UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 20162019

OrOR

For the transition period from                     to

Commission file number:File Number: 001-14895

Sarepta Therapeutics, Inc.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (617) 274-4000

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

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

None

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

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

Indicate by check mark whether the registrantRegistrant: (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 registrantRegistrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  YES ☒    No   NO ☐

Indicate by check mark whether the registrantRegistrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrantRegistrant was required to submit and post such files).  Yes  YES ☒    No   NO ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ☒

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

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 registrantRegistrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  YES ☐    No   NO ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant asRegistrant, based on the closing price of the shares of common stock on The Nasdaq Global Select Market on June 30, 201628, 2019, was approximately $912,884,809.$11,294,104,196.

The number of outstanding shares of the registrant’s common stockRegistrant’s Common Stock outstanding as of the close of business on February 21, 20172020 was 54,813,260.

77,776,779.

DOCUMENTS INCORPORATED BY REFERENCE

The registrant has incorporated by reference into Part II and Part III of this Annual Report on Form 10-K portions of its definitive Proxy Statement for its 2017 annual meetingthe 2020 Annual Meeting of Stockholders to be filed with the Commission no later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

Sarepta Therapeutics, Inc.

FORM 10-K INDEX

-i-

Forward-Looking Information

This Annual Report on Form 10-K, including the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section in Item 7, and other materials accompanying this Annual Report on Form 10-K contain forward-looking statements or incorporate by reference forward-looking statements. The statements contained in this Annual Report on Form 10-KStatements that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.statements. Forward-looking statements are often identified by words such as “believe,” “anticipate,” “expect,” “intend,” “plan,” “will,” “may,” “estimate,” “could,” “continue,” “ongoing,” “predict,” “potential,” “likely,” “seek” and other similar expressions, as well as variations or negatives of these words. You should read theseThese statements carefully because they discuss futureaddress expectations, contain projections of future results of operations or financial condition, or state other “forward-looking” information. These statements relate to our future plans, objectives, expectations, intentions and financial performance and the assumptions that underlie these statements. These forward-looking statements include, but are not limited to:

-1--2-

-2-

We undertake no obligation to update any of the forward-looking statements contained in this Annual Report on Form 10-K after the date of this report, except as required by law or the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”).law. We caution readers not to place undue reliance on forward-looking statements. Our actual results could differ materially from those discussed in this Annual Report on Form 10-K. The forward-looking statements contained in this Annual Report on Form 10-K, and other written and oral forward-looking statements made by us from time to time, are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements, including the risks, uncertainties and assumptions identified under the heading “Risk Factors” in this Annual Report on Form 10-K.

-3-

PART I

Item 1. Business.

Overview

We are a commercial-stage biopharmaceutical company focused on helping patients through the discovery and development of unique RNA-targeted therapeutics, gene therapy and other genetic therapeutic modalities for the treatment of rare neuromuscular diseases. Applying our proprietary, highly-differentiated and innovative platform technologies, and through collaborations with our strategic partners, we are able to targetdeveloping potential therapeutic candidates for a broad range of diseases and disorders, through distinct RNA-targeted mechanisms of action.

       DMD Focus

We are primarily focused on rapidly advancing the development of our potentially disease-modifying pipeline of exon-skipping drug candidates targeting DMD. DMD is a rare genetic disorder affecting children (primarily males) that characterized by progressive muscle deteriorationincluding Duchenne muscular dystrophy (“DMD”), Limb-girdle muscular dystrophies (“LGMDs”), Mucopolysaccharidosis type IIIA (“MPS IIIA”) and weakness. It is the most common type of muscular dystrophy. DMD is caused by an absence of dystrophin, a protein that helps keep muscle cells intact. The absence of dystrophin in muscle cells leads to significant cell damageother neuromuscular and ultimately causes muscle cell death and fibrotic replacement. Females are rarely affected by the disorder. In the absence of dystrophin protein, affected individuals generally experience the following symptoms, although disease severity and life expectancy vary:

EXONDYS 51 is the first disease-modifying therapy to receive accelerated approval for DMD in the U.S. The yearly cost of care for individuals with DMD is high and increases with disease progression. We believe that DMD represents a significant market opportunity.

       U.S. Commercializationcentral nervous system (“CNS”) related disorders.  

Our first commercial product, in the U.S., EXONDYS 51^® (eteplirsen) Injection (“EXONDYS 51”), was granted accelerated approval by the FDAU.S. Food and Drug Administration (“FDA”) on September 19, 2016. EXONDYS 51 is indicated for the treatment of DMD in patients who have a confirmed mutation of the DMD gene that is amenable to exon 51 skipping. TheEXONDYS 51uses our phosphorodiamidate morpholino oligomer (“PMO”) chemistry and exon-skipping technology to skip exon 51 of the dystrophin gene.

Our second commercial product, VYONDYS 53 (golodirsen) Injection (“VYONDYS 53”), was granted accelerated approval by the FDA on December 12, 2019. VYONDYS 53 is indicated for the treatment of EXONDYS 51 is based on the surrogate endpoint of an increase of dystrophinDMD in skeletal muscle observed in some EXONDYS 51-treated patients. The FDA has concluded that the data we submitted demonstrated an increase in dystrophin production that is reasonably likely to predict clinical benefit in some patients with DMD who have a confirmed mutation of the DMD gene that is amenable to exon 53 skipping. VYONDYS 53 uses our PMO chemistry and exon-skipping technology to skip exon 53 of the dystrophin gene.

In addition to our commercial-stage products, we have a PMO-based product candidate in clinical development that is designed to treat those patients with DMD who have genetic mutations amenable to skipping exon 45 of the DMD gene (SRP-4045) (casimersen). In January 2020, we commenced our rolling submission of a New Drug Application (“NDA”) to the FDA seeking accelerated approval for casimersen. We also have other PMO-based product candidates in discovery and preclinical development that are designed to skip other exons of the DMD gene.

Exon skipping is intended to promote the production of an internally truncated but functional dystrophin protein. The original PMO structure and variations of this structure that are so-called PMO-based (collectively “PMO-based”) are central to our proprietary chemistry platform. PMO technologies can be used to selectively up-regulate or down-regulate the production of a target protein through pre-mRNA splice alteration. PMO-based compounds have the potential to be designed to create more, less, or none of certain proteins, or produce analogues of endogenous proteins. This technology can be used to correct disease-causing genetic errors by inducing the targeted expression of novel proteins.

The PMO chemistry platform is highly adaptable, and we have developed next-generation PMO-based chemistries for advancing RNA-targeted therapeutics. These next-generation chemistries are specifically designed to enhance tissue targeting, intracellular delivery, target selectivity and drug potency. One of these novel technologies is based on cell-penetrating peptide-conjugated PMO (“PPMO”). The PPMO features covalent attachment of a cell-penetrating peptide to a PMO with the goal of enhanced delivery into the cell. Our most advanced PPMO product candidate is SRP-5051, which is designed to treat DMD in patients with genetic mutations amenable to exon 51 skipping. AIn 2017, we commenced a first-in-human, single ascending dose, Phase 1 clinical benefit of EXONDYS 51, including improved motor function, has not been established. Continued approvaltrial for this indication is contingent upon completing various post-marketing requirements and commitments to confirmproduct candidate.  In 2019, we commenced a multiple ascending dose study for the clinical benefittreatment of EXONDYS 51. Our FDA post marketing requirements and commitments include several studies for eteplirsen and SRP-4045 and SRP-4053, our product candidates designed to skip exons 45 and 53, respectively.

In addition to successfully completing our FDA post-marketing requirements and commitments, weDMD with SRP-5051 in patients who are focused on executing our various strategic initiatives designed to drive commercial success of EXONDYS 51 in the U.S. We believe that the key priorities for a successful commercial launch include:

-4-

Our commercial initiatives are designed to support these priorities. We are pursuing broad coverage of EXONDYS 51. The payor environment can be very challenging in the orphan drug space. As of the date of this report, the majority of covered lives are pending policy decisions and are currently reviewed case-by-case or approved with restrictions. We continue to have discussions with payors who have denied coverage or have policy decisions limiting coverage of EXONDYS 51.

       Ex-U.S. Efforts

We are also pursuing regulatory approval of eteplirsen in jurisdictions outside of the U.S. On December 19, 2016, we announced that the EMA validated our previously submitted Marketing Authorization Application (“MAA”) for eteplirsen to treat DMD amenable to exon 51 skipping.skipping, and we expect to have safety and dosing insights for this study by the middle of 2020.

As part of our multifaceted approach to DMD, we are also developing gene therapy technologies to treat DMD. We are seeking conditional approvalclinically developing a product candidate, SRP-9001, that aims to express a smaller but still functional version of eteplirsendystrophin (“micro-dystrophin”). We use a unique adeno-associated virus (“AAV”) vector called AAVrh.74 to transport the transgene – the genetic material that will make the protein of interest – to the target cells. Micro-dystrophin is used because naturally-occurring dystrophin is too large to fit in an AAV. On October 3, 2018, Nationwide Children’s Hospital (“Nationwide��) presented positive results from a Phase 1/2a clinical trial testing SRP-9001 in four individuals with DMD enrolled in the EU throughtrial. On March 25, 2019, we presented nine-month functional and creatine kinase (“CK”) data from baseline from these four individuals, and twelve-month CK data from baseline from one of these individuals.  In the centralized procedure. The reviewfourth quarter of an MAA generally takes approximately 12-15 months. The review time can vary as it is dependent on2018, we commenced a randomized, double-blind, placebo-controlled trial with the “clock stop” period which is generally between 3goal to 6 months to provide responses to questions fromestablish the EMA throughoutfunctional benefits of micro-dystrophin expression. We have dosed all 41 participants in that trial and have begun dosing participants in the review process. Duringcrossover phase of the review, westudy. We plan to initiate key activities in support of the potential launch of eteplirsencommence a trial evaluating SRP-9001 using commercial supply in the EU, such as building out our commercial infrastructure and scaling-up manufacturing. We believe Europe presents a large opportunity for us since there are more DMD patients in Europe than in the U.S. Asmiddle of the date of this report, EXONDYS 51 has not been approved for sale or marketing by any2020, pending regulatory agency or authority outside of the U.S. feedback.

-4-

We are also working towards establishing early accessdeveloping gene therapy programs for eteplirsenvarious forms of LGMDs. Our most advanced LGMD product candidate, SRP-9003, is designed to transfer a gene that codes for and restores beta-sarcoglycan protein with the goal of restoring the dystrophin associated protein complex. SRP-9003 utilizes the AAVrh.74 vector, the same vector used in various ex-U.S. jurisdictions. For commercialization activitiesSRP-9001. We commenced a Phase 1/2a trial of SRP-9003 in jurisdictions outsidethe fourth quarter of 2018. On February 27, 2019, we announced positive two-month biopsy data from the U.S.,first three-patient cohort dosed in the SRP-9003 trial and on October 4, 2019, we may chooseannounced positive nine-month functional data from these three patients. We have recently dosed one additional cohort of three patients at a higher dose per the study protocol. We expect to conduct these activities ourselves or may enter into arrangements with other pharmaceutical or biotechnology companies forhave the marketingresults from the second cohort and saleto make a dose selection in the third quarter of our products either globally or on a country-by-country basis.    

2020.

Our Next Generation Exon Skipping Technology

EXONDYS 51 is our first PMO-based technology to be granted accelerated approval by the FDA. The reminder of our product candidates currently in the clinic are also PMO-based. We are currently focused on rapidly advancing our next generation chemistry for DMD and other applications – a cell penetrating peptide conjugated PMO referred to as PPMO. In pre-clinical research, our proprietary class of PPMO compounds demonstrated enhanced efficacy as compared to PMO by improving delivery and dystrophin production in vivo, and showing a favorable tolerability in non-human primates. Based on these results, we believe our PPMO chemistry has the potential for a more durable response, which may support less frequent dosing and can potentially be tailored to target any organ. Our current plans are to open file an investigation new drug (“IND”) application in 2017 for PPMO toxicology studies and DMD exon 51.

       Pipeline: A Comprehensive Approach to DMD

In addition to EXONDYS 51, our DMD pipeline includes other product candidates, which aremore than 40 programs at various stages of development. The chart below summarizes the status of our more advanced programs as of the date of this report, including those with our strategic partners,discovery, pre-clinical and clinical development, reflecting our effortsaspiration to becomeapply our multifaceted approach and expertise in precision genetic medicine to make a profound difference in the global leader in DMD RNA-targeted precision medicine while also developing a pipeline with a comprehensive treatment approach to DMD:

-5-

       Collaborations with Multiple Treatment Approaches to DMD

In addition to advancing our exon-skipping product candidates for DMD, we are working with several strategic partners under various agreements to research and develop multiple treatment approaches to DMD. Included in these strategic partners are (i) Summit (Oxford) Ltd. (“Summit”) with whom we are collaborating under an exclusive License and Collaboration Agreement that grants us rights to Summit’s utrophin modulator pipeline in Europe, Turkey and the Commonwealthlives of Independent States and an option to acquire rights in Latin America and (ii) Nationwide Children’s Hospital with whom we are collaborating on the advancement of their microdystrophin gene therapy program under a research and exclusive option agreement and their Galgt2 gene therapy program under an exclusive license agreement.       

patients suffering from rare diseases.

Objectives and Business Strategy

We believe that our proprietary RNA-targeted technologies platformtechnology platforms and collaborations can be used to develop novel pharmaceutical products to treat a broad range of diseases and address key currently-unmet medical needs. We intend to leverage our RNA-targeted technologies platform,technology platforms, organizational capabilities, collaborations and resources to become a leading developer and marketerlead the field of RNA-targeted therapeutics,precision genetic medicines, including the treatment of rare, neuromuscular and other diseases, with a diversified portfolio of product candidates. In pursuit of this objective, we intend to engage infocus on the following activities:

executingCore Therapeutic Areas

DMD: We primarily focus on our strategic initiatives designed to achieve a successful commercialization of EXONDYS 51 in the U.S.;

-6-

General Corporate Information

We were originally incorporatedmutations in the StateSGSH gene, which encodes an enzyme called Heparan-N-sulfamidase necessary for heparan sulfate (“HS”) recycling in cells. The disrupted lysosomal degradation and resulting storage of Oregon on July 22, 1980HS and on June 6, 2013, we reincorporatedglycolipids such as gangliosides leads to severe neurodegeneration. MPS IIIA affects approximately 1 in 100,000 individuals and is inherited in an autosomal recessive pattern. There are currently no treatment options for patients.

-5-

CMT is a group of hereditary, degenerative nerve diseases that are caused by mutations in genes that produce proteins involved in the Statestructure and function of Delaware. Our principal executive offices are located at 215 First Street, Suite 415, Cambridge, MA 02142either the peripheral nerve axon or the myelin sheath. CMT can cause degeneration of motor skills, resulting in muscle weakness, and our telephone numberlimiting patients’ ability to walk or use their hands, and in some cases, can cause degeneration of sensory nerves, resulting in a reduced ability to feel heat, cold, and pain. CMT affects approximately 1 in every 2,500 individuals, while CMT type 1A, which is (617) 274-4000. On July 12, 2012, our common stock began trading undermost often caused by an extra copy of the symbol “SRPT” on the NASDAQ Global Market on a split-adjusted basis following a one-for-six reverse stock split that was effective on July 11, 2012. Our common stock is quoted on the NASDAQ Global Select Market under the same symbol.

We have not generated significant revenue from product sales to date. Even if we do achieve significant revenue from product sales, we are likely to continue to incur operating lossesPMP22 gene, affects approximately 50,000 patients in the near term. For more information about our revenues and operating losses, see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.U.S. Most patients are diagnosed at infancy, while other patients develop symptoms at adolescence. Currently, there are no available treatment options.

As of December 31, 2016, we had approximately $329.3 million of cash, cash equivalents and investments, consisting of $122.4 million of cash and cash equivalents, $195.4 million of short-term investments and $11.5 million of restricted cash and investments. We believe that our balance of cash, cash equivalents and investments is sufficient to fund our current operational plan for at least the next twelve months. In addition to pursuing additional cash resources through public or private financings, we may also seek to enter into contracts, including collaborations or licensing agreements with respect to our technologies, with third parties, including government entities.Our Commercial Products

Where You Can Find Additional Information

We make available free of charge through our corporate website, www.sarepta.comEXONDYS 51, our annual reports, quarterly reports, current reports, proxy statements and all amendments to those reports as soon as reasonably practicable after such materialfirst commercial product, approved by the FDA on September 19, 2016, is electronically filed or furnished withindicated for the SEC. These reports may also be obtained without charge by submittingtreatment of DMD in patients who have a written request via mail to Investor Relations, Sarepta Therapeutics, Inc., 215 First Street, Suite 415, Cambridge, MA 02142 or by e-mail to investorrelations@sarepta.com. Our internet website and the information contained therein or incorporated therein are not intended to be incorporated into this Annual Report on Form 10-K. In addition, the public may read and copy any materials we file or furnish with the SEC, at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549 or may obtain information on the operationconfirmed mutation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Moreover, the SEC maintains an Internet siteDMD gene that contains reports, proxyis amenable to exon 51 skipping. EXONDYS 51 uses our PMO chemistry and information statements, and other information regarding reports that we file or furnish electronically with the SEC at www.sec.gov.

We have adopted a Code of Business Conduct and Ethics and written charters for our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee.  Eachexon-skipping technology to skip exon 51 of the foregoing is available on our website at www.sarepta.com under “For Investors—Corporate Governance.”  In accordance with SEC rules, we intend to disclose any amendment (other than any technical, administrative, or other non-substantive amendment) to the above code, or any waiver of any provision thereof with respect to any of the executive officers, on our website within four business days following such amendment or waiver.  In addition, we may use our website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation Fair Disclosure promulgated by the SEC. These disclosures will be included on our website under the “For Investors” section.

Lead Development Program: Pipeline of Exon-Skipping PMO-Based Product Candidates for DMD

Proprietary Platform Technologies

PMO. The original PMO structure and variations of this structure that are so-called PMO-based (collectively “PMO-based”) are central to our proprietary chemistry platform. PMO-based therapeutics have been safely dosed in over 400 patients.dystrophin gene. PMO-based compounds are synthetic compounds that bind to complementary sequences of RNA by standard Watson-Crick nucleobase pairing. When targeted to messenger RNA (“mRNA”), PMO-based compounds down-regulate protein translation by steric blockade. The two key structural differences between PMO-based compounds and naturally occurring RNA are that the PMO nucleobases are bound to synthetic morpholino rings instead of ribose rings, and the morpholino rings are linked by phosphorodiamidate groups instead of phosphodiester groups. Replacement of the negatively charged phosphodiester in RNA with the uncharged phosphorodiamidate group in PMO eliminates linkage ionization at physiological pH. Due to these modifications, PMO-based compounds are resistant to degradation by plasma and intracellular enzymes. Unlike the RNA-targeted technologies ofsuch as siRNAs and DNA gapmers, and PMO-based compounds operate by steric blockade rather than by cellular enzymatic degradation to achieve their biological effects. Thus, PMOs use a fundamentally different mechanism from these other RNA-targeted technologies.

PMO technologies can be used to selectively up-regulate or down-regulateWe are in the productionprocess of a target protein through pre-mRNA splice alteration. This mechanism can be used to correct disease-causing genetic errors by inducing the targeted expression of

-7-

novel proteins. Thus, PMO-based compounds have the potential to be designed to create more, less, or none of certain proteins, or produce analogues of endogenous proteins.

The safety of therapeutic agents is paramount. We believe that our PMO-based compounds significantly reduce the potential for off-target effects specifically because of their demonstrated inactivity with key molecular mechanismsconducting various EXONDYS 51 clinical trials, including studies that are knownrequired to be toxicologically active when stimulated. Additionally, consistentcomply with our researchpost-marketing FDA requirements/commitments to verify and developmentdescribe the clinical benefit of EXONDYS 51.

EXONDYS 51 targets the most frequent series of mutations that cause DMD. Approximately 13% of DMD patients are amenable to date, we believe that PMO-based compounds do not exhibit coagulationexon 51 skipping. For the years ended December 31, 2019, 2018, and immune stimulatory effects, do not stimulate toll-like receptors (“TLRs”) or receptors2017, the Company recorded net revenue of the RIG-I-like receptor family,$380.7 million, $301.0 million, and do not sequester metal ions away from the catalytic centers of polymerases.

In addition to our original PMO technology, we have also developed three new PMO-based chemistry platforms. We believe that the novel characteristics intrinsic to these new platforms will allow for the development of drug candidates with favorable safety and efficacy characteristics.

PPMO. The first of these novel chemistries is based on cell-penetrating PPMOs. This technology features covalent attachment of a cell-penetrating peptide to a PMO with the goal of enhanced cellular delivery into the cytosol and the nucleus. Based on our pre-clinical research, we believe our proprietary class of PPMO compounds demonstrates enhanced efficacy as compared to PMO and has the potential to provide improved delivery and dystrophin production in vivo, favorable tolerability in non-human primates, and a more durable response, which may support less frequent dosing and can potentially be tailored to target any organ. We plan on beginning IND-enabling Good Laboratory Practice (“GLP”) toxicology studies during early 2017 and we are targeting opening an IND before year-end in 2017 for DMD exon 51.

PMOplus^®. The second of these chemistries, PMOplus^®, features the selective introduction of positive charges$154.6 million, respectively, related to the PMO backbone. We believe that PMOplus^® has potentially broad therapeutic applications, especially for anti-viral therapeutics.sale of EXONDYS 51.

PMO-X^®. The third of these chemistries, PMO-X^®VYONDYS 53, incorporates novel and proprietary chemical modifications to the PMO backbone linkages. We believe PMO-X^® may provide enhanced in vivo potency and efficacy, as well as greater flexibility in the modulation of selective tissue targeting and cellular delivery.

We believe that our PMO-based technology platforms can be used to develop novel pharmaceutical products to treat a broad range of diseases and address key currently-unmet medical needs. We intend to leverage our PMO-based technology platforms, organizational capabilities, and resources to become a leading developer and marketer of a diversified portfolio of PMO-based therapeutics, especially for the treatment of rare, neuromuscular and other diseases.

Exon-Skipping Clinical Studies

The table below indicates the status of our clinical trials for our exon-skipping pipeline as of the date of this filing. This table is a summary description of our research and clinical efforts for each exon skip targeted by our product candidates in our DMD exon-skipping pipeline:

-8-

EXONDYS 51. EXONDYS 51^® (eteplirsen) Injection, our firstsecond commercial product, approved by the U.S. FDA on September 19, 2016,December 12, 2019, is indicated for the treatment of DMD in patients who have a confirmed mutation of the DMD gene that is amenable to exon 5153 skipping. EXONDYS 51VYONDYS 53 uses our PMO chemistry and exon-skipping technology to skip exon 53 of the dystrophin gene.

