AveXis, Inc. (Form: 10-Q, Received: 08/10/2017 16:14:00)

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2017

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

For the transition period from to

Commission file number: 001-37693

AveXis, Inc.

(Exact name of registrant as specified in its charter)

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

2275 Half Day Rd, Suite 200

Bannockburn, Illinois 60015

(Address of principal executive offices, including zip code)

(847) 572-8280

(Registrant’s telephone number, including area code)

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

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

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

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

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

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

As of August 10, 2017, there were 31,925,446 shares of the registrant’s common stock outstanding.

Table of Contents

AveXis, Inc.

Quarterly Report on Form 10-Q

For the Quarter Ended June 30, 2017

INDEX

PART 1.	FINANCIAL INFORMATION	3

Item 1.	Financial Statements (Unaudited)	3

	Condensed Consolidated Balance Sheets	3

	Condensed Consolidated Statements of Operations and Comprehensive Loss	4

	Condensed Consolidated Statements of Cash Flows	5

	Notes to Condensed Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28

Item 4.	Controls and Procedures	28

PART II.	OTHER INFORMATION	30

Item 1.	Legal Proceedings	30

Item 1A.	Risk Factors	30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32

Item 3.	Default Upon Senior Securities	32

Item 4.	Mine Safety Disclosures	32

Item 5.	Other Information	32

Item 6.	Exhibits	32

SIGNATURES		33

EXHIBIT INDEX		34

Table of Contents

PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements

AveXis, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share and per share data)


	June 30,		December 31,
	2017		2016
Assets
Current assets:
Cash and cash equivalents	$	417,620	$	240,430
Prepaid expenses and other current assets		9,043		4,750
Total current assets		426,663		245,180
Property and equipment, net		40,295		24,201
Other long-term assets		2,349		1,194
Total assets	$	469,307	$	270,575
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	5,642	$	3,196
Accrued expenses and other current liabilities		18,892		16,794
Accrued indemnification obligation		2,778		4,453
Total current liabilities		27,312		24,443
Long-term liabilities		572		—
Total liabilities	$	27,884	$	24,443
Commitments and contingencies
Common stock; par value $0.0001 per share, 100,000,000 shares authorized, 31,921,455 shares issued and outstanding at June 30, 2017; 27,700,054 shares issued and outstanding at December 31, 2016		3		3
Additional paid-in capital		670,730		387,691
Accumulated deficit		(229,310)		(141,562)
Total stockholders’ equity		441,423		246,132
Total liabilities and stockholders’ equity	$	469,307	$	270,575

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

Table of Contents

AveXis, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(In thousands, except share and per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Revenue	$	—	$	—	$	—	$	—
Operating expenses:
General and administrative		13,154		5,418		22,803		10,242
Research and development		45,206		10,380		65,521		26,445
Total operating expenses		58,360		15,798		88,324		36,687
Loss from operations		(58,360)		(15,798)		(88,324)		(36,687)
Interest income		331		79		576		132

Net loss and comprehensive loss	$	(58,029)	$	(15,719)	$	(87,748)	$	(36,555)
Basic and diluted net loss per common share	$	(2.07)	$	(0.68)	$	(3.15)	$	(1.84)
Weighted-average basic and diluted common shares outstanding		27,971,733		23,013,838		27,850,199		19,876,850

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

Table of Contents

AveXis, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Six Months Ended June 30,
	2017		2016
Cash flows from operating activities
Net loss	$	(87,748)	$	(36,555)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		729		27
Stock-based compensation		13,257		17,387
Changes in operating assets and liabilities
Prepaid and other current assets		(4,306)		(2,119)
Other long-term assets		(1,155)		(731)
Accounts payable		3,457		795
Accrued expenses and other current liabilities		1,089		866
Accrued indemnification obligation		(1,675)		—
Net cash used in operating activities		(76,352)		(20,330)
Cash flows from investing activities
Capital expenditures		(16,758)		(7,503)
Net cash used in investing activities		(16,758)		(7,503)
Cash flows from financing activities
Proceeds from issuance of common stock, net of issuance costs		270,256		98,170
Payments of deferred offering costs		—		(1,198)
Proceeds from exercise of stock options		461		—
Service-based restricted stock unit vesting		(417)		—
Proceeds from exercise of stock warrants		—		42
Net cash provided by financing activities		270,300		97,014
Net increase in cash and cash equivalents		177,190		69,181
Cash and cash equivalents, Beginning of Period		240,430		62,252
Cash and cash equivalents, End of Period	$	417,620	$	131,433
Supplemental Cash Flow Information
Capital expenditures in accounts payable and accrued liabilities	$	4,936	$	578
Accrued unpaid issuance costs associated with June 2017 public offering	$	518	$	—

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

Table of Contents

AveXis, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Background

AveXis, Inc. was formed on March 8, 2010 in the state of Delaware as Biolife Cell Bank, LLC. In January 2012, the Company converted from a limited liability company to a corporation, Biolife Cell Bank, Inc. In January 2014, the Company amended and restated its Certificate of Incorporation to change its name to AveXis, Inc. ("AveXis" or "the Company").

The Company is a clinical-stage gene therapy company dedicated to developing and commercializing gene therapy treatments for patients suffering from rare and life-threatening neurological genetic diseases. The Company's initial product candidate, AVXS-101, is a gene therapy product candidate currently in a Phase 1 clinical trial for the treatment of spinal muscular atrophy (“SMA”), Type 1, the leading genetic cause of infant mortality.

Initial Public Offering

On February 10, 2016, the Company completed an initial public offering (“IPO”), which resulted in the issuance and sale of 4,750,000 shares of its common stock at a public offering price of $20.00 per share, resulting in net proceeds of approximately $88.4 million after deducting underwriting discounts. Upon the closing of the IPO, the 3,278,938 shares of Class B-1 preferred stock, 326,557 shares of Class B-2 preferred stock, 2,365,020 shares of Class C preferred stock and 3,105,000 of Class D preferred stock were automatically converted into shares of the Company’s common stock.

On March 3, 2016, the underwriters of the Company’s IPO exercised their over-allotment option to purchase an additional 527,941 shares of the Company’s common stock at the initial public offering price of $20.00 per share, less underwriting discounts and commissions, resulting in additional net proceeds of approximately $9.8 million.

September 2016 Underwritten Public Offering

On September 13, 2016, the Company completed an underwritten public offering of 4,887,500 shares of its common stock, 4,597,645 shares of which were issued and sold by the Company, including the exercise in full by the underwriters of their option to purchase 637,500 shares from the Company, and 289,855 shares of which were sold by PBM Capital Investments, LLC ("PBM"), an existing stockholder of the Company, each at a public offering price of $34.50 per share. After deducting the underwriting discounts and commissions, the net proceeds to the Company were approximately $149.1 million. The Company did not receive proceeds from the sale of the common stock by PBM.

June 2017 Underwritten Public Offering

On June 26, 2017, the Company completed an underwritten public offering of 4,111,250 shares of its common stock, including the exercise in full by the underwriters of their option to purchase 536,250 shares from the Company, at a public offering price of $70.00 per share. After deducting the underwriting discounts and commissions, the net proceeds to the Company were approximately $269.7 million.

2. Summary of Significant Accounting Policies

Basis of Presentation

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and, therefore, do not include all information and footnote disclosures normally included in the annual consolidated financial statements. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are

Table of Contents

necessary for a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year. The December 31, 2016 condensed consolidated balance sheet data contained within this Form 10-Q was derived from audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 (“Annual Report on Form 10-K”), but does not include all disclosures required by GAAP.

Significant Accounting Policies

There have been no material changes in the Company’s significant accounting policies as of and for the six months ended June 30, 2017, as compared with the significant accounting policies described in the Company’s Annual Report on Form 10-K.

Use of Estimates

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

Recently Issued Accounting Pronouncements

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

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230). ASU 2016-15 is intended to reduce the diversity in practice regarding how certain transactions are classified within the statement of cash flows. ASU 2016-15 is effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted with retrospective application. The Company is evaluating the adoption of ASU 2016-15, but has not determined the effects it may have on the Company’s consolidated financial statements.

Recently Adopted Accounting Pronouncements

In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718). The new standard simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. Under this guidance, a company recognizes all excess tax benefits and tax deficiencies as income tax expense or benefit in the statement of operations. This change eliminates the notion of the additional paid-in capital pool and reduces the complexity in accounting for excess tax benefits and tax deficiencies. The new standard is effective for public companies for annual reporting periods beginning after December 15, 2016, including interim periods within those annual reporting periods; however, early adoption is allowed. The Company adopted the new standard on January 1, 2017. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

Table of Contents

3. Property and Equipment, Net

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


	June 30,		December 31,
	2017		2016
Furniture	$	714	$	108
Equipment		24,602		230
Leasehold improvements		4,458		777
Construction in progress		11,311		23,162
Property and equipment, gross		41,085		24,277
Less: accumulated depreciation		(790)		(76)
Property and equipment, net	$	40,295	$	24,201

Depreciation expense was $484,000 and $16,000 for the three months ended June 30, 2017 and 2016, respectively, and $729,000 and $27,000 for the six months ended June 30, 2017 and 2016, respectively.

4. Accrued Expenses and Other Current Liabilities

Accrued expenses consist of the following (in thousands):


	June 30,		December 31,
	2017		2016
Accrued manufacturing development costs	$	8,529	$	7,167
Accrued payroll, bonus and deferred compensation		2,929		3,841
Accrued construction in progress		3,374		2,979
Accrued clinical trial costs		1,036		389
Accrued professional and consulting fees		1,702		1,588
Other		1,322		830
Accrued expenses and other current liabilities	$	18,892	$	16,794

5. Accrued Indemnification Obligation

In January 2014, the Company issued 2,334,391 shares of restricted common stock to a member of its Board of Directors (Dr. Brian Kaspar, see Note 6), a related party, pursuant to a consulting agreement for scientific advisory services to be performed by the director on behalf of the Company. In connection with the restricted stock purchase agreement, the Company agreed to indemnify Dr. Kaspar for any taxes, interest, fines, penalties or other costs and expenses that Dr. Kaspar may incur in the future should the Internal Revenue Service succeed in a tax determination that the stock price paid by Dr. Kaspar (which was par value) was lower than the fair market value of the stock on the date of grant. The indemnification term is in effect for six years after the due date of the tax return for the year in which the stock was issued. In January 2016, the Company entered into an employment agreement with Dr. Kaspar.

In connection with the preparation of the Company's audited consolidated financial statements for the year ended December 31, 2014, the Company determined that the per share fair value of the Company's common stock on January 28, 2014, the grant date, was $1.51.

As a result, the Company issued Dr. Kaspar an amended Form 1099 for the 2014 tax year reflecting an aggregate fair value of the restricted stock grant of $3.5 million. Due to the indemnity obligation contained in Dr. Kaspar’s restricted stock purchase agreement, the Company was required to reimburse Dr. Kaspar for the taxes he paid following the amendment of Dr. Kaspar’s 2014 personal income tax return. As a result, the Company has concluded that payment of such indemnity is probable as of December 31, 2016 and June 30, 2017.

Additionally, the Company intends to gross-up such indemnification payment for the tax that will be payable by Dr. Kaspar on the indemnity payment.

Table of Contents

On May 3, 2017, the Company paid Dr. Kaspar $1.7 million, which represents the tax liabilities owed to the U.S., State of Ohio and municipality of New Albany, Ohio pursuant to Dr. Kaspar’s 2014 amended tax returns. As a result, the Company has accrued balances of $2.8 million and $4.5 million at June 30, 2017 and December 31, 2016, respectively, representing the Company’s best estimate of the ultimate tax indemnification and gross-up payment to be made to Dr. Kaspar. The overall decrease in the accrued indemnification obligation was due to the May 3, 2017 payment to Dr. Kaspar, offset slightly by accrual of additional interest through June 30, 2017. The Company expects to pay this entire amount in 2017.

6. Stock-Based Compensation

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

The following table summarizes stock option activity under the 2014 Plan and the 2016 Plan (collectively, the “Plans”) for the six months ended June 30, 2017 (in thousands, except per share data):


		Weighted		Weighted Average
		Average		Remaining	Aggregate
	Number of	Exercise		Contractual	Intrinsic
	Shares	Price		Life (Years)	Value
Outstanding at December 31, 2016	2,577	$	22.01	8.79	$	66,466
Granted	838	$	73.18
Exercised	(97)	$	4.75
Cancelled or forfeited	(69)	$	14.57
Outstanding at June 30, 2017	3,249	$	35.88	8.65	$	150,365
Exercisable at June 30, 2017	985	$	19.08	7.91	$	62,111
Exercisable and expected to vest at June 30, 2017	3,249	$	35.88	8.65	$	150,362

(a)

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the estimated fair value of the common stock for the options that were in-the-money at June 30, 2017 and December 31, 2016.

For the six months ended June 30, 2017 and 2016, the total number of stock options exercised was 97,146 and 0, respectively, resulting in total proceeds of $461,000 and $0, respectively.

As of June 30, 2017 and December 31, 2016, there was $52.0 million and $20.6 million, respectively, of unrecognized stock-based compensation expense related to stock option awards that is expected to be recognized over a weighted-average period of 1.5 and 1.4 years, respectively.

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Research and development	$	3,546	$	1,291	$	5,523	$	12,751
General and administrative		4,452		2,554		7,217		4,636
	$	7,998	$	3,845	$	12,740	$	17,387

Stock Options Granted to Employees

The weighted-average grant date fair value of options granted during the three months ended June 30, 2017 and 2016 was $55.79 and $31.86, respectively, and for the six months ended June 30, 2017 and 2016 was $53.73 and $22.29,

Table of Contents

respectively, on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:


	Three Months Ended				Six Months Ended
	June 30,		June 30,		June 30,		June 30,
	2017		2016		2017		2016
Expected volatility	87.36	%	90.00	%	87.24	%	90.00	%
Risk-free interest rate	1.90	%	1.57	%	1.91	%	1.57	%
Expected term (in years)	6.08		6.08		6.08		6.08
Expected dividend yield	0.00	%	0.00	%	0.00	%	0.00	%

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

Service-Based Restricted Stock Units

As of June 30, 2017, and December 31, 2016, there were 37,934 and 57,500, respectively, outstanding service-based restricted stock units (“RSUs”) granted to employees. During the six months ended June 30, 2017 , 18,966 RSUs vested, which included 5,961 RSUs exchanged for tax-related purposes resulting in the remaining 13,005 RSUs converting to common stock. The Company recognized RSU-related stock-based compensation expense of $517,000 during the six months ended June 30, 2017, of which, $459,000 is research and development expense and $58,000 is general and administrative expense. No RSUs were issued and outstanding as of June 30, 2016. At June 30, 2017 and 2016, there was $710,000 and $0, respectively, of unrecognized compensation cost related to unvested RSUs that will be recognized as expense over a weighted-average period of 1.1 years. A summary of the status of the Company's RSUs at June 30, 2017 and of changes in RSUs outstanding under the 2016 Plan for the six months ended June 30, 2017 is as follows (in thousands, except per share data):


		Weighted
		Average
		Grant Date
	Number	Fair Value
	of Shares	Per Share
Outstanding at December 31, 2016	58	$	34.90
Granted	—		—
Vested	(19)	$	34.90
Forfeited and cancelled	(1)	$	34.90
Outstanding at June 30, 2017	38	$	34.90

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

Performance-Based Restricted Stock Units

On March 20, 2017, the Company granted to certain employees a total of 49,332 performance-based restricted stock units (“PSUs)”. These PSUs vest upon the achievement of certain regulatory and manufacturing milestones. If the

Table of Contents

milestones do not occur on or before the three-year anniversary of the grant date, all unvested PSUs will be cancelled. As of June 30, 2017, all 49,332 of these PSUs were outstanding, none had vested and the weighted average grant date fair value of all shares was $79.75 per share. The Company has not yet recognized any PSU-related stock-based compensation as regulatory and manufacturing milestones have not yet been met; however, in the event the performance conditions are met, $3.9 million of research and development compensation expense will be recognized by the Company. There were no PSUs issued and outstanding during the six months ended June 30, 2016.

Restricted Stock Granted to Non-Employees

In January 2014, the Company issued 2,334,391 shares of restricted common stock to Dr. Brian Kaspar pursuant to a consulting agreement for scientific advisory services. Of these shares, 583,597 common shares were vested at the time of grant and the remaining restricted shares were scheduled to vest in the amount of 25% per year on the second, third and fourth anniversary of the grant date pursuant to a restricted stock purchase agreement, which became effective upon the effectiveness of the consulting agreement.

In January 2016, the Company entered into an employment agreement with Dr. Kaspar. Upon the effectiveness of the employment agreement, Dr. Kaspar’s 1,750,794 unvested shares granted pursuant to the restricted stock purchase agreement vested in full. As a result of the vesting of the remainder of this award the Company recorded $10.4 million of additional stock compensation expense during the year ended December 31, 2016.

Warrants Granted to Non-Employees

During the six month period ended June 30, 2017, there were no warrants exercised and as a result no proceeds received by the Company. As of June 30, 2017, there were 305,775 common stock warrants vested and outstanding issued to non-employees with a weighted-average exercise price of $2.57.

7. Net Loss Per Common Share

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

The Company applies the two-class method to calculate its basic and diluted net loss per share attributable to common stockholders, as its preferred stock and common stock are participating securities. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to common stockholders. However, the two-class method does not impact the net loss per share of common stock as the Company was in a net loss position for each of the periods presented. For the three and six month periods ended June 30, 2017 and 2016, the following potentially dilutive securities have been excluded from the computations of diluted weighted-average shares outstanding because the effect would be anti-dilutive (in thousands):


	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2017	2016	2017	2016
Stock options	3,249	2,349	3,249	2,349
Stock warrants	306	310	306	310
Unvested service-based restricted stock units	38	—	38	—
Unvested performance-based restricted stock units	49	—	49	—
	3,642	2,659	3,642	2,659

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

Table of Contents

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Numerator:
Net loss and comprehensive loss	$	(58,029)	$	(15,719)	$	(87,748)	$	(36,555)
Denominator:
Weighted-average basic and diluted common shares		27,972		23,014		27,850		19,877
Basic and diluted net loss per common share	$	(2.07)	$	(0.68)	$	(3.15)	$	(1.84)

8. Commitments and Contingencies

Operating Leases

In March 2014, the Company entered into a lease agreement, which expired in April 2017, for approximately 2,418 square feet of office space in Dallas, Texas.

The Company leases a 15,668 square foot facility for its corporate headquarters in Bannockburn, Illinois, pursuant to a lease that expires in July 2024. The lease agreement provides for annual escalation in rent payments during the lease term. The Company is amortizing the escalation in rental payments on a straight-line basis over the term of the lease.

The Company also leases a 1,318 square foot facility in Columbus, Ohio for research and development activities, pursuant to a lease that expires in March 2019.

In March 2016, the Company entered into a lease agreement, which expires in August 2026, for approximately 48,529 square feet of warehouse and office space in Libertyville, Illinois. A portion of the warehouse space is used as manufacturing space. The lease agreement provides for annual escalation in rent payments during the lease term. The lease agreement provides the Company with a one-time right to terminate the lease effective as of the last day of the ninety-sixth full calendar month of the lease subject to a termination fee. The Company is amortizing the escalation in rental payments on a straight‑line basis over the term of the lease. In May 2017, the Company entered into two month-to-month lease agreements to add an additional 4,582 square feet of office space in Libertyville, Illinois.

Guarantees and Indemnifications

The Company has accrued $2.8 million and $4.5 million at June 30, 2017 and December 31, 2016, respectively, representing the Company's best estimate of the ultimate tax indemnification and gross-up payment to be made to Dr. Kaspar pursuant to a tax indemnification granted to Dr. Kaspar in connection with a restricted common stock grant (see Note 5).

Additionally, in the normal course of business, the Company has entered into agreements that contain a variety of representations and provide for general indemnification, including indemnification agreements with the Company’s officers and directors. The Company's exposure under these agreements is unknown because it involves claims that may be made against the Company in the future. To date, the Company has not paid any claims or been required to defend any action related to these indemnification obligations. As of June 30, 2017 and December 31, 2016, the Company did not have any material indemnification claims related to these agreements that were probable or reasonably possible and consequently has not recorded any related liabilities.

Litigation

On September 8, 2016, Sophia's Cure Foundation ("SCF"), a non-profit 501(c)(3) public charity, filed a complaint in U.S. District Court, Southern District of Ohio, naming as defendants Nationwide Children's Hospital ("NCH") and other

Table of Contents

entities affiliated with NCH, the Company and certain of the Company's present and former executives (the "Complaint"). According to the complaint, in 2012, SCF and Nationwide Children’s Hospital Foundation (“NCH Foundation”) entered into a donation agreement under which SCF provided NCH a gift of $550,000 to fund clinical work associated with the study of the product candidate that the Company now refers to as AVXS-101 for SMA Type 1 patients, and NCH Foundation agreed in such donation agreement to reference SCF as the "primary sponsor" of such clinical work in all publications issued by NCH Foundation. The complaint also alleges that NCH breached the donation agreement by not naming SCF as the sponsor of the investigational new drug application (the "IND") that it filed for AVXS-101. Additionally, the complaint alleges that the Company and the named Company executives tortiously interfered with SCF's rights under the donation agreement by assuming sponsorship of the IND under the NCH License. There is no contractual relationship between the Company and SCF. The complaint seeks, among other relief, monetary damages of $500.0 million and equitable relief, including taking steps to designate SCF as the sponsor of the IND. The Company filed a motion to dismiss this action on October 28, 2016. On December 5, 2016, SCF filed an amended complaint, asserting similar allegations against the Company as in the original complaint. The Company filed a motion to dismiss the amended complaint on December 19, 2016. On March 20, 2017, SCF filed an opposition brief to the Company’s motion to dismiss, and on April 10, 2017, the Company filed a reply memorandum in support of its motion to dismiss. The Court has not yet ruled on the Company’s motion to dismiss. A pre-trial conference was held on May 9, 2017. The Company believes that the complaint is without merit and intends to vigorously defend itself and its current executives from the allegations. The Company views the probability of loss in this matter to be remote.

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

9. Taxes

Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets, including its net operating losses. Based on its history of operating losses, the Company believes that it is more likely than not that the benefit of its deferred tax assets will not be realized. Accordingly, the Company has provided a full valuation allowance for deferred tax assets as of June 30, 2017 and December 31, 2016.

10. Collaboration and License Agreements

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

REGENXBIO Inc.

Effective June 7, 2017, the Company entered into a License Agreement (the “REGENX Rett and ALS License”) with REGENXBIO Inc. (“REGENX”). Under the terms of the REGENX Rett and ALS License, REGENX granted the Company an exclusive worldwide license to utilize REGENX's proprietary adeno-associated virus ("AAV") gene delivery platform for the treatment of Rett syndrome and genetic ALS, caused by mutations in the gene that produces the copper zinc superoxide dismutase 1 (“SOD1”) enzyme, by in vivo gene therapy, using REGENX’s AAV9 gene delivery vector. Under the REGENX Rett and ALS License, REGENX granted the Company an exclusive, worldwide license under the licensed patent rights to make, have made, use, import, sell and offer for sale any products covered by the REGENX Rett and ALS License (the “REGENX Rett and ALS licensed products”) in the field of the treatment of (i) Rett syndrome in humans by in vivo gene therapy using AAV9 delivering the gene encoding for methyl CpG binding protein 2, and (ii) ALS caused by SOD1 mutation in humans by in vivo gene therapy using AAV9 delivering the gene encoding for SOD1, subject to certain rights reserved by REGENX and its licensors.

Table of Contents

As consideration for the REGENX Rett and ALS License, in June 2017 the Company paid an initial fee of $6.0 million. This $6.0 million initial fee paid to REGENX was recognized as research and development expense during the three months ended June 30, 2017. Additionally, the Company agreed to pay potential future milestones of up to $36.0 million in the aggregate for the REGENX Rett and ALS licensed products, and a low double digit royalty on net sales, if any, of the REGENX Rett and ALS licensed products, subject to reduction in specified circumstances; and lower mid-double digit percentages of any sublicense fees the Company receives from sublicenses of the licensed intellectual property rights. The Company also agreed to pay an annual maintenance fee on each anniversary of the effective date of the REGENX Rett and ALS License.

The REGENX Rett and ALS License will expire upon the later of (i) the expiration, lapse, abandonment or invalidation of the last valid claim of the licensed intellectual property to expire, lapse or become abandoned or unenforceable in all the countries of the world or (ii) seven years from the first commercial sale of each REGENX Rett and ALS licensed product. Upon expiration of the REGENX Rett and ALS License, the license granted to the Company becomes irrevocable, perpetual, royalty-free and fully paid-up. The Company has the right to terminate the REGENX Rett and ALS License upon a specified period of prior written notice. REGENX may terminate the REGENX Rett and ALS License if the Company or its affiliates become insolvent, if the Company is greater than a specified number of days late in paying money due under the REGENX Rett and ALS License, or, effective immediately, if the Company or its affiliates, or sublicensees commence any action against REGENX or its licensors to declare or render any claim of the licensed patent rights invalid or unenforceable. Either party may terminate the REGENX Rett and ALS License for material breach if such breach is not cured within a specified number of days.

Nationwide Children’s Hospital

In September 2016, the Company entered into two exclusive license agreements with NCH, pursuant to which NCH granted the Company exclusive, worldwide licenses under certain patent rights to make, have made, use, sell, offer for sale and import any products covered by each license (“NCH licensed products”) and a non-exclusive, worldwide license under certain technical information to develop and manufacture the NCH Rett and ALS licensed products, in the field of therapies and treatments of Rett syndrome and ALS in human use, respectively (each an “NCH License” and collectively the “NCH Rett and ALS Licenses”).

The Company paid an initial fee of $0.2 million to NCH in connection with the NCH License for Rett syndrome and $0.1 million in connection with the NCH License for ALS in human use. Each initial fee was recognized as research and development expense during the three months ended September 30, 2016. Additionally, the Company agreed to pay potential future development milestone-based payments and an annual maintenance fee under each NCH License. Following the first commercial sale of an NCH licensed product for Rett syndrome or ALS, as applicable, under an applicable NCH License, the Company must begin paying NCH an aggregate low-single digit royalty on net sales of NCH licensed products by the Company, its affiliates and sublicensees during the term of such license.

Table of Contents

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

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”). Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2016 (the “Annual Report”), our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Forward-Looking Statements

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

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

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

the proposed clinical development pathway for AVXS-101, including the expected trial design for our proposed pivotal clinical trials, and the acceptability of the results of such trials for regulatory approval of AVXS-101 by the FDA or comparable foreign regulatory authorities;

the proposed timing of filing investigational new drug applications with the FDA in connection with gene therapies we are developing for ALS and Rett syndrome in connection with the recent license agreements executed with REGENXBIO Inc.;

our expectations regarding timing for meetings with regulatory agencies;

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

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

our ability to successfully commercialize AVXS-101;

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

Table of Contents

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

our ability to identify, recruit and retain key personnel;

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

our financial performance;

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

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

the impact of laws and regulations.

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

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

We are a clinical-stage gene therapy company dedicated to developing and commercializing novel treatments for patients suffering from rare and life-threatening neurological genetic diseases. Our initial product candidate, AVXS-101, is our proprietary gene therapy product candidate. We recently completed our Phase 1 clinical trial for AVXS-101 for the treatment of spinal muscular atrophy Type 1, or SMA Type 1, the leading genetic cause of infant mortality. SMA Type 1 is a lethal genetic disorder characterized by motor neuron loss and associated muscle deterioration, resulting in mortality or the need for permanent ventilation support before the age of two for greater than 90% of patients. The survival motor neuron protein, or SMN, is a critical protein for normal motor neuron signaling and function. Patients with SMA Type 1 either have experienced a deletion of their SMN1 genes, which prevents them from producing adequate levels of functional SMN protein, or carry a mutation in their SMN1 gene. AVXS-101 is designed to deliver a fully functional human SMN gene into the nuclei of motor neurons that then generates an increase in SMN protein levels and we believe this will result in improved motor neuron function and patient outcomes.

In our fully enrolled Phase 1 clinical trial, we treated 15 SMA Type 1 patients, divided into two dosing cohorts, and observed a favorable safety profile and that AVXS-101 is generally well-tolerated. As of January 20, 2017, the trial evaluation date for which we reported top-line results, all patients in the study have survived, in contrast to the independent, peer-reviewed natural history study for patients with SMA Type 1. Additionally, we have observed improved motor function, including in some patients, the attainment of motor milestones such as the ability to sit unassisted, crawl, stand and walk — motor milestone achievements that are essentially never seen among untreated patients suffering from SMA Type 1. The open-label, dose-escalating study was designed to evaluate the safety and

Table of Contents

tolerability of AVXS-101 in patients with SMA Type 1. The key measures of efficacy were the time from birth to an "event," which was defined as either death or at least 16 hours per day of required ventilation support for breathing for 14 consecutive days in the absence of acute reversible illness or perioperatively, and video confirmed achievement of ability to sit unassisted. Additionally, several exploratory objective measures were assessed, including a standard motor milestone development survey and Children's Hospital of Philadelphia Infant Test of Neuromuscular Disorders, or CHOP INTEND.

Event-free Survival and Safety : Data as of January 20, 2017, showed no new events, and 15 of 15 patients (100%) were event-free at 13.6 months of age. The expected event-free survival rate at 13.6 months based on the natural history of the disease is 25%. Based on these results, AVXS-101 appeared to have a favorable safety profile and to be generally well tolerated, with no new treatment related safety or tolerability concerns identified. The median age at last follow-up was 20.2 months and 30.8 months for patients who received a dose of AVXS-101 administered at 2.0 × 10 14 vector genomes per kilogram, or vg/kg, or the proposed therapeutic dose-cohort, and patients who received a dose of AVXS-101 administered at 6.7 × 10 13 vg/kg, or the low-dose cohort, respectively. Use of the term "proposed therapeutic dose" does not imply that we have established efficacy, but this one-time dose is the dosing level that we presently intend to evaluate in future trials.

Motor Milestone Achievement : As of January 20, 2017, 11 of 12 patients (92%) in the proposed therapeutic dose-cohort achieved head control, nine of 12 patients (75%) could roll a minimum of 180 degrees from back to both left and right, and 11 of 12 patients (92%) could sit with assistance.

Nine of 12 patients (75%) in the proposed therapeutic dose-cohort could sit unassisted for at least five seconds, seven of 12 patients (58%) could sit unassisted for at least 10 seconds and five of 12 patients (42%) could sit unassisted for 30 seconds or more.

As of April 25, 2017, three patients in the proposed therapeutic dose-cohort had achieved additional sitting unassisted milestones since the January 20, 2017 evaluation date. Ten of 12 patients (83%) in the proposed therapeutic dose-cohort could sit unassisted for at least five seconds, nine of 12 patients (75%) could sit unassisted for at least 10 seconds and eight of 12 patients (67%) could sit unassisted for 30 seconds or more in the post-January 20 analysis.

