10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, 2022

☐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 001-38537

AVROBIO, INC.

(Exact name of registrant as specified in its charter)

100 Technology SquareSixth Floor

Cambridge, Massachusetts 02139

(Address of principal executive offices) (Zip Code)

(617) 914-8420

(Registrant’s telephone number, including area code)

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

Title of each class Trading Symbol Name of each exchange on which registered

Common Stock, $0.0001 par value per share AVRO Nasdaq Global Select Market

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

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐No☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐No☒

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐

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

Large accelerated filer ☐ Accelerated filer ☐

Non-accelerated filer ☒ Smaller reporting company ☒

Emerging growth company ☒

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

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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

The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $34,838,485 as of June 30, 2022 (based on a closing price of $0.92 share as quoted by the Nasdaq Global Select Market as of such date). In determining the market value of non-affiliate common stock, shares of the registrant’s common stock beneficially owned by officers, directors and affiliates have been excluded. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

The registrant had 44,088,283 shares of Common Stock, $0.0001 par value per share, outstanding as of March 16, 2023.

DOCUMENTS INCORPORATED BY REFERENCE

Part III of this Annual Report on Form 10-K incorporates by reference certain information from the registrant’s definitive Proxy Statement for its 2023 annual meeting of shareholders, which the registrant intends to file pursuant to Regulation 14A with the Securities and Exchange Commission not later than 120 days after the registrant’s fiscal year end of December 31, 2022. Except with respect to information specifically incorporated by reference in this Form 10-K, the Proxy Statement is not deemed to be filed as part of this Form 10-K.

AVROBIO, Inc.

Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2022

Table of Contents

Item No. Page

PART I 1

Item 1. Business 1

Item 1A. Risk Factors 40

Item 1B. Unresolved Staff Comments 91

Item 2. Properties 91

Item 3. Legal Proceedings 91

Item 4. Mine Safety Disclosures 91

Item 6. Reserved 92

Item 7A. Quantitative and Qualitative Disclosures about Market Risk 104

Item 8. Financial Statements and Supplementary Data 104

Item 9A. Controls and Procedures 104

Item 9B. Other Information 105

Item 10. Directors, Executive Officers and Corporate Governance 106

Item 11. Executive Compensation 106

Item 14. Principal Accounting Fees and Services 106

Item 15. Exhibits and Financial Statement Schedules 107

Summary Risk Factors

Our business is subject to numerous risks and uncertainties that you should be aware of in evaluating our business. These risks include, but are not limited to, the following:

•

We have incurred net losses since inception. We expect to incur net losses for the foreseeable future and may never achieve or maintain profitability, and substantial doubt about our ability to continue as a going concern may create negative reactions to the price of our common stock.

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We will need additional funding, which may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our product development efforts or other operations.

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Our term loan agreement contains restrictions that potentially limit our flexibility in operating our business, and we may be required to make a prepayment or repay our outstanding indebtedness earlier than we expect. In addition, as a result of the deprioritization of our Fabry program in January of 2022, we can no longer draw $20.0 million of term loans that were contingent upon the achievement of certain milestones related to our development of AVR-RD-01 for Fabry disease.

•

Business interruptions resulting from the coronavirus disease, or COVID-19, pandemic or similar public health crises have caused and may cause a disruption of the development of our product candidates and adversely impact our business.

•

Our hematopoietic stem cell or HSC gene therapy product candidates are based on a novel technology, which makes it difficult to predict the time and cost of product candidate development and of subsequently obtaining regulatory approval.

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Our product candidates and the process for administering our product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit their commercial potential or result in significant negative consequences following any potential marketing approval.

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Success in preclinical studies or early clinical trials may not be indicative of results obtained in later trials.

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We may find it difficult to enroll patients in our clinical trials, which could delay or prevent us from proceeding with clinical trials of our product candidates.

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We may encounter substantial delays in our clinical trials or we may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities.

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Even if we complete the necessary preclinical and clinical studies, we cannot predict when or if we will obtain regulatory approval to commercialize a product candidate and the approval may be for a narrower indication than anticipated.

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Only one of our clinical trials utilizes our plato® platform.

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We face significant competition in our industry and there can be no assurance that our product candidates, if approved, will achieve acceptance in the market over existing established therapies. In addition, our competitors may develop therapies that are more advanced or effective than ours, which may adversely affect our ability to successfully market or commercialize any of our product candidates.

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

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We expect to rely on third parties to conduct some or all aspects of our vector production, product manufacturing, protocol development, research and preclinical and clinical testing, and these third parties may not perform satisfactorily.

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We currently rely, and expect to continue to rely, on sole source suppliers for our automated, closed cell processing system; vector supply; plasmid supply; cell culture media supply; and drug product manufacturing. In addition, we are dependent on a limited number of suppliers for some of our other components and materials used in our product candidates.

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Third-party claims of intellectual property infringement may prevent or delay our development and commercialization efforts.

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Our rights to develop and commercialize our product candidates are subject, in part, to the terms and conditions of licenses granted to us by others.

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If we experience material weaknesses or deficiencies in the future or otherwise fail to establish and maintain effective internal controls, we may be unable to produce timely and accurate financial statements, and we may conclude that our internal control over financial reporting is not effective, which could adversely impact our investors’ confidence and our stock price.

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Our failure to meet Nasdaq Global Select Market’s or Nasdaq’s, continued listing requirements could result in a delisting of our common stock.

The summary risk factors described above should be read together with the text of the full risk factors below, in the section entitled “Risk Factors” and the other information set forth in this Annual Report on Form 10-K, including our consolidated financial statements and the related notes, as well as in other documents that we file with the Securities and Exchange Commission, or the SEC. The risks summarized above or described in full below are not the only risks that we face. Additional risks and uncertainties not precisely known to us, or that we currently deem to be immaterial may also materially adversely affect our business, financial condition, results of operations and future growth prospects.

Forward-looking Information

This Annual Report on Form 10-K contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements may be identified by such forward-looking terminology as “aims,” “anticipates,” “believes,” “continue,” “could,” “designed to,” “estimates,” “expects,” “forecasts,” “goal,” “intends,” “may,” “plans,” “possible,” “potential,” “predicts,” “projects,” “seeks,” “strives,” “should,” “will,” and similar expressions or the negative of these terms. Our forward-looking statements are based on a series of expectations, assumptions, estimates and projections about our company, are not guarantees of future results or performance and involve substantial risks and uncertainty. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in these forward-looking statements. Our business and our forward-looking statements involve substantial known and unknown risks and uncertainties, including the risks and uncertainties inherent in our statements regarding:

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the impact of the COVID-19 pandemic or any other public health crisis on our clinical trial programs, clinical supply and business generally;

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

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the existence or absence of side effects or other properties relating to our product candidates which could delay or prevent their regulatory approval, limit their commercial potential, or result in significant negative consequences following any potential marketing approval;

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the durability of effects from our product candidates;

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the timing, scope or likelihood of regulatory filings and approvals;

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the anticipated regulatory pathway for our product candidates and planned interactions with regulatory agencies;

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our ability to develop and advance product candidates into, and successfully complete, clinical studies;

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

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the implementation of our business model and our strategic plans for our business, product candidates, technology and plato platform;

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our commercialization, marketing and manufacturing capabilities and strategy;

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the pricing and reimbursement of our product candidates, if approved;

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the scalability and commercial viability of our manufacturing methods and processes, including our move to a closed, automated system;

iii

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the rate and degree of market acceptance and clinical utility of our product candidates, in particular, and gene therapy, in general;

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our ability to establish or maintain collaborations or strategic relationships or obtain additional funding;

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our plans and expectations regarding our efforts to evaluate strategic opportunities with respect to one or more of our programs, our technology or our plato platform;

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our competitive position;

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the scope of protection we and/or our licensors are able to establish and maintain for intellectual property rights covering our current and future product candidates, as well as any statements as to whether we do or do not infringe, misappropriate or otherwise violate any third-party intellectual property rights;

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our financial performance;

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our ability to retain the continued service of our key professionals and to identify, hire and retain additional qualified professionals;

•

developments and projections relating to our competitors and our industry, including other lentiviral or HSC gene therapy companies;

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our expectations related to the use of our cash reserves;

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our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

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our ability to comply with the terms of our term loan agreement;

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our ability to avoid any findings of material weaknesses or significant deficiencies in the future;

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our ability to satisfy the continued listing requirements of the Nasdaq, including a minimum bid price, and to maintain our common stock listing on Nasdaq or any stock exchange;

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the impact of laws and regulations, including without limitation recently enacted tax reform legislation;

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our expectations regarding the time during which we are an emerging growth company under the Jumpstart Our Business Startups Act of 2012, or JOBS Act; and

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other risks and uncertainties, including those listed under the caption “Risk Factors.”

All of our forward-looking statements are as of the date of this Annual Report on Form 10-K only. In each case, actual results may differ materially from such forward-looking information. We can give no assurance that such expectations or forward-looking statements will prove to be correct. An occurrence of or any material adverse change in one or more of the risk factors or risks and uncertainties referred to in this Annual Report on Form 10-K or included in our other public disclosures or our other periodic reports or other documents or filings filed with or furnished to the SEC could materially and adversely affect our business, prospects, financial condition and results of operations. Except as required by law, we do not undertake or plan to update or revise any such forward-looking statements to reflect actual results, changes in plans, assumptions, estimates or projections or other circumstances affecting such forward-looking statements occurring after the date of this Annual Report on Form 10-K, even if such results, changes or circumstances make it clear that any forward-looking information will not be realized. Any public statements or disclosures by us following this Annual Report on Form 10-K that modify or impact any of the forward-looking statements contained in this Annual Report on Form 10-K will be deemed to modify or supersede such statements in this Annual Report on Form 10-K.

Note Regarding Trademarks

All brand names or trademarks appearing in this report are the property of their respective holders.

PART I

Unless the context requires otherwise, references in this Annual Report on Form 10-K to the “Company,” “AVROBIO,” “we,” “us,” and “our” refer to AVROBIO, Inc. Our “board of directors” refers to the board of directors of AVROBIO, Inc.

Item 1. Business.

Overview

We are a clinical-stage gene therapy company with a purpose to free people from a lifetime of genetic disease. Our company is focused on developing potentially curative hematopoietic stem cell, or HSC, gene therapies to treat patients with rare diseases following a single dose treatment regimen. Our gene therapies employ HSCs that are harvested from the patient and then modified with a lentiviral vector to insert the equivalent of a functional copy of the gene that is mutated in the target disease. We believe that our approach, which is designed to transform hematopoietic stem cells from patients into therapeutic products, has the potential to provide curative benefit for a range of diseases. Our initial focus is on a group of rare genetic diseases referred to as lysosomal disorders, some of which today are primarily managed with enzyme replacement therapies, or ERTs. These lysosomal disorders have well-understood biologies, identified patient populations, established standards of care yet with significant unmet needs, and represent large market opportunities with approximately $3.5 billion in worldwide net sales in 2022.

Our pipeline is currently comprised of four HSC gene therapy programs: AVR-RD-02 for the treatment of Gaucher disease type 1 and type 3; AVR-RD-04 for the treatment of cystinosis; AVR-RD-05 for the treatment of neuronopathic mucopolysaccharidosis type II, or MPS-II or Hunter syndrome; and AVR-RD-03 for the treatment of Pompe disease.

AVR-RD-02 is currently being studied for the treatment of Gaucher disease type 1 in a Company-sponsored Phase 1/2 clinical trial, which we refer to as the Guard1 clinical trial. Four patients have been dosed to date in the Guard1 clinical trial, and we have enrolled six patients to date. We are actively recruiting additional potential patients for our currently active sites. We provided updated interim clinical trial data on December 7, 2022, at which time we also provided an update on discussions with regulatory authorities regarding Gaucher disease type 3, including our plans for further clinical development. Following positive feedback from the U.S. Food and Drug Administration, or FDA, and the U.K. Medicines and Healthcare products Regulatory Agency, or MHRA, we are now planning for the initiation of a registrational, global Phase 2/3 clinical trial for Gaucher disease type 3 (GD3) in the second half of 2023, subject to regulatory alignment.

In October 2022, the FDA granted rare pediatric disease designation, or RPDD, for AVR-RD-02 for the treatment of Gaucher disease. Under this program, if AVR-RD-02 is approved by FDA, then the Company may qualify for a voucher that can be redeemed to receive a priority review of a subsequent marketing application for a different product candidate. That same month, AVR-RD-02 also was granted an Innovation Passport under the Innovative Licensing and Access Pathway, or ILAP, from the MHRA. ILAP designation is intended to accelerate the regulatory review process and facilitate patient access in the U.K. for seriously debilitating and life-threatening diseases. AVR-RD-02 previously received Fast Track Designation from the FDA in December 2021 and orphan drug designation, or ODD, in the U.S. in September 2019 and in the European Union, or EU, in September 2020.

AVR-RD-04 is currently being studied for the treatment of cystinosis by our collaborators at the University of California, San Diego, or UCSD, in a Phase 1/2 collaborator-sponsored clinical trial. Enrollment of this clinical trial is complete with a total of six patients dosed. In May 2022, our collaborators at UCSD reported updated interim data from the Phase 1/2 collaborator-sponsored clinical trial of AVR-RD-04 at the 25th Annual Meeting of American Society for Gene and Cell Therapy, or ASGCT, in Washington, D.C. and at the 19th annual WORLDSymposium in Orlando, Florida on February 25, 2023. In the first quarter of 2023, we completed a scientific advice meeting with MHRA and received feedback from the FDA regarding a planned Company-sponsored clinical trial for AVR-RD-04. Based on these regulatory interactions and feedback, we are planning to initiate activities for a Company-sponsored Phase 1/2 clinical trial in the second half of 2023, which is designed to be registration-enabling. Clinical sites are anticipated in the United Kingdom, Europe and the United States. Our current plan involves a two-part clinical development strategy, including both a pre-renal transplant population clinical trial and a post-renal transplant population. We expect to provide clinical and regulatory updates on the Phase 1/2 clinical trial of AVR-RD-04 at ASGCT in May 2023.

