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Table of Contents
Index to Consolidated Financial Statements

As filed with the Securities and Exchange Commission on May 22, 2015

Registration No. 333-204073


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



AMENDMENT No. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



Axovant Sciences Ltd.
(Exact name of registrant as specified in its charter)

Bermuda
(State or other jurisdiction of
incorporation or organization)
  2834
(Primary Standard Industrial
Classification Code Number)
  Not Applicable
(I.R.S. Employer
Identification Number)

Clarendon House
2 Church Street
Hamilton HM 11, Bermuda
+1 (441) 295-5950
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)



Corporate Services Company
2711 Centerville Road
Wilmington, DE 19808
(866) 846-8765

(Name, address, including zip code, and telephone number, including
area code, of agent for service)



Copies to:

Frank F. Rahmani
John T. McKenna
Divakar Gupta
Cooley LLP
3175 Hanover Street
Palo Alto, CA 94304
(650) 843-5000

 

Marc D. Jaffe
Nathan Ajiashvili
Latham & Watkins LLP
885 Third Avenue
New York, NY 10022
(212) 906-1200



Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this registration statement.



If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering.  o



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 under the Securities Exchange Act of 1934. (Check one):

Large accelerated filer  o   Accelerated filer  o   Non-accelerated filer  ý
(Do not check if a
smaller reporting company)
  Smaller reporting company  o



CALCULATION OF REGISTRATION FEE

             
   
Title of Securities being Registered
  Proposed Maximum
Aggregate Offering
Price (1)(2)

  Amount of
Registration Fee (3)

 
   

Common shares, $0.00001 par value per common share

  $ 172,500,000   $ 20,045  

 

 
(1)
In accordance with Rule 457(o) under the Securities Act of 1933, as amended, the number of shares being registered and the proposed maximum offering price per common share are not included in this table.

(2)
Estimated solely for purposes of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act. Includes the offering price of shares that the underwriters have the option to purchase.

(3)
The Registrant previously paid the registration fee of $20,045 with the initial filing of this registration statement.



The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

   


Table of Contents

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED MAY 22, 2015

PRELIMINARY PROSPECTUS

                             Shares

LOGO

Common Shares

We are offering                             common shares. This is our initial public offering and no public market currently exists for our common shares. We expect the initial public offering price to be between $               and $               per common share.

We intend to apply to list our common shares on the New York Stock Exchange under the symbol "AXON." Upon the closing of this offering, we expect to be a "controlled company" within the meaning of applicable New York Stock Exchange rules.

We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012, and, as such, will be subject to reduced public company reporting requirements.

Investing in our common shares involves risks. See the section titled "Risk Factors" beginning on page 9.

Neither the Securities and Exchange Commission in the United States nor any other regulatory body has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

Consent under the Exchange Control Act 1972 (and its related regulations) has been obtained from the Bermuda Monetary Authority for the issue and transfer of our common shares to and between residents and non-residents of Bermuda for exchange control purposes provided our common shares remain listed on an appointed stock exchange, which includes the New York Stock Exchange. In granting such consent, neither the Bermuda Monetary Authority nor the Registrar of Companies in Bermuda accepts any responsibility for our financial soundness or the correctness of any of the statements made or opinions expressed in this prospectus.


 
  PER SHARE   TOTAL  

Public offering price

  $     $    

Underwriting discounts and commissions (1)

  $     $    

Proceeds to us, before expenses

  $     $    

    (1)
    We refer you to the section titled "Underwriting" for additional information regarding underwriter compensation.

Delivery of the common shares is expected to be made on or about                             , 2015. We have granted the underwriters an option for a period of 30 days from the date of this prospectus to purchase an additional                        common shares. If the underwriters exercise the option in full, the total underwriting discounts and commissions payable by us will be $               and the total proceeds to us, before expenses, will be $               .

Jefferies   Evercore ISI   RBC Capital Markets

JMP Securities

Baird

   

Prospectus dated                    , 2015


Table of Contents


Table of Contents

 
  Page

Prospectus Summary

  1

Risk Factors

  9

Special Note Regarding Forward-Looking Statements

  43

Industry and Market Data

  44

Use of Proceeds

  45

Dividend Policy

  46

Capitalization

  47

Dilution

  48

Selected Consolidated Financial Data

  50

Management's Discussion and Analysis of Financial Condition and Results of Operations

  51

Business

  61

Management

  89

Executive Compensation

  97

Certain Relationships and Related Party Transactions

  102

Principal Shareholders

  106

Description of Share Capital

  108

Shares Eligible for Future Sale

  116

Bermuda Company Considerations

  118

Material Bermuda and U.S. Federal Income Tax Considerations

  123

Underwriting

  129

Legal Matters

  137

Experts

  137

Where You Can Find Additional Information

  137

Exchange Controls

  138

Enforcement of Civil Liabilities Under United States Federal Securities Laws

  139

Index to Consolidated Financial Statements

  F-1

You should rely only on the information contained in this prospectus and any free writing prospectus prepared by or on behalf of us or to which we have referred you. We have not authorized anyone to provide you with information that is different from that contained in such prospectuses. We are offering to sell our common shares, and seeking offers to buy our common shares, only in jurisdictions where such offers and sales are permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of our common shares.


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PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common shares, you should carefully read this entire prospectus, including our consolidated financial statements and the related notes thereto and the information set forth in the sections titled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." Unless the context otherwise requires, we use the terms "company," "we," "us" and "our" in this prospectus to refer to Axovant Sciences Ltd. and our wholly-owned subsidiary, Axovant Sciences, Inc.

Company Overview

We are a clinical-stage biopharmaceutical company focused on the acquisition, development and commercialization of novel therapeutics for the treatment of neurodegenerative disorders. Our goal is to be the leading biopharmaceutical company focused on the treatment of dementia, a condition characterized by a significant decline in mental capacity and impaired daily function. Our near-term focus is to develop our product candidate, which we refer to as RVT-101, for the treatment of Alzheimer's disease and other forms of dementia. We acquired worldwide rights to RVT-101 from Glaxo Group Limited and GlaxoSmithKline Intellectual Property Development Limited, collectively GSK, in December 2014. We plan to commence a Phase 3 pivotal program of RVT-101 for the treatment of mild-to-moderate Alzheimer's disease in the fourth quarter of 2015. If our Phase 3 program is successful, we plan to seek regulatory approval and commercialize RVT-101 in the United States and the European Union. In the long-term, we intend to develop a pipeline of product candidates to comprehensively address the cognitive, behavioral and functional components of dementia.

Alzheimer's disease, a form of dementia, is a progressive neurodegenerative disorder that results in significant impairments in cognition and day-to-day functioning. According to the Alzheimer's Association, Alzheimer's disease affects approximately 5.3 million people in the United States. It is estimated that between 70% and 90% of Alzheimer's disease patients age 65 and older are classified as having mild-to-moderate Alzheimer's disease. No new chemical entity has been approved by the U.S. Food and Drug Administration, or the FDA, for the treatment of Alzheimer's disease since 2003.

RVT-101 is an orally administered, potent antagonist of the 5-hydroxytryptamine 6, or 5-HT6, serotonin receptors in the brain. Antagonism of the 5-HT6 receptor is a novel mechanism that promotes the release of acetylcholine, glutamate and other neurotransmitters. These neurotransmitters are believed to be critical for alertness, memory, thought and judgment, key components of cognition and function that are impaired in patients with Alzheimer's disease. We plan to develop RVT-101 for use in combination with donepezil and potentially other cholinesterase inhibitors. Donepezil, a generic drug also marketed under the trade name Aricept by Eisai Co., Ltd. and Pfizer, Inc., is one of the most commonly used cholinesterase inhibitors. Cholinesterase inhibitors are the current standard of care for the treatment of mild-to-moderate Alzheimer's disease, and the only class of drugs approved by the FDA for the treatment of patients with mild Alzheimer's disease. Based on preclinical and clinical data collected to date, we believe RVT-101, when used in combination with donepezil, works additively to increase the concentration of acetylcholine and other neurotransmitters and thereby synergistically improve cognition and function in patients with Alzheimer's disease.

We believe RVT-101, which is being developed as a once-daily oral medication, has the potential to be a best-in-class 5-HT6 receptor antagonist for the treatment of Alzheimer's disease based on its safety, tolerability and efficacy for up to 48 weeks, as demonstrated in a 684-subject, randomized, placebo-controlled Phase 2b trial conducted by GSK. We believe this is meaningful, in part, because currently marketed Alzheimer's disease drugs were approved on efficacy data of 28 weeks or less. In this Phase 2b trial, subjects that received 35 mg RVT-101 in combination with donepezil achieved a statistically significant improvement in cognition and function, as compared to those receiving donepezil alone.

 

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Cognition and function are the two endpoints that have historically been the basis for FDA approval for drugs to treat Alzheimer's disease. To determine whether an outcome is statistically significant, a "p-value" is calculated. Historically, the FDA and European Medicines Agency, or the EMA, have generally required newly approved drugs to demonstrate an effect with a p-value of less than 0.05, which suggests there is a less than 5.0% probability that the observed effect is due to chance alone. When the p-value is less than 0.05, the result is generally considered "statistically significant." We intend to conduct a Phase 3 pivotal program in subjects with mild-to-moderate Alzheimer's disease designed to confirm the results of the Phase 2b clinical trial conducted by GSK, and we plan to commence this program in the fourth quarter of 2015.

We have assembled a team with substantial experience in developing and obtaining approval for drugs for central nervous system disorders, including Dr. Lawrence Friedhoff, the Chief Development Officer of Axovant Sciences, Inc., who previously led the development of Aricept at Eisai Co., Ltd.

Alzheimer's Disease: Overview and Market Opportunity

According to Alzheimer's Disease International, more than 44 million individuals worldwide suffer from dementia, and based on scientific literature, approximately 34 million individuals are affected by Alzheimer's disease. In addition, the prevalence of Alzheimer's disease is expected to increase over time, with 13.8 million people age 65 and older projected to have the disease by 2050 in the United States, up from 5.0 million in 2014. This projection does not include Alzheimer's disease patients under the age of 65, who currently account for approximately 4% of the overall Alzheimer's disease population.

In addition to its debilitating effect on patients' cognition and day-to-day functioning, Alzheimer's disease places a significant burden on the healthcare system. According to the Alzheimer's Association, the aggregate cost of care in 2014 for patients with Alzheimer's disease and other types of dementia in the United States was estimated to be $214 billion, over half of which is borne by the Medicare system.

Alzheimer's disease is often grouped into three categories based on severity: mild, moderate and severe. Although the relative prevalence of each of these categories is not well-defined in the literature, a report published by the Alzheimer's Society, a leading care and research charity in the United Kingdom for individuals and families that suffer from dementia, estimates that between 70% and 90% of all Alzheimer's disease patients age 65 and older have mild-to-moderate Alzheimer's disease.

The current standard of care for the treatment of patients with mild-to-moderate Alzheimer's disease includes the use of cholinesterase inhibitors initiated at the time of diagnosis. Currently marketed cholinesterase inhibitors include donepezil (marketed by Eisai Co., Ltd. and Pfizer, Inc. as Aricept), rivastigmine (marketed by Novartis AG as Exelon) and galantamine (marketed by Janssen Pharmaceuticals, Inc. as Razadyne). Cholinesterase inhibitors continue to be used widely for the treatment of patients with Alzheimer's disease and can lead to clinically significant improvements in cognition. However, most patients require additional therapy due to progression of their disease.

Our Product Candidate: RVT-101

We acquired worldwide rights to RVT-101 from GSK in December 2014. RVT-101 is an orally administered, potent antagonist of the 5-HT6 serotonin receptor. By antagonizing the 5-HT6 receptor, RVT-101 helps enhance the release of acetylcholine, glutamate and other neurotransmitters that are essential to cognition.

5-HT6 receptors are primarily localized to the central nervous system, or CNS, particularly in regions of the brain that modulate cognition. Because 5-HT6 receptor antagonists do not significantly increase levels of acetylcholine outside of the CNS, it is believed that 5-HT6 receptor antagonists have limited peripheral side effects, including many that are commonly associated with cholinesterase inhibitors. In addition, we believe that RVT-101's action as a 5-HT6 receptor antagonist provides a strong mechanistic rationale to support its use in combination with cholinesterase inhibitors. While cholinesterase inhibitors help prevent the breakdown of acetylcholine, 5-HT6 receptor antagonists promote the release of acetylcholine. Therefore, when used in combination with one another, we believe that 5-HT6 receptor antagonists and cholinesterase

 

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inhibitors increase the concentration of acetylcholine through complementary mechanisms without exacerbating the toxicities associated with cholinesterase inhibitors.

Clinical Development

Prior to our acquisition of RVT-101 in December 2014, GSK conducted 13 clinical trials for RVT-101 involving over 1,250 individuals, which included healthy subjects as well as subjects with mild-to-moderate Alzheimer's disease. In a Phase 2b clinical trial of 684 subjects with mild-to-moderate Alzheimer's disease, subjects that received 35 mg RVT-101 in combination with donepezil achieved a statistically significant improvement in cognition at 12, 24 and 48 weeks following initiation of treatment, compared to subjects that received donepezil alone, as measured by the Alzheimer's Disease Assessment Scale-cognitive, or ADAS-cog, subscale. We believe this is a meaningful result because currently marketed Alzheimer's disease drugs were approved on efficacy data of 28 weeks or less. In addition to RVT-101's effect on cognition, subjects that received 35 mg RVT-101 in combination with donepezil achieved a statistically significant improvement in function at 12, 24 and 36 weeks following the initiation of treatment, compared to subjects that received donepezil alone, as measured by the Alzheimer's Disease Cooperative Study Activities of Daily Living, or ADCS-ADL, a commonly used scale evaluating function in which a subject's ability to perform a list of daily activities is evaluated based on information obtained from the subject and his or her caregiver. We believe these ADCS-ADL results are particularly noteworthy in light of the fact that the decline in the ability of Alzheimer's disease patients to perform activities essential to daily living places a significant burden on caregivers and the healthcare system.

The graphs below present the results from the Phase 2b clinical trial described above on ADAS-cog and ADCS-ADL.


ADAS-cog Change Over 48 Weeks

CHART

 

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ADCS-ADL Change Over 48 Weeks

CHART

The tolerability profile of RVT-101 in the Phase 2b clinical trial conducted by GSK, with the relevant comparisons to placebo when added to a stable dose of donepezil, is shown in the table below.

 
  35 mg RVT-101 plus
Donepezil
  Placebo plus
Donepezil
 

24 weeks —Withdrawals from trial

    11%     12%  

48 weeks —Withdrawals from trial

    20%     22%  

24 weeks —Drug-related serious adverse events

    0%     < 1%  

48 weeks —Drug-related serious adverse events

    0%     < 1%  

24 weeks —Drug-related adverse events

    6%     9%  

48 weeks —Drug-related adverse events

    7%     13%  

Phase 3 Development Plan

We intend to conduct a Phase 3 pivotal program in subjects with mild-to-moderate Alzheimer's disease designed to confirm the results of the Phase 2b clinical trial conducted by GSK. We met with the FDA at the end of March 2015 to discuss our development plan for RVT-101. We believe that this meeting confirmed the results of the prior end-of-Phase 2 meeting between the FDA and GSK and that our proposed Phase 3 trial, if successful, would, in conjunction with GSK's Phase 2b clinical trial, be sufficient to support the filing of a new drug application, or NDA. The proposed trial would randomize patients already on a stable background of donepezil therapy to receive adjunctive treatment with either 35 mg RVT-101 or placebo once daily for a period of at least 24 weeks. We intend to begin this pivotal trial in the fourth quarter of 2015, and if the results of this trial are positive, our goal is to submit an NDA to the FDA and a marketing authorization application, or MAA, to the EMA by the end of 2017. We may conduct additional clinical trials to further support the commercial potential of RVT-101 in the United States, the European Union, Japan and other major markets.

 

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Other Potential Indications for RVT-101

Beginning in the second half of 2015, we plan to evaluate RVT-101 as a potential treatment for forms of dementia other than mild-to-moderate Alzheimer's disease, such as severe Alzheimer's disease, dementia with Lewy bodies, Parkinson's disease dementia and vascular dementia. We also intend to augment our current pipeline through the acquisition or in-license of additional late-stage product candidates for the treatment of other aspects of dementia that we believe can be developed and commercialized in a capital-efficient manner.

Our Strategy

Our goal is to be the leading biopharmaceutical company focused on the treatment of dementia. The key elements of our strategy to achieve this goal include the following:

    §
    Rapidly advance RVT-101 for the treatment of mild-to-moderate Alzheimer's disease.

    §
    Develop RVT-101 for severe Alzheimer's disease and other forms of dementia.

    §
    Acquire or in-license late-stage product candidates for the treatment of other aspects of dementia in a capital-efficient manner.

    §
    Maximize the commercial potential of our product candidates.

Risks Associated with Our Business

Our business is subject to a number of risks of which you should be aware before making a decision to invest in our common shares. These risks are discussed more fully in the section titled "Risk Factors" and include, among others:

    §
    We have a limited operating history and have never generated any product revenues.

    §
    We expect to incur significant losses for the foreseeable future and may never achieve or maintain profitability. Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern.

    §
    We are heavily dependent on the success of RVT-101, our only product candidate, and if RVT-101 does not receive regulatory approval or is not successfully commercialized, our business may be harmed.

    §
    We will require additional capital to fund our operations, and if we fail to obtain necessary financing, we may not be able to complete the development and commercialization of RVT-101.

    §
    We may be required to make significant payments in connection with our acquisition of RVT-101 from GSK.

    §
    Clinical trials are very expensive, time-consuming, difficult to design and implement and involve an uncertain outcome.

    §
    We intend to rely on third parties to conduct, supervise and monitor our clinical trials, and if those third parties perform in an unsatisfactory manner, it may harm our business.

    §
    If we are unable to obtain and maintain patent protection for our technology and products or if the scope of the patent protection obtained is not sufficiently broad, we may not be able to compete effectively in our markets.

    §
    We do not have our own manufacturing capabilities and will rely on third parties to produce clinical and commercial supplies of RVT-101 and any future product candidate.

    §
    We face significant competition from other biotechnology and pharmaceutical companies and our operating results will suffer if we fail to compete effectively.

    §
    We currently have a limited number of employees who are employed by our wholly-owned subsidiary, Axovant Sciences, Inc., and we rely on Roivant Sciences, Inc. to provide various administrative, research and development and other services.

 

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If we are unable to adequately address these and other risks we face, our business, financial condition, operating results and prospects may be adversely affected.

In addition, we are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act, or the JOBS Act, enacted in April 2012, and therefore we intend to take advantage of certain exemptions from various public company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in this prospectus, our periodic reports and our proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved. We may take advantage of these exemptions for up to five years or until we are no longer an "emerging growth company."

Relationship with Roivant Sciences Ltd., Roivant Sciences, Inc. and Axovant Sciences, Inc.

Roivant Sciences Ltd. will be our controlling shareholder.     We are a wholly-owned subsidiary of Roivant Sciences Ltd., a company focused on the acquisition, development and commercialization of late-stage product candidates that are non-strategic, deprioritized or under-resourced at other biopharmaceutical companies. After the closing of this offering, we expect to be a "controlled company" within the meaning of the corporate governance rules of the New York Stock Exchange, or the NYSE. Assuming we sell the number of the shares set forth on the cover page of this prospectus, Roivant Sciences Ltd. will own, in the aggregate, approximately          % of our outstanding common shares, or approximately          % if the underwriters exercise their option to purchase additional common shares in full. Roivant Sciences Ltd. will be able to exercise control over all matters requiring shareholder approval, including the election of our directors and approval of significant corporate transactions. We have entered into an information sharing and cooperation agreement with Roivant Sciences Ltd. For a description of this agreement, see the section titled "Certain Relationships and Related Party Transactions—Information Sharing and Cooperation Agreement."

Services Agreement with Roivant Sciences, Inc.     We and our wholly-owned subsidiary, Axovant Sciences, Inc., have received, and will continue to receive, various services provided by our affiliate, Roivant Sciences, Inc., which is also a wholly-owned subsidiary of Roivant Sciences Ltd. These services include, but are not limited to, the identification of potential product candidates, project management of clinical trials and other development, administrative and financial activities. Following the completion of this offering, we expect that our reliance on Roivant Sciences, Inc. will decrease over time as we, Axovant Sciences, Inc. and any other future subsidiary of ours continue to hire the necessary personnel to manage the development and potential commercialization of RVT-101. We and Axovant Sciences, Inc. have entered into a services agreement with Roivant Sciences, Inc. in connection with the provision of these services. For a description of this agreement, see the section titled "Certain Relationships and Related Party Transactions—Services Agreement with Roivant Sciences, Inc."

Corporate Information

We are an exempted limited company incorporated under the laws of Bermuda on October 31, 2014. Our registered office is located in Bermuda at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda, and we also have business operations at 14 Par-La-Ville Road, Hamilton HM08, Bermuda. The telephone number of our registered office is +1 (441) 295 5950. Our website address is www.axovant.com. The information contained on our website is not incorporated by reference into this prospectus, and you should not consider any information contained on, or that can be accessed through, our website as part of this prospectus or in deciding whether to purchase our common shares.

Solely for convenience, the trademarks and trade names in this prospectus are referred to without the ® and TM symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. All other trademarks, trade names and service marks appearing in this prospectus are the property of their respective owners.

 

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THE OFFERING

Common shares offered by us

                      common shares

Option to purchase additional shares

 

We have granted the underwriters an option for a period of 30 days from the date of this prospectus to purchase an additional                    common shares.

Common shares to be outstanding immediately after this offering

 

                    common shares (or                    common shares if the underwriters exercise their option to purchase additional common shares in full)

Use of proceeds

 

We estimate that the net proceeds to us from this offering, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately $                million, assuming the shares are offered at $               per common share, which is the midpoint of the price range set forth on the cover page of this prospectus.

 

We intend to use the net proceeds from this offering primarily for the clinical development of our product candidate, RVT-101. The remaining proceeds, if any, will be used for working capital and general corporate purposes. See the section titled "Use of Proceeds" for additional information.

Controlled company

 

Upon the closing of this offering, Roivant Sciences Ltd. will beneficially own a controlling interest in us and we expect to be a "controlled company" under NYSE rules. As a controlled company, we may elect to avail ourselves of the controlled company exemption under the corporate governance requirements of the NYSE.

Risk factors

 

You should read the section titled "Risk Factors" for a discussion of factors to consider carefully before deciding to invest in our common shares.

Dividend policy

 

We have never declared or paid any dividends on our common shares. We anticipate that we will retain all of our future earnings, if any, for use in the operation and expansion of our business and do not anticipate paying cash dividends in the foreseeable future.

Proposed New York Stock Exchange symbol

 

"AXON"

The number of common shares that will be outstanding immediately after this offering is based on 75,000,000 common shares outstanding as of March 31, 2015, and excludes:

    §
    4,012,500 common shares issuable upon the exercise of stock options outstanding as of March 31, 2015, with an exercise price of $0.90 per share; and
    §
    5,487,500 common shares reserved for future issuance under our 2015 Equity Incentive Plan, as amended, of which stock options for 527,500 common shares, with an exercise price of $1.04 per share, were granted in April 2015, as well as any automatic increases in the number of common shares reserved for future issuance under this plan.

Except as otherwise indicated herein, all information in this prospectus, including the number of common shares that will be outstanding after this offering, assumes or gives effect to:

    §
    no exercise by the underwriters of their option to purchase an additional                     common shares; and
    §
    the effectiveness of our amended and restated bye-laws immediately prior to the closing of this offering.

 

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SUMMARY CONSOLIDATED FINANCIAL DATA

The following tables set forth our summary consolidated statement of operations data for the period from October 31, 2014 (date of inception) through March 31, 2015 and the consolidated balance sheet data as of March 31, 2015 from our audited consolidated financial statements appearing elsewhere in this prospectus. Our historical results are not necessarily indicative of the results to be expected in the future, and our operating results for the period ended March 31, 2015 are not indicative of the results that may be expected for a full fiscal year or any other future period. You should read this summary consolidated financial data below, together with our consolidated financial statements and related notes thereto appearing elsewhere in this prospectus, as well as the sections titled "Selected Consolidated Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." Our fiscal year ends on March 31.


 
  Period from October 31,
2014 (Date of Inception)
to March 31, 2015
 
 
  (in thousands, except
share and per share data)

 

Consolidated Statement of Operations Data:

       

Operating expenses:

       

Research and development

  $ 14,324  

General and administrative

    6,722  

Total operating expenses

    21,046  

Loss before provision for income tax

    (21,046 )

Income tax expense

    (1 )

Net loss and comprehensive loss

  $ (21,047 )

Net loss per common share—basic and diluted (1)

  $ (1.32 )

Weighted average common shares outstanding—basic and diluted (1)

    15,986,842  

(1)
See Note B[7] to our consolidated financial statements for an explanation of the method used to compute basic and diluted net loss per common share.

 
  As of March 31, 2015  
 
  Actual   As Adjusted (1)(2)  
 
  (in thousands)
 

Consolidated Balance Sheet Data:

             

Cash

  $   $    

Total assets

    1,117        

Total liabilities

    8,868        

Accumulated deficit

    (21,047 )      

Total shareholders' (deficit) equity

    (7,751 )      

(1)
The as adjusted balance sheet data gives effect to our sale of               common shares in this offering at an assumed initial public offering price of $               per common share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

(2)
Each $1.00 increase or decrease in the assumed initial public offering price of $               per common share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, would increase or decrease each of cash, total assets and total shareholders' (deficit) equity on an as adjusted basis by approximately $                million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same. Similarly, each increase or decrease of 1.0 million common shares offered by us at the assumed initial public offering price $               per common share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions, would increase or decrease each of cash, total assets and total shareholders' (deficit) equity on an as adjusted basis by approximately $                million. The as adjusted information is illustrative only, and will be adjusted based on the actual initial public offering price and other terms of this offering determined at pricing.

 

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RISK FACTORS

Investing in our common shares involves a high degree of risk. You should carefully consider the risks described below, together with the other information contained in this prospectus, including our consolidated financial statements and the related notes appearing at the end of this prospectus, before making your decision to invest in our common shares. We cannot assure you that any of the events discussed in the risk factors below will not occur. These risks could have a material and adverse impact on our business, results of operations, financial condition and cash flows and if so our future prospects would likely be materially and adversely affected. If any of such events were to happen, the trading price of our common shares could decline, and you could lose all or part of your investment.

Risks Related to Our Business, Financial Position and Capital Requirements

We have a limited operating history and have never generated any product revenues.

We are a clinical-stage biopharmaceutical company with a limited operating history. We were formed in October 2014, and our operations to date have been limited to organizing and staffing our company and acquiring worldwide rights to RVT-101. We have not yet demonstrated an ability to successfully complete a large-scale, pivotal clinical trial, obtain marketing approval, manufacture a commercial scale product, or arrange for a third-party to do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization. Consequently, we have no meaningful operations upon which to evaluate our business and predictions about our future success or viability may not be as accurate as they could be if we had a longer operating history or a history of successfully developing and commercializing pharmaceutical products.

Our ability to generate revenue and become profitable depends upon our ability to successfully complete the development of our product candidate, RVT-101, for the treatment of Alzheimer's disease and other forms of dementia and obtain the necessary regulatory approvals for its commercialization. We have never been profitable, have no products approved for commercial sale and to date have not generated any revenue from product sales.

Even if we receive regulatory approval for the sale of RVT-101, we do not know when RVT-101 will generate revenue, if at all. Our ability to generate product revenue depends on a number of factors, including our ability to:

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Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses, or when, or if, we will be able to achieve or maintain profitability. Our expenses could increase beyond expectations if we are required by the U.S. Food and Drug Administration, or the FDA, and comparable non-U.S. regulatory authorities, to perform studies or clinical trials in addition to those that we currently anticipate. Even if RVT-101 is approved for commercial sale, we anticipate incurring significant costs associated with the commercial launch of this product. If we cannot successfully execute any one of the foregoing, our business may not succeed and your investment will be adversely affected.

We expect to incur significant losses for the foreseeable future and may never achieve or maintain profitability. Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern.

Investment in pharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that a product candidate will fail to gain regulatory approval or become commercially viable. We have never generated any revenues, and we cannot estimate with precision the extent of our future losses. We do not currently have any products that are available for commercial sale and we may never generate revenue from selling products or achieve profitability. We expect to continue to incur substantial and increasing losses through the projected commercialization of RVT-101. RVT-101 has not been approved for marketing in the United States and may never receive such approval. As a result, we are uncertain when or if we will achieve profitability and, if so, whether we will be able to sustain it. Our ability to produce revenue and achieve profitability is dependent on our ability to complete the development of RVT-101, obtain necessary regulatory approvals, and have RVT-101 manufactured and successfully marketed. We cannot assure you that we will be profitable even if we successfully commercialize RVT-101. If we do successfully obtain regulatory approval to market RVT-101, our revenues will be dependent, in part, upon, among other things, the size of the markets in the territories for which we gain regulatory approval, the number of competitors in such markets, the accepted price for RVT-101 and whether we own the commercial rights for that territory. If the indication approved by regulatory authorities is narrower than we expect, or the treatment population is narrowed by competition, physician choice or treatment guidelines, we may not generate significant revenue from sales of RVT-101, even if approved. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Failure to become and remain profitable may adversely affect the market price of our common shares and our ability to raise capital and continue operations. As of March 31, 2015, we had an accumulated deficit of $21.0 million.

We expect our research and development expenses to be significant in connection with our planned Phase 3 pivotal program for RVT-101 for the treatment of Alzheimer's disease. In addition, if we obtain regulatory approval for RVT-101, we expect to incur increased sales and marketing expenses. As a result, we expect to continue to incur significant and increasing operating losses and negative cash flows for the foreseeable future. These losses have had and will continue to have an adverse effect on our financial position and working capital.

Our auditors have issued a going concern opinion on our financial statements as of March 31, 2015 and for the period from October 31, 2014 (date of inception) to March 31, 2015, expressing substantial doubt that we can continue as an ongoing business due to insufficient capital for us to fund our operations. Our financial statements do not include any adjustments that may result from the outcome of this uncertainty. If we are unable to successfully complete this offering, we will need to create alternate financing or operational plans to continue as a going concern.

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We are heavily dependent on the success of RVT-101, our only product candidate, which is still under clinical development, and if RVT-101 does not receive regulatory approval or is not successfully commercialized, our business may be harmed.

We currently have no products that are approved for commercial sale and may never be able to develop marketable drug products. We expect that a substantial portion of our efforts and expenditures over the next few years will be devoted to RVT-101. Accordingly, our business currently depends heavily on the successful development, regulatory approval and commercialization of RVT-101. We cannot be certain that RVT-101 will receive regulatory approval or be successfully commercialized even if we receive regulatory approval. The research, testing, manufacturing, labeling, approval, sale, marketing and distribution of drug products are and will remain subject to extensive regulation by the FDA and other regulatory authorities in the United States and other countries that each have differing regulations. We are not permitted to market RVT-101 in the United States until it receives approval of a new drug application, or NDA, from the FDA, or in any foreign countries until it receives the requisite approval from such countries. We have not submitted an NDA to the FDA or comparable applications to other regulatory authorities and do not expect to be in a position to do so for the foreseeable future. Obtaining approval of an NDA is an extensive, lengthy, expensive and inherently uncertain process, and the FDA may delay, limit or deny approval of RVT-101 for many reasons, including:

We will require additional capital to fund our operations, and if we fail to obtain necessary financing, we may not be able to complete the development and commercialization of RVT-101.

We expect to spend substantial amounts to complete the development of, seek regulatory approvals for and commercialize RVT-101. These expenditures will include costs associated with our asset purchase

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agreement with Glaxo Group Limited and GlaxoSmithKline Intellectual Property Development Limited, collectively GSK. Under the terms of this agreement, we are obligated to make significant cash payments upon the achievement of specified development, regulatory and sales performance milestones, as well as royalty payments in connection with the sale of resulting products.

Even with the net proceeds of this offering, we may require additional capital to complete the development and potential commercialization of RVT-101 for mild-to-moderate Alzheimer's disease and the development of RVT-101 for other potential indications. If we are unable to raise capital when needed or on acceptable terms, we could be forced to delay, reduce or eliminate our development program or any future commercialization efforts. In addition, attempting to secure additional financing may divert the time and attention of our management from day-to-day activities and harm our product candidate development efforts.

Based upon our current operating plan, we believe that the net proceeds from this offering will enable us to fund our operating expenses and capital expenditure requirements through 2017 and the completion of our Phase 3 pivotal program for RVT-101 and the submission of our NDA to the FDA for the approval of RVT-101 in the United States. This estimate is based on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. Because the length of time and activities associated with successful development of RVT-101 is highly uncertain, we are unable to estimate the actual funds we will require for development and any approved marketing and commercialization activities. Our future funding requirements, both near and long-term, will depend on many factors, including, but not limited to:

We cannot be certain that additional funding will be available on acceptable terms, or at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development or commercialization of RVT-101 or potentially discontinue operations.

We may be required to make significant payments in connection with our acquisition of RVT-101 from GSK.

In December 2014, we acquired rights to RVT-101 pursuant to an asset purchase agreement with GSK, or the GSK Agreement. Under the GSK Agreement, we are subject to significant obligations, including payment obligations upon achievement of specified milestones and royalties on product sales, as well as other material obligations. We are obligated to pay GSK an additional $5 million upon the earliest to occur of specified events that indicate a single Phase 3 trial may be sufficient to obtain FDA approval for RVT-101 for Alzheimer's disease. We are also obligated to pay GSK $35 million, $25 million and $10 million upon approval of RVT-101 in the United States, the European Union and Japan, respectively, as well as an additional one-time payment of $85 million for the first calendar year in which we achieve global net sales of $1.2 billion for RVT-101. Under the GSK Agreement we are also obligated to pay a fixed

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12.5% royalty based on net sales of RVT-101. If these payments become due under the terms of the GSK Agreement, we may not have sufficient funds available to meet our obligations and our development efforts may be materially harmed.

Raising additional funds by issuing securities may cause dilution to existing shareholders, and raising funds through lending and licensing arrangements may restrict our operations or require us to relinquish proprietary rights.

We expect that significant additional capital will be needed in the future to continue our planned operations. 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, strategic alliances and license and development agreements in connection with any collaborations. We do not have any committed external source of funds. To the extent that we raise additional capital by issuing equity securities, our existing shareholders' ownership may experience substantial dilution, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common shareholder. 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 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. Any debt financing we enter into may involve covenants that restrict our operations. These restrictive covenants may include limitations on additional borrowing and specific restrictions on the use of our assets as well as prohibitions on our ability to create liens, pay dividends, redeem our shares or make investments. If we are unable to raise additional funds through equity or debt financings when needed, 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 develop and market ourselves.

We currently have a limited number of employees who are employed by our wholly-owned subsidiary, Axovant Sciences, Inc., and we rely on Roivant Sciences, Inc. to provide various administrative, research and development and other services.

As of March 31, 2015, we had one employee and our wholly-owned subsidiary, Axovant Sciences, Inc., had seven employees. We rely on the administrative and support and research and development services provided by our affiliate, Roivant Sciences, Inc., a wholly-owned subsidiary of Roivant Sciences Ltd. We and Axovant Sciences, Inc., have entered into a services agreement with Roivant Sciences, Inc. Personnel and support staff that provide services to us under this services agreement are not required to, and we do not expect that they will, have as their primary responsibility the management and administration of our business or act exclusively for us. Under this services agreement, Roivant Sciences, Inc. has the discretion to determine which of its employees will perform services under the agreement. Further, each of Vivek Ramaswamy, Alan S. Roemer and Lawrence T. Friedhoff, M.D., Ph.D. is an employee of Roivant Sciences, Inc., and Marianne L. Romeo is an employee of Roivant Sciences Ltd. As a result, such individuals are unlikely to allocate all of their time and resources to us. For a description of the terms of the services agreement and these arrangements, see the section titled "Certain Relationships and Related Party Transactions."

Roivant Sciences, Inc. has limited financing and accounting and other resources. If Roivant Sciences, Inc. fails to perform its obligations in accordance with the terms of the services agreement, it could be difficult for us to operate our business. In addition, the termination of our relationship with Roivant Sciences, Inc. and any delay in appointing or finding a suitable replacement provider (if one exists) could make it difficult for us to operate our business. Any failure by Roivant Sciences, Inc. to effectively manage our administrative,

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research and development or other services could harm our business, financial condition and results of operations.

We will need to expand our organization, and we may experience difficulties in managing this growth, which could disrupt our operations.

As of March 31, 2015, we had one employee and our wholly-owned subsidiary, Axovant Sciences, Inc., had seven employees. We expect to hire, either directly or through Axovant Sciences, Inc., additional employees for our managerial, clinical, scientific and engineering, operational, sales and marketing teams. We may have operational difficulties in connection with identifying, hiring and integrating new personnel. Future growth would impose significant additional responsibilities on our management, including the need to identify, recruit, maintain, motivate and integrate additional employees, consultants and contractors. Also, our management may need to divert a disproportionate amount of its attention away from our day-to-day activities and devote a substantial amount of time to managing these growth activities. We may not be able to effectively manage the expansion of our operations, which may result in weaknesses in our infrastructure, give rise to operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining employees. Our expected growth could require significant capital expenditures and may divert financial resources from other projects, such as the development of product candidates. If our management is unable to effectively manage our growth, our expenses may increase more than expected, our ability to generate and/or grow revenues could be reduced, and we may not be able to implement our business strategy. Our future financial performance and our ability to commercialize RVT-101 and compete effectively will depend, in part, on our ability to effectively manage any future growth.

Many of the other pharmaceutical companies that we compete against for qualified personnel and consultants have greater financial and other resources, different risk profiles and a longer history in the industry than we do. They also may provide more diverse opportunities and better chances for career advancement. Some of these characteristics may be more appealing to high-quality candidates and consultants than what we have to offer. If we are unable to continue to attract and retain high-quality personnel and consultants, the rate and success at which we can discover and develop product candidates and our business will be limited.

Our employees, independent contractors, principal investigators, consultants, commercial collaborators, service providers and other vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could have an adverse effect on our results of operations.

We are exposed to the risk that our employees and contractors, including principal investigators, consultants, commercial collaborators, service providers and other vendors may engage in fraudulent or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct or other unauthorized activities that violate the laws and regulations of the FDA and other similar regulatory bodies, including those laws that require the reporting of true, complete and accurate information to such regulatory bodies; manufacturing standards; federal and state healthcare fraud and abuse and health regulatory laws and other similar foreign fraudulent misconduct laws; or laws that require the true, complete and accurate reporting of financial information or data. Activities subject to these laws also involve the improper use or misrepresentation of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. It is not always possible to identify and deter third-party 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 be in compliance with such 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 and financial results, including the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs,

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reputational harm, diminished profits and future earnings, and curtailment of our operations, any of which could adversely affect our ability to operate our business and our results of operations.

Our business and operations would suffer in the event of system failures.

Our computer systems, as well as those of Axovant Sciences, Inc., Roivant Sciences, Inc. and our CROs and other contractors and consultants, are vulnerable to damage from computer viruses, unauthorized access, natural disasters (including hurricanes), terrorism, war and telecommunication and electrical failures. If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our drug development programs. For example, the loss of preclinical or clinical trial data from completed, ongoing or planned trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. 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 and the further development of RVT-101 or any future product candidate could be delayed.

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

The use of RVT-101 in clinical trials and the sale of any products for which we obtain marketing approval exposes us to the risk of product liability claims. Product liability claims might be brought against us by consumers, health care providers, pharmaceutical companies or others selling or otherwise coming into contact with our products. On occasion, large judgments have been awarded in class action lawsuits based on drugs that had unanticipated adverse effects. If we cannot successfully defend against product liability claims, we could incur substantial liability and costs. In addition, regardless of merit or eventual outcome, product liability claims may result in:

The product liability insurance we currently carry, and any additional product liability insurance coverage we acquire in the future, may not be sufficient to reimburse us for any expenses or losses we may suffer. Moreover, insurance coverage is becoming increasingly expensive and in the future we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses due to liability. If we obtain marketing approval for RVT-101, we intend to acquire insurance coverage to include the sale of commercial products; however, we may be unable to obtain product liability insurance on commercially reasonable terms or in adequate amounts. A successful product liability claim or series of claims brought against us could cause our share price to decline and, if judgments exceed our insurance coverage, could adversely affect our results of operations and business, including preventing or limiting the commercialization of any product candidates we develop.

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Risks Related to Clinical Development, Regulatory Approval and Commercialization

Clinical trials are very expensive, time-consuming, difficult to design and implement and involve an uncertain outcome.

Our only product candidate, RVT-101, is still in development and will require extensive clinical testing before we are prepared to submit an NDA for regulatory approval. We cannot predict with any certainty if or when we might submit an NDA for regulatory approval for RVT-101 or whether any such NDA will be approved by the FDA. Human clinical trials are very expensive and difficult to design and implement, in part because they are subject to rigorous regulatory requirements. For instance, the FDA may not agree with our proposed endpoints for any clinical trial of RVT-101, which may delay the commencement of our clinical trials. The clinical trial process is also time-consuming. We estimate that clinical trials of RVT-101 will take at least several years to complete. Furthermore, failure can occur at any stage of the trials, and we could encounter problems that cause us to abandon or repeat clinical trials. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through preclinical studies and initial clinical trials, and the results of early clinical trials of RVT-101 therefore may not be predictive of the results of our planned Phase 3 pivotal program. A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier trials.

The commencement and completion of clinical trials may be delayed by several factors, including:

Further, we, the FDA or an institutional review board, or IRB, at a clinical trial site may suspend our clinical trials at any time if it appears that we or our collaborators are failing to conduct a trial in accordance with regulatory requirements, including the FDA's current Good Clinical Practice, or GCP, regulations, that we are exposing participants to unacceptable health risks, or if the FDA finds deficiencies in our investigational new drug, or IND, submissions or the conduct of these trials. Therefore, we cannot predict with any certainty the schedule for commencement and completion of future clinical trials. If we experience delays in the commencement or completion of our clinical trials, or if we terminate a clinical trial prior to completion, the commercial prospects of RVT-101 could be harmed, and our ability to generate revenues from RVT-101 may be delayed. In addition, any delays in our clinical trials could increase our costs, slow down the approval process and jeopardize our ability to commence product sales and generate revenues. Any of these occurrences may harm our business, financial condition and results of operations.

Moreover, principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive compensation in connection with such services. Under certain circumstances, we may be required to report some of these relationships to the FDA. The FDA may conclude that a financial relationship between us and a principal investigator has created a conflict of interest or otherwise affected interpretation of the study. FDA may therefore question the integrity of the data generated at the applicable clinical trial site and the utility of the clinical trial itself may be jeopardized. This could result in

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a delay in approval, or rejection, of our marketing applications by the FDA and may ultimately lead to the denial of marketing approval of one or more of our product candidates.

In addition, we recently acquired worldwide rights to RVT-101 and were not involved in the development of RVT-101 prior to December 2014. We may experience difficulties in the transition of this product candidate from GSK to us, which may result in delays in clinical trials as well as problems in our development efforts and regulatory filings, particularly if we do not receive all of the necessary products, information, reports and data from GSK in a timely manner. Further, we have had no involvement with or control over the preclinical and clinical development of RVT-101 to date. We are dependent on GSK having conducted such research and development in accordance with the applicable protocol, legal, regulatory and scientific standards, having accurately reported the results of all clinical trials conducted prior to our acquisition of RVT-101 and having correctly collected and interpreted the data from these trials. These problems could result in increased costs and delays in the development of RVT-101 which could adversely affect any future revenues from this product candidate.

The results of our clinical trials may not support our RVT-101 claims.

Even if our clinical trials are completed as planned, we cannot be certain that their results will support the safety and effectiveness of RVT-101 for Alzheimer's disease or any other potential indication. Success in preclinical testing and early clinical trials does not ensure that later clinical trials will be successful, and we cannot be sure that the results of later clinical trials will replicate the results of prior clinical trials and preclinical testing. A failure of a clinical trial to meet its predetermined endpoints would likely cause us to abandon a product candidate and may delay development of any other product candidates. Any delay in, or termination of, our clinical trials will delay the submission of our NDAs with the FDA and, ultimately, our ability to commercialize RVT-101 and generate product revenues.

Enrollment and retention of patients in clinical trials is an expensive and time-consuming process and could be made more difficult or rendered impossible by multiple factors outside our control.

We may encounter delays in enrolling, or be unable to enroll, a sufficient number of patients to complete any of our clinical trials, and even once enrolled we may be unable to retain a sufficient number of patients to complete any of our trials. Patient enrollment and retention in clinical trials depends on many factors, including the size of the patient population, the nature of the trial protocol, the existing body of safety and efficacy data with respect to the study drug, the number and nature of competing treatments and ongoing clinical trials of competing drugs for the same indication, the proximity of patients to clinical sites and the eligibility criteria for the study. Furthermore, any negative results we may report in clinical trials of our product candidate may make it difficult or impossible to recruit and retain patients in other clinical trials of that same product candidate. Delays or failures in planned patient enrollment or retention may result in increased costs, program delays or both, which could have a harmful effect on our ability to develop RVT-101, or could render further development impossible. In addition, we expect to rely on CROs and clinical trial sites to ensure proper and timely conduct of our future clinical trials and, while we intend to enter into agreements governing their services, we will be limited in our ability to compel their actual performance.

We face significant competition from other biotechnology and pharmaceutical companies, and our operating results will suffer if we fail to compete effectively.

Drug development is highly competitive and subject to rapid and significant technological advancements. As a significant unmet medical need exists for the treatment of Alzheimer's disease, there are several large and small pharmaceutical companies focused on delivering therapeutics for the treatment of Alzheimer's disease. Further, it is likely that additional drugs will become available in the future for the treatment of Alzheimer's disease.

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We are aware of several companies that are working to develop drugs that would compete against RVT-101 for Alzheimer's disease treatment. Many of our existing or potential competitors have substantially greater financial, technical and human resources than we do and significantly greater experience in the discovery and development of product candidates, as well as in obtaining regulatory approvals of those product candidates in the United States and in foreign countries. Our current and potential future competitors also have significantly more experience commercializing drugs that have been approved for marketing. Mergers and acquisitions in the pharmaceutical and biotechnology industries could result in even more resources being concentrated among a small number of our competitors.

Competition may increase further as a result of advances in the commercial applicability of technologies and greater availability of capital for investment in these industries. Our competitors may succeed in developing, acquiring or licensing, on an exclusive basis, drugs that are more effective or less costly than any product candidate that we may develop.

We will face competition from other drugs currently approved or that will be approved in the future for the treatment of Alzheimer's disease. Therefore, our ability to compete successfully will depend largely on our ability to:

The availability of our competitors' products could limit the demand, and the price we are able to charge, for any product candidate we develop. The inability to compete with existing or subsequently introduced drugs would have an adverse impact on our business, financial condition and prospects.

Established pharmaceutical companies may invest heavily to accelerate discovery and development of novel compounds or to in-license novel compounds that could make RVT-101 less competitive. In addition, any new product that competes with an approved product must demonstrate compelling advantages in efficacy, convenience, tolerability and safety in order to overcome price competition and to be commercially successful. Accordingly, our competitors may succeed in obtaining patent protection, discovering, developing, receiving FDA approval for or commercializing medicines before we do, which would have an adverse impact on our business and results of operations.

If we are not able to obtain required regulatory approvals, we will not be able to commercialize RVT-101, and our ability to generate revenue will be materially impaired.

RVT-101 and the activities associated with its development and commercialization, including its design, research, testing, manufacture, safety, efficacy, recordkeeping, labeling, packaging, storage, approval, advertising, promotion, sale and distribution, are subject to comprehensive regulation by the FDA and other regulatory agencies in the United States and by the EMA and similar regulatory authorities outside the United States. Failure to obtain marketing approval for RVT-101 will prevent us from commercializing it.

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We have not received approval from regulatory authorities to market any product candidate in any jurisdiction, and it is possible that neither RVT-101 nor any product candidates we may seek to develop in the future will ever obtain the appropriate regulatory approvals necessary for us to commence product sales. Prior to submitting an NDA to the FDA, a marketing authorization application, or MAA, to the EMA, or an equivalent application to other foreign regulatory authorities for approval of RVT-101, we will need to complete our planned Phase 3 pivotal program.

We expect to rely on third-party CROs and consultants to assist us in filing 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 RVT-101's safety and efficacy for that indication. Securing marketing approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the regulatory authorities.

RVT-101 may cause adverse effects or have other properties that could delay or prevent its regulatory approval or limit the scope of any approved label or market acceptance.

Adverse events caused by RVT-101 could cause us, other reviewing entities, clinical trial sites or regulatory authorities to interrupt, delay or halt clinical trials and could result in the denial of regulatory approval. If an unacceptable frequency or severity of adverse events are reported in our clinical trials for RVT-101 or any future product candidates, our ability to obtain regulatory approval for such product candidates may be negatively impacted.

Furthermore, if any of our products are approved and then cause serious or unexpected side effects, a number of potentially significant negative consequences could result, including:

Any of these events could prevent us from achieving or maintaining market acceptance of the affected product candidate and could substantially increase the costs of commercializing RVT-101.

Even if we obtain FDA approval for RVT-101 in the United States, we may never obtain approval for or commercialize it in any other jurisdiction, which would limit our ability to realize its full market potential.

In order to market any products in any particular jurisdiction, we must establish and comply with numerous and varying regulatory requirements on a country-by-country basis regarding safety and efficacy. Approval by FDA in the United States 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

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delay or prevent the introduction of our products in those countries. We do not have any product candidates approved for sale in any jurisdiction, including in international markets, and we do not have experience in obtaining regulatory approval in international markets. 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 any product we develop will be unrealized.

Even if we obtain regulatory approval for RVT-101, we will still face extensive regulatory requirements and our products may face future development and regulatory difficulties.

Any product candidate for which we obtain marketing approval, along with the manufacturing processes, post-approval clinical data, labeling, packaging, distribution, adverse event reporting, storage, recordkeeping, export, import, advertising and promotional activities for such product, among other things, will be subject to extensive and ongoing requirements of and review by the FDA and other regulatory authorities. These requirements include submissions of safety and other post-marketing information and reports, establishment registration and drug listing requirements, continued compliance with current Good Manufacturing Practice, or cGMP, requirements relating to manufacturing, quality control, quality assurance and corresponding maintenance of records and documents, requirements regarding the distribution of samples to physicians and recordkeeping and current GCP requirements for any clinical trials that we conduct post-approval. Even if marketing approval of a product candidate is granted, the approval may be subject to limitations on the indicated uses for which the product may be marketed or to the conditions of approval, including any requirement to implement a REMS. If RVT-101 receives marketing approval, the accompanying label may limit the approved use of our drug, which could limit sales of the product.

The FDA may also impose requirements for costly post-marketing studies or clinical trials and surveillance to monitor the safety or efficacy of the product. The FDA closely regulates the post-approval marketing and promotion of drugs to ensure drugs are marketed only for the approved indications and in accordance with the provisions of the approved labeling. The FDA imposes stringent restrictions on manufacturers' communications regarding off-label use and if we do not market our products for their approved indications, we may be subject to enforcement action for off-label marketing. Violations of the Federal Food, Drug, and Cosmetic Act relating to the promotion of prescription drugs may lead to FDA enforcement actions and investigations alleging violations of federal and state health care 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 products, manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may yield various results, including:

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The FDA's policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of RVT-101 or any future product candidate. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained.

Even if RVT-101 receives marketing approval, it may fail to achieve market acceptance by physicians, patients, third-party payors or others in the medical community necessary for commercial success.

If RVT-101 receives marketing approval, it may nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community. If it does not achieve an adequate level of acceptance, we may not generate significant product revenues and become profitable. The degree of market acceptance of RVT-101, if approved for commercial sale, will depend on a number of factors, including but not limited to:

Because we expect sales of RVT-101, if approved, to generate substantially all of our product revenues for the foreseeable future, the failure of this product to find market acceptance would harm our business and could require us to seek additional financing.

If we are unable to establish sales, marketing and distribution capabilities either on our own or in collaboration with third-parties, we may not be successful in commercializing RVT-101, if approved.

We do not have any infrastructure for the sales, marketing or distribution of our products, and the cost of establishing and maintaining such an organization may exceed the cost-effectiveness of doing so. In order to market any product that may be approved, we must build our sales, distribution, marketing, managerial and other non-technical capabilities or make arrangements with third parties to perform these services. To achieve commercial success for any product for which we have obtained marketing approval, we will need a sales and marketing organization.

We expect to build a focused sales, distribution and marketing infrastructure to market RVT-101 in the United States and European Union, if approved. There are significant expenses and risks involved with establishing our own sales, marketing and distribution capabilities, including our ability to hire, retain and appropriately incentivize qualified individuals, generate sufficient sales leads, provide adequate training to sales and marketing personnel, and effectively manage a geographically dispersed sales and marketing team. Any failure or delay in the development of our internal sales, marketing and distribution capabilities could delay any product launch, which would adversely impact the commercialization of RVT-101. For

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example, if the commercial launch of RVT-101 for which we recruit a sales force and establish marketing capabilities is delayed or does not occur for any reason, we would have prematurely or unnecessarily incurred these commercialization expenses. This may be costly, and our investment would be lost if we cannot retain or reposition our sales and marketing personnel.

Factors that may inhibit our efforts to commercialize our products on our own include:

We do not anticipate having the resources in the foreseeable future to allocate to the sales and marketing of RVT-101 in certain markets overseas. Therefore, our future success will depend, in part, on our ability to enter into and maintain collaborative relationships for such capabilities, the collaborator's strategic interest in the product and such collaborator's ability to successfully market and sell the product. We intend to pursue collaborative arrangements regarding the sale and marketing of RVT-101, if approved, for certain markets overseas; however, we cannot assure you that we will be able to establish or maintain such collaborative arrangements, or if able to do so, that they will have effective sales forces. To the extent that we depend on third parties for marketing and distribution, any revenues we receive will depend upon the efforts of such third parties, and there can be no assurance that such efforts will be successful.

If we are unable to build our own sales force or negotiate a collaborative relationship for the commercialization of RVT-101 we may be forced to delay the potential commercialization of RVT-101 or reduce the scope of our sales or marketing activities for RVT-101. If we elect to increase our expenditures to fund commercialization activities ourselves, we will 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 will not be able to bring RVT-101 to market or generate product revenue. We could enter into arrangements with collaborative partners or otherwise at an earlier stage than otherwise would be ideal and we may be required to relinquish rights to RVT-101 or otherwise agree to terms unfavorable to us, any of which may have an adverse effect on our business, operating results and prospects.

If we are unable to establish adequate sales, marketing and distribution capabilities, either on our own or in collaboration with third parties, we will not be successful in commercializing RVT-101 and may not become profitable. We will be competing with many companies that currently have extensive and well-funded marketing and sales operations. Without an internal team or the support of a third party to perform marketing and sales functions, we may be unable to compete successfully against these more established companies.

If we obtain approval to commercialize any products outside of the United States, a variety of risks associated with international operations could materially adversely affect our business.

If RVT-101 is approved for commercialization, we intend to enter into agreements with third parties to market it in certain jurisdictions outside the United States. We expect that we will be subject to additional risks related to international operations or entering into international business relationships, including:

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We have no prior experience in these areas. In addition, there are complex regulatory, tax, labor and other legal requirements imposed by both the European Union and many of the individual countries in Europe with which we will need to comply. Many U.S.-based biopharmaceutical companies have found the process of marketing their own products in Europe to be very challenging.

Our current and future relationships with investigators, health care professionals, consultants, third-party payors, and customers will be subject to applicable healthcare regulatory laws, which could expose us to penalties.

Our business operations and current and future arrangements with investigators, healthcare professionals, consultants, third-party payors and customers, may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations. These laws may constrain the business or financial arrangements and relationships through which we conduct our operations, including how we research, market, sell and distribute our products for which we obtain marketing approval. Such laws include:

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Efforts to ensure that our current and future 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 do not comply with current or future statutes, regulations, agency guidance or case law involving applicable healthcare laws. If our operations are found to be in violation of any of these or any other health regulatory laws that may apply to us, we may be subject to significant penalties, including the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, disgorgement, individual imprisonment, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations, any of which could adversely affect our ability to operate our business and our results of operations. Defending against any such actions can be costly, time-consuming and may require significant financial and personnel resources. Therefore, even if we are successful in defending against any such actions that may be brought against us, our business may be impaired.

Recently enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize RVT-101 and affect the prices we may obtain.

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 RVT-101, 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 Education Reconciliation Act, collectively the Affordable Care Act, 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. Although it is too early to

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determine the full effect of the Affordable Care Act, the law has continued the downward pressure on pharmaceutical pricing, especially under the Medicare program, and increased the industry's regulatory burdens and operating costs. Among the provisions of the Affordable Care Act of importance to our potential drug candidates are the following:

In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted. For example, in August 2011, the President signed into law the Budget Control Act of 2011, which, among other things, created the Joint Select Committee on Deficit Reduction to recommend to Congress proposals in spending reductions. The Joint Select Committee did not achieve a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, triggering the legislation's automatic reduction to several government programs. This included further reductions to Medicare payments to providers of 2% per fiscal year, which went into effect in April 2013 and, due to subsequent legislative amendments to the statute, will stay in effect through 2024 unless additional Congressional action is taken. Additionally, in January 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, reduced Medicare payments to several providers.

Moreover, the Drug Supply Chain Security Act, which was enacted in 2012 as part of the Food and Drug Administration Safety and Innovation 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.

We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our product candidates or additional pricing pressures.

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Coverage and adequate reimbursement may not be available for RVT-101, which could make it difficult for us to sell our products profitably.

Market acceptance and sales of any product candidates that we develop, will depend in part on the extent to which reimbursement for these products and related treatments will be available from third-party payors, including government health administration authorities and private health insurers. Third-party payors decide which drugs they will pay for and establish reimbursement levels. Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own coverage and reimbursement policies. However, decisions regarding the extent of coverage and amount of reimbursement to be provided for any product candidates that we develop will be made on a plan-by-plan basis. One payor's determination to provide coverage for a product does not assure that other payors will also provide coverage, and adequate reimbursement, for the product. Additionally, a third-party payor's decision to provide coverage for a drug does not imply that an adequate reimbursement rate will be approved. Each plan determines whether or not it will provide coverage for a drug, what amount it will pay the manufacturer for the drug, and on what tier of its formulary the drug will be placed. The position of a drug on a formulary generally determines the co-payment that a patient will need to make to obtain the drug and can strongly influence the adoption of a drug by patients and physicians. Patients who are prescribed treatments for their conditions and providers prescribing such services generally rely on third-party payors to reimburse all or part of the associated healthcare costs. Patients are unlikely to use our products unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our products.

A primary trend in the U.S. healthcare industry and elsewhere is cost containment. Third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications. We cannot be sure that coverage and reimbursement will be available for any product that we commercialize and, if reimbursement is available, what the level of reimbursement will be. Inadequate coverage and reimbursement may impact the demand for, or the price of, any product for which we obtain marketing approval. If coverage and adequate reimbursement are not available, or are available only to limited levels, we may not be able to successfully commercialize any product candidates that we develop.

Additionally, there have been a number of legislative and regulatory proposals to change the healthcare system in the United States and in some foreign jurisdictions that could affect our ability to sell any future drugs profitably. These legislative and regulatory changes may negatively impact the reimbursement for any future drugs, following approval.

Risks Related to Our Dependence on Third Parties

We do not have our own manufacturing capabilities and will rely on third parties to produce clinical and commercial supplies of RVT-101 and any future product candidate.

We have no experience in drug formulation or manufacturing and do not own or operate, and we do not expect to own or operate, facilities for product manufacturing, storage and distribution, or testing. While RVT-101 was being developed by GSK, it was also being manufactured by GSK. We expect that the drug substance transferred from GSK under the GSK Agreement will be sufficient for us to complete our planned Phase 3 pivotal program, and we have contracted with a third-party to fill, finish, supply, store and distribute RVT-101 for this program. We also will rely on third-party manufacturers to supply us with sufficient quantities of RVT-101 to be used, if approved, for the commercialization of RVT-101. If we are unable to initiate or continue our relationship with one or more of these third-party contractors, we could experience delays in our development efforts as we locate and qualify new manufacturers.

Further, our reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured product candidates ourselves, including:

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Any of these events could lead to clinical trial delays, failure to obtain regulatory approval or impact our ability to successfully commercialize our products. Some of these events could be the basis for FDA action, including injunction, recall, seizure, or total or partial suspension of production.

We intend to rely on third parties to conduct, supervise and monitor our clinical trials, and if those third parties perform in an unsatisfactory manner, it may harm our business.

We intend to rely on CROs and clinical trial sites to ensure the proper and timely conduct of our clinical trials, and we expect to have limited influence over their actual performance.

We intend to rely upon CROs to monitor and manage data for our clinical programs, as well as the execution of future nonclinical studies. We expect to control only certain aspects of our CROs' activities. Nevertheless, we will be responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol, legal, regulatory and scientific standards and our reliance on the CROs does not relieve us of our regulatory responsibilities.

We and our CROs will be required to comply with the Good Laboratory Practices and GCPs, which are regulations and guidelines enforced by the FDA and are also required by the Competent Authorities of the Member States of the European Economic Area and comparable foreign regulatory authorities in the form of International Conference on Harmonization guidelines for any of our product candidates that are in preclinical and clinical development. The Regulatory authorities enforce GCPs through periodic inspections of trial sponsors, principal investigators and clinical trial sites. If we or our CROs fail to comply with GCPs, 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. Accordingly, if our CROs fail to comply with these regulations or fail to recruit a sufficient number of subjects, we may be required to repeat clinical trials, which would delay the regulatory approval process.

Our CROs will not be our employees, and we will not control whether or not they devote sufficient time and resources to our future clinical and nonclinical programs. These CROs may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical trials, or other drug development activities which could harm our competitive position. We face the risk of potential unauthorized disclosure or misappropriation of our intellectual property by CROs, which may reduce our trade secret protection and allow our potential competitors to access and exploit our proprietary technology. If our CROs do not successfully carry out their contractual duties or obligations, fail to meet

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expected deadlines, or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for any other reasons, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain regulatory approval for, or successfully commercialize any product candidate that we develop. As a result, our financial results and the commercial prospects for any product candidate that we develop would be harmed, our costs could increase, and our ability to generate revenues could be delayed.

If our relationship with these CROs terminate, we may not be able to enter into arrangements with alternative CROs or do so on commercially reasonable terms. Switching or adding additional CROs involves substantial cost and requires management time and focus. In addition, there is a natural transition period when a new CRO commences work. As a result, delays occur, which can materially impact our ability to meet our desired clinical development timelines. Though we intend to carefully manage our relationships with our CROs, there can be no assurance that we will not encounter challenges or delays in the future or that these delays or challenges will not have an adverse impact on our business, financial condition and prospects.

Risks Related to Our Intellectual Property

If we are unable to obtain and maintain patent protection for our technology and products or if the scope of the patent protection obtained is not sufficiently broad, we may not be able to compete effectively in our markets.

We rely upon a combination of patents, trade secret protection and confidentiality agreements to protect the intellectual property related to our drug development programs and product candidates. Our success depends in large part on our ability to obtain and maintain patent protection in the United States and other countries with respect to RVT-101 and any future product candidates. We seek to protect our proprietary position by filing patent applications in the United States and abroad related to our development programs and product candidates. The patent prosecution process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner.

It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. The patent applications that we own or in-license may fail to result in issued patents with claims that cover RVT-101 or any future product candidate in the United States or in other foreign countries. There is no assurance that all of the potentially relevant prior art relating to our patents and patent applications has been found, which can invalidate a patent or prevent a patent from issuing from a pending patent application. Even if patents do successfully issue and even if such patents cover RVT-101 or any future product candidate, third parties may challenge their validity, enforceability or scope, which may result in such patents being narrowed, invalidated, or held unenforceable. Any successful opposition to these patents or any other patents owned by or licensed to us could deprive us of rights necessary for the successful commercialization of any product candidates or companion diagnostic that we may develop. Further, if we encounter delays in regulatory approvals, the period of time during which we could market a product candidate and companion diagnostic under patent protection could be reduced.

If the patent applications we hold or have in-licensed with respect to our development programs and product candidates fail to issue, if their breadth or strength of protection is threatened, or if they fail to provide meaningful exclusivity for RVT-101 or any future product candidate, it could dissuade companies from collaborating with us to develop product candidates, and threaten our ability to commercialize, future drugs. Any such outcome could have a materially adverse effect on our business.

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. In addition, the laws of foreign countries may not protect our rights to the same extent as the laws of the

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United States. For example, European patent law restricts the patentability of methods of treatment of the human body more than United States law does. Publications of discoveries in scientific literature often lag behind the actual discoveries, and patent applications in the United States and 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 we were the first to make the inventions claimed in our owned or licensed patents or pending patent applications, or that we were the first to file for patent protection of such inventions. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. Our pending and future patent applications may not result in patents being issued which protect our technology or products, in whole or in part, or which effectively prevent others from commercializing competitive technologies and products. Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection.

Recent 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. On September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law. The Leahy-Smith Act includes a number of significant changes to United States patent law. These include provisions that affect the way patent applications are prosecuted and may also affect patent litigation. The United States Patent Office recently developed new regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first to file provisions, only became effective on March 16, 2013. Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of our business. However, the Leahy-Smith 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, all of which could have an adverse effect on our business and financial condition.

Moreover, we may be subject to a third party pre-issuance submission of prior art to the U.S. Patent and Trademark Office, or USPTO, or become involved in opposition, derivation, reexamination, inter partes review, post-grant review or interference proceedings challenging our patent rights or the patent rights of others. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third party patent rights. In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, it could dissuade companies from collaborating with us to license, develop or commercialize current or future product candidates.

The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our owned and licensed patents may be challenged in the courts or patent offices in the United States and abroad. Such challenges may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and products. Moreover, patents have a limited lifespan. In the United States, the natural expiration of a patent is generally 20 years after it is filed. Various extensions may be available; however the life of a patent, and the protection it affords, is limited. Without patent protection for our current or future product candidates, we may be open to competition from generic versions of such products. 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. 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.

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Obtaining and maintaining our 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.

Periodic maintenance fees on any issued patent are due to be paid to the USPTO and other foreign patent agencies in several stages over the lifetime of the patent. The USPTO and various foreign national or international patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. While an inadvertent 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 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 patent rights include, but are not limited to, failure to timely file national and regional stage patent applications based on our international patent application, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. If we or our licensors fail to maintain the patents and patent applications covering RVT-101 or any future product candidate, our competitors might be able to enter the market, which would have an adverse effect on our business.

Third party claims or litigation alleging infringement of patents or other proprietary rights or seeking to invalidate patents or other proprietary rights, may delay or prevent the development and commercialization of RVT-101 and any future product candidate.

Our commercial success depends in part on our avoiding infringement and other violations of the patents and proprietary rights of third parties. There is a substantial amount of litigation, both within and outside the United States, involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries, including patent infringement lawsuits, interferences, derivation and administrative law proceedings, inter party review, and post-grant review before the USPTO, as well as oppositions and similar processes in foreign jurisdictions. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we and our collaborators are developing product candidates. As the biotechnology and pharmaceutical industries expand and more patents are issued, and as we gain greater visibility and market exposure as a public company, the risk increases that our product candidates or other business activities may be subject to claims of infringement of the patent and other proprietary rights of third parties. Third parties may assert that we are infringing their patents or employing their proprietary technology without authorization. We have conducted searches for information in support of patent protection and otherwise evaluating the patent landscape for RVT-101, and, based on these searches and evaluations to date, we do not believe that there are valid patents which contain granted claims that could be asserted with respect to RVT-101, however, we may be incorrect.

There may be third-party patents or patent applications with claims to materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of our product candidates. Because patent applications can take many years to issue, there may be currently pending patent applications which may later result in issued patents that our product candidates may infringe. In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents. If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of any of our product candidates, any molecules formed during the manufacturing process or any final product itself, the holders of any such patents may be able to block our ability to commercialize such product candidate unless we obtained a license under the applicable patents, or until such patents expire. Similarly, if any third-party patent were held by a court of competent jurisdiction to cover aspects of our formulations, processes for manufacture or methods of use, including combination therapy, the holders of any such patent may be able to block our ability to develop and commercialize the applicable product candidate unless we obtained a license or until such patent expires. In either case, such a license may not be available on commercially reasonable terms or at all. In addition, we may be subject to claims that we are infringing

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other intellectual property rights, such as trademarks or copyrights, or misappropriating the trade secrets of others, and to the extent that our employees, consultants or contractors use intellectual property or proprietary information owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.

Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize one or more of our product candidates. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business. In the event of a successful infringement or other intellectual property claim against us, we may have to pay substantial damages, including treble damages and attorneys' fees for willful infringement, obtain one or more licenses from third parties, pay royalties or redesign our affected products, which may be impossible or require substantial time and monetary expenditure. We cannot predict whether any such license would be available at all or whether it would be available on commercially reasonable terms. Furthermore, even in the absence of litigation, we may need to obtain licenses from third parties to advance our research or allow commercialization of our product candidates, and we have done so from time to time. We may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all. In that event, we would be unable to further develop and commercialize one or more of our product candidates, which could harm our business significantly. We cannot provide any assurances that third-party patents do not exist which might be enforced against our drugs or product candidates, resulting in either an injunction prohibiting our sales, or, with respect to our sales, an obligation on our part to pay royalties and/or other forms of compensation to third parties.

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

Competitors may infringe or otherwise violate our patents, the patents of our licensors or our other intellectual property rights. To counter infringement or unauthorized use, we may be required to file legal claims, which can be expensive and time-consuming. In addition, in an infringement proceeding, a court may decide that a patent of ours or our licensors is not valid or is unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation or defense proceedings could put one or more of our patents at risk of being invalidated or interpreted narrowly and could put our patent applications at risk of not issuing. The initiation of a claim against a third party may also cause the third party to bring counter claims against us such as claims asserting that our patents are invalid or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, non-enablement or lack of statutory subject matter. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant material information from the USPTO, or made a materially misleading statement, during prosecution. Third parties may also raise similar validity claims before the USPTO in post-grant proceedings such as ex parte reexaminations, inter partes review, or post-grant review, or oppositions or similar proceedings outside the United States, in parallel with litigation or even outside the context of litigation. The outcome following legal assertions of invalidity and unenforceability is unpredictable. We cannot be certain that there is no invalidating prior art, of which we and the patent examiner were unaware during prosecution. For the patents and patent applications that we have licensed, we may have limited or no right to participate in the defense of any licensed patents against challenge by a third party. If a defendant were to prevail on a legal assertion of invalidity or unenforceability, we would lose at least part, and perhaps all, of any future patent protection on our current or future product candidates. Such a loss of patent protection could harm our business.

We may not be able to prevent, alone or with our licensors, misappropriation of our intellectual property rights, particularly in countries where the laws may not protect those rights as fully as in the United States. Our business could be harmed if in litigation the prevailing party does not offer us a license on

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commercially reasonable terms. Any litigation or other proceedings to enforce our intellectual property rights may fail, and even if successful, may result in substantial costs and distract our management and other employees.

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 this type of 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 an adverse effect on the price of our common shares.

Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.

The United States has recently enacted and implemented wide-ranging patent reform legislation. The U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening 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 actions 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 patents that we have licensed or that we might obtain in the future.

We may not be able to protect our intellectual property rights throughout the world, which could impair our business.

Filing, prosecuting and defending patents covering RVT-101 and any future product candidate throughout the world would be prohibitively expensive. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we may obtain patent protection, but where patent enforcement is not as strong as that in the United States. These products may compete with our products in jurisdictions where we do not have any issued or licensed patents and any future patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing.

Our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will discover them or that our trade secrets will be misappropriated or disclosed.

Because we expect to rely on third parties to manufacture RVT-101 and any future product candidates, and we expect to collaborate with third parties on the development of RVT-101 and any future product candidates, we must, at times, share trade secrets with them. We also conduct joint research and development programs that may require us to share trade secrets under the terms of our research and development partnerships or similar agreements. We seek to protect our proprietary technology in part by entering into confidentiality agreements and, if applicable, material transfer agreements, consulting agreements or other similar agreements with our advisors, employees, third-party contractors and consultants prior to beginning research or disclosing proprietary information. These agreements typically limit the rights of the third parties to use or disclose our confidential information, including our trade secrets. Despite the contractual provisions employed when working with third parties, the need to share trade secrets and other confidential information increases the risk that such trade secrets become known by our competitors, are inadvertently incorporated into the technology of others, or are disclosed or used in violation of these agreements. Given that our proprietary position is based, in part, on our know-how and trade secrets, a competitor's discovery of our trade secrets or other unauthorized use or disclosure would impair our competitive position and may have an adverse effect on our business and results of operations.

In addition, these agreements typically restrict the ability of our advisors, employees, third-party contractors and consultants to publish data potentially relating to our trade secrets, although our agreements may contain certain limited publication rights. Despite our efforts to protect our trade secrets, our competitors

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may discover our trade secrets, either through breach of our agreements with third parties, independent development or publication of information by any of our third-party collaborators. A competitor's discovery of our trade secrets would impair our competitive position and have an adverse impact on our business.

We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of their former employers or other third parties.

We employ individuals who were previously employed at other biotechnology or pharmaceutical companies. Although we seek to protect our ownership of intellectual property rights by ensuring that our agreements with our employees, collaborators and other third parties with whom we do business include provisions requiring such parties to assign rights in inventions to us, we may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed confidential information of our employees' former employers or other third parties. We may also be subject to claims that former employers or other third parties have an ownership interest in our patents. Litigation may be necessary to defend against these claims. There is no guarantee of success in defending these claims, and if we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Even if we are successful, litigation could result in substantial cost and be a distraction to our management and other employees.

Risks Related to this Offering and Our Common Shares

No public market for our common shares currently exists, and a public market may not develop or be liquid enough for you to sell your shares quickly or at market price.

Prior to this offering, there has not been a public market for our common shares. If an active trading market for our common shares does not develop following this offering, you may not be able to sell your shares quickly or at the market price. An inactive market may also impair our ability to raise capital to continue to fund operations by selling common shares and may impair our ability to acquire other companies or technologies by using our common shares as consideration. The initial public offering price of our common shares will be determined by negotiations between us and representatives of the underwriters, and may not be indicative of the market prices of our common shares that will prevail in the trading market.

The market price of our common shares is likely to be highly volatile, and you may lose some or all of your investment.

The market price of our common shares is likely to be highly volatile and may be subject to wide fluctuations in response to a variety of factors, including the following:

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In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors, as well as general economic, political, regulatory and market conditions, may negatively affect the market price of our common shares, regardless of our actual operating performance. The market price of our common shares may decline below the initial public offering price, and you may lose some or all of your investment.

Volatility in our share price could subject us to securities class action litigation.

In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us because pharmaceutical companies have experienced significant share price volatility in recent years. If we face such litigation, it could result in substantial costs and a diversion of management's attention and resources, which could harm our business.

We expect to be a "controlled company" within the meaning of the applicable rules of the New York Stock Exchange and, as a result, will qualify for exemptions from certain corporate governance requirements. If we rely on these exemptions, you will not have the same protections afforded to shareholders of companies that are subject to such requirements.

Upon the closing of this offering, Roivant Sciences Ltd. will continue to control a majority of the voting power of our outstanding common shares. As a result, we expect to be a "controlled company" within the meaning of the New York Stock Exchange, or NYSE, corporate governance requirements. Under these rules, a company of which more than 50% of the voting power for the election of directors is held by an individual, group or another company is a "controlled company" and may elect not to comply with certain corporate governance requirements, including the requirements:

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We intend to use these exemptions upon the closing of this offering and we may continue to use all or some of these exemptions in the future. As a result, you may not have the same protections afforded to shareholders of companies that are subject to all of the NYSE corporate governance requirements.

Roivant Sciences Ltd. will continue to own a significant percentage of our common shares and will be able to exert significant control over matters subject to shareholder approval.

Roivant Sciences Ltd. is currently our only shareholder, and after this offering is completed we will continue to be controlled by Roivant Sciences Ltd. Upon the closing of this offering, Roivant Sciences Ltd. will beneficially own approximately          % of the voting power of our outstanding common shares, or          % if the underwriters exercise their option to purchase additional common shares from us in full. Therefore, even after this offering, they will have the ability to substantially influence us through this ownership position. For example, they 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. Roivant Sciences Ltd.'s interests may not always coincide with our corporate interests or the interests of other shareholders, and they may act in a manner with which you may not agree or that may not be in the best interests of our other shareholders. So long as they continue to own a significant amount of our equity, Roivant Sciences Ltd. will continue to be able to strongly influence or effectively control our decisions.

If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our share price and trading volume could decline.

The trading market for our common shares will depend, in part, on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts. If our financial performance fails to meet analyst estimates or one or more of the analysts who cover us downgrade our common shares or change their opinion of our common shares, our share price would likely decline. If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.

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

We have never declared or paid any cash dividends on our common shares. 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. As a result, capital appreciation, if any, of our common shares would be your sole source of gain on an investment in our common shares for the foreseeable future. Additionally, we are subject to Bermuda legal constraints that may affect our ability to pay dividends on our common shares and make other payments. See "Dividend Policy" for additional information.

Our management will have broad discretion in the use of the net proceeds from this offering and may not use them effectively.

Our management will have broad discretion in the application of the net proceeds from this offering and our shareholders will not have the opportunity as part of their investment decision to assess whether the net proceeds are being used appropriately. You may not agree with our decisions, and our use of the proceeds may not yield any return on your investment. Because of the number and variability of factors that will

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determine our use of the net proceeds from this offering, their ultimate use may vary substantially from their currently intended use. Our failure to apply the net proceeds of this offering effectively could compromise our ability to pursue our growth strategy and we might not be able to yield a significant return, if any, on our investment of these net proceeds. You will not have the opportunity to influence our decisions on how to use our net proceeds from this offering. For a period of six months after the closing of this offering, we have agreed to invest any cash and cash equivalents in a non-interest bearing account, and as a result, such investment will not yield a return.

Future sales of our common shares may depress our share price.

After this offering, based on the 75,000,000 common shares outstanding as of March 31, 2015, there will be                        common shares outstanding, assuming no exercise by the underwriters of their option to purchase additional common shares from us. Sales of a substantial number of our common shares in the public market after this offering, or the perception that these sales might occur, could depress the market price of our common shares and could impair our ability to raise capital through the sale of additional equity securities. Of our issued and outstanding our common shares, all of the shares sold in this offering will be freely transferable without restrictions or further registration under the Securities Act of 1933, as amended, or the Securities Act, except for any shares acquired by our affiliates, as defined in Rule 144 under the Securities Act. The remaining 75,000,000 shares outstanding after this offering will be restricted as a result of securities laws, lock-up agreements or other contractual restrictions that restrict transfers for 180 days after the date of this prospectus. See the section titled "Shares Eligible for Future Sale—Lock-Up Agreements" for a more detailed description of the lock-up period.

We intend to file a registration statement on Form S-8 under the Securities Act to register the total number of our common shares that may be issued under our equity incentive plans. See the information in the section titled "Shares Eligible for Future Sale—Form S-8 Registration Statements" for a more detailed description of the common shares that will be available for future sale upon the registration and issuance of such shares, subject to any applicable vesting or lock-up period or other restrictions provided under the terms of the applicable plan or the option agreements entered into with the option holders. Sales of these shares have an adverse effect on the trading price of our common shares. In addition, in the future we may issue common shares or other securities if we need to raise additional capital. The number of our new common shares issued in connection with raising additional capital could constitute a material portion of our then outstanding common shares.

If you purchase our common shares in this offering, you will incur immediate and substantial dilution in the book value of your shares.

The initial public offering price of our common shares will be substantially higher than the as adjusted net tangible book value per common share of our common shares. Therefore, if you purchase our common shares in this offering, you will pay a price per common share that substantially exceeds the book value of our tangible assets after subtracting our liabilities. Based on an assumed initial public offering price of $               per common share, which is the midpoint of the price range set forth on the cover page of this prospectus, you will experience immediate dilution of $               per common share, representing the difference between our as adjusted net tangible book value per common share, after giving effect to this offering, and the assumed initial public offering price. Further, the future exercise of any outstanding options to purchase our common shares will cause you to experience additional dilution. See the section titled "Dilution" for additional information.

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 compliance with our public company responsibilities and corporate governance practices.

As a public company, and 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. The Sarbanes-

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Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the NYSE and other applicable securities rules and regulations impose various requirements on public companies. Our management and other personnel will need to devote a substantial amount of time to compliance with these requirements. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain directors' and officers' liability insurance, which could make it more difficult for us to attract and retain qualified members of our board of directors. We cannot predict or estimate the amount of additional costs we will incur as a public company or the timing of such costs.

We have identified a material weakness in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements of our financial statements or cause us to fail to meet our reporting obligations; in which case, our shareholders and other investors could lose confidence in our financial reporting, which would harm our business and could negatively impact the price of our common shares.

Prior to this offering we were a private company and had limited accounting and financial reporting personnel and other resources with which to address our internal controls and procedures. In connection with the preparation of our financial statements as of and for the period from October 31, 2014 (date of inception) to March 31, 2015, we and our independent registered public accounting firm identified a material weakness in our internal control over financial reporting, as defined in the standards established by the Public Company Accounting Oversight Board of the United States. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

We did not design or maintain an effective control environment because we did not maintain a sufficient complement of personnel with an appropriate level of knowledge of accounting, experience and training commensurate with our financial reporting requirements. This material weakness resulted in material audit adjustments related to the affiliate charge for stock compensation. Our limited personnel also resulted in our inability to consistently establish appropriate authorities and responsibilities in pursuit of our financial reporting objectives, as demonstrated by, among other things, our insufficient segregation of duties in our finance and accounting functions. We rely on Roivant Sciences, Inc. for information systems and financial and accounting support. Roivant Sciences, Inc. has limited staff and performed nearly all aspects of our financial reporting process, including, but not limited to, accessing the underlying accounting records and systems, posting and recording journal entries and taking responsibility for the preparation of the financial statements. This material weakness could result in a material misstatement of our interim or annual financial statements that would not be prevented or detected.

As the adoption of the appropriate resources becomes economically feasible, we intend to take appropriate and reasonable steps to remediate this material weakness through the hiring of additional resources and implementation of more robust review, supervision and monitoring of the financial reporting process. Due to our size, segregation of conflicting duties has not always been possible and may not be economically feasible. We are just beginning the process of implementing processes and procedures intended to mitigate the identified material weakness and the measures we have taken to date, or any measures we may take in the future, may not be sufficient to remediate these material weaknesses or to avoid potential future material weaknesses.

The Sarbanes-Oxley Act of 2002 requires, among other things, that we assess the effectiveness of our internal control over financial reporting annually and disclosure controls and procedures quarterly. In particular, beginning with the fiscal year ending on March 31, 2017, we must perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-

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Oxley Act, or Section 404. If other material weaknesses are identified in the future or we are not able to comply with the requirements of Section 404 in a timely manner, our reported financial results could be materially misstated or could be restated, we could receive an adverse opinion regarding our controls from our accounting firm, we could be subject to investigations or sanctions by regulatory authorities (which would require additional financial and management resources) and the market price of our common shares could decline.

As a result of becoming a public company, we will be obligated to develop and maintain proper and effective internal controls over financial reporting and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in our company and, as a result, the value of our common shares.

We will be required, pursuant to Section 404, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting for the first fiscal year beginning after the effective date of this offering. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. Our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting until our first annual report required to be filed with the SEC following the date we are no longer an "emerging growth company," as defined in the JOBS Act. We will be required to disclose significant changes made in our internal control procedures on a quarterly basis.

We are beginning the costly and challenging process of compiling the system and processing documentation necessary to perform the evaluation needed to comply with Section 404, and we may not be able to complete our evaluation, testing and any required remediation in a timely fashion. Our compliance with Section 404 will require that we incur substantial accounting expense and expend significant management efforts. We currently do not have an internal audit group, and we will need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge and compile the system and process documentation necessary to perform the evaluation needed to comply with Section 404.

During the evaluation and testing process of our internal control, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal control over financial reporting is effective. We cannot assure you that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting in the future. Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition or results of operations. If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our common shares could decline, and we could be subject to sanctions or investigations by the NYSE, the SEC or other regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.

We are an "emerging growth company," and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our common shares less attractive to investors.

We are an "emerging growth company," as defined in the JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies," including exemption from compliance with the auditor attestation requirements of Section 404, 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 will remain an emerging growth company until the earlier of (1) the last day of the fiscal year

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(a) following the fifth anniversary of the closing of this offering, (b) in which we have total annual gross revenue of at least $1.0 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common shares that is held by non-affiliates exceeds $700.0 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

In addition, under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards 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.

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 exemption from compliance with the auditor attestation requirements of Section 404 and reduced disclosure obligations regarding executive compensation in this prospectus and our periodic reports and proxy statements.

We cannot predict if investors will find our common shares less attractive because we may rely on these exemptions. If some investors find our common shares less attractive as a result, there may be a less active trading market for our common shares and our share price may be more volatile.

We are a Bermuda company and it may be difficult for you to enforce judgments against us or our directors and executive officers.

We are a Bermuda exempted company. As a result, the rights of our shareholders will be governed by Bermuda law and our memorandum of association and bye-laws. The rights of shareholders under Bermuda law may differ from the rights of shareholders of companies incorporated in another jurisdiction. It may be difficult for investors to enforce in the United States judgments obtained in U.S. courts against us based on the civil liability provisions of the U.S. securities laws. It is doubtful whether courts in Bermuda will enforce judgments obtained in other jurisdictions, including the United States, against us or our directors or officers under the securities laws of those jurisdictions or entertain actions in Bermuda against us or our directors or officers under the securities laws of other jurisdictions. See "Enforcement of Civil Liabilities under United States Federal Securities Laws" for additional information.

Bermuda law differs from the laws in effect in the United States and may afford less protection to our shareholders.

We are organized under the laws of Bermuda. As a result, our corporate affairs are governed by the Bermuda Companies Act 1981, as amended, or the Companies Act, which differs in some material respects from laws typically applicable to U.S. corporations and shareholders, including the provisions relating to interested directors, amalgamations, mergers and acquisitions, takeovers, shareholder lawsuits and indemnification of directors. Generally, the duties of directors and officers of a Bermuda company are owed to the company only. Shareholders of Bermuda companies typically do not have rights to take action against directors or officers of the company and may only do so in limited circumstances. Shareholder class actions are not available under Bermuda law. The circumstances in which shareholder derivative actions may be available under Bermuda law are substantially more proscribed and less clear than they would be to shareholders of U.S. corporations. The Bermuda courts, however, would ordinarily be expected to permit a shareholder to commence an action in the name of a company to remedy a wrong to the company where the act complained of is alleged to be beyond the corporate power of the company or illegal, or would result in the violation of the company's memorandum of association or bye-laws. Furthermore, consideration would be given by a Bermuda court to acts that are alleged to constitute a fraud against the minority shareholders or, for instance, where an act requires the approval of a greater percentage of the company's shareholders than those who actually approved it.