As of January 20, 2017, two patients in the proposed therapeutic dose-cohort could crawl, pull to a stand, and stand and walk independently.

Nutritional and Respiratory Support : As of January 20, 2017, six of seven patients (86%) in the proposed therapeutic dose-cohort that did not require feeding support before treatment continued without feeding support after treatment; seven of 10 patients (70%) that did not require bi-level positive airway pressure, or BiPAP, support before treatment continued without any BiPAP after treatment.

Further, as of January 20, 2017, 11 of 12 patients (92%) in the proposed therapeutic dose-cohort were fed orally, and six of 12 patients (50%) were exclusively fed orally, and eight of 12 patients (67%) were able to speak.

The U.S. Food and Drug Administration, or FDA, and the European Medicines Agency, or EMA, have each granted AVXS-101 orphan drug designation for the treatment of SMA, and the FDA has granted AVXS-101 fast track designation for the treatment of SMA Type 1. The FDA granted breakthrough therapy designation for AVXS-101 for the treatment of SMA Type 1 in pediatric patients, and the EMA granted access into its PRIority MEdicines, or PRIME, program for AVXS-101 for the treatment of SMA Type 1. In addition to developing AVXS-101 to treat SMA Type 1, we plan to develop AVXS-101 to treat additional SMA types and develop other novel treatments for rare neurological genetic diseases.

Table of Contents

Recent Developments

Clinical and Manufacturing Development Timeline

On June 14, 2017, we announced alignment with the FDA on our Good Manufacturing Practice, or GMP, commercial manufacturing process for AVXS-101 following the receipt of minutes from the Type B Chemistry Manufacturing and Controls, or CMC, meeting with the FDA. This alignment includes support for our proposed GMP commercial manufacturing process, our proposed analytical methods and corresponding qualification and validation plans — inclusive of key release assays such as potency, purity and identity — and our proposed comparability protocol, which helps assess how similar the product derived from the GMP process is to the original product used in the Phase 1 trial of AVXS-101 in patients with SMA Type 1.

Key components of our scalable, GMP commercial manufacturing process are as follows:

we will continue to utilize HEK293 cells and an adherent cell line;

our commercial-scale GMP process will utilize a novel adherent cell culture approach that can more reliably produce product and has greater surface area to potentially increase productivity relative to Hyperstacks;

we have implemented additional upstream and downstream process development improvements to meet global regulatory GMP expectations as well as to meet projected patient demand, if approved; and

we intend to utilize our GMP process for all clinical and commercial needs moving forward, including our new programs in Rett syndrome and genetic ALS described below.

In response to a request from the FDA, we intend to complete the implementation of our potency assay qualification plan, including three independent runs, prior to initiation of upcoming clinical trials. This assay utilizes the Delta 7 mouse model, which has been used historically to assess AVXS-101 potency, but now incorporates additional elements to make it acceptable to global regulatory authorities. We have initiated the work necessary to meet that request and we expect to have the data from these production runs to submit to the FDA in August 2017. Pending agreement from the FDA that the data from these production runs are sufficient, we intend to initiate our pivotal trial of AVXS-101 in SMA Type 1 in the United States and a Phase 1/2a clinical trial of AVXS-101 in SMA Type 2 in the United States later in the third quarter of 2017. In addition, we intend to initiate a pivotal trial of AVXS-101 for the treatment of SMA Type 1 in Europe during the second half of 2017.

Additionally, we are currently conducting comparability work to assess the similarity of key characteristics of the AVXS-101 product used in our Phase 1 clinical trial in SMA Type 1, which was manufactured by Nationwide Children's Hospital, or NCH, to the product derived from our new GMP manufacturing process. Data from this comparability work will be incorporated into the data package, and will include the above-mentioned potency qualification work, along with the full Phase 1 clinical data, that will be reviewed and discussed at our end-of-Phase 1 meeting with the FDA. We expect that this meeting will help further inform the regulatory pathway for AVXS-101. We anticipate providing an update on the outcome of that meeting once the official minutes are available, which we anticipate to be in the fourth quarter of 2017.

License Agreement with REGENXBIO for Rett Syndrome and Genetic ALS

On June 7, 2017, we announced that we had entered into an exclusive, worldwide license agreement with REGENXBIO Inc., or REGENX, for the development and commercialization of gene therapy using the recombinant adeno-associated virus serotype 9, or NAV AAV9, vector to treat two rare neurological monogenic disorders: Rett syndrome and a genetic form of amyotrophic lateral sclerosis, or ALS, caused by mutations in the superoxide dismutase 1, or SOD1, gene, or genetic ALS. Preclinical data suggesting promising safety and efficacy of gene therapy treatments for these disorders using NAV AAV9, generated by our Chief Scientific Officer, Dr. Brian Kaspar, has been licensed from NCH by the Company. We expect to move forward with initiating investigational new drug application, or IND, enabling studies in both Rett syndrome and ALS and plan to provide more details on these programs in the second half of 2017.

To date, we have funded our research and development and operating activities primarily through public and private equity offerings totaling $597.5 million of net proceeds. We have not generated any revenue from sales of gene therapy

Table of Contents

products to date. We have incurred significant annual net operating losses in every year since our inception and expect to continue to incur net operating losses for the foreseeable future. Our net operating losses were $38.5 million and $83.0 million for the years ended December 31, 2015 and 2016, respectively. As of June 30, 2017, we had an accumulated deficit of $229.3 million. We expect to continue to incur significant expenses and increasing operating losses for the next several years. Our net losses may fluctuate significantly from quarter to quarter and year to year. We anticipate that our expenses will increase significantly if and as we continue to develop and conduct clinical trials with respect to AVXS-101; develop our planned new programs for Rett syndrome and ALS; maintain, expand and protect our intellectual property portfolio; establish a commercial infrastructure to support the manufacture, marketing and sale of AVXS-101 if it receives regulatory approval; and hire additional personnel, such as clinical, regulatory, manufacturing, quality control and scientific personnel.

Licensing Agreements

AVXS-101

To date, we have entered into three license agreements relating to the development of AVXS-101.

Nationwide Children’s Hospital

In October 2013, we entered into an exclusive, worldwide license agreement with Nationwide Children’s Hospital, or NCH, under certain patent applications, and a non-exclusive license under certain technical information, for the use of its scAAV9 technology for the treatment of SMA, of all types, or the NCH SMA License. In January 2016, we amended and restated the NCH SMA License in its entirety. Under the NCH SMA License, we initially issued NCH and The Ohio State University, or OSU, 331,053 shares of common stock. Until May 2015, when we had reached a market capitalization of $100.0 million, we were obligated to issue additional shares to NCH and OSU from time to time to maintain a 3% ownership of the company on a fully-diluted basis. We issued an aggregate of 124,990 additional shares of common stock between October 2013 and May 2015 pursuant to these anti-dilution obligations. With certain exceptions, we are required to make up to $0.1 million in development milestone based payments to NCH. In addition, we are responsible for all clinical trial costs that are not covered by grants or certain other sources.

Following the first commercial sale of a NCH SMA licensed product we must begin paying NCH an aggregate low-single digit royalty on net sales of any products covered by the NCH SMA License, subject to reduction in specified circumstances and annual minimum royalties that increase over time. In addition, we must pay NCH a portion of sublicensing revenue received from our sublicense of the licensed technology at percentages between low-double digits and low-teens.

On November 6, 2015, the FDA approved our sponsorship of the IND and the transfer of the associated regulatory filing from NCH.

ReGenX Biosciences, LLC

In March 2014, we entered into an exclusive license agreement with ReGenX Biosciences, LLC, or ReGenX Biosciences, predecessor to REGENX, under certain patent rights owned by the Trustees of the University of Pennsylvania and licensed to ReGenX Biosciences, for the development and commercialization of products to treat spinal muscular atrophy by in vivo gene therapy using AAV9, or the ReGenX SMA License. Under the ReGenX SMA License, we paid ReGenX Biosciences an initial licensing fee of $2.0 million. We are also required to pay ReGenX Biosciences: annual maintenance fees, up to $12.25 million in milestone fees for all products covered by the ReGenX SMA License, or ReGenX SMA licensed products; mid-single to low-double digit royalty percentages on net sales of ReGenX SMA licensed products, subject to reduction in specified circumstances; and lower mid-double digit percentages of any sublicense fees we receive from sublicensees for the licensed patent rights. As of June 30, 2017, we have paid $2.4 million under the ReGenX SMA License, which includes $0.3 million in aggregate milestone payments.

Table of Contents

Asklepios Biopharmaceutical, Inc.

In May 2015, we entered into a non-exclusive, worldwide license agreement with Asklepios Biopharmaceutical, Inc., or AskBio, under certain patents and patent applications, for the use of AskBio’s self-complementary AAV genome technology for the treatment of SMA in humans, or the AskBio License. Under the AskBio License, we paid AskBio a one-time upfront license fee of $1.0 million, payable across stipulated milestones. We are also required to pay ongoing annual maintenance fees, up to a total of $0.6 million in clinical development milestone payments and up to a total of $9.0 million in commercial milestone payments. Under the terms of the AskBio License, we are required to pay AskBio annual tiered royalties on net sales of any products covered by the AskBio License, on a country-by-country basis, starting at percentages in the low-single digits and increasing to mid-single digits. These royalty rates are subject to potential reduction in specified circumstances, including, in the event we exercise our option to make a specified one-time royalty option fee payment to AskBio. We must also pay AskBio a low-double digit percentage of all consideration we receive from any sublicense of the licensed technology. Through June 30, 2017, we have paid the $1.0 million upfront license fee owed under the AskBio License.

Preclinical Programs for Rett Syndrome and ALS

We have also entered into three license agreements relating to our planned new programs for Rett syndrome and ALS.

REGENXBIO Inc.

Effective June 7, 2017, we entered into an exclusive license agreement with REGENX under certain patents and patent applications owned by the Trustees of the University of Pennsylvania and licensed to REGENX, for the development and commercialization of products to treat Rett syndrome and genetic ALS using the AAV 9 vector, or the REGENX Rett and ALS License. Under the REGENX Rett and ALS License, REGENX granted us an exclusive, worldwide license under the licensed patent rights to make, have made, use, import, sell and offer for sale any products covered by the REGENX Rett and ALS License, or the REGENX Rett and ALS licensed products, in the field of the treatment of (i) Rett syndrome in humans by in vivo gene therapy using AAV9 delivering the gene encoding for methyl CpG binding protein 2, and (ii) ALS caused by SOD1 mutation in humans by in vivo gene therapy using AAV9 delivering the gene encoding for SOD1, subject to certain rights reserved by REGENX and its licensors. The patent rights exclusively in-licensed include an issued United States patent, which expires in 2026. We have the right to sublicense the licensed technology to third parties subject to certain conditions as specified in the REGENX Rett and ALS License. Under the REGENX Rett and ALS License we grant a non-exclusive, worldwide, royalty-free, transferable, sublicenseable, irrevocable, perpetual license back to REGENX to (a) use any patentable modifications and improvements to the licensed technology that we or our affiliates or sublicensees develop, or licensed back improvements, and (b) practice the licensed back improvements in connection with AAV9 outside of our fields of use.

Under the terms of the REGENX Rett and ALS License, we have paid or are required to pay:

an initial fee of $6.0 million;

an annual maintenance fee;

up to $36.0 million in total milestone fees for the REGENX Rett and ALS licensed products;

a low double digit royalty percentage on net sales of REGENX Rett and ALS licensed products, subject to reduction in specified circumstances; and

a lower mid-double digit percentage of any sublicense fees we receive from sublicensees for the licensed intellectual property rights.

We are obligated to achieve certain development milestones with respect to the licensed disease indications. We do not have the right to control prosecution of the in-licensed patent applications nor the right to enforce the in-licensed patents. In addition, our rights under the REGENX Rett and ALS License are generally not assignable without the prior written consent of REGENX.

Table of Contents

the countries of the world or (ii) seven years from the first commercial sale of each REGENX Rett and ALS licensed product. Upon expiration of the REGENX Rett and ALS License, the license granted to us becomes irrevocable, perpetual, royalty-free and fully paid-up. We have the right to terminate the REGENX Rett and ALS License upon a specified period of prior written notice. REGENX may terminate the REGENX Rett and ALS License if we or our affiliates become insolvent, if we are greater than a specified number of days late in paying money due under the REGENX Rett and ALS License, or, effective immediately, if we or our affiliates, or sublicensees commence any action against REGENX or its licensors to declare or render any claim of the licensed patent rights invalid or unenforceable. Either party may terminate the REGENX Rett and ALS License for material breach if such breach is not cured within a specified number of days. Upon termination of the REGENX Rett and ALS License, other than for REGENX’s material breach, we grant to REGENX a non-exclusive, perpetual, irrevocable, worldwide, royalty-free, transferable, sublicenseable license under patentable modifications and improvements to any vector claimed by the licensed patents for use by REGENX for the research, development and commercialization of products in any therapeutic indication.

Nationwide Children’s Hospital

In September 2016, we entered into exclusive license agreements with NCH, pursuant to which NCH granted us exclusive, worldwide licenses under certain patent rights to make, have made, use, sell, offer for sale and import any products covered by each license, or NCH licensed products, and a non-exclusive, worldwide license under certain technical information to develop and manufacture the NCH licensed products, in the field of therapies and treatments of Rett syndrome and ALS in human use, respectively. We refer to each of the Rett syndrome and ALS in human use licenses individually as a NCH License. The patent rights exclusively in-licensed from NCH and relevant to our contemplated Rett syndrome product are a currently pending patent application being pursued only in the United States. The patent application covers the use of the aaV9 vector delivered intrathecally for the treatment of Rett syndrome. If a patent issues from this patent application, it is expected to expire in 2029. The patent rights exclusively in-licensed from NCH and relevant to our contemplated ALS product are a currently pending patent application being pursued in the United States, Canada and Europe. The patent application claims the use of the AAV9 vector as a composition of matter and its use for the treatment of ALS. If a patent issues from this patent application, it is expected to expire in 2035. We have the right to subcontract the manufacturing of products using the licensed rights under each NCH License. We also have the right to sublicense the licensed technology under each NCH License to third parties through multiple tiers.

Each NCH License sets forth a development plan for our development of the licensed technology to make and sell NCH licensed products, including for the treatment of Rett syndrome and ALS in humans, as applicable, throughout the world. We are required, if commercially reasonable, to market NCH licensed products after regulatory approval, satisfy the market demand for such products in those countries in which we have obtained regulatory approval and where it is commercially reasonable to do so and continue to develop additional NCH licensed products within the applicable field. In the event we fail to comply with such obligations, subject to certain conditions, NCH has the right to either terminate the applicable NCH License or convert our license into a non-exclusive license with respect to the applicable NCH licensed product in the applicable country. We are responsible for all clinical trial costs under each NCH License.

We paid an initial fee of $0.2 million to NCH in connection with the NCH License for Rett syndrome and $0.1 million in connection with the NCH License for ALS in human use. We also must pay NCH an annual maintenance fee under each NCH License. Following the first commercial sale of an NCH licensed product under an applicable NCH License, we must begin paying NCH an aggregate low-single digit royalty on net sales of NCH licensed products by us, our affiliates and sublicensees during the term of such license. If we unsuccessfully challenge any of the licensed patents, the royalty rate increases from low single digits to mid-single digits, in the case of the NCH License for Rett syndrome, and to high-single digits, in the case of the NCH License for ALS in human use.

With certain exceptions, we are required to make certain development milestone-based payments to NCH under each NCH License. In addition, we must also pay NCH a portion of sublicensing revenue received from our sublicense of the rights to licensed technology at a mid-single digits percentage.

We do not have the right to control prosecution of the in-licensed patent rights under either NCH License, however NCH shall consult with us on material matters regarding the prosecution of such patent rights, and NCH has the first right to enforce any patents issuing from the in-licensed patent rights and if NCH does not enforce the rights within a certain

Table of Contents

time frame, then we have the right to enforce. In addition, our rights under each NCH License are not assignable without the prior written consent of NCH, except to our affiliates, subsidiaries or any successor in interest in connection with a merger, acquisition, consolidation or sale, provided that our assignee assumes our obligations under the applicable NCH License in writing.

Unless terminated earlier, each agreement will expire on a NCH licensed product-by-NCH licensed product and country-by-country basis upon the expiration of the royalty term for such NCH licensed product in such country. The royalty term will expire on the later of (i) the date on which the last relevant patent underlying the relevant NCH licensed product expires or (ii) the expiration of any orphan drug-based exclusive marketing rights conferred by any regulatory authority with respect to a NCH licensed product in a licensed territory. Upon expiration of the agreement with respect to a particular NCH licensed product in a particular country, the license to us will survive and as a fully-paid up license. Each NCH License may be terminated prior to its expiration:

By us at any time after the second anniversary of the effective date of the applicable NCH License by providing six months' prior written notice to NCH;

By either party upon the other party's material breach of the applicable NCH License that is not cured within 90 days after receiving written notice of such breach, except in certain cases in which we may request a longer cure period;

By NCH in the event of our bankruptcy, insolvency or certain similar occurrences; or

By NCH if we or any of our affiliates bring any action or proceeding against NCH, other than a suit brought in response to any suit brought by NCH.

Certain accrued payments that we are required to make to NCH will become due in the event of termination as specified in the applicable agreement.

Financial Operations Overview

Revenue

To date, we have not generated any revenue from the commercial sale of gene therapy products, and we do not expect to generate substantial revenue for at least the next few years. In the future, we will seek to generate revenue primarily from product sales and, potentially, collaborations with strategic partners.

Operating Expenses

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

Research and Development Expenses

Research and development expense consists of expenses incurred while performing research and development activities to discover and develop potential gene therapy treatments. This includes conducting preclinical studies and clinical trials, investment in our manufacturing facility, manufacturing equipment and manufacturing development efforts and activities related to regulatory filings for product candidates. We recognize research and development expenses as they are incurred. Up-front fees incurred in obtaining technology licenses for research and development activities are expensed as incurred if the technology licensed has no alternative future use. Our research and development expense primarily consists of:

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

Table of Contents

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

costs related to executing preclinical studies and clinical trials;

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

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

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

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

allocated facility-related costs and overhead.

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

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

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

General and Administrative Expense

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

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

Interest Income

Interest income primarily consists of any interest income earned on our cash and cash equivalents.

Income Taxes

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

Table of Contents

Critical Accounting Policies and Significant Judgments and Estimates

Our critical accounting policies are described in Note 2 to our consolidated financial statements for the year ended December 31, 2016, included in our Annual Report on Form 10-K. There were no material changes to our critical accounting policies during the six months ended June 30, 2017.

Emerging Growth Company Status

Under Section 107(b) of the JOBS Act, an “emerging growth company,” or EGC, can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we are subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

As an EGC, we rely on certain of exemptions and reduced reporting requirements under the JOBS Act, including exemptions from the requirement to provide an auditor’s attestation report on our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and from any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis. We will remain an EGC until the earlier of: the last day of the fiscal year in which we have total annual gross revenues of $1.07 billion or more; December 31, 2021; the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; or the date on which we are deemed to be a large accelerated filer under the rules of the Securities and Exchange Commission, or SEC. Based on our public float as of the date of this report, we currently expect that we will become a large accelerated filer, and cease to be an EGC, as of December 31, 2017.

Recent Accounting Pronouncements

See Note 2 for disclosure of recent accounting pronouncements.

Results of Operations

Comparison of the Three and Six Months Ended June 30, 2017 and 2016

The following table summarizes our results of operations for the three and six months ended June 30, 2017 and 2016, together with the dollar increase or decrease in those items (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
		2017		2016	Period-to-Period Change			2017		2016	Period-to-Period Change
Net revenue:
Revenue	$	—	$	—	$	—	$	—	$	—	$	—
Operating expenses:
General and administrative		13,154		5,418		7,736		22,803		10,242		12,561
Research and development		45,206		10,380		34,826		65,521		26,445		39,076
Total operating expenses		58,360		15,798		42,562		88,324		36,687		51,637
Interest income (net)		331		79		252		576		132		444
Net loss	$	(58,029)	$	(15,719)	$	(42,310)	$	(87,748)	$	(36,555)	$	(51,193)

General and Administrative Expense

General and administrative expense increased from $5.4 million for the three months ended June 30, 2016, to $13.2 million for the three months ended June 30, 2017. This $7.8 million increase included increases of $2.3 million in legal, professional and consulting fees, $2.1 million in salaries and personnel-related costs, $1.9 million in non-cash stock-

Table of Contents

based compensation expense and $1.5 million in other administrative costs driven by increased headcount across all general and administrative functions to support our overall growth.

General and administrative expense increased from $10.2 million for the six months ended June 30, 2016, to $22.8 million for the six months ended June 30, 2017. This $12.6 million increase included increases of $4.1 million in salaries and personnel-related costs, $3.1 million in legal, professional and consulting fees, $2.7 million in non-cash stock-based compensation expense, and $2.7 million in other administrative costs driven by increased headcount across all general and administrative functions to support our overall growth.

Research and Development Expense

Research and development expense increased from $10.4 million for the three months ended June 30, 2016, to $45.2 million for the three months ended June 30, 2017. The $34.8 million increase was primarily attributable to product manufacturing expenses and associated accelerated spending, including increased headcount, in our product manufacturing facility, as well as expenses related to the conclusion of our Phase 1 clinical trial of AVXS-101 in SMA Type 1 and licensing fees related to our planned new programs in Rett syndrome and ALS. More specifically, this amount included increases of $16.4 million in third-party clinical and manufacturing research and development expense associated with product manufacturing, $6.1 million in research and development supplies and materials, $6.0 million attributable to the upfront license fee to REGENX for the REGENX Rett and ALS License, $2.9 million in salaries and personnel-related expenses, driven by increased headcount across all research and development and manufacturing functions from 39 employees as of June 30, 2016 to 100 employees as of June 30, 2017, $2.4 million in non-cash stock-based compensation expense and $1.0 million in other research and development expenses.

Research and development expense increased from $26.5 million for the six months ended June 30, 2016, to $65.5 million for the six months ended June 30, 2017. The $39.0 million increase was partially offset by a $6.8 million decrease in non-cash stock-based compensation expense. The decrease in non-cash stock-based compensation expense was primarily attributable to the recognition of $10.4 million of additional stock compensation expense upon the vesting in full of Dr. Kaspar’s restricted stock award during the year ended December 31, 2016. The balance of the $39.0 million increase was primarily attributable to product manufacturing expenses and associated accelerated spending, including increased headcount, in our product manufacturing facility as well as expenses related to the conclusion of our Phase 1 clinical trial of AVXS-101 in SMA Type 1. More specifically, this amount included increases of $20.7 million in third-party clinical and manufacturing research and development expense associated with product manufacturing, $10.7 million in research and development supplies and materials, $6.1 million in license fees, $5.0 million in salaries and personnel-related expenses, driven by increased headcount across all research and development and manufacturing functions, and $3.3 million in other research and development expenses.

We anticipate our research and development costs will continue to increase over the next several years due to increased spending on the development of AVXS-101 and future product candidates.

Interest Income

Interest income for the six months ended June 30, 2017 consists of interest earned on our cash and cash equivalents.

Liquidity and Capital Resources

Sources of Liquidity

To date, we have funded our research and development and operating activities primarily through equity financings, including $98.2 million, $149.1 million and $269.7 million of net proceeds from our initial public offering, our September 2016 public offering and our June 2017 public offering, respectively, and $80.5 million of aggregate net proceeds from private placements of stock prior to our initial public offering.

As of June 30, 2017, we had cash and cash equivalents of $417.6 million and had no debt outstanding.

Table of Contents

Cash Flows

The following table provides information regarding our cash flows for the six months ended June 30, 2017 and 2016 (in thousands):


	Six Months Ended June 30,
	2017		2016
Net cash used in operating activities	$	(76,352)	$	(20,330)
Net cash used in investing activities		(16,758)		(7,503)
Net cash provided by financing activities		270,300		97,014
Net increase in cash and cash equivalents	$	177,190	$	69,181

Operating Activities

For the six months ended June 30, 2017, our net cash used in operating activities of $76.4 million primarily consisted of a net loss of $87.7 million, primarily attributable to our spending on research and development, manufacturing and general and administrative expenses and $2.6 million in net cash used in changes in working capital items, which was partially offset by $14.0 million in adjustments for non-cash items. The $2.6 million in net cash used in changes in working capital represents primarily a $5.5 million increase in prepaid expenses and other current assets and other long-term assets and a $2.9 million increase in accrued expenses and other current liabilities, accounts payable and the accrued indemnification obligation. Adjustments for non-cash items consisted of $13.3 million of stock-based compensation expense and $0.7 million of depreciation and amortization.

For the six months ended June 30, 2016, our net cash used in operating activities of $20.3 million primarily consisted of a net loss of $36.6 million, primarily attributable to our spending on research and development and general and administrative expenses, which was partially offset by $17.4 million in adjustments for non-cash items and $1.1 million in net cash used in changes in working capital items. Adjustments for non-cash items primarily consisted of $17.4 million of stock-based compensation expense, of which $10.4 million was associated with the vesting in full of the restricted stock grant to Dr. Kaspar. The change in working capital was primarily attributable to an increase in prepaid expenses and other long-term assets, partially offset by an increase in accounts payable and accrued expenses and other current liabilities.

Investing Activities

For the six months ended June 30, 2017, net cash used in investing activities consisted of $16.8 million of capital expenditures, primarily related to our manufacturing facility and purchases of property and equipment. For the six months ended June 30, 2016, net cash used in investing activities consisted of $7.5 million of capital expenditures, primarily related to our manufacturing facility and purchases of property and equipment.

Financing Activities

For the six months ended June 30, 2017, net cash provided by financing activities of $270.3 million consisted primarily of funds raised from our June 2017 underwritten public offering. For the six months ended June 30, 2016, net cash provided by financing activities consisted primarily of $97.0 million from our initial public offering closed in February 2016.

Future Funding Requirements

To date, we have not generated any revenues from the commercial sale of approved gene therapy products or drug therapies and we do not expect to generate substantial revenue for at least the next few years. If we fail to complete the development of our product candidates in a timely manner or fail to obtain their regulatory approval, our ability to generate future revenue will be compromised. We do not know when, or if, we will generate any revenue from our gene therapy core business. We do not expect to generate significant revenue unless and until we obtain regulatory approval of and commercialize AVXS-101. In addition, we expect our expenses to increase in connection with our ongoing

Table of Contents

development activities, particularly as we continue the research, development and clinical trials of, and seek regulatory approval for, product candidates, including with respect to development of AVXS-101 for other types of SMA and other product candidates for other diseases. We also expect to continue to incur costs associated with operating as a public company. In addition, subject to obtaining regulatory approval of product candidates, we expect to incur significant commercialization expenses for product sales, marketing, manufacturing and distribution. We anticipate that we will need additional funding in connection with our continuing operations. If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts.

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

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

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

the scope, progress, results and costs of preclinical development, laboratory testing and clinical trials for our other product candidates, including our planned new programs in Rett syndrome and ALS;

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

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

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

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

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

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

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

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

Our future commercial revenue, if any, will be derived from sales of therapy products that we do not expect to be commercially available for several years, if at all. Accordingly, we may need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the terms of these equity securities or this debt may restrict our ability to operate. Any future debt financing and equity financing, if available, may involve agreements that include covenants limiting and restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, entering into profit-sharing or other arrangements or

Table of Contents

declaring dividends. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may be required to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us.

Contractual Obligations, Commitments and Contingencies

We lease a 15,668 square foot facility for our corporate headquarters in Bannockburn, Illinois, pursuant to a lease that expires in July 2024. The lease agreement provides for annual escalation in rent payments during the lease term. We are amortizing the escalation in rental payments on a straight-line basis over the term of the lease. We also lease a 1,318 square foot facility in Columbus, Ohio for research and development activities, pursuant to a lease that expires in March 2019. In March 2016, we entered into a lease agreement, which expires in August 2026, for approximately 48,529 square feet of warehouse and office space in Libertyville, Illinois. A portion of the warehouse space is used for manufacturing space. The lease agreement provides for annual escalation in rent payments during the lease term. The lease agreement provides us with a one-time right to terminate the lease effective as of the last day of the ninety-sixth full calendar month of the lease subject to a termination fee. We are amortizing the escalation in rental payments on a straight-line basis over the term of the lease. In March 2014, we entered into a lease agreement, which expired in April 2017, for approximately 2,418 square feet of office space in Dallas, Texas. In May 2017, we entered into two month-to-month lease agreements to add an additional 4,582 square feet of office space in Libertyville, Illinois.

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

During the three and six months ended June 30, 2017, there were no other material changes outside the ordinary course of our business to the contractual obligations specified in the table of contractual obligations included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report.

Off-Balance Sheet Arrangements

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Our primary exposure to market risk for our cash and cash equivalents is interest income sensitivity, which is affected by changes in the general level of U.S interest rates. As of June 30, 2017, we had cash and cash equivalents totaling $417.6 million. Cash and cash equivalents consist of cash, deposits with banks and short term highly liquid money market instruments with remaining maturities at the date of purchase of 90 days or less. These instruments are exposed to the impact of interest rate changes which may result in fluctuations to our interest income. The primary objective of our investment activity is to preserve capital to fund our operations. We also seek to maximize income from our investments without assuming significant risk. To achieve our objectives, we maintain a portfolio of investments in a variety of securities of high credit quality. We do not believe a sudden change in the interest rates would have a material impact on our financial condition or results of operations. A hypothetical 10% change in interest rates during any of the periods presented would not have had a material impact on our consolidated financial statements.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2017. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a

Table of Contents

company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of June 30, 2017, our Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2017, our disclosure controls and procedures were not effective at the reasonable assurance level as a result of the material weaknesses discussed below. Notwithstanding these material weaknesses, our management has concluded that the financial statements included elsewhere in this Quarterly Report present fairly, in all material respects, our financial position, results of operations and cash flows in conformity with generally accepted accounting principles (“GAAP”).

In connection with the preparation of our Annual Report on Form 10-K for the year ended December 31, 2016, our management concluded that, as of December 31, 2016, our internal control over financial reporting was not effective, as a result of material weaknesses in our control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis. The material weaknesses identified in our internal control over financial reporting related to our lack of sufficiently trained professionals with an appropriate level of accounting knowledge, lack of written policies regarding our accounting function and procedures to identify and appropriately account for complex debt and equity agreements or share-based compensation awards, lack of restricted access to key financial systems and records and appropriate segregation of duties.

Status of Remediation of Material Weaknesses

We have taken numerous steps to address these material weaknesses and believe we have made significant progress toward remediating them, primarily through the hiring of multiple additional full-time accounting and financial personnel. With the addition of these personnel and others, we believe we now have sufficient personnel with an appropriate level of accounting knowledge and experience commensurate with our financial reporting requirements.