We are in the process of conducting various VYONDYS 53 clinical trials, including studies that are required to comply with our post-marketing FDA requirements/commitments to verify and describe the clinical benefit of VYONDYS 53.

VYONDYS 53 targets the second most frequent series of mutations that cause DMD. Approximately 13%Up to 8% of DMD patients are amenable to exon 5153 skipping. In connection with fulfillingAs of December 31, 2019, we had commenced shipment of VYONDYS 53 but revenue from VYONDYS 53 was immaterial.

Our Pipeline – Key Programs

Casimersen (SRP-4045) uses our FDA post-marketing requirementsPMO chemistry and commitments, we areexon-skipping technology to skip exon 45 of the DMD gene. Casimersen is designed to bind to exon 45 of dystrophin pre-mRNA, resulting in the processexclusion, or “skipping”, of planning several studies for eteplirsen and product candidates targeting skipping ofthis exon 53 and/or exon 45. In addition, we are conducting an open label extension of our Phase 2b study for which patients can transition to commercial drug after certain criteria are met (Study 4658-us-202), an open label study on ambulatoryduring mRNA processing in patients with a concurrent untreated control arm (Study 4658-301/PROMOVI), a study evaluating the safety and tolerability of eteplirsen in participants with advanced stage DMD (Study 4658-204) and a study evaluating the safety and tolerability of eteplirsen in participants with early stage DMD (Study 4658-203), each of which will allow for patientsgenetic mutations that are amenable to transition to commercial drug after meeting certain criteria. We are also planning two additional Phase 1 studies. In connection with our MAA for eteplirsen, which received EMA validation, and our efforts to obtain approval of eteplirsen in the EU, we are in the planning stages of an intravenous study on participants between the ages of six months and four years in connection with our Pediatric Investigation Plan (“PIP”) in the EU.

Exon 53.exon 45 skipping. We are enrolling and dosing patients in ESSENCE (Study 4045-301)(4045-301), our phasePhase 3 placebo controlled confirmatory trial in patients who have a confirmed mutation of the DMD gene that is amenable to exon 45 or 53 skipping using SRP-4045casimersen and SRP-4053,golodirsen, respectively. SRP-4053, an exon 53-skipping product candidate thatOn March 28, 2019, we selected for development through the SKIP-NMD consortium, is currentlyannounced results from our interim analysis of muscle biopsy endpoints comparing casimersen treatment to placebo in the clinic in EU as partESSENCE study.In January 2020, we commenced a rolling submission of an NDA to the FDA seeking accelerated approval for casimersen.

SRP-5051 uses our next-generation chemistry platform, PPMO, and our exon-skipping technology to skip exon 51 of the dystrophin gene. The PPMO technology features covalent attachment of a Phase 1/2 study. Part I has been completedcell-penetrating peptide to a PMO with the goal of enhanced delivery into the cell. In pre-clinical research, our proprietary class of PPMO compounds demonstrated an increase in dystrophin production and Part II, an open label portiona more durable response compared to PMO. In addition, PPMO treatment in non-human primates results in high levels of this study, is ongoing (Study 4053-101). The SKIP-NMD Consortium, which supported certain clinical proofexon-skipping in skeletal, cardiac and smooth muscle tissues. Pre-clinical trials also indicate that PPMOs may require less frequent dosing than PMOs, and that PPMOs could potentially be tailored to reach other organs beyond muscle.

In the fourth quarter of concept studies and IND-enabling activities2017, we commenced a first-in-human, single ascending dose, trial for an exon 53-skipping therapeuticthe treatment of DMD using our PMO technology, received an EU Health Innovation-1 2012 collaborative research grant (grant agreement No. 305370) to support the initial development of SRP-4053. SRP-4053 will potentially address one of the most prevalent sets of mutationsSRP-5051 in DMD thatpatients who are amenable to exon-skipping.exon 51 skipping. In 2019, we commenced a multiple ascending dose study for the treatment of DMD with SRP-5051 in patients who are amenable to exon 51 skipping, and we expect to have safety and dosing insights by the middle of 2020.

Exon 45-6-

A Phase 1/2a trial of SRP-9003 was commenced in ESSENCE, our placebo controlled study for eteplirsen further described above. SRP-4045, an exon 45-skipping product candidate thatthe fourth quarter of 2018. On February 27, 2019, we selected for development in collaboration with Children’s National Medical Center (“CNMC”) in Washington, D.C. and the Carolinas Medical Center (“CMC”) in Charlotte, N.C. This collaboration was funded primarily through two grants, one from Department of Defense’s (“DoD”) Congressionally Directed Medical Research Program to CNMC and the otherannounced positive two-month biopsy data from the National Institutesfirst three-patient cohort dosed in the SRP-9003 trial, and on October 4, 2019, we announced positive nine-month functional data from these three patients. We have recently dosed one additional cohort of Neurological Disordersthree patients at a higher dose per the study protocol. We expect to have the results from the second cohort and Stroke to the CMC. Pursuant to an ongoing Sarepta-sponsored Phase 1/2 clinical study studying SRP-4045 (Study 4045-101), we have completedmake a dose titration portion (Phase 1) and are currently conducting the open-label portion of the study (Phase 2). SRP-4045 will potentially address one of the most prevalent sets of mutations in DMD that are amenable to exon-skipping.

Our DMD pipeline includes additional product candidates, which are at various stages of development. Our DMD program is part of our larger pan-exon strategy for the development of drug candidates to address the most prevalent exon mutationsselection in the DMD population. Because the majoritythird quarter of DMD patients have exon mutations that cluster together, a small number of exon-skipping therapies will potentially be disease-modifying for a relatively large percentage of DMD patients. Approximately 75-80% of the total DMD population is potentially treatable with exon-skipping therapeutics.2020.

Discovery and Research Programs

Rare DiseasesLYS-SAF 302. We are researchingcollaborating with Lysogene S.A. (“Lysogene”) to develop a gene therapy, LYS-SAF302, to treat MPS IIIA. LYS-SAF302 is an AAV-mediated gene therapy, the applicationgoal of which is to replace the faulty N-sulfoglucosamine sulfohydrolase (“SGSH”) gene with a healthy copy of the gene. LYS-SAF302 employs the AAVrh.10 virus, chosen for its ability to target the CNS. Proof-of-concept was established in MPS IIIA pre-clinical models demonstrating strong expression, broad distribution, and the ability of the compound to correct lysosomal storage defects by producing the missing enzyme.

Lysogene is conducting a global Phase 2/3 clinical trial of LYS-SAF302 (AAVance), aiming at evaluating the effectiveness of a one-time delivery of an AAVrh.10 virus carrying the N-SGSH gene. We expect to complete dosing in this trial in the first half of 2020.

-7-

The chart below summarizes the status of our proprietary PMO-based technologies in a number of rare diseases.programs, including those with our strategic partners:

Anti-Bacterials. The rapid emergence of broad antibiotic resistance has underscored the urgent need for new paradigms in antimicrobial development. Our anti-bacterial program is focused on drug-resistant bacteria identified by the Centers for Disease Control and Prevention (“CDC”) as urgent or serious threats to the U.S. healthcare system. Early research findings demonstrate that targeted PPMOs can successfully inhibit translation of essential structural genes such as acyl carrier protein (“acpP”), resistance proteins such as the NDM-1 metallo-b-lactamase, or those responsible for biofilm formation, which is critical for Burkholderia cepacia complex to evade host immune responses or systemic antibiotics such as cysteine protease cepI., which is responsible for biofilm expression. Additionally, though acpP alone can be bactericidal at clinically achievable concentration, data demonstrates that co-administration of the PPMOs targeting NDM-1 can restore antibiotic activity of drugs like meropenem or imipenem to clinically achievable levels in high-level multidrug resistant Acinetobacter, E. coli, Klebsiella, and Burkholderia spp in both bench top and mouse models. Finally, we have also seen that PPMOs targeting structural genes such as acpP or quorum sensing genes such as cepI (responsible for biofilm expression) can penetrate and disrupt established biofilm; furthermore, the PPMOs targeting acpP can successfully kill the established bacterial colonies in Burkholderia cepacia models. We believe the results of this early research could have broad commercial applicability. We are exploring IND enabling studies now, and are open to partnership opportunities in the development of our anti-bacterial program.

-9-

-8-

Manufacturing, Supply and Distribution

We have developed proprietary state-of-the-art Chemistry, Manufacturing and Controls (“CMC”) and manufacturing and techniquescapabilities that allow synthesis and purification of our productproducts and product candidates to support both clinical development as well as commercialization. Our current main focus in manufacturing is to continue scaling up production of our PMO-based therapies and optimizing manufacturing for PPMO and gene therapy-based product candidates. We have entered into certain manufacturing and supply arrangements with third-party suppliers which will in part utilize these techniquescapabilities to support production of our product and certain of our product candidates and their components. WeIn 2017, we opened a facility in Andover, Massachusetts, which significantly enhanced our research and development manufacturing capabilities. However, we currently do not have any of our own internal large scale Good Manufacturing Practices (“GMP”) manufacturing capabilities to produce our productproducts and product candidates for commercial and/or clinical use.

For our current and future manufacturing needs, we have entered into supply agreements with specialized contract manufacturing organizations (“CMO”(each a “CMO”) to produce custom raw materials, the APIsactive pharmaceutical Ingredients (“APIs”), drug product and finished goods for our products and product candidates.candidates for both commercial and clinical use. All of our CMO partners have extensive technical expertise, GMP experience and experience manufacturing our specific technology. Specially, for

For our commercial DMD program, we have commenced work with our existing manufacturers to increase product capacity from mid-scale to large-scale.

While there are a limited number of companies that can produce raw materials and APIs in the quantities and with the quality and purity that we require for our product,commercial products, based on our diligence to date, we believe our current network of manufacturing partners are able to fulfill all of these requirements, and are capable of continuing to expandexpanding capacity as needed. Additionally, we have, and will continue to evaluate further relationships with additional suppliers to increase overall capacity as well as further reduce risks.  risks associated with reliance on a limited number of suppliers for manufacturing.  

Our commercial products are distributed in the U.S. through a limited network of home infusion specialty pharmacy providers that deliver the medication to patients and a specialty distributor that distributes our products to hospitals and hospital outpatient clinics. With respect to the pre-commercial distribution of our products to patients outside of the U.S., we have contracted with third party distributors and service providers to distribute our products in certain countries through our ex-U.S. early access programs (“EAP”). We plan to continue building out our network for commercial distribution in jurisdictions in which our products are approved.

Our gene therapy manufacturing capabilities have been greatly enhanced through partnerships with Brammer Bio LLC, which has recently been acquired by Thermo Fisher Scientific Inc. (“Brammer”), Paragon Bioservices, Inc., which has recently been acquired by Catalent, Inc. (“Paragon”) and Aldevron LLC (“Aldevron”). We have adopted a hybrid development and manufacturing strategy in which we are building internal manufacturing expertise relative to all aspects of AAV-based manufacturing, including gene therapy and gene editing supply, while closely partnering with first-in-class manufacturing partners to expedite development and commercialization of our gene therapy programs. We expect that our partnerships with Brammer and Paragon will support our clinical and commercial manufacturing capacity for our micro-dystrophin DMD gene therapy programs and LGMD programs, while also acting as a manufacturing platform for potential future gene therapy programs. The collaboration integrates process development, clinical production and testing, and commercial manufacturing. Aldevron is expected to provide GMP-grade plasmid for our SRP-9001 micro-dystrophin DMD gene therapy program and LGMD programs, as well as plasmid source material for future gene therapy programs, such as CMT, MPS IIIA and other neuromuscular and CNS related disorders.

Manufacturers and suppliers of our commercial products and product candidates are subject to the FDA’s current Good Manufacturing PracticesGMP (“cGMP”) requirements and other rules and regulations prescribed by foreign regulatory authorities. We depend on our third-party partners for continued compliance with cGMP requirements and applicable foreign standards.

EXONDYS 51 is distributed in the U.S. through a limited network of home infusion specialty pharmacy providers that deliver the medication to patients and a specialty distributor that distributes EXONDYS 51 to hospitals and hospital outpatient clinics.

Material Agreements

We believe that our RNA-targeted and gene therapy technologies could be broadly applicable for the potential development of pharmaceutical products in many therapeutic areas. To further exploit our core technologies, we have and may continue to enter into research, development or commercialization alliances with universities, hospitals, independent research centers, non-profit organizations, pharmaceutical and biotechnology companies and other entities for specific molecular targets or selected disease indications. We may also selectively pursue opportunities to access certain intellectual property rights that complement our internal portfolio through license agreements or other arrangements.

Summit (Oxford) Ltd.Roche

License, Collaboration, and Option Agreement

On October 3, 2016,December 21, 2019, we entered into the exclusivea License, Collaboration, and LicenseOption Agreement (the “Collaboration Agreement”) with SummitF. Hoffman-La Roche Ltd (“Roche”) pursuant to which grantswe granted Roche an exclusive license under certain of our intellectual property rights to develop, manufacture, and commercialize SRP-9001 in all countries outside of the U.S. We retained all rights to SRP-9001 in the U.S.

-9-

Also, under the terms of the Collaboration Agreement, Roche granted us a license to use certain of its intellectual property rights to perform development activities worldwide under a joint global development plan, commercialize SRP-9001 in the U.S., and perform certain manufacturing and medical affairs activities worldwide. Such license is non-exclusive under Roche’s background intellectual property rights, exclusive in the U.S. under intellectual property rights developed by Roche under the Collaboration Agreement, and non-exclusive outside the U.S. under intellectual property rights developed by Roche under the Collaboration Agreement.

We intend to manufacture and supply all clinical and commercial supply of SRP-9001.

Roche Options and Negotiation Rights

Pursuant to the Collaboration Agreement, we granted Roche an exclusive option to obtain an exclusive license to develop, manufacture and commercialize the following products outside of the U.S.: (i) certain exon-skipping products that target the dystrophin gene to induce exon skipping, including eteplirsen, golodirsen, casimersen and SRP-5051; (ii) certain gene therapy products other than SRP-9001 that encode and directly express dystrophin or a derivative thereof; and (iii) certain gene-editing products that modify, repair, or activate an endogenous dysfunctional dystrophin gene. The products subject to Roche’s options are collectively referred to as the “Option Products.” Upon option exercise, the Option Product that is the subject of the option exercise will be included under the Collaboration Agreement as a product licensed to Roche subject to similar obligations, including with respect to development, manufacturing, commercialization, and cost-sharing as those that apply to SRP-9001.

Pursuant to the Collaboration Agreement, Roche has a right of first negotiation if we seek to grant a third-party license to (a) commercialize SRP-9001 in the U.S. or (b) commercialize any of our LGMDs products.

Exclusivity

Other than under the Collaboration Agreement, Roche may not perform any clinical trials for, or commercialize, any gene therapy product, gene-editing product, or antisense oligonucleotide for DMD for a period of five years following the execution of the Collaboration Agreement. The exclusivity period for one or more types of products may be extended if Roche exercises its option with respect to one or more exon-skipping products, gene therapy products, or gene-editing products, in each case, for a period of five years from the time of option exercise.

Development

The parties will use commercially reasonable efforts to conduct development activities with respect to SRP-9001 under the Collaboration Agreement pursuant to agreed-upon development plans. We will perform all development activities directed to obtaining and maintaining regulatory approvals for SRP-9001 in the U.S. and the European Union (“EU”), as set forth in a joint global development plan. Subject to certain exceptions, the parties will share the costs of the development activities under such joint global development plan. Roche will perform all development activities set forth in a territory-specific development plan for SRP-9001, including additional activities not set forth in the joint global development plan that are specifically directed to obtaining and maintaining regulatory approvals for SRP-9001 outside of the U.S. Roche will be solely responsible for costs arising from the territory-specific development plan for SRP-9001.

Governance

Governing committees will facilitate collaboration between the parties with respect to development, manufacturing, medical affairs, intellectual property protection, and commercialization of SRP-9001 and any other licensed products.

Financial Terms

In February 2020, Roche and Roche Finance Ltd, an affiliate of Roche (“Roche Finance”), together paid us an up-front payment of $1.2 billion, comprised of $750.0 million in cash from Roche and approximately $400.0 million from Roche Finance in exchange for 2,522,227 shares of our common stock, priced at $158.59 per share under the Stock Purchase Agreement described below. Additionally, we are eligible to receive up to $1.7 billion in regulatory and sales milestone payments with respect to SRP-9001.

In addition, the Collaboration Agreement provides that Roche will pay us royalties on net sales of SRP-9001, anticipated to be in the mid-teens.

In the event that Roche chooses to exercise its option with respect to one or more Option Products, we will be paid an option exercise fee upon each such exercise and the Option Products that are the subject of the option exercise will be subject to separate milestone payments and royalties on sales of such Option Product.

-10-

Term; Termination

Unless earlier terminated as described below, the Collaboration Agreement will continue with respect to SRP-9001 or any Option Product for which Roche has exercised its option, on a product-by-product and country-by-country basis, until the end of the royalty term for such product in such country. The royalty term expires on the later of (a) twelve years after first commercial sale in such country, (b) loss of regulatory exclusivity in such country and (c) expiration of all valid claims of specific licensed patents in such country.

Either party may terminate the Collaboration Agreement for the other party’s material breach, if such breach is not cured within a specified cure period.

If Roche breaches its development or commercialization diligence obligations with respect to a licensed product or fails to develop or commercialize a particular licensed product in a particular region for a specified period of time, then we may terminate the Collaboration Agreement with respect to such licensed products in such regions.

Roche may terminate the Collaboration Agreement if we fail to supply SRP-9001 to Roche in accordance with the terms of the Collaboration Agreement and the supply agreements to be entered into between the parties. Roche may also terminate the Collaboration Agreement for convenience with extended advance notice, in its entirety or on a licensed product-by-licensed product and region-by-region basis.

The foregoing description of the terms of the Collaboration Agreement is not complete and is qualified in its entirety by reference to the text of the Collaboration Agreement, a copy of which is filed as an exhibit to this Annual Report.

Stock Purchase Agreement

On December 21, 2019, pursuant to the Collaboration Agreement, we entered into a Stock Purchase Agreement with Roche Finance (the “Stock Purchase Agreement”) pursuant to which, in February 2020, we issued and sold 2,522,227 shares (the “Shares”) of common stock to Roche Finance in a private placement for an aggregate purchase price of approximately $400.0 million, or $158.59 per share.

The Shares are subject to lock-up restrictions, which, without our prior approval, prohibit Roche Finance from selling the Shares for a period of 180 days after the closing of the Share issuance. The Stock Purchase Agreement contains other customary terms and conditions, including mutual representations, warranties, and covenants.

Myonexus

On May 3, 2018, we purchased from Myonexus, a privately-held Delaware corporation, a warrant to purchase common stock of Myonexus (the “Warrant”), which, in combination with amendments to the Myonexus certificate of incorporation, provided us with an exclusive option (the “Option”) to acquire Myonexus. In consideration for the Warrant, we made an up-front payment of $60.0 million to Myonexus. On February 27, 2019, we announced that we exercised the exclusive rightoption to acquire Myonexus and, on April 4, 2019, we paid the Myonexus shareholders approximately $173.8 million and completed the acquisition of Myonexus.  We are required to make contingent payments to the former shareholders of Myonexus upon achievement of a threshold amount of net sales of Myonexus products and the receipt and subsequent sale of a priority review voucher with respect to a Myonexus product.

BioMarin

License Agreement

On July 17, 2017, we executed a License Agreement (as amended on April 14, 2019, the “License Agreement”) with BioMarin Leiden Holding BV, BioMarin Nederlands BV and BioMarin Technologies BV (collectively, “BioMarin”), pursuant to which BioMarin granted us a royalty-bearing, worldwide license under patent rights (“Licensed Patents”) and know-how (“Licensed Know-How”) controlled by BioMarin with respect to BioMarin’s DMD program, which are potentially necessary or useful for the treatment of DMD, to practice and exploit the Licensed Patents and Licensed Know-How in all fields of use and for all purposes, including to develop and commercialize antisense oligonucleotide products that target one or more exons of the dystrophin gene to induce exon skipping, including eteplirsen and golodirsen (collectively, the “Products”).

The license granted by BioMarin is exclusive, even as to BioMarin, with respect to the Licensed Patents, and is non-exclusive with respect to Licensed Know-How. Under the License Agreement, BioMarin has the option to convert the exclusive license under the Licensed Patents into a co-exclusive license (co-exclusive with BioMarin) (“BioMarin Co-Exclusive Option”).

-11-

Under the terms of the License Agreement, we were required to pay BioMarin an up-front payment of $15.0 million, and BioMarin is eligible to receive up to $20.0 million from us per dystrophin gene exon (other than exon 51) targeted by one or more Products in Summit’s utrophin modulator pipelinespecified regulatory milestones, as well as an additional $10.0 million milestone, payable following the regulatory approval of eteplirsen by the EMA. BioMarin is also eligible to receive $15.0 million from us upon the achievement of $650.0 million in sales, as well as royalties segmented by specified geographic markets, in some jurisdictions dependent on the existence of a patent, ranging from four (4) to eight (8) percentages of net sales on a product-by-product and country-by-country basis.

Milestones and royalties are payable with respect to eteplirsen (an exon 51 skipping Product), golodirsen (an exon 53 skipping Product), casimersen (an exon 45 skipping Product) and other Products. For eteplirsen, golodirsen and casimersen, the royalty term will expire upon March 31, 2024 in the E.U.U.S., Switzerland, Norway, Iceland, Turkeyupon December 31, 2024 in the EU and no later than December 31, 2024 in other countries provided certain conditions are met. For Products other than exon 51 skipping Products, exon 53 skipping Products and exon 45 skipping Products, the royalty term will end on a country-by country basis upon expiration of granted Licensed Patents covering the applicable Product. The royalties for all Products are subject to reduction upon BioMarin’s exercise of the BioMarin Co-Exclusive Option. All royalties are subject to further potential reductions, including for generic competition and, under specified conditions, for a specified portion of payments that we may become required to pay under third-party license agreements, subject to a maximum royalty reduction.

Unless earlier terminated, the License Agreement will expire upon the expiration of the last-to-expire royalty term. Either party may terminate the License Agreement in the event of the other party’s uncured material breach. BioMarin may also terminate the License Agreement on a Licensed Patent-by-Licensed Patent basis under specified circumstances relating to patent challenges by us.

