicable to all of our employees, but it is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant fines or other sanctions.

Product liability lawsuits against us could cause us to incur substantial liabilities and could limit commercialization of any product candidates that we may develop.

We will face an inherent risk of product liability exposure related to the testing of our product candidates in clinical trials and will face an even greater risk if we commercialize any of our product candidates. If we cannot successfully defend ourselves against claims that our product candidates caused injuries, we could incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:

• decreased demand for any product candidates that we may develop;

• injury to our reputation and significant negative media attention;

• initiation of investigations by regulators;

• withdrawal of clinical trial participants;

• significant time and costs to defend the related litigation;

• diversion of management and scientific resources from our business operations’

• substantial monetary awards to trial participants or patients;

• loss of revenue; and

• the inability to commercialize any product candidates that we may develop.

As a preclinical company, we do not currently hold product liability insurance coverage. We will need to purchase product liability insurance coverage as we initiate our clinical trials, as we expand our clinical trials, and if we commence commercialization of our product candidates. Insurance coverage is increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise. A successful product liability claim or series of claims brought against us, could decrease our cash and adversely affect our business and financial condition.

We are subject to U.S. and certain foreign export and import controls, sanctions, embargoes, anti-corruption laws, and anti-money laundering laws and regulations. Compliance with these legal standards could impair our ability to compete in domestic and international markets. We can face criminal liability and other serious consequences for violations which can harm our business.

We are subject to export control and import laws and regulations, including the U.S. Export Administration Regulations, U.S. Customs regulations, various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Controls, the U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the USA PATRIOT Act, and other state and national anti-bribery and anti-money laundering laws in the countries in which we conduct activities. Anti-corruption laws are interpreted broadly and prohibit companies and their employees, agents, contractors, and other partners from

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authorizing, promising, offering, or providing, directly or indirectly, improper payments or anything else of value to recipients in the public or private sector. We may engage third parties for clinical trials outside of the United States, to sell our products abroad once we enter a commercialization phase, and/or to obtain necessary permits, licenses, patent registrations, and other regulatory approvals. We have direct or indirect interactions with officials and employees of government agencies or government-affiliated hospitals, universities, and other organizations. We can be held liable for the corrupt or other illegal activities of our employees, agents, contractors, and other partners, even if we do not explicitly authorize or have actual knowledge of such activities. Any violations of the laws and regulations described above may result in substantial civil and criminal fines and penalties, imprisonment, the loss of export or import privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm, and other consequences.

Risks Related to Ownership of Our Common Stock

The price of our common stock may be volatile and fluctuate substantially, which could result in substantial losses for holders of our common stock.

Our stock price has been and is likely to continue to be volatile. The stock market in general and the market for biotechnology companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. The market price for our common stock may be influenced by many factors, including:

• results of preclinical studies or clinical trials of our product candidates or those of our competitors;

• unanticipated or serious safety concerns related to the use of any of our product candidates;

• adverse regulatory decisions, including failure to receive regulatory approval for any of our product candidates;

• the success of competitive drugs or technologies;

• regulatory or legal developments in the United States and other countries applicable to our product candidates;

• the size and growth of our prospective patient populations;

• developments concerning our collaborators, our external manufacturers or in-house manufacturing capabilities;

• inability to obtain adequate product supply for any product candidate for preclinical studies, clinical trials or future commercial sale or inability to do so at acceptable prices;

• developments or disputes concerning patent applications, issued patents or other proprietary rights;

• the recruitment or departure of key personnel;

• the level of expenses related to any of our product candidates or clinical development programs;

• the results of our efforts to discover, develop, acquire or in-license additional product candidates or drugs;

• actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts or publications of research reports about us or our industry;

• variations in our financial results or those of companies that are perceived to be similar to us;

• changes in the structure of healthcare payment systems;

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• market conditions in the biotechnology sector;

• our cash position or the announcement or expectation of additional financing efforts;

• general economic, industry and market conditions; and

• other factors, including those described in this “Risk Factors” section, many of which are beyond are control.

If securities analysts do not publish research or reports about our business or if they publish negative evaluations of our stock, the price of our stock could decline.

The trading market for our common stock relies in part on the research and reports that industry or financial analysts publish about us or our business. We do not have any control over the analysts or the content and opinions included in their reports. If one or more of the analysts covering our business downgrade their evaluations of our stock, the price of our stock could decline. If one or more of these analysts cease to cover our stock, we could lose visibility in the market for our stock, which in turn could cause our stock price to decline.

Our executive officers, directors, principal stockholders and their affiliates exercise significant influence over our company, which will limit your ability to influence corporate matters and could delay or prevent a change in corporate control.

As of March 31, 2020, our executive officers, directors, beneficial owners of 5% or more of our capital stock and their respective affiliates beneficially owned approximately 56% of our capital stock.

This group of stockholders have the ability to control us through this ownership position and may be able to determine all matters requiring stockholder approval. For example, these stockholders may be able to control elections of directors, amendments of our organizational documents or approval of any merger, sale of assets or other major corporate transaction. This may prevent or discourage unsolicited acquisition proposals or offers for our common stock that you may feel are in your best interest as one of our stockholders. The interests of this group of stockholders may not always coincide with your interests or the interests of other stockholders and they may act in a manner that advances their best interests and not necessarily those of other stockholders, including seeking a premium value for their common stock, and might affect the prevailing market price for our common stock.

Future sales and issuances of our common stock or rights to purchase common stock, including pursuant to our equity incentive plans, could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to fall.

Sales of a substantial number of shares of our common stock in the public market could occur at any time. If our stockholders sell, or the market perceives that our stockholders intend to sell, substantial amounts of our common stock in the public market before or after the lock-up and other legal restrictions on resale lapse in connection with our IPO, the market price of our common stock could decline significantly. Each of our officers, directors, and our pre-IPO stockholders have entered into lock-up agreements with the underwriters in our IPO that restrict their ability to sell or transfer their shares. These lock-up agreements will expire August 26, 2020. However, the underwriters in our IPO may, in their sole discretion, permit our officers, directors, and other current stockholders who are subject to the contractual lock-up to sell shares prior to the expiration of the lock-up agreements. After the lock-up agreements expire, a substantial number of shares of common stock will be eligible for sale in the public market.

We cannot predict what effect, if any, sales of our shares in the public market or the availability of shares for sale will have on the market price of our common stock. However, future sales of substantial amounts of our common stock in the public market, including shares issued upon exercise of outstanding options, or the perception that such sales may occur, could adversely affect the market price of our common stock.

We also expect that significant additional capital may be needed in the future to continue our planned operations, including conducting our planned clinical trials, manufacturing and commercialization efforts, expanded research and

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development activities and costs associated with operating as a public company. To raise capital, we may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our common stock.

Because we do not anticipate paying any cash dividends on our common stock in the foreseeable future, capital appreciation, if any, will be your sole source of gain.

We have never declared or paid any cash dividends on our common stock and do not currently intend to do so for the foreseeable future. We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. Any return to stockholders will be limited to the appreciation of stock. Therefore, the success of an investment in shares of our common stock will depend upon any future appreciation in value of the stock. We cannot guarantee you that shares of our common stock will appreciate in value or even maintain the price at which our stockholders have purchased their shares.

If we fail to establish and maintain proper and effective internal control over financial reporting in the future, our ability to produce accurate and timely financial statements could be impaired, which could harm our operating results, investors’ views of us and, as a result, the value of our common stock.

We are not currently required to comply with the Securities and Exchange Commission’s, or SEC’s, rules that implement Section 404 of the Sarbanes-Oxley Act, and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. Pursuant to Section 404, we will be required to furnish a report by our management on our internal control over financial reporting. However, while we remain an emerging growth company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To achieve compliance with Section 404 within the prescribed period, we will be engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that we will not be able to conclude, within the prescribed timeframe or at all, that our internal control over financial reporting is effective as required by Section 404. If we identify one or more material weaknesses, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements. In addition, if we are not able to continue to meet these requirements, we may not be able to remain listed on The Nasdaq Stock Market LLC, or Nasdaq.

As we grow, we expect to hire additional personnel and may utilize external temporary resources to implement, document and modify policies and procedures to maintain effective internal controls. However, it is possible that we may identify deficiencies and weaknesses in our internal controls. If material weaknesses or deficiencies in our internal controls exist and go undetected or unremediated, our financial statements could contain material misstatements that, when discovered in the future, could cause us to fail to meet our future reporting obligations and cause the price of our common stock to decline.

We will incur increased costs as a result of operating as a public company and our management will be required to devote substantial time to new compliance initiatives.

As a public company, particularly after we are no longer an “emerging growth company,” we will incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act of 2002 and rules subsequently implemented by the SEC and Nasdaq have imposed various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly.

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We are an “emerging growth company” and “smaller reporting company,” and the reduced disclosure requirements applicable to emerging growth companies and smaller reporting companies may make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. We will remain an emerging growth company until the earlier of (i) the last day of the fiscal year in which we have total annual gross revenue of $1.07 billion or more; (ii) December 31, 2025; (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC, which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the last business day of our most recently completed second fiscal quarter. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include:

• not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002;

• not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;

• being permitted to present only two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure in this report;

• reduced disclosure obligations regarding executive compensation; and

• exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

We may choose to take advantage of some, but not all, of the available exemptions. Even after we no longer qualify as an emerging growth company, we may still qualify as a smaller reporting company, which would allow us to take advantage of many of the same exemptions from disclosure requirements, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

We are also a “smaller reporting company,” meaning that the market value of our stock held by non-affiliates is less than $700.0 million and our annual revenue is less than $100.0 million during the most recently completed fiscal year. We will continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on

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Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

The exclusive forum provisions in our restated certificate of incorporation and amended and restated bylaws may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, or other employees, which may discourage lawsuits with respect to such claims.

Our restated certificate of incorporation, to the fullest extent permitted by law, will provide that the Court of Chancery of the State of Delaware will be the exclusive forum for: any derivative action or proceeding brought on our behalf; any action asserting a breach of fiduciary duty; any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, or the DGCL, our restated certificate of incorporation, or our restated bylaws; or any action asserting a claim against us that is governed by the internal affairs doctrine. This exclusive forum provision does not apply to suits brought to enforce a duty or liability created by the Securities Exchange Act of 1934, as amended, or the Exchange Act. It could apply, however, to a suit that falls within one or more of the categories enumerated in the exclusive forum provision and asserts claims under the Securities Act, inasmuch as Section 22 of the Securities Act, creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rule and regulations thereunder. There is uncertainty as to whether a court would enforce such provision with respect to claims under the Securities Act, and our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.

In March 2020, we amended and restated our restated bylaws to provide that the federal district courts of the United States of America will, to the fullest extent permitted by law, be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act, or a Federal Forum Provision. Our decision to adopt a Federal Forum Provision followed a decision by the Supreme Court of the State of Delaware holding that such provisions are facially valid under Delaware law. While there can be no assurance that federal or state courts will follow the holding of the Delaware Supreme Court or determine that the Federal Forum Provision should be enforced in a particular case, application of the Federal Forum Provision means that suits brought by our stockholders to enforce any duty or liability created by the Securities Act must be brought in federal court and cannot be brought in state court.

These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, or other employees, which may discourage lawsuits with respect to such claims. Alternatively, if a court were to find the choice of forum provisions contained in our restated certificate of incorporation or amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations and financial condition.

In addition, Section 203 of the DGCL may discourage, delay or prevent a change in control of our company. Section 203 imposes certain restrictions on mergers, business combinations and other transactions between us and holders of 15% or more of our common stock.

Provisions in our corporate charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.

Provisions in our restated certificate of incorporation and our restated bylaws may discourage, delay or prevent a merger, acquisition or other change in control of our company that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. In addition, because our board of directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors. Among other things, these provisions:

• establish a classified board of directors so that not all members of our board are elected at one time;

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• permit only the board of directors to establish the number of directors and fill vacancies on the board;

• provide that directors may only be removed “for cause” and only with the approval of two-thirds of our stockholders;

• require super-majority voting to amend some provisions in our restated certificate of incorporation and restated bylaws;

• authorize the issuance of “blank check” preferred stock that our board could use to implement a stockholder rights plan, also known as a “poison pill”;

• eliminate the ability of our stockholders to call special meetings of stockholders;

• prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders;

• prohibit cumulative voting; and

• establish advance notice requirements for nominations for election to our board or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.

Moreover, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.

Any of these provisions of our charter documents or Delaware law could, under certain circumstances, depress the market price of our common stock.

We may be subject to securities litigation, which is expensive and could divert management attention.

The market price of our common stock may be volatile. The stock market in general, and Nasdaq and biopharmaceutical companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. In the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business.

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

Unregistered Sales of Equity Securities

From January 1, 2020 through February 28, 2020 (the date of the filing of our registration statement on Form S-8) we issued stock options to employees, directors, consultants, and other service providers to purchase an aggregate of 2,408,078 shares of common stock under our 2018 Amended and Restated Equity Incentive Plan with a per share exercise price of $11.00, and 1,061,973 shares of common stock under our 2020 Equity Incentive Plan with a per share exercise price of $18.00 per share. The sales of the above securities were exempt from registration under the Securities Act of 1933, as amended, or Securities Act, in reliance upon Section 4(a)(2) of the Securities Act, or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer not involving any public offering or pursuant to benefit plans and contracts relating to compensation as provided under Rule 701. The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these transactions.

On March 3, 2020, upon the initial closing of our IPO, all shares of our then-outstanding convertible preferred stock automatically converted into 26,803,777 shares of common stock. The issuance of such common shares was exempt from the registration requirements of the Securities Act, pursuant to Section 3(a)(9) of the Securities Act, involving an exchange of securities exchanged by the issuer with its existing security holders exclusively where no commission or other remuneration is paid or given directly or indirectly for soliciting such exchange. No underwriters were involved in this issuance of shares.

Use of Proceeds

In the first quarter of 2020, we completed our IPO and sold 13,798,900 shares of common stock at an IPO price of $18.00 per share. The offer and sale of all of the shares in the IPO were registered under the Securities Act pursuant to registration statements on Form S-1 (File No. 333-236214), which was declared effective by the SEC on February 27, 2020, as supplemented by a registration statement on Form S-1 filed pursuant to Rule 462(b) (File No. 333-236733). We received net proceeds from the IPO of approximately $227.5 million, after deducting underwriting discounts and commissions of approximately $17.4 million and offering expenses of approximately $3.5 million. J.P. Morgan Securities LLC, Goldman Sachs & Co. LLC and Cowen and Company acted as joint book-running managers of the offering and as representatives of the underwriters. None of the expenses associated with the IPO were paid to directors, officers, persons owning 10% or more of any class of equity securities, or to their associates, or to our affiliates.

There has been no material change in the planned use of proceeds from our IPO as described in the Prospectus filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act on February 28, 2020.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

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Item 6. Exhibits.

The exhibits filed or furnished as part of this Quarterly Report on Form 10-Q are set forth on the Exhibit Index below.

Exhibit Number	Description	Form	File No.	Exhibit Filing Date	Filed/Furnished Herewith
3.1	Restated Certificate of Incorporation, dated March 3, 2020.				X
3.2	Amended and Restated Bylaws, dated March 26, 2020.	8-K	001-39231	March 27, 2020
10.1†^	Development Services and Clinical Supply Agreement, dated April 13, 2020, by and between the Registrant and Catalent Maryland, Inc.				X
10.2	Lease, dated April 10, 2020, by and between the Registrant and Commerce Square Partners - Philadelphia Plaza, L.P.				X
10.3	First Amendment to Lease, dated April 10, 2020, by and between the Registrant and Philadelphia Plaza – Phase II LP				X
10.4	Form of Indemnification Agreement between the Registrant and its directors and officers	S-1	333-236214	February 3, 2020
10.5	2020 Equity Incentive Plan of the Registrant, and forms of award agreements.	S-1/A	333-236214	February 18, 2020
10.6	2020 Employee Stock Purchase Plan of the registrant	S-1/A	333-236214	February 18, 2020
10.7	Consulting Agreement, dated January 31, 2020, by and between the Registrant and Stephen Squinto, Ph.D.	S-1	333-236214	February 3, 2020
10.8	Amended and Restated Employment Agreement dated February 14, 2020, by and between the Registrant and Bruce Goldsmith.	S-1/A	333-236214	February 18, 2020
10.9	Amended and Restated Employment Agreement, dated February 14, 2020, by and between the Registrant and Gary Romano.	S-1/A	333-236214	February 18, 2020
10.10	Employment Agreement, dated July 22, 2019, as amended on February 14, 2020, by and between the Registrant and Alexandros Fotopoulos.	S-1/A	333-236214	February 18, 2020

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10.11	Consulting Agreement, dated January 8, 2019, as amended on January 31, 2020, by and between the Registrant and James Wilson, M.D., Ph.D.	S-1	333-236214	February 3, 2020
10.12	Offer Letter, dated January 24, 2020, by and between the Registrant and Athena Countouriotis.	S-1	333-236214	February 3, 2020
31.1	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X
31.2	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X
32.1*	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X
32.2*	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X

*	This certification is deemed not filed for purposes of section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.
†	Registrant has omitted portions of the exhibit as permitted under Item 601(b)(10) of Regulations S-K.
^	Registrant has omitted schedules and exhibits pursuant to Item 601(b)(2) of Regulation S-K. The Registrant agrees to furnish supplementally a copy of the omitted schedules and exhibits to the SEC upon request.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	PASSAGE BIO, INC.
Date: May 11, 2020	By:	/s/ Bruce Goldsmith
		Dr. Bruce Goldsmith, Ph.D.
		Chief Executive Officer and President
Date: May 11, 2020	By:	/s/ Richard Morris
		Richard Morris
		Chief Financial Officer

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EX-3.1

Exhibit 3.1

PASSAGE BIO, INC.

RESTATED CERTIFICATE OF INCORPORATION

Passage BIO, Inc., a Delaware corporation, hereby certifies as follows:

1.         The name of the corporation is “Passage BIO, Inc.” The date of the filing of its original Certificate of Incorporation with the Secretary of State was July 26, 2017.

2.         The Restated Certificate of Incorporation of the corporation attached hereto as Exhibit “A”, which is incorporated herein by this reference, and which restates, integrates and further amends the provisions of the Certificate of Incorporation of this corporation as previously amended and/or restated, has been duly adopted by this corporation’s Board of Directors and by the stockholders in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware, with the approval of the corporation’s stockholders having been given by written consent without a meeting in accordance with Section 228 of the General Corporation Law of the State of Delaware.

IN WITNESS WHEREOF, this corporation has caused this Restated Certificate of Incorporation to be signed by its duly authorized officer and the foregoing facts stated herein are true and correct.

Dated: March 3, 2020	PASSAGE BIO, INC.
	By:	/s/ Bruce Goldsmith, Ph.D.
	Name:	Bruce Goldsmith, Ph.D.
	Title:	Chief Executive Officer and President

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EXHIBIT “A”

PASSAGE BIO, INC.

RESTATED CERTIFICATE OF INCORPORATION

ARTICLE I: NAME

The name of the corporation is Passage BIO, Inc. (the “Corporation”).

ARTICLE II: AGENT FOR SERVICE OF PROCESS

The address of the Corporation’s registered office in the State of Delaware is 1209 North Orange Street, Wilmington, Delaware 19801 in the County of New Castle. The name of the registered agent of the Corporation at that address is The Corporation Trust Company.

ARTICLE III: PURPOSE

The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the “General Corporation Law”).

ARTICLE IV: AUTHORIZED STOCK

1.         Total Authorized.  The total number of shares of all classes of stock that the Corporation has authority to issue is 310,000,000 shares, consisting of two classes: 300,000,000 shares of Common Stock, $0.0001 par value per share (“Common Stock”), and 10,000,000 shares of Preferred Stock, $0.0001 par value per share (“Preferred Stock”).

2.         Designation of Additional Series.

2.1.      The Board of Directors of the Corporation (the “Board”) is authorized, subject to any limitations prescribed by the law of the State of Delaware, to provide for the issuance of the shares of Preferred Stock in one or more series, and, by filing a Certificate of Designation pursuant to the applicable law of the State of Delaware (“Certificate of Designation”), to establish from time to time the number of shares to be included in each such series, to fix the designation, powers (including voting powers), preferences and relative, participating, optional or other special rights, if any, of the shares of each such series and any qualifications, limitations or restrictions thereof, and, except where otherwise provided in the applicable Certificate of Designation, to thereafter increase (but not above the total number of authorized shares of the Preferred Stock) or decrease (but not below the number of shares of such series then outstanding) the number of shares of any such series.  The number of authorized shares of Preferred Stock may also be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of two-thirds of the voting power of all of the then-outstanding shares of capital stock of the Corporation entitled to vote thereon, without a separate vote of the holders of the

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Preferred Stock, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law, unless a separate vote of the holders of one or more series is required pursuant to the terms of any Certificate of Designation; provided, however, that if two-thirds of the Whole Board (as defined below) has approved such increase or decrease of the number of authorized shares of Preferred Stock, then only the affirmative vote of the holders of a majority of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, without a separate vote of the holders of the Preferred Stock (unless a separate vote of the holders of one or more series is required pursuant to the terms of any Certificate of Designation), shall be required to effect such increase or decrease.  For purposes of this Restated Certificate of Incorporation (as the same may be amended and/or restated from time to time, including pursuant the terms of any Certificate of Designation designating a series of Preferred Stock, this “Certificate of Incorporation”), the term “Whole Board” shall mean the total number of authorized directors whether or not there exist any vacancies in previously authorized directorships.

2.2       Except as otherwise expressly provided in any Certificate of Designation designating any series of Preferred Stock pursuant to the foregoing provisions of this Article IV, any new series of Preferred Stock may be designated, fixed and determined as provided herein by the Board without approval of the holders of Common Stock or the holders of Pre­ferred Stock, or any series thereof, and any such new series may have powers, preferences and rights, including, without limitation, voting powers, dividend rights, liquidation rights, redemption rights and conversion rights, senior to, junior to or pari passu with the rights of the Common Stock, any series of Preferred Stock or any future class or series of capital stock of the Corporation.

2.3       Each outstanding share of Common Stock shall entitle the holder thereof to one vote on each matter properly submitted to the stockholders of the Corporation for their vote; provided, however, that, except as otherwise required by law, holders of Common Stock shall not be entitled to vote on any amendment to this Certificate of Incorporation that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together as a class with the holders of one or more other such series, to vote thereon pursuant to this Certificate of Incorporation.

ARTICLE V: AMENDMENT OF BYLAWS

The Board shall have the power to adopt, amend or repeal the Bylaws of the Corporation (as the same may be amended and/or restated from time to time, the “Bylaws”).  Any adoption, amendment or repeal of the Bylaws by the Board shall require the approval of a majority of the Whole Board.  The stockholders shall also have power to adopt, amend or repeal the Bylaws; provided, however, that notwithstanding any other provision of this Certificate of Incorporation or any provision of law that might otherwise permit a lesser or no vote, but in addition to any vote of the holders of any class or series of stock of the Corporation required by applicable law or by this Certificate of Incorporation, the affirmative vote of the holders of at least two-thirds of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required for the stockholders to adopt, amend or repeal any provision of the Bylaws; provided further, that, in the case of any proposed adoption, amendment or repeal of any provisions of the Bylaws that is approved by the Board and submitted to the stockholders for adoption thereby, if two-thirds of the Whole Board has approved such adoption, amendment or repeal of any provisions of the Bylaws,

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then only the affirmative vote of the holders of a majority of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to adopt, amend or repeal any provision of the Bylaws.

ARTICLE VI: MATTERS RELATING TO THE BOARD OF DIRECTORS

1.         Director Powers.  Except as otherwise provided by the General Corporation Law or this Certificate of Incorporation, the business and affairs of the Corporation shall be managed by or under the direction of the Board.

2.         Number of Directors.  Subject to the special rights of the holders of any series of Preferred Stock to elect additional directors under specified circumstances, the total number of directors constituting the Whole Board shall be fixed from time to time exclusively by resolution adopted by a majority of the Whole Board.

3.         Classified Board.  Subject to the special rights of the holders of one or more series of Preferred Stock to elect additional directors under specified circumstances, the directors shall be divided, with respect to the time for which they severally hold office, into three classes designated as Class I, Class II and Class III, respectively (the “Classified Board”).  The Board may assign members of the Board already in office to the Classified Board.  The number of directors in each class shall be as nearly equal as is practicable.  The initial term of office of the Class I directors shall expire at the Corporation’s first annual meeting of stockholders following the closing of the Corporation’s initial public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, relating to the offer and sale of Common Stock to the public (the “Initial Public Offering”), the initial term of office of the Class II directors shall expire at the Corporation’s second annual meeting of stockholders following the closing of the Initial Pub­lic Offering and the initial term of office of the Class III directors shall expire at the Corporation’s third annual meeting of stockholders following the closing of the Initial Public Offering.  At each annual meeting of stockholders following the closing of the Initial Public Offering, directors elected to succeed those directors of the class whose terms then expire shall be elected for a term of office expiring at the third succeeding annual meeting of stockholders after their election.

4.         Term and Removal.  Each director shall hold office until the annual meeting at which such director’s term expires and until such director’s succes­sor is duly elected and qualified, or until such director’s earlier death, resignation, disqualification or removal.  Any director may resign by delivering a resignation in writing or by electronic transmission to the Corporation at its principal office or to the Chairperson of the Board, the Chief Executive Officer, or the Secretary.  Subject to the special rights of the holders of any series of Preferred Stock, no director may be removed from the Board except for cause and only by the affirmative vote of the holders of at least two-thirds of the voting power of the then-outstanding shares of capital stock of the Corporation entitled to vote thereon, voting together as a single class. In the event of any increase or decrease in the authorized number of directors, (a) each director then serving as such shall nevertheless continue as a director of the class of which he or she is a member and (b) the newly created or eliminated directorships resulting from such increase or decrease shall be apportioned by the Board among the classes of directors so as to make all classes as nearly equal in number as is practicable,

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provided that no decrease in the number of directors constituting the Board shall shorten the term of any director.

5.         Board Vacancies and Newly Created Directorships.  Subject to the special rights of the holders of any series of Preferred Stock, any vacancy occurring in the Board for any cause, and any newly created directorship resulting from any increase in the authorized number of directors, shall be filled only by the affirmative vote of a majority of the directors then in office, even if less than a quorum, or by a sole remaining director, and shall not be filled by the stockholders.  Any director elected in accordance with the preceding sentence shall hold office for a term expiring at the annual meeting of stockholders at which the term of office of the class to which the director has been assigned expires and until such director’s successor shall have been duly elected and qualified, or until such director’s earlier death, resignation, disqualification or removal.

6.         Vote by Ballot.  Election of directors need not be by written ballot unless the Bylaws shall so provide.

7.         Preferred Directors.  If and for so long as the holders of any series of Preferred Stock have the special right to elect additional directors, then upon commencement and for the duration of the period during which such right continues: (i) the then otherwise total authorized number of directors of the Corporation shall automatically be increased by such specified number of directors, and the holders of such Preferred Stock shall be entitled to elect the additional directors so provided for or fixed pursuant to said provisions, and (ii) each such additional director shall serve until such director’s successor shall have been duly elected and qualified, or until such director’s right to hold such office terminates pursuant to said provisions, whichever occurs earlier, subject to his or her earlier death, resignation, retirement, disqualification or removal. Except as otherwise provided by the Board in the resolution or resolutions establishing such series, whenever the holders of any series of Preferred Stock having such right to elect additional directors are divested of such right pursuant to the provisions of such stock, the terms of office of all such additional directors elected by the holders of such stock, or elected to fill any vacancies resulting from the death, resignation, disqualification or removal of such additional directors, shall forthwith terminate and the total authorized number of directors of the Corporation shall be reduced accordingly.

ARTICLE VII: DIRECTOR LIABILITY

1.         Limitation of Liability.  To the fullest extent permitted by law, no director of the Corporation shall be personally liable for monetary damages for breach of fiduciary duty as a director.  Without limiting the effect of the preceding sentence, if the General Corpo­ration Law is hereafter amended to authorize the further elimination or limitation of the liability of a director, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law, as so amended.

2.         Change in Rights.  Neither any amendment nor repeal of this Article VII, nor the adoption of any provision of this Certificate of Incorporation inconsistent with this Article VII, shall eliminate, reduce or otherwise adversely affect any limitation on the personal liability of a director of the Corporation existing at the time of such amendment, repeal or adoption of such an inconsistent provision.

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ARTICLE VIII: MATTERS RELATING TO STOCKHOLDERS

1.         No Action by Written Consent of Stockholders.  Subject to the rights of any series of Preferred Stock then outstanding, no action shall be taken by the stockholders of the Corporation except at a duly called annual or special meeting of stockholders and no action shall be taken by the stockholders of the Corporation by written consent in lieu of a meeting.

2.         Special Meeting of Stockholders.  Special meetings of the stockholders of the Corporation may be called only by the Chairperson of the Board, the Chief Executive Officer, the Lead Independent Director (as defined in the Bylaws), the President, or the Board acting pursuant to a resolution adopted by a majority of the Whole Board and may not be called by the stockholders or any other person or persons.

3.         Advance Notice of Stockholder Nominations and Business Transacted at Spe­cial Meetings.  Advance notice of stockholder nominations for the election of directors of the Corporation and of business to be brought by stockholders before any meeting of stockholders of the Corporation shall be given in the manner provided in the Bylaws.  Business transacted at special meetings of stockholders shall be limited to the purpose or purposes stated in the notice of meeting.

ARTICLE IX: CHOICE OF FORUM

Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware, to the fullest extent permitted by law, shall be the sole and exclusive forum for: (a) any derivative action or proceeding brought on behalf of the Corporation; (b) any action asserting a claim of breach of a fiduciary duty owed by, or other wrongdoing by, any director, officer, stockholder, employee or agent of the Corporation to the Corporation or the Corporation’s stockholders; (c) any action asserting a claim against the Corporation arising pursuant to any provision of the General Corporation Law, this Certificate of Incorporation or the Bylaws or as to which the General Corporation Law confers jurisdiction on the Court of Chancery of the State of Delaware; (d) any action to interpret, apply, enforce or determine the validity of this Certificate of Incorporation or the Bylaws; or (e) any action asserting a claim against the Corporation governed by the internal affairs doctrine.

Any person or entity purchasing or otherwise acquiring or holding any interest in shares of capital stock of the Corporation shall be deemed to have notice of and to have consented to the provisions of this Article IX.

ARTICLE X: AMENDMENT OF CERTIFICATE OF INCORPORATION

If any provision of this Certificate of Incorporation shall be held to be invalid, illegal, or unenforceable, then such provision shall nonetheless be enforced to the maximum extent possible consistent with such holding and the remaining provisions of this Certificate of Incorporation (including without limitation, all portions of any section of this Certificate of Incorporation containing any such provision held to be invalid, illegal, or unenforceable, which is not invalid, illegal, or unenforceable) shall remain in full force and effect.

The Corporation reserves the right to amend or repeal any provision contained in this Certificate of Incorporation in the manner prescribed by the laws of the State of Delaware and all

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rights conferred upon stockholders are granted subject to this reservation; provided, however, that, notwithstanding any provision of this Certificate of Incorporation or any provision of law that might otherwise permit a lesser vote or no vote (but subject to Section 2 of Article IV hereof), but in addition to any vote of the holders of any class or series of the stock of the Corporation required by law or by this Certificate of Incorporation, the affirmative vote of the holders of at least two-thirds of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend or repeal any provision of this Certificate of Incorporation; provided, further, that if two-thirds of the Whole Board has approved such amendment or repeal of any provisions of this Certificate of Incorporation, then only the affirmative vote of the holders of at least a majority of the voting power of all of the then-outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class (in addition to any other vote of the holders of any class or series of stock of the Corporation required by law of by this Certificate of Incorporation), shall be required to amend or repeal such provisions of this Certificate of Incorporation.

* * * * * * * * * * *

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EX-10.1

Exhhibit 10.1

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*], HAS BEEN OMITTED BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO PASSAGE BIO, INC. IF PUBLICLY DISCLOSED.

PASSAGE BIO PRODUCTS

DEVELOPMENT SERVICES AND CLINICAL SUPPLY AGREEMENT

by and between

PASSAGE BIO, INC.

and

CATALENT MARYLAND, INC.

Dated as of April 13, 2020

TABLE OF CONTENTS

		Page
ARTICLE I OVERVIEW		2
1.1.	Definitions	2
1.2.	Collaboration Agreement and Exhibit C.	2
1.3.	Joint Steering Committee.	2
ARTICLE II FACILITY LICENSURE AND OPERATION		4
2.1.	Facility Licensure and Maintenance	4
2.2.	Inconsistent Activities	4
2.3.	Employees	5
2.4.	No Obligation to Perform	5
ARTICLE III PASSAGE BIO MATERIALS		5
3.1.	Passage Bio Materials	5
3.2.	Ownership and Return of Passage Bio Materials	5
3.3.	Due Care	5
ARTICLE IV DEVELOPMENTAL SERVICES AND CLINICAL SUPPLY MANUFACTURING		6
4.1.	Scope of Services and Obligations of the Parties	6
4.2.	Development Services	6
4.3.	cGMP Manufacturing Runs	7
4.4.	Process Performance Qualification	7
4.5.	Validation and Stability Studies	7
4.6.	Shipment; Title/Risk of Loss	8
4.7.	Invoicing; Payments to Catalent	9
4.8.	Change Orders	10
4.9.	Other Related Services	11
4.10.	Slot Reservation	11
ARTICLE V COMMERCIAL SUPPLY OF PASSAGE BIO PRODUCTS		12
5.1.	General Requirements	12
ARTICLE VI QUALITY ASSURANCE; QUALITY CONTROL		12
6.1.	Quality Agreement	12
6.2.	Quality Assurance; Quality Control	12
6.3.	Certificates of Analysis and Certificate of Compliance	12
6.4.	Quality Control Tests	12
6.5.	Testing and Reference Standards	12
6.6.	Process Controls and Tests	13
6.7.	Adverse Trends	13

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ARTICLE VII BATCH PROCESSING; SUPPLY INTERRUPTION AND DELAYED DELIVERY		13
7.1.	Batch Processing.	13
7.2.	Termination of a Batch	14
7.3.	Remedies for Failed Batches and Defective Batches	14
ARTICLE VIII BATCH TESTING AND PASSAGE BIO REVIEW; DEFECTIVE BATCHES		15
8.1.	Testing	15
8.2.	Passage Bio Review	15
8.3.	Latent Defects	15
8.4.	Batch Release; Defects; Quarantine	15
8.5.	Resolution of Disputes Regarding Nonconformity or Defects	16
8.6.	Remedies for Failed Batches and Defective Batches	17
8.7.	No Other Representations and Warranties	17
8.8.	Survival	17
8.9.	Financial Remedies.	17
ARTICLE IX DESIGNATED PERSON; BATCH RECORDS		17
9.1.	Designated Person	17
9.2.	Certificates and Documentation	18
9.3.	Release	18
ARTICLE X CONTINUOUS IMPROVEMENT PROGRAM		18
10.1.	Program	18
10.2.	Meetings	19
10.3.	Progress	19
10.4.	Review	20
10.5.	Implementation; Costs	20
ARTICLE XI REGULATORY MATTERS		20
11.1.	Ownership of Regulatory Materials	20
11.2.	Drug Product Regulatory Filings and Regulatory Approvals	20
11.3.	Regulatory Authority Communications	21
11.4.	Regulatory Compliance	21
11.5.	Adverse Event Reporting; Safety Data Exchange and Medical Inquiries	22
11.6.	Regulatory Authority Communications Received	22
11.7.	Reserved	23
11.8.	Passage Bio Inspections & Audits	23
11.9.	Environmental Audit of Catalent	24
ARTICLE XII LIMITATIONS AND USE		25
12.1.	Limitations	25
ARTICLE XIII FORCE MAJEURE		25
13.1.	Force Majeure Events	25

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13.2.	Examples	25
13.3.	Process	25
ARTICLE XIV CONFIDENTIALITY; MATERIAL TRANSFER		26
14.1.	Confidential Disclosure Agreement	26
14.2.	Confidential Information from the Trustees of the University of Pennsylvania	26
14.3.	Confidential Information	26
14.4.	Exceptions to Confidential Information	27
14.5.	Confidentiality Obligations	28
14.6.	Permitted Disclosure and Use	28
14.7.	Notification	29
14.8.	Publicity	29
14.9.	Use of Names	29
14.10.	Defend Trade Secrets Act Notice	30
14.11.	Survival	30
ARTICLE XV INTELLECTUAL PROPERTY		30
15.1.	General	30
15.2.	Passage Bio Materials	30
15.3.	License to Catalent	30
15.4.	License to Passage Bio	31
15.5.	Project Intellectual Property	31
15.6.	Existing Intellectual Property	31
15.7.	Patent Filings; Cooperation	32
15.8.	Notice and Defense of Third-Party Infringement Claims	32
15.9.	Patent Term Extensions	33
15.10.	Product Trademarks	33
ARTICLE XVI AFFILIATES AND SUBCONTRACTORS		33
16.1.	Performance by Affiliates	33
16.2.	Performance by Subcontractors	33
ARTICLE XVII RECORDS AND AUDITS		34
17.1.	Records and Information	34
17.2.	Financial Records; Audits	34
ARTICLE XVIII REPRESENTATIONS AND WARRANTIES		35
18.1.	Passage Bio and Catalent Mutual Representations and Warranties	35
18.2.	Mutual Covenants; No Debarment	36
18.3.	Additional Representations, Warranties and Covenants by Catalent	36
18.4.	Additional Representations, Warranties and Covenants of Passage Bio	37
18.5.	No Other Representations or Warranties	37
18.6.	Catalent Indemnity	38
18.7.	Passage Bio Indemnity	38
18.8.	Indemnification Procedures	39
18.9.	Insurance.	39

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ARTICLE XIX TERMINATION AND SURVIVAL		40
19.1.	Term and Termination	40
19.2.	Effect of Termination	41
ARTICLE XX DISPUTE RESOLUTION		44
20.1.	Disputes	44
20.2.	Dispute Resolution	44
20.3.	Patent and Trademark Dispute Resolution	45
20.4.	Injunctive Relief	45
20.5.	Continued Performance	45
ARTICLE XXI MISCELLANEOUS		45
21.1.	Assignment; Binding Effect	45
21.2.	Expenses	45
21.3.	Notices	45
21.4.	Severability	46
21.5.	Entire Agreement	47
21.6.	Waiver	47
21.7.	Governing Law; Jurisdiction; Venue	47
21.8.	Further Assurances	47
21.9.	Headings	47
21.10.	Counterparts	47
21.11.	Construction	48
21.12.	Interpretation	48
21.13.	Relationship of the Parties	48
Exhibits
A	Definitions
B	Scope of Work
C	Batch Ordering and Forecasting Requirements
D	Approved Subcontractors

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PASSAGE BIO PRODUCTS

DEVELOPMENT SERVICES AND CLINICAL SUPPLY AGREEMENT

THIS DEVELOPMENT SERVICES AND CLINICAL SUPPLY AGREEMENT (this “Agreement”), dated as of the 13th day of April, 2020 (the “Effective Date”), is entered into by and between PASSAGE BIO, INC., a corporation organized and existing under the Laws of Delaware and having a place of business at 2001 Market Street, Suite 2815, Philadelphia, Pennsylvania 19103 (“Passage Bio”), and CATALENT MARYLAND, INC. (formerly PARAGON BIOSERVICES, INC.), a corporation organized and existing under the Laws of Delaware and having a place of business at 801 West Baltimore Street, Suite 302, Baltimore, Maryland 21201 (“Catalent”).  Passage Bio and Catalent are sometimes referred to herein, individually, as a “Party” and, collectively, as the “Parties.”

RECITALS

WHEREAS, Passage Bio is an integrated genetic medicines company that is currently developing a portfolio of live transforming Adeno-associated virus (“AAV”)-delivered therapeutics for the treatment of rare monogenic central nervous system diseases, and Passage Bio is interested in securing process development services and clinical scale manufacturing capacity for such products and other drugs of which Passage Bio or its designated Affiliates or Strategic Partners may later contract with Catalent for clinical supply;

WHEREAS, Catalent has process development, manufacturing, and related services experience and expertise, and operates facilities for the development and manufacturing of biopharmaceuticals, including a commercial scale biomanufacturing facility located at 7555 Harmans Road, Baltimore, Maryland (the “BWI Facility”);

WHEREAS, on June 28, 2019, the Parties executed a Collaboration Agreement (the “Collaboration Agreement”) under which Catalent committed to provide Passage Bio with dedicated biomanufacturing space at the BWI Facility (the “Dedicated Clean Room Suite”) and, subject to future agreements, to perform clinical and commercial supply of the Passage Bio Products;

WHEREAS, the Collaboration Agreement established, among other items, the terms and conditions regarding the governance of the Dedicated Clean Room Suite for the Manufacture of the Passage Bio Products (collectively, the “Dedicated Clean Room Collaboration”);

WHEREAS, the Parties have also executed that certain Letter of Intent (“LOI”) dated December 18, 2019, as amended, that reserves [*] ([*]) slots for the manufacture of Passage Bio Products prior to the Readiness Determination;

WHEREAS, Passage Bio may request Catalent to commence supplying Passage Bio Products to Passage Bio before the Readiness Determination, and Catalent wishes to manufacture and supply such Passage Bio Products to Passage Bio (using facilities owned and operated by

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Catalent other than the Dedicated Clean Room) as requested by Passage Bio, on the terms set forth below;

WHEREAS, on May 20, 2019, Catalent Pharma Solutions, Inc. (“CPS”), a leading global provider of advanced delivery technologies and development solutions for drugs, biologics, and consumer health products, acquired Paragon Bioservices, Inc. (“Paragon”);

WHEREAS, the Collaboration Agreement contemplates clinical and commercial supply agreements for Passage Bio Products that will be negotiated and executed by the Parties, subject to the capacity of the Dedicated Clean Room Suite (this Agreement and such additional commercial supply agreements are collectively referred to herein as the “Passage Bio Supply Agreements”);

WHEREAS, it is the intent of the Parties to execute this Agreement to consummate the Parties understanding as to the development services and clinical supply manufacturing of Batches of Bulk Drug Substance and Drug Product of Passage Bio Products; and

WHEREAS, the Parties further agree and acknowledge that this Agreement satisfies the requirement set forth in Section 1.2 of the Collaboration Agreement, as amended by that certain LOI dated December 18, 2019 (as amended), for the Parties to execute a Passage Bio Supply Agreement.

NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants, agreements and provisions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Parties agree as follows:

ARTICLE I

OVERVIEW

1.1.      Definitions.  All capitalized terms used herein, including in the Exhibits and Schedules hereto, shall have the meanings specified in Exhibit A attached hereto or elsewhere in this Agreement and the Collaboration Agreement, as applicable, unless otherwise specified.

1.2.      Collaboration Agreement and Exhibit C.  The Parties agree and acknowledge that the Collaboration Agreement shall continue in accordance with its terms.  In addition, the Parties agree that, in the event of conflict between the terms of this Agreement and the Collaboration Agreement with respect to the activities to be undertaken under this Agreement, the terms of this Agreement shall control with respect to matters specifically covered by this Agreement whereas the Collaboration Agreement shall control with respect to matters not covered by this Agreement.  It is also the Parties intent that the provisions of Exhibit C shall govern any future agreements between Passage Bio, its Affiliates or Strategic Partners and Catalent with respect to Manufacturing in the Dedicated Clean Room Suite.

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1.3.      Joint Steering Committee.

(a)      For the purposes of this Agreement, the JSC shall have decision making authority as to the matters expressly stated herein including, but not limited to, Continuous Improvement Program (as defined below), procurement of Raw Materials and matters set forth in Exhibit C to this Agreement

(b)      The decisions of the JSC with respect to matters subject to its decision-making authority shall be made as set forth in this Section 1.3(b) and shall be final.  Subject to and after giving effect to the provisions of Section 1.3(c), all decisions of the JSC will be made by [*], such decision to be documented in the meeting minutes.  The JSC shall use commercially reasonable efforts to resolve the matters within its roles and functions or otherwise referred to it with due regard to this Agreement.  If the JSC cannot [*] on a matter within [*] ([*]) Business Days (or such longer period of time as mutually agreed by the Parties) after such matter has been presented to the JSC, then such matter shall be handled in the following manner.  Any disputed matter that cannot be resolved by the JSC shall be first referred to the executive officers designated by each Party.  Such executive officers shall use commercially reasonable efforts to reach mutually acceptable resolutions on all such disputed matters.  If such executive officers are unable to resolve any disputed matter within [*] ([*]) Business Days (or such longer period of time as mutually agreed by the Parties) after the dispute is first referred to them, the matter shall be resolved as provided in Section 1.3(c).

(c)      If any matter within the decision-making authority of the JSC remains unresolved following attempted resolution under Section 1.3(b), the following shall apply:

(i)         Subject to and after giving effect to the provisions of Section 1.3(c)(iv), if the dispute relates to clinical development and regulatory matters regarding any Passage Bio Product (but not to construction, commissioning, qualification, validation, operation, logistics and maintenance of equipment, instruments, systems and facilities  at the BWI Facility and in the Dedicated Clean Room Suite), Passage Bio shall have final decision-making authority with respect to such matters.  In the event any such matter requires an immediate or prompt decision and the JSC is not able to reach agreement, Passage Bio, by written notice to Catalent, may inform it of the need to accelerate a decision on that matter and that it is electing to exercise its decision-making authority on a shortened time frame than that set forth in Section 1.3(b).

(ii)        Subject to and after giving effect to the provisions of Section 1.3(c)(iv), if the dispute relates to construction, commissioning, qualification, validation, operation, logistics and maintenance of equipment, instruments, systems and facilities at the BWI Facility and in the Dedicated Clean Room Suite (but not to clinical development and regulatory matters regarding any Passage Bio Product), Catalent shall have final decision-making authority with respect to such matters, provided that Catalent’s final decision-making authority does not include the Readiness Determination.  In the event any such matter requires an immediate or prompt decision and the JSC is not able to reach agreement, Catalent, by written notice to Passage Bio, may inform it of the need to

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accelerate a decision on that matter and that it is electing to exercise its decision-making authority on a shortened time frame than that set forth in Section 1.3(b).

(iii)       Subject to and after giving effect to the provisions of Section 1.3(c)(i), (ii) and (iv), any remaining unresolved dispute regarding a matter within the decision-making authority of the JSC (including any dispute that relates to both (A) clinical development and regulatory matters regarding any Passage Bio Product and (B) construction, commissioning, qualification, validation, operation, logistics and maintenance of equipment, instruments, systems and facilities at the BWI Facility and in the Dedicated Clean Room Suite) shall be referred to the Parties’ respective designated executive officers for discussion and resolution, who shall attempt in good faith to resolve such dispute, and neither Party shall, by itself, have any final decision-making authority with respect to such dispute. Notwithstanding the foregoing, except by mutual agreement of the Parties which shall not be unreasonably withheld, delayed or denied, Catalent shall not be obligated to [*].

(iv)       Notwithstanding the foregoing provisions of this Section 1.3(c): (A) either Party’s exercise of a right to finally resolve a dispute hereunder shall not excuse the other Party from any of its obligations specifically enumerated under this Agreements; and (B) neither Party shall exercise such a right in a manner that violates any rights or obligations specifically addressed in this Agreement.  In addition, in resolving a dispute hereunder each Party shall act in good faith.

ARTICLE II

FACILITY LICENSURE AND OPERATION

2.1.      Facility Licensure and Maintenance.  Catalent will take all necessary actions to maintain in full force and effect at all times during the Term of this Agreement all permits, licenses, approvals and authorizations that allow Catalent to carry out its obligations under this Agreement, including any licenses in connection with Development Services and Manufacturing in the Bi-Park Facility, BWI Facility, or other Catalent facilities and including, after approval of the Passage Bio Products, permits, licenses, approvals and authorizations in connection with licensed Manufacture in the BWI Facility relating to the Bulk Drug Substance and Drug Product.  Catalent shall operate and maintain its facilities and all equipment used in the Manufacture of Passage Bio Products in compliance with cGMPs, applicable Laws and Regulatory Acts, and the then current Quality Agreement between Passage Bio and Catalent, shall maintain a quality management system acceptable to Passage Bio, and shall assure the capacity of the BWI Facility is sufficient to meet the Manufacturing requirements of this Agreement.

2.2.      Inconsistent Activities.  Catalent agrees that Catalent will not permit any activities within the Dedicated Clean Room Suite that are incompatible with and/or could adversely affect the Bulk Drug Substance being Manufactured by Catalent or Catalent’s ability to provide Development Services or Manufacture Batches of Bulk Drug Substance of Passage Bio Products pursuant to this Agreement.  Catalent shall be responsible, at its expense, to ensure the absence of live viruses, infectious agents, adventitious agents or antibiotics in the Dedicated Clean Room

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Suite (or other areas where the Manufacture of Passage Bio Products may occur), or of any cross-contamination in the foregoing areas, including by performing appropriate testing, cleaning, validation of cleaning procedures.

2.3.      Employees. Catalent also shall be responsible for providing and/or hiring appropriately qualified personnel (including operators, supervisors and area managers) with expertise in technical development, Manufacturing, operations, quality assurance, quality control and regulatory affairs, in accordance with a staffing plan agreed upon by Passage Bio, such staff to be capable of operating the BWI Facility in accordance with cGMPs and the Quality Agreement.  Catalent shall use commercially reasonable efforts to provide personnel who have prior experience working on the Passage Bio Products.  Catalent shall assure that such staff receive appropriate training to carry out the responsibilities assigned to them.  Catalent shall ensure that its employees involved in the Manufacture of Batches of Bulk Drug Substance and Drug Product of Passage Bio Products receive appropriate training specific to the Manufacture of Passage Bio Products.

2.4.      No Obligation to Perform.  Neither Catalent nor its Affiliates shall be obliged to Manufacture any Passage Bio Product for sale in any countries that are targeted by the comprehensive sanctions, restrictions or embargoes administered by the United Nations, European Union, United Kingdom, or the United States if it is prevented from doing so, or would be required to obtain or apply for special permission to do so, due to any restriction (such as an embargo) imposed on it by any Governmental Authority, including those imposed by the U.S. Department of the Treasury’s Office of Foreign Assets Control.

ARTICLE III

PASSAGE BIO MATERIALS

3.1.      Passage Bio Materials.  Passage Bio will provide to Catalent the Passage Bio Materials for use in the Development or Manufacture of Passage Bio Products in accordance with this Agreement.  Catalent shall maintain a written record setting forth the type and name of all Passage Bio Materials, the amount and date received and such other information as is appropriate to adequately record, track and account for all Passage Bio Materials.  With respect to Materials ordered by or procured on behalf of Strategic Partners, the JSC will meet to discuss and approve the transfer of those Materials, to the extent practicable, for the Development or Manufacture of Passage Bio Products.

3.2.      Ownership and Return of Passage Bio Materials.  All Passage Bio Materials shall remain the sole and exclusive property of Passage Bio, shall be used by Catalent only in carrying out its obligations under this Agreement and for no other purpose, shall not be transferred to any Third Party that is not specifically authorized in advance and in writing by Passage Bio, and shall be returned to Passage Bio upon request by Passage Bio and at Passage Bio’s expense at the termination of this Agreement or when no longer being used, upon request by Passage Bio and at Passage Bio’s expense.

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3.3.      Due Care.  Catalent will handle, use and store the Passage Bio Materials with due care and in compliance with the applicable Storage Guidelines.  Title and risk of loss or damage to such Passage Bio Materials will at all times remain with Passage Bio.

ARTICLE IV

DEVELOPMENTAL SERVICES AND CLINICAL SUPPLY MANUFACTURING

4.1.      Scope of Services and Obligations of the Parties.

(a)        Scope of Work.  Upon the Effective Date of this Agreement, Catalent and Passage Bio shall commence with implementation of the Scope of Work attached hereto as Exhibit B (as the same may be amended or modified pursuant hereto, the “Scope of Work”).  The Scope of Work is intended to cover the Development Services (defined below) for and clinical supply Manufacturing of the Passage Bio Products requested by Passage Bio.  Catalent shall use commercially reasonable efforts to perform all of its obligations under this Agreement (including the Scope of Work).  The Scope of Work may be amended or modified through one or more mutually agreeable exhibits executed by both Parties, it being understood that each such exhibit shall (1) be sequentially numbered (e.g., B-1, B-2, etc.), (2) specifically make reference to this Agreement and the specific Passage Bio Product to which the services apply, (3) incorporate the terms and conditions hereof by reference, and (4) include a detailed description of the services to be performed, the pricing, any equipment to be procured by Catalent at Passage Bio’s expense, if any, including procurement and other related costs, and a signature block for both Parties.  Once executed by the Parties, each additional exhibit shall be deemed part of the Scope of Work and subject to and governed by this Agreement.  The Scope of Work will address the following activities (or other activities as mutually agreed upon by the Parties): (a) [*] to (i) [*] and (ii) [*] (both (i) and (ii) being the “Development Services”), (b) [*] (the “cGMP Manufacturing Runs”), and (c) [*] (“Process Performance Qualification” or “PPQ”).  In the event of any conflict between the Scope of Work and this Agreement, the terms of this Agreement shall prevail, except to the extent the Scope of Work expressly deviates from one or more terms of this Agreement and the Parties agree in writing to such deviation.

(b)        Batch Ordering and Forecasting Requirements.  As provided for in Exhibit C attached hereto and incorporated by reference for all purposes, the Parties have agreed upon (i) the minimum annual ordering obligations of Passage Bio for Catalent’s Manufacture of Batches of Passage Bio Products, (ii) the fees that Passage Bio will pay to Catalent during the Term following the Readiness Determination for the Dedicated Clean Room Suite, and (iii) the establishment of procedures for the initial forecasting and rolling forecasts of Passage Bio’s ordering of Batches of the Passage Bio Products in the Dedicated Clean Room Suite.  Exhibit C shall also apply to future agreements between Passage Bio, its Affiliates and Strategic Partners for the clinical supply Manufacturing in the Dedicated Clean Room Suite.

4.2.      Development Services. Catalent shall diligently perform the Development Services in a professional and workman-like manner and in accordance with the activities, timeline and budget set forth in the Scope of Work.  Catalent shall commit to the Development Services appropriately qualified personnel, including, as appropriate, personnel with expertise in technical

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development, Manufacturing, operations, quality assurance, quality control, and regulatory affairs.  Passage Bio shall provide reasonable assistance in connection with the Development Services and shall have a reasonable ability to oversee the Development Services, including being permitted to contact the personnel of Catalent and/or visit the Catalent facility at which the activities are being conducted in order to facilitate the timely completion of the Development Services.  Each Party shall comply with applicable regulatory requirements applicable to it in connection with the performance of the Development Services.

4.3.      cGMP Manufacturing Runs.  As may be agreed by the Parties and set forth in the Scope of Work, Catalent will commence with the performance of the tasks associated with the cGMP Manufacturing Runs and pursuant to the schedule set forth in the Scope of Work.  These tasks include [*].  All Manufacturing of Bulk Drug Substance and Drug Product of the Passage Bio Products for the Passage Bio’s clinical trials will be performed at the BWI Facility in accordance with cGMPs, the Specifications, the Quality Agreement, any applicable Laws and otherwise in accordance with this Agreement.  Catalent shall also perform the following relating to the Manufacture of the Passage Bio Products, Bulk Drug Substance and Drug Product, as may be more fully set forth in the Scope of Work, the Specifications and the Quality Agreement:

(a)        Testing, Characterization and Release.  Catalent shall perform testing, characterization and release of the Bulk Drug Substances and/or Drug Products.  The responsibility for the testing of certain Raw Materials will be set forth in the Scope of Work and/or Quality Agreement.

(b)        Stability Testing.  Catalent shall perform stability testing and issue results in accordance with the Scope of Work and Quality Agreement.

(c)        Storage.  Catalent shall perform all storage of Bulk Drug Substance and Drug Product in accordance with the Storage Guidelines.

4.4.      Process Performance Qualification.  If made part of the Scope of Work as part of Passage Bio’s pre-Commercialization activities of a Passage Bio Product, Catalent shall perform Process Performance Qualification in support of Passage Bio’s BLA submission to the FDA for such Passage Bio Product in accordance with cGMPs, the Specifications, the Quality Agreement, any applicable Laws, and otherwise in accordance with this Agreement.  Such Process Performance Qualification may include, but is not limited to, the following tasks which are more fully described in the Scope of Work: [*]. Catalent agrees to use commercially reasonable efforts to meet the timelines set forth in the Scope of Work.  Unless otherwise agreed by the Parties in the Scope of Work, the Process Performance Qualification will be completed upon Catalent’s completion of [*].  The date upon which a final report confirming the completion of these PPQ activities has been submitted by Catalent and approved by Passage Bio shall be referred to herein as the “PPQ Completion Date.”  Passage Bio’s approval of the completion of the PPQ activities shall not be unreasonably withheld or delayed.

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4.5.      Validation and Stability Studies.

(a)       General.  Catalent shall perform on an on-going basis all validation and stability studies required by, and in accordance with, the Specifications, cGMPs, applicable Laws and Regulatory Acts, the Scope of Work, and the Quality Agreement in connection with the Manufacturing of Bulk Drug Substance and Drug Product for the Passage Bio Products.

