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

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

Registrant’s telephone number, including area code: ~~(617)~~(617) 337-4680

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule12b-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 registrant is a shell company (as defined in Rule12b-2 of the Exchange

As of May ~~1, 2018,~~7, 2023, the registrant had ~~35,461,959~~19,601,539 shares of common stock, $0.001 par value per share, outstanding.

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

CONDENSED CONSOLIDATED STATEMENTS OF ~~PREFERRED UNITS AND~~CHANGES IN STOCKHOLDERS’~~/MEMBERS’ EQUITY/(DEFICIT)~~ EQUITY

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

(~~Amounts~~unaudited, amounts in thousands, except share ~~/ unit~~ and per share ~~/ unit~~ data)

1. Nature of the Business and Basis of Presentation

Nature of Business

Solid Biosciences Inc. was organized in March 2013 under the name SOLID Ventures Management, ~~LLC. In October 2013, the Company changed its name to Solid Ventures,~~ LLC and ~~in June 2015, the Company changed its name to Solid Biosciences, LLC.~~

~~The Company~~ operated as a Delaware limited liability company ~~under the name Solid Biosciences, LLC~~ until immediately prior to the effectiveness of its registration statement on FormS-1 on January 25, 2018, at which time it completed a statutory corporate conversion into a Delaware corporation ~~(the “Corporate Conversion”)~~ and changed its name to Solid Biosciences Inc. (the “Company”). AsOn December 2, 2022, the Company completed its acquisition of AavantiBio, Inc. (“AavantiBio”), a ~~result~~privately held gene therapy company focused on transforming the lives of patients with Friedreich’s ataxia ("FA") and rare cardiomyopathies (the “Acquisition”). Upon the consummation of the ~~Corporate Conversion, all~~Acquisition, the Company acquired AavantiBio’s candidates, AVB-202-TT and AVB-401, as well as additional assets for the treatment of undisclosed cardiac diseases, platform technologies and know-how related thereto. AavantiBio is a wholly owned subsidiary of the ~~Series 1~~Company.

The Company is a life sciences company focused on advancing a portfolio of neuromuscular and ~~2 Senior Preferred Units, Junior Preferred Units, Series A, B, C and D Common Units~~cardiac programs, including SGT-003, a differentiated gene therapy candidate, for the treatment of Solid Biosciences, LLC converted into shares of common stock of Solid Biosciences Inc. on a one for 0.8485 basis and all of the unit holders of Solid Biosciences, LLC became holders of common stock of Solid Biosciences Inc.

~~The Company’s mission is to cure~~ Duchenne muscular dystrophy ~~(“DMD”~~("Duchenne"), a genetic muscle-wasting disease predominantly affecting boys. It is caused by mutations in the dystrophin gene, which result in the absence or near-absence of dystrophin protein. Dystrophin protein works to strengthen muscle fibers and protect them from daily wear and tear. Without functioning dystrophin and certain associated proteins, muscles suffer excessive damage from normal daily activities and are unable to regenerate, leading to the~~build-up~~ ~~of fibrotic, or scar, and fat tissue. The Company’s lead product candidate,SGT-001,~~ is; AVB-202-TT, a gene ~~transfer under development to restore functional dystrophin protein expression in patients’muscles. SGT-001~~ ~~has been granted Rare Pediatric Disease Designation in~~therapy program for the ~~United States~~treatment of FA; AVB-401, a gene therapy program for the treatment of BAG3-mediated dilated cardiomyopathy; and ~~Orphan Drug Designations in both~~additional assets for the ~~United States and European Union.~~treatment of undisclosed cardiac diseases. The Company ~~filed an Investigational New Drug application, or IND,~~aims to be a center of excellence, bringing together those with expertise in ~~September 2017~~science, technology, disease management and ~~initiated a Phase I/II clinical trial forSGT-001~~ incare. Patient-focused and founded by those directly impacted by Duchenne, the ~~United States during~~Company's mandate is to improve the ~~fourth quarter~~daily lives of ~~2017. In November 2017, the FDA notified the Company that the Company was not permitted to dose~~ patients in the higher-dose group of IGNITE DMD due to a partial clinical hold. The partial clinical hold related to the number of vials and manufacturing lots utilized per patient, as well as manufacturing processes to support the higher-dose group. The Company has since submitted a response to the FDA and was notified that the partial clinical hold has been resolved.living with these devastating diseases.

In March 2018, the Company announced that IGNITE DMD was placed on full clinical hold following an unexpected serious adverse event reported in the first patient dosed in the clinical trial. The Company has since received a formal clinical hold letter in which the FDA has requested additional information, including an assessment of the etiology of the event, the patient’s clinical status and laboratory parameters, and any additional measures to address patient safety. The Company is finalizing its response to the FDA letter.

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on licenses, protection of proprietary technology, dependence on key personnel, compliance with government regulations and the need to obtain additional financing to fund operations. Product candidates currently under development will require significant additional research and development efforts, including extensive~~pre-clinical~~ preclinical studies and clinical trials and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel infrastructure and extensive compliance and reporting capabilities.

The Company’s ~~product~~ candidates are in development. There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be obtained, that any products developed will obtain necessary government regulatory approval or that any approved products will be commercially viable. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will generate significant revenue from product sales. The Company operates in an environment of rapid change in technology and substantial competition from, among others, other pharmaceutical and biotechnology companies. In addition, the Company is dependent upon the services of its employees, partners and consultants.

~~Initial Public Offering in January 2018~~

On ~~January 30, 2018,~~October 27, 2022, the Company ~~completed~~effected a reverse stock split of its ~~initial public offering with the sale of 8,984,375~~outstanding shares of common stock ~~including~~at a ratio of one-for-15 pursuant to a certificate of amendment to its certificate of incorporation filed with the Secretary of State of the State of Delaware. The reverse stock split was reflected on the Nasdaq Stock Market ("Nasdaq") beginning with the opening of trading on October 28, 2022. Pursuant to the reverse stock split, every 15 shares of the Company's issued and outstanding shares of common stock were automatically combined into one issued ~~upon~~and outstanding share of common stock, without any change in the ~~exercise in full~~par value per share of the ~~underwriters’ over-allotment option, at a public offering price~~common stock. The reverse stock split reduced the authorized number of ~~$16.00~~shares of common stock from 300,000,000 to 20,000,000 and, pursuant to the certificate of amendment, such reduced authorized number of shares of common stock was subsequently multiplied by three, such that following the reverse stock split the Company has 60,000,000 shares of common stock authorized. The reverse stock split affected all issued and outstanding shares of the Company's common stock, and the respective numbers of shares of common stock underlying the Company’s outstanding stock options, outstanding restricted stock units, outstanding warrants and the Company's equity incentive plans were proportionately adjusted. All share and per share ~~resulting~~amounts of the common stock included in ~~net proceeds~~the accompanying condensed consolidated financial statements have been retrospectively adjusted to give effect to the reverse stock split for all periods presented, including reclassifying an amount equal to the reduction in par value to additional paid-in capital.

Basis of ~~$129,096, after deducting underwriting discounts and commissions and offering expenses.~~Presentation

~~Liquidity~~

The accompanying condensed consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business. Through March 31, ~~2018,~~2023, the Company has funded its operations primarily with the proceeds from the ~~private placements~~sale of redeemable preferred units and member units as well as the sale of common stock and prefunded warrants to purchase shares of its ~~recently completed~~common stock in private placements and the sale of common stock in its initial public ~~offering.~~offering, follow-on public offering in March 2021 and under its at-the-market sales agreement.

On September 29, 2022, the Company entered into a securities purchase agreement, pursuant to which, on December 2, 2022, the Company issued an aggregate of 10,638,290 shares of the Company’s common stock in a private placement. The private placement closed immediately following the closing of the Acquisition on December 2, 2022. The Company received net proceeds from the private placement of $72,551.

In accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern, the Company has ~~incurred recurring losses from operations since its inception, including~~evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a ~~net loss of $15,877 and $13,875 for~~going concern within one year after the ~~three months ended March 31, 2018 and 2017, respectively. In addition, as~~date the financial statements are issued. As of March 31, ~~2018,~~2023, the Company had an accumulated deficit of ~~$140,135.~~$592,808. During the three months ended March 31, 2023, the Company incurred a net loss of $30,070 and the Company used $27,995 of cash in operations. The Company expects to continue to generate operating losses ~~for~~in the foreseeable future.

~~As of March 31, 2018,~~ Based upon its current operating plan, the Company ~~had cash, cash equivalents andavailable-for-sale~~ ~~securities of $182,382. The Company believes~~expects that its cash, cash equivalents andavailable-for-sale securities of $185,509, excluding restricted cash of $1,833, as of March 31, ~~2018~~2023, will ~~enable it~~be sufficient to fund its operating expenses and capital expenditure requirements ~~through~~for at least ~~the next 12~~twelve months from the date of issuance of these financial statements.

~~To execute its business plans,~~However, the Company ~~will need substantial funding~~has based this estimate on assumptions that may prove to ~~support~~be wrong, and its ~~continuing operations and pursue its growth strategy. Until~~operating plan may change as a result of many factors currently unknown to it. As a result, the Company ~~can generate significant revenue from product sales, if ever,~~could deplete its capital resources sooner than it currently expects. The Company expects to finance its ~~operations~~future cash needs through ~~the sale~~a combination of ~~public or private~~ equity offerings, debt financings, collaborations, strategic alliances or other capital sources, potentially including collaborations with other companies or other strategic transactions. The Company may not be able to obtain financing on acceptable terms, or at all. Even if the Company is able to secure financing, the terms of any financing may adversely affect the holdings or the rights of the Company’s stockholders.licensing arrangements. If the Company is unable to obtain funding, the Company ~~could~~would be forced to delay, reduce or eliminate some or all of its research and development programs,~~pre-clinical~~ preclinical and clinical testing or commercialization efforts, which could adversely affect its business prospects. Although management continues to pursue these plans, there is no assurance that the Company will be successful in obtaining sufficient financing on terms acceptable to the Company to fund continuing operations, if at all.

~~Merger and Recapitalization in March 2017~~

The Company had historically owned 100% of the voting units of its wholly owned subsidiary, Solid GT, LLC (“Solid GT”), and the results of Solid GT are included in the Company’s condensed consolidated financial statements. In November 2015, Solid GT issued voting units to new investors which decreased the Company’s voting ownership in Solid GT to 77%. The Company continued to consolidate the results of Solid GT into its financial statements as the Company owned a majority voting interest in Solid GT and directed the activities of Solid GT. However, because the Company controlled but owned less than 100% of Solid GT, the Company recorded a~~non-controlling~~ ~~ownership interest at its fair value at inception and recognizes the net loss or profit attributable tonon-controlling~~ ~~interests in the condensed consolidated statements of operations based on a profit and loss sharing arrangement between the Company and thenon-controlling~~ ~~interests. The Company also presents the change in equity related to equity-based compensation issued to Solid GT employees by Solid GT innon-controlling~~ ~~interest.~~

~~On March 29, 2017, the Company merged the operations of Solid GT into the Company and Solid GT ceased to exist as a legal entity. The proportionate share of the loss attributed to thenon-controlling~~ ~~interest amounted to $1,060 for the three months ended March 31, 2017. There was no loss attributed to thenon-controlling~~ ~~interest for the three months ended March 31, 2018 since the merger was completed on March 29, 2017. See Note 3,~~~~Merger and Recapitalization~~~~, for additional information.~~

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned or controlled subsidiaries. All intercompany accounts and transactions have been eliminated.

In the opinion of management, the Company’s accompanying unaudited condensed consolidated financial statements ~~(condensed consolidated financial statements)~~ include all adjustments, consisting of normal recurring accruals, necessary for a fair ~~presentation~~statement of the Company’s financial statements for interim periods in accordance with GAAP. The information included in this quarterly report onForm 10-Q should be read in conjunction with the Company’s consolidated financial statements and the accompanying notes included in the Company’s Annual Report onForm 10-K for the year ended December 31, ~~2017.~~2022. The year-end condensed consolidated balance sheet data presented for comparative purposes was derived from the Company’s audited financial statements but does not include all disclosures required by GAAP. The results of operations for the three months ended March 31, ~~2018~~2023 are not necessarily indicative of the operating results for the full year or for any other subsequent interim period.

2. Summary of Significant Accounting Policies

The Company’s accounting policies are described in the “Notes to Consolidated Financial Statements” in its Annual Report on Form 10-K for the year ended December 31, 2022 and updated, as necessary, in this report.

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, estimates related to revenue recognition, the recognition of research and development expenses and equity-based compensation. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from the Company’s estimates.

The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations and financial condition, including clinical trials and employee-related amounts, will depend on future developments that are highly uncertain, including new information that may emerge concerning COVID-19 and the actions taken to containit or treat its impact. The Company has made estimates of the impact of COVID-19 within its financial statements and there may be changes to those estimates in future periods. Actual results could differ from the Company’s estimates.

Cash Equivalents

The Company considers all short-term, highly liquid investments with original maturities of 90 days or less at acquisition date to be cash equivalents.

Restricted Cash

The Company held restricted cash of ~~$302~~$1,833 in ~~separate~~a restricted bank ~~accounts~~account as a security ~~deposits~~deposit for ~~the~~a lease of the Company’s facilities as of March 31, ~~2018.~~2023 and December 31, 2022. The Company has included restricted cash of ~~$65~~$1,833 classified as ~~a current asset and restricted cash of $237 as a~~non-current ~~asset~~ assets as of March 31, ~~2018.~~2023 and December 31, 2022. A reconciliation of the amounts of cash and cash equivalents and restricted cash from the cash flow statement to the balance sheet is as follows:


	March 31, 2023		December 31, 2022		March 31, 2022		December 31, 2021
Cash and cash equivalents as presented on balance sheet	$	164,649	$	155,384	$	129,711	$	119,136
Restricted cash, non-current, as presented on balance sheet		1,833		1,833		2,070		2,070
Cash and cash equivalents and restricted cash as presented on cash flow statement	$	166,482	$	157,217	$	131,781	$	121,206

Leases

In June 2021, the Company entered into a lease with Hood Park LLC (“Landlord”), pursuant to which the Company leases approximately 49,869 square feet of office, laboratory, research and development and manufacturing space located in Charlestown, Massachusetts (“Premises”). The Company ~~held restricted cash~~relocated its corporate headquarters to the Premises in June 2022. The initial term of ~~$65~~the lease commenced in June 2022 when the construction of the lessor assets was substantially completed and continues for a ~~separate restricted bank account~~ten-year period, unless earlier terminated. The lease provides the Company with an option to extend the lease for an additional five-year term. The Company and the Landlord were each obligated to undertake certain improvements prior to the commencement of the lease, and significant improvements were completed as of June 2022. The monthly lease payment is approximately $305 with annual escalation of approximately 3%. The lease includes a $10,223 construction allowance. The Company was required to post a customary letter of credit in the amount of $1,833, subject to decrease on a set schedule, as a security deposit ~~for~~pursuant to the ~~lease of~~lease.

During the ~~Company’s facility as of~~year ended December 31, ~~2017. The Company has included the restricted cash of $65 as a current asset as of December 31, 2017.~~

~~Available-for-Sale~~ ~~Securities~~

~~Available-for-sale~~ securities consist of investments with original maturities greater than 90 days at acquisition date. The Company has classified its investments with maturities beyond one year as short term, based on their highly liquid nature and because such~~available-for-sale~~ ~~securities represent the investment of cash that is available for current operations.~~

~~The Company classifies all of its investments asavailable-for-sale~~ ~~securities. The Company’s investments are measured and reported at fair value using quoted prices in active markets for similar securities. Unrealized gains and losses onavailable-for-sale~~ debt securities are reported as a separate component of stockholders’ equity. The cost of securities sold is determined on a specific identification basis, and realized gains and losses are included in other income (expense) within the condensed consolidated statement of operations. If any adjustment to fair value reflects a decline in the value of the investment that2022, the Company ~~considers~~recorded a failed sales-leaseback transaction related to be “other than temporary,” the Company reduces the investment to fair value through a charge to the condensed consolidated statement of operations. No such adjustments were necessary during the periods presented.

~~Concentration of Credit Risk and of Significant Suppliers~~

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents. Periodically, the Company maintains deposits in accredited financial institutions in excess of federally insured limits.certain lab equipment. The Company maintains each of its cash balances with high-quality and accredited financial institutions and accordingly, such funds are not exposed to significant credit risk. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

~~The Company is dependent on third-party manufacturers to supply products for research and development activities of its programs, including clinical andpre-clinical~~ ~~testing. These programs could be adversely affected by a significant interruption in the supply of such drug substance products.~~

~~Fair Value Measurements~~

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

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

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

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

~~The Company’s cash equivalents andavailable-for-sale~~ ~~securities are carried at fair value, determined according to the fair value hierarchy described above. See Note 4,~~~~Fair Value of Financial Assets and Liabilities~~, for additional information. The carrying values of the Company’s accounts payable and accrued expenses and other current liabilities approximate their fair value due to the short-term nature of these liabilities.

~~Equity-Based Compensation~~

Company's consolidated balance sheets within financing labilities. In connection with ~~the completion of the Company’s initial public offering,~~this transaction, the Company adopted the 2018 Omnibus Incentive Plan, which provides for the issuance of share-based awards, including options to purchase common stock. The 2018 Omnibus Incentive Plan provides for the awarding of up to 5,001,000 shares of common stock for equity awards.

The Company measures all stock options and other stock-based awards granted to employees and directors based on the fair value on the date of the grant and recognizes compensation expense of those awards, over the requisite service period, which is generally the vesting period of the respective award. Forfeitures are accounted for as they occur. The Company applies the straight-line method of expense recognition to all awards with only service-based vesting conditions. The Company has not issued any awards with performance-based vesting conditions.

~~For stock-based awards granted tonon-employees,~~ ~~compensation expense is recognized over the period during which services are rendered by suchnon-employees~~ until completed. At the end of each financial reporting period prior to the completion of the service, the fair value of these awards is remeasured using the then-current fair value of the Company’s common stock and updated assumption inputs in the Black-Scholes option-pricing model.

~~The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company historically has been~~also recorded a private company and lacks company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. For options with service-based vesting conditions, the expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The expected term of stock options granted to~~non-employees~~ is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash ~~dividends and does not expect to pay any cash dividends in the foreseeable future.~~

~~Through January 25, 2018, the Company granted restricted common units to employees, directors andnon-employees.~~ ~~In connection with the Company’s Corporate Conversion on January 25, 2018, all restricted common units were converted to restricted shares of common stock.~~

The Company measures restricted common stock granted to employees and directors based on the fair value on the date of grant and recognizes compensation expense of those awards over the requisite service period, which is generally the vesting period of the respective award. Forfeitures are accounted for as they occur. The Company generally issued restricted common stock with only service-based vesting conditions and records the expense for these awards using the straight-line method. The Company has not issued any awards with performance-based vesting conditions.

~~The Company measured restricted common stock awards granted to consultants andnon-employees~~ ~~based on the fair value of the award on the date of grant. Compensation expense is recognized over the period during which services are rendered by such consultants andnon-employees~~ until completed. At the end of each financial reporting period prior to completion of the service, the fair value of unvested awards is remeasured using the then-current fair value of the Company’s common stock.

The Company classifies stock-based compensation expense in its condensed consolidated statement of operations and comprehensive loss in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified.

~~Income Taxes~~

~~Income taxes are accounted for~~inflow within financing activities under the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets andproceeds from financing liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company records valuation allowances to reduce deferred income tax assets to the amount that is more likely than not to be realized. The Company determines whether it is more likely than not that a tax position will be sustained upon examination. If it is not more likely than not that a position will be sustained, no amount of benefit attributable to the position is recognized. The tax benefit to be recognized of any tax position that meets the more likely than not recognition threshold is calculated as the largest amount that is more than 50% likely of being realized upon resolution of the contingency.$2,143.

Prior to the January 25, 2018, the Company had not been subject to U.S. federal income taxes as the Company was organized as a limited liability company. As such, the taxable income or loss was passed through to and included in the tax returns of the members. Since January 25, 2018, the Company’s income has since been subject to U.S. federal, state, local, and foreign income taxes and taxed at the prevailing corporate tax rates.

Segment Data

The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions. The Company’s singular focus is on developing treatments through gene therapy and other means for patients with ~~DMD.~~neuromuscular and cardiac diseases. All of the Company’s tangible assets are held in the United States.

Related Parties

~~Comprehensive Loss~~In November 2020, the Company entered into a consulting agreement with Danforth Advisors, LLC ("Danforth"), an affiliate of Stephen DiPalma, who previously served as the Company’s interim chief financial officer. Pursuant to the consulting agreement, Danforth provided the Company with the chief financial officer services of Mr. DiPalma, and other services, including financial planning, offering support and accounting services, in exchange for fees payable to Danforth based on hourly rates. The Company has paid Danforth $517 and $235 for the three months ended March 31, 2023 and 2022, respectively. In accordance with the consulting agreement, in November 2020, the Company issued to Danforth a warrant to purchase 2,000 shares of the Company’s common stock at an exercise price per share of $49.35. As of December 31, 2022, the shares had vested in full.

3. Collaborations

Ultragenyx Collaboration

Collaboration Agreement

On October 22, 2020 (the “Effective Date”), the Company entered into the Collaboration Agreement with Ultragenyx to focus on the development and commercialization of new gene therapies for Duchenne. The Company granted Ultragenyx an exclusive worldwide license for any pharmaceutical product that expresses the Company’s proprietary microdystrophin construct from AAV8 and variants thereof in clade E for the treatment of Duchenne and other diseases resulting from the lack of functional dystrophin (the “Licensed Products”). The Company retains exclusive rights to all other uses of its microdystrophin proteins, including under its existing SGT-001 and SGT-003 programs.

The Company has conducted certain research and development activities with respect to the development of the Licensed Products, and concluded such activities as were contemplated under the Collaboration Agreement during the second quarter of 2022, resulting in the recognition of the remaining deferred revenue recorded at the time the Collaboration Agreement was executed, related to the upfront payment received from Ultragenyx. The Company may conduct additional research and development activities in collaboration with Ultragenyx from time to time in the future. Ultragenyx reimbursed the Company for personnel and out-of-pocket costs that the Company incurred in conducting such activities.

In addition, Ultragenyx granted to the Company an exclusive Development Option or Income Share Option (each as defined and described below) exercisable in the Company’s sole discretion one time per Licensed Product. After the date of first achievement of clinical proof of concept, Ultragenyx will provide to the Company a data package with respect to the relevant Licensed Product. The Company will use the data package to determine whether to exercise the corresponding Development Option or Income Share Option with respect to such Licensed Product.

With respect to each Licensed Product for which the Company has not exercised the Development Option or Income Share Option the Company will be entitled to milestone payments of up to $25,000 in the aggregate for each such Licensed Product that achieves specified development milestones and $65,000 in the aggregate for each such Licensed Product that achieves specified regulatory milestones. With respect to each Licensed Product for which the Company has not exercised the Income Share Option, the Company will also be entitled to milestone payments of up to $165,000 in the aggregate for each Licensed Product that achieves specified annual worldwide net ~~loss,~~sales milestones. For Licensed Products for which the Company has not exercised the Development Option or Income Share Option, Ultragenyx will pay the Company tiered royalties on a Licensed Product-by-Licensed Product and country-by-country basis ranging from a low double-digit percentage to a mid-teens percentage based on Ultragenyx’s annual worldwide net sales of such Licensed Products.

For each Licensed Product for which Ultragenyx decides to initiate a registrational trial in humans, the Company will have the option to fund 30% of the development costs in the United States and European Union for such Licensed Product and forgo the development and regulatory milestones (the “Development Option”) and receive tiered royalties on a Licensed Product-by-Licensed Product and country-by-country basis ranging from a mid-teens percentage to a low twenties percentage based on Ultragenyx’s annual worldwide net sales of each such Licensed Product.

For each Licensed Product for which the Company exercises the Development Option, the Company may also elect to share 30% of the net income and net losses on net sales of such Licensed Product in the United States and European Union (the “Income Share Option”). For Licensed Products for which the Company has exercised the Income Share Option, the Company will not be entitled to milestone payments and Ultragenyx will pay the Company tiered royalties on a Licensed Product-by-Licensed Product and country-by-country basis ranging from a mid-teens percentage to a low twenties percentage based on Ultragenyx’s annual net sales of each such Licensed Product outside of the United States and European Union.

The Company may only exercise an Income Share Option if neither the Company nor any of its affiliates is then developing or commercializing a product that is competitive with the Licensed Product that is subject to such option. If the Company or any of its affiliates subsequently develops or commercializes a product that is competitive with a Licensed Product for which the Company has exercised an Income Share Option, then the Company and Ultragenyx will no longer share the net income and net losses on net sales of such Licensed Product and such Licensed Product will be treated as ~~well~~if the Company had exercised the Development Option with respect to such Licensed Product.

Following the Company’s exercise of the Development Option or Income Share Option with respect to a Licensed Product, the Company also has the right to cease participation in the sharing of development costs and sharing in net income and net losses on net sales, as applicable, for such Licensed Product by written notice to Ultragenyx. Upon such notice, the Company will no longer share in the development costs and net income and net losses on net sales of such Licensed Product, as applicable, and will be eligible to receive payments on milestones achieved after the opt-out for such Licensed Product and royalties at the rates applicable to Licensed Products for which the Company has not exercised the Development Option or Income Share Option, as described above.

The Collaboration Agreement continues on a country-by-country and Licensed Product-by-Licensed Product basis until the expiration of all payment obligations under the agreement. With respect to any Licensed Product for which the Company has exercised an Income Share Option, the Collaboration Agreement continues until there are no longer sales of such Licensed Product in the United States or Europe. Either party has the right to terminate the agreement if the other ~~changes~~party has materially breached in ~~stockholders’/members’ equity/(deficit)~~the performance of its obligations under the agreement and such breach has not been cured within the applicable cure period. Ultragenyx may also terminate the Collaboration Agreement in its sole discretion upon 90 days’ prior written notice to the Company.

Stock Purchase Agreement

In connection with the execution of the Collaboration Agreement, Ultragenyx and the Company also entered into a stock purchase agreement (the “Stock Purchase Agreement”) on the Effective Date, pursuant to which the Company issued and sold 521,719 shares of its common stock (the “Shares”) to Ultragenyx at a price of $76.6695 per share for an aggregate purchase price of approximately $40,000. The Stock Purchase Agreement contains customary representations, warranties and covenants of each of the parties thereto. Following the sale of the Shares, Ultragenyx beneficially owned approximately 14.45% of the Company’s outstanding common stock. As of March 31, 2023, Ultragenyx beneficially owned approximately 2.7% of the Company’s outstanding common stock.

Investor Agreement

In connection with the consummation of the transactions contemplated by the Stock Purchase Agreement, the Company and Ultragenyx entered into an Investor Agreement (the “Investor Agreement”) on the Effective Date. Pursuant to the terms of the Investor Agreement, Ultragenyx agreed that, ~~result~~so long as it holds at least 10% of the Company’s outstanding common stock, the Shares will be subject to a voting agreement, such that until the earliest to occur of certain specified events, and subject to specified conditions, Ultragenyx will, and will cause its permitted transferees to, vote in accordance with the recommendation of the Company’s Board of Directors with respect to specified matters.

Accounting Treatment

The Company concluded that the Collaboration Agreement and the Stock Purchase Agreement should be combined and treated as a single arrangement for accounting purposes as the agreements were entered into contemporaneously and in contemplation of one another.

The Company assessed this arrangement in accordance with ASC 606 and concluded that the contract counterparty, Ultragenyx, is a customer. The Company identified the following promises in the Collaboration Agreement that were evaluated under the scope of ASC 606: (1) an exclusive worldwide license to the Licensed Products; (2) an obligation to perform research and development services; and (3) an obligation to participate in a joint steering committee. The Company assessed the promised goods and services to determine if they are distinct. Based on this assessment, the Company determined that Ultragenyx cannot benefit from ~~transactions~~the promised goods and ~~economic events other than those with stockholders~~services separately from the others as they are highly interrelated and ~~members.~~therefore not distinct. Due to the early stage of the Licensed Products, the research and development services could not be performed by another party. The Company’s ~~only element~~skill-set, knowledge and expertise are required to conduct the research and development services and the research and development services are expected to involve significant further development of ~~other comprehensive income (loss) in all periods presented was unrealized gains (losses) fromavailable-for-sale~~ ~~securities.~~the Licensed Products. Accordingly, the promised goods and services represent one combined performance obligation and the entire transaction price will be allocated to that single combined performance obligation.

~~Net Loss per Share~~

The Company ~~follows~~determined the ~~two-class~~transaction price under ASC 606 at the inception of the Collaboration Agreement to be $22,513, which represents the excess proceeds from the equity investment under the Stock Purchase Agreement, when measured at fair value after taking into consideration a discount for lack of marketability, plus the estimated reimbursement of research and development costs, which represents variable consideration. The Company included the estimated reimbursement of research and development costs in the transaction price at the inception of the arrangement because the Company is required to perform research and development services and the contract requires Ultragenyx to reimburse the Company for costs incurred. Also, since the related revenue would be recognized only as the costs are incurred, the Company determined it is not probable that a significant reversal of cumulative revenue would occur. The Company evaluated how much variable consideration related to development and regulatory milestones, and the Company’s potential exercise of its Development Option or Income Share Option per Licensed Product, to include in the transaction price using the most likely amount approach and concluded that no amount should be included in the transaction price due to the high degree of uncertainty and risk associated with these potential payments. The Company also determined that royalties and sales milestones relate solely to the license of intellectual property and are therefore excluded from the transaction price under the sales- or usage-based royalty exception of ASC 606. Revenue related to these royalties and sales milestones will only be recognized when the associated sales occur, and relevant thresholds are met.

The Company determined that revenue under the Collaboration Agreement should be recognized over time as Ultragenyx simultaneously receives the benefit from the Company as the Company performs under the single performance obligation over time. The Company will recognize revenue for the single performance obligation using a cost-to-cost input method ~~when computing net loss per share,~~ as the Company has ~~issued shares that meet~~concluded it best depicts the ~~definition~~research and development and joint steering committee participation services performed. Under this method, the transaction price is recognized over the contract’s entire performance period, using costs incurred relative to total estimated costs to determine the extent of ~~participating securities. The two-class method determines net loss per share for each class~~progress towards completion.

During the three months ended March 31, 2023 and March 31, 2022, the Company recognized $0 and $1,925 of ~~common~~related party collaboration revenue, respectively, associated with its collaboration with Ultragenyx related to research and ~~participating~~

~~securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common stockholders for~~development services performed during the period and the corresponding cost reimbursement receivable.

As of March 31, 2023 and December 31, 2022, there was $0 of deferred revenue related to the Collaboration Agreement. Additionally, as of March 31, 2023 and December 31, 2022, there was $0 of related party collaboration receivables related to reimbursable costs expected to be ~~allocated between common~~received from Ultragenyx for research and ~~participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed.~~development services performed.

Basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted net loss attributable to common stockholders is computed by adjusting net loss attributable to common stockholders to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted net loss per share attributable to common stockholders is computed by dividing the diluted net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period, including potential dilutive shares of common stock assuming the dilutive effect of common stock equivalents.

The Company’s preferred stock contractually entitles the holders of such shares to participate in dividends but does not contractually require the holders of such shares to participate in losses of the Company. Accordingly, in periods in which the Company reports a net loss, such losses are not allocated to such participating securities. In periods in which the Company reports a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders, since dilutive shares of common stock are not assumed to have been issued if their effect is anti-dilutive.

~~Contingencies~~

Loss contingency provisions are recorded if the potential loss from any claim, asserted or unasserted, or legal proceeding is considered probable and the amount can be reasonably estimated or a range of loss can be determined. These accruals represent the Company’s best estimate of probable loss. Disclosure also is provided when it is reasonably possible that a loss will beCosts incurred or when it is reasonably possible that the amount of a loss will exceed the recorded provision. The Company reviews the status of each significant matter and assesses its potential financial exposure. Significant judgment is required in both the determination of probability and the determination as to whether an exposure is reasonably estimable. Because of uncertainties related to these matters, accruals are based only on the best information available at the time. As additional information becomes available, the Company reassesses the potential liability related to pending claims and may change its estimates. These changes in the estimates of the potential liabilities could have a material impact on the Company’s condensed consolidated results of operations and financial position.

~~Recently Adopted Accounting Pronouncements~~

~~In May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)2017-09,~~~~Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting~~~~(“ASU2017-09”).~~ ~~ASC2017-09~~ ~~provides guidance about which changes~~relating to the ~~terms or conditions~~Collaboration Agreement consist of ~~a share-based payment award require an entity to apply modification accounting~~internal and external research and development costs, which primarily include salaries and benefits, lab supplies, preclinical research studies, clinical studies, consulting services, and commercial development. These costs are included in ~~Topic 718. The Company adopted this standard in the first quarter of 2018~~research and ~~its adoption did not have any impact on the Company’s condensed consolidated financial statements.~~

~~In November 2016, the FASB issued ASU2016-18,~~~~Statement of Cash Flows~~ ~~(“ASU2016-18”),~~ which requires that amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents. The Company adopted this standard in the first quarter of 2018 and its adoption resulted in the inclusion of restricted cash in total cash and cash equivalents in the determination of changes in cash and cash equivalentsdevelopment expenses in the Company’s condensed consolidated ~~statements~~statement of operations during the three months ended March 31, 2023 and three months ended March 31, 2022.

4. Acquisition

On September 29, 2022, the Company entered into an Agreement and Plan of Merger with AavantiBio. The Acquisition closed on December 2, 2022 and was announced on December 5, 2022. This acquisition allowed the Company to add to its pipeline of assets. The Company acquired AavantiBio for a total purchase price of $9,169, including (i) $1 in cash ~~flows.~~and (ii) 1,354,258 shares of its common stock, par value $0.001 per share, with a fair value of $9,168 to AavantiBio equityholders. The ~~presentation of restricted cash on the condensed consolidated balance sheet remains the same.~~

~~A reconciliation~~price per share of the ~~amounts from the cash flow statement to the balance sheet is as follows:~~

   March 31,
2018    March 31,
2017
Cash and cash equivalents as presented on balance sheet
   $ 164,773    $ 29,266
Restricted cash, current, as presented on balance sheet
   65    —
Restricted cash, non-current, as presented on balance sheet
   237    165




Cash and cash equivalents and restricted cash as presented on cash flow statement
   $ 165,075    $ 29,431

~~In August 2016, the FASB issued ASU2016-15,~~~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments~~ ~~(“ASU2016-15”).~~ ~~ASU2016-15~~ ~~reduces diversity in practice by providing guidance on the classification of certain cash receipts and payments~~Company’s common stock used in the ~~statement~~calculation of ~~cash flows. ASU2016-15~~ ~~clarifies that when cash receipts and cash payments have aspects of more than one class of cash flows and cannot be separated, classification will depend on~~ the ~~predominant source or use. ASU2016-15~~purchase price is effective on a retrospective basis. The Company adopted this standard in the first quarter of 2018 and the adoption of this standard did not have a material impact on the Company’s condensed consolidated statements of cash flows.

~~Recently Issued Accounting Pronouncements~~

~~In February 2016, the FASB issuedASU 2016-02,~~~~Leases (Topic 842)~~~~(“ASU2016-02”),~~ which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the ~~principle~~closing price of ~~whether or not~~Solid’s common stock on the ~~lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based~~Nasdaq Global Select Market on ~~an effective interest method or on a straight-line basis over the term of the lease, respectively. A lessee is also required to record aright-of-use~~ asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. ASU~~2016-02~~ ~~supersedes the previous leases standard, ASC 840,~~~~Leases~~December 2, 2022, which was $6.77.

The standard is effective for public entities for annual periods beginning after December 15, 2018 and for interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU~~2016-02~~ ~~will have on its condensed consolidated financial statements.~~

~~3. Merger and Recapitalization~~

On March 29, 2017, Solid Biosciences, LLC completed a series of transactions, which included the issuance of Series 1 Senior Preferred Units pursuant to the Senior Preferred Unit Purchase Agreement (the “Senior Preferred Unit Purchase Agreement”) and the merger of Solid GT into Solid Biosciences, LLC pursuant to the merger agreement between Solid Biosciences, LLC and Solid GT (the “Merger Agreement”), collectively referred to as the “Merger and Recapitalization.” As part of the Merger and Recapitalization, Solid Biosciences, LLC (a) issued 2,500,000 Series 1 Senior Preferred Units to new investors at $10.00 per unit resulting in gross proceeds to Solid Biosciences, LLC of $25,000, (b) merged operations of Solid GT into Solid Biosciences, LLC, effected through the exchange of Solid GT units held by~~non-controlling~~ interests of Solid Biosciences, LLC into new classes Solid Biosciences, LLC units, and (c) exchanged existing Redeemable Preferred Units and Series A Common Units of Solid Biosciences, LLC into new units. The details of each component of the Merger and Recapitalization are as follows:

~~(a) Issuance of Series 1 Senior Preferred Units~~

Pursuant to the Senior Preferred Unit Purchase Agreement, Solid Biosciences, LLC issued 2,500,000 Series 1 Senior Preferred Units to new investors at $10.00 per unit resulting in gross proceeds to Solid Biosciences, LLC of $25,000.

~~(b) Merger of Solid GT into Solid Biosciences, LLC~~

~~Prior to the Merger and Recapitalization, Solid Biosciences, LLC issued Class BNon-Voting~~ ~~and Class D Voting Units of Solid GT to holders which representnon-controlling~~ ~~interests of Solid Biosciences, LLC. On March 29, 2017, in connection with the Merger and Recapitalization, thenon-controlling~~ ~~interests were eliminated as follows:~~

~~50,000 Class BNon-Voting~~ ~~Units of Solid GT (“Solid GT Class B Units”) were exchanged for 1,635,916 Series C Common Units of Solid Biosciences, LLC; and~~

~~134,920 Class D Voting Units of Solid GT (“Solid GT Class D Units”) were exchanged for 4,414,356 Junior Preferred Units of Solid Biosciences, LLC.~~

~~In addition, the Class CNon-Voting~~ Units of Solid GT (“Solid GT Class C Restricted Units”) were exchanged for Series D Common Units of Solid Biosciences, LLC. The Solid GT Class C Restricted Units were held by employees and consultants of Solid GT.

~~Since there was no change in control in connection with the Solid GT merger, the exchange of Solid GT Class B Units, Class C Restricted Units and Class D Units~~Acquisition was accounted for as ~~an equity transaction. In addition, because Solid GT Class D Units represented preferred units with preference over~~a business combination in which the ~~other classes~~Company, as the accounting acquirer, recorded the assets acquired and liabilities assumed from AavantiBio at their fair values as of ~~Solid GT Units,~~ the ~~difference between~~acquisition date. The Company recognized a gain on the ~~carrying~~purchase of AavantiBio of $18,236 as the net assets acquired of $27,405 were greater than the purchase price of $9,169. Prior to recognizing the gain, the Company reassessed the measurement and recognition of identifiable assets acquired, and liabilities assumed and concluded that the valuation procedures and resulting measures were appropriate, in all material respects. The Company believes that its ability to negotiate a purchase price lower than the fair market value of the ~~Solid GT Class D Units~~acquired net assets was due to a combination of factors, including the then prevailing market conditions and the uncertain future macroeconomic environment. The Company believes the seller, as a smaller, less well capitalized company, was motivated to complete the transaction under the terms described above as growing economic uncertainty and a rising interest rate environment negatively impacted their ability to raise additional capital.

The Company incurred acquisition related costs of $0 for three months ended March 31, 2023.

The fair value was determined utilizing the fair value hierarchy as described in Note 2 and Note 5 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022.

The following table summarizes the fair values of ~~Junior Preferred Units was recorded as a deemed dividend in members’ deficit, which impacted~~the assets acquired and liabilities assumed from AavantiBio at the acquisition date.


	December 2, 2022
Assets
Current assets:
Cash and cash equivalents	$	31,524
Prepaid expenses and other current assets		403
Total current assets		31,927
Operating lease, right-of-use asset		1,027
Property and equipment		2,765
Other non-current assets		23
Total assets	$	35,742
Liabilities
Current liabilities:
Accounts payable	$	3,575
Accrued expenses		3,634
Operating lease liabilities		778
Total current liabilities		7,987
Operating lease liabilities, excluding current portion		350
Total liabilities		8,337
Net assets acquired		27,405
Total consideration paid		9,169
Gain on acquisition of business	$	18,236

For the period from December 3, 2022 to December 31, 2022, AavantiBio's revenue and net loss ~~attributable~~before taxes included within the consolidated statement of operations subsequent to ~~common unitholders.~~

~~(c) Exchange~~the closing of ~~Solid Biosciences, LLC existing Redeemable Preferred Units~~the Acquisition was $0 and ~~Series A Common Units~~$6,041, respectively.

~~In connection with the Merger and Recapitalization, Solid Biosciences, LLC exchanged its existing Redeemable Preferred Units and Series A Common Units as follows:~~13

~~The table below displays thepre-merger~~ ~~and post-merger capitalization structure of Solid Biosciences, LLC:~~

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


	Fair Value Measurements as of March 31, 2023 Using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	—	$	110,937	$	—	$	110,937
Available-for-sale securities		—		20,860		—		20,860
	$	—	$	131,797	$	—	$	131,797

As ofMarch 31, ~~2018~~2023 and December 31, ~~2017,~~2022, the fair values of the Company’s~~available-for-sale~~ ~~debt securities, which consisted of U.S. government agency securities~~ cash equivalents and ~~corporate bond~~available-for-sale securities were determined using Level 2 inputs. During the three months ended March 31, ~~2018~~2023 and the year ended December 31, ~~2017,~~2022, there were notransfersbetween Level 1, Level 2 and Level 3.

The fair value of the Company’s cash, restricted cash, accounts payable, and accrued expenses and other current liabilities approximate their carrying value due to their short-term maturities.

6. Available-for-Sale Securities

As of March 31, ~~2018 and December 31, 2017,~~2023, the fair value ofavailable-for-sale securities by type of security was as follows:


	March 31, 2018									March 31, 2023
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value		Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
Investments:
U.S. government agency securities	$	10,475	$	—	$	(9	)	$	10,466
Treasury bills										$	19,989	$	5	$	—	$	19,994
Corporate bond securities		7,157		—		(14	)		7,143		866		—		—		866
										$	20,855	$	5	$	—	$	20,860
	$	17,632	$	—	$	(23	)	$	17,609

   December 31, 2017
   Amortized
Cost    Gross
Unrealized
Gain    Gross
Unrealized
Loss    Fair
Value
Investments:

U.S. government agency securities
   $ 9,473    $ —      $ (7 )    $ 9,466
Corporate bond securities
   7,554    —      (6 )    7,548








   $ 17,027    $ —      $ (13 )    $ 17,014








As of December 31, 2022, the fair value of available-for-sale securities by type of security was as follows:


	December 31, 2022
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
Investments:
Treasury bill	$	34,780	$	—	$	(30	)	$	34,750
Corporate bond securities		23,626		—		(38	)		23,588
	$	58,406	$	—	$	(68	)	$	58,338

The estimated fair value and amortized cost of the Company’savailable-for-sale securities as of March 31, 2023 by contractual maturity are summarized as follows:


	March 31, 2018				December 31, 2017				March 31, 2023
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	17,632	$	17,609	$	17,027	$	17,014	$	20,855	$	20,860

Totalavailable-for-sale securities	$	17,632	$	17,609	$	17,027	$	17,014	$	20,855	$	20,860

The weighted average maturity of the Company’savailable-for-sale securities as of March 31, ~~2018~~2023 was approximately 0.5 years.

The estimated fair value and amortized cost of the Company’s available-for-sale securities as of December 31, ~~2017~~2022 by contractual maturity are summarized as follows:


	December 31, 2022
	Amortized Cost		Fair Value
Due in one year or less	$	58,406	$	58,338
Total available-for-sale securities	$	58,406	$	58,338

The weighted average maturity of the Company’s available-for-sale securities as of December 31, 2022 was approximately ~~0.4~~0.5 years.

6.7. Property and Equipment

Property and equipment consists of the following:


	March 31, 2018		December 31, 2017		March 31, 2023		December 31, 2022
Furniture and fixtures	$	66	$	61	$	936	$	868
Laboratory equipment		2,682		2,338		15,372		16,416
Leasehold improvements		84		68		440		384
Computer equipment		166		77		677		677
Computer software		23		23		553		553
Construction in process		2,128		366		1,486		1,715
						19,464		20,613
		5,149		2,933
Less accumulated depreciation		731		504		10,857		10,956
					$	8,607	$	9,657
	$	4,418	$	2,429

Depreciation expense was ~~$227~~$703 and ~~$51~~$709 for the three months ended March 31, ~~2018~~2023 and ~~2017,~~2022, respectively. During the three months ended March 31, 2023 and 2022, the Company recognized an impairment loss of $374 and $0, respectively.

11. Equity-Based Compensation

~~2018 Omnibus Incentive Plan~~

In connection with the closing of the Company’s initial public offering, the ~~board~~Board of ~~directors~~Directors and stockholders approved the 2018 Omnibus Incentive Plan (the “2018 Plan”), which provides for the reservation of ~~5,001,000~~333,400 shares of common stock for equity awards. ~~The following table summarizes~~On June 16, 2020, the Company’s stockholders approved the 2020 Equity Incentive Plan (as amended or restated, the “2020 Plan”) which consisted of, at the time of approval (i) 200,000 shares of common stock ~~option activity~~and (ii) additional shares of common stock (up to 325,268) as is equal to (i) the number of shares reserved under the 2018 Plan that remain available for grant under the 2018 Plan as of immediately prior to the date the 2020 Plan was approved by the Company’s stockholders and (ii) the number of shares subject to awards granted under the 2018 Plan which awards expire, terminate or are otherwise surrendered, cancelled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right. As of the effective date of the 2020 Plan, no further awards will be made under the 2018 Plan. Any options or awards outstanding under the 2018 Plan remain outstanding and effective and are governed by their existing terms. In June 2021, the Company’s stockholders approved an amendment to the 2020 Plan to reserve an additional 466,666 shares of common stock for issuance under the plan. On December 1, 2022, the Company's stockholders approved an amendment and restatement of the 2020 Plan to (i) increase the number of shares of common stock reserved for issuance under the plan by 866,666 shares to 1,533,333 shares, subject to adjustment in the event of stock splits and other similar events, (ii) provide for an annual increase, to be added on the first day of each fiscal year during the term of the plan, beginning with the fiscal year ending December 31, 2023, of 5% of the number of shares of common stock outstanding on the first day of such fiscal year or a lesser number of shares determined by the Board of Directors, (iii) provide that up to 1,858,601 shares of common stock may be granted as “incentive stock options” under the 2020 Plan, (iv) extend the term of the plan to December 1, 2032 and (v) revise certain provisions of the plan relating to the Board of Director’s ability to delegate authority to make awards under the plan. Under the 2020 Plan, stock options may not be granted at less than fair value on the date of grant. As of March 31, 2023, 137,662 shares remained available for future issuance under the 2020 Plan. Under the 2020 Plan, stock options may not be granted at less than fair value on the date of grant.

In June 2021, the Company's stockholders also approved the 2021 Employee Stock Purchase Plan (“ESPP”), which provides for 73,525 shares to be available for purchase by eligible employees according to its terms. The first offering period under the ESPP commenced on September 1, 2021. As of March 31, 2023, 41,417 shares remained available for future issuance under the ESPP.

During the three months ended March 31, ~~2018:~~

   Number of
Options    Weighted
Average
Exercise
Price
Outstanding at December 31, 2017
   —      $ —
Granted
   558,105    26.23



Outstanding at March 31, 2018
   558,105    $ 26.23



Exercisable at March 31, 2018
   —      $ —

~~At March 31, 2018,~~2023, the Company ~~had an aggregate of $9,563 of unrecognized equity-based compensation cost related to stock options, which is expected to be recognized over a weighted average period of 3.9 years.~~

~~The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model using the assumptions noted in the following table:~~


	~~Three Months~~ ~~Ended March~~ ~~31, 2018~~
~~Expected volatility~~		~~73.8~~	%
~~Expected dividends~~		~~0.00~~	%
~~Expected term (in years)~~		~~6.25~~
~~Risk-free rate~~		~~2.77~~	%

~~The weighted average fair value of~~granted options to purchase695,596 shares of common stock ~~granted during~~under the 2020 Plan and options to purchase 90,000 shares of common stock as an inducement award in accordance with Nasdaq Listing Rule 5635(c)(4). During the three months ended March 31, ~~2018 was $17.68.~~

~~Restricted Common Stock~~

~~In connection with~~2022, the ~~Company’s Corporate Conversion on January 25, 2018, all restricted Series B and D common units were converted~~Company granted options to ~~restricted~~purchase 174,738 shares of common stock. ~~The following table summarizes~~During the ~~Company’s unvested restricted shares of common stock activity from December 31, 2017 through~~three months ended March 31, ~~2018:~~

   Units /
Shares    Weighted-
Average
Grant Date
Fair Value
Unvested restricted Series D Common Units at December 31, 2017
   1,404,265    $ 4.83
Vested units prior to Corporate Conversion
   (66,019 )    3.46
Forfeited units prior to Corporate Conversion
   (8,932 )    2.99
Unvested Series D Common Units at January 25, 2018 prior to Corporate Conversion
   1,329,314    4.91




Conversion to restricted shares of common stock upon Corporate Conversion
   1,128,182    5.79
Vested shares of common stock
   (56,655 )    3.93
Forfeited
   (6,042 )    5.55



Unvested restricted shares of common stock at March 31, 2018
   1,065,485    $ 5.89

At2023, the Company granted 347,997 restricted stock units under the 2020 Plan and 45,000 restricted stock units as an inducement award in accordance with Nasdaq Listing Rule 5635(c)(4). During the three months ended March 31, ~~2018,~~2022, the Company ~~had an aggregate of $5,655 of unrecognized equity-based compensation cost related to~~granted 96,766 restricted ~~shares of common~~ stock ~~which is expected to be recognized over a weighted average period of 1.6 years.~~units.

The Company recorded equity-based compensation expense related to all of its ~~share and unit-based~~share-based awards to employees andnon-employees in the following captions within its condensed consolidated statements of ~~operations for the three months ended March 31:~~operations:


					Three Months Ended March 31,
	2018		2017		2023		2022
Research and development	$	632	$	393	$	898	$	1,180
General and administrative		187		2,837		1,220		1,432

Total	$	819	$	3,230	$	2,118	$	2,612

12. Income Taxes

~~The Company recorded no tax benefit for~~During the three months ended March 31, ~~2018~~2023 and 2022, the Company recorded no income tax benefits for the net operating losses incurred or for the research and development tax credits and orphan drug credits generated in each year due to its uncertainty of realizing a benefit from those items. The Company ~~was not subject to federal and state income taxes~~has provided a valuation allowance for the ~~three months ended March 31, 2017 as it was organized as a limited liability company which was taxed as a partnership for U.S. tax purposes.~~

~~A reconciliation~~full amount of ~~income taxes computed using the U.S. federal statutory rate to that reflected in operations as of March 31, 2018 is as follows:~~


	~~March 31, 2018~~
~~Income tax computed at federal statutory tax rate~~		~~21.0~~	%
~~State taxes, net of federal benefit~~		~~3.1~~	%
~~Permanent differences~~		~~(2.3~~	)%
~~Tax credits~~		~~6.4~~	%
~~Loss taxed as a partnership~~		~~(8.2~~	)%
~~Other~~		~~(0.1~~	)%
~~Valuation allowance~~		~~(19.9~~	)%

		~~0.0~~	%

~~The Company established deferred tax assets and liabilities on identified book to tax temporary differences as of the date of conversion to aC-corporation.~~ Deferred income taxes reflect the net tax effects of these temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’sits net deferred tax assets ~~as of~~because, at March 31, ~~2018 is as follows:~~

   March 31, 2018
Deferred tax assets:

Tax loss carryforwards
   $ 2,027
Tax credit carryforwards
   1,019
Intangible assets
   108
Deferred revenues
   58
Deferred expenses
   100
Accrued expenses
   188
Other
   9


Total deferred tax assets
   3,509


Depreciation
   (224 )
Valuation allowance
   (3,285 )


Net deferred taxes
   $ —

~~As of March~~2023 and December 31, ~~2018, the Company has federal net operating loss carryforwards of $6,935~~2022, it was more likely than not that any future benefit from deductible temporary differences and tax credits of $956 which may be used to offset future federal income and tax liability, respectively. In addition, the Company has state net operating loss carryforwards of approximately $6,922 and tax credits of $80 which may be used to offset future state income and tax liability, respectively. The Company’s ability to utilize these federal and state carryforwards may be limited in the future if the Company experiences an ownership change pursuant to Internal Revenue Code Section 382. Ownership changes, as defined in the Internal Revenue Code, including those resulting from the issuance of common stock in connection with the Company’s public offerings, may limit the amount of net operating loss and tax credit carryforwards that can be utilized to offset future taxable income or tax liability. The Company has not conducted a study to assess whether a change of control has occurred or whether there have been multiple changes of control since inception due to the significant complexity and cost associated with such a study. If the Company has experienced a change of control, as defined by Section 382, at any time since inception, utilization of the net operating loss carryforwards or research and development tax credit carryforwards would be subject to an annual limitation under Section 382. Any limitation may result in expiration of a portion of the net operating loss carryforwards or research and development tax credit carryforwards before utilization. Further, until a study is completed and any limitation is known, no amounts are being presented as an uncertain tax position.

~~A valuation allowance is recorded against deferred tax assets if it is more likely than not that some or all of the deferred tax assets will~~ not be realized. The Company has evaluated the positive and negative evidence bearing upon the realizability of the deferred tax assets. The Company concluded, in accordance with the applicable accounting standards, that it is more likely than not that the Company will not realize the benefit of its deferred tax assets. Accordingly, the Company has recorded a full valuation allowance against its deferred tax assets. The Company had approximately $3,285 in valuation allowances recorded against its deferred tax assets as of March 31, 2018.

As of March 31, ~~2018,~~2023 and December 31, 2022, the Company ~~did not have~~had not recorded any amounts for unrecognized tax benefits. The Company ~~recognizes interest and penalties related to income taxes as a component of~~files income tax ~~expense. As~~returns as prescribed by the tax laws of ~~March~~the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal and state jurisdictions, where applicable. There are currently no pending income tax examinations. The Company’s C-Corporation tax years beginning with the year ended December 31, ~~2018, no interest and penalties have been recorded.~~2019 are open under statute. Any tax credit or net operating loss carryforward can be adjusted in future periods after the respective year of generation’s statute of limitation has closed.

~~10.~~13. Commitments and Contingencies

~~Contingencies~~Letter of Credit

~~In the first quarter of 2017, the Company terminated the development, manufacturing and testing agreement (the “Agreement”) it entered into in January 2016 with a third-party.~~ The Company ~~and~~had an outstanding letter of credit in the ~~third-party were in dispute regarding the remaining amounts owned by the Company to the third-party under the Agreement. The Company settled the matter in April 2018 for $1,320. This~~ amount ~~is included in accrued expenses and other liabilities~~of $1,833 at March 31, ~~2018.~~

~~Legal Proceedings~~

~~On March 27, 2018,~~2023 and December 31, 2022, which was required as a purported stockholder of the Company, filed a putative class action complaint alleging violations of the federal securities laws, in the United States District Court for the District of Massachusetts (Case~~No. 18-10587),~~ ~~against the Company and certain~~condition of the Company’s ~~current~~office and laboratory leases.

Indemnification Agreements

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with its executive officers and ~~underwriters in the Company’s initial public offering. The plaintiff claims to represent purchasers~~members of ~~the Company’s common stock during the period from January 25, 2018 to March 14, 2018 and seeks unspecified damages arising out~~its Board of ~~the alleged failure to disclose risks associated with toxicity and potential for adverse events related to the Company’s lead product candidate.~~

~~On March 28, 2018, a purported stockholder of~~Directors that require the Company, ~~filed a putative class action complaint alleging violations~~among other things, to indemnify them against certain liabilities that may arise by reason of ~~the federal securities laws, in the Business Litigation Section~~their status or service as executive officers or directors. The maximum potential amount of ~~the Superior Court of the Commonwealth of Massachusetts (Civil Action No. 1884-00984), against~~future payments the Company ~~Ilan Ganot, Jennifer Ziolkowski, the Company’s directors and certain of the underwriters~~could be required to make under these indemnification agreements is, in the Company’s initial public offering. The plaintiff in this suit claims to represent purchasers of the Company’s common stock in or traceable to the Company’s January 25, 2018 initial public offering and seeks unspecified damages arising out of the alleged failure to disclose risks associated with toxicity and potential for adverse events related to the Company’s lead product candidate.

~~On April 3, 2018, a purported stockholder of~~many cases, unlimited. To date, the Company ~~filed~~has not incurred any material costs as a ~~putative class action complaint alleging violations~~result of ~~the federal securities laws, in the United States District Court for the District of Massachusetts (CaseNo. 18-10639),~~ ~~against the~~such indemnification arrangements.

The Company Ilan Ganot and Jennifer Ziolkowski. The plaintiff in this suit claims to represent purchasers of the Company’s common stock during the period from January 25, 2018 to March 14, 2018 and seeks unspecified damages arising out of the alleged failure to disclose risks associated with toxicity and potential for adverse events related to the Company’s lead product candidate.

While the Company is vigorously defending against all claims asserted, this litigation could result in substantial costs to the Company and a diversion of the Company’s management’s attention and resources, which could harm its business. In addition, the uncertainty of the pending lawsuits or potential filing of additional lawsuits could lead to more volatility and a reduction in the Company’s stock price. Given the early stage of the litigation, at this time the Company is unable to reasonably estimate possible losses or form a judgmentdoes not believe that ~~an unfavorable outcome is either probable or remote. It is not currently possible to assess whether or not~~ the outcome of ~~these proceedings may~~any claims under indemnification arrangements will have a material ~~adverse~~ effect on ~~the Company.~~

~~Leases~~

~~In January 2018, the Company executed a lease agreement for lab space~~its financial position, results of operations or cash flows, and it has not accrued any liabilities related to such obligations in Cambridge, Massachusetts. The lease consists of approximately 9,500 square feet with an initial term of five years with the option to extend the term for one additional two year term. The future minimum rent commitment for the initial five-year term is approximately $3,800. In addition to rent, the lease requires the Company to pay additional amounts for taxes, insurance, maintenance and other operating expenses.

In January 2018, the Company executed a lease agreement for office space in Cambridge, Massachusetts. The space serves as the Company’s corporate headquarters and consists of approximately 16,000 square feet. The term of the lease runs through February 2022. The future minimum rent commitment for the lease term is approximately $4,600. In addition to rent, the lease requires the Company to pay additional amounts for taxes, insurance, maintenance and other operating expenses.

~~Future minimum lease payments for these operating leases~~its consolidated financial statements as of March 31, ~~2018 were~~2023 and December 31, 2022.

Legal Proceedings

The Company may periodically become subject to legal proceedings and claims arising in connection with ongoing business activities, including claims or disputes related to patents that have been issued or that are pending in the field of research on which the Company is focused. The Company is not aware of any material legal proceedings or claims as ~~follows:~~of March 31, 2023.

Year Ending December 31,

2018
   $ 1,157
2019
   1,917
2020
   1,999
2021
   2,038
2022
   1,005
Thereafter
   267


Total
   $ 8,383

~~11.~~14. Net Loss per Share

Basic and diluted net loss per share attributable to common stockholders were calculated as follows:

The numerator for basic and diluted net loss per share attributable to common stockholders is as ~~follows for the three months ended March 31:~~follows:

   2018    2017
Net loss
   $ (15,877 )    $ (13,875 )
Net loss attributable tonon-controlling interest
   —      (1,060 )




Net loss attributable to Solid Biosciences Inc.
   $ (15,877 )    $ (12,815 )
Accretion of preferred units to redemption value
   —      (959 )
Redemption of preferred units
   —      15,685
Redemption of redeemable interest fromnon-controlling interest in Solid GT
   —      (1,925 )




Net loss attributable to common stockholders
   $ (15,877 )    $ (14 )


	Three Months Ended March 31,
	2023			2022
Net loss attributable to common stockholders	$	(30,070	)	$	(25,328	)

The denominator is as ~~follows for the three months ended March 31:~~follows:

   2018    2017
Weighted average shares of common stock outstanding, basic and diluted
   29,354,650    3,047,759


	Three Months Ended March 31,
	2023		2022
Weighted average shares of common stock outstanding, basic and diluted		19,567,635		7,507,155

Net loss per share attributable to common stockholders, basic and diluted is as ~~follows for the three months ended March 31:~~follows:

2018 2017
Net loss per share attributable to common stockholders
$ (0.54 ) $ (0.01 )


	Three Months Ended March 31,
	2023			2022
Net loss per share attributable to common stockholders	$	(1.54	)	$	(3.37	)

The following potential common stock equivalents, presented based on amounts outstanding at each period end, were excluded from the calculation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect for the three and three months ended March 31:


	2023		2022
Options to purchase shares of common stock		2,113,510		1,433,968
Unvested restricted stock units		841,570		512,557
		2,955,080		1,946,525

15. Restructuring

April 2022 Plan

In April 2022, the Company implemented changes to its corporate strategy to prioritize the advancement of its then-key programs, SGT-001 and SGT-003. In connection with the changes to corporate operations, the Company reduced headcount by approximately 35 percent. During the year ended December 31, 2022, the Company recorded and paid aggregate restructuring charges of $1,520 related to severance and other employee related costs in connection with the changes to its corporate strategy. The Company does not expect to incur any additional significant costs associated with this restructuring.

November 2022 Plan

In November 2022, the Company’s Board of Directors approved a plan to reduce the Company’s workforce by approximately 18 percent. These reductions were completed by December 5, 2022. This plan was designed to streamline the Company’s operating structure following the Acquisition. The Company recorded a restructuring charge in the fourth quarter of 2022 of $5,658 related to the reduction in force, consisting of severance and other employee termination benefits. The Company paid $2,348 of this amount during the three months ended March 31, 2023 and $1,737 during the year ended December 31, 2022. The Company expects that approximately the remaining $1,573 will be paid by the first quarter of 2024.

   2018    2017
Options to purchase shares of common stock
   558,105    —
Unvested shares of common stock
   1,065,485    —
Series B common units
   —      814,620
Series D common units
   —      819,578




   1,623,590    1,634,198


One-Time Employee Termination Benefits	April 2022			November 2022
Accrued restructuring charges as of December 31, 2021	$	—		$	—
Accrual recorded as a result of restructuring charges		1,520			5,658
Amounts paid during the period		(1,520	)		(1,737	)
Accrued restructuring charges as of December 31, 2022	$	—		$	3,921
Accrual recorded as a result of restructuring charges		—			—
Amounts paid during the period		—			(2,348	)
Accrued restructuring charges as of March 31, 2023	$	—		$	1,573

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this quarterly report on Form10-Q and our audited financial statements and related notes for the year ended December 31, ~~2017~~2022 included in our annual report filed on Form10-K on March ~~29, 2018.~~23, 2023.

Some of the statements contained in this discussion and analysis or set forth elsewhere in this quarterly report on Form10-Q, including information with respect to our plans and strategy for our business, constitute forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended. We have based these forward-looking statements on our current expectations and projections about future events. The following information and any forward-looking statements should be considered in light of factors discussed elsewhere in this quarterly report on Form10-Q particularly including those risks identified in Part II, ~~-Item~~Item 1A “Risk Factors” and our other filings with the Securities and Exchange Commission, or the SEC.

Our actual results and timing of certain events may differ materially from the results discussed, projected, anticipated, or indicated in any forward-looking statements. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from the forward-looking statements contained in this quarterly report on Form10-Q. Statements made herein are made as of the date of the filing of this Form10-Q with the SEC and should not be relied upon as of any subsequent date. Even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this quarterly report on Form10-Q, they may not be predictive of results or developments in future periods. We disclaim any obligation, except as specifically required by law and the rules of the SEC, to publicly update or revise any such statements to reflect any change in our expectations or in events, conditions or circumstances on which any such statements may be based or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.

We caution readers not to place undue reliance on any forward-looking statements made by us, which speak only as of the date they are made.

~~Overview~~Unless otherwise indicated, all information in this quarterly report on Form 10-Q gives effect to a 1-for-15 reverse stock split of our common stock that became effective on October 27, 2022, and all references to historical share and per share amounts give effect to the reverse stock split.

We are a life sciences company focused on advancing a portfolio of neuromuscular and cardiac programs, including SGT-003, a differentiated gene therapy candidate, for the treatment of Duchenne muscular dystrophy, or ~~DMD,~~Duchenne; AVB-202-TT, a gene therapy program for the treatment of Friedreich’s ataxia, or FA; AVB-401, a gene therapy program for the treatment of BAG3-mediated dilated cardiomyopathy; and additional assets for the treatment of undisclosed cardiac diseases. We aim to be a center of excellence, bringing together those with expertise in science, technology, disease management and care. Patient-focused and founded by those directly impacted by Duchenne, our mandate is to improve the daily lives of patients living with these devastating diseases.

Solid was purpose-built to advance the best science and accelerate the discovery and development of treatments that may benefit all patients with Duchenne. As Solid expands to bring meaningful treatments to patients living with other neuromuscular and cardiac diseases, the values and guiding principles that drive us continue. Our corporate vision is to build an innovation platform enabling the discovery and development of high-value genetic ~~muscle-wasting~~medicines for neuromuscular and cardiac diseases by integrating internal capabilities, including a vector core, use of validated animal models, optimized expression cassettes, novel capsids and regulatory elements, and collaborations with leaders in related clinical and research fields. Our mission, which guides our operations, is to treat and change the course of neuromuscular and cardiac diseases at all stages. Underscoring this mission, our disease-focused business model is founded on the following fundamental principles:

On October 26, 2022, our board of directors approved a ~~progressive, irreversible~~reverse stock split of our outstanding shares of common stock at a ratio of one-for-15 (1:15). The reverse stock split became effective on October 27, 2022. The reverse stock split was approved by our stockholders at our Annual Meeting of Stockholders on June 7, 2022. All share and ~~ultimately fatal disease that affects approximately one~~per share amounts of the common stock included in ~~every 3,500 to 5,000 live male births and has an estimated prevalence of 10,000 to 15,000 cases~~this quarterly report on Form 10-Q, including in the ~~United States alone. DMD~~accompanying condensed consolidated financial statements, have been retrospectively adjusted to give effect to the reverse stock split for all periods presented, including reclassifying an amount equal to the reduction in par value to additional paid-in capital.

On December 2, 2022, we completed our acquisition of AavantiBio, Inc., or AavantiBio, a privately held gene therapy company focused on transforming the lives of patients with Friedreich’s ataxia, or FA, and rare cardiomyopathies, or the Acquisition. Upon the consummation of the Acquisition, we acquired AavantiBio’s gene therapy programs, AVB-202-TT and AVB-401, additional assets for the treatment of undisclosed cardiac diseases, platform technologies and know-how related thereto.

On December 2, 2022, we issued and sold 10,638,290 shares of our common stock at a price per share of $7.05 in a private placement, or the December 2022 Private Placement, which closed immediately following the Acquisition. We received $72.6 million of net proceeds from the December 2022 Private Placement after deducting offering costs.

We are focused on developing transformative treatments to improve the lives of patients with rare neuromuscular and cardiac diseases. Our current programs are all designed for treating these diseases with gene transfer products. Gene transfer, a type of gene therapy, is designed to address diseases caused by ~~mutations~~mutated genes through the delivery of functional versions of those genes, called transgenes. The transgenes are then utilized by the body to produce proteins that are absent or not functional prior to treatment, potentially offering long-lasting clinical benefit. In addition to a transgene, our gene transfer candidates include a viral capsid (a protein shell utilized as a vehicle to deliver a transgene to cells in the ~~dystrophin~~body) and a promoter (a specialized DNA sequence that directs cells to produce the protein in specific tissues). The vector is modified to no longer self-replicate yet still retain its ability to introduce new genetic material directly into patients’ cells. Adeno-associated virus, or AAV, vectors have been approved for use to deliver transgenes to patients, including via systemic delivery. The use of AAV vectors to deliver gene ~~which result~~therapies has also been extensively studied by third parties in the absence or near-absence of dystrophin protein. Dystrophin protein works to strengthen muscle fibers and protect them from daily wear and tear. Without functioning dystrophin and certain associated proteins, muscles suffer excessive damage from normal daily activities and are unable to regenerate, leading to the~~build-up~~ of fibrotic, or scar, and fat tissue. There is no cure for DMD and, for the vast majority of patients, there are no satisfactory symptomatic or disease-modifying treatments. Our lead product candidate,~~SGT-001,~~ is a gene transfer under development to restore functional dystrophin protein expression in patients’ muscles. Based on our preclinical program that included multiple animal species of different phenotypes and genetic variations, we believe the mechanism of action of~~SGT-001,~~ ~~if our~~human clinical trials ~~prove to be successful, has the potential to slow or even halt the progression~~for multiple disease indications, and in certain of ~~DMD, regardless of the type of genetic mutation or stage of the disease. We filed an IND in September 2017 and initiated a Phase I/II clinical trial forSGT-001~~ in the United States during the fourth quarter of 2017. In November 2017, the FDA notified us that we were not permitted to dose patients in the higher-dose group of IGNITE DMD due to a partial clinical hold. The partial clinical hold relatedthese trials AAV was delivered systemically to the ~~number of vials~~patient.

Due to our significant research and ~~manufacturing lots utilized per patient, as well as manufacturing processes to support the higher-dose group. We have since submitted a response to the FDA~~development expenditure, licensing and ~~were notified that the partial clinical hold has been resolved.~~

In March 2018, we announced that IGNITE DMD was placed on full clinical hold following an unexpected serious adverse event reported in the first patient dosed in the clinical trial. We have since received a formal clinical hold letter in which the FDA has requested additional information, including an assessment of the etiology of the event, the patient’s clinical statuspatent investment, and ~~laboratory parameters, and any additional measures to address patient safety. We are finalizing~~general administrative costs associated with our ~~response to the FDA letter. We plan to work closely with the FDA to address the clinical hold.~~

~~Since our inception,~~operations, we have ~~devoted~~generated substantial ~~resources to identifying and developingSGT-001~~ and our other product candidates, developing our manufacturing processes, organizing and staffing our company and providing general and administrative support for these operations. We do not have any products approved for sale. To date, we have not generated any revenue. Our ability to eventually generate any product revenue sufficient to achieve profitability will depend on the successful development, approval and eventual commercialization of~~SGT-001~~ ~~and our other product candidates. If successfully developed and approved, we intend to commercializeSGT-001~~operating losses in the United States and European Union and may enter into licensing agreements or strategic collaborations in other markets. If we generate product sales or enter into licensing agreements or strategic collaborations, we expect that any revenue we generate will fluctuate from quarter to quarter and year to year as a result of the timing and amount of any product sales, license fees, milestone payments and other payments. If we fail to complete the development of~~SGT-001~~ and our other product candidates in a timely manner or obtain regulatory approval of them, our ability to generate future revenue, and our results of operations and financial position, would be materially adversely affected.

~~We have never been profitable, and~~each period since our ~~inception, we have incurred significant operating losses.~~inception. Our net losses were ~~$15.9~~$30.1 million and ~~$13.9~~$25.3 million for the three months ended March 31, ~~2018~~2023 and ~~2017,~~2022, respectively. As of March 31, ~~2018,~~2023, we had an accumulated deficit of ~~$140.1~~$592.8 million. We expect to incur significant expenses and ~~increasing~~ operating losses for the foreseeable future.

As we seek to develop and commercialize~~SGT-001~~ ~~and our~~ SGT-003, AVB-202-TT, AVB-401 or other ~~product~~future candidates, we anticipate that our expenses will increase significantly and that we will need substantial additional funding to support our continuing operations. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity financings, debt financings or other sources, which may include licensing agreements or strategic collaborations. We may be unable to raise additional funds or enter into such agreements or arrangements when needed on favorable terms, if at all. If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, scale back or discontinue the development or commercialization of~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other ~~product~~future candidates.

Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or determine when or if we will be able to achieve or maintain profitability. Even if we are able to generate revenue from product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

On January 30, 2018, we completed our initial public offering in which we sold 8,984,375 shares of our common stock, including the underwriters’ over-allotment option, at a public offering price of $16.00 per share, in exchange for net proceeds of $129.1 million after deducting underwriting discounts and commissions and offering expenses.

As of March 31, ~~2018,~~2023, we had cash, cash equivalents, andavailable-for-sale securities of ~~$182.4~~$185.5 million, excluding restricted cash of $1.8 million. We believe that our ~~existing~~ cash, cash equivalents, andavailable-for-sale securities as of March 31, 2023 will enable us to fund our operating expenses and capital expenditure requirements ~~until the end of 2019.~~into 2025. We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently anticipate.

~~Corporate conversion~~The COVID-19 pandemic caused federal, state, and local governments to implement measures to slow the spread of the outbreak through quarantines, strict travel restriction and bans, heightened border scrutiny and other measures. The full extent of the impact of COVID-19 on our business, results of operations and financial condition will depend on future developments that are highly uncertain, including the actions taken to contain it or treat its impact and the impact on our preclinical development, employees, vendors and suppliers, all of which are uncertain and cannot be predicted. We will continue to monitor the situation closely.

Collaboration revenue was $0 for the three months ended March 31, 2023 compared to $1.9 million for the three months ended March 31, 2022. We ~~operated as a Delaware limited liability company under~~recognized this revenue related to research services and cost reimbursement from the ~~name Solid Biosciences, LLC until immediately prior to~~collaboration and license agreement, or the ~~effectiveness of our registration statement on FormS-1~~ ~~on January 25, 2018, at which time we converted into a Delaware corporation pursuant to a statutory conversion and change our name to Solid Biosciences~~Collaboration Agreement, with Ultragenyx Pharmaceutical Inc., or ~~the Corporate Conversion. As a result of the Corporate Conversion, the holders of the Series 1~~Ultragenyx. No other research and ~~2 Senior Preferred, Junior Preferred Units, Series A, B, C and D Common Units of Solid Biosciences, LLC became holders of common stock of Solid Biosciences Inc.~~

We historically owned 100% of the voting units of our wholly owned subsidiary, Solid GT, LLC, or Solid GT, and the results of Solid GT are included in our condensed consolidated financial statements. Solid GT was organized in Delaware in August 2014 and was engaged in the business of developing disease-modifying interventions for DMD through gene therapy. In November 2015, Solid GT issued voting units to new investors, which decreased our voting ownership in Solid GT to 77%. We consolidated the results of Solid GT as we owned a majority voting interest in Solid GT and we directed the activities of Solid GT.

