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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations
together with our consolidated financial statements and related notes thereto included elsewhere in this prospectus. Some of the information contained in this discussion and analysis or set forth
elsewhere in this prospectus, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and
uncertainties. As a result of many factors, including those factors set forth in the "Risk Factors" section of this prospectus, our actual results could differ materially from the results described in
or implied by the forward-looking statements contained in the following discussion and analysis.
We are a clinical-stage gene therapy company dedicated to developing and commercializing novel treatments for patients suffering from
rare and life-threatening neurological genetic diseases. Our initial product candidate, AVXS-101, is our proprietary gene therapy product candidate currently in a Phase 1 clinical trial for the
treatment of spinal muscular atrophy, or SMA, Type 1, the leading genetic cause of infant mortality. SMA Type 1 is a lethal genetic disorder characterized by motor neuron loss and
associated muscle deterioration, resulting in mortality or the need for permanent ventilation support before the age of two for greater than 90% of patients. The survival motor neuron, or SMN, is a
critical protein for normal motor neuron signaling and function. Patients with SMA Type 1 either carry a mutation in their SMN1 gene or their SMN1 genes have been deleted, which prevents them
from producing adequate levels of functional SMN protein. AVXS-101 is designed to deliver a fully functional human SMN gene into the nuclei of motor neurons that then generates an increase in SMN
protein levels and we believe this will result in improved motor neuron function and patient outcomes.
In our ongoing, fully enrolled, Phase 1 clinical trial, we have treated 15 SMA Type 1 patients as of December 31, 2015, and have observed a favorable safety profile
that is generally well-tolerated and have also observed preliminary signs of improved motor function. The U.S. Food and Drug Administration, or FDA, has granted AVXS-101 orphan drug designation for
the treatment of all types of SMA and fast track designation for the treatment of SMA Type 1. In addition to developing AVXS-101 to treat SMA Type 1, we plan to develop AVXS-101 to treat
additional SMA types and develop other novel treatments for rare neurological genetic diseases.
to the development of treatments for rare and life-threatening neurological genetic diseases, our business was focused on the creation of a processing, storage and preservation
facility for adipose tissue and regenerative stems cells, which we refer to as the stem cell business. Through two wholly-owned subsidiaries, we owned certain equipment and intellectual property
assets necessary to conduct the stem cell business. We licensed these assets to an affiliated company, BioLife Cell Bank Dallas, LLC, or BioLife Dallas, to conduct these operations. We exited
the stem cell business in January 2014, after which we have devoted substantially all of our resources to developing AVXS-101, conducting clinical trials, building our intellectual property portfolio,
organizing and staffing our company, business planning, raising capital, and providing general and administrative support for these operations.
date, we have financed our operations primarily through private placements of convertible debt and equity securities. From our inception through September 30, 2015, we had
raised an aggregate of $81.5 million from private placements of convertible debt and equity securities. In September 2015, we received an aggregate of $65.0 million in gross proceeds
from the sale of 3,093,104 shares of our Class D preferred stock at a price per share of $21.01. We have not generated any revenue from sales of gene therapy products to date. We have incurred
significant annual net operating losses in every year since our inception and expect to incur a net operating