Based on our risk assessments and ongoing reviews of our financial statements, we have implemented controls over key financial transaction areas, application of GAAP, SEC reporting and associated disclosures and are in the process of formally documenting our key accounting policies and procedures. We have also performed additional review procedures in areas subject to audit adjustments in prior periods and have identified key controls for our significant processes. In addition, effective January 1, 2017, we have converted to a new enterprise resource planning (“ERP”) financial system to support improved automation and control over our finance and accounting functions, including proper access and segregation of duties. Effective with our IPO, we no longer have complex debt and equity agreements. We have designed and implemented controls and procedures to identify and appropriately account for our share-based compensation awards.

During the remainder of 2017, we intend to continue our remediation efforts by completing the documentation of our key controls and testing the design and operating effectiveness of these controls. We are actively working to implement effective internal control over financial reporting, which includes remediation of these material weaknesses. However, such compliance is not guaranteed, and we cannot provide any assurance that our internal control over financial reporting will be effective as a result of these efforts.

Except as described above, there were no changes in our internal control over financial reporting during the fiscal quarter ended June 30, 2017 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Table of Contents

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

For this item, please refer to Note 8, Commitments and Contingencies to the Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report, which is incorporated herein by reference.

Item 1A. Risk Factors

The discussion of our business and operations discussed in this report should be read together with the risk factors contained in Item 1A of our Annual Report, as filed with the SEC on March 16, 2017, which describe various risks and uncertainties to which we are or may become subject. These risks and uncertainties have the potential to affect our business, financial condition, results of operations, cash flows, strategies, or prospects in a material and adverse manner. There are no material changes from the risk factors as previously disclosed in our Annual Report, except as noted below:

We must establish, to the FDA's satisfaction, that our proposed potency assay for AVXS-101 sufficiently characterizes the key product characteristics of our clinical and commercial product supply.

On May 1, 2017, we held a Type B Chemistry, Manufacturing and Controls, or CMC, meeting with the United States Food and Drug Administration, or the FDA, to seek alignment with the FDA regarding our proposed Good Manufacturing Practice, or GMP, commercial manufacturing process for AVXS-101, which we are primarily conducting using our own manufacturing facility. Our proposed GMP manufacturing process incorporates a novel adherent cell culture approach, which differs from the Hyperstacks approach utilized by Nationwide Children's Hospital, or NCH, to manufacture the product used in the Phase 1 clinical trial of AVXS-101 for spinal muscular atrophy, or SMA, Type 1. In order to reliably and accurately characterize the dose of the product for our planned clinical trials and, if approved, commercial demand, we will need to be able to reliably and consistently assess the key characteristics of the product we manufacture. During the CMC meeting, we presented our AVXS-101 potency assay and qualification plans to the FDA. In response, the FDA requested, among other things, that we complete the implementation of our potency assay qualification plans, including presenting the FDA with data from the appropriate production runs of AVXS-101, to enable the agency to assess the feasibility of our plans. We have already begun the work to address this request, and we expect to submit these data to the FDA in August 2017.

The outcome of our potency assay and qualification development, including the results of the analyses that we are conducting in response to the FDA's request, are not yet known. As a result, we cannot guarantee that the comprehensive data package that we generate from these production runs will be sufficient for the FDA to determine that our proposed potency assay or the product tested with this assay is acceptable. If, upon review of this data, the FDA does not determine that our proposed potency assay is acceptable, we may be required to conduct additional work to develop and validate an acceptable potency assay for AVXS-101 and/or manufacture additional qualification lots of AVXS-101, which would likely delay our planned clinical studies, including the U.S. pivotal clinical trial of AVXS-101 in SMA Type 1 and our planned Phase 1/2a clinical trial of AVXS-101 in SMA Type 2. Any such delays could have a material adverse effect on our business prospects.

Our transition from the NCH manufacturing process to our own manufacturing process, conducted at our own facility and at facilities of third-party manufacturing partners, requires us to conduct a comprehensive comparability study, which may result in delays to the approval process for AVXS-101.

Our Phase 1 clinical trial was conducted with AVXS-101 manufactured by NCH that was produced using a traditional Hyperstacks process utilizing ampicillin-resistant genetic markers for plasmid selection. We are in the process of transitioning the primary manufacturing of AVXS-101 to our own manufacturing facility, which uses a process based on a novel adherent cell culture approach that differs from the Hyperstacks approach utilized by NCH, and utilizes globally compliant kanamycin-resistant genetic markers for plasmid selection. Our third-party manufacturing partners will also use this process. We intend to use product that we manufacture using this new process for future clinical studies, including our planned U.S. pivotal trial of AVXS-101 in SMA Type 1, and, if AVXS-101 receives regulatory approval,

Table of Contents

to meet future commercial demand. We also intend to use AVXS-101 product that we manufacture for our planned Phase 1/2a clinical trial of AVXS-101 in SMA Type 2.

Because of the differences in these manufacturing processes, we are conducting a comprehensive comparability study to assess if the product that we manufacture is comparable to the product used in the Phase 1 clinical trial. In conducting this study, we are performing various tests to evaluate key characteristics of the product manufactured by NCH for the Phase 1 trial, as well as the product that we are manufacturing at our own facility, and that our third party partners are manufacturing, using our new process. Among these analyses, we are conducting tests to establish consistency with the dose concentration that was used in the second cohort of the Phase 1 trial, which is the dose that we are proposing to advance in our planned U.S. pivotal trial of AVXS-101. Given the passage of time since NCH measured the dose concentration of the product used in the Phase 1 trial, our ability to demonstrate comparability in head-to-head testing between the product used in the Phase 1 trial and the product manufactured using our new process may be complicated by any degradation or instability of the product manufactured by NCH.

Delays in completing the comparability study to the satisfaction of the FDA could delay or preclude our development and commercialization plans and, thereby, increase the risk and time to achieve regulatory approval of AVXS-101. We intend to provide the results of our comparability study, along with the full data from the Phase 1 clinical trial, in the data package that we plan to review and discuss with the FDA at our end-of-Phase 1 meeting. If the results of the comparability study are not satisfactory, we may be required to conduct additional comparability work, modify our new process or conduct additional clinical trials of AVXS-101, any of which could adversely impact our ability to continue development, and obtain marketing approval, of AVXS-101 for SMA Type 1, and our anticipated timelines for doing so, and have a material adverse effect on our business prospects.

Preclinical testing of our gene therapy product candidates for Rett syndrome and ALS may not result in our advancement of these programs into clinical trials.

Although a substantial amount of our efforts to date have focused on the development of AVXS-101 for SMA, a key element of our strategy is to discover, develop and potentially commercialize a portfolio of product candidates to treat other rare and life-threatening neurological genetic diseases. In furtherance of that strategy, we recently announced that we had entered into a license agreement with REGENX to develop and commercialize gene therapy treatments to treat two rare monogenic disorders: Rett syndrome and a genetic form of amyotrophic lateral sclerosis, or ALS, caused by mutations in the superoxide dismutase 1, or SOD1, gene. Our development efforts for our Rett syndrome and ALS programs are at an extremely early stage, and we have not yet completed IND-enabling preclinical studies for either of these programs. It is possible that future research and preclinical development of these programs may not establish sufficient indications of clinical benefit or acceptable tolerability to support the submission of an IND for one or both of these programs, in which case we may never initiate clinical trials, and we may be forced to suspend development activities for one or both of these programs. If we are not able to advance these programs into clinical trials, we will not be able to commercialize products for these indications, which would have a material adverse effect on our future business prospects, financial condition and results of operations.

The development of product candidates for our Rett syndrome and ALS programs will be subject to many risks. If we do not successfully develop and commercialize product candidates in these programs, our business prospects may be adversely affected.

Even if the results of IND-enabling studies for our gene therapy product candidates for the treatment of Rett syndrome and ALS substantiate advancing these programs into clinical trials, the development of these product candidates will be subject to many risks. There is a high failure rate for drugs and biologic products proceeding through clinical trials. Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in late-stage clinical trials even after achieving promising results in preclinical testing and earlier-stage clinical trials. Data obtained from preclinical and clinical activities are subject to varying interpretations, which may delay, limit or prevent regulatory approval. In addition, we may experience regulatory delays or rejections as a result of many factors, including due to changes in regulatory policy during the period of our product candidate development. Success in preclinical testing and early clinical trials does not ensure that later clinical trials will generate the same results or otherwise provide adequate data to demonstrate the efficacy and safety of a product candidate. Frequently, product candidates that have shown

Table of Contents

promising results in early clinical trials have subsequently suffered significant setbacks in later clinical trials. In addition, the design of a clinical trial can determine whether its results will support approval of a product and flaws in the design of a clinical trial may not become apparent until the clinical trial is well advanced.

Our ability to successfully develop gene therapy treatments for Rett syndrome and ALS will be subject to many of the same development risks as our AVXS-101 product candidate for SMA, including those discussed under the headings "Risk Factors — Risks related to the development of our current product candidate" and "Risk Factors — Risks related to the commercialization of AVXS-101" in our Annual Report on Form 10-K for the year ended December 31, 2016, which is incorporated by reference into this prospectus supplement. These risks include the risks of:

completing preclinical studies and clinical trials with positive results;

receiving marketing approvals from applicable regulatory authorities;

obtaining, maintaining, defending and enforcing intellectual property rights important to the product candidates;

establishing commercial manufacturing capabilities, or contracting with third-party manufacturers with such capabilities;

establishing and maintaining collaborations, licensing or other arrangements;

launching commercial sales, if and when approved;

achieving acceptance, if and when approved, by patients and the medical community;

effectively competing with other therapies; and

maintaining an acceptable safety profile following approval.

If we are unable to successfully develop and commercialize product candidates for Rett syndrome or ALS, we will not be able to obtain future revenues from these programs, which would have a material adverse effect on our future business prospects, financial condition and results of operations.

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

Use of Proceeds from Initial Public Offering of Common Stock

None.

Item 3. Default Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

Item 6. Exhibits

See the Exhibit Index following the signature page to this Quarterly Report for a list of exhibits filed or furnished with this report, which Exhibit Index is incorporated herein by reference.

Table of Contents

SIGNATURES

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

	AVEXIS, INC.


Date: August 10, 2017	By:	/s/ Thomas J. Dee
		Thomas J. Dee
		Senior Vice President, Chief Financial Officer
		(Principal Financial and Principal Accounting Officer)

Table of Contents

EXHIBIT INDEX

Exhibit Number		Description of Exhibit
3.1		Fifth Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on February 17, 2016).

3.2		Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed on February 17, 2016).

4.1		Specimen Stock Certificate evidencing the shares of common stock (incorporated by reference to Exhibit 4.1 to Amendment No. 2 to the Registration Statement on Form S-1 filed on February 9, 2016).

10.1†		Exclusive License Agreement dated September 9, 2016, by and between the Registrant and the Research Institute at Nationwide Children’s Hospital, with respect to Amyotrophic Lateral Sclerosis.

10.2†		Exclusive License Agreement dated September 9, 2016, by and between the Registrant and Nationwide Children’s Hospital, with respect to Rett syndrome.

10.3†		License Agreement dated June 7, 2017, by and between the Registrant and REGENXBIO Inc.

31.1		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document.
101.SCH		XBRL Taxonomy Extension Schema Document.
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.

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

† Confidential treatment has been requested for certain portions of this exhibit (indicated by asterisks). Such information has been omitted and was filed separately with the Securities and Exchange Commission.

Exhibit 10.1

CONFIDENTIAL TREATMENT REQUESTED

EXCLUSIVE LICENSE AGREEMENT
BETWEEN
THE RESEARCH INSTITUTE AT NATIONWIDE CHILDREN’S HOSPITAL
AND
AVEXIS, INC.

This Exclusive License Agreement (the “Agreement”) is entered into as of the last date of the signatures below (the “Effective Date”) by and between the Research Institute at Nationwide Children’s Hospital, a nonprofit Ohio corporation (“Research Institute”) and AveXis, Inc., a Delaware corporation having offices at 2275 Half Day Rd, Suite 160, Bannockburn, IL 60015 (“Licensee”).

RECITALS

1. Research Institute has been authorized to license rights in the Licensed Technology (as defined below) pursuant to an Inter-Institutional Agreement with Ludwig Institute for Cancer Research Ltd. (“Ludwig”) dated August 4, 2015, co-owner of the Licensed Patents;

2. Research Institute and Ludwig desire to have the Licensed Technology developed and marketed at the earliest possible time to ensure availability for public use and benefit;

3. Licensee intends to bring together the scientific and business expertise, facilities and capital to develop and market the Licensed Technology under a license from Research Institute; and

4. Research Institute and Ludwig are willing to grant Licensee a license to exploit the Licensed Technology subject to the terms and conditions set forth below.

In consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby agreed, Research Institute and Licensee hereby agree as follows:

Article 1
DEFINITIONS AND INTERPRETATION

1.1 Definitions . The capitalized terms used herein shall have the meanings set forth below in this Section 1.1 unless otherwise expressly defined in this Agreement.

1.1.1 “Affiliate” shall mean any entity which directly or indirectly owns or controls, is owned or controlled by, or is under common ownership or control with Licensee. For the purpose of this definition, “ownership” or “control” shall mean: (a) the direct or indirect possession or ownership of greater than fifty percent (50%) of the outstanding voting stock of the entity; (b) the right to receive more than fifty percent (50%) of the profits or earnings of the entity; (c) the power to appoint or remove a majority of the board of directors of the entity; or (d) the power to direct the management and policies of the entity. For clarity, an entity’s status as an Affiliate shall terminate if, at any time, such entity is not within the definition listed above; provided; however, the obligations of that entity shall continue until their purposes are fulfilled in accordance with the terms and conditions of this Agreement.

1.1.2 “Change of Control” shall mean: (a) the acquisition, either directly or indirectly, by any non-Affiliated third party of more than **** of the voting stock of

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

Licensee; (b) any merger or consolidation, including a series of transactions amounting to the foregoing, involving Licensee that requires a vote of the stockholders of Licensee; or (c) the transfer to any non-Affiliated third party of all or substantially all the assets of Licensee relating to the subject matter of this Agreement.

1.1.3 “Field of Use” shall mean for therapies and treatment of Amyotrophic Lateral Sclerosis (“ALS”) in human use only.

1.1.4 “Net Sales” shall mean the gross amount received by Licensee or any sublicensee, including its Affiliates, for the sale, transfer or other disposition of Licensed Products to a third party for end use (including where the Affiliate or sublicensee is the end user) less the following to the extent documented as attributable to the Licensed Products: ****. In the event Licensed Products are put into use, sold, transferred or otherwise disposed of other than in an arms-length transaction, or if Licensee, including its Affiliates or its sublicensees, receive consideration other than cash for Licensed Products, then the invoiced amount shall be calculated at ****.

1.1.5 “Innovators” shall mean ****.

1.1.6 “License Year” shall mean each calendar year in which this Agreement is in effect, provided that the first License Year shall begin on the Effective Date of this Agreement and run until December 31 of the same calendar year and the final License Year shall end on the date of expiration or termination of this Agreement.

1.1.7 “Licensed Patents” shall mean those patents and/or patent applications identified in Exhibit A, all U.S., PCT, and foreign applications claiming priority thereto, including divisionals, continuations, or continuations-in-part (to the extent that the claimed subject matter of such continuations-in-part is disclosed in the parent Licensed Patent) all patents issuing thereon, reissues, reexaminations, and any extensions thereof or supplementary protection certificates allowed thereon; provided, however, in each case only to the extent of subject matter claimed that is fully disclosed and enabled by the disclosures in Exhibit A to satisfy 35 U.S.C. §112.

1.1.8 “Licensed Products” shall mean any product or process, including a service: (a) that is claimed in whole or in part by the Licensed Patents, or the use or manufacture is claimed in whole or in part by the Licensed Patents; (b) the development, manufacture, use, sale or importation of which incorporates or is derived from the Technical Information; or (c) that meets the criteria of both (a) and (b).

1.1.9 “Licensed Technology” shall mean the Licensed Patents and the Technical Information.

1.1.10 “Licensed Territory” shall mean worldwide.

1.1.11 “Party” shall mean either Licensee or Research Institute, and “Parties” shall mean both Licensee and Research Institute.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

1.1.12 “Royalty Period” shall mean each calendar year during the Royalty Term; provided that the first Royalty Period of this Agreement shall begin on the date of the first commercial sale and end on the last day of the calendar year in which the first commercial sale occurs.

1.1.13 “Royalty Term” shall mean, on a Licensed Product-by-Licensed Product and country-by-country basis, the period commencing on the first commercial sale of such Licensed Product in such country in the Licensed Territory and ending on the last to occur of: (a) the last to expire of the Licensed Patents covering such Licensed Product in such country; or (b) the expiration of Market Exclusivity (as defined below).

1.1.14 “Technical Information” shall mean: (a) research and development information, unpatented inventions, and know-how pertaining to the Licensed Patents created by the Innovators of the Research Institute known as of the Effective Date or learned or developed during the Term of this Agreement; and (b) tangible materials pertaining to the Licensed Patents made by the Innovators in amounts selected by Research Institute in consultation with the Licensee and in amounts not so little as to unduly burden Licensee in its performance under this Agreement; each solely to the extent Research Institute has determined, in its sole discretion, to provide to Licensee hereunder.

1.1.15 “Term” shall have the meaning set forth in Section 11.1.

1.1.16 “Market Exclusivity” shall mean any orphan drug-based exclusive marketing rights conferred by any Regulatory Authority with respect to a Licensed Product in a country in the Licensed Territory, including orphan drug exclusivity rights conferred by the U.S. Food and Drug Administration (FDA) or any rights equivalent thereto conferred by any Regulatory Authority in any other country in the Licensed Territory.

1.2 Interpretation . Each definition in this Agreement includes the singular and the plural. References to any statute or regulation mean such statute or regulation, as amended from time to time, and include any successor legislation, regulations, guidelines and policies promulgated therefrom. The headings to the Articles and Sections are for convenience of reference and shall not affect the meaning or interpretation of this Agreement. The Exhibits attached hereto are hereby incorporated by reference into and shall be deemed a part of this Agreement. The term “including” shall mean “including but not limited to.”

Article 2
LICENSE GRANTS AND RESERVATION OF RIGHTS

2.1 Grants .

2.1.1 Patent License . Subject to the terms and conditions of this Agreement and Licensee’s compliance therewith, Research Institute and Ludwig grant to Licensee an exclusive, non-transferable (except a transfer to an Affiliate or as otherwise permitted herein), sublicensable through multiple tiers (in accordance with Section 2.1.4) license in the Field of Use in the Licensed Territory under the Licensed Patents to make, have made (only Licensed Products of Licensee, its Affiliates and sublicensees for sale by or on behalf of Licensee, its Affiliates

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

and sublicensees), use, sell, offer for sale and import Licensed Products throughout the Licensed Territory solely within the Field of Use.

2.1.2 Technical Information License . Subject to the terms and conditions of this Agreement and Licensee’s compliance therewith, Research Institute grants to Licensee a non-exclusive, non-transferable (except a transfer to an Affiliate or as otherwise permitted herein), sublicensable through multiple tiers (in accordance with Section 2.1.4) license in the Field of Use in the Licensed Territory to use the Technical Information to develop and manufacture Licensed Products throughout the Licensed Territory for the Field of Use. The Technical Information is “AS IS” and Research Institute shall transfer materials, including those materials listed in Exhibit B, that are included within the Technical Information on the same basis within **** of the Effective Date. Research Institute has no other obligation with respect to the Technical Information; provided, however, that Research Institute shall represent, to the best of its knowledge that (i) none of its inter-institutional agreements or other contractual relationships with third parties shall prohibit or otherwise operate to restrict or materially impair any of the terms of this Agreement (ii) no other obligations to third parties exist that prevent Research Institute from fulfilling its obligations under the Agreement, and (iii) it shall have a continuing obligation to provide certain Technical Information to Licensee, if Licensee determines, in consultation with Research Institute, that such Technical Information is required to satisfy Licensee’s performance under Article 3 of this Agreement to commercialize the Licensed Products. The Technical Information: (a) is provided to Licensee solely for the purpose as set forth in this Section 2.1.2 and no other purpose, in bailment with no equitable or legal title transferring; (b) shall be returned or its destruction certified upon request by Research Institute after termination of the Agreement provided, that in the event of the natural expiration of the Term, Licensee’s license to use the Technical Information would continue in accordance with Section 11.3.1; and (c) nothing herein shall be construed as a sale of the Technical Information.

2.1.3 Subcontracting . Subject to the terms and conditions of this Agreement and Licensee and each subcontractor’s compliance therewith, Licensee, its Affiliates and sublicensees may elect to have Licensed Products made for it under subcontract in accordance with its rights in Section 2.1.1, provided that Licensee, its Affiliates and sublicensees does so by a written agreement with such subcontractor consistent with the terms and conditions of this Agreement, the agreement names Research Institute and Ludwig as a third party beneficiary with respect to the indemnification obligations by such subcontractors, is not further transferable by delegation or otherwise, and terminates upon termination of this Agreement. Licensee shall provide notice to Research Institute of each such agreement granting such rights, including the contact information for the subcontractor and the specific Licensed Products the subcontractor is manufacturing. Licensee shall remain **** for each subcontractor’s compliance with the terms and conditions of this Agreement as if such entity was performing as Licensee under the terms and conditions of this Agreement, and Research Institute shall have the right to request an audit of sublicensees to determine compliance.

2.1.4 Sublicenses . Subject to the terms and conditions of this Agreement and Licensee and each sublicensee’s compliance therewith, Licensee may grant sublicenses

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

through multiple tiers under the rights licensed to Licensee in Sections 2.1.1 and 2.1.2 provided that Licensee does so by written agreement consistent with the terms and conditions of this Agreement. Licensee agrees to provide Research Institute with: (a) the identity of any sublicensee; (b) prompt notification and a copy of each final sublicense agreement and any amendment thereof. Any such sublicense agreement shall name Research Institute and Ludwig as a third party beneficiary with respect to indemnification obligation by such licensee. In the event of termination of this Agreement, in order to continue to practice the Licensed Technology, at each sublicensee’s election, such sublicensee shall become a direct licensee of Research Institute under the terms and conditions of this Agreement, to the extent applicable to the scope of the sublicense granted to such sublicensee, on the condition that (i) the sublicensee is not then in breach of its sublicense and (ii) sublicensee did not cause or contribute to such termination. Each sublicense agreement shall terminate upon termination of this Agreement. Licensee shall remain **** for each sublicensee’s compliance with the sublicense agreement as if such entity was performing as Licensee under the terms and conditions of this Agreement, and at Research Institute’s request, Licensee shall audit sublicensee(s) in accordance with the terms of the applicable sublicense agreement to determine compliance.

2.2 Reservation of Rights .

2.2.1 Research Institute and Ludwig reserve on behalf of themselves and their affiliates and subsidiaries: (a) all rights, titles and interests not expressly granted in Sections 2.1.1 and 2.1.2; (b) the right to practice, have practiced and transfer the Licensed Technology for research and development purposes, including education, research, teaching, clinical trials, publication and public service; and (c) the right to practice and license the Licensed Technology in connection with its use in Research Institute GMP manufacturing facility for research and development purposes, including education, research, teaching, clinical trials, publications and public service. Notwithstanding the foregoing, in no event shall Research Institute’s or Ludwig’s use or practice, or permit others to use or practice, the Licensed Technology in the Field of Use for any commercial for profit purpose For purposes of clarification nothing in this Agreement is intended to or shall be construed to restrict the ability of Research Institute or Ludwig to use, practice or permit others to use or practice the Licensed Technology for any purpose except as to the Field of Use, as stated above. Licensee is obtaining access to the Licensed Technology but not secrecy thereof.

2.2.2 Subject to Section 12.2, this Agreement does not convey and Research Institute retains all rights, titles or interests, including conveyances by implication, estoppel or otherwise, in tangible or intangible property rights, including any patents, know-how, tangible materials, or other inventions or discoveries, that are not the Licensed Technology as granted in Sections 2.1.1 and 2.1.2.

2.3 Government Rights . Licensee understands that the Licensed Patents may have been conceived or may be first actually reduced to practice with funding from the U.S. government. All rights granted shall be limited by and subject to the rights of the U.S. government, as applicable, and Licensee agrees to comply and enable Research Institute to comply with all obligations to the U.S. government, including those set forth in 35 U.S.C. §200 et al., regarding substantially manufacturing and practicing Licensed Products in the U.S., unless waived. On an annual basis, Licensee shall report to Research Institute whether or not it qualifies as a “small business firm” as defined in 37 C.F.R. 401.14(a)(5).

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

Article 3
DUE DILIGENCE BY LICENSEE

3.1 Due Diligence by Licensee . Licensee represents and warrants to Research Institute, to induce Research Institute to enter into this Agreement, that Licensee: (a) shall use commercially reasonable efforts to exploit the Licensed Technology, where it is commercially reasonable to do so, so that public utilization and practical application results therefrom; (b) has, or shall obtain within **** after the Effective Date, the expertise necessary to develop, market and sell Licensed Products if commercially reasonable.

3.2 Development Plan . Licensee has provided Research Institute with the development plan attached as Exhibit C describing the steps Licensee agrees to take to develop the Licensed Technology and make and sell Licensed Products in the Field of Use and throughout the Licensed Territory, as may be updated by Licensee from time to time during the Term.

3.3 Development Report . Within **** following the end of each License Year, Licensee shall provide Research Institute with a written development report containing at least the information set forth in Exhibit D, and describing in reasonable detail: (a) as of that reporting period, all development activities for each Licensed Product and the names of all sublicensees, including which are Affiliates; and (b) an updated development plan for the next reporting period which shall, notwithstanding Section 12.3, amend Exhibit C of this Agreement.

3.4 Milestones . Licensee shall achieve the following milestones. Licensee shall promptly notify Research Institute upon the achievement of each of the milestones, identify whether the Licensee or a sublicensee is responsible for the achievement of such milestone and the actual achievement date of such.

3.4.1 Licensee shall market the Licensed Products in the United States upon receiving regulatory approval if commercially reasonable;

3.4.2 Following the first commercial sale of a Licensed Product, Licensee shall satisfy the market demand for such Licensed Product in those countries within the Licensed Territory for which Licensee has obtained regulatory approval for such Licensed Product during the Term if and where commercially reasonable to do so and continue to develop additional Licensed Products and applications within the Field of Use if commercially reasonable.

3.5 Requirements . Licensee’s failure to perform any of its obligations specified in this Article 3, including: (a) perform substantially in accordance with the current development plan as defined in Exhibit C (and any update thereto); or (b) meet each milestone in Section 3.4; in each case of (a) and (b), shall constitute a material breach of this Agreement and Research Institute shall have the right and option at its sole election to terminate this Agreement as provided in Section 11.2.2 in whole or in part, or convert Licensee’s exclusive license to a non-exclusive license with respect to the applicable Licensed Product in the applicable country for which it was finally determined that Licensee had materially breached such diligence obligations hereunder.

3.6 Development Records . Licensee shall maintain documentation evidencing that Licensee is pursuing development of Licensed Products as required herein. Such documentation may include invoices for studies of Licensed Products, laboratory notebooks, internal job cost records, and filings made to the Internal Revenue Department to obtain tax credits, if available, for research and development of Licensed Products. Licensee shall permit Research Institute and/or its representatives to audit the

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

development records subject to the same procedures and restrictions set forth for audit of financial records in Section 4.7.

Article 4

ROYALTIES AND MINIMUM PAYMENTS

4.1 License Issue Fee . Licensee shall pay Research Institute a non-creditable and non-refundable license issue fee in the amount of One Hundred Thousand Dollars ($100,000), within seven (7) days of the Effective Date.

4.2 License Maintenance Fee . Licensee shall pay Research Institute the non-creditable and non-refundable license maintenance fees as follows.

4.2.1 Annual Payment . Licensee shall pay to Research Institute **** per year, payable no later than **** following the Effective Date and annually no later than **** each year.

4.2.2 Product Development Milestones . Licensee shall pay to Research Institute milestone payments in the amount specified below upon every occurrence of each of the following milestone events for each Licensed Product anywhere in the Licensed Territory.

Milestone Event		Payment Amount
IND Approval		$****USD
****		$****USD
****		$****USD
****		$****USD
Initiation of Phase I Clinical Trial		$****USD
Completion of a clinical trial demonstrating human safety and clinical safety		$****USD
First USA approval of a Biologics License Application		$****USD
First EU approval of a Biologics License Application		$****USD
Cumulative $****in Net Sales		$****USD

4.3 Earned Royalty .

4.3.1 Following first commercial sale of a Licensed Product, Licensee shall pay to Research Institute a non-creditable and non-refundable royalty of **** of Net Sales of Licensed Products defined under subsection (a) or (c) of the definition of Licensed Products during the applicable Royalty Term and Ludwig shall be entitled to receive its share of such royalties paid to Research Institute on a pro rata basis according to the Inter-Institutional Agreement between Research Institute and Ludwig of Net Sales of Licensed Products during the Royalty Term. Licensee shall not bear any financial responsibility or obligation either to Research Institute or to Ludwig regarding the respective apportionate calculation of royalties paid by Research Institute to Ludwig in connection with the Agreement, which determination is beyond the scope of the Agreement.

4.3.2 In the event that subsection (a) or (c) of the definition of Licensed Product is not applicable, then Licensee shall pay to Research Institute a royalty of **** of Net Sales of Licensed Product defined under subsection (b) of the definition of

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

Licensed Product (if applicable). In no event shall a royalty ever be paid at the same time under both Sections 4.3.1 and 4.3.2.

4.3.3 If Licensee challenges any patent of the Licensed Patents and is unsuccessful, then, in addition to all other rights and remedies available to Research Institute, Licensee agrees that the royalty rates set forth above shall be **** for the remainder of the Term.

Net Sales shall accrue with the first of invoice, use or delivery of Licensed Product as part of the first commercial sale of such Licensed Product.

4.4 Royalty Termination . Upon expiration of the last Licensed Patents covering a particular Licensed Product in a particular country, a royalty will be payable on Technical Information for the remainder of the Royalty Term , which royalty payment will expire after the expiration of Market Exclusivity in such country.

4.5 Sublicensing Payments . Licensee shall pay to Research Institute **** of all remuneration received by Licensee for each sublicense of the rights to the Licensed Technology granted hereunder, including ****, but excluding ****. Sublicensing payments shall be made to Research Institute by or on ****. Sublicensing payments expressly exclude ****. In no event will this Section 4.5 apply to any Change of Control of Licensee or its Affiliate or sublicensee or otherwise be deemed to trigger an obligation for Licensee or its Affiliate or sublicensee to pay any amount to Research Institute under this Section 4.5.