~~Net loss attributable tonon-controlling~~ interests in our condensed consolidated statement of operations and comprehensive loss consists of the portion of the net income or loss of Solid GT that is not allocated to us. Changes in the amount of net loss attributable to~~non-controlling~~ interests are directly impacted by changes in the net income or loss of Solid GT. On March 29, 2017, we merged the operations of Solid GT into the company and Solid GT ceased to exist as a separate legal entity. As a result, for periods subsequent to March 29, 2017, we no longer report any~~non-controlling~~ ~~interests related to Solid GT.~~

We have not generated any product revenue ~~as we do not have any approved products~~to date and do not expect to generate any product revenue from the sale of our products for the ~~next few years.~~foreseeable future, if ever. If our development efforts for~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other ~~product~~future candidates are successful and result in marketing approval, ~~or if we enter into collaboration or license agreements with third parties,~~ we may generate product revenue in the future from ~~a combination of~~ product ~~sales or payments from those collaboration or license agreements.~~sales.

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

Research and development expenses consist primarily of costs incurred for our research activities, including our discovery efforts, and the development ofSGT-001, our first-generation Duchenne microdystrophin gene transfer candidate that we are no longer developing, SGT-003, AVB-202-TT, AVB-401 and our other ~~product~~future candidates and include:

Research and development activities are central to our business model. We ~~expense~~are still in the early stages of development of our candidates. For example, we expect to file an IND for SGT-003 in the second half of 2023 to allow us to initiate clinical development. Product candidates in later stages of clinical development generally have higher development costs than those in preclinical development or in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will continue to increase for the foreseeable future if and as ~~incurred. We recognize costs~~we initiate clinical trials for ~~certain development activities, such as preclinical research~~SGT-003, AVB-202-TT, AVB-401 or any other future candidates and ~~development, based on an evaluation of the progress~~continue to ~~completion of specific tasks using information~~identify and data provided to us by our vendors, collaborators and third-party service providers. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our condensed consolidated financial statements as prepaid or accrued research and development expenses.develop additional candidates.

We typically use our employee and infrastructure resources across our product candidates. We track outsourced development costs and milestone payments made under our licensing arrangements by product candidates, but we do not allocate personnel costs, license payments made under our licensing arrangements or other internal costs to product candidates on a program-specific basis. These costs are included in unallocated research and development expenses in the table below.

The following table summarizes our research and development expenses by product candidates for the respective periods:

We cannot determine with certainty the duration, costs and timing of clinical trials of~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 and ~~our~~ other ~~product~~future candidates, or if, when or to what extent we will generate revenue from the commercialization and sale of any of our product candidates for which we obtain marketing approval or our other research and development expenses. We may never succeed in obtaining marketing approval for any of our product candidates. The duration, costs and timing of clinical trials and development of our ~~product~~ candidates will depend on a variety of factors, including:

Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will continue to increase for the foreseeable future as we proceed with clinical trials for~~SGT-001,~~ ~~initiate clinical trials for product candidates other thanSGT-001~~ ~~and continue to identify and develop additional product candidates.~~

General and administrative expenses consist primarily of salaries and other related costs, including equity-based compensation, for personnel in our executive, finance, business development and administrative functions. General and administrative expenses also include legal fees relating to patent and corporate ~~matters;~~matters, professional fees for accounting, auditing, tax and consulting ~~services;~~services, insurance ~~costs;~~costs, travel ~~expenses;~~expenses, acquisition costs, and facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of office facilities and other operating costs.

We expect that our general and administrative expenses will increase in the future as we ~~increase our general and administrative personnel headcount to~~ support our research and development activities and activities related to ~~the~~any planned or future clinical trials for and potential commercialization of~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 and other future candidates.

In April 2022, we implemented changes to our ~~other product candidate. We also expect~~corporate strategy. In connection with the changes to ~~incur increased expenses associated~~corporate operations, we reduced headcount by approximately 35 percent.

In November 2022, we approved a plan designed to streamline our operating structure in connection with ~~being a public company, including costs of accounting, audit, legal, regulatory andtax-related~~ ~~services associated~~the Acquisition. In connection with ~~maintaining compliance with exchange listing and SEC requirements, director and officer insurance costs and investor and public relations costs.~~the plan, we reduced headcount by approximately 18 percent in December 2022.

~~Interest income~~ (expense), net consists of interest income earned on our cash, cash equivalents, ~~and~~available-for-sale ~~securities.~~ securities, amortization of investment premium or accretion of investment discount, net of financing leases interest expense.

We have received funding from charitable organizations, which are not considered to be an ongoing major or central part of our business. The amounts received are recorded as other income as services are performed and research expenses are incurred in the condensed consolidated statements of operations.

Since our inception in 2013, we have been organized as a Delaware limited liability company for federal and state income tax purposes and treated as a partnership for U.S. income tax purposes. As such, we were not viewed as a taxpaying entity in any jurisdiction and did not require a provision for income taxes. Each member of our company was responsible for the tax liability, if any, related to its proportionate share of our taxable income.

As a result of the Corporate Conversion on January 25, 2018, we are treated as a corporation for U.S. income tax purposes and are subject to U.S. federal, state and local income taxes at the prevailing corporate tax rates. We expect to generate net operating losses at the corporate level.

We account for income taxes using an asset and liability ~~approach. Under the asset and liability method,~~approach, which requires recognition of deferred tax assets and liabilities ~~are recognized~~ for the expected future tax consequences ~~attributable to differences between the financial statement carrying amounts~~ of ~~existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income~~events that have been recognized in the ~~years~~consolidated financial statements but have not been reflected in ~~which those temporary differences are expected~~taxable income. A valuation allowance is established to ~~be recovered or settled. The effect on~~reduce deferred tax assets ~~and liabilities of a change~~to their estimated realizable value.

We account for uncertainty in ~~tax rates is~~income taxes recognized in ~~income in~~ the ~~period that includes the enactment date. We record valuation allowances~~financial statements by applying a two-step process to ~~reduce deferred income tax assets to~~determine the amount ~~that is more likely than not~~of tax benefit to be ~~realized. We~~recognized. First, the tax position must be evaluated to determine ~~whether~~the likelihood that it ~~is more likely than not that a tax position~~ will be sustained upon ~~examination.~~external examination by the taxing authorities. If itthe tax position is ~~not more likely than not that a position will~~deemed more-likely-than-not to be sustained, nothe tax position is then assessed to determine the amount of benefit ~~attributable~~ to recognize in the ~~position is recognized.~~financial statements. The ~~tax~~amount of the benefit tothat may be recognized ~~of any tax position that meets the more likely than not recognition threshold~~ is ~~calculated as~~ the largest amount that ~~is more~~has a greater than 50% ~~likely~~likelihood of being realized upon ~~resolution~~ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate as well as the ~~contingency.~~related net interest and penalties.

Critical ~~Accounting Policies~~accounting policies and ~~Use~~use of ~~Estimates~~estimates

Our management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, costs and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these ~~estimates under different assumptions or conditions.~~

During the three months ended March 31, ~~2018,~~2023, there were no material changes to our critical accounting policies. Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical accounting policies and use of estimates” in our Annual Report on Form10-K for the year ended December 31, ~~2017~~2022 and the notes to the unaudited condensed consolidated financial statements included in Part I, Item 1, “Financial Statements (unaudited),” of this quarterly report on Form10-Q. We believe that of our critical accounting policies, the following accounting policies involve the most judgment and complexity:

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

Comparison of the three months ended March 31, ~~2018~~2023 and ~~2017~~2022

The following table summarizes our results of operations for the ~~years~~three months ended March 31, ~~2018~~2023 and ~~2017:~~2022:


	Three Months Ended March 31,						Increase (decrease)			Three Months Ended March 31,						Increase			%
(in thousands)	2018			2017			Increase (decrease)			2023			2022			(decrease)			Change
Revenue	$	—		$	—		$	—

Collaboration revenue - related party										$	—		$	1,925		$	(1,925	)	(100)%
Operating expenses:
Research and development		11,929			8,733			3,196			24,631			19,945			4,686		23%
General and administrative		4,044			5,380			(1,336	)		7,399			7,352			47		1%

Total operating expenses		15,973			14,113			1,860			32,030			27,297			4,733		17%

Loss from operations		(15,973	)		(14,113	)		(1,860	)		(32,030	)		(25,372	)		(6,658	)	(26)%
Other income (expense):
Interest income		65			62			3
Other income		31			176			(145	)

Total other income (expense)		96			238			(142	)

Interest income, net											1,678			54			1,624		3,007%
Other income (loss), net											282			(10	)		292		2,920%
Total other income, net											1,960			44			1,916		4,355%
Net loss	$	(15,877	)	$	(13,875	)	$	(2,002	)	$	(30,070	)	$	(25,328	)	$	(4,742	)	(19)%


	Three Months Ended March 31,				Increase (decrease)
	2018		2017		Increase (decrease)		Three Months Ended March 31,				Increase			%
(in thousands)							2023		2022		(decrease)			Change
SGT-001	$	7,053	$	6,358	$	695	$	2,519	$	5,422	$	(2,903	)	(54)%
Other product candidates		686		461		225
SGT-003								9,148		2,155		6,993		325%
Other development programs								2,004		1,209		795		66%
Unallocated research and development expenses		4,190		1,914		2,276

Personnel related expenses								7,252		8,282		(1,030	)	(12)%
External expenses								3,708		2,877		831		29%
Total unallocated research and development expenses								10,960		11,159		(199	)	(2)%
Total research and development expenses	$	11,929	$	8,733	$	3,196	$	24,631	$	19,945	$	4,686		23%

Research and development expenses for the three months ended March 31, ~~2018~~2023 were ~~$11.9~~$24.6 million, compared to ~~$8.7~~$20.0 million for the three months ended March 31, ~~2017.~~2022. The increase of ~~$3.2~~$4.6 million in research and development ~~costs~~expenses was primarily due to a ~~$2.3 million increase in unallocated research and development costs due primarily to increased compensation and headcount as well as increased facility costs, a net $0.7~~$7.0 million increase in costs ~~related to our lead product candidateSGT-001driven~~ ~~by a $3.5 million increase in clinical development~~for SGT-003 for manufacturing and ~~manufacturing activities offset by a $2.8 million reduction in preclinical~~related costs and a ~~$0.2~~$0.8 million increase in costs ~~related~~for other development programs, offset by a $2.9 million decrease in costs for SGT-001 due to ~~our other product candidates.~~a transition to SGT-003.

General and administrative expenses were ~~$4.0~~$7.4 million for each of the three months ended March 31, 2023 and 2022.

Other income, net was $2.0 million for the three months ended March 31, ~~2018,~~2023 compared to ~~$5.4 million for the three months ended March 31, 2017. The decrease~~other expense of $1.4 million was due to a decrease in equity-based compensation of $2.7 million, offset by an increase of $1.2 million in personnel and facility related expenses and an increase of $0.1 million of other corporate expenses. The decrease in equity-based compensation of $2.7 million was primarily due to a charge associated with the exchange of certain of our vested common units in connection with the recapitalization of Solid Biosciences, LLC and our merger with Solid GT on March 29, 2017.

~~Interest income remained consistent at~~less than $0.1 million for the three months ended March 31, ~~2018 and 2017.~~

~~Other income for~~2022. The activity was primarily related to the three months ended March 31, 2018 was $0.1 million compared to $0.2 million for the three months ended March 31, 2017. The decrease of $0.1 million relates to income from charitable organizations. We do not expect these contributions to significantly increase in ~~future periods.~~interest income on available-for-sale securities included within our portfolio.

To date, we have financed our operations primarily through ~~private placements~~the sale of redeemable preferred units and member units, the sale of common stock and prefunded warrants to purchase shares of our common stock in private placements and the sale of common stock in our initial public ~~offering.~~offering, a follow-on public offering and under our “at-the-market offering” sales agreement, dated March 13, 2019 and as amended on August 16, 2021, by and between us and Jefferies LLC, or Jefferies, or the ATM Sales Agreement. Through March 31, ~~2018,~~2023, we raised an aggregate of $144.6 million of gross proceeds from our sales of preferred units prior to the completion of our initial public offering, and an aggregate of ~~$129.1~~$543.9 million of net proceeds from the sale of our common stock ~~after deducting underwriting discounts~~through public offerings, including our IPO, private placements, the ATM Sales Agreement, and ~~commission and offering expenses~~pursuant to the stock purchase agreement with Ultragenyx, as detailed in ~~our initial public offering.~~the following paragraphs.

~~We completed our initial public offering on January 30, 2018,~~On March 13, 2019, we entered into the ATM Sales Agreement, which was amended in August 2021, under which we ~~sold 8,984,375~~may offer and sell, from time to time, shares of our common stock having aggregate gross proceeds of up to $75.0 million through Jefferies as sales agent. Any such sales being made by any method that is deemed an “at-the-market offering” as defined in Rule 415 promulgated under the Securities Act. We will pay Jefferies a commission of up to 3% of the gross proceeds of any sales of common stock ~~including~~pursuant to the ~~underwriters’ over-allotment option, at a public offering price of $16.00 per share,~~ATM Sales Agreement. During the year ended December 31, 2020, we sold 420,642 shares pursuant to the ATM Sales Agreement resulting in ~~exchange for~~ net proceeds of ~~$129.1~~$23.2 million. During the year ended December 31, 2022 and the three months ended March 31, 2023, we did not sell any shares pursuant to the ATM Sales Agreement.

As of March 31, ~~2018,~~2023, we had cash, cash equivalents andavailable-for-sale securities of ~~$182.4~~$185.5 million, excluding restricted cash of $1.8 million, and had no debt outstanding.

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

During the three months ended March 31, ~~2018,~~2023, operating activities used ~~$17.2~~$28.0 million of cash, primarily resulting from our net loss of ~~$15.9~~$30.1 million and changes in our operating assets and liabilities of $0.9 million, partially offset by non-cash charges of $3.0 million. Net cash used by changes in our operating assets and liabilities during the three months ended March 31, 2023 consisted of an decrease in accrued expenses and other current and non-current liabilities of $4.9 million, partially offset by an increase in accounts payable of $2.7 million and a decrease in prepaid and other assets of $1.3 million. Non-cash activities were driven by equity-based compensation of $2.1 million and depreciation and impairment expense of $1.1 million, partially offset by amortization on available-for-sale securities of $0.2 million.

During the three months ended March 31, 2022, operating activities used $27.2 million of cash, primarily resulting from our net loss of $25.3 million and cash used in changes in our operating assets and liabilities of ~~$2.3~~$5.6 million offset bynon-cash charges of ~~$1.1~~$3.7 million due ~~primarily~~ to equity-based compensation of ~~$0.8~~$2.6 million, depreciation expense of $0.7 million and amortization on available for sale securities of $0.4 million. Net cash used in changes in our operating assets and liabilities during the three months ended March 31, ~~2018~~2022 consisted primarily of an increase in prepaid expenses and other assets of ~~$0.6~~$3.4 million, ~~due to~~a decrease in deferred revenue of $1.9 million and a decrease in accrued expenses and other liabilities of $0.4 million, offset by an increase in ~~director and officers’ insurance as we entered the public company market and deposits made for our new facilities~~accounts payable of $0.1 million and a decrease in accounts ~~payable and accrued expenses~~receivable of ~~$1.7 million due to the timing of payments.~~$0.1 million.

During the three months ended March 31, ~~2017, operating~~2023, investing activities ~~used $10.2~~provided $37.3 million of cash, ~~primarily~~ resulting from ~~our net loss~~the proceeds of ~~$13.9~~the maturity of available-for-sale securities of $37.8 million, partially offset by~~non-cash~~ ~~charges~~ the purchase of ~~$3.4 million due primarily to equity-based compensation~~property and equipment of $3.2 million, which included $2.8 million associated with the exchange of Series A common units into Series B and D common units, and cash provided by changes in our operating assets and liabilities of $0.3$0.5 million. Net cash provided by changes in our operating assets and liabilities during the three months ended March 31, 2017 consisted primarily of a decrease in prepaid expenses and other currents assets of $0.2 million due to the timing of prepaid research and development expense payments and net increase in accounts payable and accrued expenses of $0.1 million due to the timing of payments.

During the three months ended March 31, ~~2018,~~2022, investing activities ~~used $1.6~~provided $37.7 million of cash, ~~consisting primarily~~resulting from the sale or maturity of available-for-sale securities of $46.8 million, offset by $8.9 million from purchases of available-for-sale securities and $0.2 million of purchases of~~available-for-sale~~ ~~securities and~~ property and ~~equipment partially offset by proceeds on the sale and maturity ofavailable-for-sale~~ ~~securities.~~equipment.

During the three months ended March 31, ~~2017, investing activities provided $7.0 million of~~2023, there was $0 in cash ~~consisting primarily~~ from ~~proceeds on the sale and maturity ofavailable-for-sale~~ ~~securities offset by purchases of the property and equipment.~~financing activities.

~~We expect that purchases of property and equipment will increase over the next several years resulting from our move into a new office and laboratory facility in 2018.~~

During the three months ended March 31, ~~2018, net cash provided by~~2022, financing activities ~~was $131.7 million, primarily due to the proceeds from our initial public offering of $133.7 million partially offset by $2.0~~provided less than $0.1 million of ~~payments made in connection with costs incurred for our initial public offering.~~cash resulting from the exercise of pre-funded warrants.

During the three months ended March 31, 2017, net cash provided by financing activities was $24.8 million, primarily due to the proceeds from our sale of Series 1 Senior Preferred Units of $25.0 million offset in part by payments made in connection with our then - proposed initial public offering.25

We expect our expenses to increase substantially in connection with our ongoing development activities related to~~SGT-001.~~ SGT-003, AVB-202-TT, AVB-401 and other future candidates. In addition, we have incurred and expect to continue to incur ~~additional~~ costs associated with operating as a public company. We expect that our expenses will increase substantially if and as we:

On January 30, 2018, we completed our initial public offering in which we sold 8,984,375 shares of common stock, including shares of common stock issued upon the exercise in full of the underwriters’ over-allotment option, at a public offering price of $16.00 per share, resulting in net proceeds of $129.1 million, after deducting underwriting discounts and commissions and offering expenses.

As of March 31, ~~2018,~~2023, we had cash, cash equivalents andavailable-for-sale securities of ~~$182.4~~$185.5 million, excluding restricted cash of $1.8 million. WeBased on our current operating plan, we believe that our ~~existing~~ cash, cash equivalents andavailable-for-sale securities as of March 31, 2023 will ~~enable us~~be sufficient to fund our operating expenses and capital ~~expenditure~~ requirements ~~until the end of 2019. We~~into 2025. As a result, in order to continue to operate our business beyond that time, we will need to raise additional funds. However, there can be no assurance that we will be able to generate funds on terms acceptable to us, on a timely basis, or at all. In addition, we have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently anticipate.

Because of the numerous risks and uncertainties associated with the development of~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 and other future product candidates and programs and because the extent to which we may enter collaborations with third parties for development of our product candidates is unknown, we are unable to estimate the timing and amounts of increased capital outlays and operating expenses associated with completing the research and development of our product candidates. Our future capital requirements will depend on many factors, including:

We ~~intend~~expect to supply ~~our~~future clinical development ~~program~~programs for~~SGT-001~~ SGT-003 with drug ~~product~~ produced at a ~~current good manufacturing practices, or~~ cGMP compliant facility located at one of our ~~Contract Development Manufacturing Organizations, or CDMO, partners.~~CMOs. We intend to establish the capability and capacity to supply~~SGT-001~~ SGT-003 and other future product candidates at commercial scale from multiple sources, including potentially building our own GMP facility to ensure redundancy and reliability. We expect that such a facility would require capital expenditures of between $35.0 million to $45.0 million to commence operations. We expect to finalize plans to potentially build our own GMP facility after we have initial data from our Phase I/II clinical trial for~~SGT-001.~~sources.

Developing pharmaceutical products, including conducting preclinical studies and clinical trials, is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval for any product candidates or generate revenue from the sale of any products for which we may obtain marketing approval. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of products that we do not expect to be commercially available for many years, if ever. Accordingly, we will need to obtain substantial additional funds to achieve our business objectives.

Adequate additional funds may not be available to us on acceptable terms, or at all. We do not currently have any committed external source of funds. To the extent that we raise additional capital through the sale of equity securities, our existing stockholders’ ownership interest may be diluted. Any debt or preferred equity financing, if available, may involve agreements that include restrictive covenants that may limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, which could adversely impact our ability to conduct our business, and may require the issuance of warrants, which could potentially dilute existing stockholders’ ownership interests.

If we raise additional funds through licensing agreements and strategic collaborations with third parties, we may have to relinquish valuable rights to our technology, future revenue streams, research programs, or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds, we may be required to delay, limit, reduce and/or terminate development of our product candidates or any future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

~~The following table summarizes~~During the three months ended March 31, 2023, there were no material changes to our contractual obligations ~~at March 31, 2018~~ and ~~the effects that such obligations are expected to have~~commitments from those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on ~~our liquidity and cash flows in future periods:~~

In January 2018, the Company executed a lease agreement for lab space in Cambridge, Massachusetts. The lease consists of approximately 9,500 square feet with an initial term of five years with the option to extend the term for one additional~~two-year~~ ~~term. The future minimum rent commitment~~Form 10-K for the ~~initial five-year term is approximately $3.8 million. In addition to rent, the lease requires us to pay additional amounts for taxes, insurance, maintenance and other operating expenses.~~fiscal year ended December 31, 2022.

In January 2018, the Company executed a lease agreement for office space in Cambridge, Massachusetts. The lease will serve as our corporate headquarters and consists of approximately 16,000 square feet. The term of the lease runs through February 2022. The future minimum rent commitment for the lease term is approximately $4.6 million. In addition to rent, the lease requires us to pay additional amounts for taxes, insurance, maintenance and other operating expenses.

Under various agreements with third-party licensors, we have agreed to make milestone payments and pay royalties to third parties based on specific milestones. We have not included any such contingent payment obligations in the table above as the amount, timing and likelihood of such payments are not known.

We enter into contracts in the normal course of business with CROs and CMOs for clinical trials, preclinical research studies and testing, manufacturing and other services and products for operating purposes. These contracts do not contain any minimum purchase commitments and are cancelable by us upon prior notice of 30 days and, as a result, are not included in the table of contractual obligations above.

See ~~Note 2 to the condensed consolidated financial statements included elsewhere in this quarterly report on Form10-Q~~ ~~for information regarding recently adopted and issued accounting pronouncements. See also~~ Note 2 to our consolidated financial statements included in our ~~annual report~~Annual Report on Form10-K for the year ended December 31, ~~2017.~~

The Jumpstart Our Business Startups Act of 2012, or the JOBS Act, permits an ~~“emerging~~emerging growth ~~company”~~company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have irrevocably elected to ~~“opt out”~~opt out of this provision and, as a result, we will comply with new or revised accounting standards when they are required to be adopted by public companies that are not emerging growth companies.

We did not have during the periods presented, and we do not currently have, anyoff-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Item ~~3.Quantitative~~3. Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to market risk related to changes in interest rates. As of March 31, ~~2018,~~2023, our cash equivalents consisted of money market accounts that have contractual maturities of less than 90 ~~days.~~days from the date of acquisition. As of March 31, ~~2018,~~2023, our investments consisted of treasury bills and corporate bond ~~securities and U.S. government agency~~ securities that have contractual maturities of less than one year. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of U.S. interest rates. However, because of the short-term nature of the investments in our portfolio, an immediate 10% change in market interest rates would not have a material impact on the fair market value of our investment portfolio or on our financial position or results of operations.

Our management, with the participation of our President and Chief Executive Officer and our Chief Financial Officer (our principal executive officer and principal financial officer, respectively), evaluated the effectiveness of our disclosure controls and procedures as of March 31, ~~2018.~~2023. The term “disclosure controls and procedures,” as defined in Rules13a-15(e) and15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to ~~its~~the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of March 31, ~~2018,~~2023, our ~~principal executive officer~~President and ~~principal financial officer~~Chief Executive Officer and our Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were ~~not~~ effective at the reasonable assurance ~~level, due to the material weakness described below.~~level.

~~The management of the company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules13a-15(f)~~ ~~and15d-15(f)~~ under the Exchange Act. In connection with the preparation of our consolidated financial statements as of and for the years ended December 31, 2016 and 2015, we identified material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses we identified were as follows:

These material weaknesses also resulted in a restatement of our previously issued 2015 annual consolidated financial statements and adjustments to our 2016 annual consolidated financial statements, which were recorded prior to their issuance.

We are in the process of implementing measures designed to improve our internal control over financial reporting and remediate the control deficiencies that led to the material weaknesses, including hiring additional finance and accounting personnel and initiating design and implementation of our financial control environment, including the establishment of formal accounting policies and procedures, financial reporting controls and controls to account for and disclose complex transactions.

~~Other than as described above, there were~~There have been no changes in our internal control over financial reporting ~~identified~~(as defined in ~~connection with the evaluation required by Rule13a-15(d)~~Rules 13a-15(f) and~~15d-15(d)~~ of 15d-15(f) under the Exchange ~~Act that~~Act) occurred during the ~~fiscal quarter~~three months ended March 31, ~~2018~~2023 that ~~have~~has materially affected, or ~~are~~is reasonably likely to materially affect, our internal control over financial reporting.

On March 27, 2018, James Watkins, a purported stockholder of ours, filed a putative class action complaint alleging violations of the federal securities laws, in the United States District Court for the District of Massachusetts (Case~~No. 18-10587),~~ against us, Ilan Ganot, our Chief Executive Officer, Jennifer Ziolkowski, our Chief Financial Officer, and the underwriters in our initial public offering, J.P. Morgan Securities LLC, Goldman Sachs & Co. LLC, Leerink Partners, LLC, Nomura Securities Co., LLC and Chardan Capital Markets LLC. The plaintiff in this suit claims to represent purchasers of our common stock during the period from January 25, 2018 to March 14, 2018 and seeks unspecified damages arising out of the alleged failure to disclose risks associated with toxicity and potential for adverse events related to our lead product candidate.None.

On March 28, 2018, Robert Lowinger, a purported stockholder of ours, filed a putative class action complaint alleging violations of the federal securities laws, in the Business Litigation Section of the Superior Court of the Commonwealth of Massachusetts (Civil Action No. 1884-00984), against us, Ilan Ganot, Jennifer Ziolkowski, our directors and certain of the underwriters in our initial public offering. The plaintiff in this suit claims to represent purchasers of our common stock in or traceable to our January 25, 2018 initial public offering and seeks unspecified damages arising out of the alleged failure to disclose risks associated with toxicity and potential for adverse events related to our lead product candidate.

On April 3, 2018, Michael Walsh, a purported stockholder of ours, filed a putative class action complaint alleging violations of the federal securities laws, in the United States District Court for the District of Massachusetts (Case~~No. 18-10639),~~ against us, Ilan Ganot and Jennifer Ziolkowski. The plaintiff in this suit claims to represent purchasers of our common stock during the period from January 25, 2018 to March 14, 2018 and seeks unspecified damages arising out of the alleged failure to disclose risks associated with toxicity and potential for adverse events related to our lead product candidate.

While we believe that we have meritorious defenses to the allegations made in these three complaints, it is not currently possible to assess whether or not the outcome of these suits may have a material adverse effect on our business, financial condition, results of operations or prospects.

In addition, we may be involved in various other legal proceedings arising out of our operations. We are not currently a party to any such other legal proceedings that, in the opinion of our management, are likely to have a material adverse effect on our business, financial condition, results of operations or prospects. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

You should carefully consider the following risk factors, in addition to the other information contained in this ~~quarterly report~~Quarterly Report on Form10-Q, including the section of this report titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes. If any of the events described in the following risk factors and the risks described elsewhere in this ~~quarterly report~~Quarterly Report onForm 10-Q occurs, our business, operating results and financial condition could be seriously harmed and the trading price of our common stock could decline. This ~~quarterly report~~Quarterly Report on Form10-Q also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of factors that are described below and elsewhere in this ~~quarterly report~~Quarterly Report on Form10-Q.

~~Risks related~~ The risks and uncertainties described below are not the only ones we face. Additional risks not presently known to us or other factors not perceived by us to present significant risks to our business at this time also may impair our business operations.

Our business is subject to a number of risks that if realized could materially affect our business, operating results and financial ~~position~~condition and ~~need for capital requirements~~the trading price of our common stock could decline. These risks are discussed more fully below. These risks include the following:

We may fail to realize the anticipated benefits of our acquisition of AavantiBio, those benefits may take longer to realize than expected, and we may encounter significant integration difficulties.

On December 2, 2022, we completed our acquisition, or the Acquisition, of AavantiBio, Inc., or AavantiBio, a privately held gene therapy company focused on transforming the lives of patients with FA and rare cardiomyopathies. Upon the consummation of the Acquisition, we acquired AavantiBio’s pipeline programs which included programs for the treatment of FA and BAG3 mediated dilated cardiomyopathy, as well as additional assets for the treatment of undisclosed cardiac diseases. Our ability to realize the anticipated benefits of the Acquisition will depend, to a large extent, on our ability to integrate AavantiBio and these programs into our business and business strategy and realize anticipated growth opportunities and synergies. We have devoted and will continue to devote significant management attention and resources to integrating the business practices and operations of AavantiBio into ours. We may fail to realize some or all of the anticipated benefits of the Acquisition, including if the integration process takes longer than expected or is more costly than expected. Potential difficulties we may encounter in the integration process include the following:

It is possible that the integration process could result in the diversion of our management’s attention, the disruption or interruption of, or the loss of momentum in, our ongoing businesses or inconsistencies in standards, controls, procedures and policies, any of which could adversely affect our ability to maintain our relationships with third parties or the ability to achieve the anticipated benefits of the Acquisition, or could otherwise adversely affect our business and financial results.

Also, we now possess certain liabilities and obligations, including contractual liabilities and obligations, that were assumed by us upon closing of the Acquisition. Further, it is possible that undisclosed, contingent or other liabilities, problems or obligations may arise in the future of which we were previously unaware. These disclosed and undisclosed liabilities could have an adverse effect on our business, financial condition and results of operations.

Any or all of these factors could decrease or delay the expected accretive effect of the Acquisition and negatively impact our stock price. As a result, it cannot be assured that we will be successful in the integration of AavantiBio with our business or that we will realize the benefits anticipated from the Acquisition or in the anticipated time frames or at all.

Our stockholders may not realize a benefit from the Acquisition and the related private placement commensurate with the ownership dilution they experienced in connection with the Acquisition and the related private placement.

If we are unable to realize the full strategic and financial benefits anticipated from the Acquisition, our stockholders will have experienced substantial dilution of their ownership interests without receiving any commensurate benefit, or only receiving part of the commensurate benefit to the extent the combined company is able to realize only part of the benefits anticipated from the Acquisition and the related private placement.

We may be exposed to increased litigation, including stockholder litigation, which could have an adverse effect on our business and operations.

We may be exposed to increased litigation from stockholders, customers, suppliers, consumers and other third parties due to the combination of Solid’s and AavantiBio’s businesses following the Acquisition. Such litigation may have an adverse impact on our business and results of operations or may cause disruptions to our operations. In addition, in the past, stockholders have initiated class action lawsuits against biotechnology companies following periods of volatility in the market prices of these companies’ stock. Such litigation, if instituted against us, could cause us to incur substantial costs and divert management’s attention and resources, which could have a material adverse effect on our business, financial condition and results of operations.

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

Since inception, we have incurred significant net losses. Our net loss was ~~$15.9~~$30.1 million for the three months ended March 31, ~~2018. In addition, our~~2023. Our net losses were ~~$53.2 million, $23.8~~$86.0 million and ~~$6.7~~$72.2 million for the years ended December 31, ~~2017, 2016~~2022 and ~~2015,~~2021, respectively. As of March 31, ~~2018,~~2023, we had an accumulated deficit of ~~$140.1~~$592.8 million. To date, we have devoted substantially all of our efforts to research and development, including clinical development of our gene transfer ~~product~~ candidate,SGT-001, which we are no longer developing, and preclinical development of our gene transfer candidate, SGT-003, as well as to building out our management team and infrastructure. Following the Acquisition, we began also devoting efforts to preclinical development of our FA and cardiac programs. We expect that it could be several years ~~if ever,~~ before we have a commercialized product, and we may never have a commercialized product. We expect to continue to incur significant expenses and ~~increasing~~see continued operating losses for the foreseeable future. We anticipate that our expenses will increase substantially if, and as, we:

To become and remain profitable, we must develop and eventually commercialize one or more product candidates with significant market potential. This will require us to be successful in a range of challenging activities, and our expenses will increase substantially as we ~~seek~~continue to ~~resolve the full clinical hold~~monitor patients dosed in IGNITE DMD and complete preclinical studies and future clinical trials of~~SGT-001,~~ SGT-003, AVB-202-TT, AVB-401 and other future candidates, obtain marketing approval for~~SGT-001,~~ SGT-003, AVB-202-TT, AVB-401, or other future candidates, develop and validate commercial-scale manufacturing processes, manufacture, market and sell any future ~~product~~ candidates for which we may obtain marketing approval and satisfy any post-marketing requirements. Moreover, the manufacturing process requires materials which may fluctuate in cost or be limited or unavailable to us, as well as relationships with contract development and manufacturing organizations to facilitate the manufacturing process. We may never succeed in any ~~or all~~ of these activities and, even if we do, we may never generate revenue that is significant or large enough to achieve profitability. If we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would decrease the value of our company and could impair our ability to raise capital, maintain our research and development efforts, expand our business or continue our operations. A decline in the value of our company also could cause stockholders to lose all or part of their investment.

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

We expect our expenses to increase in connection with our ongoing activities, particularly as we continue the research and development of, conduct clinical trials of, and seek marketing approval for,~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 and other future candidates and otherwise integrate the operations of AavantiBio into our ~~other product candidates.~~business. In addition, if we obtain marketing approval for~~SGT-001~~ ~~and our~~ SGT-003, AVB-202-TT, AVB-401 or other ~~product~~future candidates, we expect to incur significant expenses related to product sales, marketing, manufacturing and distribution. We also expect to continue to incur additional costs associated with operating as a public company. While we believe that our cash, cash equivalents andavailable-for-sale securities as of March 31, ~~2018~~2023, will ~~enable us~~be sufficient to fund our operating expenses and capital ~~expenditure~~ requirements ~~until the end of 2019,~~into 2025, we have based this estimate on assumptions that may prove to be 2025 wrong, and we could use our available capital resources sooner than we currently anticipate. In order to continue to operate our business beyond that time, we will need to raise additional funds. However, there can be no assurance that we will be able to generate funds on terms acceptable to us, on a timely basis, or at all. In addition, we anticipate that we will need additional funding to complete the development of~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 and ~~our~~ other ~~product~~future candidates.

Identifying potential product candidates and conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to submit a new drug application, or NDA, or biologic license application, or BLA, or obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Our product revenue, if any, will be derived from or based on sales of product candidates that may not be commercially available for many years, if at all. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at ~~all.~~all, and may be impacted by the economic climate and market conditions. Our ability to raise additional funds may be adversely impacted by general economic conditions, both inside and outside the U.S., including disruptions to, and instability and volatility in, the credit and financial markets in the U.S. and worldwide, heightened inflation, interest rate and currency rate fluctuations, and economic slowdown or recession as well as concerns related to the COVID-19 pandemic and geopolitical events, including civil or political unrest. In addition, market instability and volatility, high levels of inflation and interest rate fluctuations may increase our cost of financing or restrict our access to potential sources of future liquidity. Alternatively, we may seek additional capital due to favorable market conditions or strategic considerations, even if we believe we have sufficient funds for our current or future operating plans.

Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies,SGT-001, SGT-003, AVB-202-TT, AVB-401 or our other ~~product~~future candidates.

We may seek additional capital through a combination of public and private equity offerings, debt financings, strategic partnerships and alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, ownership of our common stock will be diluted and the terms may include liquidation or other preferences that adversely affect the rights of our current stockholders. The incurrence of indebtedness would result in increased fixed payment obligations and could involve restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. If we raise additional funds through strategic partnerships and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies,SGT-001, SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other ~~product~~future candidates, or grant licenses on terms unfavorable to us.

We have never generated revenue from product sales and do not expect to do so for the ~~next several years,~~foreseeable future, if ever.

Our ability to generate revenue from product sales and achieve profitability depends on our ability, alone or with collaborative partners, to successfully complete the development of, and obtain the regulatory approvals necessary to commercialize,~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 and ~~our~~ other ~~product candidate,SB-001,~~ ~~and any other product~~future candidates that we may pursue in the future. We do not anticipate generating revenue from product sales for the ~~next several years,~~foreseeable future, if ever. Our ability to generate future revenue from product sales depends heavily on our success in:

Our limited operating history may make it difficult for our stockholders to evaluate the success of our business to date and to assess our future viability.

We are a development-stage company founded in 2013. Our operations to date, with respect to the development ofSGT-001, SGT-003 and other potential ~~product~~ candidates, have been limited to organizing and staffing our company, business planning, raising capital, acquiring rights to our technology, identifyingSGT-001 and SGT-003 as a potential gene transfer ~~product candidate~~candidates and undertaking preclinical studies of SGT-001 and SGT-003 and a clinical trial of ~~that product candidate~~SGT-001 and establishing research and development and manufacturing collaborations. Following the Acquisition, we have expanded our operations to include the development of AVB-202-TT and AVB-401. We have not yet demonstrated the ability to complete clinical trials of~~SGT-001~~ or any ~~other~~ product candidate, obtain marketing approvals, manufacture aat commercial-scale ~~product~~ or conduct sales and marketing activities necessary for successful commercialization. Consequently, any predictions our stockholders make about our prospects may not be as accurate as they could be if we had a longer operating ~~history.~~

The COVID-19 pandemic or other pandemics may affect our ability to initiate and complete current or future preclinical studies or clinical trials, disrupt regulatory activities, disrupt our manufacturing and supply chain or have other adverse effects on our business and operations. In addition, this pandemic may continue to adversely impact economies worldwide, which could result in adverse effects on our business and operations.

The COVID-19 pandemic has caused many governments to implement measures to slow the spread of the outbreak through quarantines, travel restrictions, heightened border scrutiny, and other measures. The outbreak and government measures taken in response have also had a significant impact, both direct and indirect, on businesses and commerce, as worker shortages have occurred; supply chains have been disrupted; facilities and production have been suspended; and demand for certain goods and services, such as medical services and supplies, has spiked, while demand for other goods and services, such as travel, has fallen. The future progression of the outbreak and its effects on our business and operations are uncertain.

We and our third-party manufacturers for supply of drug product for our candidates, and prospective contract research organizations, or CROs, may face disruptions that may affect our ability to initiate and complete preclinical studies or clinical trials, including disruptions in procuring items that are essential for our research and development activities, including, for example, raw materials used in the manufacturing of drug product for our candidates, and laboratory supplies for our current and future preclinical studies and clinical trials, in each case, for which there may be shortages because of ongoing efforts to address the outbreak. We and our third-party manufacturers, and prospective CROs, may face disruptions related to future clinical trials arising from delays in IND-enabling studies, manufacturing disruptions, and the ability to obtain necessary institutional review board or other necessary site approvals, as well as other delays at clinical trial sites.

We may also face difficulties recruiting or enrolling patients for our clinical trials if patients are affected by the COVID-19 virus or are fearful of visiting or traveling to, or unable to travel to, clinical trial sites because of the outbreak. For example, we experienced a few missed or postponed patient visits in our IGNITE DMD trial due to site closures early in the COVID-19 pandemic.

The response to the COVID-19 pandemic may redirect resources with respect to regulatory and intellectual property matters in a way that would adversely impact our ability to progress regulatory approvals and protect our intellectual property. For example, the FDA has announced that in order to bring new therapies to patients sick with COVID-19 as quickly as possible, it has redeployed medical and regulatory staff from other areas to work on COVID-19 therapies. In addition, we may face impediments to regulatory meetings and approvals due to measures intended to limit in-person interactions.

We expect to continue to take actions as may be required or recommended by government authorities or as we determine are in the best interests of our employees, and other business partners in light of COVID-19. In the event of a continuation of shelter-in-place orders and/or other mandated local travel restrictions, our employees conducting research and development activities may not be able to access our research space, and our core activities may be significant limited or curtailed, possibly for an extended period of time.

The pandemic has caused significant disruptions in the financial markets, and may continue to cause such disruptions, which could impact our ability to raise additional funds through public offerings and may also impact the volatility of our stock price and trading in our stock. Moreover, it is possible the pandemic will significantly impact economies worldwide, which could result in adverse effects on our business and operations. We cannot be certain what the overall impact of the COVID-19 pandemic, including any variant strains of the COVID-19 virus, will be on our business and it has the potential to adversely affect our business, financial condition, results of operations and prospects.

Finally, in response to the COVID-19 pandemic, the FDA issued numerous guidance documents to govern and facilitate the study and development of biologic products during the pandemic. On January 30, 2023, the Biden Administration announced that it will end the public health emergency declarations related to COVID-19 on May 11, 2023. On January 31, 2023, the FDA indicated that it would issue a Federal Register notice describing how the termination of the public health emergency will impact the agency’s COVID-19 related guidance. Thereafter, on March 13, 2023, the FDA announced that it will end twenty-two COVID-19-related policies when the public health emergency ends on May 11, 2023 and allow twenty-two to continue for 180 days. The FDA plans to retain twenty-four COVID-19-related policies with appropriate changes and four whose duration is not tied to the end of the public health emergency. At this point, it is unclear how, if at all, these developments will impact our efforts to develop and commercialize our product candidates.

Unfavorable global economic conditions could harm our business, financial condition or results of operations.

Our results of operations could be harmed by general conditions in the global economy and in the global financial markets. A severe or prolonged economic downturn, including the impact of increased interest rates and inflation (such as the recent rise in inflation in the United States), could result in a variety of risks to our business, including weakened demand for our product candidates and our ability to raise additional capital when needed on acceptable terms, if at all. A weak or declining economy could strain our manufacturers, possibly resulting in manufacturing disruption, or cause delays in payments for our services by third-party payors or our future collaborators. Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could harm our business.

We hold a portion of our cash and cash equivalents that we use to meet our working capital and operating expense needs in deposit accounts that could be adversely affected if the financial institutions holding such funds fail.

We hold a portion of our cash and cash equivalents that we use to meet our working capital and operating expense needs in deposit accounts at multiple financial institutions. The balance held in these accounts may exceed the Federal Deposit Insurance Corporation, or FDIC, standard deposit insurance limit of $250,000. If a financial institution in which we hold such funds fails or is subject to significant adverse conditions in the financial or credit markets, we could be subject to a risk of loss of all or a portion of such uninsured funds or be subject to a delay in accessing all or a portion of such uninsured funds. Any such loss or lack of access to these funds could adversely impact our short-term liquidity and ability to meet our operating expense obligations, including payroll obligations.

For example, on March 10, 2023, Silicon Valley Bank, or SVB, and Signature Bank, were closed by state regulators and the FDIC was appointed receiver for each bank. The FDIC created successor bridge banks and all deposits of SVB and Signature Bank were transferred to the bridge banks under a systemic risk exception approved by the United States Department of the Treasury, the Federal Reserve and the FDIC. If financial institutions in which we hold funds for working capital and operating expenses were to fail, we cannot provide any assurances that such governmental agencies would take action to protect our uninsured deposits or investments in a similar manner.

We also maintain investment accounts with other financial institutions in which we hold our investments and marketable securities and, if access to the funds we use for working capital and operating expenses is impaired, we may not be able to sell investments or transfer funds from our investment accounts to other operating accounts on a timely basis sufficient to meet our operating expense obligations.

~~SGT-001~~ ~~is a~~Our gene transfer ~~candidate~~candidates are based on a novel technology, which makes it difficult to predict the time and cost of development and of subsequently obtaining regulatory approval. To our knowledge, only ~~one~~a limited number of gene transfer ~~product has~~products have been approved for commercialization in the United States ~~for commercialization~~ and ~~only two such products have been approved in~~ the European Union.

We have historically concentrated our research and development efforts onSGT-001 and SGT-003 for the treatment of ~~DMD~~Duchenne. Prior to the Acquisition, AavantiBio concentrated its research and development efforts on candidates for the treatment of FA and BAG3-mediated dilated cardiomyopathy. We have prioritized SGT-003 for the treatment of Duchenne, and we plan to prioritize AVB-202-TT for the treatment of FA and AVB-401 for the treatment of BAG3-mediated dilated cardiomyopathy and our future success depends on our successful development of ~~that product candidate.~~these and other future candidates. Our risk of failure is high. We have experienced with SGT-001, and may in the future experience ~~additional,~~with our other candidates, problems or delays in developing~~SGT-001.~~ these and other future candidates. Any such problems or delays would cause unanticipated costs, and any development problems may not be solved. For example, we or another party may uncover a previously unknown risk associated with~~SGT-001,~~ SGT-003, AVB-202-TT, AVB-401, the adeno-associated virus, or AAV, vector, construct toxicity or other issues that may be more problematic than we currently believe and this may prolong the period of observation required for obtaining, or result in the failure to obtain, regulatory approval or may necessitate additional clinical testing.

In addition, our ability to conduct and complete our preclinical development testing and studies is contingent on our ability to source animals and other supplies required for the conduct of such testing and studies. If we are unable to obtain all necessary animals and other supplies required for the conduct of our preclinical testing and studies, we may be unable to complete such preclinical development testing and studies in a timely manner or at all. For example, some of our IND-enabling toxicology and other studies require certain non-human primates, or NHPs, that may be imported from countries in which trade relation with the U.S. are or may become challenging or through vendors who may not be able to timely source certain NHPs or at all, which may impair our ability to complete preclinical development testing and studies to support IND or similar applications or delay submission of such applications. Additionally, we may fail to demonstrate adequate product candidate efficacy and/or safety as required by regulatory authorities. We may fail to access relevant, adequate, or necessary animal models, including genetic models of disease and non-human primates in particular, for use in such studies as requested by regulatory authorities. We may also experience substantial delays as a result of our reliance on CROs to conduct all animal model experimentation necessary to assess the efficacy and safety of our product candidates. Any of these factors may result in delays to candidate progression, inability to obtain regulatory approval, and/or substantial increases in candidate development costs.

In addition, the product specifications and the clinical trial requirements of the FDA, the European Commission, the European Medicines Agency, or the EMA, and other regulatory authorities and the criteria these regulators use to determine the safety and efficacy of a product candidate vary substantially according to the type, complexity, novelty and intended use and market of such product candidate. The regulatory approval process for novel product candidates such as ours is unclear and can be more expensive and take longer than for other, better known or more extensively studied product candidates. To our knowledge, only ~~one~~~~in vivo~~a limited number of gene transfer ~~product, Spark Therapeutics, Inc.’s Luxturna, has received FDA approval~~products have been approved for commercialization in the United States and ~~only one~~~~in vivo~~ ~~gene transfer product, uniQure N.V.’s Glybera, has received marketing authorization from~~ the European ~~Commission.~~Union. As a result, it is difficult to determine how long it will take or how much it will cost to obtain regulatory approvals for~~SGT-001~~ our gene transfer candidates in either the United States or the European ~~Union.~~Union, if at all. Approvals by the European Commission may not be indicative of what the FDA may require for approval and vice versa.

~~The FDA has placed the Phase I/II clinical trial ofSGT-001~~ ~~on full clinical hold after we reported an unexpected serious adverse event in the first patient dosed in the clinical trial. We may not conduct any clinical trials ofSGT-001~~ ~~until such full clinical hold is lifted by the FDA.~~ Our business may be adversely affected if the full clinical hold is not resolved in a timely and favorable manner or if such regulatory concerns lead to more burdensome preclinical studies or clinical trials that cause significant delays in or end development of~~SGT-001.~~

~~In March 2018, the FDA placed a full clinical hold onSGT-001~~ ~~following an unexpected serious adverse event in our Phase I/II clinical trial, called IGNITE DMD, which is designed to evaluateSGT-001~~ ~~in ambulatory andnon-ambulatory~~ ~~males with DMD aged four to 17 years. On February 14, 2018, the first patient in the IGNITE DMD clinical trial, anon-ambulatory~~ ~~adolescent, was dosed with 5E13 vg/kg ofSGT-001.~~ Several days after administration the patient was hospitalized due to laboratory findings that included a decrease in platelet count followed by a reduction in red blood cell count and evidence of complement activation. We reported the unexpected serious adverse event to the FDA and, because it was unexpected, classified it as Suspected Unexpected Serious Adverse Reaction, or SUSAR. We have halted enrollment and dosing in IGNITE DMD until such time as the clinical hold is lifted. We have received the formal clinical hold letter from the FDA and we are finalizing our response to the FDA letter. We plan to work closely with the FDA to address the clinical hold. We cannot assure our stockholders that the FDA will lift the full clinical hold in a timely manner, or at all, and, if it fails to do so, our development timeline and our business would be adversely affected and our stock price would likely decline.

~~We cannot assure our stockholders that the FDA will lift the full clinical hold and allow us to pursue further development ofSGT-001~~ as planned, or at all. Further, even if the FDA lifts the full clinical hold, or if the FDA or other regulatory agencies continue to express safety concerns even after the hold is lifted, additional preclinical studies or clinical trials involving~~SGT-001,~~ ~~amendments to theSGT-001~~ enrollment criteria and/or clinical trial protocol or changes to our manufacturing process may be needed and difficult to implement and/or complete. In such instance, our progress in the development of~~SGT-001~~ ~~may be significantly slowed or stopped and the associated costs may be significantly increased, adversely affecting our business.~~

In addition, we may not be able to obtain institutional review board committee, or IRB, or data safety monitoring board committee approvals for our Phase I/II clinical trial as a result of the clinical hold, and any related risks or otherwise, which could further delay our ability to open new trial sites and enroll patients into the clinical trial, if and when the full clinical hold is lifted. Any inability to continue or complete our clinical trial of~~SGT-001,~~ ~~as a result of the full clinical hold or otherwise, will delay or terminate our clinical development plans forSGT-001,~~ ~~may require us to incur additional clinical development costs and could impair our ability to ultimately obtain FDA approval forSGT-001.~~ ~~Delays in the completion of any clinical trial ofSGT-001,~~ our lead product candidate, or any other product candidate will increase our costs, slow down our product candidate development and approval process and delay or potentially jeopardize our ability to commence product sales and generate revenue. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of~~SGT-001~~ ~~or our product candidates.~~

~~Our product~~gene transfer candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit their commercial potential or result in significant negative consequences following any potential marketing approval.

SGT-003, AVB-202-TT, AVB-401 have not yet been studied in human patients. During the conduct of clinical trials, patients may experience changes in their health, including illnesses, injuries, discomforts or a fatal outcome. Often, it is not possible to determine whether the product candidate being studied caused these conditions. For instance, ~~recently~~ we reported ~~an unexpected~~a serious adverse event in ~~theSGT-001~~ ~~Phase I/II~~ IGNITE DMD, ~~clinical trial,~~ which resulted in a ~~full~~ clinical ~~hold.~~ hold in November 2019, which has since been resolved. In April 2021, a patient treated with SGT-001 in IGNITE DMD experienced a systemic inflammatory response classified as a serious adverse event and considered by the investigator to be drug related.

In addition, it is possible that as we test~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other ~~product~~future candidates in larger, longer and more extensive clinical programs, or as use of these ~~product~~ candidates becomes more widespread if they receive regulatory approval, illnesses, injuries, discomforts and other adverse events that were observed in earlier clinical trials, as well as conditions that did not occur or went undetected in previous clinical trials, will be reported by subjects. Many times, side effects are only detectable after investigational products are tested in large-scale, Phase III clinical trials or, in some cases, after they are made available to patients on a commercial scale after approval. If additional clinical experience indicates that~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or any other ~~product~~future candidate has side effects or causes serious or life-threatening side effects, the development of the ~~product~~ candidate may fail or be delayed, or, if the ~~product~~ candidate has received regulatory approval, such approval may be ~~revoked.~~withdrawn.

There have been several significant adverse side effects in gene therapy treatments in the past, including reported cases of leukemia and death seen in other clinical trials using other vectors. The FDA convened the Cellular, Tissue, and Gene Therapies Advisory Committee in September 2021 to discuss toxicity risks of AAV based gene therapy products. Discussed risks included oncogenicity risks due to vector genome integration, hepatotoxicity, thrombotic microangiopathy, and neurotoxicity (especially related to dorsal root ganglion toxicity). While new recombinant vectors have been developed with the intent to reduce these side effects, gene therapy is still a relatively new approach to disease treatment and additional adverse side effects could develop. ~~Patients will create antibodies~~More recently, there have been reports of significant adverse side effects, including muscle weakness and myocarditis, in clinical trials of other gene therapy treatments for Duchenne that may be related to the ~~AAV vector~~type and location of the specific gene mutation causing the disease. One clinical trial sponsor reported the death, preceded by hypovolemia and cardiogenic shock, of a ~~second administration of gene transfer might not be successful.~~non-ambulatory trial Duchenne subject with advanced disease and cardiac dysfunction. There also is the potential risk of delayed adverse events following exposure to gene therapy products due to persistent biologic activity of the genetic material or other components of products used to carry the genetic material. Possible adverse side effects that may occur with treatment with gene therapy products include an immunologic reaction early after administration that could substantially limit the effectiveness of the treatment or represent safety risks for patients. Additionally, in previous clinical trials involving AAV vectors for gene therapy, some subjects experienced the development of a positive ELISPOT test associated withT-cell responses, which is of unclear clinical translatability. IfT-cells are activated, the cellular immune response system may trigger the removal of transduced cells. If our gene transfer ~~candidate demonstrates~~candidates demonstrate a similar effect or other undesirable side effects, we may decide or be required to halt or delay further clinical development of~~SGT-001.~~ SGT-003, AVB-202-TT, AVB-401 or other future candidates involving AAV vectors for gene therapy.

AsFor example, as part of our SGT-001 preclinical program, we performed necessary good laboratory practices, or GLP, toxicology studies to establish the overall safety profile ofSGT-001 in wild-type mice andnon-human primates, or NHPs. The data and our conclusions from these studies were included in our IND submission to the FDA. Systemic administration ofSGT-001 was generally well tolerated in both species. We observed no evidence of test-article-related toxicity for up to 13 weeks after systemic administration ofSGT-001 in either species that would prevent us from initiating clinical trials. In the NHP study, test-article-related effects were self-limited, mild chemistry and hematology changes with no microscopic correlates at the end of the study. There was a transient and asymptomatic increase in liver function enzymes observed in NHPs starting on day 9, which returned to normal levels by day 21. We believe there were no other relevant test-article-related adverse events associated withSGT-001 administration in either GLP study. In the NHP toxicology study, a single animal from the high dose cohort was euthanized after it did not recover from an anesthetic procedure. We believe this event was attributed to procedural errors. However, AAV vector cannot be completely ruled out as a contributing factor to the toxicity that gave rise to the event.

~~In addition to~~Additional adverse side effects ~~caused bySGT-001~~ ~~and our~~may be observed following administration of any AAV gene therapy, SGT-003 or other ~~product candidates, the administration process~~current or ~~related procedures also can cause adverse side effects.~~future candidates. For example, integration of AAV DNA into the host cell’s genome has been reported to occur. ~~Further, our~~Not all contemplated AAV delivery ~~system has not~~systems have been validated in human clinical trials previously, ~~and if~~ such as AAV-SLB101, which is a novel capsid. If a delivery system does not meet the safety criteria or cannot provide the desired efficacy results, then we may be forced to suspend or terminate our development of~~SGT-001.~~ SGT-003 or other current or future candidates. In addition, the relatively high anticipated dosing requirements for~~SGT-001~~ SGT-003 may amplify the risk of adverse side effects relating to the AAV vector. ~~Recently, James M. Wilson, M.D., Ph.D., resigned from our Scientific~~We, and others, have seen serious adverse events when administering high dose AAV vectors. The FDA convened the Cellular, Tissue, and Gene Therapies Advisory ~~Board citing emerging concerns about the possible~~Committee in September 2021 to discuss toxicity risks of ~~high systemic dosing of AAV.~~AAV based gene therapy products. Discussed risks included oncogenicity risks due to vector genome integration, hepatotoxicity, thrombotic microangiopathy, and neurotoxicity (especially related to dorsal root ganglion toxicity). If any such adverse side effects were to occur in the future and we are unable to demonstrate that they were not caused by the administration process or related procedures, the FDA, the European Commission, the EMA or other regulatory authorities could order us to cease further development of, or deny approval of,~~SGT-001~~ SGT-003 or ~~our~~any other ~~product~~future candidate for any or all targeted indications. Even if we are able to demonstrate that any serious adverse events are not product-related, such occurrences could affect patient recruitment or the ability of enrolled patients to complete the clinical trial.

Additionally, if~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other ~~product~~ candidates receive marketing approval, the FDA could require us to adopt a Risk Evaluation and Mitigation Strategy, or REMS, to ensure that the benefits outweigh the risks, which may include, among other things, a medication guide outlining the risks of the product for distribution to patients and a communication plan to health care practitioners. Furthermore, if we or others later identify undesirable side effects caused by~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other ~~product~~future candidates, several potentially significant negative consequences could result, including:

We have never completed a clinical trial and may be unable to do so for any product candidates we may develop, including~~SGT-001.~~ SGT-003, AVB-202-TT and AVB-401.

We are very early in our development efforts, and all of our candidates are still in preclinical development. Preclinical studies involve a lengthy and expensive process with an uncertain outcome. There are many potential preclinical models to test for different disease states, and we could fail to choose the best or a predictive preclinical model to determine proof of concept and potential safety and efficacy of our candidates. We may decide to suspend further testing on our candidates or technologies if, in the judgment of our management and advisors, the preclinical test results do not support further development.

We will need to successfully initiate and complete clinical trials in order to obtain FDA approval to market~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other ~~product~~future candidates. We ~~only recently initiated our first clinical trial forSGT-001,~~ have limited experience in preparing, submitting and prosecuting regulatory ~~filings,~~submissions, and have not previously submitted a ~~biologics license application, or~~ BLA for any product candidate. ~~The FDA has placedSGT-001~~ ~~on a full clinical hold. If the full clinical hold is not lifted on our Phase I/II clinical trial, we will not be able to evaluate or fully evaluate the safety, tolerability and efficacy ofSGT-001.~~ ~~In addition, in connection with its acceptance of the IND, the FDA placedSGT-001~~ ~~on a partial clinical hold, which has since been resolved.~~ We cannot be sure that submission of an IND, including the IND we plan to submit for SGT-003 in the second half of 2023, will result in the FDA allowing clinical trials to begin or to begin as proposed, or that, once begun, issues will not arise that suspend or terminate such clinical trials. Carrying out later-stage clinical trials and the submission of a successful BLA is a complicated process. This may be particularly true for design of a pivotal trial for the treatment of ~~DMD~~Duchenne as the FDA has not given clear guidance as to the necessary endpoints for approval of a treatment for ~~DMD.~~Duchenne. In addition, we ~~have had limited interactions with the FDA and~~ cannot be certain how many clinical trials of~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other ~~product~~future candidates will be required or how such trials should be designed. Consequently, we may be unable to successfully and efficiently execute and complete necessary clinical trials in a way that leads to BLA submission and approval of~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other ~~product~~future candidates. We may require more time and incur greater costs than our competitors and may not succeed in obtaining regulatory approvals of product candidates that we develop. Failure to commence or complete, or delays in, clinical trials, could prevent us from or delay us in commercializing~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 and ~~our~~ other ~~product~~future candidates.

Success in preclinical studies or early clinical trials ~~including our recently initiated Phase I/II clinical trial,~~ may not be indicative of results obtained in later trials.

Results from preclinical studies or early clinical trials ~~including our recently initiated Phase I/II clinical trial,~~ are not necessarily predictive of future clinical trial results and are not necessarily indicative of final results. Our preclinical studies for SGT-003 and AVB-202-TT in animals have been limited. We have only dosed a limited number of human subjects with SGT-001, and we have not dosed any human subjects with SGT-003, AVB-202-TT or AVB-401. There is a high failure rate for gene therapy and biologic products proceeding through clinical trials. Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in late-stage clinical trials even after achieving promising results in preclinical testing and earlier-stage clinical trials. Data obtained from preclinical and clinical activities are subject to varying interpretations, which may delay, limit or prevent regulatory approval. We also may experience regulatory delays or rejections as a result of many factors, including due to changes in regulatory policy during the period of our product candidate development. ~~Our preclinical studies forSGT-001~~ ~~in animals have been limited and we have only recently dosed a human patient withSGT-001.SGT-001~~SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other ~~product~~future candidates may fail to show the desired safety and efficacy in clinical development despite positive results in preclinical studies. This failure ~~would~~could cause us to abandon~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or other future candidates.

Preliminary or interim data that we announce or publish from time to time may change as more data become available and are subject to audit and verification procedures that could result in material changes in the final data.

From time to time, we may announce or publish preliminary or interim data from clinical trials. Positive preliminary or interim data may not be predictive of such trial’s subsequent or overall results. Preliminary or interim data are subject to the risk that one or more of the outcomes may materially change as more data become available. Additionally, preliminary or interim data are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Therefore, positive preliminary or interim data in any ongoing clinical trial may not be predictive of such results in the completed trial. We also make assumptions, estimations, calculations and conclusions as part of our ~~other product candidates.~~

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

Before obtaining marketing approval from regulatory authorities for the sale of~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other ~~product~~future candidates, we must conduct extensive clinical trials to demonstrate the safety and efficacy of the product candidate for its intended indications. Clinical testing is expensive, time-consuming and uncertain as to outcome. We cannot guarantee that any clinical trials will be conducted as planned or completed on schedule, if at all. A failure of one or more clinical trials can occur at any stage of testing. Events that may prevent successful or timely completion of clinical development include:

Additionally, if the results of any clinical trials are inconclusive or if there are safety concerns or serious adverse events associated with~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other ~~product~~future candidates, we may:

In addition, the FDA’s and other regulatory authorities’ policies with respect to clinical trials may change and additional government regulations may be enacted. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies governing clinical trials, our development plans may be impacted. For example, in December 2022, with the passage of Food and Drug Omnibus Reform Act, or FDORA, Congress required sponsors to develop and submit a diversity action plan for each Phase 3 clinical trial or any other “pivotal study” of a new drug or biological product. Similarly, the regulatory landscape related to clinical trials in the EU recently evolved. If we are not able to adapt to these and other changes in existing requirements or the adoption of new requirements or policies governing clinical trials, our development plans may be impacted.

Our product development costs will increase if we experience delays in testing or marketing approvals. In addition, if we make manufacturing or other changes to~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other ~~product~~future candidates, we may need to conduct additional studies to bridge our modified product candidates to earlier versions. We do not know whether any of our preclinical studies or clinical

trials will begin as planned, will need to be restructured or will be completed on schedule, or at all. We may also determine to change the design or protocol of one or more of our clinical trials, which we have done in the past and which could result in delays. Significant preclinical study or clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitors to bring products to market before we do and impair our ability to successfully commercialize our product candidates.

If our third-party clinical trial vendors fail to comply with strict regulations, ~~the~~any clinical trials for~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other ~~product~~future candidates may be delayed or unsuccessful.

We do not have the personnel capacity to conduct or manage the clinical trials that will be necessary for the development of~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other ~~product~~future candidates. For ~~our Phase I/II clinical trial ofSGT-001~~IGNITE DMD we are relying, and for any future clinical trials we expect we will rely, on third parties to assist us in managing, monitoring and conducting our clinical trials. If these third parties fail to comply with applicable regulations or do not adequately fulfill their obligations under the terms of our agreements with them, we may not be able to enter into alternative arrangements without undue delay or additional expenditures and, therefore, the clinical trials for~~SGT-001~~ SGT-003 or ~~our~~ other current and future product candidates may be delayed or unsuccessful.

Furthermore, the FDA can be expected to inspect some or all of the clinical sites participating in our clinical trials to determine if our clinical trials are being conducted according to GCPs. If the FDA determines that these clinical sites are not in compliance with applicable regulations, we may be required to delay, repeat or terminate the clinical trials.

We may find it difficult to enroll patients in our clinical trials, which could delay or prevent us from proceeding with clinical trials of~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other ~~product~~future candidates.

Identifying and qualifying patients to participate in any clinical trials of~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 and ~~our~~ other ~~product~~future candidates isare critical to our success. Because of our primary focus on rare diseases, we may have difficulty enrolling a sufficient number of eligible patients. The timing of any clinical trials depends on our ability to recruit patients to participate as well as complete requiredfollow-up periods. If patients are unwilling or unable to participate in our gene therapy clinical trials, including because of negative publicity from adverse events related to our ~~product~~ candidates, ~~including the unexpected serious adverse event we recently reported,~~ other approved gene therapies or the biotechnology or gene therapy fields, or due to competitive clinical trials or approvals for similar patient populations, clinical trials in products employing our vector or our platform or for other reasons, the timeline for recruiting patients, conducting clinical trials and obtaining regulatory approval of~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or our other candidates may be delayed. We may also experience delays if patients withdraw from the clinical trial or do not complete the required monitoring period. Furthermore, we may face difficulties in recruiting patients to enroll in, or once enrolled, retaining patients in future clinical trials if they or their caretakers are affected by the COVID-19 virus or are fearful of traveling to, or are unable to travel to, our clinical trial sites because of the COVID-19 pandemic or other unforeseen events. These delays could result in increased costs, delays in advancing~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other ~~product~~future candidates, delays in testing the effectiveness of~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 and ~~our~~ other ~~product~~future candidates or termination of clinical trials altogether.

We may not be able to identify, recruit and enroll a sufficient number of patients, or those with required or desired characteristics, to complete any clinical trials in a timely manner. Patient enrollment and trial completion is affected by many factors, including:

~~In March 2018, the FDA placed our Phase I/II clinical trial ofSGT-001~~ on full clinical hold following our report of an unexpected serious adverse event in the clinical trial. As a result, we have halted enrollment and dosing in the clinical trial until such time as the clinical hold is lifted. We have received the formal clinical hold letter from the FDA and we are finalizing our response to the FDA letter. We plan to work closely with the FDA to address the clinical hold. If we are slow or unable to ~~satisfy any requests~~adapt to changes in existing requirements or the adoption of new requirements or policies governing clinical trials, our development plans may be impacted. For example, in December 2022, with the ~~FDA in~~passage of Food and Drug Omnibus Reform Act, Congress required sponsors to develop and submit a ~~timely manner, or at all, or if the FDA does not lift the full clinical hold in a timely manner, or at all, we would be further delayed or prevented from enrolling patients in our Phase I/II~~diversity action plan for each phase 3 clinical trial or any other “pivotal study” of~~SGT-001.~~ a new drug or biological product. These plans are meant to encourage the enrollment of more diverse patient populations in late-stage clinical trials of FDA-regulated products. Similarly, the regulatory landscape related to clinical trials in the EU recently evolved. The EU Clinical Trials Regulation, or CTR, which was adopted in April 2014 and repeals the EU Clinical Trials Directive, became applicable on January 31, 2022. While the Clinical Trials Directive required a separate clinical trial application to

be submitted in each member state, to both the competent national health authority and an independent ethics committee, the CTR introduces a centralized process and only requires the submission of a single application to all member states concerned. The CTR allows sponsors to make a single submission to both the competent authority and an ethics committee in each member state, leading to a single decision per member state.

Our ability to successfully initiate, enroll and complete a clinical trial in any foreign country is subject to numerous risks unique to conducting business in foreign countries, including:

Even if we complete the necessary clinical trials, we cannot predict when, or if, we will obtain regulatory approval to commercialize~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other ~~product~~future candidates and the approval may be for a more narrow indication than we seek.

We cannot commercialize~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other ~~product~~future candidates until the appropriate regulatory authorities have reviewed and approved the product candidate. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state and local statutes and regulations require the expenditure of substantial time and financial resources and we may not be able to obtain the required regulatory approvals. Even if our product candidates meet their safety and efficacy endpoints in clinical trials, the regulatory authorities may not complete their review processes in a timely manner, or we may not be able to obtain regulatory approval. Additional delays may result if an FDA advisory committee or other regulatory authority recommendsnon-approval or restrictions on approval. In addition, we may experience delays or rejections based upon additional government regulation from future legislation or administrative action or changes in regulatory authority policy during the period of product development, clinical trials and the regulatory review process.

Even if we receive regulatory approval, regulatory authorities may approve a product candidate for more limited indications than requested or they may impose significant limitations in the form of narrow indications, warnings or a REMS. Regulatory authorities may require precautions or contra-indications with respect to conditions of use or they may grant approval subject to the performance of costly post-marketing clinical trials. In addition, regulatory authorities may not approve the labeling claims that are necessary or desirable for the successful commercialization of our product candidates. Any of the foregoing scenarios could materially harm the commercial prospects for our product candidates.

Even if we obtain regulatory approval for a product candidate, our product candidates will remain subject to regulatory oversight.

Even if we obtain any regulatory approval for~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other ~~product~~future candidates, we will be subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising, promotion, sampling, record-keeping and submission of safety and other post-market information. Any regulatory approvals that we receive for our product candidates may also be subject to a REMS, limitations on the approved indicated uses for which the product may be marketed or conditions of approval, or requirements for potentially costly post-marketing testing, including Phase IV clinical trials, and surveillance to monitor the quality, safety and efficacy of the product. Advertising and promotional materials must comply with FDA rules and are subject to FDA review, in addition to other potentially applicable federal and state laws.

In addition, later discovery of previously unknown adverse events or other problems with our products, manufacturers or manufacturing processes, or failure to comply with ~~applicable~~ regulatory requirements, ~~following approval ofSGT-001~~ ~~or our other product candidates, a regulatory authority~~ may ~~among other things, suspend or withdraw regulatory approval, narrow the product label, restrict the marketing~~have various consequences, including:

In addition, manufacturers of approved products and those manufacturers’ facilities are required to comply with extensive FDA requirements, including ensuring that quality control and manufacturing procedures conform to cGMPs applicable to drug manufacturers or quality assurance standards applicable to medical device manufacturers, which include requirements relating to quality control and quality assurance as well as the corresponding maintenance of records and documentation and reporting requirements. We, any contract manufacturers we may engage in the future, our future collaborators and their contract manufacturers will also be subject to other regulatory requirements, including submissions of safety and other post-marketing information and reports, registration and listing requirements, requirements regarding the distribution of samples to clinicians, recordkeeping, and costly post-marketing studies or clinical trials and surveillance to monitor the safety or efficacy of the product ~~suspend~~such as the requirement to implement a REMS.

Non-compliance with European Union requirements regarding safety monitoring or pharmacovigilance, and with requirements related to the development of products for the pediatric population, can also result in significant financial penalties. Similarly, failure to comply with the European Union’s requirements regarding the protection of personal information can also lead to significant penalties and sanctions. Further, similar restrictions apply to approved products in the EU. The holder of a marketing authorization is required to comply with a range of requirements applicable to the manufacturing, marketing, promotion and sale of medicinal products. These include: compliance with the EU’s stringent pharmacovigilance or safety reporting rules, which can impose post-authorization studies and additional monitoring obligations; the manufacturing of authorized medicinal products, for which a separate manufacturer’s license is mandatory; and the marketing and promotion of authorized drugs, which are strictly regulated in the EU and are also subject to EU Member State laws.

Accordingly, assuming we, or our collaborators, receive marketing approval for one or more of our product candidates, we, and our collaborators, and our and their contract manufacturers will continue to expend time, money and effort in all areas of regulatory compliance, including manufacturing, production, product surveillance and quality control. If we, and our collaborators, are not able to comply with post-approval regulatory requirements, our or our collaborators’ ability to market any ~~ongoing clinical trials~~future products could be limited, which could adversely affect our ability to achieve or ~~seize or detain~~sustain profitability. Further, the ~~product or otherwise require the withdrawal~~cost of ~~the product from the market.~~compliance with post-approval regulations may have a negative effect on our operating results and financial condition.

Even if we obtain and maintain approval for~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other ~~product~~future candidates from the FDA, we may never obtain approval for our product candidates outside of the United States, which would limit our market opportunities and adversely affect our business.

Even if we receive FDA approval of~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other ~~product~~future candidates in the United States, approval of a product candidate in the United States by the FDA does not ensure approval of such product candidate by regulatory authorities in other countries or jurisdictions, and approval by one foreign regulatory authority does not ensure approval by regulatory authorities in other foreign countries or by the FDA. Future sales of our product candidates outside of the United States will be subject to foreign regulatory requirements governing clinical trials, manufacturing and marketing approval. Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and more onerous than, those in the United States, including additional preclinical studies or clinical trials. In many countries outside the United States, a product candidate must be approved for reimbursement before it can be approved for sale in that country. We intend to submit a marketing authorization application, or MAA, to the EMA for approval of~~SGT-001~~ SGT-003 in the European Union, but obtaining such approval from the European Commission following the opinion of the EMA is a lengthy and expensive process. Regulatory authorities in countries outside of the United States and the European Union also have requirements for approval of product candidates with which we must comply prior to marketing in those countries. Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for us and could delay or prevent the introduction of~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other future product candidates in certain countries.

Further, clinical trials conducted in one country may not be accepted by regulatory authorities in other countries. Also, regulatory approval for~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other future product candidates may be withdrawn. If we fail to comply with the regulatory requirements, our target market will be reduced, and our ability to realize the full market potential of our product candidates will be harmed.

Additionally, we could face heightened risks with respect to seeking marketing approval in the United Kingdom as a result of Brexit. The United Kingdom is no longer part of the European Single Market and European Union Customs Union. As of January 1, 2021, the Medicines and Healthcare products Regulatory Agency, or the MHRA, became responsible for supervising medicines and medical devices in Great Britain, comprising England, Scotland and Wales under domestic law, whereas Northern Ireland will continue to be subject to European Union rules under the Northern Ireland Protocol. Any delay in obtaining, or an inability to obtain, any marketing approvals, as a result of Brexit or otherwise, may prevent us from commercializing any product candidates in the United Kingdom and/or the EU and may force us to restrict or delay efforts to seek regulatory approval in the United Kingdom for our product candidates, which could significantly and materially harm our business.

Since a significant proportion of the regulatory framework for pharmaceutical products in the U.K. covering the quality, safety, and efficacy of pharmaceutical products, clinical trials, marketing authorization, commercial sales, and distribution of pharmaceutical products is derived from EU directives and regulations, Brexit may have a material impact upon the regulatory regime with respect to the development, manufacture, importation, approval and commercialization of our product candidates in the U.K. For example, the U.K. is no longer covered by the centralized procedures for obtaining EU-wide marketing authorization from the EMA, and a separate marketing authorization will be required to market our product candidates in the U.K.

Regulatory requirements governing gene therapy products are periodically updated and may continue to change in the future.

Regulatory requirements governing gene therapy products have changed frequently and ~~may~~will likely continue to change in the future.

~~The~~ Moreover, there is substantial, and sometimes uncoordinated, overlap in those responsible for regulation of gene therapy products. For example, in the United States, the FDA has established the Office of ~~Tissues and Advanced Therapies, or the OTAT,~~Therapeutic Products within the Center for Biologics Evaluation and Research, or the CBER, to consolidate the review of gene therapy and related products, and ~~has established~~ the Cellular, Tissue and Gene Therapies Advisory Committee to advise CBER inon its review. Gene therapy clinical trials ~~conducted at institutions that receive funding for recombinant DNA research from the U.S. National Institutes of Health, or the NIH,~~may also ~~are potentially~~be subject to review and oversight by an institutional biosafety committee, a local institutional committee that reviews and oversees basic and clinical research conducted at the ~~RAC; however,~~institution participating in the ~~NIH announced that the Office of Biotechnology Activities’ Recombinant DNA Advisory Committee, or the RAC, will soon only publicly review~~ clinical ~~trials if the trials cannot be evaluated by standard oversight bodies and pose unusual risks.~~trial. Although the FDA decides whether individual gene therapy protocols may proceed, the ~~RAC public~~ review process ~~if undertaken,~~and determinations of other reviewing bodies can impede or delay the initiation of a clinical trial, even if the FDA has reviewed the trial ~~design and details~~ and approved its initiation. ~~Conversely, the~~

The FDA ~~can put an IND on a clinical hold even if the RAC~~ has ~~provided a favorable review or an exemption fromin-depth,~~ ~~public review. If we were~~issued various guidance documents regarding gene therapies, including final guidance documents released in January 2020 relating to ~~engage anNIH-funded~~ ~~institution to conduct a clinical trial, that institution’s institutional biosafety committee, or IBC,~~chemistry, manufacturing and controls information for gene therapy INDs, gene therapies for rare diseases and gene therapies for retinal disorders, as well as ~~its IRB would need~~final guidance in October 2022 for Human Gene Therapy for Neurodegenerative Diseases. Although the FDA has indicated that these and other guidance documents it previously issued are not legally binding, we believe that our compliance with them is likely necessary to ~~review~~gain approval for any gene therapy product candidate we may develop. The guidance documents provide additional factors that the ~~proposed clinical trial to assess the safety~~FDA will consider at each of the ~~trial. In addition,~~above stages of development and relate to, among other things, the proper preclinical assessment of gene therapies; the chemistry, manufacturing, and control information that should be included in an IND application; the proper design of tests to measure product potency in support of an IND or BLA application; and measures to observe delayed adverse ~~developments~~effects in ~~clinical trials~~subjects who have been exposed to investigational gene therapies when the risk of such effects is high. Further, for AAV vectors specifically, the FDA typically recommends that sponsors continue to monitor participants for potential gene therapy-related adverse events for up to a 5-year period. Other types of gene therapy or gene editing products ~~conducted by others~~ may ~~cause the FDA or other oversight bodies~~require longer follow up, potentially up to ~~change the requirements for approval of our product candidates.~~ a maximum 15-year period.

Similarly, the EMA may issue new guidelines concerning the development and marketing authorization for gene therapy products and require that we comply with these new guidelines. The grant of marketing authorization in the European Union for gene therapy products is governed by Regulation 1394/2007/EC on advanced therapy medicinal products, read in combination with Directive 2001/83/EC of the European Parliament and of the Council, commonly known as the Community code on medicinal products. Regulation 1394/2007/EC includes specific rules concerning the authorization, supervision, and pharmacovigilance of gene therapy medicinal products. Manufacturers of advanced therapy medicinal products must demonstrate the quality, safety, and efficacy of their products to the EMA, which provides an opinion regarding the MAA. The European Commission grants or refuses marketing authorization in light of the opinion delivered by the EMA.

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

As we advance our product candidates through clinical development, we will be required to consult with these regulatory and advisory groups, and comply with applicable guidelines. These regulatory review committees and advisory groups and any new guidelines they promulgate may lengthen the regulatory review process, require us to perform additional studies, increase our development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other future product candidates or lead to significant post-approval limitations or restrictions. Delay or failure to obtain, or unexpected costs in obtaining, the regulatory approval necessary to bring a potential product to market could decrease our ability to generate sufficient product revenue.

We may not be able to ~~benefit~~obtain orphan drug exclusivity for one or more of our product candidates, and even if we do, that exclusivity may not prevent the FDA or the EMA from approving other competing products.

Under the Orphan Drug Act, the FDA may designate a product candidate as an orphan drug if it is a drug or biologic intended to treat a rare disease or condition. A similar regulatory scheme governs approval of orphan products by the EMA in the European Union. Generally, if a product candidate with an orphan drug designation subsequently receives the first marketing approval for~~SGT-001~~ the indication for which it has such designation, the product is entitled to a period of marketing exclusivity, which precludes the FDA or ~~any~~the EMA from approving another marketing application for a similar product for the same therapeutic indication for that time period. The applicable period is seven years in the United States and ten years in the European Union. The exclusivity period in the European Union can be reduced to six years if a product no longer meets the criteria for orphan drug designation, in particular if the product is sufficiently profitable so that market exclusivity is no longer justified.

In order for the FDA to grant orphan drug exclusivity to one of our products, the FDA must find that the product ~~candidates.~~

~~The FDA and EMA grantedSGT-001~~ ~~orphan drug designation~~is indicated for the treatment of ~~DMD~~a condition or disease with a patient population of fewer than 200,000 individuals annually in ~~August 2016 and September 2016, respectively.~~the United States. The ~~designation ofSGT-001~~ asFDA may conclude that the condition or disease for which orphan drug exclusivity is sought does not meet this standard. Even if we obtain orphan drug exclusivity for a product, that exclusivity may not effectively protect the product from competition because different products can be approved for the same condition.

In addition, even after an orphan drug ~~does not guarantee that any regulatory agency will accelerate regulatory review of, or ultimately~~is approved, the FDA can subsequently approve ~~that~~a similar product ~~candidate, nor does it limit the ability of any regulatory agency to grant orphan drug designation to product candidates of other companies that treat~~for the same ~~indications as our~~condition if the FDA concludes that the later product ~~candidate prior~~is clinically superior in that it is shown to ~~our product candidate receiving exclusive marketing approval.~~

Webe safer, more effective or makes a major contribution to patient care. Orphan drug exclusivity may ~~lose orphan drug exclusivity~~also be lost if the FDA or EMA determines that the request for designation was materially defective or if ~~we cannot~~the manufacturer is unable to assure sufficient quantity of the ~~applicable drug~~product to meet the needs of the patients with ~~DMD.~~the rare disease or condition.

~~Even if we maintain~~The FDA Reauthorization Act of 2017, or FDARA, requires that a drug sponsor demonstrate the clinical superiority of an orphan drug ~~exclusivity forSGT-001~~ or obtain orphan drug exclusivity for our other product candidate, the exclusivity may not effectively protect the product candidate from competition because regulatory authorities still may authorize different drugs forthat is otherwise the same ~~condition or the same~~as a previously approved drug for the same ~~condition if it is determined~~rare disease in order to receive orphan drug exclusivity. FDARA reverses prior precedent holding that the Orphan Drug Act unambiguously requires that the FDA recognize the orphan exclusivity period regardless of a showing of clinical superiority.

The FDA and Congress may further reevaluate the Orphan Drug Act and its regulations and policies. This may be particularly true in light of a decision from the Court of Appeals for the 11th Circuit in September 2021 finding that, for the purpose of determining the scope of exclusivity, the term “same disease or condition” means the designated “rare disease or condition” and could not be interpreted by the FDA to ~~be clinically superior~~mean the “indication or use.” Thus, the Court of Appeals concluded that orphan drug exclusivity applies to the ~~product with~~entire designated disease or condition rather than the “indication or use.” Although there have been legislative proposals to overrule this decision, they have not been enacted into law. On January 23, 2023, FDA announced that, in matters beyond the scope of that court order, FDA will continue to apply its existing regulations tying orphan-drug exclusivity to the uses or indications for which the orphan drug ~~exclusivity.~~was approved. We do not know if, when, or how the FDA or Congress may change the orphan drug regulations and policies in the future, and it is uncertain how any changes might affect our business. Depending on what changes the FDA or Congress may make to its orphan drug regulations and policies, our business could be adversely impacted.

We may seek a breakthrough therapy designation for~~SGT-001~~ one or more of our ~~other~~ product candidates, but we might not receive such designation, and even if we do, such designation may not lead to a faster development or regulatory review or approval process.

We may seek a breakthrough therapy designation for~~SGT-001~~ one or more of our ~~other~~ product candidates; however, we cannot assure our stockholders that~~SGT-001~~ one or more of our ~~other~~ product candidates will meet the criteria for that designation. A breakthrough therapy is defined as a therapy that is intended, alone or in combination with one or more other therapies, to treat a serious condition, and preliminary clinical evidence indicates that the therapy may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. For therapies and biologics that have been designated as breakthrough therapies, interaction and communication between the FDA and the sponsor of the trial can help to identify the most efficient path for clinical development while minimizing the number of patients placed in ineffective control regimens. Therapies designated as breakthrough therapies by the FDA may also be eligible for priority review if supported by clinical data at the time the new drug application is submitted to the FDA.

Designation as a breakthrough therapy is within the discretion of the FDA. Accordingly, even if we believe that one of our product candidates meets the criteria for designation as a breakthrough therapy, the FDA may disagree and instead determine not to make such designation. Even if we receive breakthrough therapy designation, the receipt of such designation for a product candidate may not result in a faster development or regulatory review or approval process compared to drugs considered for approval under conventional FDA procedures and does not assure ultimate approval by the FDA. In addition, even if one or more of our product candidates ~~qualify~~qualifies as a breakthrough ~~therapies,~~therapy, the FDA may later decide that the product candidate no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened.

Accelerated approval by the FDA, even if granted for one or more of our product candidates, may not lead to a faster development or regulatory review or approval process and it does not increase the likelihood that our product candidates will receive marketing approval.

We may seek approval of one or more of our product candidates using the FDA’s accelerated approval pathway. A product may be eligible for accelerated approval if it treats a serious or life-threatening condition and generally provides a meaningful advantage over available therapies. In addition, it must demonstrate an effect on a surrogate or intermediate endpoint that is reasonably likely to predict clinical benefit or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, or IMM, that is reasonably likely to predict an effect on IMM or other clinical benefit. The FDA or other applicable regulatory agency makes the determination regarding whether a surrogate or intermediate endpoint is reasonably likely to predict long-term clinical benefit. Given that expression of microdystrophin has not yet been established to predict long-term clinical benefit, it is not currently accepted, and it is possible the FDA and/or other applicable regulatory agencies could decide never to accept it, as a surrogate endpoint for the accelerated approval pathway for the treatment of Duchenne.

As a condition of approval, the FDA may require that a sponsor of a drug or biologic product candidate receiving accelerated approval perform adequate and well-controlled post-marketing clinical trials. These confirmatory trials must be completed with due diligence and may be required to be initiated prior to submission of the BLA. In addition, the FDA currently requires as a condition for accelerated approval pre-approval of promotional materials, which could adversely impact the timing of the commercial launch of the product. Further, with passage of FDORA in December 2022, Congress modified certain provisions governing accelerated approval of drug and biologic products. Specifically, the new legislation authorized the FDA to: require a sponsor to have its confirmatory clinical trial underway before accelerated approval is awarded, require a sponsor of a product granted accelerated approval to submit progress reports on its post-approval studies to FDA every six months (until the study is completed) and use expedited procedures to withdraw accelerated approval of an NDA or BLA after the confirmatory trial fails to verify the product’s clinical benefit.

We may not be able to satisfy these requirements and conditions governing accelerated approval and, even if we do receive accelerated approval, we may not experience a faster development or regulatory review or approval process and receiving accelerated approval does not provide assurance of ultimate FDA approval.

We may seek a Rare Pediatric Disease Designation for SGT-003 or ~~RPDD, toSGT-001;~~ ~~however,~~other current and future product candidates. However, a BLA for~~SGT-001~~ SGT-003 or other current and future product candidates may not meet the eligibility criteria for a priority review voucher upon approval.

~~The~~With enactment of the Food and Drug Administration Safety and Innovation Act in 2012, Congress authorized the FDA ~~has granted RPDD~~ to~~SGT-001.~~ ~~RPDD does not guarantee~~ award priority review vouchers to sponsors of certain rare pediatric disease product applications that ~~a BLA for such drug will~~ meet the ~~eligibility~~ criteria specified in the law. This provision is designed to encourage development of new drug and biological products for prevention and treatment of certain rare pediatric diseases. Specifically, under this program, a sponsor who receives an approval for a drug or biologic for a “rare pediatric disease” may qualify for a voucher that can be redeemed to receive a priority review of a subsequent marketing application for a different product. The sponsor of a rare pediatric disease drug product receiving a priority review voucher may transfer (including by sale) the voucher to another sponsor. The voucher may be further transferred any number of times before the voucher is used, as long as the sponsor making the transfer has not yet submitted the application.

In order to receive a priority review voucher upon BLA approval, the product must receive designation from the FDA as a product for a rare pediatric disease prior to approval of the marketing application. A “rare pediatric disease” is a disease that is serious or life-threatening, in which the serious or life-threatening manifestations primarily affect individuals aged from birth to 18 years and affects fewer than 200,000 people in the United States, or affects more than 200,000 people in the United States but there is no reasonable expectation that the cost of developing and making available in the United States a product for such disease or condition will be recovered from sales in the United States of such product. In addition to receiving rare pediatric disease designation, in order to receive a priority review voucher, at the ~~time~~BLA must be given priority review, rely on clinical data derived from studies examining a pediatric population and dosages of the product intended for that population, not seek approval for a different adult indication in the original rare pediatric disease product application ~~is approved. We will need to request~~and be for a product that does not include a previously approved active ingredient.

Under the current statutory sunset provisions for the Rare Pediatric Disease Priority Review Voucher Program, after September 30, 2024, FDA may only award a voucher for an approved rare pediatric disease product application if the sponsor has rare pediatric disease designation for the drug, and that designation was granted by September 30, 2024. After September 30, 2026, FDA may not award any rare pediatric disease priority review ~~voucher in our BLA forSGT-001.~~ ~~The use~~vouchers. If we do not obtain approval of a ~~priority review voucher allows for~~BLA by these dates, and if the Rare Pediatric Disease Priority Review Voucher Program is not further extended by congressional action, we may not receive a ~~drug to be reviewed by the FDA within six months. However, the FDA may determine that a BLA forSGT-001~~ ~~does not meet the eligibility criteria for a priority review voucher upon approval. Moreover, even ifSGT-001~~ ~~does satisfy those criteria, the product will need to be licensed before September 30, 2022 in order to be granted a rare disease priority review voucher.~~Priority Review Voucher.

We may seek a fast track designation for~~SGT-001~~ one or more of our ~~other~~ product ~~candidates, but we might not receive such designation, and even if we do,~~candidates. However, such designation may not actually lead to a faster development or regulatory review or approval process. We might not receive such designation for one or more of our product candidates.

If a therapy is intended for the treatment of a serious condition and nonclinical or clinical data demonstrate the potential to address unmet medical need for this condition, a drug sponsor may apply for FDA fast track designation. ~~If we seek fast track designation for a product candidate, we may not receive it from the FDA. Even if we receive fast track designation,~~However, fast track designation does not ensure that we will receive marketing approval or that approval will be granted within any particular timeframe. We may not experience a faster development or regulatory review or approval process with fast track designation compared to conventional FDA procedures. In addition, the FDA may withdraw fast track designation if it believes that the designation is no longer supported by data from our clinical development ~~program.~~program or if the unmet need has been fulfilled with the approval of another product. Fast track designation alone does not guarantee qualification for the FDA’s priority review procedures.

We may seek priority review designation for~~SGT-001~~ one or more of our ~~other~~ product candidates, but we might not receive such designation, and even if we do, such designation may not lead to a faster development or regulatory review or approval process.

If the FDA determines that a product candidate offers a treatment for a serious condition and, if approved, the product would provide a significant improvement in safety or effectiveness, the FDA may designate the product candidate for priority review. A priority review designation means that the goal for the FDA to review an application is six months, rather than the standard review period of ten months. We may request priority review for our product candidates, however, we cannot assume that~~SGT-001~~ one or more of our ~~other~~ product candidates will meet the criteria for that designation. The FDA has broad discretion with respect to whether or not to grant priority review status to a product candidate, so even if we believe a particular product candidate is eligible for such designation or status, the FDA may decide not to grant it. Moreover, a priority review designation does not necessarily mean a faster development or regulatory review or approval process or necessarily confer any advantage with respect to approval compared to conventional FDA procedures. Receiving priority review from the FDA does not guarantee approval within thesix-month review cycle or at all.

Inadequate funding for the FDA, the SEC and other government agencies, including from government shut downs, or other disruptions to these agencies’ operations, could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business.

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory and policy changes. Average review times at the agency have fluctuated in recent years as a result. Disruptions at the FDA and other agencies may also slow the time necessary for new product candidates to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. In addition, government funding of the SEC and other government agencies on which our operations may rely, including those that fund research and development activities, is subject to the political process, which is inherently fluid and unpredictable.

We face significant competition and our competitors may achieve regulatory approval before us or develop therapies that are more advanced or effective than ours, which may adversely affect our ability to successfully market or commercialize~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other ~~product~~future candidates.

We operate in a highly competitive segment of the biopharmaceutical market. We face competition from many different sources, including larger and better-funded pharmaceutical, specialty pharmaceutical and biotechnology companies, as well as from academic institutions, government agencies and private and public research institutions. Our product candidates, if successfully developed and approved, will compete with established therapies as well as with new treatments that may be introduced by our competitors. There are a variety of product candidates, including gene therapies, in development for ~~DMD.~~Duchenne and FA or dilated cardiomyopathy. Many of our competitors have significantly greater financial, product candidate development, manufacturing and marketing resources than we do. Large pharmaceutical and biotechnology companies have extensive experience in clinical testing and obtaining regulatory approval for their products, and mergers and acquisitions within these industries may result in even more resources being concentrated among a smaller number of larger competitors. Smaller and other early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

For example, we are aware of several companies and research institutions conducting clinicals trials of product candidates focused on systemic gene transfers for Duchenne, including Pfizer Inc. and Sarepta Therapeutics, Inc. with product candidates currently in Phase III clinical development, Genethon with a product candidate currently in a Phase I/II/III clinical trial, and REGENXBIO Inc., which has announced that it has initiated a Phase I/II clinical trial in the first quarter of 2023. In September 2022, Sarepta Therapeutics, Inc. announced that it had submitted a BLA for its gene therapy candidate SRP-9001 for the treatment of ambulant patients with Duchenne with a PDUFA date of May 29, 2023. In February 2023, Reata Pharmaceuticals announced FDA approval of SKYCLSRYSTM (omaveloxolone) for the treatment of FA in adults and adolescents aged 16 years and older. We are also aware of several companies and research institutions conducting clinical trials of product candidates focused on systemic gene transfer for cardiomyopathy associated with FA, including Lexeo Therapeutics with a product candidate currently in a Phase I/II clinical trial.

Our commercial opportunity could be reduced or eliminated if competitors develop and commercialize products that are first to market or are safer, more effective, have fewer or less severe side effects, have broader market acceptance, are more convenient or are less expensive than any product candidate that we may develop.

We are aware of several companies focused on developing gene therapies in various indications, as well as several companies addressing other methods for modifying genes and regulating gene expression. Any advances in gene therapy technology made by a competitor may be used to develop therapies that could compete against~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or any future gene therapy ~~product~~ candidates we develop.

We may fail to capitalize on other potential product candidates that may represent a greater commercial opportunity or for which there is a greater likelihood of success.

The success of our business depends upon our ability to develop and commercialize~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 and ~~our~~ other ~~product~~future candidates. Because we have limited resources, we may forego or delay pursuit of opportunities with certain programs or product candidates or for indications that later prove to have greater commercial potential than SGT-003, AVB-202-TT, AVB-401 or other future candidates. For example, in January 2020, in connection with implementing our strategic plan to create a leaner company

focused on advancing SGT-001, or we curtailed certain activities supporting our other ~~product candidates.~~ research and development programs. Similarly, in April 2022, we announced a reorganization of our corporate operations to prioritize the advancement of our key programs, and we focused our research and development activities to those related to our SGT-001 and SGT-003 programs. Subsequent to that, in September 2022, we announced that we would be pausing activities for SGT-001.

In addition, in October 2020, we entered into a collaboration and license agreement with Ultragenyx, pursuant to which we granted Ultragenyx an exclusive worldwide license under certain intellectual property rights controlled by us to develop AAV8 or other clade E AAV variant pharmaceutical products that express our MD5 nNOS binding domain form of microdystrophin protein for the treatment of Duchenne and other disease indications resulting from a lack of functional dystrophin, which we refer to as the Licensed Products.

Our spending on current and future research and development programs may not yield any commercially viable product candidates. If we do not accurately evaluate the commercial potential for a particular product candidate, we may relinquish valuable rights to that product candidate through strategic collaborations, licensing or other arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate. Alternatively, we may allocate internal resources to a product candidate in a therapeutic area in which it would have been more advantageous to enter into a partnering arrangement. If any of these events occur, we may be forced to abandon our development efforts with respect to a particular product candidate or fail to develop a potentially successful product candidate.

Risks related to the manufacturing and commercialization of~~SGT-001~~ our product candidates

We have entered into, and may in the future enter into, collaborations with third parties for the development or commercialization of our product candidates. If our collaborations are not successful, we may not be able to capitalize on the market potential of these product candidates and our ~~other~~business could be adversely affected.

In October 2020, we entered into a collaboration and license agreement with Ultragenyx, pursuant to which we granted Ultragenyx an exclusive worldwide license under certain intellectual property rights controlled by us to develop the Licensed Products.

While we have retained all rights to and are developing on our own SGT-003, we may in the future enter into development, distribution or marketing arrangements with third parties with respect to SGT-003, AVB-202-TT, AVB-401 or future candidates. Our likely collaborators for any such sales, marketing, distribution, development, licensing or broader collaboration arrangements include large and mid-size pharmaceutical companies, regional and national pharmaceutical companies and biotechnology companies. If we enter into any such arrangements with any third parties in the future, we will likely have limited control over the amount and timing of resources that our collaborators dedicate to the development or commercialization of our product candidates. Our ability to generate revenues from these arrangements will depend on our collaborators’ abilities and efforts to successfully perform the functions assigned to them in these arrangements.

Collaborations that we enter into, including our collaboration with Ultragenyx, may not be successful, and any success will depend heavily on the efforts and activities of such collaborators. Collaborations pose a number of risks, including the following:

Collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner, or at all. If any collaborations that we enter into do not result in the successful development and commercialization of products or if one of our collaborators terminates its agreement with us, we may not receive any future research funding or milestone or royalty payments under the collaboration. If we do not receive the funding we expect under these agreements, our development of our product candidates could be delayed and we may need additional resources to develop our product candidates. All of the risks relating to product development, regulatory approval and commercialization described herein also apply to the activities of our collaborators.

Additionally, subject to its contractual obligations to us, if a collaborator of ours is involved in a business combination, the collaborator might deemphasize or terminate the development or commercialization of any product candidate licensed to it by us. If one of our collaborators terminates its agreement with us, we may find it more difficult to attract new collaborators and our perception in the business and financial communities could be adversely affected.

We may not be successful in finding strategic collaborators for continuing development of~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other ~~product~~future candidates or platform technologies, or for successfully commercializing or competing in the market for certain indications.

We may seek to establish strategic partnerships for developing~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other ~~product~~future candidates or platform technologies due to capital costs required to develop, manufacture and commercialize our product ~~candidates.~~candidates or platform technologies. We may not be successful in our efforts to establish ~~such~~ strategic partnerships or other alternative arrangements because, among other things, our research and development pipeline may be insufficient,~~SGT-001~~ SGT-003, AVB-202-TT or AVB-401 or platform technologies may be deemed to be at too early of a stage of development for collaborative effort or third parties may not view~~SGT-001~~ SGT-003, AVB-202-TT or AVB-401 or platform technologies as having the requisite potential to demonstrate safety and efficacy. We cannot be certain that, following a strategic transaction, we will achieve an economic or business benefit that justifies such transaction.

If we seek to but are unable to reach agreements with suitable collaborators on a timely basis, on acceptable terms or at all, we may have to curtail, reduce or delay the development of a product candidate, delay its potential commercialization, reduce the scope of any sales or marketing activities or increase our expenditures and undertake development, manufacturing or commercialization activities independently. If we elect to fund our own independent development or commercialization activities, we will need to obtain additional expertise and additional capital, which may not be available to us on acceptable terms or at all. If we fail to enter into collaborations and do not have sufficient funds or expertise to undertake the necessary development, manufacturing and commercialization activities, we may not be able to further develop~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other ~~product candidates.~~future candidates or platform technologies.

We have limited experience manufacturing SGT-003 and our other ~~product~~current or future candidates.

The manufacturing process we have used historically and the manufacturing process we plan to use in the future to produce~~SGT-001~~ is product for our candidates are complex and ~~has~~our processes have not been validated for commercial use. WeAs candidates progress through preclinical studies and clinical trials to marketing approval and commercialization, it is common that various aspects of the development program, such as manufacturing methods and formulation, are altered along the way in an effort to optimize safety, quality, efficacy, yield, manufacturing batch size, minimize costs and achieve consistent results. For example, we have ~~no experience~~recently moved to a transient transfection-based manufacturing~~SGT-001~~ process for SGT-003. While we have observed positive results in preclinical studies using this new manufacturing process, any further changes in manufacturing or formulation may result in effects and results that are different from those observed in our ~~other product candidates. Building our own manufacturing facility would require substantial additional investment, would be time-consuming and may be subject~~completed preclinical studies to ~~delays, including those resulting from compliance with regulatory requirements. In addition, building a manufacturing facility may cost more than we currently anticipate. Although~~date. Similarly, in the future we may ~~establish~~introduce an alternative process or formulation of one or more of our ~~own manufacturing facility~~candidates during the course of our planned preclinical studies or clinical trials. Such changes carry the risk that they will not achieve these intended objectives. Any of these changes could cause our candidates to ~~support a commercial launch, if we are unable to do so~~perform differently and affect the results of planned clinical trials or ~~otherwise decide not to do so, we may be unable to produce commercial materials or meet demand, if any should develop, forSGT-001~~ ~~and our~~ other ~~product candidates. Any such failure~~future clinical trials conducted with the altered materials. This could delay initiation or ~~prevent~~completion of clinical trials, require the conduct of bridging studies or clinical trials or the repetition of one or more studies or clinical trials, increase development costs, delay approval of our ~~commercialization ofSGT-001~~ orcandidates and jeopardize our ~~other product candidates.~~ ability to commercialize our candidates, if approved, and generate revenue.

The production of~~SGT-001~~ SGT-003 uses a transient transfection-based process which requires processing steps that are more complex than those required for most chemical pharmaceuticals. We also intend to use transient transfection manufacturing for our other current and future candidates. Moreover, unlike chemical pharmaceuticals, the physical and chemical properties of a gene ~~transfer~~therapy candidate such as ours generally cannot be fully characterized. As a result, assays of the finished product may not be sufficient to ensure that the product will perform in the intended manner. Accordingly, we have and will continue to employ multiple steps to control our manufacturing ~~process~~processes to assure that the process works and that~~SGT-001~~ is SGT-003 and our current and future products are made strictly and consistently in compliance with the process. As a result of the limited number of FDA approvals for gene transfer products to date, the timeframe required for us to obtain approval for a cGMP gene therapy manufacturing facility in the United States is uncertain.such processes. We must supply all necessary documentation in support of aan IND, BLA or ~~other~~ MAA on a timely basis and must adhere to the FDA’s and the European Union’s cGMP requirements before~~SGT-001~~ ~~and our other product candidates~~ we can obtain marketing ~~approval.~~approval for SGT-003 and other current and future candidates. In order to obtain approval, we will need to ensure that all of our processes, methods and equipment are compliant with cGMP requirements, ~~and perform~~by performing extensive audits of contract laboratories, manufacturers and suppliers.

We currently rely on third-party manufacturers for SGT-003 and plan to rely on third-party manufacturers for our~~SGT-001~~ ~~supply.~~ AVB-202-TT and AVB-401 programs. In order to produce sufficient quantities of~~SGT-001~~ for clinical trials and initial U.S. commercial demand, we have and will ~~need~~continue to further optimize and increase the ~~scale~~capacity of our manufacturing process at our third-party ~~manufacturers, and potentially through our own commercial-scale manufacturing facility.~~manufacturers. We may need to ~~change~~make changes to our ~~current~~manufacturing processes, beyond implementation of a transient transfection-based manufacturing process. We may not be able to produce sufficient quantities of~~SGT-001~~ drug product due to several factors, including equipment malfunctions, facility contamination, material shortages or contamination, natural disasters, a public health issue (for example, an outbreak of a contagious disease such as the COVID-19 pandemic), disruption in utility services, human error or disruptions in the operations of our suppliers. For example, ~~through our contract manufacturer~~ we have ~~performed and~~not released ~~within specifications~~a manufacturing ~~runs ofSGT-001~~lot for clinical supply utilizing the transient transfection-based manufacturing process and ~~have experienced~~may experience variability with respect to the success and yield ~~of these runs. We continue to engage~~between lots that will require continued engagement in process development activities to improve the reproducibility, reliability, quality and consistency of yields of ~~our~~the manufacturing process. Additional manufacturing runs will be required to produce necessary or adequate supply for our ~~Phase I/II~~future clinical ~~trial ofSGT-001~~trials and there is no guarantee that all of those runs will be within specifications or produce adequate supply. If we are not able to produce sufficient supply on the timeline expected, our overall development schedule for~~SGT-001~~ SGT-003 and other current and future candidates could be delayed, and we could incur additional expense. Any such failure could delay or prevent our IND or commercialization of SGT-003 or other current and future candidates.

If supply from a manufacturing facility is interrupted, including as a result of equipment malfunctions, facility contamination, material shortages or contamination, natural disasters, the COVID-19 pandemic or another public health issue, disruption in utility services or human error, there could be a significant disruption in supply of~~SGT-001~~ SGT-003 or ~~our~~ other current and future product candidates. ~~Further,~~In such instance, we may need to locate appropriate replacement third-party manufacturers, and we may not be able to enter into arrangements with such additional third-party manufacturers on favorable terms or at all. Use of new third-party manufacturers could increase the risk of delays in production or insufficient supplies of our product candidates as we transfer our manufacturing technology to these manufacturers and as they gain experience manufacturing our product candidates.

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

In addition, the FDA, the EMA and other foreign regulatory authorities may require us to submit samples of any lot of any approved product together with the protocols showing the results of applicable tests at any time. Under some circumstances, the FDA, the EMA or other foreign regulatory authorities may require that we not distribute a lot until the agency authorizes its release. Lot failures or product recalls could cause us to delay or abandon clinical trials or product launches.

We also may encounter problems hiring and retaining the experienced ~~specialist~~ scientific, quality control and manufacturing personnel needed to ~~operate~~oversee our manufacturing and quality control process, which could result in delays in our production or difficulties in maintaining compliance with applicable regulatory requirements.

Any problems in our manufacturing process or facilities could make us a less attractive collaborator for potential partners, including ~~larger~~biotechnology and pharmaceutical companies and academic research institutions, which could limit our access to additional attractive development programs. Problems in our manufacturing process or facilities also could restrict our ability to meet market demand for~~SGT-001,~~ ~~our~~ SGT-003 or other ~~product candidates or~~current and future product candidates.

~~Although we may establish our ownSGT-001~~ ~~manufacturing facility, we~~We expect to utilize third parties to conduct our product manufacturing for the foreseeable future. Therefore, we are subject to the risk that these third parties may not perform satisfactorily or meet regulatory requirements.

~~Until such time, if ever, as we establish a manufacturing facility that has been properly validated to comply with FDA cGMP requirements, we will~~We do not ~~be able to~~ independently manufacture material for our ~~current~~planned and future clinical ~~programs. For clinical trials ofSGT-001,~~programs and we ~~intend~~expect to utilize materials manufactured by cGMP-compliant third-party suppliers. Even following our potential establishment of a validated cGMP manufacturing facility, we intend to maintain our current and additional third-party manufacturing capabilities in order to provide multiple sources of supply. In the event that the establishment of our own manufacturing facility is delayed or not otherwise pursued and ifIf these third-party manufacturers do not successfully carry out their contractual duties, meet expected deadlines or manufacture~~SGT-001~~ SGT-003 and other current and future product candidates in accordance with

quality and regulatory requirements or if there are disagreements between us and these third-party manufacturers, we may not be able to complete, or may be delayed in completing, the clinical trials required for approval of~~SGT-001.~~ SGT-003 and other current and future product candidates. In such instances, we may need to locate an appropriate replacement third-party relationship, which may not be readily available or on acceptable terms, which would cause additional delay or increased expense prior to the approval of our product candidates.

Additionally, we rely on our third-party manufacturers for their compliance with the cGMP and their maintenance of adequate quality control, quality assurance and qualified personnel. Furthermore, all of our third-party suppliers and manufacturers are engaged with other companies to supply and/or manufacture materials or products for such companies, which exposes them to regulatory risks for the production of such materials and products. FDA inspections may identify compliance issues at third-party manufacturer facilities or at the facilities of third-party suppliers that may disrupt production or distribution, or require substantial resources to correct and prevent recurrence of any deficiencies, and could result in fines or penalties by regulatory authorities. In addition, discovery of problems with a product or the failure to comply with applicable requirements may result in restrictions on a product, manufacturer or holder of an approved BLA, including withdrawal or recall of the product from the market or other voluntary,FDA-initiated or judicial action, including fines, injunctions, civil penalties, license revocations, seizure, total or partial suspension of production or criminal penalties, any of which could significantly and adversely affect supplies of our product candidates.

In addition, we do not currently have long-term supply or manufacturing arrangements in place for the production of~~SGT-001~~ SGT-003 or other current and future product candidates at commercial scale. Although we intend to establish additional sources for long-term supply, ~~potentially including our own commercial-scale cGMP-compliant manufacturing facility and~~from one or more third-party manufacturers, if the gene therapy industry were to grow, we may encounter increasing competition for the materials necessary for the production of~~SGT-001.~~ SGT-003 or other current and future product candidates. We may experience difficulties in scaling up production beyond clinical batches. Furthermore, demand for third-party cGMP manufacturing facilities may grow at a faster rate than existing manufacturing capacity, which could disrupt our ability to find and retain third-party manufacturers capable of producing sufficient quantities of~~SGT-001~~ SGT-003 or other current and future product candidates for future clinical trials or to meet initial commercial demand in the United States. We currently rely, and expect to continue to rely, on additional third parties to manufacture materials for our product candidates and to perform quality testing. ~~Even following the potential establishment of our own cGMP-compliant manufacturing capabilities, we~~We intend to maintain third-party manufacturers for these materials, as well as to serve as additional sources of~~SGT-001,~~ SGT-003 and other current and future product candidates, which will expose us to risks including:

Any of these events could lead to clinical trial delays or failure to obtain regulatory approval or impact our ability to successfully commercialize~~SGT-001~~ SGT-003 or ~~our~~ other current and future product candidates. Some of these events could be the basis for FDA action, including injunction, recall, seizure or total or partial suspension of product manufacture.

If we are unable to establish sales, distribution and marketing capabilities or enter into agreements with third parties to market and sell~~SGT-001~~ SGT-003 and ~~our~~ other ~~product~~current and future candidates, we will be unable to generate any product revenue.

We currently have no sales, distribution or marketing organization. To successfully commercialize any product candidate that may result from our development programs, we will need to develop these capabilities, either on our own or with others. The establishment and development of our own commercial team or the establishment of a contract sales force to market any product candidate we may develop will be expensive and time-consuming and could delay any product launch. Moreover, we cannot be certain that we will be able to successfully develop this capability. We may enter into collaborations regarding~~SGT-001~~ SGT-003 and ~~our~~ other ~~product~~current and future candidates with other entities to utilize their established marketing and distribution capabilities, but we may be unable to enter into such agreements on favorable terms, if at all. If any future collaborators do not commit sufficient resources to commercialize our product candidates, or we are unable to develop the necessary capabilities on our own, we will be unable to generate sufficient product revenue to sustain our business. We compete with many companies that

currently have extensive, experienced and well-funded sales, distribution and marketing operations to recruit, hire, train and retain marketing and sales personnel. We will also face competition in our search for third parties to assist us with the sales and marketing efforts of~~SGT-001~~ ~~and our other product candidates.~~ any future products. Without an internal team or the support of a third party to perform marketing and sales functions, we ~~may~~will be unable to compete successfully against these more established companies.

If we are unable to establish medical affairs capabilities, we will be unable to establish an educated market of physicians to administer~~SGT-001~~ ~~or our other product candidates.~~ any future products.

We currently have no medical affairs team. If we are unable to successfully build a medical affairs team to address scientific and medical questions and provide expert guidance and education in the application, administration and utilization of~~SGT-001~~ ~~and our other product candidates~~ any future products to physicians, we may not be able to establish an educated market for our products. The establishment and development of our own medical affairs team will be expensive and time-consuming and could delay any product launch. Moreover, we cannot be certain that we will be able to successfully develop this capability.

If the market opportunities for~~SGT-001~~ any of our future products are smaller than we believe they are, our revenue prospects may be adversely affected and our business may suffer.

We currently focus our research and product development on treatments for ~~DMD.~~Duchenne, FA, BAG3-mediated dilated cardiomyopathy and other undisclosed cardiac indications. Our understanding of the patient population with ~~this disease~~these diseases is based on estimates in published literature and by ~~DMD~~disease-focused foundations. These estimates may prove to be incorrect and new studies may reduce the estimated incidence or prevalence of ~~this disease.~~these diseases. The number of patients in the United States, the European Union and elsewhere may turn out to be lower than expected, patients may not be otherwise amenable to treatment with our product ~~candidate~~candidates or patients may become increasingly difficult to identify and access.

Further, there are several factors that could contribute to ~~making~~reducing the actual number of patients who could receive~~SGT-001~~ SGT-003, AVB-202. AVB-401 or other future candidates less than the potentially addressable market. These include the lack of widespread availability of, and limited reimbursement for, new therapies in many underdeveloped markets. Further, the severity of the progression of a degenerative disease such as ~~DMD~~Duchenne and FA up to the time of treatment will likely diminish the therapeutic benefit conferred by a gene therapy due to irreversible cell damage.

Certain patients’ immune systems might prohibit the successful delivery of certain gene therapy products, thereby potentially limiting ~~treatment outcomes for these patients.~~the population of patients amenable to gene transfer.

As with manyAAV-mediated gene therapy approaches, certain patients’ immune systems might prohibit the successful delivery of certain gene therapy products, thereby potentially limiting ~~treatment outcomes~~the population of ~~these patients.~~patients amenable to gene transfer. While we are working to better understand the prevalence of ~~neutralizing~~ antibodies to AAV, or seroprevalence, as it relates to gene ~~therapies for DMD,~~therapy, the exact~~DMD-wide~~ seroprevalence is currently unknown and it varies by AAV serotype and age. We may not be able to address ~~this~~these potentially limiting ~~factor~~factors for gene therapy as a treatment for certain patients.

The commercial success of any of our ~~product~~ candidates, ~~includingSGT-001,~~ if approved, will depend upon market acceptance by physicians, patients, third-party payors and others in the medical community.

Even with the requisite approvals from the FDA in the United States, the European Commission in the European Union and other regulatory authorities internationally, the commercial success of~~SGT-001~~ our candidates will depend, in part, on the acceptance of physicians, patients and health care payors of gene therapy products in general, and,~~SGT-001~~ in particular for each of our current and future candidate, as medically necessary, cost-effective and safe. Any product that we commercialize may not gain acceptance by physicians, patients, health care payors and others in the medical community due to ethical, social, medical and legal concerns. If ~~these~~our products do not achieve an adequate level of acceptance, we may not generate significant product revenue and may not become profitable. The degree of market acceptance of gene therapy products and, in particular,~~SGT-001,~~ our current and future candidates, if approved for commercial sale, will depend on multiple factors, including:

Even if a potential product candidate displays a favorable efficacy and safety profile in preclinical studies and clinical trials, market acceptance of the product will not be fully known until after it is launched.

Our efforts to educate the medical community and third-party payors on the benefits of~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 and ~~our~~ other ~~product~~future candidates may require significant resources and may never be successful. Such efforts may require more resources than are typically required due to the complexity and uniqueness of our potential product candidates. If~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other ~~product~~future candidates are approved but fail to achieve market acceptance among physicians, patients or third-party payors, we will not be able to generate significant revenue from any such product.

Our gene transfer approach utilizes a vector derived from a virus, which may be perceived as unsafe or may result in unforeseen adverse events. Negative public opinion and increased regulatory scrutiny of gene therapy may damage public perception of the safety of SGT-003, AVB-202-TT, AVB-401 or our~~SGT-001~~ other gene transfer product ~~candidate~~candidates and adversely affect our ability to conduct our business or obtain regulatory approvals for~~SGT-001.~~ SGT-003, AVB-202-TT, AVB-401 or other gene transfer candidates.

Gene transfer remains a novel technology that faces many challenges imposed by the humoral immune response. The immunogenicity of AAV gene transfers is a very complex process that we and ~~public perception may be influenced by claims~~others continue to work understand through the extensive clinical experience that ~~gene transfer is unsafe,~~now exists over a broad spectrum of therapeutic areas and ~~gene transfer may not gain the acceptance~~indications. Marked inflammatory toxicities have been observed, including complement activation, cytopenias, severe hepatotoxicity as well as transgene related toxicities representing part of the ~~public or the medical community.~~ continuum of diverse aspects of clinical immune responses that can be observed post gene transfer.

In particular, our success will depend upon physicians who specialize in the treatment of ~~DMD~~Duchenne, FA and our cardiac pipeline indications, prescribing treatments that involve the use of~~SGT-001~~ viral vectors in lieu of, or in addition to, other treatments with which they are more familiar and for which greater clinical data may be available. More restrictive government regulations or negative public opinion may delay or impair the development and commercialization of~~SGT-001~~ or demand for any product candidate we may develop. A public backlash developed against gene therapy following the death of a patient in 1999 during a gene therapy clinical trial of research subjects with ornithine transcarbamylase, or OTC, deficiency, a rare disorder in which the liver lacks a functional copy of the OTC gene. The death of the clinical trial subject was due to complications of adenovirus vector administration. Dr. James M. Wilson, former chair of our Scientific Advisory Board, was aco-investigator of the 1999 trial while he was Director of the Institute for Human Gene Therapy of the University of Pennsylvania. Serious adverse events in our clinical trials, including the ~~event~~events that led to ~~our Phase I/II~~the previously-lifted clinical ~~trial ofSGT-001~~ ~~being placed~~holds on ~~full clinical hold,~~IGNITE DMD or other clinical trials involving gene transfer products or our competitors’ products, even if not ultimately attributable to the relevant product candidates, and the resulting publicity, could result in increased government regulation, unfavorable public perception, potential regulatory delays in the testing or approval of~~SGT-001,~~ SGT-003, AVB-202-TT and our other future product candidates, stricter labeling requirements for~~SGT-001~~ SGT-003, AVB-202-TT and our other future candidates, if approved, and a decrease in demand for~~SGT-001.~~ SGT-003, AVB-202-TT and our other future candidates.

~~Failure to comply with ongoing regulatory requirements could cause us to suspend production or put in place costly or time-consuming remedial measures.~~

The regulatory authorities may, at any time following approval of a product for sale, audit the manufacturing facilities for such product. If any such inspection or audit identifies a failure to comply with applicable regulations, or if a violation of product specifications or applicable regulations occurs independent of such an inspection or audit, the relevant regulatory authority may require remedial measures that may be costly or time-consuming to implement and that may include the temporary or permanent suspension of a clinical trial or commercial sales or the temporary or permanent closure of a manufacturing facility.

Any contamination in our manufacturing process, shortages of materials or failure of any of our key suppliers to deliver necessary components could result in interruption in the supply of our product candidates and delays in our clinical development or commercialization schedules.

Given the nature of biologics manufacturing, there is a risk of contamination in our manufacturing processes. Any contamination could materially adversely affect our ability to produce~~SGT-001~~ our candidates on schedule and could cause reputational damage.

Some of the materials required in our manufacturing process are derived from biologic sources. Such materials are difficult to procure and may be subject to contamination or recall. A material shortage, contamination, recall or restriction on the use of biologically derived substances in the manufacture of~~SGT-001~~ our candidates could adversely impact or disrupt the ~~commercial~~ manufacturing or the production of clinical material, which could materially and adversely affect our development timelines.

The insurance coverage and reimbursement status of newly approved products is uncertain. Failure to obtain or maintain adequate coverage and reimbursement for our product candidates, if approved, could limit our ability to market those products and decrease our ability to generate product revenue.

There is significant uncertainty related to third-party coverage and reimbursement of newly approved products. We expect the cost of a single administration of gene transfer products, such as those we are developing, to be substantial, when and if they achieve regulatory approval. We expect that coverage and reimbursement by government and private payors will be essential for most patients to be able to afford these treatments. Accordingly, sales of~~SGT-001,~~ our future products, if approved, will depend substantially, both domestically and abroad, on the extent to which the costs of~~SGT-001~~ such product candidates will be paid by health maintenance, managed care, pharmacy benefit and similar health care management organizations, or will be reimbursed by government authorities, private health coverage insurers and other third-party payors. Coverage and reimbursement by a third-party payor may depend upon several factors, including the third-party payor’s determination that use of a product is:

Obtaining coverage and reimbursement for a product from third-party payors is a time-consuming and costly process that could require us to provide to the payor supporting scientific, clinical and cost-effectiveness data. If coverage and reimbursement are not available, or are available only at limited levels, we may not be able to successfully commercialize~~SGT-001~~ ~~and~~ our ~~other product candidates.~~future products, if approved. Even if coverage is provided, the approved reimbursement amount may not be adequate to realize a sufficient return on our investment.

To our knowledge, noonly a limited number of gene transfer ~~product has~~products have been approved for coverage and reimbursement by the Centers for Medicare & Medicaid Services, or the CMS, the agency responsible for administering the Medicaid program. It is difficult to predict what the CMS will decide with respect to coverage and reimbursement for fundamentally novel products such as ours, as there is no body of established practices and precedents for these types of products either in the United States or the European Union. For example, several cancer drugs have been approved for reimbursement in the United States and have not been approved for reimbursement in certain European Union member states and vice versa. It is difficult to predict what third-party payors will decide with respect to the coverage and reimbursement for~~SGT-001~~ ~~and~~ our ~~other product candidates.~~

Governments outside the United States tend to impose strict price controls, which may adversely affect our revenue, if any.

Outside the United States, international operations generally are subject to extensive government price controls and other market regulations, and increasing emphasis on cost-containment initiatives in the European Union, Canada and other countries may put pricing pressure on us. In general, the prices of therapeutics outside the United States are substantially lower than in the United States. Other countries may allow companies to fix their own prices for therapeutics, but monitor and control company profits. Additional foreign price controls or other changes in pricing regulations could restrict the amount that we are able to charge for our product candidates. Accordingly, in markets outside the United States, the reimbursement for our product candidates may be reduced compared with the United States and may be insufficient to generate commercially reasonable product revenue.

Additionally, in countries where the pricing of gene therapy products is subject to governmental control, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a product. Political, economic and regulatory developments may further complicate pricing negotiations, and pricing negotiations may continue after reimbursement has been obtained. Reference pricing used by various European Union member states and parallel distribution, or arbitrage betweenlow-priced and high-priced member states, can further reduce prices. To obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our product candidate to other available therapies. Reimbursement of our products may be unavailable or limited in scope or amount, which would adversely affect our revenue, if any.

If we obtain approval to commercialize~~SGT-001~~ ~~and~~ our ~~other product candidates~~future products outside of the United States, in particular in the European Union, a variety of risks associated with international operations could materially adversely affect our business.

We expect that we will be subject to additional risks in commercializing~~SGT-001~~ ~~and~~ our ~~other product candidates~~future products, if approved, outside the United States, including:

The failure to comply with applicable foreign regulatory requirements may result in, among other things, fines, suspension, variation or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.

Additionally, on June 23, 2016, the electorate in the United Kingdom voted in favor of leaving the European Union, commonly referred to as Brexit. On March 29, 2017, the country formally notified the European Union of its intention to withdraw pursuant to Article 50 of the Lisbon Treaty. Since a significant proportion of the regulatory framework in the United Kingdom is derived from European Union directives and regulations, the referendum could materially impact the regulatory regime with respect to the approval of our product candidates in the United Kingdom or the European Union. Any delay in obtaining, or an inability to obtain, any marketing approvals, as a result of Brexit or otherwise, would prevent us from commercializing our product candidates in the United Kingdom and/or the European Union and restrict our ability to generate revenue and achieve and sustain profitability. If any of these outcomes occur, we may be forced to restrict or delay efforts to seek regulatory approval in the United Kingdom and/or European Union for our product candidates, which could significantly and materially harm our business.58

If we engage in future acquisitions or strategic collaborations, this may increase our capital requirements, dilute our stockholders, cause us to incur debt or assume contingent liabilities and subject us to other risks.

We may evaluate various acquisitions and strategic collaborations, including licensing or acquiring complementary products, intellectual property rights, technologies or businesses. Any potential acquisition or strategic collaboration may entail numerous risks, including:

In addition, if we undertake acquisitions, we may issue dilutive securities, assume or incur debt obligations, incur largeone-time expenses and acquire intangible assets that could result in significant future amortization expense. Moreover, we may not be able to locate suitable acquisition or collaboration opportunities and this inability could impair our ability to grow or obtain access to technology or products that may be important to the development of our business.

Our future success depends on our ability to retain key employees, consultants and advisors and to attract, retain and motivate qualified personnel.

We are highly dependent on members of our executive team, the loss of whose services may adversely impact the achievement of our objectives. While we have entered into employment agreements with certain of our executive officers, any of them could leave our employment at any time. We currently do not have “key person” insurance on any of our employees. The loss of the services of one or more of our current key employees might impede the achievement of our research, development and commercialization objectives.

Recruiting and retaining other qualified employees, consultants and advisors for our business, including scientific and technical personnel, also will be critical to our success. There currently is a shortage of skilled individuals with substantial gene therapy experience, which is likely to continue. As a result, competition for skilled personnel, including in gene therapy research and vector manufacturing, is intense and the turnover rate can be high. We may not be able to attract and retain personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies and academic institutions for individuals with similar skill sets. In addition, the ~~clinical trial hold onSGT-001,~~ ~~or the~~ failure to succeed in preclinical or clinical trials or applications for marketing approval may make it more challenging to recruit and retain qualified personnel. The inability to recruit, or loss of services of certain executives, key employees, consultants or advisors, may impede the progress of our research, development and commercialization objectives.

Our strategic plan and associated workforce reductions may not result in anticipated savings, could result in total costs and expenses that are greater than expected and could disrupt our business.

In April 2022 and December 2022, we announced a reduction in workforce by approximately 35% and 18%, respectively, as part of a strategic plan designed to streamline our operating structure. We may not realize, in full or in part, the anticipated benefits, savings and improvements in our cost structure from our restructuring efforts due to unforeseen difficulties, delays or unexpected costs. If we are unable to realize the expected operational efficiencies and cost savings from the restructuring, our operating results and financial condition would be adversely affected. We also cannot guarantee that we will not have to undertake additional workforce reductions or restructuring activities in the future. Furthermore, our strategic restructuring plan and the Acquisition may be disruptive to our operations. For example, our workforce reductions and integration of AavantiBio’s business and operations into ours could yield unanticipated consequences, such as attrition beyond planned staff reductions, or increase difficulties in our day-to-day operations. Our workforce reductions and the Acquisition could also harm our ability to attract and retain qualified management, scientific, clinical, manufacturing and sales and marketing personnel who are critical to our business. Any failure to attract or retain qualified personnel could prevent us from successfully developing and commercializing our product candidates in the future.

If we are unable to manage ~~expected~~ growth in the scale and complexity of our operations, our performance may suffer.

If we are successful in executing our business strategy, we will need to expand our managerial, operational, financial and other systems and resources to manage our operations, continue our research and development activities and, in the longer term, build a commercial infrastructure to support commercialization of~~SGT-001~~ our current and ~~any other product candidate~~future candidates and products that isare approved for sale. Future growth would impose significant added responsibilities on members of management. It is likely that our management, finance, development personnel, systems and facilities currently in place may not be adequate to support this future growth. Our need to effectively manage our operations, growth and any future product candidates requires that we continue to develop more robust business processes and improve our systems and procedures in each of these areas and to attract and retain sufficient numbers of talented employees. We may be unable to successfully implement these tasks on a larger scale and, accordingly, may not achieve our research, development and growth goals.

Our employees ~~principal investigators, consultants and commercial partners~~ may engage in misconduct or other improper activities, includingnon-compliance with regulatory standards and requirements, which could cause significant liability for us and ~~insider trading.~~harm our reputation.

We are exposed to the risk of employee fraud or other misconduct, ~~by our employees, principal investigators, consultants and commercial partners. Misconduct by these parties could include~~including intentional failures to comply with FDA regulations or ~~the~~similar regulations ~~applicable in the European Union and other jurisdictions,~~of comparable foreign regulatory authorities, provide accurate information to the FDA ~~the EMA and other~~or comparable foreign regulatory authorities, comply with ~~health care~~manufacturing standards, comply with federal and state healthcare fraud and abuse laws and regulations ~~in the United States~~ and ~~abroad,~~similar laws and regulations established and enforced by comparable foreign regulatory authorities, report financial information or data accurately or disclose unauthorized activities to us. ~~In particular, sales, marketing and business arrangements in the health care industry are subject to extensive laws and regulations intended to prevent fraud,~~Employee misconduct kickbacks, self-dealing and other abusive practices. These laws and regulations restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Such misconductcould also ~~could~~ involve the improper use of information obtained in the course of clinical trials, ~~or interactions with the FDA or other regulatory authorities, including insider trading,~~ which could result in regulatory sanctions and ~~cause~~ serious harm to our reputation. This could include violations of the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, other U.S. federal and state law, and requirements of non-U.S. jurisdictions, including the European Union Data Protection Directive. It is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from ~~government~~governmental investigations or other actions or lawsuits stemming from a failure to ~~comply~~be in compliance with ~~these~~such laws, standards, regulations, guidance or ~~regulations.~~codes of conduct. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could ~~result in~~have a significant impact on our business and results of operations, including the imposition of significant fines or other sanctions.

Enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates and may affect the prices we may set.

Our business and financial prospects could be affected by changes in health care spending and policy in the United States and abroad. We operate in a highly regulated industry and new laws or judicial decisions, or new interpretations of existing laws or decisions, related to health care availability, the method of delivery or payment for health care products and services could negatively impact our business, operations and financial condition.

For example, in the United States there is significant interest in promoting health care reform, as evidenced by the enactment of the Patient Protection and Affordable Care Act and the companion Health Care and Education Reconciliation Act, or the Health Care Reform Law. The Health Care Reform Law increased federal oversight of private health insurance plans and included a number of provisions designed to reduce Medicare expenditures and the cost of health care generally, to reduce fraud and abuse, and to provide access to increased health coverage.

The Health Care Reform Law also imposed substantial changes to the U.S. system for paying for health care, including programs to extend medical benefits to millions of individuals who have lacked insurance coverage. Generally, implementation of the Health Care Reform Law has thus far included significant cost-saving, revenue and payment reduction measures with respect to, for example, several government health care programs that might cover our products in the United States, should they be commercialized, including Medicaid and Medicare. Additional downward pricing pressure associated with the Health Care Reform Law includes that the Health Care Reform Law established and provided significant funding for a Patient-Centered Outcomes Research Institute to coordinate and fund Comparative Effectiveness Research, as those terms are defined in the Health Care Reform Law. While the stated intent of Comparative Effectiveness Research is to develop information to guide providers to the most efficacious therapies, outcomes of Comparative Effectiveness Research could influence the reimbursement or coverage for therapies that are determined to be less cost-effective than others. Should any of our products be approved for sale, but then determined to be less cost-effective than alternative therapies, the levels of reimbursement for these products, or the willingness to reimburse at all, could be adversely impacted.

~~Another provision~~In addition to legislative changes resulting from the passage of the Health Care Reform Law, ~~generally referred~~other legislative changes have been proposed and adopted since the Health Care Reform Law was enacted. In August 2011, the Budget Control Act of 2011, among other things, created measures for spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to asreach required goals, thereby triggering the ~~Physician Payment Sunshine~~legislation’s automatic reduction to several government programs. These changes included aggregate reductions

to Medicare payments to providers of up to 2% per fiscal year, which went into effect in April 2013 and will remain in effect through 2029 unless additional Congressional action is taken. The Coronavirus Aid, Relief, and Economic Security Act, or ~~Open Payments Program, has imposed~~the CARES Act, suspended the 2% Medicare sequester from May 1, 2020 through December 31, 2020, and extended the sequester through 2031. These Medicare sequester reductions were suspended through June 2022, with the full 2% cut resuming thereafter. The American Taxpayer Relief Act of 2012, among other things, reduced Medicare payments to several providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. These new ~~reporting~~laws may result in additional reductions in Medicare and ~~disclosure requirements~~other healthcare funding and otherwise affect the prices we may obtain for ~~pharmaceutical and medical device manufacturers and distributors~~any of our product candidates for which we may obtain regulatory approval or the frequency with ~~certainFDA-approved~~ ~~products,~~which any such ~~as approved vaccines, with regard~~product candidate is prescribed or used. Indeed, under current legislation, the actual reductions in Medicare payments may vary up to ~~payments or other transfers~~4%. The Consolidated Appropriations Act, which was signed into law by President Biden in December 2022, made several changes to sequestration of ~~value made~~the Medicare program. Section 1001 of the Act delays the 4% Statutory Pay-As-You-Go Act of 2010 (PAYGO) sequester for two years, through the end of calendar year 2024. Triggered by enactment of the American Rescue Plan Act of 2021, the 4% cut to ~~certain U.S.~~the Medicare program would have taken effect in January 2023. The Act’s health care ~~practitioners, such as physicians~~offset title includes Section 4163, which extends the 2% Budget Control Act of 2011 Medicare sequester for six months into fiscal year 2032 and ~~academic medical centers,~~lowers the payment reduction percentages in fiscal years 2030 and ~~with regard~~2031.

Since enactment of the Health Care Reform Law, there have been, and continue to ~~certain ownership interests held by physicians in reporting entities. The CMS publishes information from these reports on a publicly available website, including amounts transferred~~be, numerous legal challenges and Congressional actions to repeal and replace provisions of the ~~physician and teaching hospital identities.~~

~~Under the Physician Payment Sunshine Act, we are required to collect and report detailed information regarding certain financial relationships we have~~law. For example, with ~~physicians and teaching hospitals. Our compliance with these rules may also impose additional costs.~~

~~With~~ enactment of the Tax Cuts and Jobs Act of 2017, ~~which was signed by~~or the ~~President on December 22, 2017,~~TCJA, Congress repealed the “individual mandate.” The repeal of this provision of the Health Care Reform Law, which requires most Americans to carry a minimal level of health insurance, ~~will become~~became effective in 2019. ~~According to~~Further, on December 14, 2018, a U.S. District Court judge in the ~~Congressional Budget Office, the repeal~~Northern District of Texas ruled that the individual mandate will cause 13 million fewer Americans to be insured in 2027 and premiums in insurance markets may rise. Further, each chamber of the Congress has put forth multiple bills designed to repeal or repeal and replace portions of the Health Care Reform Law. Although none of these measures has been enacted by Congress to date, Congress may consider other legislation to repeal and replace elements of the Health Care Reform Law. The Congress will likely consider other legislation to replace elementsportion of the Health Care Reform Law ~~during~~is an essential and inseverable feature of the ~~next Congressional session.~~Health Care Reform Law, and therefore because the mandate was repealed as part of the TCJA, the remaining provisions of the Health Care Reform Law are invalid as well. The U.S. Supreme Court heard this case on November 10, 2020 and on June 17, 2021, dismissed this action after finding that the plaintiffs do not have standing to challenge the constitutionality of the statute. It is unclear how such litigation and other efforts to repeal and replace the Health Care Reform Law will impact the Health Care Reform Law and our business. Litigation and legislation over the Health Care Reform Law are likely to continue, with unpredictable and uncertain results.

~~The Trump Administration has also taken executive~~Although the previous administration took actions to ~~change~~undermine or delay implementation of the Health Care Reform ~~Law. In January 2017,~~Law, those policies President ~~Trump signed~~Biden rescinded those actions with the issuance of an Executive Order ~~directing~~on January 28, 2021 which directs federal agencies to reconsider rules and other policies that limit Americans’ access to health care, and consider actions that will protect and strengthen that access. Under this Executive Order, federal agencies are directed to re-examine policies that undermine protections for people with ~~authorities~~pre-existing conditions, including complications related to COVID-19; demonstrations and ~~responsibilities~~waivers under ~~the Health Care Reform Law to waive, defer, grant exemptions from, or delay the implementation of any provision of~~Medicaid and the Health Care Reform Law that ~~would impose a fiscal~~may reduce coverage or ~~regulatory burden on states, individuals, healthcare providers,~~undermine the programs, including work requirements; policies that undermine the Health Insurance Marketplace or other markets for health ~~insurers, or manufacturers of pharmaceuticals or medical devices. In October 2017, the President signed a second Executive Order allowing for the use of association health plans~~insurance; policies that make it more difficult to enroll in Medicaid and ~~short-term health insurance, which may provide fewer health benefits than the plans sold through~~ the Health Care Reform ~~Law exchanges. At~~Law; and policies that reduce affordability of coverage or financial assistance, including for dependents. This Executive Order also directs the ~~same time, the Administration announced that it will discontinue the payment~~U.S. Department of ~~CSR payments~~Health and Human Services to ~~insurance companies until Congress approves the appropriation of funds~~create a special enrollment period for ~~such CSR payments. The loss of the CSR payments is expected to increase premiums on certain policies issued by qualified health plans under~~ the Health ~~Care Reform Law. A bipartisan bill~~Insurance Marketplace in response to ~~appropriate funds~~the COVID-19 pandemic.

Current and future legislative efforts may limit the prices for ~~CSR payments was introduced in the Senate, but the future of~~our products, if and when they are licensed for marketing and that ~~bill is uncertain.~~could materially impact our ability to generate revenues.

The ~~costs~~prices of prescription pharmaceuticals ~~in the United States has also~~have been the subject of considerable discussion in the United ~~States, and members of Congress and the Administration have stated that they will address such costs through new legislative and administrative measures.~~States. To date, there have been several recent U.S. congressional inquiries, as well as proposed and ~~proposed~~enacted state and federal legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the costs of drugs under Medicare and reform government program reimbursement methodologies for ~~drug~~ products. ~~The pricing of prescription~~In 2020, CMS issued an interim final rule implementing a most favored nation model for prices that would tie Medicare Part B payments for certain physician-administered pharmaceuticals ~~is also~~to the lowest price paid in other economically advanced countries, effective January 1, 2021. That rule, however, has been subject to ~~governmental control outside~~a nationwide preliminary injunction and, on December 29, 2021, CMS issued a final rule to rescind it. With issuance of this rule, CMS stated that it will explore all options to incorporate value into payments for Medicare Part B pharmaceuticals and improve beneficiaries’ access to evidence-based care.

In addition, in October 2020, HHS and the FDA published a final rule allowing states and other entities to develop a Section 804 Importation Program, or SIP, to import certain prescription drugs from Canada into the United States. ~~In these countries, pricing~~The final rule is currently the subject of ongoing litigation, but at least six states (Vermont, Colorado, Florida, Maine, New Mexico, and New Hampshire) have passed laws allowing for the importation of drugs from Canada with the intent of developing SIPs for review and approval by the FDA. Further, on November 20, 2020, HHS finalized a regulation removing safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Part D, either directly or through pharmacy benefit managers, unless the price reduction is required by law. The final rule would eliminate the current safe harbor for Medicare drug rebates and create new safe harbors for beneficiary point-of-sale discounts and pharmacy benefit manager service fees. It originally was set to go into effect on January 1, 2022, but with passage of the Inflation Reduction Act has been delayed by Congress to January 1, 2032.

More recently, on August 16, 2022, the Inflation Reduction Act of 2022, or IRA, was signed into law by President Biden. The new legislation has implications for Medicare Part D, which is a program available to individuals who are entitled to Medicare Part A or enrolled in Medicare Part B to give them the option of paying a monthly premium for outpatient prescription drug coverage. Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with ~~governmental authorities~~Medicare (beginning in 2026), with prices that can ~~take considerable time after~~be negotiated subject to a cap; imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023); and replaces the ~~receipt~~Part D coverage gap discount program with a new discounting program (beginning in 2025). The IRA permits the Secretary of ~~marketing approval~~HHS to implement many of these provisions through guidance, as opposed to regulation, for the initial years.

Specifically, with respect to price negotiations, Congress authorized Medicare to negotiate lower prices for certain costly single-source drug and biologic products that do not have competing generics or biosimilars and are reimbursed under Medicare Part B and Part D. CMS may negotiate prices for ten high-cost drugs paid for by Medicare Part D starting in 2026, followed by 15 Part D drugs in 2027, 15 Part B or Part D drugs in 2028, and 20 Part B or Part D drugs in 2029 and beyond. This provision applies to drug products that have been approved for at least 9 years and biologics that have been licensed for 13 years, but it does not apply to drugs and biologics that have been approved for a ~~product. To obtain~~single rare disease or condition. Nonetheless, since CMS may establish a maximum price for these products in price negotiations, we would be fully at risk of government action if our products are the subject of Medicare price negotiations. Moreover, given the risk that could be the case, these provisions of the IRA may also further heighten the risk that we would not be able to achieve the expected return on our drug products or full value of our patents protecting our products if prices are set after such products have been on the market for nine years.

Accordingly, while it is currently unclear how the IRA will be effectuated, we cannot predict with certainty what impact any federal or state health reforms will have on us, but such changes could impose new or more stringent regulatory requirements on our activities or result in reduced reimbursement for our products, any of which could adversely affect our business, results of operations and financial condition.

At the state level, individual states are increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or ~~pricing approval~~patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries ~~we may~~and bulk purchasing. In addition, regional health care authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be ~~required to conduct a clinical trial~~included in their prescription drug and other health care programs. These measures could reduce the ultimate demand for our products, if approved, or put pressure on our product pricing. We expect that ~~compares~~additional state and federal healthcare reform measures will be adopted in the ~~cost effectiveness~~future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our product candidates ~~to other available therapies. If reimbursement of our products is unavailable~~ or ~~limited in scope or amount, or if~~additional pricing is set at unsatisfactory levels, our ability to generate revenues and become profitable could be impaired. The uncertain status of the Health Care Reform Law ability to may have a negative impact on our business.pressures.

The Drug Supply Chain Security Act imposes new obligations on manufacturers of pharmaceutical products related to product tracking and tracing. Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical products. We are not sure whether additional legislative changes will be enacted, or whether the current regulations, guidance or interpretations will be changed, or what the impact of such changes on our business, if any, may be.

There have been a number of federal and state legislative changes made over the last few years regarding the pricing of pharmaceutical and biologic products. Concerns about drug pricing have been expressed by members of Congress and the President.

It is likely that federal and state legislatures within the United States and foreign governments will continue to consider changes to existing health care legislation. We cannot predict the reform initiatives that may be adopted in the future or whether initiatives that have been adopted will be repealed or modified. The continuing efforts of the government, insurance companies, managed care organizations and other health care payors of to contain or reduce costs of health care may adversely affect:

Finally, in the European Union, similar political, economic and regulatory developments may affect our ability to profitably commercialize our product candidates, if approved. In addition to continuing pressure on prices and cost containment measures, legislative developments at the European Union or member state level may result in significant additional requirements or obstacles that may increase our operating costs. The delivery of healthcare in the European Union, including the establishment and operation of health services and the pricing and reimbursement of medicines, is almost exclusively a matter for national, rather than European Union, law and policy. National governments and health service providers have different priorities and approaches to the delivery of healthcare and the pricing and reimbursement of products in that context. In general, however, the healthcare budgetary constraints in most European Union member states have resulted in restrictions on the pricing and reimbursement of medicines by relevant health service providers. Coupled with ever-increasing European Union and national regulatory burdens on those wishing to develop and market products, this could prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities and affect our ability to commercialize our product candidates, if approved.

Our relationships with customers, physicians and third-party payors will be subject, directly or indirectly, to federal and state health care fraud and abuse laws, false claims laws, health information privacy and security laws, and other health care laws and regulations. If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties.

If we obtain FDA approval for~~SGT-001~~ our current or ~~our other product~~future candidates and begin commercializing one or more of those products in the United States, our operations will be directly or indirectly through our prescribers, customers and purchasers, subject to various federal and state fraud and abuse laws and regulations, including, without limitation, the federal Health Care Program Anti-Kickback Statute, the federal civil and criminal laws and the Physician Payment Sunshine Act and regulations. These laws will impact, among other things, our proposed sales, marketing and educational programs. In addition, we may be subject to patient privacy laws by both the federal government and the states in which we conduct our business. The laws that will affect our operations include, but are not limited to:

Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities could be subject to challenge under one or more of such laws. If our operations are found to be in violation of any of the laws described above or any other government regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from participation in government health care programs, such as Medicare and Medicaid, imprisonment and the curtailment or restructuring of our operations.

The risk of our being found in violation of these laws is increased by the fact that many of them have not been fully interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of interpretations. Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business. The shifting compliance environment and the need to build and maintain robust and expandable systems to comply with multiple jurisdictions with different compliance and/or reporting requirements increases the possibility that we may run afoul of one or more of the requirements.

We are subject to stringent privacy laws, information security laws, regulations, policies and contractual obligations related to data privacy and security and changes in such laws, regulations, policies, contractual obligations and failure to comply with such requirements could subject us to significant fines and penalties, which may have a material adverse effect on our business, financial condition or results of operations.

We are subject to data privacy and protection laws and regulations that apply to the collection, transmission, storage and use of personally-identifying information, which among other things, impose certain requirements relating to the privacy, security and transmission of personal information, including comprehensive regulatory systems in the United States, EU and UK. The legislative and regulatory landscape for privacy and data protection continues to evolve in jurisdictions worldwide, and there has been an increasing focus on privacy and data protection issues with the potential to affect our business. Failure to comply with any of these laws and regulations could result in enforcement action against us, including fines, imprisonment of company officials and public censure, claims for damages by affected individuals, damage to our reputation and loss of goodwill, any of which could have a material adverse effect on our business, financial condition, results of operations or prospects.

There are numerous U.S. federal and state laws and regulations related to the privacy and security of personal information. In particular, regulations promulgated pursuant to HIPAA establish privacy and security standards that limit the use and disclosure of individually identifiable health information, or protected health information, and require the implementation of administrative, physical and technological safeguards to protect the privacy of protected health information and ensure the confidentiality, integrity and availability of electronic protected health information. Determining whether protected health information has been handled in compliance with applicable privacy standards and our contractual obligations can be complex and may be subject to changing interpretation. These obligations may be applicable to some or all of our business activities now or in the future.

If we are unable to properly protect the privacy and security of protected health information, we could be found to have breached our contracts. Further, if we fail to comply with applicable privacy laws, including applicable HIPAA privacy and security standards, we could face civil and criminal penalties. HHS enforcement activity can result in financial liability and reputational harm, and responses to such enforcement activity can consume significant internal resources. In addition, state attorneys general are authorized to bring civil actions seeking either injunctions or damages in response to violations that threaten the privacy of state residents. We cannot be sure how these regulations will be interpreted, enforced or applied to our operations. In addition to the risks associated with enforcement activities and potential contractual liabilities, our ongoing efforts to comply with evolving laws and regulations at the federal and state level may be costly and require ongoing modifications to our policies, procedures and systems.

In 2018, California passed into law the California Consumer Privacy Act, or CCPA, which took effect on January 1, 2020 and imposed many requirements on businesses that process the personal information of California residents. Many of the CCPA’s requirements are similar to those found in the General Data Protection Regulation, or GDPR, including requiring businesses to provide notice to data subjects regarding the information collected about them and how such information is used and shared, and providing data subjects the right to request access to such personal information and, in certain cases, request the erasure of such personal information. The CCPA also affords California residents the right to opt-out of “sales” of their personal information. The CCPA contains significant penalties for companies that violate its requirements. In November 2020, California voters passed a ballot initiative for the California Privacy Rights Act, or CPRA, which went into effect on January 1, 2023 and significantly expanded the CCPA to incorporate additional GDPR-like provisions including requiring that the use, retention, and sharing of personal information of California residents be reasonably necessary and proportionate to the purposes of collection or processing, granting additional protections for sensitive personal information, and requiring greater disclosures related to notice to residents regarding retention of information. The CPRA also created a new enforcement agency – the California Privacy Protection Agency – whose sole responsibility is to enforce the CPRA, which will further increase compliance risk. The provisions in the CPRA may apply to some of our business activities. In addition, other states, including Virginia, Colorado, Utah, and Connecticut already have passed state privacy laws. Virginia’s privacy law also went into effect on January 1, 2023, and the laws in the other three states will go into effect later in the year. Other states will be considering these laws in the future, and Congress has also been debating passing a federal privacy law. These laws may impact our business activities, including our identification of research subjects, relationships with business partners and ultimately the marketing and distribution of our products.

Product liability lawsuits against us could cause us to incur substantial liabilities and could limit commercialization of any product candidate that we may develop.

We face an inherent risk of product liability exposure related to the testing of~~SGT-001,~~ ~~our other product candidates~~ SGT-003 and any of our current and future ~~product candidate~~candidates in preclinical studies and clinical trials and may face an even greater risk if we commercialize any product candidate that we may develop. If we cannot successfully defend ourselves against claims that our product candidates caused injuries, we could incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:

Although we maintain product liability insurance coverage, such insurance may not be adequate to cover all liabilities that we may incur. We anticipate that we will need to increase our insurance coverage each time we commence a clinical trial and if we successfully commercialize any product candidate. Insurance coverage is increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise.

If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business.

We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the generation, handling, use, storage, treatment, manufacture, transportation and disposal of, and exposure to, hazardous materials and wastes, as well as laws and regulations relating to occupational health and safety. Our operations involve the use of hazardous and flammable materials, including chemicals and viruses and other biologic materials. Our operations also produce hazardous waste products. We generally contract with third parties for the disposal of these materials

and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages. We also could incur significant costs associated with civil or criminal fines and penalties. We do not carry specific biological or hazardous waste insurance coverage, and our property, casualty and general liability insurance policies specifically exclude coverage for damages and fines arising from biological or hazardous waste exposure or contamination. Although we maintain workers’ compensation insurance for certain costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials or other work-related injuries, this insurance may not provide adequate coverage against potential liabilities. Accordingly, in the event of contamination or injury, we could be held liable for damages or be penalized with fines in an amount exceeding our resources, and our clinical trials or regulatory approvals could be suspended.

In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations, which have tended to become more stringent over time. These current or future laws and regulations may impair our research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions or liabilities.

Our internal computer systems, or those of our collaborators, contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our product development.

Despite the implementation of security measures, our internal computer systems and those of our current and any future collaborators and other contractors or consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. Such systems are also vulnerable to service interruptions or to security breaches from inadvertent or intentional actions by our employees, third-party vendors and/or business partners, or from cyber-attacks by malicious third parties. Cyber-attacks are increasing in their frequency, sophistication and intensity, and have become increasingly difficult to detect. Cyber-attacks could include the deployment of harmful malware, ransomware,denial-of-service attacks, social engineering and other means to affect service reliability and threaten the confidentiality, integrity and availability of information. Cyber-attacks also could include phishing attempts ore-mail fraud to cause payments or information to be transmitted to an unintended recipient.

While we are not aware of any such material system failure, accident, cyber-attack or security breach to date, if such an event were to occur and cause interruptions in our or our collaborators’, contractors’ or consultants’ operations, it could result in a material disruption of our development programs and our business operations, whether due to a loss of our trade secrets or other proprietary information or other similar disruptions. For example, the loss of clinical trial data from preclinical studies or clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability, our competitive position could be harmed and the further development and commercialization of~~SGT-001~~ our current and ~~our~~ other ~~product~~future candidates could be delayed.

We heavily rely on certainin-licensed patents and other intellectual property rights in connection with our development of~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 and other future candidates and may be required to acquire or license additional patents or other intellectual property rights to continue to develop and commercialize~~SGT-001.~~ SGT-003 and other future candidates.

Our ability to develop and commercialize~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 and other future product candidates is heavily dependent on licenses to patent rights and other intellectual property granted to us by third parties. In particular, we have licensed certain patents and patent applications from the University of ~~Michigan,~~Missouri, the University of ~~Missouri~~Washington and ~~the University of Washington~~others that are important or necessary to the development of~~SGT-001~~ SGT-003 and other elements of our gene transfer program. AavantiBio also licensed certain patents and patent applications from third parties that are important or necessary to the development of AVB-202-TT and other elements of AavantiBio’s gene transfer program that we acquired. Our existing license agreements impose, and we expect that future license agreements will impose, various diligence, development and commercialization obligations, milestone payments, royalties and other obligations on us. If we fail to comply with our obligations under ~~these~~our agreements, we may be subject to damages, which may be significant, and the licensor may have the right to terminate the license, in which event we may not be able to develop or market product candidates or technologies covered by the license, including~~SGT-001.~~ SGT-003, AVB-202-TT or AVB-401. In addition, certain of these license agreements are not assignable by us without the consent of the respective licensor, which may have an adverse effect on our ability to engage in certain transactions.

Under our existing license agreements, we do not have, and under future license agreements we may not have, the right to control the preparation, filing and prosecution of patent applications, or the maintenance, enforcement and defense of the patents and patent applications that we license from third parties. For example, under our inbound license agreements with the University of ~~Michigan, the University of~~ Missouri and the University of Washington, each of the applicable licensors controls the prosecution of patent applications and the maintenance of patents and patent applications. Therefore, we cannot be certain that ~~these~~the licensed patents and applications will be prosecuted, maintained, enforced and defended in a manner consistent with the best interests of our business. If our licensors fail to maintain, enforce or defend such patents, or lose rights to those patents or patent applications, the rights we have licensed may be reduced or eliminated and our right to develop and commercialize any of our product candidates that are the subject of such licensed rights, including~~SGT-001,~~ SGT-003 and AVB-202-TT, could be adversely affected. For more information, see Part I, Item 1, “Business—Strategic partnerships and collaborations/licenses” inof our Annual Report onForm 10-K for the year ended December 31, ~~2017.~~2022.

Moreover, licenses to additional third-party intellectual property, technology and materials ~~are~~may be required for our development programs but may not be available in the future or may not be available on commercially reasonable terms. For example, ~~we are aware of certain third-party patents related to certain microdystrophin constructs, which, if in force at the time ofSGT-001’s~~ ~~commercialization, may be claimed by third parties to coverSGT-001.~~ ~~In addition,~~ third parties may claim that the microdystrophin constructs and the AAV ~~vector~~vectors we are developing for use in~~SGT-001~~ SGT-003 or other current and future candidates are covered by patents held by them. We believe that we would have valid defenses to any such claims; however, if any such claims were ultimately successful, we might require a license to continue to use and sell~~SGT-001~~ SGT-003, or other current and future product candidates and such AAV ~~vector.~~vectors. Such licenses may not be available on commercially reasonable terms, or at all. The licensing or acquisition of third-party intellectual property rights is a competitive area, and several more established companies may pursue strategies to license or acquire third-party intellectual property rights that we may consider attractive. These established companies may have a competitive advantage over us due to their size, capital resources and greater clinical development and commercialization capabilities. In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. We also may be unable to license or acquire third-party intellectual property rights on terms that would allow us to make an appropriate return on our investment. Moreover, even if we are able to obtain such licenses, they may only benon-exclusive, which could permit competitors and other third parties to use the same intellectual property in competition with us.

We may collaborate with non-profit and academic institutions to accelerate our preclinical research or development under written agreements with these institutions. These institutions may provide us with an option to negotiate a license to any of the institution’s rights in technology resulting from the collaboration. Regardless of such option, we may be unable to negotiate a license within the required timeframe or under terms that are acceptable to us. If we are unable to do so, the institution may offer the intellectual property rights to other parties, potentially blocking our ability to pursue our program.

If we are unable to successfully obtain rights, or successfully challenge such rights, to any third-party intellectual property rights that are required for the development and commercialization of~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or any of our other ~~product~~future candidates, and such third-party intellectual property rights are successfully asserted against us, we may be liable for damages, which may be significant, and we may be required to cease the development and commercialization of~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other ~~product~~future candidates.

If we are unable to obtain and maintain patent protection for our product candidates, or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize products similar or identical to ours, and our ability to successfully commercialize our product candidates may be adversely affected.

Our success depends, in large part, on our and our licensors’ ability to seek, obtain, maintain, enforce and defend patent rights in the United States and other countries with respect to~~SGT-001,~~ ~~our~~ SGT-003, AVB-202-TT, AVB-401, other future product candidates and our future innovation related to our manufacturing technology. Our licensors and we have sought, and we intend to continue to seek, to protect our proprietary position by filing patent applications in the United States and, in at least some cases, one or more countries outside the United States related to~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 and ~~certain~~ other future product candidates that are important to our business. However, we cannot predict whether the patent applications we and our licensors are currently pursuing will issue as patents or whether the claims of any issued patents will provide us with a competitive advantage.

Moreover, although we ~~currently do not own any issued patents or~~have pending~~non-provisional~~ ~~patent applications and we only own two provisional~~ patent applications in the United ~~States. Each~~States and abroad, we cannot predict whether or in which jurisdictions the pending applications will result in issuance of ~~these~~patents that effectively protect any of our product candidates or will effectively prevent others from commercializing competitive products. Further, each of the provisional patent applications is not eligible to become an issued patent until, among other things, we file anon-provisional patent application within 12 months of the filing date of each provisional patent application. If we do not timely file anon-provisional patent application in respect of a provisional patent application, we may lose our priority date with respect to such provisional patent application and any patent protection on the inventions disclosed in such provisional patent application. While we intend to timely filenon-provisional patent applications relating to our provisional patent applications, we cannot predict whether such future patent applications will result in the issuance of patents that effectively protect any of our product candidates or will effectively prevent others from commercializing competitive products.

~~We also currently do not own or license any issued patents or pending patent applications with respect to our product candidateSB-001.~~ While we have an option to negotiate a license for issued patents and pending patent applications relating to such product candidate, we may not exercise our option in a timely manner or at all, or satisfy any conditions upon which our option to such patents and patent applications is contingent. In addition, the third party granting us such option may breach our option agreement and license such patents and patent applications to other third parties, including our competitors, before we exercise our option. In any event, even if we exercise such option, we are still required to negotiate and enter into a definitive agreement pursuant to which we could license rights to the optioned patents and we may be unable to enter into such a definitive agreement within the required timeframe or under terms that are acceptable to us. If we are unable to do so, the party who has granted us our option may offer the patent rights to other parties. If we are unable to secure a license to any issued patents and pending patent applications relating to~~SB-001,~~ ~~we may need to cease our development of such product candidate.~~68

We may not be able to file, prosecute, maintain, enforce, defend or license all patents that are necessary to our business.

The patent prosecution process is expensive, time-consuming and complex, and we and our licensors may not be able to file, prosecute, maintain, enforce, defend or license all necessary or desirable patents and patent applications at a reasonable cost or in a timely manner.

It is also currently unknown what claims may, if ever, issue from pending applications included in our patent rights. Additionally, certain of ourin-licensed U.S. patent rights lack corresponding foreign patents or patent applications, and therefore we will be unable to obtain patent protection for our product candidates in certain jurisdictions. We or our licensors may not be able to obtain or maintain patent protection with respect to~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other future product candidates.

Changes in either the patent laws or their interpretation in the United States and other countries may diminish our ability to protect our inventions, obtain, maintain and enforce our intellectual property rights, and more generally, could affect the value of our intellectual property rights or narrow the scope of our licensed patents or future owned patents.

It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. Although we enter intonon-disclosure and confidentiality agreements with parties who have access to confidential or patentable aspects of our research and development output, such as our employees, corporate collaborators, outside scientific collaborators, CROs, contract manufacturers, consultants, advisors and other third parties, any of these parties may breach the agreements and disclose such output before a patent application is filed, thereby jeopardizing our ability to seek patent protection.

The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has, in recent years, been the subject of much litigation. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. Patent applications included in our current and future patent rights may not result in patents being issued that protect our product candidates, effectively prevent others from commercializing competitive products or otherwise provide any competitive advantage. In fact, patent applications may not issue as patents at all. Even assuming patents issue from patent applications in which we have rights, changes in either the patent laws or interpretation of the patent laws in the United States and other jurisdictions may diminish the value of our patents or narrow the scope of our patent protection.

Other parties have developed products that may be related or competitive to our own and such parties may have filed or may file patent applications, or may have received or may receive patents, claiming inventions that may overlap or conflict with those claimed in our patent applications or issued patents. We may not be aware of all third-party intellectual property rights potentially relating to~~SGT-001,SB-001~~ SGT-003, AVB-202-TT, AVB-401 or our other ~~current or~~ future product candidates. In addition, we cannot provide any assurances that any of the inventions disclosed in our patent applications will be found to be patentable, including over third-party or our own prior art patents, publications or other disclosures, or will issue as patents. Even if our patent applications issue as patents, we cannot provide any assurances that such patents will not be challenged or ultimately held to be invalid or unenforceable. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and in other jurisdictions are typically not published until 18 months after filing, or, in some cases, at all. Therefore, we cannot know with certainty whether the inventors of our licensed patents and applications were the first to make the inventions claimed in those patents or pending patent applications, or that they were the first to file for patent protection of such inventions. Similarly, should we own any issued patents or patent applications in the future, we may not be certain that we were the first to file for patent protection for the inventions claimed in such patents or patent applications. Furthermore, given the differences in patent laws in the United States, Europe and other foreign jurisdictions, for example, the availability of grace periods for filing patent applications and what can be considered as prior art, we cannot make any assurances that any claims in our pending and future patent applications in the United States or other jurisdictions will issue, or if they do issue, whether they will issue in a form that provides us with any meaningful competitive advantage. Similarly, we cannot make any assurances that if the patentability, validity, enforceability or scope of our pending or future patents and patent applications in the United States or foreign jurisdictions are challenged by any third party, that the claims of such pending or future patents and patent applications will survive any such challenge in a form that provides us with any meaningful competitive advantage. For example, we are aware of certain third-party patents and publications related to certain microdystrophin constructs. While we believe that our owned orin-licensed patents and patent applications claim novel and

non-obvious features of microdystrophin constructs that are not described in such third-party patents or publications, such third-party patents and publications may have earlier priority or publication dates and may be asserted as prior art against our owned orin-licensed patents and applications. Any such challenge, if successful, could limit or eliminate patent protection for our products and product candidates or otherwise materially harm our business. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights cannot be predicted with any certainty.

Moreover, the coverage claimed in a patent application can be significantly reduced before the patent is issued, and its scope can be reinterpreted after issuance. Even if patent applications we license or may own in the future do issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors or other third parties from competing with us or otherwise provide us with any competitive advantage. Any patents that we license or may own in the future may be challenged, narrowed, circumvented, or invalidated by third parties. Consequently, we do not know whether any of our product candidates will be protectable or remain protected by valid and enforceable patents. Our competitors or other third parties may be able to circumvent our patents by developing similar or alternative products in anon-infringing manner.

The degree of patent protection we require to successfully compete in the marketplace may be unavailable. We cannot provide any assurances that any of the patents or patent applications included in our patent rights include or will include claims with a scope sufficient to protect~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 and ~~our~~ other future product candidates or otherwise provide any competitive advantage. In addition, the laws of foreign countries may not protect our proprietary rights to the same extent as the laws of the United States. Furthermore, patents have a limited lifespan. In the United States, the natural expiration of a patent is generally twenty years after it is filed. Certain extensions may be available, however, the life of a patent, and the protection it affords, is limited. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our patent rights may not provide us with adequate and continuing patent protection sufficient to exclude others from commercializing products similar or identical to our product candidates, including biosimilar versions of such products.

Our licensed patents, and any patents we may own in the future, may be challenged, narrowed, invalidated or held unenforceable.

Even if we acquire patent protection that we expect should enable us to maintain some competitive advantage, third parties, including competitors, may challenge the validity, enforceability or scope thereof, which may result in such patents being narrowed, invalidated or held unenforceable. In litigation, a competitor could claim that ourin-licensed patents or any patents we may own in the future are not valid or enforceable for a number of reasons. If a court agrees, we would lose our rights to those challenged patents. Third parties also may raise similar claims before administrative bodies in the United States or abroad, even outside the context of litigation. Such proceedings could result in the revocation or cancellation of or amendment to our licensed patents and any patents we may own in the future in such a way that they no longer cover SGT-003, AVB-202-TT, AVB-401 or other future product candidates.

Even if issued, the issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our current and future patent rights may be challenged in the courts or patent offices in the United States and abroad. For example, we may be subject to a third-party submission of prior art to the U.S. Patent and Trademark Office, or USPTO, challenging the validity of one or more claims of patents included in our patent rights. Such submissions may also be made prior to a patent’s issuance, precluding the granting of a patent based on one of the pending patent applications included in our patent rights. We may become involved in opposition, derivation, revocation, reexamination, post-grant andinter partes review, or interference proceedings challenging one or more patents included in our patent rights. For example, competitors may claim that they invented the inventions claimed in patents or patent applications included in our patent rights, such as the microdystrophin we use in~~SGT-001,~~ SGT-003, prior to the inventors of such patents or patent applications, or may have filed one or more patent applications before the filing of the patents or patent applications included in our patent rights. A competitor who can establish an earlier filing or invention date may also assert that we are infringing their patents and that we therefore cannot practice our technology related to our product candidates as claimed in the patents or patent applications included in our patent rights. Competitors may also contest patents or patent applications included in our patent rights by showing that the claimed subject matter was not patent-eligible, was not novel or was obvious or that the patent claims failed any other requirement for patentability or enforceability. In addition, we may in the future be subject to claims by our or our licensors’ current or former employees or consultants asserting an ownership right in the patents or patent applications included in our patent rights as an inventor orco-inventor, as a result of the work they performed.

An adverse determination in any such submission or proceeding may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar therapeutics, without payment to us, or could limit the duration of the patent

protection covering our product candidates. Such challenges may also result in our inability to manufacture or commercialize our product candidates without infringing third-party patent rights, and we may be required to obtain a license from third parties, which may not be available on commercially reasonable terms or at all, or we may need to cease the development, manufacture and commercialization of one or more of our product candidates. In addition, if the breadth or strength of protection provided by the patents and patent applications included in our patent rights is threatened, it could dissuade companies from collaborating with us to license, develop or commercialize current or future product candidates. Such proceedings also may result in substantial cost and require significant time from our scientists and management, even if the eventual outcome is favorable to us.

Even if they are unchallenged, the patents and pending patent applications included in our patent rights may not provide us with any meaningful protection or prevent competitors from designing around our patent claims to circumvent our patent rights by developing similar or alternative therapeutics in anon-infringing manner. For example, a third party may develop a competitive therapeutic that provides benefits similar to one or more of our product candidates but that uses a vector or an expression construct that falls outside the scope of our patent protection. If the patent protection provided by the patents and patent applications we license or pursue with respect to our product candidates is not sufficiently broad to impede such competition, our ability to successfully commercialize our product candidates could be negatively affected.

Our intellectual property licenses with third parties may be subject to disagreements over contract interpretation, which could narrow the scope of our rights to the relevant intellectual property or technology or increase our financial or other obligations to our licensors.

We currently depend, and will continue to depend, on our license, collaboration and other similar agreements. Further development and commercialization of~~SGT-001~~ ~~and~~ SGT-003, AVB-202-TT, AVB-401, our other ~~current~~future candidates and ~~future product candidates~~platform technologies may require us to enter into additional license, collaboration or other similar agreements. The agreements under which we currently license intellectual property or technology from third parties are complex, and certain provisions in such agreements may be susceptible to multiple interpretations. The resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant intellectual property or technology, impact our ability to sublicense the relevant intellectual property or technology, or increase what we believe to be our financial or other obligations under the relevant agreement. Moreover, if disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on commercially acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates.

If any of our licenses or material relationships are terminated or breached, we may:

These risks apply to any agreements that we may enter into in the future for~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 and our other ~~current and~~ future ~~product~~ candidates.

If we fail to comply with our obligations in the agreements under which we license intellectual property rights from third parties or otherwise experience disruptions to our business relationships with our licensors, we could lose license rights that are important to our business.

We have certain obligations under licensing agreements with third parties that include annual maintenance fees and payments that are contingent upon achieving various development, commercial and regulatory milestones. Pursuant to many of these license agreements, we are required to make milestone payments if certain development, regulatory and commercial sales milestones are achieved, and may have certain additional research funding obligations. Also, pursuant to the terms of many of these license agreements, when and if commercial sales of a licensed product commence, we must pay royalties to our licensors on net sales of the respective licensed products.

We have entered into license agreements with third parties and may need to obtain additional licenses from one or more of these same third parties or from others to advance our research or allow our commercialization of~~SGT-001~~ SGT-003, AVB-202-TT or other ~~product~~future candidates. It is possible that we may be unable to obtain additional licenses at a reasonable cost or on reasonable terms, if at all. In that event, we may be required to expend significant time and resources to redesign~~SGT-001,~~ ~~our~~ SGT-003, AVB-202-TT other ~~product~~future candidates or the methods for manufacturing them or to develop or license replacement products, all of which may not be feasible on a technical or commercial basis. If we are unable to do so, we may be unable to develop or commercialize~~SGT-001~~ SGT-003, AVB-202-TT or ~~our~~ other ~~product~~future candidates. We cannot provide any assurances that third-party patents or other intellectual property rights do not exist that might be enforced against our manufacturing methods, product candidates or any technologies we may develop, resulting in either an injunction prohibiting our manufacture or sales, or, with respect to our sales, an obligation on our part to pay royalties and/or other forms of compensation to third parties.

In each of our existing license agreements, and we expect in our future agreements, patent prosecution of our licensed technology is controlled solely by the licensor, and we may be required to reimburse the licensor for their costs of patent prosecution. If our licensors fail to obtain and maintain patent or other protection for the proprietary intellectual property we license from them, we could lose our rights to the intellectual property or our exclusivity with respect to those rights, and our competitors could market competing products using the intellectual property. Further, in ~~each~~certain of our license agreements our licensors have the first right to bring any actions against any third party for infringing on the patents we have licensed. Our license agreements also require us to meet development thresholds to maintain the license, including establishing a set timeline for developing and commercializing product candidates. Disputes may arise regarding intellectual property subject to our licensing agreements, including:

If disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize~~SGT-001~~ SGT-003, AVB-202-TT or ~~our~~ other ~~product~~future candidates. In spite of our best efforts, our licensors might conclude that we have materially breached our license agreements and might therefore terminate the license agreements, thereby resulting in disputes or litigation, which could cause us to incur substantial costs and distract management’s time, and if we are unsuccessful, we could lose our ability to develop and commercialize products covered by these license agreements. If these licenses are ultimately terminated by the licensor, or if the underlying patents fail to provide the intended exclusivity, competitors would have the freedom to seek regulatory approval of, and to market, products identical to ours.

Third parties may initiate legal proceedings alleging that we are infringing, misappropriating or otherwise violating their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the success of our business.

Our commercial success depends upon our ability and the ability of our future collaborators to develop, manufacture, market and sell~~SGT-001~~ ~~and our~~ SGT-003, AVB-202-TT, AVB-401 or other ~~current and~~ future ~~product~~ candidates without infringing, misappropriating or otherwise violating the proprietary rights and intellectual property of third parties. The biotechnology and pharmaceutical industries are characterized by extensive and complex litigation regarding patents and other intellectual property rights. We or our licensors may in the future become party to, or be threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other ~~product~~future candidates, including interference proceedings, post grant review andinter partes review before the USPTO. Our competitors or other third parties may assert infringement claims against us, alleging that, among other things, our therapeutics, manufacturing methods, formulations or administration methods are covered by their patents.

Given the vast number of patents in our field of technology, we cannot be certain or guarantee that a court would hold that~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or any of our other ~~product~~future candidates ~~does~~do not infringe an existing patent or a patent that may be granted in the future. Many companies and institutions have filed, and continue to file, patent applications related to gene therapy and related manufacturing methods. Some of these patent applications have already been allowed or issued and others may issue in the future. Since this area is competitive and of strong interest to pharmaceutical and biotechnology companies, there will likely be additional patent applications filed and additional patents granted in the future, as well as additional research and development programs expected in the future. Furthermore, because patent applications can take many years to issue, may be confidential for 18 months or more after filing and can be revised before issuance, there may be applications now pending that may later result in issued patents that may be infringed by the manufacture, use, sale or importation of our product candidates and we may or may not be aware of such patents. If a patent holder believes the manufacture, use, sale or importation of one of our product candidates infringes its patent, the patent holder may sue us even if we have licensed other patent protection for our product candidates. Moreover, we may face patent infringement claims fromnon-practicing entities that have no relevant product revenue and against whom our licensed patent portfolio may therefore have no deterrent effect.

It is also possible that we have failed to identify relevant third-party patents or applications for which we may need a license to develop and commercialize~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 and ~~our~~ other ~~product~~future candidates. For example, applications filed before November 29, 2000, and certain applications filed after that date that will not be filed outside the United States remain confidential until patents issue. Moreover, it is difficult for industry participants, including us, to identify all third-party patent rights that may be relevant to our product candidates because patent searching is imperfect due to differences in terminology among patents, incomplete databases and the difficulty in assessing the meaning of patent claims. We may fail to identify relevant patents or patent applications or may identify pending patent applications of potential interest but incorrectly predict the likelihood that such patent applications may issue with claims of relevance to our product candidates. In addition, we may be unaware of one or more issued patents that would be infringed by the manufacture, sale or use of a current or future product candidate, or we may incorrectly conclude that a third-party patent is invalid, unenforceable or not infringed by our activities. Additionally, pending patent applications that have been published can, subject to certain limitations, be later amended in a manner that could cover our product candidates.

Third parties may assert infringement claims against us based on existing patents or patents that may be granted in the future, regardless of their merit. There is a risk that third parties may choose to engage in litigation with us to enforce or to otherwise assert their patent or other intellectual property rights against us. For example, ~~as discussed above,~~ third parties may claim that the microdystrophin or the AAV ~~vector~~vectors we are developing for use in~~SGT-001~~ is SGT-003, AVB-202-TT, AVB-401 or other future candidates are covered by patents held by them. Even if we believe such claim, or other intellectual property claims alleged by third parties, are without merit, there is no

assurance that we would be successful in defending such claims. A court of competent jurisdiction could hold that these third-party patents are valid, enforceable and infringed, which could materially and adversely affect our ability to commercialize~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other ~~product~~future candidates covered by the asserted third-party patents. In order to successfully challenge the validity of any such U.S. patent in federal court, we would need to overcome a presumption of validity. As this burden is a high one requiring us to present clear and convincing evidence as to the invalidity of any such U.S. patent claim, there is no assurance that a court of competent jurisdiction would invalidate the claims of any such U.S. patent. Similarly, there is no assurance that a court of competent jurisdiction would find that~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other future product candidates did not infringe a third-party patent.

Patent and other types of intellectual property litigation can involve complex factual and legal questions, and their outcome is uncertain. If we are found, or believe there is a risk that we may be found, to infringe, misappropriate or otherwise violate a third party’s intellectual property rights, and we are unsuccessful in demonstrating that such intellectual property rights are invalid or unenforceable, we could be required or may choose to obtain a license from such third party to continue developing, manufacturing and marketing our product candidates. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Even if we were able to obtain a license, it could benon-exclusive, thereby giving our competitors and other third parties access to the same technologies licensed to us, and it could require us to make substantial licensing and royalty payments. We could be forced, including by court order, to cease developing, manufacturing and commercializing the infringing product candidate, including~~SGT-001.~~ SGT-003, AVB-202-TT, AVB-401 or other future candidates. In addition, we could be found liable for monetary damages, including treble damages and attorneys’ fees, if we are found to have willfully infringed a patent or other intellectual property right. A finding of infringement, misappropriation or other violation of intellectual property rights, or claims that we have done so, could prevent us from manufacturing and commercializing our product candidates or force us to cease some or all of our business operations.

Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their normal responsibilities.

Litigation or other legal proceedings relating to intellectual property claims, with or without merit, is unpredictable and generally expensive and time-consuming. Competitors may infringe patents that we may own in the future or the patents of our licensing partners or we may be required to defend against claims of infringement. Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses and could distract our technical and management personnel from their normal responsibilities. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities.

We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources and more mature and developed intellectual property portfolios. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing or misappropriating or successfully challenging our intellectual property rights. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace.

~~We may not be successful in obtaining necessary rights toSGT-001~~ ~~or our other product candidates through acquisitions andin-licenses.~~

~~We currently have certain rights to intellectual property, through licenses from third parties, to developSGT-001.~~ Because development and commercialization of our current and future product candidates may require the use of additional proprietary rights held by these or other third parties, the growth of our business may depend, in part, on our ability to acquire,~~in-license~~ ~~or use these additional proprietary rights. We may be unable to acquire orin-license~~ ~~any compositions, methods of use, processes or other intellectual property rights from third parties that we identify as necessary forSGT-001~~ or our other product candidates. The licensing or acquisition of third-party intellectual property rights is a competitive area, and several more established companies may pursue strategies to license or acquire third-party intellectual property rights that we may consider attractive. These established companies may have a competitive advantage over us due to their size, capital resources and greater clinical development and commercialization capabilities. In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. We also may be unable to license or acquire third-party intellectual property rights on terms that would allow us to make an appropriate return on our investment.

~~We may collaborate withnon-profit~~ and academic institutions to accelerate our preclinical research or development under written agreements with these institutions. These institutions may provide us with an option to negotiate a license to any of the institution’s rights in technology resulting from the collaboration. Regardless of such option, we may be unable to negotiate a license within the required timeframe or under terms that are acceptable to us. If we are unable to do so, the institution may offer the intellectual property rights to other parties, potentially blocking our ability to pursue our program.

~~If we are unable to successfully obtain rights to required third-party intellectual property rights or maintain the existing intellectual property rights we have, we may have to abandon development ofSGT-001~~ ~~or our other product candidates.~~

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

Periodic maintenance fees, renewal fees, annuity fees and various other government fees on patents and/or applications will be due to be paid to the USPTO and various government patent agencies outside of the United States over the lifetime of our licensed patents and applications and any patents and patent applications we may own in the future. The USPTO and variousnon-U.S. government patent agencies require compliance with several procedural, documentary, fee payment and other similar provisions during the patent application process. We employ reputable intellectual property law firms and other professionals to help us comply and we are also dependent on our licensors to take the necessary action to comply with these

requirements with respect to our licensed intellectual property. In many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules. There are situations, however, in whichnon-compliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, potential competitors might be able to enter the market and this circumstance could have a material adverse effect on our business.

Some intellectual property that we havein-licensed may have been discovered through government-funded programs and thus may be subject to federal regulations such as~~“march-in”~~ “march-in” rights, certain reporting requirements, and a preference for U.S. manufacturing. Compliance with such regulations may limit our exclusive rights, and limit our ability to contract withnon-U.S. manufacturers.

Some of the intellectual property rights we have licensed, including such rights licensed from the University of ~~Michigan,~~Missouri, the University of ~~Missouri~~Washington and the University of ~~Washington,~~Florida, are stated to have been generated through the use of U.S. government funding and may therefore be subject to certain federal regulations. As a result, the U.S. government may have certain rights to intellectual property embodied in our current or future product candidates pursuant to the Bayh-Dole Act of 1980, or Bayh-Dole Act. These U.S. government rights in certain inventions developed under a government-funded program include anon-exclusive,non-transferable, irrevocable worldwide license to use inventions for any governmental purpose. In addition, the U.S. government has the right to require us to grant exclusive, partially exclusive ornon-exclusive licenses to any of these inventions to a third party if it determines that: (i) adequate steps have not been taken to commercialize the invention, (ii) government action is necessary to meet public health or safety needs or (iii) government action is necessary to meet requirements for public use under federal regulations (also referred to as~~“march-in~~ “march-in rights”). The U.S. government also has the right to take title to these inventions if we, or the applicable licensor, fail to disclose the invention to the government and fail to file an application to register the intellectual property within specified time limits. Intellectual property generated under a government funded program is also subject to certain reporting requirements, compliance with which may require us or the applicable licensor to expend substantial resources. In addition, the U.S. government requires that any products embodying the subject invention or produced through the use of the subject invention be manufactured substantially in the United States. The manufacturing preference requirement can be waived if the owner of the intellectual property can show that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not commercially feasible. This preference for U.S. manufacturers may limit our ability to contract withnon-U.S. product manufacturers for products covered by such intellectual property. To the extent any of our current or future intellectual property is generated through the use of U.S. government funding, the provisions of the Bayh-Dole Act may similarly apply.

We may not be able to protect our intellectual property and proprietary rights throughout the world.

Filing, prosecuting, maintaining, enforcing and defending patents on product candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States could be less extensive than those in the United States. Although our license agreements grant us worldwide rights, certain of ourin-licensed U.S. patents lack corresponding foreign patents or patent applications. For example, the issued U.S. patents we license from the University of Michigan do not have any corresponding foreign patents or patent applications. Thus, we will not have the opportunity to obtain patent protection for the subject matter of such patents outside the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States even in jurisdictions where we and our licensors pursue patent protection. Consequently, we and our licensors may not be able to prevent third parties from practicing our inventions in all countries outside the United States, even in jurisdictions where we and our licensors pursue patent protection, or from selling or importing products made using our inventions in and into the United States or other jurisdictions. Competitors may use our inventions in jurisdictions where we and our licensors have not pursued and obtained patent protection to develop their own products and may export otherwise infringing products to territories where we have patent protection, but where enforcement is not as strong as it is in the United States. These products may compete with our product candidates and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property rights, particularly those relating to biotechnology products, which could make it difficult for us to stop the infringement of our patents, if pursued and obtained, or the marketing of competing products in violation of our intellectual property and proprietary rights generally. Proceedings to enforce our

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

~~Issued patents relating toSGT-001~~ ~~or our other product candidates could be found invalid or unenforceable if challenged.~~74

~~If one of our licensing partners or we initiate legal proceedings against a third party to enforce a patent relating toSGT-001~~ or our other product candidates, the defendant could counterclaim that the patent covering our product candidate is invalid or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, written description,~~non-enablement~~ or failure to claim patent eligible subject matter. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld information material to patentability from the USPTO, or made a misleading statement, during prosecution. Third parties also may raise similar claims before administrative bodies in the United States or abroad, even outside the context of litigation. Such mechanisms include~~re-examination,~~ ~~post grant review,~~~~inter partes~~ review, interference proceedings, derivation proceedings and equivalent proceedings in foreign jurisdictions (e.g., opposition proceedings). Such proceedings could result in the revocation or cancellation of or amendment to our licensed patents and any patents we may own in the future in such a way that they no longer cover~~SGT-001~~ or our other product candidates. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which the patent examiner, we or our licensing partners were unaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity or unenforceability, we could lose at least part, and perhaps all, of the patent protection on~~SGT-001~~ ~~or our other product candidates or technologies.~~

If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.

In addition to the protection afforded by patents, we rely on trade secret protection and confidentiality agreements to protect proprietaryknow-how that is not patentable or that we elect not to patent, processes for which patents are difficult to enforce and any other elements of the discovery and development processes of~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 and ~~our~~ other ~~product~~future candidates that involve proprietaryknow-how, information or technology that is not covered by patents. ~~Our~~Aspects of our manufacturing process isare protected by trade secrets. However, trade secrets can be difficult to protect and some courts inside and outside the United States are less willing or unwilling to protect trade secrets.

We seek to protect our proprietaryknow-how, trade secrets and processes, in part, by entering into confidentiality agreements and, if applicable, material transfer agreements, consulting agreements or other similar agreements with our employees, consultants, scientific advisors, CROs, manufacturers and contractors. These agreements typically limit the rights of third parties to use or disclose our confidential information. However, we may not be able to prevent the unauthorized disclosure or use of our technicalknow-how or other trade secrets by the parties to these agreements, despite the existence generally of confidentiality agreements and other contractual restrictions. We cannot guarantee that we have entered into such agreements with each party that may have or have had access to our trade secrets or proprietary processes. Monitoring unauthorized uses and disclosures is difficult and we do not know whether the steps we have taken to protect our proprietaryknow-how and trade secrets will be effective. If any of our employees, collaborators, CROs, manufacturers, consultants, advisors and other third parties who are parties to these agreements breaches or violates the terms of any of these agreements, we may not have adequate remedies for any such breach or violation. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive, and time-consuming, and the outcome is unpredictable. As a result, we could lose our trade secrets. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises and physical and electronic security of our information technology systems. While we have confidence in these security measures, they may still be breached, and we may not have adequate remedies for any breach.

In addition, our trade secrets may otherwise become known or be independently discovered by competitors. Competitors could purchase our product candidates, if approved, and attempt to replicate some or all of the competitive advantages we derive from our development efforts, willfully infringe, misappropriate or otherwise violate our intellectual property rights, design around our protectedknow-how and trade secrets, or develop their own competitive technologies that fall outside of our

intellectual property rights. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent them, or those to whom they communicate such trade secrets, from using that technology or information to compete with us. If our trade secrets are not adequately protected so as to protect our market against competitors’ products and technologies, our competitive position could be adversely affected.

We may be subject to claims asserting that our employees, consultants or advisors have wrongfully used or disclosed alleged trade secrets of their current or former employers or claims asserting ownership of what we regard as our own intellectual property.

Certain of our employees, consultants or advisors are currently, or were previously, employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors, as well as our academic partners. Although we try to ensure that our employees, consultants and advisors do not use the proprietary information orknow-how of others in their work for us, we may be subject to claims that these individuals or we have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such individual’s current or former employer. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. An inability to incorporate such technologies or features would have a material adverse effect on our business and may prevent us from successfully commercializing our product candidates. Moreover, any such litigation or the threat of such litigation may adversely affect our ability to hire employees or contract with independent contractors. A loss of key personnel or their work product could hamper or prevent our ability to commercialize our product candidates. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management.

In addition, while it is our policy to require our employees and contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that we regard as our own. Moreover, even when we obtain agreements assigning intellectual property to us, the assignment of intellectual property rights may not be self-executing or the assignment agreements may be breached, and we may be forced to bring claims against third parties, or defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual property. Moreover, individuals executing agreements with us may have preexisting or competing obligations to a third party, such as an academic institution, and thus an agreement with us may be ineffective in perfecting ownership of inventions developed by that individual.

Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our product candidates.

Changes in either the patent laws or the interpretation of the patent laws in the United States could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents. On September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law. The Leahy-Smith Act includes several significant changes to U.S. patent law. Prior to March 2013 in the United States, assuming that other requirements for patentability are met, the first to make the claimed invention was entitled to the patent, while outside the United States, the first to file a patent application was entitled to the patent. After March 2013, under the Leahy-Smith Act, the United States transitioned to a first inventor to file system in which, assuming that other requirements for patentability are met, the first inventor to file a patent application will be entitled to the patent on an invention regardless of whether a third party was the first to invent the invention. The Leahy-Smith Act also includes a number of significant changes that affect the way patent applications will be prosecuted and may also affect patent litigation. These include allowing third-party submission of prior art to the USPTO during patent prosecution and additional procedures to attack the validity of a patent through various post-grant proceedings administered by the USPTO. The USPTO developed new regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first to file provisions, only became effective on March 16, 2013. Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of our business as, among other reasons, the USPTO must still implement various regulations. However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents.

The patent positions of companies engaged in the development and commercialization of biologics and pharmaceuticals are particularly uncertain. Two cases involving diagnostic method claims and “gene patents” have been decided by the ~~Supreme Court of the United States, or the~~U.S. Supreme Court. On March 20, 2012, the U.S. Supreme Court issued a decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc., or Prometheus, a case involving patent claims directed to a process of

measuring a metabolic product in a patient to optimize a drug dosage for the patient. According to the U.S. Supreme Court, the addition of well understood, routine or conventional activity such as “administering” or “determining” steps was not enough to transform an otherwise patent-ineligible natural phenomenon into patent-eligible subject matter. On July 3, 2012, the USPTO issued a guidance memo to patent examiners indicating that process claims directed to a law of nature, a natural phenomenon or a naturally occurring relation or correlation that do not include additional elements or steps that integrate the natural principle into the claimed invention such that the natural principle is practically applied and the patent claim amounts to significantly more than the natural principle itself should be rejected as directed to patent-ineligible subject matter. On June 13, 2013, the U.S. Supreme Court issued its decision in Association for Molecular Pathology v. Myriad Genetics, Inc., or Myriad, a case involving patent claims held by Myriad Genetics, Inc. relating to the breast cancer susceptibility genes BRCA1 and BRCA2. Myriad held that an isolated segment of naturally occurring DNA, such as the DNA constituting the BRCA1 and BRCA2 genes, is not patent-eligible subject matter, but that complementary DNA may be patent-eligible.

In 2014, the USPTO issued a guidance to its patent examiners for evaluating claims for patent subject matter eligibility under the relevant statute (35 U.S.C. § 101). This guidance was in response to a series of decisions from the U.S. Supreme Court on patent claims reciting judicial exceptions, including Abstract Ideas, Laws of Nature/Natural Principles, Natural Phenomena and/or Natural Products. Based on judicial decisions and public feedback, several supplements to this guidance and additional memoranda and materials have since been issued and are continually being issued, while the current eligibility guidance has been incorporated into the latest ~~(9th)~~(10th) edition of the MPEP (Manual for Patent Examination Procedure), last revised in ~~January 2018.~~June 2020. The current subject matter eligibility guideline instructs USPTO examiners to follow atwo-part test, set forth in the U.S. Supreme Court decisions Alice/Mayo, as the only test that should be used to evaluate the eligibility of claims under examination, including claims directed to natural products and principles including all naturally occurring nucleic acids. Certain claims of our licensed patents and patent applications contain, and any future patents we may obtain may contain, claims that relate to specific recombinant DNA sequences that are naturally occurring at least in part and, therefore, could be the subject of future challenges made by third parties. In addition, the current USPTO subject matter eligibility guidance and the constantly evolving case law, together with contemplated congressional action, could all impact our ability to pursue similar patent claims in patent applications we may prosecute in the future.

We cannot assure our stockholders that our efforts to seek patent protection for our product candidates will not be negatively impacted by the decisions described above, rulings in other cases or changes in guidance or procedures issued by the USPTO. We cannot fully predict what impact the U.S. Supreme Court’s decisions in Prometheus and Myriad may have on the ability of life science companies to obtain or enforce patents relating to their products in the future. These decisions, the guidance issued by the USPTO and rulings in other cases or changes in USPTO guidance or procedures could have a material adverse effect on our existing patent rights and our ability to protect and enforce our intellectual property in the future.

Moreover, although the U.S. Supreme Court has held in Myriad that isolated segments of naturally occurring DNA are not patent-eligible subject matter, certain third parties could allege that activities that we may undertake infringe other gene-related patent claims, and we may deem it necessary to defend ourselves against these claims by assertingnon-infringement and/or invalidity positions, or paying to obtain a license to these claims. In any of the foregoing or in other situations involving third-party intellectual property rights, if we are unsuccessful in defending against claims of patent infringement, we could be forced to pay damages or be subjected to an injunction that would prevent us from utilizing the patented subject matter.

If we do not obtain patent term extension for patents relating to~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 or ~~our~~ other ~~product~~future candidates, our business may be materially harmed.

Depending upon the timing, duration and specifics of any FDA marketing approval of~~SGT-001~~ SGT-003, AVB-202-TT, AVB-401 and ~~our~~ other ~~product~~future candidates, one or more U.S. patents that we license or may own in the future may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, or the Hatch-Waxman Amendments. The Hatch-Waxman Amendments permit a patent extension term of up to five years as compensation for patent term lost during the FDA regulatory review process based on the first regulatory approval for a particular drug or biologic. A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, only one patent may be extended and only those claims covering the approved drug, a method for using it or a method for manufacturing it may be extended. However, we may not be granted an extension because of, for example, failing to exercise due diligence during the testing phase or regulatory review process, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents or otherwise failing to satisfy applicable requirements. Moreover, the applicable time period or the scope of patent protection afforded could be less than we request. In addition, to the extent we wish to pursue patent term extension based on a patent that wein-license from a third party, we would need the cooperation of that third party. If we are unable to obtain patent term extension or the term of any such extension is less than we request, our competitors may be able to enter the market sooner.

If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition and our business may be adversely affected.

We have registered trademarks with the USPTO for the marks “SOLID BIOSCIENCES”, and “SOLID BIOSCIENCES” logo and registered marks in foreign jurisdictions for “SOLID BIOSCIENCES”, “SOLID GT” and ~~“SOLID”.~~“SOLID BIOSCIENCES” logo. Once registered, our trademarks or trade names may be challenged, infringed, diluted, tarnished, circumvented or declared generic or determined to be infringing on other marks. We may not be able to protect our rights to these trademarks and trade names, which we need to build name recognition among potential partners or customers in our markets of interest. At times, competitors may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. In addition, there could be potential trade name or trademark infringement, dilution or tarnishment claims brought by owners of other registered trademarks or trademarks that incorporate variations of our registered or unregistered trademarks or trade names. Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business may be adversely affected. Our efforts to enforce or protect our proprietary rights related to trademarks, trade secrets, domain names, copyrights or other intellectual property may be ineffective and could result in substantial costs and diversion of resources.

Intellectual property rights and regulatory exclusivity rights do not necessarily address all potential threats.

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

If approved, our product candidates that are licensed and regulated as biologics may face competition from biosimilars approved through an abbreviated regulatory pathway.

The Biologics Price Competition and Innovation Act of 2009, or BPCIA, was enacted as part of the Health Care Reform Law to establish an abbreviated pathway for the approval of biosimilar and interchangeable biological products. The regulatory pathway establishes legal authority for the FDA to review and approve biosimilar biologics, including the possible designation of a biosimilar as “interchangeable” based on its similarity to an approved biologic. Under the BPCIA, a reference biological product is granted 12 years of data exclusivity from the time of first licensure of the product, and the FDA will not accept an application for a biosimilar or interchangeable product based on the reference biological product until four years after the date of first licensure of the reference product In addition, the licensure of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the reference product was first licensed. During this 12-year period of exclusivity, another company may still develop and receive approval of a competing biologic, so long as its BLA does not reply on the reference product, sponsor’s data or submit the application as a biosimilar application. The law is complex and is still being interpreted and implemented by the FDA. As a result, its ultimate impact, implementation, and meaning are subject to uncertainty, and any new policies or processes adopted by the FDA could have a material adverse effect on the future commercial prospects for our biological products.

We believe that any of the product candidates we develop as a biological product under a BLA should qualify for the 12-year period of exclusivity. However, there is a risk that this exclusivity could be shortened due to congressional action or otherwise, or that the FDA will not consider the subject product candidates to be reference products for competing products, potentially creating the opportunity for biosimilar competition sooner than anticipated. Moreover, the extent to which a biosimilar, once approved, will be substituted for any one of the reference products in a way that is similar to traditional generic substitution for non-biological products will depend on a number of marketplace and regulatory factors that are still developing. Nonetheless, the approval of a biosimilar to our product candidates would have a material adverse impact on our business due to increased competition and pricing pressure.

If we cannot comply with Nasdaq’s continued listing standards, our common stock could be delisted, which would harm our business, the trading price of our common stock, our ability to raise additional capital and the liquidity of the market for our common stock.

We must satisfy Nasdaq’s continued listing requirements, including, among other things, a minimum closing bid price of $1.00 per share, or risk delisting, which would have a material adverse effect on our business. A delisting of our common stock from Nasdaq could materially reduce the liquidity of our common stock and result in a corresponding material reduction in the price of our common stock. In addition, delisting could harm our ability to raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, suppliers, customers and employees and fewer business development opportunities. Any potential delisting of our common stock from Nasdaq would also make it more difficult for our stockholders to sell their shares in the public market.

Our executive officers, directors and principal stockholders maintain the ability to control or significantly influence all matters submitted to our stockholders for approval.

Our executive officers and directors and principal stockholders, ~~who own more than 5% of our outstanding common stock,~~ in the aggregate, beneficially own shares representing ~~approximately 66.0%~~a significant percentage of our ~~common stock outstanding as of May 1, 2018.~~capital stock. As a result, if these stockholders were to choose to act together, they would be able to control or significantly influenceall matters submitted to our stockholders for approval, as well as our management and affairs. For example, these persons, if they choose to act together, would control or significantly influence the election of directors and approval of any merger, consolidation or sale of all or substantially all of our assets.

A significant ~~portion~~number of our total outstanding shares ~~are restricted from immediate resale but~~ may be sold into the market in the near future, which could cause the market price of our common stock to drop significantly, even if our business is performing well.

Sales of a substantial number of shares of our common stock in the public market could occur at any ~~time, subject to certain restrictions described below.~~time. These sales, or the perception in the market that holders of a large number of shares intend to sell shares, could reduce the market price of our common stock. ~~As of May 1, 2018, we had~~Our outstanding ~~35,461,959~~ shares of common ~~stock. This includes the shares that we sold in our initial public offering, which was completed on January 30, 2018, which~~stock may be ~~resold~~freely sold in the public market ~~immediately without restriction, unless purchased~~at any time to the extent permitted by ~~our affiliates. The remaining 26,477,584~~Rules 144 and 701 under the Securities Act of 1933, as amended, or the Securities Act, or to the extent such shares have already been registered under the Securities Act and are held by non-affiliates of common stock that were issued prior to our initial public offering pursuant to our conversion into a Delaware corporation pursuant to a statutory conversion, are currently restricted as a result of securities laws or~~lock-up~~ ~~agreements entered into in connection with our initial public offering but will be able to be sold into the public market in the near future.~~ours. Moreover, ~~as of May 1, 2018,~~ holders of ~~an aggregate~~a substantial number of ~~approximately 24.2 million~~ shares of our common stock have rights, subject to certain conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders.

In October 2020, in connection with the execution of our collaboration and license agreement with Ultragenyx, we issued and sold 521,719 shares of our common stock to Ultragenyx. For the ten-year period after date of such sale, subject to specified conditions, we have agreed to file a registration statement in order to register all or a portion of the shares sold to Ultragenyx.

In July 2019 and December 2020, we completed private placements of shares of our common stock and pre-funded warrants to purchase shares of our common stock to several accredited investors. In December 2022, we also issued shares of our common stock in the Acquisition and in a related private placement to several accredited investors. We have filed registration statements covering the resale of these shares by the purchasers in these private placements and the stock consideration issued in the Acquisition, and have agreed to keep such registration statements effective until the date the shares covered by the respective registration statement have been sold or can be resold without restriction under Rule 144 of the Securities Act.

In addition, ~~on January 29, 2018,~~ we have filed ~~a Registration Statement on FormS-8~~ ~~to register approximately 5.0 million~~registration statements registering all shares ~~reserved for future issuance~~of common stock that we may issue under our ~~2018 Omnibus Incentive Plan will become eligible for sale in the public market in the future, subject to certain legal and contractual limitations.~~equity compensation plans. These shares can be freely sold in the public market upon issuance, subject to black-out periods and volume limitations applicable to ~~affiliates~~affiliates.

We currently have on file with the SEC a universal shelf registration statement which allows us to offer and ~~thelock-up~~ ~~agreements entered into in connection with our initial public offering.~~

In addition, J.P. Morgan Securities LLC, Goldman Sachs & Co. LLC and Leerink Partners LLC, the representatives of the underwriters in our initial public offering, may, in their sole discretion, release all or some portion of the shares subject to~~lock-up~~ ~~agreements at any time and for any reason. Sales of a substantial number of such shares upon expiration of thelock-up~~ ~~agreements, the perception that such sales may occur, or early release of these agreements, could cause our market price to fall or make it more difficult for an investor to~~ sell ~~our~~registered common stock, preferred stock, debt securities, depositary shares, warrants and/or units from time to time pursuant to one or more offerings at aprices and terms to be determined at the time ~~and price that the investor deems appropriate.~~of sale.

The price of our common stock has been, and ~~may~~ in the future is likely to be, volatile and fluctuate substantially, which could result in substantial losses for holders of our common stock.

Our stock price has been, and ~~may~~ in the future is likely to be, volatile. The stock market in general and the market for biopharmaceutical or pharmaceutical companies in particular, has experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, our stockholders may not be able to sell their shares of common stock at or above the price they paid for their shares. The market price for our common stock may be influenced by many factors, including:

If our quarterly operating results fall below the expectations of investors or securities analysts, the price of our common stock could decline substantially. Furthermore, any quarterly fluctuations in our operating results may, in turn, cause the price of our stock to fluctuate substantially.

In the past, following periods of volatility in the market price of a company’s securities, securities class-action litigation often has been instituted against that company. ~~As described in Part II, Item 1, “Legal Proceedings,” we~~We and certain of our executive officers and board members have previously been named as defendants in purported class action lawsuits. ~~This litigation, and any additional~~Any such litigation instituted against us could cause us to incur substantial costs to defend such claims and divert management’s attention and resources.

~~If securities analysts do not publish research or reports about our business or if they publish negative evaluations~~Our October 2022 reverse stock split may decrease the liquidity of the shares of our ~~stock,~~common stock.

The liquidity of the ~~price~~shares of our common stock ~~could decline.~~

~~The~~may be affected adversely by the 1-for-15 reverse stock split we effected in October 2022 given the reduced number of shares that are outstanding following the reverse stock split, which may lead to reduced trading and a smaller number of market makers for our common stock, ~~relies, in part, on~~particularly if the ~~research and reports that industry or financial analysts publish about us or our business. If one or more of the analysts covering our business downgrade their evaluations~~price per share of our common stock is not sustained. In addition, the ~~price~~reverse stock split has increased the number of stockholders who own “odd lots” of less than 100 shares of

our common stock, A purchase or sale of less than 100 shares of common stock may result in incrementally higher trading costs through certain brokers, particularly “full service” brokers. Therefore, those stockholders who own fewer than 100 shares of our common stock ~~could decline. If one or more of these analysts cease~~following the reverse stock split may be required to ~~cover our stock, we could lose visibility in the market for our stock, which in turn could cause our stock price to decline.~~pay higher transaction costs if they sell their common stock.

An active trading market for our common stock may not be ~~sustained~~sustained.

~~Prior to our initial public offering, which occurred on January 26, 2018, there was no public market for our common stock.~~ Although our common stock is listed on the Nasdaq Global Select Market, given the limited trading history of our common stock, there is a risk that an active trading market for our shares may not continue to develop or be sustained. If an active market for our common stock does not continue to develop or is not sustained, it may be difficult for our stockholders to sell shares without depressing the market price for the shares, orif at all.

We are an “emerging growth company,” and a “smaller reporting company” and the reduced disclosure requirements applicable to emerging growth companies and smaller reporting companies may make our common stock less attractive to investors.

We are an “emerging growth company,” or EGC, as defined in the Jumpstart our Business Startups Act of 2012, or the JOBS Act. We will remain an EGC until the earliest of: (i) the last day of the fiscal year in which we have total annual gross revenues of ~~$1.07~~$1.235 billion or more; (ii) December 31, 2023; (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; and (iv) the date on which we are deemed to be a large accelerated filer under the rules of the Securities and Exchange Commission, or the SEC. For so long as we remain an EGC, we are permitted and intend to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include:

We are also a smaller reporting company, and we will remain a smaller reporting company until the fiscal year following the determination that our voting and non-voting common stock held by non-affiliates is more than $250 million measured on the last business day of our second fiscal quarter, or our annual revenues are less than $100 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is more than $700 million measured on the last business day of our second fiscal quarter. Similar to emerging growth companies, smaller reporting companies are able to provide simplified executive compensation disclosure and have certain other reduced disclosure obligations, including, among other things, being permitted to provide only two years of audited financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations”; not being required to furnish a contractual obligations table in “Management's Discussion and Analysis of Financial Condition and Results of Operations”; and not being required to furnish a stock performance graph in our annual report.

We may choose to take advantage of some, but not all, of the available exemptions. We have taken advantage of reduced reporting burdens in ~~this quarterly report on Form10-Q.~~our filings with the Securities and Exchange Commission. In particular, we have not included all of the executive compensation information that would be required if we were not an EGC. We cannot predict whether investors will find our common stock less attractive if we rely on certain or all of these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

We incur increased costs as a result of operating as a public company, and our management is ~~now~~ required to devote substantial time to new compliance initiatives.

As a public company, and particularly after we are no longer an EGC or a smaller reporting company, we incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act and rules subsequently implemented by the SEC and Nasdaq have imposed various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and other personnel devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance.

Pursuant to Section 404, we ~~will be~~are required to furnish a report by our management on our internal control over financial ~~reporting, including, once~~reporting. However, while we ~~are no longer~~remain an EGC or a smaller reporting company with less than $100 million in revenue, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To achieve compliance with Section 404 within the prescribed period, we will be engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that neither we nor our independent registered public accounting firm will be able to conclude within the prescribed timeframe that our internal control over financial reporting is effective as required by Section 404. This could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.

We have identified material weaknesses in our internal control over financial reporting. If we are unable to remediate these material weaknesses, or if we identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect our business and stock price.

We have identified material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. If we are unable to remediate these material weaknesses, or if we identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, our stock price.

In connection with the audits of our consolidated financial statements as of and for the years ended December 31, 2015 and December 31, 2016, we identified material weaknesses in our internal control over financial reporting. The material weaknesses we identified were as follows:

Each of the control deficiencies could result in a misstatement of our accounts or disclosures that would result in a material misstatement of our annual or interim consolidated financial statements that would not be prevented or detected, and accordingly, we determined that these control deficiencies constitute material weaknesses.

We cannot assure our stockholders that the measures we have taken to date, and actions we may take in the future, will be sufficient to remediate the control deficiencies that led to our material weaknesses in our internal control over financial reporting or that they will prevent or avoid potential future material weaknesses. In addition, neither our management nor an independent registered public accounting firm has performed an evaluation of our internal control over financial reporting in accordance with the provisions of the Sarbanes-Oxley Act because no such evaluation has been required. Had we or our independent registered public accounting firm performed an evaluation of our internal control over financial reporting in accordance with the provisions of the Sarbanes-Oxley Act, additional material weaknesses may have been identified. If we are unable to successfully remediate our existing or any future material weaknesses in our internal control over financial reporting, or identify any additional material weaknesses, the accuracy and timing of our financial reporting may be adversely affected, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting, and our share price may decline as a result.

Provisions in our certificate of incorporation and our bylaws and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.

Provisions in our certificate of incorporation and our bylaws may discourage, delay or prevent a merger, acquisition or other change in control of us that stockholders may consider favorable, including transactions in which our stockholders might otherwise receive a premium for their shares. These provisions also could limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. In addition, because our ~~board~~Board of ~~directors~~Directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our ~~board~~Board of ~~directors.~~Directors. Among other things, these provisions:

Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, or the DGCL, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.

Because we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, capital appreciation, if any, is the only sole source of gain for an investment in our common stock.

We have never declared or paid cash dividends on our capital stock. We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. In addition, the terms of any future debt agreements may preclude us from paying dividends. As a result, capital appreciation, if any, of our common stock will be the sole source of gain for an investor for the foreseeable future.

Our certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for such disputes with us or our directors, officers or employees.

Our certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware is the exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim for breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, our certificate of incorporation or our bylaws or (iv) any action asserting a claim governed by the internal affairs doctrine. We do not intend to have this choice of forum provision apply to, and this choice of forum provision will not apply to, actions arising under the Securities Act or the Exchange Act. The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees. Alternatively, if a court were to find the choice of forum provision contained in our certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions.

~~Use~~Recent Sales of ~~Proceeds from Initial Public Offering~~Unregistered Securities

On January 30, 2018, we closed our initial public offering, in which we issued and sold 8,984,375 shares of common stock, including 1,171,875 shares of our common stock pursuant to the underwriters’ over-allotment, at a public offering price of $16.00 per share. The aggregate gross proceeds to us from our initial public offeringWe did not sell any securities that were ~~approximately $143.8 million. All of the shares of common stock issued and sold in our initial public offering were~~not registered under the Securities Act ~~pursuant~~during the three months ended March 31, 2023.

On May 8, 2023, Robert Huffines notified us of his decision to resign from our board of directors, effective June 06, 2023. Mr. Huffines' decision to resign from our board of directors was not due to a ~~registration statement~~disagreement on ~~FormS-1~~ ~~(RegistrationNo. 333-222357),~~ ~~which was declared effective by the SEC on January 25, 2018 and a registration statement on FormS-1~~ ~~MEF (RegistrationNo. 333-222705)~~ filed pursuant to Rule 462(b) of the Securities Act. J.P. Morgan Securities LLC, Goldman Sachs & Co. LLC and Leerink Partners LLC were joint book-running managers for the initial public offering. The offering commenced on January 25, 2018 and did not terminate until the sale of all of the shares offered. The aggregate net proceeds to us were approximately $129.1 million, after deducting underwriting discounts and commissions and offering expenses payable by us of approximately $14.7 million.

~~Except as set forth below, no offering expenses were paid directly or indirectly to~~ any of our directors or officers (or their associates) or persons owning ten percent or more of any class of our equity securities or to any other affiliates. JPMC Strategic Investments II Corporation, or JPMC, owned in excess of 10% of our issued and outstanding common stock immediately priormatter related to our ~~initial public offering, and JPMC is an affiliate of J.P. Morgan Securities LLC, which was a book running manager in our initial public offering. In addition,~~operations, policies or practices. We greatly appreciate the contributions Mr. ~~Robert~~ Huffines ~~one of our directors, is an employee of J.P. Morgan Securities LLC.~~has made to Solid Biosciences.

There has been no material change in the planned use of net proceeds from our initial public offering as described in our final prospectus filed with the SEC on January 29, 2018 pursuant to Rule 424(b). We have been using and plan to continue to use the net offering proceeds to fund research, development and clinical trial expenses, and the remainder for general and administrative expenses and other general corporate purposes.84

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Delaware		90-0943402
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

~~141 Portland Street, Fifth~~500 Rutherford Avenue, Third Floor ~~Cambridge,~~ Charlestown, MA		~~02139~~ 02129
(Address of principal executive offices)		(Zip Code)


Title of each class	Trading Symbol	Name of exchange on which registered
Common Stock $0.001 par value per share	SLDB	The Nasdaq Global Select Market


				Page
PART I.		FINANCIAL INFORMATION			2
Item 1.		Financial Statements (Unaudited)			2
		Condensed Consolidated Balance Sheets at March 31, ~~2018~~ 2023and December 31, ~~2017~~2022			2
		Condensed Consolidated Statements of Operations for the three months ended March 31, ~~2018~~2023 and ~~2017~~2022			3
		Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, ~~2018~~2023 and ~~2017~~2022			4
		Condensed Consolidated Statements of ~~Preferred Units and~~Changes in Stockholders’~~/Members’ Equity/(Deficit)~~ Equity for the three months ended March 31, ~~2018~~2023 and ~~the year ended December 31, 2017~~2022			5
		Condensed Consolidated Statements of Cash Flows for the three months ended March 31, ~~2018~~2023 and ~~2017~~2022			6
		Notes to the Condensed Consolidated Financial Statements			7
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			24	19
Item 3.		Quantitative and Qualitative Disclosures About Market Risk			35	28
Item 4.		Controls and Procedures			36	28
PART II.		OTHER INFORMATION			37	29
Item 1.		Legal Proceedings			37	29
Item 1A.		Risk Factors			37	29
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds			80	84
Item 6.5.	Other Information	~~Exhibits~~			80	84
Item 6.	Exhibits	~~Signatures~~ 85
	Signatures		82	86


	March 31,			December 31,
	2018			2017
Assets
Current assets:
Cash and cash equivalents	$	164,773		$	52,080
Available-for-sale-securities		17,609			17,014
Prepaid expenses and other current assets		1,931			1,499
Restricted cash		65			65

Total current assets		184,378			70,658
Property and equipment, net		4,418			2,429
Othernon-current assets		209			—
Restricted cash		237			—
Deferred offering costs		—			3,106

Total assets	$	189,242		$	76,193

Liabilities, Preferred Units and Stockholders’ / Members’ Equity / (Deficit)
Current liabilities:
Accounts payable	$	5,835		$	5,066
Accrued expenses and other current liabilities		4,092			6,205

Total current liabilities		9,927			11,271
Othernon-current liabilities		365			—

Total liabilities		10,292			11,271

Commitments and contingencies (Note 10)
Series 2 Senior Preferred Units, no units authorized at March 31, 2018 and 4,886,000 units authorized at December 31, 2017; no units issued and outstanding at March 31, 2018 and 4,886,000 units issued and outstanding at December 31, 2017		—			55,002
Series 1 Senior Preferred Units, no units authorized at March 31, 2018 and 2,500,000 units authorized at December 31, 2017; no units issued and outstanding at March 31, 2018 and 2,500,000 units issued and outstanding at December 31, 2017		—			25,000
Junior Preferred Units, no units authorized at March 31, 2018 and 4,414,356 units authorized at December 31, 2017; no units issued and outstanding at March 31, 2018 and 4,414,356 units issued and outstanding at December 31, 2017		—			44,177
Stockholders’ / Members’ equity / (deficit):
Series A, B, C and D Common Units, no units authorized at March 31, 2018 and 20,189,509 units authorized at December 31, 2017; no units issued and outstanding at March 31, 2018 and 19,438,552 units issued and outstanding at December 31, 2017		—			65,014
Preferred stock, $0.001 par value; 10,000,000 shares authorized at March 31, 2018 and no shares authorized at December 31, 2017; no shares issued and outstanding at March 31, 2018 and December 31, 2017		—			—
Common stock, $0.001 par value; 300,000,000 shares authorized at March 31, 2018 and no shares authorized at December 31, 2017; 35,476,892 shares issued and outstanding at March 31, 2018 and no shares issued and outstanding at December 31, 2017		35			—
Additionalpaid-in capital		319,073			—
Accumulated other comprehensive loss		(23	)		(13	)
Accumulated deficit		(140,135	)		(124,258	)

Total stockholders’/members’ equity/(deficit)		178,950			(59,257	)

Total liabilities, preferred units and stockholders’/members’ equity	$	189,242		$	76,193


	Redeemable Preferred Units			Amount			Series 2 Senior Preferred Units			Amount			Series 1 Senior Preferred Units			Amount			Junior Preferred Units			Amount			Series A, B, C and D Common Units			Amount			Common Stock			Amount		Additional paid in capital		Accumulated other comprehensive income (loss)			Accumulated Deficit			Total Members’/ Stockholders’ Equity (Deficit)			Non-controlling Interest			Total Equity (Deficit)
Balance at December 31, 2016		17,100,000		$	71,649			—			—			—			—			—			—			5,123,917		$	558			—			—		—	$	23		$	(84,941	)	$	(84,360	)	$	46,474		$	(37,886	)
Issuance of Series 1 senior preferred units, net of issuance costs of $500 and tranche right of $459		—			—			—			—			2,500,000		$	24,041			—			—			—			—			—			—		—		—			—			—			—			—
Accretion of Series 1 senior preferred units to redemption value		—			—			—			—			—			959			—			—			—			—			—			—		—		—			(959	)		(959	)		—			(959	)
Redemption of preferred units		—			(15,685	)		—			—			—			—			—			—			—			—			—			—		—		—			15,685			15,685			—			15,685
Equity-based compensation		—			—			—			—			—			—			—			—			—			5,030			—			—		—		—			—			5,030			300			5,330
Net loss		—			—			—			—			—			—			—			—			—			—			—			—		—		—			(52,118	)		(52,118	)		(1,060	)		(53,178	)
Issuance of Series B common units in exchange for Series A common units		—			—			—			—			—			—			—			—			(1,301,520	)		—			—			—		—		—			—			—			—			—
Issuance of Series D common units in exchange for Series A common units		—			—			—			—			—			—			—			—			(160,954	)		—			—			—		—		—			—			—			—			—
Issuance of Series A common units in exchange for redeemable preferred units		(17,100,000	)		(55,964	)		—			—			—			—			—			—			12,219,299			55,964			—			—		—		—			—			55,964			—			55,964
Issuance of junior preferred units in redemption of Class Dnon-controlling interest in Solid GT		—			—			—			—			—			—			4,414,356		$	44,177			—			—			—			—		—		—			(1,925	)		(1,925	)		(42,252	)		(44,177	)
Issuance of Series C common units in exchange for Class Bnon-controlling interest in Solid GT		—			—			—			—			—			—			—			—			1,635,916			2,053			—			—		—		—			—			2,053			(2,053	)		—
Issuance of Series D common units in exchange for Class Cnon-controlling interest in Solid GT		—			—			—			—			—			—			—			—			1,083,205			1,409			—			—		—		—			—			1,409			(1,409	)		—
Issuance of Series D common units		—			—			—			—			—			—			—			—			838,689			—			—			—		—		—			—			—			—			—
Issuance of Series 2 senior preferred units,								4,886,000		$	55,002
Unrealized loss on available for sale securities		—			—									—			—			—			—			—			—										(36	)		—			(36	)		—			(36	)

Balance at December 31, 2017		—			—			4,886,000		$	55,002			2,500,000		$	25,000			4,414,356		$	44,177			19,438,552		$	65,014			—		$	—	$	—	$	(13	)	$	(124,258	)	$	(59,257	)		— ��		$	(59,257	)
Conversion of units into shares of common stock		—			—			(4,886,000	)		(55,002	)		(2,500,000	)		(25,000	)		(4,414,356	)		(44,177	)		(19,429,620	)		(65,180	)		26,498,559			26		189,333		—			—			124,179			—			124,179
Issuance of common stock upon initial public offering, net of issuance costs of $4,592		—			—			—			—			—			—			—			—			—			—			8,984,375		$	9	$	129,087		—			—			129,096			—			129,096
Equity-based compensation		—			—			—			—			—			—			—			—			—			166								653		—			—			819			—			819
Net loss		—			—			—			—			—			—			—			—			—			—										—			(15,877	)		(15,877	)		—			(15,877	)
Repurchase of common units/ shares of common stock																										(8,932	)					(6,042	)
Unrealized loss on available for sale securities		—			—			—			—			—			—			—			—			—			—										(10	)		—			(10	)		—			(10	)

Balance at March 31, 2018		—			—			—		$	—			—		$	—			—		$	—			—		$	—			35,476,892		$	35	$	319,073	$	(23	)	$	(140,135	)	$	178,950		$	—		$	178,950


	For the Three Months Ended March 31, 2023
	Common Stock		Amount		Additional Paid in Capital		Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Stockholders' Equity
Balance at December 31, 2022		19,556,732	$	20	$	774,452	$	(68	)	$	(562,738	)		211,666
Equity-based compensation		—		—		2,118		—			—			2,118
Vesting of restricted stock units		16,400		—		—		—			—			—
Unrealized gain on available-for-sale securities		—		—		—		73			—			73
Net loss		—		—		—		—			(30,070	)		(30,070	)
Balance at March 31, 2023		19,573,132	$	20	$	776,570	$	5		$	(592,808	)	$	183,787


	March 31, 2018		March 31, 2017
Cash and cash equivalents as presented on balance sheet	$	164,773	$	29,266
Restricted cash, current, as presented on balance sheet		65		—
Restricted cash, non-current, as presented on balance sheet		237		165

Cash and cash equivalents and restricted cash as presented on cash flow statement	$	165,075	$	29,431


	Fair Value Measurements as of March 31, 2018 Using:								Fair Value Measurements as of December 31, 2022 Using:
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents									$	—	$	69,374	$	—	$	69,374
Available-for-sale securities	$	—	$	17,609	$	—	$	17,609		—		58,338		—		58,338
									$	—	$	127,712	$	—	$	127,712


	March 31, 2023		December 31, 2022
Prepaid research and development expenses	$	2,245	$	2,913
Prepaid expenses and other assets		2,850		3,003
	$	5,095	$	5,916


	Number of Options		Weighted Average Exercise Price
Outstanding at December 31, 2017		—	$	—
Granted		558,105		26.23

Outstanding at March 31, 2018		558,105	$	26.23

Exercisable at March 31, 2018		—	$	—


	Units / Shares			Weighted- Average Grant Date Fair Value
Unvested restricted Series D Common Units at December 31, 2017		1,404,265		$	4.83
Vested units prior to Corporate Conversion		(66,019	)		3.46
Forfeited units prior to Corporate Conversion		(8,932	)		2.99
Unvested Series D Common Units at January 25, 2018 prior to Corporate Conversion		1,329,314			4.91

Conversion to restricted shares of common stock upon Corporate Conversion		1,128,182			5.79
Vested shares of common stock		(56,655	)		3.93
Forfeited		(6,042	)		5.55

Unvested restricted shares of common stock at March 31, 2018		1,065,485		$	5.89


	March 31, 2018
Deferred tax assets:
Tax loss carryforwards	$	2,027
Tax credit carryforwards		1,019
Intangible assets		108
Deferred revenues		58
Deferred expenses		100
Accrued expenses		188
Other		9

Total deferred tax assets		3,509

Depreciation		(224	)
Valuation allowance		(3,285	)

Net deferred taxes	$	—


Year Ending December 31,
2018	$	1,157
2019		1,917
2020		1,999
2021		2,038
2022		1,005
Thereafter		267

Total	$	8,383


	Three Months Ended March 31,						Increase (decrease)
	2018			2017			Increase (decrease)			Three Months Ended March 31,
(in thousands)										2023			2022
Cash used in operating activities	$	(17,172	)	$	(10,196	)	$	(6,976	)	$	(27,995	)	$	(27,190	)
Cash (used in) provided by investing activities		(1,611	)		6,962			(8,573	)
Cash provided by investing activities											37,260			37,743
Cash provided by financing activities		131,713			24,822			106,891			—			22

Net increase in cash, cash equivalents and restricted cash	$	112,930		$	21,588		$	91,342		$	9,265		$	10,575


	Payments due by period
(in thousands)	Total		Less Than 1 Year		1 - 3 Years		3 - 5 Years		More Than 5 Years
Operating lease commitments⁽¹⁾	$	8,383	$	1,157	$	5,954	$	1,272	$	—


Exhibit Number		Description

~~2.1~~ 10.1		~~Plan~~Employment agreement, dated as of ~~Conversion, dated~~ January 25, ~~2018~~2019, by and between Solid Biosciences Inc. and Carl Morris Ph.D (incorporated by reference to Exhibit ~~2.2~~10.4 to the Annual Report on Form10-K filed on March ~~29, 2018)~~ 13, 2019).

~~2.2~~ 10.2		Employment Agreement, ~~and Plan of Merger,~~ dated ~~January~~ 25, 2018, by and among Solid Biosciences Inc., Bain Capital Life Sciences Fund, L.P., BCIP Life Sciences Associates, LP, BCLS Solid Bio, Inc., Foresite Capital Fund III, L.P. and FC Fund III Solid Holdings, Inc. (incorporated by reference to Exhibit 2.3 to the Annual Report on Form~~10-K~~ ~~filed on March~~September 29, ~~2018).~~

~~3.1~~		~~Certificate of Incorporation of Solid Biosciences Inc. (incorporated by reference to Exhibit 4.1 to the Registration Statement on FormS-8~~ ~~filed on January~~ ~~29, 2018).~~

~~3.2~~		~~Bylaws of Solid Biosciences Inc. (incorporated by reference to Exhibit 4.2 to the Registration Statement on FormS-8~~ ~~filed on January~~ ~~29, 2018).~~

~~10.1~~		~~Solid Biosciences Inc. 2018 Omnibus Incentive Plan (incorporated by reference to Exhibit 99.1 to the Registration Statement on FormS-8~~ ~~filed on January~~ ~~29, 2018).~~



~~10.2~~		~~Form of Incentive Stock Option Agreement under 2018 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.7 to the Registration Statement on FormS-1~~ ~~filed on December~~ ~~29, 2017).~~

~~10.3~~		~~Form of Nonqualified Stock Option Agreement under 2018 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.8 to the Registration Statement on FormS-1~~ ~~filed on December~~ ~~29, 2017).~~

~~10.4~~		~~Form of Restricted Stock Agreement under 2018 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.9 to the Registration Statement on FormS-1~~ ~~filed on December~~ ~~29, 2017).~~

~~10.5~~		~~Sublease, dated as of January~~ ~~30, 2018,~~2022, by and between Solid Biosciences ~~LLC~~Inc. and ~~Twitter, Inc. (incorporated by reference to Exhibit 10.20 to the Annual Report on Form10-K~~ ~~filed on March~~ ~~29, 2018).~~David Tyronne Howton.

31.1		Certification of Principal Executive Officer Pursuant to Rules13a-14(a) and15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Principal Financial Officer Pursuant to Rules13a-14(a) and15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


			~~Solid Biosciences Inc.~~

~~Date: May 10, 2018~~			~~By:~~		~~/s/ Ilan Ganot~~	Solid Biosciences Inc.
					~~Ilan Ganot~~
				Date: May 11, 2023		By:	/s/ Alexander Cumbo
		Alexander Cumbo
		President and Chief Executive Officer ~~(Principal~~ (Principal Executive Officer)

~~Date: May 10, 2018~~			~~By:~~		~~/s/ Jennifer Ziolkowski~~
Date: May 11, 2023	By:				~~Jennifer Ziolkowski~~ /s/ Kevin Tan
		Kevin Tan
		Chief Financial Officer ~~(Principal~~ (Principal Financial and Accounting Officer)

Large accelerated filer

Accelerated filer

Non-accelerated filer

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Smaller reporting company

Emerging growth company