Settlement Agreement

On July 17, 2017, Sarepta and The University of Western Australia (“UWA”) on the one hand, and the CommonwealthBioMarin Parties and Academisch Ziekenhuis Leiden (“AZL”) on the other hand (collectively, the “Settlement Parties”), executed a Settlement Agreement pursuant to which all legal actions in the U.S. and certain legal actions in Europe (the “Actions”) would be stopped or withdrawn as between the Settlement Parties. Specifically, the terms of Independent States (the “Licensed Territory”the Settlement Agreement required that existing efforts pursuing ongoing litigation and opposition proceedings would be stopped as between the Settlement Parties, and the Settlement Parties would cooperate to withdraw the Actions before the European Patent Office (except for actions involving third parties), the U.S. Patent and Trademark Office, the U.S. Court of Appeals for the Federal Circuit and the High Court of Justice of England and Wales, except for the cross-appeal of the Interlocutory Decision of the Opposition Division dated April 15, 2013 of the European Patent Office of EP 1619249B1 (“EP ‘249 Appeal”). in which Sarepta agreed to withdraw its appeal and BioMarin/AZL agreed to continue with its appeal with Sarepta having oversight of the continued appeal by BioMarin/AZL.

Additionally, under the terms of the Settlement Agreement, the Settlement Parties agreed to release each other and the customers, end-users, agents, suppliers, distributors, resellers, contractors, consultants, services and partners of Sarepta or BioMarin (as applicable) from claims and damages related to (i) the patent rights controlled by the releasing party that are involved in the Actions, (ii) with respect to Sarepta and UWA, its patent rights related to the patent rights involved in the Actions, and (iii) with respect to BioMarin and AZL, all of the Licensed Patents and Licensed Know-How.

Under the terms of the CollaborationSettlement Agreement, weSarepta made an up-front payment of $40.0$20.0 million to Summit, with the potential for additional payments of up to $192.0 million based on achievement of certain development and regulatory milestones for ezutromid. For each of Summit’s future generation small molecule utrophin modulators, we may be required to make up to $290.0 million in development and regulatory milestone payments. Additionally, on a product-by-product basis, we may be required to make up to $330.0 million in sales milestone payments.BioMarin.

The Collaboration Agreement also grants us an option to expand the Licensed Territory. If we exercise this option, then we will be liable for a one-time $10.0 million option fee as well as up to $7.0 million in regulatory milestone payments. For each of Summit’s lead product candidate, ezutromid, for the treatment of DMD, and its second generation and future generation small molecule utrophin modulators (collectively, the “Licensed Product”), we may be liable for up to $82.5 million in sales milestone payments.

Additionally, we may be required to make tiered royalty payments ranging from a low to high teens percentage of net sales on a product-by-product basis in the Licensed Territory.

Under the Collaboration Agreement, Summit will be solely responsible for all research and development costs for the Licensed Products until December 31, 2017. Thereafter, Summit will be responsible for 55.0% of the budgeted research and development costs related to the Licensed Products in the Licensed Territory, and we will be responsible for 45.0% of such costs. Any costs in excess of 110.0% of the budgeted amount will be borne by the party that incurred such costs. Summit is also obligated to spend a specified minimum amount on the research and development of certain Licensed Products prior to the end of 2019.

Manufacture and Supply of Licensed Products

-10-

Under the Collaboration Agreement, Summit has agreed to use commercially reasonable efforts to supply to us active pharmaceutical ingredient, finished drug product and placebo for us to conduct research, development and commercialization activities for the Licensed Products. We will also have the right to establish back up and second source suppliers under certain circumstances.

Commercialization

Under the Collaboration Agreement, we will be solely responsible for all commercialization activities and associated costs relating to the Licensed Products in the Licensed Territory. We have agreed to use commercially reasonable efforts to commercialize the Licensed Products in specified countries within the Licensed Territory and, if the exclusive option to expand the Licensed Territory to include specified countries in South and Central America (the “Option Territory”) is exercised, to use commercially reasonable efforts to commercialize the Licensed Products in certain specified countries within the Option Territory.

University of Western Australia

In April 2013, we entered into an agreement with University of Western Australia (“UWA”)UWA under which an existing exclusive license agreement between the two parties was amended and restated and, in June 2016, we entered into the first amendment to the license agreement (the “Amended and Restated UWA“UWA License Agreement”). The Amended and Restated UWA License Agreement grants us specific rights to compounds for the treatment of DMD by inducing the skipping of certain exons.exon skipping. EXONDYS 51, SRP-4045VYONDYS 53 and SRP-4053casimersen fall under the scope of the license agreement. Under the Amended and Restated UWA License Agreement, we may beare required to make payments of up to $6.0 million in the aggregate to UWA based on the successful achievement of certain development and regulatory milestones relating to EXONDYS 51, VYONDYS 53 and up to fivefour additional product candidates. As of the date of this report, a portionDecember 31, 2019, $2.7 million of the $6.0 million development and regulatory milestone payments has been made. We mayare also be obligated to make payments to UWA of up to $20.0 million upon the achievement of certain sales milestones. Additionally, we may beare required to pay a low-single-digit percentage royalty on net sales of products covered by issued patents licensed from UWA during the term of the Amended and Restated UWA License Agreement. However, we have the option to purchase future royalties up-front. Under this option, prior to the First Amendment (defined below), we could be required to makeup-front for a one-time royalty payment of $30.0 million to UWA.

In June 2016, we entered into the first amendment to the Amended and Restated UWA License Agreement (the “First Amendment”) with UWA. Under the First Amendment, we were obligated to make an up-front payment of $7.0 million to UWA upon execution of the First Amendment. Under the terms of the First Amendment, UWA has waived rights to certain royalties and amended the timing of certain other royalty payments under the Amended and Restated UWA License Agreement, including lowering the one-time royalty payment that is due by us upon exercise of the option to purchase future royalties up-front. Upon exercise of the option to purchase future royalties up-front, we would still be obligated to make up to $20.0 million in payments to UWA upon achievement of certain sales milestones.$23.0 million.

Currently, the latest date on which an issued patent covered by our agreement withthe UWA License Agreement expires is November 2030 (not accounting for(excluding any patent term extension, supplemental protection certificate or pediatric extensions that may be available),; however, patents grantinggranted from pending patent applications could result in a later expiration date.

-12-

Key Strategic Alliances

In connection with our multi-front battle against DMD and other rare neuromuscular diseases, we have entered into a number ofmultiple partnering opportunities.opportunities, including the ones described below. We believe that these collaborations, taken along with our own programs, represent the mosta comprehensive approach to treating DMD.these rare neuromuscular diseases.  

Nationwide Children’s Hospital

In January 2016,December 2015, we entered into an exclusive license agreement with Nationwide Children’s Hospital for their Galgt2to acquire exclusive rights to its GALGT2 gene therapy program. This program explores the potential surrogate gene therapy approach to DMD. Under this approach, the gene therapy looks to induce genes that make proteins that can perform a similar function as dystrophin, with the goal of producing a muscle cell that can function normally even when dystrophin is absent. This approach has the potential to be used broadly in several muscular dystrophies, regardless of their mutation.for neuromuscular related disorders.

In addition, in December 2016, we entered into a research andan exclusive option agreement with Nationwide Children’s Hospital onto acquire exclusive rights to their microdystrophinmicro-dystrophin gene therapy program as well as a sponsored research agreement to conduct pre-IND research and conduct the first clinical trial with the lead micro-dystrophin gene therapy. In October 2018, we exercised our exclusive license option and an option under the sponsored research agreement and entered into an exclusive license agreement with Nationwide to acquire exclusive rights to its micro-dystrophin gene therapy program.

Furthermore, in October 2018, we entered into an exclusive option agreement with Nationwide with respect to exclusive rights to its NT-3 gene therapy program for the treatment of certain CMT neuropathy subtypes, including CMT Type 1A.  The initialoption agreement contains pre-determined economic terms for the exclusive license to be entered into upon us exercising our option.  

In addition, in March 2019, we entered into an exclusive option agreement with Nationwide with respect to exclusive rights to its calpain-3 gene therapy program for the treatment of LGMD Type 2A.   The option agreement contains pre-determined economic terms for the exclusive license to be entered into upon us exercising our option.

Lysogene

In October 2018, we entered into a license and collaboration agreement with Lysogene, a gene therapy company focused on the treatment of orphan diseases of the CNS, for the development of a gene therapy, LYS-SAF302, to treat MPS IIIA. Concomitantly, we also entered into an option with Lysogene to acquire an exclusive license to an additional CNS-targeted gene therapy candidate. Lysogene is responsible for completion of the pivotal trial which is expectedfor LYS-SAF302. We have exclusive commercial rights to go into Phase 1/2a trialLYS-SAF302 and exclusive option rights for the additional CNS-targeted gene therapy program in late 2017,the U.S. and all territories outside of Europe, and Lysogene will retain exclusive commercial rights to each program in Europe. We will be conducted at Nationwide Children’s Hospital. Parent Project Muscular Dystrophy has committed $2.2responsible for global manufacturing of LYS-SAF302 and will supply Lysogene for its territory. If all milestones are met, we may be required to pay up to $130.8 million in development and commercial milestones and tiered royalties upon commercialization.

Duke University

In October 2017, we entered into a sponsored research and exclusive option agreement with Duke University, granting us an exclusive option to an exclusive license to intellectual property and technology related to certain CRISPR/Cas9 technology developed in the trial, with supportlaboratory of Charles A. Gersbach, Ph.D. The underlying premise of Dr. Gersbach’s approach is to restore dystrophin expression by removing or “excising” exons from additional Duchenne foundations and families. We have committedthe dystrophin gene. This includes a strategy to excise exons potentially enabling treatment for a majority of the trial throughDMD patient population.

Genethon

In May 2017, we entered into a sponsored research agreement with Nationwide Children’s Hospital,Genethon, under which we have been collaborating with Genethon on the pre-clinical development of its micro-dystrophin gene therapy products for the treatment of DMD. In November 2019, we entered into a license and collaboration agreement with Genethon, under which we will collaborate and share costs with Genethon on the clinical development of such products for the treatment of DMD. Under such agreement, we received the exclusive right to commercialize such products in the majority of the world (primarily excluding the EU).  For the rights we received under such agreement, we made an up-front payment of $28.0 million; may be required to pay up to $236.3 million in development, regulatory and sales milestones; and upon commercialization, will be required to make tiered royalty payments based on net sales of licensed products.

-13-

StrideBio

On November 13, 2019, we entered into a collaboration and license agreement with StrideBio, Inc. (“StrideBio”), a leading developer of novel AAV capsids, to develop in vivo AAV-based therapies for up to eight CNS and neuromuscular targets. Pursuant to the agreement, we were granted an exclusive license on selected targets to leverage StrideBio’s capsid technology intended to enhance specific tropism to tissues of interest and evade neutralizing antibodies. StrideBio will conduct all IND enabling research, development and manufacturing for the first four CNS targets, which are MECP2 (Rett syndrome), SCN1A (Dravet syndrome), UBE3A (Angelman syndrome), and NPC1 (Niemann-Pick). Additionally, we have an exclusive option for up to exclusively license the program.

     Catabasis

-11-

In September 2016, we entered into a joint research collaboration with Catabasis Pharmaceuticals, Inc. (“Catabasis”) to explore a combination drug treatment approach for DMD. We will contribute our expertise to study an exon skipping treatment while Catabasis will contribute its oral NF-kB inhibition treatment for this combination study for DMD. The objective of the joint research is to study the safety and efficacy of combining these two treatment strategies using a mouse model of DMD, including evaluating the potential forfour additional or synergistic benefits.

Charley’s Fund Agreement

In October 2007, Charley’s Fund, Inc. (“Charley’s Fund”), a nonprofit organization that funds drug development and discovery initiatives specific to DMD, awarded us a research grant of approximately $2.5 million and, in May 2009, the grant authorization was increased to a total of $5.0 million. Pursuant to the related sponsored research agreement, the grant was provided to support the development of product candidates related to exon 50 skipping using our proprietary exon-skipping technologies. As of December 31, 2016, Charley’s Fund had made payments of approximately $3.4 million to us. Revenue associated with this research and development arrangement is recognizedtargets based on the proportional performance method. To date, we have recognized approximately $0.1 million as revenue. We have deferred $3.3 million of previous receipts, which are anticipated to be recognized as revenue upon resolution of outstanding performance obligations.StrideBio’s capsid technology.

Previously, we noted unexpected toxicology findings in the kidney as part of our series of preclinical studies for AVI-5038, our PMO-based candidate designed for the treatment of individuals with DMD who have an error in the gene coding for dystrophin that can be treated by skipping exon 50. We have conducted additional preclinical studies and have not alleviated the toxicity problem. Pursuant toUnder the terms of ourthe agreement, StrideBio will be responsible for AAV capsid development, non-clinical development and manufacturing of preclinical candidates to be selected for advancement into clinical studies. The parties will also share early clinical development activities for certain selected targets, with Charley’s Fund,Sarepta responsible for late stage development and commercialization of all targets. StrideBio received up-front consideration of $46.9 million, of which $29.4 million was in the receiptform of additional funds is tied toSarepta common stock and the satisfactionbalance in cash. In addition, StrideBio will receive significant future development, regulatory and commercial milestones upon the achievement of certain clinical milestones. Becausespecified milestone events for each of the toxicity issuesfour programs. StrideBio will also receive royalties on worldwide net sales of any commercial products developed through the collaboration. Sarepta has also obtained an exclusive option to expand the collaboration to include up to an additional four targets with AVI-5038, satisfactionan up-front option payment of up to $42.5 million along with future downstream milestone and royalty payments, while StrideBio has an option to obtain co-development and co-commercial rights in the U.S. to one of the additional milestones under the agreement is unlikely and we do not expectcollaboration targets. In addition, Sarepta has made a commitment to receive any additional funds from Charley’s Fund.invest in StrideBio’s next financing round that meets certain conditions.

Patents and Proprietary Rights

Our success depends in part upon our ability to protectobtain and maintain exclusivity for our core technologiesproducts, product candidates and intellectual property. To accomplish this, weplatform technologies.  We typically rely on a combination of intellectual property rights, including patents,patent protection and regulatory exclusivity to maintain exclusivity for our products and product candidates, whereas exclusivity for our platform technologies is generally based on patent protection and trade secrets, copyrights and trademarks, as well assecret protection.  In addition to patent protection, regulatory exclusivity, and trade secret protection, we also protect our products, product candidates and platform technologies with copyrights, trademarks, and contractual protections.

Our patents and patent applications are directed to our product candidates as well as to our PMO-based technologies platform. We actively seek patent protection for certain of our product candidates and certain of our proprietary technologies by filing patent applications in the U.S. and other countries as appropriate.

Our product candidates and our technologies are primarily protected by composition of matter and use patents and patent applications. Currently, our exon skipping clinical product candidates for DMD include EXONDYS 51 (eteplirsen), SRP-4045 and SRP-4053.

We own patents and have exclusively licensed patents from UWA that provide primary patent protection for eteplirsen, SRP-4045 and SRP-4053 as follows:

Eteplirsen

SRP-4045

-12-

SRP-4053

* Stated expiration dates do not account for any patent term extension, supplemental protection certificate or pediatric extensions that may be available.

**Granted patents in the United States and Europe (EP) are shown here.  Additional patent protection in the U.S., Europe (EP) or other countries or regions through pending or granted foreign counterparts may be available.

*** Involved in U.S. Patent Interference No. 106,007. Judgment dated April 29, 2016 ordered cancellation of (i) all claims, except claim 77, of U.S. Application No. 11/233,495 to BioMarin (AZL); and (ii) U.S. 8,455,636 to us (UWA).  Appeal by BioMarin (AZL) to the Court of Appeals for the Federal Circuit pending (Case No. 2016-2262).

**** Involved in U.S. Patent Interference No. 106,008. Judgement dated September 20, 2016 ordered cancellation of all claims of U.S. Application No. 13/550,210 to BioMarin (AZL).  Appeal by BioMarin (AZL) to the Court of Appeals for the Federal Circuit pending (Case No. 2017-1078).

*****Involved in U.S. Patent Interference No. 106,013.  Judgment dated September 29, 2015 ordered cancellation of U.S. 8,486,907 to us (UWA).  Decision dated December 29, 2015 denied our Request for Rehearing. Appeal by us (UWA) to the Court of Appeals for the Federal Circuit pending (Case Nos. 2016-1937, 2016-2086 (consolidated)).

******Involved in Opposition proceedings initiated on August 25, 2016.

In addition to the foregoing patents that protect eteplirsen, SRP-4045 and SRP-4053, we either solely own or exclusively license from UWA patents and These patent applications in the U.S. and in major foreign markets that provide additional protection for eteplirsen as well as our DMD follow-on exon-skipping candidates (e.g., SRP-4045 and SRP-4053), which cover the composition of matter, preparation and/or uses of these drug candidates. These patents, and patent applications, if granted, expire between 2025 and 2036, such expiration dates not accounting for any patent term extension, supplemental protection certificate or pediatric extensions that may be available.

We separately own patents and patent applications in the U.S. and in major foreign markets that cover our proprietary PMO-based technologies (e.g., PPMO, PMOplus^®, PMO-X^®). These patents, and patent applications, if granted, expire between 2024 and 2036, such expiration dates not accounting for any patent term extension, supplemental protection certificate or pediatric extensions that may be available. We are the owner of multiple federal trademark registrations in the U.S.directed to various inventions, including, but not limited to, Sarepta^®, Sarepta Therapeutics^®, PMOplus^®, PMO-X^® the Sarepta Therapeutics logo, EXONDYS^®,active ingredients, pharmaceutical formulations, methods of use, and EXONDYS 51^®.manufacturing methods.  In addition, we have multiple pending trademarkactively acquire exclusive rights to third party patents and patent applications in the U.S. and in major foreign markets.

Our commercial success will depend in part on obtaining and maintaining patent protection and trade secret protection forto protect our in-licensed product candidates and successfully defending these patents against third-party challenges. Our ability to protect our product candidates from unauthorized making, using, selling, offering to sell or importing by third parties is dependent on the extent to which we have rights under valid and enforceable patents that cover these activities.corresponding platform technologies.

We do not have patents or patent applications in every jurisdiction where there is a potential commercial market for our product candidates. For each of our programs, our decision to seek patent protection in specific foreign markets, in addition to the U.S., is based on many factors, including:

-13-

We continually evaluate our patent portfolio and patent strategy and believe our owned and licensed patents and patent applications provide us with a competitive advantage; however, if markets where we do not have patents or patent applications become commercially important, our business may be adversely affected.

The A discussion of certain risks and uncertainties that may affect our patent positions of pharmaceutical, biotechnologyposition, regulatory exclusivities and other life sciences companies canproprietary rights is set forth in Item 1A. Risk Factors included in this report, and a discussion of legal proceedings related to the key patents protecting our products and product candidates are set forth below in the footnotes to the tables in this section.

-14-

Certain of our product candidates are in therapeutic areas that have been the subject of many years of extensive research and development by academic organizations and third parties who may control patents or other intellectual property that they might assert against us, should one or more of our product candidates in these therapeutic areas succeed in obtaining regulatory approval and thereafter be highly uncertaincommercialized. We continually evaluate the intellectual property rights of others in these areas in order to determine whether a claim of infringement may be made by others against us.  Should we determine that a third party has intellectual property rights that could impact our ability to freely market a compound, we consider a number of factors in determining how best to prepare for the commercialization of any such product candidate.  In making this determination we consider, among other things, the stage of development of our product candidate, the anticipated date of first regulatory approval, whether we believe the intellectual property rights of others are valid, whether we believe we infringe the intellectual property rights of others, whether a license is available upon commercially reasonable terms, whether we will seek to challenge the intellectual property rights of others, the term of the rights, and involve complex legalthe likelihood of and factual questionsliability resulting from an adverse outcome should we be found to infringe the intellectual property rights of others.

Currently, U.S. patents, as well as most foreign patents, are generally effective for which important legal principles remain unresolved. No consistent policy regarding20 years from the breadthdate the earliest regular application was filed.  In some countries, the patent term may be extended to recapture a portion of claims allowedthe term lost during regulatory review of the claimed therapeutic.  For example, in biotechnologythe U.S., under the Drug Price Competition and Patent Term Restoration Act of 1984, commonly known as the Hatch-Waxman Act, a patent that covers an FDA-approved drug may be eligible for patent term extension (for up to 5 years, but not beyond a total of 14 years from the date of product approval) as compensation for patent term lost during the FDA regulatory review process.  In the U.S., only one patent may be extended for any product based on FDA delay.  In addition to patent term extension, patents has emerged to date in the U.S. and tests used for determining the patentability of patent claims in all technologies are in flux. In addition, there is no assurance as to the degree and range of protections any of our patents, if issued, may afford us or whether patents will be issued. Patents which may be issuedgranted additional term due to us may be subjecteddelays at the U.S. Patent and Trademark Office (“USPTO”) during prosecution of a patent application.  We actively strive to further governmental review that may ultimately result inmaximize the reduction of their scope of protection, and pending patent applications may have their requested breadth of protection significantly limited before being issued, if issued at all. For example, we are aware of certain claims that our competitor BioMarin has rights to in the U.S that, if granted, may provide the basispotential for BioMarin or other parties that have rights to these claims to assert that our drug candidates, eteplirsen and/or SRP-4053, infringe on such claims. In 2014, the Patent Trial and Appeal Board (“PTAB”) of the USPTO declared various patent interferences between certain patents held by Sarepta under a license from the UWA and patent applications held by BioMarin under license from Academisch Ziekenhuis Leiden (“AZL”) related to exon 51 and exon 53 skipping therapies designed to treat DMD. Patents held or licensed to Sarepta and included in these interference proceedings are presumed valid by statute for the duration of these proceedings and any appeals. These interferences have not changed our plans to seek regulatory approval for eteplirsen in foreign markets and pursue post-marketing commitments in the U.S., continue with our clinical development plans for eteplirsen and SRP-4053 or continue to commercialize EXONDYS 51 in the U.S.; however, if final resolution of these interferences and related appeals are not in our favor, our current business, development and commercialization plans for eteplirsen and SRP-4053 may be negatively impacted. For details on and risks related to the interferences that the PTAB has declared involving our patents, please read Risk Factors—Risks Relating to Our Business—Our success, competitive position and future revenue, if any, depend in part on our ability and the abilities of our licensors to obtain and maintain patent protection for our technologies, product,products and product candidates to preservein accordance with the law.

Key Patents & Regulatory Exclusivities

Our products, product candidates and our trade secrets, to prevent third parties from infringing on our proprietary rightstechnologies are primarily protected by composition of matter and to operate without infringing on the proprietary rightsmethods of third parties.