In September 2022, the FDA granted RPDD for AVR-RD-04 for the treatment of cystinosis. AVR-RD-04 has previously received Fast Track Designation from the FDA and ODD from the FDA and EMA.

AVR-RD-05 is our preclinical program for the treatment of Hunter syndrome. In September 2022, we announced that the MHRA, Research Ethics Committee, or REC, and Health Research Authority, or HRA, have accepted the clinical trial

application, or CTA, submitted by our collaborators at The University of Manchester for initiation of a Phase 1/2 collaborator-sponsored clinical trial of investigational autologous HSC gene therapy in infants diagnosed with MPS-II, or Hunter Syndrome, in the United Kingdom. We currently expect the Phase 1/2 collaborator-sponsored clinical trial will be initiated in 2023. In October 2021, the FDA granted RPDD for AVR-RD-05 for the treatment of Hunter syndrome. The FDA previously granted ODD for AVR-RD-05.

AVR-RD-03 is our preclinical program for the treatment of Pompe disease. While we continue to advance AVR-RD-03, we are prioritizing our Gaucher disease and cystinosis clinical programs. As a result, we no longer expect to initiate a clinical trial for AVR-RD-03 in 2023.

In January 2022, we announced the deprioritization of AVR-RD-01, our investigational gene therapy program for Fabry disease. This decision was made due to several factors, including new clinical data showing variable engraftment patterns from the five most recently dosed patients in the Company’s Phase 2 clinical trial of AVR-RD-01 for the treatment of Fabry disease, which we refer to as the FAB-GT clinical trial. The emergence of such new data would have significantly extended the program’s development timeline. That development, coupled with an increasingly challenging market and regulatory environment for Fabry disease, were among the primary factors leading to the Company’s deprioritization of its Fabry program. As a result of the deprioritization, the Company stopped enrollment of its Phase 2 FAB-GT clinical trial and since early 2022, we have been focusing on our other pipeline programs.

Since its first clinical use in 2003, HSC gene therapy has been studied in several third parties’ clinical trials for rare diseases such as transfusion-dependent beta thalassemia, cerebral adrenoleukodystrophy, metachromatic leukodystrophy, and adenosine deaminase severe combined immunodeficiency. Initially, the use of HSC gene therapies was restricted primarily to the most severe diseases where the risks of the typical requirement for ablating the patients’ bone marrow had a clinically justifiable risk/benefit profile. To date, hundreds of patients have been treated with HSC gene therapies in third parties’ and our rare disease clinical trials, and we believe the technology can be developed for other serious conditions based on a rigorous risk/benefit assessment.

The myeloablation procedure, also known as the conditioning regimen, is typically an essential step in the ex vivo gene therapy treatment procedure and is administered prior to the gene therapy. We have worked to optimize the conditioning regimen through utilization ofa precision busulfan dosing program, which we refer to as Target Concentration Intervention, or TCI. TCI is designed to enable careful titrating of exposure to the conditioning drug to a specific area under the curve, or AuC. The conditioning regimen utilized as part of our plato platform includes TCI to assess how rapidly the individual patient metabolizes the conditioning agent so physicians can adjust the dose as needed, with a goal of minimizing side effects from conditioning while maximizing the potential of durable engraftment. In addition, we are evaluating the potential future use of alternative conditioning agents in lieu of the current busulfan TCI conditioning regimen. For example, we have entered into a collaboration agreement with Jasper Therapeutics, Inc. and are currently evaluating the potential use of its monoclonal antibody conditioning agent. We are also evaluating the potential use of additional agents to tailor the conditioning regimen for certain disease indications.

plato® is our gene therapy platform designed to provide the foundation for the potential worldwide commercialization of our gene therapies, if approved. It is a HSC gene therapy platform incorporating multiple upgrades including a four-plasmid lentiviral vector designed to optimize vector copy number; transduction efficiency and resulting enzyme activity; a closed, automated manufacturing system designed to improve consistency and predictability of the drug product; and a personalized approach to conditioning. Six patients in our FAB-GT clinical trial of AVR-RD-01, for which enrollment was halted, and four patients in our Guard1 clinical trial of AVR-RD-02 have been dosed with drug product manufactured utilizing the plato platform, and we intend to utilize the plato platform with these process changes for all future patients enrolling in our Company-sponsored clinical trials. We believe our innovations in viral vector design, cellular manufacturing, cryopreservation, conditioning and other related processes are important steps towards advancing the field of HSC gene therapy and realizing its full potential to treat a number of diseases. We plan to continue leveraging advancements in stem cell transplantation with the goal of improving patient tolerability of our HSC gene therapies.

Our gene therapies currently target rare lysosomal disorders in which the current standard of care provides the mechanistic proof that the enzymes or proteins produced endogenously following treatment with our gene therapies can offer benefit to patients. Typically, in lysosomal disorders, a gene mutation results in the deficiency or malfunctioning of an enzyme or other protein. This results in the inability of lysosomes to properly process cellular materials such as damaged organelles. As a result, substrates and their metabolites accumulate to toxic levels in the body’s cells and, in turn, disrupt the function of multiple tissues and organs. Gaucher disease (types 1 and 3), Hunter syndrome and Pompe disease are currently primarily managed by bi-weekly (or weekly in the case of Hunter syndrome), multi-hour infusions with ERTs that seek to

exogenously replace the missing functional enzyme. However, given their pharmacokinetics, most ERTs typically remain in the plasma only for a short period of time and thus are not ideal because they are only dosed weekly or every two weeks. Cystinosis is currently treated with two oral formulations of cysteamine that must be taken orally every 12 or 6 hours, leading to significant pill burden and compliance challenges. Further, oral cysteamine treatment has no effect on ocular cystine crystals deposits, thus requiring patients to be treated with topical cysteamine eye drops which must be applied each hour the patient is awake. These existing therapies manage, rather than cure, the underlying diseases and, as a result, patients continue to have disease progression. Further, the frequent, periodic and life-long dosing schedule required for ERTs and cysteamine results in significant costs for the healthcare system and is burdensome for the patient.

We believe our gene therapies leverage the well-understood mechanism of ERTs by transforming a patient’s own stem cells into a drug product that enables the patient to express functional enzyme or other protein and mirror the biology seen in an otherwise healthy individual. We believe that a single dose of our gene therapies may provide meaningful life-long benefit to these patients and potentially halt the progression of these diseases while also potentially providing significant health economic advantages.

Our programs leverage years of extensive preclinical and early clinical research by leading researchers, as well as our internal research and ongoing clinical efforts. The status of our HSC gene therapy programs is reflected below.

Planned regulatory milestones subject to regulatory agency clearance; *Collaborator-sponsored Phase 1/2 clinical trial of AVR-RD-04 is funded in part by grants to UCSD from the California Institute for Regenerative Medicine (CIRM), Cystinosis Research Foundation (CRF), and National Institutes of Health (NIH).

Our Expertise

We are led by biopharmaceutical experts with extensive experience in gene and cellular therapy, and rare diseases. Our team has broad expertise in the clinical and regulatory aspects of rare diseases as well as process development and manufacturing for cellular therapies. Members of our management team have held senior positions at Affinia Therapeutics, Amicus Therapeutics, Biogen, GlaxoSmithKline, Lentigen Technology, Novartis, Takeda, Spark Therapeutics, and other companies pursuing development, manufacturing and commercialization of gene, cellular and other therapies to treat rare diseases.

Our Strategy

Our purpose is to develop and commercialize HSC gene therapies that free patients from a lifetime of genetic disease. Key elements of our strategy include:

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Advance our pipeline targeting lysosomal disorders. We are developing a pipeline of four gene therapies to treat Gaucher disease (type 1 and type 3), cystinosis, Hunter syndrome and Pompe disease. We intend to continue to advance these programs in parallel and to obtain clinical data that could potentially support regulatory filings around the world.

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Leverage our proprietary plato® gene therapy platform to accelerate development of our pipeline. Continue implementing and enhancing our plato platform covering vector design and production, drug product manufacturing, as well as analytics. We believe our end-to-end plato platform is scalable for planned global

commercialization, if approved. We believe our innovations in viral vector design, cellular manufacturing, cryopreservation, and other related processes are important steps towards advancing the field of HSC gene therapy and realizing its full potential to treat a number of diseases. plato incorporates a four-plasmid lentiviral vector designed to optimize vector copy number, transduction efficiency and resulting enzyme activity. In combination with this vector, in some indications we use a number of proprietary peptide tag technologies to enhance uptake of therapeutic protein in key tissues. We have also developed a manufacturing process that we believe is both reproducible and scalable, and we believe this technology could enable us to deliver our gene therapies to patients, if approved, in quantities sufficient for global commercial supply. In addition, we believe our personalized approach to conditioning using busulfan through TCI could enable us to deliver durable, “head-to-toe” treatment of symptoms and early intervention in the treatment of lysosomal disorders. We intend to continue to leverage advancements in stem cell transplantation, including evaluating the potential use of monoclonal antibody conditioning.

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Leverage our approach beyond our initial indications. We are developing gene therapies for the treatment of four different lysosomal disorders and believe that we will gain significant learnings and technical insights from these programs. In the future, we may leverage our technology and insights to treat a number of rare and non-rare diseases where we believe our HSC approach has transformative potential.

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Selectively and opportunistically evaluate opportunities and initiatives to maximize business value. As part of our business strategy, from time to time, we evaluate and intend to continue to evaluate opportunities to collaborate, partner, enter into joint ventures or undertake other strategic initiatives with third parties with respect to one or more of our programs, our technology or our plato platform, all with the goal of maximizing the value of our business. Despite devoting significant efforts to identify and evaluate potential opportunities, there can be no assurance that efforts will result in us pursuing any transaction or that any transaction, if pursued, will be completed on attractive terms or at all.

Our Approach

We develop gene therapies utilizing our HSC-based approach to transform a patient’s own stem cells into a drug product. Our investigational gene therapies employ lentiviral vectors that are designed to result in stable integration of the desired genes in the chromosomes of HSCs such that they are permanently maintained in the cell and can be reproduced as the cell divides. HSCs are primitive stem cells that develop into all types of blood cells, including white blood cells, red blood cells and platelets. To accomplish this, we harvest a patient’s HSCs and modify them ex vivo to add the equivalent of a functional copy of the gene that is mutated in the target disease. We then infuse the genetically modified cells back into the patient. Our gene therapies are designed to be administered to the patient as a one-time therapy following a conditioning regimen.

We are focused on employing our approach to treat and potentially cure lysosomal disorders. These disorders have well-understood biologies, identified patient populations, established standards of care that leave many patients with significant unmet medical needs, and represent large markets with approximately $3.5 billion in worldwide net sales in 2022. We believe our HSC gene therapy approach can be industrialized into a robust, scalable and, if approved, commercially viable process that will allow us to deliver our potentially curative therapies to patients across the world.

Potential Advantages of HSC Gene Therapy Approach

We believe HSC gene therapy has the potential to provide numerous advantages, including:

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Durable benefit. We believe HSC gene therapy has the potential to provide life-long benefits with a single dose. Lentiviral vectors can integrate stably into the genome of HSCs and, when these cells replicate, they pass the integrated genes on to their progeny cells. Across the industry, efficacy in patients treated with HSC gene therapies have been demonstrated for longer than 13 years.

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Systemic therapeutic effect. Progeny cells circulate systemically and may migrate into tissues and therefore have the ability to provide therapeutic benefit to affected tissues and organs throughout the body. In addition, we believe that our personalized busulfan conditioning regimen has the potential to allow the therapeutic benefits of our gene therapies to cross the blood-brain barrier and treat symptoms arising in the central nervous system. These often severe symptoms are typically unaddressed by the current standards-of-care for lysosomal disorders.

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Broad patient applicability. HSC gene therapies have been used to deliver treatments to patients of all ages, including children, and to patients who may be ineligible for other types of gene therapy due to the presence of

preexisting antibodies that detect viral vectors and trigger the immune system to destroy the vector and cells infected by the vector.

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Restoration of protein function. By contrast to the standard-of-care enzyme replacement therapy, which seeks to clear toxic substrate as a key symptom of a non-functioning gene, restoration of gene function may deliver a wide array of additional biochemical benefits throughout the body.

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Tolerability in clinical trials. To date, we have not seen any unexpected safety events in 24 patients across four clinical trials, with the longest follow-up more than 5 years to date.

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Larger and varied payloads. In contrast to other viral vectors, lentiviral vectors have the capacity to carry larger gene sequences, which allow them to potentially address a large variety of indications.

Strategic Selection of Our Initial Indications

There are approximately 70 identified lysosomal disorders, which are characterized by an abnormal toxic build-up of substrates and their metabolites in the body’s cells. We are currently targeting Gaucher disease (type 1 and type 3), cystinosis, Hunter syndrome and Pompe disease. Each of these disorders affects a meaningful number of patients, has a suboptimal standard of care with unmet medical need and, we believe, is appropriate for HSC gene therapy. We believe our approach has the potential to address the shortcomings of existing therapies that, despite chronic dosing, cannot halt or reverse disease progression, restore normal lifespan or adequately address symptoms arising in both the peripheral tissues and the central nervous system.

Expanding the Utility of HSC Gene Therapy with Optimized Conditioning Regimens

A core part of our approach is to expand the use of HSC gene therapy to treat numerous lysosomal disorders. We believe conditioning is an essential step to optimize these treatments as it is designed to clear space in the patient’s bone marrow and central nervous system for cells carrying the therapeutic gene. This maximizes the potential for their long-term engraftment which may enhance durability of therapeutic effect. We believe enabling patient and physician choice of conditioning agents has the potential to be a substantial advance in the gene therapy field, and are evaluating the implementation of a tailored conditioning approach for certain disease indications.