(b)        Duties.  In performing its duties under this Section 4.5 and as specified in a Scope of Work or Purchase Order, Catalent shall perform the following tasks:

(i)         prepare and provide to Passage Bio, in the format designated in the Quality Agreement, applicable Regulatory Materials as may be required for submission to the Regulatory Authorities;

(ii)        pull, store and analyze data and maintain, for periods of time set forth in the Quality Agreement, database containing applicable Regulatory Materials, and provide Passage Bio and any applicable Regulatory Authorities with such cooperation as is requested to respond to regulatory inquiries or investigations;

(iii)       notify Passage Bio promptly and in accordance with the timing set forth in the Quality Agreement if any Batch of Bulk Drug Substance or Drug Product fails any stability test(s), and initiate an investigation of such failure, promptly provide to Passage Bio all test results from the investigation and consult with and reach agreement with Passage Bio on corrective actions to be taken; and

(iv)       report to Passage Bio promptly and in accordance with the timing set forth in the Quality Agreement any atypical results, deviations or  adverse trends exhibited during testing, or process deviations, including, by way of example only, those which might reasonably be expected to impact quality or physical characteristics of the Bulk Drug Substance and/or Drug Product, and initiate an investigation thereof, promptly providing to Passage Bio all test results from the investigation, and consulting with and reach agreement with Passage Bio on corrective actions to be taken in accordance with the Quality Agreement.

4.6.      Shipment; Title/Risk of Loss.

(a)        Acceptance of Batch Documentation.  Catalent will Manufacture all Batches of Passage Bio Products in accordance with the Product Requirements and Catalent will store and ship them in accordance with the applicable provisions of this Agreement, the Quality Agreement and the Storage Guidelines.  As soon as Catalent has determined that a Batch complies with the Product Requirements, Catalent will send the Batch Documentation to Passage Bio by a mutually agreed upon method.  For each Batch, Passage Bio will review the Batch Documentation to confirm that it meets the Product Requirements and to determine the appropriate use of that Batch.  Within [*] Business Days of receipt of Batch Documentation, unless otherwise agreed to by the Parties, Passage Bio shall either provide its acceptance of the Batch Documentation in accordance with the procedures set forth in the Quality Agreement (“Passage Bio Approval”) or,

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in the event Passage Bio has identified specific issues or deviations with the Batch Documentation, give written notice thereof to Catalent, and such specific issues or deviations shall be resolved by the Parties in accordance with the Quality Agreement.  If Passage Bio fails to respond within [*] Business Days with its acceptance of the Batch or provide written notice of issues or deviations with the Batch Documentation, Passage Bio Approval of the Batch will be deemed to have occurred.  Upon Passage Bio Approval, the Batch Documentation will be deemed approved and the relevant Batch of Passage Bio Product will be made available for shipment as provided in Section 4.6(b), provided that the granting of Passage Bio Approval with respect to a Batch shall not preclude a subsequent claim with respect to any Latent Defect in such Batch in accordance with Section 8.3.

(b)        Delivery. The Delivery of a Batch of Passage Bio Product shall be deemed to have occurred upon Passage Bio Approval.  Following the date upon when such Passage Bio Approval occurs, Catalent shall either (i) move the Batch, packed and packaged in appropriate containers in accordance with the Quality Agreement, for storage at the BWI Facility or (ii) tender the Batch for shipment, packed and packaged in appropriate containers in accordance with the Quality Agreement, to the Passage Bio carrier at the BWI Facility.  Catalent will store Bulk Drug Substance, [*], until the earlier of (a) [*], and (b) [*].  Any requests by Passage Bio for storage beyond the foregoing time periods shall be rendered at a cost to be mutually agreed upon by the Parties and updated on an annual basis.  All storage of Bulk Drug Substance and Drug Product shall be performed in accordance with the Storage Guidelines and the Quality Agreement.  Passage Bio shall be responsible for Product in transit, including, but not limited to, any cost of insurance, transport fee, and any risk associated with transit or customs delays, storage and handling, if applicable.

(c)        Shipment.  Following Passage Bio Approval, and when Passage Bio requests shipment of Batches of Bulk Drug Substance or Drug Product, Catalent shall ship such Batches, as requested, Ex Works (as defined in INCOTERMS 2010) – BWI Facility.

(d)        Title/Risk of Loss.  Title to and risk of loss with respect to any Batch of Bulk Drug Substance and any Batch of Drug Product resulting therefrom shall pass from Catalent to Passage Bio upon the date of Delivery of such Batch of Bulk Drug Substance and/or Drug Product to Passage Bio.

(e)        Delivery Timing.  The timing of Delivery of clinical supply of Bulk Drug Substance and Drug Product Manufactured shall be pursuant to a Scope of Work, the applicable Purchase Order or otherwise agreed to by the Parties.

4.7.      Invoicing; Payments to Catalent.

(a)        Scope of Work.  The Scope of Work attached hereto under Exhibit B shall contain pricing for any applicable Development Services, cGMP Manufacturing Runs and Process Performance Qualification activities to be performed by Catalent under this Agreement. With respect to all services performed by Catalent, if not already set forth in the applicable Scope of Work, the Parties shall mutually agree upon a customized schedule for payments (each, a “Payment Schedule”).  Each such payment shall be due and payable within [*] ([*]) days

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following the receipt of the invoice.  If Catalent proposes to adjust the amounts set forth in the Scope of Work or the corresponding Payment Schedule, the Parties shall follow the procedures set forth in Section 4.8 with respect to a Change Order, and no such adjustment shall take effect absent a Change Order with respect thereto.

(b)        Purchase Orders.  Catalent will invoice Passage Bio for Development Services and Manufacturing pursuant to a Purchase Orders or as otherwise agreed to by the Parties in the Scope of Work.  Each such undisputed payment shall be due and payable within [*] ([*]) days following the receipt of the invoice.  For administrative convenience, the Parties may agree on a process to group invoicing of multiple billing into a single invoice. Any such process which deviates from the payment process described above must be mutually agreed and in writing by the Parties.

(c)        Pass-Through Costs.   Catalent shall provide monthly invoices to Passage Bio for all Raw Materials (other than Passage Bio Materials) and outsourced services (considered to be pass-through expenses) for the Development Services or Manufacturing at the actual procurement cost (the “Procurement Cost”) plus the Procurement Fee, provided that, (i) in the event that purchases are projected to exceed $[*] in a given month, Catalent may, at its option, bill semi-monthly, and (ii) in the event that purchases are projected to exceed $[*] in a given month, Catalent may, at its option, require that the purchases be paid in advance with an accounting and payment true-up due within [*] ([*]) days of receipt of vendor invoice.  Payment for amounts invoiced by Catalent which are undisputed amounts by Passage Bio shall be due and payable within [*] ([*]) days following the date of the invoice. If the monthly invoices include Raw Materials and/or outsourced services that are not listed in the Scope of Work, Catalent shall provide reasonably detailed information for such materials and/or services with the monthly invoice(s) containing the charges for such use such materials or services.

(d)        All payments to Catalent by Passage Bio shall be in United States currency and shall be by wire transfer to:

Wire transfer:

Account Name            [*]

ABA#:                         [*]

Account#:                    [*]

(e)      Notwithstanding anything to the contrary herein, all invoices issued pursuant to this Agreement shall be payable within the time periods expressly set forth herein unless Passage Bio notifies Catalent of a disputed invoice amount.  In the case of a disputed amount, the Parties will in good faith discuss the item and seek resolution.  Any continuing dispute of the invoice amount or the payment obligation with respect thereto shall be resolved in accordance with dispute resolution provisions set forth in Section 20.2 of this Agreement.  Passage Bio will pay all undisputed amounts of such invoice, if any, within the applicable payment term period.  In the event that Passage Bio has not paid any undisputed invoice amounts on or before the applicable due date, such failure shall be considered a material breach under this Agreement, subject to applicable cure provisions.  Such past due amounts shall bear interest from

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the date due until paid at the rate of [*] ([*]%) per annum (or if less, the highest rate legally permitted), payable on demand.

4.8.      Change Orders

(a)        Catalent Requested Changes.  Before Catalent may amend or change an agreed upon Scope of Work, Catalent shall prepare a Change Order describing in reasonable detail the nature of such change(s) and propose such Change Order to Passage Bio for Passage Bio’s review and written approval.  If any changes contemplated by a Change Order will have a financial or other impact on the Scope of Work, Catalent shall include in the Change Order a written description of such impacts.  If Passage Bio approves the Change Order notwithstanding Catalent’s notice of any resulting cost increase, Passage Bio shall reimburse Catalent for the cost of such changes as detailed in the Change Order.  Upon approval of the Change Order by Passage Bio, the Change Order will be implemented as soon as it is commercially practical to do so in a good faith effort to meet the development and manufacturing timelines as set forth in the Scope of Work.  In the event a proposed Change Order is not approved by Passage Bio, then work shall continue under the original Scope of Work.

(b)        Passage Bio Requested Changes.  Passage Bio shall have the right to request reasonable modifications to the Scope of Work by providing notice thereof to Catalent.  Upon receipt of such notice, Catalent shall generate a Change Order to reasonably reflect such requested modifications in accordance with the process described in Section 4.8(a).  If Passage Bio approves the Change Order notwithstanding Catalent’s notice of any resulting cost increase, Passage Bio shall reimburse Catalent for the cost of such changes as detailed in the Change Order.  Upon approval of such Change Order by Passage Bio, the Change Order will be implemented as soon as it is commercially practical to do so in a good faith effort to meet the development and manufacturing timelines as set forth in the Scope of Work or as described in the Change Order.

(c)        The procedures of Sections 4.8(a) or (b) shall be employed for any changes requested to document(s) which are part of Catalent’s cGMP document system provided that the approval of the appropriate Catalent department heads (including the Quality Assurance department) shall be required prior to any such change and any such changes are in compliance with cGMPs, the Specifications, the Quality Agreement, any applicable Laws and otherwise in accordance with this Agreement.  In the event of any requested change to a Passage Bio-specific document, Passage Bio approval shall also be required.

4.9.      Other Related Services.  Catalent shall provide such other services relating to the Passage Bio Products as agreed to between the Parties in a Scope of Work, which shall include the scope and fees for any such services and the terms and conditions of this Agreement shall govern and apply to such services.

4.10.    Slot Reservation.  Pursuant to the terms of the LOI, Catalent currently reserves [*] ([*]) slots for the Manufacture of Passage Bio Products at the BWI Facility in 2020.  At Passage Bio’s election, these [*] ([*]) slots shall be made available to Passage Bio pursuant to an agreed upon Manufacturing schedule.  In addition, to the extent a Scope of Work for Manufacturing of Batches includes the identification of a particular slot, Catalent shall reserve such slot for Passage

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Bio.  All Development Services and Manufacturing ordered pursuant to the LOI shall be completed in accordance with the terms of this Agreement, and a Scope of Work shall be attached hereto for such work.

ARTICLE V

COMMERCIAL SUPPLY OF PASSAGE BIO PRODUCTS

5.1.      General Requirements. Passage Bio is Developing the Passage Bio Products pursuant to a clinical development plan that currently projects a potential Marketing Authorization during the term of the Dedicated Clean Room Collaboration.  Should Passage Bio elect to file a BLA and Commercialize a Passage Bio Product that has been the subject of clinical supply Manufacturing by Catalent under this Agreement, the Parties agree to [*].

ARTICLE VI

QUALITY ASSURANCE; QUALITY CONTROL

6.1.      Quality Agreement.  Promptly following the execution of this Agreement, and in any event no later than [*] ([*]) days following the Effective Date, the Parties will negotiate and enter into a Quality Agreement with respect to the Manufacture of the Passage Bio Products for use in phase-appropriate clinical trials, the provisions of which will be incorporated herein by reference thereto and deemed a material part of this Agreement.  Further, upon the Readiness Determination with respect to the BWI Facility, the Parties agree to negotiate in good faith a new Quality Agreement, which will amend and supersede the initial Quality Agreement, and which will specifically address and govern the Manufacture of Passage Bio Products for registrational clinical trials and commercial use.  In the event of a conflict between the terms of the Quality Agreement and the terms of this Agreement as pertaining to any quality matters, the terms of the Quality Agreement shall control.

6.2.      Quality Assurance; Quality Control.  Catalent shall implement and perform operating procedures and controls for: (a) sampling, stability and other testing of Passage Bio Materials, Bulk Drug Substance and, if applicable, Drug Product, (b) for validation, documentation and release of Bulk Drug Substance and, if applicable, Drug Product, and (c) such other quality assurance and quality control procedures as required by Specifications, cGMPs, applicable Laws and Regulatory Acts and the Quality Agreement. Only Bulk Drug Substance and, if applicable, Drug Product complying with the Product Requirements may be released by Catalent.

6.3.      Certificates of Analysis and Certificate of Compliance.  Catalent shall supply to Passage Bio upon reasonable request copies of its analysis and data supporting the Certificate of Analysis and/or Certificate of Compliance of each Batch of Bulk Drug Substance and Drug Product provided under this Agreement.

6.4.      Quality Control Tests.  As may be provided for in the Scope of Work, Catalent shall ensure that representative samples of Bulk Drug Substance and Drug Product are taken, analyzed and retained in accordance with the Specifications, cGMPs and the Quality Agreement,

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using quality control methods provided by or agreed with Passage Bio and validated by Catalent prior to the release of the Batches.

6.5.      Testing and Reference Standards.  As may be provided for in the Scope of Work, Catalent shall ensure that testing methodology and testing reference standards comply with Specifications, cGMPs and the Quality Agreement.  Catalent shall provide to Passage Bio as reasonably requested in a timely manner and at no additional cost sufficient quantities of reference standards for Bulk Drug Substance and Drug Product so as to enable Passage Bio to carry out and/or maintain the necessary testing capability to comply with its regulatory obligations and the obligations set out in cGMPs and the Quality Agreement throughout the Term of this Agreement.

6.6.      Process Controls and Tests.  As may be provided for in the Scope of Work, Catalent shall institute and maintain process controls during the Manufacture of Bulk Drug Substance and Drug Product in accordance with the Specifications, cGMPs, applicable Laws and Regulatory Acts and the Quality Agreement.  Further, Catalent shall maintain full records of such tests which shall upon request be made available to Passage Bio together with retained in-process samples, in the event of a complaint or query arising in respect of Bulk Drug Substance and Drug Product.  Such records and samples shall be retained by Catalent for a period of [*] ([*]) years from the time they were made or taken or, alternatively, delivered to Passage Bio, or such longer period as required by applicable Laws.

6.7.      Adverse Trends.  As may be provided for in the Scope of Work, Catalent must report any adverse trends to Passage Bio that arise during normal or stability testing of Bulk Drug Substance and Drug Product, or in connection with trending for process, which might reasonably be expected to impact the quality or physical characteristics of Bulk Drug Substance or Drug Product.

ARTICLE VII

BATCH PROCESSING; SUPPLY INTERRUPTION AND DELAYED DELIVERY

7.1.      Batch Processing.

(a)        The Parties acknowledge that as part of the Product Requirements, the Parties will mutually define Specifications (with respect to the Manufacturing of Batches (the “Batch Processing”) for the purpose of determining, among other things, whether a Batch may be released. For illustration purposes only, examples of reasons for terminating a Batch may include the following events (each, a “Terminating Event”):

(i)         The Batch fails to comply with the in-process or final Specifications;

(ii)        Equipment used to Manufacture the Batch malfunctions;

(iii)      The Raw Materials used during the Batch Processing fail or are defective (e.g. [*]);

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(iv)       The Raw Materials change or differ from previous lots of materials purchased from the same vendor (e.g., [*]);

(v)        The Batch becomes contaminated during the Batch Processing;

(vi)       A Catalent manufacturing associate or operator makes a mistake in processing the Batch (e.g. [*]); and

(vii)      A Catalent manufacturing associate or operator commits an act or omission resulting in the loss of the Batch.

(b)        For the purposes of this Agreement, a Terminating Event that leads to the termination or rejection of a Batch of Bulk Drug Substance or Drug Product, including an event or series of events that causes the Batch to fail one or more in-process and/or release testing specifications, shall be referred to as a “Failed Batch.”  A Failed Batch is always a Batch that is terminated by Catalent prior to the submission of Batch Documentation to Passage Bio due to a Terminating Event.  A “Defective Batch” (see Section 8.4 below) is a Batch that is rejected or otherwise determined to have a Defect after the Batch Documentation is provided to Passage Bio.

[*]        Each Failed Batch and Defective Batch will be the subject of an investigation to be performed in accordance with the Quality Agreement (each as “Batch Investigation”).  The responsibility for the costs associated with each Batch Investigation will be determined based on [*].  The Batch Investigation will endeavor to determine the root cause of or primary reason for the Batch termination or rejection (the “Primary Cause”) and the corrective measures to be taken in the Manufacture of future Batches of Bulk Drug Substance or Drug Product, as appropriate, to minimize of chances of or prevent the same type of root cause from happening again.  The JSC will be advised of the findings and outcome of the Batch Investigation.  In the event any dispute regarding a Failed Batch or Defective Batch (including the Primary Cause thereof) is not resolved under the procedures set forth in the Quality Agreement, the [*].

7.2.      Termination of a Batch.  Catalent shall have full authority, subject to compliance with the Quality Agreement, to make the decision to terminate a Batch before completion, provided that Catalent will promptly confer with Passage Bio during the Batch Processing to determine whether a Batch that is otherwise outside agreed upon process parameters (based upon in-process testing) may ultimately be accepted by Passage Bio.  For example, a Batch may be low yielding but otherwise meet all release specifications and deemed acceptable.  Prior to terminating a Batch, Catalent shall confer with Passage Bio regarding acceptance of the Batch despite the fact that it is out of trend (or, for example, out of the in-process acceptance range on yield).  If Passage Bio agrees in writing (e-mail is acceptable) to accept the Batch despite the low yield (or other related parameters) it may not later reject the Batch for that reason.  The Parties agree that with respect to meeting the quality and safety specifications of a Batch, a Batch that does not meet the Specifications will be deemed a Failed Batch.  As set forth in Section 8 below and following Passage Bio Approval of a Batch and Delivery by Catalent, Passage Bio may later reject the Batch and deem it a Defective Batch if it determines through its own release testing that the Batch does not meet the Product Requirements.

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7.3.      Remedies for Failed Batches and Defective Batches.  The remedies set forth in Section 8.6 shall apply to all Failed Batches and Defective Batches.

ARTICLE VIII

BATCH TESTING AND PASSAGE BIO REVIEW; DEFECTIVE BATCHES

8.1.      Testing.  As may be provided for in the Scope of Work or otherwise agreed to by the Parties, Catalent or its approved subcontractor will perform all testing of each Batch of Passage Bio Product to determine conformity with the Product Requirements and, as part of the Batch Documentation to be provided to Passage Bio, Catalent will issue a Certificate of Analysis and Certificate of Conformance based on the results thereof.  Passage Bio may elect to conduct additional release testing, in its sole discretion, in which case Passage Bio shall work with Catalent to promptly undertake such testing and shall report any adverse findings to Catalent.  If such additional testing is not deemed necessary, then Passage Bio shall inform Catalent. Any testing which Passage Bio elects to perform shall not relieve Catalent from its obligations to comply with the terms of this Agreement, including its obligations with respect to any Batch that is determined to be a Defective Batch.

8.2.      Passage Bio Review.

(a)        Pursuant to Section 4.6(a), Catalent will deliver the Batch Documentation to Passage Bio following its completion of all testing set forth in the Specifications or otherwise provided for in the Quality Agreement and Passage Bio shall review and advise Catalent as to its determination of whether the Batch meets the Product Requirements.  [*]

(b)        Upon actual physical receipt of each Batch by Passage Bio or its designee (“Actual Passage Bio Receipt”), Passage Bio (or its designee) will:

(i)         inspect the Batch and confirm that the quantity received by Passage Bio (or its designee) matches the quantity set forth in the Batch Documentation, and make all the necessary reserves on the delivery receipt related to any shortage in the quantity; and

(ii)        inform Catalent, by email of any shortage identified through the conduct of the inspection pursuant to Section 8.2(b)(i) within [*] ([*]) Business Days from the date of Actual Passage Bio Receipt of such Batch.

8.3.      Latent Defects.  Any Passage Bio Approval or other acceptance of any Batch of Bulk Drug Substance or Drug Project by Passage Bio shall not preclude a subsequent claim with respect to any Latent Defect, provided that: (i) Passage Bio notifies Catalent of such Latent Defect no later than [*] ([*]) days after the discovery of the Defect, and (ii) such Latent Defect is mutually agreed upon between the Parties or otherwise determined in accordance with [*]. In such event, Passage Bio shall have the rights set forth in Section 8.6 with respect to such Batch.

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8.4.      Batch Release; Defects; Quarantine.

(a)        Satisfaction of Product Requirements.  Catalent shall not release any Batch to Passage Bio that does not conform to the Product Requirements, without the prior written approval of Passage Bio, and Passage Bio shall have the right to reject any Batch that fails to satisfy the Product Requirements.

(b)        Catalent Notifications.  Without limiting any of the foregoing in this Article VIII, Catalent shall notify Passage Bio as promptly as practicable but in no event any longer than the timeframes agreed in the Quality Agreement upon becoming aware of any problem related to the Manufacture of Batches under this Agreement including:

(i)         where any Batch may be affected by bacteriological or other contamination, significant chemical, physical or other change or deterioration or stability failures; and

(ii)        where any Batch may not comply with the Product Requirements therefor.

(c)        Quarantine.  In the event of any actual or alleged Terminating Event or Defect in a Batch, Catalent shall quarantine and properly tag such Batch. Catalent shall promptly submit to Passage Bio a report detailing the nature of the Terminating Event or Defect, including the investigation and testing done and Catalent’s recommended disposition of the Batch.

(d)        Defects Discovered by Passage Bio.  In the event Passage Bio discovers any actual or alleged Defect in a Batch:

(i)         Passage Bio shall notify Catalent in writing;

(ii)        the payment obligation in relation to any such Delivery shall be suspended forthwith pending resolution of the dispute;

(iii)       the Parties shall immediately endeavor to agree whether or not the Batch in question complies with the requirements of this Agreement;

(iv)       Catalent shall be entitled at all reasonable time to inspect and/or analyze the relevant Batch;

(v)        as set forth in Section 7.1(c), Catalent will conduct a Batch Investigation into each Defect in a Batch and provide any additional information regarding the Defect as may be reasonably requested by Passage Bio; and

(vi)       the ultimate disposition of a Batch determined to have a Defect will be the responsibility of Passage Bio’s quality assurance department.

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8.5.      Resolution of Disputes Regarding Nonconformity or Defects.  In case of any disagreement between the Parties as to whether a Batch contains a Defect, or as to the cause of any Terminating Event or Defect, the quality assurance representatives of the Parties will attempt in good faith to resolve any such disagreement and each Party will follow the dispute resolution procedures [*].

8.6.      Remedies for Failed Batches and Defective Batches.

(a)        If a Batch of Bulk Drug Substance or Drug Product Manufactured is a Failed Batch or a Defective Batch, at Passage Bio’s election, Catalent [*].

(b)        Responsibility for the cost and expense of the Manufacture of a new Batch of Bulk Drug Substance and/or Drug Product or Reprocessing of the Failed or Defective Batch of Bulk Drug Substance and/or Drug Product shall be based upon the Primary Cause of the Batch failure or defect determined by the Batch Investigation (subject to Section 8.5):

(i)         if the Primary Cause is determined to be attributable to [*]; or

(ii)        if the Primary Cause is determined to be attributable [*]; or

(iii)       if the Primary Cause is unable to be determined or is determined to be [*]; or

(iv)       if the Primary Cause is determined to be attributable [*]

(c)        For each Failed or Defective Batch subject to Section 8.6(b)(i), (ii) and (iii), Passage Bio will [*].  For each Failed or Defective Batch subject to Section 8.6(b)(iv), Passage Bio shall be responsible for both [*].

(d)        In the case of any Failed Batch or Defective Batch with respect to which Catalent is obligated to pay for the Passage Bio Materials pursuant to Section 8.6(b)(ii), Passage Bio shall provide the Passage Bio Materials to Catalent at a cost based upon [*].

8.7.      No Other Representations and Warranties.  THE OBLIGATION OF CATALENT TO [*] ABOVE, SUBJECT TO THE LIMITATIONS SET FORTH IN [*], SHALL BE, TOGETHER WITH PASSAGE BIO’S RIGHTS UNDER [*] TO THIS AGREEMENT, PASSAGE BIO’S SOLE AND EXCLUSIVE REMEDY UNDER THIS AGREEMENT FOR A FAILED BATCH OR DEFECTIVE BATCH OF BULK DRUG SUBSTANCE AND/OR DRUG PRODUCT AND IS IN LIEU OF ANY OTHER WARRANTY, EXPRESS OR IMPLIED.

8.8.      Survival.  The provisions of Section 8.6 shall survive termination or expiration of this Agreement.

8.9.      Financial Remedies.  Exhibit C contains certain additional remedies for Failed and Defective Batches.

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ARTICLE IX

DESIGNATED PERSON; BATCH RECORDS

9.1.      Designated Persons.

(a)      Catalent shall at all times and in accordance with any applicable Laws employ and designate in writing a quality representative (the “Quality Representative”) who shall have the necessary experience, qualifications, independence and authority and who will supervise the overall quality assurance of the Manufacture of Bulk Drug Substance and/or Drug Products, including those quality requirements set forth in cGMPs, this Agreement and the Quality Agreement.  Such individual shall be responsible for confirming by his/her signature on the appropriate batch record that each Batch of Bulk Drug Substance and Drug Product conforms with the Product Requirements and is Manufactured in accordance with the Quality Agreement.

(b)      For the duration of the Agreement, Catalent shall designate an individual to serve as the project manager and primary liaison to Passage Bio for the operational performance of the Development Services and Manufacturing hereunder (the “Catalent Project Manager”).

9.2.      Certificates and Documentation.  Catalent shall at all times and in accordance with applicable Laws supply to Passage Bio with respect to, and in advance of, each Delivery of Bulk Drug Substance and Drug Product the relevant:

(a)        copy of the Batch Record;

(b)        Certificate of Compliance in accordance with the format and subject matter as set out in the Quality Agreement;

(c)        Certificate of Analysis; and

(d)        such quality related documentation as is required under the Quality Agreement, duly signed by the designated person, corresponding to the Batch of Bulk Drug Substance and Drug Product contained in that Delivery (the foregoing, collectively, referred to as the “Batch Documentation”).

9.3.      Release.  The designated person shall be responsible for the release of each Batch of Bulk Drug Substance and Drug Product after review of the Batch Documentation (which shall be signed in accordance with the Quality Agreement) for each Batch of Bulk Drug Substance that has been produced.

ARTICLE X

CONTINUOUS IMPROVEMENT PROGRAM

10.1.    Program.  The Parties expect that the Supply Pricing for each Batch of Passage Bio Product may decrease from the pricing set forth in Schedule 1.1 of Exhibit C during the Term of this Agreement due to cost reductions gained through experience in Manufacturing such Passage Bio Product, as well as increased Batch sizes during each calendar year.  Such cost reductions may

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relate to development and implementation of Manufacturing efficiencies, feature improvements, raw material or component purchase price reductions, engineering breakthroughs, and/or delivery and distribution enhancements that result in lower cost of goods sold and/or operating expenses for Catalent, but without any negative impact on the quality of the Passage Bio Product.  Catalent commits to implementing a Continuous Improvement Program (“CIP”) whereby it will seek to investigate and, after consultation with Passage Bio, if mutually agreed by the Parties, implement continuous improvement projects and to use reasonable efforts to negotiate advantaged pricing for the benefit of Catalent and Passage Bio.  As part of the CIP, the Parties agree that through the JSC, the areas of review include, but are not limited to, the following:

(a)        improvements in quality and technology and use of best practices;

(b)        improvements in quality and technology and use of best practices relating to the Manufacture of Passage Bio Products and Good Manufacturing Practices in accordance with the Quality Agreement;

(c)        reduction of waste associated with Manufacture of Passage Bio Products;

(d)        a reduction in costs associated with the performance of Catalent’s obligations under this Agreement including all costs associated with the Manufacture and Delivery of Passage Bio Products under this Agreement;

(e)        improvements in quality of service provided by Catalent to Passage Bio in connection with the performance of this Agreement;

(f)        processing time reduction in respect of the Manufacture of Bulk Drug Substance and Drug Product;

(g)        improvements in the supply chain efficiency between Catalent and Passage Bio and its Affiliates or Strategic Partners in connection with the performance of this Agreement (including order/Delivery process, Delivery procedures and transport costs where relevant as well as improving the ability to get access to formulation and filling areas close to the BWI Facility with the goal of facilitating the supply chain of the Passage Bio Products); and

(h)        any other objectives agreed by the Parties from time to time (collectively, the “Continuous Improvement Program”).

10.2.    Meetings. Reasonably in advance of the start of Manufacturing activities under this Agreement and thereafter annually during the Term of this Agreement, the JSC shall meet to agree upon:

(a)        objectives for the CIP;

(b)        targets for cost reduction; and

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(c)        the means of measuring and implementing the results of the CIP.

10.3.    Progress. Progress against objectives shall be measured annually in accordance with Section 10.4.  Catalent will use all commercially reasonable efforts to achieve the agreed objectives and targets identified for the relevant year.

10.4.    Review. The Parties shall assure that the JSC meets annually during the Term of this Agreement to review performance in relation to the objectives agreed pursuant to Section 10.2.

10.5.    Implementation; Costs. Implementation of any such improvement shall be subject to mutual agreement of the Parties.  Catalent shall not implement any such improvement without Passage Bio’s prior written consent obtained through the Specification change procedures set forth in Section 4.8, and, if applicable, implementation shall not occur until any necessary Regulatory Approvals have been obtained from a Regulatory Authority.  Any realized cost reductions that are the result of a CIP project shall serve to decrease the then-current Supply Pricing of any applicable Passage Bio Product(s) by an amount equal to [*] percent ([*]%) of such reductions, which will be effective for any Passage Bio Products ordered under this Agreement placed after the price reduction (until any later price reduction).

ARTICLE XI

REGULATORY MATTERS

11.1.    Ownership of Regulatory Materials.  As between the Parties, any and all Regulatory Materials, including Regulatory Approvals, arising under this Agreement in respect of the Passage Bio Products and the Manufacture thereof, including labeling and packaging and any Drug Master Files and Chemistry, Manufacturing and Control (“CMC”) (or equivalent) sections of any such Regulatory Materials shall be in the name of Passage Bio, and Passage Bio shall own all right, title and interest in and to all such Regulatory Materials; provided, however, that Regulatory Materials, including Regulatory Approvals, solely relating to establishment license approvals for the Manufacture of Bulk Drug Substance and/or Drug Product shall be in the name of Catalent, and Catalent shall own all right, title and interest in and to only such Regulatory Materials, subject to and after giving effect to Passage Bio’s right to use such establishment license approvals in connection with its Development, Manufacturing and Commercialization activities for the Manufacture of Bulk Drug Substance and/or Drug Product.

11.2.    Drug Product Regulatory Filings and Regulatory Approvals.

(a)        Passage Bio General Responsibilities.  As between the Parties, Passage Bio shall be solely responsible for the preparation of all Regulatory Materials owned by Passage Bio in the Territory.  Passage Bio may identify Catalent in any Regulatory Material, application or filing or other such initial regulatory filing or submission as required by applicable Laws or Regulatory Acts; provided that it notify Catalent in advance and secure Catalent’s approval which will not be unreasonably withheld, conditioned or delayed.  Upon Catalent’s written request, Passage Bio shall provide Catalent with a copy of the Regulatory Approval or Marketing Authorization for each Territory in which Passage Bio has been authorized by a Regulatory

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Authority to distribute, market or sell the Passage Bio Products. If Passage Bio is unable to provide such information for any such Territory, Catalent shall have no obligation to deliver Bulk Drug Substance and/or Drug Product to Passage Bio for distribution, marketing or use in such Territory, notwithstanding anything to the contrary in this Agreement.

(b)        Manufacturing Approvals and BWI Facility Related Sections.  Catalent shall be responsible for the preparation of all Regulatory Materials solely relating to establishment license approvals for the Manufacture of Bulk Drug Substance and/or Drug Product for use in Passage Bio Products, including as may be necessary or desirable for obtaining and maintaining such establishment license approvals with respect to the BWI Facility.  Catalent also shall timely prepare and provide to Passage Bio the Regulatory Materials relating to establishment license approvals for the Manufacture of Bulk Drug Substance and/or Drug Product in order for Passage Bio to comment and agree on and to use in compiling, supporting and maintaining its regulatory filings for the Passage Bio Products and maintaining the capacity to supply Bulk Drug Substance and Drug Product.  Catalent shall provide to Passage Bio such Regulatory Materials with the content and in the format required by Regulatory Authorities and the Quality Agreement, as well as such other content and format requested by Passage Bio.

11.3.    Regulatory Authority Communications.  As between the Parties, Passage Bio shall be solely responsible for communicating with any Regulatory Authority having jurisdiction anywhere in the world regarding the Passage Bio Products; provided, that [*]; and Catalent shall, where requested by Passage Bio to do so, assist Passage Bio in communications as they pertain to the Manufacture of Bulk Drug Substance and/or Drug Product, including but not limited to provision of documentation and other evidence, preparation for and participation in any inspection and conduct of any other activities necessary to facilitate the communications between Passage Bio and the Regulatory Authority.  Catalent shall be responsible for communicating with any Regulatory Authority having jurisdiction over the BWI Facility regarding matters related to the BWI Facility; provided, that Catalent shall, as promptly as practicable but in no event later than the timeframes agreed in the Quality Agreement, notify Passage Bio (and reasonably consult with Passage Bio in advance of any such communications) in the event that Catalent communicates, or intends to communicate, with a Regulatory Authority either on its own initiative in accordance with this Agreement or as a result of such Regulatory Authority initiating contact with Catalent, regarding matters that may affect or involve operations or other activities associated Passage Bio Products.

11.4.    Regulatory Compliance.

(a)        Catalent shall promptly provide to Passage Bio, at Passage Bio’s request [*], for its provision to the relevant Regulatory Authorities, all such documents and information as may be required from time to time by such Regulatory Authorities with respect to the Manufacture of Bulk Drug Substance or Drug Product.  In addition, Catalent shall promptly, at Passage Bio’s or the Regulatory Authority’s request, provide such documents and information directly to the Regulatory Authorities.  In the case Catalent receives a direct communication or request for information from a Regulatory Authority with respect to the Manufacture of a Passage Bio Bulk Drug Substance or Drug Product and/or the BWI Facility that could impact Catalent’s

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ability to Manufacture and timely Deliver Batches of Passage Bio Products, Catalent shall give prompt written notice thereof to Passage Bio and consult with Passage Bio, and Passage Bio shall be entitled to review any proposed response or submission from Catalent to such Regulatory Authority before it is given (excluding documents and information which solely contain Catalent-proprietary information), and, to the extent permitted by the Regulatory Authority and involving communications regarding or otherwise affecting the Manufacture of Passage Bio Products, Catalent shall permit Passage Bio to accompany and take part in any such communications with such Regulatory Authority.  For the avoidance of doubt, the foregoing provisions of this Section 11.4(a) apply to any response to the findings of an inspection carried out according to Sections 11.4(b) or 11.8, to the extent such response is related to Manufacture of Bulk Drug Substance or Drug Product under this Agreement or Passage Bio’s pursuit of Regulatory Approval for the Passage Bio Products.

(b)        Catalent shall allow and shall be responsible for handling inspections of the BWI Facility as requested by such Regulatory Authority, the findings of which inspections and actions to be taken by Catalent to remedy conditions cited in the inspections, if any, to the extent they affect the Manufacture of Bulk Drug Substance or Drug Product shall promptly be made known in writing to Passage Bio.  Catalent shall, to the extent practicable, notify Passage Bio in advance of any such inspection relating to the Manufacture of Bulk Drug Substance or Drug Product and provide Passage Bio with the opportunity to attend and participate.

(c)        If any Regulatory Authority requires any changes to be made with respect to the Manufacture of Bulk Drug Substance or Drug Product, Catalent shall (i) immediately notify Passage Bio in accordance with the Quality Agreement; (ii) send Passage Bio copies of any relevant documents delivered to it by said Regulatory Authority in accordance with the Quality Agreement; and (iii) formulate an action plan with Passage Bio in accordance with the Quality Agreement.

(d)        Catalent shall respond in accordance with the Quality Agreement to any questions of a regulatory nature relating to Bulk Drug Substance, Drug Product or their Manufacture raised either by Passage Bio, its Affiliates or Strategic Partners, sublicensees or distributors, or by a Regulatory Authority.

11.5.    Adverse Event Reporting; Safety Data Exchange and Medical Inquiries.

(a)        Pharmacovigilance.  Passage Bio shall be responsible for the collection, processing and submission of information related to adverse events associated with the Passage Bio Products in accordance with applicable Laws and Regulatory Acts and this Agreement.  To the extent Catalent becomes aware of information related to an adverse event, it shall promptly provide such information to Passage Bio and shall otherwise provide all reasonable assistance Passage Bio may request in the handling of adverse event reports in accordance with the Quality Agreement.

(b)        Product Communication and Medical or Customer Inquiries.  Passage Bio shall be responsible for handling all medical or customer questions or inquiries about the Passage Bio Products, in each case in accordance with applicable Laws, Regulatory Acts and this

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Agreement.  Any medical or customer questions or inquiries received by Catalent shall be referred to Passage Bio as soon as practicable following Catalent’s receipt of the inquiry.  Catalent shall use reasonable efforts to assist Passage Bio in its response to such questions or inquiries.

11.6.    Regulatory Authority Communications Received.

(a)        General.  Catalent shall inform Passage Bio as promptly as practicable but in no event later than within the timeframes agreed in the Quality Agreement of notification of any action by, or notification or other information which it receives from, any Regulatory Authority with respect to its Manufacture of Passage Bio Products or the BWI Facility which: (i) raises any concerns regarding the market approval, safety or efficacy of the Passage Bio Products; (ii) relates to expedited and periodic reports of adverse events with respect to the Passage Bio Products; (iii) are Regulatory Warning Notices; and/or (iv) may have an adverse impact on Regulatory Approval, Development, Manufacturing or Commercialization of the Passage Bio Products.

(b)        Cooperation.  The Parties shall reasonably cooperate with and assist each other in complying with regulatory obligations, including by each Party providing to the Parties such information and documentation which is in such Party’s possession as may be reasonably necessary for a Party to prepare a response to an inquiry from a Regulatory Authority with respect to the Bulk Drug Substance, the Drug Product or the BWI Facility.

(c)        Disclosures. In addition to its obligations under this Agreement, Catalent shall promptly disclose to Passage Bio the following regulatory information: all material notices or demands received from Regulatory Authorities in connection with its Manufacture of Passage Bio Bulk Drug Substance or Drug Product or the BWI Facility if such notices or demands could adversely affect Catalent’s Manufacture of Passage Bio’s Products, including any notice, audit notice, notice of initiation by Regulatory Authorities of investigations, inspections, detentions, seizures or injunctions, a notice of violation letter (i.e., an untitled letter), warning letter, service of process or other inquiry, including that which may affect the overall compliance status of any Party participating in the Manufacturing of the Passage Bio Products.

11.7.    Reserved.

11.8.    Passage Bio Inspections & Audits.

(a)      Passage Bio shall have the right, at its expense, from time to time during the Term of this Agreement but not more than [*] (unless otherwise agreed between the Parties and subject to and after giving effect to the provisions of Section 11.8(b)), and pursuant to the procedures set forth in the Quality Agreement (e.g., advance notice and duration of inspection), to enter and inspect the BWI Facility and any related utilities and/or services used in and records and documents for the Manufacture of Bulk Drug Substance and/or Drug Product in order to:

(i)         carry out a cGMP, quality and compliance audit of those parts of the BWI Facility involved in or which could have any impact on the Manufacture of Bulk Drug Substance and/or Drug Product (including those used for storing, warehousing and/or testing and utilities); and

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(ii)        examine any Bulk Drug Substance and any Drug Product in inventory or otherwise stored at the BWI Facility, and to ensure compliance with the terms of this Agreement.

(b)      Notwithstanding Section 11.8(a), Passage Bio shall have the right to enter the BWI Facility, subject to its compliance with the BWI Facility’s applicable health and safety requirements, at any time during normal business hours, in accordance with its rights set forth in the Quality Agreement or as otherwise necessary in Passage Bio’s reasonable discretion to comply with an obligation to a Regulatory Authority.  In addition to the rights set out in Section 11.8(a), where any audit carried out in accordance with this Section 11.8(b) has identified any observations or negative findings then Passage Bio shall have the right to carry out, upon reasonable prior notice and during normal business hours, reasonable follow up compliance audit(s).

(c)      Catalent shall be solely responsible for ensuring the cGMP compliance status of any approved subcontractors used in relation to the performance of its obligations pursuant to this Agreement and the Quality Agreement.  Catalent shall use commercially reasonable efforts to secure the right for Passage Bio to have the same inspection rights described in this Section 11.8 at the premises of any such subcontractor.  If Catalent is unable to secure such rights, it shall carry out such inspections itself on Passage Bio’s behalf and shall report the findings within [*] ([*]) Business Days of completing the same.

(d)      All Catalent personnel time and resources necessary to complete the audits contemplated hereunder shall be provided at no cost to Passage Bio; however, any Catalent personnel time and resources necessary to complete more than [*] per year (except for cause audits) shall be invoiced to Passage Bio at $[*] per audit, subject to annual adjustment.  Unless otherwise specified in the Quality Agreement, Catalent shall allow a maximum of [*] ([*]) Business Day to perform such audit.  Passage Bio shall be responsible for all Third-Party costs of all manufacturing audits conducted at the written request of Passage Bio.

(e)      For the avoidance of doubt, any audits or inspections, checking or tests conducted by Passage Bio or any of its servants or agents in relation to Bulk Drug Substance, Drug Product or the matters covered under this Agreement shall in no way diminish or relieve Catalent of any of its obligations hereunder.

11.9.     Environmental Audit of Catalent. Catalent agrees that Passage Bio (the “Auditing Party”) shall have the right upon reasonable notice and during normal business hours, at the Auditing Party’s expense, once every year during the Term of this Agreement to conduct, or to nominate a Third Party (subject to execution of confidentiality and indemnity agreements reasonably acceptable to Catalent and the Auditing Party) to conduct on the Auditing Party’s behalf, an environmental audit of Catalent’s operations at the BWI Facility under this Agreement to monitor Catalent’s compliance with applicable environmental Laws and Regulatory Acts, and with applicable environmental health safety guidelines; provided, however, the Auditing Party or any such Third Party may not perform any invasive testing of the BWI Facility without Catalent’s prior written consent and the Auditing Party or any such Third Party will provide

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Catalent the opportunity to accompany Auditing Party or any such Third Party in the event of any such invasive testing of the BWI Facility.

ARTICLE XII

LIMITATIONS AND USE

12.1.    Limitations.

(a)        No Unauthorized Use.  Each Party covenants that it will not use or practice any of the other Party’s Intellectual Property, Arising IP or Confidential Information licensed, sublicensed, disclosed or otherwise made available to it by such other Party, its Affiliates (and additionally, in the case of Passage Bio, it’s Strategic Partners), or their Representatives under this Agreement or the Collaboration Agreement except for the purposes expressly permitted herein.  Except as explicitly set forth herein, no Party grants any license, express or implied, under any Patents, Regulatory Materials, Confidential Information or any other Intellectual Property rights, whether by implication, estoppel or otherwise.

(b)        Limited Access.  Catalent hereby covenants to and agrees with Passage Bio that it and its Affiliates shall limit access to the Passage Bio Materials, Passage Bio Technology, and Confidential Information utilized in the Manufacturing of the Passage Bio Products to such employees of Catalent or its Affiliates on a need to know/access basis.

ARTICLE XIII

FORCE MAJEURE

13.1.    Force Majeure Events.  No Party shall be in breach under this Agreement because of any failure to perform its obligations under this Agreement if the failure arises from causes beyond the control and without the fault or negligence of such Party (“Force Majeure Event”), unless:

(a)        The supplies, services or other subject matter impacted by the Force Majeure Event were obtainable from other sources; and

(b)        The Party experiencing a Force Majeure Event preventing it from performing its obligations or duties under this Agreement failed to obtain such supplies, services or other subject matter therefrom.

13.2.    Examples.  Examples of these Force Majeure Events are: (1) [*], (2) [*], (3) [*], (4) [*], (5) [*], (6) [*], (7) [*], (8) [*], and (9) [*].  A Force Majeure Event does not include (i) a Party’s financial inability to perform (including, in the case of Catalent, the inability to obtain the Financing, whether in whole or part), or general business or economic conditions affecting the industry as a whole, (ii) Catalent’s inability to obtain approvals for operating the BWI Facility, and/or (iii) an act, omission or circumstance arising from the negligence or willful misconduct of the Party claiming that a Force Majeure event has occurred.

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13.3.    Process.

(a)        The Party experiencing a Force Majeure Event preventing it from performing its obligations or duties under this Agreement shall promptly notify the other Party of the occurrence and particulars of such Force Majeure Event and shall provide the other Party, from time to time, with its best estimate of the duration of such Force Majeure Event and with notice of the resolution or cessation thereof.  The Party so affected shall use commercially reasonable efforts to avoid or promptly remove such causes of nonperformance.

(b)        Upon resolution or cessation of the Force Majeure Event, the affected Party shall promptly notify the other Party thereof, and performance of any suspended obligation or duty under this Agreement shall promptly recommence.

(c)        If the Force Majeure Event (except for a Force Majeure Event subject to Section 2.4) [*].

(d)        This Article XIII will not operate to excuse payment by a Party experiencing a Force Majeure Event of any amounts due to another Party under this Agreement.

ARTICLE XIV

CONFIDENTIALITY; MATERIAL TRANSFER

14.1.    Confidential Disclosure Agreement.  Effective February 27, 2018, the Parties executed a Confidential Disclosure Agreement (the “Disclosure Agreement”) the purpose of which is set forth therein.  All information and materials disclosed by a Party prior to the Effective Date under the Disclosure Agreement, to the extent meeting the requirements of the definition of Confidential Information thereunder, shall be protected as Confidential Information pursuant to this Agreement. The Disclosure Agreement remains in full force and effect and, in the event of a conflict between the Disclosure Agreement and this Agreement, the terms in this Agreement will control.

14.2.    Confidential Information from the Trustees of the University of Pennsylvania.  [*], Paragon (now Catalent) and the Trustees of the University of Pennsylvania (the “University of Pennsylvania”), entered into a Confidential Disclosure Agreement (the “CDA”) the purpose of which is set forth therein.  The CDA was extended, and the scope expanded by and through the execution of a [*].  Effective on [*], Catalent, Passage Bio and the University of Pennsylvania executed [*] in order to allow for Confidential Information exchanged between Catalent and the University of Pennsylvania under the CDA and GMP Agreement to be used for carrying out each Party’s obligations under this Agreement.

14.3.    Confidential Information.  As used in this Agreement, the term “Confidential Information” means the following:

(a)        any and all secret, confidential, non-public or proprietary information or Intellectual Property, including any data or materials, whether in written, oral, graphic, video,

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computer or other form, which is disclosed or made available by a Party or an Affiliate or Strategic Partner or Representative of such Party (the “Disclosing Party”) to the other Party or an Affiliate or Strategic Partner or Representative of such other Party (the “Receiving Party”) pursuant to this Agreement (including Confidential Information disclosed prior to the Effective Date hereof in connection with the Dedicated Clean Room Collaboration), or which arises as a result of this Agreement, and which: (i) if disclosed in written, graphic, electronic or other tangible form, is labeled as confidential or proprietary, (ii) if disclosed orally or visually, is identified as confidential or proprietary at the time of disclosure and is confirmed to be confidential or proprietary by the Disclosing Party in writing to the Receiving Party within [*] ([*]) days of such disclosure, (iii) by its nature, should reasonably be considered to be confidential or proprietary; or (iv) is specifically designated as Confidential Information herein; and

(b)        any information concerning this Agreement, the Collaboration Agreement or the other Passage Bio Supply Agreements; and

(c)        includes but is not limited to that which relates to business plans, strategic plans or business methods that derive economic value from not being generally known to other persons or easily ascertainable by other persons, business policies, research, product plans, Passage Bio Products or components thereof (with respect to Passage Bio’s Confidential Information), product pricing or product strategy, services, service pricing or service strategy, Manufacturing information, actual or proposed alliance partners, actual or proposed vendors, vendor offerings and pricing, actual or proposed customers, customer usage and customer purchasing potential, employee and consulting relationship information, actual or proposed markets, sales and marketing materials, plans and methods, specifications, shop-practices, software, developments, inventions (whether or not patented), product names or marks, trade secrets, technologies, discoveries, and any other intellectual property (whether or not registered), processes, designs, drawings, engineering, hardware configuration information or finance, accounting or financial plans and forecasts, compilations, formulas, devices, methods, prototypes, techniques, procedures, protocols, programs, records, and databases.  Without limiting the foregoing, Passage Bio Materials, Passage Bio Intellectual Property, and all Passage Bio Product specific portions of documents and records describing the Manufacture of Passage Bio Products, and Passage Bio Arising IP shall be deemed to be Passage Bio’s Confidential Information.

14.4.    Exceptions to Confidential Information.  Confidential Information shall not include any information or materials to the extent the Receiving Party can reasonably demonstrate through its contemporaneous written records that such information or materials are or have been:

(a)      part of public domain at the time of its creation or receipt by the Receiving Party or which thereafter becomes part of the public domain other than as a result of a breach of this Agreement or the obligations of confidentiality under this Agreement; or

(b)      is approved in writing by the Disclosing Party for release; or

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(c)      independently developed by the Receiving Party or its Affiliates or Strategic Partner or Representatives without use of or reference to the Confidential Information of the Disclosing Party; or

(d)      received on an unrestricted basis from a Third Party who, to the knowledge of the Receiving Party, is not under any obligation of confidentiality towards the Disclosing Party with respect to such information; or

(e)      was rightfully known by the Receiving Party or its Affiliates or Strategic Partner prior to the date of disclosure to the Receiving Party by the other Party.

The Receiving Party has the burden of proving any of the above exceptions.  The Disclosing Party has the right to inspect the Receiving Party’s documentary evidence upon which the Receiving Party bases its claim that Confidential Information is within any of the above exceptions.

14.5.    Confidentiality Obligations.  Each Party shall keep all Confidential Information received from or on behalf of another Party with the same degree of care with which it maintains the confidentiality of its own Confidential Information, but in all cases no less than a reasonable degree of care.  Each Party, in their position as a Receiving Party hereunder, shall, during the Term and thereafter:

(a)      not use the Disclosing Party’s Confidential Information other than as strictly necessary to exercise its rights and perform its obligations under this Agreement; and

(b)      maintain the Disclosing Party’s Confidential Information in strict confidence and, subject to Section 14.4, not disclose the Disclosing Party’s Confidential Information to any Person without the Disclosing Party’s prior written consent; provided, however, the Receiving Party may disclose the Confidential Information to its Representatives or Strategic Partners who:

(i)         have a need to know the Confidential Information for purposes of the Receiving Party’s performance, or exercise of its rights concerning the Confidential Information, under this Agreement;

(ii)        have been apprised of this restriction; and

(iii)       are themselves bound by written nondisclosure agreements or ethical obligations of confidentiality at least as restrictive as those set forth in this Section 14.5, provided further that the Receiving Party shall be responsible for ensuring its Representatives’ compliance with, and shall be liable for any breach by its Representatives of the confidentiality and non-disclosure obligations set forth herein.

14.6.    Permitted Disclosure and Use.  Notwithstanding Section 14.3, a Party may disclose Confidential Information belonging to another Party if and only to the extent such disclosure is reasonably necessary to:

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(a)        comply with applicable Laws, Regulatory Acts, rules, regulations, government requirements or court orders, provided that the Receiving Party shall: promptly notify the Disclosing Party of its notice of any such requirements and provide the Disclosing Party a reasonable opportunity to seek a protective order or other appropriate remedy or waive its rights under this Article XIV; and disclose only the portion of Confidential Information that it is legally required to furnish;

(b)        secure any Regulatory Approvals for the Passage Bio Products, provided that the Disclosing Party will take all reasonable steps to limit disclosure of the Confidential Information outside such Regulatory Authority and to otherwise maintain the confidentiality of the Confidential Information; or

(c)        solely with respect to Confidential Information consisting of this Agreement and the financial aspects of this Agreement, for the presentation of or reporting to financial agencies or institutions, actual or potential acquirers, investors or brokers, and their respective officers, directors, employees and representatives for the limited purpose of securing debt or equity financing of the Receiving Party and maintaining compliance with the definitive agreements executed in connection therewith; provided that any such disclosure is provided pursuant to a confidentiality agreement containing similar or more restrictive terms than in this Agreement and provided further that the Receiving Party shall be responsible for ensuring such recipients’ compliance with, and shall be liable for any violation by such recipients of, the Receiving Party’s confidentiality and disclosure obligations contained herein.

14.7.    Notification.  A Receiving Party shall notify a Disclosing Party promptly upon discovery of any unauthorized use or disclosure of a Disclosing Party’s Confidential Information and will cooperate with a Disclosing Party in any reasonably requested fashion to assist a Disclosing Party to regain possession of such Confidential Information and to prevent its further unauthorized use or disclosure.

14.8.    Publicity.  The Parties agree that any initial public announcement of the execution of this Agreement shall be in the form of a mutual press release to be agreed upon by the Parties; provided, that the Parties shall also agree on the timing of such public announcement.  Except as otherwise provided in this Section 14.8, each Party shall maintain the confidentiality of all provisions of this Agreement, and without the prior written consent of the other Party, which consent shall not be unreasonably withheld, no Party nor its respective Affiliates shall make any press release or other public announcement of the provisions of this Agreement to any Third Party, except for: (i) disclosures required by stock exchange regulation or any listing agreement with a national securities exchange, in which case a Disclosing Party shall provide the other Parties with at least [*] ([*]) [*] notice unless otherwise not practicable, but in any event no later than the time a disclosure required by such stock exchange regulation or listing agreement is made; and (ii) disclosures as may be required by applicable Laws and Regulatory Acts, including but not limited to those required by the Securities Exchange Commission and the FDA, in which case a Disclosing Party shall provide the other Parties with prompt advance notice of such disclosure and cooperate with the other Party to seek a protective order or other appropriate remedy, including a request for confidential treatment in the case of a filing with the Securities and Exchange

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Commission.  A Party may publicly disclose without regard to the preceding requirements of this Section 14.8 any information that was previously publicly disclosed pursuant to this Section 14.8.

14.9.    Use of Names.  Except as otherwise set forth in this Agreement, no Party shall use the name of another Party in any public announcement, press release or other public document without the written consent of such other Party; provided, however, that, subject to and after giving effect to the provisions of Sections 14.6 and 14.8, any Party may use the name of another Party in any document filed with any Regulatory Authority or Governmental Authority, including the FDA, EMA and the Securities and Exchange Commission.

14.10.  Defend Trade Secrets Act Notice.  The Receiving Party acknowledges, and shall inform its Representatives of, the following notice required by the Defend Trade Secrets Act: An individual will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made in confidence to a federal, state, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law.  Similarly, an individual will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.  An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to that individual’s attorney and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal; and does not disclose the trade secret, except pursuant to court order.

14.11.  Survival.  The obligations and prohibitions contained in this Article XIV as they apply to Confidential Information shall survive the expiration or termination of this Agreement for a period of [*] ([*]) [*], provided that with respect to any trade secrets of a Party that are expressly disclosed in writing to the other Party as trade secrets, such obligations and prohibitions shall survive for so long as such Party maintains such Confidential Information as its trade secrets.

ARTICLE XV

INTELLECTUAL PROPERTY

15.1.    General. This Article XV provides the general terms regarding Intellectual Property and attendant rights of the Parties thereto for the Development services and the Manufacture of the Passage Bio Products.  In the event of a conflict between the terms and conditions in this Agreement and the Collaboration Agreement as to Intellectual Property matters associated with a Passage Bio Product, this Agreement shall control.  In the event of a conflict between the terms and conditions of this Agreement and the Collaboration Agreement as to Intellectual Property matters associated with the Dedicated Clean Room Suite, the Collaboration Agreement shall control.

15.2.    Passage Bio Materials.  As between the Parties, Passage Bio shall own all rights in and title to the Passage Bio Materials.

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15.3.    License to Catalent.  Passage Bio retains all right, title, and interest in and to any Passage Bio Intellectual Property.  Nothing in this Agreement shall be construed to grant Catalent any right or license to any Passage Bio Intellectual Property except as expressly set forth herein.  During the Term, Passage Bio hereby grants to Catalent a fully paid, non-exclusive, non-sublicensable, non-transferable license under any and all Passage Bio Intellectual Property and Passage Bio Arising IP that is necessary for the sole and limited purpose of Catalent’s performance of the Development services and the Manufacture of Batches of the Bulk Drug Substance and Drug Product.

