

	Common Shares			Additional Paid-in Capital		Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
	Common Shares
	Shares	Amount
Balance at March 31, 2019	22,779,891	$	—	$	741,318	$	(686,016	)	$	911		$	56,213
Issuance of shares upon exercise of stock options	781	—		5		—			—			5
Share-based compensation expense	—	—		2,135		—			—			2,135
Non-cash capital contribution received from Roivant Sciences, Inc.	—	—		28		—			—			28
Foreign currency translation adjustment	—	—		—		—			(972		)	(972		)
Net loss	—	—		—		(28,057		)	—			(28,057		)
Balance at June 30, 2019	22,780,672	$	—	$	743,486	$	(714,073	)	$	(61	)	$	29,352
Issuance of shares upon exercise of stock options	10,997	—		81		—			—			81
Share-based compensation expense	—	—		891		—			—			891
Non-cash capital contribution received from Roivant Sciences, Inc.	—	—		48		—			—			48
Foreign currency translation adjustment	—	—		—		—			552			552
Net loss	—	—		—		(13,884		)	—			(13,884		)
Balance at September 30, 2019	22,791,669	$	—	$	744,506	$	(727,957	)	$	491		$	17,040

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

~~AXOVANT SCIENCES LTD.~~

~~Condensed Consolidated Statements of Cash Flows~~

~~(Unaudited, in thousands)~~

Six Months Ended September 30,
2018 2017
Cash flows from operating activities:

Net loss $ (85,723 ) $ (138,352 )
Adjustments to reconcile net loss to net cash used in operating activities:

Disposal of fixed assets 9
—
Foreign currency translation adjustment 446
(250 )
Share-based compensation 8,316
30,940
Depreciation and non-cash amortization 1,647
1,050
Deferred tax assets —
2,709
Changes in operating assets and liabilities:

Prepaid expenses and other current assets (1,921 ) 1,870
Other non-current assets (4,324 ) —
Accounts payable (2,132 ) (5,691 )
Due to RSL, RSI and RSG 2,283
1,323
Accrued expenses (7,547 ) (1,002 )
Income tax receivable 221
(2,155 )
Net cash used in operating activities (88,725 ) (109,558 )
Cash flows from investing activities:

    Purchases of property and equipment (18 ) (3,643 )
Net cash used in investing activities (18 ) (3,643 )
Cash flows from financing activities:

    Exercise of stock options 118
1,486
    Cash proceeds from issuance of common shares, net of costs 25,014
134,515
Net cash provided by financing activities 25,132
136,001
Net change in cash (63,611 ) 22,800
Cash—beginning of period 154,337
212,573
Cash—end of period $ 90,726
$ 235,373
Non-cash financing activities:
Non-cash capital contribution received by ASG from RSI $ 422
$ —
Issuance of common stock upon exercise of warrant —
2,594

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

AXOVANT ~~SCIENCES~~GENE THERAPIES LTD.

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)



	Six Months Ended September 30,
	2019			2018
Cash flows from operating activities:
Net loss	$	(41,941	)	$	(85,723	)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss on disposal of fixed assets	25			9
Unrealized foreign currency translation adjustment	(420		)	446
Amortization of operating lease right-of-use assets	795			—
Share-based compensation expense	3,026			8,316
Depreciation and non-cash amortization	734			1,647
Change in operating lease liabilities	(759		)	—
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	1,480			(1,921		)
Income tax receivable	(345		)	221
Other non-current assets	341			(4,324		)
Accounts payable	(131		)	(2,132		)
Due to Roivant Sciences Ltd. and certain of its wholly owned subsidiaries	(124		)	1,861
Accrued expenses	842			(7,547		)
Net cash used in operating activities	(36,477		)	(89,147		)
Cash flows from investing activities:
Purchases of property and equipment	(174		)	(18		)
Net cash used in investing activities	(174		)	(18		)
Cash flows from financing activities:
Payments on long-term debt	(10,255		)	—
Capital contribution received from Roivant Sciences, Inc.	76			422
Cash proceeds from stock option exercises	86			118
Cash proceeds from issuance of common shares, net of costs	—			25,014
Net cash (used in) provided by financing activities	(10,093		)	25,554
Net change in cash and cash equivalents	(46,744		)	(63,611		)
Cash and cash equivalents—beginning of period	106,999			154,337
Cash and cash equivalents—end of period	$	60,255		$	90,726
Non-cash operating activities:
Operating lease right-of-use assets recognized upon the adoption of ASC 842, Leases, on April 1, 2019	$	2,986		$	—
Operating lease liabilities recognized upon the adoption of ASC 842, Leases, on April 1, 2019	2,400			—
Amounts reclassified from other non-current assets to operating lease right-of-use assets upon the adoption of ASC 842, Leases, on April 1, 2019	586			—

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

AXOVANT GENE THERAPIES LTD.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 1—Description of Business

Axovant ~~Sciences~~Gene Therapies Ltd. ("AGT"), together with its wholly owned subsidiaries (the "Company"), is a clinical-stage ~~gene therapy~~ company focused on gene therapy for neurological diseases. The Company is developing a pipeline of innovative product candidates for the treatment of these debilitating ~~neurological and neuromuscular~~ diseases, ~~such as~~including Parkinson's disease, ~~oculopharyngeal muscular dystrophy ("OPMD"), amyotrophic lateral sclerosis ("ALS"), frontotemporal dementia,~~GM1 gangliosidosis and ~~other indications.~~GM2 gangliosidosis (including Tay-Sachs disease and Sandhoff disease). The Company is ~~also developing nelotanserin for~~dedicated to realizing the ~~treatment~~potential of ~~Lewy body dementia ("LBD") and potentially other neurology and psychiatry indications.~~gene therapies to offer transformative patient outcomes in areas of high unmet medical need.

~~The Company~~AGT is an exempted limited company incorporated under the laws of Bermuda, ~~in October 2014~~which was originally formed under the name Roivant Neurosciences Ltd. ~~The Company~~in October 2014 and changed its name to Axovant Sciences Ltd. in March ~~2015. The Company~~2015 and to Axovant Gene Therapies Ltd. in March 2019. AGT has ~~six~~seven wholly owned subsidiaries:

Axovant Holdings Limited ("AHL")~~, a direct wholly owned subsidiary of Axovant Sciences Ltd., was incorporated in England and Wales in August 2016;~~ ;

Axovant Sciences, Inc. ("ASI")~~, a direct wholly owned subsidiary of AHL, was incorporated in Delaware in February 2015;~~ ;

Axovant Sciences GmbH ("ASG")~~, a direct wholly owned subsidiary of AHL, was organized in Switzerland in August 2016;~~ ;

Axovant Sciences America, Inc. ("ASA")~~, a direct wholly owned subsidiary of AHL, was incorporated in Delaware in July 2017; and~~ ;

Axovant Treasury Holdings, Inc. ("ATH")~~, a direct wholly owned subsidiary of ASL and~~ ;

Axovant Treasury, Inc. ("ATI")~~, a direct wholly owned subsidiary of ATH, were each incorporated in Delaware in March 2018. ASG holds all of the Company's intellectual property rights~~; and ~~is the principal operating company for conducting the Company’s business.~~

Axovant Sciences Europe Limited.

The Company's near-term focus is to develop its gene therapy product candidates AXO-Lenti-PD, a potential one-time treatment for Parkinson's disease, and AXO-AAV-OPMD, a potential one-time treatment for OPMD. The Company has initiated a clinical study of AXO-Lenti-PD in patients with Parkinson's disease and intends to initiate a clinical study of AXO-AAV-OPMD in patients with OPMD in the second half of 2019. Prior to the recent in-licensing of AXO-Lenti-PD in June 2018 and AXO-AAV-OPMD in July 2018, the Company's primary focus had been on developing nelotanserin, a selective inverse agonist of the 5-HT_2A ~~receptor, and intepirdine, an antagonist of the 5-HT~~₆ receptor for which development had been terminated in January 2018. Topline data from the ongoing Phase 2 study of nelotanserin in REM Sleep Behavior Disorder ("RBD") in LBD patients is expected to be available in December 2018. The Company is evaluating the possibility of partnering or pursuing other strategic opportunities for nelotanserin. In October 2018, the Company discontinued its development plans for RVT-104 as a potential treatment for patients with Alzheimer's disease or dementia with Lewy bodies ("DLB"), which is a sub-type of LBD.

~~From~~Since its inception, the Company has devoted substantially all of its efforts to organizing and staffing the Company, raising capital, acquiring product candidates and advancing its product candidates into clinical development. The Company has determined that it has one operating and reporting segment as it allocates resources and assesses financial performance on a consolidated basis. The Company does not expect to generate revenue unless and until it successfully completes development and obtains regulatory approval for one of its product candidates. The Company believes it currently has access to sufficient funds to meet its financial needs for at least the next 12 months. The Company will be required to obtain further funding through public or private offerings of its share capital, debt financing, collaboration and licensing arrangements or other sources as it advances its product candidates through preclinical and clinical development. Adequate additional funding may not be available to the Company on acceptable terms, or at all.

Note 2—Summary of Significant Accounting Policies

(A) Basis of Presentation:

The Company’s fiscal year ends on March 31, and its fiscal quarters end on June 30, September 30 and December 31.

~~The accompanying interim~~These unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. These ~~interim~~ unaudited condensed consolidated financial statements and accompanying notes should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, ~~2018 the ("Annual~~2019 (the "Annual Report"), filed with the Securities and Exchange Commission ("SEC") on June 11, ~~2018.~~2019. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary to present fairly the financial position of the

Company and its results of operations and cash flows for the ~~interim~~ periods presented have been included. Operating results for the three and six-months ended September 30, ~~2018~~2019 are not necessarily indicative of the results that may be expected for the year ending March 31, ~~2019,~~2020, for any other interim period, or for any other future year.

Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification ("ASC"), and as amended by Accounting Standards ~~Update~~Updates ("ASU"), issued by the Financial Accounting Standards Board ("FASB"). ~~The~~These unaudited condensed consolidated financial statements and accompanying notes include the accounts of the Company and its wholly owned subsidiaries. The Company has no unconsolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Certain prior period balances have been reclassified to conform to the current period presentation.

These unaudited condensed consolidated financial statements and accompanying notes have been prepared on the basis that the Company will continue as a going concern, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern (see Note 2(B)).

A 1-for-8 reverse share split of the Company's outstanding common stock was effected on May 8, 2019 as approved by the Company's Board of Directors and a majority of its shareholders, which reduced the number of common shares issued and outstanding from approximately 182.2 million to 22.8 million as of May 8, 2019. As such, all references to share and per share amounts in these unaudited condensed consolidated financial statements and accompanying notes have been retroactively restated to reflect the 1-for-8 reverse share split, except for the authorized number of shares of the Company's common stock and the par value per share, which were not affected.

There have been no significant changes in the Company’s accounting policies from those disclosed in its Annual ~~Report.~~

Report, except for the Company's adoption of Topic 842, "Leases (Topic 842)" ("Topic 842") (see Note 2(F) and Note 5).

(B) Going Concern and Management's Plans:

The Company assesses and determines its ability to continue as a going concern in accordance with the provisions of ASC Topic 205-40, "Presentation of Financial Statements—Going Concern" ("ASC Topic 205-40"), which requires the Company to evaluate whether there are conditions or events that raise substantial doubt about its ability to continue as a going concern within one year after the date that its annual and interim consolidated financial statements are issued. Certain additional financial statement disclosures are required if such conditions or events are identified. If and when an entity’s liquidation becomes imminent, financial statements should be prepared under the liquidation basis of accounting. Determining the extent, if any, to which conditions or events raise substantial doubt about the Company’s ability to continue as a going concern, or the extent to which mitigating plans sufficiently alleviate any such substantial doubt, as well as whether or not liquidation is imminent, requires significant judgment by management.

The Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the consolidated financial statements are issued.

As of September 30, 2019, the Company’s cash and cash equivalents totaled $60.3 million and its accumulated deficit was $728.0 million. For the six months ended September 30, 2019 and the fiscal year ended March 31, 2019, the Company incurred net losses of $41.9 million and $129.1 million, respectively. As of September 30, 2019, the Company had aggregate net interest-bearing indebtedness of $34.4 million, of which $22.6 million was due within one year in the absence of any amendment made to the Company's Loan Agreement (as defined in Note 7) with Hercules Capital, Inc. ("Hercules"). The Company expects to continue to incur significant operating and net losses, as well as negative cash flows from operations, for the foreseeable future as it continues to develop its gene therapy product candidates and prepares for potential future regulatory approvals and commercialization of its products, if approved. The Company has not generated any revenue to date and does not expect to generate product revenue unless and until it successfully completes development and obtains regulatory approval for at least one of its product candidates, and its current cash and cash equivalents balance will not be sufficient to complete all necessary development activities and commercially launch its products. The Company’s Loan Agreement with Hercules currently requires that the Company maintain a minimum cash balance equal to the lesser of $30.0 million or the outstanding amount due under the Loan Agreement. As of September 30, 2019, the Company was in compliance with all affirmative and negative covenants in the Loan Agreement with Hercules, including the minimum cash covenant. The Company has received two financing proposals, which, if executed, would either prevent or eliminate the potential for noncompliance with the minimum cash covenant. The Company expects to execute a definitive financing agreement by December 31, 2019; however, if a financing agreement is not executed and the Company fails to maintain compliance with the minimum cash balance requirement, an event of default would occur under the Loan Agreement, and Hercules could choose to accelerate the indebtedness under the Loan Agreement. The Company anticipates that its current cash and cash equivalents balance will not be sufficient to sustain operations beyond six months (under one proposal) or twelve months (under the other proposal) following the date that these unaudited condensed consolidated financial statements and notes were issued, which raises substantial doubt about the Company's ability to continue as a going concern.

To continue as a going concern, the Company will need, among other things, to raise additional capital in the near term. The Company continually assesses multiple options to obtain additional funding to support its operations, including proceeds from offerings of the Company’s equity securities or debt, cash received from the exercise of outstanding common stock options, or transactions involving product development, technology licensing or collaboration arrangements, or other sources of capital to complete its currently planned development programs. Management can provide no assurances that it can raise a sufficient amount of financing for the Company on favorable terms, if at all. Although the Company has successfully obtained financing in the past, and management believes that it will continue to do so in the future, ASC Subtopic 205-40 does not permit future financing activities that are not probable of being implemented and probable of alleviating the conditions that raise substantial doubt to be included in the Company's assessment of its liquidity.

Due to these uncertainties, there is substantial doubt about the Company’s ability to continue as going concern. These unaudited condensed consolidated financial statements and accompanying notes have been prepared on the basis that the Company will continue as a going concern, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company regularly evaluates estimates and assumptions related to ~~the~~certain assets, ~~liabilities,~~including which costs are charged to research and ~~expenses (including compensation expense) allocated to the Company under its services agreements with Roivant Sciences, Inc. ("RSI")~~development and ~~Roivant Sciences GmbH ("RSG"), each a wholly owned subsidiary of the Company’s parent company, RSL,~~general and administrative expense, as well as ~~the evaluation of the Company's~~assumptions used to estimate its ability to continue as a going concern ~~contingent liabilities, share-based compensation~~ and ~~research and development costs.~~estimate the fair value of its stock option awards. Specifically, the Company estimates the grant date fair value of stock option awards with only time-based vesting requirements using a Black-Scholes valuation model and uses a Monte Carlo Simulation method under the income approach to estimate the grant date fair value of stock option awards with market-based performance conditions. The Company bases its estimates and assumptions on historical experience and on various other factors that it believes to be 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. Actual results could differ from those estimates.

~~(C)~~(D) Net Loss per Common Share:

Basic net loss per common share is computed by dividing the net loss applicable to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing the net loss applicable to common shareholders by the diluted weighted-average number of common shares outstanding during the period calculated in accordance with the treasury stock method. ~~Stock options to purchase approximately 15.8 million~~In periods in which the Company reports a net loss, all common share equivalents are deemed anti-dilutive such that basic net loss per common share and diluted net loss per common share are equivalent. Potentially dilutive common shares ~~were not included~~have been excluded from the diluted net loss per common share computations in all periods presented because such securities have an anti-dilutive effect on net loss per common share due to the ~~calculation~~Company’s net loss. There are no reconciling items used to calculate the weighted-average number of ~~diluted weighted-average~~total common shares outstanding for ~~each of the three~~basic and ~~six-months ended September 30, 2018 because they were anti-dilutive given the~~diluted net loss ~~of the Company.~~per common share data. Stock options and ~~a warrant which, combined, would enable the~~Restricted Stock Units ("RSUs") to purchase ~~of an aggregate of 5.4 million and 10.4~~approximately 3.0 million common shares were not included in the calculation of diluted weighted-average common shares outstanding for the three and six-months ended September 30, ~~2017, respectively,~~2019 because they were anti-dilutive given the net loss of the Company. Stock options to purchase approximately 2.0 million common shares were not included in the calculation of diluted weighted-average common shares outstanding for the three and six-months ended September 30, 2018 because they were anti-dilutive given the net loss of the Company.

~~(D)~~(E) Financial Instruments and Fair Value ~~Measurements:~~

Measurement:

The Company utilizes fair value measurement guidance prescribed by accounting standards to value its financial instruments.

The guidance establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances.

Fair value is defined as the exchange price, or exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering market participant assumptions in fair value measurements, the guidance establishes a three-tier fair value hierarchy that distinguishes among the following:

Level 1-Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

Level 2-Valuations are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and models for which all significant inputs are observable, either directly or indirectly.

Level 3-Valuations are based on inputs that are unobservable (supported by little or no market activity) and significant to the overall fair value measurement.

To the extent the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

The Company’s financial instruments include cash and cash equivalents, a long-term investment, accounts payable and long-term debt. Cash consists of non-interest-bearing deposits denominated in the U.S. dollar and Swiss franc, while cash equivalents consists of interest-bearing money market fund deposits denominated in the U.S. dollar, which are invested in debt securities issued or guaranteed by the U.S. government and repurchase agreements fully collateralized by U.S. Treasury and U.S. government securities. Cash and accounts payable are stated at their respective historical carrying amounts, which approximate fair value due to their short-term nature. The carrying value of the Company's money market fund included in cash and cash equivalents of $30.4 million at September 30, 2019 approximated fair value, which is based on quoted prices in active markets for identical securities.