The pharmaceutical, biotechnologyuse patents and other life sciences patent situation outside the U.S. can be even more uncertain. For example, BioMarin has rights to European Patent No. EP 1619249. We opposed this patent in the Opposition Divisionapplications. A summary of the European Patent Office (“Opposition Division”), and in November 2011, we announced that, although we succeeded in invalidating somegranted composition of the patent’s claims, the Opposition Division maintained in amended form certain claimsmatter and/or methods of this patent relating to the treatment of DMD by skipping dystrophin exons 51 and 46. We and BioMarin both appealed this decision in June 2013; however, pending final resolution of this matter, the patent at issue may provide the basis for BioMarin or other parties that have rights to such patent in the relevant European country to assert that our drug candidate, eteplirsen, infringes on such patent upon launching eteplirsen in such relevant European country. The outcome of the appeal cannot be predicted or determined as of the date of this report. If, as part of any appeal before the European Patent Office, we are unsuccessful in invalidating BioMarin’s claims that were maintained by the Opposition Division or if claims previously invalidated by the Opposition Division are restored on appeal, our ability to commercialize both eteplirsen and other therapeutic candidates, such as SRP-4045 and SRP-4053 could be materially impaired.  Moreover, our ability to commercialize eteplirsen could be materially impaired in a European country where BioMarin has a patent related to EP 1619249 while the appeal process remains ongoing before the European Patent Office Board of Appeals. In addition, we are aware of various divisional applications relating to EP 1619249 that are being pursued by BioMarin, which are pending, granted and, in some cases, are proceeding to grant.  One of these divisional applications that has been granted claims exon 45 skipping antisense oligonucleotides (EP 2594641) and another claims exon 53 skipping antisense oligonucleotides (EP 2602322).  We opposed EP 2594641 and EP 2602322 in the Opposition Division on September 29, 2016 and December 1, 2016, respectively.  Should we be unsuccessful in invalidating these patents, or any related patents that grant, our ability to commercialize eteplirsen or our other therapeutic candidates, such as SRP-4045 and SRP-4053, could be materially impaired.

In addition to government, court and regulatory patent decisions, changes in either the patent laws or in interpretations of patent laws in the U.S. and other countries may diminish the value of our intellectual property. Accordingly, we cannot predict the breadth of claims that may be allowed or enforced in theuse patents that we own or have licensed from/to third-parties. Further, since publicationcontrol in the U.S. and Europe, which cover our products and late-stage clinical product candidates, is provided below. To the extent the product or product candidate indicated above the tables that immediately follow the name of discoveries in scientific or patent literature often lags behind actual discoveries, theresuch product is no assurance that we were the first creator of inventions covered by a patent that is licensed to Sarepta, we may owe milestones and/or royalties to the indicated licensor in connection with the development and/or commercial sale of the product or product candidate.

Eteplirsen

-15-

The various types of regulatory exclusivity for which our products have been granted and our product candidates are anticipated to be eligible to receive are generally discussed below, under ‘Government Regulation’ – ‘Data and Market Exclusivities’ and ‘Orphan Drug Designation and Exclusivity’.  In connection with its FDA approval on September 19, 2016, the FDA granted EXONDYS 51 (eteplirsen) New Chemical Entity (“NCE”) exclusivity until September 19, 2021, and Orphan Drug Exclusivity until September 19, 2023.

Golodirsen

The various types of regulatory exclusivity for which our products have been granted and our product candidates are anticipated to be eligible to receive are generally discussed below, under ‘Government Regulation’ – ‘Data and Market Exclusivities’ and ‘Orphan Drug Designation and Exclusivity’.  In connection with its FDA approval on December 12, 2019, the FDA granted VYONDYS 53 (golodirsen) NCE exclusivity until December 12, 2024, and Orphan Drug Exclusivity until December 12, 2026.

-16-

Casimersen

In addition to the foregoing composition of matter and method of use patents that protect eteplirsen, casimersen and golodirsen, we either solely own or exclusively license from UWA, BioMarin or AZL patents and patent applications in the U.S. and in major foreign markets that provide additional protection for eteplirsen, casimersen, and golodirsen, which cover the composition of matter, preparation and/or that we wereuses of the first to fileproducts and product candidates. These patents, and patent applications, if granted, would expire through at least 2038, such expiration dates not accounting for these inventions.any patent term extension, patent term adjustment, supplemental protection certificate or pediatric extensions that may be available.

Platform Technologies

We separately own patents and patent applications in the U.S. and in major foreign markets that cover our proprietary PMO-based platform technologies (e.g., PPMO, PMOplus, PMO-X). These patents, and patent applications, if granted, expire through at least 2038, such expiration dates not accounting for any patent term extension, supplemental protection certificate or pediatric extensions that may be available.

Trademarks

Our trademarks are important to us and are generally filed to protect our corporate brand, our products and platform technologies.  We typically file trademark applications and pursue their registration in the U.S., Europe and other markets in which we anticipate using such trademarks.  We are the owner of multiple federal trademark registrations in the U.S. including, but not limited to, Sarepta, Sarepta Therapeutics, the double-helix logo, EXONDYS, and EXONDYS 51.   In addition, we have multiple pending trademark applications in the U.S. and in major foreign markets, including, but not limited to, VYONDYS and VYONDYS 53.  Trademark protection varies in accordance with local law, and continues in some countries as long as the trademark is used and in other countries as long as the trademark is registered. Trademark registrations generally are for fixed but renewable terms.

Government Regulation

The testing, manufacturing, labeling, advertising, promotion, distribution, exportation and marketing of our products are subject to extensive regulation by governmental authorities in the U.S. and in other countries. In the U.S., the FDA, under the Federal Food, Drug and Cosmetic Act and its implementing regulations, regulates pharmaceutical products. Failure to comply with applicable U.S. requirements may subject us to administrative or judicial sanctions, such as FDA refusal to approve pending new drug

-14-

marketing applications, (“NDAs”), withdrawal of approval of approved products, warning letters, untitled letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, civil penalties and/or criminal prosecution.

-17-

U.S. Drug Approval Process

To obtain FDA approval of a product candidate, we must, first and foremost,among other things, submit clinical data providing substantial evidence of safety and efficacy of the product for its intended use, as well as detailed information on product composition, its manufacture and controls and proposed labeling. The testing and collection of data and the preparation of necessary applications are expensive and time-consuming. The FDA may not act quickly or favorably in reviewing these applications, and we may encounter significant difficulties or costs in our efforts to obtain FDA approvals that could delay or preclude us from marketing our products.

The steps required before a drug may be approved for marketing in the U.S. generally include the following:

Preclinical studiesPre-clinical trials may include laboratory evaluations of the product chemistry, pharmacology, toxicity and formulation, as well as animal studies to assess the pharmacokinetics, metabolism, bio-distribution, elimination and toxicity of the product candidate. The conduct of the preclinicalpre-clinical tests and formulation of the compounds for testing must comply with federal regulations and requirements. The results of the preclinical studies,pre-clinical trials, manufacturing information, analytical data and a proposed first in human clinical trial protocol are submitted to the FDA as part of the IND, which must become effective before clinical trials may be initiated. The IND will become effective approximately 30 days after receipt by the FDA, unless the FDA raises concerns or questions about the supportive data, or the study design, particularly regarding potential safety issues with conducting the clinical trial as described in the protocol. In this situation, the trials are placed on clinical hold and the IND sponsor must resolve any outstanding FDA concerns before clinical trials can proceed.

Clinical trials involve the administration of the product candidate to healthy volunteers or patient participants under the supervision of a qualified principal investigator. Clinical trials are conducted under protocols detailing the objectives of the study, the administration of the investigational product, study procedures, parameters to be used in monitoring safety and the effectiveness criteria to be evaluated. Each protocol must be submitted to the FDA as a submission to the IND. Clinical trials must be conducted in accordance with the FDA’s Good Clinical Practice (“GCP”) requirements and federal and state laws and regulations protecting study subjects. Further, each clinical trial must be reviewed and approved by the Institutional Review Board (“IRB”) at or servicing each institution in which the clinical trial will be conducted. The IRB will consider, among other things, rationale for conducting the trial, clinical trial design, participant informed consent, ethical factors, the safety and rights of human subjects and the possible liability of the institution. The FDA can temporarily or permanently halt a clinical trial at any time, or impose other sanctions, if it believes that the clinical trial is not being conducted in accordance with FDA requirements or presents an unacceptable risk to the clinical trial subjects. The IRB may also require the clinical trial at a particular site be halted, either temporarily or permanently, for failure to comply with GCP or the IRB’s requirements, or may impose other conditions.

-18-

Clinical trials typically are conducted in three sequential drug development phases (Phases 1, 2 and 3) prior to approval, and a portion of these phases may overlap. A fourth post-approval phase (Phase 4) may include additional clinical studies.trials. A general description of clinical trials conducted in each phase of development is provided below. However, the number of study subjects involved in each phase of drug development for rare diseases can be significantly less than typically expected for more common diseases with larger patient populations:

-15-

A company seeking marketing approval for a new drug in the U.S. must submit to the FDA the results of the preclinicalpre-clinical and clinical trials to the FDA in the form of a marketing application, together with, among other things, detailed information on the manufacture and composition of the product candidate and proposed labeling, in the form of an NDA, including payment of a user fee unlessfor FDA review of the submissionapplication. The user fee is waived for an application for a product intended to treat an Orphan Indication. The FDA assesses all submitted NDAsmarketing applications for completeness before it accepts them for filing. In some case,cases, the FDA may request additional information before accepting an NDAa marketing application for filing. Once the submission is accepted for filing, the FDA begins an in-depth review of the NDA.marketing application. Applications receive either standard or priority review. Under the current goals mandated under the Prescription Drug User Fee Act (the “PDUFA”), the FDA has ten months in which to complete its initial review of a standard NDAmarketing application and respond to the applicant, and six months for a priority NDA.marketing application. The FDA does not always meet its PDUFA goal dates for standard or priority NDAs.marketing applications. The review process and the PDUFA goal date may be extended by three months if the FDA requests or the NDAmarketing application sponsor otherwise provides additional information or clarification regarding information already provided in the submission within the last three months before the PDUFA goal date. The FDA may refer an application to an advisory committee for review, evaluation and recommendation as to whether the application should be approved. Though the FDA is not bound by such recommendations, it considers them carefully when making decisions. If the FDA’s evaluations of the NDAmarketing application and the clinical and manufacturing procedures and facilities are favorable, the FDA may issue an approval letter. If the FDA finds deficiencies in the NDA,marketing application, it may issue a complete response letter, which defines the conditions that must be met in order to secure final approval of the NDA.marketing application. If and when those conditions have been met to the FDA’s satisfaction, the FDA will issue an approval letter, authorizing commercial marketing of the drug. Sponsors that receive a complete response letter may submit to the FDA information that represents a complete response to the issues identified by the FDA. Resubmissions by the NDAmarketing application sponsor in response to a complete response letter trigger new review periods of varying length (typically two to six months) based on the content of the resubmission. If the FDA’s evaluation of the NDAmarketing application and the commercial manufacturing procedures and facilities is not favorable, the FDA may refuse tonot approve the NDA.marketing application.

-19-

A sponsor may also seek designation of its drug candidates under programs designed to accelerate the FDA’s review and potential approval of NDAs.marketing applications. For instance, a sponsor may seek FDA designation of a drug candidate as a “fast track product.” Fast track products are those products intended for the treatment of a serious or life-threatening disease or condition and which demonstrate the potential to address unmet medical needs for such disease or condition. If fast track designation is obtained, the FDA may initiate early and frequent communication and begin reviewing sections of an NDAa marketing application before the application is complete. This “rolling review” is available if the applicant provides, and the FDA approves, a schedule for the remaining information. Eteplirsen was granted fast track status in 2007 and both AVI-7288 and AVI-7537 were granted fast track status in September 2012.2007.

The Food and Drug Administration Safety and Innovation Act (“FDASIA”) enacted and signed into law in 2012 amended the criteria for the fast track and accelerated approval pathways and, as a result, the pathways now share many common eligibility criteria. FDASIA provides both the sponsor companies and the FDA with greater flexibility and expedited regulatory mechanisms. The statute clarifies that a fast track product may be approved pursuant to an accelerated approval (Subpart – H) or under the traditional approval process. In addition, FDASIA codified the accelerated approval pathway as separate and apart from the fast track pathway, meaning that for drugs to be eligible for accelerated approval, they do not need to be designated under the fast track pathway. FDASIA

-16-

reinforces the FDA’s authority to grant accelerated approval of a drug that treats a serious condition and generally provides a meaningful advantage over available therapies and demonstrates an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality (“IMM”) that is reasonably likely to predict an effect on IMM or other clinical benefit (i.e., an intermediate clinical endpoint). Approvals of this kind typically include requirements for appropriate post-approval Phase 4 clinical trials to confirm clinical benefit. FDASIA retains this requirement and further requires those studies to verify and describe the predicted effect on irreversible morbidity or mortality or other clinical benefit.

Additionally, FDASIA established a new, expedited regulatory mechanism referred to as breakthrough therapy designation. Breakthrough therapy designation, fast track, and accelerated approval are not mutually exclusive and are meant to serve different purposes. The breakthrough therapy designation is focused on expediting the development and review process and by itself does not create an alternate ground for product approval. A sponsor may seek FDA designation of a drug candidate as a breakthrough therapy if the drug is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. The FDA issued guidance entitled “Expedited Programs for Serious Conditions––Drugs and Biologics” in May 2014.

Finally, if a drug candidate demonstrates a significant benefit over existing therapy, it may be eligible for priority review, which means it will be reviewed within a six-month timeframe from the date a complete NDAmarketing application is accepted for filing. A Regenerative Medicine Advanced Therapy (“RMAT”) designation is also designed to accelerate approval for regenerative advanced therapies such as our gene therapy product candidates, but the exact mechanisms have not yet been announced by FDA.

We cannot be sure that any of our drug candidates will qualify for any of these expedited development, review and approval programs, or that, if a drug does qualify, that the product candidates will be approved, will be accepted as part of any such program or that the review time will be shorter than a standard review.

Holders of an approved NDAmarketing application are required to:

The FDA periodically inspects the sponsor’s records related to safety reporting and/or manufacturing; this latter effort includes assessment of compliance with cGMP. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain cGMP compliance. Discovery of problems with a product after approval may result in restrictions on a product, manufacturer, or holder of an approved NDA,marketing application, including withdrawal of the product from the market.

-20-

Foreign Regulatory Requirements

We are pursuing regulatory approval of eteplirsen in jurisdictions outside of the U.S. In November 2016, we submitted a marketing authorization application (“MAA”) for eteplirsen to the EMA and the application was validated in December 2016. As we announced on June 1, 2018, the Committee for Medicinal Products for Human Use (“CHMP”) within the EMA adopted a negative opinion for eteplirsen. In September 2018, the CHMP confirmed its negative opinion for eteplirsen, and the European Commission adopted the CHMP opinion in December 2018. During 2019, we sought follow-up EMA scientific advice for eteplirsen. Once data from our ongoing studies is available, we plan to evaluate future engagement with the EMA on potential next steps.

We have initiated key activities in support of the potential launch of our products in the EU, such as building out commercial infrastructure and scaling-up manufacturing. As of the date of this Annual Report, EXONDYS 51 and VYONDYS 53 have only been approved for sale and marketing in the U.S. by the FDA, and EXONDYS 51 has been approved in addition for sale and marketing in Israel by the Israeli Ministry of Health.

Thus, in addition to regulations in the U.S., our business is subject to a variety of foreign regulations governing clinical trials and commercial sales and distribution of our products.  Irrespective of whether it concerns an FDA approved or investigational drug, the commencement of clinical trials and the subsequent marketing of a drug product in foreign countries are subject to preliminary approvals from the corresponding regulatory authorities of such countries. For example, the conduct of clinical trials in the EU is currently still governed by the Clinical Trials Directive 2001/20/EC and Directive 2005/28/EC laying down the principles and guidelines on GCP. Both Directives provide a system for the approval of clinical trials, which has been implemented through national legislation in the member states in the EU. Under this system, a sponsor must obtain approval from the competent national authority of an EU member state in which the clinical trial is to be conducted, or in multiple member states if the clinical trial is to be conducted in a number of countries. Furthermore, the sponsor may only start a clinical trial at a specific study site after the competent ethics committee has issued a favorable opinion. The Clinical Trials Application (“CTA”) must include the supporting information prescribed by Directive 2001/20/EC and Directive 2005/28/EC, corresponding national laws of the member states, and as further detailed in the applicable guidance documents.

In April 2014, the EU adopted a new Clinical Trials Regulation (EU) No 536/2014 to replace the current Clinical Trials Directive 2001/20/EC. Although the new Clinical Trials Regulation has been adopted and has entered into force in 2014, it will only come into application in the EU Member States six months after the European Commission has confirmed the functionality of the new Clinical Trials Information System (“CTIS”), which is the centralized EU portal and database for clinical trials introduced by the Regulation. The Regulation is currently expected to enter into application mid-2021. When the Regulation enters into application, it will repeal the currently applicable Clinical Trials Directive 2001/20/EC and its national implementation legislations. It will also apply to clinical trials that were authorized under the previous legislation if they are still ongoing three years after the Regulation has come into operation. No legislation needs to be adopted to implement the new Regulation into national law. The new Regulation provides an overhaul of the system, in order to harmonize the assessment of the submission and assessment of clinical trials conducted in EU Member States and to ensure greater consistency with the highest standards of patient safety in the EU. Specifically, the new legislation seeks to simplify and streamline approval of the clinical trials. Under the new coordinated procedure, the sponsor of a clinical trial is required to submit a single application to a reporting EU Member State. The reporting Member State will consult and coordinate with all other Member States in which the clinical trial is planned to be conducted. If the application is rejected, it can be amended and resubmitted through a central EU Portal. If an approval is issued, the sponsor can start the clinical trial in all Member States concerned. However, a Member State can in certain cases declare an “opt-out” from the approval. In such a case, the clinical trial cannot be conducted in such Member State(s). The Clinical Trials Regulation also aims to streamline and simplify the rules on safety reporting for clinical trials.

In order to obtain marketing authorization for a medicinal product in the EU, applicants are required to submit a MAA to either (a) the national competent authorities (through the decentralized, mutual recognition, or national procedures) or (b) the EMA (through the centralized authorization procedure). Applicants are required to demonstrate the quality, safety and efficacy of the medicinal product in the application for marketing authorization, which implies the requirement to conduct human clinical trials to generate the necessary clinical data. Furthermore, all applications for marketing authorization for new medicines have to include the results of studies as described in an agreed pediatric investigation plan (“PIP”). Regulation (EC) No 726/2004 of the European Parliament and of the Council lays down the rules applicable to the centralized procedure for the authorization of medicinal products; The centralized procedure allows pharmaceutical companies to submit s a single application to EMA, which is followed by a single evaluation and which results in a single approval to market the medicinal product  throughout the European Economic Area (the “EEA”), on the basis of a single market authorization. Approval via the centralized procedure is a two-step process whereby the CHMP first evaluates the MAA and issues an opinion on whether the medicinal product may be authorized or not (step 1). The CHMP opinion is subsequently sent to the European Commission (“EC”), which takes a legally binding decision to grant a marketing authorization (step 2). The marketing authorization is valid throughout the EU and is automatically recognized in three of the four European Free Trade Association states (Iceland, Liechtenstein and Norway). This allows the marketing authorization holder to market the medicine and make it available throughout the EEA. The timeframe for the first step of the centralized procedure (evaluation by the CHMP) opinion is 210 days from receipt of a valid application. However, the actual time needed to complete this first step is generally longer than the 210 days, since procedural clock stops are required in order for the applicant to respond to additional requests for information by the CHMP. Following a positive CHMP opinion, the EC has 67 days to issue its decision to grant the marketing authorization or not.

-21-

Accelerated evaluation of the MAA is possible in exceptional cases, following a justified request from the applicant, when a medicinal product is of a major public health interest, particularly from the point of view of therapeutic innovation. The CHMP determines what constitutes a major public interest on a case-by-case basis. Justifications must include the major benefits expected and present the arguments to support the claim that the medicinal product introduces new methods of therapy or improves on existing methods, thereby addressing, to a significant extent, the greater unmet needs for maintaining and improving public health. In case of an accelerated assessment, the timeframe for review of a MAA by the EMA’s CHMP is reduced to 150 days. The timeframe for the EC to issue its decision remains unaltered.

Article 3 of Regulation (EC) No 726/2004 defines in which cases the centralized application procedure must (mandatory scope) or may (optional scope) be followed. The centralized procedure is mandatory for medicinal products derived from biotechnological and other high-tech processes, orphan medicinal products, advanced therapy medicinal products and products indicated for the treatment of HIV/AIDS, cancer, diabetes, auto-immune and other immune dysfunctions, viral diseases and neurodegenerative diseases. For medicinal products that do not fall under any of the aforementioned categories, a submission via the centralized procedure is possible, provided that it concerns a new active substance or product that can demonstrate a significant therapeutic, scientific or technical innovation and for which approval would be in the interest of public health. Given the foregoing, our portfolio of innovative orphan products for neurodegenerative diseases is subject to the mandatory centralized procedure.

Innovative medicinal products which have been authorized in accordance with the centralized procedure, benefit from an eight-year period of data protection and a ten-year period of marketing protection. During the data exclusivity period, applicants for approval of generics of these innovative products cannot reference or rely upon data contained in the marketing authorization dossier submitted for the innovative medicinal product. Furthermore, the marketing protection entails that even if the generic product is approved, it cannot be placed on the market until the full ten-year period of market protection has elapsed from the initial authorization of the reference medicinal product. The marketing protection period can be extended to a maximum of eleven years if, during the first eight years of those ten years, the marketing authorization holder for the innovative product obtains an authorization for new therapeutic indications which, during the scientific evaluation prior to their authorization, are held to bring a significant clinical benefit in comparison with existing therapies or as the result of significant pre-clinical or clinical trials.

Pharmaceutical companies can apply for the designation as an orphan medicine. In the EU, applications for orphan designation are evaluated by the EMA. In order to qualify as an orphan medicine, the medicinal product must be intended to diagnose, prevent or treat condition that is life-threatening or chronically debilitating, with a prevalence of no more than 5 in 10,000 people in the EU or for which it is unlikely that its sale would generate sufficient returns to justify the investment needed for its development. In addition, the sponsor is required to demonstrate that no satisfactory method of diagnosis, prevention or treatment of the condition can be authorized in the EU or, if such method exists, the medicinal product is of significant benefit to those affected by the condition as compared to approved methods. The benefits of being granted orphan designation are significant, including up to ten years of market exclusivity. During this ten-year period, the EMA may not accept a new marketing application for a similar medicinal product for the same therapeutic indication as the approved orphan medicinal product. Pursuant to Regulation (EC) 1901/2006 on medicinal products for pediatric use,the ten-year orphan market exclusivity can be extended to a maximum period of twelve years on the satisfactory completion of all the key elements of the agreed PIP. We have been granted orphan drug designation for eteplirsen in the EU.