15.4.    License to Passage Bio.  Catalent retains all right, title, and interest in and to any Catalent Intellectual Property.  Any Intellectual Property created or developed solely or jointly by Catalent in the course of performing the Scope of Work, the clinical and commercial supply Manufacturing of Bulk Drug Substance or Drug Product, and/or the Continuous Improvement Program that relates generally to the Development or Manufacture of substances or drug products, including any process, protocol, technology, Know-How or the like that applies generally to the conduct by Catalent of laboratory and manufacturing operations and activities, and does not incorporate or utilize Passage Bio Confidential Information, Passage Bio Intellectual Property, or Passage Bio Products, shall be “Catalent Arising IP” and Catalent shall own all right, title and interest therein.  Catalent hereby grants to Passage Bio an irrevocable, perpetual, transferrable, fully paid, non-exclusive, worldwide license, with the right to grant and authorize sublicenses, to practice Catalent Arising IP, and to practice any Catalent Intellectual Property to the extent necessary to practice such Catalent Arising IP, for the sole and limited purposes of Development,  Manufacturing, Commercialization and use, by or on behalf of Passage Bio or a Passage Bio sublicensee, of the Passage Bio Products.

15.5.    Project Intellectual Property.  All Intellectual Property created or developed by Passage Bio or solely or jointly by Catalent in the course of performing the Scope of Work, the clinical and commercial supply Manufacturing of Bulk Drug Substance or Drug Product, and/or the Continuous Improvement Program, that is specified as a deliverable, or incorporates or utilizes Passage Bio Confidential Information, Passage Bio Intellectual Property, or Passage Bio Products, shall be “Passage Bio Arising IP” and the exclusive property of Passage Bio. As such Passage Bio Arising IP is created or developed, Catalent shall provide written notice to Passage Bio of any such Passage Bio Arising IP, as soon as possible but no later than [*] ([*]) Business Days after conception or observation of the same by Catalent. Catalent hereby assigns, and agrees to assign, to Passage Bio all right, title, and interest in and to all Passage Bio Arising IP, free and clear of all liens, claims, and encumbrances, and shall take any actions, including but not limited to the execution of documents, reasonably requested by Passage Bio and at Passage Bio’s expense, to effect the purposes of the foregoing.

15.6.    Existing Intellectual Property.  If Catalent desires to incorporate any Intellectual Property into the Development or Manufacture of the Passage Bio Products that is the subject of a Third Party Patent, or that is otherwise the subject of a Third Party license obligation, Catalent will provide prior written notice and seek the written approval of Passage Bio concerning the same.  Upon receipt of such a notice, Passage Bio shall provide a prompt written response to Catalent no later than [*] ([*]) days from receipt of such notice, indicating Passage Bio’s approval or objection

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to the same.  In no event shall Catalent incorporate any Intellectual Property into the Development or Manufacture of the Passage Bio Products that is subject of a Third Party Patent or a Third Party license obligation without Passage Bio’s prior written approval.  Upon any objection by Passage Bio, the Parties will meet and confer to determine a mutually acceptable work-around to the Intellectual Property subject to the objection.  If there is no suitable work-around and the Parties desire to secure the right to use such Intellectual Property, Catalent shall secure a license to the Intellectual Property at Passage Bio’s cost for the Development or Manufacture of the Passage Bio Products, such license to be subject to Passage Bio’s prior written consent. Catalent shall indemnify Passage Bio pursuant to Section 18.6 for any Intellectual Property of any Third Party incorporated into the Development or Manufacture of the Passage Bio Products for which a license has not been secured without having provided prior notice to, and received approval from, Passage Bio under this Section 15.6. Absent knowledge of actual infringement or a reasonable likelihood of potential infringement (e.g., via Third Party notice), Catalent is under no general obligation to undertake any patent infringement or patent clearance studies or to obtain any patent opinions, or to seek or secure any licenses to Third Party Intellectual Property on Passage Bio’s behalf.

15.7.    Patent Filings; Cooperation.  The Parties agree to reasonably cooperate in the preparation, filing, prosecution and maintenance of all Patents disclosing or claiming the Passage Bio Arising IP or the Catalent Arising IP upon request of the relevant Party (collectively, the “Arising IP Patents”), including obtaining and executing necessary powers of attorney and assignments by the named inventors, providing relevant technical reports to the filing Party concerning Inventions disclosed in such Arising IP Patents, obtaining execution of such other documents which are needed in the filing and prosecution of such Arising IP Patents.  The Parties shall cooperate reasonably in the prosecution of all Arising IP Patents.

15.8.    Notice and Defense of Third-Party Infringement Claims.  The Parties acknowledge that successful completion of Catalent’s obligations under this Agreement may require a license to Third Party Intellectual Property.

(a)        If Passage Bio determines that a license to Third Party Intellectual Property (including Third Party Intellectual Property of other Passage Bio suppliers) is required for Catalent’s use of Passage Bio Intellectual Property in order to Manufacture the Passage Bio Products, Passage Bio will be responsible for obtaining and maintaining such license, which license will extend to Catalent for the Manufacturing necessary hereunder.  In the event either Party is put on notice by a Third Party of alleged infringement of such Third Party’s Intellectual Property arising solely from Passage Bio Intellectual Property, as used by Catalent in performing the Manufacturing, such Party will promptly inform the other Party of such notification, including furnishing a copy of such notification (or those portions of the notification directly pertaining to same).  Passage Bio and Catalent together will promptly investigate such notice, and if deemed credible by Passage Bio, seek to resolve the same with such Third Party in a manner that allows for the Manufacture of the Passage Bio Products and exploitation, including the commercial sale, of the same.  [*]

(b)        If Catalent determines that a license to Third Party Intellectual Property (excluding Third Party Intellectual Property of other Passage Bio suppliers) is required for

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Catalent’s use of Catalent Intellectual Property in order to Manufacture the Passage Bio Products, [*].  In the event either Party is put on notice by a Third Party of alleged infringement of such Third Party’s Intellectual Property arising solely from Catalent Intellectual Property, as used by Catalent in performing the Manufacturing, such Party will promptly inform the other Party of such notification, including furnishing a copy of such notification (or those portions of the notification directly pertaining to same).  Catalent and Passage Bio together will promptly investigate such notice, and if deemed credible by Catalent, seek to resolve the same with such Third Party in a manner that allows for the manufacture of the Passage Bio Products and exploitation, including the commercial sale, of the same.  [*].

15.9.    Patent Term Extensions.  As between the Parties, Passage Bio shall have the exclusive right, but not the obligation, to seek Patent Term Extensions (including any supplemental protection certificates and the like available under applicable Laws) in relation to Regulatory Approval of a Passage Bio Products.  Upon Passage Bio’s request, Catalent shall reasonably cooperate with Passage Bio in connection with all such activities.

15.10.  Product Trademarks.  Passage Bio shall in its sole discretion select trademarks under which it shall Commercialize the Passage Bio Products.

ARTICLE XVI

AFFILIATES AND SUBCONTRACTORS

16.1.    Performance by Affiliates.  The Parties recognize that each may perform some or all of its obligations under this Agreement through Affiliates, and additionally, in the case of Passage Bio, through Strategic Partners; provided, however, that each Party shall remain responsible for and be a guarantor of the performance by its Affiliates (or Strategic Partners, as applicable) and shall cause its Affiliates (or Strategic Partners, as applicable) to comply with the provisions of this Agreement in connection with such performance.  Each Party hereby expressly waives any requirement that the other Party exhaust any right, power or remedy, or proceed against an Affiliate (or Strategic Partners, as applicable), for any obligation or performance hereunder prior to proceeding directly against such Party.  Wherever in this Agreement a Party delegates responsibility to Affiliates (or Strategic Partners, as applicable), such Party agrees that such entities may not make decisions inconsistent with this Agreement, amend the terms of this Agreement or act contrary to its terms in any way.

16.2.    Performance by Subcontractors.  Catalent shall have the right to subcontract a limited portion of its rights and obligations hereunder at any given time during the Term, but only after (i) qualifying the applicable subcontractor (in accordance with applicable Laws, Regulatory Acts and the Quality Agreement) and (ii) obtaining Passage Bio’s prior written consent, not to be unreasonably withheld; provided, however, that with respect to each such subcontract, (i) Catalent shall ensure that each of its subcontractors accepts and complies with all applicable terms and conditions of this Agreement (including the Quality Agreement), and Catalent shall remain responsible for, and shall guarantee, the performance of its subcontractors hereunder, and (ii) any such subcontract shall (A) be subject and subordinate to the terms and conditions of this Agreement, (B) contain terms and conditions which are consistent with the terms and conditions

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of this Agreement, (C) not in any way diminish, reduce or eliminate any of Catalent’s obligations under this Agreement, and (D) impose on the subcontractor all applicable obligations under the terms of this Agreement, including the reporting, audit, inspection and confidentiality provisions hereunder, as well as a provision prohibiting such subcontractor from further sublicensing or subcontracting.  For the avoidance of doubt, any act or omission by a subcontractor of Catalent in connection with its performance of the obligations imposed upon Catalent by this Agreement shall be deemed an act or omission by Catalent.  Catalent hereby expressly waives any requirement that Passage Bio exhaust any right, power or remedy, or proceed against a subcontractor, for any obligation or performance hereunder prior to proceeding directly against Catalent.  No sublicense rights or licenses may be extended to any such permitted subcontractors of Catalent.  However, it is acknowledged and understood by the Parties that the license grants provided to Catalent under this Agreement cover the activities relating to the performance of this Agreement of permitted subcontractors of Catalent and other Persons duly engaged by Catalent as contemplated hereunder.  Any references in this Agreement to a “permitted” or “approved” subcontractor of Catalent shall mean those subcontractors of Catalent who satisfy all of the requirements set forth in this Section 16.2.  Catalent’s subcontractors approved by Passage Bio at the outset of this Agreement are listed in Exhibit D.

ARTICLE XVII

RECORDS AND AUDITS

17.1.    Records and Information.

(a)        General.  Catalent shall maintain up-to-date, accurate records of all material activities conducted by or on behalf of it under this Agreement (hereinafter the “Catalent Records”), as well as may be required in order to comply with cGMPs, applicable Laws and Regulatory Acts and the Quality Agreement, and including in respect of all data and other information pertaining to the Manufacture of the Bulk Drug Substance and Drug Product (which records shall include, as applicable, books, records, reports, charts, graphs, comments, computations, analyses, recordings, photographs, computer programs and documentation thereof).

(b)        Access to Records.  Unless otherwise set forth in the Quality Agreement or Scope of Work, Passage Bio and its agents or designees shall have the right, [*], not more than [*] ([*]) [*] per calendar year (unless for cause), to review Catalent Records, at reasonable times, upon written request, relating to the activities undertaken by Catalent under this Agreement.

17.2.    Financial Records; Audits.

(a)        Financial Records.  Catalent and any approved subcontractors shall keep full, true and accurate records and books of account containing all particulars that may be reasonably necessary for the purpose of confirming the accuracy of, and calculating, as applicable, all payments due or sought in relation to the activities under this Agreement and any other records reasonably required to be maintained with respect to Catalent’s obligations under this Agreement, and Catalent shall maintain complete and accurate records in sufficient detail to permit Passage Bio to confirm the accuracy of all costs and any other amounts payable or otherwise reimbursable

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under this Agreement, in each case for a minimum period of [*] ([*]) [*] or such longer period as required by applicable Laws.

(b)        Audits.  Passage Bio shall have a right during the Term and for a period of [*] ([*]) months thereafter to request an audit of Catalent in order to confirm the accuracy of any of the foregoing in this Section 17.2 (an “Audit”); provided, however, that Passage Bio shall only have the right to request such Audit [*] during any given calendar year and the review period of the Audit shall be limited to the preceding [*] ([*]) [*] from the date of the Audit.  Upon the written request by Passage Bio to audit Catalent, Passage Bio shall have the right to engage an independent, conflict-free, internationally recognized accounting firm to perform a review as is reasonably necessary to enable such accounting firm to calculate or otherwise confirm the accuracy of any of the foregoing for the calendar year(s) requested by Passage Bio; provided, that (i) such accountants shall be given access to, and shall be permitted to examine and copy such books and records of Catalent upon [*] ([*]) Business Days’ prior written notice to Catalent, and at all reasonable times on such Business Days, (ii) prior to any such examination taking place, such accountants shall enter into a confidentiality agreement with Catalent reasonably acceptable to Catalent in order to keep all information and data contained in such books and records strictly confidential and shall not disclose such information or copies of such books and records to any Person who is not an employee of such accountants, including Passage Bio, but shall only use the same for the purpose of the reviews and/or calculations which they need to perform in order to determine any amounts being reviewed, and (iii) such accountants shall use commercially reasonable efforts to minimize any disruption to Catalent’s business.  Catalent shall make personnel reasonably available during regular business hours to answer queries on all such books and records required for the purpose of the Audit.  The accountants shall deliver a copy of their findings to each of the Parties within [*] ([*]) Business Days of the completion of the review, and, in the absence of fraud or manifest error, the findings of such accountant shall be final and binding on each of the Parties.  Any underpayments by a Party shall be paid to the other Party within [*] ([*]) Business Days of notification of the results of such inspection.  Any overpayments made by a Party shall be refunded to the other Party within [*] ([*]) Business Days of notification of the results of such inspection.  The cost of the accountants shall be the responsibility of [*] unless the accountants’ calculation shows that [*].

ARTICLE XVIII

REPRESENTATIONS AND WARRANTIES

18.1.    Passage Bio and Catalent Mutual Representations and Warranties.  Passage Bio and Catalent each hereby represent, warrant and covenant to one another as follows, as of the Effective Date:

(a)        Corporate/Company Existence and Power.  It is a company or corporation duly organized, validly existing, and in good standing under the Laws of the jurisdiction in which it is incorporated, and has full company or corporate power and authority and the legal right to own and operate its property and assets and to carry on its business as it is now being conducted and as contemplated in this Agreement, including the right to grant the licenses granted by it hereunder (except as provided in Section 18.1(d)).

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(b)        Authority and Binding Agreement.

(i)         It has the company or corporate power and authority and the legal right to enter into this Agreement and perform its obligations hereunder,

(ii)        It has taken all necessary company or corporate action on its part required to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder, and

(iii)      This Agreement has been duly executed and delivered on behalf of such Party, and constitutes a legal, valid, and binding obligation of such Party that is enforceable against it in accordance with its terms, except as enforcement may be affected by bankruptcy, insolvency or other similar Laws and by general principles of equity.

(c)        No Conflicts.  The execution, delivery and performance of this Agreement by it does not (i) conflict with any agreement, instrument or understanding, oral or written, to which it is a party and by which it may be bound or (ii) violate any Laws of any Governmental Authority having jurisdiction over it.

(d)        All Consents and Approvals Obtained.  Except with respect to Regulatory Approvals for the Development, Manufacturing or Commercialization of the Passage Bio Products or as otherwise expressly noted in this Agreement, (i) all necessary consents, approvals and authorizations of, and (ii) all notices to, and filings by such Party with, all Governmental Authorities and other Persons required to be obtained or provided by such Party as of the Effective Date in connection with the execution, delivery and performance of this Agreement have been obtained and provided, except for those approvals, if any, not required at the time of execution of this Agreement.

(e)        Compliance with Law.  The Parties shall perform all of their respective obligations under this Agreement in full compliance with all applicable Laws.

18.2.    Mutual Covenants; No Debarment.  No Party shall use in any capacity, in connection with its Development, Manufacture or Commercialization of a Drug Product hereunder, any Person who has been debarred pursuant to Section 306 of the FD&C Act (or similar Law outside of the U.S.), or who is the subject of a conviction described in such section, and each Party shall inform the other Party in writing immediately if it or any Person who is performing services for such Party hereunder is debarred or is the subject of a conviction described in Section 306 (or similar Law outside of the U.S.), or if any action, suit, claim, investigation or legal administrative proceeding is pending or, to such Party’s knowledge, is threatened, relating to the debarment of such Party or any Person used in any capacity by such Party in connection with its Development, Manufacture or Commercialization of a Drug Product hereunder.

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18.3.    Additional Representations, Warranties and Covenants by Catalent.  Catalent represents, warrants and covenants to Passage Bio as follows:

(a)        As of the Effective Date, to the best of Catalent’s knowledge, the use of Catalent Intellectual Property in the performance of activities contemplated under this Agreement as of the Effective Date shall not infringe any Intellectual Property of Third Parties.  [*].

(b)        Catalent has complied, and is now complying, with all applicable Law.  Catalent shall hold, as and when necessary during the Term of this Agreement, all licenses, permits and similar authorizations required by any Regulatory Authority for Catalent to perform its obligations under this Agreement.

(c)        The Batches Delivered by Catalent to Passage Bio under this Agreement shall be free of any liens, security interests or other encumbrances.

(d)        All Bulk Drug Substance and Drug Product Manufactured hereunder will be (i) Manufactured with Raw Materials specified and approved by Passage Bio in the Bill of Materials, (ii) performed in accordance with the Quality Agreement and in compliance with the requirements of cGMP and applicable Law, (iii) packaged, labeled, stored and shipped in accordance with the Quality Agreement and Storage Guidelines approved by Passage Bio; (iv) transferred free and clear of any liens or encumbrances of any kind other than arising through or as a result of the acts or omissions of Passage Bio or its agents or representatives; and (v) for Passage Bio Products for which a Passage Bio Approval has occurred, will meet the Product Requirements; provided that, [*].

(e)        All Batch Documentation, including any applicable Certificates of Analysis and Certificates of Compliance, submitted to Passage Bio will be true and accurate.

(f)        Catalent lawfully owns the BWI Facility and controls operations in the BWI Facility and will maintain the Dedicated Clean Room Suite in accordance with cGMPs and in such condition as will allow Catalent to manufacture Batches of Bulk Drug Substance of Passage Bio Products in compliance with cGMPs.

(g)        Catalent is not aware of any issues with respect to its compliance with Collaboration Agreement and, without limiting the foregoing, the Readiness Determination date is expected to be [*].

18.4.    Additional Representations, Warranties and Covenants of Passage Bio.  Passage Bio represents, warrants and covenants to Catalent as follows:

(a)        Passage Bio hereby represents and warrants to Catalent that, as of the Effective Date, that to the best of Passage Bio’s knowledge, the use of Passage Bio Technology in the performance of activities contemplated under this Agreement as of the Effective Date shall not infringe any Intellectual Property of Third Parties.  [*].

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(b)        Passage Bio covenants to Catalent that Passage Bio shall comply with all applicable Laws in its use of the Passage Bio Products as well as Bulk Drug Substance Delivered to it under this Agreement.

18.5.    No Other Representations or Warranties.  EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, NO REPRESENTATIONS OR WARRANTIES WHATSOEVER, WHETHER EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED REPRESENTATION OR WARRANTY WITH RESPECT TO (I) MERCHANTABILITY, NON-INFRINGEMENT, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, (II) THE LIKELIHOOD OF SUCCESS OF ANY APPLICATION FOR MARKETING AUTHORIZATION RELATING TO THE PASSAGE BIO PRODUCTS CURRENTLY IN DEVELOPMENT OR FOR WHICH MARKETING AUTHORIZATION HAS NOT YET BEEN GRANTED EITHER IN THE U.S. OR IN ANY OTHER COUNTRY, OR (III) THE PROBABLE SUCCESS OR PROFITABILITY OF THE PASSAGE BIO PRODUCTS AFTER THE EFFECTIVE DATE ARE MADE OR GIVEN BY OR ON BEHALF OF A PARTY AND, EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, ALL REPRESENTATIONS AND WARRANTIES, WHETHER ARISING BY OPERATION OF LAW OR OTHERWISE, ARE HEREBY EXPRESSLY EXCLUDED.

18.6.    Catalent Indemnity.  Catalent shall defend, indemnify and hold harmless Passage Bio and its Affiliates and Strategic Partners (each, a “Passage Bio Indemnitee”) from and against any and all liabilities, losses, costs and expenses (collectively, “Loss”) suffered or incurred by them in connection with any claim brought by a Third Party that arises or is alleged to arise from or in connection with:

(a)        any breach of representation, warranty or covenant made by Catalent under this Agreement;

(b)        any gross negligence or willful misconduct of Catalent, its Affiliates or any of their respective Representatives with respect to the performance of this Agreement; and

(c)        infringement of any Third-Party Intellectual Property arising from or in connection with the use of the Catalent Intellectual Property or the Catalent Arising IP pursuant to this Agreement; and

(d)        any Third-Party personal injury, illness or death, or loss or damage to Third Party property (excluding Intellectual Property matters) caused by Catalent’s negligent acts or omissions in the Manufacture of a Passage Bio Product.

Except to the extent in each case that the Loss in question resulted from the gross negligence or willful misconduct of, or material breach of this Agreement by, a Passage Bio Indemnitee or any of its or their Representatives.  Catalent’s obligation to defend, indemnify and hold harmless a Passage Bio Indemnitee hereunder is subject to the limitation of liability set forth in Section 19.2(i).

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18.7.    Passage Bio Indemnity.  Passage Bio shall defend, indemnify and hold harmless Catalent and its respective Affiliates (each, a “Catalent Indemnitee”) from and against any and all Loss suffered or incurred by them in connection with any claim brought by a Third Party that arises or is alleged to arise from or in connection with:

(a)        the manufacture, packaging, testing, labeling, handling, distribution, marketing, use of or exposure to Bulk Drug Substance, Drug Product, Passage Bio Materials or Passage Bio Materials, import, export or sale of the Bulk Drug Substance or Drug Product, in any form, including but not limited to, any Third-Party infringement claims based on claims that the Cell Lines, Bulk Drug Substance, Drug Product (or its use or manufacture) infringes such Third Party’s Intellectual Property;

(b)        any breach of representation or warranty made by Passage Bio under this Agreement;

(c)        any Third-Party personal injury, illness or death, or loss or damage to Third Party property (excluding Intellectual Property matters) arising from or in connection with the Passage Bio Products;

(d)        any gross negligence or willful misconduct of Passage Bio, its Affiliates or any of their respective Representatives with respect to the performance of this Agreement; and

(e)        infringement of any Third-Party Intellectual Property arising from or in connection with the use of the Passage Bio Technology pursuant to this Agreement, in a manner Covered by Passage Bio Patents;

except to the extent in each case that the Loss in question resulted from the gross negligence or willful misconduct of, or material breach of this Agreement by, a Catalent Indemnitee or any of its or their Representatives.

18.8.    Indemnification Procedures.  The Person or Persons claiming indemnity under this Article XVIII (the “Indemnified Party”) shall give written notice to the Party from whom indemnity is being sought (the “Indemnifying Party”) promptly after learning of such claim.  The Indemnified Party shall provide the Indemnifying Party with reasonable assistance, at the Indemnifying Party’s expense, in connection with the defense of the claim for which indemnity is being sought.  The Indemnifying Party shall have the right, but not the obligation, to assume and conduct the defense of the claim with counsel of its choice; provided, the Indemnified Party may participate in and monitor such defense with counsel of its own choosing at its sole expense.  The Indemnifying Party shall not settle any claim without (a) first consulting with the Indemnified Party, and (b) obtaining the prior written consent of the Indemnified Party, not to be unreasonably withheld or delayed, unless the settlement involves only the payment of money.  The Indemnified Party shall not settle or compromise any such claim without (x) first consulting with the Indemnifying Party, and (y) obtaining the prior written consent of the Indemnifying Party.  If the Indemnifying Party does not assume and conduct the defense of the claim as provided above, (i) the Indemnified Party may, using counsel of its choice, defend against such claim in any manner the Indemnified Party may deem reasonably appropriate, and (ii) the Indemnifying Party shall

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remain responsible to indemnify the Indemnified Party as provided in this Article XVIII, provided, that in such instance such indemnity shall also include the reasonable and documented legal fees and reasonable out-of-pocket costs incurred by the Indemnified Party in connection with so defending itself in the absence of a defense being provided by the Indemnifying Party.

18.9.    Insurance.

(a)      Catalent shall, at its own cost and expense, obtain and maintain in full force and effect during the Term the following:  (A) Commercial General Liability Insurance with a per occurrence limit of $[*] and an annual aggregate limit of $[*], (B) Products and Completed Operations Liability Insurance with a per occurrence limit of not less than $[*], (C) Workers’ Compensation Insurance with statutory amounts and Employers Liability Insurance with limits of not less than $[*] per accident, and (D) Auto Liability insurance for owned, hired and non-owned vehicles in a minimum amount of $[*] combined single limit.

(b)      Passage Bio shall, at its own cost and expense, obtain and maintain in full force and effect during the Term the following:  (A) Commercial General Liability Insurance with a per occurrence limit of $[*] and an annual aggregate limit of $[*], (B) Products and Completed Operations Liability Insurance with a per occurrence limit of not less than $[*], (C) Workers’ Compensation Insurance with statutory amounts and Employers Liability Insurance with limits of not less than $[*] per accident, and (D) Auto Liability insurance for owned, hired and non-owned vehicles in a minimum amount of $[*] combined single limit.  Passage Bio shall, at its own cost and expense, obtain and maintain in full force and effect during the Term, All Risk Property Insurance, including transit coverage, in an amount equal to the full replacement value of its property while in, or in transit to, or from, a Catalent facility.

(c)      Each Party may self-insure all or any portion of the required insurance as long as, together with its Affiliates, its U.S. GAAP net worth is greater than $[*] or its annual EBITDA (earnings before interest, taxes, depreciation and amortization) is greater than $[*].  If any of the required policies of insurance are written on a claims-made basis, such policies shall be maintained throughout the Term and for a period of at least [*] ([*]) [*] thereafter. Each Party shall be named as an additional insured within the other Party’s products liability insurance policies; provided, that such additional insured status will apply solely to the extent of the insured Party’s indemnity obligations under this agreement.  Waivers of subrogation and additional insured status obligations will operate the same whether insurance is carried through Third Parties or self-insured.  Upon the other Party’s written request from time to time, each Party shall promptly furnish to the other Party a certificate of insurance or other evidence of the required insurance.  Each insurance policy that is required under this Agreement shall be obtained from an insurance carrier with an A.M. Best or equivalent rating of at least A- VII or an S&P rating of A.

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ARTICLE XIX

TERMINATION AND SURVIVAL

19.1.    Term and Termination.

(a)        The term of this Agreement (the “Term”) shall begin on the Effective Date and continue until the earlier of (i) five (5) years from the Readiness Determination (the “Initial Manufacturing Period”), which period may be extended once, at Passage Bio’s option, for an additional five (5) year-period (such option to be exercised upon written notice to be delivered at least [*] ([*]) [*] before the end of the Initial Manufacturing Period) (the “Extended Manufacturing Period”), or (ii) termination in accordance with this Section 19.1.  The Parties may also extend the Term by mutual written agreement.

(b)        Passage Bio shall have the right to terminate this Agreement by giving written notice to Catalent in the event of any of the following:

(i)         For convenience; or

(ii)        One or more Passage Bio Product subject to this Agreement undergoes a market withdrawal or otherwise is determined by Passage Bio or a Regulatory Authority to have material safety risks or sufficient questions regarding efficacy or substantial Manufacturing concerns, in each case leading to the cessation or termination of Development, Manufacture or Commercialization of, or seeking Regulatory Approval for, the Passage Bio Products as a group; or

(iii)       If Passage Bio has, in good faith, exhausted all reasonable remedies to resolve a patent dispute and a court or other competent authority issues a final decision that Passage Bio Technology infringes a valid and enforceable Patent held by a Third Party or grants an injunction that renders Passage Bio unable to sell the Passage Bio Products.

(c)        Either Party hereto shall have the right to terminate this Agreement by giving the other Party written notice in the event of any of the following:

(i)         The bankruptcy or insolvency of the other Party; or

(ii)        If the other Party is in material breach of this Agreement, provided that if the breach is capable of cure (1) the non-breaching Party shall first provide ninety (90) days prior written notice and an opportunity to cure to the breaching Party and (2) in the event the breach is not cured within such ninety (90) day period, the breaching Party has not diligently pursued an acceptable cure and provided a reasonable plan of proposed actions and schedule for completing such cure outside the ninety (90) day period that the non-breaching Party agrees, in its sole discretion, is reasonably likely to allow for cure in a sufficient and timely enough manner; or

(iii)      The other Party is suspended or debarred by FDA or the United States government.

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(iv)       [*].

19.2.    Effect of Termination.

(a)        The Party making notification of termination shall specify in the termination notice the effective date of the termination (the “Termination Date”), which, in the event of termination pursuant to Section 19.1(c)(ii), shall be no sooner than the date that is [*] ([*]) days after notification of the breach if such breach is capable of cure.

(b)        Under any termination of this Agreement, Catalent shall be entitled to payment of (i) [*].

(c)        If this Agreement is terminated by Passage Bio pursuant to Section 19.1(b)(i) or by Catalent pursuant to Sections 19.1(c)(i), (ii), or (iii) on or following the Readiness Determination, the economic consequences will be solely as follows:

(i)         If the Collaboration Agreement is also terminated, Catalent shall be entitled to payment of an early termination fee (the “Termination Fee”) in an amount equal to [*].  Within [*] ([*]) days following the Termination Date, Passage Bio shall make a lump sum payment to Catalent in the amount of the Termination Fee; or

(ii)        Subject to its rights under Section 2.5.4 of Exhibit C, if the Collaboration Agreement is not being terminated, Passage Bio may (1) extend the Termination Date [*] and accept and pay for Delivery of the equivalent number of Batches ordered in [*], (2) extend the Termination Date [*] and accept Delivery of the Batches ordered for [*], or (3) pay an amount equal to the then applicable Supply Pricing multiplied by the number of Batches ordered for the remainder of [*].

(d)        If this Agreement is terminated by Passage Bio pursuant to Sections 19.1(b)(ii) or (iii) following the Readiness Determination, the economic consequences will be solely as follows:

(i)         If the Collaboration Agreement is also terminated, Catalent shall be entitled to a Termination Fee equal to equal to [*] ([*]) [*].  Within [*] ([*]) days following Termination Date, Passage Bio shall make a lump sum payment to Catalent in the amount of the Termination Fee; or

(ii)         If the Collaboration Agreement is not being terminated, Passage Bio may (1) extend the Termination Date to [*] and accept and pay for [*], or (2) pay an amount equal to the then applicable Supply Pricing multiplied by [*].

(e)        If this Agreement is terminated by Passage Bio pursuant to Sections 19.1(c)(i), (iii), or (iv), the economic consequences will be solely as follows:  [*].  In the event that Batches of Bulk Drug Substances are in the process of being Manufactured on the Termination Date, Catalent shall be entitled [*]. Within [*] ([*]) days following the Termination Date, Passage Bio shall make a lump sum payment to Catalent in the amounts owed pursuant to

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Section 19.2(b) and (e).  In the case of a termination governed by this Section 19.2(e), this Agreement shall continue in effect until the payment by Passage Bio of the foregoing lump sum amount.

(f)      If this Agreement is terminated by Passage Bio pursuant to Section 19.1(c)(ii), then, without limiting the remedies provided to Passage Bio under this Agreement and all the rights and remedies available to Passage Bio under applicable Law, (i) Passage Bio shall pay Catalent for Batches of Bulk Drug Substances for the Manufacturing [*], and (ii) in the event that Batches of Bulk Drug Substances are in the process of being Manufactured on the Termination Date, Catalent shall be entitled to [*].

(g)        Under any termination of this Agreement, and in addition to amounts paid pursuant to Sections 19.2(b) through (f), Catalent shall be reimbursed by Passage Bio for all non-cancellable fees and expenses incurred by Catalent and approved by Passage Bio.  Additionally, under any termination of this Agreement, the JSC shall review and approve the disposition of any Raw Materials procured and stored for the Manufacture of Bulk Drug Substance or Drug Product under this Agreement, provided that all Passage Bio Materials and all other Raw Materials that have been paid for by Passage Bio shall be delivered to Passage Bio, at Passage Bio’s expense.

(h)        Payments under Section 19.2(g) shall be made to Catalent within [*] ([*]) days following the submission to Passage Bio of an accounting of all non-cancellable fees and expenses incurred by Catalent and a corresponding invoice.

(i)         Under any termination of this Agreement, Catalent shall refund any deposits for those portions of any outstanding Scope of Work that have not been completed, return any amounts advanced for cancellable costs, and deliver to Passage Bio all inventory of Passage Bio Materials and any other Raw Materials for which Passage Bio has paid; and Passage Bio shall be relieved of all further purchase and payment obligations under this Agreement.

(j)         IN THE EVENT OF CATALENT’S [*]. EXCEPT WITH RESPECT TO DAMAGES AVAILABLE FOR CATALENT’S [*] CATALENT’S LIABILITY TO PASSAGE BIO FOR ANY AND ALL INJURIES, CLAIMS, LOSSES, EXPENSES, OR DAMAGES, WHATSOEVER, ARISING OUT OF OR IN ANY WAY RELATED TO THE ACTIVITIES OF THIS AGREEMENT, FROM ANY CAUSE OR CAUSES INCLUDING, BUT NOT LIMITED TO, BREACH OF CONTRACT, NEGLIGENCE, ERRORS, OMISSIONS OR STRICT LIABILITY, SHALL NOT EXCEED [*] DURING THE TERM (THE “ACTUAL DAMAGES CAP”).  FOR THE SAKE OF CLARITY: (I) EXPENSES INCURRED BY CATALENT PURSUANT [*] OR THIS SECTION FOR THE [*] OR FOR THE [*] SHALL COUNT TOWARDS THE ACTUAL DAMAGES CAP; AND (II) [*] SHALL NOT COUNT TOWARDS THE ACTUAL DAMAGES CAP.  IN THE EVENT THAT THE TERM IS EXTENDED PURSUANT TO [*], THE ACTUAL DAMAGES CAP SHALL BE [*].   IN NO EVENT WILL EITHER PARTY BE LIABLE TO OTHER PARTY FOR ANY INDIRECT, SPECIAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES (INCLUDING, BUT NOT LIMITED TO, DAMAGES BASED UPON LOST PROFITS, RELIANCE OR

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EXPECTATION, BUSINESS INTERRUPTION, LOST BUSINESS, OR LOST SAVINGS) FOR ANY ACTS OR FAILURE TO ACT UNDER THIS AGREEMENT, INCLUDING ANY TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH ITS TERMS, EVEN IF THE PARTY HAS BEEN ADVISED OF THE POSSIBLE EXISTENCE OF SUCH DAMAGES.  The limitations of liability reflect the allocation of risk between the Parties.  The limitations specified in this Section 19.2(i) will survive and apply even if any limited remedy specified in this Agreement is found to have failed of its essential purpose.

(k)        In the event of termination or expiration of this Agreement, in addition to any rights or obligations that by their terms are intended to survive the Term of this Agreement, the following provisions shall survive such termination: Article XI, Section 12.1, Article XIV, Article XV (except for any licenses that are granted solely for the duration of the Term), Sections 18.3 through 18.9, Section 19.2, Article XX, Article XXI, and Exhibit A.  So long as the Collaboration Agreement remains in effect following the termination or expiration of this Agreement, Passage Bio shall continue to be obligated to pay the [*].  Termination or expiration of this Agreement for any reason will not relieve the Parties of any liability accruing prior thereto and will be without prejudice to the rights and remedies of any Party with respect to any antecedent breach of the provisions of this Agreement.

(l)         Each Party acknowledges that, in the event of termination and unless otherwise agreed to by Passage Bio, Catalent shall promptly return or destroy, as directed by Passage Bio, any Passage Bio Materials as well as Passage Bio Technology, and each Party shall promptly return to the other Party or destroy (as such other Party may direct) all data and documents in any form comprising or containing any Confidential Information of the other Party, except that each Party may retain: (a) one copy of the other Party’s Confidential Information in secure legal archives for evidentiary purposes only and (b) a copy of computer records or files containing such Confidential Information that have been created pursuant to automatic archiving or back-up procedures that cannot reasonably be deleted (collectively, “Retained Copies”), provided, however, that any such Retained Copies will be kept confidential by the Receiving Party in accordance with the terms and provisions of this Agreement for as long as the Receiving Party is in possession of the Retained Copies.  In addition, Catalent shall provide a written certification to Passage Bio that (i) Catalent and its subcontractors have satisfied their confidentiality and recording obligations in all respects and (ii) all Passage Bio Technology and copies thereof on any media in possession of Catalent, any of its employees or contractors have been destroyed or returned to Passage Bio, such certification to be signed by a duly authorized officer of Catalent.

(m)       Upon termination or during the notice period regarding termination of this Agreement, Catalent shall provide reasonable assistance to Passage Bio with respect to the transfer to Passage Bio or another manufacturer of the then-current Manufacturing process for the Passage Bio Product.  [*].

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ARTICLE XX

DISPUTE RESOLUTION

20.1.    Disputes.  The Parties recognize that, from time to time, disputes may arise as to certain matters which relate to a Party’s rights and/or obligations in connection with this Agreement.  It is the objective of the Parties to establish procedures to facilitate the resolution of disputes arising under this Agreement in an expedient manner by mutual cooperation and without resort to litigation.  To accomplish this objective, the Parties agree to follow the procedures set forth in this Article XX to resolve any controversy or claim arising out of, relating to or in connection with this Agreement.

20.2.    Dispute Resolution.

(a)      In the event of a dispute under this Agreement, the Parties will refer the dispute to their respective designated executive officers for discussion and resolution, who shall attempt in good faith to resolve such dispute.  If such executive officers are unable to resolve such a dispute within [*] ([*]) days of the dispute being referred to them, either Party shall be free to initiate the binding arbitration proceedings outlined in Section 20.2(b).

(b)      If such executives cannot reach a resolution of the dispute within a reasonable time, then such dispute shall be resolved by binding alternative dispute resolution in accordance with the then existing commercial arbitration rules of International Institute for Conflict Prevention and Resolution, 30 East 33rd Street, 6th Floor, New York, NY 10016.  Arbitration shall be conducted in the jurisdiction of the defendant Party, in the English language. Any disputes related to Intellectual Property shall not be subject to arbitration.

20.3.    Patent and Trademark Dispute Resolution.  Any dispute, controversy or claim relating to the scope, validity, enforceability or infringement of any Patent rights covering the Manufacture, use or sale of any product or technology or of any trademark rights relating to any product or technology shall be submitted to a court of competent jurisdiction or patent office in which such Patent or trademark rights were granted or arose.

20.4.    Injunctive Relief.  Nothing herein may prevent a Party from seeking a preliminary injunction or temporary restraining order, in any court of competent jurisdiction, so as to prevent any confidential information from being disclosed in violation of an applicable confidentiality agreement entered into by the Parties or to prevent the threat of imminent harm.

20.5.    Continued Performance.  Unless otherwise agreed in writing, the Parties will continue to provide service and honor all other commitments under this Agreement during the course of dispute resolution pursuant to the provisions of Section 20.2, except as provided for in Section 2.4 or to the extent such commitments are the subject of such dispute, controversy or claim.

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ARTICLE XXI

MISCELLANEOUS

21.1.    Assignment; Binding Effect.  This Agreement shall not be assignable by either Party hereto without the prior written consent of the other Party, provided that each Party may assign or otherwise transfer this Agreement, without the consent of the other Party (i) to any of its Affiliates, or (ii) in connection with the transfer or sale of all or substantially all of its business or assets related to this Agreement, or (iii) in connection with a merger, acquisition or other similar transaction involving the assigning Party.

21.2.    Expenses; Attorneys’ Fees.  Except as expressly specified herein, each Party shall bear its own expenses with respect to this Agreement.  The prevailing Party in any dispute shall be entitled to recover attorneys’ fees and costs.

21.3.    Notices.  All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given (a) when received if delivered personally, (b) when transmitted by e-mail (with confirmation of successful transmission and with a duplicate copy directed pursuant to the methods set forth in (c) or (d) below), (c) upon receipt, if sent by registered or certified mail (postage prepaid, return receipt requested) and (d) the day after it is sent, if sent for next-day delivery to a domestic address by overnight mail or courier, to the Parties at the following addresses:

If to Passage Bio         Passage Bio, Inc.

Attn: CEO

1200 Market Street, Suite 2815

Philadelphia, Pennsylvania 19103

Telephone: (267) 866-0317

Email: [*]

with a copy to:

Passage Bio, Inc.

Attn: General Counsel

1200 Market Street, Suite 2815

Philadelphia, Pennsylvania 19103

Telephone:

Email: [*]

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If to Catalent               Catalent Maryland, Inc.

Attn: President – Gene Therapy

801 West Baltimore Street, Suite 302

Baltimore, Maryland 21201

Telephone: 410-975-4050

Email: [*]

with a copy to:

Catalent Pharma Solutions, LLC

14 Schoolhouse Road

Somerset, NJ 08873 USA

Attn: General Counsel (Legal Department)

E-Mail: [*]

Facsimile: +1 (732) 537-6491

Mr. Andrew L.  Strong

Pillsbury Winthrop Shaw Pittman, LLP

909 Fannin, Suite 2000

Houston, Texas 7701

Email: [*]

provided, however, that if any Party shall have designated a different address by notice to the others, then to the last address so designated.

21.4.    Severability.  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, unenforceable or against its regulatory policy such determination shall not affect the enforceability of any others or of the remainder of this Agreement; and in connection with such term, provision, covenant or restriction of this Agreement which is held invalid, void, unenforceable or against regulatory policy, the Parties shall negotiate in good faith with a view to the substitution therefor of a suitable and equitable solution in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid term, provision, covenant or restriction and, absent any agreement by the Parties, such court of competent jurisdiction or other authority shall substitute therefore such term, provision, covenant or restriction as is legal, valid and enforceable but otherwise similar to the invalid term, provision, covenant or restriction.

21.5.    Entire Agreement.  This Agreement may not be amended, supplemented or otherwise modified except by an instrument in writing signed by the Parties hereto.  This Agreement, inclusive of the Quality Agreement, LOI, and Collaboration Agreement, all which are incorporated by reference, contain the entire agreement of the Parties hereto with respect to the Manufacture of the Passage Bio Products, superseding all negotiations, prior discussions and preliminary agreements made prior to the date hereof.

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21.6.    Waiver.  The failure of any Party to enforce any condition or part of this Agreement at any time shall not be construed as a waiver of that condition or part, nor shall it forfeit any rights to future enforcement thereof.  No waiver of any provision of this Agreement will be valid unless made in writing and signed by the Party to which such performance is due.

21.7.    Governing Law; Jurisdiction; Venue.  This Agreement (including any claim or controversy arising out of or relating to this Agreement) shall be governed and construed by the Laws of the State of Delaware without regard to conflict of law principles that would result in the application of any Law other than the Laws of the State of Delaware.  The Parties hereto agree that a final judgment in any such action shall be conclusive and, notwithstanding anything to the contrary, may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law.  The United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Agreement.

21.8.    Further Assurances.  In order to carry out the provisions of this Agreement, give effect to the transactions contemplated hereby, and to defend claims or enforce rights with respect to Third Parties, the Parties shall from time to time at the reasonable request and expense of the other Party, furnish the other Party such further information, assurances or access, execute and deliver such additional documents, instruments and conveyances, and take such other actions and do such other things, as may be reasonably necessary or appropriate.

21.9.    Headings.  The headings of the Articles, Sections, subsections, Schedules and Exhibits of this Agreement are inserted for convenience only and shall not be deemed to constitute a part hereof.

21.10.  Counterparts.  This Agreement may be signed in any number of counterparts, each and every one of which shall be considered one and the same agreement and shall become effective when a counterpart hereof shall have been signed by each of the Parties and delivered to each of the other Parties, notwithstanding variations in format or file designation which may result from the electronic transmission, storage and printing of copies of this Agreement from separate computers or printers.  Facsimile signatures and signatures transmitted via PDF shall be treated as original signatures.

21.11.  Construction.  The language in all parts of this Agreement shall be construed, in all cases, according to its fair meaning.  The Parties acknowledge that each Party and its counsel have reviewed and revised this Agreement and that any rule of construction to the effect that any ambiguities are to be resolved against a drafting Party shall not be employed in the interpretation of this Agreement.

21.12.  Interpretation.

(a)      When a reference is made in this Agreement to an Article, Section, Exhibit, Schedule, Recital or Preamble, such reference is to an Article, Section, Exhibit, Schedule, Recital or Preamble of or to this Agreement unless otherwise indicated.

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(b)      The words “hereof,” “herein,” “hereto” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole, including the Exhibits and Schedules, and not to any particular provision of this Agreement.

(c)      The terms defined in the singular have a comparable meaning when used in the plural, and vice versa.

(d)      Words of one gender include the other gender.

(e)      References to a Person are also to its successors and permitted assigns.

(f)      The term “Dollars” and “$” means United States Dollars.

(g)      The word “including” means “including without limitation” and the words “include” and “includes” have corresponding meanings.

(h)      References herein to an agreement, law or regulation include such agreement, law or regulation as amended, restated, supplemented, or otherwise modified from time to time unless otherwise specified.

21.13.  Relationship of the Parties.  This Agreement and the Collaboration Agreement are not intended by the Parties to constitute or create a joint venture, pooling arrangement, partnership, or formal business organization of any kind, and the rights and obligations of the Parties shall be only those expressly set forth herein and therein.  No Party will have any right, power or authority, nor will they represent themselves as having any authority to assume, create or incur any expense, liability or obligation, express or implied, on behalf of another Party, or otherwise act as an agent for another Party for any purpose.

* * * * * * * * * * *

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their respective duly authorized officers as of the date first above written.

PASSAGE BIO, INC.
By:	/s/ Bruce Goldsmith
Name:	Bruce Goldsmith, Ph.D.
Title:	CEO

CATALENT MARYLAND, INC.
By:	/s/ Pete Buzy
Name:	Pete Buzy
Title:	President – Gene Therapy

[Signature page to Development and Clinical and Commercial Supply Agreement]

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EXHIBIT A

DEFINITIONS

This Exhibit A provides agreed upon definitions applicable to the Parties for purposes of this Agreement.  All capitalized terms used in this Agreement without definition shall have the meanings ascribed thereto in this Exhibit A or the Collaboration Agreement, as applicable.

1.1       Definitions.

“Additional Raw Materials Cost” means the costs of the Raw Materials procured by Catalent associated with the re-Manufacture or Reprocessing of a Failed Batch or Defective Batch of Drug Product or Bulk Drug Substance under Section 8.6, which costs are comprised of (a) with respect to Drug Product, the cost of any additional Raw Materials necessary for the supply of any substitute Bulk Drug Substance that must be replaced therefor and the cost of any other additional Raw Materials necessary for Manufacture of the new Batch or to Reprocess the current Batch of Drug Product; and (b) with respect to Bulk Drug Substance, the cost for the supply of Raw Materials necessary to Manufacture a new Batch or Reprocess the current Batch of Bulk Drug Substance.  Additional Raw Materials Cost does not include the costs for Passage Bio Materials.

“Affiliate” means, with respect to Passage Bio or any Third Party, any corporation, firm, partnership or other entity that controls, is controlled by or is under common control with such entity; and with respect to Catalent, CPS or any other corporation, firm, partnership or other entity that controls, is controlled by or is under common control with CPS.  For the purposes of this definition, “control” means the ownership of at least 50% of the voting share capital of an entity or any other comparable equity or ownership interest.

“Batch” means a specific quantity of any Passage Bio Products Bulk Drug Substance or Drug Product, as applicable in the given context, that is intended to have uniform character and quality within specified limits and is produced according to a single cycle of Manufacture.

“Batch Record” means a manufacturing record for a Batch generated by Catalent concurrently with the production of a specific Batch such that successive steps in such processes are documented.

“Bill of Materials” shall mean the list of Raw Materials prepared by Catalent and approved by Passage Bio necessary for and to be consumed or used during the Manufacture of Batches of Bulk Drug Substance or Drug Product.

“Bio-Park Facility” shall mean the product development and clinical supply manufacturing facility located at 801 West Baltimore Street, Baltimore, Maryland.

“BLA” means a Biologics License Application (or successor or equivalent application) (including all supplements, amendments, and modifications thereof) for authorization for

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marketing of a biologic product, as defined in the applicable Laws and regulations and filed with applicable Regulatory Authorities.

“Bulk Drug Substance” means the active pharmaceutical ingredients of the Passage Bio Products being Manufactured by Catalent in bulk form and prior to any formulation, filling, and finishing.

“Business Day” means a day other than a Saturday, Sunday, or other day on which commercial banks in New York are authorized or required by Law to be closed for business.

“BWI Facility” shall mean the commercial scale biomanufacturing facility located at 7555 Harmans Road, Harmans, Maryland.

“Catalent Intellectual Property” means any Intellectual Property owned or Controlled by Catalent prior to the Effective Date, or otherwise arising outside the performance of this Agreement, without reliance on or reference to any Passage Bio Confidential Information.

“Cell Line” means the cell line licensed to or used by Passage Bio for the Manufacture of the Passage Bio Products and any derivatives, modifications or progeny thereof.

“Certificate of Analysis” means a written certificate issued by Catalent listing the items tested, the Specifications, testing methods and test results for a specific Batch.

“Certificate of Compliance” means a written certificate issued by Catalent, in a form approved by the Parties and executed by Catalent’s quality assurance department, certifying that each Batch has been Manufactured in accordance with and satisfies the Product Requirements.

“Commercialize,” “Commercializing” or “Commercialization” means all activities directed to the marketing (whether through direct, in-person, electronic or other marketing channels), promotion, selling or offering for sale of a product for an indication, including planning, market research, pre-marketing activities undertaken in preparation for launch, advertising, educating, marketing, promoting, importing, exporting, distributing and post-marketing safety surveillance and reporting.  For clarity, “Commercialize,” “Commercializing” or “Commercialization” shall not include any activities included within the Manufacturing or Development of a product.

“Control,” “Controls” or “Controlled” means, when used in reference to intellectual property, other intangible property, or materials, that a Party owns or has a license or sublicense to such intellectual property, other intangible property or materials, and has the ability to grant a license or sublicense or other right to use such intellectual property, other intangible property or materials, as applicable, as provided for herein, without (i) requiring the consent of a Third Party or (ii) violating the terms of any agreement or other arrangement with any Third Party.

“Cover,” “Covering” or “Covered” means, with respect to a country in the Territory, but for a license granted under a valid claim of a Patent, the use or sale, or offer for sale in such country

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of the subject matter at issue would infringe such valid claim, or in the case of a Patent that is a Patent application, would infringe a valid claim in such Patent application if it were to issue as a Patent.

“Dedicated Clean Room Suite” means clean room suite at the BWI Facility (the suite and associated corridors being approximately 5,000 sq. ft.) that will be dedicated to Passage Bio for Manufacturing of Passage Bio Products.

“Defect” means, with respect to a Batch, a defect that causes the Batch to fail to conform to the Specifications or otherwise cannot be used due to the failure of the Batch to meet the Product Requirements, and which is (a) discovered by Passage Bio upon review of the Batch Documentation or Actual Passage Bio Receipt of the Batch or (b) a Latent Defect.

“Develop,” “Developing” or “Development” means any and all activities relating to research, non-clinical, preclinical and clinical trials, toxicology testing, statistical analysis, publication and presentation of research and study results and reporting, process and analytical development, analytical testing, preparation and submission of applications (including any CMC-related information) for regulatory approval of a product, necessary or reasonably useful or otherwise requested or required by a Regulatory Authority as a condition or in support of obtaining or maintaining all regulatory approvals for such product.  For clarity, “Development” shall not include any activities included within the Manufacturing of a product.

“Drug Master File” means submissions to FDA (or its equivalent) used to provide confidential, detailed information about facilities, processes, or articles used in the manufacturing, processing, packaging, and storing of human drug products formulated mixture of the Bulk Drug Substance and any excipients, finished and filled in final marketed dosage form.

“Drug Product” means the formulated mixture of the Bulk Drug Substance and any excipients, finished and filled in final marketed dosage form.

“EMA” means the European Medicines Agency or its successor.

“EU” means the countries of the European Union as it exists at any time.

“FD&C Act” means the U.S. Federal Food, Drug and Cosmetic Act, as amended, and the regulations promulgated thereunder.

“FDA” means the U.S. Food and Drug Administration or its successor.

“Fiscal Year” or “FY” means the calendar year commencing on January 1 and concluding on December 31.

“GAAP” means United States generally accepted accounting principles, as in effect from time to time, consistently applied.

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“Good Manufacturing Practices” or “cGMPs” means the then-current good manufacturing practices required by (i) the FDA, as set forth in the FD&C Act and the regulations promulgated thereunder, for the manufacture and testing of pharmaceutical materials, including the provisions of 21 C.F.R. Parts 210 and 211, (ii) European Commission Directive 91/356/EEC, as amended by Directive 2003/94/EC, and 91/412/EEC respectively, as well as “The rules governing medicinal products in the European Union,” Volume 4, Guidelines for good manufacturing practices for medicinal products for human and veterinary use, and (iii) the principles detailed in the ICH Q7A guidelines, in each case, including all applicable rules, regulations, orders and guidance applicable thereto, and as each may be amended from time to time, and any successor thereto.

“Governmental Authority” means any multinational, federal, state, local, municipal or other governmental authority of any nature (including any governmental division, prefecture, subdivision, department, agency, bureau, branch, office, commission, council, court or other tribunal), in each case, having jurisdiction over the applicable subject matter in the Territory.

“Improvements” means all discoveries, Inventions, developments, modifications, innovations, updates, enhancements or improvements to Technology (whether or not protectable under Patent, trademark, copyright or similar Laws) that are conceived, discovered, invented, developed, created, made or reduced to practice in the performance of the Parties’ obligations under this Agreement.

“IND” means both the application of an Investigational New Drug Application to the FDA and its equivalent in other countries and their Regulatory Authorities, such as a clinical trial application or a clinical trial exemption, the filing of which is necessary to commence or conduct clinical testing of a pharmaceutical product in humans in such jurisdiction.

“Invention” means any subject matter invented during the Term, whether or not recorded or recognized as such during the Term, by or on behalf of a Party or one or more of the Parties jointly, as determined in accordance with the provisions of U.S. patent Law governing inventions, in the performance of activities under this Agreement.

“Intellectual Property” means all information, data, works of authorship, discoveries, concepts, Technology, methods, Know-How, designs, processes, software, algorithms and inventions, whether patentable or not, including, without limitation, those that could be the subject of patent, copyright, industrial design, trade secret or other forms of protection; including, without limitation, all (i) Patents; (ii) trademark applications, registrations, service marks, domain names and all renewals and extensions thereto; and (iii) copyright applications and registrations and all restorations, reversions, renewals and extensions thereof.

“Joint Steering Committee” or “JSC” has the same meaning ascribed to it in the Collaboration Agreement.

“Know-How” means any proprietary data, results, material(s), and nonpublic information of any type whatsoever, in any tangible or intangible form, including know-how, trade secrets,

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practices, techniques, methods, processes, inventions, discoveries, developments, specifications, formulations, formulae, materials or compositions of matter of any type or kind (patentable or otherwise), software, algorithms, marketing reports and plans, market research, expertise (including experts’ information), test data (including pharmacological, biological, chemical, biochemical, toxicological, preclinical and clinical test data), analytical and quality control data, stability data, other study data and procedures.

“Latent Defect” means a Defect that is not discoverable upon inspection and analysis of the Batch Documentation or upon inspection using commercially reasonable efforts at the time of Actual Passage Bio Receipt, but is discovered at a later time.

“Laws” means, with respect to Passage Bio, all laws, statutes, rules, regulations, directives, decisions, ordinances, guidelines and other pronouncements of any Governmental Authority currently in effect or enacted or promulgated during the Term, and as amended from time to time, of each jurisdiction in which the Passage Bio Product is produced, marketed, distributed, used or sold; and with respect to Catalent all laws, statutes, rules and regulations, currently in effect or enacted or promulgated during the Term, and as amended from time to time, of the jurisdiction in which Catalent Manufactures the Passage Bio Product, including cGMP.

“Manufacture” or “Manufacturing” means all activities, whether performed by a Party or a Third Party designee of a Party, related to the manufacturing of a product, or any ingredient thereof, including document preparation, material acquisition/release, GMP suite activation, manufacturing for clinical use, formulation, filling and finishing activities, in process and product testing, release of product, quality assurance activities related to manufacturing and release of product, handling and storage of product and ongoing stability tests, packaging and labeling, and regulatory activities related to any of the foregoing.

“Manufacturing Configuration” means the Manufacturing process configuration for each Passage Bio Product involving [*], such configuration which may change from time to time.

“Manufacture/Release Period” means the period of time required for the manufacture, release and Approval of a Batch of Passage Bio Bulk Drug Substance, commencing on the first day of Manufacturing of the Batch and concluding on the Delivery of the Batch.

“Marketing Authorization” means an approval and authorization, including any renewals thereof, of the applicable Regulatory Authority necessary for the manufacture, packaging, marketing, storage, import, export, transport, distribution, sale and use of a pharmaceutical or biologic product in any country of the Territory.

“Marketing Authorization Application” or “MAA” means an application to the appropriate Regulatory Authority for approval to sell a Drug Product (but excluding Pricing Approval) in any particular country or regulatory jurisdiction, including such application filed with the EMA pursuant to the Centralized Procedure or with the applicable Regulatory Authority of a country in accordance with such country’s national approval procedure.

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“Maximum Upstream Runs” means the maximum number of upstream production runs that can be completed in the Dedicated Clean Room Suite during a Dedicated Manufacturing Period and is based on [*] that the Parties mutually agree can be safely and efficiently operated in the Dedicated Clean Room Suite.

