PROTEOSTASIS THERAPEUTICS, INC. (Form: 10-Q, Received: 11/14/2017 17:24:01)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

For the quarterly period ended September 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: 001-37695

Proteostasis Therapeutics, Inc.

(Exact name of registrant as specified in its charter)

Delaware

20-8436652

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

200 Technology Square, 4th Floor

Cambridge, Massachusetts 02139

(Address of principal executive office) (Zip Code)

Registrant’s telephone number, including area code: (617) 225-0096

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 (§ 232.405 of this chapter) 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, or a smaller reporting 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 November 9, 2017, there were 25,216,088 shares of the registrant’s Common Stock, $0.001 par value per share, outstanding.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “aim”, “may”, “will”, “should”, “expects”, “intends”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential”, “continue” or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

•

our estimates regarding our clinical trials, including, without limitation, the timing of the initiation of, completion of, enrollment in, and data from our trials;

•

our estimates regarding anticipated filing of INDs for nominated drug candidates;

•

our estimates regarding expenses, future revenues and capital requirements;

•

our ability to obtain and maintain regulatory approval of PTI-428, PTI-801 and PTI-808, and our combination solutions for any indication, and the labeling under any approval we may obtain;

•

our ability to obtain and maintain sanctioning or favorable scoring of our clinical trials or protocols from other third parties, such as the Therapeutics Development Network of the Cystic Fibrosis Foundation or the Clinical Trial Network of the European Cystic Fibrosis Society;

•

intense competition in the CF market and the ability of our competitors, many of whom have greater resources than we do, to offer different, better or lower cost therapeutic alternatives than our product candidates;

•

anticipated regulatory developments in the United States and foreign countries;

•

anticipated developments with respect to, and the commercial availability of, CFTR modulators with which PTI-428 or other of our product candidates is intended to be administered, including Vertex’s Kalydeco® and Orkambi®;

•

our plans to develop and commercialize PTI-428, PTI-801, PTI-808 and our combination solutions including expected preclinical and clinical results and timing;

•

our ability to obtain and maintain intellectual property protection for our proprietary assets;

•

the size and growth of the potential markets for PTI-428, PTI-801, PTI-808 and our combination solutions, and our ability to serve those markets;

•

the rate and degree of market acceptance of PTI-428, PTI-801, PTI-808 and our combination solutions for any indication;

•

our ability to obtain additional financing;

•

the loss of key scientific or management personnel; and

•

other forward-looking statements discussed elsewhere in this report.

Any forward-looking statements in this Quarterly Report on Form 10-Q reflect our current views with respect to future events and with respect to our future financial performance and involve known and unknown risks, uncertainties and other 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 these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those described under Part II, Item 1A. Risk Factors and elsewhere in this Quarterly Report on Form 10-Q. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

This Quarterly Report on Form 10-Q also contains estimates, projections and other information concerning our industry, the general business environment, and the markets for certain diseases, including estimates regarding the potential size of those markets and the estimated incidence and prevalence of certain medical conditions. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events, circumstances or numbers including actual disease prevalence rates and market size, may differ materially from the information reflected in this report. Unless otherwise expressly stated, we obtained this industry, business information, market data, prevalence information and other data from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources, in some cases applying our own assumptions and analysis that may, in the future, not prove to have been accurate.

Kalydeco® and Orkambi® are trademarks of Vertex Pharmaceuticals Incorporated.

Proteostasis Therapeutics, I nc.

INDEX

		Page
PART I – FINANCIAL INFORMATION
Item 1.	Condensed Financial Statements (unaudited)
	Condensed Balance Sheets as of September 30, 2017 and December 31, 2016	4
	Condensed Statements of Operations for the Three and Nine Months Ended September 30, 2017 and 2016	5
	Condensed Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2017 and 2016	6
	Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2017 and 2016	7
	Notes to Condensed Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27

Item 4.	Management’s Evaluation of our Disclosure Controls and Procedures	28

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	65
Item 6.	Exhibits	66

Signatures		67

PART I — FINANC IAL INFORMATION

PROTEOSTASIS THERAPEUTICS, INC.

CONDENSED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

	September 30,			December 31,
	2017			2016
Assets
Current assets:
Cash and cash equivalents	$	18,192		$	18,613
Short-term investments		25,034			66,897
Restricted cash		294			—
Accounts receivable		1,079			668
Prepaids and other current assets		1,838			4,059
Total current assets		46,437			90,237
Property and equipment, net		12,582			541
Other assets		41			68
Restricted cash, net of current portion		1,656			294
Total assets	$	60,716		$	91,140
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	2,535		$	2,021
Accrued expenses		5,855			4,328
Deferred revenue		1,754			2,204
Deferred rent		139			201
Other liabilities		756			—
Total current liabilities		11,039			8,754
Deferred revenue, net of current portion		—			752
Deferred rent, net of current portion		—			87
Derivative liability		3			91
Other liabilities, net of current portion		11,355			—
Total liabilities		22,397			9,684
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized as of September 30, 2017 and December 31, 2016, respectively; no shares issued and outstanding as of September 30, 2017 and December 31, 2016		—			—
Common stock, $0.001 par value; 125,000,000 shares authorized as of September 30, 2017 and December 31, 2016, respectively; 25,112,724 and 25,000,734 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively		26			26
Additional paid-in capital		241,758			238,902
Accumulated other comprehensive loss		(7	)		(22	)
Accumulated deficit		(203,458	)		(157,450	)
Total stockholders’ equity		38,319			81,456
Total liabilities and stockholders’ equity	$	60,716		$	91,140

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

PROTEOSTASIS THERAPEUTICS, INC.

CONDENSED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Revenue	$	1,551		$	1,715		$	3,719		$	4,324
Operating expenses:
Research and development		12,894			9,218			41,372			23,498
General and administrative		2,741			3,266			8,813			8,682
Total operating expenses		15,635			12,484			50,185			32,180
Loss from operations		(14,084	)		(10,769	)		(46,466	)		(27,856	)
Interest income		155			36			515			56
Other expense, net		(25	)		(38	)		(57	)		(15	)
Net loss		(13,954	)		(10,771	)		(46,008	)		(27,815	)
Accruing dividends on preferred stock		—			—			—			(1,378	)
Net loss attributable to common stockholders	$	(13,954	)	$	(10,771	)	$	(46,008	)	$	(29,193	)
Net loss per share attributable to common stockholders—basic and diluted	$	(0.56	)	$	(0.54	)	$	(1.84	)	$	(1.75	)
Weighted average common shares outstanding—basic and diluted		25,093,344			20,073,685			25,051,536			16,672,368

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

PROTEOSTASIS THERAPEUTICS, INC.

CONDENSED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Net loss	$	(13,954	)	$	(10,771	)	$	(46,008	)	$	(27,815	)
Other comprehensive loss:
Unrealized gain (loss) on investments		20			(9	)		15			(9	)
Comprehensive loss	$	(13,934	)	$	(10,780	)	$	(45,993	)	$	(27,824	)

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

PROTEOSTASIS THERAPEUTICS, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine Months Ended September 30,
	2017			2016
Cash flows from operating activities:
Net loss	$	(46,008	)	$	(27,815	)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization		187			248
Premium on short-term investments		(140	)		(124	)
Amortization of premium on short-term investments		182			2
Non-cash rent expense		(149	)		(134	)
Stock-based compensation expense		2,228			1,245
Stock issued for consulting services		555			130
Change in fair value of derivative liability		(88	)		140
Change in fair value of preferred stock warrant liability		—			(82	)
Gain on disposal of property and equipment		—			(13	)
Changes in operating assets and liabilities:
Accounts receivable		(411	)		473
Prepaids and other current assets		2,221			(2,200	)
Other assets		27			63
Accounts payable		514			390
Accrued expenses		1,527			1,849
Deferred revenue		(1,202	)		(1,992	)
Net cash used in operating activities		(40,557	)		(27,820	)
Cash flows from investing activities:
Change in restricted cash		(1,656	)		—
Purchases of short-term investments		(23,727	)		(56,299	)
Proceeds received from maturities of short-term investments		65,563			—
Purchases of property and equipment		(117	)		(32	)
Proceeds received from disposal of property and equipment		—			13
Net cash provided by (used in) investing activities		40,063			(56,318	)
Cash flows from financing activities:
Proceeds from issuance of common stock upon completion of initial public offering, net of commissions and underwriting discounts		—			46,500
Proceeds from issuance of common stock upon completion of follow-on public offering, net of commissions and underwriting discounts		—			70,265
Proceeds from exercise of stock options		30			144
Proceeds from issuance of common stock pursuant to employee stock purchase plan		43			—
Payments of initial public offering costs		—			(2,515	)
Payments of follow-on public offering costs		—			(272	)
Net cash provided by financing activities		73			114,122
Net increase (decrease) in cash and cash equivalents		(421	)		29,984
Cash and cash equivalents at beginning of period		18,613			13,844
Cash and cash equivalents at end of period	$	18,192		$	43,828
Supplemental disclosure of non-cash investing and financing activities:
Conversion of convertible preferred stock into common stock	$	—		$	112,292
Issuance of common stock to settle accrued Series A preferred stock dividends	$	—		$	3
Issuance of common stock for partial payment of accrued bonus	$	—		$	62
Conversion of preferred stock warrants into common stock warrants	$	—		$	28
Deferred offering costs included in accounts payable and accrued expenses	$	—		$	524
Amounts capitalized under build-to-suit lease transaction	$	12,111		$	—

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

PROTEOSTASIS THERAPEUTICS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

1.	Nature of the Business

Proteostasis Therapeutics, Inc. (the “Company”) was incorporated in Delaware on December 13, 2006. The Company is a clinical stage biopharmaceutical company developing small molecule therapeutics to treat cystic fibrosis (“CF”) and other diseases caused by dysfunctional protein processing. The Company focuses on identifying therapies that restore protein function. CF is a disease caused by defects in the cystic fibrosis transmembrane conductance regulator (“CFTR”) protein and insufficient CFTR protein function. The Company’s lead product candidates, PTI-428, PTI-801 and PTI-808 are in early clinical development, with plans for double and triple combinations, and the Company’s other drug candidates are in the preclinical development and discovery phases.

As of December 31, 2016, the Company adopted the provisions of Financial Statement Account Standards Board (FASB) Accounting Standard Codification (ASC) Topic 205-40, Presentation of Financial Statements – Going Concern (ASC 205-40), which requires management to assess the Company’s ability to continue as a going concern for twelve months after the date of the financial statements are issued. This standard requires management to 1) identify and disclose if there are initial conditions indicating substantial doubt about the Company’s ability to continue as a going concern within twelve months of the issuance date of the financial statements, 2) disclose the principal conditions that gave rise to substantial doubt, 3) disclose management’s evaluation of the significance of those conditions in relation to the Company’s ability to meet its obligations and 4) disclose management’s plans that are intended to mitigate the adverse conditions. In accordance with the accounting standard, when considering management’s plans to mitigate the conditions giving rise to substantial doubt, management can only consider those plans which are probable to be successfully implemented .

The Company has incurred losses from operations since its inception. As of September 30, 2017, the Company had an accumulated deficit of $203.5 million. During the three and nine months ended September 30, 2017, the Company incurred losses of $14.0 million and $46.0 million and during the nine months ended September 30, 2017 the Company used $40.6 million of cash in operations. The Company expects to continue to generate operating losses in the foreseeable future. The Company currently expects that its cash, cash equivalents and short-term investments of $43.2 million will be sufficient to fund its operating expenses and capital requirements, based upon its current operating plan, through the second quarter of 2018. As of September 30, 2017, management has further assessed this risk and, in accordance with the requirements of ASC 205-40, determined that there are initial conditions indicating that there is substantial doubt about the Company’s ability to continue as a going concern within twelve months of the issuance date of these condensed financial statements. These indicators are the Company’s accumulated deficit and the forecasted cash expenditures. Although the Company has been successful in raising capital in the past, there is no assurance that it will be successful in obtaining such additional financing on terms acceptable to the Company, if at all, nor is it considered probable under the accounting standards. As such, under the requirements of ASC 205-40, management may not consider the potential for future capital raises in its assessment of the Company’s ability to meet its obligations for the next twelve months. If the Company is unable to obtain funding, the Company would be forced to delay, reduce or eliminate its research and development programs, product portfolio expansion or commercialization efforts, which could adversely affect its business prospects, or the Company may be unable to continue operations.

Thus, in accordance with the requirements of ASC 205-40, management has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for twelve months from the date these condensed financial statements are issued.

The condensed financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, the realization of assets and the satisfaction of liabilities and commitments in the normal course of business .

2.	Summary of Significant Accounting Policies

Unaudited Interim Financial Information

The condensed balance sheet at December 31, 2016 was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). The accompanying condensed financial statements as of September 30, 2017 and for the three and nine months ended September 30, 2017 are unaudited. The accompanying unaudited interim financial statements have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited condensed financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto for the year ended December 31, 2016 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 30, 2017. In the opinion of management, all adjustments, consisting only of normal recurring adjustments as necessary, for the fair statement of the Company’s condensed financial position as of September 30, 2017 and condensed results of its operations and cash flows for the three and nine months ended September 30, 2017 have been made. The results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2017.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, revenue recognition, the accrual for research and development expenses and the valuation of common stock and the derivative liability. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates.

Restricted Cash

As of September 30, 2017 and December 31, 2016, restricted cash consisted of a certificate of deposit in the amount of $0.3 million collateralizing a letter of credit issued as a security deposit in connection with the Company’s lease of its corporate facilities at 200 Technology Square, Cambridge, MA.

On September 19, 2017, the Company entered into a lease agreement for a new corporate headquarters at 80 Guest Street, Brighton, MA (see Note 11). As of September 30, 2017, restricted cash, net of current portion, consisted of a money market account in the amount of $1.7 million collateralizing a letter of credit issued as a security deposit for this lease agreement.

Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. As of September 30, 2017 and December 31, 2016, the Company’s cash equivalents consisted of money market funds.

Short-term Investments

Short-term investments represent holdings of available-for-sale marketable securities in accordance with the Company’s investment policy and cash management strategy. Short-term investments mature within one-year from the balance sheet date. Investments in marketable securities are recorded at fair value, with any unrealized gains and losses, net of taxes, reported as a component of stockholders’ equity until realized or until a determination is made that an other-than-temporary decline in market value has occurred. The cost of marketable securities sold is determined based on the specific identification method and any realized gains or losses on the sale of investments are reflected as a component of other expense, net.

Fair Value Measurements

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

•

Level 1—Quoted prices in active markets for identical assets or liabilities.

•

Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

•

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The Company’s derivative liability, short-term investments and cash equivalents are carried at fair value determined according to the fair value hierarchy described above (see Note 4). The carrying value of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate their fair value due to the short-term nature of these assets and liabilities.

Net Loss per Share

In February 2016, upon the closing of the IPO, all of the outstanding shares of the Company’s redeemable convertible preferred stock automatically converted into 9,699,600 shares of the Company’s common stock. Prior to this conversion, the Company followed the two-class method when computing net loss per share as the Company had issued shares that met the definition of participating securities. The two-class method determines net loss per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. The Company’s redeemable convertible preferred stock contractually entitled the holders of such shares to participate in dividends, but did not contractually require the holders of such shares to participate in losses of the Company. Accordingly, the two-class method did not apply for periods in which the Company reported a net loss or a net loss attributable to common stockholders resulting from dividends or accretion related to its redeemable convertible preferred stock.

Basic net income (loss) per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted net loss per share attributable to common stockholders is computed by dividing the diluted net loss attributable to common stockholders by the weighted average number of common shares, including potential dilutive common shares assuming the dilutive effect of outstanding stock options and unvested restricted common shares, as determined using the treasury stock method. For periods in which the Company has reported net losses, diluted net loss per common share attributable to common stockholders is the same as basic net loss per common share attributable to common stockholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. For any period in which the Company has reported net income, basic net income per common share attributable to common stockholders is adjusted for certain amounts to calculate diluted net loss per common share attributable to common stockholders, since dilutive common shares are assumed to have been issued if their effect is dilutive and not to have been issued if their effect is anti-dilutive.

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which supersedes existing revenue recognition guidance under GAAP. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The standard defines a five-step process to achieve this principle, and will require companies to use more judgment and make more estimates than under the current guidance. The Company expects that these judgments and estimates will include identifying performance obligations in the customer contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date , which delays the effective date of ASU 2014-09 such that the standard is effective for public entities for annual periods beginning after December 15, 2017 and for interim periods within those fiscal years. Early adoption of the standard

is permitted for annual periods beginning after December 15, 2016. In April 2016, the FASB issue d ASU 2016-10, Identifying Performance Obligations and Licensing . The new standard clarifies two aspects of ASU 2014-09, Revenue from Contracts with Customers (Topic 606) : identifying performance obligations and the licensing implementation guidance. These new standards will become effective for the Company on January 1, 2018. The Company only has one contract (see Note 8) within the scope of Topic 606 and intends to use the modified retrospective method for adoption. Since the inception of the contract the Company has recognized $8.1 million in revenue. The Company is still assessing the impact that the adoption of these new standards will have on its financial statements and related disclosures.

In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”) . This guidance will require that lease arrangements longer than 12 months result in an entity recognizing an asset and liability equal to the present value of the lease payments in the statement of financial position. This guidance is effective for annual periods beginning after December 15, 2018, and interim periods therein. This standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU 2016-02 will have on its financial statements and related disclosures.

In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”) . The new standard involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The new standard was adopted by the Company on January 1, 2017 on a modified retrospective basis. As a result, the Company has made an accounting policy election to account for forfeitures as they occur. The adoption of ASU 2016‑09 also requires excess tax benefits and tax deficiencies be recorded in the income statement as opposed to additional paid‑in capital when the awards vest or are settled. This had no material impact on the condensed financial statements as of and for the three and nine months ended September 30, 2017 .

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments . The new standard clarifies certain aspects of the statement of cash flows, including the classification of debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, distributions received from equity method investees and beneficial interests in securitization transactions. The new standard also clarifies that an entity should determine each separately identifiable source or use within the cash receipts and cash payments on the basis of the nature of the underlying cash flows. In situations in which cash receipts and payments have aspects of more than one class of cash flows and cannot be separated by source or use, the appropriate classification should depend on the activity that is likely to be the predominant source or use of cash flows for the item. The new standard will be effective for the Company on January 1, 2018. The Company is currently evaluating the impact that the adoption of this standard will have on its statements of cash flows .

In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 719): Scope of Modification Accounting . The new standard provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The new standard will be effective for the Company on January 1, 2018; however, early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s financial position or results of operations.

3.	Short Term Investments

The following table summarizes the Company’s short term investments as of September 30, 2017 and December 31, 2016 (in thousands):

	September 30, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S government-sponsored enterprise securities	$	12,519	$	—	$	(3	)	$	12,516
U.S. treasury securities		12,522		—		(4	)		12,518
	$	25,041	$	—	$	(7	)	$	25,034

	December 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S government-sponsored enterprise securities	$	53,384	$	—	$	(20	)	$	53,364
U.S. treasury securities		13,535		—		(2	)		13,533
	$	66,919	$	—	$	(22	)	$	66,897

The Company did not have any realized gains or losses on its short-term investments for the three and nine months ended September 30, 2017 and 2016 . There were no other-than-temporary impairments recognized for the three and nine months ended September 30, 2017 and 2016 .

4.	Fair Value of Financial Assets and Liabilities

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values (in thousands):

	Fair Value Measurements as of September 30, 2017 Using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	14,370	$	—	$	—	$	14,370
Short-term investments:
U.S. government-sponsored enterprise securities		—		12,516		—		12,516
U.S. treasury securities		—		12,518		—		12,518
	$	14,370	$	25,034	$	—	$	39,404
Liabilities:
Derivative liability	$	—	$	—	$	3	$	3
	$	—	$	—	$	3	$	3

	Fair Value Measurements as of December 31, 2016 Using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	15,440	$	—	$	—	$	15,440
Short-term investments:
U.S. government-sponsored enterprise securities		—		53,365		—		53,365
U.S. treasury securities		—		13,532		—		13,532
	$	15,440	$	66,897	$	—	$	82,337
Liabilities:
Derivative liability	$	—	$	—	$	91	$	91
	$	—	$	—	$	91	$	91

During the periods ended September 30, 2017 and December 31, 2016, there were no transfers between Level 1, Level 2 and Level 3.

Derivative Liability

The derivative liability relates to a cash settlement option associated with the change of control provision in our Cystic Fibrosis Foundation Therapeutics, Inc. (“CFFT”) agreement, which meets the definition of a derivative. The fair value of the derivative liability is based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The fair value of the derivative instrument was determined using the Monte-Carlo simulation analysis. In determining the fair value of the derivative liability, the inputs impacting fair value include the fair value of the Company’s common stock, expected term of the derivative instrument, expected volatility of the common stock price, risk-free interest rate, expected sales-based milestone payments, discount rate, probability of a change of control event, and the probability that the counterparty would elect to accept the alternative cash payment in lieu of its right to the future sales-based milestone payments.

As of September 30, 2017 and December 31, 2016, the Company determined the per share common stock price available based on the closing price of its common stock on the NASDAQ Global Market as of September 29, 2017 and December 30, 2016, respectively. The Company determined the expected term of the instrument to be 2.25 years and 2.50 years as of September 30, 2017 and December 31, 2016, respectively. The Company estimated its expected stock volatility to be 80.0% and 81.1% as of September 30, 2017 and December 31, 2016, respectively, based on the historical volatility of publicly traded peer companies for terms matching the expected term of the instrument for each respective period. The risk-free interest rate was determined to be 1.51% and 1.33% as of September 30, 2017 and December 31, 2016, respectively, by reference to the U.S. Treasury yield curve for terms matching the expected term of the instrument for each respective period.

Changes in the values of the derivative liability are summarized below (in thousands):

	Derivative
	Liability
Fair value at December 31, 2016	$	91
Change in fair value		(88	)
Fair value at September 30, 2017	$	3

5.	Prepaids and Other Current Assets

Prepaids and other current assets consisted of the following (in thousands):

	September 30,		December 31,
	2017		2016
Prepaid clinical, manufacturing and scientific expenses	$	1,197	$	1,390
Prepaid insurance expenses		218		104
Other prepaid expenses and other current assets		423		2,565
	$	1,838	$	4,059

6.	Accrued Expenses

Accrued expenses consisted of the following (in thousands):

	September 30,		December 31,
	2017		2016
Accrued payroll and related expenses	$	1,293	$	1,813
Accrued research and development expenses		4,086		1,612
Accrued professional fees		399		383
Accrued other		77		520
	$	5,855	$	4,328

7.	Stock-Based Compensation

2016 Stock Option and Incentive Plan

On February 3, 2016, the Company’s stockholders approved the 2016 Stock Option and Incentive Plan (the “2016 Plan”), which became effective on February 9, 2016. The 2016 Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock units, restricted stock awards and other stock-based awards. The number of shares initially reserved for issuance under the 2016 Plan is 1,581,839 shares. The number of shares of common stock that may be issued under the 2016 Plan will automatically increase on each January 1, beginning on January 1, 2017, by the lesser of 3% of the shares of the Company’s common stock outstanding on the immediately preceding December 31 or an amount determined by the Company’s board of directors or the compensation committee of the board of directors. The shares of common stock underlying any awards that are forfeited, canceled, repurchased or are otherwise terminated by the Company under the 2016 Plan and the 2008 Plan will be added back to the shares of common stock available for issuance under the 2016 Plan.

As of September 30, 2017, the total number of shares reserved under the 2016 Plan and 2008 Plan was 3,577,930 and the Company had 631,077 shares available for future issuance under the 2016 Plan.

2016 Employee Stock Purchase Plan

On February 3, 2016, the Company’s stockholders approved the 2016 Employee Stock Purchase Plan (the “2016 ESPP”), which became effective in connection with the completion of the Company’s initial public offering. A total of 138,757 shares of common stock were reserved for issuance under this plan. In addition, the number of shares of common stock that may be issued under the 2016 ESPP will automatically increase on each January 1, beginning on January 1, 2017 and ending on January 1, 2026, by the least of (i) 138,757 shares of common stock, (ii) 1% of the Company’s shares of common stock outstanding on the immediately preceding December 31 and (iii) an amount determined by the Company’s board of directors or the compensation committee of the board of directors.

During the nine months ended September 30, 2017, 10,829 shares of common stock were issued pursuant to the 2016 ESPP. As of September 30, 2017, the total number of shares reserved under the 2016 ESPP was 266,685 shares. The Company recognized less than $0.1 million of stock-based compensation during each of the three and nine month periods ended September 30, 2017.

Stock Option Grants and Shares to Non-employees

Prior to 2013, the Company issued options to purchase 203,964 shares of common stock to non-employees, primarily members of the Company’s scientific advisory board, that vest upon the achievement of specified development and clinical milestones. As of September 30, 2017, options for the purchase of 83,250 shares held by non-employees remained unvested, pending achievement of the specified milestones, and had an aggregate fair value of $0.1 million.

Stock-Based Compensation

Stock-based compensation expense, including shares issued to a non-employee for consulting services, was classified in the statements of operations as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Research and development	$	412	$	119	$	1,070	$	351
General and administrative		636		451		1,713		1,024
	$	1,048	$	570	$	2,783	$	1,375

8.	Collaboration Agreement

Astellas

Under the Collaborative Research, Development, Commercialization and License Agreement (as further amended, the “Astellas Agreement”) with Astellas Pharma Inc. (“Astellas”), entered into in November 2014, the Company recognized revenue of $1.6 million and $1.0 million for the three months ended September 30, 2017 and 2016, respectively, and $3.7 million and $2.2 million for the nine months ended September 30, 2017 and 2016, respectively. The Company recognizes revenue from all upfront payments, research funding payments, non-substantive milestone payments and reimbursements of third-party costs under this arrangement, together as a single unit, over the three and a half year research term of the agreement, which commenced in January 2015, with a cumulative catch-up for the elapsed portion of the services being recognized at the time any non-substantive milestone payment or other consideration is earned. Amounts recorded as deferred revenue under the Astellas Agreement totaled $1.8 million and $3.0 million as of September 30, 2017 and December 31, 2016, respectively.

Biogen

Under the now-terminated collaboration agreement between the Company and Biogen New Ventures, formerly Biogen Idec New Ventures Inc. (“Biogen”), the Company recognized revenue of $0.7 million and $2.1 million for the three and nine months ended September 30, 2016. The Company did not have any deferred revenue under the Biogen agreement as of September 30, 2017 and December 31, 2016 and will not recognize any additional revenue under this terminated agreement in the future.

9.	Income Taxes

The Company did not record a federal or state income tax benefit for its losses for the three and nine months ended September 30, 2017 and 2016 due to the conclusion that a full valuation allowance is required against the Company’s deferred tax assets.

10.	Net Loss per Share

Basic and diluted net loss per share attributable to common stockholders was calculated as follows (in thousands, except share and per share amounts):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Numerator:
Net loss	$	(13,954	)	$	(10,771	)	$	(46,008	)	$	(27,815	)
Accruing dividends on preferred stock		—			—			—			(1,378	)
Net loss attributable to common stockholders-basic and diluted	$	(13,954	)	$	(10,771	)	$	(46,008	)	$	(29,193	)
Denominator:
Weighted average number of common shares outstanding—basic		25,093,344			20,073,685			25,051,536			16,672,368
Net loss per share attributable to common stockholders—basic and diluted	$	(0.56	)	$	(0.54	)	$	(1.84	)	$	(1.75	)

The Company’s potential dilutive securities, which include stock options and a warrant to purchase common stock, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same.

The Company has reported a net loss for all periods presented. Therefore, diluted net loss per common share is the same as basic net loss per common share. The following potentially dilutive securities outstanding, prior to the use of the treasury stock method or if-converted method, have been excluded from the computation of diluted weighted-averag e shares outstanding, because such securities had an antidilutive impact due to the losses reported :

	September 30,
	2017		2016
Options to purchase common stock		2,946,853		1,731,823
Warrant for the purchase of convertible preferred stock (as converted to common stock)		—		14,800
		2,946,853		1,746,623

The warrant for the purchase of common stock was exercised in February 2016. The Company issued 4,349 shares in a net issuance transaction.

11.	Build-to-Suit Lease

On September 19, 2017, the Company entered into a lease agreement for its new headquarters, consisting of approximately 30,000 square feet of laboratory and office space located in Brighton, Massachusetts. The lease commencement date will be on the earlier of (i) the first date on which tenant commenced occupancy for the conduct of business in the premises, or (ii) April 15, 2018, subject to extension for certain delays. The lease will extend for a lease term from the commencement date and then for ten years starting with the first day of the month following the month in which the commencement date falls, unless terminated earlier. The Company is entitled to one seven-year option to extend. Annual rent under the lease, exclusive of operating expenses and real estate taxes, will be approximately $1.7 million in the first year, with annual increases of 2.75% each year thereafter. Total expected rental payments through the initial lease term are approximately $18.8 million. The Company will be entitled to an improvement allowance of approximately $4.8 million for certain permitted costs related to the design and construction of Company improvements to the premises. The lease contains customary provisions allowing the landlord to terminate the lease if the Company fails to remedy a breach of any of its obligations within specified time periods, or upon bankruptcy or insolvency of the Company .

The Company is not the legal owner of the leased space. However, in accordance with ASC 840, Leases , because of the Company’s expected level of direct financial and operational involvement in the substantial tenant improvements required, the Company is deemed to be the owner of the leased space, including the building shell, during the construction period. As a result, the Company capitalized approximately $12.1 million as a build-to-suit asset within property, plant and equipment, net and recognized a corresponding build-to-suit facility lease obligation within other liabilities and other non-current liabilities on its balance sheets equal to the estimated replacement cost of its leased portion of the building at the inception of the lease.

Additionally, construction costs incurred as part of the build-out and tenant improvements will also be capitalized within property, plant and equipment, net. Rental payments made under the lease will be allocated to interest expense and the build-to-suit facility lease obligation, based on the implicit rate of the build-to-suit facility lease obligation. The build-to-suit facility lease obligation was approximately $12.1 million as of September 30, 2017 .

Item 2.

Management’s Discussion and Analysis o f Financial Condition and Results of Operation

The following discussion and analysis of our financial condition and the results of operations should be read in conjunction with our financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q (“Quarterly Report”) and our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016 (the “Annual Report”) filed with the Securities and Exchange Commission on March 30, 2017. 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, 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 in our Annual Report and in this Quarterly 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.

Overview

We are a clinical stage biopharmaceutical company developing small molecule therapeutics to treat cystic fibrosis, or CF, and other diseases caused by dysfunctional protein processing. The Company focuses on identifying therapies that restore protein function. CF is a disease caused by defects in the cystic fibrosis transmembrane conductance regulator, or CFTR, protein and insufficient CFTR protein function. Our CF focused pipeline consists of novel CFTR modulators including correctors, potentiators and amplifiers. We have exploited the novel mechanism of action of the amplifiers as a drug screening tool and have identified correctors and potentiators to be developed as part of a combination therapy. We are in clinical development for PTI-428, an amplifier, PTI-801, a corrector, and PTI-808, a potentiator. We are developing and, if approved, intend to commercialize our own therapies, including a double combination of our corrector and potentiator and a triple combination consisting of our corrector, potentiator and amplifier to be indicated for CF patients who have at least one F508del mutation, representing the majority of the patient population.

The approval of CFTR modulator based therapy, consisting of a potentiator and a combination of a potentiator and a corrector, has validated the clinical benefit of a small molecule pharmacological approach to improve CFTR function and has become a standard of care for eligible CF patients. These developments have spurred drug discovery and development initiatives that include a combinational approach of multiple modulators. Several companies are currently developing combined uses of three CFTR modulators whose goal is the restoration of CFTR protein activity in CF patients by using one potentiator and two corrector molecules. Correctors, such as lumacaftor or tezacaftor, are believed to improve protein folding and trafficking to enable abnormally folded CFTR protein to achieve some level of activity without repairing the actual protein mutation. Potentiators, such as ivacaftor, are believed to increase the opening time of the CFTR protein channel resulting in higher ion flow across the cell membrane.

CFTR modulators are compounds that affect the folding, trafficking, function and clearance of CFTR protein and can be classified according to the ways in which they affect CFTR protein. Amplifiers, which include PTI-428, are CFTR modulators designed to selectively increase the amount of the unfolded form of CFTR protein, thereby providing additional substrate for other CFTR modulators, such as correctors and potentiators, to act upon. Using industry-standard in vitro studies, we have demonstrated that co-administration of PTI-428 with these other CFTR modulators significantly improves the in vitro CFTR protein activity achieved by these CFTR modulators alone.

A triple combination regimen that includes PTI-428 with PTI-801, a corrector, and PTI-808, a potentiator, has been shown to restore in vitro CFTR protein activity to approximately 100% of normal, in patient-derived human bronchial epithelial, or HBE, cells homozygous for F508del.

With the recent advent of CFTR modulators, the CF treatment paradigm is shifting from palliative care, which addresses only the symptoms of CF, to disease-modifying agents that target the genetic mutations and protein dysfunction that cause the disease. We are developing and, if approved, intend to commercialize PTI-428 for CF patients with an F508del mutation of the CFTR gene, the most common CFTR gene mutation. In the United States, approximately 86% of all CF patients have an F508del mutation of the CFTR gene, of which approximately 53% are homozygous (having two copies of the F508del mutation), and approximately 47% are heterozygous (having an F508del mutation and one other mutation).

We have analyzed published data by Vertex Pharmaceuticals Incorporated, or Vertex, of its CFTR modulators (the potentiator ivacaftor and the correctors lumacaftor and tezacaftor) and combinations thereof, which showed a strong correlation between the in vitro CFTR protein activity and lung function improvement. We have shown in vitro that PTI-428 increases the amount of available CFTR protein and, when combined with ivacaftor and either lumacaftor or tezacaftor, nearly doubles the CFTR protein activity in the cell compared to a combination of only ivacaftor and either lumacaftor or tezacaftor. In the fourth quarter of 2015, the investigational new drug application, or IND, that we submitted to the U.S. Food and Drug Administration, or FDA, for a Phase 1 clinical trial to evaluate our PTI-428 product candidate became effective. In January 2016, we received Fast Track designation from the FDA for the investigation of PTI-428 for the treatment of CF. We initiated our first Phase 1 clinical trial in CF subjects and healthy volunteers in

the first half of 2016. The Phase 1 trial in CF subjects includes single ascending dose, or SAD, and multiple ascending dose, or MAD, cohorts. The Phase 1 trial in healthy volunteers includes SAD and MAD cohorts to assess the safety, pharmacokinetic and exploratory biomarker res ults.

We reported preliminary safety and pharmacokinetic (PK) data from MAD cohorts in the PTI-428 Phase 1 clinical trial in CF subjects receiving PTI-428 or placebo for 7 days in addition to Orkambi® as their background, standard of care therapy, as well as a cohort with CF subjects receiving PTI-428 or placebo for 7 days who are not taking CFTR modulator based therapies.

We have initiated a 28-day Phase 2 clinical trial for PTI-428, which commenced dosing of CF patients to receive PTI-428 or placebo for 28 days in addition to Orkambi® as their background therapy, we have completed enrollment and we expect preliminary data from this cohort in the fourth quarter of 2017. We have also initiated and commenced dosing for a study of patients on Kalydeco® who will be dosed with PTI-428 or placebo for 14 days and currently intend to report preliminary data in the first quarter of 2018.

Our IND for the Phase 1 study of PTI-801, a corrector molecule, was submitted to the FDA in the first quarter of 2017 and is now active. In March 2017, we received Fast Track designation from the FDA for the investigation of PTI-801 for the treatment of CF. We have completed dosing of subjects in the key SAD and MAD cohorts of the healthy volunteer portion of this study, to assess the safety and PK of PTI-801, reported initial data on this portion of the study, and are now enrolling and dosing CF subjects on background Orkambi®. We expect initial data from CF subjects on background Orkambi® who have been dosed with PTI-801 or placebo for 14 days in the fourth quarter of 2017.

Our IND for the Phase 1 study of PTI-808, a potentiator molecule, was submitted to the FDA in the second quarter of 2017 and is now active. The study protocol includes healthy volunteer cohorts to assess safety and PK, which are underway, and multiple dosing cohorts in CF patients. Under the same study protocol we plan to explore dosing of PTI-808 with our other investigational agents, PTI-428 and PTI-801. We expect initial data from the SAD and MAD cohorts of a 7-day study in healthy volunteers taking PTI-808 in the fourth quarter of 2017.

Our combination development program is intended to evaluate the clinical profile of the potential combinations of our drug candidates: PTI-801, PTI-808 and PTI-428. The initiation of the first combination study in CF patients is contingent on the outcome of the ongoing clinical studies with PTI-428 and PTI-801, each as an add-on to Orkambi ® . We have completed preclinical combination safety and toxicology studies and have initiated a combination safety, tolerability and PK study in healthy volunteers with all three compounds. We expect initial data from a 7-day study in healthy volunteers taking all three compounds in the fourth quarter of 2017. Our CFTR modulators have shown synergy in vitro with other known and investigational CFTR modulators, creating several possible development pathways, including potential add-on therapies to marketed CFTR modulators and proprietary double and triple combinations as shown in Figure 1. Notably, in vitro data in patient cells showed that the combination of PTI-801 and PTI-808 restored CFTR protein activity to levels beyond those observed in cells from healthy carriers. Given the potential therapeutic benefit of multiple combination options and our commitment to next generation modulators, our combination development plan includes a PTI-801 and PTI-808 doublet and a PTI-808, PTI-801, and PTI-428 triplet. This effort enables us to both diversify our combination strategy and understand the value potential of each component within our portfolio. Additionally, co-administration of PTI-801 and PTI-808 is intended to explore the clinical effect of the dual combination based on in vitro assay data we observed which showed superior in vitro CFTR protein activity compared with the agents in the currently approved product Orkambi ^® or combinations being reviewed for potential marketing authorization in the near future (ivacaftor and tezacaftor). We aim to initiate this dual combination study in CF patients in the fourth quarter of 2017 and initiate a triple combination study in the first half of 2018. These studies are expected to enroll CF patients homozygous for F508del who are not taking Orkambi®.

Figure 1

We strive to collect endorsement and sanctioning for all our studies in CF patients from key regional advocacy organizations to expedite patient recruitment and trial execution. Our Phase 1/2 study protocol for PTI-428 received approval and favorable ranking from the Clinical Trial Network of the European Cystic Fibrosis Society, or the CTN, a patient advocacy group that reviews protocols for CF trials and provides recommendations to its member sites. The PTI-801 study protocol has been sanctioned and favorably ranked by both the CTN and the Therapeutic Development Network, or TDN, part of the Cystic Fibrosis Foundation Therapeutics. We have submitted the PTI-808 study protocol – which includes co-administration with PTI-801 and PTI-428 – to the CTN and TDN for review, and will seek endorsement from both groups upon additional review of clinical data.

In addition, we have partnered with a major pharmaceutical company, Astellas Pharma Inc., or Astellas, on our unfolded protein response, or UPR, program. The UPR program is intended to reduce the accumulation of unfolded proteins in the endoplasmic reticulum, or ER, which is observed in many diseases caused by an imbalance in the proteostasis network and characterized by defects in protein folding, trafficking and clearance, including genetic, neurodegenerative and retinal degenerative diseases. In August 2016, we announced the achievement of a preclinical milestone by demonstrating that selective modulation of the UPR pathway is an effective disease-modifying approach in the treatment of multiple diseases with few or no therapies currently available.

Since our inception in 2006, we have devoted substantially all of our resources to organizing and staffing our company, business planning, raising capital, acquiring and developing product and technology rights, and conducting research and development activities for our product candidates. We do not have any products approved for sale and have not generated any revenue from product sales. We have funded our operations to date with proceeds from the sale of preferred stock, the issuance of convertible promissory notes, proceeds from our initial public offering in February 2016, our follow-on public offering in September 2016, and, to a lesser extent, payments received in connection with collaboration agreements and a research grant.

Since our inception, we have incurred significant operating losses. Our net losses were $14.0 million and $10.8 million for the three months ended September 30, 2017 and 2016, respectively, and $46.0 million and $27.8 million for the nine months ended September 30, 2017 and 2016, respectively. As of September 30, 2017, we had an accumulated deficit of $203.5 million. We expect to continue to incur significant expenses and increasing operating losses for at least the next several years. We expect our expenses and capital requirements will increase substantially in connection with our ongoing activities, as we:

•

expand clinical trials for PTI-428, PTI-801 and PTI-808;

•

explore combination therapies in doublet, triplet and/or quad formats;

•

seek regulatory approval for our product candidates;

•

seek support and approval from our collaboration partners, the TDN and other interested parties ;

•

hire personnel to support our product development, manufacturing, commercialization and administrative efforts; and

•

advance the research and development efforts of our product candidates, including, without limitation, back-up compounds.

We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for our product candidates. If we obtain regulatory approval for any of our product candidates, we expect to incur significant expenses related to developing our internal commercialization capability to support product sales, marketing and distribution. I n addition, we will continue to incur additional costs associated with operating as a public company.

As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through the sale of public or private equity, debt financings or other capital sources, including potential collaborations with other companies or other strategic transactions. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more of our product candidates.

On October 31, 2017, we determined to focus our resources on research and clinical development of our CF programs, as well as supporting our collaboration with Astellas. Accordingly, we reduced our headcount dedicated to research from 46% of the total workforce to 34% through the elimination of 13 positions. As a result of this action, which is anticipated to be completed during the fourth quarter, we estimate annualized savings of approximately $3.0 million, with estimated one-time severance and related costs of approximately $0.2 million in the fourth quarter of 2017.

We expect that our cash, cash equivalents and short-term investments as of September 30, 2017 will enable us to fund our operating expenses and capital requirements, based upon our current operating plan, through the second quarter of 2018. See “ —Liquidity and Capital Resources” .

Components of our Results of Operations

Revenue

To date, we have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products in the foreseeable future. All of our revenue during the three and nine months ended September 30, 2017 was derived from our collaboration agreement with Astellas, while all of our revenue during the three and nine months ended September 30, 2016 was derived from our collaboration agreement with Astellas and our now-terminated collaboration agreement with Biogen New Ventures, formerly Biogen Idec New Ventures Inc. (“Biogen”).

Under the Astellas collaboration agreement, entered into in November 2014, we recognized revenue of $1.6 million and $1.0 million for the three months ended September 30, 2017 and 2016, respectively, and $3.7 million and $2.2 million of for the nine months ended September 30, 2017 and 2016. We recognize revenue from all upfront payments, research funding payments, non-substantive milestone payments and reimbursements of third-party costs under this arrangement, together as a single unit, over the three and a half-year research term, which commenced in January 2015, with a cumulative catch-up for the elapsed portion of the research services being recognized at the time any non-substantive milestone payment or other consideration is earned. Amounts recorded as deferred revenue under the Astellas collaboration agreement totaled $1.8 million and $3.0 million as of September 30, 2017 and December 31, 2016, respectively.

Under the now-terminated collaboration agreement we had with Biogen, we recognized revenue of $0.7 million for the three months ended September 30, 2016 and $2.1 million for the nine months ended September 30, 2016. We recognized revenue from all upfront license payments, research funding payments, non-substantive milestone payments and reimbursements of third-party costs under this arrangement, together as a single unit, over the four-year research term, which commenced in December 2013, with a cumulative catch-up for the elapsed portion of the research services being recognized at the time any non-substantive milestone payment or other consideration is earned. We did not have any deferred revenue under the agreement as of September 30, 2017 and December 31, 2016 and we will not recognize any additional revenue under this terminated agreement in the future.

We expect that any future revenue recognized under the Astellas collaboration agreement will fluctuate from quarter to quarter as a result of the uncertain timing of future milestone payments and the uncertain quantity of our research services provided from quarter to quarter. Further, subject to the terms and conditions of our collaboration agreement, our collaborator has certain unilateral rights to discontinue their participation in the research activities and, as a result, future payments to us under the agreement.

Operating Expenses

Research and Development Expenses

Research and development expenses, which include costs of research services incurred in connection with our collaboration agreements and research grant, consist primarily of costs incurred in connection with the discovery and development of our product candidates, which include:

•

employee-related expenses, including salaries, related benefits, travel and stock-based compensation expense for employees engaged in research and development functions;

•

expenses incurred in connection with the preclinical and clinical development of our product candidates and under agreements with contract research organizations, or CROs;

•

facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance and supplies; and

•

payments made under third-party licensing agreements.

We expense research and development costs as incurred. We recognize external development costs based on an evaluation of the progress to completion of specific tasks using information provided to us by our service providers.

Our direct research and development expenses are tracked on a program-by-program basis and consist primarily of external costs, such as fees paid to consultants, central laboratories, contractors and CROs in connection with our clinical trials and preclinical development activities. We do not allocate employee costs, costs associated with our platform technology and facility expenses, including depreciation or other indirect costs, to specific product development programs because these costs are deployed across multiple product development programs and, as such, are not separately classified. We use internal resources to manage our preclinical development activities and perform data analysis for such activities. These employees work across multiple development programs and, therefore, we do not track their costs by program.

The table below summarizes our research and development expenses incurred by development program:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
	(in thousands)				(in thousands)
CF	$	7,484	$	6,052	$	24,858	$	13,999
UPR		529		233		1,119		877
Unallocated expenses		4,881		2,933		15,395		8,622
Total research and development expenses	$	12,894	$	9,218	$	41,372	$	23,498

We expect that our expenses will increase substantially in connection with our ongoing clinical trials and preclinical development activities. At this time, we cannot reasonably estimate the costs for completing the clinical development of PTI-428, PTI-801 or PTI-808 for the treatment of CF or the cost associated with the development of any of our other product candidates.

The successful development and commercialization of our product candidates is highly uncertain. This is due to the numerous risks and uncertainties associated with product development and commercialization, including the uncertainty of:

•

the scope, progress, outcome and costs of our preclinical development activities, clinical trials and other research and development activities;

•

establishing an appropriate safety profile with IND-enabling studies;

•

successful patient enrollment in, and the initiation and completion of, clinical trials;

•

the cooperation and approval we receive from third parties including clinical investigators, CROs, the TDN and CTN;

•

the timing, receipt and terms of any marketing approvals from applicable regulatory authorities;

•

establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers;

•

obtaining, maintaining, defending and enforcing patent claims and other intellectual property rights;

•

significant and changing government regulation;

•

launching commercial sales of our product candidates, if and when approved, whether alone or in collaboration with others; and

•

maintaining a continued acceptable safety profile of the product candidates following approval.

Any changes in the outcome of any of these variables, or others identified within this filing, with respect to the development of our product candidates in preclinical and clinical development could mean a significant change in the costs and timing associated with the development of these product candidates. For example, if the FDA or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently expect or if we experience significant delays in enrollment in any of our planned clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development of that product candidate.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and related costs, including stock-based compensation, for personnel in executive, finance and administrative functions. General and administrative expenses also include direct and allocated facility-related costs as well as professional fees for legal, consulting, accounting and audit services.

Other Income (Expense), Net

Interest Income . Interest income consists of interest earned on cash equivalents and short-term investments held by us during the three and nine months ended September 30, 2017 and 2016.

Other Income (Expense), Net . Other income (expense), net primarily consists of the amortization of premium on our short-term investments and the gains or losses associated with the changes in the fair values of our derivative liability. The derivative liability relates to a cash settlement option associated with the change of control provision in our CFFT collaboration agreement, which meets the definition of a derivative. Therefore, we have classified this derivative as a liability that we remeasure to fair value at each reporting period, and we record the changes in the derivative liability as a component of other income (expense), net.

Critical Accounting Policies and Significant Judgments and Estimates

Our financial statements are prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of our financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis.

Our actual results may differ from these estimates under different assumptions or conditions. During the nine months ended September 30, 2017, there were no material changes to our critical accounting policies. Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Critical Accounting Policies and Significant Judgments and Estimates” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC, on March 30, 2017 and the notes to the financial statements appearing elsewhere in this Quarterly Report on Form 10-Q. We believe that of our critical accounting policies, the following accounting policies involve the most judgment and complexity:

•

revenue recognition;

•

accrued research and development expenses;

•

stock-based compensation; and

•

valuation of derivative liability.

Accordingly, we believe the policies set forth above are critical to fully understanding and evaluating our financial condition and results of operations. If actual results or events differ materially from the estimates, judgments and assumptions used by us in applying these policies, our reported financial condition and results of operations could be materially affected.

Results of Operations

Comparison of Three Months Ended September 30, 2017 and 2016

The following table summarizes our results of operations for the three months ended September 30, 2017 and 2016 (in thousands):

	Three Months Ended September 30,						Increase
	2017			2016			(Decrease)
Research collaboration revenue	$	1,551		$	1,715		$	(164	)
Operating expenses:
Research and development		12,894			9,218			3,676
General and administrative		2,741			3,266			(525	)
Total operating expenses		15,635			12,484			3,151
Loss from operations		(14,084	)		(10,769	)		(3,315	)
Interest income		155			36			119
Other expense, net		(25	)		(38	)		13
Total other expenses, net		130			(2	)		132
Net loss	$	(13,954	)	$	(10,771	)	$	(3,183	)

Revenue

Revenue was $1.6 million for the three months ended September 30, 2017, compared to $1.7 million for the three months ended September 30, 2016. The decrease of $0.1 million is the result of a reduction of $0.7 million of revenue recognized under the Biogen collaboration that terminated in the fourth quarter of 2016. This decrease was partially offset by an increase of $0.6 million of revenue recognized under the Astellas agreement in the three months ended September 30, 2017, which is primarily a result of payments under the agreement being recognized as revenue over the research term, with a cumulative catch-up for the elapsed portion of the research term .

Research and Development Expenses

Research and development expenses were $12.9 million for the three months ended September 30, 2017, compared to $9.2 million for the three months ended September 30, 2016. The increase of $3.7 million was primarily due to an increase of $1.4 million in activities supporting our CF program as we continue to advance our candidates in the clinic. During the three months ended September 30, 2017, costs incurred in connection with the development of PTI-801 and PTI-808 accounted for a combined increase of $5.4 million, or $2.7 million each, largely related to increased manufacturing, preclinical and clinical trial expenses as we transition to Phase 1 clinical trials. The increase was partially offset by a $3.3 million decrease in spending on PTI-428 as compared to the same period last year. Additionally, there was an increase of $1.2 million in personnel-related costs during the three months ended September 30, 2017 as compared to September 30, 2016, including $0.3 million in employee stock-based compensation expense, primarily driven by an overall increase in headcount to support the development of our CF product pipeline.

General and Administrative Expenses

General and administrative expenses were $2.7 million for the three months ended September 30, 2017, compared to $3.3 million for the three months ended September 30, 2016. The decrease of $0.6 million in general and administrative expenses was primarily due to a decrease of $0.4 million in professional fees and a $0.4 million decrease in facility costs, partially offset by an increase of $0.3 million in personnel-related costs, including $0.2 million of employee stock-based compensation.

Interest Income

Interest income was $0.2 million for the three months ended September 30, 2017 as compared to less than $0.1 million for the three months ended September 30, 2016 and consists of interest earned on short-term investments initially purchased in September 2016 with proceeds from our follow-on offering completed in September 2016.

Other Income (Expense), Net

Other expenses were less than $0.1 million for the three months ended September 30, 2017 and 2016.

Comparison of Nine Months Ended September 30, 2017 and 2016

The following table summarizes our results of operations for the nine months ended September 30, 2017 and 2016 (in thousands):

	Nine Months Ended September 30,						Increase
	2017			2016			(Decrease)
Research collaboration revenue	$	3,719		$	4,324		$	(605	)
Operating expenses:
Research and development		41,372			23,498			17,874
General and administrative		8,813			8,682			131
Total operating expenses		50,185			32,180			18,005
Loss from operations		(46,466	)		(27,856	)		(18,610	)
Interest income		515			56			459
Other income (expense), net		(57	)		(15	)		(42	)
Total other expenses, net		458			41			417
Net loss	$	(46,008	)	$	(27,815	)	$	(18,193	)

Revenue

Revenue was $3.7 million for the nine months ended September 30, 2017, compared to $4.3 million for the three months ended September 30, 2016. The decrease of $0.6 million is the result of a reduction of $2.1 million of revenue recognized under the Biogen collaboration that terminated in the fourth quarter of 2016. This decrease was partially offset by an increase of $1.5 million of revenue recognized under the Astellas agreement. Payments under the agreement are recognized as revenue over the research term, with a cumulative catch-up for the elapsed research term being recognized at the time any such payments are earned.

Research and Development Expenses

Research and development expenses were $41.4 million for the nine months ended September 30, 2017, compared to $23.5 million for the nine months ended September 30, 2016. The increase of $17.9 million was primarily due to an increase of $10.9 million in activities supporting our CF program, primarily related to the continued advancement of our Phase 1 clinical trials for PTI-801 and PTI-808 which accounted for a combined $11.8 million increase due to manufacturing, preclinical and clinical trial expenses as we prepared and advanced these candidates into their Phase 1 clinical trials during the nine months ended September 30, 2017. Costs incurred on PTI-428 decreased by $1.9 million during the nine months ended September 30, 2017. Additionally, there was an increase of $4.1 million in personnel-related costs, including $0.7 million in employee stock-based compensation expense, primarily driven by an overall increase in headcount to support the development of our CF product pipeline.

General and Administrative Expenses

General and administrative expenses were $8.8 million for the nine months ended September 30, 2017, compared to $8.7 million for the nine months ended September 30, 2016.

Interest Income

Interest income was $0.5 million for the nine months ended September 30, 2017 as compared to less than $0.1 million of interest income for the nine months ended September 30, 2016. The increase was primarily due to interest earned on short-term investments held during the nine months ended September 30, 2017. Short-term investments were initially purchased with proceeds from our follow-on offering that was completed in September 2016.

Other Income (Expense), Net

Other expenses were less than $0.1 million for the nine months ended September 30, 2017 and 2016.

Liquidity and Capital Resources

Since our inception, we have incurred significant operating losses. We have generated limited revenue to date from our collaboration agreements and research grant. We have not yet commercialized any of our product candidates, which are in various phases of preclinical development and clinical trials, and we do not expect to generate revenue from sales of any product for several years, if at

all. We have funded our operations to date with proceeds received from our initial public offering and subsequent follow-on offering, the sale of preferred stock, the issuance of convertible promissory notes and, to a lesser extent, payments received in connection with collaboration agreements and a research grant.

As of September 30, 2017, we had cash, cash equivalents and short-term investments of $43.2 million. We expect that our cash, cash equivalents and short-term investments as of September 30, 2017 will enable us to fund our operating expenses and capital requirements, based upon our current operating plan, through the second quarter of 2018. As of September 30, 2017, we have further assessed this risk and, in accordance with the requirements of ASC 205-40, determined that there are initial conditions indicating that there is substantial doubt about our ability to continue as a going concern within twelve months of the issuance date of these condensed financial statements. These indicators are our accumulated deficit and the forecasted cash expenditures. Although we have been successful in raising capital in the past, there is no assurance that we will be successful in obtaining such additional financing on terms acceptable to us, if at all, nor is it considered probable under the accounting standards. As such, under the requirements of ASC 205-40, our management may not consider the potential for future capital raises in their assessment of our ability to meet its obligations for the next twelve months.

The ability to reduce spending at a level that mitigates the factors described above, is not considered probable, as defined in the accounting standards; as such, under the requirements of ASC 205-40, the full extent to which we may extend our funds through these actions may not be considered in our management’s assessment of our ability to continue as a going concern for the next twelve months. In accordance with the requirements of ASC 205-40, management has concluded that it is required to disclose that substantial doubt exists about our ability to continue as a going concern for twelve months from the date these condensed financial statements are issued. While we have plans in place to mitigate these actions, they are not considered probable, as defined in the accounting standards, and a failure to raise the additional funding or to effectively implement cost reductions could harm our business, results of operations and future prospects.

Although we have been successful in raising capital in the past, there is no assurance that we will be successful in obtaining such additional financing on terms acceptable to us, if at all. If we are unable to obtain funding, we could be forced to delay, reduce or eliminate some or all of our research and development programs, product portfolio expansion or commercialization efforts, which would adversely affect our business prospects, or we may be unable to continue operations.

Cash Flows

The following table summarizes our sources and uses of cash for each of the periods presented (in thousands):

	Nine Months Ended September 30,
	2017			2016
Cash used in operating activities	$	(40,557	)	$	(27,820	)
Cash provided by (used in) investing activities		40,063			(56,318	)
Cash provided by financing activities		73			114,122
Net increase (decrease) in cash and cash equivalents	$	(421	)	$	29,984

Operating Activities. Net cash used in operating activities was $40.6 million during the nine months ended September 30, 2017, primarily driven by our net loss of $46.0 million, partially offset by changes in our operating assets and liabilities of $2.7 million and non-cash charges of $2.8 million. Our net loss was primarily attributed to our research and development activities associated with the advancement of our preclinical studies and clinical trials.

During the nine months ended September 30, 2016, operating activities used $27.8 million of cash, primarily resulting from our net loss of $27.8 million. Our net loss was primarily attributed to research and development activities and our general and administrative expenses.

Investing Activities. During the nine months ended September 30, 2017, net cash provided by investing activities was $40.1 million, primarily consisting of proceeds received from maturities of short-term investments and offset by additional purchases of short-term investments.

During the nine months ended September 30, 2016, we used $56.3 million of cash in investing activities primarily as a result of our purchases of short-term investments.

Financ ing Activities. During the nine months ended September 30, 2017, net cash provided by financing activities was less than $0.1 million, primarily resulting from the exercise of stock options and the issuance of common stock pursuant to the employee stock pu rchase plan.

During the nine months ended September 30, 2016, net cash provided by financing activities was $114.1 million, primarily resulting from gross proceeds of $116.8 million from the sale of common stock in connection with our initial and follow-on public offerings, partially offset by payments of $2.8 million of public offering costs.

Operating Capital Requirements

We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities and clinical trials of our product candidates in development.

Our expenses will also increase as we:

•

pursue the clinical development of our most advanced product candidates, including PTI-428, PTI-801 and PTI-808;

•

seek the support and approval from our collaboration partners, the TDN and other interested parties;

•

continue the research and development of our other product candidates and combination therapies;

•

seek to identify and develop additional product candidates;

•

seek marketing approvals for any of our product candidates that successfully complete clinical development;

•

develop and expand our sales, marketing and distribution capabilities for our product candidates for which we obtain marketing approval;

•

scale up our manufacturing processes and capabilities to support our ongoing preclinical activities and clinical trials of our product candidates and commercialization of any of our product candidates for which we obtain marketing approval;

•

maintain, expand and protect our intellectual property portfolio;

•

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

•

increase our product liability and clinical trial insurance coverage as we initiate our clinical trials and commercialization efforts.

Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical drugs, we are unable to estimate the exact amount of our working capital requirements. Our future funding requirements will depend on many factors, including:

•

the number and characteristics of the product candidates we pursue;

•

the scope, progress, results and costs of researching and developing our product candidates, and conducting preclinical studies and clinical trials;

•

the timing of, and the costs involved in, obtaining regulatory approvals for our product candidates;

•

the timing of, and costs involved in, manufacturing our drug candidates and any drugs we successfully commercialize;

•

our ability to establish and maintain strategic collaborations, licensing or other arrangements and the financial terms of such agreements;

•

delays that may be caused by changing regulatory requirements;

•

cost and timing of hiring new employees to support our continued growth;

•

the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims, including litigation costs and the outcome of such litigation; and

•

the timing, receipt and amount of sales of, or milestone payments related to or royalties on, our current or future product candidates, if any.

Until such time, if ever, as we can generate product revenue sufficient to achieve profitability, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaboration agreements, other third-party funding, strategic alliances, licensing arrangements or marketing and distribution arrangements. To the extent that we raise additional capital through the

sale of equity or convertible debt securities, ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of a common stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through other third-party funding, collaborations agreements, strategic alliances, licensing arrangements or marketing and distribution arrangements, we may have to relinquish valuable rights to our technologies, future revenue stre ams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our p roduct development or future commercialization efforts or grant rights to develop and market products or product candidates that we would otherwise prefer to develop and market ourselves.

Based upon our current operating plan, we believe our existing cash, cash equivalents and short-term investments will enable us to fund our operating expenses and capital expenditure requirements through the second quarter of 2018.

Contractual Obligations and Commitments

The Company currently leases office and laboratory space in Cambridge, Massachusetts pursuant to an operating lease that, as amended, expires in May 2018. The Company recorded rent expense of $0.4 million during each of the three months ended September 30, 2017 and 2016 and $1.3 million and $1.2 million during the nine months ended September 30, 2017 and 2016, respectively.

On September 19, 2017, the Company entered into a lease agreement for its new headquarters, consisting of approximately 30,000 square feet of laboratory and office space located in Brighton, Massachusetts. The lease commencement date will be on the earlier of (i) the first date on which tenant commenced occupancy for the conduct of business in the premises, or (ii) April 15, 2018, subject to extension for certain delays. The lease will extend for a lease term from the commencement date and then for ten years starting with the first day of the month following the month in which the commencement date falls, unless terminated earlier. The Company is entitled to one seven-year option to extend. Annual rent under the lease, exclusive of operating expenses and real estate taxes, will be approximately $1.7 million in the first year, with annual increases of 2.75% each year thereafter. The Company will be entitled to an improvement allowance of approximately $4.8 million for certain permitted costs related to the design and construction of Company improvements to the premises the lease contains customary provisions allowing the landlord to terminate the lease if the Company fails to remedy a breach of any of its obligations within specified time periods, or upon bankruptcy or insolvency of the Company.

The following table summarizes our contractual obligations as of September 30, 2017 and the effects that such obligations are expected to have on our liquidity and cash flows in future periods (in thousands):

	Total		Less Than 1 Year		1 to 3 Years		3 to 5 Years		More than 5 Years
Operating lease commitments (1)	$	19,670	$	1,729	$	3,404	$	3,594	$	10,943
Consulting agreement (2)		1,470		840		630		—		—
Total	$	21,140	$	2,569	$	4,034	$	3,594	$	10,943

(1)

Amounts in the table reflect payments due for our lease of office and laboratory space in Cambridge, Massachusetts under an operating lease agreement that, as amended, expires in May 2018 and our new lease for office and laboratory space in Brighton, MA, which commences in April 2018 and expires approximately March 2028.

(2)

In May 2016, we entered into an agreement with Dr. Stelios Papadopoulos to provide consulting and advisory services as and when requested. We will pay a quarterly retainer of $0.2 million to Dr. Papadopoulos over a three-year term for a total of $2.5 million. The quarterly retainer may be settled in cash, common stock of the Company or a combination thereof, at our discretion.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the Securities and Exchange Commission.

Item 3.

Quantitative and Qualitative Disclosures About Market Risks

Interest Rate Fluctuation Risk

Our cash, cash equivalents and short-term investments as of September 30, 2017, consisted of money market funds, government-sponsored enterprise securities and U.S. treasury securities. The primary objectives of our investment activities are to preserve principal, provide liquidity and maximize income without significantly increasing risk. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of U.S. interest rates. However, because of the nature

of the instruments in our portfolio, a sudden change in market interest rates would not be expected to have a material impact on our financial condition and/or results of operation.

Item 4.

Management’s Evaluation of our Disclosure Controls and Procedures.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities and Exchange Act of 1934 is (1) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our President and Chief Executive Officer, who is our principal executive officer, and our Chief Financial Officer, who is our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

As of September 30, 2017, our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934). Our 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. Our principal executive officer and principal financial officer have concluded based upon the evaluation described above that, as of September 30, 2017, our disclosure controls and procedures were effective at the reasonable assurance level.

There were no changes in our internal control over financial reporting during the three months ended September 30, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHE R INFORMATION

Item 1.