At September 30, 2019, the Company held a long-term investment in nonredeemable convertible preferred stock, which is accounted for in accordance with the provisions of ASC 321, "Investments - Equity Securities" whereby the Company elected to use the measurement alternative therein (see Note 4).

The following table summarizes the fair value of the Company's money market fund included in cash equivalents based on the inputs used at September 30, 2019 in determining such values (in thousands):



	Fair Value		Price Quotations (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Money market fund	$	30,425	$	30,425	$	—	$	—

The carrying value of the Company’s debt ~~was $53.3~~of $34.4 million ~~as of~~at September 30, ~~2018 and approximates~~2019 approximated fair value, which was based on current interest rates for similar types of borrowings and is in Level 2 of the fair value hierarchy. ~~See Note 5 for the actual book carrying value of the Company's long-term debt at September 30, 2018.~~

~~(E)~~(F) Recent Accounting Pronouncements:

In February 2016, the FASB issued ~~ASU No. 2016-02, "Leases(Topic 842)" ("ASU No. 2016-02"), as well as ASU No. 2018-10, "Codification Improvements to~~ Topic 842, ~~Leases" and ASU No. 2018-11, "Leases (Topic 842): Targeted Improvements" in July 2018 (collectively, the "Lease Standards"),~~ which ~~relate to a comprehensive new lease standard that amends various aspects of existing accounting guidance for leases. The core principle of the Lease Standards will require~~requires lessees to ~~present the assets and liabilities that arise from leases~~recognize on their consolidated balance ~~sheets. The Lease Standards are~~sheets a liability to make lease payments and a right-of-use asset representing their right to use the underlying asset for the lease term for both finance and operating leases with lease terms greater than twelve months. Topic 842 is effective for annual periods beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2018. Early adoption is permitted. ~~The Company has implemented~~A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. Topic 842 allows entities to choose to use either (i) the effective date or (ii) the beginning of the earliest comparative period presented in the financial statements as the date of initial application. Topic 842 provides a ~~process to identify its outstanding lease portfolio and is currently evaluating its outstanding leases to determine the impact the Lease Standards will have on its consolidated financial statements.~~

~~In January 2017, the FASB issued ASU 2017-01, "Business Combinations (Topic 805): Clarifying the Definition~~number of ~~a Business~~" ("ASU No. 2017-01"), which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses.optional practical expedients in transition. The Company adopted ~~the provisions of ASU No. 2017-01~~Topic 842 on April 1, ~~2018 on~~2019 using the optional modified retrospective transition method. Comparative periods were not restated. For leases that commenced prior to April 1, 2019, the Company elected the following package of practical expedients when assessing the transition impact: (1) not to reassess whether any expired or existing contracts are or contain leases; (2) not to reassess the lease classification for any expired or existing leases; and (3) not to reassess initial direct costs for any existing leases. The Company also elected to: (1) use the total lease term in its initial incremental borrowing rate calculation; (2) combine its lease and non-lease components and account for them as a ~~prospective basis.~~single lease component; and (3) not apply the use of hindsight in determining the lease term when considering lessee options to extend or terminate the lease and to purchase the underlying asset. Upon adoption, the Company recorded corresponding aggregate operating lease right-of-use assets and operating lease liabilities of $3.0 million and $2.4 million, respectively, including $0.6 million of prepaid rent previously classified within other non-current assets in the Company’s consolidated balance sheet that was reclassified to operating lease right-of-use assets. The adoption of the new standard did not materially impact the Company’s consolidated results of operations and cash flows and did not have an impact on the ~~Company's consolidated financial statements and disclosures will depend on~~Company’s beginning accumulated deficit balance. For additional information regarding the ~~facts and circumstances of any specific future transactions. See~~Company’s leases, see Note 35 for further information regarding the impact of the Company's adoption of ~~ASU No. 2017-01 on the license agreements executed during the three and six-months ended September 30, 2018.~~Topic 842.

In February 2018, the FASB issued ASU No. 2018-02, "Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" ("ASU No. 2018-02"). On December 22, 2017, an Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018 (commonly known as the "Tax Cuts and Jobs Act") was enacted in the United States, which introduced a comprehensive set of tax reforms. ASU No. 2018-02 allows companies to reclassify stranded tax effects resulting from the Tax Cuts and Jobs Act, from accumulated other comprehensive (loss) income to retained earnings. ASU No. 2018-02 is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. The Company ~~expects to adopt~~adopted the provisions of ASU No. 2018-02 for the fiscal year beginning April 1, ~~2019. As the Company has~~2019, which did not ~~yet completed its final review of the impact of ASU No. 2018-02 but expects to by March 31, 2019, the Company has not determined whether the adoption of this guidance will~~ have a material impact on its consolidated financial statements ~~or disclosures.~~

~~In March 2018, the FASB issued ASU No. 2018-05, "Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118~~," ("ASU No. 2018-05"). ASU No. 2018-05 amends certain SEC material in Topic 740 for the income tax accounting implications of the Tax Cuts and Jobs Act. ASU No. 2018-05 was effective immediately. The Company evaluated the impact of the Tax Cuts and Jobs Act as well as the guidance of Staff Accounting Bulletin 118 ("SAB 118") and incorporated the changes into the determination of a reasonable estimate of deferred taxes and appropriate disclosures in the notes to the Company’s consolidated financial statements. The Company will continue to evaluate the impact this tax reform legislation may have on our results of operations, financial position, cash flows and related disclosures.

In June 2018, the FASB issued ASU No. 2018-07, "Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting," ("ASU No. 2018-07"). ASU No. 2018-07 requires equity-classified share-based payment awards issued to nonemployees to be measured on the grant date, rather than remeasuring the awards through the performance completion date as previously required. Additionally, for nonemployee awards with performance conditions, compensation cost associated with the award is to be recognized when achievement of the performance condition is probable, rather than upon achievement of the performance condition. Further, the requirement to reassess the liability or equity classification for nonemployee awards upon vesting is eliminated, except for awards in the form of convertible instruments. ASU No. 2018-07 ~~also clarifies that any share-based payment awards issued to customers should be evaluated under ASC 606,~~ ~~Revenue from Contracts with Customers. ASU No. 2018-07~~ is effective for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year, with early adoption permitted after the adoption of ASU No. 2014-09. The Company ~~expects to adopt~~adopted the provisions of ASU No. 2018-07 for the fiscal year beginning April 1, ~~2019. As the Company has not yet completed its final review of the impact of ASU No. 2018-07 but expects to by March 31,~~ 2019, ~~the Company has not determined whether the adoption of this guidance will have a material impact on its consolidated financial statements or disclosures.~~

~~In August 2018, the FASB issued ASU No. 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement"~~ ~~("ASU No. 2018-13")~~. ASU No. 2018-13 removes, modifies, and adds certain recurring and nonrecurring fair value measurement disclosures, including removing disclosures around the amount(s) of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels, and the valuation processes for Level 3 fair value measurements, among other things. ASU No. 2018-13 adds disclosure requirements around changes in unrealized gains and losses included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and a narrative description of measurement uncertainty. The amendments in ASU No. 2018-13 are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty are to be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption, with all other amendments applied retrospectively to all periods presented. Early adoption is permitted. The Company early adopted the provisions of ASU No. 2018-13 during the three months ended September 30, 2018, which did not have a material impact on its consolidated financial statements ~~or disclosures because the Company does not currently have any Level 3 fair value measurements on a recurring or nonrecurring basis,~~ and ~~also has not had transfers between Level 1 and Level 2 of the fair value hierarchy.~~related disclosures.

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the SEC did not, or are not believed by management to, have a material impact on the Company’s present or future consolidated financial position, results of operations or cash flows.

Note 3—License and Collaboration Agreements

(A)Oxford BioMedica License Agreement

On June 5, 2018, the Company, through its wholly owned subsidiary, ASG, entered into an exclusive license agreement ~~(the "Oxford BioMedica Agreement")~~ with Oxford BioMedica (UK) Ltd. ("~~Oxford BioMedica"~~Oxford"), pursuant to which the Company received a worldwide, exclusive, royalty-bearing, sub-licensable license under certain patents and other intellectual property controlled by Oxford ~~BioMedica~~ to develop and commercialize AXO-Lenti-PD and related gene therapy products for all diseases and ~~conditions.~~conditions (the "Oxford Agreement"). In June 2018, as consideration for the license, the Company made an upfront nonrefundable payment to Oxford ~~BioMedica~~ of $30.0 million, $5.0 million of which ~~will be~~was applied as a credit against the process development work and clinical supply that Oxford ~~BioMedica will~~is obligated to provide to the ~~Company.~~Company over the term of the Oxford Agreement. Under the terms of the Oxford ~~BioMedica~~ Agreement, the Company could be obligated to make payments to Oxford ~~BioMedica~~ totaling up to $55.0 million upon the achievement of specified development milestones and $757.5 million upon the achievement of specified regulatory and sales milestones. In April 2019, certain development milestones were achieved resulting in a $13.0 million net payment due to Oxford. The Company will also be obligated to pay Oxford ~~BioMedica~~ a tiered royalty from 7% to 10%, based on yearly aggregate net sales of the underlying gene therapy products, subject to specified reductions upon the occurrence of certain events as set forth in the Oxford ~~BioMedica~~ Agreement. These royalties are required to be paid, on a product-by-product and country-by-country basis, until the latest to occur of the expiration of the last to expire valid claim of a licensed patent covering such product in such country, the expiration of regulatory exclusivity for such product in such country, or 10 years after the first commercial sale of such product in such country.

The Company is solely responsible, at its expense, for all activities related to the development and commercialization of the gene therapy products underlying the Oxford ~~BioMedica~~ Agreement. Pursuant to the Oxford ~~BioMedica~~ Agreement, the Company is required to use commercially reasonable efforts to develop, obtain regulatory approval of, and commercialize a gene therapy product underlying the Oxford ~~BioMedica~~ Agreement in the United States and at least one major market country in Europe. In addition, the Company is required to meet certain diligence milestones and to include at least one U.S.-based clinical trial site in a pivotal study of a gene therapy product underlying the Oxford ~~BioMedica~~ Agreement. If the Company fails to meet any of these specified development milestones, it may cure such failure by paying Oxford ~~BioMedica~~ certain fees, which range from $0.5 million to $1.0 million.

The Company ~~has~~ evaluated the Oxford ~~BioMedica~~ Agreement and ~~has~~ determined that the acquired set of assets and activities did not meet the definition of a business and thus the transaction was not considered a business combination. The Company determined that the in-process research and development ("IPR&D") had not reached technological feasibility, and therefore, has no alternative future use. Accordingly, $25.0 million of the ~~initial~~$30.0 million upfront nonrefundable payment ~~required~~to Oxford under the ~~license agreement~~Oxford Agreement was recorded as research and development expense in the Company's unaudited condensed consolidated statements of operations during the ~~six~~three months ended ~~September~~June 30, 2018. As the remaining $5.0 million of the ~~initial~~upfront payment under the licensing agreement represents a nonrefundable payment for process development work and clinical supply that Oxford ~~BioMedica will~~is obligated to provide over the term of the ~~license agreement,~~Oxford Agreement, the Company fully capitalized this portion of the payment upon execution, with ~~$1.1~~$2.0 million remaining capitalized within prepaid expenses and other current ~~assets and $3.7 million remaining capitalized within other non-current~~ assets in its unaudited condensed consolidated balance sheet as of September 30, ~~2018,~~2019, which ~~will be~~is recorded to research and development expense as the process development work and clinical supply are provided by ~~Oxford BioMedica.~~Oxford. Additionally, the Company incurred ~~$1.2~~$2.7 million and ~~$1.3~~$4.1 million of AXO-Lenti-PD program-specific costs within research and development expenses in its unaudited condensed consolidated statements of operations during the three and six-months ended September 30, ~~2018, respectively. During~~2019, respectively, and $1.2 million and $1.3 million during the three and six-months ended September 30, 2018, ~~the~~respectively. The Company paid Oxford a total of $5.2 million and $6.5 million, respectively, during the three and six-months ended September 30, 2019 and $0.1 million and $30.1 million, respectively, ~~to Oxford BioMedica,~~during the three and six-months ended September 30, 2018, including the upfront nonrefundable payment during the ~~six~~three months ended ~~September~~June 30, 2018.

(B)Benitec Biopharma License and Collaboration Agreement

OnIn July 8, 2018, the Company, through its wholly owned subsidiary, ASG, entered into a license and collaboration agreement (the "Benitec Agreement") with Benitec Biopharma Limited ("Benitec")~~. Pursuant~~, pursuant to ~~the Benitec Agreement,~~which the Company made an upfront payment of $10.0 million and received a worldwide, exclusive, royalty-bearing, sub-licensable license under certain patents and other intellectual property controlled by Benitec to develop and commercialize investigational gene therapy AXO-AAV-OPMD and related gene therapy products (collectively, the "AXO-AAV-OPMD Program") for all diseases and conditions.

~~Under~~ In June 2019, the Company notified Benitec of its intention to terminate the Benitec Agreement ~~the Company will also collaborate with Benitec~~in its entirety, which termination became effective on five additional research plans as part of the "Collaboration Programs" for other genetic neurological or neuromuscular disorders using Benitec technologies. The Company will receive a worldwide, exclusive, royalty-bearing, sub-licensable license under certain patents and other intellectual property controlled by Benitec to develop and commercialize products arising from each Collaboration Program.

September 3, 2019.

The Company ~~has~~ evaluated the Benitec Agreement and ~~has~~ determined that the acquired set of assets and activities did not meet the definition of a business and thus the transaction was not considered a business combination. The Company determined that the IPR&D had not reached technological feasibility, and therefore, has no alternative future use. Accordingly, the $10.0 million upfront nonrefundable payment ~~required under the terms of the Benitec Agreement~~ was recorded as research and development expense in the Company's unaudited condensed consolidated ~~statements~~statement of operations during the three months ended September 30, 2018. The Company also incurred $0.4 million and $2.1 million, respectively, of AXO-AAV-OPMD program-specific costs within research and development expenses in its unaudited condensed consolidated statement of operations during the three and six-months ended September 30, ~~2018. Additionally, the Company incurred~~2019 and $1.7 million during both the three and six-months ended September 30, 2018. The Company paid Benitec a total of ~~AXO-AAV-OPMD program-specific costs in its unaudited condensed consolidated statements of operations~~$1.7 million and $2.4 million, respectively, during the three and six-months ended September 30, ~~2018. During~~2019 and $10.0 million during the three and six-months ended September 30, 2018.

(C)The University of Massachusetts Medical School Exclusive License Agreement

In December 2018, the Company, ~~paid~~through its wholly owned subsidiary, ASG, entered into an exclusive license agreement (the "UMMS Agreement"), with the University of Massachusetts Medical School ("UMMS") pursuant to which the Company received a ~~total~~worldwide, royalty-bearing, sub-licensable license under certain patent applications and any patents issuing therefrom, biological materials and know-how controlled by UMMS to develop and commercialize gene therapy product candidates, including AXO-AAV-GM1 and AXO-AAV-GM2, for the treatment of GM1 gangliosidosis and GM2 gangliosidosis (including Tay-Sachs disease and Sandhoff disease), respectively. This license is exclusive with respect to patents and biological materials and non-exclusive with respect to know-how and is subject to UMMS' retained rights for academic research, teaching and non-commercial patient care purposes, as well as to certain pre-existing rights of the U.S. government.

Under the UMMS Agreement, the Company is solely responsible, at its expense, for the research, development and commercialization of the licensed gene therapy product candidates. The Company will reimburse UMMS for payments made by UMMS for the manufacture of clinical trial materials for the Company, up to a specified amount. The Company is obligated to use diligent efforts to develop and commercialize the licensed gene therapy product candidates and is required to achieve certain development and commercial milestones in accordance with the timeline set forth in the agreement.

The Company evaluated the UMMS Agreement and determined that the acquired set of assets and activities did not meet the definition of a business and thus the transaction was not considered a business combination. The Company determined that the IPR&D had not reached technological feasibility, and therefore, has no alternative future use. Accordingly, the upfront payment of $10.0 million ~~to Benitec, including the upfront nonrefundable payment. Further,~~made from the Company ~~will~~to UMMS was recorded as research and development expense in the Company's unaudited condensed consolidated statement of operations during the three months ended December 31, 2018. In addition, the Company could be obligated to make payments to ~~Benitec~~UMMS totaling up to ~~(i) for the AXO-AAV-OPMD Program, $67.5~~$24.5 million upon the achievement of specified development and regulatory milestones and ~~$120.0~~$39.8 million upon the achievement of specified ~~sales milestones, and (ii) for each Collaboration Program, $33.5 million upon the achievement of specified~~commercial milestones. In February 2019, certain development and regulatory milestones were achieved resulting in a $1.0 million payment due to UMMS, and ~~$60.0~~in October 2019, further development and regulatory milestones were achieved resulting in an additional $1.0 million ~~upon the achievement of specified sales milestones.~~

~~Benitec will receive 30% of net profits of world-wide sales of products from the AXO-AAV-OPMD Program, subject~~payment due to ~~an agreed minimum amount for such payments. This profit-sharing payment will be made for so long as the Company or its affiliates or sublicensees commercialize such products.~~UMMS (see Note 12). The Company ~~will~~is also obligated to pay ~~Benitec a~~UMMS tiered ~~royalty~~mid-single digit royalties based on yearly ~~aggregate~~ net sales of the licensed products, ~~arising from each Collaboration Program,~~ subject to a specified ~~reductions~~annual minimum amount. Additionally, the Company will pay UMMS a percentage of any revenues it receives from any third-party sublicenses to licensed products at rates ranging in the mid-single digits to mid-teens.

The UMMS Agreement will expire upon the ~~occurrence~~expiration of ~~certain events as set forth in~~ the ~~Benitec Agreement. These royalties are required~~Company's obligations to ~~be paid, on a product-by-product and country-by-country basis,~~make royalty payments to UMMS, which continues until the ~~latest to occur~~later of the expiration of ~~the last to expire valid claim of a~~ licensed ~~patent covering such product in such country, the expiration of regulatory~~patents and any applicable orphan designation exclusivity ~~for such product in such country, or ten~~and 10 years after the first commercial sale of the licensed products. Upon such ~~product in such country.~~

~~Under~~expiration, the ~~Benitec~~licenses granted to the Company by UMMS will automatically convert to perpetual, irrevocable, worldwide royalty-free licenses. The Company has the right to terminate the UMMS Agreement ~~Benitec will perform certain development and manufacturing activities~~at any time upon 90 days' advance written notice to UMMS. Either party may terminate the UMMS Agreement for the ~~AXO-AAV-OPMD Program and research activities for each Collaboration Program, and~~other party's uncured material breach upon 60 days' advance written notice, including in the event that UMMS reasonably determines the Company ~~will reimburse Benitec for~~has not fulfilled its diligence obligations.