“Minimum Annual Threshold” means the minimum annual revenue that must be paid by Passage Bio to Catalent for the Manufacture of Batches of Bulk Drug Substance of Passage Bio Products in the Dedicated Clean Room Suite.

“Passage Bio Products” means the Passage Bio live transforming AAV-delivered therapeutics for the treatment of rare monogenic central nervous system diseases and, in the future, other therapeutic products which Passage Bio or its designated Affiliates or Strategic Partners may develop, and other additional products that are the subject of a Passage Bio Supply Agreement or an Additional Manufacture and Supply Agreement.

“Passage Bio Intellectual Property” means Passage Bio Patents, Passage Bio Technology and any Intellectual Property owned or Controlled by Passage Bio on or prior to the Effective Date, or otherwise arising outside the performance of this Agreement, without reliance on or reference to any Catalent Confidential Information.

“Passage Bio Materials” means any or all of the materials, samples, compounds, including biological materials, master cell bank, working cell bank and/or research cell bank, the Cell Line, and the DNA plasmids, as made available to Catalent by or on behalf of Passage Bio or its successor in interest, as well as all information provided by or on behalf of Passage Bio concurrently therewith that specifically relates thereto.

“Passage Bio Patents” means any Patent that is owned or Controlled by Passage Bio as of the Effective Date or comes under the ownership or Control of Passage Bio during the Term and (i) is necessary for or useful to the Development, Manufacture, use or Commercialization of Passage Bio Products or (ii) relates to any Passage Bio Products.  For purposes of this definition, Passage Bio shall not be deemed to Control any Patent that is licensed by Catalent to Passage Bio pursuant to this Agreement.

“Passage Bio Technology” means (i) any present and future Technology that is owned or Controlled by Passage Bio and necessary for or useful to the Development, Manufacture or Commercialization of Passage Bio Products and (ii) any Technology that is developed or obtained by or on behalf of Passage Bio related to Passage Bio Products, or the Manufacture of any of the foregoing, (a) prior to the Effective Date, or (b) independent of this Agreement and without the use of the Confidential Information of Catalent.  Passage Bio Technology specifically includes any Passage Bio Materials.  For purposes of this definition, Passage Bio shall not be deemed to Control any Technology that is licensed by Catalent to Passage Bio pursuant to this Agreement.

“Patent Term Extension” means any term extensions, supplementary protection certificates, Regulatory Exclusivity and equivalents thereof offering Patent protection beyond the initial term with respect to any issued Patents.

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“Patents” means (i) all national, regional and international patents and patent applications, including provisional patent applications, (ii) all patent applications filed either from such patents, patent applications or provisional applications or from an application claiming priority from either of these, including divisionals, continuations, continuations-in-part, provisionals, converted provisionals and continued prosecution applications, (iii) any and all patents that have issued or in the future issue from the foregoing patent applications ((i) and (ii)), including utility models, petty patents and design patents and certificates of invention, (iv) any and all extensions or restorations by existing or future extension or restoration mechanisms, including revalidations, reissues, re-examinations and extensions (including any supplementary protection certificates and the like) of the foregoing patents or patent applications (i), (ii), and (iii)) and (v) any similar rights, including so-called pipeline protection or any importation, revalidation, confirmation or introduction patent or registration patent or patent of additions to any of such foregoing patent applications and patents.

“Person” means any corporation, limited or general partnership, limited liability company, joint venture, trust, unincorporated association, governmental body, authority, bureau or agency, any other entity or body, or an individual.

“Pricing Approval” means the approval, agreement, determination or decision from a Governmental Authority establishing the price and/or reimbursement for a Passage Bio Product for sale in a given country of the Territory, as required by applicable Laws in such country or other regulatory jurisdiction prior to the sale of the Passage Bio Product in such country or regulatory jurisdiction.

“Process Inherent Issues” means failures for which the Primary Cause is Passage Bio’s process technology, instructions, setpoints and/or Specifications for producing Batches of Bulk Drug Substance or Passage Bio Products, where such failures are inconsistent with historical trends of successful Batches or do not enable a transferable and suitable Manufacture of Batches of Bulk Drug Substance or Passage Bio Products to meet the Specifications.

“Procurement Costs” means the actual price paid by Catalent for the procurement of materials and supplies used in the Manufacture of Passage Bio Products.  Procurement Costs do not include the Procurement Fee.

“Procurement Fee” means the fee that is paid to Catalent for its services in the procurement of materials and supplies used in the Manufacture of Passage Bio Products (other than Passage Bio Materials), such fee being a certain percentage of the Procurement Costs.  [*]

“Product Approval” means, with respect to a Drug Product, the approval of a Governmental Authority necessary for the marketing and sale in a given country or regulatory jurisdiction, which may include the approval of an MAA (but shall not include any Pricing Approvals).

“Product Requirements” shall mean, with respect to each Batch Manufactured pursuant to this Agreement, that such Batch shall: (a) conform to the applicable Specifications; (b) be

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manufactured, packaged, labeled, handled, and stored in compliance with applicable Laws and the Quality Agreement; (c) contain only Raw Materials that have been used, handled or stored in accordance with the Storage Guidelines, applicable Laws and the Quality Agreement; and (d) not be adulterated or misbranded within the meaning of the FD&C Act, or within the meaning of any applicable state or municipal law in which the definitions of adulteration or misbranding are substantially the same as those contained in the FD&C Act, as such Act and such law are constituted and effective at the time of delivery and will not be an article which may not, under provisions of Sections 404, 505 or 512 of the FD&C Act, be introduced in interstate commerce.

“Purchase Order” means a written or electronic order form submitted by Passage Bio in accordance with the terms of this Agreement to Catalent authorizing the manufacture and supply of Bulk Drug Substance and/or Drug Product.

“Quality Agreement” means a detailed document specifying the quality and regulatory procedures and responsibilities of the Parties with respect to the Manufacture of the Passage Bio Products, entered into pursuant to Section 6.1 by and between Passage Bio and Catalent.  All references to Quality Agreement herein shall refer to the Quality Agreement in effect at the time of the Manufacture of the Passage Bio Products.

“Raw Materials” means all physical materials to be consumed in the Manufacture of Bulk Drug Substance or Drug Product or incorporated into Bulk Drug Substance or Drug Product or the packaging thereof, including process consumables, packaging materials, and components needed for the Manufacture of Bulk Drug Substance and/or Drug Product.

“Readiness Determination” has the meaning ascribed to it in the Collaboration Agreement.

“Regulatory Acts” means any rules, regulations, directives, decisions, ordinances, guidelines and other pronouncements of any Regulatory Authority.

“Regulatory Approvals” means, with respect to a Drug Product or a facility for the Manufacture of a Drug Product or component thereof, all filings and approvals (including, as applicable, IND filings, Product Approvals, Pricing Approvals, establishment license approvals and, in each case any supplements and amendments thereto), licenses, registrations or authorizations of any Governmental Authority necessary to obtain Marketing Authorization for or to Develop, Manufacture or Commercialize a Drug Product, as applicable, in the Territory.

“Regulatory Authority” means, any applicable Governmental Authority involved in granting Regulatory Approval in the Territory. In the United States, this includes the FDA and in the European Union, this includes the EMA.

“Regulatory Exclusivity” means, with respect to Drug Products, any exclusive marketing rights or data exclusivity rights conferred by any Governmental Authority with respect to the Drug Products other than a Patent right, including in the European Union, Regulation (EC) No 726/2004 and Directive 2001/83/EC (as amended).

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“Regulatory Materials” means, with respect to Drug Products or the facilities used to Manufacture Drug Products or a component thereof, as applicable, regulatory applications, submissions, notifications, communications, correspondence, registrations, Regulatory Approvals and/or other filings made to, received from or otherwise conducted with a Regulatory Authority that are necessary in order to obtain Marketing Authorization for or to Develop, Manufacture or Commercialize a Drug Product or to use a facility for the Manufacture thereof, for or in a particular country or regulatory jurisdiction, including all rights under the foregoing, including rights to clinical data and Regulatory Exclusivity.  Regulatory Materials include BLAs, INDs, MAAs, presentations, responses, applications for Product Approvals and granted Product Approvals.

“Regulatory Warning Notices” means Form FDA 483 Inspectional Observations, Establishment Inspection Reports, warning letters, or their equivalents and any similar correspondences received from the FDA or any other Governmental Authority having jurisdiction over a Drug Product or any facility for the Manufacture of a Drug Product or component thereof.

“Representatives” means a Party’s (and its Affiliates’, and additionally, in the case of Passage Bio, its Strategic Partners’) directors, officers, full-time employees, part-time employees, temporary workers, subcontractors, consultants, agents, permitted sublicensees (if any) and legal, technical, and business advisors.

“Reprocess” or “Reprocessing” means introducing a Batch back into, and repeating appropriate manipulation steps that are part of, the established Manufacturing process.

“Scope of Work” means the work stages, schedules and budgets which are attached to this Agreement under Exhibit B relative to the Development Services, cGMP Manufacturing and Process Performance Qualification for the Passage Bio Products in the Dedicated Clean Room Suite used for the Manufacture of the Passage Bio Products.

“Specifications” shall mean any and all chemical, physical, microbiological and biological test methods and any specifications required for release by Catalent to Passage Bio of Passage Bio Products that have been predetermined and mutually approved by the Parties pursuant to an applicable Scope of Work.

“Storage Guidelines” means those procedures (based on information provided by Passage Bio), as approved by Passage Bio in writing, methods and conditions for packaging (including, as applicable, use of digital artwork files or labels provided by Passage Bio), preserving, monitoring and storing all Passage Bio Materials, Raw Materials, Bulk Drug Substance and/or Drug Product, as set forth in the Quality Agreement or as otherwise mutually agreed to in writing by the Parties.

“Strategic Partners” means the individuals or entities that are part of a strategic partnership, which is a relationship between two commercial enterprises formalized by one or more business contracts.  For the purposes of this Agreement, [*].

“Technology” means all inventions, methods, techniques, trade secrets, copyrights, Know-How, knowledge, data, developments, discoveries, documentation, experience, formulas

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and formulations, proprietary information, processes, test procedures, hardware, software and other intellectual property of any kind, whether or not protectable under patent, trademark, copyright or similar Law.

“Territory” means the U.S. and [*], and any other country that the Parties agree in writing to add this definition of Territory in an amendment to this Agreement, but excluding any countries that are targeted by the comprehensive sanctions, restrictions or embargoes administered by the United Nations, European Union, United Kingdom, or the United States. Catalent shall not be obliged to Process Products for sale in any of such countries if it is prevented from doing so, or would be required to obtain or apply for special permission to do so, due to any restriction (such as an embargo) imposed on it by any governmental authority, including those imposed by the U.S. Department of the Treasury’s Office of Foreign Assets Control.

“Third Party” means any Person other than the Parties.

“U.S.” means the United States of America and its possessions and territories.

1.2       Additional Definitions. The following terms have the meanings set forth in the corresponding Sections of this Agreement:

Defined Term	Section
Action	18.3(c)
Actual Damages Cap	19.2(i)
Actual Passage Bio Receipt	8.2(b)
Additional Batches	2.5.4, Exhibit C
Arising IP Patents	15.7
Auditing Party	11.9
Audits	17.2(b)
Batch Documentation	9.2(d)
Batch Investigation	7.1(c)
Batch Processing	7.1(a)
Binding Orders Period	2.5.2, Exhibit C
Binding Quarter or BQ	2.5.2, Exhibit C
Catalent Arising IP	15.4
Catalent Indemnitee	18.7
Catalent Project Manager	9.1(b)
Catalent Records	17.1(a)
cGMP Manufacturing Runs	4.1
Chemistry Manufacturing and Control or CMC	11.1
Continuous Improvement Program	10.1(h)
CIP	10.1
CPS	Recitals
Defective Batch	7.1(b)
Delivery	4.6(b)
Disclosing Party	14.3(a)

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Disclosure Agreement	14.1
Extended Manufacturing Period	19.1(a)
Failed Batch	7.1(b)
FQ	2.5.1, Exhibit C
Fiscal Year or FY	2.3.3, Exhibit C
GMP Agreement	14.2
Indemnified Party	18.8
Indemnifying Party	18.8
Initial Forecast	2.5.1, Exhibit C
Initial Manufacturing Period	19.1(a)
LOI	Recitals
Loss	18.6
Manufacturing Start Date	2.2, Exhibit C
Supply Pricing	1.1, Exhibit C
Maximum Annual Batches	2.4.1, Exhibit C
Paragon	14.2
Passage Bio Approval	4.6(a)
Passage Bio Arising IP	15.5
Passage Bio Indemnitee	18.6
Passage Bio Supply Agreements	Recitals
Payment Schedule	4.7(a)
PPI	2.3.2, Exhibit C
Primary Cause	7.1(c)
Process Performance Qualification or PPQ	4.1(a)
PPQ Completion Date	4.4
Receiving Party	14.3(a)
Retained Copies	19.2(k)
Rolling Forecast	2.5.3, Exhibit C
Scope of Work	4.1
Term	19.1
Terminating Event	7.1(a)
Termination Date	19.2(a)
Termination Fee	19.2(c)(i)

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EXHIBIT B

SCOPE OF WORK

EXHIBIT C

BATCH ORDERING AND FORECASTING REQUIREMENTS

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EXHIBIT C

BATCH ORDERING AND FORECASTING REQUIREMENTS

This Exhibit C establishes the Parties understanding as to (i) the minimum annual ordering obligations of Passage Bio for the Manufacture of Batches of Passage Bio Products in the Dedicated Clean Room Suite, (ii) the fees that Passage Bio will pay to Catalent during the Term following the Readiness Determination for the Dedicated Clean Room Suite, and (iii) the establishment of procedures for the initial forecasting and rolling forecasts of Passage Bio’s ordering of Batches of the Passage Bio Products in the Dedicated Clean Room Suite.  It is the intent of the Parties, that the minimum annual ordering obligations set forth in this Exhibit may be satisfied through the Manufacture of Batches under this Agreement, [*] (“Additional Manufacturing and Supply Agreements”).

ARTICLE I

SUMMARY

1.1.      Batch Pricing Based on Manufacturing Configuration.  Each Passage Bio Product being Manufactured by Catalent pursuant to this Agreement and future supply agreement/s may have differing Manufacturing Configurations.  In addition, such Manufacturing Configurations may change during the Term for the same Passage Bio Product.  Accordingly, pricing for clinical supply of Passage Bio Products will vary depending upon the Manufacturing Configuration utilized in the Manufacture of Batches of such products and shall be set forth in each supply agreement (the “Supply Pricing”).  For the purposes of this Agreement, the Supply Pricing for the Term is based upon a Manufacturing Configuration of [*] and is set forth in Schedule 1.1 of this Exhibit C.  For all other clinical supply and any new commercial supply Manufacturing, the applicable Supply Pricing for Batches of Bulk Drug Substance and Drug Product of Passage Bio Products will be agreed to by the Parties and provided in each Scope of Work.

1.2.      Minimum Annual Requirements.  As consideration for Catalent’s agreement to exclusively dedicate the Dedicated Clean Room Suite to Passage Bio, Passage Bio agrees to the minimum purchase obligations set forth in Sections 2.3 and 2.4 hereof.

ARTICLE II

CLINICAL MANUFACTURE AND COMMERCIAL SUPPLY

2.1.      General Requirements. The Dedicated Clean Room Suite is intended for the Manufacture of clinical and commercial supply of Bulk Drug Substance of Passage Bio Products.

2.2.      Manufacturing Start Date.  The Parties have agreed that [*] is the date on which Passage Bio intends for Catalent to commence, and the date on which Catalent must be ready to commence, Manufacturing Batches of Bulk Drug Substance of the Passage Bio Products and is referred to herein as the “Anticipated Manufacturing Start Date”; and the date on which Catalent actually commences Manufacture of the first Batch of Bulk Drug Substance of the Passage Bio Products is referred to herein as the “Manufacturing Start Date.”

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2.3.      Minimum Annual Threshold.

2.3.1    Commencing upon the earlier of (a) Manufacturing Start Date or (b) Readiness Determination through the Term, and subject to Passage Bio’s right to make adjustments to the Initial and Rolling Forecasts as provided for in Section 2.5 of this Exhibit, Passage Bio shall submit Binding Purchase Orders (or by other mutual agreement) for Batches of Bulk Drug Substance of any Passage Bio Product to be Manufactured by Catalent that, if Delivered by Catalent, results in annual revenue to Catalent in an amount equal to or greater than the Minimum Annual Threshold (defined below) on the low end and the Maximum Annual Batches (defined below) on the high end. Subject to Passage Bio’s right to make adjustments to the Initial and Rolling Forecasts as provided for in Section 2.5.4 of this Exhibit (and thereby to any Purchase Order relating thereto), Passage Bio shall issue each binding Purchase Order in accordance with the requirements set forth in Section 2.5.5 below.

2.3.2    Upon the Readiness Determination, the Minimum Annual Threshold is initially based upon the Supply Pricing of [*] Batches of Bulk Drug Substance of the Passage Bio Products to be Manufactured in the Dedicated Clean Room Suite (the “Minimum Annual Batches”) and shall be [*].  The Supply Pricing used for calculating the Minimum Annual Threshold is set forth in Schedule 1.1 to this Exhibit.  Starting in [*], the Minimum Annual Threshold may be increased year over year in accordance with increases in the Product Price Index (“PPI”) for Pharmaceutical Preparation Manufacturing ([*]).  Fees or expenses for the procurement of Raw Materials or other direct costs that are charged at cost plus a Procurement Fee [*].  If Catalent conducts any Manufacturing of Batches of Passage Bio Products outside of the Dedicated Clean Room Suite (other than non-cGMP Batches Manufactured as part of Development Services), [*].

2.3.3    In the event that Passage Bio fails to order, or fails to cause its Affiliates or Strategic Partners to order, sufficient quantities of Batches of Passage Bio Products to meet the Minimum Annual Threshold, Catalent shall submit an invoice to Passage Bio following the conclusion of the calendar year (January 1 through December 31) (“Fiscal Year” or “FY”) during which the minimums were not achieved for an amount equal to the difference between (i) the applicable Minimum Annual Threshold and (ii) the aggregate revenue received from Passage Bio in such FY for Manufacturing Batches of Passage Bio Products (excluding Procurement Costs and Procurement Fees), including revenue from Passage Bio for replacement Batches or Reprocessing Failed or Defective Batches pursuant to Section 8.6(b)(iv) of the Agreement.  Passage Bio shall make payment within [*] ([*]) days upon receipt of the invoice.

2.4       Purchase Orders; Forecasts; Procedures.

2.4.1    Upon receipt of a Purchase Order from Passage Bio pursuant to this Agreement and/or one or more Passage Bio Supply Agreements and/or Additional Manufacturing and Supply Agreements, Catalent shall Manufacture Batches of Bulk Drug Substance and/or Drug Product at the BWI Facility in accordance with the Product Requirements, cGMPs, the then-current Quality Agreement and any applicable Laws and otherwise in accordance with the applicable supply agreements.  The maximum number of Batches of Bulk Drug Substance that can be Manufactured in the Dedicated Clean Room Suite (the “Maximum Annual Batches”) at any time during the Term is [*].  The [*], and the corresponding Maximum Annual Batches, shall be determined by the JSC.  The JSC will make an initial determination of the [*] upon the Readiness Determination

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and the JSC will review the [*] periodically (no less than annually) and make appropriate adjustments thereto.

2.4.2    Purchase Orders shall include orders for Drug Product, however, the Manufacture of Batches of Drug Product shall be performed in accordance [*], which schedule shall generally consist of the Manufacture and Delivery of Batches of Drug Product [*] the Delivery of Batches of Bulk Drug Substance of each Passage Bio Product in a quantity [*] necessary for the Manufacture of one or more Batches of Drug Product.

2.5       Initial Forecast; Rolling Forecasts; Delivery.

2.5.1    On or before [*], Passage Bio shall provide to Catalent an initial forecast of its Batch requirements for the Delivery of Bulk Drug Substance for the [*] ([*]) fiscal quarters (each an “FQ” and consecutively commencing on [*] and [*]) immediately following the Manufacture/Release Period for the first Batch of Bulk Drug Substance to be Manufactured pursuant to this Agreement (the forecast being the “Initial Forecast”).  The Initial Forecast (and subsequent Rolling Forecasts) shall provide the number of Batches of Bulk Drug Substance for the Passage Bio Products.  Passage Bio may also include in the Initial Forecast the Batch needs of its Affiliates and Strategic Partners that are being Manufactured by Catalent pursuant to an Additional Manufacturing and Supply Agreement. However, for the avoidance of doubt and notwithstanding the Batches being Manufactured by Catalent for Passage Bio’s Affiliates or Strategic Partners, Passage Bio shall not be relieved of its obligation to meet the Minimum Annual Threshold.  Payments by Passage Bio’s Affiliates and Strategic Partners for Batches Manufactured by Catalent in the Dedicated Clean Room Suite shall count towards the Minimum Annual Threshold.

2.5.2    Subject to the rights to make adjustments set forth herein, the Initial Forecast shall be binding as to the [*] ([*]) FQs (such quarters are each a “Binding Quarter” or “BQ” and the entire period is the “Binding Orders Period”) and non-binding as to the following [*] ([*]) FQs (such quarters are each a “Non-Binding Quarter” or “NBQ”).  It is the intent of the Parties for the BQs to align with the calendar FQs and, therefore, the first BQ shall commence on first day following the Manufacture/Release Period for the first Batch of Bulk Drug Substance Manufactured and conclude at the end of the FQ in which that BQ commenced. The Maximum Annual Batches and Minimum Annual Threshold shall be pro-rated based upon the number of days remaining in the calendar year, rounded up to the nearest whole number.  The Initial Forecast and subsequent Rolling Forecasts shall be provided by Passage Bio to Catalent in a form of notice substantially similar to the example notice provided in this Exhibit as Attachment A.  Unless otherwise agreed by Catalent, the number of Batches forecasted by Passage Bio in the Binding Orders Period may not exceed [*] ([*]) the Maximum Annual Batches.  A timeline illustration of Initial Forecast and subsequent Rolling Forecasts is provided in this Exhibit as Attachment B.

2.5.3    Rolling Forecasts.  At least [*] ([*]) [*] prior to the Anticipated Manufacturing Date of the first Batch of Bulk Drug Substance to be Delivered during [*] of the Initial Forecast and each FQ thereafter, Passage Bio will refresh its [*] ([*]) FQ forecast, and the previous first Non-Binding Quarter or “NBQ[*]” becomes Binding Quarter [*] or “BQ[*]” and a new NBQ[*] is added to the forecast (such forecasting then becomes the “Rolling Forecast”).

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2.5.4    Forecast Modification; Monitoring.

(a)        Passage Bio will be afforded the flexibility to make modification requests to the Initial and Rolling Forecasts, as set forth below (each a “Forecast Modification”).  Following the delivery of the Initial or Rolling Forecasts, if a Forecast Modification is made for [*] that requests the Manufacture of one or more Batch(es) of Passage Bio Product(s) other than that which was originally forecasted, Catalent shall use commercially reasonable efforts, but shall not be obligated, to Manufacture the Batch(es) of different Passage Bio Product(s).  If a Forecast Modification is made for [*] that requests additional Batches over what was originally forecast (the “Additional Batches”), Catalent shall use commercially reasonable efforts, but shall not be obligated, to Manufacture the Additional Batches.

(b)        Subject to its requirement to meet the Minimum Annual Threshold requirement, if the Forecast Modification results in a reduction of the number of Batches forecasted for [*] and that reduction is attributable to [*] [*], agreed to by Catalent, that results in [*] in the quantity of Bulk Drug Substance being Manufactured in single Batch (e.g., [*]), Passage Bio shall [*].

(c)        If the Forecast Modification reduces the number of Batches of Bulk Drug Substance of a Passage Bio Product that were to be Delivered by Catalent during the Binding Orders Period under Section 2.5.2 and Passage Bio is unable to substitute one or more Batches as provided for in subsection (a) above, Passage Bio shall be obligated to pay Catalent according to the table below for all such Batches ordered in that Binding Orders Period that were cancelled. Cancellation of any orders of Drug Product of a Passage Bio Product shall be subject to the same cancellation fees below; provided that no such cancellation fees shall apply for any such orders of Drug Product cancelled prior to the date that is [*] ([*]) days prior to the Manufacturing Start Date for the cancelled Batch of Drug Product.

[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]

During the period in which Catalent is Manufacturing Bulk Drug Substance and/or Drug Product, the JSC will have periodic teleconferences or meetings to monitor and review the status of Manufacturing operations and to address any issues that may arise.

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2.5.5    Delivery Dates.  Within [*] ([*]) days following Catalent’s receipt of the Initial Forecast and each Rolling Forecast thereafter, Catalent shall prepare, with input from Passage Bio, and submit to the JSC a Batch production schedule for the next Binding Orders Period which includes the order of production of each Batch of Passage Bio Product forecasted and the anticipated delivery of the Batch Documentation for each such Batch to Passage Bio (the “Proposed Production Schedule”).  Within [*] ([*]) days following receipt of the Proposed Production Schedule from Catalent, [*] (the “Approved Production Schedule”). For each Batch of Passage Bio Product being Manufactured during a Binding Orders Period, the Approved Production Schedule for that Batch shall be based upon [*].  Within [*] ([*]) days upon [*]approval of the Approved Production Schedule, Passage Bio (and each Passage Bio Affiliate and/or Strategic Partner) shall submit to Catalent Purchase Orders specifying the number of Batches and the anticipated delivery dates (as specified in the Approved Production Schedule).  If for any reason Catalent is unable to Deliver the required Batches of Passage Bio Products specified in a Purchase Order on or before the anticipated Delivery date set forth in the Approved Production Schedule, Catalent shall notify Passage Bio promptly upon discovery of its inability to meet the Approved Production Schedule and, [*]. All Purchase Orders submitted in compliance with this Agreement and/or one or more Passage Bio Supply Agreements or Additional Manufacturing and Supply Agreements shall be binding on Catalent.  No later than [*] ([*]) days after Passage Bio’s submission of a Purchase Order, Catalent shall provide Passage Bio with written acknowledgment of receipt of the Purchase Order.  Catalent shall timely Manufacture and Deliver the amounts ordered by Passage Bio in accordance with this Section 2.5.5, and Catalent shall use commercially reasonably efforts to Manufacture and Deliver any Additional Batches; it being understood that Catalent’s failure to supply such Additional Batches shall not constitute a breach under this Agreement.  In the event of delays or suspension of the Manufacture of Batches of Passage Bio Products [*], Passage Bio shall continue to be obligated to pay to Catalent the Minimum Annual Threshold.

2.5.6    Supply Failure.  During each Binding Orders Period, if Catalent fails to supply Batches of any Passage Bio Products that meet the Specifications in such numbers that equate to [*], a “Supply Failure” shall be deemed to have occurred upon receipt of written notice from Passage Bio.  In the event Passage Bio, at its discretion, elects to delay the restart of a Failed Batch thereby pushing out the anticipated restart date, the additional time to push out the restart shall not count against [*].  Within [*] ([*]) days of receipt of written notice from Passage Bio of its determination that a Supply Failure has occurred, Catalent shall complete an investigation and report to the JSC the cause of or reason for the Supply Failure and the appropriate corrective action to prevent such failure from reoccurring.  The JSC shall review such plan, and if found reasonably acceptable, approve the plan on a timely basis such that Catalent is able to implement it prior to the next production run.   Thereafter, as to the delayed or failed Batches of Passage Bio Product that attributed to the Supply Failure, Catalent shall [*].  If (i) [*], (ii) [*], or (iii) [*] (any of (i) through (iii) being a “Repeat Supply Failure”), Passage Bio shall have the right to [*].

2.6      Clean Room Use Fee Credits.

2.6.1    Batch Credit.  Catalent will provide Passage Bio a credit against the Clean Room Use Fee (the “Batch Credit”) if Catalent’s Manufacturing of Passage Bio Products result in the Manufacture of more than [*] ([*]) Batches of Bulk Drug Substance in the Dedicated Clean Room Suite (the “Excess Batches”).  For each of the Excess Batches up to [*] ([*]) Batches of Bulk Drug

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Substance Manufactured during the calendar year, Catalent with provide a Batch Credit [*] credited against the Clean Room Use Fee for the following year.  By way of example, [*].  For the purpose of calculating the Batch Credit during the partial first year of Delivering Batches under this Agreement, the Minimum Annual Batches shall be pro-rated based upon the number of months remaining in the calendar year, rounded up to the nearest whole number; however, the Batch Credit may not exceed the pro-rated Clean Room Use Fee paid by Passage Bio for that year.

2.6.2    Catalent Use Credit.  If the Dedicated Clean Room Suite is not being fully utilized for the Manufacture of Passage Bio Products, Catalent may make a request to Passage Bio to use the suite for Manufacturing on behalf of other Catalent customers (a “Catalent Use Request”).  Each Catalent Use Request submitted to Passage Bio shall provide the specific clean room suite(s) being requested, the schedule during which the suite(s) will be used and the nature of the Manufacturing activities that will be performed in the suite(s), subject to any confidentiality requirements between Catalent and its customers.  Within [*] ([*]) days of the Catalent Use Request, Passage Bio, in its reasonable discretion, shall approve or deny such request and, if approved, Catalent shall provide a credit to Passage Bio against the Clean Room Use Fee (the “Catalent Use Credit” together with the Batch Credit, referred to herein as, the “CRUF Credits”).  [*].

2.6.3    Reconciliation. The CRUF Credits shall be determined by Catalent prior to issuing the Clean Room Use Fee Invoice (as defined in the Collaboration Agreement) for the following FQ. The maximum combined CRUF Credits in a FQ is equal to [*] ([*]%) of the Clean Room Use Fee.  However, during the final FQ in the last year of the Term, the value of any accrued CRUF credits shall be issued in the form of a credit against other amounts owed to Catalent by Passage Bio or a refund to Passage Bio within [*] ([*]) days following the expiration of the Agreement.

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EXHIBIT C, ATTACHMENT A

Form of Passage Bio Notice of Batch Forecasts

To:

From:

Date:

Passage Bio's Initial & Rolling Forecast for Batches of Bulk Drug Substance

Product Name	Product Ref #	BQ1	BQ2	NBQ1	NBQ2
[•]	[•]
[•]	[•]
[•]	[•]
[•]	[•]
Totals

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EXHIBIT C, ATTACHMENT B

Timeline Illustration of Initial and Rolling Forecasts

[*]

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EXHIBIT C, SCHEDULE 1.1

Supply Pricing

Step	Description	Pricing	Details
[*]	⚫[*]	[*]	[*]
[*]	⚫[*]	[*]	[*]
[*]	[*]	[*]	⚫[*]
[*]	⚫  [*]	[*]	⚫[*]
[*]	⚫[*]	[*]	⚫[*]
[*]	⚫[*]	[*]	⚫[*]

*Note: Minimum Annual Threshold = [*] = [*]

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EXHIBIT D

Approved Subcontractors

EX-10.2

	Exhibit 10.2
	Tenant: Passage BIO, Inc. Premises: One Commerce Square, Suite 3900

LEASE

THIS LEASE (“Lease”) is entered into as of _______________, between COMMERCE SQUARE PARTNERS - PHILADELPHIA PLAZA, L.P., a Delaware limited partnership (“Landlord”), and PASSAGE BIO, INC., a Delaware corporation (“Tenant”).

In consideration of the mutual covenants stated below, and intending to be legally bound, Landlord and Tenant covenant and agree as follows:

1.            KEY DEFINED TERMS.

(a)          “Abatement Period” means the period that begins on the Commencement Date and ends on the day immediately prior to the 14-month anniversary of the Commencement Date. During the Abatement Period, no Fixed Rent or Project Expenses are due or payable, but Tenant shall pay to Landlord: (i) electricity costs for the lights and plugs in the Premises pursuant to Section 6 below; and (ii) Philadelphia use and occupancy taxes.

(b)          “Additional Rent” means all rents, costs, and expenses other than Fixed Rent that Tenant is obligated to pay Landlord pursuant to this Lease.

(c)          “Broker” means Savills, Inc.

(d)          “Building” means the building known as One Commerce Square located at 2005 Market Street, Philadelphia, Pennsylvania 19103, containing approximately 942,866 rentable square feet. Landlord hereby represents that the usable square footage of the Building and Premises has been determined pursuant to guidelines generally established by the Standard Method for Measuring Floor Area in Office Buildings (“BOMA”).

(e)          “Business Hours” means the hours of 8:00 a.m. to 6:00 p.m. on weekdays, and 9:00 a.m. to 1:00 p.m. on Saturdays, excluding Building holidays. The current Building holidays are: New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day; any change in Building holidays shall be consistent with other national holidays for which first class buildings in the Philadelphia, Pennsylvania area also closed for business.

(f)           “Commencement Date” means the date that is the earlier of: (i) the date on which Tenant first conducts any business in all or any portion of the Premises; or (ii) the later of (A) Substantial Completion of the Leasehold Improvements (as defined in Exhibit C) and delivery of the Premises to Tenant or (B) January 1, 2021. Notwithstanding anything set forth herein to the contrary, if Tenant is prevented from moving into the Premises as a result of a Force Majeure Event (which shall include, but not be limited to, delays in delivery of Tenant’s furniture for the Premises as a result of worldwide shipping disruptions resulting from the coronavirus), and provided Tenant takes all commercially reasonable actions to mitigate such delay, the Commencement Date shall be extended on a day-for-day basis for each day of delay caused solely by such Force Majeure Event.

(g)          “Common Areas” means, to the extent they exist at the Project, the lobby, parking facilities, passenger and freight elevators, rooftop terrace, fitness or health center, plaza and sidewalk areas, multi-tenanted floor restrooms, and other similar areas of unrestricted access at the Project or designated for the benefit of Building tenants, and the areas on multi-tenant floors in the Building devoted to corridors, elevator lobbies, and other similar facilities serving the Premises.

(h)          “Expiration Date” means the last day of the Term, or such earlier date of termination of this Lease pursuant to the terms hereof.

(i)           “Fixed Rent” means fixed rent in the amounts set forth below:

TIME PERIOD	FIXED RENT PER R.S.F.	ANNUALIZED FIXED RENT	MONTHLY INSTALLMENT
Commencement Date – end of Abatement Period	$ 0.00	$ 0.00	$ 0.00

Fixed Rent Start Date – end of Rent Period 1	$  28.50	$ 1,066,299.00	$ 88,858.25
Rent Period 2	$  29.36	$ 1,098,475.04	$ 91,539.59
Rent Period 3	$  30.24	$ 1,131,399.36	$ 94,283.28
Rent Period 4	$  31.15	$ 1,165,446.10	$ 97,120.51
Rent Period 5	$  32.08	$ 1,200,241.12	$ 100,020.09
Rent Period 6	$  33.04	$ 1,236,158.56	$ 103,013.21
Rent Period 7	$  34.03	$ 1,273,198.42	$ 106,099.87
Rent Period 8	$ 35.05	$ 1,311,360.70	$ 109,280.06
Rent Period 9	$ 36.10	$ 1,350,645.40	$ 112,553.78
Rent Period 10 – End of Initial Term	$ 37.18	$ 1,391,052.52	$ 115,921.04

(j)           “Fixed Rent Start Date” means the day immediately following the end of the Abatement Period.

(k)          “Initial Term” means the period commencing on the Commencement Date, and ending at 11:59 p.m. on: (i) if the Commencement Date is the first day of a calendar month, the day immediately prior to the 130-month anniversary of the Commencement Date; or (ii) if the Commencement Date is not the first day of a calendar month, the last day of the calendar month containing the 130-month anniversary of the Commencement Date.

(l)           “Laws” means federal, state, county, and local governmental and municipal laws, statutes, ordinances, rules, regulations, codes, decrees, orders, and other such requirements, and decisions by courts in cases where such decisions are considered binding precedents in the state or commonwealth in which the Premises are located (“State”), and decisions of federal courts applying the laws of the State, including without limitation Title III of the Americans with Disabilities Act of 1990, 42 U.S.C. §12181 et seq. as now in effect or hereafter amended and all rules and regulations issued thereunder.

(m)         “Premises” means, collectively, the following spaces in the Building, as shown on Exhibit A attached hereto, which are deemed to contain 37,414 rentable square feet in the aggregate: (i) the space presently known as Suite 3800, which is deemed to contain 14,633 rentable square feet; (ii) the space presently known as Suite 3900, which is deemed to contain 14,633 rentable square feet; and (iii) the space to be known as Suite 4000, which is deemed to contain 8,148 rentable square feet. Upon the Commencement Date, the Premises shall be known collectively as Suite 3900. Landlord hereby represents that the rentable square footage of the Premises has been determined pursuant to BOMA.

(n)          “Project” means the Building, together with the parcel of land owned by Landlord upon which the Building is located, and all Common Areas.

(o)          “Rent” means Fixed Rent and Additional Rent. Landlord may apply payments received from Tenant to any obligations of Tenant then due and owing without regard to any contrary Tenant instructions or requests. Additional Rent shall be paid by Tenant in the same manner as Fixed Rent, without setoff, deduction, or counterclaim, except as otherwise expressly set forth herein.

(p)          “Rent Period” means, with respect to the first Rent Period, the period that begins on the Fixed Rent Start Date and ends on the last day of the calendar month preceding the month in which the 2-year anniversary of the Commencement Date occurs; thereafter each succeeding Rent Period shall commence on the day following the end of the preceding Rent Period, and shall extend for 12 consecutive months.

(q)          “Security Deposit” means $34,066.84.

(r)           “Tenant’s NAICS Code” means Tenant’s 6-digit North American Industry Classification number under the North American Industry Classification System as promulgated by the Executive Office of the President, Office of Management and Budget, which is 541715.

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(s)           “Term” means the Initial Term together with any extension of the term of this Lease agreed to by the parties in writing.

2.            PREMISES. Landlord leases to Tenant, and Tenant leases from Landlord, the Premises for the Term subject to the terms and conditions of this Lease. Tenant accepts the Premises in their “AS IS”, “WHERE IS”, “WITH ALL FAULTS” condition, except that Landlord shall complete the Leasehold Improvements pursuant to Exhibit C attached hereto, and subject to Landlord’s continuing obligations under this Lease.

3.            TERM.

(a)          The Term shall commence on the Commencement Date. The terms and provisions of this Lease are binding on the parties upon Tenant’s and Landlord’s execution of this Lease notwithstanding a later Commencement Date for the Term. The rentable area of the Premises and the Building on the Commencement Date shall be deemed to be as stated in Section 1. By execution and delivery of a Confirmation of Lease Term substantially in the form of Exhibit B attached hereto (“COLT”), Landlord and Tenant shall confirm the Commencement Date, rentable square footage of the Premises and all other matters stated therein. If Tenant fails to respond to a proposed COLT within 10 business days after Tenant’s receipt of such request, Landlord may thereafter send to Tenant a second proposed COLT, which includes in bold and 14-point capitalized type the following statement: “SECOND AND FINAL REQUEST—TENANT HAS 10 BUSINESS DAYS TO RESPOND PURSUANT TO SECTION 3”. If Tenant then fails to respond to such second proposed COLT within 10 business days after receipt thereof, Tenant shall be deemed to have approved all matters set forth therein, which shall then be conclusive and binding on Tenant.

(b)          Provided there is no Event of Default, Landlord shall use commercially reasonable efforts to achieve Substantial Completion of the Leasehold Improvements on or before December 15, 2020, subject to Force Majeure Events (as defined in Section 25(g) and which shall include, but not be limited to, delays resulting from the coronavirus). Provided there is no Event of Default, if Substantial Completion does not occur on or before the Outside Completion Date, then notwithstanding anything to the contrary herein from and after the Fixed Rent Start Date Tenant shall receive 1 day’s abatement of Fixed Rent for each day that elapses after the Outside Completion Date until Substantial Completion occurs, and the Term shall be extended by the same number of days. The “Outside Completion Date” means the date that is 200 days after the Plan Delivery Date (as defined in Exhibit C); provided, however, the Outside Completion Date shall be pushed back on a day-for-day basis for each day that Substantial Completion is delayed due to a Force Majeure Event (as defined in Section 25(g)).

(c)          Provided there is no Event of Default, if Substantial Completion does not occur on or before the Completion Termination Date, then notwithstanding anything to the contrary herein Tenant shall have the right to terminate this Lease by at least 30 days’ written notice to Landlord received within 9 days after the Completion Termination Date, provided this Lease shall remain in full force and effect and Tenant shall no longer have the right to terminate this Lease if Landlord delivers possession of the Premises to Tenant within 30 days after Landlord’s receipt of Tenant’s termination notice. The “Completion Termination Date” means the date that is 290 days after the Plan Delivery Date; provided, however, the Completion Termination Date will be pushed back on a day-for-day basis for each day that Substantial Completion is delayed due to a Force Majeure Event (as defined in Section 25(g)). The termination right set forth in this paragraph and the rent abatement set forth in Section 3(b) shall be Tenant’s sole and exclusive remedies in connection with any delay in Substantial Completion, and Landlord shall not be liable for any other direct, indirect, special, consequential, or other damages suffered by Tenant as a result of any such delay.

4.            FIXED RENT; SECURITY DEPOSIT; LATE FEE.

(a)          Tenant covenants and agrees to pay to Landlord during the Term, without notice, demand, setoff, deduction, or counterclaim except as otherwise set forth in this Lease, Fixed Rent in the amounts set forth in Section 1. The Monthly Installment of Fixed Rent, the monthly amount of Estimated Operating Expenses as set forth in Section 5, and any estimated amount of utilities as set forth in Section 6, shall be payable to Landlord in advance on or before the first day of each month of the Term. If the Fixed Rent Start Date is not the first day of a calendar month, then the Fixed Rent due for the partial month commencing on the Fixed Rent Start Date shall be prorated based on the number of days in such month. All Rent payments shall be made by either (i) check or (ii) electronic funds transfer as follows (or as otherwise directed in writing by Landlord to Tenant from time to time): (A) ACH debit of funds, provided Tenant shall first complete Landlord’s then-current forms authorizing Landlord to automatically debit

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Tenant’s bank account; or (B) ACH credit of immediately available funds to an account designated by Landlord. “ACH” means Automated Clearing House network or similar system designated by Landlord. All Rent payments shall include the Building number and the Lease number, which numbers will be provided to Tenant in the COLT.

(b)          Landlord shall cause its affiliate, Philadelphia Plaza – Phase II LP, to transfer to Landlord the balance of the security deposit held by such affiliate under its lease with Tenant at Two Commerce Square promptly after Tenant’s surrender of the premises leased thereunder, and Landlord shall maintain such balance as the Security Deposit under this Lease. Notwithstanding the foregoing, if such balance is less than $34,066.84, then Tenant shall promptly pay the difference to Landlord so that the Security Deposit held by Landlord hereunder is $34,066.84. No interest shall be paid to Tenant on the Security Deposit, and Landlord shall have the right to commingle the Security Deposit with other funds of Landlord. If there is an Event of Default by Tenant under this Lease, Landlord may use, apply or retain the whole or any part of the Security Deposit for the payment of: (A) any rent or other sums that Tenant has not paid when due (beyond any applicable note and cure period); and/or (B) any sum that Landlord expends or is required to expend in connection with an Event of Default (as defined in Section 17). Landlord’s use of the Security Deposit shall not prevent Landlord from exercising any other remedy available to Landlord under this Lease, at law or in equity and shall not operate as either liquidated damages or as a limitation on any recovery to which Landlord may otherwise be entitled. If any portion of the Security Deposit is used, applied, or retained by Landlord in accordance with this Section 4(b), Tenant shall, within 10 business days after the written demand therefor, deposit cash with Landlord in an amount sufficient to restore the Security Deposit to its original amount. Landlord shall return the Security Deposit or the balance thereof (as applicable) to Tenant within 1 month after the later of the Expiration Date, Tenant’s surrender of possession of the Premises to Landlord in the condition required under this Lease, Tenant’s payment of all outstanding Rent, and Landlord’s receipt of written notice from Tenant of its forwarding address. Upon the return of the Security Deposit or the balance thereof (as applicable) to Tenant, Landlord shall be completely relieved of liability with respect to the Security Deposit. If the originally named Tenant has assigned this Lease, Landlord may return the Security Deposit or the balance thereof (as applicable) to the current Tenant unless Landlord receives reasonably satisfactory evidence of the originally named Tenant’s right to receive the Security Deposit. If Landlord conveys ownership of the Building and Landlord delivers the Security Deposit to the transferee, Landlord shall thereupon be released from all liability for the return of such Security Deposit and Tenant shall look solely to the transferee for the return of the Security Deposit.

(c)          If Landlord does not receive the full payment from Tenant of any Rent when due under this Lease (without regard to any notice and/or cure period to which Tenant might be entitled), Tenant shall also pay to Landlord as Additional Rent a late fee in the amount of 5% of such overdue amount. Notwithstanding the foregoing, Landlord shall waive the above-referenced late fee 2 times during any 12 consecutive months of the Term, provided Tenant makes the required payment within 3 business days after receipt of notice of such late payment. With respect to any Rent payment (whether it be by check, ACH/wire, or other method) that is returned unpaid for any reason, Landlord shall have the right to assess a reasonable fee to Tenant as Additional Rent, which fee is currently $40.00 per returned payment.

5.            OPERATING EXPENSES.

(a)          Certain Definitions.

(i)           “Janitorial Expenses” means all costs associated with trash and garbage removal, recycling, cleaning, and sanitizing the Building, and the items of work set forth in Exhibit D attached hereto.

(ii)          “Operating Expenses” means collectively Project Expenses and Taxes.

(iii)         “Project Expenses” means all costs and expenses paid, incurred, or accrued by Landlord in connection with the maintenance, operation, repair, and replacement of the Project including, without limitation: a management fee not to exceed 3% of gross rents and revenues from the Project; all costs associated with the removal of snow and ice from the Project; property management office rent; costs for flexible work and community space for tenants of Landlord and Landlord’s affiliates; conference room and fitness center costs; security measures; transportation program costs; Janitorial Expenses; Project Utility Costs (as defined in Section 6 below); capital expenditures, repairs, and replacements, necessary to comply with changes in applicable law effective after the Commencement Date or when made with the reasonable expectation of reducing other Project Expenses (but only to

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the extent of the actual reduction), and then only to the extent of the amortized costs of such capital item over the useful life of the improvement as reasonably determined by Landlord; valet, concierge, and card-access parking system costs; all insurance premiums and deductibles paid or payable by Landlord with respect to the Project; and the cost of providing those services required to be furnished by Landlord under this Lease. Notwithstanding the foregoing, “Project Expenses” shall not include any of the following: (A) repairs or other work occasioned by fire, windstorm, or other insured casualty or by the exercise of the right of eminent domain to the extent Landlord actually receives insurance proceeds or condemnation awards therefor; (B) leasing commissions, accountants’, consultants’, auditors or attorneys’ fees, costs and disbursements and other expenses incurred in connection with negotiations or disputes with other tenants or prospective tenants or other occupants, or associated with the enforcement of any other leases or the defense of Landlord’s title to or interest in the real property or any part thereof; (C) costs incurred by Landlord in connection with the original construction of the Building and related facilities; (D) costs (including permit, license, and inspection fees) incurred in renovating or otherwise improving or decorating, painting, or redecorating leased space for other tenants or other occupants or vacant space; (E) interest on debt or amortization payments on any mortgage or deeds of trust or any other borrowings and any ground rent; (F) any compensation paid to clerks, attendants or other persons in commercial concessions operated by Landlord; (G) any fines or fees for Landlord’s failure to comply with Laws; (H) legal, accounting, and other expenses related to Landlord’s financing, refinancing, mortgaging, or selling the Building or the Project; (I) any increase in an insurance premium caused by the non-general office use, occupancy or act of another tenant; (J) costs for sculpture, decorations, painting or other objects of art in excess of amounts typically spent for such items in office buildings of comparable quality in the competitive area of the Building; (K) cost of any political, charitable, or civic contribution or donation; (L) reserves for repairs, maintenance, and replacements; (M) Taxes; (N) cost of utilities directly metered or submetered to Building tenants and paid separately by such tenants; (O) fines, interest, penalties, or liens arising by reason of Landlord’s failure to pay any Project Expenses when due, except that Project Expenses shall include interest or similar charges if the collecting authority permits such Project Expenses to be paid in installments with interest thereon, such payments are not considered overdue by such authority and Landlord pays the Project Expenses in such installments; (P) costs and expenses associated with hazardous waste or hazardous substances including but not limited to the cleanup of such hazardous waste or hazardous substances and the costs of any litigation (including, but not limited to reasonable attorneys’ fees) arising out of the discovery of such hazardous waste or hazardous substances; (Q) the portion of any wages, salaries, fees, or fringe benefits paid to personnel above the level of regional property manager; (R) costs of extraordinary services provided to other tenants of the Building or services to which Tenant is not entitled (including, without limitation, costs specially billed to and paid by specific tenants); (S) all costs relating to activities for the solicitation and execution of leases of space in the Building, including legal fees, real estate brokers’ commissions, expenses, fees, and advertising, moving expenses, design fees, rental concessions, rental credits, tenant improvement allowances, lease assumptions or any other cost and expenses incurred in the connection with the leasing of any space in the Building; (T) costs representing an amount paid to an affiliate of Landlord (exclusive of any management fee permitted under the Operating Expense inclusions (including the limitation set forth herein)) to the extent in excess of market rates for comparable services if rendered by unrelated third parties; (U) costs arising from Landlord’s default under this Lease or any other lease for space in the Building; (V) costs of selling the Project or any portion thereof or interest therein, including, without limitation any realty transfer taxes resulting from such sale; (W) costs or expenses arising from the gross negligence of Landlord or its agents or employees; (X) costs incurred to remedy, repair, or otherwise correct violations of Laws that exist on the Commencement Date; (Y) the depreciation of the Building and other real property structures in the Project, if any; (Z) legal expenses associated with the negotiation and enforcement of leases or the defense of Landlord’s title to the Building or other portions of the Project; (AA) Landlord’s general corporate overhead and general administrative expenses not directly related to the operation of the Project; (BB) cost of payroll for clerks and attendants, bookkeeping, garage keepers’ liability insurance, parking management fees, tickets and uniforms directly incurred in operating the parking facilities; (CC) costs or expenses incurred by Landlord for use of any portions of the Building to accommodate events including, but not limited to shows, promotions, kiosks, displays, filming, photography, private events or parties, ceremonies, and advertising beyond the normal expenses otherwise attributable to providing Building services, such as lighting and HVAC to such public portions of the Building in normal Building operations during standard Building hours of operation; (DD) any bad debt loss, rent loss or reserves for bad debts or rent loss; (EE) any costs that duplicate costs for which Landlord is reimbursed by any other party other than through Project Expenses; (FF) any costs or expenses which are of a type or nature ordinarily not included in operating expenses under sound accounting practices applicable generally to Class A office buildings in Philadelphia; (GG) any recalculation of or additional Project Expenses actually incurred more than two (2) years prior to the year in which Landlord proposes that such costs be included; (HH) costs actually reimbursed (or, if Landlord does not carry insurance that Landlord is required pursuant to this Lease to carry, then such costs as would

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have been reimbursed) through insurance proceeds to repair or replace damage by fire or other casualty, including specifically, without limitation, any deductible under any insurance policy in excess of the maximum deductible permitted in this Lease, as well as any other costs for which Landlord is actually reimbursed by any vendors or other third parties; (II) costs actually reimbursed through condemnation proceeds to repair, replace or rebuild the Building after a condemnation of any portion thereof; (JJ) expenditures for capital improvements or replacements, or other capital expenditures, except as expressly permitted above in this subsection (iii); (KK) advertising costs relating to marketing the Building; (LL) costs for overtime HVAC to tenants, it being intended that the costs of all overtime HVAC shall be billed (if not otherwise paid directly to the utility provider) to the tenants separately based on their respective usages; (MM) rentals for items which if purchased, rather than rented, would constitute a capital item, except to the extent a capital expense is permitted above; (NN) costs, including permit, license and inspection costs, incurred with respect to the installation of any individual tenant’s or other occupant’s improvements in the Building or incurred in renovating or otherwise improving, decorating, painting or redecorating vacant space for any individual tenant or other occupant of the Building; (OO) tax penalties incurred as a result of Landlord’s failure to make payments and/or to file any tax or informational returns when due; (PP) costs arising from Landlord’s charitable or political contributions; (QQ) costs for the acquisition of (as contrasted with the maintenance of) sculpture, paintings or other objects of art; (RR) costs associated with the operation of the business of the partnership or entity which constitutes Landlord as the same are distinguished from the costs of operation of the Project, including partnership accounting and legal matters, costs of defending any lawsuits with or claims by any mortgagee, costs of selling, syndicating, financing, mortgaging or hypothecating any of Landlord’s interest in the Project, costs of any disputes between Landlord and its employees not engaged in Project operation, costs of disputes between Landlord and the building manager, or fees, damages, settlements or other amounts paid in connection with, or other amounts paid in connection with disputes with other tenants; (SS) any entertainment, dining or travel expenses for any purpose not related to property management; (TT) other than in connection with customary tenant-appreciation events, any flowers, balloons, or other gifts provided to any entity whatsoever, including, but not limited to, Tenant, other tenants, employees, vendors, contractors, prospective tenants and agents; (UU) costs of installing, operating and maintaining any specialty improvement that is not made available to Tenant; (VV) all costs for materials, utilities, goods, services or other benefits furnished by Landlord that are required to be directly paid for by Tenant or other tenants to Landlord or the service provider, or for which Tenant or other tenants contract directly with the service provider, including, without limitation, electricity costs which are paid directly by Tenant or other tenants to the provider of electric power; and any taxes, charges, assessments or other costs relating to such costs; (WW) any and all costs for the repair or replacement of any items under warranty from third parties to the extent of the warranty coverage, including, without limitation, any defects in the original construction of the Building or Premises, or any costs of Landlord’s performance of any construction warranty to Tenant or any other Building tenant; and (XX) any and all other expenses for which Landlord is reimbursed (other than pursuant to a general operating costs pass through. Landlord shall exercise all commercially reasonable remedies to obtain reimbursement of all amounts to which it is entitled from any and all third parties. Landlord shall not collect or be entitled to collect Project Expenses from all of its tenants in an amount in excess of 100% of the Project Expenses actually incurred by Landlord.

(iv)         “Taxes” means all taxes, assessments, and other governmental charges, whether general or special, ordinary or extraordinary, foreseen or unforeseen, including without limitation business improvement district charges, improvement contributions paid to business improvement districts or similar organizations, gross receipts tax for the Building, and special assessments for public improvements or traffic districts, that are levied or assessed against, or with respect to the ownership of, all or any portion of the Project during the Term or, if levied or assessed prior to the Term, are properly allocable to the Term, business property operating license charges, and real estate tax appeal expenditures incurred by Landlord. “Taxes” shall not include: (i) any inheritance, estate, succession, transfer, gift, franchise, corporation, income or profit tax or capital levy that is or may be imposed upon Landlord; or (ii) any transfer tax or recording charge resulting from a transfer of the Building or the Project; provided, however, if at any time during the Term the method of taxation prevailing at the commencement of the Term shall be altered such that in lieu of or as a substitute in whole or in part for any Taxes now levied, assessed or imposed on real estate there shall be levied, assessed or imposed: (A) a tax on the rents received from such real estate; or (B) a license fee measured by the rents receivable by Landlord from the Premises or any portion thereof; or (C) a tax or license fee imposed upon the Premises or any portion thereof, then the same shall be included in Taxes. Tenant may not file or participate in any Tax appeals for any tax lot in the Project. Further, “Taxes” shall not include any sales, use, use and occupancy, transaction privilege, or other excise tax that may at any time be levied or imposed upon Tenant, or measured by any amount payable by Tenant under this Lease, whether such tax exists on the date of this Lease or is adopted hereafter (collectively, “Other Taxes”). Tenant shall pay all Other Taxes monthly or otherwise

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when due, whether collected by Landlord or collected directly by the applicable governmental agency; if applicable Law requires Landlord to collect any Other Taxes, such Other Taxes shall be payable to Landlord as Additional Rent.

(v)          “Tenant’s Share” means the rentable square footage of the Premises divided by the rentable square footage of the Building on the date of calculation, which on the date of this Lease is stipulated to be 3.97%. Tenant’s Share will change during the Term if the rentable square footage of the Premises and/or the Building changes.

(b)          Commencing on the Fixed Rent Start Date and continuing thereafter during the Term, Tenant shall pay to Landlord in advance on a monthly basis, payable pursuant to Section 5(c) below, Tenant’s Share of Operating Expenses. If the Building is operated as part of a complex of buildings or in conjunction with other buildings or parcels of land, then Landlord may prorate the common expenses and costs with respect to each such building or parcel of land in such manner as Landlord, in its sole but reasonable judgment, shall determine. Landlord shall calculate Operating Expenses using generally accepted accounting principles, and may allocate certain categories of Operating Expenses to the applicable tenants on a commercially reasonable basis.