We plan to continue using busulfan conditioning and intend to strive to optimize its tolerability profile. We have pioneered precision dosing of busulfan in gene therapy in a single treatment cycle, with the goal of enhancing the patient experience. A body of research has identified an optimal exposure range for busulfan (Bu-90). Our approach is to personalize conditioning to each patient using TCI, a precision dosing program. TCI is designed to allow for continually controlled exposure by assessing via simple blood draws how rapidly the individual patient metabolizes busulfan, to inform further administration. Use of busulfan in a conditioning regimen causes side effects and can transiently compromise the patient’s immune system, known as neutropenia, and reduce blood clotting, known as thrombocytopenia. The higher the level of conditioning, the greater the potential risk of more serious complications, such as veno-occlusive disease. However, we believe our approach to conditioning has the potential for reduced, predictable and manageable short- and long-term toxicities and maximized long-term engraftment.

In addition to our utilization of busulfan, we are exploring the implementation of monoclonal antibody conditioning as a potential alternative conditioning approach for certain indications and have entered into a collaboration agreement with Jasper Therapeutics.

plato®: Our Commercial-Scale Platform

In addition to developing first-line gene therapies, an important key to our strategy is to continuously improve our technology and production processes and to leverage these improvements across our gene therapies, if approved. plato is designed to provide the foundation for the potential worldwide commercialization of our gene therapies. It is a HSC gene therapy platform incorporating multiple upgrades including a four-plasmid lentiviral vector designed to optimize vector copy number, transduction efficiency and resulting enzyme activity; a closed, automated manufacturing system designed to improve consistency and predictability of the drug product; and a personalized approach to conditioning. plato has been used to dose a total of 10 patients in our clinical trials, which includes six patients from our FAB-GT trial for which enrollment was halted, and four patients from our Guard1 trial for Gaucher disease type 1. We intend to utilize the plato platform for all future patients enrolling in our Company-sponsored clinical trials. We believe our plato platform may lead to better patient outcomes and will represent a significant advance in our industry towards achieving the quality and scale required for global commercialization of gene therapies.

Our plato platform is designed to feature:

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Large scale vector production: We currently have manufacturing capabilities, through contract manufacturing organizations, or CMOs, at 200-liter bioreactor scale, with vector production capable of treating a substantial number of patients per year.

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Global reach: Our automated, closed system for manufacturing is designed to allow for the flexible production of our gene therapies. The automated, closed manufacturing system is portable with proprietary AVROBIO algorithms which allow for efficient establishment of manufacturing capabilities in multiple geographies that can be expanded or adjusted as our global supply requirements evolve. We believe this planned approach will facilitate global manufacturing and shipping of our gene therapies, and will promote access to our products by patients and caregivers.

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Quality of manufacturing: Our platform is designed to utilize current good manufacturing practices, or cGMP, and we believe our automated, closed manufacturing system may result in less production variability and reduce the risk of operator error, while enhancing the potency of the drug product. We believe these features will improve the quality of our gene therapies that are produced.

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Patient convenience: Our gene therapies are cryopreserved, which is a feature designed to promote a longer shelf-life. We believe that a longer shelf-life will allow patients and clinics to schedule treatment sessions with greater convenience.

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Cost containment: Our platform is designed to control fixed and variable expenses associated with manufacturing our gene therapies.

We believe the plato platform will form the backbone of our future commercialization efforts and our goal to take gene therapy mainstream.

Next Generation Vector Technology

We have utilized our core expertise in the development and optimization of lentiviral vectors to improve the vectors used in our gene therapies. We have made and expect to continue to make enhancements to our lentiviral vectors to improve safety, efficacy and efficiency. For example, clinical trials of AVR-RD-01 first utilized our original academic three-plasmid-produced lentiviral vector, which we refer to as LV1. However, we dosed six patients in our now halted FAB-GT clinical trial of AVR-RD-01 and the first four patients in our ongoing Guard1 clinical trial of AVR-RD-02 using our proprietary four-plasmid lentiviral vector, which we refer to as LV2, and expect to dose all future patients in our Company-sponsored trials with LV2. Our goal is to employ vectors that are state-of-the-art and that can be produced in a cost-effective and scalable manner.

Automated, Closed Manufacturing System

Our team has significant experience in cell processing and commercial-scale cellular therapy manufacturing. We have developed and are implementing a detailed plan for more cost efficient and scalable manufacturing of our gene therapies. In contrast to a number of other gene therapy companies that have not developed their commercial scale plans from the outset, we have executed on our plans to move to a closed suspension bioreactor system for vector production, as well as a closed, automated system for manufacturing our gene therapy product. Our move to a closed, automated manufacturing system was completed in 2019 as part of implementing upgrades from our plato platform, and six patients in our now halted FAB-GT clinical trial of AVR-RD-01 and the first four patients in our ongoing Guard1 clinical trial of AVR-RD-02 were each dosed using this system.

Our manufacturing approach is intended to allow for the production of drug product using relatively small, self-contained devices, which may reduce our reliance on large traditional clean rooms that are expensive to establish and maintain. We believe our manufacturing approach may result in greater flexibility in the location of manufacture and help to control costs associated with traditional manufacturing. In addition, we believe our automated manufacturing process may reduce operator error and yield greater consistency and less variability in the manufactured drug product.

We currently plan to rely on one CMO site, located in the United States, as a sole source provider of drug product for our Company-sponsored clinical trials worldwide.

Optimization of Conditioning Regimen

The conditioning regimen that we first employed utilized melphalan, a common chemotherapy drug, to ablate the patient’s bone marrow. As part of the upgrades to our plato platform, we transitioned to utilizing busulfan, another chemotherapy drug, that has been in use since the 1950’s. Busulfan is indicated for use in combination with cyclophosphamide as a conditioning regimen prior to allogeneic stem cell transplantation for chronic myeloid leukemia. Busulfan is routinely used in conditioning regimens before allogeneic stem cell transplantations for both malignant and non-malignant conditions. It has also been used as a single-agent, or in combination with an immunosuppressive agent, such as cyclophosphamide, in conditioning regimens prior to ex vivo gene therapy transplants.

Busulfan permits utilization of TCI in our conditioning regimen, thereby enabling physicians to personalize the dosing to each patient by titrating over four days to potentially enhance patient tolerability to the conditioning procedure and promote cell engraftment. By contrast, melphalan is administered once with no TCI, and may cause concerns regarding conditioning-related toxicity across patients due to individual differences in metabolism of the drug. In addition, we believe that the utilization of busulfan in our conditioning regimen has the potential to allow our gene therapies to cross the blood-brain barrier, a feature which may yield therapeutic benefit in diseases that have a central nervous system component, such as Gaucher disease type 3, Hunter syndrome, Pompe disease and other rare and non-rare diseases.

Advantages of Our Approach over Existing Therapies

We believe our gene therapy candidates offer several potential advantages over existing therapies for lysosomal disorders, including:

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Curative impact that has the potential to halt or reverse disease progression. Existing ERTs for Gaucher disease, Hunter syndrome and Pompe disease, and oral therapies for cystinosis, provide some therapeutic benefit to patients. However, because of their suboptimal pharmacokinetics, these ERTs only transiently increase plasma enzyme levels and the therapies for cystinosis require multiple doses throughout the day. In contrast, our lentiviral-based gene therapies are designed to enable the body to constantly produce the functional enzyme or other protein. This can potentially halt pathological damage and, depending on the targeted indication and organ system, may even reverse disease progression. Our investigational HSC gene therapies may provide potentially curative treatment to patients. This concept is illustrated in the graphs below.

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Durable, single-dose treatment. Our gene therapies offer the potential for a single dose to replace life-long, bi-weekly infusions or daily oral therapies that are often accompanied by numerous side effects and impact patients’ quality of life. Our gene therapies are designed to transform the patient’s own cells into a drug product that enables the continuous delivery of functional enzyme or other protein throughout the body after a single dose.

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Reduced treatment cost over a patient’s lifetime. Existing ERTs and oral therapies can cost millions of dollars over a patient’s lifetime because these therapies require frequent doses of expensive treatments to manage symptoms. Our single-dose gene therapies are designed to replace the costly chronic intravenous and oral therapies that are the current standard of care for patients with lysosomal disorders.

AVR-RD-02, Our Gene Therapy for Gaucher Disease (Type 1 and Type 3)

We are developing AVR-RD-02 for the treatment of Gaucher disease type 1 and type 3). We plan to manufacture AVR-RD-02 from hematopoietic stem cells that are first harvested from the patient, modified to add the gene that encodes for glucocerebrosidase, or GCase, and then infused into the patient.

Patient enrollment has commenced and is ongoing for the Phase 1/2 Guard1 clinical trial of AVR-RD-02 in patients with Gaucher disease type 1, and as of March 1, 2023 we have dosed four patients. The Guard1 trial is actively recruiting additional potential patients for our currently active sites.

We are planning for a Phase 2/3 clinical trial of AVR-RD-02 in pediatric and young adult patients with Gaucher disease type 3, which we refer to as the Guard3 clinical trial. We expect to open our first clinical trial site in the United Kingdom or the United States in the second half of 2023, subject to regulatory clearance by the MHRA or the FDA, as applicable. Initiation of additional clinical trial sites in Europe is expected at later dates and will be subject to regulatory clearance by the EMA and the relevant national regulatory authorities, as applicable.

Disease Overview

Gaucher Disease Type 1

Gaucher disease type 1 is the non-neuronopathic form of Gaucher disease, a rare, autosomal recessive, lysosomal disorder caused by a hereditary deficiency of functional GCase, an enzyme responsible for degrading glucocerebroside, a cell membrane building block, into glucose and lipids within lysosomes of cells. In patients with Gaucher disease type 1, the recycling of glucocerebroside from the breakdown of old red and white blood cells is inhibited, leading to its accumulation in macrophages. These abnormal macrophages, known as Gaucher cells, accumulate in multiple organs, particularly the liver, spleen and bone marrow.

Gaucher disease type 1 is one of the most common lysosomal disorders. It is diagnosed in approximately one in 44,000 births worldwide and is more prevalent in certain ethnic groups, such as people of Ashkenazi Jewish heritage. Approximately 90% of patients suffering from Gaucher disease in western countries have Gaucher disease type 1, which manifests as multiple morbidities including enlargement of the spleen and liver, low red blood cells, or anemia, low platelet count, or thrombocytopenia, and bone abnormalities including bone pain, fractures and arthritis. Bruising, risk of bleeding and fatigue are common due to the thrombocytopenia and anemia. Compared with the general population, patients with Gaucher disease type 1 have an approximately 20-fold increased risk of developing Parkinson’s disease. Gaucher disease type 1 does not have manifestations of central nervous system symptoms.

Gaucher Disease Type 3

Gaucher disease type 3 is the subacute, chronic neurological form of Gaucher disease, a rare, autosomal recessive, lysosomal disorder caused by a hereditary deficiency of functional GCase, an enzyme responsible for degrading glucocerebroside, a cell membrane building block, into glucose and lipids within lysosomes of cells. In patients with Gaucher type 3 disease, the recycling of glucocerebroside from the breakdown of old red and white blood cells is inhibited, leading to its accumulation in macrophages. These abnormal macrophages, known as Gaucher cells, accumulate in multiple organs, particularly the liver, spleen and bone marrow. In addition, glucosylceramide accumulates in perivascular macrophages and brain glial cells and neurons leading to neuronal death. Clinically, central nervous system manifestations of Gaucher disease type 3 appear in childhood or adolescence, typically within the latter part of the first decade for the majority of patients, although the course of disease is markedly heterogenous.

Gaucher disease type 3 is estimated to occur in one in 100,000-300,00 births and is more prevalent in certain ethnic groups, such as people of Swedish Norrbottnian descent. Systemic manifestations of Gaucher disease type 3 may include enlargement of the spleen and liver, low red blood cells, or anemia, low platelet count, or thrombocytopenia, and bone abnormalities including bone pain, fractures and arthritis. Bruising, risk of bleeding and fatigue are common due to the thrombocytopenia and anemia. Variable other features of Gaucher disease type 3 include pulmonary infiltrates and esophageal varices associated with liver cirrhosis. Presentation of diverse neurologic features may begin at any time during infancy and early childhood with the most prevalent finding of horizontal supranuclear gaze palsy. Other manifestations of neurological disease include generalized seizures, myoclonus, ataxia, and/or dementia.

Limitations of Current Therapies

Gaucher disease type 1 is currently treated with bi-weekly infusions of ERT consisting of recombinant GCase over a patient’s lifetime. The most commonly prescribed ERTs for Gaucher disease are Cerezyme, marketed by Sanofi, and VPRIV, marketed by Takeda. Pfizer markets ELELYSO, an ERT indicated for Gaucher disease type 1.

Although long-term ERT for Gaucher disease type 1 results in some therapeutic benefit, ERTs leave patients with significant unmet needs. Twenty-five percent of patients with Gaucher disease continue to experience physical limitations following two years of ERT, and a clinically significant percentage of patients continue to experience bone pain, thrombocytopenia and enlargement of spleen following ten years of ERT. In a published study of ERT therapy for Gaucher disease type 1, six target goals were evaluated, including parameters for hemoglobin and platelet levels, spleen and liver volumes, and general bone pain and severe disabling bone pain known as bone crisis. Following at least four years of ERT in this study, approximately 60% of patients failed to achieve one or more of these six target goals.

In addition to ERTs, the FDA has approved several oral therapies for the treatment of Gaucher disease, including Zavesca (miglustat) marketed by Actelion and Cerdelga (eliglustat) marketed by Sanofi. We believe these oral therapies also provide suboptimal treatment. Zavesca is approved as a second line therapy and is associated with significant toxicities, including diarrhea, weight loss and tremors. Cerdelga is not approved for use in children, has highly variable metabolism due to patient-to-patient genetic variations and is highly susceptible to interactions with other drugs.

Both ERTs and oral therapies for Gaucher type 1 impose significant costs on the healthcare system. We estimate that the average five-year cost to the healthcare system per Gaucher patient (all types) prescribed standard of care treatment in the United States is approximately $2.3 million. In 2022, Sanofi’s Cerezyme and Cerdelga together generated worldwide net sales of approximately €995 million euros and Takeda’s VPRIV generated worldwide net sales of approximately 47 billion Japanese yen.