4.6 Royalty Payment and Report . Within **** after the end of each Royalty Period, Licensee shall provide to Research Institute a written report, due even if there are no Net Sales, detailing Licensee’s and each sublicensee’s sales and development activities during the Royalty Period. Each report shall: (a) be substantially in the form attached as Exhibit E; (b) be certified as accurate and complete by an authorized official of Licensee; and (c) set forth a full accounting of any amounts due, including the description and number of Licensed Products manufactured, used, transferred and/or otherwise disposed of, the calculation of Net Sales of such Licensed Products on a country-by-country basis, including an itemized listing of any allowable deductions or credits, if any, under this Agreement, the total royalty payment and remuneration due during such Royalty Period, any amounts due for milestones, exchange rates used and the method of calculation of amounts due Research Institute for such Royalty Period, including any sublicensing payments and royalties received and payable. Concurrent with the making of each such report, Licensee shall include payment due. If no payment is due for the Royalty Period, Licensee shall so state.

4.7 Accounting . Licensee shall keep and maintain and shall require all of its sublicensees to keep and maintain complete, accurate, and continuous records for a period of ****, which show the manufacture, transfer, use, and other disposition of Licensed Products. Such records shall include general ledger records showing cash receipts and expenses, and records which include production records, customers, and related information, in sufficient detail to determine the amounts payable hereunder. Licensee shall permit Research Institute and/or its representatives reasonable access annually during and within ****, to audit during ordinary business hours, such records as may be necessary to verify or determine royalties or other payments paid or payable under this Agreement. Licensee shall pay Research Institute unpaid amounts due hereunder, plus interest as set forth in Section 4.9 within ****. Research Institute shall pay the cost and expense of the audit unless the results of the audit reveal an under-reporting or an underpayment due Research Institute of **** or more, in which case Licensee shall reimburse Research Institute for the costs and expenses of the audit within **** after receipt of invoice.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

4.8 Annual Certifications . For so long as Licensee remains a publicly traded company, Licensee shall provide Research Institute with annual certifications regarding Licensee’s compliance with the Sarbanes-Oxley Act regarding internal controls for characterizing royalty payments made under this Agreement

4.9 Interest . The royalty and other payments set forth in this Agreement shall, if overdue, bear interest until payment at **** or the maximum amount permitted under law, whichever is less. The acceptance of the payment of such interest shall not foreclose Research Institute from exercising any other rights or remedies it may have.

4.10 Payment Procedures . All payments due from Licensee hereunder shall be made in U.S. dollars by check or money order payable to the “Research Institute at Nationwide Research Institute Hospital.” With respect to transfers in countries outside the United States, payments shall be made in U.S. dollars at the rate of exchange published in the Wall Street Journal on the close of business on the last banking day of each Royalty Period in which the royalty accrues. Such payments shall reference the Research Institute tax identification number **** and shall be remitted to the address for Research Institute specified in Section 12.1 of this Agreement.

4.11 Taxes . All amounts payable to Research Institute under this Agreement are net of all taxes and other charges, and Licensee shall pay, and shall indemnify and hold the Research Institute harmless against, all taxes, transfer fees and other charges (other than taxes based on Research Institute’s and Ludwig’s income, for which Research Institute and Ludwig shall remain solely responsible and liable) levied by any taxing authority on account of license fees, royalties or any other sums payable under this Agreement. Licensee shall deliver to Research Institute copies of all official tax receipts.

Article 5

PATENT MANAGEMENT

5.1 Prosecution and Maintenance of Licensed Patents . Provided that Licensee timely makes all of its payments under this Agreement, Research Institute shall use reasonable efforts consistent with its normal practices to prosecute and maintain the Licensed Patents in the Field of Use and Licensed Territory and Licensee shall cooperate with all lawful requests of Research Institute in effectuating such efforts.

5.1.1 Consultation. Research Institute shall consult with Licensee and keep Licensee reasonably informed regarding the preparation, filing, prosecution and maintenance of the Licensed Patents within the Field of Use and Licensed Territory reasonably prior to any deadline or action with any patent office and use reasonable good faith efforts to implement all reasonable requests made by Licensee regarding such matters.

5.1.2 Control. Licensee agrees that Research Institute has the sole right without other obligation regarding the Licensed Patents to determine whether or not, and where, to: (a) file and prosecute patent applications; and (b) maintain and defend the patents, including to institute, defend and conduct all interferences, oppositions and other past-grant proceedings. This Section 5.1.2 shall not govern third-party actions or proceedings, which are governed by Article 6 hereof

5.1.3 Notice. Licensee shall promptly inform Research Institute of all matters that come to its attention that may affect the filing, prosecution, defense or maintenance of the Licensed Patents. Licensee certifies to Research Institute on

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

behalf of itself and any entity to which it conveys Licensed Rights, that they qualify for “small entity” status pursuant to 13 C.F.R. 121.802 and shall notify Research Institute immediately in the event this no longer is the case. Research Institute shall use its best efforts to promptly notify Licensee, within **** business days of Research Institute ‘s receipt of all matters that come to its attention that may affect the filing, prosecution, defense or maintenance of the Licensed Patents.

5.2 Patent Costs .

5.2.1 Reimbursement . Licensee shall reimburse Research Institute the amount of **** to cover past patent costs and expenses in respect of the Licensed Patents that have been incurred by Research Institute prior to the Effective Date, on the Effective Date. Subject to Section 5.2.2, Licensee shall reimburse Research Institute for all documented costs and expenses associated with the preparation, filing and maintenance of the Licensed Patents, arising during the Term, within **** of the date of an invoice.

5.2.2 Notice of Election . Licensee may elect to discontinue paying for the filing, prosecution, and/or maintenance of any patent or patent application within the Licensed Patents by providing Research Institute with **** prior written notice of such election in which event Licensee shall not be responsible for any such payments after ****. In the event that Licensee does not provide such notice, Licensee shall remain responsible for the documented costs and expenses incurred by Research Institute.

5.2.3 Loss of Rights, Continuing Payment Obligation . If Licensee has provided notice of its election to discontinue payment for the filing, prosecution, and/or maintenance of any patent or patent application within the Licensed Patents as set forth in Section 5.2.2, or fails to pay any invoice submitted by Research Institute for those patent costs within **** after the date of that invoice (with an additional **** period, effective upon receipt of notice by Licensee, to allow Licensee the opportunity to cure any such failure), the corresponding patent or patent application shall be excluded from the Licensed Patents, and all rights relating to those patent applications and patents shall revert to Research Institute without further obligation to Licensee and may be freely licensed by Research Institute to others. If Licensee elects not to pay the patent costs for the filing, prosecution, and/or maintenance of any patent application or patent in any country or for any patent or patent application, and Research Institute acting in reliance on that election ceases to prosecute that patent application or maintain that patent in that country where Research Institute has a good faith belief it was entitled to continue to prosecute or maintain, then Licensee agrees that it and its sublicensees shall not sell any product or practice any process claimed in that patent as issued, or in the case of an application, claimed at the time Licensee notifies Research Institute of its decision not to support the application, unless Licensee pays royalties under this Agreement on sales in that country at the rate set forth in Section 4.3.2 as if such patent or patent application was included in the Licensed Patents.

10.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

Licensed Patents; each in accordance with the applicable laws of any country. Each Party agrees to execute any documents and to take any additional actions as the other Party may reasonably request in connection therewith. Licensee shall reimburse Research Institute for any expenses incurred by Research Institute for the foregoing.

5.4 Challenge . In the event Licensee intends to challenge the validity or enforceability of any of the Licensed Patents, Licensee agrees that it shall: (a) give Research Institute **** prior written notice; (b) continue to make all payments associated with costs and expenses associated with preparation, filing, and maintenance of the Licensed Patents in escrow or other similar third-party administered trust account; and (c) continue to comply and require any sublicensee to comply with the terms and conditions of this Agreement. In the event that one or more of the Licensed Patents are found by a court of law or other arbitration tribunal to be invalid or unenforceable, then any funds paid into the foregoing escrow account shall be released in full and paid to ****. For purposes of clarity, no payment (outside the expenses outlined in this Article 5 made to Research Institute is refundable or may be offset, including any amounts paid under this Agreement prior to or during the period of the challenge, even if the challenge is successful or it is otherwise determined that the Licensed Patents do not include valid claims.

Article 6
INFRINGEMENT

6.1 Notice . Licensee shall promptly notify Research Institute of any actual or suspected infringement of any Licensed Patent and furnish any available evidence thereof (“Infringement Notice”). Both Parties shall use reasonable efforts and cooperate to terminate infringement in the Licensed Territory and within the Field of Use without litigation.

6.2 Research Institute Abatement . Research Institute shall have the right, but shall not be obligated, to bring, control and settle any action to enforce the Licensed Patents, and, in furtherance of such right, Licensee shall cooperate with Research Institute, including joining the suit as reasonably requested, without expense to Licensee. Any recovery or damages received in an action brought by Research Institute shall be retained by ****.

6.3 Licensee Abatement . If, within **** after the date of the Infringement Notice, Research Institute has not acted to abate the alleged infringement, and Licensee has fully cooperated pursuant to Sections 6.1 and 6.2, then Licensee shall have the right, but shall not be obligated, to bring an action to enforce Licensed Patents in the Field of Use and Licensed Territory and, in furtherance of such right, Research Institute hereby agrees that it shall cooperate with Licensee, without expense to Research Institute, but shall not be required to join the suit unless it elects to do so in its sole discretion. Licensee shall notify Research Institute in writing in the event that Licensee decides to initiate suit. The total cost of any such infringement action commenced or defended solely by Licensee shall be borne by Licensee and from any recovery or damages therefrom shall be ****.

6.4 Settlement . The abating Party shall have the right to reasonably settle an action filed pursuant to Section 6.3, provided that such settlement does not impose any material obligations on any Party including compromising the Licensed Patents, or admit fault.

Article 7

REPRESENTATIONS, WARRANTIES AND DISCLAIMERS

7.1 Representations and Warranties . Each of Licensee and Research Institute represents and warrants to the other Party that: (a) it is and shall be at all times during the Term a valid legal entity existing under the law of its state of its incorporation with the power to own all of its properties and assets and to carry on its business as it is currently being conducted; (b) the execution and delivery of this

11.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

Agreement has been duly authorized and no further approval, corporate or otherwise, is required in order to execute this valid, binding and enforceable Agreement, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting the enforcement of creditors’ rights generally and the application of general principles of equity and judicial discretion; (c) it shall comply with the terms and conditions of this Agreement and all applicable international, national, or local laws and regulations in its performance under this Agreement and development, manufacture and sale, use, transfer and other disposition of the Licensed Products; and (d) its execution, delivery, and performance of this Agreement shall not conflict in any material fashion with the terms of any other agreement or instrument to which it is or becomes a party or by which it is or becomes bound. Research Institute represents to Licensee that (a) it has not previously assigned, conveyed or otherwise encumbered its right, title and interest in the Licensed Technology and (b) it is authorized to grant the rights to the Licensed Technology herein to Licensee.

7.2 Disclaimers . NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY NOT EXPRESSLY SET FORTH IN THIS ARTICLE 7, AND RESEARCH INSTITUTE AND LUDWIG ON BEHALF OF THEMSELVES AND THEIR AFFILIATES AND SUBSIDIARIES EXPRESSLY DISCLAIM ALL REPRESENTATIONS AND WARRANTIES WHETHER EXPRESS, STATUTORY, IMPLIED OR OTHERWISE, INCLUDING MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, ARISING FROM ANY COURSE OF DEALING, USAGE, OR TRADE PRACTICE, WITH RESPECT TO THE SCOPE, VALIDITY OR ENFORCEABILITY OF THE LICENSED TECHNOLOGY; THAT ANY PATENT SHALL ISSUE BASED UPON ANY OF THE PENDING LICENSED PATENTS; THE ACCURACY OF THE TECHNICAL INFORMATION; OR THAT THE MANUFACTURE, USE, SALE, OFFER FOR SALE OR IMPORTATION OF LICENSED PRODUCTS SHALL NOT INFRINGE INTELLECTUAL PROPERTY RIGHTS. THE ENTIRE RISK AS TO PERFORMANCE OF LICENSED PRODUCTS IS ASSUMED BY LICENSEE. LICENSEE AGREES THAT IN NO EVENT SHALL RESEARCH INSTITUTE, LUDWIG, THEIR AFFILIATES, SUBSIDIARIES AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, REPRESENTATIVES, STUDENTS, INDEPENDENT CONTRACTORS OR AGENTS, BE RESPONSIBLE OR LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR OTHER DAMAGES WHATSOEVER, WHETHER GROUNDED IN TORT (INCLUDING NEGLIGENCE AND PRODUCT LIABILITY), STRICT LIABILITY, CONTRACT OR OTHERWISE. THE ABOVE LIMITATIONS ON LIABILITY APPLY EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. NOTHING SHALL LIMIT RESEARCH INSTITUTE AND LUDWIG REMEDIES OR ABILITY TO RECOVER DAMAGES, INCLUDING INCREASED DAMAGES, FOR WILLFUL INFRINGEMENT IN THE EVENT RESEARCH INSTITUTE AND LUDWIG ASSERTS THEIR INTELLECTUAL PROPERTY RIGHTS.

7.3 No Warranties to Third Parties . Licensee shall not make any statements, representations or warranties or accept any liabilities or responsibilities whatsoever to or with regard to any person or entity that are inconsistent with this Agreement.

Article 8
INDEMNITY & INSURANCE

8.1 Indemnity . Licensee on behalf of itself and its sublicensees and subcontractors shall indemnify, hold harmless, and defend Research Institute, Ludwig, their affiliates and subsidiaries, and their respective officers, directors, employees, representatives, students, agents, and independent contractors (“Research Institute and Ludwig Indemnitees”) from and against any and all liability, losses, damages, costs, fees, and expenses, of any kind whatsoever in law or in equity, including reasonable attorneys’ fees, expert witness fees, and court costs, (collectively, “Losses”), that such Indemnitees may suffer resulting from any third party claims, demands, or judgments against such Indemnitee arising out of Licensee’s, its Affiliates or its sublicensees’ and/or any other party to whom access to the Licensed

12.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

Rights are provided by Licensee or its Affiliates: (a) breach of this Agreement or any other agreement of Licensee with a third party relating to the Licensed Technology and/or Licensed Products; (b) exercise or practice of the rights granted hereunder by Licensee, its Affiliates and/or its sublicensees, including the manufacture, sale, offer for sale, importation, keeping, marking or use of Licensed Technology, Licensed Products and product liability relating to the same; (c) negligence, gross negligence or willful misconduct by its or its Affiliates and/or sublicensee, except, in each case of (a), (b), and (c), to the extent that any such claim, demand, or judgment is attributable to: (v) any internal contractual disparity(ies) between Research Institute and Ludwig, including, without limitation, financial disparity(ies); (w) any Losses resulting, directly or indirectly from breach of the Inter-Institutional Agreement between Research Institute and Ludwig, to which Licensee is not a party (x) any breach of this Agreement by any Research Institute and Ludwig Indemnitees; (y) negligence, recklessness or willful misconduct on the part of any Research Institute and Ludwig Indemnitees; or (z) any breach by any Research Institute and Ludwig Indemnitees of any applicable law, rule or regulation.

8.2 Insurance . Licensee shall obtain and maintain at all times during the Term and after, and shall require its sublicensees, and any subcontractors of any of the foregoing, to obtain and maintain insurance as set forth in Section 8.1 to ensure all obligations to Research Institute and Ludwig and their affiliates and subsidiaries hereunder, including without affecting the generality of the foregoing: (a) insurance for all statutory workers’ compensation and employers’ liability requirements covering any and all employees with respect to activities resulting from, arising out of or relating to this Agreement; and (b) comprehensive general liability insurance, including product liability insurance, with reputable and financially secure insurance carriers in amounts sufficient to cover their respective activities and indemnity obligations. Further without affecting the generality of the foregoing, such insurance shall: (i) provide an appropriate and standard level of coverage considering the size of Licensee, the type of Licensed Product and standards in the industry, which in any event shall not be less than the amount required to satisfy Licensee’s obligations to Research Institute and Ludwig Indemnitees; and (ii) include Research Institute and Ludwig Indemnitees as additional insureds. At Research Institute’s request, Licensee shall furnish a certificate of insurance evidencing the policy’s compliance herewith. Licensee is required to provide Research Institute with **** prior written notice of cancellation or material change in such policy. Notwithstanding the foregoing, Licensee shall maintain no less than **** in general liability coverage.

8.3 Procedure . Licensee shall keep Research Institute fully informed in writing on Licensee’s actions regarding the indemnification obligations hereunder and of Licensee’s defense(s) of any claim under this Article 8. Research Institute and Ludwig Indemnitees shall reasonably cooperate as requested, at the expense of the Licensee, in the defense of the action. Licensee shall not settle any action without the prior written consent of Research Institute and Ludwig if the terms of such settlement contain admissions of wrongdoing by Research Institute or Ludwig or any covenants or other restrictions affecting Research Institute’s or Ludwig’s ongoing activities or require payment of any consideration to be made by Research Institute or Ludwig. Licensee shall not make any admission of liability on behalf of Research Institute and Ludwig Indemnitees or make any public statements relating to Research Institute and Ludwig Indemnitees without Research Institute’s and Ludwig’s prior written consent.

Article 9
MARKING, ACKNOWLEDGEMENTS; NO USE OF NAMES OR ENDORSEMENT

9.1 Marking . Subject to Section 8.1, Licensee may mark Licensed Products with a patent notice in accordance with each country’s patent laws in any country where the Licensed Product is made, sold or imported. Licensee shall provide and require its sublicensees including its Affiliates to provide notice of the Field of Use and Licensed Territory restrictions to all entities, including subcontractors and customers, to prevent exhaustion of the Licensed Patents and any implied license.

13.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

9.2 Acknowledgements. Licensee shall also consult with Research Institute and Ludwig and if so requested thereby, include the following statement in its advertising of Licensed Products: “Invented at and licensed by the Research Institute at Nationwide Children’s Hospital and Ludwig Institute for Cancer Research Ltd.” A Party may issue a press release or other form of public announcement regarding this Agreement and activities hereunder but only after the other Party has given its written approval, such approval not to be unreasonably withheld.

9.3 No Use of Research Institute and Ludwig Names . Licensee shall not, without the prior written consent of Research Institute and Ludwig, identify Research Institute, Ludwig, or any affiliate or subsidiary of Research Institute and those of Ludwig, in any advertising or other promotional materials to be disseminated to the public or use the name of Research Institute, Ludwig, their affiliates or subsidiaries or any of its respective faculty members, employees, or students, or any trademark, service mark, trade name, or symbol owned by or associated with Research Institute and Ludwig, and/or any affiliate or subsidiary of Research Institute and Ludwig.

9.4 No Endorsement . Notwithstanding anything to the contrary, Research Institute and Ludwig do not directly or indirectly endorse any product or service provided, or to be provided, by Licensee and/or sublicensees including the Licensed Product. Licensee shall not state or imply any endorsement by Research Institute, Ludwig or any of Research Institute’s or Ludwig’s employees.

Article 10
CONFIDENTIALITY

10.1 Definition. The Parties agree to keep and maintain any information or materials identified as confidential by the disclosing Party (“Disclosing Party”) when provided to the other Party (“Receiving Party”) individually and collectively (“Confidential Information”) in confidence and shall not disclose, use or otherwise make available the Confidential Information during and for **** after the Term except as reasonably necessary to fulfill its obligations or exercise its rights under this Agreement and provided that any party receiving disclosure has agreed to an obligation of confidentiality and prohibition on use at least as protective as this Article 10. In no event shall Licensee or anyone receiving Confidential Information from Licensee use such Confidential Information in any manner detrimental to Research Institute Ludwig, their affiliates, subsidiaries or to their respective rights. Technical Information shall be deemed the Confidential Information of Research Institute regardless of whether marked as such. Research Institute has the right to disclose Confidential Information received from Disclosing Party to its affiliates, subsidiaries, agents and independent contractors and their respective employees under an obligation of confidentiality at least as stringent as provided for herein. Licensee remains liable for the compliance of its sublicensees, subcontractors and any other party receiving Confidential Information from Licensee.

10.2 Exceptions . Confidential Information does not include any information or material that Receiving Party evidences:

10.2.1 by adequate written records that it knew or possessed prior to its receipt from Disclosing Party;

10.2.2 is in the public domain through no act or omission of the Receiving Party or anyone accessing Confidential Information therefrom;

10.2.3 is subsequently lawfully disclosed to Receiving Party by a third party free of any obligations of confidentiality; or

14.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

10.2.4 by adequate and contemporaneous written records is independently developed by employees of the Receiving Party or its affiliates or subsidiaries without knowledge of or access to the Confidential Information.

Confidential Information specific to particular products or circumstances shall not be deemed to be within the exceptions stated in Section 10.2 merely if embraced by general disclosures regarding other products or circumstances. A combination of features shall not be deemed to be within the foregoing exceptions merely if the individual features of such combination qualify.

10.3 Permitted Disclosure . If Receiving Party is required by law, regulation or court order to disclose the Confidential Information, it shall have the right to do so provided that Receiving Party provides prior written notice to Disclosing Party of such requirement and reasonably assists Disclosing Party in its efforts to obtain a protective order or other remedy of Disclosing Party’s election.

Article 11
EXPIRATION & TERMINATION

11.1 Expiration. This Agreement commences on the Effective Date and, unless earlier terminated in accordance with the terms of this Agreement, shall expire, on a Licensed Product-by-Licensed Product and country-by-country basis on the expiration of the Royalty Term for such Licensed Product in such country (the “Term”).

11.2 Termination .

11.2.1 Licensee may terminate this Agreement for convenience at any time after the second (2nd) anniversary of the Effective Date by giving written notice to Research Institute at least **** prior to the effective date of termination.

11.2.2 A Party may terminate this Agreement immediately upon notice to the other Party if such Party is in material breach of any provision of this Agreement and such breach is not cured within **** after written notice thereof; provided, however, that with respect to a breach of Licensee’s obligations under Article 3, such notice and cure period shall be **** after written notice thereof is provided and if Licensee reasonably believes that a longer cure period is necessary, Licensee may provide Research Institute with a commercially reasonable written plan to cure such breach within a longer cure period, and such cure period shall be extended for up to an additional **** provided that Licensee is using commercially reasonable efforts to implement such plan and Research Institute will reasonably consider in good faith any additional extension to such cure period for such breach requested by Licensee.

11.2.3 Unless prohibited by law, Research Institute may terminate this Agreement immediately without notice to Licensee in the event of (a) the bankruptcy, insolvency (either a deficit in net worth or the inability to pay debts as they mature), or dissolution of Licensee; (b) Licensee making an assignment for the benefit of its creditors or an offer of settlement, extension, or composition to its unsecured creditors generally; or (c) the appointment of a trustee, conservator, receiver, or similar fiduciary for Licensee for substantially all of the assets of Licensee.

15.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

11.2.4 Research Institute does not license its rights to entities that bring suit or institute proceedings against Research Institute or its affiliates or subsidiaries, and as such, Research Institute may immediately terminate this Agreement, unless prohibited by law, if Licensee or an Affiliate directly or indirectly bring any action or proceeding against Research Institute, regarding the validity or enforceability of the Licensed Patents unless such suit, action or proceeding is in response to any suit, action or proceeding brought by Research Institute. In the event Research Institute is a prevailing Party, Licensee agrees to promptly pay Research Institute for all costs and expenses of the suit brought by Licensee or an Affiliate including reasonable attorneys’ fees and court costs. Licensee shall include language in all contracts with its subcontractors or sublicensees consistent with this provision and shall terminate such subcontract or sublicense in the event such entity brings suit against Research Institute, or its affiliates or subsidiaries. Should any such suit be brought against Research Institute or its affiliates or subsidiaries, Research Institute shall not terminate this Agreement if Licensee promptly exercises its right of termination of the subcontractor or sub-licensee filing or participating as a party in any such suit.

11.3 Consequences of Termination .

11.3.1 Reversion of Rights . Upon termination of this Agreement, all rights granted immediately revert to Research Institute and Ludwig, and Licensee agrees not to practice or have practiced the Technical Information or valid claims of the Licensed Patents. All Confidential Information of the other Party shall be returned or destruction certified, at the Disclosing Party’s election provided that the Receiving Party shall be permitted to retain one copy of the Confidential Information in order to verify its compliance hereunder. Upon the expiration of the Royalty Term under this Agreement, the licenses granted to Licensee hereunder shall automatically convert to perpetual, irrevocable, royalty-free and fully-paid licenses, at which time Research Institute shall no longer have any further liabilities.

11.3.2 Surviving Rights and Obligations . The termination or expiration of this Agreement does not relieve either party of its rights and obligations that have previously accrued. Rights and obligations that by their nature prescribe continuing rights and obligations shall survive the termination or expiration of this Agreement. Without limiting the foregoing, the following provisions shall survive any termination or expiration of this Agreement: Articles 1, 7, 8, 10, 11, and 12 and Sections 4.1, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.11, 5.2.1, 6.4.

11.3.3 Terminal Payment . If this Agreement is terminated before all the payments that have accrued under this Agreement have been made (including all accrued license fees for the Royalty Period in which the Agreement is terminated), Licensee shall promptly submit a terminal report and payment of all such accrued payments to Research Institute even though the due date has not been reached. Research Institute shall have the right to conduct a final audit in accordance with Section 4.7

16.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

Article 12
MISCELLANEOUS PROVISIONS

12.1 Notices . All notices required or permitted to be given under this Agreement shall be effective when sent to the applicable Party’s address set forth below or to such other address as may be designated by written notice and given in writing, with reference to this Agreement, and when: (a) delivered personally; (b) sent by electronic mail, receipt confirmed; (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) two (2) days after deposit with a commercial overnight carrier, with written verification of receipt.

To Research Institute:

Research Institute at Nationwide Children’s Hospital
Attention: Director, Office of Technology Commercialization
(NCH OTC Ref. No. 2015-0277)
700 Children’s Drive
Columbus, Ohio 43205
Phone: (614) 722 2701
Email: OTCagreements@nationwidechildrens.org
cc: Legal@nationwidechildrens.org

To Licensee: AveXis, Inc.

Attention: Sean P. Nolan, CEO, and
Michael Johannesen, General Counsel
2275 Half Day Rd, Suite 160
Bannockburn, IL 60015
Phone: 972.725.7797
Email: snolan@avexis.com;
mjohannesen@avexis.com
cc: tdee@avexis.com

With a copy to (which shall not constitute notice):

Cooley LLP

Attention: Darren DeStefano & Kenneth J. Krisko

One Freedom Square

Reston Town Center 11951

Freedom Drive Reston, VA 20190-5656

Email: kkrisko@cooley.com; ddestefano@cooley.com

12.2 Assignment . This Agreement is personal to Licensee and may not be assigned, transferred or delegated to a non-affiliated person, in whole or in part, by Licensee without the prior written consent of Research Institute, which shall not be unreasonably withheld. For the purposes of clarification, consent of Research Institute shall be deemed consent of both Research Institute and Ludwig. Notwithstanding the foregoing, Licensee may assign any of its rights or delegate any of its obligations under this Agreement without Research Institute’s consent to (i) its Affiliate(s) or subsidiary(ies) or (ii) its successor in interest in connection with any merger, acquisition, consolidation, or sale of all or substantially all of the assets of Licensee, provided that such assignee assumes in writing or under law all of the obligations of Licensee hereunder and notice thereof is provided to Research Institute. Any attempted assignment, transfer or delegation, including any sublicense or subcontract in contravention with the terms and conditions of this Agreement shall be null and void. Research Institute has the right to assign or transfer the Licensed Patents, the Technical Information, its obligations and/or benefits hereunder and this Agreement without the consent of Licensee. This Agreement shall be binding

17.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

on the Parties and their successors and assigns and shall inure to the benefit of the Parties and their permitted successors and assigns. The representations, warranties, covenants, and undertakings contained in this Agreement are for the sole benefit of the Parties and their permitted successors and assigns and shall not be construed as conferring any rights to any third party.

12.3 Entire Agreement; Amendments . This Agreement including its Exhibits contains the entire understanding of the Parties with respect to the subject matter and supersedes all other prior communications, agreements, or understandings, written or oral. The Parties may, from time to time during the Term, modify, vary or alter any of the provisions of this Agreement, but only by an instrument duly executed by authorized officials of both Parties and only if such instrument specifically states that it is an amendment to this Agreement. Each Party acknowledges that it was provided an opportunity to seek advice of counsel and as such this Agreement shall not be strictly construed for or against either Party.

12.4 Severability . The terms and conditions of this Agreement are severable, and in the event that any term or condition of this Agreement shall be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that term or condition shall be reformed if possible, but only to the extent necessary to remove such invalidity, illegality or unenforceability in such jurisdiction and to effectuate the intent of the Parties as evidenced on the Effective Date. If reformation is not possible, then that term or condition shall be deleted and neither the validity, legality or enforceability of remaining terms and conditions nor the validity, legality or enforceability of the deleted term or condition in any jurisdiction it is valid, legal or enforceable shall in any way be affected or impaired thereby.

12.5 Waiver . No waiver by either Party of any term or condition of this Agreement, no matter how long continuing or how often repeated, shall be deemed a waiver of any subsequent act or omission, nor shall any delay or omission on the part of either Party to exercise any right, power, or privilege or to insist upon compliance with any term or condition of this Agreement be deemed a waiver of such right, power or privilege or excuse a similar subsequent failure to perform any such term or condition. All waivers must be in writing and signed by the Party granting such waiver.

12.6 No Agency . The relationship between the Parties is that of independent contractors. Neither Party shall be deemed to be an agent, employee, joint venturer or partner of the other and neither Party shall have any right or authority to assume or create any obligation or responsibility on behalf of the other Party or to bind that Party in any manner.

12.7 Governing Law . This Agreement shall be governed solely by the laws of the state of Ohio, without regard to any choice-of-law provisions, the Uniform Commercial Code or the International Convention on the Sale of Goods. In any litigation or arbitration arising under or relating to the terms and conditions of this Agreement, the prevailing Party or Parties shall be entitled to recover all documented costs and expenses of the suit, action or proceeding, including reasonable attorneys’ fees and court and/or arbitration costs.

12.8 Jurisdiction and Forum . The state and federal courts located in Franklin County in the state of Ohio shall have exclusive jurisdiction over any claim or dispute resulting from, relating to or arising out of this Agreement. Licensee hereby irrevocably consents to the exclusive jurisdiction of such courts and irrevocably waive any claim of inconvenient forum.

12.9 Export Control . It is understood that Research Institute is subject to United States laws and regulations controlling the export of technical data, computer software, laboratory prototypes, and other commodities that may require a license from the applicable agency of the United States government and/or may require written assurances by Licensee that it shall not export data or commodities to certain foreign countries without prior approval of such agency. Research Institute neither represents that a license is required, nor that, if required, it shall be issued.

18.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

The Parties have executed this Agreement by their duly authorized officers or representatives, in one or more counterparts, each of which shall be deemed an original but all of which taken together constitute one and the same instrument as of the Effective Date.

RESEARCH INSTITUTE AT NATIONWIDE		AVEXIS, INC.
CHILDREN’S HOSPITAL

By:	/s/Amy Roscoe	By:	/s/Sean P. Nolan
	Amy Roscoe, Vice President Research Planning and Finance		Sean P. Nolan, Chief Executive Officer

Date	08 Sept. 2016	Date	9-9-16

19.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

EXHIBIT A

LICENSED PATENTS

****

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

EXHIBIT B

TECHNICAL INFORMATION TRANSFER

****

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

EXHIBIT C

DEVELOPMENT PLAN

For each Licensed Product, on a country-by-country basis, provide a reasonably detailed summary of the activities that Licensee plans to undertake to make the Licensed Technology available for sale in the commercial marketplace.

I.	Development Program
	A.	****
	B.	****
	C.	****

II.	Governmental Approval
	A.	Types of Submissions Required
	B.	Government Agency (e.g. FDA, EPA)

III.	Proposed Market Approach

IV.	Competitive Information
	A.	Potential Competitors
	B.	****
	C.	****
	D.	****

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

EXHIBIT D
DEVELOPMENT REPORT AND DEVELOPMENT PLAN UPDATE

For each Licensed Product, on a country-by-country basis, provide a reasonably detailed summary of the activities that Licensee has undertaken and plans to undertake to make the Licensed Technology available for sale in the commercial marketplace.

****

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

EXHIBIT E
RESEARCH INSTITUTE ROYALTY REPORT

Licensee: _______________________ Agreement No.: ____________________________

Inventor: _______________________ Research Institute File No.: _____________________

Period Covered: From: ______/______/______Through: ______/______/______________

Prepared By: _______________________ Date: _____/______/______________________

Approved By: ______________________ Date: _____/______/___________________

	If license covers several major product lines, please prepare a separate report
	for each line. Then combine all product line into a summary report.

	Report Type: ☐ Single Product Line Report:
	_____________________________________________________________________
	☐ Multiproduct Summary Report: Page 1 of ______ Pages
	☐ Product Line Details: Line: ___________ Tradename: ___________
	Pages:____________
	☐ Report Currency: ☐ U.S. Dollars ☐ Other _________________

Country	Invoice Amount/Amount Received if not invoiced	[*Less: Allowances]	Net Sales	Royalty Rate	Period Royalty Amount
Country	Invoice Amount/Amount Received if not invoiced	[*Less: Allowances]	Net Sales	Royalty Rate	This Year	Last Year
****
****
****
****




Other:



Total:

Total Royalty: ______________ Conversion Rate: ________ Royalty in U.S. Dollars: $_____________________

The following royalty forecast is non-binding and for Research Institute’s internal planning purposes only:

Royalty Forecast Under This Agreement: ****

Any other consideration due Research Institute during this Royalty Period:

Annual Payments: ________________________ Milestones: ____________________________

Minimum Royalties: ______________________ Sublicense Payments: ________________________

On a separate page, please indicate the reason for returns or adjustments if significant. Also note any unusual occurrences that affect royalty amounts during this period. To assist Research Institute’s forecasting, please comment on any significant expected trends in sales volume.

I certify that this report is accurate and complete: ___________________________

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

Exhibit 10.2

CONFIDENTIAL TREATMENT REQUESTED

EXCLUSIVE LICENSE AGREEMENT

BETWEEN

THE RESEARCH INSTITUTE AT NATIONWIDE CHILDREN’S HOSPITAL

AND

AVEXIS, INC.

This Exclusive License Agreement (the “Agreement”) is entered into as of the last date of the signatures below (the “Effective Date”) by and between Nationwide Children’s Hospital, a nonprofit Ohio corporation (“Children’s”) and AveXis, Inc., a Delaware corporation having offices at 2275 Half Day Rd, Suite 160, Bannockburn, IL 60015 (“Licensee”).

RECITALS

1. Children’s has been authorized to license rights in the Licensed Technology (as defined below)

2. Children’s desires to have the Licensed Technology developed and marketed at the earliest possible time to ensure availability for public use and benefit;

3. Licensee intends to bring together the scientific and business expertise, facilities and capital to develop and market the Licensed Technology under a license from Children’s; and

4. Children’s is willing to grant Licensee a license to exploit the Licensed Technology subject to the terms and conditions set forth below.

In consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby agreed, Children’s and Licensee hereby agree as follows:

ARTICLE 1

DEFINITIONS AND INTERPRETATION

1.1 Definitions . The capitalized terms used herein shall have the meanings set forth below in this Section 1.1 unless otherwise expressly defined in this Agreement.

1.1.2 “Change of Control” shall mean: (a) the acquisition, either directly or indirectly, by any non-Affiliated third party of more than **** of the voting stock of Licensee; (b) any merger or consolidation, including a series of transactions amounting to the foregoing, involving Licensee that requires a vote of the stockholders of Licensee; or (c) the transfer to any non-Affiliated third party of all or substantially all the assets of Licensee relating to the subject matter of this Agreement.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

1.1.3 “Field of Use” shall mean for therapies and treatment of Rett Syndrome (“Rett”) in human use only.

1.1.5 “Innovators” shall mean ****.

1.1.9 “Licensed Technology” shall mean the Licensed Patents and the Technical Information.

1.1.10 “Licensed Territory” shall mean worldwide.

1.1.11 “Market Exclusivity” shall mean any orphan drug-based exclusive marketing rights conferred by any Regulatory Authority with respect to a Licensed Product in a country in the Licensed Territory, including orphan drug exclusivity rights conferred by the U.S. Food and Drug Administration (FDA) or any rights equivalent thereto conferred by any Regulatory Authority in any other country in the Licensed Territory.

1.1.12 “Party” shall mean either Licensee or Children’s, and “Parties” shall mean both Licensee and Children’s.

1.1.13 “Royalty Period” shall mean each calendar year during the Royalty Term; provided that the first Royalty Period of this Agreement shall begin on the date of the first commercial sale and end on the last day of the calendar year in which the first commercial sale occurs.

1.1.14 “Royalty Term” shall mean, on a Licensed Product-by-Licensed Product and country-by-country basis, the period commencing on the first commercial sale of such Licensed Product in

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

such country in the Licensed Territory and ending on the last to occur of: (a) the last to expire of the Licensed Patents covering such Licensed Product in such country; or (b) the expiration of Market Exclusivity (as defined below).

1.1.15 “Technical Information” shall mean: (a) research and development information, unpatented inventions, and know-how pertaining to the Licensed Patents created by the Innovators of Children’s known as of the Effective Date or learned or developed during the Term of this Agreement; and (b) tangible materials pertaining to the Licensed Patents made by the Innovators in amounts selected by Children’s in consultation with the Licensee and in amounts not so little as to unduly burden Licensee in its performance under this Agreement; each solely to the extent Children’s has determined, in its sole discretion, to provide to Licensee hereunder.

1.1.16 “Term” shall have the meaning set forth in Section 11.1.

ARTICLE 2

LICENSE GRANTS AND RESERVATION OF RIGHTS

2.1 Grants .

2.1.1 Patent License . Subject to the terms and conditions of this Agreement and Licensee’s compliance therewith, Children’s grants to Licensee an exclusive, royalty-bearing, non-transferable (except a transfer to an Affiliate or as otherwise permitted herein), sublicensable through multiple tiers (in accordance with Section 2.1.4) license in the Field of Use in the Licensed Territory under the Licensed Patents to make, have made (only Licensed Products of Licensee, its Affiliates and sublicensees for sale by or on behalf of Licensee, its Affiliates and sublicensees), use, sell, offer for sale and import Licensed Products throughout the Licensed Territory solely within the Field of Use.

2.1.2 Technical Information License . Subject to the terms and conditions of this Agreement and Licensee’s compliance therewith, Children’s grants to Licensee a non-exclusive, non-transferable (except a transfer to an Affiliate or as otherwise permitted herein), sublicensable through multiple tiers (in accordance with Section 2.1.4) license in the Field of Use in the Licensed Territory to use the Technical Information to develop and manufacture Licensed Products throughout the Licensed Territory for the Field of Use. The Technical Information is “AS IS” and Children’s shall transfer materials, including those materials listed in Exhibit B, that are included within the Technical Information on the same basis within **** of the Effective Date. Children’s has no other obligation with respect to the Technical Information; provided, however, that Children’s shall represent, to the best of its knowledge that (i) none of its inter-institutional agreements or other contractual relationships with third parties shall prohibit or otherwise operate to restrict or materially impair any of the terms of this Agreement (ii) no other obligations to third parties exist that prevent Children’s from fulfilling its obligations under the Agreement, and (iii) it shall have a continuing obligation to provide certain Technical Information to Licensee, if Licensee determines, in consultation with Children’s, that such Technical Information is required to satisfy Licensee’s performance under Article 3 of this Agreement to commercialize the Licensed Products. The Technical Information: (a) is provided to Licensee solely for the purpose as set forth in this Section 2.1.2

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

and no other purpose, in bailment with no equitable or legal title transferring; (b) shall be returned or its destruction certified upon request by Children’s after termination of the Agreement provided, that in the event of the natural expiration of the Term, Licensee’s license to use the Technical Information would continue in accordance with Section 11.3.1; and (c) nothing herein shall be construed as a sale of the Technical Information.

2.1.3 Subcontracting . Subject to the terms and conditions of this Agreement and Licensee and each subcontractor’s compliance therewith, Licensee, its Affiliates and sublicensees may elect to have Licensed Products made for it under subcontract in accordance with its rights in Section 2.1.1, provided that Licensee, its Affiliates and sublicensees does so by a written agreement with such subcontractor consistent with the terms and conditions of this Agreement, the agreement names Children’s as a third party beneficiary with respect to the indemnification obligations by such subcontractors, is not further transferable by delegation or otherwise, and terminates upon termination of this Agreement. Licensee shall provide notice to Children’s of each such agreement granting such rights, including the contact information for the subcontractor and the specific Licensed Products the subcontractor is manufacturing. Licensee shall remain **** for each subcontractor’s compliance with the terms and conditions of this Agreement as if such entity was performing as Licensee under the terms and conditions of this Agreement, and Children’s shall have the right to request an audit of sublicensees to determine compliance.

2.1.4 Sublicenses . Subject to the terms and conditions of this Agreement and Licensee and each sublicensee’s compliance therewith, Licensee may grant sublicenses through multiple tiers under the rights licensed to Licensee in Sections 2.1.1 and 2.1.2 provided that Licensee does so by written agreement consistent with the terms and conditions of this Agreement. Licensee agrees to provide Children’s with: (a) the identity of any sublicensee; (b) prompt notification and a copy of each final sublicense agreement and any amendment thereof any such sublicense agreement shall name Children’s as a third party beneficiary with respect to indemnification obligation by such licensee. In the event of termination of this Agreement, in order to continue to practice the Licensed Technology, at each sublicensee’s election, such sublicensee shall become a direct licensee of Children’s under the terms and conditions of this Agreement, to the extent applicable to the scope of the sublicense granted to such sublicensee, on the condition that (i) the sublicensee is not then in breach of its sublicense and (ii) sublicensee did not cause or contribute to such termination. Each sublicense agreement shall terminate upon termination of this Agreement. Licensee shall remain **** for each sublicensee’s compliance with the sublicense agreement as if such entity was performing as Licensee under the terms and conditions of this Agreement, and at Children’s’ request, Licensee shall audit sublicensee(s) in accordance with the terms of the applicable sublicense agreement to determine compliance.

2.2 Reservation of Rights .

2.2.1 Children’s reserves on behalf of themselves and their Affiliates: (a) all rights, titles and interests not expressly granted in Sections 2.1.1 and 2.1.2; (b) the right to practice, have practiced and transfer the Licensed Technology for research and development purposes, including education, research, teaching, clinical trials, publication and public service; and (c) the right to practice and license the Licensed Technology in connection with its use in Children’s GMP manufacturing facility for research and development purposes, including education, research, teaching, clinical trials, publications and public service. Notwithstanding the foregoing, in no event shall Children’s’ use or practice, or permit others to use or practice, the Licensed Technology in the Field of Use for any commercial for profit purpose whatsoever. For purposes of clarification nothing in this Agreement is intended to or shall be construed to restrict the ability of Children’s to use, practice or permit others to use or practice the Licensed Technology for any purpose except as to the Field of Use, as stated above. Licensee is obtaining access to the Licensed Technology but not secrecy thereof.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

2.2.2 Subject to Section 12.2, this Agreement does not convey and Children’s retains all rights, titles or interests, including conveyances by implication, estoppel or otherwise, in tangible or intangible property rights, including any patents, know-how, tangible materials, or other inventions or discoveries, that are not the Licensed Technology as granted in Sections 2.1.1 and 2.1.2.

2.3 Government Rights . Licensee understands that the Licensed Patents and licensed methods may have been conceived or may be first actually reduced to practice with funding from the U.S. government. All rights granted shall be limited by and subject to the rights of the U.S. government, as applicable, and Licensee agrees to comply and enable Children’s to comply with all obligations to the U.S. government, including those set forth in 35 U.S.C. §200 et al., regarding substantially manufacturing and practicing Licensed Products in the U.S., unless waived. On an annual basis, Licensee shall report to Children’s whether or not it qualifies as a “small business firm” as defined in 37 C.F.R. 401.14(a)(5).

ARTICLE 3

DUE DILIGENCE BY LICENSEE

3.1 Due Diligence by Licensee . Licensee represents and warrants to Children’s, to induce Children’s to enter into this Agreement, that Licensee: (a) shall use commercially reasonable efforts to exploit the Licensed Technology, where it is commercially reasonable to do so, so that public utilization and practical application results therefrom; (b) has, or shall obtain within **** after the Effective Date, the expertise necessary to develop, market and sell Licensed Products if commercially reasonable.

3.2 Development Plan . Licensee has provided Children’s with the development plan attached as Exhibit C describing the steps Licensee agrees to take to develop the Licensed Technology and make and sell Licensed Products in the Field of Use and throughout the Licensed Territory, as may be updated by Licensee from time to time during the Term.

3.3 Development Report . Within **** following the end of each License Year, Licensee shall provide Children’s with a written development report containing at least the information set forth in Exhibit D, and describing in reasonable detail: (a) as of that reporting period, all development activities for each Licensed Product and the names of all sublicensees, including which are Affiliates; and (b) an updated development plan for the next reporting period which shall, notwithstanding Section 12.3, amend Exhibit C of this Agreement.

3.4 Milestones . Licensee shall achieve the following milestones. Licensee shall promptly notify Children’s upon the achievement of each of the milestones, identify whether the Licensee or a sublicensee is responsible for the achievement of such milestone and the actual achievement date of such.

3.4.1 Licensee shall market the Licensed Products in the United States upon receiving regulatory approval if commercially reasonable;

3.4.2 Following the first commercial sale of a Licensed Product, Licensee shall satisfy the market demand for such Licensed Product in those countries within the Licensed Territory for which Licensee has obtained regulatory approval for such Licensed Product during the Term if and where commercially reasonable to do so and continue to develop additional Licensed Products, Licensed Methods and applications within the Field of Use if commercially reasonable.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

sole election to terminate this Agreement as provided in Section 11.2.2 in whole or in part, or convert Licensee’s exclusive license to a non-exclusive license with respect to the applicable Licensed Product in the applicable country for which it was finally determined that Licensee had materially breached such diligence obligations hereunder.

3.6 Development Records . Licensee shall maintain documentation evidencing that Licensee is pursuing development of Licensed Products as required herein. Such documentation may include invoices for studies of Licensed Products, laboratory notebooks, internal job cost records, and filings made to the Internal Revenue Department to obtain tax credits, if available, for research and development of Licensed Products. Licensee shall permit Children’s and/or its representatives to audit the development records subject to the same procedures and restrictions set forth for audit of financial records in Section 4.7.

ARTICLE 4

ROYALTIES AND MINIMUM PAYMENTS

4.1 License Issue Fee . Licensee shall pay Children’s a non-creditable and non-refundable license issue fee in the amount of Two Hundred Thousand Dollars ($200,000) within seven (7) days of the Effective Date.

4.2 License Maintenance Fee . Licensee shall pay Children’s the non-creditable and non-refundable license maintenance fees as follows.

4.2.1 Annual Payment . Licensee shall pay to Children’s **** per year, payable no later than **** following the Effective Date and annually no later than **** each year.

4.2.2 Product Development Milestones . Licensee shall pay to Children’s milestone payments in the amount specified below upon every occurrence of each of the following milestone events for each Licensed Product anywhere in the Licensed Territory.


Milestone Event		Payment Amount
IND Approval	$	**** USD
****	$	**** USD
****	$	**** USD
****	$	**** USD
Initial of Phase 1 Clinical Trial	$	**** USD
Completion of a clinical trial demonstration human safety and clinical safety	$	**** USD
First USA approval of a Biologics License Application	$	**** USD
First EU approval of a Biologics License Application	$	**** USD
First Commercial Sale	$	**** USD

4.3 Earned Royalty .

4.3.1 Following first commercial sale of a Licensed Product, Licensee shall pay to Children’s a non-creditable and non-refundable royalty of **** of Net Sales of Licensed Products defined under subsection (a) or (c) of the definition of Licensed Products during the applicable Royalty Term.

4.3.2 In the event that subsection (a) or (c) of the definition of Licensed Product is not applicable, then Licensee shall pay to Children’s a royalty of **** of Net Sales of Licensed Product defined

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

under subsection (b) of the definition of Licensed Product (if applicable). In no event shall a royalty ever be paid at the same time under both Sections 4.3.1 and 4.3.2.

4.3.3 If Licensee challenges any patent of the Licensed Patents and is unsuccessful, then, in addition to all other rights and remedies available to Children’s, Licensee agrees that the royalty rates set forth above shall be **** for the remainder of the Term.

Net Sales shall accrue with the first of invoice, use or delivery of Licensed Product as part of the first commercial sale of such Licensed Product.

4.4 Royalty Reduction . Upon expiration of the last Licensed Patents covering a particular Licensed Product in a particular country, the royalty rate payable hereunder with respect to such Licensed Product will be reduced by **** for the remainder of the Royalty Term, which royalty payment will expire after Market Exclusivity.

4.5 Sublicensing Payments . Licensee shall pay to Children’s **** of all remuneration received by Licensee for each sublicense of the rights to the Licensed Technology granted hereunder, including ****, but excluding ****. Sublicensing payments shall be made to Children’s by or on ****. Sublicensing payments expressly exclude ****. In no event will this Section 4.5 apply to any Change of Control of Licensee or its Affiliate or sublicensee or otherwise be deemed to trigger an obligation for Licensee or its Affiliate or sublicensee to pay any amount to Children’s under this Section 4.5.

4.6 Royalty Payment and Report . Within **** after the end of each Royalty Period, Licensee shall provide to Children’s a written report, due even if there are no Net Sales, detailing Licensee’s and each sublicensee’s sales and development activities during the Royalty Period. Each report shall: (a) be substantially in the form attached as Exhibit E; (b) be certified as accurate and complete by an authorized official of Licensee; and (c) set forth a full accounting of any amounts due, including the description and number of Licensed Products manufactured, used, transferred and/or otherwise disposed of, the calculation of Net Sales of such Licensed Products on a country-by-country basis, including an itemized listing of any allowable deductions or credits, if any, under this Agreement, the total royalty payment and remuneration due during such Royalty Period, any amounts due for milestones, exchange rates used and the method of calculation of amounts due Children’s for such Royalty Period, including any sublicensing payments and royalties received and payable. Concurrent with the making of each such report, Licensee shall include payment due. If no payment is due for the Royalty Period, Licensee shall so state.

4.7 Accounting . Licensee shall keep and maintain and shall require all of its sublicensees to keep and maintain complete, accurate, and continuous records for a period of ****, which show the manufacture, transfer, use, and other disposition of Licensed Products. Such records shall include general ledger records showing cash receipts and expenses, and records which include production records, customers, and related information, in sufficient detail to determine the amounts payable hereunder. Licensee shall permit Children’s and/or its representatives reasonable access annually during and within ****, to audit during ordinary business hours, such records as may be necessary to verify or determine royalties or other payments paid or payable under this Agreement. Licensee shall pay Children’s unpaid amounts due hereunder, plus interest as set forth in Section 4.9 within **** after receiving a written audit report. Children’s shall pay the cost and expense of the audit unless the results of the audit reveal an under-reporting or an underpayment due Children’s of **** or more, in which case Licensee shall reimburse Children’s for the costs and expenses of the audit within **** receipt of invoice.

4.8 Annual Certifications . For so long as Licensee remains a publicly traded company, Licensee shall provide Children’s with annual certifications regarding Licensee’s compliance with the

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

Sarbanes-Oxley Act regarding internal controls for characterizing royalty payments made under this Agreement.

4.9 Interest . The royalty and other payments set forth in this Agreement shall, if overdue, bear interest until payment at **** or the maximum amount permitted under law, whichever is less. The acceptance of the payment of such interest shall not foreclose Children’s from exercising any other rights or remedies it may have.

4.10 Payment Procedures . All payments due from Licensee hereunder shall be made in U.S. dollars by check or money order payable to the “Nationwide Children’s Hospital.” With respect to transfers in countries outside the United States, payments shall be made in U.S. dollars at the rate of exchange published in the Wall Street Journal on the close of business on the last banking day of each Royalty Period in which the royalty accrues. Such payments shall reference Children’s tax identification number **** and shall be remitted to the address for Children’s specified in Section 12.1 of this Agreement.

4.11 Taxes . All amounts payable to Children’s under this Agreement are net of all taxes and other charges, and Licensee shall pay, and shall indemnify and hold Children’s harmless against, all taxes, transfer fees and other charges (other than taxes based on Children’s’s income, for which Children’s shall remain solely responsible and liable) levied by any taxing authority on account of license fees, royalties or any other sums payable under this Agreement. Licensee shall deliver to Children’s copies of all official tax receipts.

ARTICLE 5

PATENT MANAGEMENT

5.1 Prosecution and Maintenance of Licensed Patents . Provided that Licensee timely makes all of its payments under this Agreement, Children’s shall use reasonable efforts consistent with its normal practices to prosecute and maintain the Licensed Patents in the Field of Use and Licensed Territory and Licensee shall cooperate with all lawful requests of Children’s in effectuating such efforts.

5.1.1 Consultation. Children’s shall consult with Licensee and keep Licensee reasonably informed regarding the preparation, filing, prosecution and maintenance of the Licensed Patents within the Field of Use and Licensed Territory reasonably prior to any deadline or action with any patent office and use reasonable good faith efforts to implement all reasonable requests made by Licensee regarding such matters.

5.1.2 Control. Licensee agrees that Children’s has the sole right without other obligation regarding the Licensed Patents to determine whether or not, and where, to: (a) file and prosecute patent applications; and (b) maintain and defend the patents, including to institute, defend and conduct all interferences, oppositions and other past-grant proceedings. This Section 5.1.2 shall not govern third-party actions or proceedings, which are governed by Article 6 hereof

5.1.3 Notice. Licensee shall promptly inform Children’s of all matters that come to its attention that may affect the filing, prosecution, defense or maintenance of the Licensed Patents. Licensee certifies to Children’s on behalf of itself and any entity to which it conveys Licensed Rights, that they qualify for “small entity” status pursuant to 13 C.F.R. 121.802 and shall notify Children’s immediately in the event this no longer is the case. Children’s shall use its best efforts to promptly notify Licensee, within **** of Children’s receipt of all matters that come to its attention that may affect the filing, prosecution, defense or maintenance of the Licensed Patents.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

5.2 Patent Costs .

5.2.1 Reimbursement . Licensee shall reimburse Children’s the amount of **** to cover past patent costs and expenses in respect of the Licensed Patents that have been incurred by Children’s prior to the Effective Date, on the Effective Date. Subject to Section 5.2.2, Licensee shall reimburse Children’s for all documented costs and expenses associated with the preparation, filing and maintenance of the Licensed Patents, arising during the Term, within **** of the date of an invoice.

5.2.2 Notice of Election . Licensee may elect to discontinue paying for the filing, prosecution, and/or maintenance of any patent or patent application within the Licensed Patents by providing Children’s with **** prior written notice of such election in which event Licensee shall not be responsible for any such payments after ****. In the event that Licensee does not provide such notice, Licensee shall remain responsible for the documented costs and expenses incurred by Children’s.

5.2.3 Loss of Rights, Continuing Payment Obligation . If Licensee has provided notice of its election to discontinue payment for the filing, prosecution, and/or maintenance of any patent or patent application within the Licensed Patents as set forth in Section 5.2.2, or fails to pay any invoice submitted by Children’s for those patent costs within **** after the date of that invoice (with an additional **** period, effective upon receipt of notice by Licensee, to allow Licensee the opportunity to cure any such failure), the corresponding patent or patent application shall be excluded from the Licensed Patents, and all rights relating to those patent applications and patents shall revert to Children’s without further obligation to Licensee and may be freely licensed by Children’s to others. If Licensee elects not to pay the patent costs for the filing, prosecution, and/or maintenance of any patent application or patent in any country or for any patent or patent application, and Children’s acting in reliance on that election ceases to prosecute that patent application or maintain that patent in that country where Children’s has a good faith belief it was entitled to continue to prosecute or maintain, then Licensee agrees that it and its sublicensees shall not sell any product or practice any process claimed in that patent as issued, or in the case of an application, claimed at the time Licensee notifies Children’s of its decision not to support the application, unless Licensee pays royalties under this Agreement on sales in that country at the rate set forth in Section 4.3.2 as if such patent or patent application was included in the Licensed Patents.

5.3 Patent Term Extensions . For each Licensed Product, the Parties shall discuss in good faith, mutually cooperate and agree in: (a) selecting a patent within the Licensed Patents to seek a term extension for; and/or (b) seeking a supplementary protection certificate in relation thereto from the Licensed Patents; each in accordance with the applicable laws of any country. Each Party agrees to execute any documents and to take any additional actions as the other Party may reasonably request in connection therewith. Licensee shall reimburse Children’s for any expenses incurred by Children’s for the foregoing.

5.4 Challenge . In the event Licensee intends to challenge the validity or enforceability of any of the Licensed Patents, Licensee agrees that it shall: (a) give Children’s **** prior written notice; (b) continue to make all payments associated with costs and expenses associated with preparation, filing, and maintenance of the Licensed Patents in escrow or other similar third-party administered trust account; and (c) continue to comply and require any sublicensee to comply with the terms and conditions of this Agreement. In the event that one or more of the Licensed Patents are found by a court of law or other arbitration tribunal to be invalid or unenforceable, then any funds paid into the foregoing escrow account shall be released in full and paid to ****. For purposes of clarity, no payment (outside the expenses outlined in this Article 5 made to Children’s is refundable or may be offset, including any amounts paid under this Agreement prior to or during the period of the challenge, even if the challenge is successful or it is otherwise determined that the Licensed Patents do not include valid claims.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

ARTICLE 6

INFRINGEMENT

6.1 Notice . Licensee shall promptly notify Children’s of any actual or suspected infringement of any Licensed Patent and furnish any available evidence thereof (“Infringement Notice”). Both Parties shall use reasonable efforts and cooperate to terminate infringement in the Licensed Territory and within the Field of Use without litigation.

6.2 Children’s Abatement . Children’s shall have the right, but shall not be obligated, to bring, control and settle any action to enforce the Licensed Patents, and, in furtherance of such right, Licensee shall cooperate with Children’s, including joining the suit as reasonably requested, without expense to Licensee. Any recovery or damages received in an action brought by Children’s shall be retained by ****.

6.3 Licensee Abatement . If, within **** after the date of the Infringement Notice, Children’s has not acted to abate the alleged infringement, and Licensee has fully cooperated pursuant to Sections 6.1 and 6.2, then Licensee shall have the right, but shall not be obligated, to bring an action to enforce Licensed Patents in the Field of Use and Licensed Territory and, in furtherance of such right, Children’s hereby agrees that it shall cooperate with Licensee, without expense to Children’s, but shall not be required to join the suit unless it elects to do so in its sole discretion. Licensee shall notify Children’s in writing in the event that Licensee decides to initiate suit. The total cost of any such infringement action commenced or defended solely by Licensee shall be borne by Licensee and from any recovery or damages therefrom shall be ****.

ARTICLE 7

REPRESENTATIONS, WARRANTIES AND DISCLAIMERS

7.1 Representations and Warranties . Each of Licensee and Children’s represents and warrants to the other Party that: (a) it is and shall be at all times during the Term a valid legal entity existing under the law of its state of its incorporation with the power to own all of its properties and assets and to carry on its business as it is currently being conducted; (b) the execution and delivery of this Agreement has been duly authorized and no further approval, corporate or otherwise, is required in order to execute this valid, binding and enforceable Agreement, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting the enforcement of creditors’ rights generally and the application of general principles of equity and judicial discretion; (c) it shall comply with the terms and conditions of this Agreement and all applicable international, national, or local laws and regulations in its performance under this Agreement and development, manufacture and sale, use, transfer and other disposition of the Licensed Products; and (d) its execution, delivery, and performance of this Agreement shall not conflict in any material fashion with the terms of any other agreement or instrument to which it is or becomes a party or by which it is or becomes bound. Children’s represents to Licensee that (a) it has not previously assigned, conveyed or otherwise encumbered its right, title and interest in the Licensed Technology and (b) it is authorized to grant the rights to the Licensed Technology herein to Licensee.

7.2 Disclaimers . NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY NOT EXPRESSLY SET FORTH IN THIS ARTICLE 7, AND RESEARCH INSTITUTE ON BEHALF OF THEMSELVES AND THEIR AFFILIATES EXPRESSLY DISCLAIM ALL REPRESENTATIONS AND WARRANTIES WHETHER EXPRESS, STATUTORY, IMPLIED OR OTHERWISE, INCLUDING MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, ARISING FROM ANY COURSE OF DEALING, USAGE, OR TRADE PRACTICE, WITH RESPECT TO THE

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

SCOPE, VALIDITY OR ENFORCEABILITY OF THE LICENSED TECHNOLOGY; THAT ANY PATENT SHALL ISSUE BASED UPON ANY OF THE PENDING LICENSED PATENTS; THE ACCURACY OF THE TECHNICAL INFORMATION; OR THAT THE MANUFACTURE, USE, SALE, OFFER FOR SALE OR IMPORTATION OF LICENSED PRODUCTS SHALL NOT INFRINGE INTELLECTUAL PROPERTY RIGHTS. THE ENTIRE RISK AS TO PERFORMANCE OF LICENSED PRODUCTS IS ASSUMED BY LICENSEE. LICENSEE AGREES THAT IN NO EVENT SHALL RESEARCH INSTITUTE, ITS AFFILIATES, AND ITS RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, REPRESENTATIVES, STUDENTS, INDEPENDENT CONTRACTORS OR AGENTS, BE RESPONSIBLE OR LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR OTHER DAMAGES WHATSOEVER, WHETHER GROUNDED IN TORT (INCLUDING NEGLIGENCE AND PRODUCT LIABILITY), STRICT LIABILITY, CONTRACT OR OTHERWISE. THE ABOVE LIMITATIONS ON LIABILITY APPLY EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. NOTHING SHALL LIMIT RESEARCH INSTITUTE'S REMEDIES OR ABILITY TO RECOVER DAMAGES, INCLUDING INCREASED DAMAGES, FOR WILLFUL INFRINGEMENT IN THE EVENT RESEARCH INSTITUTE ASSERTS ITS INTELLECTUAL PROPERTY RIGHTS.

ARTICLE 8

INDEMNITY & INSURANCE

8.1 Indemnity . Licensee on behalf of itself and its sublicensees and subcontractors shall indemnify, hold harmless, and defend Children’s, its Affiliates and its respective officers, directors, employees, representatives, students, agents, and independent contractors (“Children’s Indemnitees”) from and against any and all liability, losses, damages, costs, fees, and expenses, of any kind whatsoever in law or in equity, including reasonable attorneys’ fees, expert witness fees, and court costs, (collectively, “Losses”), that such Indemnitees may suffer resulting from any third party claims, demands, or judgments against such Indemnitees arising out of Licensee’s, its Affiliates or its sublicensees’ and/or any other party to whom access to the Licensed Rights are provided by Licensee or its Affiliates: (a) breach of this Agreement or any other agreement of Licensee with a third party relating to the Licensed Technology and/or Licensed Products; (b) exercise or practice of the rights granted hereunder by Licensee, its Affiliates and/or its sublicensees, including the manufacture, sale, offer for sale, importation, keeping, marking or use of Licensed Technology, Licensed Products and product liability relating to the same; (c) negligence, gross negligence or willful misconduct by its or its Affiliates and/or sublicensee, except, in each case of (a), (b), and (c), to the extent that any such claim, demand, or judgment is attributable to: (x) any breach of this Agreement by any Children’s Indemnitees; (y) negligence, recklessness or willful misconduct on the part of any Children’s Indemnitees; or (z) any breach by any Children’s Indemnitees of any applicable law, rule or regulation.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

coverage considering the size of Licensee, the type of Licensed Product and standards in the industry, which in any event shall not be less than the amount required to satisfy Licensee’s obligations to Children’s Indemnitees; and (ii) include Children’s Indemnitees as additional insureds. At Children’s’s request, Licensee shall furnish a certificate of insurance evidencing the policy’s compliance herewith. Licensee is required to provide Children’s with **** prior written notice of cancellation or material change in such policy. Notwithstanding the foregoing, Licensee shall maintain no less than **** in general liability coverage.

8.3 Procedure . Licensee shall keep Children’s fully informed in writing on Licensee’s actions regarding the indemnification obligations hereunder and of Licensee’s defense(s) of any claim under this Article 8. Children’s Indemnitees shall reasonably cooperate as requested, at the expense of the Licensee, in the defense of the action. Licensee shall not settle any action without the prior written consent of Children’s if the terms of such settlement contain admissions of wrongdoing by Children’s or any covenants or other restrictions affecting Children’s’s ongoing activities or require payment of any consideration to be made by Children’s. Licensee shall not make any admission of liability on behalf of Children’s Indemnitees or make any public statements relating to Children’s Indemnitees without Children’s’s prior written consent.

ARTICLE 9

MARKING, ACKNOWLEDGEMENTS; NO USE OF NAMES OR ENDORSEMENT

9.2 Acknowledgements. Licensee shall also consult with Children’s and if so requested thereby, include the following statement in its advertising of Licensed Products: “Invented at and licensed by the Nationwide Children’s Hospital.” A Party may issue a press release or other form of public announcement regarding this Agreement and activities hereunder but only after the other Party has given its written approval, such approval not to be unreasonably withheld.

9.3 No Use of Children’s Name . Licensee shall not, without the prior written consent of Children’s, identify Children’s, or any Affiliate of Children’s, in any advertising or other promotional materials to be disseminated to the public or use the name of Children’s its Affiliates or any of its respective faculty members, employees, or students, or any trademark, service mark, trade name, or symbol owned by or associated with Children’s, and/or any Affiliate of Children’s.

9.4 No Endorsement . Notwithstanding anything to the contrary, Children’s does not directly or indirectly endorse any product or service provided, or to be provided, by Licensee and/or sublicensees including the Licensed Product. Licensee shall not state or imply any endorsement by Children’s or any of its employees.

ARTICLE 10

CONFIDENTIALITY

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

reasonably necessary to fulfill its obligations or exercise its rights under this Agreement and provided that any party receiving disclosure has agreed to an obligation of confidentiality and prohibition on use at least as protective as this Article 10. In no event shall Licensee or anyone receiving Confidential Information from Licensee use such Confidential Information in any manner detrimental to Children’s, its Affiliates or its respective rights. Technical Information shall be deemed the Confidential Information of Children’s regardless of whether marked as such. Children’s has the right to disclose Confidential Information received from Disclosing Party to its Affiliates, agents and independent contractors and their respective employees under an obligation of confidentiality at least as stringent as provided for herein. Licensee remains liable for the compliance of its sublicensees, subcontractors and any other party receiving Confidential Information from Licensee.

10.2 Exceptions . Confidential Information does not include any information or material that Receiving Party evidences:

10.2.1 by adequate written records that it knew or possessed prior to its receipt from Disclosing Party;

10.2.2 is in the public domain through no act or omission of the Receiving Party or anyone accessing Confidential Information therefrom;

10.2.3 is subsequently lawfully disclosed to Receiving Party by a third party free of any obligations of confidentiality; or

10.2.4 by adequate and contemporaneous written records is independently developed by employees of the Receiving Party or its Affiliates without knowledge of or access to the Confidential Information.

ARTICLE 11

EXPIRATION & TERMINATION

11.2 Termination .

11.2.1 Licensee may terminate this Agreement for convenience at any time after the second (2nd) anniversary of the Effective Date by giving written notice to Children’s at least **** prior to the effective date of termination.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

11.2.2 A Party may terminate this Agreement immediately upon notice to the other Party if such Party is in material breach of any provision of this Agreement and such breach is not cured within **** after written notice thereof; provided, however, that with respect to a breach of Licensee’s obligations under Article 3, such notice and cure period shall be **** after written notice thereof is provided and if Licensee reasonably believes that a longer cure period is necessary, Licensee may provide Children’s with a commercially reasonable written plan to cure such breach within a longer cure period, and such cure period shall be extended for up to an additional **** provided that Licensee is using commercially reasonable efforts to implement such plan and Children’s will reasonably consider in good faith any additional extension to such cure period for such breach requested by Licensee.

11.2.3 Unless prohibited by law, Children’s may terminate this Agreement immediately without notice to Licensee in the event of (a) the bankruptcy, insolvency (either a deficit in net worth or the inability to pay debts as they mature), or dissolution of Licensee; (b) Licensee making an assignment for the benefit of its creditors or an offer of settlement, extension, or composition to its unsecured creditors generally; or (c) the appointment of a trustee, conservator, receiver, or similar fiduciary for Licensee for substantially all of the assets of Licensee.

11.2.4 Children’s does not license its rights to entities that bring suit or institute proceedings against Children’s or its Affiliates, and as such, Children’s may immediately terminate this Agreement, unless prohibited by law, if Licensee or an Affiliate directly or indirectly bring any action or proceeding against Children’s, regarding the validity or enforceability of the Licensed Patents unless such suit, action or proceeding is in response to any suit, action or proceeding brought by Children’s. In the event Children’s is a prevailing Party, Licensee agrees to promptly pay Children’s for all costs and expenses of the suit brought by Licensee or an Affiliate including reasonable attorneys’ fees and court costs. Licensee shall include language in all contracts with its subcontractors or sublicensees consistent with this provision and shall terminate such subcontract or sublicense in the event such entity brings suit against Children’s, or its Affiliates. Should any such suit be brought against Children’s or its Affiliates , Children’s shall not terminate this Agreement if Licensee promptly exercises its right of termination of the subcontractor or sub-licensee filing or participating as a party in any such suit.

11.3 Consequences of Termination .

11.3.1 Reversion of Rights . Upon termination of this Agreement, all rights granted immediately revert to Children’s, and Licensee agrees not to practice or have practiced the Technical Information or valid claims of the Licensed Patents. All Confidential Information of the other Party shall be returned or destruction certified, at the Disclosing Party’s election provided that the Receiving Party shall be permitted to retain one copy of the Confidential Information in order to verify its compliance hereunder. Upon the expiration of the Royalty Term under this Agreement, the licenses granted to Licensee hereunder shall automatically convert to perpetual, irrevocable, royalty-free and fully-paid licenses, at which time Children's shall no longer have any further liabilities hereunder.

11.3.2 Surviving Rights and Obligations . The termination or expiration of this Agreement shall not relieve either Party of its rights and obligations that have previously accrued. Rights and obligations that by their nature prescribe continuing rights and obligations shall survive the termination or expiration of this Agreement. Without limiting the foregoing, the following provisions shall survive any termination or expiration of this Agreement: Articles Articles 1, 7, 8, 10, 11, and 12 and Sections 4.1, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.11, 5.2.1, 6.4.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

payment of all such accrued payments to Children’s even though the due date has not been reached. Children’s shall have the right to conduct a final audit in accordance with Section 4.7.

ARTICLE 12

MISCELLANEOUS PROVISIONS

To Children’s:	Nationwide Children’s Hospital
	Attention: Director, Office of Technology Commercialization
	(NCH OTC Ref. No. 2015-0277)
	700 Children’s Drive
	Columbus, Ohio 43205
	Phone: (614) 722 2701
	Email: OTCagreements@nationwidechildrens.org
	cc: Legal@nationwidechildrens.org

To Licensee:	AveXis, Inc.
	Attention: Sean P. Nolan, CEO and
	Michael Johannesen, General Counsel
	2275 Half Day Rd, Suite 160 Bannockburn, IL 60015
	Phone: 972.725.7797
	Email: snolan@avexis.com; mjohannesen@avexis.com
	cc: tdee@avexis.com

With a copy to (which shall not constitute notice):	Cooley LLP
	Attention: Darren DeStefano & Kenneth J. Krisko
	One Freedom Square
	Reston Town Center 11951
	Freedom Drive Reston, VA 20190-5656
	Email: kkrisko@cooley.com; ddestefano@cooley.com

12.2 Assignment . This Agreement is personal to Licensee and may not be assigned, transferred or delegated to a non-affiliated person, in whole or in part, by Licensee without the prior written consent of Children’s, which shall not be unreasonably withheld. Notwithstanding the foregoing, Licensee may assign any of its rights or delegate any of its obligations under this Agreement without Children’s’ consent to (i) its Affiliate(s) or (ii) its successor in interest in connection with any merger, acquisition, consolidation, or sale of all or substantially all of the assets of Licensee, provided that such assignee assumes in writing or under law all of the obligations of Licensee hereunder and notice thereof is provided to Children’s. Any attempted assignment, transfer or delegation, including any sublicense or subcontract in contravention with the terms and conditions of this Agreement shall be null and void. Children’s has the right to assign or transfer the Licensed Patents, the Technical Information, its obligations and/or benefits hereunder and this Agreement without the consent of Licensee. This Agreement shall be binding on the Parties and their successors and assigns and shall inure to the benefit of the Parties and their permitted successors and assigns. The representations, warranties, covenants, and undertakings contained in this Agreement are for

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

the sole benefit of the Parties and their permitted successors and assigns and shall not be construed as conferring any rights to any third party.

12.7 Governing Law . This Agreement shall be governed solely by the laws of the State of Ohio, without regard to any choice-of-law provisions, the Uniform Commercial Code or the International Convention on the Sale of Goods. In any litigation or arbitration arising under or relating to the terms and conditions of this Agreement, the prevailing Party or Parties shall be entitled to recover all documented costs and expenses of the suit, action or proceeding, including reasonable attorneys’ fees and court and/or arbitration costs.

12.9 Export Control . It is understood that Children’s is subject to United States laws and regulations controlling the export of technical data, computer software, laboratory prototypes, and other commodities that may require a license from the applicable agency of the United States government and/or may require written assurances by Licensee that it shall not export data or commodities to certain foreign countries without prior approval of such agency. Children’s neither represents that a license is required, nor that, if required, it shall be issued.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.


NATIONWIDE CHILDREN’S HOSPITAL		AVEXIS, INC.


By:	/s/Amy Roscoe	By:	/s/Sean P. Nolan
		Sean P. Nolan, Chief Executive Officer

Date	9/8/2016	Date	9/9/2016

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

EXHIBIT A

LICENSED PATENTS

****

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

EXHIBIT B

TECHNICAL INFORMATION TRANSFER

To be agreed to in writing by the Parties at a later date.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

EXHIBIT C

DEVELOPMENT PLAN

I. Development Program

A. ****

B. ****

C. ****

II. Governmental Approval

A. Types of Submissions Required

B. Government Agency (e.g. FDA, EPA)

III. Proposed Market Approach

IV. Competitive Information

A. Potential Competitors

B. ****

C. ****

D. ****

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

‎ EXHIBIT D

DEVELOPMENT REPORT AND DEVELOPMENT PLAN UPDATE

****

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

‎ EXHIBIT E

CHILDREN’S ROYALTY REPORT

Licensee: _______________________ Agreement No.: ____________________________

Inventor: _______________________ Children’s File No.: _____________________

Period Covered: From: ______/______/______Through: ______/______/______________

Prepared By: _______________________ Date: _____/______/______________________

Approved By: ______________________ Date: _____/______/___________________

	If license covers several major product lines, please prepare a separate report
	for each line. Then combine all product line into a summary report.


	Report Type: ☐ Single Product Line Report:
	_____________________________________________________________________
	☐ Multiproduct Summary Report: Page 1 of ______ Pages
	☐ Product Line Details: Line: ___________ Tradename: ___________
	Pages:____________
	☐ Report Currency: ☐ U.S. Dollars ☐ Other _________________

Country	Invoice Amount/Amount Received if not invoiced	[*Less: Allowances]	Net Sales	Royalty Rate	Period Royalty Amount
Country	Invoice Amount/Amount Received if not invoiced	[*Less: Allowances]	Net Sales	Royalty Rate	This Year	Last Year
****
****
****
****




Other:



Total:

Total Royalty: ______________ Conversion Rate: ________ Royalty in U.S. Dollars: $_____________________

The following royalty forecast is non-binding and for Children’s’ internal planning purposes only:

Royalty Forecast Under This Agreement: ****

Any other consideration due Children’s during this Royalty Period:

Annual Payments: ________________________ Milestones: ____________________________

Minimum Royalties: ______________________ Sublicense Payments: ________________________

On a separate page, please indicate the reason for returns or adjustments if significant. Also note any unusual occurrences that affect royalty amounts during this period. To assist Children’s’ forecasting, please comment on any significant expected trends in sales volume.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

I certify that this report is accurate and complete: ___________________________

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

EXHIBIT 10.3

CONFIDENTIAL TREATMENT REQUESTED

License Agreement

This LICENSE AGREEMENT (“ Agreement ”) is entered into as of June 7, 2017 (“ Effective Date ”) by and between REGENXBIO Inc., a corporation organized under the laws of the State of Delaware, with offices at 9600 Blackwell Road, Suite 210, Rockville, MD 20850 (“ Licensor ”), and AveXis, Inc., a corporation organized under the laws of the State of Delaware, with offices at 2275 Half Day Road, Suite 200, Bannockburn, IL 60015. Licensor and Licensee are hereinafter referred to individually as a “ Party ” and collectively as the “ Parties .”

WHEREAS, Licensor has rights under certain Licensed Patents (as defined herein) pertaining to adeno-associated virus serotype 9; and

WHEREAS, Licensee desires to obtain an exclusive license under the Licensed Patents under the terms set forth herein;

NOW, THEREFORE, in consideration of the promises and covenants contained in this Agreement, and intending to be legally bound, the Parties hereby agree as follows:

Article 1: Definitions

1.1 “ AAV9 ” means (a) the recombinant adeno-associated virus serotype 9 vector with the specified sequence set forth in GenBank **** and (b) any recombinant adeno-associated virus derivatives of such serotype 9 vector that are covered by the claims of the Licensed Patents.

1.2 “ Affiliate ” means any legal entity directly or indirectly, during the term of this Agreement, controlling, controlled by, or under common control with another entity. For purposes of this Agreement, “ control ” means the direct or indirect ownership of more than 50% of the outstanding voting securities of a legal entity, or the right to receive more than 50% of the profits or earnings of a legal entity, or the right to control the policy decisions of a legal entity. An entity may be or become an Affiliate of an entity and may cease to be an Affiliate of an entity, in each case, during the term of this Agreement.

1.3 “ ALS Field ” means the treatment of Amyotrophic Lateral Sclerosis, caused by mutations in the gene that produces the copper zinc superoxide dismutase 1 (SOD1) enzyme, in humans by in vivo gene therapy using AAV9 delivering the gene encoding for SOD1.

1.4 “ Calendar Quarter ” means each three-month period or any portion thereof, beginning on January 1, April 1, July 1, and October 1.

1.5 “ Change of Control ” means (i) any transaction or series of related transactions following which the holders of Licensee’s capital stock or membership or equity interests immediately prior to such transaction or series of related transactions collectively are the owners of less than 50% of the outstanding equity interests of Licensee entitled to (a) vote with respect to the election of directors (or positions having a similar function) or (b) receive the proceeds upon any sale, liquidation or dissolution of Licensee; (ii) a sale, transfer, or other disposition, in a single transaction or series of related transactions, of all or a material portion of Licensee’s interest in

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

the Licensed Product; (iii) a sale, transfer, or other disposition, in a single transaction or series of related transactions, of all or a material portion of Licensee’s right title, or interest in its assets taken as a whole; or (iv) the merger of Licensee with a Third Party by operation of law or otherwise.

1.6 “ Confidential Information ” means and includes all technical information, inventions, developments, discoveries, software, know-how, methods, techniques, formulae, animate and inanimate materials, data, processes, finances, business operations or affairs, and other proprietary ideas, whether or not patentable or copyrightable, of either Party that are (a) marked or otherwise identified as confidential or proprietary at the time of disclosure in writing; or (b) if disclosed orally, visually, or in another non-written form, identified as confidential at the time of disclosure and summarized in reasonable detail in writing as to its general content within 30 days after original disclosure. The Parties acknowledge that (i) the terms and conditions of this Agreement and (ii) the records and reports referred to in Section 3.7 will be deemed the Confidential Information of both Parties, regardless of whether such information is marked or identified as confidential. In addition, information provided to Licensee pursuant to the provisions of Section 7.1 will be deemed the Confidential Information of Licensor, regardless of whether such information is marked or identified as confidential. Notwithstanding the foregoing, Confidential Information will not include the following, in each case, to the extent evidenced by competent written proof of the Receiving Party:

1.6.1 information that was already known to the Receiving Party, other than under an obligation of confidentiality, at the time of disclosure by the Disclosing Party;

1.6.2 information that was generally available to the public or otherwise part of the public domain at the time of its disclosure to the Receiving Party;

1.6.3 information that became generally available to the public or otherwise part of the public domain after its disclosure, other than through any act or omission of the Receiving Party in breach of this Agreement;

1.6.4 information that is independently discovered or developed by the Receiving Party without the use of Confidential Information of the Disclosing Party; or

1.6.5 information that was disclosed to the Receiving Party, other than under an obligation of confidentiality, by a Third Party who had no obligation to the Disclosing Party not to disclose such information to others.

1.7 “ Disclosing Party ” has the meaning set forth in Section 5.1.

1.8 “ Domain Antibody ” means ****.

1.9 “ FDA ” means the United States Food and Drug Administration, or a successor agency in the United States with responsibilities comparable to those of the United States Food and Drug Administration.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

1.10 “ Fields ” means the ALS Field and RETT Field (individually, the ALS Field and the RETT Field are hereinafter referred to as a “ Field ”).

1.11 “ GSK Agreement ” means that certain License Agreement entered into between Licensor and SmithKline Beecham Corporation, effective on March 6, 2009, as amended by that certain Amendment to License Agreement dated April 15, 2009, and as further amended from time to time.

1.12 “ Licensed Know-How ” means ****.

1.13 “ Licensed Patents ” means, to the extent they cover AAV9, (a) all United States patents and patent applications listed in Exhibit A , including patents arising from such patent applications, and (b) any re-examination certificates thereof, and their foreign counterparts and extensions, continuations, divisionals, and re-issue applications; provided that “Licensed Patents” will not include any claim of a patent or patent application covering “Manufacturing Technology.”

1.14 “ Licensed Product ” means (a) any AAV9 product that is made, made for, used, sold, offered for sale, or imported by Licensee, its Affiliates, and any of its or their Sublicensees, (i) the manufacture, use, sale, offer for sale, or import of which product, in the absence of the license granted pursuant to this Agreement, would infringe or is covered by at least one Valid Claim in the country of manufacture, use, sale, offer for sale, or import, including products manufactured by a process that would infringe or is covered by at least one Valid Claim in the country of manufacture, use, sale, offer for sale, or import or (ii) that incorporates, was developed using, or is produced or manufactured through the use of, or with respect to which Licensee otherwise acquired a license to, Licensed Know-How ; or (b) any service sold by Licensee, its Affiliates, and any of its or their Sublicensees with respect to the administration of any AAV9 product to patients that (i) in the absence of the licenses granted pursuant to this Agreement, would infringe or is covered by at least one Valid Claim in the country of sale or (ii) that incorporates, was developed using, or is produced or manufactured through the use of, or with respect to which Licensee otherwise acquired a license to, Licensed Know-How .

1.15 “ Licensed Technology ” means, collectively, the Licensed Patents and Licensed Know-How.

1.16 “ Licensee Inventions ” means any new or improved composition of matter, process, method formula, information, product, invention (whether or not patentable or otherwise protectable), discovery, idea, material, or other know-how that is first discovered, produced, conceived, or reduced to practice by or on behalf of Licensee, its Affiliates, or any of its or their Sublicensees in connection with the exercise of any rights granted under this Agreement that relate to or are applicable to the inventions claimed in the Licensed Patents, or the Licensed Know-How.

1.17 “ Manufacturing Technology ” means any and all patents, patent applications, know-how, and all intellectual property rights associated therewith that are owned or controlled by Licensor,

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

and including all tangible embodiments thereof, that claim, cover or relate to the manufacture of adeno-associated viruses, adeno-associated virus vectors, research or commercial reagents related thereto, Licensed Products, or other products, including manufacturing processes, technical information relating to the methods of manufacture, protocols, standard operating procedures, batch records, assays, formulations, quality control data, specifications, scale up methods, any and all improvements, modifications, and changes thereto, and any and all activities associated with such manufacture. Any and all chemistry, manufacturing, and controls (CMC), drug master files (DMFs), or similar materials provided to regulatory authorities and the information contained therein are deemed Manufacturing Technology.

1.18 “ Marketing Authorization ” means all approvals, licenses, registrations or authorizations of any federal, state or local regulatory agency, department, bureau or other governmental entity, necessary for the manufacturing, use, storage, import, transport, marketing and sale of Licensed Products in a country or regulatory jurisdiction.

1.19 “ NDA ” means a New Drug Application filed with the FDA as described in 21 C.F.R. § 314, a Biological License Application (BLA) pursuant to 21 C.F.R. § 601.2, or any equivalent or any corresponding application for regulatory approval in any country or regulatory jurisdiction other than the United States .

1.20 “ Net Sales ” means the gross receipts from sales or other disposition of a Licensed Product (including fees for services within the definition of “Licensed Product”) by Licensee and/or its Affiliates and/or any Sublicensees to Third Parties less the following deductions that are directly attributable to a sale, specifically and separately identified on an invoice or other documentation and actually borne by Licensee, its Affiliates, or any Sublicensees: ****. In the event consideration other than cash is paid to Licensee, its Affiliates, or any Sublicensees, for purposes of determining Net Sales, the Parties shall use the cash consideration that Licensee, its Affiliates, or any Sublicensees would realize from an unrelated buyer in an arm’s length sale of an identical item sold in the same quantity and at the time and place of the transaction, as determined jointly by Licensor and Licensee based on transactions of a similar type and standard industry practice, if any.

1.21 “ Penn Agreement ” means that certain License Agreement entered into between Licensor and The Trustees of the University of Pennsylvania, effective on February 24, 2009, as amended by that letter agreement dated March 6, 2009, by that certain Second Amendment to License Agreement effective on September 9, 2014, and by that certain Third Amendment to License Agreement effective on April 29, 2016, and as further amended from time to time.

1.22 “ Phase 3 Clinical Trial ” means a pivotal clinical trial in humans performed to gain evidence with statistical significance of the efficacy of a product in a target population, and to obtain expanded evidence of safety for such product that is needed to evaluate the overall benefit-risk relationship of such product, to form the basis for approval of an NDA and to provide an adequate basis for physician labeling, as described in 21 C.F.R. § 312.21(c) or the corresponding regulation in jurisdictions other than the United States.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

1.23 “ Prosecute ” means preparation, filing, and prosecuting patent applications and maintaining patents, including any reexaminations, reissues, oppositions, inter partes review, and interferences.

1.24 “ Receiving Party ” has the meaning set forth in Section 5.1.

1.25 “ REGENXBIO Licensors ” means SmithKline Beecham Corporation (or any successor thereto under the GSK Agreement) and The Trustees of the University of Pennsylvania (or any successor thereto under the Penn Agreement).

1.26 “ Retained Rights ” has the meaning set forth in Section 2.2.

1.27 “ RETT Field ” means the treatment of Rett Syndrome in humans by in vivo gene therapy using AAV9 delivering the gene encoding for methyl CpG binding protein 2 (MECP2).

1.28 “ Sublicensee ” means (i) any Third Party or Affiliate to whom Licensee grants a sublicense of some or all of the rights granted to Licensee under this Agreement as permitted by this Agreement; and (ii) any other Third Party or Affiliate to whom a sublicensee described in clause (i) has granted a further sublicense as permitted by this Agreement.

1.29 “ Third Party ” means any person or entity other than a Party to this Agreement or Affiliates of a Party to this Agreement.

1.30 “ Valid Claim ” means a claim of an issued and unexpired patent (including any patent claim the term of which is extended by any extension, supplementary protection certificate, patent term restoration, or the like) included within the Licensed Patents or a claim of a pending patent application included within the Licensed Patents, which has not lapsed, been abandoned, been held revoked, or been deemed unenforceable or invalid by a non-appealable decision or an appealable decision from which no appeal was taken within the time allowed for such appeal of a court or other governmental agency of competent jurisdiction.

Article 2: License Grant

2.1 License Grant . Subject to the terms and conditions of this Agreement, including the Retained Rights, Licensor hereby grants to Licensee an exclusive, sublicensable (as provided in Section 2.4 only), non-transferable (except as provided in Section 10.2), royalty-bearing, worldwide license, under the Licensed Technology to make, have made, use, import, sell, and offer for sale Licensed Products solely in the Fields, including, for the avoidance of doubt, the right to conduct research and development.

2.2 Retained Rights . Except for the rights and licenses specified in Section 2.1, no license or other rights are granted to Licensee under any intellectual property of Licensor, whether by implication, estoppel, or otherwise and whether such intellectual property is subordinate, dominant, or otherwise useful for the practice of the Licensed Technology. Notwithstanding anything to the contrary in this Agreement, Licensor may use and permit others to use the Licensed Technology for any research, development, commercial, or other purposes outside of the Fields. Without limiting the foregoing, and notwithstanding anything in this Agreement to

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

the contrary, Licensee acknowledges and agrees that the following rights are retained by Licensor and the REGENXBIO Licensors (individually and collectively, the “ Retained Rights ”), whether inside or outside the Fields:

2.2.1 The rights and licenses granted in Section 2.1 shall not include any right (and Licensor and the REGENXBIO Licensors retain the exclusive (even as to Licensee), fully sublicensable right) under the Licensed Technology to make, have made, use, sell, offer to sell, and import Domain Antibodies that are expressed by an adeno-associated vector, including AAV9.

2.2.2 Licensor and the REGENXBIO Licensors retain the following rights with respect to the Licensed Technology:

(a) A non-exclusive, sublicensable right under the Licensed Technology to make, have made, use, sell, offer to sell, and import products that deliver RNA interference and antisense drugs using an adeno-associated vector, including AAV9; and

(b) A non-exclusive right for the REGENXBIO Licensors (which right is sublicensable by the REGENXBIO Licensors) to use the Licensed Technology for non-commercial research purposes and to use the Licensed Technology for such REGENXBIO Licensors’ discovery research efforts with non-profit organizations and collaborators.

2.2.3 The rights and licenses granted in Section 2.1 shall not include any right (and Licensor retains the exclusive (even as to Licensee), fully sublicensable right) under the Licensed Technology:

(a) to conduct commercial reagent and services businesses, which includes the right to make, have made, use, sell, offer to sell, and import research reagents, including any viral vector construct; provided that, for clarity, such rights retained by Licensor shall not include the right to conduct clinical trials in humans in the Fields; or

(b) to use the Licensed Technology to provide services to any Third Parties; provided that Licensee’s license under Section 2.1 does include the right to provide the service of the administration of Licensed Products to patients.

2.2.4 Licensor retains the fully sublicensable right under the Licensed Technology to grant non-exclusive research and development licenses to Affiliates and Third Parties; provided that such research and development rights retained by Licensor shall not include the right to use the Licensed Technology to conduct (or permit others to conduct) clinical trials in humans in the Fields or use the Licensed Technology to sell products in the Fields.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

2.2.5 The Trustees of the University of Pennsylvania may use and permit other non-profit organizations or other non-commercial entities to use the Licensed Technology for educational and research purposes.

2.3 Government Rights . Licensee acknowledges that the United States government retains certain rights in intellectual property funded in whole or part under any contract, grant, or similar agreement with a federal agency. The license grant hereunder is expressly subject to all applicable United States government rights, including any applicable requirement that products resulting from such intellectual property sold in the United States must be substantially manufactured in the United States.

2.4 Sublicensing .

2.4.1 The license granted pursuant to Section 2.1 is sublicensable by Licensee to any Affiliates or Third Parties; provided that any such sublicense must comply with the provisions of this Section 2.4 (including Section 2.4.2).

2.4.2 The right to sublicense granted to Licensee under this Agreement is subject to the following conditions:

(a) Licensee may only grant sublicenses pursuant to a written sublicense agreement with the Sublicensee; ****. Licensor must receive written notice as soon as practicable following execution of any such sublicenses. Any further sublicenses granted by any Sublicensees (to the extent permitted hereunder) must comply with the provisions of this Section 2.4 (including Section 2.4.2) to the same extent as if Licensee granted such sublicense directly.

(b) In each sublicense agreement, the Sublicensee must be required to comply with the terms and conditions of this Agreement to the same extent as Licensee has agreed and must acknowledge that Licensor is an express third party beneficiary of such terms and conditions under such sublicense agreement.