Similar to the U.S., marketing authorization holders and manufacturers of medicinal products are subject to comprehensive regulatory oversight by the EMA and/or the national competent authorities of the EU Member States. This oversight applies both before and after the granting of manufacturing and marketing authorizations. It includes compliance with EU GMP and GDP rulesin relation to such activities as distribution, importing and exporting of medicinal products, rules governing conduct of pharmacovigilance and requirements governing advertising, promotion and sale of medicinal products.

Failure to comply with the EU Member State laws implementing the EU Community Code on medicinal products, and EU rules governing the promotion of medicinal products, interactions with physicians, misleading and comparative advertising and unfair commercial practices, with the EU Member State laws that apply to the promotion of medicinal products, statutory health insurance, bribery and anti-corruption or with other applicable regulatory requirements can result in enforcement action by the relevant EU Member State authorities. This may include any of the following sanctions: fines, imprisonment, orders forfeiting products or prohibiting or suspending their supply to the market, orders to suspend, vary, or withdraw the marketing authorization or requiring the manufacturer to issue public warnings, or to conduct a product recall.

The approval process in other countries outside the U.S. and the EU varies from country to country, and the time may be longer or shorter than that required for the FDA approval. In addition, the requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement for market access vary greatly from country to country. In all cases, clinical trials are conducted in accordance with GCP and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.

-22-

Data and Market Exclusivities

In addition to patent exclusivities, the FDA and certain other foreign health authorities may grant data or market exclusivity for a newly approved chemical entity or biologic, which runs in parallel to any patent protection. Regulatory data protection or exclusivity prevents a potential generic competitor from relying on clinical trial data generated by the sponsor when establishing the safety and efficacy of its competing product. Market exclusivity prohibits any marketing of the same drug for the same indication.

In the U.S., the FDA will generally grant an NCE that is the subject of an NDA with five years of regulatory data exclusivity, during which time a competitor generally may not submit an application to the FDA based on a sponsor’s clinical data.  A competitor, however, may file an Abbreviated New Drug Application (“ANDA”) seeking approval of a generic drug four years from the date of approval of the innovative product if it is accompanied by a so-called Paragraph IV certification. For a newly approved biologic that is the subject of a Biologics License Application (“BLA”), the FDA will generally grant 12 years of market exclusivity, during which time a competitor may not market the same drug for the same indication.  

In addition, the FDA may provide six months of pediatric exclusivity to a sponsor of a marketing application, if the sponsor conducted a pediatric study or studies of a product. This process is applied to products developed for adult use and is initiated by the FDA as a written request for pediatric studies that applies to a sponsor’s product. If the sponsor conducts qualifying studies and the studies are accepted by the FDA, then an additional six months of pediatric exclusivity will be added to previously granted exclusivity, such as orphan drug exclusivity and NCE exclusivity, as well as certain patent-based exclusivities.

Orphan Drug Designation and Exclusivity in the U.S.

In the U.S., the FDA may grant orphan drug designation to drugs intended to treat a rare disease or condition that affects fewer than 200,000 individuals in the U.S., or more than 200,000 individuals in the U.S. for which there is no reasonable expectation that the cost of developing and making available in the U.S. a drug for this type of disease or condition will be recovered from sales in the U.S. for that drug. An orphan drug designation must be requested before submitting an application for marketing approval. An orphan drug designation does not shorten the duration of the regulatory review and approval process. The approval of an orphan designation request does not alter the regulatory requirements and process for obtaining marketing approval. Safety and efficacy of a compound must be established through adequate and well-controlled studies. If a product which has an orphan drug designation subsequently receives FDA approval for the indication for which it has such designation, the product is generally entitled to an orphan drug exclusivity period of seven years, which means the FDA may not grant approval to any other application to market the same chemical entity for the same indication for a period of seven years, except in limited circumstances, such as where an alternative product demonstrates clinical superiority to the product with orphan exclusivity. In addition, holders of exclusivity for orphan drugs are expected to assure the availability of sufficient quantities of their orphan drugs to meet the needs of patients. Failure to do so could result in the withdrawal of orphan exclusivity for the drug. Competitors may receive approval of different drugs or biologics for the indications for which a prior approved orphan drug has exclusivity.

In the U.S., we have been granted an orphan drug designation for AVI-7288 for prophylaxis following documented or suspected exposure to Marburg virus, AVI-7537 for prophylaxis for patients following documented or suspected exposure to Ebola virus and AVI-5038 for the treatment of DMD in patients with a deletion, duplication or frame shift mutation correctable by skipping of exon 50 of the dystrophin gene to allow restoration of the reading frame (including mutations within exons 51, 51-53, or 51-55) in the U.S. The FDA granted orphan drug exclusivity to EXONDYS 51 through September 19, 2023, which is seven years from its approval date, September19, 2016, for the treatment of DMD in patients who have a confirmed mutation of the DMD gene that is amenable to exon 51 skipping.

-17-

Distinct from orphan drug exclusivity, the FDA may provide six months of pediatric exclusivity to a sponsor of an NDA, if the sponsor conducted a pediatric study or studies of such product. This process is applied to products developed for adult use and is initiated by the FDA as a written request for pediatric studies that applies to a sponsor’s product. If the sponsor conducts qualifying studies and the studies are accepted by the FDA, then an additional six months of pediatric exclusivity will be added to previously granted exclusivity, such as orphan drug exclusivity and new chemical entity exclusivity.

Foreign Regulatory Requirements

We are pursuing regulatory approval of eteplirsen in jurisdictions outside of the U.S. On December 19, 2016, we announced thatEurope, the EMA validated for centralized assessment our previously submitted MAA for eteplirsenmay grant orphan status to treat DMD amenable to exon 51 skipping. Thus, in addition to regulations in the U.S., our business will be subject to a variety of foreign regulations governing clinical trials and commercial sales and distribution of our products.  Irrespective of whether it is an FDA approved drug or an investigational drug, approvals by the comparable regulatory authorities of foreign countries are required before we can commence clinical trials or marketing of the product in those countries. For example, in the EU, the conduct of clinical trials is governed by the currently applicable Clinical Trials Directive 2001/20/EC concerning conduct of clinical trials in the EU and the Directive 2005/28/EC laying down the principles and guidelines on GCP, a system for the approval of clinical trials that has been implemented through national legislation in the member states in the EU. Under this system, a sponsor must obtain approval from the competent national authority of an EU member state in which the clinical trial is to be conducted, or in multiple member states if the clinical trial is to be conducted in a number of countries. Furthermore, the sponsor may only start a clinical trial at a specific study site after the competent ethics committee has issued a favorable opinion. The Clinical Trials Application (“CTA”) must include the supporting information prescribed by Directive 2001/20/EC and Directive 2005/28/EC and corresponding national laws of the member states and further detailed in the applicable guidance documents.

In April 2014, the EU adopted a new Clinical Trials Regulation (EU) No 536/2014 to replace the current Clinical Trials Directive. The new Clinical Trials Regulation has come into force, but will come into application in all EU Member States in October 2018 without the need for any national implementing legislation. The new regulation provides an overhaul of the system to ensure greater consistency in the approval of clinical trialscandidates thereby providing such product candidates with the highest standards of patient safety in the EU. Specifically, the new legislation seeks to simplify and streamline approval. Under the new coordinated procedure for the approval, the sponsor of a clinical trial is required to submit a single application to a reporting EU Member State. The reporting Member State will consult and coordinate with all other Member States in which the clinical trial is planned to be conducted (concerned Member States). If the application is rejected, it can be amended and resubmitted through a central EU Portal. If an approval is issued, the sponsor can start the clinical trial in all concerned Member States. However, a concerned Member State can in certain cases declare an “opt-out” from the approval. In such a case, the clinical trial cannot be conducted in those Member State(s). The Clinical Trials Regulation also aims to streamline and simplify the rules on safety reporting for clinical trials.

In order to obtain marketing authorization for a medicinal product in the EU, applicants are required to submit an MAA to either the national Competent Authorities or the EMA for the Centralized authorization procedures, using the ICH Common Technical Document (“CTD”). Applicants are required to demonstrate the quality, safety and efficacy of the medicinal product in the application for marketing authorization. This includes the requirement to conduct human clinical trials to generate the necessary clinical data. Submission of data in compliance with an agreed PIP is essential for the validation or acceptance of an MAA for review. Medicinal products are authorized in the EU through one of several different procedures, either by the national competent authorities of the EU Member States (through the decentralized, mutual recognition, or national procedures), or through the centralized authorization procedure administered by the EMA. Regulation (EC) No 726/2004 of the European Parliament and of the Council lays down the centralized procedure for the authorization of medicinal products, for which there is a single application, a single evaluation and a single approval allowing direct access to the single market of the EU. Approval via the Centralized Procedure is a two-step process whereby the Committee for Medicinal Products for Human Use (“CHMP”) first adopts an “Opinion” recommending grant of a marketing authorization following a review of the submitted data to inform an assessment of benefit/risk. The adopted Opinion can be positive or negative.  A positive CHMP opinion is followed by European Commission (“EC”) binding decision to grant a marketing authorization. The marketing authorization is valid throughout the EU and is automatically recognized in three of the four European Free Trade Association states (Iceland, Liechtenstein and Norway). These countries collectively belong to the European Economic Area. The timeframe for the evaluation of a marketing authorization application leading to the CHMP opinion is 210 days (discounting procedural clock-stops) from receipt of a valid application for marketing authorization. This time period to complete the scientific review is generally longer than the 210 days as “clock stops” are required to respond to additional written or oral information requested by the EMA. Following a positive CHMP opinion, the EU Commission has 67 days to issue the EC Decision (i.e. the marketing authorization).

Article 3 of Regulation (EC) No 726/2004 defines the scope and eligibility of applications for evaluation under the centralized procedure through which medicinal products must ("mandatory scope") or may ("optional scope" or "Generic/Hybrid") be authorized by the Community. The centralized procedure is compulsory for certain medicinal products, including medicinal products

-18-

derived from biotechnological processes, orphan medicinal products, advanced therapy medicinal products and products indicated for the treatment of certain diseases including treatment of neurodegenerative diseases. It is optional for new active substances and products that can demonstrate a significant therapeutic, scientific or technical innovation, where approval would be in the interest of public health. Our portfolio of innovative orphan products for neurodegenerative is subject to the mandatory centralized procedure.

Accelerated evaluation may be granted in exceptional cases, following a justified request from the applicant, when a medicinal product is of a major public health interest, particularly from the point of view of therapeutic innovation. CHMP determines what constitutes a major public interest on a case by case basis. Justifications must include the major benefits expected and present the arguments to support the claim that the medicinal product introduces new methods of therapy or improves on existing methods, thereby addressing, to a significant extent, the greater unmet needs for maintaining and improving public health. During an accelerated assessment, the opinion of the CHMP is given, in principle, within 150 days. The EU Commission Decision is then issued according to the timetable described above.

Innovative medicinal products authorized in the EU on the basis of a full stand-alone marketing authorization application consisting of pharmaceutical and preclinical testing results and clinical trial data (as opposed to an application for a generic marketing authorization that relies on the results of pre-clinical and clinical trials available in the marketing authorization dossier for another, previously approved, reference medicinal product) are treated as reference medicinal products and accordingly entitled to eight years’ data exclusivity. During this period, applicants for approval of generics of these innovative products cannot reference or rely upon data contained in the marketing authorization dossier submitted for the innovative medicinal product. Even if the generic product is approved, it cannot be placed on the market until the full 10-year period of market protection has elapsed from the initial authorization of the reference medicinal product. This period can be extended to a maximum of eleven years if, during the first eight years of those ten years, the MA holder for the innovative product obtains an authorization for new therapeutic indications which, during the scientific evaluation prior to their authorization, are held to bring a significant clinical benefit in comparison with existing therapies or as the result of significant preclinical or clinical studies.

In the EU, orphan medicinal product designation is considered by the EMA for drugs intended to diagnose, prevent or treat a life-threatening or very serious condition with a prevalence of no more than 5 in 10,000 people in the EU. In addition, the sponsor is required to demonstrate that there exists no satisfactory method of diagnosis, prevention or treatment of the condition that has been authorized in the EU or if such method exists, the medicinal product is of significant benefit to those affected by the condition as compared to approved methods. Medicinal products developed for treating serious and chronic conditions would likely not be marketed without incentives due to low market return on the sponsor’s development investment. As such, they may also be eligible for an EU orphan drug designation.  Benefits of being granted orphan designation are significant, including up to ten years of market exclusivity. During this ten-year period, the EMA may not accept a new marketing exclusivity, meaning that another application for marketing authorization of a later, similar medicinal product for the same therapeutic indication as thewill generally not be approved orphan medicinal product. Pursuant to Regulation (EC) 1901/2006 on medicinal products for pediatric use, the 10-year orphan market exclusivity can be extended to a maximum period of 12 years on the satisfactory completion of all the key elements of the agreed PIP. We have been granted orphan drug designation for eteplirsen and AVI-5038 in the EU.

Similarly to the U.S., marketing authorization holders and manufacturers of medicinal products are subject to comprehensive regulatory oversight by the EMA and/or the national competent authorities of the EU Member States. This oversight applies both before and after the granting of manufacturing and marketing authorizations. It includes compliance with EU GMP and GDP rules in relation to such activities as distribution, importing and exporting of medicinal products, rules governing conduct of pharmacovigilance and requirements governing advertising, promotion and sale of medicinal products.

Failure to comply with the EU Member State laws implementing the EU Community Code on medicinal products, and EU rules governing the promotion of medicinal products, interactions with physicians, misleading and comparative advertising and unfair commercial practices, with the EU Member State lawsEurope during that apply to the promotion of medicinal products, statutory health insurance, bribery and anti-corruption or with other applicable regulatory requirements can result in enforcement action by the relevant EU Member State authorities. This may include any of the following: fines, imprisonment, orders forfeiting products or prohibiting or suspending their supply to the market, orders to suspend, vary, or withdraw the marketing authorization or requiring the manufacturer to issue public warnings, or to conduct a product recall.

The collection and use of personal health data and other personal information in the EU is governed by the provisions of the Data Protection Directive as implemented into national laws by the EU Member States. This Directive imposes a number of strict obligations and restrictions on the ability to collect, analyze and transfer patient data, including sensitive health data from clinical trials and adverse event reporting. There is, moreover, a growing trend towards imposition of an obligation of public disclosure of clinical trial data in the EU, which adds to the complexity of obligations relating to the processing of health data from clinical trials. Such public disclosure obligations are provided in the new EU Clinical Trials Regulation, EMA disclosure initiatives, and voluntary commitments by industry. The Data Protection Directive also includes requirements relating to the consent of the individuals to whom

-19-

the personal data relates, the information provided to the individuals prior to processing their personal data or personal health data, notification of data processing obligations to the competent national data protection authorities and the security and confidentiality of the personal data. The Data Protection Directive also prohibits the transfer of personal data to countries outside of the EU Member States that are not considered by the EU to provide an adequate level of data protection. These countries include the U.S. Failure to comply with the requirements of the Data Protection Directive and the related national data protection laws of the EU Member States may result in fines and other administrative penalties. Data protection authorities from the different EU Member States may interpret the EU Data Protection Directive and national laws differently, which adds to the complexity of processing personal data in the EU Guidance developed at both EU level and at national level in individual EU Member States concerning implementation and compliance practices are often updated or otherwise revised.

In December 2015, a proposal for an EU General Data Protection Regulation, intended to replace the current EU Data Protection Directive, was agreed between the European Parliament, the Council of the European Union and the European Commission. The EU General Data Protection Regulation, which was officially adopted in April 2016 and will be applicable in May 2018, will introduce new data protection requirements in the EU, as well as substantial fines for breaches of the data protection rules. The EU General Data Protection Regulation will increase our responsibility and liability in relation to any personal data that we process, and we may be required to put in place additional mechanisms to ensure compliance with the new EU data protection rules.

The approval process in other countries outside the U.S. and the EU varies from country to country, and the time may be longer or shorter than that required for the FDA approval. In addition, the requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement for market access vary greatly from country to country. In all cases, clinical trials are conducted in accordance with GCP and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.period.

Expanded / Early Access

In certain countries, drug products approved in the U.S. or the EU can be accessed by patients before the drug has obtained marketing approval in such country. There are various forms of this access including, but not limited to, the actual purchase of product by the purchaser, which is often times the government for patients, on a named patient basis, and providing the product either free of charge on a named patient basis and providing the product on afor compassionate use basis or can be charged at a price agreed by the National Agencies.use. Each country has its own laws and regulations that apply to these forms of access and the extent and nature of such laws and regulations vary by country.For example, in 2018, the so-called Right to Try Act became law in the U.S. The law, among other things, allows eligible patients to access certain investigational new drug products that have completed a Phase I clinical trial and that are undergoing investigation for FDA approval without enrolling in clinical trials and without obtaining FDA permission under the FDA expanded access program. There is no obligation for a pharmaceutical manufacturer to make its drug products available to such eligible patients as a result of the Right to Try Act.

We have initiated an EAP for eteplirsen in select countries in Europe, North America, South America and Asia where it currently has not been approved. We are also in the process of initiating an EAP for golodirsen outside of the U.S. The EAP provides a mechanism through which physicians can prescribe our products, within their professional responsibility, to patients who meet pre-specified medical and other criteria and can secure funding. We have commenced shipments through the EAP and continue to expand the EAP to include more countries. In addition, we contracted with third party distributors and service providers to distribute our products in certain areas outside the U.S., such as Brazil and certain countries in the Middle East, on a named patient basis.

-23-

Other Regulatory Requirements

In addition to regulations enforced by the FDA and foreign authorities relating to the clinical development and marketing of products, we are or may become subject to regulation under the Occupational Safety and Health Act, the Toxic Substances Control Act, the Resource Conservation and Recovery Act and other present and potential future foreign, federal, state and local laws and regulations. Although we believe that we are in material compliance with applicable environmental laws that apply to us, we cannot predict whether new regulatory restrictions will be imposed by state or federal regulators and agencies or whether existing laws and regulations will adversely affect us in the future.

Healthcare Fraud and Abuse Laws

We are subject to various federal, state and local laws targeting fraud and abuse in the healthcare industry, including anti-kickback and false claims laws. Violations of fraud and abuse laws may be punishable by crime or civil sanctions, including fines and civil monetary penalties, and/or exclusion from federal health care programs (including Medicare and Medicaid). Federal and state authorities are paying increased attention to enforcement of these laws within the pharmaceutical industry, and private individuals have been active in alleging violations of the laws and briningbringing suits on behalf of the government under the federal False Claims Act (“FCA”). Violations of international fraud and abuse laws could result in similar penalties, including exclusion from participation in health programs outside the U.S. Given the broad scope of these laws, our activities could be subject to scrutiny under the laws. If we were subject to allegations concerning, or were convicted of violating, these laws, our business could be harmed.

The federal Anti-Kickback Statute generally prohibits, among other things, a pharmaceutical manufacturer from directly or indirectly soliciting, offering, receiving, or paying any remuneration in cash or in kind where one purpose is either to induce the referral of an individual for, or the purchase or prescription of a particular drug that is payable by a federal health care program, including Medicare or Medicaid. The Healthcare Reform Act clarifies the intent requirements of the federal Anti-Kickback Statute, providing that aA person or entity does not need to have actual knowledge of the statute or a specific intent to violate the statute. Violations of the federal Anti-Kickback Statute can result in exclusion from Medicare, Medicaid or other governmental programs as well as civil and criminal fines and penalties of up to $50,000$102,522 per violation and three times the amount of the unlawful remuneration.

-20-

In addition, the Healthcare Reform Act revised the FCA to provide that a A claim arising from a violation of the Federalfederal Anti-Kickback Statute also constitutes a false or fraudulent claim for purposes of the FCA. The majorityA new federal anti-kickback statute enacted in 2018 prohibits certain payments related to referrals of states also have anti-kickback, false claims,patients to certain providers (such as clinical laboratories) and similar fraud and abuse laws and although the specific provisions of these laws vary, their scope is generally broad, and there may not be regulations, guidance or court decisions that apply the lawsapplies to particular industry practices. There is therefore a possibility that our practices might be challenged under the anti-kickback statutes or similar laws.services reimbursed by private health plans as well as government health care programs.

Federal and state false claims laws generally prohibit anyone from knowingly and willfully, among other activities, presenting, or causing to be presented for payment to third party payors (including Medicare and Medicaid) claims for drugs or services that are false or fraudulent (which may include claims for services not provided as claimed or claims for medically unnecessary services). False or fraudulent claims for purposes of the FCA carry fines and civil penalties for violations ranging from $10,781$11,181 to $21,563$22,363 for each false claim, plus up to three times the amount of damages sustained by the federal government and, most critically, may provide the basis for exclusion from federally funded healthcare programs. There is also a criminal FCA statute by which individuals or entities that submit false claims can face criminal penalties. In addition, under the federal Civil Monetary Penalty Law, the Department of Health and Human Services Office of Inspector General has the authority to exclude from participation in federal health care programs or to impose civil penalties against any person who, among other things, knowingly presents, or causes to be presented, certain false or otherwise improper claims. Our activities relating

The majority of states also have anti-kickback, false claims, and similar fraud and abuse laws and although the specific provisions of these laws vary, their scope is generally broad, and there may not be regulations, guidance or court decisions that apply the laws to the sale and marketing of our products may be subject to scrutiny under these laws.particular industry practices.

Laws and regulations have also been enacted by the federal government and various states to regulate the sales and marketing practices of pharmaceutical manufacturers. The laws and regulations generally limit financial interactions between manufacturers and health care providers; require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the U.S. federal government; and/or require disclosure to the government and/or public of financial interactions (so-called “sunshine laws”). The Healthcare Reform Act requires manufacturers toState laws may also require disclosure of pharmaceutical pricing information and marketing expenditures. Manufacturers must also submit information to the FDA on the identity and quantity of drug samples requested and distributed by a manufacturer during each year. Recent scrutiny of pharmaceutical pricing practices by certain companies may lead to changes in laws that currently allow substantial flexibility in pricing decisions by pharmaceutical manufacturers. Such changes could occur at the federal level or state level and may be adopted by statute, rule, or sub-regulatory policies. State laws may also require disclosure of pharmaceutical pricing information and marketing expenditures. Many of these laws and regulations contain ambiguous requirements or require administrative guidance for implementation. Given the lack of clarity in laws and their implementation, our activities could be subject to the penalty provisions of the pertinent federal and state laws and regulations.

Data Privacy and Security

We may be subject to privacy and security laws in the various jurisdictions in which we operate, obtain or store personally identifiable information.  The legislative and regulatory landscape for privacy and data protection continues to evolve, and there has been an increasing focus on privacy and data protection issues with the potential to affect our business.