During the three and six-months ended September 30, 2019, the Company incurred $1.7 million and $2.7 million, respectively, of program-specific costs ~~incurred, in accordance with an agreed-upon~~related to AXO-AAV-GM1 and AXO-AAV-GM2 within research and development ~~plan~~expenses in its unaudited condensed consolidated statement of operations and ~~budget. The Company is solely responsible, at its expense, for all other activities related~~paid a total of $0.8 million and $1.8 million, respectively, to ~~the research, development and commercialization of products from the AXO-AAV-OPMD Program and the Collaboration Programs.~~

UMMS.

Note 4—Long-term Investment

On February 13, 2019, ASG entered into a share subscription agreement (the "Subscription Agreement") to purchase up to approximately 8.1 million shares of nonredeemable convertible preferred stock of Arvelle Therapeutics B.V. ("Arvelle") in exchange for €0.00001 per share paid in cash, as well as certain goods and services provided by ASG to Arvelle. The first closing under the Subscription Agreement occurred on February 25, 2019 with ASG purchasing approximately 5.9 million nonredeemable convertible preferred shares of Arvelle, which was initially recorded at a fair value of $5.9 million and was capitalized as a long-term investment in the Company's consolidated balance sheet and recorded to other non-operating income in the Company's consolidated statement of operations. ASG also received the right to purchase up to approximately 2.2 million additional nonredeemable convertible preferred shares of Arvelle at a price of €0.00001 per share upon a potential future second closing under the Subscription Agreement. The Company accounts for its investment in Arvelle in accordance with the provisions of ASC 321, "Investments - Equity Securities", and elected to use the measurement alternative therein. The investment will be remeasured upon future observable price change(s) in orderly transaction(s) or upon impairment, if any.

On February 13, 2019, ASI and ASG entered into a transition services agreement with two wholly owned subsidiaries of Arvelle, whereby ASI and ASG received reimbursement for any expenses they, or third parties acting on their behalf, incurred on behalf of Arvelle or its subsidiaries (the "Transition Services Agreement"). For any general and administrative and research and development activities performed by its employees, ASI billed the employee compensation expense plus a predetermined mark-up, whereby the Company recorded $0.1 million and $0.2 million to other income in its unaudited condensed consolidated statement of operations during the three and six-months ended September 30, 2019 for such costs, inclusive of the mark-up. The Company billed Arvelle for all other charges at cost under the terms of the Transition Services Agreement. The Transition Services Agreement ended in September 2019.

Note 5—Leases

The Company adopted the provisions of Topic 842 on April 1, 2019 using the effective date as its date of initial application and applied the optional modified retrospective transition method. Comparative periods were not restated. For leases that commenced prior to April 1, 2019, the Company elected the following package of practical expedients when assessing the transition impact: (1) not to reassess whether any expired or existing contracts are or contain leases; (2) not to reassess the lease classification for any expired or existing leases; and (3) not to reassess initial direct costs for any existing leases. The Company also elected to: (1) use the total lease term in its initial incremental borrowing rate calculation; (2) combine its lease and non-lease components and account for them as a single lease component; and (3) not apply the use of hindsight in determining the lease term when considering lessee options to extend or terminate the lease and to purchase the underlying asset. Upon adoption, the Company recorded corresponding aggregate operating lease right-of-use assets and operating lease liabilities of $3.0 million and $2.4 million, respectively, including $0.6 million of prepaid rent previously classified within other non-current assets in the Company’s consolidated balance sheet that was reclassified to operating lease right-of-use assets. Operating right-of-use assets and obligations were recognized based on the present value of remaining lease payments over the lease term using an incremental borrowing rate of 12.9%. As the Company’s operating leases do not provide an implicit rate, estimated incremental borrowing rates were used based on the information available at the adoption date in determining the present value of lease payments. Operating lease expense is recognized on a straight-line basis over the lease term. Variable lease costs such as common area costs and other operating costs are expensed as incurred. Leases with an initial term of 12 months or less are not recorded within the Company's unaudited condensed balance sheet. In addition, the Company reviews agreements at inception to determine if they include a lease, and when they do, uses its incremental borrowing rate or implicit interest rate to determine the present value of the future lease payments.

The Company leases office facilities in New York, New York and Princeton, New Jersey, with corresponding lease terms ending in January 2021 and October 2020, respectively, whereby the last payment under the lease agreement for the office facility in New York, New York is due in September 2020. These leases are classified as operating leases in accordance with the provisions of Topic 842. The aggregate weighted-average remaining lease term and aggregate weighted-average discount rate were 1.3 years and 12.9%, respectively, for the Company's contractual rent obligations for operating leases as of September 30, 2019.

In each of the three- and six-month periods ended September 30, 2019 and 2018, the Company incurred $0.5 million and $0.9 million, respectively, in rent expense associated with contractual rent obligations for its operating leases. During the six months ended September 30, 2019, the Company paid $0.9 million related to its contractual rent obligations associated with operating lease right-of-use assets. The following table provides a reconciliation of the Company's remaining undiscounted contractual rent obligations due within each respective fiscal year ending March 31 to the operating lease liabilities recognized as of September 30, 2019 (in thousands):



Fiscal Year Ending March 31,	Amount
2020	$	896
2021	898
2022	—
2023	—
2024	—
Thereafter	—
Total undiscounted payments	1,794
Less: Present value adjustment	(119		)
Present value of future payments	$	1,675

Note 6—Accrued Expenses

As of September 30, ~~2018,~~2019, and March 31, ~~2018, the Company’s~~2019, accrued expenses consisted of the following (in thousands):


					September 30, 2019		March 31, 2019
	September 30, 2018		March 31, 2018
Research and development expenses	$	18,409	$	21,855	$	18,185	$	13,416
Salaries, bonuses, and other compensation expenses	3,169		7,718		1,798		3,899
Legal expenses	1,073		779		626		1,319
Other expenses	1,664		1,510		818		1,985
Total accrued expenses	$	24,315	$	31,862	$	21,427	$	20,619

Note 5—7—Long-term Debt

On February 2, 2017, ~~the Company~~AGT and its subsidiaries, AHL, ASG and ASI, entered into a loan and security agreement (as amended on May 24 and September 22, 2017) (the "Loan Agreement") with Hercules, ~~Capital, Inc., ("Hercules"),~~ under which the ~~Company,~~AGT, AHL and ASG (the "Borrowers") borrowed an aggregate of $55.0 million (the "Term Loan"). Subsequently, ~~the Company~~ASA was added ~~its subsidiary ASA~~ as a Borrower in July 2017 and ~~its subsidiaries~~ ATH and ATI were added as Borrowers in April 2018. Pursuant to the Loan Agreement, ASI has issued a guaranty of the Borrowers’ obligations under the Loan Agreement. The Term Loan bears interest at a variable per annum rate calculated for any day as the greater of either (i) the prime rate plus 6.80%, and (ii) 10.55%. The Term Loan has a scheduled maturity date of March 1, 2021. The Borrowers were obligated to make monthly payments of accrued interest under the Loan Agreement until September 1, 2018, followed by monthly installments of principal and interest beginning October 1, 2018, through March 1, 2021. In connection with the Loan Agreement, the Borrowers and ASI, as guarantor, granted Hercules a first position lien on substantially all of their respective assets, excluding intellectual property. Prepayment of the Term Loan is subject to penalty.

~~On May 24, 2017, the~~ The Loan Agreement ~~was amended such~~with Hercules currently requires that ~~commencing July 1, 2017,~~ the ~~required~~Borrowers maintain an aggregate minimum ~~amount of unrestricted~~ cash isbalance equal to the lesser of ~~(i) $35.0~~$30.0 million ~~(the "Applicable Amount") plus certain aged accounts payable amounts (as further defined in the Loan Agreement) and (ii)~~or the outstanding amount ~~of debt~~due under the Loan Agreement plus certain aged accounts payable (as further defined in the Loan Agreement), provided that the Applicable Amount may be lowered to $30 million upon the achievement of certain clinical milestones as set forth in the Loan Agreement.

The Loan Agreement also includes customary events of default. Upon the occurrence of an event of default, a default interest rate of an additional 5.0% may be applied to the outstanding principal balance, and Hercules may declare all outstanding obligations immediately due and payable and take such other actions as set forth in the Loan Agreement. At no time ~~has~~have the ~~Company~~Borrowers been in default under the provisions of the Loan Agreement. In addition, for so long as the Term Loan remains outstanding, the ~~Company~~Borrowers shall be required to use ~~its~~their commercially reasonable efforts to afford Hercules the opportunity to participate in future underwritten equity offerings of the ~~Company’s~~Company's common shares up to a total of $3.0 million.

In connection with the Loan Agreement, the Company issued a warrant to Hercules, exercisable for an aggregate of ~~274,086~~34,260 of the ~~Company’s~~Company's common shares at an exercise price of ~~$12.04~~$96.32 per share (the "Warrant"). In August 2017, Hercules exercised the Warrant on a cashless basis and received a net issuance of ~~129,827~~16,228 of the Company's common shares. The ~~Company has~~Warrant was accounted for ~~the Warrant~~ as an equity instrument since it was indexed to the Company’s common shares and met the criteria for classification in shareholders’ equity. The relative fair value of the Warrant on the date of issuance ~~was~~of approximately $2.3 million ~~and~~ was ~~treated as a discount to the debt. This amount will be amortized to interest expense under the effective interest method over the life of the Term Loan, which is a period of 48 months. The Company~~ estimated ~~the value of the Warrant~~ using the Black-Scholes model. ~~The key assumptions used to value the Warrant were as follows:~~

Exercise price $ 12.04
Share price on date of issuance $ 11.96
Volatility 77.6 %
Risk-free interest rate 2.27 %
Expected dividend yield — %
Contractual term (in years) 7

In addition, at the closing of the Term Loan, the Company paid transaction costs of $1.5 ~~million, which~~million. These amounts were recorded as a discount on the debt and ~~will be~~are amortized to interest expense using the effective interest method over the life of the Term Loan, which is a period of 48 months.

Outstanding debt obligations ~~are~~were as follows (in thousands):


	September 30, 2018			March 31, 2018			September 30, 2019			March 31, 2019
Principal amount	$	55,000		$	55,000		$	35,040		$	45,295
Less: unamortized discount and debt issuance costs	(1,682		)	(2,322		)	(685		)	(1,119		)
Loan payable less unamortized discount and debt issuance costs	53,318			52,678			34,355			44,176
Less: current portion of long-term debt	(20,009		)	(9,753		)	(22,613		)	(21,182		)
Long-term loan payable, net of current maturities	$	33,309		$	42,925		$	11,742		$	22,994

Note 6—8—Related Party Transactions

(A) Services Agreements:

In ~~2015, the Company~~October 2014, AGT and ASI entered into a services agreement with ~~RSI (the "Services Agreement"~~Roivant Sciences, Inc. ("RSI"), a wholly owned subsidiary of RSL, under which RSI ~~has~~ agreed to provide certain administrative and research and development services to ~~the Company. The Company~~AGT and ASI (the "RSI Services Agreement"). AGT and ASI amended and restated the RSI Services Agreement with RSI on October 13, 2015, effective for the fiscal year commencing April 1, 2015. Under the RSI Services Agreement, as amended and restated, ~~the Company pays~~AGT and ASI pay or ~~reimburses~~reimburse RSI for any expenses it, or third parties acting on its behalf, incurs for ~~the Company.~~AGT and ASI. For any general and administrative and research and development activities performed by RSI employees, RSI charges back the employee compensation expense plus a predetermined mark-up. Employee compensation expense, inclusive of base salary and fringe benefits, is determined based upon the relative percentage of time utilized on ~~Company~~AGT and ASI matters. All other costs are billed back at cost. The accompanying interim unaudited condensed consolidated financial statements include third-party expenses that have been paid by RSI and RSL, as well as share-based compensation expense allocated to the Company by RSL (see Note 8(B)(2)).

In February 2017, ~~the Company~~AGT and ASI amended and restated the RSI Services Agreement, effective as of December 13, 2016, to add ASG as a services recipient. In addition, in February 2017, ASG entered into a separate services agreement with ~~RSG,~~Roivant Sciences GmbH ("RSG"), a wholly owned subsidiary of RSL, effective as of December 13, 2016 (the "RSG Services Agreement"), for the provision of services by RSG to ASG in relation to the identification of potential product candidates and project management of clinical trials, as well as other services related to development, administrative and financial activities.

In June 2019, both the RSI Services Agreement and the RSG Services Agreement were amended, whereby RSI and RSG, respectively, as service providers, have agreed to indemnify AGT, ASI and ASG and each of their officers, employees and directors against all losses arising out of, due to or in connection with the provision of services (or the failure to provide services) under the applicable services agreement, subject to certain limitations set forth in the applicable services agreement. In addition, AGT, ASI and ASG have agreed to indemnify RSI and RSG, respectively, and their respective affiliates and officers, employees and directors against all losses arising out of, due to or in connection with the receipt of services under the applicable services agreement, subject to certain limitations set forth in the applicable services agreement. Such indemnification obligations will not exceed the payments made by AGT, ASI and ASG under the applicable services agreement for the specific service that allegedly caused or was related to the losses during the period in which such alleged losses were incurred. The term of each of the services agreements will continue until terminated upon 90 days’ written notice by any party with respect to the services such party provides or receives thereunder.

Under the RSI Services ~~Agreements,~~Agreement, expenses of $48 thousand and $76 thousand were incurred during the ~~Company incurred~~three and six-months ended September 30, 2019, respectively, inclusive of the mark-up. Under the RSI Services Agreement and the RSG Services Agreement, expenses of $0.9 million and ~~$1.6~~$4.3 million ~~for~~were incurred during the three ~~months~~and six-months ended September 30, 2018, ~~and 2017, respectively, and $4.3 million and $4.4 million for the six months ended September 30, 2018 and 2017,~~ respectively, inclusive of the ~~predetermined~~ mark-up.

(B) Information Sharing and Cooperation Agreement:

In March 2015, the Company entered into an information sharing and cooperation agreement (the "Cooperation Agreement") with RSL. The Cooperation Agreement, among other things, grants the Company a right of first review on any potential dementia-related product or investment opportunity that RSL may consider pursuing and obligates the Company to deliver periodic financial statements and other financial information to RSL and comply with other specified financial reporting requirements.

On June 5, 2018, in connection with a share purchase placement agreement with RSL (the “Private Placement”), the Company entered into an amended and restated information sharing and cooperation agreement (the "Restated Cooperation Agreement") with RSL, which became effective as of July 9, 2018, the closing date of the Private Placement. The Restated Cooperation Agreement, among other things: (1) obligates the Company to deliver to RSL periodic financial statements and other information upon reasonable request and to comply with other specified financial reporting requirements; (2) requires the Company to supply certain material information to RSL to assist it in preparing any future SEC filings; and (3) requires the Company to implement and observe certain policies and procedures related to applicable laws and regulations. The Company agreed to indemnify RSL and its affiliates and their respective officers, employees and directors against all losses arising out of, due to or in connection with RSL’s status as a shareholder under the Restated Cooperation Agreement and the operations of or services provided by RSL or its affiliates or their respective officers, employees or directors to the Company or any of its subsidiaries, subject to certain limitations set forth in the Restated Cooperation Agreement.

Subject to specified exceptions, the Restated Cooperation Agreement will terminate at such time as RSL is no longer required (a) under U.S. GAAP to consolidate the Company's results of operations and financial position, (b) under U.S. GAAP to account for its investment in the Company under the equity method of accounting, or (c) otherwise to include separate financial statements of the Company in its filings with the SEC pursuant to any SEC rule. In addition, the Cooperation Agreement may be terminated upon mutual written consent of the parties or upon written notice from RSL to the Company in the event of the Company's bankruptcy, liquidation, dissolution or winding-up.

~~(B)~~(C) Family Relationships:

~~Geetha~~Shankar Ramaswamy, MD, the former ~~Vice President, Medical and Scientific Strategy~~Chief Business Officer of ASI, and ana former employee of RSI, is the ~~mother~~brother of Vivek Ramaswamy, the Chief Executive Officer of RSI, former Chairman of the Company's Board of Directors and former Chief Executive Officer of the Company. Sarah Friedhoff, formerly Senior Business Operations and Research and Development Specialist of ASI, is the daughter of Lawrence Friedhoff, MD, PhD, formerly the Chief Development Officer of ASI and an officer of RSI. Shankar Ramaswamy, MD, the Senior Vice President, Business Development of ASI, and a former employee of RSI, is the brother of Vivek Ramaswamy. Lawrence Friedhoff, MD, PhD, Geetha Ramaswamy, MD and Sarah Friedhoff were no longer employed by ASI beginning in October 2017. The accompanying interim unaudited condensed consolidated financial statements include share-based compensation expense associated with family members Geetha Ramaswamy, MD, Shankar Ramaswamy, MD and Sarah Friedhoff (see Note 8(B)(3)).

Salary expenses for Shankar Ramaswamy, MD were ~~$75,000~~$56 thousand and ~~$66,950~~$75 thousand for the three months ended September 30, ~~2018~~2019 and ~~2017,~~2018, respectively, and ~~$150,000~~$131 thousand and ~~$133,900~~$150 thousand for the six months ended September 30, 2019 and 2018, ~~and 2017,~~ respectively. ~~Salary expenses for Geetha Ramaswamy, MD were $66,950 and $133,900 for~~During the ~~three and six-months~~six months ended September 30, ~~2017,~~2019 and 2018, Shankar Ramaswamy, MD received annual cash bonuses for prior fiscal year performance of $143 thousand and $134 thousand, respectively. ~~Salary expenses for Sarah Friedhoff were $19,312 and $38,625 for~~These unaudited condensed consolidated financial statements also include share-based compensation expense associated with Shankar Ramaswamy, MD (see Note 10(B)(3)). During the ~~three and six-months~~six months ended September 30, ~~2017, respectively.~~2019, Shankar Ramaswamy, MD was granted stock options with an aggregate grant date fair value, as computed in accordance with FASB ASC 718, Compensation - Stock Compensation, of $0.4 million. No stock options were granted to Shankar Ramaswamy, MD during the six months ended September 30, 2018. Shankar Ramaswamy, MD was no longer employed by ASI as of September 2019.