Current therapies used to treat Gaucher disease type 1, namely, ERT and SRT, do not penetrate the brain and therefore have no effect on the neurological aspects of Gaucher disease type 3. The most commonly prescribed ERTs for Gaucher disease are Cerezyme, marketed by Sanofi, and VPRIV, marketed by Takeda.

Patients with Gaucher disease type 3 may exhibit wide variation of disease progression with the severity of systemic disease and neurological deficits differing considerably between patients. In a published study of SRT therapy for Gaucher disease type 3, no significant benefits were demonstrated on the neurological manifestations of Gaucher disease type 3. Although long-term ERT for Gaucher disease type 3 results in some therapeutic benefit on visceral, hematological and bone manifestations, ERTs leave patients with significant unmet needs owing to persisting accumulation of substrate within the central nervous system. Following 10 years of ERT, two patients’ epilepsy had worsened while a third patient developed epilepsy around eight years after treatment initiation. Another published study on ERT showed that enzyme infusions had no effect on patients with myoclonus and approximately 40% of patients deteriorated neurologically during a median 3.5 year follow-up period.

Our Solution

We are developing AVR-RD-02 to potentially provide a functional cure to patients with Gaucher disease type 1 and type 3 with a single dose of the patient’s own hematopoietic stem cells modified in an ex vivo procedure. AVR-RD-02 is a HSC gene therapy that contains a codon-optimized human gene and is designed to maximize the likelihood of sustained GCase production in hematopoietic stem cells and their progeny.

Ongoing Phase 1/2 Clinical Trial (Guard1)

We have initiated our Guard1 Phase 1/2 clinical trial of AVR-RD-02 in patients with Gaucher disease type 1. Patient enrollment has commenced, and as of March 1, 2023, four patients have been dosed. This clinical trial is actively recruiting additional potential patients for our currently active sites. Our initial clinical trial is open to treatment-naïve patients; patients who have been stable on ERT for at least 24 months; and patients who have not received ERT or substrate reduction therapy, or SRT, in the past 12 months. We intend to enroll 8 to 16 patients, between the ages of 18 and 50, with Gaucher disease type 1. Patients currently prescribed ERT will cease treatment for the duration of the clinical trial. All enrolled patients will receive a single treatment with AVR-RD-02 and will be followed for 52 weeks to measure safety and efficacy. We intend to utilize our plato platform for all patients enrolling in our Phase 1/2 clinical trial of AVR-RD-02. Our efficacy endpoints for this clinical trial will include visceral domain and hematologic measures such as liver and spleen volumes, hemoglobin, platelet counts, bone pain and bone density measures, and quality of life measures along with critical biological blood markers used to track the disease progression in Gaucher disease type 1.

In December 2022, we presented data on the first four patients in the Guard1 clinical trial, which is described below.

Vector Copy Number (VCN)

All four adult GD1 patients in the Guard1 clinical trial who have been infused with investigational AVR-RD-02, based on data as of November 2022, achieved a VCN between 0.54 to 0.86 per diploid genome, 14 weeks to two years post gene therapy. We believe this indicates sustained engraftment and the presence of the transgene in the peripheral blood leukocytes, the essential cell impacted in Gaucher disease patients.

Plasma Lyso-Gb1 Reductions

Glucosylsphingosine, or lyso-Gb1, is considered a surrogate marker for disease activity and treatment response for Gaucher disease type 1. In the case of ERT-naïve patients and patients who have discontinued ERT, we believe that reductions in lyso-Gb1 levels following treatment with gene therapy are likely driven by the therapeutic effect of gene therapy. In all four adult Gaucher disease type 1 patients dosed to date in the Guard1 clinical trial, based on data as of November 2022, we observed that lyso-Gb1 decreased 21% to 70% (21%, 21%, 30% and 70%, respectively) below ERT baseline levels for all four patients, 12 weeks to two years post gene therapy. In this study baseline ERT is the measurement of single plasma lyso-Gbl value observed prior to initiating mobilization. Lyso-Gbl is a downstream metabolic product of glucocerebroside and is considered a sensitive and specific biomarker used for disease monitoring in patients with Gaucher disease.

Plasma Chitotriosidase Reductions

Chitotriosidase is a biomarker of macrophage activation that is found in high levels in Gaucher disease patients where the macrophages have accumulated an excess lipid burden. In the Guard1 clinical study, the metabolite chitotriosidase was reduced in the two patients with evaluable samples, reflecting a reduction in macrophage activation and inflammation. Patient 1's chitotriosidase level has declined from a high of 145.8 μmol/L/h prior to gene therapy treatment to 42.4 μmol/L/h (≤38.1 μmol/L/h is considered normal range) two years post gene therapy. Patient 2, who was in the normal range before gene therapy treatment, still decreased from 24.3 μmol/L/h at baseline to 19.2 μmol/L/h at week 52. Samples from the other two adult patients dosed to date are not evaluable.

In this study, baseline ERT is the measurement of a single chitotriosidase value observed prior to initiating mobilization.

Liver and Spleen Volume Reductions

In three of the four adult patients dosed with AVR-RD-02, as of November 2022, a demonstrated reduction in liver and spleen volumes below the ERT baseline was observed. Patient 4 was not yet scanned as of the data cutoff date for liver or spleen volume. In the patients who were scanned, we observed the following results.

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Patient 1 data showed a clinically significant 24% reduction in liver volume at 104 weeks post gene therapy (patient underwent a splenectomy during childhood).

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Patient 2 data showed a clinically significant 11% reduction in liver volume and 23% reduction in spleen volume at 52 weeks post gene therapy.

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Patient 3 data showed a 4% reduction in liver volume and a 19% reduction in spleen volume, at 26 weeks post gene therapy.

Hemoglobin Concentration and Platelet Counts

Gaucher disease type 1 typically causes patients to have low levels of hemoglobin and platelets. In this study, the baseline measurement was taken one month prior to discontinuation of ERT. Twelve weeks to two years post gene therapy, hemoglobin and platelet levels, as of November 2022, were in normal range following gene therapy for all four adult patients in the Guard1 clinical trial.

Safety Data

As of the most recent cut-off date of September 27, 2022, safety data from the four adult patients dosed indicated no AEs related to drug product. All AEs observed were related to myeloablative conditioning, stem cell mobilization, underlying disease or pre-existing conditions. The majority of AEs were mild or moderate and resolved without clinical sequelae. As of the safety cut-off date of September 27, 2022, all AEs had resolved except for one AE of amenorrhea, which remains unresolved and ongoing.

Because this clinical trial is ongoing, safety and efficacy data are preliminary and subject to change. As is typical in open-label studies in which interim reports are provided, the data are regularly reviewed and validated. As a result, certain data may change over time, including reductions or increases in the number of reported safety events as well as the characterization of the severity or relatedness of safety events, until the database is locked at the end of the study.

Data From First Pediatric Gaucher Disease Type 3 Patient Dosed with AVR-RD-02

In December 2022, we announced that an 11-year-old patient with Gaucher disease type 3 was dosed with AVR-RD-02 at the University of Manchester, U.K., on a named patient basis, and we presented the named patient data at our virtual Gaucher disease Program Update. The patient’s physicians then presented additional data at the WORLDSymposium in February 2023.

At 581 days post gene therapy, the patient has normalized peripheral blood leukocyte glucocerebrosidase, or GCase, enzyme activity and plasma chitotriosidase, a marker of activated macrophages, and remains off ERT and SRT. The patient’s albumin levels increased 15 to 21 g/L at 1.2 years post gene therapy, reflecting improvements in lymphadenopathy and enteropathy. This patient was previously refractory to maximal and multimodal medical therapy, including ERT, SRT, enteral steroids and dietary restrictions. Additionally, the patient did not develop any new lesions on MRI assessments post gene therapy and had no clinically detectable change in neurological status or new neurological manifestations 15 months post gene therapy.

To date, safety data from this patient indicate no adverse events, or AEs, related to drug product. All AEs observed were related to myeloablative conditioning, stem cell mobilization, underlying disease or pre-existing conditions.

Planned Clinical Trial of AVR-RD-02 for Gaucher Disease Type 3 (Guard3)

A Phase 2/3 Guard3 clinical trial of AVR-RD-02 in patients with Gaucher disease type 3 is currently planned, with initiation anticipated in the second half of 2023, subject to regulatory alignment. The Guard3 trial is anticipated to be a global, open label, parallel-arm and randomized controlled clinical trial to evaluate the efficacy and safety of AVR-RD-02 in pediatric and young adult patients. The Guard3 trial is expected to include approximately 40 Gaucher disease type 3 participants (male or female), randomized on a 1:1 basis to receive either AVR-RD-02 HSC gene therapy or continue to receive standard of care ERT. Currently, the Guard3 trial design anticipates that following the observation period, eligible participants who received ERT will be eligible to cross over into the active arm to receive AVR-RD-02 HSC gene therapy.

The planned primary efficacy endpoint is a novel, multi-domain endpoint to reflect the systemic and heterogeneous nature of Gaucher disease, including ataxia (impaired coordination), breathing ability and liver and spleen volume. A key secondary efficacy measure plans to examine substrate levels in cerebrospinal fluid, or CSF, which reflects the impact of the HSC gene therapy in the central nervous system, or CNS.

The design of the planned Phase 2/3 clinical trial of AVR-RD-02 in patients with Gaucher disease type 3 is still subject to regulatory agency review and clearance, and final trial design may differ from current plans, including changes based on regulatory agency feedback.

We intend to utilize our plato platform for all patients who enroll in our planned Phase 2/3 Guard3 clinical trial and receive HSC gene therapy.

Overall, data from both the Guard1 and planned Guard3 clinical trials are expected to leverage the similar underlying pathophysiology for both types of Gaucher disease.

AVR-RD-04, Our Gene Therapy for Cystinosis

Together with UCSD, we are developing CTNS-RD-04, which we refer to as AVR-RD-04, for the treatment of patients with cystinosis. AVR-RD-04 is manufactured from hematopoietic stem cells that are first harvested from the patient, modified to add the gene that encodes for cystinosin, and then infused into the patient. AVR-RD-04 is currently being studied by our collaborators at UCSD in a Phase 1/2 collaborator-sponsored clinical trial. As of March 1, 2023 six patients have been dosed with AVR-RD-04 and the trial is fully enrolled. In February 2023, our collaborators at UCSD reported updated interim data from the Phase 1/2 collaborator-sponsored clinical trial of AVR-RD-04 at the 2023 WORLDSymposium in Orlando, Florida. We expect to provide clinical and regulatory updates on the Phase 1/2 clinical trial of AVR-RD-04 at ASGCT in May 2023.

In September 2022, the FDA granted RPDD for AVR-RD-04 for the treatment of cystinosis. AVR-RD-04 has previously received Fast Track Designation from the FDA and ODD from the FDA and EMA.

In the first quarter of 2023, we completed a scientific advice meeting with MHRA and received feedback from the FDA regarding a planned Company-sponsored clinical trial for AVR-RD-04. Based on these regulatory interactions and feedback and subject to regulatory clearance, we are planning to initiate activities for a Company-sponsored Phase 1/2 clinical trial for cystinosis in the second half of 2023, which is designed to be registration-enabling. Clinical sites are anticipated in the United Kingdom, Europe and the United States. Our current plan involves a two-part clinical development strategy, including both a pre-renal transplant population clinical trial and a post-renal transplant population clinical trial.

Disease Overview

Cystinosis is a rare, genetic, autosomal recessive, lysosomal disorder caused by the accumulation of cystine, the oxidized dimer of the amino acid cysteine. Cystine is normally transported through the lysosomal membrane to the cytosol where it is reutilized after its transformation to cysteine. In cystinosis, cystine accumulates inside the lysosomes because of a defect in the gene that encodes cystinosin, the protein that transports cystine across the lysosomal membrane. Cystine is poorly soluble and forms crystals as its concentration increases. These crystals build up and cause complications in many organs and tissues. The kidneys and eyes are especially vulnerable to damage, and the muscles, thyroid, pancreas and testes may also be affected.

The most severe form of cystinosis begins in infancy, causing poor growth and a particular type of kidney damage in which certain molecules, such as glucose, amino acids, phosphate, and bicarbonate, that should be reabsorbed into the bloodstream are instead eliminated in the urine. These renal problems ultimately lead to impaired growth and may result in soft, bowed bones, especially in the legs. By the time the patient is approximately two years old, cystine crystals may be present in the cornea, and the buildup of these crystals in the eye causes pain and an increased sensitivity to light. Untreated children with cystinosis may experience complete kidney failure by the age of ten. Other signs and symptoms that may occur in untreated patients, especially after adolescence, include muscle deterioration, blindness, inability to swallow, type 1 diabetes mellitus, hypothyroidism, and central nervous system problems. More than 90% of untreated patients require a kidney transplant before the age of 20. It is estimated that cystinosis disease is diagnosed in approximately one in 170,000 people.

Limitations of Current Therapies

Cystinosis is currently treated with oral formulations of cysteamine that enter the lysosome and stimulate the breakdown of cystine into products that do not require the cystinosin protein to be transported. Oral treatment can delay the development of kidney failure by six to ten years if it is started at a very early age, however it cannot prevent kidney failure or the development of other complications, such as the formation of cystine crystals in the cornea. The most commonly prescribed oral therapies for cystinosis are Procysbi (delayed release cysteamine bitartrate), marketed by Horizon Orphan, and Cystagon (cysteamine bitartrate), marketed by Mylan and Recordati S.p.A. In 2021, Procysbi generated worldwide net sales of approximately $190 million. We estimate that the average five-year cost to the healthcare system per cystinosis patient prescribed standard of care treatment in the United States is approximately $4.3 million.