Legal Proceedings

In the ordinary course of business, we are from time to time involved in lawsuits, claims, investigations, proceedings, and threats of litigation relating to intellectual property, commercial arrangements, employment and other matters. While the outcome of these proceedings and claims cannot be predicted with certainty, as of September 30, 2017, we were not party to any material pending legal proceedings, and we are not aware of any claims or actions pending or threatened against us that would have a material adverse impact on our financial position, results of operations or cash flows.

Item 1A.

Risk Factors

Investing in our common stock involves a high degree of risk. You should carefully consider the following risks and uncertainties, together with all of the other information in this Quarterly Report on Form 10-Q, or this report, including our financial statements and related notes, before investing in our common stock. Any of the risks we describe below could adversely affect our business, financial condition or results of operations. The market price of our common stock could decline if one or more of these risks or uncertainties actually occur, causing you to lose all or part of your investment. Additional risks that we currently do not know about, or that we currently believe to be immaterial, may also impair our business. Certain statements below are forward-looking statements. See “Forward-Looking Statements” in this report.

Risks Relating to Our Business

We have incurred significant losses since our inception. We anticipate that we will continue to incur significant losses for the foreseeable future, and we may never achieve or maintain profitability.

We are a drug research and development company focused primarily on developing our lead product candidates, PTI-428, PTI-801 and PTI-808 for the treatment of CF, as well as our other product candidates for CF, as part of our potential combination therapies. We have incurred significant net losses in each year since our inception, including net losses of $15.8 million, $25.0 million and $37.2 million for the years ended December 31, 2014, 2015 and 2016, respectively, and $46.0 million for the nine months ended September 30, 2017. As of September 30, 2017, we had an accumulated deficit of $203.5 million.

To date, we have financed our operations primarily through the sale of equity securities and debt financings. We have devoted most of our financial resources to research and development, including our preclinical and clinical development activities. We have not completed the development of any of our product candidates. We expect to continue to incur significant and increasing losses and negative cash flows for the foreseeable future. The size of our losses will depend, in part, on the rate of future expenditures and our ability to generate revenues. In particular, we expect to incur substantial and increased expenses as we:

•

continue the clinical development of our lead product candidates, PTI-428, PTI-801 and PTI-808, for the treatment of CF;

•

seek to obtain regulatory approvals for PTI-428, PTI-801, and potential combination therapies, and our other product candidates;

•

seek cooperation and support from third parties, including clinical investigators, industry experts, therapeutic development networks of patient advocacy groups and clinical research organizations, as we enroll patients in our clinical trials;

•

conduct our ongoing clinical trials and prepare for additional clinical trials and potential commercialization of PTI-428, PTI-801, and our other product candidates;

•

scale up contracted manufacturing processes and quantities to conduct our ongoing clinical trials and prepare for additional clinical trials and the commercialization of PTI-428, PTI-801, and our other product candidates for any indications for which we receive regulatory approval;

•

establish outsourcing of the commercial manufacturing of PTI-428, PTI-801, PTI-808 and our other product candidates for any indications for which we may receive regulatory approval;

•

establish an infrastructure for the sales, marketing and distribution of PTI-428, PTI-801 and our other product candidates for any indications for which we may receive regulatory approval;

•

advance our combination therapies, including a potential doublet and triplet candidate, as a treatment for CF into clinical trials;

•

expand our research and development activities and advance the discovery and dev elopment programs for other product candidates, including, without limitation, preclinical laboratory, animal and other testing and reports and the preparation of investigational new drug filings in the U.S., and the equivalent in non-U.S. jurisdictions wh ere we may seek to conduct clinical trials;

•

maintain, expand and protect our intellectual property portfolio;

•

continue our research and development efforts and seek to discover additional product candidates, including back-up candidates to existing product candidates; and

•

add clinical, regulatory, operational, financial and management information systems and personnel, including personnel to support our clinical development and commercialization efforts and operations as a public company.

To become and remain profitable, we must succeed in developing and eventually commercializing products with significant market potential. This will require us to be successful in a range of challenging activities, including discovering product candidates, completing preclinical testing and clinical trials of our product candidates, obtaining and maintaining regulatory approval for these product candidates, and manufacturing, marketing and selling those products. We are only in the preliminary stages of these activities.

None of our product candidates has been approved or commercialized. We may never succeed in obtaining regulatory approval for or commercializing any of our product candidates. If our product candidates are not approved or commercialized, if any products that do receive regulatory approvals later show unanticipated properties (for example, unexpected safety issues), or if revenues from any products that do receive regulatory approvals are insufficient, we will not achieve profitability and our business may fail.

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

Our ability to generate future revenues from product sales is uncertain and depends upon our ability to successfully develop, obtain regulatory approval for and commercialize our product candidates, as well as the receipt and/or maintenance of regulatory approval of products and product candidates under development by third parties that our product candidates will or may in the future depend on.

Our ability to generate revenue and achieve profitability depends on our ability, alone or with collaborators, to successfully complete the development of, obtain the necessary regulatory approvals for, and commercialize, a product candidate or candidates. Our several development programs are currently focused on demonstrating their respective clinical benefit for CF patients. If either PTI-428 or PTI-801 is approved, it may be approved for co-administration with ivacaftor and lumacaftor. We do not anticipate generating revenues from sales of PTI-428, PTI-801 or any product candidate for the foreseeable future, if ever. Our ability to generate future revenues from product sales depends heavily on:

•

Vertex’s continued compliance with regulatory requirements, the continued commercial availability of ivacaftor and lumacaftor, the reimbursement of their cost to CF patients by insurers and their overall success in the market;

•

the successful regulatory approval and commercial launch of CFTR modulators other than ivacaftor and lumacaftor (for example, tezacaftor with ivacaftor) that we desire to test for administration with PTI-428, PTI-801 and/or our other product candidates;

•

obtaining favorable results for and advancing the development of PTI-428, PTI-801, PTI-808 and our other product candidates, including successfully enrolling patients in and completing our ongoing clinical trials and initiating and completing additional clinical trials;

•

obtaining regulatory approval in the United States of PTI-428, PTI-801 and our other product candidates for CF and equivalent foreign regulatory approvals;

•

launching and commercializing PTI-428, PTI-801 and our other product candidates, including building a production infrastructure and a sales force, and collaborating with third parties;

•

achieving broad market acceptance of PTI-428, PTI-801 and our other product candidates in the medical community and with third-party payors; and

•

generating and advancing through clinical development, a pipeline of product candidates in addition to PTI-428 and PTI-801, such as PTI-808 (as part of our potential combination therapies), and next-generation CFTR modulators.

Conducting preclinical testing and clinical trials is a time-consuming , expensive and uncertain process that takes years to complete, and we may never generate the data necessary to obtain regulatory approval and achieve product sales. Our anticipated development costs would likely increase if we do not obtain favorable resu lts or if development of any product candidate is delayed. In particular, if we are required by the U.S. Food and Drug Administration, or FDA, and comparable regulatory authorities in other countries to perform studies or trials in addition to those that w e currently expect to undertake, we would likely incur higher costs than we anticipate. Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to predict the timing or amount of any increase in our anticipated development costs.

In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of products that we do not expect to be commercially available for several years, if at all. Even if one or more of our product candidates is approved for commercial sale, we anticipate incurring significant costs in connection with commercialization. As a result, we cannot assure you that we will be able to generate revenues from sales of any approved product candidates, or that we will achieve or maintain profitability even if we do generate sales.

We will require additional capital to fund our operations, including if our operating plan changes. If we fail to obtain additional capital, we would be forced to delay, reduce or eliminate one or more of our product research and development programs, seek corporate partners for the development of our product development programs or relinquish or license on unfavorable terms our rights to technologies or product candidates.

Developing pharmaceutical products, including conducting preclinical studies and clinical trials, is a time-consuming, expensive and uncertain process that takes years to complete. We expect our research and development expenses to substantially increase in connection with our ongoing activities, particularly as we advance our clinical programs for PTI-428, PTI-801, PTI-808 and our other product candidates.

Based upon our current operating plan, we believe that our existing cash, cash equivalents and short-term investments of $43.2 million as of September 30, 2017 will enable us to fund our operating expenses and capital expenditure requirements through the second quarter of 2018. As of September 30, 2017, management has further assessed this risk and, in accordance with the requirements of ASC 205-40, determined that there are initial conditions indicating that there is substantial doubt about our ability to continue as a going concern within twelve months of the issuance date of the financial statements in this Quarterly Report on Form 10-Q. Although we have been successful in raising capital in the past, there is no assurance that we will be successful in obtaining additional financing on terms acceptable to us, if at all, nor is it considered probable under the accounting standards. As such, under the requirements of ASC 205-40, management may not consider the potential for future capital raises in their assessment of our ability to meet our obligations for the next twelve months. If we are unable to obtain funding, we would be forced to delay, reduce or eliminate one or more of our research and development programs, product portfolio expansion or commercialization efforts, which would adversely affect our business prospects, or we may be unable to continue operations.

Thus, in accordance with the requirements of ASC 205-40, management has concluded that it is required to disclose that substantial doubt exists about our ability to continue as a going concern for twelve months from the date the financial statements in this Quarterly Report on Form 10-Q are issued.

In addition, should our operating plan change, we will be required to reassess our operating capital needs and there can be no assurance that we will have the cash resources to fund any changed operating plan or that additional funding will be available on terms acceptable to us, or at all. Changing circumstances including those beyond our control may cause us to consume capital more rapidly than we currently anticipate, and we may need additional funds sooner than planned. For example, our clinical trials may encounter technical, enrollment or other difficulties that could increase our development costs more than we expect, or the FDA may require us or we may choose to perform studies or trials in addition to those that we currently anticipate. We may need to raise additional funds to support our ongoing programs for PTI-428, PTI-801 and PTI-808, and other clinical candidates, through regulatory approval and commercialization, or if we need to obtain regulatory approval for PTI-428 or PTI-801 for administration with drugs other than ivacaftor and lumacaftor.

Securing additional financing may divert our management from our day-to-day activities, which may adversel y affect our ability to develop and commercialize our product candidates, including PTI-428, PTI-801 and PTI-808. In addition, we cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all. If we are unable to raise additional capital when required or on acceptable terms, we may be required to:

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significantly delay, scale back or discontinue the research, development or commercialization of our product candidates, including PTI-428, PTI-801 and PTI-808, and our other research or pre-clinical activities;

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seek corporate partners for PTI-428, PTI-801, PTI-808 or any of our other product candidates at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available; or

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relinquish, or license on unfavorable terms, our rights to technologies or product candidates that we otherwise would seek to develop or commercialize ourselves.

If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we will be prevented from pursuing our development and commercialization efforts, which will have a material adverse effect on our business, operating results and prospects and on our ability to develop our product candidates. In addition, if we are unable to raise capital, we will also need to implement cost reductions, and any failure to effectively do so will harm our business, results of operations and future prospects.

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

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs primarily through the sale of equity securities, debt financings and government and foundation grants. We may also seek to raise capital through third-party collaborations, strategic alliances and similar arrangements. We currently do not have any committed external source of funds.

In order to raise additional funds to support our operations, we may sell additional equity or debt securities, enter into collaborations, strategic alliances, or licensing arrangements or other marketing or distribution arrangements. To the extent that we raise additional capital through the sale of equity or debt securities, the ownership interest of existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of common stockholders. For example, our board of directors has the right to issue previously-authorized shares of preferred stock with such preferences without stockholder approval. Debt financing, if available, may involve the right to convert any such debt into equity on favorable conversion terms, which conversion would dilute existing stockholders’ ownership interest. Any such debt financing would also likely include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, and declaring dividends, and will impose limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business.

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

We have a limited operating history, which may make it difficult to evaluate the success of our business to date and to assess our future viability.

We were formed and began operations in December 2006. Our operations to date have been limited to organizing and staffing our company, business planning, raising capital, acquiring and developing product and technology rights and conducting research and development activities for our product candidates. We are currently in preclinical development for our proposed doublet candidate comprised of PTI-801 and PTI-808 and clinical development for PTI-428, PTI-801 and PTI-808 (the latter of which includes a triple combination of all three of our proprietary compounds). We have not obtained regulatory approval for any of our product candidates. Consequently, any predictions about our future success, performance or viability may not be as accurate as they could be if we had a longer operating history, more experience with clinical development or approved products on the market.

We might not be able to utilize all or a significant portion of our net operating loss carryforwards and research and development tax credit carryforwards.

As of December 31, 2016, we had federal and state net operating loss carryforwards of $138.7 million and $124.5 million, respectively, which begin to expire in 2026 and 2030, respectively. As of December 31, 2016, we also had federal and state research and development tax credit carryforwards of $4.9 million and $2.6 million, respectively, which begin to expire in 2027 and 2025, respectively. These net operating loss and tax credit carryforwards could expire unused and be unavailable to offset future income tax liabilities. In addition, under Section 382 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change, by value, in its equity ownership over a three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income may be limited. We have not determined if we have experienced Section 382 ownership changes in the past and if a portion of our net operating loss and tax credit carryforwards are subject to an annual limitation under Section 382. In addition, we may experience ownership changes in the future as a result of subsequent shifts in our stock ownership, some of which may be outside of our control. If we determine that an ownership change has occurred and our ability to use our historical net operating loss and tax credit carryforwards is materially limited, it would harm our future operating results by effectively increasing our future tax obligations. We have a full valuation allowance against our net deferred tax assets.

Risks Relating to the Development and Regulatory Approval of Our Product Candidates

We depend substantially on the success of our lead product candidate, PTI-428, which is currently in early clinical development and is a new class of CFTR modulator. We cannot be certain that we will be able to successfully complete the clinical development of, obtain regulatory approval for, or successfully commercialize PTI-428.

We currently have no products on the market, and our most advanced product candidate, PTI-428, is currently in clinical development. We initiated our first Phase 1 clinical trial for PTI-428 in CF patients and another in healthy volunteers in the first half of 2016 and are currently conducting a Phase 2 clinical trial in CF patients. PTI-801 is at an earlier stage, as we have completed dosing of subjects in the key SAD and MAD cohorts of the healthy volunteer portion of this study, to assess the safety and PK of PTI-801, and are now conducting the CF portion of this study. PTI-808, our other product candidate in clinical development, is in a Phase 1 clinical trial in healthy volunteers.

Our business depends substantially on the successful clinical development, regulatory approval and commercialization of PTI-428, a new class of CFTR modulator known as amplifier, and it will require substantial additional clinical development and regulatory approval efforts before we are permitted to commence its commercialization, if ever. The clinical trials and manufacturing and marketing of PTI-428 and any other product candidates will be subject to extensive and rigorous review and regulation by numerous government authorities in the United States, the European Union and other jurisdictions where we intend to test and, if approved, market our product candidates. Before obtaining regulatory approvals for the commercial sale of any product candidate, we must demonstrate through preclinical testing and clinical trials that the product candidate is safe and effective for use in each target indication, and potentially in specific patient populations, including the pediatric population. This process can take many years and may include post-marketing studies and surveillance, which would require the expenditure of substantial resources beyond the proceeds we have currently raised. Of the large number of drugs in development for approval in the United States and the European Union, only a small percentage successfully complete the FDA or European Medicines Agency, or EMA, regulatory approval processes, as applicable, and are commercialized. Accordingly, even if we are able to obtain the requisite financing to continue to fund our research, development and clinical programs, we cannot assure you that PTI-428 or any of our other product candidates will be successfully developed or commercialized.

We also depend on the success of our product candidate PTI-801, which is currently in early clinical development. We cannot be certain that we will be able to successfully complete the clinical development of, obtain regulatory approval for, or successfully commercialize PTI-801.

For PTI-801, we have completed dosing of subjects in the key SAD and MAD cohorts of the healthy volunteer portion of this study, to assess the safety and PK of PTI-801, and are now conducting the CF portion of this study.

Our business depends on the successful clinical development, regulatory approval and commercialization of PTI-801, a class of CFTR modulator known as a corrector, and it will require substantial additional clinical development and regulatory approval efforts before we are permitted to commence its commercialization, if ever. The clinical trials and manufacturing and marketing of PTI-801 and any other product candidates will be subject to extensive and rigorous review and regulation by numerous government authorities in the United States, the European Union and other jurisdictions where we intend to test and, if approved, market our product candidates. Before obtaining regulatory approvals for the commercial sale of any product candidate, we must demonstrate through precl inical testing and clinical trials that the product candidate is safe and effective for use in each target indication, and potentially in specific patient populations, including the pediatric population. This process can take many years and may include pos t-marketing studies and surveillance, which would require the expenditure of substantial resources beyond the proceeds we have currently raised. Of the large number of drugs in development for approval in the United States and the European Union, only a sm all percentage successfully complete the FDA or European Medicines Agency, or EMA, regulatory approval processes, as applicable, and are commercialized. Accordingly, even if we are able to obtain the requisite financing to continue to fund our research, de velopment and clinical programs, we cannot assure you that PTI-801 or any of our other product candidates will be successfully developed or commercialized.

The regulatory approval processes of the FDA and comparable foreign regulatory authorities are lengthy, time-consuming and inherently unpredictable. If we are ultimately unable to obtain regulatory approval for PTI-428, PTI-801, PTI-808 or our other product candidates, our business will be substantially harmed.

We are not permitted to market PTI-428, PTI-801, PTI-808 or any of our other product candidates in the United States or the European Union until we receive approval of a New Drug Application, or NDA, from the FDA or a Marketing Authorization Application, or MAA, from the European Commission, respectively. Prior to submitting an NDA to the FDA or an MAA to the EMA for approval of any of our product candidates for a specific indication, we will need to complete preclinical and toxicology studies, as well as Phase 1, Phase 2 and Phase 3 clinical trials.

Successfully initiating and completing our clinical program and obtaining approval of an NDA or an MAA is a complex, lengthy, expensive and uncertain process, and the FDA, the EMA or other comparable foreign regulatory authorities may delay, limit or deny approval of any of our candidates for many reasons, including, among others:

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we may not be able to demonstrate that our product candidates are safe and effective to the satisfaction of the FDA or the EMA;

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the results of our clinical trials may not meet the level of statistical or clinical significance required by the FDA or the EMA for marketing approval;

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the FDA or the EMA may disagree with the number, design, size, conduct or implementation of our clinical trials;

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the FDA or the EMA may require that we conduct additional clinical trials or cohorts or run cohorts sequentially, all of which could delay our trial completion timelines;

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the FDA or the EMA may not approve the formulation, labeling or specifications of PTI-428, PTI-801, PTI-808 or our other product candidates;

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the clinical research organizations, or CROs, that we retain to conduct our clinical trials may take actions outside of our control that materially adversely impact our clinical trials;

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the FDA or the EMA may find the data from preclinical studies and clinical trials insufficient to demonstrate that PTI-428, PTI-801, PTI-808 and/or our other product candidates’ clinical and other benefits outweigh their safety or other risks, including, without limitation, the potential for drug-drug interaction;

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the FDA or the EMA may disagree with our interpretation of data from our preclinical studies and clinical trials, including our characterization of observed toxicities;

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the FDA or the EMA may not accept data generated at our clinical trial sites;

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if our NDAs or MAAs, if and when submitted, are reviewed by the FDA or the EMA, as applicable, the regulatory agency may have difficulties scheduling the necessary review meetings in a timely manner, may recommend against approval of our application or may recommend that the FDA or the EMA, as applicable, require, as a condition of approval, additional preclinical studies or clinical trials, limitations on approved labeling or distribution and use restrictions;

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the FDA may require development of a Risk Evaluation and Mitigation Strategy as a condition of approval or post-approval, and the EMA may grant only conditional approval or impose specific obligations as a condition for marketing authorization, or may require us to conduct post-authorization safety studies;

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the FDA or the EMA may find deficiencies with or not approve the manufacturing processes or facilities of third-party manufacturers with which we contract; or

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the FDA or the EMA may change their approval policies or adopt new regulations.

Any of these factors, many of which are beyond our control, could jeopardize our ability to obtain regulatory approval for and successfully market PTI-428, PTI-801, PTI-808 or any of our other product candidates. Any such setback in our pursuit of regulatory approval would have a material adverse effect on our business and prospects.

In addition to the United States and the European Union, we intend to market our product candidates, if approved, in other international markets. Such marketing will require separate regulatory approvals in each market and compliance with numerous and varying regulatory requirements. The approval procedures vary from country-to-country and may require additional testing. Moreover, the time required to obtain approval may differ from that required to obtain FDA or EMA approval. In addition, in many countries, a product candidate must be approved for reimbursement before it can be approved for sale in that country. Approval by the FDA or the EMA does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval by one foreign regulatory authority does not ensure approval by regulatory authorities in other foreign countries or by the FDA or the EMA. The regulatory approval process in other international markets may include all of the risks associated with obtaining FDA or EMA approval.

Our lead product candidate, PTI-428, and our PTI-801 candidate, are designed to be administered with other CF therapies. Developing product candidates for administration with other therapies may lead to unforeseen side effects or failures in our clinical trials that could delay or prevent their regulatory approval or limit the commercial profile of an approved label. Such other therapies could also be removed from or supplanted in the market and result in significant negative consequences.

We are studying our lead product candidate PTI-428, and our PTI-801 candidate, in clinical trials as a combination therapy with therapies that are approved and commercially available to the patients we plan to enroll in such clinical trials. We anticipate that if one or more of our product candidates is approved for marketing, it will be approved to be administered only with other therapies. Our development programs and planned studies carry all the risks inherent in drug development activities, including the risk that they will fail to demonstrate meaningful efficacy or acceptable safety. In addition, our development programs are subject to additional regulatory, commercial, manufacturing and other risks because of the use of other therapies in combination with our product candidates. For example, the other therapies may lead to toxicities that are improperly attributed to our product candidates or the combination of our product candidates with other therapies may result in toxicities that the product candidate or other therapy does not produce when used alone. The other therapies we are using in combination may be removed from the market, or we may not be able to secure adequate quantities of such materials for which we have no guaranteed supply contract, and thus be unavailable for testing or commercial use with any of our approved products. The other therapies we may use in combination with our product candidates may be supplanted in the market by newer, safer and/or more efficacious products or combinations of products. For example, we are testing or intend to test PTI-428 and PTI-801 in clinical trials where we provide our investigational product to CF patients stable on background therapy of ivacaftor and lumacaftor. The manufacturer of this background therapy is conducting testing of ivacaftor and tezacaftor, on its own and together with other modulators as part of triple combinations, any of which, if approved, could supplant the existing therapy. Testing product candidates in combination with other therapies may increase the risk of significant adverse effects or test failures, or impact from drug-drug interactions. The timing, outcome and cost of developing products to be used in combination with other therapies is difficult to predict and dependent on a number of factors that are outside our reasonable control. If we experience safety or toxicity issues in our clinical trials or with any approved products, we may not receive approval to market any products, which could prevent us from ever generating revenues or achieving profitability.

If the data from our existing, ongoing and planned preclinical studies and clinical trials of PTI-428 and PTI-801 each as a combination therapy administered w ith ivacaftor and lumacaftor regarding the safety or efficacy of these combinations are not favorable, the FDA and comparable foreign regulatory authorities may not approve either of these combination therapies and we may be forced to delay or terminate th e development of either or both of these combination therapies, which would materially harm our business. Further, even if we gain marketing approvals for either of these combination therapies from the FDA and comparable foreign regulatory authorities in a timely manner, we cannot be certain that they will be commercially successful. If the results of the anticipated or actual timing of marketing approvals for these combination therapies, or the market acceptance of these combination therapies, if approved, including treatment reimbursement levels agreed to by third-party payors, do not meet the expectations of investors or public market analysts, the market price of our common stock would likely decline. Currently, some jurisdictions outside of the United States do not provide reimbursement for all or some of the standard of care therapies included in our combination therapies. Government and other third-party payors seek to contain costs of health care through legislative and other means. If they fail to p rovide coverage and adequate reimbursement rates for these products, it could increase the cost of our trials in such jurisdictions and decrease the possible market for any approved combination therapy that includes these co-administered drugs.

Failures or delays in the commencement, progress or completion of our clinical trials of our product candidates, including PTI-428, PTI-801 and PTI-808, including due to competition from competing trials for CF patients, amended or additional trials or cohorts, lack of sufficient approvals including from the FDA, local regulatory and ethics bodies and those of therapeutic development networks of patient advocacy groups, or trial holds or stoppage due to interim results or safety concerns, could result in increased costs to us and could delay, prevent or limit our ability to generate clinical trial data, advance our product candidates in the clinic, submit an NDA (or foreign equivalent) for any of our product candidates for U.S. or foreign marketing approval, derive revenue and continue our business.

Successful completion of the clinical trials for PTI-428, PTI-801, PTI-808 and our other candidates is a prerequisite to submitting an NDA to the FDA or a MAA to the EMA and, consequently, the ultimate approval and commercial marketing of PTI-428, PTI-801, PTI-808 and our other candidates in the United States and the European Union. Similar prerequisites apply in other foreign jurisdictions and for all of our product candidates in any jurisdiction. Clinical trials are expensive, difficult to design and implement, can take many years to complete and are uncertain as to outcome. A product candidate can unexpectedly fail at any stage of clinical development. The historical failure rate for product candidates is high due to scientific feasibility, safety, tolerability, toxicology, efficacy, changing standards of medical care and other variables. If the FDA requires us to complete, or we choose to implement, amended or additional studies beyond what we currently expect, or to run additional cohorts or conduct cohorts sequentially, we may be delayed in completing our clinical trials and our expenses will increase. Expansion of our trials into Europe and other ex-U.S. jurisdictions will require IND-equivalent submissions to, and the approval of, local regulatory and ethics bodies, and we cannot assure you we will receive these approvals, or receive them in a timely manner. If therapeutic development networks of CF patient advocacy groups in the United States and/or other jurisdictions such as Europe do not timely sanction or highly rate or score our trials, or prioritize trials of other sponsors over our trials, we may not be able to enroll sufficient patients to conduct our trials at their member sites, or it may take longer to conduct these trials and we may need to look to other jurisdictions where we can more efficiently run our trials. Many CF clinical trial sites place importance on the review, ranking and sanctioning of therapeutic development networks of CF patient advocacy groups. In the U.S., we believe many sites consider sanctioning from the Protocol Review Committee, or PRC, of the Therapeutic Development Network of the U.S.-based Cystic Fibrosis Foundation’s Therapeutic Branch, or the TDN, when deciding whether and when to participate in a trial or which trials to prioritize. For example, the TDN deferred sanctioning of PTI-428, which we believe has contributed to a delay in our trial. There is also a large number of CF programs in clinical development at this time, including numerous corrector and combination trials from Vertex and other companies with greater resources and experience than us, which we believe has also contributed to a delay in our trials. We face intense competition for eligible CF patients, which has and could continue to hamper our recruitment efforts; this competition is likely to intensify following the recent clinical data announcements from multiple triple combination trials from Vertex. We do not know whether all of our clinical trials will begin or be completed on schedule, if at all, as the commencement and completion of clinical trials can be delayed or prevented for a number of reasons, including, among others:

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delays in reaching or failing to reach agreement on acceptable terms with prospective CROs and trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;

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inadequate quantity or quality of or access to a product candidate or other materials, such as combination therapies for co-administration in our trials that are marketed by other firms, necessary to conduct clinical trials;

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difficulties obtaining institutional review board, or IRB, or ethics committee approval to conduct a clinical trial at a prospective site or sites;

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challenges in recruiting and enrolling patients to participate in clinical trials, including the size and nature of the patient population, the proximity of patients to clinical sites (including, without limitation, if U.S. trial sites include interna tional subjects coming to the U.S. on a visa), eligibility criteria for the clinical trial, the nature of the clinical trial protocol (including, without limitation, patient factors such as the time commitment involved in the required number of trial-relat ed visits and procedures and the inability to take certain existing therapies during the trial), risks included in the signed informed consent and any new or amended consents required by each study participant, the availability of approved effective treatm ents for the relevant disease and competition from other clinical trial programs for similar indications;

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unfavorable review of or a decision to defer sanctioning or not sanction one or more of our clinical trials by the TDN, or the CTN, each of which may not sanction our trials for conduct at prospective trial sites, may change or alter any approval it may grant, or may provide a ranking or revised ranking of an amended protocol that adversely impacts recruitment in our clinical trials compared with other investigational new drugs in CF; the TDN deferred sanctioning of PTI-428, and while we remain in discussions with the TDN on its continued review of PTI-428, and the TDN recently approved and favorably ranked our PTI-801 protocol, we cannot assure you that it will ever sanction PTI-428 or any of our other trials, including, without limitation, any combination trials we seek to conduct; the CTN has approved and favorably ranked the protocols for our PTI-428 and PTI-801 trials and we are actively working to expand into Europe with its member sites, subject to regulatory and ethics approvals in local jurisdictions, but we cannot assure you that such expansion will be successful;

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severe or unexpected drug-related side effects experienced by patients in our clinical trials or by individuals using drugs similar to our product candidates;

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reports from preclinical or clinical testing of other similar therapies that raise safety or efficacy concerns; or

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difficulties retaining and/or obtaining data from patients who have enrolled in a clinical trial but may be prone to withdraw due to lack of efficacy, side effects, personal issues, loss of interest, difficulty travelling to the trial site or returning for required check-ins, or other factors, some of which are out of our control.

There are an unprecedented number of CF clinical trials ongoing in the United States and in other countries. As a result of this and other factors described above, the activation of clinical trial sites for our ongoing trials, and securing our target subject enrollment for these clinical trials, has been delayed from what we had originally planned. If we are unable to increase our enrollment, we will not have a substantially complete data set for these trials by our target dates.

We expanded our clinical trial protocols for PTI-428, PTI-801 and PTI-808 to include CF patients. These expansions required protocol amendments to our INDs that are in effect with the FDA, which are subject to FDA comment. We are required to receive IRB approval for these amended protocols but there is no guarantee that IRBs of our existing and prospective clinical trial sites will approve these expansions. Any failure or delay in obtaining necessary permissions from the relevant IRBs to expand our trials may delay their completion and our overall development plan.

Clinical trials may also be delayed or terminated as a result of ambiguous or negative interim results. In addition, a clinical trial may be suspended, placed on clinical hold or terminated by us, the FDA, other regulatory authorities or the IRBs at the sites where the IRBs are overseeing a clinical trial, or a data safety monitoring board, or DSMB, may recommend that the sponsor suspend or terminate a trial, due to a number of factors, including, among others:

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failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols;

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inspection of the clinical trial operations or trial sites by the FDA, the EMA or other regulatory authorities that reveals deficiencies or violations that require us to undertake corrective action, including the imposition of a clinical hold;

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unforeseen safety issues, including any that could be identified in our ongoing toxicology studies, adverse side effects or lack of effectiveness, including as part of ambiguous or negative interim results;

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changes in government regulations or administrative actions;

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problems with clinical supply materials; and

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lack of adequate funding to continue the clinical trial.

Positive results from preclinical or in vitro and in vivo testing of PTI-428, PTI-801, PTI-808, or our other candidates are not necessarily predictive of the results of our ongoing and future clinical trials of these candidates. If we cannot achieve positive results in our clinical trials for PTI-428, PTI-801, PTI-808, or our other candidates, we may be unable to successfully develop, obtain regulatory approval for and commercialize PTI-428, PTI-801, PTI-808, or our other candidates.

Positive results from our preclinical testing of PTI-428, PTI-801, PTI-808 and our other candidates in vitro and in vivo may not necessarily be predictive of the results from our clinical trials in humans. Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in clinical trials after achieving positive results in preclinical in vitro and in vivo studies, and we, or the third parties whose drug candidates we expect to be co-administered with PTI-428 and PTI-801, may face similar setbacks. For example, CFTR mRNA levels in target tissues of rats and monkeys exposed to PTI-428 were observed to increase proportionally with exposure to PTI-428. Additionally, preliminary exploratory biomarker nasal CFTR mRNA and protein data from the SAD and MAD cohorts in our Phase 1 clinical trial for PTI-428 in healthy volunteers confirm target engagement. However, later clinical trials may not show that this biomarker is predictive of clinical efficacy or we may not be able to successfully obtain sufficient biomarker data to analyze. Preclinical and clinical data are often susceptible to varying interpretations and analyses, and the FDA or other regulatory agencies may require changes to our protocols or other aspects of our clinical trials or require additional studies. Additionally, many companies that believed their product candidates performed satisfactorily in preclinical studies and clinical trials nonetheless failed to obtain FDA or EMA approval. If we fail to produce positive results in our clinical trials of PTI-428, the development timeline and regulatory approval and commercialization prospects for our leading product candidate, and, correspondingly, our business and financial prospects, would be materially adversely affected. These risks will also apply to any other of our product candidates, such as PTI-801 and PTI-808, which, if they occur, could also impair our ability to successfully commence, progress or complete studies of our potential combination therapies.

Even if we obtain positive clinical results for PTI-428 or PTI-801 in early-stage clinical trials (including, without limitation, those involving a relatively short duration in a small number of subjects, with the publication of interim, initial, preliminary or final results), those positive results may not be repeated in later-stage clinical trials. These risks will also apply to any other of our product candidates.

Before obtaining regulatory approval for the sale of our product candidates, including PTI-428, PTI-801, and any combination therapies, we must conduct extensive clinical trials to demonstrate the safety and efficacy of our product candidates in humans. Successful completion of such clinical trials is a prerequisite to submitting an NDA to the FDA and, consequently, the ultimate approval and commercial marketing of PTI-428 and PTI-801 in the United States. Similar requirements apply in the European Union and other foreign jurisdictions. A failure of one or more clinical trials can occur at any stage of testing. The outcome of preclinical testing and early clinical trials may not be predictive of the success of later clinical trials, and preliminary, initial or interim results of a clinical trial do not necessarily predict final results. Our current CF trials involve relatively short duration in a small number of patients, resulting in limited data sets. From time to time, we may publish or report interim, initial or preliminary data from our clinical trials. Interim, initial or preliminary data from clinical trials that we may conduct may not be indicative of the final results of the trial and are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Interim, initial or preliminary data also remain subject to audit and verification procedures that may result in the final data being materially different from the interim, initial or preliminary data. We may also experience delays in analyzing or an inability to analyze samples, including, without limitation, biomarker data, due to insufficient sample size, errors in collection procedures at one or more sites, or other factors. As a result, interim, initial or preliminary data should be viewed with caution until the final data are available .

Negative or inconclusive results of our clinical trials of PTI-428 or PTI-801, or any other clinical trials we conduct, could mandate repeated or additional clinical studies. We do not know whether our clinical trials of any product candidate will demonstrate adequate efficacy and safety to result in regulatory approval to market such product candidate. Even if early-stage clinical results are favorable, if later-stage clinical trials (including, without limitation, those for longer duration with greater numbers of patients) do not produce favorable results, our ability to obtain regulatory approval for our product candidates, including PTI-428 and PTI-801, may be adversely impacted.

Our product candidates may cause adverse effects or have other properties that could delay or pr event their regulatory approval or limit the scope of any approved label or market acceptance.

Undesirable side effects caused by our product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in the denial of regulatory approval by the FDA or other comparable foreign regulatory authorities. It is possible that, during the course of the development of PTI-428, PTI-801 or our other product candidates, results of our studies and clinical trials could reveal an unacceptable severity and prevalence of side effects and/or drug-drug interactions. For example, in preclinical testing of PTI-428 we observed reduced platelet counts in the animals we tested following administration at doses in excess of the doses we expect to administer in our clinical trials. As a result of this or any other side effects, our clinical trials could be suspended or terminated and the FDA or comparable foreign regulatory authorities could order us to cease further development, or deny approval, of our product candidates for any or all targeted indications. The drug-related side effects could affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims or result in delays in the trials due to requirements to provide new informed consents to patients to disclose new or changed risks or side effects. Even if approved for marketing, our product candidates could face label restrictions based on the above factors or others.

Additionally, if one or more of our product candidates receive marketing approval, and we or others later identify undesirable side effects caused by such products, a number of potentially significant negative consequences could result, including:

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regulatory authorities may withdraw approvals of such product or impose restrictions on its distribution in a form of a modified Risk Evaluation and Mitigation Strategy;

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regulatory authorities may require additional labeling, such as warnings or contraindications;

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we may be required to change the way the product is administered or to conduct additional clinical studies;

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

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our reputation may suffer.

Any of these events could delay or prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved, and could significantly harm our business, results of operations and prospects.

If we cannot demonstrate an acceptable safety and toxicity profile for our product candidates in our clinical studies, we will not be able to continue our clinical trials or obtain approval for our product candidates.

In order to obtain approval of a product candidate, we must demonstrate safety in various nonclinical and clinical tests. At the time of initiating human clinical trials, we may not have conducted or may not conduct the types of nonclinical testing ultimately required by regulatory authorities, or future nonclinical tests may indicate that our product candidates are not safe for use. Nonclinical testing and clinical testing are both expensive and time-consuming and have uncertain outcomes. For example, results of an earlier laboratory study of PTI-130, a former amplifier candidate, in non-rodent species suggested potential hematologic and reproductive toxicology issues that we believe are specific to the non-rodent species. We cannot predict whether future safety and toxicology studies may produce these same problems or cause other undesirable effects. We also observed certain undesired hematological (including reduced platelet count) side effects in animals dosed at levels of PTI-428 that are higher than those intended for our clinical studies. We plan to complete additional toxicity studies of reproductive toxicity, carcinogenicity and long-term side effects prior to or concurrent with any Phase 3 clinical trials of our product candidates, and we cannot exclude the possible occurrence of these or other side effects in future nonclinical or clinical studies. In addition, success in initial tests does not ensure that later testing will be successful. We may experience numerous unforeseen events during, or as a result of, the testing process, which could delay or prevent our ability to develop or commercialize our product candidates, including:

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our preclinical and nonclinical testing may produce inconclusive or negative safety results, which may require us to conduct additional nonclinical testing or to abandon product candidates;

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our product candidates may have unfavorable pharmacology or toxicity characteristics or suggest possible drug-drug interaction;

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our product candidates may cause undesirable side effects; and

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the FDA or other regulatory authorities may determine that additional safety testing is required.

Any such events would increase our costs and could delay or prevent our ability to commercialize our product candidates, which could adversely impact our business, financial condition and results of operations.

Combination therapies involve additional complexity and risk that could delay or cause our programs to stall or fail; development of such programs may be more costly, may take longer to achieve regulatory approval and may be associated with unanticipated adverse events.

Clinical development and commercialization of combination therapies, such as our potential doublet and triple combination, and our PTI-428 and PTI-801 candidates being tested in the clinic with patients taking background standard of care therapies, involve additional complexity and risk, including without limitation, those involving pre-clinical studies, drug-drug interactions, dose selection, unanticipated adverse events, clinical design and approvals of regulatory bodies and therapeutic development networks of patient advocacy groups. For example, if we or regulatory bodies identify concerns in pre-clinical combination toxicology studies, we may need to run additional studies before commencing or continuing clinical development. Combination therapy clinical development may also involve more restrictive inclusion criteria based on the profiles of multiple investigational products, which could delay enrollment. We have limited experience developing and commercializing combination therapies and are competing with industry players with greater resources than us. If we are unable to manage the additional complexities and risks of the development and commercialization of combination therapies, our proposed combination program could be delayed, halted or otherwise fail to receive approval.

PTI-428 is based on a novel technology, which may raise development issues we may not be able to resolve, regulatory issues that could delay or prevent approval, or personnel issues that may keep us from being able to develop our product candidates.

Our product candidate PTI-428 is based on our novel amplifier technology. We are not aware of other drugs that work in a manner that we believe our amplifier technology does. We cannot assure you that development problems related to our novel technology will not arise in the future that could cause significant delays or that we are not able to resolve.

Clinical development and regulatory approval of novel product candidates such as ours can be more expensive and take longer than other, more well-known or extensively studied pharmaceutical product candidates due to our, investigators’ and regulatory agencies’ lack of experience with them. These factors also apply to patient advocacy groups and sanctioning by their affiliated therapeutic development center arms, such as the TDN. To our knowledge, there are no other amplifiers in clinical development and none have been approved to date. The novelty of our technology may lengthen the clinical development timeline and regulatory review process, require us to conduct additional studies or clinical trials, increase our development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of our product candidates or lead to significant post-approval limitations or restrictions. For example, the FDA could require additional studies or characterization that may be difficult or impossible to perform.

In addition, if we are unable to hire and retain the necessary personnel, the rate and success at which we can develop and commercialize product candidates will be limited. Any such events would increase our costs and could delay or prevent our ability to commercialize our product candidates, which could adversely impact our business, financial condition and results of operations.

Even if we meet safety and efficacy endpoints in clinical trials, we cannot predict whether or when we will obtain regulatory approval to commercialize our product candidates and we cannot, therefore, predict the timing of any future revenue from PTI-428, PTI-801, or any of our other product candidates.

We cannot commercialize our product candidates, including PTI-428, PTI-801, or combination therapies, until the appropriate regulatory authorities, such as the FDA, have reviewed and approved the product candidate. The regulatory agencies may not complete their review processes in a timely manner, or we may not be able to obtain regulatory approval for PTI-428, PTI-801, combination therapies, or our other product candidates at all. Additional delays may result if PTI-428, PTI-801, combination therapies, or any other product candidate is brought before an FDA advisory committee or an analogous foreign body, which could recommend restrictions on approval or recommend non-approval of the product candidate. In addition, we may experience delays or rejections based upon additional government regulation from future legislation or administrative action, or changes in regulatory agency policy during the period of product development, clinical studies and the review process. As a result, we cannot predict when, if at all, we will receive any future revenue from commercialization of any of our product candidates, including PTI-428, PTI-801, and combination therapies.

Even if we obtain regulatory approval for PTI-428, PTI-801 and/or our other product candidates, we will still face extensive regulatory requirements and our products may face future development and regulatory difficulties.

Even if we obtain regulatory approval in the United States, the FDA may still impose significant restrictions on the indicated uses or marketing of our product candidates, including PTI-428 and PTI-801, or impose ongoing requirements for potentially costly post-approval studies or post-market surveillance, including Phase 4 clinical trials. For example, the labeling, if approved for our

product candidates, including PTI-428 and PTI-801, will likely include restrictions on use due to the specific patient population and manner of use in which the drug was evaluated and the safety and efficacy data o btained in those evaluations.

PTI-428, PTI-801 and our other product candidates will also be subject to additional ongoing FDA requirements governing the labeling, packaging, storage, distribution, safety surveillance, advertising, promotion, record-keeping and reporting of safety and other post-market information. The holder of an approved NDA is obligated to monitor and report adverse events and any failure of a product to meet the specifications described in the NDA. The holder of an approved NDA must also submit new or supplemental applications and obtain FDA approval for certain changes to the approved product, product labeling or manufacturing process. Advertising and promotional materials must comply with FDA rules and are subject to FDA review, in addition to other potentially applicable federal and state laws.

In addition, manufacturers of drug products and their facilities are subject to payment of user fees and continual review and periodic inspections by the FDA and other regulatory authorities for compliance with current good manufacturing practice, or cGMP, requirements and adherence to commitments made in the NDA. If we, or a regulatory agency, discover previously unknown problems with a product, such as quality issues or adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, a regulatory agency may impose restrictions relative to that product or the manufacturing facility, including requesting a recall or requiring withdrawal of the product from the market or suspension of manufacturing.

If we fail to comply with applicable regulatory requirements following approval of our product candidate, a regulatory agency may:

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issue an untitled or warning letter asserting that we are in violation of the law;

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seek an injunction or impose civil or criminal penalties or monetary fines;

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suspend or withdraw regulatory approval;

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suspend any ongoing clinical trials;

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refuse to approve a pending NDA or supplements to an NDA submitted by us; or

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request a recall and/or seize product.

Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate negative publicity. The occurrence of any event or penalty described above may inhibit our ability to commercialize PTI-428, PTI-801 and our other product candidates and inhibit our ability to generate revenues.

Even if we obtain FDA approval for PTI-428, PTI-801 or any of our other product candidates in the United States, we may never obtain approval for or commercialize PTI-428, PTI-801 or any of our other product candidates outside of the United States, which would limit our ability to realize their full market potential.

In order to market any products outside of the United States, we must establish and comply with numerous and varying regulatory requirements on a country-by-country basis regarding safety and efficacy. Approval by the FDA does not ensure approval by regulatory authorities in other countries or jurisdictions. In addition, clinical trials conducted in one country may not be accepted by regulatory authorities in other countries, and regulatory approval in one country does not guarantee regulatory approval in any other country. Approval processes vary among countries and can involve additional product testing and validation and additional administrative review periods. Seeking foreign regulatory approval could result in difficulties and costs for us and require additional preclinical studies or clinical trials which could be costly and time consuming. Regulatory requirements can vary widely from country to country and could delay or prevent the introduction of our product candidates in those countries. We do not have any product candidates approved for sale in any jurisdiction, including international markets, and we do not have experience in obtaining regulatory approval in international markets. If we fail to comply with regulatory requirements in international markets or to obtain and maintain required approvals, or if regulatory approvals in international markets are delayed, our target market will be reduced and our ability to realize the full market potential of our product candidates will be unrealized.

If we are not able to obtain orphan product status for PTI-428 or obtain such status for future product candidates for which we seek this status (such as PTI-801), we will not be able to claim the tax credits for our clinical trials of such products provided by this status or potentially take advantage of other benefits of orphan drug status.

Regulatory authorities in some jurisdictions, including the United States and the European Union, may designate drugs for relatively small patient populations as orphan drugs. Under the Orphan Drug Act of 1983, the FDA may designate a product as an orphan drug if it is a drug intended to treat a rare disease or condition, which is generally defined as a disease or condition that fewer

than 200,000 individuals in the United States have been diagnosed as having at the time of th e submission of the request for orphan drug designation. Under Regulation No. (EC) 141/2000 on Orphan Medicinal Products, a medicinal product may be designated as an orphan medicinal product if, among other things, it is intended for the diagnosis, prevent ion or treatment of a life-threatening or chronically debilitating condition affecting not more than five in 10,000 people in the European Union when the application is made. Generally, if a product with an orphan drug designation subsequently receives the first marketing approval for the indication for which it has such designation, the product is entitled to a period of market exclusivity. This exclusivity precludes the EMA or the FDA, as applicable, from approving another marketing application for the sa me or, in the European Union, a similar drug for the same indication for that time period, unless, among other things, the later product is clinically superior. The exclusivity period is seven years in the United States and ten years in the European Union following marketing approval. The EU exclusivity period can be reduced to six years if a drug no longer meets the criteria for orphan drug designation, for example if the drug is sufficiently profitable so that market exclusivity is no longer justified. We did not receive orphan drug designation on our first application for PTI-428, and intend to continue to seek orphan drug designation for PTI-428 once additional data are available.

In the United States, orphan drug exclusivity may be lost if the FDA withdraws or revokes the orphan-drug designation as permitted by law, we withdraw the marketing application for the drug, we consent to another’s marketing application for approval of the same use or indication as the designated orphan drug, or we fail to assure a sufficient quantity of the drug as required by law. Similarly, in the European Union, exclusivity may be lost if we request the removal of the orphan-drug designation or the drug no longer meets any of the criteria that made it eligible for orphan-drug status at the outset. Even after an orphan drug is approved, the same or, in the European Union, a similar drug can subsequently be approved for the same condition if the competent regulatory agency concludes that the later drug is clinically superior to the original orphan drug by providing a significant therapeutic advantage over and above that drug.

If we do not obtain orphan drug exclusivity or if our competitors obtain orphan drug exclusivity for other rare diseases or conditions we are targeting before we do, we may be delayed in obtaining marketing authorization or we may lose out on the potential benefits of market exclusivity associated with the orphan drug designation. Among the other benefits of orphan drug designation are tax credits for certain research and a waiver of the NDA application user fee. If we do not obtain orphan designation for PTI-428 or our other product candidates (such as PTI-801), we will lose out on such benefits associated with orphan designation.

Use of social media platforms presents new risks.

Social media increasingly is being used to communicate about our product candidates and the diseases our therapies are designed to treat. We believe that members of the CF community may be more active on social media as compared to other patient populations. Social media practices in the pharmaceutical and biotechnology industries are evolving, which creates uncertainty and risk of noncompliance with regulations applicable to our business. For example, patients may use social media platforms to comment on the effectiveness of, or adverse experiences with, a drug candidate, which could result in reporting obligations. In addition, there is a risk of inappropriate disclosure of sensitive information or negative or inaccurate posts or comments about us on any social networking website. If any of these events were to occur or we otherwise fail to comply with applicable regulations, we could incur liability, face restrictive regulatory actions or incur other harm to our business.

Risks Relating to Our Dependence on Third Parties

If third parties on which we depend to conduct our preclinical studies or any ongoing or future clinical trials do not perform as contractually required, fail to satisfy regulatory or legal requirements or miss expected deadlines, our development program could be delayed with materially adverse effects on our business and prospects.

We rely on clinical research organizations, clinical data management organizations and consultants, collectively referred to as CROs, to design, conduct, supervise and monitor preclinical and clinical studies of our product candidates and plan to do the same for our ongoing and future clinical trials for PTI-428, PTI-801, PTI-808, combination therapies and any other clinical trials. We and our CROs are required to comply with various regulations, including Good Clinical Practice, or GCP, requirements, which are enforced by the FDA, and guidelines of the Competent Authorities of the Member States of the European Economic Area, and comparable foreign regulatory authorities to ensure that the health, safety and rights of patients are protected in clinical development and clinical trials, and that trial data integrity is assured. Regulatory authorities ensure compliance with these requirements through periodic inspections of trial sponsors, principal investigators and trial sites, as well as third party contractors. If we or any of our CROs fail to comply with applicable requirements, or the CRO does not perform its contractually required obligations (or makes errors or mistakes), the clinical data, including, without limitation, biomarker data, generated in our clinical trials may not be collected or may be collected but be deemed unreliable, and the FDA, the EMA or other comparable foreign regulatory authorities may require us (or we may choose ourselves) to perform additional clinical trials before approving our marketing applications. We cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical trials comply with such requirements. In addition, our clinical trials must be conducted with products produced under cGMP requirements, which mandate the methods, facilities and controls used in manufacturing, processing and packaging of a drug product to ensure its safety and identity.

Failure to comply with these regulations may require us to delay or repeat preclinical and clinical trials, which would delay the regulatory approval process.

Our CROs are not our employees, and except for remedies available to us under our agreements with such CROs, we cannot control whether or not they devote sufficient time and resources to our ongoing clinical and preclinical programs. We generally represent a small percentage of these firms’ overall business, which could limit our ability to receive priority allocation of their resources. If CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols, regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated and we may not be able to obtain regulatory approval for or successfully commercialize our product candidates. As a result, our operations and the commercial prospects for our product candidates would be harmed, our costs could increase and our ability to generate revenues could be delayed.

We also rely on clinical investigators and clinical research organizations, as well as therapeutics development arms of patient advocacy groups, such as the TDN and CTN, to assist in the design and review of our clinical trials, including supporting the enrollment of qualified patients. If these third parties do not approve or sanction our trial design to facilitate enrollment, our ability to conduct clinical trials may be impeded. Because we have relied on third parties, our internal capacity to perform these functions is limited. Outsourcing these functions involves risk that third parties may not perform to our standards, may not produce results in a timely manner or may fail to perform at all. In addition, the use of third-party service providers requires us to disclose our proprietary information to these parties, which could increase the risk that this information will be misappropriated or inadvertently be made publicly-available. We currently have a small number of employees, which limits the internal resources we have available to identify and monitor our third-party providers. To the extent we are unable to identify and successfully manage the performance of third-party service providers in the future, our business may be adversely affected. Though we carefully manage our relationships with our CROs, and other third parties, there can be no assurance that we will not encounter similar challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition and prospects.

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

We rely on third-party manufacturers and suppliers and we intend to rely on third parties to produce preclinical, clinical and commercial supplies of PTI-428, PTI-801, PTI-808 and any future product candidates. These third parties may not perform as contractually required or expected and issues may arise that could delay the commencement or completion of clinical trials.

We rely on third parties to supply the materials and components for our research and development, preclinical and clinical trial supplies. We do not own manufacturing facilities or supply sources for such components and materials. There can be no assurance that our supply of research and development, preclinical and clinical development drugs and other materials will not be limited, interrupted, restricted in certain geographic regions or of satisfactory quality or continue to be available at acceptable prices. Any replacement of these third parties could require significant effort and expertise because there may be a limited number of qualified replacements.

The manufacturing process for a product candidate is subject to FDA, EMA and other foreign regulatory authority review. Suppliers and manufacturers must meet applicable manufacturing requirements and undergo rigorous facility and process validation tests required by regulatory authorities to comply with regulatory standards such as cGMP. In the event that any of our suppliers or manufacturers fails to comply with such requirements or to perform its obligations to us in relation to quality, timing or otherwise, or if our supply of components or other materials becomes limited or interrupted for other reasons, our regulatory filings may be delayed, our preclinical studies or clinical trials may be delayed or suspended, and we may be forced to manufacture the materials ourselves, for which we currently do not have the capabilities or resources, or enter into an agreement with another third party, which we may not be able to do on reasonable terms, if at all. In some cases, the technical skills or technology required to manufacture our product candidates may be unique or proprietary to the original manufacturer and we may have difficulty, or there may be contractual restrictions prohibiting us from, transferring such skills or technology to another third party and a feasible alternative may not exist; even if it exists, it may be cost-prohibitive and time-prohibitive to engage in technology transfer to switch vendors for product candidate manufacturing. These factors would increase our reliance on such manufacturer or require us to obtain a license from such manufacturer in order to have another third party manufacture our product candidates. If we are required to change manufacturers for any reason, we will be required to verify that the new manufacturer maintains facilities and procedures that comply with quality standards and with all applicable regulations and guidelines. The delays associated with the verification of a new manufacturer could negatively affect our ability to develop product candidates in a timely manner or within budget. Drug formulation is an inherently

uncertain p rocess with numerous steps, some of which may need to be repeated, to ensure quality, accuracy and yield; unexpected variances may occur, which could delay our manufacturing efforts and delay commencement or completion of pre-clinical studies and/or clinic al trials.

We expect to continue to rely on third-party manufacturers if we receive regulatory approval for any product candidate. To the extent that we have existing, or enter into future, manufacturing arrangements with third parties, we will depend on these third parties to perform their obligations in a timely manner consistent with contractual and regulatory requirements, including those related to quality control and assurance. If we are unable to obtain or maintain third-party manufacturing for product candidates, or to do so on commercially reasonable terms, we may not be able to develop and commercialize our product candidates successfully. Our or a third party’s failure to execute on our manufacturing requirements could adversely affect our business in a number of ways, including:

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preventing us from initiating or continuing preclinical studies or clinical trials of product candidates under development;

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delaying our submissions of regulatory applications or receipt of regulatory approvals for product candidates;

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preventing a collaborator from cooperating with us;

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subjecting our product candidates to additional inspections by regulatory authorities;

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requiring us to cease distribution or to recall batches of our product candidates; and

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in the event of approval to market and commercialize a product candidate, preventing us from meeting commercial demands for our products.

If a current or future collaborative partner terminates or fails to perform its obligations under an agreement with us, or if research does not produce viable lead candidates or meet specified criteria during the applicable research term, the development and commercialization of the product candidates could be delayed or terminated.

We are currently party to a collaborative arrangement with Astellas. If our collaborative partner does not devote sufficient time and resources to a collaboration arrangement with us, we may not realize the potential commercial benefits of the arrangement, and our results of operations may be materially adversely affected.

Much of the potential revenue from our collaborations consists of contingent payments, such as payments for achieving scientific or regulatory milestones or royalties payable on sales of drugs. The milestone and royalty revenue that we may receive under these collaborations will depend upon our collaborators’ ability to successfully develop, introduce, market and sell new products. Our collaboration partners may fail to develop or effectively commercialize their products using our products or technologies or otherwise discontinue their research activities because they:

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exercise their unilateral right to terminate the collaboration agreement, which, for example, our former collaboration partner, Biogen, did in December 2016, including, without limitation, if research does not produce a viable lead candidate or meet specified criteria during the applicable research term;

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decide not to devote the necessary resources due to internal constraints, such as limited personnel with the requisite expertise, limited cash resources or specialized equipment limitations, or the belief that other drug development programs may have a higher likelihood of obtaining marketing approval or may potentially generate a greater return on investment;

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decide to pursue other technologies or develop other product candidates, either on their own or in collaboration with others, including our competitors, to treat the same diseases targeted by our own collaborative programs;

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do not have sufficient resources necessary to carry the product candidate through clinical development, marketing approval and commercialization; or

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cannot obtain the necessary marketing approvals.

Competition may negatively impact a partner’s focus on and commitment to our relationship and, as a result, could delay or otherwise negatively affect the commercialization of our products, which would have a material adverse effect on our operating results and financial condition. Terminated collaborations include the risk that the former partner maintains rights to exploit certain co-developed technology, and the risk that, to the extent the program is desired to continue, funding formerly provided by the partner will need to come from alternative sources such as us or a new partner and such funding may not be available on terms acceptable to us, if at all. These factors can cause a delay or abandonment of technology programs and could negatively affect commercialization of our products, which would have a material adverse effect on our operating results and financial condition.

We face a number of challenges in seeking future collaborations. Collaborations are complex and any potential discussions may not result in a definitive agreement for many reasons. For example, whether we reach a definitive agreement for a collaboration will

depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration, and the proposed collaborator’s evaluation of a number of factors, such as the design or results of our clinical trials, the potential market for our product candidates, the costs and complexities of manufacturing and delivering our product candidates to patients, the potential of competing products, the existence of uncertainty with respec t to ownership or the coverage of our intellectual property, and industry and market conditions generally. If we determine that additional collaborations for our product candidates are necessary and are unable to enter into such collaborations on acceptabl e terms, we might elect to delay or scale back the development or commercialization of our product candidates in order to preserve our financial resources or to allow us adequate time to develop the required physical resources and systems and expertise our selves.

Collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner, or at all. In addition, there have been a significant number of recent business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future collaborators. If a future collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our product development or commercialization program could be delayed, diminished or terminated.

Risks Relating to Commercialization of Our Product Candidates

The commercial success of PTI-428, PTI-801 and our other product candidates will depend upon the acceptance of those products, if approved, by the medical community, including physicians, patients and health care payors.

Even if PTI-428, PTI-801 or our other product candidates are approved for sale, they may not achieve sufficient market acceptance by physicians, patients, healthcare payors and others in the medical community. If these product candidates, if approved, do not achieve an adequate level of acceptance, we may not generate significant product revenues and we may not become profitable. The degree of market acceptance of any of our product candidates, including PTI-428 and PTI-801, will depend on a number of factors, including:

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demonstration of safety and efficacy in our clinical trials;

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the relative convenience, ease of administration and acceptance by physicians, patients and health care payors;

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the prevalence and severity of any adverse effects;

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limitations or warnings contained in the FDA-approved label for the relevant product candidate;

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availability of alternative treatments;

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pricing and cost-effectiveness;

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the effectiveness of our or any future collaborators’ sales and marketing strategies; and

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our ability to obtain and maintain healthcare payor approval or reimbursement, which may vary from country to country.

If any of our product candidates, including PTI-428 and PTI-801, is approved but does not achieve an adequate level of acceptance by physicians, patients and health care payors, we may not generate sufficient revenue and we may not become or remain profitable.

If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to sell and market our product candidates, we may not be successful in commercializing our product candidates if and when they are approved.

We do not have a sales or marketing infrastructure, and we have limited experience in the sales, marketing or distribution of pharmaceutical products. Our commercialization strategy will target key prescribing physicians and advocacy groups, as well as provide patients with support programs, ensure product access and secure reimbursement. Outside of the United States, Canada, Europe and Australia, we may seek a partner to commercialize our products. In the future, we may choose to build a focused sales and marketing infrastructure to market or co-promote our product candidates if and when they are approved, which would be expensive and time-consuming. Alternatively, we may elect to outsource these functions to third parties. Either approach carries significant risks. For example, recruiting and training a sales force is expensive and time-consuming and, if done improperly, could delay a product launch and result in limited sales. If the commercial launch of a product candidate for which we recruit a sales force and establish marketing capabilities is delayed or does not occur for any reason, we would have prematurely or unnecessarily incurred these commercialization expenses. This may be costly, and our investment would be lost if we cannot retain or reposition our sales and marketing personnel.

Factors that may inhibit our efforts to com mercialize our product candidates on our own include:

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inability to recruit, manage and retain adequate numbers of effective sales and marketing personnel;

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the inability of marketing personnel to develop effective marketing materials;

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the inability of sales personnel to obtain access to or persuade adequate numbers of physicians to prescribe any future products;

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the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and

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unforeseen costs and expenses associated with creating an independent sales and marketing organization.

We may also not be successful in entering into additional arrangements with third parties to sell and market our product candidates or doing so on terms that are favorable to us. Even if we do enter into arrangements with third parties to perform sales, marketing and distribution services, our product revenues or the profitability of these product candidates are likely to be lower than if we were to market and sell our products ourselves. In addition, we likely will have little control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market our products effectively. If we do not establish sales and marketing capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in commercializing our product candidates.

If our competitors develop technologies or product candidates more rapidly than we do or their technologies are more effective, our ability to develop and successfully commercialize our products may be adversely affected. Competitive products for treatment of CF may reduce or eliminate the commercial opportunity for our product candidates.

The clinical and commercial landscape for CF is highly competitive and subject to rapid and significant technological change. New data from clinical-stage products continue to emerge. It is possible that these data may alter the current standard of care, completely precluding us from further developing PTI-428, PTI-801 or our other product candidates for CF. Further, it is possible that we may advance our clinical trials only to find that data from competing products make it impossible for us to complete enrollment in these trials, resulting in our inability to file for marketing approval with regulatory agencies. Even if PTI-428, PTI-801 or our other product candidates are approved for marketing, they may have limited sales due to particularly intense competition in the CF market.

Competitive therapeutic treatments include those that are currently in development and any new treatments that enter the market. We believe that a significant number of products are currently under development, and may become commercially available in the future, for the treatment of conditions for which we may try to develop product candidates. Our potential competitors include large pharmaceutical and biotechnology companies, specialty pharmaceutical and generic drug companies, academic institutions, government agencies and research institutions. Examples include Vertex, AbbVie Inc., Galapagos NV, ProQR Therapeutics N.V., F. Hoffmann-LaRoche Ltd., Novartis AG, Gilead Sciences, Inc., Laurent Pharmaceuticals Inc., Pfizer Inc., AstraZeneca, Parion Sciences, Inc., RaNA Therapeutics Inc., Sanofi Genzyme, Bayer AG, Corbus Pharmaceuticals Holdings, Inc., Shire and several other companies.

Although PTI-428 and PTI-801 are being developed as individual therapies to be administered with ivacaftor and lumacaftor, Vertex or other competitors could develop other drugs or combinations that may obviate the applicability of PTI-428 and PTI-801. Changes in standard of care or use patterns could also make our combination therapy obsolete. For example, Vertex is developing tezacaftor and ivacaftor as a combination therapy on its own and also as part of a triple combination therapy with an additional Vertex corrector. If PTI-428 or PTI-801 is approved for marketing as a combination therapy to be administered with ivacaftor and lumacaftor but use of another therapy becomes more prevalent than ivacaftor and lumacaftor, the availability of ivacaftor and lumacaftor may be limited, sales of PTI-428 or PTI-801 could be negatively impacted and our financial results and stock price would be adversely affected.

Many of our competitors have greater financial, technical, manufacturing, clinical development, marketing, sales and supply resources, technical and human resources or experience than us and significantly greater experience in the discovery and development of product candidates, obtaining FDA and other regulatory approvals of product candidates and the commercialization of those products. Accordingly, our competitors may be more successful than we may be in obtaining FDA and other regulatory approvals for therapies and achieving widespread market acceptance. Our competitors’ products may be more effective, or more effectively marketed and sold, than any product candidate we may commercialize and may render our therapies obsolete or non-competitive before we can recover development and commercialization expenses.