(c)          For each calendar year (or portion thereof) for which Tenant has an obligation to pay any Operating Expenses, Landlord shall send to Tenant a statement of the monthly amount of projected Operating Expenses due from Tenant for such calendar year (“Estimated Operating Expenses”), and Tenant shall pay to Landlord such monthly amount of Estimated Operating Expenses as provided in Section 5(b), without further notice, demand, setoff, deduction, or counterclaim. As soon as administratively available after each calendar year (which shall in any event be no later than one hundred twenty (120) days after the end of such calendar year), Landlord shall send to Tenant a reconciliation statement of the actual Operating Expenses for the prior calendar year (“Reconciliation Statement”). If the amount actually paid by Tenant as Estimated Operating Expenses exceeds the amount due per the Reconciliation Statement, Tenant shall receive a credit in an amount equal to the overpayment, which credit shall be applied towards future Rent until fully credited. If the credit exceeds the aggregate future Rent owed by Tenant, and there is no Event of Default, Landlord shall pay the excess amount to Tenant within 30 days after delivery of the Reconciliation Statement. If Landlord has undercharged Tenant, then Landlord shall either send Tenant an invoice setting forth the additional amount due or indicate the amount due as part of the Reconciliation Statement, which amount shall be paid in full by Tenant within 30 days after receipt of such invoice.

(d)          If, during the Term, less than 95% of the rentable area of the Building is or was occupied by tenants, Project Expenses shall be deemed for such year to be an amount equal to the costs that would have been incurred had the occupancy of the Building been at 95% throughout such year, as reasonably determined by Landlord and taking into account that certain expenses fluctuate with the Building’s occupancy level (e.g., Janitorial Expenses) and certain expenses do not so fluctuate (e.g., landscaping). In addition, if Landlord is not obligated or otherwise does not offer to furnish an item or a service to a particular tenant or portion of the Building (e.g., if a tenant separately contracts with an office cleaning firm to clean such tenant’s premises) and the cost of such item or service would otherwise be included in Project Expenses, Landlord shall equitably adjust the Project Expenses so the cost of the item or service is shared only by tenants actually receiving such item or service. All payment calculations under this Section shall be prorated for any partial calendar years during the Term and all calculations shall be based upon Project Expenses as grossed-up in accordance with the terms of this Lease. Tenant’s obligations under this Section shall survive the Expiration Date.

(e)          If Landlord or any affiliate of Landlord has elected to qualify as a real estate investment trust (“REIT”), any service required or permitted to be performed by Landlord pursuant to this Lease, the charge or cost of which may be treated as impermissible tenant service income under the laws governing a REIT, may be performed by an independent contractor of Landlord, Landlord’s property manager, or a taxable REIT subsidiary that is affiliated with either Landlord or Landlord’s property manager (each, a “Service Provider”). If Tenant is subject to a charge under this Lease for any such service, then at Landlord’s direction Tenant shall pay the charge for such service either to Landlord for further payment to the Service Provider or directly to the Service Provider and, in either case: (a) Landlord shall credit such payment against any charge for such service made by Landlord to Tenant under this Lease; and (b) Tenant’s payment of the Service Provider shall not relieve Landlord from any obligation under this Lease concerning the provisions of such services.

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(f)           Landlord shall maintain in a safe and orderly manner all of its records pertaining to the Operating Expenses payable pursuant to this Lease in accordance with generally accepted accounting principles. Provided there is no outstanding uncured monetary default by Tenant under this Lease, Tenant shall have the right, at its sole cost and expense, to cause Landlord’s records related to a Reconciliation Statement to be audited provided: (i) Tenant provides notice of its intent to audit such Reconciliation Statement within 3 months after receipt of the Reconciliation Statement; (ii) the audit is performed by a certified public accountant that has not been retained on a contingency basis or other basis where its compensation relates to the cost savings of Tenant; (iii) any such audit may not occur more frequently than once during each 12-month period of the Term, nor apply to any year prior to the year of the then-current Reconciliation Statement being reviewed; (iv) the audit is completed within 1 month after the date that Landlord makes all of the necessary and applicable records available to Tenant or Tenant’s auditor; (v) the contents of Landlord’s records shall be kept confidential by Tenant, its auditor, and its other professional advisors, other than as required by applicable Law, and if requested by Landlord, Tenant and its auditor shall execute Landlord’s standard confidentiality agreement as a condition to Tenant’s audit rights under this paragraph; and (vi) if Tenant’s auditor determines that an overpayment is due Tenant, Tenant’s auditor shall produce a detailed report addressed to both Landlord and Tenant, which report shall be delivered within 30 days after Tenant’s auditor’s completion of the audit. During completion of Tenant’s audit, Tenant shall nonetheless timely pay all of Tenant’s Share of Operating Expenses without setoff or deduction (except as expressly provided by this Lease). If Tenant’s audit report discloses any discrepancy, Landlord and Tenant shall use good faith efforts to resolve the dispute. If the parties are unable to reach agreement within 30 days after Landlord’s receipt of the audit report, Tenant shall have the right to refer the matter to a mutually acceptable independent certified public accountant (such approval by either party not to be unreasonably withheld, conditioned or delayed), who shall work in good faith with Landlord and Tenant to resolve the discrepancy; provided if Tenant does not do so within such 30-day period (which period shall be extended on a day-for-day basis for each day Landlord fails to approve Tenant’s reasonable selection of an accountant), Landlord’s calculations and the Reconciliation Statement at issue shall be deemed final and accepted by Tenant. The fees and costs of such independent accountant to which such dispute is referred shall be borne by the unsuccessful party and shall be shared pro rata to the extent each party is unsuccessful as determined by such independent certified public accountant, whose decision shall be final and binding. Within 30 days after resolution of the dispute, whether by agreement of the parties or a final decision of an independent accountant, Landlord shall pay or credit to Tenant, or Tenant shall pay to Landlord, as the case may be, all unpaid Operating Expenses due and owing.

6.            UTILITIES.

(a)          Commencing on the Commencement Date, and continuing throughout the Term, Tenant shall pay for utility services as follows without setoff, deduction, or counterclaim: (i) Tenant shall pay directly to the applicable utility service provider for any utilities that are separately metered (not submetered) to the Premises; (ii) Tenant shall pay Landlord for any utilities serving the Premises that are separately submetered based upon Tenant’s submetered usage, (Landlord shall be responsible for any maintenance and replacement costs associated with such submeters; the costs of which may be included in Operating Expenses); and (iii) Tenant shall pay Landlord for Tenant’s Share of Project Utility Costs, as set forth in Section 5 above. “Project Utility Costs” means the total cost for all utilities serving the Project, excluding the costs of utilities that are directly metered or submetered to Building tenants or paid separately by such tenants. As of the date hereof, to Landlord’s actual knowledge, but without prejudice to Landlord’s right to make modifications from time to time:

● Electric for the lights and plugs of the Premises is currently separately submetered, and electric for HVAC serving the Premises is paid as part of Operating Expenses pursuant to Section 5.

Notwithstanding anything to the contrary in this Lease, Landlord shall have the right to install meters, submeters, or other energy-reducing systems in the Premises at any time to measure any or all utilities serving the Premises, the costs of which shall be included in Project Expenses. For those utilities set forth in subsection (ii) above, Landlord shall have the right to either invoice Tenant for such utilities separately as Additional Rent (payable within 30 days after receipt of an invoice therefor), or include such utilities in amounts due as Project Expenses. Landlord shall have the right to estimate the utility charge, which estimated amount shall be payable to Landlord within 30 days after receipt of an invoice therefor and may be included along with the invoice for Project Expenses, provided Landlord shall be required to reconcile on an annual basis based on utility invoices received for such period. The cost of utilities payable by Tenant under this Section shall include all applicable taxes and Landlord’s then-current reasonable charges for reading the applicable meters, provided Landlord shall have the right to engage a third party to read the submeters,

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and Tenant shall reimburse Landlord for both the utilities consumed as evidenced by the meters plus the costs for reading the meters within 30 days after receipt of an invoice therefor. Tenant shall pay such rates as Landlord may establish from time to time, which shall not be in excess of any applicable rates chargeable by Law, or in excess of the general service rate or other such rate that would apply to Tenant’s consumption if charged by the utility or municipality serving the Building or general area in which the Building is located. If Tenant fails to pay timely any direct-metered utility charges from the applicable utility provider, and such failure continues uncured following fifteen (15) days written notice thereof Landlord shall have the right but not the obligation to pay such charges on Tenant’s behalf and bill Tenant for such costs plus the Administrative Fee (as defined in Section 17), which amount shall be payable to Landlord as Additional Rent within 30 days after receipt of an invoice therefor. Tenant shall at all times comply with the rules, regulations, terms, policies, and conditions applicable to the service, equipment, wiring, and requirements of the utility supplying electricity to the Building.

(b)          For any separately metered utilities, Landlord is hereby authorized to request and obtain, on behalf of Tenant, Tenant’s utility consumption data from the applicable utility provider for informational purposes and to enable Landlord to obtain full building Energy Star scoring for the Building. Landlord shall have the right to shut down the Building systems (including electricity and HVAC systems) for required maintenance, safety inspections, or any other reason, including without limitation in cases of emergency, provided, except in the case of an emergency, Landlord shall use commercially reasonable efforts to provide at least three (3) business days’ notice and to cause any planned shutdown to occur during non-business hours. Landlord shall not be liable for any interruption in providing any utility that Landlord is obligated to provide under this Lease, unless such interruption or delay: (i) renders the Premises or any material portion thereof untenantable for the normal conduct of Tenant’s business at the Premises, and Tenant has ceased using such untenantable portion, provided Tenant shall first endeavor to use any generator that serves the Premises or of which Tenant has the beneficial use; (ii) results from Landlord’s negligence or willful misconduct or is in Landlord’s control to remediate; and (iii) extends for a period longer than 3 consecutive days, in which case, Tenant’s obligation to pay Fixed Rent and Project Expenses shall be abated with respect to the untenantable portion of the Premises that Tenant has ceased using for the period beginning on the 4^th consecutive day after such conditions are met and ending on the earlier of: (A) the date Tenant recommences using the Premises or the applicable portion thereof; or (B) the date on which the service(s) is substantially restored. The rental abatement described above shall be Tenant’s sole remedy in the event of a utility interruption, and Tenant hereby waives any other rights against Landlord in connection therewith. Landlord shall have the right to change the utility providers to the Project at any time. In the event of a casualty or condemnation affecting the Building and/or the Premises, the terms of Sections 14 and 15, respectively, shall control over the provisions of this Section.

(c)          If Landlord reasonably determines that: (i) Tenant exceeds the design conditions for the heating, ventilation, and air conditioning (“HVAC”) system serving the Premises, introduces into the Premises equipment that overloads such system, or negligently causes such system to not adequately perform its proper functions; or (ii) the heavy concentration of personnel, motors, machines, or equipment used in the Premises, including telephone and computer equipment, or any other condition in the Premises caused by Tenant (for example, more than one shift per day or 24-hour use of the Premises), adversely affects the temperature or humidity otherwise maintained by such system, then Landlord shall notify Tenant in writing and Tenant shall have 20 days to remedy the situation to Landlord’s reasonable satisfaction. Landlord represents that the use of the Premises for general office use during Business Hours consistent with the use by other office tenants in the Building will not cause any of the adverse conditions set forth in the preceding sentence nor permit Landlord to have any right to install additional equipment at Tenant’s cost. If Tenant fails to timely remedy the situation to Landlord’s reasonable satisfaction, Landlord shall have the right to install one or more supplemental air conditioning units in the Premises with the cost thereof, including the cost of installation, operation and maintenance, being payable by Tenant to Landlord within 30 days after Landlord’s written demand. Tenant shall not change or adjust any closed or sealed thermostat or other element of the HVAC system serving the Premises without Landlord’s express prior written consent, such consent not to be unreasonably conditioned, withheld, or delayed. Landlord may install and operate meters or any other reasonable system for monitoring or estimating any services or utilities used by Tenant in excess of those required to be provided by Landlord (including a system for Landlord’s engineer reasonably to estimate any such excess usage). If such system indicates materially excess services or utilities, Tenant shall pay Landlord’s reasonable charges for installing and operating such system and any supplementary air conditioning, ventilation, heat, electrical, or other systems or equipment (or adjustments or modifications to the existing Building systems and equipment), and Landlord’s reasonable charges for such amount of excess services or utilities used by Tenant. All supplemental HVAC systems and equipment serving the Premises (including without limitation Tenant’s Supplemental HVAC, as defined in Section 11(a) below) shall be

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separately metered to the Premises at Tenant’s cost, and Tenant shall be solely responsible for all electricity registered by, and the maintenance and replacement of, such meters. Landlord has no obligation to keep cool any of Tenant’s information technology equipment that is placed together in one room, on a rack, or in any similar manner (“IT Equipment”), and Tenant waives any claim against Landlord in connection with Tenant’s IT Equipment. Landlord shall have the option to require that the computer room and/or information technology closet in the Premises shall be separately submetered at Tenant’s expense, and Tenant shall pay Landlord for all electricity registered in such submeter. Within 1 month after written request, Tenant shall provide to Landlord electrical load information reasonably requested by Landlord with respect to any computer room and/or information technology closet in the Premises. Landlord shall provide Tenant, whenever reasonably practicable, advanced notice of any service slowdowns, interruptions, or stoppages and, to the extent any equipment being maintained, repaired, replaced, or improved is located within the Premises, shall use its commercially reasonable efforts (subject to union and governmental requirements) to schedule such work outside of Business Hours, except in the case of emergencies.

7.            LANDLORD SERVICES.

(a)          Subject to Section 5 and Section 6, Landlord shall provide the following to the Premises during the Term: (i) HVAC service in in accordance with the following temperature specifications during Business Hours: 72 degrees at 50% relative humidity; provided HVAC service to the Premises on Saturdays will be provided only upon Tenant’s prior request to Landlord received no later than noon on the preceding business day; (ii) electricity for lighting and standard office equipment for comparable buildings in the market in which the Project is located; (iii) water, sewer, and, to the extent applicable to the Building, gas, oil, and steam service; (iv) security as reasonably determined by Landlord for the Building and Common Areas on a 24/7 basis; and (v) cleaning services meeting the minimum specifications set forth in Exhibit D attached hereto. Tenant, at Tenant’s expense, shall make arrangements with the applicable utility companies and public bodies to provide, in Tenant’s name, telephone, cable, and any other utility service not provided by Landlord that Tenant desires at the Premises. The Building electrical system will be capable of providing an average of 6 watts per square foot of rentable area to the Premises for lighting and measured load.

(b)          Landlord shall not be obligated to furnish any services, supplies, or utilities other than as set forth in this Lease; provided, however, upon Tenant’s prior request sent in accordance with Section 25(n) below, Landlord may furnish additional services, supplies, or utilities, in which case Tenant shall pay to Landlord, immediately upon demand, Landlord’s then-current charge for such additional services, supplies, or utilities, or Tenant’s pro rata share thereof, if applicable, as reasonably determined by Landlord. Landlord’s current rate for HVAC service outside of Business Hours requested with at least 24 hours’ prior notice (or by noon for weekend service) is $92.00 per hour for cooling and $57.00 per hour for heating, per zone, with a 2-hour minimum if the service does not commence immediately following the end of a day’s Business Hours.

8.            USE; SIGNS; COMMON AREAS; PARKING.

(a)          Tenant shall use the Premises for general office use (non-medical) and storage incidental thereto, and for no other purpose (“Permitted Use”). Tenant’s use of the Premises for the Permitted Use shall be subject to all applicable Laws, and to all reasonable requirements of the insurers of the Building. Tenant represents and warrants to Landlord, for informational purposes only, that Tenant’s current NAICS Code is set forth in Section 1 hereof, provided the foregoing shall not be construed in any manner as a restriction on the Permitted Use.

(b)          Landlord shall provide Tenant with Building-standard identification signage on all Building lobby directories and at the main entrance to the Premises, and directional signage at the elevator lobbies on any multi-tenant floors, the costs of which shall be paid for by Landlord for the originally named Tenant, otherwise by Tenant as Additional Rent within 30 days after written demand. Tenant shall not place, erect, or maintain any signs at the Premises, the Building, or the Project that are visible from outside of the Premises. Notwithstanding the foregoing and provided all of the Monument Signage Conditions are fully satisfied, Tenant shall have the right to cause Landlord, exercisable by the delivery of written notice from Tenant to Landlord within the first 12-month period after the Commencement Date, to install a full panel sign (“Panel”) on the top slot of the existing monument sign of the Building (“Monument Sign”), subject to applicable Laws (including without limitation all necessary local governmental approvals) and satisfaction of all of the following terms and conditions: (i) the size and Tenant’s specifications and design of the Panel shall be subject to Landlord’s prior written consent and generally consistent

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with the aesthetic standards of the Building; (ii) Landlord shall obtain the Panel on Tenant’s behalf, at Tenant’s sole cost and expense; (iii) Landlord shall install the Panel, at Tenant’s sole and expense; (iv) Landlord shall maintain and repair the Monument Sign, the costs of which shall be proportionately paid by the tenants having panel signs on such Monument Sign; (v) Landlord shall maintain and repair the Panel, at Tenant’s sole cost and expense; (vi) if the Monument Sign is illuminated, Tenant shall pay its proportionate share of the costs of such illumination (equitably allocated in Landlord’s reasonable determination); and (vii) if the Panel requires replacement, such replacement shall be at Tenant’s sole cost and expense. The “Monument Signage Conditions” are that: (a) the originally named Tenant has not subleased more than twenty percent (20%) of the Premises (other than to a Permitted Transferee); (b) there has been no Event of Default; and (c) this Lease is in full force and effect. From and after the Surrender Date, or immediately upon any of the Monument Signage Conditions no longer being satisfied, Landlord shall have the right, at Tenant’s sole cost and expense, to remove the Panel and repair and restore the Monument Sign to its prior existing condition. Tenant shall pay Landlord for all costs due under this paragraph as Additional Rent within 30 days after receipt of Landlord’s invoice therefor.

(c)          Subject to the Building rules and regulations, Tenant shall have the nonexclusive right in common with others to use the Common Areas for their intended purposes.

(d)          Provided Landlord does not unreasonably and materially interfere with Tenant’s normal and customary business operations and to the extent that the Tenant’s Leasehold Improvements are not damaged, and Tenant is not denied the beneficial use of its Premises, Landlord shall have the right in its sole but reasonable discretion to, from time to time, construct, maintain, operate, repair, close, limit, take out of service, alter, change, and modify all or any part of the Common Areas. Landlord, Landlord’s agents, contractors, and utility service providers shall have the right to install, use, and maintain ducts, pipes, wiring, and conduits in and through the Premises provided such use does not cause the usable area of the Premises to be reduced beyond a de minimis amount. Landlord shall use commercially reasonable efforts to schedule and conduct all such construction, maintenance, repairs, closures, alterations or changes so as to reasonably minimize any disruption or interference to Tenant’s business.

(e)          Subject to Landlord’s security measures and Force Majeure Events (as defined in Section 25(g)), Landlord shall provide Tenant with access to the Building and, if applicable, passenger elevator service for use in common with others for access to and from the Premises 24 hours per day, 7 days per week, except during emergencies. Landlord shall have the right to limit the number of elevators (if any) to be operated during repairs and during non-Business Hours and on weekends. If applicable, Landlord shall provide Tenant with access to the freight elevator(s) of the Building from time to time following receipt of Tenant’s prior request, and Tenant shall pay Landlord’s then-current charge for use of such freight elevators.

(f)           Tenant shall have the right throughout the Term to obtain 10 permits for unreserved parking on level P2, and 5 permits for reserved parking, of standard-size automobiles of Tenant and its employees within the parking facility serving the Building: (i) if applicable, by entering from time to time into the parking operator’s standard agreement covering the use of parking spaces in such facility; (ii) upon the terms and subject to the conditions set forth in such agreements; and (iii) subject to Tenant’s monthly payment to such operator of its fee for the right to such parking spaces. The current fee for such spaces is $400.00 per month for each unreserved space and $500.00 per month for each reserved space, both inclusive of applicable taxes; provided, however, the parking garage operator reserves the right to increase the fee from time to time, consistent with prevailing rates in such parking facility. All vehicles entering or parking in the parking areas shall do so at the owner’s sole risk and Landlord assumes no responsibility for any damage, destruction, vandalism, or theft with respect to such vehicles. Notwithstanding anything set forth herein, Tenant may elect to have its employees contract directly for the parking spaces and pay the fee directly to the garage operator. To the extent not included in the fee (if any) charged for parking in the parking facility for the Building, Tenant shall be solely liable for all parking taxes (if any) imposed by the applicable governmental authority with respect to Tenant’s parking spaces. If Landlord elects (in its sole and absolute discretion) to operate the parking facility, Tenant shall pay Landlord such taxes within 30 days after receipt of an invoice therefor and Landlord shall then remit such taxes to the applicable governmental authority. If the parking facility is not operated by Landlord, Tenant shall pay the operator such taxes and the operator shall then remit such taxes to the applicable governmental authority.

(g)          During the Term and subject to demand, Landlord shall endeavor to provide a fitness center within the Building or, for so long as Two Commerce Square is owned by Landlord or an affiliate of Landlord, Two

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Commerce Square. Tenant shall have the right, in common with other tenants, to use any conference space available to tenants of the Building and, for so long as Two Commerce Square is owned by Landlord or an affiliate of Landlord, Two Commerce Square.

9.            TENANT’S ALTERATIONS.

(a)          The construction of the initial Leasehold Improvements (as defined in Exhibit C) shall be governed by the terms of Exhibit C attached hereto and made a part hereof. Except for the Leasehold Improvements and as otherwise set forth below, Tenant shall not, and shall not permit any Tenant Agent to, cut, drill into, or secure any fixture, apparatus, or equipment, or make alterations, improvements, or physical additions of any kind to any part of the Premises (collectively, “Alterations”) without first obtaining the written consent of Landlord, which consent shall not be unreasonably withheld, conditioned, or delayed. If Landlord fails to respond to a request for consent to a proposed Alteration within 10 business days after Landlord’s receipt of such request, the request shall be deemed denied. Notwithstanding the foregoing, if Landlord fails to respond within such 10 business-day period, Tenant may thereafter send to Landlord a second written requesting approval of the proposed Alteration, which request must set forth in bold and 14-point capitalized type on the first page thereof the following statement: “SECOND AND FINAL REQUEST—LANDLORD HAS 10 BUSINESS DAYS TO RESPOND PURSUANT TO SECTION 9” (“Second Alteration Request”). If Landlord then fails to respond to the Second Alteration Request within 10 business days after receipt thereof (“Second Alteration Request Response Period”), Landlord shall be deemed to have elected to consent to the proposed Alteration, provided Tenant shall otherwise have complied with all provisions of this Lease relating to such Alterations. Notwithstanding the foregoing, if Landlord notifies Tenant in writing within the Second Alteration Request Response Period that Landlord requires additional time to review the request, then the Second Alteration Request Response Period shall be extended by an additional 10 business days. “Tenant Agent” means any agent, employee, subtenant, assignee, contractor, subcontractor, client, family member, licensee, customer, invitee, or guest of Tenant. All Alterations shall be completed in compliance with all applicable Laws, and Landlord’s reasonable rules and regulations for construction, and sustainable guidelines and procedures, using new or comparable materials only, by a contractor reasonably approved in writing by Landlord, and on days and at times reasonably approved in writing by Landlord. Notwithstanding the foregoing, Landlord’s consent shall not be required for any Alteration costing less than $50,000.00 in the aggregate per calendar year and that: (i) is nonstructural; (ii) does not impact any of the Building systems, involve electrical work, require a building permit, materially affect the air quality in the Building, or require Landlord to incur additional costs as a result thereof; and (iii) is not visible from outside of the Premises.

(b)          Throughout the performance of Alterations, Tenant shall carry, or cause any contractor, subcontractor, or design professional to carry, via written contract, workers’ compensation insurance in statutory limits together with employer’s liability insurance, commercial general liability insurance (including, but not limited to, coverage for ongoing and products-completed operations), automobile liability, and umbrella/excess liability insurance in like form and limits in accordance with the terms and conditions required of Tenant under Section 12 below, and such other insurance coverage and limits as Landlord may otherwise reasonably require, which may include, without limitation, reasonable amounts of professional liability insurance with respect to design professionals, as well as contractor’s pollution liability with respect to contractors and subcontractors. Tenant shall also require any such contractor, subcontractor, or design professional to satisfy the same additional coverage terms as required of Tenant under Section 12 below with respect to naming Landlord, Landlord’s Property Manager, and Additional Insureds (as defined in Section 12) and any other applicable party whose name and address shall have been furnished to Tenant each as an additional insured, which have been furnished to Tenant by way of endorsement ISO CG 20 37 together with CG 20 10 or their equivalent, which shall be primary, and any other insurance that may be available to Landlord and any such additional insured will be excess and noncontributory, and waiving all rights of recovery and subrogation. In addition, Tenant shall carry “all risk” Builder’s Risk insurance covering the Alterations, unless otherwise agreed upon in writing by Landlord and Tenant. Tenant shall provide to Landlord prior written notice of its intention to perform any Alteration, together with a certificate of insurance from each contractor evidencing that the insurance required under this Lease is in effect during all construction activities.

(c)          Promptly after final completion of any Alteration, Tenant shall provide Landlord with a release of liens from all contractors, subcontractors, and design professionals associated with such Alterations. Tenant shall be solely responsible for the installation and maintenance of its data, telecommunication, and security systems and wiring at the Premises, which shall be done in compliance with all applicable Laws, and Landlord’s rules and regulations. Tenant shall be responsible for all elements of Alterations (including, without limitation, compliance with

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Laws, and functionality of the design), and Landlord’s approval of any Alteration and the plans therefor shall in no event relieve Tenant of the responsibility for such design, or create responsibility or liability on Landlord’s part for their completeness, design sufficiency, or compliance with Laws. With respect to all improvements and Alterations made after the date hereof, Tenant acknowledges that (A) Tenant is not, under any circumstance, acting as the agent of Landlord; and (B) the Alterations were not made for the immediate use and benefit of Landlord. Nothing in this Lease or in any consent to the making of Alterations or improvements shall be deemed or construed in any way as constituting a request by Landlord, express or implied, to any contractor, subcontractor, or supplier for the performance of any labor or the furnishing of any materials for the use or benefit of Landlord. Tenant shall not overload any floor or part thereof in the Premises or the Building, including any public corridors or elevators, by bringing in, placing, storing, installing or removing any large or heavy articles, and Landlord may prohibit, or may direct and control the location and size of, safes and all other heavy articles, and may reasonably require, at Tenant’s sole cost and expense, supplementary supports of such material and dimensions as Landlord may deem necessary to properly distribute the weight. Any articles of personal property including business and trade fixtures not attached to, or built into, the Premises, Tenant’s trade machinery and equipment, free-standing cabinet work, and movable partitions, which were installed by Tenant in the Premises as part of the Leasehold Improvements or otherwise shall be and remain the property of Tenant and may be removed by Tenant at any time during the Term as long as Tenant is not in default hereunder (following the lapse of any applicable notice and cure periods) and provided Tenant repairs to Landlord’s reasonable satisfaction any damage to the Premises, the Building and any other part of the Project caused by such removal.

10.          ASSIGNMENT AND SUBLETTING.

(a)          Except as expressly permitted pursuant to Section 10(c), neither Tenant nor Tenant’s legal representatives or successors-in-interest by operation of law or otherwise, shall sell, assign, transfer, hypothecate, mortgage, encumber, grant concessions or licenses, sublet, or otherwise dispose of all or any interest in this Lease or the Premises, or permit any person or entity other than Tenant to occupy any portion of the Premises (each of the foregoing is a “Transfer” to a “Transferee”), without Landlord’s prior written consent, which consent shall not be unreasonably withheld, conditioned, or delayed. If Landlord fails to respond to a request for consent to a proposed Transfer within 10 business days after Landlord’s receipt of such request and all of the Transfer Information, the request shall be deemed denied. Notwithstanding the foregoing, if Landlord fails to respond within such 10 business-day period, Tenant may thereafter send to Landlord a second written request for approval of the proposed Transfer, which request must set forth in bold and 14-point capitalized type on the first page thereof the following statement: “SECOND AND FINAL REQUEST—LANDLORD HAS 5 BUSINESS DAYS TO RESPOND PURSUANT TO SECTION 10” (“Second Transfer Request”). If Landlord then fails to respond to the Second Transfer Request within 5 business days after receipt thereof, Landlord shall be deemed to have elected to consent to the proposed Transfer, but Landlord shall not be estopped by or deemed to have approved any specific terms of the Transfer (such as, for example, if the assignment document were to release Tenant from any further liability under this Lease or if the sublease provides for a sublease term extending beyond the term of this Lease).. Any Transfer undertaken without Landlord’s prior written consent (other than pursuant to Section 10(c)) shall, at Landlord’s option, be void. For purposes of this Lease, a Transfer shall include, without limitation, any assignment by operation of law, and any merger, consolidation, or asset sale involving Tenant, any direct or indirect transfer of control of Tenant, and any transfer of a majority of the ownership interests in Tenant. Consent by Landlord to any one Transfer shall be held to apply only to the specific Transfer authorized, and shall not be construed as a waiver of the duty of Tenant, or Tenant’s legal representatives or assigns, to obtain from Landlord consent to any other or subsequent Transfers pursuant to the foregoing, or as modifying or limiting the rights of Landlord under the foregoing covenant by Tenant.

(b)          Without limiting the bases upon which Landlord may reasonably withhold its consent to a proposed Transfer, it shall not be unreasonable for Landlord to withhold its consent if: (i) the proposed assignee shall have a net worth that is not acceptable to Landlord in Landlord’s reasonable discretion, taking into account the remaining obligations under this Lease and the fact that Tenant is not released; (ii) Tenant is proposing to Transfer to an existing tenant of the Building or the building known as Two Commerce Square if owned by Landlord or Landlord’s affiliate(s), or to another prospect with whom Landlord or Landlord’s affiliate(s) are then actively negotiating in the Building or Two Commerce Square, and comparable space is available in such buildings; or (iii) the nature of such Transferee’s proposed business operation would violate the terms of this Lease or of any other lease for the Building (including any exclusivity provisions).

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(c)          Notwithstanding anything to the contrary in this Lease, Tenant shall have the right without the prior consent of Landlord, to make a Transfer to any Affiliate (as defined below), or an entity into which Tenant merges or that acquires substantially all of the assets or stock of Tenant (“Surviving Entity”) (the Surviving Entity or Affiliate are also referred to as a “Permitted Transferee”); provided: (i) Tenant delivers to Landlord the Transfer Information (as defined below); (ii) the Surviving Entity shall have a tangible net worth at least equal to the net worth of Tenant on the date of this Lease or otherwise reasonably acceptable to Landlord taking into account the fact that the originally named Tenant is not being released; (iii) the originally named Tenant shall not be released or discharged from any liability under this Lease by reason of such Transfer, and the Permitted Transferee shall assume in writing all of the obligations and liabilities of Tenant under this Lease; (iv) the use of the Premises shall not change; and (v) such Transfer is not being made to circumvent Tenant’s obligations under this Lease. An “Affiliate” means a corporation, limited liability company, partnership, or other registered entity, 50% or more of whose equity interest is owned by the same persons or entities owning 50% or more of Tenant’s equity interests, a subsidiary, or a parent corporation. If Tenant assigns this Lease to a Permitted Transferee, Tenant shall provide written notice thereof to Landlord within fifteen (15) days after the date of such assignment.

(d)          If at any time during the Term Tenant desires to complete a Transfer, Tenant shall give written notice to Landlord of such desire together with the Transfer Information. If Tenant desires to assign this Lease or to sublease the entire Premises other than pursuant to Section 10(c) for the full (or substantially the full) Term of this Lease, Landlord shall have the right to accelerate the Expiration Date so that the Expiration Date shall be the date on which the proposed assignment or sublease would be effective. If Landlord elects to accelerate the Expiration Date pursuant to this paragraph, Tenant shall have the right to rescind its request for Landlord’s consent to the proposed assignment or sublease by giving written notice of such rescission to Landlord within 10 days after Tenant’s receipt of Landlord’s acceleration election notice. If Tenant does not so rescind its request, Tenant shall deliver the Premises in the same condition as Tenant is, by the terms of this Lease, required to deliver the Premises to Landlord upon the Expiration Date.

(e)          The “Transfer Information” means the following information: (i) a copy of the proposed form of assignment and assumption agreement, or sublease agreement, as applicable (with respect to a Permitted Transfer, such agreement to be delivered to Landlord within 10 business days after the transaction closes and with respect to all other Transfers, such agreement shall be provided in draft form and shall not be executed until Landlord’s consent has been given); and (ii) a copy of the then-current financials of the Transferee (either audited or certified by the chief financial officer or other officer of the Transferee).

(f)           Any sums or other economic consideration received by Tenant as a result of any Transfer (except rental or other payments received that are attributable to the amortization of the cost of leasehold improvements made to the transferred portion of the Premises by Tenant for the Transferee), less Tenant’s reasonable expenses incident to the Transfer, including, without limitation, standard leasing commissions) whether denominated rentals under the sublease or otherwise, that exceed, in the aggregate, the total sums which Tenant is obligated to pay Landlord under this Lease (prorated to reflect obligations allocable to that portion of the Premises subject to such Transfer) shall, at Landlord’s option, either be retained by Tenant or divided evenly between Landlord and Tenant, with Landlord’s portion being payable to Landlord as Additional Rent without affecting or reducing any other obligation of Tenant hereunder, provided such difference shall be further reduced by the sum of the following: (i) rental or other payments received that are attributable to the amortization of the cost of leasehold improvements made to the transferred portion of the Premises by Tenant for the Transferee; (ii) reasonable expenses incident to the Transfer, including standard leasing commissions other economic concessions including, without limitation, planning allowance, lease takeover payments, moving expenses and the like paid by Tenant to or on behalf of the Transferee in connection with the Transfer; (iii) reasonable costs incurred by Tenant in advertising the transfer space; and (iv) Tenant’s and Landlord’s reasonable attorneys’ fees paid by Tenant to third parties in connection with the Transfer.

(g)          Regardless of Landlord’s consent to a proposed Transfer, no Transfer shall release Tenant from Tenant’s obligations or alter Tenant’s primary liability to fully and timely pay all Rent when due from time to time under this Lease and to fully and timely perform all of Tenant’s other obligations under this Lease, and the originally named Tenant and all assignees shall be jointly and severally liable for all Tenant obligations under this Lease. The acceptance of rental by Landlord from any other person shall not be deemed to be a waiver by Landlord of any provision hereof. If a Transferee defaults in the performance of any of the terms of this Lease, Landlord may proceed directly against the originally named Tenant without the necessity of exhausting remedies against such

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Transferee. If there has been a Transfer and an Event of Default occurs, Landlord may collect Rent from the Transferee and apply the net amount collected to the Rent herein reserved; but no such collection shall be deemed a waiver of the provisions of this Section, an acceptance of such Transferee as tenant hereunder or a release of Tenant from further performance of the covenants herein contained.

11.          REPAIRS AND MAINTENANCE.

(a)          Except with respect to Landlord Repairs (as defined below) and any other obligations of Landlord expressly set forth in this Lease, Tenant, at Tenant’s expense, shall keep and maintain the Premises in good order and condition including promptly making all repairs necessary to keep and maintain such in good order and condition. When used in this Lease, “repairs” shall include repairs and any reasonably necessary replacements. Tenant shall have the option of replacing lights, ballasts, tubes, ceiling tiles, outlets and similar equipment itself or advising Landlord of Tenant’s desire to have Landlord make such repairs, in which case Tenant shall pay to Landlord for such repairs at Landlord’s then-standard rate. To the extent that Tenant requests that Landlord make any other repairs that are Tenant’s obligation to make under this Lease, Landlord may elect to make such repairs on Tenant’s behalf, at Tenant’s expense, and Tenant shall pay to Landlord such expense along with the Administrative Fee. If there is an uncured Event of Default, Landlord may elect to require that Tenant prepay the amount of such repair. All Tenant repairs shall comply with Laws and utilize materials and equipment that are at least equal in quality to those being repaired. In addition, Tenant shall maintain, at Tenant’s expense, Tenant’s Supplemental HVAC, Premises Hot Water Heaters, and/or Alterations in a clean and safe manner and in proper operating condition throughout the Term. “Tenant’s Supplemental HVAC” means any supplemental HVAC system serving the Premises (regardless of who installed it). “Premises Hot Water Heater” means any hot water heater serving the Premises (regardless of who installed it), including without limitation expansion tanks and any associated piping. Tenant shall maintain Tenant’s Supplemental HVAC under a service contract with a firm and upon such terms as may be reasonably satisfactory to Landlord, including inspection and maintenance on at least a semiannual basis, and provide Landlord with a copy thereof. Tenant shall maintain Premises Hot Water Heaters under a service contract with a firm and upon such terms as may be reasonably satisfactory to Landlord, including inspection and maintenance on at least an annual basis, and provide Landlord with a copy thereof. Within 5 business days after Landlord’s request, Tenant shall provide Landlord with evidence that such contracts are in place. Further, Tenant shall ensure that all Premises Hot Water Heaters installed by Tenant have a working automatic water shut-off device with audible alarm and a leak pan underneath. All repairs to the Building and/or the Project made necessary solely by reason of the installation, maintenance, and operation of Tenant’s Supplemental HVAC, Premises Hot Water Heaters, and Alterations shall be Tenant’s expense. In the event of an emergency, such as a burst waterline or act of God, Landlord shall have the right to make repairs for which Tenant is responsible hereunder (at Tenant’s cost) without giving Tenant prior notice, but in such case Landlord shall provide notice to Tenant as soon as practicable thereafter, and Landlord shall take commercially reasonable steps to minimize the costs incurred. Further, Landlord shall have the right to make repairs for which Tenant is responsible hereunder (at Tenant’s cost) with prior notice to Tenant if Landlord believes in its sole and absolute discretion that the repairs are necessary to prevent harm or damage to the Building, and Landlord shall take commercially reasonable steps to minimize the costs incurred.

(b)          Landlord, at Landlord’s expense (except to the extent such expenses are includable in Project Expenses), shall make all necessary repairs to: (i) the footings and foundations and the structural elements of the Building; (ii) the roof of the Building; (iii) the HVAC, plumbing, elevators (if any), electric, fire protection and fire alert systems within the Building core from the core to the point of connection for service to the Premises, but specifically excluding Tenant’s Supplemental HVAC, Premises Hot Water Heaters, and Alterations; (iv) the Building exterior; and (v) the Common Areas (collectively, “Landlord Repairs”). All Landlord Repairs shall be made in accordance with the standard of a first class office building. Any provision of this Lease to the contrary notwithstanding, any repairs to the Project or any portion thereof made necessary by the willful misconduct of Tenant or any Tenant Agent shall be made at Tenant’s expense, subject to the waivers set forth in Section 12(c). Landlord shall, with respect to Landlord Repairs, use commercially reasonable efforts to minimize the disruption or interference to Tenant’s normal and customary business operations in the Premises.

(c)          The parties agree it is in their mutual best interest that the Building and Premises be operated and maintained in a manner that is environmentally responsible, fiscally prudent, and provides a safe and productive work environment. Accordingly, Landlord shall use commercially reasonable efforts to operate and maintain the Common Areas of the Building to: (1) minimize to the extent reasonably feasible: (i) direct and indirect

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energy consumption and greenhouse gas emissions; (ii) water consumption; (iii) the amount of material entering the waste stream; and (iv) negative impacts upon the indoor air quality of the Building; and (2) permit the Building to maintain its LEED rating and an Energy Star label, to the extent applicable, the costs of which shall be included in Project Expenses (except to the extent otherwise not permitted). Further, at no material cost to Tenant, Tenant shall use commercially reasonable efforts to conduct its operations in the Building and within the Premises to: (1) minimize to the extent reasonably feasible: (i) direct and indirect energy consumption and greenhouse gas emissions; (ii) water consumption; (iii) the amount of material entering the waste stream; and (iv) negative impacts upon the indoor air quality of the Building; and (2) permit the Building to maintain its LEED rating and an Energy Star label, to the extent applicable. Notwithstanding any of the foregoing, in no event shall Tenant be deemed to be in default of this subsection (c) unless Landlord provides written notice of reasonable rules and regulations to implement the foregoing and Tenant fails to use reasonable efforts to comply with such rules and regulations.

12.          INSURANCE; SUBROGATION RIGHTS.

(a)          Tenant shall not violate, or permit the violation of, any condition imposed by any insurance policy then issued in respect of the Project and shall not do, or permit anything to be done, or keep or permit anything to be kept in the Premises, that would subject Landlord to any liability or responsibility for personal injury or death or property damage, increase any insurance rate in respect of the Project over the rate that would otherwise then be in effect, result in insurance companies of good standing refusing to insure the Project in amounts reasonably satisfactory to Landlord, or result in the cancellation of, or the assertion of any defense by the insurer in whole or in part to claims under, any policy of insurance in respect of the Project. If, by reason of any failure of Tenant to comply with this Lease, the premiums on Landlord’s insurance on the Project are higher than they otherwise would be, Tenant shall reimburse Landlord, on demand, for that part of such premiums attributable to such failure on the part of Tenant.

(b)          Tenant, at Tenant’s expense, shall obtain and keep in full force and effect at all times as of the Commencement Date (or Tenant’s earlier accessing of the Premises), all of the following insurance policies:

(i)           commercial general liability insurance written on an ISO CG 00 01 occurrence policy form or its equivalent, including a Separation of Insureds clause, coverage for contractual liability covering Tenant’s contractual obligations under this Lease as an insured contract, personal injury liability, host liquor liability, premises-operations and hazards thereto, as well as liability arising out of this Lease in respect of the Premises and the conduct or operation of business therein. The minimum limits of coverage shall be no less than $1,000,000 per occurrence and $2,000,000 general aggregate (applying per location) for bodily injury (including death and mental anguish) and property damage, $1,000,000 personal and advertising injury, and $1,000,000 products-completed operations (for which coverage shall be maintained continuously for a minimum period equal to the applicable statute of limitations or statute of repose, whichever is greater) or in such other amounts as Landlord may from time to time require.

(ii)          business automobile liability insurance covering liability arising from any auto (including, owned, non-owned, and hired auto, provided such non-owned and hired auto liability may be satisfied by endorsement to the commercial general liability policy) in an amount of no less than $1,000,000 combined single limit per accident for bodily injury and property damage.

(iii)         workers’ compensation in statutory limits together with employer’s liability insurance in amounts of no less than $1,000,000 each accident, $1,000,000 disease policy limit, and $1,000,000 disease each employee.

(iv)         umbrella/excess liability insurance on a follow form basis in amounts of no less than $10,000,000 per occurrence and $10,000,000 annual aggregate (applying per location) in excess of commercial general liability, employer’s liability, and automobile liability insurance policies, concurrent to, and no more restrictive than such underlying insurance policies. Such policy shall be endorsed to provide that this insurance is primary to, and noncontributory with, any other insurance in which Landlord and any Additional Insured is an insured, whether such other insurance is primary, excess, self-insurance, or insurance on any other basis, which must cause the umbrella/excess coverage to be vertically exhausted, whereby such coverage is not subject to any “Other Insurance” provision under Tenant’s umbrella/excess liability policy. The limits of liability may be satisfied by a combination of primary and excess liability insurance.

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(v)          property insurance written on an ISO CP 10 30-Cause of Loss-Special Form, commonly referred to as the “all risk” policy form, or its equivalent, including, but not limited to, coverage against sprinkler leakage and other damage due to water, fire, windstorm, cyclone, tornado, hail, explosion, riot,  civil commotion, aircraft, vehicle, smoke damage, vandalism, and malicious mischief insuring all present and future Tenant’s Property leased by or in the care, custody, and control of Tenant and located in the Premises in an amount of no less than the full replacement cost thereof, with an agreed amount endorsement (waiving applicable co-insurance clause). “Tenant’s Property” means Tenant’s trade fixtures, equipment, personal property, signage, and Specialty Alterations (as defined in Section 18(b)). Tenant shall not self-insure. Tenant shall neither have, nor make, any claim against Landlord for any loss or damage to Tenant’s Property, regardless of the cause of the loss or damage, including, without limitation, fire, explosion, falling plaster, steam, gas, air contaminants or emissions, electricity, electrical or electronic emanations or disturbance, water, rain, snow, or leaks from any part the Building or from the pipes, appliances, equipment, or plumbing works or from the roof or from any other place, nor shall Landlord be liable for any loss of or damage to property of Tenant or of others entrusted to employees of Landlord.

(vi)         business interruption insurance covering any loss due to the occurrence of any of the hazards required to be insured against by Tenant pursuant to this Lease, in an amount sufficient to cover Tenant’s monetary obligations under this Lease for a period of at least 12 months.

(vii)        boiler and machinery, if there is a boiler, supplemental air conditioning unit, or pressure object or similar equipment in the Premises.

(c)          All insurance policies required of Tenant under this Lease, including ongoing and products-completed operations coverage but exclusive of workers’ compensation, shall name Landlord, Landlord’s property manager, Brandywine Realty Trust, and any other applicable party whose name and address have been furnished to Tenant, each as an additional insured (collectively, “Additional Insureds”). All such coverages shall be primary and any other insurance that may be available to Landlord and any Additional Insured will be excess and noncontributory. Each Additional Insured shall be afforded coverage as broad as if this Lease had expressly covered the claim against the Additional Insured, and for the greater of the minimum amount called for by this Lease or Tenant’s actual policy limit.

(d)          Prior to the Commencement Date (or Tenant’s earlier accessing of the Premises), Tenant shall provide Landlord and/or Landlord’s designated agent with certificates that evidence that all insurance coverages required under this Lease are in place for the policy periods. Tenant shall also furnish to Landlord and/or Landlord’s designated agent throughout the Term replacement certificates at least 30 days prior to the expiration dates of the then-current policy or policies or, upon request by Landlord and/or Landlord’s designated agent from time to time, sufficient information to evidence that the insurance required under this Section is in full force and effect. In addition, all such policies shall contain a provision whereby the same cannot be canceled or materially altered without at least 30 days’ prior written notice of such cancellation or material alteration provided to Landlord, which shall be afforded by policy endorsement extending such notice to Landlord. Tenant shall include a waiver of the insurer’s right of subrogation against Landlord and Additional Insureds during the Term in each of Tenant’s liability and workers’ compensation policies. If Tenant fails to provide Landlord and/or Landlord’s designated agent with a requested insurance certificate as required under this Lease within 30 days after receipt of Landlord’s written request therefor, Tenant shall pay to Landlord a fee equal to $25.00 for each day that elapses after such 30-day period until Landlord and/or Landlord’s designated agent receives the requested certificate. In no event will any acceptance of certificates of insurance by Landlord, or failure of Tenant to provide certificates of insurance as required hereunder, be construed as a waiver or limitation of Tenant’s obligations to maintain insurance coverage pursuant to this Section 12. All insurance required under this Lease shall be issued by an insurance company that has been in business for at least 5 years, is authorized to do business in the State, and is rated “A-/X” or greater by A.M. Best’s Insurance Reports or any successor publication of comparable standing. The limits of any such required insurance shall not in any way limit Tenant’s liability under this Lease or otherwise. If Tenant fails to maintain such insurance, Landlord may, but shall not be required to, procure and maintain the same, at Tenant’s expense, which expense shall be reimbursed by Tenant as Additional Rent within 30 days after written demand. The deductible or self-insured retention amount required under any insurance policy maintained by Tenant shall be the sole responsibility of Tenant and not exceed $25,000, unless otherwise approved by Landlord in writing.

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(e)          When Alterations are in process, Tenant shall carry, or cause, any contractor, subcontractor, and design professional to carry the insurance specified in Section 9. In addition, Tenant shall require its movers and other vendors to procure insurance in like forms and amounts as required herein and deliver to Landlord and/or Landlord’s designated agent a certificate of insurance naming each Additional Insured as an additional insured, which policies shall be primary and any other insurance that may be available to Landlord and any Additional Insured will be excess and noncontributory.

(f)           Landlord shall obtain and maintain, or cause to be obtained or maintained, the following insurance during the Term: (i) replacement cost insurance including “all risk” property insurance on the Building, including without limitation leasehold improvements (exclusive of Tenant’s Property); (ii) commercial general liability insurance (including bodily injury and property damage) covering Landlord’s operations at the Project in amounts reasonably required by Landlord or any Mortgagee (as defined in Section 16); and (iii) such other insurance as reasonably required by Landlord or any Mortgagee.

(g)          Landlord and Tenant shall each include in each of its insurance policies (insuring the Building in case of Landlord, and insuring Tenant’s Property in the case of Tenant, against loss, damage, or destruction by fire or other casualty) a waiver of the insurer’s right of subrogation against the other party during the Term, and consent to a waiver of right of recovery pursuant to the terms of this paragraph. Both Landlord and Tenant agree to immediately give each insurance company which has issued to it policies of insurance written notice of the terms of such mutual waivers and to cause such insurance policies to be properly endorsed, if necessary, to prevent the invalidation thereof by reason of such waivers. If such waivers are unobtainable from the insurance carrier or unenforceable, then the party who was assured the waiver of subrogation shall receive from the other party: (i) an express agreement that such policy shall not be invalidated if the assured party waives the right of recovery against any party responsible for a casualty covered by the policy before the casualty; or (ii) any other form of permission for the release of the other party. Notwithstanding anything to the contrary in this Lease, each party hereby waives, releases, and agrees not to make any claim against or seek to recover from, the other party with respect to any claim (including a claim for negligence) that such party might otherwise have against the other party for loss, damage, or destruction with respect to its property occurring during the Term to the extent to which such party is, or is required to be, insured under a policy or policies containing a waiver of subrogation or permission to release liability. Nothing contained in this Section 12(g) shall be deemed to relieve either party of any duty imposed elsewhere in this Lease to repair, restore, or rebuild, or nullify any abatement of rents provided for elsewhere in this Lease.

13.          INDEMNIFICATION.

(a)          Except to the extent the release of liability and waiver of subrogation provided in Section 12 above applies, Tenant shall defend, indemnify, and hold harmless Landlord, Landlord’s property manager, Brandywine Realty Trust, and each of Landlord’s directors, officers, members, partners, trustees, employees, and agents (collectively, “Landlord Indemnitees”) from and against any and all third-party claims, actions, damages, liabilities, and expenses (including all reasonable costs and expenses (including reasonable attorneys’ fees)) to the extent arising out of or from or related to: (i) any breach or default of any of Tenant’s obligations under this Lease; (ii) any negligence or willful act or omission of Tenant, any Tenant Indemnitees (as defined below), or any Tenant Agent; and (iii) any acts or omissions occurring at, or the condition, use, or operation of, the Premises, except in any such case to the extent arising from Landlord’s negligence or willful misconduct. If Tenant fails to promptly defend a Landlord Indemnitee following written demand by the Landlord Indemnitee, the Landlord Indemnitee shall defend the same at Tenant’s expense, by retaining or employing counsel reasonably satisfactory to such Landlord Indemnitee.

(b)          Except to the extent the release of liability and waiver of subrogation provided in Section 12 above applies, Landlord shall defend, indemnify, and hold harmless Tenant and each of Tenant’s directors, officers, members, partners, trustees, employees, and agents (collectively, “Tenant Indemnitees”) from and against any and all third-party claims, actions, damages, liabilities, and expenses (including all reasonable costs and expenses (including reasonable attorneys’ fees)) to the extent arising out of or from or related to: (i) any breach or default of any of Landlord’s obligations under this Lease; and (ii) any negligence or willful misconduct of Landlord or any Landlord Indemnitees, except in any such case to the extent arising from Tenant’s negligence or willful misconduct. If Landlord fails to promptly defend a Tenant Indemnitee following written demand by the Tenant Indemnitee, the Tenant Indemnitee shall defend the same at Landlord’s expense, by retaining or employing counsel reasonably satisfactory to such Tenant Indemnitee.

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(c)          Landlord’s and Tenant’s obligations under this Section shall not be limited by the amount or types of insurance maintained or required to be maintained under this Lease. The provisions of this Section shall survive the Expiration Date.

14.          CASUALTY DAMAGE. If there occurs any casualty to the Project and: (i) insurance proceeds are unavailable to Landlord or are insufficient to restore the Project to substantially its pre-casualty condition; or (ii) more than 30% of the total area of the Building is damaged, Landlord shall have the right to terminate this Lease and all the unaccrued obligations of the parties hereto, by sending written notice of such termination to Tenant within 60 days after such casualty. Such notice shall specify a termination date not fewer than 30 nor more than 90 days after such notice is given to Tenant. If there occurs any casualty to the Premises and: (i) in Landlord’s reasonable judgment, the repair and restoration work would require more than 210 consecutive days to complete after the casualty (assuming normal work crews not engaged in overtime); or (ii) the casualty occurs during the last 12 months of the Term, Landlord and Tenant shall each have the right to terminate this Lease and all the unaccrued obligations of the parties hereto, by sending written notice of such termination to the other party within 60 days after the date of such casualty. Such notice shall specify a termination date not fewer than 30 nor more than 90 days after such notice is given to the other party, but in no event shall the termination date be after the last day of the Term. If this Lease is not terminated pursuant to this paragraph and Landlord fails to complete the repair or restoration work within 90 days after Landlord’s estimated date for completion of the repair and restoration work (subject to extension for delays caused solely by Tenant and Force Majeure Events), then Tenant shall have the right to terminate this Lease by sending at least 30 days’ prior written notice to Landlord within 30 days after such estimated date of completion, provided this Lease shall remain in full force and effect and Tenant shall no longer have the right to terminate this Lease if Landlord delivers possession of the Premises to Tenant within 30 days after Landlord’s receipt of Tenant’s termination notice.  If there occurs any casualty to the Premises and neither party terminates this Lease, then Landlord shall use commercially reasonable efforts to cause the damage to be repaired (exclusive of Tenant’s Property) to a condition as nearly as practicable to that existing prior to the damage, with commercially reasonable speed and diligence, subject to delays that may arise by reason of adjustment of the loss under insurance policies, Laws, and Force Majeure Events. Landlord shall not be liable for any inconvenience or annoyance to Tenant or Tenant Indemnitees, injury to Tenant’s business, or pain and suffering, resulting in any way from such damage or the repair thereof. Notwithstanding the foregoing, Tenant’s obligation to pay Fixed Rent and Additional Rent shall be equitably adjusted or abated during the period (if any) during which Tenant is not reasonably able to use the Premises or an applicable portion thereof as a result of such casualty. Tenant shall have no right to terminate this Lease as a result of any damage or destruction of the Premises, except as expressly provided in this Section. The provisions of this Lease, including this Section, constitute an express agreement between Landlord and Tenant with respect to any and all damage to, or destruction of, all or any part of the Premises, and any Law with respect to any rights or obligations concerning damage or destruction in the absence of an express agreement between the parties, and any other statute or regulation, now or hereafter in effect, shall have no application to this Lease or any damage or destruction to all or any part of the Premises.

15.          CONDEMNATION. If a taking renders the Premises reasonably unsuitable for the Permitted Use or prevents reasonable access to the Premises, this Lease shall, at either party’s option exercised by written notice to the other within 30 days after such taking, terminate as of the date title to condemned real estate vests in the condemner, the Rent herein reserved shall be apportioned and paid in full by Tenant to Landlord to such date, all Rent prepaid for period beyond that date shall forthwith be repaid by Landlord to Tenant, and neither party shall thereafter have any liability for any unaccrued obligations hereunder; provided, however, a condition to the exercise by Tenant of such right to terminate shall be that the portion of the Premises taken shall be of such extent and nature as materially to handicap, impede, or impair Tenant’s use of the balance of the Premises for its normal business operations. If this Lease is not terminated after a condemnation, then notwithstanding anything to the contrary in this Lease, Fixed Rent and Additional Rent shall be equitably reduced in proportion to the area of the Premises that has been taken for the balance of the Term. Tenant shall have the right to make a claim against the condemner for moving expenses and business dislocation damages to the extent that such claim does not reduce the sums otherwise payable by the condemner to Landlord.

16.          SUBORDINATION; ESTOPPEL CERTIFICATE.

(a)          Provided Tenant’s right of possession of the Premises shall not be disturbed during the Term by the Mortgagee so long as there is no then existing Event of Default, this Lease shall be subordinate at all

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times to the lien of any mortgages and deeds of trust now or hereafter placed upon the Premises, Building, and/or Project and land of which they are a part (a “Mortgage”) without the necessity of any further instrument or act on the part of Tenant to effectuate such subordination. Tenant further agrees to execute and deliver within 10 days after demand such further instrument evidencing such subordination and attornment as shall be reasonably required by any Mortgagee. If Landlord shall be or is alleged to be in default of any of its obligations owing to Tenant under this Lease, Tenant shall give to the holder (the “Mortgagee”) of any mortgage or deed of trust now or hereafter placed upon the Premises, Building, and/or Project whose name and address has been furnished to Tenant, notice by overnight mail of any such default that Tenant shall have served upon Landlord. Tenant shall not be entitled to exercise any right or remedy as there may be because of any default by Landlord without having given such notice to the Mortgagee. The Mortgagee shall have thirty (30) days from receipt of Tenant’s notice within which to cure such default or such longer period as may be reasonably necessary to complete the cure provided Mortgagee is proceeding diligently to cure such default. Notwithstanding the foregoing, any Mortgagee may at any time subordinate its mortgage to this Lease, without Tenant’s consent, by notice in writing to Tenant, and thereupon this Lease shall be deemed prior to such Mortgage without regard to their respective dates of execution and delivery, and in that event the Mortgagee shall have the same rights with respect to this Lease as though it had been executed prior to the execution and delivery of the Mortgage.

(b)          Tenant shall attorn to any foreclosing mortgagee, purchaser at a foreclosure sale or by power of sale, or purchaser by deed in lieu of foreclosure. If the holder of a superior mortgage shall succeed to the rights of Landlord, then at the request of such party so succeeding to Landlord’s rights (herein sometimes called successor landlord) and upon such successor landlord’s written agreement to accept Tenant’s attornment, Tenant shall attorn to and recognize such successor landlord as Tenant’s landlord under this Lease and shall promptly, without payment to Tenant of any consideration therefor, execute and deliver any instrument that such successor landlord may request to evidence such attornment. Upon such attornment, this Lease shall continue in full force and effect as, or as if it were, a direct lease between the successor landlord and Tenant upon all of the terms, conditions, and covenants as are set forth in this Lease and shall be applicable after such attornment, except that the successor landlord shall not be bound by any modification of this Lease not approved by the mortgagee which materially increases Landlord’s obligations or materially decreases Tenant’s obligations under this Lease, or by any previous prepayment of more than one month’s rent, unless such modification or prepayment shall have been expressly approved in writing by the holder of the superior mortgage through or by reason of which the successor landlord shall have succeeded to the rights of Landlord. With respect to any assignment by Landlord of Landlord’s interest in this Lease, or the rents payable hereunder, conditional in nature or otherwise, which assignment is made to any Mortgagee, Tenant agrees that the execution thereof by Landlord, and the acceptance thereof by the Mortgagee, shall never be deemed an assumption by such Mortgagee of any of the obligations of Landlord hereunder, unless such Mortgagee shall, by written notice sent to Tenant, specifically elect, or unless such Mortgagee shall foreclose the Mortgage and take possession of the Premises. Tenant, upon receipt of written notice from a Mortgagee that such Mortgagee is entitled to collect Rent hereunder may in good faith remit such Rent to Mortgagee without incurring liability to Landlord for the nonpayment of such Rent. The provisions for attornment set forth in this Section 16(b) shall be self-operative and shall not require the execution of any further instrument. However, if Landlord reasonably requests a further instrument confirming such attornment, Tenant shall execute and deliver such instrument within 10 days after receipt of such request.

(c)          Tenant must at any time and from time to time, within 20 days after receipt of Landlord’s written request, execute and deliver to Landlord a commercially reasonable estoppel certificate in form reasonably satisfactory to Tenant certifying all reasonably requested information pertaining to this Lease.

(d)          Provided the Premises comprise at least 20,000 rentable square feet, there is no outstanding Event of Default, and this Lease is in full force and effect, Landlord shall use best efforts to obtain a subordination, non-disturbance, and attornment agreement from its current and any future Mortgagee on such Mortgagee’s then-current form therefor upon Tenant’s written request. All costs and expenses charged by the Mortgagee to provide, draft, negotiate, and finalize such non-disturbance agreement shall be paid by Tenant within 30 days after Landlord gives to Tenant a reasonably detailed statement therefor, whether or not a non-disturbance agreement is actually agreed to and executed.

17.          DEFAULT AND REMEDIES.

(a)          An “Event of Default” shall be deemed to exist and Tenant shall be in default hereunder if: (i) Tenant fails to pay any Rent when due and such failure continues for more than 5 business days after Landlord has

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given Tenant written notice of such failure (such notice being in lieu of, and not in addition to, any applicable statutory notice); provided, however, in no event shall Landlord have any obligation to give Tenant more than 1 such notice in any 12-month period, after which there shall be an Event of Default if Tenant fails to pay any Rent when due during such 12-month period, regardless of Tenant’s receipt of notice of such nonpayment, and, provided further, there shall be an automatic Event of Default if Tenant fails to pay any Rent when due and the automatic stay of bankruptcy precludes issuance of a default notice; (ii) Tenant fails to bond over a mechanic’s or materialmen’s lien within 30 days after Landlord’s demand; (iii) there is any assignment or subletting (regardless of whether the same might be void under this Lease) in violation of the terms of this Lease and Tenant fails to undo or void such Transfer within ten (10) business days after written notice; (iv) Tenant fails to deliver any Landlord-requested estoppel certificate or subordination agreement within 5 business days after receipt of notice that such document was not received within the time period required under this Lease, provided (A) such notice states in bold that Tenant’s failure to respond within five (5) business days shall be an Event of Default and (B) it shall not be an Event of Default if Tenant’s failure to deliver such document is a result of Tenant’s good faith negotiation of the form of such document; (v) there is a filing of a voluntary petition for relief by Tenant or any guarantor, or the filing of a petition against Tenant or any guarantor in a proceeding under the federal bankruptcy or other insolvency laws that is not withdrawn or dismissed within 90 days thereafter, or Tenant’s rejection of this Lease after such a filing, or, under the provisions of any law providing for reorganization or winding up of corporations, the assumption by any court of competent jurisdiction of jurisdiction, custody, or control of Tenant or any substantial part of its property, or of any guarantor, where such jurisdiction, custody, or control remains in force, unrelinquished, unstayed, or unterminated for a period of 90 days, or the commencement of steps or proceedings toward the dissolution, winding up, or other termination of the existence of Tenant, or toward the liquidation of either of their respective assets, or the evidence of the inability of Tenant or any guarantor to pay its debts as they come due, including without limitation an admission in writing of its inability to pay its debts when due, or any judgment docketed against any guarantor which is not paid, bonded, or otherwise discharged within 45 days; or (v) Tenant fails to observe or perform any of Tenant’s other agreements or obligations under this Lease and such failure continues for more than 30 days after Landlord gives Tenant written notice of such failure (not to exceed an additional 90 days), or the expiration of such additional time period as is reasonably necessary to cure such failure, provided Tenant promptly commences and thereafter proceeds with all due diligence and in good faith to cure such failure.

(b)          Upon the occurrence of an Event of Default, Landlord, in addition to the other rights or remedies it may have under this Lease, at law, or in equity, and without prejudice to any of the same, shall have the option, without any notice to Tenant and with or without judicial process, to pursue any one or more of the following remedies:

(i)           Landlord shall have the right to terminate this Lease, in which event Tenant shall immediately surrender the Premises to Landlord, and Tenant shall pay Landlord upon demand for the direct losses and damages that Landlord suffers or incurs by reason of such termination which shall equal damages in an amount equal to the total of: (A) the costs of repossessing the Premises and all other expenses reasonably incurred by Landlord in connection with Tenant’s default, plus the Administrative Fee; (B) the unpaid Rent earned as of the date of termination; and (C) all Rent for the period that would otherwise have constituted the remainder of the Term less the fair market rental of the Premises for such period (as reasonably determined by Landlord as of the time of such termination), discounted to present value at a rate of 2% per annum. The “Administrative Fee” means 5% of the costs incurred by Landlord in curing Tenant’s default or performing Tenant’s obligations hereunder.

(ii)          Landlord shall have the right to terminate Tenant’s right of possession (but not this Lease) and may repossess the Premises by forcible detainer or forcible entry and detainer suit or otherwise in accordance with Laws, without demand or notice of any kind to Tenant and without terminating this Lease. If Tenant receives written notice of a termination of its right to possession, such notice will serve as both a notice to vacate, notice to pay or quit, and a demand for possession of, the Premises, and Landlord may immediately thereafter initiate a forcible detainer action without any further demand or notice of any kind to Tenant.

(iii)         Landlord shall have the right to enter and take possession of all or any portion of the Premises without electing to terminate this Lease, in which case Landlord shall have the right to relet all, or any portion of the Premises on such terms as Landlord deems advisable. Landlord will not be required to incur any expenses to relet all or any portion of the Premises, although Landlord may at its option incur customary leasing commissions or other costs for the account of Tenant as Landlord shall deem necessary or appropriate to relet. If there

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is an Event of Default, Landlord shall use commercially reasonable efforts to mitigate its damages. However, Landlord shall not be required to give any special preference or priority to reletting the Premises over other vacant space in the Building, Landlord shall be deemed to have used commercially reasonable efforts if it uses the same efforts in marketing the Premises as used in marketing other vacant space at the Building, and in no event shall Landlord be responsible or liable for any failure to relet the Premises or any part thereof, or for any failure to collect any rent due upon a reletting. Landlord’s rejection of a prospective replacement tenant based on an offer of rentals below Landlord’s published rates for new leases of comparable space at the Building at the time in question, or below the rates provided in this Lease or containing terms less favorable than those contained herein, shall not give rise to a claim by Tenant that Landlord failed to mitigate its damages.

(iv)         Landlord shall have the right to enter the Premises without terminating this Lease and without being liable for prosecution or any claim for damages therefor and maintain the Premises and repair or replace any damage thereto or do anything for which Tenant is responsible hereunder. Tenant shall reimburse Landlord immediately upon demand for any out-of-pocket costs which Landlord incurs in thus effecting Tenant’s compliance under this Lease, and Landlord shall not be liable to Tenant for any damages with respect thereto.

(v)          Landlord shall have the right to continue this Lease in full force and effect, whether or not Tenant shall have abandoned the Premises. If Landlord elects to continue this Lease in full force and effect pursuant to this Section, then Landlord shall be entitled to enforce all of its rights and remedies under this Lease, including the right to recover Rent as it becomes due. Landlord’s election not to terminate this Lease pursuant to this Section or pursuant to any other provision of this Lease, at law or in equity, shall not preclude Landlord from showing the Premises to potential tenants, subsequently electing to terminate this Lease, or pursuing any of its other remedies.

(c)          Upon the occurrence of an Event of Default, Tenant shall be liable to Landlord for, and Landlord shall be entitled to recover: (i) all Rent accrued and unpaid; (ii) all reasonable costs and expenses incurred by Landlord in recovering possession of the Premises, including reasonable legal fees, and removal and storage of Tenant’s property; (iii) the costs and expenses of restoring the Premises to the condition in which the same were to have been surrendered by Tenant as of the Expiration Date; (iv) the costs of reletting commissions; (v) all legal fees and court costs incurred by Landlord in connection with the Event of Default; and (vi) the unamortized portion (as reasonably determined by Landlord) of brokerage commissions and consulting fees incurred by Landlord, and tenant concessions including free rent given by Landlord, in connection with this Lease.

(d)          Any amount payable by Tenant under this Lease that is not paid when due shall bear interest at the rate of 1% per month until paid by Tenant to Landlord.

(e)          Neither any delay or forbearance by Landlord in exercising any right or remedy hereunder nor Landlord’s undertaking or performing any act that Landlord is not expressly required to undertake under this Lease shall be construed to be a waiver of Landlord’s rights or to represent any agreement by Landlord to thereafter undertake or perform such act. Landlord’s waiver of any breach by Tenant of any covenant or condition herein contained (which waiver shall be effective only if so expressed in writing by Landlord) or Landlord’s failure to exercise any right or remedy in respect of any such breach shall not constitute a waiver or relinquishment for the future of Landlord’s right to have any such covenant or condition duly performed or observed by Tenant, or of Landlord’s rights arising because of any subsequent breach of any such covenant or condition, nor bar any right or remedy of Landlord in respect of such breach or any subsequent breach.

(f)           If there is a default by Tenant in the performance of any covenant, agreement, term, provision, or condition contained in this Lease that results in an emergency situation or there is an Event of Default, then in either case Landlord, in addition to any other rights and remedies it has under this Lease and without thereby waiving such default, may perform the same for the account of and at the expense of Tenant (but shall not be obligated to do so), without notice in a case of emergency and in any other case if such default continues after 5 days from the date that Landlord gives written notice to Tenant of its intention to do so. Landlord may invoice Tenant for all amounts paid by Landlord and all losses, costs, and expenses incurred by Landlord in connection with any such performance by Landlord pursuant to this paragraph, plus the Administrative Fee, including, without limitation, all amounts paid and costs and expenses incurred by Landlord for any property, material, labor, or services provided, furnished, or rendered, or caused to be provided, furnished, or rendered, by Landlord to Tenant (together with interest at the rate of 1% per month from the date Landlord pays the amount or incurs the loss, cost, or expense until the date of full

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repayment by Tenant) monthly or immediately, at Landlord’s option, and shall be due and payable by Tenant to Landlord as Additional Rent within 30 days after Tenant receives the invoice. Any reservation of a right by Landlord to enter upon the Premises and to make or perform any repairs, alterations, or other work in, to, or about the Premises, which, in the first instance, is Tenant’s obligation pursuant to this Lease, shall not be deemed to impose any obligation on Landlord to do so, render Landlord liable to Tenant or any third party for the failure to do so, or relieve Tenant from any obligation to indemnify Landlord as otherwise provided elsewhere in this Lease.

(g)          The rights granted to Landlord in this Section shall be cumulative of every other right or remedy provided in this Lease or which Landlord may otherwise have at law or in equity or by statute, and the exercise of one or more rights or remedies shall not prejudice or impair the concurrent or subsequent exercise of other rights or remedies or constitute a forfeiture or waiver of Rent or damages accruing to Landlord by reason of any Event of Default under this Lease. Landlord shall have all rights and remedies now or hereafter existing at law or in equity with respect to the enforcement of Tenant’s obligations hereunder and the recovery of the Premises. No right or remedy herein conferred upon or reserved to Landlord shall be exclusive of any other right or remedy, but shall be cumulative and in addition to all other rights and remedies given hereunder or now or hereafter existing at law or in equity. Landlord shall be entitled to injunctive relief in case of the violation, or attempted or threatened violation, of any covenant, agreement, condition or provision of this Lease, or to a decree compelling performance of any covenant, agreement, condition or provision of this Lease.

(h)          No payment by Tenant or receipt by Landlord of a lesser amount than any payment of Fixed Rent or Additional Rent herein stipulated shall be deemed to be other than on account of the earliest stipulated Fixed Rent or Additional Rent due and payable hereunder, nor shall any endorsement or statement or any check or any letter accompanying any check or payment as Rent be deemed an accord and satisfaction. Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such Rent or pursue any other right or remedy provided for in this Lease, at law or in equity, and acceptance of such partial payment shall be deemed subject to Landlord’s reservation of all rights.

(i)           Tenant further waives the right to any notices to quit as may be specified in the Landlord and Tenant Act of Pennsylvania, Act of April 6, 1951, as amended, or any similar or successor provision of law, and agrees that 5 days’ notice shall be sufficient in any case where a longer period may be statutorily specified.

(j)           In addition to, and not in lieu of any of the foregoing rights granted to Landlord:

(1)          WHEN THIS LEASE OR TENANT’S RIGHT OF POSSESSION SHALL BE TERMINATED BY COVENANT OR CONDITION BROKEN, OR FOR ANY OTHER REASON, EITHER DURING THE TERM OF THIS LEASE OR ANY RENEWAL OR EXTENSION THEREOF, AND ALSO WHEN AND AS SOON AS THE TERM HEREBY CREATED OR ANY EXTENSION THEREOF SHALL HAVE EXPIRED, IT SHALL BE LAWFUL FOR ANY ATTORNEY AS ATTORNEY FOR TENANT TO FILE AN AGREEMENT FOR ENTERING IN ANY COMPETENT COURT AN ACTION TO CONFESS JUDGMENT IN EJECTMENT AGAINST TENANT AND ALL PERSONS CLAIMING UNDER TENANT, WHEREUPON, IF LANDLORD SO DESIRES, A WRIT OF EXECUTION OR OF POSSESSION MAY ISSUE FORTHWITH, WITHOUT ANY PRIOR WRIT OF PROCEEDINGS, WHATSOEVER, AND PROVIDED IF FOR ANY REASON AFTER SUCH ACTION SHALL HAVE BEEN COMMENCED THE SAME SHALL BE DETERMINED AND THE POSSESSION OF THE PREMISES HEREBY DEMISED REMAIN IN OR BE RESTORED TO TENANT, LANDLORD SHALL HAVE THE RIGHT UPON ANY SUBSEQUENT DEFAULT OR DEFAULTS, OR UPON THE TERMINATION OF THIS LEASE AS HEREINBEFORE SET FORTH, TO BRING ONE OR MORE ACTION OR ACTIONS AS HEREINBEFORE SET FORTH TO RECOVER POSSESSION OF THE SAID PREMISES.

(2)          In any action to confess judgment in ejectment, Landlord shall first cause to be filed in such action an affidavit made by it or someone acting for it setting forth the facts necessary to authorize the entry of judgment, of which facts such affidavit shall be conclusive evidence, and if a true copy of this Lease (and of the truth of the copy such affidavit shall be sufficient evidence) be filed in such action, it shall not be necessary to file the original as a warrant of attorney, any rule of Court, custom or practice to the contrary notwithstanding.

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TENANT WAIVER. TENANT SPECIFICALLY ACKNOWLEDGES THAT TENANT HAS VOLUNTARILY, KNOWINGLY, AND INTELLIGENTLY WAIVED CERTAIN DUE PROCESS RIGHTS TO A PREJUDGMENT HEARING BY AGREEING TO THE TERMS OF THE FOREGOING PARAGRAPHS REGARDING CONFESSION OF JUDGMENT. TENANT FURTHER SPECIFICALLY AGREES THAT IN THE EVENT OF DEFAULT, LANDLORD MAY PURSUE MULTIPLE REMEDIES INCLUDING OBTAINING POSSESSION PURSUANT TO A JUDGMENT BY CONFESSION FURTHERMORE, TENANT SPECIFICALLY WAIVES ANY CLAIM AGAINST LANDLORD AND LANDLORD’S COUNSEL FOR VIOLATION OF TENANT’S CONSTITUTIONAL RIGHTS IN THE EVENT THAT JUDGMENT IS CONFESSED PURSUANT TO THIS LEASE.

TENANT: PASSAGE BIO, INC.
By:	/s/ Jill Quigley
Name:	Jill Quigley
Title:	Chief Operating Officer
Date:	4/13/2020

(k)          If Landlord defaults in the performance of any of its maintenance or repair obligations under this Lease, Tenant may send to Landlord written notice thereof, which notice must identify with reasonable specificity the default and Tenant’s remedies under this paragraph (“Reminder Notice”). If Landlord fails to either: (i) dispute the existence of such default within 5 business days; or (ii) cure such default within Landlord’s Cure Period, then a “Landlord Failure” is deemed to exist and Tenant will have all rights and remedies available at law or in equity for a landlord default. “Landlord’s Cure Period” means 30 days after Landlord’s receipt of a Reminder Notice, provided if cure cannot be reasonably effected by Landlord within such 30-day period, Landlord’s Cure Period includes such additional time as may be reasonably necessary for Landlord to cure, provided Landlord commences to cure within such 30-day period and diligently prosecutes such cure to completion. If a Landlord Failure results in an imminent, material threat to persons or Tenant’s property at the Premises, the Reminder Notice must so state and if Landlord fails to cure such Landlord Failure, then Tenant may, subject to the terms of this paragraph, perform such cure with respect to the Premises. Except to the extent specifically set forth otherwise in this paragraph, in no event shall Tenant have the right to terminate or cancel this Lease, withhold or abate rent, or setoff any claim for damages against Rent as a result of any default or breach by Landlord of its covenants or obligations or any representations, warranties, or promises hereunder. In effecting such cure, Tenant shall not take or permit to be taken any action or omission that could jeopardize the effectiveness of the roof, HVAC, or other warranties for the Building or otherwise affect any Building system. All actions taken by Tenant to cure a Landlord Failure pursuant to this paragraph must be in accordance with all Laws. Tenant may use only contractors who are duly licensed in the State, perform such work in comparable buildings in the normal course of their business, charge rates that are reasonable and competitive, and are reasonably approved by Landlord. Upon commencing such work, Tenant’s contractors must complete the cure within a reasonable period of time, and in a good and workmanlike manner. Prior to commencing any such work, Tenant must cause its contractors and subcontractors to provide to Landlord certificates evidencing adequate insurance coverage naming Landlord and any other associated or affiliated entity as addition insureds. Tenant shall indemnify, defend, protect, and hold harmless Landlord from and against any and all loss, cost, damage, or liability incurred by Landlord arising out of or from or related to Tenant’s performance of any such cure, including, without limitation, claims made by other occupants of the Building that Tenant’s performance of such work interfered with their occupancy of space in the Building. Upon Tenant’s cure of the Landlord Failure, Landlord shall reimburse Tenant for Tenant’s reasonable, out-of-pocket, third-party costs incurred in curing the Landlord Failure within 30 days after Landlord’s receipt of an Invoice for such costs (with such back-up documentation as Landlord might reasonably request). An “Invoice” means a detailed notice of the work completed and the materials used, all reasonably requested lien waivers, together with a schedule of all costs expended by Tenant in performing such work. An “Objection” means a written objection by Landlord to the payment of such Invoice setting forth with reasonable particularity Landlord’s reasons for its claim that such action did not have to be taken by Landlord pursuant to this Lease or that the charges set forth on the Invoice(s) are excessive or otherwise not complete. If Landlord delivers an Objection to

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Tenant and if such parties are not able to resolve any dispute regarding Tenant’s Invoice or Landlord’s Objection within 30 days after Tenant receives such Objection, then Tenant may pay amounts due to Landlord under this Lease into an escrow account until such Invoice and any Objection thereto are satisfactorily resolved by the parties or by a court of competent jurisdiction.

18.          SURRENDER; HOLDOVER.

(a)          By no later than the Expiration Date or earlier termination of Tenant’s right to possession of the Premises (such earlier date, the “Surrender Date”), Tenant shall vacate and surrender the Premises to Landlord in good order and condition, free of all Transferees, vacant, broom clean, and in conformity with the applicable provisions of this Lease, including without limitation Sections 9 and 11. Tenant shall have no right to hold over beyond the Surrender Date, and if Tenant does not vacate as required such failure shall be deemed an Event of Default and Tenant’s occupancy shall not be construed to effect or constitute anything other than a tenancy at sufferance. During any period of occupancy beyond the Surrender Date, the amount of Rent owed by Tenant to Landlord will be the Holdover Percentage of the Rent for the month immediately prior to the Expiration Date, without prorating for any partial month of holdover in excess of five (5) days, and except that any provisions in this Lease that limit the amount or defer the payment of Additional Rent are null and void. The “Holdover Percentage” equals: (i) 150% for the first two (2) months of holdover; and (ii) 200% for any period of holdover beyond two (2) months. The acceptance of Rent by Landlord or the failure or delay of Landlord in notifying or evicting Tenant following the Surrender Date shall not create any tenancy rights in Tenant and any such payments by Tenant may be applied by Landlord against its costs and expenses, including reasonable attorneys’ fees, incurred by Landlord as a result of such holdover. The provisions of this Section shall not constitute a waiver by Landlord of any right of reentry as set forth in this Lease; nor shall receipt of any Rent or any other act in apparent affirmance of the tenancy operate as a waiver of Landlord’s right to terminate this Lease for a breach of any of the terms, covenants, or obligations herein on Tenant’s part to be performed. No option to extend this Lease shall have been deemed to have occurred by Tenant’s holdover, and any and all options to extend this Lease or expand the Premises shall be deemed terminated and of no further effect as of the first date that Tenant holds over. In addition, if Tenant fails to vacate and surrender the Premises as herein required by the Surrender Date, Tenant shall indemnify, defend, and hold harmless Landlord from and against any and all costs, losses, expenses, or liabilities incurred as a result of or related to such failure, including without limitation, claims made by any succeeding tenant and real estate brokers’ claims and reasonable attorneys’ fees. Tenant’s obligation to pay Rent and to perform all other Lease obligations for the period up to and including the Surrender Date, and the provisions of this Section, shall survive the Expiration Date. In no way shall the remedies to Landlord set forth above be construed to constitute liquidated damages for Landlord’s losses resulting from Tenant’s holdover.

(b)          Prior to the Surrender Date, Tenant, at Tenant’s expense, shall remove from the Premises Tenant’s Property and all telephone, security (but excluding communication equipment system) wiring and cabling, and restore in a good and workmanlike manner any damage to the Premises and/or the Building caused by such removal or replace the damaged component of the Premises and/or the Building if such component cannot be restored as aforesaid as reasonably determined by Landlord. Notwithstanding the foregoing: (i) Tenant shall not be required to remove a Specialty Alteration if at the time Tenant requests Landlord’s consent to such Specialty Alteration, Tenant provides Landlord with written notification that Tenant desires to not be required to remove such Specialty Alteration and Landlord consents in writing to Tenant’s non-removal request; and (ii) Tenant shall have no obligation to remove or restore the currently existing internal staircase in the Premises, even if Tenant makes alterations to the staircase during the Term. A “Specialty Alteration” means an Alteration that: (i) Landlord required to be removed in connection with Landlord’s consent to making such Alteration; or (ii) is not Building standard, including without limitation kitchens (other than a pantry installed for the use of Tenant’s employees only), executive restrooms, computer room installations, supplemental HVAC equipment and components, safes, vaults, libraries or file rooms requiring reinforcement of floors, internal staircases, slab penetrations, non-Building standard life safety systems, security systems, specialty door locksets (such as cipher locks) or lighting, and any demising improvements done by or on behalf of Tenant after the Commencement Date. If Tenant fails to remove any of Tenant’s Property, wiring, or cabling as required herein, the same shall be deemed abandoned and Landlord, at Tenant’s expense, may remove and dispose of same and repair and restore any damage caused thereby, or, at Landlord’s election, such Tenant’s Property, wiring, and cabling shall become Landlord’s property. Tenant shall not remove any Alteration (other than Specialty Alterations) from the Premises without the prior written consent of Landlord.

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19.          RULES AND REGULATIONS. Tenant covenants that Tenant and Tenant Agents shall comply with the rules and regulations set forth on Exhibit E attached hereto. Landlord shall have the right to rescind and/or augment any of the rules and regulations and to make such other and further written rules and regulations as in the reasonable judgment of Landlord shall from time to time be needed for the safety, protection, care, and cleanliness of the Project, the operation thereof, the preservation of good order therein, and the protection and comfort of its tenants, their agents, employees, and invitees, so long as any rescinding or augmentation of the rules and regulations does not materially increase Tenant’s obligations or materially decrease Tenant’s rights under this Lease, which when delivered to Tenant shall be binding upon Tenant in a like manner as if originally prescribed. In the event of an inconsistency between the rules and regulations and this Lease, the provisions of this Lease shall control. Landlord shall not have any liability to Tenant for any failure of any other tenants to comply with any of the rules and regulations. Notwithstanding the foregoing, Landlord shall apply the rules and regulations to, and enforce the rules and regulations against, all tenants of the Building in a nondiscriminatory manner.

20.          GOVERNMENTAL REGULATIONS.

(a)          Landlord represents to Tenant that, as of the date of this Lease, to Landlord’s actual knowledge without independent investigation: (i) the Premises are, and as of the Commencement Date the Premises will be, in material compliance with all Laws; and (ii) there are no hazardous substances on the Premises in violation of environmental Laws, nor will there be as of the Commencement Date. Tenant shall not use, generate, manufacture, refine, transport, treat, store, handle, dispose, bring, or otherwise cause to be brought or permit any Tenant Agent to bring, in, on, or about any part of the Project, any hazardous waste, solid waste, hazardous substance, toxic substance, petroleum product or derivative, asbestos, polychlorinated biphenyl, hazardous material, pollutant, contaminant, or similar material or substance as defined by the Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C. Sections 9601 et seq., as the same may from time to time be amended, and the regulations promulgated pursuant thereto (CERCLA), or now or hereafter defined or regulated as such by any other Law (“Hazardous Material”). Notwithstanding the foregoing, Tenant shall be permitted to bring onto the Premises office cleaning supplies and products normally found in modern offices provided Tenant only brings a reasonable quantity of such supplies and products onto the Premises and Tenant shall at all times comply with all Laws pertaining to the storage, handling, use, disposal, and application of such supplies and products, and all Laws pertaining to the communication to employees and other third parties of any hazards associated with such supplies and products. Tenant shall not cause or permit to exist any release, spillage, emission, or discharge of any Hazardous Material on or about the Premises (“Release”). In the event of a Release in the Premises, Tenant shall immediately notify Landlord in writing, report such Release to the relevant government agencies as, and if, required by applicable Law, and promptly remove the Hazardous Material and otherwise investigate and remediate the Release in accordance with applicable Law and to the reasonable satisfaction of Landlord. Landlord shall have the right, but not the obligation, to enter upon the Premises to investigate and/or remediate the Release in lieu of Tenant, and Tenant shall reimburse Landlord as Additional Rent for the actual reasonable costs of such remediation and investigation. Tenant shall promptly notify Landlord if Tenant acquires knowledge of the presence of any Hazardous Material on or about the Premises, except as Tenant is permitted to bring onto the Premises under this Lease. Landlord shall have the right to inspect and assess the Premises for the purpose of determining whether Tenant is handling any Hazardous Material in violation of this Lease or applicable Law, or to ascertain the presence of any Release. This subsection shall survive the Expiration Date.

(b)          Tenant shall, and shall cause Tenant Agents to, use the Premises in compliance with all applicable Laws. Tenant shall, at its sole cost and expense, promptly comply with each and all of such Laws, except in the case of required structural changes not triggered by Tenant’s particular use or manner of use or change in use of the Premises, or Tenant’s Alterations. Without limiting the generality of the foregoing, Tenant shall: (i) obtain, at Tenant’s expense, before engaging in Tenant’s business or profession within the Premises, all necessary licenses and permits including, but not limited to, state and local business licenses, and permits; and (ii) remain in compliance with and keep in full force and effect at all times all licenses, consents, and permits necessary for the lawful conduct of Tenant’s business or profession at the Premises. Tenant shall pay all personal property taxes, income taxes, gross receipts taxes, and other taxes, assessments, duties, impositions, and similar charges that are or may be assessed, levied, or imposed upon Tenant or Tenant’s Property. Tenant shall also comply with all applicable Laws that do not relate to the physical condition of the Premises and with which only the occupant can comply, such as laws governing maximum occupancy, workplace smoking, VDT regulations, and illegal business operations, such as gambling. The judgment of any court of competent jurisdiction or the admission of Tenant in any judicial, governmental or regulatory

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action, regardless of whether Landlord is a party thereto, that Tenant has violated any of such Laws shall be conclusive of that fact as between Landlord and Tenant.

(c)          Notwithstanding anything to the contrary in this Lease, if the requirement of any public authority obligates either Landlord or Tenant to expend money in order to bring the Premises and/or any area of the Project into compliance with Laws as a result of: (i) Tenant’s particular use (other than general office use) or alteration of the Premises; (ii) Tenant’s change in the use of the Premises; (iii) the manner of conduct of Tenant’s business or operation of its installations, equipment, or other property therein; (iv) any cause or condition created by or at the instance of Tenant or any Tenant Agent, other than by Landlord’s performance of any work for or on behalf of Tenant; or (v) breach of any of Tenant’s obligations hereunder, then Tenant shall bear all costs of bringing the Premises and/or Project into compliance with Laws, whether such costs are related to structural or nonstructural elements of the Premises or Project.

(d)          Except to the extent Tenant shall comply as set forth above in this Section 21, during the Term Landlord shall comply with all applicable Laws regarding the Project (including the Premises), including without limitation compliance with Title III of the Americans with Disabilities Act of 1990, 42 U.S.C. §12181 et seq. and its regulations as to the design and construction of the Common Areas.

(e)          Each party hereto hereby acknowledges and agrees that it will not knowingly violate any applicable Laws regarding bribery, corruption, and/or prohibited business practices as they concern each such party’s respective activities under or in connection with this Lease, and each such party will be solely responsible for and will hold harmless the other party from and against any claims or liabilities in connection with any of such responsible party’s own violations of any such Laws.

21.          NOTICES. Wherever in this Lease it is required or permitted that notice or demand be given or served by either party to this Lease to or on the other party, such notice or demand will be duly given or served if in writing and either: (i) personally served; (ii) delivered by prepaid nationally recognized courier service (e.g., Federal Express, UPS, and USPS) with evidence of receipt required for delivery; (iii) delivered by registered or certified mail, return receipt requested, postage prepaid; or (iv) if an email address is provided by the recipient, emailed; in all such cases addressed to the parties at the addresses set forth below. Each such notice will be deemed to have been given to or served upon the party to which addressed on the date the same is delivered or delivery is refused. Each party has the right to change its address for notices (provided such new address is in the continental United States) by a writing sent to the other party in accordance with this Section, and each party will, if requested, within 10 days confirm to the other its notice address. Notices from Landlord may be given by either an agent or attorney acting on behalf of Landlord. Notwithstanding the foregoing: (a) any notice from Landlord to Tenant regarding ordinary business operations (e.g., exercise of a right of access to the Premises, notice of maintenance activities or Landlord access, changes in rules and regulations, etc.) may be given by written notice left at the Premises or delivered by regular mail, facsimile, or electronic means (such as email) to any person at the Premises whom Landlord reasonably believes is authorized to receive such notice on behalf of Tenant without copies; and (b) invoices, notices of change in billing or notice address, and statements of estimated or reconciliation of Operating Expenses and/or utilities, may be sent by regular mail or electronic means (such as email) to Tenant’s billing contact without copies.

Tenant: Prior to Commencement Date: Passage BIO, Inc. Attn: Jill Quigley 2001 Market Street, Suite 2850 Philadelphia, PA 19103 Phone: ________________ Email for billing contact: jquigley@passagebio.com From and after the Commencement Date: Passage BIO, Inc. Attn: Jill Quigley 2005 Market Street, Suite 3800 Philadelphia, PA 19103 Phone: ________________

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	Email for billing contact: jquigley@passagebio.com
Landlord:	Commerce Square Partners - Philadelphia Plaza, L.P. c/o Brandywine Realty Trust Attn: Legal Notices/Legal Dept., RE: Building 181 FMC Tower at Cira Centre South 2929 Walnut St., Suite 1700 Philadelphia, PA 19104 Phone No. 610-325-5600 Email: Legal.Notices@bdnreit.com

Notwithstanding anything to the contrary in this Lease, billing statements and the like may be sent by regular mail or electronic means (such as email) to Tenant’s billing contact without copies.

Tenant’s billing contact:

Passage BIO, Inc.

Attn: Richard Morris

2005 Market Street, Suite 3800

Philadelphia, PA 19103

Phone: ________________

Email: rmorris@passagebio.com

For informational purposes, Tenant’s current contacts for the following are set forth below, and Tenant shall endeavor to notify Landlord in writing of any changes to this information:

(1) Tenant insurance certificates:

Name: Jill Quigley

Email: jquigley@passagebio.com

(2) Tenant property management issues:

Name: Stephen Biroc

Email: sbiroc@passagebio.com

22.          BROKERS. Landlord and Tenant each represents and warrants to the other that such representing party has had no dealings, negotiations, or consultations with respect to the Premises or this transaction with any broker or finder other than a Landlord affiliate and Broker. Each party shall indemnify, defend, and hold harmless the other from and against any and all liability, cost, and expense (including reasonable attorneys’ fees and court costs), arising out of or from or related to its misrepresentation or breach of warranty under this Section. Landlord shall pay Broker a commission in connection with this Lease pursuant to the terms of a separate written agreement between Landlord and Broker. This Section shall survive the Expiration Date.

23.          LANDLORD’S LIABILITY. Landlord’s obligations hereunder shall be binding upon Landlord only for the period of time that Landlord is in ownership of the Building, and upon termination of that ownership, Tenant, except as to any obligations that are then due and owing, shall look solely to Landlord’s successor-in-interest in ownership of the Building for the satisfaction of each and every obligation of Landlord hereunder. Upon request and without charge, Tenant shall attorn to any successor to Landlord’s interest in this Lease. Landlord may transfer its interest in the Building without the consent of Tenant, and such transfer or subsequent transfer shall not be deemed a violation on Landlord’s part of any of the terms of this Lease. Landlord shall have no personal liability under any of the terms, conditions, or covenants of this Lease. Tenant and Tenant Agents shall look solely to the equity of Landlord in the Building and/or the rents and/or net proceeds actually received therefrom for the satisfaction of any claim, remedy, or cause of action of any kind whatsoever arising from the relationship between the parties or any rights and obligations they may have relating to the Project, this Lease, or anything related to either, including without limitation as a result of the breach of any Section of this Lease by Landlord. In addition, no recourse shall be had for an obligation of Landlord hereunder, or for any claim based thereon or otherwise in respect thereof or the relationship between the parties, against any past, present, or future Landlord Indemnitee (other than Landlord), whether by virtue of any statute

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or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such other liability being expressly waived and released by Tenant with respect to the Landlord Indemnitees (other than Landlord).

24.          RELOCATION. [INTENTIONALLY DELETED]

25.          GENERAL PROVISIONS.

(a)          Provided Tenant has performed all of the terms and conditions of this Lease to be performed by Tenant, including the payment of Rent, Tenant shall peaceably and quietly hold and enjoy the Premises for the Term, without hindrance from Landlord or anyone lawfully or equitably claiming by, through, or under Landlord, under and subject to the terms and conditions of this Lease and of any mortgages and deeds of trust now or hereafter affecting all or any portion of the Premises.

(b)          Subject to the terms and provisions of Section 10, the respective rights and obligations provided in this Lease shall bind and inure to the benefit of the parties hereto, their successors and assigns.

(c)          This Lease shall be governed in accordance with the Laws of the State, without regard to choice of law principles. Landlord and Tenant hereby consent to the exclusive jurisdiction of the state and federal courts located in the jurisdiction in which the Project is located.

(d)          In connection with any litigation or arbitration arising out of this Lease, Landlord or Tenant, whichever is the prevailing party as determined by the trier of fact in such litigation, shall be entitled to recover from the other party all reasonable costs and expenses incurred by the prevailing party in connection with such litigation, including reasonable attorneys’ fees. If, in the context of a bankruptcy case, Landlord is compelled at any time to incur any expense, including attorneys’ fees, in enforcing or attempting to enforce the terms of this Lease or to enforce or attempt to enforce any actions required under the Bankruptcy Code to be taken by the trustee or by Tenant, as debtor-in-possession, then the sum so paid by Landlord shall be awarded to Landlord by the Bankruptcy Court and shall be immediately due and payable by the trustee or by Tenant’s bankruptcy estate to Landlord in accordance with the terms of the order of the Bankruptcy Court.

(e)          This Lease, which by this reference incorporates all exhibits, riders, schedules, and other attachments hereto, supersedes all prior discussions, proposals, negotiations and discussions between the parties and this Lease contains all of the agreements, conditions, understandings, representations, and warranties made between the parties hereto with respect to the subject matter hereof, and may not be modified orally or in any manner other than by an agreement in writing signed by both parties hereto or their respective successors-in-interest. Whenever placed before one or more items, the words “include”, “includes”, and “including” shall mean considered as part of a larger group, and not limited to the item(s) recited. Except to the extent expressly set forth otherwise in this Lease, neither Landlord, nor anyone acting on Landlord’s behalf, has made any representation, warranty, estimation, or promise of any kind or nature whatsoever relating to the physical condition of the Building or the land under the Building or suitability, including without limitation, the fitness of the Premises for Tenant’s intended use. If any provisions of this Lease are held to be invalid, void, or unenforceable, the remaining provisions hereof shall in no way be affected or impaired and such remaining provisions shall remain in full force and effect.

(f)           TIME IS OF THE ESSENCE UNDER ALL PROVISIONS OF THIS LEASE, INCLUDING ALL NOTICE PROVISIONS.

(g)          If Landlord or Tenant is in any way delayed or prevented from performing any obligation (except for payment of any amount due by a party hereunder and the giving of notice with respect to the exercise of a Lease option) due to fire or other casualty (or reasonable delays in the adjustment of insurance claims), acts of terrorism, war, pandemic, or other emergency (including severe weather emergency), governmental delay beyond what is commercially reasonable (provided the party claiming the delay provides reasonable evidence to the other party that the party claiming the delay is diligently pursuing the approval or permit that is the subject to the governmental delay), inability to obtain any materials or services (exclusive of delays in connection with long-lead items requested by Tenant for the Leasehold Improvements), acts of God, strike, lockout or other labor dispute, orders or regulations of any federal, state, county or municipal authority, embargoes, or any other cause beyond such party’s

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reasonable control (whether similar or dissimilar to the foregoing events) (each, a “Force Majeure Event”), then the time for performance of such obligation shall be excused for the period of such delay or prevention (and such party shall not be deemed in default with respect to the performance of its obligations) and extended for a period equal to the period of such delay or prevention. Financial disability or hardship shall never constitute a Force Majeure Event. No such inability or delay due to a Force Majeure Event shall constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any abatement or diminution of Rent (except as otherwise expressly set forth herein), or relieve the other party from any of its obligations under this Lease, or impose any liability upon such party or its agents, by reason of inconvenience or annoyance to the other party, or injury to or interruption of the other party’s business, or otherwise.

(h)          Excepting payments of Fixed Rent, Operating Expenses, and utilities (which are to be paid as set forth in Sections 4, 5, and 6) and unless a specific time is otherwise set forth in this Lease for any Tenant payments, all amounts due from Tenant to Landlord shall be paid by Tenant to Landlord as Additional Rent within 30 days after receipt of an invoice therefor.

(i)           Unless Tenant’s financials are publicly available online at no cost to Landlord, within 10 business days after written request by Landlord (but not more than once during any 12-month period unless a default has occurred under this Lease or Landlord has a reasonable basis to suspect that Tenant has suffered a material adverse change in its financial position, or in the event of a sale, financing, or refinancing by Landlord of all or any portion of the Project), Tenant shall furnish to Landlord, Mortgagee, or Landlord’s prospective mortgagee or purchaser, reasonably requested financial information. In connection therewith and upon Tenant’s request, Landlord and Tenant shall execute a mutually acceptable confidentiality agreement on Landlord’s form therefor.

(j)           Tenant represents and warrants to Landlord that: (i) Tenant was duly organized and is validly existing and in good standing under the Laws of the jurisdiction set forth for Tenant in the first sentence of this Lease; (ii) Tenant is legally authorized to do business in the State; (iii) the person(s) executing this Lease on behalf of Tenant is(are) duly authorized to do so; and (iv) Tenant has the full corporate or partnership power and authority to enter into this Lease and has taken all corporate or partnership action, as the case may be, necessary to carry out the transaction contemplated herein, so that when executed, this Lease constitutes a valid and binding obligation enforceable in accordance with its terms. From time to time upon Landlord’s request, Tenant will provide Landlord with corporate resolutions or other proof in a form acceptable to Landlord authorizing the execution of this Lease at the time of such execution. Landlord represents and warrants to Tenant that: (i) Landlord was duly organized and is validly existing and in good standing under the Laws of the jurisdiction set forth for Landlord in the first sentence of this Lease; (ii) Landlord is legally authorized to do business in the State; (iii) the person(s) executing this Lease on behalf of Landlord is(are) duly authorized to do so; and (iv) Landlord has the full corporate or partnership power and authority to enter into this Lease and has taken all corporate or partnership action, as the case may be, necessary to carry out the transaction contemplated herein, so that when executed, this Lease constitutes a valid and binding obligation enforceable in accordance with its terms

(k)          Each party hereto represents and warrants to the other that such party is not a party with whom the other is prohibited from doing business pursuant to the regulations of the Office of Foreign Assets Control (“OFAC”) of the U.S. Department of the Treasury, including those parties named on OFAC’s Specially Designated Nationals and Blocked Persons List. Each party hereto is currently in compliance with, and shall at all times during the Term remain in compliance with, the regulations of OFAC and any other governmental requirement relating thereto. Each party hereto shall defend, indemnify, and hold harmless the other from and against any and all claims, damages, losses, risks, liabilities, and expenses (including reasonable attorneys’ fees and costs) incurred by the other to the extent arising from or related to any breach of the foregoing certifications. The foregoing indemnity obligations shall survive the Expiration Date.

(l)           Neither Tenant, nor anyone acting through, under, or on behalf of Tenant, shall have the right to record this Lease, nor any memorandum, notice, affidavit, or other writing with respect thereto.

(m)         Whenever Tenant is required to obtain Landlord’s consent pursuant to this Lease or the exhibits hereto, Landlord’s consent shall not be unreasonably conditioned, withheld, or delayed. Tenant shall not claim any money damages by way of setoff, counterclaim, or defense, based on any claim that Landlord unreasonably withheld its consent, in which case Tenant’s sole and exclusive remedy shall be an action for specific performance,

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injunction, or declaratory judgment. Notwithstanding the foregoing, if a court determines that Landlord acted maliciously or in bad faith in unreasonably withholding, conditioning, or delaying its consent or approval in an instance where Landlord was obligated not to unreasonably withheld, condition, or delay its consent or approval, then the limitation on damages and remedies provided for in this paragraph shall have no further application.

(n)          All requests made to Landlord to perform repairs or furnish services, supplies, utilities, or freight elevator usage (if applicable), shall be made online to the extent available (currently such requests shall be made via https://connect.brandywinerealty.com/, as the same may be modified by Landlord from time to time) otherwise via email or written communication to Landlord’s property manager for the Building. Whenever Tenant requests Landlord to take any action not required of Landlord under this Lease or give any consent required or permitted to be given by Landlord under this Lease (for example, a request for a Transfer consent, a consent to an Alteration, or a subordination of Landlord’s lien, but other than a request for services, supplies, or utilities which is governed by Section 7(b)), Tenant shall pay to Landlord for Landlord’s administrative and/or professional costs in connection with each such action or consent Landlord’s reasonable costs incurred by Landlord in reviewing and taking the proposed action or consent, including reasonable attorneys’, engineers’ and/or architects’ fees (as applicable). The foregoing amount shall be paid by Tenant to Landlord within 30 days after Landlord’s delivery to Tenant of an invoice for such amount. Tenant shall pay such amount without regard to whether Landlord takes the requested action or gives the requested consent.

(o)          Landlord shall have the right, to the extent required to be disclosed by Landlord or Landlord’s affiliates in connection with filings required by applicable Laws, including without limitation the Securities and Exchange Commission (“SEC”), without notice to Tenant to include in such securities filings general information relating to this Lease, including, without limitation, Tenant’s name, the Building, and the square footage of the Premises. Except as set forth in the preceding sentence, neither Tenant nor Landlord shall issue, or permit any broker, representative, or agent representing either party in connection with this Lease to issue: (i) any press release; or (ii) any other public disclosure regarding the specific terms of this Lease (including any amendments or modifications thereto), without the prior written approval of the other party. The parties acknowledge that the transaction described in this Lease and the terms thereof (but not the existence thereof) are of a confidential nature and shall not be disclosed except to such party’s employees, attorneys, accountants, consultants, advisors, affiliates, and actual and prospective purchasers, lenders, investors, subtenants and assignees (collectively, “Permitted Parties”), and except as, in the good faith judgment of Landlord or Tenant, may be required to enable Landlord or Tenant to comply with its obligations under Law or under laws and regulations of the SEC. Neither party may make any public disclosure of the specific terms of this Lease, except as required by Law, including without limitation SEC laws and regulations, or as otherwise provided in this paragraph. In connection with the negotiation of this Lease and the preparation for the consummation of the transactions contemplated hereby, each party acknowledges that it will have had access to confidential information relating to the other party. Each party shall treat such information and shall cause its Permitted Parties to treat such confidential information as confidential, and shall preserve the confidentiality thereof, and not duplicate or use such information, except by Permitted Parties.

(p)          Tenant acknowledges and agrees that Landlord shall not be considered a “business associate” for any purpose under the Health Insurance Portability and Accountability Act of 1996 and all related implementing regulations and guidance.

(q)          Tenant shall cause any work performed on behalf of Tenant to be performed by contractors who work in harmony, and shall not interfere, with any labor employed by Landlord or Landlord’s contractors. If at any time any of the contractors performing work on behalf of Tenant does not work in harmony or interferes with any labor employed by Landlord, other tenants, or their respective mechanics or contractors, then the permission granted by Landlord to Tenant to do or cause any work to be done in or about the Premises may be withdrawn by Landlord with 48 hours’ written notice to Tenant.

(r)           This Lease may be executed in any number of counterparts, each of which when taken together shall be deemed to be one and the same instrument. This Lease shall not be binding nor shall either party have any obligations or liabilities or any rights with respect hereto, or with respect to the Premises, unless and until both parties have executed and delivered this Lease. The parties acknowledge and agree that notwithstanding any law or presumption to the contrary, the exchange of copies of this Lease and signature pages by electronic transmission

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shall constitute effective execution and delivery of this Lease for all purposes, and signatures of the parties hereto transmitted and/or produced electronically shall be deemed to be their original signature for all purposes.

(s)           Landlord and persons authorized by Landlord may enter the Premises at all reasonable times upon reasonable advance notice or, in the case of an emergency, at any time without notice. Landlord shall not be liable for inconvenience to or disturbance of Tenant by reason of any such entry; provided, however, in the case of repairs or work, such shall be done, so far as practicable, so as to not unreasonably interfere with Tenant’s use of the Premises.

(t)           If more than one person executes this Lease as Tenant, each of them is jointly and severally liable for the keeping, observing, and performing of all of the terms, covenants, conditions, provisions, and agreements of this Lease to be kept, observed, and performed by Tenant.

(u)          TO THE EXTENT PERMITTED BY APPLICABLE LAW, LANDLORD AND TENANT HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER AGAINST THE OTHER ON ANY MATTER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE AS AMENDED FROM TIME TO TIME, THE RELATIONSHIP OF LANDLORD AND TENANT, OR TENANT’S USE OR OCCUPANCY OF THE BUILDING, ANY CLAIM OR INJURY OR DAMAGE, OR ANY EMERGENCY OR OTHER STATUTORY REMEDY WITH RESPECT THERETO. TENANT CONSENTS TO SERVICE OF PROCESS AND ANY PLEADING RELATING TO ANY SUCH ACTION AT THE PREMISES; PROVIDED, HOWEVER, NOTHING HEREIN SHALL BE CONSTRUED AS REQUIRING SUCH SERVICE AT THE PREMISES. TENANT WAIVES ANY RIGHT TO RAISE ANY NONCOMPULSORY COUNTERCLAIM IN ANY SUMMARY OR EXPEDITED ACTION OR PROCEEDING INSTITUTED BY LANDLORD. LANDLORD, TENANT, ALL GUARANTORS, AND ALL GENERAL PARTNERS EACH WAIVES ANY OBJECTION TO THE VENUE OF ANY ACTION FILED IN ANY COURT SITUATED IN THE JURISDICTION IN WHICH THE BUILDING IS LOCATED, AND WAIVES ANY RIGHT, CLAIM, OR POWER UNDER THE DOCTRINE OF FORUM NON CONVENIENS OR OTHERWISE TO TRANSFER ANY SUCH ACTION TO ANY OTHER COURT.

(v)          Except in connection with a Tenant holdover or Landlord’s remedies set forth in this Lease for an Event of Default, and notwithstanding anything to the contrary in this Lease, each party waives, and the other shall not be liable to the waiving party for, any claim against the other party or the other party’s agents, invitees, employees, or contractors, for loss of business opportunity, loss of profits, loss of income, economic loss, consequential damages, or punitive damages; the foregoing waiver shall survive the expiration or sooner termination of this Lease..

26.          EXTENSION OPTION.

(a)          Provided: (i) no Event of Default exists; (ii) this Lease is in full force and effect; (iii) Tenant is the originally named Tenant or a Permitted Transferee; and (iv) Tenant has not subleased more than 25% of the Premises to any entity that is not a Permitted Transferee, Tenant shall have the right to extend the Term (“Extension Option”) with respect to the Extension Premises for up to 2 consecutive terms of 60 months each beyond the end of the Initial Term (each, an “Extension Term”) by delivering Tenant’s written extension election notice (“Extension Notice”) to Landlord no later than the Extension Deadline, with time being of the essence. The “Extension Deadline” means the date that is 15 months prior to the expiration of the Initial Term or the then-current Extension Term, as applicable. The “Extension Premises” means, as designated by Tenant in the Extension Notice, either all of the Premises or a portion of the Premises containing at least 75% of the Premises, provided Tenant and Landlord shall mutually agree on the location of such portion to the extent any portion consists of less than an entire floor. Notwithstanding the foregoing, if the Extension Notice is silent as to the designation of the Extension Premises, then Tenant shall be deemed to have designated all of the Premises to be the Extension Premises. If an uncured Event of Default exists at any time after Landlord receives an Extension Notice but before the first day of the applicable Extension Term, then Landlord, at Landlord’s option before the Event of Default is cured, shall have the right to nullify Tenant’s exercise of such Extension Option. The terms and conditions of this Lease during each Extension Term shall remain unchanged with respect to the Extension Premises except Tenant shall only be entitled to the 2 Extension Terms provided above, the annual Fixed Rent for the applicable Extension Term shall be the Extension Rent (as defined below), the Expiration Date shall be the last day of the Extension Term (or such earlier date of

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termination of this Lease pursuant to the terms hereof), and, except to the extent reflected in the Extension Rent, Landlord shall have no obligation to perform any tenant improvements to the Extension Premises or provide any tenant improvement allowance to Tenant. Upon Tenant’s delivery of the Extension Notice, Tenant may not thereafter revoke its exercise of the Extension Option. Notwithstanding anything to the contrary in this Lease, Tenant shall have no right to extend the Term other than or beyond the 2, 60-month Extension Terms described in this paragraph, and if Tenant fails to exercise any Extension Option for an Extension Term, all subsequent Extension Options for Extension Terms shall be null and void and of no further force and effect.

(b)          “Extension Rent” means the fair market extension term base rent for space comparable to the Extension Premises in comparable buildings in the market in which the Project is located. In determining the Extension Rent, Landlord, Tenant and any broker shall take into account all relevant factors including, without limitation, prevailing market allowances and concessions for renewing tenants, space measurement methods and loss factors, the lease term, the size of the space, the location of the building(s), the amenities offered at the building(s), the age of the building(s), and whether Project Expenses and other pass-through expenses are on a triple net, base year, expense stop or other basis. In lieu of directly providing any prevailing market allowances and/or concessions, Landlord may elect to reduce the Extension Rent by the economic equivalent thereof to reflect the fact that such allowances and concessions were not provided directly to Tenant. During the Extension Term, Tenant shall not be entitled to any tenant improvement allowances, free rent periods, or other economic concessions (if any) that Tenant was entitled to during the prior Term, except to the extent such items are indirectly incorporated into the Extension Rent as set forth in this Section. When the Extension Rent is being determined for the first year of the Extension Term, the Extension Rent for the second and all subsequent years of the Extension Term shall also be determined in accordance with the same procedures as are set forth herein and based upon the then prevailing annual rent escalation factor in the applicable leasing market.

(c)          If Tenant timely exercises an Extension Option and Landlord and Tenant do not agree upon the Extension Rent in writing by the date that is the later of 20 days after Landlord’s receipt of the Extension Notice or 3 months prior to the Extension Deadline, then within 15 days after either party notifies the other in writing that such notifying party desires to determine the Extension Rent in accordance with the procedures set forth in this Section, Landlord and Tenant shall each deliver to the other party a written statement of such delivering party’s determination of the Extension Rent, together with such supporting documentation as the delivering party desires to deliver. Within 10 days after such 15-day period, Landlord and Tenant shall appoint a real estate broker having a minimum of 10 years’ experience in the market in which the Project is located who shall select either Landlord’s determination or Tenant’s determination, whichever the broker finds more accurately reflects the Extension Rent. The broker shall be instructed to notify Landlord and Tenant of such selection within 10 days after such broker’s appointment. The broker shall have no power or authority to select any Extension Rent other than the Extension Rent submitted by Landlord or Tenant nor shall the broker have any power or authority to modify any of the provisions of this Lease, and the decision of the broker shall be final and binding upon Landlord and Tenant. If Landlord and Tenant do not timely agree in writing upon the appointment of the broker, Landlord and Tenant shall each select a broker, who together will select a third qualified broker with a minimum of 10 years’ experience in the market in which the Project is located, who will determine the Extension Rent. If Tenant fails to timely notify Landlord of Tenant’s selection, Landlord shall have the right to unilaterally appoint the broker. The fee and expenses of the broker shall be shared equally by Landlord and Tenant.

(d)          Upon Tenant’s timely and proper exercise of an Extension Option pursuant to the terms above and satisfaction of the above conditions: (i) the “Term” shall include the Extension Term, subject only to the determination of Extension Rent; (ii) the “Premises” for each Extension Term shall be the applicable Extension Premises; and (iii)  upon Landlord’s request, Tenant shall execute prior to the expiration of the then-expiring Term, an appropriate amendment to this Lease, in form and content reasonably satisfactory to both Landlord and Tenant, memorializing the extension of the Term for the ensuing Extension Term (provided Tenant’s failure to execute such amendment shall not negate the effectiveness of Tenant’s exercise of the Extension Option).

27.          TERMINATION OPTION. Provided: (i) no Event of Default exists; (ii) this Lease is in full force and effect; and (iii) Tenant is the originally named Tenant or a Permitted Transferee, Tenant has the right to terminate this Lease effective at 11:59 p.m. on the Termination Date, in accordance with and subject to each of the following terms and conditions (“Termination Option”). The “Termination Date” means: (A) if the Fixed Rent Start Date is the first day of a calendar month, the day immediately prior to the 84-month anniversary of the Fixed Rent Start Date; or

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(B) if the Fixed Rent Start Date is not the first day of a calendar month, the last day of the calendar month containing the 84-month anniversary of the Fixed Rent Start Date. If Tenant desires to exercise the Termination Option, Tenant must give to Landlord irrevocable written notice of Tenant’s exercise of the Termination Option (“Termination Notice”), and pay Landlord the Termination Payment (as defined below) as provided herein. The Termination Notice and 50% of the Termination Payment must be received by Landlord no later than the date that is 15 months prior to the Termination Date, and 50% of the Termination Payment must be received by Landlord no later than the date that is 15 days prior to the Termination Date, failing which the Termination Option is deemed waived (provided Landlord reserves the right to waive in writing the requirement that Tenant fully and/or timely pay the Termination Payment). The “Termination Payment” means the sum of the unamortized (amortized on a straight-line basis with interest at 8%) amount as of the Termination Date of the following in connection with this Lease and any amendment to this Lease (including with respect to any expansion of the Premises after the Commencement Date): (i) brokerage commissions and attorneys’ fees paid by Landlord; (ii) rent concessions; and (iii) any and all allowances to Tenant, including without limitation the Leasehold Improvement Allowance (as defined in Exhibit C), but expressly excluding the Base Building Allowance. Tenant’s payment of the Termination Payment is a condition precedent to the termination of this Lease on the Termination Date, and such obligation survives the Expiration Date. Tenant acknowledges and agrees that the Termination Payment is not a penalty and is fair and reasonable compensation to Landlord for the loss of expected rentals from Tenant. The Termination Payment is payable only by wire transfer or cashier’s check. Time is of the essence with respect to the dates and deadlines set forth herein. As of the date Tenant delivers the Termination Notice, any and all unexercised rights or options of Tenant to extend the Term or expand the Premises (whether expansion options, rights of first refusal, rights of first offer, or otherwise), and any and all outstanding tenant improvement allowance not properly claimed by Tenant in accordance with this Lease shall immediately terminate and are automatically, without further action required by any party, null and void and of no force or effect. If Tenant timely and properly exercises the Termination Option in accordance with this paragraph, this Lease and the Term shall come to an end on the Termination Date with the same force and effect as if the Term were fixed to expire on such date, the Expiration Date shall be the Termination Date, and the terms and provisions of Section 18 shall apply. Upon Tenant’s request after the Commencement Date, Landlord shall notify Tenant of its calculation of the Termination Payment.

28.          RIGHT OF FIRST OFFER.

(a)          Provided: (i) no Event of Default exists; (ii) this Lease is in full force and effect; (iii) Tenant is the originally named Tenant or a Permitted Transferee; and (iv) Tenant has not subleased more than 50% of the Premises to any entity that is not a Permitted Transferee, then following receipt of Tenant’s written request at any time after the Commencement Date, Landlord shall notify Tenant in writing (“Landlord’s ROFO Notice”) when any rentable space located on the 36^th, 37^th, or 38^th floors of the Building (“Potential ROFO Space”) becomes available to lease (as defined below) from Landlord or Landlord reasonably anticipates that such space will become available to lease from Landlord prior to the last 36 months of the Term. Landlord’s ROFO Notice shall identify the portion of the Potential ROFO Space that is available to lease (such identified space, “ROFO Space”), and include the anticipated availability date and basic market economic terms for the lease of the ROFO Space and, subject to the terms and provisions of this Section, Tenant shall have a continuous right (“ROFO”) to lease all (but not less than all) of the ROFO Space by delivering Tenant’s written notice of such election to Landlord (“Tenant’s ROFO Notice”) within 5 business days after Tenant’s receipt of Landlord’s ROFO Notice.

(b)          Upon Tenant’s delivery of Tenant’s ROFO Notice, Tenant may not thereafter revoke Tenant’s exercise of the ROFO. If an Event of Default exists at any time after Landlord receives Tenant’s ROFO Notice but before the first day that Tenant commences to lease the ROFO Space, Landlord, at Landlord’s option, shall have the right to nullify Tenant’s exercise of the ROFO with respect to the ROFO Space. If Tenant notifies Landlord that Tenant elects not to lease the ROFO Space or if Tenant fails to timely deliver Tenant’s ROFO Notice to Landlord with respect thereto, then Landlord shall have the right to enter into a lease agreement(s) for the ROFO Space under one or more leases containing such terms as Landlord deems acceptable in Landlord’s sole discretion, and the ROFO shall be void and have no further force or effect with respect to such space; provided, however: (i) the ROFO shall survive with respect to the balance of the Potential ROFO Space; and (ii) if, within 6 months after Landlord’s ROFO Notice with respect thereto, either Landlord has not leased such ROFO Space, or Landlord proposes such ROFO Space to another prospect with terms that are 20% (or more) more favorable in the aggregate than those terms initially proposed to Tenant, then Landlord shall reoffer such ROFO Space to Tenant.

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(c)          Landlord may at any time choose to use any space that is or about to become vacant within the Building for marketing or property management purposes, or as a Building amenity or Common Area such as a fitness center or conference area, or to lease such space to an existing tenant of Landlord in connection with the relocation of such tenant, without in any such case notifying or offering such space to Tenant or giving rise to any right of Tenant hereunder. Space is “available to lease” if and when: (i) the lease for any tenant of all or a portion of the space expires or is otherwise terminated, provided space shall not be deemed to be or become available if the space is assigned or subleased by the tenant of the space, or relet by the tenant or subtenant of the space by renewal, extension, or new lease; and (ii) to the extent that all or a portion of the ROFO Space is available to lease from Landlord as of the date of this Lease, Landlord has entered into a lease with a third-party tenant for such currently available ROFO Space after the date of this Lease and the term of that lease has expired (including, without limitation, the expiration of any lease term extension period(s), regardless of whether the extension right or agreement is contained in such lease or is agreed to at any time by Landlord and the tenant under such lease or otherwise) or been terminated.

(d)          Except to the extent expressly set forth in Landlord’s ROFO Notice to the contrary, if Tenant elects to lease the ROFO Space, such space shall become subject to this Lease upon the same terms and conditions as are then applicable to the original Premises, except that Tenant shall take the ROFO Space in “AS IS” condition and Landlord shall have no obligation to make any improvements or alterations to the ROFO Space, and the term of Tenant’s lease of the ROFO Space shall be the term specified in Landlord’s ROFO Notice. Landlord shall determine the exact location of any demising walls (if any) for the ROFO Space. Tenant shall not be entitled to any tenant improvement allowances, free rent periods, or other special concessions granted to Tenant with respect to the original Premises. Upon Tenant’s leasing of the ROFO Space, the “Premises” shall include the ROFO Space and, except as otherwise set forth in this Section, all computations made under this Lease based upon or affected by the rentable area of the Premises shall be recomputed to include the ROFO Space.

(e)          If Tenant timely exercises its right to lease the ROFO Space: (i) Tenant’s lease of the ROFO Space shall commence 4 months after the later of: (A) the date of availability specified in Landlord’s ROFO Notice; or (B) the date Landlord tenders possession of the ROFO Space in vacant condition; and (ii) upon Landlord’s request, Tenant shall execute an appropriate new lease or amendment, in form and content reasonably satisfactory to both Landlord and Tenant, memorializing the expansion of the Premises as set forth in this Section (provided Tenant’s failure to execute such lease or amendment shall not negate the effectiveness of Tenant’s exercise of the ROFO).

29.          RIGHT OF FIRST REFUSAL.

(a)          Provided: (i) no Event of Default exists; (ii) this Lease is in full force and effect; (iii) Tenant is the originally named Tenant or a Permitted Transferee; and (iv) Tenant has not subleased more than 50% of the Premises to any entity that is not a Permitted Transferee, then if, at any time beginning on the Effective Date and ending on the date that is 36 months prior to the end of the Term, Landlord desires to execute a written letter of intent or lease proposal (“Proposal”) with a potential tenant for Suite 4010 when it is available to lease, Landlord shall so notify Tenant in writing (“Landlord’s Notice”) and, subject to the terms and provisions of this Section, Tenant shall have right (“Right of First Refusal”) to enter into a lease for the entire (but not less than the entire) Suite 4010 upon the terms set forth in this Section by delivering Tenant’s written notice of such election to Landlord (“Tenant’s ROFR Notice”) within 5 business days after Tenant’s receipt of Landlord’s Notice. “Suite 4010” means the space to be known as Suite 4010 in the Building, as shown on Exhibit A attached hereto, which is deemed to contain 6,485 rentable square feet; collectively, Suite 4000 and Suite 4010 comprise all of the 40^th floor of the Building. Space is “available to lease” if and when the lease for any current tenant of all or a portion of the space expires or is otherwise terminated, provided space shall not be deemed to be or become available if the space is assigned or subleased by the current tenant of the space, or relet by the current tenant or subtenant of the space by renewal, extension, or new lease. Upon Tenant’s delivery of Tenant’s ROFR Notice, Tenant may not thereafter revoke Tenant’s exercise of the Right of First Refusal.

(b)          If Tenant notifies Landlord that Tenant elects not to lease Suite 4010 or if Tenant fails to timely deliver Tenant’s ROFR Notice to Landlord, Landlord shall have the right thereafter to lease Suite 4010 to one or more tenants under one or more leases containing substantially the terms set forth in the Proposal, but the Right of First Refusal shall apply the next time Suite 4010 is available to lease.

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(c)          If Tenant timely exercises its Right of First Refusal: (i) Tenant’s lease of Suite 4010 shall commence 4 months after the later of the date of availability specified in Landlord’s Notice, or the date upon which the prior occupant (“Prior Occupant”) of Suite 4010 physically vacates and surrenders possession of Suite 4010 and Landlord delivers Suite 4010 in broom clean condition; (ii) the terms set forth in the Proposal shall apply to the lease of Suite 4010, including the term of Tenant’s lease of Suite 4010 shall be the same period as set forth in the Proposal; (iii) except as set forth in the Proposal to the contrary, Tenant shall lease Suite 4010 under all of the terms and conditions of this Lease except that Tenant shall take Suite 4010 in “AS IS” condition, and Landlord shall have no obligation to make any improvements or alterations to Suite 4010 or provide any tenant improvement allowance; and (iv) upon Landlord’s request, Tenant shall execute an appropriate new lease or amendment, in form and content reasonably satisfactory to both Landlord and Tenant, memorializing the expansion of the Premises as set forth in this Section (provided Tenant’s failure to execute such lease or amendment shall not negate the effectiveness of Tenant’s exercise of the Right of First Refusal). Notwithstanding the foregoing, if Landlord receives Tenant’s ROFR Notice on or prior to the 36-month anniversary of the Commencement Date, then at Tenant’s election, Suite 4010 shall be leased under all of the same terms and conditions as set forth in this Lease, including at the same Fixed Rent per rentable square foot as for the then-current Premises, but with pro rata concessions, and coterminous. Landlord and the tenant proposing to lease Suite 4010 shall not be precluded from making changes to the Proposal during lease negotiations so long as such changes are the result of arm’s-length negotiations between Landlord and such prospective tenant and not the result of bad faith and collusion insofar as Tenant’s interests are concerned, and so long as the changes do not materially alter any of the financial terms set forth in the Proposal. Provided Landlord has complied with the terms of the following sentence, Landlord will have no liability to Tenant if Landlord does not deliver or does not timely deliver Suite 4010 to Tenant. Landlord will promptly commence and diligently pursue obtaining possession of Suite 4010 (including by initiating legal proceedings) so that Landlord can timely deliver Suite 4010 to Tenant; provided, however, if Landlord has not delivered possession of Suite 4010 to Tenant within 6 months after the commencement date set forth in the Proposal, Tenant’s sole remedy shall be to terminate Tenant’s election to lease Suite 4010 by notifying Landlord in writing within 30 days after the expiration of such 6-month period. Nothing herein contained shall obligate Landlord to make any payment to the Prior Occupant in order to entice the Prior Occupant to physically vacate and surrender possession of Suite 4010.

30.          FIRST EXPANSION OPTION.

(a)          Provided: (i) no Event of Default exists; (ii) this Lease is in full force and effect; (iii) Tenant is the originally named Tenant or a Permitted Transferee; and (iv) Tenant has not subleased more than 50% of the Premises to any entity that is not a Permitted Transferee, then Tenant has the option (“First Expansion Option”) to lease all (but not less than all) of Suite 4010 upon the terms and conditions set forth in this Section. If Tenant desires to exercise the First Expansion Option, Tenant shall send a written notice to Landlord of its irrevocable exercise of the First Expansion Option (“Tenant’s First Expansion Notice”), which must be received by Landlord no later than the 2-year anniversary of the Commencement Date, time of the essence. Upon Tenant’s delivery of Tenant’s First Expansion Notice, Tenant may not thereafter revoke Tenant’s exercise of the First Expansion Option. If an Event of Default exists at any time after Landlord receives Tenant’s First Expansion Notice but before the first day that Tenant commences to lease Suite 4010, Landlord, at Landlord’s option, shall have the right to nullify Tenant’s exercise of the First Expansion Option.

(b)          If Tenant timely exercise the First Expansion Option, Suite 4010 shall be leased under all of the same terms and conditions as set forth in this Lease with respect to the Premises, including at the same Fixed Rent per rentable square foot then applicable to the Premises, but with pro rata concessions, and coterminous. Upon Tenant’s leasing of Suite 4010, the “Premises” shall include Suite 4010 and, except as otherwise set forth in this Section, all computations made under this Lease based upon or affected by the rentable area of the Premises shall be recomputed to include Suite 4010.

(c)          If Tenant timely exercises the First Expansion Option: (i) Landlord shall tender possession of Suite 4010 to Tenant in vacant and broom-clean condition within 6 months after receipt of Tenant’s First Expansion Notice; (ii) Tenant’s lease of Suite 4010 shall commence 4 months after the date Landlord tenders possession of Suite 4010 in vacant and broom-clean condition; and (iii) upon Landlord’s request, Tenant shall execute an appropriate new lease or amendment, in form and content reasonably satisfactory to both Landlord and Tenant, memorializing the expansion of the Premises as set forth in this Section (provided Tenant’s failure to execute such lease or amendment shall not negate the effectiveness of Tenant’s exercise of the First Expansion Option).

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31.          SECOND EXPANSION OPTION.

(a)          Provided: (i) no Event of Default exists; (ii) this Lease is in full force and effect; (iii) Tenant is the originally named Tenant or a Permitted Transferee; and (iv) Tenant has not subleased more than 50% of the Premises to any entity that is not a Permitted Transferee, then Tenant has the option (“Second Expansion Option”) to lease all (but not less than all) of the 2^nd Expansion Space upon the terms and conditions set forth in this Section. “2^nd Expansion Space” means, initially, the 41^st floor of the Building; provided, however, if the 41^st floor will not be available to lease within 9 months after Landlord’s receipt of Tenant’s Second Expansion Notice, then the 2^nd Expansion Space shall be the 37^th floor of the Building. If Tenant desires to exercise the Second Expansion Option, Tenant shall send a written notice to Landlord of its irrevocable exercise of the Second Expansion Option (“Tenant’s Second Expansion Notice”), which must be received by Landlord no earlier than the 5-year anniversary of the Commencement Date and no later than the 7-year anniversary of the Commencement Date, time of the essence. Upon Tenant’s delivery of Tenant’s Second Expansion Notice, Tenant may not thereafter revoke Tenant’s exercise of the Second Expansion Option. If an Event of Default exists at any time after Landlord receives Tenant’s Second Expansion Notice but before the first day that Tenant commences to lease the 2^nd Expansion Space, Landlord, at Landlord’s option, shall have the right to nullify Tenant’s exercise of the Second Expansion Option.

(b)          If Tenant timely exercise the Second Expansion Option, the 2^nd Expansion Space shall be leased under all of the same terms and conditions as set forth in this Lease with respect to the Premises, including at the same Fixed Rent per rentable square foot then applicable to the Premises, but with pro rata concessions, and coterminous. Upon Tenant’s leasing of Suite 4010, the “Premises” shall include the 2^nd Expansion Space and, except as otherwise set forth in this Section, all computations made under this Lease based upon or affected by the rentable area of the Premises shall be recomputed to include the 2^nd Expansion Space.

(c)          If Tenant timely exercises the Second Expansion Option: (i) Landlord shall tender possession of the 2^nd Expansion Space to Tenant in vacant and broom-clean condition within 9 months after receipt of Tenant’s Second Expansion Notice; (ii) Tenant’s lease of the 2^nd Expansion Space shall commence 4 months after the date Landlord tenders possession of the 2^nd Expansion Space in vacant and broom-clean condition; and (iii) upon Landlord’s request, Tenant shall execute an appropriate new lease or amendment, in form and content reasonably satisfactory to both Landlord and Tenant, memorializing the expansion of the Premises as set forth in this Section (provided Tenant’s failure to execute such lease or amendment shall not negate the effectiveness of Tenant’s exercise of the Second Expansion Option).

[SIGNATURES ON FOLLOWING PAGE]

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TENANT CONFESSION CERTIFICATION:  Tenant acknowledges and agrees that any failure of Tenant to execute Section 17 of this Lease shall be an absolute bar from Tenant (or Tenant’s successors or assigns) claiming, alleging or petitioning, including, but not limited to, in any petition to open said confession, that such Section is invalid and not binding upon Tenant (or Tenant’s successors or assigns).

IN WITNESS WHEREOF, the parties hereto have executed this Lease under seal as of the day and year first-above stated.

LANDLORD:			TENANT:
COMMERCE SQUARE PARTNERS - PHILADELPHIA			PASSAGE BIO, INC.
PLAZA, L.P.
By:	Brandywine Commerce Sub I LLC, its general partner		By:	/s/ Jill Quigley
			Name:	Jill Quigley
	By:	/s/ George Johnstone	Title:	Chief Operating Officer
	Name:	George Johnstone	Date:	4/13/2020
	Title:	EVP Operations
	Date:	4/13/2020

Exhibits:

Exhibit A:	Location Plan of Premises
Exhibit B:	Form of COLT
Exhibit C:	Leasehold Improvements
Exhibit D:	Cleaning Specifications
Exhibit E:	Rules and Regulations

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EXHIBIT A

LOCATION PLAN OF PREMISES AND SUITE 4010 (NOT TO SCALE)

A-1

A-2

EXHIBIT B

FORM OF COLT

CONFIRMATION OF LEASE TERM

THIS CONFIRMATION OF LEASE TERM (“COLT”) is made as of                                            between                  , (“Landlord”) and                                               , (“Tenant”).

1.            Landlord and Tenant are parties to that certain lease dated        (“Lease Document”), with respect to the premises described in the Lease Document, known as Suite        consisting of approximately rentable square feet (“Premises”), located at                .

2.            All capitalized terms, if not defined in this COLT, have the meaning give such terms in the Lease Document.

3.            Tenant has accepted possession of the Premises in their “AS IS” “WHERE IS” condition and all improvements required to be made by Landlord per the Lease Document have been completed [except for the following punch list items:              ].

4.            The Lease Document provides for the commencement and expiration of the Term of the lease of the Premises, which Term commences and expires as follows:

a.            Commencement of the Term of the Premises:              

b.            Expiration of the Term of the Premises:              

5.            The required amount of the Security Deposit and/or Letter of Credit per the Lease Document is $               . Tenant has delivered the Security Deposit and/or Letter of Credit per the Lease Document in the amount of $          .

6.            The Building Number is __________ and the Lease Number is ____________.

LANDLORD:			TENANT:
COMMERCE SQUARE PARTNERS - PHILADELPHIA			PASSAGE BIO, INC.
PLAZA, L.P.
By:	Brandywine Commerce Sub I LLC, its general partner		By:	/s/ Jill Quigley
			Name:	Jill Quigley
	By:	/s/ George Johnstone	Title:	COO
	Name:	George Johnstone	Date:	4/13/2020
	Title:	EVP Operations
	Date:	4/13/2020

B-1

EXHIBIT C

LEASEHOLD IMPROVEMENTS

This Exhibit C-Leasehold Improvements (“Exhibit”) is a part of the Lease to which this Exhibit is attached. Capitalized terms not defined in this Exhibit shall have the meanings set forth for such terms in the Lease.

1.            Definitions.

(a)          “Architect” means the licensed architect engaged by Tenant, subject to Landlord’s reasonable approval, to prepare the Architectural Plans.

(b)          “Architectural Plans” means 100% fully coordinated and complete, Permittable and accurate architectural working drawings and specifications for the Leasehold Improvements prepared by the Architect including all architectural dimensioned plans showing wall layouts, wall and door locations, power and telephone locations and reflected ceiling plans and further including elevations, details, specifications and schedules according to accepted AIA standards.

(c)          “Base Building Allowance” means an amount equal to the product of $9.00 multiplied by the rentable square footage of the Premises, which product equals $336,726.00.

(d)          “Base Building Improvements” means that portion of the Leasehold Improvements that relates to demolishing the interior of the Premises, upgrading the existing restrooms on the 38^th, 39^th, and 40^th floors, and renovating the interior stairwell in the Premises.

(e)          “Building Standard” means the quality and quantity of materials, finishes, ways and means, and workmanship specified from time to time by Landlord as being standard for leasehold improvements at the Building or for other areas at the Building, as applicable.

(f)           “CD’s” means the Architectural Plans together with the MEP Plans, copies of all permit applications required for the Leasehold Improvements, all related documents, and if applicable, the Structural Plans.

(g)          “Central Systems” means any Building system or component within the Building core servicing the tenants of the Building or Building operations generally (such as base building plumbing, electrical, heating, ventilation and air conditioning, fire protection and fire alert systems, elevators, structural systems, building maintenance systems or anything located within the core of the Building or central to the operation of the Building).

(h)          “Construction Costs” means all costs in the permitting, demolition, construction, acquisition, and installation of the Leasehold Improvements, including, without limitation, contractor fees, overhead and profit, and the cost of all labor and materials supplied by Contractor, suppliers, independent contractors, and subcontractors arising in connection with the Leasehold Improvements.

(i)           “Construction Management Fee” means a fee in the amount of 3% of the Leasehold Improvement Allowance.

(j)           “Contractor” means the general contractor selected by Landlord pursuant to Section 2(c) below to construct and install the Leasehold Improvements.

(k)          “Improvement Allowance” means, collectively, the Base Building Allowance and the Leasehold Improvement Allowance.

(l)           “Improvement Costs” means the sum of: (i) the Planning Costs; (ii) the Construction Costs; and (iii) the Construction Management Fee.

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(m)         “Landlord’s Designer” means the architect, space planner, or engineer, if any, engaged by Landlord to review the CD’s as contemplated by Section 2 below.

(n)          “Leasehold Improvement Allowance” means an amount equal to the product of $65.00 multiplied by the rentable square footage of the Premises, which product equals $2,431,910.00.

(o)          “Leasehold Improvements” means the improvements, alterations, and other physical additions to be made or provided to, constructed, delivered or installed at, or otherwise acquired for, the Premises in accordance with the CD’s, or otherwise approved in writing by Landlord or paid for in whole or in part from the Improvement Allowance. Any provision of this Exhibit to the contrary notwithstanding, the Leasehold Improvements shall not include Tenant’s Equipment or any of the associated permits therefor.

(p)          “MEP Engineer” means the engineer engaged by Tenant, subject to Landlord’s reasonable approval, to prepare the MEP Plans.

(q)          “MEP Plans” means 100% fully coordinated and complete, Permittable and accurate mechanical, electrical, and plumbing plans, schedules and specifications for the Leasehold Improvements prepared by the MEP Engineer in accordance and in compliance with the requirements of applicable building, plumbing, and electrical codes and the requirements of any authority having jurisdiction over or with respect to such plans, schedules and specifications, which are complete, accurate, consistent, and fully coordinated with and implement and carry out the Architectural Plans.

(r)           “Permittable” means that the applicable plan meets the requirements necessary to obtain a building permit from the city or county (as applicable) in which the Building is located.

(s)           “Planning Costs” means all actual, reasonable, documented, third-party costs incurred by Tenant and directly related to the design of the Leasehold Improvements including, without limitation, the professional fees of any engineers, consultants, architects, space planners, and other professionals preparing and/or reviewing the CD’s.

(t)           “Punch List” means the list of items of Leasehold Improvements, if any, that require installation, correction, repair, or replacement, do not materially affect Tenant’s ability to use the Premises for the Permitted Use, and are listed in a writing prepared in accordance with Section 7 below.

(u)          “Structural Engineer” means the engineer engaged by Tenant, subject to Landlord’s reasonable approval, to prepare the Structural Plans.

(v)          “Structural Plans” means 100% fully coordinated and complete, Permittable, and accurate structural plans, schedules and specifications, if any, for the Leasehold Improvements prepared by the Structural Engineer in accordance and in compliance with the requirements of any authority having jurisdiction over or with respect to such plans, schedules and specifications, which are complete, accurate, consistent, and fully coordinated with and implement and carry out the Architectural Plans.

(w)         “Substantial Completion” means the later of the date on which: (i) the Leasehold Improvements have been completed in accordance with the CD’s (and any Approved Changes) except for the Punch List; and (ii) Landlord has obtained a final inspection approval, or temporary or permanent certificate of occupancy from the applicable local governing authority. If issuance of such approval or certificate is conditioned upon Tenant’s installation of any of Tenant’s Equipment, or completion of any other work or activity in the Premises for which Tenant is responsible, and the governmental authority will not issue the approval or certificate, or schedule an inspection of the Leasehold Improvements due to Tenant’s failure to complete any work, installation, or activity (including the installation of any of Tenant’s Equipment), then Substantial Completion shall be deemed to have occurred when sub item (i) has been achieved without Landlord having obtained the approval or temporary or permanent certificate of occupancy and correspondingly, the Commencement Date shall be established.

(x)          “TEA” means a Tenant expenditure authorization, which may be in the form of a written document and/or an email sent via electronic transmittal to Tenant’s Representative (as defined in Section 2(g)).

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(y)          “Tenant Delay” means any actual delay in Substantial Completion as a result of any of the following: (i) Tenant fails to fully and timely comply with the terms of this Exhibit, including without limitation Tenant’s failure to comply with any of the deadlines specified in this Exhibit; (ii) Tenant changes the CD’s, including any Approved Changes, notwithstanding Landlord’s approval of such changes (provided Landlord notified Tenant in writing of the anticipated period of Tenant Delay and Tenant thereafter elects to proceed with such Approved Changes); (iii) delays caused by any governmental or quasi-governmental authorities arising from the Leasehold Improvements being designed to include items or improvements not typically found in office space of other comparable buildings in the market in which the Building is located; (iv) Tenant or any Tenant Agent interferes with the work of Landlord or Contractor including, without limitation, during any pre-commencement entry period or in connection with Tenant’s installation of Tenant’s Equipment; (v) Tenant requests non-Building Standard improvements, materials, finishes, or installations with a long lead time (provided Landlord promptly notified Tenant of such item after becoming aware that the item had a long lead time, and Tenant proceeded knowing the long-lead status); or (vi) any other delay caused by Tenant or any Tenant Agent.

(z)          “Tenant’s Equipment” means any telephone, telephone switching, data, and security cabling and systems, cabling, furniture, computers, servers, suite security, Tenant’s trade fixtures, and other personal property installed (or to be installed) by or on behalf of Tenant in the Premises.

2.            Process.

(a)          Proposed CD’s. By no later than the Outside Plan Delivery Date, Tenant shall prepare and deliver to Landlord, in hard copy and .pdf format, proposed CD’s for Landlord’s review, stamped for permit filing, together with any underlying detailed information Landlord may require in order to evaluate the CD’s (“Proposed CD’s”). The “Outside Plan Delivery Date” means the later of: (i) June 15, 2020; or (ii) the date that is 30 days after the later of (A) the date the Pennsylvania Governor’s order that all non-essential business must cease is terminated or expires, or (B) the date the Premises are available to Tenant for the purpose of measuring/completing its plans. Tenant shall use commercially reasonable efforts to deliver Proposed CD’s to Landlord by June 1, 2020, and the date on which Tenant delivers the Proposed CD’s to Landlord is the “Plan Delivery Date”. The design of the Leasehold Improvements must be consistent with sound architectural, engineering, and construction practices in first-class office buildings comparable in size and market to the Building.

(b)          Landlord’s Approval Process. Within 10 business days after Landlord’s receipt of the CD’s, Landlord shall notify Tenant in writing as to whether Landlord approves or disapproves such CD’s, which approval shall not be unreasonably withheld, and may contain conditions. Notwithstanding the foregoing, if the Architect is L2P and the MEP Engineer is HPE, then Landlord shall provide its response within 5 business days. If Landlord disapproves of the CD’s, or approves the CD’s subject to modifications, Landlord shall state in its written notice to Tenant the reasons therefor, and Tenant, upon receipt of such written notice, shall revise and resubmit the CD’s to Landlord for review within 5 business days thereafter and Landlord’s reasonable approval, which approval shall not be unreasonably withheld. This process shall continue until the Proposed CD’s are approved by Landlord. All design, construction, and installation in connection with the Leasehold Improvements shall conform to the requirements of applicable building, plumbing, and electrical codes and the requirements of any authority having jurisdiction over, or with respect to, such Leasehold Improvements. All reasonable third-party costs incurred by Landlord in connection with review of the CD’s with respect to the internal stairwell and/or smoke evacuation shall be paid by Tenant to Landlord within 30 days after receipt by Tenant of a statement of such costs. Landlord’s approval of the CD’s is not a representation that: (a) such CD’s are in compliance with all applicable Laws; or (b) the CD’s or design is sufficient for the intended purposes. Tenant shall be responsible for all elements of the design of the Leasehold Improvements and the CD’s (including, without limitation, compliance with Laws, functionality of design, the structural integrity of the design, the configuration of the Premises and the placement of Tenant’s furniture, appliances and equipment), and Landlord’s approval of the Leasehold Improvements and the CD’s shall in no event relieve Tenant of the responsibility for such design, or create responsibility or liability on Landlord’s part for their completeness, design sufficiency, or compliance with Laws.

(c)          TEA for Construction Costs; Contractor Selection. Promptly after the full execution and delivery of the Lease, Landlord shall cause three general contractors to submit bids for the general conditions, overhead, and profit related to the Leasehold Improvements. Tenant shall have the right to participate in the selection of the general contractor for the Leasehold Improvements. Landlord shall competitively bid the Leasehold Improvements with a

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minimum of three qualified contractors (MJ Settelen shall not participate), and select the lowest qualified bidder. Tenant may submit two contractors of its choice to be included in the bid process, provided such contractor is union, reasonably approved by Landlord, meets Landlord’s insurance requirements, and complies with all contractor rules and regulations. After Landlord’s approval of the CD’s, the Contractor shall then bid the components of the Leasehold Improvements to multiple applicable subcontractors for each respective trade, provided that upon completion of the structural plans, which will likely occur prior to completion of the CD’s, the Contractor shall immediately seek bids and enter into contracts with the necessary supplier/manufacturer of the components of the internal staircase. After selection of the subcontractors, Landlord shall then prepare a TEA for the Construction Costs, and deliver such TEA to Tenant for approval in accordance with Section 1(d) below.

(d)          Tenant’s Approval Process. Within 5 business days after Tenant’s receipt of a TEA from Landlord, Tenant shall notify Landlord in writing as to whether Tenant approves or disapproves of such TEA, which approval shall not be unreasonably withheld, conditioned, or delayed. If Tenant disapproves of a TEA: (i) Tenant shall provide Landlord with a reasonably detailed written statement setting forth the reason(s) for such disapproval; (ii) Landlord and Tenant shall work together in good faith to promptly resolve any open issues; (iii) Landlord shall promptly have the TEA revised and resubmitted to Tenant for Tenant’s approval; and (iv) this process shall continue until Tenant approval is given, except that Tenant shall approve or disapprove any revisions within 2 business days after Tenant’s receipt thereof. Tenant’s disapproval of a TEA shall be deemed unreasonable if the TEA is substantially based on the CD’s. If Tenant fails to timely deliver to Landlord Tenant’s written, reasonable disapproval, Tenant shall be deemed to have given its approval, and Landlord shall be authorized (but not required) to proceed thereon.

(e)          Change Orders. Tenant shall have the right to make changes to the CD’s provided: (i) such changes are approved in writing by Landlord (“Approved Changes”); and (ii) the net costs to Landlord (including any delay costs) arising therefrom (the “Additional Costs”) shall be included in Improvement Costs. It shall be deemed reasonable for Landlord to deny consent to a requested change to the CD’s if Landlord determines that Substantial Completion will be delayed. Landlord shall have the right to issue a TEA for Additional Costs, which shall be included in the total Construction Costs.

(f)           Tenant’s and Landlord’s Representative. “Tenant’s Representative” means Jill Quigley, whose email address is jquigley@passagebio.com, and Stephen Biroc, whose email address is sbiroc@passagebio.com, either of whom can act as Tenant’s Representative. “Landlord’s Representative” means Matt Elko, whose email address is matthew.elko@bdnreit.com. Each party shall have the right to designate a substitute individual as Tenant’s Representative or Landlord’s Representative, as applicable, from time to time by written notice to the other. All correspondence and information to be delivered to Tenant with respect to this Exhibit shall be delivered to Tenant’s Representative, and all correspondence and information to be delivered to Landlord with respect to this Exhibit shall be delivered to Landlord’s Representative. Notwithstanding anything to the contrary in the Lease, communications between Landlord’s Representative and Tenant’s Representative in connection with this Exhibit may be given via electronic means such as email without copies. Tenant’s Representative shall have authority to grant any consents or approvals by Tenant under this Exhibit, and for authorizing and executing any and all change orders or other documents in connection with this Exhibit, and Landlord shall have the right to rely thereon. Tenant hereby ratifies all actions and decisions with regard to the Leasehold Improvements that Tenant’s Representative may have taken or made prior to the execution of the Lease. Landlord shall not be obligated to respond to or act upon any plan, drawing, change order, approval, or other matter relating to the Leasehold Improvements until it has been executed by Tenant’s Representative or a senior officer of Tenant.

(g)          Tenant shall require any architect, structural engineer, design professional, or MEP engineer retained or contracted by Tenant to carry, and to cause its subcontractors to carry, throughout the duration of any contract or any work authorized under purchase order, at their expense, professional liability insurance in amounts of no less than $2,000,000 each occurrence and $2,000,000 in the aggregate, and umbrella and/or excess liability insurance in amounts of no less $2,000,000 each occurrence and $2,000,000 in the aggregate.

3.            Completion of Leasehold Improvements.

(a)          Allocation. Except to the extent that the CD’s, the Approved Changes, and/or this Exhibit provide that Tenant shall complete a portion of the Leasehold Improvements, Landlord shall cause the Leasehold

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Improvements to be made, constructed, or installed in a good and workmanlike manner substantially in accordance with the CD’s and Approved Changes.

(b)          Building Standards. Except as expressly set forth otherwise in the CD’s and/or the Approved Changes, Landlord shall cause the Leasehold Improvements to be constructed or installed to Building Standards; provided, however, Landlord shall have the right to substitute, after providing written notice to Tenant and providing Tenant with an opportunity to approve said substitution comparable non-Building Standard materials, fixtures, finishes, and items to the extent Building Standard items are not readily available.

4.            Central Systems. Neither Tenant nor any of its agents or contractors shall alter, modify, or in any manner disturb any of the Central Systems.

5.            Tenant’s Equipment. Tenant shall be solely responsible for the procuring, ordering, delivery, and installation of Tenant’s Equipment in compliance with all Laws. Tenant shall coordinate the installation of Tenant’s Equipment (including cabling) at the Premises with Contractor’s completion of the Leasehold Improvements.

6.            Cooperation. Tenant and Tenant’s Representative shall cooperate with Landlord, Architect, and the Contractor to promote the efficient and expeditious completion of the Leasehold Improvements.

7.            Punch List. Prior to Substantial Completion, the Architect shall prepare a preliminary Punch List in writing for Landlord’s and Tenant’s review. Landlord shall schedule a walkthrough of the Premises with Tenant’s Representative to occur on Substantial Completion, from which Landlord and Tenant shall generate a final Punch List. Landlord shall diligently pursue completion of any Punch List work, and make commercially reasonable efforts to complete all Punch List work within 30 days after Substantial Completion, subject to long-lead items. Landlord shall obtain from Contractor a commercially customary one-year warranty for the Leasehold Improvements, and Landlord shall use commercially reasonable efforts to make a claim under such warranties on behalf of Tenant to the extent necessary. The taking of possession of the Premises by Tenant shall constitute an acknowledgment by Tenant that the Premises are in good condition and that all work and materials provided by Landlord are satisfactory except as to: (i) any latent defects discovered within the first 12 months of the Term; (ii) items contained in the Punch List; and (iii) items covered by the one-year warranty.

8.            Tenant Delay. In the event of Tenant Delay, Substantial Completion shall be deemed to be the date Substantial Completion would have occurred but for Tenant Delays. Landlord shall have no obligation to expend any funds, employ any additional labor, contract for overtime work, or otherwise take any action to compensate for any Tenant Delay. Any incremental costs in labor, materials, and supplies incurred due to Tenant Delay shall be included in Construction Costs.

9.            Early Access. Subject to the terms herein and Tenant’s compliance with all applicable Laws, Tenant shall have reasonable access to the Premises (“Early Access”) during completion of the Leasehold Improvements to coordinate installation of Tenant’s cabling and wiring and during the 2-week period immediately prior to Substantial Completion to install its furniture, fixtures, and equipment; provided in any such case Tenant’s Early Access does not unreasonably interfere with, or unreasonably delay completion of the Leasehold Improvements, and Tenant first provides Landlord with a certificate of insurance as required under the Lease. Tenant shall be fully responsible for all costs related to Early Access. All insurance, waiver, indemnity, and alteration provisions of the Lease shall be in full force and effect during Early Access. Tenant shall ensure that its phone/data, security, and other vendors comply with all applicable Laws and pull their permits and perform their work in conjunction with the Leasehold Improvements so as not to delay completion of the Leasehold Improvements and any and all inspections therefor. Tenant and its contractors shall coordinate all activities with Landlord in advance and in writing, and shall comply with Landlord’s instructions and directions so that Tenant’s early entry does not interfere with or delay any work to be performed by Landlord. Any delay resulting from Early Access, including without limitation due to a Tenant vendor’s work delaying Landlord’s ability to obtain its permits, shall be deemed a Tenant Delay.

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10.          Costs.

(a)          Improvement Allowance. Landlord shall provide the Improvement Allowance to Tenant in accordance with this Exhibit. The Improvement Allowance shall be applied solely towards payment of the Improvement Costs, and, except as set forth below, specifically excluding costs for Tenant’s Equipment, cabling, moving, utilities, and movable furniture, fixtures, or equipment that has no permanent connection to the structure of the Building; provided, however, the Base Building Allowance shall be applied solely to Improvement Costs related to the Base Building Improvements (and not to any costs related to the Leasehold Improvements). If, as of the 6-month anniversary of the Commencement Date, then except as set forth in the following sentence, any portion of the Improvement Allowance remains unused, the Improvement Allowance shall be deemed reduced by such unused amount, and Landlord shall retain such undisbursed portion of the Improvement Allowance which shall be deemed waived by Tenant and shall not be paid to Tenant, credited against Rent, or applied to Tenant’s moving costs or prior lease obligations. Notwithstanding the foregoing, if, after payment in full of the Leasehold Improvements and no outstanding monetary Event of Default, there are unused Improvement Allowance dollars, then by written notice to Landlord received no later than the 6-month anniversary of the Commencement Date, Tenant may apply up to $243,191.00 of the Improvement Allowance towards the actual and reasonable, out-of-pocket, documented costs incurred by Tenant for moving to the Premises, and signage and voice and data cabling expenses (“Reimbursable Costs”) provided, and notwithstanding anything to the contrary in the Lease, Tenant may not remove from the Premises any of the items purchased with such funds, and all of Tenant’s right, title, and interest in and to such items purchased shall automatically be conveyed to Landlord on the Surrender Date. Subject to the preceding sentence, Landlord shall reimburse Tenant up to the total Reimbursable Costs within 30 days after Landlord’s receipt of an invoice therefor (no more frequently than once per month) together with reasonable supporting documentation, evidence of payment in full by Tenant, and unconditional lien waivers (on Landlord’s form therefor). Any portion of the Reimbursable Costs for which Tenant has not submitted an invoice for reimbursement on or before the 6-month anniversary of the Commencement Date shall be deemed waived by Tenant and will not be paid to Tenant or credited against Rent. Tenant shall mark and tag all cabling installed by it or on its behalf by no later than Substantial Completion, and notwithstanding anything to the contrary in the Lease, shall surrender such cabling with the Premises by no later than the Surrender Date.

(b)          Construction Management Fee. Tenant shall pay the Construction Management Fee to Landlord as compensation for Landlord’s construction management services under this Exhibit. Landlord may deduct all or a portion of Construction Management Fee from the Improvement Allowance, and/or invoice Tenant therefor if the entirety of the Improvement Allowance has been expended, payable to Landlord within 30 days after the date of such invoice.

(c)          Excess Costs. Tenant shall be solely responsible for all Construction Costs in excess of the Improvement Allowance (subject to reduction as set forth in Section 10(b) above) (“Excess Costs”). Landlord may issue a TEA for Excess Costs. Tenant shall pay Landlord 50% of the estimated Excess Costs in full within 30 days after receipt of an invoice therefor. Tenant shall pay Landlord any and all unpaid Excess Costs within 30 days after receipt of an invoice therefor from time to time, provided Landlord shall not invoice Tenant for more than 50% of the Excess Costs prior to Landlord’s use of all of the Improvement Allowance (that is, Landlord may not invoice Tenant for the balance of Excess Costs until the balance of the Improvement Allowance is $0.00). Tenant shall be solely responsible for all Planning Costs. Within 3 days after receipt of request therefor from time to time, Tenant shall provide Landlord with an accounting of all costs incurred by or on behalf of Tenant in connection with the Planning Costs. If the total Construction Costs plus the Construction Management Fee is less than the Improvement Allowance (with such difference being the “Available Allowance”), then Landlord shall reimburse Tenant an amount equal to the lesser of: (i) the Planning Costs; and (ii) the Available Allowance, within 30 days after Landlord’s receipt of an invoice therefor (no more frequently than once per month) together with reasonable supporting documentation, evidence of payment in full by Tenant, and unconditional lien waivers (on Landlord’s form therefor).

(d)          Rent. If Tenant fails to make any payment when due under this Exhibit, such failure shall be deemed a failure to make a Rent payment under the Lease. Landlord shall have no obligation to make a disbursement from the Improvement Allowance if, at the time such disbursement is to be made, there exists an uncured Event of Default.

(e)          Space Plan Allowance. Provided there is no Event of Default, Landlord will reimburse Tenant an amount equal to the lesser of: (i) $4,489.68; and (ii) the actual and reasonable third-party costs incurred by Tenant in connection with an initial space plan for the Premises (such lesser amount being hereinafter referred to as the “Space Plan Allowance”). Landlord will pay the Space Plan Allowance to Tenant within 30 days after Landlord’s receipt of

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an invoice therefor (no more frequently than once per month) together with reasonable supporting documentation, evidence of payment in full by Tenant, and unconditional lien waivers (on Landlord’s form therefor). Any portion of the Space Plan Allowance not used by Tenant on or before the 6-month anniversary of the Commencement Date will be deemed waived by Tenant and will not be paid to Tenant or credited against Rent.

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EXHIBIT D

CLEANING SPECIFICATIONS

CLEANING SPECIFICATIONS BrandywineRealtyTrust I I l!iiD] DAILY WEEKLY AS NEEDED Empty trash and recycle Spot clean carpet Remove visible debris/ litter from carpet Spot clean desks and tables Straighten chair-furniture Turn off lights Dust desks (only if clear of personal effects) and tops of system furniture Vacuum carpet Clean telephones in common areas Clean tables Clean wastebaskets Clean light fixtures and vents Clean walls, switch plates and baseboards Dust file cabinets,partitions and bookshelves Clean chairs Clean doors Dust pictures and surfaces over 5' Dust window sills, blinds, ledges and radiators Spot clean side light glass Office f\1 Sinks Floors Counters Trash receptacle Toilet/urinals Dispensers Door Spot clean walls Spot clean partitions Dust lights Dust surfaces over S' Ceiling vents Clean walls Clean partitions Restroom Spot clean carpet Sweep kitchen floors Wet mop kitchen floors Burnish polished surfaces Machine scrub restroom floors .-.tt.. Floor Care I These specifications are subject to change without notice. The cost for any cleaning over and above the standard cleaning specifications are to be paid by tenant. D-1

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EXHIBIT E

RULES AND REGULATIONS

RULES AND REGULATIONS I. Sidewalks, entrances, passages, elevators, vestibules, stairways, corridors, halls, lobby, and any other part of the Building shall not be obstructed or encumbered by Tenant or used for any purpose other than ingress or egress to and from the Prem ises. Landlord shall have the right to control and operate the common portions of the Building and exterior facilities furnished for common use of the Building's tenants (such as the eating, smoking, and parking areas) in such a m anner as Landlord deems appropriate. 2. No awnings or other projections may be attached to the outside walls of the Building without the prior written consent of Landlord. All drapes and window blinds shall be of a quality, type, design, and color, and attached in a manner approved in writing by Landlord. 3. No showcases, display cases, or other articles may be put in front of or affixed to any part of the exterior of the Building, or placed in hallways or vestibules without the prior written consent of Landlord. All supplies shall be kept in designated storage areas. Tenant shall not use or permit the use of any portion of the Project for outdoor storage. No mats, trash, or other objects may be placed in the public corridors, hallways, stairs, or other common areas of the Building. 4. Restrooms and other plumbing fixtures shall not be used for any purposes other than those for which they were constructed, and no debris, rubbish, rags, or other substances may be thrown therein. Only standard toilet tissue m ay be flushed in commodes. All damage resulting from any misuse of these fixtures shall be the responsibility of the tenant who, or whose employees, agents, visitors, clients, or licensees, caused such damage. Bathing and changing of clothes is perm itted only in designated shower/locker facilities, and is not permitted in restrooms. 5. Tenant shall not, without the prior written consent of Landlord, mark, paint, drill into, bore, cut, string wires, or in any way deface any part of the Premises or the Building except for the reasonable hanging of decorative or instructional m aterials on the walls of the Premises. Tenant shall remove seasonal decorations that are visible outside of the Premises within 30 days after the end of the applicable season. 6. Tenant shall not construct, install, maintain, use, or operate in any part of the Project any electrical dev ice, wiring, or other apparatus in connection with a loud speaker system or other sound/communication system that may be heard outside the Premises. 7. No bicycles, mopeds, skateboards, scooters, or other vehicles may be brought into, used, or kept in or about the Building or in the comm on areas of the Project other than in locations specifically designated thereof. No anim als or pets of any kind (other than a service animal performing a specified task), including without limitation fish, rodents, and birds, may be brought into, used, or kept in or about the Building. Rollerblading and roller skating is not permitted in the Building or in the common areas of the Project. 8. Tenant shall not cause or permit any unusual or objectionable odors to be produced upon or permeate from the Premises. 9. No space in the Project may be used for the manufacture of goods for sale in the ordinary course of business, or for sale at auction of merchandise, goods, or property of any kind. 10. Tenant shall not make any unseemly or disturbing noises, or disturb or interfere with the occupants of the Building or neighboring buildings or residences by voice, musical instrument, radio, talking machines, whistling, singing, lewd behavior, or in any other way. All passage through the Building's hallways, elevators, and m ain lobby shall be conducted in a quiet, businesslike manner. Tenant shall not commit or suffer any waste upon the Premises, the Building, or the Project, or any nuisance, or do any other act or thing that may disturb the quiet enjoym ent of any other tenant in the Building or Project. II . Tenant shall not throw anything out of the doors, windows, or down corridors or stairs of the Building. 12. Tenant shall not place, install, or operate in the Premises or in any part of the Project, any engine, stove, machinery, or electrical equipm ent not directly related to its business, including without limitation space Revised 20141 Brandywine Realty Trust E-1

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heaters, coffee cup wanners, and small refrigerators, conduct mechanical operations, cook thereon or therein, or place or use in or about the Premises or the Project any explosives, gasoline, kerosene oil, acids, caustics, canned heat, charcoal, or any other flammable, explosive or hazardous material, without the prior written consent of Landlord. Notwithstanding the foregoing, Tenant shall have the right to install and use a coffee machine, microwa ve oven, toaster, ice maker, refrigerator, and/or vending machine in compliance with all applicable Laws in a kitchen or break room designated as such by Landlord, provided Tenant shall use only stainless steel braided hoses. All supply waterlines shall be of copper (not plastic) tubing. 13. No smoking (including without limitation of cigarettes, ciga rs, and e-cigarettes) is permitted anywhere in the Prem ises, the Building, or the Project, including but not limited to restrooms, hallways, elev ators, stairs, lobby, exit and entrance vestibules, sidewalks, and parking lot areas, provided smoking shall be permitted in any Landlord-designated exterior smoking area. All cigarette ashes and butts shall be deposited in the containers provided for such disposal, and shall not be disposed of on sidewalks, parking lot areas, or toilets. 14. Tenant shall not install any additional locks or bolts of any kind upon any door or window of the Building without the prior written consent of Landlord. Tenant shall, upon the termination of its tenancy, return to Landlord all keys for the Premises, either furnished to or otherwise procured by Tenant, and all security access cards to the Building. 15. Tenant shall keep all doors to hallways and corridors closed during Business Hours except as they may be used for ingress or egress. 16. Tenant shall not use the name of the Building, Project, Landlord, or Landlord's agents or affiliates in any way in connection with its business except as the address thereof. Landlord shall also have the right to prohibit any advertising by Tenant that, in Landlord's sole opinion, tends to impair the reputation of the Building or its desirability as a building for offices, and upon written notice from Landlord, Tenant shall refrain from or discontinue such advertising. 17. Tenant shall be responsible for all security access cards issued to it, and shall secure the return of all security cards from all employees terminating employment with them. Lost cards shall cost $35.00 per card to replace. No person/company other than Building tenants and/or their employees may have security access cards unless Landlord grants prior written approval. 18. All deliveries to the Building that involve the use of a hand cart, hand truck, or other heavy equipment or dev ice shall be made v ia the freight elevator, if such freight elevator exists in the Building. Tenant shall be responsible to La ndlord for any loss or damage resulting from any deliveries made by or for Tenant to the Building. Tenant shall procure and deliver to Landlord a certificate of insurance from its movers, which certificate shall nam e Landlord as an additional insured. 19. Landlord reserves the right to inspect all freight to be brought into the Building, and to exclude from the Building all freight or other material that violates any of these rules and regulations. 20. Tenant shall refer all contractors, contractor's representatives, and installation technicians rendering any service on or to the Premises, to Landlord for Landlord's approval and supervision before performance of any contractual service or access to Building. This provision shall apply to all work performed in the Building including installation of telephones, telegraph equipment, electrical devices and attachments, and installations of any nature affecting floors, walls, woodwork, trim, windows, ceilings, equipment, or any other physical portion of the Building. Landlord reserves the right to require that all agents of contractors and vendors sign in and out of the Building. 21. If Tenant desires to introduce electrical, signaling, telegraphic, telephonic, protective alarm or other wires, apparatus or devices, Landlord shall direct where and how the same are to be placed, and except as so directed, no installation boring or cutting shall be permitted, without Landlord's consent, not to be unreasonably withheld, conditioned, or delayed. Landlord shall have the right to prevent and to cut off the transmission of excessive or dangerous current of electricity or annoyances into or through the Building or the Premises and to require the changing of wiring connections or layout at Tenant's expense, to the extent that Landlord may reasonably deem necessary, and further to require compliance with such reasonable and Revised 2014 1 Brandywine Realty Trust E-2

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Wliformly applied rules as Landlord may establish relating thereto, and in the event of non-compliance with the requirements or rules, Landlord shall have the right immediately to cut wiring or to do what it reasonably considers necessary to remove the danger, annoyance, or electrical interference with apparatus in any part of the Building. All wires installed by Tenant must be clearly tagged at the distributing boards and junction boxes and elsewhere where required by Landlord, with the suite number of the office to which such wires lead, and the purpose for which the wires respectively are used, together with the name of the concern, if any, operating such wires. 22. Landlord reserves the right to exclude from the Building at all times any person who is not known or does not properly identify himself or herself to Landlord's managem ent or security personnel. 23. Landlord may require, at its sole option, all persons entering the Building outside of Business Hours to register at the time they enter and at the time they leave the Building. 24. No space within the Building, or in the common areas such as the parking lot, may be used at any time for the purpose of lodging, sleeping, or for any immoral or illegal purposes. 25. Tenant shall not use the hallways, stairs, lobby, or other common areas of the Building as lounging areas during breaks or during lunch periods. 26. No canvassing, soliciting, or peddling is permitted in the Building or its common areas. 27. Tenant shall comply with all Laws regarding the collection, sorting, separation, and recycling of garbage, trash, rubbish and other refuse, and Landlord's recycling policy for the Building. 28. Landlord does not maintain suite fmishes that are non-standard, such as kitchens, bathrooms, wallpaper, special lights, etc. However, should the need arise for repair of items not maintained by Landlord, Landlord at its sole option, may arrange for the work to be done at tenant's expense. 29. Tenant shall clean at least once a year, at its expense, drapes in the Premises that are visible from the exterior of the Building. 30. No pictures, signage, advertising, decals, banners, etc. may be placed in or on windows in such a manner as they are visible from the exterior, without the prior written consent of Landlord. 31. Tenant is prohibited at all times from eating or drinking in hallways, elevators, restrooms, lobbies, or lobby vestibules outside of the Premises. Food storage shall be limited to a Landlord-approved kitchen or break room. 32. Tenant shall be responsible to Landlord for any acts of vandalism performed in the Building by its employees, invitees, agents, contractors, licensees, subtenants, and assignees. 33. Tenant shall not permit the visit to the Premises of persons in such numbers or under such conditions as to interfere with the use and enjoyment by other tenants of the entrances, hallways, elevators, lobby, exterior comm on areas, or other public portions or facilities of the Building. 34. Landlord's employees shall not perform any work or do anything outside of their regular duties unless under special instructions from Landlord. Requests for such requirements shall be submitted in writing to Landlord. 35. Tenant is prohibited from interfering in any manner with the installation and/or maintenance of the heating, air conditioning and ventilation facilities and equipment at the Project. 36. Landlord shall not be responsible for lost or stolen personal property, equipment, money, or jewelry regardless of whether such loss occurs when an area is locked against entry or not. 37. Landlord shall not permit entrance to the Premises by use of pass key controlled by Landlord, to any person at any time without written permission of Tenant, except employees, contractors or service personnel Revised 20141 Brandywine Realty Trust E-3

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supervised or employed by Landlord. 38. Tenant shall observe and comply with the driving and parking signs and m arkers on the Project grounds and surrounding areas. Tenant shall comply with all reasonable and uniformly applied parking regulations promulgated by Landlord from time to time for the orderly use of vehicle parking areas. Parked vehicles shall not be used for vending or any other business or other activity while parked in the parking areas. Vehicles shall be parked only in striped parking spaces, except for loading and unloading, which shall occur solely in zones marked for such purpose, and be so conducted as to not unreasonably interfere with traffic flow or with loading and unloading areas of other tenants. Tractor trailers shall be parked in areas designated for tractor trailer parking. Employee and tenant vehicles shall not be parked in spaces marked for visitor parking or other specific use. All vehicles entering or parking in the parking areas shall do so at owner's sole risk and Landlord assumes no responsibility for any damage, destruction, vandalism, or theft. Tenant shall cooperate with Landlord in any reasonable and uniformly applied measures implemented by Landlord to control abuse of the parking areas, including without limitation access control programs, tenant and guest vehicle identification programs, and validated parking programs, provided no such validated parking program shall result in T enant being charged for spaces to which it has a right to free use under the Lease. Each vehicle owner shall promptly respond to any sounding vehicle alarm or horn, and failure to do so may result in temporary or perm anent exclusion of such vehicle from the parking areas. Any v ehicle that violates the parking regulations may be cited, towed at the expense of the owner, temporarily or permanently excluded from the parking areas, or subject to other lawful consequence. 39. Tenant shall not enter other separate tenants' hallways, restrooms, or premises except with prior written approval from Landlord's management. 40. Tenant shall not place weights anywhere beyond the load-per-square-foot carrying capacity of the Building. 41. Tenant shall comply with all laws, regulations, or other governmental requirem ents with respect to energy savings, not permit any waste of any utility services provided Landlord, and cooperate with Landlord fully to ensure the m ost effective and efficient operation of the Building. 42. The finishes, including floor and wall coverings, and the furnishings and fixtures in any areas of the Premises that are visible from the common areas of the Building are subject to Landlord' s approval in its sole discretion. Selections for these areas shall be pre-approved in writing by Landlord. 43. Power strips and extension cords shall not be combined (also known as daisy chaining). 44. Candles and open flames are prohibited in the Building. 45. Guns, firearms, and other dangerous weapons (concealed or otherwise) are not allowed at the Project, subject to applicable Law (if any) requiring Landlord to so permit at the Project. Landlord reserves the right to rescind any of these rules and make such other and further rules and regulations as in the judgment of Landlord shall from time to time be needed for the safety, protection, care, and cleanliness of the Project, the operations thereof, the preservation of good order therein, and the protection and comfort of its tenants, their agents, employees, and inv itees, which rules when made and notice thereof given to Tenant shall be binding upon Tenant in a like manner as if originally prescribed. As used in these rules and regulations, capitalized terms shall have the respective meanings given to them in the Lease to which these rules and regulations are attached, provided Tenant shall be responsible for compliance herewith by everyone under Tenant's reasonable control, including without limitation its employees, invitees, agents, contractors, licensees, subtenants and assignees, and a violation of these rules and regulations by any of the foregoing is deemed a violation by Tenant. Revised 20141 Brandywine Realty Trust

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EX-10.3

	Exhibit 10.3
	Tenant: Passage BIO, Inc. Premises: Two Commerce Square, Suite 2850

FIRST AMENDMENT TO LEASE

THIS FIRST AMENDMENT TO LEASE (“Amendment”) is made and entered into as of ________________, by and between PHILADELPHIA PLAZA - PHASE II LP, a Pennsylvania limited partnership (“Landlord”), and PASSAGE BIO, INC., a Delaware corporation (“Tenant”).

A.           Landlord and Tenant are parties to a Lease (“Current Lease”) dated as of September 26, 2018, for the Premises deemed to contain 8,887 rentable square feet presently known as Suite 2850 in the Building known as Two Commerce Square located at 2001 Market Street, Philadelphia, Pennsylvania 19103. The Current Lease as amended by this Amendment is referred to herein as the “Lease”.

B.           Contemporaneously with the execution of this Amendment, an affiliate of Landlord, Commerce Square Partners - Philadelphia Plaza, L.P. (“One Commerce Landlord”), and Tenant are executing a new lease agreement (“One Commerce Lease”) for approximately 37,414 rentable square feet presently known as Suites 3800, 3900, and 4000 in the building known as One Commerce Square located at 2005 Market Street, Philadelphia, Pennsylvania 19103 (“Relocation Premises”).

C.           The Term of the Lease is currently scheduled to expire on June 30, 2026. Landlord and Tenant wish to amend the Lease to provide for the earlier termination of the Lease upon the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and intending to be legally bound, Landlord and Tenant hereby agree as follows:

1.            Incorporation of Recitals; Definitions. The recitals set forth above are hereby incorporated herein by reference as if set forth in full in the body of this Amendment. Capitalized terms used but not otherwise defined in this Amendment have the respective meanings given to them in the Current Lease.

2.            Early Termination Date. Provided no Event of Default then exists (except as waived in writing by Landlord, in Landlord’s sole and absolute discretion), the Lease shall terminate as of 11:59 p.m. on the Early Termination Date, in the same manner and with the same effect as if that date had been originally fixed in the Lease for the expiration of the Term. The “Early Termination Date” means the day that is 5 business days after the Commencement Date as defined in the One Commerce Lease. Notwithstanding the foregoing, no Fixed Rent or Operating Expenses shall be due during the period commencing on the Commencement Date as defined in the One Commerce Lease, and ending on the Early Termination Date. Any and all options of Tenant to extend or reduce the Term or expand or reduce the size of the Premises, including without limitation rights of first refusal, offer, and negotiation, are hereby deleted in their entireties and are of no further force and effect. Tenant grants to Landlord the right to market for lease and show to prospective tenants all or a portion of the Premises during the remainder of the Term, provided Landlord provides to Tenant reasonable prior notice of such access and uses reasonable efforts to not disturb Tenant’s business operations within the Premises.

3.            Surrender. By no later than the Early Termination Date, Tenant must vacate and surrender the Premises to Landlord in the same manner and with the same effect as if that date had been originally fixed in the Lease as the expiration date of the Term therefor. If Tenant fails to do so, an Event of Default will have occurred, Tenant will be deemed a tenant at sufferance with respect to the Premises, and Landlord’s remedies will be as specified in the Lease and otherwise available at law and in equity, including under Section 18 of the Current Lease. Notwithstanding the foregoing, by no later than September 1, 2020, Landlord shall notify Tenant in writing if Landlord elects for Tenant to surrender with the Premises all of the furniture (other than chairs) and cabling that are currently located in the Premises (collectively, “Existing Personal Property”). If Landlord makes such election, then on the Early Termination Date: (i) Tenant shall not remove the Existing Personal Property from the Premises; (ii) all of Tenant’s right, title, and interest in and to the Existing Personal Property shall automatically be conveyed to Landlord for $1.00; and (iii) Tenant shall provide Landlord with names of the manufacturer and vendor for the furniture. Notwithstanding anything set forth herein to the contrary, if Tenant is prevented from moving into the Relocation Premises as a result of a Force Majeure Event (which shall include, but not be limited to, delays in delivery of Tenant’s furniture for the New Premises as a result of worldwide shipping disruptions resulting from the coronavirus), and provided Tenant takes all commercially reasonable actions to mitigate such delay, the Early Termination Date shall be extended on a day-for-day basis for each day of delay caused solely by such Force Majeure Event.

4.            Outstanding Rent and Other Charges. Tenant must pay to Landlord all rent, including but not limited to Fixed Rent, Additional Rent, utilities, and all other charges as specified in the Lease through the Early Termination Date. Any charges with respect to the Premises that cannot be ascertained prior to the Early Termination Date may be estimated by Landlord, and Tenant must pay such estimated amount. All such amounts will be used and held by Landlord for payment of such obligations of Tenant, with Tenant being liable for any additional costs upon demand by Landlord, or with any excess to be returned to Tenant after all such obligations have been determined and satisfied.

5.            Security Deposit. Landlord is currently holding a Security Deposit in the amount of $34,066.84. Landlord shall transfer the balance of the Security Deposit to One Commerce Landlord when all conditions to such return under the Lease have been satisfied.

6.            Effect of Amendment; Ratification. Landlord and Tenant hereby acknowledge and agree that, except as provided in this Amendment, the Current Lease has not been modified, amended, canceled, terminated, released, superseded, or otherwise rendered of no force or effect. The Current Lease is hereby ratified and confirmed by the parties hereto, and every provision, covenant, condition, obligation, right, term, and power contained in and under the Current Lease continues in full force and effect, affected by this Amendment only to the extent of the amendments and modifications set forth herein. In the event of any conflict between the terms and conditions of this Amendment and those of the Current Lease, the terms and conditions of this Amendment control. To the extent permitted by applicable law, Landlord and Tenant hereby waive trial by jury in any action, proceeding, or counterclaim brought by either against the other on any matter arising out of or in any way connected with the Lease, the relationship of Landlord and Tenant, or Tenant’s use or occupancy of the Building, any claim or injury or damage, or any emergency or other statutory remedy with respect thereto. Tenant specifically acknowledges and agrees that Section 17(j) of the Current Lease concerning Confession of Judgment is hereby restated in full below:

In addition to, and not in lieu of any of the foregoing rights granted to Landlord:

(1)          WHEN THIS LEASE OR TENANT’S RIGHT OF POSSESSION SHALL BE TERMINATED BY COVENANT OR CONDITION BROKEN, OR FOR ANY OTHER REASON, EITHER DURING THE TERM OF THIS LEASE OR ANY RENEWAL OR EXTENSION THEREOF, AND ALSO WHEN AND AS SOON AS THE TERM HEREBY CREATED OR ANY EXTENSION THEREOF SHALL HAVE EXPIRED, IT SHALL BE LAWFUL FOR ANY ATTORNEY AS ATTORNEY FOR TENANT TO FILE AN AGREEMENT FOR ENTERING IN ANY COMPETENT COURT AN ACTION TO CONFESS JUDGMENT IN EJECTMENT AGAINST TENANT AND ALL PERSONS CLAIMING UNDER TENANT, WHEREUPON, IF LANDLORD SO DESIRES, A WRIT OF EXECUTION OR OF POSSESSION MAY ISSUE FORTHWITH, WITHOUT ANY PRIOR WRIT OF PROCEEDINGS, WHATSOEVER, AND PROVIDED IF FOR ANY REASON AFTER SUCH ACTION SHALL HAVE BEEN COMMENCED THE SAME SHALL BE DETERMINED AND THE POSSESSION OF THE PREMISES HEREBY DEMISED REMAIN IN OR BE RESTORED TO TENANT, LANDLORD SHALL HAVE THE RIGHT UPON ANY SUBSEQUENT DEFAULT OR DEFAULTS, OR UPON THE TERMINATION OF THIS LEASE AS HEREINBEFORE SET FORTH, TO BRING ONE OR MORE ACTION OR ACTIONS AS HEREINBEFORE SET FORTH TO RECOVER POSSESSION OF THE SAID PREMISES.

(2)          In any action to confess judgment in ejectment, Landlord shall first cause to be filed in such action an affidavit made by it or someone acting for it setting forth the facts necessary to authorize the entry of judgment, of which facts such affidavit shall be conclusive evidence, and if a true copy of this Lease (and of the truth of the copy such affidavit shall be sufficient evidence) be filed in such action, it shall not be necessary to file the original as a warrant of attorney, any rule of Court, custom or practice to the contrary notwithstanding.

TENANT WAIVER. TENANT SPECIFICALLY ACKNOWLEDGES THAT TENANT HAS VOLUNTARILY, KNOWINGLY, AND INTELLIGENTLY WAIVED CERTAIN DUE PROCESS RIGHTS TO A PREJUDGMENT HEARING BY AGREEING TO THE TERMS OF THE FOREGOING PARAGRAPHS REGARDING CONFESSION OF JUDGMENT. TENANT FURTHER SPECIFICALLY AGREES THAT IN THE EVENT OF DEFAULT, LANDLORD MAY PURSUE MULTIPLE REMEDIES INCLUDING OBTAINING POSSESSION PURSUANT TO A JUDGMENT BY CONFESSION FURTHERMORE, TENANT SPECIFICALLY WAIVES ANY CLAIM AGAINST LANDLORD AND

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LANDLORD’S COUNSEL FOR VIOLATION OF TENANT’S CONSTITUTIONAL RIGHTS IN THE EVENT THAT JUDGMENT IS CONFESSED PURSUANT TO THIS LEASE.

TENANT: PASSAGE BIO, INC.
By:	/s/ Jill Quigley
Name:	Jill Quigley
Title:	Chief Operating Officer
Date:	4/13/2020

7.            Representations. Each of Landlord and Tenant represents and warrants to the other that the individual executing this Amendment on such party’s behalf is authorized to do so. Tenant hereby represents and warrants to Landlord that there are no defaults by Landlord or Tenant under the Current Lease, nor any event that with the giving of notice or the passage of time, or both, will constitute a default under the Current Lease.

8.            Counterparts; Electronic Transmittal. This Amendment may be executed in any number of counterparts, each of which when taken together will be deemed to be one and the same instrument. The parties acknowledge and agree that notwithstanding any law or presumption to the contrary, the exchange of copies of this Amendment and signature pages by electronic transmission will constitute effective execution and delivery of this Amendment for all purposes, and signatures of the parties hereto transmitted and/or produced electronically will be deemed to be their original signature for all purposes.

[SIGNATURES ON FOLLOWING PAGE]

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IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Amendment as of the date first-above written.

LANDLORD:
PHILADELPHIA PLAZA - PHASE II LP
By:	Brandywine Commerce Sub II LLC, its general partner
	By:	/s/ George Johnstone
	Name:	George Johnstone
	Title:	EVP Operations
	Date:	4/13/2020
TENANT:
PASSAGE BIO, INC.
By:	/s/ Jill Quigley
Name:	Jill Quigley
Title:	Chief Operating Officer
Date:	4/13/2020

Signature Page

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO RULE 13a-14(a) OR 15d-14(a) OF

THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Bruce Goldsmith, certify that:

1.            I have reviewed this Quarterly Report on Form 10-Q of Passage Bio, 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.            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

c.            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; and

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 11, 2020
	/s/	Bruce Goldsmith
	Bruce Goldsmith, Ph.D.
	Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO RULE 13a-14(a) OR 15d-14(a) OF

THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Richard Morris, certify that:

1.            I have reviewed this Quarterly Report on Form 10-Q of Passage Bio, 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.            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

c.            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; and

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 11, 2020
	/s/	Richard Morris
	Richard Morris
	Chief Financial Officer
	(Principal Financial Officer and Principal Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Bruce Goldsmith, Chief Executive Officer of Passage Bio, Inc. (the “Company”), do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1.           the Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended March 31, 2020 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

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

Dated: May 11, 2020	/s/	Bruce Goldsmith
	Bruce Goldsmith, Ph.D.
	Chief Executive Officer
	(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Richard Morris, Chief Financial Officer of Passage Bio, Inc. (the “Company”), do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1.           the Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended March 31, 2020 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

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

Dated: May 11, 2020	/s/	Richard Morris
	Richard Morris
	Chief Financial Officer
	(Principal Financial Officer and
	Principal Accounting Officer)

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Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Level 1 | Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	$ 284,173	$ 155,846

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Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Operating expenses:
Research and development	$ 13,117	$ 3,033
General and administrative	4,795	1,154
Loss from operations	(17,912)	(4,187)
Change in fair value of future tranche right liability		(3,482)
Interest income	327
Net loss	$ (17,585)	$ (7,669)
Per share information:
Net loss per share of common stock, basic and diluted	$ (1.00)	$ (1.83)
Weighted average common shares outstanding, basic and diluted	17,624,011	4,197,604

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Commitments (Tables)

3 Months Ended

Mar. 31, 2020

Commitments

Schedule of future minimum rental payments for operating leases

(in thousands)
2021	$	—
2022		889
2023		1,098
2024		1,131
2025		1,165
Thereafter		7,763
	$	12,046

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Nature of Operations

3 Months Ended

Mar. 31, 2020

Nature of Operations

Nature of Operations

1. Nature of Operations

Passage Bio, Inc. (the Company), a Delaware corporation incorporated in July 2017, is a genetic medicines company focused on advancing transformative therapies for rare monogenic central nervous system diseases. The Company has a strategic research collaboration with the Trustees of the University of Pennsylvania’s (Penn’s), Gene Therapy Program (GTP) that provides the Company with access to one of the premier research institutions in the world for the discovery and preclinical development of genetic medicine product candidates and exclusive rights to certain rare, monogenic  central nervous system (CNS) indications. Under this collaboration, GTP conducts discovery and investigation new drug enabling preclinical activities and the Company conducts all clinical development, regulatory strategy, and commercialization activities under the agreement. The Company also has a collaboration agreement and a development services and clinical supply arrangement with Catalent Maryland, Inc. (Catalent) (formerly Paragon Bioservices, Inc.) for clinical scale manufacturing requirements.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2020

Summary of Significant Accounting Policies

Basis of Presentation

Basis of Presentation

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP). Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (ASC) and Accounting Standards Updates (ASU) promulgated by the Financial Accounting Standards Board (FASB).

Interim Financial Statements

Interim Financial Statements

The accompanying unaudited interim financial statements have been prepared from the books and records of the Company in accordance with GAAP for interim financial information and Rule 10‑01 of Regulation S‑X promulgated by the Securities and Exchange Commission (SEC), which permits reduced disclosures for interim periods. All adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the accompanying balance sheets, statements of operations, convertible preferred stock and stockholders’ equity (deficit), and cash flows have been made. Although these interim financial statements do not include all of the information and footnotes required for complete annual financial statements, management believes the disclosures are adequate to make the information presented not misleading. Unaudited interim results of operations and cash flows are not necessarily indicative of the results that may be expected for the full year. Unaudited interim financial statements and footnotes should be read in conjunction with the December 31, 2019 financial statements and footnotes included in the prospectus as filed with the SEC on February 27, 2020.

Use of Estimates

Use of Estimates

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

Estimates and assumptions are periodically reviewed and the effects of the revisions are reflected in the accompanying financial statements in the period they are determined to be necessary. Prior to the IPO, significant areas that required management’s estimates included the fair value of the Company’s future tranche right liability and its common stock. After the IPO, the most significant judgements are used in estimates to determine the fair value of stock options issued.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Management believes that the carrying amounts of the Company’s financial instruments, including cash equivalents, prepaid expenses, and accounts payable, approximate fair value due to the short‑term nature of those instruments. The future tranche right liability was recorded at its estimated fair value.

Share-based compensation

Share-based compensation

The Company measures share-based awards at their grant-date fair value and records compensation expense on a straight-line basis over the vesting period of the awards.

Estimating the fair value of share-based awards requires the input of subjective assumptions, including, prior to the IPO, the estimated fair value of the Company's common stock, and, for stock options, the expected life of the options and stock price volatility. The Company accounts for forfeitures for stock option awards as they occur. The Company uses the Black-Scholes option pricing model to value its stock option awards. The assumptions used in estimating the fair value of share-based awards represent management's estimate and involve inherent uncertainties and the application of management's judgment. As a result, if factors change and management uses different assumptions, share-based compensation expense could be materially different for future awards.

The expected life of the stock options is estimated using the "simplified method," as the Company has no historical information from which to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock option grants. The simplified method is the midpoint between the vesting period and the contractual term of the option. For stock price volatility, the Company uses comparable public companies as a basis for its expected volatility to calculate the fair value of option grants. The risk-free rate is based on the U.S. Treasury yield curve commensurate with the expected life of the option.

Net Loss Per Share

Net Loss Per Share

Basic net loss per share of common stock is computed by dividing net loss by the weighted‑average number of shares of common stock outstanding during each period. Diluted loss per share of common stock includes the effect, if any, from the potential exercise or conversion of securities, such as convertible preferred stock, which would result in the issuance of incremental shares of common stock. For diluted net loss per share, the weighted‑average number of shares of common stock is the same for basic net loss per share due to the fact that when a net loss exists, dilutive securities are not included in the calculation as the impact is anti‑dilutive.

The following potentially dilutive securities have been excluded from the computation of diluted weighted‑average shares of common stock outstanding, as they would be anti‑dilutive:

	March 31,
	2020	2019
Series A‑1 convertible preferred stock	—	14,216,333
Future tranche right	—	5,009,808
Stock options (including shares subject to repurchase)	6,359,947	736,962
Stock options vested and exercised, but subject to settlement of nonrecourse promissory notes	—	258,336
	6,359,947	20,221,439

Amounts in the above table reflect the common stock equivalents.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016‑02, Leases, which requires a lessee to record a right‑of‑use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. As the Company has elected to use the extended transition period for complying with new or revised accounting standards as available under the Jobs Act, the standard is effective for the Company beginning January 1, 2021, with early adoption permitted. The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosures.

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Convertible Preferred Stock and Common Stock

3 Months Ended

Mar. 31, 2020

Convertible Preferred Stock and Common Stock

Convertible Preferred Stock and Common Stock

7. Convertible Preferred Stock and Common Stock

Initial Public Offering

In March 2020, the Company completed its IPO in which the Company sold 13,798,900 shares of its common stock, which included shares sold pursuant to an option granted to the underwriters to purchase additional shares, at a public offering price of $18.00 per share. The Company received net proceeds of $227.5 million after deducting underwriting discounts, commissions, and other offering expenses paid by the Company. In addition, immediately prior to the initial closing of the IPO on March 3, 2020, (i) all of the Company’s outstanding shares of convertible preferred stock converted into an aggregate of 26,803,777  shares of common stock and (ii) the Company filed an amended and restated certificate of incorporation to, among other things, increase the number of authorized shares of common stock to 300.0 million.

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2020

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

3. Summary of Significant Accounting Policies

The Company’s complete summary of significant accounting policies can be found in “Note 3. Summary of Significant Accounting Policies” in the audited financial statements included in the Company’s prospectus filed with the SEC on February 27, 2020.

Basis of Presentation

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP). Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (ASC) and Accounting Standards Updates (ASU) promulgated by the Financial Accounting Standards Board (FASB).

Interim Financial Statements

The accompanying unaudited interim financial statements have been prepared from the books and records of the Company in accordance with GAAP for interim financial information and Rule 10‑01 of Regulation S‑X promulgated by the Securities and Exchange Commission (SEC), which permits reduced disclosures for interim periods. All adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the accompanying balance sheets, statements of operations, convertible preferred stock and stockholders’ equity (deficit), and cash flows have been made. Although these interim financial statements do not include all of the information and footnotes required for complete annual financial statements, management believes the disclosures are adequate to make the information presented not misleading. Unaudited interim results of operations and cash flows are not necessarily indicative of the results that may be expected for the full year. Unaudited interim financial statements and footnotes should be read in conjunction with the December 31, 2019 financial statements and footnotes included in the prospectus as filed with the SEC on February 27, 2020.

Use of Estimates

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

Estimates and assumptions are periodically reviewed and the effects of the revisions are reflected in the accompanying financial statements in the period they are determined to be necessary. Prior to the IPO, significant areas that required management’s estimates included the fair value of the Company’s future tranche right liability and its common stock. After the IPO, the most significant judgements are used in estimates to determine the fair value of stock options issued.

Fair Value of Financial Instruments

Management believes that the carrying amounts of the Company’s financial instruments, including cash equivalents, prepaid expenses, and accounts payable, approximate fair value due to the short‑term nature of those instruments. The future tranche right liability was recorded at its estimated fair value.

Share-based compensation

The Company measures share-based awards at their grant-date fair value and records compensation expense on a straight-line basis over the vesting period of the awards.

Estimating the fair value of share-based awards requires the input of subjective assumptions, including, prior to the IPO, the estimated fair value of the Company's common stock, and, for stock options, the expected life of the options and stock price volatility. The Company accounts for forfeitures for stock option awards as they occur. The Company uses the Black-Scholes option pricing model to value its stock option awards. The assumptions used in estimating the fair value of share-based awards represent management's estimate and involve inherent uncertainties and the application of management's judgment. As a result, if factors change and management uses different assumptions, share-based compensation expense could be materially different for future awards.

The expected life of the stock options is estimated using the "simplified method," as the Company has no historical information from which to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock option grants. The simplified method is the midpoint between the vesting period and the contractual term of the option. For stock price volatility, the Company uses comparable public companies as a basis for its expected volatility to calculate the fair value of option grants. The risk-free rate is based on the U.S. Treasury yield curve commensurate with the expected life of the option. 

Net Loss Per Share

Basic net loss per share of common stock is computed by dividing net loss by the weighted‑average number of shares of common stock outstanding during each period. Diluted loss per share of common stock includes the effect, if any, from the potential exercise or conversion of securities, such as convertible preferred stock, which would result in the issuance of incremental shares of common stock. For diluted net loss per share, the weighted‑average number of shares of common stock is the same for basic net loss per share due to the fact that when a net loss exists, dilutive securities are not included in the calculation as the impact is anti‑dilutive.

The following potentially dilutive securities have been excluded from the computation of diluted weighted‑average shares of common stock outstanding, as they would be anti‑dilutive:

	March 31,
	2020	2019
Series A‑1 convertible preferred stock	—	14,216,333
Future tranche right	—	5,009,808
Stock options (including shares subject to repurchase)	6,359,947	736,962
Stock options vested and exercised, but subject to settlement of nonrecourse promissory notes	—	258,336
	6,359,947	20,221,439

Amounts in the above table reflect the common stock equivalents.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016‑02, Leases, which requires a lessee to record a right‑of‑use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. As the Company has elected to use the extended transition period for complying with new or revised accounting standards as available under the Jobs Act, the standard is effective for the Company beginning January 1, 2021, with early adoption permitted. The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosures.

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Share‑Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		12 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Number of shares
Outstanding at January 1, 2020	2,577,719
Granted	3,470,051
Forfeited	(134,331)
Outstanding at March 31, 2020	5,913,439		2,577,719
Exercisable at March 31, 2020	275,891
Vested or expected to vest at March 31, 2020	5,913,439
Weighted average exercise price per share
Outstanding at January 1, 2020	$ 5.90
Granted	13.14
Forfeited	1.02
Outstanding at March 31, 2020	9.94		$ 5.90
Exercisable at March 31, 2020	5.01
Vested or expected to vest at March 31, 2020	$ 9.94
Weighted average remaining contractual term (years)
Outstanding	9 years 6 months		9 years 3 months 18 days
Exercisable at March 31, 2020	9 years 3 months 18 days
Vested or expected to vest at March 31, 2020	9 years 6 months
Weighted average grant date fair value of options granted	$ 9.93	$ 0.73
Unrecognized compensation expense related to unvested stock option awards	$ 41.8
Weighted average period for recognition	2 years 6 months 11 days

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Share‑Based Compensation

3 Months Ended

Mar. 31, 2020

Share‑Based Compensation

Share‑Based Compensation

8. Share‑Based Compensation

Equity Incentive Plan

The Company has two equity incentive plans: the 2018 Equity Incentive Plan, as amended, and the 2020 Equity Incentive Plan. New awards can only be granted under the 2020 Equity Incentive Plan (the Plan). The total number of shares authorized under the Plan as of March 31, 2020 was 5,362,823. Of this amount, 4,435,181 shares were available for future grants as of March 31, 2020. The number of shares of the Company’s common stock that may be issued pursuant to rights granted under the Plan shall automatically increase on January 1st of each year, commencing on January 1, 2021 and continuing for ten years, in an amount equal to five percent of the total number of shares of the Company’s common stock outstanding on December 31st of the preceding calendar year, subject to the discretion of the board of directors or compensation committee to determine a lesser number of shares shall be added for such year. The Plan provides for the granting of common stock, incentive stock options, nonqualified stock options, restricted stock awards, and/or stock appreciation rights to employees, directors, and other persons, as determined by the Company’s board of directors. The Company’s stock options vest based on the terms in each award agreement, generally over four‑year periods, and have a term of ten years.

The Company measures share‑based awards at their grant‑date fair value and records compensation expense on a straight‑line basis over the vesting period of the awards. The Company recorded share‑based compensation expense in the following expense categories in its accompanying statements of operations for the period presented:

	March 31,
(in thousands)	2020		2019
Research and development	$	1,046	$	4
General and administrative		1,322		227
	$	2,368	$	231

During the three months ended March 31, 2020, the Company modified certain awards and recognized an additional $0.7 million related to the modifications, $0.6 million of which was recognized in research and development expense and $0.1 million was recognized in general and administrative expense.

The following table summarizes stock option activity for the three months ended March 31, 2020:

				Weighted
		Weighted		average
		average		remaining
	Number of	exercise price		contractual
	shares	per share		term (years)
Outstanding at January 1, 2020	2,577,719	$	5.90	9.3
Granted	3,470,051		13.14
Forfeited	(134,331)		1.02
Outstanding at March 31, 2020	5,913,439	$	9.94	9.5
Exercisable at March 31, 2020	275,891	$	5.01	9.3
Vested or expected to vest at March 31, 2020	5,913,439	$	9.94	9.5

The weighted‑average grant date fair value of options granted was $9.93 and $0.73 for the three months ended March 31, 2020 and 2019, respectively. As of March 31, 2020, the total unrecognized compensation expense related to unvested stock option awards was $41.8 million, which the Company expects to recognize over a weighted‑average period of 2.53 years.

The fair value of each option was estimated on the date of grant using the weighted average assumptions in the table below:

	Three months ended March 31,
	2020		2019
Expected volatility	92.6	%	87.0	%
Risk‑free interest rate	1.4	%	2.5	%
Expected term	6.07 years		5.56 years
Expected dividend yield	—		—

The Plan provides certain holders of stock options an election to early exercise prior to vesting. The Company has the right to repurchase early exercised options without transferring any appreciation in the value of the underlying shares to the employee if the employee terminates employment before the end of the original vesting period. The repurchase price is the lesser of the original exercise price or the then fair value of the Company’s common stock. At March 31, 2020, $44,000 of proceeds from unvested early exercised options were recognized as a non‑current liability in other liabilities in the accompanying balance sheet.

The 2018 Equity Incentive Plan allowed for the exercise of options to be financed with nonrecourse notes. For accounting purposes, payment of principal and interest are viewed as the exercise price of the option. Therefore, no interest income was recognized.

The following table summarizes activity relating to early exercises of stock options during the three months ended March 31, 2020:

	Number of shares
Unvested balance at January 1, 2020	494,603
Vested	(48,095)
Unvested balance at March 31, 2020	446,508

Nonrecourse Promissory Notes with Related Parties

In February 2019, the Company’s interim chief executive officer and chief operating officer elected to early exercise 688,875 and 309,994 stock options, respectively, in exchange for cash proceeds of $0.2 million and nonrecourse promissory notes (the Notes) of $0.8 million. The Notes bore interest at 2.91% and were secured by the underlying shares of common stock that were issued until January 2020, when the Company forgave the Notes and associated interest related to the early exercise of stock options by the interim chief executive officer and chief operating officer. An aggregate of 406,894 shares that were previously not considered outstanding for accounting purposes due to being secured by the Notes became outstanding upon the forgiveness of the Notes in January 2020.

Employee Stock Purchase Plan

The Company’s 2020 Employee Stock Purchase Plan (the ESPP) became effective on February 28, 2020. The ESPP authorizes the issuance of up to 434,000 shares of the Company’s common stock. The number of shares of the Company’s common stock that may be issued pursuant to rights granted under the ESPP shall automatically increase on January 1st of each year, commencing on January 1, 2021 and continuing for ten years, in an amount equal to one percent of the total number of shares of the Company’s common stock outstanding on December 31st of the preceding calendar year, subject to the discretion of the board of directors or compensation committee to determine a lesser number of shares shall be added for such year.

Under the ESPP, eligible employees can purchase the Company’s common stock through accumulated payroll deductions at such times as are established by the compensation committee. Eligible employees may purchase the Company’s common stock at 85% of the lower of the fair market value of the Company’s common stock on the first day of the offering period or on the last day of the offering period. Eligible employees may contribute up to 15% of their eligible compensation. Under the ESPP, a participant may not accrue rights to purchase more than $25,000 worth of the Company’s common stock for each calendar year in which such right is outstanding.

Effective March 3, 2020, employees who elected to participate in the ESPP commenced payroll withholdings that accumulate through November 15, 2020. In accordance with the guidance in ASC 718‑50 – Compensation – Stock Compensation, the ability to purchase shares of the Company’s common stock at 85% of the lower of the price on the first day of the offering period or the last day of the offering period (i.e. the purchase date) represents an option and, therefore, the ESPP is a compensatory plan under this guidance. Accordingly, share-based compensation expense is determined based on the option’s grant-date fair value as estimated by applying the Black Scholes option-pricing model and is recognized over the withholding period. The Company recognized share-based compensation expense of $23,000 during the three months ended March 31, 2020 related to the ESPP.

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Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2020

Fair Value of Financial Instruments

Fair Value of Financial Instruments

4. Fair Value of Financial Instruments

Fair value is the price that could be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value determination in accordance with applicable accounting guidance requires that a number of significant judgments be made. Additionally, fair value is used on a nonrecurring basis to evaluate assets for impairment or as required for disclosure purposes by applicable accounting guidance on disclosures about fair value of financial instruments. Depending on the nature of the assets and liabilities, various valuation techniques and assumptions are used when estimating fair value. The carrying amounts of certain of the Company’s financial instruments, including prepaid expense and accounts payable are shown at cost, which approximates fair value due to the short‑term nature of these instruments. The Company follows the provisions of FASB ASC Topic 820, Fair Value Measurement, for financial assets and liabilities measured on a recurring basis. The guidance requires fair value measurements be classified and disclosed in one of the following three categories:

· Level 1:  Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

· Level 2:  Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liabilities.

· Level 3:  Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

The following fair value hierarchy table presents information about the Company’s assets measured at fair value on a recurring basis:

	Fair value measurement at
	reporting date using
	Quoted prices
	in active		Significant
		markets for	other		Significant
	identical		observable			unobservable
	assets		inputs		inputs
(in thousands)	(Level 1)		(Level 2)		(Level 3)
March 31, 2020:
Assets:
Cash equivalents (Money Market Fund)	$	284,173	$	—	$	—
December 31, 2019:
Assets:
Cash equivalents (Money Market Fund)	$	155,846	$	—	$	—

The Company evaluated the future tranche right feature within the Series A-1 convertible preferred stock issued in 2018 and determined that the future tranche right was a freestanding financial instrument that was classified as a liability and was re-measured at each reporting period until the redemption feature was exercised in connection with the sale and issuance of the Series A-2 convertible preferred stock in May 2019.

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Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2020

Summary of Significant Accounting Policies

Schedule of antidilutive securities excluded from computation of earnings per share

	March 31,
	2020	2019
Series A‑1 convertible preferred stock	—	14,216,333
Future tranche right	—	5,009,808
Stock options (including shares subject to repurchase)	6,359,947	736,962
Stock options vested and exercised, but subject to settlement of nonrecourse promissory notes	—	258,336
	6,359,947	20,221,439

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Share‑Based Compensation - Share-based compensation expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	$ 2,368	$ 231
Additional share-based compensation expense due to modifications	700
Research and development
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	1,046	4
Additional share-based compensation expense due to modifications	600
General and administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	1,322	$ 227
Additional share-based compensation expense due to modifications	$ 100

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Related Party Transactions (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Related Party Transaction [Line Items]
Research and development expenses	$ 13,117,000	$ 3,033,000
Penn Agreement
Related Party Transaction [Line Items]
Research and development expenses		2,900,000	$ 7,700,000
Payments made to related party			12,600,000
Prepaid research and development asset		5,700,000	$ 10,700,000
Consulting Agreement
Related Party Transaction [Line Items]
Related party transaction expenses		31,000,000,000
Share-based compensation expense		$ 6,000

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Risks and Liquidity

3 Months Ended

Mar. 31, 2020

Risks and Liquidity

Risks and Liquidity

2. Risks and Liquidity

The Company has incurred recurring losses and negative cash flows from operations since inception and had an accumulated deficit of $76.2 million as of March 31, 2020. The Company anticipates incurring additional losses until such time, if ever, that it can generate significant sales of its product candidates currently in development. Substantial additional capital will be needed by the Company to fund its operations and to develop its product candidates.

In March 2020, the Company closed its initial public offering (IPO) in which the Company issued and sold 13,798,900 shares of its common stock, which included shares sold pursuant to an option granted to the underwriters to purchase additional shares, at a public offering price of $18.00 per share for net proceeds of $227.5 million after deducting underwriting discounts, commissions and other offering expenses.

The Company’s operations have consisted primarily of organizing the Company, securing financing, developing licensed technology, performing research and conducting preclinical studies. The Company faces risks associated with early‑stage biotechnology companies whose product candidates are in development. Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital for the Company to complete its research and development, achieve its research and development objectives, defend its intellectual property rights, and recruit and retain skilled personnel, and key members of management. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

The Company plans to seek additional funding through public or private equity offerings, debt financings, other collaborations, strategic alliances and licensing arrangements. The Company may not be able to obtain financing on acceptable terms, or at all, and the Company may not be able to enter into strategic alliances or other arrangements on favorable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of the Company’s stockholders. If the Company is unable to obtain funding, the Company could be required to delay, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, which could adversely affect its business prospects.

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Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Accrued Expenses and Other Current Liabilities
Professional fees	$ 344	$ 997
Compensation and related benefits	1,388	1,502
Research and development	946	507
Other	18	46
Accrued Expenses and Other Current Liabilities	$ 2,696	$ 3,052

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Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity (Deficit) - USD ($)	Preferred Stock [Member] Series A-1 Convertible Preferred Stock	Preferred Stock [Member] Series A-2 Convertible Preferred Stock	Preferred Stock [Member] Series B Convertible Preferred Stock	Common stock	Additional paid‑in capital	Accumulated Deficit	Series A-1 Convertible Preferred Stock	Series A-2 Convertible Preferred Stock	Series B Convertible Preferred Stock	Total
Balance at Beginning of period at Dec. 31, 2018	$ 43,118,000
Balance at Beginning of period (in shares) at Dec. 31, 2018	44,418,606
Temporary equity
Sale of Series A‑1 convertible preferred stock, net of issuance costs	$ 19,981,000
Sale of Series A‑1 convertible preferred stock, net of issuance costs (in shares)	18,604,652
Balance at end of period at Mar. 31, 2019	$ 63,099,000
Balance at end of period (in shares) at Mar. 31, 2019	63,023,258
Balance at Beginning of period at Dec. 31, 2018				$ 4,195,649	$ 856,000	$ (13,029,000)				$ (12,173,000)
Stockholders' equity
Vesting of early exercise option awards					13,000					13,000
Vesting of early exercise option awards (in shares)				13,538
Share‑based compensation expense					231,000					231,000
Net loss						(7,669,000)				(7,669,000)
Balance at end of period at Mar. 31, 2019				$ 4,209,187	1,100,000	(20,698,000)				(19,598,000)
Balance at Beginning of period at Dec. 31, 2018	$ 43,118,000
Balance at Beginning of period (in shares) at Dec. 31, 2018	44,418,606
Balance at end of period at Dec. 31, 2019	$ 74,397,000	$ 46,311,000	$ 109,897,000				$ 74,397,000	$ 46,311,000	$ 109,897,000	230,605,000
Balance at end of period (in shares) at Dec. 31, 2019	63,023,258	22,209,301	33,592,907				63,023,258	22,209,301	33,592,907
Balance at Beginning of period at Dec. 31, 2018				4,195,649	856,000	(13,029,000)				(12,173,000)
Stockholders' equity
Net loss										(7,669,000)
Balance at end of period at Dec. 31, 2019				$ 4,293,039	2,410,000	(58,663,000)				(56,253,000)
Temporary equity
Conversion of convertible preferred stock upon initial public offering (in shares)	(63,023,258)	(22,209,301)	(33,592,907)
Stockholders' equity
Vesting of early exercise option awards					32,000					32,000
Vesting of early exercise option awards (in shares)				454,971
Sale of common stock upon consummation of initial public offering, net of issuance costs of $____				$ 1,000	227,498,000					227,499,000
Sale of common stock upon consummation of initial public offering, net of issuance costs of $____(in shares)				13,798,900
Conversion of convertible preferred stock upon initial public offering	$ (74,397,000)	$ (46,311,000)	$ (109,897,000)	$ 3,000	230,602,000					230,605,000
Conversion of convertible preferred stock upon initial public offering (in shares)				26,803,777
Share‑based compensation expense					2,368,000					2,368,000
Net loss						(17,585,000)				(17,585,000)
Balance at end of period at Mar. 31, 2020				$ 4,000	$ 462,910,000	$ (76,248,000)				$ 386,666,000
Balance at end of period (in shares) at Mar. 31, 2020				45,350,687

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Share‑Based Compensation (Tables)

3 Months Ended

Mar. 31, 2020

Share‑Based Compensation

Schedule of share-based compensation expense category

	March 31,
(in thousands)	2020		2019
Research and development	$	1,046	$	4
General and administrative		1,322		227
	$	2,368	$	231

Summary of stock option activity plan

				Weighted
		Weighted		average
		average		remaining
	Number of	exercise price		contractual
	shares	per share		term (years)
Outstanding at January 1, 2020	2,577,719	$	5.90	9.3
Granted	3,470,051		13.14
Forfeited	(134,331)		1.02
Outstanding at March 31, 2020	5,913,439	$	9.94	9.5
Exercisable at March 31, 2020	275,891	$	5.01	9.3
Vested or expected to vest at March 31, 2020	5,913,439	$	9.94	9.5

Schedule of weighted average assumptions applied to options

	Three months ended March 31,
	2020		2019
Expected volatility	92.6	%	87.0	%
Risk‑free interest rate	1.4	%	2.5	%
Expected term	6.07 years		5.56 years
Expected dividend yield	—		—

Summary of activity relating to early exercises of stock options

	Number of shares
Unvested balance at January 1, 2020	494,603
Vested	(48,095)
Unvested balance at March 31, 2020	446,508

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Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2020	May 08, 2020
Document and Entity Information
Document Type	10-Q
Document Period End Date	Mar. 31, 2020
Entity Registrant Name	Passage BIO, Inc.
Entity Current Reporting Status	No
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		45,350,687
Entity Central Index Key	0001787297
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Amendment Flag	false

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Convertible Preferred Stock and Common Stock (Details) - USD ($) $ / shares in Units, $ in Millions			1 Months Ended	3 Months Ended
	Feb. 28, 2020	Jul. 02, 2018	Mar. 31, 2020	Mar. 31, 2020	Dec. 31, 2019
Common stock, par value (in dollars per share)			$ 0.0001	$ 0.0001	$ 0.0001
Common stock, shares authorized			300,000,000	300,000,000	300,000,000
Preferred stock, par value (in dollars per share)			$ 0.0001	$ 0.0001	$ 0.0001
IPO
Shares issued			13,798,900	13,798,900
Share price		$ 18.00	$ 18.00	$ 18.00
Net proceeds		$ 227.5		$ 227.5
Shares issued on stock conversion	26,803,777
Common stock, shares authorized	300,000,000

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Share‑Based Compensation - Assumptions Used in Determining Fair Value & Early exercise of Stock Options (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
Expected volatility	92.60%	87.00%
Risk‑free interest rate	1.40%	2.50%
Expected term	6 years 26 days	5 years 6 months 22 days
Proceeds from early exercise stock options	$ 44	$ 176
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares [Roll Forward]
Unvested balance at January 1, 2020	494,603
Vested	(48,095)
Unvested balance at March 31, 2020	446,508

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Subsequent Events

3 Months Ended

Mar. 31, 2020

Subsequent Events [Abstract]

Subsequent Events

10. Subsequent Events

Outside of the items disclosed in Note 6, there are no other subsequent events that warrant disclosure.

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Commitments

3 Months Ended

Mar. 31, 2020

Commitments

Commitments

6. Commitments and Contingencies

Amended and Restated Research, Collaboration and License Arrangement with Penn

In May 2020, the Company amended and restated its research, collaboration and licensing agreement with Penn (the Penn Expansion Agreement) for research and development collaborations and exclusive license rights to patents for certain products and technologies, which supersedes the Company’s existing sponsored research, collaboration and licensing agreement with Penn, dated September 18, 2018, as amended. Under the Penn Expansion Agreement, the Company agreed to fund discovery research conducted by Penn for five years, beginning in May 2020, and will receive exclusive rights, subject to certain limitations, to technologies resulting from the discovery research for the Company’s products developed with GTP, such as novel capsids, toxicity reduction technologies and delivery and formulation improvements. This funding commitment is $5.0 million annually, with quarterly payments of $1.3 million. The Penn Expansion Agreement also increased the number of remaining options available to the Company to commence additional licensed programs for rare, monogenic CNS indications from six to eleven, and extended the option exercise window by three years. Accordingly, the window to exercise all eleven remaining options extends to May 2025. If the Company were to exercise any of these options, it would owe Penn a non-refundable upfront fee of $1.0 million per product indication.

Catalent Agreements

In June 2019, the Company entered into a collaboration agreement (the Catalent Collaboration Agreement) with Catalent. As part of the Catalent Collaboration Agreement, the Company paid Catalent an upfront fee for the commissioning, qualification, validation and equipping of a clean room suite (the Clean Room Suite). Subject to validation of the Clean Room Suite, which is expected to occur by the end of 2020, the Company will pay an annual fee for five years for the use of the Clean Room Suite and is also committed to minimum annual purchase commitments.

In April 2020, the Company entered into a development services and clinical supply agreement (the Manufacturing and Supply Agreement) with Catalent to secure clinical scale manufacturing capacity for batches of active pharmaceutical ingredients for the Company’s gene therapy product candidates. The Manufacturing and Supply Agreement confirms the terms contemplated by the Catalent Collaboration Agreement. The Catalent Collaboration Agreement continues to be in effect pursuant to its terms.

Under the terms of the Manufacturing and Supply Agreement, Catalent has agreed to manufacture batches of drug product for the Company’s gene therapy product candidates at the Clean Room Suite at a Catalent facility provided for in the Catalent Collaboration Agreement. The Manufacturing and Supply Agreement provides for a term of five years which period may be extended once, at the Company’s option, for an additional five year-period.

The Company has the right to terminate the Manufacturing and Supply Agreement for convenience or other reasons specified in the Manufacturing and Supply Agreement upon prior written notice. If the Company terminates the Manufacturing and Supply Agreement for convenience and certain other specified events, it will be obligated to pay an early termination fee to Catalent.

Under both the Collaboration Agreement and the Manufacturing and Supply Agreement, the Company has an annual minimum commitment of $10.6 million per year owed to Catalent for five years, subject to certain inflationary adjustments.

Operating Leases

The Company leases office space in Philadelphia, Pennsylvania under a noncancelable lease (Existing Lease Agreement), as amended. The lease is classified as an operating lease and the Company recognizes rent expense on a straight‑line basis over the lease term. The Company recognized rent expense of $36,000 and $51,000 during the three months ended March 31, 2020 and 2019, respectively, related to this lease. The future minimum lease payments under the Company’s Existing Lease Agreement as of March 31, 2020 is $0.2 million for the remainder of 2020.

In April 2020, the Company entered into a new lease agreement (New Lease Agreement) for larger office space in Philadelphia to accommodate the Company’s continued growth and serve as the new corporate headquarters. The New Lease Agreement is expected to commence in January 2021 and is expected to expire in November 2031. Upon signing the New Lease Agreement, the Company amended the Existing Lease Agreement such that the Existing Lease Agreement will terminate five days after the commencement of the New Lease Agreement with no further payments due under the Existing Lease Agreement. The Company has an option to extend the term of the New Lease Agreement by up to two five-year terms. The landlord also will provide the Company with a tenant improvement allowance of up to $2.8 million. The future minimum lease payments under the Company’s New Lease Agreement are as follows:

(in thousands)
2021	$	—
2022		889
2023		1,098
2024		1,131
2025		1,165
Thereafter		7,763
	$	12,046

Employment Agreements

The Company has entered into employment agreements with key personnel providing for compensation and severance in certain circumstances, as described in the respective employment agreements.

Other Research and Development Arrangements

The Company enters into agreements with contract research organizations (CROs) to assist in the performance of research and development activities. Expenditures to CROs will represent a significant cost in clinical development for the Company. The Company could also enter into additional collaborative research, contract research, manufacturing, and supplier agreements in the future, which may require upfront payments and long‑term commitments of cash.

Patent Infringement Claim

On February 18, 2020, the Company received a letter from Regenxbio Inc. (Regenx), which stated its view that the use of the Company’s AAVhu68 capsid infringes patent claims to which Regenx has an exclusive license and which expire in 2024. Regenx also stated that it has exclusive licenses to various pending patent applications regarding the use of AAV vectors administered via instar-cisterna magna injection, and that these applications may lead to issued claims that Regenx believes may, if issued, cover the Company’s planned method of administration for the Company’s lead product candidates. The Company believes it has valid defenses to the issued claims set forth by Regenx relating to AAVhu68. Further, the prosecution of pending patent applications is highly uncertain, and it is unclear whether any patents will be issued from these pending Regenx patent applications at all, much less with claims that are relevant to the administration of the Company’s product candidates. Regenx also asked for information regarding the Company’s relationship with Dr. Wilson while he was serving as an advisor to Regenx. Regenx's letter also offers to discuss licensing the applicable patent portfolios from them. In April 2020, the Company responded to Regenx indicating that it does not believe it requires a license to any of the specified Regenx patents or patent applications at this time, and that it found that Dr. Wilson’s relationship with the Company was consistent with his obligations to Regenx. The Company will continue to monitor the situation and, if necessary, take appropriate actions, which may include responding to further correspondence from Regenx, and engaging in discussions with Regenx regarding their claims. If any such patents were enforceable and such claims were ultimately successful, the Company might require a license to continue to use and sell any product candidates using such AAV vector.

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Commitments - Operating Lease (Details)	1 Months Ended	3 Months Ended
	Apr. 30, 2020 USD ($) item	Mar. 31, 2020 USD ($)	Mar. 31, 2019 USD ($)
Rent expense		$ 36,000	$ 51,000
Future minimum lease payments for the remainder of 2020		$ 200,000
Termination period of existing lease agreement	5 days
Number of extension terms | item	2
Extended term of new lease agreement	5 years
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
2022	$ 889,000
2023	1,098,000
2024	1,131,000
2025	1,165,000
Thereafter	7,763,000
Total	12,046,000
Maximum
Tenant improvement allowance	$ 2,800,000

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Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Cash flows used in operating activities:
Net loss	$ (17,585)	$ (7,669)	$ (7,669)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of future tranche right liability		3,482	3,482
Depreciation and amortization	49	12
Share‑based compensation	2,368	231
Deferred rent	(15)	444
Changes in operating assets and liabilities:
Prepaid expenses and other assets	(978)	31
Prepaid research and development	(5,595)	2,925
Accounts payable	331	(47)
Accrued expenses	(426)	377
Net cash used in operating activities	(21,851)	(214)
Cash flows used in investing activities:
Purchases of property and equipment	(99)	(884)
Net cash used in investing activities	(99)	(884)
Cash flows provided by financing activities:
Proceeds from issuance of common stock upon initial public offering	229,904
Proceeds from early exercise stock options	44	176
Net cash provided by financing activities	229,904	20,157
Net increase in cash and cash equivalents	207,954	19,059
Cash and cash equivalents at beginning of year	158,874	24,861	24,861
Cash and cash equivalents at end of year	366,828	43,920	$ 158,874
Supplemental disclosure of non‑cash investing and financing activities:
Deferred offering costs in accrued expenses and other current liabilities	70
Deferred offering costs in accounts payable	1,571
Reclassification of deferred offering costs paid in a prior period	763
Property and equipment in accounts payable		134
Vesting of early exercise option awards	$ 32	13
Series A-1 Convertible Preferred Stock
Cash flows provided by financing activities:
Proceeds from Issuance of Convertible Preferred Stock		$ 19,981

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Summary of Significant Accounting Policies (Details) - shares	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Amount of antidilutive securities excluded from computation of earnings per share	6,359,947	20,221,439
Series A-1 Convertible Preferred Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Amount of antidilutive securities excluded from computation of earnings per share		14,216,333
Future tranche right
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Amount of antidilutive securities excluded from computation of earnings per share		5,009,808
Stock options (including shares subject to repurchase)
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Amount of antidilutive securities excluded from computation of earnings per share	6,359,947	736,962
Stock options vested and exercised, but subject to settlement of nonrecourse promissory notes
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Amount of antidilutive securities excluded from computation of earnings per share		258,336

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Balance Sheets (unaudited) (Parenthetical) - $ / shares	Mar. 31, 2020	Dec. 31, 2019
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	45,797,195	5,194,518
Common stock, shares outstanding	45,350,687	4,293,039
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Series A-1 Convertible Preferred Stock
Convertible preferred stock, shares authorized		63,023,258
Convertible preferred stock, shares, issued		63,023,258
Convertible preferred stock, shares, outstanding		63,023,258
Series A-2 Convertible Preferred Stock
Convertible preferred stock, shares authorized		22,209,301
Convertible preferred stock, shares, issued		22,209,301
Convertible preferred stock, shares, outstanding		22,209,301
Series B Convertible Preferred Stock
Convertible preferred stock, shares authorized		33,592,907
Convertible preferred stock, shares, issued		33,592,907
Convertible preferred stock, shares, outstanding		33,592,907

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Accrued Expenses and Other Current Liabilities (Tables)

3 Months Ended

Mar. 31, 2020

Accrued Expenses and Other Current Liabilities

Schedule of accrued liabilities and other current liabilities

(in thousands)	March 31, 2020		December 31, 2019
Professional fees	$	344	$	997
Compensation and related benefits		1,388		1,502
Research and development		946		507
Other		18		46
	$	2,696	$	3,052

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Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity (Deficit) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Issuance cost	$ 3,495
Series A-1 Convertible Preferred Stock
Issuance cost		$ 19

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Risks and Liquidity (Details) - USD ($) $ / shares in Units, $ in Thousands		1 Months Ended	3 Months Ended
	Jul. 02, 2018	Mar. 31, 2020	Mar. 31, 2020	Dec. 31, 2019
Risks And Liquidity [Line Items]
Accumulated deficit		$ (76,248)	$ (76,248)	$ (58,663)
IPO
Risks And Liquidity [Line Items]
Shares issued		13,798,900	13,798,900
Share price	$ 18.00	$ 18.00	$ 18.00
Net proceeds	$ 227,500		$ 227,500

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Balance Sheets (unaudited) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 366,828	$ 158,874
Prepaid expenses	2,921	156
Prepaid research and development	12,340	6,745
Total current assets	382,089	165,775
Property and equipment, net	1,137	1,087
Other assets	9,201	11,751
Total assets	392,427	178,613
Current liabilities:
Accounts payable	2,532	629
Accrued expenses and other current liabilities	2,696	3,052
Total current liabilities	5,228	3,681
Deferred rent	489	504
Other liabilities	44	76
Total liabilities	5,761	4,261
Convertible preferred stock, $0.0001 par value:
Total convertible preferred stock		230,605
Commitments (note 7)
Stockholders’ equity (deficit):
Common stock, $0.0001 par value: 300,000,000 shares authorized; 45,797,195 shares issued and 45,350,687 shares outstanding at March 31, 2020 and 5,194,518 shares issued and 4,293,039 shares outstanding at December 31, 2019	4
Additional paid‑in capital	462,910	2,410
Accumulated deficit	(76,248)	(58,663)
Total stockholders’ equity (deficit)	386,666	(56,253)
Total liabilities, convertible preferred stock and stockholders’ equity (deficit)	$ 392,427	178,613
Series A-1 Convertible Preferred Stock
Convertible preferred stock, $0.0001 par value:
Total convertible preferred stock		74,397
Series A-2 Convertible Preferred Stock
Convertible preferred stock, $0.0001 par value:
Total convertible preferred stock		46,311
Series B Convertible Preferred Stock
Convertible preferred stock, $0.0001 par value:
Total convertible preferred stock		$ 109,897

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Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2020

Fair Value of Financial Instruments

Summary of assets measured at fair value on a recurring basis

	Fair value measurement at
	reporting date using
	Quoted prices
	in active		Significant
		markets for	other		Significant
	identical		observable			unobservable
	assets		inputs		inputs
(in thousands)	(Level 1)		(Level 2)		(Level 3)
March 31, 2020:
Assets:
Cash equivalents (Money Market Fund)	$	284,173	$	—	$	—
December 31, 2019:
Assets:
Cash equivalents (Money Market Fund)	$	155,846	$	—	$	—

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Commitments - Paragon Collaboration Agreement (Details) - USD ($) $ in Millions	1 Months Ended		3 Months Ended
	May 31, 2020	Apr. 30, 2020	Mar. 31, 2020
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Term of manufacturing and supply agreement		5 years
Additional extension term of manufacturing and supply agreement		5 years
Subsequent Event [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Minimum amount agreed to purchase in batches of drug product		$ 10.6
Catalent
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Period for which annual fee is payable			5 years
Catalent | Subsequent Event [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Upfront payments	$ 1.0
Annual fee payable	5.0
Quarterly fee payable	$ 1.3
Period for which annual fee is payable	5 years

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Share‑Based Compensation - Equity Incentive Plan & ESPP (Details)		3 Months Ended
	Mar. 03, 2020 USD ($) shares	Mar. 31, 2020 USD ($) plan shares	Mar. 31, 2019 USD ($)	Dec. 31, 2019 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of equity incentive plans | plan		2
Share-based compensation expense | $		$ 2,368,000	$ 231,000
Equity Incentive Plan 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares authorized | shares				5,362,823
Period till which there is automatic increase in rights granted under the Plan		10 years
Percent of the total number of shares of the Company’s common stock outstanding		5.00%
Shares available for grant | shares		4,435,181
Vesting period		4 years
Term of award		10 years
Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares authorized | shares	434,000
Period till which there is automatic increase in rights granted under ESPP	10 years
Percentage of common stock outstanding	1.00%
Percentage of stock purchase price	85.00%
Percentage of maximum employee contribution	15.00%
Maximum amount of common stock that can be purchased | $	$ 25,000
Share-based compensation expense | $		$ 23,000

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Share-Based Compensation - Nonrecourse Promissory Notes with related parties (Details) - USD ($) $ in Millions	1 Months Ended	3 Months Ended
	Feb. 28, 2019	Mar. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares that becomes outstanding		406,894
Interim Chief Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares early exercised	688,875
Interim Chief Operating Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares early exercised	309,994
Promissory Note With Related Parties
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Interest rate of notes receivable	2.91%
Promissory Note With Related Parties | Interim Chief Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Notes receivable in exchange of stock options exercised	$ 0.2
Promissory Note With Related Parties | Interim Chief Operating Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Notes receivable in exchange of stock options exercised	$ 0.8

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Related Party Transactions

3 Months Ended

Mar. 31, 2020

Related Party Transactions

Related Party Transactions

9. Related-Party Transactions

Penn Agreement

Penn is a stockholder of the Company. Research and development expenses with Penn during the three months ended March 31, 2020 and 2019 were $7.7 million and $2.9 million, respectively. The Company made $12.6 million in cash payments to Penn during the three months ended March 31, 2020, and had a prepaid research and development asset of $10.7 million and $5.7 million as of March 31, 2020 and December 31, 2019, respectively, in the accompanying balance sheets.

Consulting Agreement

James M. Wilson, M.D., Ph.D., an employee of Penn and a stockholder of the Company, serves as the Company’s chief scientific advisor pursuant to a consulting agreement. The Company recognized $31,000 of expense related to these services during the three months ended March 31, 2020, including $6,000 of share‑based compensation expense.

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Accrued Expenses and Other Current Liabilities

3 Months Ended

Mar. 31, 2020

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 consisted of the following:

(in thousands)	March 31, 2020		December 31, 2019
Professional fees	$	344	$	997
Compensation and related benefits		1,388		1,502
Research and development		946		507
Other		18		46
	$	2,696	$	3,052