Procysbi and Cystagon must be taken orally every 12 or 6 hours, respectively, leading to significant pill burden and compliance challenges. Because cysteamine works by directly binding to cystine, rather than through a typical small molecule that inhibits an enzyme or receptor, a substantial quantity is required. For adults, this can mean taking at least 12 capsules twice a day, every day. Oral therapy with cysteamine is associated with a high degree of noncompliance due to the frequency with which it must be dosed and the accompanying nausea, as well as the acrid sulfur smell that it produces in the breath and body. It has been estimated that only one third of patients are able to adhere to the strict dosing schedule. Studies have shown that adherence diminishes over time in adolescents and adults despite disease impact. Further, oral cysteamine treatment has no effect on ocular cystine crystals deposits, thus requiring patients to be treated with topical cysteamine eye drops which must be applied each hour the patient is awake.

Our Solution

We are developing AVR-RD-04 to potentially provide a functional cure to patients with cystinosis with a single dose of the patient’s own hematopoietic stem cells modified in an ex vivo procedure. AVR-RD-04 is a HSC gene therapy containing a human gene for cystinosin designed to maximize the likelihood of sustained cystinosin production in hematopoietic stem cells and their progeny.

Ongoing Phase 1/2 Collaborator-Sponsored Clinical Trial

In the ongoing collaborator-sponsored Phase 1/2 clinical trial of AVR-RD-04, six patients with cystinosis who have previously been treated with cysteamine have been dosed. This clinical trial is being conducted by UCSD and has been funded in part by grants to UCSD from the California Institute for Regenerative Medicine, Cystinosis Research Foundation and National Institutes of Health. The clinical trial’s primary endpoints are safety and tolerability, assessed for up to two years after treatment. Secondary endpoints to assess preliminary efficacy include change from baseline in cystine levels in rectal mucosa and granulocytes, as well as cystine crystal counts in the cornea and skin. These secondary efficacy endpoints will also be evaluated through clinical tests of kidney function, ophthalmologic measures, muscle strength, pulmonary function and neurological and psychometric function, as well as through patient-reported outcomes and assessments of health-related quality of life. Mixed leukocyte and granulocyte cystine concentration measures have been part of cystinosis standard of care treatment for the past two decades, and changes in the average level of cystine in granulocytes from baseline was originally a primary endpoint of the clinical trial of AVR-RD-04. However, we and our collaborators at UCSD determined that cystine concentration in leukocytes and granulocytes, which is used to monitor small molecule therapies, is not appropriate to represent the mechanism of action of a gene therapy. As a result, the protocol for this clinical trial was amended in 2020 to retain safety and tolerability as the primary endpoint, as is appropriate for this stage of development, and shift measurement of cystine in granulocytes to a secondary endpoint.

Because this is a collaborator-sponsored clinical, the study drug is not manufactured using our plato platform, and neither the automated, closed manufacturing system nor LV2 is used in connection with this clinical trial.

As of February 2023, the first five patients in the trial had discontinued and remained off oral cysteamine, with the first patient out to 36 months post-treatment. Additionally, four of the five dosed patients had discontinued and remained off cysteamine eye drops as of May 6, 2022. The second patient in the trial, who had stopped cysteamine eye drops one-month post-treatment with AVR-RD-04 per the trial protocol, resumed cysteamine eye drops in July 2021.

Vector Copy Number

In February 2023, our collaborator presented interim VCN data for the first five patients dosed in the Phase 1/2 clinical trial ranging from 0.7 and 2.0 per diploid genome between three- to 27-months post gene therapy.

Cystine Crystals in Skin and Gastrointestinal Mucosa Biopsy Tissues

Skin and gastrointestinal mucosa biopsies have been performed on patients at baseline and post-treatment with AVR-RD-04. The data from the biopsies are intended to show the average skin intracytoplasmic crystals per cell, which is a measurement of the number of toxic crystals in each cell. In February 2023, our collaborator at UCSD reported biopsy data in skin and gastrointestinal mucosa. In the skin, reductions in average intracytoplasmic crystals per cell ranged from 8% in patient 1, 64% in patient 2 and 81% in patient 3 below the patients’ own standard-of-care baseline measures at 12-27 months post gene therapy. In gastrointestinal mucosa, a measurable reduction below patients’ own standard-of-care baseline measures was observed post gene therapy, including a 73% reduction after 27 months for patient 1, a 28% reduction after 12 months for patient 2, an 86% reduction after 12 months for patient 3, and a 21% reduction after 6 months for patient 4. These data suggest the systemic distribution of functional cystinosis protein is impacting a variety of measures throughout the body. As of February 2023, our collaborator at UCSD had not yet reported skin biopsy data for patients 4, 5 and 6 or gastrointestinal mucosa biopsy data for patients 5 and 6.

Levels of Cystine in Cornea

Levels of corneal cystine crystals are being assessed in this clinical trial using IVCM. In May 2022, we presented a set of images of the first patient’s cornea measured at baseline and 18-months post-administration. The baseline IVCM images were taken using a Nidek ConfoScan microscope and the subsequent images were taken using a Heidelberg (HRT3) with Rostock Cornea Module microscope. Each of the post-treatment images showed a noticeable decline in the presence of corneal crystals. The images were preliminarily scored by a physician, on a scale of zero to four, to quantify crystal deposition in each corneal layer of the central cornea. In a patient-reported outcome scale of photophobia severity, the first three patients for which data are available, reported improved or stable photophobia scores. Patient 1, who entered the trial with a higher level of cystine crystal accumulation in the eye, reported a two-point photophobia score improvement 24 months post gene therapy. Patients 2 and 3, who both entered the trial with relatively lower cystine crystal accumulation in the eye, reported stable photophobia scores, both at 12 months post gene therapy. Patients 1, 3, 4 and 5 remain off cysteamine eye drops.

Kidney Function

Assessment of kidney function includes measurements of serum creatinine, or sCR, and eGFR, which is determined using the CKD-EPI formula. The first patient in the Phase 1/2 clinical trial exhibited an eGFR value of 18.1 mL/min/1.73m2 at 27 months post-treatment as compared to a baseline value of 55 mL/min/1.73m2. This patient’s eGFR values had been trending downward in the three years prior to administration of AVR-RD-04. We expect this patient’s eGFR levels to continue declining at a level consistent with the irreversible nature of nephropathic cystinosis. At six months post-treatment the second patient in the clinical trial, who received two kidney transplants prior to treatment in the clinical trial, exhibited an eGFR value of 81 mL/min/1.73m2 as compared to a baseline value of 71 mL/min/1.73m2.

Safety Data

As of the safety data cut-off date of January 9, 2023, preliminary interim clinical data for the first six patients dosed in the Phase 1/2 clinical trial appear to indicate that the AVR-RD-04 investigational gene therapy has been generally well tolerated with no unexpected safety events identified. There have been no reports of safety events attributed to the AVR-RD-04 drug product. As of the safety data cut-off date, a total of 173 adverse events, or AEs, were reported, a majority of which were reported by the investigator to be moderate or mild and resolved without clinical sequelae. All reported AEs were consistent with expectations for the underlying disease, stem cell mobilization and conditioning regimen prescribed by the study protocol.

The foregoing data on the Phase 1/2 clinical trial of AVR-RD-04 have been provided by our collaborators at UCSD and are subject to change. Additionally, because this clinical trial is ongoing, safety and efficacy data are preliminary and subject to change. As is typical in open-label studies in which interim reports are provided, the data are regularly reviewed and validated. As a result, certain data may change over time, including reductions or increases in the number of reported safety events, as well as the characterization of the severity or relatedness of safety events, until the database is locked at the end of the study.

AVR-RD-05, Our Gene Therapy for Hunter Syndrome

We are developing AVR-RD-05 for the treatment of mucopolysaccharidosis type II (MPSII), or Hunter syndrome. AVR-RD-05 involves ex vivo transduction of the patient’s own hematopoietic stem cells with a therapeutic transgene, in-licensed from the University of Manchester, or UoM, designed to express functional iduronate 2-sulfatase, or IDS, which is the enzyme the patient needs to maintain cellular health, coupled to a proprietary ApoE2 protein tag that is designed to improve stability of the enzyme in the bloodstream and facilitate uptake by tissues.

AVR-RD-05 will be studied by our collaborators at UoM, and a Phase 1/2 collaborator-sponsored clinical trial of AVR-RD-05 is expected to be initiated in 2023.

Disease Overview

Hunter syndrome disease is a rare, recessive lysosomal disorder caused by a mutation in the gene that encodes for IDS that results in accumulation of the glycosaminoglycans heparan and dermatan sulfate. Hunter syndrome affects a multitude of organs and is a chronic and progressive multi‐system disorder. Clinical manifestations in Hunter syndrome include skeletal abnormalities, known as dysostosis multiplex, short stature, joint stiffness, and hepatosplenomegaly, accompanied by cardiorespiratory symptoms. Severe cases of Hunter syndrome, which are most common, also feature progressive neurodegeneration, typically followed by death in teenage years due to obstructive airway disease and cardiac failure.

Hunter syndrome is an X-linked disorder, meaning the gene that is responsible is located on the X chromosome. Because males have only one X chromosome, an abnormal copy of the gene that causes Hunter syndrome is sufficient to cause the disease. The overall diagnosed incidence of Hunter syndrome is estimated to be approximately one in 100,000 to one in 170,000 males worldwide.

Limitations of Current Therapies

Hunter syndrome is currently treated with ERT delivered by weekly intravenous infusion. The onpreclinical dataly approved therapy for Hunter syndrome is Elaprase, marketed by Takeda, which generated worldwide net sales of approximately 80 billion Japanese yen in 2022. We estimate that the average five-year cost to the healthcare system per Hunter patient prescribed standard of care treatment in the United States is approximately $2.4 million.

Two-thirds of patients experience developmental and neurological decline, which is often noted by approximately age two. Due to lack of newborn screening, diagnosis usually occurs much later in patient’s lives, around five years of age and can be as late as eight years. Although patients typically begin ERT treatment almost immediately after diagnosis, often the disease symptoms are far advanced and ERT is insufficient to halt the disease progression. ERT does not treat the neurological symptoms of the disease, and therefore a significant unmet need remains in a majority of patients with Hunter syndrome. Furthermore, anti-ERT antibodies are a limitation for a significant part of the patient population.

Our Solution

We, together with our collaborators at UoM, are developing AVR-RD-05 to potentially provide a functional cure to patients with Hunter syndrome. AVR-RD-05 is intended to be a gene therapy product containing a codon-optimized human gene for IDS attached to a ApoE2 protein tag designed to increase the cells’ secretion of IDS to potentially restore healthy cellular function, stabilize the secreted IDS so it has a longer half-life, and facilitate uptake of IDS into the brain. In addition, we believe that the utilization of busulfan in our conditioning regimen may have the potential to allow AVR-RD-05 to cross the blood-brain barrier, a feature which may yield therapeutic benefit.

Preclinical Data

In November 2020, we presented previously published preclinical data on AVR-RD-05. The study presented data from normal study mice, mice affected with the equivalent of Hunter syndrome, mice treated with AVR-RD-05 modified to not incorporate the ApoE2 protein tag, and mice treated with AVR-RD-05 incorporating the proprietary ApoE2 tag. These data demonstrated the effect of AVR-RD-05 on levels and composition of heparan sulfate in the brain, neuro-inflammatory pathologies, facial and skeletal abnormalities, as well as cognitive performance and sensorimotor coordination and balance. We believe these data support the potential of AVR-RD-05 to treat this progressive disease, and potentially prevent the onset of severe symptoms if treated early.

Planned Phase 1/2 Collaborator-Sponsored Clinical Trial

Our collaborators at UoM plan to initiate a Phase 1/2 clinical trial in 2023. The Phase 1/2 clinical trial is expected to enroll five male patients, age three months to 12 months, with an early progressive form of the disease. The clinical trial is expected to be open to treatment-naïve patients as well as patients currently on ERT. The clinical trial’s primary endpoints are expected to be safety and tolerability. Secondary endpoints to assess preliminary efficacy are expected to include measurements of peripheral expression of IDS activity in plasma, CSF, and leukocytes; heparin sulfate concentration in CSF, plasma and urine; VCN per diploid genome, proportion of cells containing the inserted gene in total bone marrow colony forming units; cognitive function; and various behavioral and quality of life measurements.

Because this is a collaborator-sponsored clinical, the study drug will not be manufactured using our plato platform, and neither the automated, closed manufacturing system nor LV2 will be used in connection with this clinical trial.

AVR-RD-03, Our Gene Therapy for Pompe Disease

We are developing AVR-RD-03 for the treatment of Pompe disease. We will manufacture AVR-RD-03 from hematopoietic stem cells that are first harvested from the patient, modified to add the gene that encodes for acid alpha glucosidase A, or GAA, attached to a peptide sequence known as a glycosylation-independent lysosomal targeting, or GILT, tag and then infused into the patient. AVR-RD-03 will incorporate a GILT tag because the GILT tag has been found to increase the uptake of GAA into cells, especially in muscle cells by a multiple of 25, which is a particularly important target tissue for patients with Pompe disease and a target tissue that is considered difficult to access for ERT. AVR-RD-03 is designed to incorporate a potent promoter to increase volume of system enzyme in circulation.

Disease Overview

Pompe disease is a rare, autosomal recessive lysosomal disorder caused by a mutation in the gene that encodes for GAA that results in the buildup of glycogen, a complex sugar, in the body’s cells. The accumulation of glycogen in certain organs and tissues, especially muscles, impairs normal tissue and organ function. Patients with Pompe disease experience serious muscle related problems, including progressive muscle weakness, especially in the legs and trunk, and the muscles that control breathing. As the disorder progresses, breathing problems can lead to respiratory failure.

The overall diagnosed incidence of Pompe disease is estimated to be approximately one in 58,000 people although frequency and disease progression varies with age of onset, ethnicity and geography. Overall diagnosed incidence of Pompe disease is projected to increase to one in 22,000 people as it is increasingly included in newborn screening panels.