If we successfully obtain approval for any product candidate, we will face competition based on many different factors, inclu ding the efficacy, safety and tolerability of our products, the ease with which our products can be administered, the extent to which physicians and patients accept combination therapies and, for PTI-428, new classes of modulators, the timing and scope of regulatory approvals for these products, the availability and cost of manufacturing, marketing and sales capabilities, price, reimbursement coverage and patent position. Competing products could present superior treatment alternatives, including being mor e effective, safer, or less expensive, or could be marketed and sold more effectively than any products we may develop. Competitive products may make any products we develop, or products with which we are approved for use in combination, obsolete or noncom petitive before we recover the expense of developing and commercializing our product candidates. Such competitors could also recruit our employees, which could negatively impact our level of expertise and our ability to execute our business plan. Mergers a nd acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a small number of competitors.

We also compete with other clinical-stage companies and institutions for clinical trial participants, which could reduce our ability to recruit participants for our clinical trials. For example, actual or perceived risks of our product candidates, such as PTI-428, may negatively affect potential clinical trial participants or patients when deciding whether to participate in our clinical trials, and could result in patients seeking alternative clinical trials or commercial therapies from our competitors. Delay in recruiting clinical trial participants could adversely affect our ability to bring a product to market prior to our competitors. Further, research and discoveries by others may result in breakthroughs that render our product candidates obsolete even before they begin to generate any revenue.

In addition, our competitors may obtain patent protection or FDA approval and commercialize products more rapidly than we do, which may impact future sales of any of our product candidates that receive marketing approval. If the FDA approves the commercial sale of any of our product candidates, we will also be competing with respect to marketing capabilities and manufacturing efficiency, areas in which we have limited or no experience. We expect competition among products will be based on product efficacy and safety, the timing and scope of regulatory approvals, availability of supply, marketing and sales capabilities, product price, reimbursement coverage by government and private third-party payors, and patent position. Our profitability and financial position will suffer if we cannot compete effectively in the marketplace, even if our products receive regulatory approval.

Payor approval and reimbursement may not be available for PTI-428, PTI-801 and our other product candidates, or third party therapies taken with our drugs, which could make it difficult or impossible for us to sell our products profitably.

Market acceptance and sales of PTI-428 or PTI-801, or any other product candidates that we develop, will depend in part on the extent to which reimbursement for these products and related third party treatments will be available from government health administration authorities, private health insurers and other organizations. Government authorities and third-party payors, such as private health insurers, health maintenance organizations and pharmacy benefit management organizations, decide which medications they will pay for, at what tier level and establish reimbursement levels. A primary trend in the United States healthcare industry and elsewhere is cost containment. Government authorities and these third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications. Increasingly, third-party payors are requiring that companies provide them with predetermined discounts from list prices and are challenging the prices charged for medical products. We cannot be sure that reimbursement will be available for any product that we commercialize and, if reimbursement is available, what the level of reimbursement will be. Even if we are successful in gaining reimbursement in one country, that does not mean we will achieve reimbursement at the same levels or at all in any other country. Reimbursement may impact the demand for, or the price of, any product for which we obtain marketing approval. Obtaining reimbursement for our products may be particularly difficult because of the higher prices often associated with products administered under the supervision of a physician. Also, reimbursement amounts may reduce the demand for, or the price of, our products. If reimbursement is not available, or is available only to limited levels, we may not be able to successfully commercialize PTI-428, PTI-801, or any other product candidates that we develop. We will also be required to establish systems and programs that assist patients in determining the reimbursement level and in some instances establishing patient economic support programs to alleviate the economic burden of co-pays and/or co-insurance. These patient support programs are complex, costly and require knowledge and expertise that we currently do not possess.

There have been a number of legislative and regulatory proposals to change the healthcare system in the United States and in some foreign jurisdictions that could affect our ability to sell any future products profitably. These legislative and regulatory changes may negatively impact the reimbursement for any future products, following approval. The availability of generic treatments may also substantially reduce the likelihood of reimbursement for any future products, including PTI-428 and PTI-801. The application of user fees to generic drug products will likely expedite the approval of additional generic drug treatments. We expect to experience pricing pressures in connection with the sale of PTI-428, PTI-801 and any other product candidate that we develop, due to the trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative changes.

In addition, there may be significant delays in obtaining rei mbursement for approved products, and coverage may be more limited than the purposes for which the product is approved by the FDA or regulatory authorities in other countries. Moreover, eligibility for reimbursement does not imply that any product will be paid for in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution. Interim payments for new products, if applicable, may also not be sufficient to cover our costs and may not be made permanent. Pa yment rates may vary according to the use of the product and the clinical setting in which it is used, may be based on payments allowed for lower cost products that are already reimbursed, and may be incorporated into existing payments for other services. Net prices for products may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of products from countries where they may be sold at lower prices than in the United States. Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement policies.

Our inability to promptly obtain coverage and profitable payment rates from both government-funded and private payors for any of our product candidates, including PTI-428 and PTI-801, could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products and our overall financial condition.

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

The success of our business depends primarily on our ability to identify, develop and commercialize product candidates. Because we have limited financial and managerial resources, we focus on research programs and product candidates for the indications that take advantage of our deep expertise and knowledge and that we believe are the most scientifically and commercially promising. Our resource allocation decisions may cause us to fail to capitalize on viable scientific or commercial products or profitable market opportunities. In addition, we may spend valuable time and managerial and financial resources on research programs and product candidates for specific indications that ultimately do not yield any scientifically or commercially viable products. If we do not accurately evaluate the scientific and commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaboration, licensing or other royalty arrangements in situations where it would have been more advantageous for us to retain sole rights to development and commercialization.

Risks Relating to Regulation of Our Industry

We may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws and health information privacy and security laws. Some of these laws were recently amended, and their interpretation following such amendments remains unclear. If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties.

If we obtain FDA approval for any of our product candidates and begin commercializing those products in the United States, our operations may be directly, or indirectly through our customers, subject to various federal and state fraud and abuse laws, including, without limitation, the federal anti-kickback statute. These laws may impact, among other things, our proposed sales, marketing and education programs. In addition, we may be subject to patient privacy regulation by both the federal government and the states in which we conduct our business. The laws that may affect our ability to operate include:

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the federal anti-kickback statute which prohibits, among other things, persons or entities from knowingly and willfully soliciting, offering, receiving or paying any remuneration (including any kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, lease, order or recommendation of, any good, facility, item or service, for which payment may be made, in whole or in part, under federal healthcare programs such as Medicare and Medicaid;

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the federal false claims laws and civil monetary penalties, including civil whistleblower or qui tam actions, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, to the federal government, claims for payment or approval that are false or fraudulent or from knowingly making a false statement to improperly avoid, decrease or conceal an obligation to pay money to the federal government;

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the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) which, among other things, imposes criminal liability for knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or to obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private) and knowingly or willfully falsifying, concealing, or covering up by any trick or device a material fact or making any materially false statement using or making any false or fraudulent document, in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters;

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HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and its implementing re gulations, and as amended by the final HIPAA omnibus rule, Modifications to the HIPAA Privacy, Security, Enforcement, and Breach Notification Rules Under HITECH and the Genetic Information Nondiscrimination Act; Other Modifications to HIPAA, published in J anuary 2013, which imposes certain obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information without appropriate authorization by entities subject to the rule, such as health plans, clearinghouses and healthcare providers;

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the Federal Food, Drug, and Cosmetic Act, or FDCA, which prohibits, among other things, the distribution of adulterated or misbranded drugs or medical devices;

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the federal Physician Payments Sunshine Act, enacted as part of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, collectively referred to herein as the Affordable Care Act, or the ACA, and its implementing regulations, which requires certain manufacturers of drugs, devices, biologicals and medical supplies to report to the Centers for Medicare and Medicaid Services information related to payments and other transfers of value made to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members. Failure to submit required information may result in civil monetary penalties of up to an aggregate of $150,000 per year (or up to an aggregate of $1 million per year for “knowing failures”), for all payments, transfers of value, or ownership or investment interests that are not reported; and

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analogous state laws and regulations, including: state anti-kickback and false claims laws, which may apply to our business practices, including but not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by state governmental and non-governmental third-party payors, including private insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government; and state laws and regulations that require manufacturers to file reports relating to pricing and marketing information, which requires tracking gifts and other remuneration and items of value provided to healthcare professionals and entities.

Further, the ACA, among other things, amends the intent requirement of the federal anti-kickback and criminal health care fraud statutes. A person or entity can now be found guilty of fraud or false claims under ACA without actual knowledge of the statute or specific intent to violate it. In addition, ACA provides that the government may assert that a claim including items or services resulting from a violation of the federal anti-kickback statute constitutes a false or fraudulent claim for purposes of the false claims statutes. Possible sanctions for violation of these anti-kickback laws include monetary fines, civil and criminal penalties, exclusion from Medicare, Medicaid and other government programs and forfeiture of amounts collected in violation of such prohibitions. Any violations of these laws, or any action against us for violation of these laws, even if we successfully defend against it, could result in a material adverse effect on our reputation, business, results of operations and financial condition.

In addition, there has been a trend of increased state regulation of payments made to physicians for marketing. Some states, such as California, Massachusetts and Vermont, mandate implementation of corporate compliance programs, along with the tracking and reporting of gifts, compensation, and other remuneration to physicians.

The scope and enforcement of these laws is uncertain and subject to change in the current environment of health care reform, especially in light of the lack of applicable precedent and regulations. Such changes are impossible to predict. It is possible that some of our business activities could be subject to challenge by federal or state regulatory authorities under one or more of these laws. Any such challenge could have a material adverse effect on our reputation, business, results of operations, and financial condition. Any state or federal regulatory review of us, regardless of the outcome, would be costly and time-consuming, and could have a material adverse effect on our business, financial condition and results of operations.

Our emplo yees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could have a material adverse effect on our business.

We are exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional failures to comply with FDA regulations, provide accurate information to the FDA, comply with manufacturing standards we have established, comply with federal and state health-care fraud and abuse laws and regulations, report financial information or data accurately or disclose unauthorized activities to us. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Employee misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. We have adopted a Code of Business Conduct and Ethics but it is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent misconduct may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and results of operations, including the imposition of significant fines or other sanctions.

Health care reform measures could adversely affect our business.

In the United States and foreign jurisdictions, there have been a number of legislative and regulatory changes to the healthcare system that could affect our future results of operations. In particular, there have been and continue to be a number of initiatives at the U.S. federal and state levels that seek to reduce healthcare costs. The ACA, which includes measures to significantly change the way health care is financed by both governmental and private insurers, was enacted in March 2010. Among the provisions of the ACA of greatest importance to the pharmaceutical and biotechnology industry are the following:

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an annual, nondeductible fee on any entity that manufactures or imports certain branded prescription drugs and biologic products, apportioned among these entities according to their market share in certain government healthcare programs;

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new requirements to report certain financial arrangements with physicians and teaching hospitals, including reporting any “transfer of value” made or distributed to physicians and teaching hospitals and reporting any ownership interests held by physicians and their immediate family members;

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a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research;

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creation of the Independent Payment Advisory Board which, beginning in 2014, has authority to recommend certain changes to the Medicare program that could result in reduced payments for prescription drugs, which recommendations can have the effect of law even without congressional action; and

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establishment of a Center for Medicare Innovation at the Centers for Medicare & Medicaid Services to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending.

At this time, the full effect that the ACA would have on our business remains unclear. As a result of the 2016 election in the United States, there is great political uncertainty concerning the fate of the ACA and other healthcare laws. Legislation has been drafted to repeal and replace parts of the ACA, but it is uncertain when a bill would be passed and what any replacement law would encompass. We cannot predict any initiatives that may be adopted in the future.

Individual states have become increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access, and marketing cost disclosure and transparency measures, and designed to encourage importation from other countries and bulk purchasing. Legally mandated price controls on payment amounts by third-party payors or other restrictions could harm our business, results of operations, financial condition and prospects. In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs. This could reduce ultimate demand for our products or put pressure on our product pricing, which could negatively affect our business, results of operations, financial condition and prospects.

In addition, given recent feder al and state government initiatives directed at lowering the total cost of healthcare, Congress and state legislatures will likely continue to focus on healthcare reform, the cost of prescription drugs and biologics and the reform of the Medicare and Medic aid programs. While we cannot predict the full outcome of any such legislation, it may result in decreased reimbursement for drugs and biologics, which may further exacerbate industry-wide pressure to reduce prescription drug prices. This could harm our ab ility to generate revenues. Increases in importation or re-importation of pharmaceutical products from foreign countries into the United States could put competitive pressure on our ability to profitably price our products, which, in turn, could adversely affect our business, results of operations, financial condition and prospects. We might elect not to seek approval for or market our products in foreign jurisdictions in order to minimize the risk of re-importation, which could also reduce the revenue we g enerate from our product sales. It is also possible that other legislative proposals having similar effects will be adopted.

Furthermore, regulatory authorities’ assessment of the data and results required to demonstrate safety and efficacy can change over time and can be affected by many factors, such as the emergence of new information, including on other products, changing policies and agency funding, staffing and leadership. We cannot be sure whether future changes to the regulatory environment will be favorable or unfavorable to our business prospects. For example, average review times at the FDA for marketing approval applications can be affected by a variety of factors, including budget and funding levels and statutory, regulatory and policy changes.

The Referendum of the United Kingdom’s Membership of the European Union creates uncertainty and could negatively impact our business.

On June 23, 2016, the United Kingdom, or the U.K., held a referendum in which voters approved an exit from the European Union, or the E.U., commonly referred to as “Brexit.” As a result of the referendum, it is expected that the British government will begin negotiating the terms of the U.K.’s withdrawal from the E.U. A withdrawal could, among other outcomes, disrupt the free movement of goods, services and people between the U.K. and the E.U., undermine bilateral cooperation in key policy areas and significantly disrupt trade between the U.K. and the E.U. In addition, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the U.K. determines which E.U. laws to replace or replicate. Given the lack of comparable precedent, it is unclear what financial, trade, regulatory and legal implications the withdrawal of the U.K. from the E.U. would have and how such withdrawal would affect us.

The announcement of Brexit caused significant volatility in global stock markets and currency exchange rate fluctuations that resulted in the strengthening of the U.S. dollar against foreign currencies in which we could, if we ever commercialize a product, conduct business. The announcement of Brexit and the withdrawal of the U.K. from the E.U. may also create global economic uncertainty, which may cause third-party payors, including governmental organizations, to closely monitor their costs and reduce their spending budgets. Any of these effects of Brexit, among others, could adversely affect our business, financial condition and operating results, particularly if we receive approval to commercialize a product.

Risks Relating to Protecting Our Intellectual Property

It is difficult and expensive to protect our intellectual property rights and we cannot ensure that they will prevent third parties from competing against us. If we are unable to adequately protect our proprietary technology, or obtain and maintain issued patents that are sufficient to protect our product candidates, others could compete against us more directly, which would have a material adverse impact on our business, results of operations, financial condition and prospects.

Our success will depend, in part, on our ability to obtain and maintain intellectual property rights, both in the United States and other countries, successfully defend this intellectual property against third-party challenges and successfully enforce this intellectual property to prevent third-party infringement. We rely upon a combination of patents, trade secret protection and confidentiality agreements.

Our ability to protect any of our product candidates and technologies from unauthorized or infringing use by third parties depends in substantial part on our ability to obtain and maintain valid and enforceable patents in both the United States and other countries. Patent matters in the biotechnology and pharmaceutical industries can be highly uncertain and involve complex legal and factual questions. Changes in the patent laws, their implementing regulations or their interpretations may diminish the value of our patent rights.

There can be no assurance that we will discover or develop patentable products or processes or that patents will issue from any pending patent applications owned or licensed by us, or if issued, the breadth of such patent coverage. We currently have no issued patents covering any of our product candidates, including PTI-428, PTI-801 and PTI-808, or our technologies, and many of our patent applications related to our CF program are in the earliest stages, including several provisional patent applications, although we do have two (2) issued patents covering early CFTR modulator compounds not currently in development. We cannot provide any assurances that any of our pending patent applications will lead to issued patents and, if they do, that such patents will include claims

with a scope sufficient to protect our product candidates or otherwise provide any competitive advantage. Even if issued, we cannot guarantee that claims of issued patents owned or licensed to us are or will be held valid or enforceable by the courts or, even if unchallenged, will provide us with exclusivity or commercial value for our product candidates or technology or any significant protection against competitive products or prevent others from designing around our claims. Further, if we encounter delays in regulatory approvals, the per iod of time during which we could market our product candidates under patent protection could be reduced. Our patent rights also depend on our compliance with technology and patent licenses upon which our patent rights are based and upon the validity of as signments of patent rights from consultants and other inventors that were, or are, not employed by us.

The patent positions of biotechnology and pharmaceutical companies, including our patent position, involve complex legal and factual questions, and, therefore, the issuance, scope, validity and enforceability of any patent claims that we may obtain cannot be predicted with certainty. Patents, if issued, may be challenged, deemed unenforceable, invalidated, or circumvented. U.S. patents and patent applications may also be subject to derivation or adversarial proceedings, ex parte reexamination, or inter partes review proceedings, supplemental examination and challenges in district court. Patents may be subjected to opposition, post-grant review, or comparable proceedings lodged in various foreign, both national and regional, patent offices. These proceedings could result in either loss of the patent or denial of the patent application or loss or reduction in the scope of one or more of the claims of the patent or patent application. In addition, such proceedings may be costly. Thus, any patents, should they issue, that we may own or exclusively license may not provide any protection against competitors.

Patent applications are generally maintained in confidence until publication. In the United States, for example, patent applications are maintained in secrecy for up to 18 months after their filing. Similarly, publication of discoveries in scientific or patent literature often lags behind actual discoveries. Consequently, we cannot be certain that we were the first to file patent applications on our product candidates. There is also no assurance that all of the potentially relevant prior art relating to our patents and patent applications has been found, which could be used by a third party to challenge validity of our patents, should they issue, or prevent a patent from issuing from a pending patent application.

In addition, even if patents do successfully issue, third parties may challenge any such patent we own or license through adversarial proceedings in the issuing offices, which could result in the invalidation or unenforceability of some or all of the relevant patent claims. If a third party asserts a substantial new question of patentability against any claim of a U.S. patent we own or license, the U.S. Patent and Trademark Office, or USPTO, may grant a request for reexamination, which may result in a loss of scope of some claims or a loss of the entire patent. The adoption of the Leahy-Smith America Invents Act, or the Leahy-Smith Act, on September 16, 2011, established additional opportunities for third parties to invalidate U.S. patent claims, including inter partes review and post-grant review, on the basis of a lower legal standards than reexamination and additional grounds.

We will incur significant ongoing expenses in maintaining our patent portfolio. Should we lack the funds to maintain our patent portfolio or to enforce our rights against infringers, we could be adversely impacted. Moreover, the failure of any patents that may issue to us or our licensors to adequately protect our product candidates or technology could have an adverse impact on our business.

We will not be able to seek and obtain protection for our intellectual property in all jurisdictions throughout the world, and we may not be able to adequately enforce our intellectual property rights even in the jurisdictions where we seek protection.

Filing, prosecuting and defending patents on all of our product candidates throughout the world would be prohibitively expensive. Competitors may manufacture and sell our potential products in those foreign countries where we do not file for and obtain patent protection or where patent protection may be unavailable, not obtainable or ultimately not enforceable. Our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets and, further, may be able to export otherwise infringing products to territories where we have patent protection but where enforcement is not as strong as that in the United States. These products may compete with our products in jurisdictions where we do not have any issued patents and our patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing.

The statutory deadlines for pursuing patent protection in individual foreign jurisdictions are based on the priority date of each of our patent applications. For PTI-428, all of the statutory deadlines have passed. For our patent applications related to PTI-801, PTI-808, potentiators and correctors, the relevant statutory deadlines have not yet expired. Thus, for each of these patent families, particularly those that we believe provide coverage for these product candidates, we will need to decide whether and where to pursue protection outside the United States by the relevant deadlines, and we will only have the opportunity to obtain patent protection in those jurisdictions where we file for protection, and prosecute and obtain issued claims.

The laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States. Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. The scope and available coverage thus may vary significantly. Outside of the United States, patents we own or license, if

issued, may become subject to patent opposition in the European Patent Of fice or similar proceedings, which may result in loss of scope of some claims or loss of the entire patent. Participation in adversarial proceedings is very complex and expensive, and may divert our management’s attention from our core business and may res ult in unfavorable outcomes that could adversely affect our ability to prevent third parties from competing with us.

The legal systems of some countries, particularly developing countries, do not favor the enforcement of patents and other intellectual property protection, especially those relating to biotechnology. This could make it difficult for us to stop the infringement of our patents, if obtained, or the misappropriation of our other intellectual property rights. For example, many foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties. In addition, many countries limit the enforceability of patents against third parties, including government agencies or government contractors. In these countries, patents may provide limited or no benefit. Patent protection must ultimately be sought on a country-by-country basis, which is an expensive and time-consuming process with uncertain outcomes. Accordingly, we may choose not to seek patent protection in certain countries, and we will not have the benefit of patent protection in such countries.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biopharmaceuticals, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally. For example, an April 2014 report from the Office of the United States Trade Representative identified a number of countries, including India and China, where challenges to the procurement and enforcement of patent rights have been reported. Several countries, including India and China, have been listed in the report every year since 1989. If we encounter difficulties in protecting our intellectual property rights in foreign jurisdictions, our business prospects could be substantially harmed.

Proceedings to enforce our patent rights, if obtained, in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly, could put our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

Intellectual property rights do not necessarily address all potential threats to our competitive advantage.

The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect our business, or permit us to maintain our competitive advantage. The following examples are illustrative:

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Others may be able to make compounds that are similar to our product candidates but that are not covered by the claims of any patents, should they issue, that we own or have exclusively licensed.

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We or our licensors or strategic collaborators might not have been the first to make the inventions covered by any issued patent or pending patent application that we own or have exclusively licensed.

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We or our licensors or strategic collaborators might not have been the first to file patent applications covering certain of our inventions.

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Others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights.

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Our pending patent applications may not lead to issued patents.

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Patents, should they issue, that we own or that we have exclusively licensed, if any, may not provide us with any competitive advantages, or may be held invalid or unenforceable, as a result of legal challenges by our competitors.

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Our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets.

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We may not develop additional proprietary technologies that are patentable.

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The patents of others may have an adverse effect on our business.

Should any of these events occur, they could significantly harm our business, results of operations and prospects.

Recent patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents.

The Leahy-Smith Act includes a number of significant changes to United States patent law. These include provisions that affect the way patent applications will be prosecuted and may also affect patent litigation. Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of our business, our current and pending patent portfolio and future intellectual property strategy. However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business and financial condition.

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

Periodic maintenance fees on any issued patent are due to be paid to the USPTO, the European Patent Office and other foreign patent agencies in several stages over the lifetime of the patent. The USPTO and various foreign national or international patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance events that could result in abandonment or lapse of patent rights include, but are not limited to, failure to file non-provisional applications claiming priority to our provisional applications by the statutory deadlines, failure to timely file national and regional stage patent applications based on an international patent application, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. If we or our licensors fail to maintain the patents and patent applications covering our product candidates, our competitors might be able to enter the market, which would have a material adverse effect on our business.

The patent protection and patent prosecution for some of our product candidates is dependent or may be dependent in the future on third parties.

While we normally seek and gain the right to fully prosecute the patents relating to our product candidates, there may be times when platform technology patents or product-specific patents that relate to our product candidates are controlled by our licensors or collaboration partners. In addition, our licensors and/or licensees and/or collaboration partners may have back-up rights to prosecute patent applications in the event that we do not do so or choose not to do so, and our licensees and/or collaboration partners may have the right to assume patent prosecution rights after certain milestones are reached. If any of our licensing partners fails to appropriately prosecute and maintain patent protection for patents covering any of our product candidates, our ability to develop and commercialize those product candidates may be adversely affected and we may not be able to prevent competitors from making, using and selling competing products.

We have entered into and may in the future enter into licenses to licensed intellectual property. If we were to lose our rights to licensed intellectual property, we may not be able to continue developing or commercializing a product candidate, if approved, that relied on such licensed intellectual property.

We are currently a party to and may in the future be party to license agreements under which we are or will be granted rights to intellectual property that are important to our business. Certain of our existing license agreements impose, and we expect that future license agreements will impose on us, various diligence obligations, payment of milestones and/or royalties and other obligations, including, without limitation, patent prosecution, research and development and efforts to meet milestones under mutually-agreed development plans. If we fail to comply with our obligations under these agreements, or we are subject to a bankruptcy, the licensor may have the right to terminate the license, in which event we would not be able to continue to use the rights granted under the license, or develop or market products covered by the license. Our business could suffer, for example, if any current or future licenses terminate, if the licensors fail to abide by the terms of the license, if the licensed patents or other rights are found to be invalid or unenforceable, or if we are unable to enter into necessary licenses on acceptable terms.

We may need to obtain licenses from third parties to advance our research or allow commercialization of our product candidates, and we cannot provide any assurances that third-party patents do not exist that might be enforced against our current product candidates or future products in the absence of such a license. We may fail to obtain any of these licenses on commercially reasonable terms, if at all. Even if we are able to obtain a license, it may be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. In that event, we may be required to expend significant time and resources to develop or license replacement technology. If we are unable to do so, we may be unable to develop or commercialize the affected product candidates, which could materially harm our business, and the third parties owning such intellectual property rights could seek either an injunction prohibiting our sales, or, with respect to our sales, an obligation on our part to pay royalties and/or other forms of compensation.

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

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

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

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

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

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

If disputes over intellectual property that we license now or in the future prevent or impair our ability to maintain our licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates.

We may be subject to litigation alleging that we are infringing the intellectual property rights of third parties or litigation or other adversarial proceedings seeking to invalidate our patents or other proprietary rights, and we may need to resort to litigation to protect or enforce our patents or other proprietary rights, all of which will be costly to defend, uncertain in its outcome and may prevent or delay development and commercialization efforts or otherwise harm our business.

Our success also will depend, in part, on our refraining from infringing patents or otherwise violating intellectual property owned or controlled by others. Numerous patents and pending applications are owned by third parties in the fields in which we are developing product candidates, both in the United States and elsewhere. It is difficult for industry participants, including us, to identify all third-party patent rights that may be relevant to our product candidates and technologies because patent searching is imperfect due to differences in terminology among patents, incomplete databases and the difficulty in assessing the meaning and scope of patent claims. Moreover, because some patent applications are maintained in secrecy until the patents publish, we cannot be certain that third parties have not filed patent applications that cover our products and technologies. We may fail to identify relevant patents or patent applications or may identify pending patent applications of potential interest but incorrectly predict the likelihood that such patent applications may issue with claims of relevance to our technology. In addition, we may be unaware of one or more issued patents that would be infringed by the manufacture, sale, importation or use of a current or future product candidate, or we may incorrectly conclude that a third-party patent is invalid, unenforceable or not infringed by our activities. Additionally, pending patent applications can, subject to certain limitations, be later amended in a manner that could cover our technologies, our future products or the manufacture or use of our future products. Pharmaceutical companies, biotechnology companies, universities, research institutions and others may have filed patent applications or have received, or may obtain, issued patents in the United States or elsewhere relating to aspects of our technology, including our products, processes for testing, manufacture, formulation or methods of use, including combination therapy. It is uncertain whether the issuance of any third-party patents will require us to alter our product candidates or processes, obtain licenses, or cease certain activities.

If patents issued to third parties contain blocking, dominating or conflicting claims we may choose to or, if such claims are ultimately determined to be valid, be required to obtain licenses to these patents or to develop or obtain alternative non-infringing technology and cease practicing those activities, including, potentially, the manufacture or marketing of any products deemed to infringe those patents. If any licenses are required, there can be no assurance that we will be able to obtain any such licenses on commercially favorable terms, if at all, and if these licenses are not obtained, we might be prevented from pursuing the development and commercialization of certain of our potential products entirely or for certain indications. Even if a license can be obtained on acceptable terms, the rights may be non-exclusive, which could give our competitors access to the same technology or intellectual property rights licensed to us. Our failure to obtain a license to any technology that we may require to commercialize our products on favorable terms may have a material adverse impact on our business, financial condition and results of operations.

We may be exposed to, or threatened with, future litigation by third parties, including our competitors, having patent or other intellectual property rights alleging that our technologies, including our products, processes for manufacture or methods of use, including combination therapy, or other proprietary technologies infringe, either literally or under the doctrine of equivalents, their intellectual property rights. Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize one or more of our product candidates. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business. In the event of a successful infringement or other intellectual property claim against us, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, obtain one or more licenses from third parties, pay royalties or redesign our affected products, which may be impossible or require substantial time and monetary expenditure. We cannot

predict whether any such license would be available at all or whether it would be available on commercially reasonable terms. Parties making successful claims a gainst us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize one or more of our product candidates. We cannot provide any assurances that third-party patents do not exist which mi ght be enforced against our products or product candidates, resulting in either an injunction prohibiting our sales, or, with respect to our sales, an obligation on our part to pay royalties and/or other forms of compensation to third parties. Any of those occurrences would have a material adverse impact on our business.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation or any other patent litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our common stock.

We may be involved in lawsuits to protect or enforce our intellectual property, which could be time consuming, expensive and unsuccessful, and issued patents covering our product candidates could be found invalid or unenforceable if challenged in court.

Competitors may infringe our patents or the patents of our licensors, assuming patents issue from patent applications we own or license. Litigation, which could result in substantial costs to us (even if determined in our favor), may also be necessary to enforce any patents issued or licensed to us. The cost to us in initiating any litigation or other proceeding relating to patent or other proprietary rights, even if resolved in our favor, could be substantial, and litigation would divert our management’s attention. Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could delay our research and development efforts and limit our ability to continue our operations. In addition, in an infringement proceeding, a court may decide that a patent of ours or our licensors is not valid, is unenforceable and/or is not infringed, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question.

If we were to initiate legal proceedings against a third party to enforce a patent covering one of our product candidates or our technology, the defendant could counterclaim that our patent is invalid or unenforceable. In patent litigation in the United States and in most European countries, defendant counterclaims alleging invalidity or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, for example, lack of novelty, obviousness or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution. The outcome following legal assertions of invalidity and unenforceability during patent litigation is unpredictable. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we and the patent examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity or unenforceability, we would lose at least part, and perhaps all, of the patent protection on one or more of our products or certain aspects of our platform technology. Such a loss of patent protection could have a material adverse impact on our business. Patents and other intellectual property rights also will not protect our technology if competitors design around our protected technology without legally infringing our patents or other intellectual property rights.

An adverse result in any litigation or defense proceedings could put one or more of our patents at risk of being invalidated or interpreted narrowly and could put our patent applications at risk of not issuing. Any of these outcomes would not only have an adverse effect on our patent portfolio but may also have an adverse effect on our business if we are unable to prevent the competitive activities of third parties.

If we are not able to adequately prevent disclosure of trade secrets and other proprietary information, the value of our technology and products could be significantly diminished.

We rely on trade secrets to protect technology especially where patent protection is not believed to be appropriate or obtainable or where patents have not issued. We attempt to protect our proprietary technology and processes, in part, with confidentiality agreements and assignment of invention agreements with our employees and confidentiality agreements with our consultants and certain contractors. There can be no assurance that these agreements will not be breached, that we would have adequate remedies for any breach, or that our trade secrets will not otherwise become known or be independently discovered by competitors. We may fail in certain circumstances to obtain the necessary confidentiality agreements, or their scope or term may not be sufficiently broad to protect our interests.

If our trade secrets or other intellectual property become known to our competitors, it could result in a material adverse effect on our business, financial condition and results of operations. To the extent that we or our consultants or research collaborators use intellectual property owned by others in work for us, disputes may also arise as to the rights to related or resulting know-how and inventions.

We may be subject to claims challenging the inventorship or ownership of our patents and other intellectual property.

We enter into confidentiality and intellectual property assignment agreements with our employees, consultants, outside scientific advisors, and sponsored researchers. These agreements generally provide that inventions conceived by the party in the course of rendering services to us will be our exclusive property. However, these agreements may not be honored and may not effectively assign intellectual property rights to us. Moreover, we may not obtain these agreements in all circumstances.

Litigation may be necessary to defend against these and other claims challenging inventorship or ownership. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

We may be subject to claims that we or our employees or consultants have wrongfully used or disclosed alleged trade secrets of our employees’ or consultants’ former employers or their clients. These claims may be costly to defend and if we do not successfully do so, we may be required to pay monetary damages and may lose valuable intellectual property rights or personnel.

Many of our employees and consultants were previously or concurrently employed at universities or biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although no claims against us are currently pending, we may be subject to claims that these employees, consultants or we have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their employers. Litigation may be necessary to defend against these claims. If we fail in defending such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. A loss of key research personnel or their work product could compromise our ability to commercialize, or prevent us from commercializing, our product candidates, which could severely harm our business. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management.

Risks Relating to Our Business Operations and Industry

Our future success depends on our ability to retain executives and to attract, retain and motivate key personnel in a competitive environment for skilled biotechnology personnel.

Because of the specialized scientific nature of our business and the unique properties of our technology, our success is highly dependent upon our ability to attract and retain qualified scientific and technical personnel, consultants and advisors. We are dependent on the principal members of our scientific and management staff, particularly Ms. Meenu Chhabra, Ms. Helen Boudreau, and Drs. Po-Shun Lee, Geoffrey Gilmartin, Benito Munoz and Marija Zecevic, who have extensive knowledge of and experience developing our technology. Additionally, we are dependent on our Vice President, Clinical Operations, Ms. Sheila Wilson, to conduct our clinical operations. The loss of any of their services might significantly delay or prevent the achievement of our research, development and business objectives.

We will need to recruit a significant number of additional personnel in order to achieve our operating goals. In order to pursue our product development and marketing and sales plans, we will need to hire additional qualified scientific personnel to perform research and development, and preclinical studies, as well as personnel with expertise in clinical operations, clinical testing, government regulation, compliance, manufacturing, marketing and sales, which may strain our existing managerial, operational, regulatory compliance, financial and other resources. We also rely on consultants and advisors to assist in formulating our research

and development str ategy and adhering to complex regulatory requirements. We face strong competition for qualified individuals from numerous pharmaceutical and biotechnology companies, universities and other research institutions, many of which have greater financial and oth er resources than us. There can be no assurance that we will be able to attract and retain such individuals on acceptable terms, if at all. Additionally, our facilities are located in Massachusetts, which may make attracting and retaining qualified scienti fic and technical personnel from outside of Massachusetts difficult. The failure to attract and retain qualified personnel, consultants and advisors could have a material adverse effect on our business, financial condition and results of operations.

As our product candidates advance through clinical trials we may experience difficulties in managing our growth and expanding our operations, including, without limitation, managing international clinical trials.

We have limited experience in drug development. As our product candidates advance through preclinical studies and clinical trials, we will need to expand our development, regulatory and manufacturing capabilities or contract with other organizations to provide these capabilities for us. In the future, we expect to have to manage additional relationships with collaborators or partners, suppliers and other organizations, including, without limitation, international clinical trials. Our ability to manage our operations and future growth will require us to continue to improve our operational, financial and management controls, reporting systems and procedures. We may not be able to implement improvements to our management information and control systems in an efficient or timely manner and may discover deficiencies in existing systems and controls.

We are exposed to potential product liability or similar claims, and insurance against these claims may not be sufficient to cover our liabilities, or may not be available to us at a reasonable rate in the future or at all.

Our business exposes us to potential liability risks that are inherent in the testing, manufacturing and marketing of human therapeutic products. Clinical trials involve the testing of product candidates on human subjects or volunteers under a research plan, and carry a risk of liability for personal injury or death to patients due to unforeseen adverse side effects, improper administration of the product candidate, or other factors. Many of these patients are already seriously ill and are therefore particularly vulnerable to further illness or death. Our trials may include third party drugs taken with ours that could injure trial subjects for whose damages we would be liable and, even if we were not, we nevertheless may not be able to show or prove that our product was not a cause of the injury.

We carry clinical trial liability insurance. However, there can be no assurance that we will be able to obtain the amount of insurance necessary to cover potential claims or liabilities. We could be materially and adversely affected if we were required to pay damages or incur defense costs in connection with a claim outside the scope of indemnity or insurance coverage, if the indemnity is not performed or enforced in accordance with its terms, or if our liability exceeds the amount of applicable insurance. In addition, there can be no assurance that insurance, if obtained, will continue to be available on terms acceptable to us. Similar risks would exist upon the commercialization or marketing of any products by us or our collaborators.

Regardless of their merit or eventual outcome, product liability claims may result in:

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decreased demand for our product;

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injury to our reputation and significant negative media attention;

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withdrawal of clinical trial volunteers or subjects;

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costs of litigation;

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distraction of management; and

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substantial monetary awards to plaintiffs.

Should any of these events occur, it could have a material adverse effect on our business and financial condition.

We may become involved in securities class action litigation that could divert management’s attention and adversely affect our business and could subject us to significant liabilities.

The stock markets have from time to time experienced significant price and volume fluctuations that have affected the market prices for the common stock of pharmaceutical and biotechnology companies. These broad market fluctuations as well a broad range of other factors, including the realization of any of the risks described in this “Risk Factors” section of this report, may cause the market price of our common stock to decline. In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us because biotechnology and pharmaceutical companies generally experience significant stock price volatility. We may become involved in this type of litigation in

the future. Litigation often is expensive and diverts management’s attention and reso urces, which could adversely affect our business. Any adverse determination in any such litigation or any amounts paid to settle any such actual or threatened litigation could require that we make significant payments.

Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements and insider trading.

We are exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional failures to comply with FDA regulations, to provide accurate information to the FDA, to comply with manufacturing standards we have established, to comply with federal and state healthcare fraud and abuse laws and regulations, to report financial information or data accurately or to disclose unauthorized activities to us. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Employee misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. It is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant fines or other sanctions.

We must comply with environmental laws and regulations, and failure to comply with these laws and regulations could expose us to significant liabilities.

We use hazardous chemicals and biological materials in certain aspects of our business and are subject to a variety of U.S. federal, state and local laws and regulations governing the use, generation, manufacture, distribution, storage, handling, treatment and disposal of these materials. Although we believe our safety procedures for handling and disposing of these materials and waste products comply with these laws and regulations, we cannot eliminate the risk of accidental injury or contamination from the use, manufacture, distribution, storage, handling, treatment or disposal of hazardous materials. In the event of contamination or injury, or failure to comply with environmental, occupational health and safety and export control laws and regulations, we could be held liable for any resulting damages and any such liability could exceed our assets and resources, including any available insurance.

Risks Relating to Our Common Stock

Our stock price will likely continue to be volatile and an active, liquid and orderly trading market may not develop for our common stock. As a result you may not be able to resell your shares at or above your purchase price.

The market price of our common stock may fluctuate substantially as a result of many factors, some of which are beyond our control. These fluctuations could cause you to lose all or part of the value of your investment in our common stock. Factors that could cause fluctuations in the market price of our common stock include the following:

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the development status of our product candidates and when our products receive regulatory approval;

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the results, and the timing of results, of our preclinical studies and clinical trials, including, without limitation, the publication or delay in publication of preliminary, interim or final results, adverse events, side effects, safety or efficacy data or other information;

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the support and approval, if any, that we receive from our collaboration partners, the TDN and other interested parties;

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performance of third parties on whom we rely to conduct pre-clinical studies, manage our clinical trials, and manufacture our products, product components and product candidates, including their ability to comply with regulatory requirements;

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the success of, and fluctuation in, the sales of our product candidates, if approved;

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our execution of our sales and marketing, manufacturing and other aspects of our business plan;

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results of operations that vary from those of our competitors and the expectations of securities analysts and investors;

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changes in expectations as to our future financial performance, including financial estimates by securities analysts and investors;

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our announcement of significant licensing or collaboration arrangements, or the termination of such arrangements;

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our announcement of significant contracts, acquisitions, or capital commitments;

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announcements by our competitors of competing products or other initiatives, including, without limitation, those that lead to the development of a new standard of care;

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announcements by third parties of significant claims or proceedings against us;

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regulatory and reimbursement developments in the United States and abroad;

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future sales of our common stock or debt securities;

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additions or departures of key personnel; and

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general domestic and international economic conditions unrelated to our performance.

In addition, the stock market in general has experienced significant price and volume fluctuations that have often been unrelated or disproportionate to operating performance of individual companies. These broad market factors may adversely affect the market price of our common stock, regardless of our operating performance. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted. A securities class action suit against us could result in significant liabilities and, regardless of the outcome, could result in substantial costs and the diversion of our management’s attention and resources.

Prior to our initial public offering in February 2016, there was no public market for shares of our common stock. The listing of our common stock on The NASDAQ Global Market does not assure that a meaningful, consistent and liquid trading market exists. Although our common stock is listed on The NASDAQ Global Market, trading volume in our common stock has been limited and an active trading market for our shares may never develop or be sustained. If an active market for our common stock does not develop, you may be unable to sell your shares when you wish to sell them or at a price that you consider attractive or satisfactory. The lack of an active market may also adversely affect our ability to raise capital by selling securities in the future, or impair our ability to license or acquire other product candidates, businesses or technologies using our shares as consideration.

We could be subject to securities class action litigation.

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

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who covers us downgrades our stock or publishes inaccurate or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price and trading volume to decline.

Our principal stockholders have and will have a controlling influence over our business affairs and may make business decisions with which you disagree and which may adversely affect the value of your investment.

Our executive officers, directors and principal stockholders and their affiliates beneficially own or control, directly or indirectly, a majority of the outstanding shares of our common stock. As a result, if some of these persons or entities act together, they will have the ability to exercise significant influence over matters submitted to our stockholders for approval, including the election and removal of directors, amendments to our certificate of incorporation and by-laws and the approval of any business combination. These actions may be taken even if they are opposed by other stockholders. This concentration of ownership may also have the effect of delaying or preventing a change of control of our company or discouraging others from making tender offers for shares of our common stock, which could prevent our stockholders from receiving a premium for their shares. Some of these persons or entities who make up our principal stockholders may have interests different from yours.

Future sales, or the expectation of future sales, of a substantial number of our common shares could depress the trading price of our common stock.

If we or our stockholders sell substantial amounts of shares of our common stock in the public market or if the market anticipates that these sales could occur, the market price of shares of our common stock could decline. These sales may make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate, or to use equity as consideration for future acquisitions.

Pursuant to our 2016 Stock Option and Incentive Plan, or the 2016 Plan, our board is authorized to grant stock options and other equity-based awards to our employees, directors and consultants. The number of shares available for future grant under the 2016 Plan automatically increases each year by up to 3% of all shares of our capital stock outstanding as of December 31 of the prior calendar year, subject to the ability of our board of directors or compensation committee to take action to reduce the size of the increase in any given year. Currently, we plan to register the increased number of shares available for issuance under the 2016 Plan each year. If our board of directors or compensation committee elects to increase the number of shares available for future grant by the maximum amount each year, our stockholders may experience additional dilution, which could cause our stock price to fall.

A significant portion of our total outstanding shares may be sold into the market. This could cause the market price of our common stock to drop significantly, even if our business is doing well.

Sales of a substantial number of shares of our common stock in the public market could occur at any time. If our stockholders sell, or the market believes that our stockholders intend to sell, substantial amounts of our common stock in the public market, the market price of our common stock could decline significantly.

The holders of a significant portion of shares of our common stock, or their transferees, have rights, subject to some conditions, to require us to file one or more registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders. If we were to register the resale of these shares, they could be freely sold in the public market. If these additional shares are sold, or if it is believed that they will be sold, in the public market, the trading price of our common stock could decline.

Actual or potential sales of our common stock by our employees, including our executive officers, pursuant to pre-arranged stock trading plans could cause our stock price to fall or prevent it from increasing for numerous reasons, and actual or potential sales by such persons could be viewed negatively by other investors.

In accordance with the guidelines specified under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, and our policies regarding stock transactions, our employees and executive officers may adopt stock trading plans pursuant to which they have arranged to sell shares of our common stock from time to time in the future. Generally, sales under such plans by our executive officers and directors require public filings. Actual or potential sales of our common stock by such persons could cause the price of our common stock to fall or prevent it from increasing for numerous reasons. For example, a substantial number of shares of our common stock becoming available (or being perceived to become available) for sale in the public market could cause the market price of our common stock to fall or prevent it from increasing. Also, actual or potential sales by such persons could be viewed negatively by other investors.

We have broad discretion in the use of our cash and cash equivalents and may not use them effectively or may use them in a way with respect to which stockholders do not approve.

Our management will have broad discretion in the use of our cash and could spend it in ways that do not improve our results of operations or enhance the value of shares of our common stock. The failure by our management to utilize our cash effectively could result in financial losses that could have a material adverse effect on our business, cause the market price of shares of our common stock to decline and delay the development of our product candidates. We may invest our cash in a manner that does not produce income or that loses value. If we do not invest our cash in ways that enhance stockholder value, we may fail to achieve expected financial results, which could cause the price of shares of our common stock to decline.

As an “emerging growth company,” we are allowed to postpone the date by which we must comply with certain laws and regulations intended to protect investors and to reduce the amount of information we provide in our reports filed with the Securities and Exchange Commission, or SEC. This reduced disclosure could make our common stock less attractive to investors.

The JOBS Act is intended to reduce the regulatory burden on “emerging growth companies.” As defined in the JOBS Act, a public company whose initial public offering of common equity securities occurred after December 8, 2011 and whose annual gross revenues are less than $1.0 billion will, in general, qualify as an “emerging growth company” until the earliest of:

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the last day of its fiscal year following the fifth anniversary of the date of its initial public offering of common equity securities;

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the last day of its fiscal year in which it has annual gross revenue of $1.0 billion or more;

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the date on which it has, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; and

•

the date on which it is deemed to be a “large accelerated filer,” which will occur at such time as the company (1) has an aggregate worldwide market value of common equity securities held by non-affiliates of $700.0 million or more as of the last business day of its most recently completed second fiscal quarter, (2) has been required to file annual and quarterly reports under the Securities Exchange Act of 1934, as amended, or the Exchange Act, for a period of at least 12 months and (3) has filed at least one annual report pursuant to the Exchange Act.

Under this definition, we are an “emerging growth company” and could remain an “emerging growth company” for more than five years. For so long as we are an “emerging growth company,” we will, among other things:

•

not be required to comply with the auditor attestation requirements of section 404(b) of Sarbanes-Oxley;

•

not be required to hold a nonbinding advisory stockholder vote on executive compensation pursuant to Section 14A(a) of the Exchange Act;

•

not be required to seek stockholder approval of any golden parachute payments not previously approved pursuant to Section 14A(b) of the Exchange Act;

•

be exempt from any rule adopted by the Public Company Accounting Oversight Board, requiring mandatory audit firm rotation or a supplemental auditor discussion and analysis; and

•

be subject to reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.

In addition, Section 107 of the JOBS Act provides that an emerging growth company can use the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. This permits an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

In this report and our other periodic reports we have not included all of the executive compensation related information that would be required if we were not an emerging growth company. We cannot predict whether investors will find our common stock less attractive for relying on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

As a public reporting company, we are and will be subject to rules and regulations established from time to time by the SEC and the Public Company Accounting Oversight Board, or PCAOB, regarding our internal control over financial reporting. We may not complete improvements to our internal control over financial reporting in a timely manner, or these internal controls may not be determined to be effective, which may adversely affect investor confidence in our company and, as a result, the market price of our common stock could decline and you could lose all or part of your investment.

We are a public reporting company subject to the rules and regulations established from time to time by the SEC and the PCAOB. These rules and regulations require, among other things, that we establish and periodically evaluate procedures with respect to our internal controls over financial reporting. Reporting obligations as a public company are likely to place a considerable strain on our financial and management systems, processes and controls, as well as on our personnel.

In addition, as a public company we are required to document and test our internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, so that our management can certify as to the effectiveness of our internal controls over financial reporting by the due date for our annual report for the year ending December 31, 2016 and thereafter, which will require us to continue to document and make changes to our internal controls over financial reporting. Likewise, our independent registered public accounting firm will be required to provide an attestation report on the effectiveness of our internal control over financial reporting at such time as we cease to be an “emerging growth company,” as defined in the JOBS Act, although, as described in the preceding risk factor, we could potentially qualify as an “emerging growth company” for more than five years. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating.

If our senior management is unable to conclude that we have effective internal control over financial reporting, or to certify the effectiveness of such controls, or if our independent registered public accounting firm cannot render an unqualified opinion on management’s assessment and the effectiveness of our internal control over financial reporting once we cease to be an emerging growth company, or if material weaknesses in our internal controls are identified, we could be subject to regulatory scrutiny and a loss of public confidence, which could have a material adverse effect on our business and our stock price. In addition, if we do not maintain adequate financial and management personnel, processes and controls, we may not be able to manage our business effectively or accurately report our financial performance on a timely basis, which could cause a decline in our common stock price and adversely affect our results of operations and financial condition.

Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.

We are subject to the periodic reporting requirements of the Exchange Act. Our disclosure controls and procedures are designed to reasonably ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is accumulated and communicated to management and recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures as well as internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are and will be met. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not be detected.

Operating as a public company has significantly increased our costs and requires our management to devote substantial time to compliance efforts.

As a public company, we are incurring and will continue to incur significant legal, accounting, insurance and other expenses that we did not incur as a private company. The Dodd-Frank Act and the Sarbanes-Oxley Act, as well as related rules implemented by the SEC and The NASDAQ Stock Market, have required changes in corporate governance practices of public companies. In addition, rules that the SEC is implementing or is required to implement pursuant to the Dodd-Frank Act are expected to require additional changes. We expect that compliance with these and other similar laws, rules and regulations, including compliance with Section 404 of the Sarbanes-Oxley Act, will substantially increase our expenses, including our legal and accounting costs, and make some activities more time-consuming and costly. We also expect these laws, rules and regulations to make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage, which may make it more difficult for us to attract and retain qualified persons to serve on our board of directors or as officers. We expect that we will need to hire additional accounting, finance and other personnel in connection with our efforts to comply with the requirements of being a public company, and our management and other personnel will need to devote a substantial amount of time towards maintaining compliance with these requirements. These requirements will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. Although the JOBS Act may for a limited period of time somewhat lessen the cost of complying with these additional regulatory and other requirements, we nonetheless expect a continued increase in legal, accounting, insurance and certain other expenses in the future, which will negatively impact our business, results of operations and financial condition.

Anti-takeover provi sions in our charter documents could discourage, delay or prevent a change in control of our company and may affect the trading price of our common stock.

Our amended and restated certificate of incorporation and amended and restated by-laws and the Delaware General Corporation Law contain provisions that may enable our board of directors to resist a change in control of our company even if a change in control were to be considered favorable by you and other stockholders. These provisions:

•

provide that directors can be removed only for cause, and then only by a supermajority stockholder vote;

•

establish advance notice requirements for nominating directors and proposing matters to be voted on by stockholders at stockholder meetings;

•

require majority stockholder voting to effect certain amendments to our certificate of incorporation and by-laws;

•

create a classified board of directors whose members serve staggered three-year terms;

•

specify that special meetings of our stockholders can be called only by our board of directors;

•

prohibit stockholder action by written consent;

•

provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum;

•

specify that no stockholder is permitted to cumulate votes at any election of directors;

•

expressly authorize our board of directors to modify, alter or repeal our amended and restated by-laws, subject to any limitations set forth therein;

•

require supermajority votes of the holders of our common stock to amend specified provisions of our amended and restated certificate of incorporation; and

•

require supermajority votes of the holders of our common stock to amend our amended and restated by-laws, unless such amendments have been recommended to the stockholders, in which case only a majority vote is necessary.

In addition, we are subject to the provisions of Section 203 of the Delaware General Corporation Law. In general, Section 203 prohibits a publicly-held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a three-year period following the time that this stockholder becomes an interested stockholder, unless the business combination is approved in a prescribed manner. A “business combination” includes, among other things, a merger, asset or stock sale or other transaction resulting in a financial benefit to the interested stockholder. An “interested stockholder” is a person who, together with affiliates and associates, owns, or did own within three years prior to the determination of interested stockholder status, 15% or more of the corporation’s voting stock.

A Delaware corporation may “opt out” of these provisions with an express provision in its original certificate of incorporation or an express provision in its certificate of incorporation or by-laws resulting from a stockholders’ amendment approved by at least a majority of the outstanding voting shares. We have not opted out of these provisions. As a result, mergers or other takeover or change in control attempts of us may be discouraged or prevented.

We do not expect to pay any dividends on our common stock for the foreseeable future.

We currently expect to retain all future earnings, if any, for future operations, expansion and repayment of debt and have no current plans to pay any cash dividends to holders of our common stock for the foreseeable future. Any decision to declare and pay dividends in the future will be made at the discretion of our board of directors and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions and other factors that our board of directors may deem relevant. As a result, you may not receive any return on an investment in our common stock unless you sell our common stock for a price greater than that which you paid for it.

Our by-laws provide that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders.

Our by-laws provide that the Court of Chancery of the State of Delaware is the sole and exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our certificate of incorporation or our by-laws, or any action asserting a claim against us that is governed by the internal affairs doctrine. The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, other employees or stockholders (including beneficial owners), which may discourage such lawsuits against us and our directors, officers, other employees or stockholders (including beneficial owners). Alternatively, if a court were to find the choice of forum provision contained in our by-laws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Use of Proceeds from Registered Securities

On February 17, 2016, we closed the sale of 6,250,000 shares of common stock to the public at an initial public offering price of $8.00 per share. The offer and sale of the shares in the IPO were registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333-208735), which was filed with the SEC on December 23, 2015 and amended subsequently and declared effective on February 10, 2016. The underwriters of the offering were Leerink Partners and RBC Capital Markets, acting as joint book-running managers for the offering and as representatives of the underwriters. Baird and H.C. Wainwright & Co. acted as co-managers for the offering. We raised approximately $42.5 million in net proceeds in the IPO after deducting underwriting discounts and commissions of approximately $3.5 million and other offering expenses of $4.0 million. No offering expenses were paid directly or indirectly to any of our directors or officers (or their associates) or persons owning ten percent or more of any class of our equity securities or to any other affiliates. There has been no material change in the planned use of proceeds from our initial public offering as described in our final prospectus filed with the SEC pursuant to Rule 424(b) of the Securities Act.

Item 3.

Defaults Upon Senior Securities

Not applicable.

Item 4.

Mine Safety Disclosures

Not applicable.

Item 5.

Other Information

Not applicable.

Item 6.

Exhibits

The exhibits filed as part of this Quarterly Report on Form 10-Q are set forth on the Exhibit Index, which is incorporated herein by reference.

		Incorporated by Reference
Exhibit No.	Exhibit Description	Form	File No.	Exhibit No.	Filing Date

3.1	Fifth Amended and Restated Certificate of Incorporation of the Company.	S-1/A	333-208735	3.2	February 1, 2016

3.2	Second Amended and Restated By-laws of the Company.	S-1/A	333-208735	3.4	February 1, 2016

4.1	Specimen Common Stock Certificate.	S-1/A	333-208735	4.1	February 1, 2016

4.2	Third Amended and Restated Stockholders’ Agreement of the Company.	S-1/A	333-208735	4.2	February 1, 2016

4.3	Form of Preferred Stock Warrant.	S-1	333-208735	4.3	December 23, 2015

10.1	Employment Agreement between the Company and Helen Boudreau, dated as of July 25, 2017.	8-K	001-37695	10.1	July 31, 2017

10.2	Lease Between the Company, as Tenant, and Ice Box, LLC, as Landlord, dated as of September 19, 2017.				Filed herewith

31.1	Certification of Principal Executive Officer pursuant to Exchange Act rules 13a-14 or 15d-14.				Filed herewith

31.2	Certification of Principal Financial Officer pursuant to Exchange Act rules 13a-14 or 15d-14.				Filed herewith

32.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350.				Furnished herewith

101.INS	XBRL Instance Document.				Filed herewith

101.SCH	XBRL Taxonomy Extension Schema Document.				Filed herewith

101.CAL	XBRL Taxonomy Extension Calculation Document.				Filed herewith

101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.				Filed herewith

101.LAB	XBRL Taxonomy Extension Labels Linkbase Document.				Filed herewith

101.PRE	XBRL Taxonomy Extension Presentation Link Document.				Filed herewith

SIGNA TURES

Pursuant to the requirements 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.

	PROTEOSTASIS THERAPEUTICS, INC.

Date: November 14, 2017	By:	/s/ Meenu Chhabra
		Meenu Chhabra
		President and Chief Executive Officer (Principal Executive Officer)
Date: November 14, 2017	By:	/s/ Helen M. Boudreau
		Helen M. Boudreau
		Chief Financial Officer (Principal Financial Officer)

Date: November 14, 2017	By:	/s/ Brett Hagen
		Brett Hagen
		Vice President of Finance (Principal Accounting Officer)

Exhibit 10.2

LEASE

BETWEEN

PROTEOSTASIS THERAPEUTICS, INC., AS TENANT

AND

ICE BOX, LLC, AS LANDLORD

80 Guest Street, Brighton, ma

ACTIVE/81213857.2

ACTIVE/91437610.6

TABLE OF CONTENTS

PAGE

ARTICLE 1 BASIC DATA; DEFINITIONS

1.1

Basic Data 1

1.2

Additional Definitions 4

1.3

Enumeration of Exhibits 7

ARTICLE 2 PREMISES AND APPURTENANT RIGHTS

2.1

Lease of Premises 7

2.2

Appurtenant Rights and Reservations 7

2.3

Parking 9

2.4

Shuttle Service 11

ARTICLE 3 BASIC RENT

3.1

Payment .11

ARTICLE 4 CONDITION OF PREMISES

4.1

Condition of Premises; Initial Improvements 12

ARTICLE 5 USE OF PREMISES

5.1

Permitted Use 12

5.2

Installations and Alterations by Tenant .15

5.3

Extra Hazardous Use 18

5.4

Hazardous Materials .19

ARTICLE 6 ASSIGNMENT AND SUBLETTING

6.1

Prohibition .22

6.2

Landlord’s Consent 23

6.3

Acceptance of Rent 25

6.4

Excess Payments 26

6.5

Landlord’s Recapture Right 26

6.6

Further Requirements 26

ARTICLE 7 RESPONSIBILITY FOR REPAIRS AND CONDITION OF PREMISES; SERVICES TO BE FURNISHED BY LANDLORD

7.1

Landlord Repairs .27

7.2

Tenant Repairs; Compliance with Laws .28

7.3

Floor Load ‑ Heavy Machinery .29

7.4

Utility Services .29

7.5

Other Services .31

7.6

Interruption of Service 31

ARTICLE 8 REAL ESTATE TAXES

8.1

Payments on Account of Real Estate Taxes .36

8.2

Abatement 37

(i)

ACTIVE/91437610.6

ARTICLE 9 BUILDING OPERATING EXPENSES AND LABORATORY OPERATING EXPENSES

9.1

Definitions 38

9.2

Tenant’s Payment of Operating Expenses .39

ARTICLE 10 INDEMNITY AND PUBLIC LIABILITY INSURANCE

10.1

Tenant’s Indemnity 40

10.2

Tenant Insurance 40

10.3

Tenant’s Risk 42

10.4

Landlord’s Insurance 43

10.5

Waiver of Subrogation 43

ARTICLE 11 FIRE, EMINENT DOMAIN, ETC.

11.1

Landlord’s Right of Termination 44

11.2

Restoration; Tenant’s Right of Termination 44

11.3

Abatement of Rent 45

11.4

Eminent Domain 46

ARTICLE 12 HOLDING OVER; SURRENDER

12.1

Holding Over 47

12.2

Surrender of Premises 47

ARTICLE 13 RIGHTS OF MORTGAGEES; TRANSFER OF TITLE

13.1

Rights of Mortgagees or Ground Lessor .48

13.2

Assignment of Rents and Transfer of Title .49

13.3

Notice to Mortgagee 50

ARTICLE 14 DEFAULT; REMEDIES

14.1

Tenant’s Default .50

14.2

Landlord’s Remedies .52

14.3

Additional Rent 56

14.4

Remedying Defaults 56

14.5

Remedies Cumulative 56

14.6

Enforcement Costs 56

14.7

Waiver .56

14.8

Security Deposit 57

14.9

Landlord’s Default 62

14.10

Independent Covenants 62

ARTICLE 15 MISCELLANEOUS PROVISIONS

15.1

Landlord’s Rights of Access 62

15.2

Covenant of Quiet Enjoyment 63

15.3

Landlord’s Liability .63

15.4

Estoppel Certificate 64

15.5

Brokerage 64

15.6

Rules and Regulations 64

15.7

Financial Statements 65

(ii)

ACTIVE/91437610.6

15.8

Substitute Space 65

15.9

Confidentiality 65

15.10

Invalidity of Particular Provisions; Saving Clause 65

15.11

Provisions Binding, Etc 66

15.12

Recording 66

15.13

Notice 66

15.14

Authority 67

15.15

When Lease Becomes Binding; Entire Agreement; Modification 67

15.16

Paragraph Headings and Interpretation of Sections 67

15.17

Joint and Several Liability; Successors and Assigns 67

15.18

Waiver of Jury Trial 68

15.19

Reservation 68

15.20

Prohibited Persons and Transactions 68

15.21

Time Is of the Essence 69

15.22

Multiple Counterparts; Entire Agreement 69

15.23

Governing Law 69

(iii)

ACTIVE/91437610.6

Exhibit 10.2

L E A S E

THIS LEASE is dated as of September 19, 2017 (the “ Effective Date ”), between the Landlord and the Tenant named below, and is of space in the Building described below.

ARTICLE 1
BASIC DATA; DEFINITIONS

Basic Data

. Each reference in this Lease to any of the following terms shall be construed to incorporate the data for that term set forth in this Section:

Landlord : ICE BOX, LLC, a Massachusetts limited liability company

Landlord’s Notice Address : c/o NB Development Group, 221 N. Beacon Street, Brighton, MA 02135, Attn: James Halliday

Landlord’s Payment Address :

By Wire:

Bank:

ABA#:

Account# :

Account Name:

By Mail:

Ice Box LLC

221 North Beacon Street

Brighton, MA 02135

Tenant : PROTEOSTASIS THERAPEUTICS, INC., a Delaware corporation

Tenant’s Notice Address: (a) Prior to the Tenant Occupancy Date:

Proteostasis Therapeutics, Inc.

200 Technology Sq.

4th Floor

Cambridge, MA 02139

Attn: Chief Financial Officer

With Copies to:

Brown Rudnick LLP

One Financial Center

Boston, MA 02111

Attn: Jeffrey A. Huebschmann, Esq.

(b) After the Tenant Occupancy Date:

Proteostasis Therapeutics, Inc.

ACTIVE/91437610.6

80 Guest Street

Brighton, MA 02135

Attn: Chief Financial Officer

Guarantor : None.

Property : The land located in Brighton, Massachusetts together with the buildings and other improvements thereon known as 80 Guest Street, Brighton, Massachusetts 02135 located in the Complex and referred to as “C3 Parcel” on the site plan attached hereto as Exhibit B .

Building : The multi-story, mixed use building on the Property and containing approximately 246,405 rentable square feet (exclusive of the Rink Building), as the same may be altered, expanded, reduced or otherwise changed by Landlord from time to time.

Premises : Agreed to be 29,836 rentable square feet consisting of the entire fifth (5 ^th ) floor of the Building and approximately as shown on the location plan attached hereto as Exhibit A .