(D) RSL Financings:

~~(C) RSL Private Placement Financing:~~

OnIn July 9, 2018, the Company received $25.0 million of net proceeds from RSL in exchange for the issuance and sale of ~~14,285,714~~1,785,714 of the Company's common shares to RSL at a purchase price of ~~$1.75~~$14.00 per common share, which was the closing price per share of the Company's common shares on the Nasdaq Global Select Market on June 5, 2018, the date of the share purchase agreement (see Note 7)9(B)).

~~Note 7—Shareholders' Equity~~

In ~~April 2017,~~December 2018, the Company issued and sold ~~7,753,505~~4,145,115 common shares in a follow-on public offering, including ~~1,011,326~~395,115 common shares sold pursuant to the exercise ~~in full~~ of the ~~underwriters’~~underwriters' option to purchase additional shares, at an offering price of ~~$18.54~~$8.00 per common share for gross proceeds of ~~$143.7 million.~~$33.2 million, including 1,250,000 shares issued and sold to RSL. The aggregate net proceeds to the Company were ~~$134.5~~approximately $31.6 million, after deducting underwriting discounts and commissions and offering expenses ~~paid~~incurred (see Note 9(B)).

In March 2019, the Company issued and sold 3,333,333 common shares at an offering price of $12.00 per common share for gross proceeds of $40.0 million, including 833,333 shares issued and sold to RSL. The aggregate net proceeds to the Company were approximately $37.9 million, after deducting underwriting discounts and commissions and offering expenses incurred (see Note 9(B)).

Note 9—Shareholders' Equity

(A) Overview:

The Company’s Memorandum of Association, filed on October 31, 2014 in Bermuda, authorized the issuance of one class of shares. The total number of shares authorized was 1,000,000,000 with a par value per share of $0.00001 at September 30, 2019. A 1-for-8 reverse share split of the Company's outstanding common stock was effected on May 8, 2019 as approved by the ~~Company.~~Company's Board of Directors and a majority of its shareholders, which reduced the number of common shares issued and outstanding from approximately 182.2 million to 22.8 million as of May 8, 2019. As such, all references to share and per share amounts in these unaudited condensed consolidated financial statements and accompanying notes have been retroactively restated to reflect the 1-for-8 reverse share split, except for the authorized number of shares of the Company's common stock and the par value per share, which were not affected.

(B) Transactions:

During the ~~three~~six months ended ~~March 31, 2018 and~~ September 30, ~~2018, RSL~~2019, expenses of $76 thousand were incurred ~~$0.3 million and~~by RSI ~~incurred $0.4 million, respectively, of expenses~~ on behalf of the ~~Company. These amounts~~Company that were treated as capital ~~contributions.~~

contributions (see Note 8(A)).

On June 5, 2018, the Company entered into a share purchase agreement with RSL, its majority shareholder, pursuant to which the Company agreed to issue and sell to RSL ~~14,285,714~~1,785,714 of its common shares at a purchase price of ~~$1.75~~$14.00 per share, which was the closing price per share of the Company's common shares on the Nasdaq Global Select Market on June 5, 2018. On July 9, 2018, the Company received $25.0 million of net proceeds from RSL upon the closing of this private placement (see Note ~~6 (C)~~8 (D)).

On June 22, 2018, the Company entered into a sales agreement with Cowen and Company, LLC ("Cowen") to sell the Company's common shares having an aggregate offering price of up to $75.0 million from time to time through an at-the-market equity offering program under which Cowen is acting as the Company's agent. Cowen is entitled to compensation for its services in an amount up to 3% of the gross proceeds of any of the Company's common shares sold under the sales agreement. As of September 30, ~~2018,~~2019, approximately ~~$75.0~~$74.9 million of the Company's common shares remained available for sale under the sales agreement.

On December 18, 2018, the Company issued and sold 4,145,115 common shares in a follow-on public offering, including 395,115 common shares sold pursuant to the exercise of the underwriters’ option to purchase additional shares, at an offering price of $8.00 per common share for gross proceeds of $33.2 million, including 1,250,000 shares issued and sold to RSL (see Note 8(D)). The aggregate net proceeds to the Company were approximately $31.6 million, after deducting underwriting discounts and commissions and offering expenses incurred.

In March 2019, the Company issued and sold 3,333,333 common shares, including 833,333 shares issued and sold to RSL, at an offering price of $12.00 per common share for gross proceeds of $40.0 million. The aggregate net proceeds to the Company were approximately $37.9 million, after deducting underwriting discounts and commissions and offering expenses incurred.

Note 8—10—Share-Based Compensation

In ~~April 2017,~~March 2015, the ~~number of common shares authorized for issuance under the Company's~~Company adopted its 2015 Equity Incentive Plan, ~~increased automatically to an aggregate of approximately 16.5 million common shares~~which was amended and restated in ~~accordance with the terms of the 2015 Equity Incentive Plan. In~~ June 2017 ~~the Company's~~by its Board of Directors ~~amended~~ and restated the 2015 Equity Incentive Plan (the "2015 Plan") to, among other things, increase the number of common shares authorized for issuance thereunder to approximately 20.5 million common shares. The 2015 Plan became effective upon shareholder approval in August ~~2017.~~2017 (the "2015 Plan"). A 1-for-8 reverse share split of the Company's outstanding common stock was effected on May 8, 2019 as approved by the Company's Board of Directors and a majority of its shareholders. As such, all references to share and per share amounts in these unaudited condensed consolidated financial statements and accompanying notes have been retroactively restated to reflect the 1-for-8 reverse share split, except for the authorized number of shares of the Company's common stock and the par value per share, which were not affected. In April ~~2018,~~2019, the number of common shares authorized for issuance under the 2015 Plan increased automatically to approximately ~~24.8~~4.0 million common shares in accordance with the terms of the 2015 Plan. AtUnder the 2015 Plan at September 30, ~~2018,~~2019, a total of ~~8.2~~0.8 million common shares were available for future grant, ~~under the 2015 Plan,~~RSUs underlying approximately 0.3 million common shares were outstanding, and options to purchase approximately ~~15.8 million common shares were outstanding under the 2015 Plan, with a weighted average exercise price of $4.66 per share.~~

~~(A) Stock Options Granted to Employees and Directors:~~

During the six months ended September 30, 2018 and 2017, the Company granted options to its employees and directors under the 2015 Plan to purchase a total of 2.1 million and 8.8 million common shares, respectively. The stock options granted during the six months ended September 30, 2018 include approximately 0.6 million common shares with market-based performance conditions to employees with a weighted average exercise price of $2.98 per share, a contractual term of 10 years, and a corresponding estimated grant date fair value of $1.1 million. As of September 30, 2018, stock options with market-based performance conditions to purchase 1.52.7 million common shares were outstanding with a weighted-average exercise price of ~~$2.02~~$16.46 per share.

(A) Equity Awards:

During the six months ended September 30, 2019 and 2018, the Company granted options to purchase a total of 1.5 million and 0.4 million of its common shares, respectively, with weighted-average exercise prices of $8.15 and $17.33, respectively, and estimated grant date fair values of $7.6 million and $4.0 million, respectively, under the 2015 Plan. The stock options granted to employees during the six months ended September 30, 2019 and 2018 include options with market-based performance conditions to purchase 0.4 million and 69 thousand common shares, respectively, with weighted-average exercise prices of $8.07 and $23.88 per share, respectively, and corresponding estimated grant date fair values of $1.2 million and $1.1 million, respectively, which were estimated using Monte Carlo Simulation methods under the income approach. As of September 30, 2019, options with market-based performance conditions to purchase 0.5 million common shares at a weighted-average exercise price of $10.79 per share were outstanding. The market-based performance options vest based on the trading price for the Company’s common shares exceeding certain closing ~~prices of the Company's common shares.~~price thresholds. As of September 30, ~~2018,~~2019, stock options with market-based performance conditions to purchase approximately ~~0.4 million~~40 thousand common shares with a weighted-average exercise price of ~~$1.46~~$11.68 per share were ~~vested, which occurred during~~outstanding and vested.

During the six months ended September 30, ~~2018.~~

2019, the Company granted RSUs underlying a total of 0.3 million common shares with an aggregate grant date fair value of $2.6 million to its employees under the 2015 Plan, with one-half of the RSUs granted vesting on January 31, 2020 and the remainder vesting on July 31, 2020.

The Company recorded total share-based compensation expense ~~related to stock options issued to Company employees and directors~~ of ~~$5.2~~$1.1 million and ~~$12.7~~$5.2 million ~~respectively,~~ for the three months ended September 30, 2019 and 2018, respectively, and ~~2017, and $9.8~~$3.1 million and ~~$24.9~~$10.2 million for the six months ended September 30, 2019 and 2018, respectively, related to options and ~~2017.~~RSUs granted to its employees, directors and consultants. The share-based compensation expense was recorded as research and development and general and administrative expenses in the Company's unaudited condensed consolidated statements of operations. At September 30, ~~2018,~~2019, total unrecognized compensation expense related to non-vested outstanding equity awards related to options and RSUs granted to its employees, directors and consultants was ~~$27.8~~$13.5 million, which is expected to be recognized over the remaining weighted-average service period of ~~2.3~~2.41 years.

(B) Share-Based Compensation for Related Parties:

(1) ~~Stock Options Granted to Non-Employees:~~

During the six months ended September 30, 2018 and 2017, the Company granted options to purchase a total of 1.0 million and 0.2 million common shares, respectively, to consultants as well as employees and consultants of RSI as compensation for support services provided to the Company. The fair value of the stock options granted to RSI employees and other consultants is accounted for by the Company in accordance with the authoritative guidance for non-employee equity awards and is remeasured on each valuation date until performance is complete using the Black-Scholes pricing model.

Each award is subject to a specified vesting schedule. Compensation expense will be recognized by the Company over the required service period to earn each award. The Company recorded $(23) thousand and $0.3 million of share-based compensation expense (benefit) for the three months ended September 30, 2018 and 2017, respectively, and $0.4 million and $1.3 million for the six months ended September 30, 2018 and 2017, respectively. The share-based compensation expense (benefit) was recorded within research and development and general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations. The total remaining unrecognized compensation cost related to the non-vested stock options amounted to $1.2 million as of September 30, 2018, which is expected to be recognized over the remaining weighted-average service period of 2.3 years.

~~(2)~~ Share-Based Compensation Allocated to the Company by RSL:

The Company ~~incurs~~has incurred share-based compensation expense for RSL common share awards and RSL options issued by RSL to RSL, RSG and RSI employees. Share-based compensation expense ishas been allocated to the Company by RSL based upon the relative percentage of time utilized by RSL, RSG and RSI employees on Company matters.

The RSL common share awards are fair valued on the date of grant and that fair value is recognized over the requisite service period. Significant judgment and estimates were used to estimate the fair value of these awards, as they are not publicly traded. RSL common share awards are subject to specified vesting schedules and requirements (a mix of time-based, performance-based and corporate event-based, including targets for RSL’s post-IPO market capitalization and future financing events). The Company estimated the fair value of each RSL option on the date of grant using the Black-Scholes closed-form option-pricing model.

The Company recorded no share-based compensation expense ~~(benefit)~~for the three and six-months ended September 30, 2019 and share-based compensation benefit of $(3.2) million and ~~$2.3~~$(2.7) million for the three ~~months~~and six-months ended September 30, 2018 ~~and 2017, respectively, and $(2.7) million and $4.4 million for the six months ended September 30, 2018 and 2017, respectively,~~ in relation to the RSL common share awards and options issued by RSL to RSL, RSG and RSI employees.

(2) RSL Common Share Awards and Options:

Certain employees ~~net~~ of ~~forfeitures.~~

~~(3) Share-Based Compensation for Family Members:~~

the Company have been granted RSL common share awards and options. The Company recorded ~~aggregate~~ share-based compensation (benefit) expense of ~~$0.9~~$(0.2) million and ~~$1.0~~$0.5 million for the three months ended September 30, ~~2018~~2019 and ~~2017,~~2018, respectively, and ~~$1.7~~$(0.1) million and ~~$2.4~~$0.8 million, for the six months ended September 30, 2019 and 2018, respectively, related to these awards.

(3) Share-Based Compensation for Family Members:

During the six months ended September 30, 2019 and ~~2017,~~2018, the Company granted Shankar Ramaswamy, MD stock options to purchase 81,750 common shares as annual stock option grant in his capacity as an employee of ASI. No stock options were granted to Shankar Ramaswamy, MD during the six months ended September 30, 2018. The Company recorded aggregate share-based compensation (benefit) expense of $(0.1) million and $0.9 million for the three months ended September 30, 2019 and 2018, respectively, and $20 thousand and $1.6 million for the six months ended September 30, 2019 and 2018, respectively, in connection with options vesting for ~~Geetha~~Shankar Ramaswamy, ~~MD,~~MD. Shankar Ramaswamy, MD ~~and Sarah Friedhoff.~~

was no longer employed by ASI as of September 2019.

Shankar Ramaswamy, MD, while previously employed by RSI, was also granted RSL common shares. The Company recorded share-based compensation expense of $7 thousand and $0.1 million for the three ~~months~~and six-months ended September 30, 2018, ~~and 2017, respectively, and $0.1 million and $0.2 million for the six months ended September 30, 2018 and 2017,~~ respectively, related to the RSL common share awards held by Shankar Ramaswamy, MD, which the Company has recorded as research and development expense in the ~~accompanying~~Company's unaudited condensed consolidated statements of operations. ~~At September 30, 2018, all~~All compensation expense related to these RSL common share awards had been ~~recognized.~~

~~Note 9—Restructuring~~

In October 2017, the Company initiated and committed to the first of two corporate realignments to focus its efforts and resources on the Company's ongoing and future programs that included a reduction in its workforce and a transfer of certain employees to affiliates. The second realignment was initiated and committed to in February 2018. The Company completed the reduction in headcount from these actions in the fourth quarter of fiscal 2018.

During the six months ended September 30, 2018, the Company made cash expenditures of approximately $1.6 million for one-time severance and related costs in connection with the corporate realignments completed in the prior fiscal year.

The impacted employees are eligible to receive severance payments in specified amounts, health benefits and outplacement services. The Company has recorded these charges in research and development and general and administrative expenses in the accompanying condensed consolidated statements of operations based on responsibilities of the impacted employees.

~~The following sets forth information regarding the balances and activity associated with the Company's accrued employee severance and other personnel benefits (in thousands):~~

Balance as of March 31, 2018 Expenses, net Cash Non-cash Balance as of September 30, 2018
Employee severance and other personnel benefits $ 2,460
$ —
$ (1,573 ) $ —
$ 887

~~Note 10—Income Taxes~~

The Company is not subject to taxation under the laws of Bermuda since it was organized as a Bermuda Exempted Limited Company, for which there is no current tax regime. The Company’s provision for income taxes is primarily federal, state and local income taxes in the United States. The Company assesses the realizability of its deferred tax assets at each balance sheet date based on available positive and negative evidence in order to determine the amount which is more likely than not to be realized and records a valuation allowance as necessary. The Company's effective tax rates of (0.3)% and 2.2% for the three months ended September 30, 2018 and 2017, respectively, and (0.2)% and (0.7)% for the six months ended September 30, 2018 and 2017, respectively, differ from the Bermuda federal statutory rate of 0% primarily due to the U.S. permanent unfavorable tax differences, stock compensation deductions and a valuation allowance that effectively eliminates the Company's net deferred tax assets.

On December 22, 2017, the President of the United States signed into law an Act to provide for reconciliation pursuant to Titles II and V of the concurrent resolution on the budget for fiscal year 2018 (commonly known as the "Tax Cuts and Jobs Act"), which introduced a comprehensive set of tax reforms. The Tax Cuts and Jobs Act significantly revises U.S. tax lawrecognized by ~~among other provisions, lowering the U.S. federal statutory income tax rate from 35% to 21% and eliminating or reducing certain income tax deductions.~~

The effects of changes in tax laws are required to be recognized in the period in which the legislation is enacted. However, due to the complexity and significance of the Tax Cuts and Jobs Act’s provisions, the SEC staff issued SAB 118, which allows companies to record the tax effects of the Tax Cuts and Jobs Act on a provisional basis based on a reasonable estimate, and then, if necessary, subsequently adjust such amounts during a limited measurement period as more information becomes available. The measurement period ends when a company has obtained, prepared, and analyzed the information necessary to finalize its accounting, but cannot extend beyond one year from enactment.

The Tax Cuts and Jobs Act did not have a material impact on our financial statements since our deferred temporary differences are fully offset by a valuation allowance and the Company does not have any offshore earnings from which to record the mandatory transition tax. However, given the significant complexity of the Tax Cuts and Jobs Act, anticipated guidance from the U.S. Treasury about implementing the Tax Cuts and Jobs Act, and the potential for additional guidance from the SEC or the FASB related to the Tax Cuts and Jobs Act, these estimates may be adjusted during the measurement period. The Company's provisional amounts for income taxes were based on the Company’s present interpretations of the Tax Cuts and Jobs Act and current available information, including assumptions and expectations about future events, such as its projected financial performance, and are subject to further refinement as additional information becomes available (including potential new or interpretative guidance issued by the FASB or the Internal Revenue Service and other tax agencies) and further analyses are completed. The Company continues to analyze the changes in certain income tax deductions and gather additional data to compute the full impacts on the Company’s deferred and current tax assets and liabilities.

March 31, 2019.

Note 11—Commitments and Contingencies

As of September 30, ~~2018,~~2019, the Company had entered into commitments under ~~a license agreement with~~the Oxford ~~BioMedica, a license and collaboration agreement with Benitec, a development, marketing, and supply agreement with Arena Pharmaceuticals GmbH ("Arena")~~Agreement (see Note 3), athe UMMS Agreement (see Note 3), the Loan Agreement ~~with Hercules, an amended~~(see Note 7), the services ~~agreement~~agreements with RSI ~~a separate service agreement with~~and RSG (see Note ~~6(A)~~8(A))., and agreements to rent office space. In addition, the Company has entered into services agreements with third parties for pharmaceutical manufacturing and research activities. Expenditures to contract research organizations and contract manufacturing organizations represent significant costs in clinical development. Subject to required notice periods and the Company's obligations under binding purchase orders, the Company can elect to discontinue the work under these agreements at any time. The Company expects to enter into other commitments as the business further develops.

During the six months ended September 30, 2018, there were no material changes outside the ordinary course of business to the Company's specified contractual obligations set forth in the contractual obligations table included in the Annual Report, other than to the license agreementSee Note 5 for 19,554 square feet of office space in New York, New York, which was originally set to expire in January 2019 and was extended to January 2021. For the three and six-months ended September 30, 2018, the Company incurred $0.4 million and $0.9 million, respectively, ininformation regarding rent expense ~~associated with all contractual rent obligations. The following table provides information regarding~~incurred, and remaining contractual rent obligations due, ~~within each respective year ending March 31, as~~in connection with the Company's outstanding contractual rent obligations.

In June 2019, the Company entered into a manufacturing services agreement with a third-party for the manufacture of cGMP grade viral vector, which can be terminated without cause by the Company with six months written notice. Under the terms of this agreement, the Company is committed to pay a minimum of approximately $1.4 million for manufacturing services through December 2020, which remains outstanding at September 30, ~~2018 (in thousands):~~2019.

Note 12—Subsequent Events

Total 2019 2020 2021
Rent obligations, net of prepayments $ 3,576
$ 895
$ 1,791
$ 890

In October 2019, further development and regulatory milestones were achieved for the Company's AXO-AAV-GM2 program resulting in an additional $1.0 million payment due to UMMS.

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

The following discussion and analysis of our financial condition, results of operations and cash flows should be read in conjunction with (1) the interim unaudited ~~interim~~ condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q, and (2) the audited consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations for the fiscal year ended March 31, ~~2018~~2019, included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the "SEC") on June 11, ~~2018.~~2019. Unless the context requires otherwise, references in this report to "Axovant", the "Company," "we," "us," and "our" refer to Axovant ~~Sciences~~Gene Therapies Ltd. and its subsidiaries.

This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These statements are often identified by the use of words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "project," "will," "would" or the negative or plural of these words or similar expressions or variations, although not all forward-looking statements contain these identifying words. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. The forward-looking statements appearing in a number of places inthroughout this Quarterly Report on Form 10-Q include, but are not limited to, statements regarding our intentions, beliefs, projections, outlook, analyses or current expectations concerning, among other things:

the success and timing of our ongoing development and potential commercialization of ~~AXO-Lenti-PD, AXO-AAV-OPMD and nelotanserin;~~our product candidates;

our relationships under our license ~~agreements with Oxford BioMedica (UK) Ltd. and Benitec Biopharma Limited;~~agreements;

the success of our interactions with the U.S. Food and Drug Administration ("FDA") and international regulatory authorities;

the anticipated start dates, durations and completion dates of our ongoing and future nonclinical studies and clinical trials, as well as subsequent portions or cohorts of our ongoing clinical trials;

the receipt of approvals or endorsements by data monitoring or other committees necessary for commencement or continuation of clinical trials;

the anticipated designs of our future clinical studies;

anticipated future regulatory submissions and the timing of, and our ability to, obtain and maintain regulatory approval for our product candidates;

the rate and degree of market acceptance and clinical utility of any approved product candidate;

our ability to identify and in-license or acquire additional product candidates;

our commercialization, marketing and manufacturing capabilities and strategy;

continued service of our executive officers or other key scientific or management personnel;

our ability to obtain, maintain and enforce intellectual property rights for our product candidates;

our anticipated future cash position;

our estimates regarding our results of operations, financial condition, liquidity, capital requirements, prospects, growth and strategies;

the success of competing ~~drugs~~therapies that are or may become available; and

our stated objective of ~~becoming~~building the world's leading gene therapy company ~~focused on developing a pipeline~~for the treatment of ~~innovative product candidates for debilitating~~ neurological ~~and neuromuscular diseases such as Parkinson's disease, oculopharyngeal muscular dystrophy ("OPMD"), amyotrophic lateral sclerosis ("ALS"), frontotemporal dementia, and other indications.~~diseases.

We have based these forward-looking statements largely on our current expectations and projections about future events, including the responses we expect from the ~~U.S. Food and Drug Administration (the "FDA")~~FDA and other regulatory authorities and financial trends that we believe may affect our financial condition, results of operations, business strategy, nonclinical studies and clinical trials and financial needs. Such forward-looking statements are subject to a number of risks, uncertainties, assumptions and other factors known and unknown that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified herein, and those discussed in the section titled "Risk Factors" set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q and in our other filings with the SEC. These risks are not exhaustive. You should not rely upon forward-looking statements as predictions of future events. Furthermore, such forward-looking statements speak only as of the date of this report. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements as predictions of future events.

Overview

We are a clinical-stage ~~gene therapy~~ company focused on developing ~~a pipeline of~~ innovative ~~product candidates~~gene therapies for ~~debilitating~~ neurological ~~and neuromuscular diseases such as Parkinson's disease, OPMD, ALS, frontotemporal dementia, and other indications.~~diseases. We ~~are also developing nelotanserin~~currently have three clinical stage programs: (i) AXO-Lenti-PD for the treatment of ~~Lewy body dementia ("LBD")~~Parkinson’s disease, which is comprised of the first generation ProSavin^® in which 15 patients were previously dosed in a phase 1/2 study, and ~~potentially other neurology~~the second generation AXO-Lenti-PD in which we have dosed two patients in Cohort 1 of the dose ranging study and ~~psychiatry indications.~~are currently dosing Cohort 2 that will enroll up to six patients; (ii) the AXO-AAV-GM1 program for the treatment of GM1 gangliosidosis in which two patients have been dosed and we expect to continue to dose patients in the study later this year and next year; and (iii) the AXO-AAV-GM2 program for the treatment of GM2 gangliosidosis (including Tay-Sachs and Sandhoff disease) in which two patients have been dosed and we expect to dose additional patients later this year and next year.

We are dedicated to realizing the potential of gene therapies to offer transformative patient outcomes in areas of high unmet medical need. We have assembled a portfolio of gene therapies in partnership with leading scientific institutions and have built a team with extensive experience in the gene therapy space. We will continue to build integrated internal development capabilities from product development through commercialization, with a focus on accelerating the pace of product development in the clinic. As part of our ongoing business strategy we continue to explore potential opportunities to acquire or license new product candidates as well as opportunities for partnership or collaboration on our existing products in development. Our ~~near-term focus~~vision is to ~~develop our~~build the world's leading gene therapy ~~product candidates AXO-Lenti-PD, a potential one-time~~company for the treatment ~~for Parkinson's disease,~~of neurological diseases by progressing our current programs and AXO-AAV-OPMD, a potential one-time treatment for OPMD. In October 2018, we began a clinical study of AXO-Lenti-PD in patients with Parkinson's disease and intend to begin a clinical study of AXO-AAV-OPMD in patients with OPMD in the second half of 2019. Prior to the recent in-licensing of AXO-Lenti-PD in June 2018 and AXO-AAV-OPMD in July 2018, our primary focus had been on developing nelotanserin, a selective inverse agonist of the 5-HT_2A ~~receptor, and intepirdine, an antagonist of the 5-HT~~₆ receptor, for which development was discontinued in January 2018. Topline data from the ongoing Phase 2 study of nelotanserin in REM Sleep Behavior Disorder ("RBD") in LBD patients is expected to be available in December 2018. We are evaluating the possibility of partnering or pursuing other strategic opportunities for nelotanserin. In October 2018, we discontinued our development plans for RVT-104 as a potential treatment for patients with Alzheimer's disease or dementia with Lewy bodies ("DLB"), which is a sub-type of LBD.

~~In January 2018, we announced the discontinuation of our development of intepirdine, an antagonist of the 5-HT~~₆ receptor, following our announcement that neither the Phase 2b HEADWAY clinical trial of intepirdine in patients with DLB nor the pilot Phase 2 Gait and Balance clinical trial of intepirdine in patients with dementia and gait impairment met their respective primary endpoints, and the September 2017 announcement that our Phase 3 MINDSET clinical trial of intepirdine in patients with mild-to-moderate Alzheimer's disease did not meet its co-primary efficacy endpoints. Following the announcement of Phase 3 MINDSET clinical trial results, we also discontinued further development of RVT-103, which had been intended for use in combination with intepirdine.

~~We remain committed to~~ identifying, developing and commercializing other novel gene therapy treatments for ~~debilitating~~ neurological ~~and neuromuscular~~ diseases. ~~We are continuing to actively explore opportunities to acquire or in-license additional products, product candidates and technologies to further build our pipeline.~~

We were founded in October 2014 and our operations to date have been limited to organizing and staffing our company, raising capital, acquiring our product candidates and advancing our product candidates into clinical development. To date, we have not generated any revenue and we have financed our operations primarily through the public and private offerings of our equity securities and our venture debt financing. As of September 30, 2018, we had $90.7 million of cash. In July 2018, we received $25.0 million of net proceeds from the issuance and sale of our common shares in a private placement to RSL. We recorded net losses of $33.8 million and $69.1 million for the three months ended September 30, 2018 and 2017, respectively, $85.7 million and $138.4 million for the six months ended September 30, 2018 and 2017, respectively, and $221.6 million for the year ended March 31, 2018. We have determined that we have one operating and reporting segment.

Our Product Pipeline

The following table summarizes the status of our gene therapy development ~~programs to which~~programs. Our wholly owned subsidiary, Axovant Sciences GmbH ~~our wholly owned subsidiary,~~("ASG"), holds global commercial ~~rights:~~

rights to each of the following programs:



~~Compound~~Gene Therapy Program	Clinical Indication	Clinical Development Stage

~~Gene Therapy Programs~~
AXO-Lenti-PD	Parkinson's disease	~~Clinical~~Phase 2

~~AXO-AAV-OPMD~~AXO-AAV-GM1	~~Oculopharyngeal muscular dystrophy~~GM1 gangliosidosis	~~Preclinical~~Phase 1/2

~~AXO-AAV-ALS~~AXO-AAV-GM2	~~Amyotrophic lateral sclerosis~~GM2 gangliosidosis (including Tay-	~~Research~~Phase 1/2
	Sachs and Sandhoff diseases)
~~AXO-AAV-FTD~~	~~Frontotemporal dementia~~	~~Research~~

~~Four additional AXO-AAV~~	~~Undisclosed~~	~~Research~~
~~Collaboration Programs~~

~~Small Molecule Program~~
~~Nelotanserin~~	~~Visual hallucinations in LBD~~	~~Phase 2 Pilot Study Completed~~
	~~REM sleep behavior disorder in LBD~~	~~Phase 2 Ongoing~~

~~Gene Therapy Programs~~

AXO-Lenti-PD Program

Overview

AXO-Lenti-PD ~~(also known as OXB-102)~~ is an in vivo lentiviral gene therapy investigational product candidate currently being developed ~~for the~~as a potential one-time treatment of Parkinson’s disease. We licensed the worldwide development and commercialization rights to AXO-Lenti-PD and ~~its predecessor product candidate ProSavin®~~ProSavin from Oxford BioMedica (UK) Ltd. ("~~Oxford BioMedica"~~Oxford"), under an exclusive license agreement ~~(the "Oxford BioMedica Agreement")~~ entered into in June ~~2018.~~2018 (the "Oxford Agreement"). Currently, we have six years of data on 15 patients dosed in a Phase 1/2 clinical trial of ProSavin and 12-month data on two patients dosed in Cohort 1 of the Phase 2 clinical trial of the SUNRISE-PD study. We expect initial data from up to six patients dosed in Cohort 2 of the SUNRISE-PD study in the first half of calendar year 2020.

AXO-Lenti-PD delivers a construct of three genes that encode the critical enzymes required for the biochemical synthesis of dopamine from endogenous tyrosine. The three enzymes are: Tyrosine Hydroxylase ~~(or TH,~~("TH"), the enzyme that converts tyrosine to levodopa ~~or "L-dopa"~~("L-dopa"), Cyclohydrolase 1 ~~(or CH1,~~("CH1"), the rate-limiting enzyme for synthesis of Tetrahydrobiopterin ~~or BH4,~~("BH4"), a critical cofactor for production of ~~L-dopa),~~L-dopa, and Aromatic L-Amino Acid Decarboxylase ~~(or AADC,~~("AADC"), the enzyme that converts L-dopa to ~~dopamine).~~dopamine. AXO-Lenti-PD is delivered by a one-time ~~MRI-guided~~ stereotactic guided infusion into the putamen. We believe that delivery of all three of these genes will enable the continuous, tonic, endogenous synthesis of dopamine in this region of the brain that is suffering from loss of dopaminergic innervation.

Dopamine deficiency plays a central role in ~~Parkinson's~~Parkinson’s disease and we believe that restoring the ability to synthesize dopamine ~~synthesis capability~~ in patients will offer lasting improvement in the symptoms of ~~Parkinson's~~Parkinson’s disease. Oxford ~~BioMedica~~ previously conducted a Phase 1/2 clinical study with ~~ProSavin (also known as OXB-101), an earlier version of this product candidate.~~ProSavin. In this clinical trial, ProSavin was observed to have a favorable long-term safety profile and demonstrated effects on motor function for over six years, supporting proof-of-concept. AXO-Lenti-PD delivers a re-engineered ~~transgene~~ construct relative to ProSavin ~~and~~that has been demonstrated to increase dopamine production in nonclinical studies.

Parkinson’s Disease

~~Parkinson's Disease Overview~~

~~Parkinson's~~Parkinson’s disease is a chronic neurodegenerative disorder that primarily results in progressive and debilitating motor symptoms. It is estimated that up to ~~one million~~1,000,000 people in the United States and ~~7 million~~7,000,000 to ~~10 million~~10,000,000 people worldwide suffer from ~~Parkinson's~~Parkinson’s disease. It typically develops between the ages of 55 and 65 years and affects approximately 1% of people ~~over the age~~60 years of ~~60 years.~~age. The underlying factors that result in the development of ~~Parkinson's~~Parkinson’s disease are largely unknown. However, ~~Parkinson's~~Parkinson’s disease is a neurodegenerative disease that results in reduced levels of the neurotransmitter dopamine in the striatum, a region in the ~~brain.~~brain responsible for motor control. Dopamine is essential for movement, and low levels of dopamine in patients with ~~Parkinson's~~Parkinson’s disease are believed to result in the typical motor symptoms of the disease, including hypo- and bradykinesia, rigidity, tremor, and postural instability.

The treatment of ~~Parkinson's~~Parkinson’s disease is currently limited to symptomatic treatments, as no therapies have proven effective in altering the course of the disease or addressing the underlying pathophysiological processes. The mainstay of treatment typically involves the daily administration of oral L-dopa, the precursor to dopamine. While L-dopa is effective in controlling motor symptoms early in the disease, progressive loss of dopaminergic neurons and chronic L-dopa therapy are believed to contribute to the "wearing ~~off"~~off" of ~~L-dopa's~~L-dopa’s efficacy in the more advanced stages of the disease. Patients become increasingly less responsive to oral L-dopa therapy and require higher doses to manage their symptoms. More advanced ~~Parkinson's~~Parkinson’s disease patients often begin to experience "~~on-off"~~ on-off" motor fluctuations, characterized by unpredictable "OFF periods" of reduced mobility and increased rigidity and tremor. In addition, abnormal and involuntary movements known as dyskinesias may occur at higher L-dopa blood levels. Approximately 10% of patients per year develop "on-off" motor fluctuations after starting L-dopa therapy.

As ~~Parkinson's~~Parkinson’s disease progresses, other therapies can be ~~given~~used in combination with L-dopa and include dopamine receptor agonists and inhibitors of enzymes related to dopamine metabolism, such as monoamine oxidase B ~~(MAO-B)~~("MAO-B") and catechol O-methyl transferase ~~(COMT)~~("COMT"). These therapies aim to further improve overall dopaminergic function. Patient-friendly treatment options for motor fluctuations in advanced ~~Parkinson's~~Parkinson’s disease are limited. Subcutaneous injections of the dopamine agonist apomorphine are used for the acute treatment of OFF ~~episodes.~~periods. Duopa/Duodopa is an enteral suspension of L-dopa and the peripheral AADC inhibitor carbidopa that is continuously administered over the course of the day through a surgically-placed percutaneous endoscopic gastrostomy with jejunal ("PEG-J") tube to reduce fluctuations in L-dopa blood levels. Deep-Brain Stimulation ("DBS"), a procedure in which electrodes are surgically placed in the basal ganglia, either in the subthalamic nucleus or internal globus pallidus, is another option in advanced ~~Parkinson's~~Parkinson’s disease. Through an impulse generator, electrical stimuli are delivered to the brain to modulate neural signals within these target regions. It remains unclear exactly how DBS improves the symptoms of ~~Parkinson's~~Parkinson’s disease. Both Duopa/Duodopa and DBS require indwelling hardware --- a PEG-J tube, or electrodes, leads, and impulse generator --- respectively.

~~Predecessor~~

Earlier-Generation Product Candidate: ProSavin (OXB-101)

ProSavin, the ~~predecessor~~earlier-generation gene therapy candidate to AXO-Lenti-PD, delivered the same three genes (AADC, TH, and CH1) as AXO-Lenti-PD in the same lentiviral vector, but in a ~~different~~less optimized payload configuration. AXO-Lenti-PD was the result of multifactorial experimentation to ~~modify~~optimize the payload configuration to improve endogenous dopamine production. The initial Phase 1/2 clinical trial of ProSavin was completed in 2012 and long-term follow-up is ongoing.

Nonclinical Studies for ProSavin

~~Nonclinical~~In nonclinical studies in non-human primate models of Parkinson's disease, ~~demonstrated that~~ ProSavin ~~can safely restore~~was shown to be well-tolerated, restored striatal dopamine production to approximately 50% of normal levels and ~~correct~~improved motor ~~deficits~~function without associated dyskinesias (p-value<0.05). ProSavin was observed to improve Parkinson's disease symptoms and clinical disease severity in the same non-human primate model, with a durable response seen up to 12 months (p-value<0.05 at all time points beyond week 4). One of the ProSavin treated non-human primates was continued on the study and exhibited a sustained motor improvement until the study was concluded at 44 months. Also, in non-human primate models, treatment with ProSavin plus oral levodopa significantly reduced dyskinesias (p<0.05) compared to an empty vector plus oral levodopa, with effects sustained out to eight weeks. Nonclinical study data did not reveal adverse reactions nor findings with potential impact on patient safety and provided pertinent data on the optimal method of delivery in the clinic. ProSavin was also observed to be well tolerated when co-administered with L-dopa and apomorphine, indicating that it can be used in conjunction with these commonly used Parkinson's disease medications.

In summary, these experiments were determined to demonstrate the long-term safety of therapeutic doses of ProSavin as well as significant efficacy to improve measures of movement and reduce dyskinesias in animal models. These results supported the initiation of clinical trials for ProSavin.

Phase 1/2 Clinical Trial of ProSavin

ProSavin was evaluated for safety and efficacy in a Phase 1/2 study in patients with advanced Parkinson's disease by ~~Oxford BioMedica.~~Oxford. In this study, ProSavin was observed to be well-tolerated with sustained improvements on motor function as measured by the Unified Parkinson's Disease Rating Scale ("UPDRS") Part III (motor) score in the state "OFF" levodopa medication, which we refer to as UPDRS Part III "OFF." The Phase 1/2 clinical trial was conducted at sites in the United Kingdom ("U.K.") and France on a total of 15 patients with advanced Parkinson's disease. Three dose levels of ProSavin were assessed in four patient cohorts: ~~dose level one (1.9~~Low Dose: 1.9 × 10⁷ transducing units ~~or "TU"~~("TU") in Cohort 1 (n=3); ~~cohort 1); dose level two (4.0~~Medium Dose: 4.0 × 10⁷ ~~TU; cohorts~~TU in Cohorts 2a (n=3) and ~~2b)~~2b (n=3); ~~and dose level three (1.0~~High Dose: 1.0 × 10⁸ ~~TU; cohort 3)~~TU in Cohort 3 (n=6). Cohorts 2b and 3 underwent a modified delivery method to increase the rate of delivery of the viral vector. The primary endpoints were the number and severity of adverse events as well as the UPDRS Part III "OFF" scores at 6six months after gene therapy administration. No serious adverse events related to ProSavin or the surgical procedure were reported. Reported adverse events ~~("AEs")~~ were generally mild and related to either Parkinson's disease progression or L-dopa-induced dyskinesias that were ameliorated with reduction of L-dopa administration. The most common ~~AEs~~adverse events in the first 12 months were dyskinesia (n=11 subjects), "on-off" motor fluctuations (n=9), headache (n=4), and akinesia (n=3).

Across all patients, mean UPDRS Part III "OFF" scores were significantly improved at six months (33% reduction, p-value=0.0001) and 12 months (31% reduction, p-value=0.0001). compared to baseline. In a long term follow up safety study being performed by Oxford for the patients from the Phase 1/2 study, ProSavin has been observed to show a favorable long-term safety profile and demonstrated effects on motor function for over six years. Sustained improvement was seen through six years of follow-up and the long-term follow-up study is still ongoing (10 years exposure in the earliest subject). Clinical data from this study were published in The Lancet in 2014 and long-term follow-up data from this study were published in Human Gene Therapy Clinical Development in 2018.

~~Second-Generation~~Next-Generation Product Candidate: AXO-Lenti-PD

AXO-Lenti-PD is a re-engineered gene therapy product candidate that was selected following multifactorial experimentation to ~~modify~~optimize the payload configuration of ProSavin to ~~further improve~~increase endogenous dopamine production. The modifications included a different ordering of the genes, the fusion of TH and CH1 with a flexible linker, and the removal of a genetic control element between TH and AADC. Both ProSavin and AXO-Lenti-PD utilize exactly the same fourth generation lentiviral vector. We believe these changes lead to more balanced stoichiometry of gene expression and colocalization of enzymatic activity. The targeted net result is ~~improved~~increased dopamine production in transduced cells.

Nonclinical ~~studies~~Studies for AXO-Lenti-PD

In vitro experiments with AXO-Lenti-PD ~~demonstrated~~showed up to 10-fold increases in dopamine + L-dopa production over ProSavin. In vivo experiments in non-human primate models showed increased AADC activity in the brain with AXO-Lenti-PD compared to ProSavin as measured by PET scans. Functionally, in non-human primate models at approximately 1/5^th5th of the dose, AXO-Lenti-PD demonstrated a similar level of improvement in spontaneous locomotor activity compared to ProSavin. We believe these data provide evidence that AXO-Lenti-PD ~~has~~may have greater potency compared to ProSavin in terms of dopamine production, enzymatic activity and functional improvement in animal models of Parkinson's disease.

SUNRISE-PD Phase 2 Clinical ~~Study~~Trial of AXO-Lenti-PD

In ~~October~~the fourth quarter of calendar year 2018, we initiated athe Phase 2 clinical ~~study~~trial of ~~AXO-Lenti-PD in patients with Parkinson's disease with initial clinical data expected to be available~~the SUNRISE-PD study in the ~~first half~~U.K. The SUNRISE-PD study is currently enrolling patients in the U.K., and we plan to file an investigational new drug application ("IND") with the FDA to support enrollment of ~~2019.~~ patients in the United States. Additionally, we plan to file a Clinical Trial Application to support local enrollment in France.

The ~~planned~~design of the SUNRISE-PD study ~~design~~ consists of two ~~parts:~~

~~Part A is~~parts, including a ~~non-randomized~~single arm dose-escalation ofportion studying multiple potential dose ~~levels.~~

~~Part B is~~levels and a ~~double-blind design~~sham-controlled portion with patients randomized either to an active group receiving the optimal dose as determined in ~~Part A,~~the first portion, or a control group receiving an imitation "sham" surgical procedure. Assuming successful completion of the dose-escalation portion of the study, the sham-controlled portion is expected to commence by the end of calendar year 2020.

The SUNRISE-PD study ~~will evaluate~~is evaluating the safety and tolerability of AXO-Lenti-PD as well as ~~assess~~assessing efficacy using clinical measures of motor function, ~~such as~~patient diaries and biomarkers. We expect the primary endpoint of the double-blind, randomized, sham-controlled portion of the SUNRISE-PD study will be assessed at six months and may include data from Hauser patient diaries and the UPDRS Part III "OFF" scores and other measures being assessed in the study.

In June 2019, we reported six-month data from Cohort 1 in the open-label, dose-escalation portion of the SUNRISE-PD Phase 2 study. AXO-Lenti-PD was observed to be generally well tolerated, with no serious adverse events related to the product candidate or the procedure. At month six, the patients experienced an average improvement from baseline in UPDRS III (motor) score, in the state "OFF" levodopa therapy, of 17 points, representing an average improvement of 29% from baseline. Individual patient improvements from baseline at six months of 14 points and 20 points were observed (from 58 to 44 and from 60 to 40, respectively). The patients experienced an average improvement of approximately 20 points from baseline on the UPDRS Part II (activities of daily living) "OFF" score, and an average improvement of 3 points from baseline on the UPDRS Part IV (complications of therapy) "OFF" score.

In addition, at month six the patient recorded Hauser diaries showed, on average, the patients experienced an improvement from baseline of ON time without dyskinesia of 2.7 hours, a reduction of 2.4 hours in ON time with non-troublesome dyskinesias, a reduction of ON time with troublesome dyskinesias of 1.5 hours, and ~~biomarkers.~~an increase in OFF time of 0.9 hours. At month six, the average LEDD was decreased by 233 mg for patients in Cohort 1. This represents an average reduction of 21% from baseline. At month six, the average PDQ-39 Summary Index score for the patients in Cohort 1 improved to 18 points (a reduction of 32 points from baseline), which represents an approximate 65% improvement from baseline.

~~Manufacturing for AXO-Lenti-PD~~We dosed the first patient in the second dose cohort of the SUNRISE-PD clinical study in April 2019 and expect to continue enrollment of patients during calendar year 2019 with three-month data on all patients dosed in the cohort expected in the first half of calendar year 2020. The dose being tested in Cohort 2 is 1.4×10⁷ TU, which is three times higher than the dose used in Cohort 1.

AXO-AAV-GM1 and AXO-AAV-GM2 Programs

Overview

We ~~intend to use Oxford Biomedica~~are developing AXO-AAV-GM1 and AXO-AAV-GM2 as ~~our contract manufacturer~~potential one-time disease-modifying treatments for ~~current good manufacturing practices ("cGMP") supply~~GM1 and GM2 gangliosidosis (including Tay-Sachs disease and Sandhoff disease), respectively.

GM1 Gangliosidosis and GM2 Gangliosidosis (Including Tay-Sachs and Sandhoff Diseases)

GM1 gangliosidosis is a rare, inherited neurodegenerative lysosomal storage disorder characterized by the accumulation of ~~AXO-Lenti-PD pursuant~~GM1 ganglioside. This accumulation occurs due to a ~~clinical supply agreement that will be negotiated by~~defect in the ~~parties. Oxford Biomedica has already produced~~galactosidase beta 1 ("GLB1") gene. The GLB1 gene codes for the ~~initial cGMP clinical trial material~~β-galactosidase ("β-gal") enzyme which catalyzes the hydrolysis of GM1 gangliosides. Impaired β-gal activity results in the toxic accumulation of GM1 gangliosides, causing the progressive destruction of nerve cells in the brain and spinal cord and early death. GM1 gangliosidosis is uniformly fatal, and there are no disease-modifying treatment options. The estimated incidence for ~~initiation of the clinical study using an adherent cell process. Oxford Biomedica~~GM1 gangliosidosis is ~~currently developing a cell suspension process to support commercial scale cGMP manufacturing of AXO-Lenti-PD, which we intend to use~~approximately one in ~~Part B of the clinical study.~~100,000 live births worldwide.

~~AXO-AAV Programs~~

~~Silence-and-Replace Technology~~GM2 gangliosidosis, also known as Tay-Sachs or Sandhoff diseases, is a rare, inherited neurodegenerative lysosomal storage disorders characterized by buildup of GM2 ganglioside in lysosomes. Defects in the hexosaminidase subunit alpha ("HEXA") gene (leading to Tay-Sachs disease) and hexosaminidase subunit beta ("HEXB") gene (leading to Sandhoff disease) cause deficiencies in beta-hexosaminidase A ("Hex A") enzyme activity. Hex A enzyme deficiency leads to progressive accumulation of GM2 gangliosides in the central nervous system ("CNS") with ensuing neurodegeneration. Both Tay-Sachs disease and Sandhoff disease are characterized by progressive nervous system dysfunction, resulting in marked cognitive and physical impairment. Tay-Sachs and Sandhoff diseases result in approximately 50% mortality by three and a half years of age and 75% mortality by five years of age. Currently there are no disease-modifying treatment options for either Tay-Sachs disease or Sandhoff disease, and management is limited to symptomatic treatment. The estimated incidence for Tay-Sachs and Sandhoff diseases is approximately one in 180,000 live births worldwide.

The ~~Silence-and-Replace technology platform~~estimated incidence for the combination of GM1 gangliosidosis, Tay-Sachs and Sandhoff diseases is ~~designed~~approximately one in 65,000 live births worldwide. We estimate that there are between approximately 600 and 1,000 patients with GM1 gangliosidosis, Tay-Sachs and Sandhoff diseases in the United States and European Union combined. These diseases, in the severe form, reduce life expectancy to produce a long-term restoration of normal gene function and is achieved by combining RNA interference ("RNAi") (silence) with gene therapy (replace) in a single administration of a single adeno-associated viral ("AAV") vector construct. This approach may be applicabletwo to ~~various genetic diseases, particularly autosomal dominant genetic disorders caused by nucleotide repeat expansion.~~four years.

Multiple neurological and muscular diseases are associated with erroneous expression of a mutated gene. RNAi has shown potential to silence the expression of disease-associated genes. Commonly-used RNAi approaches, in which small interfering RNA ("siRNA") is introduced directly into the cell, achieve only transient gene silencing and are limited by the requirement for repeated administration and variable concentrations of siRNA over time. To provide lasting gene silencing, the Silence-and-Replace technology employs ddRNAi, in which viral vectors deliver a DNA construct that produces short hairpin RNAs ("shRNAs"), which are processed by the cell into siRNAs, which then silence the mutated genes.

In an autosomal dominant genetic disorder, particularly one caused by nucleotide repeat expansion, silencing of the mutant gene can also lead to silencing of the wild type gene, which may be required for normal function. The Silence-and-Replace strategy is designed to address this potential issue by delivering a functional copy of the gene that is re-engineered to be resistant to knockdown. The gene that encodes the functional protein may be contained within the same viral vector as the ddRNAi construct.

~~AXO-AAV-OPMD Program~~

~~Overview~~

AXO-AAV-GM1

~~The AXO-AAV-OPMD Program~~AXO-AAV-GM1 is an investigational gene therapy currently being developed as a potential one-time disease modifying treatment for ~~OPMD, which we licensed from Benitec Biopharma Limited ("Benitec") in July 2018.~~GM1 gangliosidosis. The ~~Program~~program utilizes an ~~AAV~~adeno-associated virus ("AAV") vector to deliver ~~a Silence-and-Replace construct to silence the mutant poly-A binding protein N1 ("PABPN1") gene that causes OPMD and replace it with~~ a functional copy of the ~~PABPN1~~GLB1 ~~gene. This Silence-and-Replace approach aims~~gene with the goals of restoring β-gal enzyme activity in the CNS and reducing GM1 ganglioside accumulation, to ~~knock down~~ultimately improve neurological function and extend survival. The therapy is administered intravenously and utilizes the ~~expression~~AAV9 capsid, which has been shown to cross the blood-brain barrier. Intravenous administration has the potential to broadly transduce the CNS and peripheral tissues, as well as treat peripheral manifestations of the disease. We licensed exclusive worldwide rights for the development and commercialization of AXO-AAV-GM1 from the University of Massachusetts Medical School ("UMMS") in December 2018.

Preclinical studies in GM1 murine and feline models have supported AXO-AAV-GM1's ability to improve β-gal enzyme activity, reduce GM1 ganglioside accumulation, improve neuromuscular function, and extend survival. Magnetic resonance imaging ("MRI") of GM1 feline models treated with other GM1 gene therapy demonstrated substantially normal brain architecture through at least two years of age, as compared with untreated GM1 feline models.

AXO-AAV-GM1 is currently being evaluated with the first patient dosed in May 2019 and a second patient dosed in September 2019 under an IND overseen by the National Institutes of Health ("NIH"). We expect to present an update from the first child dosed with AXO-AAV-GM1 in the fourth quarter of calendar year 2019, and to complete enrollment in Part A of the registrational study of late infantile and juvenile onset (type II) GM1 patients by the first quarter of calendar year 2020 with complete data available in mid-calendar year 2020. We also plan to expand the clinical development plan to include infantile GM1 subjects (Type I), the population most severely affected by the disease.

AXO-AAV-GM2

AXO-AAV-GM2 is an investigational gene therapy that we are developing as a potential one-time disease modifying treatment for GM2 gangliosidosis (including Tay-Sachs disease and Sandhoff disease). The AXO-AAV-GM2 program utilizes AAV dual vectors to deliver functional copies of both the ~~wild-type and mutant~~ ~~PABPN1~~HEXA gene ~~through ddRNAi, while at the same time expressing a re-engineered copy of~~and the ~~PABPN1~~HEXB~~, which~~ gene, with the goal of restoring normal Hex A enzyme function in the CNS. AXO-AAV-GM2 is ~~resistant~~administered directly to ~~silencing~~the brain and ~~codes for~~CNS and utilizes the ~~functional PABPN1 protein.~~neurotropic AAVrh.8 capsid. The ~~gene therapy~~HEXA and HEXB genes will be delivered in a ~~single administration directly into target muscle tissue to provide long-term correction of muscle pathology and restoration of function.~~

~~Oculopharyngeal Muscular Dystrophy Overview~~

OPMD is a muscular disease that is inherited through a primarily autosomal dominant pattern. OPMD is estimated to affect approximately 15,000 people in North America and Europe. The disease generally presents in patients between the ages of 40 and 70 years old and is characterized primarily by progressive difficulty swallowing, eyelid drooping, and weakness1:1 ratio using separate AAvrh.8 vectors. As part of the ~~proximal extremities. Swallowing difficulties can have life-threating consequences, including malnutrition~~AXO AAV-GM2 program, we are also exploring a next-generation gene therapy that would utilize a bicistronic vector to deliver both the HEXA and ~~aspiration pneumonia. As~~HEXB genes in a single vector using the ~~disease progresses, the swallowing difficulties become more severe and other muscles may become involved. There are no products approved~~AAV9 capsid for systemic intravenous administration. We licensed exclusive worldwide rights for the ~~treatment~~development and commercialization of ~~OPMD and therefore, treatment options available to patients are limited. OPMD is caused by mutations~~AXO-AAV-GM2 from UMMS in the gene coding for PABPN1, a ubiquitously expressed protein that regulates the processing of messenger RNAs. The normal PABPN1 protein contains ten copies of the amino acid alanine, which forms a polyalanine tract. In OPMD, the mutated ~~PABPN1~~ gene has an expansion of alanine-encoding trinucleotide repeats, resulting in an abnormally long polyalanine tract. The protein that forms from the mutated gene is prone to aggregating into insoluble nuclear inclusion bodies which leads to muscle cell pathology and disease progression.

~~Nonclinical studies for AXO-AAV-OPMD~~

~~Data from mouse models of OPMD showed gene therapy from the AXO-AAV-OPMD Program provided up to 86% inhibition of~~ ~~PABPN1~~ ~~gene expression, while restoring functional~~ ~~PABPN1~~ ~~transgene expression up to 63% of normal levels. The A17 mouse model is a well-validated~~ ~~in vivo~~ model that is designed to exhibit many of the key pathological features of OPMD patients. The levels of gene silencing and expression achieved in this model coincided with decreased muscle pathology and a restoration of muscle force and muscle weight to near wild-type levels.December 2018.

~~Planned Clinical Study for AXO-AAV-OPMD Program~~

~~We expect to initiate a clinical study for the investigational AXO-AAV-OPMD Program~~Administration of AXO-AAV-GM2 in the ~~second half~~Sandhoff mouse model showed increases in Hex A enzyme, reductions of ~~2019.~~GM2 ganglioside in the brain, and improvements in motor coordination. Extension of survival was also observed in the Sandhoff mouse model, with increases in survival in a dose-dependent manner. The ~~FDA~~AXO-AAV-GM2 program utilizes AAV vectors to deliver functional copies of both the HEXA gene and ~~European Commission~~the HEXB gene, with the goal of restoring normal Hex A enzyme function in the CNS. Patients with infantile Tay-Sachs disease, late-infantile or juvenile disease, and adult disease have ~~granted Orphan Drug Designation~~been shown to have less than 0.1%, approximately 0.5%, and between 2% and 4% of normal Hex A activity, respectively. In addition, patients with infantile Tay-Sachs disease, late-infantile or juvenile disease, and adult disease have a median survival time from birth of three to four, 10 to 15, and over 18 years, respectively. Hex A activity of between 5% and 10% or more of normal is believed to be compatible with a disease-free life. We believe that the restoration of Hex A activity to 0.5% of normal activity could represent a clinically meaningful effect. AXO-AAV-GM2 is currently being evaluated in two patients under an expanded access IND overseen by UMMS. Axovant will conduct the registrational program under an IND filed by the company.

Patient #1

AXO-AAV-GM2 is currently being evaluated with the first patient having been dosed in November 2018 under the expanded access IND overseen by UMMS. In March 2019 and October 2019, the three-month and six-month data were reported from the first patient, a 30-month-old with advanced infantile Tay-Sachs disease, who received a total dose of 1.0×10¹⁴ vg of AXO-AAV-GM2 administered into the cisterna magna (75% of vector) and lumbar spinal canal (25% of vector) only. Due to the ~~AXO-AAV-OPMD Program~~patient's advanced disease, a co-delivered intrathalamic injection of AXO-AAV-GM2 was not administered.

Hex A activity was determined using the 4MUGS assay, the standard assay for assessing activity of the ~~treatment~~enzyme. At baseline, the patient's enzyme activity in the cerebrospinal fluid ("CSF") was 0.37% of ~~OPMD.~~

~~AXO-AAV-OPMD Program Manufacturing~~

~~We plan~~normal. At three months following administration, there was an apparent increase in enzyme activity in the CSF to ~~use a contract manufacturer for cGMP manufacturing~~1.22% of ~~AXO-AAV-OPMD. We are currently working with a third-party cGMP manufacturer and have completed an engineering run of AXO-AAV-OPMD~~normal, which was maintained at the ~~250L scale using a baculovirus-based suspension production system~~six-month timepoint at 1.06% of normal, representing an approximately 3-fold increase in ~~anticipation~~CSF enzyme activity at both three and six-months post-injection. Serum Hex A enzyme activity also increased from baseline (0.26% of ~~cGMP manufacturing for~~normal) at all time points measured (0.42% of normal at three months and 0.28% at six months) following administration of AXO-AAV-GM2. Additionally, the CSF GM2 levels were noted to decrease by about 25% relative to baseline at three months, and then increase by approximately 25% compared to baseline at six months post infusion. The clinical ~~trials.~~relevance of these changes is unknown.

~~Additional Collaboration Programs~~

~~Under our license and collaboration agreement~~AXO-AAV-GM2 was observed to be generally well-tolerated with ~~Benitec (the "Benitec Agreement"~~no reports of serious adverse events ("SAE" or "SAEs")~~, we will pursue five additional~~ related to the investigational gene therapy ~~research plans~~ as ~~part~~ of ~~collaboration programs focused on genetic neurological~~either the three-month or ~~neuromuscular disorders utilizing Benitec’s technologies. We plan to initiate~~six-month visits. No clinically relevant laboratory abnormalities were observed following administration. Within the safety parameters that were summarized by the investigator was a ~~research plan to develop gene therapy products targeting the~~ ~~C9orf72~~ ~~gene, which is associated with ALS and frontotemporal dementia ("FTD"). In addition, we plan to initiate four other research plans focused on undisclosed genetic neurological disorders.~~

~~ALS and FTD are neurological disorders~~high CSF pressure (42 cm H2O) that ~~have been linked to hexanucleotide repeats in the~~ ~~C9orf72~~ ~~gene. Thirty to forty percent of familial ALS cases are associated with~~ ~~C9orf72~~ ~~gene mutations and these patients have a progressive muscle weakness resulting from the death of motor neurons in the spinal cord and brain. Patients with FTD associated with~~ ~~C9orf72~~ ~~gene mutations have a progressive brain disorder that affects personality, behavior, language and movement. While the exact role of~~ ~~C9orf72~~ ~~gene mutation is unknown, both expression of the mutated~~ ~~C9orf72~~ ~~gene and lack of functional~~ ~~C9orf72~~ ~~gene are believed~~was noted to be ~~implicated. We believe Silence-and-Replace gene therapy is a promising approach for~~21 cm H2O after the ~~restoration of normal~~ ~~C9orf72~~ ~~gene function and has the potential~~infusion (normal 18 cm H2O). Baseline aspartate transaminase elevation was noted to ~~deliver lasting benefits for ALS and FTD patients.~~

~~Small Molecule Program~~

~~Nelotanserin~~

~~Overview~~

~~In October 2015, we acquired from our majority shareholder, Roivant Sciences Ltd. ("RSL"), the global rights to nelotanserin, a selective inverse agonist of the 5-HT~~_2A ~~receptor. To date, we have been investigating and developing nelotanserin to address visual hallucinations and RBD~~be well described in patients with ~~LBD.~~Tay-Sachs disease. There was a slight transient rise in liver function tests that were considered related to the oral medications (Sirolimus or Keppra). The SAE of possible aspiration pneumonia was considered unrelated to the investigational therapy by the investigator. From an immunology standpoint, the patient was noted to have achieved adequate immunosuppression with no humoral or T-cell response to the vector. The patient's clinical condition was stable from baseline to month six without clinical deterioration observed on neurological exam. In ~~January 2018, we reported results~~addition, there was no deterioration in the MRI of the brain from baseline to the MRI at month three post infusion.

Patient #2

In June 2019, a six month old child with early symptomatic infantile Tay-Sachs disease received AXO-AAV-GM2 prior to the onset of severe symptoms, delivered into the thalamus bilaterally as well as into the cisterna magna and lumbar intrathecal space, the planned routes of administration for ~~a pilot Phase 2 Visual Hallucination study of nelotanserin~~patients in ~~patients with LBD. Nelotanserin~~the registrational program. The surgical procedure was ~~generally~~ well tolerated ~~but did not show any statistical trends~~with no neurological defects noted. There were baseline elevated transaminases noted with a transient increase. This child is clinically stable at three months after dosing with no loss or gain of ~~improvement on prespecified analyses~~milestones. Importantly, no seizure activity and no exaggerated startle responses were observed. By contrast, the patient’s untreated, two older siblings with Tay-Sachs disease exhibited rapid disease progression, clinical regression and seizure onset at 12 to 18 months of ~~various scales~~age. In addition, a brain MRI taken three months after administration (at 10 months of age) demonstrated no damage to ~~assess visual hallucinations. However, we did observe positive trends on UPDRS Part III~~the thalamus and normal new myelin deposition. By contrast, commonly reported MRI findings in ~~the primary efficacy population (3.12 point improvement, p=0.075 unadjusted) which will also be assessed~~infantile Tay-Sachs disease at this age include demyelination and cerebral and cerebellar atrophy. The CHOP INTEND score, a 16-item scale of motor function that has been validated in the ongoing RBD study. We expect topline data, anticipated to be available in December 2018, from our currently ongoing Phase 2 study of nelotanserin to address visual hallucinations and RBD in patientsinfants with ~~LBD.~~

~~Nelotanserin for REM Sleep Behavior Disorder in Lewy Body Dementia~~

~~Medical Need~~

~~RBD is a common clinical feature of LBD, and is a condition where patients lose normal sleep paralysis resulting in the physical acting~~neuromuscular disorders, was 58 out of ~~their dreams, impacting their quality~~64 at baseline, increasing to a total score of ~~life~~60 at month three following gene transfer and ~~endangering themselves~~ranging between 58-61 from week two to month three.

At baseline, the CSF Hex A enzyme activity was 1.57% of normal and ~~their bed partners. While off-label treatment~~subsequently increased to 1.8% of ~~RBD~~normal enzyme activity at three months following administration. Serum Hex A enzyme activity also increased from baseline (0.26% of normal) at all time points measured (0.50% of normal at three months) following administration of AXO-AAV-GM2. A sustained level ≥ 0.5% of normal enzyme activity may correlate with benzodiazepines is common, this class of drugs is associated with severe side effects in patients with dementia, including sedation, worsening of cognition and increased risk of falls. We believe that there is a ~~need for new therapeutic options that can reduce the frequency of RBD without sedating patients or worsening cognition in patients with dementia.~~clinically meaningful effect.

~~Clinical Development~~

AXO-AAV-GM2 was observed to be generally well-tolerated with no reports of SAEs related to the investigational gene therapy. One SAE was a febrile urinary tract infection due to Klebsiella and was considered unrelated to the investigational therapy by the investigator. No clinically relevant laboratory abnormalities were observed following administration, with a transient positive immune response related to the Sirolimus. The patient's clinical condition was stable from baseline to month three without gain or loss of milestones and a stable neurological exam with lower extremity weakness that is unchanged from baseline. In ~~March 2016, we initiated a four-week, double-blind, randomized, placebo-controlled Phase 2 study in patients~~addition, the MRI showed no injury to the thalamus and an increase of myelin that is seen with DLB and Parkinson's disease dementia suffering from RBD. This study will utilize objective measures of efficacy as assessed in a sleep-lab setting. Due to challenges with recruitment for this study, we elected to close enrollment prior to reaching our enrollment target. Because of this smaller than planned enrollment, the study may not qualify as pivotal. We expect to receive top-line results for this study in December 2018. Patients completing the double-blind portion of this study were eligible to enroll in an open label extension study of nelotanserin.normal brain development.

Our Key Agreements

Oxford BioMedica License Agreement

OnIn June 5, 2018, we, through our wholly owned subsidiary, ~~Axovant Sciences GmbH ("ASG"),~~ASG, entered into the Oxford ~~BioMedica~~ Agreement, pursuant to which we received a worldwide, exclusive, royalty-bearing, sub-licensable license under certain patents and other intellectual property controlled by Oxford ~~BioMedica~~ to develop and commercialize AXO-Lenti-PD and related gene therapy products for all diseases and conditions. In June 2018, as partial consideration for the license, we made an upfront payment to Oxford ~~BioMedica~~ of $30.0 million, $5.0 million of which ~~will be~~was applied as a credit against the process development work and clinical supply that Oxford ~~BioMedica will~~is obligated to provide to ~~us.~~us over the term of the Oxford Agreement. Under the terms of the Oxford ~~BioMedica~~ Agreement, we could be obligated to make payments to Oxford ~~BioMedica~~ totaling up to $55.0 million upon the achievement of specified development milestones and $757.5 million upon the achievement of specified regulatory and sales milestones. In April 2019, certain development milestones were achieved resulting in a $13.0 million net payment due to Oxford. We will also be obligated to pay Oxford ~~BioMedica~~ a tiered royalty from 7% to 10%, based on yearly aggregate net sales of the ~~Gene Therapy Products,~~underlying gene therapy products, subject to specified reductions upon the occurrence of certain events as set forth in the Oxford ~~BioMedica~~ Agreement. These royalties are required to be paid, on a product-by-product and country-by-country basis, until the latest to occur of the expiration of the last to expire valid claim of a licensed patent covering such product in such country, the expiration of regulatory exclusivity for such product in such country, or 10 years after the first commercial sale of such product in such country.

We are solely responsible, at our expense, for all activities related to the development and commercialization of the ~~Gene Therapy Products.~~gene therapy products. Pursuant to the Oxford ~~BioMedica~~ Agreement, we are required to use commercially reasonable efforts to develop, obtain regulatory approval of, and commercialize a ~~Gene Therapy Product~~gene therapy product in the United States and at least one major market country in Europe. In addition, we are required to meet certain diligence milestones and to include at least one U.S.-based clinical trial site in a pivotal study of a ~~Gene Therapy Product.~~gene therapy product. If we fail to meet any of these specified development milestones, we may cure such failure by paying Oxford ~~BioMedica~~ certain fees, which range from $0.5 million to $1.0 million. Pursuant to the Oxford ~~BioMedica~~ Agreement, Oxford ~~Biomedica will~~is expected to be our cGMP manufacturer for AXO-Lenti-PD, subject to a separate clinical and commercial supply agreement to be negotiated between the parties.

~~Benitec Biopharma~~The University of Massachusetts Medical School Exclusive License ~~and Collaboration~~ Agreement

~~On July 8,~~In December 2018, we, through our wholly owned subsidiary, ASG, entered into ~~the Benitec Agreement,~~an exclusive license agreement (the "UMMS Agreement") with UMMS pursuant to which we received a worldwide, ~~exclusive,~~ royalty-bearing, sub-licensable license under certain patent applications and any patents issuing therefrom, biological materials and ~~other intellectual property~~know-how controlled by ~~Benitec~~UMMS to develop and commercialize ~~investigational~~ gene therapy ~~AXO-AAV-OPMD~~product candidates, including AXO-AAV-GM1 and ~~related gene therapy products (collectively,~~AXO-AAV-GM2, for the ~~"AXO-AAV-OPMD Program")~~treatment of GM1 gangliosidosis and GM2 gangliosidosis (including Tay-Sachs disease and Sandhoff disease). This license is exclusive with respect to patents and biological materials and non-exclusive with respect to know-how and is subject to UMMS' retained rights for ~~all diseases~~academic research, teaching and ~~conditions.~~non-commercial patient care purposes, as well as to certain pre-existing rights of the U.S. government.

Under the ~~Benitec~~UMMS Agreement, we ~~will also collaborate with Benitec on five additional~~are solely responsible, at our expense, for the research, ~~plans ("Collaboration Programs") for other genetic neurological or neuromuscular disorders using Benitec technologies.~~development and commercialization of the licensed product candidates. We will ~~receive~~reimburse UMMS for payments made by UMMS for the manufacture of clinical trial materials for us, up to a ~~worldwide, exclusive, royalty-bearing, sub-licensable license under certain patents and other intellectual property controlled by Benitec~~specified amount. We are obligated to use diligent efforts to develop and commercialize ~~products arising from each Collaboration Program.~~

the licensed product candidates and are required to achieve certain development and commercial milestones in accordance with the timeline set forth in the agreement.

Under the terms of the ~~Benitec~~UMMS Agreement, we made an upfront payment of $10.0 million. In addition, we ~~will~~could be obligated to make payments to ~~Benitec~~UMMS totaling up to ~~(i) for the AXO-AAV-OPMD Program, $67.5~~$24.5 million upon the achievement of specified development and regulatory milestones and ~~$120.0~~$39.8 million upon the achievement of specified ~~sales milestones, and (ii) for each Collaboration Program, $33.5 million upon the achievement of specified~~commercial milestones. In February 2019, certain development and regulatory milestones were achieved resulting in a $1.0 million payment to UMMS, and ~~$60.0~~in October 2019, further development and regulatory milestones were achieved resulting in an additional $1.0 million ~~upon the achievement of specified sales milestones. Benitec will receive 30% of net profits of our world-wide sales of products from the AXO-AAV-OPMD Program, subject~~payment due to ~~an agreed minimum amount for such payments. This profit-sharing payment will be made for so long as we or our affiliates or sublicensees commercialize such products.~~UMMS. We ~~will~~are also obligated to pay ~~Benitec a~~UMMS tiered ~~royalty~~mid-single digit royalties based on yearly ~~aggregate~~ net sales of the licensed products, ~~arising from each Collaboration Program,~~ subject to a specified ~~reductions~~annual minimum amount. Additionally, we will pay UMMS a percent of any revenues we receive from any third-party sublicenses to licensed products at rates ranging in the mid-single digits to mid-teens.

The UMMS Agreement will expire upon the ~~occurrence~~expiration of ~~certain events as set forth in the Benitec Agreement. These royalties are required~~our obligations to ~~be paid, on a product-by-product and country-by-country basis,~~make royalty payments to UMMS, which continues until the ~~latest to occur~~later of the expiration of ~~the last to expire valid claim of a~~ licensed ~~patent covering such product in such country, the expiration of regulatory~~patents and any applicable orphan designation exclusivity ~~for such product in such country, or ten~~and 10 years after the first commercial sale of the licensed products. Upon such ~~product in such country.~~

~~Under~~expiration, the ~~Benitec~~licenses granted to us by UMMS will automatically convert to perpetual, irrevocable, worldwide royalty-free licenses. We have the right to terminate the UMMS Agreement Benitec will perform certain research activities for each Collaboration Program and development and manufacturing activities for the AXO-AAV-OPMD Program, and we will reimburse Benitec for its costs incurred, in accordance with an agreed-upon research and development plan and budget. We are solely responsible, at ~~our expense, for all other activities related to the research, development and commercialization of products from the Collaboration Programs and the AXO-AAV-OPMD Program.~~

~~Arena Development Agreement for Nelotanserin~~

In October 2015, we exercised an option to acquire global rights, title, interest and obligations in and to nelotanserin from our parent company, RSL. In May 2015, RSL entered into a development, marketing and supply agreement for nelotanserin (the "Arena Development Agreement") with Arena Pharmaceuticals GmbH ("Arena"), and we entered into a Waiver and Option Agreement with RSL. Upon the exercise of our option, we assumed RSL’s rights and obligations under the Arena Development Agreement, as amended on October 18, 2017. In January 2018, we were notified by Arena that it has assigned all of its rights and obligations under the Arena Development Agreement to an affiliate, 125 Royalty Inc. Under the Waiver and Option Agreement, we recorded $5.3 million as research and development expense which was 110% of the payments made to Arena by RSL, and the costs incurred by RSL in connection with the development of nelotanserin. We will be responsible for future contingent payments under the Arena Development Agreement, including up to $4.0 million in potential development milestone payments, up to $37.5 million in potential regulatory milestone payments and up to $60.0 million in potential commercial milestone payments. Under the Arena Development Agreement, we are also obligated to purchase all commercial supplies of nelotanserin from Arena at a fixed price equal to 15% of net sales of nelotanserin.

~~The Arena Development Agreement will remain in effect until terminated: (1) by the parties’ mutual agreement; (2) for~~ any ~~reason by us~~time upon 90 ~~days’~~days' advance written notice to ~~Arena; (3) by either~~UMMS. Either party ~~upon written notice~~may terminate the UMMS Agreement for the other ~~party’s~~party's uncured material breach or insolvency event if such party fails to cure such breach or the insolvency event is not dismissed within the specified cure period; or (4) by Arena if we or our affiliates participate in a challenge to certain Arena patents.

