Item     1    Business

Overview

OvaScience is a company focused on the discovery and development of new treatment options for women and families struggling with infertility. OvaScience is leveraging the breakthrough discovery of egg precursor, or EggPC ^SM , cells to transform the treatment landscape for women’s fertility.

EggPC cells are undifferentiated germ cells from fetal development that may have the capacity to mature into eggs (White et al., Nature Medicine 2012). The cells reside in the outer ovarian cortex, and are believed to be largely dormant in situ in humans. The existence of EggPCs has been widely accepted in lower species, such as worms, flies, and teleost fish, (Woods and Tilly, Semin Reprod Med 2013), and there is a large and growing body of evidence for EggPC cells in mammals and humans (White et al., Nature Medicine 2012; Dunlop et al., Lancet 2014; Bai et al., Cell Prolif 2013; Wolff et al., Reprod Sci 2014). OvaScience’s portfolio of treatment options uses our patented technology, including proprietary methods to isolate EggPC cells from a woman’s own ovarian tissue.

The need for new fertility treatment options is significant and growing. Based on estimates from the World Bank and CDC there are approximately 1.3 billion women worldwide of reproductive age, and approximately 12% or 163 million of these women are estimated to be struggling with infertility. Continued year-over-year growth is driven by declining total fertility rates in many markets, women delaying childbirth, increasing prevalence of obesity and chronic conditions associated with infertility, and increasing awareness and acceptance of infertility treatment.

In Vitro Fertilization (IVF) represents the standard of care treatment for infertility. IVF outcomes are poor, however, with an average live birth rate per cycle of 28 percent based on a CDC report. For women with Diminished Ovarian Reserve, including those with Primary Ovarian Insufficiency (POI) or Poor Ovarian Reserve (POR), IVF is largely ineffective. In these women, the average live birth rate per cycle is only six percent. Market research suggests that many patients with POI or POR resort to a donor egg or adoption, with some giving up on having a child altogether (Fulcrum Research Group). Other women are unable or unwilling to undergo hormone stimulation, which is a required component of standard IVF treatment. The EggPC cell technology has the potential to offer new treatment options to these women.

The OvaPrime ^SM  treatment: OvaPrime is a potential fertility treatment that could help restore a woman’s egg production. With OvaPrime, a woman’s own EggPC cells are isolated from a niche within her ovary where they are quiescent and repositioned such that they receive the appropriate signals to mature in vivo into healthy, fertilizable eggs. The addressable market for OvaPrime is women undergoing IVF diagnosed with Diminished Ovarian Reserve. Based on a 2015 report from the CDC, this represents approximately thirty one percent of all IVF cycles, or 0.6 million women per year globally.

The OvaTure ^SM  treatment: OvaTure is a potential fertility treatment that eliminates the need for hormone stimulation. With OvaTure, a woman’s own EggPC cells are isolated from her ovary and matured in vitro into healthy, fertilizable eggs. This potential treatment may be an option for all women undergoing IVF, which represents approximately 1.9 million women per year globally.

The AUGMENT ^SM  treatment: AUGMENT is a fertility treatment designed to improve fertilization and pregnancy rates. With AUGMENT, mitochondria from a woman’s own EggPC cells are isolated and injected into the egg during IVF.

We believe our EggPC technology has the potential to make significant advances in the treatment landscape for women and families struggling with infertility. We believe our EggPC technology could improve IVF by:

Increasing live birth rates and reducing the number of IVF cycles . By restoring egg production, we believe we may increase the percentage of live births and reduce the number of IVF cycles required.

Reducing the incidence of multiple births . By generating higher quality eggs, we believe our EggPC technology may allow for the transfer of fewer embryos per IVF cycle and, as a result, lower the incidence of multiple births and the associated complications.

Lowering the overall cost of the IVF process . If we reduce the number of IVF cycles required for a live birth and the incidence of multiple births, we believe our fertility treatment options may also lower the overall costs associated with the IVF process.

Restoring egg production for women who make too few or no eggs . OvaPrime is designed to restore a woman’s egg production by isolating a woman’s own EggPC cells from a niche within her ovary where they are quiescent, and repositioning such that they receive the appropriate signals to mature in vivo into healthy, fertilizable eggs.

Eliminating the need for hormone stimulation. OvaTure is designed to mature EggPC cells into fertilizable eggs in vitro, or outside the body. If successful, OvaTure could eliminate the need for hormone stimulation for the maturation of multiple eggs prior to egg retrieval in the IVF process.

Developing new treatments for diseases. OvaXon ^SM is a joint venture with Intrexon, which is focused on developing significant improvements in human and animal health using our EggPC cell technology and Intrexon’s synthetic biology and high throughput platform for applications.

Global Fertility Market

Based on estimates from the World Bank and CDC, there are approximately 1.3 billion women worldwide of reproductive age, and approximately 12% or 163 million of these women are estimated to be struggling with infertility. Our Company estimates suggest that approximately 1.9 million women worldwide undergo IVF per year.

Figure 1

IVF cycle volumes and cost vary widely by market as evidenced in Figure 2. Volumes are highest in Japan and U.S. at more than 400,000 cycles and 250,000 cycles annually, respectively. Cost is highest in the U.S. at approximately $14,000 per IVF cycle.

Figure 2

In many markets globally, IVF is paid for out-of-pocket, particularly in high growth areas outside the European Union (EU), and the United States (Figure 3). Many third-party payors, including national health services or government funded insurance programs, as well as private payors, place significant restrictions on coverage and reimbursement for reproductive technologies. These restrictions include limits on the types and number of procedures covered, as well as overall annual or lifetime dollar limits on reimbursement. In some markets, there can also be long waiting-times and inferior quality of care for public clinics that offer government funding. In the U.S., 15 states mandate reproductive health coverage; only 8 of these states require some level of coverage for IVF.

Figure 3

An IVF procedure (Figure 4) typically begins with hyperstimulation of the woman's ovaries by a combination of fertility hormones. Then one or more eggs are taken from the woman ’ s ovarian follicles and fertilized in vitro with either standard insemination, or ICSI, in which a single sperm is injected by needle into the egg. If the egg is healthy and has enough energy, it will start to divide, and the resulting embryo can be transferred into the woman's uterus three to five days after ICSI. These steps typically occur over several months.

Figure 4

According to a 2014 CDC report, IVF success rates decrease with age (Figure 5) due to declines in egg health and production. When a woman chooses to use an egg donated from a younger woman (donor egg), studies show that success rates are similar to a younger woman's.

Despite relatively low success rates, risks and other shortcomings, IVF has become increasingly common. Donor eggs are typically viewed by women as a ‘last resort’, and all other treatment are typically exhausted before pursuing this option. Strict donor compensation and anonymity restrictions have also resulted in donor egg shortages and waiting-lists in many markets around the globe.

Figure 5

The Discovery of Egg Precursor Cells

In 2004, one of our scientific founders, Jonathan Tilly, Ph.D. (who at that point in time was the co-founder and Director of the Vincent Center for Reproductive Biology at Harvard Medical School and the Massachusetts General Hospital (MGH), and currently the Chair of Northeastern Department of Biology), discovered the existence of EggPC cells within the ovaries of adult mice. Subsequent research by Dr. Tilly demonstrated that these EggPC cells also exist in human ovaries and have the potential to mature into eggs and, therefore, to replenish a woman's egg supply. This research demonstrated that these EggPC cells might provide a source of fresh cellular components, such as mitochondria, that could potentially be used to enhance the health of existing eggs.

Dr. Tilly discovered the existence of mouse EggPC cells by staining the outer cell layer of the ovary using an antibody that binds specifically to a protein found on EggPC cells called mouse VASA homologue. Following publication of this discovery in Nature Medicine in 2004, Dr. Tilly performed additional research, beginning in 2005, which demonstrated the existence of human EggPC cells in adult human ovaries. In this research, Dr. Tilly replicated the results obtained with mouse tissue using human ovarian tissue. Dr. Tilly was able to isolate precursor cells in the ovaries of reproductive age women using an antibody that binds to the human VASA analogue protein, which is found on human EggPC cells. Dr. Tilly also conducted an experiment in which human EggPC cells were isolated and expanded in vitro and then grafted into female mouse hosts and matured in vivo into eggs that exhibited a genetic signature indicating the eggs could be fertilized. Dr. Tilly's research findings with respect to human EggPC cells were published in the March 2012 issue of Nature Medicine . These findings have been corroborated by multiple independent laboratories.

We hold an exclusive license from MGH to multiple issued patents as well as various patent applications directed to methods of identifying and isolating EggPC cells, compositions comprising EggPC cells and methods of using EggPC cells to treat infertility and related disorders.

OvaPrime

OvaPrime is a potential fertility treatment that could help a restore a woman’s egg production, and is currently in clinical development. With OvaPrime, a woman’s own EggPC cells are isolated from a niche within her ovary where they are

quiescent, and repositioned such that they receive the appropriate signals to mature in vivo into healthy, fertilizable eggs (Figure 6).

Figure 6

We reported large animal toxicology and small animal proof-of-concept studies relating to OvaPrime in 2014.

In August 2015, we also completed a good laboratory practices level toxicology study in cynomolgus monkeys which demonstrated the safety of OvaPrime method in a non-human primate model. All animals survived to the scheduled necropsy and no morbidity was observed. Additionally, no significant pre-to-post within-animal changes in hematology, serum chemistry, or urinalysis were observed, and all animals reestablished menstrual cycles within 69 days of egg precursor cell reintroduction. Ovarian follicular distribution at the final necropsy was comparable in the three dosage groups, suggesting that there was no disruption to normal ovarian physiology.

In 2016, we began a Phase 1 OvaPrime clinical trial in Canada to evaluate the safety of OvaPrime in patients with poor ovarian response (POR) or primary ovarian insufficiency (POI) and secondarily, assess changes in women’s hormone levels, follicular development and occurrence of pregnancy. 

Each subject has one ovary exposed to the EggPC cells, while the other ovary is exposed to the EggPC vehicle as a means to have each subject serve as her own control. Results between the treatment and control ovary are examined for relevant endpoints such as antral follicle counts.

The primary study endpoint is to evaluate the safety of all subjects regardless of pregnancy outcome. Additional exploratory endpoints include OvaPrime’s effect on patients’ anti-mullerian hormone (AMH), follicle stimulating hormone (FSH) and estradiol (E2) levels, as well as follicular development as measured by ultrasound.

In January 2018, we announced initial safety data from this trial. In an interim safety analysis of the first 20 patients followed for six months post-EggPC cell reintroduction, OvaPrime was generally safe and well-tolerated. Among the first 20 patients evaluable for safety six-months post-EggPC cell reintroduction, there were no treatment related serious adverse events (SAEs) and no adverse events (AEs) related to the EggPC cells. There were seven mild AEs, four of which were deemed unrelated to OvaPrime and three of which were related to the standard laparoscopic procedure used to reintroduce EggPC cells into the ovary. No patients discontinued treatment because of an AE. The mean duration of follow-up among these 20 patients was nine months.

We closed enrollment in this Phase 1 study at 81 patients, for a modified intent-to-treat (mITT) population of 58, and intend to progress OvaPrime into a multi-center Phase 1b/2a trial in women with POI or POR.  We expect a readout of six-

month safety data of all patients in our Phase 1 study by year-end 2018 and a readout of secondary endpoints by the end of the third quarter of 2019. However, based on preliminary blinded data, we do not expect this Phase 1 clinical trial to produce strong signals on any of our secondary endpoints. We believe this may be due to the delivery of a sub-optimal EggPC cell dose.

To address this, we have significantly improved our cell processing and thaw techniques in recent months. Specifically, we have enhanced the yield and purity of the EggPC cells we are repositioning, and believe we now have a process that will maximize the delivered dose. We believe these advancements will allow us to consistently administer a significantly higher number of EggPC cells per treatment in the planned Phase 1b/2a OvaPrime clinical trial than were administered in the Phase 1 OvaPrime study. These enhancements in cell processing and yield are also being applied to AUGMENT and OvaTure as appropriate.

We are now focused on advancing OvaPrime into a new Phase 1b/2a clinical trial, which will evaluate the safety and tolerability of administering a higher number of EggPC cells per treatment. Our decision to close enrollment in our Phase 1 trial and to move forward with a Phase 1b/2a trial of OvaPrime was driven by both the encouraging safety results in our Phase 1 trial and the recent improvements in cell processing and thaw techniques. We believe that these improved cell-processing techniques will yield a more robust signal on our secondary endpoints.

We are currently conducting a series of preclinical animal studies to better understand the characteristics of EggPC cells as part of the OvaPrime treatment, and the impact of our improved EggPC cell yield and purity on efficacy. Findings from these studies will allow us to further optimize the design of our Phase 1b/2a trial to provide meaningful insights regarding the safety and secondary endpoints of OvaPrime. We plan to provide an update on our development plan and begin enrollment of our planned Phase 1b/2a OvaPrime clinical trial in the second half of 2018.

Our goals are forward looking statements, and there are a number of risks and uncertainties that could cause our actual results to differ materially from our forward looking statements. Please see the sections entitled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors.”

OvaTure

OvaTure is a potential fertility treatment that eliminates the need for hormone stimulation. With OvaTure, a woman’s own EggPC cells are isolated from her ovary and matured in vitro into healthy, fertilizable eggs (Figure 7).

Figure 7

In December 2013, we entered into a collaboration with Intrexon to accelerate development of OvaTure, which we refer to as the OvaTure Collaboration. The companies also formed OvaXon LLC, a joint venture, which focused principally on the generation and commercialization of low cost, elite heifer embryos for entry into the food chain.

In 2016 and 2017, the OvaTure Collaboration generated data supporting the characterization and level of developmental competence of human EggPC cell derived-eggs, and the OvaXon joint venture generated data supporting the characterization of bovine EggPC cell derived-eggs, as well as signs of developmental competence.

Starting in August 2017, Intrexon continued bovine EggPC work for us under the OvaTure Collaboration rather than under the OvaXon joint venture. We are in discussions with Intrexon regarding the future of the OvaXon joint venture.

On February 1, 2018, we provided Intrexon with written notice of termination of the OvaTure Collaboration, effective 90 days following notice. We believe that we can best continue the development of OvaTure by building out our internal capabilities and expertise under the leadership of Dr. James Lillie, our Chief Scientific Officer, and engaging with contract research organizations that have specific, complementary capabilities to our own, as well as our academic collaborators. 

Currently, for OvaTure, we are exploring different subculture systems that allow for even further maturation of oocytes. Recently, in conjunction with one of our academic partners, we developed a human subculture system that has produced larger eggs, with morphologic features that appear to be more mature. Specifically, these EggPC cell-derived eggs are approximately 100 to 120 microns in size, have a thicker zona pellucida and are surrounded by a cumulus oocyte complex (COC). The COC is a series of cumulus or support cells that have aggregated around the cell and is typical of an endogenous developing follicle. We are encouraged by these data and are pushing forward on this subculture strategy to improve its consistency and yield.

Figure 8 below summarizes the important steps that we have taken in our efforts to produce mature, fertilized eggs.

Figure 8

Figure 9 shows an increase in cytoplasmic volume for OvaTure eggs similar to maturing endogenous eggs:

Figure 9

Figure 10 demonstrates that maturing OvaTure eggs present with structural characteristics comparable to endogenous eggs.

Figure 10

 

In summary, as eggs mature in nature, they would begin to increase in size and develop a thickened zona pellucida. The nucleus would enlarge and form a germinal vesicle - which would then break down to allow the chromosomes to condense and separate, keeping half the genetic material and the majority of the cytoplasm in the egg and placing the remainder in the polar body for disposal. At this point the egg would be ready to fertilize. To date we have observed eggs at various stages of development that display the stage-appropriate hallmarks of a maturing egg.

We are focused on optimizing subculture techniques for the maturation of human and bovine EggPC cells. We are also working with our academic partners to secure authorization to fertilize human EggPC cell-derived eggs outside of the United States, which we must do before we can fertilize human eggs for research purposes. In the meantime, we are working to make the maturation of human eggs a more repeatable, robust process so that we can increase the likelihood of success in our fertilization studies. Other next steps include initiating discussions with appropriate regulatory authorities.

Our next steps in the bovine OvaTure program including generating a high quality mature egg, followed by subsequent fertilization, embryo transfer, and live birth from an EggPC cell-derived egg.

Our goals are forward looking statements, and there are a number of risks and uncertainties that could cause our actual results to differ materially from our forward looking statements. Please see the sections entitled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors.”

Collaboration with Intrexon to Accelerate Development of OvaTure

In December 2013, we entered into the OvaTure Collaboration with Intrexon governing the use of Intrexon's synthetic biology technology platform for the accelerated development of our OvaTure platform. In February 2018, we provided Intrexon with written notice of termination of the OvaTure Collaboration, effective 90 days following notice. The OvaTure Collaboration provided for Intrexon to deliver laboratory and animal data to support OvaTure development, and provided that upon the delivery of laboratory and animal data, we would incur an obligation to pay Intrexon a mid-single digit royalty on net sales of any OvaTure fertility treatment in the future, and the exact royalty will depend upon the timing of the completion of the milestone. The royalty will apply if Intrexon intellectual property is utilized in the continued development of OvaTure.

As a technology access fee, we (1) issued Intrexon 273,224 shares of our common stock worth approximately $2.5 million on the date of issuance upon the execution of the OvaTure Collaboration in December 2013, and (2) paid Intrexon $2.5 million cash. We also agreed to make a commercial milestone payment three months after the first commercial sale of OvaTure. The shares issued to Intrexon are subject to "piggy-back" registration rights that entitle Intrexon, unless waived, to have the shares included in any new registration statement filed in connection with an underwritten public offering, subject to underwriter cutback.

OvaXon Joint Venture with Intrexon

In December 2013, we also entered into a joint venture with Intrexon to leverage Intrexon's synthetic biology technology platform and our technology relating to EggPC cells to pursue the development of potential fertility treatments within fields-of-use defined under the joint venture, which include prevention of genetic disease and animal health.