Basic Rent : The Basic Rent, net of all Additional Rent, is as follows:


RENTAL PERIOD	RENTAL RATE PER RSF	ANNUAL BASIC RENT	MONTHLY PAYMENT
First Lease Year	$55.50	$1,655,898.00	$137,991.50
Second Lease Year	$57.03	$1,701,547.08	$141,795.59
Third Lease Year	$58.60	$1,748,389.60	$145,699.13
Fourth Lease Year	$60.21	$1,796,425.56	$149,702.13
Fifth Lease Year	$61.87	$1,845,953.32	$153,829.44
Sixth Lease Year	$63.57	$1,896,674.52	$158,056.21
Seventh Lease Year	$65.32	$1,948,887.52	$162,407.29
Eighth Lease Year	$67.12	$2,002,592.32	$166,882.69
Ninth Lease Year	$68.97	$2,057,788.92	$171,482.41
Tenth Lease Year	$70.87	$2,114,477.32	$176,206.44

Lease Year : Each period of twelve (12) consecutive months, commencing on the Rent Commencement Date and each successive twelve (12) month period, except that if the Rent Commencement Date shall occur on a date other than the first day of a month, then the first Lease Year shall include the period from the Rent Commencement Date to the first day of the following month and the twelve (12) calendar months thereafter.

Commencement Date : The Substantial Completion Date of Landlord’s Work as provided in Exhibit C . Notwithstanding the foregoing, if Tenant’s personnel shall occupy all or any part of the Premises for the conduct of its business prior to the Commencement Date as determined pursuant to the preceding sentence, such date of occupancy shall, for all purposes of

ACTIVE/91437610.6

this Lease, be the Commencement Date. Promptly upon the occurrence of the Commencement Date, Landlord and Tenant shall execute and deliver a letter designating the Commencement Date substantially in the form attached hereto as Exhibit E , but the failure by either party to execute and deliver such a letter shall have no effect on the Commencement Date, as hereinabove determined.

Rent Commencement Date : The earliest date to occur of (i) April 15, 2018 (subject to extension pursuant to Section 7 of Exhibit C to this Lease), or (ii) the date Tenant has commenced occupancy of any portion of the Premises for the conduct of business.

Tenant’s Pro Rata Share of the Office Portion : For purposes of calculating Tenant’s payments with respect to Taxes and Building Operating Expenses, Tenant’s Pro Rata Share shall mean the fraction, expressed as a percentage, the numerator of which shall be the rentable square feet in the Premises and the denominator of which shall be total rentable square feet of the Office Portion of the Building.

Tenant’s Laboratory Share : For purposes of calculating Tenant’s payments with respect to the Laboratory Operating Expenses associated with the Laboratory Portion of the Premises, Tenant’s Laboratory Share shall mean the fraction, expressed as a percentage, the numerator of which shall be the rentable square feet of the Premises designed for laboratory use (as determined based on Tenant’s final as-built interior laboratory construction plans for the Premises approved by Landlord) and the denominator of which shall be total rentable square feet of the Laboratory Portion of the Building.

Letter of Credit : One Million Six Hundred Fifty Five Thousand Eight Hundred Ninety Eight and 00/100 Dollars ( $1,655,898.00 ) to be held, disposed of and reduced as provided in Section 14.8 .

Term : The period commencing on the Commencement Date and expiring at 12:00 a.m. on the tenth (10 ^th ) anniversary of the Rent Commencement Date, except that if the Rent Commencement Date is other than the first day of a calendar month, the expiration of the Term shall be at the close of the last day of the calendar month in which such anniversary falls. The Term shall include any extension thereof that is expressly provided for by this Lease and that is effected strictly in accordance with this Lease; if no extension of the Term is expressly provided for by this Lease, no right to extend the Term shall be implied by this provision.

Initial Commercial General Liability Insurance : $3,000,000 per occurrence/ $5,000,000 aggregate (combined single limit) for property damage, bodily injury or death.

Permitted Use : The Premises are to be used and occupied by Tenant solely for the purpose of general office and research and development uses, including a biotechnical and Uniform Building Code (“ UBC ”) “B” laboratory use (provided that no laboratory classified as a BSL-3 or BSL-4 or a UBC “H” use shall be permitted). The use of the Premises shall be in conformity with all applicable Laws, including any hazardous waste or medical waste rules and regulations promulgated by Landlord or any applicable governmental authority.

ACTIVE/91437610.6

Landlord’s Contribution : An amount equal to $160.00 per rentable square foot of the Premises for a total of Four Million Seven Hundred Seventy Three Thousand Seven Hundred Sixty and 00/100 Dollars ($4,773,760.00) .

Office Portion: That portion of the Building located at and above the ground floor of the Building which is programmed for and serving office uses (i.e. excluding the Parking Garage and the Laboratory Portion and Retail Portion).

Retail Portion: The portion of the Building located on the ground floor (i.e. excluding the Parking Garage, the Laboratory Portion and the Office Portion).

Laboratory Portion : That portion of floors four (4), five (5) and six (6) of the Building which is leased to tenants for laboratory uses (i.e., excluding the Parking Garage, the Office Portion and the Retail Portion). The Laboratory Portion shall initially be designated as fifty percent (50%) of the floor area on each of floors four (4), five (5) and six (6) of the Building, subject to adjustment based upon final as-built tenant construction plans for those floors in the Building.

Rink Building : The portion of the connected buildings on the Property that contains the hockey rink and which consists of the ice area, boards, benches and entries thereto.

Parking Garage: The three-level, podium style parking garage at the Property.

Complex: The Building, Parking Garage and the adjacent building on the Property referred to as the “Rink Building,” and all common areas and other improvements now or hereafter constructed on the Property, as the same may be altered, expanded, reduced or otherwise changed from time to time, subject to the terms and conditions of this Lease.

Boston Landing Project: That certain development project known as “Boston Landing,” containing the Complex and the additional parcels of land (together with all buildings, structures and other improvements constructed or to be constructed from time to time thereon) shown on the site plan attached hereto as Exhibit B .

Comparable Buildings: Shall mean first class, mixed use office and laboratory buildings in the greater Boston area (including, but not limited to, the Boston Landing Project) which have services, systems and facilities comparable to the Building.

Declaration : That certain Declaration of Covenants, Easements and Restrictions for Boston Landing Boston (Brighton), Massachusetts, dated as of April 14, 2016 and recorded with the Suffolk County Registry of Deeds in Book 55999, Page 85, as the same may be further amended from time to time. Landlord represents and warrants to Tenant that the Declaration is in full force and effect, and Landlord is not in default in the performance of its obligations under the Declaration, and that this Lease shall not be subject to any future amendments which (i) are inconsistent with any of Tenant’s express rights under this Lease, (ii) which materially adversely affect the use and occupancy of the Premises by Tenant, or (iii) increase any obligations of Tenant as under the Lease (other than to a de minimis extent).

ACTIVE/91437610.6

Additional Definitions

. When used in Lease, the capitalized terms set forth below shall bear the meanings set forth below.

Adequate Assurance : As defined in Section 14.1 .

Adequate Assurance of Future Performance : As defined in Section 14.1 .

Additional Rent : All charges and sums payable by Tenant as set forth in this Lease, other than and in addition to Basic Rent.

Affiliate : With respect to Landlord or Tenant, as the case may be, a Person or Persons directly or indirectly, through one or more intermediaries, controlling, controlled by or under common control with Landlord or Tenant. The term “control” as used in the immediately preceding sentence, means, with respect to a Person that is a corporation, the right to exercise, directly or indirectly, more than fifty percent (50%) of the voting rights attributable to the shares of the controlled corporation and, with respect to a Person that is not a corporation, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the controlled Person.

Alterations : As defined in Section 5.3 .

Bankruptcy Code : As defined in Section 14.1 .

Base Building: Shall mean all of the Structural Elements (as hereinafter defined) of the Building, the roof and roof membrane , the common building and core facilities of the Building, and the Base Building Systems (as hereinafter defined) serving the Building, but shall not include any Improvements relating to the Premises (whether existing or constructed by Landlord or Tenant), Alterations, the distribution portions of Base Building Systems which exclusively serve the Premises (whether located in the Premises or other areas of the Building), or other fixtures or personal property installed by or on behalf of Tenant or any party claiming by, through or under Tenant.

Laboratory Systems : Shall mean the HVAC system (including outside air handling units, chiller and exhaust fans and risers), laboratory waste water system, the laboratory exhaust facilities and equipment (including the laboratory exhaust energy recovery unit and exhaust riser), boilers, and hot water and chilled water distribution systems (including pumps and risers), electrical panel and facilities, water heaters and risers, fire protection and suppression system for the laboratory areas, water service to the Chemical Storage Room, louvers and mechanical rooms serving the Laboratory Portion, and other common service systems exclusively serving the Laboratory Portion of the Building and whether or not such Laboratory Systems are shared (or capable of being shared) by tenants or other occupants of the Laboratory Portion of the Building. As of the Commencement Date, the Laboratory Systems include, without limitation, the following: (i) ph Neutralization Tank (as hereinafter defined) and ph Neutralization room, (ii) RO/DI, (iii) vacuum equipment and compressed air, (iv) laboratory waste water treatment system, (v) Chemical Storage Room, (vi) laboratory venting equipment and systems (including central exhaust unit supply and exhaust ductwork), (vii) air handling units (for supply air) on floors four (4), five (5) and six (6) of the Building, (viii) laboratory exhaust energy recovery unit, including a new exhaust riser for the Laboratory Portion, (ix) an air chiller to accommodate

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laboratory loads, (x) two (2) boilers and hot water distribution for on-floor laboratory use, (xi) chilled water distribution for on-floor laboratory and future connections for laboratory floor supplemental cooling for the Laboratory Portion, and (xii) water heaters and risers for non-potable and tempered water loop .

Base Building Systems: Shall mean the mechanical, gas, electrical, sanitary, heating, air conditioning, ventilating, elevator, plumbing, fire control and suppression, sprinkler/life safety and security systems (to the extent installed by Landlord, exclusive of any security system installed exclusively for Tenant) and other common service systems of the Building, excluding the Laboratory Systems.

Brokers : Transwestern Consulting Group.

Building Operating Expenses : As defined in Section 9.1 .

Business Day : All days except Saturdays, Sundays, New Year’s Day, Martin Luther King Day, Memorial Day, Presidents Day, Independence Day, Labor Day, Columbus Day, Veteran’s Day, Thanksgiving Day, Christmas Day (and the following day when any such day occurs on Sunday and the prior day when any such day occurs on a Saturday).

Common Facilities : As defined in Section 2.2 .

Default Interest Rate : As defined in Section 3.1(a) .

Emergency: Any threat of immediate injury or damage to persons or property or the immediate imposition of a civil or criminal fine or penalty.

Environmental Laws : Any federal, state and/or local statute, ordinance, bylaw, code, rule and/or regulation now or hereafter enacted, pertaining to any aspect of the environment or human health, including, without limitation, Chapter 21C, Chapter 21D, and Chapter 21E of the General Laws of Massachusetts and the regulations promulgated by the Massachusetts Department of Environmental Protection, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. § 9601 et seq., the Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6901 et seq., the Toxic Substances Control Act, 15 U.S.C. §2061 et seq., the Federal Clean Water Act, 33 U.S.C. §1251, and the Federal Clean Air Act, 42 U.S.C. §7401 et seq .

Expense Charges : The Additional Rent payable by Tenant pursuant to Article 8 and Article 9 of this Lease.

Event of Bankruptcy : As defined in Section 14.1 .

Event of Default : As defined in Section 14.1 .

Force Majeure : Collectively and individually, strikes, lockouts or other labor trouble, fire or other casualty, acts of God, governmental preemption of priorities or other controls in connection with a national or other public emergency or shortages of fuel, supplies or labor resulting therefrom, unusually adverse weather conditions, fire or other casualty, acts of

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terrorism or bioterrorism, civil commotion, or any other cause, whether similar or dissimilar, beyond the reasonable control of the party required to perform an obligation.

Holder : As defined in Section 13.1 .

Hazardous Materials : Shall mean chemicals, contaminants, pollutants, flammables, explosives, materials, wastes or other substances listed, defined, determined or identified as hazardous or toxic under, or regulated by reason of its impact or potential impact on humans, animals and/or the environment under any Environmental Laws or otherwise controlled pursuant to any Environmental Laws, including, without limitation, any “oil,” “hazardous material,” “hazardous waste,” “hazardous substance” or “chemical substance or mixture”, as the foregoing terms (in quotations) are defined in any Environmental Laws.

Improvements : As defined in Section 10.2 .

Laboratory Operating Expenses : As defined in Section 9.1 .

Land : The land that constitutes a portion of the Property.

Landlord’s Restoration Work : As defined in Section 11.2 .

Landlord’s Work : As defined in Exhibit C .

Laws : All present and future statutes, laws, codes, regulations, ordinances, orders, rules, bylaws, administrative guidelines, requirements, directives and actions of any federal, state or local governmental or quasi-governmental authority, and other legal requirements of whatever kind or nature that are applicable to the Property, Landlord or Tenant, including, without limitation, all Environmental Laws and the Americans With Disabilities Act of 1990 (including the Americans With Disabilities Act Accessibility Guidelines for Buildings and Facilities), and any amendments, modifications or changes to any of the foregoing.

Mortgage : As defined in Section 13.1 .

Operating Year : As defined in Section 9.1 .

Original Tenant : the originally named Tenant, Proteostasis Therapeutics, Inc., a Delaware corporation

Person : A natural person, a partnership, a joint venture, a corporation, a limited liability company, a trust and any other form of business or legal association or entity.

Recapture Date : As defined in Section 6.4 .

Rules and Regulations : As defined in Section 2.2 .

Specified Restoration Work : As defined in Section 11.2 .

Structural Elements : Shall mean the structural (i.e., load bearing) components of the Building, including the roof (including the roof membrane, insulation and decking), and the

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footings, foundations, exterior structural walls, interior structural columns and other load-bearing elements of the Building (including without limitation floor slabs) .

Substantial Completion Date : As defined in Exhibit C .

Successor : As defined in Section 13.1 .

Tangible Net Worth : Shall mean total assets minus intangible assets (including, without limitation, goodwill, patents and copyrights) and total liabilities, all as calculated in accordance with generally accepted accounting principles.

Taxes : As defined in Section 8.1 .

Tax Year : As defined in Section 8.1 .

Tenant Delay : As defined in Exhibit C .

Tenant’s Removable Property : As defined in Section 5.3 .

Tenant’s Restoration Work : As defined in Section 11.2 .

Enumeration of Exhibits

. The following Exhibits are a part of this Lease, are incorporated herein by reference attached hereto, and are to be treated as a part of this Lease for all purposes. Undertakings contained in such Exhibits are agreements on the part of Landlord and Tenant, as the case may be, to perform the obligations stated therein.

Exhibit A - Location Plan of the Premises

Exhibit B – Site Plan of Boston Landing Project

Exhibit C – Landlord’s Work Letter

Exhibit D – Tenant’s Work Letter

Exhibit E - Commencement Date Letter

Exhibit F – Building Operating Expenses and Laboratory Operating Expenses

Exhibit G - Rules and Regulations

Exhibit H – Form of Letter of Credit

Exhibit I – Tenant’s Removable Property

Exhibit J – HVAC Specifications

ARTICLE 2
PREMISES AND APPURTENANT RIGHTS

Lease of Premises

. Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the Premises for the Term and upon the terms and conditions hereinafter set forth.

Appurtenant Rights and Reservations

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(a) Tenant shall have, as appurtenant to the Premises, the non ‑exclusive right to use, and permit its invitees to use in common with Landlord and others, (i) public or common lobbies, hallways, stairways, elevators and common walkways necessary for access to the Building and the Premises; (ii) the loading areas, pedestrian sidewalks, landscaped areas, trash enclosures and other areas or facilities, if any, serving the Building and designated by Landlord from time to time for the non ‑exclusive use of tenants and other occupants of the Building, including, without limitation, the podium area of the Building (the “Common Facilities” ); and (iii) subject to the terms of this Lease, the Laboratory Systems; but such rights shall always be subject to reasonable rules and regulations from time to time established by Landlord and uniformly enforced against all laboratory tenant and occupants of the Building, pursuant to Section 15.7 (the “Rules and Regulations” ) and to the right of Landlord to designate and change from time to time such areas and facilities so to be used. Subject to applicable Laws and the terms and conditions of the Declaration (including the Boston Landing Rules and Regulations), Tenant shall have, as appurtenant to the Premises, the non ‑exclusive right, in common with Landlord and others entitled thereto, to use, and to permit its invitees to use, the Common Areas and Facilities (as defined in the Declaration) of the Boston Landing Project. Notwithstanding anything in this Lease to the contrary, Landlord shall not during the Term reduce access to, reconfigure, or otherwise modify the Common Facilities in a manner that unreasonably interferes with Tenant’s use and enjoyment of, and access to, the Premises.

(b) Excepted and excluded from the Premises and the Common Facilities are the floor slab, demising walls and perimeter walls and exterior windows (except the inner surfaces of each thereof), and any space in the Premises used for shafts, stacks, pipes, conduits, fan rooms, ducts, electric or other utilities, sinks or other Building facilities, but the entry doors (and related glass and finish work) to the Premises are a part thereof. Landlord shall have the right to place in the Premises, but in such manner as to reduce to a minimum interference with Tenant’s use of the Premises and not to reduce the usable square feet of the Premises (except to a de minimis extent) or otherwise materially adversely affect Tenant’s use and occupancy of the Premises for the purpose contemplated under this Lease, utility lines, equipment, stacks, pipes, conduits, ducts and the like. In the event that Tenant shall install any hung ceilings or walls in the Premises, Tenant shall install and maintain, as Landlord may require, proper access panels therein to afford access to any facilities above the ceiling or within or behind the walls. Tenant shall be entitled to install any such ceilings or walls only in compliance with the other terms and conditions of this Lease. Tenant shall have no right to access and use the fan rooms, janitorial, electrical, telephone and telecommunications closets, conduits, risers, plenum spaces and other service areas of the Building without the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed.

(c) Tenant may install (i) signs or lettering on or adjacent to the entry doors to the Premises, and (ii) identification signage for Tenant in the elevator lobbies on floors on which the Premises is located, provided such signs conform to sign standards for the Building adopted by Landlord in its reasonable discretion and Tenant has submitted to Landlord a plan or sketch in reasonable detail (showing, without limitation, size, color, location, materials and method of affixation) of the sign to be placed on such entry doors.

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Except for the foregoing signage, Tenant will not place on the exterior of the Premises (including both interior and exterior surfaces of doors and interior surfaces of windows) or on any part of the Building outside the Premises, any sign, symbol, advertisement or the like visible to public view outside of the Premises. If and only so long as Landlord maintains a tenant directory in the main lobby of the Building, Landlord shall cause Tenant’s name to be listed on the main lobby tenant directory; provided, however, that any changes or replacements of such lobby listing after the initial installation shall be at Tenant’s expense.

(d) The designation or use from time-to-time of portions of the Property or the Complex as Common Facilities, Base Building Systems or Laboratory Systems shall not restrict Landlord’s use of such areas for buildings, structures and/or for retail or such other purposes in connection with and consistent with the operations of the Property and the Complex as Landlord shall reasonably determine, including, without limitation, the expansion or remodeling of the Building to include one or more additional stores and restaurants, residential or other units (on the present and/or additional levels), Landlord hereby reserving the unrestricted right to build, add to, subtract from, lease, license, relocate and/or otherwise use (temporarily and/or permanently), any buildings, kiosks, other structures, parking areas, roadways or other areas or facilities anywhere upon the Building, the Property or the Complex for retail or such other purposes as Landlord shall reasonably determine, provided Landlord does not in the exercise of such right cause an unreasonable interference under the circumstances with the access to the Premises, the Parking Garage, and/or Tenant’s use of the Premises and/or the Parking Garage. There shall be a commensurate adjustment in Tenant's Pro Rata Shares set forth in Section 1.1 as a result of any expansion or contraction of the rentable square footage of the Building or Laboratory Portion.

Parking

(a) Beginning on the Commencement Date, Landlord shall provide or shall cause the Parking Garage operator to provide to Tenant monthly parking passes in the Parking Garage at a ratio of 2.0 unreserved parking spaces per 1,000 rentable square feet of the Premises (the “ Tenant’s Parking Ratio ”), for the parking of passenger automobiles on a non-exclusive, unassigned, first-come, first-served basis, in the Parking Garage at the Property, which will be provided at no additional rental charge to Tenant. In the event that the rentable square footage of the Premises increases or decreases at any time during the Term, the maximum number of parking passes provided to Tenant hereunder shall be increased or decreased based upon the Tenant’s Parking Ratio. The parking spaces in the Parking Garage subscribed for by Tenant are referred to herein as “ Tenant’s Parking Spaces ”. The Tenant’s Parking Spaces granted herein are for use by employees of Tenant and other occupants of the Premises, Tenant’s contractors, agents and invitees, are non-transferable (other than to an assignee or subtenant or other occupant permitted to occupy and use the Premises pursuant to the applicable provisions of this Lease).

(b) Unless otherwise determined by Landlord or the operator of such garage (the “ Garage Operator ”), the Parking Garage is to be operated on a self-parking

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basis and Tenant’s parking shall be on an unreserved basis. Landlord agrees that, in accordance with the Transportation Access Plan Agreement or any LEED certification pursued from time to time by Landlord, the Parking Garage or the Building will provide onsite, secure bicycle storage and shower/changing rooms in the Fitness Facility and, subject to applicable Laws, the Parking Garage will provide priority parking for car/van pools, hybrids, small cars, mopeds and motorbikes. Landlord reserves the right to institute, expand or withdraw a valet or stacked parking system or to institute other reasonable parking controls, rules or regulations, at any time and in its reasonable discretion provided the same are not inconsistent with Tenant’s rights under this Lease.

(c) Landlord shall have the absolute right (a) to allocate and assign parking spaces among some or all of the tenants of the Property (and Tenant shall comply with any such parking assignments), including, without limitation, the right to designate a reserved area of the Parking Garage as a valet area for the customers and visitors to the Retail Portion of the Building provided that the same does decrease the number of monthly parking contracts that Tenant is entitled to under this Section 2.3 , (b) to reconfigure the parking area, and/or (c) to modify the ingress to and egress from the Parking Garage as Landlord shall deem appropriate, as long as reasonable access to such area is maintained after such modification is completed. Landlord or the Garage Operator shall have the right to temporarily close all or any portion of the Parking Garage for the purpose of maintaining, repairing, restoring, altering or improving same, provided that Landlord exercises diligent efforts to reopen such areas of the Parking Garage as soon as reasonably possible in light of the nature of repairs or other work being performed in the Parking Garage.

(d) Landlord shall have no obligation to monitor the use of such parking facility, nor shall Landlord be responsible for any loss or damage to any vehicle or other property or for any injury to any person. Tenant and its employees shall observe reasonable safety precautions in the use of the Parking Garage and shall at all times abide by all reasonable rules and regulations of uniform applicability to the users of the Parking Garage from time to time established by Landlord or the Garage Operator governing the use thereof. Except to the extent of negligence or willful acts, neither the Landlord nor the Garage Operator assumes any responsibility whatsoever for loss or damage due to fire or theft or otherwise to any automobile or to any personal property therein, however caused, and Tenant agrees, upon written request from the Landlord, from time to time, to notify its officers, employees and agents then using any of the parking privileges provided for herein, of such limitation of liability. Tenant further acknowledges and agrees that a license only is hereby granted, and no bailment is intended or shall be created. Tenant’s employees having the use of monthly parking passes shall be required to display identification or parking sticker at all times in all vehicles parked in the garage. Any vehicle not displaying such a sticker may be towed away at the vehicle owner’s expense in accordance with the garage rules and regulations. In addition, Landlord’s and Tenant’s use of the garage shall be subject to all Laws and the permits and approvals issued in connection with the development of the Boston Landing Project.

(e) Notwithstanding Tenant’s parking rights under this Lease, in accordance with the Transportation Access Plan Agreement entered into by Landlord and

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the Boston Transportation Department in connection with the development of the Property, Tenant shall exercise reasonable efforts to (i) promote and encourage employees of Tenant and other occupants of the Premises to rideshare or carpool, as part of which Tenant shall consider providing subsidized parking rates and other incentives for rideshare or carpool vehicles and participating in the MassRides car sharing program, (ii) promote and encourage employees to use public transportation to commute to the Premises, including providing on-line and on-site or payroll deduction transit pass sales and providing subsidized transit pass rates, (iii) participate in the MBTA Corporate T-Pass Program, and (iv) provide employees with information on bus, subway and commuter rail routes and schedules. Landlord encourages Tenant and all tenants of the Boston Landing Project to reasonably consider offering full-time and part-time employees a subsidy for transit passes and to become members of the local Transportation Management Association. Tenant shall reasonably cooperate with Landlord (at no cost to Tenant) in programs and other activities initiated by Landlord to comply with Landlord’s obligations under the Transportation Agreements.

Shuttle Service

. Subject to weather and other force majeure delays, Landlord will provide, as part of Building Operating Expenses, shuttle service on Business Days between the Boston Landing Project and Harvard Square and Kenmore Square for the general use of all tenants and occupants of the Boston Landing Project, subject to reasonable modifications from time to time in Landlord’s reasonable discretion. The hours, frequency and routes of shuttle services shall be subject to reasonable modification by Landlord in Landlord’s reasonable discretion as demand for use of such shuttle service changes during the Term and subject to any applicable provisions of the Declaration.

ARTICLE 3
BASIC RENT

3.1 Payment .

(a) Tenant agrees to pay the Basic Rent and Additional Rent to Landlord, or as directed by Landlord, commencing on the Commencement Date, without offset, abatement (except as provided in Section 11.3 ), deduction or demand, except as otherwise expressly provided in this Lease . Basic Rent shall be payable in equal monthly installments, in advance, on the first day of each and every calendar month during the Term of this Lease, to Landlord at Landlord’s Payment Address or at such other place as Landlord shall from time to time designate by notice, in lawful money of the United States. In the event that any installment of Basic Rent or any payment of Additional Rent is not paid when due, Tenant shall pay, in addition to any charges under Section 14.4 , an administrative fee equal to 3% of the overdue payment. In addition to the foregoing, i f payment of Rent or other charges due under this Lease are not paid within ten (10) Business Days after the date due, such past due amount shall bear interest from the date due until paid at a rate equal to the lesser of (i) a rate equal to 3% plus the prime rate published from time to time in The Wall Street Journal or its successor publication and (ii) the highest rate permitted to be charged by applicable Law (the “ Default Interest Rate ”). Landlord and Tenant agree that all amounts due from Tenant under or in respect of this Lease, whether labeled Basic Rent, Additional Rent or otherwise, shall be considered as

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rental reserved under this Lease for all purposes, including without limitation regulations promulgated pursuant to the Bankruptcy Code, and including further without limitation Section 502(b) thereof. Landlord agrees to waive the administrative fee due hereunder for the first late payment by Tenant under this Lease per calendar year, provided that Landlord receives such payment from Tenant within five (5) Business Days after written notice of such delinquency is given to Tenant (provided that if such payment is not received within the aforesaid five (5) Business Day period, interest on the outstanding amount will accrue as of the original date such payment is due).

(b) Basic Rent for any partial month shall be pro‑rated on a daily basis, and if the first day on which Tenant must pay Basic Rent shall be other than the first day of a calendar month, the first payment which Tenant shall make to Landlord shall be equal to a proportionate part of the monthly installment of Basic Rent for the partial month from the first day on which Tenant must pay Basic Rent to the last day of the month in which such day occurs, plus the installment of Basic Rent for the succeeding calendar month.

ARTICLE 4
CONDITION OF PREMISES

Condition of Premises; Initial Improvements

. Except for the Landlord Work, to be performed by Landlord in accordance with the provisions of Exhibit C , the Premises are being leased in their present condition, AS IS, WITHOUT REPRESENTATION OR WARRANTY by Landlord. Except for the Tenant Improvement, Landlord shall have no obligation to perform any alterations or to make any improvements to the Premises to prepare them for Tenant’s occupancy. Tenant acknowledges that Tenant has inspected the Premises, Laboratory Systems and Common Facilities and has found the same satisfactory, subject to Landlord's obligation to complete Landlord's Work in accordance with all of the terms and conditions of this Lease . On the Commencement Date Landlord shall deliver exclusive possession of the Premises to Tenant vacant, broom clean and free and clear of all tenants and their personal property.

ARTICLE 5
USE OF PREMISES

Permitted Use

(a) Tenant agrees that the Premises shall be used and occupied by Tenant only for the Permitted Use and for no other use without Landlord’s express written consent. Notwithstanding anything to the contrary contained in this Lease, no more than fifty percent (50%) of the floor area for each floor that is located in the Laboratory Portion may be used or designed for research and development, including a biotechnical and/or laboratory use. This Lease shall at all times be subject and subordinate to the Declaration and the Record Documents (as hereinafter defined) and Tenant agrees that it shall not engage in any action that would result in a violation of the Declaration or any of the Record Documents, as the same may be amended from time to time. For purposes of this

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Lease, “ Record Documents ” shall mean all agreements declarations, covenants, restrictions, reservations, liens, conditions, easements, encumbrances and other matters of record and affecting the Property on the date hereof and all agreements declarations, covenants, restrictions, reservations, liens, conditions, easements, encumbrances and other matters hereinafter granted or executed by Landlord, any of Landlord’s affiliates (or their respective successors or assigns (collectively, the “ Landlord Parties ”), including, without limitation, any amendments to existing Record Documents entered into or obtained by any of the Landlord Parties in connection with the development of the Boston Landing Project, including, without limitation, the Fundamental Approvals (as defined in the Declaration). Landlord represents and warrants to Tenant that, as of the date of this Lease, there is no so called “ground lease,” “master lease” or similar instrument encumbering the Premises.

(b) Tenant shall not (a) use or occupy the Building, (b) permit the use or occupancy of the Premises, (c) do anything or bring into or keep in or about the Building, or (d) permit any act or practice to be done or anything to be brought into or kept in or about the Premises or any part thereof that: (i) would violate any of the covenants, agreements, terms, provisions and conditions of this Lease or any applicable Laws; (ii) would constitute a nuisance; or (iii) is inconsistent with the maintenance, operation, or occupancy of the Building as a first ‑class mixed-use laboratory and office building, or is liable to invalidate any insurance maintained by Landlord on the Building or its contents or the Laboratory Systems or Common Facilities. Tenant shall maintain temperature and humidity in the Premises in accordance with ASHRAE standards at all times. Tenant shall not use any method of HVAC other than that approved in writing by Landlord or present at the Property and serving the Premises as of the Effective Date of this Lease.

(c) Tenant acknowledges and agrees that the Building is or may become in the future certified under the Green Building Initiative’s Green Globes TM for Continual Improvement of Existing Buildings (Green Globes TM-CIEB), the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) rating system, or similar standard pursuant to Landlord’s sustainable building practices. Landlord’s sustainability practices may address whole-building operations and maintenance issues including chemical use; indoor air quality; energy efficiency; water efficiency; recycling programs; exterior maintenance programs; and systems upgrades to meet green building energy, water and lighting performance standards. Tenant shall exercise reasonable efforts not to change its manner of use of the Premises or the operation of its business therein in any manner that will cause the Building or any part thereof not to conform with Landlord’s sustainability practices or the certification of the Building issued pursuant to the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) rating system or other applicable ratings or standards now or hereafter achieved for the Building, such as, without limitation, the U.S. EPA’s Energy Star® rating. Tenant agrees to exercise reasonable efforts to use proven energy and carbon reduction measures, including energy efficient bulbs in task lighting; use of lighting controls; daylighting measures to avoid overlighting interior spaces; closing shades on the certain sides of the building to avoid over heating the space; and purchasing ENERGY STAR® qualified equipment, including but not limited to lighting, office equipment, commercial and residential quality kitchen equipment, vending and ice

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machines; purchasing products certified by the U.S. EPA’s Water Sense® program, provided, however, other than the cost of any future re-certification of such LEED certification which Landlord shall be entitled to include in Operating Expenses, Tenant shall not be obligated to incur additional expenses, more than di minimis in nature, in order to comply with the provisions of this Section 5.1(c) .

(d) Landlord reserves the right, at any time during the Term, to submit the Building and/or the Property to the provisions of Chapter 183A of the Massachusetts General Laws to create a condominium (a “ Condominium Conversion ”). In the event of a Condominium Conversion, this Lease shall remain in full force and effect and be subject and subordinate to the master deed and by-laws and other documents creating the condominium (the “ Condominium Documents ”). Following the creation of the Condominium, Landlord and Tenant shall execute a revised Notice of Lease and any other documents to replace the original legal description in such documents with the legal description of the condominium unit in which the Premises is located. Tenant agrees to subordinate this Lease to the Condominium Documents and enter into any instruments reasonably requested by Landlord in connection with the foregoing so long as the same do not diminish or detract from the rights of Tenant or expand or enhance the obligations of Tenant or decrease any obligations of Landlord under this Lease in any material way. As a condition to such subordination, Landlord shall deliver to Tenant a Non-Disturbance Agreement in form reasonably acceptable to Landlord and Tenant from the association or board governing the condominium that Tenant’s possession of the Premises shall not be disturbed in the event of any termination of the Condominium or any exercise by the association or board of its rights under the Condominium Documents to enforce assessments of unpaid common charges against the unit. If either party reasonably believes that it is necessary to clarify the terms of this Lease as a result of such Condominium Conversion, Landlord and Tenant shall promptly execute an agreement clarifying their respective obligations under this Lease; provided, however, that neither party shall be required to execute any such instrument which would diminish or detract from the rights of such party or expand or enhance the obligations of such party, in either case under this Lease.

(e) Tenant shall establish and maintain a chemical safety program administered by a licensed, qualified individual if required by and in accordance with the requirements of the Massachusetts Water Resources Authority (“ MWRA ”) and any other applicable governmental authority. Tenant shall be solely responsible for all costs incurred in connection with such chemical safety program, and Tenant shall provide Landlord with such documentation as Landlord may reasonably require evidencing Tenant’s compliance with the requirements of (a) the MWRA and any other applicable governmental authority with respect to such chemical safety program and (b) this Section. Tenant shall be responsible for obtaining and maintaining in full force and effect during the Term (i) all necessary permits required by the MWRA (“ Tenant’s MWRA Permit ”) for Tenant’s discharge of Industrial Wastewater (as defined by applicable Laws) from the Premises to the sewer system serving the Building, and (ii) a wastewater treatment operator license from the Commonwealth of Massachusetts with respect to Tenant’s use of the ph Neutralization Tank (as hereinafter defined) in the Building. Tenant shall not introduce anything into the ph Neutralization Tank or the sewer system serving the

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Building (x) in violation of the terms of Tenant’s MWRA Permit, (y) in violation of applicable Laws or (z) that would interfere with the proper functioning of the ph Neutralization Tank or the sewer system serving the Building. Landlord agrees to reasonably cooperate with Tenant, at no cost to Landlord, in order to obtain Tenant’s MWRA Permit and the wastewater treatment operator license. Tenant shall reimburse Landlord within ten (10) Business Days after demand for any reasonable out of pocket costs incurred by Landlord pursuant to this Section.

(f) Tenant shall be responsible for the proper use, storage, removal and disposal of all Medical Waste (as hereinafter defined) in accordance with Laws and any additional requirements which Landlord may reasonably establish from time to time by written notice to Tenant. Tenant shall, at its sole cost and expense, engage a reputable, duly licensed and insured contractor for such disposal of Medical Waste, provided, however, Tenant may utilize Tenant’s own employees for such disposal so long as such employees are properly licensed in Massachusetts to dispose of Medical Waste. Tenant shall not place any Medical Waste in any Common Facilities. “ Medical Waste ” shall mean collectively, (i) any human or animal tissue, blood, urine or other bodily fluids, materials or biological byproducts, (ii) any medical supplies (including used syringes, gauze and bandages), and (iii) any and all substances and materials defined or referred to as “a-medical waste,” “biological waste,” “biohazardous waste,” “biohazardous material” or any other term of similar import under any Environmental Laws.

(g) Tenant shall not cause or permit (or conduct any activities that would cause) any release of any odors or fumes of any kind from the Premises that are not common or typical for general office use for the Office Portion of the Premises or common or typical for research and development uses for the Laboratory Portion of the Premises. Tenant shall in compliance with applicable Laws vent all fumes and odors from the Premises (and remove odors from Tenant’s exhaust stream) as Landlord reasonably requires. The placement and configuration of all ventilation exhaust pipes, louvers and other equipment shall be subject to Landlord’s approval. Tenant shall, at Tenant’s sole cost and expense, provide odor eliminators and other devices (such as filters, air cleaners, scrubbers and whatever other equipment may in Landlord’s reasonable judgment be necessary or appropriate from time to time) to remove, eliminate and abate any unreasonable odors, fumes or other substances in Tenant’s exhaust stream that, in Landlord’s reasonable judgment, emanate from Tenant’s Premises and are not common or typical for general office use or for research and development uses, as applicable. Any work Tenant performs under this Section shall constitute Alterations. Tenant’s responsibility to control odors, fumes and exhaust as provided in this Section 5.1(g) shall continue throughout the Term.

(h) Tenant acknowledges that it has been advised that the Landlord Parties and/or other Parcel Owners (as defined in the Declaration) intend to construct additional improvements on and continue and complete the full development of the Boston Landing Project pursuant to the Declaration, the Fundamental Approvals and the Other Site Approvals (as such terms are defined in the Declaration) in one or more phases. As a material inducement to Landlord to enter into this Lease, Tenant acknowledges and expressly agrees that the Landlord Parties and/or other third parties shall have the right

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(but without any obligation so to do) at any time during the Term to complete and construct the additional phases of the Boston Landing Project (the “ Project Improvements ”) pursuant to the Declaration, the Fundamental Approvals and the Other Site Approvals and the construction of Project Improvements during the Term and while Tenant is in occupancy of the Premises shall not be considered an eviction, actual or constructive, of Tenant from the Premises and shall not entitle Tenant to terminate this Lease or to an abatement of any Basic Rent, Escalation Charges or Additional Rent payable hereunder. Tenant acknowledges and agrees that such ongoing construction may result in noise, dust, vibrations and other disturbances and Tenant has entered into this Lease and agreed to perform the obligations of Tenant hereunder with knowledge of the on-going performance of the Project Improvements. Landlord shall, to the extent any construction activities at the Boston Landing and the performance of the Project Improvements are being performed by or on behalf of any of the Landlord Parties, implement reasonable construction measures and procedures to mitigate dust and noise to the extent commercially feasible provided that such efforts and measures shall not require any of the Landlord Parties to perform the Project Improvements outside of normal building hours or at material additional cost to any of the Landlord Parties .

5.2 Tenant Work .

(a) Promptly following the Commencement Date, Tenant shall undertake, at Tenant’s sole cost and expense, the making of leasehold improvements to and fixturing of the Premises (the “ Tenant Work” ). All Tenant Work shall be performed in accordance with the terms and conditions of Exhibit D attached hereto and the terms of this Lease applicable to Alterations.

(b) Tenant shall reimburse Landlord within thirty (30) days of receipt of Landlord’s written invoice, as Additional Rent, for actual out‑of‑pocket, third‑party engineer and architect costs incurred by Landlord in connection with review and approval of the Construction Drawings and Change Orders (as hereinafter defined), provided that the charges of such consultants are commercially reasonable for the services provided to Landlord. Notwithstanding anything to the contrary contained herein, Tenant shall be entitled to apply the Landlord’s Contribution toward the costs associated with this Section 5.2(b) ; provided, however, such costs will be considered soft costs and shall be subject to and applied toward the twenty percent (20%) cap on soft cost application of the Landlord’s Contribution set forth in Section 4(b) of Exhibit D .

5.3 Installations and Alterations by Tenant .

(a) Tenant shall make no alterations, additions or improvements (collectively, “ Alterations ”) in or to the Premises (including any of the Tenant Work, necessary for Tenant’s initial occupancy of the Premises) or any Base Building Systems or Laboratory Systems serving the Premises without Landlord’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed with respect to non‑structural Alterations that do not adversely affect any portion of the Base Building or Laboratory Systems or the Base Building Systems. Notwithstanding the foregoing, Tenant may make Cosmetic Alterations (as hereinafter defined) to the Premises without Landlord’s consent so long as Landlord is notified in writing at least ten (10) days prior to

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commencement of any such Cosmetic Alterations. Landlord may, at the time consent is given, identify in writing any Alterations (including any of the Tenant Work, necessary for Tenant’s initial occupancy of the Premises) that adversely affect or alter the Structural Elements as Special Improvements (as hereinafter defined) which, provided Landlord so identifies such alterations, shall be removed by Tenant and the Premises restored at the end of the Term pursuant to Section 5.3(e ) below. Any Alterations shall be in accordance with Landlord’s Rules and Regulations from time to time in effect and with plans and specifications meeting the requirements set forth in such Rules and Regulations and approved in advance by Landlord. All Alterations shall (i) be performed in a good and workmanlike manner using only new and only quality materials and in compliance with all applicable Laws; (ii) be made at Tenant’s sole cost and expense; (iii) become part of the Premises and the property of Landlord upon the expiration or earlier termination of the Term of this Lease unless Landlord otherwise notifies Tenant (at the time consent is given) such Alteration must be removed at the end of the Term or earlier expiration of this Lease as provided in Section 5.3(e) below; (iv) be made by contractors and subcontractors reasonably approved in advance by Landlord; and (v) be coordinated with any work being performed by Landlord in such a manner as not to damage the Building or interfere with the management, maintenance or operation of the Building. At Landlord’s request, Tenant shall, before its work is started, secure assurances satisfactory to Landlord in its reasonable discretion protecting Landlord against claims arising out of the furnishing of labor and materials for the Alterations. If any Alterations shall involve the removal of fixtures, equipment or other property in the Premises which are not Tenant’s Removable Property, such fixtures, equipment or property shall be promptly replaced by Tenant at its expense with new fixtures, equipment or property of like utility and of at least equal quality. Tenant shall promptly reimburse Landlord for all reasonable out of pocket costs, including attorneys’, architects’, engineers’, and consultants’ fees, incurred by Landlord in connection with any request from Tenant pursuant to this Section 5.3 . Tenant acknowledges and agrees that any review or approval by Landlord of any plans and/or specifications with respect to any Alterations is solely for Landlord’s benefit, and without any representation or warranty whatsoever to Tenant with respect to the adequacy, correctness or efficiency thereof or otherwise. Landlord shall have the right to require that Tenant use Landlord’s designated structural contractor and architect for the Building for the design and performance of any Alterations affecting the Structural Elements and/or that Tenant use Landlord’s designated fire and life safety contractor and engineer for the Building to perform Tenant’s connection to the Building’s fire alarm system or any Alterations that affect the fire alarm or fire/life safety systems in the Building. For purposes hereof, “ Cosmetic Alterations ” shall mean painting and other minor cosmetic or decorative alterations to the Premises and other non-structural alterations which other non-structural alterations (1) do not affect any area of the Building outside of the Premises, (2) are not visible from the exterior of the Premises or the Building, (3) do not adversely affect the Building’s electrical, plumbing, mechanical or fire/life safety systems or any other systems of the Building, and (4) cost less than $100,000 in any Lease Year and do not require the issuance of a building permit.

(b) Except for Tenant’s Removable Property (as hereinafter defined), all property of any kind paid for by Landlord, all Alterations, all fixtures and partitions, hardware, built-in machinery, built-in casework and cabinets or other similar additions,

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equipment, property or improvements built into the Premises so as to become an integral part of the Premises, including, without limitation, fume hoods which penetrate the roof or plenum area, built-in or walk-in cold rooms, built-in or walk-in warm rooms, deionized water systems, glass washing equipment, autoclaves, chillers, built-in plumbing, electrical and mechanical equipment and systems, and any power generator and transfer switch (collectively, “ Laboratory Reusable Installations ”), shall be and shall remain the property of Landlord during the Term and following the expiration or earlier termination of the Term, and shall not be removed by Tenant at any time and shall remain in and be surrendered with the Premises as part thereof. “ Tenant’s Removable Property ” shall mean any items listed on Exhibit I attached hereto and any items agreed by Landlord in writing to be included on Exhibit I in the future, as well as Tenant’s personal property and all movable business and trade equipment owned or installed by Tenant or any party claiming by, through or under Tenant, not constituting Laboratory Reusable Installations. Tenant’s Removable Property shall remain the property of Tenant and may be removed by Tenant at any time prior to the expiration or earlier termination of the Term, provided that Tenant, at its expense, shall repair any damage to the Building caused by such removal. Any provision of this Lease to the contrary notwithstanding, Tenant shall be solely responsible for the ordering, delivery and installation of any telephone, telephone switching, telephone and data cabling, and Tenant’s Removable Property to be installed by or on behalf of Tenant in the Premises and for the removal of all telephone and data cabling installed in the Building by or on behalf of Tenant or anyone claiming by, through or under Tenant at the expiration or earlier termination of the Term of this Lease.

(c) Notice is hereby given that Landlord shall not be liable for any labor or materials furnished or to be furnished to Tenant upon credit, and that no mechanic’s or other lien for any such labor or materials shall attach to or affect the reversion or other estate or interest of Landlord in and to the Premises, the Building or the Property. To the maximum extent permitted by law, before such time as any contractor commences to perform work on behalf of Tenant, such contractor (and any subcontractors) shall furnish a written statement acknowledging the provisions set forth in the prior clause. Tenant agrees to pay promptly when due the entire cost of any work done on behalf of Tenant, its agents, employees or independent contractors, and not to cause or permit any liens for labor or materials performed or furnished in connection therewith to attach to all or any part of the Property and within twenty (20) days after receipt of written notice of any such liens to discharge or bond over (satisfactory to Landlord) any such liens which may so attach. If, notwithstanding the foregoing, any lien is filed against all or any part of the Property for work claimed to have been done for, or materials claimed to have been furnished to, Tenant or its agents, employees or independent contractors, Tenant, at its sole cost and expense, shall, within twenty (20) days after receipt of written notice thereof, cause such lien to be dissolved promptly after receipt of notice that such lien has been filed, by the payment thereof or by the filing of a bond sufficient to accomplish the foregoing. If Tenant shall fail to discharge any such lien, Landlord may, at its option, discharge such lien and treat the cost thereof (including attorneys’ fees incurred in connection therewith) as Additional Rent payable upon demand, it being expressly agreed that such discharge by Landlord shall not be deemed to waive or release the Event of Default in not discharging or so bonding over such lien within such twenty (20) day period. Tenant shall indemnify and hold Landlord harmless

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from and against any and all expenses, liens, claims, liabilities and damages based on or arising, directly or indirectly, by reason of the making of any alterations, additions or improvements by or on behalf of Tenant to the Premises under this Section, which obligation shall survive the expiration or termination of this Lease.

(d) In the course of any work being performed by Tenant (including, without limitation, the installation or removal of any Tenant’s Removable Property), Tenant agrees to use labor compatible with that being employed by Landlord for work in the Building or on the Property or other buildings owned by Landlord or its affiliates (which term, for purposes hereof, shall include, without limitation, entities which control or are under common control with or are controlled by Landlord or, if Landlord is a partnership or limited liability company, by any partner or member of Landlord) and not to employ or permit the use of any labor or otherwise take any action which might result in a labor dispute or disharmony involving personnel providing services in the Building or on the Property pursuant to arrangements made by Landlord.

(e) Landlord may, by written notice to Tenant at the time of the approval of any Special Improvement (as hereinafter defined), require Tenant, at Tenant’s expense, to remove any Special Improvement made to the Premises at the expiration or earlier termination of the Term, and to repair any damage to the Premises and Building caused by such removal and return the affected portion of the Premises to a Building standard tenant improved condition as determined by Landlord. If Tenant fails to complete such removal and/or to repair any damage caused by the removal of any Special Improvements to the Premises designated by Landlord for removal, and return the affected portion of the Premises to a Building standard tenant improved condition as determined by Landlord, then, without limiting Landlord’s other rights and remedies, at Landlord’s option, either (A) Tenant shall be deemed to be holding over in the Premises and Rent shall continue to accrue in accordance with the terms of Article 12 , below, until such work shall be completed, or (B) Landlord may do so and may charge the cost thereof to Tenant. For purposes hereof, “ Special Improvements ” shall mean any Alterations made by Tenant or any party claiming by, through or under Tenant that (i) would reasonably be expected to adversely affect any structural or exterior element of the Building, any area or element outside of the Premises or any facility or base building mechanical system serving any area of the Building, or (ii) involve or affect the exterior design, size, height or other exterior dimensions of the Building, or (iii) are inconsistent with the Building standards for Comparable Buildings, or (iv) will require material additional expense to demolish or remove the Premises to normal office/laboratory use on termination of this Lease or increase the Operating Expenses for the Building, and shall expressly include, without limitation, such Alterations as interconnecting/internal staircases, data centers in excess of 2,000 square feet of rentable floor area (either singly or collectively), and non-core restrooms (and any horizontal plumbing lines associated with such restrooms).

Extra Hazardous Use

. Tenant covenants and agrees that Tenant will not do or permit anything to be done in or upon the Premises, or bring in anything or keep anything therein, which shall increase the rate of property or liability insurance on the Premises or the Property above the standard rate applicable to Premises being occupied for the Permitted Use. If the premium or rates payable with respect to any policy or policies of insurance carried by or on

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behalf of Landlord with respect to the Property increases as a result of any act or activity on or use of the Premises during the Term by Tenant or Tenant’s employees, agents, contractors, subtenants, licensee, invitees or anyone claiming by, through or under Tenant (whether or not done knowingly by such a party, but only to the extent resulting from such act or activity as set forth in this Section 5.4 ) or payment by the insurer of any claim arising from any act or neglect of Tenant, its employees, agents, contractors, invitees, subtenants, licensees or anyone claiming by, through or under Tenant, Tenant shall be given written notice and a five (5) business day opportunity to discontinue such use and if Tenant fails to do so, Tenant shall pay such increase, from time to time, within thirty (30) days after written demand therefor by Landlord, as Additional Rent.

5.5 Hazardous Materials .

(a) Landlord acknowledges that it is not the intent of this Section 5.5 to prohibit Tenant from using the Premises for the Permitted Use. Tenant may operate its business according to prudent industry practices so long as the use or presence of Hazardous Materials is strictly and properly monitored by Tenant according to all then applicable Environmental Laws. As a material inducement to Landlord to allow Tenant to use Hazardous Materials in connection with its business, Tenant agrees to deliver to Landlord prior to the Commencement Date a list identifying each type of Hazardous Materials to be brought upon, kept, used, stored, handled, treated, generated on, or released or disposed of from, the Premises and setting forth any and all governmental approvals or permits required in connection with the presence, use, storage, handling, treatment, generation, release or disposal of such Hazardous Materials on or from the Premises (" Hazardous Materials List "). Upon request of Landlord, Tenant shall deliver to Landlord an updated Hazardous Materials List within thirty (30) days following Landlord’s request. Tenant shall deliver to Landlord true and correct copies of the permits, approvals, reports and correspondence, and storage and management plans relating to the use, storage, handling, treatment, generation, release or disposal of Hazardous Materials by Tenant at the Premises. At any time following Tenant's receipt of a request from Landlord, Tenant shall promptly complete a "hazardous materials questionnaire" using the form then-provided by Landlord. At least three (3) months prior to the surrender of the Premises, Tenant shall deliver to Landlord a narrative description of the actions proposed (or required by any governmental authority) to be taken by Tenant in order to surrender the Premises (including any Alterations permitted by Landlord to remain in the Premises, the Improvements and Laboratory Reusable Installations) at the expiration or earlier termination of the Term, free from any residual impact from the Tenant’s use of Hazardous Materials and otherwise released for unrestricted use and occupancy consistent with Tenant’s obligations under Section 5.5(e) below (the " Surrender Plan "). Tenant’s Surrender Plan shall state that, (a) (i) all laboratory space, including floors, walls, ceilings, counters, piping, supply lines, waste lines and plumbing in or serving the Premises and all exhaust or other ductwork in or serving the Premises, and (ii) any applicable systems shared by laboratory space, including without limitation exhaust or other ductwork, in or serving the Premises have been de-commissioned to the extent required by, and in accordance with, applicable Laws and in accordance with best industry practice; (b) the interior surfaces of the Premises (including floors, walls, ceilings, and counters), piping, supply lines, waste lines and plumbing, and all such

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exhaust or other ductwork in the Premises, may be reused by a subsequent tenant or disposed of in compliance with applicable Laws without: (i) incurring special costs on account of uncompleted de-commissioning work; (ii) undertaking special procedures for demolition, disposal, investigation, assessment, cleaning or removal of such Hazardous Materials related to the former laboratory use areas of the Premises; or (iii) giving notice in connection with such Hazardous Materials; and (c) the Premises may be reoccupied for office or laboratory use, or demolished or renovated without: (i) incurring special costs on account of uncompleted de-commissioning work; (ii) undertaking special procedures for disposal, investigation, assessment, cleaning or removal of Hazardous Materials; or (iii) giving notice in connection with Hazardous Materials. Further, for purposes of clauses (b) and (c), “special costs” or “special procedures” shall mean costs or procedures, as the case may be, that would not be incurred but for the nature of the Hazardous Materials as Hazardous Materials instead of non-Hazardous Materials. The final report shall also include reasonable detail concerning the clean-up measures taken, the clean-up locations, the tests run and the analytic results applicable to the above .

(b) Any handling, treatment, transportation, storage, disposal or use of Hazardous Materials by Tenant in or about the Premises or the Property and Tenant’s use of the Premises shall comply with all applicable Environmental Laws. Without Landlord’s prior written consent, Tenant shall not conduct any sampling or investigation of soil or groundwater on the Property to determine the presence of any constituents therein.

(c) Tenant shall indemnify, defend upon demand with counsel reasonably acceptable to Landlord, and hold Landlord and the Landlord Parties (as hereinafter defined) harmless from and against, any liabilities, losses claims, damages, interest, penalties, fines, reasonable attorneys’ and experts’ fees, court costs, remediation costs, and other expenses which result from the use, storage, handling, treatment, transportation, release, threat of release or disposal of Hazardous Materials in or about the Premises or the Property by Tenant or Tenant’s agents, employees, contractors or invitees. The provisions of this paragraph (c) shall survive the expiration or earlier termination of this Lease.

(d) Tenant shall give written notice to Landlord as soon as reasonably practicable of (i) any communication received by Tenant from any governmental authority concerning Hazardous Materials which relates to the Premises or the Property, and (ii) any disposal, release or threat of release of Hazardous Materials on, under, from or about the Building or the Property of which Tenant is aware.

(e) Upon the expiration of the Term or earlier termination of Tenant’s right of possession, Tenant shall surrender the Premises to Landlord in the same condition as received, subject to any Alterations or Laboratory Reusable Installations permitted or required by Landlord to remain in the Premises, free of Hazardous Materials (subject to the requirements of Section 5.5(a) ) brought upon, kept, used, stored, handled, treated, generated in, or released or disposed of from, the Premises by any person other than Landlord or any of the Landlord Parties (collectively, “ Tenant Laboratory Operations ”) and released of all licenses, clearances or other authorization of any kind required to enter

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into and restore the Premises issued by any governmental authority having jurisdiction over the use, storage, handling, treatment, generation, release, disposal, removal or remediation of Hazardous Materials, broom clean, ordinary wear and tear and casualty loss and condemnation excepted. Tenant’s Surrender Plan shall be accompanied by a current listing of (i) all Hazardous Materials licenses and permits held by or on behalf of Tenant or any party claiming by, through or under Tenant with respect to the Premises, and (ii) all Hazardous Materials used, stored, handled, treated, generated, released or disposed of from the Premises, and shall be subject to the review and approval of Landlord’s environmental consultant. In connection with the review and approval of the Surrender Plan, upon the request of Landlord, Tenant shall deliver to Landlord or its consultant such additional non-proprietary information concerning Tenant Laboratory Operations as Landlord shall reasonably request. On or before such surrender, Tenant shall deliver to Landlord evidence that the approved Surrender Plan shall have been satisfactorily completed and Landlord shall have the right, subject to reimbursement at Tenant’s expense as set forth below, to cause Landlord’s environmental consultant to inspect the Premises and perform such additional procedures as may be deemed reasonably necessary to confirm that the Premises are, as of the effective date of such surrender or early termination of the Lease, free from any residual adverse impact from Tenant Laboratory Operations. Tenant shall reimburse Landlord, within ten (10) days of demand as Additional Rent, for the reasonable expense incurred by Landlord for Landlord’s environmental consultant to review and approve the Surrender Plan and to visit the Premises and verify satisfactory completion of the same. Landlord shall have the unrestricted right to deliver such Surrender Plan and any report by Landlord’s environmental consultant with respect to the surrender of the Premises to third parties .

(f) Tenant hereby represents and warrants to Landlord that (i) neither Tenant nor any of its legal predecessors has been required by any prior landlord, lender or governmental authority at any time to take remedial action in connection with Hazardous Materials contaminating a property which contamination was permitted by Tenant or such predecessor or resulted from Tenant's or such predecessor's action or use of the property in question in violation of Environmental Law, and (ii) Tenant is not subject to any enforcement order issued by any governmental authority in connection with the use, storage, handling, treatment, generation, release or disposal of Hazardous Materials (including, without limitation, any order related to the failure to make a required reporting to any governmental authority).

(g) If Landlord has a reasonable basis to believe that Tenant or any of the Tenant Parties is in violation of any of the terms or conditions of this Section 5.5 , Landlord shall have the right to conduct annual tests of the Premises to determine whether any contamination of the Premises, the Building or the Property has occurred as a result of Tenant's use. In addition, at any time, and from time to time, prior to the expiration or earlier termination of the Term, Landlord shall have the right to conduct appropriate tests of the Premises and the Building to determine if contamination has occurred as a result of Tenant's use of the Premises. In connection with such testing, upon the written request of Landlord, Tenant shall deliver to Landlord or its consultant such non-proprietary information concerning the use of Hazardous Materials in or about the Premises by Tenant or any party claiming by, through or under Tenant. If contamination has occurred for

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which Tenant is liable under this Section 5.5 , Tenant shall pay all costs to conduct such tests. If no such contamination is found, Landlord shall pay the costs of such tests. Tenant shall, at its sole cost and expense, promptly and satisfactorily remediate in accordance with all Environmental Laws any contamination identified by such testing to be in violation of Environmental Laws. Landlord's receipt of or satisfaction with any environmental assessment in no way waives any rights which Landlord may have against Tenant.

(h) In no event may Tenant install any underground or other storage tanks in or under the Building or at the Property without Landlord’s prior written consent, which consent may be withheld in Landlord's sole and absolute discretion.

(i) Tenant's obligations under this Section 5.5 shall survive the expiration or earlier termination of the Lease. Without limitation of Landlord’s other remedies under this Lease, during any period of time after the expiration or earlier termination of this Lease required by Tenant or Landlord to complete the removal from the Premises of any Hazardous Materials (including, without limitation, the release and termination of any licenses or permits restricting the use of the Premises and the completion of the approved Surrender Plan) or to satisfy Tenant’s obligations under Section 5.5(e) above, Tenant shall continue to pay the full Rent in accordance with this Lease for any portion of the Premises not relet by Landlord in Landlord's sole discretion, which Rent shall be prorated daily.

ARTICLE 6
ASSIGNMENT AND SUBLETTING

6.1 Prohibition .

(a) Tenant covenants and agrees that neither this Lease nor the term and estate hereby granted, nor any interest herein or therein, will be assigned, mortgaged, pledged, encumbered or otherwise transferred, whether voluntarily, involuntarily, by operation of law or otherwise, and that neither the Premises nor any part thereof will be encumbered in any manner by reason of any act or omission on the part of Tenant, or used or occupied or permitted to be used or occupied, by anyone other than Tenant, or for any use or purpose other than a Permitted Use, or be sublet (which term, without limitation, shall include granting of concessions, licenses and the like) in whole or in part, or be offered or advertised for assignment or subletting by Tenant or any person acting on behalf of Tenant, without, in each case, the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed, subject to the terms and conditions of Section 6.2 below (all of the foregoing are hereinafter sometimes referred to collectively as “ Transfers ” and any person to whom any Transfer is made or sought to be made is hereinafter sometimes referred to as a “ Transferee ”). Without limiting the foregoing, any agreement pursuant to which: (x) Tenant is relieved from the obligation to pay, or a third party agrees to pay on Tenant’s behalf, all or any portion of the Basic Rent or Additional Rent under this Lease ; and/or (y) a third party undertakes or is granted by or on behalf of Tenant the right to assign or attempt to assign this Lease or sublet or attempt to sublet all or any portion of the Premises, shall for all purposes hereof

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be deemed to be a Transfer of this Lease and subject to the provisions of this Article 6 . A Transfer under this Article 6 shall also include a sale or other transfer (by one or more transfers) of any of the following: the voting stock, partnership interests, membership or other equity interests in Tenant (or any other mechanism such as the issuance of additional stock or the creation of additional partnership or membership interests) which results in a change of control of Tenant or a sale or other transfer (in one or more transfers) of fifty percent (50%) or more of the assets of Tenant, as if such transfer were an assignment of this Lease. Notwithstanding the foregoing, if equity interests in Tenant at any time are or become traded on a national securities exchange (as defined in the Securities Exchange Act of 1934), the transfer of equity interests in Tenant on a national securities exchange shall not be deemed an assignment within the meaning of this Article; provided, however, that if Tenant is a corporation the outstanding stock of which is listed on a national securities exchange, then any private purchase or buyout of stock shall be deemed a Transfer under this Article 6 .

(b) Notwithstanding the foregoing, Landlord’s consent shall not be required under Section 6.1(a), and Section 6.3, Section 6.4, and Section 6.5 shall not apply to any assignment of this Lease or sublease of all or any portion of the Premises to (x) an entity into or with which Tenant is merged or consolidated, or to which all or substantially all of Tenant’s assets or stock are transferred, or (y) transactions with any entity which controls or is controlled by Tenant or is under common control with Tenant; provided and only on condition that in any such event:

(i) the successor to Tenant has a net worth, computed in accordance with generally accepted accounting principles (“ GAAP ”) consistently applied, at least equal to the Tangible Net Worth of Tenant on the date of this Lease,

(ii) proof satisfactory to Landlord of the Tangible Net Worth of both the transferee and Tenant shall have been delivered to Landlord at least ten (10) days prior to the effective date of any such transaction, or, if Tenant is prohibited by Law or any restrictions in the agreement facilitating such transaction from disclosing such information prior to the effective date of any such transaction, within ten (10) days following the effective date of any such transaction,

(iii) the transfer is for a valid business purpose of Tenant and is not a subterfuge for the provisions of this Article 6 , and

(iv) the transferee agrees directly with Landlord, by written instrument in form satisfactory to Landlord in its reasonable discretion, to be bound by all the obligations of Tenant hereunder, including, without limitation, the covenant against further assignment and subletting.

Any assignment or sublease under this Section 6.1(b) is referred to herein as a " Permitted Transfer ". Except in cases of statutory merger or consolidation or sale of substantially all of the assets or stock of Tenant (and in connection with which

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sale Tenant is dissolved and provided the purchaser becomes the named Tenant under this Lease by operation of law or by written assignment and assumption agreement in form reasonably acceptable to Landlord) in which case the surviving entity in the merger or consolidation or the purchaser of such assets or stock to which this Lease has been assigned shall be solely liable as the Tenant under this Lease, Tenant shall continue to remain fully liable under this Lease, on a joint and several basis with the Permitted Transferee .

Landlord’s Consent

(a) If Tenant desires Landlord’s consent to any Transfer, Tenant shall notify Landlord in writing, which notice (the “ Transfer Notice ”) shall include (i) the proposed effective date of the Transfer, which shall not be less than thirty (30) days nor more than one hundred eighty (180 ) days after the date of delivery of the Transfer Notice, (ii) a description of the portion of the Premises to be transferred, (iii) all of the terms of the proposed Transfer and the consideration therefor, including the name and address of the proposed Transferee, and an executed copy of all documentation effectuating the proposed Transfer, including all operative documents to evidence such Transfer and all agreements incidental or related to such Transfer, (iv) current financial statements of the proposed Transferee certified by an officer, partner or owner thereof, business credit and personal references and history of the proposed Transferee and any other information reasonably required by Landlord which will enable Landlord to determine the financial responsibility, character, and reputation of the proposed Transferee, nature of such Transferee’s business and proposed use of the Premises.