~~Services Agreements with Roivant Sciences, Inc. and Roivant Sciences GmbH~~

In October 2014, we and our wholly owned subsidiary, Axovant Sciences, Inc. ("ASI") entered into a services agreement with Roivant Sciences, Inc. ("RSI"), a wholly owned subsidiary of RSL, pursuant to which RSI provides us with services in relation to the identification of potential product candidates and project management of clinical trials, as well as other services related to our development, administrative and financial functions. In February 2017, in connection with the contribution and assignment of all of our intellectual property rights to ASG, we amended and restated this services agreement effective as of December 13, 2016, as a result of which ASG was added as a recipient of services from RSI. In addition, ASG also entered into a separate services agreement with Roivant Sciences GmbH ("RSG"), a wholly owned subsidiary of RSL, effective as of December 13, 2016, for the provision of services by RSG to ASG in relation to the identification of potential product candidates and project management of clinical trials, as well as other services related to development, administrative and financial activities. Under the terms of both services agreements, we are obligated to pay or reimburse RSI and RSG for the costs they, or third parties acting on their behalf, incur in providing services to us or ASG,upon 60 days' advance written notice, including administrative and support services as well as research and development services. In addition, we are obligated to pay RSI and RSG for their services at a predetermined mark-up on the costs incurred directly by RSI and RSG in connection with any general and administrative and research and development services provided directly by RSI and RSG.

Under the services agreement in effect as of December 31, 2016, we incurred expenses of $0.9 million and $1.6 million for the three months ended September 30, 2018 and 2017, respectively, and $4.3 million and $4.4 million for the six months ended September 30, 2018 and 2017, respectively, inclusive of the mark-up. We have recorded these charges as research and development expense and general and administrative expense in our condensed consolidated statements of operations.

~~Venture Debt Financing from Hercules Capital, Inc.~~

On February 2, 2017, we and our wholly owned subsidiaries, Axovant Holdings Limited ("AHL"), ASG and ASI entered into a loan and security agreement, as amended on May 24, 2017 and September 22, 2017 (the "Loan Agreement") with Hercules Capital, Inc. ("Hercules") under which we, AHL and ASG (collectively, the "Borrowers") borrowed an aggregate of $55.0 million (the "Term Loan"). ASI issued a guaranty of the Borrowers’ obligations under the Loan Agreement. At the closing of the Term Loan, the Borrowers paid Hercules a facility charge of $550,000. Subsequently, we added our subsidiary Axovant Sciences America, Inc. ("ASA") as a Borrower in July 2017 and our subsidiaries ATH and ATI as Borrowers in April 2018. The Term Loan bears interest at a variable per annum rate calculated for any day as the greater of either (i) the prime rate plus 6.80%, and (ii) 10.55%. The Term Loan has a scheduled maturity date of March 1, 2021. The Borrowers are obligated to make monthly payments of accrued interest under the Loan Agreement until September 1, 2018, followed by monthly installments of principal and interest through March 1, 2021. In connection with the Loan Agreement, the Borrowers and ASI, as guarantor, granted Hercules a first position lien on substantially all of their respective assets, excluding intellectual property. Prepayment of the Term Loan is subject to penalty.

The Loan Agreement includes customary affirmative and restrictive covenants and representations and warranties, including a minimum cash covenant, a covenant against the occurrence of a "change in control," financial reporting obligations, and certain limitations on indebtedness, liens (including a negative pledge on intellectual property and other assets), investments, distributions (including dividends), collateral, transfers, mergers or acquisitions, taxes, corporate changes, and deposit accounts. The Loan Agreement also includes customary events of default, including payment defaults, breaches of covenants following any applicable cure period, the occurrence of certain events that could reasonably be expected to have a "material adverse effect" as set forth in the ~~Loan Agreement, cross acceleration to the debt and certain events relating to bankruptcy or insolvency. Upon the occurrence of an~~ event of default, a default interest rate of an additional 5.0% may be applied to the outstanding principal balance, and Hercules may declare all outstanding obligations immediately due and payable and take such other actions as set forth in the Loan Agreement.

~~In addition, for so long as the Term Loan remains outstanding,~~that UMMS reasonably determines we ~~are required to use commercially reasonable efforts to afford Hercules the opportunity to participate in future underwritten equity offerings of~~have not fulfilled our ~~common shares up to a specified amount.~~

In connection with the entry into the Loan Agreement, we issued a warrant to Hercules which was exercisable for an aggregate of 274,086 of our common shares at an exercise price of $12.04 per share. In August 2017, Hercules exercised the warrant on a cashless basis and received a net issuance of 129,827 of our common shares.diligence obligations.

Financial Operations Overview

Revenue

We have not generated any revenue from the sale of any products, and we do not expect to generate any revenue unless and until we obtain regulatory approval of and begin to commercialize one of our gene therapy product candidates in development.

Research and Development Expense

Since our inception, our operations have primarily been focused on organizing and staffing our company, raising capital, and acquiring, ~~and~~ preparing for and advancing our product candidates ~~intepirdine, nelotanserin, RVT-103, RVT-104, AXO-Lenti-PD and AXO-AAV-OPMD,~~ into clinical development. Our research and development expenses include program-specific costs, as well as unallocated internal costs.

Program-specific costs include:

direct third-party costs, which include expenses incurred under agreements with contract research organizations ("CROs") and contract manufacturing organizations, the cost of consultants who assist with the development of our product candidates on a program-specific basis, investigator grants, sponsored research, manufacturing costs in connection with producing materials for use in conducting nonclinical and clinical studies, and any other third-party expenses directly attributable to the development of our product candidates; and

upfront payments for the purchase of in-process research and development and milestone payments, which include costs incurred under ~~the~~our agreements with Oxford ~~BioMedica Agreement, the Benitec Agreement~~ and ~~the Arena Development Agreement.~~UMMS, as well as costs incurred for our discontinued AXO-AAV-OPMD, intepirdine and nelotanserin programs.

Unallocated internal costs include:

share-based compensation expense for research and development personnel, including expense related to ~~RSL~~ common share awards and ~~RSL options~~option awards issued by ~~RSL~~our parent company, Roivant Sciences Ltd. ("RSL"), to ~~RSI~~its employees and ~~RSG~~employees of its wholly owned subsidiaries, Roivant Sciences, Inc. ("RSI") and Roivant Sciences GmbH ("RSG"), as well as to certain of our employees;

personnel-related expenses, which include employee-related expenses, such as salaries, benefits and travel expenses, for research and development personnel;

costs allocated to us under our services agreements with RSI and RSG; and

other expenses, which includes the cost of consultants who assist with our research and development but are not allocated to a specific program.

Research and development activities will continue to be central to our business model. We expect ~~to continue to incur research and development expense as we continue~~ our ~~development program for nelotanserin in LBD. However, due to the termination of the MINDSET, HEADWAY and Gait and Balance trials of intepirdine, we expect our overall~~ research and development expense to ~~decrease significantly until such time~~increase as we ~~undertake additional development~~advance our current gene therapy product candidate programs ~~including in relation to the AXO-Lenti-PD program, the AXO-AAV-OPMD program, the Collaboration Programs with Benitec~~ and additional product candidates we may in-license or acquire as we pursue our updated business plan. ~~We also expect our share-based compensation~~For the three and ~~other employee-related expenses for~~six-months ended September 30, 2019, the majority of our research and development ~~personnel~~expenses were associated with our gene therapy product candidates. For the three months ended September 30, 2018, the majority of our research and development expenses were associated with our since-discontinued AXO-AAV-OPMD gene therapy program, including an upfront nonrefundable payment to ~~increase as~~Benitec Biopharma Limited ("Benitec") under a ~~result~~license and collaboration agreement (the "Benitec Agreement") to develop and commercialize investigational gene therapy AXO-AAV-OPMD and related gene therapy products. For the six months ended September 30, 2018, the majority of our research and development expenses were associated with upfront nonrefundable payments to Oxford under the ~~transfer of certain activities from RSI~~Oxford Agreement and ~~RSG in July 2018, offset by a reduction in costs allocated~~ to usBenitec under ~~our services agreements with RSI and RSG.~~

the Benitec Agreement.

Product candidates in later stages of clinical development ~~such as nelotanserin,~~ 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.

The duration, costs and timing of clinical trials of our products in development and any other product candidates will depend on a variety of factors that include, but are not limited to, the following:

the number of trials required for approval;

the per patient trial costs;

the number of patients who participate in the trials;

the number of sites included in the trials;

the countries in which the trials are conducted;

the length of time required to enroll eligible patients;

the ~~number of doses~~dose that patients receive;

the drop-out or discontinuation rates of patients;

the potential additional safety monitoring or other studies requested by regulatory agencies;

the duration of patient follow-up;

the timing and receipt of regulatory approvals; and

the efficacy and safety profile of the product candidates.

In addition, the probability of success of our gene therapy products in development and any other product candidate will depend on numerous factors, including competition, manufacturing capability and commercial viability. We may never succeed in achieving regulatory approval of our gene therapy product candidates for any indication in any country. As a result of the uncertainties discussed above, we are unable to determine in advance the duration and completion costs of any clinical trial we conduct, or when and to what extent we will generate revenue from the commercialization and sale of our products in development or other product candidates, if at all.

General and Administrative Expense

General and administrative expenses consist primarily of share-based compensation, legal and accounting fees, consulting services, ~~services received under the services agreements with RSI and RSG~~ and employee-related expenses, such as salaries, benefits and travel expenses for general and administrative personnel. General and administrative expenses also include fees for services received by ASG under the services agreements with RSI and RSG.

We anticipate that our general and administrative expenses will continue to decrease, primarily as the result of a reduction in share-based compensation and other employee-related expenses for our general and administrative personnel due to headcount reductions over the ~~recent reduction in headcount, partially offset by the decision~~past year, as we have changed our focus from small molecule drugs to ~~build out internal administration and finance functions at Axovant and reduce our utilization of RSI services.~~gene therapies.

Results of Operations for the Three and Six-Months Ended September 30, ~~2018~~2019 and ~~2017~~2018

The following table summarizes our results of operations for the three and six-months ended September 30, ~~2018~~2019 and ~~2017~~2018 (in thousands):


	Three Months Ended September 30,							Six Months Ended September 30,							Three Months Ended September 30,									Six Months Ended September 30,
	2018		2017		Change			2018		2017		Change			2019			2018			Change			2019			2018			Change
Operating expenses:
Research and development expenses
(includes total share-based compensation expense (benefit) of $(1,128) and $5,916 for the three months ended September 30, 2018 and 2017 and $1,389 and $12,172 for the six months ended September 30, 2018 and 2017, respectively)	$	21,502	$	38,555	$	(17,053	)	$	58,920	$	82,267	$	(23,347	)
(includes share-based compensation expense (benefit) of $409 and $(1,128) for the three months ended September 30, 2019 and 2018 and $1,130 and $1,389 for the six months ended September 30, 2019 and 2018, respectively)															$	6,833		$	21,502		$	(14,669	)	$	27,923		$	58,920		$	(30,997	)
General and administrative expenses
(includes total share-based compensation expense of $3,585 and $9,424 for the three months ended September 30, 2018 and 2017 and $6,927 and $18,768 for the six months ended September 30, 2018 and 2017, respectively)	10,622		30,112		(19,490		)	22,376		51,630		(29,254		)
(includes share-based compensation expense of $482 and $3,585 for the three months ended September 30, 2019 and 2018 and $1,896 and $6,927 for the six months ended September 30, 2019 and 2018, respectively)															5,051			10,622			(5,571		)	11,519			22,376			(10,857		)
Total operating expenses	$	32,124	$	68,667	$	(36,543	)	$	81,296	$	133,897	$	(52,601	)	11,884			32,124			(20,240		)	39,442			81,296			(41,854		)
Interest expense															1,313			1,932			(619		)	2,871			3,902			(1,031		)
Other (income) expense															560			(315		)	875			(537		)	353			(890		)
Loss before income tax expense															(13,757		)	(33,741		)	19,984			(41,776		)	(85,551		)	43,775
Income tax expense															127			94			33			165			172			(7		)
Net loss															$	(13,884	)	$	(33,835	)	$	19,951		$	(41,941	)	$	(85,723	)	$	43,782

Research and Development Expenses

Our research and development expenses during the three and six-months ended September 30, ~~2018~~2019 and ~~2017~~2018 consisted of the following (in thousands):


	Three Months Ended September 30,								Six Months Ended September 30,								Three Months Ended September 30,									Six Months Ended September 30,
	2018			2017		Change			2018			2017		Change			2019			2018			Change			2019			2018		Change
Program-specific costs:
AXO-Lenti-PD	$	1,198		$	—	$	1,198		$	26,330		$	—	$	26,330		$	2,723		$	1,198		$	1,525		$	17,123		$	26,330	$	(9,207	)
AXO-AAV-OPMD	11,747			—		11,747			11,747			—		11,747			367			11,747			(11,380		)	2,143			11,747		(9,604		)
AXO-AAV-GM1 and AXO-AAV-GM2																	1,702			—			1,702			2,702			—		2,702
Intepirdine	964			20,923		(19,959		)	2,261			47,730		(45,469		)	(957		)	964			(1,921		)	(957		)	2,261		(3,218		)
Nelotanserin	4,206			3,579		627			7,560			6,793		767			101			4,206			(4,105		)	212			7,560		(7,348		)
RVT-103	1			369		(368		)	2			612		(610		)
RVT-104	3			285		(282		)	(73		)	634		(707		)
Unallocated internal costs:
Share-based compensation	(1,128		)	5,916		(7,044		)	1,389			12,172		(10,783		)
Share-based compensation expense (benefit)																	409			(1,128		)	1,537			1,130			1,389		(259		)
Personnel-related	2,881			4,755		(1,874		)	4,417			8,596		(4,179		)	1,534			2,881			(1,347		)	3,684			4,417		(733		)
Services agreements	107			295		(188		)	2,352			1,387		965			—			107			(107		)	—			2,352		(2,352		)
Other	1,523			2,433		(910		)	2,935			4,343		(1,408		)	954			1,527			(573		)	1,886			2,864		(978		)
Total research and development expenses	$	21,502		$	38,555	$	(17,053	)	$	58,920		$	82,267	$	(23,347	)	$	6,833		$	21,502		$	(14,669	)	$	27,923		$	58,920	$	(30,997	)



Bermuda		98-1333697
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Suite 1, 3rd Floor 11-12 St. James's Square London SW1Y 4LB, United Kingdom		Not Applicable
(Address of principal executive offices)		(Zip Code)



Title of each Class	Trading Symbol	Name of each exchange on which registered
Common Shares, par value $0.00001 per share	AXGT	The Nasdaq Stock Market LLC



	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets as of September 30, ~~2018~~2019 and March 31, ~~2018~~2019	3
Condensed Consolidated Statements of Operations for the Three and Six-Months Ended September 30, ~~2018~~2019 and ~~2017~~2018	4
Condensed Consolidated Statements of Comprehensive Loss for the Three and Six-Months Ended September 30, ~~2018~~2019 and ~~2017~~2018	5
Condensed Consolidated ~~Statement~~Statements of Shareholders’ Equity for the ~~Six Months~~Three and Six-Months Ended September 30, 2019 and 2018	6
Condensed Consolidated Statements of Cash Flows for the Six Months Ended September 30, ~~2018~~2019 and ~~201~~20187	7
Notes to Condensed Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	1921
Item 3. Quantitative and Qualitative Disclosures About Market Risk	3736
Item 4. Controls and Procedures	3736
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	38
Item 1A. Risk Factors	39
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	8587
Item 3. Defaults Upon Senior Securities	8587
Item 4. Mine Safety Disclosures	8587
Item 5. Other Information	8587
Item 6. Exhibits	8688

SIGNATURES	8789


	September 30, 2018			March 31, 2018			September 30, 2019			March 31, 2019
Assets
Current assets:
Cash	$	90,726		$	154,337
Cash and cash equivalents							$	60,255		$	106,999
Prepaid expenses and other current assets	4,095			2,174			4,503			5,859
Income tax receivable	1,530			1,751			2,071			1,726
Total current assets	96,351			158,262			66,829			114,584
Long-term investment							5,871			5,871
Other non-current assets	4,324			—			46			973
Operating lease right-of-use assets							2,237			—
Property and equipment, net	1,513			2,524			1,081			1,278
Total assets	$	102,188		$	160,786		$	76,064		$	122,706

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	1,817		$	3,949		$	1,567		$	1,698
Due to RSL, RSI and RSG	2,859			1,011
Accrued expenses	24,315			31,862			21,427			20,619
Current portion of operating lease liabilities							1,672			—
Current portion of long-term debt	20,009			9,753			22,613			21,182
Total current liabilities	49,000			46,575			47,279			43,499
Operating lease liabilities, net of current portion							3			—
Long-term debt	33,309			42,925			11,742			22,994
Total liabilities	82,309			89,500			59,024			66,493

Commitments and contingencies (Note 11)

Shareholders’ equity:
Common shares, par value $0.00001 per share, 1,000,000,000 shares authorized, 122,175,480 and 107,788,074 issued and outstanding at September 30, 2018 and March 31, 2018, respectively	1			1
Common shares, par value $0.00001 per share, 1,000,000,000 shares authorized, 22,791,669 and 22,779,891 issued and outstanding at September 30, 2019 and March 31, 2019, respectively							—			—
Additional paid-in capital	661,980			628,110			744,506			741,318
Accumulated deficit	(642,674		)	(556,951		)	(727,957		)	(686,016		)
Accumulated other comprehensive income	572			126			491			911
Total shareholders’ equity	19,879			71,286			17,040			56,213
Total liabilities and shareholders’ equity	$	102,188		$	160,786		$	76,064		$	122,706



		AXOVANT ~~SCIENCES~~GENE THERAPIES LTD.


		By:	/s/ ~~Gregory Weinhoff~~David Nassif
Date:	November ~~7, 2018~~8, 2019	Name:	~~Gregory Weinhoff~~ ~~(Duly Authorized Officer and Principal Financial Officer)~~ David Nassif
		Title:	Principal Financial Officer and Principal Accounting Officer



Exercise price	$	12.04
Share price on date of issuance	$	11.96
Volatility	77.6		%
Risk-free interest rate	2.27		%
Expected dividend yield	—		%
Contractual term (in years)	7



	Balance as of March 31, 2018		Expenses, net		Cash			Non-cash		Balance as of September 30, 2018
Employee severance and other personnel benefits	$	2,460	$	—	$	(1,573	)	$	—	$	887



	Total		2019		2020		2021
Rent obligations, net of prepayments	$	3,576	$	895	$	1,791	$	890



Large accelerated filer	o	Accelerated filer	x



Non-accelerated filer	o	Smaller reporting company	o x