-24-

Within the U.S., our operations may be affected by the Health Insurance Portability and Accountability Act of 1996 as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations (collectively, “HIPAA”), which impose obligations on certain “covered entities” (healthcare providers, health plans and healthcare clearinghouses) and certain of their “business associate” contractors with respect to safeguarding the privacy, security and transmission of individually identifiable health information. Although we believe that we currently are neither a “covered entity” nor a “business associate” under the legislation, a business associate relationship may be imputed from facts and circumstances even in the absence of an actual business associate agreement. In addition, HIPAA may affect our interactions with customers who are covered entities or their business associates because HIPAA affects the ability of these entities to disclose patient health information to us.

Various states also have laws that regulate the privacy and security of personal information and so may affect our business operations. For example, we are subject to the California Consumer Privacy Act (“CCPA”), that became effective on January 1, 2020. The CCPA gives California consumers (defined to include all California residents) certain rights, including the right to ask companies to disclose information regarding the collection, use and disclosure of their personal information.  The CCPA also imposes several obligations on companies to provide notice to California consumers regarding a company’s data processing activities. Additionally, the CCPA gives California consumers the right to ask companies to delete a consumer’s personal information and it places limitations on a company’s ability to sell personal information, including providing consumers a right to opt out of sales of their personal information. The compliance obligations imposed by the General Data Protection Regulation (the “GDPR”) and the CCPA have required us to enhance our operations. The CCPA contains significant penalties for companies that violate its requirements and provides California residents a private right of action, including the ability to seek statutory damages, in the event of a data breach involving their data.

Outside the U.S., other laws regulating the privacy and security of personal information may apply.  For example, the processing of personal data in the EEA, is subject to the GDPR, which took effect in May 2018. The GDPR increases obligations with respect to clinical trials conducted in the EEA, such as in relation to the provision of fair processing notices, exercising data subject rights and reporting certain data breaches to regulators and affected individuals, as well as how we document our relationships with third parties that process GDPR-covered personal data on our behalf. The GDPR also increases the scrutiny applied to transfers of personal data from the EEA (including from clinical trial sites in the EEA) to countries that are considered by the European Commission to lack an adequate level of data protection, such as the U.S.  Fines for non-compliance with the GDPR have the potential to be significant—the greater of EUR 20.0 million or 4% of our global annual revenue in the previous financial year.  The GDPR imposes a private right of action on data subjects and their representatives for breaches of certain data protection requirements.

Pharmaceutical Pricing and Reimbursement

Our first commercial product in the U.S., EXONDYS 51, was granted accelerated approval by the FDA on September 19, 2016. We have an ongoing dialogue with payors globally with the goal of obtaining broad coverage for EXONDYS 51.our products. To date, payors’ policies on coverage for EXONDYS 51our products have varied on their approach,widely, including policies that allow broad coverage per the EXONDYS 51respective product’s prescribing information, policies that provide limited coverage toand policies that have denied coverage. The majority of payors are reviewinghave policies that provide for case-by-case coverage on a case-by-case basis or approving with restrictions.restricted coverage. Our revenue depends, in part, upon the priceextent to which payors provide coverage for our products and the amount that payors, including government authorities or programs, private health insurers and other organizations, reimburse on behalf of patients and physicianshealthcare providers for the cost of EXONDYS 51.our products.

Third Party Reimbursement and Pricing in the U.S.

Commercial Insurance. Coverage and reimbursement of our EXONDYS 51 variesproducts vary from commercial payor to commercial payor. Many commercial payors, such as managed care plans, manage access to FDA approved products’ coverage partly to control costs to their plans,products, and may use drug formularies and medical policies (which may include specific coverage requirements such as prior authorization,re-authorization and achieving performance metrics under value-based contracts) to limit their exposure.control utilization. Exclusion from policiesor restriction in coverage can directly reduce product usage in the payor’s patient population and may negatively impact utilization in other payor plans, as well.usage.

Medicaid. Our product EXONDYS 51 isproducts are eligible to be reimbursed by Medicaid. Medicaid is a joint federal and state program that is administered by the states for low income and disabled beneficiaries. Under the Medicaid Drug Rebate Program, participating manufacturers are required to pay a rebate for each unit of product reimbursed under the state Medicaid programs. The amount of the rebate for each product is set by law and may be subject to an additional discount if certain pricing increases more than inflation. State Medicaid programs and Medicaid managed care plans can seek additional “supplemental” rebates from manufacturers in connectionsconnection with favorable positioning on formularies.

Medicare. Medicareis a federal program that is administered by the federal government that covers individuals age 65 and over as well as those with certain disabilities. Our product EXONDYS 51 isproducts are eligible for reimbursement under Medicare Part B. Medicare Part B generally covers drugs that must be administered by physicians. Medicare Part B pays for such drugs under a payment methodology based on the average sales price (“ASP”) of the drugs. Reimbursement levels and reimbursement methodologies have come under scrutiny and may be subject to change. The Centers for Medicare & Medicaid Services (“CMS”) are

-21-

also increasingly bundling drug reimbursement into procedure costs, which can severely decrease the reimbursement rates for some manufacturers’ drugs.

-25-

Federal Purchasers. Drug products are subject to discounted pricing when purchased by federal agencies via the Federal Supply Schedule (“FSS”). FSS participation is required for a drug product to be covered and reimbursed by certain federal agencies and for coverage under Medicaid, Medicare Part B and the Public Health Service (“PHS”) 340B drug pricing program. FSS pricing is negotiated periodically with the Department of Veterans Affairs. FSS pricing is intended not to exceed the price that a manufacturer charges its most-favored non-federal customer for its product. In addition, prices for drugs purchased by the Veterans Administration, Department of Defense (including drugs purchased by military personnel and dependents through the TRICARE retail pharmacy program), Coast Guard, and PHS are subject to a cap on pricing (known as the “federal ceiling price”) and may be subject to an additional discount if pricing increases more than the rate of inflation.

PHS 340B Drug Pricing Program. To maintain coverage of drugs under the Medicaid Drug Rebate Program and Medicare Part B, manufacturers are required to extend discounts to certain purchasers under the PHS 340B drug pricing program. Purchasers eligible for discounts include hospitals that serve a disproportionate share of financially needy patients, community health clinics and other entities that receive health services grants from the PHS.

ACA. The United StatesHealthcare and Other Reform. In the U.S., federal and state governments continue to propose and pass legislation designed to reform delivery of, or payment for, health care, which include initiatives to reduce the cost of healthcare. For example, in March 2010, the U.S. Congress enacted the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act (the “Healthcare Reform Act”), which expanded health care coverage through Medicaid expansion, andimplemented the implementation of the individual“individual mandate” for health insurance mandatecoverage (by imposing a tax penalty on individuals who did not obtain insurance) and which included changes tochanged the coverage and reimbursement of drug products under government health carehealthcare programs. ModificationsUnder the Trump administration, there have been ongoing efforts to modify or repeal of all or certain provisions of the Affordable CareHealthcare Reform Act.  Tax reform legislation was enacted at the end of 2017 that includes provisions that will affect healthcare insurance coverage and payment, such as the elimination of the tax penalty for individuals who do not maintain sufficient health insurance coverage. The Healthcare Reform Act are expectedhas also been subject to judicial challenge. In December 2018, a federal district court judge, in a challenge brought by a number of state attorneys general, found the Healthcare Reform Act unconstitutional in its entirety because once Congress repealed the “individual mandate” provision, there was no longer a basis to rely on Congressional taxing authority to support enactment of the law. The court reasoned that the “individual mandate” was not severable from the rest of the Healthcare Reform Act and found the entire Healthcare Reform Act was an unconstitutional exercise of Congressional authority. In December 2019, a federal appeals court agreed that the individual mandate provision was unconstitutional, but remanded the case back to the district court to assess more carefully whether any provisions of the Healthcare Reform Act were severable and could survive.  Pending action by the district court and resolution of any appeals, which could take some time, the Healthcare Reform Act is still operational in all respects.

There have been other reform initiatives under the new Trump administrationAdministration. For example, in May 2018, President Trump and Congress. We cannot predict the ultimate content, timing or effectSecretary of anythe Department of Health and Human Services released a “blueprint” to lower prescription drug prices and out-of-pocket costs. Certain proposals in the blueprint, and related drug pricing measures proposed since the blueprint, could cause significant operational and reimbursement changes for the pharmaceutical industry. As another example, in October 2018, the CMS solicited public comments on potential changes to payment for certain Medicare Part B drugs, including reducing the Affordable Care ActMedicare payment amount for selected Medicare Part B drugs to more closely align with international drug prices. As another example, legislation passed in 2019 revised how certain prices reported by manufacturers under the Medicaid Drug Rebate Program are calculated, a revision that the Congressional Budget Office has estimated will save the Medicaid program approximately $3.0 billion in the next ten years.

There have also been efforts by government officials or other federallegislators to implement measures to regulate prices or payment for pharmaceutical products, including legislation on drug importation. Recently, there has been considerable public and government scrutiny of pharmaceutical pricing and proposals to address the perceived high cost of pharmaceuticals.  There have also been recent state reform efforts. There is no assurance thatlegislative efforts to address drug costs, which generally have focused on increasing transparency around drug costs or limiting drug prices. Certain state legislation has been subject to legal challenges. Adoption of new legislation regulating drug pricing at the federal or state health care reform will not adverselylevel could further affect demand for, or pricing of, our future business and financial results.products.

General legislative cost control measures may also affect reimbursement for our products. The Budget Control Act, as amended, resulted in the imposition of 2% reductions in Medicare (but not Medicaid) payments to providers in 2013 and will remain in effect through 20252029 unless additional Congressional action is taken. Any significant spending reductions affecting Medicare, Medicaid or other publicly funded or subsidized health programs that may be implemented and/or any significant taxes or fees that may be imposed on us could have an adverse impact on our results of operations.

-26-

Third Party Reimbursement and Pricing outside the U.S.

We currently have no products approved for marketing outside the U.S., other than a marketing authorization for EXONDYS 51 in Israel. We may need to conduct expensive pharmacoeconomic studies in order to demonstrate the cost-effectiveness of our products. In the EU and certain other territories, price controls and Health Technology Assessments for new, highly priced medicines are expected. Uncertainty exists about the pricing and reimbursement status of newly approved products in the EU. Criteria such as cost-effectiveness, cost per quality-adjusted life year, budget impact, or others, in addition to the clinical benefit, are often required to demonstrate added value or benefit of a drug and vary by country. Third party reimbursement limits may reduce the demand for our products. The pace of the application process in some countries could also delay commercial product launches. Gaining acceptance of our product pipeline and an economically viable reimbursement terms in the EU and other markets will require strong education and awareness efforts around DMD.

DMDas well as strong data supporting its effectiveness and cost-effectiveness.

Competition

The pharmaceutical and biotechnology industries are intensely competitive, and any product candidate developed by us would likely compete with existing drugs and therapies. There are many pharmaceutical companies, biotechnology companies, public and private universities, government agencies and research organizations that compete with us in developing various approaches to the treatment of rare, neuromuscular and other diseases. Many of these organizations have substantially greater financial, technical, manufacturing and marketing resources than we have. Several of them have developed or are developing therapies that could be used for treatment of the same diseases that we are targeting. In addition, manysome of these competitors have significantly greater commercial infrastructures than we have. Our ability to compete successfully will depend largely on:

-22-

DMD Program Competition. Currently, other than EXONDYS 51 and VYONDYS 53, no disease-modifying product in the U.S. has been approved for the treatment of DMD and no such product is commercially available outsidein the European Economic Area (“EEA”).U.S. Other companies, however, have product candidates or other interests in development for the treatment of DMD.  

PTC Therapeutics (“PTC”) has a small molecule candidate, ataluren, which targets nonsense mutations in development. The European Commission granted conditional marketing authorization for ataluren for the treatment of a subset of DMD patients in August 2014. In January 2016, PTC announced the completion of its rolling submission of an NDA for ataluren to the FDA and submission of its Phase 3 Ataluren Confirmatory Trial (“ACT”) DMD clinical trial result to the EMA. Ataluren uses a distinct scientific approach that addresses a different genotype of DMD patients compared to eteplirsen. Therefore, we do not believe ataluren is appropriate for the treatment of DMD patients that are amenable to exon-skipping therapy.

BioMarin has an exon 51-skipping product candidate, drisapersen. An NDA for drisapersen was filed by the FDA and an MAA was submitted to the EMA in June 2015. In January 2016, the FDA issued a complete response letter and declined the approval for drisapersen for the treatment of DMD. BioMarin announced on May 31, 2016 its intent to discontinue clinical and regulatory development of drisapersen as well as its other clinical stage candidates, BMN 044, BMN 045 and BMN 053, then-currently in Phase 2 studies for distinct forms of DMD.  BioMarin further announced its intent to continue to explore the development of next generation oligonucleotides for the treatment of DMD.

Wave Life Sciences (“Wave”) until recently was developing an exon 51 skipping product candidate for DMD, suvodirsen (WVE-210201). Wave also reported its intent to develop an exon 53 skipping product candidate, WVE-N531.  On December 16, 2019, Wave announced the selectiondiscontinuation of its stereopure exon-skipping candidate, WVE-210201, to target deletionssuvodirsen development for DMD (exon 51 amenable patients) and the suspension of Exon 51.  WVE-210201 is said to be entering the clinic in the second halffurther development of 2017.WVE-N531 for DMD (exon 53 amenable patients).

Nippon Shinyaku Co. Ltd. (“Nippon”) has reported early clinical development data for its exon 53 skipping candidate, NS-065,viltolarsen (NS-065/NCNP-01), from a Phase 1/2 study in Japan and the first patient dosed in a Phase 2 study which is enrolling in the U.S. It has also reported a phase 1/2 study in Japan. NS-065Viltolarsen has been reported to have received an orphan drug designation in the U.S. and, was granted Fast Trackfast track designation by FDA and received a “SAKIGAKE designation” in Japan from the Japanese Ministry of Health, Labor, and Welfare (“MHLW”). Nippon reported in February 2019 that it had initiated a rolling NDA submission with the FDA.  Nippon announced on February 7, 2020 that the FDA has filed its NDA for viltolarsen setting a target action date of the third calendar quarter of 2020.  Nippon announced on September 26, 2019 that it submitted its NDA for viltolarsen in Japan to the MHLW.  

-27-

Daiichi Sankyo (“Daiichi”) has reported earlya phase 1/2 clinical developmenttrial being underway in Japan for its exon 45 skipping candidate, DS-5141b. In April 2018, Daiichi announced top-line results of the Phase 1/2 clinical trial in Japan of DS-5141 and that Daiichi will continue to develop DS-5141b.  Daiichi continues to sponsor an ongoing Phase 1/2 clinical trial of DS-5141b that is active and not recruiting.  

Solid Biosciences, LLC (“Solid”) has reported that its micro-dystrophin gene transfer product candidate for DMD, SGT-001 began a Phase 2 clinical study in December 2017.  SGT-001 was granted fast track designation by the FDA in October 2018, orphan drug designation in August 2016, and rare pediatric disease designation in 2017. In Europe, orphan designation was granted in September 2016. In February 2019, Solid reported micro-dystrophin expression data for the first three patients in its clinical trial and announced plans to continue the study at a higher dose pending FDA and IRB approval.  Solid announced on January 9, 2020 that in response to the FDA placing the SGT-001 IGNITE DMD trial on clinical hold, previously announced in November 2019, it is conducting its analyses of SGT-001 to determine how to address the clinical hold and resume dosing.

Pfizer Inc. (“Pfizer”), following its acquisition of Bamboo Therapeutics, Inc., has initiated a Phase 1 clinical trial in January 2018 to test the safety and Genethon have reported that they are eachtolerability of its AAV-9 / micro-dystrophin gene transfer product candidate for DMD, PF-06939926/BMB-D001. The related orphan designation was granted in Europe in August 2016, and in the pre-clinical stagesU.S. in May 2017. Rare pediatric disease designation was granted by the FDA in April 2018.  In June 2019, Pfizer presented initial Phase 1b clinical data on PF-06939926, and on January 28, 2020, it announced that it expects proof-of-concept readouts for PF-06939926 in the first half of development of a gene therapy technology for DMD.2020.

Other companies continue to pursue approval of products for the treatment of DMD and their products may or may not prove to be safer and/or more efficacious than the products and product candidates in our DMD pipeline.  Regarding any of these competitors, it is unknown if further clinical development of these or other exon-skipping compounds is planned.

Additionally, companies such as Santhera, Summit,PTC Therapeutics, Catabasis, PfizerFibrogen, ReveraGen, Capricor, BioPhytis, Mallinckrodt, Astellas Pharma, and Tivorsan have unique product candidates with mechanisms of action distinct from ours in different stages of development or approval in DMD which we believe could be seen as complementary to exon skipping and not a direct replacement of our clinicalproducts or product candidates at this time.

In addition, several companies and institutions have recently entered into collaborations or other agreements for the development of product candidates, including mRNA, gene (CRISPR, AAV, etc.) or small molecule therapies that are potential competitors for therapies being developed in the muscular dystrophy, neuromuscular, CNS and rare disease space, including but not limited to Audentes (now Astella), 4D Molecular Therapeutics, Biogen Inc., Ionis, Synthena AG, Alexion Pharmaceuticals, Inc., Sanofi, Shire,Takeda, Roche, Novartis, Eli Lilly, Alnylam Pharmaceuticals, Inc., Moderna Therapeutics, Inc., Summit, Akashi, Catabasis Oxford University, Exonics Therapeutics (acquired by Vertex Pharmaceuticals), CRISPR Therapeutics and Oxford University.Editas Medicine.

Platform Technology Competition. We believe that other biotechnology and pharmaceutical companies share a focus on RNA-targeted drug discovery and development. Competitors with respect to our RNA-targeted technologies include, but are not limited to, Alnylam, Tekmira Pharmaceuticals Corp., Deciphera Pharmaceuticals, Ionis, BioMarin, Sanofi, Synthena AG, Roche Innovation Center Copenhagen (formerly Santaris Pharma A/SS), Shire plc (now Roche)Takeda), Nippon, Shinyaku, Daiichi Sankyo, Moderna Therapeutics, Avidity, Dyne Therapeutics, Stoke Therapeutics and Wave.

-23-

Employees

As of December 31, 2016,2019, we had 197743 employees, 89387 of whom hold advanced degrees. Of these employees, 90397 are engaged directly in research and development activities and 107346 are in selling, general and administration including 3171 in the sales force. None of our employees are covered by collective bargaining agreements and we consider relations with our employees to be good.

General Corporate Information

We were originally incorporated in the State of Oregon on July 22, 1980, and on June 6, 2013, we reincorporated in the State of Delaware. Our principal executive offices are located at 215 First Street, Suite 415, Cambridge, MA 02142 and our telephone number is (617) 274-4000. Our common stock is quoted on the Nasdaq Global Select Market under the symbol “SRPT”.

While we achieve revenue from EXONDYS 51 and VYONDYS 53 in the U.S. and through distribution of eteplirsen on a named patient basis or through our EAP outside the U.S., we are likely to continue to incur operating losses in the near term associated with our ongoing operations, research and development activities and potential business development activities. For more information about our revenues and operating losses, see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

-28-

As of December 31, 2019, we had approximately $1,134.4 million of cash, cash equivalents and investments, consisting of $835.1 million of cash and cash equivalents, $289.7 million of short-term investments and $9.6 million of long-term restricted cash investments. We believe that our balance of cash, cash equivalents and investments is sufficient to fund our current operational plan for at least the next twelve months. In addition to pursuing additional cash resources through public or private financings, we may also seek to enter into contracts, including collaborations or licensing agreements with respect to our technologies, with third parties, including government entities.

Where You Can Find Additional Information

We make available free of charge through our corporate website, www.sarepta.com, our annual reports, quarterly reports, current reports, proxy statements and all amendments to those reports as soon as reasonably practicable after such material is electronically filed or furnished with the SEC. These reports may also be obtained without charge by submitting a written request via mail to Investor Relations, Sarepta Therapeutics, Inc., 215 First Street, Suite 415, Cambridge, MA 02142 or by e-mail to investorrelations@sarepta.com. Our internet website and the information contained therein or incorporated therein are not intended to be incorporated into this Annual Report on Form 10-K. In addition, the Securities and Exchange Commission (the “SEC”) maintains an Internet site that contains reports, proxy and information statements, and other information regarding reports that we file or furnish electronically with the SEC at www.sec.gov.

We have adopted a Code of Business Conduct and Ethics and written charters for our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee.  Each of the foregoing is available on our website at www.sarepta.com under “For Investors—Corporate Governance.”  In accordance with SEC rules, we intend to disclose any amendment (other than any technical, administrative, or other non-substantive amendment) to the above code, or any waiver of any provision thereof with respect to any of our executive officers, on our website within four business days following such amendment or waiver.  In addition, we may use our website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation Fair Disclosure promulgated by the SEC. These disclosures will be included on our website under the “For Investors” section.

Item 1A. Risk Factors.

Factors That Could Affect Future Results

Set forth below and elsewhere in this report and in other documents we file with the SEC are descriptions of risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements contained in this report. Because of the following factors, as well as other variables affecting our operating results, past financial performance should not be considered a reliable indicator of future performance and investors should not use historical trends to anticipate results or trends in future periods. The risks and uncertainties described below are not the only ones facing us. Other events that we do not currently anticipate or that we currently deem immaterial also affect our results of operations and financial condition.

Risks Related to Our Business

We are highly dependent on the commercial success of EXONDYS 51our products in the U.S.; we We may not be able to meet expectations with respect to EXONDYS 51 sales of our products or attain profitability and positive cash-flow from operations.

On September 19, 2016 and December 12, 2019, the FDA granted accelerated approval for EXONDYS 51 and VYONDYS 53, respectively, as a therapeutic treatmenttreatments for DMD in patients who have a confirmed mutation in the DMD gene that is amenable to exon 51 skipping.and exon 53 skipping, respectively. EXONDYS 51 is currently commercially available.available in the U.S. and Israel only, and VYONDYS 53 is currently commercially available in the U.S. only, although they are available in additional countries through our EAP. The commercial success of EXONDYS 51 willour products continues to depend on a number of factors, including, but not limited to:

-29-

-24-

In addition, the process leading to a patient’s first infusion of EXONDYS 51 may be slower for certain patients. For example, the time to first infusion may take longer if a patient chooses to put in an intravenous port, which eases access to the vein. As the launch of EXONDYS 51 progresses, we expect the variation among patients to decline, leading to a faster time to infusion. However, delays in the process prior to first infusion could negatively impact the sales of EXONDYS 51.

We may experience significant fluctuations in sales of EXONDYS 51our products from period to period and, ultimately, we may never generate sufficient revenues from EXONDYS 51our products to reach or maintain profitability or sustain our anticipated levels of operations.

EXONDYS 51 may cause undesirable side effects or have other properties that could limit its commercial potential.