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When the affairs of a company are being conducted in a manner that is oppressive or prejudicial to the interests of some shareholders, one or more shareholders may apply to the Supreme Court of Bermuda, which may make such order as it sees fit, including an order regulating the conduct of the company's affairs in the future or ordering the purchase of the shares of any shareholders by other shareholders or by the company. Additionally, under our bye-laws and as permitted by Bermuda law, each shareholder has waived any claim or right of action against our directors or officers for any action taken by directors or officers in the performance of their duties, except for actions involving fraud or dishonesty. In addition, the rights of our shareholders and the fiduciary responsibilities of our directors under Bermuda law are not as clearly established as under statutes or judicial precedent in existence in jurisdictions in the United States, particularly the State of Delaware. Therefore, our shareholders may have more difficulty protecting their interests than would shareholders of a corporation incorporated in a jurisdiction within the United States.

There are regulatory limitations on the ownership and transfer of our common shares.

Common shares may be offered or sold in Bermuda only in compliance with the provisions of the Companies Act and the Bermuda Investment Business Act 2003, which regulates the sale of securities in Bermuda. In addition, the Bermuda Monetary Authority must approve all issues and transfers of shares of a Bermuda exempted company. However, the Bermuda Monetary Authority has, pursuant to its statement of June 1, 2005, given its general permission under the Exchange Control Act 1972 and related regulations for the issue and free transfer of our common shares to and among persons who are non-residents of Bermuda for exchange control purposes as long as the shares are listed on an appointed stock exchange, which includes the NYSE. This general permission would cease to apply if we were to cease to be listed on the NYSE.

We have anti-takeover provisions in our bye-laws that may discourage a change of control.

Our bye-laws contain provisions that could make it more difficult for a third party to acquire us without the consent of our board of directors. These provisions provide for:

These anti-takeover defenses could discourage, delay or prevent a transaction involving a change in control of our company and may prevent our shareholders from receiving the benefit from any premium to the market price of our common shares offered by a bidder in a takeover context. Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of our common shares if the provisions are viewed as discouraging takeover attempts in the future. These provisions could also discourage proxy contests, make it more difficult for you and other shareholders to elect directors of your choosing and cause us to take corporate actions other than those you desire. See "Description of Share Capital."

We may reduce the voting power of your common shares without your consent.

Under our amended and restated bye-laws, in the event that any U.S. person holds, directly, indirectly or constructively, 9.5% or more of the total voting power of our issued share capital, excluding any U.S. person that holds, directly, indirectly or constructively, 9.5% or more of the total voting power of issued share capital immediately prior to the closing of this offering, the aggregate votes conferred by the common shares held by such person (or by any person through which such U.S. person indirectly or constructively holds shares) will be reduced by our board of directors to the extent necessary such that the common

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shares held, directly, indirectly or constructively, by such U.S. person will constitute less than 9.5% of the voting power of all issued and outstanding shares. Roivant Sciences Ltd., certain of its affiliates, and Vivek Ramaswamy, our principal executive officer, will not be subject to these provisions. Further, our board of directors may determine that shares shall carry different or no voting rights as it reasonably determines, based on the advice of counsel, to be appropriate to (1) avoid the existence of any U.S. person who holds 9.5% or more of the total voting power of our issued share capital or (2) avoid adverse tax, legal or regulatory consequences to us, any subsidiary of ours or any holder of our common shares or its affiliates. These provisions may discourage potential investors from acquiring a stake or making a significant investment in our company as well as discourage a takeover attempt, which may prevent our shareholders from receiving the benefit of any such transactions as well as adversely affect the prevailing market price of our common shares if viewed as discouraging takeover attempts in the future.

We may become subject to unanticipated tax liabilities.

We are incorporated under the laws of, and managed and controlled from, Bermuda. We may, however, become subject to income, withholding or other taxes in certain jurisdictions by reason of our activities and operations, and it is also possible that taxing authorities in any such jurisdictions could assert that we are subject to greater taxation than we currently anticipate. Any such non-Bermudan tax liability could materially adversely affect our results of operations.

Taxing authorities could reallocate our taxable income among our subsidiaries, which could increase our overall tax liability.

We and Roivant Sciences Ltd., our principal shareholder, are based in Bermuda, and we currently have a subsidiary in the United States. If we succeed in growing our business, we expect to conduct increased operations through our subsidiaries in various tax jurisdictions pursuant to transfer pricing arrangements between us, our parent company and our subsidiaries. If two or more affiliated companies are located in different countries, the tax laws or regulations of each country generally will require that transfer prices be the same as those between unrelated companies dealing at arms' length and that appropriate documentation is maintained to support the transfer prices. While we believe that we operate in compliance with applicable transfer pricing laws and intend to continue to do so, our transfer pricing procedures are not binding on applicable tax authorities.

If tax authorities in any of these countries were to successfully challenge our transfer prices as not reflecting arms' length transactions, they could require us to adjust our transfer prices and thereby reallocate our income to reflect these revised transfer prices, which could result in a higher tax liability to us. In addition, if the country from which the income is reallocated does not agree with the reallocation, both countries could tax the same income, resulting in double taxation. If tax authorities were to allocate income to a higher tax jurisdiction, subject our income to double taxation or assess interest and penalties, it would increase our consolidated tax liability, which could adversely affect our financial condition, results of operations and cash flows.

Changes in our effective tax rate may reduce our net income in future periods.

Our tax position could be adversely impacted by changes in tax rates, tax laws, tax practice, tax treaties or tax regulations or changes in the interpretation thereof by the tax authorities in Europe, the United States, Bermuda and other jurisdictions as well as being affected by certain changes currently proposed by the OECD and their action plan on Base Erosion and Profit Shifting . Such changes may become more likely as a result of recent economic trends in the jurisdictions in which we operate, particularly if such trends continue. If such a situation was to arise, it could adversely impact our tax position and our effective tax rate. Failure to manage the risks associated with such changes, or misinterpretation of the laws providing such changes, could result in costly audits, interest, penalties and reputational damage, which could adversely affect our business, results of our operations and our financial condition.

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Our actual effective tax rate may vary from our expectation and that variance may be material. A number of factors may increase our future effective tax rates, including: (1) the jurisdictions in which profits are determined to be earned and taxed; (2) the resolution of issues arising from any future tax audits with various tax authorities; (3) changes in the valuation of our deferred tax assets and liabilities; (4) increases in expenses not deductible for tax purposes, including transaction costs and impairments of goodwill in connection with acquisitions; (5) changes in the taxation of share-based compensation; (6) changes in tax laws or the interpretation of such tax laws, and changes in generally accepted accounting principles; and (7) challenges to the transfer pricing policies related to our structure.

U.S. holders of our common shares may suffer adverse tax consequences if we are characterized as a passive foreign investment company.

Generally, if, for any taxable year, at least 75% of our gross income is passive income, or at least 50% of the value of our assets is attributable to assets that produce passive income or are held for the production of passive income, including cash, we would be characterized as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes. For purposes of these tests, passive income includes dividends, interest, and gains from the sale or exchange of investment property and rents and royalties other than rents and royalties which are received from unrelated parties in connection with the active conduct of a trade or business. If we are characterized as a PFIC, U.S. holders of our common shares may suffer adverse tax consequences, including having gains realized on the sale of our common shares treated as ordinary income, rather than capital gain, the loss of the preferential rate applicable to dividends received on our common shares by individuals who are U.S. holders, and having interest charges apply to distributions by us and the proceeds of sales of our common shares. See the section titled "Material Bermuda and U.S. Federal Income Tax Considerations—U.S. Federal Income Tax Considerations—Passive Foreign Investment Company Rules."

Our status as a PFIC will depend on the composition of our income and the composition and value of our assets (which, assuming we are not a "controlled foreign corporation," or a CFC, under Section 957(a) of the Code for the year being tested, may be determined in large part by reference to the market value of our common shares, which may be volatile) from time to time. Our status may also depend, in part, on how quickly we utilize the cash proceeds from this offering in our business. We believe that we were not a CFC prior to this offering in the current taxable year which will end on March 31, 2016. Based on this belief, with respect to the taxable year beginning in 2014 and foreseeable future taxable years, we presently do not anticipate that we will be a PFIC based upon the expected value of our assets, including any goodwill, and the expected composition of our income and assets. However, our status as a PFIC is a fact-intensive determination made on an annual basis and we cannot provide any assurances regarding our PFIC status for the current or future taxable years.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that involve substantial risks and uncertainties. The forward-looking statements are contained principally in the sections titled "Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business," but are also contained elsewhere in this prospectus. In some cases, you can identify forward-looking statements by the words "may," "might," "will," "could," "would," "should," "expect," "intend," "plan," "objective," "anticipate," "believe," "estimate," "predict," "project," "potential," "continue" and "ongoing," or the negative of these terms, or other comparable terminology intended to identify statements about the future. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although we believe that we have a reasonable basis for each forward-looking statement contained in this prospectus, we caution you that these statements are based on a combination of facts and factors currently known by us and our expectations of the future, about which we cannot be certain. Forward-looking statements include statements about:

You should refer to the section titled "Risk Factors" for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this prospectus will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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

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INDUSTRY AND MARKET DATA

Certain industry data and market data included in this prospectus were obtained from independent third-party surveys, market research, publicly available information, reports of governmental agencies and industry publications and surveys. All of management's estimates presented herein are based upon management's review of independent third-party surveys and industry publications prepared by a number of sources and other publicly available information. All of the market data used in this prospectus involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. We believe that the information from these industry publications and surveys included in this prospectus is reliable. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section titled "Risk Factors." These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us.

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USE OF PROCEEDS

We estimate that the net proceeds from our issuance and sale of                    common shares in this offering will be approximately $                million, or approximately $                million if the underwriters exercise their option to purchase additional common shares in full, based upon an assumed initial public offering price of $               per common share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

Each $1.00 increase or decrease in the assumed initial public offering price of $               per common share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, would increase or decrease the net proceeds to us from this offering by approximately $                million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same. We may also increase or decrease the number of shares we are offering. Each increase or decrease of 1.0 million in the number of shares we are offering at the assumed initial public offering price of $               per common share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions would increase or decrease the net proceeds to us from this offering by approximately $                million, assuming the assumed initial public offering price stays the same.

We intend to use the net proceeds from this offering for the following purposes:

This expected use of the net proceeds from this offering represents our intentions based upon our current plans and business conditions, which could change in the future as our plans and business conditions evolve. The amounts and timing of our actual expenditures may vary significantly depending on numerous factors, including the progress of our development, the status of and results from preclinical studies and clinical trials, as well as any collaborations that we may enter into with third parties, and any unforeseen cash needs.

We believe opportunities may exist from time to time to expand our current business through the acquisition or in-license of complementary product candidates. While we have no current agreements or commitments for any specific acquisitions or in-licenses at this time, we may use a portion of the net proceeds for these purposes.

Our management will have broad discretion in the application of the net proceeds from this offering, and investors will be relying on the judgment of our management regarding the application of the net proceeds of this offering. The timing and amount of our actual expenditures will be based on many factors, including cash flows from operations and the anticipated growth of our business. Pending these uses, for a period of six months after the closing of this offering, we plan to invest these net proceeds in a non-interest bearing account. Thereafter, we may choose to invest these net proceeds in short-term, interest bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the United States. The goal with respect to the investment of these net proceeds is capital preservation and liquidity so that such funds are readily available to fund our operations.

We believe that the net proceeds from this offering will be sufficient to enable us to fund our operating expenses and capital expenditure requirements through 2017 and the completion of our Phase 3 pivotal program for RVT-101 and the submission of our NDA with the FDA for the approval of RVT-101 in the United States. We have based this estimate on assumptions that may prove to be incorrect, and we could use our available capital resources sooner than we currently expect.

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DIVIDEND POLICY

We have never declared or paid any dividends on our common shares. We anticipate that we will retain all of our future earnings, if any, for use in the operation and expansion of our business and do not anticipate paying cash dividends in the foreseeable future. Any decision to declare and pay dividends in the future will be made at the sole discretion of our board of directors and will depend on, among other things, our results of operations, cash requirements, financial condition, contractual restrictions and other factors that our board of directors may deem relevant. In addition, pursuant to Bermuda law, a company may not declare or pay dividends if there are reasonable grounds for believing that (1) the company is, or would after the payment be, unable to pay its liabilities as they become due or (2) that the realizable value of its assets would thereby be less than its liabilities. Under our bye-laws, each common share is entitled to dividends if, as and when dividends are declared by our board of directors, subject to any preferred dividend right of the holders of any preference shares.

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CAPITALIZATION

The following table sets forth our cash and capitalization as of March 31, 2015:

The following information is illustrative only of our capitalization following the closing of this offering and will change based on the actual initial public offering price and other terms of this offering determined at pricing. You should read this table together with the sections titled "Selected Consolidated Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related notes appearing elsewhere in this prospectus.


 
 
As of March 31, 2015
 
 
  Actual   As Adjusted (1)  

Cash

  $   $    

Shareholders' (deficit) equity:

             

Common shares, $0.00001 par value; 1,000,000,000 shares authorized, 75,000,000 shares issued and outstanding, actual; 1,000,000,000 shares authorized,                        shares issued and outstanding, as adjusted

  $ 750   $    

Common shares subscribed

    (750 )      

Additional paid-in capital

    13,296,173        

Accumulated deficit

    (21,047,019 )      

Total shareholders' (deficit) equity

    (7,750,846 )      

Total capitalization

  $ (7,750,846 ) $    

(1)
Each $1.00 increase or decrease in the assumed initial public offering price of $               per common share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, would increase or decrease the as adjusted amount of each of cash, additional paid-in capital, total shareholders' (deficit) equity and total capitalization by approximately $                million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same. Each increase or decrease of 1.0 million in the number of common shares we are offering at the assumed initial public offering price of $               per common share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions, would increase or decrease each of cash, additional paid-in capital, total shareholders' (deficit) equity and total capitalization on an as adjusted basis by approximately $                million.

The number of common shares outstanding in the table above excludes:

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DILUTION

If you invest in our common shares in this offering, your interest will be diluted to the extent of the difference between the initial public offering price per common share and the as adjusted net tangible book value per common share of our common shares immediately after this offering. Net tangible book value per common share is determined by dividing our total tangible assets less total liabilities by the number of outstanding common shares.

As of March 31, 2015, we had a net tangible book deficit of $(7,750,846), or $(0.10) per common share.

After giving effect to the issuance and sale of                                             common shares in this offering at an assumed initial public offering price of $               per common share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, our as adjusted net tangible book value as of March 31, 2015 would have been $               , or $               per common share. This represents an immediate increase in the as adjusted net tangible book value of $               per common share to our sole shareholder, and an immediate dilution in the as adjusted net tangible book value of $               per common share to investors purchasing our common shares in this offering. The following table illustrates this per common share dilution:


Assumed initial public offering price per common share

       
$
 

Net tangible book deficit per common share as of March 31, 2015

  $ (0.10 )      

Increase in net tangible book value per common share attributable to new investors participating in this offering

             

As adjusted net tangible book value per common share after this offering

             

Dilution per common share to investors participating in this offering

        $    

Each $1.00 increase (decrease) in the assumed initial public offering price of $               per common share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) our as adjusted net tangible book value as of March 31, 2015 by approximately $                million, or approximately $               per common share, and would increase (decrease) dilution to investors in this offering by approximately $               per common share, assuming that the number of common shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting underwriting discounts and commissions.

Similarly, each increase (decrease) of 1.0 million shares in the number of common shares we are offering would increase (decrease) our as adjusted net tangible book value as of March 31, 2015 by approximately $               and $               per common share, respectively, and would increase (decrease) dilution to investors in this offering by approximately $               and $               per common share, respectively, assuming the assumed initial public offering price remains the same, and after deducting underwriting discounts and commissions. The as adjusted information is illustrative only, and we will adjust this information based on the actual initial public offering price and other terms of this offering determined at pricing.

If the underwriters exercise their option in full to purchase an additional               common shares in this offering, the as adjusted net tangible book value per common share after the offering would be $               per common share, the increase in the as adjusted net tangible book value per common share to our sole shareholder would be $               per common share and the dilution to new investors purchasing common shares in this offering would be $               per common share.

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The following table sets forth as of March 31, 2015, on the as adjusted basis described above, the differences between the number of common shares purchased from us, the total consideration paid and the weighted average price per common share paid by our sole shareholder and by investors purchasing our common shares in this offering at an assumed initial public offering price of $               per common share, which is the midpoint of the price range set forth on the cover page on this prospectus, before deducting underwriting discounts and commissions and estimated offering expenses payable by us:


 
  Shares Purchased   Total Consideration  
Weighted Average
Price Per
Common Share
 
 
  Number   Percent   Amount   Percent  

Sole shareholder

    75,000,000     100 % $ 5,000,750     100 % $ 0.07  

New investors

                               

Total

          100 % $       100 %      

Each $1.00 increase or decrease in the assumed initial public offering price of $               per common share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase or decrease the total consideration paid by new investors by $                million, and increase or decrease the percent of total consideration paid by new investors by approximately                              percentage points, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same.

The table and discussion above exclude:

To the extent any options are issued under our equity incentive plans, or we issue additional common shares in the future, there will be further dilution to investors participating in this offering. In addition, we may choose to raise additional capital because of market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans. If we raise additional capital through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our shareholders.

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SELECTED CONSOLIDATED FINANCIAL DATA

The following tables set forth our selected financial data for the period indicated. We derived the consolidated statement of operations data for the period from October 31, 2014 (date of inception) through March 31, 2015 and the consolidated balance sheet data as of March 31, 2015 from our audited consolidated financial statements appearing elsewhere in this prospectus. The data should be read together with the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results to be expected in the future, and our operating results for the period ended March 31, 2015 are not indicative of the results that may be expected for a full fiscal year or any other future period. Our fiscal year ends on March 31.


 
 
Period from October 31,
2014 (Date of Inception)
to March 31, 2015
 
 
  (in thousands, except share
and per share data)

 

Consolidated Statement of Operations Data:

       

Operating expenses:

       

Research and development

  $ 14,324  

General and administrative

    6,722  

Total operating expenses

    21,046  

Loss before provision for income tax

    (21,046 )

Income tax expense

    (1 )

Net loss and comprehensive loss

  $ (21,047 )

Net loss per common share—basic and diluted (1)

  $ (1.32 )

Weighted average shares outstanding—basic and diluted (1)

    15,986,842  

(1)
See Note B[7] to our consolidated financial statements for an explanation of the method used to compute basic and diluted net loss per common share.


 
 
As of March 31, 2015
 
 
  (in thousands)
 

Consolidated Balance Sheet Data:

       

Cash

  $  

Total assets

    1,117  

Total liabilities

    8,868  

Accumulated deficit

    (21,047 )

Total shareholders' deficit

    (7,751 )

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes thereto included elsewhere in this prospectus. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the section titled "Risk Factors" for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Our fiscal year ends on March 31.

Overview

We are a clinical-stage biopharmaceutical company focused on the acquisition, development and commercialization of novel therapeutics for the treatment of neurodegenerative disorders. We are a wholly-owned subsidiary of Roivant Sciences Ltd., a company focused on the acquisition, development and commercialization of late-stage product candidates that are non-strategic, deprioritized or under-resourced at other biopharmaceutical companies.

Our near-term focus is to develop RVT-101 for the treatment of Alzheimer's disease and other forms of dementia. We acquired the worldwide rights to RVT-101 from Glaxo Group Limited and GlaxoSmithKline Intellectual Property Development Limited, collectively GSK, in December 2014. We plan to commence a Phase 3 pivotal program of RVT-101 for the treatment of mild-to-moderate Alzheimer's disease in the fourth quarter of 2015. Should our Phase 3 program be successful, we plan to rapidly seek regulatory approval and commercialization of RVT-101 in the United States and the European Union. In the long-term, we intend to develop a pipeline of product candidates to comprehensively address the cognitive, behavioral and functional components of dementia.

We were founded in October 2014 and our operations to date have been limited to organizing and staffing our company, raising capital from Roivant Sciences Ltd. and acquiring RVT-101. To date, we have not generated any revenue and have financed our operations exclusively through capital contributions from Roivant Sciences Ltd. As of March 31, 2015, we had an accumulated deficit of $21.0 million. We recorded a net loss of $21.0 million for the period from inception to March 31, 2015.

Asset Purchase Agreement with GlaxoSmithKline

In December 2014, we entered into an asset purchase agreement with GSK, or the GSK Agreement, pursuant to which GSK assigned to us all of their rights to certain patents, regulatory documentation, data records and materials related to SB-742457, which we now refer to as RVT-101, and other related compounds claimed by a specific patent application.

Under the GSK Agreement, GSK received an upfront payment of $5 million and we are obligated to pay GSK an additional $5 million upon the earliest to occur of specified events that indicate a single Phase 3 trial may be sufficient to obtain FDA approval for RVT-101 for the treatment of Alzheimer's disease. We are also obligated to pay GSK $35 million, $25 million and $10 million upon approval of RVT-101 in the United States, the European Union and Japan, respectively, as well as an additional one-time payment of $85 million for the first calendar year in which we achieve global net sales of $1.2 billion for RVT-101.

Under the GSK Agreement we are also obligated to pay a fixed 12.5% royalty based on net sales of RVT-101, subject to reduction on account of expiration of patent and regulatory exclusivity or upon generic entry. See the section titled "Business—Asset Purchase Agreement with GlaxoSmithKline" for additional information.

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Services Agreement with Roivant Sciences, Inc.

We and our wholly-owned subsidiary, Axovant Sciences, Inc., have entered into a services agreement with Roivant Sciences, Inc., a wholly-owned subsidiary of Roivant Sciences Ltd., or the Services Agreement, pursuant to which Roivant Sciences, Inc. provides us with services in relation to the identification of potential product candidates, project management of clinical trials and other development, administrative and financial activities. Under the terms of our services agreement with Roivant Sciences, Inc., we are obligated to pay or reimburse Roivant Sciences, Inc. for the costs it, or third parties acting on its behalf, incurs in providing services to us, including administrative and support services as well as research and development services. In addition, we are obligated to pay to Roivant Sciences, Inc. an amount equal to 10% of the costs incurred in connection with research and development service. Following the completion of this offering, we expect that our reliance on Roivant Sciences, Inc. will decrease over time as we, Axovant Sciences, Inc. and any other future subsidiary of ours continue to hire the necessary personnel to manage the development and potential commercialization of RVT-101. See the section titled "Certain Relationships and Related Party Transactions—Services Agreement with Roivant Sciences, Inc." for additional information.

For the period from October 31, 2014 (date of inception) to March 31, 2015, we have incurred expenses of $2.0 million, inclusive of the mark-up, under the Services Agreement. We have recorded these charges as research and development and general and administrative expense in our consolidated statement of operations.

Financial Operations Overview

Revenue

We have not generated any revenue from the sale of any products, and we do not expect to generate any revenue unless or until we obtain regulatory approval of and commercialize RVT-101.

Research and Development Expense

Since our inception, our operations have primarily been limited to the acquisition of the rights to RVT-101 and the pharmaceutical development of related clinical trial material inventory. Our research and development expenses to date consist of an upfront payment of $5.0 million made, and a contingent payment of $5.0 million to be made, to GSK in connection with our asset purchase and the related professional fees associated with such asset purchase, as well as employee salaries and related benefits, share-based compensation expense and costs allocated under the Services Agreement, including third-party costs. The payments to acquire RVT-101 did not meet the definition for capitalization under accounting principles generally accepted in the United States of America, or U.S. GAAP, and were therefore expensed. Following the closing of this offering, we expect to significantly increase our research and development efforts as we initiate our Phase 3 pivotal program for RVT-101. Research and development expenses will include:

Research and development activities will continue to be central to our business model. Product candidates in later stages of clinical development, such as RVT-101, generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-

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stage clinical trials. We expect our research and development expenses to be significant over the next several years as we increase personnel and compensation costs and commence a potential Phase 3 pivotal program. It is difficult to determine with certainty the duration and completion costs of any clinical trial we may conduct.

The duration, costs and timing of clinical trials of RVT-101 and any other product candidates will depend on a variety of factors that include, but are not limited to, the following:

In addition, the probability of success for RVT-101 and any other product candidate will depend on numerous factors, including competition, manufacturing capability and commercial viability.

General and Administrative Expense

General and administrative expenses consist primarily of legal and accounting fees relating to our formation and corporate matters, consulting services, services provided under the Services Agreement, employee salaries and related benefits and share-based compensation.

We anticipate that our general and administrative expenses will increase in the future to support our continued research and development activities 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 NYSE rules and SEC requirements, insurance, and investor relations costs. In addition, if RVT-101 obtains regulatory approval for marketing, we expect that we would incur expenses associated with building a sales and marketing team.

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Results of Operations from October 31, 2014 (Date of Inception) to March 31, 2015

The following table sets forth our results of operations for the period from October 31, 2014 (date of inception) to March 31, 2015.


 
 
Period from October 31, 2014 (Date
of Inception) to March 31, 2015
 
 
  (in thousands)
 

Operating expenses:

       

Research and development

  $ 14,324  

General and administrative

    6,722  

Total operating expenses

    21,046  

Net loss and comprehensive loss

  $ (21,047 )

Research and Development Expenses

Research and development expenses were $14.3 million for the period from October 31, 2014 (date of inception) to March 31, 2015, and were primarily attributable to the $5.0 million upfront payment made, and the $5.0 million contingent payment to be made, to GSK in connection with the GSK Agreement, and $4.3 million of professional costs related thereto, as well as costs allocated under the Services Agreement, and employee salaries and related benefits. We recorded share-based compensation expense of $3.2 million for the period ended March 31, 2015.

General and Administrative Expenses

General and administrative expenses were $6.7 million for the period from October 31, 2014 (date of inception) to March 31, 2015, and were primarily attributable to employee salaries and related benefits, share-based compensation, legal and professional fees and consulting services associated with the formation of our company and corporate matters and certain direct and indirect costs associated with services performed by Roivant Sciences, Inc. We recorded share-based compensation expense of $5.1 million for the period ended March 31, 2015.

Liquidity and Capital Resources

Overview

For the period from October 31, 2014 (date of inception) to March 31, 2015, we had a cumulative net loss of $21.0 million. As of March 31, 2015, we had no cash and no long-term debt. All operations to date have been financed through capital contributions, short-term advances from Roivant Sciences Ltd. or its affiliates paying expenses related to our operations, which we will be required to reimburse. These factors raise substantial doubt about our ability to continue as a going concern.

We expect to continue to incur significant and increasing operating losses at least for the next several years. We do not expect to generate revenue unless and until we successfully complete development and obtain regulatory approval for RVT-101. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our planned clinical trials and our expenditures on other research and development activities. We anticipate that our expenses will increase substantially as we:

    §
    commence our Phase 3 pivotal program of RVT-101 for the treatment of mild-to-moderate Alzheimer's disease;

    §
    commence the research and development of RVT-101 for the treatment of severe Alzheimer's disease and other forms of dementia, such as dementia with Lewy bodies, Parkinson's disease dementia and vascular dementia;

    §
    seek to identify, acquire, develop and commercialize additional product candidates;

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    §
    integrate acquired technologies into a comprehensive regulatory and product development strategy;

    §
    achieve milestones under our agreements with third parties that will require us to make substantial payments to those parties;

    §
    maintain, expand and protect our intellectual property portfolio;

    §
    hire scientific, clinical, quality control and administrative personnel;

    §
    add operational, financial and management information systems and personnel, including personnel to support our drug development efforts;

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

    §
    ultimately establish a sales, marketing and distribution infrastructure and scale up external manufacturing capabilities to commercialize any drug candidates for which we may obtain regulatory approval; and

    §
    begin to operate as a public company.

We intend to use the proceeds of this offering primarily to fund the research and development of RVT-101 for the treatment of mild-to-moderate Alzheimer's disease and other potential indications. These funds may not be sufficient to enable us to complete all necessary development and commercially launch RVT-101. Accordingly, we may be required to obtain further funding through other public or private offerings of our capital stock, debt financing, collaboration and licensing arrangements or other sources. Adequate additional funding may not be available to us on acceptable terms, or at all. If we are unable to raise capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development or commercialization of RVT-101 or potentially discontinue operations.

Until such time, if ever, as we can generate substantial revenue from sales of RVT-101, we expect to finance our cash needs through a combination of equity offerings, debt financings and potential collaboration, license or development agreements. We do not currently have any committed external source of funds. 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 shareholder. 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 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 be required to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our drug 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 sets forth a summary of our cash flows for the period from October 31, 2014 (date of inception) to March 31, 2015:

 
  (in thousands)  

Net cash used in operating activities

  $ (683 )

Net cash used in investing activities

    (5,009 )

Net cash provided by financing activities

    5,691  

Operating Activities

For the period from October 31, 2014 (date of inception) to March 31, 2015, net cash used in operating activities was $0.7 million. Net cash used in operating activities was primarily attributable to payments made by Roivant Sciences, Inc. on our behalf.

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Investing Activities

For the period from October 31, 2014 (date of inception) to March 31, 2015, net cash used in investing activities was $5.0 million, which was primarily attributable to purchases of in-process research and development.

Financing Activities

For the period from October 31, 2014 (date of inception) to March 31, 2015, net cash provided by financing activities was $5.7 million, which was primarily attributable to capital contributions from Roivant Sciences Ltd.

Outlook

Based on the expected net proceeds from this offering, our research and development plans and our timing expectations related to the commencement of our Phase 3 pivotal program for RVT-101, we expect that the net proceeds from this offering will enable us to fund our operating expenses and capital expenditure requirements through 2017 and the completion of our Phase 3 pivotal program for RVT-101 and the submission of our NDA with the FDA for the approval of RVT-101 in the United States. However, we have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we expect.

Contractual Obligations

As of March 31, 2015, we did not have any ongoing material financial commitments, other than pursuant to the GSK Agreement, such as lines of credit or guarantees that we expect to affect our liquidity over the next several years.

Off-Balance Sheet Arrangements

We did not have during the period presented, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules.

Critical Accounting Policies and Significant Judgments and Estimates

Our management's discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the dates of the balance sheets and the reported amounts of expenses during the reporting periods. In accordance with U.S. GAAP, we evaluate our estimates and judgments on an ongoing basis. Significant estimates include assumptions used in the determination of some of our costs incurred under our services agreement with Roivant Sciences, Inc., which costs are charged to research and development and general and administrative expense, as well as assumptions used to estimate the fair value of our common shares. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We define our critical accounting policies as those accounting principles generally accepted in the United States of America that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations, as well as the specific manner in which we apply those principles. While our significant accounting policies are more fully described in Note B to our consolidated financial statements appearing elsewhere in this prospectus, we believe the following are the critical accounting policies used in the preparation of our financial statements that require significant estimates and judgments.

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Contingent Payment Liability

One significant estimate relates to the probability and timing of the contingent payment liability recorded in the balance sheet. Such liability relates to our asset purchase agreement with GSK (see Note C to our consolidated financial statements). Based upon our meeting with the FDA at the end of March 2015, we believe it is probable that we will be obligated to pay $5.0 million to GSK during the second quarter of the fiscal year ending March 31, 2017 (see Note G to our consolidated financial statements). Should the specified criteria for payment not be met, or be met in a period different from our expectation, there could be significant fluctuation in our financial results in future periods.

Valuation of Share-Based Compensation under our Services Agreement

Another significant estimate affecting our financial results relates to the compensation expenses charged to us under the Services Agreement with Roivant Sciences, Inc. In accordance with the Services Agreement total compensation, inclusive of base salary, fringe benefits and share-based compensation is charged back to us at actual cost plus a pre-determined mark-up for any research and development activities performed by Roivant Sciences, Inc. on our behalf. The actual costs are determined based upon the relative percentage of time utilized on our matters. A significant component of total compensation relates to the share-based awards that BVC Ltd., or BVC, issued to Roivant Sciences, Inc. employees.

Such awards are in the form of restricted shares of BVC granted to Roivant Sciences, Inc. employees. BVC is a non-public entity, which holds a non-controlling ownership interest in Roivant Sciences Ltd., our parent. BVC's ownership interest and board rights in Roivant Sciences Ltd. allow it to exercise significant influence over Roivant Sciences Ltd. As such, because the awards are not based on our or Roivant Sciences Ltd.'s shares, they are remeasured at fair value at each reporting period until the awards vest. Significant judgment and estimates were used to estimate the fair value of these awards, as the underlying shares in BVC are not publicly traded. Roivant Sciences, Inc.'s estimation of fair value of the awards considered recent transactions entered into by Roivant Sciences Ltd., relevant industry and comparable public company data, as well as discounted cash flow analyses. As BVC is a non-public entity, the majority of the inputs used to estimate the fair value of the restricted share awards are considered level 3 due to their unobservable nature. Each award is subject to specified vesting schedules and requirements (a mix of time-based, performance-based and corporate event-based, including post-IPO market capitalization target and financing events). Compensation expense will be charged to us by Roivant Sciences, Inc. over the required service period to earn the award, which is expected to be four years, subject to the achievement of performance and event-based vesting requirements. At March 31, 2015, the remaining weighted average requisite service period over which the awards could be earned was 3.11 years. For the period from October 31, 2014 (inception) to March 31, 2015, we have incurred share-based compensation expense of $0.4 million, inclusive of the mark-up, under the Services Agreement. We have recorded these charges as research and development and general and administrative expense in our consolidated statement of operations.

Roivant Sciences, Inc. also incurred additional share-based compensation costs related to these restricted share awards, which was not charged to us under the Services Agreement. We have recorded $7.8 million (our share of these costs based on the pro rata time spent by Roivant Sciences, Inc. employees on our matters) as research and development and general and administrative expenses in our consolidated statement of operations and as an additional capital contribution from Roivant Sciences Ltd.

Due to the significance of the estimates in the calculation of fair value of the instruments, the related compensation expense charged to us by Roivant Sciences, Inc. could fluctuate significantly period to period.

Share-Based Compensation

We recognize compensation costs related to stock options granted to employees based on the estimated fair value of the awards on the date of grant, net of forfeitures. We estimate the grant date fair value, and the resulting share-based compensation expense, using the Black-Scholes option-pricing model. The grant date

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fair value of the share-based awards is generally recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective awards.

We recognize compensation costs related to stock options granted to non-employees based on the estimated fair value of the awards on the date of grant, net of forfeitures, as well; however, the fair value of the stock options granted to non-employees is remeasured each reporting period until the service is complete, and the resulting increase or decrease in value, if any, is recognized as expense or income, respectively, during the period the related services are rendered.

The Black-Scholes option-pricing model requires the use of highly subjective assumptions, which determine the fair value of share-based awards. These assumptions include:

Expected Term.     Our expected term represents the period that our share-based awards are expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term).

Expected Volatility.     Because we are a privately-held company and do not have any trading history for our common shares, the expected volatility was estimated using weighted average measures of implied volatility and the historical volatility of our peer group of companies for a period equal to the expected life of the stock options. Our peer group of publicly traded biopharmaceutical companies was chosen based on their similar size, stage in the life cycle or area of specialty.

Risk-Free Interest Rate.     The risk-free interest rate is based on the rates paid on securities issued by the U.S. Treasury with a term approximating the expected life of the stock options.

Expected Dividend.     We have never paid, and do not anticipate paying, cash dividends on our common shares. Therefore, the expected dividend yield was assumed to be zero.

The assumptions used are described in Note G to our consolidated financial statements. In addition to the Black-Scholes assumptions, we estimate our forfeiture rate based on an analysis of our actual forfeitures and will continue to evaluate the adequacy of the forfeiture rate based on actual forfeiture experience, analysis of employee turnover behavior and other factors. The impact from any forfeiture rate adjustment would be recognized in full in the period of adjustment and if the actual number of future forfeitures differs from our estimates, we might be required to record adjustments to share-based compensation in future periods.

For the period from October 31, 2014 (date of inception) to March 31, 2015, share-based compensation expense was $518,300, which included $450,900 and $67,400 for employee and non-employee share-based compensation expense, respectively. This expense reflects the re-assessment of the fair value of stock options granted in March 2015 in light of our proposed initial public offering. As of March 31, 2015, we had $54.1 million of total unrecognized share-based compensation costs, net of estimated forfeitures, which we expect to recognize over a weighted-average period of 3.91 years.

Prior to this offering, the fair value of our common shares underlying our stock options was estimated on each grant date by our board of directors. In order to determine the fair value of our common shares underlying granted stock options, our board of directors considered, among other things, timely valuations of our common shares prepared by an unrelated third-party valuation firm in accordance with the guidance provided by the American Institute of Certified Public Accountants Practice Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation . Given the absence of a public trading market for our common shares, our board of directors exercised reasonable judgment and considered a number of objective and subjective factors to determine the best estimate of the fair value of our common shares, including (1) our business, financial condition and results of operations, including related industry trends affecting our operations; (2) our forecasted operating performance and projected future cash flows; (3) the illiquid nature of our common shares; (4) liquidation preferences and other rights and privileges of

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our common shares; (5) market multiples of our most comparable public peers and (6) market conditions affecting our industry.

After the closing of this offering, our board of directors will determine the fair value of each common share underlying share-based awards based on the closing price of our common shares as reported by the NYSE on the date of grant.

Based on an assumed initial public offering price of $               per share, the midpoint of the price range set forth on the cover page of this prospectus, the intrinsic value of stock options outstanding at March 31, 2015 was $                million, of which $                million and $                million related to stock options that were vested and unvested, respectively, at that date.

Income Taxes

We account for income taxes in accordance with ASC 740, Income Taxes . Under the assets-and-liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and the respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

We account for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, we recognize the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. As of March 31, 2015, we did not have any significant uncertain tax positions.

Recent Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. This ASU removes the definition of a development stage entity and all incremental financial reporting requirements from U.S. GAAP for development stage entities. The elimination of the development stage entity financial reporting requirements is effective for annual reporting periods beginning after December 15, 2014. A public business entity may adopt this guidance early for any annual reporting period or interim period for which financial statements have not been issued. All other entities may adopt this guidance early for financial statements that have not yet been made available for issue. We adopted this guidance in the fiscal year ended March 31, 2015, and it did not have a significant impact on our consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014-15, "Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern" , or ASU 2014-15. ASU 2014-15 is intended to define management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. Specifically, ASU 2014-15 provides a definition of the term substantial doubt and requires an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). It also requires certain disclosures when substantial doubt is alleviated as a result of consideration of management's plans and requires an express statement and other disclosures when substantial doubt is not alleviated. The new standard will be effective for reporting periods beginning after December 15, 2016, with early adoption permitted. We are currently evaluating the impact of the adoption of ASU 2014-14 on our consolidated financial statements and disclosures.

In February 2015, the FASB issued ASU No. 2015-02, " Consolidation (Topic 810), Amendments to the Consolidation Analysis". ASU 2015-02 changes the analysis that a reporting entity must perform to

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determine whether it should consolidate certain types of legal entities. All legal entities are subject to reevaluation under the revised consolidation model. ASU 2015-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. ASU 2015-02 may be applied retrospectively to all prior periods presented in the financial statements or by using a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. We are currently assessing the impact of adopting ASU 2015-02.

JOBS Act

In April 2012, the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, was enacted. Section 107(b) of 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. Thus, an emerging growth company can 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 extended transition period, and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.

Quantitative and Qualitative Disclosures about Market Risk

We did not have any cash or other financial instruments as of March 31, 2015.

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BUSINESS

Overview

We are a clinical-stage biopharmaceutical company focused on the acquisition, development and commercialization of novel therapeutics for the treatment of neurodegenerative disorders. Our goal is to be the leading biopharmaceutical company focused on the treatment of dementia, a condition characterized by a significant decline in mental capacity and impaired daily function. Our near-term focus is to develop our product candidate, which we refer to as RVT-101, for the treatment of Alzheimer's disease and other forms of dementia. In the long-term, we intend to develop a pipeline of product candidates to comprehensively address the cognitive, behavioral and functional components of dementia.

In December 2014, we acquired the worldwide rights to RVT-101 from Glaxo Group Limited and GlaxoSmithKline Intellectual Property Development Limited, collectively GSK. We plan to commence a Phase 3 pivotal program of RVT-101 for the treatment of mild-to-moderate Alzheimer's disease in the fourth quarter of 2015. If our Phase 3 program is successful, we plan to seek regulatory approval and commercialize RVT-101 in the United States and the European Union.

Alzheimer's disease is a progressive neurodegenerative disorder. According to the Alzheimer's Association, a leading voluntary health organization in Alzheimer's disease care, support and research, Alzheimer's disease affects approximately 5.3 million people in the United States. It is estimated that between 70% and 90% of Alzheimer's disease patients age 65 and older are classified as having mild-to-moderate Alzheimer's disease. No new chemical entity has been approved by the U.S. Food and Drug Administration, or the FDA, for the treatment of Alzheimer's disease since 2003, with multiple drugs aimed at modifying the course of the disease having failed at various stages of development. Key opinion leaders in Alzheimer's disease have called into question the field's historical focus on developing "disease-modifying" drugs, and more generally, the distinction between "disease-modifying" and "symptomatic" therapies for Alzheimer's disease.

RVT-101 is an orally administered, potent antagonist of the 5-hydroxytryptamine 6, or 5-HT6, serotonin receptors in the brain. Antagonism of the 5-HT6 receptor is a novel mechanism of action that promotes the release of acetylcholine, glutamate and other neurotransmitters. These neurotransmitters are believed to be critical for alertness, memory, thought and judgment, key components of cognition and function that are impaired in patients with Alzheimer's disease. We plan to develop RVT-101 for use in combination with donepezil and potentially other cholinesterase inhibitors. Donepezil, a generic drug also marketed under the trade name Aricept by Eisai Co., Ltd. and Pfizer, lnc., is one of the most commonly used cholinesterase inhibitors. Cholinesterase inhibitors are designed to help prevent the breakdown of acetylcholine. Cholinesterase inhibitors are the current standard of care for the treatment of mild-to-moderate Alzheimer's disease, and the only class of drugs approved by the FDA for the treatment of patients with mild Alzheimer's disease. Based on preclinical and clinical data collected to date, we believe RVT-101, when used in combination with donepezil, works additively to increase the concentration of acetylcholine and other neurotransmitters and thereby synergistically improve cognition and function in patients with Alzheimer's disease.

We believe RVT-101, which is being developed as a once-daily oral medication, has the potential to be a best-in-class 5-HT6 receptor antagonist for the treatment of Alzheimer's disease based on its safety, tolerability and efficacy profile for up to 48 weeks, as demonstrated in a 684-subject, randomized, placebo-controlled Phase 2b trial conducted by GSK. We believe this is significant, in part, because currently marketed Alzheimer's disease drugs were approved on efficacy data of 28 weeks or less. Furthermore, we believe RVT-101 has a number of favorable properties as a product candidate for Alzheimer's disease, including once daily dosing, a low potential for drug interactions, and an ability to be administered with or without food.

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RVT-101 was originally developed by GSK. Prior to our acquisition of RVT-101 in December 2014, GSK conducted 13 clinical trials for RVT-101 involving over 1,250 individuals, which included healthy subjects as well as subjects with mild-to-moderate Alzheimer's disease. In a Phase 2b clinical trial of 684 subjects with mild-to-moderate Alzheimer's disease, subjects that received 35 mg RVT-101 in combination with donepezil achieved a statistically significant improvement in cognition at 12, 24 and 48 weeks following initiation of treatment, compared to subjects that received donepezil alone, as measured by the Alzheimer's Disease Assessment Scale-cognitive, or ADAS-cog, subscale. In addition to RVT-101's effect on cognition, subjects that received 35 mg RVT-101 in combination with donepezil achieved a statistically significant improvement in function at 12, 24 and 36 weeks following the initiation of treatment, compared to subjects that received donepezil alone, as measured by the Alzheimer's Disease Cooperative Study Activities of Daily Living, or ADCS-ADL, a commonly used scale evaluating function in which a subject's ability to perform a list of daily activities is evaluated based on information obtained from the subject and his or her caregiver. We believe these ADCS-ADL results are particularly noteworthy in light of the fact that the decline in the ability of Alzheimer's disease patients to perform activities essential to daily living places a significant burden on caregivers and the healthcare system. We plan to confirm the results of the Phase 2b clinical trial conducted by GSK in our planned Phase 3 pivotal program and further assess the safety and efficacy of RVT-101 in combination with donepezil.

To determine whether an outcome is statistically significant, a "p-value" is calculated. Historically, the FDA and European Medicines Agency, or the EMA, have generally required newly approved drugs to demonstrate an effect with a p-value of less than 0.05, which suggests there is a less than 5.0% probability that the observed difference between the control group and the treatment group is due to chance alone rather than the efficacy of the treatment. When the p-value is less than 0.05, the result is generally considered "statistically significant," and may support a finding of efficacy by regulatory authorities. However, regulatory authorities, including the FDA and EMA, do not rely on strict statistical significance thresholds as criteria for market approval and maintain the flexibility to evaluate the overall risks and benefits of a treatment. Accordingly, treatments may receive market approval from the FDA or EMA even if the p-value of the primary endpoint is greater than 0.05, or may fail to receive market approval from the FDA or EMA even if the p-value of the primary endpoint is less than 0.05.

According to Alzheimer's Disease International, the international federation of Alzheimer's disease associations, more than 44 million people worldwide suffer from some form of dementia. Beginning in the second half of 2015, we plan to evaluate RVT-101 as a potential treatment for forms of dementia other than mild-to-moderate Alzheimer's disease, such as severe Alzheimer's disease, dementia with Lewy bodies, Parkinson's disease dementia and vascular dementia. We also intend to augment our current pipeline through the acquisition or in-license of additional late-stage product candidates that complement RVT-101 and that we believe can be developed and commercialized in a capital-efficient manner.

We are a wholly-owned subsidiary of Roivant Sciences Ltd., a company focused on the acquisition, development and commercialization of late-stage product candidates that are non-strategic, deprioritized or under-resourced at other biopharmaceutical companies. We have assembled a team with substantial experience in developing and obtaining approval for drugs for central nervous system disorders, including Dr. Lawrence Friedhoff, the Chief Development Officer of Axovant Sciences, Inc., who previously led the development of Aricept at Eisai Co., Ltd. Aricept achieved peak annual global sales of $4.2 billion in 2010.

Our Strategy

Our goal is to be the leading biopharmaceutical company focused on the treatment of dementia.

The key elements of our strategy to achieve this goal include the following:

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Market Opportunity for the Treatment of Alzheimer's Disease

Dementia is a term that describes a wide range of symptoms associated with a decline in memory or other cognitive abilities severe enough to interfere with daily activities. Alzheimer's disease, a progressive neurodegenerative disorder that results in significant impairments in cognition and function, is one form of dementia. According to Alzheimer's Disease International, more than 44 million individuals worldwide suffer from dementia, and based on scientific literature, approximately 34 million individuals are affected by Alzheimer's disease. It is estimated that 11% of adults age 65 and older have Alzheimer's disease. In addition, the prevalence of Alzheimer's disease is expected to increase over time, with 13.8 million people age 65 and older projected to have the disease by 2050 in the United States. This projection does not include Alzheimer's disease patients under the age of 65, who currently account for approximately 4% of the overall Alzheimer's disease population.

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Projected Number of People Age 65 and Older
with Alzheimer's Disease in U.S. (Millions)

GRAPHIC

                                                 Source: Alzheimer's Association.

In addition to its debilitating effect on patients' cognition and day-to-day functioning, Alzheimer's disease places a significant burden on the healthcare system. According to the Alzheimer's Association, the aggregate cost of care in 2014 for patients with Alzheimer's disease and other types of dementia in the United States was estimated to be $214 billion, over half of which is borne by the Medicare system.

Alzheimer's disease is often grouped into three categories based on severity: mild, moderate and severe. Although the relative prevalence of each of these categories is not well-defined in the literature, a report published by the Alzheimer's Society, a leading care and research charity in the United Kingdom for individuals and families that suffer from dementia, estimates that between 70% and 90% of all Alzheimer's disease patients age 65 and older have mild-to-moderate Alzheimer's disease.

The following figure illustrates the estimated proportion of Alzheimer's disease patients with mild, moderate and severe Alzheimer's disease by age group.

GRAPHIC

                                                                Source: Alzheimer's Society: Dementia UK, 2007.

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While the pathophysiology of Alzheimer's disease is not completely known, it is understood that cognitive and behavioral disturbances are the result of dysfunctional neurotransmitter systems, including those associated with acetylcholine, glutamate, dopamine and norepinephrine. The FDA has approved two classes of drugs for the treatment of Alzheimer's disease: cholinesterase inhibitors and N -methyl-D-aspartate, or NMDA, receptor antagonists. The current standard of care for the treatment of patients with mild-to-moderate Alzheimer's disease includes the use of cholinesterase inhibitors initiated at the time of diagnosis. Cholinesterase inhibitors are designed to help prevent the breakdown of acetylcholine. Acetylcholine is a chemical messenger believed to be critical for alertness, memory, thought and judgment. Currently marketed cholinesterase inhibitors include donepezil (marketed by Eisai and Pfizer as Aricept), rivastigmine (marketed by Novartis AG as Exelon) and galantamine (marketed by Janssen Pharmaceuticals as Razadyne). Prior to the availability of generic forms of donepezil in 2010, Aricept was the most widely prescribed cholinesterase inhibitor, achieving peak annual global sales of $4.2 billion. Other cholinesterase inhibitors include Exelon and Razadyne, which achieved peak annual global sales of $1.1 billion in 2011 and $575 million in 2008, respectively. Cholinesterase inhibitors continue to be used widely for the treatment of patients with Alzheimer's disease and can improve cognition. However, most patients require additional therapy due to progression of their disease.

There is no therapy currently approved by the FDA or the EMA for use in conjunction with cholinesterase inhibitors for the treatment of mild-to-moderate Alzheimer's disease. In moderate-to-severe Alzheimer's disease, memantine, an NMDA receptor antagonist marketed by Forest Laboratories as Namenda, is commonly administered in combination with cholinesterase inhibitors. Namenda achieved peak annual global sales of $2.3 billion in 2013. Namenda, however, is only approved for moderate-to-severe Alzheimer's disease and is not approved by the FDA for mild Alzheimer's disease. Other than cholinesterase inhibitors, no other drugs are currently approved for the treatment of mild Alzheimer's disease. Accordingly, we believe there is a significant opportunity to improve the clinical outcomes of patients with mild-to-moderate Alzheimer's disease, particularly in the development of drugs to be used in combination with cholinesterase inhibitors.

According to a report by the Alzheimer's Society in 2007, the population of patients with mild-to-moderate Alzheimer's disease is estimated to be significantly larger than the population with severe disease, accounting for an estimated 70% to 90% of all Alzheimer's disease patients age 65 and older. We believe that our product candidate, RVT-101, if approved, would represent a compelling option for use in combination with cholinesterase inhibitors for the treatment of mild-to-moderate Alzheimer's disease, as has been the case for Namenda in patients with moderate-to-severe Alzheimer's disease.

RVT-101

Overview

We acquired worldwide rights to RVT-101 from GSK in December 2014. RVT-101 is an orally administered, potent antagonist of the 5-HT6 serotonin receptor. By antagonizing the 5-HT6 receptor, RVT-101 helps enhance the release of acetylcholine, glutamate and other neurotransmitters that are essential to cognition.

5-HT6 receptors are primarily localized to the central nervous system, or CNS, particularly in regions of the brain that modulate cognition. Because 5-HT6 receptor antagonists do not significantly increase levels of acetylcholine outside of the CNS, it is believed that 5-HT6 receptor antagonists have limited peripheral side effects, including many that are commonly associated with cholinesterase inhibitors. In addition, we believe that RVT-101's action as a 5-HT6 receptor antagonist provides a strong mechanistic rationale to support its use in combination with cholinesterase inhibitors. While cholinesterase inhibitors help prevent the breakdown of acetylcholine, 5-HT6 receptor antagonists promote the release of acetylcholine. Therefore, when used in combination with one another, we believe that 5-HT6 receptor antagonists and cholinesterase inhibitors increase the concentration of acetylcholine through complementary mechanisms without exacerbating the toxicities associated with cholinesterase inhibitors.

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The following graphic depicts RVT-101's potential mechanistic additivity or synergy with donepezil.

GRAPHIC

In addition to the role of 5-HT6 receptor antagonists in promoting the central release of neurotransmitters important to cognition and function, scientific literature suggests that 5-HT6 receptor antagonists may also improve neural structural plasticity. Plasticity refers to the physical flexibility of neuronal synapses, which are structures that enable communication between different nerve cells in the brain. Neural structural plasticity enables the brain to adapt and process complex information, which is impaired in patients with Alzheimer's disease. In preclinical studies in rats, 5-HT6 receptor antagonists have been observed to augment the expression level of polysialic acid neural cell adhesion molecule, or PSA-NCAM, which is an essential mediator of plasticity and cognition. According to published literature, antagonism of the 5-HT6 receptor decreases gamma aminobutyric acid, or GABA, which in turn increases the release of glutamate. This is believed to promote the increased expression of PSA-NCAM by young neurons, which enables the brain to adapt and process complex information and may provide another reason to believe that RVT-101 may impact the progression of dementia.

Preclinical and Clinical Development

Preclinical and Phase 1 Clinical Development

In preclinical studies conducted by GSK, RVT-101 was observed to be a potent, selective, orally bioavailable 5-HT6 receptor antagonist that penetrates the CNS, with activity in multiple models of cognitive enhancement. In in vitro studies, RVT-101 was observed to have a high affinity for the human recombinant 5-HT6 receptor, with a negative log of the dissociation constant (pK i ) value of 9.63. The pKi value is a standard metric for comparing the relative strength with which different compounds bind to a biologic receptor, particularly those with the same mechanism of action or within the same class. A higher pKi value suggests stronger binding of a drug for a given target. In addition, RVT-101 was observed to have high selectivity for the 5-HT6 receptor, with greater than 100 times selectivity for the 5-HT6 receptor over all other receptors screened, other than the 5-HT2a receptor, for which RVT-101 was observed to have a pKi value of 7.99, suggesting approximately 44 times greater selectivity for the 5-HT6 receptor over the 5-HT2a receptor. In studies in male Sprague Dawley rats, the co-administration of RVT-101 with donepezil resulted in increased levels of acetylcholine in the brain as compared to those induced by either drug alone. This

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provides neurochemical evidence of a potential additive or synergistic effect associated with co-administration of a 5-HT6 receptor antagonist with a cholinesterase inhibitor.

Furthermore, the combination of RVT-101 and donepezil demonstrated potentially synergistic activity in task recall, or memory, in a rat model of age dependent effects using a water maze. No significant synergistic activity was observed on the rate of task acquisition, or learning.

In 2007, GSK submitted to the FDA an investigational new drug application, or IND, for SB742457 (now known as RVT-101), for the treatment of mild-to-moderate Alzheimer's disease. In December 2014, this IND was transferred to us, and is the IND under which our Phase 3 pivotal program will be conducted. GSK completed nine Phase 1 clinical trials for RVT-101 in a total of 225 healthy adults. Single doses of up to 175 mg and repeat doses of up to 50 mg of RVT-101 were administered to young and elderly subjects. In these studies, no safety signals or trends in adverse events, electrocardiogram, vital signs or laboratory parameters were identified that would have precluded further studies of RVT-101. These studies demonstrated a number of favorable properties of RVT-101, including once daily dosing, a low potential for drug interactions and an ability to be taken with or without food. In addition, imaging studies using positive emission tomography, or PET, scanning demonstrated that RVT-101 has near to full occupancy of the 5-HT6 receptors in the caudate and putamen regions of the brain, even at doses as low as 3 mg. Based on a pharmacokinetic and pharmacodynamic model using PET imaging data, repeat dosing with the daily 35 mg dose of RVT-101 is predicted to occupy greater than 90% of 5-HT6 receptors in 97.5% of subjects and approximately 65% of 5-HT2a receptors in the brain.

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Phase 2 Clinical Development

GSK completed four Phase 2 clinical trials for RVT-101 in subjects with mild-to-moderate Alzheimer's disease, including three that evaluated RVT-101 as monotherapy and one that evaluated RVT-101 as adjunctive therapy in subjects who were already receiving a stable dose of donepezil. The designs of these trials, beginning with the most recently conducted, are summarized in the table below.

Phase/Trial Number
  Trial Design   Treatments/Dose   Sample Size   Outcome Measures
Phase IIb
AZ3110866
  48-week, double-blind, parallel group, placebo-controlled adjunct trial in mild-to-moderate Alzheimer's disease; adjunct to donepezil (5-10 mg)   Placebo (donepezil alone)
RVT-101 15 mg (on top of donepezil)
RVT-101 35 mg (on top of donepezil)
1:1:1 ratio
  684
Subjects stratified by baseline MMSE
  Primary: ADAS-cog, CDR-SB
Secondary: ADCS-ADL, MMSE, RBANS

Phase IIb
AZ3110865

 

24-week, double-dummy, parallel group, placebo-controlled monotherapy trial in mild-to-moderate Alzheimer's disease

 

Placebo
RVT-101 15 mg RVT-101 35 mg Donepezil 5-10 mg
1:1:1:1 ratio

 

576
Subjects stratified by baseline MMSE score

 

Primary: ADAS-cog, CIBIC plus
Secondary: RBANS, ADCS-ADL, MMSE, CSDD

Phase IIa
AZ3106242

 

24-week, double-blind, parallel group, placebo-controlled monotherapy trial in mild-to-moderate Alzheimer's disease

 

Placebo
RVT-101 15-35 mg
Donepezil 5-10 mg
1:1:1 ratio

 

198

 

Primary: ADAS-cog, CIBIC plus
Secondary: NPI, DAD, MMSE, CPTB, CTT, DVT, ACQLI

Phase IIa
AZ3100603

 

24-week, double-blind, parallel group, placebo-controlled monotherapy trial in mild-to-moderate Alzheimer's disease

 

Placebo
RVT-101 5 mg RVT-101 15 mg RVT-101 35 mg
2:1:1:2 ratio

 

371

 

Primary: ADAS-cog, CIBIC plus
Secondary: NPI, DAD, MMSE, CPTB, ACQLI

MMSE—Mini mental status examination score
ADAS-cog—Alzheimer's disease assessment scale
CDR-SB—Clinical dementia rating—scale sum of boxes
ADCS-ADL—Alzheimer's disease cooperative study—Activities of Daily Living Inventory scale
RBANS—Repeatable battery for the assessment of neuropsychological status scale
CIBIC-plus—Clinicians global impression of change plus caregiver input scale
CSDD—Cornell scale for depression in dementia
NPI—Neuropsychiatric inventory scale
DAD—Disability assessment for dementia scale
CPTB—Cognitive psychometric test battery
CTT—Color trails test
DVT—Digit vigilance test
ACQLI—Alzheimer's care quality of life instrument scale

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In all of the Phase 2 clinical trials conducted by GSK, RVT-101 was well-tolerated with no clinically meaningful trends in adverse events or serious adverse events. As monotherapy, treatment with RVT-101 did not result in a statistically significant improvement in cognition or function when compared to placebo. In the largest of these monotherapy trials (Study AZ3110865), donepezil, which was chosen as an active comparator, also failed to demonstrate a statistically significant benefit over placebo on the cognitive primary endpoint (ADAS-cog).

We view the results of the AZ3110866 trial, or the 0866 trial, in which RVT-101 was administered as an adjunctive therapy with donepezil, to be most directly relevant to our future development plans for RVT-101. This trial was designed as a large randomized placebo-controlled study in subjects with mild-to-moderate Alzheimer's disease, in which 684 subjects on a stable background of donepezil treatment were randomized to receive either 35 mg RVT-101, 15 mg RVT-101 or placebo once daily. The trial was originally planned to run for 24 weeks but was later extended to 48 weeks. The completion rate at week 24 was greater than 85% in each arm of the study, and the withdrawal rate at week 24 was lower in the 35 mg RVT-101 group (11%) than in the placebo group (12%). Median MMSE was the same in the placebo and the 15 mg and 35 mg RVT-101 groups (19.0). Baseline demographics were similar across the placebo groups and treatment groups. The design of this adjunctive therapy trial is shown in the following diagram:

GRAPHIC

In the group that received 35 mg RVT-101 in the 0866 trial, statistically significant improvements in cognition, as measured by the ADAS-cog scale, were observed at multiple time points, including at 12, 24 and 48 weeks following initiation of treatment. We believe this is a meaningful result because currently marketed Alzheimer's disease drugs were approved on data of 28 weeks or less. In addition to improvement in cognition, subjects in the 35 mg RVT-101 group demonstrated statistically significant improvement in function at 12, 24 and 36 weeks as measured by the ADCS-ADL. We believe these results on ADCS-ADL are particularly noteworthy in light of the fact that the decline in the ability of Alzheimer's disease patients to perform activities essential to daily living places a significant burden on caregivers and the healthcare system. The FDA has historically approved investigational Alzheimer's drugs based on efficacy in improving both cognition and function.

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The ADAS-cog, or the Alzheimer's Disease Assessment Scale—cognitive subscale, is a widely-used general cognitive measure in clinical trials of Alzheimer's disease. The scale assesses multiple cognitive domains ( e.g. , language and memory) by asking subjects to complete a set of defined tasks. Changes in the ADAS-cog score are often used to evaluate improvement or worsening of cognition, with higher scores suggesting greater dysfunction. The ADCS-ADL, or the Alzheimer's Disease Cooperative Study—Activities of Daily Living, is a commonly used scale that evaluates a patient's ability to perform tasks of everyday living ( e.g. , household chores, toileting and dressing) based on information obtained from the subject and his or her caregiver. Changes in the ADCS-ADL score are often used to evaluate improvement or worsening of functional ability, with lower scores suggesting greater dysfunction.

The results of the 0866 trial on ADAS-cog and ADCS-ADL, as analyzed by our statistician based on data files provided by GSK, are summarized below. We present these analyses, conducted using two different statistical methods and two different sets of covariates, to demonstrate the robust nature of our data irrespective of method of analysis. The first of these methods is the Mixed Model Repeated Measure, or MMRM, analysis, which is a commonly used method to account for incomplete data. This was the primary intent-to-treat, or ITT, statistical method of analysis as pre-specified by GSK. The second method is the Analysis of Covariance, or ANCOVA, based on observed data (also referred to as a completer analysis). This analytical method includes data only from subjects that completed the study at each of the time points at which data was collected.

Both of these statistical methods control for covariates, which are unrelated variables that may independently impact the effect of one variable on another. It is common to account for covariates when analyzing data to determine the true effect of a drug on a given outcome. We have presented two sets of results, based on two sets of covariates, for both the MMRM and completer analyses on ADAS-cog and ADCS-ADL. The first set of covariates were pre-specified by GSK for consideration in the primary analysis and the second set of covariates (or closest available comparable covariates) were those used in the LADDER trial, a published Phase 2 study evaluating the effects of idalopirdine, a 5-HT6 antagonist in development by H. Lundbeck A/S, a Danish pharmaceutical company, or Lundbeck, in patients with moderate Alzheimer's disease. Each set of covariates is described in the footnotes to the tables below.

The results presented below include the covariates that were pre-specified by GSK for consideration in the primary analysis.

ADAS-cog—Change from Baseline

Visit
  Treatment   Number of
subjects
  Difference vs.
donepezil alone:
MMRM ITT Analysis (1)(2)
  P-value   Difference vs. donepezil
alone: Completer
Analysis (1)(3)
  P-value  

Week 12

  Placebo (donepezil alone)     206                          

  15 mg RVT-101     203     –0.24     0.631     –0.23     0.645  

  35 mg RVT-101     219     –1.30     0.006 **   –1.29     0.008 **

Week 24

  Placebo (donepezil alone)     194                          

  15 mg RVT-101     185     –0.67     0.281     –0.75     0.231  

  35 mg RVT-101     207     –1.50     0.013 *   –1.63     0.007 **

Week 36

  Placebo (donepezil alone)     164                          

  15 mg RVT-101     156     –0.04     0.947     –0.06     0.925  

  35 mg RVT-101     181     –1.21     0.057     –1.35     0.039 *

Week 48

  Placebo (donepezil alone)     145                          

  15 mg RVT-101     142     –0.07     0.925     –0.18     0.824  

  35 mg RVT-101     170     –1.64     0.024 *   –1.82     0.018 *
(1)
Higher score indicates greater dysfunction, lower score indicates relative improvement

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(2)
MMRM ITT analysis includes the following covariates: baseline ADAS-cog total score, baseline MMSE, country group, visit, time since diagnosis, baseline BMI, treatment, baseline ADAS-cog total score by visit, baseline MMSE by visit and treatment by visit.

(3)
Completer Analysis includes the following covariates: baseline ADAS-cog total score, baseline MMSE, country group, time since diagnosis, baseline BMI and treatment.

P-value is a conventional statistical method for measuring the statistical significance of clinical results. A p-value of 0.05 or less represents statistical significance, meaning that there is a less than 1-in-20 likelihood that the observed results occurred by chance.

*
p < 0.05

**
p < 0.01

ADCS-ADL—Change from Baseline

Visit
  Treatment   Number of
subjects
  Difference vs.
donepezil alone:
MMRM ITT Analysis (1)(2)
  P-value   Difference vs. donepezil
alone: Completer
Analysis (1)(3)
  P-value  

Week 12

  Placebo (donepezil alone)     202                          

  15 mg RVT-101     201     0.63     0.396     0.64     0.381  

  35 mg RVT-101     222     1.72     0.019 *   1.72     0.016 *

Week 24

  Placebo (donepezil alone)     192                          

  15 mg RVT-101     186     1.43     0.110     1.42     0.116  

  35 mg RVT-101     209     2.00     0.024 *   2.11     0.016 *

Week 36

  Placebo (donepezil alone)     164                          

  15 mg RVT-101     160     –0.07     0.944     –0.08     0.942  

  35 mg RVT-101     183     1.93     0.038 *   2.20     0.029 *

Week 48

  Placebo (donepezil alone)     147                          

  15 mg RVT-101     145     0.46     0.705     1.22     0.325  

  35 mg RVT-101     171     1.94     0.088     2.34     0.048 *
(1)
Lower score indicates greater dysfunction, higher score indicates relative improvement

(2)
MMRM ITT analysis includes the following covariates: baseline ADCS-ADL total score, baseline MMSE, country group, visit, time since diagnosis, baseline BMI, treatment, baseline ADCS-ADL total score by visit, baseline MMSE by visit and treatment by visit.

(3)
Completer analysis includes the following covariates: baseline ADCS-ADL total score, baseline MMSE, country group, time since diagnosis, baseline BMI and treatment.

*
p < 0.05

The data tables below present the results of analyses that account for the same covariates (or closest available comparable covariates) as those included in the LADDER trial.

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ADAS-cog—Change from Baseline

Visit
  Treatment   Number of
subjects
  Difference vs.
donepezil alone:
MMRM ITT Analysis (1)(2)
  P-value   Difference vs. donepezil
alone: Completer
Analysis (1)(3)
  P-value  

Week 12

  Placebo (donepezil alone)     206                          

  15 mg RVT-101     203     –0.32     0.524     –0.32     0.529  

  35 mg RVT-101     219     –1.42     0.003 **   –1.41     0.005 **

Week 24

  Placebo (donepezil alone)     194                          

  15 mg RVT-101     185     –0.77     0.227     –0.80     0.212  

  35 mg RVT-101     207     –1.66     0.007 **   –1.82     0.004 **

Week 36

  Placebo (donepezil alone)     164                          

  15 mg RVT-101     156     –0.15     0.818     –0.16     0.820  

  35 mg RVT-101     181     –1.40     0.035 *   –1.58     0.020 *

Week 48

  Placebo (donepezil alone)     145                          

  15 mg RVT-101     142     –0.23     0.779     –0.46     0.579  

  35 mg RVT-101     170     –1.90     0.012 *   –2.12     0.008 **
(1)
Higher score indicates greater dysfunction, lower score indicates relative improvement

(2)
MMRM ITT analysis includes the following covariates: baseline ADAS-cog total score, country group, visit, treatment, baseline ADAS-cog total score by visit and treatment by visit.

(3)
Completer analysis includes the following covariates: baseline ADAS-cog total score, country group and treatment.

*
p < 0.05

**
p < 0.01


ADCS-ADL—Change from Baseline

Visit
  Treatment   Number of
subjects
  Difference vs.
donepezil alone:
MMRM ITT Analysis (1)(2)
  P-value   Difference vs. donepezil
alone: Completer
Analysis (1)(3)
  P-value  

Week 12

  Placebo (donepezil alone)     202                          

  15 mg RVT-101     201     0.78     0.292     0.77     0.290  

  35 mg RVT-101     222     1.79     0.015 *   1.78     0.013 *

Week 24

  Placebo (donepezil alone)     192                          

  15 mg RVT-101     186     1.69     0.061     1.60     0.080  

  35 mg RVT-101     209     2.18     0.016 *   2.28     0.011 *

Week 36

  Placebo (donepezil alone)     164                          

  15 mg RVT-101     160     0.18     0.863     0.16     0.876  

  35 mg RVT-101     183     2.16     0.026 *   2.42     0.018 *

Week 48

  Placebo (donepezil alone)     147                          

  15 mg RVT-101     145     0.85     0.495     1.57     0.216  

  35 mg RVT-101     171     2.27     0.059     2.62     0.032 *
(1)
Lower score indicates greater dysfunction, higher score indicates relative improvement

(2)
MMRM ITT analysis includes the following covariates: baseline ADCS-ADL total score, country group, visit, treatment, baseline ADCS-ADL total score by visit and treatment by visit.

(3)
Completer analysis includes the following covariates: baseline ADCS-ADL total score, country group and treatment.

*
p < 0.05

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The graphs below present the results on ADAS-cog and ADCS-ADL.


ADAS-cog Change over 48 Weeks

GRAPHIC

ADCS-ADL Change over 48 Weeks

GRAPHIC

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GSK's pre-specified co-primary endpoints in the 0866 trial were the ADAS-cog and Clinical Dementia Rating Sum of Boxes, or CDR-SB, a composite scale with certain components that evaluate cognition and others that assess function, at 24 weeks following treatment. While the 35 mg RVT-101 dose group demonstrated a statistically significant improvement in the CDR-SB at 12 weeks and a trend suggesting a benefit at 24 weeks and further time points, the benefit at 24 weeks was not statistically significant. No Alzheimer's disease drugs have ever been approved on the basis of CDR-SB as a primary endpoint. We believe that the ADAS-cog and ADCS-ADL represents a more appropriate set of co-primary endpoints in patients with mild-to-moderate Alzheimer's disease given the precedence of other Alzheimer's disease drugs having been approved on the basis of each of these endpoints. GSK also measured the Mini Mental Status Exam, or MMSE, and Repeatable Battery for the Assessment of Neurophsychological Status, or RBANS, as secondary endpoints. RVT-101 did not show a statistically significant benefit as measured by MMSE or RBANS.

The following table presents the results of GSK's analysis on CDR-SB.


CDR-SB—Change from Baseline

Visit
  Treatment   Number of
subjects
  Difference vs. placebo
donepezil alone:
MMRM ITT Analysis (1)(2)
  P-value  

Week 12

  Placebo (donepezil alone)     205              

  15 mg RVT-101     200     –0.12     0.387  

  35 mg RVT-101     221     –0.30     0.018 *

Week 24

  Placebo (donepezil alone)     194              

  15 mg RVT-101     186     –0.11     0.563  

  35 mg RVT-101     207     –0.14     0.418  

Week 36

  Placebo (donepezil alone)     165              

  15 mg RVT-101     155     0.18     0.439  

  35 mg RVT-101     179     –0.19     0.336  

Week 48

  Placebo (donepezil alone)     149              

  15 mg RVT-101     143     0.34     0.190  

  35 mg RVT-101     170     –0.06     0.787  
(1)
Higher score indicates greater dysfunction, lower score indicates relative improvement

(2)
The following covariates are included in this analysis: baseline score, baseline MMSE, country group, visit, time since diagnosis, baseline BMI, treatment, baseline score by visit, baseline MMSE by visit and treatment by visit.

*
p < 0.05

Safety and Tolerability

RVT-101 was observed to be well-tolerated by subjects in all 13 clinical trials conducted by GSK. In the 0866 trial, which was a large randomized trial in which subjects received RVT-101 or placebo added to a stable dose of donepezil, the proportion of subjects that experienced drug-related adverse events was lower in the group that received 35 mg RVT-101 with donepezil than in the group that received placebo with donepezil, at 24 weeks (6% versus 9%) and 48 weeks (7% versus 13%). The proportion of subjects that had adverse events leading to withdrawal from the trial was comparable across the 35 mg RVT-101 group and the placebo group, with 5% and 3% having an adverse event leading to withdrawal at 24 weeks, and 7% and 5% at 48 weeks, in each of the groups respectively. At week 24, a total of nine subjects (1.3%) across all three groups had drug-related adverse events that led to withdrawal from the study. In the placebo group, two subjects (0.9%) withdrew from the study due to at least one drug-related adverse event (worsening Alzheimer's disease, insomnia and/or seizure). In the 15 mg RVT-101 group, three subjects (1.4%) withdrew from the study due to at least one drug-related adverse event (lichenoid keratosis, pruritus and/or pustular rash). In the 35 mg RVT-101 group, four subjects (1.7%) withdrew from the study due to at least one drug-related adverse event (rash, drug eruption, hepatic enzyme elevation, agitation and/or increased libido). The incidence of serious adverse events was similar across treatment groups at 24 weeks

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(4% to 7%). There were no drug-related serious adverse events in the RVT-101 groups at 24 or 48 weeks, and there was one drug-related serious adverse event in the placebo group (aphasia) at 24 weeks. No subjects in either the 35 mg or 15 mg RVT-101 groups experienced a fall-related serious adverse event, as compared to two subjects in the placebo group, and falls were less frequent in both the 35 mg RVT-101 group (2%) and the 15 mg RVT-101 group (2%) compared to the placebo group (6%). There were no notable differences between the RVT-101 and placebo groups in vital sign changes, electrocardiogram changes or significant changes in laboratory parameters, and there was no evidence of significant liver toxicity (e.g. at week 24, one subject (< 1%) in the 35 mg RVT-101 group had elevated levels of liver enzymes, alanine aminotransferase, or ALT, and aspartate aminotransferase, or AST, that were greater than three times the upper limit of normal and led to withdrawal from the study). We believe RVT-101's favorable liver toxicity profile is particularly noteworthy in light of the liver toxicity issues observed with other Alzheimer's disease drugs that are in development today or have been approved in the past.

The tolerability profile of RVT-101 in the 0866 trial, with the relevant comparisons to placebo when added to a stable dose of donepezil, is shown in the table below.

 
  35 mg RVT-101 plus
Donepezil
  Placebo plus
Donepezil
 

24 weeks —Withdrawals from trial

    11 %   12 %

48 weeks —Withdrawals from trial

    20 %   22 %

24 weeks —Drug-related serious adverse events

    0 %   < 1 %

48 weeks —Drug-related serious adverse events

    0 %   < 1 %

24 weeks —Drug-related adverse events

    6 %   9 %

48 weeks —Drug-related adverse events

    7 %   13 %

Other Clinical Trials of 5-HT6 Receptor Antagonists

Lundbeck, in conjunction with Otsuka Pharmaceutical, is also developing a 5-HT6 receptor antagonist that is currently in Phase 3, idalopirdine (Lu AE58054).

In the LADDER trial referenced above, idalopirdine demonstrated statistically significant benefits in cognition at 24 weeks in patients receiving a stable dose of donepezil. We believe that the observed efficacy of idalopirdine in improving cognition validates the mechanism of action of 5-HT6 receptor antagonists. Idalopirdine did not show statistically significant benefits on any functional endpoints or other secondary endpoints, though it did demonstrate a positive trend. In the trial, 12% of patients in the idalopirdine group discontinued due to adverse events (compared to 5% of patients in the placebo group), and 8% discontinued due to elevations in liver enzymes, with 9% and 6% experiencing AST or ALT elevations greater than twice and three times the upper limit of normal respectively. We believe that liver toxicity is a particularly sensitive adverse event in Alzheimer's disease drug development given the history of liver toxicity associated with tacrine, the first cholinesterase inhibitor approved for Alzheimer's disease, which was withdrawn from the U.S. market in 2012. In addition, 6% of patients in the idalopirdine group experienced serious adverse events that were judged to be drug-related at week 24 (compared to 4% of patients in the placebo group), and 21% of patients in the idalopirdine group withdrew from the study (compared to 11% of patients in the placebo group).

According to Clinical Trials.gov, in its current Phase 3 program, Lundbeck is evaluating idalopirdine at multiple different doses, all of which are lower than the daily dose at which efficacy was observed in the LADDER trial, and at a different dosing frequency (once daily) than that which was evaluated in the LADDER trial (three times daily). In addition, according to ClinicalTrials.gov, Lundbeck has not specified a co-primary function endpoint for its Phase 3 program.

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Phase 3 Clinical Development Plan

We intend to conduct a Phase 3 pivotal program in subjects with mild-to-moderate Alzheimer's disease designed to confirm the results of the 0866 trial. We met with the FDA at the end of March 2015 to confirm that there are no additional clinical or non-clinical studies required to support the initiation of our Phase 3 pivotal program. We believe that our meeting with the FDA confirms the results of the prior end-of-Phase 2 meeting between the FDA and GSK, and further reinforces our view that no additional clinical or non-clinical studies will be required prior to the initiation of our planned Phase 3 pivotal program. As a result, based on our meeting with the FDA, we intend to conduct a Phase 3 trial to confirm the results of the 0866 trial and believe that this trial, if successful, would, in conjunction with the 0866 trial, be sufficient to support the filing of a NDA. Our proposed Phase 3 trial would randomize patients already on a stable background of donepezil therapy to receive adjunctive treatment with either 35 mg RVT-101 or placebo once daily for a period of at least 24 weeks. We plan to enroll at least 500 subjects for each arm of this trial. We intend to begin this pivotal trial in the fourth quarter of 2015, and if the results of this trial are positive, our goal is to submit an NDA to the FDA and an MAA to the EMA by the end of 2017. We may conduct additional clinical trials to further support the commercial potential of RVT-101 in the United States, the European Union, Japan and other major markets. For example, we may consider conducting additional studies to support approval of a fixed dose combination of RVT-101 and donepezil. We do not intend to develop RVT-101 as a monotherapy.

Other Potential Indications for RVT-101

In addition to our plan to develop and commercialize RVT-101 for the treatment of mild-to-moderate Alzheimer's disease, we intend to evaluate RVT-101 in trials for the potential treatment of other forms of dementia, such as severe Alzheimer's disease, dementia with Lewy bodies, Parkinson's disease dementia and vascular dementia, beginning in the second half of 2015. Our goal is to have preliminary results from the first of these potential trials in the second half of 2016.

Severe Alzheimer's Disease

We believe the efficacy of RVT-101 in treating patients with mild-to-moderate Alzheimer's disease supports its investigation in patients with severe Alzheimer's disease. Moreover, we believe the favorable tolerability profile of RVT-101 supports its use in combination with other classes of drugs currently used to treat patients with severe Alzheimer's disease, including cholinesterase inhibitors and NMDA antagonists.

Dementia with Lewy Bodies

Dementia with Lewy bodies is a condition characterized by abnormal clusters of proteins known as Lewy bodies that accumulate within nerve cells. According to the Alzheimer's Association, dementia with Lewy bodies affects between 600,000 and 900,000 individuals in the United States. While dementia with Lewy bodies is estimated to account for between 10% and 25% of all dementia cases, there are no drugs approved by the FDA for its treatment. In addition to suffering from impaired cognition and cognitive fluctuations, patients with dementia with Lewy bodies often suffer from visual hallucinations, muscular rigidity and tremors.

Patients with dementia with Lewy bodies are often treated off-label with cholinesterase inhibitors. Cholinergic neurotransmission is thought to be even more dysfunctional in dementia with Lewy bodies than in Alzheimer's disease. This suggests that neurotransmitter-targeted therapies that work by increasing the inter-synaptic concentration of acetylcholine, much like RVT-101 in Alzheimer's disease, may also be effective in improving cognition in patients with dementia with Lewy bodies. While cholinesterase inhibitors are not approved by the FDA for dementia with Lewy bodies, donepezil was approved in September 2014 in Japan for this indication on the basis of two randomized placebo-controlled trials in fewer than 150 subjects conducted by Eisai Co., Ltd. In one of these trials, subjects receiving 5 mg of Aricept achieved a 3.4 point improvement in mini mental status examination, or MMSE, score, a test used to measure cognitive impairment, compared to patients receiving placebo (p<0.001). We believe that the

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addition of a 5-HT6 receptor antagonist, such as RVT-101, may augment the efficacy of cholinesterase inhibitors in patients with dementia with Lewy bodies by promoting the synaptic release of acetylcholine and other neurotransmitters essential to cognition. We are not aware of any drugs in late-stage clinical development for the treatment of dementia with Lewy bodies. As such, we believe that RVT-101 has the potential to be the first drug approved by the FDA for dementia with Lewy bodies. Based on the number of patients affected by dementia with Lewy bodies in the United States, our internal estimates suggest that the potential market opportunity is $2 billion to $4 billion in the United States. We believe we can complete a Phase 2 clinical trial for the treatment of dementia with Lewy bodies for between $5 million and $15 million. This estimate is based on assumptions that may prove to be wrong, and the cost of this trial may be greater than expected.

Parkinson's Disease Dementia

Parkinson's disease is a neurodegenerative disorder associated with motor and neuropsychiatric symptoms that is estimated to affect approximately one million individuals in the United States. The Alzheimer's Association estimates that up to 80% of individuals with Parkinson's disease may experience dementia. These patients experience changes in memory, judgment and concentration, as well as visual hallucinations, delusions, and sleep disturbances. Rivastigmine, a cholinesterase inhibitor, is the only drug approved by the FDA for the treatment of Parkinson's disease dementia. We believe the efficacy of rivastigmine in Parkinson's disease dementia suggests that other classes of drugs that increase the synaptic level of acetylcholine, such as 5-HT6 receptor antagonists, may also be effective in treating patients with this disease.

Vascular Dementia

Vascular dementia is caused by impaired blood flow to the brain and is often associated with strokes, which deprive brain cells of oxygen and nutrients. Symptoms are most obvious in the period following a stroke, and include confusion, disorientation, and speech and visual abnormalities. In a randomized-placebo controlled clinical trial sponsored by Eisai Medical Research Inc., patients with vascular dementia treated with donepezil achieved a statistically significant benefit in cognition relative to placebo. We believe this suggests that other classes of drugs that increase the concentration of acetylcholine, such as 5-HT6 receptor antagonists, may also be effective in treating the disease.

Asset Purchase Agreement with GlaxoSmithKline

In December 2014, we entered into an asset purchase agreement with GSK, or the GSK Agreement, pursuant to which GSK assigned to us all of their rights to certain patents, regulatory documentation, data records and materials related to SB-742457, which we now refer to as RVT-101, and other related compounds claimed by a specific patent application.

Under the GSK Agreement, we are obligated to use commercially reasonable efforts to develop, manufacture, commercialize and seek and maintain regulatory approval for RVT-101. GSK retains the right to use the assigned compounds for internal research purposes, but GSK is not allowed to conduct clinical development or commercialize any assigned compound in any field of use during the royalty term for any products containing RVT-101, which we refer to as the RVT-101 Products.

Under the GSK Agreement, GSK received an upfront payment of $5 million and an additional $5 million upon the earliest to occur of specified events that indicate a single Phase 3 trial may be sufficient to obtain FDA approval for RVT-101 Products for Alzheimer's disease. We are also obligated to pay GSK $35 million, $25 million and $10 million upon approval of RVT-101 in the United States, the European Union and Japan, respectively, as well as an additional one-time payment of $85 million for the first calendar year in which we achieve global net sales of $1.2 billion for RVT-101.

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Under the GSK Agreement we are also obligated to pay a fixed 12.5% royalty based on net sales of RVT-101 Products, subject to reduction on a product-by-product and country-by-country basis, on account of expiration of patent and regulatory exclusivity or upon generic entry. Our royalty obligations with respect to RVT-101 Products will end, on a product-by-product and country-by-country basis, on the latest of (1) expiration of the last valid claim of the assigned patents covering the manufacture, use or composition of such product in such country, (2) expiration of regulatory exclusivity for such product in such country, or (3) 12 years from the first commercial sale of such product in such country, or if such country is one of the five major European countries listed in the GSK Agreement, then 12 years from the first commercial sale of such product in at least three such major European countries.

Our royalty payment obligations and our milestone payment obligations for RVT-101 Products may be reduced by a portion of royalty payments, and in some cases other payments, made to third parties for rights to certain U.S. patents, in each case subject to a maximum reduction.

Sales and Marketing

We do not have our own marketing, sales or distribution capabilities. In order to commercialize our product candidate if approved for commercial sale, we must either develop a sales and marketing infrastructure or collaborate with third-parties that have sales and marketing experience. We plan to directly commercialize our product candidates in the United States and the European Union. In other markets for which commercialization may be less capital efficient for us, we may selectively pursue strategic collaborations with third parties in order to maximize the commercial potential of our product candidates.

Manufacturing

We have no experience in drug formulation or manufacturing and do not own or operate, and we do not expect to own or operate, facilities for product manufacturing, storage and distribution, or testing. While RVT-101 was being developed by GSK, it was also being manufactured by GSK. We expect that the drug substance transferred from GSK under the GSK Agreement will be sufficient for us to complete our planned Phase 3 pivotal program, and we have contracted with a third-party to fill, finish, supply, store and distribute the drug product for this program. We also will rely on third-party manufacturers to supply us with sufficient quantities of RVT-101 to be used, if approved, for the commercialization of RVT-101. If we are unable to initiate or continue our relationship with one or more of these third-party contractors, we could experience delays in our development efforts as we locate and qualify new manufacturers.

RVT-101 is a small molecule that can be manufactured using commercially available technologies. We acquired data from GSK related to the chemical synthesis and manufacturing of RVT-101, and we expect that we will be able to contract with third-party manufacturers for commercial supplies of RVT-101 on a cost-efficient basis based on our understanding of the simple structure and synthesis of the compound.

Manufacturing of any product candidate is subject to extensive regulations that impose various procedural and documentation requirements, which govern recordkeeping, manufacturing processes and controls, personnel, quality control and quality assurance, among others. We expect that all of our contract manufacturing organizations will manufacture RVT-101 under current Good Manufacturing Practice, or cGMP, conditions. cGMP is a regulatory standard for the production of pharmaceuticals to be used in humans.

Competition

We consider RVT-101's most direct competitor to be idalopirdine (Lu AE58054), a 5-HT6 receptor antagonist being developed by Lundbeck that is currently in Phase 3. Based on the publicly available information, other companies developing 5-HT6 receptor antagonists include Biotie Therapies, Pfizer, Avineuro and Suven Life Sciences. These other 5-HT6 receptor antagonists are all in Phase 2 or earlier stages of development for cognitive and other neurodegenerative disorders, and it is unknown to us whether

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any of these compounds remain in active development. We believe the development of multiple 5-HT6 receptor antagonists by other biopharmaceutical firms adds further validation to the therapeutic relevance of 5-HT6 as a target for the treatment of neurodegenerative disorders.

In addition to other 5-HT6 receptor antagonists in active development, we are aware of many biotechnology and pharmaceutical companies as well as academic institutions, government agencies and private and public research institutions that are developing, and may in the future develop and commercialize, products for Alzheimer's disease and other cognitive disorders.

Drug development is highly competitive and subject to rapid and significant technological advancements. Our ability to compete will significantly depend upon our ability to complete necessary clinical trials and regulatory approval processes, and effectively market any drug that we may successfully develop. Our current and potential future competitors include pharmaceutical and biotechnology companies, academic institutions and government agencies. The primary competitive factors that will affect the commercial success of any product candidate for which we may receive marketing approval include efficacy, safety and tolerability profile, dosing convenience, price, coverage and reimbursement. Many of our existing or potential competitors have substantially greater financial, technical and human resources than we do and significantly greater experience in the discovery and development of product candidates, as well as in obtaining regulatory approvals of those product candidates in the United States and in foreign countries. Our current and potential future competitors also have significantly more experience commercializing drugs that have been approved for marketing. Mergers and acquisitions in the pharmaceutical and biotechnology industries could result in even more resources being concentrated among a small number of our competitors.

Accordingly, our competitors may be more successful than us in obtaining regulatory approval for therapies and in achieving widespread market acceptance of their drugs. It is also possible that the development of a cure or more effective treatment method for Alzheimer's disease by a competitor could render our product candidate non-competitive or obsolete or reduce the demand for our product candidate before we can recover our development and commercialization expenses.

Intellectual Property

Our commercial success depends in part on our ability to obtain and maintain proprietary protection for RVT-101, any of our future product candidates, novel discoveries, product development technologies and other know-how, to operate without infringing on the proprietary rights of others and to prevent others from infringing our proprietary rights. Our policy is to seek to protect our proprietary position by, among other methods, filing or in-licensing U.S. and foreign patents and patent applications related to our proprietary technology, inventions and improvements that are important to the development and implementation of our business. We also rely on trademarks, trade secrets, know-how, continuing technological innovation and potential in-licensing opportunities to develop and maintain our proprietary position.

While we seek broad coverage under our existing patent applications, there is always a risk that an alteration to the process may provide sufficient basis for a competitor to avoid infringement claims. In addition, patents, if granted, expire and we cannot provide any assurance that any patents will be issued from our pending or any future applications or that any potentially issued patents will adequately protect our intellectual property.

Following our execution of the GSK Agreement, as of March 31, 2015, by virtue of assignment of the patent rights under the GSK Agreement, we were the exclusive owner of five granted U.S. patents, one pending, allowed U.S. patent application and 100 ex-U.S. patents or patent applications in numerous foreign jurisdictions. These patents and patent applications cover the RVT-101 molecule as a composition of matter, as well as its use alone or in combination with other pharmaceutical agents. The allowed U.S. application covers the use of specific doses of RVT-101 in combination with donepezil to treat vascular

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dementia, Lewy Body dementia and Huntington's disease dementia and naturally expires in December 2028. Since February 2015, we have filed six provisional patent applications directed to uses of the RVT-101 molecule alone or in combination with other pharmaceutical agents. The issued U.S. composition of matter patent for RVT-101 naturally expires in 2024. We expect the term of this patent will be extended up to five years to 2029 under the provisions of the Hatch-Waxman Act. The provisional patent application on RVT-101, if granted, would extend the patent life for RVT-101 and uses thereof through 2035.

Individual patents extend for varying periods depending on the date of filing of the patent application or the date of patent issuance and the legal term of patents in the countries in which they are obtained. Generally, patents issued for regularly filed applications in the United States are granted a term of 20 years from the earliest effective filing date. In addition, in certain instances, a patent term can be extended to recapture a portion of the U.S. Patent and Trademark Office, or the USPTO, delay in issuing the patent as well as a portion of the term effectively lost as a result of the FDA regulatory review period. However, as to the FDA component, the restoration period cannot be longer than five years and the total patent term including the restoration period must not exceed 14 years following FDA approval. The duration of foreign patents varies in accordance with provisions of applicable local law, but typically is also 20 years from the earliest effective filing date. However, the actual protection afforded by a patent varies on a product by product basis, from country to country and depends upon many factors, including the type of patent, the scope of its coverage, the availability of regulatory-related extensions, the availability of legal remedies in a particular country and the validity and enforceability of the patent.

Furthermore, we rely upon trade secrets and know-how and continuing technological innovation to develop and maintain our competitive position. We seek to protect our proprietary information, in part, using confidentiality agreements with our commercial partners, collaborators, employees and consultants and invention assignment agreements with our employees. We also have confidentiality agreements or invention assignment agreements with our commercial partners and selected consultants. These agreements are designed to protect our proprietary information and, in the case of the invention assignment agreements, to grant us ownership of technologies that are developed through a relationship with a third party. These agreements may be breached, and we may not have adequate remedies for any breach. In addition, our trade secrets may otherwise become known or be independently discovered by competitors. To the extent that our commercial partners, collaborators, employees and consultants use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.

Our commercial success will also depend in part on not infringing upon the proprietary rights of third parties. It is uncertain whether the issuance of any third-party patent would require us to alter our development or commercial strategies, or our drugs or processes, obtain licenses or cease certain activities. Our breach of any license agreements or failure to obtain a license to proprietary rights that we may require to develop or commercialize our future drugs may have an adverse impact on us. If third parties prepare and file patent applications in the United States that also claim technology to which we have rights, we may have to participate in interference proceedings in the USPTO, to determine priority of invention.

Government Regulation

FDA Drug Approval Process

In the United States, pharmaceutical products are subject to extensive regulation by the FDA. The Federal Food, Drug, and Cosmetic Act, and other federal and state statutes and regulations, govern, among other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-approval monitoring and reporting, sampling and import and export of pharmaceutical products. Failure to comply with applicable U.S. requirements may subject a company to a variety of administrative or judicial sanctions, such as FDA refusal to approve pending NDAs

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warning or untitled letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties and criminal prosecution.

We cannot market a drug product candidate in the United States until the drug has received FDA approval. The steps required before a drug may be marketed in the United States generally include the following:

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    completion of extensive pre-clinical laboratory tests, animal studies, and formulation studies in accordance with the FDA's GLP regulations;

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    submission to the FDA of an IND for human clinical testing, which must become effective before human clinical trials may begin;

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    performance of adequate and well-controlled human clinical trials in accordance with GCP requirements to establish the safety and efficacy of the drug for each proposed indication;

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    submission to the FDA of an NDA after completion of all pivotal clinical trials;

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    satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the active pharmaceutical ingredient, or API, and finished drug product are produced and tested to assess compliance with cGMPs; and

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    FDA review and approval of the NDA prior to any commercial marketing or sale of the drug in the United States.

Satisfaction of FDA pre-market approval requirements typically takes many years and the actual time required may vary substantially based upon the type, complexity and novelty of the product or disease.

Preclinical tests include laboratory evaluation of product chemistry, formulation and toxicity, as well as animal trials to assess the characteristics and potential safety and efficacy of the product. The conduct of the preclinical tests must comply with federal regulations and requirements, including good laboratory practices. The results of preclinical testing are submitted to the FDA as part of an IND along with other information, including information about product chemistry, manufacturing and controls and a proposed clinical trial protocol. Long term preclinical tests, such as animal tests of reproductive toxicity and carcinogenicity, may continue after the IND is submitted.

A 30-day waiting period after the submission of each IND is required prior to the commencement of clinical testing in humans. If the FDA has neither commented on nor questioned the IND within this 30-day period, the clinical trial proposed in the IND may begin. If the FDA raises concerns or questions about the conduct of the trial, such as whether human research subjects will be exposed to an unreasonable health risk, the IND sponsor and the FDA must resolve any outstanding FDA concerns or questions before clinical trials can proceed.

Clinical trials involve the administration of the investigational new drug to healthy volunteers or patients under the supervision of a qualified investigator. Clinical trials must be conducted in compliance with federal regulations, including GCP requirements, as well as under protocols detailing the objectives of the trial, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated. Each protocol and subsequent protocol amendments must be submitted to the FDA as part of the IND.

The FDA may order the temporary, or permanent, discontinuation of a clinical trial at any time, or impose other sanctions, if it believes that the clinical trial either is not being conducted in accordance with FDA requirements or presents an unacceptable risk to the clinical trial patients. The study protocol and informed consent information for patients in clinical trials must also be submitted to an institutional review board, or IRB, for approval at each site at which the clinical trial will be conducted. An IRB may also require the clinical trial at the site to be halted, either temporarily or permanently, for failure to comply with the IRB's requirements, or may impose other conditions.

Clinical trials to support NDAs for marketing approval are typically conducted in three sequential phases, but the phases may overlap. In Phase 1, the initial introduction of the drug into healthy human subjects or

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patients, the drug is tested to assess pharmacological actions, side effects associated with increasing doses and, if possible, early evidence on effectiveness. Phase 2 usually involves trials in a limited patient population to determine metabolism, pharmacokinetics, the effectiveness of the drug for a particular indication, dosage tolerance and optimum dosage, and to identify common adverse effects and safety risks. If a compound demonstrates evidence of effectiveness and an acceptable safety profile in Phase 2 evaluations, Phase 3 clinical trials, also called pivotal trials, are undertaken to obtain the additional information about clinical efficacy and safety in a larger number of patients, typically at geographically dispersed clinical trial sites, to permit the FDA to evaluate the overall benefit-risk relationship of the drug and to provide adequate information for the labeling of the drug. In most cases the FDA requires two adequate and well controlled Phase 3 clinical trials to demonstrate the efficacy of the drug. A single Phase 3 clinical trial with other confirmatory evidence may be sufficient in rare instances where the study is a large multicenter trial demonstrating internal consistency and a statistically very persuasive finding of a clinically meaningful effect on mortality, irreversible morbidity or prevention of a disease with a potentially serious outcome and confirmation of the result in a second trial would be practically or ethically impossible.

After completion of the required clinical testing, an NDA is prepared and submitted to the FDA. FDA approval of the NDA is required before marketing of the product may begin in the United States. The NDA must include the results of all preclinical, clinical and other testing and a compilation of data relating to the product's pharmacology, chemistry, manufacture and controls. The cost of preparing and submitting an NDA is substantial. The submission of most NDAs is additionally subject to a substantial application user fee, and the manufacturer and/or sponsor under an approved NDA are also subject to annual product and establishment user fees. These fees are typically increased annually.

The FDA has 60 days from its receipt of an NDA to determine whether the application will be accepted for filing based on the agency's threshold determination that it is sufficiently complete to permit substantive review. Once the submission is accepted for filing, the FDA begins an in-depth review. The FDA has agreed to certain performance goals in the review of NDAs. Most such applications for standard review drug products are reviewed within 10 to 12 months; most applications for priority review drugs are reviewed in six to eight months. Priority review can be applied to drugs to treat serious conditions that the FDA determines offer significant improvement in safety or effectiveness. The review process for both standard and priority review may be extended by the FDA for three additional months to consider certain late-submitted information, or information intended to clarify information already provided in the submission.

The FDA may also refer applications for novel drug products, or drug products that present difficult questions of safety or efficacy, to an advisory committee—typically a panel that includes clinicians and other experts—for review, evaluation and a recommendation as to whether the application should be approved. The FDA is not bound by the recommendation of an advisory committee, but it generally follows such recommendations. Before approving an NDA, the FDA will typically inspect one or more clinical sites to assure compliance with GCPs. Additionally, the FDA will inspect the facility or the facilities at which the drug is manufactured. The FDA will not approve the product unless compliance with cGMPs is satisfactory and the NDA contains data that provide substantial evidence that the drug is safe and effective in the indication studied.

After the FDA evaluates the NDA and the manufacturing facilities, it issues either an approval letter or a complete response letter. A complete response letter generally outlines the deficiencies in the submission and may require substantial additional testing, or information, in order for the FDA to reconsider the application. If, or when, those deficiencies have been addressed to the FDA's satisfaction in a resubmission of the NDA, the FDA will issue an approval letter. The FDA has committed to reviewing such resubmissions in two or six months depending on the type of information included.

An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications. As a condition of NDA approval, the FDA may require a Risk Evaluation and Mitigation

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Strategy, or REMS, to ensure that the benefits of the drug outweigh the potential risks. A REMS can include a medication guide, a communication plan for healthcare professionals and elements to assure safe use, such as special training and certification requirements for individuals who prescribe or dispense the drug, requirements that patients enroll in a registry and other measures that the FDA deems necessary to assure the safe use of the drug. The requirement for a REMS can materially affect the potential market and profitability of the drug. Moreover, product approval may require substantial post-approval testing and surveillance to monitor the drug's safety or efficacy. Once granted, product approvals may be withdrawn if compliance with regulatory standards is not maintained or problems are identified following initial marketing.

Changes to some of the conditions established in an approved application, including changes in indications, labeling, or manufacturing processes or facilities, require submission and FDA approval of a new NDA or NDA supplement before the change can be implemented. An NDA supplement for a new indication typically requires clinical data similar to that in the original application, and the FDA uses the same procedures and actions in reviewing NDA supplements as it does in reviewing NDAs. Such supplements are typically reviewed within 10 months of receipt.

Post-Approval Requirements

Once an NDA is approved, a product may be subject to certain post-approval requirements. For instance, the FDA closely regulates the post-approval marketing and promotion of drugs, including standards and regulations for direct-to-consumer advertising, off-label promotion, industry-sponsored scientific and educational activities and promotional activities involving the internet and social media. Drugs may be marketed only for the approved indications and in accordance with the provisions of the approved labeling.

Adverse event reporting and submission of periodic reports is required following FDA approval of an NDA. The FDA also may require post-marketing testing, known as Phase 4 testing, REMS, surveillance to monitor the effects of an approved product, or restrictions on the distribution or use of the product. In addition, quality-control, drug manufacture, packaging and labeling procedures must continue to conform to cGMPs after approval. Drug manufacturers and certain of their subcontractors are required to register their establishments with the FDA and certain state agencies. Registration with the FDA subjects entities to periodic unannounced inspections by the FDA, during which the agency inspects manufacturing facilities to assess compliance with cGMPs. Accordingly, manufacturers must continue to expend time, money and effort in the areas of production and quality-control to maintain compliance with cGMPs. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or failure to comply with regulatory requirements, may result in, among other things:

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    restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls;

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    fines, warning letters or holds on post-approval clinical trials;

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    refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of product approvals;

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    product seizure or detention, or refusal to permit the import or export of products; or

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    injunctions or the imposition of civil or criminal penalties.

Foreign Regulation

In order to market any product outside of the United States, we would need to comply with numerous and varying regulatory requirements of other countries and jurisdictions regarding quality, safety and efficacy and governing, among other things, clinical trials, marketing authorization, commercial sales and distribution of our products. Whether or not we obtain FDA approval for a product, we would need to obtain the necessary approvals by the comparable foreign regulatory authorities before we can commence clinical trials or marketing of the product in foreign countries and jurisdictions. Although many of the issues discussed above with respect to the United States apply similarly in the context of the European Union, the

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approval process varies between countries and jurisdictions and can involve additional product testing and additional administrative review periods. The time required to obtain approval in other countries and jurisdictions might differ from and be longer than that required to obtain FDA approval. Regulatory approval in one country or jurisdiction does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country or jurisdiction may negatively impact the regulatory process in others.

Other Healthcare Laws

Although we currently do not have any products on the market, our current and future business operations may be subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and foreign jurisdictions in which we conduct our business. Such laws include, without limitation, state and federal anti-kickback, fraud and abuse, false claims, privacy and security, price reporting and physician sunshine laws. Some of our pre-commercial activities are subject to some of these laws.

The federal Anti-Kickback Statute makes it illegal for any person or entity, including a prescription drug manufacturer or a party acting on its behalf to knowingly and willfully solicit, receive, offer, or pay any remuneration that is intended to induce the referral of business, including the purchase, order, lease of any good, facility, item or service for which payment may be made under a federal healthcare program, such as Medicare or Medicaid. The term "remuneration" has been broadly interpreted to include anything of value. The Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on one hand and prescribers, purchasers, formulary managers, and beneficiaries on the other. Although there are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, the exceptions and safe harbors are drawn narrowly. Practices that involve remuneration that may be alleged to be intended to induce prescribing, purchases or recommendations may be subject to scrutiny if they do not qualify for an exception or safe harbor. Failure to meet all of the requirements of a particular applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the Anti-Kickback Statute. Instead, the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all its facts and circumstances. Several courts have interpreted the statute's intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of federal healthcare covered business, the Anti-Kickback Statute has been violated. Violations of this law are punishable by up to five years in prison, and can also result in criminal fines, administrative civil money penalties and exclusion from participation in federal healthcare programs.

Additionally, the intent standard under the Anti-Kickback Statute was amended by the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010, collectively the Affordable Care Act, to a stricter standard such that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. In addition, the Affordable Care Act codified case law that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act.

The federal civil False Claims Act prohibits, among other things, any person or entity from knowingly presenting, or causing to be presented, for payment to, or approval by, federal programs, including Medicare and Medicaid, claims for items or services, including drugs, that are false or fraudulent or not provided as claimed. Persons and entities can be held liable under these laws if they are deemed to "cause" the submission of false or fraudulent claims by, for example, providing inaccurate billing or coding information to customers or promoting a product off-label. In addition, our future activities relating to the reporting of wholesaler or estimated retail prices for our products, the reporting of prices used to calculate Medicaid rebate information and other information affecting federal, state and third-party reimbursement for our products, and the sale and marketing of our products, are subject to scrutiny under this law. Penalties for

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federal civil False Claims Act violations may include up to three times the actual damages sustained by the government, plus mandatory civil penalties of between $5,500 and $11,000 for each separate false claim, the potential for exclusion from participation in federal healthcare programs, and, although the federal False Claims Act is a civil statute, False Claims Act violations may also implicate various federal criminal statutes.

The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, created new federal criminal statutes that prohibit among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services. Like the federal Anti-Kickback Statute, the Affordable Care Act amended the intent standard for certain healthcare fraud statutes under HIPAA such that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

The civil monetary penalties statute imposes penalties against any person or entity that, among other things, is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent.

Also, many states have similar fraud and abuse statutes or regulations that may be broader in scope and may apply regardless of payor, in addition to items and services reimbursed under Medicaid and other state programs. Additionally, to the extent that any of our products are sold in a foreign country, we may be subject to similar foreign laws.

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and their implementing regulations, including the final omnibus rule published on January 25, 2013, mandates, among other things, the adoption of uniform standards for the electronic exchange of information in common healthcare transactions, as well as standards relating to the privacy and security of individually identifiable health information, which require the adoption of administrative, physical and technical safeguards to protect such information. Among other things, HITECH makes HIPAA's security standards directly applicable to "business associates," defined as independent contractors or agents of covered entities that create, receive or obtain protected health information in connection with providing a service for or on behalf of a covered entity. At present, it is unclear if we would be considered a business associate subject to HIPAA based on our business activities and service offerings upon the commercialization of a product. HITECH also increased the civil and criminal penalties that may be imposed against covered entities and business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorney's fees and costs associated with pursuing federal civil actions. In addition, certain state laws govern the privacy and security of health information in certain circumstances, some of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts. Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties.

The Affordable Care Act imposed, among other things, new annual reporting requirements for covered manufacturers for certain payments and other transfers of value provided to physicians and teaching hospitals, as well as certain ownership and investment interests held by physicians and their immediate family members. Failure to submit timely, accurately and completely the required information for all payments, transfers of value and ownership or investment interests may result in civil monetary penalties of up to an aggregate of $150,000 per year and up to an aggregate of $1 million per year for "knowing failures."

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Because we intend to commercialize products that could be reimbursed under a federal healthcare program and other governmental healthcare programs, we intend to develop a comprehensive compliance program that establishes internal control to facilitate adherence to the rules and program requirements to which we will or may become subject. Although the development and implantation of compliance programs designed to establish internal control and facilitate compliance can mitigate the risk of investigation, prosecution, and penalties assessed for violations of these laws, the risks cannot be entirely eliminated.

If our operations are found to be in violation of any of such laws or any other governmental regulations that apply to us, we may be subject to penalties, including, without limitation, administrative, civil and criminal penalties, damages, fines, disgorgement, contractual damages, reputational harm, diminished profits and future earnings, the curtailment or restructuring of our operations, exclusion from participation in federal and state healthcare programs and individual imprisonment, any of which could adversely affect our ability to operate our business and our financial results.

Health Reform

In the United States and foreign jurisdictions, there have been a number of legislative and regulatory changes to the healthcare system that could affect our future results of operations. There have been and continue to be a number of initiatives at the United States federal and state levels that seek to reduce healthcare costs.

In particular, the Affordable Care Act has had, and is expected to continue to have, a significant impact on the healthcare industry. The Affordable Care Act was designed to expand coverage for the uninsured while at the same time containing overall healthcare costs. With regard to pharmaceutical products, among other things, the Affordable Care Act revises the definition of "average manufacturer price" for calculating and reporting Medicaid drug rebates on outpatient prescription drug prices and imposes a significant annual fee on companies that manufacture or import certain branded prescription drug products. Substantial new provisions affecting compliance have also been enacted, which may require us to modify our business practices with healthcare providers and entities, and a significant number of provisions are not yet, or have only recently become, effective.

We cannot predict the full impact of the Affordable Care Act on pharmaceutical companies, as many of the reforms require the promulgation of detailed regulations implementing the statutory provisions, some of which has not yet fully occurred. In the coming years, additional legislative and regulatory changes could be made to governmental health programs that could significantly impact pharmaceutical companies and the success of our product candidate.

In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted. In August 2011, the President signed into law the Budget Control Act of 2011, which, among other things, created the Joint Select Committee on Deficit Reduction to recommend to Congress proposals in spending reductions. The Joint Select Committee did not achieve a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, triggering the legislation's automatic reduction to several government programs. These included reductions to Medicare payments to providers of 2% per fiscal year, which went into effect on April 1, 2013 and, due to subsequent legislative amendments to the statute, will stay in effect through 2024 unless additional Congressional action is taken. Additionally, in January 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, further reduced Medicare payments to several providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

Moreover, the recently enacted Drug Supply Chain Security Act, imposes new obligations on manufacturers of pharmaceutical products, among others, related to product tracking and tracing, which will be phased in over several years beginning in 2015. Among the requirements of this new legislation, manufacturers will be required to provide certain information regarding the drug product to individuals and entities to which product ownership is transferred, label drug product with a product identifier, and keep certain records

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regarding the drug product. The transfer of information to subsequent product owners by manufacturers will eventually be required to be done electronically. Manufacturers will also be required to verify that purchasers of the manufacturers' products are appropriately licensed. Further, under this new legislation, manufacturers will have drug product investigation, quarantine, disposition, and notification responsibilities related to counterfeit, diverted, stolen, and intentionally adulterated products, as well as products that are the subject of fraudulent transactions or which are otherwise unfit for distribution such that they would be reasonably likely to result in serious health consequences or death.

Coverage and Reimbursement

Sales of our products, once approved, will depend, in part, on the extent to which the costs of our products will be covered by third-party payors, such as government health programs, private health insurers and managed care organizations. Third-party payors generally decide which drugs they will cover and establish certain reimbursement levels for such drugs. In particular, in the U.S., private health insurers and other third-party payors often provide reimbursement for products and services based on the level at which the government (through the Medicare or Medicaid programs) provides reimbursement for such treatments. Patients who are prescribed treatments for their conditions and providers performing the prescribed services generally rely on third-party payors to reimburse all or part of the associated healthcare costs. Patients are unlikely to use our products unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our products. Sales of our product candidate, and any future product candidate, will therefore depend substantially on the extent to which the costs of our product candidate, and any future product candidate, will be paid by third-party payors. Additionally, the market for our product candidate, and any future product candidate, will depend significantly on access to third-party payors' formularies without prior authorization, step therapy, or other limitations such as approved lists of treatments for which third-party payors provide coverage and reimbursement. Additionally, coverage and reimbursement for therapeutic products can differ significantly from payor to payor. One third-party payor's decision to cover a particular medical product or service does not ensure that other payors will also provide coverage for the medical product or service, or will provide coverage at an adequate reimbursement rate. As a result, the coverage determination process will require us to provide scientific and clinical support for the use of our products to each payor separately and will be a time-consuming process.

Third-party payors are developing increasingly sophisticated methods of controlling healthcare costs and increasingly challenging the prices charged for medical products and services. Additionally, the containment of healthcare costs has become a priority of federal and state governments and the prices of drugs have been a focus in this effort. The U.S. government, state legislatures and foreign governments have shown significant interest in implementing cost-containment programs, including price controls, restrictions on reimbursement and requirements for substitution of generic products. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could limit our net revenue and results. If these third-party payors do not consider our products to be cost-effective compared to other therapies, they may not cover our products once approved as a benefit under their plans or, if they do, the level of reimbursement may not be sufficient to allow us to sell our products on a profitable basis. Decreases in third-party reimbursement for our products once approved or a decision by a third-party payor to not cover our products could reduce or eliminate utilization of our products and have an adverse effect on our sales, results of operations and financial condition. In addition, state and federal healthcare reform measures have been and will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our products once approved or additional pricing pressures.

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Employees

As of March 31, 2015, we had one employee and our wholly-owned subsidiary, Axovant Sciences, Inc., had seven employees. Each Axovant Sciences, Inc. employee provides services to us pursuant to an intercompany services agreement between us and Axovant Sciences, Inc.

Facilities

Our registered office is located in Bermuda at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda, and we also have business operations at 14 Par-La-Ville Road, Hamilton HM08, Bermuda. We intend to add new facilities or expand our existing facilities as we add employees, and we believe that suitable additional or substitute space will be available as needed to accommodate any such expansion of our operations.

Legal Proceedings

We are not currently a party to any material legal proceedings, and we are not aware of any pending or threatened legal proceeding against us that we believe could have an adverse effect on our business, operating results or financial condition.

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MANAGEMENT

Directors and Executive Officers

The following table sets forth information concerning our directors and executive officers, including their ages as of May 1, 2015:

Name
  Age   Position

Executive Officers

       

Vivek Ramaswamy*

  29   Principal Executive Officer and Director

Alan S. Roemer*

  45   Principal Financial and Accounting Officer

Marianne L. Romeo**

  47   Head, Global Transactions & Risk Management and Director

Lawrence T. Friedhoff, M.D., Ph.D.*

  66   Chief Development Officer

Mark Altmeyer*

  54   President and Chief Commercial Officer

Christine Mikail*

  37   Chief Administrative Officer and General Counsel

Non-Employee Directors

 

 

 

 

Berndt Modig (1)(2)(3)

  56   Director

Lawrence Olanoff, M.D., Ph.D. (1)

  63   Director

Ilan Oren (2)(3)

  31   Director

Atul Pande, M.D. (1)(2)(3)

  60   Director

*
Employee of our wholly-owned subsidiary, Axovant Sciences, Inc. Such employee provides services to us pursuant to an inter-company services agreement between us and Axovant Sciences, Inc.

**
Employee of Axovant Sciences Ltd.

(1)
Member of the audit committee. Mr. Modig serves as the chair of this committee.

(2)
Member of the compensation committee. Mr. Oren serves as the chair of this committee.

(3)
Member of the nominating and corporate governance committee. Dr. Pande serves as the chair of this committee.

Vivek Ramaswamy has served as our principal executive officer, as a member of our board of directors and as the Chief Executive Officer of Axovant Sciences, Inc. since March 2015. Since May 2014, Mr. Ramaswamy has served as the President and Chief Executive Officer of Roivant Sciences, Inc., a drug development and commercialization services company that is wholly owned by our parent, Roivant Sciences Ltd. Mr. Ramaswamy is a director of Roivant Sciences Ltd. and is the Chairman of the board of directors of Tekmira Pharmaceuticals Corporation. From August 2007 to May 2014, Mr. Ramaswamy was a member of the investment team at QVT Financial LP. In 2007 Mr. Ramaswamy co-founded and served as the President of Campus Venture Network, a technology company that was acquired in 2009. Mr. Ramaswamy received his A.B. in Biology, summa cum laude , from Harvard College and a J.D. degree from Yale Law School. We believe Mr. Ramaswamy's experience as Chief Executive Officer of Roivant Sciences, Inc., Chairman of the board of directors of Tekmira Pharmaceuticals Corporation, and a life sciences investor qualify him to serve on our board of directors.

Alan S. Roemer has served as our principal financial and accounting officer and as the Chief Financial Officer of Axovant Sciences, Inc. since March 2015. Since May 2014, Mr. Roemer has served as the Senior Vice President, Finance & Operations of Roivant Sciences, Inc. From 2009 to 2014, Mr. Roemer was a Managing Director for the Trout Group and Trout Capital, where he provided financing, investor relations and strategic advisory services for life sciences company clients. He joined Trout in 2009 from Zelos Therapeutics, where he served as Chief Financial Officer & Treasurer. Prior to joining Zelos, Mr. Roemer was a Vice President at Pharmasset, Inc. (acquired by Gilead) from 1999 to 2008. Prior to Pharmasset,

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Mr. Roemer was a healthcare consultant for Booz-Allen & Hamilton and Deloitte Consulting, and he held various operational roles at Bank of America. Mr. Roemer currently serves as a member of the board of directors for SomPharmaceuticals SA, a Swiss company focused on the development of somatostatin analogs for rare diseases; a member of the Board of Trustees of the Helene Fuld College of Nursing; and an advisor to entrepreneurs of early stage life sciences companies. Mr. Roemer received his B.S. in Business Administration from Georgetown University and his M.B.A. and M.P.H. degrees from Emory University's Goizueta Business School and Rollins School of Public Health.

Marianne L. Romeo has served as our Head, Global Transactions & Risk Management and as a member of our board of directors since March 2015. Since December 2014 she has served as Head, Global Transactions & Risk Management of Roivant Sciences Ltd. Previously, Ms. Romeo had a 20 year career with Marsh Inc. in risk consulting and insurance brokerage, most recently serving as Managing Director and Head of Casualty from 2008 to 2014 and Senior Vice President and Healthcare Practice Leader from 2003 to 2008 for Bowring Marsh (Bermuda) Ltd., an international insurance placement broker and wholly owned subsidiary of Marsh Inc. During her time at Bowring Marsh, Ms. Romeo served in various functional roles, including excess casualty brokerage, risk management consulting, and business management. Ms. Romeo established the Healthcare Practice within Marsh's Bermuda operation in 2003 and continues to serve on the Board of the Bermuda Society for Healthcare Risk Management (BSHRM). Ms. Romeo received her B.Sc. in Manufacturing Engineering, cum laude , from Tufts University and her M.S. in Occupational Health and Environmental Science from the City University of New York, Hunter College. We believe Ms. Romeo's experience in healthcare and risk management qualifies her to serve on our board of directors.

Lawrence T. Friedhoff, M.D., Ph.D.  has served as the Chief Development Officer of Axovant Sciences, Inc. since March 2015. Since May 2014, Dr. Friedhoff has served as Senior Vice President, Research and Development of Roivant Sciences, Inc. From 2003 to 2014, Dr. Friedhoff served as Chief Executive Officer and President of Pharmaceutical Special Projects Group, LLC, a drug development consulting company where he provided drug development consulting services to international pharmaceutical companies. As part of his work for the Pharmaceutical Special Projects Group, Dr. Friedhoff served as Chief Development Officer of Mitotech S.A., a Pharmaceutical Special Projects Group client, from March 2014 to February 2015. From 2007 to 2014, Dr. Friedhoff served as Chief Executive Officer of Senex Biotechnology, Inc., a drug discovery and development company. He remains a Director of Senex. From 1998 to 2003, Dr. Friedhoff served as Executive Vice President, Research and Development of Andrx Corporation, a brand and generic pharmaceutical company, leading its Branded Drug Development efforts. From 1988 to 1998, Dr. Friedhoff worked for subsidiaries of Eisai, Co. Ltd., ultimately serving as Executive Vice President, Research and Development of Eisai, Inc., a subsidiary of Eisai Co. Ltd., where he lead the drug development team for Aricept, a branded drug used to treat Alzheimer's disease. Prior to Eisai, Dr. Friedhoff worked for ER Squibb, Inc. (eventually Bristol-Myers Squibb), including as a Clinical Pharmacology Director. Dr. Friedhoff received his M.D. from the New York University School of Medicine and his Ph.D. in Chemistry from Columbia University Graduate School.

Mark Altmeyer has served as the President and Chief Commercial Officer of Axovant Sciences, Inc. since March 2015. From February 2009 to December 2014, Mr. Altmeyer served as Chief Executive Officer and President of Otsuka America Pharmaceutical, Inc. Prior to his time at Otsuka, Mr. Altmeyer served in a number of executive leadership roles at Bristol-Myers Squibb, including Senior Vice President, Global Commercialization from 2006 to 2008 and Senior Vice President, Neuroscience Business Unit from 2002 to 2005 during the approval and launch of Abilify, a branded drug used to treat multiple psychiatric conditions, including schizophrenia, depression and bipolar disorder. Mr. Altmeyer currently serves as a director for Contact of Mercer County. Mr. Altmeyer received his B.A. from Middlebury College and his M.B.A. from Harvard Business School.

Christine Mikail has served as the Chief Administrative Officer and General Counsel of Axovant Sciences, Inc. since March 2015. Previously, she served as Senior Vice President, Legal Affairs, General

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Counsel and Secretary at NPS Pharmaceuticals from March 2014 to February 2015. From February 2012 to February 2014, Ms. Mikail served as Executive Vice President, Corporate Development, General Counsel, Chief Compliance Officer and Corporate Secretary of Dendreon Corporation, a biotechnology company. Prior to Dendreon, Ms. Mikail held senior corporate development and legal positions with Savient Pharmaceuticals from February 2011 to February 2012 and ImClone Systems, a wholly-owned subsidiary of Eli Lilly, from March 2008 to February 2011. Ms. Mikail began her career at Hale and Dorr LLP, Lowenstein Sandler PC and Reed Smith LLP where she counseled on corporate and securities law, regulatory and licensing matters, as well as financings and mergers and acquisitions, on behalf of public and private companies. She received her B.A., cum laude , from Rutgers University and her J.D. from Fordham University School of Law.

Berndt Modig has served as a member of our board of directors since March 2015. Previously, he served as Chief Financial Officer of Prosensa Holding N.V. from March 2010 to January 2015, when Prosensa was acquired by BioMarin Pharmaceutical Inc. From October 2003 to November 2008, Mr. Modig was Chief Financial Officer at Jerini AG where he directed private financing rounds, its initial public offering in 2005, and its acquisition by Shire plc in 2008. Prior to his time at Jerini, Mr. Modig served as Chief Financial Officer at Surplex AG from 2001 to 2003 and as Finance Director Europe of U.S.-based Hayward Industrial Products Inc. from 1999 to 2001. In previous positions, Mr. Modig was a partner in the Brussels-based private equity firm Agra Industria from 1994 to 1999 and a Senior Manager in the Financial Services Industry Group of Price Waterhouse LLP in New York from 1991 to 1994. Mr. Modig currently serves as a director and member of the audit committee of Affimed N.V. (NASDAQ:AFMD) and as a director and the chair of the audit committee of Auris Medical Holding AG (NASDAQ:EARS). He also served as a director of Mobile Loyalty plc from 2012 to 2013. Mr. Modig received his bachelor's degree in business administration, economics and German from the University of Lund, Sweden and his M.B.A. from INSEAD, Fontainebleau, France and is a Certified Public Accountant. We believe Mr. Modig is qualified to serve on our board of directors because of his extensive international experience in finance and operations, private equity, and mergers and acquisitions.

Lawrence Olanoff, M.D., Ph.D.  has served as a member of our board of directors since May 2015. Dr. Olanoff most recently served as chief operating officer from October 2006 to December 2010, and as a director from October 2006 to July 2014, of Forest Laboratories, Inc. (acquired by Actavis plc). From July 2005 to October 2006, Dr. Olanoff was president and chief executive officer at Celsion Corporation. He also served as executive vice president and chief scientific officer of Forest Laboratories from 1995 to 2005. Prior to joining Forest Laboratories in 1995, Dr. Olanoff served as senior vice president of clinical research and development at Sandoz Pharmaceutical Corporation (now a division of the Novartis Group) and at the Upjohn Company in a number of positions including corporate vice president of clinical development and medical affairs. Dr. Olanoff is currently a member of the board of directors of Ironwood Pharmaceuticals, Inc. He is also an adjunct assistant professor and special advisor to the president for corporate relations at the Medical University of South Carolina (MUSC), an ex-officio director of the MUSC foundation for research development, as well as chairman of the board of the Clinical Biotechnology Research Institute at Roper St. Francis Hospital. Dr. Olanoff received his Ph.D. in biomedical engineering and M.D. from Case Western Reserve University. We believe Dr. Olanoff is qualified to serve on our board of directors because of his detailed knowledge of the pharmaceutical industry, his broad operational experience and his research and development leadership over the course of his career.

Ilan Oren has served as a member of our board of directors since March 2015. He currently serves as Vice President, Business Development at Dexcel Pharma, a position he has held since September 2011. From September 2007 to July 2011, he was employed by L.E.K. Consulting, advising clients in the life science sector on corporate strategy, mergers and acquisitions, licensing and drug commercialization projects. Mr. Oren currently serves as a director of Cynapsus Therapeutics Inc., a publicly-traded specialty pharmaceutical company, and as a director of Roivant Sciences Ltd. Mr. Oren received his B.A. in

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Economics from Harvard University. We believe that Mr. Oren is qualified to serve on our board of directors because of his extensive leadership experience and knowledge of the life sciences industry.

Atul Pande, M.D.  has served as a member of our board of directors since March 2015. Dr. Pande is President of Verity BioConsulting, a drug development consulting firm, and Chief Medical Officer of Tal Medical, a clinical-stage medical device company. Dr. Pande is also a non-executive board member of Autifony Therapeutics and Heptares Therapeutics, and serves on the Scientific Advisory Boards of Cennerv Pharma and Centrexion Corporation. Previously, he was Senior Vice President and Senior Advisor, Pharmaceutical R&D at GlaxoSmithKline. He has also held senior roles at Pfizer R&D, Parke-Davis/Warner-Lambert and Lilly Research Laboratories. Dr. Pande completed his research fellowship training in psychiatry at the University of Michigan Medical School and his postgraduate specialty training and psychiatry residency program at Western University. We believe Dr. Pande is qualified to serve on our board of directors because of his medical background and significant knowledge of the life sciences industry.

Board of Directors

Our board of directors currently consists of six members. Each director is currently elected to the board for a one-year term, to serve until the election and qualification of successor directors at the general meeting of shareholders, or until the director's earlier removal, resignation or death.

In accordance with our amended and restated bye-laws, which will become effective upon the closing of this offering, our board of directors will be divided into three classes, each of which will consist, as nearly as possible, of one-third of the total number of directors constituting our entire board and which will serve staggered three-year terms. At each general meeting of shareholders, the successors to directors whose terms then expire will be elected to serve from the time of election and qualification until the third annual meeting following election. Our directors will be divided among the three classes as follows:

    §
    Class I, which will consist of Ilan Oren and Marianne L. Romeo, and their term will expire at our first general meeting of shareholders to be held after the completion of this offering;

    §
    Class II, which will consist of Vivek Ramaswamy and Atul Pande, M.D., and their term will expire at our second general meeting of shareholders to be held after the completion of this offering; and

    §
    Class III, which will consist of Berndt Modig and Lawrence Olanoff, M.D., Ph.D., and their term will expire at our third general meeting of shareholders to be held after the completion of this offering.

Our amended and restated bye-laws will provide that the authorized number of directors may be changed only by resolution approved by a majority of our board of directors. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors.

The division of our board of directors into three classes with staggered three-year terms may delay or prevent a change of our management or a change in control.

Director Independence

Our board of directors has undertaken a review of the independence of the directors and considered whether any director has a material relationship with us that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. As a result of this review, our board of directors has determined that Mr. Modig, Dr. Olanoff and Dr. Pande, representing three of the six members of our board of directors, are "independent" as that term is defined under the applicable rules and regulations of the SEC and NYSE rules. Our board of directors has determined that (1) Mr. Ramaswamy, by virtue of his positions as our principal executive officer and as a member of the board of directors of Roivant Sciences Ltd., (2) Mr. Oren, by virtue of his position as a member of the board of directors of Roivant Sciences Ltd., and (3) Ms. Romeo, by virtue of her position as our Head, Global Transactions & Risk Management, are not independent under applicable SEC and NYSE rules. We plan to comply with the

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NYSE corporate governance requirement that independent directors comprise a majority of our board of directors within one year of our listing on the NYSE.

After the closing of this offering, we expect to be a "controlled company" within the meaning of applicable NYSE rules because more than 50% of the voting power for the election of directors will be held by Roivant Sciences Ltd. Under NYSE rules, as a "controlled company," we will be exempt from the NYSE corporate governance requirements that our nominating and corporate governance committee and compensation committee consist solely of independent directors. We may rely on these exemptions from the corporate governance requirements until we are no longer a "controlled company" or until our board determines to no longer rely on these exemptions. It is currently contemplated that neither our compensation committee nor our nominating and corporate governance committee will consist entirely of independent directors. Accordingly, you may not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of the NYSE. We may continue to rely on these exemptions so long as we are allowed to as a "controlled company."

Committees of the Board of Directors

Our board of directors will establish an audit committee, a compensation committee and a nominating and corporate governance committee, each of which will have the composition and responsibilities described below. From time to time, the board may establish other committees to facilitate the management of our business.

Audit Committee

Our audit committee will review our internal accounting procedures and consult with and review the services provided by our independent registered public accountants. Upon the closing of this offering, our audit committee will consist of three directors, Berndt Modig, Lawrence Olanoff, M.D., Ph.D. and Atul Pande, M.D. Mr. Modig will be the chairman of the audit committee, and our board of directors has determined that Mr. Modig is an "audit committee financial expert" as defined by SEC rules and regulations.

The controlled company exemption does not modify the independence requirements for an audit committee, and we intend to comply with the requirements of Rule 10A-3 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the applicable NYSE rules. Under Rule 10A-3 of the Exchange Act, we are permitted to phase in our compliance with the independent audit committee requirements set forth in Rule 10A-3 of the Exchange Act as follows: (1) one independent member at the time of listing, (2) a majority of independent members within 90 days of listing and (3) all independent members within one year of listing. We are relying on this phase in exception and expect that all three members of our audit committee will be determined by our board of directors to be independent within one year of our listing on the NYSE. Our board of directors has determined that such reliance will not materially and adversely affect the ability of our audit committee to act independently and to satisfy the other requirements set forth in Rule 10A-3 of the Exchange Act.

Our board of directors has determined that each of Mr. Modig, Dr. Olanoff and Dr. Pande is an independent director under NYSE rules and each of Mr. Modig and Dr. Pande is independent under Rule 10A-3 of the Exchange Act. Our board of directors has determined that Dr. Olanoff is not independent under Rule 10A-3 of the Exchange Act by virtue of his consulting agreement, which is described in more detail in the section titled "Certain Relationships and Related Party Transactions." We intend to continue to evaluate the requirements applicable to us and we intend to comply with future requirements to the extent that they become applicable to our audit committee.

The principal duties and responsibilities of our audit committee will include:

    §
    recommending and retaining an independent registered public accounting firm to serve as independent auditor to audit our financial statements, overseeing the independent auditor's work and determining the independent auditor's compensation;

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    §
    approving in advance all audit services and non-audit services to be provided to us by our independent auditor;
    §
    establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls, auditing or compliance matters, as well as for the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters;
    §
    reviewing and discussing with management and our independent auditor the results of the annual audit and the independent auditor's review of our quarterly financial statements; and
    §
    conferring with management and our independent auditor about the scope, adequacy and effectiveness of our internal accounting controls, the objectivity of our financial reporting and our accounting policies and practices.

Compensation Committee

Our compensation committee will review and determine the compensation of all our executive officers. Upon the closing of this offering, our compensation committee will consist of three directors, Berndt Modig, Ilan Oren and Atul Pande, M.D., each of whom will be a non-employee member of our board of directors as defined in Rule 16b-3 under the Exchange Act. Mr. Oren will be the chairman of the compensation committee. As a controlled company, we intend to rely upon the exemption from the requirement that we have a compensation committee composed entirely of independent directors. The principal duties and responsibilities of our compensation committee will include:

    §
    establishing and approving, and making recommendations to the board of directors regarding, performance goals and objectives relevant to the compensation of our chief executive officer, evaluating the performance of our chief executive officer in light of those goals and objectives and setting, or recommending to the full board of directors for approval, the chief executive officer's compensation, including incentive-based and equity-based compensation, based on that evaluation;
    §
    setting the compensation of our other executive officers, based in part on recommendations of the chief executive officer;
    §
    exercising administrative authority under our equity incentive plan and employee benefit plans;
    §
    establishing policies and making recommendations to our board of directors regarding director compensation;
    §
    reviewing and discussing with management the compensation discussion and analysis that we may be required from time to time to include in SEC filings; and
    §
    preparing a compensation committee report on executive compensation as may be required from time to time to be included in our annual proxy statements or annual reports on Form 10-K filed with the SEC.

Nominating and Corporate Governance Committee

Upon the closing of this offering, our nominating and corporate governance committee will consist of three directors, Berndt Modig, Ilan Oren and Atul Pande, M.D. Dr. Pande will be the chairman of the nominating and corporate governance committee. As a controlled company, we intend to rely upon the exemption from the requirement that we have a nominating and corporate governance committee composed entirely of independent directors. The nominating and corporate governance committee's responsibilities will include:

    §
    assessing the need for new directors and identifying individuals qualified to become directors;
    §
    recommending to the board of directors the persons to be nominated for election as directors and to each of the board's committees;
    §
    assessing individual director performance, participation and qualifications;
    §
    developing and recommending to the board corporate governance principles;
    §
    monitoring the effectiveness of the board and the quality of the relationship between management and the board; and
    §
    overseeing an annual evaluation of the board's performance.

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Code of Business Conduct and Ethics for Employees, Executive Officers and Directors

Effective upon the closing of this offering, we will adopt a Code of Business Conduct and Ethics, or the Code of Conduct, applicable to all of our employees, executive officers and directors. Following the closing of this offering, the Code of Conduct will be available on our website at www.axovant.com. The nominating and corporate governance committee of our board of directors will be responsible for overseeing the Code of Conduct and must approve any waivers of the Code of Conduct for employees, executive officers and directors. We expect that any amendments to the Code of Conduct, or any waivers of its requirements, will be disclosed on our website.

Compensation Committee Interlocks and Insider Participation

None of our directors who we expect to serve as a member of our compensation committee is, or has at any time during the past year been, one of our officers or employees. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any other entity that has one or more executive officers serving on our board of directors or compensation committee.

Director Compensation

We provide cash and equity-based compensation to our directors for the time and effort necessary to serve as a member of our board of directors. Ms. Romeo, Dr. Pande and Dr. Olanoff are each entitled to receive $40,000 in annual director fees, and Mr. Modig is entitled to receive $60,000 in annual director fees. In March 2015, we granted Mr. Modig, Ms. Romeo and Dr. Pande stock options to purchase 85,000, 75,000 and 75,000 common shares, respectively, with an exercise price of $0.90 per share. Each option vests over a period of three years, with one third of the common shares underlying the option vesting on the first anniversary of the option grant date and the remainder vesting in eight equal quarterly installments thereafter. Each option allows for early exercise, subject to our repurchase option with respect to any unvested common shares, in accordance with the terms our standard form of early exercise stock purchase agreement. All common shares underlying these options will become fully vested upon a change in control, as defined in our 2015 Equity Incentive Plan.

We expect that our board of directors will adopt a director compensation policy for non-employee directors following the closing of this offering. Pursuant to this policy, we expect that any director who is also an employee of ours or our subsidiary will not receive any additional compensation for his or her service as a director.

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2015 Director Compensation Table

The following table sets forth information regarding the compensation earned for service on our board of directors during the fiscal year ended March 31, 2015 by our directors.

Name
  Fees
Earned or
Paid in
Cash
  Option
Awards (1)(2)
  Total  

Berndt Modig

  $ 2,301   $ 1,214,565   $ 1,216,866  

Ilan Oren

             

Atul Pande, M.D. 

    1,534     1,071,675     1,073,209  

Marianne L. Romeo

    1,534     1,071,675     1,073,209  

(1)
This column reflects the full grant date fair value for options granted during the year as measured pursuant to Accounting Standards Codification, or ASC, Topic 718 as stock-based compensation in our consolidated financial statements. Unlike the calculations contained in our consolidated financial statements, this calculation does not give effect to any estimate of forfeitures related to service-based vesting, but assumes that the director will perform the requisite service for the award to vest in full. The assumptions we used in valuing options are described in Note G to our consolidated financial statements included in this prospectus.

(2)
The table below shows the aggregate number of option awards outstanding for each of our directors as of March 31, 2015:

Name
  Options Awards (#)  

Berndt Modig

    85,000  

Ilan Oren

     

Atul Pande, M.D. 

    75,000  

Marianne L. Romeo

    150,000 (a)

(a)
Includes 75,000 common shares underlying a stock option granted to Ms. Romeo in her capacity as an employee in March 2015, with an exercise price of $0.90 per share. This option vests over a period of four years, with one quarter of the common shares underlying the option vesting on the first anniversary of the option grant date and the remainder vesting in twelve equal quarterly installments thereafter. Such option allows for early exercise, subject to our repurchase option with respect to any unvested common shares in accordance with the terms our standard form of early exercise stock purchase agreement. All common shares underlying such option will become fully vested upon a change in control, as defined in our 2015 Equity Incentive Plan.

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EXECUTIVE COMPENSATION

2015 Summary Compensation Table

The following table sets forth information regarding compensation earned during the period ended March 31, 2015 by our named executive officers, which include our principal executive officer and the next two most highly compensated executive officers for fiscal 2015.


Name and Principal Position
  Salary (2)   Option
Awards (3)
  Total  

Vivek Ramaswamy (1)

  $ 9,423   $   $ 9,423  

Principal Executive Officer

                   

Mark Altmeyer (1)

    11,538     16,088,753     16,100,291  

President and Chief Commercial Officer

                   

Christine Mikail (1)

    11,538     13,407,294     13,418,832  

Chief Administrative Officer and General Counsel

                   

(1)
Employee of our wholly-owned subsidiary, Axovant Sciences, Inc. Such employee provides services to us pursuant to an inter-company services agreement between us and Axovant Sciences, Inc.

(2)
Represents salary earned since the commencement of employment with Axovant Sciences, Inc. in March 2015.

(3)
This column reflects the full grant date fair value for options granted during the year as measured pursuant to ASC Topic 718 as share-based compensation in our consolidated financial statements. Unlike the calculations contained in our consolidated financial statements, this calculation does not give effect to any estimate of forfeitures related to service-based vesting, but assumes that the named executive officer will perform the requisite service for the award to vest in full. The assumptions we used in valuing options are described in Note G to our consolidated financial statements included in this prospectus.

In addition to the amounts set forth in the table above, during the period ended March 31, 2015, we incurred expense of $7,385,296 for the services of Vivek Ramaswamy, of which $6,251,118 was share-based compensation expense and $634,178 was pursuant to the Services Agreement. Included in the amount pursuant to the Services Agreement was $354,010 of share-based compensation expense.

Outstanding Equity Awards at March 31, 2015

The following table provides information about outstanding equity held by each of our named executive officers at March 31, 2015. There were no stock awards outstanding at March 31, 2015, and all awards were granted under our 2015 Equity Incentive Plan.


 
   
  Number of Securities Underlying
Unexercised Options (#)
   
   
 
 
  Option
Grant Date
  Option
Exercise
Price
  Option
Expiration
Date
 
Name
  Exercisable (1)   Unexercisable  

Vivek Ramaswamy

              $      

Mark Altmeyer

    03/18/15     1,125,000         0.90     03/17/25  

Christine Mikail

    03/18/15     937,500         0.90     03/17/25  

(1)
These stock options vest over a four-year period: 25% of the common shares underlying the options vest on the first anniversary of the option grant date, and the remainder vest in twelve equal quarterly installments thereafter. Each option allows for early exercise, subject to our repurchase option with respect to any unvested common shares, in accordance with the terms our standard form of early exercise stock purchase agreement. All common shares underlying these options will become fully vested upon a change in control, as defined in our 2015 Equity Incentive Plan.

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Employment Arrangements

Each of our executive officers, other than Marianne L. Romeo, is employed by our wholly-owned subsidiary, Axovant Sciences, Inc., and provides services to us pursuant to an inter-company services agreement between us and Axovant Sciences, Inc. Ms. Romeo is employed directly by us. Axovant Sciences, Inc. has an employment agreement or offer letter with each of our executive officers that sets forth the initial terms and conditions of employment. These agreements provide for at-will employment and set forth the executive officer's annual base salary, performance bonus target opportunity, initial equity incentive grant, terms of severance and eligibility for employee benefits. The annual target bonus that each executive officer is eligible to receive will be payable based on our board of director's assessment of each executive officer's individual performance and overall company performance. Ms. Romeo has entered into an offer letter with us that also sets forth the initial terms and conditions of her at-will employment. Pursuant to the terms of her offer letter, she is not eligible for severance or change in control benefits. For the purposes of this discussion, references to "we," "us" and "our" shall be deemed to refer to Axovant Sciences, Inc. as context requires.

Under each executive officers' employment agreement or initial offer letter, as applicable, upon a general release of claims, such executive officer is eligible for the following severance and change in control benefits:

    §
    If we terminate the executive officer's employment without cause or the executive officer resigns for good reason, then we will pay to the executive officer a one-time cash payment equal to the sum of his or her annual base salary and bonus target opportunity. We will also reimburse the executive officer for continued medical coverage for one year if he or she timely elects such continued coverage.

    §
    If the executive officer is employed by us immediately prior to a change in control, then we will pay to the executive officer a pro-rated portion of his or her annual target bonus based on the higher of target or actual achievement of pro-rated performance targets as of the change in control, and all remaining common shares underlying the executive officer's outstanding options will vest.

    §
    If the executive officer is employed by us immediately prior to a change in control and, within one year, the executive officer's employment is terminated without cause or the executive officer resigns for good reason, then he or she will receive a one-time cash payment equal to 1.5 times the sum of his or her current annual base salary and bonus target opportunity, We will also reimburse the executive officer for continued medical coverage for 18 months if he or she timely elects such continued coverage.

In addition to the severance and change in control benefits described above, in the case of Mark Altmeyer Christine Mikail and Alan S. Roemer, if such executive officer terminates his or her employment for special good reason and his or her performance was determined to be very good or higher against agreed upon objectives during the executive officer's performance review immediately prior to the termination, then 50% of the common shares underlying such executive officer's outstanding options will vest. The definitions of "cause," "good reason," "change in control" and "special good reason" are defined in the individual employment agreements or offer letter, in the case of Lawrence T. Friedhoff, M.D., Ph.D., entered into with each of our executive officers, and set forth in the form of executive officer employment agreement or individual offer letter, if applicable, filed as exhibits to the registration statement of which this prospectus is a part.

The amount and terms of these benefits reflect the negotiations of each of our named executive officers with us. We consider the severance and change in control benefits critical to attracting and retaining high caliber executives. We believe that appropriately structured severance and change in control benefits, including accelerated vesting provisions, minimize the distractions and reduce the risk that an executive voluntarily terminates his or her employment with us during times of uncertainty, such as before an acquisition is completed. We believe that our existing arrangements allow each executive officer to focus on continuing normal business operations and, in the event of a change in control, on the success of a potential business combination, rather than on how business decisions that may be in the best interest of our shareholders will impact his or her own financial security.

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The following table sets forth the current base salaries and bonus targets for each of our named executive officers.


Named Executive Officer
  Base Salary   Bonus Target Opportunity   Initial Equity
Incentive Grant
(Number of
Common Shares
Underlying Options)
Vivek Ramaswamy   $350,000   $175,000  

Mark Altmeyer

 

300,000

 

150,000

 

1,125,000

Christine Mikail

 

300,000

 

150,000

 

    937,500

2015 Equity Incentive Plan

In March 2015, our board of directors and our sole shareholder adopted our 2015 Equity Incentive Plan, or the 2015 Plan. In May 2015, our board of directors amended the 2015 Plan and our sole shareholder ratified such amendments. The 2015 Plan, as amended, will become effective upon the execution of the underwriting agreement related to this offering. The description of the 2015 Plan set forth below, reflects the 2015 Plan, as amended. Our 2015 Plan provides for the grant of incentive options within the meaning of Section 422 of the Internal Revenue Code, or the Code, to our employees and our parent and subsidiary corporations' employees, and for the grant of nonstatutory options, restricted stock awards, restricted stock unit awards, stock appreciation rights, performance stock awards and other forms of stock compensation to our employees, including officers, consultants and directors. The 2015 Plan also provides for the grant of performance cash awards to our employees, consultants and directors.

Authorized Shares

The maximum number of common shares that may be issued under the 2015 Plan is 9,500,000 shares. The number of common shares reserved for issuance under the 2015 Plan will automatically increase on April 1 of each year, for a period of ten years, from April 1, 2016 continuing through April 1, 2025, by 4% of the total number of our common shares outstanding on March 31 of the preceding fiscal year, or a lesser number of shares as may be determined by our board of directors. The maximum number of shares that may be issued pursuant to the exercise of incentive options under the 2015 Plan is 47,500,000.

Shares issued under the 2015 Plan may be authorized but unissued or reacquired common shares. Shares subject to stock awards granted under the 2015 Plan that expire or terminate without being exercised in full, or that are paid out in cash rather than in shares, will not reduce the number of shares available for issuance under the 2015 Plan. Additionally, shares issued pursuant to stock awards under the 2015 Plan that we repurchase or that are forfeited, as well as shares reacquired by us as consideration for the exercise or purchase price of a stock award or to satisfy tax withholding obligations related to a stock award, will become available for future grant under the 2015 Plan.

Administration

Our board of directors, or a duly authorized committee thereof, will have the authority to administer the 2015 Plan. Our board of directors will delegate its authority to administer the 2015 Plan to our compensation committee under the terms of the compensation committee's charter. Our board of directors may also delegate to one or more of our officers the authority to (i) designate employees other than officers to receive specified stock awards and (ii) determine the number of our common shares to be subject to such stock awards. Subject to the terms of the 2015 Plan, the administrator has the authority to determine the terms of awards, including recipients, the exercise price or strike price of stock awards, if any, the number of shares subject to each stock award, the fair market value of a common share, the vesting schedule applicable to the awards, together with any vesting acceleration, the form of consideration, if any, payable upon exercise or settlement of the stock award and the terms and conditions of the award agreements for use under the 2015 Plan.

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The administrator has the power to modify outstanding awards under our 2015 Plan. Subject to the terms of the 2015 Plan, the administrator has the authority to reprice any outstanding option or stock appreciation right, cancel and re-grant any outstanding option or stock appreciation right in exchange for new stock awards, cash or other consideration, or take any other action that is treated as a repricing under generally accepted accounting principles, with the consent of any adversely affected participant.

Section 162(m) Limits

At such time as necessary for compliance with Section 162(m) of the Code, no participant may be granted stock awards covering more than 2,000,000 common shares under the 2015 Plan during any calendar year pursuant to options, stock appreciation rights and other stock awards whose value is determined by reference to an increase over an exercise price or strike price of at least 100% of the fair market value of our common shares on the date of grant. Additionally, no participant may be granted in a calendar year a performance stock award covering more than 2,000,000 common shares or a performance cash award having a maximum value in excess of $1,000,000 under the 2015 Plan. These limitations enable us to grant awards that will be exempt from the $1.0 million limitation on the income tax deductibility of compensation paid per covered executive officer imposed by Section 162(m) of the Code.

Performance Awards

The 2015 Plan permits the grant of performance-based stock and cash awards that may qualify as performance-based compensation that is not subject to the $1.0 million limitation on the income tax deductibility of compensation paid per covered executive officer imposed by Section 162(m) of the Code. To enable us to grant performance-based awards that will qualify, our compensation committee can structure such awards so that the stock or cash will be issued or paid pursuant to such award only following the achievement of specified pre-established performance goals during a designated performance period.

Changes to Capital Structure

In the event there is a specified type of change in our capital structure, such as a split, reverse split or recapitalization, appropriate adjustments will be made to (1) the class and maximum number of shares reserved for issuance under our 2015 plan, (2) the class and maximum number of shares by which the share reserve may increase automatically each year, (3) the class and maximum number of shares that may be issued upon the exercise of incentive stock options, (4) the class and maximum number of shares subject to stock awards that can be granted to any person in a calendar year (as established under the 2015 Plan pursuant to Section 162(m) of the Code), and (5) the class and number of shares and exercise price, strike price or purchase price, if applicable, of all outstanding stock awards.

Corporate Transactions

The 2015 Plan provides that in the event of a specified corporate transaction, including without limitation a consolidation, merger, or similar transaction involving our company, the sale of all or substantially all of the assets of our company, the direct or indirect acquisition by an person or persons acting as a group of ownership of shares representing a majority of the then outstanding share capital of our company, the administrator will determine how to treat each outstanding stock award. The administrator may:

    §
    arrange for the assumption, continuation or substitution of a stock award by a successor corporation;

    §
    arrange for the assignment of any reacquisition or repurchase rights held by us to a successor corporation;

    §
    accelerate the vesting of the stock award and provide for its termination prior to the effective time of the corporate transaction;

    §
    arrange for the lapse, in whole or in part, of any reacquisition or repurchase right held by us;

    §
    cancel the stock award prior to the transaction in exchange for a cash payment, which may be reduced by the exercise price payable in connection with the stock award; or

    §
    make a payment, in such form as determined by the administrator, equal to the excess, if any, of the value of the property that would have been received if such award was exercised immediately prior to the effective time of the corporate transaction over any exercise price payable.

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The administrator is not obligated to treat all stock awards or portions of stock awards, even those that are of the same type, in the same manner. The administrator may take different actions with respect to the vested and unvested portions of a stock award.

Change in Control

The administrator may provide, in an individual award agreement or in any other written agreement between us and the participant, that the stock award will be subject to additional acceleration of vesting and exercisability in the event of a change in control. In the absence of such a provision, no such acceleration of the stock award will occur.

Plan Amendment or Termination

Our board has the authority to amend, suspend, or terminate the 2015 Plan, provided that such action does not materially impair the existing rights of any participant without such participant's written consent. No incentive options may be granted after the tenth anniversary of the date our board of directors adopted the 2015 Plan.

Rule 10b5-1 Sales Plans

Our directors and executive officers may adopt written plans, known as Rule 10b5-1 plans, in which they will contract with a broker to buy or sell our common shares on a periodic basis. Under a Rule 10b5-1 plan, a broker executes trades pursuant to parameters established by the director or officer when entering into the plan, without further direction from them. The director or officer may amend a Rule 10b5-1 plan in some circumstances and may terminate a plan at any time. Our directors and executive officers also may buy or sell additional shares outside of a Rule 10b5-1 plan when they are not in possession of material nonpublic information subject to compliance with the terms of our insider trading policy. Prior to 180 days after the date of this offering, subject to early termination, the sale of any shares under such plan would be prohibited by the lock-up agreement that the director or officer has entered into with the underwriters.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

The following is a description of transactions since our inception on October 31, 2014 to which we have been a participant in which the amount involved exceeded or will exceed $120,000, and in which any of our directors, executive officers or holders of more than 5% of our share capital, or any members of their immediate family, had or will have a direct or indirect material interest.

Information Sharing and Cooperation Agreement

We have entered into an information sharing and cooperation agreement, or the Cooperation Agreement, with Roivant Sciences Ltd. The Cooperation Agreement, among other things:

Subject to specified exceptions, the Cooperation Agreement will terminate upon the earlier of the mutual written consent of the parties or when Roivant Sciences Ltd. is no longer required by U.S. GAAP to consolidate our results of operations and financial position or account for its investment in us under the equity method of accounting or by any rule of the Securities and Exchange Commission to include our separate financial statements in its filings with the Securities and Exchange Commission.

Waiver and Option Agreement for Arena Development Agreement

On May 1, 2015, we received an offer notice, as defined in the Cooperation Agreement, from Roivant Sciences Ltd. relating to the opportunity to acquire from Arena Pharmaceuticals GmbH, or Arena, certain rights to develop and market nelotanserin, a novel inverse agonist of the 5-HT2a receptor. On May 8, 2015, (1) we entered into a Waiver and Option Agreement with Roivant Sciences Ltd. with respect to such opportunity and (2) Roivant Sciences Ltd. entered into a development, marketing and supply agreement for nelotanserin with Arena, or the Arena Development Agreement.

Pursuant to the terms of the Waiver and Option Agreement, Roivant Sciences Ltd. granted us an option to receive an assignment and assume all of Roivant Sciences Ltd.'s right, title and interest in and to the Arena Development Agreement, together with any amendments and related side letters or other agreements. Our option is exercisable beginning on or after the earlier of (a) the date that is three months following the closing of this offering and (b) the date that is six months following the effective date of the Arena Development Agreement. Our option expires on the earlier of (a) the date that is 18 months following the closing of this offering and (b) 21 months following the effective date of the Arena development agreement. If we elect to exercise our option, we will be required to reimburse Roivant Sciences Ltd. for 110% of any payments made to Arena, including but not limited to the $4 million up-front payment, and any costs incurred in connection with the development of nelotanserin, in each case pursuant to the Arena development agreement. The services agreement with Roivant Sciences, Inc., as described below, will not apply with regard to any reimbursements made to Roivant Sciences Ltd. in the event that we elect to exercise our option.

Services Agreement with Roivant Sciences, Inc.

We and our wholly-owned subsidiary, Axovant Sciences, Inc., have entered into a services agreement with Roivant Sciences, Inc., a wholly-owned subsidiary of Roivant Sciences Ltd., or the Services Agreement, pursuant to which Roivant Sciences, Inc. provides us with services in relation to the identification of potential product candidates, project management of clinical trials and other development, administrative and financial activities. Following the completion of this offering, we expect that our reliance on Roivant Sciences, Inc. will decrease over time as we, Axovant Sciences, Inc. and any other future subsidiary of ours continue to hire the necessary personnel to manage the development and potential commercialization of

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RVT-101. The Services Agreement will continue in perpetuity until terminated by either party upon 60 days' written notice.

Under the terms of the Services Agreement, we are obligated to pay or reimburse Roivant Sciences, Inc. for the costs it, or third parties acting on its behalf, incurs in providing services to us, including administrative and support services as well as research and development services. In addition, we are obligated to pay to Roivant Sciences, Inc. an amount equal to 10% of the costs incurred in connection with research and development services. We, Axovant Sciences, Inc. and Roivant Sciences, Inc. may agree to adjust this additional fee on an annual basis to between 8% and 12% of costs incurred in providing research and development services.

Administrative and support services include, but are not limited to, payroll, general administrative, corporate and public relations, investor relations, financial marketing, activities in connection with raising capital, accounting and auditing, tax, health, safety environmental and regulatory affairs, staffing and recruiting, benefits, information and technology services, purchasing and legal services. Research and development services include, but are not limited to, preparatory assistance in respect of the identification of product candidates, performance and oversight of due diligence to evaluate potential product candidates, management and oversight of external consultants in connection with potential product candidate investment opportunities, participation in meetings with regulatory authorities related to product candidates, development of plans for potential clinical trials, selection of manufacturers of product candidates, management and oversight of clinical trials and product manufacturing, analysis of clinical trial data and management of regulatory filings and approval process.

Under the Services Agreement, Roivant Sciences, Inc. has agreed to indemnify us and Axovant Sciences, Inc., and each our respective officers, employees and directors against all losses arising out of, due to or in connection with the provision of services (or the failure to provide services) under the services agreement, except to the extent such losses are the result of the gross negligence or willful misconduct of such indemnified parties. Such indemnification obligations will not exceed the payments made by us and by Axovant Sciences, Inc. under the Services Agreement for the specific service that allegedly caused or was related to the losses during the period in which such alleged losses were incurred.

During the period from October 31, 2014 (date of inception) to March 31, 2015, we have incurred expenses of $2.0 million, inclusive of mark-up, under the Services Agreement.

Family Relationships

Geetha Ramaswamy, an employee of Axovant Sciences, Inc. and a former consultant to Roivant Sciences, Inc., is the mother of Vivek Ramaswamy, our principal executive officer, a member of our board of directors, the Chief Executive Officer of Axovant Sciences, Inc. and the President and Chief Executive Officer of Roivant Sciences, Inc. Shankar Ramaswamy, an employee of Axovant Sciences, Inc. and a former employee of Roivant Sciences, Inc., is the brother of Vivek Ramaswamy.

In March 2015, Geetha Ramaswamy was granted a stock option for 262,500 common shares and Shankar Ramaswamy was granted a stock option for 750,000 common shares, in each case, with an exercise price of $0.90 per share. Each option vests over a period of four years, with 25% of the common shares underlying the option vesting on the first anniversary of the option grant date and the remainder vesting in twelve equal quarterly installments thereafter. Each option allows for early exercise, subject to our repurchase option with respect to any unvested common shares in accordance with the terms our standard form of early exercise stock purchase agreement. All common shares underlying each option will become fully vested upon a change in control, as defined in our 2015 Equity Incentive Plan.

During the period from October 31, 2014 (date of inception) to March 31, 2015, we incurred an aggregate of $98,000 under the Services Agreement for services rendered by Geetha Ramaswamy and Shankar Ramaswamy. We also incurred $3,800 of salary expense related to their employment at Axovant Sciences, Inc.

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Employment and Consulting Agreements

Each of our executive officers has entered into an employment agreement with us or our wholly-owned subsidiary, Axovant Sciences, Inc. For additional information regarding these employment agreements, see the section titled "Executive Compensation—Employment Arrangements." In addition, Vivek Ramaswamy, Alan S. Roemer and Lawrence T. Friedhoff, M.D., Ph.D. are also employees of our affiliate, Roivant Sciences, Inc. and Marianne L. Romeo is an employee of Roivant Sciences Ltd.

In April 2015, Axovant Sciences Inc. entered into a one-year consulting agreement with Lawrence Olanoff, M.D., Ph.D., a member of our board of directors, to provide advice and counsel in connection with the design and conduct of our clinical trials and the evaluation of potential product candidates. The fees incurred pursuant to this agreement are expected to be less than $25,000 in the aggregate.

Other Transactions

We have granted stock options to members of our board of directors and executive officers. For a description of these stock options, see the sections titled "Management—Director Compensation" and "Executive Compensation," respectively.

Indemnification Agreements

In connection with this offering, we will enter into indemnification agreements with each of our directors and executive officers. These indemnification agreements will provide the directors and executive officers with contractual rights to indemnification and expense advancement that are, in some cases, broader than the specific indemnification provisions contained under Bermuda law. See "Description of Share Capital—Indemnification of Directors and Officers" for additional information regarding indemnification under Bermuda law and our amended and restated bye-laws.

Related Person Transaction Policy

Prior to this offering, we have not had a formal policy regarding approval of transactions with related parties. We expect to adopt a related person transaction policy that sets forth our procedures for the identification, review, consideration and approval or ratification of related person transactions. The policy will become effective immediately upon the execution of the underwriting agreement for this offering. For purposes of our policy only, a related person transaction is a transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we and any related person are, were or will be participants in which the amount involved exceeds $120,000. Transactions involving compensation for services provided to us as an employee or director are not covered by this policy. A related person is any executive officer, director or beneficial owner of more than 5% of any class of our voting securities, including any of their immediate family members and any entity owned or controlled by such persons.

Under the policy, if a transaction has been identified as a related person transaction, including any transaction that was not a related person transaction when originally consummated or any transaction that was not initially identified as a related person transaction prior to consummation, our management must present information regarding the related person transaction to our audit committee, or, if audit committee approval would be inappropriate, to another independent body of our board of directors, for review, consideration and approval or ratification. The presentation must include a description of, among other things, the material facts, the interests, direct and indirect, of the related persons, the benefits to us of the transaction and whether the transaction is on terms that are comparable to the terms available to or from, as the case may be, an unrelated third party or to or from employees generally. Under the policy, we will collect information that we deem reasonably necessary from each director, executive officer and, to the extent feasible, significant shareholder to enable us to identify any existing or potential related-person transactions and to effectuate the terms of the policy. In addition, under our Code of Conduct that we expect to adopt prior to the closing of this offering, our employees and directors will have an affirmative

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responsibility to disclose any transaction or relationship that reasonably could be expected to give rise to a conflict of interest. In considering related person transactions, our audit committee, or other independent body of our board of directors, will take into account the relevant available facts and circumstances including, but not limited to:

The policy requires that, in determining whether to approve, ratify or reject a related person transaction, our audit committee, or other independent body of our board of directors, must consider, in light of known circumstances, whether the transaction is in, or is not inconsistent with, our best interests and those of our shareholders, as our audit committee, or other independent body of our board of directors, determines in the good faith exercise of its discretion.

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PRINCIPAL SHAREHOLDERS

The following table sets forth the beneficial ownership of our common shares as of March 31, 2015 by:

The percentage ownership information shown in the table is based upon 75,000,000 common shares outstanding as of March 31, 2015.

We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. In addition, the rules include common shares issuable pursuant to the exercise of options or warrants that are either immediately exercisable or exercisable on or before May 30, 2015, which is 60 days after March 31, 2015. These shares are deemed to be outstanding and beneficially owned by the person holding those options or warrants for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws.

Except as otherwise noted below, the address for persons or entities listed in the table is c/o Axovant Sciences Inc., 1441 Broadway, 3rd Floor, New York, New York 10018.

 
   
  Percentage of Shares
Beneficially Owned
 
 
  Number of
Shares
Beneficially
Owned
 
Name of Beneficial Owner
  Before
Offering
  After
Offering
 

5% Shareholders:

                   

Roivant Sciences Ltd. (1)

    75,000,000     100.0 %     %

Named Executive Officers and Directors:

   
 
   
 
   
 
 

Vivek Ramaswamy (1)

    75,000,000     100.0        

Mark Altmeyer (2)

    1,125,000     1.5        

Christine Mikail (3)

    937,500     1.2        

Berndt Modig (4)

    85,000     *        

Lawrence Olanoff, M.D. Ph.D.

               

Ilan Oren (1)

    75,000,000     100.0        

Atul Pande, M.D. (5)

    75,000     *        

Marianne L. Romeo (6)

    150,000     *        

All current directors and executive officers as a group (10 persons) (7)

   
77,697,500
   
100.0
       

*
Represents beneficial ownership of less than 1%.

(1)
Voting and dispositive decisions of Roivant Sciences Ltd. require unanimous approval by the three directors of Roivant Sciences Ltd.: Vivek Ramaswamy, our principal executive officer and a member of our board of directors, Ilan Oren, a

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(2)
Represents 1,125,000 common shares issuable pursuant to a stock option exercisable within 60 days of March 31, 2015.

(3)
Represents 937,500 common shares issuable pursuant to a stock option exercisable within 60 days of March 31, 2015.

(4)
Represents 85,000 common shares issuable pursuant to a stock option exercisable within 60 days of March 31, 2015.

(5)
Represents 75,000 common shares issuable pursuant to a stock option exercisable within 60 days of March 31, 2015.

(6)
Represents 150,000 common shares issuable pursuant to stock options exercisable within 60 days of March 31, 2015. The address for Ms. Romeo is c/o Axovant Sciences Ltd., Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.

(7)
Includes 2,697,500 common shares issuable pursuant to stock options exercisable within 60 days of March 31, 2015.

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DESCRIPTION OF SHARE CAPITAL

The following description of our share capital and provisions of our memorandum of association and amended and restated bye-laws are summaries. You should also refer to the memorandum of association and the amended and restated bye-laws, which are filed as exhibits to the registration statement of which this prospectus is part.

General

We are an exempted company incorporated under the laws of Bermuda. We are registered with the Registrar of Companies in Bermuda under registration number 49659. We were incorporated on October 31, 2014 under the name Roivant Neurosciences Ltd. We changed our name to Axovant Sciences Ltd. in March 2015. Our registered office is located in Bermuda at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda, and we also have business operations at 14 Par-La-Ville Road, Hamilton HM08, Bermuda.

The objects of our business are unrestricted, and Axovant Sciences Ltd. has the capacity of a natural person. We can therefore undertake activities without restriction on our capacity.

Prior to the closing of this offering our sole shareholder will approve certain amendments to our bye-laws that will become effective upon the closing of this offering. The following description assumes that such amendments have become effective.

Since our incorporation, other than a subdivision of our authorized and issued share capital, there have been no material changes to our share capital, mergers, amalgamations or consolidations of us or any of our subsidiaries, no material changes in the mode of conducting our business, no material changes in the types of products produced or services rendered. There have been no bankruptcy, receivership or similar proceedings with respect to us or our subsidiaries.

There have been no public takeover offers by third parties for our shares nor any public takeover offers by us for the shares of another company that have occurred during the last or current financial years.

Initial settlement of our common shares will take place on the closing date of this offering through The Depository Trust Company, or DTC") in accordance with its customary settlement procedures for equity securities registered through DTC's book-entry transfer system. Each person beneficially owning common shares registered through DTC must rely on the procedures thereof and on institutions that have accounts therewith to exercise any rights of a holder of the common shares.

Share Capital

Immediately following the closing of this offering, our authorized share capital will consist of 1,000,000,000 common shares, $0.00001 par value per common share. As of March 31, 2015, we had 75,000,000 common shares issued and outstanding, all of which were held by Roivant Sciences Ltd. All of our issued and outstanding common shares prior to the closing of this offering are fully paid. Pursuant to our amended and restated bye-laws, subject to the requirements of the New York Stock Exchange, or the NYSE, and to any resolution of the shareholders to the contrary, our board of directors is authorized to issue any of our authorized but unissued shares. There are no limitations on the right of non-Bermudians or non-residents of Bermuda to hold or vote our shares provided our common shares remain listed on an appointed stock exchange, which includes the NYSE.

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Common Shares

Holders of common shares have no pre-emptive, redemption, conversion or sinking fund rights. Holders of common shares are entitled to one vote per share on all matters submitted to a vote of holders of common shares, subject to the limitations described below. Unless a different majority is required by law or by our amended and restated bye-laws, resolutions to be approved by holders of common shares require approval by a simple majority of votes cast at a meeting at which a quorum is present.

Under our amended and restated bye-laws, any U.S. person, other than any excluded person, as described below, whose controlled shares, as defined below, would constitute 9.5% or more of the total voting power of our issued share capital, would have their aggregate votes reduced by our board of directors to the extent necessary such that the controlled shares of such U.S. person will constitute less than 9.5% of the voting power of all issued and outstanding shares. These reductions will be made on an automatic basis pursuant to the procedures set forth in our bye-laws. Under these provisions, certain shareholders may have their voting rights reduced to less than one vote per share, while other shareholders may have voting rights in excess of one vote per share. Any person, including any U.S. person, whose controlled shares constitute 9.5% or more of the total voting power of our issued share capital immediately prior to the closing of this offering, will be exempt from the foregoing voting restrictions. As a result, we expect that Roivant Sciences Ltd., certain of its affiliates, and Vivek Ramaswamy, our principal executive officer, will be exempt from these restrictions. For purposes of this paragraph, "controlled shares" means all shares of Axovant Sciences Ltd. directly, indirectly or constructively owned by any person, as determined pursuant to Sections 957 and 958 of the Code and the Treasury Regulations promulgated thereunder. Further, our board of directors may determine that shares shall carry different voting rights as it reasonably determines, based on the advice of counsel, to be appropriate to avoid the existence of a U.S. person whose controlled shares constitute 9.5% or more of the total voting power of our issued share capital.

In addition, under our amended and restated bye-laws, shares shall not carry voting rights to the extent that our board of directors reasonably determines, based on the advice of counsel, that it is necessary to do so to avoid adverse tax, legal or regulatory consequences to us, any of our subsidiaries or any direct or indirect holder of our common shares or its affiliates, provided that our board of directors will use reasonable efforts to afford equal treatment to similarly situated shareholders to the extent possible under the circumstances.

In the event of our liquidation, dissolution or winding up, the holders of common shares are entitled to share equally and ratably in our assets, if any, remaining after the payment of all of our debts and liabilities, subject to any liquidation preference on any issued and outstanding preference shares.

Preference Shares

Pursuant to Bermuda law and our amended and restated bye-laws, our board of directors may, by resolution, establish one or more series of preference shares having such number of shares, designations, dividend rates, relative voting rights, conversion or exchange rights, redemption rights, liquidation rights and other relative participation, optional or other special rights, qualifications, limitations or restrictions as may be fixed by the board of directors without any further shareholder approval. Such rights, preferences, powers and limitations, as may be established, could have the effect of discouraging an attempt to obtain control of our company.

Dividend Rights

Under Bermuda law, a company may not declare or pay dividends if there are reasonable grounds for believing that (1) the company is, or would after the payment be, unable to pay its liabilities as they become due; or (2) that the realizable value of its assets would thereby be less than its liabilities. Under our amended and restated bye-laws, each common share is entitled to dividends if, as and when dividends are declared by our board of directors, subject to any preferred dividend right of the holders of any preference shares. We do not anticipate paying cash dividends in the foreseeable future.

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Variation of Rights

If at any time we have more than one class of shares, the rights attaching to any class, unless otherwise provided for by the terms of issue of the relevant class, may be varied either: (1) with the consent in writing of the holders of 75% of the issued shares of that class; or (2) with the sanction of a resolution passed by a majority of the votes cast at a general meeting of the relevant class of shareholders at which a quorum consisting of at least two persons holding or representing one-third of the issued shares of the relevant class is present. Our amended and restated bye-laws specify that the creation or issue of shares ranking equally with existing shares will not, unless expressly provided by the terms of issue of existing shares, vary the rights attached to existing shares. In addition, the creation or issue of preference shares ranking prior to common shares will not be deemed to vary the rights attached to common shares or, subject to the terms of any other class or series of preference shares, to vary the rights attached to any other class or series of preference shares.

Transfer of Shares

Our board of directors may, in its absolute discretion and without assigning any reason, refuse to register the transfer of a share on the basis that it is not fully paid. Our board of directors may also refuse to recognize an instrument of transfer of a share unless it is accompanied by the relevant share certificate and such other evidence of the transferor's right to make the transfer as our board of directors shall reasonably require or unless all applicable consents, authorizations and permissions of any governmental agency or body in Bermuda have been obtained or if it appears to our board of directors that certain tax, regulatory or legal consequences for us, any subsidiary of ours, holders of our common shares or their affiliates would result from the transfer. Subject to these restrictions, a holder of common shares may transfer the title to all or any of his common shares by completing a form of transfer in the form set out in our amended and restated bye-laws (or as near thereto as circumstances admit) or in such other common form as our board of directors may accept. The instrument of transfer must be signed by the transferor and transferee, although in the case of a fully paid share our board of directors may accept the instrument signed only by the transferor.

Meetings of Shareholders

Under Bermuda law, a company is required to convene at least one general meeting of shareholders each calendar year, which we refer to as the annual general meeting. However, the shareholders may by resolution waive this requirement, either for a specific year or period of time, or indefinitely. When the requirement has been so waived, any shareholder may, on notice to the company, terminate the waiver, in which case an annual general meeting must be called. We have chosen not to waive the convening of an annual general meeting.

Bermuda law provides that a special general meeting of shareholders may be called by the board of directors of a company and must be called upon the request of shareholders holding not less than 10% of the paid-up capital of the company carrying the right to vote at general meetings. Bermuda law also requires that shareholders be given at least five days' advance notice of a general meeting, but the accidental omission to give notice to any person does not invalidate the proceedings at a meeting. Our amended and restated bye-laws provide that our principal executive officer or the chairman or any two directors or any director and the secretary or board of directors may convene an annual general meeting and our principal executive officer or the chairman or any two directors or any director and the secretary or our board of directors may convene a special general meeting. Under our amended and restated bye-laws, at least 14 days' notice of an annual general meeting or ten days' notice of a special general meeting must be given to each shareholder entitled to vote at such meeting. This notice requirement is subject to the ability to hold such meetings on shorter notice if such notice is agreed: (1) in the case of an annual general meeting by all of the shareholders entitled to attend and vote at such meeting; or (2) in the case of a special general meeting by a majority in number of the shareholders entitled to attend and vote at the

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meeting holding not less than 95% in nominal value of the shares entitled to vote at such meeting. Subject to the rules of the NYSE, the quorum required for a general meeting of shareholders is two or more persons present in person at the start of the meeting and representing in person or by proxy in excess of 50% of all issued and outstanding common shares.

Access to Books and Records and Dissemination of Information

Members of the general public have a right to inspect the public documents of a company available at the office of the Registrar of Companies in Bermuda. These documents include a company's amended and restated memorandum of association, including its objects and powers, and certain alterations to the amended and restated memorandum of association. The shareholders have the additional right to inspect the bye-laws of the company, minutes of general meetings and the company's audited financial statements, which must be presented in the annual general meeting. The register of members of a company is also open to inspection by shareholders and by members of the general public without charge. The register of members is required to be open for inspection for not less than two hours in any business day (subject to the ability of a company to close the register of members for not more than thirty days in a year). A company is required to maintain its share register in Bermuda but may, subject to the provisions of the Companies Act establish a branch register outside of Bermuda. A company is required to keep at its registered office a register of directors and officers that is open for inspection for not less than two hours in any business day by members of the public without charge. Bermuda law does not, however, provide a general right for shareholders to inspect or obtain copies of any other corporate records.

Election and Removal of Directors

Our amended and restated bye-laws will provide that our board of directors shall consist of such number of directors as the board of directors may determine. Upon the closing of this offering, our board of directors will consist of six directors. Our board of directors will be divided into three classes that are, as nearly as possible, of equal size. Each class of directors will be elected for a three-year term of office, but the terms will be staggered so that the term of only one class of directors expires at each annual general meeting. The initial terms of the Class I, Class II and Class III directors will expire in 2016, 2017 and 2018, respectively. At each succeeding annual general meeting, successors to the class of directors whose term expires at the annual general meeting will be elected for a three-year term.

A shareholder holding any percentage of the common shares in issue may propose for election as a director someone who is not an existing director or is not proposed by our board of directors. Where a director is to be elected at an annual general meeting, notice of any such proposal for election must be given not less than 90 days nor more than 120 days before the anniversary of the last annual general meeting prior to the giving of the notice or, in the event the annual general meeting is called for a date that is not less than 30 days before or after such anniversary the notice must be given not later than ten days following the earlier of the date on which notice of the annual general meeting was posted to shareholders or the date on which public disclosure of the date of the annual general meeting was made. Where a director is to be elected at a special general meeting; provided, that our board of directors has determined that shareholders may nominate persons for election at such special general meeting, that notice must be given not later than seven days following the earlier of the date on which notice of the special general meeting was posted to shareholders or the date on which public disclosure of the date of the special general meeting was made.

A director may be removed, only with cause, by the shareholders, provided notice of the shareholders meeting convened to remove the director is given to the director. The notice must contain a statement of the intention to remove the director and a summary of the facts justifying the removal and must be served on the director not less than 14 days before the meeting. The director is entitled to attend the meeting and be heard on the motion for his removal.

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Proceedings of Board of Directors

Our amended and restated bye-laws provide that our business is to be managed and conducted by our board of directors. Bermuda law permits individual and corporate directors and there is no requirement in our bye-laws or Bermuda law that directors hold any of our shares. There is also no requirement in our amended and restated bye-laws or Bermuda law that our directors must retire at a certain age.

The compensation of our directors will be determined by the board of directors, and there is no requirement that a specified number or percentage of "independent" directors must approve any such determination. Our directors may also be paid all travel, hotel and other reasonable out-of-pocket expenses properly incurred by them in connection with our business or their duties as directors.

A director who discloses a direct or indirect interest in any contract or arrangement with us as required by Bermuda law will not be entitled to vote in respect of any such contract or arrangement in which he or she is interested unless the chairman of the relevant meeting of the Board of Directors determines that such director is not disqualified from voting.

Indemnification of Directors and Officers

Section 98 of the Companies Act provides generally that a Bermuda company may indemnify its directors, officers and auditors against any liability which by virtue of any rule of law would otherwise be imposed on them in respect of any negligence, default, breach of duty or breach of trust, except in cases where such liability arises from fraud or dishonesty of which such director, officer or auditor may be guilty in relation to the company. Section 98 further provides that a Bermuda company may indemnify its directors, officers and auditors against any liability incurred by them in defending any proceedings, whether civil or criminal, in which judgment is awarded in their favor or in which they are acquitted or granted relief by the Supreme Court of Bermuda pursuant to Section 281 of the Companies Act.

Our amended and restated bye-laws provide that we shall indemnify our officers and directors in respect of their actions and omissions, except in respect of their fraud or dishonesty, and that we shall advance funds to our officers and directors for expenses incurred in their defense upon receipt of an undertaking to repay the funds if any allegation of fraud or dishonesty is proved. Our amended and restated bye-laws provide that the shareholders waive all claims or rights of action that they might have, individually or in right of the company, against any of the company's directors or officers for any act or failure to act in the performance of such director's or officer's duties, except in respect of any fraud or dishonesty of such director or officer. Section 98A of the Companies Act permits us to purchase and maintain insurance for the benefit of any officer or director in respect of any loss or liability attaching to him in respect of any negligence, default, breach of duty or breach of trust, whether or not we may otherwise indemnify such officer or director. We have purchased and maintain a directors' and officers' liability policy for such purpose.

Amendment of Memorandum of Association and Bye-laws

Bermuda law provides that the memorandum of association of a company may be amended by a resolution passed at a general meeting of shareholders. Our amended and restated bye-laws provide that no bye-law shall be rescinded, altered or amended, and no new bye-law shall be made, unless it shall have been approved by a resolution of our board of directors and by a resolution of our shareholders including the affirmative vote of a majority of all votes entitled to be cast on the resolution.

Under Bermuda law, the holders of an aggregate of not less than 20% in par value of a company's issued share capital or any class thereof have the right to apply to the Supreme Court of Bermuda for an annulment of any amendment of the memorandum of association adopted by shareholders at any general meeting, other than an amendment that alters or reduces a company's share capital as provided in the Companies Act. Where such an application is made, the amendment becomes effective only to the extent that it is confirmed by the Supreme Court of Bermuda. An application for an annulment of an amendment

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of the memorandum of association must be made within 21 days after the date on which the resolution altering the company's memorandum of association is passed and may be made on behalf of persons entitled to make the application by one or more of their number as they may appoint in writing for the purpose. No application may be made by shareholders voting in favor of the amendment.

Amalgamations and Mergers

The amalgamation or merger of a Bermuda company with another company or corporation (other than certain affiliated companies) requires the amalgamation or merger agreement to be approved by the company's board of directors and by its shareholders. Unless the company's bye-laws provide otherwise, the approval of 75% of the shareholders voting at such meeting is required to approve the amalgamation or merger agreement, and the quorum for such meeting must be two or more persons holding or representing more than one-third of the issued shares of the company. Our amended and restated bye-laws provide that the approval of a simple majority of shareholders voting at a meeting to approve the amalgamation or merger agreement shall be sufficient, and the quorum for such meeting shall be two or more persons holding or representing more than 50% of the issued voting shares.

Under Bermuda law, in the event of an amalgamation or merger of a Bermuda company with another company or corporation, a shareholder of the Bermuda company who did not vote in favor of the amalgamation or merger and who is not satisfied that fair value has been offered for such shareholder's shares may, within one month of notice of the shareholders meeting, apply to the Supreme Court of Bermuda to appraise the fair value of those shares.

Business Combinations

Although the Companies Act does not contain specific provisions regarding "business combinations" between companies organized under the laws of Bermuda and "interested shareholders," we have included these provisions in our bye-laws. Specifically, our bye-laws contain provisions which prohibit us from engaging in a business combination with an interested shareholder for a period of three years after the date of the transaction in which the person became an interested shareholder, unless, in addition to any other approval that may be required by applicable law:

For purposes of these provisions, a "business combination" includes recapitalizations, mergers, amalgamations, consolidations, exchanges, asset sales, leases, certain issues or transfers of shares or other securities and other transactions resulting in a financial benefit to the interested shareholder. An "interested shareholder" is any person or entity that beneficially owns 15% or more of our issued and outstanding voting shares and any person or entity affiliated with or controlling or controlled by that person or entity.

Shareholder Suits

Class actions and derivative actions are generally not available to shareholders under Bermuda law. The Bermuda courts, however, would ordinarily be expected to permit a shareholder to commence an action in the name of a company to remedy a wrong to the company where the act complained of is alleged to be

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beyond the corporate power of the company or illegal, or would result in the violation of the company's memorandum of association or bye-laws. Furthermore, consideration would be given by a Bermuda court to acts that are alleged to constitute a fraud against the minority shareholders or, for instance, where an act requires the approval of a greater percentage of the company's shareholders than that which actually approved it.

When the affairs of a company are being conducted in a manner that is oppressive or prejudicial to the interests of some part of the shareholders, one or more shareholders may apply to the Supreme Court of Bermuda, which may make such order as it sees fit, including an order regulating the conduct of the company's affairs in the future or ordering the purchase of the shares of any shareholders by other shareholders or by the company.

Our amended and restated bye-laws contain a provision by virtue of which our shareholders waive any claim or right of action that they have, both individually and on our behalf, against any director or officer in relation to any action or failure to take action by such director or officer, except in respect of any fraud or dishonesty of such director or officer. We have been advised by the SEC that in the opinion of the SEC, the operation of this provision as a waiver of the right to sue for violations of federal securities laws would likely be unenforceable in U.S. courts.

Capitalization of Profits and Reserves

Pursuant to our amended and restated bye-laws, our board of directors may (1) capitalize any part of the amount of our share premium or other reserve accounts or any amount credited to our profit and loss account or otherwise available for distribution by applying such sum in paying up unissued shares to be allotted as fully paid bonus shares pro rata (except in connection with the conversion of shares) to the shareholders; or (2) capitalize any sum standing to the credit of a reserve account or sums otherwise available for dividend or distribution by paying up in full, partly paid or nil paid shares of those shareholders who would have been entitled to such sums if they were distributed by way of dividend or distribution.

Untraced Shareholders

Our amended and restated bye-laws provide that our board of directors may forfeit any dividend or other monies payable in respect of any shares that remain unclaimed for six years from the date when such monies became due for payment. In addition, we are entitled to cease sending dividend warrants and checks by post or otherwise to a shareholder if such instruments have been returned undelivered to, or left uncashed by, such shareholder on at least two consecutive occasions or, following one such occasion, reasonable enquires have failed to establish the shareholder's new address. This entitlement ceases if the shareholder claims a dividend or cashes a dividend check or a warrant.

Certain Provisions of Bermuda Law

We have been designated by the Bermuda Monetary Authority as a non-resident for Bermuda exchange control purposes. This designation allows us to engage in transactions in currencies other than the Bermudan dollar, and there are no restrictions on our ability to transfer funds (other than funds denominated in Bermudan dollars) in and out of Bermuda or to pay dividends to U.S. residents who are holders of our common shares.

The Bermuda Monetary Authority has given its consent for the issue and free transferability of all of the common shares that are the subject of this offering to and between residents and non-residents of Bermuda for exchange control purposes, provided our shares remain listed on an appointed stock exchange, which includes the NYSE. Approvals or permissions given by the Bermuda Monetary Authority do not constitute a guarantee by the Bermuda Monetary Authority as to our performance or our creditworthiness. Accordingly, in giving such consent or permissions, neither the Bermuda Monetary Authority nor the Registrar of Companies in Bermuda shall be liable for the financial soundness, performance or default of our business or for the

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correctness of any opinions or statements expressed in this prospectus. Certain issues and transfers of common shares involving persons deemed resident in Bermuda for exchange control purposes require the specific consent of the Bermuda Monetary Authority.

In accordance with Bermuda law, share certificates are only issued in the names of companies, partnerships or individuals. In the case of a shareholder acting in a special capacity (for example as a trustee), certificates may, at the request of the shareholder, record the capacity in which the shareholder is acting. Notwithstanding such recording of any special capacity, we are not bound to investigate or see to the execution of any such trust.

Transfer Agent and Registrar

A register of holders of the common shares will be maintained by Codan Services Limited in Bermuda, and a branch register will be maintained in the United States by                                             , which will also serve as transfer agent. The transfer agent's address is                                             .

Listing

We intend to apply for listing of our common shares on the NYSE under the trading symbol "AXON."

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SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, no public market existed for our common shares. Future sales of our common shares in the public market after this offering, or the perception that these sales could occur, could adversely affect prevailing market prices for our common shares and could impair our future ability to raise equity capital.

Based on the number of shares outstanding as of March 31, 2015, upon the closing of this offering and assuming no exercise by the underwriters of their option to purchase additional common shares,                             common shares will be outstanding. All of the common shares sold in this offering will be freely tradable without restrictions or further registration under the Securities Act of 1933, as amended, or the Securities Act, except for any shares sold to our "affiliates," as that term is defined under Rule 144 under the Securities Act. The remaining 75,000,000 common shares held by existing shareholders are "restricted securities," as that term is defined in Rule 144 under the Securities Act. Restricted securities may be sold in the public market only if registered or if their resale qualifies for exemption from registration described below under Rule 144 promulgated under the Securities Act.

As a result of contractual restrictions described below and the provisions of Rules 144 and 701, the shares sold in this offering and the restricted securities will be available for sale in the public market as follows:

Rule 144

In general, persons who have beneficially owned our common shares for at least six months, and any affiliate of the company who owns our common shares, are entitled to sell their securities without registration with the SEC under an exemption from registration provided by Rule 144 under the Securities Act.

Non-Affiliates

Any person who is not deemed to have been one of our affiliates at the time of, or at any time during the three months preceding, a sale may sell an unlimited number of common shares under Rule 144 if:

Any person who is not deemed to have been an affiliate of ours at the time of, or at any time during the three months preceding, a sale and has held the common shares for at least one year, including the holding period of any prior owner other than one of our affiliates, will be entitled to sell an unlimited number of common shares without regard to the length of time we have been subject to Exchange Act periodic reporting or whether we are current in our Exchange Act reporting.

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Affiliates

Persons seeking to sell restricted securities who are our affiliates at the time of, or any time during the three months preceding, a sale, would be subject to the restrictions described above. They are also subject to additional restrictions, by which such person would be required to comply with the manner of sale and notice provisions of Rule 144 and would be entitled to sell within any three-month period only that number of securities that does not exceed the greater of either of the following:

Additionally, persons who are our affiliates at the time of, or any time during the three months preceding, a sale may sell unrestricted securities under the requirements of Rule 144 described above, without regard to the six-month holding period of Rule 144, which does not apply to sales of unrestricted securities.

Rule 701

Rule 701 under the Securities Act, as in effect on the date of this prospectus, permits resales of shares in reliance upon Rule 144 but without compliance with certain restrictions of Rule 144, including the holding period requirement. Our employees, executive officers or directors who purchase shares under a written compensatory plan or contract will be entitled to rely on the resale provisions of Rule 701, but any holders of Rule 701 shares will be required to wait until 90 days after the date of this prospectus before selling their shares. However, all our Rule 701 shares are subject to lock-up agreements as described below and in the section titled "Underwriting" and will become eligible for sale upon the expiration of the restrictions set forth in those agreements.

Form S-8 Registration Statements

As soon as practicable after the closing of this offering, we intend to file with the SEC one or more registration statements on Form S-8 under the Securities Act to register the our common shares that are issuable pursuant to our 2015 plan. These registration statements will become effective immediately upon filing. Shares covered by these registration statements will then be eligible for sale in the public markets, subject to vesting restrictions, any applicable lock-up agreements described below and Rule 144 limitations applicable to affiliates.

Lock-Up Agreements

We and the holders of all of our common shares outstanding on the date of this prospectus, including each of our executive officers and directors, have entered into lock-up agreements with the underwriters or otherwise agreed, subject to certain exceptions, that we and they will not, directly or indirectly, offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale, or otherwise dispose of or hedge any of our common shares, any options or warrants to purchase our common shares, or any securities convertible into, or exchangeable for or that represent the right to receive our common shares, without the prior written consent of Jefferies LLC for a period of 180 days from the date of this prospectus.

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BERMUDA COMPANY CONSIDERATIONS

Our corporate affairs are governed by our memorandum of association and bye-laws and by the corporate law of Bermuda. The provisions of the Companies Act, which applies to us, differ in certain material respects from laws generally applicable to U.S. companies incorporated in the State of Delaware and their stockholders. The following is a summary of significant differences between the Companies Act (including modifications adopted pursuant to our bye-laws) and Bermuda common law applicable to us and our shareholders and the provisions of the Delaware General Corporation Law applicable to U.S. companies organized under the laws of Delaware and their stockholders.

Bermuda   Delaware
Shareholder meetings    

May be called by the board of directors and must be called upon the request of shareholders holding not less than 10% of the paid-up capital of the company carrying the right to vote at general meetings.

 

May be held at such time or place as designated in the certificate of incorporation or the bylaws, or if not so designated, as determined by the board of directors.

May be held in or outside Bermuda.

 

May be held in or outside of Delaware.

Notice:

 

Notice:

Shareholders must be given at least five days' advance notice of a general meeting, but the unintentional failure to give notice to any person does not invalidate the proceedings at a meeting.

 

Written notice shall be given not less than ten nor more than 60 days before the meeting.

Notice of general meetings must specify the place, the day and hour of the meeting and in the case of special general meetings, the general nature of the business to be considered.

 

Whenever stockholders are required to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, if any, date and hour of the meeting, and the means of remote communication, if any.

Our bye-laws provide that at least 14 days' notice of an annual general meeting and 10 days' notice of a special general meeting must be given to each shareholder entitled to vote at such meeting.

 

 


Shareholders' voting rights

 

 

Shareholders may act by written consent to elect directors. Shareholders may not act by written consent to remove a director or auditor.

 

With limited exceptions, stockholders may act by written consent to elect directors unless prohibited by the certificate of incorporation.

Generally, except as otherwise provided in the bye-laws, or the Companies Act, any action or resolution requiring approval of the shareholders may be passed by a simple majority of votes cast. Any person authorized to vote may authorize another person or persons to act for him or her by proxy.

 

Any person authorized to vote may authorize another person or persons to act for him or her by proxy.

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Bermuda   Delaware

The voting rights of shareholders are regulated by a company's bye-laws and, in certain circumstances, by the Companies Act. The bye-laws may specify the number to constitute a quorum and if the bye-laws permit, a general meeting of the shareholders of a company may be held with only one individual present if the requirement for a quorum is satisfied. Subject to the rules of the NYSE, our bye-laws provide that the quorum required for a general meeting of shareholders is two or more persons present in person at the start of the meeting and representing in person or by proxy in excess of 50% of all issued and outstanding common shares.

 

For stock corporations, the certificate of incorporation or bylaws may specify the number to constitute a quorum, but in no event shall a quorum consist of less than one-third of shares entitled to vote at a meeting. In the absence of such specifications, a majority of shares entitled to vote shall constitute a quorum.

Our bye-laws provide that when a quorum is once present in general meeting it is not broken by the subsequent withdrawal of any shareholders.

 

When a quorum is once present to organize a meeting, it is not broken by the subsequent withdrawal of any stockholders.

The bye-laws may provide for cumulative voting, although our bye-laws do not.

 

The certificate of incorporation may provide for cumulative voting.

The amalgamation or merger of a Bermuda company with another company or corporation (other than certain affiliated companies) requires the amalgamation or merger agreement to be approved by the company's board of directors and by its shareholders. Unless the company's bye-laws provide otherwise, the approval of 75% of the shareholders voting at such meeting is required to approve the amalgamation or merger agreement, and the quorum for such meeting must be two or more persons holding or representing more than one-third of the issued shares of the company.

 

Any two or more corporations existing under the laws of the state may merge into a single corporation pursuant to a board resolution and upon the majority vote by stockholders of each constituent corporation at an annual or special meeting.

Every company may at any meeting of its board of directors sell, lease or exchange all or substantially all of its property and assets as its board of directors deems expedient and in the best interests of the company to do so when authorized by a resolution adopted by the holders of a majority of issued and outstanding shares of a company entitled to vote.

 

Every corporation may at any meeting of the board sell, lease or exchange all or substantially all of its property and assets as its board deems expedient and for the best interests of the corporation when so authorized by a resolution adopted by the holders of a majority of the outstanding stock of a corporation entitled to vote.

Any company that is the wholly owned subsidiary of a holding company, or one or more companies which are wholly owned subsidiaries of the same holding company, may amalgamate or merge without the vote or consent of shareholders provided that the approval of the board of directors is obtained and that a director or officer of each such company signs a statutory solvency declaration in respect of the relevant company.

 

Any corporation owning at least 90% of the outstanding shares of each class of another corporation may merge the other corporation into itself and assume all of its obligations without the vote or consent of stockholders; however, in case the parent corporation is not the surviving corporation, the proposed merger shall be approved by a majority of the outstanding stock of the parent corporation entitled to vote at a duly called stockholder meeting.

Any mortgage, charge or pledge of a company's property and assets may be authorized without the consent of shareholders subject to any restrictions under the bye-laws.

 

Any mortgage or pledge of a corporation's property and assets may be authorized without the vote or consent of stockholders, except to the extent that the certificate of incorporation otherwise provides.

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Bermuda   Delaware
Directors    

The board of directors must consist of at least one director.

The number of directors is fixed by the bye-laws, and any changes to such number must be approved by the board of directors and/or the shareholders in accordance with the company's bye-laws.

 

The board of directors must consist of at least one member.

Number of board members shall be fixed by the bylaws, unless the certificate of incorporation fixes the number of directors, in which case a change in the number shall be made only by amendment of the certificate of incorporation.

Removal:

 

Removal:

Under our bye-laws, any or all directors may be removed only with cause by the holders of a majority of the shares entitled to vote at a special meeting convened and held in accordance with the bye-laws for the purpose of such removal.

 

Any or all of the directors may be removed, with or without cause, by the holders of a majority of the shares entitled to vote unless the certificate of incorporation otherwise provides.

In the case of a classified board, stockholders may effect removal of any or all directors only for cause.


Duties of directors

 

 

The Companies Act authorizes the directors of a company, subject to its bye-laws, to exercise all powers of the company except those that are required by the Companies Act or the company's bye-laws to be exercised by the shareholders of the company. Our bye-laws provide that our business is to be managed and conducted by our Board of Directors. At common law, members of a board of directors owe a fiduciary duty to the company to act in good faith in their dealings with or on behalf of the company and exercise their powers and fulfill the duties of their office honestly. This duty includes the following essential elements:

a duty to act in good faith in the best interests of the company;

a duty not to make a personal profit from opportunities that arise from the office of director;

a duty to avoid conflicts of interest; and

a duty to exercise powers for the purpose for which such powers were intended.

 

Under Delaware law, the business and affairs of a corporation are managed by or under the direction of its board of directors. In exercising their powers, directors are charged with a fiduciary duty of care to protect the interests of the corporation and a fiduciary duty of loyalty to act in the best interests of its stockholders. The duty of care requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, and disclose to stockholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director act in a manner he reasonably believes to be in the best interests of the corporation. He must not use his corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interest of the corporation and its stockholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the stockholders generally.

The Companies Act imposes a duty on directors and officers of a Bermuda company:

to act honestly and in good faith with a view to the best interests of the company; and

to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

The Companies Act also imposes various duties on directors and officers of a company with respect to certain matters of management and administration of the company. Under Bermuda law, directors and officers generally owe fiduciary duties to the company itself, not to the company's individual shareholders, creditors or any class thereof. Our shareholders may not have a direct cause of action against our directors.

 

In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, a director must prove the procedural fairness of the transaction, and that the transaction was of fair value to the corporation.

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Bermuda   Delaware
Takeovers    

An acquiring party is generally able to acquire compulsorily the common shares of minority holders of a company in the following ways:

By a procedure under the Companies Act known as a "scheme of arrangement." A scheme of arrangement could be effected by obtaining the agreement of the company and of holders of common shares, representing in the aggregate a majority in number and at least 75% in value of the common shareholders present and voting at a court ordered meeting held to consider the scheme of arrangement. The scheme of arrangement must then be sanctioned by the Bermuda Supreme Court. If a scheme of arrangement receives all necessary agreements and sanctions, upon the filing of the court order with the Registrar of Companies in Bermuda, all holders of common shares could be compelled to sell their shares under the terms of the scheme of arrangement.

By acquiring pursuant to a tender offer 90% of the shares or class of shares not already owned by, or by a nominee for, the acquiring party (the offeror), or any of its subsidiaries. If an offeror has, within four months after the making of an offer for all the shares or class of shares not owned by, or by a nominee for, the offeror, or any of its subsidiaries, obtained the approval of the holders of 90% or more of all the shares to which the offer relates, the offeror may, at any time within two months beginning with the date on which the approval was obtained, by notice compulsorily acquire the shares of any nontendering shareholder on the same terms as the original offer unless the Supreme Court of Bermuda (on application made within a one-month period from the date of the offeror's notice of its intention to acquire such shares) orders otherwise.

Where the acquiring party or parties hold not less than 95% of the shares or a class of shares of the company, by acquiring, pursuant to a notice given to the remaining shareholders or class of shareholders, the shares of such remaining shareholders or class of shareholders. When this notice is given, the acquiring party is entitled and bound to acquire the shares of the remaining shareholders on the terms set out in the notice, unless a remaining shareholder, within one month of receiving such notice, applies to the Supreme Court of Bermuda for an appraisal of the value of their shares. This provision only applies where the acquiring party offers the same terms to all holders of shares whose shares are being acquired.

 

Delaware law provides that a parent corporation, by resolution of its board of directors and without any stockholder vote, may merge with any subsidiary of which it owns at least 90% of each class of its capital stock. Upon any such merger, and in the event the parent corporate does not own all of the stock of the subsidiary, dissenting stockholders of the subsidiary are entitled to certain appraisal rights.

Delaware law also provides, subject to certain exceptions, that if a person acquires 15% of voting stock of a company, the person is an "interested stockholder" and may not engage in "business combinations" with the company for a period of three years from the time the person acquired 15% or more of voting stock.

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Bermuda   Delaware
Dissenter's rights of appraisal    

A dissenting shareholder (that did not vote in favor of the amalgamation or merger) of a Bermuda exempted company is entitled to be paid the fair value of his or her shares in an amalgamation or merger.

 

With limited exceptions, appraisal rights shall be available for the shares of any class or series of stock of a corporation in a merger or consolidation.

The certificate of incorporation may provide that appraisal rights are available for shares as a result of an amendment to the certificate of incorporation, any merger or consolidation or the sale of all or substantially all of the assets.


Dissolution

 

 

Under Bermuda law, a solvent company may be wound up by way of a shareholders' voluntary liquidation. Prior to the company entering liquidation, a majority of the directors shall each make a statutory declaration, which states that the directors have made a full enquiry into the affairs of the company and have formed the opinion that the company will be able to pay its debts within a period of 12 months of the commencement of the winding up and must file the statutory declaration with the Registrar of Companies in Bermuda. The general meeting will be convened primarily for the purposes of passing a resolution that the company be wound up voluntarily and appointing a liquidator. The winding up of the company is deemed to commence at the time of the passing of the resolution.

 

Under Delaware law, a corporation may voluntarily dissolve (i) if a majority of the board of directors adopts a resolution to that effect and the holders of a majority of the issued and outstanding shares entitled to vote thereon vote for such dissolution; or (ii) if all stockholders entitled to vote thereon consent in writing to such dissolution.


Shareholders' derivative actions

 

 

Class actions and derivative actions are generally not available to shareholders under Bermuda law. Bermuda courts, however, would ordinarily be expected to permit a shareholder to commence an action in the name of a company to remedy a wrong to the company where the act complained of is alleged to be beyond the corporate power of the company or illegal, or would result in the violation of the company's memorandum of association or bye-laws. Furthermore, consideration would be given by a Bermuda court to acts that are alleged to constitute a fraud against the minority shareholders or, for instance, where an act requires the approval of a greater percentage of the company's shareholders than that which actually approved it.

 

In any derivative suit instituted by a stockholder of a corporation, it shall be averred in the complaint that the plaintiff was a stockholder of the corporation at the time of the transaction of which he complains or that such stockholder's stock thereafter devolved upon such stockholder by operation of law.

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MATERIAL BERMUDA AND U.S. FEDERAL INCOME TAX CONSIDERATIONS

The following is a discussion of the material Bermuda and U.S. federal income tax considerations that may be relevant to an investment decision by a potential investor with respect to our common shares.

Bermuda Tax Considerations

At the present time, there is no Bermuda income or profits tax, withholding tax, capital gains tax, capital transfer tax, estate duty or inheritance tax payable by us or by our shareholders in respect of our shares. We have obtained an assurance from the Minister of Finance of Bermuda under the Exempted Undertakings Tax Protection Act 1966 that, in the event that any legislation is enacted in Bermuda imposing any tax computed on profits or income, or computed on any capital asset, gain or appreciation or any tax in the nature of estate duty or inheritance tax, such tax shall not, until March 31, 2035, be applicable to us or to any of our operations or to our shares, debentures or other obligations except insofar as such tax applies to persons ordinarily resident in Bermuda or is payable by us in respect of real property owned or leased by us in Bermuda.

U.S. Federal Income Tax Considerations

The following are the material U.S. federal income tax consequences to U.S. Holders (as defined below) of owning and disposing of common shares acquired in this offering. This discussion does not address any aspects of U.S. taxation other than U.S. federal income taxation, does not address any U.S. state, local or non-U.S. tax considerations, and does not purport to be a comprehensive description of all tax considerations that may be relevant to a particular person's decision to acquire common shares. This discussion applies only to U.S. Holders that hold their common shares as capital assets for U.S. federal income tax purposes. In addition, it does not describe all of the tax consequences that may be relevant in light of a U.S. Holder's particular circumstances including alternative minimum, gift, and estate tax consequences, and does not address the tax consequences applicable to U.S. Holders subject to special rules, such as:

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If an entity that is classified as a partnership for U.S. federal income tax purposes holds common shares, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Partnerships holding common shares and partners in such partnerships should consult their tax advisers as to the particular U.S. federal income tax consequences of owning and disposing of common shares.

This discussion is based on the Code, administrative pronouncements, judicial decisions and final, temporary and proposed U.S. Treasury regulations all as of the date hereof, any of which is subject to change, possibly with retroactive effect, and to differing interpretations, all of which could affect the tax considerations described below. There can be no assurances that the Internal Revenue Service, or IRS, will not take a different position concerning the tax consequences of the acquisition, ownership and disposition of the common shares or that such a position would not be sustained.

A "U.S. Holder" is a beneficial owner of common shares that for U.S. federal income tax purposes is:

U.S. Holders should consult their tax advisers concerning the U.S. federal, state, local and foreign tax consequences of owning and disposing of common shares in their particular circumstances.

Subject to the discussion below under "Passive Foreign Investment Company Rules," this discussion assumes that we are a foreign corporation that is not, and will not become, a passive foreign investment company, or PFIC, as described below.

Taxation of Distributions

Although we do not currently plan to pay dividends, any future distributions paid on common shares (including the amount of any foreign taxes withheld therefrom) will be treated as taxable dividends to a U.S. Holder to the extent of such U.S. Holder's pro rata share of our current and/or accumulated earnings and profits (as determined under U.S. federal income tax principles). To the extent that a distribution paid to a U.S. Holder with respect to our common shares exceeds such U.S. Holder's pro rata share of our current and accumulated earnings and profits, it will be treated as a non-taxable return of capital to the extent of the U.S. Holder's basis in the common shares (determined on a share-by-share basis), will reduce (but not below zero) such basis, and thereafter generally will be treated as a capital gain. See "—Sale or Other Taxable Disposition of Common Shares" below. We may not maintain calculations of our earnings and profits under U.S. federal income tax principles. Accordingly, distributions, if any, generally will be reported to U.S. Holders as dividends. The amount of any dividend income paid in Bermudan dollars will be the U.S. dollar amount calculated by reference to the exchange rate in effect on the date of receipt, regardless of whether the payment is in fact converted into U.S. dollars. If the dividend is converted into U.S. dollars on the date of receipt (or deemed receipt), a U.S. Holder should not be required to recognize foreign currency gain or loss in respect of the dividend income. A U.S. Holder may have foreign currency gain or loss if the dividend is converted into U.S. dollars after the date of receipt. Such foreign currency gain or loss should be treated as ordinary income or loss from United States sources for United States foreign tax credit purposes.

Dividends received by a non-corporate U.S. Holder are eligible to be taxed at reduced rates, if we are a "qualified foreign corporation" and certain other applicable requirements, including holding period requirements, are met. The reduced rate applicable to dividends paid to non-corporate U.S. Holders is not

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available for dividends paid by a PFIC (described below) or in certain other situations, including if we are not a qualified foreign corporation. A non-United States corporation (other than a corporation that is classified as a PFIC for the taxable year in which the dividend is paid or the preceding taxable year) generally will be considered to be a qualified foreign corporation (a) if it is eligible for the benefits of a comprehensive tax treaty with the United States which the Secretary of Treasury of the United States determines is satisfactory for purposes of this provision and which includes an exchange of information provision, or (b) with respect to any dividend it pays on common shares which are readily tradable on an established securities market in the United States. The common shares are expected to be listed on the NYSE, which is an established securities market in the United States, and we expect the common shares to be readily tradable on the NYSE. However, there can be no assurance that the common shares will be considered readily tradable on an established securities market in the United States in later years. Subject to the discussion under "Passive Foreign Investment Company Rules," below, such dividends will generally be "qualified dividend income" in the hands of individual U.S. Holders, provided that the holding period requirement and certain other requirements are met. Dividends received by a corporate U.S. Holder will not be eligible for the dividends-received deduction generally available to U.S. corporate shareholders under the Code for dividends received from certain U.S. and non-U.S. corporations.

For foreign tax credit limitation purposes, distributions paid on the common shares that are treated as dividends will be treated as income from sources outside the United States and will generally constitute passive category income.

Sale or Other Taxable Disposition of Common Shares

For U.S. federal income tax purposes, gain or loss recognized on the sale or other taxable disposition of common shares generally will be capital gain or loss, and will be long-term capital gain or loss if the U.S. Holder held the shares for more than one year. The amount of the gain or loss will equal the difference between the U.S. Holder's adjusted tax basis in the common shares disposed of and the amount realized on the disposition, in each case as determined in U.S. dollars. Long-term capital gains recognized by non-corporate U.S. Holders are taxable at reduced rates. There are limitations on the deductibility of capital losses. Any such capital gain or loss will generally be U.S.-source gain or loss for foreign tax credit limitation purposes.

If the consideration received for the common shares is paid in foreign currency, the amount realized will be the U.S. dollar value of the payment received translated at the spot rate of exchange on the date of disposition. A U.S. Holder may realize additional gain or loss upon the subsequent sale or disposition of such currency, which will generally be treated as U.S. source ordinary income or loss. If the common shares are treated as traded on an established securities market and the relevant holder is either a cash basis taxpayer or an accrual basis taxpayer who has made a special election (which must be applied consistently from year to year and cannot be changed without the consent of the IRS), such holder will determine the U.S. dollar value of the amount realized in a foreign currency by translating the amount received at the spot rate of exchange on the settlement date of the disposition. If the common shares are not treated as traded on an established securities market, or the relevant U.S. Holder is an accrual basis taxpayer that is not eligible to or does not elect to determine the amount realized using the spot rate on the settlement date, such U.S. Holder will recognize foreign currency gain or loss to the extent of any difference between the U.S. dollar amount realized on the date of disposition (as determined above) and the U.S. dollar value of the currency received at the spot rate on the settlement date. Any such foreign currency gain or loss will generally be U.S. source ordinary income or loss.

Passive Foreign Investment Company Rules

In general, a corporation organized outside the United States will be a PFIC in any taxable year in which either (i) at least 75% of its gross income is "passive income" or (ii) on average at least 50% of the value of its assets is attributable to assets that produce passive income or are held for the production of passive income. Passive income for this purpose generally includes, among other things, dividends, interest, royalties, rents, and gains from commodities transactions and from the sale or exchange of property that

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gives rise to passive income. Assets that produce or are held for the production of passive income may include cash, even if held as working capital or raised in a public offering, marketable securities and other assets that may produce passive income. The average value of a corporation's assets for this purpose, in the case of a corporation whose shares are publicly traded for the taxable year, generally is the average of their fair market value at the end of each quarter. In determining whether a non-U.S. corporation is a PFIC, a proportionate share of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest (by value) is taken into account.

We believe that we were not a CFC prior to this offering in the current taxable year which will end on March 31, 2016. Based on this belief, we do not believe we were a PFIC in the taxable year that began in 2014 and, based on the nature of our business, the projected composition of our income and the projected composition and estimated fair market values of our assets, we do not expect to be a PFIC in the taxable year commencing April 1, 2015. However, there can be no assurances in this regard, or that the IRS will agree with our conclusion, because we expect to hold following this offering a substantial amount of cash, and because the calculation of the value of our assets may be based in part on the value of our shares, which may fluctuate considerably after this offering. In addition, there can be no assurances regarding our PFIC status in one or more subsequent years to the extent that our activities change, and our United States counsel expresses no opinion with respect to our PFIC status (including the impact of our potential status as a CFC) in the taxable year that began in 2014 or the taxable year commencing April 1, 2015, and also expresses no opinion with respect to our predictions or past determinations regarding our PFIC status in the past or in the future.

If we are a PFIC in any taxable year during which a U.S. Holder owns our shares, such U.S. Holder could be liable for additional taxes and interest charges upon (1) a distribution paid during a taxable year that is greater than 125% of the average annual distributions paid in the three preceding taxable years, or, if shorter, the U.S. Holder's holding period for the shares, and (2) any gain recognized on a sale, exchange or other taxable disposition, including a pledge, of the shares, whether or not we continue to be a PFIC. In these circumstances, the tax will be determined by allocating such distribution or gain ratably over the U.S. Holder's holding period for the shares. The amount allocated to the current taxable year (i.e., the year in which the distribution occurs or the gain is recognized) and any year prior to the first taxable year in which we are a PFIC will be taxed as ordinary income earned in the current taxable year. The amount allocated to other taxable years will be taxed at the highest marginal rates in effect for individuals or corporations, as applicable, to ordinary income for each such taxable year, and an interest charge, generally applicable to underpayments of tax, will be added to the tax. If we are a PFIC for any year during which a U.S. Holder holds the shares, we must generally continue to be treated as a PFIC by that holder for all succeeding years during which the U.S. Holder holds the shares, unless we cease to meet the requirements for PFIC status and the U.S. Holder makes a "deemed sale" election with respect to the shares. If such election is made, the U.S. Holder will be deemed to have sold the shares it holds at their fair market value on the last day of the last taxable year in which we qualified as a PFIC, and any gain from such deemed sale would be subject to the consequences described above. After the deemed sale election, the U.S. Holder's shares with respect to which the deemed sale election was made will not be treated as shares in a PFIC unless we subsequently become a PFIC.

If we are a PFIC for any taxable year during which a U.S. Holder holds the shares and one of our non-United States subsidiaries is also a PFIC (i.e., a lower-tier PFIC), such U.S. Holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC and would be subject to the rules described above on certain distributions by the lower-tier PFIC and a disposition of shares of the lower-tier PFIC even though such U.S. Holder would not receive the proceeds of those distributions or dispositions. Each U.S. Holder is advised to consult its tax advisors regarding the application of the PFIC rules to any of our subsidiaries.

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The tax consequences that would apply if we were a PFIC would be different from those described above if a timely and valid "mark-to-market" election is made by a U.S. Holder for the shares held by such U.S. Holder. An electing U.S. Holder generally would take into account as ordinary income each year, the excess of the fair market value of the shares held at the end of the taxable year over the adjusted tax basis of such shares. The U.S. Holder would also take into account, as an ordinary loss each year, the excess of the adjusted tax basis of such shares over their fair market value at the end of the taxable year, but only to the extent of the excess of amounts previously included in income over ordinary losses deducted as a result of the mark-to-market election. The U.S. Holder's tax basis in the shares would be adjusted to reflect any income or loss recognized as a result of the mark-to-market election. Any gain from a sale, exchange or other taxable disposition of the shares in any taxable year in which we are a PFIC would be treated as ordinary income and any loss from such sale, exchange or other taxable disposition would be treated first as ordinary loss (to the extent of any net mark-to-market gains previously included in income) and thereafter as capital loss. If, after having been a PFIC for a taxable year, we cease to be classified as a PFIC, the U.S. Holder would not be required to take into account any latent gain or loss in the manner described above and any gain or loss recognized on the sale or exchange of the shares would be classified as a capital gain or loss.

A mark-to-market election is available to a U.S. Holder only for "marketable stock." Generally, stock will be considered marketable stock if it is "regularly traded" on a "qualified exchange" within the meaning of applicable U.S. Treasury regulations. A class of stock is regularly traded during any calendar year during which such class of stock is traded, other than in de minimis quantities, on at least 15 days during each calendar quarter. The shares will be marketable stock as long as they remain listed on a qualified exchange, such as the NYSE, and are regularly traded. A mark-to-market election will not apply to the shares for any taxable year during which we are not a PFIC, but will remain in effect with respect to any subsequent taxable year in which we become a PFIC. Such election will not apply to any subsidiary that we own. Accordingly, a U.S. Holder may continue to be subject to the PFIC rules with respect to any lower-tier PFICs notwithstanding the U.S. Holder's mark-to-market election for our shares.

The tax consequences that would apply if we were a PFIC would also be different from those described above if a U.S. Holder were able to make a valid "qualified electing fund," or QEF, election. As we do not expect to provide U.S. Holders with the information required in order to permit a QEF election, prospective investors should assume that a QEF election will not be available.

Each U.S. Holder who is a shareholder of a PFIC must file an annual report containing certain information.

Medicare Tax

In general, a United states person that is an individual or estate, or a trust that does not fall into a special class of trusts that is exempt from such tax, is subject to a 3.8% tax on the lesser of (1) the United States person's "net investment income" for the relevant taxable year and (2) the excess of the United States person's modified adjusted gross income for the taxable year over a certain threshold (which in the case of individuals will be between $125,000 and $250,000, depending on the individual's circumstances). A U.S. holder's net investment income will include its gross dividend income and its net gains from the disposition of our common shares, unless such dividends or net gains are derived in the ordinary course of the conduct of a trade or business (other than a trade or business that consists of certain passive or trading activities). If you are a United States person that is an individual, estate or trust, you are encouraged to consult your tax advisors regarding the applicability of the Medicare tax to your income and gains in respect of your investment in our common shares.

Information Reporting and Backup Withholding

U.S. Holders may be required to file certain U.S. information reporting returns with the IRS with respect to an investment in our common shares, including, among others, IRS Form 8938 (Statement of Specified Foreign Financial Assets). U.S. Holders paying more than $100,000 for our common shares may be required to file IRS Form 926 (Return by a U.S. Transferor of Property to a Foreign Corporation) reporting

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this payment. Substantial penalties may be imposed upon a U.S. Holder that fails to comply with the required information reporting.

Payments of dividends and sales proceeds that are made within the United States or through certain U.S.-related financial intermediaries generally are subject to information reporting, and may be subject to backup withholding, unless (i) the U.S. Holder is a corporation or other exempt recipient or (ii) in the case of backup withholding, the U.S. Holder provides a correct taxpayer identification number and certifies that it is not subject to backup withholding.

The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a credit against the U.S. Holder's U.S. federal income tax liability and may entitle it to a refund, provided that the required information is timely furnished to the IRS.

Each U.S. Holder is urged to consult with its tax advisor concerning the United States federal income tax consequences of purchasing, holding, and disposing of our common shares if we are or become classified as a PFIC, including the procedure for, and the possibility and consequences of, making a purging or mark-to-market election. We cannot provide any assurances that the IRS will agree with our annual determinations of our PFIC status.

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UNDERWRITING

Subject to the terms and conditions set forth in the underwriting agreement, dated as of                    , 2015, between us and Jefferies LLC, as the representative of the underwriters named below, we have agreed to sell to the underwriters, and each of the underwriters has agreed, severally and not jointly, to purchase from us, the respective number of common shares shown opposite its name below:

Underwriter
  Number of
Common Shares

Jefferies LLC

   

Evercore Group L.L.C. 

   

RBC Capital Markets, LLC

   

JMP Securities LLC

   

Robert W. Baird & Co. Incorporated

   

Total

   

The underwriting agreement provides that the obligations of the several underwriters are subject to certain conditions precedent such as the receipt by the underwriters of officers' certificates and legal opinions and approval of certain legal matters by their counsel. The underwriting agreement provides that the underwriters will purchase all of the common shares if any of them are purchased. If an underwriter defaults, the underwriting agreement provides that the purchase commitments of the nondefaulting underwriters may be increased or the underwriting agreement may be terminated. We have agreed to indemnify the underwriters and certain of their controlling persons against certain liabilities, including liabilities under the Securities Act, and to contribute to payments that the underwriters may be required to make in respect of those liabilities.

The underwriters have advised us that, following the pricing of this offering, they currently intend to make a market in our common shares as permitted by applicable laws and regulations. However, the underwriters are not obligated to do so, and the underwriters may discontinue any market-making activities at any time without notice in their sole discretion. Accordingly, no assurance can be given as to the liquidity of the trading market for our common shares, that you will be able to sell any of our common shares held by you at a particular time or that the prices that you receive when you sell will be favorable.

The underwriters are offering the common shares subject to their acceptance of the common shares from us and subject to prior sale. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part. In addition, the underwriters have advised us that they do not intend to confirm sales to any account over which they exercise discretionary authority.

Commission and Expenses

The underwriters have advised us that they propose to offer the common shares to the public at the initial public offering price set forth on the cover page of this prospectus and to certain dealers, which may include the underwriters, at that price less a concession not in excess of $               per common share. After the offering, the initial public offering price, concession and reallowance to dealers may be reduced by the representative. No such reduction will change the amount of proceeds to be received by us as set forth on the cover page of this prospectus.

The following table shows the public offering price, the underwriting discounts and commissions that we are to pay the underwriters and the proceeds, before expenses, to us in connection with this offering. Such

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amounts are shown assuming both no exercise and full exercise of the underwriters' option to purchase additional shares.

 
  Per Share   Total  
 
  Without
Option to
Purchase
Additional
Shares
  With
Option to
Purchase
Additional
Shares
  Without
Option to
Purchase
Additional
Shares
  With
Option to
Purchase
Additional
Shares
 

Public offering price

  $     $     $     $    

Underwriting discounts and commissions paid by us

  $     $     $     $    

Proceeds to us, before expenses

  $     $     $     $    

We estimate expenses payable by us in connection with this offering, other than the underwriting discounts and commissions referred to above, will be approximately $               . We have also agreed to reimburse the underwriters for certain of their expenses incurred in connection with review by the Financial Industry Regulatory Authority, Inc. of the terms of this offering in an amount not to exceed $               .

Determination of Offering Price

Prior to this offering, there has not been a public market for our common shares. Consequently, the initial public offering price for our common shares will be determined by negotiations between us and the representative. Among the factors to be considered in these negotiations will be prevailing market conditions, our financial information, market valuations of other companies that we and the underwriters believe to be comparable to us, estimates of our business potential, the present state of our development and other factors deemed relevant.

We offer no assurances that the initial public offering price will correspond to the price at which our common shares will trade in the public market subsequent to the offering or that an active trading market for our common shares will develop and continue after the offering.

Listing

We intend to apply to have our common shares listed on the NYSE under the trading symbol "AXON."

Stamp Taxes

If you purchase common shares offered in this prospectus, you may be required to pay stamp taxes and other charges under the laws and practices of the country of purchase, in addition to the offering price listed on the cover page of this prospectus.

Option to Purchase Additional Shares

We have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase, from time to time, in whole or in part, up to an aggregate of                             common shares from us at the public offering price set forth on the cover page of this prospectus, less underwriting discounts and commissions. If the underwriters exercise this option, each underwriter will be obligated, subject to specified conditions, to purchase a number of additional shares proportionate to that underwriter's initial purchase commitment as indicated in the table above.

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No Sales of Similar Securities

We, our officers, directors and holders of all our outstanding share capital and other securities have agreed, subject to specified exceptions, not to directly or indirectly:

This restriction terminates after the close of trading of our common shares on and including the 180th day after the date of this prospectus.

Jefferies LLC may in its sole discretion and at any time or from time to time before the termination of the 180-day period release all or any portion of the securities subject to lock-up agreements. There are no existing agreements between the underwriters and our shareholder who will execute a lock-up agreement, providing consent to the sale of shares prior to the expiration of the lock-up period.

Stabilization

The underwriters have advised us that, pursuant to Regulation M under the Securities Exchange Act of 1934, as amended, they may engage in short sale transactions, stabilizing transactions, syndicate covering transactions or the imposition of penalty bids in connection with this offering. These activities may have the effect of stabilizing or maintaining the market price of our common shares at a level above that which might otherwise prevail in the open market. Establishing short sales positions may involve either "covered" short sales or "naked" short sales.

"Covered" short sales are sales made in an amount not greater than the underwriters' option to purchase additional common shares in this offering. The underwriters may close out any covered short position by either exercising their option to purchase additional common shares or purchasing our common shares in the open market. In determining the source of shares to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the option to purchase additional shares.

"Naked" short sales are sales in excess of the option to purchase additional common shares. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of our common shares in the open market after pricing that could adversely affect investors who purchase in this offering.

A stabilizing bid is a bid for the purchase of common shares on behalf of the underwriters for the purpose of fixing or maintaining the price of our common shares. A syndicate covering transaction is the bid for or the purchase of common shares on behalf of the underwriters to reduce a short position incurred by the underwriters in connection with the offering. Similar to other purchase transactions, the underwriters' purchases to cover the syndicate short sales may have the effect of raising or maintaining the market price of our common shares or preventing or retarding a decline in the market price of our common shares. As a result, the price of our common shares may be higher than the price that might otherwise exist in the open market. A penalty bid is an arrangement permitting the underwriters to reclaim the selling concession otherwise accruing to a syndicate member in connection with the offering if our common shares originally

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sold by such syndicate member are purchased in a syndicate covering transaction and therefore have not been effectively placed by such syndicate member.

Neither we, nor any of the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of our common shares. The underwriters are not obligated to engage in these activities and, if commenced, any of the activities may be discontinued at any time.

Electronic Distribution

A prospectus in electronic format may be made available by e-mail or on the web sites or through online services maintained by one or more of the underwriters or their affiliates. In those cases, prospective investors may view offering terms online and may be allowed to place orders online. The underwriters may agree with us to allocate a specific number of common shares for sale to online brokerage account holders. Any such allocation for online distributions will be made by the underwriters on the same basis as other allocations. Other than the prospectus in electronic format, the information on the underwriters' web sites and any information contained in any other web site maintained by any of the underwriters is not part of this prospectus, has not been approved and/or endorsed by us or the underwriters and should not be relied upon by investors.

Other Activities and Relationships

The underwriters and certain of their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. The underwriters and certain of its affiliates have, from time to time, performed, and may in the future perform, various commercial and investment banking and financial advisory services for us and our affiliates, for which they received or will receive customary fees and expenses.

In the ordinary course of their various business activities, the underwriters and certain of their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own accounts and for the accounts of their customers, and such investment and securities activities may involve securities and/or instruments issued by us and our affiliates. If the underwriters or their respective affiliates have a lending relationship with us, they routinely hedge their credit exposure to us consistent with their customary risk management policies. The underwriters and their respective affiliates may hedge such exposure by entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in our securities or the securities of our affiliates, including potentially our common shares offered hereby. Any such short positions could adversely affect future trading prices of our common shares offered hereby. The underwriters and certain of their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

Selling Restrictions

This prospectus does not constitute an offer to sell to, or a solicitation of an offer to buy from, anyone in any country or jurisdiction (1) in which such an offer or solicitation is not authorized, (2) in which any person making such offer or solicitation is not qualified to do so or (3) in which any such offer or solicitation would otherwise be unlawful. No action has been taken that would, or is intended to, permit a public offer of the common shares or possession or distribution of this prospectus or any other offering or publicity material relating to the common shares in any country or jurisdiction (other than the United States) where any such action for that purpose is required. Accordingly, each underwriter has undertaken that it will not, directly or indirectly, offer or sell any common shares or have in its possession, distribute or

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publish any prospectus, form of application, advertisement or other document or information in any country or jurisdiction except under circumstances that will, to the best of its knowledge and belief, result in compliance with any applicable laws and regulations and all offers and sales of the common shares by it will be made on the same terms.

European Economic Area

In relation to each member state of the European Economic Area which has implemented the Prospectus Directive (each, a Relevant Member State), an offer to the public of any common shares which are the subject of the offering contemplated by this prospectus supplement and the accompanying prospectus may not be made in that Relevant Member State except that an offer to the public in that Relevant Member State of any common shares may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:

provided that no such offer of common shares shall require us or any of the underwriters to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.

For the purposes of this provision, the expression an "offer common shares to the public" in relation to the common shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the common shares to be offered so as to enable an investor to decide to purchase or subscribe to the common shares, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State and the expression "Prospectus Directive" means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member State and the expression "2010 PD Amending Directive" means Directive 2010/73/EU.

United Kingdom

This prospectus is only being distributed to, and is only directed at, persons in the United Kingdom that are qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive that are also (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order") and/or (ii) high net worth entities falling within Article 49(2)(a) to (d) of the Order and other persons to whom it may lawfully be communicated (each such person being referred to as a "relevant person").

This prospectus and its contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other persons in the United Kingdom. Any person in the United Kingdom that is not a relevant person should not act or rely on this document or any of its contents.

Bermuda

Securities may be offered or sold in Bermuda only in compliance with the provisions of the Investment Business Act 2003 of Bermuda which regulates the sale of securities in Bermuda and it is not intended for any offer or sale of shares to the public to take place in Bermuda.

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Australia

This prospectus is not a disclosure document for the purposes of Australia's Corporations Act 2001 (Cth) of Australia, or Corporations Act, has not been lodged with the Australian Securities & Investments Commission and is only directed to the categories of exempt persons set out below. Accordingly, if you receive this prospectus in Australia:

You confirm and warrant that you are either:

To the extent that you are unable to confirm or warrant that you are an exempt sophisticated investor, associated person or professional investor under the Corporations Act any offer made to you under this prospectus is void and incapable of acceptance.

You warrant and agree that you will not offer any of the securities issued to you pursuant to this prospectus for resale in Australia within 12 months of those securities being issued unless any such resale offer is exempt from the requirement to issue a disclosure document under section 708 of the Corporations Act.

Hong Kong

No securities have been offered or sold, and no securities may be offered or sold, in Hong Kong, by means of any document, other than to persons whose ordinary business is to buy or sell shares or debentures, whether as principal or agent; or to "professional investors" as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong ("SFO") and any rules made under that Ordinance; or in other circumstances which do not result in the document being a "prospectus" as defined in the Companies Ordinance (Cap. 32) of Hong Kong ("CO") or which do not constitute an offer or invitation to the public for the purpose of the CO or the SFO. No document, invitation or advertisement relating to the securities has been issued or may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted under the securities laws of Hong Kong) other than with respect to securities which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" as defined in the SFO and any rules made under that Ordinance.

This prospectus has not been registered with the Registrar of Companies in Hong Kong. Accordingly, this prospectus may not be issued, circulated or distributed in Hong Kong, and the securities may not be offered for subscription to members of the public in Hong Kong. Each person acquiring the securities will be required, and is deemed by the acquisition of the securities, to confirm that he is aware of the restriction on offers of the securities described in this prospectus and the relevant offering documents and that he is not acquiring, and has not been offered any securities in circumstances that contravene any such restrictions.

Japan

The offering has not been and will not be registered under the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948 of Japan, as amended), or FIEL, and the initial purchaser will not offer or sell any securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan, except pursuant to an exemption from the registration requirements of,

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and otherwise in compliance with, the FIEL and any other applicable laws, regulations and ministerial guidelines of Japan.

Singapore

This prospectus has not been and will not be lodged or registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the common shares may not be circulated or distributed, nor may the common shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the "SFA"), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the common shares are subscribed or purchased under Section 275 of the SFA by a relevant person which is:

Switzerland

The common shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange, or SIX, or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a of the CO or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this prospectus nor any other offering or marketing relating to the common shares or this offering may be publicly distributed or otherwise made publicly available in Switzerland.

Neither this document nor any other offering or marketing material relating to this offering, the Company or the common shares has been or will be filed with or approved by any Swiss regulatory authority.

Canada

The offering of our common shares in Canada is being made on a private placement basis in reliance on exemptions from the prospectus requirements under the securities laws of each applicable Canadian province and territory where the common shares may be offered and sold, and therein may only be made with investors that are purchasing as principal and that qualify as both an "accredited investor" as such term is defined in National Instrument 45-106 Prospectus and Registration Exemptions and as a "permitted client" as such term is defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligation. Any offer and sale of our common shares in any province or territory of

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Canada may only be made through a dealer that is properly registered under the securities legislation of the applicable province or territory wherein our common shares are offered and/or sold or, alternatively, by a dealer that qualifies under and is relying upon an exemption from the registration requirements therein.

Any resale of our common shares by an investor resident in Canada must be made in accordance with applicable Canadian securities laws, which may require resales to be made in accordance with prospectus and registration requirements, statutory exemptions from the prospectus and registration requirements or under a discretionary exemption from the prospectus and registration requirements granted by the applicable Canadian securities regulatory authority. These resale restrictions may under certain circumstances apply to resales of our common shares outside of Canada.

Upon receipt of this document, each Canadian investor hereby confirms that it has expressly requested that all documents evidencing or relating in any way to the sale of the securities described herein (including for greater certainty any purchase confirmation or any notice) be drawn up in the English language only. Par la réception de ce document, chaque investisseur canadien confirme par les présentes qu'il a expressément exigé que tous les documents faisant foi ou se rapportant de quelque manière que ce soit à la vente des valeurs mobilières décrites aux présentes (incluant, pour plus de certitude, toute confirmation d'achat ou tout avis) soient rédigés en anglais seulement.

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LEGAL MATTERS

The validity of the common shares and certain other matters of Bermuda law will be passed upon for us by Conyers Dill & Pearman Limited, our special Bermuda counsel. Certain other legal matters will be passed upon for us by Cooley LLP, Palo Alto, California, and for the underwriters by Latham & Watkins LLP, New York, New York.


EXPERTS

The consolidated financial statements as of March 31, 2015 and for the period from October 31, 2014 (date of inception) to March 31, 2015 included in this prospectus have been so included in reliance on the report (which contains an explanatory paragraph relating to our ability to continue as a going concern as described in Note A to the financial statements) of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.


WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the SEC a registration statement on Form S-1 under the Securities Act, with respect to the common shares being offered by this prospectus. This prospectus, which constitutes part of the registration statement, does not contain all of the information in the registration statement and its exhibits. For further information with respect to our company and the common shares offered by this prospectus, we refer you to the registration statement and its exhibits. Statements contained in this prospectus as to the contents of any contract or any other document referred to are not necessarily complete, and in each instance, we refer you to the copy of the contract or other document filed as an exhibit to the registration statement. Each of these statements is qualified in all respects by this reference.

You can read our SEC filings, including the registration statement, over the internet at the SEC's website at www.sec.gov . You may also read and copy any document we file with the SEC at its public reference room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may also obtain copies of these documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities.

Upon the closing of this offering, we will be subject to the information reporting requirements of the Exchange Act, and we will file reports, proxy statements and other information with the SEC. These reports, proxy statements and other information will be available for inspection and copying at the public reference room and website of the SEC referred to above. We also maintain a website at www.axovant.com, at which you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. The information contained in, or that can be accessed through, our website is not part of, and is not incorporated into, this prospectus.

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EXCHANGE CONTROLS

The permission of the Bermuda Monetary Authority is required, pursuant to the provisions of the Exchange Control Act 1972 and related regulations, for all issuances and transfers of shares (which includes our common shares) of Bermuda companies to or from a non-resident of Bermuda for exchange control purposes, other than in cases where the Bermuda Monetary Authority has granted a general permission. The Bermuda Monetary Authority, in its notice to the public dated June 1, 2005, has granted a general permission for the issue and subsequent transfer of any securities of a Bermuda company from and/or to a non-resident of Bermuda for exchange control purposes for so long as any "Equity Securities" of the company (which would include our common shares) are listed on an "Appointed Stock Exchange" (which would include the New York Stock Exchange). Certain issues and transfers of common shares involving persons deemed resident in Bermuda for exchange control purposes require the specific consent of the Bermuda Monetary Authority.

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ENFORCEMENT OF CIVIL LIABILITIES UNDER UNITED STATES FEDERAL SECURITIES LAWS

We are a Bermuda exempted company. As a result, the rights of holders of our common shares will be governed by Bermuda law and our memorandum of association and bye-laws. The rights of shareholders under Bermuda law may differ from the rights of shareholders of companies incorporated in other jurisdictions. It may be difficult for investors to enforce in the United States judgments obtained in U.S. courts against us based on the civil liability provisions of the U.S. securities laws. Our registered office address in Bermuda is Clarendon House, 2 Church Street, Hamilton HM11, Bermuda, and we also have business operations at 14 Par-La-Ville Road, Hamilton HM08, Bermuda .

We have been advised by our special Bermuda counsel that there is no treaty in force between the United States and Bermuda providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters. As a result, whether a U.S. judgment would be enforceable in Bermuda against us or our directors and officers depends on whether the U.S. court that entered the judgment is recognized by a Bermuda court as having jurisdiction over us or our directors and officers, as determined by reference to Bermuda conflict of law rules. The courts of Bermuda would recognize as a valid judgment, a final and conclusive judgment in personam obtained in a U.S. court pursuant to which a sum of money is payable (other than a sum of money payable in respect of multiple damages, taxes or other charges of a like nature or in respect of a fine or other penalty). The courts of Bermuda would give a judgment based on such a U.S. judgment as long as (1) the U.S. court had proper jurisdiction over the parties subject to the judgment; (2) the U.S. court did not contravene the rules of natural justice of Bermuda; (3) the U.S. judgment was not obtained by fraud; (4) the enforcement of the U.S. judgment would not be contrary to the public policy of Bermuda; (5) no new admissible evidence relevant to the action is submitted prior to the rendering of the judgment by the courts of Bermuda; (6) there is due compliance with the correct procedures under the laws of Bermuda; and (7) the U.S. judgment is not inconsistent with any judgment of the courts of Bermuda in respect of the same matter.

In addition, and irrespective of jurisdictional issues, the Bermuda courts will not enforce a U.S. federal securities law that is either penal or contrary to Bermuda public policy. We have been advised that an action brought pursuant to a public or penal law, the purpose of which is the enforcement of a sanction, power or right at the instance of the state in its sovereign capacity, is unlikely to be entertained by a Bermuda court. Certain remedies available under the laws of U.S. jurisdictions, including certain remedies under U.S. federal securities laws, would not be available under Bermuda law or enforceable in a Bermuda court, as they are likely to be contrary to Bermuda public policy. Further, it may not be possible to pursue direct claims in Bermuda against us or our directors and officers for alleged violations of U.S. federal securities laws because these laws are unlikely to have extraterritorial effect and do not have force of law in Bermuda. A Bermuda court may, however, impose civil liability on us or our directors and officers if the facts alleged and proved in the Bermuda proceedings constitute or give rise to a cause of action under the applicable governing law, not being a foreign public, penal or revenue law.

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Index to Consolidated Financial Statements

 
  Page

Report of Independent Registered Public Accounting Firm

  F-2

Consolidated Balance Sheet at March 31, 2015

 
F-3

Consolidated Statements of Operations and Comprehensive Loss for the Period from October 31, 2014 (Date of Inception) to March 31, 2015

 
F-4

Consolidated Statements of Shareholders' Deficit for the Period from October 31, 2014 (Date of Inception) to March 31, 2015

 
F-5

Consolidated Statements of Cash Flows for the Period from October 31, 2014 (Date of Inception) to March 31, 2015

 
F-6

Notes to Consolidated Financial Statements

 
F-7

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholder of Axovant Sciences Ltd.:

We have audited the accompanying consolidated balance sheet of Axovant Sciences Ltd. and its subsidiary as of March 31, 2015 and the related consolidated statement of operations and comprehensive loss, shareholders' deficit and cash flows for the period from inception of October 31, 2014 through the period ended March 31, 2015. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Axovant Sciences Ltd. at March 31, 2015 and the results of its operations and its cash flows for the period from inception of October 31, 2014 through the period ended March 31, 2015 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note A to the financial statements, the Company has insufficient capital to fund its operations which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note A[2]. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ PricewaterhouseCoopers LLP

Florham Park, NJ
May 21, 2015

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AXOVANT SCIENCES LTD.
CONSOLIDATED BALANCE SHEET
MARCH 31, 2015

Assets

 

Current assets:

       

Prepaid expenses

  $ 3,604  

Deferred IPO costs

    1,104,663  

Total current assets

    1,108,267  

Machinery & equipment

    9,122  

Total assets

  $ 1,117,389  

Liabilities and Shareholders' Deficit

 

Current liabilities:

       

Accounts payable

  $ 403,396  

Due to Roivant Sciences Ltd. and Roivant Sciences, Inc.

    2,306,777  

Accrued legal fees

    831,751  

Accrued expenses

    326,311  

Total current liabilities

    3,868,235  

Contingent payment liability

    5,000,000  

Total liabilities

    8,868,235  

Commitments and contingencies (Note I)

       

Shareholders' deficit:

       

Common shares, par value $0.00001 per share, 1,000,000,000 shares authorized, 75,000,000 issued and outstanding

    750  

Common shares subscribed

    (750 )

Additional paid-capital

    13,296,173  

Accumulated deficit

    (21,047,019 )

Total shareholders' deficit

    (7,750,846 )

Total liabilities and shareholders' deficit

  $ 1,117,389  

   

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

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AXOVANT SCIENCES LTD.
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE PERIOD FROM OCTOBER 31, 2014 (DATE OF INCEPTION) TO MARCH 31, 2015

Operating expenses:

       

Research and development

  $ 14,324,314  

General and administrative

    6,721,737  

Total operating expenses

    21,046,051  

Loss before provision for income tax

    (21,046,051 )

Income tax expense

    (968 )

Net loss and comprehensive loss

  $ (21,047,019 )

Net loss per common share—basic and diluted

  $ (1.32 )

Weighted average common shares outstanding—basic and diluted

    15,986,842  

   

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

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AXOVANT SCIENCES LTD.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' DEFICIT

 
  Common Stock    
   
   
   
 
 
  Common Stock
Subscribed
  Additional
Paid-in Capital
  Accumulated
Deficit
  Total
Shareholders'
Deficit
 
 
  Shares   Amount  

Balance at October 31, 2014

    10,000,000   $ 100   $ (100 ) $   $   $  

Capital contribution

                5,000,000         5,000,000  

Common stock issued to RSL

    65,000,000     650     (650 )            

Share-based compensation

                518,267         518,267  

Capital contribution-share based compensation (See Note E[1]

                7,777,906         7,777,906  

Net loss

                    (21,047,019 )   (21,047,019 )

Balance at March 31, 2015

    75,000,000   $ 750   $ (750 ) $ 13,296,173   $ (21,047,019 ) $ (7,750,846 )

   

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

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AXOVANT SCIENCES LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS

 
  Period from October 31,
2014 (date of inception)
to March 31, 2015
 

Cash flows from operating activities:

       

Net loss

  $ (21,047,019 )

Adjustments to reconcile net loss to net cash used in operating activities:

       

In-process research and development expenses

    10,000,000  

Share-based compensation

    8,296,173  

Changes in operating assets and liabilities:

       

Prepaid expenses

    (3,604 )

Accounts payable

    116,606  

Due to Roivant Sciences Ltd. and Roivant Sciences, Inc. 

    1,487,697  

Accrued liabilities

    467,649  

Net cash used in operating activities

    (682,498 )

Cash flows from investing activities:

   
 
 

Purchase of in-process research and development

    (5,000,000 )

Purchase of machinery and equipment

    (9,122 )

Net cash used in investing activities

    (5,009,122 )

Cash flows from financing activities:

   
 
 

Proceeds from additional capital contributions

    5,000,000  

Due to Roivant Sciences Ltd. and Roivant Sciences, Inc. for amounts paid on behalf of the Company

    717,080  

IPO costs paid

    (25,460 )

Net cash provided by financing activities

    5,691,620  

Net change in cash

   
 

Cash—beginning of period

     

Cash—end of period

  $  

Non-cash financing activities:

   
 
 

Deferred IPO costs, unpaid

  $ 1,079,203  

   

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

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AXOVANT SCIENCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note A—Description of Business and Liquidity

[1] Description of Business:

Axovant Sciences Ltd. (the "Company") is a clinical-stage biopharmaceutical company focused on the acquisition, development and commercialization of novel therapeutics for the treatment of neurological disorders. The Company's initial focus is on developing products to treat the cognitive impairment and behavioral disturbances associated with dementia. The Company was founded on October 31, 2014 as a Bermuda Exempted Limited Company and a wholly-owned subsidiary of Roivant Sciences Ltd. ("RSL"), under the name Roivant Neurosciences, Ltd. The Company changed its name to Axovant Sciences Ltd. in March 2015. On February 24, 2015, Axovant Sciences, Inc. was formed, and on March 7, 2015, it became a wholly-owned subsidiary of the Company based in the United States of America. The Company's fiscal year ends on March 31.

From its inception, the Company has devoted substantially all of its efforts to organizing and staffing the Company, raising capital and acquiring drug development programs. The Company has determined that it has one operating and reporting segment. The Company has one product candidate (RVT-101) under development which was acquired from Glaxo Group Limited and GlaxoSmithKline Intellectual Property Development Limited (collectively "GSK") on December 17, 2014 (See Note C).

[2] Liquidity:

The Company has not been capitalized with sufficient funding to conduct its operations, other than receiving a $5 million capital contribution from RSL to acquire the product candidate from GSK. Certain other costs of conducting the Company's operations were paid by RSL or RSL's wholly-owned subsidiary Roivant Sciences, Inc. ("RSI") and will be reimbursed by the Company upon receipt of additional external funding pursuant to the services agreement with RSI and Axovant Sciences, Inc. The Company has not generated any revenues and does not anticipate generating any revenues in the foreseeable future. Since the Company has no available cash or credit facilities, the Company is dependent upon RSL or its affiliates to provide services and funding to support the operations of the Company until, at least, such time as external financing is completed.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. The Company anticipates incurring additional losses until such time, if ever, that it can obtain marketing approval to sell, and then generate significant sales, of its product candidate that is currently in development. Substantial additional financing will be needed by the Company to fund its operations and to develop and commercialize its product candidate. These factors raise substantial doubt about the Company's ability to continue as a going concern.

The Company will seek to obtain additional capital through the sale of debt or equity financings or other arrangements to fund operations; however, there can be no assurance that the Company will be able to raise needed capital under acceptable terms, if at all. The sale of additional equity may dilute existing shareholders and newly issued shares may contain senior rights and preferences compared to currently outstanding common shares. Issued debt securities may contain covenants and limit the Company's ability to pay dividends or make other distributions to shareholders. If the Company is unable to obtain such additional financing, operations would need to be scaled back or discontinued. The Company is currently exploring external financing alternatives which will be needed by the Company to fund its operations.

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AXOVANT SCIENCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note A—Description of Business and Liquidity (Continued)

The Company's future operations are highly dependent on a combination of factors, including (i) the timely and successful completion of additional financing discussed above; (ii) the success of its research and development program; (iii) the development of competitive therapies by other biotechnology and pharmaceutical companies, (iv) the Company's ability to manage growth of the organization; (v) the Company's ability to protect its proprietary technology; and, ultimately; (vi) regulatory approval and market acceptance of the Company's product candidate.

Note B—Summary of Significant Accounting Policies

[1] Basis of Presentation:

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"). Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted accounting principles as found in the Accounting Standards Codification ("ASC") and Accounting Standards Update ("ASU") of the Financial Accounting Standards Board ("FASB"). The consolidated financial statements include the accounts of Axovant Sciences Ltd. and its wholly-owned subsidiary. All intercompany balances and transactions have been eliminated in consolidation.

[2] Use of estimates:

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

One significant estimate relates to the probability and timing of the contingent payment liability recorded in the balance sheet. Such liability relates to the GSK purchase agreement (See Note C). Management believes it is probable that the Company will be obligated to pay $5,000,000 to GSK during the second quarter of the fiscal year ending March 31, 2017 (See Note I). Should the specified criteria for payment not be met, or be met in a period different from Management's expectation, there could be significant fluctuation in the financial results of the Company in future periods.

Another significant estimate relates to the compensation expenses allocated to the Company under the services agreement with RSI and Axovant Sciences, Inc. Compensation expense under this agreement is significantly comprised of share-based compensation that is re-measured at fair value at the end of each reporting period and charged to the Company until the awards vest (See Note E). The inputs used to estimate the fair value of these instruments at the investor's level are considered level 3 as they reflect management's best estimate of what market participants would use in pricing the share award at the measurement date rather than observable data. Due to the significance of these estimates in the calculation of fair value by RSI, the related compensation expense charged to the Company by RSI could fluctuate significantly period to period.

Additionally, accounting for share-based compensation granted by the Company requires fair value estimates of the equity instrument granted. If the Company's estimate of the fair value of share-based compensation is too high or too low, it will have the effect of overstating or understating expenses. The two factors that most affect charges or credits to operations related to share-based compensation are the estimated fair market value of the common shares underlying stock options for which share-based compensation is recorded and the estimated volatility of such fair market value.

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AXOVANT SCIENCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note B—Summary of Significant Accounting Policies (Continued)

Another significant estimate relates to accrued expenses for estimated costs of research and development activities conducted by third-party service providers, which primarily include the conduct of clinical trials and contract manufacturing activities. The estimated costs are recorded based upon the estimated amount of services provided but not yet invoiced, and are included in accrued liabilities in the balance sheet and within research and development expense in the statement of operation and comprehensive loss. The estimate of the amount of work completed is developed through discussions with internal personnel and external services providers as to the progress of stage of completion of the services and the agreed-upon fee to be paid for such services. Significant judgments and estimates are required in determining the accrued balance in each reporting period. As actual costs become known, the accrued estimates are adjusted. Such estimates are not expected to be materially different from amounts actually incurred, however the Company's understanding of the status and timing of services performed, the number of subjects enrolled, and the rate of subject enrollment may vary from estimates and could result in reporting amounts that are too high or too low in any particular period. The estimate of accrued research and development expense in dependent, in part, upon the receipt of timely and accurate reporting from clinical research organizations and other third-party service providers.

[3] Machinery and equipment:

Machinery and equipment, consisting of computer equipment, is recorded at cost. Maintenance and repairs that do not improve or extend the lives of the respective assets are expensed to operations as incurred. Upon disposal, retirement or sale, the related cost and accumulated depreciation is removed from the accounts and any resulting gain or loss is included in the results of operations. Depreciation will be recorded for machinery and equipment using the straight-line method over the estimated useful lives of three to five years, once the equipment is installed and placed in service.

The Company reviews the recoverability of all long-lived assets, including the related useful lives, whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset might not be recoverable. Recoverability is measured by comparison of the book values of the assets to future net undiscounted cash flows that the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the book value of the assets exceed their fair value, which is measured based on the projected discounted future net cash flows arising from the assets.

[4] Research and Development Expense:

Research and development costs are charged to expense when incurred. The Company expenses in-process research and development projects acquired as asset acquisitions which have not reached technological feasibility and which have no alternative future use. Research and development expenses primarily consist of the intellectual property and research and development materials acquired from GSK (See Note C), certain costs charged by RSI under its services agreement with the Company and Axovant Sciences, Inc. (See Note D) and expenses from third parties who conduct research and development activities on behalf of the Company. For the period from October 31, 2014 (date of inception) through March 31, 2015, the Company recorded $14,324,000 of research and development expense, of which $3,178,000 is attributable to share-based compensation expense.

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AXOVANT SCIENCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note B—Summary of Significant Accounting Policies (Continued)

[5] Income Taxes:

The Company accounts for income taxes in accordance with ASC 740, Income Taxes . Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and the respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded when, after consideration of all positive and negative evidence, it is not more likely than not that the Company's deferred tax assets will be realizable. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. As of March 31, 2015, the Company does not have any significant uncertain tax positions. When and if the Company were to recognize interest and penalties related to unrecognized tax benefits, they would be reported in tax expense.

[6] Share-Based Compensation:

The Company accounts for share-based awards to employees and directors in accordance with the provisions of ASC 718, Compensation—Stock Compensation . Under ASC 718, share-based awards are valued at fair value on the date of grant and that fair value is recognized over the requisite service period. The Company values its stock options using the Black-Scholes option pricing model. Certain assumptions need to be made with respect to utilizing the Black-Scholes option pricing model, including the expected life of the award, volatility of the underlying shares, the risk-free interest rate and anticipated forfeiture of the share-based awards. The expected life of the stock options was calculated using the method allowed by the provisions of ASC 718. The risk-free interest rate is based on the rates paid on securities issued by the U.S. Treasury with a term approximating the expected life of the equity award. As the Company does not have a trading history for the Company's common shares the expected share price volatility for the Company's common shares was estimated by taking the average historical price volatility for industry peers. Estimates of pre-vesting award forfeitures are based on the Company's expectations of future employee turnover. The Company will adjust its estimate of forfeitures over the requisite service period based on the extent to which actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures will be recognized through a cumulative catch-up adjustment in the period of change and will also impact the amount of compensation expense to be recognized in future periods.

The Company accounts for share-based payments to non-employees issued in exchange for services based upon the fair value of the equity instruments issued, in conformity with authoritative guidance issued by the FASB. Compensation expense for stock options issued to non-employees is calculated using the Black-Scholes option pricing model and is recorded over the service performance period. Options subject to vesting are required to be periodically remeasured over their service performance period, which is generally the same as the vesting period.

[7] Net Loss per Common Share:

Basic net loss per common share is computed by dividing net loss applicable to common shareholders by the weighted-average number of common shares of outstanding during the period. Diluted net loss per common share is computed by dividing the net loss applicable to common shareholders by the diluted

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AXOVANT SCIENCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note B—Summary of Significant Accounting Policies (Continued)

weighted-average number of common shares outstanding during the period calculated in accordance with the treasury stock method. Stock options to purchase 4,012,500 common shares were not included in the calculation of common shares outstanding for the period ended March 31, 2015 because they were anti-dilutive.

[8] Recently Issued Accounting Pronouncements:

In June 2014, the FASB issued ASU No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation . This ASU removes the definition of a development stage entity and all incremental financial reporting requirements from U.S. GAAP for development stage entities. Topic 915 Development Stage Entities will be removed from the FASB ASC. The elimination of the development stage entity financial reporting requirements is effective for annual reporting periods beginning after December 15, 2014. A public business entity may adopt this guidance early for any annual reporting period or interim period for which financial statements have not been issued. All other entities may adopt this guidance early for financial statements that have not yet been made available for issue. The Company adopted this guidance, which did not have a significant impact on the consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014-15, " Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern " ("ASU 2014-15"). ASU 2014-15 is intended to define management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. Specifically, ASU 2014-15 provides a definition of the term substantial doubt and requires an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). It also requires certain disclosures when substantial doubt is alleviated as a result of consideration of management's plans and requires an express statement and other disclosures when substantial doubt is not alleviated. The new standard will be effective for reporting periods beginning after December 15, 2016, with early adoption permitted. Management is currently evaluating the impact of the adoption of ASU 2014-14 on its consolidated financial statements and disclosures.

In February 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-02, " Consolidation (Topic 810), Amendments to the Consolidation Analysis". ASU 2015-02 changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. All legal entities are subject to reevaluation under the revised consolidation model. ASU 2015-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. ASU 2015-02 may be applied retrospectively to all prior periods presented in the financial statements or by using a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company is currently assessing the impact of adopting ASU 2015-02.

Note C—Asset Purchase Agreement

On December 17, 2014 the Company entered into an asset purchase agreement to acquire certain intellectual property and research and development materials from GSK, which the Company renamed RVT-101, in exchange for the following consideration:

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AXOVANT SCIENCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note C—Asset Purchase Agreement (Continued)

For the consideration above, the Company also received a small quantity of inventory of RVT-101, and certain research and development historical records. The Company did not hire, or receive, any GSK workforce or employees working on RVT-101, or any research, clinical or manufacturing equipment. Additionally, the Company did not assume from GSK any contracts, licenses or agreements between GSK and any third party with respect to RVT-101. The Company will need to independently develop all clinical processes and procedures for the Phase 3 clinical trial through the use of internal and external resources once appropriate and acceptable resources have been identified and obtained.

As the intellectual property and inventory of RVT-101 acquired had no alternative future use on the date of acquisition, the Company recorded the payments made, and probable to be made (see Note I), to acquire such items as research and development expense at the date of the transaction.

Note D—Machinery and Equipment

Machinery and equipment of $9,100, consisting of computers, was purchased in March 2015. Depreciation expense was $0 for the period from October 31, 2014 (date of inception) through March 31, 2015.

Note E—Related Party Transactions

[1] Services Agreement:

During 2015, the Company and its wholly owned subsidiary, Axovant Sciences, Inc., entered into a formal services agreement with RSI (the "Services Agreement"). RSI will provide certain administrative and research and development services on behalf of the Company during the formative period of the Company. Under the terms of the Services Agreement, the Company will pay or reimburse RSI for any expenses it, or third parties acting on its behalf, incurs for the Company. For any research and development activity performed by RSI employees, RSI will charge back the cost of the employee's time plus a pre-determined mark-up. All other costs will be billed back at cost. RSI also provided such services prior to the formalization of the Services Agreement, and such costs have been recognized by the Company in the

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AXOVANT SCIENCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note E—Related Party Transactions (Continued)

period in which the services were rendered. The consolidated financial statements also include third-party expenses that have been paid by RSI and RSL since the inception of the Company.

In accordance with the Services Agreement, total compensation, inclusive of base salary, fringe benefits and share-based compensation at RSI is proportionately allocated to the Company on the basis of actual cost, plus a pre-determined mark-up for any research and development activities performed by RSI on behalf of the Company. The actual costs are determined based upon the relative percentage of time utilized on Company matters. A significant component of RSI's total compensation charged back to the Company relates to the share-based awards issued by BVC Ltd. ("BVC") to RSI employees.

Such awards are in the form of restricted shares of BVC granted to RSI's employees. BVC is a non-public entity, which holds a non-controlling ownership interest in RSL, the parent of the Company and RSI. BVC's ownership interest and board rights in RSL allow it to exercise significant influence over RSL. As such, because the awards are not based on the Company's or RSL's shares, they are remeasured at fair value at each reporting period until the awards vest. Significant judgment and estimates were used to estimate the fair value of these awards as the underlying shares in BVC are not publicly traded. RSI's estimation of fair value of the awards considered recent transactions entered into by RSL, relevant industry and comparable public company data, as well as discounted cash flow analyses. As BVC is a non-public entity, the majority of the inputs used to estimate the fair value of the restricted share awards are considered level 3 due to their unobservable nature. Each award is subject to specified vesting schedules and requirements (a mix of time-based, performance-based and corporate event-based, including post-IPO market capitalization target and financing events). Compensation expense will be charged to the Company by RSI over the required service period to earn the award, which is expected to be four years, subject to the achievement of performance and event-based vesting requirements. At March 31, 2015, the remaining weighted average requisite service period over which the awards could be earned was 3.11 years. For the period from October 31, 2014 (date of inception) to March 31, 2015, the Company incurred share-based compensation expense of $446,300, inclusive of the mark-up, to the Company under the Services Agreement. The Company has recorded these charges as research and development and general and administrative expense in the consolidated statement of operations. RSI also incurred additional share-based compensation cost related to these restricted share awards which was not charged to the Company under the Services Agreement. The Company has recorded $7,778,000 (its share of these costs based on the pro rata time spent by RSI employees on Company matters) as research and development and general and administrative expense in the consolidated statement of operations and as an additional capital contribution from RSL.

For the period from October 31, 2014 (date of inception) to March 31, 2015, the Company also incurred $1,551,000 of expenses under the Services Agreement, inclusive of the mark-up, for third-party costs incurred by RSI on its behalf, employee-related services and overhead allocations which the Company has recorded as research and development and general and administrative expense in the consolidated statement of operations. Included in this amount is $258,000 of expense related to a compensation arrangement provided to Vivek Ramaswamy as RSI's Chief Executive Officer by one of BVC's investors.

[2] Stock Options:

On March 18, 2015 the Company granted stock options for 527,500 common shares to employees of RSI, with an exercise price of $0.90, as compensation for support services provided to the Company. The fair value of the stock options granted to RSI employees is accounted for by the Company in accordance with

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AXOVANT SCIENCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note E—Related Party Transactions (Continued)

the authoritative guidance for non-employee equity awards and is remeasured on each valuation date until performance is complete using the Black-Scholes pricing model.

Each award is subject to specified vesting schedules. Compensation expense will be recognized by the Company over the required service period to earn the award, which is expected to be four years. For the period from October 31, 2014 (date of inception) to March 31, 2015, the Company incurred compensation expense of $518,300, which the Company recorded as research and development and general and administrative expense in the consolidated statement of operations. The total remaining unrecognized compensation cost related to the non-vested stock options amounted to $7,225,600 as of March 31, 2015, which will be recognized over the weighted-average remaining requisite service period of 3.96 years. Refer to Note G for additional disclosures.

[3] Information Sharing and Cooperation Agreement:

In March 2015, the Company entered into an information sharing and cooperation agreement with RSL. The information sharing and cooperation agreement, among other things, grants the Company a right of first review on any potential dementia-related product or investment opportunity that RSL may consider pursuing and obligates the Company to deliver periodic financial statements and other financial information to RSL and comply with other specified financial reporting requirements.

[4] Family Relationships:

Geetha Ramaswamy, an employee of Axovant Sciences, Inc. and a former consultant to Roivant Sciences, Inc., is the mother of Vivek Ramaswamy, the Company's principal executive officer, a member of the Company's board of directors, the Chief Executive Officer of Axovant Sciences, Inc. and the President and Chief Executive Officer of Roivant Sciences, Inc. Shankar Ramaswamy, an employee of Axovant Sciences, Inc. and a former employee of Roivant Sciences, Inc., is the brother of Vivek Ramaswamy.

Each of Geetha Ramaswamy and Shankar Ramaswamy has an annual salary of $250,000. In March 2015, Geetha Ramaswamy was granted a stock option for 262,500 common shares and Shankar Ramaswamy was granted a stock option for 750,000 common shares, in each case, with an exercise price of $0.90 per share.

During the period from October 31, 2014 (date of inception) through March 31, 2015, the Company was charged an aggregate of $98,000 under the Services Agreement for services rendered by Geetha Ramaswamy and Shankar Ramaswamy, and incurred $3,800 of salary expense related to their employment at Axovant Sciences, Inc.

Note F—Shareholders' Deficit

[1] Overview:

The Company's Memorandum of Association, filed on October 31, 2014 in Bermuda, authorizes the issuance of one class of stock to be designated, respectively, "Share Capital." The total number of shares which the Company is authorized to issue is 10,000, each with a par value of $1.00 per share.

[2] Transactions:

Upon the Company's formation, RSL subscribed for 100 shares of the Company's share capital.

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AXOVANT SCIENCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note F—Shareholders' Deficit (Continued)

On December 17, 2014, RSL paid the initial $5,000,000 payment to GSK upon the closing of the transaction on behalf of the Company (see Note C) which is reflected in the financial statements as an additional capital contribution. There were no additional shares issued in connection with such contributions to additional paid-in-capital as RSL owns 100% of the share ownership.

On March 18, 2015, upon approval of the Board of Directors, the Company issued an additional 650 shares, increasing the total number of issued and outstanding shares to 750, which have been reflected in the accompanying financial statements as 65,000,000 and 75,000,000, respectively, post stock split as discussed in [3] below.

[3] Stock Split:

Effective March 18, 2015, upon approval of the Board of Directors and the Company's sole member, RSL, the Company effected a stock split of the authorized, issued and outstanding shares of the Company at a ratio of 100,000-to-1. The stock split increased the total number of authorized shares from 10,000 to 1,000,000,000, increased the total number of shares issued and outstanding from 750 to 75,000,000, and decreased par value from $1.00 to $0.00001. All information in the accompanying financial statements and notes thereto regarding share amounts of the common stock and prices per share of the common stock has been adjusted to reflect the application of the stock split on a retroactive basis.

Note G—Share-Based Compensation

In March 2015, the Company adopted its 2015 Equity Incentive Plan (the "2015 Plan"), under which 7,500,000 shares of the Company's common shares are reserved for grant as of March 31, 2015. The Company's employees, directors and consultants are eligible to receive non-qualified and incentive stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, and other stock awards under the plan. Options granted to consultants and employees generally vest over four years and have a ten-year contractual term. Options granted to members of the board of directors vest over three years and have a ten-year contractual term. Generally, each option has an exercise price equal to the fair market value of the Company's common shares on the date of grant. For grants of incentive stock options, if the grantee owns, or is deemed to own, 10% or more of the total voting power of the Company, then the exercise price shall be 110% of the fair market value of the Company's common shares on the date of grant and the option will have a five-year contractual term. Options that are forfeited or expire are available for future grants. At March 31, 2015, a total of 3,487,500 common shares were available for future issuance under the 2015 Plan.

Stock options granted under the 2015 Plan provide option holders, if approved by the Board of Directors, the right to exercise their options prior to vesting. In the event that an option holder exercises the unvested portion of any option, such unvested portion will be subject to a repurchase option held by the Company at the lower of (1) the fair market value of its common shares on the date of repurchase and (2) the exercise price of the options. Any common shares underlying such unvested portion will continue to vest in accordance with the original vesting schedule of the option. As of March 31, 2015, no outstanding stock options had been exercised.

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AXOVANT SCIENCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note G—Share-Based Compensation (Continued)

The following table illustrates the stock options granted for the period from October 31, 2014 (date of inception) through March 31, 2015:

 
  Grant Date   Number
of Options
  Exercise
Price
  Fair
Value
Price
  Vesting
Terms
  Assumptions used in
Black-Scholes
option pricing model
 

Directors and Employees

  March 18, 2015     3,485,000   $ 0.90   $ 15.00   Over 3.0-4.0 years   Volatility     74.00 %

                            Risk free interest rate     1.57 %

                            Expected term, in years     6 - 6.25  

                            Dividend yield     0.00  

Consultants

 

March 18, 2015

   
527,500
 
$

0.90
 
$

15.00
 

Over 4.0 years

 

Volatility

   
81.1

%

                            Risk free interest rate     1.94 %

                            Remaining expected term, in years     9.96  

                            Dividend yield     0.00  

The following table summarizes information about stock option activity for the period from October 31, 2014 (date of inception) through March 31, 2015:

 
  Number of
Options
  Weighted
Average
Exercise
Price
  Weighted
Average
Grant Date
Fair Value
  Weighted
Average
Remaining
Contractual
Life
  Aggregate
Intrinsic
Value (000)s
 

Options outstanding at October 31, 2014

      $   $       $  

Granted

    4,012,500     0.90     15.00     9.96      

Exercised

                           

Forfeited

                           

Cancelled

                           

Options outstanding at March 31, 2015

    4,012,500   $ 0.90   $ 15.00     9.96   $  

Options exercisable at March 31, 2015

  $ 4,012,500   $ 0.90   $ 15.00     9.96   $  

In the period ended March 31, 2015 the Company recorded share-based compensation expense related to stock options issued to employees and directors of $450,900. The Company recorded in the same period $67,400 of share-based compensation expense related to stock options issued to non-employees (Note E[2]). This share-based compensation expense is included in research and development and general and administrative expenses in the accompanying consolidated statement of operations.

In connection with the Company's initial public offering and after preliminary discussions with the underwriters, the Company reassessed the determination of the fair value of the common shares underlying stock options granted in March 2015. As a result, the Company determined that the fair value of the common shares as of March 18, 2015 was $15.00 per share, which was higher than the fair value as initially determined by the Board of Directors on the date of grant. The use of this higher share price increased both recognized and unrecognized share-based compensation expense and also impacted the valuation of the BVC restricted stock compensation discussed in Note E[1].

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AXOVANT SCIENCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note G—Share-Based Compensation (Continued)

At March 31, 2015, total unrecognized compensation expense related to non-vested options was $54,115,000 and is expected to be recognized over the remaining weighted-average service period of 3.91 years.

Note H—Income Taxes

The (provision for) benefit from income taxes is based on income taxes as follows:

 
  October 31, 2014
(Date of Inception)
through March 31, 2015
 

Bermuda

  $ (21,048,009 )

United States

    1,958  

Loss from continuing operations before taxes

  $ (21,046,051 )

The (provision for) benefit from income taxes for the period from October 31, 2014 (date of inception) to March 31, 2015 consists of U.S. federal and state taxes of $968.

The Company's effective tax rate for the period October 31, 2014 (date of inception) to March 31, 2015 was (0.01)% primarily due to the organization of Axovant Sciences Ltd. as a Bermuda Exempted Limited Company, for which there is no current tax regime and none expected as of the date of this report.

The Company will file its initial federal, state and local income tax returns for the fiscal year ended March 31, 2015. The Company is subject to tax examinations for fiscal year 2015 and forward in all applicable tax jurisdictions.

Note I—Commitments and Contingencies

The Company entered into commitments under the GSK purchase agreement (Note C), and a services agreement with RSI (Note D). In addition, during the three months ended March 31, 2015, the Company entered into formal services agreements with a third parties for pharmaceutical manufacturing. The agreements can be terminated by the Company with 30 days written notice. The Company expects to enter into other commitments as the business further develops.

Under the terms of the GSK intellectual property purchase agreement (Note C) the Company believes it is probable that the Company will not have dosed the first patient in a second Phase 3 trial for RVT-101 within six months following the dosing of the first patient in the Company's first Phase 3 trial for RVT-101. As such, the Company deems it probable that the first contingent payment of $5 million under the GSK agreement will be made during the second quarter of the fiscal year ending March 31, 2017. The Company has recorded the obligation as contingent payment liability in the accompanying balance sheet and as research and development expense in the statement of operations.

Note J—Subsequent Events

The Company has evaluated subsequent events through May 21, 2015, the date that the financial statements were available to be issued.

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AXOVANT SCIENCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note J—Subsequent Events (Continued)

In April 2015, the Company granted options to purchase 527,500 common shares to certain employees and consultants of the Company, with an exercise price of $1.04 under the 2015 Plan. The options granted vest ratably over four years.

In April 2015, RSL made a cash capital contribution of $750,000. No additional shares of the Company's common shares were issued in connection with this capital contribution.

In May 2015, the Company's Board of Directors amended the 2015 Plan to increase the number of common shares authorized for issuance thereunder to 9,500,000 common shares. The amendment of the 2015 Plan will become effective upon the execution of the underwriting agreement relating to the Company's IPO.

On May 1, 2015, the Company received an offer notice, as defined in the Cooperation Agreement, from Roivant Sciences Ltd. relating to the opportunity to acquire from Arena Pharmaceuticals GmbH, or Arena, certain rights to develop and market nelotanserin, a novel inverse agonist of the 5-HT2a receptor. On May 8, 2015, (1) the Company entered into a Waiver and Option Agreement with Roivant Sciences Ltd. with respect to such opportunity and (2) Roivant Sciences Ltd. entered into a development, marketing and supply agreement for nelotanserin with Arena (the "Arena Development Agreement").

Pursuant to the terms of the Waiver and Option Agreement, Roivant Sciences Ltd. granted the Company an option to receive an assignment and assume all of Roivant Sciences Ltd.'s right, title and interest in and to the Arena Development Agreement, together with any amendments and related side letters or other agreements. The Company's option is exercisable beginning on or after the earlier of (a) the date that is three months following the closing of this offering and (b) the date that is six months following the effective date of the Arena Development Agreement. The Company's option expires on the earlier of (a) the date that is 18 months following the closing of this offering and (b) 21 months following the effective date of the Arena development agreement. If the Company elects to exercise the option, the Company will be required to reimburse Roivant Sciences Ltd. for 110% of any payments made to Arena, including but not limited to the $4 million up-front payment, and any costs incurred in connection with the development of nelotanserin, in each case pursuant to the Arena development agreement. The services agreement between the Company and Roivant Sciences, Inc. will not apply with regard to any reimbursements made to Roivant Sciences Ltd. in the event that the Company elects to exercise the option.

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                             Shares

LOGO

Axovant Sciences Ltd.

Common Shares


Preliminary Prospectus


Jefferies

Evercore ISI

RBC Capital Markets

JMP Securities

Baird

                             , 2015

Until                             , 2015 (25 days after the commencement of this offering), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.


Table of Contents


PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.    Other Expenses of Issuance and Distribution.

The following table sets forth all costs and expenses, other than underwriting discounts and commissions, payable by us in connection with the sale of the common shares being registered. All amounts shown are estimates except for the SEC registration fee, the Financial Industry Regulatory Authority, or FINRA, filing fee and the New York Stock Exchange, or NYSE, initial listing fee.


 
  Amount to
be Paid
 

SEC registration fee

  $ 20,045  

FINRA filing fee

    26,375  

NYSE initial listing fee

    *  

Printing and engraving expenses

    *  

Legal fees and expenses

    *  

Accounting fees and expenses

    *  

Transfer agent and registrar fees and expenses

    *  

Miscellaneous fees and expenses

    *  

Total

  $ *  

*
To be filed by amendment.

Item 14.    Indemnification of Directors and Officers.

Section 98 of the Companies Act provides generally that a Bermuda company may indemnify its directors, officers and auditors against any liability which by virtue of any rule of law would otherwise be imposed on them in respect of any negligence, default, breach of duty or breach of trust, except in cases where such liability arises from fraud or dishonesty of which such director, officer or auditor may be guilty in relation to the company. Section 98 further provides that a Bermuda company may indemnify its directors, officers and auditors against any liability incurred by them in defending any proceedings, whether civil or criminal, in which judgment is awarded in their favor or in which they are acquitted or granted relief by the Supreme Court of Bermuda pursuant to section 281 of the Companies Act.

We have adopted provisions in our bye-laws that provide that we shall indemnify our officers and directors in respect of their actions and omissions, except in respect of their fraud or dishonesty. Our bye-laws provide that the shareholders waive all claims or rights of action that they might have, individually or in right of the company, against any of the company's directors or officers for any act or failure to act in the performance of such director's or officer's duties, except in respect of any fraud or dishonesty of such director or officer. Section 98A of the Companies Act permits us to purchase and maintain insurance for the benefit of any officer or director in respect of any loss or liability attaching to him in respect of any negligence, default, breach of duty or breach of trust, whether or not we may otherwise indemnify such officer or director. We have purchased and maintain a directors' and officers' liability policy for such a purpose.

In connection with this offering, we expect to enter into indemnification agreements with each of our directors and executive officers. These indemnification agreements will provide the directors and executive officers with contractual rights to indemnification and expense advancement that are, in some cases, broader than the specific indemnification provisions contained under Bermuda law.

In addition, the underwriting agreement filed as Exhibit 1.1 to this Registration Statement provides for indemnification by the underwriters of us and our officers and directors for certain liabilities arising under the Securities Act, or otherwise.

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Table of Contents

Item 15.    Recent Sales of Unregistered Securities.

Issuances of Share Capital

On November 14, 2014, we issued 100 common shares, and on March 18, 2015, we issued an additional 650 common shares, to Roivant Sciences Ltd., our sole shareholder, for an aggregate price of $750, which does not give effect to the 100,000-to-1 stock split effected on March 18, 2015. Each such offer, sale and issuance was exempt from registration under Section 4(a)(2) of the Securities Act.

We granted stock options to purchase an aggregate of 4,012,500 of our common shares at an exercise price of $0.90 per share and an aggregate of 527,500 of our common shares at an exercise price of $1.04 on March 18, 2015 and April 13, 2015, respectively, to a total of 19 employees, consultants and directors under our 2015 Equity Incentive Plan. All of these options remain outstanding. The offers, sales and issuances of these securities were deemed to be exempt from registration under the Securities Act in reliance on Rule 701 thereunder as offers and sale of securities pursuant to certain compensatory benefit plans and contracts relating to compensation in compliance with Rule 701.

Item 16.    Exhibits and Financial Statement Schedules.

(a)
Exhibits.

The exhibits to the registration statement are listed in the Exhibit Index attached hereto and are incorporated by reference herein.

(b)
Financial Statement Schedules.

See Index to Financial Statements on Page F-1. All schedules have been omitted because they are not required or are not applicable.

Item 17.    Undertakings.

The undersigned Registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1)
For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective.

(2)
For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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Table of Contents


SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Amendment No. 1 to Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in New York, New York, on the 22nd day of May, 2015.

    AXOVANT SCIENCES LTD.

 

 

By:

 

/s/ VIVEK RAMASWAMY

Vivek Ramaswamy
Principal Executive Officer


Power of Attorney

KNOW ALL BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Vivek Ramaswamy and Alan S. Roemer, and each of them, his or her true and lawful agent, proxy and attorney-in-fact, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to (i) act on, sign and file with the Securities and Exchange Commission any and all amendments (including post-effective amendments) to this registration statement together with all schedules and exhibits thereto and any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, together with all schedules and exhibits thereto, (ii) act on, sign and file such certificates, instruments, agreements and other documents as may be necessary or appropriate in connection therewith, (iii) act on and file any supplement to any prospectus included in this registration statement or any such amendment or any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and (iv) take any and all actions which may be necessary or appropriate to be done, as fully for all intents and purposes as he or she might or could do in person, hereby approving, ratifying and confirming all that such agent, proxy and attorney-in-fact or any of his or her substitutes may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Act, this Amendment No. 1 to Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature
 
Title
 
Date

 

 

 

 

 
/s/ VIVEK RAMASWAMY

Vivek Ramaswamy
  Principal Executive Officer and Director   May 22, 2015

/s/ ALAN S. ROEMER

Alan S. Roemer

 

Principal Financial and Accounting Officer

 

May 22, 2015

*

Berndt Modig

 

Director

 

May 22, 2015

  

Lawrence Olanoff, M.D., Ph.D

 

Director

 

 

*

Ilan Oren

 

Director

 

May 22, 2015

*

Atul Pande, M.D.

 

Director

 

May 22, 2015

*

Marianne L. Romeo

 

Director

 

May 22, 2015

 

By:   /s/ VIVEK RAMASWAMY

Vivek Ramaswamy
Attorney-in-fact
   

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Table of Contents


EXHIBIT INDEX

Exhibit
Number
  Description of Exhibit
  1.1†   Form of Underwriting Agreement.

  2.1*††

 

Asset Purchase Agreement, by and among the Registrant and Glaxo Group Limited and GlaxoSmithKline Intellectual Property Development Limited, dated as of December 17, 2014.

  3.1††

 

Certificate of Incorporation.

  3.2††

 

Memorandum of Association.

  3.3††

 

Bye-laws, as currently in effect.

  3.4

 

Form of Amended and Restated Bye-laws, to be effective immediately prior to the closing of this offering.

  5.1†

 

Opinion of Conyers Dill & Pearman Limited as to legality.

10.1+

 

2015 Equity Incentive Plan, as amended.

10.2+

 

Forms of Option Grant Notice and Option Agreement under 2015 Equity Incentive Plan, as amended.

10.3+

 

Form of Early Exercise Stock Purchase Agreement under 2015 Equity Incentive Plan, as amended.

10.4+

 

Form of Indemnification Agreement with directors and executive officers.

10.5††

 

Services Agreement, dated as of October 31, 2014, by and among Roivant Sciences, Inc., Axovant Sciences, Inc. and the Registrant.

10.6††

 

Information Sharing and Cooperation Agreement, dated as of March 18, 2015, by and between Roivant Sciences Ltd. and the Registrant.

10.7+

 

Form of Executive Officer Employment Agreement with Axovant Sciences, Inc.

10.8+

 

Employment Offer Letter, dated as of April 25, 2015, by and between Lawrence Friedhoff and Axovant Sciences, Inc.

10.9

 

Waiver and Option Agreement, dated as of May 8, 2015, by and between Roivant Sciences Ltd. and the Registrant.

21.1††

 

Subsidiaries of the Registrant.

23.1

 

Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm.

23.2†

 

Consent of Conyers Dill & Pearman Limited (included in Exhibit 5.1).

24.1††

 

Powers of Attorney (included on the signature page to this registration statement).
To be submitted by amendment.

††
Previously filed.

+
Indicates management contract or compensatory plan.

*
Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment and have been separately filed with the Securities and Exchange Commission.

II-4




Exhibit 3.4

 

BYE-LAWS OF

 

AXOVANT SCIENCES LTD.

 



 

TABLE OF CONTENTS

 

Interpretation

 

1.               Definitions

 

Shares

 

2.               Power to Issue Shares

3.               Power of the Company to Purchase its Shares

4.               Rights Attaching to Shares

5.               Calls on Shares

6.               Forfeiture of Shares

7.               Share Certificates

8.               Fractional Shares

 

Registration of Shares

 

9.               Register of Members

10.        Registered Holder Absolute Owner

11.        Transfer of Registered Shares

12.        Transmission of Registered Shares

 

 Alteration of Share Capital

 

13.        Power to Alter Capital

14.        Variation of Rights Attaching to Shares

 

Dividends and Capitalisation

 

15.        Dividends

16.        Power to Set Aside Profits

17.        Method of Payment

18.        Capitalisation

 

Meetings of Members

 

19.        Annual General Meetings

20.        Special General Meetings

21.        Requisitioned General Meetings

22.        Notice

23.        Giving Notice and Access

24.        Notice of Nominations and Member Business

25.        Postponement or Cancellation of General Meeting

26.        Electronic Participation and Security at General Meetings

27.        Quorum at General Meetings

28.        Chairman to Preside at General Meetings

29.        Voting on Resolutions

30.        Power to Demand Vote on Poll

31.        Voting by Joint Holders of Shares

32.        Votes of Members - General

33.        Adjustment of Voting Power

34.        Other Adjustments of Voting Power

35.        Notice

36.        Board Determination Binding

37.        Requirement to Provide Information and Notice

38.        Instrument of Proxy

39.        Representation of Corporate Member

40.        Adjournment of General Meeting

41.        Written Resolutions

42.        Directors Attendance at General Meetings

 

Directors and Officers

 

43.        Election of Directors

44.        Classes of Directors

45.        Term of Office of Directors

46.        Alternate Directors

47.        Removal of Directors

48.        Vacancy in the Office of Director

49.        Remuneration of Directors

50.        Defect in Appointment

51.        Directors to Manage Business

52.        Powers of the Board of Directors

53.        Register of Directors and Officers

54.        Appointment of Officers

55.        Appointment of Secretary

56.        Duties of Officers

57.        Remuneration of Officers

58.        Conflicts of Interest

59.        Indemnification and Exculpation of Directors and Officers

 

Meetings of the Board of Directors

 

60.        Board Meetings

61.        Notice of Board Meetings

62.        Electronic Participation in Meetings

63.        Quorum at Board Meetings

64.        Board to Continue in Event of Vacancy

65.        Chairman to Preside

66.        Written Resolutions

67.        Validity of Prior Acts of the Board

 

Corporate Records

 

68.        Minutes

69.        Place Where Corporate Records Kept

70.        Form and Use of Seal

 

Accounts

 

71.        Books of Account

72.        Financial Year End

 

Audits

 

73.        Annual Audit

74.        Appointment of Auditor

75.        Remuneration of Auditor

76.        Duties of Auditor

77.        Access to Records

78.        Financial Statements

79.        Distribution of Auditor’s Report

80.        Vacancy in the Office of Auditor

 

Business Combinations

 

81.        Business Combinations

 

Voluntary Winding-Up and Dissolution

 

82.        Winding-Up

 

Changes to Constitution

 

83.        Changes to Bye-laws

84.        Changes to the Memorandum of Association

85.        Discontinuance

86.        Amalgamation

 



 

Axovant Sciences Ltd.

 

INTERPRETATION

 

1.                                       Definitions

 

1.1                                In these Bye-laws, the following words and expressions shall, where not inconsistent with the context, have the following meanings, respectively:

 

Act                                                                                                                                                                                                                              the Companies Act 1981 as amended from time to time;

 

Alternate Director                                                                                                                                                 an alternate director appointed in accordance with these Bye-laws;

 

Attribution Percentage                                                                                                                        with respect to a Member, the percentage of the Member’s shares that are treated as Controlled Shares of a Tentative 9.5% U.S. Member;

 

Auditor                                                                                                                                                                                                        includes an individual or partnership;

 

Board                                                                                                                                                                                                               the board of directors appointed or elected pursuant to these Bye-laws and acting by resolution in accordance with the Act and these Bye-laws or the directors present at a meeting of directors at which there is a quorum;

 

Code                                                                                                                                                                                                                    the United States Internal Revenue Code of 1986, as amended;

 

Company                                                                                                                                                                                          the company for which these Bye-laws are approved and confirmed;

 

Controlled Shares                                                                                                                                                 all shares of the Company directly, indirectly or constructively owned by a person as determined pursuant to sections 957 and 958 of the Code and the Treasury Regulations promulgated thereunder;

 

1



 

Director                                                                                                                                                                                                      a director of the Company and shall include an Alternate Director;

 

indirect                                                                                                                                                                                                         when referring to a holder or owner of shares, ownership of shares within the meaning of section 958(a)(2) of the Code;

 

Member                                                                                                                                                                                                   the person registered in the Register of Members as the holder of shares in the Company and, when two or more persons are so registered as joint holders of shares, means the person whose name stands first in the Register of Members as one of such joint holders or all of such persons, as the context so requires;

 

9.5% U.S. Member                                                                                                                                           a U.S. Person whose Controlled Shares constitute nine and one-half percent (9.5%) or more of the voting power of all issued shares of the Company or who would otherwise be treated as a “United States Shareholder” as defined by section 951(b) of the Code, if the Company were a controlled foreign corporation as defined in section 957 of the Code and if the ownership threshold under section 951(b) of the Code were nine and one-half percent (9.5%), other than a 9.5% Excluded U.S. Member;

 

9.5% Excluded U.S. Member                                                                                     (i) a person who would, as of the time these Bye-laws become effective, be a 9.5% U.S. Member pursuant to the definition of 9.5% U.S. Member and (ii) a person that is not a U.S. Person, but who would, as of the time these Bye-laws become

 

2



 

effective, be a 9.5% U.S. Member pursuant to the definition of 9.5% U.S. Member if such person was a U.S. Person; provided, however, that when determining if a person would be a 9.5% U.S. Member for purposes of this definition, the exclusion from the definition of a 9.5% U.S. Member for 9.5% Excluded U.S. Members shall be disregarded;

 

notice                                                                                                                                                                                                                written notice as further provided in these Bye-laws unless otherwise specifically stated;

 

Officer                                                                                                                                                                                                           any person appointed by the Board to hold an office in the Company;

 

Register of Directors and Officers                                                              the register of directors and officers referred to in these Bye-laws;

 

Register of Members                                                                                                                                 the register of members referred to in these Bye-laws;

 

Resident Representative                                                                                                              any person appointed to act as resident representative and includes any deputy or assistant resident representative;

 

Secretary                                                                                                                                                                                              the person appointed to perform any or all of the duties of secretary of the Company and includes any deputy or assistant secretary and any person appointed by the Board to perform any of the duties of the Secretary;

 

3



 

Tentative 9.5% U.S. Member                                                                                    a U.S. Person that, but for adjustments or restrictions on exercise of the voting power of shares pursuant to Bye-law 33, would be a 9.5% U.S. Member (other than a 9.5% Excluded U.S. Member);

 

Treasury Share                                                                                                                                                               a share of the Company that was or is treated as having been acquired and held by the Company and has been held continuously by the Company since it was so acquired and has not been cancelled; and

 

U.S. Person                                                                                                                                                                                    a “United States person” as defined in Section 957(c) of the Code.

 

1.2                                In these Bye-laws, where not inconsistent with the context:

 

(a)                                  words denoting the plural number include the singular number and vice versa;

 

(b)                                  words denoting the masculine gender include the feminine and neuter genders;

 

(c)                                   words importing persons include companies, associations or bodies of persons whether corporate or not;

 

(d)                                  the words:

 

(i)                                      “may” shall be construed as permissive; and

 

(ii)                                   “shall” shall be construed as imperative;

 

(e)                                   a reference to  statutory provision shall be deemed to include any amendment or re-enactment thereof;

 

(f)                                    the word “corporation” means a corporation whether or not a company within the meaning of the Act;

 

4



 

 

(g)                                   unless otherwise provided herein, words or expressions defined in the Act shall bear the same meaning in these Bye-laws.

 

1.3                                In these Bye-laws expressions referring to writing or its cognates shall, unless the contrary intention appears, include facsimile, printing, lithography, photography, electronic mail and other modes of representing words in visible form.

 

1.4                                Headings used in these Bye-laws are for convenience only and are not to be used or relied upon in the construction hereof.

 

SHARES

 

2.                                       Power to Issue Shares

 

2.1                                Subject to these Bye-laws and to any resolution of the Members to the contrary, and without prejudice to any special rights previously conferred on the holders of any existing shares or class of shares, the Board shall have the power to issue any unissued shares on such terms and conditions as it may determine.

 

2.2                                Subject to the Act, any preference shares may be issued or converted into shares that (at a determinable date or at the option of the Company or the holder) are liable to be redeemed on such terms and in such manner as may be determined by the Board (before the issue or conversion).

 

2.3                                Notwithstanding the foregoing or any other provision of these Bye-laws, the Company may not issue any shares in a manner that the Board determines in its sole discretion may result in a non de minimis adverse tax, legal or regulatory consequence to the Company, any of its subsidiaries or any direct or indirect holder of shares or its affiliates.

 

3.                                       Power of the Company to Purchase its Shares

 

3.1                                The Company may purchase its own shares for cancellation or acquire them as Treasury Shares in accordance with the Act on such terms as the Board shall think fit.

 

5



 

3.2                                The Board may exercise all the powers of the Company to purchase or acquire all or any part of its own shares in accordance with the Act.

 

3.3                                Notwithstanding the foregoing or any other provision of these Bye-laws, any such purchase or acquisition may not be made if the Board determines in its sole discretion that the purchase or acquisition may result in a non de minimis adverse tax, legal or regulatory consequence to the Company, any of its subsidiaries or any direct or indirect holder of shares or its affiliates.

 

4.                                       Rights Attaching to Shares

 

4.1                                At the date these Bye-laws are adopted, the share capital of the Company is divided into seventy five million (75,000,000) common shares of par value US$0.00001 each (the “Common Shares”), the holders of which shall, subject to these Bye-laws:

 

(a)                                  be entitled to one vote per share;

 

(b)                                  be entitled to such dividends as the Board may from time to time declare;

 

(c)                                   in the event of a winding-up or dissolution of the Company, whether voluntary or involuntary or for the purpose of a reorganisation or otherwise or upon any distribution of capital, be entitled to the surplus assets of the Company; and

 

(d)                                  generally be entitled to enjoy all of the rights attaching to shares.

 

4.2                                The Board is authorised to provide for the creation and issuance of preference shares (the “Preference Shares”) in one or more series, and to establish from time to time the number of shares to be included in each such series, and to fix the terms, including designation, powers, preferences, rights, qualifications, limitations and restrictions of the shares of each such series (and, for the avoidance of doubt, such matters and the issuance of such Preference Shares with prior ranking shall not be deemed to vary the rights attached to the Common Shares or, subject to the terms of any other series of Preference Shares, to vary the rights attached to any other series of Preference Shares). 

 

6



 

The authority of the Board with respect to each series shall include, but not be limited to, determination of the following:

 

(a)                                  the number of shares constituting that series and the distinctive designation of that series;

 

(b)                                  the dividend rate on the shares of that series, whether dividends shall be cumulative and, if so, from which date or dates, and the relative rights of priority, if any, of the payment of dividends on shares of that series;

 

(c)                                   whether that series shall have voting rights, in addition to the voting rights provided by law, and if so, the terms of such voting rights;

 

(d)                                  whether that series shall have conversion or exchange privileges (including, without limitation, conversion into Common Shares), and, if so, the terms and conditions of such conversion or exchange, including provision for adjustment of the conversion or exchange rate in such events as the Board shall determine;

 

(e)                                   whether or not the shares of that series shall be redeemable or repurchaseable, and, if so, the terms and conditions of such redemption or repurchase, including the manner of selecting shares for redemption or repurchase if less than all shares are to be redeemed or repurchased, the date or dates upon or after which they shall be redeemable or repurchaseable, and the amount per share payable in case of redemption or repurchase, which amount may vary under different conditions and at different redemption or repurchase dates;

 

(f)                                    whether that series shall have a sinking fund for the redemption or repurchase of shares of that series, and, if so, the terms and amount of such sinking fund;

 

(g)                                   the right of the shares of that series to the benefit of conditions and restrictions upon the creation of indebtedness of the Company or any subsidiary, upon the issue of any additional shares (including additional shares of such series or any other series) and upon the payment of dividends or the making of other

 

7



 

distributions on, and the purchase, redemption or other acquisition by the Company or any subsidiary of any issued shares of the Company;

 

(h)                                  the rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the Company, and the relative rights of priority, if any, of payment in respect of shares of that series; and

 

(i)                                      any other relative participating, optional or other special rights, qualifications, limitations or restrictions of that series.

 

4.3                                Any Preference Shares of any series which have been redeemed (whether through the operation of a sinking fund or otherwise) or which, if convertible or exchangeable, have been converted into or exchanged for shares of any other class or classes shall have the status of authorised and unissued Preference Shares of the same series and may be reissued as a part of the series of which they were originally a part or may be reclassified and reissued as part of a new series of Preference Shares to be created by resolution or resolutions of the Board or as part of any other series of Preference Shares, all subject to the conditions and the restrictions on issuance set forth in the resolution or resolutions adopted by the Board providing for the issue of any series of Preference Shares.

 

4.4                                At the discretion of the Board, whether or not in connection with the issuance and sale of any shares or other securities of the Company, the Company may issue securities, contracts, warrants or other instruments evidencing any shares, option rights, securities having conversion or option rights, or obligations on such terms, conditions and other provisions as are fixed by the Board, including, without limiting the generality of this authority, conditions that preclude or limit any person or persons owning or offering to acquire a specified number or percentage of the issued Common Shares, other shares, option rights, securities having conversion or option rights, or obligations of the Company or transferee of the person or persons from exercising, converting, transferring or receiving the shares, option rights, securities having conversion or option rights, or obligations.

 

8


 

4.5                                All the rights attaching to a Treasury Share shall be suspended and shall not be exercised by the Company while it holds such Treasury Share and, except where required by the Act, all Treasury Shares shall be excluded from the calculation of any percentage or fraction of the share capital, or shares, of the Company.

 

5.                                       Calls on Shares

 

5.1                                The Board may make such calls as it thinks fit upon the Members in respect of any moneys (whether in respect of nominal value or premium) unpaid on the shares allotted to or held by such Members (and not made payable at fixed times by the terms and conditions of issue) and, if a call is not paid on or before the day appointed for payment thereof, the Member may at the discretion of the Board be liable to pay the Company interest on the amount of such call at such rate as the Board may determine, from the date when such call was payable up to the actual date of payment.  The Board may differentiate between the holders as to the amount of calls to be paid and the times of payment of such calls.

 

5.2                                Any amount which by the terms of allotment of a share becomes payable upon issue or at any fixed date, whether on account of the nominal value of the share or by way of premium, shall for all the purposes of these Bye-laws be deemed to be an amount on which a call has been duly made and payable on the date on which, by the terms of issue, the same becomes payable, and in case of non-payment all the relevant provisions of these Bye-laws as to forfeiture, payment of interest, costs and expenses, forfeiture or otherwise shall apply as if such amount had become payable by virtue of a duly made and notified call.

 

5.3                                The joint holders of a share shall be jointly and severally liable to pay all calls and any interest, costs and expenses in respect thereof.

 

5.4                                The Company may accept from any Member the whole or a part of the amount remaining unpaid on any shares held by him, although no part of that amount has been called up or become payable.

 

9



 

6.                                       Forfeiture of Shares

 

6.1                                If any Member fails to pay, on the day appointed for payment thereof, any call in respect of any share allotted to or held by such Member, the Board may, at any time thereafter during such time as the call remains unpaid, direct the Secretary to forward such Member a notice in writing in the form, or as near thereto as circumstances admit, of the following:

 

Notice of Liability to Forfeiture for Non-Payment of Call
Axovant Sciences Ltd. (the “Company”)

 

You have failed to pay the call of [amount of call] made on the [ ] day of [ ], 20[ ], in respect of the [number] share(s) [number in figures] standing in your name in the Register of Members of the Company, on the [ ] day of [ ], 20[ ], the day appointed for payment of such call. You are hereby notified that unless you pay such call together with interest thereon at the rate of [ ] per annum computed from the said [ ] day of [ ], 20[ ] at the registered office of the Company the share(s) will be liable to be forfeited.

 

Dated this [ ] day of [ ], 20[ ]

 

 

 

 

 

 

[Signature of Secretary] By Order of the Board

 

 

6.2                                If the requirements of such notice are not complied with, any such share may at any time thereafter before the payment of such call and the interest due in respect thereof be forfeited by a resolution of the Board to that effect, and such share shall thereupon become the property of the Company and may be disposed of as the Board shall determine. Without limiting the generality of the foregoing, the disposal may take place by sale, repurchase, redemption or any other method of disposal permitted by and consistent with these Bye-laws and the Act.

 

6.3                                A Member whose share or shares have been so forfeited shall, notwithstanding such forfeiture, be liable to pay to the Company all calls owing on such share or shares at the

 

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time of the forfeiture, together with all interest due thereon and any costs and expenses incurred by the Company in connection therewith.

 

6.4                                The Board may accept the surrender of any shares which it is in a position to forfeit on such terms and conditions as may be agreed. Subject to those terms and conditions, a surrendered share shall be treated as if it had been forfeited.

 

7.                                       Share Certificates

 

7.1                                Every Member shall be entitled to a certificate under the common seal (or a facsimile thereof) of the Company or bearing the signature (or a facsimile thereof) of a Director or Secretary or a person expressly authorized to sign specifying the number and, where appropriate, the class of shares held by such Member and whether the same are fully paid up and, if not, specifying the amount paid on such shares. The Board may by resolution determine, either generally or in a particular case, that any or all signatures on certificates may be printed thereon or affixed by mechanical means.

 

7.2                                The Company shall be under no obligation to complete and deliver a share certificate unless specifically called upon to do so by the person to whom the shares have been allotted.

 

7.3                                If any share certificate shall be proved to the satisfaction of the Board to have been worn out, lost, mislaid, or destroyed the Board may cause a new certificate to be issued and request an indemnity for the lost certificate if it sees fit.

 

7.4                                Notwithstanding any provisions of these Bye-laws:

 

(a)                                  the Directors shall, subject always to the Act and any other applicable laws and regulations and the facilities and requirements of any relevant system concerned, have power to implement any arrangements they may, in their absolute discretion, think fit in relation to the evidencing of title to and transfer of uncertificated shares and to the extent such arrangements are so implemented, no provision of these Bye-laws shall apply or have effect to the extent that it is in

 

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any respect inconsistent with the holding or transfer of shares in uncertificated form; and

 

(b)                                  unless otherwise determined by the Directors and as permitted by the Act and any other applicable laws and regulations, no person shall be entitled to receive a certificate in respect of any share for so long as the title to that share is evidenced otherwise than by a certificate and for so long as transfers of that share may be made otherwise than by a written instrument.

 

8.                                       Fractional Shares

 

The Company may issue its shares in fractional denominations and deal with such fractions to the same extent as its whole shares and shares in fractional denominations shall have in proportion to the respective fractions represented thereby all of the rights of whole shares including (but without limiting the generality of the foregoing) the right to vote, to receive dividends and distributions and to participate in a winding-up.

 

REGISTRATION OF SHARES

 

9.                                       Register of Members

 

9.1                                The Board shall cause to be kept in one or more books a Register of Members and shall enter therein the particulars required by the Act.

 

9.2                                The Register of Members shall be open to inspection without charge at the registered office of the Company on every business day, subject to such reasonable restrictions as the Board may impose, so that not less than two hours in each business day be allowed for inspection.  The Register of Members may, after notice has been given in accordance with the Act, be closed for any time or times not exceeding in the whole thirty days in each year.

 

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10.                                Registered Holder Absolute Owner

 

The Company shall be entitled to treat the registered holder of any share as the absolute owner thereof and accordingly shall not be bound to recognise any equitable claim or other claim to, or interest in, such share on the part of any other person.

 

11.                                Transfer of Registered Shares

 

11.1                         An instrument of transfer shall be in writing in the form of the following, or as near thereto as circumstances admit, or in such other form as the Board may accept:

 

Transfer of a Share or Shares
Axovant Sciences Ltd. (the “Company”)

 

FOR VALUE RECEIVED                            [amount], I, [name of transferor] hereby sell, assign and transfer unto [transferee] of [address], [number] shares of the Company.

 

DATED this [ ] day of [ ], 20[ ]

 

 

 

Signed by:

 

In the presence of:

 

 

 

 

 

 

 

 

 

Transferor

 

Witness

 

 

 

 

 

 

 

 

 

 

 

 

Transferee

 

Witness

 

11.2                         Such instrument of transfer shall be signed by (or in the case of a party that is a corporation) on behalf of the transferor and transferee, provided that, in the case of a fully paid up share, the Board may accept the instrument signed by or on behalf of the transferor alone. The transferor shall be deemed to remain the holder of such share until the same has been registered as having been transferred to the transferee in the Register of Members.

 

11.3                         The Board may refuse to recognise any instrument of transfer unless it is accompanied by the certificate in respect of the shares to which it relates and by such other evidence as the Board may reasonably require to show the right of the transferor to make the transfer.

 

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11.4                         The joint holders of any share may transfer such share to one or more of such joint holders, and the surviving holder or holders of any share previously held by them jointly with a deceased Member may transfer any such share to the executors or administrators of such deceased Member.

 

11.5                         The Board may in its absolute discretion and without assigning any reason therefor refuse to register the transfer of a share which is not fully paid up.  The Board shall refuse to register a transfer unless all applicable consents, authorisations and permissions of any governmental body or agency in Bermuda have been obtained.  If the Board refuses to register a transfer of any share the Secretary shall, within three months after the date on which the transfer was lodged with the Company, send to the transferor and transferee notice of the refusal.

 

11.6                         Shares may be transferred without a written instrument if transferred by an appointed agent or otherwise in accordance with the Act.

 

11.7                         Notwithstanding anything to the contrary in these Bye-laws, shares that are listed or admitted to trading on an appointed stock exchange may be transferred in accordance with the rules and regulations of such exchange.

 

11.8                         Notwithstanding the foregoing, the Board may decline to approve or register or permit the registration of any transfer of shares if it appears to the Board that any non-de minimis adverse tax, regulatory or legal consequences to the Company, any subsidiary of the Company or any direct or indirect holder of shares or its Affiliates would result from such Transfer.

 

12.                                Transmission of Registered Shares

 

12.1                         In the case of the death of a Member, the survivor or survivors where the deceased Member was a joint holder, and the legal personal representatives of the deceased Member where the deceased Member was a sole holder, shall be the only persons recognised by the Company as having any title to the deceased Member’s interest in the shares.  Nothing herein contained shall release the estate of a deceased joint holder from

 

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any liability in respect of any share which had been jointly held by such deceased Member with other persons.  Subject to the Act, for the purpose of this Bye-law, legal personal representative means the executor or administrator of a deceased Member or such other person as the Board may, in its absolute discretion, decide as being properly authorised to deal with the shares of a deceased Member.

 

12.2                         Any person becoming entitled to a share in consequence of the death or bankruptcy of any Member may be registered as a Member upon such evidence as the Board may deem sufficient or may elect to nominate some person to be registered as a transferee of such share, and in such case the person becoming entitled shall execute in favour of such nominee an instrument of transfer in writing in the form, or as near thereto as circumstances admit, of the following:

 

Transfer by a Person Becoming Entitled on Death/Bankruptcy of a Member

 

Axovant Sciences Ltd. (the “Company”)

 

I/We, having become entitled in consequence of the [death/bankruptcy] of [name and address of deceased/bankrupt Member] to [number] share(s) standing in the Register of Members of the Company in the name of the said [name of deceased/bankrupt Member] instead of being registered myself/ourselves, elect to have [name of transferee] (the “Transferee”) registered as a transferee of such share(s) and I/we do hereby accordingly transfer the said share(s) to the Transferee to hold the same unto the Transferee, his or her executors, administrators and assigns, subject to the conditions on which the same were held at the time of the execution hereof; and the Transferee does hereby agree to take the said share(s) subject to the same conditions.

 

 

DATED this [ ] day of [ ], 20[ ]

 

Signed by:

 

In the presence of:

 

 

 

 

 

 

 

 

 

Transferor

 

Witness

 

 

 

 

 

 

 

 

 

Transferee

 

Witness

 

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12.3                         On the presentation of the foregoing materials to the Board, accompanied by such evidence as the Board may require to prove the title of the transferor, the transferee shall be registered as a Member.  Notwithstanding the foregoing, the Board shall, in any case, have the same right to decline or suspend registration as it would have had in the case of a transfer of the share by that Member before such Member’s death or bankruptcy, as the case may be.

 

12.4                         Where two or more persons are registered as joint holders of a share or shares, then in the event of the death of any joint holder or holders the remaining joint holder or holders shall be absolutely entitled to such share or shares and the Company shall recognise no claim in respect of the estate of any joint holder except in the case of the last survivor of such joint holders.

 

ALTERATION OF SHARE CAPITAL

 

13.                                Power to Alter Capital

 

13.1                         The Company may if authorised by resolution of the Members increase, divide, consolidate, subdivide, change the currency denomination of, diminish or otherwise alter or reduce its share capital in any manner permitted by the Act.

 

13.2                         Where, on any alteration or reduction of share capital, fractions of shares or some other difficulty would arise, the Board may deal with or resolve the same in such manner as it thinks fit.

 

14.                                Variation of Rights Attaching to Shares

 

14.1                         If, at any time, the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, whether or not the Company is being wound-up, be varied with the consent in writing of the holders of three-fourths of the issued shares of that class or with the sanction of a resolution passed by a majority of the votes cast at a separate

 

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general meeting of the holders of the shares of the class at which meeting the necessary quorum shall be two persons at least holding or representing by proxy one-third of the issued shares of the class.  The rights conferred upon the holders of the shares of any class or series issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class or series, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.

 

14.2                         Notwithstanding the foregoing or any other provision of these Bye-laws, the Company shall not vary or alter the rights attaching to any class of shares if the Board, after taking into account any adjustments to or restrictions on exercise of voting rights under Bye-laws 33 and 34 (inclusive), determines in its sole discretion that any non de minimis adverse tax, regulatory or legal consequences to the Company, any subsidiary of the Company, or any direct or indirect holders of shares or its affiliates may result from such variation.

 

DIVIDENDS AND CAPITALISATION

 

15.                                Dividends

 

15.1                         The Board may, subject to these Bye-laws and in accordance with the Act, declare a dividend to be paid to the Members, in proportion to the number of shares held by them, and such dividend may be paid in cash or wholly or partly in specie in which case the Board may fix the value for distribution in specie of any assets. No unpaid dividend shall bear interest as against the Company.

 

15.2                         The Board may fix any date as the record date for determining the Members entitled to receive any dividend.

 

15.3                         The Company may pay dividends in proportion to the amount paid up on each share where a larger amount is paid up on some shares than on others.

 

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15.4         The Board may declare and make such other distributions (in cash or in specie) to the Members as may be lawfully made out of the assets of the Company.  No unpaid distribution shall bear interest as against the Company.

 

16.           Power to Set Aside Profits

 

The Board may, before declaring a dividend, set aside out of the surplus or profits of the Company, such amount as it thinks proper as a reserve to be used to meet contingencies or for equalising dividends or for any other purpose.

 

17.           Method of Payment

 

17.1         Any dividend or other moneys payable in respect of a share may be paid by cheque or draft sent through the post directed to the address of the Member in the Register of Members (in the case of joint Members, the senior joint holder, seniority being determined by the order in which the names stand in the Register of Members), or by direct transfer to such bank account as such Member may direct. Every such cheque shall be made payable to the order of the person to whom it is sent or to such persons as the Member may direct, and payment of the cheque or draft shall be a good discharge to the Company. Every such cheque or draft shall be sent at the risk of the person entitled to the money represented thereby. If two or more persons are registered as joint holders of any shares any one of them can give an effectual receipt for any dividend paid in respect of such shares.

 

17.2         The Board may deduct from the dividends or distributions payable to any Member all moneys due from such Member to the Company on account of calls or otherwise.

 

17.3         Any dividend and/or other moneys payable in respect of a share which has remained unclaimed for 6 years from the date when it became due for payment shall, if the Board so resolves, be forfeited and cease to remain owing by the Company. The payment of any unclaimed dividend or other moneys payable in respect of a share may (but need not) be paid by the Company into an account separate from the Company’s own account. Such payment shall not constitute the Company a trustee in respect thereof.

 

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17.4         The Company shall be entitled to cease sending dividend cheques and warrants by post or otherwise to a Member if those instruments have been returned undelivered to, or left uncashed by, that Member on at least two consecutive occasions, or, following one such occasion, reasonable enquiries have failed to establish the Member’s new address. The entitlement conferred on the Company by this Bye-law 17.4 in respect of any Member shall cease if the Member claims a dividend or cashes a dividend cheque or warrant.

 

18.           Capitalisation

 

18.1         The Board may capitalise any amount for the time being standing to the credit of any of the Company’s share premium or other reserve accounts or to the credit of the profit and loss account or otherwise available for distribution by applying such amount in paying up unissued shares to be allotted as fully paid up bonus shares pro-rata (except in connection with the conversion of shares of one class to shares of another class) to the Members.

 

18.2         The Board may capitalise any amount for the time being standing to the credit of a reserve account or amounts otherwise available for dividend or distribution by applying such amounts in paying up in full, partly or nil paid up shares of those Members who would have been entitled to such amounts if they were distributed by way of dividend or distribution.

 

MEETINGS OF MEMBERS

 

19.           Annual General Meetings

 

The annual general meeting of the Company shall be held in each year (other than the year of incorporation) at such time and place as the Principal Executive Officer or the Chairman (if any) or any two Directors or any Director and the Secretary or the Board shall appoint.

 

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20.           Special General Meetings

 

The Principal Executive Officer or the Chairman (if any) or any two Directors or any Director and the Secretary or the Board may convene a special general meeting whenever in their judgment such a meeting is necessary.

 

21.           Requisitioned General Meetings

 

The Board shall, on the requisition of Members holding at the date of the deposit of the requisition not less than one-tenth of such of the paid-up share capital of the Company as at the date of the deposit carries the right to vote at general meetings, forthwith proceed to convene a special general meeting and the provisions of the Act shall apply.

 

22.           Notice

 

22.1         At least 14 days’ notice of an annual general meeting shall be given to each Member entitled to attend and vote thereat, stating the date, place and time at which the meeting is to be held, that the election of Directors will take place thereat, and as far as practicable, the other business to be conducted at the meeting.

 

22.2         At least 10 days’ notice of a special general meeting shall be given to each Member entitled to attend and vote thereat, stating the date, time, place and the general nature of the business to be considered at the meeting.

 

22.3         The Board may fix any date as the record date for determining the Members entitled to receive notice of and to vote at any general meeting.

 

22.4         A general meeting shall, notwithstanding that it is called on shorter notice than that specified in these Bye-laws, be deemed to have been properly called if it is so agreed by (i) all the Members entitled to attend and vote thereat in the case of an annual general meeting; and (ii) by a majority in number of the Members having the right to attend and vote at the meeting, being a majority together holding not less than 95% in nominal value of the shares giving a right to attend and vote thereat in the case of a special general meeting.

 

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22.5         The accidental omission to give notice of a general meeting to, or the non-receipt of a notice of a general meeting by, any person entitled to receive notice shall not invalidate the proceedings at that meeting.

 

23.           Giving Notice and Access

 

23.1         A notice may be given by the Company to a Member:

 

(a)            by delivering it to such Member in person, in which case the notice shall be deemed to have been served upon such delivery ; or

 

(b)            by sending it by post to such Member’s address in the Register of Members, in which case the notice shall be deemed to have been served seven days after the date on which it is deposited, with postage prepaid, in the mail ; or

 

(c)            by sending it by courier to such Member’s address in the Register of members, in which case the notice shall be deemed to have been served two days after the date on which it is deposited, with courier fees paid, with the courier service ; or

 

(d)            by transmitting it by electronic means (including facsimile and electronic mail, but not telephone) in accordance with such directions as may be given by such Member to the Company for such purpose, in which case the notice shall be deemed to have been served at the time that it would in the ordinary course be transmitted; or

 

(e)            by delivering it in accordance with the provisions of the Act pertaining to delivery of electronic records by publication on a website, in which case the notice shall be deemed to have been served at the time when the requirements of the Act in that regard have been met; or

 

(f)             in accordance with Bye-law 23.4.

 

23.2         Any notice required to be given to a Member shall, with respect to any shares held jointly by two or more persons, be given to whichever of such persons is named first in

 

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the Register of Members and notice so given shall be sufficient notice to all the holders of such shares .

 

23.3         In proving service under paragraphs 23.1 (b), (c) and (d), it shall be sufficient to prove that the notice was properly addressed and prepaid, if posted or sent by courier, and the time when it was posted, deposited with the courier, or transmitted by electronic means .

 

23.4         Where a Member indicates his consent (in a form and manner satisfactory to the Board) to receive information or documents by accessing them on a website rather than by other means, or receipt in this manner is otherwise permitted by the Act, the Board may deliver such information or documents by notifying the Member of their availability and including therein the address of the website, the place on the website where the information or document may be found, and instructions as to how the information or document may be accessed on the website.

 

23.5         In the case of information or documents delivered in accordance with Bye-law 23.4, service shall be deemed to have occurred when (i) the Member is notified in accordance with that Bye-law; and (ii) the information or document is published on the website.

 

24.           Notice of Nominations and Member Business

 

24.1         Annual General Meetings

 

(a)            Nominations of persons for election to the Board or the proposal of other business to be transacted by the Members may be made at an annual general meeting only (A) pursuant to the Company’s notice of meeting (or any supplement thereto), (B) by or at the direction of the Board or (C) subject to any applicable law, by Members of record at the time of giving of notice as provided for in this Bye-law 24.1 and who comply with the notice procedures set forth in this Bye-law 24.1;

 

(b)            For nominations or other business to be properly brought before an annual general meeting by a Member pursuant to clause (C) of Bye-law

 

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24.1(a), the Member must have given timely notice thereof in writing to the Secretary and any such proposed business must constitute a proper matter for Member action. To be timely, a Member’s notice shall be delivered to or mailed and received by the Secretary at the registered office of the Company not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual general meeting; provided, that in the event that the date of the annual general meeting is called for a date that is not less than 30 days before or after such anniversary then to be timely such notice must be received at the registered office of the Company not later than ten days following the earlier of the date on which notice of the annual general meeting was posted to shareholders or the date on which public disclosure of the date of the annual general meeting was made. In no event shall the public announcement of an adjournment or postponement of an annual general meeting commence a new time period (or extend any time period) for the giving of a Member’s notice as described above. For purposes of Bye-laws 24.1(b) and 24.2, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, the Associated Press, PR Newswire, Businesswire, Bloomberg or any comparable news service in the United States or in a document publicly filed by the Company with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act of 1934;

 

(c)            A Member’s notice to the Secretary shall set forth (A) as to each person whom the Member proposes to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Section 14(a) of the Securities Exchange Act of 1934 (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected), (B) as to any other business that the Member proposes to bring before the general meeting, a brief description of

 

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the business desired to be brought before the general meeting, the text of the proposal or business, the reasons for conducting such business at the general meeting and any material interest in such business of such Member and the beneficial owner, if any, on whose behalf the proposal is made, and (C) as to the Member giving the notice and the beneficial owner, if any, on whose behalf the proposal is made:

 

(i)             the name and address of such Member (as they appear in the Register of Members) and any such beneficial owner;

 

(ii)            the class or series and number of shares of the Company which are held of record or are beneficially owned by such Member and by any such beneficial owner;

 

(iii)           a description of any agreement, arrangement or understanding between or among such Member and any such beneficial owner, any of their respective affiliates or associates, and any other person or persons (including their names) in connection with the proposal of such nomination or other business;

 

(iv)           a description of any agreement, arrangement or understanding (including, regardless of the form of settlement, any derivative, long or short positions, profit interests, forwards, futures, swaps, options, warrants, convertible securities, share appreciation or similar rights, hedging transactions and borrowed or loaned shares) that has been entered into by or on behalf of, or any other agreement, arrangement or understanding that has been made, the effect or intent of which is to create or mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of, such Member or any such beneficial owner or any such nominee with respect to the Company’s securities (a “Derivative Instrument”);

 

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(v)            to the extent not disclosed pursuant to clause (iv) above, the principal amount of any indebtedness of the Company or any of its subsidiaries beneficially owned by such Member or by any such beneficial owner, together with the title of the instrument under which such indebtedness was issued and a description of any Derivative Instrument entered into by or on behalf of such Member or such beneficial owner relating to the value or payment of any indebtedness of the Company or any such subsidiary;

 

(vi)           a representation that the Member is a holder of record of shares of the Company entitled to vote at such general meeting and intends to appear in person or by proxy at the general meeting to bring such nomination or other business before the general meeting; and

 

(vii)          a representation as to whether such Member or any such beneficial owner intends or is part of a group that intends to (i) deliver a proxy statement and/or form of proxy to holders of at least the percentage of the voting power of the Company’s outstanding shares required to approve or adopt the proposal or to elect each such nominee and/or (ii) otherwise to solicit proxies from Members in support of such proposal or nomination;

 

(d)            If requested by the Company, the information required under clauses (ii), (iii), (iv) and (v) of Bye-law 24.1(c) shall be supplemented by such Member and any such beneficial owner not later than 10 days after the record date for notice of the general meeting to disclose such information as of such record date;

 

(e)            Notwithstanding anything to the contrary, the notice requirements set forth herein with respect to the proposal of any business pursuant to this Bye-law 24.1 other than a nomination shall be deemed satisfied by a Member if such Member has submitted a proposal to the Company in compliance with Rule 14a-8 promulgated under the Securities and Exchange Act of 1934 and such Member’s

 

25



 

proposal has been included in a proxy statement that has been prepared by the Company to solicit proxies for the general meeting.

 

24.2         Special General Meetings

 

(a)            Only such business shall be conducted at a special general meeting as shall have been brought before the general meeting in accordance with the Company’s notice of meeting pursuant to Bye-laws 22 and 23.

 

(b)            Nominations of persons for election to the Board at a special general meeting may be made (i) by or at the direction of the Board or (ii) provided that the Board has determined that Members may nominate persons for election to the Board at such general meeting, by any Member of the Company who is a Member of record at the time of giving of notice provided for in this Bye-law 24.2(b), who shall be entitled to vote at the general meeting and who complies with the notice procedures set forth in this Bye-law 24.

 

(c)            For nominations to be properly brought before a special general meeting by a Member pursuant to Bye-law 24.2(b)(ii), the Member must have given timely notice thereof in writing to the Secretary. To be timely, a Member’s notice shall be delivered to or mailed and received at the registered office of the Company not later than seven days following the earlier of the date on which notice of the special general meeting was posted to shareholders or the date on which public disclosure of the date of the special general meeting was made.

 

(d)            A Member’s notice to the Secretary, including any notice of requisition pursuant to Bye-law 21, shall comply with the notice requirements of Bye-law 24.1(c) and (d).

 

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24.3         General

 

(a)            At the request of the Board, any person nominated by the Board for election as a director shall furnish to the Secretary the information that is required to be set forth in a Member’s notice of nomination pursuant to Bye-law 24.1(c).

 

(b)            No person shall be eligible to be nominated by a Member to serve as a director of the Company unless nominated in accordance with the procedures set forth in this Bye-law 24.

 

(c)            The chairman of the general meeting shall, if the facts warrant, determine and declare to the general meeting that a nomination was not made in accordance with the procedures prescribed by these Bye-laws or that business was not properly brought before the general meeting, and if he should so determine and declare, the defective nomination shall be disregarded or such business shall not be transacted, as the case may be.

 

(d)            Notwithstanding the foregoing provisions of this Bye-law 24, unless otherwise required by the Act, if the Member (or a qualified representative of the Member) does not appear at the annual or special general meeting to present a nomination or other proposed business, such nomination shall be disregarded or such proposed business shall not be transacted, as the case may be, notwithstanding that proxies in respect of such vote may have been received by the Company. For purposes of this Bye-law 24.3, to be considered a qualified representative of the Member, a person must be a duly authorized officer, manager or partner of such Member or must be authorized by a writing executed by such Member or an electronic transmission delivered by such Member to act for such Member as proxy at the general meeting and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the general meeting.

 

24.4         Without limiting the foregoing provisions of this Bye-law 24, a Member shall also comply with all applicable requirements of the Securities Exchange Act of 1934 and the

 

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rules and regulations thereunder with respect to the matters set forth in this Bye-law 24; provided, that any references in these Bye-laws to the Securities Exchange Act of 1934 or the rules and regulations promulgated thereunder are not intended to and shall not limit any requirements applicable to nominations or proposals as to any other business to be considered pursuant to this Bye-law, and compliance with Bye-law 24.1 or 24.2 shall be the exclusive means for a Member to make nominations or submit other business (other than as provided in Bye-law 24.1(e)).

 

24.5                         Notwithstanding anything in this Bye-law 24 or otherwise in these Bye-laws to the contrary, this Bye-law 24 shall not apply to any nomination of any individual pursuant to the Shareholders Agreement.

 

25.                                Postponement or Cancellation of General Meeting

 

The Secretary may, and on instruction from the Chairman or the Principal Executive Officer shall, postpone or cancel any general meeting called in accordance with these Bye-laws (other than a meeting requisitioned under these Bye-laws) provided that notice of postponement or cancellation is given to each Member before the time for such meeting.  Fresh notice of the date, time and place for the postponed or cancelled meeting shall be given to the Members in accordance with these Bye-laws.

 

26.                                Electronic Participation and Security at General Meetings

 

26.1                         Members may participate in any general meeting by such telephonic, electronic or other communications facilities or means as permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously, and participation in such a meeting shall constitute presence in person at such meeting.

 

26.2                         The Board may, and at any general meeting, the chairman of such meeting may make any arrangement and impose any requirement or restriction it or he considers appropriate to ensure the security of a general meeting including, without limitation, requirements for evidence of identity to be produced by those attending the meeting, the searching of their personal property and the restriction of items that may be taken into

 

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the meeting place. The Board and, at any general meeting, the chairman of such meeting are entitled to refuse entry to a person who refuses to comply with any such arrangements, requirements or restrictions.

 

27.                                Quorum at General Meetings

 

27.1                         At any general meeting two or more persons present at the start of the meeting and representing in person or by proxy in excess of 50% of the total issued voting shares in the Company shall form a quorum for the transaction of business.

 

27.2                         If within half an hour from the time appointed for the meeting a quorum is not present, then, in the case of a meeting convened on a requisition, the meeting shall be deemed cancelled and, in any other case, the meeting shall stand adjourned to the same day one week later, at the same time and place or to such other day, time or place as the Secretary may determine. Unless the meeting is adjourned to a specific date, place and time announced at the meeting being adjourned, fresh notice of the date, place and time for the resumption of the adjourned meeting shall be given to each Member entitled to attend and vote thereat in accordance with these Bye-laws.

 

28.                                Chairman to Preside at General Meetings

 

Unless otherwise agreed by a majority of those attending and entitled to vote thereat, the Chairman, if there be one, and if not the Principal Executive Officer, if there be one, shall act as chairman at all general meetings at which such person is present. In their absence, a chairman shall be appointed or elected by those present at the meeting and entitled to vote.

 

29.                                Voting on Resolutions

 

29.1                         Subject to the Act and these Bye-laws, any question proposed for the consideration of the Members at any general meeting shall be decided by the affirmative votes of a majority of the votes cast in accordance with these Bye-laws and in the case of an equality of votes the resolution shall fail.

 

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29.2                         No Member shall be entitled to vote at a general meeting unless such Member has paid all the calls on all shares held by such Member.

 

29.3                         At any general meeting a resolution put to the vote of the meeting shall, in the first instance, be voted upon by a show of hands and, subject to these Bye-laws and any rights or restrictions for the time being lawfully attached to any class of shares, every Member present in person and every person holding a valid proxy at such meeting shall be entitled to one vote and shall cast such vote by raising his hand.

 

29.4                         In the event that a Member participates in a general meeting by telephone, electronic or other communications facilities or means, the chairman of the meeting shall direct the manner in which such Member may cast his vote on a show of hands.

 

29.5                         At any general meeting if an amendment is proposed to any resolution under consideration and the chairman of the meeting rules on whether or not the proposed amendment is out of order, the proceedings on the substantive resolution shall not be invalidated by any error in such ruling.

 

29.6                         At any general meeting a declaration by the chairman of the meeting that a question proposed for consideration has, on a show of hands, been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in a book containing the minutes of the proceedings of the Company shall, subject to these Bye-laws, be conclusive evidence of that fact.

 

30.                                Power to Demand a Vote on a Poll

 

30.1                         Notwithstanding the foregoing, a poll may be demanded by any of the following persons:

 

(a)                                  the chairman of such meeting; or

 

(b)                                  at least three Members present in person or represented by proxy; or

 

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(c)                                   any Member or Members present in person or represented by proxy and holding between them not less than one-tenth of the total voting rights of all the Members having the right to vote at such meeting; or

 

(d)                                  any Member or Members present in person or represented by proxy holding shares in the Company conferring the right to vote at such meeting, being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total amount paid up on all such shares conferring such right.

 

30.2                         Where a poll is demanded, subject to any rights or restrictions for the time being lawfully attached to any class of shares, every person present at such meeting shall have one vote for each share of which such person is the holder or for which such person holds a proxy (subject to any adjustments or eliminations of voting power of any shares pursuant to Bye-laws 33 and 34) and such vote shall be counted by ballot as described herein, or in the case of a general meeting at which one or more Members are present by telephone, electronic or other communications facilities or means, in such manner as the chairman of the meeting may direct and the result of such poll shall be deemed to be the resolution of the meeting at which the poll was demanded and shall replace any previous resolution upon the same matter which has been the subject of a show of hands.  A person entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way.

 

30.3                         A poll demanded for the purpose of electing a chairman of the meeting or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken at such time and in such manner during such meeting as the chairman (or acting chairman) of the meeting may direct. Any business other than that upon which a poll has been demanded may be conducted pending the taking of the poll.

 

30.4                         Where a vote is taken by poll, each person physically present and entitled to vote shall be furnished with a ballot paper on which such person shall record his vote in such manner as shall be determined at the meeting having regard to the nature of the

 

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question on which the vote is taken.  Each ballot paper shall be signed or initialled or otherwise marked so as to identify the voter and the registered holder in the case of a proxy.  Each person present by telephone, electronic or other communications facilities or means shall cast his vote in such manner as the chairman shall direct.  At the conclusion of the poll, the ballot papers and votes cast in accordance with such directions shall be examined and counted by a committee of not less than two Members or proxy holders appointed by the chairman for the purpose.  The result of the poll shall be declared by the chairman.

 

31.                                Voting by Joint Holders of Shares

 

In the case of joint holders, the vote of the senior who tenders a vote (whether in person or by proxy) shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the Register of Members.

 

32.                                Votes of Members — General

 

Subject to the provisions of Bye-laws 33 and 34 below, and subject to any rights and restrictions for the time being attached to any class or classes or series of shares, every Member shall have one vote for each share carrying the right to vote on the matter in question of which he is the holder. Notwithstanding any other provisions of these Bye-laws, all determinations in these Bye-laws that are made by or subject to a vote or approval of Members shall be based upon the voting power of such Members’ shares as determined pursuant to Bye-laws 33 and 34.

 

33.                                Adjustment of Voting Power

 

33.1                         Notwithstanding any other provision of these Bye-laws, the voting power of all shares is hereby adjusted (and shall be automatically adjusted in the future) to the extent necessary so that there is no 9.5% U.S. Member.  The Board shall implement the foregoing in the manner provided herein, provided, however, that the foregoing provision and the remainder of this Bye-law 33 shall not apply in the event that one Member, other than a person described in clause (ii) of the definition of 9.5% Excluded

 

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U.S. Member, owns greater than seventy-five percent (75%) of the voting power of the issued shares of the Company determined without applying the voting power adjustments or eliminations under Bye-laws 33 and 34.

 

33.2                         The Board shall from time to time, including prior to any time at which a vote of Members is taken, take all reasonable steps necessary to ascertain, including those specified in Bye-law 37, through communications with Members or otherwise, whether there exists, or will exist at the time any vote of Members is taken, a Tentative 9.5% U.S. Member.

 

33.3                         In the event that a Tentative 9.5% U.S. Member exists, the aggregate votes conferred by shares held by a Member and treated as Controlled Shares of that Tentative 9.5% U.S. Member shall be reduced to the extent necessary such that the Controlled Shares of the Tentative 9.5% U.S. Member will constitute less than nine and one-half percent (9.5%) of the voting power of all issued and outstanding shares.  In applying the previous sentence where shares held by more than one Member are treated as Controlled Shares of such Tentative 9.5% U.S. Member, the reduction in votes shall apply to such Members in descending order according to their respective Attribution Percentages, provided that, in the event of a tie, the reduction shall apply pro rata to such Members based on the voting power of the shares held by each such Member.  The votes of Members owning no shares treated as Controlled Shares of any Tentative 9.5% U.S. Member shall, in the aggregate, be increased by the same number of votes subject to reduction as described above, provided, however, that no shares shall be conferred votes to the extent that doing so will cause any person to be treated as a 9.5% U.S. Member.  Such increase shall be apportioned to all such Members in proportion to their voting power at that time, provided, that such increase shall be limited to the extent necessary to avoid causing any person to be a 9.5% U.S. Member.  The adjustments of voting power described in this Bye-law shall apply repeatedly until there is no 9.5% U.S. Member.  The Board may deviate from any of the principles described in this Bye-law and determine that shares held by a Member shall carry different voting rights as it reasonably

 

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determines, based on the advice of counsel, to be appropriate (1) to avoid the existence of any 9.5% U.S. Member or (2) to avoid adverse tax, legal or regulatory consequences to the Company, any subsidiary of the Company, or any direct or indirect holder of shares or its affiliates; provided, however, that the Board will use reasonable efforts to afford equal treatment to similarly situated Members to the extent possible under the circumstances.  For the avoidance of doubt, in applying the provisions of Bye-laws 33 and 34, a share may carry a fraction of a vote.

 

34.                                Other Adjustments of Voting Power

 

In addition to the provisions of Bye-law 33, any shares shall not carry any right to vote to the extent that the Board determines, based on the advice of counsel, that it is necessary that such shares should not carry the right to vote in order to avoid adverse tax, legal or regulatory consequences to the Company, any subsidiary of the Company, or any other direct or indirect holder of shares or its affiliates, provided that no adjustment pursuant to this sentence shall cause any person to become a 9.5% U.S. Member; and provided, further, that the Board will use reasonable efforts to afford equal treatment to similarly situated Members to the extent possible under the circumstances.

 

35.                                Notice

 

Prior to the meeting at which Members shall vote on any matter (or prior to any vote in the case of notification to Members specified in item (3) of this Bye-law 35), the Board may, in its sole discretion, (1) retain the services of an internationally recognized accounting firm or organization with comparable professional capabilities in order to assist the Company in applying the principles of Bye-laws 33 and 34, (2) obtain from such firm or organization a statement describing the information obtained and procedures followed and setting forth the determinations made with respect to Bye-laws 33 and 34, and (3) notify in writing or orally each Member of the voting power conferred by its shares determined in accordance with Bye-laws 33 and 34.  For the avoidance of doubt, any failure by the Board to take any of the actions described in this Bye-law 35 shall not invalidate any votes cast or the proceedings at the meeting.

 

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36.                                Board Determination Binding

 

Any determination by the Board as to any adjustments or eliminations of voting power of any shares made pursuant to Bye-laws 33 and 34 shall be final and binding and any vote taken based on such determination shall not be capable of being challenged solely on the basis of such determination.

 

37.                                Requirement to Provide Information and Notice

 

37.1                         The Board shall have the authority to request from any direct or indirect holder of shares, and such holder of shares shall provide, such information as the Board may reasonably request for the purpose of determining whether any holder’s voting rights are to be adjusted.  If such holder fails to respond to such a request, or submits incomplete or inaccurate information in response to such a request, the Board may determine in its sole discretion that such holder’s shares shall carry no voting rights in which case such holder shall not exercise any voting rights in respect of such shares until otherwise determined by the Board.

 

37.2                         Any direct or indirect holder of shares shall give notice to the Company within ten days following the date that such holder acquires actual knowledge that it is the direct or indirect holder of Controlled Shares of nine and one-half percent (9.5%) or more of the voting power of all issued shares of the Company (without giving effect to voting power adjustments or eliminations under Bye-law 33.

 

37.3                         Notwithstanding the foregoing, no Member shall be liable to any other Member or the Company for any losses or damages resulting from such Member’s failure to respond to, or submission of incomplete or inaccurate information in response to, a request under Bye-law 37.1 or from such Member’s failure to give notice under Bye-law 37.2.

 

37.4                         Any information provided by any Member to the Company pursuant to this Bye-law 37 or for purposes of making the analysis required by Bye-laws 33 and 34, shall be deemed “confidential information” (the “Confidential Information”) and shall be used by the Company solely for the purposes contemplated by such Bye-law (except as may be

 

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required otherwise by applicable law or regulation). The Company shall hold such Confidential Information in strict confidence and shall not disclose any Confidential Information that it receives without the consent of the Member, except (i) to the U.S. Internal Revenue Service (the “Service”) if and to the extent the Confidential Information is required by the Service, (ii) to any outside legal counsel or accounting firm engaged by the Company to make determinations regarding the relevant Bye-law or (iii) as otherwise required by applicable law or regulation or upon consent.

 

37.5                         For the avoidance of doubt, the Company shall be permitted to disclose to the Members and others the relative voting percentages of all Members after application of Bye-law 33.  At the written request of a Member, the Confidential Information of such Member shall be destroyed or returned to such Member after the later to occur of (i) such Member no longer being a Member or (ii) the expiration of the applicable statute of limitations with respect to any Confidential Information obtained for purposes of engaging in any tax-related analysis.

 

38.                                Instrument of Proxy

 

38.1                         A Member may appoint a proxy by (a) an instrument appointing a proxy in writing in substantially the following form or such other form as the Board may determine from time to time:

 

Proxy

 

Axovant Sciences Ltd. (the “Company”)

 

I/We, [insert names here], being a Member of the Company with [number] shares, HEREBY APPOINT [name] of [address] or failing him, [name] of [address] to be my/our proxy to vote for me/us at the meeting of the Members to be held on the [ ] day of [ ], 20[ ] and at any adjournment thereof.  (Any restrictions on voting to be inserted here.)

 

Signed this [ ] day of [ ], 20[ ]

 

 

 

 

 

 

 

Member(s)

 

 

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or (b) such telephonic, electronic or other means as may be approved by the Board from time to time.

 

38.2                         The appointment of a proxy must be received by the Company at the registered office or at such other place or in such manner as is specified in the notice convening the meeting or in any instrument of proxy sent out by the Company in relation to the meeting at which the person named in the appointment proposes to vote, and an appointment of proxy which is not received in the manner so permitted shall be invalid.

 

38.3                         A Member who is the holder of two or more shares may appoint more than one proxy to represent him and vote on his behalf in respect of different shares.

 

38.4                         The decision of the chairman of any general meeting as to the validity of any appointment of a proxy shall be final.

 

39.                                Representation of Corporate Member

 

39.1                         A corporation which is a Member may, by written instrument, authorise such person or persons as it thinks fit to act as its representative at any meeting and any person so authorised shall be entitled to exercise the same powers on behalf of the corporation which such person represents as that corporation could exercise if it were an individual Member, and that Member shall be deemed to be present in person at any such meeting attended by its authorised representative or representatives.

 

39.2                         Notwithstanding the foregoing, the chairman of the meeting may accept such assurances as he thinks fit as to the right of any person to attend and vote at general meetings on behalf of a corporation which is a Member.

 

40.                                Adjournment of General Meeting

 

40.1                         The chairman of any general meeting at which a quorum is present may with the consent of Members holding a majority of the voting rights of those Members present in person or by proxy (and shall if so directed by Members holding a majority of the voting rights of those Members present in person or by proxy), adjourn the meeting.

 

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40.2                         In addition, the chairman may adjourn the meeting to another time and place without such consent or direction if it appears to him that:

 

(a)                                  it is likely to be impracticable to hold or continue that meeting because of the number of Members wishing to attend who are not present; or

 

(b)                                  the unruly conduct of persons attending the meeting prevents, or is likely to prevent, the orderly continuation of the business of the meeting; or

 

(c)                                   an adjournment is otherwise necessary so that the business of the meeting may be properly conducted.

 

40.3                         Unless the meeting is adjourned to a specific date, place and time announced at the meeting being adjourned, fresh notice of the date, place and time for the resumption of the adjourned meeting shall be given to each Member entitled to attend and vote thereat in accordance with these Bye-laws.

 

41.                                Written Resolutions

 

41.1                         Subject to these Bye-laws anything which may be done by resolution of the Company in general meeting or by resolution of a meeting of any class of the Members may, without a meeting be done by written resolution in accordance with this Bye-law.

 

41.2                         Notice of a written resolution shall be given, and a copy of the resolution shall be circulated to all Members who would be entitled to attend a meeting and vote thereon.  The accidental omission to give notice to, or the non-receipt of a notice by, any Member does not invalidate the passing of a resolution.

 

41.3                         A written resolution is passed when it is signed by, or in the case of a Member that is a corporation on behalf of, the Members who at the date that the notice is given represent such majority of votes as would be required if the resolution was voted on at a meeting of Members at which all Members entitled to attend and vote thereat were present and voting.

 

41.4                         A resolution in writing may be signed by any number of counterparts.

 

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41.5                         A resolution in writing made in accordance with this Bye-law is as valid as if it had been passed by the Company in general meeting or by a meeting of the relevant class of Members, as the case may be (provided that (i) any such resolution shall be valid only if the signature of the last Member to sign is affixed outside the United States (unless the Board dispenses with this requirement), and (ii) the Board may declare such resolution to be invalid if the Board determines that the use of a resolution in writing would result in a non-de minimis adverse tax, regulatory or legal consequence to the Company, any subsidiary of the Company, or any direct or indirect holder of shares or its affiliates), and any reference in any Bye-law to a meeting at which a resolution is passed or to Members voting in favour of a resolution shall be construed accordingly.

 

41.6                         A resolution in writing made in accordance with this Bye-law shall constitute minutes for the purposes of the Act.

 

41.7                         This Bye-law shall not apply to:

 

(a)                                  a resolution passed to remove an Auditor from office before the expiration of his term of office; or

 

(b)                                  a resolution passed for the purpose of removing a Director before the expiration of his term of office.

 

41.8                         For the purposes of this Bye-law, the effective date of the resolution is the date when the resolution is signed by, or in the case of a Member that is a corporation whether or not a company within the meaning of the Act, on behalf of, the last Member whose signature results in the necessary voting majority being achieved and any reference in any Bye-law to the date of passing of a resolution is, in relation to a resolution made in accordance with this Bye-law, a reference to such date.

 

42.                                Directors Attendance at General Meetings

 

The Directors shall be entitled to receive notice of, attend and be heard at any general meeting.

 

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DIRECTORS AND OFFICERS

 

43.                                Election of Directors

 

43.1                         The Board shall consist of such number of Directors being not less than two (2) Directors and such number in excess as the Board may from time to time determine.

 

43.2                         Only persons who are proposed or nominated in accordance with Bye-law 24 shall be eligible for election as Directors.

 

43.3                         Where the number of persons validly proposed for re-election or election as a Director is greater than the number of Directors to be elected, the persons receiving the most votes (up to the number of Directors to be elected) shall be elected as Directors, and an absolute majority of the votes cast shall not be a prerequisite to the election of such Directors.

 

43.4                         At any general meeting the Members may authorise the Board to fill any vacancy in their number left unfilled at a general meeting.

 

44.                                Classes of Directors

 

The Directors shall be divided into three classes designated Class I, Class II, and Class III. Each class of Directors shall consist, as nearly as possible, of one third of the total number of Directors constituting the entire Board.

 

45.                                Term of Office of Directors

 

The Class I Directors shall initially hold office for a one year term, the Class II Directors shall initially hold office for a two year term and the Class III Directors shall initially hold office for a three year term. At each succeeding annual general meeting, successors to the class of Directors whose term expires at that annual general meeting shall be elected for a three year term. If the number of Directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of Directors in each class as nearly equal as possible, and any Director of any class elected to fill a vacancy shall hold office for a term that shall coincide with the remaining term of the other Directors of that class, but in no case shall a decrease in the number of Directors shorten the term of any Director then in office.  A Director shall hold office

 

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until the annual general meeting for the year in which his term expires, subject to his office being vacated pursuant to Bye-law 48.

 

46.                                Alternate Directors

 

46.1                         At any general meeting, the Members may elect a person or persons to act as a Director in the alternative to any one or more Directors or may authorise the Board to appoint such Alternate Directors.

 

46.2                         Unless the Members otherwise resolve, any Director may appoint a person or persons to act as a Director in the alternative to himself by notice deposited with the Secretary.  Any person so elected or appointed shall have all the rights and powers of the Director or Directors for whom such person is appointed in the alternative provided that such person shall not be counted more than once in determining whether or not a quorum is present.

 

46.3                         An Alternate Director shall be entitled to receive notice of all meetings of the Board and to attend and vote at any such meeting at which a Director for whom such Alternate Director was appointed in the alternative is not personally present and generally to perform at such meeting all the functions of such Director for whom such Alternate Director was appointed.

 

46.4                         An Alternate Director shall cease to be such if the Director for whom he was appointed to act as a Director in the alternative ceases for any reason to be a Director, but he may be re-appointed by the Board as an alternate to the person appointed to fill the vacancy in accordance with these Bye-laws.

 

47.                                Removal of Directors

 

47.1                         Subject to any provision to the contrary in these Bye-laws, the Members holding a majority of the issued and outstanding shares of the Company may, at any special general meeting convened and held in accordance with these Bye-laws, by the affirmative vote of all such Members, remove a Director, only with cause, provided that

 

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the notice of any such meeting convened for the purpose of removing a Director shall contain a statement of the intention so to do and be served on such Director not less than 14 days before the meeting and at such meeting the Director shall be entitled to be heard on the motion for such Director’s removal.

 

47.2                         If a Director is removed from the Board under the provisions of this Bye-law the Members may fill the vacancy at the meeting at which such Director is removed and a Director so appointed shall hold office in the same class of Directors as the removed Director held until the next annual general meeting or until such Director’s office is otherwise vacated. In the absence of such election or appointment, the Board may fill the vacancy.

 

47.3                         For the purpose of Bye-law 47.1, “cause” shall mean a conviction for a criminal offence involving dishonesty or engaging in conduct which brings the Director or the Company into disrepute and which results in material financial detriment to the Company.

 

48.                                Vacancy in the Office of Director

 

48.1                         The office of Director shall be vacated if the Director:

 

(a)                                  is removed from office pursuant to these Bye-laws or is prohibited from being a Director by law;

 

(b)                                  is or becomes bankrupt, or makes any arrangement or composition with his creditors generally;

 

(c)                                   is or becomes of unsound mind or dies; or

 

(a)                                  resigns his office by notice to the Company.

 

48.2                         The Members in general meeting or the Board shall have the power to appoint any person as a Director to fill a vacancy on the Board occurring as a result of the death, disability, disqualification or resignation of any Director or as a result of an increase in the size of the Board and to appoint an Alternate Director to any Director so appointed.

 

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49.                                Remuneration of Directors

 

The remuneration (if any) of the Directors shall be determined by the Board or a committee thereof  and shall be deemed to accrue from day to day.  The Directors may also be paid all travel, hotel and other expenses properly incurred by them  in attending and returning from the meetings of the Board, any committee appointed by the Board, general meetings, or in connection with the business of the Company or their duties as Directors generally.

 

50.                                Defect in Appointment

 

All acts done in good faith by the Board, any Director, a member of a committee appointed by the Board, any person to whom the Board may have delegated any of its powers shall, or any person acting as a Director shall, notwithstanding that it be afterwards discovered that there was some defect in the appointment of any Director or person acting as aforesaid, or that he was, or any of them were, disqualified, be as valid as if every such person had been duly appointed and was qualified to be a Director or act in the relevant capacity.

 

51.                                Directors to Manage Business

 

The business of the Company shall be managed and conducted by the Board.  In managing the business of the Company, the Board may exercise all such powers of the Company as are not, by the Act or by these Bye-laws, required to be exercised by the Company in general meeting.

 

52.                                Powers of the Board of Directors

 

The Board may:

 

(a)                                  appoint, suspend, or remove any manager, secretary, clerk, agent or employee of the Company and may fix their remuneration and determine their duties;

 

(b)                                  exercise all the powers of the Company to borrow money and to mortgage or charge or otherwise grant a security interest in its undertaking, property and uncalled capital, or any part thereof, and may issue debentures, debenture stock and other securities whether outright or as security for any debt, liability or obligation of the Company or any third party;

 

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(c)                                   appoint one or more Directors to the office of managing director or Principal Executive Officer of the Company, who shall, subject to the control of the Board, supervise and administer all of the general business and affairs of the Company;

 

(d)                                  appoint a person to act as manager of the Company’s day-to-day business and may entrust to and confer upon such manager such powers and duties as it deems appropriate for the transaction or conduct of such business;

 

(e)                                   by power of attorney, appoint any company, firm, person or body of persons, whether nominated directly or indirectly by the Board, to be an attorney of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Board) and for such period and subject to such conditions as it may think fit and any such power of attorney may contain such provisions for the protection and convenience of persons dealing with any such attorney as the Board may think fit and may also authorise any such attorney to sub-delegate all or any of the powers, authorities and discretions so vested in the attorney;

 

(f)                                    procure that the Company pays all expenses incurred in promoting and incorporating the Company and listing the shares of the Company;

 

(g)                                   delegate any of its powers (including the power to sub-delegate) to a committee of one or more persons appointed by the Board which may consist partly or entirely of non-Directors, provided that every such committee shall conform to such directions as the Board shall impose on them and provided further that the meetings and proceedings of any such committee shall be governed by these Bye-laws regulating the meetings and proceedings of the Board, so far as the same are applicable and are not superseded by directions imposed by the Board;

 

(h)                                  delegate any of its powers (including the power to sub-delegate) to any person on such terms and in such manner as the Board may see fit;

 

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(i)                                      present any petition and make any application in connection with the liquidation or reorganisation of the Company;

 

(j)                                     in connection with the issue of any share, pay such commission and brokerage as may be permitted by law; and

 

(k)                                  authorise any company, firm, person or body of persons to act on behalf of the Company for any specific purpose and in connection therewith to execute any deed, agreement, document or instrument on behalf of the Company.

 

53.                                Register of Directors and Officers

 

The Board shall cause to be kept in one or more books at the registered office of the Company a Register of Directors and Officers and shall enter therein the particulars required by the Act.

 

54.                                Appointment of Officers

 

The Board may appoint such officers (who may or may not be Directors) as the Board may determine for such terms as the Board deems fit.

 

55.                                Appointment of Secretary

 

The Secretary shall be appointed by the Board from time to time for such terms as the Board deems fit.

 

56.                                Duties of Officers

 

The Officers shall have such powers and perform such duties in the management, business and affairs of the Company as may be delegated to them by the Board from time to time.

 

57.                                Remuneration of Officers

 

The Officers shall receive such remuneration as the Board may determine.

 

58.                                Conflicts of Interest

 

58.1                         Any Director, or any Director’s firm, partner or any company with whom any Director is associated, may act in any capacity for, be employed by or render services to the Company and such Director or such Director’s firm, partner or company shall be

 

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entitled to remuneration as if such Director were not a Director. Nothing herein contained shall authorise a Director or Director’s firm, partner or company to act as Auditor to the Company.

 

58.2                         If a Director or an immediate family member of a Director is directly or indirectly interested in a contract or proposed contract or arrangement with the Company such Director shall declare the nature of such interest as required by the Act.

 

58.3                         Following a declaration being made pursuant to this Bye-law, a Director may not vote in respect of a contract or proposed contract or arrangement in which such Director is interested, and may not be counted in the quorum for such meeting, unless the chairman of the relevant Board meeting determines that such Director is not disqualified from voting.  For the avoidance of doubt, no Director or immediate family member shall be considered “interested” with respect to any transaction in which all of the Members participate or are offered to participate.  The chairman of a Board meeting may require a Director to leave the meeting to enable the Board to discuss and/or vote on a matter in which the chairman considers the Director or an immediate family member of the Director to be interested.  If a majority in number of the Directors in attendance at a Board meeting considers the chairman of the meeting or an immediate family member of the chairman to be interested in a particular matter, they may require the chairman to leave the meeting to enable the Board to discuss and/or vote on such matter.

 

58.4                         For the purpose of this Bye-law 58, “immediate family member” means, in relation to a Director, his child, step-child, parent, step-parent, spouse, civil partner, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-law or any person (other than a tenant or employee) sharing the household of the Director.

 

59.                                Indemnification and Exculpation of Directors and Officers

 

59.1                         The Directors, Resident Representative, Secretary and other Officers (such term to include any person appointed to any committee by the Board) acting in relation to any

 

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of the affairs of the Company or any subsidiary thereof and the liquidator or trustees (if any) acting in relation to any of the affairs of the Company or any subsidiary thereof and every one of them (whether for the time being or formerly), and their heirs, executors and administrators (each of which an “indemnified party”), shall be indemnified and secured harmless out of the assets of the Company from and against all actions, costs, charges, losses, damages and expenses which they or any of them, their heirs, executors or administrators, shall or may incur or sustain by or by reason of any act done, concurred in or omitted in or about the execution of their duty, or supposed duty, or in their respective offices or trusts, and no indemnified party shall be answerable for the acts, receipts, neglects or defaults of the others of them or for joining in any receipts for the sake of conformity, or for any bankers or other persons with whom any moneys or effects belonging to the Company shall or may be lodged or deposited for safe custody, or for insufficiency or deficiency of any security upon which any moneys of or belonging to the Company shall be placed out on or invested, or for any other loss, misfortune or damage which may happen in the execution of their respective offices or trusts, or in relation thereto, PROVIDED THAT this indemnity shall not extend to any matter in respect of any fraud or dishonesty to the extent prohibited by the Act in relation to the Company which may attach to any of the indemnified parties.  Each Member agrees to waive any claim or right of action such Member might have, whether individually or by or in the right of the Company, against any Director or Officer on account of any action taken by such Director or Officer, or the failure of such Director or Officer to take any action in the performance of his duties with or for the Company or any subsidiary thereof, PROVIDED THAT such waiver shall not extend to any matter in respect of any fraud or dishonesty in relation to the Company which may attach to such Director or Officer.

 

59.2                         The Company may purchase and maintain insurance for the benefit of any Director or Officer against any liability incurred by him under the Act in his capacity as a Director or Officer or indemnifying such Director or Officer in respect of any loss arising or

 

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liability attaching to him by virtue of any rule of law in respect of any negligence, default, breach of duty or breach of trust of which the Director or Officer may be guilty in relation to the Company or any subsidiary thereof.

 

59.3                         The Company may advance moneys to a Director or Officer for the costs, charges and expenses incurred by the Director or Officer in defending any civil or criminal proceedings against him, on condition that the Director or Officer shall repay the advance if any allegation of fraud or dishonesty in relation to the Company is proved against him.

 

59.4                         No amendment or repeal of any provision of this Bye-law 59 shall alter, to the detriment of any Person, the right of such Person to the indemnification or advancement of expenses related to a claim based on an act or failure to act which took place prior to such amendments.

 

MEETINGS OF THE BOARD OF DIRECTORS

 

60.                                Board Meetings

 

The Board may meet for the transaction of business, adjourn, and otherwise regulate its meetings as it sees fit. A resolution put to the vote at a meeting of the Board shall be carried by the affirmative votes of a majority of the votes cast and in the case of an equality of votes the resolution shall fail.

 

61.                                Notice of Board Meetings

 

The Chairman or a majority of the Directors then in office may, and the Secretary on the requisition of a Director shall, at any time summon a meeting of the Board. Notice of a meeting of the Board shall be deemed to be duly given to a Director if it is given to such Director verbally (including in person or by telephone) or otherwise communicated or sent to such Director by post, electronic means or other mode of representing words in a visible form at such Director’s last known address or in accordance with any other instructions given by such Director to the Company for this purpose at least 48 hours prior to such Board meeting, unless

 

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each Director attends or gives his prior written consent to the meeting being held on such shorter notice.

 

62.                                Electronic Participation in Meetings

 

Directors may participate in any meeting by such telephonic, electronic, or other communications facilities or means as permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously, and participation in such a meeting shall constitute presence in person at such meeting.

 

63.                                Quorum at Board Meetings

 

The quorum necessary for the transaction of business at a meeting of the Board shall be a majority of the Directors then in office.

 

64.                                Board to Continue in the Event of Vacancy

 

The Board may act notwithstanding any vacancy in its number but, if and so long as its number is reduced below the number fixed by these Bye-laws as the quorum necessary for the transaction of business at meetings of the Board, the continuing Directors or Director may act for the purpose of (i) summoning a general meeting; or (ii) preserving the assets of the Company.

 

65.                                Chairman to Preside

 

Unless otherwise agreed by a majority of the Directors attending , the Chairman, if there be one, shall act as chairman at all meetings of the Board at which such person is present. In his absence a chairman shall be appointed or elected by the Directors present at the meeting.

 

66.                                Written Resolutions

 

A resolution signed by all the Directors, which may be in counterparts, shall be as valid as if it had been passed at a meeting of the Board duly called and constituted, such resolution to be effective on the date on which the last Director signs the resolution , provided, that (i) any such resolution shall be valid only if the signature of the last Director to sign is affixed outside the United States (unless the Board dispenses with this requirement), and (ii) the Board may declare

 

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such resolution to be invalid if the Board determines that the use of a resolution in writing would result in a non-de minimis adverse tax, regulatory or legal consequence to the Company, any subsidiary of the Company, or any direct or indirect holder of shares or its affiliates .  For the purposes of this Bye-law only, “the Directors” shall not include an Alternate Director.

 

67.                                Validity of Prior Acts of the Board

 

No regulation or alteration to these Bye-laws made by the Company in general meeting shall invalidate any prior act of the Board which would have been valid if that regulation or alteration had not been made.

 

CORPORATE RECORDS

 

68.                                Minutes

 

The Board shall cause minutes to be duly entered in books provided for the purpose:

 

(a)                                  of all elections and appointments of Officers;

 

(b)                                  of the names of the Directors present at each meeting of the Board and of any committee appointed by the Board; and

 

(c)                                   of all resolutions and proceedings of general meetings of the Members, meetings of the Board, and meetings of committees appointed by the Board.

 

69.                                Place Where Corporate Records Kept

 

Minutes prepared in accordance with the Act and these Bye-laws shall be kept by the Secretary at the registered office of the Company.

 

70.                                Form and Use of Seal

 

70.1                         The Company may adopt a seal in such form as the Board may determine.  The Board may adopt one or more duplicate seals for use in or outside Bermuda.

 

70.2                         A seal may, but need not be affixed to any deed, instrument, share certificate or document, and if the seal is to be affixed thereto, it shall be attested by the signature of

 

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(i) any Director; or (ii) any Officer; or (iii) the Secretary; or (iv) any person authorized by the Board for that purpose.

 

70.3                         A Resident Representative may, but need not, affix the seal of the Company to certify the authenticity of any copies of documents.

 

ACCOUNTS

 

71.                                Books of Account

 

71.1                         The Board shall cause to be kept proper records of account with respect to all transactions of the Company and in particular with respect to:

 

(a)                                  all sums of money received and expended by the Company and the matters in respect of which the receipt and expenditure relates;

 

(b)                                  all sales and purchases of goods by the Company; and

 

(c)                                   all assets and liabilities of the Company.

 

71.2                         Such records of account shall be kept at the registered office of the Company, or subject to the Act, at such other place as the Board thinks fit and shall be available for inspection by the Directors during normal business hours.

 

72.                                Financial Year End

 

The financial year end of the Company may be determined by resolution of the Board and failing such resolution shall be 31 st  March in each year.

 

AUDITS

 

73.                                Annual Audit

 

Subject to any rights to waive laying of accounts or appointment of an Auditor pursuant to the Act, the accounts of the Company shall be audited at least once in every year.

 

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74.                                Appointment of Auditor

 

74.1                         Subject to the Act, the Members shall appoint an auditor to the Company to hold office for such term as the Members deem fit until a successor is appointed.

 

74.2                         The Auditor may be a Member but no Director, Officer or employee of the Company shall, during his continuance in office, be eligible to act as an Auditor of the Company.

 

75.                                Remuneration of Auditor

 

The remuneration of the Auditor shall be fixed by the Company in general meeting or in such manner as the Members may determine. In the case of an Auditor appointed pursuant to Bye-law 82, the remuneration of the Auditor shall be fixed by the Board.

 

76.                                Duties of Auditor

 

76.1                         The financial statements provided for by these Bye-laws shall be audited by the Auditor in accordance with generally accepted auditing standards. The Auditor shall make a written report thereon in accordance with generally accepted auditing standards.

 

76.2                         The generally accepted auditing standards referred to in this Bye-law may be those of a country or jurisdiction other than Bermuda or such other generally accepted auditing standards as may be provided for in the Act. If so, the financial statements and the report of the Auditor shall identify the generally accepted auditing standards used.

 

77.                                Access to Records

 

The Auditor shall at all reasonable times have access to all books kept by the Company and to all accounts and vouchers relating thereto, and the Auditor may call on the Directors or Officers of the Company for any information in their possession relating to the books or affairs of the Company.

 

78.                                Financial Statements

 

Subject to any rights to waive laying of accounts pursuant to the Act, financial statements as required by the Act shall be laid before the Members in general meeting. A resolution in writing

 

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made in accordance with Bye-law 41 receiving, accepting, adopting, approving or otherwise acknowledging financial statements shall be deemed to be the laying of such statements before the Members in general meeting.

 

79.                                Distribution of Auditor’s report

 

The report of the Auditor shall be submitted to the Members in general meeting.

 

80.                                Vacancy in the Office of Auditor

 

If the office of Auditor becomes vacant by the resignation or death or the Auditor, or by the Auditor becoming incapable of acting by reason of illness or other disability at a time when the Auditor’s services are required, the vacancy thereby created shall be filled in accordance with the Act.

 

BUSINESS COMBINATIONS

 

81.                                Business Combinations

 

83.1                         (a)                                  Any Business Combination with any Interested Shareholder within a period of three years following the time of the transaction in which the person become an Interested Shareholder must be approved by the Board and authorised at an annual or special general meeting, by the affirmative vote of at least 66 and 2/3% of the issued and outstanding voting shares of the Company that are not owned by the Interested Shareholder unless:

 

(i)                                      prior to the time that the person became an Interested Shareholder, the Board approved either the Business Combination or the transaction which resulted in the person becoming an Interested Shareholder; or

 

(ii)                                   upon consummation of the transaction which resulted in the person becoming an Interested Shareholder, the Interested Shareholder owned at least 85% of the number of issued and outstanding voting shares of the Company at the time the transaction commenced, excluding for the purposes of determining the number of shares issued and outstanding

 

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those shares owned (i) by persons who are directors and also officers and (ii) employee share plans in which employee participants do not have the right to determine whether shares held subject to the plan will be tendered in a tender or exchange offer.

 

(b)                                  The restrictions contained in this Bye-law 81.1 shall not apply if:

 

(i)                                      a Member becomes an Interested Shareholder inadvertently and (i) as soon as practicable divests itself of ownership of sufficient shares so that the Member ceases to be an Interested Shareholder; and (ii) would not, at any time within the three-year period immediately prior to a Business Combination between the Company and such Member, have been an Interested Shareholder but for the inadvertent acquisition of ownership; or

 

(ii)                                   the Business Combination is proposed prior to the consummation or abandonment of, and subsequent to the earlier of the public announcement or the notice required hereunder of, a proposed transaction which (i) constitutes one of the transactions described in the following sentence; (ii) is with or by a person who either was not an Interested Shareholder during the previous three years or who became an Interested Shareholder with the approval of the Board; and (iii) is approved or not opposed by a majority of the members of the Board then in office who were Directors prior to any person becoming an Interested Shareholder during the previous three years or were recommended for election or elected to succeed such Directors by resolution of the Board approved by a majority of such Directors. The proposed transactions referred to in the preceding sentence are limited to:

 

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(a)                                  a merger, amalgamation or consolidation of the Company (except an amalgamation in respect of which, pursuant to the Act, no vote of the shareholders of the Company is required);

 

(b)                                  a sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), whether as part of a dissolution or otherwise, of assets of the Company or of any entity directly or indirectly wholly-owned or majority-owned by the Company (other than to the Company or any entity directly or indirectly wholly-owned by the Company) having an aggregate market value equal to 50% or more of either the aggregate market value of all of the assets of the Company determined on a consolidated basis or the aggregate market value of all the issued and outstanding shares of the Company; or

 

(c)                                   a proposed tender or exchange offer for 50% or more of the issued and outstanding voting shares of the Company.

 

The Company shall give not less than 20 days notice to all Interested Shareholders prior to the consummation of any of the transactions described in subparagraphs (a) or (b) of the second sentence of this paragraph (ii).

 

(c)                                   For the purpose of this Bye-law 81 only, the term:

 

(i)                                      “affiliate” means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, another person;

 

(ii)                                   “associate,” when used to indicate a relationship with any person, means: (i) any company, partnership, unincorporated association or other entity of which such person is a director, officer or partner or is, directly or indirectly, the owner of 20% or more of any class of voting shares; (ii) any trust or other estate in which such person has at least a 20% beneficial

 

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interest or as to which such person serves as trustee or in a similar fiduciary capacity; and (iii) any relative or spouse of such person, or any relative of such spouse, who has the same residence as such person;

 

(iii)                                “Business Combination,” when used in reference to the Company and any Interested Shareholder of the Company, means:

 

(a)                                  any merger, amalgamation or consolidation of the Company or any entity directly or indirectly wholly-owned or majority-owned by the Company, wherever incorporated, with (A) the Interested Shareholder or any of its affiliates, or (B) with any other company, partnership, unincorporated association or other entity if the merger, amalgamation or consolidation is caused by the Interested Shareholder;

 

(b)                                  any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), except proportionately as a shareholder of the Company, to or with the Interested Shareholder, whether as part of a dissolution or otherwise, of assets of the Company or of any entity directly or indirectly wholly-owned or majority-owned by the Company which assets have an aggregate market value equal to 10% or more of either the aggregate market value of all the assets of the Company determined on a consolidated basis or the aggregate market value of all the issued and outstanding shares of the Company;

 

(c)                                   any transaction which results in the issuance or transfer by the Company or by any entity directly or indirectly wholly-owned or majority-owned by the Company of any shares of the Company, or any share of such entity, to the Interested Shareholder, except:

 

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(A) pursuant to the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into shares of the Company, or shares of any such entity, which securities were issued and outstanding prior to the time that the Interested Shareholder became such; (B) pursuant to a dividend or distribution paid or made, or the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into shares of the Company, or shares of any such entity, which security is distributed, pro rata to all holders of a class or series of shares subsequent to the time the Interested Shareholder became such; (C) pursuant to an exchange offer by the Company to purchase shares made on the same terms to all holders of such shares; or (D) any issuance or transfer of shares by the Company; provided however, that in no case under items (B)-(D) of this subparagraph shall there be an increase in the Interested Shareholder’s proportionate share of the any class or series of shares;

 

(d)                                  any transaction involving the Company or any entity directly or indirectly wholly-owned or majority-owned by the Company which has the effect, directly or indirectly, of increasing the proportionate share of any class or series of shares, or securities convertible into any class or series of shares of the Company, or shares of any such entity, or securities convertible into such shares, which is owned by the Interested Shareholder, except as a result of immaterial changes due to fractional share adjustments or as a result of any repurchase or redemption of any shares not caused, directly or indirectly, by the Interested Shareholder; or

 

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(e)                                   any receipt by the Interested Shareholder of the benefit, directly or indirectly (except proportionately as a shareholder of the Company), of any loans, advances, guarantees, pledges or other financial benefits (other than those expressly permitted in subparagraphs (a)-(d) of this paragraph) provided by or through the Company or any entity directly or indirectly wholly-owned or majority-owned by the Company;

 

(iv)                               “control,” including the terms “controlling,” “controlled by” and “under common control with,” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting shares, by contract or otherwise. A person who is the owner of 20% or more of the issued and outstanding voting shares of any company, partnership, unincorporated association or other entity shall be presumed to have control of such entity, in the absence of proof by a preponderance of the evidence to the contrary; provided that notwithstanding the foregoing, such presumption of control shall not apply where such person holds voting shares, in good faith and not for the purpose of circumventing this provision, as an agent, bank, broker, nominee, custodian or trustee for one or more owners who do not individually or as a group have control of such entity;

 

(v)                                  “Interested Shareholder” means any person (other than the Company and any entity directly or indirectly wholly-owned or majority-owned by the Company) that (i) is the owner of 15% or more of the issued and outstanding voting shares of the Company, (ii) is an affiliate or associate of the Company and was the owner of 15% or more of the issued and outstanding voting shares of the Company at any time within the three-year period immediately prior to the date on which it is sought to be determined whether such person is an Interested Shareholder or (iii) is an

 

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affiliate or associate of any person listed in (i) or (ii) above; provided, however, that the term “Interested Shareholder” shall not include any person whose ownership of shares in excess of the 15% limitation set forth herein is the result of action taken solely by the Company unless such person referred to in this proviso acquires additional voting shares of the Company otherwise than as a result of further corporate action not caused, directly or indirectly, by such person. For the purpose of determining whether a person is an Interested Shareholder, the voting shares of the Company deemed to be issued and outstanding shall include voting shares deemed to be owned by the person through application of paragraph (8) below, but shall not include any other unissued shares which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise;

 

(vi)                               “person” means any individual, company, partnership, unincorporated association or other entity;

 

(vii)                            “voting shares” means, with respect to any company, shares of any class or series entitled to vote generally in the election of directors and, with respect to any entity that is not a company, any equity interest entitled to vote generally in the election of the governing body of such entity;

 

(viii)                         “owner,” including the terms “own” and “owned,” when used with respect to any shares, means a person that individually or with or through any of its affiliates or associates:

 

(a)                                  beneficially owns such shares, directly or indirectly; or

 

(b)                                  has (A) the right to acquire such shares (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or

 

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upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise; provided, however, that a person shall not be deemed the owner of shares tendered pursuant to a tender or exchange offer made by such person or any of such person’s affiliates or associates until such tendered shares are accepted for purchase or exchange; or (B) the right to vote such shares pursuant to any agreement, arrangement or understanding; provided, however, that a person shall not be deemed the owner of any shares because of such person’s right to vote such shares if the agreement, arrangement or understanding to vote such shares arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made to 10 or more persons; or

 

(c)                                   has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent as described in item (B) of subparagraph (b) of this paragraph), or disposing of such shares with any other person that beneficially owns, or whose affiliates or associates beneficially own, directly or indirectly, such shares.

 

83.2                         In respect of any Business Combination to which the restrictions contained in Bye-law 81.1 do not apply but which the Act requires to be approved by the Members, the necessary general meeting quorum and Members’ approval shall be as set out in Bye-laws 27 and 29 respectively.

 

VOLUNTARY WINDING-UP AND DISSOLUTION

 

82.                                Winding-Up

 

If the Company shall be wound up the liquidator may, with the sanction of a resolution of the Members, divide amongst the Members in specie or in kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may, for

 

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such purpose, set such value as he deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the Members or different classes of Members. The liquidator may, with the like sanction, vest the whole or any part of such assets in the trustees upon such trusts for the benefit of the Members as the liquidator shall think fit, but so that no Member shall be compelled to accept any shares or other securities or assets whereon there is any liability.

 

CHANGES TO CONSTITUTION

 

83.                                Changes to Bye-laws

 

83.1                         No Bye-law may be rescinded, altered or amended and no new Bye-law may be made save in accordance with the Act and until the same has been approved by a resolution of the Board and by a resolution of the Members.

 

83.2                         Bye-laws 30, 45, 46, 49, 61, 82 and 84 may not be rescinded, altered or amended and no new Bye-law may be made which would have the effect of rescinding, altering or amending the provisions of such Bye-laws, until the same has been approved by a resolution of the Board including the affirmative vote of not less than 66 2/3% of the Directors then in office and by a resolution of the Members including the affirmative vote of not less than 66 2/3% of the votes attaching to all shares in issue.

 

84.                                Changes to the Memorandum of Association

 

No alteration or amendment to the Memorandum of Association may be made save in accordance with the Act and until same has been approved by a resolution of the Board and by a resolution of the Members including the affirmative vote of not less than 66 2/3% of the votes attaching to all shares in issue.

 

85.                                Discontinuance

 

The Board may exercise all the powers of the Company to discontinue the Company to a jurisdiction outside Bermuda pursuant to the Act.

 

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86.                                Amalgamation or Merger

 

Any resolution proposed for consideration at any general meeting to approve the amalgamation or merger of the Company with any other company, wherever incorporated, shall require the approval of a simple majority of votes cast at such meeting and the quorum for such meeting shall be that required in Bye-law 27 and a poll may be demanded in respect of such resolution in accordance with the provisions of Bye-law 30.

 

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Exhibit 10.1

 

AXOVANT SCIENCES LTD.

 

2015 EQUITY INCENTIVE PLAN

 

ADOPTED BY THE BOARD OF DIRECTORS:  MARCH 18, 2015

APPROVED BY THE SOLE MEMBER: MARCH 18, 2015

AMENDED BY THE BOARD OF DIRECTORS: MAY 19, 2015

APPROVED BY THE SHAREHOLDERS: MAY 19, 2015

TERMINATION DATE: MARCH 17, 2025

 

1.                                       GENERAL.

 

(a)                                  Eligible Award Recipients.   Employees, Directors and Consultants are eligible to receive Awards.

 

(b)                                  Available Awards.   The Plan provides for the grant of the following types of Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) Stock Appreciation Rights, (iv) Restricted Stock Awards, (v) Restricted Stock Unit Awards, (vi) Performance Stock Awards, (vii) Performance Cash Awards, and (viii) Other Stock Awards.

 

(c)                                   Purpose.   The Plan, through the granting of Awards, is intended to help the Company secure and retain the services of eligible award recipients, provide incentives for such persons to exert maximum efforts for the success of the Company and any Affiliate and provide a means by which the eligible recipients may benefit from increases in value of the Common Stock.

 

2.                                       ADMINISTRATION.

 

(a)                                  Administration by Board.   The Board will administer the Plan.  The Board may delegate administration of the Plan to a Committee or Committees, as provided in Section 2(c).

 

(b)                                  Powers of Board.   The Board will have the power, subject to, and within the limitations of, the express provisions of the Plan:

 

(i)                                     To determine (A) who will be granted Awards; (B) when and how each Award will be granted; (C) what type of Award will be granted; (D) the provisions of each Award (which need not be identical), including when a person will be permitted to exercise or otherwise receive cash or Common Stock under the Award; (E) the number of shares of Common Stock subject to, or the cash value of, an Award; and (F) the Fair Market Value applicable to an Award.

 

(ii)                                 To construe and interpret the Plan and Awards granted under it, and to establish, amend and revoke rules and regulations for administration of the Plan and Awards.  The Board, in the exercise of these powers, may correct any defect, omission or inconsistency in the Plan or in any Award Agreement or in the written terms of a Performance Cash Award, in a manner and to the extent it will deem necessary or expedient to make the Plan or Award fully effective.

 

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(iii)                             To settle all controversies regarding the Plan and Awards granted under it.

 

(iv)                              To accelerate, in whole or in part, the time at which an Award may be exercised or vest (or at which cash or shares of Common Stock may be issued).

 

(v)                                  To suspend or terminate the Plan at any time.  Except as otherwise provided in the Plan or an Award Agreement, suspension or termination of the Plan will not impair a Participant’s rights under his or her then-outstanding Award without his or her written consent except as provided in subsection (viii) below.

 

(vi)                              To amend the Plan in any respect the Board deems necessary or advisable, including, without limitation, by adopting amendments relating to Incentive Stock Options and certain nonqualified deferred compensation under Section 409A of the Code and/or to make the Plan or Awards granted under the Plan compliant with the requirements for Incentive Stock Options or exempt from or compliant with the requirements for nonqualified deferred compensation under Section 409A of the Code, subject to the limitations, if any, of applicable law. However, if required by applicable law, and except as provided in Section 9(a) relating to Capitalization Adjustments, the Company will seek shareholder approval of any amendment of the Plan that (A) materially increases the number of shares of Common Stock available for issuance under the Plan, (B) materially expands the class of individuals eligible to receive Awards under the Plan, (C) materially increases the benefits accruing to Participants under the Plan, (D) materially reduces the price at which shares of Common Stock may be issued or purchased under the Plan, (E) materially extends the term of the Plan, or (F) materially expands the types of Awards available for issuance under the Plan.  Except as otherwise provided in the Plan  or an Award Agreement, no amendment of the Plan will materially impair a Participant’s rights under an outstanding Award unless (1) the Company requests the consent of the affected Participant, and (2) such Participant consents in writing.

 

(vii)                          To submit any amendment to the Plan for shareholder approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of  (A) Section 162(m) of the Code regarding the exclusion of performance-based compensation from the limit on corporate deductibility of compensation paid to Covered Employees, (B) Section 422 of the Code regarding Incentive Stock Options, or (C) Rule 16b-3.

 

(viii)                      To approve forms of Award Agreements for use under the Plan and to amend the terms of any one or more Awards, including, but not limited to, amendments to provide terms more favorable to the Participant than previously provided in the Award Agreement, subject to any specified limits in the Plan that are not subject to Board discretion; provided however, that a Participant’s rights under any Award will not be impaired by any such amendment unless (A) the Company requests the consent of the affected Participant, and (B) such Participant consents in writing.  Notwithstanding the foregoing, (1) a Participant’s rights will not be deemed to have been impaired by any such amendment if the Board, in its sole discretion, determines that the amendment, taken as a whole, does not materially impair the Participant’s rights, and (2) subject to the limitations of applicable law, if any, the Board may amend the terms of any one or more Awards without the affected Participant’s consent (A) to maintain the qualified status of the Award as an Incentive Stock Option under Section 422 of the Code; (B) to change the terms of an Incentive Stock Option, if such change results in impairment

 

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of the Stock Award solely because it impairs the qualified status of the Stock Award as an Incentive Stock Option under Section 422 of the Code; (C) to clarify the manner of exemption from, or to bring the Award into compliance with, Section 409A of the Code; or (D) to comply with other applicable laws or listing requirements.

 

(ix)                              Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company and that are not in conflict with the provisions of the Plan or Awards.

 

(x)                                  To adopt such procedures and sub-plans as are necessary or appropriate to permit participation in the Plan by Employees, Directors or Consultants who are foreign nationals or employed outside the United States (provided that Board approval will not be necessary for immaterial modifications to the Plan or any Award Agreement that are required for compliance with the laws of the relevant foreign jurisdiction).

 

(xi)                              To effect, with the consent of any adversely affected Participant, (A) the reduction of the exercise, purchase or strike price of any outstanding Award; (B) the cancellation of any outstanding Stock Award and the grant in substitution therefor of a new (1) Option or SAR, (2) Restricted Stock Award, (3) Restricted Stock Unit Award, (4) Other Stock Award, (5) cash and/or (6) other valuable consideration determined by the Board, in its sole discretion, with any such substituted award (x) covering the same or a different number of shares of Common Stock as the cancelled Stock Award and (y) granted under the Plan or another equity or compensatory plan of the Company; or (C) any other action that is treated as a repricing under generally accepted accounting principles.

 

(c)                                   Delegation to Committee.

 

(i)                                     General .  The Board may delegate some or all of the administration of the Plan to a Committee or Committees.  If administration of the Plan is delegated to a Committee, the Committee will have, in connection with the administration of the Plan, the powers theretofore possessed by the Board that have been delegated to the Committee, including the power to delegate to a subcommittee of the Committee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board will thereafter be to the Committee or subcommittee, as applicable).  Any delegation of administrative powers will be reflected in resolutions, not inconsistent with the provisions of the Plan, adopted from time to time by the Board or Committee (as applicable).  The Board may retain the authority to concurrently administer the Plan with the Committee and may, at any time, revest in the Board some or all of the powers previously delegated.

 

(ii)                                 Section 162(m) and Rule 16b-3 Compliance.   The Committee may consist solely of two or more Outside Directors, in accordance with Section 162(m) of the Code, or solely of two or more Non-Employee Directors, in accordance with Rule 16b-3.

 

(d)                                  Delegation to an Officer.   The Board may delegate to one (1) or more Officers the authority to do one or both of the following: (i) designate Employees who are not Officers to be recipients of Options and SARs (and, to the extent permitted by applicable law, other Stock Awards) and, to the extent permitted by applicable law, the terms of such Stock Awards, and (ii)

 

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determine the number of shares of Common Stock to be subject to such Stock Awards granted to such Employees; provided, however, that the Board resolutions regarding such delegation will specify the total number of shares of Common Stock that may be subject to the Stock Awards granted by such Officer and that such Officer may not grant a Stock Award to himself or herself.  Any such Stock Awards will be granted on the form of Stock Award Agreement most recently approved for use by the Committee or the Board, unless otherwise provided in the resolutions approving the delegation authority.  The Board may not delegate authority to an Officer who is acting solely in the capacity of an Officer (and not also as a Director) to determine the Fair Market Value pursuant to Section 13(x)(iii) below.

 

(e)                                   Effect of Board’s Decision. All determinations, interpretations and constructions made by the Board in good faith will not be subject to review by any person and will be final, binding and conclusive on all persons.

 

3.                                       SHARES SUBJECT TO THE PLAN.

 

(a)                                  Share Reserve .

 

(i)                                     Subject to Section 9(a) relating to Capitalization Adjustments and the following sentence regarding the annual increase, the aggregate number of shares of Common Stock that may be issued pursuant to Stock Awards from and after the Effective Date will not exceed 9,500,000 shares (the “ Share Reserve ”). In addition, the Share Reserve will automatically increase on April 1st of each year, for the period commencing on (and including) April 1, 2016 and ending on (and including) April 1, 2025, in an amount equal to four percent (4%) of the total number of shares of Capital Stock outstanding on March 31st of the preceding calendar year.  Notwithstanding the foregoing, the Board may act prior to March 31st of a given year to provide that there will be no April 1st increase in the Share Reserve for such year or that the increase in the Share Reserve for such year will be a lesser number of shares of Common Stock than would otherwise occur pursuant to the preceding sentence.

 

(ii)                                 For clarity, the Share Reserve in this Section 3(a) is a limitation on the number of shares of Common Stock that may be issued pursuant to the Plan.  Accordingly, this Section 3(a) does not limit the granting of Stock Awards except as provided in Section 7(a).

 

(iii)                             Shares may be issued in connection with a merger or acquisition as permitted by NASDAQ Listing Rule 5635(c) or, if applicable, NYSE Listed Company Manual Section 303A.08, AMEX Company Guide Section 711 or other applicable rule, and such issuance will not reduce the number of shares available for issuance under the Plan.

 

(b)                                  Reversion of Shares to the Share Reserve .  If a Stock Award or any portion thereof (i) expires or otherwise terminates without all of the shares covered by such Stock Award having been issued or (ii) is settled in cash ( i.e. , the Participant receives cash rather than stock), such expiration, termination or settlement will not reduce (or otherwise offset) the number of shares of Common Stock that may be available for issuance under the Plan.  If any shares of Common Stock issued pursuant to a Stock Award are forfeited back to or repurchased by the Company because of the failure to meet a contingency or condition required to vest such shares in the Participant, then the shares that are forfeited or repurchased will revert to and again

 

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become available for issuance under the Plan.  Any shares reacquired by the Company in satisfaction of tax withholding obligations on a Stock Award or as consideration for the exercise or purchase price of a Stock Award will again become available for issuance under the Plan.

 

(c)                                   Incentive Stock Option Limit.  Subject to the provisions of Section 9(a) relating to Capitalization Adjustments, the aggregate maximum number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Options will be 47,500,000 shares of Common Stock.

 

(d)                                  Section 162(m) Limitations .  Subject to the provisions of Section 9(a) relating to Capitalization Adjustments, at such time as the Company may be subject to the applicable provisions of Section 162(m) of the Code, the following limitations shall apply.

 

(i)                                     A maximum of 2,000,000 shares of Common Stock subject to Options, SARs and Other Stock Awards whose value is determined by reference to an increase over an exercise or strike price of at least 100% of the Fair Market Value on the date the Stock Award is granted may be granted to any one Participant during any one fiscal year of the Company.  Notwithstanding the foregoing, if any additional Options, SARs or Other Stock Awards whose value is determined by reference to an increase over an exercise or strike price of at least 100% of the Fair Market Value on the date the Stock Award are granted to any Participant during any one fiscal year, compensation attributable to the exercise of such additional Stock Awards will not satisfy the requirements to be considered “qualified performance-based compensation” under Section 162(m) of the Code unless such additional Stock Award is approved by the Company’s stockholders.

 

(ii)                                 A maximum of 2,000,000 shares of Common Stock subject to Performance Stock Awards may be granted to any one Participant during any one fiscal year of the Company (whether the grant, vesting or exercise is contingent upon the attainment during the Performance Period of the Performance Goals).

 

(iii)                             A maximum of $1,000,000 may be granted as a Performance Cash Award to any one Participant during any one fiscal year of the Company.

 

(e)                                   Source of Shares.   The stock issuable under the Plan will be shares of authorized but unissued or reacquired Common Stock, including shares repurchased by the Company on the open market or otherwise.

 

4.                                       ELIGIBILITY.

 

(a)                                  Eligibility for Specific Stock Awards .  Incentive Stock Options may be granted only to employees of the Company or a “parent corporation” or “subsidiary corporation” thereof (as such terms are defined in Sections 424(e) and 424(f) of the Code).  Stock Awards other than Incentive Stock Options may be granted to Employees, Directors and Consultants; provided, however , that Stock Awards may not be granted to Employees, Directors and Consultants who are providing Continuous Service only to any “parent” of the Company, as such term is defined in Rule 405, unless (i) the stock underlying such Stock Awards is treated as “service recipient stock” under Section 409A of the Code (for example, because the Stock Awards are granted pursuant to a corporate transaction such as a spin off transaction), or (ii) the Company, in

 

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consultation with its legal counsel, has determined that such Stock Awards are otherwise exempt from Section 409A of the Code, or (iii) the Company, in consultation with its legal counsel, has determined that such Stock Awards comply with the distribution requirements of Section 409A of the Code.

 

(b)                                  Ten Percent Shareholders .   A Ten Percent Shareholder will not be granted an Incentive Stock Option unless the exercise price of such Option is at least one hundred ten percent (110%) of the Fair Market Value on the date of grant and the Option is not exercisable after the expiration of five (5) years from the date of grant.

 

5.                                       PROVISIONS RELATING TO OPTIONS AND STOCK APPRECIATION RIGHTS.

 

Each Option or SAR will be in such form and will contain such terms and conditions as the Board deems appropriate.  All Options will be separately designated Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a separate certificate or certificates will be issued for shares of Common Stock purchased on exercise of each type of Option.  If an Option is not specifically designated as an Incentive Stock Option, or if an Option is designated as an Incentive Stock Option but some portion or all of the Option fails to qualify as an Incentive Stock Option under the applicable rules, then the Option (or portion thereof) will be a Nonstatutory Stock Option. The provisions of separate Options or SARs need not be identical; provided, however , that each Stock Award Agreement will conform to (through incorporation of provisions hereof by reference in the applicable Stock Award Agreement or otherwise) the substance of each of the following provisions:

 

(a)                                  Term.   Subject to the provisions of Section 4(b) regarding Ten Percent Shareholders, no Option or SAR will be exercisable after the expiration of ten (10) years from the date of its grant or such shorter period specified in the Stock Award Agreement.

 

(b)                                  Exercise Price.   Subject to the provisions of Section 4(b) regarding Ten Percent Shareholders, the exercise or strike price of each Option or SAR will be not less than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Option or SAR on the date the Stock Award is granted.  Notwithstanding the foregoing, an Option or SAR may be granted with an exercise or strike price lower than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Stock Award if such Stock Award is granted pursuant to an assumption of or substitution for another option or stock appreciation right pursuant to a Corporate Transaction and in a manner consistent with the provisions of Section 409A of the Code and, if applicable, Section 424(a) of the Code.  Each SAR will be denominated in shares of Common Stock equivalents.

 

(c)                                   Purchase Price for Options.   The purchase price of Common Stock acquired pursuant to the exercise of an Option may be paid, to the extent permitted by applicable law and as determined by the Board in its sole discretion, by any combination of the methods of payment set forth below.  The Board will have the authority to grant Options that do not permit all of the following methods of payment (or otherwise restrict the ability to use certain methods) and to grant Options that require the consent of the Company to use a particular method of payment.  The permitted methods of payment are as follows:

 

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(i)                                     by cash, check, bank draft or money order payable to the Company;

 

(ii)                                 pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of the stock subject to the Option, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds;

 

(iii)                             by delivery to the Company (either by actual delivery or attestation) of shares of Common Stock;

 

(iv)                              if an Option is a Nonstatutory Stock Option, by a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of Common Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price; provided, however, that the Company will accept a cash or other payment from the Participant to the extent of any remaining balance of the aggregate exercise price not satisfied by such reduction in the number of whole shares to be issued.  Shares of Common Stock will no longer be subject to an Option and will not be exercisable thereafter to the extent that (A) shares issuable upon exercise are used to pay the exercise price pursuant to the “net exercise,” (B) shares are delivered to the Participant as a result of such exercise, and (C) shares are withheld to satisfy tax withholding obligations; or

 

(v)                                  in any other form of legal consideration that may be acceptable to the Board and specified in the applicable Stock Award Agreement.

 

(d)                                  Exercise and Payment of a SAR.   To exercise any outstanding SAR, the Participant must provide written notice of exercise to the Company in compliance with the provisions of the Stock Appreciation Right Agreement evidencing such SAR.  The appreciation distribution payable on the exercise of a SAR will be not greater than an amount equal to the excess of (A) the aggregate Fair Market Value (on the date of the exercise of the SAR) of a number of shares of Common Stock equal to the number of Common Stock equivalents in which the Participant is vested under such SAR, and with respect to which the Participant is exercising the SAR on such date, over (B) the aggregate strike price of the number of Common Stock equivalents with respect to which the Participant is exercising the SAR on such date.  The appreciation distribution may be paid in Common Stock, in cash, in any combination of the two or in any other form of consideration, as determined by the Board and contained in the Stock Award Agreement evidencing such SAR.

 

(e)                                   Transferability of Options and SARs.   The Board may, in its sole discretion, impose such limitations on the transferability of Options and SARs as the Board will determine.  In the absence of such a determination by the Board to the contrary, the following restrictions on the transferability of Options and SARs will apply:

 

(i)                                     Restrictions on Transfer .  An Option or SAR will not be transferable except by will or by the laws of descent and distribution (or pursuant to subsections (ii) and (iii) below), and will be exercisable during the lifetime of the Participant only by the Participant.  The Board may permit transfer of the Option or SAR in a manner that is not prohibited by applicable

 

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tax and securities laws. Except as explicitly provided herein, neither an Option nor a SAR may be transferred for consideration.

 

(ii)                                 Domestic Relations Orders .  Subject to the approval of the Board or a duly authorized Officer, an Option or SAR may be transferred pursuant to the terms of a domestic relations order, official marital settlement agreement or other divorce or separation instrument as permitted by Treasury Regulation 1.421-1(b)(2).  If an Option is an Incentive Stock Option, such Option may be deemed to be a Nonstatutory Stock Option as a result of such transfer.

 

(iii)                             Beneficiary Designation .  Subject to the approval of the Board or a duly authorized Officer, a Participant may, by delivering written notice to the Company, in a form approved by the Company (or the designated broker), designate a third party who, upon the death of the Participant, will thereafter be entitled to exercise the Option or SAR and receive the Common Stock or other consideration resulting from such exercise.  In the absence of such a designation, upon the death of the Participant, the executor or administrator of the Participant’s estate will be entitled to exercise the Option or SAR and receive the Common Stock or other consideration resulting from such exercise.  However, the Company may prohibit designation of a beneficiary at any time, including due to any conclusion by the Company that such designation would be inconsistent with the provisions of applicable laws.

 

(f)                                    Vesting Generally.   The total number of shares of Common Stock subject to an Option or SAR may vest and become exercisable in periodic installments that may or may not be equal.  The Option or SAR may be subject to such other terms and conditions on the time or times when it may or may not be exercised (which may be based on the satisfaction of Performance Goals or other criteria) as the Board may deem appropriate.  The vesting provisions of individual Options or SARs may vary.  The provisions of this Section 5(f) are subject to any Option or SAR provisions governing the minimum number of shares of Common Stock as to which an Option or SAR may be exercised.

 

(g)                                  Termination of Continuous Service.   Except as otherwise provided in the applicable Stock Award Agreement or other agreement between the Participant and the Company, if a Participant’s Continuous Service terminates (other than for Cause and other than upon the Participant’s death or Disability), the Participant may exercise his or her Option or SAR (to the extent that the Participant was entitled to exercise such Stock Award as of the date of termination of Continuous Service) within the period of time ending on the earlier of (i) the date three (3) months following the termination of the Participant’s Continuous Service (or such longer or shorter period specified in the applicable Stock Award Agreement, and (ii) the expiration of the term of the Option or SAR as set forth in the Stock Award Agreement.  If, after termination of Continuous Service, the Participant does not exercise his or her Option or SAR within the applicable time frame, the Option or SAR (as applicable) will terminate.

 

(h)                                  Extension of Termination Date.   If the exercise of an Option or SAR following the termination of the Participant’s Continuous Service (other than for Cause and other than upon the Participant’s death or Disability) would be prohibited at any time solely because the issuance of shares of Common Stock would violate the registration requirements under the Securities Act, then the Option or SAR will terminate on the earlier of (i) the expiration of a total period of time

 

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(that need not be consecutive) equal to the applicable post termination exercise period after the termination of the Participant’s Continuous Service during which the exercise of the Option or SAR would not be in violation of such registration requirements, or (ii) the expiration of the term of the Option or SAR as set forth in the applicable Stock Award Agreement.  In addition, unless otherwise provided in a Participant’s Stock Award Agreement, if the sale of any Common Stock received upon exercise of an Option or SAR following the termination of the Participant’s Continuous Service (other than for Cause) would violate the Company’s insider trading policy, then the Option or SAR will terminate on the earlier of (i) the expiration of a period of time (that need not be consecutive) equal to the applicable post-termination exercise period after the termination of the Participant’s Continuous Service during which the sale of the Common Stock received upon exercise of the Option or SAR would not be in violation of the Company’s insider trading policy, or (ii) the expiration of the term of the Option or SAR as set forth in the applicable Stock Award Agreement.

 

(i)                                     Disability of Participant.   Except as otherwise provided in the applicable Stock Award Agreement or other agreement between the Participant and the Company, if a Participant’s Continuous Service terminates as a result of the Participant’s Disability, the Participant may exercise his or her Option or SAR (to the extent that the Participant was entitled to exercise such Option or SAR as of the date of termination of Continuous Service), but only within such period of time ending on the earlier of (i) the date twelve (12) months following such termination of Continuous Service (or such longer or shorter period specified in the Stock Award Agreement), and (ii) the expiration of the term of the Option or SAR as set forth in the Stock Award Agreement.  If, after termination of Continuous Service, the Participant does not exercise his or her Option or SAR within the applicable time frame, the Option or SAR (as applicable) will terminate.

 

(j)                                     Death of Participant.   Except as otherwise provided in the applicable Stock Award Agreement or other agreement between the Participant and the Company, if (i) a Participant’s Continuous Service terminates as a result of the Participant’s death, or (ii) the Participant dies within the period (if any) specified in the Stock Award Agreement for exercisability after the termination of the Participant’s Continuous Service (for a reason other than death), then the Option or SAR may be exercised (to the extent the Participant was entitled to exercise such Option or SAR as of the date of death) by the Participant’s estate, by a person who acquired the right to exercise the Option or SAR by bequest or inheritance or by a person designated to exercise the Option or SAR upon the Participant’s death, but only within the period ending on the earlier of (i) the date eighteen (18) months following the date of death (or such longer or shorter period specified in the Stock Award Agreement), and (ii) the expiration of the term of such Option or SAR as set forth in the Stock Award Agreement.  If, after the Participant’s death, the Option or SAR is not exercised within the applicable time frame, the Option or SAR (as applicable) will terminate.

 

(k)                                  Termination for Cause.   Except as explicitly provided otherwise in a Participant’s Stock Award Agreement or other individual written agreement between the Company or any Affiliate and the Participant, if a Participant’s Continuous Service is terminated for Cause, the Option or SAR will terminate immediately upon such Participant’s termination of Continuous Service, and the Participant will be prohibited from exercising his or her Option or SAR from and after the time of such termination of Continuous Service.

 

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(l)                                     Non-Exempt Employees .  If an Option or SAR is granted to an Employee who is a non-exempt employee for purposes of the Fair Labor Standards Act of 1938, as amended, the Option or SAR will not be first exercisable for any shares of Common Stock until at least six (6) months following the date of grant of the Option or SAR (although the Stock Award may vest prior to such date).  Consistent with the provisions of the Worker Economic Opportunity Act, (i) if such non-exempt Employee dies or suffers a Disability, (ii) upon a Corporate Transaction in which such Option or SAR is not assumed, continued, or substituted, (iii) upon a Change in Control, or (iv) upon the Participant’s retirement (as such term may be defined in the Participant’s Stock Award Agreement, in another agreement between the Participant and the Company, or, if no such definition, in accordance with the Company’s then current employment policies and guidelines), the vested portion of any Options and SARs may be exercised earlier than six (6) months following the date of grant.  The foregoing provision is intended to operate so that any income derived by a non-exempt employee in connection with the exercise or vesting of an Option or SAR will be exempt from his or her regular rate of pay. To the extent permitted and/or required for compliance with the Worker Economic Opportunity Act to ensure that any income derived by a non-exempt employee in connection with the exercise, vesting or issuance of any shares under any other Stock Award will be exempt from the employee’s regular rate of pay, the provisions of this Section 5(l) will apply to all Stock Awards and are hereby incorporated by reference into such Stock Award Agreements.

 

6.                                       PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS AND SARS.

 

(a)                                  Restricted Stock Awards.   Each Restricted Stock Award Agreement will be in such form and will contain such terms and conditions as the Board deems appropriate.  To the extent consistent with the Company’s bylaws, at the Board’s election, shares of Common Stock underlying a Restricted Stock Award may be (i) held in book entry form subject to the Company’s instructions until any restrictions relating to the Restricted Stock Award lapse; or (ii) evidenced by a certificate, which certificate will be held in such form and manner as determined by the Board.  The terms and conditions of Restricted Stock Award Agreements may change from time to time, and the terms and conditions of separate Restricted Stock Award Agreements need not be identical.  Each Restricted Stock Award Agreement will conform to (through incorporation of the provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions:

 

(i)                                     Consideration . A Restricted Stock Award may be awarded in consideration for (A) cash, check, bank draft or money order payable to the Company, (B) past services to the Company or an Affiliate, or (C) any other form of legal consideration that may be acceptable to the Board, in its sole discretion, and permissible under applicable law.

 

(ii)                                 Vesting . Shares of Common Stock awarded under the Restricted Stock Award Agreement may be subject to forfeiture to the Company in accordance with a vesting schedule to be determined by the Board.

 

(iii)                             Termination of Participant’s Continuous Service .  If a Participant’s Continuous Service terminates, the Company may receive through a forfeiture condition or a repurchase right, any or all of the shares of Common Stock held by the Participant as of the date of termination of Continuous Service under the terms of the Restricted Stock Award Agreement.

 

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(iv)                              Transferability .  Rights to acquire shares of Common Stock under the Restricted Stock Award Agreement will be transferable by the Participant only upon such terms and conditions as are set forth in the Restricted Stock Award Agreement, as the Board will determine in its sole discretion, so long as Common Stock awarded under the Restricted Stock Award Agreement remains subject to the terms of the Restricted Stock Award Agreement.

 

(v)                                  Dividends.  A Restricted Stock Award Agreement may provide that any dividends paid on Restricted Stock will be subject to the same vesting and forfeiture restrictions as apply to the shares subject to the Restricted Stock Award to which they relate.

 

(b)                                  Restricted Stock Unit Awards.  Each Restricted Stock Unit Award Agreement will be in such form and will contain such terms and conditions as the Board deems appropriate.  The terms and conditions of Restricted Stock Unit Award Agreements may change from time to time, and the terms and conditions of separate Restricted Stock Unit Award Agreements need not be identical.  Each Restricted Stock Unit Award Agreement will conform to (through incorporation of the provisions hereof by reference in the Agreement or otherwise) the substance of each of the following provisions:

 

(i)                                     Consideration.   At the time of grant of a Restricted Stock Unit Award, the Board will determine the consideration, if any, to be paid by the Participant upon delivery of each share of Common Stock subject to the Restricted Stock Unit Award.  The consideration to be paid (if any) by the Participant for each share of Common Stock subject to a Restricted Stock Unit Award may be paid in any form of legal consideration that may be acceptable to the Board, in its sole discretion, and permissible under applicable law.

 

(ii)                                 Vesting.  At the time of the grant of a Restricted Stock Unit Award, the Board may impose such restrictions on or conditions to the vesting of the Restricted Stock Unit Award as it, in its sole discretion, deems appropriate.

 

(iii)                             Payment .  A Restricted Stock Unit Award may be settled by the delivery of shares of Common Stock, their cash equivalent, any combination thereof or in any other form of consideration, as determined by the Board and contained in the Restricted Stock Unit Award Agreement.

 

(iv)                              Additional Restrictions.  At the time of the grant of a Restricted Stock Unit Award, the Board, as it deems appropriate, may impose such restrictions or conditions that delay the delivery of the shares of Common Stock (or their cash equivalent) subject to a Restricted Stock Unit Award to a time after the vesting of such Restricted Stock Unit Award.

 

(v)                                  Dividend Equivalents.  Dividend equivalents may be credited in respect of shares of Common Stock covered by a Restricted Stock Unit Award, as determined by the Board and contained in the Restricted Stock Unit Award Agreement.  At the sole discretion of the Board, such dividend equivalents may be converted into additional shares of Common Stock covered by the Restricted Stock Unit Award in such manner as determined by the Board.  Any additional shares covered by the Restricted Stock Unit Award credited by reason of such dividend equivalents will be subject to all of the same terms and conditions of the underlying Restricted Stock Unit Award Agreement to which they relate.

 

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(vi)                              Termination of Participant’s Continuous Service.  Except as otherwise provided in the applicable Restricted Stock Unit Award Agreement, such portion of the Restricted Stock Unit Award that has not vested will be forfeited upon the Participant’s termination of Continuous Service.

 

(c)                                   Performance Awards .

 

(i)                                     Performance Stock Awards .  A Performance Stock Award is a Stock Award (covering a number of shares not in excess of that set forth in Section 3(d) above) that is payable or that may be granted, may vest or may be exercised, contingent upon the attainment during a Performance Period of certain Performance Goals.  A Performance Stock Award may, but need not, require the Participant’s completion of a specified period of Continuous Service. The length of any Performance Period, the Performance Goals to be achieved during the Performance Period, and the measure of whether and to what degree such Performance Goals have been attained will be conclusively determined by the Committee (or, if not required for compliance with Section 162(m) of the Code, the Board), in its sole discretion.  In addition, to the extent permitted by applicable law and the applicable Award Agreement, the Board may determine that cash may be used in payment of Performance Stock Awards.

 

(ii)                                 Performance Cash Awards .  A Performance Cash Award is a cash award (for a dollar value not in excess of that set forth in Section 3(d) above) that is payable contingent upon the attainment during a Performance Period of certain Performance Goals.  A Performance Cash Award may also require the completion of a specified period of Continuous Service.  At the time of grant of a Performance Cash Award, the length of any Performance Period, the Performance Goals to be achieved during the Performance Period, and the measure of whether and to what degree such Performance Goals have been attained will be conclusively determined by the Committee (or, if not required for compliance with Section 162(m) of the Code, the Board), in its sole discretion.  The Board may specify the form of payment of Performance Cash Awards, which may be cash or other property, or may provide for a Participant to have the option for his or her Performance Cash Award, or such portion thereof as the Board may specify, to be paid in whole or in part in cash or other property.

 

(iii)                             Board Discretion .  The Board retains the discretion to reduce or eliminate the compensation or economic benefit due upon attainment of Performance Goals and to define the manner of calculating the Performance Criteria it selects to use for a Performance Period.  Partial achievement of the specified criteria may result in the payment or vesting corresponding to the degree of achievement as specified in the Stock Award Agreement or the written terms of a Performance Cash Award.

 

(iv)                              Section 162(m) Compliance .  Unless otherwise permitted in compliance with the requirements of Section 162(m) of the Code with respect to an Award intended to qualify as “performance-based compensation” thereunder, the Committee will establish the Performance Goals applicable to, and the formula for calculating the amount payable under, the Award no later than the earlier of (a) the date 90 days after the commencement of the applicable Performance Period, and (b) the date on which 25% of the Performance Period has elapsed, and in any event at a time when the achievement of the applicable Performance Goals remains substantially uncertain.  Prior to the payment of any compensation under an Award intended to

 

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qualify as “performance-based compensation” under Section 162(m) of the Code, the Committee will certify the extent to which any Performance Goals and any other material terms under such Award have been satisfied (other than in cases where such Performance Goals relate solely to the increase in the value of the Common Stock). Notwithstanding satisfaction of, or completion of any Performance Goals, the number of shares of Common Stock, Options, cash or other benefits granted, issued, retainable and/or vested under an Award on account of satisfaction of such Performance Goals may be reduced by the Committee on the basis of such further considerations as the Committee, in its sole discretion, will determine.

 

(d)                                  Other Stock Awards .  Other forms of Stock Awards valued in whole or in part by reference to, or otherwise based on, Common Stock, including the appreciation in value thereof (e.g., options or stock rights with an exercise price or strike price less than one hundred percent (100%) of the Fair Market Value of the Common Stock at the time of grant) may be granted either alone or in addition to Stock Awards provided for under Section 5 and the preceding provisions of this Section 6.  Subject to the provisions of the Plan, the Board will have sole and complete authority to determine the persons to whom and the time or times at which such Other Stock Awards will be granted, the number of shares of Common Stock (or the cash equivalent thereof) to be granted pursuant to such Other Stock Awards and all other terms and conditions of such Other Stock Awards.

 

7.                                       COVENANTS OF THE COMPANY.

 

(a)                                  Availability of Shares.   The Company will keep available at all times the number of shares of Common Stock reasonably required to satisfy then-outstanding Stock Awards.

 

(b)                                  Securities Law Compliance.   The Company will seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to grant Stock Awards and to issue and sell shares of Common Stock upon exercise of the Stock Awards; provided, however, that this undertaking will not require the Company to register under the Securities Act the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any such Stock Award.  If, after reasonable efforts and at a reasonable cost, the Company is unable to obtain from any such regulatory commission or agency the authority that counsel for the Company deems necessary for the lawful issuance and sale of Common Stock under the Plan, the Company will be relieved from any liability for failure to issue and sell Common Stock upon exercise of such Stock Awards unless and until such authority is obtained. A Participant will not be eligible for the grant of an Award or the subsequent issuance of cash or Common Stock pursuant to the Award if such grant or issuance would be in violation of any applicable securities law.

 

(c)                                   No Obligation to Notify or Minimize Taxes.  The Company will have no duty or obligation to any Participant to advise such holder as to the time or manner of exercising such Stock Award.  Furthermore, the Company will have no duty or obligation to warn or otherwise advise such holder of a pending termination or expiration of an Award or a possible period in which the Award may not be exercised.  The Company has no duty or obligation to minimize the tax consequences of an Award to the holder of such Award.

 

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8.                                       MISCELLANEOUS.

 

(a)                                  Use of Proceeds from Sales of Common Stock.  Proceeds from the sale of shares of Common Stock pursuant to Stock Awards will constitute general funds of the Company.

 

(b)                                  Corporate Action Constituting Grant of Awards.   Corporate action constituting a grant by the Company of an Award to any Participant will be deemed completed as of the date of such corporate action, unless otherwise determined by the Board, regardless of when the instrument, certificate, or letter evidencing the Award is communicated to, or actually received or accepted by, the Participant.  In the event that the corporate records (e.g., Board consents, resolutions or minutes) documenting the corporate action constituting the grant contain terms (e.g., exercise price, vesting schedule or number of shares) that are inconsistent with those in the Award Agreement as a result of a clerical error in the papering of the Award Agreement, the corporate records will control and the Participant will have no legally binding right to the incorrect term in the Award Agreement.

 

(c)                                   Shareholder Rights.   No Participant will be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Common Stock subject to an Award unless and until (i) such Participant has satisfied all requirements for exercise of, or the issuance of shares of Common Stock under, the Award pursuant to its terms, and (ii) the issuance of the Common Stock subject to the Award has been entered into the books and records of the Company.

 

(d)                                  No Employment or Other Service Rights.   Nothing in the Plan, any Award Agreement or any other instrument executed thereunder or in connection with any Stock Award granted pursuant thereto will confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Award was granted or will affect the right of the Company or an Affiliate to terminate (i) the employment of an Employee with or without notice and with or without cause, (ii) the service of a Consultant pursuant to the terms of such Consultant’s agreement with the Company or an Affiliate, or (iii) the service of a Director pursuant to the bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state in which the Company or the Affiliate is incorporated, as the case may be.

 

(e)                                   Change in Time Commitment .  In the event a Participant’s regular level of time commitment in the performance of his or her services for the Company and any Affiliates is reduced (for example, and without limitation, if the Participant is an Employee of the Company and the Employee has a change in status from a full-time Employee to a part-time Employee) after the date of grant of any Award to the Participant, the Board has the right in its sole discretion to (x) make a corresponding reduction in the number of shares subject to any portion of such Award that is scheduled to vest or become payable after the date of such change in time commitment, and (y) in lieu of or in combination with such a reduction, extend the vesting or payment schedule applicable to such Award. In the event of any such reduction, the Participant will have no right with respect to any portion of the Award that is so reduced or extended.

 

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(f)                                    Incentive Stock Option Limitations.   To the extent that the aggregate Fair Market Value (determined at the time of grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under all plans of the Company and any Affiliates) exceeds one hundred thousand dollars ($100,000) (or such other limit established in the Code) or otherwise does not comply with the rules governing Incentive Stock Options, the Options or portions thereof that exceed such limit (according to the order in which they were granted) or otherwise do not comply with such rules will be treated as Nonstatutory Stock Options, notwithstanding any contrary provision of the applicable Option Agreement(s).

 

(g)                                  Investment Assurances.   The Company may require a Participant, as a condition of exercising or acquiring Common Stock under any Award, (i) to give written assurances satisfactory to the Company as to the Participant’s knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Award; and (ii) to give written assurances satisfactory to the Company stating that the Participant is acquiring Common Stock subject to the Award for the Participant’s own account and not with any present intention of selling or otherwise distributing the Common Stock.  The foregoing requirements, and any assurances given pursuant to such requirements, will be inoperative if (A) the issuance of the shares upon the exercise or acquisition of Common Stock under the Award has been registered under a then currently effective registration statement under the Securities Act, or (B) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws.  The Company may, upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the Common Stock.

 

(h)                                  Withholding Obligations.   Unless prohibited by the terms of an Award Agreement, the Company may, in its sole discretion, satisfy any federal, state or local tax withholding obligation relating to an Award by any of the following means or by a combination of such means: (i) causing the Participant to tender a cash payment; (ii) withholding shares of Common Stock from the shares of Common Stock issued or otherwise issuable to the Participant in connection with the Award; provided, however , that no shares of Common Stock are withheld with a value exceeding the minimum amount of tax required to be withheld by law (or such lesser amount as may be necessary to avoid classification of the Award as a liability for financial accounting purposes); (iii) withholding cash from an Award settled in cash; (iv) withholding payment from any amounts otherwise payable to the Participant; or (v) by such other method as may be set forth in the Award Agreement.

 

(i)                                     Electronic Delivery .  Any reference herein to a “written” agreement or document will include any agreement or document delivered electronically, filed publicly at www.sec.gov (or any successor website thereto) or posted on the Company’s intranet (or other shared electronic medium controlled by the Company to which the Participant has access).

 

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(j)                                     Deferrals.   To the extent permitted by applicable law, the Board, in its sole discretion, may determine that the delivery of Common Stock or the payment of cash, upon the exercise, vesting or settlement of all or a portion of any Stock Award may be deferred and may establish programs and procedures for deferral elections to be made by Participants.  Deferrals by Participants will be made in accordance with Section 409A of the Code.  Consistent with Section 409A of the Code, the Board may provide for distributions while a Participant is still an employee or otherwise providing services to the Company.  The Board is authorized to make deferrals of Stock Awards and determine when, and in what annual percentages, Participants may receive payments, including lump sum payments, following the Participant’s termination of Continuous Service, and implement such other terms and conditions consistent with the provisions of the Plan and in accordance with applicable law.

 

(k)                                  Compliance with Section 409A of the Code.  Unless otherwise expressly provided for in an Award Agreement, the Plan and Award Agreements will be interpreted to the greatest extent possible in a manner that makes the Plan and the Awards granted hereunder exempt from Section 409A of the Code, and, to the extent not so exempt, in compliance with Section 409A of the Code.  If the Board determines that any Award granted hereunder is not exempt from and is therefore subject to Section 409A of the Code, the Award Agreement evidencing such Award will incorporate the terms and conditions necessary to avoid the consequences specified in Section 409A(a)(1) of the Code, and to the extent an Award Agreement is silent on terms necessary for compliance, such terms are hereby incorporated by reference into the Award Agreement.  Notwithstanding anything to the contrary in this Plan (and unless the Award Agreement specifically provides otherwise), if the shares of Common Stock are publicly traded, and if a Participant holding an Award that constitutes “deferred compensation” under Section 409A of the Code is a “specified employee” for purposes of Section 409A of the Code, no distribution or payment of any amount that is due because of a “separation from service” (as defined in Section 409A of the Code without regard to alternative definitions thereunder) will be issued or paid before the date that is six (6) months following the date of such Participant’s “separation from service” or, if earlier, the date of the Participant’s death, unless such distribution or payment can be made in a manner that complies with Section 409A of the Code, and any amounts so deferred will be paid in a lump sum on the day after such six (6) month period elapses, with the balance paid thereafter on the original schedule.

 

(l)                                     Clawback/Recovery .  All Awards granted under the Plan will be subject to recoupment in accordance with any clawback policy that the Company is required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law. In addition, the Board may impose such other clawback, recovery or recoupment provisions in an Award Agreement as the Board determines necessary or appropriate, including but not limited to a reacquisition right in respect of previously acquired shares of Common Stock or other cash or property upon the occurrence of an event constituting Cause.  No recovery of compensation under such a clawback policy will be an event giving rise to a right to resign for “good reason” or “constructive termination” (or similar term) under any agreement with the Company or an Affiliate.

 

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9.                                       ADJUSTMENTS UPON CHANGES IN COMMON STOCK; OTHER CORPORATE EVENTS.

 

(a)                                  Capitalization Adjustments .  In the event of a Capitalization Adjustment, the Board will appropriately and  proportionately adjust: (i) the class(es) and maximum number of securities subject to the Plan pursuant to Section 3(a), (ii) the class(es) and maximum number of securities that may be issued pursuant to the exercise of Incentive Stock Options pursuant to Section 3(c), (iii) the class(es) and maximum number of securities that may be awarded to any person pursuant to Sections 3(d), and (iv) the class(es) and number of securities and price per share of stock subject to outstanding Stock Awards.  The Board will make such adjustments, and its determination will be final, binding and conclusive.

 

(b)                                  Dissolution .  Except as otherwise provided in the Stock Award Agreement, in the event of a Dissolution of the Company, all outstanding Stock Awards (other than Stock Awards consisting of vested and outstanding shares of Common Stock not subject to a forfeiture condition or the Company’s right of repurchase) will terminate immediately prior to the completion of such Dissolution, and the shares of Common Stock subject to the Company’s repurchase rights or subject to a forfeiture condition may be repurchased or reacquired by the Company notwithstanding the fact that the holder of such Stock Award is providing Continuous Service, provided, however, that the Board may, in its sole discretion, cause some or all Stock Awards to become fully vested, exercisable and/or no longer subject to repurchase or forfeiture (to the extent such Stock Awards have not previously expired or terminated) before the Dissolution is completed but contingent on its completion.

 

(c)                                   Corporate Transactions.   The following provisions will apply to Stock Awards in the event of a Transaction unless otherwise provided in the Stock Award Agreement or any other written agreement between the Company or any Affiliate and the Participant or unless otherwise expressly provided by the Board at the time of grant of a Stock Award.  In the event of a Transaction, then, notwithstanding any other provision of the Plan, the Board may take one or more of the following actions with respect to Stock Awards, contingent upon the closing or completion of the Transaction:

 

(i)                                     arrange for the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) to assume or continue the Stock Award or to substitute a similar stock award for the Stock Award (including, but not limited to, an award to acquire the same consideration paid to the shareholders of the Company pursuant to the Transaction);

 

(ii)                                 arrange for the assignment of any reacquisition or repurchase rights held by the Company in respect of Common Stock issued pursuant to the Stock Award to the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company);

 

(iii)                             accelerate the vesting, in whole or in part, of the Stock Award (and, if applicable, the time at which the Stock Award may be exercised) to a date prior to the effective time of such Transaction as the Board determines (or, if the Board does not determine such a date, to the date that is five (5) days prior to the effective date of the Transaction), with such Stock Award terminating if not exercised (if applicable) at or prior to the effective time of the

 

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Transaction; provided, however, that the Board may require Participants to complete and deliver to the Company a notice of exercise before the effective date of a Transaction, which exercise is contingent upon the effectiveness of such Transaction;

 

(iv)                              arrange for the lapse, in whole or in part, of any reacquisition or repurchase rights held by the Company with respect to the Stock Award;

 

(v)                                  cancel or arrange for the cancellation of the Stock Award, to the extent not vested or not exercised prior to the effective time of the Transaction, in exchange for such cash consideration, if any, as the Board, in its sole discretion, may consider appropriate; and

 

(vi)                              make a payment, in such form as may be determined by the Board equal to the excess, if any, of (A)  the value of the property the Participant would have received upon the exercise of the Stock Award immediately prior to the effective time of the Transaction, over (B) any exercise price payable by such holder in connection with such exercise.  For clarity, this payment may be zero ($0) if the value of the property is equal to or less than the exercise price.  Payments under this provision may be delayed to the same extent that payment of consideration to the holders of the Company’s Common Stock in connection with the Transaction is delayed as a result of escrows, earn outs, holdbacks or any other contingencies.

 

The Board need not take the same action or actions with respect to all Stock Awards or portions thereof or with respect to all Participants.  The Board may take different actions with respect to the vested and unvested portions of a Stock Award.

 

(d)                                  Change in Control.   A Stock Award may be subject to additional acceleration of vesting and exercisability upon or after a Change in Control as may be provided in the Stock Award Agreement for such Stock Award or as may be provided in any other written agreement between the Company or any Affiliate and the Participant, but in the absence of such provision, no such acceleration will occur.

 

10.                                PLAN TERM; EARLIER TERMINATION OR SUSPENSION OF THE PLAN.

 

(a)                                  Plan Term.   The Board may suspend or terminate the Plan at any time.  Unless terminated sooner by the Board, the Plan will automatically terminate on the day before the tenth (10th) anniversary of the earlier of (i) the date the Plan is adopted by the Board, or (ii) the date the Plan is approved by the shareholders of the Company.  No Stock Awards may be granted under the Plan while the Plan is suspended or after it is terminated.

 

11.                                EFFECTIVE DATE OF PLAN.

 

This Plan will become effective on the Effective Date.

 

12.                                CHOICE OF LAW.

 

To the extent that United States federal laws do not otherwise control, this Plan and all determinations made and actions taken pursuant to this Plan shall be governed by the internal laws of the State of New York, and construed accordingly, except for those matters subject to

 

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The Companies Act, 1981 of Bermuda (as amended), which shall be governed by Bermuda law, without giving effect to principles of conflicts of laws, and construed accordingly.

 

13.                                DEFINITIONS.   As used in the Plan, the following definitions will apply to the capitalized terms indicated below:

 

(a)                                  Affiliate ” means, at the time of determination, each of the following: (i) any “parent” of the Company, as such term is defined in Rule 405; (ii) any “subsidiary” of the Company, as such term is defined in Rule 405; and (iii) any other entity in which the Company or any of its Affiliates has a material equity interest or control relationship unless otherwise designated by the Board.  An entity will be deemed an Affiliate of the Company for purposes of this definition only for such periods as the requisite ownership or control relationship is maintained.  The Board will have the authority to determine the time or times at which “parent” or “majority-owned subsidiary” status is determined within the definitions set forth in Rule 405.

 

(b)                                  Award ” means a Stock Award or a Performance Cash Award.

 

(c)                                   Award Agreement ” means a written agreement between the Company and a Participant evidencing the terms and conditions of an Award.

 

(d)                                  Board ” means the Board of Directors of the Company.

 

(e)                                   Capitalization Adjustment ” means any change that is made in, or other events that occur with respect to, the Common Stock subject to the Plan or subject to any Stock Award after the Effective Date without the receipt of consideration by the Company through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, large nonrecurring cash dividend, stock split, reverse stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure, or any similar equity restructuring transaction, as that term is used in Statement of Financial Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor thereto).  Notwithstanding the foregoing, the conversion of any convertible securities of the Company will not be treated as a Capitalization Adjustment.

 

(f)                                    Cause ” will have the meaning ascribed to such term in any written agreement between the Participant and the Company defining such term and, in the absence of such agreement, such term means, with respect to a Participant, the occurrence of any of the following events: (i)  such Participant’s willful failure substantially to perform his or her duties and responsibilities to the Company or deliberate violation of a Company policy; (ii) such Participant’s commission of any act of fraud, embezzlement, dishonesty or any other willful misconduct that has caused or is reasonably expected to result in material injury to the Company; (iii) unauthorized use or disclosure by such Participant of any proprietary information or trade secrets of the Company or any other party to whom the Participant owes an obligation of nondisclosure as a result of his or her relationship with the Company; or (iv) such Participant’s willful breach of any of his or her obligations under any written agreement or covenant with the Company.  The determination that a termination of the Participant’s Continuous Service is either for Cause or without Cause will be made by the Company, in its sole discretion.  Any determination by the Company that the Continuous Service of a Participant was terminated with

 

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or without Cause for the purposes of outstanding Stock Awards held by such Participant will have no effect upon any determination of the rights or obligations of the Company or such Participant for any other purpose.

 

(g)                                  Change in Control ” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:

 

(i)                                     any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities other than by virtue of a merger, consolidation or similar transaction.  Notwithstanding the foregoing, a Change in Control will not be deemed to occur (A) on account of the acquisition of securities of the Company directly from the Company, (B) on account of the acquisition of securities of the Company by an investor, any affiliate thereof or any other Exchange Act Person that acquires the Company’s securities in a transaction or series of related transactions the primary purpose of which is to obtain financing for the Company through the issuance of equity securities, (C) on account of the acquisition of securities of the Company by any individual who is, on the IPO Date, either an executive officer or a Director (either, an “ IPO Investor ”) and/or any entity in which an IPO Investor has a direct or indirect interest (whether in the form of voting rights or participation in profits or capital contributions) of more than 50% (collectively, the “ IPO Entities ”) or on account of the IPO Entities continuing to hold shares that come to represent more than 50% of the combined voting power of the Company’s then outstanding securities as a result of the conversion of any class of the Company’s securities into another class of the Company’s securities having a different number of votes per share pursuant to the conversion provisions set forth in the Company’s Amended and Restated Certificate of Incorporation; or (D) solely because the level of Ownership held by any Exchange Act Person (the “ Subject Person ”) exceeds the designated percentage threshold of the outstanding voting securities as a result of a repurchase or other acquisition of voting securities by the Company reducing the number of shares outstanding, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of voting securities by the Company, and after such share acquisition, the Subject Person becomes the Owner of any additional voting securities that, assuming the repurchase or other acquisition had not occurred, increases the percentage of the then outstanding voting securities Owned by the Subject Person over the designated percentage threshold, then a Change in Control will be deemed to occur;

 

(ii)                                 there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company and, immediately after the consummation of such merger, consolidation or similar transaction, the shareholders of the Company immediately prior thereto do not Own, directly or indirectly, either (A) outstanding voting securities representing more than fifty percent (50%) of the combined outstanding voting power of the surviving Entity in such merger, consolidation or similar transaction or (B) more than fifty percent (50%) of the combined outstanding voting power of the parent of the surviving Entity in such merger, consolidation or similar transaction, in each case in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such transaction; provided, however , that a merger, consolidation or similar transaction will not constitute a Change in Control under this prong of the definition if the outstanding voting

 

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securities representing more than 50% of the combined voting power of the surviving Entity or its parent are owned by the IPO Entities;

 

(iii)                             there is consummated a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries to an Entity, more than fifty percent (50%) of the combined voting power of the voting securities of which are Owned by shareholders of the Company in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such sale, lease, license or other disposition; provided, however , that a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries will not constitute a Change in Control under this prong of the definition if the outstanding voting securities representing more than 50% of the combined voting power of the acquiring Entity or its parent are owned by the IPO Entities; or

 

(iv)                              individuals who, on the date the Plan is adopted by the Board, are members of the Board (the “ Incumbent Board ”) cease for any reason to constitute at least a majority of the members of the Board; provided, however , that if the appointment or election (or nomination for election) of any new Board member was approved or recommended by a majority vote of the members of the Incumbent Board then still in office, such new member will, for purposes of this Plan, be considered as a member of the Incumbent Board.

 

Notwithstanding the foregoing definition or any other provision of the Plan, (A) the term Change in Control will not include a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of the Company, and (B) the definition of Change in Control (or any analogous term) in an individual written agreement between the Company or any Affiliate and the Participant will supersede the foregoing definition with respect to Awards subject to such agreement; provided, however, that if no definition of Change in Control or any analogous term is set forth in such an individual written agreement, the foregoing definition will apply.

 

(h)                                  Code ” means the Internal Revenue Code of 1986, as amended, including any applicable regulations and guidance thereunder.

 

(i)                                     Committee ” means a committee of two (2) or more Directors to whom authority has been delegated by the Board in accordance with Section 2(c).

 

(j)                                     Common Stock ” means the common shares of the Company.

 

(k)                                  Company ” means Axovant Sciences Ltd., an exempted limited company incorporated under the laws of Bermuda, with its registered office at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda, or any successor to all or substantially all of its businesses by merger, amalgamation, consolidation, purchase of assets, or otherwise.

 

(l)                                     Consultant means any person, including an advisor, who is (i) engaged by the Company or an Affiliate to render consulting or advisory services and is compensated for such services, or (ii) serving as a member of the board of directors of an Affiliate and is compensated

 

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for such services.  However, service solely as a Director, or payment of a fee for such service, will not cause a Director to be considered a “Consultant” for purposes of the Plan. Notwithstanding the foregoing, a person is treated as a Consultant under this Plan only if a Form S-8 Registration Statement under the Securities Act is available to register either the offer or the sale of the Company’s securities to such person.

 

(m)                              Continuous Service ” means that the Participant’s service with the Company or an Affiliate, whether as an Employee, Director or Consultant, is not interrupted or terminated.  A change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee, Director or Consultant or a change in the Entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s service with the Company or an Affiliate, will not terminate a Participant’s Continuous Service; provided, however , that if the Entity for which a Participant is rendering services ceases to qualify as an Affiliate, as determined by the Board in its sole discretion, such Participant’s Continuous Service will be considered to have terminated on the date such Entity ceases to qualify as an Affiliate.  For example, a change in status from an Employee of the Company to a Consultant of an Affiliate or to a Director will not constitute an interruption of Continuous Service.  To the extent permitted by law, the Board or the chief executive officer of the Company, in that party’s sole discretion, may determine whether Continuous Service will be considered interrupted in the case of (i) any leave of absence approved by the Board or chief executive officer, including sick leave, military leave or any other personal leave, or (ii) transfers between the Company, an Affiliate, or their successors.  Notwithstanding the foregoing, a leave of absence will be treated as Continuous Service for purposes of vesting in an Award only to such extent as may be provided in the Company’s leave of absence policy, in the written terms of any leave of absence agreement or policy applicable to the Participant, or as otherwise required by law.

 

(n)                                  Corporate Transaction ” means a sale of all or substantially all of the Company’s assets, or a merger, consolidation or other capital reorganization or business combination transaction of the Company with or into another corporation, entity or person, or the direct or indirect acquisition (including by way of a tender or exchange offer) by any person, or persons acting as a group, of beneficial ownership or a right to acquire beneficial ownership of shares representing a majority of the voting power of the then outstanding shares of capital stock of the Company.

 

(o)                                  Covered Employee ” will have the meaning provided in Section 162(m)(3) of the Code.

 

(p)                                  Director ” means a member of the Board.

 

(q)                                  Disability ” means, with respect to a Participant, the inability of such Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or that has lasted or can be expected to last for a continuous period of not less than twelve (12) months as provided in Sections 22(e)(3) and 409A(a)(2)(c)(i) of the Code, and will be determined by the Board on the basis of such medical evidence as the Board deems warranted under the circumstances.

 

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(r)                                   Dissolution means when the Company has completely wound up its affairs and dissolved in accordance with the Companies Act 1981 of Bermuda.

 

(s)                                    Effective Date ” means the effective date of this Plan, which is the earlier of (i) the date that this Plan is first approved by the Company’s shareholders, and (ii) the date this Plan is adopted by the Board.

 

(t)                                     Employee means any person employed by the Company or an Affiliate.  However, service solely as a Director, or payment of a fee for such services, will not cause a Director to be considered an “Employee” for purposes of the Plan.

 

(u)                                  Entity ” means a corporation, partnership, limited liability company or other entity.

 

(v)                                  Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

(w)                                Exchange Act Person ” means any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person” will not include (i) the Company or any Subsidiary of the Company, (ii) any employee benefit plan of the Company or any Subsidiary of the Company or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary of the Company, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, (iv) an Entity Owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their Ownership of stock of the Company; or (v) any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of the Effective Date, is the Owner, directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities.

 

(x)                                  Fair Market Value ” means, as of any date, the value of the Common Stock determined as follows:

 

(i)                                     If the Common Stock is listed on any established stock exchange or traded on any established market, the Fair Market Value of a share of Common Stock will be, unless otherwise determined by the Board, the closing sales price for such stock as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the date of determination, as reported in a source the Board deems reliable.

 

(ii)                                 Unless otherwise provided by the Board, if there is no closing sales price for the Common Stock on the date of determination, then the Fair Market Value will be the closing selling price on the last preceding date for which such quotation exists.

 

(iii)                             In the absence of such markets for the Common Stock, the Fair Market Value will be determined by the Board in good faith and in a manner that complies with Sections 409A and 422 of the Code.

 

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(y)                                  Incentive Stock Option ” means an option granted pursuant to Section 5 of the Plan that is intended to be, and that qualifies as, an “incentive stock option” within the meaning of Section 422 of the Code.

 

(z)                                   IPO Date ” means the date and time of execution of the underwriting agreement between the Company and the underwriter(s) managing the initial public offering of the Common Stock, pursuant to which the Common Stock is priced for the initial public offering.

 

(aa)                           Non-Employee Director ” means a Director who either (i) is not a current employee or officer of the Company or an Affiliate, does not receive compensation, either directly or indirectly, from the Company or an Affiliate for services rendered as a consultant or in any capacity other than as a Director (except for an amount as to which disclosure would not be required under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act (“ Regulation S-K ”)), does not possess an interest in any other transaction for which disclosure would be required under Item 404(a) of Regulation S-K, and is not engaged in a business relationship for which disclosure would be required pursuant to Item 404(b) of Regulation S-K; or (ii) is otherwise considered a “non-employee director” for purposes of Rule 16b-3.

 

(bb)                           Nonstatutory Stock Option ” means any option granted pursuant to Section 5 of the Plan that does not qualify as an Incentive Stock Option.

 

(cc)                             Officer ” means a person who is an officer within the meaning of Section 16 of the Exchange Act.

 

(dd)                           Option ” means an Incentive Stock Option or a Nonstatutory Stock Option to purchase shares of Common Stock granted pursuant to the Plan.

 

(ee)                             Option Agreement ” means a written agreement between the Company and an Optionholder evidencing the terms and conditions of an Option grant.  Each Option Agreement will be subject to the terms and conditions of the Plan.

 

(ff)                               Optionholder ” means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Option.

 

(gg)                           Other Stock Award ” means an award based in whole or in part by reference to the Common Stock which is granted pursuant to the terms and conditions of Section 6(c).

 

(hh)                           Other Stock Award Agreement ” means a written agreement between the Company and a holder of an Other Stock Award evidencing the terms and conditions of an Other Stock Award grant.  Each Other Stock Award Agreement will be subject to the terms and conditions of the Plan.

 

(ii)                                 Outside Director ” means a Director who either (i) is not a current employee of the Company or an “affiliated corporation” (within the meaning of Treasury Regulations promulgated under Section 162(m) of the Code), is not a former employee of the Company or an “affiliated corporation” who receives compensation for prior services (other than benefits under a tax-qualified retirement plan) during the taxable year, has not been an officer of the Company or an “affiliated corporation,” and does not receive remuneration from the Company or an

 

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“affiliated corporation,” either directly or indirectly, in any capacity other than as a Director, or (ii) is otherwise considered an “outside director” for purposes of Section 162(m) of the Code.

 

(jj)                                 Own ,” “ Owned ,” “ Owner ,” “ Ownership A person or Entity will be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired “Ownership” of securities if such person or Entity, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power, which includes the power to vote or to direct the voting, with respect to such securities.

 

(kk)                           Participant ” means a person to whom an Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Award.

 

(ll)                                 Performance Cash Award ” means an award of cash granted pursuant to the terms and conditions of Section 6(c)(ii).

 

(mm)                   Performance Criteria means the one or more criteria that the Board will select for purposes of establishing the Performance Goals for a Performance Period.  The Performance Criteria that will be used to establish such Performance Goals may be based on any one of, or combination of, the following as determined by the Board: (i) earnings (including earnings per share and net earnings); (ii) earnings before interest, taxes and depreciation; (iii) earnings before interest, taxes, depreciation and amortization; (iv) earnings before interest, taxes, depreciation, amortization and legal settlements; (v) earnings before interest, taxes, depreciation, amortization, legal settlements and other income (expense); (vi) earnings before interest, taxes, depreciation, amortization, legal settlements, other income (expense) and stock-based compensation; (vii) earnings before interest, taxes, depreciation, amortization, legal settlements, other income (expense), stock-based compensation and changes in deferred revenue; (viii) total stockholder return; (ix) return on equity or average stockholder’s equity; (x) return on assets, investment, or capital employed; (xi) stock price; (xii) margin (including gross margin); (xiii) income (before or after taxes); (xiv) operating income; (xv) operating income after taxes; (xvi) pre-tax profit; (xvii) operating cash flow; (xviii) sales or revenue targets; (xix) increases in revenue or product revenue; (xx) expenses and cost reduction goals; (xxi) improvement in or attainment of working capital levels; (xxii) economic value added (or an equivalent metric); (xxiii) market share; (xxiv) cash flow; (xxv) cash flow per share; (xxvi) share price performance; (xxvii) debt reduction; (xxviii) implementation or completion of projects or processes; (xxix) employee retention; (xxx) stockholders’ equity; (xxxi) capital expenditures; (xxxii) debt levels; (xxxiii) operating profit or net operating profit; (xxxiv) workforce diversity; (xxxv) growth of net income or operating income; (xxxvi) billings; (xxxvii) bookings; (xxxviii) initiation or completion of phases of clinical trials and/or studies by specified dates; (xxxix) patient enrollment rates, (xxxx) budget management; (xxxxi) regulatory body and/or pricing approval with respect to products, studies and/or trials; (xxxxii) commercial launch of products;  (xxxxiii) progress of partnered programs; (xxxxix) strategic partnerships or transactions; and (xxxxx) to the extent that an Award is not intended to comply with Section 162(m) of the Code, other measures of performance selected by the Board.

 

(nn)                           Performance Goals means, for a Performance Period, the one or more goals established by the Board for the Performance Period based upon the Performance Criteria.  Performance Goals may be based on a Company-wide basis, with respect to one or more

 

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business units, divisions, Affiliates, or business segments, and in either absolute terms or relative to the performance of one or more comparable companies or the performance of one or more relevant indices.  Unless specified otherwise by the Board (i) in the Award Agreement at the time the Award is granted or (ii) in such other document setting forth the Performance Goals at the time the Performance Goals are established, the Board will appropriately make adjustments in the method of calculating the attainment of Performance Goals for a Performance Period as follows: (1) to exclude restructuring and/or other nonrecurring charges; (2) to exclude exchange rate effects; (3) to exclude the effects of changes to generally accepted accounting principles; (4) to exclude the effects of any statutory adjustments to corporate tax rates; (5) to exclude the effects of any “extraordinary items” as determined under generally accepted accounting principles; (6) to exclude the dilutive effects of acquisitions or joint ventures; (7) to assume that any business divested by the Company achieved performance objectives at targeted levels during the balance of a Performance Period following such divestiture; (8) to exclude the effect of any change in the outstanding shares of common stock of the Company by reason of any stock dividend or split, stock repurchase, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to common stockholders other than regular cash dividends; (9) to exclude the effects of stock based compensation and the award of bonuses under the Company’s bonus plans; (10) to exclude costs incurred in connection with potential acquisitions or divestitures that are required to expensed under generally accepted accounting principles; (11) to exclude the goodwill and intangible asset impairment charges that are required to be recorded under generally accepted accounting principles; (12) to exclude the effect of any other unusual, non-recurring gain or loss or other extraordinary item; (13) to exclude the effects of the timing of acceptance for review and/or approval of submissions to the Food and Drug Administration or any other regulatory body and (14) to exclude the effects of entering into or achieving milestones involved in licensing, collaboration, or other business development transactions.  In addition, the Board retains the discretion to reduce or eliminate the compensation or economic benefit due upon attainment of Performance Goals and to define the manner of calculating the Performance Criteria it selects to use for such Performance Period. Partial achievement of the specified criteria may result in the payment or vesting corresponding to the degree of achievement as specified in the Stock Award Agreement or the written terms of a Performance Cash Award.

 

(oo)                           Performance Period means the period of time selected by the Board over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to and the payment of a Stock Award or a Performance Cash Award.  Performance Periods may be of varying and overlapping duration, at the sole discretion of the Board.

 

(pp)                           Performance Stock Award ” means a Stock Award granted under the terms and conditions of Section 6(c)(i).

 

(qq)                           Plan ” means this Axovant Sciences Ltd. 2015 Equity Incentive Plan.

 

(rr)                             Restricted Stock Award means an award of shares of Common Stock which is granted pursuant to the terms and conditions of Section 6(a).

 

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(ss)                               Restricted Stock Award Agreement means a written agreement between the Company and a holder of a Restricted Stock Award evidencing the terms and conditions of a Restricted Stock Award grant.  Each Restricted Stock Award Agreement will be subject to the terms and conditions of the Plan.

 

(tt)                                 Restricted Stock Unit Award means a right to receive shares of Common Stock which is granted pursuant to the terms and conditions of Section 6(b).

 

(uu)                           Restricted Stock Unit Award Agreement means a written agreement between the Company and a holder of a Restricted Stock Unit Award evidencing the terms and conditions of a Restricted Stock Unit Award grant.  Each Restricted Stock Unit Award Agreement will be subject to the terms and conditions of the Plan.

 

(vv)                           Rule 16b-3 ” means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time to time.

 

(ww)                       Rule 405 ” means Rule 405 promulgated under the Securities Act.

 

(xx)                           Securities Act ” means the Securities Act of 1933, as amended.

 

(yy)                           Stock Appreciation Right or “ SAR ” means a right to receive the appreciation on Common Stock that is granted pursuant to the terms and conditions of Section 5.

 

(zz)                             Stock Appreciation Right Agreement means a written agreement between the Company and a holder of a Stock Appreciation Right evidencing the terms and conditions of a Stock Appreciation Right grant.  Each Stock Appreciation Right Agreement will be subject to the terms and conditions of the Plan.

 

(aaa)                    Stock Award means any right to receive Common Stock granted under the Plan, including an Incentive Stock Option, a Nonstatutory Stock Option, a Restricted Stock Award, a Restricted Stock Unit Award, a Stock Appreciation Right, a Performance Stock Award, or any Other Stock Award.

 

(bbb)                    Stock Award Agreement means a written agreement between the Company and a Participant evidencing the terms and conditions of a Stock Award grant.  Each Stock Award Agreement will be subject to the terms and conditions of the Plan.

 

(ccc)                       Subsidiary ” means, with respect to the Company, (i) any corporation of which more than fifty percent (50%) of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, stock of any other class or classes of such corporation will have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, Owned by the Company, and (ii) any partnership, limited liability company or other entity in which the Company has a direct or indirect interest (whether in the form of voting or participation in profits or capital contribution) of more than fifty percent (50%) .

 

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(ddd)                    Ten Percent Shareholder ” means a person who Owns (or is deemed to Own pursuant to Section 424(d) of the Code) shares possessing more than ten percent (10%) of the total combined voting power of all classes of shares of the Company or any Affiliate.

 

(eee)                       Transaction ” means a Corporate Transaction or a Change in Control.

 

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Exhibit 10.2

 

AXOVANT SCIENCES LTD.
STOCK OPTION GRANT NOTICE
(2015 EQUITY INCENTIVE PLAN)

 

Axovant Sciences Ltd. (the “ Company ”), pursuant to its 2015 Equity Incentive Plan (the “ Plan ”), hereby grants to Optionholder an option to purchase the number of common shares of the Company (the “ Common Stock ”) set forth below.  This option is subject to all of the terms and conditions as set forth in this stock option grant notice (this “ Stock Option Grant Notice ”), in the Option Agreement, the Plan and the Notice of Exercise, all of which are attached hereto and incorporated herein in their entirety.  Capitalized terms not explicitly defined herein but defined in the Plan or the Option Agreement will have the same definitions as in the Plan or the Option Agreement.  If there is any conflict between the terms herein and the Plan, the terms of the Plan will control.

 

Optionholder:

 

Date of Grant:

 

Vesting Commencement Date:

 

Number of Shares Subject to Option:

 

Exercise Price (Per Share):

 

Total Exercise Price:

 

Expiration Date:

 

 

Type of Grant:

o Incentive Stock Option (1)

o Nonstatutory Stock Option

 

 

 

Exercise Schedule :

o Same as Vesting Schedule

o Early Exercise Permitted

 

Vesting Schedule :

 

Payment:

By one or a combination of the following items (described in the Option Agreement):

 

 

 

¨               By cash, check, bank draft, wire transfer or money order payable to the Company

 

¨               Pursuant to a Regulation T Program

 

¨               By delivery of already-owned shares

 

¨               If and only to the extent this Option is a Nonstatutory Stock Option, and subject to the Company’s consent at the time of exercise, by a “net exercise” arrangement

 


(1)   If this is an Incentive Stock Option, it (plus other outstanding Incentive Stock Options) cannot be first exercisable for more than $100,000 in value (measured by exercise price) in any calendar year.  Any excess over $100,000 is a Nonstatutory Stock Option.

 

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Additional Terms/Acknowledgements:   Optionholder acknowledges receipt of, and understands and agrees to, this Stock Option Grant Notice, the Option Agreement and the Plan.  Optionholder acknowledges and agrees that this Stock Option Grant Notice and the Option Agreement may not be modified, amended or revised except as provided in the Plan.  Optionholder further acknowledges that as of the Date of Grant, this Stock Option Grant Notice, the Option Agreement, and the Plan set forth the entire understanding between Optionholder and the Company regarding this option award and supersede all prior oral and written agreements, promises and/or representations on that subject with the exception of (i) Stock Awards previously granted and delivered to Optionholder, (ii) any compensation recovery policy that is adopted by the Company or is otherwise required by applicable law and (iii) any written employment or severance arrangement that would provide for vesting acceleration of this option upon the terms and conditions set forth therein.

 

OTHER AGREEMENTS:

 

 

 

 

By accepting this option, Optionholder consents to receive such documents by electronic delivery and to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

 

 

AXOVANT SCIENCES LTD.

 

OPTIONHOLDER:

 

 

 

By:

 

 

 

Signature

 

Signature

 

 

 

Title:

 

 

Date:

 

 

 

 

 

 

Date:

 

 

 

 

ATTACHMENTS :  Option Agreement, 2015 Equity Incentive Plan and Notice of Exercise

 

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ATTACHMENT I

 

OPTION AGREEMENT

 



 

AXOVANT SCIENCES LTD.
2015 EQUITY INCENTIVE PLAN

 

OPTION AGREEMENT
(INCENTIVE STOCK OPTION OR NONSTATUTORY STOCK OPTION)

 

Pursuant to your Stock Option Grant Notice (“ Stock Option Grant Notice ”) and this Option Agreement (this “ Option Agreement ”), Axovant Sciences Ltd. (the “ Company ”) has granted you an option under its 2015 Equity Incentive Plan (the “ Plan ”) to purchase the number of common shares of the Company (the “ Common Stock ”) indicated in your Stock Option Grant Notice at the exercise price indicated in your Stock Option Grant Notice.  The option is granted to you effective as of the date of grant set forth in the Stock Option Grant Notice (the “ Date of Grant ”).  If there is any conflict between the terms in this Option Agreement and the Plan, the terms of the Plan will control.  Capitalized terms not explicitly defined in this Option Agreement or in the Stock Option Grant Notice but defined in the Plan will have the same definitions as in the Plan.

 

The details of your option, in addition to those set forth in the Stock Option Grant Notice and the Plan, are as follows:

 

1.                                       VESTING.   Your option will vest as provided in your Stock Option Grant Notice.  Vesting will cease upon the termination of your Continuous Service.

 

2.                                       NUMBER OF SHARES AND EXERCISE PRICE.  The number of shares of Common Stock subject to your option and your exercise price per share in your Stock Option Grant Notice will be adjusted for Capitalization Adjustments.

 

3.                                       EXERCISE RESTRICTION FOR NON-EXEMPT EMPLOYEES.   If you are an Employee eligible for overtime compensation under the Fair Labor Standards Act of 1938, as amended (that is, a “ Non-Exempt Employee ”), and except as otherwise provided in the Plan, you may not exercise your option until you have completed at least six (6) months of Continuous Service measured from the Date of Grant, even if you have already been an employee for more than six (6) months.  Consistent with the provisions of the Worker Economic Opportunity Act, you may exercise your option as to any vested portion prior to such six (6) month anniversary in the case of (i) your death or disability, (ii) a Corporate Transaction in which your option is not assumed, continued or substituted, (iii) a Change in Control or (iv) your termination of Continuous Service on your “retirement” (as defined in the Company’s benefit plans).

 

4.                                       EXERCISE PRIOR TO VESTING (“EARLY EXERCISE”).   If permitted in your Stock Option Grant Notice ( i.e. , the “Exercise Schedule” indicates “Early Exercise Permitted”) and subject to the provisions of your option, you may elect at any time that is both (i) during the period of your Continuous Service and (ii) during the term of your option, to exercise all or part of your option, including the unvested portion of your option; provided , however , that:

 

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(a)                            a partial exercise of your option will be deemed to cover first vested shares of Common Stock and then the earliest vesting installment of unvested shares of Common Stock;

 

(b)                            any shares of Common Stock so purchased from installments that have not vested as of the date of exercise will be subject to the purchase option in favor of the Company as described in the Company’s form of Early Exercise Stock Purchase Agreement;

 

(c)                             you will enter into the Company’s form of Early Exercise Stock Purchase Agreement with a vesting schedule that will result in the same vesting as if no early exercise had occurred; and

 

(d)                            if your option is an Incentive Stock Option, then, to the extent that the aggregate Fair Market Value (determined at the Date of Grant) of the shares of Common Stock with respect to which your option plus all other Incentive Stock Options you hold are exercisable for the first time by you during any calendar year (under all plans of the Company and its Affiliates) exceeds $100,000, your option(s) or portions thereof that exceed such limit (according to the order in which they were granted) will be treated as Nonstatutory Stock Options.

 

5.                                       METHOD OF PAYMENT.   You must pay the full amount of the exercise price for the shares you wish to exercise.  You may pay the exercise price in cash or by check, bank draft, wire transfer or money order payable to the Company or in any other manner permitted by your Stock Option Grant Notice , which may include one or more of the following:

 

(a)                            Pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of Common Stock, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds.  This manner of payment is also known as a “broker-assisted exercise”, “same day sale”, or “sell to cover”.

 

(b)                            By delivery to the Company (either by actual delivery or attestation) of already-owned shares of Common Stock that are owned free and clear of any liens, claims, encumbrances or security interests, and that are valued at Fair Market Value on the date of exercise.  “Delivery” for these purposes, in the sole discretion of the Company at the time you exercise your option, will include delivery to the Company of your attestation of ownership of such shares of Common Stock in a form approved by the Company.  You may not exercise your option by delivery to the Company of Common Stock if doing so would violate the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock.

 

6.                                       WHOLE SHARES.   You may exercise your option only for whole shares of Common Stock.

 

7.                                       SECURITIES LAW COMPLIANCE.   In no event may you exercise your option unless the shares of Common Stock issuable upon exercise are then registered under the Securities Act or, if not registered, the Company has determined that your exercise and the issuance of the shares would be exempt from the registration requirements of the Securities Act.  The exercise of your option also must comply with all other applicable laws and regulations governing your option, and you may not exercise your option if the Company determines that

 

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such exercise would not be in material compliance with such laws and regulations (including any restrictions on exercise required for compliance with Treas. Reg. 1.401(k)-1(d)(3), if applicable).

 

8.                                       TERM.   You may not exercise your option before the Date of Grant or after the expiration of the option’s term.  The term of your option expires, subject to the provisions of Section 5(h) of the Plan, upon the earliest of the following:

 

(a)                            immediately upon the termination of your Continuous Service for Cause;

 

(b)                            three (3) months after the termination of your Continuous Service for any reason other than Cause, your Disability, or your death (except as otherwise provided in Section 8(d) below); provided , however , that if during any part of such three-month period your option is not exercisable solely because of the condition set forth in the section above relating to “Securities Law Compliance,” your option will not expire until the earlier of the Expiration Date or until it has been exercisable for an aggregate period of three (3) months after the termination of your Continuous Service; provided further , if during any part of such three (3) month period, the sale of any shares of Common Stock received upon exercise of your option would violate the Company’s insider trading policy, then your option will not expire until the earlier of the Expiration Date or until it has been exercisable for an aggregate period of three (3) months after the termination of your Continuous Service during which the sale of the shares of Common Stock received upon exercise of your option would not be in violation of the Company’s insider trading policy.  Notwithstanding the foregoing, if (i) you are a Non-Exempt Employee, (ii) your Continuous Service terminates within six (6) months after the Date of Grant, and (iii) you have vested in a portion of your option at the time of your termination of Continuous Service, your option will not expire until the earlier of (x) the later of (A) the date that is seven (7) months after the Date of Grant, and (B) the date that is three (3) months after the termination of your Continuous Service, and (y) the Expiration Date;

 

(c)                             twelve (12) months after the termination of your Continuous Service due to your Disability (except as otherwise provided in Section 8(d)) below;

 

(d)                            eighteen (18) months after your death if you die either during your Continuous Service or within three (3) months after your Continuous Service terminates for any reason other than Cause;

 

(e)                             the Expiration Date indicated in your Stock Option Grant Notice; and

 

(f)                              the day before the tenth (10th) anniversary of the Date of Grant.

 

If your option is an Incentive Stock Option, note that to obtain the federal income tax advantages associated with an Incentive Stock Option, the Code requires that at all times beginning on the Date of Grant and ending on the day three (3) months before the date of your option’s exercise, you must be an employee of the Company or an Affiliate, except in the event of your death or Disability.  The Company has provided for extended exercisability of your option under certain circumstances for your benefit but cannot guarantee that your option will necessarily be treated as an Incentive Stock Option if you continue to provide services to the Company or an Affiliate as a Consultant or Director after your employment terminates or if you

 

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otherwise exercise your option more than three (3) months after the date your employment with the Company or an Affiliate terminates.

 

9.                                       EXERCISE.

 

(a)                            You may exercise the vested portion of your option (and the unvested portion of your option if your Stock Option Grant Notice so permits) during its term by (i) delivering a Notice of Exercise (in a form designated by the Company) or completing such other documents and/or procedures designated by the Company for exercise and (ii) paying the exercise price and any applicable withholding taxes to the Company’s Secretary, stock plan administrator, or such other person as the Company may designate, together with such additional documents as the Company may then require.

 

(b)                            By exercising your option you agree that, as a condition to any exercise of your option, the Company may require you to enter into an arrangement providing for the payment by you to the Company of any tax withholding obligation of the Company arising by reason of (i) the exercise of your option, or (ii) the disposition of shares of Common Stock acquired upon such exercise.

 

(c)                             If your option is an Incentive Stock Option, by exercising your option you agree that you will notify the Company in writing within fifteen (15) days after the date of any disposition of any of the shares of Common Stock issued upon exercise of your option that occurs within two (2) years after the Date of Grant or within one (1) year after such shares of Common Stock are transferred upon exercise of your option.

 

(d)                            By exercising your option you agree that you will not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale with respect to any shares of Common Stock or other securities of the Company held by you, for a period of one hundred eighty (180) days following the effective date of a registration statement of the Company filed under the Securities Act or such longer period as the underwriters or the Company will request to facilitate compliance with FINRA Rule 2711 or NYSE Member Rule 472 or any successor or similar rule or regulation (the “ Lock-Up Period ”); provided , however , that nothing contained in this section will prevent the exercise of a repurchase option, if any, in favor of the Company during the Lock-Up Period.  You further agree to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriters that are consistent with the foregoing or that are necessary to give further effect thereto.  In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to your shares of Common Stock until the end of such period.  You also agree that any transferee of any shares of Common Stock (or other securities) of the Company held by you will be bound by this Section 9(d).  The underwriters of the Company’s stock are intended third party beneficiaries of this Section 9(d) and will have the right, power and authority to enforce the provisions hereof as though they were a party hereto.

 

10.                                TRANSFERABILITY.   Except as otherwise provided in this Section 10, your option is not transferable, except by will or by the laws of descent and distribution, and is exercisable during your life only by you.

 

I-4


 

(a)                            Certain Trusts.   Upon receiving written permission from the Board or its duly authorized designee, you may transfer your option to a trust if you are considered to be the sole beneficial owner (determined under Section 671 of the Code and applicable state law) while the option is held in the trust.  You and the trustee must enter into transfer and other agreements required by the Company.

 

(b)                            Domestic Relations Orders.   Upon receiving written permission from the Board or its duly authorized designee, and provided that you and the designated transferee enter into transfer and other agreements required by the Company, you may transfer your option pursuant to the terms of a domestic relations order, official marital settlement agreement or other divorce or separation instrument as permitted by Treasury Regulation 1.421-1(b)(2) that contains the information required by the Company to effectuate the transfer.  You are encouraged to discuss the proposed terms of any division of this option with the Company prior to finalizing the domestic relations order or marital settlement agreement to help ensure the required information is contained within the domestic relations order or marital settlement agreement.  If this option is an Incentive Stock Option, this option may be deemed to be a Nonstatutory Stock Option as a result of such transfer.

 

(c)                             Beneficiary Designation.   Upon receiving written permission from the Board or its duly authorized designee, you may, by delivering written notice to the Company, in a form approved by the Company and any broker designated by the Company to handle option exercises, designate a third party who, on your death, will thereafter be entitled to exercise this option and receive the Common Stock or other consideration resulting from such exercise.  In the absence of such a designation, your executor or administrator of your estate will be entitled to exercise this option and receive, on behalf of your estate, the Common Stock or other consideration resulting from such exercise.

 

11.                                RIGHT OF REPURCHASE.   The Company will have the right to repurchase all of the shares of Common Stock you acquire pursuant to the exercise of your option upon termination of your Continuous Service for Cause.  Such repurchase will be at the exercise price you paid to acquire the shares and will be effected pursuant to such other terms and conditions, and at such time, as the Company shall determine.

 

12.                                OPTION NOT A SERVICE CONTRACT.   Your option is not an employment or service contract, and nothing in your option will be deemed to create in any way whatsoever any obligation on your part to continue in the employ of the Company or an Affiliate, or of the Company or an Affiliate to continue your employment.  In addition, nothing in your option will obligate the Company or an Affiliate, their respective shareholders, boards of directors, officers or employees to continue any relationship that you might have as a Director or Consultant for the Company or an Affiliate.

 

13.                                WITHHOLDING OBLIGATIONS.

 

(a)                            At the time you exercise your option, in whole or in part, and at any time thereafter as requested by the Company, you hereby authorize withholding from payroll and any other amounts payable to you, and otherwise agree to make adequate provision for (including by means of a “same day sale” pursuant to a program developed under Regulation T as promulgated

 

I-5



 

by the Federal Reserve Board to the extent permitted by the Company), any sums required to satisfy the federal, state, local and foreign tax withholding obligations of the Company or an Affiliate, if any, which arise in connection with the exercise of your option.

 

(b)                            If this option is a Nonstatutory Stock Option, then upon your request and subject to approval by the Company, and compliance with any applicable legal conditions or restrictions, the Company may withhold from fully vested shares of Common Stock otherwise issuable to you upon the exercise of your option a number of whole shares of Common Stock having a Fair Market Value, determined by the Company as of the date of exercise, not in excess of the minimum amount of tax required to be withheld by law (or such lower amount as may be necessary to avoid classification of your option as a liability for financial accounting purposes).  Any adverse consequences to you arising in connection with such share withholding procedure shall be your sole responsibility.

 

(c)                             You may not exercise your option unless the tax withholding obligations of the Company and/or any Affiliate are satisfied.  Accordingly, you may not be able to exercise your option when desired even though your option is vested, and the Company will have no obligation to issue a certificate for such shares of Common Stock or release such shares of Common Stock from any escrow provided for herein, if applicable, unless such obligations are satisfied.

 

14.                                TAX CONSEQUENCES . You hereby agree that the Company does not have a duty to design or administer the Plan or its other compensation programs in a manner that minimizes your tax liabilities. You will not make any claim against the Company, or any of its Officers, Directors, Employees or Affiliates related to tax liabilities arising from your option or your other compensation.  In particular, you acknowledge that this option is exempt from Section 409A of the Code only if the exercise price per share specified in the Stock Option Grant Notice is at least equal to the “fair market value” per share of Common Stock on the Date of Grant and there is no other impermissible deferral of compensation associated with the option.

 

15.                                OTHER DOCUMENTS .  You hereby acknowledge receipt of and the right to receive a document providing the information required by Rule 428(b)(1) promulgated under the Securities Act, which includes the Plan prospectus.  In addition, you acknowledge receipt of the Company’s policy permitting certain individuals to sell shares only during certain “window” periods and the Company’s insider trading policy, in effect from time to time.

 

16.                                EFFECT ON OTHER EMPLOYEE BENEFIT PLANS .  The value of this option will not be included as compensation, earnings, salaries, or other similar terms used when calculating your benefits under any employee benefit plan sponsored by the Company or any Affiliate, except as such plan otherwise expressly provides. The Company expressly reserves its rights to amend, modify, or terminate any of the Company’s or any Affiliate’s employee benefit plans.

 

17.                                NOTICES.   Any notices provided for in your option or the Plan will be given in writing (including electronically) and will be deemed effectively given upon receipt or, in the case of notices delivered by mail by the Company to you, five (5) days after deposit in the United States mail, postage prepaid, addressed to you at the last address you provided to the Company.  The Company may, in its sole discretion, decide to deliver any documents related to

 

I-6



 

participation in the Plan and this option by electronic means or to request your consent to participate in the Plan by electronic means.  By accepting this option, you consent to receive such documents by electronic delivery and to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

 

18.                                VOTING RIGHTS .  You will not have voting or any other rights as a shareholder of the Company with respect to the shares to be issued pursuant to this option until such shares are issued to you.  Upon such issuance, you will obtain full voting and other rights as a shareholder of the Company.  Nothing contained in this option, and no action taken pursuant to its provisions, will create or be construed to create a trust of any kind or a fiduciary relationship between you and the Company or any other person.

 

19.                                SEVERABILITY .  If all or any part of this Option Agreement or the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity will not invalidate any portion of this Option Agreement or the Plan not declared to be unlawful or invalid.  Any Section of this Option Agreement (or part of such a Section) so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.

 

20.                                MISCELLANEOUS .

 

(a)                            The rights and obligations of the Company under your option will be transferable to any one or more persons or entities, and all covenants and agreements hereunder will inure to the benefit of, and be enforceable by the Company’s successors and assigns.

 

(b)                            You agree upon request to execute any further documents or instruments necessary or desirable in the sole determination of the Company to carry out the purposes or intent of your option.

 

(c)                             You acknowledge and agree that you have reviewed your option in its entirety, have had an opportunity to obtain the advice of counsel prior to executing and accepting your option, and fully understand all provisions of your option.

 

(d)                            This Option Agreement will be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

 

(e)                             All obligations of the Company under the Plan and this Option Agreement will be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

 

*                                          *                                          *                                          *                                          *                                          *

 

I-7



 

This Option Agreement will be deemed to be signed by you upon the signing or the acceptance by you of the Stock Option Grant Notice to which it is attached.

 

I-8



 

ATTACHMENT II

 

2015 EQUITY INCENTIVE PLAN

 

II-1



 

ATTACHMENT III

 

NOTICE OF EXERCISE

 



 

NOTICE OF EXERCISE

 

AXOVANT SCIENCES LTD.

 

Clarendon House

 

2 Church Street

 

Hamilton HM 11, Bermuda

Date of Exercise:                       

 

This constitutes notice to Axovant Sciences Ltd. (the “ Company ”) under my stock option that I elect to purchase the below number of common shares of the Company (the “ Shares ”) for the exercise price set forth below.

 

Type of option (check one):

 

Incentive o

 

Nonstatutory o

 

 

 

 

 

 

 

Stock option dated:

 

 

 

 

 

 

 

 

 

 

 

Number of Shares as to which option is exercised:

 

 

 

 

 

 

 

 

 

 

 

Certificates to be issued in name of:

 

 

 

 

 

 

 

 

 

 

 

Total exercise price:

 

$

 

 

$

 

 

 

 

 

 

 

 

Cash payment delivered herewith:

 

$

 

 

$

 

 

 

 

 

 

 

 

Regulation T Program (cashless exercise):

 

$

 

 

$

 

 

 

 

 

 

 

 

Value of                  Shares delivered herewith:

 

$

 

 

$

 

 

 

By this exercise, I agree (i) to provide such additional documents as you may require pursuant to the terms of the Axovant Sciences Ltd. 2015 Equity Incentive Plan, (ii) to provide for the payment by me to you (in the manner designated by you) of your withholding obligation, if any, relating to the exercise of this option, and (iii) if this exercise relates to an incentive stock option, to notify you in writing within fifteen (15) days after the date of any disposition of any of the Shares issued upon exercise of this option that occurs within two (2) years after the date of grant of this option or within one (1) year after such Shares are issued upon exercise of this option.

 

 

Very truly yours,

 

 

 

 

 

 

 

Signature

 

 

 

 

 

 

 

Print Name

 

III-1


 

AXOVANT SCIENCES LTD.
STOCK OPTION GRANT NOTICE
(2015 EQUITY INCENTIVE PLAN)

 

Axovant Sciences Ltd. (the “ Company ”), pursuant to its 2015 Equity Incentive Plan (the “ Plan ”), hereby grants to Optionholder an option to purchase the number of common shares of the Company (the “ Common Stock ”) set forth below.  This option is subject to all of the terms and conditions as set forth in this stock option grant notice (this “ Stock Option Grant Notice ”), in the Option Agreement, the Plan and the Notice of Exercise, all of which are attached hereto and incorporated herein in their entirety.  Capitalized terms not explicitly defined herein but defined in the Plan or the Option Agreement will have the same definitions as in the Plan or the Option Agreement.  If there is any conflict between the terms herein and the Plan, the terms of the Plan will control.

 

Optionholder:

 

 

Date of Grant:

 

 

Vesting Commencement Date:

 

 

Number of Shares Subject to Option:

 

 

Exercise Price (Per Share):

 

 

Total Exercise Price:

 

 

Expiration Date:

 

 

 

Type of Grant:

 

¨ Incentive Stock Option (1)

 

¨ Nonstatutory Stock Option

 

 

 

 

 

Exercise Schedule :

 

Same as Vesting Schedule

 

 

 

Vesting Schedule :

 

Payment:

By one or a combination of the following items (described in the Option Agreement):

 

 

 

 

o

By cash, check, bank draft, wire transfer or money order payable to the Company

 

o

Pursuant to a Regulation T Program

 

o

By delivery of already-owned shares

 

o

If and only to the extent this Option is a Nonstatutory Stock Option, and subject to the Company’s consent at the time of exercise, by a “net exercise” arrangement

 

Additional Terms/Acknowledgements:   Optionholder acknowledges receipt of, and understands and agrees to, this Stock Option Grant Notice, the Option Agreement and the Plan.  Optionholder acknowledges and agrees that this Stock Option Grant Notice and the Option Agreement may not be modified, amended or revised except as provided in the Plan.  Optionholder further acknowledges that as of the Date of Grant, this Stock Option Grant Notice, the Option Agreement, and the Plan set forth the entire understanding between Optionholder and the Company regarding this option award and supersede all prior oral and written agreements, promises and/or representations on that subject with the exception of (i) Stock Awards previously granted and delivered to Optionholder, (ii) any compensation recovery policy that is adopted by the Company or is otherwise required by applicable law and (iii) any written employment or severance arrangement that would provide for vesting acceleration of this option upon the terms and conditions set forth therein.

 

OTHER AGREEMENTS:

 

 


(1)   If this is an Incentive Stock Option, it (plus other outstanding Incentive Stock Options) cannot be first exercisable for more than $100,000 in value (measured by exercise price) in any calendar year.  Any excess over $100,000 is a Nonstatutory Stock Option.

 

1



 

By accepting this option, Optionholder consents to receive such documents by electronic delivery and to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

 

 

AXOVANT SCIENCES LTD.

OPTIONHOLDER:

 

 

By:

 

 

 

 

Signature

 

 

Signature

 

 

 

 

Title:

 

 

Date:

 

 

 

 

 

 

Date:

 

 

 

 

 

ATTACHMENTS :  Option Agreement, 2015 Equity Incentive Plan and Notice of Exercise

 

2



 

ATTACHMENT I

 

OPTION AGREEMENT

 



 

AXOVANT SCIENCES LTD.
2015 EQUITY INCENTIVE PLAN

 

OPTION AGREEMENT
(INCENTIVE STOCK OPTION OR NONSTATUTORY STOCK OPTION)

 

Pursuant to your Stock Option Grant Notice (“ Stock Option Grant Notice ”) and this Option Agreement (this “ Option Agreement ”), Axovant Sciences Ltd. (the “ Company ”) has granted you an option under its 2015 Equity Incentive Plan (the “ Plan ”) to purchase the number of common shares of the Company (the “ Common Stock ”) indicated in your Stock Option Grant Notice at the exercise price indicated in your Stock Option Grant Notice.  The option is granted to you effective as of the date of grant set forth in the Stock Option Grant Notice (the “ Date of Grant ”).  If there is any conflict between the terms in this Option Agreement and the Plan, the terms of the Plan will control.  Capitalized terms not explicitly defined in this Option Agreement or in the Stock Option Grant Notice but defined in the Plan will have the same definitions as in the Plan.

 

The details of your option, in addition to those set forth in the Stock Option Grant Notice and the Plan, are as follows:

 

1.                                       VESTING.   Your option will vest as provided in your Stock Option Grant Notice.  Vesting will cease upon the termination of your Continuous Service.

 

2.                                       NUMBER OF SHARES AND EXERCISE PRICE.   The number of shares of Common Stock subject to your option and your exercise price per share in your Stock Option Grant Notice will be adjusted for Capitalization Adjustments.

 

3.                                       EXERCISE RESTRICTION FOR NON-EXEMPT EMPLOYEES.   If you are an Employee eligible for overtime compensation under the Fair Labor Standards Act of 1938, as amended (that is, a “ Non-Exempt Employee ”), and except as otherwise provided in the Plan, you may not exercise your option until you have completed at least six (6) months of Continuous Service measured from the Date of Grant, even if you have already been an employee for more than six (6) months.  Consistent with the provisions of the Worker Economic Opportunity Act, you may exercise your option as to any vested portion prior to such six (6) month anniversary in the case of (i) your death or disability, (ii) a Corporate Transaction in which your option is not assumed, continued or substituted, (iii) a Change in Control or (iv) your termination of Continuous Service on your “retirement” (as defined in the Company’s benefit plans).

 

4.                                       INCENTIVE STOCK OPTION LIMITATION.   If your option is an Incentive Stock Option, then, to the extent that the aggregate Fair Market Value (determined at the Date of Grant) of the shares of Common Stock with respect to which your option plus all other Incentive Stock Options you hold are exercisable for the first time by you during any calendar year (under all plans of the Company and its Affiliates) exceeds $100,000, your option(s) or portions thereof

 

I-1



 

that exceed such limit (according to the order in which they were granted) will be treated as Nonstatutory Stock Options.

 

5.                                       METHOD OF PAYMENT.   You must pay the full amount of the exercise price for the shares you wish to exercise.  You may pay the exercise price in cash or by check, bank draft, wire transfer or money order payable to the Company or in any other manner permitted by your Stock Option Grant Notice , which may include one or more of the following:

 

(a)                            Pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of Common Stock, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds.  This manner of payment is also known as a “broker-assisted exercise”, “same day sale”, or “sell to cover”.

 

(b)                            By delivery to the Company (either by actual delivery or attestation) of already-owned shares of Common Stock that are owned free and clear of any liens, claims, encumbrances or security interests, and that are valued at Fair Market Value on the date of exercise.  “Delivery” for these purposes, in the sole discretion of the Company at the time you exercise your option, will include delivery to the Company of your attestation of ownership of such shares of Common Stock in a form approved by the Company.  You may not exercise your option by delivery to the Company Common Stock if doing so would violate the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock.

 

6.                                       WHOLE SHARES.   You may exercise your option only for whole shares of Common Stock.

 

7.                                       SECURITIES LAW COMPLIANCE.   In no event may you exercise your option unless the shares of Common Stock issuable upon exercise are then registered under the Securities Act or, if not registered, the Company has determined that your exercise and the issuance of the shares would be exempt from the registration requirements of the Securities Act.  The exercise of your option also must comply with all other applicable laws and regulations governing your option, and you may not exercise your option if the Company determines that such exercise would not be in material compliance with such laws and regulations (including any restrictions on exercise required for compliance with Treas. Reg. 1.401(k)-1(d)(3), if applicable).

 

8.                                       TERM.   You may not exercise your option before the Date of Grant or after the expiration of the option’s term.  The term of your option expires, subject to the provisions of Section 5(h) of the Plan, upon the earliest of the following:

 

(a)                            immediately upon the termination of your Continuous Service for Cause;

 

(b)                            three (3) months after the termination of your Continuous Service for any reason other than Cause, your Disability, or your death (except as otherwise provided in Section 8(d) below); provided , however , that if during any part of such three-month period your option is not exercisable solely because of the condition set forth in the section above relating to “Securities Law Compliance,” your option will not expire until the earlier of the Expiration Date or until it has been exercisable for an aggregate period of three (3) months after the termination of your Continuous Service; provided further , if during any part of such three (3) month period, the

 

I-2



 

sale of any shares of Common Stock received upon exercise of your option would violate the Company’s insider trading policy, then your option will not expire until the earlier of the Expiration Date or until it has been exercisable for an aggregate period of three (3) months after the termination of your Continuous Service during which the sale of the shares of Common Stock received upon exercise of your option would not be in violation of the Company’s insider trading policy.  Notwithstanding the foregoing, if (i) you are a Non-Exempt Employee, (ii) your Continuous Service terminates within six (6) months after the Date of Grant, and (iii) you have vested in a portion of your option at the time of your termination of Continuous Service, your option will not expire until the earlier of (x) the later of (A) the date that is seven (7) months after the Date of Grant, and (B) the date that is three (3) months after the termination of your Continuous Service, and (y) the Expiration Date;

 

(c)                             twelve (12) months after the termination of your Continuous Service due to your Disability (except as otherwise provided in Section 8(d)) below;

 

(d)                            eighteen (18) months after your death if you die either during your Continuous Service or within three (3) months after your Continuous Service terminates for any reason other than Cause;

 

(e)                             the Expiration Date indicated in your Stock Option Grant Notice; and

 

(f)                              the day before the tenth (10th) anniversary of the Date of Grant.

 

If your option is an Incentive Stock Option, note that to obtain the federal income tax advantages associated with an Incentive Stock Option, the Code requires that at all times beginning on the Date of Grant and ending on the day three (3) months before the date of your option’s exercise, you must be an employee of the Company or an Affiliate, except in the event of your death or Disability.  The Company has provided for extended exercisability of your option under certain circumstances for your benefit but cannot guarantee that your option will necessarily be treated as an Incentive Stock Option if you continue to provide services to the Company or an Affiliate as a Consultant or Director after your employment terminates or if you otherwise exercise your option more than three (3) months after the date your employment with the Company or an Affiliate terminates.

 

9.                                       EXERCISE.

 

(a)                            You may exercise the vested portion of your option during its term by (i) delivering a Notice of Exercise (in a form designated by the Company) or completing such other documents and/or procedures designated by the Company for exercise and (ii) paying the exercise price and any applicable withholding taxes to the Company’s Secretary, stock plan administrator, or such other person as the Company may designate, together with such additional documents as the Company may then require.

 

(b)                            By exercising your option you agree that, as a condition to any exercise of your option, the Company may require you to enter into an arrangement providing for the payment by you to the Company of any tax withholding obligation of the Company arising by reason of (i) the exercise of your option, or (ii) the disposition of shares of Common Stock acquired upon such exercise.

 

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(c)                             If your option is an Incentive Stock Option, by exercising your option you agree that you will notify the Company in writing within fifteen (15) days after the date of any disposition of any of the shares of Common Stock issued upon exercise of your option that occurs within two (2) years after the Date of Grant or within one (1) year after such shares of Common Stock are transferred upon exercise of your option.

 

(d)                            By exercising your option you agree that you will not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale with respect to any shares of Common Stock or other securities of the Company held by you, for a period of one hundred eighty (180) days following the effective date of a registration statement of the Company filed under the Securities Act or such longer period as the underwriters or the Company will request to facilitate compliance with FINRA Rule 2711 or NYSE Member Rule 472 or any successor or similar rule or regulation (the “ Lock-Up Period ”); provided , however , that nothing contained in this section will prevent the exercise of a repurchase option, if any, in favor of the Company during the Lock-Up Period.  You further agree to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriters that are consistent with the foregoing or that are necessary to give further effect thereto.  In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to your shares of Common Stock until the end of such period.  You also agree that any transferee of any shares of Common Stock (or other securities) of the Company held by you will be bound by this Section 9(d).  The underwriters of the Company’s stock are intended third party beneficiaries of this Section 9(d) and will have the right, power and authority to enforce the provisions hereof as though they were a party hereto.

 

10.                                TRANSFERABILITY.   Except as otherwise provided in this Section 10, your option is not transferable, except by will or by the laws of descent and distribution, and is exercisable during your life only by you.

 

(a)                            Certain Trusts.   Upon receiving written permission from the Board or its duly authorized designee, you may transfer your option to a trust if you are considered to be the sole beneficial owner (determined under Section 671 of the Code and applicable state law) while the option is held in the trust.  You and the trustee must enter into transfer and other agreements required by the Company.

 

(b)                            Domestic Relations Orders.   Upon receiving written permission from the Board or its duly authorized designee, and provided that you and the designated transferee enter into transfer and other agreements required by the Company, you may transfer your option pursuant to the terms of a domestic relations order, official marital settlement agreement or other divorce or separation instrument as permitted by Treasury Regulation 1.421-1(b)(2) that contains the information required by the Company to effectuate the transfer.  You are encouraged to discuss the proposed terms of any division of this option with the Company prior to finalizing the domestic relations order or marital settlement agreement to help ensure the required information is contained within the domestic relations order or marital settlement agreement.  If this option is an Incentive Stock Option, this option may be deemed to be a Nonstatutory Stock Option as a result of such transfer.

 

I-4



 

(c)                             Beneficiary Designation.   Upon receiving written permission from the Board or its duly authorized designee, you may, by delivering written notice to the Company, in a form approved by the Company and any broker designated by the Company to handle option exercises, designate a third party who, on your death, will thereafter be entitled to exercise this option and receive the Common Stock or other consideration resulting from such exercise.  In the absence of such a designation, your executor or administrator of your estate will be entitled to exercise this option and receive, on behalf of your estate, the Common Stock or other consideration resulting from such exercise.

 

11.                                RIGHT OF REPURCHASE.   The Company will have the right to repurchase all of the shares of Common Stock you acquire pursuant to the exercise of your option upon termination of your Continuous Service for Cause.  Such repurchase will be at the exercise price you paid to acquire the shares and will be effected pursuant to such other terms and conditions, and at such time, as the Company shall determine.

 

12.                                OPTION NOT A SERVICE CONTRACT.   Your option is not an employment or service contract, and nothing in your option will be deemed to create in any way whatsoever any obligation on your part to continue in the employ of the Company or an Affiliate, or of the Company or an Affiliate to continue your employment.  In addition, nothing in your option will obligate the Company or an Affiliate, their respective shareholders, boards of directors, officers or employees to continue any relationship that you might have as a Director or Consultant for the Company or an Affiliate.

 

13.                                WITHHOLDING OBLIGATIONS.

 

(a)                            At the time you exercise your option, in whole or in part, and at any time thereafter as requested by the Company, you hereby authorize withholding from payroll and any other amounts payable to you, and otherwise agree to make adequate provision for (including by means of a “same day sale” pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board to the extent permitted by the Company), any sums required to satisfy the federal, state, local and foreign tax withholding obligations of the Company or an Affiliate, if any, which arise in connection with the exercise of your option.

 

(b)                            If this option is a Nonstatutory Stock Option, then upon your request and subject to approval by the Company, and compliance with any applicable legal conditions or restrictions, the Company may withhold from fully vested shares of Common Stock otherwise issuable to you upon the exercise of your option a number of whole shares of Common Stock having a Fair Market Value, determined by the Company as of the date of exercise, not in excess of the minimum amount of tax required to be withheld by law (or such lower amount as may be necessary to avoid classification of your option as a liability for financial accounting purposes).  Any adverse consequences to you arising in connection with such share withholding procedure shall be your sole responsibility.

 

(c)                             You may not exercise your option unless the tax withholding obligations of the Company and/or any Affiliate are satisfied.  Accordingly, you may not be able to exercise your option when desired even though your option is vested, and the Company will have no obligation to issue a certificate for such shares of Common Stock or release such shares of

 

I-5



 

Common Stock from any escrow provided for herein, if applicable, unless such obligations are satisfied.

 

14.                                TAX CONSEQUENCES . You hereby agree that the Company does not have a duty to design or administer the Plan or its other compensation programs in a manner that minimizes your tax liabilities. You will not make any claim against the Company, or any of its Officers, Directors, Employees or Affiliates related to tax liabilities arising from your option or your other compensation.  In particular, you acknowledge that this option is exempt from Section 409A of the Code only if the exercise price per share specified in the Stock Option Grant Notice is at least equal to the “fair market value” per share of Common Stock on the Date of Grant and there is no other impermissible deferral of compensation associated with the option.

 

15.                                OTHER DOCUMENTS .  You hereby acknowledge receipt of and the right to receive a document providing the information required by Rule 428(b)(1) promulgated under the Securities Act, which includes the Plan prospectus.  In addition, you acknowledge receipt of the Company’s policy permitting certain individuals to sell shares only during certain “window” periods and the Company’s insider trading policy, in effect from time to time.

 

16.                                EFFECT ON OTHER EMPLOYEE BENEFIT PLANS .  The value of this option will not be included as compensation, earnings, salaries, or other similar terms used when calculating your benefits under any employee benefit plan sponsored by the Company or any Affiliate, except as such plan otherwise expressly provides. The Company expressly reserves its rights to amend, modify, or terminate any of the Company’s or any Affiliate’s employee benefit plans.

 

17.                                NOTICES.   Any notices provided for in your option or the Plan will be given in writing (including electronically) and will be deemed effectively given upon receipt or, in the case of notices delivered by mail by the Company to you, five (5) days after deposit in the United States mail, postage prepaid, addressed to you at the last address you provided to the Company.  The Company may, in its sole discretion, decide to deliver any documents related to participation in the Plan and this option by electronic means or to request your consent to participate in the Plan by electronic means.  By accepting this option, you consent to receive such documents by electronic delivery and to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

 

18.                                VOTING RIGHTS .  You will not have voting or any other rights as a shareholder of the Company with respect to the shares to be issued pursuant to this option until such shares are issued to you.  Upon such issuance, you will obtain full voting and other rights as a shareholder of the Company.  Nothing contained in this option, and no action taken pursuant to its provisions, will create or be construed to create a trust of any kind or a fiduciary relationship between you and the Company or any other person.

 

19.                                SEVERABILITY .  If all or any part of this Option Agreement or the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity will not invalidate any portion of this Option Agreement or the Plan not declared to be unlawful or invalid.  Any Section of this Option Agreement (or part of such a Section) so declared to be

 

I-6



 

unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.

 

20.                                MISCELLANEOUS .

 

(a)                            The rights and obligations of the Company under your option will be transferable to any one or more persons or entities, and all covenants and agreements hereunder will inure to the benefit of, and be enforceable by the Company’s successors and assigns.

 

(b)                            You agree upon request to execute any further documents or instruments necessary or desirable in the sole determination of the Company to carry out the purposes or intent of your option.

 

(c)                             You acknowledge and agree that you have reviewed your option in its entirety, have had an opportunity to obtain the advice of counsel prior to executing and accepting your option, and fully understand all provisions of your option.

 

(d)                            This Option Agreement will be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

 

(e)                             All obligations of the Company under the Plan and this Option Agreement will be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

 

*          *          *          *          *          *

 

This Option Agreement will be deemed to be signed by you upon the signing or the acceptance by you of the Stock Option Grant Notice to which it is attached.

 

I-7



 

ATTACHMENT II

 

2015 EQUITY INCENTIVE PLAN

 

II-1



 

ATTACHMENT III

 

NOTICE OF EXERCISE

 



 

NOTICE OF EXERCISE

 

AXOVANT SCIENCES LTD.

 

Clarendon House

 

2 Church Street

 

Hamilton HM 11, Bermuda

Date of Exercise:                       

 

This constitutes notice to Axovant Sciences Ltd. (the “ Company ”) under my stock option that I elect to purchase the below number of common shares of the Company (the “ Shares ”) for the exercise price set forth below.

 

Type of option (check one):

 

Incentive o

 

Nonstatutory o

 

 

 

 

 

 

 

Stock option dated:

 

 

 

 

 

 

 

 

 

 

 

Number of Shares as to which option is exercised:

 

 

 

 

 

 

 

 

 

 

 

Certificates to be issued in name of:

 

 

 

 

 

 

 

 

 

 

 

Total exercise price:

 

$

 

 

$

 

 

 

 

 

 

 

 

Cash payment delivered herewith:

 

$

 

 

$

 

 

 

 

 

 

 

 

Regulation T Program (cashless exercise):

 

$

 

 

$

 

 

 

 

 

 

 

 

Value of                  Shares delivered herewith:

 

$

 

 

$

 

 

 

By this exercise, I agree (i) to provide such additional documents as you may require pursuant to the terms of the Axovant Sciences Ltd. 2015 Equity Incentive Plan, (ii) to provide for the payment by me to you (in the manner designated by you) of your withholding obligation, if any, relating to the exercise of this option, and (iii) if this exercise relates to an incentive stock option, to notify you in writing within fifteen (15) days after the date of any disposition of any of the Shares issued upon exercise of this option that occurs within two (2) years after the date of grant of this option or within one (1) year after such Shares are issued upon exercise of this option.

 

 

Very truly yours,

 

 

 

 

 

 

 

Signature

 

 

 

 

 

 

 

Print Name

 

III-1




Exhibit 10.3

 

AXOVANT SCIENCES LTD.

 

EARLY EXERCISE STOCK PURCHASE AGREEMENT

UNDER THE 2015 EQUITY INCENTIVE PLAN

 

THIS AGREEMENT is made by and between Axovant Sciences Ltd., an exempted limited company incorporated under the laws of Bermuda (the “ Company ”), and                                (“ Purchaser ”).

 

WITNESSETH:

 

WHEREAS, Purchaser holds a stock option dated                                (the “ Option ”)  to purchase common shares of the Company (“ Common Stock ”) pursuant to the Company’s 2015 Equity Incentive Plan (the “ Plan ”); and

 

WHEREAS , the Option consists of a Stock Option Grant Notice and a Stock Option Agreement; and

 

WHEREAS, Purchaser desires to exercise the Option on the terms and conditions contained herein; and

 

WHEREAS, Purchaser wishes to take advantage of the early exercise provision of Purchaser’s Option and therefore to enter into this Agreement;

 

NOW, THEREFORE, IT IS AGREED between the parties as follows:

 

1.                                       INCORPORATION OF PLAN AND OPTION BY REFERENCE.   This Agreement is subject to all of the terms and conditions as set forth in the Plan and the Option.  If there is a conflict between the terms of this Agreement and/or the Option and the terms of the Plan, the terms of the Plan shall control.  If there is a conflict between the terms of this Agreement and the terms of the Option, the terms of the Option shall control.  Defined terms not explicitly defined in this Agreement but defined in the Plan shall have the same definitions as in the Plan.  Defined terms not explicitly defined in this Agreement or the Plan but defined in the Option shall have the same definitions as in the Option.

 

2.                                       PURCHASE AND SALE OF COMMON STOCK.

 

(a)                                  Agreement to purchase and sell Common Stock.   Purchaser hereby agrees to purchase from the Company, and the Company hereby agrees to sell to Purchaser, an aggregate of       (     ) shares of Common Stock at $  per share, for an aggregate purchase price of $      , payable as follows:

 

Cash, check, bank draft or money order payable to the Company

 

$                      

 

1



 

Value of              shares of Common Stock (1)

 

$                      

 

 

 

Total Exercise Price

 

$                      .

 

(b)                                  Closing . The closing hereunder, including payment for and delivery of the Common Stock, shall occur at the offices of the Company immediately following the execution of this Agreement, or at such other time and place as the parties may mutually agree; provided, however, that if shareholder approval of the Plan is required before the Option may be exercised, then the Option may not be exercised, and the closing shall be delayed, until such shareholder approval is obtained.  If such shareholder approval is not obtained within the time limit specified in the Plan, then this Agreement shall be null and void.

 

3.                                       UNVESTED SHARE REPURCHASE OPTION (2) .

 

(a)                                  Repurchase Option .  In the event Purchaser’s Continuous Service terminates, then the Company shall have an irrevocable option (the “ Repurchase Option ”) for a period of ninety (90) days after said termination (or in the case of shares issued upon exercise of the Option after such date of termination, within ninety (90) days after the date of the exercise), or such longer period as may be agreed to by the Company and Purchaser, to repurchase from Purchaser or Purchaser’s personal representative, as the case may be, those shares that Purchaser received pursuant to the exercise of the Option that have not as yet vested as of such termination date in accordance with the Vesting Schedule indicated on Purchaser’s Stock Option Grant Notice (the “ Unvested Shares ”).

 

(b)                                  Share Repurchase Price.    The Company may repurchase all or any of the Unvested Shares at the lower of (i) the Fair Market Value of the such shares (as determined under the Plan) on the date of repurchase, or (ii) the price equal to Purchaser’s Exercise Price for such shares as indicated on Purchaser’s Stock Option Grant Notice.

 

4.                                       EXERCISE OF REPURCHASE OPTION.  The Repurchase Option shall be exercised by written notice signed by such person as designated by the Company, and delivered or mailed as provided herein.  Such notice shall identify the number of shares of Common Stock to be purchased and shall notify Purchaser of the time, place and date for settlement of such purchase, which shall be scheduled by the Company within the term of the Repurchase Option set forth above.  The Company shall be entitled to pay for any shares of Common Stock purchased

 


(1)                                      Shares must meet the public trading requirements set forth in the Option.  Shares must be valued in accordance with the terms of the Option being exercised, must have been owned for the minimum period required in the Option and must be owned free and clear of any liens, claims, encumbrances or security interest.  Certificates must be endorsed or accompanied by an executed stock assignment.

(2)   Note: share repurchase are subject to the statutory solvency test under section 42A of the Companies Act 1981 of Bermuda

 

2



 

pursuant to its Repurchase Option at the Company’s option in cash or by offset against any indebtedness owing to the Company by Purchaser (including without limitation any Promissory Note given in payment for the Common Stock), or by a combination of both.  Upon delivery of such notice and payment of the purchase price in any of the ways described above, the Company shall become the legal and beneficial owner of the Common Stock being repurchased and all rights and interest therein or related thereto, and the Company shall have the right to transfer to its own name the Common Stock being repurchased by the Company, without further action by Purchaser.

 

5.                                       CAPITALIZATION ADJUSTMENTS TO COMMON STOCK.   In the event of a Capitalization Adjustment, then any and all new, substituted or additional securities or other property to which Purchaser is entitled by reason of Purchaser’s ownership of Common Stock shall be immediately subject to the Repurchase Option and be included in the word “Common Stock” for all purposes of the Repurchase Option with the same force and effect as the shares of the Common Stock presently subject to the Repurchase Option, but only to the extent the Common Stock is, at the time, covered by such Repurchase Option.  While the total Option Price shall remain the same after each such event, the Option Price per share of Common Stock upon exercise of the Repurchase Option shall be appropriately adjusted.

 

6.                                       CORPORATE TRANSACTIONS.   In the event of a Corporate Transaction, then the Repurchase Option may be assigned by the Company to the successor of the Company (or such successor’s parent company), if any, in connection with such Corporate Transaction.  To the extent the Repurchase Option remains in effect following such Corporate Transaction, it shall apply to the new capital stock or other property received in exchange for the Common Stock in consummation of the Corporate Transaction, but only to the extent the Common Stock was at the time covered by such right.  Appropriate adjustments shall be made to the price per share payable upon exercise of the Repurchase Option to reflect the Corporate Transaction upon the Company’s capital structure; provided, however, that the aggregate price payable upon exercise of the Repurchase Option shall remain the same.

 

7.                                       ESCROW OF UNVESTED COMMON STOCK.   As security for Purchaser’s faithful performance of the terms of this Agreement and to insure the availability for delivery of Purchaser’s Common Stock upon exercise of the Repurchase Option herein provided for, Purchaser agrees, at the closing hereunder, to deliver to and deposit with the Secretary of the Company or the Secretary’s designee (“ Escrow Agent ”), as Escrow Agent in this transaction, three (3) share transfer forms duly endorsed (with date and number of shares blank) in the form attached hereto as Exhibit A, together with a certificate or certificates evidencing all of the Common Stock subject to the Repurchase Option; said documents are to be held by the Escrow Agent and delivered by said Escrow Agent pursuant to the Joint Escrow Instructions of the Company and Purchaser set forth in Exhibit C, attached hereto and incorporated by this reference, which instructions also shall be delivered to the Escrow Agent at the closing hereunder.

 

3



 

8.                                       RIGHTS OF PURCHASER. Subject to the provisions of the Option, Purchaser shall exercise all rights and privileges of a shareholder of the Company with respect to the shares deposited in escrow.  Purchaser shall be deemed to be the holder of the shares for purposes of receiving any dividends that may be paid with respect to such shares and for purposes of exercising any voting rights relating to such shares, even if some or all of such shares have not yet vested and been released from the Company’s Repurchase Option.

 

9.                                       LIMITATIONS ON TRANSFER.  In addition to any other limitation on transfer created by applicable securities laws, Purchaser shall not sell, assign, hypothecate, donate, encumber or otherwise dispose of any interest in the Common Stock while the Common Stock is subject to the Repurchase Option.  After any Common Stock has been released from the Repurchase Option, Purchaser shall not sell, assign, hypothecate, donate, encumber or otherwise dispose of any interest in the Common Stock except in compliance with the provisions herein and applicable securities laws.  Furthermore, the Common Stock shall be subject to any right of first refusal in favor of the Company or its assignees that may be contained in Purchaser’s Stock Option Agreement.

 

10.                                RESTRICTIVE LEGENDS.  All certificates representing the Common Stock shall have endorsed thereon legends in substantially the following forms (in addition to any other legend which may be required by other agreements between the parties hereto):

 

(a)                                  “THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN OPTION SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER, OR SUCH HOLDER’S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THIS COMPANY.  ANY TRANSFER OR ATTEMPTED TRANSFER OF ANY SHARES SUBJECT TO SUCH OPTION IS VOID WITHOUT THE PRIOR EXPRESS WRITTEN CONSENT OF THE COMPANY.”

 

(b)                                  “THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED.  THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.”

 

(c)                                   “THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE COMPANY AND/OR ITS ASSIGNEE(S).”

 

(d)                                  “THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED PURSUANT TO THE EXERCISE OF [AN INCENTIVE STOCK OPTION/ A NONSTATUTORY STOCK OPTION] .

 

4



 

(e)                                   Any legend required by appropriate blue sky officials.

 

11.                                INVESTMENT REPRESENTATIONS.   In connection with the purchase of the Common Stock, Purchaser represents to the Company the following:

 

(a)                                  Purchaser is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Common Stock.  Purchaser is acquiring the Common Stock for investment for Purchaser’s own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act.

 

(b)                                  Purchaser understands that the Common Stock has not been registered under the Securities Act by reason of a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Purchaser’s investment intent as expressed herein.

 

(c)                                   Purchaser further acknowledges and understands that the Common Stock must be held indefinitely unless the Common Stock is subsequently registered under the Securities Act or an exemption from such registration is available.  Purchaser further acknowledges and understands that the Company is under no obligation to register the Common Stock.  Purchaser understands that the certificate evidencing the Common Stock will be imprinted with a legend that prohibits the transfer of the Common Stock unless the Common Stock is registered or such registration is not required in the opinion of counsel for the Company.

 

(d)                                  Purchaser is familiar with the provisions of Rules 144 and 701, under the Securities Act, as in effect from time to time, which, in substance, permit limited public resale of “restricted securities” acquired, directly or indirectly, from the issuer thereof (or from an affiliate of such issuer), in a non-public offering subject to the satisfaction of certain conditions.  Rule 701 provides that if the issuer qualifies under Rule 701 at the time of issuance of the securities, such issuance will be exempt from registration under the Securities Act.  In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the securities exempt under Rule 701 may be sold by Purchaser ninety (90) days thereafter, subject to the satisfaction of certain of the conditions specified by Rule 144 and the market stand-off provision described in Purchaser’s Stock Option Agreement and Section 12 below.

 

(e)                                   In the event that the sale of the Common Stock does not qualify under Rule 701 at the time of purchase, then the Common Stock may be resold by Purchaser in certain limited circumstances subject to the provisions of Rule 144, which requires, among other things: (i) the availability of certain public information about the Company, and (ii) the resale occurring following the required holding period under Rule 144 after Purchaser has purchased, and made full payment of (within the meaning of Rule 144), the securities to be sold.

 

5



 

(f)                                    Purchaser further understands that at the time Purchaser wishes to sell the Common Stock there may be no public market upon which to make such a sale, and that, even if such a public market then exists, the Company may not be satisfying the current public current information requirements of Rule 144 or 701, and that, in such event, Purchaser would be precluded from selling the Common Stock under Rule 144 or 701 even if the minimum holding period requirement had been satisfied.

 

12.                                MARKET STAND-OFF AGREEMENT. By exercising the Option, Purchaser agrees not to sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, any shares of Common Stock or other securities of the Company held by Purchaser, for a period of one hundred eighty (180) days following the effective date of a registration statement of the Company filed under the Securities Act or such longer period as necessary to permit compliance with NASD Rule 2711 or NYSE Member Rule 472 and similar rules or regulations (the “ Lock-Up Period ”); provided, however , that nothing shall prevent the exercise of the Repurchase Option during the Lock-Up Period.  Purchaser further agrees to execute and deliver such other agreements as may be reasonably requested by the Company and/or the underwriter(s) that are consistent with the foregoing or that are necessary to give further effect thereto.  In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to Purchaser’s shares of Common Stock until the end of such period. The underwriters of the Company’s shares are intended third party beneficiaries of this Section 12 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto.

 

13.                                SECTION 83(b) ELECTION.    Purchaser understands that Section 83(a) of the Code taxes as ordinary income the difference between the amount paid for the Common Stock and the fair market value of the Common Stock as of the date any restrictions on the Common Stock lapse.  In this context, “restriction” includes the right of the Company to buy back the Common Stock pursuant to the Repurchase Option set forth above.  Purchaser understands that Purchaser may elect to be taxed at the time the Common Stock is purchased, rather than when and as the Repurchase Option expires, by filing an election under Section 83(b) (an “ 83(b) Election ”) of the Code with the Internal Revenue Service within thirty (30) days of the date of purchase.  Even if the fair market value of the Common Stock at the time of the execution of this Agreement equals the amount paid for the Common Stock, the 83(b) Election must be made to avoid income under Section 83(a) in the future.  Purchaser understands that failure to file such an 83(b) Election in a timely manner may result in adverse tax consequences for Purchaser.  Purchaser further understands that Purchaser must file an additional copy of such 83(b) Election with his or her federal income tax return for the calendar year in which the date of this Agreement falls.  Purchaser acknowledges that the foregoing is only a summary of the effect of United States federal income taxation with respect to purchase of the Common Stock hereunder, and does not purport to be complete.  Purchaser further acknowledges that the Company has directed Purchaser to seek independent advice regarding the applicable provisions of the Code, the income tax laws of any municipality, state or foreign country in which Purchaser may reside, and the tax consequences of Purchaser’s death.  Purchaser assumes all responsibility for filing an 83(b)

 

6



 

Election and paying all taxes resulting from such election or the lapse of the restrictions on the Common Stock.

 

14.                                REFUSAL TO TRANSFER.  The Company shall not be required (a) to transfer on its books any shares of Common Stock of the Company which shall have been transferred in violation of any of the provisions set forth in this Agreement, or (b) to treat as owner of such shares or to accord the right to vote as such owner or to pay dividends to any transferee to whom such shares shall have been so transferred.

 

15.                                NO EMPLOYMENT RIGHTS.  This Agreement is not an employment contract and nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company or its Affiliates to terminate Purchaser’s employment for any reason at any time, with or without cause and with or without notice.

 

16.                                MISCELLANEOUS.

 

(a)                                  Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed facsimile if sent during normal business hours of the recipient, and if not during normal business hours of the recipient, then on the next business day, (c) five (5) calendar days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) business day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt.  All communications shall be sent to the other party hereto at such party’s address hereinafter set forth on the signature page hereof, or at such other address as such party may designate by ten (10) days advance written notice to the other party hereto.

 

(b)                                  Successors and Assigns.  This Agreement shall inure to the benefit of the successors and assigns of the Company and, subject to the restrictions on transfer herein set forth, be binding upon Purchaser, Purchaser’s successors, and assigns. The Company may assign the Repurchase Option hereunder at any time or from time to time, in whole or in part.

 

(c)                                   Attorneys’ Fees; Specific Performance.  Purchaser shall reimburse the Company for all costs incurred by the Company in enforcing the performance of, or protecting its rights under, any part of this Agreement, including reasonable costs of investigation and attorneys’ fees. It is the intention of the parties that the Company, upon exercise of the Repurchase Option and payment for the shares repurchased, pursuant to the terms of this Agreement, shall be entitled to receive the Common Stock, in specie, in order to have such Common Stock available for future issuance without dilution of the holdings of other shareholders.  Furthermore, it is expressly agreed between the parties that money damages are inadequate to compensate the Company for the Common Stock and that the Company shall, upon proper exercise of the Repurchase Option, be entitled to specific enforcement of its rights to purchase and receive said Common Stock.

 

7



 

Governing Law; Venue.  To the extent that United States federal laws do not otherwise control, this Agreement and all determinations made and actions taken pursuant to this Agreement and the Plan shall be governed by the internal laws of the State of New York, and construed accordingly, except for those matters subject to The Companies Act, 1981 of Bermuda (as amended), which shall be governed by Bermuda law, without giving effect to principles of conflicts of laws, and construed accordingly.

 

(d)                                  The parties agree that any action brought by either party to interpret or enforce any provision of this Agreement shall be brought in, and each party agrees to, and does hereby, submit to the jurisdiction and venue of, the appropriate state or federal court for the district encompassing the Company’s principal place of business.

 

(e)                                   Further Execution.  The parties agree to take all such further action(s) as may reasonably be necessary to carry out and consummate this Agreement as soon as practicable, and to take whatever steps may be necessary to obtain any governmental approval in connection with or otherwise qualify the issuance of the securities that are the subject of this Agreement.

 

(f)                                    Independent Counsel.   Purchaser acknowledges that this Agreement has been prepared on behalf of the Company by Cooley LLP, counsel to the Company and that Cooley LLP does not represent, and is not acting on behalf of, Purchaser.  Purchaser has been provided with an opportunity to consult with Purchaser’s own counsel with respect to this Agreement.

 

(g)                                  Entire Agreement; Amendment.  This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes and merges all prior agreements or understandings, whether written or oral.  This Agreement may not be amended, modified or revoked, in whole or in part, except by an agreement in writing signed by each of the parties hereto.

 

(h)                                  Severability.   If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith.  In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms.

 

(i)                                     Counterparts.   This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.

 

8



 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of                               .

 

 

AXOVANT SCIENCES LTD.

 

 

 

By

 

 

Name

 

 

Title

 

 

Address:

 

 

 

 

 

 

 

Purchaser

 

Address:

 

 

 

 

ATTACHMENTS:

 

Exhibit A                                              Assignment Separate from Certificate

Exhibit B                                              Joint Escrow Instructions

 

9


 

EXHIBIT A

 

SHARE TRANSFER FORM SEPARATE FROM SHARE CERTIFICATE

 

FOR VALUE RECEIVED,                                                hereby sells, assigns and transfers for value received unto Axovant Sciences Ltd., an exempted limited company incorporated under the laws of Bermuda (the “Company”), pursuant to the Repurchase Option under that certain Early Exercise Stock Purchase Agreement, dated                                by and between the undersigned and the Company (the “Agreement”),                                (                              ) common shares of the Company standing in the undersigned’s name on the books of the Company represented by Certificate No(s).                                and does hereby irrevocably constitute and appoint the Company’s Secretary attorney-in-fact to transfer said common shares on the books of the Company with full power of substitution in the premises.  This share transfer form may be used only in accordance with and subject to the terms and conditions of the Agreement, in connection with the repurchase of common shares issued to the undersigned pursuant to the Agreement, and only to the extent that such shares remain subject to the Company’s Repurchase Option under the Agreement.

 

Dated:

 

 

 

 

 

 

 

 

(Signature)

 

 

 

 

 

(Print Name)

 

(INSTRUCTION:   Please do not fill in any blanks other than the “Signature” line and the “Print Name” line. )

 

10



 

EXHIBIT B

 

JOINT ESCROW INSTRUCTIONS

 

Secretary

Axovant Sciences Ltd.

Clarendon House
2 Church Street
Hamilton HM 11, Bermuda

 

Dear Sir or Madam:

 

As Escrow Agent for both Axovant Sciences Ltd., , an exempted limited company incorporated under the laws of Bermuda (“Company”), and the undersigned purchaser of common shares of the Company (“Purchaser”), you are hereby authorized and directed to hold the documents delivered to you pursuant to the terms of that certain Early Exercise Stock Purchase Agreement (“Agreement”), dated                                to which a copy of these Joint Escrow Instructions is attached as Exhibit C, in accordance with the following instructions:

 

1.             In the event the Company or an assignee shall elect to exercise the Repurchase Option set forth in the Agreement, the Company or its assignee will give to Purchaser and you a written notice specifying the number of common shares to be purchased, the purchase price, and the time for a closing hereunder at the principal office of the Company.  Purchaser and the Company hereby irrevocably authorize and direct you to close the transaction contemplated by such notice in accordance with the terms of said notice.

 

2.             At the closing you are directed (a) to date any share transfer forms necessary for the transfer in question, (b) to fill in the number of shares being transferred, and (c) to deliver same, together with the certificate evidencing the common shares to be transferred, to the Company against the simultaneous delivery to you of the purchase price (which may include suitable acknowledgment of cancellation of indebtedness) of the number of common shares being purchased pursuant to the exercise of the Repurchase Option.

 

3.             Purchaser irrevocably authorizes the Company to deposit with you any certificates evidencing common shares to be held by you hereunder and any additions and substitutions to said shares as specified in the Agreement.  Purchaser does hereby irrevocably constitute and appoint you as the Purchaser’s attorney-in-fact and agent for the term of this escrow to execute with respect to such securities and other property all documents of assignment and/or transfer and

 

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all share certificates necessary or appropriate to make all securities negotiable and complete any transaction herein contemplated.

 

4.             This escrow shall terminate and the common shares held hereunder shall be released in full upon the expiration or exercise in full of the Repurchase Option, whichever occurs first.

 

5.             If at the time of termination of this escrow you should have in your possession any documents, securities, or other property belonging to Purchaser, you shall deliver all of same to Purchaser and shall be discharged of all further obligations hereunder; provided, however, that if at the time of termination of this escrow you are advised by the Company that the property subject to this escrow is the subject of a pledge or other security agreement, you shall deliver all such property to the pledgeholder or other person designated by the Company.

 

6.             Except as otherwise provided in these Joint Escrow Instructions, your duties hereunder may be altered, amended, modified or revoked only by a writing signed by all of the parties hereto.

 

7.             You shall be obligated only for the performance of such duties as are specifically set forth herein and may rely and shall be protected in relying or refraining from acting on any instrument reasonably believed by you to be genuine and to have been signed or presented by the proper party or parties or their assignees.  You shall not be personally liable for any act you may do or omit to do hereunder as Escrow Agent or as attorney-in-fact for Purchaser while acting in good faith and any act done or omitted by you pursuant to the advice of your own attorneys shall be conclusive evidence of such good faith.

 

8.             You are hereby expressly authorized to disregard any and all warnings given by any of the parties hereto or by any other person or corporation, excepting only orders or process of courts of law, and are hereby expressly authorized to comply with and obey orders, judgments or decrees of any court.  In case you obey or comply with any such order, judgment or decree of any court, you shall not be liable to any of the parties hereto or to any other person, firm or corporation by reason of such compliance, notwithstanding any such order, judgment or decree being subsequently reversed, modified, annulled, set aside, vacated or found to have been entered without jurisdiction.

 

9.             You shall not be liable in any respect on account of the identity, authority or rights of the parties executing or delivering or purporting to execute or deliver the Agreement or any documents or papers deposited or called for hereunder.

 

10.          You shall not be liable for the outlawing of any rights under any statute of limitations with respect to these Joint Escrow Instructions or any documents deposited with you.

 

11.          Your responsibilities as Escrow Agent hereunder shall terminate if you shall cease to be Secretary of the Company or if you shall resign by written notice to the Company.  In the

 

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event of any such termination, the Secretary of the Company shall automatically become the successor Escrow Agent unless the Company shall appoint another successor Escrow Agent, and Purchaser hereby confirms the appointment of such successor as Purchaser’s attorney-in-fact and agent to the full extent of your appointment.

 

12.          If you reasonably require other or further instruments in connection with these Joint Escrow Instructions or obligations in respect hereto, the necessary parties hereto shall join in furnishing such instruments.

 

13.          It is understood and agreed that should any dispute arise with respect to the delivery and/or ownership or right of possession of the securities, you are authorized and directed to retain in your possession without liability to anyone all or any part of said securities until such dispute shall have been settled either by mutual written agreement of the parties concerned or by a final order, decree or judgment of a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but you shall be under no duty whatsoever to institute or defend any such proceedings.

 

14.          Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery, including delivery by express courier or five days after deposit in the United States Post Office, by registered or certified mail with postage and fees prepaid, addressed to each of the other parties hereunto entitled at the following addresses, or at such other addresses as a party may designate by ten days’ advance written notice to each of the other parties hereto:

 

COMPANY:

Axovant Sciences Ltd.

 

Clarendon House

 

2 Church Street

 

Hamilton HM 11, Bermuda

 

Attn: [                            ]

 

 

PURCHASER:

 

 

 

 

 

ESCROW AGENT:

Axovant Sciences Ltd.

 

Clarendon House

 

2 Church Street

 

Hamilton HM 11, Bermuda

 

Attn: Corporate Secretary

 

15.          By signing these Joint Escrow Instructions you become a party hereto only for the purpose of said Joint Escrow Instructions; you do not become a party to the Agreement.

 

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16.          You shall be entitled to employ such legal counsel and other experts (including without limitation the firm of Cooley LLP) as you may deem necessary properly to advise you in connection with your obligations hereunder.  You may rely upon the advice of such counsel, and may pay such counsel reasonable compensation therefor.  The Company shall be responsible for all fees generated by such legal counsel in connection with your obligations hereunder.

 

17.          This instrument shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.  It is understood and agreed that references to “you” or “your” herein refer to the original Escrow Agent and to any and all successor Escrow Agents.  It is understood and agreed that the Company may at any time or from time to time assign its rights under the Agreement and these Joint Escrow Instructions in whole or in part.

 

18.          This Agreement shall be governed by and interpreted and determined in accordance with the laws of the State of California, as such laws are applied by California courts to contracts made and to be performed entirely in California by residents of that state.

 

 

Very truly yours,

 

 

 

AXOVANT SCIENCES LTD.

 

 

 

 

 

By

 

 

 

 

 

Title

 

 

 

 

 

 

PURCHASER:

 

 

 

 

 

 

 

 

ESCROW AGENT:

 

 

 

 

 

Secretary, Axovant Sciences Ltd.

 

 

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Exhibit 10.4

 

AXOVANT SCIENCES LTD.

 

INDEMNIFICATION AGREEMENT

 

This INDEMNIFICATION AGREEMENT , dated and effective as of                              (this “ Agreement ”), is by and between AXOVANT SCIENCES LTD. , an exempted limited company incorporated under the laws of Bermuda (the “ Company ” (as such definition is further expanded below))                                     , and, if such individual is a Director serving the Company as a representative of an entity,                                        (each an “ Indemnitee ” and collectively, the “ Indemnitees ”).

 

RECITALS:

 

A.                                     The Company desires to attract and retain the services of highly qualified individuals, such as the Indemnitee, to serve the Company and its related entities.

 

B.                                     In order to induce Indemnitee to provide services to the Company, the Company wishes to provide for the indemnification of, and the advancement of expenses to, the Indemnitees to the maximum extent permitted by law.

 

C.                                     The Company and Indemnitees recognize the continued difficulty in obtaining and maintaining adequate liability insurance for persons serving as directors, officers, employees, agents or fiduciaries of private and public companies, the significant increases in the cost of such insurance and the general reductions in the coverage of such insurance.

 

D.                                     The Company and Indemnitees further recognize the substantial increase in corporate litigation in general, subjecting directors, officers, employees, agents and fiduciaries to expensive litigation risks at the same time as the availability and coverage of liability insurance has been severely limited.

 

E.                                     In view of the considerations set forth above, the Company desires that Indemnitees shall be indemnified and advanced expenses by the Company as set forth herein.

 

AGREEMENT:

 

NOW, THEREFORE , in consideration of the foregoing and the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration had and received, the Company and the Indemnitees hereby agree as follows:

 

1.                                       Certain Definitions.

 

(a)                                  Bermuda Companies Act ” shall mean the Companies Act 1981 of Bermuda, as amended.

 

(b)                                  Change in Control ” shall mean, and shall be deemed to have occurred if, on or after the date of this Agreement, (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) (the “ Exchange Act ”, other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company acting in such capacity or a corporation owned directly or indirectly by the shareholders of the

 

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Company in substantially the same proportions as their ownership of shares of the Company, becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than 50% of the total voting power represented by the Company’s then outstanding Voting Securities (as defined below), (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company (the “ Board ”) and any new director whose election by the Board or nomination for election by the Company’s shareholders was approved by a vote of at least two thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, (iii) the shareholders of the Company approve a merger or consolidation of the Company with any other corporation other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 75% of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of (in one transaction or a series of related transactions) all or substantially all of the Company’s assets.

 

(c)                                   Claim ” shall mean with respect to a Covered Event (as defined below): any threatened, pending or completed action, suit, proceeding or alternative dispute resolution mechanism, or any hearing, inquiry or investigation that an Indemnitee in good faith believes might lead to the institution of any such action, suit, proceeding or alternative dispute resolution mechanism, whether civil, criminal, administrative, investigative or other.

 

(d)                                  Covered Event ” shall mean any event or occurrence related in any way to the fact that Indemnitee is or was a director, officer, employee, agent, or fiduciary of the Company, or is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary of another corporation, partnership, company, joint venture, employee benefit plan, trust or other enterprise, or by reason of any action or inaction on the part of Indemnitee while serving in any such capacity.

 

(e)                                   Expenses ” shall mean any and all expenses (including attorneys’ fees and all other costs, expenses and obligations incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, to be a witness in or to participate in, any action, suit, proceeding, alternative dispute resolution mechanism, hearing, inquiry or investigation), judgments, fines, penalties and amounts paid in settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld), actually and reasonably incurred, of any Claim and any federal, state, local or foreign taxes imposed on any Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement.

 

(f)                                    Expense Advance ” shall mean a payment to any Indemnitee pursuant to Section 3 of Expenses in advance of the settlement of or final judgment in any action, suit, proceeding or alternative dispute resolution mechanism, hearing, inquiry or investigation which constitutes a Claim.

 

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(g)                                  Independent Legal Counsel ” shall mean an attorney or firm of attorneys, selected in accordance with the provisions of Section 2(d) hereof, who shall not have otherwise performed services for the Company or the applicable Indemnitee within the last three years (other than with respect to matters concerning the rights of the Indemnitees under this Agreement, or of other indemnitees under similar indemnity agreements).

 

(h)                                  References to “ other enterprises ” shall include employee benefit plans; references to “ fines ” shall include any excise taxes assessed on an Indemnitee with respect to an employee benefit plan; and references to “serving at the request of the Company” shall include any service as a director, officer, employee, agent or fiduciary of the Company which imposes duties on, or involves services by, such director, officer, employee, agent or fiduciary with respect to an employee benefit plan, its participants or its beneficiaries; and if such Indemnitee acted in good faith and in a manner such Indemnitee reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to in this Agreement.

 

(i)                                     Reviewing Party ” shall mean, subject to the provisions of Section 2(d), any person or body appointed by the Board in accordance with applicable law to review the Company’s obligations hereunder and under applicable law, which may include a member or members of the Board, Independent Legal Counsel or any other person or body not a party to the particular Claim for which an Indemnitee is seeking indemnification.

 

(j)                                     Section ” refers to a section of this Agreement unless otherwise indicated.

 

(k)                                  Voting Securities ” shall mean any securities of the Company that vote generally in the election of directors.

 

2.                                       Indemnification.

 

(a)                                  Indemnification of Expenses.   Subject to the provisions of Section 2(b) below, the Company shall indemnify each Indemnitee for Expenses to the fullest extent permitted by law if such indemnitee was or is or becomes a party to or witness or other participant in, or is threatened to be made a party to or witness or other participant in, any Claim (whether by reason of or arising in part out of a Covered Event), including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, provided that the indemnity shall not extend to any matter in respect of any fraud or dishonesty to the extent prohibited by the Bermuda Companies Act in relation to the Company that may attach to any Indemnitee.

 

(b)                                  Review of Indemnification Obligations.   Notwithstanding the foregoing, in the event any Reviewing Party shall have determined in good faith (as detailed in written opinion of counsel, in any case in which Independent Legal Counsel is the Reviewing Party), that an Indemnitee is not entitled to be indemnified hereunder under applicable law, (i) the Company shall have no further obligation under Section 2(a) to make any payments to such Indemnitee not made prior to such determination by such Reviewing Party, and (ii) the Company shall be entitled to be reimbursed by such Indemnitee (who hereby agrees to reimburse the Company) for all Expenses theretofore paid in indemnifying such Indemnitee; provided, however , that if such Indemnitee has commenced or thereafter commences legal proceedings in a

 

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court of competent jurisdiction to secure a determination that such Indemnitee is entitled to be indemnified hereunder under applicable law, any determination made by any Reviewing Party that such Indemnitee is not entitled to be indemnified hereunder under applicable law shall not be binding and such Indemnitee shall not be required to reimburse the Company for any Expenses theretofore paid in indemnifying such Indemnitee until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed).  An Indemnitee’s obligation to reimburse the Company for any Expenses shall be unsecured and no interest shall be charged thereon.

 

(c)                                   Indemnitee Rights on Unfavorable Determination; Binding Effect.   If any Reviewing Party determines that an Indemnitee substantively is not entitled to be indemnified hereunder in whole or in part under applicable law, such Indemnitee shall have the right to commence litigation seeking an initial determination by the court or challenging any such determination by such Reviewing Party or any aspect thereof, including the legal or factual bases therefor, and, subject to the provisions of Section 15 the Company hereby consents to service of process and to appear in any such proceeding.  Absent such litigation, any determination by any Reviewing Party shall be conclusive and binding on the Company and Indemnitee.

 

(d)                                  Selection of Reviewing Party; Change in Control.   If there has not been a Change in Control, any Reviewing Party shall be selected by the Board, and if there has been such a Change in Control, any Reviewing Party with respect to all matters thereafter arising concerning the rights of an Indemnitee to indemnification of Expenses under this Agreement or any other agreement or under the Company’s Memorandum of Association or Bye-laws as now or hereafter in effect, or under any other applicable law, if desired by such Indemnitee, shall be Independent Legal Counsel selected by such Indemnitee and approved by the Company (which approval shall not be unreasonably withheld).  Such counsel, among other things, shall render its written advice to the Company and such Indemnitee as to whether and to what extent such Indemnitee would be entitled to be indemnified hereunder under applicable law and the Company agrees to abide by such advice.  The Company agrees to pay the reasonable fees and expenses of the Independent Legal Counsel referred to above and to indemnify fully such counsel against any and all expenses (including attorneys’ fees), claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.  Notwithstanding any other provision of this Agreement, the Company shall not be required to pay Expenses of more than one Independent Legal Counsel in connection with all matters concerning a single Indemnitee, and such Independent Legal Counsel shall be the Independent Legal Counsel for any or all other Indemnitees unless (i) the employment of separate counsel by one or more Indemnitees has been previously authorized by the Company in ·writing, or (ii) an Indemnitee shall have provided to the Company a written statement that such Indemnitee has reasonably concluded that there may be a conflict of interest between such Indemnitee and the other Indemnitees with respect to the matters arising under this Agreement.

 

(e)                                   Mandatory Payment of Expenses.   Notwithstanding any other provision of this Agreement other than Section 10 hereof, to the extent that an Indemnitee has been successful on the merits or otherwise, including, without limitation, the dismissal of an action without prejudice, in defense of any Claim, such Indemnitee shall be indemnified against all Expenses incurred by such Indemnitee in connection therewith.

 

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3.                                       Expense Advances.

 

(a)                                  The Company shall make Expense Advances to an Indemnitee upon receipt of a written undertaking by or on behalf of the Indemnitee to repay such amounts if it shall ultimately be determined (as set forth herein) that the Indemnitee is not entitled to be indemnified therefor by the Company.

 

(b)                                  Form of Undertaking.   Any obligation to repay any Expense Advances hereunder pursuant to a written undertaking by the Indemnitee shall be unsecured and no interest shall be charged thereon.

 

(c)                                   Determination of Reasonable Expense Advances.   The parties agree that for the purposes of any Expense Advance for which an Indemnitee has made written demand to the Company in accordance with this Agreement, all Expenses included in such Expense Advance that are certified in good faith by affidavit of such Indemnitee as being reasonable shall be presumed conclusively to be reasonable.

 

4.                                       Procedures for Indemnification and Expense Advances.

 

(a)                                  Timing of Payments .  All payments of Expenses (including without limitation Expense Advances) by the Company to an Indemnitee pursuant to this Agreement shall be made to the fullest extent permitted by law as soon as practicable after written demand by such Indemnitee therefor is presented to the Company, but in no event later than forty-five (45) business days after such written demand by such Indemnitee is presented to the Company, except in the case of Expense Advances, which shall be made no later than thirty (30) business days after such written demand by such Indemnitee is presented to the Company.

 

(b)                                  Notice/Cooperation by Indemnitee.   Each Indemnitee shall, as a condition precedent to such Indemnitee’s right to be indemnified or Indemnitee’s right to receive Expense Advances under this Agreement, give the Company notice in writing as soon as practicable of any Claim made against such Indemnitee for which indemnification will or could be sought under this Agreement.  Notice to the Company shall be directed to the Principal Executive Officer of the Company at the address shown on the signature page of this Agreement (or such other address as the Company shall designate in writing to Indemnitee).  In addition, such Indemnitee shall give the Company such information and cooperation as it may reasonably require and as shall be within Indemnitee’s power.

 

(c)                                   No Presumptions; Burden of Proof.   For purposes of this Agreement, the termination of any Claim by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere , or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by this Agreement or applicable law.  In addition, neither the failure of any Reviewing Party to have made a determination as to whether an Indemnitee has met any particular standard of conduct or had any particular belief, nor an actual determination by any Reviewing Party that an Indemnitee has not met such standard of conduct or did not have such belief, prior to the commencement of legal proceedings by such Indemnitee to secure a judicial determination that such Indemnitee should be indemnified under this Agreement or applicable law, shall be a defense to such Indemnitee’s claim or create a presumption that such Indemnitee has not met any particular

 

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standard of conduct or did not have any particular belief.  In connection with any determination by any Reviewing Party or otherwise as to whether the Indemnitee is entitled to be indemnified hereunder the burden of proof shall be on the Company to establish that such Indemnitee is not so entitled.

 

(d)                                  Notice to Insurers.   If, at the time of the receipt by the Company of a notice of a Claim pursuant to Section 4(b) hereof, the Company has liability insurance in effect which may cover such Claim, the Company shall give prompt notice of the commencement of such Claim to the insurers in accordance with the procedures set forth in the respective policies.  The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of such Indemnitee, all amounts payable as a result of such Claim in accordance with the terms of such policies, subject to any other claims which may be paid pursuant to such policies.

 

(e)                                   Selection of Counsel.   In the event the Company shall be obligated hereunder to provide indemnification for or make any Expense Advances with respect to the Expenses of any Claim, the Company, if appropriate, shall be entitled to assume the defense of such Claim with counsel approved by Indemnitee (which approval shall not be unreasonably withheld) upon the delivery to such Indemnitee of written notice of the Company’s election to do so.  After delivery of such notice, approval of such counsel by such Indemnitee and the retention of such counsel by the Company, the Company will not be liable to such Indemnitee under this Agreement for any fees or expenses of separate counsel subsequently retained by or on behalf of such Indemnitee with respect to the same Claim; provided, however , that, (i) such Indemnitee shall have the right to employ such Indemnitee’s separate counsel in any such Claim at such Indemnitee’s expense, and (ii) if (A) the employment of separate counsel by such Indemnitee has been previously authorized by the Company, (B) such Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and such Indemnitee in the conduct of any such defense and such Indemnitee has received written advice of counsel to such effect, or (C) the Company shall not continue to retain such counsel to defend such Claim, then the fees and expenses of Indemnitee’s separate counsel shall be Expenses for which Indemnitee may receive indemnification or Expense Advances hereunder.

 

5.                                       Additional Indemnification Rights; Non-Exclusivity.

 

(a)                                  Scope.   The Company hereby agrees to indemnify each Indemnitee to the fullest extent permitted by law, notwithstanding that such indemnification is not specifically authorized by the other provisions of this Agreement, the Company’s Memorandum of Association, its Bye-laws or by statute.  In the event of any change after the date of this Agreement in any applicable law, statute or rule which expands the right of a Bermuda exempted limited company to indemnify a member of its board of directors or an officer, employee, agent or fiduciary, it is the intent of the parties hereto that each Indemnitee shall enjoy by this Agreement the greater benefits afforded by such change.  In the event of any change in any applicable law, statute or rule which narrows the right of a Bermuda exempted limited company to indemnify a member of its board of directors or an officer, employee, agent or fiduciary, such change, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement, shall have no effect on this Agreement or the parties’ rights and obligations hereunder except as set forth in Section10(a) hereof.

 

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(b)                                  Non-Exclusivity.   The indemnification and the payment of Expense Advances provided by this Agreement shall be in addition to any rights to which each Indemnitee may be entitled under the Company’s Memorandum of Association, its Bye-laws, any other agreement, any vote of shareholders or disinterested directors, applicable Bermuda law, or otherwise.  The indemnification and the payment of Expense Advances provided under this Agreement shall continue as to each Indemnitee for any action taken or not taken while serving in an indemnified capacity even though subsequent thereto Indemnitee may have ceased to serve in such capacity.

 

(c)                                   [Primacy of Indemnification.  The Company hereby acknowledges that Indemnitee has certain rights to indemnification, advancement of expenses and/or insurance provided by [Name of Fund/Sponsor] and certain of [its][their] affiliates (collectively, the “ Fund Indemnitors ”).  The Company hereby agrees (i) that it is the indemnitor of first resort ( i.e. , its obligations to Indemnitee are primary and any obligation of the Fund Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by Indemnitee are secondary), (ii) that it shall be required to advance the full amount of expenses incurred by Indemnitee and shall be liable for the full amount of all Expenses, judgments, penalties, fines and amounts paid in settlement to the extent legally permitted and as required by the terms of this Agreement and the Company’s Memorandum of Association or Bye-laws (or any other agreement between the Company and Indemnitee), without regard to any rights Indemnitee may have against the Fund Indemnitors, and (iii)  that it irrevocably waives, relinquishes and releases the Fund Indemnitors from any and all claims against the Fund Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof.  The Company further agrees that no advancement or payment by the Fund Indemnitors on behalf of Indemnitee with respect to any claim for which Indemnitee has sought indemnification from the Company shall affect the foregoing and the Fund Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of Indemnitee against the Company.  The Company and Indemnitee agree that the Fund Indemnitors are express third party beneficiaries of the terms of this Section 5(c).] (1)

 

6.                                       No Duplication of Payments.   The Company shall not be liable under this Agreement to make any payment in connection with any Claim made against an Indemnitee to the extent such Indemnitee has otherwise actually received payment (under any insurance policy, provision of the Company’s Memorandum of Association, its Bye-laws or otherwise) of the amounts otherwise payable hereunder.

 

7.                                       Partial Indemnification.   If an Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses incurred connection with any Claim, but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify such Indemnitee for the portion of such Expenses to which such Indemnitee is entitled.

 

8.                                       Mutual Acknowledgment.   The Company and each Indemnitee acknowledge that in certain instances, federal law or applicable public policy may prohibit the Company from indemnifying its directors, officers, employees, agents or fiduciaries under this Agreement or otherwise.  Each Indemnitee understands and acknowledges that the Company has undertaken or may be required in the future to undertake with the Securities and Exchange Commission to

 


(1)   To delete if not applicable.

 

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submit the question of indemnification to a court in certain circumstances for a determmat1on of the Company’s right under public policy to indemnify Indemnitee.

 

9.                                       Liability Insurance.   To the extent the Company maintains liability insurance applicable to directors, officers, employees, agents or fiduciaries, each Indemnitee shall be covered by such policies in such a manner as to provide such Indemnitee the same rights and benefits as are provided to the most favorably insured of the Company’s directors, if Indemnitee is a director; or of the Company’s officers, if Indemnitee is not a director of the Company but is an officer; or one of the Company’s key employees, agents or other fiduciaries, if Indemnitee is not an officer or director but is a key employee, agent or other fiduciary.

 

10.                                Exceptions.   Notwithstanding any other provision of this Agreement, the Company shall not be obligated pursuant to the terms of this Agreement:

 

(a)                                  Excluded Action or Omissions.   To indemnify an Indemnitee for Expenses resulting from acts, omissions or transactions for which such Indemnitee is prohibited from receiving indemnification under this Agreement or applicable law, provided, however , that notwithstanding any limitation set forth in this Section 10(a) regarding the Company’s obligation to provide indemnification, such Indemnitee shall be entitled under Section 3 to receive Expense Advances hereunder with respect to any such Claim unless and until a court having jurisdiction over the Claim shall have made a final judicial determination (as to which all rights of appeal therefrom have been exhausted or lapsed) that such Indemnitee has engaged in acts, omissions or transactions for which such Indemnitee is prohibited from receiving indemnification under this Agreement or applicable law (any such final determination, an “ Adverse Final Determination ”), and provided, further , that the Company shall have no obligation to provide any Expense Advances unless and until such Indemnitee has furnished the Company with an undertaking to repay Expense Advances in the event of an Adverse Final Determination.

 

(b)                                  Claims Initiated by Indemnitee.   To indemnify or make Expense Advances to the Indemnitee with respect to Claims initiated or brought voluntarily by an Indemnitee and not by way of defense, counterclaim or crossclaim, except: (i) with respect to actions or proceedings brought to establish or enforce a right to indemnification under this Agreement or any other agreement or insurance policy or under the Company’s Memorandum of Association or Bye-laws now or hereafter in effect relating to Claims for Covered Events, (ii) in specific cases if the Board has approved the initiation or bringing of such Claim, or (iii) as otherwise required under applicable Bermuda law, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, or insurance recovery, as the case may be.

 

(c)                                   Lack of Good Faith.   To indemnify an Indemnitee for any Expenses incurred by such Indemnitee with respect to any action instituted:  (i) by such Indemnitee to enforce or interpret this Agreement, if a court having jurisdiction over such action determines as provided in Section 13 that each of the material assertions made by such Indemnitee as a basis for such action was not made in good faith or was frivolous, or (ii) by or in the name of the Company to enforce or interpret this Agreement, if a court having jurisdiction over such action determines as provided in Section 13 that each of the material defenses asserted by such Indemnitee in such action was made in bad faith or was frivolous .

 

Furthermore, notwithstanding anything herein to the contrary, Indemnitee shall be entitled under Section 3 (to the maximum extent permitted by law) to receive Expense Advances

 

8



 

hereunder with respect to any Claim arising from the purchase and sale of securities of the Company by the Indemnitee in violation of Section 16(b) of the Exchange Act unless and until a court having jurisdiction over the Claim shall have made a final judicial determination (as to which all rights of appeal therefrom have been exhausted or lapsed) that Indemnitee has violated said statute or the Claim is settled and in connection with such settlement Indemnitee admits a violation of said statute, in which event Indemnitee will be obligated to repay all Expense Advances to the Company pursuant to a payment plan or other payment arrangements mutually agreeable to the parties.

 

11.                                Counterparts.   This Agreement may be executed and delivered in multiple counterparts (including facsimile, PDF, or other electronic counterparts), each of which, when taken together, shall constitute one and the same instrument.

 

12.                                Binding Effect; Successors and Assigns.   This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors, assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), spouses, heirs and personal and legal representatives.  The Company shall require and cause any successor (whether direct or indirect, and whether by purchase, merger, consolidation or otherwise) to all, substantially all, or a substantial part, of the business or assets of the Company, by written agreement in form and substance satisfactory to the Indemnitees, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.  This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as a director, officer, employee, agent or fiduciary (as applicable) of the Company or of any other enterprise at the Company’s request.

 

13.                                Expenses Incurred in Action Relating to Enforcement or Interpretation.   In the event that any action is instituted by any Indemnitee under this Agreement or under any liability insurance policies maintained by the Company to enforce or interpret any of the terms hereof or thereof, such Indemnitee shall be entitled to be indemnified for all Expenses incurred by such Indemnitee with respect to such action (including without limitation attorneys’ fees), regardless of whether Indemnitee is ultimately successful in such action, unless as a part of such action a court having jurisdiction over such action makes a final judicial determination (as to which all rights of appeal therefrom have been exhausted or lapsed) that each of the material assertions made by such Indemnitee as a basis for such action was not made in good faith or was frivolous; provided, however , that until such final judicial determination is made, Indemnitee shall be entitled under Section 3 to receive payment of Expense Advances hereunder with respect to such action.  In the event of an action instituted by or in the name of the Company under this Agreement to enforce or interpret any of the terms of this Agreement, each Indemnitee shall be entitled to be indemnified for all Expenses incurred by such Indemnitee in defense of such action (including without limitation costs and expenses incurred with respect to such Indemnitee’s counterclaims and cross-claims made in such action), unless as a part of such action a court having jurisdiction over such action makes a final judicial determination (as to which all rights of appeal therefrom have been exhausted or lapsed) that each of the material defenses asserted by such Indemnitee in such action was made in bad faith or was frivolous; provided, however , that until such final judicial determination is made, such Indemnitee shall be entitled under Section 3 to receive payment of Expense Advances hereunder with respect to such action.

 

9



 

14.                                Notice.   All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed duly given (i) if delivered by hand and signed for by the party addressed, on the date of such delivery, or (ii) if mailed by domestic certified or registered mail with postage prepaid, on the third business day after the date postmarked.  Addresses for notice to either party are as shown on the signature page of this Agreement, or as subsequently modified by written notice.

 

15.                                Consent to Jurisdiction.  The Company and each Indemnitee each hereby irrevocably consent to the jurisdiction of the courts of Bermuda for all purposes in connection with any action or proceeding which arises out of or relates to this Agreement and agree that any action instituted under this Agreement shall be commenced, prosecuted and continued only in Bermuda, which shall be the exclusive and only proper forum for adjudicating such a claim.

 

16.                                Severability.   The provisions of this Agreement shall be severable in the event that any of the provisions hereof (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law.  Furthermore, to the fullest extent possible, the provisions of this Agreement (including without limitation each portion of this Agreement containing any provision held to be invalid, void or otherwise unenforceable, that is not itself invalid, void or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

 

17.                                Choice of Law.   This Agreement, and all rights, remedies, liabilities, powers and duties of the parties to this Agreement, shall be governed by and construed in accordance with the laws of Bermuda without regard to its principles of conflicts of laws.

 

18.                                Subrogation.   In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of each Indemnitee, who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Company effectively to bring suit to enforce such rights.

 

19.                                Amendment and Termination.   No amendment, modification, termination or cancellation of this Agreement shall be effective unless it is in writing signed by both the parties hereto.  No waiver of any of the provisions of this Agreement shall be deemed to be or shall constitute a waiver of any other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver.

 

20.                                Integration and Entire Agreement.   This Agreement sets forth the entire understanding between the parties hereto and supersedes and merges all previous written and oral negotiations, commitments, understandings and agreements relating to the subject matter hereof between the parties hereto.

 

21.                                No Construction as Employment Agreement.   Nothing contained in this Agreement shall be construed as giving Indemnitee any right to be retained in the employ of the Company or any of its subsidiaries or affiliated entities.

 

[ Signature page follows . ]

 

10



 

IN WITNESS WHEREOF , the parties hereto have executed this INDEMNIFICATION AGREEMENT as of the date first written above.

 

 

AXOVANT SCIENCES LTD.

 

 

 

 

 

By:

 

 

 

Vivek Ramaswamy

 

 

Principal Executive Officer

 

 

 

 

Address:

 

 

 

Clarendon House

 

2 Church Street

 

Hamilton HM 11, Bermuda

 

 

 

INDEMNITEE:

 

 

 

 

 

 

 

Address:

 

 

 

 

 

[NAME OF FUND, IF APPLICABLE]

 

 

 

 

 

By:

 

 

Name:

 

Title:

 




Exhibit 10.7

 

AXOVANT SCIENCES, INC.

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (the “ Agreement ”) is entered into as of [INSERT DATE], 2015, by and between [INSERT EXECUTIVE NAME] (the “ Executive ”) and Axovant Sciences, Inc. (the “ Company ”).

 

RECITALS

 

A.                                     The Company desires the association and services of Executive and [his/her] skills, abilities, background and knowledge, and is willing to engage Executive’s services on the terms and conditions set forth in this Agreement.

 

B.                                     Executive desires to be in the employ of the Company, and is willing to accept such employment on the terms and conditions set forth in this Agreement.

 

C.                                     This Agreement supersedes any and all prior and contemporaneous oral or written employment agreements or arrangements between Executive and the Company or any predecessor thereof.

 

AGREEMENT

 

In consideration of the foregoing, the parties agree as follows:

 

1.                                       EMPLOYMENT BY THE COMPANY.

 

1.1                                Position; Duties; Location.   Subject to the terms and conditions of this Agreement, Executive shall hold the position of [INSERT POSITION AND TITLE].  Executive’s activities and duties shall be as directed by the Company’s Chief Executive Officer.  It is understood and agreed that Executive’s duties may include providing services to or for the benefit of the Company’s affiliates, including, but not limited to, Axovant Sciences, Ltd. (the “Parent”), pursuant to that certain Services Agreement by and between Parent and the Company effective as of March 7, 2015 or otherwise, provided, that Executive agrees that [he/she] will not provide any services from within the United States for Parent or any affiliate of Parent that is organized in a jurisdiction outside the United States.  Executive shall devote Executive’s full business energies, interest, abilities and productive time to the proper and efficient performance of Executive’s duties under this Agreement; provided, however, that Executive may devote reasonable periods of time to (a) serving on the board of directors of other corporations subject to the prior approval of the CEO, and (b) engaging in charitable or community service activities, so long as none of the foregoing additional activities materially interfere with Employee’s duties under this Agreement. Executive shall report to the Company’s Chief Executive Officer and shall work generally from the Company’s offices in New York City, New York.  Executive may work from remote locations, provided it does not interfere with the successful performance of Executive’s duties.  Executive understands that [his/her] duties may require periodic business travel.

 



 

1.2                                Policies and Procedures.   The employment relationship between the parties shall be governed by this Agreement and by the policies and practices established by the Company and/or its Board of Directors (the “ Board ”).  In the event that the terms of this Agreement differ from or are in conflict with the Company’s policies or practices, this Agreement shall govern and control.

 

1.3                                Exclusive Employment; Agreement not to Participate in Company’s Competitors.  Subject to Section 1.1 above, except with the prior written consent of the Company’s Chief Executive Officer, Executive will not during employment with the Company undertake or engage in any other employment, occupation or business enterprise.  During Executive’s employment, Executive agrees not to acquire, assume or participate in, directly or indirectly, any position, investment or interest known by Executive to be adverse or antagonistic to the Company, its business, or prospects, financial or otherwise, or in any company, person, or entity that is, directly or indirectly, in competition with the business of the Company.  Ownership by Executive in professionally managed funds over which the Executive does not have control or discretion in investment decisions, or, an investment of less than two percent (2%) of the outstanding shares of capital stock of any corporation with one or more classes of its capital stock listed on a national securities exchange or publicly traded on a national securities exchange or in the over-the-counter market shall not constitute a breach of this Section.

 

1.4                                Start Date.  Executive’s employment with the Company [will commence/commenced] on [INSERT DATE] (the “ Start Date ”).

 

2.                                       AT-WILL EMPLOYMENT.

 

Executive’s employment relationship with the Company is, and shall at all times remain, at-will.  This means that either Executive or the Company may terminate the employment relationship at any time, for any reason or for no reason, with or without cause or advance notice.

 

3.                                       COMPENSATION AND BENEFITS.

 

3.1                                Salary. The Company shall pay Executive a base salary at the annualized rate of $[INSERT ANNUAL BASE SALARY] (the “Base Salary” ), less payroll deductions and all required withholdings, payable in regular periodic payments in accordance with the Company’s normal payroll practices.  The Base Salary shall be prorated for any partial year of employment on the basis of a 365-day year.  The Base Salary may be adjusted from time to time in the Company’s discretion.  Immediately prior to or following the consummation of an initial public offering, the Base Salary shall be adjusted upward as necessary to meet appropriate public market standards as determined by the Board or the Compensation Committee thereof.

 

3.2                                Performance Bonus.   Each fiscal year, Executive will be eligible to earn an additional cash bonus with a target of fifty percent (50%) of [his/her] Base Salary, based on the Board’s assessment of Executive’s individual performance and overall Company performance.  Following the consummation of an initial public offering, the percentage of Base Salary that Executive will be eligible to earn as a bonus shall be adjusted upward as necessary to meet appropriate public market standards as determined

 



 

by the Board or the Compensation Committee thereof.  In order to earn and receive the bonus, Executive must remain employed by the Company through and including the bonus payout date, which will be on or before April 30 of the year following the year for which it is paid.  The determination of whether Executive has earned a bonus and the amount thereof shall be determined by the Board (and/or a committee thereof) in its sole discretion.  The Company reserves the right to modify the bonus criteria from year to year.  Within 30 days following a Change in Control (as defined below), the Company shall pay to Executive a pro-rated bonus (based on the higher of target or actual achievement of pro-rata performance targets for the number of days that have elapsed in such calendar year as of the Change in Control) and with the bonus amounts to be the pro-rated portion of a full annual bonus based on the number of days that have elapsed in such calendar year as of the Change in Control.

 

3.3                                Equity.  Subject to the terms of Parent’s 2015 Equity Incentive Plan (the “ Plan ”), Executive [will be/has been] granted an option (the “ Option ”) to purchase a number of shares of Parent’s Common Stock equal to [INSERT NUMBER OF SHARES] (the “ Option Shares ”).  Twenty-five percent (25%) of the Option Shares will vest one year after the Start Date and the balance of the Option Shares will vest in a series of twelve (12) successive equal quarterly installments measured from the first anniversary of the Start Date. The exercise price of the Option will be equal to the fair market value of the Parent Common Stock on the date of grant of the Option, as determined by the Parent Board in its sole discretion.  The Option will be governed by the Plan and other documents issued in connection with the grant.  In addition, the Executive will be eligible for additional discretionary periodic or annual equity incentive grants based upon the Executive’s performance as well as business conditions at the Company (including possibly following the consummation of an initial public offering based on appropriate public market comparables for the Executive’s position) and in any event on a basis no less favorable than that provided to other senior Company executives from time to time.  Upon a Change in Control, any unvested portion of the Option and any other options or additional equity incentive grants that Executive may have received shall immediately vest in full, and the Company agrees to take all action required by the Board and/or the board of directors of Parent to accelerate the vesting of any such unvested options or equity incentive grants.

 

3.4                                Benefits and Insurance.   Executive shall, in accordance with Company policy and the terms of the applicable plan documents, be eligible to participate in benefits under any benefit plan or arrangement that may be in effect from time to time and made available to similarly situated Company employees (including but not limited to being named as an officer for purposes of the Company’s Directors & Officers Insurance).  The Company reserves the right to modify, add or eliminate benefits from time to time.  Executive shall accrue four (4) weeks of vacation per year subject to the Company’s policy regarding vacation.  Executive may carry over five (5) days of unused vacation to the next calendar year; any other portion of accrued but unused vacation shall not carry over to the next calendar year.

 

3.5                                Expense Reimbursements.   The Company will reimburse Executive for all reasonable business expenses Executive incurs in conducting [his/her] duties hereunder, pursuant to the Company’s usual expense reimbursement policies.  Reimbursement will be made as soon as practicable following receipt from Executive of reasonable documentation supporting said expenses.

 



 

4.                                       PROPRIETARY INFORMATION OBLIGATIONS.

 

As a condition of employment Executive agrees to execute and abide by the Company’s Employee Non-Disclosure And Inventions Assignment Agreement ( NDA ”).

 

5.                                       TERMINATION OF EMPLOYMENT.

 

5.1                                Termination Without Cause Or Resignation For Good Reason.

 

(a)                                  If Executive’s employment with the Company is terminated without Cause or Executive resigns for Good Reason, in either case, prior to a Change in Control or more than twelve (12) months following a Change in Control, then the Company shall pay Executive any earned but unpaid Base Salary and unused vacation accrued through the date of termination, at the rates then in effect, less standard deductions and withholdings.  In addition, if Executive furnishes to the Company an executed waiver and release of claims in a form to be provided by the Company, which may include an obligation for Executive to provide reasonable transition assistance (the “Release” )  that is nonrevocable prior to the Release Date, and if Executive allows such Release to become effective in accordance with its terms, then the Executive shall receive the following benefits:

 

(i)  The Company shall pay Executive an amount equal to one (1) times the sum of the Executive’s then current Base Salary (without regard to any reduction in Base Salary that would otherwise constitute Good Reason), the full amount of Executive’s annual target bonus in respect of the calendar year in which the termination of employment occurs, and any unpaid annual bonus amount with respect to the calendar year ended prior to the termination of Executive’s employment.  Said amount shall be paid to Executive in a single lump sum within ten (10) days following the Release Date and will be subject to required withholding;

 

(ii)  If Executive is eligible for and timely elects COBRA continuation coverage, the Company will reimburse COBRA premiums for the first twelve (12) months of COBRA coverage; provided, however, that if Executive ceases to be eligible for COBRA or becomes eligible to enroll in the group health insurance plan of another employer, Executive will immediately notify the Company and the Company’s obligation to provide the COBRA premium benefits shall immediately cease.  Further, notwithstanding the foregoing, if at any time the Company determines, in its sole discretion, that it cannot provide the COBRA premium benefits without potentially incurring financial costs or penalties under applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then in lieu of paying COBRA premiums on Executive’s behalf, the Company will pay Executive on a monthly basis a fully taxable cash payment equal to the COBRA premium for that month, subject to applicable tax withholding.  This payment may be, but need not be, used by Executive to pay for COBRA premiums; and

 

[(iii)  In the event that Executive’s employment is terminated on account of Special Good Reason and Executive’s performance was determined to be “Very Good” or higher against agreed objectives during Executive’s performance review immediately prior to the termination, in addition to the payments and benefits

 



 

provided in Section 5.1(a)(i) and (ii), 50% of the then unvested portion of the Option, and any other options or additional equity grants that the Executive may have received, shall immediately become fully vested.] (1)

 

(b)                                  If Executive’s employment with the Company is terminated without Cause or Executive resigns for Good Reason, in either case, upon or on or before the twelve-month anniversary of a Change in Control (but not before a Change in Control), then the Company shall pay Executive any earned but unpaid Base Salary and unused vacation accrued through the date of termination, at the rates then in effect, less standard deductions and withholdings.  In addition, if Executive furnishes to the Company an executed Release that is nonrevocable prior to the Release Date, and if Executive allows such Release to become effective in accordance with its terms, then the Executive shall receive the following benefits:

 

(i)  The Company shall pay Executive an amount equal to one and a half (1.5) times the sum of the Executive’s then current Base Salary (without regard to any reduction in Base Salary that would otherwise constitute Good Reason), the full amount of Executive’s annual target bonus in respect of the calendar year in which the termination of employment occurs, and any unpaid annual bonus amount with respect to the calendar year ended prior to the termination of Executive’s employment.  Said amount shall be paid to Executive in a single lump sum within ten (10) days following the Release Date

 

(ii)  If Executive is eligible for and timely elects COBRA continuation coverage, the Company will reimburse COBRA premiums for the first eighteen (18) months of COBRA coverage; provided, however, that if Executive ceases to be eligible for COBRA or becomes eligible to enroll in the group health insurance plan of another employer, Executive will immediately notify the Company and the Company’s obligation to provide the COBRA premium benefits shall immediately cease.  Further, notwithstanding the foregoing, if at any time the Company determines, in its sole discretion, that it cannot provide the COBRA premium benefits without potentially incurring financial costs or penalties under applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then in lieu of paying COBRA premiums on Executive’s behalf, the Company will pay Executive on a monthly basis a fully taxable cash payment equal to the COBRA premium for that month, subject to applicable tax withholding.  This payment may be, but need not be, used by Executive to pay for COBRA premiums.

 

[(iii) In the event that Executive’s employment is terminated on account of Special Good Reason and Executive’s performance was determined to be “Very Good” or higher against agreed objectives during Executive’s performance review immediately prior to the termination, in addition to the payments and benefits provided in Section 5.1(b)(i) and (ii), 50% of the then unvested portion of any then outstanding options or other equity grants that the Executive may have received, which have not already accelerated pursuant to the last sentence of Section 3.3, shall immediately become fully vested.] (2)

 


(1)                                      To be inserted into the employment agreements of certain executive officers at the discretion of the Board.

 

(2)                                      To be inserted into the employment agreements of certain executive officers at the discretion of the Board.

 



 

5.2                                Other Termination.  If Executive resigns [his/her] employment at any time without Good Reason or Executive’s employment is terminated by the Company at any time for Cause or due to death or Disability, the Company shall pay Executive (or her estate) any Base Salary and any unused vacation accrued through the date of such resignation or termination, at the rates then in effect, less standard deductions and withholdings.  In addition, in the event of a termination due to death or Disability, Executive (or [his/her] estate) will be paid an amount equal to Executive’s target bonus amount for the year in which such resignation or termination occurs pro-rated to the date of such resignation or termination. The Company shall thereafter have no further obligations to Executive, except as may otherwise be required by law.

 

5.3                                Definitions .  For purposes of this Agreement, the following terms shall have the following meanings:

 

(a)                                  “Cause” shall mean the occurrence of any of the following: (i) Executive’s willful failure to substantially perform [his/her] duties and responsibilities to the Company after written demand for performance from the Company which specifically sets forth the factual basis for the Company’s belief that the Executive has not substantially performed such duties and after she has been provided with a sixty (60) day cure period, or Executive’s deliberate violation of a Company policy; (ii) Executive’s commission of any act of fraud, embezzlement, dishonesty or any other willful misconduct that has caused or is reasonably expected to result in material injury to the Company; (iii) unauthorized use or disclosure by Executive of any proprietary information or trade secrets of the Company or any other party to whom Executive owes an obligation of nondisclosure as a result of [his/her] relationship with the Company; (iv) Executive’s willful breach of any of [his/her] obligations under any written agreement or covenant with the Company; or (v) Executive’s conviction of (x) any felony, or (y) any misdemeanor crime involving fraud or dishonesty.  For purposes of this Agreement, no act or failure to act, on the part of Executive, will be considered ‘‘willful” unless it is done, or omitted to be done, by Executive in bad faith or without reasonable belief that Executive’s action or omission was in the best interests of the Company.

 

(b)                                  “Disability” shall mean the Executive’s inability to perform [his/her] duties and responsibilities hereunder, with or without reasonable accommodation, due to any physical or mental illness or incapacity, which condition either (i) has continued for a period of 180 days (including weekends and holidays) in any consecutive 365-day period.

 

(c)                                   “Good Reason” for Executive to resign [his/her] employment hereunder shall mean the occurrence of any of the following events without Executive’s consent: (i) a material reduction by the Company of Executive’s Base Salary below that Base Salary as set as of the time of the reduction, provided, however, that if such reduction occurs in connection with a Company-wide decrease in executive team compensation, such reduction shall not constitute Good Reason provided that it is a reduction of a proportionally like amount or percentage affecting the entire executive team; (ii) a material breach of this Agreement by the Company; (iii) relocation of Executive’s primary work location to a location that increases Executive’s one-way commute by more than fifty (50) miles as compared to Executive’s then current primary work location immediately prior to such relocation; or (iv) an adverse change in Executive’s duties, authority, or

 


 

responsibilities relative to Executive’s duties, authority, or responsibilities in effect immediately prior to such reduction, without limiting the foregoing, including a change in the Executive’s reporting responsibilities so that she no longer reports directly to the CEO of the Company.  Provided, however, that, any such resignation by Executive shall only be deemed for Good Reason pursuant to this definition if: (1) Executive gives the Company written notice of intent to terminate for Good Reason within thirty (30) days following the first occurrence of the condition(s) that [he/she] believes constitute(s) Good Reason, which notice shall describe such condition(s); (2) the Company fails to remedy such condition(s) within thirty (30) days following receipt of the written notice (the “ Cure Period ”); and (3) Executive voluntarily terminates [his/her] employment within thirty (30) days following the end of the Cure Period.

 

(d)                                  [“ Special Good Reason ” for Executive to resign [his/her] employment hereunder shall mean if within twelve (12) months from the start date of another executive being hired by the Company, (i) the Executive terminates [his/her] employment due to an adverse change in Executive’s duties, authority, or responsibilities relative to Executive’s duties, authority, or responsibilities in effect immediately prior to such reduction, without limiting the foregoing, including a change in the Executive’s reporting responsibilities so that she no longer reports directly to the Chief Executive Officer of the Company or (ii) Executive is involuntarily terminated because the Company hires a third party who assumes Executive’s position or a portion of [his/her] position, provided, however, that, any termination by Executive shall only be deemed to constitute Special Good Reason pursuant to clause (i) of this definition if: (1) Executive gives the Company written notice of intent to terminate for Special Good Reason within thirty (30) days following the first occurrence of the condition(s) that Executive believes will give [his/her] the right to terminate for Special Good Reason, which notice shall describe such condition(s); (2) the Company fails to remedy such condition(s) within the Cure Period; and Executive voluntarily terminates [his/her] employment within thirty (30) days following the end of the Cure Period.] (3)

 

(e)                                   A Change in Control means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:

 

(i)                                     any person or entity becomes the Owner, directly or indirectly, of securities of the Company or Parent representing more than fifty percent (50%) of the combined voting power of the Company’s or Parent’s then outstanding securities other than by virtue of a merger, consolidation or similar transaction.  Notwithstanding the foregoing, a Change in Control will not be deemed to occur (A) on account of the acquisition of securities of the Company directly from the Company or the acquisition of securities of the Parent directly from Parent, (B) on account of the acquisition of securities of the Company or Parent by an investor, any affiliate thereof or any other person or entity that acquires the Company’s or Parent’s securities in a transaction or series of related transactions the primary purpose of which is to obtain financing for the Company or Parent through the issuance of equity securities; (C) on account of the acquisition of securities of the Company or Parent by any individual who is, on the IPO Date, either an executive officer or a Director (either, an “IPO Investor”) and/or any entity in which an IPO Investor has a direct or indirect interest (whether in the form of voting rights or participation in profits or capital contributions) of more than 50% (collectively, the “IPO Entities”) or on account of the IPO Entities continuing to hold shares that come to represent more than 50% of the combined voting power of the Company's or Parent's then outstanding securities as a result of the conversion of any class of the Company's or Parent's securities into another class of the Company's or Parent's securities having a different number of votes per share pursuant to the conversion provisions set forth in the Company's or Parent's Amended and Restated Certificate of Incorporation.  For these purposes, “IPO Date” means the date and time of execution of the underwriting agreement between the Company or Parent and the underwriter(s) managing the initial public offering of the Common Stock of the Company or Parent, pursuant to which the Common Stock is priced for the initial public offering; or (D) solely because the level of ownership held by any person or entity (the “ Subject Person ”) exceeds the designated percentage threshold of the outstanding voting securities as a result of a repurchase or other acquisition of voting securities by the Company or Parent reducing the number of shares outstanding, provided that if a Change in Control would occur (but for the operation of this clause (D)) as a result of the acquisition of voting securities by the

 


(3)             To be inserted into the employment agreements of certain executive officers at the discretion of the Board.

 



 

Company or Parent, and after such share acquisition, the Subject Person becomes the owner of any additional voting securities that, assuming the repurchase or other acquisition had not occurred, increases the percentage of the then outstanding voting securities owned by the Subject Person over the designated percentage threshold, then a Change in Control will be deemed to occur;

 

(ii)                                 there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company or Parent and, immediately after the consummation of such merger, consolidation or similar transaction, the shareholders of the Company or Parent, as the case may be, immediately prior thereto do not own, directly or indirectly, either (A) outstanding voting securities representing more than fifty percent (50%) of the combined outstanding voting power of the surviving entity in such merger, consolidation or similar transaction or (B) more than fifty percent (50%) of the combined outstanding voting power of the parent of the surviving entity in such merger, consolidation or similar transaction, in each case in substantially the same proportions as their ownership of the outstanding voting securities of the Company or Parent, as the case may be, immediately prior to such transaction; provided, however , that a merger, consolidation or similar transaction will not constitute a Change in Control under this prong of the definition if the outstanding voting securities representing more than 50% of the combined voting power of the surviving Entity or its parent are owned by the IPO Entities; or

 

(iii)                             there is consummated a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated assets of the Company and its subsidiaries or Parent and its subsidiaries, as the case may be, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its subsidiaries or Parent and its subsidiaries, as the case may be, to an entity, more than fifty percent (50%) of the combined voting power of the voting securities of which are owned by shareholders of the Company or of Parent, as the case may be, in substantially the same proportions as their ownership of the outstanding voting securities of the Company or of Parent immediately prior to such sale, lease, license or other disposition; provided, however , that a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries will not constitute a Change in Control under this prong of the definition if the outstanding voting securities representing more than 50% of the combined voting power of the acquiring Entity or its parent are owned by the IPO Entities;

 

(iv)                              individuals who, on March 18, 2015, are members of the Board of Directors of the Company or Parent (the “Incumbent Board”) cease for any reason to constitute at least a majority of the members of the Board of Directors of the Company or Parent; provided, however, that if the appointment or election (or nomination for election) of any new Board member was approved or recommended by a majority vote of the members of the Incumbent Board then still in office, such new member will be considered as a member of the Incumbent Board. Notwithstanding the foregoing definition, the term Change in Control will not include (x) a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of the Company or Parent, or (y) a liquidation or dissolution ancillary to or in connection with an assignment for the benefit of creditors, a bankruptcy proceeding, appointment of receiver or similar proceeding or transaction.

 

5.4                                Release Date ” shall mean the date that is fifty-five (55) days following the date of Executive’s termination.

 

5.5                                Effect of Termination.  Executive agrees that should [his/her] employment be terminated for any reason, she shall be deemed to have resigned from any and all positions with the Company, including, but not limited, to a position on the Board.

 

5.6                                Section 409A Compliance.

 

(a)  It is intended that any benefits under this Agreement satisfy, to the greatest extent possible, the exemptions from the application of Section 409A of the Internal Revenue Code of 1986, as amended ( Section 409A ), provided under Treasury Regulations Sections 1.409A-1(b)(4), and 1.409A-1(b)(9), and this Agreement will be

 



 

construed to the greatest extent possible as consistent with those provisions, and to the extent not so exempt, this Agreement (and any definitions hereunder) will be construed in a manner that complies with Section 409A.  For purposes of Section 409A (including, without limitation, for purposes of Treasury Regulations Section 1.409A-2(b)(2)(iii)), Executive’s right to receive any installment payments under this Agreement (whether severance payments, if any, or otherwise) shall be treated as a right to receive a series of separate payments and, accordingly, each installment payment hereunder shall at all times be considered a separate and distinct payment. A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Section 409A and, for purposes of any such provision of this Agreement, references to a “resignation,” “termination,” “termination of employment” or like terms shall mean separation from service.  Notwithstanding any provision to the contrary in this Agreement, if Executive is deemed by the Company at the time of a separation from service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i), and if any payments or benefits that the Executive becomes entitled to under this Agreement on account of such separation from service are deemed to be “deferred compensation,” then to the extent delayed commencement of any portion of such payments or benefits is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) and the related adverse taxation under Section 409A, such payments shall not be provided prior to the earliest of (i) the expiration of the six-month period measured from the date of separation from service, (ii) the date of Executive’s death or (iii) such earlier date as permitted under Section 409A without the imposition of adverse taxation.  Upon the first business day following the expiration of such period, all payments deferred pursuant to this paragraph shall be paid in a lump sum, and any remaining payments due shall be paid as otherwise provided herein.  No interest shall be due on any amounts so deferred.

 

(b)                                  With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by Section 409A, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, and (iii) such payments shall be made on or before the last day of the Executive’s taxable year following the taxable year in which the expense was incurred. The Company makes no representation or warranty and shall have no liability to the Executive or any other person if any provisions of this Agreement are determined to constitute deferred compensation subject to Code Section 409A but do not satisfy an exemption from, or the conditions of, Code Section 409A.

 

5.7                                Section 280G .

 

(a)                                  If any payment or benefit (including payments and benefits pursuant to this Agreement) that Executive would receive in connection with a Change in Control or other transaction (the “Transaction”) from the Company or otherwise (“ Transaction Payment ”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “ Code ”), and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the

 



 

Excise Tax ”), then the Company shall cause to be determined, before any amounts of the Transaction Payment are paid to Executive, which of the following two alternative forms of payment would result in Executive’s receipt, on an after-tax basis, of the greater amount of the Transaction Payment notwithstanding that all or some portion of the Transaction Payment may be subject to the Excise Tax: (1) payment in full of the entire amount of the Transaction Payment (a “Full Payment”), or (2) payment of only a part of the Transaction Payment so that Executive receives the largest payment possible without the imposition of the Excise Tax (a “Reduced Payment”).  For purposes of determining whether to make a Full Payment or a Reduced Payment, the Company shall cause to be taken into account the value of the noncompetition provision set forth in the NDA, all applicable federal, state and local income and employment taxes and the Excise Tax (all computed at the highest applicable marginal rate, net of the maximum reduction in federal income taxes which could be obtained from a deduction of such state and local taxes).  If a Reduced Payment is made, (x) Executive shall have no rights to any additional payments and/or benefits constituting the Transaction Payment, and (y) reduction in payments and/or benefits shall occur in the manner that results in the greatest economic benefit to Executive as determined in this paragraph.  If more than one method of reduction will result in the same economic benefit, the portions of the Transaction Payment shall be reduced pro rata.

 

(b)                                  Notwithstanding the foregoing, in the event that no stock of the Company is readily tradeable on an established securities market or otherwise (within the meaning of Section 280G of the Code) at the time of the Change in Control of the Company, the Company shall cause a vote of shareholders to be held to approve the portion of the Transaction Payments that exceeds three times Executive’s “base amount” (within the meaning of Section 280G of the Code) (the “ Excess Parachute Payments ”) in accordance with Treas. Reg. §1.280G-1, and Executive shall cooperate with such vote of shareholders, including the execution of any required documentation subjecting Executive’s entitlement to all Excess Parachute Payments to such shareholder vote. In the event that the Company does not cause a vote of shareholder to be held to approve all Excess Parachute Payments, the provisions set forth in Section 5.6(a) shall apply.

 

(c)                                   Unless Executive and the Company otherwise agree in writing, any determination required under this section shall be made in writing by the Company’s independent public accountants (the “ Accountants ”), whose determination shall be conclusive and binding upon Executive and the Company for all purposes.  For purposes of making the calculations required by this section, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code.  The Accountants shall provide detailed supporting calculations to the Company and Executive as requested by the Company or Executive. Executive and the Company shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this section.  The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this section as well as any costs incurred by Executive with the Accountants for tax planning under Sections 280G and 4999 of the Code.

 



 

6.                                       ARBITRATION.

 

As a condition of employment Executive agrees to execute and abide by the Arbitration Agreement provided herewith.

 

7.                                       GENERAL PROVISIONS.

 

7.1                                Representations and Warranties.  Executive represents and warrants that Executive is not restricted or prohibited, contractually or otherwise, from entering into and performing each of the terms and covenants contained in this Agreement, and that Executive’s execution and performance of this Agreement will not violate or breach any other agreements between the Executive and any other person or entity.

 

7.2                                Advertising Waiver.  Executive agrees to permit the Company, and persons or other organizations authorized by the Company, to use, publish and distribute advertising or sales promotional literature concerning the products and/or services of the Company in which Executive’s name and/or pictures of Executive appear.  Executive hereby waives and releases any claim or right Executive may otherwise have arising out of such use, publication or distribution.

 

7.3                                Miscellaneous.   This Agreement, along with the NDA and Arbitration Agreement, constitutes the complete, final and exclusive embodiment of the entire agreement between Executive and the Company with regard to its subject matter.  It is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes any other such promises, warranties or representations.  This Agreement may not be modified or amended except in a writing signed by both Executive and a duly authorized officer or member of the Board.  This Agreement will bind the heirs, personal representatives, successors and assigns of both Executive and the Company, and inure to the benefit of both Executive and the Company, and to [his/her] and its heirs, successors and assigns.  If any provision of this Agreement is determined to be invalid or unenforceable, in whole or in part, this determination will not affect any other provision of this Agreement and the provision in question will be modified so as to be rendered enforceable.  This Agreement will be deemed to have been entered into and will be construed and enforced in accordance with the laws of the State of New York as applied to contracts made and to be performed entirely within New York.  Any ambiguity in this Agreement shall not be construed against either party as the drafter.  Any waiver of a breach of this Agreement shall be in writing and shall not be deemed to be a waiver of any successive breach.  This Agreement may be executed in counterparts and facsimile signatures will suffice as original signatures.

 



 

IN WITNESS WHEREOF , the parties have executed this Agreement as of the day and year first written above.

 

 

AXOVANT SCIENCES, INC.

 

 

 

 

 

 

By:

 

 

 

Name:

Christine Mikail

 

 

Title:

Chief Administrative Officer and General Counsel

 

 

 

 

ACCEPTED AND AGREED:

 

 

 

 

 

[INSERT NAME OF EXECUTIVE]

 

 




Exhibit 10.8

 

GRAPHIC

 

April  25, 2015

 

Lawrence Friedhoff, MD

525 Rivervale Road

Rivervale, NJ 07678

 

Re:  Employment Offer and Terms

 

Dear Larry:

 

On behalf of Axovant Sciences,  Inc. (“Axovant” or the “Company”), a wholly-owned subsidiary of Axovant Sciences Ltd., thank you for your interest in joining our team. Based on your background and experience, we believe that you will make significant contributions to the overall growth of our biotechnology company.

 

We are eager to begin integrating you into Axovant immediately. Therefore, we are pleased to offer you employment at-will with the Company based on the terms that are outlined in this letter agreement.

 

Position:

Chief Development Officer

 

 

Reporting To:

Chief Executive Officer

 

 

Start Date:

Your first day of employment will be May 1, 2015 (“Start Date”).

 

 

Location:

It is expected that you generally will work from the Company’s office in New York, New York. It is understood that reasonable travel will be required for your job and that, except as it will not interfere with the successful performance of your duties, you may work from remote locations.

 

 

Annual Base Salary:

The Company will pay you semi-monthly at an annual base salary rate of $300,000 (or $12,500.00 per pay period) based on full-time employment status. Your annual base salary will be subject to periodic review and increase, and it may be adjusted upward within a reasonable period of time subsequent to the consummation of an Initial Public Offering (IPO) based on appropriate public market comparables for your position. This

 

Axovant Sciences,  Inc.  ·   1441 Broadway, 3rd Floor, New York, NY 10018  ·   axovant.com

 



 

GRAPHIC

 

 

position is classified as exempt from overtime. Enclosed is a New York Notice and Acknowledgement of Pay Rate and Payday.

 

 

Performance Bonus:

In addition to your Annual Base Salary, you will be eligible to receive an annual discretionary performance bonus, after the end of each fiscal year on March 31 st  (the “Performance Bonus”). The Company will target your Performance Bonus at 50% of your base salary if your performance is determined to be “Very Good” or higher against agreed objectives and business conditions at the Company. Your performance bonus may be adjusted upward subsequent to the consummation of an IPO based on appropriate public market comparables for your position. To be eligible to earn the Performance Bonus, you must by employed by the Company until the last day of the fiscal year on March 31 st . The Performance Bonus may be prorated if you are employed for less than a full fiscal year or if the Company’s conducts your review or performance assessment for a period covering less than a full fiscal year. The Company will pay the Performance Bonus, if any, by no later than thirty (30) days after the end of the Company’s fiscal year or by April 30 th .

 

 

Benefits:

You will be eligible to participate in the employee expense reimbursement, benefits and insurance (including D&O insurance) programs as may be made available by the Company. These programs currently include medical, dental, vision, life and disability insurance, as well as a 401k program, all of which are subject to eligibility requirements, enrollment criteria and the other terms and conditions of such plans and programs. Details of these benefits, including mandatory employee contributions, if any, will be made available to you when you begin full-time employment. The Company reserves the right to change or rescind its benefit plans and programs and alter employee contribution levels at its discretion.

 

 

 

You will be eligible for four (4) weeks of paid vacation per calendar year, which shall accrue on a prorated basis as of your Start Date. You will be allowed to carry forward five (5) days of unused vacation time into the next calendar year. In addition,

 

Axovant Sciences,  Inc.  ·   1441 Broadway, 3rd Floor, New York, NY 10018  ·   axovant.com

 



 

GRAPHIC

 

 

enclosed is a Notice of Employee Rights under the New York City Earned Sick Time Act.

 

 

Equity Incentive:

Pursuant to your Consulting Agreement with Roivant Neurosciences, Inc. (predecessor to Axovant Sciences, Inc.) dated March 18, 2015, you were granted 225,000 stock options of Axovant Sciences Ltd. at $0.90 per share on March 18, 2015. These stock options are subject to 4-year vesting period with 25% at Year 1 and quarterly vesting thereafter, as well as any other terms contained in the standard grant agreements of Axovant Sciences Ltd.

 

 

 

In addition, you may be eligible for additional discretionary periodic or annual equity incentive grants based upon your performance as well as business conditions at the Company (including possibly following the consummation of an IPO based on appropriate public market comparables for your position).

 

 

Severance:

If the Company terminates your employment without cause or if you terminate your employment for good reason (as such terms are customarily defined), the Company will (a) pay you, in a cash lump sum, one (1) times the sum of your then current annual base salary and annual target bonus opportunity, and (b) continue to pay the employer portion of continued medical and dental benefits (as they may be in effect from time to time) for twelve months following the termination. In the event of a change of control (as such terms are customarily defined, but not including an IPO), the Company will accelerate the vesting of any outstanding equity incentive compensation grants as of the effective time of the change of control. In addition, in the event of a termination occurring within one year following the change of control, you will also receive severance as follows: (1) the Company will pay you, in a cash lump sum, one and one half (1.5) times the sum of your then current annual base salary and annual target bonus opportunity, and (2) continue to pay the employer portion of continued medical and dental benefits (as they may be in effect from time to time) for eighteen months following the termination.

 

Axovant Sciences,  Inc.  ·   1441 Broadway, 3rd Floor, New York, NY 10018  ·   axovant.com

 



 

GRAPHIC

 

Representation

 

Regarding Other

 

Obligations:

This offer is conditioned on your representation that you are not subject to any confidentiality, non-competition agreement or any other similar type of restriction that may affect your ability to devote full time and attention to your work at the Company. If you have entered into any agreement that may restrict your activities on behalf of the Company, please provide a copy of the agreement as soon as possible.

 

 

 

This offer is also conditioned on your representation and warranty that you have not been debarred or received notice of any action or threat with respect to debarment under the provisions of the Generic Drug Enforcement Act of 1992, 21 U.S.C. § 335(a) or any similar legislation applicable in the US or in any other country where the Company intends to develop its activities.

 

 

Further Agreement:

It is expected that, as soon as practicable following the date hereof, you and the Company will enter into an employment agreement that memorializes and integrates the provisions of this letter agreement together with other customary and mutually agreed provisions.

 

 

Other Terms:

Your employment with the Company shall be on an at-will basis. You or the Company may terminate employment for any reason or no reason and at any time. The Company requests, however, that you provide at least thirty (30) days of notice of your intention to resign. Upon the commencement of employment, you will be required to sign a Confidentiality, Assignment of Inventions and Non-compete Agreement as a condition of your employment. Finally, Axovant’s offer to you is contingent on your submission of satisfactory proof of your identity and your legal authorization to work in the United States.

 

Axovant Sciences,  Inc.  ·   1441 Broadway, 3rd Floor, New York, NY 10018  ·   axovant.com

 



 

GRAPHIC

 

Larry, we are very excited about having you join Axovant Sciences,  Inc. as Chief Development Officer. Your experience and judgment will have a great impact on our Company’s growth and success, and we believe that you will derive a great deal of enjoyment out of your role and responsibilities.

 

If you have any questions about this information, please contact me at (212) 531-3315 or alan.roemer@axovant.com.  Otherwise, please confirm your acceptance of this offer of at-will employment with Axovant Sciences,  Inc. by signing below.

 

 

Very truly yours,

 

 

 

AXOVANT SCIENCES,  INC.

 

 

 

 

/s/ Alan S. Roemer

 

 

Alan S. Roemer

 

 

Chief Financial Officer

 

 

 

 

Agreed and Accepted:

 

 

 

 

 

By:

/s/ Lawrence Friedhoff

 

Lawrence Friedhoff, MD

 

 

 

 

 

Date:

 

 

 

Axovant Sciences,  Inc.  ·   1441 Broadway, 3rd Floor, New York, NY 10018  ·   axovant.com

 




Exhibit 10.9

 

CONFIDENTIAL

 

WAIVER AND OPTION AGREEMENT

 

This Waiver and Option Agreement (this “ Agreement ”), dated as of May 8, 2015 (the “ Effective Date ”), is by and between Roivant Sciences Ltd., a Bermuda exempted company (“ Roivant ”), and Axovant Sciences Ltd. (formerly known as Roivant Neurosciences Ltd.), a Bermuda exempted company (“ Axovant ”).  Each of Roivant and Axovant may be referred to herein as a “ Party ” and together as the “ Parties ”.

 

WHEREAS

 

A.                                     Roivant and Axovant previously entered into that certain Information Sharing and Cooperation Agreement dated as of March 18, 2015 (the “ Cooperation Agreement ”);

 

B.                                     Pursuant to the Cooperation Agreement, Roivant has provided Axovant with an Offer Notice (as defined in the Cooperation Agreement) relating to opportunity to acquire from Arena Pharmaceuticals GmbH (“ Arena ”) certain rights to develop and market nelotanserin and related products (nelotanserin and such related products, the “ Product ” and such opportunity, the “ Product Opportunity ”), as further described in Exhibit A hereto;

 

C.                                     Axovant wishes to waive certain of its rights under the Cooperation Agreement with respect to the Product Opportunity, subject to the terms and conditions set forth herein; and

 

D.                                     Roivant wishes to grant to Axovant, and Axovant wishes to receive, an option to receive an assignment of any agreement that Roivant may enter into with Arena relating to the Product Opportunity, subject to the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Roivant and Axovant, intending to be legally bound, hereby agree as follows:

 

1.                                       DEFINITIONS

 

1.1                                “Affiliate” means any Person, whether de jure or de facto, other than a Party, that directly or indirectly owns, is owned by or is under common ownership with a Party to the extent of at least 50 percent of the equity having the power to vote on or direct the affairs of the entity, and any Person actually controlled by, controlling, or under common control with a Party; provided, however, for the purposes hereof, Axovant and any majority owned or controlled subsidiary of Axovant shall not be deemed to be an Affiliate of Roivant.

 

1.2                                “Development IP” means (a) all tangible and intangible scientific, technical, trade, financial or business information and materials, including compounds, compositions of matter, formulations, techniques, processes, methods, trade secrets, formulae, procedures, tests, data, results, analyses, documentation, reports, information (including pharmacological, toxicological, non-clinical (including chemistry, manufacturing and control)), and clinical test design, methods, protocols, data, results, analyses, and conclusions, quality assurance and quality control information, regulatory documentation, information and submissions pertaining to, or

 



 

made in association with, filings with any regulatory authority, product life cycle management strategies, knowledge, know how, skill, and experience, and all other discoveries, developments, inventions (whether or not confidential, proprietary, patented or patentable), and tangible embodiments of any of the foregoing, and (b) all patents, copyrights, trademarks, moral rights, proprietary rights and/or industrial rights covering any item in subclause (a) above and all filings therefor, in each case, arising from the performance of the Development Program.

 

1.3                                “Development Program” means the program for the development of the Product in the Field to be agreed between Roivant and Arena pursuant to the Development Agreement (as defined in Section 3.1(a)), as may be modified pursuant to the Arena Agreement.

 

1.4                                Field ” means the prevention or treatment of any disease, state or condition in humans.

 

1.5                                “Person” means any individual, corporation, trust, estate, partnership, joint venture, company, association, governmental bureau or agency, or any other entity regardless of the type or nature thereof.

 

1.6                                “Reimbursable Costs” means (a) payments made by Roivant to Arena pursuant to the Arena Agreements, and (b) the fully-burdened cost incurred by Roivant and its Affiliates to conduct the Development Program. For purposes of this definition, the fully-burdened cost includes without limitation: (i) the costs of any materials used in conducting the Development Program; (ii) the salary, stock option plan or other similar plans, benefits (if any) (including without limitation, medical plans and 401(k) or other retirement plans), employment taxes (if any) of all Roivant’s or its Affiliates’ employees involved in conducting the Development Program; (iii) related overhead expenses (including without limitation cost of facilities and utilities costs, insurance, and the cost of all general support, operational and business services); (iv) any and all licensing fees paid or payable to third parties for any intellectual property necessary or useful for the conduct of the Development Program (provided that such intellectual property can be transferred or assigned to Axovant in connection with the assignment of the Arena Agreements (as defined below); and (v) any depreciation, amortization or other cost recovery for financial accounting purposes related to assets of Roivant or its Affiliates to the extent such assets are used in conducting the Development Program.

 

2.                                       OFFER NOTICE AND WAIVER

 

2.1                                Receipt of Offer Notice.  Axovant acknowledges and confirms that (a) it has received from Roivant the Offer Notice attached as Exhibit A hereto, and (b) the Product Opportunity described therein constitutes a Dementia Opportunity as defined in the Cooperation Agreement.

 

2.2                                Waiver .  Axovant hereby waives its right of first review described in Section 1.01 of the Cooperation Agreement solely with respect to the Product Opportunity, and confirms that it will not provide Roivant with an Acceptance Notice (as defined in the Cooperation Agreement) with respect to the Product Opportunity.

 

2.3                                Reservation of Rights.   Axovant expressly reserves its right of first review under the Cooperation Agreement with respect to all Dementia Opportunities other than the Product Opportunity.

 

2



 

3.                                       ARENA AGREEMENTS

 

3.1                                Development Agreement and Related Agreements.

 

(a)                                  Roivant will seek to enter into a development, marketing and supply agreement with Arena relating to the Product Opportunity (the “ Development Agreement ”).  Roivant will have no obligation to enter into the Development Agreement except on such terms and conditions as are acceptable to it in its sole and exclusive discretion.  Roivant may execute amendments, side letters and other agreements with Arena or its affiliate Arena Pharmaceuticals, Inc. relating to the Development Agreement as it sees fit in in its sole and exclusive discretion until such time as it receives the Exercise Notice (as defined below) (the Development Agreement, as may be amended, together with any such related side letters and agreements, the “ Arena Agreements ”).

 

(b)                                  Within ten (10) business days following the execution of the Development Agreement, Roivant will provide Axovant with a true, correct and legible copy of the Development Agreement.  If Roivant executes any amendments, side letters or other agreements with Arena or its affiliate Arena Pharmaceuticals, Inc. relating to the Development Agreement prior to the expiration of the Option Exercise Period, then within ten (10) business days following the execution of such document, Roivant will provide Axovant with a true, correct and legible copy of such document.

 

(c)                                   Following Roivant’s receipt of the Exercise Notice, Roivant will not enter into any amendment to the Development Agreement, nor any side letter or other agreement with Arena relating to the Development Agreement, without Axovant’s prior written consent.

 

3.2                                Covenant.  Subject to Section 3.3, unless and until the Option (as defined below) has terminated unexercised, Roivant will not grant to any Person any rights under the Arena Agreements or with respect to the Product, whether by assignment, transfer, license, sublicense or otherwise, except with Axovant’s express prior written consent.  Notwithstanding the foregoing, Roivant may grant a non-exclusive sublicense under such rights to contractors performing work under the Development Program solely to conduct such work, without such consent from Axovant, provided that the agreement between Roivant and such contractor under which such work is performed can be assigned to Axovant without such contractor’s consent in connection with Axovant’s exercise of the Option.

 

3.3                                Right of First Refusal.   Unless and until the Option (as defined below) has terminated unexercised, Axovant will have a right of first refusal as follows:  Roivant will not grant to any Person any rights under the Arena Agreements, whether by assignment, transfer, license, sublicense or otherwise, until Roivant has first provided to Axovant a reasonably detailed set of written terms upon which Roivant would be willing to grant such rights (the “ Roivant Notice ”).  If Axovant notifies Roivant in writing within thirty (30) days of Axovant’s receipt of such notice that Axovant is interested in acquiring such rights (the “ Axovant Notice ”), then the Parties will negotiate in good faith a definitive agreement to grant Axovant such rights on such terms.  If Axovant does not notify Roivant within thirty (30) days of Axovant’s receipt of the Roivant Notice that it wishes to negotiate the agreement described in the Roivant Notice, or if the Parties fail to execute a definitive agreement for such rights within sixty (60) days of the Axovant Notice (the later of such applicable date referred to as the “ RoFR Expiration Date ”), then Roivant may grant such rights to a third party, provided that (i) the terms on which Roivant

 

3



 

grants such rights to such third party are not more favorable to such third party than the terms last offered to Axovant in writing by Roivant and (ii) the definitive binding agreement(s) with respect to the grant of such rights to the third party is entered into no later than sixty (60) days of the RoFR Expiration Date.  Notwithstanding the foregoing, Roivant may grant a non-exclusive sublicense under such rights to contractors performing work under the Development Program solely to conduct such work without triggering the right of first refusal set forth in this Section, provided that the agreement between Roivant and such contractor under which such work is performed can be assigned to Axovant without such contractor’s consent in connection with Axovant’s exercise of the Option.

 

4.                                       OPTION

 

4.1                                Grant of Option.  Roivant hereby grants to Axovant an option to receive an assignment and assume all of Roivant’s right, title and interest in and to the Arena Agreements, the Product and the Development Program (the “ Option ”), subject to the terms and conditions of this Article 4.

 

4.2                                Option Exercise Period.  The Option Exercise Period will commence upon the earlier of: (a) three (3) months following the closing of Axovant’s initial public offering and (b) six (6) months following the effective date of the Development Agreement.  The Option Exercise Period will expire upon the earlier of: (x) eighteen (18) months following the closing of Axovant’s initial public offering and (b) twenty-one (21) months following the effective date of the Development Agreement.

 

4.3                                Option Exercise.  Axovant may exercise the Option at any time during the Option Exercise Period by providing Roivant written notice of exercise (the “ Exercise Notice ”).

 

4.4                                Termination of Option.   If Roivant does not receive the Exercise Notice prior to the expiration of Option Exercise Period, then the Option will terminate and Roivant will have no further obligation to Axovant with respect to the Product or the Arena Agreements.

 

4.5                                Effect of Option Exercise.

 

(a)                                  Statement of Reimbursable Costs; Other Information.  Within ten (10) days of Roivant’s receipt of the Exercise Notice, Roivant will provide Axovant with (i) a statement of all Reimbursable Costs incurred to date and all further Reimbursable Costs reasonably anticipated by Roivant to be incurred prior to the completion of the transfer of the Development Program to Axovant, together with any supporting documentation reasonably requested by Axovant, and (ii) to the extent that any documents or information described in Section 4.6(a) or (b) exists but has not yet been provided to Axovant, such documents and information.

 

(b)                                  Assignment of Arena Agreements.  Within ten (10) days of Roivant’s provision of the documents and information described in subsection (a) above, Roivant will assign to Axovant all of Roivant’s right, title and interest in and to the Arena Agreements, unless Axovant provides written notice to Roivant that it will not accept the assignment.  If Axovant provides such notice, then the Option will be deemed to be terminated with the effects set forth in Section 4.4.

 

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(c)                                   Assignment of Development IP.   Contemporaneously with the assignment of the Arena Agreements described above, Roivant will assign to Axovant all Development IP specific to the Product and, with respect to Development IP that is not specific to the Product, grant to Axovant a perpetual, irrevocable, exclusive, fully paid-up, royalty-free, worldwide license, with the right to grant sublicenses through multiple tiers, under such Development IP to make, have made, use, sell, offer for sale, research, develop and otherwise exploit the Product for all purposes in the Field.

 

(d)                                  Reimbursable Costs.   If Axovant exercises the Option and accepts the assignment of the Arena Agreements, then it will reimburse Roivant for one hundred and ten percent (110%) of Roivant’s Reimbursable Costs, as follows:  Within thirty (30) days following Roivant’s receipt of the Exercise Notice, Roivant will provide to Axovant an invoice and accounting of its Reimbursable Costs through such date, together with any supporting documentation reasonably requested by Axovant, and Axovant will pay such invoices (if undisputed) within thirty (30) days of receipt.  Thereafter, Roivant will provide to Axovant an invoice and accounting of its Reimbursable Costs on a monthly basis, together with any supporting documentation reasonably requested by Axovant, and Axovant will pay such invoices (if undisputed) within thirty (30) days of receipt.  If Axovant disputes any invoice, the Parties will promptly confer and attempt to resolve such dispute in good faith.  Notwithstanding the foregoing, Axovant will have no obligation to reimburse any Reimbursable Costs that, prior to the calculation of the ten percent (10%) mark-up described above, are more than ten percent (10%) in excess of the amounts stated in the statement of Reimbursable Costs provided by Roivant pursuant to subsection (a) above.

 

(e)                                   Transition of Development Program and Development IP.  Concurrently with the assignment of the Arena Agreements, the Parties will cooperate to transfer to Axovant as expeditiously as practicable full responsibility for the Development Program, including all regulatory filings and correspondence (including, without limitation IND No. 73405 (serial number 0031)), contracts, documentation and databases relating to the Development Program or the Product.  Upon Axovant’s reasonable request, Roivant will provide reasonable assistance to enable Axovant to utilize the Development IP in the development and commercialization of the Product in the Field.

 

4.6                                Provision of Information.  Until the earlier of the expiration of the Option Exercise Period or Roivant’s receipt of the Exercise Notice, Roivant will provide Axovant with the following information:

 

(a)                                  Arena Agreement.  Roivant will provide Axovant with all material correspondence relating to the Arena Agreement and all material documentation produced pursuant to the Arena Agreement including, without limitation, meeting materials and minutes, on a monthly basis.

 

(b)                                  Development Program.  Roivant will provide Axovant with detailed reports regarding the plans and progress of the Development Program on a monthly basis, and will respond as promptly as practicable to Axovant’s requests for clarification or additional information.  Roivant will provide Axovant with copies of all filings and correspondence with any regulatory authority relating to the Product.

 

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(c)                                   Reimbursable Costs.  Roivant will provide Axovant with a detailed statement of Reimbursable Costs incurred on a monthly basis together with a good faith forecast of Reimbursable Costs for the upcoming six (6) months.

 

4.7                                Access to Books and Records . Roivant will maintain books and records pertaining to the Development Program and will make them available for inspection and audit, at Axovant’s expense, by a mutually acceptable independent certified public accounting firm during normal business hours upon reasonable prior written notice to Roivant.  If Axovant exercises the Option and accepts assignment of the Arena Agreements, then Roivant’s obligations and Axovant’s rights under this Section will continue for three (3) years following the completion of the transfer of the Development Program to Axovant.

 

4.8                                Use of Information.  Unless and until Axovant provides the Exercise Notice to Roivant and accepts the assignment of the Arena Agreements, Axovant will use the information provided under Sections 4.6 and 4.8 solely to evaluate its interest in exercising the Option and accepting the assignment of the Arena Agreements.

 

4.9                                Services Agreement.   The Parties agree that the Services Agreement entered into between Roivant and Axovant as of October 31, 2014 and between Roivant, Axovant and Axovant Neurosciences, Inc. (formerly known as Roivant Neurosciences, Inc.) as of March 7, 2015 (the “ Services Agreement ”) will not apply with respect to any Reimbursable Costs; provided that following the assignment of the Arena Agreements to Axovant, the Parties may agree in writing that all Reimbursable Costs incurred by Roivant following the date of such assignment (“ Post-Exercise Costs ”) will be subject solely by the Services Agreement, in which event the Post-Exercise Costs will no longer be subject to this Agreement.

 

5.                                       CONFIDENTIALITY

 

5.1                                Confidential Information .  Except to the extent expressly authorized by this Agreement or otherwise agreed in writing by the Parties, and subject to the other applicable terms of this Article 5, the Parties agree that the receiving Party (the “ Receiving Party ”) will keep confidential and not publish or otherwise disclose or use for any purpose other than as provided for in this Agreement any information or materials, patentable or otherwise, in any form (written, oral, photographic, electronic, magnetic, or otherwise) that is disclosed to it by the other Party (the “ Disclosing Party” ) pursuant to this Agreement, including all information concerning any Arena Agreements, the Product, the Product Opportunity or the Development Program, and any other technical or business information of whatever nature concerning the Disclosing Party or its technology or business (collectively, “ Confidential Information ”  of the Disclosing Party), except that the Receiving Party may disclose Confidential Information of the Disclosing Party to its Affiliates and its and its Affiliates’ respective officers, directors, employees, agents, subcontractors and consultants with a need to know such Confidential Information to assist the Receiving Party with the activities contemplated or required of it by this Agreement (and who will be advised of the Receiving Party’s obligations hereunder and who are bound by confidentiality and non-use obligations with respect to such Confidential Information no less onerous than those set forth in this Agreement) (each, a “ Recipient” ).  For clarity, all information and materials provided by Arena to Roivant in connection with the Arena Agreements is deemed to be the Confidential Information of Roivant, subject to Section 5.6.  Notwithstanding the foregoing, the Parties acknowledge the practical difficulty of policing the

 

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use of information in the unaided memory of the Receiving Party or its Recipients, and as such each Party agrees that the Receiving Party will not be liable for the use by any of its Recipients of specific Confidential Information of the Disclosing Party that is retained in the unaided memory of such Recipient; provided, that (a) such Recipient is not aware that such Confidential Information is the confidential information of Disclosing Party at the time of such use; (b) the foregoing is not intended to grant, and will not be deemed to grant, the Receiving Party, its Affiliates, or its Recipients (i) a right to disclose the Disclosing Party’s Confidential Information or (ii) a license under any Patents or other intellectual property right of the Disclosing Party; and (c) such Recipient has not intentionally memorized such Confidential Information for use outside this Agreement. For the purpose of this Article 5, the term “ Disclosing Party” will include each Party and its Affiliates and its and their respective officers, directors, employees, agents, subcontractors and consultants who are directed or authorized to disclose such Party’s and/or its Affiliates’ Confidential Information, and the term “ Receiving Party” will include each Party and its Affiliates.

 

5.2                                Exceptions .  Notwithstanding Section 5.1, the obligations of Section 5.1 will not apply to any specific Confidential Information that the Receiving Party thereof can demonstrate, in each case by competent evidence:

 

(a)                                  was already known to the Receiving Party or any of its Recipients, other than under an obligation of confidentiality, at the time of disclosure;

 

(b)                                  was generally available to the public or was otherwise part of the public domain at the time of its disclosure to the Receiving Party;

 

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

 

(d)                                  was subsequently lawfully disclosed to the Receiving Party or any of its Recipients without any obligation of confidentiality or non-use by a Person other than the Disclosing Party, and who, to the knowledge of the Receiving Party or such Recipient, did not directly or indirectly receive such information from the Disclosing Party or any of its Affiliates under an obligation of confidence; or

 

(e)                                   was independently developed by the Receiving Party or any of its Recipients without use of or reference to any information or materials disclosed by the Disclosing Party.

 

Information specific to the use of certain compounds, methods, conditions or features will not be deemed to be within the foregoing exceptions merely because such information is embraced by general disclosures in the public domain or in the possession of the Receiving Party or its Recipients.  In addition, a combination of information will not be deemed to fall within the foregoing exceptions, even if all of the components fall within an exception, unless the combination itself and its significance are in the public domain or in the possession of the Receiving Party prior to the disclosures hereunder.  Notwithstanding anything to the contrary herein, neither the act of using information in a clinical trial nor the filing of information with a governmental authority shall, for the purpose of this Article 5, in and of itself be deemed to place such information in the public domain.

 

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5.3                                Permitted Disclosures .  Notwithstanding the provisions of Section 5.1 or Section 5.2, the Receiving Party may disclose Confidential Information of the Disclosing Party as expressly permitted by this Agreement or if and to the extent such disclosure is reasonably necessary or useful in the following instances:

 

(a)                                  the performance by the Receiving Party of its obligations or exercise of its rights as contemplated by this Agreement; provided, that wherever reasonable and practicable in the circumstances the recipient of any such Confidential Information will be subject to obligations of confidentiality and non-use with respect to such Confidential Information substantially similar to the obligations of confidentiality and non-use of the Receiving Party pursuant to this Article 5;

 

(b)                                  prosecuting or defending litigation with respect to a Party or its Affiliates as permitted by this Agreement, provided, that a protective order or any similar measures are sought by such Party with respect to the information to be disclosed, to the extent reasonably possible;

 

(c)                                   complying with applicable laws; or

 

(d)                                  disclosure to Third Parties in connection with due diligence or similar investigations by or on behalf of a Third Party in connection with an actual or potential marketing, distribution or supply agreement with, or license to, or collaboration with such Third Party or an actual or potential merger or acquisition or investment by such Third Party, or in connection with performance of any such license, collaboration or merger agreement, and disclosure to actual or potential Third Party investors in confidential financing documents, provided, in each case, that any such Third Party agrees to be bound by obligations of confidentiality and non-use substantially similar to the obligations of confidentiality and non-use of the Receiving Party pursuant to this Article 5, but of shorter duration if customary under the circumstances;

 

provided that wherever reasonable and practicable in the circumstances the recipient of any such Confidential Information will be subject to reasonable and customary obligations of confidentiality with respect to such Confidential Information.

 

5.4                                Notwithstanding the foregoing, in the event the Receiving Party or a Recipient is required to make a disclosure of the Disclosing Party’s Confidential Information pursuant to Section 5.3(d) to comply with a subpoena or other legal order, it shall, except where impracticable, give reasonable advance notice to the Disclosing Party of such disclosure and give the Disclosing Party a reasonable opportunity to quash such subpoena or order and to obtain a protective order requiring that the Confidential Information and documents that are the subject of such subpoena or order be held in confidence by such court or agency or, if disclosed, be used only for the purposes for which such subpoena or order was issued; and provided, further, that if such subpoena or order is not quashed or a protective order is not obtained, the Confidential Information disclosed in response to such subpoena or order will be limited to the Disclosing Party’s Confidential Information that is legally required to be disclosed in response to such subpoena or order and will still be subject to the restrictions on use set forth in this Article 5.

 

5.5                                Confidentiality of this Agreement and its Terms .  Except as otherwise provided in this Article 5, each Party agrees not to disclose to any third party the existence of this

 

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Agreement or the terms and conditions of this Agreement without the prior written consent of the other Party, except that each Party may disclose the terms and conditions of this Agreement that are not otherwise made public as contemplated by Section 5.5 as permitted under Section 5.3.

 

5.6                                Effect of Assignment of Arena Agreements.   If Axovant exercises the Option and accepts the assignment of the Arena Agreements, then all Confidential Information relating to the Arena Agreements, the Product, the Product Opportunity and the Development Program will thereafter be deemed to be Axovant’s Confidential Information, such that Axovant will be deemed to be the Disclosing Party with respect to such Confidential Information and Roivant will be deemed to be the Receiving Party with respect to such Confidential Information.

 

6.                                       INDEMNIFICATION

 

6.1                                Indemnification of Axovant .  Roivant will defend, indemnify and hold harmless each of Axovant, its Affiliates, and its and their respective directors, officers and employees (collectively, the “ Axovant Indemnitees” ) from and against any and all losses, liabilities, damages, penalties, fines, costs and expenses (including reasonable attorneys’ fees and other expenses of litigation) (“ Losses” ) from any claims, actions, suits or proceedings brought by a third party, including investigation by a regulatory authority, (each, a “ Third Party Claim ”) against any Axovant Indemnitee to the extent arising from, based upon or occurring as a result of:  (a) the (i) negligence or willful misconduct of or (ii) violation of applicable laws or regulations by, in each case ((i) and (ii)), Roivant or any of its Affiliates or its or their respective subcontractors in conducting the Development Program or any activity relating to the Product; or (b) any breach or default by Roivant or its Affiliates or their respective employees, agents or contractors of any of the Arena Agreements or of the confidentiality provisions of this Agreement, except, in each case, that the foregoing indemnification obligations will not apply to the extent any such Third Party Claim falls within the scope of the indemnification obligations of Axovant set forth in Section 6.2, as to which Third Party Claim each Party will indemnify the other Party to the extent of its liability with respect to the Losses applicable to such Third Party Claim.

 

6.2                                Indemnification of Roivant.   Axovant will defend, indemnify and hold harmless each of Roivant, its Affiliates, and its and their respective directors, officers and employees (collectively, the “ Roivant Indemnitees ”) from and against any and all Losses from any Third Party Claims against any Roivant Indemnitee to the extent arising from, based on or occurring as a result of:  (a) if Axovant exercises the Option and accepts the assignment of the Arena Agreement, then the (i) negligence or willful misconduct of or (ii) violation of applicable laws or regulations by, in each case ((i) and (ii)), Axovant or any of its Affiliates or its or their respective subcontractors in conducting the Development Program or any activity relating to the Product; or (b) any breach or default by Axovant (or any of its Affiliates) of any of the Arena Agreements (but only if Axovant exercises the Option and accepts the assignment of the Arena Agreement) or of the confidentiality provisions of this Agreement; except, in each case, that the foregoing indemnification obligations will not apply to the extent any such Third Party Claim falls within the scope of the indemnification obligations of Roivant set forth in Section 6.1, as to which Third Party Claim each Party will indemnify the other Party to the extent of its liability with respect to the Losses applicable to such Third Party Claim.

 

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6.3                                Procedure . A Party that intends to exercise its rights to defense, indemnity or hold harmless under this Article 6 (the “ Indemnitee ”) will promptly notify the indemnifying Party (the “ Indemnitor ”) in writing of any Third Party Claim in respect of which the Indemnitee intends to exercise such rights.  The failure to deliver written notice to the Indemnitor within a reasonable time after the commencement of any action with respect to a Third Party Claim will only relieve the Indemnitor of its obligations under this Article 6 if and to the extent the Indemnitor is actually prejudiced thereby.  The Indemnitee will provide the Indemnitor with reasonable assistance, at the Indemnitor’s expense, in connection with the defense of the Third Party Claim.  The Indemnitor will have the right to assume and conduct the defense of the Third Party Claim with counsel of its choice.  The Indemnitee may participate in and monitor such defense with counsel of its choice, which will be at its own expense.  The Indemnitor will not settle any Third Party Claim without the prior written consent of the Indemnitee, not to be unreasonably conditioned, withheld or delayed, unless the settlement involves only the payment of money by the Indemnitor and does not involve any admission of liability or wrongdoing on the part of any Axovant Indemnitees or Roivant Indemnitees, as applicable.  So long as the Indemnitor is defending the Third Party Claim, the Indemnitee will not settle such Third Party Claim without the prior written consent of the Indemnitor, unless Indemnitee releases Indemnitor for all liability for such settlement.

 

7.                                       TERM AND TERMINATION

 

7.1                                Term.  This Agreement will commence upon the Effective Date and terminate (a) if Axovant does not provide Roivant with an Exercise Notice during the Option Exercise Period, then upon the expiration of the Option Exercise Period; (b) if Axovant provides Roivant with an Exercise Notice during the Option Exercise Period but provides written notice to Roivant that Axovant will not accept the assignment of the Arena Agreements as set forth in Section 4.5(b), then upon Roivant’s receipt of such notice; and (c) if Axovant provides Roivant with an Exercise Notice during the Option Exercise Period and accepts the assignment of the Arena Agreements, then one year following the completion of the transfer of the Development Program.

 

7.2                                Termination.

 

(a)                                  Axovant may terminate this Agreement for convenience upon thirty (30) days written notice at any time prior the expiration of the Option Exercise Period, provided that Axovant has not at such time provided Roivant with an Exercise Notice.

 

(b)                                  This Agreement may be terminated by a Party upon written notice by such Party to the other Party if the other Party is in material breach of this Agreement and has not cured such breach within ninety (90) days (or thirty (30) days with respect to any payment breach) after notice from the terminating Party detailing the specific material breach that is alleged.  Any such termination shall become effective at the end of such ninety (90)-day (or thirty (30)-day with respect to any payment breach) period unless the breaching Party has cured any such breach prior to the end of such period.

 

7.3                                Survival.  Articles 5, 6 and 8 will survive any termination of this Agreement.

 

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8.                                       GENERAL TERMS

 

8.1                                Notices .  Any and all notices, elections, offers, acceptances, and demands permitted or required to be made under this Agreement will be in writing, signed by the Party giving such notice, election, offer, acceptance, or demand and will be delivered personally, by messenger, courier service, telecopy, first class mail or similar transmission, to the Party, at its address on file with the Party giving such notice, election, offer, acceptance or demand or at such other address as may be supplied in writing. The date of personal delivery or the date of mailing, as the case may be, will be the date of such notice, election, offer, acceptance, or demand.

 

8.2                                Force Majeure . If the performance of any part of this Agreement by a Party, or of any obligation under this Agreement, is prevented, restricted, interfered with, or delayed by reason of any cause beyond the reasonable control of the Party liable to perform, unless conclusive evidence to the contrary is provided, the Party so affected shall, on giving written notice to the other Parties, be excused from such performance to the extent of such prevention, restriction, interference, or delay, provided that the affected Party will use its reasonable best efforts to avoid or remove such causes of nonperformance and will continue performance with the utmost dispatch whenever such causes are removed. When such circumstances arise, the Parties will discuss what, if any, modification of the terms of this Agreement may be required in order to arrive at an equitable solution.

 

8.3                                Successors and Assigns . This Agreement may not be assigned or otherwise conveyed by any Party without the prior written consent of the other Parties; provided however that such prior written consent will not be required for an assignment to an Affiliate of a Party. This Agreement will be binding on and inure to the benefit of the Parties hereto and their respective successors, successors in title and assigns to the extent that such assignment is permitted under this Section.

 

8.4                                Entire Agreement, Amendments . This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof, and supersedes all prior agreements, understandings, and communications between the Parties, whether oral or written, relating to the same subject matter. For clarity, the Cooperation Agreement will remain in full force and effect.  No change, modification, or amendment of this Agreement will be valid or binding on the Parties unless such change or modification will be in writing signed by the Party or Parties against whom the same is sought to be enforced.

 

8.5                                Remedies Cumulative . The remedies of the Parties under this Agreement are cumulative and will not exclude any other remedies to which the Party may be lawfully entitled.

 

8.6                                Not for the Benefit of Third Parties . This Agreement is for the exclusive benefit of the Parties to this Agreement and not for the benefit of any third party.

 

8.7                                Further Assurances. Each Party hereby covenants and agrees that it will execute and deliver such deeds and other documents as may be required to implement any of the provisions of this Agreement.

 

8.8                                No Waiver. The failure of any Party to insist on strict performance of a covenant hereunder or of any obligation hereunder will not be a waiver of such Party’s right to demand strict compliance therewith in the future, nor will the same be construed as a novation of this Agreement.

 

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8.9                                Integration . This Agreement constitutes the full and complete agreement of the Parties.

 

8.10                         Captions . Titles or captions of articles and paragraphs contained in this Agreement are inserted only as a matter of convenience and for reference, and in no way define, limit, extend, or describe the scope of this Agreement or the intent of any provision hereof.

 

8.11                         Number and Gender. Whenever required by the context, the singular number will include the plural, the plural number will include the singular, and the gender of any pronoun will include all genders.

 

8.12                         Counterparts. This Agreement may be executed in multiple copies, each one of which will be an original and all of which will constitute one and the same document, binding on the Parties, and each Party hereby covenants and agrees to execute all duplicates or replacement counterparts of this Agreement as may be required.

 

8.13                         Governing Law and Jurisdiction. This Agreement and the legal relations between the Parties will be governed by and construed in accordance with the laws of the State of New York, without regard to any conflict of laws rules. The courts located within the state of New York will have exclusive jurisdiction over any and all disputes between the Parties, whether in law or equity, arising out of or relating to this Agreement and the agreements, instruments and documents contemplated hereby and the Parties consent to and agree to submit to the exclusive jurisdiction of such courts. Each Party waives and agrees not to assert in any such dispute, to the fullest extent permitted by applicable law, any claim that (a) such Party is not personally subject to the jurisdiction of such courts, (b) such Party and such Party’s property is immune from any legal process issued by such courts or (c) any litigation or other proceeding commenced in such courts is brought in an inconvenient forum.

 

8.14                         Computation of Time . Whenever the last day for the exercise of any privilege or the discharge of any duty hereunder will fall on a Saturday, Sunday, or any public or legal holiday, whether local or national, the Party having such privilege or duty will have until 5:00 p.m. (EST or, if in effect in New York, EDT) on the next succeeding business day to exercise such privilege, or to discharge such duty.

 

8.15                         Severability . In the event any provision, clause, sentence, phrase, or word hereof, or the application thereof in any circumstances, is held to be invalid or unenforceable, such invalidity or unenforceability will not affect the validity or enforceability of the remainder hereof, or of the application of any such provision, sentence, clause, phrase, or word in any other circumstances.

 

8.16                         Costs and Expenses . Unless otherwise provided in this Agreement, each Party will bear all fees and expenses incurred in performing its obligations under this Agreement.

 

8.17                         Provisions of Law. A reference in this Agreement to a provision of law, regulation, rule, official directive, request, or guideline (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory, or other authority or organization is a reference to that provision as amended or re-enacted currently or in the future.

 

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8.18                         Meaning in Notices . Unless a contrary indication appears, a term used in any notice given under or in connection with this Agreement has the same meaning in that notice as in this Agreement.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.

 

 

AXOVANT SCIENCES LTD.

ROIVANT SCIENCES LTD.

 

 

 

 

 

By:

/s/ Marianne L. Romeo

 

By:

/s/ Ilan Oren

 

 

 

 

 

Name:

Marianne L. Romeo

 

Name:

Ilan Oren

 

 

 

 

 

Title:

Head, Global Transactions

 

Title:

Director

 

and Risk Management

 

 

 

 



 

Exhibit A

 

Offer Notice

 



 

May 1, 2015

 

Axovant Sciences Ltd.

Clarendon House

2 Church Street

Hamilton HM11

Bermuda

Attention: Corporate Secretary

 

Re:                              Offer Notice Pursuant to Information Sharing and Cooperation Agreement

 

This letter serves as an “Offer Notice” as defined in the Information Sharing and Cooperation Agreement between Roivant Sciences Ltd. (“ Roivant ”) and Axovant Sciences Ltd. (formerly known as Roivant Sciences Ltd.)(“ Axovant ”) dated as of March 18, 2015 (the “ Agreement ”).  Capitalized terms used herein and not otherwise defined will have the meaning ascribed in the Agreement.

 

Roivant has received from Arena Pharmaceuticals GmbH (“ Arena ”) the terms for a Dementia Opportunity as described in Appendix A.  Pursuant to Section 1.01 of the Agreement, please advise us as to whether Axovant wishes to pursue this Dementia Opportunity.

 

Sincerely,

 

/s/ Marianne L. Romeo

 

 

 

Marianne L. Romeo

 

Head, Global Transactions & Risk Management

 

 

cc                                     Alan S. Roemer, Axovant Sciences, Inc. (formerly Roivant Neurosciences, Inc.)

 



 

Appendix A

 

Summary of Proposed Terms
for Nelotanserin Development, Marketing and Supply Agreement

 

Products :  The “ Initial Product ” (containing up to 40 mg of nelotanserin) and any “ Additional Products ” (products containing nelotanserin (other than the Initial Product)) or Related Compounds that are added to the Agreement by Roivant’s approval of a development plan, which is subject to Arena’s reasonable consent with respect to its manufacturing and process development obligations).

 

·                   Related Compounds ” means a compound within the scope of certain specified patent claims; Roivant will lose rights to these compounds if it does not file an IND within 4 years on at least one of them

 

·                   Compound ” means nelotanserin and Related Compounds

 

Field The prevention or treatment of any disease, state or condition in humans.

 

Rights Granted; Exclusivity :

 

·                   Roivant to be appointed exclusive worldwide distributor of Products in the Field and to have exclusive worldwide commercialization rights for Products in the Field, with the right to appoint sub-distributors.

 

·                   Roivant to be granted a limited, non-exclusive license to develop the Products in accordance with “ Development Plans ” proposed by Roivant, which are subject to Arena’s reasonable consent with respect to its manufacturing and process development obligations under such plans.

 

·                   Roivant would not receive any commercial licenses from Arena.  It receives exclusivity through a negative covenant that prohibits Arena and its Affiliates from researching, developing, marketing, selling, distributing or commercializing any pharmaceutical product containing a Compound or from licensing or authorizing any Third Party to do the same.

 

·                   Both parties and their affiliates to be prohibited from developing and commercializing pharmaceutical products that contain a compound (other than any Compound or Reverted Compound) that acts primarily by being a centrally acting inverse agonist or antagonist of 5HT 2A  and 5HT 2A  is the target for which such compound has the highest potency and selectivity (“ Competing Product” ):

 

·                   For the first 5 years of the Agreement, Arena and its affiliates are prohibited from clinically developing, marketing, selling, distributing and commercializing any Competing Product (other than temanogrel) for the treatment of behavioral disturbances in patients with dementia, including but not limited to agitation and psychosis.

 

·                   For the Initial Term (defined below), Roivant and its affiliates are prohibited from clinically developing, marketing, selling, distributing and commercializing any Competing Product for the treatment of any neurodegenerative or neuropsychiatric disorder.

 

·                   If either Party is acquired by an entity with a Competing Product, then such entity may continue to develop and commercialize such Competing Product, however, such Competing Product will not be taken into account when determining whether such Party is meeting its obligations under the agreement to use commercially reasonable efforts.

 

Development:

 

·                   Roivant will develop Products in accordance with Development Plans and will use Commercially Reasonable Efforts to do so according to the timelines in Development Plans.  Without limiting the generality of the foregoing, Roivant or its Affiliate shall commence a Phase 2 Trial regarding the Initial Compound prior to January 1, 2017; provided, that such date shall automatically be

 



 

extended to account for any delay in Arena’s provision of conforming Finished Product, transferring the IND for the Initial Product, or transferring various regulatory documents and clinical and preclinical data

 

·                   If Roivant fails to file an IND for at least one Related Compound prior to the 4 th  anniversary of the effective date of the agreement, then Roivant’s rights with respect to all Related Compounds (other than Related Compounds that are salts, hydrates or similar variants of nelotanserin) will terminate and such compounds will be deemed to be “ Reverted Compounds ”.

 

·                   Roivant will own all intellectual property (IP) arising from development of the Compounds and Products under the Development Plans, excluding generally applicable manufacturing IP created by or on behalf of Arena.

 

Commercialization : Roivant to use commercially reasonable effort to commercialize Products in each country in which it has received regulatory approval.  Roivant will to provide Commercialization Plans for each major market country to Arena and update regularly.

 

Arena Supply Obligations :

 

·                   General : Roivant to exclusively purchase Products from Arena.

 

·                   Clinical Supply (Finished Product) :  Arena will supply initial order of finished Initial Product for Phase 2 clinical trial using currently existing inventory of jet-milled API; Roivant will reimburse Arena for its FTE and out-of-pocket costs.  Details of additional orders for Finished Products and placebo for use in clinical trials to be agreed by the Parties.

 

·                   API.   Arena will seek to enter into a supply agreement with a primary third party manufacturer to supply API.  Roivant must consent to selection of manufacturer.  Roivant to reimburse 137% of Arena’s FTE costs relating to diligence, engagement and qualification activities, plus out-of-pocket costs.  Following qualification of primary API manufacturer, at Roivant’s reasonable request, Arena will seek additional supply sources for API in same manner as set forth above, with Roivant reimbursing 137% of Arena’s FTE costs relating to diligence, engagement and qualification activities and supplier maintenance, plus out-of-pocket costs.

 

·                   Finished Product — Secondary Supplier .  At Roivant’s reasonable request following 1 st  regulatory approval for a Finished Product, Arena to seek a second source manufacturer for Finished Product in same manner as for secondary API suppliers, with equivalent reimbursement obligations by Roivant.

 

·                   Safety Stock .  At Roivant’s reasonable request after the primary third party manufacturer for API has been qualified, Arena shall establish and maintain in inventory at least such quantities of safety stock of such Compound as reasonably requested by Roivant and to which Arena does not reasonably object.  Roivant to pay 35% of Minimum Product Purchase Price for Compound safety stock, to credited against price of Finished Product at time of delivery.  Similar but later mechanism for Finished Product safety stock, with Roivant paying an additional 35% of Minimum Product Purchase Price for Finished Product safety stock, which is also creditable against the price of Finished Product at time of delivery

 

·                   Failure to Supply Finished Product.   The Parties shall meet as soon as practicable to discuss the situation and seek to find resolution, and in any event Arena shall continue to use good faith diligent efforts to deliver to Roivant back-ordered amounts of Finished Product as soon as possible.  Roivant will continue to order all its requirements for supply by Arena, in accordance with the supply commitments of the agreement.

 

Payments

 

·                   Upfront Payment.   US$4.0 million

 

·                   Milestone Payments.   Each milestone payment below payable only once; total amount not to exceed US$41.5 million

 



 

Milestone Event

 

Milestone Payment

 

(a)  Initiation of dosing in the first Phase 3 trial involving a Product in a first Indication

 

US$

2,000,000

 

(b)  Initiation of dosing in the first Phase 3 trial involving a Product in a second Indication

 

US$

2,000,000

 

(c)  Upon the first submission of an NDA for a Product by the FDA

 

US$

5,000,000

 

(d)  Upon the first submission of a Marketing Authorization Application (MAA) for a Product by the EMA

 

US$

2,500,000

 

(e)  Upon the first NDA approval for a Product

 

US$

20,000,000

 

(f)  Upon the first MAA approval for a Product

 

US$

10,000,000

 

 

·                   Product Purchase Price.   Equal to the greater of (i) the Minimum Product Purchase Price and (ii) (x) during the Initial Term (defined below) for such Product in such Product’s country of sale, 15% of the net sales of such Product and (y) during the Extended Term (defined below) for such Product in such Product’s country of sale, 10% of the net sales of such Product.

 

·                   “Minimum Product Purchase Price”

 

·                   Initial Product.   US$0.50 per tablet, subject to certain adjustments.

 

·                   Additional Products.   An amount per tablet to be agreed upon by the Parties.

 

·                   Product Purchase Price Adjustment Payments. The product purchase prices owed by Roivant for its purchase of Product from Arena for commercial sale in a particular commercial year are subject to adjustment by the payment by Roivant of one-time purchase price adjustment payments, as provided below for the first achievement of net sales in any Commercial Year above each threshold net sales amount set forth below:

 

Aggregate Products Net Sales for a
Commercial Year

 

Product Purchase Price Adjustment
Payment

 

(1) at least US$300,000,000

 

US$

10,000,000

 

(2) at least US$600,000,000

 

US$

20,000,000

 

(2) at least US$900,000,000

 

US$

30,000,000

 

 

Term:   The agreement will continue on a Product-by-Product and country-by-country basis until the later of (i) expiration of all issued patents covering such Product in such country and (ii) 12 years after the first commercial sale of such Product in such country (such period, the “ Initial Term ”).  Upon expiration of the Initial Term, the agreement shall continue in full force and effect on a Product-by-Product and country-by-country basis until the agreement is terminated by mutual agreement, by Roivant for convenience, for material breach, for bankruptcy, or for a patent challenge (such period, the “ Extended Term ”).

 




Exhibit 23.1

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

We hereby consent to the use in this Registration Statement on Form S-1/A of Axovant Sciences Ltd. of our report dated May 21, 2015 relating to the financial statements of Axovant Sciences Ltd., which appears in such Registration Statement.  We also consent to the reference to us under the heading “Experts” in such Registration Statement.

 

 

/s/ PricewaterhouseCoopers LLP

 

Florham Park, New Jersey

 

May 21, 2015