We and Intrexon formed OvaXon to conduct the joint venture. Each party contributed $1.5 million to OvaXon and each has a 50 percent equity interest, with research and development costs and profits to be split accordingly. OvaXon is governed by a board of managers, which have equal representation by us and Intrexon. Pursuant to an Intellectual Property License between us and OvaXon, we licensed our technology in the field of the joint venture to OvaXon, and OvaXon entered into a collaboration agreement with Intrexon to develop our technology in the field utilizing Intrexon's synthetic biology platform.

Starting in August 2017, Intrexon continued bovine EggPC work for us under the OvaTure Collaboration rather than under the OvaXon joint venture. In February 2018, we terminated the OvaTure Collaboration. We are in discussions with Intrexon regarding the future of the OvaXon joint venture. 

We recorded our initial investment in OvaXon as an equity method investment in December 2013. As of December 31, 2017 and 2016, our equity investment in OvaXon was $0.1 million and included within other current assets on our consolidated balance sheets. We and Intrexon both made additional contributions of $1.1 million and $1.8 million for the years ending December 31, 2017 and 2016, respectively.

AUGMENT

AUGMENT is a fertility treatment designed to improve fertilization and pregnancy rates. With AUGMENT, mitochondria from a woman’s own EggPC cells are isolated and injected into the egg during IVF (Figure 11).

Figure 11

AUGMENT was introduced in select clinics outside of the United States. AUGMENT is currently available to patients in Japan through the Agreement with the IVF Japan Group, as described below. AUGMENT is not available in the United States. We met with the United States Food and Drug Administration, or FDA, in the second quarter of 2017 regarding AUGMENT, and will continue to work with the FDA under its available procedures to determine the most appropriate regulatory pathway for potential entry into the U.S. market.

As previously disclosed, since December 2016, our corporate strategy has been focused on advancing OvaPrime and OvaTure.

On October 25, 2017, we executed a collaborative access agreement (the "Agreement") with the IVF Japan Group, under which we provided the IVF Japan Group with an exclusive license only in Japan to offer AUGMENT. The Agreement has an initial term of one year (the "Initial Term"). The Agreement terminates (i) at the end of the Initial Term unless there is mutual consent by both parties and the Agreement is extended or (ii) in the event of a material breach that is not cured within 30 days. During the Initial Term, IVF Japan Group will pay us a fixed amount of $1,000 per AUGMENT cycle and will reimburse us for all lab operations and personnel costs, which we anticipate to be approximately $0.2 million for the Initial Term, and are payable in nonrefundable quarterly installments on the first day of each quarter. The IVF Japan Group is also responsible to reimburse us for the cost of materials for AUGMENT for all cycles in excess of 100 which are estimated at $2,000 per cycle. We will retain the worldwide commercialization rights for AUGMENT outside of Japan.

An AUGMENT treatment cycle begins with an ovarian biopsy performed by the patient's doctor prior to hormone stimulation. Our proprietary process identifies and isolates the patient’s own EggPC cells, and then the patient’s own mitochondria from these EggPC cells are further isolated. The patient’s own mitochondria are then injected into her egg at the time of fertilization. This has the potential to improve fertilization and pregnancy rates with IVF.

Regulation of AUGMENT

W e believe that AUGMENT is not subject to the traditional regulatory requirements (e.g., lengthy pre-market review and approval of an application for marketing authorization) that apply to drugs, biologics, medicinal products and medical devices, where it is available. However, applicable regulatory bodies may disagree with our view. If they do, we and our associated clinic may suffer significant delay or expense or may cease offering the treatment.

In some countries, the national health authority may delegate the review of a fertility treatment to an industry self-regulatory body, and institutional review board, or other body. For example, the approval of IVF Japan Group's application to use AUGMENT in Japan was made by the Japan Society of Obstetrics and Gynecology (JSOG). In some other countries, there

are specific fertility regulatory authorities, such as the United Kingdom’s Human Fertilisation and Embryology Authority ("HFEA"), which license IVF facilities and determine what procedures such establishments may perform.

The United States does not have a fertility regulatory body separate and apart from the United States Food and Drug Administration (FDA). In September 2013, we received an "untitled" letter from the FDA advising us to file an IND application for AUGMENT. Following the receipt of the FDA letter, we chose to suspend the availability of AUGMENT in the United States. We met with the FDA in the second quarter of 2017 regarding AUGMENT, and will continue to work with the FDA under its available procedures to determine the most appropriate regulatory pathway for potential entry into the US market. In March 2018, Health Canada informed us that performing AUGMENT violates Canada's Assisted Human Reproduction Act, and requested that we cease offering AUGMENT in Canada. Accordingly, we are no longer making AUGMENT available in Canada while we consider next steps.

It will be necessary to apply on a country by country basis for whatever licenses or approvals, if any, are required to offer AUGMENT. In some cases, there are no clear guidelines on what standards may apply to AUGMENT or what licenses or approvals may be required, and it will be necessary to continue to engage in discussions with regulatory authorities in certain of the countries in which AUGMENT would be introduced. If any clinics are unable to obtain any required licenses or approvals in a particular country, if the application process takes longer than expected, or if additional licenses or approvals are required to commercialize the treatment on a large scale, then the introduction of AUGMENT in such countries may be delayed or involve additional expense.

Our plans are forward looking statements, and there are a number of risks and uncertainties that could cause our actual results to differ materially from our forward looking statements. Please see the sections entitled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors.”

The Role of Mitochondria in Egg Health

Fertility decreases with age, and the energy levels in the egg are believed to play a major role in this decline (Figure 3). After fertilization, the early stage embryo requires energy for cell division. Inadequate energy results in a failure of the newly formed embryo to develop. We believe that the energy level in a woman's eggs may be supplemented, and the success of embryo development improved, by the injection of mitochondria from the woman's own EggPC cells into her egg at the time of fertilization.

Animal Studies. Studies published in peer reviewed medical journals, including Human Cell (2004), Electronic Journal of Biology (2005), Reproduction Research (2006) and Reproductive Biomedicine (2011), provided evidence of the effects of mitochondria on egg health. In these studies, which involved a number of species, including bovine, porcine, rabbit and murine, third-party scientists demonstrated that the addition of mitochondria to eggs with mitochondrial deficiencies increased cellular energy levels, egg health and the likelihood of fertilization and healthy live births.

Donor Mitochondria Studies. In humans, clinical case reports published in the peer-reviewed medical journals Molecular Human Reproduction (1998) and Human Reproduction (2001), researchers transferred cytoplasm from the eggs of younger women donors into the eggs of older women who failed multiple IVF cycles. The cytoplasm is the liquid portion of a human cell that surrounds the nucleus and contains the egg's mitochondria. Each of these reports showed increased rates of fertilization, embryo development, implantation and pregnancy for the older women whose eggs were transfused. In one of these published reports, approximately 30 women who had previously failed two to five IVF cycles, achieved 13 pregnancies and delivered 16 healthy offspring. Additional published reports showed similar success rates ranging from 25-44 percent for women who had previously failed multiple cycles and had not achieved a pregnancy.

These clinical case reports served as the basis for the scientific hypothesis that the addition of healthy donor mitochondria might be used to improve the quality of eggs with mitochondrial deficiencies. However, following publication of these initial clinical reports, many scientists and clinicians questioned the long-term safety of the use of third-party donor mitochondria in humans because mitochondria contain DNA. Mitochondria produce energy in all cells of the body. Unlike nuclear DNA, contained in the nucleus, which is inherited from two different people, half from the biological mother and half from the biological father, mitochondrial DNA is inherited solely from the mother. As a result, while the process appeared to be safe with respect to the fertilized egg and the patient, scientists and clinicians questioned whether the presence of mitochondria, and therefore mitochondrial DNA, from two different women might adversely impact a child's health later in life. In response to these concerns, the FDA stated that the use of cells in therapy involving the transfer of third party genetic materials, including mitochondrial DNA, requires submission of an Investigational New Drug application, or IND.

Our Approach. The approach we have used with AUGMENT builds on these reports but uses a woman's own mitochondria from her own EggPC cells to improve her fertility instead of third-party donor mitochondria. While all cells contain mitochondria, we believe the mitochondria from cells involved in reproduction, known as germline cells, as opposed to

other cells in the body, known as somatic cells, are the ideal source of mitochondria for transfer to improve egg health. This is because somatic cells are exposed to environmental toxins and cell waste products that may cause mutations or deletions in mitochondrial DNA that can be passed on during cell division. These mutations and deletions can decrease the quality of the mitochondria and the ability to produce energy. In contrast, the mitochondrial DNA from germline cells contain minimal mutations and deletions. Because the mitochondria within an egg are the template for all subsequent cell reproduction in the offspring, we believe that it is necessary to use high-quality mitochondria to improve egg health.

The approach we have used with AUGMENT is to use germline mitochondria from the patient's own EggPC cells to improve the quality of the patient's eggs. By using mitochondria from the woman's own EggPC cells, instead of from a third-party donor, AUGMENT does not involve the transfer of third-party genetic material.

Publication of AUGMENT Treatment Experience in Peer-Reviewed Journal. In August 2015, the first published analysis comparing AUGMENT to standard IVF within the same woman within the same cycle was included in the peer-reviewed Journal of Fertilization: In Vitro- IVF-Worldwide Reproductive Medicine, Genetic & Stem Cell Biology . The analysis demonstrated statistically significant higher rates of embryo selection and transfer with AUGMENT based on standard embryo quality measures, including preimplantation genetic diagnosis/screening, resulting in statistically significant higher rates of pregnancy.

Research and Development Spending

During the years ended December 31, 2017 , 2016 and 2015 we spent approximately $18.3 million , $21.6 million and $18.4 million , respectively, on our research and development activities.

Manufacturing

We have established current Good Tissue Practice (cGTP)-compliant laboratories to perform the necessary steps for OvaPrime and AUGMENT either within or contiguous to the international IVF clinics in which AUGMENT is offered and our clinical trials for OvaPrime are ongoing.

In addition, we have contracted with a third-party supplier to perform the identification and isolation of EggPC cells and the preparation of mitochondria steps in the AUGMENT process in the event we decide to undertake offsite manufacturing. Our supplier has significant experience in tissue and cell therapy manufacturing. In regions outside of the United States, we may contract with third-parties, through partnerships, out-licenses or other arrangements, to process and manufacture our potential fertility treatments.

Marketing and Sales

In December 2016, we announced a corporate restructuring based on a strategic decision to slow our commercial expansion, which included a 30 percent reduction of our workforce, including our global sales and marketing team. In June 2017, we announced a further corporate structuring based on our strategic decision to no longer offer AUGMENT on a commercial basis outside of North America which included a 50 percent reduction of our workforce, including our global sales and marketing team.

Foreign Subsidiaries

We established international headquarters in the United Kingdom to coordinate our international commercial efforts and in July 2017, our UK headquarters was closed to reflect our new corporate strategy focusing on research and development efforts. We have also established subsidiaries in certain key regions where we will offer our fertility treatments. These subsidiaries are part of an international legal entity structure through which we plan to (and have, in some cases) license the ex-U.S. commercial rights to OvaPrime, OvaTure treatment as well as AUGMENT treatment and any other potential future products or treatments. This arrangement would allow any potential value enhancement and future profits for the assets to be shared between us and the subsidiaries.

Intellectual Property

We believe we have a strong and growing intellectual property portfolio. We aggressively strive to protect the proprietary technology that we believe is important to our business, including seeking and maintaining patents intended to cover our treatments and compositions, their methods of use and processes for their manufacture, as well as any other inventions that are commercially important to the development of our business. We seek to obtain domestic and international patent protection, and endeavor to promptly file patent applications for new commercially valuable inventions. We also rely on trade secrets to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection.

Our success will depend on our ability to obtain and maintain patent and other proprietary protection for commercially important technology, inventions and know-how related to our business, defend and enforce our patents, preserve the confidentiality of our trade secrets and operate without infringing the valid and enforceable patents and proprietary rights of third parties. We will also rely on continuing technological innovation and in-licensing opportunities to develop and maintain our proprietary position.

Patents and Patent Applications

As of February 20, 2018, we own or have exclusively licensed 65 issued patents in 44 countries and jurisdictions and have more than 170 applications pending in more than 130 countries (including applications directly filed in countries and applications filed in regional patent offices); communications indicating allowance have been received for three of these applications.

One family of patents and applications that we own by way of assignment from our own inventors provides protection into 2035 and is directed to a plurality of monoclonal antibody compositions and methods of using those compositions to isolate EggPC cells, a step common to each one of our OvaPrime, OvaTure and AUGMENT treatments. This family includes two issued U.S. patents, one pending U.S. application, and approximately 50 patent applications pending in nearly 130 foreign countries.

We have exclusively licensed a portfolio of patent applications owned or co-owned by The General Hospital Corporation, the corporate entity of MGH, pursuant to an agreement that is summarized below. As of February 20, 2018, we held an exclusive license under this agreement to six issued U.S. patents owned by MGH, four pending U.S. non-provisional patent applications owned by MGH, 50 patents issued by patent offices outside of the U.S. which are owned by MGH, 68 applications pending with patent offices outside of the U.S. which are owned by MGH, two issued patents, including one U.S. patent co-owned by MGH and The President and Fellows of Harvard College, or Harvard, one pending U.S. non-provisional application co-owned by MGH and Harvard, and seventeen applications pending in patent offices outside of the U.S. which are co-owned by MGH and Harvard.

One family of patents and applications that we have licensed from MGH is directed to female germline stem cells, including methods of isolating such female germline stem cells and various uses for such female germline stem cells, including methods for IVF, methods for egg production, methods to treat infertility and methods to restore ovarian function. This family includes issued patents in the U.S., Canada and 30 European countries, all of which will expire in May 2025. We believe that some of the patents of this family provide protection for therapeutic compositions comprising EggPC cells, which are referred to in the patents as female germline stem cells, and that some of the patents of this family provide protection for elements of the manufacturing process for obtaining such therapeutic compositions.

A second family of patent applications that we have licensed from MGH is directed to methods and compositions for producing female germline stem cells or oocytes from stem cells derived from either bone marrow or peripheral blood. This family includes two pending U.S. non-provisional applications and one Canadian application, which, if issued as patent(s), also would expire in May 2025. We believe that patents issuing from this family may provide protection for an alternative method of obtaining EggPC cells.

A third family of patent applications that we have licensed from MGH is directed to methods and compositions for autologous germline mitochondrial energy transfer. A total of 22 patents have issued in this family as of February 20, 2018, including three in each of the U.S. and Australia, two in each of Japan, Israel and South Africa, and one in each of ten other countries/jurisdictions, including Canada, where a second patent is expected to issue from an application for which a communication of allowance has been received. Further, over 50 applications are pending in the U.S. and foreign patent offices. These applications provide opportunity for obtaining patents not only in the countries/jurisdictions in which at least one patent has already issued, but also in nearly 120 others. The issued patents, and any additional patents claiming priority to the underlying provisional applications, will expire in April 2032 unless patent term extension is granted. We believe that these patents, and any patents issuing from this family, provide protection for AUGMENT and several important aspects thereof.

A fourth family of patent applications that we have licensed from MGH and Harvard is directed to methods and compositions for enhancing the bioenergetic status in oocytes or EggPCs. This family includes one patent issued in each of the U.S. and Australia, and a total of 19 applications that are pending with the U.S. and foreign patent offices. The applications in this family provide opportunity for obtaining patents in more than 60 countries/jurisdictions. Any patents claiming priority to the underlying provisional application would expire in April 2032 unless patent term extension is granted. We believe that patents issuing from this family may provide protection for aspects of the AUGMENT procedure, as well as culture media that we may develop in the future.

In our efforts to improve AUGMENT, we invented a method of isolating mitochondria from EggPCs and concentrating the mitochondria in the picoliter-scale volume required for injection into oocytes as part of AUGMENT. We own this patent family, with applications currently pending in the U.S. and more than 70 other countries.

Additionally, we own one issued U.S. patent and one pending U.S. non-provisional patent application, with all issued patents expiring in June 2026. We believe that patents issued or issuing from this family may provide protection for an alternative method of producing healthy eggs.

Trade Secrets

In addition to patents, we expect to rely on trade secrets and know-how to develop and maintain our competitive positions. For example, significant aspects of AUGMENT are based on unpatented trade secrets and know-how. Trade secrets and know-how can be difficult to protect. We seek to protect our proprietary technology and processes, in part, by confidentiality agreements with our employees, consultants, scientific advisors and contractors. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises and physical and electronic security of our information technology systems. While we have confidence in these individuals, organizations and systems, agreements or security measures may be breached and we may not have adequate remedies for any breach. In addition, our trade secrets and know-how may otherwise become known or may be independently discovered by competitors. To the extent that our consultants, contractors or collaborators 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.

Exclusive License Agreement with Massachusetts General Hospital

In June 2011, we entered into an exclusive license agreement with MGH under which we acquired an exclusive, worldwide, royalty-bearing license to specified patent rights owned by MGH and a non-exclusive license under specified know-how to make, use and sell products and processes and to develop and perform services covered by the licensed patent rights or which employ or are based on the licensed know-how in certain specified licensed fields. The license further included the grant to us under certain patent rights co-owned by MGH and Harvard to make, use and sell products and processes and to develop and perform services covered by such patent rights for use in ex vivo human female fertility treatments.

Pursuant to an amended and restated license agreement in November 2017, we agreed to expand the licensed field of the patent rights solely owned by MGH to include all uses, including human female fertility, the treatment or prevention of inherited (including mitochondrial) diseases or defects in all animals, including humans, assisted and/or artificial reproductive technology in all non-human animals, the artificial creation of food, research animals and/or animal products, the treatment of menopause and all diagnostics.

Under the terms of this license agreement, as amended, we have agreed to pay MGH upfront license fees, annual license fees and an annual maintenance fee and agreed to reimburse MGH for certain patent related fees and costs incurred by MGH and Harvard, including past patent fees and costs totaling approximately $0.4 million in the aggregate. We also agreed to pay MGH milestone payments of up to an aggregate of approximately $10.9 million upon the achievement of specified developmental and commercialization milestones. We are also obligated under this license agreement to make a payment to MGH upon our consummation of certain specified liquidity events, subject to a specified cap. To date, we have we paid MGH an aggregate of $0.5 million in connection with our consummation of public offerings that fall within the definition of a liquidity event for purposes of this license agreement.