The severity of Pompe disease symptoms and rate of progression is highly variable and correlated with age of symptom onset and the degree of enzyme deficiency. Infantile or early onset disease, the most severe form of Pompe disease, accounts for approximately 25% of all affected patients. Those with early-onset disease are usually diagnosed in the first few months of life and is associated with cardiomyopathy. Left untreated, these patients can die due to heart failure, respiratory distress or malnutrition resulting from feeding difficulties within the first year of life. Patients with late-onset disease typically have higher enzyme levels and usually have symptoms such as reduced mobility and respiratory problems but are not at increased risk of developing cardiomyopathy. Late-onset patients experience progressive difficulty walking and respiratory decline. While life expectancy can vary, Pompe disease is a life-limiting disease that can result in death due to complications from respiratory failure.

Limitations of Current Therapies

Pompe disease is currently treated with ERT delivered by bi-weekly intravenous infusion. Approved therapies for Pompe disease include Lumizyme (known as Myozyme outside of the United States), indicated for both infantile onset Pompe disease, or IOPD, and late onset Pompe disease, or LOPD. In addition, Nexviazyme (known as Nexviadyme outside of the United States) has been approved as an ERT for LOPD only. The products are marketed by Sanofi, which generated collective worldwide net sales of approximately €1.2 billion euros in 2022. We estimate that the average five-year cost to the healthcare system per Pompe patient prescribed standard of care treatment in the United States is approximately $3.2 million.

Though patients treated with ERT for Pompe disease have improved survival and respiratory function, ERT is not curative, and patients in long-term observational studies continue to have increased risk of respiratory failure and have residual muscle weakness including difficulties swallowing with risk of aspiration. One challenge with ERT treatment for Pompe disease is that a standard dose requires approximately twenty-fold more enzyme compared to standard doses for Fabry or Gaucher diseases. Large doses of Lumizyme that are delivered systemically in order to achieve potentially therapeutic levels in the target tissues result in approximately 90% of patients developing antibodies against the therapy. These antibody responses may impact both the efficacy and safety of Lumizyme. The FDA approval of Lumizyme and Nexviazyme carry black box warnings related to the risk of severe allergic and immune mediated reactions, including life-threatening anaphylaxis.

Our Solution

We are developing AVR-RD-03 to be a gene therapy product containing a codon-optimized human gene for GAA attached to a GILT tag designed to increase uptake of GAA in muscle cells. AVR-RD-03 will target patients with late onset Pompe disease, which represent the majority of patients with this disease. In addition, we believe that the utilization of busulfan in our conditioning regimen may have the potential to allow AVR-RD-03 to cross the blood-brain barrier, a feature which may yield therapeutic benefit. While we are continuing to advance AVR-RD-03, we are prioritizing our Gaucher disease and cystinosis clinical programs. As a result, we no longer expect to initiate a clinical trial for AVR-RD-03 in 2023.

Preclinical Data

In November 2020, we presented data from a study in which mice with the equivalent of classic infantile-onset Pompe disease were treated with AVR-RD-03. We believe these data support the potential of lentiviral-based gene expression of GAA to prevent some of the symptoms of GAA deficiency. These results also demonstrated the need to further increase the uptake of GAA into muscle cells to treat patients, which is a known challenge for ERTs and leads to the use of large quantities of enzyme to attempt to deliver effective treatment levels.

We believe we can use a GILT tag to address the known challenges of skeletal muscle uptake in patients with Pompe disease. Attachment of a GILT tag to a particular protein can increase the effective uptake of that protein into target tissues. We are designing AVR-RD-03 to use a GILT tag to facilitate GAA uptake into cells and thereby reduce the therapeutically required amount of GAA produced by a patient’s cells following gene therapy treatment.

In mouse models of Pompe, administration of recombinant GAA with the GILT tag demonstrated significant reduction in glycogen in cardiac and skeletal muscles as compared to the administration of recombinant GAA alone. We licensed GILT tag technology from BioMarin Pharmaceutical Inc., or BioMarin, and are incorporating a GILT tag into our lentiviral vector with the goal of the patient producing GILT-tagged GAA following treatment with AVR-RD-03.

GAA Enzyme Production

Our preclinical study measured the levels of GAA observed in normal mice, mice with the equivalent of infantile-onset Pompe disease, mice treated with AVR-RD-03 modified to not incorporate our proprietary GILT tag, and mice treated with AVR-RD-03 including our GILT tag, in each case measured 16 weeks post-treatment. These data showed significant overexpression of GAA in bone marrow, white blood cells and plasma in mice treated with AVR-RD-03 without our GILT tag as well as AVR-RD-03 incorporating our GILT tag.

Glycogen Reduction

Our preclinical study also measured glycogen levels in the heart and brain at four months post-treatment with our GILT-tagged version of AVR-RD-03, which showed a 99% and 100% reduction, respectively, in glycogen levels. In addition, our study measured glycogen levels in various organs of the study mice at eight months post-treatment. The data showed an average of greater than 99% reduction in glycogen levels in the heart, greater than 97% reduction in the diaphragm, greater than 85% reduction in skeletal muscle, greater than 95% reduction in the brain, and greater than 99% reduction in the spinal cord.

Manufacturing

Industrializing Our Gene Therapies Through Our Outsourced Manufacture and Supply Network

We have established manufacturing relationships that we believe will provide us with drug product manufacturing capabilities to support all aspects of the development and eventual commercialization of our gene therapies. Our team has leveraged their broad expertise in the manufacturing of gene and cellular therapies to build a network of CMO partners for the development and manufacture of drug products and outsourced suppliers for the supply of vectors and plasmids. We currently rely, and expect to continue to rely, on sole source suppliers for vector supply, plasmid supply and cell culture media. In addition, although we have historically relied on multiple CMO partners for drug product manufacturing, we currently plan to use a sole source CMO as the provider of drug product for our ongoing and future Company-sponsored clinical trials. However, we believe that our third-party CMO partner and suppliers have capacity to accommodate current and future clinical trials and we are continuing to build a network that we expect will have capacity to generate sufficient quantities to meet our expected commercial needs.

To optimize production of our gene therapies, we have moved our cell processing to an automated, closed system using disposable supplies. We believe this industrialized manufacturing process will enable a repeatable approach through which we can design and manufacture commercially viable HSC gene therapies to potentially treat a large variety of genetic disorders. We expect that our automation of the manufacturing processes will further increase our CMO partners’ manufacturing capacity.

Producing a Patient’s Gene Therapy

We start the process to produce a patient’s gene therapy with the mobilization of a patient’s stem cells from the bone marrow to the blood stream and collect them via apheresis, a standard procedure used in stem cell transplants. The apheresis material is then transported to the manufacturing facility where we isolate the stem cells and treat these cells with a lentiviral vector to insert the equivalent of a functional copy of the gene that is mutated in the target disease. The manufacturing process typically takes approximately three days to complete. We preserve patients’ modified cells at a very low temperature, using cryopreservation to maintain the cellular material in optimal condition until it is thawed prior to being infused into the patient. Cryopreservation of the product allows for long-term storage and the ability to conduct a number of quality control tests to validate the modified cells prior to introducing them into the patient. We believe cryopreservation will also enable us to supply our products globally, as well as significantly increase the convenience of infusion scheduling for clinicians and patients, compared to fresh ex vivo gene therapy products that may have shelf-lives of only 24 hours.

Prior to infusion of the gene therapy-modified cells into the patient, the patients undergo a conditioning regimen to remove some of the patient’s unmodified cells from the bone marrow to create sufficient space for the modified hematopoietic stem cells to engraft and produce their progeny.

After the conditioning regimen is complete, the HSC-modified stem cells are infused into the patient by intravenous administration. After infusion, these cells are expected to engraft into the bone marrow, replicate and differentiate into all the various types of blood cells that will distribute throughout the body. These widely distributed cells potentially lead to sustained expression of the desired therapeutic enzyme or protein. The sustained expression of the functional enzyme or protein is a direct substitute for the protein currently delivered by ERTs, which require periodic infusions.

Intellectual Property and Other Barriers to Entry

The proprietary nature of, or protection for, our gene therapy technology, our product candidates, our production methods and supply chain are an important part of our strategy to develop and commercialize novel therapies. To maximize the commercial opportunity for our gene therapies, if approved, we and our partners have been building and continue to build barriers to entry by our competitors, including:

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We in-license and develop know-how, including data, relating to certain of our product candidates.

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We rely on trade secret protection to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection.

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Our management team has significant experience in cell processing and commercial-scale cellular therapy manufacturing. Leveraging this experience, we are building our global network of suppliers and CMO partners which combines their expertise in vector manufacturing with a closed, automated manufacturing system, all utilizing cGMP.

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Our gene therapies are designed to potentially provide a curative benefit. If our gene therapies are approved before any other potentially curative treatments, we believe the benefits of our approach and the resulting first mover advantage may provide meaningful disincentive for companies seeking to develop potentially curative therapies that may compete with our own. See “—Competition.”

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We are developing therapies to treat rare diseases and expect to pursue orphan-drug designation in the United States and similar protection outside of the United States. To date, the FDA and the European Commission, or the EC, have each granted orphan drug designation, or ODD, to AVR-RD-02 for the treatment of Gaucher disease, AVR-RD-04 for the treatment of cystinosis, and the FDA has granted ODD to AVR-RD-05 for the treatment of Hunter disease. These and other regulatory exclusivities, if granted or applicable, can prevent competitors, during the exclusivity period, from obtaining regulatory approval of the same drug or biological product for the same indication. See “—Government Regulation.”

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We currently in-license patents and patent applications relating to certain of our product candidates. We have also filed our own patent applications, which are positioned to further protect certain of our product candidates.

We have in-licensed patents and patent applications from BioMarin Pharmaceutical Inc., Papillon Therapeutics, Inc. (previously GenStem Therapeutics, Inc.) and The University of Manchester directed to compositions and methods related to the manufacture and use of certain of our gene therapies. In addition, we have in-licensed certain intellectual property rights and know-how from the University Health Network and affiliates of Lund University. For example, we have in-licensed know-how and data from University Health Network related to AVR-RD-01, our Fabry disease program which was deprioritized in January 2022. Also for example, we have in-licensed know-how and data related to AVR-RD-02, including certain information about the vector and its use, from certain academic scientists affiliated with Lund University. Each of our licenses are limited to particular fields, such as Gaucher disease, cystinosis, Hunter syndrome, Pompe disease, or Fabry disease, and are subject to certain retained rights. We do not control the prosecution and maintenance of all of our in-licensed patents and patent applications, and our rights to enforce the patents are limited in certain ways. For additional detail regarding the risks associated with our license agreements see “Risk Factors—Risks Related to Intellectual Property.”

As of March 1, 2023, our in-licensed patent portfolio relating to certain of our gene therapies included the following:

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AVR-RD-03 (Pompe program): one U.S. patent, projected to expire in 2023, and one U.S. patent application, which if granted, would be projected to expire in 2029, as well as corresponding patents and patent applications in certain foreign jurisdictions, as they pertain to compositions and methods for promoting lysosomal uptake of acid alpha-glucosidase and the treatment of Pompe disease. These patents and patent applications are licensed to us by BioMarin and relate to the GILT tag.

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AVR-RD-04 (Cystinosis program): one U.S. patent application, which, if granted, would be projected to expire in 2038, as well as corresponding patents and patent applications in certain foreign jurisdictions, containing claims directed to hematopoietic stem cells expressing cystinosin and methods of using the same for the treatment of cystinosis. These patent applications are licensed to us by Papillon Therapeutics (formerly GenStem Therapeutics), and Papillon obtained its rights from the University of California, San Diego.

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AVR-RD-05 (Hunter program): two U.S. patent applications, which, if granted, would be projected to expire in 2038, as well as corresponding patents and patent applications in certain foreign jurisdictions, containing claims directed to gene therapy vectors encoding iduronate-2-sulfatase and methods of using the same for the treatment of Hunter syndrome. These patent applications are licensed to us by the University of Manchester.

As of March 1, 2023, our Company-owned patent portfolio also included the following:

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AVR-RD-03 (Pompe program): one international (PCT) application, which, if granted in the U.S., would be projected to expire in 2041, containing claims directed to CD34+ stem cells expressing acid alpha-glucosidase and methods of using the same for the treatment of Pompe disease.

The term of any given patent depends upon the legal term of patents in the countries in which they are obtained. In most countries in which we file, the patent term is 20 years from the date of filing the application, subject to the timely payment of maintenance fees, among other considerations. In the United States, a patent’s term may be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the U.S. Patent and Trademark Office, or USPTO, in granting a patent, or may be shortened if a patent is terminally disclaimed over an earlier-filed commonly owned patent. In addition, in certain instances, a patent term can be extended to recapture a portion of the term effectively lost as a result of FDA regulatory review period. However, the restoration period cannot be longer than five years and the total patent term including the restoration period must not exceed 14 years following FDA approval. In certain foreign jurisdictions similar extensions as compensation for regulatory delays are also available. The actual protection afforded by a patent varies on a claim by claim and country by country basis for each applicable product and depends upon many factors, including the type of patent, the scope of its coverage, the availability of regulatory related extensions, the availability of legal remedies in a particular country and the validity and enforceability of the patent. Currently, we do not own or license patents or patent applications related to our AVR-RD-01 (which we deprioritized in January 2022), AVR-RD-02, or AVR-RD-06 product candidates. We rely, in some circumstances, on trade secrets and unpatented know-how that is either owned by or licensed to us to protect our technology. We seek to protect our proprietary technology and processes, in part, by entering into confidentiality agreements with our employees, consultants, scientific advisors and contractors.

License Agreements

License Agreement with The University of Manchester

In September 2020, we entered into an agreement, or the MPSII License Agreement, with The University of Manchester, whereby UoM granted us an exclusive worldwide license under certain patent and other intellectual property rights, subject to certain retained rights, to develop, commercialize and sell an ex vivo lentiviral gene therapy for use in the treatment of Hunter syndrome, or mucopolysaccharidosis type II. As consideration for the MPSII License Agreement, we agreed to pay UoM an upfront, one-time fee of $8.0 million.