(d) Within **** after entering into a sublicense, Licensor must receive a copy of the sublicense written in the English language for Licensor’s records and to share with the REGENXBIO Licensors. The copy of the sublicense may be redacted to exclude confidential information of the applicable Sublicensee, but such copy shall not be redacted to the extent that it impairs Licensor’s (or the REGENXBIO Licensors’) ability to ensure compliance with this Agreement; provided that, if either of the REGENXBIO Licensors requires a complete, unredacted copy of the sublicense, Licensee shall provide such complete, unredacted copy.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

(e) Licensee’s execution of a sublicense agreement will not relieve Licensee of any of its obligations under this Agreement. Licensee is and shall remain **** to Licensor for all of Licensee’s duties and obligations contained in this Agreement and for any act or omission of an Affiliate or Sublicensee that would be a breach of this Agreement if performed or omitted by Licensee, and Licensee will be deemed to be in breach of this Agreement as a result of such act or omission.

2.5 Improvements .

2.5.1 Licensee hereby grants to Licensor a non-exclusive, worldwide, royalty-free, transferable, sublicensable, irrevocable, perpetual license:

(a) to use any Licensed Back Improvements (and any intellectual property rights with respect thereto) consummate in scope to the Retained Rights, and

(b) to practice the Licensed Back Improvements (and any intellectual property rights with respect thereto) in connection with AAV9, including the right to research, develop, make, have made, use, offer for sale, and sell products and services; provided that Licensor shall have no right, under the license in this Section 2.5.1(b), to practice the Licensed Back Improvements in the Fields.

2.5.2 For purposes of this Agreement, “ Licensed Back Improvements ” means any patentable modifications or improvements developed by Licensee, any Affiliates, or any Sublicensees to any vector that is the subject of a claim within the Licensed Patents.

2.5.3 Licensee agrees to provide prompt notice to Licensor upon the filing of any patent application covering any Licensee Invention and/or any Licensed Back Improvement, together with a reasonably detailed description of or access to any such Licensed Back Improvement to permit the practice of any such invention or improvement.

2.6 Transfer of Licensed Know-How . During the **** following the Effective Date, at Licensee’s sole expense, **** Licensor will deliver to Licensee copies of Licensed Know-How in the form that such Licensed Know-How then exists, including ****.

2.7 Section 365(n) of the Bankruptcy Code . All rights and licenses granted to Licensee or Licensor under or pursuant to this Agreement are and will otherwise be deemed to be, for purposes of Section 365(n) of the United States Bankruptcy Code (Title 11, U.S. Code), as amended (the “ Bankruptcy Code ”) or any comparable law outside the United States, licenses of rights to “intellectual property” as defined in Section 101(35A) of the Bankruptcy Code. The Parties will retain and may fully exercise all of their respective rights and elections under the Bankruptcy Code and any comparable law outside the United States.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

Article 3: Consideration

3.1 Initial Fee . In partial consideration of the license granted to Licensee under Section 2.1, Licensee shall pay Licensor an initial fee of $6,000,000, which shall be payable within **** after the Effective Date.

3.2 Annual Maintenance Fee . In partial consideration of the license granted to Licensee under Section 2.1, Licensee shall pay Licensor on-going annual maintenance fees of $**** for each Field on each anniversary of the Effective Date.

3.3 Milestone Fees .

3.3.1 In partial consideration of the rights and licenses granted to Licensee under Section 2.1, Licensee shall pay Licensor the following milestone payments within **** after the achievement of each event for only the first Licensed Product in each Field to achieve each of the following milestone events:


Milestone		Milestone Payment
1. First treatment of the 1st human subject in a clinical trial ( i.e. , first patient, first dose)		$****
2. First treatment in Phase 3 Clinical Trial (i.e., first patient, first dose)		$****
3. NDA submission in the United States		$****
4. Marketing Authorization submission in the European Union		$****
5. NDA approval in the United States		$****
6. Marketing Authorization approval in the European Union		$****
Total (per Licensed Product in each Field):		$ 18,000,000.00

For clarity, the milestone payments set forth in this Section 3.3.1 are payable *** with respect to only the first Licensed Product in each Field to reach each of the foregoing milestone events, ****.

3.3.2 To the extent that either of the first two development milestones in Section 3.3.1 ‎ ( i.e ., first treatment of a human subject in a clinical trial or first treatment in Phase 3 Clinical Trial) has not been paid at the time of achievement of either the NDA or Marketing Authorization submission milestone ( i.e. , milestones 3 and 4 in Section ‎ 3.3.1 ‎ ), then, upon the achievement of either of such submission milestones, the preceding unpaid development milestone payments shall be made in addition to the payment corresponding to the applicable submission milestone that has been achieved.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

3.4 Royalties . In further consideration of the rights and licenses granted to Licensee under Section 2.1, Licensee shall pay to Licensor a royalty of **** on Net Sales of Licensed Products, subject to the reductions in royalty rates set forth in Section 3.4.1.

3.4.1 Third Party Royalties Stacking Provision . If Licensee must obtain a license from a Third Party to avoid infringement of such Third Party’s rights in order to manufacture, use, or commercialize a given Licensed Product and if the royalties required to be paid to such Third Party for such license, together with those royalties payable to Licensor, in the aggregate, exceed **** of Net Sales for any Licensed Product, then the royalty owed to Licensor for that Licensed Product will be reduced by an amount calculated as follows:

STACKING ROYALTY CALCULATIONS

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

Where
R = reduction of Licensor royalty,
A = unreduced Licensor royalty,
B = sum of all Third Party royalties,
C = increment of projected total royalty above ****.

Example Calculation:


Assume:	i) all Third Party royalties = ****
	ii) unreduced Licensor royalty = ****
	iii) projected total royalty = ****

R = (**** - ****) * (**** / (**** + ****))

R = (**** * ****)

R = ****

Licensor Stacked Royalty = **** – **** = **** (but subject to the cap described below)

Notwithstanding the foregoing, Licensee will pay to Licensor no less than **** of the royalties that Licensee would otherwise pay to Licensor with respect to Net Sales of Licensee if there were no royalties due to Third Parties.

3.4.2 Royalty Payment Period . Licensee’s obligation hereunder for payment of a royalty under this Section 3.4 on the Net Sales of Licensed Products in a given country will end on a country-by-country, Licensed Product-by-Licensed Product basis on the later of: (i) expiration, lapse, abandonment, or invalidation of the last Valid Claim of the Licensed Patents to expire, lapse, become abandoned or become unenforceable for the applicable Licensed Product in the applicable country, or (ii) 7 years from the first commercial sale of the applicable Licensed Product in the applicable country.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

3.5 Sublicense Fees .

3.5.1 In further consideration of the rights and licenses granted to Licensee under Section 2.1, Licensee will pay Licensor **** of any sublicense fees (****) received by Licensee or its Affiliates from a Third Party for the Licensed Technology from any Sublicensee or from any person or entity granted any option to obtain a sublicense.

3.5.2 With respect to the obligations under this Section 3.5, Licensee shall not be required to submit any amounts received from a Third Party for the following:

(a) Reimbursement or payment, in either case, of Licensee’s actual costs for research, development, and/or manufacturing activities performed by Licensee or its Affiliates corresponding directly to the research, development and/or manufacturing of Licensed Products pursuant to a specific agreement;

(b) Any and all amounts paid to Licensee or its Affiliates by a Sublicensee as royalties on sales of Licensed Product sold by the Sublicensee under a sublicense agreement; and

3.5.3 If Licensee or its Affiliates receives sublicense fees from Sublicensees or from any person or entity granted any option to obtain a sublicense under this Agreement in the form of non-cash consideration, then, at Licensor’s option, Licensee shall pay Licensor payments as required by this Section 3.5 (a) in the form of the non-cash consideration received by Licensee or its Affiliates or (b) a cash payment determined based on the fair market value of such non-cash consideration. If Licensee or its Affiliate enters into any sublicense that is not an arm’s length transaction, fees due under this Section 3.5 will be calculated based on the fair market value of such transaction, at the time of the transaction, assuming an arm’s length transaction made in the ordinary course of business, as determined jointly by Licensor and Licensee based on transactions of a similar type and standard industry practice, if any.

3.5.4 To the extent Licensee receives payment from a Third Party relating to one or more of the milestone events set forth in the table in Section 3.3, then the amount of the payment made to Licensor under such Section 3.3 with respect to such milestone event shall not be deemed sublicense fees under this Section 3.5; instead, the amounts due under this Section 3.5 shall be calculated by applying the applicable sublicense fee rate set forth in Section 3.5.1 above to the sublicense fees received by Licensee from such Third Party after deducting the amount of the payment under Section 3.3.

3.6 Adjustment of Fees for Licenses . On a Licensed Product-by-Licensed Product, country-by-country basis, upon the date on which the manufacture, use, sale, offer for sale, or import of a Licensed Product does not infringe or is not covered by a Valid Claim in such country, then the applicable fees and payments due under this Section 3 shall be reduced by ****.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

3.7 Reports and Records .

3.7.1 Licensee must deliver to Licensor within **** after the end of each Calendar Quarter after the first commercial sale of a Licensed Product a report setting forth the calculation of the royalties due to Licensor for such Calendar Quarter, including:

(a) Number of Licensed Products included within Net Sales, listed by country;

(b) Gross consideration for Net Sales of Licensed Product, including all amounts invoiced, billed, or received, listed by country;

(c) Qualifying costs to be excluded from the gross consideration, as described in Section 1.20, listed by category of cost and by country;

(d) Net Sales of Licensed Products listed by country;

(e) A detailed accounting of any royalty reductions applied pursuant to Section 3.4.1;

(f) Royalties owed to Licensor; and

(g) The computations for any applicable currency conversions.

3.7.2 Licensee shall pay the royalties due under Section 3.4 within **** following the last day of the Calendar Quarter in which the royalties accrue. Licensee shall send the royalty payments along with the report described in Section 3.7.1.

3.7.3 Within **** after the occurrence of a milestone event described in Section 3.3, Licensee must deliver to Licensor a report describing the milestone event that occurred, together with a payment of the applicable amount due to Licensor pursuant to Section 3.3.

3.7.4 Within **** after the receipt of any fees from any Sublicensee as described in Section ‎ 3.5, Licensee must deliver to Licensor a report describing the fees received and any permitted deductions under Section 3.5.2 listed by category, together with a payment of the applicable amount due to Licensor pursuant to Section ‎ 3.5.

3.7.5 All financial reports under this Section 3.7 will be certified by the chief financial officer of Licensee or Licensee’s qualified financial representative.

3.7.6 Licensee shall maintain and require its Affiliates and all Sublicensees to maintain, complete and accurate books and records which enable the royalties, fees, and payments payable under this Agreement to be verified. The records must be maintained for **** after the submission of each report under Article 3. Upon reasonable prior written notice to Licensee, Licensee and its Affiliates and all Sublicensees will provide Licensor and/or the REGENXBIO Licensors (and their respective accountants) with access to all of the relevant books, records, and related background information required to conduct a review or audit of the royalties, fees, and payments payable to Licensor under this Agreement to be verified. Access will be made available: (a) during normal business hours; (b) in a manner reasonably designed to facilitate the

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

auditing party’s review or audit without unreasonable disruption to Licensee’s business; and (c) no more than once each calendar year during the term of this Agreement and for a period of 5 years thereafter. Licensee will promptly pay to Licensor the amount of any underpayment determined by the review or audit, plus accrued interest. If the review or audit determines that Licensee has underpaid any payment by **** or more, then Licensee will also promptly pay the costs and expenses of Licensor and the REGENXBIO Licensors and their respective accountants in connection with the review or audit. If the review or audit determines that Licensee has overpaid any payment, then Licensor shall refund the overpayment to Licensee.

3.8 Currency, Interest .

3.8.1 All dollar amounts referred to in this Agreement are expressed in United States dollars. All payments to Licensor under this Agreement must be made in United States dollars.

3.8.2 If Licensee receives payment in a currency other than United States dollars for which a royalty or fee or other payment is owed under this Agreement, then (a) the payment will be converted into United States dollars at the conversion rate for the foreign currency as published in the eastern edition of the Wall Street Journal , N.Y. edition or other publication as mutually agreed upon by the Parties, as of the last business day of the Calendar Quarter in which the payment was received by Licensee; and (b) the conversion computation will be documented by Licensee in the applicable report delivered to Licensor under Section 3.7.

3.8.3 All amounts that are not paid by Licensee when due will accrue interest from the date due until paid at a rate equal to ****% per month (or the maximum allowed by law, if less).

3.9 Taxes and Withholding .

3.9.1 All payments hereunder will be made free and clear of, and without deduction or deferment in respect of, and Licensee shall pay and be responsible for, and shall hold Licensor harmless from and against, any taxes, duties, levies, fees, or charges, including sales, use, transfer, excise, import, and value added taxes (including any interest, penalties, or additional amounts imposed with respect thereto) but excluding withholding taxes to the extent provided in Section 3.9.2. At the request of Licensee, Licensor will give Licensee such reasonable assistance, which will include the provision of documentation as may be required by the relevant tax authority, to enable Licensee to pay and report and, as applicable, claim exemption from or reduction of, such tax, duty, levy, fee, or charge.

3.9.2 If any payment made by Licensee hereunder becomes subject to withholding taxes with respect to Licensor’s gross or net income under the laws of any jurisdiction, Licensee will deduct and withhold the amount of such taxes for the account of Licensor to the extent required by law and will pay the amounts of such taxes to the proper governmental authority in a timely manner and promptly transmit to Licensor appropriate proof of payment of such withholding taxes. At the request of Licensor, Licensee will give Licensor such reasonable assistance, which will include the provision of appropriate certificates of such deductions made together with other supporting documentation as may be required by the relevant tax authority, to enable Licensor to claim exemption from or reduction of, or otherwise obtain repayment of, such

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

withholding taxes, and will upon request provide such additional documentation from time to time as is reasonably required to confirm the payment of withholding tax.

Article 4: Diligence

4.1 Diligence Obligations . Licensee will use commercially reasonable efforts to develop, commercialize, market, promote, and sell Licensed Products in each Field. Commercially reasonable efforts means efforts equivalent to those utilized by ****.

4.2 Reporting . Within ****after the Effective Date and within **** of each December 1 thereafter, Licensee shall provide Licensor with written progress reports, setting forth in such detail as Licensor may reasonably request, the progress of the development, evaluation, testing, and commercialization of each Licensed Product. Licensee will also notify Licensor within **** of the first commercial sale by Licensee, its Affiliates, or any Sublicensees of each Licensed Product. Such a report (“ Development Progress Report ”), setting forth the current stage of development of Licensed Products, shall include:

4.2.1 Date of Development Progress Report and time covered by such report;

4.2.2 Major activities and accomplishments completed by Licensee, its Affiliates, and any Sublicensees relating directly to the Licensed Product since the last Development Progress Report;

4.2.3 Significant research and development projects relating directly to the Licensed Product currently being performed by Licensee, its Affiliates, and any Sublicensees and projected dates of completion;

4.2.4 A development plan covering the next two years at least, which will include future development activities to be undertaken by Licensee, its Affiliates, or any Sublicensees during the next reporting period relating directly to the Licensed Product, Licensee’s strategy to bring the Licensed Product to commercialization, and projected timeline for completing the necessary tasks to accomplish the goals of the strategy;

4.2.5 Projected total development remaining before product launch of each Licensed Product; and

4.2.6 Summary of significant development efforts using the Licensed Technology being performed by Third Parties, including the nature of the relationship between Licensee and such Third Parties.

4.3 Confidential Information . The Parties agree that Development Progress Reports shall be deemed Licensee’s Confidential Information; provided that Licensor may share a copy of such reports with the REGENXBIO Licensors.

4.4 Improvements . Simultaneously with the Development Progress Report, Licensee shall deliver a detailed description of any Licensed Back Improvements, if not previously provided pursuant to Section 2.5.3.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

Article 5: Confidentiality

5.1 Treatment of Confidential Information . Each Party, as a receiving party (a “ Receiving Party ”), agrees that it will (a) treat Confidential Information of the other Party (the “ Disclosing Party ”) as strictly confidential; (b) protect the Confidential Information of the Disclosing Party with at least the same degree of care as it protects its own confidential and proprietary information, and in any event with not less than a reasonable degree of care; (c) not disclose such Confidential Information to Third Parties without the prior written consent of the Disclosing Party, except as may be permitted in this Agreement; provided that any disclosure permitted hereunder shall be under confidentiality agreements with provisions at least as stringent as those contained in this Agreement; and (d) not use such Confidential Information for purposes other than those authorized expressly in this Agreement. The Receiving Party agrees to ensure that its employees who have access to Confidential Information are obligated in writing to abide by confidentiality obligations at least as stringent as those contained under this Agreement.

5.2 Public Announcements .

5.2.1 The Parties agree they will release a joint press release in the form attached hereto as Exhibit B . Except as provided in Section 5.2.2, any other press releases by either Party with respect to the other Party or any other public disclosures concerning the existence of or terms of this Agreement shall be subject to review and approval by the other Party. Once the joint press release or any other written statement is approved for disclosure by both Parties, either Party may make subsequent public disclosure of the contents of such statement without the further approval of the other Party.

5.2.2 Notwithstanding Section 5.2.1, Licensor has the right to publish (through press releases, scientific journals, or otherwise) and refer to any clinical, regulatory, or research results that have been publicly disclosed by Licensee related to Licensee’s Licensed Product or AAV9 program, including referring to Licensee by name as a licensee of Licensor, which publication or referral by Licensor shall not require the prior consent of Licensee.

5.3 Authorized Disclosure . Notwithstanding the provisions of Section 5.1 or 5.2, either Party may disclose Confidential Information or make such a disclosure of the existence of and/or terms of this Agreement to any ****; provided that, in each case, such recipient of Confidential Information is obligated to keep such information confidential on terms no less stringent than those set forth in this Agreement. Furthermore, Licensee agrees that Licensor may share a copy of this Agreement, reports and notices provided by Licensee to Licensor pursuant to the terms of this Agreement, and copies of sublicense agreements provided to Licensor hereunder with the REGENXBIO Licensors. In the event that the Receiving Party receives service of legal process that purports to compel disclosure of the Disclosing Party’s Confidential Information or becomes obligated by law, rule, regulation or rules of a security exchange to disclose the Confidential Information of the Disclosing Party or the existence of or terms of this Agreement to any governmental authority, the Receiving Party shall promptly notify the Disclosing Party, so that the Disclosing Party may seek an appropriate protective order or other remedy with respect to narrowing the scope of such requirement and/or waive compliance by the Receiving Party with the provisions of this Agreement. The Receiving Party will provide the Disclosing Party with

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

reasonable assistance in obtaining such protective order or other remedy. If, in the absence of such protective order or other remedy, the Receiving Party is nonetheless required by law, rule, regulation or rules of a security exchange to disclose the existence of or terms of this Agreement or other Confidential Information of the Disclosing Party, the Receiving Party may disclose such Confidential Information without liability hereunder; provided that the Receiving Party shall furnish only such portion of the Confidential Information that is legally required to be disclosed and only to the extent required by law.

5.4 Term of Confidentiality . The obligations of this Article 5 shall continue for a period of **** following the expiration or termination of this Agreement.

Article 6: Term and Termination

6.1 Term of Agreement . This Agreement will commence on the Effective Date and continue in effect on a country-by-country, Licensed Product-by-Licensed Product basis until the later of: (i) the expiration, lapse, abandonment, or invalidation of the last Valid Claim of the Licensed Patents to expire, lapse, become abandoned, or become unenforceable for the applicable Licensed Product, or (ii) 7 years from the first commercial sale of each Licensed Product, unless sooner terminated as provided in this Agreement. Upon expiration of the Agreement, the license grant to Licensee pursuant to Section 2.1 shall become irrevocable, perpetual, royalty-free and fully paid-up.

6.2 Licensee’s Right to Terminate . Licensee may, upon six months’ prior written notice to Licensor, terminate this Agreement for any reason, with or without cause. In exercising such termination right, Licensee may terminate the Agreement in its entirety or, if desired, Licensee may specify in the written notice that this Agreement is terminating only with respect to one Field.

6.3 Termination for Breach .

6.3.1 Licensor may terminate this Agreement, if Licensee is late in paying to Licensor royalties, fees, or any other monies due under this Agreement, and Licensee does not pay Licensor in full within 15 days upon written demand from Licensor, which termination shall be effective immediately upon the expiration of such 15-day cure period.

6.3.2 Either Party may terminate this Agreement, if the other Party materially breaches this Agreement and does not cure such material breach within 30 days after written notice of the breach, which termination shall be effective immediately upon the expiration of such 30 day cure period. Notwithstanding the above, if termination is by Licensor as a result of Licensee’s materially breaching Section 4.1 and if Licensee disputes in good faith that such material breach exists and gives Licensor written notice of such dispute within 30 days following Licensee’s receipt of Licensor’s notice of default, then Licensor may not terminate this Agreement until the dispute is resolved in accordance with Section 10.6; provided that Licensor shall be entitled to terminate this Agreement at the end of the original 30-day cure period, without waiting for resolution of the dispute in accordance with Section 10.6, if the

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

breach by Licensee of this Agreement would cause Licensor to be in breach of the Penn Agreement or the GSK Agreement.

6.3.3 Notwithstanding the foregoing in Section 6.3.1 and Section 6.3.2, any uncured payment failure or breach of this Agreement solely with respect to either the ALS Field or the RETT Field (and not both Fields) will only give the terminating Party the right to terminate this Agreement with respect to the applicable Field (and not both Fields).

6.4 Termination for Insolvency .

6.4.1 Licensor may terminate this Agreement, effective immediately upon written notice to Licensee, if Licensee or any of its Affiliates experiences any Trigger Event.

6.4.2 Licensee shall include in each sublicense agreement entered into with a Sublicensee a right of Licensee to terminate such sublicense agreement if such Sublicensee experiences any Trigger Event; and Licensee shall terminate the sublicense agreement, effective immediately upon written notice to the Sublicensee, if the Sublicensee experiences any Trigger Event. In addition, if the Sublicensee’s experiencing of a Trigger Event gives a REGENXBIO Licensor a right of termination under the Penn Agreement or GSK Agreement, Licensor may terminate this Agreement, effective immediately upon written notice to Licensee, if any Sublicensee experiences any Trigger Event.

6.4.3 For purposes of this Section 6.4, “ Trigger Event ” means any of the following: (a) if Licensee, any Affiliate, or any Sublicensee, as applicable, (i) becomes insolvent, becomes bankrupt, or generally fails to pay its debts as such debts become due, (ii) is adjudicated insolvent or bankrupt, (iii) admits in writing its inability to pay its debts, (iv) suffers the appointment of a custodian, receiver, or trustee for it or its property and, if appointed without its consent, is not discharged within 30 days, (v) makes an assignment for the benefit of creditors, or (vi) suffers proceedings being instituted against it under any law related to bankruptcy, insolvency, liquidation, or the reorganization, readjustment, or release of debtors and, if contested by it, not dismissed or stayed within ten days; (b) the institution or commencement by Licensee, any Affiliate, or any Sublicensee, as applicable, of any proceeding under any law related to bankruptcy, insolvency, liquidation, or the reorganization, readjustment, or release of debtors; (c) the entering of any order for relief relating to any of the proceedings described in Section 6.4.3(a) or (b) above; (d) the calling by Licensee, any Affiliate, or any Sublicensee, as applicable, of a meeting of its creditors with a view to arranging a composition or adjustment of its debts; or (e) the act or failure to act by Licensee, any Affiliate, or any Sublicensee, as applicable, indicating its consent to, approval of, or acquiescence in any of the proceedings described in Section 6.4.3(b) through (d) above.

6.5 Patent Challenge .

6.5.1 Licensor may terminate this Agreement, effective immediately upon written notice to Licensee, upon the commencement by Licensee, any of its Affiliates, or any Sublicensee of a Patent Challenge.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

6.5.2 For purposes of this Section 6.5, “ Patent Challenge ” means any action against Licensor or the REGENXBIO Licensors, including an action for declaratory judgment, to declare or render invalid or unenforceable the Licensed Patents, or any claim thereof.

6.6 Effects of Termination . The effect of termination by Licensee pursuant to Section 6.2, by either Party, as applicable, under Section 6.3, or by Licensor pursuant to Section 6.4 or 6.5 shall be as follows; provided that for any termination with respect to either the ALS Field or the RETT Field (and not both Fields), then the following provisions shall apply only with respect to such terminated Field:

6.6.1 The licenses granted by Licensor hereunder shall terminate, and Licensee, its Affiliates, and (unless the sublicense agreement is assigned pursuant to Section 6.6.2) all Sublicensees shall cease to make, have made, use, import, sell, and offer for sale all Licensed Products and shall cease to otherwise practice the Licensed Technology; provided that Licensee shall have the right to continue to sell its existing inventories of Licensed Products for a period not to exceed **** after the effective date of such termination;

6.6.2 If termination is by Licensor pursuant to Section 6.3, 6.4, or 6.5, then, at Licensor’s request, Licensee shall assign to Licensor any or all sublicenses granted to Third Parties to the extent of the rights licensed to Licensee hereunder and sublicensed to the Sublicensee; provided that (i) prior to such assignment, Licensee shall advise Licensor whether such Sublicensee is then in full compliance with all terms and conditions of its sublicense and continues to perform thereunder, and, if such Sublicensee is not in full compliance or is not continuing to perform, Licensor may elect not to have such sublicense assigned; and (ii) following such assignment, Licensor shall not be liable to such Sublicensee with respect to any obligations of Licensee to the Sublicensee that are not consistent with, or not required by, Licensor’s obligations to Licensee under this Agreement; and all sublicenses not requested to be assigned to Licensor shall terminate. If termination is for any other reason, then all sublicenses shall terminate;

6.6.3 If termination is by Licensee pursuant to Section 6.2 or by Licensor pursuant to Section 6.3, 6.4, or 6.5, Licensee shall grant, and hereby grants, to Licensor a non-exclusive, perpetual, irrevocable, worldwide, royalty-free, transferable, sublicensable license under any patentable modifications or improvements (and any intellectual property rights with respect thereto) developed by Licensee, any Affiliates, or any Sublicensees to any vector that is the subject of a claim within any of the Licensed Patents, for use by Licensor for the research, development, and commercialization of products in any therapeutic indication;

6.6.4 Licensee shall pay all monies then-owed to Licensor under this Agreement; and

6.6.5 Each Receiving Party shall, at the Disclosing Party’s request, return all Confidential Information of the Disclosing Party. Notwithstanding the foregoing, one copy may be kept by either Party for a record of that Party’s obligations.

6.7 Survival . Licensee’s obligation to pay all monies due and owed to Licensor under this Agreement which have matured as of the effective date of termination or expiration shall survive

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

the termination or expiration of this Agreement. In addition, the provisions of Section 2.2, (Retained Rights), 2.3 (Government Rights), 2.5 (Improvements), Article 3 (Consideration) (solely with respect to any final reports or to the extent any amounts accrued prior to expiration or termination but unpaid), Section 3.7 (Reports and Records), Article 5 (Confidentiality), Article 6 (Term and Termination), Section 8.3 (Disclaimer of Warranties, Damages), Section 8.4 (Indemnification), Section 8.5 (Insurance), Article 9 (Use of Name), and Article 10 (Additional Provisions) shall survive such termination or expiration of this Agreement in accordance with their respective terms.

Article 7: Patent Maintenance; Patent Infringement

7.1 Prosecution of Licensed Patents . As between Licensor and Licensee, the Parties agree as follows:

7.1.1 Licensor shall have the sole right, but not the obligation, to Prosecute patent applications and issued patents within Licensed Patents, in Licensor’s sole discretion. Subject to Section 7.1.3, Licensor shall provide Licensee with a reasonable opportunity to review and provide comments in connection with the Prosecution of the Licensed Patents; and Licensor shall keep Licensee reasonably informed as to all material developments with respect to such Licensed Patents and shall supply to Licensee copies of material communications received and filed in connection with the Prosecution of such Licensed Patents.

7.1.2 Nothing in this Agreement obligates Licensor to continue to Prosecute any patent applications or issued patents, and Licensee acknowledges that Licensor shall have no obligation to undertake any inter-party proceedings, such as oppositions, inter partes review, or interferences, or to undertake any re-examination or re-issue proceedings, in either case, with respect to the Licensed Patents.

7.1.3 Licensee acknowledges that The Trustees of the University of Pennsylvania control Prosecution of the Licensed Patents, with Licensor having certain rights to review. Licensee acknowledges and agrees that (a) the rights and obligations under this Section 7.1 are subject to the rights of the REGENXBIO Licensors set forth in the GSK Agreement and Penn Agreement with respect to the Licensed Patents, and (b) Licensor’s obligations under this Agreement only apply to the extent of Licensor’s rights with respect to participation in Prosecuting the Licensed Patents under the GSK Agreement and the Penn Agreement.

7.2 Infringement Actions Against Third Parties .

7.2.1 Licensee is responsible for notifying Licensor promptly of any infringement of Licensed Patents (other than Retained Rights) that may come to Licensee’s attention, including any “patent certification” filed in the United States under 21 U.S.C. § 355(b)(2) or 21 U.S.C. § 355(j)(2) or similar provisions in other jurisdictions alleging the invalidity, unenforceability or non-infringement of any Licensed Patents, and any notification received pursuant to subsection (k) of 42 U.S.C § 262 for any Licensed Product that becomes a “reference product.” However, Licensee is under no obligation to search for potential infringers.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

7.2.2 As between Licensor and Licensee, but subject to any obligations of Licensor to the REGENXBIO Licensors, Licensor shall have the sole right, but not the obligation, to prosecute any such infringement **** and shall execute all documents necessary to initiate litigation to prosecute, maintain, and settle such action. Nothing in this Agreement obligates Licensor to bring or prosecute lawsuits against Third Parties for infringement of any Licensed Patents.

7.2.3 Licensee shall have no right to undertake prosecution of any such infringement.

7.3 Defense of Infringement Claims . In the event Licensee or Licensor becomes aware that Licensee’s or any of its Affiliates’ or any Sublicensees’ practice of the Licensed Patents is the subject of a claim for patent infringement by a Third Party, that Party shall promptly notify the other, and the Parties shall consider the claim and the most appropriate action to take. Licensee shall cause each of its Affiliates and each Sublicensee to notify Licensee promptly in the event such entity becomes aware that its practice of the Licensed Patents is the subject of a claim of patent infringement by another. To the extent Licensor takes any action, Licensor (or the REGENXBIO Licensors) shall have the right to require Licensee’s reasonable cooperation in any such suit, upon written notice to Licensee; and Licensee shall have the obligation to participate upon Licensor’s request, in which event, Licensor shall bear the cost of Licensee’s participation. Without Licensor’s prior written permission, which shall not be unreasonably denied, Licensee must not settle or compromise any such suit in a manner that imposes any material obligations or restrictions on Licensor or either of the REGENXBIO Licensors or grants any rights to the Licensed Patents other than rights that Licensee has the right to grant under this Agreement.

Article 8: Warranties; Indemnification

8.1 Representations and Warranties by Licensor . Licensor represents and warrants to Licensee as of the Effective Date:

8.1.1 Licensor has the right, power, and authority to enter into this Agreement and to grant to Licensee the rights specified in this Agreement;

8.1.2 This Agreement when executed shall become the legal, valid, and binding obligation of it, enforceable against it, in accordance with its terms;

8.1.3 There are no actions, suits, proceedings, or arbitrations pending or, to Licensor’s knowledge, threatened against Licensor relating to the Licensed Patents that would be inconsistent with the rights granted to Licensee under this Agreement;

8.1.4 To Licensor’s knowledge, (a) the Licensed Patents are solely owned by The Trustees of the University of Pennsylvania, and (b) no Third Party (other than the REGENXBIO Licensors) has any right, interest, or claim in or to such Licensed Patents in the Fields that are inconsistent with those granted to Licensee in the Fields under this Agreement; and

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

8.1.5 Licensor has not received any written notice from any Third Party patentee alleging infringement of such Third Party’s patents by the practice of the Licensed Patents in the Fields.

8.2 Representations and Warranties by Licensee . Licensee represents and warrants to Licensor as of the Effective Date that:

8.2.1 Licensee has the right, power, and authority to enter into this Agreement and to grant the rights granted by it hereunder;

8.2.2 This Agreement when executed shall become the legal, valid, and binding obligation of it, enforceable against it, in accordance with its terms;

8.2.3 Licensee has the ability and the resources, including financial resources, necessary to carry out its obligations under this Agreement; and

8.2.4 There are no actions, suits, proceedings, or arbitrations pending or, to Licensee’s knowledge, threatened against Licensee that would impact activities under this Agreement.

8.3 Disclaimer of Warranties, Damages . EXCEPT AS SET FORTH IN SECTION 8.1, THE LICENSED TECHNOLOGY, LICENSED PRODUCTS, AND ALL RIGHTS LICENSED UNDER THIS AGREEMENT ARE PROVIDED ON AN “AS IS” BASIS, AND, EXCEPT AS EXPRESSLY SET FORTH IN SECTION 8.1, LICENSOR MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT THERETO. BY WAY OF EXAMPLE BUT NOT OF LIMITATION, LICENSOR MAKES NO REPRESENTATIONS OR WARRANTIES, AND HEREBY DISCLAIMS ALL EXPRESS AND IMPLIED REPRESENTATIONS AND WARRANTIES, (i) OF COMMERCIAL UTILITY, ACCURACY, COMPLETENESS, PERFORMANCE, TITLE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OR ENFORCEABILITY OF THE LICENSED TECHNOLOGY, AND PROFITABILITY; OR (ii) THAT THE USE OF THE LICENSED TECHNOLOGY OR LICENSED PRODUCTS WILL NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK, OR OTHER PROPRIETARY RIGHTS OF THIRD PARTIES. EXCEPT AS SET FORTH HEREIN, NONE OF LICENSOR AND THE REGENXBIO LICENSORS SHALL BE LIABLE TO LICENSEE, LICENSEE’S SUCCESSORS OR ASSIGNS, ANY SUBLICENSEES, OR ANY THIRD PARTY WITH RESPECT TO: (a) ANY CLAIM ARISING FROM USE OF THE LICENSED TECHNOLOGY, LICENSED PRODUCTS, AND ANY OR ALL RIGHTS LICENSED UNDER THIS AGREEMENT OR FROM THE DEVELOPMENT, TESTING, MANUFACTURE, USE, OR SALE OF LICENSED PRODUCTS; OR (b) ANY CLAIM FOR LOSS OF PROFITS, LOSS OR INTERRUPTION OF BUSINESS, OR FOR INDIRECT, SPECIAL, INCIDENTAL, EXEMPLARY, PUNITIVE, OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING ANY ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT OR THE EXERCISE OF RIGHTS HEREUNDER, REGARDLESS OF ANY NOTICE OF SUCH DAMAGES. NOTHING IN THIS SECTION 8.3 IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

PARTY UNDER SECTION 8.4 OR TO LIMIT A PARTY’S LIABILITY FOR BREACHES OF ITS OBLIGATION REGARDING CONFIDENTIALITY UNDER ARTICLE 5.

8.4 Indemnification .

8.4.1 By Licensee . Licensee shall defend, indemnify, and hold harmless Licensor, the REGENXBIO Licensors, and their respective shareholders, members, officers, trustees, faculty, students, contractors, agents, and employees (individually, a “ Licensor Indemnified Party ” and, collectively, the “ Licensor Indemnified Parties ”) from and against any and all Third Party liability, loss, damage, action, claim, fee, cost, or expense (including attorneys’ fees) (individually, a “ Third Party Liability ” and, collectively, the “ Third Party Liabilities ”) suffered or incurred by the Licensor Indemnified Parties from claims of such Third Parties that result from or arise out of: ****; provided, however, that Licensee shall not be liable for claims to the extent based on any breach by Licensor of the representations, warranties, or obligations of this Agreement or the gross negligence or intentional misconduct of any of the Licensor Indemnified Parties. Without limiting the foregoing, Licensee must defend, indemnify, and hold harmless the Licensor Indemnified Parties from and against any Third Party Liabilities resulting from:

(a) any **** or other claim of any kind related to the **** by a Third Party of a Licensed Product that was **** by Licensee, its Affiliates, any Sublicensees, their respective assignees, or vendors;

(b) any claim by a Third Party that the ****; and

(c) **** conducted by or on behalf of Licensee, its Affiliates, any Sublicensees, their respective assignees, or vendors relating to the Licensed Technology or Licensed Products, including any claim by or on behalf of ****.

8.4.2 Indemnification Procedure . Licensee, as an indemnifying party (an “ Indemnifying Party ”), shall not be permitted to settle or compromise any claim or action giving rise to Third Party Liabilities in a manner that imposes any restrictions or obligations on Licensor, the REGENXBIO Licensors, or any indemnified party (an “ Indemnified Party ”) without Licensor’s prior written consent or that grants any rights to the Licensed Technology or Licensed Products other than those Licensee has the right to grant under this Agreement without Licensor’s prior written consent. The Indemnifying Party shall be permitted to control any litigation or potential litigation involving the defense of any claim subject to indemnification pursuant to this Section 8.4, including the selection of counsel, with the reasonable approval of the Indemnified Party. If an Indemnifying Party fails or declines to assume the defense of any such claim or action within **** after notice thereof, the Indemnified Party may assume the defense of such claim or action at the cost and risk of the Indemnifying Party, and any Third Party Liabilities related thereto shall be conclusively deemed a Third Party Liability of the Indemnifying Party. The indemnification rights of a Indemnified Party contained in this Agreement are in addition to all other rights that such Indemnified Party may have at law or in equity or otherwise. The Indemnifying Party will pay directly all Third Party Liabilities incurred for defense or negotiation of any claim hereunder or will reimburse the Indemnified Party for all

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

documented Third Party Liabilities incident to the defense or negotiation of any such claim within **** after the Indemnifying Party’s receipt of invoices for such fees, expenses, and charges.

8.5 Insurance . Licensee will procure and maintain insurance policies for the following coverages with respect to product liability, personal injury, bodily injury, and property damage arising out of Licensee’s (and its Affiliates’ and any Sublicensees’) performance under this Agreement: (a) during the term of this Agreement, comprehensive general liability, including broad form and contractual liability, in a minimum amount of $**** combined single limit per occurrence (or claim) and $**** in the aggregate annually; (b) prior to the commencement of clinical trials involving Licensed Products and thereafter for a period of not less than **** (or such longer period as Licensee is required by applicable law to continue to monitor the participants in the clinical trial), clinical trials coverage in amounts that are reasonable and customary in the U.S. pharmaceutical industry, subject always to a minimum limit of $**** combined single limit per occurrence (or claim) and $**** in the aggregate annually; and (c) from prior to the first commercial sale of a Licensed Product until **** after the last sale of a Licensed Product, product liability coverage, in amounts that are reasonable and customary in the U.S. pharmaceutical industry, subject always to a minimum limit of $**** combined single limit per occurrence (or claim) and $**** in the aggregate annually. Licensor may review periodically the adequacy of the minimum amounts of insurance for each coverage required by this Section 8.5, and Licensor reserves the right to require Licensee to adjust the limits accordingly. The required minimum amounts of insurance do not constitute a limitation on Licensee’s liability or indemnification obligations to the Licensor Indemnified Parties under this Agreement. The policies of insurance required by this Section 8.5 will be issued by an insurance carrier with an A.M. best rating of **** or better and will name Licensor as an additional insured with respect to Licensee’s performance (and its Affiliates’ and any Sublicensees’) under this Agreement. Licensee will provide Licensor with insurance certificates evidencing the required coverage within **** after the Effective Date and the commencement of each policy period and any renewal periods. Each certificate will provide that the insurance carrier will notify Licensor in writing at least **** prior to the cancellation or material change in coverage. Licensee will cause all Sublicensees to comply with the terms of this Section 8.5 to the same extent as Licensee.

Article 9: Use of Name

9.1 Licensee, its Affiliates, any Sublicensees, and all of its and their employees and agents must not use Licensor’s, the University of Pennsylvania’s, or SmithKline Beecham Corporation’s name, seal, logo, trademark, or service mark (or any adaptation thereof) or the name, seal, logo, trademark, or service mark (or any adaptation thereof) of any of such entities’ representative, school, organization, employee, or student in any way without the prior written consent of Licensor or such entity, as applicable, unless required to do so pursuant to applicable law, rule, regulation or rules of a securities exchange; provided, however that Licensee may acknowledge the existence and general nature of this Agreement, subject to Section 5.2 or 5.3, as applicable.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

9.2 Licensor and all of its employees and agents must not use Licensee’s name, seal, logo, trademark, or service mark (or any adaptation thereof) in any way without the prior written consent of Licensee; provided, however that Licensor may acknowledge the existence and general nature of this Agreement, subject to Section 5.2 or 5.3, as applicable, and refer to Licensee as a licensee of Licensor.

Article 10: Additional Provisions

10.1 Relationship . Nothing in this Agreement shall be deemed to establish a relationship of principal and agent between Licensee and Licensor, nor any of their agents or employees for any purpose whatsoever, nor shall this Agreement be construed as creating any other form of legal association or arrangement which would impose liability upon one Party for the act or failure to act of the other Party.

10.2 Assignment . The rights and obligations of Licensee and Licensor hereunder shall inure to the benefit of, and shall be binding upon, their respective permitted successors and assigns. Licensee may not assign or otherwise transfer (by operation of law or otherwise) this Agreement or any of its rights or obligations under this Agreement without the prior written consent of Licensor which consent is in the absolute discretion of Licensor (except Licensee shall have the right to assign this Agreement without Licensor’s consent to a wholly owned Affiliate, in which case Licensee shall remain responsible for the performance of this Agreement by such Affiliate); provided, however, Licensee shall be permitted to transfer (by operation of law or otherwise ) this Agreement without Licensor’s consent in connection with a Change of Control; provided that, Licensee: (i) requires any transferee or successor to agree in writing to be legally bound by this Agreement to the same extent as Licensee and provides Licensor with a copy of such undertaking; (ii) provides Licensor with written notice of the Change of Control to Licensor **** of the consummation of the transaction resulting in a Change of Control of Licensee; and (iii) provides Licensor with a copy of the definitive agreement for the Change of Control of Licensee with **** of the consummation of the transaction (provided, that Licensee shall be entitled to include customary redactions in such copy provided to Licensor, to the extent such redacted information is not necessary to verify compliance with the terms of this Agreement or otherwise required by the Penn Agreement and/or GSK Agreement) . Notwithstanding anything to the contrary in this Agreement, for clarity, in case of a Licensee Change of Control, in no event shall any intellectual property rights owned or controlled by the acquirer or its Affiliates immediately prior to such Licensee Change of Control be included in any of the licenses granted to Licensor under this Agreement. Licensor may assign this Agreement and its rights and obligations without the consent of Licensee. No assignment shall relieve the assigning Party of responsibility for the performance of any accrued obligations which it has prior to such assignment. Any attempted assignment by Licensee in violation of this Section ‎ 10.2 shall be null and void and of no legal effect.

10.3 Waiver . A waiver by either Party of a breach of any provision of this Agreement will not constitute a waiver of any subsequent breach of that provision or a waiver of any breach of any other provision of this Agreement.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

10.4 Notices . Notices, payments, statements, reports, and other communications under this Agreement shall be in writing and shall be deemed to have been received as of the date received if sent by public courier ( e.g. , Federal Express), by Express Mail, receipt requested, by facsimile, or by electronic mail (with a copy of such facsimile or electronic mail also sent by one of the other methods of delivery) and addressed as follows:


If for Licensor:	with a copy to:
REGENXBIO Inc. 9600 Blackwell Road Suite 210 Rockville, MD 20850 USA Attn: Chief Executive Officer Telephone: 240-552-8181 Facsimile: 240-652-9692	REGENXBIO Inc. 9600 Blackwell Road Suite 210 Rockville, MD 20850 USA Attn: General Counsel Telephone: 240-552-8181 Facsimile: 240-652-9692
If for Licensee:
AveXis, Inc. 2275 Half Day Road, Suite 200 Bannockburn, IL 60015 Attn: Chief Executive Officer Telephone: Facsimile:

Either Party may change its official address upon written notice to the other Party.

10.5 Applicable Law . This Agreement shall be construed and governed in accordance with the laws of the State of New York, without giving effect to conflict of law provisions that may require the application of the laws of another jurisdiction. Subject to Section 10.6, the Parties hereby submit to the exclusive jurisdiction of and venue in the courts located in the State of New York with respect to any and all disputes concerning the subject of this Agreement.

10.6 Dispute Resolution . In the event of any controversy or claim arising out of or relating to this Agreement, the Parties shall first attempt to resolve such controversy or claim through good faith negotiations for a period of not less than **** following notification of such controversy or claim to the other Party. If such controversy or claim cannot be resolved by means of such negotiations during such period, then such controversy or claim shall be resolved by binding arbitration administered by the American Arbitration Association (“ AAA ”) in accordance with the Commercial Arbitration Rules of the AAA in effect on the date of commencement of the arbitration, subject to the provisions of this Section 10.6. The arbitration shall be conducted as follows:

10.6.1 The arbitration shall be conducted by three arbitrators, each of whom by training, education, or experience has knowledge of the research, development, and commercialization of

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

biological therapeutic products in the United States. The arbitration shall be conducted in English and held in New York, New York.

10.6.2 In its demand for arbitration, the Party initiating the arbitration shall provide a statement setting forth the nature of the dispute, the names and addresses of all other parties, an estimate of the amount involved (if any), the remedy sought, otherwise specifying the issue to be resolved, and appointing one neutral arbitrator. In an answering statement to be filed by the responding Party within **** after confirmation of the notice of filing of the demand is sent by the AAA, the responding Party shall appoint one neutral arbitrator. Within **** from the date on which the responding Party appoints its neutral arbitrator, the first two arbitrators shall appoint a chairperson.

10.6.3 If a Party fails to make the appointment of an arbitrator as provided in Section 10.6.2, the AAA shall make the appointment. If the appointed arbitrators fail to appoint a chairperson within the time specified in Section 10.6.2 and there is no agreed extension of time, the AAA shall appoint the chairperson.

10.6.4 The arbitrators will render their award in writing and, unless all Parties agree otherwise, will include an explanation in reasonable detail of the reasons for their award. Judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof, including in the courts described in Section 10.5. The arbitrators will have the authority to grant injunctive relief and other specific performance; provided that the arbitrators will have no authority to award damages in contravention of this Agreement, and each Party irrevocably waives any claim to such damages in contravention of this Agreement. The arbitrators will, in rendering their decision, apply the substantive law of the State of New York, without giving effect to conflict of law provisions that may require the application of the laws of another jurisdiction. The decision and award rendered by the arbitrators will be final and non-appealable (except for an alleged act of corruption or fraud on the part of the arbitrator).

10.6.5 The Parties shall use their reasonable efforts to conduct all dispute resolution procedures under this Agreement as expeditiously, efficiently, and cost-effectively as possible.

10.6.6 All expenses and fees of the arbitrators and expenses for hearing facilities and other expenses of the arbitration will be borne equally by the Parties unless the Parties agree otherwise or unless the arbitrators in the award assess such expenses against one of the Parties or allocate such expenses other than equally between the Parties. Each of the Parties will bear its own counsel fees and the expenses of its witnesses except to the extent otherwise provided in this Agreement or by applicable law.

10.6.7 Compliance with this Section 10.6 is a condition precedent to seeking relief in any court or tribunal in respect of a dispute, but nothing in this Section 10.6 will prevent a Party from seeking equitable or other interlocutory relief in the courts of appropriate jurisdiction, pending the arbitrators’ determination of the merits of the controversy, if applicable to protect the confidential information, property, or other rights of that Party or to otherwise prevent irreparable harm that may be caused by the other Party’s actual or threatened breach of this Agreement.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

10.7 No Discrimination . Licensee, its Affiliates, and Licensee shall use reasonable efforts to require that any Sublicensees, in their respective activities under this Agreement, shall not discriminate against any employee or applicant for employment because of race, color, sex, sexual, or affectional preference, age, religion, national, or ethnic origin, handicap, or because he or she is a disabled veteran or a veteran (including a veteran of the Vietnam Era).

10.8 Compliance with Law . Licensee (and its Affiliates’ and any Sublicensees’) must comply with all prevailing laws, rules, and regulations that apply to its activities or obligations under this Agreement. Without limiting the foregoing, it is understood that this Agreement may be subject to United States laws and regulations controlling the export of technical data, computer software, laboratory prototypes, and other commodities, articles, and information, including the Arms Export Control Act as amended in the Export Administration Act of 1979 and that Licensee’s obligations are contingent upon compliance with applicable United States export laws and regulations. The transfer of certain technical data and commodities may require a license from the cognizant agency of the United States Government and/or written assurances by Licensee that Licensee shall not export data or commodities to certain foreign countries without prior approval of such agency. Licensor neither represents that a license is not required nor that, if required, it will issue.

10.9 Entire Agreement . This Agreement, together with all exhibits hereto, embodies the entire understanding between the Parties relating to the subject matter hereof and supersedes all prior understandings and agreements, whether written or oral. This Agreement may not be varied except by a written document signed by duly authorized representatives of both Parties.

10.10 Marking . Licensee, its Affiliates, and any Sublicensees shall mark any Licensed Product (or their containers or labels) made, sold, or otherwise distributed by it or them with any notice of patent rights necessary or desirable under applicable law to enable the Licensed Patents to be enforced to their full extent in any country where Licensed Products are made, used, sold, offered for sale, or imported.

10.11 Severability and Reformation . If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, then such invalid or unenforceable provision will be automatically revised to be a valid or enforceable provision that comes as close as permitted by law to the Parties’ original intent; provided that, if the Parties cannot agree upon such valid or enforceable provision, the remaining provisions of this Agreement will remain in full force and effect, unless the invalid or unenforceable provisions are of such essential importance to this Agreement that it is to be reasonably assumed that the Parties would not have entered into this Agreement without the invalid or unenforceable provisions.

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

10.13 Interpretation; Construction . The captions to the several Articles and Sections of this Agreement are included only for convenience of reference and shall not in any way affect the construction of, or be taken into consideration in interpreting, this Agreement. In this

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

Agreement, unless the context requires otherwise, (a) the word “ including ” shall be deemed to be followed by the phrase “ without limitation ” or like expression; (b) references to the singular shall include the plural and vice versa; (c) references to masculine, feminine, and neuter pronouns and expressions shall be interchangeable; (d) the words “ herein ” or “ hereunder ” relate to this Agreement; (e) “ or ” is disjunctive but not necessarily exclusive; (f) the word “ will ” shall be construed to have the same meaning and effect as the word “ shall ”; (g) all references to “ dollars ” or “ $ ” herein shall mean U.S. Dollars; (h) unless otherwise provided, all reference to Sections, Articles, and exhibits in this Agreement are to Sections, Articles, and exhibits of and in this Agreement; and (i) whenever this Agreement refers to a number of days, such number shall refer to calendar days unless business days are specified. Business days shall mean a day on which banking institutions in Washington, D.C. are open for business. Each Party represents that it has been represented by legal counsel in connection with this Agreement and acknowledges that it has participated in the drafting hereof. In interpreting and applying the terms and provisions of this Agreement, the Parties agree that no presumption will apply against the Party which drafted such terms and provisions.

10.14 Cumulative Rights and Remedies . The rights and remedies provided in this Agreement and all other rights and remedies available to either Party at law or in equity are, to the extent permitted by law, cumulative and not exclusive of any other right or remedy now or hereafter available at law or in equity. Neither asserting a right nor employing a remedy shall preclude the concurrent assertion of any other right or employment of any other remedy, nor shall the failure to assert any right or remedy constitute a waiver of that right or remedy.

10.15 Counterparts . This Agreement may be executed in one or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

IN WITNESS WHEREOF, the Parties, intending to be legally bound, have caused this License Agreement to be executed by their duly authorized representatives.


REGENXBIO INC.		AVEXIS, INC.


By:	/s/ Kenneth Mills	By:	/s/ Sean P. Nolan
Name:	Kenneth Mills	Name:	Sean P. Nolan
Title:	President & CEO	Title:	Chief Executive Officer

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

Exhibit A

Licensed Patents

Application #	Patent #	Filing Date	Country	Status
****	****	****	****	****

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

Exhibit B
Press Release

AveXis and REGENXBIO Announce New Exclusive Worldwide Licenses for the Treatment of Two Rare Neurological Monogenic Disorders Using NAV AAV9 Vector

REGENXBIO grants AveXis new licenses to NAV AAV9 vector for the development and commercialization of treatments for Rett syndrome (RTT) and amyotrophic lateral sclerosis (ALS)

CHICAGO and ROCKVILLE, Md., June 07, 2017 (GLOBE NEWSWIRE) -- AveXis, Inc. (NASDAQ:AVXS) and REGENXBIO Inc. (NASDAQ:RGNX) today announced an exclusive worldwide license agreement for AveXis to develop and commercialize gene therapy treatments using REGENXBIO’s NAV AAV9 vector to treat two rare neurological monogenic disorders: Rett syndrome (RTT) and a genetic form of amyotrophic lateral sclerosis (ALS) caused by mutations in the superoxide dismutase 1 (SOD1) gene.

Under the terms of the license agreement, REGENXBIO will receive an upfront payment upon execution, ongoing fees, milestone payments and royalties on net sales of products incorporating the NAV AAV9 vector.

“Building on our experience and the success we have seen to date with the use of REGENXBIO’s NAV AAV9 vector in our spinal muscular atrophy clinical trials, this new license agreement reflects progress on executing our corporate strategy and our vision of becoming the leader in the treatment of rare and life-threatening neurological genetic diseases,” said Sean Nolan, President and Chief Executive Officer of AveXis. “While we remain intensely focused on the development and commercialization of AVXS-101 for the treatment of spinal muscular atrophy, we are excited by the potential for gene therapy to address the needs of patients with RTT and ALS – two devastating diseases for which there are no cures and insufficient existing treatments.”

“This license agreement for our NAV AAV9 vector highlights the strength of our relationship with our existing NAV Technology Licensee, AveXis, and our commitment to bringing important new NAV-based gene therapies to patients with severe diseases with significant unmet medical need,” said Kenneth T. Mills, President and Chief Executive Officer of REGENXBIO. "As a leader in AAV-based gene therapy, REGENXBIO continues to selectively and strategically license our NAV Technology Platform for specific vector and indication combinations in a way that allows us to maintain our focus on internal product development while at the same time advancing the overall field by expanding the pipeline of NAV-based gene therapies.”

Preclinical data demonstrating promising efficacy and safety of gene therapy treatments for RTT and ALS using NAV AAV9, generated by AveXis’ Chief Scientific Officer Dr. Brian Kaspar at Nationwide Children's Hospital, has been licensed by AveXis. AveXis intends to move forward with initiating IND-enabling studies in both RTT and ALS and plans to provide more details on these programs in the second half of 2017.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

About Rett Syndrome

Rett syndrome (RTT) is a devastating, rare neurological disorder characterized by slowed growth, loss of normal movement and coordination and loss of communication skills. RTT is caused by an X-linked dominant mutation in the methyl CpG binding protein 2 ( MECP2 ) gene, which results in problems with the protein production critical for brain development. Rett Syndrome occurs in approximately one of every 10,000 female births and usually begins to show signs and symptoms in infants between six and 18 months of age. Current treatments only offer symptomatic relief and do not target the genetic cause of the disease, leaving a significant unmet need.

About Genetic Amyotrophic Lateral Sclerosis

Amyotrophic lateral sclerosis (ALS) is a progressive neurodegenerative disease that affects nerve cells in the brain and the spinal cord. Familial or inherited forms of ALS reflect five to 10 percent of ALS cases, or approximately one to two thousand people in the U.S., and can be caused by mutations in several genes known to be associated with ALS. Approximately 20 percent of these cases are caused by mutations in the gene that produces the copper zinc superoxide dismutase 1 (SOD1) enzyme, which leads to a progressive degeneration of motor neurons affecting movement and muscle control. ALS usually occurs in people between the ages of 40 and 70. Current treatments only offer modest benefits and do not target the genetic cause of the disease, leaving a significant unmet need

About AveXis, Inc.

AveXis is a clinical-stage gene therapy company developing treatments for patients suffering from rare and life-threatening neurological genetic diseases. The company’s initial proprietary gene therapy candidate, AVXS-101, recently completed a Phase 1 clinical trial for the treatment of SMA Type 1. For additional information, please visit www.avexis.com .

About REGENXBIO Inc.

REGENXBIO is a leading clinical-stage biotechnology company seeking to improve lives through the curative potential of gene therapy. REGENXBIO’s NAV® Technology Platform, a proprietary adeno-associated virus (AAV) gene delivery platform, consists of exclusive rights to more than 100 novel AAV vectors, including AAV7, AAV8, AAV9 and AAVrh10. REGENXBIO and its third-party NAV Technology Platform Licensees are applying the NAV Technology Platform in the development of a broad pipeline of candidates in multiple therapeutic areas.

AveXis Forward-Looking Statements

This press release contains "forward-looking statements," within the meaning of the Private Securities Litigation Reform Act of 1995, regarding, among other things, AveXis’ research, development and regulatory plans for its programs for treatment of RTT and ALS, its expectations regarding initiation of IND-enabling studies for these programs and timing of providing an update on these programs. Such forward-looking statements are based on current expectations and involve inherent risks and uncertainties, including factors that could delay, divert or change any of them, and could cause actual results to differ materially from those projected in its forward-looking statements. Meaningful factors which could cause actual results to differ include, but are not limited to, the scope, progress, expansion, and costs of developing

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

and commercializing AveXis’ product candidates; regulatory developments in the U.S. and EU, as well as other factors discussed in the "Risk Factors" and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of AveXis’ Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 16, 2017. In addition to the risks described above and in the Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the SEC, other unknown or unpredictable factors also could affect AveXis’ results. There can be no assurance that the actual results or developments anticipated by AveXis will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, AveXis. Therefore, no assurance can be given that the outcomes stated in such forward-looking statements and estimates will be achieved.

All forward-looking statements contained in this press release are expressly qualified by the cautionary statements contained or referred to herein. AveXis cautions investors not to rely too heavily on the forward-looking statements AveXis makes or that are made on its behalf. These forward-looking statements speak only as of the date of this press release (unless another date is indicated). AveXis undertakes no obligation, and specifically declines any obligation, to publicly update or revise any such forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

REGENXBIO Forward-Looking Statements

This press release contains “forward-looking statements,” within the meaning of the Private Securities Litigation Reform Act of 1995, regarding, among other things, REGENXBIO’s research, development and regulatory plans in connection with its NAV Technology Platform and gene therapy treatments. Such forward-looking statements are based on current expectations and involve inherent risks and uncertainties, including factors that could cause actual results to differ materially from those projected by such forward-looking statements. All of REGENXBIO’s development timelines could be subject to adjustment depending on recruitment rate, regulatory agency review and other factors that could delay the initiation and completion of clinical trials. Meaningful factors which could cause actual results to differ include, but are not limited to, the timing of enrollment, commencement and completion of REGENXBIO’s clinical trials; the timing and success of preclinical studies and clinical trials conducted by REGENXBIO and its development partners; the ability to obtain and maintain regulatory approval of REGENXBIO’s product candidates, and the labeling for any approved products; the scope, progress, expansion, and costs of developing and commercializing REGENXBIO’s product candidates; REGENXBIO’s ability to establish and maintain development partnerships; REGENXBIO’s expenses and revenue; regulatory developments in the United States and foreign countries; the sufficiency of REGENXBIO’s cash resources and needs for additional financing; and other factors discussed in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of REGENXBIO’s Annual Report on Form 10-K for the year ended December 31, 2016 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, which are on file with the Securities and Exchange Commission (SEC) and available at www.sec.gov . In addition to the risks described above and in REGENXBIO’s filings with the SEC, other unknown or unpredictable factors also could affect REGENXBIO’s results. There can be no assurance that the actual results or developments anticipated by REGENXBIO will be realized or, even if substantially realized, that they will

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

have the expected consequences to, or effects on, REGENXBIO. Therefore, no assurance can be given that the outcomes stated in such forward-looking statements and estimates will be achieved.

All forward-looking statements contained in this press release are expressly qualified by the cautionary statements contained or referred to herein. REGENXBIO cautions investors not to rely too heavily on the forward-looking statements REGENXBIOmakes or that are made on its behalf. These forward-looking statements speak only as of the date of this press release (unless another date is indicated). REGENXBIO undertakes no obligation, and specifically declines any obligation, to publicly update or revise any such forward-looking statements, whether as a result of new information, future events or otherwise.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITHRESPECT TO THE OMITTED PORTIONS.

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Sean P. Nolan, certify that:

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

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

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

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

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

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

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

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

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

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

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


Date: August 10, 2017	/s/ Sean P. Nolan
	Sean P. Nolan
	President and Chief Executive Officer

Exhibit 31.2

Certification of Chief Financial Officer

I, Thomas J. Dee, certify that:

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

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


Date: August 10, 2017	/s/ Thomas J. Dee
	Thomas J. Dee
	Senior Vice President, Chief Financial Officer

Exhibit 32.1

Certification of Chief Executive Officer and Chief Financial Officer

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

The Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2017 (the “Quarterly Report”), to which this Certification is attached as Exhibit 32.1, fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and

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


Date: August 10, 2017	/s/ Sean P. Nolan
	Sean P. Nolan
	President and Chief Executive Officer

Date: August 10, 2017	/s/ Thomas J. Dee
	Thomas J. Dee
	Senior Vice President, Chief Financial Officer

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