(b) In the event Landlord does not exercise its options pursuant to Section 6.5 below to recapture the Premises or terminate this Lease in whole or in part, Landlord’s consent to a proposed Transfer shall not be unreasonably withheld, conditioned or delayed, provided and upon condition that:

(i) There shall not be an Event of Default that remains uncured;

(ii) In Landlord’s reasonable judgment the proposed Transferee is engaged in a business which is in keeping with the then standards of the Building and Property and the proposed use is limited to the Permitted Use, including being classified by the UBC (as hereinafter defined) as a “B” occupancy area for the use and storage of Hazardous Materials;

(iii) The proposed Transferee is a reputable entity and has sufficient financial worth and stability in light of the responsibilities to be undertaken, based on evidence provided by Tenant (and others) to Landlord, as determined by Landlord in its reasonable discretion;

(iv) The proposed Transferee is not then a tenant of Landlord at any part of the Property, provided that Landlord has competing space of similar size available;

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(v) The proposed Transferee is not a person or entity with whom Landlord is then, or during the preceding four (4) months has been, actively negotiating to lease space at the Property;

(vi) The proposed Transferee or any person or entity which, directly or indirectly, controls, is controlled by, or is under common control with, the proposed Transferee is not a direct or indirect competitor, in the footwear or apparel industry, of Landlord or any of Landlord’s affiliates, including, without limitation, New Balance Athletic Shoe, Inc. or any successor thereto, (a “ Landlord Competitor ”)

(vii) The proposed Transfer shall be in form reasonably satisfactory to Landlord and shall comply with the applicable provisions of this Article 6 ;

(viii) Tenant shall not have advertised or publicized in any way the availability of the Premises at rental rate less than the base rent and additional rent at which Landlord is then offering to lease other space located in the Building without prior notice to and approval by Landlord, which approval shall not be unreasonably withheld, conditioned or delayed;

(ix) With respect to a proposed sublease, the proposed sublease involves, in Landlord’s reasonable judgment, a portion of the Premises which is independently leasable space;

(x) With respect to and after taking into account a proposed sublease, there will not be more than three (3) different entities (including Tenant) occupying the Premises;

(xi) Intentionally omitted;

(xii) The proposed Transfer shall not have (or potentially have) any adverse effect on any real estate investment trust qualification requirements of Landlord or any of its affiliates or otherwise cause Landlord or any of its affiliates to be in violation of any Laws to which Landlord or such affiliate is subject, including, without limitation, the Employment Retirement Security Act of 1974;

(xiii) If required in the mortgage documents or ground lease, the holder of any Superior Mortgage and/or Superior Lease, as applicable, consents to such Transfer; and

(xiv) Neither the identity nor business of the proposed Transferee would cause Landlord to be in violation of any covenant or restriction contained in another lease then in effect at the Property.

(c) As a condition to an assignment or subletting, whether Landlord’s consent is required or not, Landlord may require a Hazardous Materials List, certified by

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the proposed assignee or sublessee to be true and correct, which the proposed assignee or sublessee intends to use, store, handle, treat, generate in or release or dispose of from the Premises, together with copies of all documents relating to such use, storage, handling, treatment, generation, release or disposal of Hazardous Materials by the proposed assignee or subtenant in the Premises, prior to the proposed assignment or subletting, including, without limitation: permits; approvals; reports and correspondence; and storage and management plans.

Acceptance of Rent

. If this Lease is assigned, or if the Premises or any part thereof is sublet or occupied by anyone other than Tenant, whether or not in violation of the terms and conditions of the Lease, Landlord may, at any time and from time to time, collect rent and other charges from the Transferee, and apply the net amount collected to the rent and other charges herein reserved, but no such Transfer, collection or modification of any provisions of this Lease shall be deemed a waiver of this covenant, or the acceptance of the Transferee as a tenant or a release of Tenant from the further performance of covenants on the part of Tenant to be performed hereunder. Any consent by Landlord to a particular Transfer or other act for which Landlord’s consent is required under paragraph (a) of Section 6.1 shall not in any way diminish the prohibition stated in paragraph (a) of Section 6.1 as to any further such Transfer or other act or the continuing liability of the Original Tenant. No Transfer hereunder shall relieve Tenant from its obligations hereunder, and Tenant shall remain fully and primarily liable therefor. Landlord may revoke any consent by Landlord to a particular Transfer if the Transfer does not provide that the Transferee agrees to be independently bound, by and upon all of the covenants, agreements, terms, provisions and conditions set forth in this Lease on the part of Tenant to be kept and performed, and as may be applicable to a subtenancy.

Excess Payments

. If Tenant assigns this Lease or sublets the Premises or any portion thereof, Tenant shall pay to Landlord as Additional Rent fifty percent (50%) of the amount, if any, by which (a) any and all compensation received by Tenant as a result of such Transfer, net only of reasonable expenses actually incurred by Tenant in connection with such Transfer, including, but not limited to brokerage commissions, legal fees, and in the instance of a sublease, demising and leasehold improvement costs (prorated over the term of the Transfer), as well as any unamortized portion of leasehold improvements paid for directly by Tenant for the Premises, exceeds (b) in the case of an assignment, the Basic Rent and Additional Rent under this Lease, and in the case of a subletting, the portion of the Basic Rent and Additional Rent allocable to the portion of the Premises subject to such subletting. Notwithstanding the foregoing, Tenant shall not be required to share any rent attributable to the leasing of equipment to a subtenant. Such payments shall be made on the date the corresponding payments under this Lease are due. Notwithstanding the foregoing, the provisions of this Section shall impose no obligation on Landlord to consent to an assignment of this Lease or a subletting of all or a portion of the Premises.

Landlord’s Recapture Right

. Notwithstanding anything herein to the contrary, in addition to withholding or granting consent with respect to any proposed Transfer, in the event the Transfer request relates to fifty percent (50%) or more of the Premises for the balance of the Term, Landlord shall have the right, to be exercised in writing within thirty (30) days after receipt of a Transfer Notice, to terminate this Lease (in the event of a proposed assignment for the remainder of the Term) or terminate that portion of the Premises to be subleased (in the event

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of a proposed sublease); provided, however, Tenant shall have the right to rescind any request for sublease consent if Landlord exercises its right to recapture in accordance with the terms and conditions of this Section 6.5 , by providing written notice to Landlord within five (5) Business Days of Tenant’s receipt of Landlord’s notice of its intent to recapture such subleased portion of the Premises. In the case of a proposed assignment, this Lease shall terminate as of the date (the “ Recapture Date ”) which is the later of (a) sixty (60) days after receipt of Landlord’s written notice of such election, and (b) the proposed effective date of such Transfer, as if such date were the last day of the Term of this Lease. In either event, if requested by Tenant, Landlord shall provide not less than ninety (90) days from the Recapture Date to allow Tenant to vacate and surrender the Premises, including to comply with the requirements of Section 5.5 . If Landlord exercises the rights under this Section 6.5 in connection with a proposed sublease, this Lease shall be deemed amended to eliminate the proposed sublease premises from the Premises as of the Recapture Date, and thereafter all Basic Rent and Expense Charges shall be appropriately prorated to reflect the reduction of the Premises as of the Recapture Date. If Landlord recaptures Tenant’s sublease space which is less than all of the Premises, as a condition to Landlord’s recapture, Landlord shall agree, at its cost, to separately demise the recapture space from the balance of the Premises and otherwise adjust all mechanical systems and utilities to provide the same level of service to the retained Premises as had existed prior to Landlord exercising its recapture right. In the event that Landlord exercises its termination right herein, Tenant shall be relieved and discharged from any further obligations under the Lease with respect to that portion of the Premises terminated by Landlord (but not any obligations accruing prior to such termination date) as of the termination date or such later date as Tenant fully vacates and surrenders the recapture space to Landlord in accordance with the terms and conditions of this Lease, including, without limitation, Section 5.5 of this Lease.

Further Requirements

. Tenant shall reimburse Landlord on demand, as Additional Rent, for any reasonable out‑of ‑pocket costs (including reasonable attorneys’ fees and expenses), not to exceed $3,000 in each instance, incurred by Landlord in connection with any actual or proposed assignment or sublease or other act described in paragraph (a) of Section 6.1 , whether or not consummated, including the costs of making investigations as to the acceptability of the proposed assignee or subtenant. Any sublease to which Landlord gives its consent shall not be valid unless and until Tenant and the sublessee execute a consent agreement in form and substance satisfactory to Landlord in its reasonable discretion and a fully executed counterpart of such sublease has been delivered to Landlord. Any sublease shall provide that: (i) the term of the sublease ends no later than one day before the last day of the Term of this Lease; (ii) such sublease is subject and subordinate to this Lease; (iii) Landlord may enforce the provisions of the sublease, including collection of rents; and (iv) in the event of termination of this Lease or reentry or repossession of the Premises by Landlord, Landlord may, at its sole discretion and option, take over all of the right, title and interest of Tenant, as sublessor, under such sublease, and such subtenant shall, at Landlord’s option, attorn to Landlord, but nevertheless Landlord shall not (A) be liable for any previous act or omission of Tenant under such sublease; (B) be subject to any defense or offset previously accrued in favor of the subtenant against Tenant; or (C) be bound by any previous modification of such sublease made without Landlord’s written consent or by any previous prepayment of more than one month’s rent.

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ARTICLE 7
RESPONSIBILITY FOR REPAIRS AND CONDITION OF PREMISES; SERVICES TO BE FURNISHED BY LANDLORD

7.1 Landlord Repairs .

(a) Except as otherwise provided in this Lease, Landlord agrees to maintain, repair and replace so as to keep in good working order, condition and repair, and in compliance with all applicable Laws, the Structural Elements of the Building, including exterior glass , the Base Building and Base Building Systems up to the point of connection with the Premises (but specifically excluding any supplemental heating, ventilation or air conditioning equipment or systems exclusively serving the Premises installed at Tenant’s request or as a result of Tenant’s requirements in excess of Building standard design criteria), except that Landlord shall in no event be responsible to Tenant for the repair of interior glass in the Premises or the doors (or related glass and finish work) leading to the Premises, or subject to Section 10.5 , any condition in the Premises or the Building caused by any act or neglect of Tenant, its invitees or contractors . Landlord shall also keep and maintain the Parking Garage and all Common Facilities in a good and clean working order, condition and repair, free of snow and accumulation of dirt and rubbish and with reasonable treatment of ice on driveways and pedestrian walkways, and shall keep, maintain, and repair all landscaped areas on the Property in a neat and orderly condition. Subject to the terms and conditions of this Lease, Landlord shall be responsible for the maintenance, replacement and repair of Laboratory Systems only to the portion of the valve or cap for such system on each floor that connects to and exclusively services the Premises; Tenant hereby agreeing that any such portion of such system that extends from the point of such valve or cap connection on each floor to and in the Premises shall not be considered a Laboratory System. Landlord shall not be responsible to maintain or make any improvements or repairs to the Building other than as expressly in this Section 7.1 provided, unless expressly provided otherwise in this Lease. Landlord shall be responsible for the repair and maintenance of any base Building HVAC (as hereinafter defined), subject to such expense being properly includable as an Operating Expense; provided, however, the costs otherwise covered under HVAC warranty or insurance shall not be included as an Operating Expense.

(b) Landlord shall not be liable for any failure to make repairs in the Premises which Landlord has undertaken to make under the provisions of this Section 7.1 or elsewhere in this Lease, unless Tenant has given notice to Landlord of the need to make such repairs (unless Landlord otherwise is known to have actual knowledge of the need for such repairs), and Landlord has failed to commence to make such repairs within a reasonable time after receipt of such notice, or fails to proceed with reasonable diligence to complete such repairs.

(c) Except with respect to Tenant’s obligations under Section 7.2(b) of this Lease to comply with applicable Laws, Landlord shall, as part of Operating Expenses to the extent permitted pursuant to Article 9 and Exhibit F of this Lease, maintain the Common Facilities of the Property, the Parking Garage, the Structural Elements of the Building, the Base Building Systems and the Laboratory Systems serving

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the Premises and the Building in general in compliance with applicable Laws. Landlord agrees to operate the Building s in a manner consistent with Comparable Buildings.

7.2 Tenant Repairs; Compliance with Laws .

(a) Tenant shall keep and maintain the Premises and the Improvements, Laboratory Reusable Installations, fixtures and appurtenances therein or thereon (including, without limitation, electrical and mechanical or laboratory systems not considered part of the Base Building Systems or Laboratory Systems or any portion of such systems that have been installed for the exclusive use and benefit of Tenant such as additional HVAC equipment, hot water heaters, electronic, data, phone, and other telecommunications cabling and related equipment, and security or telephone systems for the Premises), neat and clean and in good order, condition and repair, excepting only those repairs for which Landlord is responsible under the terms of this Lease, reasonable wear and tear, and damage by fire or other casualty or as a consequence of the exercise of the power of eminent domain; and Tenant shall surrender the Premises, at the end of the Term, in such condition. For the avoidance of doubt, Tenant shall be responsible for the Laboratory Systems which serve the Premises from the point of valve or cap connection on each floor to the Premises. Tenant shall be responsible for all Tenant specific equipment. Subject to Section 10.5 regarding waiver of subrogation, Tenant shall be responsible for the cost of repairs which may be made necessary by reason of damage to the Building caused by any act or neglect of Tenant, or its employees, contractors or invitees (including any damage by fire or other casualty arising therefrom). Tenant shall be responsible for the installation of any fire suppression or fire rating system that is required for Tenant’s use, other than the Base Building fire protection system to the extent installed by Landlord pursuant to the Landlord/Tenant Matrix (as hereinafter defined) attached as Schedule 1 to Exhibit C as shall be provided as part of the Base Building Systems.

(b) Tenant shall comply with all Laws from time to time in effect and all directions, rules and regulations of governmental agencies having jurisdiction, and the standards recommended by the local Board of Fire Underwriters applicable to the Premises and Tenant’s use and occupancy thereof and its business and operations therein, and shall, at Tenant’s expense, obtain all permits, licenses and the like required thereby. Notwithstanding the foregoing, Tenant shall not be obligated to make structural repairs or alterations to the Premises in order to comply with any Laws unless the need for such repairs or alterations arises from (i) the specific manner and nature of Tenant’s use or occupancy of the Premises, as distinguished from mere general office , research and development uses, including a biotechnical and laboratory use in compliance with the Permitted Use hereunder, (ii) any cause or condition created by or at the insistance of the Tenant , including, without limitation, the performance of the Tenant Work and/or any other Alterations made by Tenant, or (iii) a breach by Tenant of any provisions of this Lease. Any of the foregoing conditions caused by any employee, agent, contractor, or subtenant of Tenant or any other party claiming by, through, or under Tenant shall be attributable to Tenant for purposes of this Lease. Tenant shall also be responsible for the cost of compliance with all present and future Laws in respect of the Building to the extent arising from any of the causes set forth in clauses (i) through (iv) above of this Section

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7.2(b) , in which event Tenant shall be responsible to perform, at Tenant's sole cost and expense, such repairs or alterations, whether or not such compliance requires work which is structural or non-structural, ordinary or extraordinary, foreseen or unforeseen .

(c) If repairs are required to be made by Tenant pursuant to the terms hereof, Landlord may demand that Tenant make the same promptly, and if Tenant refuses or neglects to commence and complete such repairs within the applicable time period therefor set forth in Section 14(a)(ii) of this Lease (except in the case of Emergency, including without limitation, notice of an unsafe condition in the Premises, in which event Landlord may make such repairs immediately and without notice), Landlord may (but shall not be required to do so) make or cause such repairs to be made and the provisions of Section 14.4 shall be applicable to the costs thereof. Landlord shall make a commercially reasonable effort to notify Tenant, which notification may be oral, of Landlord’s exercise of its rights under this Section 7.2(c) .

7.3 Floor Load ‑ Heavy Machinery .

(a) Tenant shall not place a load upon any floor in the Premises exceeding the limit such floor was designed to supports or such lower amount as may be proscribed by applicable Law. Landlord reserves the right to prescribe the weight and position of all business machines and mechanical equipment, including safes, which shall be placed so as to distribute the weight. Business machines and mechanical equipment shall be placed and maintained by Tenant at Tenant’s expense in settings sufficient, in Landlord’s judgment, to absorb and prevent vibration, noise and annoyance. Tenant shall not move any safe, heavy machinery, heavy equipment, freight, bulky matter or fixtures into or out of the Building without Landlord’s prior consent, which consent may include a requirement to provide insurance, naming Landlord as an insured, in such amounts as Landlord may deem reasonable.

(b) If any such safe, machinery, equipment, freight, bulky matter or fixtures requires special handling, Tenant agrees to employ only persons holding a Master Rigger’s license to do such work, and that all work in connection therewith shall comply with applicable Laws. Any such moving shall be at the sole risk and hazard of Tenant, and Tenant will exonerate, indemnify and save Landlord harmless against and from any liability, loss, injury, claim or suit resulting directly or indirectly from such moving.

7.4 Utility Services .

(a) Tenant shall pay for all water (including the cost to service, repair and replace reverse osmosis, de-ionized and other treated water), gas, heat, light, power , telephone, internet service, cable television, other telecommunications and other utilities supplied to the Premises, together with any fees, surcharges and taxes thereon charged by the applicable utility provider . Electricity and gas supplied to the Premises shall each be separately metered, and chilled water and HVAC airflow for the Laboratory Systems shall be separately submetered or check metered. Tenant shall be entitled to use up to fourteen (14) watts per usable square foot of the Laboratory Portion of the Premises and up to six (6) watts per usable square foot of the Office Portion of the Premises of electrical power.

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Tenant shall be responsible for procuring and paying for separately metered utilities directly to the provider of the utilities. If any utility is not separately metered or submetered to Tenant, Tenant shall pay either Tenant’s pro rata share, as the case may be, of all charges of such utility jointly metered with other premises, or Tenant’s Occupied Laboratory Share (as hereinafter defined), as reasonably determined by Landlord, as Additional Rent or, in the alternative, Landlord may, at its option, monitor the usage of such utilities by Tenant and charge Tenant with the cost of purchasing, installing and monitoring such metering equipment, which cost shall be paid by Tenant as Additional Rent , unless such separate meters or submeters are installed as part of the Tenant Work, in which event the cost of installation shall be included in the cost of such work . Landlord may base its bills for utilities on reasonable estimates; provided that Landlord adjusts such billings to reflect the actual cost of providing utilities to the Premises no less than quarterly. To the extent that Tenant uses more than Tenant’s Laboratory Share of any utilities attributable to the Laboratory Systems or more than Tenant’s Pro Rata Share of the Office Portion of any utilities attributable to the Building Systems, then Tenant shall pay Landlord for Tenant’s increased share of such utilities to reflect such excess.

(b) Tenant shall be responsible for the installation of the following check meters (i) the standard flow meter on each floor at the capped connection for non-potable cold water, (ii) the standard flow meter on the supply line and deductive meter on the return line at each floor, located at the capped connection, for non-potable hot water supply and return, (iii) the standard flow meter at each floor, located at the capped connection, for tempered water, (iv) polypropylene purified water meter on the supply line and deductive meter on the return line at each floor, located at the capped connection, for the RO/DI system, (v) mass flow meter at each floor, located at the capped connection, for compressed air, (vi) mass flow meter at each floor, located at the capped connection, for the vacuum system, (vii) chilled water meters on the capped chilled water connections on each floor to meter supplemental chilled water usage, (viii) hot water meters on the capped hot water connections on each floor to meter hot water usage, and (ix) condenser water meters on the capped condenser water connection on each floor to meter condenser water usage (collectively, the “ Tenant Installed Checkmeters ”). Tenant shall be responsible for the ongoing repair and maintenance of any Tenant Installed Checkmeters. Tenant shall also be responsible for providing bus tap, meter and meter socket at each floor for direct utility metering and an electronic check meter for tenant equipment connected to the Generator. In the event Tenant requires natural gas on any floor within the Premises, Tenant shall be required to request gas service installation from the utility provider and would be billed directly with a separate meter. Notwithstanding anything to the contrary contained herein, in no event shall Tenant be entitled to occupy all or any portion of the Premises until the Tenant Installed Checkmeters have been installed by Tenant and are fully operational. At Tenant’s election, Tenant shall be entitled to include the installation of the Tenant Installed Checkmeters as part of the Tenant Work pursuant to Exhibit D but at Tenant’s sole cost and expense.

(c) Notwithstanding anything in this Lease to the contrary, Tenant shall pay the cost of utilities used in the Premises based on the consumption thereof as metered by the applicable Tenant Installed Checkmeters and/or any separate meters or submeters installed by Tenant at the rates for the applicable utility then being charged by

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the applicable public utility (together with all taxes and fees included by the utility provider), without markup or any additional fees or charges added by Landlord.

(d) In the event any governmental entity promulgates or revises any Law, or issues mandatory controls relating to the use or conservation of energy, water, gas, light or electricity, or the provision of any other utility or service furnished by Landlord in the Building, Landlord may take any appropriate action to comply with such provision of Law or mandatory controls, including the making of alterations to the Building, subject, however, to the terms and conditions of this Lease. Tenant agrees to provide, within 10 Business Days of request by Landlord, such information and documentation as may be needed for compliance with any energy reporting or sustainability requirements as may be adopted from time to time by the City of Boston or any other governmental authority with jurisdiction over the Building, which information shall include, without limitation, usage at or by the Premises of electricity, natural gas, steam, hot or chilled water or other energy. Neither Landlord’s actions nor its failure to act shall entitle Tenant to any damages, abate or suspend Tenant’s obligation to pay Basic Rent and Additional Rent or constitute or be construed as a constructive or other eviction of Tenant except as otherwise specifically set forth herein. The parties hereto shall comply with all mandatory energy conservation controls and requirements applicable to the Building that are imposed or instituted by the federal, state, county or municipal governments and are of general applicability to the occupants of the Building, including, without limitation, controls on the permitted range of temperature settings in office/retail buildings, and requirements necessitating curtailment of the volume of energy consumption or the hours of operation of the Building. Any terms or conditions of this Lease that conflict or interfere with compliance with such controls or requirements shall be suspended for the duration of such controls or requirements. Compliance with such controls or requirements shall not be considered an eviction, actual or constructive, of Tenant from the Premises and shall not entitle Tenant to terminate this Lease or to an abatement of any Rent payable hereunder.

7.5 Other Services .

(a) For the Office Portion of the Premises only, Landlord shall provide Base Building heating, ventilation and air-conditioning (“ HVAC ”) for heating and cooling as normal seasonal changes may require to provide reasonably comfortable space temperature and ventilation for occupants of the Office Portion of the Premises under normal business operation for general office use during Building Service Hours as defined below and substantially in accordance with the HVAC Specifications for the Office Portion of the Building attached hereto as Exhibit J . Landlord agrees to carry a separate maintenance contract on the HVAC units and/or systems, which maintenance contract cost shall be included as part of Operating Expenses. If Tenant shall require air conditioning, heating or ventilation outside the hours and days above specified for the office portion of the Premises, Landlord may furnish such service and Tenant shall pay therefor such charges as may from time to time be in effect for the Building upon demand as Additional Rent. In the event Tenant introduces into the Premises personnel or equipment which overloads the capacity of the Building system or in any other way interferes with the system’s ability to perform adequately its proper functions, supplementary systems may, if

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and as needed, at Landlord’s option, be provided by Landlord, at Tenant’s expense. “ Building Service Hours ” are 8:00 A.M. to 6:00 P.M. on Business Days and, upon at least 24 hours prior written request by Tenant, 8:00 A.M. to 1:00 P.M. on Saturdays, in all events, excluding the holidays set forth in Section 1.1 of this Lease.

(b) For the Laboratory Portion of the Premises, Landlord shall provide Base Building HVAC for heating and cooling as normal seasonal changes may require to provide code required ventilation for occupants of the Laboratory Portion of the Premises under normal business operation for general laboratory use and substantially in accordance with the HVAC Specifications attached hereto as Exhibit J for the Laboratory Portion of the Building. Air will be supplied to the Office Portion of the Premises at 1 cfm per useable square foot of the Office Portion of the Premises and air will be supplied to the Laboratory Portion for the Premises at 1.5 cfm per useable square foot of the Laboratory Portion of the Premises.

(c) In the event Tenant introduces into the Premises personnel or equipment which overloads the capacity of the applicable Base Building HVAC system or in any other way adversely affects the applicable Base Building HVAC system’s ability to perform adequately its proper functions, including, without limitation, Tenant’s design, layout or occupancy level of the Premises in a manner which inhibits the HVAC system’s ability to perform in accordance with the applicable HVAC specifications attached as exhibits to this Lease, Tenant may be required to install supplementary systems at Tenant’s sole cost and expense in order to provide comfortable space temperature and ventilation in the applicable portion of the Premises, and Landlord shall not be deemed to be in default of Landlord’s obligation under this Section 7.5 to provide HVAC service to the Premises in accordance with Exhibit J , as applicable to the portion of the Premises at issue (i.e. the Office Portion or Laboratory Portion, as applicable), to the extent resulting from such interference or overloading by Tenant

(d) For the Laboratory Portion of the Premises, Landlord, as part of Landlord’s Work, shall install (1) one (1) air handler unit per floor of the Laboratory Portion of the Premises and (2) an additional supplemental chiller system for the tenants of the Laboratory Portion located on the mechanical penthouse roof of the Building. Tenant, at its expense, may install its own heating, ventilation and air conditioning units (“ Tenant’s HVAC Units ”) in and serving the Premises, which Tenant’s HVAC Units must be located within the bounds of the Premises. The Tenant’s HVAC Units shall be compatible with the Building’s mechanical system and shall be operated and maintained by Tenant at its expense. Tenant shall furnish and operate and maintain, at its expense, the pumps required to draw and return the condenser water required for Tenant’s HVAC Units.

(e) Landlord shall provide condenser water of ten (10) tons to the Premises and Tenant shall pay Landlord’s then standard condenser water charge for the Building for its use of such condenser water. Current charge is $303.00 per annum per ton of condenser water allocated to the Premises subject to increase from time to time during the Term. Tenant shall be responsible for pumping/circulating the supplied condenser water throughout the Premises. Tenant may, at its expense, connect the machinery and

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equipment of Tenant’s HVAC Units to the Building air supply and return systems, condenser water supply and return and steam supply and condensate return lines at such locations, by such means and routing and otherwise in such manner as Landlord shall reasonably designate or approve.

(f) Landlord shall provide fresh air units exclusive to each floor within the Laboratory Portion for the supply of air to the Premises. Tenant shall be responsible for Tenant’s pro rata share based on rentable square footage of the Premises, as the case may be, of all charges of Landlord for operating, repairing and maintaining fresh air units with other premises on the floor. By way of example, in the event Tenant leases a full floor its pro rata share for the fresh air unit on that floor is one hundred percent (100%).

(g) Landlord shall provide water (at temperatures supplied by the city in which the Property is located) for drinking, lavatory and toilet purposes (“ Potable Water ”) for the Premises and non-potable hot water for Tenant’s laboratory use (“ Non Potable Water ”). Such water shall be made available from the main connection point for such service on the floor on which the Premises is located and the distribution of water (both Potable Water and Non-Potable Water) within the Premises shall be performed by Tenant. If Tenant uses Potable Water for any purpose other than for ordinary lavatory and drinking purposes, Landlord may assess a reasonable charge for the additional water so used, or upon advance written notice to Tenant install a water meter and thereby measure Tenant’s water consumption for all purposes. In the latter event, Tenant shall pay the cost of the meter and the cost of installation thereof as Additional Rent upon demand and shall keep such meter and installation equipment in good working order and repair. Tenant agrees to pay for water consumed, as shown on such meter (at the rates then charged by the public utility, together with all sewer charges, taxes and fees), together with the sewer charge based on such meter charges, as and when bills are rendered, and in the event Tenant fails timely to make any such payment, Landlord may pay such charges and collect the same from Tenant upon demand as Additional Rent. Notwithstanding anything to the contrary contained in this Section, Tenant shall be responsible for Tenant’s Laboratory Share of the costs associated with the Non Potable Water.

(h) Cleaning and janitorial services to the Common Areas. Tenant shall be responsible for all cleaning and janitorial services to the Premises, consistent with such services performed by office and laboratory tenants of Comparable Buildings. Subject to the labor harmony requirements in this Lease and Landlord’s reasonable approval, Tenant may utilize any qualified cleaning and janitorial contractors to provide these cleaning services to the Premises.

(i) Access to the Premises and the Parking Garage 24 hours per day, 7 days per week, and 365 days per year, subject to security and safety precautions from time to time in effect, if any, and subject always to restrictions based on emergency conditions.

(j) Passenger elevator service in common with Landlord and other tenants in the Building 24 hours per day, 7 days per week, and 365 days per year. Tenant shall have access, on a non‑exclusive, first‑come, first‑serve basis, to freight elevators serving the Building, at no additional charge during the Building’s normal freight hours.

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(k) Landlord may from time to time, but shall not be obligated to, as part of Operating Expenses, provide one or more attendants in or about the common areas of the Building. Tenant expressly acknowledges and agrees that, if provided: (i) such attendants shall not serve as police officers, and will be unarmed, and will not be trained in situations involving potentially physical confrontation; and (ii) such attendants will be solely an amenity to tenants of the Building for purposes such as assisting visitors and invitees of tenants and others in the Building, monitoring fire control and alarm equipment, and summoning emergency services to the Building as and when needed, and not for the purpose of securing any individual tenant premises or guaranteeing the physical safety of Tenant’s Premises or of Tenant’s employees, agents, contractors or invitees. If and to the extent that Tenant desires to provide security for the Premises or for such persons or their property, Tenant shall be responsible for so doing, after having first consulted with Landlord and after obtaining Landlord’s consent, which shall not be unreasonably withheld , conditioned or delayed . Landlord expressly disclaims any and all responsibility and/or liability for the physical safety of Tenant’s property , and for that of Tenant’s employees, agents, contractors and invitees, and, without in any way limiting the operation of Article 10 hereof, Tenant, for itself and its agents, contractors, invitees and employees, hereby expressly waives any claim, action, cause of action or other right which may accrue or arise as a result of any damage or injury to the person or property of Tenant or any such agent, invitee, contractor or employee except, with respect to personal injury only, if and to the extent caused by Landlord’s negligence or willful misconduct. Tenant agrees that, as between Landlord and Tenant, it is Tenant’s responsibility to advise its employees, agents, contractors and invitees as to necessary and appropriate safety precautions.

(l) As part of Landlord’s Work, the Building will be serviced by a common laboratory waste sanitary sewer connection from the pH neutralization room on the third (3 ^rd ) floor of the Building to the municipal sewer line in the street adjacent to the Building. Landlord will install, as part of Landlord’s Work, a separate ph neutralization tank (the “ ph Neutralization Tank ”) for common use by tenants and occupants of the Laboratory Portion of the Building. Landlord will provide a connection point and tap and Tenant shall be responsible, as part of the Tenant Work, to connect the Premises to the ph Neutralization Tank. Tenant shall have a non-exclusive right to use Tenant’s Laboratory Share of the ph Neutralization Tank in accordance with applicable Laws in common with other tenants of the Laboratory Portion. Tenant shall reimburse Landlord for all costs, charges and expenses incurred by Landlord from time to time in connection with or arising out of the operation, use, maintenance, repair or refurbishment of the ph Neutralization Tank, including all clean-up costs relating to the ph Neutralization Tank (collectively, “ Tank Costs ”); provided, however, that if the ph Neutralization Tank is being used by other tenant(s) or occupant(s) of the Laboratory Portion of the Building at any time during the Term, then Tenant shall only be obligated to pay its proportionate share of the Tank Costs, as determined by Landlord in accordance with, as reasonably determined by Landlord, either Tenant’s Laboratory Share or Tenant’s Occupied Laboratory Share, if applicable, of the Tank Costs. Notwithstanding the foregoing, in the event the ph Neutralization Tank or the pH neutralization room is damaged or repairs to the ph Neutralization Tank or the pH neutralization room are required solely as a result of the improper use of either the ph Neutralization Tank or the pH neutralization room by

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Tenant, Tenant shall be responsible for one hundred percent (100%) of the cost of any repairs or replacement required as a result of such improper use by Tenant, regardless of whether the ph Neutralization Tank is then being used by other tenant(s) or occupant(s) of the Building.

(m) Landlord has installed a back-up generator at the Property (the “ Generator ”), with capacity for Tenant to connect its laboratory equipment load of up to four (4) watts per usable square foot of the Laboratory Portion of the Premises (the “ Tenant’s Generator Capacity ”). Tenant shall be entitled to use, at any time during the Term, up to Tenant’s Generator Capacity of power from the Generator (after deducting any power from the Generator required for the Common Facilities) on a non-exclusive basis with other tenants in the Building; provided, however, in no event shall Tenant’s equipment connected to the Generator exceed four (4) watts per usable square foot of the Laboratory Portion of the Premises. Any back-up power needs of Tenant in excess of Tenant’s Generator Capacity shall be Tenant’s responsibility, including Tenant’s laboratory equipment, and notwithstanding Landlord’s approval of Tenant’s Space Plan or Construction Documents in accordance with Exhibit D . Tenant shall reimburse Landlord for Tenant’s Laboratory Share of all costs, charges and expenses incurred by Landlord from time to time in connection with or arising out of the operation, use, maintenance, repair or refurbishment of the Generator, including, the costs for fuel, permitting, inspection and testing (collectively, “ Generator Costs ”); provided, however, that if the Generator is being used by other tenant(s) or occupant(s) of the Laboratory Portion of the Building at any time during the Term, then Tenant shall only be obligated to pay Tenant’s Occupied Laboratory Share of the Generator Costs. Landlord expressly disclaims any warranties with regard to the Generator or the installation thereof, including any warranty of merchantability or fitness for a particular purpose. Landlord shall maintain and repair the Generator so as to keep same in good working condition as part of Generator Costs, but shall not be liable for any failure to make any repairs or to perform any maintenance that is an obligation of Landlord unless such failure shall persist for an unreasonable time after Tenant provides Landlord with written notice of the need for such repairs or maintenance.

(n) As part of the Laboratory Systems, Tenant shall be allowed to utilize up to Tenant’s Laboratory Share of space in the chemical storage room within the specified zone in the basement level of the Building (the “ Chemical Storage Room ”) for chemical storage. The Chemical Storage Room shall be designated by the Uniform Building Code (“ UBC ”) as a “B” occupancy area for the use and storage of Hazardous Materials. If the use of Hazardous Materials by Tenant requires fire control areas or chemical storage areas in excess of Tenant’s Laboratory Share, then Tenant shall, at its sole cost and expense and upon Landlord’s written request, establish and maintain a separate area of the Premises classified by the UBC as a “B” occupancy area for the use and storage of Hazardous Materials, or take such other action as is necessary to ensure that its share of the fire control areas or chemical storage areas of the Building is not greater than Tenant’s Laboratory Share. Notwithstanding anything in this Lease to the contrary, Landlord shall not have and expressly disclaims any liability (unless arising from Landlord's negligence or willful misconduct) related to Tenant’s or other tenants’ use or disposal of Hazardous Materials within the Chemical Storage Room, it being

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acknowledged by Tenant that Tenant and other tenants are best suited to evaluate the safety and efficacy of its Hazardous Materials usage and procedures in the Premises and in the Chemical Storage Room.

(o) Tenant shall indemnify, save, defend (at Landlord’s option and with counsel reasonably acceptable to Landlord) and hold the Landlord Parties harmless from and against any and all claims, losses, cost, damages any liability or expense of whatever nature (“ Claims ”), including (a) diminution in value of the Property or any portion thereof, (b) damages for the loss or restriction on use of rentable or usable space or of any amenity of the Property, and (c) and (c ) sums paid in settlement of Claims that arise during or after the Term as a result of Tenant’s improper use of any Laboratory Systems, the ph Neutralization Tank, the Chemical Storage Room or Generator. This indemnification by Tenant includes the reasonable costs incurred in connection with any investigation of site conditions or any clean-up, remediation, removal or restoration required by any governmental authority caused by Tenant’s improper use of the Laboratory Systems, ph Neutralization Tank, the Chemical Storage Room or Generator.

Interruption of Service

(a) Landlord reserves the right to curtail, suspend, interrupt and/or stop the supply of water, sewage, electrical current, cleaning, and other services, and to curtail, suspend, interrupt and/or stop use of entrances and/or lobbies serving access to the Building, or other portions of the Property, without thereby incurring any liability to Tenant, when necessary by reason of accident or emergency, or for repairs, alterations, replacements or improvements in the judgment of Landlord reasonably exercised desirable or necessary, or when prevented from supplying such services or use due to any act or neglect of Tenant or Tenant’s agents employees, contractors or invitees or any person claiming by, through or under Tenant or by Force Majeure, including, but not limited to, strikes, lockouts, difficulty in obtaining materials, accidents, laws or orders, or inability, by exercise of reasonable diligence, to obtain electricity, water, gas, steam, coal, oil or other suitable fuel or power. Except as otherwise set forth in Section 7.6(b) below, no diminution or abatement of rent or other compensation, nor any direct, indirect or consequential damages shall or will be claimed by Tenant as a result of, nor shall this Lease or any of the obligations of Tenant be affected or reduced by reason of, any such interruption, curtailment, suspension or stoppage in the furnishing of the foregoing services or use, irrespective of the cause thereof. Except as otherwise expressly provided in this Lease, the failure or omission on the part of Landlord to furnish any of the foregoing services or use as provided in this paragraph shall not be construed as an eviction of Tenant, actual or constructive, nor entitle Tenant to an abatement of Rent, nor to render the Landlord liable in damages, nor release Tenant from prompt fulfillment of any of its covenants under this Lease. Notwithstanding anything herein to the contrary, in each instance of stoppage, Landlord shall exercise reasonable diligence to eliminate the cause thereof and, except in case of emergency repairs, Landlord will give Tenant reasonable advance notice of any contemplated stoppage and will use reasonable efforts to avoid unnecessary inconvenience to Tenant by reason thereof.

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(b) Notwithstanding the foregoing, if (i) an interruption or curtailment, suspension or stoppage of an Essential Service (as said term is hereinafter defined) shall occur, except if any of the same is due to any act or neglect of Tenant or Tenant’s agents employees, contractors or invitees or any person claiming by, through or under Tenant, or is an event which is covered by the provisions of Article 11 of this Lease (any such interruption of an Essential Service being hereinafter referred to as a “ Service Interruption ”), and (ii) such Service Interruption is within the reasonable control of Landlord to remedy (and Landlord is not impeded by reason of any Force Majeure), and (iii) as a result of such Service Interruption, the Premises becomes untenantable so that for the Eligibility Period (as hereinafter defined) Tenant is unable to and does not in fact conduct its business in the affected portion of the Premises during the entirety of the Eligibility Period by reason of such untenantability, then there shall be an abatement of one day’s Basic Rent and Additional Rent (but not any of the Monthly Improvement Costs Payments) for each day during which such Service Interruption continues after the Eligibility Period until such date that the Premises or the affected portion thereof shall be rendered tenantable (or such earlier date, if any, as Tenant shall reoccupy the Premises or the affected portion thereof for the conduct of its business); provided, however, that if any part of the Premises is reasonably useable for Tenant’s normal business operations or if Tenant conducts all or any part of its operations in any portion of the Premises notwithstanding such Service Interruption, then the amount of each daily abatement of Basic Rent shall only be proportionate to the nature and extent of the interruption of Tenant’s normal operations or ability to use the Premises. For the purposes hereof, the “ Eligibility Period ” shall be defined as five (5) consecutive Business Days after Landlord’s receipt of written notice from Tenant of the condition causing untenantability in the Premises. For purposes hereof, the term “ Essential Services ” shall mean the following services in accordance with Landlord’s obligations under this Lease: passenger elevator service, water and sewer/septic service, HVAC, electricity and the Laboratory Systems. The remedies set forth in this Section 7.6(b) shall be Tenant’s sole remedy on account of a Service Interruption and this Section 7.6(b) shall not apply in the event of untenantability caused by fire or other casualty or taking (which shall be subject to the terms and conditions of Article 11 below). A Service Interruption will not be deemed to have occurred if Tenant introduces into the Premises personnel or equipment which overloads the capacity of the Building systems or in any other way interferes with any building system’s ability to perform its proper functions, including, without limitation, Tenant’s design, layout or occupancy level of the Premises in a manner which inhibits the HVAC system’s ability to perform properly in the manner designed.

7.7 Force Majeure . If either party shall be prevented or delayed from punctually performing any obligations or satisfying any condition under this Lease as a result of a Force Majeure event, then the time to perform such obligation to satisfy such condition shall be extended on a day for day basis for the period of the delay caused by such event; provided, however, that the party claiming the benefit of this provision shall, as a condition thereto, give notice to the other party in writing within ten (10) days of the incident specifying with particularity the nature thereof, the reason therefor, the date and time such incident occurred and a reasonable estimate of the period that such incident will delay the fulfillment of obligations contained herein. Failure to give such notice within the specified time shall render such delay invalid in extending the time for performing the obligations hereunder. This Section

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7.7 shall not apply to Tenant's obligations under Exhibit C of this Lease nor the inability of either party to pay any sum of money due hereunder or the failure to perform any other obligation due to the lack of money or inability to raise capital or borrow for any purpose.

ARTICLE 8
INTENTIONALLY OMITTED

ARTICLE 9
BUILDING OPERATING EXPENSES AND LABORATORY OPERATING EXPENSES

Definitions

. “ Operating Year ” shall mean each calendar year all or any part of which falls within the Term, “ Building Operating Expenses ” shall mean the aggregate costs and expenses incurred by Landlord with respect to the operation, administration, cleaning, insuring, repair, maintenance and management of the Building and the Building’s allocable share of costs with respect to the Common Facilities of the Complex, including, without limitation, the costs and expenses set forth in Exhibit F attached hereto as Building Operating Expenses (but excluding the Laboratory Operating Expenses), and “ Laboratory Operating Expenses ” shall mean the aggregate costs and expenses incurred by Landlord with respect to the operation, administration, cleaning, insuring, repair, maintenance and management of the Laboratory Portion of the Building and the Laboratory Systems, including, without limitation, the costs and expenses set forth in Exhibit F attached hereto as Laboratory Operating Expenses (but excluding the Building Operating Expenses). If during any portion of the Operating Year for which Building Operating Expenses are being computed, less than ninety-five percent (95%) of the Building was occupied by tenants or Landlord was not supplying all tenants with the services being supplied under this Lease, actual Operating Expenses incurred shall be extrapolated reasonably by Landlord on an item by item basis to the estimated Building Operating Expenses that would have been incurred if the Building were at least ninety-five percent (95%) occupied for such Operating Year and such services were being supplied to all tenants, and such extrapolated amount shall, for the purposes hereof, be deemed to be the Building Operating Expenses for such Operating Year. Only those Operating Expenses that are affected by variation in occupancy levels shall be so “grossed-up”. In the event that the Laboratory Portion is less than fully occupied, or any tenants or occupants have elected not to use any of the Laboratory Systems during any portion of the Term, Tenant acknowledges that during such time, rather than allocating such expenses based on Tenant’s Laboratory Share, Landlord may elect to allocate certain Laboratory Operating Expenses and charges to Tenant based on the ratio of the total rentable area of the Premises designed for laboratory use (as determined based on Tenant’s final as-built interior laboratory construction plans for the Premises approved by Landlord) to the total rentable area of the Laboratory Portion leased to tenants that are using that Laboratory System (“ Tenant’s Occupied Laboratory Share ”), as reasonably determined by Landlord. Landlord shall have the right to recalculate the Tenant’s Occupied Laboratory Share from time to time as occupancy of the Laboratory Portion changes. Except as expressly provided herein, or approved by Landlord, Tenant shall only be entitled to use Tenant’s Laboratory Share of the Laboratory Systems, regardless of whether Tenant is paying Tenant’s Occupied Laboratory Share or Pro Rata Share of Laboratory Portion of the costs thereof. If and to the extent the Property includes other buildings as part of a larger project or development, Landlord shall have the right to allocate to each building on the Property, including the Building, an equitable portion of the

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costs and expenses for the Common Facilities of the Property, in accordance with its good faith business judgment, and the allocable portion of such costs and expenses shall be included in Building Operating Expenses hereunder.

Landlord shall have the right, from time to time, to equitably allocate some or all of the Building Operating Expenses for the Building among different portions or occupants of the Building (the “ Cost Pools ”), in Landlord’s reasonable discretion. Such Cost Pools may include, but shall not be limited to, the office space tenants of the Building, the laboratory space tenants of the Building and the retail space tenants of the Building and Tenant’s Pro Rata Share of the Office Portion for any costs included in a Cost Pool shall be calculated on the basis of the ratio of the rentable square footage of the Premises to the rentable square footage of the portions of the Building included in such Cost Pool. If any space in the Building is converted from retail space to office space and/or laboratory space, as applicable, then the rentable area of the space in the Building converted from retail space to office space and/or laboratory space, as applicable, shall be added to the denominator used to calculate Tenant’s Pro Rata Share of the Office Portion for the remaining portion of that calendar year and subsequent calendar years. Likewise if any space in the Building is converted from office space and/or laboratory space, as applicable, to retail space, then the rentable area of the space in the Building converted from office space and/or laboratory space, as applicable, to retail space shall be deducted from the denominator used to calculate Tenant’s Pro Rata Share of the Office Portion for the remainder of such calendar year and subsequent calendar years.

9.2 Tenant’s Payment of Operating Expenses .

(a) From and after the Rent Commencement Date, Tenant shall pay to Landlord, as Additional Rent:

(i) an amount equal to (y) the Building Operating Expenses multiplied by (z) Tenant’s Pro Rata Share of the Office Portion, such amount to be apportioned for any portion of an Operating Year in which the Rent Commencement Date falls or the Term of this Lease ends; and

(ii) an amount equal to (y) the Laboratory Operating Expenses multiplied by (z) Tenant’s Laboratory Share (or, if applicable per Section 9.1 , Tenant’s Occupied Laboratory Share), such amount to be apportioned for any portion of an Operating Year in which the Rent Commencement Date falls or the Term of this Lease ends.

(b) Estimated payments by Tenant on account of Building Operating Expenses and Laboratory Operating Expenses shall be made on the first day of each and every calendar month during the Term of this Lease, in the fashion herein provided for the payment of Basic Rent. The monthly amount so to be paid to Landlord shall be sufficient to provide Landlord by the end of each Operating Year a sum equal to Tenant’s required payment, as reasonably estimated by Landlord from time to time during each Operating Year, on account of Building Operating Expenses and Laboratory Operating Expenses for such Operating Year. After the end of each Operating Year, Landlord shall submit to Tenant a reasonably detailed accounting of Building Operating Expenses and Laboratory

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Operating Expenses for such Operating Year, and Landlord shall certify to the accuracy thereof. If estimated payments theretofore made for such Operating Year by Tenant exceed Tenant’s required payment on account thereof for such Operating Year according to such statement, Landlord shall credit the amount of overpayment against subsequent obligations of Tenant with respect to Building Operating Expenses and Laboratory Operating Expenses (or promptly refund such overpayment if the Term of this Lease has ended and Tenant has no further obligation to Landlord); but if the required payments on account thereof for such Operating Year are greater than the estimated payments (if any) theretofore made on account thereof for such Operating Year, Tenant shall make payment to Landlord within thirty (30) days after being so advised by Landlord, and the obligation to make such payment for any period within the Term shall survive expiration of the Term.

(c) Any such accounting by Landlord shall be binding and conclusive upon Tenant unless within one hundred twenty (120) days after Tenant's receipt of such accounting from Landlord Tenant shall notify Landlord that Tenant intends to undertake an audit of such of Landlord’s books as are directly relevant to the Building Operating Expenses and Laboratory Operating Expenses accounting for the Operating Year in question, provided and on condition that (i) there is then no uncured Event of Default under this Lease, (ii) Tenant has made all payments of Additional Rent billed or invoiced by Landlord as of the date of the audit, (iii) the audit is performed only by Tenant’s employees, internal accounting department or an independent certified public accounting firm or, commercial real estate broker or experienced operating expense review firm such as Cyberlease, all as reasonably approved by Landlord, and provided and on the express condition that such reviewer’s fee or other compensation is fixed by contract and is in no manner computed or determined based upon the results of the audit, (iv) both Tenant and its examiners execute and deliver to Landlord a commercially reasonable confidentiality agreement in form and substance reasonably acceptable to Landlord whereby such parties expressly agree to maintain the results of such audit in strict confidence (except disclosures to Tenant's officers, employees, attorneys, lenders, investors and/or as required by a court of competent jurisdiction) , and (v) such audit is commenced and completed and the results thereof delivered to Landlord within ninety (90 ) days following the date Landlord makes its books available to Tenant at Landlord's offices at the Boston Landing Project. If Tenant fails to timely deliver a dispute notice to Landlord, or fails to complete its audit and deliver the results thereof to Landlord within the applicable ninety (90 ) day period, then, in either of such events, Landlord’s accounting shall be binding and conclusive upon Tenant for all purposes of this Lease. If it is finally determined by such auditor or mutually agreed by the parties that Landlord has overstated the applicable Tenant’s Pro Rata Share of the Building Operating Expenses or Laboratory Operating Expenses, Landlord shall credit within thirty (30) days following such resolution the amount of such overstatement against the monthly installments of Additional Rent next due under this Lease (or refund within thirty (30) days following such resolution such amount to Tenant if the Term has ended and Tenant has no further obligations to Landlord under this Lease. If it is finally determined by mutual agreement or other legal proceeding that Landlord understated the Additional Rent payable by Tenant, then Landlord may invoice Tenant for any amount by which Tenant’s payments under this Section 9.2 was understated, which invoice shall be payable by Tenant within thirty (30) days after receipt

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of such invoice. In the event that it is determined by mutual agreement or legal proceeding that Landlord’s Building Operating Expenses or Laboratory Operating Expenses were overstated by more than five percent (5%), Landlord shall reimburse Tenant for its reasonable out of pocket audit costs (not to exceed $5,000.00).

ARTICLE 10
INDEMNITY AND PUBLIC LIABILITY INSURANCE

Indemnity

(a) Subject to the waiver of subrogation in Sections 10.5 and 15.3, e xcept to the extent arising from the negligence or willful misconduct of Landlord or its agents, employees or contractors , Tenant shall defend with counsel first reasonably approved by Landlord, save harmless, and indemnify Landlord and Landlord’s managing agent, beneficiaries, partners, members, shareholders, subsidiaries, officers, directors, agents, trustees and employees (“ Landlord Parties ”) from and against all, claims losses, cost, damages, any liability or expense of whatever nature arising from injury, loss, accident or damage to any person or property, to the extent arising from or claimed to have arisen (a) from any accident, injury or damage whatsoever to any person, or to the property of any person, occurring in the Premises; (b) from the omission (where there is a duty to act), fault, willful act , negligence or other misconduct of Tenant or Tenant’s agents, employees, contractors, licensees or invitees, (c) in connection with Tenant’s use of the Premises or any business conducted therein or any work done or condition created in the Premises by Tenant, its agent, employees or contractors, or anyone claiming by, through or under Tenant, or (d) the failure of Tenant to perform and discharge its covenants and obligations under this Lease and, in any case, occurring after the Commencement Date (or such earlier date as of which Tenant takes possession of the Premises) until the expiration of the Term of this Lease and thereafter so long as Tenant is in occupancy of any part of the Premises . This indemnity and hold harmless agreement shall include indemnity against all losses, costs, damages, expenses and liabilities incurred in or in connection with any such claim or any proceeding brought thereon, and the defense thereof, including, without limitation, reasonable attorneys’ fees and costs at both the trial and appellate levels. The provisions of this Section 10.1(a) shall survive the expiration or earlier termination of this Lease.

(b) Subject to the waiver of subrogation in Sections 10.5 and 15.3 , except to the extent arising from the negligence or willful misconduct of Tenant or anyone claiming by, through or under Tenant (the “ Tenant Parties ”), from and against all claims of any third party arising from any accident, injury or damage whatsoever to any person, or to the property of any person, where such accident, damage or injury results or is claimed to have resulted from (i) the gross negligence or willful misconduct of Landlord or Landlord’s agents, employees or contractors, or (ii) if Landlord exercises its recapture rights pursuant to Section 6.5 of this Lease, any accident, injury or damage whatsoever to any person, or to the property of any person, occurring in the recaptured portion of the Premises after Tenant’s delivery of possession to Landlord, together with reasonable attorneys’ fees incurred in connection with each such claim or action brought thereon; provided, however, in no event shall this indemnity apply to the extent any such claim

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arises from the negligence or willful misconduct of Tenant or any of the Tenant Parties. This indemnity and hold harmless agreement shall include indemnity against all losses, costs, damages, expenses and liabilities incurred in or in connection with any such claim or any proceeding brought thereon, and the defense thereof, including, without limitation, reasonable attorneys’ fees and costs at both the trial and appellate levels. The provisions of this Section 10.1(b) shall survive the expiration or earlier termination of this Lease..

Tenant Insurance

(a) Tenant agrees to maintain, at Tenant’s expense, in full force from the date upon which Tenant first enters the Premises for any reason, throughout the Term of this Lease, and thereafter so long as Tenant is in occupancy of any part of the Premises, (a) commercial general liability insurance providing coverage for bodily injury, property damage and personal/advertising injury. Such policy shall include broad form contractual liability, clinical trial liability insurance coverage in at least the amounts of the Initial General Liability Insurance specified in Section 1.1 or such greater amounts as Landlord in its reasonable discretion shall from time to time request, under which Tenant is named as an insured and Landlord, Landlord’s property manager, any Superior Mortgagee and Superior Lessor, and such other persons as Landlord reasonably may request are named as additional insureds, (b) special form (formerly known as “all‑risk”) property insurance on a “replacement cost” basis, insuring Tenant’s Removable Property and any alterations, additions and improvements located from time to time in the Premises, whether made by Tenant pursuant to Article 5 or otherwise existing in the Premises as of the Commencement Date (such alterations, additions and improvements collectively the “ Improvements ”), (c) workers’ compensation insurance with statutory limits, (d) employer’s liability insurance with the following limits: bodily injury by disease per person $1,000,000.00; bodily injury by accident policy limit $1,000,000.00; bodily injury by disease policy limit $1,000,000.00, (e) business automobile liability insurance including owned (if any), hired and non‑owned automobiles, in an amount not less than One Million Dollars ($1,000,000) combined single limit per occurrence, (f) business interruption insurance insuring interruption or stoppage of Tenant’s business at the Premises for a period of not less than twelve (12) months, including leasehold interest coverage insuring Tenant’s ongoing lease obligations, and (g) umbrella or excess liability insurance with limits of $4,000,000 per occurrence and $4,000,000 aggregate, providing coverage over and above the commercial general liability, employer’s liability and automobile insurance policies noted above. Pollution Legal Liability insurance is not currently required based on the Hazardous Materials documents that Tenant delivered to Landlord as of the Effective Date. If the Hazardous Materials documents change during the Term and Tenant continues to store, handle, generate or treat Hazardous Materials on or about the Premises or other circumstances change related to Tenant’s use of Hazardous Materials on or about the Premises, Landlord reserves the right, in Landlord’s sole discretion, to require Tenant to obtain Pollution Legal Liability insurance. Such coverage shall include bodily injury, sickness, disease, death or mental anguish or shock sustained by any person; property damage including physical injury to or destruction of tangible property including the resulting loss of use thereof, clean-up costs, and the loss of use of tangible property that has not been physically injured or destroyed; and defense costs, charges and expenses incurred in the investigation, adjustment or defense of claims for

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such compensatory damages. Coverage shall apply to both sudden and non-sudden pollution conditions including the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any watercourse or body of water. Claims-made coverage is permitted, provided the policy retroactive date is continuously maintained prior to the commencement date of this agreement, and coverage is continuously maintained during all periods in which Tenant occupies the Premises. Coverage shall be maintained with limits of not less than $1,000,000 per incident with a $2,000,000 policy aggregate and for a period of two (2) years thereafter.

(b) Aggregate limits under Tenant’s commercial general liability and excess/umbrella liability policies set forth in Section 10.2 (a) shall apply on a “per location” basis via endorsement under each policy. Tenant’s insurance shall include appropriate endorsements providing that the insurance shall be primary to, and not contributory with any insurance carried by Landlord, whose insurance shall be considered excess only. Each policy required hereunder shall be non‑cancelable and non‑amendable with respect to Landlord and Landlord’s said designees without thirty (30) days’ prior notice, with the exception of cancellation for non-payment of premium which shall be ten (10) day notice. The policies of insurance required to be maintained by Tenant hereunder shall be issued by companies domiciled in the United States and qualified and licensed to conduct business in the state in which the Property is located, and shall be rated A:X or better in the most current issue of A.M Best’s Key Rating Guide (or any successor thereto). At all times during the Term, such insurance shall be maintained, and Tenant shall cause a current and valid certificate of such policies to be deposited with Landlord. If Tenant fails to have a current and valid certificate of such policies on deposit with Landlord at all times during the Term and such failure is not cured within three (3) Business Days following Tenant’s receipt of notice thereof from Landlord, Landlord shall have the right, but not the obligation, to obtain such an insurance policy, and Tenant shall be obligated to pay Landlord the amount of the premiums applicable to such insurance within ten (10) days after Tenant’s receipt of Landlord’s request for payment thereof. Tenant’s insurance policies shall not include deductibles in excess of Five Thousand Dollars ($5,000.00).

Tenant’s Risk

. Tenant agrees to use and occupy the Premises and to use such other portions of the Property as Tenant is herein given the right to use at Tenant’s own risk. Landlord shall not be liable to Tenant, its employees, agents, invitees or contractors for any damage, injury, loss, compensation, or claim (including, but not limited to, claims for the interruption of or loss to Tenant’s business) based on, arising out of or resulting from any cause whatsoever, including, but not limited to, repairs to any portion of the Premises or the Property, any fire, robbery, theft, mysterious disappearance and/or any other crime or casualty, the actions of any other tenants of the Building or of any other person or persons, or any leakage in any part or portion of the Premises or the Building, or from water, rain or snow that may leak into, or flow from any part of the Premises or the Building, or from drains, pipes or plumbing fixtures in the Building, unless due to the gross negligence or willful misconduct of Landlord or Landlord’s agents, contractors or employees. Any goods, property or personal effects stored or placed in or about the Premises shall be at the sole risk of Tenant, and neither Landlord nor Landlord’s insurers shall in any manner be held responsible therefor. Landlord shall not be responsible or

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liable to Tenant, or to those claiming by, through or under Tenant, for any loss or damage that may be occasioned by or through the acts or omissions of persons occupying adjoining premises or any part of the premises adjacent to or connecting with the Premises or any part of the Property or otherwise. Notwithstanding the foregoing, and to the extent permitted by Law, Landlord shall not be released from liability for any injury, loss, damages or liability to the extent arising from any gross negligence or willful misconduct of Landlord, its servants, employees or agents acting within the scope of their authority on or about the Premises; provided, however, that in no event shall Landlord, its servants, employees or agents have any liability to Tenant based on any loss with respect to or interruption in the operation of Tenant’s business. The provisions of this Section 10.3 shall be applicable from and after the execution of this Lease and until the end of the Term of this Lease, and during any additional period as Tenant may use or be in occupancy of any part of the Premises or of the Building.

Landlord’s Insurance

. Landlord shall maintain, as a part of Building Operating Expenses, special form property insurance on the Building in such amounts and subject to such deductibles as Landlord may reasonably determine. Such insurance shall be maintained with an insurance company selected by Landlord or a Superior Mortgagee, and payment for losses thereunder shall be made solely to Landlord subject to the rights of the Superior Mortgagee from time to time. Additionally Landlord may maintain such additional insurance, including, without limitation, earthquake insurance, terrorism insurance, flood insurance, liability insurance and/or rent insurance, as Landlord may in its sole discretion elect. The cost of all such additional insurance shall also be part of the Building Operating Expenses. Any or all of Landlord’s insurance may be provided by blanket coverage maintained by Landlord or any affiliate of Landlord under its insurance program for its portfolio of properties or by Landlord’s or any affiliate of Landlord’s program of self ‑insurance, and in such event Building Operating Expenses shall include the portion of the reasonable cost of blanket insurance or self-insurance that is allocated to the Building. In no event shall any self-insurance costs or retentions be charged to Tenant, except that Landlord’s commercially reasonable deductible may be included in Operating Expenses.

Waiver of Subrogation

Notwithstanding anything herein to the contrary, Landlord and Tenant each hereby waives any and all rights of recovery, claim, action, or cause of action against the other, its agents, employees, licensees, or invitees for any loss or damage to Property, Improvements or personal property (located at the Premises) of such party therein or thereon by reason of fire, the elements, or any other cause which is covered, or would have been covered, by the property insurance coverages required to be maintained by Landlord and Tenant, respectively, under this Lease, regardless of cause or origin, including omission of the other party hereto, its agents, employees, licensees, or invitees. Each party shall look to its respective insurance coverage, and its deductibles and self-insurance or self-insured retentions (which shall be deemed insurance coverage for purposes of this Section 10.5 ), for recovery of any insured property damage. Landlord and Tenant covenant that no insurer shall hold any right of subrogation against either of such parties with respect thereto. The parties hereto agree that any and all such property insurance policies required to be carried by either shall be endorsed with a subrogation clause, substantially as follows: “This insurance shall not be invalidated should the insured waive, in writing prior to a loss, any and all right of recovery against any party for loss occurring to the Complex described therein,” and shall provide that such party’s insurer waives any right of recovery against the other party in connection with any such loss or damage.

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ARTICLE 11
FIRE, EMINENT DOMAIN, ETC.

Landlord’s Right of Termination

. If the Premises or the Building are substantially damaged (the term “substantially damaged” meaning damage of such a character that the same cannot, in the ordinary course, reasonably be expected to be repaired within two hundred ten (210) days from the time that repair work would commence, as determined in good faith by Landlord's architect) by fire or other casualty (each, a “ Casualty ”), then Landlord shall have the right to terminate this Lease by giving notice of Landlord’s election so to do within ninety (90) days after the occurrence of such Casualty provided, however, that Landlord shall only be permitted to terminate this Lease on account of such damage if Landlord terminates the leases of at least 75% of the office tenants in the Building similarly affected by the casualty (where Landlord has a termination right thereunder). If Landlord exercises such termination right, this Lease shall terminate thirty (30) days after the date of such notice with the same force and effect as if such date were the date originally established as the expiration date hereof. In no event shall Landlord have any liability for damages to Tenant for inconvenience, annoyance or interruption of business arising from any Casualty.

11.2 Restoration; Tenant’s Right of Termination

(a) If the Building or the Premises or any other improvements on or portions of the Complex including, without limitation, the Common Facilities shall be partially or totally damaged or destroyed by a Casualty and if this Lease is not terminated as provided in this Article 11 , then (i) Landlord shall repair and restore the same to the condition prior to the Casualty, as applicable, (but excluding Tenant’s Removable Property and the Improvements) (the “ Landlord’s Restoration Work ”) with reasonable dispatch (but Landlord shall not be required to perform the same on an overtime or premium pay basis) after notice to Landlord of the Casualty and the collection of the insurance proceeds attributable to such Casualty, and (ii) Tenant shall repair and restore in accordance with Section 5.3 all of Tenant’s Removable Property and the Improvements to the condition prior to the Casualty (“ Tenant’s Restoration Work ”), with reasonable dispatch after the Casualty, following completion of Landlord’s Restoration Work . Notwithstanding anything to the contrary contained herein, if in Landlord’s sole discretion it would be appropriate for safety reasons, health reasons or the efficient operation or restoration of the Building or the Premises for Landlord to perform all or a portion of Tenant’s Restoration Work on behalf of Tenant, then (x) Landlord shall give Tenant a written notice specifying the portion of Tenant’s Restoration Work to be performed by Landlord (the “ Specified Restoration Work ”), (y) Landlord shall perform the Specified Restoration Work, and (z) Tenant shall pay to Landlord within ten (10) days following the giving of Landlord’s written demand therefor (or Landlord shall retain from the insurance proceeds paid to Landlord in accordance with the last sentence of this Section 11.2(a) ) the cost of such Specified Restoration Work.