As part of the agreement, we are obligated to make milestone payments of up to an aggregate of $80.0 million upon the achievement of specified development and regulatory milestones, to pay royalties, on a product-by-product and country-by-country basis, of a mid-single digit percentage based on net sales of products licensed under the agreement and to pay a low double-digit percentage of any sublicense fees received by us. In the third quarter of 2022, we paid a $2.0 million milestone under the MPSII License Agreement following regulatory approval of the CTA for the collaborator-sponsored Phase 1/2 clinical trial sponsored by UoM, and the next anticipated payment milestone is $4.0 million, upon the dosing of the first patient in the collaborator-sponsored Phase 1/2 clinical trial sponsored by UoM, which payment is anticipated in the second half of 2023.

Unless terminated earlier, the agreement expires upon the later of 15 years from the effective date or the expiration of the last valid claim of the licensed patents, subject to certain surviving rights and obligations. We and UoM can each terminate the agreement in the event of the bankruptcy or insolvency of the other party, or a material breach by the other party and failure to cure such breach within a certain period of time. UoM has the right to terminate the agreement in the event of certain actions relating to challenge or opposition to the licensed intellectual property brought us or its affiliates or sublicensees.

Concurrently with the MPSII License Agreement, we entered into a collaborative research funding agreement with UoM, or the CRFA. Under the CRFA, we have agreed to fund the budgeted costs of an investigator-sponsored Phase 1/2 clinical trial to be sponsored by UoM in connection with the development activities under the MPSII License Agreement, which are currently estimated to equal approximately £9.9 million in the aggregate.

Exclusive License Agreement with University Health Network

In November 2016, we entered into a license agreement with University Health Network, or UHN, pursuant to which UHN granted us an exclusive worldwide license under certain intellectual property rights and a non-exclusive worldwide license under certain know-how, including certain rights to data, in each case subject to certain retained rights, to develop, commercialize and sell products for use in the treatment of Fabry disease. Intellectual property licensed to us under this agreement relates to our Fabry program, which we deprioritized in January 2022. Under the terms of the agreement, we are required to meet certain performance milestones within specified timeframes. UHN may terminate the agreement if we fail to meet these performance milestones despite using commercially reasonable efforts and we are unable to reach agreement with UHN on revised timeframes.

As consideration for the licenses, we paid to UHN a one-time upfront fee in the amount of CAD$75,000 and are obligated to pay an additional annual fee until the first sale of a licensed product in certain markets. We are also required to make payments to UHN in connection with the achievement of certain development and regulatory milestones, in an aggregate amount of CAD$2.45 million, as well as royalties on a country-by-country basis of a low to mid-single digit percentages on annual sales of licensed products and a lower single digit royalty in certain circumstances. Additionally, we agree to pay a low double-digit percentage of all sublicensing revenue. Our royalty obligation expires on a licensed product-by-licensed product and country-by-country basis upon the latest to occur of the expiration or termination of the last valid claim under the licensed patent rights in such country (if and when any such patent rights come into existence under the license agreement in the future), the tenth anniversary of the first commercial sale of such licensed product in such country and the expiration of any applicable regulatory exclusivity in such country.

In addition, under this agreement we made a philanthropic commitment to donate funds to organizations for the benefit of the Canadian Fabry community in an amount equal to a low double-digit percentage of our royalty payments and regulatory milestone payments, up to a maximum amount of CAD$0.5 million in any calendar year.

Unless terminated earlier, this exclusive license agreement with UHN will expire upon the expiration of our royalty obligation for all licensed products. Either we or UHN may terminate the license agreement if the other party commits a material breach and fails to cure such breach within a certain period of time. UHN may terminate this agreement if we enter into bankruptcy or insolvency. We may terminate this agreement for any reason upon notice to UHN.

License Agreement with Lund University Rights Holders

In January 2017, we entered into an exclusive license agreement with Prof. Stefan Karlsson and Dr. Maria Dahl, affiliates of Lund University, pursuant to which Prof. Karlsson and Dr. Dahl, and certain other relevant rights holders that may have an interest in intellectual property generated under a research project we are funding with Lund University, granted to us an exclusive worldwide license, subject to certain retained rights, under certain intellectual property rights to develop, commercialize and sell products in any and all uses relevant to Gaucher disease. Intellectual property licensed to us under this agreement relates to our Gaucher program.

As consideration for the license, we are required to make payments in connection with the achievement of certain milestones up to an aggregate of $0.55 million.

Our license agreement with the rights holders expires on the latest of (i) the twentieth anniversary of the end of a certain research project we are funding pursuant to an agreement with Lund University, (ii) the expiration of the term of any patent filed on the licensed rights that covers a licensed product, (iii) the expiration of any applicable marketing exclusivity right and (iv) such time that neither we nor any of our sublicensees or partners or contractors are commercializing a licensed product. Either we or the rights holders acting together may terminate the license agreement if the other such party commits a material breach and fails to cure such breach within a certain period of time, or if the other party enters into liquidation, becomes insolvent, or enters into composition or statutory reorganization proceedings.

License Agreement with BioMarin Pharmaceutical Inc.

In August 2017, we entered into a license agreement with BioMarin pursuant to which BioMarin granted us an exclusive worldwide license under certain intellectual property rights related to GILT tags owned or controlled by BioMarin to develop, commercialize and sell retroviridae-based gene therapy products for use in the treatment of Pompe disease. This agreement was amended in February 2018 and again in January 2020 to, among things, provide that BioMarin would supply us with certain materials related to the GILT tags technology. Under the terms of the agreement, we must use commercially reasonable efforts to develop and commercialize one or more licensed products in the United States and certain European countries. In addition, we are required to initiate an IND-enabling pharmacology/toxicology study of a licensed product within a specified period of time.

As consideration for the license, we paid an initial license fee in the amount of $0.5 million and issued 233,765 shares of our Series B preferred stock to BioMarin at the time of our Series B financing. We are also obligated to make payments to BioMarin upon achievement of certain milestones up to an aggregate of $13.0 million and pay to BioMarin a low single digit royalty percentage on net sales of licensed products covered by patent rights in a relevant country. Our royalty obligation expires on a licensed product-by-licensed product and country-by-country basis upon the latest to occur of the expiration or termination of the last valid claim under the licensed patent rights in such country, which is currently projected to occur in 2029, the tenth anniversary of the first commercial sale of such licensed product in such country and the expiration of any applicable regulatory exclusivity in such country.

Unless terminated earlier, our license agreement with BioMarin will expire upon the expiration of our royalty obligation for all licensed products throughout the world. Either we or BioMarin may terminate the license agreement if the other party commits a material breach and fails to cure such breach within a certain period of time. BioMarin may also terminate the agreement in the event of any challenge or opposition to the licensed patent rights or related actions brought by us or our affiliates or sublicensees, or if we, our affiliates or sublicensees knowingly assist a third party in challenging or otherwise opposing the licensed patent rights, except as required under a court order or subpoena. In addition, BioMarin may terminate the agreement upon our bankruptcy or insolvency. We may terminate the agreement for any reason upon notice to BioMarin.

License Agreement with Papillon Therapeutics, Inc. (previously GenStem Therapeutics, Inc.)

In October 2017, we entered into a license agreement with GenStem Therapeutics, Inc., or GenStem, pursuant to which GenStem granted us an exclusive worldwide license, subject to certain retained rights, under certain intellectual property rights owned or controlled by GenStem related to our cystinosis program, including certain rights licensed to GenStem from the University of California, San Diego, to develop, commercialize and sell products for use in the treatment of cystinosis. Under the terms of the agreement, we must use commercially reasonable efforts to develop and commercialize one or more licensed products in the United States and in at least one country from other specified markets. We also agreed to comply with certain access requirements consistent with the California Institute for Regenerative Medicine regulations and to manufacture certain licensed products substantially in the United States. In October 2021, we received noticed that the license agreement with GenStem had been assigned to Papillon Therapeutics, Inc., or Papillon.

As consideration for the license, we paid an initial license fee in the amount of $1.0 million and are required to make payments upon completion of certain development milestones up to an aggregate of $16.0 million. For example, in November 2019 we made a $2.0 million payment in connection with the dosing of the first patient in the investigator-sponsored Phase 1/2 clinical trial of AVR-RD-04 in cystinosis in the United States. Additionally, we will pay to Papillon a tiered mid to high-single digit royalty percentage on annual net sales of licensed products as well as a low double-digit percentage of sublicense income received from certain third party sublicensees. Our royalty obligation expires on a licensed product-by-licensed product and country-by-country basis on the eleventh anniversary of the first commercial sale of such licensed product in such country or the expiration of the last valid claim under the licensed patent rights covering such licensed product in such country, which is currently projected to occur in 2038, whichever is later.

Unless terminated earlier, our license agreement with Papillon will terminate upon the expiration of our royalty obligation for all licensed products throughout the world. Either we or Papillon may terminate the license agreement if the other party commits a material breach and fails to cure such breach within a certain period of time. In addition, we may terminate the agreement for any reason upon notice to Papillon.

Competition

Our industry is highly competitive and subject to rapid and significant technological change. Our potential competitors include larger pharmaceutical, specialty pharmaceutical and biotechnology companies, as well as academic institutions, government agencies and private and public research institutions. Key competitive factors affecting the commercial success of our gene therapies are likely to be efficacy, safety and tolerability profile, reliability, convenience, price and reimbursement.

The market for treatment of lysosomal disorders is especially large and competitive. The gene therapies we are currently developing, if approved, will face competition.

Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a small number of our competitors. Accordingly, our competitors may be more successful than we may be in obtaining FDA approval for drugs and achieving widespread market acceptance. Our competitors’ products may be more effective, or more effectively marketed and sold, than any product we may commercialize and may render our gene therapies obsolete or non-competitive before we can recover the expenses of developing and commercializing any of our gene therapies. Our competitors may also obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours. We anticipate that we will face intense and increasing competition as new drugs enter the market and advanced technologies become available. Finally, the development of new treatment methods for the diseases we are targeting could render our gene therapies non-competitive or obsolete. See “Risk Factors—Risks related to the discovery and development of our product candidates—We face significant competition in our industry and there can be no assurance that our product candidates, if approved, will achieve acceptance in the market over existing established therapies. In addition, our competitors may develop therapies that are more advanced or effective than ours, which may adversely affect our ability to successfully market or commercialize any of our product candidates,” and elsewhere in this Annual Report on Form 10-K for more information regarding competitors and competitive products.

Government Regulation

In the United States, biological products, including gene therapy products, are subject to regulation under the Federal Food, Drug, and Cosmetic Act, or FD&C Act, and the Public Health Service Act, or PHS Act, and other federal, state, local and foreign statutes and regulations. Both the FD&C Act and the PHS Act and their corresponding regulations govern, among other things, the testing, manufacturing, safety, efficacy, labeling, packaging, storage, record keeping, distribution, reporting, advertising and other promotional practices involving biological products. Each clinical study protocol for a gene therapy product must be reviewed by the FDA, and FDA approval must be obtained before the marketing of biological products. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources and we may not be able to obtain the required regulatory approvals.

Within the FDA, the Center for Biologics Evaluation and Research, or CBER, regulates gene therapy products. The FDA and the NIH have published guidance documents with respect to the development and submission of gene therapy protocols. The FDA has published guidance documents related to, among other things, gene therapy products in general, their preclinical assessment, observing subjects involved in gene therapy studies for delayed adverse events, potency testing, and chemistry, manufacturing and control information in INDs for gene therapies.

Ethical, social and legal concerns about gene therapy, genetic testing and genetic research could result in additional regulations restricting or prohibiting the processes we may use. Federal and state agencies, congressional committees and foreign governments have expressed interest in further regulating biotechnology. More restrictive regulations or claims that our products are unsafe or pose a hazard could prevent us from commercializing any products. New government requirements may be established that could delay or prevent regulatory approval of our product candidates under development. It is impossible to predict whether legislative changes will be enacted, regulations, policies or guidance changed, or interpretations by agencies or courts changed, or what the impact of such changes, if any, may be.

U.S. Biological Products Development Process

The process required by the FDA before a biological product may be marketed in the United States generally involves the following:

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completion of nonclinical laboratory tests and animal studies according to good laboratory practices, or GLPs, and applicable requirements for the humane use of laboratory animals or other applicable regulations;

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

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approval by an independent institutional review board, or IRB, or ethics committee at each clinical study site before each study may be initiated;

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performance of adequate and well-controlled human clinical studies according to the FDA’s regulations commonly referred to as good clinical practices, or GCPs, and any additional requirements for the protection of human research subjects and their health information, to establish the safety and efficacy of the proposed biological product for its intended use;

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submission to the FDA of a Biologics License Application, or BLA, for marketing approval that includes substantive evidence of safety, purity, and potency from results of nonclinical testing and clinical studies;

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satisfactory completion of an FDA inspection of the manufacturing facility or facilities where the biological product is produced to assess compliance with cGMPs, to assure that the facilities, methods and controls are adequate to preserve the biological product’s identity, strength, quality and purity and, if applicable, the FDA’s current good tissue practices, or GTPs, for the use of human cellular and tissue products;

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potential FDA audit of the nonclinical and clinical study sites that generated the data in support of the BLA;

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payment of user fees for FDA review of the BLA (unless a fee waiver applies); and

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FDA review and approval, or licensure, of the BLA.

Before testing any biological product candidate, including a gene therapy product, in humans, the product candidate enters the preclinical testing stage. Preclinical tests, also referred to as nonclinical studies, include laboratory evaluations of product chemistry, toxicity and formulation, as well as animal studies to assess the potential safety and activity of the product candidate. The conduct of the preclinical tests must comply with federal regulations and requirements including GLPs.

The clinical study sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data or literature and a proposed clinical protocol, to the FDA as part of the IND. Some preclinical testing may continue even after the IND is submitted. An IND is a request for authorization from the FDA to ship an unapproved, investigational product in interstate commerce and to administer it to humans, and must become effective before clinical trials may begin. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA places the clinical study on a clinical hold within that 30-day time period. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical study can begin. In addition to the submission of an IND to the FDA before initiation of a clinical trial in the United States, certain human clinical trials involving recombinant or synthetic nucleic acid molecules are subject to oversight of institutional biosafety committees, or IBCs, as set forth in the National Institutes of Health, or NIH, Guidelines for Research Involving Recombinant or Synthetic Nucleic Acid Molecules, or NIH Guidelines. Under the NIH Guidelines, recombinant and synthetic nucleic acids are defined as: (i) molecules that are constructed by joining nucleic acid molecules and that can replicate in a living cell (i.e., recombinant nucleic acids); (ii) nucleic acid molecules that are chemically or by other means synthesized or amplified, including those that are chemically or otherwise modified but can base pair with naturally occurring nucleic acid molecules (i.e., synthetic nucleic acids); or (iii) molecules that result from the replication of those described in (i) or (ii). Specifically, under the NIH Guidelines, supervision of human gene transfer trials includes evaluation and assessment by an IBC, a local institutional committee that reviews and oversees research utilizing recombinant or synthetic nucleic acid molecules at that institution. The IBC assesses the safety of the research and identifies any potential risk to public health or the environment, and such review may result in some delay before initiation of a clinical trial. While the NIH Guidelines are not mandatory unless the research in question is being conducted at or sponsored by institutions receiving NIH funding of recombinant or synthetic nucleic acid molecule research, many companies and other institutions not otherwise subject to the NIH Guidelines voluntarily follow them.

The FDA also may impose clinical holds on a biological product candidate at any time before or during clinical studies due to safety concerns or non-compliance. If the FDA imposes a clinical hold, studies may not recommence without FDA authorization and then only under terms authorized by the FDA. Accordingly, we cannot be sure that submission of an IND will result in the FDA allowing clinical studies to begin, or that, once begun, issues will not arise that suspend or terminate such studies.

Clinical studies involve the administration of the biological product candidate to healthy volunteers or patients under the supervision of qualified investigators, generally physicians not employed by or under the study sponsor’s control. Clinical studies are conducted under protocols detailing, among other things, the objectives of the clinical study, dosing procedures, subject selection and exclusion criteria, and the parameters to be used to monitor subject safety, including stopping rules that assure a clinical study will be stopped if certain adverse events should occur. Each protocol and any amendments to the protocol must be submitted to the FDA as part of the IND. Clinical studies must be conducted and monitored in accordance with the FDA’s regulations comprising the GCP requirements, including the requirement that all research subjects provide informed consent. Further, each clinical study must be reviewed and approved by an IRB at or servicing each institution at which the clinical study will be conducted. An IRB is charged with protecting the welfare and rights of study participants and considers such items as whether the risks to individuals participating in the clinical studies are minimized and are reasonable in relation to anticipated benefits. The IRB also approves the form and content of the informed consent that must be signed by each clinical study subject or his or her legal representative and must monitor the clinical study until completed. Clinical research involving recombinant DNA that is subject to NIH guidelines also must be reviewed by an institutional biosafety committee, or IBC, a local institutional committee that reviews and oversees basic and clinical research conducted at that institution. The IBC assesses the safety of the research and identifies any potential risk to public health or the environment.

Clinical studies typically are conducted in three sequential phases that may overlap or be combined:

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Phase 1. The biological product is initially introduced into healthy human subjects and tested for safety. In the case of some products for severe or life-threatening diseases, especially when the product may be too inherently toxic to ethically administer to healthy volunteers, the initial human testing is often conducted in patients.

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Phase 2. The biological product is evaluated in a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance, optimal dosage and dosing schedule.

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Phase 3. Clinical studies are undertaken to further evaluate dosage, clinical efficacy, potency, and safety in an expanded patient population at geographically dispersed clinical study sites. These clinical studies are intended to establish the overall risk/benefit ratio of the product and provide an adequate basis for approval and product labeling.

Post-approval clinical studies, sometimes referred to as Phase 4 clinical studies, may be conducted after initial marketing approval. These clinical studies are used to gain additional experience from the treatment of patients in the intended therapeutic indication, particularly for long-term safety follow-up. The FDA recommends that sponsors observe subjects for potential gene therapy-related delayed adverse events for a 15-year period, including a minimum of five years of annual examinations followed by ten years of annual queries, either in person or by questionnaire, of study subjects.

During all phases of clinical development, regulatory agencies require extensive monitoring and auditing of all clinical activities, clinical data, and clinical study investigators. Annual progress reports detailing the results of the clinical studies must be submitted to the FDA. Written IND safety reports must be promptly submitted to the FDA, the NIH and the investigators for serious and unexpected adverse events, any findings from other studies, tests in laboratory animals or in vitro testing that suggest a significant risk for human subjects, or any clinically important increase in the rate of a serious suspected adverse reaction over that listed in the protocol or investigator brochure. The sponsor must submit an IND safety report within 15 calendar days after the sponsor determines that the information qualifies for reporting. The sponsor also must notify the FDA of any unexpected fatal or life-threatening suspected adverse reaction within seven calendar days after the sponsor’s initial receipt of the information. Phase 1, Phase 2 and Phase 3 clinical studies may not be completed successfully within any specified period, if at all. The FDA or the sponsor, acting on its own or based on a recommendation from the sponsor’s data safety monitoring board may suspend a clinical study at any time on various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical study at its institution if the clinical study is not being conducted in accordance with the IRB’s requirements or if the biological product has been associated with unexpected serious harm to patients.

Human gene therapy products are a new category of therapeutics. Because this is a relatively new and expanding area of novel therapeutic interventions, there can be no assurance as to the length of the study period, the number of patients the FDA will require to be enrolled in the studies in order to establish the safety, efficacy, purity and potency of human gene therapy products, or that the data generated in these studies will be acceptable to the FDA to support marketing approval. The NIH has a publicly accessible database, the Genetic Modification Clinical Research Information System which includes information on gene transfer studies and serves as an electronic tool to facilitate the reporting and analysis of adverse events on these studies.

Concurrent with clinical studies, companies usually complete additional animal studies and also must develop additional information about the physical characteristics of the biological product as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements. To help reduce the risk of the introduction of adventitious agents with use of biological products, the PHS Act emphasizes the importance of manufacturing control for products whose attributes cannot be precisely defined. The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other things, the sponsor must develop methods for testing the identity, strength, quality, potency and purity of the final biological product. Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the biological product candidate does not undergo unacceptable deterioration over its shelf life.

U.S. Review and Approval Processes

After the completion of clinical studies of a biological product, FDA approval of a BLA must be obtained before commercial marketing of the biological product. The BLA must include results of product development, laboratory and animal studies, human studies, information on the manufacture and composition of the product, proposed labeling and other relevant information. The testing and approval processes require substantial time and effort and there can be no assurance that the FDA will accept the BLA for filing and, even if filed, that any approval will be granted on a timely basis, if at all.

Within 60 days following submission of the application, the FDA reviews a BLA submitted to determine if it is substantially complete before the agency accepts it for filing. The FDA may refuse to file any BLA that it deems incomplete or not properly reviewable at the time of submission and may request additional information. In this event, the BLA must be resubmitted with the additional information. The resubmitted application also is subject to review before the FDA accepts it for filing. In most cases, the submission of a BLA is subject to a substantial application user fee, although the fee may be waived under certain circumstances. Under the goals and policies agreed to by the FDA under the Prescription Drug User Fee Act, or PDUFA, for original BLAs, the FDA has ten months from the filing date in which to complete its initial review of a standard application and respond to the applicant, and six months from the filing date for an application with priority review. The FDA does not always meet its PDUFA goal dates, and the review process is often significantly extended by FDA requests for additional information or clarification. This review typically takes twelve months from the date the BLA is submitted to the FDA because the FDA has approximately two months to make a “filing” decision. The review process and the PDUFA goal date may be extended by three months if the FDA requests or the BLA sponsor otherwise provides additional information or clarification regarding information already provided in the submission within the last three months before the PDUFA goal date.

Once the submission is accepted for filing, the FDA begins an in-depth substantive review of the BLA. The FDA reviews the BLA to determine, among other things, whether the proposed product is safe and potent, or effective, for its intended use, and has an acceptable purity profile, and whether the product is being manufactured in accordance with cGMP to assure and preserve the product’s identity, safety, strength, quality, potency and purity. The FDA may refer applications for novel biological products or biological products that present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions. During the biological product approval process, the FDA also will determine whether a Risk Evaluation and Mitigation Strategy, or REMS, is necessary to assure the safe use of the biological product. If the FDA concludes a REMS is needed, the sponsor of the BLA must submit a proposed REMS; the FDA will not approve the BLA without a REMS, if required.

Before approving a BLA, the FDA typically will inspect the facilities at which the product is manufactured. The FDA will not approve the product unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. For a gene therapy product, the FDA also will not approve the product if the manufacturer is not in compliance with GTPs. These are FDA regulations that govern the methods used in, and the facilities and controls used for, the manufacture of human cells, tissues, and cellular and tissue-based products, or HCT/Ps, which are human cells or tissue intended for implantation, transplant, infusion, or transfer into a human recipient. The primary intent of the GTP requirements is to ensure that cell and tissue-based products are manufactured in a manner designed to prevent the introduction, transmission and spread of communicable disease. FDA regulations also require tissue establishments to register and list their HCT/Ps with the FDA and, when applicable, to evaluate donors through screening and testing. Additionally, before approving a BLA, the FDA will typically inspect one or more clinical sites to assure that the clinical studies were conducted in compliance with IND study requirements and GCP requirements. To assure cGMP, GTP and GCP compliance, an applicant must incur significant expenditure of time, money and effort in the areas of training, record keeping, production, and quality control.

Under the Pediatric Research Equity Act, or PREA, a BLA or supplement to a BLA for a novel product (e.g., new active ingredient, new indication, etc.) must contain data to assess the safety and effectiveness of the biological product for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. The FDA may grant deferrals for submission of data or full or partial waivers. Unless otherwise required by regulation, PREA does not apply to any biological product for an indication for which orphan designation has been granted.

Notwithstanding the submission of relevant data and information, the FDA may ultimately decide that the BLA does not satisfy its regulatory criteria for approval and deny approval. Data obtained from clinical studies are not always conclusive and the FDA may interpret data differently than we interpret the same data. If the agency decides not to approve the BLA in its present form, the FDA will issue a complete response letter that usually describes all of the specific deficiencies in the BLA identified by the FDA. The deficiencies identified may be minor, for example, requiring labeling changes, or major, for example, requiring additional clinical studies. Additionally, the complete response letter may include recommended actions that the applicant might take to place the application in a condition for approval. If a complete response letter is issued, the applicant may either resubmit the BLA, addressing all of the deficiencies identified in the letter, or withdraw the application.

If a product receives regulatory approval, the approval may be significantly limited to specific diseases and dosages or the indications for use may otherwise be limited, which could restrict the commercial value of the product. Further, the FDA may require that certain contraindications, warnings or precautions be included in the product labeling. The FDA may impose restrictions and conditions on product distribution, prescribing, or dispensing in the form of a REMS, or otherwise limit the scope of any approval. In addition, the FDA may require post marketing clinical studies, sometimes referred to as Phase 4 clinical studies, designed to further assess a biological product’s safety and effectiveness, and testing and surveillance programs to monitor the safety of approved products that have been commercialized.

Orphan Drug Designation

Under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biological product intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in the United States and for which there is no reasonable expectation that the cost of developing and making a drug or biological product available in the United States for this type of disease or condition will be recovered from sales of the product. Orphan product designation must be requested before submitting a BLA. After the FDA grants orphan product designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. Orphan product designation does not convey any advantage in or shorten the duration of the regulatory review and approval process.

Orphan drug designation entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages and user-fee waivers. If a product that has orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications to market the same drug or biological product for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity. Competitors, however, may receive approval of different products for the indication for which the orphan product has exclusivity or obtain approval for the same product but for a different indication for which the orphan product has exclusivity. Orphan product exclusivity also could block the approval of one of our products for seven years if a competitor obtains approval of the same biological product as defined by the FDA or if our product candidate is determined to be contained within the competitor’s product for the same indication or disease. If a drug or biological product designated as an orphan product receives marketing approval for an indication broader than what is designated, it may not be entitled to orphan product exclusivity. Orphan drug status in the European Union has similar, but not identical, benefits.

Expedited Development and Review Programs

The FDA has various programs, including Fast Track designation, breakthrough therapy designation, accelerated approval and priority review, that are intended to expedite or simplify the process for the development and FDA review of drugs and biologics that are intended for the treatment of serious or life-threatening diseases or conditions. These programs do not change the standards for approval but may expedite the development or approval process. To be eligible for fast track designation, new drugs and biological products must be intended to treat a serious or life-threatening condition and demonstrate the potential to address unmet medical needs for the condition. Fast Track designation applies to the combination of the product and the specific indication for which it is being studied. The sponsor of a new drug or biologic

may request the FDA to designate the drug or biologic as a Fast Track product at any time during the clinical development of the product. One benefit of fast track designation, for example, is that the FDA may consider for review sections of the marketing application for a product that has received Fast Track designation on a rolling basis before the complete application is submitted.

Under the breakthrough therapy program, products intended to treat a serious or life-threatening disease or condition may be eligible for the benefits of the Fast Track program when preliminary clinical evidence demonstrates that such product may have substantial improvement on one or more clinically significant endpoints over existing therapies. Additionally, FDA will seek to ensure the sponsor of a breakthrough therapy product receives timely advice and interactive communications to help the sponsor design and conduct a development program as efficiently as possible.

Any product is eligible for priority review if it has the potential to provide safe and effective therapy where no satisfactory alternative therapy exists or a significant improvement in the treatment, diagnosis or prevention of a disease compared to marketed products. The FDA will attempt to direct additional resources to the evaluation of an application for a new drug or biological product designated for priority review in an effort to facilitate the review. Under priority review, the FDA’s goal is to review an application in six months, compared to ten months for a standard review.

TECX US Equity

TECX · 10-K · period ended 2022-12-31

Item 1. Business.

TECX US Equity☆

TECX · 10-K · period ended 2022-12-31

Item 1. Business.

TECX US Equity