If we or others identify previously unknown side effects, in particular if they are severe, or if known side effects are more frequent or severe than in the past, then:

Any of the above occurrences would harm or prevent sales of EXONDYS 51, increase our expenses and impair our ability to successfully commercialize EXONDYS 51. Furthermore, once EXONDYS 51 is commercially available, it may be used in a wider population and in a less rigorously controlled environment than in clinical studies. As a result, regulatory authorities, healthcare practitioners, third-party payors or patients may perceive or conclude that the use of EXONDYS 51 is associated with previously unknown serious adverse effects, undermining our commercialization efforts.

We currently rely on third parties to manufactureEven though EXONDYS 51 and VYONDYS 53 have received accelerated approval by the FDA, they face future post-approval development and regulatory requirements, which will present additional challengeswe will need to produce our product candidates; our dependence on these parties, including any inability on our part to accurately anticipate product demand and timely secure manufacturing capacity to meet commercial or clinical product demand may impair the commercialization of EXONDYS 51 and the research and development programs and potential commercialization of our product candidates.successfully navigate.

We currently do not have the internal ability to undertake the manufacturing process for EXONDYS 51 or our product candidates in the quantities needed to meet commercial demand for EXONDYS 51, or to conduct our research and development programs and conduct clinical trials for our product candidates. Therefore, we rely on, and expect to continue relying on for the foreseeable future, a limited number of third parties to manufacture and supply materials (including raw materials and subunits), drug substance (“API”) and drug product, as well as to perform additional steps in the manufacturing process, such as the filling and labeling of vials and storage of EXONDYS 51 and our product candidates. There are a limited number of third parties with facilities and capabilities suited for the manufacturing process of EXONDYS 51 and our product candidates, which creates a heightened risk that we may not be able to obtain materials and APIs in the quantity and purity that we require. In addition, the process for adding new

-25-

manufacturing capacity can be lengthy and could cause delays in our development efforts. Any interruption of the development or operation of those facilities due to, among other reasons, events such as order delays for equipment or materials, equipment malfunction, quality control and quality assurance issues, regulatory delays and possible negative effects of such delays on supply chains and expected timelines for product availability, production yield issues, shortages of qualified personnel, discontinuation of a facility or business or failure or damage to a facility by natural disasters such as earthquake or fire, could result in the cancellation of shipments, loss of product in the manufacturing process or a shortfall in available EXONDYS 51, product candidates or materials.

If these third parties were to cease providing quality manufacturing and related services to us, and we are not able to engage appropriate replacements in a timely manner, our ability to manufacture EXONDYS 51 or our product candidates in sufficient quality and quantity required for commercial use of EXONDYS 51 and/ or for planned pre-clinical testing, clinical trials and potential commercial use of our product candidates would be adversely affected.

We have, through our third-party manufacturers, produced or are in the process of producing clinical and commercial supply of our product candidates and EXONDYS 51, respectively, based on our current understanding of market demands and our needs for our research and development efforts and clinical trials. In light of the limited number of third parties with the expertise to produce EXONDYS 51 and our product candidates, the lead time needed to manufacture them, and the availability of underlying materials, we may not be able to, in a timely manner or at all, establish or maintain sufficient commercial manufacturing arrangements on the commercially reasonable terms necessary to provide adequate supply of EXONDYS 51 to meet demands that exceed our commercial assumptions or to provide adequate supply of our product candidates to meet demands that exceed our clinical assumptions. Furthermore, we may not be able to obtain the significant financial capital that may be required in connection with such arrangements. Even after successfully engaging third parties to execute the manufacturing processThe accelerated approvals for EXONDYS 51 and our product candidates, such parties may not complyVYONDYS 53 granted by the FDA were based on an increase in the surrogate biomarker of dystrophin in skeletal muscles observed in some patients treated with the terms and timelines they have agreed to for various reasons, some of which may be out of their or our control, which could impact our ability to execute our business plans on expected or required timelines in connection with the commercialization of EXONDYS 51 and the continued development of our product candidates. We may alsoVYONDYS 53. These products will be requiredsubject to enter into long-term manufacturing agreements that contain exclusivity provisions and/or substantial termination penalties, which could have a material adverse effect on our business prior toongoing FDA requirements governing labeling, packaging, storage, advertising, promotion and after commercialization.

The third partiesrecordkeeping, and we use in the manufacturing process for EXONDYS 51 and our product candidates may fail to comply with cGMP regulations.

Our contract manufacturers are required to producesubmit additional safety, efficacy and other post-marketing information to the FDA.

Under the accelerated approval pathway, continued approval may be contingent upon verification of a clinical benefit in confirmatory trials. These post-approval requirements and commitments may not be feasible and/or could impose significant burdens and costs on us; could negatively impact our materials, APIsdevelopment, manufacturing and supply of our products; and could negatively impact our financial results. Failure to meet post-approval commitments and requirements, including completion of enrollment and in particular, any failure to obtain positive safety and efficacy data from our ongoing and planned studies of our products, would lead to negative regulatory action from the FDA and/or withdrawal of regulatory approval of EXONDYS 51or VYONDYS 53.

-30-

Manufacturers of drug products under cGMP. We and our contract manufacturerstheir facilities are subject to continual review and periodic inspections by the FDA and corresponding state and foreignother regulatory authorities to ensure strictfor compliance with cGMP and other applicable government regulations. We do not have control over a third-party manufacturer’s compliance with these regulations and requirements. In addition, changes in cGMP could negatively impact the ability of our contractDrug product manufacturers to complete the manufacturing process of EXONDYS 51 and our product candidates in a compliant manner on the schedule we require for commercial and clinical trial use, respectively. The failure to achieve and maintain compliance with cGMP and other applicable government regulations, including failure to detect or control anticipated or unanticipated manufacturing errors, could result in product recalls, patient injury or death. If our contract manufacturers fail to adhere to applicable cGMP and other applicable government regulations, or experience manufacturing problems, we will suffer significant consequences, including product seizures or recalls, postponement or cancellation of clinical trials, loss or delay of product approval, fines and sanctions, loss of revenue, termination of the development of a product candidate, reputational damage, shipment delays, inventory shortages, inventory write-offs and other product-related charges and increased manufacturing costs. If we experience any of these results, we may not be able to successfully commercialize EXONDYS 51.

We may not be able to successfully scale up manufacturing of EXONDYS 51 or our product candidates in sufficient quality and quantity or within sufficient timelines, or be able to secure ownership of intellectual property rights developed in this process, which could negatively impact our commercialization of EXONDYS 51 and or the development of our product candidates.

We are working to increase manufacturing capacity and scale up production of some of the components of our drug products. During the remainder of 2017, our focus remains on (i) achieving larger-scale manufacturing capacity for EXONDYS 51 throughout the manufacturing supply chain and (ii) continuing to increase material and API production capacity to provide the anticipated amounts of drug product needed for our planned studies for our product candidates. We may not be able to successfully increase manufacturing capacity or scale up the production of materials, APIs and drug products, whether in collaboration with third-party manufacturers or on our own, in a manner that is safe, compliant with cGMP conditions or other applicable legal or regulatory requirements, in a cost-effective manner, in a time frame required to meet our timeline for commercialization,continuously monitor and report adverse events from clinical trials and other business plans, or at all. Compliance with cGMP requirements and other quality issues may arise during our efforts to increase manufacturing capacity and scale up production with our current or any new contract manufacturers. These issues may arise in connection withcommercial use of the underlying materials, the inherent properties of EXONDYS 51product. If we or a product candidate, EXONDYS 51regulatory agency discover previously unknown adverse events or events of unanticipated severity or frequency, a regulatory agency may require labeling changes, implementation of risk evaluation and mitigation strategy program, or additional post-marketing studies or clinical trials.  If we or a regulatory agency discover previously unknown problems with a product, candidate in combinationsuch as problems with other components added duringa facility where the API or drug product is manufactured or tested, a regulatory agency may impose restrictions on that product and/or the manufacturer, including removal of specific product lots from the market, withdrawal of the product from the market, or suspension of manufacturing. Sponsors of drugs approved under FDA accelerated approval provisions also are required to submit to the FDA, at least 30 days before initial use, all promotional materials intended for use after the first 120 days following marketing approval. If we or the manufacturing and packaging process or during shipping and storage of the APIs or finished drug product. In addition, in orderfacilities for our products fail to release EXONDYS 51 for commercial use and demonstrate

-26-

stability of product candidates for use in late stage clinical trials (and any subsequent drug products for commercial use), our manufacturing processes and analytical methods must be validated in accordancecomply with applicable regulatory guidelines. We may not be able to successfully validate, or maintain validation of, our manufacturing processes and analytical methods or demonstrate adequate purity, stability or comparability of EXONDYS 51 or our product candidates inrequirements, a timely or cost-effective manner, or at all. If we are unable to successfully validate our manufacturing processes and analytical methods or to demonstrate adequate purity, stability or comparability, the commercial availability of EXONDYS 51 and the continued development and/or regulatory approval of our product candidates may be delayed, which could significantly harm our business.

During work with our third-party manufacturers to increase manufacturing capacity and scale up production, it is possible that they could make proprietary improvements in the manufacturing and scale-up processes for EXONDYS 51 or our product candidates. We may not own or be able to secure ownership of such improvements or may have to share the intellectual property rights to those improvements. Additionally, it is possible that we will need additional processes, technologies and validation studies, which could be costly and which we may not be able to develop or acquire from third parties. Any failure to secure the intellectual rights required for the manufacturing process needed for large-scale clinical trials or commercialization of EXONDYS 51 or the continued development of our product candidates could cause significant delays in our business plans or otherwise negatively impact the commercialization of EXONDYS 51 or the continued development of our product candidates.

If we are unable to maintain our agreements with third parties to distribute EXONDYS 51 to patients, our results of operations and business could be adversely affected.

We will rely on third parties to commercially distribute EXONDYS 51 to patients. We have contracted with a third-party logistics company to warehouse EXONDYS 51 and with specialty pharmacies to sell and distribute it to patients. A specialty pharmacy is a pharmacy that specializes in the dispensing of medications for complex or chronic conditions that require a high level of patient education and ongoing management. We are also planning to contract with a third-party call center to help us with some or all of the following: coordinate prescription intake and distribution, reimbursement adjudication, patient financial support, and ongoing compliance support. This distribution network will require significant coordination with our sales and marketing and finance organizations. In addition, failure to coordinate financial systems could negatively impact our ability to accurately report product revenue from EXONDYS 51. If we are unable to effectively manage the distribution process, the commercial launch and sales of EXONDYS 51, as well as any future products we may commercialize, could be delayed or severely compromised and our results of operations may be harmed.

In addition, the use of specialty pharmacies and a call center involves certain risks, including, but not limited to, risks that these organizations will:

agency may:

Any such events may result in decreased product sales and lower product revenue, which would harm our results of operations and business.

If we are unable to successfully maintain and further develop internal commercialization capabilities, sales of EXONDYS 51 may be negatively impacted.

We have hired a commercial team and put in the organizational infrastructure we believe we need for a successful commercial launch of EXONDYS 51. We will need to commit significant time and financial and managerial resources to maintain and further develop our marketing and sales force to ensure they have the technical expertise required to address any challenges we may face with the commercialization of EXONDYS 51. Factors that may inhibit our efforts to maintain and develop our commercialization capabilities include:

-27-

If we are not successful in establishing and maintaining an effective sales and marketing infrastructure, we will have difficulty commercializing EXONDYS 51, which would adversely affect our business and financial condition.

We are subject to uncertainty relating to reimbursement policies which, if not favorable, for EXONDYS 51, could hinder or prevent EXONDYS 51’sthe commercial success.success of our products and/or product candidates.

Our ability to successfully commercialize EXONDYS 51maintain and/or increase sales of our products in the U.S. will dependdepends in part on the coverage and reimbursement levels set by governmental authorities, private health insurers and other third-party payors. Third-partyThird party payors are increasingly challenging the effectiveness of and prices charged for medical products and services. We may not be able to obtain or maintain adequate third-party coverage or reimbursement for EXONDYS 51, our products, and/or we may be required to sell EXONDYS 51 at an unsatisfactory price.provide discounts or rebates on our products in order to obtain or maintain adequate coverage.

We expect that private insurers will continue to consider the efficacy, effectiveness, cost-effectiveness and safety of EXONDYS 51our products, including any new data and analyses that we are able to collect and make available in a compliant manner, in determining whether to approve reimbursement for EXONDYS 51our products and at what level.levels. If there are considerable delays in the generation of new evidence or if any new data and information we collect is not favorable, third party insurers may make coverage decisions that negatively impact sales of our products. We continue to have discussions with payors, some of which may eventually deny coverage. We may not receive approval for reimbursement of EXONDYS 51our products from privateadditional insurers on a satisfactory rate or basis, in which case our business would be materially adversely affected. In addition, obtaining these approvals can be a time consuming and expensive process. Our business would be materially adversely affected if we doare not able to maintain favorable coverage decisions and/or fail to receive these approvals on a timely basis.additional favorable coverage decisions from third party insurers, in particular during re-authorization processes for patients that have already initiated therapy. Our business could also be adversely affected if government health programs, private health insurers, including managed care organizations, the Medicare or Medicaid programs or other reimbursingreimbursement bodies or payors limit the indications for which EXONDYS 51our products will be reimbursed.

Additionally, in the wake of governmentreimbursed or fail to recognize accelerated approval and public scrutiny of pharmaceutical pricing practices, there have been efforts at the federal and state levels to implement legislation or regulations to promote transparency in drug pricing or limit drug prices. Such initiatives are likely to continue the pressure on pharmaceutical pricing, may require us to modify our business practices with healthcare practitioners, and may also increase our regulatory burdens and operating costs.surrogate endpoints as clinically meaningful.

In some foreign countries, particularly Canada and the countries of Europe, Latin America and Asia Pacific, the pricing of prescription pharmaceuticals is subject to strict governmental control. In these countries, pricing negotiations with governmental authorities can take six12 to 1224 months or longer after the receipt of regulatory approval and product launch. ToIn order to obtain favorable reimbursement for the indications sought or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our products,collect additional data, including EXONDYS 51, to other available therapies.conducting additional studies. Furthermore, several European countries have implemented government measures to either freeze or reduce pricing of pharmaceutical products. If reimbursement for our products is unavailable in any country in which reimbursement is sought, limited in scope or amount, or if pricing is set at unsatisfactory levels, our business could be materially harmed. In addition, many foreign countries are referencing to other countries’ official public list price, hence an unsatisfactory price level in one country could consequently impinge negatively upon overall revenue.

-31-

We expect to experience pricing pressures in connection with the sale of EXONDYS 51our current and our future products due to the a number of factors, including current and future healthcare reforms and initiatives by government health programs and private insurers (including managed care plans) to reduce healthcare costs.costs, the scrutiny of pharmaceutical pricing, the ongoing debates on reducing government spending and additional legislative proposals. These healthcare reform efforts or any future legislation or regulatory actions aimed at controlling and reducing healthcare costs, including through measures designed to limit reimbursement, restrict access or impose unfavorable pricing modifications on pharmaceutical products, could impact our and our partners’ ability to obtain or maintain reimbursement for our products at satisfactory levels, or at all, which could materially harm our business and financial results.

Additionally, our gene therapy product candidates represent novel approaches to treatment that will call for new levels of innovation in both pricing, reimbursement, payment and drug access strategies. Current reimbursement models may not accommodate the unique factors of our gene therapy product candidates, including high up-front costs, lack of long-term efficacy and safety data and fees associated with complex administration, dosing and patient monitoring requirements. Hence, it may be necessary to restructure approaches to payment, pricing strategies and traditional payment models to support these therapies.

The downward pressure on healthcare costs in general has become intense. As a result, increasingly high barriers are being erected to the entry of new products. If we are unable to obtain adequate levels of reimbursement, our ability to successfully market and sell our products and product candidates will be harmed. The manner and level at which reimbursement is provided for services related to our products and product candidates (e.g., for administration of our products to patients) is also important. Inadequate reimbursement for such services may lead to physician resistance and limit our ability to market or sell our products.

Healthcare reform and other governmental and private payor initiatives may have an adverse effect upon, and could prevent commercial success of EXONDYS 51our products and our other product candidates.

The U.S. government and individual states arehave aggressively pursuingpursued healthcare reform, as evidenced by the passing of the Affordable Care Act.Healthcare Reform Act and the ongoing efforts to modify or repeal that legislation. The Affordable CareHealthcare Reform Act substantially changed the way healthcare is financed by both governmental and private insurers and contains a number of provisions that affect coverage and reimbursement of drug products and/or that could potentially reduce the demand for pharmaceutical products such as increasing drug rebates under state Medicaid programs for brand name prescription drugs and extending those rebates to Medicaid managed care and assessing a fee on manufacturers and importers of brand name prescription drugs reimbursed under certain government programs, including Medicare and Medicaid. Other aspects of healthcare reform, such as expanded government enforcement authority and heightened standards that could increase compliance-related costs, could also affect our business. Modifications tohave been implemented under the Trump Administration and additional modifications or repeal of all or certain provisions of the Affordable Care Actmay occur.  There are, expected as a result of the outcome of the recent presidential election and Republicans maintaining control of Congress, consistent

-28-

with statements made by Donald Trump and members of Congress during the presidential campaign and following the election.may continue to be, judicial challenges. We cannot predict the ultimate content, timing or effect of any changes to the Affordable CareHealthcare Reform Act or other federal and state reform efforts. There is no assurance that federal or state health care reform will not adversely affect our future business and financial results, and we cannot predict how future federal or state legislative, judicial or administrative changes relating to healthcare reform will affect our business.

The U.S. government, state legislatures and foreign governments have shown significant interest in implementing cost-containment programs to limit the growth of government-paid healthcare costs, including price controls, waiver from Medicaid drug rebate law requirements, restrictions on reimbursement and requirements for substitution of generic products for branded prescription drugs.drugs and the introduction of international reference pricing in the U.S.  We anticipate that the U.S. Congress, state legislatures and the private sector will continue to consider and may adopt healthcare policies intended to curb rising healthcare costs. These cost containment measures may include:include implementation or modification of:

We are unable to predict what additional legislation, regulations or policies, if any, relating to the healthcare industry or third party coverage and reimbursement may be enacted in the future or what effect such legislation, regulations or policies would have on our business. Any cost containment measures, including those listed above, or other healthcare system reforms that are adopted, could significantly decrease the available coverage and the price we might establish for EXONDYS 51our products and our other potential products,product candidates, which would have an adverse effect on our net revenues and operating results.

-32-

Our products may not be widely adopted by patients, payors or healthcare providers, which would adversely impact our potential profitability and future business prospects.

The Foodcommercial success of our products, particularly in the near term in the U.S., depends upon the level of market adoption by patients, payors and Drug Administration Amendments Acthealthcare providers. If our products do not achieve an adequate level of 2007 also providesmarket adoption for any reason, or if market adoption does not persist, our potential profitability and our future business prospects will be severely adversely impacted. The degree of market acceptance of our products depends on a number of factors, including:

We may not be able to expand the FDA enhanced post-marketing authority, includingglobal footprint of our products outside of the authority to require post-marketing studies and clinical trials, labeling changes based on new safety information, and compliance with risk evaluations and mitigation strategies approved by the FDA. The FDA’s exercise of this authority could result in increased development-related costs following the commercial launch of EXONDYS 51, and could result in potential restrictions on the sale and/or distribution of EXONDYS 51, even in its approved indications and patient populations.U.S.

Even though EXONDYS 51 has beenwas approved by the FDA as a treatment for DMD in patients who have a confirmed mutationmarketing in the DMD gene that is amenable to exon 51 skipping, it faces future post-approval developmentU.S. and regulatory requirements, which will present additional challenges.

On September 19, 2016, the FDA granted accelerated approval for EXONDYS 51 as a therapeutic treatment for patients with DMD who have a confirmed mutation in the DMD gene that is amenable to exon 51 skipping. This indication is based on an increase in dystrophin in skeletal muscles observed in some patients treated with EXONDYS 51. EXONDYS 51 will be subject to ongoing FDA requirements governing the labeling, packaging, storage, advertising, promotion, recordkeepingIsrael, and submission of safety, efficacy and other post-market information.

Continued approval for this indication is contingent upon completing various post-marketing requirements and commitments, including the requirement to conduct a randomized, controlled clinical trial to verify the drug’s clinical benefit. These post-approval requirements and commitments may not be feasible and/or could impose significant burdens and costs on us; could negatively impact our development, manufacturing and supply of EXONDYS 51; and could negatively impact our financial results. Failure to meet post-approval commitments and requirements, including completion of enrollment and obtaining positive safety and efficacy data from our confirmatory studies for EXONDYS 51, would lead to negative regulatory action from the FDA and/or withdrawal of regulatory approval of EXONDYS 51.

Manufacturers of drug products and their facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities for compliance with cGMP regulations. Drug product manufacturers are required to continuously monitor and report adverse events from clinical trials and commercial use of the product. If we or a regulatory agency discover previously unknown adverse events or events of unanticipated severity or frequency, a regulatory agency may require labeling changes implementation of risk evaluation and mitigation strategy (REMS) program.  If we or a regulatory agency discover previously unknown problems with a product, such as problems with a facility where the API or drug product is manufactured or tested, a

-29-

regulatory agency may impose restrictions on that product and/or the manufacturer, including removal of specific product lots from the market, withdrawal of the product from the market, or suspension of manufacturing. If we or the manufacturing facilities for EXONDYS 51 fail to comply with applicable regulatory requirements, a regulatory agency may:

Even though EXONDYS 51 has beenVYONDYS 53 was approved for marketing in the U.S., we may nevernot receive approval to commercialize EXONDYS 51 outsidethese products in additional countries. In November 2016, we submitted a MAA for eteplirsen to the EMA and the application was validated in December 2016. As we announced on June 1, 2018, the CHMP of the U.S.EMA adopted a negative opinion for eteplirsen. In September 2018, the CHMP of the EMA confirmed its negative opinion for eteplirsen, and the European Commission adopted the CHMP opinion in December 2018.During 2019, we sought follow-up EMA scientific advice for eteplirsen. Once data from our ongoing studies is available, we plan to evaluate future engagement with the EMA on potential next steps.