(b) Landlord shall not carry any insurance on Tenant’s Removable Property or on the Improvements (including without limitation any of the Tenant Work performed in connection with this Lease other than the Landlord’s Work) that constitute part of Tenant’s Restoration Work and shall not be obligated to repair or replace Tenant’s

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Removable Property or such Improvements (whether or not installed by or at the expense of Landlord). Tenant shall look solely to its insurance for recovery of any damage to or loss of Tenant’s Removable Property and any Improvements. Tenant shall notify Landlord promptly of any casualty in the Premises.

(c) Within ninety (90) days after the occurrence of any Casualty affecting the Premises or access thereto, Landlord shall deliver to Tenant a written estimate from a reputable contractor, architect or engineer designated by Landlord as to the probable length of time that will be necessary to substantially complete Landlord’s Restoration Work (“ Estimated Completion Date ”). If such time estimate exceeds nine (9) months from the date that repair work would commence, Tenant shall have the right to terminate this Lease by giving notice to Landlord thereof within thirty (30) days after receipt of such estimate (time being of the essence with respect to the giving of such notice by Tenant). If Tenant is entitled pursuant to the terms of this Section 11.2(c) to terminate this Lease and Tenant fails to deliver a termination notice to Landlord within the thirty (30) day period set forth herein, Tenant will be deemed to have waived Tenant’s rights under this Section 11.2(c) to terminate the Lease on account of such Casualty. Notwithstanding the foregoing, in the event Landlord fails to complete Landlord’s Restoration Work within sixty (60) days following the Estimated Completion Date, subject to Force Majeure and any Tenant Delay, Tenant shall have the right to terminate this Lease by giving notice to Landlord thereof within thirty (30) days after Landlord’s failure to complete the Landlord’s Restoration Work by the date which is sixty (60) days following the Estimated Completion Date. The provisions of this Section are in lieu of any statutory termination provisions allowable in the event of a Casualty.

(d) Except to the extent such damage by fire or other casualty is the result of any act or omission by Tenant, any subtenant or any of their respective partners, directors, officers, servants, employees, agents or contractors, if the Premises or the Building are substantially damaged by fire or other casualty, and this Lease is not otherwise terminated hereunder, and if Landlord’s Restoration Work shall not be substantially completed within ninety (90) days after the time period set forth in Landlord’s estimate for substantial completion of Landlord’s Restoration Work as described in Section 11.2(c) , Tenant shall have the right to terminate this Lease by delivering at least thirty (30) days prior written notice to Landlord of such election which notice must be delivered within ten (10) Business Days after the expiration of such time period, provided, however, that if Landlord completes such restoration prior to the end of such thirty (30) day notice period, Tenant’s notice of termination shall be deemed rescinded, and this Lease shall continue in full force and effect. If Tenant is entitled pursuant to the terms of this paragraph (d) to terminate this Lease and Tenant fails to deliver a termination notice to Landlord within the ten (10) Business Day period set forth herein, Tenant will be deemed to have waived Tenant’s rights under this paragraph (d) to terminate the Lease on account of such Casualty.

(e) If this Lease is terminated under any of the provisions of this Article 11 as a result of a Casualty, Landlord shall be entitled to retain for its benefit and Tenant shall promptly pay over to Landlord the proceeds of insurance maintained by Tenant on the Improvements after deducting Tenant’s unamortized cost to initially

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construct the Improvements above the amount of the Landlord’s Contribution, with such amortization being done on a straight line basis over the initial Term of this Lease in accordance with GAAP. This Section 11.2 shall be deemed an express agreement governing any damage or destruction of the Premises by fire or other casualty, and any law providing for a contingency in the absence of an express agreement, now or hereafter in force, shall have no application.

Abatement of Rent

(a) . If the Premises is damaged by a Casualty, Basic Rent and Expense Charges payable by Tenant shall abate proportionately for the period from the date of such fire or other casualty until the earlier of (a) the date that Landlord substantially completes Landlord’s Restoration Work (provided that if Landlord would have completed Landlord’s Restoration Work at an earlier date but for Tenant having failed to cooperate with Landlord in effecting such Work or collecting insurance proceeds and such failure continued for more than two (2) Business Days after receipt by Tenant of notice thereof, then the Premises shall be deemed to have been repaired and restored on such earlier date and the abatement shall cease), or (b) the date Tenant or other occupant reoccupies any portion of the Premises for the conduct of business (in which case the Basic Rent and Expense Charges allocable to such reoccupied portion shall be payable by Tenant from the date of such occupancy). Notwithstanding the foregoing, if by reason of any act or omission by Tenant, any subtenant or any of their respective partners, directors, officers, servants, employees, agents or contractors , Landlord, or any Mortgagee shall be unable to collect all of the insurance proceeds (including, without limitation, rent insurance proceeds) applicable to the casualty and such act or omission is not cured within five (5) business days after written notice from Landlord, then, without prejudice to any other remedies which may be available against Tenant, there shall be no abatement of Basic Rent or of Expense Charges.

11.4 Eminent Domain

(a) If the Premises shall be affected by any exercise of the power of eminent domain, Basic Rent, Expense Charges and all other charges payable by Tenant shall be justly and equitably abated and reduced according to the nature and extent of the loss of use thereof suffered by Tenant. In no event shall Landlord have any liability for damages to Tenant for inconvenience, annoyance or interruption of business arising from such exercise of the power of eminent domain.

(b) If more than 25% of the Building is taken by any exercise of the right of eminent domain, then Landlord or Tenant shall have the right to terminate this Lease (even if Landlord’s entire interest in the Premises may have been divested) by giving notice of its election so to do within ninety (90) days after the occurrence of the effective date of such taking, whereupon this Lease shall terminate thirty (30) days after the date of such notice with the same force and effect as if such date were the date originally established for the expiration of the Term of this Lease.

(c) If any part of the Premises is taken and such taking will prevent Tenant from conducting its business in the Premises in a manner reasonably comparable to that conducted immediately before such taking for a period of more than one hundred

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eighty (180) days, then Tenant may terminate this Lease as of the date of such taking by giving written notice to Landlord within thirty (30) days after the taking, and all Basic Rent, Expense Charges and all other charges payable by Tenant under this Lease shall be apportioned as of the date of such taking.

(d) If this Lease shall not be terminated pursuant to Section 11.4(b) , Landlord shall thereafter use due diligence to restore the Premises (excluding any Alterations made by Tenant pursuant to Section 5.3 ) to proper condition for Tenant’s use and occupation, provided that Landlord’s obligation shall be limited to the amount of compensation recoverable by Landlord from the taking authority. If, for any reason, such restoration shall not be substantially completed within six (6) months after the expiration of the ninety (90) day period referred to in Section 11.4(b) (which six month period may be extended for such periods of time as Landlord is prevented from proceeding with or completing such restoration for any cause beyond Landlord’s reasonable control, but in no event for more than an additional three (3) months), Tenant shall have the right to terminate this Lease by giving notice to Landlord thereof within thirty (30) days after the expiration of such period (as so extended). Upon the giving of such notice, this Lease shall cease and come to an end thirty (30) days after the giving of such notice, without further liability or obligation on the part of either party unless, within such thirty (30) day period, Landlord substantially completes such restoration. Such right of termination shall be Tenant’s sole and exclusive remedy at law or in equity for Landlord’s failure so to complete such restoration.

(e) Landlord shall have and hereby reserves and excepts, and Tenant hereby grants and assigns to Landlord, all rights to recover for damages to the Property and the leasehold interest hereby created, and to compensation accrued or hereafter to accrue by reason of such taking, and by way of confirming the foregoing, Tenant hereby grants and assigns, and covenants with Landlord to grant and assign to Landlord, all rights to such damages or compensation, and covenants to deliver such further assignments and assurances thereof as Landlord may from time to time request. Nothing contained herein shall be construed to prevent Tenant from prosecuting in any condemnation proceedings a claim for the value of any of Tenant’s Removable Property installed in the Premises by Tenant at Tenant’s expense and for relocation expenses, provided that such action shall not affect the amount of compensation otherwise recoverable by Landlord from the taking authority.

ARTICLE 12
HOLDING OVER; SURRENDER

Holding Over

. If Tenant or anyone claiming by, through or under Tenant shall remain in possession of all or any part of the Premises (which shall include Tenant’s failure to comply with Section 5.5(e) of this Lease or a failure by Tenant to remove any Tenant’s Removable Property or Alterations as required under this Lease) after the expiration or earlier termination of the Term of this Lease, such holding over shall be treated as a daily tenancy at sufferance at a Basic Rent equal to the greater of (i) the fair market rental rate for the Premises based upon the most recent comparable transactions for the Building and in transactions for comparable space on the same floor or above in Comparable Buildings, and (ii) (y) one hundred

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fifty percent ( 150 %) of the Basic Rent in effect for the last rental period of the Term for the first thirty (30) days of Tenant’s holdover, then (z) two hundred percent (200%) of the Basic Rent in effect for the last rental period of the Term for the period following the first thirty (30) days of Tenant’s holdover, in all events plus Expense Charges and other Additional Rent herein provided (prorated on a daily basis). If any such holding over continues for more than thirty (30) days , then, in addition to any other liabilities to Landlord accruing therefrom, Tenant shall protect, defend, indemnify and hold Landlord harmless from all loss, costs and damages, direct and/or indirect, sustained by reason of any such holding over, including, without limitation, claims made by and loss of any succeeding tenant arising out of such failure to timely surrender possession in the condition required under this Lease. In all other respects, such holding over shall be on the terms and conditions set forth in this Lease as far as applicable (and excluding any extension, expansion or rights of first offer of tenant) in the Lease. Nothing contained in this Article 12 shall be construed as a consent by Landlord to any holding over by Tenant, and Landlord shall have the right to immediately terminate such holding over pursuant to applicable Law. The provisions of this Article 12 shall not be deemed to limit or constitute a waiver of any other rights or remedies of Landlord provided herein or at law.

Surrender of Premises

. Upon the expiration or earlier termination of the Term of this Lease, Tenant shall promptly and peaceably quit and surrender to Landlord the Premises in neat and clean condition and in good order, condition and repair and consistent with Tenant’s obligations under this Lease including the Hazardous Materials surrender obligations of Section 5.5(e) of this Lease, together with all Alterations which may have been made or installed in, on or to the Premises prior to or during the Term of this Lease (except as otherwise expressly required pursuant to Section 5.3(e) above), excepting only ordinary wear and tear, and damage by fire or other casualty for which, under other provisions of this Lease Tenant has no responsibility to repair or restore, or as a consequence of the exercise of the power of eminent domain. Notwithstanding the foregoing, if this Lease has been terminated on account of a Casualty, Tenant will not be obligated to perform the Tenant’s Restoration Work so long as Tenant has paid the insurance proceeds to Landlord in accordance with Section 11.2(e) above. Tenant shall remove all of Tenant’s Removable Property, all signs installed by or on behalf of Tenant in or on the Premises and the Building, all lines and other wiring and cabling installed by Tenant prior to or during the Term. Tenant shall repair any damage to the Premises or the Building caused by such removal and restore the affected area to its condition prior to the installation thereof. Any Tenant’s Removable Property which shall remain in the Building or on the Premises after the expiration or termination of the Term of this Lease shall be deemed conclusively to have been abandoned, and either may be retained by Landlord as its property or may be disposed of in such manner as Landlord may see fit, at Tenant’s sole cost and expense.

ARTICLE 13
RIGHTS OF MORTGAGEES; TRANSFER OF TITLE

13.1 Rights of Mortgagees or Ground Lessor .

(a) This Lease, and all rights of Tenant hereunder, are and shall be subject and subordinate to any ground or underlying leases of the Property and to all renewals, extensions, modifications and replacements thereof, and to all mortgages, deeds of trust or similar encumbrances which may now or hereafter affect the Property, whether

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or not such mortgages or other encumbrances shall also cover other lands and/or buildings, and to each and every advance made or hereafter to be made under such mortgages and other encumbrances, and to all renewals, modifications, replacements, extensions and consolidations of such mortgages and other encumbrances. This Section shall be self operative and no further instrument of subordination shall be required. In confirmation of such subordination, Tenant shall promptly execute, acknowledge and deliver any instrument that Landlord, the lessor under any such lease or the holder of any such mortgage or other encumbrance or any of their respective successors in interest may reasonably request to evidence such subordination. Any lease to which this Lease is, at the time referred to, subject and subordinate is herein called “ Superior Lease ” and the lessor of a Superior Lease or its successor in interest at the time referred to, is herein called “ Superior Lessor ”; and any mortgage or other encumbrance to which this Lease is, at the time referred to, subject and subordinate, is herein called “ Superior Mortgage ” and the holder of a Superior Mortgage, or its successor in interest at the time referred to, is herein called “ Superior Mortgagee .” If any Superior Mortgagee, shall so elect, this Lease and the rights of Tenant hereunder, shall be superior in right to the rights of such holder, with the same force and effect as if this Lease had been executed, delivered and recorded, or a statutory notice hereof recorded, prior to the execution, delivery and recording of any such Superior Mortgage. The election of any such Superior Mortgagee shall become effective upon either notice from such Superior Mortgagee to Tenant in the same fashion as notices from Landlord to Tenant are to be given hereunder or by the recording in the appropriate registry or recorder’s office of an instrument in which the Superior Mortgagee subordinates its rights under such Superior Mortgage to this Lease.

(b) If any Superior Lessor or Superior Mortgagee or the nominee or designee of any Superior Lessor or Superior Mortgagee shall succeed to the rights of Landlord under this Lease, whether through possession or foreclosure action or delivery of a new lease or deed, or otherwise, then at the request of such party so succeeding to Landlord’s rights (herein called “ Successor Landlord ”), Tenant shall attorn to and recognize such Successor Landlord as Tenant’s landlord under this Lease and shall promptly execute and deliver any instrument that such Successor Landlord may reasonably request to evidence such attornment. Tenant waives the provisions of any law or regulation, now or hereafter in effect, which terminates or may give or purport to give Tenant any right to terminate or otherwise affect this Lease or the obligations of Tenant hereunder in the event that any such foreclosure, termination or other proceeding is filed, prosecuted or completed. Upon such attornment, this Lease shall continue in full force and effect as a direct lease between the Successor Landlord and Tenant upon all of the terms, conditions and covenants as are set forth in this Lease, except that the Successor Landlord shall not be (i) liable in any way to Tenant for any act or omission, neglect or default on the part of Landlord under this Lease, (ii) responsible for any monies owing by or on deposit with Landlord to the credit of Tenant, (iii) subject to any counterclaim or setoff which theretofore accrued to Tenant against Landlord, (iv) bound by any modification of this Lease subsequent to such Superior Lease or Superior Mortgage, or by any previous prepayment of fixed rent for more than one (1) month, which was not approved in writing by the Superior Lessor or the Superior Mortgagee thereto, (v) liable to the Tenant beyond the Successor Landlord’s interest in the Property and the rents, income, receipts, revenues, issues and profits issuing from such Property, (vi) responsible for the

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performance of any work to be done by the Landlord under this Lease to render the Premises ready for occupancy by the Tenant, (vii) liable for the payment of any improvement allowance or similar amount owing to Tenant on account of the performance of any alterations or leasehold improvements to the Premises or the Building, or (viii) required to remove any person occupying the Premises or any part thereof, except if such person claims by, through or under the Successor Landlord.

(c) Landlord shall use commercially reasonable efforts to deliver to Tenant a “Subordination, Non-Disturbance and Attornment Agreement” (“ SNDA ”) in the then customary form of such Superior Mortgagee or Superior Lessor with respect to any future Superior Mortgages and Superior Leases. Landlord shall in no event be required to expend any monies or commence or prosecute litigation or reject financing which is otherwise satisfactory to Landlord in order to deliver such an SNDA. Tenant may request customary and reasonable modifications to such SNDA from the Superior Mortgagee and Superior Lessor (as the case may be) except that Landlord’s obligations under this Section 13.1(c) shall be deemed fully satisfied when Landlord delivers an SNDA from its Superior Mortgagee or Superior Lessor, as applicable, on its standard form regardless of the acceptability to such Superior Mortgagee or Superior Lessor of Tenant’s requested modifications . Notwithstanding anything to the contrary contained in this Section 13.1 , with respect to future Superior Leases, the provisions of Section 13.1(a) shall be conditioned upon the execution and delivery by and between Tenant and any such Superior Lessor of an SNDA in the then customary form of such Superior Lessor and with such customary and reasonable modifications to such SNDA as may be reasonably acceptable to the Superior Lessor and Tenant.

13.2 Assignment of Rents and Transfer of Title .

(a) With reference to any assignment by Landlord of Landlord’s interest in this Lease, or the rents payable hereunder, conditional in nature or otherwise, which assignment is made to a Superior Mortgagee on property which includes the Premises, Tenant agrees that the execution thereof by Landlord, and the acceptance thereof by the Superior Mortgagee shall never be treated as an assumption by the Superior Mortgagee of any of the obligations of Landlord hereunder unless the Superior Mortgagee shall, by notice sent to Tenant, specifically otherwise elect and, except as aforesaid, the Superior Mortgagee shall be treated as having assumed Landlord’s obligations hereunder only upon foreclosure of the Superior Mortgage and the taking of possession of the Premises.

(b) In no event shall the acquisition of Landlord’s interest in the Property by a purchaser which, simultaneously therewith, leases Landlord’s entire interest in the Property back to the seller thereof be treated as an assumption by operation of law or otherwise, of Landlord’s obligations hereunder, but Tenant shall look solely to such seller‑lessee, and its successors from time to time in title, for performance of Landlord’s obligations hereunder. In any such event, this Lease shall be subject and subordinate to the lease to such purchaser. For all purposes, such seller‑lessee, and its successors in title, shall be the Landlord hereunder unless and until Landlord’s position shall have been assumed by such purchaser‑lessor.

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(c) Except as provided in paragraph (b) of this Section, in the event of any transfer of title to the Property by Landlord, Landlord shall thereafter be entirely freed and relieved from the performance and observance of all covenants and obligations hereunder arising from and after the date of such transfer, so long as any such transferee assumes in writing (or by operation of law) all of Landlord's obligations under this Lease .

Notice to Mortgagee

. Tenant shall not seek to enforce any remedy it may have for any default on the part of Landlord without first giving any Superior Mortgagee and Superior Lessor (of which Tenant has been provided written notice including their notice addresses), as applicable, written notice by certified mail, return receipt requested, specifying the default in reasonable detail, and affording such Superior Mortgagee and Superior Lessor, as applicable, (i) an opportunity to perform Landlord’s obligations hereunder (but not less than thirty (30) days), or (ii) time to obtain possession of the mortgaged or leased estate and then to cure such default of Landlord, if such default cannot be cured without such Superior Mortgagee or Superior Lessor or taking possession of the mortgaged or leased estate, but not to exceed one hundred eighty (180) days in the aggregate to obtain such possession and cure the Landlord default. The curing of any of Landlord’s defaults by a Superior Mortgagee or Superior Lessor shall be treated as performance by Landlord.

ARTICLE 14
DEFAULT; REMEDIES

14.1 Tenant’s Default .

(a) If at any time subsequent to the date of this Lease any one or more of the following events (herein referred to as an “ Event of Default ”) shall occur:

(i) Tenant shall fail to pay the Basic Rent, Expense Charges or any other Additional Rent hereunder when due and such failure shall continue for five (5) Business Days after written notice to Tenant from Landlord (except that such written notice shall only be required twice (i.e. two separate failures) in any twelve (12) month period, with any subsequent failure to pay such sums constituting an Event of Default unless paid within five (5) Business Days after the date due without need for an additional written notice); or

(ii) Tenant shall neglect or fail to perform or observe any other covenant herein contained on Tenant’s part to be performed or observed and Tenant shall fail to remedy the same within thirty (30) days after notice to Tenant (or such shorter period for completing a cure for such default as may be required by applicable Laws or by virtue of an Emergency) specifying such neglect or failure, or if such failure is of such a nature that Tenant cannot reasonably remedy the same within such thirty (30) day period, Tenant shall fail to commence promptly (and in any event within such thirty (30) day period) to remedy the same and thereafter to diligently prosecute such remedy to completion with diligence and continuity (and in any event, within ninety (90) days after the notice described in this subparagraph (ii) ), provided that (x) in no event shall Tenant have such additional period of time that would (A) subject Landlord or any

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Superior Lessor or any Superior Mortgagee to prosecution for a crime or any other fine or charge, or (B) subject the Property, or any part thereof, to any lien or encumbrance which is not removed or bonded within the time period required under this Lease, and (y) such written notice shall only be required twice in any twelve (12) month period, with any of the same subsequent performance default constituting an Event of Default unless cured within the period required under this Lease without need for an additional written notice); or

(iii) Tenant’s leasehold interest in the Premises shall be taken on execution or by other process of law directed against Tenant; or

(iv) If Tenant or any guarantor of this Lease shall (i) make an assignment for the benefit of creditors, (ii) acquiesce in a petition in any court in any bankruptcy, reorganization, composition, extension or insolvency proceedings, (iii) seek, consent to or acquiesce in the appointment of any trustee, receiver or liquidator of Tenant or of any guarantor of this Lease or of all or any part of Tenant’s or such guarantor’s property, (iv) file a petition seeking an order for relief under the Title 11 of the United States Code, as now or hereafter amended or supplemented (the “ Bankruptcy Code ”), or by filing any petition under any other present or future federal, state or other statute or law for the same or similar relief, or (v) fail to win the dismissal, discontinuation or vacating of any involuntary bankruptcy proceeding filed under the Bankruptcy Code, or under any other present or future federal, state or other statute or law for the same or similar relief, within ninety (90) days after such proceeding is initiated; or

(v) Any lien has been filed against the Property, or any portion thereof, as a result of work performed by or on behalf of Tenant (other than any work performed for Tenant by Landlord or its employees, agents or contractors), and Tenant fails, within 30 days after the lien is filed, either (1) to cause said lien to be removed from the Property, or (2) to furnish a bond sufficient to remove the lien or cause a title insurance endorsement to be issued with respect to such lien, which endorsement shall be satisfactory, in form and substance to Landlord, in Landlord’s sole and absolute discretion; or

(vi) Tenant’s interest in the Premises shall be transferred without Landlord prior written consent, if so required, in violation of Article 6 hereof, and Tenant shall fail to remedy the same within fifteen (15) days after written notice to Tenant specifying such violation;

then in any such case Landlord may exercise any of Landlord’s rights or remedies available under this Lease, at law or in equity.

14.2 Landlord’s Remedies .

(a) Upon the occurrence of an Event of Default, Landlord shall have the following remedies, in addition to any and all other rights and remedies available at

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Law or in equity or otherwise provided in this Lease, any one or more of which Landlord may resort to cumulatively, consecutively, or in the alternative:

(i) Landlord may continue this Lease in full force and effect, and collect Rent and other charges as and when due, without prejudice to Landlord’s right to subsequently elect to terminate this Lease on account of such Event of Default;

(ii) Landlord may terminate this Lease upon written notice to Tenant to such effect, in which event this Lease (and all of Tenant’s rights hereunder) shall immediately terminate, but such termination shall not affect those obligations of Tenant which are intended by their terms to survive the expiration or termination of this Lease, and Tenant shall remain liable for damages as hereinafter set forth in this Section 14.2 . This Lease may also be terminated by a judgment specifically providing for termination;

(iii) Landlord may terminate Tenant’s right of possession without terminating this Lease upon written notice to Tenant to such effect, in which event Tenant’s right of possession of the Premises shall immediately terminate, but this Lease shall continue subject to the effect of this Section 14.2 ;

(iv) Landlord may, but shall not be obligated to, perform any defaulted obligation of Tenant, and to recover from Tenant, as Additional Rent, the costs incurred by Landlord in performing such obligation. Notwithstanding the foregoing, or any other notice and cure period set forth herein, Landlord may exercise its rights under this Section 14.2(a)(iv) without prior notice or upon shorter notice than otherwise required hereunder (and as may be reasonable under the circumstances) in the event of any one or more of the following circumstances is present: (i) there exists a reasonable risk of prosecution of Landlord unless such obligation is performed sooner than the stated cure period; (ii) there exists an Emergency arising out of the defaulted obligation; or (iii) the Tenant has failed to obtain insurance required by this Lease, or such insurance has been canceled by the insurer without being timely replaced by Tenant, as required herein; and

(v) Landlord shall have the right to recover damages from Tenant, as set forth in this Section 14.2 .

(b) Upon any termination of this Lease or of Tenant’s right of possession, Landlord, at its sole election, may (i) re ‑enter the Premises, either by summary proceedings or other lawful proceedings and remove and dispossess Tenant and all other persons and any and all property from the same, as if this Lease had not been made, (ii) remove all property from the Premises and store the same in a public warehouse or elsewhere at Tenant’s expense, and/or (iii) deem such property to be abandoned, and, in such event, Landlord may dispose of such property at Tenant’s expense, free from any claim by Tenant or anyone claiming by, through or under Tenant. It shall not constitute a constructive or other termination of this Lease or Tenant’s right to possession if Landlord (a) exercises its right to repair or maintain the Premises, (b) performs any unperformed

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obligations of Tenant, (c) stores or removes Tenant’s property from the Premises after Tenant’s dispossession, (d) attempts to relet, or, in fact, does relet, the Premises or (e) seeks the appointment of a receiver on Landlord’s initiative to protect Landlord’s interest under this Lease.

(c) If this Lease shall have been terminated as provided in this Article, Tenant shall pay the Basic Rent, Expense Charges, Additional Rent and other sums payable hereunder up to the time of such termination, and thereafter Tenant, until the end of what would have been the Term of this Lease in the absence of such termination, and whether or not the Premises shall have been relet, shall be liable to Landlord for, and shall pay to Landlord, as liquidated current damages: the Basic Rent, Expense Charges, Additional Rent and other sums that would be payable hereunder if such termination had not occurred, less the net proceeds, if any, of any reletting of the Premises, after deducting all actual expenses incurred by Landlord in connection with such reletting, including, without limitation, all repossession costs, brokerage commissions, legal expenses, attorneys’ fees, advertising, expenses of employees, alteration costs and expenses of preparation for such reletting. Tenant shall pay the portion of such current damages to Landlord monthly on the days which the Basic Rent would have been payable hereunder if this Lease had not been terminated.

(d) At any time after termination of this Lease as provided in this Article, whether or not Landlord shall have collected any such current damages under (c) above, Landlord may elect to receive from Tenant , as liquidated final damages and in lieu of all such current damages with respect to the recovery of Rent, beyond the date of such demand, an amount equal to the excess, if any, of the then present value of the Basic Rent, Expense Charges, Additional Rent and other sums as hereinbefore provided which would be payable hereunder from the date of such demand assuming that, for the purposes of this paragraph, annual payments by Tenant on account of Taxes, Building Operating Expenses and Laboratory Operating Expenses would be the same as the payments required for the immediately preceding Operating or Tax Year plus a three percent (3%) annual increase per year for what would be the then unexpired Term of this Lease if the same remained in effect, over the then fair net rental value (inclusive of all such charges) of the Premises for the same period. In the computation of present value, a discount at the then market discount rate as reasonably determined by Landlord shall be employed.

(e) In case of any Event of Default, re‑entry, expiration and dispossession by summary proceedings or otherwise, Landlord may (i) relet the Premises or any part or parts thereof, either in the name of Landlord or otherwise, for a term or terms which may at Landlord’s option be equal to or less than or exceed the period which would otherwise have constituted the balance of the Term of this Lease and may grant concessions or free rent to the extent that Landlord considers advisable and necessary to re let the same and (ii) make such reasonable alterations, repairs and decorations in the Premises as Landlord considers advisable and necessary for the purpose of reletting the Premises; and the making of such alterations, repairs and decorations shall not operate or be construed to release Tenant from liability hereunder as aforesaid. Tenant, for itself and any and all persons claiming through or under Tenant, including its creditors, upon the termination of this Lease and of the term of this Lease in accordance with the terms

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hereof, or in the event of entry of judgment for the recovery of the possession of the Premises in any action or proceeding, or if Landlord shall enter the Premises by process of law or otherwise, hereby waives any right of redemption provided or permitted by any statute, law or decision now or hereafter in force, and does hereby waive, surrender and give up all rights or privileges which it or they may or might have under and by reason of any present or future law or decision, to redeem the Premises or for a continuation of this Lease for the term of this Lease hereby demised after having been dispossessed or ejected therefrom by process of law, or otherwise.

(f) In addition to any other remedies under this Article 14 , Tenant shall immediately become liable to Landlord for all damages proximately caused by Tenant’s breach of its obligations under this Lease, including all actual costs Landlord incurs in reletting (or attempting to relet) the Premises or any part thereof, including, without limitation, brokers’ commissions, expenses of cleaning, altering and preparing the Premises for new tenants, legal fees and all other like expenses properly chargeable against the Premises and the rental received therefrom and like costs, provided that nothing set forth in this Section 14.2(f) shall be construed to impose upon Landlord any obligation to relet the Premises or to mitigate its damages hereunder, except to the extent expressly required under applicable Law or as expressly set forth in this Section 14.2(f) . If Landlord does elect to relet the Premises (or any portion thereof), such reletting may be for a period shorter or longer than the remaining Term, and upon such terms and conditions as Landlord deems appropriate, in its sole and absolute discretion, and Tenant shall have no interest in any sums collected by Landlord in connection with such reletting except to the extent expressly set forth herein. If the Premises or any part thereof shall be relet in combination with any other space, then proper apportionment on a per-square foot basis shall be made of the rent received from such reletting and of the expenses of such reletting. If Landlord shall succeed in reletting the Premises during the period in which Tenant is paying monthly rent damages as described in Section 14.2(c) , Landlord shall credit Tenant with the net rents collected by Landlord from such reletting, after first deducting from the gross rents, as and when collected by Landlord, (A) all actual expenses incurred or paid by Landlord in collecting such rents, and (B) any theretofore unrecovered costs associated with the termination of this Lease or Landlord’s reentry into the Premises, including any theretofore unrecovered expenses of reletting or other damages payable hereunder. If the Premises or any portion thereof be relet by Landlord for the unexpired portion of the Term before presentation of proof of such damages to any court, commission or tribunal, the amount of rent reserved upon such reletting shall, prima facie, constitute the fair and reasonable rental value for the Premises, or part thereof, so relet for the term of the reletting. Landlord shall not be liable in any way whatsoever for its failure or refusal to relet the Premises or, if the Premises or any part are relet, for its failure to collect the rent under such reletting, and no such refusal or failure to relet or failure to collect rent shall release or affect Tenant’s liability for damages or otherwise under this Lease. The foregoing notwithstanding, in the event of termination of this Lease or repossession of the Premises after an Event of Default of Tenant, and provided Tenant has cooperated with Landlord in timely surrendering of possession of the Premises as required herein after such termination or repossession, Landlord agrees to use commercially reasonable efforts to mitigate its damages hereunder, provided, however, Landlord’s obligation to use commercially reasonable efforts to mitigate its damages shall be deemed

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satisfied by Landlord’s marketing of the Premises in a manner substantially similar to the manner in which Landlord markets other premises within the Building, and provided further, that Landlord shall not be obligated to show preference for reletting the Premises over any other vacant space in the Building, to lease any space while Landlord is assembling such space as part of a block of space for lease, or to lease the Premises for a rental less than the current fair market rent then prevailing for comparable office space in Comparable Buildings.

(g) If the trustee or the debtor in possession assumes the Lease under applicable bankruptcy law, it may assume and assign its interest in this Lease only if the proposed assignee first provides Landlord with (1) notice of such proposed assignment, setting forth (i) the name and address of the proposed assignee, its proposed use of the Premises, reasonably detailed character and financial references for such person (including its most recent balance sheet and income statements certified by its chief financial officer or, if available, a certified public accountant) and any other information reasonably requested by Landlord, and (ii) all of the terms and conditions of such offer, shall be given to Landlord by Tenant or such trustee no later than twenty (20) days after receipt by Tenant or such trustee of such offer, but in any event no later than ten (10) days prior to the date that Tenant or such trustee shall make application to a court of competent jurisdiction for authority and approval to assume this Lease and enter into such assignment; (2) Adequate Assurance of Future Performance (as hereinafter defined) of all of Tenant’s obligations under this Lease, and (3) Landlord determines, in the exercise of its reasonable business judgment, that the assignment of this Lease will not breach any other lease, or any mortgage, financing agreement, or other agreement relating to the Property by which Landlord or the Property is then bound (and Landlord shall not be required to obtain consents or waivers from any third party required under any lease, mortgage, financing agreement, or other such agreement by which Landlord is then bound). Landlord shall have the option, to be exercised by notice to Tenant or such trustee given at any time prior to the date the application is filed for court approval of the assumption and assignment of this Lease to the proposed assignee, to accept an assignment of this Lease upon the same terms and conditions and for the same consideration, if any, as the bona fide offer made by such proposed assignee, less any brokerage commissions which may be payable out of the consideration to be paid by such person for the assignment of this Lease.

(h) For purposes only of paragraph (g) above, and in addition to any other requirements under the Bankruptcy Code, any future federal bankruptcy law and applicable case law, “Adequate Assurance of Future Performance” means at least the satisfaction of the following conditions, which Landlord and Tenant acknowledge to be commercially reasonable:

(i) the proposed assignee submitting a current financial statement, audited by a certified public accountant, that allows a net worth and working capital in amounts determined in the reasonable business judgment of Landlord to be sufficient to assure the future performance by the assignee of Tenant’s obligation under this Lease; and

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(ii) if requested by Landlord in the exercise of its reasonable business judgment, the proposed assignee obtaining a guarantee (in form and substance satisfactory to Landlord) from one or more persons who satisfy Landlord’s standards of creditworthiness; and

(iii) the proposed assignee is of a character and financial worth such as is in keeping with the standards of Landlord in those respects for the Property, the assignee’s tenancy is of the same quality as other tenants at the Property, and the purposes for which the proposed assignee intends to use the Premises are uses expressly permitted by and not prohibited by this Lease or prohibited by any other lease at the Property.

Additional Rent

. If Tenant shall fail to pay when due any sums under this Lease designated as an Operating Expense Charge or other Additional Rent, Landlord shall have the same rights and remedies as Landlord has hereunder for failure to pay Basic Rent.

Remedying Defaults

. Landlord shall have the right, but shall not be required, to pay such sums or do any act which requires the expenditure of monies which may be necessary or appropriate by reason of the failure or neglect of Tenant to perform any of the provisions of this Lease which failure continues beyond any applicable notice and cure periods, and in the event of the exercise of such right by Landlord, Tenant agrees to pay to Landlord forthwith upon demand all such sums, together with interest thereon at the Default Interest Rate, as Additional Rent.

Remedies Cumulative

. The specified remedies to which Landlord may resort hereunder are not intended to be exclusive of any remedies or means of redress to which Landlord may at any time be entitled lawfully, and Landlord may invoke any remedy (including the remedy of specific performance) allowed at law or in equity as if specific remedies were not herein provided for.

Litigation Costs

. In the event of litigation or other legal proceeding between Landlord and Tenant relating to the provisions of this Lease or Tenant’s occupancy of the Premises, the losing party shall, upon demand, reimburse the prevailing party for its reasonable costs of prosecuting and/or defending such proceeding (including, without limitation, reasonable attorneys’ fees).

14.7 Waiver .

(a) Failure on the part of Landlord or Tenant to complain of any action or non‑action on the part of the other, no matter how long the same may continue, shall never be a waiver by Tenant or Landlord, respectively, of any of the other’s rights hereunder. Further, no waiver at any time of any of the provisions hereof by Landlord or Tenant shall be construed as a waiver of any of the other provisions hereof, and a waiver at any time of any of the provisions hereof shall not be construed as a waiver at any subsequent time of the same provisions. The consent or approval of Landlord or Tenant to or of any action by the other requiring such consent or approval shall not be construed to

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waive or render unnecessary Landlord’s or Tenant’s consent or approval to or of any subsequent similar act by the other.

(b) Any waiver by Landlord or Tenant of any provisions of this Lease must be in a writing signed by Landlord or Tenant, as applicable. In addition, Landlord’s acceptance of any payment from Tenant after a termination of this Lease due to an Event of Default by Tenant shall not have the effect of reinstating this Lease, nor estop Landlord from exercising any of the rights and remedies granted to Landlord hereunder arising out of such Event of Default. No payment by Tenant or acceptance by Landlord of a lesser amount than the Basic Rent, Expense Charges, Additional Rent and other sums due hereunder shall be deemed to be other than on account of the total amount due from Tenant to Landlord, to be applied in such order as Landlord deems appropriate. In no event shall any endorsement or statement on any check or accompanying any check or payment be deemed an accord and satisfaction; and Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such Basic Rent, Expense Charges, Additional Rent or other sum and to pursue any other remedy provided in this Lease.

Security Deposit

(a) Simultaneously with the execution of this Lease by Tenant, Tenant shall deliver to Landlord, and Tenant shall maintain in effect at all times during the Initial Term, as security for the full and faithful performance and observance by Tenant of Tenant’s covenants and obligations under this Lease, an unconditional, irrevocable, absolutely “clean” letter of credit in the amount set forth in Section 1.1 hereof and substantially in the form annexed hereto as Exhibit H or other form reasonably approved by Landlord and otherwise reasonably satisfactory to Landlord and issued by a banking corporation reasonably satisfactory to Landlord and either having its principal place of business or a duly licensed branch or agency in Boston, MA. Such letter of credit shall have an expiration date no earlier than the first anniversary of the date of issuance thereof and shall be automatically renewed from year to year unless terminated by the issuer thereof by notice to Landlord given not less than forty-five (45) days prior to the expiration thereof. Tenant shall, throughout the Initial Term of this Lease, deliver to Landlord, in the event of the termination of any such letter of credit, replacement letters of credit in lieu thereof (each such letter of credit and such extensions or replacements thereof, as the case may be, is hereinafter referred to as a “ Letter of Credit ”) no later than 30 days prior to the expiration date of the preceding Letter of Credit. The term of each such Letter of Credit shall be not less than one year and shall be automatically renewable from year to year as aforesaid. Notwithstanding the foregoing, if Landlord shall elect, in its sole discretion, to accept a Letter of Credit which is subject to a final expiration date, Tenant shall deliver a replacement of or amendment to such Letter of Credit no later than thirty (30) days prior to such final expiration date, and the final Letter of Credit delivered to Landlord pursuant to this Section 14.8 shall have a final expiration date occurring not earlier than sixty (60) days following the expiration date of this Lease. If Tenant shall fail to obtain any replacement of or amendment to a Letter of Credit within any of the applicable time limits set forth in this Section 14.8 , Tenant shall be in default of its obligations under this Section 14.8 and Landlord shall have the right (but not the

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obligation), at its option, to draw down the full amount of the existing Letter of Credit and use, apply and retain the same as security hereunder , and notwithstanding such draw by Landlord, Landlord shall have the right (but not the obligation), at its option, to give written notice to Tenant stating that such failure by Tenant to deliver such replacement of or amendment to the Letter of Credit constitutes a continuing default by Tenant of its obligations under this Section 14.8 , and in the event that Tenant shall not have delivered such replacement or amendment to Landlord within fifteen (15) Business Days after Tenant’s receipt of such notice, Landlord may give to Tenant a notice of intention to end the term of this Lease at the expiration of five (5) days from the date of the service of such notice of intention, and upon the expiration of said five (5) days unless Tenant shall have delivered such replacement of or amendment to the Letter of Credit during such five (5) day period, this Lease and the term and estate hereby granted, whether or not the Initial Term shall theretofore have commenced, shall terminate with the same effect as if that day was the day herein definitely fixed for the end and expiration of this Lease, but Tenant shall remain liable for damages as provided in this Article 14 . Upon delivery to Landlord of any such replacement of or amendment to the Letter of Credit within the fifteen (15 ) Business Day period described in the preceding sentence, such default shall be deemed cured and Landlord shall return to Tenant the proceeds of the Letter of Credit which had been drawn by Landlord pursuant to the preceding sentence (or any balance thereof to which Tenant is entitled).

(b) In the event Tenant defaults in respect of the full and prompt payment and performance of any of the terms, provisions, covenants and conditions of this Lease beyond applicable notice (the delivery of which shall not be required for purposes of this Section 14.8 if Landlord is prevented or prohibited from delivering the same under applicable law, including, but not limited to, all applicable bankruptcy and insolvency law) and the expiration of any applicable cure periods (except that no notice and cure period shall be required for purposes of this Section 14.8 with respect to any default by Tenant hereunder if, at the time of such default, any of the events set forth in Section 14.8(b)(iv) shall have occurred with or without the acquiescence of Tenant), including, but not limited to, the payment of Basic Rent and Expense Charges, Landlord may, at its election, (but shall not be obligated to) draw down the entire Letter of Credit or any portion thereof and use, apply or retain the whole or any part of the security represented by the Letter of Credit to the extent required for the payment of: (i) Basic Rent, Expense Charges or any other sum as to which Tenant is in default, (ii) any sum which Landlord may expend or may be required to expend by reason of Tenant’s default in respect of any of the terms, provisions, covenants, and conditions of this Lease, including but not limited to, any reletting costs or expenses (including, without limitation, any free rent, tenant improvement allowance, leasing commissions, attorneys’ fees, costs and expenses, and other fees, costs and expenses relating to the reletting of all or any portion of the Premises), (iii) any damages or deficiency in the reletting of the Premises, whether such damages or deficiency accrued before or after summary proceedings or other re‑entry by Landlord, or (iv) any damages awarded to Landlord in accordance with the terms and conditions of this Article 14 hereof, it being understood that any use of the whole or any part of the security represented by the Letter of Credit shall not constitute a bar or defense to any of Landlord’s other remedies under this Lease or any Law, including but not limited to Landlord’s right to assert a claim against Tenant under 11 U.S.C. §502(b)(6) or

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any other provision of Title 11 of the United States Code. To insure that Landlord may utilize the security represented by the Letter of Credit in the manner, for the purpose, and to the extent provided in this Section 14.8 , each Letter of Credit shall provide that the full amount or any portion thereof may be drawn down by Landlord upon the presentation to the issuing bank (or the advising bank, if applicable) of Landlord’s draft drawn on the issuing bank without accompanying memoranda or statement of beneficiary. In no event shall the Letter of Credit require Landlord to submit evidence to the issuing (or advising) bank of the truth or accuracy of any such written statement and in no event shall the issuing bank or Tenant have the right to dispute the truth or accuracy of any such statement nor shall the issuing (or advising) bank have the right to review the applicable provisions of the Lease. In no event and under no circumstance shall the draw down on or use of any amounts under the Letter of Credit constitute a basis or defense to the exercise of any other of Landlord’s rights and remedies under this Lease or under any Law, including, but not limited to, Landlord’s right to assert a claim against Tenant under 11 U.S.C. §502(b)(6) or any other provision of Title 11 of the United States Code.

(c) In the event Tenant defaults in respect of any of the terms, provisions, covenants or conditions of this Lease beyond notice (the delivery of which shall not be required for purposes of this Section 14.8 if Landlord is prevented or prohibited from delivering the same under applicable law, including, but not limited to, all applicable bankruptcy and insolvency law) and the expiration of any applicable cure periods (except no notice and cure period shall be required for purposes of this Section 14.8 with respect to any default by Tenant hereunder if, at the time of such default, any of the events set forth in Section 14.8(b)(iv) shall have occurred with or without the acquiescence of Tenant) and Landlord utilizes all or any part of the security represented by the Letter of Credit but does not terminate this Lease as provided in this Article 14 hereof, Landlord may, in addition to exercising its rights as provided in paragraph (b) hereof, retain the unapplied and unused balance of the portion of the Letter of Credit drawn down by Landlord (herein called the “ Cash Security ”) as security for the faithful performance and observance by Tenant thereafter of the terms, provisions, and conditions of this Lease, and may use, apply, or retain the whole or any part of said Cash Security to the extent required for payment of Basic Rent, Additional Rent or any other sum as to which Tenant is in default (beyond applicable notice and cure periods) or for any sum which Landlord may expend or be required to expend by reason of Tenant’s default in respect of any of the terms, covenants, and conditions of this Lease. In the event Landlord uses, applies or retains any portion or all of the security represented by the Letter of Credit, Tenant shall forthwith restore the amount so used, applied or retained (at Landlord’s option, either by the deposit with Landlord of cash or the provision of a replacement Letter of Credit) so that at all times the amount of the security represented by the Letter of Credit and the Cash Security (if any) shall be not less than the security required by Section 1.1 hereof, failing which Tenant shall be in default of its obligations under this Section 14.8 and Landlord shall have the same rights and remedies as for the non‑payment of Basic Rent beyond the applicable grace period, unless Tenant shall have restored the Letter of Credit as set forth in this Section 14.8(c) within five (5) days following Landlord’s written demand for such restoration.

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(d) In addition to and without limitation of Landlord’s other rights under this Section 14.8 , if at any time during the Term of the Lease (as the same may be extended), Landlord reasonably determines that the financial condition of the issuer of the then current Letter of Credit is such that Landlord’s ability to draw upon the Letter of Credit is, or in the future may be, impaired, restricted, refused or otherwise adversely affected, then Tenant shall, within 10 Business Days of Landlord’s written request to Tenant, then Landlord may immediately draw upon the Letter of Credit as provided in Section 14.8 and use, apply and retain the same as Cash Security hereunder and Landlord shall have the right, by giving Tenant written notice of such requirement, to require that Tenant obtain from a new issuer a replacement Letter of Credit, which issuer and replacement Letter of Credit shall both comply in all respects with the requirements of this Section 14.8 . In the event that Tenant shall not have delivered to Landlord a replacement Letter of Credit complying with all of the requirements of this Section 14.8 within ten (10) days after Tenant’s receipt of such notice, Landlord shall have the right ( but not the obligation), at its option, to give written notice to Tenant stating that such failure constitutes a continuing and immediate Default of Tenant under this Lease without any additional notice or cure period applicable thereto, and Landlord shall have the right to exercise all rights and remedies available to Landlord under this Lease or at Law and in equity with respect to such Default of Tenant.

(e) If Tenant shall fully and faithfully comply with all of Tenant’s covenants and obligations under this Lease, the Letter of Credit and the Cash Security (if any) shall be returned to Tenant within sixty (60 ) days after the date fixed as the end of this Lease and after delivery to Landlord of entire possession of the Premises; provided, however, that in no event shall any such return be construed as an admission by Landlord that Tenant has performed all of its obligations hereunder. In the event of any sale, transfer or leasing of Landlord’s interest in the Building whether or not in connection with a sale, transfer or leasing of the Land to a vendee, transferee or lessee, Landlord shall have the right to transfer the Letter of Credit and the Cash Security (if any) to the vendee, transferee or lessee or, in the alternative, to require Tenant to deliver a replacement Letter of Credit or appropriate amendment to the Letter of Credit naming the new landlord as beneficiary, and, upon delivery by Tenant of a replacement Letter of Credit, if applicable, Landlord shall return the existing Letter of Credit to Tenant. Upon such transfer or return of the Letter of Credit and the Cash Security (if any), Landlord shall thereupon be released by Tenant from all liability for the return thereof, and Tenant shall look solely to the new landlord for the return of the same. The provisions of the preceding sentence shall apply to every subsequent sale, transfer or leasing of the Building, and any successor of Landlord may, upon a sale, transfer, leasing or other cessation of the interest of such successors in the Building, whether in whole or in part, transfer the Letter of Credit and the Cash Security (if any) to any vendee, transferee or lessee of the Building (or require Tenant to deliver a replacement Letter of Credit as hereinabove set forth) and shall thereupon be relieved of all liability with respect thereto. If Tenant shall fail to timely deliver a replacement Letter of Credit, as required by Landlord, Tenant shall be in default of its obligations under this Section 14.8 and Landlord shall have the right (but not the obligation), at its option, to draw down the existing Letter of Credit and retain the proceeds as Cash Security hereunder until a replacement Letter of Credit is delivered, and notwithstanding such draw by Landlord, Landlord shall have the right (but not the

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obligation), at its option, to give written notice to Tenant stating that such failure by Tenant to deliver such replacement Letter of Credit constitutes a continuing default by Tenant of its obligations under this Section 14.8 , and in the event that Tenant shall not have delivered such replacement to Landlord within fifteen (15) Business Days after Tenant’s receipt of such notice, Landlord may give to Tenant a notice of intention to end the term of this Lease at the expiration of five (5) days from the date of the service of such notice of intention, and upon the expiration of said five (5) days this Lease and the term and estate hereby granted shall terminate in accordance with the provisions of paragraph (a) of this Section 14.8 . Upon delivery to Landlord of any such replacement Letter of Credit within the fifteen (15) Business Day period described in the preceding sentence, such default shall be deemed cured and Landlord shall return to Tenant the proceeds of the Letter of Credit which had been drawn by Landlord pursuant to the preceding sentence (or any balance thereof to which Tenant is entitled). Landlord and Tenant hereby agree that, in connection with the transfer by Landlord or its successors or assigns hereunder of Landlord’s interest in the Letter of Credit, Tenant shall be solely liable to pay any transfer commission and other costs charged by the issuing bank in connection with any such transfer of the Letter of Credit, as Expense Charges hereunder, upon Landlord’s demand therefor. Except in connection with a permitted assignment of this Lease, Tenant shall not assign or encumber or attempt to assign or encumber the security represented by the Letter of Credit, and neither Landlord nor its successors or assigns shall be bound by any such assignment, encumbrance, attempted assignment or attempted encumbrance. In any event, in the absence of evidence satisfactory to Landlord of an assignment of the right to receive the security represented by the Letter of Credit, Landlord may return the Letter of Credit to the original Tenant regardless of one or more assignments of this Lease.

(f) Neither the Letter of Credit, any proceeds therefrom or the Cash Security, if any, shall be deemed an advance rent deposit or an advance payment of any other kind, or a measure or limitation of Landlord’s damages or constitute a bar or defense to any of the Landlord’s other remedies under this Lease or at law or in equity upon Tenant’s default.

(g) Notwithstanding anything to the contrary contained in this Section 14.8 , provided that there has been no monetary Event of Default or a material non-monetary Event of Default of Tenant at any time prior to the Review Date (as hereinafter defined), the face amount of the Letter of Credit may be reduced by Tenant to $827,949.00 on the earlier to occur of (i) the third (3 ^rd ) anniversary of the Commencement Date, or (ii) the market capitalization of Tenant meeting or exceeding Two Hundred Million and 00/100 Dollars ($200,000,000) (the earlier to occur of (i) or (ii) being the “ Review Date ”). If Tenant has satisfied the Reduction Condition as of the Reduction Review Date, Landlord shall, at Tenant’s election and within ten (10) Business Days after Landlord’s receipt of written request from Tenant, effect the reduction in the Letter of Credit amount required under this Lease by either accepting an amendment to the Letter of Credit which Landlord is then holding (which amendment shall be in form and substance reasonably acceptable to Landlord) or by exchanging the Letter of Credit which Landlord is then holding for a substitute Letter of Credit complying with the requirements of this Lease in the appropriate amount. In no event shall the Letter of Credit have automatic reduction provisions. Tenant shall be deemed to have satisfied the “ Reduction

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Condition ” as of the Review Date if there has been no Event of Default at any time prior to the Review Date.

(h) As a material inducement to Landlord to enter into this Lease, Tenant hereby acknowledges and agrees that the Letter of Credit and the proceeds thereof (including, without limitation any Cash Security created by the draw down of all or any portion of the Letter of Credit) and the obligation to make available or pay to Landlord all or a portion thereof in satisfaction of any obligation of Tenant under this Lease, shall be deemed third-party obligations and not the obligation of Tenant hereunder and, accordingly, (A) shall not be subject to any limitation on damages contained in Section 502(b)(6) of Title 11 of the United States Code or any other limitation on damages that may apply under any federal, state or local law, rule or regulation in connection with a bankruptcy, insolvency or other similar proceeding by, against or on behalf of Tenant, (B) shall not diminish or be offset against any amounts that Landlord would be able to claim against Tenant pursuant to 11 U.S.C. §502(b)(6) as if no Letter of Credit existed, and (C) may be relied on by Landlord in the event of an assignment of this Lease that is not expressly permitted in accordance with the terms of this Lease even if such assignment has been authorized and approved by a court exercising jurisdiction in connection with a bankruptcy, insolvency or other similar proceeding by, against or on behalf of Tenant.

Landlord’s Default

(a) Subject to the provisions of Section 14.6(b) below, Landlord shall in no event be in default in the performance of any of Landlord’s obligations hereunder unless and until Landlord shall have failed to perform such obligations within thirty (30) days, or such additional time as is commercially reasonably required to correct any such default, after written notice by Tenant to Landlord properly specifying wherein Landlord has failed to perform any such obligation. Except as otherwise expressly set forth in this Lease, Tenant shall not assert any right to deduct the cost of repairs or any monetary claim against the Landlord from rent thereafter due and payable, but shall look solely to the Landlord for satisfaction of such claim.

(b) If Landlord fails to provide any services, perform any repairs or maintenance, or perform any other obligation expressly required of Landlord under the terms of this Lease (excluding any services, repairs or obligations which Landlord is unable, despite the exercise of reasonable and diligent efforts, to perform due to Force Majeure and Tenant would be similarly affected thereby), which failure materially, adversely affects Tenant’s ability to occupy or operate its business in any portion of the Premises, and Landlord fails to commence to take corrective action within ten (10) days after written notice from Tenant (or within three (3) Business Days in the event Tenant is unable to conduct business in any portion of the Premises as a result of such failure), or if Landlord timely commences such corrective action but thereafter fails to diligently complete such action, then Tenant, without limiting any other remedies of Tenant, may, after five (5) additional Business Days’ prior written notice given to Landlord, any Mortgagees of Landlord of which Tenant has written notice of, which notice indicates in bold, capitalized text that “ IF LANDLORD FAILS TO COMMENCE PERFORMANCE WITHIN 5 BUSINESS DAYS’ AFTER RECEIPT, TENANT

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MAY PROCEED TO EXERCISE TENANT’S SELF HELP RIGHTS UNDER SECTION 14.9(b) OF THE LEASE, ” and if Landlord fails to commence such curative action within such five (5) Business Day period and thereafter diligently pursue such curative action to completion, then Tenant may make such reasonable repairs or perform such services. Landlord shall reimburse Tenant for all out-of-pocket costs reasonably incurred in connection with such repairs or services completed by Tenant hereunder, together with interest thereon at a rate equal to the lesser of (i) a rate equal to 2% plus the prime rate published from time to time in The Wall Street Journal or its successor publication and (ii) the highest rate permitted to be charged by applicable Law, within fifteen (15) days after submission by Tenant to Landlord of a statement of such costs together with invoices and other reasonable supporting documentation . If Landlord fails to pay such sum to Tenant within thirty (30) days after receipt of invoices and documentation of such expenditures from Tenant, then Tenant may, after five (5) additional Business Days’ prior written notice (an “ Offset Notice ”) given to Landlord which notice indicates in bold, capitalized text that “ THIS IS A TIME SENSITIVE OFFSET NOTICE AND LANDLORD SHALL BE DEEMED TO ACCEPT SUCH OFFSET IF IT FAILS TO RESPOND TO THIS SECOND REQUEST FOR DISBURSEMENT WITHIN FIVE (5) BUSINESS DAYS AFTER RECEIPT, ” and, if Landlord fails within five (5) Business Days after receipt of such Offset Notice, to either (i) send Tenant written notice which disputes in good faith that the specified payment (or portion thereof) is due from Landlord (a “ Landlord’s Dispute Notice ”) and setting forth with reasonable particularity Landlord’s reasons for its claim that Landlord was not in default of its obligations and/or such action did not have to be taken by Tenant pursuant to the terms of the Lease and/or that the charges are unnecessary or excessive (in which case Landlord shall pay the amount it contends would not have been unnecessary or excessive), or (ii) disburse the amount of the payment referenced in the Offset Notice, then Tenant shall have the right to have such unpaid amount, together with interest thereon at the Interest Rate, credited against the next installment(s) of Rent thereafter due under this Lease, up to a maximum monthly offset of twenty-five percent (25%) of the amount of each such payment of monthly Rent. Tenant’s self-help rights under this Section 14.9(b) may be exercised only with respect to conditions actually existing within the Premises and, provided and only so long as essential services (including access) to other tenants in the Building are not interrupted or adversely affected, the Building Systems serving the Premises (and in any event not adversely affecting the Building Structure). In the event Landlord delivers a Landlord’s Dispute Notice to Tenant, Tenant may, but shall not be obligated to, elect to submit Landlord’s Dispute Notice to arbitration in Boston, Massachusetts for expedited proceedings under the Expedited Procedures of the Commercial Arbitration Rules of the AAA (or its successor). In any case where Tenant elects to utilize such expedited arbitration: (a) the parties will have no right to object if the arbitrator so appointed was on the list submitted by the AAA and was not objected to in accordance with Expedited Procedure E ‑4 (except that any objection shall be made within four (4) Business Days from the receipt of notice of appointment), (b) the Notice of Hearing shall be given four (4) Business Days in advance of the hearing, (c) the first hearing shall be held within five (5) Business Days after the appointment of the arbitrator, and (d) the losing party in such arbitration shall pay the costs of such arbitration costs charged by the AAA and/or the arbitrator. Judgment upon any award rendered in any

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arbitration held pursuant to this Section 14.9(b) may be entered in any court having jurisdiction, and in connection therewith, the arbitrator shall be bound by the provisions of this Lease, and shall not add to, subtract from or otherwise modify such provisions.

Independent Covenants

. Tenant hereby acknowledges and agrees that the obligations of Tenant hereunder shall be separate and independent covenants and agreements, that the obligations of Tenant hereunder, including, without limitation the obligation to pay Basic Rent, Expense Charges, Additional Rent and other sums due hereunder, shall continue unaffected, unless the requirement to pay or perform the same shall have been terminated or abated pursuant to an express provision of this Lease. Such waiver and acknowledgements by Tenant are a material inducement to Landlord entering into this Lease. To the extent of any conflicts or inconsistencies between the terms and provisions of this Section 14.10 and the terms and provisions of the remainder of this Lease, the terms and provisions of this Section 14.10 shall control.

ARTICLE 15
MISCELLANEOUS PROVISIONS

Landlord’s Rights of Access

. Upon the terms and conditions of this Section 15.1 , Landlord and its agents, representatives, contractors and employees shall have the right to enter the Premises upon no less than 48 hours prior notice (except in an emergency, in which event Landlord shall endeavor to give such notice as is reasonably practicable under the circumstances and in all events notice under this Article 15 may be by telephone to the Chief Financial Officer notwithstanding anything to the contrary in this Lease) for the purpose of doing maintenance, making such repairs, alterations or improvements as Landlord shall have the right to make by the provisions of this Lease or otherwise in exercising Landlord’s rights or fulfilling Landlord’s obligations under this Lease. Landlord and its agents, representatives, contractors and employees shall have the right to enter the Premises without notice to Tenant for the purpose of performing janitorial and other services which Landlord is obligated to provide under this Lease or for exercising any of Landlord’s rights under Article 14 of this Lease. Landlord and its invitees shall also have the right on no less than 48 hours prior notice to enter the Premises, for the purpose of inspecting them or exhibiting them to prospective purchasers, prospective or actual Superior Lessors or Superior Mortgagees of the Building and, during the final twelve (12) months of the Term, to prospective tenants. For each of the above purposes, Landlord shall at all times have a key with which to unlock all the doors in the Premises, excluding Tenant’s vaults, safes and special security areas designated in advance by Tenant to Landlord. In an emergency, Landlord shall have the right to use any means that Landlord may deem proper to open the doors in and to the Premises. Any entry into the Premises by Landlord in the manner hereinbefore described shall not be deemed to be a forcible or unlawful entry into, or a detainer of, the Premises, or an actual or constructive eviction of Tenant from any portion of the Premises. No provision of this Lease shall be construed as obligating Landlord to perform any repairs, alterations or decorations except as otherwise expressly agreed to be performed by Landlord in this Lease. In exercising its rights under this Section 15.1 , Landlord shall make a commercially reasonable effort not to unreasonably interfere with Tenant's business operations at the Premises.

Notwithstanding the foregoing, and so long as Tenant makes such representative available at the scheduled time, Tenant shall have the right (except in the case of an emergency) to have a

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representative of Tenant accompany Landlord and its agents, representatives, contractors and employees in exercising its right of access to the Premises; provided, however, Landlord shall not be responsible for any obligations under this Lease or applicable Laws to the extent Landlord is not permitted reasonable and timely access by Tenant to the necessary areas of the Premises.

Covenant of Quiet Enjoyment

. Subject to the terms and conditions of this Lease, on payment of the Basic Rent and Expense Charges and other Additional Rent and observing, keeping and performing all of the other terms and conditions of this Lease on Tenant’s part to be observed, kept and performed, Tenant shall lawfully, peaceably and quietly enjoy the Premises during the term hereof, without hindrance or ejection by any persons lawfully claiming by, through or under Landlord to have title to the Premises superior to Tenant. The foregoing covenant of quiet enjoyment is in lieu of any other covenant, express or implied.

15.3 Landlord’s Liability .

(a) Tenant agrees to look solely to Landlord’s then equity interest in the Property at the time of recovery for recovery of any judgment against Landlord, and agrees that neither Landlord nor any successor of Landlord nor any beneficiary, trustee, member, manager, partner, director, officer, employee or shareholder of Landlord or such successor shall ever be personally liable for any such judgment, or for the payment of any monetary obligation to Tenant. The provision contained in the foregoing sentence is not intended to, and shall not, limit any right that Tenant might otherwise have to obtain injunctive relief against Landlord or any successor of Landlord, or to take any action not involving the personal liability of Landlord or any successor of Landlord to respond in monetary damages from Landlord’s assets other than Landlord’s equity interest in the Property. In furtherance of the foregoing, if Landlord fails to perform any provision of this Lease which is Landlord’s obligation to perform, and as a consequence of such failure, Tenant shall recover a money judgment against Landlord, such judgment shall be satisfied only (i) out of the proceeds of sale received upon levy against the right, title and interest of Landlord in the Building, or (ii) to the extent not encumbered by a secured creditor, out of the rents or other incomes receivable by Landlord from the property of which the Premises are a part.

(b) Except for Tenant’s liability for damages under Section 5.5(c) and Section 12.1 of this Lease, in no event shall either Landlord or Tenant ever be liable to the other for any loss of business or any other indirect or consequential damages suffered by that party from whatever cause. Landlord shall look solely to the assets of Tenant to enforce Tenant’s obligations hereunder and in no event shall any of Tenant’s partners, former partners, shareholders, directors, officers, principals, clients, employees or agents, directly and indirectly, disclosed or undisclosed, of Tenant ever be personally liable for any judgment against Tenant or for any other liability or obligation of Tenant under this Lease owed to Landlord or any successor of Landlord. The provision contained in the foregoing sentence is not intended to, and shall not, limit any right that Landlord might otherwise have to obtain injunctive relief (or to take any other action against Tenant or any Tenant Parties or their respective successors in interest not involving the personal liability of Tenant or any Tenant Parties and which is not otherwise inconsistent with the recourse limitations set forth in the prior sentence).

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(c) Where provision is made in this Lease for Landlord’s consent, and Tenant shall request such consent, and Landlord shall fail or refuse to give such consent, Tenant shall not be entitled to any damages for any withholding by Landlord of its consent, it being intended that Tenant’s sole remedy shall be an action for specific performance or injunction, and that such remedy shall be available only in those cases where Landlord has expressly agreed in writing not to unreasonably withhold its consent. Furthermore, whenever Tenant requests Landlord’s consent or approval (whether or not provided for herein), Tenant shall pay to Landlord, on demand, as Additional Rent, any reasonable expenses incurred by Landlord (including without limitation reasonable attorneys’ fees and costs, if any) in connection therewith.

(d) Any repairs or restoration required or permitted to be made by Landlord under this Lease may be made during normal business hours, and Landlord shall have no liability for damages to Tenant for inconvenience, annoyance or interruption of business arising therefrom.

Estoppel Certificate

. Landlord and Tenant shall, at any time and from time to time, upon not less than ten (10) Business Days prior written request from the other, execute, acknowledge and deliver to the requesting party an estoppel certificate, containing a certification as to: (i) whether the Term has commenced, setting forth the Commencement Date and the expiration date; (ii) that this Lease is unmodified and in full force and effect (or, if there have been modifications, that this Lease is in full force and effect, as modified, and stating the modification(s)); (iii) the dates to which the Basic Rent, Additional Rent and all other amounts to be paid by Tenant hereunder have been paid in advance, if at all; (iv) whether to the actual knowledge of the signer there are any uncured defaults, and, if defaults are claimed, stating the facts giving rise thereto; and (v) such other factual statements as may be reasonably requested by either party.

Brokerage

. Tenant warrants and represents that Tenant has dealt with no broker in connection with the consummation of this Lease other than the Brokers specified in Section 1.1 , and, in the event of any brokerage claims against Landlord predicated upon prior dealings with Tenant, Tenant agrees to defend the same and indemnify Landlord against any such claim (except any claim by Brokers). Landlord warrants and represents that Landlord has dealt with no broker in connection with the consummation of this Lease other than Brokers, and, in the event of any brokerage claims against Tenant predicated upon prior dealings with Landlord, Landlord agrees to defend the same and indemnify Tenant against any such claim. Landlord shall be responsible to pay the commission or fee due to Brokers as and to the extent provided in a separate written agreement.

Rules and Regulations

. Tenant, its employees, representatives, agents, subtenants, licensees, contractors, and invitees shall abide by the Rules and Regulations from time to time established by Landlord and the Boston Landing Rules and Regulations (as defined in the Declaration), it being agreed that (i) Landlord shall have the right from time to time during the Term to make reasonable changes in and additions to the Rules and Regulations as Landlord deems necessary for the management, safety, care, cleanliness, conservation and sustainability of the Building and the Property and for the preservation of good order therein and (ii) BLOC (as defined in the Declaration shall have the right from time to time during the Term to make

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reasonable changes in and additions to the Boston Landing Rules and Regulations as BLOC deems necessary for the management, safety, care, cleanliness, conservation and sustainability of the Boston Landing Project and for the preservation of good order therein. The Rules and Regulations shall be generally applicable to all tenants of the Building of similar nature to the Tenant named herein. Landlord agrees that any such Rules and Regulations will be uniformly enforced, provided, however, Landlord may waive any one or more of the Rules and Regulations for the benefit of any particular tenant if Landlord reasonably deems such waiver appropriate, but no such waiver shall be construed as a waiver of such Rules and Regulations in favor of any other tenant, nor prevent Landlord from enforcing such Rules and Regulations against any or all tenants of the Building. Landlord shall not have any obligation to enforce the Rules and Regulations or the terms of any other lease against any other Tenant and Landlord shall not be liable to Tenant for violation thereof by any other tenant, its employees, representatives, agents, contractors, visitors, subtenants, licensees or invitees. In the event that there shall be a conflict between such Rules and Regulations and the provisions of this Lease, the provisions of this Lease shall control. The Rules and Regulations currently in effect are set forth in Exhibit G attached hereto and made a part hereof.

Financial Statements

. Tenant shall deliver to Landlord, within ten (10 ) Business Days after Landlord’s reasonable request for the same, Tenant’s most recently completed financial statements (audited if available) prepared and certified by an independent certified public accountant or certified by an officer of Tenant as being true and correct in all material respects. Landlord and its affiliates and investors shall keep such financial statements confidential, provided that Landlord shall be permitted to deliver such financial statements to a lender, purchaser or lessor or a prospective lender, purchaser or lessor in connection with (i) a sale or financing of the Building or the Property or any interest in any deed of trust encumbering the Building or the Property, or (ii) a sale of all or substantially all of the interests in Landlord or (iii) any other recapitalization of the equity interests in Landlord, so long as Landlord first advises the recipient of the confidential nature of such statements. Notwithstanding the foregoing, if and only so long as Tenant’s stock is publicly traded on a national exchange (or publicly listed in an equivalent manner, such as on NASDAQ) that requires its financial statements to be publicly disclosed, Tenant shall have no obligation to deliver any financial statements to Landlord. Any such financial statements may be relied upon by any actual or potential lessor, purchaser, or mortgagee of the Property.

Substitute Space

. Intentionally omitted.

Confidentiality

(a) Tenant agrees that this Lease and the terms contained herein will be treated as strictly confidential and except as required by Law (or except with the written consent of Landlord) Tenant shall not disclose the same to any third party except for Tenant’s partners, lenders, accountants, auditors, brokers and attorneys who have been advised of the confidentiality provisions contained herein and agree to be bound by the same. In the event Tenant is required by Law to provide this Lease or disclose any of its terms, Tenant shall give Landlord prompt written notice of such requirement prior to making disclosure so that Landlord may seek an appropriate protective order. If failing the entry of a protective order Tenant is compelled to make disclosure, Tenant shall only disclose portions of the Lease which Tenant is

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required to disclose and will exercise reasonable efforts to obtain assurance that confidential treatment will be accorded to the information so disclosed.

(b) Landlord will not, and will use reasonable efforts to cause Landlord’s agents not to, reveal to any person, association or company, any confidential information provided to Landlord by Tenant concerning the business or finances of Tenant. For purposes of this Section 15.9(b) , confidential information shall not include information that (i) is or becomes generally available to the public other than as a result of a disclosure by Landlord or any Landlord agent, or (ii) was available to Landlord on a non-confidential basis prior to its disclosure to Landlord by Tenant or its representatives). Notwithstanding the foregoing, Landlord may disclose such financial information as may be provided by Tenant to Landlord to actual or prospective lenders or purchasers of the Property and/or actual or prospective investors in Landlord or any of its affiliates and to Landlord’s consultants, attorneys, insurers, auditors and accountants, so long as any person or entity to whom Landlord discloses such information agrees to keep such information confidential and may disclose any information to the extent required by any Law or order of any public authority or court.

Invalidity of Particular Provisions; Saving Clause

. If any term or provision of this Lease, or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Lease shall be valid and be enforced to the fullest extent permitted by law.

Provisions Binding, Etc.

. Except as herein otherwise provided, the terms hereof shall be binding upon and shall inure to the benefit of the successors and assigns, respectively, of Landlord and Tenant (except in the case of Tenant, only such successors and assigns as may be permitted hereunder) and, if Tenant shall be an individual, upon and to his heirs, executors, administrators, successors and permitted assigns. Each term and each provision of this Lease to be performed by Tenant shall be construed to be both a covenant and a condition. Any reference in this Lease to successors and assigns of Tenant shall not be construed to constitute a consent to assignment by Tenant.

Recording

. Tenant agrees not to record this Lease, but, if the Term of this Lease (including any extended term) is seven (7) years or longer, each party hereto agrees, on the request of the other, to execute a notice of lease in recordable form and complying with applicable Law and shall contain no information other than what is statutorily required to record a notice of lease. In no event shall such document set forth the rent or other charges payable by Tenant under this Lease; and any such document shall expressly state that it is executed pursuant to the provisions contained in this Lease, and is not intended to vary the terms and conditions of this Lease. At any time following Landlord’s request, Tenant shall execute and deliver to Landlord within ten (10) days after such request a release of any document recorded in the real property records for the location of the Property evidencing this Lease or notice of termination of this Lease in recordable form, which shall be held in escrow by Landlord until the expiration or earlier termination of the Term. The obligations of Tenant under this Section shall survive the expiration or any earlier termination of the Term.

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Notice

. Whenever, by the terms of this Lease, notice shall or may be given either to Landlord or to Tenant (excluding notices pursuant to Section 15.1 which may be oral or by email), such notice shall be in writing and shall be sent by hand, registered or certified mail, or overnight or other commercial courier, postage or delivery charges, as the case may be, prepaid as follows:

If intended for Landlord, addressed to Landlord at the address set forth in Article 1 of this Lease (or to such other address or addresses as may from time to time hereafter be designated by Landlord by like notice).

If intended for Tenant, addressed to Tenant at the address set forth in Article I of this Lease except that from and after the Commencement Date the address of Tenant shall be the Premises (or to such other address or addresses as may from time to time hereafter be designated by Tenant by like notice).

Except as otherwise provided herein, all such notices shall be effective when received; provided, that (i) if receipt is refused, notice shall be effective upon the first occasion that such receipt is refused, (ii) if the notice is unable to be delivered due to a change of address of which no notice was given, notice shall be effective upon the date such delivery was attempted, (iii) if the notice address is a post office box number, notice shall be effective the day after such notice is sent as provided hereinabove or (iv) if the notice is to a foreign address, notice shall be effective two (2) days after such notice is sent as provided hereinabove.

Any notice given by an attorney on behalf of Landlord or by Landlord’s managing agent shall be considered as given by Landlord and shall be fully effective. Any notice given by an attorney on behalf of Tenant shall be considered as given by Tenant and shall be fully effective.

Authority

(a) Tenant hereby represents and warrants to Landlord that (i) Tenant is duly organized and validly existing in good standing under the laws of the State of Delaware and authorized to conduct business in the Commonwealth of Massachusetts, and possesses all licenses and authorizations necessary to carry on its business, (ii) Tenant has full power and authority to carry on its business, enter into this Lease and consummate the transaction contemplated by this Lease, (iii) the individual executing and delivering this Lease on Tenant’s behalf has been duly authorized to do so, (iv) this Lease has been duly executed and delivered by Tenant, (v) this Lease constitutes a valid, legal, binding and enforceable obligation of Tenant (subject to bankruptcy, insolvency or creditor rights laws generally, and principles of equity generally), (vi) the execution, delivery and performance of this Lease by Tenant will not cause or constitute a default under, or conflict with, the organizational documents of Tenant or any agreement to which Tenant is a party, (vii) the execution, delivery and performance of this Lease by Tenant will not violate any applicable Law, and (viii) all consents, approvals, authorizations, orders or filings of or with any court or governmental agency or body, if any, required on the part of Tenant for the execution, delivery and performance of this Lease have been obtained or made.

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(b) Landlord hereby represents and warrants to Tenant that (i) Landlord is duly organized under the laws of Massachusetts and validly existing and in good standing under the laws of, the Commonwealth of Massachusetts, and possesses all licenses and authorizations necessary to carry on its business, (ii) Landlord has full power and authority to carry on its business, enter into this Lease and consummate the transaction contemplated by this Lease, (iii) the individual executing and delivering this Lease on Landlord’s behalf has been duly authorized to do so, (iv) this Lease has been duly executed and delivered by Landlord, (v) this Lease constitutes a valid, legal, binding and enforceable obligation of Landlord (subject to bankruptcy, insolvency or creditor rights laws generally, and principles of equity generally), (vi) the execution, delivery and performance of this Lease by Landlord will not cause or constitute a default under, or conflict with, the organizational documents of Landlord or any agreement to which Landlord is a party, (vii) the execution, delivery and performance of this Lease by Landlord will not violate any applicable Law, and (viii) all consents, approvals, authorizations, orders or filings of or with any court or governmental agency or body, if any, required on the part of Landlord for the execution, delivery and performance of this Lease have been obtained or made.

When Lease Becomes Binding; Entire Agreement; Modification

. The submission of this document for examination and negotiation does not constitute an offer to lease, or a reservation of, or option for, the Premises, and this document shall become effective and binding only upon the execution and delivery hereof by both Landlord and Tenant. This Lease is the entire agreement between Landlord and Tenant, and this Lease expressly supersedes any negotiations, considerations, representations and understandings and proposals or other written documents relating hereto. This Lease may be modified or altered only by written agreement between Landlord and Tenant, and no act or omission of any employee or agent of Landlord shall alter, change or modify any of the provisions hereof.

Paragraph Headings and Interpretation of Sections

. The paragraph headings throughout this instrument are for convenience and reference only, and the words contained therein shall in no way be held to explain, modify, amplify or aid in the interpretation, construction or meaning of the provisions of this Lease. The provisions of this Lease shall be construed as a whole, according to their common meaning (except where a precise legal interpretation is clearly evidenced), and not for or against either party. Use in this Lease of the words “including,” “such as” or words of similar import, when followed by any general term, statement or matter, shall not be construed to limit such term, statement or matter to the specified item(s), whether or not language of non‑limitation, such as “without limitation” or “including, but not limited to,” or words of similar import, are used with reference thereto, but rather shall be deemed to refer to all other terms or matters that could fall within a reasonably broad scope of such term, statement or matter.

Joint and Several Liability; Successors and Assigns

. If there shall be more than one person or entity which constitute the “Tenant” or "Landlord" hereunder, the obligations of Tenant of Landlord, as applicable, hereunder shall be joint and several for all such persons and entities. The covenants and conditions herein contained, subject to the provisions as to assignment, shall inure to and bind the heirs, successors, executors, administrators and assigns of the parties hereto.

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Waiver of Jury Trial

. IN ANY ACTION OR PROCEEDING ARISING HEREFROM, LANDLORD AND TENANT HEREBY CONSENT TO (I) THE JURISDICTION OF ANY COMPETENT COURT WITHIN THE STATE WHERE THE BUILDING IS LOCATED, (II) SERVICE OF PROCESS BY ANY MEANS AUTHORIZED BY THE LAW OF THE STATE WHERE THE BUILDING IS LOCATED, AND (III) IN THE INTEREST OF SAVING TIME AND EXPENSE, TRIAL WITHOUT A JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR THEIR SUCCESSORS IN RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT’S USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM FOR INJURY OR DAMAGE, OR ANY EMERGENCY OR STATUTORY REMEDY. IN THE EVENT LANDLORD COMMENCES ANY SUMMARY PROCEEDINGS OR ACTION FOR NONPAYMENT OF BASE RENT OR ADDITIONAL RENT, TENANT SHALL NOT INTERPOSE ANY COUNTERCLAIM OF ANY NATURE OR DESCRIPTION (UNLESS SUCH COUNTERCLAIM SHALL BE MANDATORY) IN ANY SUCH PROCEEDING OR ACTION, BUT SHALL BE RELEGATED TO AN INDEPENDENT ACTION AT LAW.

Reservation

. Except as otherwise expressly set forth in this Lease, nothing set forth in this Lease shall be deemed or construed to restrict Landlord from making any repairs, renovations, replacements, improvements and modifications to, or to reconfigure, any of the parking areas, Base Building Systems, Laboratory Systems or Common Facilities serving the Property, and Landlord expressly reserves the right to make any such repairs, renovations, replacements, improvements and modifications or reconfigurations to such areas and other facilities of the Building, Base Building Systems, Laboratory Systems, and Common Facilities as Landlord may deem appropriate, including the addition or deletion of temporary or permanent improvements therein, or the conversion of areas now dedicated for the non- exclusive common use of tenants (including Tenant) to the exclusive use of one or more tenants or licensees within the Building. In connection with the foregoing, Landlord may temporarily close or cover entrances, doors, windows, corridors, or other facilities without liability to Tenant; however, in doing so, Landlord shall use commercially reasonable efforts to not unreasonably interfere with or disturb Tenant’s use and occupancy of the Premises. Notwithstanding anything in this Lease to the contrary, Landlord shall not during the Term reduce access to, reconfigure, or otherwise modify the Common Facilities in a manner that unreasonably interferes with Tenant’s use and enjoyment of, and access to, the Premises.

Prohibited Persons and Transactions

. Tenant represents and warrants that neither Tenant nor any of its affiliates, nor any of their respective partners, members, and none of their respective employees, officers, directors, representatives or agents is, nor will they become, a person or entity with whom U.S. persons or entities are restricted from doing business under regulations of the Office of Foreign Asset Control (“ OFAC “) of the Department of the Treasury (including those named on OFAC’s Specially Designated and Blocked Persons List) or under any statute, executive order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), or other governmental action and is not and will not Transfer this Lease to, contract with or otherwise engage in any dealings or transactions or be otherwise associated with such persons or entities.

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Time Is of the Essence

. Time is of the essence of each provision of this Lease.

Multiple Counterparts; Entire Agreement

. This Lease may be executed in multiple counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same document. This Lease constitutes the entire agreement between the parties hereto, Landlord’s managing agent and their respective affiliates with respect to the subject matter hereof and thereof and supersedes all prior dealings between them with respect to such subject matter, and there are no verbal or collateral understandings, agreements, representations or warranties not expressly set forth in this Lease. No subsequent alteration, amendment, change or addition to this Lease shall be binding upon Landlord or Tenant, unless reduced to writing and signed by the party or parties to be charged therewith.

Governing Law

. This Lease shall be governed by the laws of the state in which the Property is located, without regard to application of any conflict of law principles.

ARTICLE 16

EXTENSION OF TERM

16.1 Options to Extend . Provided that, both at the time of exercise or at the commencement of the Extended Term (as hereinafter defined), (i) this Lease is in full force and effect, and (ii) no Event of Default shall have occurred and be continuing (either at the time of exercise or at the commencement of the Extended Term), and (iii) Tenant is in occupancy of not less than 75% of the Premises and Tenant shall not have assigned this Lease or sublet more than 25% of the Premises (other than a transfer permitted without Landlord’s consent pursuant to Section 6.1(b) ) (any of which conditions described in clauses (i), (ii), and (iii) may be waived by Landlord at any time in Landlord’s sole discretion), Tenant shall have the option to extend the Term of this Lease for up to one (1) extended term (the “ Extended Term ”) of seven (7) years by giving written notice to Landlord (an “ Extension Notice ”) not later than twelve (12) months prior to the expiration date of the Term. The effective giving of such notice of extension by Tenant shall automatically extend the Term of this Lease for the Extended Term, and no instrument of renewal or extension need be executed. In the event that Tenant fails timely to give such notice to Landlord, this Lease shall automatically terminate at the end of the Term, and Tenant shall have no further option to extend the Term of this Lease. The Extended Term shall commence on the day immediately succeeding the expiration date of the original Term, and shall end on the day immediately preceding the seventh (7 ^th ) anniversary of such Extended Term. The Extended Term shall be on all the terms and conditions of this Lease, except: (x) Tenant shall have no further option to extend the Term, (y) the Basic Rent for the Extended Term shall be one-hundred percent (100%) of the Fair Market Rental Value of the Premises as of the commencement of the Extended Term, taking into account all then relevant factors and determined pursuant to Section 16.2 below, and (z) Landlord shall not be required to furnish any materials or perform any work to prepare the Premises for Tenant’s occupancy during the Extended Term and Landlord shall not be required to provide or pay any work allowance or reimburse Tenant for any alterations made or to be made by Tenant, or to grant Tenant any rent concession with respect to the Extended Term. The termination of this Lease during the initial Term shall terminate and render void any option or right on Tenant’s part to extend this Lease for any Extended Term, and nothing contained in this Section 16.1 shall prevent Landlord from exercising any right granted to or reserved by Landlord in this Lease to

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terminate this Lease. Tenant’s right under this Article 16 shall be personal to the Original Tenant under this Lease and shall not apply in favor of or be exercisable by any assignee of this Lease (other than a permitted transferee pursuant to Section 6.1(b) of this Lease), nor any sublessee of all or any portion of the Premises .

16.2 Determination of Fair Market Rental Value . Provided Tenant has timely delivered an Extension Notice hereunder to extend the Term of this Lease pursuant to Section 16.1 above and the conditions for Tenant’s exercise have been satisfied, Landlord shall provide Tenant, at least nine (9) months prior to the then expiration of the Term of this Lease, with Landlord’s good faith estimate of the Fair Market Rental Value of the Premises for the Extended Term. If Tenant disagrees with Landlord’s estimate of the Fair Market Rental Value as set forth in Landlord’s notice referred to above, Tenant shall notify Landlord within ten (10) Business Days after its receipt of Landlord’s notice setting forth Tenant’s estimate of the Fair Market Rental Value of the Premises and the parties agree to act in good faith to attempt to reach agreement on the Fair Market Rental Value of the Premises for the Extended Term. If Tenant fails to notify Landlord that Tenant disagrees with Landlord’s estimate and setting forth Tenant’s Fair Market Rental Value estimate within such ten (10) Business Day period then Tenant will be deemed to have accepted Landlord’s estimate of the Fair Market Rental Value for the Premises during the Extended Term. If Tenant has timely given its dispute notice and the parties are unable to reach agreement thereon within thirty (30) days after the delivery of such notice by Tenant, then either party may submit the determination of the Fair Market Rental Value of the Premises to arbitration by giving notice to the other party naming the initiating party’s arbitrator within ten (10) Business Days after the expiration of such thirty (30) day period. Within fifteen (15) days after receiving a notice of initiation of arbitration, the responding party shall appoint its own arbitrator by notifying the initiating party of the responding party’s arbitrator. If the second arbitrator shall not have been so appointed within such fifteen (15) day period, the initiating party shall deliver written notice of such failure to the responding party and the responding party shall have a period of ten (10) days after receipt of such notice to appoint its arbitrator and deliver written notice thereof to the initiating party. If the responding party fails to notify the initiating party of its designated arbitrator within the foregoing additional ten (10) day period, then the second arbitrator shall be chosen in the same manner as described below with respect to the selection of the third arbitrator. Upon the selection (or appointment, as the case may be) of the second arbitrator, the two arbitrators thus appointed shall, within fifteen (15) days after the responding party’s notice of appointment of the second arbitrator, appoint a third arbitrator. If the two initial arbitrators are unable timely to agree on the third arbitrator, then either may, on behalf of both, request such appointment by the Boston office of the American Arbitration Association, or its successor, or, on its failure, refusal or inability to act, by a court of competent jurisdiction. The Fair Market Rental Value of the Premises for the Extended Term shall be determined by the method commonly known as “baseball arbitration”, whereby Landlord’s selected arbitrator and Tenant’s selected arbitrator shall each set forth its respective determination of the Fair Market Rental Value of the Premises, and the third arbitrator must select one or the other (it being understood that the third arbitrator shall be expressly prohibited from selecting a compromise figure). Landlord’s selected arbitrator and Tenant’s selected arbitrator shall deliver their determinations of the Fair Market Rental Value of the Premises to the third arbitrator within five (5) Business Days of the appointment of the third arbitrator and the third arbitrator shall render his or her decision within ten (10) days after receipt of both of the other two determinations of the Fair Market Rental

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Value of the Premises. The third arbitrator’s decision shall be binding on both Landlord and Tenant. All arbitrators shall be commercial real estate brokers who are independent from the parties and who have had at least ten (10) years’ experience in Comparable Buildings. Each party shall pay the fees of its own arbitrator, and the fees of the third arbitrator shall be shared equally by the parties. In the event Tenant initiates the aforesaid arbitration process and as of the commencement of the Extended Term the amount of the Basic Rent for the Extended Term has not been determined, Tenant shall pay the amount determined by Landlord for the Premises and when the determination has actually been made, an appropriate retroactive adjustment shall be made as of the commencement of the Extended Term if necessary. In the event that such determination shall result in an overpayment by Tenant of any Basic Rent, such overpayment shall be paid by Landlord to Tenant promptly after such determination has been made, and if such determination shall result in an underpayment by Tenant of any Basic Rent, Tenant shall pay any such amounts to Landlord promptly following such determination. As used in this Lease, the term “Fair Market Rental Value” shall mean the fixed annual rent and additional rent that owners of Comparable Buildings have agreed to accept, and nonaffiliated tenants of Comparable Buildings have agreed to pay in current arms-length, nonequity transactions for comparable space, for a term comparable to the Extended Term and taking into account all other then relevant factors.

ARTICLE 17

RIGHT OF FIRST OFFER

17.1 Right of First Offer.

(a) Subject to the terms and conditions of this Article 17 and the rights of any Superior Occupants (as defined in Section 17.1(e)) and provided the ROFO Conditions (as hereinafter defined) are satisfied, Landlord shall give Tenant written notice (“ Landlord’s Offer Notice ”), at the time that Landlord determines, in its sole judgment, that any Available ROFO Space (as hereinafter defined) will become available for lease to an unrelated third party and after (1) the Superior Occupants have declined or failed to exercise their rights to lease such space, and (2) the expiration or termination of the lease with the then tenant of such space and the failure of such tenant in such space to exercise any extension or renewal rights granted to such party (any such party described in clause (2) of this Section 17.1 being an “ Existing Tenant ”), and Tenant will have the right to lease the offered Available ROFO Space pursuant to the terms and conditions of this Section 17.1 . For purposes hereof, “ Available ROFO Space ” shall mean any leasable space on the fourth (4 ^th ) and sixth (6 ^th ) floors of the Building, after (i) all Superior Occupants have declined or failed to exercise their rights to lease such space, (ii) the expiration or termination of the lease or occupancy agreement (whether or not such tenant or occupant occupies such space pursuant to a written agreement) with the then tenant or occupant of such space and the failure of such tenant or occupant in such space to exercise any extension or renewal rights granted to such party, and (iii) the failure of Landlord to grant any tenant or occupant of the space the right to renew or continue its term of occupancy whether or not such rights are expressly granted by a lease or other written instrument and whether or not such right to renew or continue its term of occupancy is subsequently memorialized in a lease or written instrument (any such party described in

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clauses (ii) and (iii) being an “ Existing Tenant ”). Tenant acknowledges and agrees that the Available ROFO Space is currently available for lease and the term “Initial Available ROFO Space Lease Up” shall refer to the initial leases (and any extensions or renewals thereof) entered into by Landlord with third party tenants for all or any portion of the Available ROFO Space (any such tenant or occupant of leases entered into as part of the Initial Available ROFO Space Lease-Up being a Superior Occupant for purposes of this Article 17 with respect to the Available ROFO Space leased to such tenant or occupant). The parties agree that the provisions of this Article 17 shall not apply to any Available ROFO Space until after the applicable Available ROFO Space has been leased by Landlord as part of the Initial Available ROFO Space Lease Up, and the tenants of the initial available ROFO Space Lease Up shall be deemed “Superior Occupants” for the purposes of this Lease.

(b) Landlord’s Offer Notice shall specify the rentable square footage and location of the Available ROFO Space (together with a floor plan of such space), the Basic Rent for the Available ROFO Space (which shall be Landlord’s estimate of the Offer Space Fair Market Rental (as defined in Section 17.2 ) of the Available ROFO Space), the date that Landlord estimates the Available ROFO Space will be delivered to Tenant (the “ Anticipated ROFO Commencement Date ”), the term of the Lease with respect to the Available ROFO Space (which term shall be coterminous with the remaining Term of this Lease subject to Section 17.1(d) below), and all other material terms and conditions which will apply to the Available ROFO Space. Tenant shall have an option exercisable by written notice to Landlord within fifteen (15) Business Days after the date of Landlord’s Offer Notice, time being of the absolute essence, that (x) Tenant elects to lease all (but not less than all) of the Available ROFO Space identified in Landlord’s Offer Notice on the terms set forth in Landlord’s Offer Notice, (y) Tenant elects to lease the Available ROFO Space, but that Tenant disputes Landlord’s determination of Offer Space Fair Market Rental set forth in Landlord’s Offer Notice, or (z) Tenant rejects Landlord’s Offer Notice. If Tenant rejects Landlord’s Offer Notice or if Tenant fails to timely notify Landlord of Tenant’s election, time being of the absolute essence, Tenant shall be deemed to have given notice that Tenant rejects Landlord’s Offer Notice and, in either case, Landlord shall thereafter be entitled to lease such Available ROFO Space to any third party on such terms and conditions and for such rent as Landlord determines in its sole discretion and Tenant will have no further right to lease the Available ROFO Space unless such space again becomes “Available ROFO Space” after Landlord leases the offered space to a third party after Tenant’s rejection or deemed rejection of Landlord’s Offer Notice.

(c) If Tenant timely delivers a Tenant Exercise Notice electing to lease the Available ROFO Space, then, on the date on which Landlord delivers vacant possession of such Available ROFO Space to Tenant (the “ Offer Space Commencement Date ”), the Available ROFO Space shall become part of the Premises, upon all of the terms and conditions set forth in this Lease, except that (i) the Basic Rent for the Available ROFO Space shall be the Offer Space Fair Market Rental (as hereinafter defined) for such Available ROFO Space as of the Offer Space Commencement Date, determined in the manner set forth in Section 17.2 below (unless Tenant has accepted or deemed to have accepted Landlord’s determination of the Offer Space Fair Market Rental set forth in

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Landlord’s Offer Notice), (ii) except as set forth in Landlord’s Offer Notice, Landlord shall not be required to perform any leasehold improvements, alterations or any other work, pay any Landlord’s contribution or grant any work allowance or any other amount, grant any rent concessions, or render any services to make the Building or the Available ROFO Space ready for Tenant’s use or occupancy, and Tenant shall accept the Available ROFO Space in its “as is” condition on the Offer Space Commencement Date, except that Landlord shall deliver the Available ROFO Space to Tenant vacant and broom clean, and (iii) subject to Section 17.1(d) below, Tenant’s lease of the Available ROFO Space shall be co-terminous with the Term of this Lease for the Premises (including being subject to Article 16 of this Lease).

(d) If the Available ROFO Space shall be available for delivery to Tenant at any time during the last thirty-six (36) months of either the original Term or the Extended Term, as the case may be, then: (i) if Tenant then has a right to extend the Term pursuant to Section 16.1 which has not either lapsed unexercised or been irrevocably waived, then Tenant shall have no right to lease such Available ROFO Space unless Tenant irrevocably and unconditionally exercises Tenant’s extension option prior to, or simultaneously with, the giving of Tenant’s extension option exercise notice (notwithstanding any limitation as to the time of exercise set forth in Section 16.1 ), in which event the term as to the Available ROFO Space shall be co-terminous with the Term as so extended; or (ii) if Tenant has no further right to extend the Term (i.e., because Tenant’s right to extend the Term of the Lease pursuant to Section 16.1 has been irrevocably waived by Tenant or has lapsed unexercised), then Landlord shall have no obligation to offer to Tenant and Tenant shall have no right to lease the Available ROFO Space under this Section 16.1 . Notwithstanding Tenant’s exercise of its extension option in accordance with the foregoing clause (i), the Fair Market Rental Value for the original Premises (as it may have been previously expanded) for such Extended Term shall be determined at the same time and in the same manner such Fair Market Rental Value would have been determined if Tenant had exercised the extension option within the time periods for such exercise set forth in Section 16.1 of this Lease.

(e) The term “ Superior Occupants ” for purposes of this Section 17.1 shall mean and refer to (i) the tenants of the initial ROFO Space Lease Up, (ii) the Existing Tenant from time to time of any Available ROFO Space (or any affiliate of such tenant or occupant), including any extension or renewal rights granted by Landlord at any time whether prior to or subsequent to the date hereof to the Existing Tenants of any space and regardless of whether the existing or future leases for such space expressly provide the Existing Tenants thereunder with any such right to renew or extend; and (iv) any person or entity to whom Landlord may have granted prior to the date of this Lease any written option, right of first offer, right of second offer, right of first refusal, expansion right or other right to lease or occupy any space that would otherwise have been Available ROFO Space. Landlord shall have the right to negotiate with and to lease any Available ROFO Space at any time to the Superior Occupant(s) or to extend or renew the lease or occupancy of any Superior Occupant(s) (whether or not such rights are expressly set forth in the Superior Occupant lease or occupancy agreement) before Landlord will have any obligation to offer the applicable Available ROFO Space to Tenant pursuant to this Section 17.1 . In addition, Tenant acknowledges and agrees that any space in the Building

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that intends to convert to common area or building amenity space shall not be considered available to lease or subject to Tenant’s rights under this Section 17.1 .

(f) Except with respect to the co-terminous Term of the Lease for any Available ROFO Space and the original Premises, nothing contained in this Article 17 shall be construed to require Landlord to offer Available ROFO Space at business terms identical to or consistent with the terms for the initial Premises under this Lease.

(g) The rights created by this Section 17.1 shall be personal to the Original Tenant under this Lease and shall not apply in favor of or be exercisable by any assignee of this Lease (other than an assignee or successor that is permitted without Landlord’s consent pursuant to Section 6.1(b) of this Lease), nor any sublessee of all or any portion of the Premises.

(h) The “ ROFO Conditions ” shall mean the following conditions are satisfied in full both as of the date of Landlord’s Offer Notice, and on the commencement date of this Lease as to the applicable Offer Space (as hereinafter defined): (1) this Lease is in full force and effect, (2) no Event of Default of Tenant shall have occurred and be continuing and there shall not have been more than two monetary or material non-monetary Event of Defaults of Tenant under this Lease (even if subsequently cured by Tenant), and (3) the Original Tenant shall be in occupancy of the entire Premises and Tenant has not assigned this Lease or sublet any portion of the Premises, exclusive of transfers permitted without consent pursuant to Section 6.1(b) (provided that the foregoing requirements of clauses (2) and (3) of this sentence may be waived by Landlord in its sole discretion, at any time).

17.2 Determination of Offer Space Fair Market Rental.

(a) The Basic Rent with respect to any Available ROFO Space leased by Tenant pursuant to this Section 17.1 (individually or collectively for purposes of this Section 17.2 , the “ Offer Space ”) shall be the Offer Space Fair Market Rental for such Offer Space and which shall be determined as of the date estimated by Landlord in Landlord’s Offer Notice as the Anticipated ROFO Commencement Date for such Offer Space. If Tenant timely so elects to lease the Available ROFO Space pursuant to Section 17.1 , but disputes Landlord’s determination of the Offer Space Fair Market Rental for the Available ROFO Space, and the parties do not agree on the Offer Space Fair Market Rental within thirty days (30) after delivery of such notice from Tenant, then either party may initiate the arbitration procedure set forth in Section 16.2 above to determine the Offer Space Fair Market Rental by giving notice to the other within an additional thirty (30) days after the end of such thirty (30) day period, provided, however, for purposes of any arbitration procedure, references in Section 16.2 to “Premises” shall be deemed to refer instead to the applicable Offer Space and references to “Fair Market Rental Value” shall be deemed to refer instead to the Offer Space Fair Market Rental defined in this Section 17.2 for the remainder of the Term of this Lease. If neither party timely submits the dispute for arbitration within such ten (10) Business Day period, Landlord’s determination in the Landlord’s Offer Notice shall be binding on the parties. Upon determination of the Offer Space Fair Market Rental of the applicable Offer Space, or if

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Tenant has accepted (or is deemed to have accepted) Landlord’s determination in the Landlord’s Offer Notice, Landlord and Tenant shall, within thirty (30) days, execute an amendment to this Lease incorporating the applicable Offer Space into the Premises upon the terms contained in Landlord’s Offer Notice, and otherwise on substantially the same terms and conditions as contained in this Lease, provided, however, failure of the parties to execute such an amendment shall have no effect on the effectiveness of the expansion of the Premises to include the applicable Offer Space and the economic terms associated therewith as set forth above. If either party submits the determination of the Offer Space Fair Market Rental Value to arbitration and as of the commencement date of this Lease for such Offer Space the amount of the Offer Space Fair Market Rental Value has not been determined, Tenant shall pay the amount set forth in Landlord’s determination in the Landlord’s Offer Notice as the Basic Rent for the Offer Space and when the determination has actually been made, an appropriate retroactive adjustment shall be made as of the commencement date for such Offer Space if necessary. In the event that such determination shall result in an overpayment by Tenant of any Basic Rent, such overpayment shall be paid or, at Tenant’s election, credited by Landlord to Tenant promptly after such determination has been made, and if such determination shall result in an underpayment by Tenant of any Basic Rent, Tenant shall pay any such amounts to Landlord within thirty (30) days following such determination.

(b) For purposes of this Article 17 , the “ Offer Space Fair Market Rental ” of the applicable Offer Space means the fixed annual rent and additional rent that owners of Comparable Buildings have agreed to accept, and nonaffiliated tenants of Comparable Buildings have agreed to pay in current arms-length, nonequity transactions for comparable expansion space for comparable office and laboratory use, for a term comparable to the remaining Term of this Lease following the Anticipated ROFO Commencement Date and taking into account all other relevant factors, including that Landlord shall be entitled to laboratory rental rates for fifty percent (50%) of each floor now or hereafter designated for the Laboratory Portion even in the event Tenant shall not be using the same for laboratory purposes.

[Signatures commence on following page]

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[Signature page of lease]

IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be duly executed by persons hereunto duly authorized, as of the date first set forth above.

LANDLORD:

ICE BOX, LLC, a Massachusetts limited liability company

By: ICE BOX MANAGER, LLC, a Massachusetts limited liability company, its Manager

By:/Jim Halliday

Name: James M. Halliday
Title: Vice President

TENANT:

PROTEOSTASIS THERAPEUTICS, INC.

By:/s/ Meenu Chhabra

Name: Meenu Chhabra
Title: President and CEO
Tenant’s Federal Taxpayer
Identification Number:

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EXHIBIT A
Location Plan of Premises

A-1

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EXHIBIT B
Site Plan of the Boston Landing Project

B-1

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EXHIBIT C
Landlord’s Work

1. Construction of Landlord’s Work . Subject to the provisions of this Exhibit C , Landlord, at Landlord’s sole cost and expense, shall cause John Moriarty & Associates, or such other general contractor acceptable to Landlord (“ General Contractor ”) to perform the laboratory conversion of the Building and the shell delivery condition of the Premises (“ Landlord’s Work ”) substantially in accordance the Landlord/Tenant Matrix (“ Landlord/Tenant Matrix ”) attached hereto as Schedule 1 and those construction documents listed on Schedule 2 attached hereto. The Landlord’s Work shall not include the elements shown on Exhibit D or any attachments thereto, which elements shall be performed by Tenant, at Tenant’s expense, as part of the Tenant Work. Landlord shall have the right to make changes to Landlord’s Work (the “ Landlord Permitted Changes ”) that do not (i) materially reduce the quality of materials shown in the Landlord’s Work, or (ii) materially and adversely affect the design, costs to install, or performance of the Tenant Work (but only to the extent Tenant has already submitted Tenant’s Construction Drawings (as hereinafter defined) pursuant to Exhibit D for the Tenant Work to Landlord) or Tenant’s use thereof for the Permitted Use. Landlord shall give Tenant reasonable advance written notice of any such changes to the Landlord’s Work that affect the Premises prior to implementing such changes, indicating whether or not such change is a Landlord Permitted Change or not, and if such change is not a Landlord Permitted Change, the change shall be subject to prior written approval by Tenant, which approval shall not be unreasonably withheld, conditioned or delayed. Failure by Tenant to disapprove any submission of proposed changes to the Landlord’s Work within five (5) Business Days after submission shall constitute approval thereof. Any disapproval shall be accompanied by a specific statement of the reasons therefor. Landlord shall be responsible for obtaining all building permits and other governmental approvals required to construct the Landlord’s Work and for causing the General Contractor to construct the Landlord’s Work as described on and substantially in accordance with the Landlord/Tenant Matrix, in compliance with all of the terms and conditions of this Exhibit C and the Lease, in a good and workmanlike manner and with all applicable Laws.

2. Substantial Completion . The Landlord’s Work shall be deemed “ Substantially Complete ” as of the date (the “ Substantial Completion Date ”) that (i) the Landlord’s Work is completed except for minor, punch list-type items of work and adjustment of equipment and fixtures (“ Punch List Items ”) that can be completed after Tenant commences the performance of the Tenant Work or after its occupancy of the Premises without, in the aggregate, causing material interference with the performance of the Tenant Work or Tenant’s use or occupancy of the Premises, (ii) all governmental inspections for occupancy of the base building have been successfully completed and a temporary certificate of occupancy has been authorized for issuance by the applicable governmental authority to the extent required by law, and (iii) Landlord’s architect has issued a Certificate of Substantial Completion relating thereto, provided, however, if the Landlord’s Work is delayed by any Tenant Delay, then the Substantial Completion Date shall be the date upon which the aforesaid conditions would have been satisfied but for such Tenant Delay. In the event Landlord has a qualified third party commission the Base Building Systems Landlord shall provide Tenant with a copy of such commissioning report. Landlord shall complete, as soon as conditions practically permit and within thirty (30) days following the Substantial Completion Date all Punch List Item, subject to delays resulting from

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Landlord’s Force Majeure and delays due to the failure of Tenant to permit timely access to the Premises . “ Landlord’s Force Majeure ” shall mean any prevention, delay or stoppage due to governmental regulation, strikes, lockouts or other labor difficulties, acts of God, acts of war, terrorist acts, civil commotions, unusual scarcity of or inability to obtain labor or materials, casualty or other causes reasonably beyond Landlord's control and excluding normal weather related events typical for the applicable season of the year; provided, however, that in no event shall the financial inability of Landlord or Landlord’s contractors constitute a cause beyond Landlord’s reasonable control. Landlord will exercise reasonable efforts to Substantially Complete the Landlord’s Work by February 15, 2018 (the “ Estimated Commencement Date ”).

3. Early Access. Provided and on the express condition that Tenant uses John Moriarty & Associates as the general contractor to perform the Tenant Work, Landlord will permit Tenant and Tenant’s contractors to access the Premises from and after September 15, 2017 in order to commence the performance of the Tenant Work so long as, in Landlord’s reasonable determination, such access and work can be performed without interference with or delay in the timely performance of any remaining Landlord’s Work. If Tenant does not use John Moriarty & Associates as the general contractor for the Tenant Work, Tenant will have no right to access the Premises for the performance of the Tenant Work until the Substantial Completion Date, provided, however, upon the request of Tenant, Landlord shall grant Tenant reasonable access to the Premises following completion of Landlord’s demolition work to the Premises to allow Tenant to perform Customary Pre-Construction Activities (as hereinafter defined), provided such access, in Landlord’s reasonable discretion, is coordinated with and will not interfere with the timely performance of Landlord’s Work. Any early access by Tenant prior to the substantial completion of the Landlord’s Work shall be subject to reasonable rules and regulations as may be established by Landlord from time to time, including, without limitation, hours of access and that the performance of Landlord’s Work shall have priority over any activities that Tenant is conducting or shall propose to conduct during the period prior to the Substantial Completion of Landlord’s Work. Any interference by Tenant, its employees, agents, invitees or contractors that causes an actual delay in the performance of the Landlord’s Work as a result of Tenant’s early access to the Premises shall constitute a Tenant Delay under this Lease. “Customary Pre-Construction Activities” shall mean such architectural and engineering activities that are generally performed in preparation for the construction of first class office space in the financial district of Boston, Massachusetts and which do not involve the performance of work which physically alters in any way any portion of the Premises or the Building and which do not affect or interfere with the operation of any Building systems. Examples of Customary Pre-Construction Activities are the taking or preparation of measurements, surveys, elevations, sketches and layouts. Any such access to the Premises by Tenant and Tenant’s employees, agents, contractors, subcontractors material suppliers and laborers prior to the Substantial Completion Date shall be (i) at Tenant’s sole risk and expense, (ii) coordinated with the timely performance of the Landlord’s Work and not interfere with or delay in any material respect the performance of the Landlord’s Work, and (iii) subject to such reasonable access rules as Landlord may impose based upon the status of completion of Landlord’s Work and the remaining Landlord’s Work to be performed in the Premises, (iv) subject to and upon all of the same terms and conditions of this Lease except for the obligation to pay Rent, (v) conditioned upon Tenant’s complying with and performing, and causing its employees, agents, contractors, subcontractors, material suppliers and laborers to comply with and perform, all of Tenant’s insurance and indemnity obligations and other obligations governing the conduct of Tenant at the

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Property under the Lease (provided that no Basic Rent, or Additional Rent shall accrue or be payable during such time), and (vi) to the fullest extent permitted by applicable Laws, the installation or placement of any furniture, equipment, construction materials and supplies and other property in the Premises shall be at the sole risk and hazard of Tenant and Landlord shall not be liable for any theft, loss, injury or damage to any such property therein and Tenant shall be solely responsible for the security of any such Tenant’s property, materials and supplies.

4. Tenant Delays . As used in this Work Letter, “ Tenant Delay ” shall mean any actual delay in the design, commencement, progress or substantial completion of any elements of the Landlord’s Work attributable to the following (i) the default of Tenant, or Tenant’s agents, employees or contractors under the Lease, including this Exhibit C , or (ii) the failure of Tenant or Tenant’s Construction Representative (as defined in Exhibit D ) to make any requested written submission, or to respond to any written request to Tenant from Landlord, or to take any other required action, within the time periods for such submission, response, or action as set forth in the Lease and/or this Exhibit C ; or (iii) Tenant Change Orders made by Tenant in accordance with Exhibit D ; or (iv) any delays resulting from Tenant or any of Tenant’s contractors not complying with the rules and regulations for the performance of the Tenant Work in the Building of which Tenant is given written notice; or (v) any other delays caused by the acts or, where there is a duty of Tenant to act under the Lease or Exhibit C or Exhibit D , omissions by Tenant, Tenant’s contractors, architects, engineers or anyone else engaged by, through or under Tenant in connection with the preparation of the Premises for Tenant’s occupancy, including, without limitation, utility companies and other entities furnishing communications, data processing or other service, equipment or furniture.

Tenant agrees that no Tenant Delay shall delay commencement of the Term or the obligation to pay Basic Rent or Additional Rent and the Commencement Date will be the date the Commencement Date would have occurred but for Tenant Delay. Tenant shall reimburse Landlord for the amount, if any, by which the cost of Landlord’s Work is increased as the direct result of any Tenant Delay within thirty (30) days of billing therefor, and shall be considered to be Additional Rent. Landlord agrees to provide Tenant with written notice advising Tenant that such Tenant Delay is occurring and setting forth Landlord’s good faith estimate as to the likely length of such Tenant Delay within a reasonable period of time after Landlord becomes aware of such Tenant Delay, provided, however, that Landlord will not have any obligation to deliver any Tenant Delay notice to Tenant with respect to any Tenant Delay that Landlord has previously disclosed in writing to Tenant or Tenant is otherwise aware of, such as, by way of example only, the Tenant Delay that Landlord disclosed in writing to Tenant in connection with Landlord’s review and approval of a Tenant Change Order.

5. Warranty Period.

Landlord warrants to Tenant that the materials and equipment furnished in the performance of the Landlord’s Work will be of good quality and the Landlord’s Work will be free from defects not inherent in the quality described in the applicable plans and specifications therefor. Any portion of the Landlord’s Work not conforming to the foregoing requirements will be considered defective and will be repaired or replaced by Landlord at Landlord’s expense so long as Landlord receives notice of such defect prior to the expiration of the Warranty Period (as hereinafter defined). The foregoing warranty shall not apply to the extent of damage or defect caused by (1) the negligent acts or omissions or the willful misconduct of Tenant or any of Tenant’s agents, employees or contractors, (2) improper

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operation by Tenant or anyone claiming by, through or under Tenant, or (3) normal wear and tear and normal usage. The foregoing warranty with respect to each component of the Landlord’s Work shall commence on the Substantial Completion Date and shall expire on the date which is one (1) year after the Substantial Completion Date (the “ Warranty Period ”), and Tenant shall be required to deliver notice to Landlord of any defects prior to the expiration of the Warranty Period in order to permit Landlord to take action to enforce Landlord’s warranty rights with respect to the Landlord’s Work. Landlord agrees that it shall correct any portion of the Landlord’s Work which during the Warranty Period is found not to be in accordance with the warranties set forth in this Section 5. Landlord shall use commercially reasonable efforts to enforce warranties from its general contractors, subcontractors, vendors and others on Tenant’s behalf. Except for Punch List Items and except to the extent to which Tenant shall have given Landlord notice of defective items or any other items as to which Landlord has not performed Landlord’s construction obligations under this Exhibit C within the Warranty Period, subject to Landlord’s obligations with respect to claims submitted by Tenant to Landlord prior to the expiration of the Warranty Period, Tenant shall be deemed conclusively to have approved Landlord’s construction following Tenant’s taking possession of the Premises for the normal conduct of its business and shall have no claim that Landlord has failed to perform any of Landlord’s obligations under this Lease or Exhibit C with respect to Landlord’s Work.

6. Remedy for Late Delivery . If the Substantial Completion Date of the Landlord’s Work has not occurred by the Estimated Commencement Date, subject to a day for day postponement of such Estimated Commencement Date on account of delays in the substantial completion of the Landlord’s Work resulting from any Tenant Delay, then the April 15, 2018 date set forth in clause (i) of the definition of the Rent Commencement Date in Section 1.1 of this Lease, shall be postponed one (1) day for each day the Substantial Completion Date is delayed beyond the Estimated Commencement Date (as so extended). If the Substantial Completion Date of the Landlord’s Work has not occurred by March 15, 2018 (the “ Outside Date ”), subject to a day for day postponement of such Estimated Commencement Date on account of delays in the substantial completion of the Landlord’s Work resulting from any Landlord’s Force Majeure delay and/or any Tenant Delay, and such failure of the Landlord’s Work by the Outside Date results in an actual delay of the Substantial Completion of the Tenant Work (as hereinafter defined) then Tenant shall have the right to receive a credit against the Basic Rent payable under the Lease equal to one (1) day’s Basic Rent for each calendar day following the Outside Date (as so extended) and ending on the Substantial Completion Date.

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SCHEDULE 1
Landlord/Tenant Matrix

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SCHEDULE 2
List of Construction Documents for Landlord’s Work

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EXHIBIT D
Tenant Work

1. DEFINED TERMS .

Capitalized terms not defined herein shall have the same meaning ascribed to such terms within the Lease (including all other Exhibits to the Lease). In addition, the following terms shall have the following meanings:

“ Building Permit Date ” shall mean the date upon which a building permit for the Tenant Work is first issued or issuable by the applicable governmental authority to Tenant (and/or any contractor, architect or permit expediter processing such building permit on Tenant’s behalf), whether or not Tenant (or such contractor, architect or permit expediter) actually obtains the issuance of such permit on such date.

“ Change Order ” shall have the meaning set forth in Section 3 of this Exhibit D below.

“ Construction Documents ” shall mean the construction drawings for the Tenant Work, as approved (and/or deemed approved) by Landlord and Tenant, as the same may be modified (i) by Change Orders, and/or (ii) to meet the requirements of a reviewing governmental authority and comply with all applicable laws, codes, rules and regulations as part of the process of obtaining the issuance of building permits or other approvals for the Tenant Work, provided any material modifications to the approved Construction Documents required by a reviewing governmental authority for the issuance of a building or other permit required to perform the Tenant Work shall be subject to Landlord’s approval in accordance with the standards set forth in Section 5.3 of the Lease.

“ Landlord’s Contribution ” shall mean an amount equal to $160.00 per rentable square foot of the Premises for a total of Four Million Seven Hundred Seventy Three Thousand Seven Hundred Sixty and 00/100 Dollars ($4,773,760.00).

“ Partial Lien Release ” means a partial release of liens to be provided at the time of each payment of a portion of Landlord’s Contribution, other than the final payment of the Landlord's Contribution, and relating to payment for the portion of work for which the prior Landlord's Contribution was applied. Partial Lien Releases shall (i) be executed and delivered by Tenant’s Contractor and any and all subcontractors and/or materialmen supplying labor and/or materials in connection with the Tenant Work performed under the Tenant's Contractor's construction contract with Tenant, and (ii) be in form and substance reasonably satisfactory to Landlord

" Final Lien Release " means the final release of liens to be provided at the time of final completion of the Tenant Work, and in all events prior to Landlord making final payment of any unfunded portion of Landlord’s Contribution relating to the applicable portion of the work in question. Final Lien Releases shall (i) be executed and delivered by Tenant’s Contractor and any and all subcontractors and/or materialmen supplying labor and/or materials in connection with the Tenant Work performed under the Tenant's Contractor's construction contract with Tenant, and (ii) be in form and substance reasonably satisfactory to Landlord.

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“ Space Plan ” shall mean that certain Space Plan entitled Proteostasis Therapeutics, Inc. Floor 5 80 Guest Street, Brighton, Massachusetts Preliminary Layout (Job #17158.11) dated August 10, 2017, prepared by R.E. Dinneen Architects & Planners, Inc. and relating to the Premises.

“ Substantial Completion of the Tenant Work ” and phrases of a similar nature shall mean that the Tenant Work shall have been completed substantially in accordance with the Construction Documents, other than (A) items that require an unusually long lead time for procurement and/or installation, and (B) “punch list” items and other minor defects which will not unreasonably interfere with Tenant’s ability to lawfully occupy and use the Premises or prevent the issuance of an final inspection approvals and an occupancy permit or its equivalent. Tenant shall be responsible for obtaining all governmental inspection and other approvals with regard to the Tenant Work and/or which are necessary to permit Tenant to install its furniture, fixtures and equipment in, and to occupy and use, the Premises lawfully for the Permitted Use.

“ Tenant’s Contractor ” means the general contractor selected by Tenant to perform the Tenant Work, which general contractor shall be subject to Landlord’s prior approval, which shall not be unreasonably withheld, conditioned or delayed.

“ Tenant’s Construction Representative ” shall mean Brett Hagan and Michael McDonell, or any other representative appointed by Tenant of which Landlord is notified. Tenant’s Construction Representative shall have the power to bind Tenant with respect to all matters arising under this Exhibit D . In addition, Tenant agrees that written notices or transmittals given by Landlord to Tenant’s Construction Representative pursuant to this Exhibit D shall be deemed duly delivered to Tenant for all purposes of the Lease (effective as of the earlier to occur of actual receipt or refusal of such delivery by Tenant’s Construction Representative).

“ Tenant Work ” shall mean all improvements, alterations, installations and work shown on the Construction Documents, except as otherwise set forth in this Exhibit D .

2. PREPARATION OF PLANS AND SPECIFICATIONS .

(a) Promptly following the date of this Lease, Tenant shall cause construction drawings for the Tenant Work (“ Construction Drawings ”) consistent with the Space Plan to be completed and submitted to Landlord for review and approval.

(b) Within ten (10) Business Days after receipt of any Construction Drawings, Landlord shall return such Construction Drawings to Tenant with its objections, suggested modifications and/or approval (which suggested objections and suggested modifications are herein referred to as “ Landlord Modifications ”). Unless Tenant has an objection to any Landlord Modifications, said Construction Drawings shall thereafter be revised by Tenant to reflect the applicable changes. If, upon receipt of any Landlord Modifications, Tenant wishes to take exception thereto, Tenant may do so within ten (10) Business Days after Tenant’s receipt of such Landlord Modifications. In such event, Tenant shall confer with Landlord prior to the expiration of such ten (10) Business Day period to resolve all matters with which Tenant was not in agreement. Landlord and

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Tenant, in good faith, agree to resolve outstanding issues within such ten (10) Business Days, and Tenant thereafter will as soon as reasonably practicable revise the Construction Drawings to reflect such final agreement. After the first submission and resubmission, Landlord and Tenant agree (i) to restrict further objections or disputes to matters which have not previously been agreed upon or accepted by the other party, (ii) to deliver revised submissions or objections within ten (10) days following receipt, and (iii) to confer regularly in a good faith effort to resolve all matters in dispute expeditiously. The parties shall, in all events, attempt to reach final agreement on the Construction Drawings as soon as possible. Each party agrees that its failure to respond to a submission or resubmission within the above- referenced time frames shall constitute such party’s acceptance of the submission or resubmission in question, or, to the extent applicable, a delay caused by the delinquent party.

(c) Promptly upon final approval of the Construction Documents, Tenant shall submit an application for, and diligently pursue issuance of, a building permit (and any other approvals required) for the Tenant Work. Landlord, at no cost, shall reasonably assist Tenant in the procurement of its building permit including signing any typical permit processing documents. Tenant shall provide Landlord with copies of all written comments, responses, approvals, disapprovals and/or other correspondence received from all applicable governmental authorities in connection with such application, and shall otherwise keep Landlord informed regarding the processing of Tenant’s building permit application.

3. PERFORMANCE OF TENANT WORK .

(a) Promptly after the issuance of a building permit for the Tenant Work, Tenant shall commence and perform the Tenant Work, in order to achieve Substantial Completion of the Tenant Work. Except as provided herein, no deviation from the Construction Documents shall be made by Tenant (other than field changes, substitution of material and other minor changes) except by written change order approved by Landlord (“ Change Order ”), which approval shall not be unreasonably withheld, conditioned or delayed subject to the terms of Landlord’s construction and other building rules and regulations. Tenant shall be responsible for the payment of any and all costs to complete the Tenant Work except to the extent Tenant is entitled to receive Landlord’s Contribution and the Space Planning Allowance under this Exhibit D . All Tenant Work shall be performed by Tenant’s Contractor and subcontractors; and those subcontractors whose cost of work exceeds $5,000.00 shall have been approved by Landlord, which approval will not be unreasonably withheld, conditioned or delayed. All subcontractors performing the Tenant Work shall be financially sound and able to complete the portion of the Tenant Work for which they are responsible in a prompt and timely fashion. In the performance of the Tenant Work by Tenant or Tenant’s Contractor, Tenant shall comply with, and shall cause Tenant’s Contractor and all subcontractors to comply with, the provisions of this Exhibit D .

(b) The performance of the Tenant Work by Tenant or under Tenant’s supervision shall be governed (in addition to the provisions of this Exhibit D ) by all covenants, agreements, rules and regulations set forth in the Lease with regard to

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Alterations, as if such provisions were fully restated herein and expressly made applicable to the performance of the Tenant Work. Without limitation, Tenant will enter into one or more construction contracts for the performance of the Tenant Work with the Tenant’s Contractor, and will deliver a true, correct and complete copy of such construction contract(s) to Landlord promptly after execution.

(c) The Tenant Work under this Exhibit D may not commence nor may Tenant permit Tenant’s Contractor or any other contractors and/or subcontractors to commence any work until all required contractors (including Tenant’s Contractor) and subcontractor insurance has been obtained, and, if Landlord requests, until such contractor and subcontractor certificates of such insurance have been delivered to Landlord. Such insurance policies shall name the Landlord, Landlord’s property manager and Landlord’s mortgagee(s) as additional insureds and such other parties as may be reasonably requested by Landlord as additional insureds. Such certificates of insurance shall provide that no material change or cancellation of such insurance coverage shall be undertaken without thirty (30) days’ prior written notice to Landlord of the insurer will not include such a provision in the certificates, then Tenant shall provide such notice to Landlord.

(d) Landlord will, upon reasonable prior notice to Tenant, have the right to inspect the performance of the Tenant Work by Tenant’s Contractor and any subcontractor(s), and Tenant agrees to cooperate with Landlord to facilitate such inspections, including notifying Landlord prior to any and all government inspections of the Tenant Work so that Landlord’s construction manager can be present for such inspections. Landlord shall not unreasonably interfere with the performance of the Tenant Work during the course of any inspections by Landlord pursuant to this subparagraph but Landlord shall have no liability to Tenant in connection with such inspections except to the extent of the negligence or willful misconduct of Landlord or any Landlord Parties and subject to the waiver of claims and subrogation set forth in Section 10.5 of this Lease

(e) Tenant and its contractor performing the Tenant Work shall provide copies of warranties for the Tenant Work and the materials and equipment which are incorporated into the Building and Premises in connection therewith, as well as provide to Landlord all operating and maintenance manuals for all equipment and materials incorporated into the Building and/or Premises as part of the Tenant Work. Tenant shall enforce all such warranties to the extent repairs and/or maintenance is required to be performed by Landlord under this Lease on warranted items covered by such warranties. Without limitation, all aspects of the Tenant Work shall be warranted to be free from defects in design and workmanship for a period of not less than one (1) year from Substantial Completion of the Tenant Work.

(f) Except as expressly permitted under Section 3 of Exhibit C attached hereto, Tenant shall have no right to enter the Premises prior to the Substantial Completion Date. However, in the event Landlord consents in its discretion to any such entry, such entry shall be subject to all of the terms and conditions of the Lease, except for the obligation to pay Rent (which will not be applicable until the Rent

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Commencement Date, as provided in the Lease). Tenant shall bear the full risk of loss for any materials, equipment or other property which are brought into the Building or the Premises as part of the Tenant Work (which shall be stored or installed in the Premises at Tenant’s sole risk). Notwithstanding the Substantial Completion Date, Tenant shall not occupy or conduct business in or from the Premises until the Tenant Work is Substantially Complete and Tenant has obtained a temporary or final certificate of occupancy and similar approvals from applicable governmental authorities for the lawful use and occupancy of the Premises for the Permitted Use.

(g) Upon Substantial Completion of the Tenant Work, Tenant shall deliver to Landlord a written notice (the “ Completion Notice ”) certifying that the Tenant Work is Substantially Complete. Within five (5) days after Tenant delivers the Completion Notice, Tenant and a representative of Landlord shall jointly inspect the Premises with Tenant’s architect and Tenant’s Contractor. If, as a result of the aforementioned joint inspection, either Landlord or Tenant discovers minor deviations or variations from the Construction Documents of a nature commonly found on a “punch list” (as that term is used in the construction industry), Tenant shall promptly notify Tenant’s Contractor of such deviations; provided, however, that in the event of a dispute, Landlord (or Landlord’s Representative) and Tenant (or Tenant’s Contractor) shall negotiate in good faith, using their reasonable discretion, to determine which items constitute punch list items. The existence of such punch list items shall not affect the obligation of Tenant to pay Rent, additional rent or any other charges due under this Lease. Tenant’s construction contract for the Tenant Work will require that Tenant’s Contractor cause all such punch list items to be remedied as soon as is practicable after the date of such joint inspection, and Tenant will use all reasonable and diligent efforts to enforce such obligation.

(h) All Tenant Work shall be performed using contractors and subcontractors which will not create or increase the likelihood of any labor disputes, disharmony, strikes or any other forms of protest at the Property.

4. PAYMENT OF COSTS; TENANT’S CONTRIBUTION; LANDLORD’S CONTRIBUTION .

(a) Tenant shall complete the Tenant Work on a lien-free basis. Without limiting Landlord’s rights and remedies due to an Event of Default by Tenant due to its violation of this covenant, if a lien is filed or attaches to the Premises, the Building or the Property as a result of the Tenant Work, Landlord shall have the right (but not the obligation) to pay such costs to remove such lien, and to deduct from Landlord’s Contribution, or bill Tenant for, any amount so paid by Landlord.

(b) In consideration of Tenant’s fulfillment of all of its obligations under this Exhibit D and the performance of all of its financial and other obligations under this Lease and subject to the terms of this Exhibit D , Landlord agrees to fund Landlord’s Contribution (subject to the limitations set forth below) towards the total costs (the " Total TI Costs ”) incurred by Tenant to perform the Tenant Work in or to the Premises, subject to the Landlord Funding Conditions (as hereinafter defined). Notwithstanding

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any provision of this Section 4(b) to the contrary, Tenant shall have the right to apply up to twenty percent (20%) of the Landlord’s Contribution to soft costs associated with the Tenant Work including, but not limited to, architect’s and engineer’s fees and data and telecom cabling, but not for Tenant’s furniture, fixtures and equipment or moving costs. Tenant acknowledges and agrees that Landlord’s total financial obligation with respect to the design, permitting, purchase, construction, and installation of the Tenant Work or any other improvements to the Premises shall be limited solely to Landlord’s Contribution and Landlord shall have absolutely no obligation to make any payment of the Landlord’s Contribution until the requirements set forth in Section 4 (c) of this Exhibit D have been satisfied. Tenant shall be solely responsible for any and all Total TI Costs, except to the extent Landlord is obligated to disburse any portion of Landlord’s Contribution. The amount of Total TI Costs in excess of Landlord’s Contribution shall be paid by Tenant and is herein referred to as the “ Tenant Contribution .” From and after September 15, 2017, the Landlord’s Contribution solely with respect to the Tenant's Work to be performed under Tenant's construction contract with Tenant's Contractor will be payable on a percentage of completion basis, not more than once during each calendar month, and any amount so funded will be paid to Tenant’s Contractor (or reimbursed to Tenant if Tenant has already paid Tenant’s Contractor and provided evidence of such payment and a partial lien waiver therefor to Landlord) within thirty (30) days following Landlord’s receipt of all of the following items:

(i) a payment request (a “ Funding Request ”), seeking that percentage of Landlord’s Contribution (less the applicable holdback amount specified below) which corresponds to the percentage of completion of the Tenant Work performed in or to the Premises which has been achieved as of the date of such payment request:

(ii) a certificate of Tenant’s architect to Landlord and any other party reasonably designated by Landlord (such as Landlord’s mortgagee, if any) specifying the percentage of completion of the Tenant Work performed in or to the Premises in accordance with the Construction Documents which Tenant has achieved as of the date of such certificate, which shall in no event be less than the sum of (A) the percentage of Landlord’s Contribution which Tenant is then seeking to have disbursed (exclusive of any holdback amount hereinafter provided in this Exhibit D ), plus (B) the percentage of Landlord’s Contribution (exclusive of any holdback amount previously impounded) which has previously been disbursed to Tenant in connection with any and all prior payment requests made by Tenant for the Premises (and in any payment request seeking final payment, such certificate shall include a certification by the Tenant’s architect that the Tenant Work for the Premises has been Substantially Completed in accordance with the Construction Documents, and that all punch list items noted by the parties have also been fully completed);

(iii) a copy of the temporary or final certificate of use and occupancy (or its equivalent) issued to Tenant by the applicable governmental authority with respect to the Premises (final payment of Landlord’s Contribution only). If the temporary certificate of use and occupancy is provided, Tenant shall provide the

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final certificate of use and occupancy as soon as it is issued by the applicable governmental authority;

(iv) a copy of complete as-built plans and specifications for the Tenant Work to the Premises (final payment of Landlord’s Contribution only);

(v) evidence that Tenant has funded the Tenant Contribution prior to any payment request (and each prior payment request made by Tenant), as defined in and determined pursuant to Section 4(c), below; and

(vi) Partial Lien Release for the Tenant Work with respect to which payment is being requested, other than the final payment, and a Final Lien Release for the final payment of the Landlord's Contribution.

Upon receipt and approval of all such items and subject to Landlord’s right to dispute the amount properly due pursuant to this Exhibit D in connection with a Funding Request, Landlord shall, within thirty (30) days following receipt of the Funding Request, disburse the amount requested to be funded to Tenant. If Tenant fails to pay any portion of the Tenant Contribution as and when required, Landlord shall have the right to withhold any further funding of Landlord’s Contribution pending Tenant’s delivery of evidence reasonably satisfactory to Landlord that Tenant has made such Tenant Contribution and any such withholding by Landlord shall not be deemed a delay by Landlord or otherwise postpone Tenant’s obligation to pay Rent under this Lease. In addition, excluding any portion of a Funding Request relating solely to soft costs, Landlord shall have the right to hold back five percent (5%) of the amount of requested from any Funding Request until such time as, in addition to Tenant’s satisfaction of the requirements otherwise applicable to a final payment under clauses (i) – (vi) above of this Section 4(b), Landlord has received a certificate from Tenant’s architect that all punch list items have been corrected or completed; provided, however, such hold back shall not be in addition to the retainage under Tenant’s construction contract for the Tenant’s Work and in the event Tenant submits a Funding Request that reflects at least a five percent (5%) retainage under Tenant’s construction contract for the Tenant’s Work then Landlord will not withhold such additional five percent (5%) hold back and will retain a five percent (5%) hold back only from the final Funding Request in accordance with this Section 4(b) . Subject to the twenty percent (20%) cap set forth in this Section 4(b) , from and after September 15, 2017, the Landlord’s Contribution allocable to soft costs applicable to Tenant's Work hereunder shall be paid by Landlord to Tenant within thirty (30) days after Landlord's receipt of a reasonably detailed invoice therefor.

(c) In addition to the Landlord’s Contribution, Landlord agrees to provide Tenant with a space planning allowance (the “ Space Planning Allowance ”) in an amount not to exceed $2,983.60 to be applied toward the cost of the preparation of a preliminary space plan or fit plan for the Premises to be prepared by Tenant’s architect. The Space Planning Allowance shall be paid to Tenant within ten (10) Business Days

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after the later of the date this Lease is executed and delivered by the parties and the date Landlord receives a copy of a paid invoice therefore from Tenant.

(d) Notwithstanding anything in this Lease, including this Exhibit D to the contrary, Landlord’s obligation to make any payment of the Landlord’s Contribution or the Space Planning Allowance is conditioned upon there being no uncured Event of Default under this Lease.

Without limiting Tenant’s obligations to complete all of the Tenant Work to the Premises in accordance with the terms hereof, Tenant acknowledges and agrees that Landlord shall have no obligation to pay or fund the final installment of Landlord’s Contribution if the Tenant Work to the Premises is not substantially complete and conditions (i) through (vi) above are not satisfied within twelve (12) months following the Rent Commencement Date of this Lease.

5. Additional Provisions Regarding the Tenant Work .

With regard to the performance of the Tenant Work pursuant to this Exhibit D , the following provisions shall apply:

(a) Insurance Requirements During Construction .

(i) Tenant shall secure, pay for, and maintain, or cause its contractors and subcontractors to secure, pay for, and maintain, during the continuance of construction and fixturing work within the Premises, all of the insurance policies required in the amounts as set forth herein, together with such insurance as may from time to time be required by city, county, state or federal laws, codes, regulations or authorities.

(ii) The Tenant Work under this Exhibit D may not commence nor may Tenant permit its contractors and/or subcontractors to commence any work until all required insurance has been obtained, and, if Landlord requests, until Tenant’s, or its contractors and subcontractors, certificates of such insurance have been delivered to Landlord. Tenant’s or its contractors and subcontractors insurance policies shall name the Landlord, Landlord’s property manager, and Landlord’s mortgagee(s) as additional insureds and such other parties as may be reasonably requested by Landlord as additional insureds. Such certificates of insurance shall provide that no change or cancellation of such insurance coverage shall be undertaken without thirty (30) days’ prior written notice to Landlord; provided, however, in the event such insurer is unable to provide such notice, Tenant shall be obligated to provide such notice to Landlord.

(iii) Landlord shall have the right to require Tenant, and Tenant shall have the duty, to stop work in the Premises immediately if any of the insurance coverage Tenant or its contractors and subcontractors are required to carry herein lapses during the course of such work, in which event the Tenant Work may not be resumed until the required insurance is obtained and satisfactory evidence of same is provided to Landlord.

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(iv) In the event Tenant employs a contractor or subcontractor to perform all or part of the Tenant Work, Tenant shall carry, or cause Tenant’s Contractors to carry, General Contractor’s and Subcontractor’s Required Minimum Coverages and Limits of Liability as follows (the insurance required under this Exhibit D shall be in addition to any and all insurance required to be procured by Tenant pursuant to the terms of the Lease):

(A) Worker’s Compensation, as required by state law, and Employer’s Liability Insurance with a limit of not less than $1,000,000 (or more if required by the law of the State) and any insurance required by any Employee Benefit Act or similar statute applicable where the work is to be performed, as will protect the contractor and subcontractors from any and all liability under the aforementioned act(s) or similar statute.

(B) Comprehensive General Liability Insurance (including Contractor’s Protective Liability) in an amount not less than $2,000,000 per occurrence whether involving personal injury liability (or death resulting therefrom) or property damage liability or a combination thereof (combined single limit coverage) with a minimum aggregate limit of $2,000,000. Such insurance shall insure Tenant’s general contractor against any and all claims for personal injury, death, and damage to the property of others arising from its operations under its contract, whether such operations are performed by Tenant’s contractors, subcontractors, or sub-subcontractors, or by anyone directly or indirectly employed by any of them.

(C) Comprehensive Automotive Liability Insurance, for the ownership, maintenance, or operation of any automotive equipment, whether owned, leased, or otherwise held, including employer’s non-ownership and hired car liability endorsements, in an amount not less than $2,000,000 per occurrence and $2,000,000 aggregate, combined single limit bodily injury and property damage liability.

(D) Builder’s risk insurance in such amount as is commensurate with the scope and Total TI Cost of such work.

(b) Minimize Disturbances During Construction . In the performance of the Tenant Work, Tenant shall cause its contractor(s) to use reasonable and diligent efforts not to unreasonably interfere with ongoing operations in the Building and the Property. Without limiting the foregoing, Tenant agrees to cause its contractor to use reasonable and diligent efforts to minimize excess noise, and to limit its construction activities to the portion of the Premises being constructed and those portions of the Common Areas (if any) in which Tenant is permitted to stage materials and perform the Tenant Work in accordance with the Construction Documents.

(c) Utilities During Construction . Tenant shall be responsible for all utility costs associated with the performance of the Tenant Work and shall either supply its own

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electricity and other utilities, or shall reimburse Landlord for all utility costs associated with such work. Tenant shall keep all construction areas reasonably clean and free of trash and debris, and shall police the activities of its contractors, subcontractors and their respective employees with regard to keeping the Building and the Property clean. Tenant shall also use reasonable and diligent efforts to minimize any disturbance to the other tenants and occupants of the Building and Property in the course of such construction activities. Tenant agrees to follow (or cause its contractors and subcontractors to follow) all reasonable directions given to Tenant or its contractors or subcontractors by Landlord’s Construction Representative and to otherwise comply with any reasonable rules and regulations established by Landlord from time to time with regard to Tenant’s construction activities within the Building. Tenant’s construction contract shall indemnify Tenant and Landlord from damages, losses, and expenses associated with the acts and omissions of Tenant’s Contractor, its agents, employees, and subcontractors.

(d) Violations with respect to the Tenant Work . In the event (i) of any material violation of this Exhibit D , or (ii) the construction of any improvements in the Premises which are not within the scope of the Construction Documents (or other Landlord-approved plans), Landlord shall have the right to cause Tenant and Tenant’s contractor to stop the Tenant Work and to remove any such improvements which have been constructed in violation of the Construction Documents (or other Landlord-approved plans) or this Exhibit D at Tenant’s expense, and to seek any and all appropriate legal and equitable relief in order to enforce the provisions of this Exhibit D .

(e) Without limiting the generality or applicability of this Exhibit D or the Lease, Tenant agrees that the following provisions shall apply to the performance of the Tenant Work:

(i) In performing any plumbing work which is contemplated under the Construction Documents (or other Landlord-approved plans if required by the terms of the Lease) which may require removal of floor slab in corridors or areas which are within the common areas of the Building, Tenant agrees: (A) to conduct such work expeditiously and in a manner which is calculated to minimize, to the fullest extent practicable, any inconvenience to Landlord’s building personnel, and other Building tenants, occupants and invitees who use such common corridors; (B) upon completion of the plumbing work, to restore the finishes within such common corridors to their original condition; and (C) if materials necessary to match such finishes, upon restoration, to the finish of the portions of the corridor which were not removed or affected by such work or alterations, are not available, Tenant shall be responsible to restore the entire corridor to a uniform finish acceptable to Landlord in Landlord’s sole but reasonable discretion, consistent with the quality of the existing finish.

(ii) In performing any portions of the Tenant Work which involve construction work which affects the exterior portions of the Building, the Property or Common Areas, Tenant agrees that it shall, at Tenant’s sole expense, restore all areas of the Building’s or Property’s exterior and/or Common Areas, including without limitation all adjacent planting areas, sidewalks and parking areas,

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affected by the performance of such work or alterations to their original condition upon the completion of such portions of the Tenant Work.

(iii) Tenant shall, as part of the Tenant Work, protect and restore all work areas of the Building and Property (including without limitation, any portions of the Common Areas of the Property) required for access to the Premises, or otherwise utilized or affected in performing the Tenant Work, including, but not limited to, the Building roof, common corridor floors, walls, and ceilings, floor penetrations and chase wall penetrations. Tenant shall use only qualified roofing contractors for penetrations and reflashing of affected roof areas (if any), which roofing contractors shall be subject to Landlord’s approval, and Tenant and such contractor shall warrant to Landlord the integrity of any such roof or exterior penetrations that are performed as part of the Tenant Work, and that the same are free from leakage and are otherwise properly waterproof. Tenant shall further ensure (and warrant to Landlord) that all floor penetrations that are performed as part of the Tenant Work are properly fire-stopped, in accordance with applicable building and fire codes and prudent construction practices. Landlord’s construction manager and/or representatives shall be advised at the time Tenant commences any portion of the Tenant Work involving the exterior of the Building, the Property, the Building roof, the common corridors, and all floor to floor penetrations, and all such work shall be subject to the inspection and approval of Landlord (and in the case of work involving the exterior of the Building, shall be supervised by Landlord’s construction manager and/or other representatives). In regard to the foregoing right of inspection and approval, Tenant and its contractor shall, upon reasonable prior notice, permit such construction manager and/or representatives free access to all affected areas of the Premises and Building necessary for Landlord to conduct such inspections and/or supervision .

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EXHIBIT E
Commencement Date Letter

___________________, 20__

[Name of Contact]

[Name of Tenant]

[Address of Tenant]

RE:

[ Name of Tenant]
[Premises Rentable Area and Floor]
[Address of Building]

Dear [Name of Contact]:

Reference is made to that certain Lease, dated as of _________________, 20__, between [Landlord] , as Landlord and [Tenant] as Tenant, with respect to Premises on the ______floor of the above-referenced building. In accordance with Section [____] of the Lease, this is to confirm that the Commencement Date of the Term of the Lease occurred on ______________, and that the Term of the Lease shall expire on ________________.

If the foregoing is in accordance with your understanding, kindly execute the enclosed duplicate of this letter, and return the same to us.

Very truly yours,

[Landlord]

By:

Name:
Title:

Accepted and Agreed:

[Tenant]

By:

Name:

Title:

Date:

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EXHIBIT F
Building Operating Expenses and Laboratory Operating Expenses

Building Operating Expenses shall include the following expenses, without limitation, and reasonably and equitably allocated to the Office Portion of the Building’s cost pool:

All expenses incurred by Landlord or Landlord’s agents which shall be directly related to employment of personnel, including amounts incurred for wages, salaries for services, payroll, social security, unemployment and similar taxes, workmen’s compensation insurance, disability benefits, pensions, hospitalization, retirement plans and group insurance, uniforms and working clothes and the cleaning thereof, and expenses imposed on Landlord or Landlord’s agents pursuant to any collective bargaining agreement for the services of employees of Landlord or Landlord’s agents in connection with the operation, repair, maintenance, cleaning, management and protection of the Property, including, without limitation, day and night supervisors, manager, accountants, bookkeepers, janitors, carpenters, engineers, mechanics, electricians and plumbers and personnel engaged in supervision of any of the persons mentioned above; provided that, if any such employee is also employed on other property of Landlord, such compensation shall be suitably prorated among the Property and such other properties.

The cost of services, utilities, materials and supplies furnished or used in the operation, repair, maintenance, cleaning, management and protection of the Property.

The cost of replacements for tools and other similar equipment used in the repair, maintenance, cleaning and protection of the Property, provided that, in the case of any such equipment used jointly on other property of Landlord, such costs shall be suitably prorated among the Property and such other properties.

Where the Property is managed by Landlord or an affiliate of Landlord, management fees at reasonable rates for self managed buildings consistent with the class of building and the services rendered, which management fees shall not exceed three percent (3%) of Gross Receivable Rents for the Building (“ Gross Receivable Rents for the Building ” for the purposes hereof being defined as annual Basic Rent, Building Operating Expenses, with the exception of the aforesaid management fee, Laboratory Operating Expenses, and Taxes for the Building for the relevant year), whether or not actually paid, or where managed by other than Landlord or an affiliate thereof, the amounts accrued for management, together with, in either case, amounts accrued for legal and other professional fees relating to the Property, but excluding such fees and commissions paid in connection with services rendered for securing or renewing leases and for matters not related to the normal administration and operation of the Property.

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Commercially reasonable premiums and deductibles incurred for insurance against damage or loss to the Property from such hazards as Landlord shall determine, including, but not by way of limitation, insurance covering loss of rent attributable to any such hazards, and public liability insurance .

Replacements to the roof or other structural elements or other capital expenditures or improvements but only to the extent (i) Landlord, during the Term, installs or replaces any equipment or other item in or to the Building which Landlord anticipates in good faith will effect an energy savings or will make the Building or any part thereof more energy efficient or for the purpose of reducing Operating Expenses, or (ii) which are required due to changes in applicable Laws or as a result of new Laws not in effect as of the Effective Date of the Lease (collectively, the “ Permitted Capital Expenditures ”), provided, however, that only the annual charge ‑off of such Permitted Capital Expenditure shall be included in each Operating Year's Operating Expenses (or a prorata amount thereof for any partial Operating Year). Annual charge‑off shall be determined by dividing the original Permitted Capital Expenditure plus an interest factor, reasonably determined by Landlord, as being the interest rate then being charged for long‑term mortgages by institutional lenders on like properties within the locality in which the Property is located, by the number of years of useful life of the Permitted Capital Expenditure; and the useful life shall be determined reasonably by Landlord in accordance with GAAP and practices in effect at the time of making such expenditure.

Cost of operation of the Building and the other areas of the Complex as more specifically provided in the Lease, including those incurred in discharging the obligations under Article 7 of the Lease; provided, however, there shall be excluded from the Building Operating Expenses the expenses that solely relate to and benefit only the Retail Portion of the Building or the Laboratory Portion of the Building and/or do not serve or benefit the Office Portion of the Building in any manner.

The Building’s share (as reasonably determined by Landlord) of expenses related to the operation of the open areas, public areas and amenities, plazas, common areas, facilities and other non-leasable areas of the Complex and Complex’s Percentage Share (as defined in the Declaration) of the CAM Charges for the Boston Landing Project allocated to the Complex under the Declaration, including the Complex’s share of all costs incurred to operate the shuttle service for the Boston Landing Project and like amenities for use of tenants of the Building either alone or in common with tenants of other buildings in the Complex or the Boston Landing Project (excluding the costs to construct and initially fixture or furnish any such amenities), provided that there shall be no duplication in any such expense charged to Tenant as Operating Expenses hereunder.

The costs to operate, repair and maintain Base Building Systems and Common Facilities in the Building (including, without limitation, utility and other costs to maintain, repair and operate Base Building Systems , if any, serving the Building,

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including, without limitation, the general costs to operate, repair and maintain the Building (including, without limitation, insurance costs for the Building); provided, however, (1) in no event shall Landlord be entitled to pass through greater than one hundred percent (100%) of those costs for the operation, repair and maintenance of Base Building Systems and Common Facilities due to the same being allocated to both the Office Portion, Retail Portion or Laboratory Portion of the Building, and (2) there shall be excluded from the Building Operating Expenses the expenses that solely relate to and benefit only the Retail Portion of the Building or the Laboratory Portion of the Building and do not serve or benefit the Office Portion of the Building in any manner.

10.

Costs for electricity, water and sewer use charges, gas and other utilities supplied to the Property and not paid for directly by tenants.

11.

Taxes (as hereinafter defined). “ Taxes ” shall mean (i) all ad valorem real property taxes, assessments (including betterment, special or otherwise), levies, fees and all other government levies, exactions and charges of every kind and nature, general and special, ordinary and extraordinary, foreseen and unforeseen, which are, at any time prior to or during the Term, imposed or levied upon or assessed against the Property or any portion thereof or against any Basic Rent, Additional Rent or other rent of any kind or nature payable to Landlord by anyone on account of the ownership, leasing or operation of the Property, or which arise on account of or in respect of the ownership, development, leasing, operation or use of the Property or any portion thereof; (ii) all gross receipts taxes or similar taxes imposed or levied upon, assessed against or measured by any Basic Rent, Additional Rent or other rent of any kind or nature or other sum payable to Landlord by anyone on account of the ownership, development, leasing, operation, or use of the Property or any portion thereof; (iii) all value added, use and similar taxes at any time levied, assessed or payable on account of the ownership, development, leasing, operation, or use of the Property or any portion thereof; (iv) the Building’s pro rata share of the Taxes allocated to the Complex under the Declaration, and (v) reasonable expenses of any proceeding for abatement of any of the foregoing items included in Taxes, but the amount of special taxes or special assessments included in Taxes shall be limited to the amount of the installment (plus any interest, other than late charges and penalty interest, payable thereon) of such special tax or special assessment required to be paid during the year in respect of which such Taxes are being determined. There shall be excluded from Taxes all income, estate, succession, gift, franchise, inheritance and transfer taxes of Landlord (or any affiliate thereof); provided, however, that if at any time during the Term, the present system of ad valorem taxation of real property shall be changed so that a gross receipts capital levy, franchise, income, profits, sales, rental, use and occupancy, or other new or additional tax or charge shall in whole or in part be substituted for, or added to, such ad valorem tax and levied against, or be payable by, Landlord with respect to the Property or any portion thereof, such tax or charge shall be included in the term “ Taxes ” for the purposes of this Article.

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12.

Betterment assessments, provided the same are apportioned equally over the longest period permitted by law, and to the extent, if any, not included in Taxes.

13.

Amounts paid to independent contractors for services, materials and supplies furnished for the operation, repair, maintenance, cleaning and protection of the Property not in excess of market rates for Comparable Buildings.

14.

Except to the extent covered by warranty or an insurance claim, any convector units, filters or heat pump repairs and replacements.

Laboratory Operating Expenses shall include the following, without limitation and without duplication of any other Operating Expenses or Taxes charged to Tenant under this Lease:

All costs of any kind paid or incurred by Landlord in connection with the operation or maintenance of the Laboratory Systems and the provision of services that exclusively serve the Laboratory Portion of the Building, which shall include, without limitation, costs of repairs and replacements to Laboratory Systems; costs of utilities furnished to the Laboratory Systems and any Common Facilities exclusively serving the Laboratory Systems; sewer fees; HVAC; maintenance or replacement of equipment utilized for operation and maintenance of the Laboratory Systems; license, permit and inspection fees; sales, use and excise taxes on goods and services purchased by Landlord in connection with the operation, maintenance or repair of the Laboratory Systems; other expenses incurred in connection with the operation, maintenance or repair of the Laboratory Systems; accounting, legal and other professional fees and expenses incurred in connection with the Laboratory Systems; Permitted Capital Expenditures related to the Laboratory Systems; costs of complying with applicable Laws (except to the extent such costs are incurred to remedy non-compliance as of the Commencement Date with applicable Laws); costs to keep the Laboratory Systems in compliance with, or costs or fees otherwise required under or incurred pursuant to any covenants, conditions or restrictions associated with the Property or Complex, including insurance premiums attributable to Laboratory Systems, and premiums for commercial general liability, property casualty, earthquake, terrorism and environmental coverages; portions of insured losses to Laboratory Systems paid by Landlord as part of the deductible portion of a loss pursuant to the terms of insurance policies; service contracts; costs of services of independent contractors retained to do work of a nature referenced above; and costs of compensation (including employment taxes and fringe benefits) of all persons who perform regular and recurring duties connected with the day-to-day operation and maintenance of Laboratory Systems.

Any taxes or assessments in lieu thereof imposed separately on any Laboratory Systems or reasonably determined by Landlord to be attributable to any Laboratory Systems and not other portions of the Property or Complex.

Cost of operation of the Building and the other areas of the Complex as more specifically provided in the Lease, including those incurred in discharging the

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obligations under Article 7 of the Lease; provided, however, there shall be excluded from the Laboratory Operating Expenses the expenses that solely relate to and benefit only the Retail Portion of the Building or the Office Portion of the Building and do not serve or benefit the Laboratory Portion of the Building in any manner.

If Landlord shall receive any tax refund or reimbursement of Taxes or sum in lieu thereof with respect to any Tax Year all or any portion of which falls within the Term, then out of any balance remaining thereof after deducting Landlord’s expenses in obtaining such refund, Landlord shall, provided there does not then exist an Event of Default, credit an amount equal to such refund or reimbursement or sum in lieu thereof (exclusive of any interest, and apportioned if such refund is for a Tax Year a portion of which falls outside the Term,) multiplied by Tenant’s Pro Rata Share against the monthly installments of Additional Rent next due under this Lease (or refund such amount to Tenant if the Term has ended and Tenant has no further obligations to Landlord).

Notwithstanding anything to the contrary set forth in the Lease, Building Operating Expenses and Laboratory Operating Expenses shall not include the following:

(i)

Any cost or expense to the extent to which Landlord is paid or reimbursed (other than as a payment for Operating Expenses), including work or services performed for any tenant (including Tenant) or the cost of any item for which Landlord has been paid or reimbursed by insurance, warranties, service contracts, condemnation proceeds or otherwise;

(ii)

The cost of any work or services performed for any other property other than the Building or Complex;

(iii)

Leasing commissions, attorneys’ fees, space planning costs, and other costs and expenses incurred in connection with lease, sublease and/or assignment negotiations and transactions with present or prospective tenants or other occupants of the Building;

(iv)

Costs associated with the operation of the business of the entity which constitutes Landlord, Landlord's management company or any affiliate of Landlord as the same are distinguished from the costs of operation of the Building;

(v)

Taxes;

(vi)

Costs (including permit, license, and inspection fees) incurred in renovating, improving, decorating, painting or redecorating vacant leasable space or space for tenants, the cost of tenant improvements, build out allowances, moving expenses, assumption of rent under existing leases and other concessions incurred in connection with leasing space in the Building or in the Complex;

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(vii)

Depreciation and amortization on the Building, except as expressly permitted elsewhere in the Lease;

(viii)

Overhead and profit and other costs paid to subsidiaries or affiliates of Landlord for services or materials on or to the Property or for supplies or other materials (exclusive of the management fee set forth in Item #4 above), to the extent that the costs of the service, supplies or materials exceed the competitive costs of the services, supplies or materials were they not provided by a subsidiary or affiliate;

(ix)

Interest on debt or amortization payments on mortgages or deeds of trust or any other debt for borrowed money and any other costs and expenses incurred in connection with the financing and/or refinancing of the Building, Property and/or Complex;

(x)

Items and services which Tenant is not entitled to receive under this Lease but which Landlord provides selectively to one or more tenants of the Building other than Tenant or for which Landlord is separately reimbursed;

(xi)

Costs incurred, in excess of the commercially reasonable deductible, in connection with repairs or other work needed to the Building and/or the Complex because of fire, windstorm, or other casualty or cause required to be insured against by Landlord under this Lease or the exercise of eminent domain; provided, however, in no event shall any self-insurance retentions be charged to Tenant, other than the aforementioned commercially reasonable deductible;

(xii)

Any costs, fines or penalties incurred because Landlord violated any Law;

(xiii)

Capital expenditures other than Permitted Capital Expenditures;

(xiv)

Legal, auditing, consulting and professional fees and other costs, (other than those legal, auditing, consulting and professional fees and other costs incurred in connection with the normal and routine maintenance and operation of the Building), including, without limitation, those: (i) paid or incurred in connection with financings, refinancings or sales of any Landlord's interest in the Building or the Complex, (ii) relating to specific disputes with tenants, and (iii) relating to any special reporting required by securities laws;

(xv)

Costs incurred in performing work or furnishing services for any tenant (including Tenant), whether at such tenant's or Landlord's expense, to the extent that such work or services is in excess of any work or service that Landlord is obligated to furnish to Tenant (e.g., if Landlord agrees to provide extra cleaning to another tenant, the cost thereof would be excluded since Landlord is not obligated to furnish extra cleaning to Tenant);

(xvi)

The cost of repairs or replacements incurred by reason of fire or other casualty or condemnation other than costs not in excess of a reasonable deductible on any insurance maintained by Landlord;

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(xvii)

Insurance premiums to the extent any tenant requires Landlord to purchase additional insurance because of such tenant's use of the Building;

(xviii)

Any advertising, promotional or marketing expenses for the Building, the Complex and the Boston Landing Project including any merchant’s association except for expenses passed through under the Declaration;

(xix)

The cost of any service or materials (exclusive of the management fee) provided by any party related to Landlord, to the extent such costs exceed the reasonable cost for such service or materials absent such relationship in buildings similar to the Building in the vicinity of the Building;

(xx)

Payments for rented equipment, the cost of which equipment would constitute a capital expenditure if the equipment were purchased to the extent that such payments exceed the amount which could have been included in Operating Expenses had Landlord purchased such equipment rather than leasing such equipment;

(xxi)

Penalties, damages, and interest for late payment or violations of any obligations of Landlord, including, without limitation, taxes, insurance, equipment leases and other past due amounts;

(xxii)

Contributions to charitable organizations;

(xxiii)

Costs incurred in removing the property of former tenants or other occupants of the Building;

(xxiv)

The cost of testing, remediation or removal of Hazardous Materials in the Building, the Complex or the Boston Landing Project required by Environmental Laws;

(xxv)

The cost of acquiring, installing, moving or restoring objects of art;

(xxvi)

Wages, salaries, or other compensation paid to any executive employees above the grade of senior property or regional property manager at the Complex;

(xxvii)

The net (i.e. net of the reasonable costs of collection) amount recovered by Landlord under any warranty or service agreement from any contractor or service provider shall be credited against Operating Expenses;

(xxviii)

Cost or expenses due to the willful misconduct or negligence of Landlord or any of the Landlord Parties;

(xxix)

Bad debt expenses;

(xxx)

Ground lease payments, if any (except to the extent payment is for Taxes);

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(xxxi)

Costs to finance or refinance debt, create and/or file condominium maps or documents or sell the Building or the Complex;

(xxxii)

Costs related to the Rink Building; or

(xxxiii)

Reserves.

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EXHIBIT G
Rules and Regulations of Building

The following regulations are generally applicable:

The public sidewalks, entrances, passages, courts, elevators, vestibules, stairways, corridors or halls shall not be obstructed or encumbered by Tenant (except as necessary for deliveries) or used for any purpose other than ingress and egress to and from the Premises.

No awnings, curtains, blinds, shades, screens or other projections shall be attached to or hung in, or used in connection with, any window of the Premises or any outside wall of the Building. Such awnings, curtains. blinds, shades, screens or other projections must be of a quality, type, design and color, and attached in the manner, approved by Landlord.

No show cases or other articles shall be put in front of or affixed to any part of the exterior of the Building, nor, if the Building is occupied by more than one tenant, displayed through interior windows into the common areas of the Building, nor placed in the halls, corridors or vestibules.

The water and wash closets and other plumbing fixtures shall not be used for any purposes other than those for which they were designed and constructed, and no sweepings, rubbish, rags, acids or like substances shall be deposited therein. All damages resulting from any misuse of the fixtures shall be borne by the Tenant.

Tenant shall not use the Premises or any part thereof or permit the Premises or any part thereof to be used as a public employment bureau or for the sale of property of any kind at auction.

Tenant must, upon the termination of its tenancy, return to the Landlord all locks, cylinders and keys to offices and toilet rooms of the Premises.

Landlord reserves the right to exclude from the Building after business hours and at all hours on days other than Business Days all persons connected with or calling upon the Tenant who do not present a pass to the Building signed by the Tenant or who are not escorted in the Building by an employee of Tenant. Tenant shall be responsible for all persons for whom it issues any such pass and shall be liable to the Landlord for all wrongful acts of such persons.

The requirements of Tenant will be attended to only upon application at the Building Management Office. Employees of Landlord shall not perform any work or do anything outside of their regular duties, unless under special instructions from the office of the Landlord.

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There shall not be used in any space in the Building, or in the public halls of the Building, either by Tenant or its agent, contractors, employees or others, in the delivery or receipt of merchandise, any hand trucks, except those equipped with rubber tires and side guards.

10.

No bicycles, vehicles or animals (except service animals) of any kind shall be brought into or kept in or about the Premises.

11.

No tenant shall make, or permit to be made, any unseemly or disturbing noises or disturb or interfere with occupants of this or any neighboring building or premises or those having business with them whether by use of any musical instrument, radio, talking machine, unmusical noise, whistling, singing, or in any other way. No tenant shall throw anything out of the doors, windows or skylights or down the passageways.

12.

The Premises shall not be used for lodging or sleeping or for any immoral or illegal purpose.

13.

No smoking shall be permitted in the Premises or the Building. Smoking shall only be permitted in smoking areas outside of the Building which have been designated by the Landlord. Tenant shall comply with all applicable “No Smoking” and if Tenant is required by Law to adopt a written smoking policy, a copy of said policy shall be on file in the property manager’s office in the Building.

14.

Landlord shall have the right, exercisable without notice and without liability to any tenant, to change the name and street address of the Building.

15.

Tenant shall not use the name of the Building for any purpose other than Tenant’s business address; Tenant shall not use the name of the Building for Tenant’s business address after Tenant vacates the Premises; nor shall Tenant use any picture or likeness of the Building in any circulars, notices, advertisements or correspondence. Tenant shall not represent itself as being associated with any company or corporation by which the Building may be known.

16.

No article which is explosive or dangerous is allowed in the Building.

17.

Room‑to‑room canvassing to solicit business from other tenants of the Building is not permitted.

18.

Tenant shall not waste electricity, water or air-conditioning and shall cooperate fully with Landlord to assure the most effective and efficient operation of the Building’s heating and air-conditioning systems. Tenant shall participate in any recycling programs undertaken by Landlord or required by applicable Laws.

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19.

No locks or similar devices shall be attached to any door except by Landlord and Landlord shall have the right to retain a key to all such locks. Tenant may not install any locks without Landlord’s prior approval, which approval shall not be unreasonably withheld.

20.

To the extent permitted by law, Tenant shall not cause or permit picketing or other activity which would interfere with the business of Landlord or any other tenant or occupant of the Building, or distribution of written materials involving its employees in or about the Building, except in those locations and subject to time and other limitations as to which Landlord may give prior written consent.

21.

Tenant shall not cook, otherwise prepare or sell any food or beverages in or from the Premises or use the Premises for housing accommodations or lodging or sleeping purposes except that Underwriters’ Laboratory‑approved equipment and microwave ovens may be used in the Premises for heating food and brewing coffee, tea and similar beverages for Tenant’s employees and visitors provided such use is in compliance with applicable Laws and does not disturb other tenants in the Building with odor, refuse or pests.

22.

All office equipment of any electrical or mechanical nature shall be placed by Tenant in the Premises in settings approved by Landlord to absorb or prevent any vibration, noise or annoyance. Tenant shall not permit the use of any apparatus for sound production or transmission in such manner that the sound so transmitted or produced shall be audible or vibrations therefrom shall be detectable beyond the Premises; nor permit objectionable odors or vapors to emanate from the Premises.

23.

Tenant shall not construct or place partitions, furniture or other obstructions that interfere with Landlord’s free access to mechanical installations located in the Building, including air-cooling, fan, ventilating and machine rooms and mechanical and electrical closets, the proper functioning of the Base Building Systems or the moving of Landlord’s equipment to and from the enclosures containing said installations. Neither Tenant nor any contractor, invitee or licensee of Tenant shall at any time enter said enclosures or tamper with, adjust, or otherwise affect in any manner such mechanical installations

24.

No floor covering shall be affixed to any floor in the Premises by means of glue or other adhesive without Landlord’s prior written consent not to be unreasonably withheld, conditioned or delayed.

25.

Tenant shall comply with all safety, fire protection and evacuation procedures and regulations established by Landlord or any governmental agency.

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26.

Tenant shall cause all freight to be delivered to or removed from the Building and the Premises in accordance with the requirements established by Landlord therefor. Deliveries shall be made during Building Service Hours and are subject to local municipal noise ordinances. No deliveries shall be made that impede or interfere with other tenants in or the operation of the Property or Complex.

27.

Tenant shall comply with all orders, requirements and conditions now or hereafter imposed by applicable Laws or Landlord (“ Waste Regulations ”) regarding the collection, sorting, separation and recycling of waste products, garbage, refuse and trash generated by Tenant (collectively, “ Waste Products ”), including (without limitation) the separation of Waste Products into receptacles reasonably approved by Landlord and the removal of such receptacles in accordance with any collection schedules prescribed by Waste Regulations.

28.

Tenant shall store all of its trash, garbage and Hazardous Materials in receptacles within its Premises or in receptacles designated by Landlord outside of the Premises, including a dumpster at the loading dock for the disposal of trash and garbage other than Hazardous Materials, which dumpster shall be supplied by Landlord subject to Force Majeure (the “ Dumpster ”). Tenant shall not place in any such receptacle any material that cannot be disposed of in the ordinary and customary manner of trash or garbage disposal. Any Hazardous Materials transported through outside of the Premises shall be held in secondary containment devices. With the exception of items placed in the Dumpster, Tenant shall be responsible, at its sole cost and expense, for Tenant’s removal of its trash, garbage and Hazardous Materials.

29.

The rules and regulations set forth in Attachment I to this Exhibit, which is by this reference made a part hereof, are applicable to any Alterations being undertaken by or for Tenant in the Premises pursuant to Section 5.3 of the Lease.

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Attachment I to Exhibit G
Rules and Regulations for Tenant Alterations

A. General

1.	All Alterations made by Tenant in, to or about the Premises shall be made in accordance with the requirements of this Exhibit and by union contractors or mechanics approved by Landlord.

2.	Tenant shall, prior to the commencement of any work, submit for Landlord’s written approval, complete plans for the Alterations, with full details and specifications for all of the Alterations, in compliance with Section D below.

3.	Alterations must comply with the Building Code applicable to the Property and the requirements, rules and regulations and any other governmental agencies having jurisdiction.

4.	No work shall be permitted to commence before Tenant obtains and furnishes to Landlord copies of all necessary licenses and permits from all governmental authorities having jurisdiction.

All demolition, removals or other categories of work that may inconvenience other tenants or disturb Building operations, must be scheduled and performed before 7:00 a.m. or after 6:00 p.m. and Tenant shall provide the Building manager with at least 48 hours’ notice prior to proceeding with such work.

6.	All inquiries, submissions, approvals and all other matters shall be processed through Landlord’s property manager.

All work, if performed by a contractor or subcontractor, shall be subject to reasonable supervision and inspection by Landlord’s representative. Such supervision and inspection shall be at Tenant’s sole expense and Tenant shall pay Landlord’s reasonable charges for such supervision and inspection as Additional Rent within thirty (30) days after receiving Landlord’s invoice therefor.

B. Prior to Commencement of Work

1.	Tenant shall submit to the property manager a request to perform the work. The request shall include the following enclosures:

(i)

A list of Tenant’s contractors and/or subcontractors for Landlord’s approval, which approval shall not be unreasonably withheld conditioned or delayed.

(ii)

Four complete sets of plans and specifications properly stamped by a registered architect or professional engineer and meeting the requirements in Section D below.

(iii)

A properly executed building permit application form.

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(iv)

Four executed copies of the Insurance Requirements Agreement in the form attached to this Exhibit as Attachment II and made a part hereof from Tenant’s contractor and, if requested by Landlord, from the contractor’s subcontractors.

(v)

Contractor’s and subcontractor’s insurance certificates, including an indemnity in accordance with the Insurance Requirements Agreement.

2.	Landlord will return the following to Tenant:

(i)

Two sets of plans approved or a disapproved with specific comments as to the reasons therefor (such approval or comments shall not constitute a waiver of approval of governmental authorities).

(ii)

Two fully executed copies of the Insurance Requirements Agreement.

3. Landlord’s approval of the plans, drawings, specifications or other submissions in respect of any Alterations shall create no liability or responsibility on the part of Landlord for their completeness, design sufficiency or compliance with requirements of any applicable laws, rules or regulations of any governmental or quasi ‑governmental agency, board or authority. Any plan or design approval rights reserved to or exercised by Landlord hereunder are for the sole and exclusive benefit of Landlord to ensure compatibility of such work with Building systems and Building standards, and such approval does not constitute any representation or warranty whatsoever as to the adequacy, correctness, efficiency or compliance with applicable Law of such plan or design or the work shown thereon and Landlord is expressly not reviewing Tenant’s plans for such purposes.

Tenant shall obtain a building permit from the Building Department and necessary permits from other governmental agencies. Tenant shall be responsible for keeping current all permits. Tenant shall submit copies of all approved plans and permits to Landlord and shall post the original permit on the Premises prior to the commencement of any work.

C. Requirements and Procedures

1.	All structural and floor loading requirements shall be subject to the prior approval of Landlord’s structural engineer, such approval to be granted or withheld in accordance with Section 5.3 of the Lease.

All mechanical (HVAC, plumbing and sprinkler) and electrical requirements shall be subject to the approval of Landlord’s mechanical and electrical engineers, such approval to be granted or withheld in accordance with Section 5.3 of the Lease, and all mechanical and electrical work shall be performed by contractors who are engaged by Landlord in constructing, operating or maintaining the Building. When necessary, Landlord will require engineering and shop drawings, which drawings must be approved by Landlord before work is started, such approval to be granted or withheld in accordance with Section 5.3 of the Lease. Drawings are to be prepared by Tenant and all approvals shall be obtained by Tenant.

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Elevator service for construction work shall be charged to Tenant at standard Building rates which will include the reasonable cost of operators and supervisory staff. Prior arrangements for elevator use shall be made at least 48 hours in advance with Building manager by Tenant. No material or equipment shall be carried under or on top of elevators. If an operating engineer or master mechanic is required by any union regulations, such engineer or master mechanic shall be paid for by Tenant.

If shutdown of risers and mains for electrical, HVAC, sprinkler and plumbing work is required, such work shall be supervised by Landlord’s representative and shall be performed only at times approved by Landlord. No work will be performed in Building mechanical equipment rooms without Landlord’s approval and under Landlord’s supervision.

5.	Tenant’s contractor shall:

(i)

have a superintendent or foreman on the Premises at all times;

(ii)

police the job at all times, continually keeping the Premises orderly;

(iii)

maintain cleanliness and protection of all areas, including elevators and lobbies.

(iv)

protect the front and top of all peripheral HVAC units and thoroughly clean them at the completion of work;

(v)

block off supply and return grills, diffusers and ducts to keep dust from entering into the Building air conditioning system; and

(vi)

avoid disturbance of other tenants.

6.	If Tenant’s contractor is negligent in any of its responsibilities, Tenant shall be charged for corrective work.

All equipment and installations must be equal to the standards generally in effect with respect to the remainder of the Building. Any deviation from such standards will be permitted only if indicated or specified on the plans and specifications and approved by Landlord, such approval to be granted or withheld in accordance with Section 5.3 of the Lease.

8.	A properly executed air balancing report signed by a professional engineer shall be submitted to Landlord upon the completion of all HVAC work.

9.	Upon completion of the Alterations, Tenant shall submit to Landlord a permanent certificate of occupancy and final approval by the other governmental agencies having jurisdiction.

10.	Tenant shall submit to Landlord a final “as‑built” set of drawings in Auto‑CAD format and one set of blueprints showing all items of the Alterations in full detail.

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11.	Additional and differing provisions in the Lease, if any, will be applicable and will take precedence.

D. Standards for Plans and Specifications

Whenever Tenant shall be required by the terms of the Lease (including this Exhibit) to submit plans to Landlord in connection with any Alterations, such plans shall include at least the following:

1.	Floor plan indicating location of partitions and doors (details required of partition and door types).

2.	Location of standard electrical convenience outlets and telephone outlets.

3.	Location and details of special electrical outlets; e.g., photocopiers, etc.

4.	Reflected ceiling plan showing layout of standard ceiling and lighting fixtures. Partitions to be shown lightly with switches located indicating fixtures to be controlled.

5.	Locations and details of special ceiling conditions, lighting fixtures, speakers, etc.

6.	Location and specifications of floor covering, paint or paneling with paint colors referenced to standard color system.

7.	Finish schedule plan indicating wall covering, paint, or paneling with paint colors referenced to standard color system.

8.	Details and specifications of special millwork, glass partitions, rolling doors and grilles, blackboards, shelves, etc.

9.	Hardware schedule indicating door number keyed to plan, size, hardware required including butts, latchsets or locksets, closures, stops, and any special items such as thresholds, soundproofing, etc. Keying schedule is required.

10.	Verified dimensions of all built‑in equipment (file cabinets, lockers, plan files, etc.)

11.	Location and weights of storage files.

12.	Location of any special soundproofing requirements.

13.	Location and details of special floor areas exceeding 50 pounds of live load per square foot.

14.	All structural, mechanical, plumbing and electrical drawings, to be prepared by the base building consulting engineers, necessary to complete the Premises in accordance with Tenant’s Plans.

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15.	All drawings to be uniform size (30” x 46”) and shall incorporate the standard project electrical and plumbing symbols and be at a scale of 1/8” = 1’ or larger.

16. All drawings shall be submitted in hard ‑copy paper form (together with a PDF scanned copy of all paper drawings) and on disk in Auto‑CAD Version 2000.

17.

All drawings shall be stamped by an architect (or, where applicable, an engineer) licensed in the jurisdiction in which the Property is located and without limiting the foregoing, shall be sufficient in all respects for submission to applicable authorization in connection with a building permit application.

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Attachment II to Exhibit G
Contractor’s Insurance Requirements

Building:

Landlord:

Tenant:

Premises:

The undersigned contractor or subcontractor (“ Contractor ”) has been hired by the tenant named above (hereinafter called “ Tenant ”) of the Building named above (or by Tenant’s contractor) to perform certain work (“ Work ”) for Tenant in the Premises identified above. Contractor and Tenant have requested the landlord named above (“ Landlord ”) to grant Contractor access to the Building and its facilities in connection with the performance of the Work, and Landlord agrees to grant such access to Contractor upon and subject to the following terms and conditions:

Contractor agrees to indemnify and save harmless Landlord and its respective officers, employees and agents and their affiliates, subsidiaries and partners, and each of them, from and with respect to any claims, demands, suits, liabilities, losses and expenses, including reasonable attorneys’ fees, arising out of or in connection with the Work (and/or imposed by law upon any or all of them) because of personal injuries, bodily injury (including death at any time resulting therefrom) and loss of or damage to property, including consequential damages, whether such injuries to person or property are claimed to be due to negligence of the Contractor, Tenant, Landlord or any other party entitled to be indemnified as aforesaid except to the extent specifically prohibited by law (and any such prohibition shall not void this Agreement but shall be applied only to the minimum extent required by law).

2.	Contractor shall provide and maintain at its own expense, until completion of the Work, the following insurance:

(a) “Builder’s All Risk” insurance in an amount at least equal to 100% of the replacement value of such Alterations.

(b) Workmen’s Compensation and Employers Liability Insurance covering each and every workman employed in, about or upon the Work, as provided for in and in the amounts required by each and every statute applicable to Workmen’s Compensation and Employers’ Liability Insurance.

(c) Commercial General Liability Insurance including coverages for Protective and Contractual Liability (to specifically include coverage for the indemnification clause of this Agreement) for not less than the following limits:

Personal Injury: $5,000,000 per person

$10,000,000 per occurrence

Property Damage: $3,000,000 per occurrence

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$3,000,000 general aggregate

(d) Commercial Automobile Liability Insurance (covering all owned, non ‑owned and/or hired motor vehicles to be used in connection with the Work) for not less than the following limits:

Bodily Injury:

$3,000,000 per person

$5,000,000 per occurrence

Property Damage:

$1,000,000 per occurrence

$3,000,000 general aggregate

Contractor shall furnish a certificate from its insurance carrier or carriers to the Building office before commencing the Work, showing that it has complied with the above requirements regarding insurance and providing that the insurer will give Landlord ten (10) days’ prior written notice of the cancellation of any of the foregoing policies.

3.	Contractor shall require all of its subcontractors engaged in the Work to provide the following insurance:

(a) Workmen’s Compensation and Employers Liability Insurance covering each and every workman employed in, about or upon the Work, as provided for in and in the amounts required by each and every statute applicable to Workmen’s Compensation and Employers’ Liability Insurance.

(b) Commercial General Liability Insurance including Protective and Contractual Liability coverages with limits of liability at least equal to the limits stated in paragraph 2(c).

(c) Commercial Automobile Liability Insurance (covering all owned, non ‑owned and/or hired motor vehicles to be used in connection with the Work) with limits of liability at least equal to the limits stated in paragraph 2(d).

Upon the request of Landlord, Contractor shall require all of its subcontractors engaged in the Work to execute an Insurance Requirements agreement in the same form as this Agreement.

Agreed to and executed this day of , 20 .

Contractor:

By:

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EXHIBIT H

Form of Letter of Credit

IRREVOCABLE TRANSFERABLE STANDBY LETTER OF CREDIT NUMBER

ISSUING BANK:

______________________________

PLACE AND DATE OF ISSUE: PLACE AND DATE OF EXPIRY:

_________________ AT OUR COUNTERS

BENEFICIARY:

______________________

ATTN: _______________

APPLICANT:

______________________

UP TO AN AGGREGATE AMOUNT THEREOF: USD

PARTIAL DRAWINGS: PERMITTED

CREDIT AVAILABLE WITH:

______________________

ATTN: _______________

AGAINST PRESENTATION OF DOCUMENTS AS DETAILED HEREIN

DRAFTS: AT SIGHT

DRAWN ON: __________________________

WE HEREBY ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF CREDIT NO. ______ IN YOUR FAVOR FOR THE ACCOUNT OF _______________ AVAILABLE FOR DRAWINGS FOR UP TO AN AGGREGATE AMOUNT OF USD

THIS LETTER OF CREDIT IS AVAILABLE BY PAYMENT UPON YOUR (OR YOUR TRANSFEREE’S) DRAFT(S) IN THE FORM OF ANNEX A HERETO, DRAWN AT SIGHT ON US AND PURPORTEDLY SIGNED BY AN AUTHORIZED REPRESENTATIVE OF YOU (OR YOUR TRANSFEREE).

DOCUMENTS PRESENTED UNDER THIS LETTER OF CREDIT MAY BE SUBMITTED EITHER IN PERSON, BY RECOGNIZED OVERNIGHT DELIVERY SERVICE, OR UNITED STATES POSTAL SERVICE TO ___________________________________________ (UNLESS SENT BY FACSIMILE AS DESCRIBED BELOW)

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DRAFTS PRESENTED WITH OUR ____________ OFFICE, AS LISTED HEREABOVE, SHALL BE PAYABLE IN IMMEDIATELY AVAILABLE FUNDS, WITH PAYMENT TO TAKE PLACE PRIOR TO THE END OF THE NEXT BANKING DAY IN MASSACHUSETTS FOLLOWING THE SUBMISSION DATE.

PRESENTATION WILL ALSO BE DEEMED MADE UPON OR RECEIPT OF YOUR TELECOPIER TRANSMISSION TO US AT FAC NO. (XXX) XXX-XXXX OF A FACSIMILE OF THE APPROPRIATE SIGHT DRAFT AND DRAWINGS CERTIFICATE PROPERLY COMPLETED AND SIGNED, TOGETHER WITH: (I) YOUR STATEMENT THAT YOU HAVE SENT TO US BY NATIONALLY RECOGNIZED OVERNIGHT COURIER (FREIGHT PREPAID), FOR RECEIPT TO OUR OFFICE LOCATED AT ____________________________ ON THE FOLLOWING BUSINESS DAY, THE SIGNED ORIGINALS OF SUCH DOCUMENTS AND (II) YOUR TELEPHONE ADVICE TO US AT (XXX) XXX-XXXX (OR SUCH OTHER NUMBER AS WE SHALL SPECIFY TO YOU IN WRITING) OF YOUR SENDING OF THE ABOVE‑DESCRIBED TELECOPIER TRANSMISSION. IN THE EVENT OF ANY DISCREPANCY ON SUCH ORIGINALS, THE DOCUMENTS SENT BY TELECOPIER TRANSMISSION UPON WHICH PAYMENT WAS MADE, SHALL BE CONSIDERED AS VALID.

DRAFTS SO PRESENTED VIA TELECOPIER TRANSMISSION (“FAX”) SHALL BE PAYABLE IN IMMEDIATELY AVAILABLE FUNDS ON THE SAME BUSINESS DAY OF SUCH SUBMISSION PROVIDED THAT SUCH SUBMISSION IS MADE PRIOR TO 12:00 NOON ON ANY BUSINESS DAY, AND IF SUCH SUBMISSION IS MADE BETWEEN NOON AND 5:00 P.M. ON ANY BUSINESS DAY PAYMENT SHALL BE NO LATER THAN THE NEXT BUSINESS DAY FOLLOWING SUCH SUBMISSION.

THIS LETTER OF CREDIT EXPIRES AT OUR CLOSE OF BUSINESS ON THE EXPIRATION DATE AS STATED ABOVE, OR ANY AUTOMATICALLY EXTENDED EXPIRATION DATE AS HEREINAFTER SET FORTH.

DRAFTS MUST BE ACCOMPANIED BY:

THE ORIGINAL OF THIS LETTER OF CREDIT AND AMENDMENTS THERETO, IF ANY. IN THE EVENT OF A PARTIAL DRAWING WE WILL ENDORSE THE AMOUNT ON THE CREDIT AND RETURN THE ORIGINAL TO YOU VIA OVERNIGHT COURIER SERVICE.

A STATEMENT (SUCH STATEMENT, THE “DRAWING CERTIFICATE”) PURPORTEDLY SIGNED BY AN AUTHORIZED REPRESENTATIVE OF YOU (OR YOUR TRANSFEREE), IN THE FORM OF ANNEX B‑1 OR B‑2 HERETO, AS APPROPRIATE.

MULTIPLE AND PARTIAL DRAWS ARE PERMITTED.

THIS LETTER OF CREDIT SHALL INITIALLY EXPIRE ON ___________________, BUT SUCH EXPIRATION DATE SHALL BE AUTOMATICALLY EXTENDED FOR SUCCESSIVE PERIODS OF ONE (1) YEAR ON THE PRESENT EXPIRATION DATE AND EACH SUCCESSIVE EXPIRATION DATE UNLESS AT LEAST NINETY (90) DAYS BEFORE THE THEN CURRENT EXPIRATION DATE WE NOTIFY YOU (OR YOUR TRANSFEREE) IN WRITING BY OVERNIGHT COURIER (NATIONALLY RECOGNIZED AND PROVIDING EVIDENCE OF DELIVERY) OR CERTIFIED/REGISTERED MAIL, RETURN RECEIPT REQUESTED THAT THIS LETTER OF CREDIT WILL NOT BE EXTENDED BEYOND THE THEN CURRENT EXPIRATION DATE. IN THE EVENT YOU (OR YOUR TRANSFEREE) ARE SO NOTIFIED, ANY UNUSED PORTION OF THE LETTER OF CREDIT SHALL BE AVAILABLE UPON PRESENTATION, PRIOR

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TO THE THEN CURRENT EXPIRATION DATE, OF A SIGHT DRAFT AND A DRAWING CERTIFICATE, IN THE FORM OF ANNEX B ‑2 HERETO, PURPORTEDLY SIGNED BY AN AUTHORIZED REPRESENTATIVE OF YOU (OR YOUR TRANSFEREE).

WE HEREBY ENGAGE WITH YOU TO HONOR DRAFTS DRAWN UNDER AND IN COMPLIANCE WITH THE TERMS OF THIS IRREVOCABLE STANDBY LETTER OF CREDIT UPON PRESENTATION TO US AS LISTED ABOVE.

EXCEPT AS EXPRESSLY STATED HEREIN, THIS UNDERTAKING IS NOT SUBJECT TO CONDITION OR QUALIFICATION. OUR OBLIGATION UNDER THIS LETTER OF CREDIT IS OUR INDIVIDUAL OBLIGATION, AND IS IN NO WAY CONTINGENT UPON REIMBURSEMENT WITH RESPECT THERETO.

THIS LETTER OF CREDIT SETS FORTH ALL OF THE TERMS AND CONDITIONS OF OUR OBLIGATION TO YOU AND SHALL NOT BE AMENDED OR MODIFIED EXCEPT BY WRITTEN INSTRUMENT DULY EXECUTED BY YOU AND US.

THIS LETTER OF CREDIT MAY BE TRANSFERRED, ONE OR MORE TIMES, IN ITS ENTIRETY BUT NOT IN PART, BY YOU OR ANY TRANSFEREE OF THIS LETTER OF CREDIT (A “TRANSFEREE”) AND ANY TRANSFEREE SHALL SUCCEED TO ALL OF THE RIGHTS HEREUNDER OF SUCH TRANSFEREE’S TRANSFEROR; PROVIDED, HOWEVER, THAT NO TRANSFER SHALL BE EFFECTIVE UNLESS (A) THE TRANSFEROR SHALL FIRST HAVE SUBMITTED TO US AN INSTRUCTION IN THE FORM OF THE SPECIMEN ATTACHED HERETO AS ANNEX C (THE “TRANSFER INSTRUCTIONS”) AND (B) NOTICE OF SUCH TRANSFER HAS BEEN ENDORSED HEREON BY US. UPON SUBMISSION TO US OF THE TRANSFER INSTRUCTIONS, WE WILL ENDORSE A NOTICE OF TRANSFER ON THIS LETTER OF CREDIT. THE LAST TRANSFEREE HEREOF, FROM TIME TO TIME, SHALL BE THE “TRANSFEREE” REFERENCED IN THE TEXT OF OTHER PARAGRAPHS OF THIS LETTER OF CREDIT. OUR TRANSFER FEE IN EFFECT WILL BE PAID BY THE APPLICANT, BUT SUCH PAYMENT SHALL NOT BE A CONDITION TO TRANSFER.

EXCEPT AS OTHERWISE EXPRESSLY STATED HEREIN THIS LETTER OF CREDIT IS SUBJECT TO THE INTERNATIONAL STANDBY PRACTICES (ISP98) INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NO. 590 AND, TO THE EXTENT NOT INCONSISTENT THEREWITH, THE LAW OF THE STATE OF MASSACHUSETTS, INCLUDING THE MASSACHUSETTS UNIFORM COMMERCIAL CODE.

PLEASE ADDRESS ANY INQUIRIES OR CORRESPONDENCE

ATTN: _______________., QUOTING OUR REF. NO.:

ATTN: ________________ TEL.: (XXX) XXX-XXXX SWIFT: XXXXX

AUTHORIZED SIGNATURE AUTHORIZED SIGNATURE

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ANNEX A TO

LETTER OF CREDIT NO. _________

SIGHT DRAFT

___________________

(DATE)

Pay to ___________________, U.S. _____________________ Dollars

(U.S. $________________) drawn under ___________________ Irrevocable Letter Of Credit

No. __________________, by wiring such amount to:

TO: ____________________

____________________

By:

Name:

Title:

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Annex B-1

DRAWING CERTIFICATE

_______________________

(ISSUER) (DATE)

RE: Irrevocable Standby Letter of Credit No. ______ (the “Letter of Credit”)

Ladies & Gentlemen:

This drawing under the Letter of Credit is being made pursuant to that certain Agreement of Lease dated _______________, now between ___________________ (“Landlord”) and GOODWIN PROCTER LLP (“Tenant”), as the same may have been amended or otherwise modified (the “Lease”).

The undersigned certifies to ________________ (“Issuer”) the following:

1. Tenant is in default under the Lease and such default has continued beyond any applicable notice and cure period under said Lease or the landlord under the lease is otherwise permitted to draw on the Letter of Credit pursuant to the terms of the Lease.

2. The undersigned is the beneficiary under the Letter of Credit.

By:

Name:

Title:

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REQUEST FOR TRANSFER

DATE:

RE:	________________________ STANDBY LETTER OF CREDIT NUMBER ______

GENTLEMEN:

FOR VALUE RECEIVED, THE UNDERSIGNED BENEFICIARY HEREBY IRREVOCABLY TRANSFERS TO:

(NAME OF TRANSFEREE)

(STREET ADDRESS)

(CITY, STATE, COUNTRY)

ALL RIGHTS OF THE UNDERSIGNED BENEFICIARY TO DRAW UNDER THE ABOVE LETTER OF CREDIT IN ITS ENTIRETY.

WE FURTHER CERTIFY THAT THIS TRANSFEREE IS THE HOLDER OF THE LANDLORD’S INTEREST IN THE LEASE REFERENCED IN THE LETTER OF CREDIT.

PLEASE ADVISE THE TRANSFERRED LETTER OF CREDIT THROUGH, (IF APPLICABLE):

(ADVISING BANK)

(STREET ADDRESS)

(CITY, STATE, COUNTRY)

BY THIS TRANSFER, ALL RIGHTS OF THE UNDERSIGNED BENEFICIARY IN SUCH LETTER OF CREDIT ARE TRANSFERRED TO THE TRANSFEREE AND THE TRANSFEREE SHALL HAVE THE SOLE RIGHTS AS BENEFICIARY THEREOF, INCLUDING SOLE RIGHTS TO ANY AMENDMENTS WHETHER INCREASES OR EXTENSIONS OR OTHER AMENDMENTS AND WHETHER NOW EXISTING OR HEREAFTER MADE. ALL AMENDMENTS ARE TO BE ADVISED TO THE TRANSFEREE WITHOUT NECESSITY OF ANY CONSENT OF OR NOTICE TO THE UNDERSIGNED BENEFICIARY.

THE ORIGINAL LETTER OF CREDIT IS RETURNED HEREWITH TOGETHER WITH ANY AND ALL AMENDMENTS, AND WE ASK YOU TO ENDORSE THE TRANSFER ON THE REVERSE OF THE LETTER OF CREDIT AND FORWARD IT DIRECTLY TO THE TRANSFEREE WITH YOUR CUSTOMARY NOTICE OF TRANSFER.

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VERY TRULY YOURS, AUTHENTICATED	SIGNATURE (BANK’S SEAL REQUIRED)
FOR (BENEFICIARY CO’S NAME)
BY (AUTHORIZED SIGNATURE)	BY (BENEFICIARY’S BANK)

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EXHIBIT I

Tenant’s Removable Property

Tenant’s personal property and all movable business and trade equipment owned or installed by Tenant or any party claiming by, through or under Tenant, not constituting Laboratory Reusable Installations.

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Exhibit 31.1

Certification

I, Meenu Chhabra, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the period ended September 30, 2017 of Proteostasis Therapeutics, Inc.;

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

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

4. The registrant’s other certifying officer(s) 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. (Paragraph omitted pursuant to SEC Release Nos. 33-8238/34-47986 and 33-8392/34-49313);

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; and

5. The registrant’s other certifying officer(s) 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: November 14, 2017			/s/ Meenu Chhabra
			Meenu Chhabra
			President and Chief Executive Officer
			(Principal Executive Officer)

Exhibit 31.2

Certification

I, Helen M. Boudreau, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the period ended September 30, 2017 of Proteostasis Therapeutics, Inc.;

b. (Paragraph omitted pursuant to SEC Release Nos. 33-8238/34-47986 and 33-8392/34-49313);

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: November 14, 2017			/s/ Helen M. Boudreau
			Helen M. Boudreau
			Chief Financial Officer
			(Principal Financial Officer)

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report on Form 10-Q of Proteostasis Therapeutics, Inc. (the “Company”) for the period ended September 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Meenu Chhabra, President and Chief Executive Officer (Principal Executive Officer) hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to my knowledge:

1)	the Report which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

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

Date: November 14, 2017

/s/ Meenu Chhabra

Meenu Chhabra

President and Chief Executive Officer

(Principal Executive Officer)

In connection with the quarterly report on Form 10-Q of Proteostasis Therapeutics, Inc. (the “Company”) for the period ended September 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Helen M. Boudreau, Chief Financial Officer (Principal Financial Officer) hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to my knowledge:

(1)	the Report which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

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

Date: November 14, 2017

/s/ Helen M. Boudreau

Helen M. Boudreau

Chief Financial Officer

(Principal Financial Officer)