We are further obligated under this license agreement to pay MGH a royalty in the low single digits based on net sales of licensed products and processes that we commercialize under the agreement. Net sales are defined under this license agreement to exclude any amounts billed to patients by clinics and medical practices that use licensed products or perform licensed services for patients, but to include the amounts paid to us by such clinics and medical practices. Our obligation to pay royalties for each licensed product and process expires on a country-by-country basis on the date of expiration of the licensed patent rights that cover that licensed product or process in that country except that, solely with respect to the license under certain patent rights co-owned by MGH and Harvard for ex vivo human fertility treatments, our obligation to pay a royalty will continue at a reduced rate for a period of three years after the expiration of such patent rights if the licensed patent rights covered the licensed product or process in that country prior to expiration. Royalty rates are subject to reduction in any country if we are required to obtain a license from any third-party to the extent the licensed patent rights infringe the third-party’s patent rights if such payments are in excess of one percent of net sales. If we enter into a sublicense under this license agreement, we will be obligated to pay MGH a percentage of certain consideration paid to us by the sublicensee.

We are required to use commercially reasonable efforts to develop and commercialize licensed products and licensed processes under this license agreement. In particular, we are required to achieve specified development and commercialization milestones in certain countries by specified dates, which dates may be subject to extension by us upon making certain specified payments to MGH.

Under the terms of the agreement, MGH and Harvard have retained the right to practice the licensed patent rights within the licensed fields for research and educational purposes only.

We have the right to terminate the agreement for any reason upon at least 90 days' prior written notice. MGH has the right to terminate the agreement if we fail, subject to a specified cure period, to pay any amounts due and payable under the agreement to MGH, we otherwise materially breach the agreement and fail to cure such breach within a specified cure period, we fail to maintain insurance coverage as required under the agreement, we enter bankruptcy proceedings or make an assignment for the benefit of our creditors, or we or a sublicensee challenges the licensed patent rights in a legal or administrative proceeding. The agreement otherwise terminates upon the expiration or abandonment of all licensed patents and patent applications.

Competition

The biotechnology and pharmaceutical industries are highly competitive and subject to rapid technological change. There are a number of pharmaceutical companies, biotechnology companies, universities and research organizations actively engaged in research and development of potential fertility treatments. Some of these treatments, similar to our current and future fertility treatments, are designed to address the shortcomings of IVF.

In particular, we are aware of a number of companies and laboratories that are currently developing potential fertility treatments intended to identify high quality embryos for use in IVF and a university study of the transfer of granulosa cell mitochondria into eggs. We are also aware of a university study of induced pluripotent stem cells, or iPS, showing that iPS cells can be generated from somatic cells and programmed to become differentiated cells, which can include germline cells such as oocytes. However, we believe it is unlikely this approach would have clinical applications because these are non-germline, pluripotent cells. Novocellus Ltd. is developing an embryo viability test, using culture media, to aid in the selection of embryos used in IVF. We believe that culture media is complementary to our fertility treatment options. FertiliTech and Auxogyn, Inc. are developing hardware and software that analyzes embryo development against cell division timing parameters to help identify the highest quality embryo within a group of embryos. If successfully developed, these products could improve outcomes and alleviate some of the other shortcomings of traditional IVF, thereby decreasing the need for our potential fertility treatments. Fertility Focus, along with strategic partner Norgenix, are developing a fertiloscope for the early diagnosis of, and immediate corrective surgery for, the physical causes of infertility. Molecular diagnostic companies like Reprogenetics are developing novel preimplantation genetic diagnosis and screening methods to detect chromosomal and genetic disorders of embryos prior to transfer back to the women. Testing embryos in this manner may increase the likelihood of pregnancy, reduce the chances of pregnancy loss, and improve the odds of delivery.

We are also aware of a number of other treatments in development that have the potential to restore egg production for women who make too few or no eggs. These treatments include, but are not limited to, platelet-rich plasma injections, in vitro activation, in vitro maturation, ovarian fragmentation, and transplantation of stem cells. If successfully developed, these products have the potential to address some of the shortcomings of standard IVF for women with POI or POR who do not make few or no eggs. However, these treatments are early in preclinical and clinical development and very limited data demonstrating efficacy has been generated to date.

There can be no assurance that we will be able to compete effectively. Our competitors may develop and commercialize new technologies before we do, allowing them to offer products, services or solutions that are superior to those that we may offer or that establish market positions before the time, if any, at which we are able to bring potential fertility treatments to the market. Many of our competitors, either alone or with their strategic partners, have substantially greater financial, technical and human resources than we do and significantly greater experience in the discovery and development of product candidates, obtaining FDA and other regulatory approvals of products and the commercialization of those products. Accordingly, our competitors may be more successful than we may be in developing, commercializing and achieving widespread market acceptance. Our competitors' products may be more effective, or more effectively marketed and sold, than any treatment we may commercialize and may render our potential fertility treatments obsolete or non-competitive before we can recover the expenses of developing and commercializing any of our potential fertility treatments. We anticipate that we will face intense and increasing competition as new treatments enter the market and advanced technologies become available. We also face competition from standard IVF clinics.

For OvaPrime and AUGMENT, our ability to gain market acceptance will depend on, among other things, our ability to demonstrate improved IVF success rates, thereby reducing the number of cycles required to produce a live birth, our ability to reduce multiple births, and our ability to treat patients that face particular challenges with standard IVF, such as patients with diminished ovarian reserve. Our ability to gain market acceptance for OvaTure, if and when introduced, will depend on our ability to demonstrate increased pregnancy and live birth rates as compared to standard IVF and other infertility treatments, reduced multiple births and a reduction in the need for hormonal hyperstimulation for egg retrieval. We anticipate that price also will be an important competitive factor for all our fertility treatment options. At this time, we cannot evaluate how our

potential fertility treatments, if successfully developed and commercialized, would compare technologically, clinically or commercially to any other potential products being developed or to be marketed by competitors.

Government Regulation

Government authorities around the world regulate, among other things, the development, testing, manufacture, quality, approval, distribution, labeling, packaging, storage, record keeping, sale, marketing, import, export and promotion of drugs, biologics and medical devices, as well as other types of medical products and procedures. Most countries also have rules relating to procurement and use of human tissues or cells, and rules relating to assisted human reproduction. Although the specific rules vary country by country, in general different levels of regulation are applicable depending on the nature of the treatment, the level of risk involved, and/or its intended uses. Some classes of products (e.g., treatments regulated as drugs or biologics in the United States, or treatments regulated as medicinal products in the EU) require extensive preclinical testing, clearance to conduct clinical trials, successful completion of clinical trials, and submission and approval of an application for marketing authorization before the therapy can be commercially marketed. Such products also are subject to significant post-marketing requirements.

Many countries also specify various classes of therapies that are exempt from the above-mentioned pre-market review and approval requirements. In these jurisdictions, the development and marketing of such therapies generally do not require the conduct of clinical trials or pre-review and approval of a marketing application by the relevant regulatory authority. In addition, although many such therapies are still subject to post-marketing requirements, these requirements typically are substantially reduced as compared to the requirements for drugs, biologics, medicinal products or medical devices.

There can be no assurance that regulatory authorities in countries where we have introduced, or will introduce, AUGMENT or OvaPrime will agree with our determinations that these fertility treatments are exempt from pre-market review and approval as a drug, biologic, medicinal product or medical device. If the regulatory authorities in a given country disagree with our determination, then we likely will be required to cease commercial marketing of that fertility treatment in that country, and may not be able to resume commercial marketing without first demonstrating safety and efficacy through clinical trials, submitting an application for marketing authorization, and receiving approval from the relevant regulatory authorities. In these circumstances, we are likely to be significantly delayed in our ability to commercialize our fertility treatments in such country, or we may elect to cease our commercialization activities in that country altogether. From time to time, we engage in discussions regarding AUGMENT and our potential fertility treatments with regulatory authorities in certain of the countries in which we have launched or plan to introduce our fertility treatments. We expect to have ongoing dialogue with these regulatory authorities.

With regard to the United States, we commenced a clinical study of AUGMENT in the United States in 2012. We did so without an IND on the basis of our determination that AUGMENT was exempt from pre-market review and approval in the United States and did not require an IND to conduct clinical testing. In 2013, however, we received an "untitled" letter from the FDA questioning our determination of exempt status and advising us to file an IND for the potential fertility treatment. We have since discontinued our clinical study and are focused on commercializing our fertility treatments outside of the United States. We met with the FDA in the second quarter of 2017 regarding AUGMENT, and will continue to work with the FDA under its available procedures to determine the most appropriate regulatory pathway for potential entry into the U.S. market. We cannot provide any assurance, however, that the FDA will ultimately change the position taken in the "untitled" letter. In March 2018, Health Canada informed us that performing AUGMENT violates Canada's Assisted Human Reproduction Act, and requested that we cease offering AUGMENT in Canada. Accordingly, we are no longer making AUGMENT available in Canada while we consider next steps.

European Union Requirements

Regulation of Medicinal Products

If the authorities in certain EU countries were to determine that any of our potential treatments are subject to regulation as medicinal products, including as advanced therapy medicinal products, they would be subject to extensive pre- and post-market regulation by regulatory authorities at both the EU and national levels. Advanced therapy medicinal products include tissue engineered products, which are cells or tissues that have undergone substantial manipulation and that are administered to human beings in order to regenerate, repair or replace a human tissue.

Clinical Trials.     Clinical trials of medicinal products in the EU must be conducted in accordance with EU and national regulations and the International Conference on Harmonization, or ICH, guidelines on Good Clinical Practice, or GCP. Prior to commencing a clinical trial, the sponsor must obtain a clinical trial authorization from the competent authority, and a positive opinion from an independent ethics committee. Currently, clinical trial authorization applications must be submitted to the competent authority in each EU member state in which the trial will be conducted. Under the new Regulation on Clinical Trials, which is expected to take effect in or after October 2018, there will be a centralized application procedure where one

national authority takes the lead in reviewing the application and the other national authorities have only a limited involvement. Any substantial changes to the trial protocol or other information submitted with the clinical trial applications must be notified to or approved by the relevant competent authorities and ethics committees.

During the development of a medicinal product EMA, and national medicines regulators within the EU provide the opportunity for dialogue and guidance on the development program. At the EMA level, this is usually done in the form of scientific advice, which is given by the Scientific Advice Working Party of the Committee for Medicinal Products for Human Use, or CHMP. A fee is incurred with each scientific advice procedure. Advice from the EMA is typically provided based on questions concerning, for example, quality (chemistry, manufacturing and controls testing), nonclinical testing and clinical studies, and pharmacovigilance plans and risk-management programs. Advice is not legally binding with regard to any future marketing authorization application of the product concerned. To date, we have not initiated any scientific advice procedures or other discussions with the EMA or any national regulatory authorities in the EU.

Marketing Authorizations.     After completion of the required clinical testing, we must obtain a marketing authorization before we may place a medicinal product on the market in the EU. There are various application procedures available, depending on the type of product involved. All application procedures require an application in the common technical document, or CTD, format, which includes the submission of detailed information about the manufacturing and quality of the product, and non-clinical and clinical trial information. There is an increasing trend in the EU towards greater transparency and, while the manufacturing or quality information is currently generally protected as confidential information, the EMA and national regulatory authorities are now liable to disclose much of the non-clinical and clinical information in marketing authorization dossiers, including the full clinical trial reports, in response to freedom of information requests after the marketing authorization has been granted. Clinical trial reports will also be posted on the EMA's website following the grant, denial or withdrawal of a marketing authorization application, subject to procedures for limited redactions and protection against unfair commercial use.

The centralized procedure gives rise to marketing authorizations that are valid throughout the EU and, by extension (after national implementing decisions), in Norway, Iceland and Liechtenstein, which, together with the EU member states, comprise the European Economic Area, or EEA. Applicants file marketing authorization applications with the EMA, but the marketing authorization itself is granted by the European Commission. The centralized procedure is compulsory for medicinal products that (1) are derived from certain biotechnology processes, (2) contain a new active substance (approved after November 20, 2005) indicated for the treatment of certain diseases, (3) are orphan medicinal products or (4) are advanced therapy medicinal products, such as cell therapy medicines. For medicines that do not fall within these categories, an applicant may voluntarily submit an application for a centralized marketing authorization to the EMA, as long as the CHMP agrees that (i) the medicine concerned contains a new active substance (approved after November 20, 2005), (ii) the medicine is a significant therapeutic, scientific, or technical innovation, or (iii) if its authorization under the centralized procedure would be in the interest of patients or animal health at the EU level.

For those medicinal products for which the centralized procedure is not available, the applicant must submit marketing authorization applications to the national medicines regulators through one of three procedures: (1) a national procedure, which results in a marketing authorization in a single EU member state; (2) the decentralized procedure, in which applications are submitted simultaneously in two or more EU member states; and (3) the mutual recognition procedure, which must be used if the product has already been authorized in at least one other EU member state, and in which the EU member states are required to grant an authorization recognizing the existing authorization in the other EU member state, unless they identify a serious risk to public health.

The EU medicines rules expressly permit the member states to adopt national legislation prohibiting or restricting the sale, supply or use of any medicinal product containing, consisting of or derived from a specific type of human or animal cell, such as embryonic stem cells. Thus, it is possible that the national laws in certain EU member states may prohibit or restrict us from commercializing our fertility treatments, even if they have been granted an EU marketing authorization.

Data Exclusivity.     Marketing authorization applications for generic medicinal products do not need to include the results of pre-clinical and clinical trials, but instead can refer to the data included in the marketing authorization of a reference product for which regulatory data exclusivity has expired. If a marketing authorization is granted for a medicinal product containing a new active substance, that product benefits from eight years of data exclusivity, during which generic marketing authorization applications referring to the data of that product may not be accepted by the regulatory authorities, and a further two years of market exclusivity, during which such generic products may not be placed on the market. The two-year period may be extended to three years if during the first eight years a new therapeutic indication with significant clinical benefit over existing therapies is approved.

There is a special regime for biosimilars, or biological medicinal products that are similar to a reference medicinal product but that do not meet the definition of a generic medicinal product, for example, because of differences in raw materials

or manufacturing processes. For such products, the results of appropriate pre-clinical or clinical trials must be provided, and guidelines from the EMA detail the type of quantity of supplementary data to be provided for different types of biological product. There are no such guidelines for complex biological products, such as gene or cell therapy medicinal products, and so it is unlikely that biosimilars of those products will currently be approved in the EU. However, guidance from the EMA states that they will be considered in the future in light of the scientific knowledge and regulatory experience gained at the time.

Post-Approval Controls.     The holder of a marketing authorization must establish and maintain a pharmacovigilance system and appoint an individual qualified person for pharmacovigilance, or QPPV, who is responsible for oversight of that system. Key obligations include expedited reporting of suspected serious adverse reactions and submission of periodic safety update reports, or PSURs.

All new marketing authorization applications must include a risk management plan, or RMP, describing the risk management system that the company will put in place and documenting measures to prevent or minimize the risks associated with the product. The regulatory authorities may also impose specific obligations as a condition of the marketing authorization. Such risk-minimization measures or post-authorization obligations may include additional safety monitoring, more frequent submission of PSURs, or the conduct of additional clinical trials or post-authorization safety studies. Risk management plans and PSURs may be made available to third parties requesting access, subject to limited redactions.

All advertising and promotional activities for the product must be consistent with the approved summary of product characteristics, and therefore all off-label promotion is prohibited. Direct-to-consumer advertising of prescription medicines is also prohibited in the EU. Although general requirements for advertising and promotion of medicinal products are established under EU directives, the details are governed by regulations in each member state and can differ from one country to another.

Medicinal products may only be manufactured in the EU, or imported into the EU from another country, by the holder of a manufacturing authorization from the competent national authority. The manufacturer or importer must have a qualified person, or QP, who is responsible for certifying that each batch of product has been manufactured in accordance with EU standards of good manufacturing practice, or GMP, before releasing the product for commercial distribution in the EU or for use in a clinical trial. Manufacturing facilities are subject to periodic inspections by the competent authorities for compliance with GMP.

Regulation of Medical Devices

If European regulatory authorities were to determine that any of our potential treatments are subject to regulation as a medical device, the following requirements would apply. A medical device may be placed on the market within the EEA if it conforms to certain "essential requirements". These are general in nature and broad in scope. The most fundamental essential requirement, for example, is that a device must be designed and manufactured in such a way that it will not compromise the clinical condition or safety of patients, or the safety and health of users or other persons. Other essential requirements include that the device must achieve the performances intended by the manufacturer and be designed, manufactured and packaged in a suitable manner, and any undesirable side effect must constitute an acceptable risk when weighed against the performances intended.

The manufacturer is obliged to demonstrate that the device conforms to the relevant essential requirements through a conformity assessment procedure. The nature of the assessment depends upon the classification of the device. The classification rules are mainly based on three criteria: the length of time the device is in contact with the body, the degree of invasiveness, and the extent to which the device affects the anatomy. In brief and generally; Class I (low risk) devices are those that do not enter or interact with the body, Class IIa and IIb (medium risk) devices are invasive or implantable or interact with the body; and Class III (high risk) devices are those that affect the vital organs.

Conformity assessment procedures for all but the lowest risk classification of device involve a notified body. Notified bodies are entities licensed to provide independent certification of certain classes of medical device. Most notified bodies are private commercial entities or private non-profit organizations.

EU regulatory bodies are not involved in the pre-market approval of medical devices, with only very limited exceptions (such as medical devices that incorporate a medicinal product as an ancillary substance). The onus of ensuring a device is safe enough to be placed on the market is ultimately the responsibility of the manufacturer and the notified body.

As part of the conformity assessment procedure, the manufacturer will need to conduct a clinical evaluation of the device. This clinical evaluation may consist of an analysis of the scientific literature relating to similar devices, new clinical investigations of the device, or a combination of the two. For class III devices, the conduct of clinical investigations is mandatory. Such studies must adhere to the Declaration of Helsinki, which requires appropriate ethics committee approval of the study.

Once the appropriate conformity assessment procedure for a medical device has been completed, the manufacturer must draw up a written declaration of conformity and affix the CE mark to the device. The device can then be marketed throughout the EEA.

Manufacturers must put in place a device vigilance system that allows them to review relevant post-marketing experience and take corrective actions where necessary. As part of that system, manufacturers must report to the competent regulatory authorities any adverse incident related to a medical device that leads or might lead, directly or indirectly, to the death of a patient, user or other person or to a serious deterioration in their state of health. They must also report any recalls or other field safety corrective actions.

Additional and/or different regulatory requirements will apply to medical devices pursuant to the EU Medical Devices Regulation (EU) No. 2017/745, which will apply as of May 2020.

Human Cells and Tissues

Human cells and tissues that are intended for human applications but that do not fall within the scope of rules governing medicinal products or medical devices are not subject to pre-market review and approval, nor do they require extensive preclinical and clinical testing. However, there are EU rules governing the donation, procurement, testing and storage of human cells and tissues intended for human application, whether or not they are advanced therapy medicinal products. These rules also cover the processing, preservation and distribution of human cell and tissues that are not advanced therapy medicinal products. Establishments that conduct such activities must be licensed and are subject to inspection by regulatory authorities. Such establishments must implement appropriate quality systems and maintain appropriate records to ensure that cells and tissues can be traced from the donor to the recipient and vice versa. There are also requirements to report serious adverse events and reactions linked to the quality and safety of cells and tissues. More detailed rules may exist at the national level.

IVF Treatment

While the procurement, processing and distribution of gametes and embryos for use in IVF and other assisted reproduction treatments falls within the scope of the EU rules governing human cells and tissues, there are no harmonized EU requirements for the performance of IVF and other medical treatments. Instead, the practice of medicine is regulated entirely at the national level in the individual member states. In some EU countries, there are specific regulatory authorities, such as the United Kingdom’s HFEA, which license IVF facilities and determine what procedures such establishments may perform. In other EU countries, the national health authority may review or delegate the review of a fertility treatment to an industry self-regulatory body, an institutional review board, or other body.

We believe that neither AUGMENT nor, when introduced and available, OvaPrime are subject to regulation as a medicinal product or a medical device in the EU, and instead is subject to the less rigorous regulations that apply to use of human cells and tissues that are intended for human applications and to any national rules that govern IVF treatment. When we proceed with the introduction of our treatments into certain countries within the EU on this basis, there is a risk that European or national regulatory authorities may reach a different conclusion.

United States Requirements

The FDA regulates human cell, tissue, or cellular or tissue-based products ("HCT/Ps") according to a tiered, risk-based approach. Under this approach, some HCT/Ps are regulated as biological products under the Public Health Service Act, or PHSA, or as drugs or devices under the Federal Food, Drug, and Cosmetic Act, or FDCA, and the agency’s implementing regulations. Section 351 of the PHSA prohibits the introduction of a biological product into interstate commerce without an FDA-approved application for marketing authorization under that section. For pioneer products, the typical application under section 351 of the PHSA is the biologics license application ("BLA").

Biological products, including certain HCT/Ps, that are regulated under section 351 of the PHSA are subject to significant pre and post-market regulation. Section 351 of the PHSA prohibits the introduction of a biological product into interstate commerce without an FDA-approved BLA. After approval, a BLA product is subject to significant requirements relating to, among other things, manufacturing, adverse event reporting, advertising and promotion, distribution, packaging, labeling, import/export, and record keeping.

Certain HCT/Ps, however, are regulated solely under section 361 of the PHSA, which authorizes the FDA to promulgate regulations to prevent the spread of communicable diseases. Such products are referred to as "section 361 HCT/Ps." The FDA will regulate an HCT/P as a section 361 HCT/P if it meets all of the following criteria:

HCT/Ps that meet all of these requirements are regulated exclusively under section 361 of the PHSA and the FDA's implementing regulations at 21 C.F.R. Part 1271. These regulations impose requirements for registration and listing, donor screening and testing, and good tissue practice, among other things. They do not, however, impose the IND requirements or the pre-market review and approval requirements described above for biologics regulated under section 351 of the PHSA.

Some HCT/Ps may be exempt from the requirements for section 351 biologics and section 361 HCT/Ps. For example, establishments that remove HCT/Ps from a donor and return them to the same donor during a single surgical procedure are exempt from the requirements for both section 351 biologics and section 361 HCT/Ps.

It is not certain how FDA would regulate any of our current or potential fertility treatments. As discussed above, in 2012 we commenced a clinical trial of AUGMENT in the United States, but subsequently received from the FDA an "untitled" letter questioning the status of AUGMENT as a section 361 HCT/P, and advising us to file an IND for the potential fertility treatment, following which we suspended our commercialization efforts in the United States. We believe that AUGMENT could meet the criteria for regulation as a section 361 HCT/P, but there is no guarantee that FDA would agree with our classification of AUGMENT or any of our potential fertility treatments. We met with the FDA in the second quarter of 2017 regarding AUGMENT, and will continue to work with the FDA under its available procedures to determine the most appropriate regulatory pathway for potential entry into the U.S. market.

Other Healthcare Laws and Compliance Regulations

Both in and outside of the United States, our activities may be subject to regulation by various federal, state and local authorities in addition to the FDA or EMA. In the United States, this likely includes the Centers for Medicare and Medicaid Services ("CMS"), other divisions of the U.S. Department of Health and Human Services, such as the Office of Inspector General, and the U.S. Department of Justice and individual U.S. Attorney offices within the Department of Justice, as well as state and local governments, and ex-US equivalents. Our operations in the relevant jurisdictions must comply with all of these applicable requirements or we may be unable to conduct our business or may face civil or criminal sanctions.

We are also subject to varying anti-corruption laws that exist both in the United States, where we are based, and the various countries in which we operate or otherwise offer our fertility treatments. For example, the Foreign Corrupt Practices Act ("FCPA"), prohibits any U.S. individual or business from paying, offering, or authorizing payment or offering of anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining business. The FCPA also obligates companies whose securities are listed in the United States to comply with certain accounting provisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations. The anti-bribery provisions of the FCPA are enforced primarily by the U.S. Department of Justice. The Securities and Exchange Commission (SEC) is involved with enforcement of the books and records provisions of the FCPA. Failure to comply with the FCPA or similar laws in other countries where we operate could subject us to significant penalties that could have a material impact on our business.

Coverage, Pricing and Reimbursement

We believe that very few third party payors, either in the EU, the United States or other countries, including national health services and government funded insurance programs as well as private payors, will agree to cover and reimburse for

OvaPrime, OvaTure, AUGMENT, or other potential fertility treatments we may attempt to commercialize. Thus, it is likely that IVF clinics and physicians will be able to use OvaPrime, OvaTure and AUGMENT and our other potential fertility treatments only if the patient can afford and is willing to pay for our treatment out of pocket. The cost of OvaPrime, OvaTure, AUGMENT and our other potential fertility treatments may be beyond the means of many patients.

Third party payors include government health administrative authorities, managed care providers, private health insurers and other organizations. The process for determining whether a payor will provide coverage for a treatment or procedure may be separate from the process for setting the price or reimbursement rate that the payor will pay for the treatment or procedure. Even if third party payors were to provide some minimal level of coverage and reimbursement for OvaPrime, OvaTure, AUGMENT or our other potential fertility treatments, such third party payors are increasingly challenging the price and examining the medical necessity and cost-effectiveness, in addition to the safety and efficacy, of medical products and procedures.

In the EU and elsewhere, governments influence the price of medical products and procedures through their pricing and reimbursement rules and control of national healthcare systems that fund a large part of consumers' medical costs. Some jurisdictions operate positive and negative list systems under which treatments or procedures may be marketed only after a reimbursement price has been agreed upon. To obtain reimbursement or pricing approval, some of these countries may require the completion of clinical trials that compare the cost-effectiveness of our particular treatments or procedures to currently available therapies. Other countries allow medical companies to fix their own prices, but monitor and control company profits. The downward pressure on healthcare costs has become very intense. As a result, increasingly high barriers are being erected to the entry of new treatments and procedures.

Employees

As of December 31, 2017 , we had 36 full-time employees. None of our employees are represented by a labor union or covered by a collective bargaining agreement. We consider our relationship with our employees to be good.

Our Corporate Information

We were incorporated under the laws of the State of Delaware in April 2011 under the name Ovastem, Inc. and changed our name to OvaScience, Inc. in May 2011. Our principal executive offices are located at 9 4th Avenue, Waltham, Massachusetts 02451, and our telephone number is (617) 500-2802. Our website address is www.ovascience.com. The information contained on, or that can be accessed through, our website is not a part of this Annual Report on Form 10-K. We have included our website address in this Annual Report solely as an inactive textual reference.

Available Information

You may obtain free copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments to those reports, as soon as reasonably practicable after they are electronically filed or furnished to the SEC, on the Investors section of our website at www.ovascience.com or by contacting our Corporate Communications department at (617) 500-2802. The contents of our website are not incorporated by reference into this report and you should not consider information provided on our website to be part of this report.

Item 1A.    Risk Factors

RISK FACTORS

Our business is subject to numerous risks. We caution you that the following important factors, among others, could cause our actual results to differ materially from those expressed in forward-looking statements made by us or on our behalf in filings with the SEC, press releases, communications with investors and oral statements. Any or all of our forward-looking statements in this Annual Report on Form 10-K and in any other public statements we make may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Many factors mentioned in the discussion below will be important in determining future results. Consequently, no forward-looking statement can be guaranteed. Actual future results may differ materially from those anticipated in forward-looking statements. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosure we make in our reports filed with the SEC.

Risks Related to Our Financial Position and Need for Additional Capital

Our early stage of development may make it difficult for you to assess our future viability.

We recently announced a change in our corporate strategy, including a shift to focus on the advancement of OvaPrime and OvaTure, which are in clinical and preclinical development, respectively. We cannot assure you that this shift will be successful. Any predictions you make about our future success or viability may not be as accurate as they could be if we were in a later stage of development.

We have not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encountered by early stage businesses in new and rapidly evolving fields. For example, to execute our business plan, we will need to be successful in a range of challenging activities, including clinical trials of OvaPrime, development of OvaTure, obtaining any required approvals, manufacturing, marketing and selling those potential fertility treatments that we successfully develop, and addressing the challenges of foreign operations.

In addition, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown challenges.

We have incurred significant losses since our inception. We expect to incur losses for the foreseeable future and may never achieve or maintain profitability.

Since our inception, we have incurred significant operating losses. Our net loss was $51.0 million for the year ended December 31, 2017 . As of December 31, 2017 , we had an accumulated deficit of $301.5 million . We have recorded limited revenues to date and have financed our operations primarily through equity financings. We have devoted significant efforts to research and development, acquiring our technology, researching and developing the OvaPrime, OvaTure and AUGMENT treatments and, previously to building out our international infrastructure.

We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. The net losses we incur may fluctuate significantly from quarter to quarter. We anticipate that our expenses will increase if and as we:

To become and remain profitable, we must develop and eventually commercialize our potential fertility treatments with significant market potential, including OvaPrime and OvaTure, and determine strategies to scale our treatments commercially. This will require us to be successful in a range of challenging activities, completing preclinical and clinical trials for our treatments, obtaining any necessary regulatory approvals and successfully commercializing, either alone or with partners. We may never succeed in these activities and, even if we do, may never generate revenues that are significant or large enough to achieve profitability. If we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would decrease the value of our company and could impair our ability to raise capital, maintain our research and development efforts, expand our business or continue our operations.

We will need substantial additional funding. If we are unable to raise capital when needed, we would be forced to delay, reduce or eliminate our fertility treatment development programs.

We expect our expenses to increase in connection with our ongoing activities, particularly as we continue the development of our fertility treatments. We are currently focused on developing the OvaPrime and OvaTure treatments. We expect to incur significant expenses with respect to the continued development and clinical trials for our fertility treatments. Our clinical trials will be costly. Furthermore, we expect to continue to incur costs associated with operating as a public company. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to raise capital when needed or on attractive terms, we will be forced to delay, reduce or eliminate some or all of our research and development programs.

We believe that our cash and cash equivalents and short-term investments of approximately $67.2 million at December 31, 2017 , will be sufficient to fund our current operating plan for at least the next 12 months. There can be no assurances, however, that the current operating plan will be achieved or that additional funding, if needed, will be available on terms acceptable to us, or at all.

Identifying, developing and commercializing potential fertility treatments is a time consuming, expensive and uncertain process that takes years to complete. We may fail to achieve sufficient revenues from our fertility treatments to achieve profitability on our expected timelines or at all. We will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all.

Until the time, if ever, that we can generate sufficient revenues from our potential fertility treatments, we plan to finance our cash needs through some combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. We do not have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our existing stockholders will be diluted, and the terms of these new securities may include liquidation or other preferences that adversely affect the rights of our existing stockholders. Debt 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 licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or potential fertility treatments or grant licenses on terms that may not be favorable to us.

We are currently subject to two securities class action lawsuits and three shareholder derivative lawsuits, the unfavorable outcomes of which may have a material adverse effect on our financial condition, results of operations and cash flows.

In October 2015, a purported class action lawsuit was filed in the Suffolk County Superior Court in the Commonwealth of Massachusetts, against us, certain of our executive officers, the members of our board of directors and certain of the underwriters from our January 2015 follow-on public offering of our common stock by investors alleging violations of the Securities Act of 1933, as amended. The plaintiffs’ motion for class certification has been denied, and the court has entered summary judgment dismissing the claims of all but one of the plaintiffs. The remaining plaintiff has also filed a substantially similar putative class action complaint in the U.S. District Court for the District of Massachusetts. On March 24, 2017, a second purported shareholder class action lawsuit was filed against us and certain of our present and former officers alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. 

On November 9, 2016, a purported shareholder derivative action was filed against certain present and former officers and directors of ours alleging breaches of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement and corporate waste for purported actions related to our January 2015 follow-on public offering. On June 30, 2017, a second purported shareholder derivative action was filed against certain of our present and former directors and us as a nominal defendant, alleging breach of fiduciary duties, waste of corporate assets, unjust enrichment, and violations of Section 14(a) of the Securities Exchange Act of 1934, alleging that compensation awarded to the director defendants was excessive. On July 27, 2017, a third purported shareholder derivative complaint was filed against certain of our present and former directors and us as a nominal defendant, alleging breach of fiduciary duty, unjust enrichment, and violations of Section 14(a) of the Securities Exchange Act of 1934 alleging that compensation awarded to the director defendants was excessive and seeking redress for purported actions related to our January 2015 follow-on public offering and public statements. On September 26, 2017, the plaintiffs filed an amended complaint which eliminated all claims regarding allegedly excessive director pay. While we believe we have substantial legal and factual defenses to these claims in these lawsuits and we will vigorously defend the lawsuits, the outcome of litigation is difficult to predict and quantify, and the defense against such claims or actions can be costly and divert management resources. In connection with these lawsuits, we could incur substantial costs, and such costs and any related settlements or judgments may not be covered by insurance.

Risks Related to Research, Development and Commercialization of Our Potential Fertility Treatments

We have changed our corporate strategy to focus on OvaPrime and OvaTure, each of which is at a substantially earlier stage of development than AUGMENT. As a result, it will take a longer period of time for us to complete the development of, and to commercialize, any products that will generate meaningful revenues.

In December 2016, we announced that we would slow the commercial expansion of AUGMENT, reassess our ongoing and planned clinical studies of AUGMENT, and undertake a corporate restructuring, and in June 2017, we announced that we would discontinue ongoing efforts related to the AUGMENT treatment outside of North America. In January 2018, we announced a further corporate restructuring designed to streamline our operations and reduce our cost structure. We expect these changes to enable us to extend our cash position into 2020, and will increase our focus on the development of OvaPrime and OvaTure. Both of those treatments are at a substantially earlier stage of development than AUGMENT. Accordingly, we expect that it will take a longer period of time for us to complete the development of, and to generate revenues from the sale of, our treatments than it would have had we continued to pursue the commercial expansion of AUGMENT in accordance with our previous corporate strategy. The process of developing OvaTure and OvaPrime is uncertain and may never yield treatments that allow us to achieve revenue from their sale, and if we do succeed in developing treatments for sale, we may never be able to develop a profitable commercial model.

The science underlying OvaPrime, OvaTure and AUGMENT is based on recent discoveries, and as a result the programs are subject to a higher level of risk than programs based on longer established science. Additionally, our OvaPrime treatment and OvaTure treatment are at early stages of clinical and preclinical development, respectively, and may never yield treatments that can be successfully commercialized.

OvaPrime, OvaTure and AUGMENT are based on recent scientific discoveries relating to egg precursor cells. As a result, the programs are subject to a higher level of risk than programs based on longer established science.

With respect to OvaTure, while we have observed key criteria of developmental competence in EggPC cell-derived eggs in both human and bovine models, we will not know if we have successfully developed fertilizable, mature eggs until we have successfully fertilized them, and we may never succeed in fertilizing human or bovine EggPC cell-derived eggs. We may find that there are important criteria for developmental competence that we are not observing, or that elements of the criteria for maturity that we have observed are inadequately developed for fertilization. To date, our efforts to fertilize bovine EggPC cell-derived eggs have failed. Further, we will require authorization from regulatory bodies outside of the United States to attempt to fertilize a human Egg PC cell-derived egg before we can test any eggs that we do mature. There are significant aspects of OvaTure that will require additional innovation for us to continue its development. The recent nature of the scientific discoveries underlying OvaTure, the need for additional innovation and the absence of information about egg precursor cell technology from human clinical trials all increase the risks associated with this potential fertility treatment. In any event, we believe that it will be costly and time consuming to develop and successfully commercialize OvaTure, and we may not succeed in doing so.

OvaPrime has only recently been used in humans in our ongoing OvaPrime clinical trial in Canada. The preclinical data we have generated for this treatment under development may not be replicated in humans.

We have limited patient experience with AUGMENT and our experience with AUGMENT to date may not be representative of what women will experience in the future. If results from clinics are unfavorable, the AUGMENT program could be delayed or abandoned. Further, international IVF clinics that we work with may determine not to provide or continue providing AUGMENT based on clinical efficacy, safety or commercial, logistic, regulatory or other reasons, or they may never expand their use of AUGMENT sufficiently for it to be a viable commercial offering.

We may not be able to successfully develop OvaTure, OvaPrime or other potential fertility treatments.

In 2016, we began a clinical trial of OvaPrime in Canada, and in January 2018, we announced initial clinical data from this trial. We plan to initiate a multi-center, prospective, controlled, Phase 1b/2a clinical trial of OvaPrime in 2018 to evaluate the safety and tolerability of administering a higher number of EggPC cells per OvaPrime treatment in women with POI or POR. The successful enrollment of patients in these clinical studies and their results, including whether and by how much OvaPrime restores egg production, will impact our ability to further introduce the treatment, obtain approval where necessary, and ultimately generate revenues from any sales of OvaPrime. If the results of the clinical trials are unfavorable, OvaPrime may not be viable or significant additional time and expense could be required before we are able to commercialize this potential fertility treatment. Our OvaTure program is in preclinical development, and we may not succeed in fertilizing an EggPC cell-derived egg, determining a clinical and regulatory pathway for OvaTure, or developing a viable commercial model for the treatment if we succeed in our development efforts. Further, the time it takes to achieve discovery stage goals can is unpredictable.

We face significant risks associated with clinical trials.

We are engaged in clinical studies of OvaPrime, and intend to pursue clinical trials for OvaTure if we succeed in fertilizing human EggPC cell-derived eggs. Clinical studies are expensive, difficult to design and implement and uncertain as to outcome. Regulatory authorities and IRB or ethics committees regulate clinical trials and can suspend or terminate them for many reasons, or require additional expensive and time consuming preclinical work. Success in animal and preclinical studies does not ensure that studies in humans will be successful, and interim or preliminary findings do not necessarily predict final results. Our potential fertility treatments rely on new and complex technology that impacts human reproductive systems. Therefore, regulatory authorities and ethics committees may be especially cautious in reviewing and approving our clinical protocols for such potential fertility treatments.

The timing of results from and completion of the studies will depend, in part, on our ability to enroll clinic sites and patients in the studies on the timeline expected. Enrollment in any studies could be delayed for a number of reasons, including the unwillingness of patients to undergo, or physicians to prescribe, an additional surgical procedure in connection with IVF.

Patient and clinical site enrollment may be affected by other factors, including:

Our inability to enroll a sufficient number of clinic sites or patients for clinical trials for OvaPrime or our other fertility treatments would result in significant delays or may require us to abandon one or more clinical trials altogether. Enrollment delays in our clinical trials may result in increased development costs for our potential fertility treatments, which would cause the value of our company to decline and limit our ability to obtain additional financing.

Even if we are able to commercialize any of our fertility treatments, they may fail to achieve the degree of market acceptance by physicians, patients and others in the medical community necessary for commercial success.

Even if we are able to commercialize any of our fertility treatments, they may nonetheless fail to gain sufficient market acceptance by physicians, patients and others in the medical community. For example, doctors may continue to rely on current treatments, including fertility drugs and standard IVF, which are well established in the medical community. In addition, the novel nature of, as well as the need for a laparascopic biopsy to be performed in connection with AUGMENT, OvaPrime and OvaTure may affect market acceptance by physicians and patients, if and when they receive regulatory approval as required. Our ability to gain market acceptance of our treatments will depend on the experience women have with these treatment options over time. If our potential fertility treatments do not achieve an adequate level of acceptance, we may not generate significant treatment revenues and we may not become profitable. The degree of market acceptance of our fertility treatments, after receipt of any necessary licenses or approvals, will depend on a number of factors, including:

In addition, our ability to successfully commercialize our potential fertility treatments will depend on the continued use and acceptance of IVF, ICSI and fertility treatments generally. To the extent that the medical community or patient population determines that these procedures are unsafe or are otherwise not generally accepted, the market for our potential fertility treatments and, therefore, our business would be negatively affected.

If we are unable to establish sales and marketing capabilities or enter into additional agreements with third parties to sell and market our potential fertility treatments, we may not be successful in commercializing them.

To achieve commercial success for any potential fertility treatment, we must either develop a sales and marketing team or outsource these functions to third parties.

There are risks involved both with establishing our own sales and marketing capabilities and entering into arrangements with third parties to perform these services. For example, recruiting and training a sales force is expensive and time consuming and could delay the introduction of any fertility treatment. If the commercial introduction or expansion of our treatments 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. For example, we incurred restructuring costs in connection with the corporate restructurings that we announced in December 2016, June 2017 and January 2018.

If we enter into arrangements with third parties to perform sales, marketing and distribution services, our treatment revenues or the profitability of these treatment revenues to us are likely to be lower than if we were to market and sell any potential fertility treatment ourselves. In addition, we may not be successful in entering into arrangements with third parties to sell and market our potential fertility treatments or may be unable to do so on terms that are favorable to us. We likely will have limited control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market our potential fertility treatments effectively and in compliance with applicable laws.

We may not be successful in obtaining necessary rights to additional technologies or potential fertility treatments, including from our scientific founders, for our development pipeline through acquisitions and in-licenses.

We may be unable to acquire or in-license additional technologies or potential fertility treatments from third parties, including our scientific founders, in order to grow our business. A number of more established companies may also pursue strategies to license or acquire potential fertility treatments that we may consider attractive. These established companies may have a competitive advantage over us due to their size, cash resources and greater clinical development and commercialization capabilities.

For example, we continue to work collaboratively with our scientific founders. These scientists continue to be active in the field of infertility and may develop new potential fertility treatments or intellectual property based on their continued research relating to infertility. The rights to new inventions by our scientific founders generally belong to the hospitals and academic institutions at which they are employed and are not subject to license or other rights in our favor. In the event that our scientific founders, or other third party scientists or entities, develop potential fertility treatments or intellectual property that

we wish to acquire or in-license, we may be unable to negotiate such acquisition or in-license. Our failure to reach an agreement for any applicable potential fertility treatment or intellectual property could result in a third party acquiring the related rights and thereby harm our business.

In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. We also may be unable to license or acquire relevant potential fertility treatments on terms that would allow us to make an appropriate return on our investment.

We expect that competition for acquiring and in-licensing potential fertility treatments that are attractive to us may increase in the future, which may mean fewer suitable opportunities for us as well as higher acquisition or licensing costs. If we are unable to successfully obtain rights to suitable potential fertility treatments on reasonable terms, or at all, our business, financial condition and prospects for growth could suffer.

We face substantial competition, including from more established infertility treatments, such as standard IVF, as well as advances in new artificial reproductive technologies, which may result in others discovering, developing or commercializing potential fertility treatments before or more successfully than we do.

There are a number of fertility treatments that are generally accepted in the medical and patient communities, including fertility drugs, IUI and IVF. Competition in the infertility market is largely based on pregnancy and live birth rates and side effects of treatment on patients. Accordingly, our success is highly dependent on our ability to develop potential fertility treatments that improve pregnancy and live birth rates and reduce risks and side effects, as compared to existing treatments. The ability of any potential fertility treatment that we successfully develop to reduce the overall costs associated with IVF also will be an important competitive factor.

Competitors may develop new infertility drugs, assisted reproductive technology, or ART, therapies, devices and techniques that could render obsolete our potential fertility treatments. There are a number of pharmaceutical companies, biotechnology companies, universities and research organizations actively engaged in research and development of potential fertility treatments. Like our treatments, some of these potential fertility treatments are designed to address the shortcomings of IVF. In particular, we are aware of a number of companies and laboratories that are currently developing potential fertility treatments intended to identify high quality embryos for use in IVF, a university study of the transfer of granulosa cell mitochondria into eggs, a university study using pronuclear transfer for improvement in IVF success rates and a university study of induced pluriopotent stem cells, or iPS, shows that iPS cells can be generated from somatic cells and programmed to become differentiated cells, which can include germ line cells such as oocytes. Novocellus Ltd. is developing an embryo viability test, using culture media, to aid in the selection of embryos used in IVF. FertiliTech and Auxogyn, Inc. are developing hardware and software that analyzes embryo development against cell division timing parameters to help identify the highest quality embryo within a group of embryos. If successfully developed, these potential fertility treatments could improve outcomes and alleviate some of the other shortcomings of standard IVF, thereby decreasing the need for our potential fertility treatments. Fertility Focus, along with its strategic partner Norgenix, are developing a fertiloscope for the early diagnosis of, and immediate corrective surgery for, the physical causes of infertility. Molecular diagnostic companies like Reprogenetics are developing novel preimplantation genetic diagnosis and screening methods to detect chromosomal and genetic disorders of embryos prior to transfer back to the women. Testing embryos in this manner may increase the likelihood of pregnancy, reduce the chances of pregnancy loss, and improve the odds of delivery. At this time, we cannot evaluate how our potential fertility treatments, if successfully developed and commercialized, would compare technologically, clinically or commercially to any other potential fertility treatments being developed or to be marketed by competitors. There can be no assurance that we will be able to compete effectively. OvaXon is engaged in gene editing, which is a rapidly evolving field. OvaXon could potentially have competitors in both in the United States and internationally, including major multinational pharmaceutical companies, biotechnology companies and universities and other research institutions. Some of the pharmaceutical and biotechnology companies we expect OvaXon to compete with include GlaxoSmithKline plc, Sangamo BioSciences Inc., HemaQuest Pharmaceuticals, Inc., Merck & Co., Inc., and Novartis AG.

Our competitors may develop and commercialize new technologies before we do, allowing them to offer potential fertility treatments, services or solutions that are superior to those that we may offer or which establish market positions before the time, if any, at which we are able to bring potential fertility treatments to the market. Many of our competitors, either alone or with their strategic partners, have substantially greater financial, technical and human resources than we do and significantly greater experience in the discovery and development of potential fertility treatments, obtaining FDA and other regulatory approvals of potential fertility treatments and the commercialization of those treatments. Accordingly, our competitors may be more successful than we may be in developing, commercializing and achieving widespread market acceptance. Our competitors' potential fertility treatments may be safer, more effective or more effectively marketed and sold than any treatment we may commercialize and may render our potential fertility treatments obsolete or non-competitive before we can recover the expenses of developing and commercializing any of our potential fertility treatments. We anticipate that we will face intense and increasing competition as new treatments enter the market and advanced technologies become available.

We could be subject to negative publicity, political action and additional regulation because of the nature of our potential fertility treatments. These factors could increase our development and commercialization costs.

Our potential fertility treatments are based on innovative science regarding eggs, embryos and fertilization, and potentially in the case of our OvaXon joint venture, gene editing. These can be controversial subjects and, as a result, we could be subject to adverse publicity, political reaction and regulation, as well as changes to the laws and regulations affecting our potential fertility treatments. This may result in our incurring costs beyond what we anticipate in order to develop and commercialize our potential fertility treatments or may make it impossible to develop our potential fertility treatments at all. Bad publicity could also delay or impede our ability to obtain any necessary licenses or authorizations for us or our clinic accounts to introduce or continue to provide our treatments in countries where the criticism occurs. In addition, some states are considering adopting legislation defining when personhood begins. To the extent adopted, this legislation could limit, restrict or prohibit the use of IVF, which would have a negative effect on our ability to develop and sell our potential fertility treatments and, as a result, on our business.

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

We face an inherent risk of product liability exposure related to the use of our fertility treatments in humans and will face an even greater risk as we continue the development and commercialization of our potential fertility treatments, including potential fertility treatments developed by OvaXon. Product liability claims involving our activities may be brought for significant amounts because our potential fertility treatments involve mothers and children. For example, it is possible that we will be subject to product liability claims that assert that our potential fertility treatments have caused birth defects in children or that such defects are inheritable. In light of the nature of our planned activities, these claims could be made many years into the future based on effects that were not observed or observable at the time of birth. If we cannot successfully defend ourselves against claims that our potential fertility treatments caused injuries, we will incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:

We obtained product liability insurance coverage when we initiated our AUGMENT treatment study in the United States and introduced AUGMENT in select IVF centers outside of the United States. We will need to maintain product liability insurance coverage as we continue to introduce the OvaPrime and OvaTure treatments, and/or conduct clinical trials for our current or potential fertility treatments. Such insurance is increasingly expensive and difficult to procure. In the future, such insurance may not be available to us at all or may only be available at a very high cost and, if available, may not be adequate to cover all liabilities that we may incur. In addition, we may need to increase our insurance coverage in connection with the commercialization of our current or potential fertility treatments. If we are not able to obtain and maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise, our business could be harmed, possibly materially.

Procedures such as IVF, as well as companies that manufacture and store cells and tissues, are the subject of standards and recommendations by national regulatory authorities and/or non-governmental bodies. Failure to comply with these standards could harm our commercial prospects or subject us to negative media attention or government sanctions.

Various countries where we are seeking or may seek to introduce our fertility treatments have standards set by regulatory authorities and/or non-governmental bodies that govern IVF procedures and the procurement, storage and processing of gametes and embryos for use in IVF procedures. In the UK, for example, the HFEA has adopted a Code of Practice, as well as supplementary guidance documents, with which licensed IVF clinics are obliged to comply. Similarly, the UK's Association of Clinical Embryologists has adopted a series of best practice guidelines for its members. Even where these standards are voluntary, if we, or third parties that we work with, including IVF clinics, fail to comply with these standards, our commercial

prospects could be harmed because patients may prefer to use the services and potential fertility treatments of companies that meet these standards. Similarly, physicians or IVF clinics may be less likely to endorse or use procedures or potential fertility treatments that fail to comply with such standards. In addition, failure to meet the standards could subject us to negative media attention.

Risks Related to Regulation of Our Potential Fertility Treatments and Other Regulatory Matters

Our potential plans to develop and introduce OvaPrime and make AUGMENT available in selected regions outside of the United States depend upon these treatments meeting the requirements of a class of products or a type of practice or treatment exempt from pre-market review and approval of applications for marketing authorizations in such regions. Determinations by regulators in the markets we target that these treatments do not meet the requirements for a class of products exempt from pre-market review and approval could significantly delay or prevent commercialization of those products. Failure to obtain marketing approval in international regions, to the extent required, would prevent our potential fertility treatments from being marketed in such regions. Additionally, our plans to continue to define the clinical pathway for OvaTure will depend upon the regulatory pathway applicable in regions of the world that we target.

Our potential plans to introduce OvaPrime and make AUGMENT available in select regions outside of the United States depend upon the treatments meeting the requirements of a class of products or a type of practice or treatment exempt from pre-market review and approval of applications for marketing authorizations in such regions. There can be no assurance that this will be the case in any particular jurisdiction, or that applicable Foreign Regulatory Authorities will agree with our determinations that our treatments meet these requirements. If the Foreign Regulatory Authorities in a given country disagree with our determination that our treatments are exempt from pre-market review and approval of applications for marketing authorizations required for drugs, biologics, medicinal products and medical devices, then we likely will be required to cease commercial marketing of that fertility treatment in that country, and may not be able to resume commercial marketing without first demonstrating safety and efficacy through clinical trials, submitting an application for marketing authorization, and receiving approval from the relevant regulatory authorities. In these circumstances, we are likely to be significantly delayed in our ability to commercialize our fertility treatments in such country, or we may elect to cease our commercialization activities in that country altogether. In 2012, we commenced a clinical study of AUGMENT in the United States relying on our conclusion that AUGMENT met the requirements for a section 361 HCT/P, and therefore did not require an IND. In September 2013, however, we received an "untitled" letter from the FDA questioning the status of AUGMENT as a section 361 HCT/P and advising us to file an IND for AUGMENT. As a result, we chose to suspend enrollment in our AUGMENT study in the United States. We spoke with the FDA in the first half of 2017 as part of our ongoing exploration of potential entry into the U.S. market, and continue to engage in discussions with the agency. However, we cannot provide any assurance as to the outcome of those discussions. In March 2018, Health Canada informed us that performing AUGMENT violates Canada's Assisted Human Reproduction Act, and requested that we cease offering AUGMENT in Canada. Accordingly, we are no longer making AUGMENT available in Canada while we consider next steps.

We will be unable to complete the development of OvaTure if we do not obtain authorization to fertilize an Egg PC cell-derived egg. Additionally, our plans to continue to define the clinical pathway for OvaTure will depend upon the regulatory pathway available in regions of the world that we target. From time to time, we engage in discussions regarding our fertility treatments with Foreign Regulatory Authorities in certain of the countries in which we have introduced or plan to introduce such fertility treatment or potential fertility treatment. We expect to have ongoing dialogue with these regulatory authorities. If any of our fertility treatments are subject to pre-market approval in a particular region, failure to obtain such required marketing approval in international regions would prevent us from marketing such fertility treatment in such regions, which could have a material adverse effect on our business, results of operations or financial condition.

Further, if Foreign Regulatory Authorities in a particular region determine that our fertility treatments do not meet the requirements of a class of products that is exempt from pre-market approval of applications for marketing authorization, then in order to market and sell our potential fertility treatments in that region, we or our third party collaborators may need to obtain separate marketing approvals and will need to comply with numerous and varying regulatory requirements, as described above. Additionally, study or license requirements vary among countries and may cause delays of or suspension of the approval process and can involve additional testing. The time required to obtain approval in foreign regions can be lengthy, and may differ substantially from region to region. The regulatory approval process outside the United States may be subject to risks like those associated with obtaining FDA approval. In addition, in many countries, a treatment must be approved for reimbursement before the treatment can be approved for sale in that country. Furthermore, some countries have restrictions particular to IVF and/or other fertility treatments, which may impose additional regulatory barriers for market entry for our potential fertility treatments. If required, we may not obtain approvals from regulatory authorities outside the United States on a timely basis, if at all. Approval by the FDA for marketing in the United States does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval by one regulatory authority outside the United States does not ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA.

By way of example, regulators could determine that OvaPrime, OvaTure or AUGMENT, and/or any other potential fertility treatments, do not meet the requirements for a class of products exempt from pre-market review and approval. In that case, they could be regulated as medicinal products (including advanced therapy medicinal products), as medical devices or as human tissues and cells intended for human applications. For example, products regulated as advanced therapy medicinal products may only be placed on the market in the EU once they have been granted a marketing authorization by the European Commission. Securing a marketing authorization from the European Commission requires the submission of extensive preclinical and clinical data and supporting information, including information about the manufacturing process, to the EMA to establish the potential fertility treatment's safety, efficacy and quality. Following review of the marketing authorization application the EMA will issue an opinion, which the European Commission will take into account when deciding whether or not to grant a marketing authorization. If we are required to follow this regulatory pathway for OvaPrime, OvaTure treatment or our potential fertility treatments, this may significantly delay or preclude commercialization of these treatments. Similar determinations in other markets outside of the United States could have the same impact.

Even if regulators in regions outside of the United States, such as the EU, deem our treatments to be exempt from pre-market review and approval of an application for marketing authorization as required of drugs, biologics, medicinal products and medical devices, other regulatory requirements may nevertheless be applicable. For example, medical treatments and processes, such as IVF, may be regulated at the national level, which is the case in the EU. Such national regulations may restrict the extent to which the eggs used in IVF treatments may be manipulated and so may prevent us from commercializing our treatments in that country. Alternatively, such regulations may require the IVF facilities to be licensed by the national regulatory authority to perform specific IVF procedures or require us or our clinic accounts to obtain special approval of or licenses from national regulatory bodies to introduce our treatments in that country. For example, there are specific fertility regulatory authorities, such as the United Kingdom’s HFEA, which license IVF facilities and determine what procedures such establishments may perform. In other countries, the national health authority may delegate the review of a fertility treatment to an industry self-regulatory body, an institutional review board, or other body. For example, the approval of our clinic account’s application to use AUGMENT in Japan was made by the JSOG. However, in some countries, there are no clear guidelines on what standards may apply to our treatments or what licenses or approvals may be required. While we have engaged and will continue to engage in discussions with regulatory authorities in certain of the countries in which we have introduced or plan to introduce our fertility treatments, if we or our clinic accounts are unable to obtain any required licenses or approvals in a particular country, if the application process takes longer than expected, or if additional licenses or approvals are required to commercialize the treatment on a large scale, then our introduction of our fertility treatments in such countries may be delayed, we may incur additional expenses, and we may determine not to provide the treatment in such countries.

It is unclear what regulatory pathway FDA will ultimately require for OvaPrime, OvaTure and AUGMENT or any other potential fertility treatments we may develop.

In 2012, we commenced a clinical study of AUGMENT in the United States. We did so without an IND on the basis of our conclusion that FDA would regulate AUGMENT as a section 361 HCT/P.

In September 2013, we received an "untitled" letter from the FDA advising us to file an IND application for AUGMENT. Following the receipt of the FDA letter, we chose to suspend the availability of AUGMENT in the United States. We met with the United States Food and Drug Administration, or FDA, in the second quarter of 2017 regarding AUGMENT, and will continue to work with the FDA under its available procedures to determine the most appropriate regulatory pathway for potential entry into the US market. We spoke with the FDA in the first half of 2017 as part of our ongoing exploration of potential entry into the U.S. market for our fertility treatments and continue to engage in discussions with the agency. We believe that AUGMENT meets the regulatory definition of a section 361 HCT/P or is a procedure that can be performed as part of the practice of medicine - and in either case, is exempt from pre-market approval. AUGMENT involves isolation of mitochondria from egg precursor cells, and injection of those mitochondria into the same woman's egg, which we believe constitutes minimal manipulation of both the mitochondria and the egg. We believe AUGMENT involves only homologous use, does not combine the oocyte with an article that raises new safety concerns, and involves tissues for reproductive use. We therefore believe that AUGMENT meets all four of the criteria for a section 361 HCT/P set forth in FDA's regulation. If FDA ultimately agrees with our conclusions, AUGMENT would not be required to be the subject of clinical trials pursuant to an IND, nor will it be required to seek FDA pre-market review and approval of an NDA or BLA. However, both AUGMENT, OvaPrime and our potential fertility treatments constitute new technologies, the proper regulatory characterization of which likely constitute matters of first impression for FDA. Particularly because AUGMENT, OvaPrime and our potential fertility treatments are intended to result in the creation of human life, there can be no assurance that FDA will agree with our views as to the proper regulatory characterization of AUGMENT, OvaPrime or any of our potential fertility treatments. FDA may conclude that AUGMENT, OvaPrime and/or potential fertility treatments constitute drugs, biologics, or medical devices. If FDA makes such a determination for AUGMENT, OvaPrime or any of our potential fertility treatments, we may be required to conduct clinical trials under an IND (or investigational device exemption for a medical device) and seek FDA pre-market review and approval of an NDA or BLA (or premarket approval for a medical device). In that event, we may abandon pursuing

that potential fertility treatment in the United States, or suffer significant delays and expense seeking to obtain any necessary approval.

Even if the FDA regulates AUGMENT as a section 361 HCT/P, adequate substantiation must still be generated for any claims made in the marketing of AUGMENT before it is commercialized in the United States. Failure to establish such adequate substantiation in the opinion of federal or state authorities or equivalent Foreign Regulatory Authorities could substantially impair the ability to generate revenue with respect to AUGMENT.

If AUGMENT does not ultimately need to be submitted to the FDA for preapproval due to the FDA regulating the treatment as a section 361 HCT/P, adequate substantiation must still be generated for claims made in any marketing materials for the treatment. Both the U.S. Federal Trade Commission (FTC) and the states retain jurisdiction over the marketing of products for which advertising and promotion are not regulated by the FDA, and require certain standards of evidence to support claims made in marketing materials. Many countries outside of the United States have similar regulatory authorities that regulate the marketing of products. The ultimate marketer of AUGMENT will need to generate such adequate substantiation for any claims made about AUGMENT. If, however, after marketing commences of AUGMENT in the United States, the FTC or one or more states or foreign authorities conclude that adequate substantiation does not exist for any claims, the marketer may be subject to significant penalties or may be forced to alter or cease marketing of AUGMENT in one or more jurisdictions. In addition, if the promotion of AUGMENT suggests that AUGMENT is intended for uses that are not consistent with a section 361 HCT/P, the FDA or equivalent Foreign Regulatory Authorities might consider the potential fertility treatment to be a new drug or biologic. The marketer of AUGMENT will therefore be limited in the promotional claims that it could make about AUGMENT.

Procedures such as IVF, as well as companies that manufacture and store cells and tissues, are the subject of standards and recommendations by national non-governmental bodies. Failure to comply with these standards could harm our commercial prospects or subject us to government sanctions.

Various countries where we may seek to introduce our fertility treatments have standards set by regulatory authorities and/or non-governmental bodies that govern IVF procedures and the procurement, storage and processing of gametes and embryos for use in IVF procedures. In the UK, for example, the HFEA has adopted a Code of Practice with which licensed IVF clinics are obliged to comply, as well as supplementary guidance documents. Similarly, the UK's Association of Clinical Embryologists has adopted a series of best practice guidelines for its members. Even where these standards are voluntary, if we, or third parties that we work with, including IVF clinics, fail to comply with these standards, our commercial prospects could be harmed because patients may prefer to use the services and potential fertility treatments of companies that meet these standards. Similarly, physicians or IVF clinics may be less likely to endorse or use procedures or potential fertility treatments that fail to comply with such standards.

Numerous states place restrictions on the operation of facilities and laboratories that recover, test, process, manufacture, store or dispose of certain cells and tissues. If we do not comply with such state regulations, as well as potential local regulations, we could be subject to significant sanctions.

Various states, including New York, California, Florida, Illinois, Maryland, Texas, Massachusetts and others, impose requirements on facilities and laboratories that recover, test, process, manufacture, store or dispose of certain cells and tissues. These requirements can have significant geographic reach. In Maryland, for example, the permit requirements applicable to tissue banks, including reproductive tissue banks, apply not only to tissue banks located in Maryland, but also those tissue banks located outside of the state that are represented or serviced in Maryland. In some cases, the requirements imposed by states, such as record keeping and testing requirements, may be more stringent than those imposed by the FDA. If we begin commercialization of our fertility treatments in the United States, we will have to comply with these state requirements. Failure to comply with these state requirements could subject us to significant sanctions.

We will not be able to sell any potential fertility treatment that is regulated as a medical device without obtaining and maintaining necessary regulatory clearances or approvals.

Some regions or countries may determine that certain of our potential fertility treatments, or certain aspects of such treatments, such as the innovative culture media solution that we are planning to develop, should be regulated as medical devices. In such cases, we will need to seek approval or clearance from the appropriate regulatory authorities in such countries.

In the EU, for example, we will need to complete a conformity assessment procedure, to demonstrate that our fertility treatments conform to the essential requirements set out in EU law, and only then may we apply the CE mark to the products, which would allow the products to be marketed throughout the EU. In other countries, such products may be subject to pre-market review and approval by regulatory authorities or some other form of regulatory clearance. We cannot guarantee that we will be able to complete the necessary conformity assessment procedures or obtain the necessary regulatory clearances of pre-market approvals of these medical devices. In addition, any modifications to medical devices that we successfully bring to

market, if any, may require new conformity assessment procedures, regulatory clearances or pre-market approvals. Marketing a medical device without the necessary CE mark, clearance or approval could result in a warning letter, fines, injunctions, product seizures or other civil or criminal penalties. Delays in our receipt of CE marking, regulatory clearance or pre-market approval will cause delays in our ability to sell our potential fertility treatments, which will have a negative effect on our ability to generate and grow revenues.

In addition to the challenges associated with obtaining any necessary marketing approvals in international jurisdictions, economic, political and other risks associated with foreign operations could adversely affect our international sales.

We are currently subject to risks associated with doing business internationally as a result of our clinical development of OvaPrime outside of the United States. If we succeed in commercializing any other products internationally, then our business will be subject to additional risks associated with doing business internationally. For example, our future results of operations could be harmed by a variety of factors, including:

We currently have a limited international infrastructure including, without limitation, sales, manufacturing and distribution capabilities. Establishing and expanding commercial activities and complying with laws in foreign jurisdictions may be costly and could disrupt our operations.

Even if our fertility treatments are not subject to pre-market review and approval, they may be subject to certain ongoing regulation in some regions. We could be subject to significant civil or criminal penalties if we fail to comply with these requirements, and we may be unable to commercialize our potential fertility treatments.

If regulatory authorities allow our fertility treatments to be offered to patients in any of the countries we seek to access, we will still be subject to numerous post-market requirements. Post-marketing requirements applicable to such products vary by region and by country. For example, in the United States, section 361 HCT/Ps are subject to several regulatory requirements, including those related to registration and listing, record keeping, labeling, cGTPs, donor eligibility and other activities. HCT/Ps that do not meet the definition of a section 361 HCT/P and, therefore, are approved via an NDA or BLA, are also subject to these and additional ongoing obligations. If we fail to comply with these requirements, or similar requirements in foreign jurisdictions, we could be subject to warning letters, product seizures, injunctions or civil and criminal penalties.

Moreover, even if the FDA or equivalent Foreign Regulatory Authorities allow our fertility treatments to be marketed without pre-market approval, the regulatory authorities could still seek to take enforcement action, which could include serving a written order that an HCT/P be recalled or destroyed, taking possession of the HCT/P, requiring cessation of manufacturing, or otherwise seeking to withdraw the potential fertility treatment from the market for a variety of reasons, including if the regulatory authority develops concerns regarding the safety of the potential fertility treatment or its manufacturing process.

Any fertility treatment for which we are required to obtain marketing approval, and for which we obtain such marketing approval, will be subject to continuing regulation after approval. We may be subject to significant penalties if we fail to comply with these requirements.

Any potential fertility treatment, including any potential fertility treatment developed by our OvaXon joint venture, for which we obtain approval or clearance of an application for marketing authorization, will be subject to continuing regulation by the FDA or equivalent Foreign Regulatory Authorities. Specific requirements will vary by country and/or region. In general, however, such requirements will include those relating to, among other things, submission of safety and other post-marketing information and reports, registration and listing, manufacturing, packaging, quality control, storage, distribution, quality assurance and corresponding maintenance of records and documents, labeling, advertising and promotional activities, distribution of samples to physicians and recordkeeping. Even if marketing approval or clearance of a potential fertility treatment is granted, the approval or clearance may be subject to limitations on the uses for which the potential fertility

treatment may be marketed, be subject to restrictions on distribution or use, or contain requirements for costly post-marketing testing to further evaluate the safety or efficacy of the potential fertility treatment. The FDA and equivalent Foreign Regulatory Authorities closely regulate the post-approval marketing and promotion of drugs, biologics and medical devices to ensure such products are marketed only for the approved indications or cleared uses and in accordance with the provisions of the approved labeling. The FDA and equivalent Foreign Regulatory Authorities impose stringent restrictions on manufacturers' communications regarding off-label use and if we market our potential fertility treatments for uses other than for their approved indications, we may be subject to enforcement action.

In addition, later discovery of previously unknown problems with our potential fertility treatments, manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may yield various results, including:

It is unlikely that third party payors will cover or reimburse for OvaPrime, OvaTure or other future potential fertility treatments and services, and many patients may be unable to afford them.

Many third party payors, both in the United States and foreign countries, including national health services or government funded insurance programs as well as private payors, place significant restrictions on coverage and reimbursement for IVF and other ART procedures. Those restrictions may include limits on the types of procedures covered, limits on the number of procedures covered and overall annual or lifetime dollar limits on reimbursement for IVF and other ART procedures. As a result, we believe very few third party payors, either in the United States or outside the United States, will reimburse for OvaPrime, OvaTure, or other future potential fertility treatments and services. Thus, it is likely that IVF clinics and physicians will be able to use OvaPrime, OvaTure, and other future potential fertility treatments and services only if the patient can afford and is willing to pay out-of-pocket. The cost of OvaPrime, OvaTure and other future potential fertility treatments and services may be beyond the means of many patients. This may limit the size of the market and prices charged for OvaPrime, OvaTure or other future potential fertility treatments and services and, thereby, limit our future revenues.

Even in those limited situations in which government or private payors may cover the the OvaPrime treatment, OvaTure, or other future potential fertility treatments and services, cost containment pressures may later cause these third party payors to adopt strategies designed to limit the amount of reimbursement paid to IVF clinics and physicians, including but not limited to the following:

Additionally, in those limited situations where ART procedures such as IVF are available to disabled patients of childbearing age enrolled in federal healthcare programs, such as Medicare, the covered services and potential fertility treatments may be subject to changes in coverage and reimbursement rules and procedures, including retroactive rate adjustments. These contingencies could even further decrease the range of potential fertility treatments and services covered by such programs or the reimbursement rates paid directly or indirectly for such potential fertility treatments and services. Such changes could further limit our ability to sell our potential fertility treatments, which may have a material adverse effect on our revenues.

In March 2010, Congress enacted healthcare reform legislation known as the Affordable Care Act. The Affordable Care Act has substantially changed the way that healthcare is financed by both governmental and private insurers and significantly affected the delivery and financing of healthcare in the United States. The Affordable Care Act contains provisions that, among other things, govern enrollment in federal healthcare programs, effect reimbursement changes, encourage use of comparative effectiveness research in healthcare decision making and enhance fraud and abuse requirements and enforcement. The Affordable Care Act imposes a significant annual fee on companies that manufacture or import branded prescription drug products, which could include our potential fertility treatments, if the FDA regulates those treatments as a biologic. The fee, which is not deductible for federal income tax purposes, is based on the manufacturer's market share of sales of branded drugs and biologics, excluding orphan drugs, to, or pursuant to coverage under, specified U.S. government programs. In addition, the law subjects most medical devices to a 2.3 percent excise tax, beginning in 2020. The Affordable Care Act may have a material adverse effect on our results of operations and financial condition. However, it is also possible that the Affordable Care Act will be repealed and/or replaced, given the current federal administration in the United States. We are unable at this time to determine the outcome or impact on us of this uncertainty.

The reimbursement process for products and procedures outside the United States generally is subject to risks, like those associated with reimbursement in the United States, including the risk that it is unlikely that third party payors will cover or reimburse OvaPrime, OvaTure or other future potential fertility treatments and services. Many national health services and third party payors in the EU already place coverage and reimbursement limits on ART procedures, including IVF, and may impose even greater limits in the future. In many EU member states, medicinal products and medical devices are subject to formal pricing and reimbursement approvals before they can be reimbursed by national health services or government-funded insurance schemes. Reimbursement may be conditional on the agreement by the seller not to sell the product above a fixed price in that country, or the national authority may unilaterally establish a reimbursement price in connection with the inclusion of the product on a list of reimbursable products.

The likelihood that many third party payors will refuse to cover and reimburse for OvaPrime, OvaTure and other future potential fertility treatments and services and that many patients will be unable to afford to pay for them out of pocket may reduce the demand for, or the price of, OvaPrime, OvaTure and other future potential fertility treatments and services, which would have a material adverse effect on our revenues. Additional legislation or regulation relating to the healthcare industry or third party coverage and reimbursement may be enacted in the future, and could adversely affect the revenues generated from the sale of our potential fertility treatments.

Several states and certain foreign countries have enacted legislation that may hamper the ability of IVF clinics and physicians to pass through the cost of our potential fertility treatments to patients or third party payors.

Several states, including California and New York, and certain foreign countries require direct billing of laboratory or pathology services, prohibit physicians from marking up the cost of laboratory or pathology services when they pass these costs on to patients or other payors or require that physicians disclose to patients what they actually paid to obtain laboratory or pathology services. Additionally, the federal government has enacted regulations limiting the Medicare reimbursement available to physicians who contract out the technical component of certain laboratory and pathology procedures.

To the extent that OvaTure, OvaPrime or other future potential fertility treatments or services are treated as laboratory or pathology services for purposes of reimbursement, these laws may make it difficult for us to market those potential fertility treatments and services to IVF clinics and physicians in some states and may also require us to restructure our business model before we can expand into certain markets. To the extent that our IVF clinic and physician customer base anticipates seeking Medicare reimbursement, these laws may require a comprehensive restructuring of our business model, and therefore adversely impact our ability to market our potential fertility treatments. Any additional legislation or regulation in this area could also adversely affect our ability to market our potential fertility treatments.

Even though we anticipate very limited third party coverage and reimbursement for OvaPrime, OvaTure treatment and our future potential fertility treatments and services, our future arrangements with third party payors and IVF clinics and physicians may be subject to foreign, federal and state fraud and abuse laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings.

Even though we anticipate very limited third party coverage and reimbursement, including from federal healthcare programs, for any of our potential fertility treatments and services, our future arrangements with third party payors and IVF clinics and physicians may expose us to broadly applicable fraud and abuse laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell and distribute OvaPrime, OvaTure and any other future potential fertility treatments and services for which we obtain marketing approval. Restrictions under federal and state fraud and abuse laws and regulations that may be applicable to our business include the following:

Efforts to ensure that our business arrangements with third parties will comply with applicable fraud and abuse laws and regulations will involve substantial costs. Governmental authorities may conclude that our business practices do not comply with current or future statutes, regulations or case law involving applicable fraud and abuse laws and regulations. If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, exclusion from government funded healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations. If any of the IVF clinics or physicians or other providers or entities with whom we expect to do business are found to be not in compliance with

applicable laws, they may be subject to similar criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.

Even the assertion of a violation under any of these provisions could have a material adverse effect on our financial condition and results of operations. Any such assertion would likely trigger an investigation of our business or executives that could cause us to incur substantial costs and result in significant liabilities or penalties, as well as damage to our reputation.

Laws and regulations governing international operations, including the FCPA, may preclude us from developing, manufacturing and selling certain potential fertility treatments outside of the United States and require us to develop and implement costly compliance programs.

We have active operations outside of the United States, and we must comply with numerous laws and regulations relating to our business operations in each jurisdiction in which we plan to operate. The creation and implementation of international business practices compliance programs is costly and such programs are difficult to enforce, particularly where reliance on third parties is required.

The Foreign Corrupt Practices Act, or FCPA, prohibits any U.S. individual or business from paying, offering, or authorizing payment or offering of anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining business. The FCPA also obligates companies whose securities are listed in the United States to comply with certain accounting provisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations. The anti-bribery provisions of the FCPA are enforced primarily by the U.S. Department of Justice. The SEC is involved with enforcement of the books and records provisions of the FCPA.

Compliance with the FCPA is expensive and difficult, particularly in countries in which corruption is a recognized problem. In addition, the FCPA presents particular challenges in the biotechnology industry, because, in many countries, hospitals are operated by the government, and doctors and other hospital employees are considered foreign officials. Certain payments to hospitals in connection with clinical studies and other work have been deemed to be improper payments to government officials and have led to FCPA enforcement actions.

The failure to comply with laws governing international business practices may result in substantial penalties. Violation of the FCPA can result in significant civil and criminal penalties. The SEC also may suspend or bar issuers from trading securities on United States exchanges for violations of the FCPA's accounting provisions.

The recently passed comprehensive federal tax reform bill could adversely affect our business and financial condition.

On December 22, 2017, President Trump signed into law the “Tax Cuts and Jobs Act,” or TCJA, which significantly reforms the Internal Revenue Code of 1986, as amended, or the Code. The TCJA, among other things, includes changes to U.S. federal tax rates, imposes significant additional limitations on the deductibility of interest and net operating loss carryforwards, allows for the expensing of capital expenditures, and puts into effect the migration from a worldwide system of taxation to a territorial system. Our net deferred tax assets and liabilities will be revalued at the newly enacted U.S. corporate rate, and the impact, if any, will be recognized in our tax expense in the year of enactment. We continue to examine the impact this tax reform legislation may have on our business. The overall impact of the TCJA is uncertain and our business and financial condition could be adversely affected.

We may have obligations under our contracts with IVF clinics and physicians or other healthcare providers to protect the privacy of patient health information.

In the course of performing our business, we will obtain, from time to time, confidential patient health information. For example, we may learn patient names and be exposed to confidential patient health information when we provide training on OvaPrime, OvaTure and other future potential fertility treatments and services to the staff at IVF clinics and physicians' offices. United States federal and state laws protect the confidentiality of certain patient health information, in particular individually identifiable information, and restrict the use and disclosure of that information. At the federal level, the Department of Health and Human Services promulgated health information and privacy and security rules under HIPAA. At this time, we are not a HIPAA covered entity. However, our current and future business associate or other confidentiality agreements with covered entities contain commitments to protect the privacy and security of patients' health information and, in some instances, may require us to indemnify the covered entity for any claim, liability, damage, cost or expense arising out of or in connection with a breach of the agreement by us. If we were to violate one of these agreements, we could lose customers and be exposed to liability or our reputation and business could be harmed. In addition, the Health Information Technology for Economic and Clinical Health (HITECH) Act, enacted in February 2009, expands the HIPAA privacy and security rules, including imposing many of the requirements of those rules directly on business associates and making business associates directly subject to

HIPAA civil and criminal enforcement provisions and associated penalties. We may be required to make costly system modifications to comply with the HIPAA privacy and security requirements. Our failure to comply may result in criminal and civil liability.

Other federal and state laws apply to the use and disclosure of health information, as well as certain financial information, which could affect the manner in which we conduct our business. Such laws are not necessarily preempted by HIPAA, in particular those laws that afford greater protection to the individual than does HIPAA or cover different subject matter. Such state laws typically have their own penalty provisions, which could be applied in the event of an unlawful action affecting health information.

In the member states of the EU and many other countries, we will be subject to similar or more stringent data privacy laws, such as those implementing the European Data Protection Directive 95/46/EC and as of May 2018 the EU General Data Protection Regulation(EU) No. 2016/679, that require us to protect all individually identifiable information and restrict the use, disclosure and onward transfer of that information. Such national laws typically have their own civil or criminal enforcement provisions and associated penalties. We may incur costs in complying with the applicable privacy and security requirements, which may include registration with the national data protection authorities.

If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business.

We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials, including chemicals and biological materials. Our operations also produce hazardous waste products. We generally contract with third parties for the disposal of these materials and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties.

Although we maintain workers' compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological, hazardous or radioactive materials.

In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair our research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.

Risks Related to the Manufacturing of Our Potential Fertility Treatments

We may rely on third parties for the manufacture of our potential fertility treatments for development and commercialization. This reliance on third parties may increase the risk of failing to provide manufacturing capacity to meet our potential fertility treatments at an acceptable cost. Lack of direct control of manufacturing capacity, costs and regulatory compliance could delay, prevent or impair our development and commercialization efforts.

We currently manufacture on-site or near to international IVF clinics where AUGMENT is offered and our clinical trials for our OvaPrime treatment are ongoing, in each case using our own equipment and employees. We entered into a master services agreement with a third party manufacturer to execute a technology transfer program to potentially provide services for the manufacture of the AUGMENT and OvaPrime treatments in the event that we decide to outsource our manufacturing operations for clinic or commercial activities. In addition, if we utilize centralized off-site manufacturing in the future, we may also enter into similar master service agreements with other third party manufacturers to perform the processing steps for our AUGMENT and OvaPrime treatments. While we believe that our third party manufacturer has the capabilities to undertake the manufacturing activities in accordance with all applicable rules and regulations, there can be no assurance that they will be able to do so successfully or be capable of maintaining consistent quality standards. We seek to maintain high standards by working with high quality clinics, providing our own manufacturing equipment and personnel, and conducting regular training and quality audits, however there can be no assurance that such clinics will maintain consistent quality standards for activities outside of our control.

Reliance on third party manufacturers and laboratories entails risks, including:

We may wish to utilize third party manufacturers or third party collaborators for the manufacture of our other potential fertility treatments for preclinical testing, clinical trials and for commercial supply. We may be unable to establish any agreements with third party manufacturers or to do so on acceptable terms.

While we have identified and may continue to identify contractors with suitable regulatory experience and expertise, they may not be able to comply with cGTP regulations or similar regulatory requirements expected from global regulatory bodies in countries where we plan to offer our fertility treatments. Any performance failure on the part of our existing or future manufacturers and service providers could delay clinical development or marketing approval or adversely affect or impede commercial sales. Our failure, or the failure of our third party manufacturers and service providers, to comply with applicable regulations could also result in sanctions being imposed on us, including fines, injunctions, civil penalties, suspension or withdrawal of approvals, license revocation, seizures or recalls of products, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our potential fertility treatments and harm our business and results of operations.

We may compete with other companies for access to manufacturing facilities. There are a limited number of manufacturers that operate under cGTP and cGMP regulations and that might be capable of manufacturing for us. It is possible that some of these manufacturers have agreements with our competitors that limit or restrict their ability to contract with us, further narrowing the number of manufacturers that are available to us.

We do not currently have arrangements in place for redundant supply or a second contract manufacturing supplier for OvaPrime. Although we believe that there are other potential alternative manufacturers who could manufacture our potential fertility treatments, we may incur added costs and delays in identifying and qualifying any such replacement.

Our potential future dependence upon others for the manufacture of our potential fertility treatments may adversely affect our future profit margins and our ability to commercialize OvaPrime or any future potential fertility treatments that we seek to market on a timely and competitive basis.

We are reliant on single sourcing of materials and equipment for our potential fertility treatments which could put us at risk for continuity of supply in the event that any of our suppliers are unable to supply us in part or in full.

We also are reliant on single sourcing for the majority of our raw materials, consumables and processing equipment, including but not limited to our proprietary antibody and Fluorescence-Activated Cell Sorting equipment. At this point in time we do not have the capacity or intent to source alternative or secondary suppliers of materials or processing equipment.

There is a risk that if we are required to find alternative suppliers, for whatever reason, this could delay supply of our fertility treatments for clinical or commercial purposes and could add an additional, unplanned financial burden on the company. Qualification of alternative suppliers could be a costly and timely process that would need to be driven through our Quality Management System to confirm and document that all the testing and validation activities are in place to ensure that like-for-like changes do not impact the performance and safety of our potential fertility treatments.

Risks Related to Our Dependence on Third Parties

We currently rely and will in the future rely on selected international IVF clinics to conduct clinical trials, enroll patients, commercialize, gain experience and generate data on OvaPrime and our other treatments. We will also rely on other third parties to conduct clinical trials for our fertility treatments. Such third parties may not perform satisfactorily, including failing to meet volume expectations, quality standards or deadlines for the completion of such studies or trials.

Our reliance on these third parties for providing our potential fertility treatments and for clinical development activities will reduce our control over these activities.

We will remain responsible for ensuring that OvaPrime and our other treatments are introduced with consistent and high quality standards. Moreover, the FDA and equivalent Foreign Regulatory Authorities will require us to comply with GCPs with respect to any clinical trials for any of our potential fertility treatments conducted in connection with a submission to the FDA or Foreign Regulatory Authorities, including an IND or equivalent application, and will require that we record and report clinical trial results to assure that data and reported results are credible and accurate and that the rights and safety of patients are protected. We will also be required to register ongoing FDA-regulated clinical trials and post the results of completed clinical trials on a government-sponsored database, ClinicalTrials.gov, within certain timeframes. Failure to do so can result in fines, adverse publicity and civil and criminal sanctions.

Our reliance on these third parties, including IVF clinics, for providing OvaPrime and our other treatments, and conducting clinical development activities, will reduce our control over these activities. If these third parties do not successfully carry out their contractual duties, meet expected deadlines, conduct our clinical trials in accordance with regulatory requirements or our stated protocols or maintain consistent quality standards, we will not be able to obtain, or may be delayed in obtaining, regulatory approvals for our potential fertility treatments and will not be able to, or may be delayed in our efforts to, successfully commercialize our potential fertility treatments. Furthermore, these third parties may also have relationships with other entities, some of which may be our competitors, or have their own IVF practices and could devote more of their resources to such other entities or their own business at the expense of expending sufficient resources on our clinical development activities

We depend on collaborations with third parties, particularly academic partners and contract research organizations, for the development of our potential fertility treatments. If those collaborations are not successful, we may not be able to succeed in developing and ultimately commercializing these potential fertility treatments.

In December 2013, we established a collaboration with Intrexon to accelerate development of OvaTure, and entered into the OvaXon joint venture with Intrexon to create new applications to prevent inherited diseases for human and animal health. In 2016 and 2017, the OvaTure Collaboration generated data supporting the characterization and developmental competence of human EggPC cell derived-eggs, and the OvaXon joint venture generated data supporting the characterization and developmental competence of bovine EggPC cell derived-eggs. Starting in August 2017, Intrexon continued bovine EggPC work for us under the OvaTure Collaboration rather than under the OvaXon joint venture. On February 1, 2018, we provided Intrexon with written notice of termination of the OvaTure Collaboration, effective 90 days following notice. We are in discussions with Intrexon regarding the future of the OvaXon joint venture, and there can be no assurance that we will reach agreement on how to proceed with the joint venture. Academic partners have also generated data supporting the characterization and developmental competence of human EggPC cell-derived eggs. We are also seeking authority to attempt to fertilize a human EggPC cell-derived egg with academic partners in Europe. Our ability to continue our preclinical work on human and bovine OvaTure depend significantly upon our relationships with our commercial and academic partners, and if we do not succeed in maintaining successful commercial and academic partnerships, our development efforts may be delayed or fail.

The success of our Phase 1 OvaPrime clinical trial in Canada, and our plans to establish sites, enroll patients and complete our planned Phase 1b/2a multi-site clinical trial, will depend significantly on our relationship with key IVF centers in Canada. The near term clinical development of AUGMENT depends almost entirely on our relationship with our clinic account in Japan, which has licensed AUGMENT for use in Japan.

In the future, if we seek to commercialize our treatments, our success will depend on our clinic accounts.. In addition, we may seek partners for further development and commercialization of our fertility treatments. These collaborations could take the form of license, distribution, sales representative, joint venture, sponsored research, co-promotion or other arrangements with pharmaceutical and biotechnology companies, other commercial entities and academic and other institutions.

In any such arrangements with third parties, we will likely have limited control over the amount and timing of resources that such collaborators dedicate to the development or commercialization of our potential fertility treatments. Collaboration agreements may not lead to development or commercialization of potential fertility treatments in the most efficient manner, or at all. Our ability to generate revenues from these arrangements will depend on, among other things, our collaborators' successful performance of the functions assigned to them in these arrangements.

Collaborations involving our potential fertility treatments would pose the following risks to us:

If we are not able to establish collaborations, we may have to alter our development and commercialization plans.

Our potential fertility treatment development programs and the potential commercialization of such treatments will require substantial additional cash to fund expenses. We may collaborate with pharmaceutical and biotechnology companies for the development and potential commercialization of some of our potential fertility treatments. For example, we currently intend to seek to collaborate with third parties to commercialize OvaPrime and other potential fertility treatments we successfully develop.

We face significant competition in seeking appropriate collaborators. Whether we reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator's resources and expertise, the terms and conditions of the proposed collaboration, and the proposed collaborator's evaluation of a number of factors. Those factors may include the design or results of our clinical trials, if any, the likelihood of approval by the FDA or similar regulatory authorities outside the United States or the availability of an exemption for the need or pre-marketing review or approval of our potential fertility treatment, the potential market for such potential fertility treatment, the costs and complexities of manufacturing and delivering the potential fertility treatment to patients, the potential and relative cost of competing fertility treatments, uncertainty with respect to our ownership of technology, which can exist if there is a challenge to such ownership without regard to the merits of the challenge, and industry and market conditions generally. The collaborator may also consider alternative potential fertility treatments or technologies for similar indications or conditions that may be available to collaborate on and whether such a collaboration could be more attractive than the one with us for our potential fertility treatment. We may also be restricted under existing license agreements from entering into agreements on certain terms with potential collaborators. In addition, there have been a significant number of business combinations among pharmaceutical and biotechnology companies that have resulted in a reduced number of potential future collaborators. Collaborations are complex and time consuming to negotiate, document and manage. We may not be able to negotiate collaborations on a timely basis, on acceptable terms, or at all.

If we are not able to obtain a collaborator for a particular program, we may have to curtail the development of such program or of one or more of our other development programs, delay the potential commercialization of such program, reduce the scope of any sales or marketing activities for the program or increase our expenditures and undertake development or commercialization activities for the program at our own expense. If we elect to increase our expenditures to fund development or commercialization activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms or at all. If we do not have sufficient funds, we may not be able to further develop our potential fertility treatments or bring these potential fertility treatments to market and generate revenue.

Risks Related to Our Intellectual Property

If we fail to comply with our obligations under our intellectual property licenses, we could lose license rights that are important to our business.

We have an exclusive license from MGH with respect to the intellectual property that forms the basis of our business. The license under MGH-owned patent rights and know-how is for human female fertility, the treatment or prevention of inherited (including mitochondrial) diseases or defects in all animals, including humans, assisted and/or artificial reproductive technology in all non-human animals, and the artificial creation of food, research animals and/or animal products; and the license under the MGH and Harvard co-owned patent right is for ex-vivo human female fertility treatments. Our existing MGH license agreement and another agreement granting rights impose, and we expect that future license agreements will impose, various obligations on us, including diligence, milestone payments, royalty payments, insurance and other obligations. For example, under our license agreement with MGH, we are required to use commercially reasonable efforts to develop and make available to the public licensed fertility treatments and to satisfy specified diligence milestones within specified timeframes. If we fail to comply with our obligations under this or other of our license agreements, our licensors may have the right to terminate our licenses, in which event we might not be able to market potential fertility treatments that are covered by these agreements, or to convert our licenses to non-exclusive licenses, which could materially adversely affect the value of the potential fertility treatments we developed under the license agreements. Termination of these license agreements or reduction or elimination of our licensed rights may result in our having to negotiate new or reinstated licenses with less favorable terms, or to cease commercialization of licensed technology and potential fertility treatments. This could materially adversely affect our business, particularly in the case of our license from MGH.

If we are unable to obtain and maintain patent protection for our technology and potential fertility treatments, or if our licensors are unable to obtain and maintain patent protection for the technology or potential fertility treatments that we license from them, our competitors could develop and commercialize technology and potential fertility treatments similar or identical to ours, and our ability to successfully commercialize our technology and potential fertility treatments may be adversely affected.

Our success depends in large part on our and our licensors' ability to obtain and maintain patent protection in the United States and other countries with respect to our proprietary technology and potential fertility treatments. We and our licensors have sought to protect our proprietary position by filing patent applications within the United States and abroad related to our novel technologies and potential fertility treatments that are important to our business. The process of obtaining patent protection is uncertain, and we and our licensors may not succeed in obtaining the patent protection for our novel technologies and potential fertility treatments that we seek. If we and our licensors are unable to obtain and maintain patent protection of sufficient scope for our technology and potential fertility treatments, our competitors could develop and commercialize technology and potential fertility treatments similar or identical to ours, and in that case our ability to successfully commercialize our technology and potential fertility treatments may be adversely affected. This risk is greater outside the United States where some aspects of our in-licensed intellectual property are not protected by patents. In addition, the laws of foreign countries may not protect our rights to the same extent as the laws of the United States.

Moreover, under our license agreement with MGH, we do not have the right to control the preparation, filing and prosecution of the licensed patent applications, to defend the validity and enforceability of the licensed patents against challenges by third parties, or to maintain the licensed patents covering our technology or potential fertility treatments. This could also be the case under any other license agreements we enter into in the future. Therefore, we rely on MGH, and may rely on other licensors in the future, to file, defend and maintain patents that are important to our business. The failure of MGH or other licensors to successfully prosecute, defend and maintain these patents and patent applications in a manner consistent with the best interests of our business could adversely affect our ability to successfully commercialize our technology and potential fertility treatments.

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. As a result, the issuance, scope, validity, enforceability and commercial value of our and our licensors' patent rights are highly uncertain. Our and our licensors' pending and future patent applications may not result in patents being issued which protect our technology or potential fertility treatments or that effectively prevent others from commercializing competitive technologies and potential fertility treatments. 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.

Publications of discoveries in the 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 be certain that we or our licensors were the first to make the inventions claimed in our owned or licensed patents or pending patent applications, or that we or our licensors were the first to file for patent protection of such inventions.

Under the America Invents Act enacted in September 2011, the United States moved to a first inventor to file system in March 2013. Outside the United States, the first to file a patent application is generally entitled to the patent. We may become involved in patent litigation or reexamination, post-grant review, opposition, derivation or interference proceedings challenging our patent rights or the patent rights of others. An adverse determination in any such litigation or proceeding could reduce the

scope of, or invalidate, our patent rights, allow third parties to commercialize our technology or potential fertility treatments and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize potential fertility treatments without infringing third party patent rights.

Moreover, in recent years, the Supreme Court and the U.S. Court of Appeals for the Federal Circuit have rendered decisions in several patent cases such as Association for Molecular Pathology v. Myriad Genetics, Inc. (Myriad I) , BRCA1- & BRCA2-Based Hereditary Cancer Test Patent Litig., (Myriad II) , Mayo Collaborative Services v. Prometheus Laboratories, Inc. , and Alice Corporation Pty. Ltd. v. CLS Bank International , either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. For example, in the Myriad I case, the U.S. Supreme Court held that certain claims to naturally occurring substances are not patentable. We cannot predict how future decisions by the courts, the U.S. Congress, or the U.S. Patent and Trademark Office, USPTO, may impact the value of our patents. In addition to increasing uncertainty with regard to our and our licensors’ or collaborators’ ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by 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 existing patents and patents that we may obtain in the future.

If the scope of the patent protection we or our licensors obtain is not sufficiently broad, we may not be able to prevent others from developing and commercializing technology and potential fertility treatments similar or identical to ours.

Our owned and licensed patents and any owned or licensed patent applications that issue as patents may not provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage. Our competitors may be able to circumvent our owned or licensed patents by developing similar or alternative technologies or potential fertility treatments in a non-infringing manner. The issuance of a patent is not conclusive as to its 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 patent claims being narrowed, invalidated or held unenforceable, which could limit our ability to use and commercialize, or to stop or prevent others from using or commercializing, similar or identical technology and potential fertility treatments, or limit the duration of the patent protection of our technology and potential fertility treatments. Given the amount of time required for the development, testing and regulatory review of new potential fertility treatments, patents protecting such candidates might expire before or shortly after such candidates are commercialized. For example, certain of the U.S. patents and patent applications that we exclusively license from MGH will expire in May 2025. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing potential fertility treatments similar or identical to ours.

We may be required to initiate lawsuits to protect or enforce our patents, which could be expensive, time consuming and unsuccessful.

Competitors may infringe our patents. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time consuming. In addition, in an infringement proceeding, a court may decide that a patent of ours is invalid or 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 proceeding could put one or more of our patents at risk of being invalidated or interpreted narrowly. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during litigation.

Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the success of our business.

Our commercial success depends upon our ability and the ability of our current and future collaborators to develop, manufacture, market and sell our potential fertility treatments and use our proprietary technologies without infringing the proprietary rights of third parties. We may become party to, or threatened with, future adversarial proceedings or litigation regarding intellectual property rights with respect to our potential fertility treatments and technology, including interference proceedings before the USPTO. Third parties may assert infringement claims against us based on existing patents or patents that may be granted in the future. If we are found to infringe a third party's intellectual property rights, we could be required to obtain a license from such third party to continue developing and marketing our potential fertility treatments and technology. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. We could be forced, including by court order, to cease commercializing the infringing technology or treatment. In addition, we could be found liable for monetary damages. A finding of infringement could prevent us from commercializing our potential fertility treatments or force us to cease some of our business operations, which could materially harm our business. Claims that

we have wrongfully appropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business.

We may be subject to claims that our employees have wrongfully appropriated, used or disclosed intellectual property of their former employers.

Many of our employees were previously employed at universities or other biotechnology or pharmaceutical companies. Although we try to ensure that our employees do not appropriate or use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or these employees have appropriated, used or disclosed intellectual property, including information forming the basis of patents and patent applications, trade secrets or other proprietary information, of any such employee's former employer. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel and our reputation may be harmed.

Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their normal responsibilities.

Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses, and could distract our technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, such developments could have a substantial adverse effect on the price of our common stock. Such litigation or proceedings could substantially increase our operating losses, reduce the resources available for development activities and adversely affect our ability to raise additional funds. We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace.

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

In addition to seeking patents for some of our technology and potential fertility treatments, we also rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our competitive position. The protection available for trade secrets is particularly important with respect to our process for manufacturing AUGMENT, to OvaTure, OvaPrime and to our potential fertility treatments, which will involve significant unpatented know-how. Any appropriation of our know-how, by competing contract manufacturers, collaborators or otherwise, could harm our business and we could suffer financial loss. We seek to protect these trade secrets, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to such trade secrets, such as our employees, corporate collaborators, outside scientific collaborators, sponsored researchers, contract manufacturers, consultants, advisors and other third parties. We also enter into confidentiality and invention or patent assignment agreements with our employees and consultants. Despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent such competitor from using that technology or information to compete with us. If any of our trade secrets were to be disclosed to or independently developed by a competitor, our competitive position would be harmed.

Risks Related to Employee Matters and Managing Growth

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

We are highly dependent on Dr. Kroeger, our chief executive officer, as well as the other principal members of our management and scientific teams. Although we have entered into an employment arrangement with Dr. Kroeger providing for certain benefits, including severance in the event of a termination without cause, this arrangement does not prevent him from terminating his employment with us at any time. We do not maintain "key person" insurance for any of our executives or other employees. The loss of the services of any of these persons could impede the achievement of our research, development and commercialization objectives.

Recruiting and retaining qualified medical, scientific, clinical and manufacturing personnel will also be critical to our success. We may not be able to attract and retain these personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel. We also experience competition for the hiring of scientific

and clinical personnel from universities and research institutions. In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development and commercialization strategy. Our consultants and advisors, including our scientific co-founders, may be employed by employers other than us and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us.

We may encounter difficulties in connection with our recent organizational changes.

In December 2016, June 2017 and January 2018 we implemented corporate restructurings that significantly reduced our workforce, in order to pursue our revised strategy of focusing on the advancement of OvaPrime and OvaTure more efficiently with a leaner , m ore versatile organization. We may face challenges associated with transitioning to a much smaller organization.

A breakdown or breach of our information technology systems could subject us to liability or interrupt the operation of our business.

Many of our key business processes are facilitated by information technology systems. Information technology systems are potentially vulnerable to breakdown, malicious intrusion and random attack. Likewise, individuals authorized to access our information technology systems may pose a risk by exposing private or confidential data to unauthorized persons or to the public. While we believe that we have taken appropriate security measures to minimize these risks to our data and information technology systems, there can be no assurance that our efforts will prevent breakdowns or breaches in our systems that could adversely affect our business.

Risks Associated with Our Capital Stock

The market price of our common stock has been and may continue to be volatile and may fluctuate in a way that is disproportionate to our operating performance.

Our stock price may continue to experience substantial volatility as a result of a number of factors, including:

Many of these factors are beyond our control. The stock markets in general, and the market for pharmaceutical and biotechnological companies in particular, have historically experienced extreme price and volume fluctuations. These fluctuations often have been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors could reduce the market price of our common stock, regardless of our actual operating performance.

We have never paid and do not intend to pay cash dividends.

We have never paid cash dividends on any of our capital stock and we currently intend to retain future earnings, if any, to fund the development and growth of our business. As a result, capital appreciation, if any, of our common stock will be our common stockholders' sole source of gain for the foreseeable future.

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

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

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

If we fail to maintain an effective system of internal control over financial reporting in the future, we may not be able to accurately report our financial condition, results of operations or cash flows, which may adversely affect investor confidence in us and, as a result, the value of our common stock.

The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal controls for financial reporting and disclosure controls and procedures. We are required, under Section 404, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting. This assessment must include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. A material weakness is a control deficiency, or combination of control deficiencies, in internal control over financial reporting that results in more than a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis. Section 404 also generally requires an attestation from our independent registered public accounting firm on

the effectiveness of our internal control over financial reporting. Now that we no longer qualify as an emerging growth company as defined in the JOBS Act, we are no longer exempted from certain requirements, such as the independent registered public accounting firm attestation.

Our compliance with Section 404 requires that we incur substantial accounting expense and expend significant management efforts. We currently do not have an internal audit group, and we may 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. We may not be able to complete our evaluation, testing and any required remediation in a timely fashion. During the evaluation and testing process, 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, results of operations or cash flows. 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 stock could decline, and we could be subject to sanctions or investigations by the Nasdaq, 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.

Item 1B.     Unresolved Staff Comments

None.

Item 2.     Properties

We currently occupy approximately 25,200 square feet of office and laboratory space in Waltham, Massachusetts. This facility is under a lease agreement that expires in November 2020 that can be extended for an additional five-year term. We believe our facility is sufficient to meet our current needs and that suitable additional space will be available if and when needed.

We also maintain lab space in Toronto, Canada under a lease agreement that is cancellable by either us or the landlord with 60 days' written notice.

Item 3.     Legal Proceedings

On October 9, 2015, a purported class action lawsuit was filed in the Suffolk County Superior Court in the Commonwealth of Massachusetts against us, several of our officers and directors and certain of the underwriters from our January 2015 follow-on public offering of our common stock. The plaintiffs purport to represent those persons who purchased shares of our common stock pursuant or traceable to our January 2015 follow-on public offering. The plaintiffs allege, among other things, that the Company defendants made false and misleading statements and failed to disclose material information in the Company’s January 2015 Registration Statement and incorporated offering materials. Plaintiffs allege violations of Sections 11, 12 and 15 of the Securities Act of 1933, as amended, and seek, among other relief, unspecified compensatory damages, rescission, pre-and post-judgment interest and fees, costs and disbursements. On December 7, 2015, the OvaScience defendants filed a notice of removal with the Federal District Court for the District of Massachusetts.  On December 30, 2015, plaintiffs filed a motion to remand the action to the Superior Court. Oral argument on the motion to remand was held on February 19, 2016. On February 23, 2016, the District Court granted plaintiffs' motion to remand the action to the Superior Court. On February 26, 2016, a second putative class action suit was filed in the Suffolk County Superior Court in the Commonwealth of Massachusetts against the Company, several of our officers and directors and certain of the underwriters from the January 2015 follow-on public offering. The complaint is substantially similar to the complaint filed in October 2015. The two actions subsequently were consolidated and plaintiffs filed a First Amended Class Action Complaint on June 17, 2016. Defendants filed motions to dismiss the complaint. Those motions were denied by order dated December 22, 2016. On August 17, 2016, an additional plaintiff, Westmoreland County Employee Retirement System (“Westmoreland”) moved to intervene in the consolidated action. The defendants opposed Westmoreland’s motion to intervene. The Superior Court granted Westmoreland’s Motion to Intervene on October 26, 2017. On August 7, 2017, the plaintiffs filed their motion for class certification, which the defendants opposed. Oral argument on the motion for class certification was held on September 29, 2017. On November 7, 2017, the Superior Court denied the plaintiffs’ motion for class certification. On August 14, 2017, the Defendants filed their motion for summary judgment against plaintiffs Heather Carlson, Cesar Castellanos, Philipp Hofmann, and Carlos Rivas, which the plaintiffs opposed. Oral argument on the motion for summary judgment was held on October 18, 2017. On November 21, 2017, the Superior Court allowed the Defendants’ motion for summary judgment, and the claims asserted by plaintiffs Heather Carlson, Cesar Castellanos, Philipp Hofmann, and Carlos Rivas in the consolidated actions were dismissed, leaving Westmoreland as the sole remaining plaintiff. On November 22, 2017, Westmoreland filed a putative class action complaint in the U.S. District Court for the District of Massachusetts against the same defendants alleging the same claims as are alleged in the state court case (the “Westmoreland Federal Action”). On January 17, 2018, the lead plaintiff in a different case, a purported shareholder class action alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Dahhan Action”) filed a motion to intervene in the Westmoreland Federal Action and to consolidate the Westmoreland Federal Action with the Dahhan Action. We have opposed this motion, which is pending. On January 22, 2018, Westmoreland filed a motion to voluntarily dismiss the Superior Court action without prejudice. We have opposed that motion and the Court has scheduled oral argument on April 3, 2018. We believe that the complaints in both cases are without merit and intend to defend against the litigation. There can be no assurance, however, that we will be successful. A resolution of these lawsuits adverse to the Company or the other defendants could have a material effect on our consolidated financial position and results of operations in the period in which the lawsuit is resolved. At present, we are unable to estimate potential losses, if any, related to the lawsuit.

On November 9, 2016, a purported shareholder derivative action was filed in the Business Litigation Session of the Suffolk County Superior Court in the Commonwealth of Massachusetts against certain of our present and former officers and directors alleging breaches of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement and corporate waste for purported actions related to the January 2015 follow-on public offering. On February 23, 2017, the court approved the parties’ joint stipulation to stay all proceedings in the action until further notice. Following a status conference in December 2017, the stay was lifted. On January 25, 2018, at the parties' request, the court entered a second order staying all proceedings in the action under further order of the court. We believe that the complaint is without merit and intend to defend against the litigation. There can be no assurance, however, that we will be successful. A resolution of this lawsuit adverse to the Company or the other defendants could have a material effect on our consolidated financial position and results of operations in the period in which the lawsuit is resolved. At present, we are unable to estimate potential losses, if any, related to the lawsuit.

On March 24, 2017, a purported shareholder class action lawsuit was filed in the U.S. District Court for the District of Massachusetts against the Company and certain of our present and former officers alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.  On July 5, 2017, the Court entered an order approving the appointment of Freedman Family Investments LLC as lead plaintiff, the firm of Robins Geller Rudman & Dowd LLP as lead counsel, and the Law Office of Alan L. Kovacs as local counsel.  Plaintiff filed an amended complaint on August 25, 2017.  We have filed a motion to dismiss the amended complaint, which is pending. On January 17, 2018, the lead plaintiff moved to consolidate the Westmoreland Federal Action with this case. We have opposed this motion, which is pending. We believe that the complaint is without merit and intend to defend against the litigation. There can be no assurance, however, that we will be successful. A resolution of this lawsuit adverse to the Company or the other defendants could have a material effect on our consolidated financial position and results of operations in the period in which the lawsuit is resolved. At present, we are unable to estimate potential losses, if any, related to the lawsuit.

On June 30, 2017, a purported shareholder derivative complaint was filed in the U.S. District Court for the District of Delaware against certain of our present and former directors and the Company as a nominal defendant, alleging breach of fiduciary duties, waste of corporate assets, unjust enrichment, and violations of Section 14(a) of the Securities Exchange Act of 1934, alleging that compensation awarded to the director defendants was excessive. We have filed a motion to dismiss the complaint, which is pending. We believe that the complaint is without merit and intend to defend against the litigation. There can be no assurance, however, that we will be successful. At present, we are unable to estimate potential losses, if any, related to the lawsuit.

On July 27, 2017, a purported shareholder derivative complaint was filed in the U.S. District Court for the District of Massachusetts against certain of our present and former directors and the Company as a nominal defendant, alleging breach of fiduciary duty, unjust enrichment and violations of Section 14(a) of the Securities Exchange Act of 1934 alleging that compensation awarded to the director defendants was excessive and seeking redress for purported actions related to the Company’s January 2015 follow-on public offering and public statements. On September 26, 2017, the plaintiffs filed an amended complaint which eliminated all claims regarding allegedly excessive director pay. On October 27, 2017, the defendants filed a motion to dismiss the amended complaint, which is pending. We believe that the complaint is without merit and intend to defend against the litigation. There can be no assurance, however, that we will be successful. At present, we are unable to estimate potential losses, if any, related to the lawsuit.

We are not party to any other litigation in any court and management is not aware of any contemplated proceeding by any governmental authority against the Company.

Item 4.     Mine Safety Disclosures

Not Applicable.