We are not permitted to market or sell EXONDYS 51 in the EU or in any other foreign countries on a commercial basis until we receive the requisite approval from such country’s regulatory authorities. In order to market any product in a foreign country outside of the U.S., we must comply with numerous and varying regulatory requirements for approval in those countries regarding demonstration of evidence of the product’s safety and efficacy and governing, among other things, labeling, distribution, advertising, and promotion, as well as pricing and reimbursement of the product. Obtaining marketing approval in a country outside of the U.S. is an extensive, lengthy, expensive and uncertain process, and the regulatory authority may reject an application or delay, limit or deny approval of any of our products for many reasons, including:

-33-

Approval procedures vary among countries and can involve additional product testing and additional administrative review periods. The time required to obtain approval in other countries might differ significantly from that required to obtain approval in the U.S. In particular, in many foreign countries, it is required that a product receives pricing and reimbursement approval before the product can be distributed commercially. Many foreign countries undertake cost-containment measures that could affect pricing or reimbursement of our products. This can result in substantial delays, and the price that is ultimately approved in some countries may be lower than the price for which we expect to offer EXONDYS 51.our products.

Marketing approval in one country does not ensure marketing approval in another, but a failure or delay in obtaining marketing approval in one country may have a negative effect on the approval process in others. Failure to obtain marketing approval in other countries or any delay or setback in obtaining such approval would impair our ability to develop foreign markets for eteplirsenour products and could adversely affect our business and financial condition. Any such complicationsIn addition, failure to obtain approval in one country or area may reduceaffect sales under the EAP in other countries or areas. Even if we are successful in obtaining regulatory approval of our target marketproducts in additional countries, our revenue earning capacity will depend on commercial and delay or limit the full commercial potential of eteplirsen. Many foreign countries are undertaking cost-containment measures that could affectmedical infrastructure, pricing orand reimbursement of eteplirsen.negotiations and decisions with third party payors, including government payors.

In November 2016,addition, we submittedhave granted Roche an MAAexclusive option to obtain an exclusive license to commercialize certain products, including eteplirsen and golodirsen, outside of the U.S.  If this option is exercised, Roche will have sole control over and decision-making authority with respect to the commercialization of such products outside the U.S.

We cannot predict whether historical revenues from eteplirsen through our EAP outside the U.S. will continue or whether we will be able to continue to distribute eteplirsen through our EAP.

We have initiated an EAP for eteplirsen toin select countries in Europe, North America, South America and Asia where it currently has not been approved. We are also in the EMA. The application was validated in December 2016 and is currently under review. We believe thatprocess of initiating an EAP for golodirsen outside of the U.S. While we submitted a robust packagegenerate revenue from the distribution of clinical, dystrophin and safety data to support the review of eteplirsen. We also believe that, in contrast to the FDA approval, the clinical dataeteplirsen through our EAP, we cannot predict whether historical revenues from this program will continue, whether we will be centralable to continue to distribute our products through our EAP, orwhether commercial revenues will exceed revenues historically generated from sales through our EAP. Reimbursement through national EAPs may cease to be available if authorization for an EAP expires or is terminated.For example, healthcare providers in evaluating the application, while dystrophin willEAP jurisdictions may not be supportive of the drug’s mechanism of action. However, obtaining approval of an MAAconvinced that their patients benefit from our products or any other filing for approval inmay prefer to wait until such time as our products are approved by a foreign country is an extensive, lengthy, expensive and uncertain process, and the regulatory authority may rejectin their country before prescribing any of our products. Even if a filing or delay, limit or deny approval of eteplirsenhealthcare provider is interested in obtaining access to our products for many reasons, including:

-30-

regulatory authorities mayIf we are not find the data from clinical trials sufficient to demonstrate that eteplirsen’s clinical benefits outweigh its safety risks;successful in maintaining an effective commercial, sales and marketing infrastructure, we will encounter difficulty in achieving, maintaining or such regulatory authorities may disagree withincreasing projected sales of our interpretation of data from preclinical studies or clinical trials and require that we conduct one or more additional trials;

-34-

If we are unable to execute effectively our sales and marketing activities outside the U.S., we may be unable to generate sufficient product revenue.

EXONDYS 51 isand VYONDYS 53 are our first and second commercial product.products, respectively. As a result, we have only recently had to build our sales, marketing, managerial and other non-technical capabilities are relatively new in the U.S. We plan to continue to buildhave built a commercial infrastructuresales force in Europe and we are currently in the EU andprocess of building commercial infrastructure in other key countries in order to be ready to launch eteplirsen our products with a relatively small specialty sales force ifin the product isevent our products are ultimately approved in those jurisdictions. The establishment and development of our commercial infrastructure will continue to be expensive and time consuming, and we may not be able to successfully fully develop this capability in a timely manner or at all. We anticipate developing a commercial infrastructurebuilding sales, medical, marketing, managerial, distribution and other capabilities across multiple jurisdictions if eteplirsen is approved in such jurisdictions.to prepare for potential approvals ex-U.S. Doing so will require a high degree of coordination and compliance with laws and regulations in such jurisdictions. If we are unable to effectively coordinate such activities or comply with such laws and regulations, our ability to commercialize eteplirsenour products in such jurisdictions will be adversely affected. Even if we are able to effectively hire a sales force and develop a marketing and sales infrastructure,capabilities, our sales force may not be successful in commercializing eteplirsenour products or any other product candidate that we develop. If we are unable to establish adequate manufacturing, sales, marketing, supply and distribution capabilities, whether independently or with third parties, we may not be able to generate product revenue and may not become profitable.profitable outside of the U.S.Furthermore, we have granted Roche an exclusive option to obtain an exclusive license to commercialize certain products, including eteplirsen and golodirsen, outside of the U.S. If this option is exercised, Roche will have sole control over and decision-making authority with respect to the commercialization of such products outside the U.S.

EXONDYS 51If we fail to obtain or maintain regulatory exclusivity for our products, then we may not be widely adopted by patients, payors or healthcare providers, which would adversely impactable to protect our potential profitability and future business prospects.

The commercial success of EXONDYS 51, particularly in the near term in the U.S., depends upon its level of market adoption by patients, payors and healthcare providers. If EXONDYS 51 does not achieve an adequate level of market adoption for any reason, our potential profitabilityproducts from competition and our future business prospects will be severely adversely impacted. The degree of market acceptance of EXONDYS 51 depends on a number of factors, including:

The patient population suffering from DMD, and in particular those with mutations amenable to exon-51 skipping, is small and has not been established with precision. If the actual number of patients is smaller than we estimate, our revenue and ability to achieve profitability may be adversely affected.

DMDimpacted.  If a competitor obtains an authorization to market the same or substantially same product before a product of ours is authorized in a fatal genetic neuromuscular disorder affecting an estimated one in approximately every 3,500 to 5,000 males born worldwide, of which up to 13% are estimated togiven country and is granted regulatory exclusivity, then our product may not be amenable to exon-51 skipping. Our estimateauthorized for sale as a result of the sizecompetitor’s regulatory exclusivity and as a result, our investment in the development of that product may not be returned.

In addition to any patent protection, we rely on various forms of regulatoryexclusivity to protect our products. During the development of our products, we anticipate regulatoryexclusivities available upon approval of our products. Implementation and enforcement of regulatory exclusivity, which may consist of regulatory data protection and market protection, varies widely from country to country. Failure to qualify for regulatory exclusivity, or failure to obtain or maintain the extent or duration of such protections that we expect in each of the patient population is

-31-

basedmarkets for our products due to challenges, changes or interpretations in the law or otherwise, could affect our revenues for our products or our decision on published studies as well as internal analyses. If thewhether to market our products in a particular country or countries or could otherwise have an adverse impact on our results of these studiesoperations.  We are not guaranteed to receive or maintain regulatoryexclusivity for our analysiscurrent or future products, and if our products that are granted orphan status were to lose their status as orphan drugs or the data or marketing exclusivity provided for orphan drugs, our business and operations could be adversely affected.

Due to the nature of themour products and product candidate pipeline, in addition to new chemical entity exclusivity and new biologic exclusivity, orphan drug exclusivity is especially important for our products that are eligible for orphan drug designation. For eligible products, we plan to rely on orphan drug exclusivity to maintain a competitive position.  If we do not accurately reflecthave adequate patent protection for our products, then the numberrelative importance of patients with DMD, our assessment of the market may be inaccurate, making it difficult or impossibleobtaining regulatory exclusivity is even greater.  While orphan status for us to meet our revenue goals, or to obtain and maintain profitability. Since EXONDYS 51 targets a small patient population, the per-patient drug pricing must be high in order to recover our development and manufacturing costs, fund adequate patient support programs, fund additional research and achieve profitability. We may be unable to maintain or obtain sufficient sales volumes at a price high enough to justify our product development efforts and our sales, marketing and manufacturing expenses.

We have been granted orphan drug designations in the U.S. and in the EU for someany of our product candidates, however, there can be no guarantee thatproducts, if granted or maintained, would provide market exclusivity for the time periods specified above upon approval, we willwould not be able to maintain orphan statusexclude other companies from obtaining regulatory approval of products using the same or similar active ingredient for these product candidates nor that we will receive orphan drug approval and prevent third parties from developing and commercializing products that are competitivethe same indication during or beyond the exclusivity period applicable to our product candidates.

To date, in addition toon the basis of orphan drug exclusivity described above for EXONDYS 51, we have been granted orphanstatus (e.g., seven years in the U.S.).  Orphan drug designation byneither shortens the FDA underdevelopment time or regulatory review time of a drug, nor gives the Orphan Drug Act for additional product candidates for the treatment of DMD and infectious diseases, including AVI-7537 for the treatment of Ebola virus and AVI-7288 for the treatment of the Marburg virus.

We also have been granted orphan medicinal product designationsdrug any advantage in the EU for two of our product candidates in DMD (including EXONDYS 51). Product candidates granted orphan status in Europe can be provided with up to ten years of marketing exclusivity, meaning that another application for marketing authorization of a later, similar medicinal product for the same therapeutic indication will generally not be approved in Europe during that time period. Althoughregulatory review or approval process.

In addition, we may have product candidates that obtainface risks with maintaining regulatory exclusivities for our products, and our protection may be circumvented, even if maintained.  For instance, orphan drug exclusivity in Europe, the U.S. may be rescinded if (i) an alternative, competing product demonstrates clinical superiority to our product with orphan status and associatedexclusivity; or (ii) we are unable to assure the availability of sufficient quantities of our orphan products to meet the needs of patients.  Moreover, competitors may receive approval of different drugs or biologics for indications for which our prior approved orphan products have exclusivity.  Orphan drug exclusivity periodin Europe may be modified for several reasons, including a significant change to the orphan medicinal product designations or status criteria after-market authorization of the orphan product (e.g., product profitability exceeds the criteria for orphan drug designation), problems with the production or supply of the orphan drug, or a competitor drug, although similar, is safer, more effective or otherwise clinically superior than the initial orphan drug.

As discussed above, we are not guaranteed to receive or maintain orphan status for our current or future product candidates, and if our product candidates that are granted orphan status were to lose their status as orphan drugs or the marketing exclusivity provided for them in the U.S. or the EU, our business and operations could be adversely affected. While orphan status for any of our products, if granted or maintained, would provide market exclusivity in the U.S. and the EU for the time periods specified above, we would not be able to exclude other companies from manufacturing and/or selling products using the same active ingredient for the same indication beyond the exclusivity period applicable to our product on the basis of orphan drug status. In addition,  Thus, we cannot guarantee that another company will not receive approval to market a product candidate that is granted orphan drug status in the U.S. or the EUexclusivity for the same drug or similar drug and same orphan indication as any of our product candidates for which we plan to file an NDA, BLA or MAA.   If that were to happen, our prior approved orphan products may face competition and any pending NDA, BLA or MAA for our product candidate for that indication may not be approved until the competing company’s period of exclusivity has expired in the U.S. or the EU, as applicable.

For example, in January 2020, the FDA issued a draft guidance to clarify its position on when gene therapy products would be considered the “same” or “different” for purposes of orphan drug exclusivity. The draft guidance notes that if the gene therapy products differ in either the gene transferred by the products (“transgene”) or the vector used to deliver the transgene, then the two gene therapy products are different and could both be approved for same indication. If wethe transgene and the vector are unablethe same, then the products are likely the “same,” such that the first product approved would gain regulatory exclusivity over the second product. If there are other, lesser differences in the products, FDA would make a case-by-case determination as how to maintainapply orphan exclusivity to the competing product. As illustrated by this draft guidance, orphan drug exclusivity as applied to gene therapy products is an evolving area subject to change and interpretation by the FDA and therefore we cannot be certain as to how the FDA will apply those rules to our products.

-35-

Even though we have obtained orphan drug designation for EXONDYS 51certain of our product candidates and even if we obtain orphan drug designation for these or our future product candidates, due to the uncertainties associated with developing biopharmaceutical products, we may not be the first to obtain marketing approval for any particular orphan indication, which means that we may not obtain orphan drug exclusivity and could also potentially be blocked from approval of certain product candidates until the competitor’s orphan drug exclusivity period on its product expires (e.g., seven years in the U.S., we may face increased competition.

Under the Orphan Drug Act, the FDA may designate a product as an orphan drug if).  Moreover, with respect to antisense oligonucleotides and gene therapies, it is a drug intendeduncertain how similarity between product candidates designed to treat athe same rare disease or condition affecting fewer than 200,000 people inmay be determined on a country-by-country basis and whether the U.S. A company that first obtains FDA approval for a designated orphan drug for the specified rare disease or condition generally receives orphan drug marketing exclusivity for that drug for a period of seven years from the date of its approval. This orphan drug exclusivity preventsof a previously approved product can block the approval of another drug containinga chemically distinct product candidate under regulatory review.

The patient population suffering from DMD, LGMDs, Pompe disease, CMT 1A and MPS IIIA is small and has not been established with precision. If the same active ingredient used for the same orphan indication, except in circumstances where, based on the FDA’s determination, a subsequent drug is safer, more effective or makes a major contribution to patient care, or if the orphan drug manufacturer is unable to assure that a sufficient quantity of the orphan drug is available to meet the needsactual number of patients with theis smaller than we estimate, our revenue and ability to achieve profitability may be adversely affected.

DMD, LGMD, Pompe disease, CMT 1A and MPS IIIA are rare, disease or condition. Orphan drug exclusivity may alsofatal genetic disorders. DMD affects an estimated one in approximately every 3,500 to 5,000 males born worldwide, of which up to 13% are estimated to be lost if the FDA later determines that the initial request for designation was materially defective. EXONDYS 51 was granted orphan drug exclusivity for the treatment of DMD in patients who have a confirmed mutation of the DMD gene that is amenable to exon 51 skipping which we expect will provide the drug with orphan drug marketing exclusivityand up to 8% are estimated to be amenable to exon 53. LGMDs as a class affect an estimated range of approximately one in every 14,500 to one in every 123,000 individuals. Pompe disease affects an estimated one in approximately every 40,000 individuals. CMT is a group of peripheral nerve disorders affecting approximately one in every 2,500 individuals. CMT type 1A affects approximately 50,000 patients in the U.S. until September 19, 2023, seven years fromMPS IIIA affects approximately 1 in 100,000 newborns. Our estimates of the datesize of its approval. However, such exclusivitythese patient populations are based on limited number of published studies as well as internal analyses. Various factors may decrease the market size of our products and product candidates, including the severity of the disease, patient demographics and the response of patients’ immune systems to our products and product candidates. If the results of these studies or our analysis of them do not effectively protectaccurately reflect the product from competition ifrelevant patient population, our assessment of the FDA determines that a subsequent drugmarket may be inaccurate, making it difficult or impossible for the same indication is safer, more effective or makes a major contribution to patient care, or if we are unable to assure the FDA that sufficient quantities of EXONDYS 51 are availableus to meet patient demand. In addition, orphan drug exclusivity does not prevent the FDA from approving competing drugs for the sameour revenue goals, or similar indication containing a different active ingredient. If a subsequent drug is approved for marketing for the same or similar indication, we mayto obtain and maintain profitability.  

We face increasedintense competition and our revenues from the salerapid technological change, which may result in other companies discovering, developing or commercializing competitive products.

The biotechnology and pharmaceutical industries are highly competitive and subject to significant and rapid technological change. We are aware of EXONDYS 51 will be adversely affected.

We will incur significant liability if it is determined that we are promoting any “off-label” use of EXONDYS 51.

Physicians are permitted to prescribe drug products for usesmany pharmaceutical and biotechnology companies that are not describedactively engaged in research and development in areas in which our products and product candidates are aimed. Some of these competitors are developing or testing product candidates that now, or may in the product’s labelingfuture, compete directly with our products or product candidates. For example, we face competition in the field of DMD by third parties who are developing or who had once developed: (i) exon skipping product candidates, such as Wave Life Sciences (notably for exons 51 and 53), Nippon Shinyaku (notably for exon 53), Daiichi Sankyo (notably for exon 45) and Audentes Therapeutics, Inc. (notably for exons 2, 51 and 53); (ii) gene therapies that express microdystrophin or mini-dystrophin, such as Pfizer and Solid Biosciences; (iii) CRISPR/Cas 9 approaches, such as Exonics Therapeutics (acquired by Vertex Pharmaceuticals), CRISPR Therapeutics and Editas Medicine; (iv) other disease modifying approaches, such as PTC Therapeutics, which has a small molecule candidate, ataluren, that targets nonsense mutations; and (v) other approaches that may be palliative in nature or potentially complementary with our products and product candidates and that differ from those approvedare being developed by applicableSanthera, Catabasis, Fibrogen, ReveraGen, Capricor, BioPhytis, Mallinckrodt, Astellas Pharma, and Tivorsan .  Although BioMarin announced on May 31, 2016 its intent to discontinue clinical and regulatory agencies. Off-label uses are common across medical specialties. Althoughdevelopment of drisapersen as well as its other clinical stage candidates, BMN 044, BMN 045 and BMN 053, then-currently in Phase 2 studies for distinct forms of DMD, it further announced its intent to continue to explore the FDA and other regulatory agencies do not regulate a physician’s choicedevelopment of treatments, the FDA and other regulatory agencies do prohibit

-32-

advertising and promotion of off-label uses of approved drug products or promotion of an approved drug on information that is not in the final, FDA-approved label for a product and restrict communications on off-label use. Accordingly, we may not promote EXONDYS 51 in the U.S. for use in any indications other thannext generation oligonucleotides for the treatment of DMDDMD.  In addition, while Wave announced its intention to discontinue development of suvodirsen and suspend development of WVE-N531, continued development of one or both of these candidates is possible.

In addition, we are aware of many pharmaceutical and biotechnology companies that are actively engaged in patients whoresearch and development using platform technologies that may be viewed as competing with ours beyond and including those companies mentioned immediately above, such as Alnylam Pharmaceuticals, Inc., Tekmira Pharmaceuticals Corp., Deciphera Pharmaceuticals, Ionis Pharmaceuticals, Inc., Roche Innovation Center Copenhagen (formerly Santaris Pharma A/S), Shire plc (now Takeda), Biogen, Moderna Therapeutics, Avidity, Dyne Therapeutics, Stoke Therapeutics and Sanofi. Additionally, several companies and institutions have a confirmed mutationentered into collaborations or other agreements for the development of product candidates, including mRNA, gene therapy and gene editing (CRIPSR and AAV, among others) and small molecule therapies that are potential competitors for therapies being developed in the muscular dystrophy, neuromuscular and rare disease space, including, but not limited to, Astellas Pharma, Biogen Inc., Ionis, Alexion Pharmaceuticals, Inc., Sanofi, Shire (now Takeda), Eli Lilly, Alnylam Pharmaceuticals, Inc., Moderna Therapeutics, Inc., Akashi, Catabasis, Capricor Therapeutics, Oxford University, Exonics Therapeutics (acquired by Vertex Pharmaceuticals), and Editas Medicine.

If any of our competitors are successful in obtaining regulatory approval for any of their product candidates, it may limit our ability to enter into the market, gain market share or maintain market share in the DMD genespace or other diseases targeted by our platform technologies, products and product candidate pipeline.

-36-

It is possible that is amenable to exon 51 skipping. Additionally, we are not able to promote EXONDYS 51 based on any information excludedour competitors will succeed in developing technologies that limit the final FDA-approved label, including previously published clinical data. The FDA and other regulatory authorities actively enforce laws and regulations prohibiting promotion of amarket size for our products or product for off-label uses and the promotion of products for which marketing approval has not been obtained. A company that is found to have improperly promoted its drug product will be subject to significant liability, including civil and administrative remedies as well as criminal sanctions.

Notwithstandingcandidates, impact the regulatory restrictions on off-label promotion, the FDAapproval and other regulatory authorities allow companies to engage in truthful, non-misleadingpost-marketing process for our products and non-promotional scientific exchange concerning their products. We intend to engage in medical education activities and communicate with healthcare providers in compliance with all applicable laws, regulatory guidance and industry best practices. Although we have established a compliance program and continue to enhance it to ensure that all such activities are performed in a legal and compliant manner, EXONDYS 51 is our first commercial product which could increase risk of non-compliance with our internal compliance policies and applicable rules and regulations, which could negatively impact our business.

Most of our product candidates, are at an early stage of development and may never receive regulatory approval.

Othermore effective than EXONDYS 51, which the FDA approved for use in the U.S. in September 2016 and for which we filed an MAA in November 2016 with the EMA, our most advanced product candidates are exon 45 and 53 skipping products. We are in the process of conducting, startingproducts or planning various EXONDYS 51 clinical studies including studies that are required to comply with regulatory NDA and/or MAA filing requirements as well as studies we need to conduct to comply with our post-marketing FDA requirements to verify and describe clinical benefit. The exon 53-skipping product candidate, which we are working on with the SKIP-NMD consortium, is currently in the clinic in EU. The Part I dose-titration portion of this Phase 1/2a study has been completed and Part II open label portion of the study is ongoing. We have also completed the dose titration portion and are conducting the open-label portion of a study for our exon 45-skipping product candidate. Additionally, we are enrolling patients in the U.S. and working towards initiating sites in the EU and Canada for a clinical trial using exon 45- and 53-skipping product candidates, which we refer to as the ESSENCE study. The remainder of our product candidates are in discovery or early stages of development. These product candidates will require significant further development, financial resources and personnel to develop into commercially viable products and obtain regulatory approval, if at all. Currently, our exon 45-skipping product candidate, the exon 53-skipping product candidate we are developing with the SKIP-NMD consortium, each for DMD, and radavirsen (formerly AVI-7100) for influenza are in active clinical development. Our other product candidates, including our anti-bacterials and AVI-7537 in Ebola and AVI-7288, are in discovery, pre-clinical development or inactive. Given the FDA approval of EXONDYS 51, we expect that much of our effort and many of our expenditures over the next several years will be devoted to clinical development and regulatory activities associated with EXONDYS 51 and other exon-skipping candidates as part of our larger follow-on exon strategy in DMD, our other disease candidates, our proprietary chemistry, and other potential therapeutic areas that provide long-term market opportunities. We may be delayed, restricted, or unable to further develop our active and other product candidates or successfully obtain approvals needed to market them. Although EXONDYS 51 was approved under accelerated approval by the FDAwould render our technologies obsolete or noncompetitive. Our competitors may, among other things: