UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

~~FORM10-Q~~

FORM 10-Q

(Mark One)


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

For the quarterly period ended ~~June 30, 2018~~March 31, 2024


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

For the transition period fromto

Commission File Number:001-38537

AVROBIO, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware		81-0710585
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

One ~~Kendall Square~~Broadway ~~Building 300, Suite 201~~Fourteenth Floor Cambridge MA, Massachusetts		~~02139~~ 02142
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code:~~(617)~~ (617) 914-8420

100 Technology Square

Sixth Floor

Cambridge, Massachusetts02139

(Former name, former address and former fiscal year, if changed since last report)

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

Title of each class

Trading

Symbol(s)

Name of each exchange

on which registered

Common Stock, $0.0001 par value per share

AVRO

Nasdaq Global Select Market

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

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

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


Large accelerated filer	☐	☐	Accelerated filer	☐
Non-accelerated filer	☒
~~Non-accelerated~~ ~~filer~~		~~☒ (Do not check if a smaller reporting company)~~	Smaller reporting company	☐ ☒

			Emerging growth company	☒ ☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act). Yes ☐☒ No ☒☐

As of ~~July 31, 2018,~~May 2, 2024, the registrant had ~~23,936,838~~44,893,750 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents


				Page
PART I.	FINANCIAL INFORMATION	~~FINANCIAL INFORMATION~~1
Item 1.		Condensed Consolidated Financial Statements (Unaudited)				1
		~~Condensed Consolidated~~ Balance Sheets			1
		~~Condensed Consolidated~~ Statements of Operations and Comprehensive Loss			2
		~~Condensed Consolidated~~ Statements of Stockholders’ Equity	3
	Statements of Cash Flows			3	4
		Notes to ~~Unaudited Condensed~~ Consolidated Financial Statements			4	5
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			22	17
Item 3.		Quantitative and Qualitative Disclosures About Market Risk			32	25
Item 4.		Controls and Procedures			32	25
PART II.	OTHER INFORMATION	~~OTHER INFORMATION~~26
Item 1.		Legal Proceedings			34	26
Item 1A.		Risk Factors			34	26
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds			69	83
Item 3.		Defaults Upon Senior Securities			69	83
Item 4.		Mine Safety Disclosures			69	83
Item 5.		Other Information			69	83
Item 6.		Exhibits			69	84
	Signatures			70	85

Summary Risk Factors

The business of AVROBIO, Inc., or AVROBIO, is subject to numerous risks and uncertainties that you should be aware of in evaluating AVROBIO’s business. These risks include, but are not limited to, the following, including risks related to the proposed merger (as defined below) with Tectonic Therapeutic, Inc., a Delaware corporation, or Tectonic:

•

The exchange ratio (as defined below) will not change or otherwise be adjusted based on the market price of AVROBIO common stock as the exchange ratio depends on AVROBIO’s net cash at the closing and not the market price of AVROBIO common stock, so the merger consideration at the closing may have a greater or lesser value than at the time the Merger Agreement (as defined below) was signed.

•

Failure to complete the merger may result in either AVROBIO or Tectonic paying a termination fee to the other party, and could harm the AVROBIO common stock price and future business and operations of each company.

•

Some AVROBIO and Tectonic directors and executive officers have interests in the merger that are different from AVROBIO stockholders and that may influence them to support or approve the merger without regard to AVROBIO stockholders’ interests.

•

AVROBIO stockholders and Tectonic stockholders may not realize a benefit from the merger commensurate with the ownership dilution they will experience in connection with the merger, including the issuance of Tectonic common stock in the private financings (as defined below).

•

If the merger is not completed, AVROBIO’s stock price may decline significantly.

•

AVROBIO has incurred net losses since inception, expects to incur net losses for the foreseeable future and may never achieve or maintain profitability.

•

If AVROBIO decides to resume development of its product candidates, AVROBIO will need additional funding, which may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force AVROBIO to delay, limit or terminate AVROBIO’s product development efforts or other operations.

•

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

•

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

•

AVROBIO’s product candidates and the process for administering AVROBIO’s product candidates may cause undesirable side effects or have other properties that, should AVROBIO resume development of its product candidates, could delay or prevent their regulatory approval, limit their commercial potential or result in significant negative consequences following any potential marketing approval.

•

Success in preclinical studies or early clinical trials may not be indicative of results obtained in later trials, should AVROBIO resume development of its product candidates.

•

Should AVROBIO resume development of its product candidates, AVROBIO may find it difficult to enroll patients in AVROBIO’s clinical trials, which could delay or prevent AVROBIO from proceeding with clinical trials of AVROBIO’s product candidates.

•

Should AVROBIO resume development of its product candidates, AVROBIO may encounter substantial delays in resuming its clinical trials or AVROBIO may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities.

•

Should AVROBIO resume development of its product candidates, even if AVROBIO completes the necessary preclinical and clinical studies, AVROBIO cannot predict whether or when AVROBIO would be able to obtain regulatory approval to commercialize a product candidate, and any approval could be for a narrower indication than anticipated.

•

AVROBIO’s commercially-scalable plato® platform has been used in only two of AVROBIO’s clinical trials and clinical development has been halted.

•

AVROBIO faces significant competition in AVROBIO’s industry and, should AVROBIO resume development of its product candidates, there can be no assurance that AVROBIO’s product candidates, if approved, will achieve acceptance in the market over existing established therapies. In addition, AVROBIO’s competitors may develop therapies that are more advanced or effective than AVROBIO’s, which may adversely affect AVROBIO’s ability to successfully market or

commercialize any of AVROBIO’s product candidates, should AVROBIO resume development of AVROBIO’s product candidates.
•
Gene therapies are novel, complex and difficult to manufacture. Should AVROBIO resume development of its product candidates, AVROBIO could experience production problems that result in delays in AVROBIO’s development or commercialization programs or otherwise adversely affect AVROBIO’s business.
•
Should AVROBIO resume development of its product candidates, AVROBIO expects to rely on third parties to conduct some or all aspects of AVROBIO’s vector production, product manufacturing, protocol development, research and preclinical and clinical testing, and these third parties may not perform satisfactorily.
•
AVROBIO has historically relied, and, should AVROBIO resume development of its product candidates, expects to continue to rely, on sole source suppliers for AVROBIO’s automated, closed cell processing system; vector supply; plasmid supply; cell culture media supply; and drug product manufacturing. In addition, AVROBIO is dependent on a limited number of suppliers for some of AVROBIO’s other components and materials used in AVROBIO’s product candidates.
•
Should AVROBIO resume development of its product candidates, third-party claims of intellectual property infringement may prevent or delay AVROBIO’s development and commercialization efforts.
•
AVROBIO’s rights to develop and commercialize its product candidates, should AVROBIO resume development of its product candidates, are subject, in part, to the terms and conditions of licenses granted to AVROBIO by others.
•
If AVROBIO experiences material weaknesses or deficiencies in the future, or otherwise fails to establish and maintain effective internal controls, AVROBIO may be unable to produce timely and accurate financial statements, and AVROBIO may conclude that its internal control over financial reporting is not effective, which could adversely impact AVROBIO’s investors’ confidence and AVROBIO’s stock price.
•
AVROBIO’s failure to meet Nasdaq Global Select Market’s, or Nasdaq, continued listing requirements could result in a delisting of AVROBIO common stock.
The summary risk factors described above should be read together with the text of the full risk factors below, in the section entitled “Risk Factors” and the other information set forth in this Quarterly Report on Form 10-Q, including AVROBIO’s consolidated financial statements and the related notes, as well as in other documents that AVROBIO files with the Securities and Exchange Commission, or the SEC. The risks summarized above or described in full below are not the only risks that AVROBIO faces. Additional risks and uncertainties not precisely known to AVROBIO, or that AVROBIO currently deems to be immaterial may also materially adversely affect AVROBIO’s business, financial condition, results of operations and future growth prospects.
iii
Note Regarding Forward-looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements may be identified by such forward-looking terminology as “aims,” “anticipates,” “believes,” “continue,” “could,” “designed to,” “estimates,” “expects,” “forecasts,” “goal,” “intends,” “may,” “plans,” “possible,” “potential,” “predicts,” “projects,” “seeks,” “strives,” “should,” “will,” and similar expressions or the negative of these terms. AVROBIO’s forward-looking statements are based on a series of expectations, assumptions, estimates and projections about AVROBIO, are not guarantees of future results or performance and involve substantial risks and uncertainty. AVROBIO may not actually achieve the plans, intentions or expectations disclosed in AVROBIO’s forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in these forward-looking statements. AVROBIO’s business and its forward-looking statements involve substantial known and unknown risks and uncertainties, including the risks and uncertainties inherent in AVROBIO’s statements regarding:
•
the risk that the conditions to closing of the potential merger with Tectonic are not satisfied, including failure to obtain stockholder approval for the transactions;
•
AVROBIO’s ability to meet expectations regarding the timing and completion of the merger;
•
uncertainties as to the timing and costs of the consummation of the transactions contemplated by the Merger Agreement and the ability of AVROBIO and Tectonic to consummate the transaction, including the private financings;
•
the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the Merger Agreement;
•
the fact that under the terms of the Merger Agreement, AVROBIO is restrained from soliciting other acquisition proposals during the pendency of the merger, except in certain circumstances;
•
the effect of the announcement or pendency of the merger on AVROBIO’s business relationships, operating results and business generally, including disruption of AVROBIO’s management’s attention from ongoing business operations due to the merger and potential adverse reactions or changes to business relationships resulting from the announcement or completion of the transactions;
•
the risk that the Merger Agreement may be terminated in circumstances that require AVROBIO to pay a termination fee;
•
the outcome of any legal proceedings that may be instituted against AVROBIO, Tectonic or any of each company’s respective directors or officers related to the Merger Agreement or the transactions contemplated thereby;
•
the impact of the COVID-19 pandemic or any other public health crisis on AVROBIO’s clinical trial programs, should AVROBIO resume development of its product candidates, clinical supply and business generally;
•
should AVROBIO resume development of its product candidates, the timing, progress and results of preclinical studies and clinical trials for AVROBIO’s programs and product candidates, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the trials will become available and AVROBIO’s research and development programs;
•
should AVROBIO resume development of its product candidates, the existence or absence of side effects or other properties relating to AVROBIO’s product candidates which could delay or prevent their regulatory approval, limit their commercial potential, or result in significant negative consequences following any potential marketing approval;
•
the durability of effects from AVROBIO’s product candidates, should AVROBIO resume development of its product candidates;
•
the timing, scope or likelihood of regulatory filings and approvals, should AVROBIO resume development of its product candidates;
•
should AVROBIO resume development of its product candidates, the anticipated regulatory pathway for its product candidates and planned interactions with regulatory agencies;
•
should AVROBIO resume development of its product candidates, AVROBIO’s ability to develop and advance product candidates into, and successfully complete, clinical studies;
•
should AVROBIO resume development of its product candidates, AVROBIO’s expectations regarding the size of the patient populations for its product candidates, if approved for commercial use;
•
the implementation of AVROBIO’s business model and its strategic plans for its business, product candidates, should AVROBIO resume development of its product candidates, technology and plato platform;
iv
•
should AVROBIO resume development of its product candidates, AVROBIO’s commercialization, marketing and manufacturing capabilities and strategy;
•
should AVROBIO resume development of its product candidates, the pricing and reimbursement of AVROBIO’s product candidates, if approved;
•
should AVROBIO resume development of its product candidates, the scalability and commercial viability of AVROBIO’s manufacturing methods and processes, including AVROBIO’s move to a closed, automated system;
•
should AVROBIO resume development of its product candidates, the rate and degree of market acceptance and clinical utility of its product candidates, in particular, and gene therapy, in general;
•
AVROBIO’s ability to establish or maintain collaborations or strategic relationships or obtain additional funding;
•
AVROBIO’s competitive position;
•
the scope of protection AVROBIO and/or its licensors are able to establish and maintain for intellectual property rights covering its product candidates, should AVROBIO resume development of its product candidates, as well as any statements as to whether AVROBIO does or does not infringe, misappropriate or otherwise violate any third-party intellectual property rights;
•
AVROBIO’s financial performance;
•
AVROBIO’s ability to retain the continued service of its key professionals and, should AVROBIO resume development of its product candidates, to identify, hire and retain additional qualified professionals;
•
should AVROBIO resume development of its product candidates, developments and projections relating to its competitors and industry, including other lentiviral or HSC gene therapy companies;
•
AVROBIO’s expectations related to the use of its cash reserves;
•
AVROBIO’s estimates regarding expenses, future revenue, capital requirements and needs for additional financing;
•
AVROBIO’s ability to avoid any findings of material weaknesses or significant deficiencies in the future;
•
AVROBIO’s ability to satisfy the continued listing requirements of the Nasdaq, including a minimum bid price, and to maintain its common stock listing on Nasdaq or any stock exchange;
•
the impact of laws and regulations, including without limitation recently enacted tax reform legislation; and
•
other risks and uncertainties, including those listed under the caption “Risk Factors.”
All of AVROBIO’s forward-looking statements are as of the date of this Quarterly Report on Form 10-Q only. In each case, actual results may differ materially from such forward-looking information. AVROBIO can give no assurance that such expectations or forward-looking statements will prove to be correct. An occurrence of or any material adverse change in one or more of the risk factors or risks and uncertainties referred to in this Quarterly Report on Form 10-Q or included in AVROBIO’s other public disclosures or its other periodic reports or other documents or filings filed with or furnished to the SEC could materially and adversely affect AVROBIO’s business, prospects, financial condition and results of operations. Except as required by law, AVROBIO does not undertake or plan to update or revise any such forward-looking statements to reflect actual results, changes in plans, assumptions, estimates or projections or other circumstances affecting such forward-looking statements occurring after the date of this Quarterly Report on Form 10-Q, even if such results, changes or circumstances make it clear that any forward-looking information will not be realized. Any public statements or disclosures by AVROBIO following this Quarterly Report on Form 10-Q that modify or impact any of the forward-looking statements contained in this Quarterly Report on Form 10-Q will be deemed to modify or supersede such statements in this Quarterly Report on Form 10-Q.
Note Regarding Trademarks
All brand names or trademarks appearing in this Quarterly Report are the property of their respective holders. Unless the context requires otherwise, references in this Quarterly Report to the “Company,” “AVROBIO,” “we,” “us,” and “our” refer to AVROBIO, Inc.
v

PART I—FINANCIAL INFORMATION

~~Item 1.~~

~~Financial Statements.~~

~~AVROBIO, INC.~~Item 1. Financial Statements.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(~~amounts~~ in thousands, except ~~share and~~ per share data)


	March 31, 2024			December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	90,481		$	98,020
Restricted cash		283			283
Prepaid expenses and other current assets		1,074			1,958
Total current assets		91,838			100,261
Operating lease assets		110			432
Restricted cash, net of current portion		400			400
Total assets	$	92,348		$	101,093
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	243		$	27
Accrued expenses and other current liabilities		3,042			5,449
Operating lease liabilities		224			878
Total current liabilities		3,509			6,354
Total liabilities		3,509			6,354
Commitments and contingencies (Note 7)
Stockholders’ equity:
Preferred stock, $0.0001 par value; 10,000 shares authorized and no shares issued or outstanding as of March 31, 2024 and December 31, 2023		—			—
Common stock, $0.0001 par value; 150,000 shares authorized; 44,882 and 44,654 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively		4			4
Additional paid-in capital		572,918			572,010
Accumulated deficit		(484,083	)		(477,275	)
Total stockholders’ equity		88,839			94,739
Total liabilities and stockholders’ equity	$	92,348		$	101,093

   June 30,
2018 December 31,
2017
Assets

Current assets:

Cash and cash equivalents
   $ 155,015 $ 5,963
Prepaid expenses and other current assets
   1,132 345


Total current assets
   156,147 6,308
Property and equipment, net
   2,050 349
Other assets
   533 365


Total assets
   $ 158,730 $ 7,022


Liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)

Current liabilities:

Accounts payable
   $ 4,193 $ 527
Accrued expenses and other current liabilities
   5,438 2,098


Total current liabilities
   9,631 2,625
Warrant to purchase redeemable convertible preferred stock
   —   35
Derivative liability
   —   371
Deferred rent, net of current portion
   781 126
Other long-term liability
   —   500


Total liabilities
   10,412 3,657


Commitments and contingencies (Note 13)

Redeemable convertible preferred stock (Note 8)
   —   26,500
Stockholders’ equity (deficit):

Common stock, $0.0001 par value; 150,000,000 and 51,000,000 shares authorized as of June 30, 2018 and December 31, 2017, respectively; 23,936,838 and 2,581,474 shares issued as of June 30, 2018 and December 31, 2017, respectively; 23,722,049 and 2,305,173 shares outstanding as of June 30, 2018 and December 31, 2017, respectively
   2 —
Additionalpaid-in capital
   192,443 339
Accumulated deficit
   (44,127 ) (23,474 )


Total stockholders’ equity (deficit)
   148,318 (23,135 )


Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)
   $ 158,730 $ 7,022

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

~~AVROBIO, INC.~~

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE ~~LOSS~~INCOME (LOSS)

(unaudited)

(~~amounts~~ in thousands, except ~~share and~~ per share data)

   Three Months Ended June 30, Six Months Ended June 30,
   2018 2017 2018 2017
Operating expenses:

Research and development
   $ 7,407 $ 1,881 $ 13,054 $ 3,315
General and administrative
   2,140 661 4,281 1,271


Total operating expenses
   9,547 2,542 17,335 4,586


Loss from operations
   (9,547 ) (2,542 ) (17,335 ) (4,586 )


Other income (expense):

Interest income
   234 11 392 15
Change in fair value of preferred stock warrant liability
   (150 ) —   (162 ) —
Change in fair value of derivative liability
   (1,042 ) (3 ) (1,629 ) (35 )
Other expense
   (2 ) —   (15 ) (5 )


Total other income (expense), net
   (960 ) 8 (1,414 ) (25 )


Net loss
   $ (10,507 ) $ (2,534 ) $ (18,749 ) $ (4,611 )


Comprehensive loss
   $ (10,507 ) $ (2,534 ) $ (18,749 ) $ (4,611 )


Reconciliation of net loss to net loss attributable to common stockholders:

Net loss
   $ (10,507 ) $ (2,534 ) $ (18,749 ) $ (4,611 )
Accretion of issuance costs on redeemable convertible preferred stock
   —   —   (2,243 ) (47 )


Net loss attributable to common stockholders—basic and diluted
   $ (10,507 ) $ (2,534 ) $ (20,992 ) $ (4,658 )


Net loss per share attributable to common stockholders — basic and diluted (Note 12)
   $ (2.98 ) $ (1.15 ) $ (7.16 ) $ (2.12 )


Weighted-average number of common shares used in computing net loss per share attributable to common stockholders—basic and diluted
   3,529,269 2,202,735 2,930,358 2,192,283


	Three Months Ended March 31,
	2024			2023
Operating expenses:
Research and development	$	683		$	17,333
General and administrative		7,258			7,887
Total operating expenses		7,941			25,220
Loss from operations		(7,941	)		(25,220	)
Other income:
Interest income, net		1,146			248
Other (expense) income, net		(13	)		15
Total other income, net		1,133			263
Net loss and comprehensive loss attributable to common stockholders—basic and diluted	$	(6,808	)	$	(24,957	)
Earnings per share:
Net loss per share — basic and diluted	$	(0.15	)	$	(0.57	)
Shares used in computing earnings per share:
Weighted-average number of common shares outstanding — basic and diluted		44,791			44,037

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

~~AVROBIO, INC.~~

CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~STOCKHOLDERS’ EQUITY

(unaudited)

(~~amounts~~ in thousands)

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

Net loss
   $ (18,749 ) $ (4,611 )
Adjustments to reconcile net loss to net cash used in operating activities:

Stock-based compensation expense
   566 64
Depreciation and amortization expense
   66 15
Impairment loss of property and equipment
   235 —
Amortization of deferred offering costs
   22 2
Deferred rent expense
   (23 ) 135
Change in fair value of preferred stock warrant liability
   162 —
Change in fair value of derivative liability
   1,629 35
Changes in operating assets and liabilities:

Prepaid expenses and other current assets
   (768 ) (176 )
Other assets
   (300 ) (3 )
Accounts payable
   3,029 (545 )
Accrued expenses and other current liabilities
   (98 ) 626


Net cash used in operating activities
   (14,229 ) (4,458 )


Cash flows from investing activities:

Change in restricted cash
   24 —
Purchases of property and equipment
   (424 ) (62 )


Net cash used in investing activities
   (400 ) (62 )


Cash flows from financing activities:

Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs
   58,258 3,468
Payments of issuance costs on debt facility
   —   (32 )
Proceeds from issuance of common shares upon completion of initial public offering, net of offering costs
   105,423 —


Net cash provided by financing activities
   163,681 3,436


Net increase (decrease) in cash and cash equivalents
   149,052 (1,084 )
Cash and cash equivalents at beginning of period
   5,963 5,357


Cash and cash equivalents at end of period
   $ 155,015 $ 4,273


Supplemental disclosure ofnon-cash investing and financing activities:

Purchases of property and equipment included in accounts payable
   $ 756 $ 240
Purchases of property and equipment paid for by landlord
   $ 842 $ —
Deferred offering costs included in accrued expenses
   $ 1,241 $ 11
Accretion of issuance costs related to redeemable convertible preferred stock
   $ 2,240 $ 47
Issuance of warrants associated with debt facility
   $ —   $ 18
Property and equipment held for sale
   $ 19 $ —


	Three Months Ended March 31, 2023
	Common Stock				Additional		Accumulated			Total Stockholders’
	Shares		Amount		Paid-in Capital		Deficit			Equity
Balance as of December 31, 2022		43,916	$	4	$	564,798	$	(489,432	)	$	75,370
Vesting of restricted stock units		105		—		—		—			—
Exercise of stock options		46		—		42		—			42
Issuance of common stock under the 2018 employee stock purchase plan		21		—		13		—			13
Stock-based compensation expense		—		—		2,530		—			2,530
Net loss		—		—		—		(24,957	)		(24,957	)
Balance as of March 31, 2023		44,088	$	4	$	567,383	$	(514,389	)	$	52,998


	Three Months Ended March 31, 2024
	Common Stock				Additional		Accumulated			Total Stockholders’
	Shares		Amount		Paid-in Capital		Deficit			Equity
Balance as of December 31, 2023		44,654	$	4	$	572,010	$	(477,275	)	$	94,739
Vesting of restricted stock units		191		—		—		—			—
Exercise of stock options		33		—		26		—			26
Issuance of common stock under the 2018 employee stock purchase plan		4		—		4		—			4
Stock-based compensation expense		—		—		878		—			878
Net loss		—		—		—		(6,808	)		(6,808	)
Balance as of March 31, 2024		44,882	$	4	$	572,918	$	(484,083	)	$	88,839

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

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)


	Three Months Ended March 31,
	2024			2023
Cash flows from operating activities:
Net loss	$	(6,808	)	$	(24,957	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		878			2,530
Depreciation and amortization expense		—			328
Non-cash interest expense		—			80
Non-cash lease expense		322			592
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		884			2,187
Accounts payable		216			207
Current and non-current operating lease liabilities		(654	)		(600	)
Accrued expenses and other current liabilities		(2,407	)		(651	)
Net cash used in operating activities		(7,569	)		(20,284	)
Cash flows from investing activities:
Purchases of property and equipment		—			(8	)
Net cash used in investing activities		—			(8	)
Cash flows from financing activities:
Proceeds from exercise of stock options		26			42
Proceeds from issuance of ESPP shares		4			13
Net cash provided by financing activities		30			55
Net decrease in cash, cash equivalents and restricted cash		(7,539	)		(20,237	)
Cash, cash equivalents and restricted cash at beginning of period		98,703			92,846
Cash, cash equivalents and restricted cash at end of period	$	91,164		$	72,609
Supplemental disclosure of non-cash investing and financing activities:
Interest paid	$	—		$	463
Lease liability arising from obtaining right-of-use assets		—			2,392
Reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets:
Cash and cash equivalents, end of period	$	90,481		$	72,326
Restricted cash		683			283
Cash, cash equivalents and restricted cash, end of period	$	91,164		$	72,609

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

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~Three and Six Months Ended June 30, 2018 and 2017~~

(~~amounts~~ in thousands, except share and per share data)

1. Nature of the Business ~~and Basis of Presentation~~

AVROBIO, Inc. (the “Company” or “AVROBIO”) is a ~~clinical stage~~ gene therapy company which has been focused on developing potentially curative~~ex vivo~~ ~~lentiviral~~ hematopoietic stem cell, or HSC, gene therapies to treat rare diseases following a single ~~dose.~~dose treatment regimen.

On July 12, 2023, following a comprehensive review of the Company’s business by its Board of Directors (the “Board”), the Company announced its intention to halt development of its programs and explore strategic alternatives focused on maximizing stockholder value, which may include, but are not limited to, an acquisition, a merger, business combination or divestiture. The decision was not related to any safety or medical issues or negative regulatory feedback related to the Company’s programs. On January 30, 2024, the Company entered into the Agreement and Plan of Merger and Reorganization (the “Merger Agreement”), with Alpine Merger Subsidiary, Inc. (“Merger Sub”), a direct, wholly owned subsidiary of the Company, and Tectonic Therapeutic, Inc. (“Tectonic”) pursuant to which Merger Sub will merge with and into Tectonic, with Tectonic surviving as a wholly-owned subsidiary of the Company (the “Merger”).

The Company is subject to risks and uncertainties including, should it resume development of its product candidates, risks and uncertainties common to early-stage companies in the biotechnology industry, including but not limited to, risks associated with completing preclinical studies and clinical trials, receiving regulatory approvals for product candidates, development by competitors of new biopharmaceutical products, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. ~~Product~~Should the Company resume development of its product candidates, ~~currently under development will require~~ significant additional research and development efforts, including preclinical and clinical testing and regulatory approval, prior to ~~commercialization.~~commercialization, would be required. These efforts would require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even if the Company’s product development efforts are successful, should the Company resume development of its product candidates, it is uncertain when, if ever, the Company ~~will~~would realize revenue from product sales.

In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), 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 that the consolidated financial statements are issued.

The Company has devoted substantially all of its efforts to research and development, business planning, acquiring operating assets, seeking protection for its technology and product candidates, and raising capital. Since inception, the Company has had recurring losses and has funded its operations through sales of preferred stock and common stock, a term loan facility and the sale of the Company’s cystinosis gene therapy program (designated AVR-RD-04) and all other assets of the Company specifically related to this program. As of March 31, 2024, the Company had an accumulated deficit of $484,083. The Company expects that its cash and cash equivalents of $90,481 as of March 31, 2024 will be sufficient to fund current planned operations and capital expenditure requirements for at least the next twelve months from the filing date of this Quarterly Report on Form 10-Q with the Securities and Exchange Commission (“SEC”).

On May 19, 2023, the Company entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Novartis Pharma AG and Novartis Pharmaceuticals Corporation (collectively, “Novartis”), providing for the sale of the Company’s cystinosis gene therapy program (designated AVR-RD-04) and all other assets of the Company specifically related to this program. The aggregate consideration to the Company consisted of a cash payment of $87,500 upon closing of the transaction. The Company completed the Asset Sale on June 9, 2023 and recognized $83,736 as a gain on asset sale, net of $3,764 transaction costs, in the condensed consolidated statement of operations and comprehensive income (loss) for the three months ended March 31, 2024. See Note 3 for further discussion.

In July 2023, the Board approved a reduction in the Company’s workforce by approximately 50% across different areas and functions in the Company (the “July 2023 Workforce Reduction”). The July 2023 Workforce Reduction was substantially completed by the end of July 2023. The Company informed affected employees in the July 2023 Workforce Reduction on July 12, 2023. Since the date of the July 2023 Workforce Reduction, the Company’s remaining employees have primarily focused on activities relating to halting further development of the Company’s programs, the pursuit of strategic alternatives, and the provision of services under the previously disclosed Separation Services Agreement between the Company and Novartis in connection with the sale to Novartis of the Company’s cystinosis gene therapy program. The Company’s remaining workforce was further reduced by 11 employees in a workforce reduction implemented effective as of October 31, 2023 (the “October 2023 Workforce Reduction”). The Company’s workforce was further reduced by 8 employees in the December 2023 Workforce Reduction effective as of December 31, 2023 (the

AVROBIO, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(in thousands, except share and per share data)
“December 2023 Workforce Reduction”). Affected employees in the July 2023 Workforce Reduction, October 2023 Workforce Reduction, December 2023 Workforce Reduction, and February 2024 Workforce Reduction were offered separation benefits, including severance payments. See Note 12 for further discussion.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements (the “unaudited condensed consolidated financial statements”) have been prepared in conformity with accounting principles generally accepted in the United States of America ~~(GAAP)~~(“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted accounting principles as found in the Accounting Standards Codification ~~(ASC)~~(“ASC”) and ~~Accounting Standards Update (ASU)~~ASU of the ~~Financial Accounting Standards Board (FASB).~~FASB.

The unaudited condensed consolidated ~~interim~~ financial statements have been prepared on the same basis as the audited annual consolidated financial statements as of and for the year ended December 31, ~~2017,~~2023, and, in the opinion of management, reflect all adjustments, consisting of normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of ~~June 30, 2018,~~March 31, 2024, and the results of its operations for the three months ended March 31, 2024 and 2023, its statements of stockholders’ equity for the three months ended March 31, 2024 and 2023 and its statement of cash flows for the three ~~and six~~ months ended ~~June 30, 2018~~March 31, 2024 and ~~2017.~~2023.

The results for the ~~six~~three months ended ~~June 30, 2018~~March 31, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, ~~2018,~~2024, any other interim periods, or any future year or period. These interim financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, ~~2017,~~2023, and the notes thereto, which are included ~~elsewhere~~ in the Company’s ~~final prospectus~~Annual Report on Form 10-K for ~~its initial public offering (“IPO”),~~the year ended December 31, 2023, filed with the ~~Securities and Exchange Commission (“SEC”) pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended,~~SEC on ~~June 21, 2018 (the “Prospectus”).~~March 14, 2024.

The ~~accompanying~~unaudited condensed consolidated financial statements reflect the application of certain significant accounting policies as described below and elsewhere in these notes to the unaudited condensed consolidated financial statements. As of ~~June 30, 2018,~~March 31, 2024, there have been no changes to the Company’s significant accounting policies ~~and estimates, which are detailed~~as described in the Company’s ~~Prospectus, have not changed.~~

~~Reverse Stock Split~~

~~On June 1, 2018, the Board approved a1-for-4.312~~ ~~reverse stock split of the Company’s common stock. The reverse stock split was approved by the stockholders~~Annual Report on June 7, 2018 and became effective on June 7, 2018. Stockholders entitled to fractional shares as a result of the reverse stock split will receive a cash payment in lieu of receiving fractional shares. All share and per share data shown in the accompanying unaudited condensed consolidated financial statements and related notes have been retroactively revised to reflect the reverse stock split. Shares of common stock underlying outstanding stock options and other equity instruments were proportionately reduced and the respective exercise prices, if applicable, were proportionately increased in accordance with the terms of the agreements governing such securities. Shares of common stock reserved for issuance upon the conversion of the Company’s Preferred Stock were proportionately reduced and the respective conversion prices were proportionately increased.

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~1. Nature of the Business and Basis of Presentation (continued)~~

~~Initial Public Offering~~

~~On June 20, 2018, the Company’s registration statement on~~Form ~~S-1~~ relating to its IPO was declared effective by the SEC. The IPO closed on June 25, 2018 and the Company issued and sold 5,247,958 common shares at a public offering price of $19.00 per share for net proceeds of $90,271 after deducting underwriting discounts and commissions of $6,980 and other offering expenses of approximately $2,459. Simultaneously, on June 25, 2018, the Company issued and sold 787,193 additional common shares, pursuant to the full exercise of the underwriters’ option to purchase additional shares, for net proceeds of $13,910 after deducting underwriting discounts and commissions of $1,047. Thus, the aggregate net proceeds to the Company from the IPO, after deducting underwriting discounts and commissions and other offering costs, were $104,182. Upon the closing of the IPO, series Seed redeemable convertible preferred stock (the “Series Seed Preferred Stock”), series A redeemable convertible preferred stock (the “Series A Preferred Stock”) and series B redeemable convertible preferred stock (the “Series B Preferred Stock”), (the Series Seed Preferred Stock, the Series A Preferred Stock and the Series B Preferred Stock are collectively referred to as the “Preferred Stock”) then outstanding converted into an aggregate of 15,320,213 shares of common stock.

~~2. Summary of Significant Accounting Policies~~

~~Subsequent Event Considerations~~

The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the consolidated financial statements to provide additional evidence for certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated as required. See Note 15.

~~Use of Estimates~~

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

~~Cash and Cash Equivalents~~

The Company considers all highly liquid investments purchased with original maturities of 90 days or less at acquisition to be cash equivalents. Cash and cash equivalents include cash held in banks and amounts held in interest-bearing money market accounts. Cash equivalents are carried at cost, which approximates their fair market value.

~~Concentrations of Credit Risk~~

~~The Company has no significantoff-balance~~ sheet risk, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents and restricted cash. Periodically, the Company maintains deposits in accredited financial institutions in excess of federally insured limits. The Company deposits its cash and cash equivalents in financial institutions that it believes have high credit quality and has not experienced any losses on such accounts and does not believe it is exposed to any unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~2. Summary of Significant Accounting Policies (continued)~~

~~Fair Value Measurements~~

Certain assets and liabilities of the Company are carried at fair value under GAAP (see Note 3). Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market10-K for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:fiscal year ended December 31, 2023.

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

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

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

Segment Information

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or ~~decision making~~decision-making group, in making decisions on how to allocate resources and assess performance. The Company’s chief operating decision maker is the chief executive officer (“CEO”). The Company and the CEO view the Company’s operations and manage its business as one operating segment. All material long-lived assets of the Company reside in the United States.

Use of Estimates

~~Research~~The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires that the Company make estimates and ~~Development Costs~~

~~Research~~judgments that may affect the reported amounts of assets, liabilities and ~~development costs are expensed as incurred. Research~~expenses and development expenses consist of costs incurred in performing research and development activities, including salaries, stock-based compensation and benefits, facilities costs, depreciation, third-party license fees, and external costs of outside vendors engaged to conduct preclinical development activities and clinical trials as well as to manufacture research and development materials.~~Non-refundable~~ prepayments for goods or services that will be used or rendered for future research and development activities are deferred and capitalized. Such amounts are recognized as an expense as the goods are delivered or the related ~~services are performed or until it is no longer expected that~~disclosure of contingent assets and liabilities at the ~~goods will be delivered or~~date of the ~~services rendered.~~

financial statements and the reported amounts of expenses during the reporting periods. On an ongoing basis, the Company evaluates its estimates, judgments and methodologies. The Company ~~has entered into~~bases its estimates on historical experience and on various ~~research~~other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and ~~development related contracts with parties both inside and outside of the United States. The payments to~~liabilities. Actual results may differ from these agreements are recorded as research and development expenses as incurred. The Company records accrued liabilities for estimated ongoing research costs. When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the studies or clinical trials, including the phase or completion of events, invoices received and contracted costs. Significant judgments andestimates. Changes in estimates are ~~made~~reflected in ~~determining~~reported results in the accrued balances at the end of any reporting period. Actual results could differ from the Company’s estimates. The Company’s historical accrual estimates have not been materially different from the actual costs.period in which they become known.

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

~~2. Summary~~

Significant estimates relied upon in preparing the unaudited condensed consolidated financial statements include the determination of ~~Significant Accounting Policies (continued)~~the fair value of share-based awards issued and the estimation of accrued research and development expenses.

Stock-based Compensation

~~Stock-Based Compensation~~

For stock-based awards issued to employees and members of the Company’s ~~board of directors (the “Board”)~~Board for their services on the Board, the Company measures the estimated fair value of the stock-based award on the date of grant and recognizes compensation expense for those awards over the requisite service period, which is generally the vesting period of the respective award. The Company issues stock-based awards with only service-based vesting conditions and records the expense for these awards using the straight-line method. The Company has not issued any stock-based awards with performance- or market-based vesting conditions. The Company accounts for forfeitures as they occur.

~~Stock-based~~Prior to the adoption of ASU No. 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, the measurement date for non-employee awards ~~issued~~was generally the date the services are completed, resulting in financial reporting period adjustments to~~non-employees~~ ~~are recorded at their~~ stock-based compensation during the vesting terms for changes in the fair ~~values, and are periodically revalued as~~value of the awards. After adoption of ASU 2018-07, the measurement date for non-employee awards ~~vest and are recognized as expense over~~is the ~~related service period.~~later of the adoption date of ASU 2018-07, or the date of grant, without change in the fair value of the award. For stock-based awards granted to~~non-employees~~ nonemployees subject to graded vesting that only contain service conditions, the Company has elected to recognize stock-based compensation expense using the straight-line recognition method.

The Company classifies stock-based compensation expense in its consolidated statements of operations and comprehensive loss in the same manner in which the award recipient’s cash compensation costs are classified.

Subsequent Event Considerations

~~Given~~The Company considers events or transactions that occur after the ~~absence of an active market for the Company’s common stock~~balance sheet date but prior to the ~~IPO, the Company and the Board, the members of which the Company believes have extensive business, finance, and venture capital experience, were required to estimate the fair value~~issuance of the Company’s common stock at the time of each grant of a stock-based award. The Company and the Board determined the estimated fair value of the Company’s equity instruments based on a number of factors, including external market conditions affecting the biotechnology industry sector. The Company and the Board utilized various valuation methodologies in accordance with the framework of the American Institute of Certified Public Accountants’ Technical Practice Aid, ~~Valuation of Privately-Held Company Equity Securities Issued as Compensation~~, to estimate the fair value of its common stock. Each valuation methodology includes estimates and assumptions that require the Company’s judgment. These estimates and assumptions include a number of objective and subjective factors in determining the value of the Company’s common stock at each grant date, including: (1) prices paid for the Company’s redeemable convertible preferred stock, which the Company had sold to outside investors in~~arm’s-length~~ transactions, and the rights, preferences, and privileges of the Company’s redeemable convertible preferred stock and common stock; (2) valuations performed by an independent valuation specialist; (3) the Company’s stage of development; (4) the fact that the grants of stock-based awards involved illiquid securities in a private company; and (5) the likelihood of achieving a liquidity event for the common stock underlying the stock-based awards, such as an IPO or sale of the Company, given prevailing market conditions.

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model. As there was no public market for its common stock prior to June 21, 2018, which was the first day of trading, and as the trading history of the Company’s common stock was limited through June 30, 2018, the Company determined the volatility for awards granted based on an analysis of reported data for a group of guideline companies that issued options with substantially similar terms. The expected volatility has been determined using a weighted-average of the historical volatility measures of this group of guideline companies. The Company expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. The expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. The Company has not paid, and does not anticipate paying, cash dividends on its common stock; therefore, the expected dividend yield is assumed to be zero.

See Note 10 for the assumptions used by the Company in determining the grant date fair value of stock-based awards granted, as well as a summary of the stock-based award activity under the Company’s stock-based compensation plan for the six months ended June 30, 2018.

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~2. Summary of Significant Accounting Policies (continued)~~

~~Warrant to Purchase Preferred Stock~~

Prior to the IPO, the Company classified the warrant for the purchase of shares of its redeemable convertible preferred stock (see Note 7) as a liability on its consolidated balance sheets as the warrant is a free-standing financial instrument that may require the Company to transfer assets upon exercise. The preferred stock warrant liability was initially recorded at fair value upon the date of issuance and is subsequently remeasured to fair value at each reporting date. Changes in the fair value of the warrant to purchase preferred stock are recognized as a component of other income (expense), net in the consolidated statements of operations and comprehensive loss. Changes in the fair value of the warrant to purchase preferred stock will continue to be recognized until the warrant is exercised, expires or qualifies for equity classification.

The Company utilizes the Black-Scholes option-pricing model, which incorporates assumptions and estimates, to value the warrant. The Company assesses these assumptions and estimates on a quarterly basis as additional information impacting the assumptions is obtained. Estimates and assumptions impacting the fair value measurement include the fair value per share of the underlying redeemable convertible preferred stock issuable upon exercise of the warrant, the remaining contractual term of the warrant, the risk-free interest rate, the expected dividend yield and the expected volatility of the price of the underlying redeemable convertible preferred stock.

Upon the IPO, the warrant to purchase preferred stock was converted to a warrant to purchase common stock. The carrying amount of warrant to purchase preferred stock as of the date of IPO was transferred to the account of additional paid in capital.

~~Comprehensive Income (Loss)~~

~~Comprehensive income (loss) is defined as the change in stockholders’ equity of a business enterprise during a period from transactions and other events and circumstances fromnon-owner~~ sources. Comprehensive income (loss) includes net income (loss) as well as other changes in stockholders’ (deficit) equity which includes certain changes in equity that are excluded from net income (loss). Comprehensive loss has been disclosed in the accompanying statements of operations and comprehensive loss and equals the Company’s net loss for all periods presented.

~~Leases~~

The Company categorizes leases at their inception as either operating or capital leases. On certain lease arrangements, the Company may receive rent holidays or other incentives. The Company recognizes lease costs on a straight-line basis once control of the space is achieved, without regard to deferred payment terms, such as rent holidays, that defer the commencement date of required payments or escalating payment amounts. The difference between required lease payments and rent expense has been recorded as deferred rent and other accrued expenses and other current liabilities in the accompanying consolidated balance sheets. Additionally, incentives received are treated as a reduction of costs over the term of the agreement, as they are considered an inseparable part of the lease agreement.

~~Net Income (Loss) per Share Attributable to Common Stockholders~~

~~Net income (loss) per share attributable to common stockholders is determined using thetwo-class~~ method, which includes the weighted-average number of shares of common stock outstanding during the period and other securities that participate in dividends (a participating security). In periods of income, the redeemable convertible preferred stock would be considered participating securities because the shares include rights to participate in dividends with the common stock; however, the redeemable convertible preferred stock is not considered a participating security in periods of loss as they do not have an obligation to share in the Company’s net losses.

~~Under thetwo-class~~ method, basic net income (loss) per share attributable to common stockholders is computed by dividing the net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per share attributable to common stockholders is computed using the more dilutive of (1) the~~two-class~~ ~~method or (2) theif-converted~~ method. The Company allocates net income first to the holders of Preferred Stock based on dividend rights under the Company’s certificate of incorporation and then to preferred and common stockholders based on ownership interests.

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~2. Summary of Significant Accounting Policies (continued)~~

~~Emerging Growth Company Status~~

The Company is an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act, or JOBS Act, and may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. The Company may take advantage of these exemptions until the Company is no longer an “emerging growth company.” Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards. The Company has elected to use the extended transition period for complying with new or revised accounting standards and as a result of this election, its consolidated financial statements ~~may not be comparable~~ to ~~companies~~provide additional evidence for certain estimates or to identify matters that comply with public company effective dates. The Company may take advantage of these exemptions up until the last day of the fiscal year following the fifth anniversary of an offering or such earlier time that it is no longer an “emerging growth company”.require additional disclosure. Subsequent events have been evaluated as required.

Recently ~~Issued~~Adopted Accounting Pronouncements

In June ~~2018,~~2016, the FASB issued ASU No.~~2018-07,~~ ~~“Compensation—Stock Compensation~~ 2016-13, Financial Instruments—Credit Losses (Topic ~~718)~~326): ~~Improvements~~Measurement of Credit Losses on Financial Instruments, or ASU 2016-13. ASU 2016-13 requires that credit losses be reported as an allowance using an expected losses model, representing the entity’s current estimate of credit losses expected to ~~Nonemployee Share-Based Payment Accounting”~~be incurred. For available-for-sale debt securities with unrealized losses, this standard now requires allowances to be recorded instead of reducing the amortized cost of the investment. On January 1, 2023 the Company adopted this standard, which addresses accounting for issuance of all share-based payments on the same accounting model. Previously, accounting for share-based payments to employees was covered by ASC Topic 718 while accounting for such payments to~~non-employees~~ ~~was covered by ASC Subtopic505-50.~~ ~~As it considered recently issued updates to ASC 718, the FASB, as part of its simplification initiatives, decided to replace ASC Subtopic505-50~~ ~~with Topic 718 as the guidance fornon-employee~~ ~~share-based awards. Under this new guidance, both sets of awards, for employees andnon-employees,~~ ~~will essentially follow the same model, with small variations related to determining the term assumption when valuing anon-employee~~ ~~award as well as a different expense attribution model fornon-employee~~ ~~awards as opposed to employee awards. The ASU is effective for public business entities beginning in 2019 calendar years and one year later fornon-public~~ ~~business entities. The Company is currently evaluating the~~had no impact ~~that the adoption of ASU2018-07~~ ~~will have~~ on its ~~consolidated~~ financial ~~statements.~~position or results of operations.

In ~~July 2017,~~November 2019, the FASB issued ASU~~2017-11,~~ ~~Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815) I. Accounting for Certain~~ 2019-11, “Codification Improvements to Topic 326, Financial Instruments ~~with Down Round Features II. Replacement of the Indefinite Deferral for Mandatorily Redeemable~~ – Credit Losses,” or ASU 2019-11. ASU 2019-11 is an accounting pronouncement that amends ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of ~~Certain Nonpublic Entities~~Credit Losses on Financial Instruments.” The amendments update guidance on reporting credit losses for financial assets. These amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and ~~Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception~~. ~~Part I applies~~any other financial assets not excluded from the scope that have the contractual right to ~~entities that issue~~receive cash. On January 1, 2023 the Company adopted this standard, which had no impact on its financial ~~instruments such as warrants, convertible debt~~position or ~~convertible preferred stock that contain down-round features. Part II replaces~~results of operations.

Recently Issued Accounting Pronouncements

In December 2023, the ~~indefinite deferral for certain mandatorily redeemable noncontrolling interests~~FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This guidance is intended to enhance the transparency and ~~mandatorily redeemable financial instruments~~decision-usefulness of ~~nonpublic entities contained within ASC Topic 480 with a scope exception and does not impact the accounting for these mandatorily redeemable instruments. For public entities, the~~income tax disclosures. The amendments in ~~Part I of this update are effective~~ASU 2023-09 address investor requests for ~~fiscal years,~~enhanced income tax information primarily through changes to disclosure regarding rate reconciliation and ~~interim periods within those fiscal years, beginning after December 15, 2018. For all other entities,~~income taxes paid both in the ~~amendments~~United States and in ~~Part I of this update are~~foreign jurisdictions. ASU 2023-09 is effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities, including adoption in an interim period. The Company is currently evaluating2024 on a prospective basis, with the ~~impact that the adoption of ASU2017-11~~ ~~will have on its consolidated financial statements.~~

~~In May 2017, the FASB issued ASUNo. 2017-09,~~ ~~Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting~~ ~~(“ASU2017-09”),~~ ~~which clarifies when~~option to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The standard is effective for annual periods beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for (1) public business entities for reporting periods for which financial statements have not yet been issued and (2) all other entities for reporting periods for which financial statements have not yet been made available for issuance. The Company is currently evaluating the impact that the adoption of ASU~~2017-09~~ ~~will have on its consolidated financial statements.~~

~~In November 2016, the FASB issued ASUNo. 2016-18,~~ ~~Statement of Cash Flows (Topic 230): Restricted Cash~~ ~~(“ASU2016-18”),~~ which requires restricted cash to be presented with cash and cash equivalents on the statement of cash flows and disclosure of how the statement of cash flows reconciles to the balance sheet if restricted cash is shown separately from cash and cash equivalents on the balance sheet. For public entities,apply the standard is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. For all other entities, the standard is effective for annual periods beginning after December 15, 2018, including interim periods within fiscal years beginning after December 15, 2019.retrospectively. Early adoption is permitted. The Company is currently evaluating this guidance to determine the impact ~~that the adoption of ASU2016-18~~ ~~will~~it may have on its consolidated financial ~~statements.~~statement disclosures.

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

~~2. Summary of Significant Accounting Policies (continued)~~

~~Recently Issued Accounting Pronouncements (continued)~~

In ~~August 2016,~~October 2023, the FASB issued ASU~~No. 2016-15,~~ ~~Statement of Cash Flows: Classification of Certain Cash Receipts~~ 2023-06 “Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and ~~Cash Payments~~Simplification Initiative,” which incorporates certain SEC disclosure requirements into the FASB Accounting Standards Codification (“~~ASU2016-15”~~Codification”), ~~to address diversity in practice in how certain cash receipts and cash payments are presented and classified~~. The amendments in the ~~statement~~ASU are expected to clarify or improve disclosure and presentation requirements of ~~cash flows. For public~~a variety Codification topics, allow investors to more easily compare entities subject to the ~~standard is~~SEC’s existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the Codification with the SEC’s regulations. The effective date for ~~annual periods beginning after December 15, 2017, including interim periods within those fiscal years. For all other entities,~~each amendment will be the ~~standard is~~date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, ~~for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019.~~with early adoption prohibited. The amendments in this ASU should be applied prospectively. The Company is currently evaluating this guidance to determine the impact ~~that the adoption of ASU2016-15~~ ~~will~~it may have on its consolidated financial ~~statements.~~statement disclosures.

3. License and Purchase Agreements

~~In February 2016,~~Agreement with The University of Manchester

On September 30, 2020, the ~~FASB issued ASUNo. 2016-02~~Company entered into an agreement (“MPSII License Agreement”) with The University of Manchester, England (“UoM”), ~~Leases (Topic 842)~~whereby UoM granted to the Company an exclusive worldwide license under certain patent and other intellectual property rights, subject to certain retained rights, to develop, commercialize and sell an ex vivo lentiviral gene therapy for use in the treatment of Hunter syndrome, or mucopolysaccharidosis type II (“~~ASU2016-02”~~MPSII”), ~~which sets out the principles~~. As consideration for the ~~recognition, measurement, presentation~~MPSII License Agreement, the Company agreed to pay UoM an upfront, one-time fee of $8,000, which was recognized as research and ~~disclosure~~development expense during the year ended December 31, 2020.

As part of ~~leases for both parties~~the agreement, the Company was obligated to make milestone payments of up to an aggregate of $80,000 upon the achievement of specified development and regulatory milestones, to pay royalties, on a ~~contract (i.e., lessees~~product-by-product and ~~lessors). The new standard requires lessees to apply~~country-by-country basis, of a ~~dual approach, classifying leases as either finance or operating leases~~mid-single digit percentage based on net sales of products licensed under the ~~principle~~agreement and to pay a low double digit percentage of ~~whether or not the lease is effectively a financed purchase~~any sublicense fees received by the ~~lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on~~Company. During the third quarter of 2022, a ~~straight-line basis over~~$2,000 milestone payment under the ~~term~~MPSII License Agreement became due following the date of regulatory approval of the ~~lease. A lessee is also required to record aright-of-use~~ ~~asset and a lease liability~~CTA for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less may be accounted for similar to existing guidance for operating leases today. ASU~~2016-02~~ ~~supersedes~~ the ~~previous leases standard, ASC 840,~~ ~~Leases~~ ~~. For public entities,not-for-profit~~ ~~entities and an employee benefit plan that files financial statements~~investigator-sponsored Phase 1/2 clinical trial sponsored by UoM.

Concurrently with the ~~U.S. Securities and Exchange Commission (SEC),~~MPSII License Agreement, the ~~standard is effective for public entities for annual periods beginning after December 15, 2018 including interim periods within those fiscal years. For all other entities,~~Company entered into a collaborative research funding agreement with UoM (“CRFA”). Under the ~~standard is effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted.~~

~~In September 2017,~~CRFA, the ~~FASB issued ASU No.2017-13,~~ ~~Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842)~~ ~~, which provides additional clarification and implementation guidance related~~Company had agreed to~~ASU 2016-02~~ ~~and has~~ fund the ~~same effective date and transition requirements as ASU2016-02.~~ ~~The Company is currently evaluating the impact that the adoption~~budgeted costs of~~ASU 2016-02~~ ~~will have on its consolidated financial statements.~~

~~3. Fair Value of Financial Assets and Liabilities~~

~~The following table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicates the level of the fair value hierarchy utilized~~ an investigator-sponsored Phase 1/2 clinical trial to ~~determine such fair values as of June 30, 2018 and December 31, 2017, respectively:~~

   Fair Value Measurements as of
June 30, 2018 Using:
   Level 1    Level 2    Level 3    Total
Assets:

Money market funds
   $ 154,549    $ —      $ —      $ 154,549








   Fair Value Measurements as of
December 31, 2017 Using:
   Level 1    Level 2    Level 3    Total
Assets:

Money market funds
   $ 5,684    $ —      $ —      $ 5,684
Restricted cash
   24    —      —      24








   $ 5,708    $ —      $ —      $ 5,708








Liabilities:

Derivative liability
   $ —      $ —      $ 371    $ 371
Warrant to purchase redeemable convertible preferred stock
   —      —      35    35








   $ —      $ —      $ 406    $ 406

~~During the six months ended June 30, 2018 and 2017, there were no transfers between Level 1, Level 2 and Level 3.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~3. Fair Value of Financial Assets and Liabilities (continued)~~

~~Valuation of the Warrant to Purchase Preferred Stock~~

~~The warrant to purchase preferred stock liability in the table above is composed of the fair value of a warrant to purchase shares of Series A Preferred Stock that was issued to a lender~~be sponsored by UoM in connection with ~~a loan and security agreement in 2017. The fair value of~~ the ~~warrant~~development activities under the MPSII License Agreement, which were expected to ~~purchase preferred stock was determined based on significant inputs not observable~~equal approximately £9,900 in the ~~market, which represents a Level 3 measurement within the fair value hierarchy.~~aggregate.

~~In order to determine the fair value of the warrant to purchase preferred stock,~~On September 8, 2023 the Company ~~utilized available facts~~ and ~~circumstances to estimate~~UoM terminated the ~~number of shares of Series A Preferred Stock for which~~MPSII License Agreement and the ~~warrant will ultimately be exercisable. The Company then used the Black-Scholes option-pricing model, which incorporates assumptions~~CFRA, and estimates, to value the warrant to purchase preferred stock. Estimates and assumptions impacting the fair value measurement include the fair value of the underlying shares of Series A Preferred Stock, the remaining contractual term of the warrant, risk-free interest rate, expected dividend yield and expected volatility of the price of the underlying preferred stock. The Company determined the fair value of the underlying preferred stock based on various valuation methodologies. The Company lacks company-specific historical and implied volatility information of its stock. Therefore, it estimates its expected stock volatility based on the historical volatility of publicly traded guideline companies for a term equal to the remaining contractual term of the warrant. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve for time periods approximately equal to the remaining contractual term of the warrant. The Company estimated no expected dividend yield based on the fact that the Company has never paid or declared dividends and does not intend to do so in the foreseeable future. Upon the IPO, the warrant to purchase preferred stock was converted to a warrant to purchase common stock. The carrying amount of warrant to purchase preferred stock as of the date of IPO was transferred to the account of additional paid in capital.

~~The following table sets forth a summary of changes in the fair value of the Company’s preferred stock warrant liability for which fair value was determined by Level 3 inputs:~~

   Warrant
Liability
Balance as of December 31, 2017
   $ 35
Change in fair value
   162
Conversion of preferred stock warrant to common stock warrant
   (197 )
Balance as of June 30, 2018
   $ —

~~Valuation of Derivative~~

~~In January 2016,~~ in connection with ~~a license agreement entered into~~such termination, the Company paid UoM £3,900. Following the termination of the MPSII License Agreement and the CFRA, the Company does not have any remaining financial obligations to UoM.

For the three months ended March 31, 2024, the Company did not incur costs related to the CRFA. For the three months ended March 31, 2023, the Company incurred $1,610 related to the CRFA.

Agreements with University Health Network (“UHN”), and as part of the initial consideration for the license, the Company issued 1,161,665 shares of common stock to UHN pursuant to a stock purchase agreement (the “Stock Purchase Agreement”). The Stock Purchase Agreement contains a provision requiring the Company to make a cash payment to UHN of up to $2,000 if UHN’s fully diluted ownership is reduced within specified percentages as part of an IPO by the Company. The Company concluded the anti-dilution feature represented a derivative instrument and should be measured at fair value, with changes in fair value recognized as a gain or loss to other income (expense), net in the consolidated statements of operations and comprehensive loss. The initial fair value of the derivative of $49 was recorded as research and development expense in January 2016.

On June 30, 2017, the Company remeasured the fair value of the derivative, using current assumptions, resulting in an increase in fair value of $3 and $35, which was recorded in other expense in the accompanying condensed consolidated statements of operations and comprehensive loss for the three months and six months ended June 30, 2017, respectively.

On June 21, 2018, in connection with the Company’s IPO, the Company remeasured the fair value of the derivative to $2,000 as the Company was required to pay the dilution payment as mentioned above, which the Company paid in July 2018. An increase in fair value of $1,042 and $1,629 was recorded in other expense in the accompanying condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2018, respectively.

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~3. Fair Value of Financial Assets and Liabilities (continued)~~

~~The following table sets forth a summary of changes in the fair value of the Company’s derivative liability for which fair value is determined by Level 3 inputs:~~

   Derivative
Liability
Balance as of December 31, 2017
   $ 371
Change in fair value
   1,629
Transferred to accrued expenses
   (2,000 )


Balance as of June 30, 2018
   $ —

~~4. Prepaid Expenses and Other Current Assets~~

~~Prepaid expenses and other current assets consisted of the following:~~

   June 30,
2018    December 31,
2017
Prepaid development costs
   $ 762    $ 163
Prepaid rent
   76    122
Other current assets
   294    60




   $ 1,132    $ 345

~~5. Property and Equipment, Net~~

~~Property and equipment, net consisted of the following:~~

   June 30,
2018    December 31,
2017
Laboratory and office equipment
   $ 926    $ 126
Leasehold improvements
   1,112    240
Computer equipment and software
   83    28




   2,121    394
Less: Accumulated depreciation and amortization
   (71 )    (45 )




   $ 2,050    $ 349

Depreciation and amortization expense for the three months ended June 30, 2018 and 2017 was $45 and $13, respectively. Depreciation and amortization expense for the six months ended June 30, 2018 and 2017 was $66 and $15, respectively.

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~6. Accrued Expenses~~

~~Accrued expenses and other current liabilities consisted of the following:~~

   June 30,
2018    December 31,
2017
Dilution payment (Note 3)
   $ 2,000    $ —
Compensation and benefit costs
   846    794
Short-term deferred rent
   171    9
Research and development costs
   753    831
IPO issuance cost
   693    —
Property and equipment
   667    —
Other liabilities
   308    464




   $ 5,438    $ 2,098

~~7. Loan Agreement and Warrant to Purchase Preferred Stock~~

On June 23, 2017, the Company entered into the Loan Agreement with a lender, which provided for the issuance of term loans of up to $10,000, subject to the achievement of various development and corporate milestones. Any outstanding principal amounts under the Loan Agreement will accrue interest at a floating per annum rate equal to the greater of 1% and the “prime rate,” as defined in the Loan Agreement, minus 3%.

Payments on the Loan Agreement are interest only, payable monthly in arrears, until November 1, 2018, which can be extended by six months if the third tranche is drawn. Thereafter, principal and interest amounts are repayable over a~~30-month~~ ~~period, unless the third tranche is funded and the initial interest-only period is extended by six months, in which case principal and interest amounts are repayable over a24-month~~ ~~period. As of June 30, 2018, the Company had not drawn down from the facility and $10,000 was available to the Company.~~

The Loan Agreement contains customary indemnification obligations and customary events of default. In the event of default by the Company under the Loan Agreement, the lender would be entitled to exercise their remedies thereunder, including the right to accelerate the debt, upon which the Company may be required to repay all amounts then outstanding under the Loan Agreement or the lender may take possession of the collateral securing the Loan Agreement. No events of default had occurred through June 30, 2018.

The Loan Agreement also includes certain restrictions on, among other things, the Company’s ability to incur additional indebtedness, change the name or location of its business, merge with or acquire other entities, pay dividends or make other distributions to holders of the Company’s capital stock, make certain investments, engage in transactions with affiliates, create liens, open new deposit accounts, sell assets or pay subordinated debt.

In connection with the Loan Agreement, the Company agreed to issue a warrant to the lender for the purchase of up to 188,702 shares of the Company’s Series A Preferred Stock with an exercise price of $0.7949 per share. The warrant expires on June 22, 2027. The warrant is initially exercisable for the purchase of up to 28,305 shares of Series A Preferred Stock and can become exercisable for up to an additional 160,397 shares of Series A Preferred Stock based on the amounts drawn under the Loan Agreement. On the issuance date of the warrant, the Company recorded a deferred financing cost and a liability for the warrant to purchase preferred stock in the Company’s consolidated balance sheet equal to the issuance-date fair value of the warrant. Upon closing of the IPO, the carrying amount of the warrant to purchase preferred stock as of the date of IPO was transferred to the account of additional paid in capital (Note 3).

The Company recognized a loss of $150 and $162 in the condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2018, respectively, related to the change in fair value of the warrant.

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~8. Redeemable Convertible Preferred Stock~~

Prior to the IPO, the authorized capital stock of the Company included 63,491,857 shares of $0.0001 par value preferred stock, of which 3,333,333 shares have been designated as Series Seed Preferred Stock, 31,639,202 shares have been designated as Series A Preferred Stock and 28,519,322 shares have been designated as Series B Preferred Stock.

~~In January 2018, the Company issued and sold 28,519,322 shares of Series B Preferred Stock, at a price of $2.1389 per share, for total proceeds of $58,757, net of issuance costs of $2,243.~~

~~As of December 31, 2017, the Preferred Stock consisted of the following:~~

   December 31, 2017
   Preferred
Shares
Authorize    Preferred
Shares
Issued and
Outstanding    Carrying
Value    Liquidation
Preference    Common Stock
Issuable Upon
Conversion
Series Seed preferred stock
   3,333,333    3,333,333    $ 1,500,000    $ 1,500,000    806,711
Series A preferred stock
   31,639,202    31,450,499    25,000,000    25,000,000    7,611,438










   34,972,535    34,783,832    $ 26,500,000    $ 26,500,000    8,418,149

Upon closing of the IPO, the Preferred Stock as of December 31, 2017, together with Series B Preferred Stock issued in January 2018, were converted to 15,320,213 shares of common stock. The holders of the Company’s Preferred Stock had certain voting, dividend, and redemption rights, as well as liquidation preferences and conversion privileges. All rights, preferences, and privileges associated with the preferred stock were terminated at the time of the Company’s IPO in conjunction with the conversion of all outstanding shares of Preferred Stock into shares of common stock.

~~9. Common Stock~~

~~As of June 30, 2018, the authorized capital stock of the Company included 150,000,000 shares of common stock, $0.0001 par value, respectively.~~

~~At June 30, 2018 and December 31, 2017, the Company has reserved the following shares of common stock for future issuance:~~

   June 30,
2018    December 31,
2017
Shares reserved for Series Seed Preferred Stock outstanding
   —      806,711
Shares reserved for Series A Preferred Stock outstanding
   —      7,611,438
Shares reserved for issuance under the 2018 Stock Option and Incentive Plan
   533,911    —
Shares reserved for issuance under the 2018 Employee Stock Purchase Plan
   223,200    —
Shares reserved for vesting of restricted stock awards
   214,789    276,301
Shares reserved for exercise of outstanding stock options
   1,871,139    1,034,961
Shares reserved for issuance under the 2015 Stock Option and Grant Plan
   —      143,717




Total shares of authorized common stock reserved for future issuance
   2,843,039    9,873,128

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~10. Stock-Based Compensation~~

~~Amended and Restated 2015 Stock Option and Grant Plan~~

The Company’s Amended and Restated 2015 Stock Option and Grant Plan, (the “2015 Plan”) provides for the Company to issue restricted stock awards and restricted stock units, or to grant incentive stock options or~~non-statutory~~ stock options. Incentive stock options may be granted only to the Company’s employees including officers and members of the Board who are also employees. Restricted stock awards and restricted stock units and~~non-statutory~~ ~~stock options may be granted to employees, members of the Board, outside advisors, and consultants of the Company.~~

~~The total number of common shares that may be issued under the 2015 Plan was 2,008,564 shares. Following the IPO, no further grants will be made under 2015 plan.~~

Shares that expire, are terminated, surrendered or canceled under the 2015 Plan without having been fully exercised will be available for future awards under the 2018 Plan (as defined below). In addition, shares of common stock that are tendered to the Company by a participant to exercise an award are added to the number of shares of common stock available for future awards.

~~The 2015 Plan is administered by the Board. Equity awards granted to employees and members of the Board typically vest over four years.~~

~~2018 Stock Option and Incentive Plan~~

The Company’s 2018 Stock Option and Incentive Plan (the “2018 Plan”) was adopted by the Board June 1, 2018 and approved by stockholders on June 7, 2018 and became effective upon the effectiveness of the Company’s Registration Statement on Form~~S-1.~~ The 2018 Plan replaced the 2015 Plan as the Board determined not to make additional awards under the 2015 Plan following the pricing of the Company’s IPO. The 2018 Plan allows the compensation committee to make equity-based and cash-based incentive awards to its officers, employees, directors and other key persons (including consultants).

The Company initially reserved 616,300 shares of its common stock for the issuance of awards under the 2018 Plan. The 2018 Plan provides that the number of shares reserved and available for issuance under the plan will automatically increase each January 1, beginning on January 1, 2019, by 4% of the outstanding number of shares of our common stock on the immediately preceding December 31, or such lesser number of shares as determined by its compensation committee. This number is subject to adjustment in the event of a stock split, stock dividend or other change in its capitalization.

~~The total number of common shares that may be issued under the 2018 Plan was 616,300 shares as of June 30, 2018, of which 533,911 shares remained available for future grant.~~

~~During the six months ended June 30, 2018 and 2017, the Company granted options to purchase 836,178 and 196,872 shares of common stock to employees and members of the Board, respectively.~~

~~2018 Employee Stock Purchase Plan~~

The Company’s 2018 Employee Stock Purchase Plan (the “ESPP”) was adopted by the Board June 1, 2018 and approved by stockholders on June 7, 2018 and became effective upon the effectiveness of the Company’s Registration Statement on Form~~S-1.~~ The ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423(b) of the Code. The ESPP initially reserves and authorizes the issuance of up to a total of 223,200 shares of common stock to participating employees. The ESPP provides that the number of shares reserved and available for issuance will automatically increase each January 1, beginning on January 1, 2019 and each January 1 thereafter through January 1, 2028, by the least of (i) 1% of the outstanding number of shares of our common stock on the immediately preceding December 31; (ii) 1,115,700 shares or (iii) such number of shares as determined by the ESPP administrator. The number shares reserved under the ESPP is subject in the event of a stock split, stock dividend or other change in our capitalization.

~~The total number of common shares that may be issued under the ESPP was 223,200 shares as of June 30, 2018, of which 223,200 shares remained available for future grant.~~

~~As of June 30, 2018, the initial purchase period under the ESPP has not yet commenced.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~10. Stock-Based Compensation (continued)~~

~~Stock Option Valuation~~

~~The assumptions that the Company used to determine the grant-date fair value of stock options granted to employees and members of the Board were as follows, presented on a weighted-average basis:~~

   Six Months
Ended June 30,
   2018 2017
Expected option life (years)
   6.06 6.08
Risk-free interest rate
   2.73 % 1.90 %
Expected volatility
   83.86 % 85.50 %
Expected dividend yield
   —   % —   %

~~The following table summarizes the Company’s stock option activity for the six months ended June 30, 2018:~~

   Number of
Options    Weighted-
Average
Exercise
Price    Weighted-
Average
Remaining
Contractual
Term
(Years)    Aggregate
Intrinsic
Value
Outstanding as of December 31, 2017
   1,034,961    $ 0.78    8.94    $ 3,427
Granted
   836,178    $ 6.38    9.74
Exercised
   —
Cancelled or forfeited
   —



Outstanding as of June 30, 2018
   1,871,139    $ 3.29    9.02    $ 47,228



Exercisable as of June 30, 2018
   309,594    $ 0.72    8.13    $ 8,619
Unvested as of June 30, 2018
   1,559,125    $ 3.80    9.20    $ 38,609

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the underlying stock options and the estimated fair value of the Company’s common stock for those stock options that had exercise prices lower than the estimated fair value of the Company’s common stock at June 30, 2018.

~~The weighted-average grant-date fair value of the Company’s stock options granted during the six months ended June 30, 2018 and 2017 was $7.63 and $0.66, respectively.~~

~~Restricted Common Stock~~

~~The following table summarizes the Company’s restricted common stock activity for the six months ended June 30, 2018:~~

Number
of Shares Weighted-Average
Grant Date Fair
Value
Issued and unvested as of December 31, 2017
276,301 $ 0.42
Vested
(61,512 ) 0.42
Forfeited, canceled or expired
— —

Issued an unvested as of June 30, 2018
214,789 0.42

~~The total fair value of restricted common stock vested during the six months ended June 30, 2018 and 2017 was $26 and $17, respectively.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~10. Stock-Based Compensation (continued)~~

~~Stock-Based Compensation~~

~~Stock-based compensation expense was allocated as follows:~~

   Six Months Ended
June 30,
   2018    2017
Research and development
   $ 187    $ 35
General and administrative
   379    29




Total stock-based compensation expense
   $ 566    $ 64

~~As of June 30, 2018, total unrecognized compensation cost related to the unvested stock-based awards was $6,776, which is expected to be recognized over a weighted-average period of 3.61 years.~~

~~11. License Agreements~~

~~Agreements with UHN~~

Fabry License Agreement—

On January 27, 2016, the Company entered into an agreement with UHN, pursuant to which UHN granted the Company an option to enter into an exclusive license under the UHN intellectual property related to Fabry disease in accordance with thepre-negotiated licensing terms. On November 4, 2016, the Company exercised its option and entered into a license agreement with UHN, pursuant to which UHN granted the Company an exclusive worldwide license under certain intellectual property rights and anon-exclusive worldwide license under certainknow-how, in each case subject to certain retained rights, to develop, commercialize and sell products for use in the treatment of Fabry disease. In addition, for three years following the execution of the agreement, UHN granted the Company an exclusive option to obtain a license under certain improvements to the licensed intellectual property rights as well as an option to negotiate a license under certain other improvements.

Under this agreement, the Company paid an option fee of CAD ~~$20,~~$20, an upfront license fee of CAD ~~$75,~~$75, plus the annual license maintenance fee for the first year. Thereafter, the Company is also required to pay UHN future annual license maintenance fees until

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

the first sale of a licensed product in certain markets. The Company is also obligated to make future milestone payments in an aggregate amount of up to CAD ~~$2,450~~$2,450 upon the achievement of specified milestones as well as royalties on acountry-by-country basis of a low to~~mid-single~~ ~~digit~~ mid-single-digit percentage of annual net sales of licensed products and a lower single-digit royalty percentage in certain circumstances. Additionally, the Company has agreed to pay a low double-digit royalty percentage of all sublicensing revenue.

The agreement requires the Company to meet certain performance milestones within specified timeframes.

UHN may terminate the agreement if the Company fails to meet these performance milestones despite using commercially reasonable efforts and the Company is unable to reach agreement with UHN on revised timeframes. The Company’s royalty obligation expires on a licensedproduct-by-licensed product andcountry-by-country basis upon the latest to occur of the expiration or termination of the last valid claim under the licensed intellectual property rights in such country, the tenth anniversary of the first commercial sale of such licensed product in such country and the expiration of any applicable regulatory exclusivity in such country.

Unless terminated earlier, the agreement expires upon the expiration of the Company’s royalty obligation for all licensed products. UHN can terminate the agreement if the Company fails to make any payments within a specified period after receiving written notice of such failure, or in the event that the Company fails to obtain or maintain insurance. Either the Company or UHN may terminate the license agreement in the event of a material breach by the other party and failure to cure such breach within a certain period of time. The Company can voluntarily terminate the agreement with prior notice to UHN.

Effective January 4, 2024, AVROBIO terminated the Fabry license agreement with UHN, and in connection with such termination, the Company paid UHN CAD$194. Following the termination of the agreement, AVROBIO does not have any remaining financial obligations to UHN pursuant to the Fabry license agreement.

For the ~~six~~three months ended ~~June 30, 2018~~March 31, 2024, the Company did not incur research and ~~2017, no upfront fee~~development expense related to this agreement with UHN. For the three months ended March 31, 2023 the Company recorded research and development expense related to this agreement with UHN of $34, which consists of reimbursable funded study trial costs. No milestone or maintenance fees were incurred related to ~~Fabry license agreement.~~

this agreement in the three months ended March 31, 2024 and 2023.

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~11. License Agreements (continued)~~

~~Agreements with UHN (continued)~~

Interleukin 12 License Agreement—

On January 27, 2016, the Company entered into an exclusive license agreement with UHN, pursuant to which UHN granted the Company a license to certain patent rights for the commercial development, manufacture, distribution and use of any products or processes resulting from development of those patent rights related to Interleukin 12. Upon execution of this agreement, the Company paid an upfront license fee of CAD ~~$264.~~$264. In addition, as part of the initial consideration for the license, the Company issued to UHN 1,161,665 shares of the Company’s common ~~stock.~~stock and agreed to pay UHN up to $2,000 upon the closing of an IPO if certain criteria are met. The fair value of the shares issued to UHN of ~~$480~~$480 and the upfront fee was expensed upon the execution of the agreement. ~~In addition, the Company agreed to pay UHN up to $2,000 upon~~Upon the closing of anthe IPO ~~if certain~~in 2018, as the criteria ~~are met. This obligation is considered a derivative instrument and was initially recorded at fair value of $49.~~were met, the Company paid UHN $2,000. The Company iswas also required to pay UHN future annual license maintenance fees of CAD ~~$50~~$50 on each anniversary of the effective date of the license agreement prior to expiration or termination and potential future milestone payments of up to CAD ~~$19,275~~$19,275 upon the achievement of specified clinical and regulatory milestones. The Company also agreed to pay UHN royalties of a low ~~single digit~~single-digit percentage of net sales of licensed products sold by the Company. If the Company ~~grants~~granted any sublicense rights under the license agreement, the Company ~~has~~ agreed to pay UHN a low double-digit royalty percentage of any sublicense income received by the Company.

The agreement ~~requires~~also required the Company to meet certain ~~due~~ diligence requirements based upon specified milestones. ~~The agreement expires on~~

Effective as of August 24, 2023, the ~~later~~Company and UHN agreed to terminate the Interleukin 12 License Agreement, and in connection with such termination there were no payments made to UHN. Following the termination of the ~~date the last patent rights expire in the last country or ten years from the date of first sale. UHN can terminate the~~ agreement, if the Company ~~fails~~does not have any remaining financial obligations to ~~make any payments within a specified period after receiving written notice of such failure, or in~~UHN pursuant to the ~~event that~~Interleukin 12 License Agreement.

For the three months ended March 31, 2024, the Company ~~fails~~did not incur research and development expense related to ~~obtain or maintain insurance. The Company can voluntarily terminate the~~this agreement with ~~prior notice to~~ UHN. ~~Either the Company or UHN may terminate the license agreement in the event of a material breach by the other party and failure to cure such breach within a certain period of time.~~

For the ~~six~~three months ended ~~June 30, 2018 and 2017,~~March 31, 2023 the Company recorded research and development expense related to this agreement with UHN of ~~$41 and $151 (nil for~~$37. No milestone fees were incurred related to this agreement in the three months ended ~~June 30, 2018~~March 31, 2024 and ~~2017), respectively, which consists of upfront fees and license maintenance fees and development milestone payments.~~2023.

Agreement with BioMarin Pharmaceutical Inc. (“BioMarin”)

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

On August 31, 2017, the Company entered into a license agreement with BioMarin, pursuant to which BioMarin granted the Company an exclusive worldwide license under certain intellectual property rights owned or controlled by BioMarin to develop, commercialize and sell products for use in the treatment of Pompe disease. The license agreement was amended in February 2018 and again in January 2020 to, among things, provide that BioMarin would supply the Company with certain technology materials. As consideration for this agreement, the Company paid an upfront license fee of ~~$500~~$500 in cash and issued 233,765 shares of Series B Preferred Stock to BioMarin at the time of ~~our~~the Company’s Series B Preferred Stock financing in January 2018. ~~Both~~The Company has a license agreement with BioMarin, pursuant to which BioMarin granted the ~~upfront cash payment~~Company an exclusive worldwide license under certain intellectual property rights owned or controlled by BioMarin to develop, commercialize and sell products for use in the treatment of ~~$500 and the value of the shares Series B Preferred Stock issued of $500 were recorded as research and development expense during the year ended December 31, 2017.~~Pompe disease. The Company is also obligated to make future milestone payments of up to ~~$13,000~~$13,000 upon the achievement of certain specified milestones and agreed to pay BioMarin royalties of a low single-digit percentage of net sales of licensed products sold by the Company or its affiliates covered by patent rights in a relevant country. ~~No upfront fees~~

The Company has recognized no expenses related to the license ~~were recorded~~ for the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2024 and 2023.

Unless terminated earlier, the agreement expires upon the expiration of the Company’s royalty obligation for all licensed products throughout the world. BioMarin and the Company can terminate the agreement in the event of a material breach by the other party and failure to cure such breach within a certain period of time. The Company may terminate the agreement at will upon written notice to BioMarin. BioMarin has the right to terminate the agreement upon the Company’s bankruptcy or insolvency, or in the event of any challenge or opposition to the licensed patent rights or related actions brought by the Company or its affiliates or sublicensees, or if the Company, its affiliates or sublicensees knowingly assist a third-party in challenging or otherwise opposing the licensed patent rights, except as required under a court order or subpoena.

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~11. License Agreements (continued)~~

Agreement with Papillon Therapeutics, Inc. (previously GenStem Therapeutics, Inc. ~~(“GenStem”~~)

On October 2, 2017, the Company entered into a license agreement with GenStem, pursuant to which GenStem granted the Company an exclusive worldwide license, subject to certain retained rights, under certain intellectual property rights owned or controlled by GenStem to develop, commercialize and sell products for use in the treatment of cystinosis. Under this agreement, the Company paid an upfront license fee of ~~$1,000~~$1,000 and is required to make payments upon completion of certain milestones up to an aggregate of ~~$16,000.~~$16,000. The Company also agreed to pay GenStem a tiered mid to high single-digit royalty percentage on annual net sales of licensed products as well as a low double-digit percentage of sublicense income received from certain ~~third party~~third-party licensees. The Company’s royalty obligation expires on a licensedproduct-by-licensed product andcountry-by-country basis on the eleventh anniversary of the first commercial sale of such licensed product in such country or the expiration of the last valid claim under the licensed patent rights covering such licensed product in such country, whichever is later. Unless terminated earlier, the agreement expires upon the expiration of the Company’s royalty obligation for all licensed products throughout the world. GenStem and the Company can terminate the agreement in the event of a material breach by the other party and failure to cure such breach within a certain period of time. The Company may terminate the agreement at will upon the specified prior written notice to GenStem. ~~No upfront fees~~In October 2021, the Company received notice that the license agreement with GenStem had been assigned to Papillon Therapeutics, Inc. (“Papillon”). On June 9, 2023, in connection with the close of the Asset Purchase Agreement, discussed and defined above, the Company transferred this agreement to Novartis.

The Company has recognized no expenses related to ~~the license were recorded~~this agreement for the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2024 and 2023.

Agreement with Lund University Rights Holders

On November 17, 2016, the Company entered into a license agreement with affiliates of Lund University, along with certain other relevant rights holders that may be added from time to time, pursuant to which such rights holders granted to the Company an exclusive worldwide license, subject to certain retained rights, under certain intellectual property rights to develop, commercialize and sell products in any and all uses relevant to Gaucher disease. As consideration for the license, the Company is required to make payments in connection with the achievement of certain milestones up to an aggregate of ~~$550.~~$550. The agreement expires on the latest of (i) the twentieth anniversary of the end of a certain research project the Company is funding pursuant to an agreement with Lund University, (ii) the expiration of the term of any patent filed on the licensed rights that covers a licensed product, (iii) the expiration of any applicable marketing exclusivity right and (iv) such time that neither the Company nor any sublicensees, partners or contractors are commercializing a licensed product. Either the Company or the rights holders acting together may terminate the license agreement if the other such party commits a material breach and fails to cure such breach within a certain period of time, or if the other party enters into liquidation, becomes insolvent, or enters into composition or statutory reorganization proceedings. ~~No upfront fees related to the license were recorded for the six months ended June 30, 2018 and 2017.~~

AVROBIO, INC.

~~12. Net Loss per Share~~

For purposes of the diluted net loss per share calculation, stock options, unvested restricted stock, the warrant to purchase shares of Series A Preferred Stock and Preferred Stock were considered to be common stock equivalents but have been excluded from the calculation of diluted net loss per share, as their effect would be anti-dilutive for all periods presented. Therefore, the weighted-average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same.

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

   Six Months Ended
June 30,
   2018    2017
Options to purchase common stock
   1,871,139    796,311
Restricted common stock
   214,789    368,062
Redeemable convertible preferred stock (as converted to common stock)
   —      4,155,742
Warrants to purchase redeemable convertible preferred stock (as converted to common stock)
   —      6,850
Warrants to purchase common stock
   6,850    —

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

~~13. Commitments~~

The Company has recognized no expenses related to this agreement for the three months ended March 31, 2024 and ~~Contingencies~~2023.

~~Lease Agreements~~Sale of Cystinosis Program

On May 19, 2023, the Company entered into the Asset Purchase Agreement with Novartis, providing for the sale of the Company’s cystinosis gene therapy program (designated AVR-RD-04) and all other assets of the Company specifically related to this program. In addition, pursuant to the Asset Purchase Agreement, the Company has granted an exclusive license to Novartis to use certain intellectual property of the Company, which consists of certain proprietary elements of the Company’s plato®gene therapy platform technology specifically within the field of cystinosis. The foregoing transactions contemplated by the Asset Purchase Agreement are referred to as the “Asset Sale.” The Company has also agreed not to assert claims against Novartis for violations of certain other Company intellectual property rights in connection with Novartis’s exercise of the exclusive license granted to it under the Asset Purchase Agreement, and for violations of the licensed intellectual property, except in connection with activities by Novartis in the fields of Gaucher disease, Pompe disease, Hunter syndrome and Fabry disease, or indemnification claims under the Asset Purchase Agreement. The aggregate consideration to the Company consisted of a cash payment of $87,500 upon closing of the transaction. During the year ended December 31, 2023, the Company recognized $83,736 as a gain on asset sale, net of $3,764 in transaction costs, in the consolidated statement of operations and comprehensive income (loss).

4. Fair Value Measurement

The following table presents information about the Company’s financial assets measured at fair value on a recurring basis and indicates the level of the fair value hierarchy utilized to determine such fair values as of March 31, 2024 and December 31, 2023:


	Fair Value Measurements as of March 31, 2024
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents — money market funds	$	89,229	$	—	$	—	$	89,229
	$	89,229	$	—	$	—	$	89,229


	Fair Value Measurements as of December 31, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents — money market funds	$	96,707	$	—	$	—	$	96,707
	$	96,707	$	—	$	—	$	96,707

The fair value of cash equivalents was determined through quoted prices by third-party pricing services.

During the three months ended March 31, 2024, there were no transfers between levels.

5. Supplemental Balance Sheet Information

Prepaid expenses and other current assets

Prepaid expenses and other current assets consisted of the following:


	March 31, 2024		December 31, 2023
Other current assets	$	626	$	570
Prepaid insurance		411		816
Prepaid research and development expenses		37		572
Prepaid expenses and other current assets	$	1,074	$	1,958

Restricted cash

As of March 31, 2024 and December 31, 2023, the Company had restricted cash as presented in the table below, which consists of cash used to secure letters of credit for the benefit of the landlord in connection with the Company’s lease agreements as well as

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

restricted cash related to the Company’s corporate credit card program. The cash will be restricted until the termination or modification of the lease arrangement and corporate credit card program, respectively.


	March 31, 2024		December 31, 2023
Restricted cash	$	283	$	283
Restricted cash, net of current portion		400		400

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consisted of the following:


	March 31, 2024		December 31, 2023
Consulting and professional fees	$	1,630	$	892
Compensation and benefit costs		686		3,463
Research and development expenses		396		711
Other liabilities		330		383
Accrued expenses and other current liabilities	$	3,042	$	5,449

6. Leases

On August 31, 2018, the Company entered into a sublease agreement for office and lab space located in Cambridge Massachusetts, United States, which originally was set to expire in October 2020 but was subsequently amended and expired on April 30, 2024. In July 2022, the Company moved its corporate headquarters to this subleased location. Effective January ~~12, 2018,~~24, 2023, the Company amended the terms of the sublease, which expired on April 30, 2024. In accordance with the sublease agreement, the Company was required to maintain a security deposit of $283, which was recorded in restricted cash as of March 31, 2024 and December 31, 2023. In July 2023, the Company ceased use of the lab space. This resulted in an impairment of the right of use asset of $940, recognized in the third quarter of 2023. Effective as of April 22, 2024, the Company moved its corporate headquarters to its current location at One Broadway, 14th Floor, Cambridge, Massachusetts 02142.

On June 1, 2020, the Company entered into a lease agreement for office space located in ~~Cambridge, Massachusetts. The~~Toronto, Ontario, Canada, which was set to expire in June 2025. On October 31, 2023, the lease agreement expires in January 2023, with a landlord who is an affiliate of the landlord of the Company’s prior lease facility. The annual lease payments are subject to a 3% increase each year. The Company recognizes rent expense on a straight-line basis over the lease period and has recorded deferred rent for rent expense incurred but not yet paid. The Company received a tenant incentive allowance of $842 in 2018. Such incentive allowance is being amortized as a reduction of rent expense on a straight-line basis over the lease period.was terminated. In accordance with the lease agreement, the Company iswas required to maintain a security deposit of ~~$209, which was recorded in other assets.~~CAD$27. In ~~contemplation of this agreement,~~October 2022, the Company entered into a sublease agreement to sublease this space. The term of the sublease agreement commenced on October 1, 2022 and was set to expire on June 29, 2025. The sublease was also terminated ~~its prior~~on October 31, 2023.

The following table summarizes the effect of lease ~~agreement.~~costs in the Company’s consolidated statement of operations and comprehensive loss:


	Three Months Ended March 31,		Three Months Ended March 31,
	2024		2023
Operating lease costs	$	339	$	670
Sublease income		—		(23	)
Total lease costs	$	339	$	647

During the three months ended March 31, 2024 and 2023, the Company made cash payments for operating leases of $672 and $687, respectively.

As of March 31, 2024, future minimum payments of operating lease liabilities are as follows:

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

March 31,
2024

2024

$
224

2025

—

2026

—

2027

—

Thereafter

—

Total lease payments

$
224

Less: interest

—

Present value of lease liabilities

$
224

As of March 31, 2024, the weighted average remaining lease term was 0.1 years and the weighted average incremental borrowing rate used to determine the operating lease liability was 16.15%. As of March 31, 2023, the weighted average remaining lease term was 1.2 years and the weighted average incremental borrowing rate used to determine the operating lease liability was 15.67%.

7. Commitments and Contingencies

Legal Proceedings

The Company, from time to time, may be party to litigation arising in the ordinary course of business. The Company was not subject to any material legal proceedings during the ~~six~~three months ended ~~June 30, 2018~~March 31, 2024 and ~~2017,~~2023 and to the best of ~~its~~the Company’s knowledge, no material legal proceedings are currently pending or threatened.

Other

The Company is also party to various agreements, principally relating to licensed technology, that require future payments relating to milestones not met at ~~June 30, 2018~~March 31, 2024 and December 31, ~~2017,~~2023, or royalties on future ~~sales of specified products.~~sales. No milestone or royalty payments under these agreements are expected to be payable in the immediate ~~future.~~future, except as disclosed in Note 3 “License Agreements.”

The Company enters into standard indemnification agreements in the ordinary course of business. Pursuant to the agreements, the Company agrees to indemnify, hold harmless, and to reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally the Company’s business partners, in connection with any U.S. patent or any copyright or other intellectual property infringement claim by any third-party with respect to the Company’s products. Further, the Company indemnifies its directors and officers who are, or were, serving at the Company’s request in such capacities. The Company’s maximum exposure under these arrangements is unknown as of March 31, 2024. The Company does not anticipate recognizing any significant losses relating to these arrangements. The term of these indemnification agreements is generally perpetual any time after execution of the agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. The Company has never incurred costs to defend lawsuits or settle claims related to these indemnification agreements.

AVROBIO, INC.

~~14.~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

8. Stockholders’ Equity

Common Stock

As of March 31, 2024 and December 31, 2023, the authorized capital stock of the Company included 150,000,000 shares of common stock, $0.0001 par value and 10,000,000 shares of undesignated preferred stock. As of March 31, 2024 and December 31, 2023, no undesignated preferred stock was outstanding.

Through March 31, 2024, no cash dividends have been declared or paid.

Common Stock Reserved for Future Issuance

As of March 31, 2024 and December 31, 2023, the Company has reserved the following shares of common stock for future issuance:


	March 31, 2024		December 31, 2023
Shares reserved for exercise of outstanding stock options		4,812,817		5,142,272
Shares reserved for vesting of restricted stock units		677,785		936,358
Shares reserved for issuance under the 2018 Stock Option and Grant Plan		8,299,245		7,978,667
Shares reserved for issuance under the 2018 Employee Stock Purchase Plan		1,771,748		1,771,748
Shares reserved for issuance under the 2019 Inducement Plan		1,511,183		1,407,211
Shares reserved for issuance under the 2020 Inducement Plan		1,700,000		1,700,000
Total shares of authorized common stock reserved for future issuance		18,772,778		18,936,256

9. Stock-based Compensation

Stock Option Valuation

The following table summarizes the Company’s stock option activity for the three months ended March 31, 2024:


	Number of Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding as of December 31, 2023		5,142,272		$	7.33		6.24	$	663
Granted		—		$	—
Exercised		(32,756	)	$	0.79
Cancelled or forfeited		(296,699	)	$	9.71
Outstanding as of March 31, 2024		4,812,817		$	7.23		6.09	$	519
Exercisable as of March 31, 2024		3,639,245		$	8.45		5.46	$	346

The aggregate intrinsic value of options exercised during the three months ended March 31, 2024 and 2023 was $16 and $1, respectively.

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

Restricted Stock Units

The following table summarizes the Company’s restricted common stock units for the three months ended March 31, 2024:


	Number of Shares			Weighted- Average Grant Date Fair Value
Issued and unvested as of December 31, 2023		936,358		$	2.13
Granted		60,251		$	1.31
Vested		(190,973	)	$	1.71
Forfeited, cancelled or expired		(127,851	)	$	2.49
Issued and unvested as of March 31, 2024		677,785		$	2.11

The total fair value of restricted stock units vested during the three months ended March 31, 2024 and 2023 was $326 and $194, respectively.

Stock-Based Compensation

Stock-based compensation expense was allocated as follows:


	Three Months Ended March 31,
	2024		2023
Research and development	$	170	$	622
General and administrative		708		1,908
Total stock-based compensation expense	$	878	$	2,530

As of March 31, 2024, total unrecognized compensation cost related to the unvested stock-based awards was $2,911, which is expected to be recognized over a weighted-average period of 1.91 years.

10. Net Income (Loss) Per Share

For purposes of the diluted net loss per share calculation, stock options and unvested restricted stock are considered to be common stock equivalents but have been excluded from the calculation of diluted net loss per share, as their effect would be anti-dilutive for all periods presented. Therefore, the weighted-average number of common shares outstanding used to calculate both basic and diluted net loss per share is the same.


	Three Months Ended March 31,
	2024		2023
Options to purchase common stock		4,812,817		9,154,769
Restricted stock units		677,785		2,026,338

11. Related Party Transactions

UHN

~~In connection with~~For the ~~Company’s entry into a license agreement with UHN on January 27, 2016,~~three months ended March 31, 2024, the Company ~~issued UHN 1,161,665 shares of its common stock. As a result of~~did not recognize research and development expense related to the ~~issuance of common stock, UHN owned 4.64% and 9.65% of~~license agreements with UHN. For the Company’s fully diluted equity as of June 30, 2018 and December 31, 2017, respectively. Upon the closing of the IPO, as UHN’s fully-diluted percentage ownership of the Company was reduced within a range of specified percentages, the Company is obligated to pay UHN an amount up to $2,000, which was recorded in accrued expenses as of June 30, 2018. See Note 3 for further discussion on the accounting treatment for this provision.

~~During the six~~three months ended ~~June 30, 2018 and 2017,~~March 31, 2023, the Company recognized ~~$41 and $151 (nil for three months ended June 30, 2018 and 2017), respectively,~~$71 of research and development expense related to the license agreements with UHN. Refer to Note 3 “License Agreements” for additional information regarding the UHN license agreements.

~~For~~Others

In the ~~six months ended June 30, 2018 and 2017~~first quarter of 2023, the ~~Company recorded expenses of $40 and $48 ($2 and $24~~sublease for the three months ended June 30, 2018 and 2017), respectively, related to consulting services provided by an entity affiliated with an officer of the Company and a member of the Board. The entity is also a shareholder of the Company and owned 0.48% and 1.56% of the Company’s fully diluted equity as of June 30, 2018 and 2017, respectively.

~~Others~~

~~For the three and six months ended June 30, 2017, the Company recorded expenses of $15 and $15, respectively, related to services~~space that was previously provided by an entity affiliated with a member of the Company’s Board was assigned to Novartis. Therefore, for the three months ended March 31, 2024 the Company did not record expense related to a sublease to rent office and lab space provided by an entity affiliated with a member of the ~~use of office space. The lease was terminated in February 2017 and the services were no longer being provided as of June 30, 2017.~~Company’s Board. For

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

~~15. Subsequent Events~~

~~On July 13, 2018,~~ the ~~lender~~three months ended March 31, 2023 the Company recorded $652 related to the sublease to rent office and lab space previously provided by an entity affiliated with a member of the ~~Loan Agreement exercised its common stock warrants to purchase 6,850 shares of common stock on~~Company’s Board.

12. Restructuring Activities

In July 2023, the Board approved a ~~net basis, resulting~~reduction in the ~~issuance~~Company’s workforce by approximately 50% across different areas and functions in the Company’s July 2023 Workforce Reduction. The July 2023 Workforce Reduction was substantially completed by the end of ~~6,091 shares~~July 2023. The Company informed affected employees in the July 2023 Workforce Reduction on July 12, 2023. Since the date of ~~common stock.~~the July 2023 Workforce Reduction, the Company’s remaining employees have primarily focused on activities relating to halting further development of the Company’s programs, the pursuit of strategic alternatives, and the provision of services under the previously disclosed Separation Services Agreement between the Company and Novartis in connection with the sale to Novartis of the Company’s cystinosis gene therapy program. Under the July 2023 Workforce Reduction, the Company recognized total restructuring expenses of $3,015 for the year ended December 31, 2023, recognized as $1,800 and $1,215 of research and development and general and administrative expense, respectively, in the consolidated statement of operations and comprehensive income (loss). For the three months ended March 31, 2024 and 2023, no related expense was recognized. These one-time employee termination benefits are related to affected employees, who were offered separation benefits, including severance payments. Approximately $479 of these expenses were related to non-cash stock-based compensation expense, and there are no remaining accrued payments as of March 31, 2024.

The Company’s workforce was reduced by 11 employees in the October 2023 Workforce Reduction effective as of October 31, 2023. Under the October 2023 Workforce Reduction, the Company recognized total restructuring expenses of $1,093 for the year ended December 31, 2023 recognized as research and development expense in the consolidated statement of operations and comprehensive income (loss). For the three months ended March 31, 2024 and 2023, no related expense was recognized. These one-time employee termination benefits are related to affected employees, who were offered separation benefits, including severance payments. There are no remaining accrued payments as of March 31, 2024.

The Company’s workforce was reduced by 8 employees in the December 2023 Workforce Reduction effective as of December 31, 2023. Under the December 2023 Workforce Reduction, the Company recognized total restructuring expenses of $950 for the year ended December 31, 2023 recognized as $866 and $64 of research and development and general and administrative expense, respectively, in the consolidated statement of operations and comprehensive income (loss). For the three months ended March 31, 2024 the Company recognized $74 and $9 of research and development and general and administrative expense, respectively, in the consolidated statement of operations and comprehensive loss. For the three months ended March 31, 2023, no related expense was recognized. These one-time employee termination benefits are related to affected employees, who were offered separation benefits, including severance payments. There are no remaining accrued payments as of March 31, 2024.

The Company’s workforce was reduced by 2 employees in the February 2024 Workforce Reduction effective as of February 29, 2024. Under the February 2024 Workforce Reduction, the Company recognized total restructuring expenses of $241 for the three months ended March 31, 2024 recognized as $146 and $96 of research and development and general and administrative expense, respectively, in the consolidated statement of operations and comprehensive loss. For the three months ended March 31, 2023, no related expense was recognized. These one-time employee termination benefits are related to affected employees, who were offered separation benefits, including severance payments. There are no remaining accrued payments as of March 31, 2024.


	Three Months Ended March 31,
	2024
Restructuring expenses	$	5,299
Cash payments		(4,820	)
Non-cash expenses		(479	)
Liability included in accrued expenses and other current liabilities at March 31, 2024	$	—

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

~~Item 2.~~

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

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

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes appearing elsewhere in this Quarterly Report on Form10-Q and our audited consolidated financial statements and related ~~footnotes~~notes for the year ended December 31, ~~2017~~2023 included in our Annual Report on Form 10-K for the ~~final prospectus for our initial public offering dated June 20, 2018.~~year ended December 31, 2023. Some of the information contained in this discussion and analysis or set forth elsewhere in this ~~report,~~Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks, uncertainties and assumptions. Factors that might cause future results to differ materially from those projected in the forward-looking statements include, but are not limited to, those set forth in ~~Item 1A of Part II of this report,~~our Annual Report on Form 10-K for the year ended December 31, 2023, as supplemented by our subsequent filings with the SEC.

Overview

We are a ~~Phase 2 clinical stage~~ gene therapy company with a purpose to free people from a lifetime of genetic disease. Our company has been focused on developing potentially curative~~ex vivo~~ ~~lentiviral-based~~ HSC gene therapies to treat patients with rare diseases following a single ~~dose. Our~~dose treatment regimen. The gene therapies we had been developing employ ~~hematopoietic stem cells~~HSCs that are ~~extracted~~harvested from the patient and then modified with a lentiviral ~~vectors~~vector to insert the equivalent of a functional copy of the gene that is ~~defective~~mutated in the target disease. We believe that our approach, which is designed to transform stem cells from patients into therapeutic products, has the potential to provide curative benefit ~~in an outpatient setting~~ for a range of diseases. Our ~~initial~~development focus ishas been on a group of rare genetic diseases referred to as lysosomal ~~storage diseases,~~disorders, some of which today are primarily managed with enzyme replacement therapies, or ERTs.

WeOn July 12, 2023, following a comprehensive review of our business by our Board of Directors, or the AVROBIO Board, we announced our intention to halt development of our programs and explore strategic alternatives focused on maximizing stockholder value, which may include, but are ~~initially targeting rare diseases~~not limited to, an acquisition, a merger, business combination or divestiture.

Subsequently, in ~~which current standard~~connection with ongoing cost reduction efforts related to our ongoing review of ~~care provides~~potential strategic alternatives, we have terminated all Company-sponsored treatment-related and Company-sponsored long-term follow-up clinical studies relating to our AVR-RD-02, or Gaucher disease type 1, program, and Company-sponsored long term follow-up studies relating to our AVR-RD-01, or Fabry disease, program (which we previously deprioritized). In addition, in September 2023, we terminated our agreements with the ~~mechanistic proof that~~University of Manchester for the ~~enzymes or proteins produced endogenously following treatment with our gene therapies can offer benefit to patients. Typically in lysosomal storage diseases,~~license and development of a gene ~~mutation results~~therapy for MPSII, or Hunter syndrome, and discontinued our AVR-RD-05, or Hunter syndrome gene therapy program. Previously, in June 2023, we sold our cystinosis gene therapy program to Novartis Pharma AG and Novartis Pharmaceuticals Corporation, or collectively Novartis. As of the date of the filing of this Quarterly Report, we currently have a total of three gene therapy product candidates, none of which are currently in active clinical development, including AVR-RD-02 for the treatment of Gaucher disease type 1 and type 3, AVR-RD-03 for the treatment of Pompe disease and AVR-RD-01 for the treatment of Fabry disease.

After a comprehensive review of strategic alternatives, including identifying and reviewing potential candidates for a strategic transaction, on January 30, 2024, we entered into an Agreement and Plan of Merger and Reorganization, or the Merger Agreement, with Alpine Merger Subsidiary, Inc., our direct, wholly owned subsidiary, or Merger Sub, and Tectonic pursuant to which Merger Sub will merge with and into Tectonic, with Tectonic surviving as our wholly-owned subsidiary, such transaction referred to hereinafter as the merger. The merger was unanimously approved by the AVROBIO Board, and the AVROBIO Board resolved to recommend approval of the Merger Agreement to AVROBIO stockholders. In connection with the merger, certain investors have agreed to purchase shares of Tectonic common stock at a purchase price of $12.39908 per share, subject to and immediately prior to the closing of the merger, pursuant to the terms of a subscription agreement entered into by such investors and Tectonic, or the Subscription Agreement, and certain investors have consummated or will consummate certain additional purchases of Tectonic common stock pursuant to the conversion of certain simple agreements for future equity, or SAFEs, entered into by such investors and Tectonic, or the Tectonic SAFEs, for an aggregate purchase price among the transactions contemplated by the Subscription Agreement and such Tectonic SAFEs of approximately $130.7 million, such transactions collectively, the private financings. At the effective time of the merger, each share of then-outstanding Tectonic common stock will be converted into the right to receive a number of shares of AVROBIO common stock, equal to the exchange ratio as set forth in the ~~deficiency~~Merger Agreement, or ~~malfunctioning~~the exchange ratio. Concurrently with the closing of ~~an enzyme~~the merger, and assuming approval by AVROBIO stockholders, we anticipate effecting a reverse stock split, or ~~other protein. This results~~the reverse stock split, at a ratio in the ~~inability~~range between 1:3 to 1:30, inclusive. Additionally, at or prior to the effective time of ~~lysosomes~~the merger, AVROBIO and a rights agent will enter into a Contingent Value Rights Agreement, or CVR Agreement, pursuant to ~~properly process cellular byproducts. As a result, these byproducts accumulate~~which AVROBIO stockholders of record as of immediately prior to ~~toxic levels~~ such effective time (including holders of AVROBIO common stock issued upon settlement of the AVROBIO restricted stock units, or RSUs) will receive one non-transferable contingent value right, or CVR for each outstanding share of AVROBIO common stock held by such stockholder on such date.

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

The closing of the ~~body’s cells~~merger is subject to approval by AVROBIO stockholders and ~~in turn, disrupt the function of multiple tissues and organs. Fabry disease, Gaucher disease and Pompe disease are primarily managed bybi-weekly,~~ multi-hour infusions with ERTs that seek to exogenously replace the missing enzyme. However, given the characteristics of most ERTs, they typically only remain in the plasma for a short period of time and thus, are not ideal because they are only dosed every two weeks. These existing therapies manage, rather than cure, the underlying diseases and, as a result, patients continue to have disease progression. Further, the frequent, periodic and life-long dosing schedule required for ERTs results in significant costs for the healthcare system and is burdensome for the patient.

We seek to develop promising gene therapy programs by applying our expertise in gene and cellular therapies and clinical and regulatory strategy and execution to efficiently bring these potentially curative therapies to patients. In our initial programs, we leverage years of extensive preclinical and early clinical research by leading researchers,Tectonic stockholders, as well as ~~our internal research efforts,~~other customary closing conditions including Nasdaq’s approval of the listing of the shares of the AVROBIO common stock to ~~advance potential therapies. We plan~~be issued in connection with the proposed merger. The closings of the private financings are conditioned upon the satisfaction or waiver of the conditions to ~~identify and develop future product candidates through our own internal research efforts~~the closing of the merger as well as ~~through collaborations~~certain other conditions. The closing of the merger is conditioned upon the satisfaction or waiver of the receipt of cash proceeds not less than $114.5 million in connection with ~~leading academics.~~the consummation of the transactions contemplated by the private financings. If the transactions are completed, the business of Tectonic will continue as the business of the combined company.

AVROBIO’s future operations are highly dependent on the success of the merger and there can be no assurances that the merger will be successfully consummated. There can be no assurance that the strategic review process or any transaction relating to a specific asset, including the merger and any AVROBIO asset sale (as defined below), will result in AVROBIO pursuing such a transaction(s), or that any transaction(s), if pursued, will be completed on terms favorable to AVROBIO and its stockholders in the existing AVROBIO entity or any possible entity that results from a combination of entities. If the strategic review process is unsuccessful, and if the merger is not consummated, the AVROBIO Board may decide to pursue a dissolution and liquidation of our company.

Since our inception in 2015, we have devoted substantially all of our resources to organizing and staffing our company, business planning, raising capital, acquiring or discovering product candidates and securing related intellectual property rights, conducting discovery, research and development activities for our programs and planning for potential commercialization. ~~We do not have any products approved for sale and~~To date, we have not generated any product revenue ~~from product sales. To date, we~~and have ~~funded~~financed our operations ~~with proceeds from~~primarily through the ~~sales~~private placement of ~~preferred stock~~our securities and through public offerings of our ~~initial public offering of~~ common ~~stock, or our initial public offering (the “IPO”).~~stock. Through ~~June 30, 2018,~~March 31, 2024, we had received gross cash proceeds of $87.5 million from ~~the~~ sales of our preferred ~~stock~~stock; gross cash proceeds, before deducting underwriting discounts and ~~$114.7~~commissions and expenses, of $428.1 million from ~~the~~ sales of our common stock through our ~~IPO. Since~~initial public offering, or IPO, and follow-on offerings; gross cash proceeds, before deducting commissions and expenses, of $23.5 million from sales of our ~~inception,~~common stock through our prior “at-the-market” facility, or our prior ATM facility; $15.0 million drawn in term loans under the Term Loan Agreement (as defined below), which was repaid in full and terminated on June 9, 2023; and gross proceeds, before deducting transaction costs, of $87.5 million from the sale of the Company’s cystinosis gene therapy program.

Additionally, we have incurred significant operating losses. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our current or future product candidates and programs. Our net ~~losses were $18.7~~loss was $6.8 million and ~~$4.6~~$25.0 million for the ~~six~~three months ended ~~June 30, 2018~~March 31, 2024 and ~~2017,~~2023, respectively. As of ~~June 30, 2018~~March 31, 2024, we had an accumulated deficit of ~~$44.1~~$484.1 million. WeShould we resume development of our product candidates, we would expect to continue to incur significant expenses for at least the next several years as we advance our product candidates from ~~discovery through~~ preclinical development and clinical trials and seek regulatory approval of our product candidates. Should we resume development of our product candidates, we would expect to expend significant resources to advance these candidates. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution. ~~We may also incur expenses in connection with thein-licensing~~ ~~or acquisition~~

Should we resume development of ~~additional~~our product ~~candidates. Furthermore,~~candidates, we expect to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses that we did not incur as a private company.

~~As a result, we will~~would need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we would expect to finance our operations with proceeds from outside sources, with a majority of such proceeds expected to be derived from sales of ~~equity, including the net proceeds from our IPO.~~equity. We may also ~~plan to~~ pursue additional funding from outside sources, including ~~our expansion of, or our entry into, new~~ borrowing

~~arrangements; research~~ arrangements and ~~development incentive payments from the Australian government; and our~~ entry into potential future collaboration agreements for one or more of our programs. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more of our product candidates or delay our pursuit of potential~~in-licenses~~ ~~or acquisitions.~~

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

AVROBIO, INC.

~~As of June 30, 2018, we had cash~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and cash equivalents of $155.0 million. We believe that our existing cash and cash equivalents as of June 30, 2018 will enable us to fund our operating expenses and capital expenditure requirements into 2020. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. See “—Liquidity and Capital Resources.” To finance our operations beyond that point, we will need to raise additional capital, which cannot be assured.per share data)

~~We recently dosed the first patient in our ongoing Phase 2 clinical trial ofAVR-RD-01~~ ~~for Fabry disease. We recently held apre-IND~~ ~~meeting with the FDA to discuss the requirements to commence clinical trials in the United States. We expect to open a U.S. site for our ongoing Phase 2 clinical trial ofAVR-RD-01~~ ~~in 2019. In addition, on July 11, 2018, a third patient was dosed in the ongoing investigator-sponsored Phase 1 clinical trial ofAVR-RD-01~~ ~~for Fabry disease.~~

Components of Our Consolidated Results of Operations

~~Revenue~~

To date, we have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products in the near future. If development efforts for our product candidates are successful and result in regulatory approval or additional license agreements with third parties, we may generate revenue in the future from product sales.

Operating Expenses

Research and Development Expenses

Research and development expenses consist primarily of costs incurred in connection with the discovery and development of our product candidates. We expense research and development costs as incurred. These expenses ~~include:~~

consist of costs incurred in connection with the development of our product candidates, including:

•

license maintenance fees and milestone fees incurred in connection with various license agreements;

•

expenses incurred under agreements with contract research organizations, or CROs, contract manufacturing organizations, or CMOs, as well as investigative sites and consultants that conduct our clinical trials, preclinical studies and other scientific development services;

•

manufacturingscale-up expenses and the cost of acquiring and manufacturing preclinical and clinical trial materials and commercial materials, including manufacturing validation batches;

•

costs of purchasing lab supplies and non‑capital equipment used in our preclinical activities;

•

employee-related expenses, including salaries, related benefits, travel and stock-based compensation expense for employees engaged in research and development functions;

•

costs related to compliance with regulatory requirements; and

•

allocated facilities costs, depreciation and other expenses, which include rent and utilities.

We recognize external development costs based on an evaluation of the progress to completion of specific tasks using information provided to us by our service providers.

Our direct research and development expenses are tracked on aprogram-by-program basis for our product candidates and consist primarily of external costs, such as fees paid to outside consultants, CROs, CMOs, and central laboratories in connection with our preclinical development, process development, manufacturing and clinical development activities. Our direct research and development expenses by program also include fees incurred under license agreements. We do not allocate employee costs or facility expenses, including depreciation or other indirect costs, to specific programs because these costs are deployed across multiple programs and, as such, are not separately classified. We use internal resources primarily to oversee the research and discovery as well as for managing our preclinical development, process development, manufacturing and clinical development activities. These employees work across multiple programs and, therefore, we do not track their costs by program.

The table below summarizes our research and development expenses ~~incurred by program:~~related to our product candidates (in thousands):


	Three Months Ended March 31,
	2024			2023
Fabry	$	(34	)	$	1,256
Gaucher		(25	)		5,119
Cystinosis		—			456
Hunter		—			1,653
Pompe		—			24
Other research activities		(12	)		45
Unallocated research and development expenses		754			8,780
Total research and development expenses	$	683		$	17,333

   Three Months
Ended June 30,    Six Months
Ended June 30,
   2018    2017    2018    2017
   (in thousands)
Fabry
   $ 2,519    $ 864    $ 4,407    $ 1,251
Gaucher
   1,579    174    2,434    265
AML
   —      —      46    166
Cystinosis
   129    —      277    —
Pompe
   237    —      384    —
Unallocated research and development expenses
   2,943    843    5,506    1,633








Total research and development expenses
   $ 7,407    $ 1,881    $ 13,054    $ 3,315

Research and development activities ~~are~~will be central to our business ~~model.~~model, should we resume development of our product candidates. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. As a result, should we resume development of our product candidates, we expect that our research and development expenses will increase substantially over the next several years, particularly as we increase personnel costs, including stock-based compensation, contractor costs and facilities costs, as we continue to advance the development of our product candidates. WeShould we resume development of our product candidates, we also expect to incur additional expenses related to milestone and royalty payments payable to third parties with whom we have entered into license agreements to acquire the rights to our product candidates. See “Risk Factors—Risks related to our

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

business, financial position and need for additional capital—We have incurred net losses since inception. We expect to incur net losses for the foreseeable future and may never achieve or maintain profitability.”

The successful development and commercialization of our product candidates is highly uncertain. At this time, should we resume development of our product candidates, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical development of any of our product candidates or when, if ever, material net cash inflows may commence from any of our product candidates. This uncertainty is due to the numerous risks and uncertainties associated with product development and commercialization, including the uncertainty of:

•

the scope, progress, outcome and costs of our preclinical development activities, clinical trials and other research and development activities;

•

establishing an appropriate safety profile withIND-enabling studies;

•

successful patient enrollment in, and the design, initiation and completion of, clinical trials;

•

the timing, receipt and terms of any marketing approvals from applicable regulatory authorities;

•

establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers;

•

development and timely delivery of commercial-grade drug formulations that can be used in our clinical trials and for commercial launch;

•

obtaining, maintaining, defending and enforcing patent claims and other intellectual property rights;

•

significant and changing government regulation;

•

launching commercial sales of our product candidates, if and when approved, whether alone or in collaboration with others; ~~and~~

•

maintaining a continued acceptable safety profile of the product candidates following ~~approval.~~

approval; and

•

the risks disclosed in the section entitled “Risk Factors” of this Quarterly Report on Form 10-Q.

WeShould we resume development of our product candidates, we may never succeed in achieving regulatory approval for any of our product candidates. We may obtain unexpected results from our clinical trials. We may elect to discontinue, delay or modify clinical trials of some product candidates or focus on others. Any changes in the outcome of any of these variables with respect to the development of our product candidates in preclinical and clinical development could mean a significant change in the costs and timing associated with the development of these product candidates. For example, if the U.S. Food and Drug Administration, or FDA, or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently expect, or if we experience significant delays in enrollment in any of our planned clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development of that product candidate. Identifying potential product candidates and conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries, related benefits, travel and stock-based compensation expense for personnel in executive, finance and administrative functions. General and administrative expenses also include professional fees for legal, consulting, accounting and audit services.

WeShould we resume development of our product candidates, we would anticipate that our general and administrative expenses ~~will~~would increase ~~in the future~~ as we increase our headcount to support ~~our continued~~ research activities and development of our product candidates. We also anticipate that we ~~will~~would incur increased accounting, audit, legal, ~~regulatory,~~ compliance, director and officer insurance costs as well as investor and public relations expenses associated with being a public company. We anticipate the additional costs for these services ~~will~~would substantially increase our general and administrative expenses. Additionally, if and when we believe a regulatory approval of a product candidate appears likely, we anticipate an increase in payroll and ~~expense~~other commercialization-related expenses as a result of our preparation for commercial operations, especially as it relates to the sales and marketing of our product candidate.

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

Other (Expense) Income, ~~(Expense)~~Net

~~Interest Income~~

~~Interest~~Other (expense) income, net primarily consists of interest income earned on ~~money market funds~~our cash and ~~other bank deposits.~~

~~Other Expense~~

~~Other~~cash equivalents, changes in foreign currency, and interest expense ~~consists of foreign exchange gain or loss.~~

~~Change in Fair Value of Preferred Stock Warrant Liability~~

~~In connection with entering into our loan agreement, we agreed to issue a warrant to purchase shares of our preferred stock~~related to the lender. Prior to the completion of the IPO, we classified the warrant as a liability on our consolidated balance sheet and we were required to remeasure to fair value at each reporting date. We recognized changes in the fair value of the warrant liability as a component of other income (expense), net in our consolidated statements of operations and comprehensive loss. Upon the IPO, the warrant to purchase preferred stock was converted to a warrant to purchase common stock. The carrying amount of the warrant to purchase preferred stock as of the date of IPO was transferred to additional paid in capital. No further revaluation needed for the warrant to purchase common stock.Term Loan Agreement.

~~Change in Fair Value of Derivative Liability~~

Our stock purchase agreement with University Health Network, or UHN, provides for a payment to UHN upon completion of an initial public offering, which included our June 2018 IPO, if UHN’s fully-diluted percentage ownership of our company is reduced within a range of specified percentages. We classify the IPO dilution payment obligation as a liability on our consolidated balance sheet and we are required to remeasure to fair value at each reporting date. We recognize changes in the fair value of the derivative liability as a component of other income (expense), net in our consolidated statements of operations and comprehensive loss. On June 21, 2018, in connection with our IPO, we remeasured the fair value of the derivative liability to $2.0 million as we were required to pay the dilution payment as mentioned above, which was paid in July 2018.

Consolidated Results of Operations

Comparison of the ~~Three Months Ended June 30, 2018~~three months ended March 31, 2024 and ~~2017~~2023

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


	Three Months Ended March 31,
	2024			2023			Change
Operating expenses:
Research and development	$	683		$	17,333		$	(16,650	)
General and administrative		7,258			7,887			(629	)
Total operating expenses		7,941			25,220			(17,279	)
Loss from operations		(7,941	)		(25,220	)		17,279
Other income:
Interest income, net		1,146			248			898
Other (expense) income, net		(13	)		15			(28	)
Total other income, net		1,133			263			870
Net loss	$	(6,808	)	$	(24,957	)	$	18,149

   Three Months
Ended June 30,    Change
   2018    2017
   (in thousands)
Operating expenses:

Research and development
   $ 7,407    $ 1,881    $ 5,526
General and administrative
   2,140    661    1,479






Total operating expenses
   9,547    2,542    7,005






Loss from operations
   (9,547 )    (2,542 )    (7,005 )
Other income (expense):

Interest income
   234    11    223
Change in fair value of preferred stock warrant liability
   (150 )    —      (150 )
Change in fair value of derivative liability
   (1,042 )    (3 )    (1,039 )
Other expense
   (2 )    —      (2 )






Total other expense, net
   (960 )    8    (968 )






Net loss
   $ (10,507 )    $ (2,534 )    $ (7,973 )

Research and Development Expenses

   Three Months
Ended June 30,    Change
   2018    2017
   (in thousands)
Direct research and development expenses by program:

Fabry
   $ 2,519    $ 864    $ 1,655
Gaucher
   1,579    174    1,405
Cystinosis
   129    —      129
Pompe
   237    —      237
Unallocated research and development expenses:

Personnel related (including stock-based compensation)
   2,123    646    1,477
Other
   820    197    623






Total research and development expenses
   $ 7,407    $ 1,881    $ 5,526

Research and development expenses ~~were $7.4~~decreased by approximately $16.7 million for the three months ended June 30, 2018, compared to $1.9 million for the three months ended June 30, 2017. The increase of $5.5 million was primarily due to increases of $1.7 million in direct costs for our Fabry program, $1.4 million in direct costs connected with our Gaucher program, $0.1 million in direct costs related to our Cystinosis program, $0.2 million in direct costs connected with our Pompe program and $2.1 million in research and discovery and unallocated costs, which primarily consisted of personnel-related costs due to the increase in research and development employee headcount.

~~The increase in direct costs for our Fabry program was primarily due to CMO fees of $0.7 million, CRO fees of $0.3 million, as well as process development costs and consulting fees of $0.6 million.~~

~~The increase in direct costs for our Gaucher program was primarily due to CMO fees of $0.8 million, as well as CRO fees and consulting fees of $0.3 million.~~

~~The increase in direct costs for our Cystinosis program was primarily due to consulting fees of $0.1 million.~~

~~The increase in direct costs for our Pompe program was primarily due to process development costs of $0.2 million.~~

The increase in research and discovery and unallocated costs was primarily due to an increase of $1.5 million in personnel-related costs, including stock-based compensation, as a result of hiring additional personnel in our research and development department, an increase of $0.4 million in unallocated research and development costs and an increase of $0.3 million in unallocated facility costs and rent expense. Personnel-related costs for the three months ended June 30, 2018 and 2017 included stock-based compensation expense of $0.2 million and less than $0.1 million, respectively.

~~General and Administrative Expenses~~

~~General and administrative expenses were $2.1 million for the three months ended June 30, 2018, compared~~ to $0.7 million for the three months ended June 30, 2017. The increase of $1.5 million was primarily due to increases of $0.9 million in personnel-related costs, including stock-based compensation, $0.3 million in consulting expense, $0.2 million in professional fees and $0.1 million in facility expense. The increase in personnel-related costs was due to the hiring of additional personnel in our general and administrative functions, including the hiring of our Chief Financial Officer (“CFO”) in late 2017. Professional fees increased due to costs associated with the preparation of our financial statements, preparing to become a publicly traded company, as well as ongoing business operations. The increase in facility expense was primarily due to the addition of increased office space as a result of the continued growth of the employee headcount.

~~Other Income (Expense), net~~

~~Other income (expense), net was an expense of $1.0~~March 31, 2024, from $17.3 million for the three months ended ~~June 30, 2018, compared to an income less than $0.1~~March 31, 2023. This decrease was driven by a $6.7 million decrease in personnel-related and consulting costs, including non-cash stock-based compensation, a $5.7 million decrease in development costs, a $2.7 million decrease in manufacturing costs, a $0.2 million decrease in preclinical costs, and a $1.2 million decrease in allocated facility expense.

General and Administrative Expenses

General and administrative expenses were $7.3 million for the three months ended ~~June 30, 2017. The increase in other expense~~March 31, 2024, compared to $7.9 million for the three months ended March 31, 2023. This decrease of ~~$1.0~~$0.6 million was ~~primarily due to increase of $1.0~~driven by a $2.5 million decrease in ~~the change~~personnel-related and consulting costs, including non-cash stock-based compensation, a $0.4 million decrease in ~~fair value of derivative liability~~rent expense, a $0.3 million decrease in depreciation expense, and ~~an increase of $0.2~~a $0.3 million decrease in ~~the change in fair value of preferred stock warrant liability,~~information technology-related costs which were partially offset by a ~~$0.2~~$1.7 million increase in ~~interest income.~~legal expenses and a $1.2 million increase in allocated facility expense.

~~Comparison of the Six Months Ended June 30, 2018 and 2017~~Other Income, Net

~~The following table summarizes our consolidated results of operations for the six months ended June 30, 2018 and 2017:~~

   Six Months
Ended June 30,
   2018    2017    Change
   (in thousands)
Operating expenses:

Research and development
   $ 13,054    $ 3,315    $ 9,739
General and administrative
   4,281    1,271    3,010






Total operating expenses
   17,335    4,586    12,749






Loss from operations
   (17,335 )    (4,586 )    (12,749 )
Other income (expense):

Interest income
   392    15    377
Change in fair value of preferred stock warrant liability
   (162 )    —      (162 )
Change in fair value of derivative liability
   (1,629 )    (35 )    (1,594 )
Other expenses
   (15 )    (5 )    (10 )






Total other expense, net
   (1,414 )    (25 )    (1,389 )






Net loss
   $ (18,749 )    $ (4,611 )    $ (14,138 )

~~Research and Development Expenses~~

   Six Months
Ended June 30,
   2018    2017    Change
   (in thousands)
Direct research and development expenses by program:

Fabry
   $ 4,407    $ 1,251    $ 3,156
Gaucher
   2,434    265    2,169
AML
   46    166    (120 )
Cystinosis
   277    —      277
Pompe
   384    —      384
Unallocated research and development expenses:

Personnel related (including stock-based compensation)
   3,743    1,281    2,462
Other
   1,763    352    1,411






Total research and development expenses
   $ 13,054    $ 3,315    $ 9,739

~~Research and development expenses were $13.1~~Other income, net, was $1.1 million for the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2024, compared to ~~$3.3~~$0.3 million for the ~~six~~three months ended ~~June 30, 2017. The increase of $9.7 million was~~March 31, 2023. This change is primarily due to ~~increases~~the elimination of ~~$3.2 million in direct costs for our Fabry program, $2.2 million in direct costs connected with our Gaucher program, $0.3 million in direct costs~~interest expense related to our Cystinosis program, $0.4 million in direct costs related to our Pompe program and $3.9 million in research and discovery and unallocated costs, all partially offset by a decrease of $0.1 million in direct costs for our AML program as we shifted our focus onto developing our other programs.

~~The increase in direct costs for our Fabry program~~the Term Loan Agreement, which was ~~primarily due topre-clinical,~~ ~~clinical and process development costs of $1.4 million, CMO fees of $0.7 million, as well as CRO and consulting fees of $1.0 million.~~

~~The increase in direct costs for our Gaucher program was primarily due to CMO fees of $0.8 million, process development costs of $0.9 million, as well as CRO and consulting fees of $0.3 million.~~

~~The increase in direct costs for our Cystinosis program was primarily due to consulting fees of $0.3 million.~~

~~The increase in direct costs for our Pompe program was primarily due to development costs of $0.3 million.~~

The increase in research and discovery and unallocated costs was primarily due to an increase of $2.5 million in personnel-related costs, including stock-based compensation, as a result of hiring additional personnel in our research and development department, an increase of $0.5 million in unallocated research and development costs, and an increase of $0.8 million in unallocated facility costs and rent expense. Personnel-related costs for the six months ended June 30, 2018 and 2017 included stock-based compensation expense of $0.2 million and less than $0.1 million, respectively.

~~General and Administrative Expenses~~

General and administrative expenses were $4.3 million for the six months ended June 30, 2018, compared to $1.3 million for the six months ended June 30, 2017. The increase of $3.0 million was primarily due to increases of $1.4 million in personnel-related costs, including stock-based compensation, $1.0 million in consulting expense, $0.4 million in professional fees and $0.1 million in legal expense. The increase in personnel-related costs was due to the hiring of additional personnel in our general and administrative functions, including the hiring of our CFO in late 2017. Professional fees increased due to costs associated with the preparation of our consolidated financial statements, preparing to become a publicly traded company, as well as ongoing business operations.

~~Other Income (Expense), net~~

Other income (expense), net was an expense of $1.4 million for the six months ended June 30, 2018, compared to an expense less than $0.1 million for the six months ended June 30, 2017. The increase in other expense of $1.4 million was primarily due to an increase of $1.6 millionpaid off in the ~~change in fair value~~second quarter of ~~derivative liability and an increase of $0.2 million in the change in fair value of preferred stock warrant liability, partially offset by a $0.4 million increase in interest income.~~

2023.

Liquidity and Capital Resources

Since our inception, we have not generated any revenue and have incurred significant operating losses and negative cash flows from our operations. We have funded our operations to date primarily with proceeds from the sale of preferred stock and our common stock through our ~~IPO.~~ IPO, and we have raised additional capital through subsequent follow-on offerings and our prior ATM facility.Through ~~June 30, 2018,~~March 31, 2024, we had received gross cash proceeds of $87.5 ~~and $114.7~~ million from sales of our preferred stock; gross cash proceeds, before deducting underwriting discounts and commissions and expenses, of $428.1 million from sales of our common stock through our IPO and ~~IPO, respectively.~~follow-on offerings; gross cash proceeds, before deducting commissions and expenses, of $23.5 million from sales of our common stock under our prior ATM facility; $15.0 million drawn in term loans under our Term Loan Agreement, which was repaid in full and terminated on June 9, 2023; and gross proceeds, before deducting transaction costs, of $87.5 million from the sale of our cystinosis gene therapy program.

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

On July 1, 2019, we filed a shelf registration statement on Form S-3 with the SEC, or the July 2019 Shelf, which covers the offering, issuance and sale by us of up to an aggregate of $200.0 million of our common stock, preferred stock, debt securities, warrants and/or units. We simultaneously entered into a Sales Agreement with Cowen and Company, LLC, as sales agent, to provide for the offering, issuance and sale by us of up to $50.0 million of our common stock from time to time in ATM offerings under the July 2019 Shelf. The July 2019 Shelf was declared effective by the SEC on July 10, 2019.

On December 20, 2019, we filed a shelf registration statement on Form S-3 with the SEC, or the December 2019 Shelf, which covers the offering, issuance and sale by us of up to an aggregate of $250.0 million of our common stock, preferred stock, debt securities, warrants and/or units. The December 2019 Shelf was declared effective by the SEC on January 14, 2020.

In July 2019, we closed an underwritten public offering, or the July 2019 Follow-On Offering, under the July 2019 Shelf of 7,475,000 shares of our common stock at a public offering price of $18.50 per share, which included 975,000 shares of our common stock resulting from the full exercise of the underwriters’ option to purchase additional shares at the public offering price. The net proceeds to us from this offering, after deducting underwriting discounts and commissions and other offering expenses payable by us, were $129.5 million.

In February 2020, we closed an underwritten public offering, or the February 2020 Follow-On Offering, under the December 2019 Shelf of 4,350,000 shares of our common stock at a public offering price of $23.00 per share. The net proceeds to us from this offering, after deducting underwriting discounts and commissions and other offering expenses payable by us, were $93.6 million.

In June 2020, we sold an aggregate of 384,140 shares of common stock under the prior ATM facility for net proceeds, after deducting commissions and other offering expenses payable by us, of $8.1 million.

In November 2020, we closed an underwritten public offering, or the November 2020 Follow-On Offering, of 5,000,000 shares of our common stock at a public offering price of $15.00 per share. The net proceeds to us from the November 2020 Follow-On Offering, after deducting underwriting discounts and commissions and other offering expenses payable by us, were $70.2 million.

In May 2021, we sold an aggregate of 1,829,268 shares of common stock under the prior ATM facility for net proceeds, after deducting commissions and other offering expenses payable by us, of $14.5 million. As of March 31, 2024, approximately $26.5 million of common stock remained available for future issuance under the prior ATM facility.

On November 2, 2021, or the Closing Date, we entered into the Term Loan Agreement. The Term Loan Agreement provided for (i) on the Closing Date, $30.0 million aggregate principal amount of term loans available through October 31, 2023; (ii) an additional $20.0 million in term loan facilities available through October 31, 2023 upon the achievement of certain regulatory or clinical milestones prior to the time of draw, or the Milestone Funding; and (iii) an additional discretionary $15.0 million term loan facility available upon our request and approval by the Agent and the Lenders, or, collectively, the Term Loans. We drew $15.0 million in term loans on the Closing Date. On June 9, 2023, upon the closing of the Asset Sale, all outstanding amounts due and owed, including principal, interest, and other charges, under the Term Loan Agreement, dated as of November 2, 2021, by and among the Company, Silicon Valley Bank, a division of First-Citizens Bank & Trust and the other parties thereto, or the Term Loan Agreement, were repaid in full and the Term Loan Agreement was terminated. Upon repayment, the obligations of the Company under the Term Loan Agreement were satisfied in full, the Term Loan Agreement and all related loan documents were terminated and all liens and security interests granted thereunder were released and terminated (excluding certain indemnification obligations that expressly survive termination of the Term Loan Agreement).

In July 2022, the July 2019 Shelf expired, and on November 8, 2022, we filed a shelf registration statement on Form S-3 with the SEC, or the November 2022 Shelf, which covered the offering, issuance and sale by us of up to an aggregate of $250.0 million of our common stock, preferred stock, debt securities, warrants and/or units. The December 2019 Shelf expired in December 2022, and the November 2022 Shelf carried forward unsold securities previously covered by the December 2019 Shelf, thus registering an aggregate total of $250.0 million of our common stock, preferred stock, debt securities, warrants and/or units. In connection with the November 2022 Shelf, we simultaneously entered into a new Sales Agreement with Cowen and Company, LLC, as sales agent, to provide for the offering, issuance and sale by us of up to $50.0 million of our common stock from time to time in “at-the-market” offerings under the November 2022 Shelf, or the 2022 ATM Facility. As of the date of this report, we have not made any sales under the 2022 ATM Facility. On November 3, 2023, we withdrew the November 2022 Shelf. We will not make any potential sales under the 2022 ATM Facility unless a new shelf registration statement on Form S-3 is filed and declared effective.

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

As of March 31, 2024, we had cash and cash equivalents of $90.5 million. Cash in excess of immediate requirements is invested primarily with a view to liquidity and capital preservation.

Cash Flows

The following table summarizes our cash flows for each of the periods ~~presented:~~presented (in thousands):


	Three Months Ended March 31,
	2024			2023
Net cash used in operating activities	$	(7,569	)	$	(20,284	)
Net cash used in investing activities		—			(8	)
Net cash provided by financing activities		30			55
Net decrease in cash and cash equivalents	$	(7,539	)	$	(20,237	)

   Six Months Ended
June 30,
   2018    2017
Net cash used in operating activities
   $ (14,229 )    $ (4,458 )
Net cash used in investing activities
   (400 )    (62 )
Net cash provided by financing activities
   163,681    3,436




Net increase (decrease) in cash and cash equivalents
   $ 149,052    $ (1,084 )

Operating Activities

During the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2024, operating activities used ~~$14.2~~$7.6 million of cash, ~~and~~ cash equivalents and restricted cash, resulting from our net loss of ~~$18.7~~$6.8 million and from cash used by changes in our operating assets and liabilities of $2.0 million, which was offset by non-cash charges of $1.2 million. The net change in our operating assets and liabilities was primarily due to a $2.4 million decrease in accrued expenses and other current liabilities and a $0.7 million decrease in current and non-current operating lease liabilities, which were partially offset by a $0.9 million decrease in prepaids and other current assets. The non-cash charges primarily included $0.9 million of ~~$2.7~~stock-based compensation expense and $0.3 million in non-cash lease expense.

During the three months ended March 31, 2023, operating activities used $20.3 million of cash, cash equivalents and restricted cash, resulting from our net loss of $25.0 million and ~~net~~ cash provided by changes in our operating assets and liabilities of ~~$1.9~~$1.1 million and partially offset by non-cash charges of $3.5 million. ~~Thenon-cash~~ charges primarily included $0.6 million of stock-based compensation, $1.6 million of change in fair value of derivative liability and $0.2 million of change in fair value of preferred stock warrant liability. The net changes in our operating assets and liabilities ~~was~~were primarily due to ~~increases~~a $2.2 million decrease in ~~liabilities of $3.0 million due to ongoing research, development,~~prepaids and ~~clinical trial efforts and partially~~other current assets, offset by ~~increases~~a $0.7 million decrease in ~~assets of $1.2~~accrued expenses and other current liabilities and a $0.6 million ~~including an increase due to a $0.2 million security deposit for a new~~decrease in current and non-current operating lease ~~that was executed in 2018.~~

~~During the six months ended June 30, 2017, operating activities used $4.5~~liabilities. The non-cash charges primarily included $2.5 million of ~~cash~~stock-based compensation expense, $0.6 million in non-cash lease expense, and ~~cash equivalents, resulting from our net loss of $4.6 million and net cash used by changes in our operating assets and liabilities of $0.1 million, primarily offset bynon-cash~~ ~~charges of~~ $0.3 ~~million.~~

~~Investing Activities~~

~~During the six months ended June 30, 2018, we used $0.4~~ million of depreciation and amortization expense.

Investing Activities

No cash ~~and cash equivalents~~was provided by, or used in, investing activities ~~consisting of purchases of property and equipment. During~~for the ~~six~~three months ended ~~June 30, 2017, we~~March 31, 2024 compared to cash used in investing activities of less than ~~$0.1~~($0.1) million ~~of cash and cash equivalents in purchases of property and equipment.~~

~~Financing Activities~~

~~During~~for the ~~six~~three months ended ~~June 30, 2018, net~~March 31, 2023.

Financing Activities

Net cash provided by financing activities was ~~$163.7~~less than $0.1 million ~~primarily consisting of net cash proceeds of $105.4 million from our IPO in June 2018 and net cash proceed of $58.3 million from our issuance of Series B preferred stock in January 2018.~~

~~During~~for the ~~six~~three months ended ~~June 30, 2017, net~~March 31, 2024 compared to cash provided by financing activities ~~was $3.4~~of $0.1 million ~~consisting of net cash proceeds from our issuance of Series A preferred stock in~~for the three months ended March ~~2017.~~31, 2023.

~~Term Loan Agreement~~Funding Requirements

~~In June 2017,~~Should we ~~entered into a Loan and Security Agreement, which we refer to as the Loan Agreement, with Silicon Valley Bank, or SVB, providing a senior securednon-revolving~~ loan facility of up to an aggregate principal amount of $10.0 million, available for us to draw down in three tranches until October 31, 2018, subject to the satisfaction of certain milestones for each tranche. As of June 30, 2018, we had not drawn down from the facility and the $3.5 million first tranche was available.

The first tranche of $3.5 million was made available upon entry into the Loan Agreement as we satisfied the borrowing conditions at such time. The second tranche of $3.5 million will be made available after the funding of the first tranche amounts and upon confirmation by SVB that either we have met certain clinical and developmental milestones, or we have subsequently obtained at least $7.5 million in cash proceeds from the saleresume development of our equity securities from investors reasonably acceptable to SVB. The third tranche of $3.0 million will be made available after the funding of the first and second tranche amounts and upon confirmation by SVB that we have subsequently obtained at least an additional $6.5 million in cash proceeds from the sale of our equity securities to investors reasonably acceptable to SVB, and we have received a signed and enforceable term sheet from investors acceptable to SVB committing to provide financing on or before March 31, 2018 in an amount equal to at least 12 months of operating expenses. In January 2018, we received gross cash proceeds of $60.5 million from the sale of our Series B preferred stock.

Any outstanding principal amounts under the Loan Agreement will accrue interest at a floating per annum rate equal to the greater of 1% and the “prime rate,” as published in the Wall Street Journal, minus 3%. Payments on the Loan Agreement are interest only, payable monthly in arrears, until November 1, 2018, which can be extended by six months if the third tranche is drawn. Thereafter, principal and interest amounts are repayable over a~~30-month~~ ~~period, unless the third tranche is funded and the initial interest-only period is extended by six months, in which case principal and interest amounts are repayable over a24-month~~ ~~period.~~

Pursuant to the Loan Agreement, we provided a first priority security interest in all existing and after-acquired assets, excluding intellectual property and certain other assets owned by us. The Loan Agreement contains a negative pledge on our intellectual property.

In connection with the Loan Agreement, we issued a warrant to SVB to purchase shares of our Series A preferred stock at an exercise price of $0.7949 per share. This warrant was initially exercisable for 28,305 shares of Series A preferred stock. Up to an additional 160,397 shares of Series A preferred stock may become subject to this warrant, with the proportion of such additional shares equal to the percentage of the full $10.0 million aggregate principal amount under the Loan Agreement that we draw down thereunder. Following the completion of our IPO, this warrant is initially exercisable for 6,850 shares of common stock, and up to an additional 38,818 shares of common stock may become subject to this warrant.

The Loan Agreement allows us to voluntarily prepay all but not less than all the outstanding amounts thereunder. A scaling prepayment fee of 1% or 0.5% would be assessed if we prepay the amounts within the first anniversary of funding, or between the first and second anniversary of funding, respectively. No prepayment fee would be assessed if we prepay the amounts after the second anniversary of funding. A final payment fee of 6.75% multiplied by the original principal amount of each tranche drawn is due upon the earliest to occur of the maturity date of the Loan Agreement, the termination of the Loan Agreement, the acceleration of the Loan Agreement or repayment or prepayment of such borrowings.

The Loan Agreement contains customary indemnification obligations and customary events of default, including, among other things, our failure to fulfill certain of our obligations under the Loan Agreement and the occurrence of a material adverse change in our business, operations or condition, a material impairment of the prospect of repayment of any portion of the loan, or a material impairment in the perfection or priority of the SVB’s lien in the collateral or in the value of such collateral. In the event of default by us under the Loan Agreement, SVB would be entitled to exercise its remedies thereunder, including the right to accelerate the debt, upon whichproduct candidates, we may not be ~~required~~able to ~~repay all amounts then outstanding under~~resume activities at the ~~Loan Agreement or SVB may take possession of the collateral securing the Loan Agreement.~~

The Loan Agreement includes certain restrictions on, among other things, our ability to incur additional indebtedness, change the name or location of our business, merge with or acquire other entities, pay dividends or make other distributions to holders of our capital stock, make certain investments, engage in transactions with affiliates, create liens, open new deposit accounts, sell assets or pay subordinated debt.

~~Funding Requirements~~

Wesame costs as previously, and we expect our expenses towould increase substantially, ~~in connection with our ongoing activities,~~ particularly as we advance the preclinical activities and clinical trials of our product candidates. ~~In addition, we expect to incur additional costs associated with operating as a public company that we had not incurred as a private company.~~ Our expenses ~~will~~would also increase, ~~as we:~~

~~continue our~~should we resume development of our product candidates, ~~including continuing enrollment in our recently initiated Phase 2 clinical trial forAVR-RD-01;~~

as we:

•

initiate additional clinical trials and preclinical studies for our ~~other~~ product candidates;

•

seek to identify and develop orin-license or acquire additional product candidates and technologies;

•

~~seek to industrialize our~~~~ex vivo~~ ~~lentiviral gene therapy approach into a robust, scalable and, if approved, commercially viable process;~~

•

seek to industrialize our ex vivo lentiviral gene therapy approach into a robust, scalable and, if approved, commercially viable process;

•

seek marketing approvals for our product candidates that successfully complete clinical trials, if any;

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

•

establish a sales, marketing and distribution infrastructure to commercialize any product candidates for which we may obtain marketing approval;

•

hire and retain additional personnel, such as clinical, medical, manufacturing, quality, ~~control,~~ commercial and scientific personnel;

•

expand our infrastructure, office space and facilities to accommodate our ~~growing~~ employee base, including adding equipment and physical infrastructure to support our research and development; and

•

continue to ~~transition our organization to operating as a~~incur additional public ~~company.~~

company-related costs.

We believe our cash and cash equivalents as of June 30, 2018 will enable us to fund our operating expenses and capital expenditure requirements into 2020. We have based these estimates on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. If we receive regulatory approval for~~AVR-RD-01~~ or our other product candidates, we expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution, depending on where we choose to commercialize.

Until such time, if ever, that we can generate product revenue sufficient to achieve profitability, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaboration agreements, government and other third-party funding, strategic alliances, licensing arrangements or marketing and distribution arrangements. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through government and other third-party funding, collaboration agreements, strategic alliances, licensing arrangements or marketing and distribution arrangements, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market products or product candidates that we would otherwise prefer to develop and market ourselves.

Contractual Obligations and Commitments

The disclosure of our contractual obligations and commitments is set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Contractual Obligations and Commitments” in our ~~final prospectus~~Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on June 21, 2018. There have been no significant changes to the table except for the new lease signed on January 12, 2018. The lease agreement expires in January 2023, with a landlord who is an affiliate of the landlord of our prior lease facility. The annual lease payments are subject to a 3% increase each year. In accordance with the lease agreement, we received a tenant incentive allowance of $842 thousand and maintained a security deposit of $209 thousand during the six months ended June 30, 2018. In contemplation of this agreement, we terminated our prior lease agreement.March 14, 2024.

Critical Accounting Policies and Significant Judgments and Estimates

Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions. During the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2024, there were no material changes to our critical accounting policies. Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Critical Accounting Policies and Significant Judgments and Estimates” in our ~~final prospectus dated June 20, 2018~~Annual Report on Form 10-K for the ~~IPO,~~fiscal year ended December 31, 2023, which was filed with the SEC on ~~June 21, 2018~~March 23, 2023, and the notes to the consolidated financial statements included in Item 1, ~~“Condensed~~“Condensed Consolidated Unaudited Financial Statements,” of this Quarterly Reporton Form 10-Q.

~~Emerging Growth Company Status~~

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. We may take advantage of these exemptions until we are no longer an emerging growth

company. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards. We have elected to use the extended transition period for complying with new or revised accounting standards and, as a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates. We may take advantage of these exemptions up until the last day of the fiscal year following the fifth anniversary of our IPO or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1.07 billion in annual revenue, we have more than $700.0 million in market value of our stock held by~~non-affiliates~~ ~~(and we have been a public company for at least 12 months and have filed one annual report onForm 10-K)~~ ~~or we issue more than $1.0 billion ofnon-convertible~~ ~~debt securities over a three-year period.~~

~~Off-Balance~~ ~~Sheet Arrangements~~

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

Recently Issued Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2, “Summary of Significant Accounting Policies”to our consolidated financial statements appearing at the beginning of this Quarterly Report onForm 10-Q.

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

~~Item 3.~~

~~Quantitative and Qualitative Disclosures about Market Risk.~~

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Interest Rate Risk

As of ~~June 30, 2018,~~March 31, 2024, we had cash and cash equivalents of ~~$155.0~~$90.5 million, which consisted of ~~cash and~~primarily money market funds. ~~Interest income~~Our primary exposure to market risk is ~~sensitive to~~interest rate sensitivity, which is affected by changes in the general level of U.S. interest ~~rates; however, due~~rates, particularly because our cash equivalents are in held in short-term money market funds. Due to short-term duration of our investment portfolio and the ~~nature~~low risk profile of ~~these~~our investments, an immediate ~~10%~~100 basis point change in interest rates would not have a material ~~impact~~effect on the fair market value of our ~~cash and cash equivalents, financial position or results of operations.~~portfolio.

Foreign Currency Exchange Risk

We are exposed to foreign exchange rate risk. Our headquarters are located in the United States, where the majority of our general and administrative expenses and research and development costs are incurred in U.S. dollars. A portion of our research and development costs are incurred by our subsidiaries in Australia and Canada, whose functional currencies are the U.S. dollar but engage in transactions in Australian dollars and Canadian dollars, respectively. During ~~each of~~ the ~~six~~three months ended ~~June 30, 2018~~March 31, 2024 and ~~2017,~~2023, we recognized foreign currency transaction losses of ~~$15 thousand~~$13 and ~~$5 thousand,~~$28, respectively. These losses primarily related to unrealized and realized foreign currency gains and losses as a result of transactions entered into by our Australian and Canadian subsidiaries in currencies other than the U.S. dollar. These foreign currency transaction gains and losses were recorded in other expense, net in our consolidated statements of operations. We believe that a 10% change in the exchange rate between the U.S. dollar, Australian dollar, Great British Pound, and Canadian dollar would not have a material impact on our financial position or results of operations.

As we continue to grow our business, our results of operations and cash flows will be subject to fluctuations due to changes in foreign currency exchange rates, which could adversely impact our results of operations. To date, we have not entered into any foreign currency hedging contracts to mitigate our exposure to foreign currency exchange risk.

~~Item 4.~~

~~Controls and Procedures.~~

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our interim Chief Executive Officer and ~~our~~ Chief Financial Officer (our principal executive officer and principal financial ~~officer, respectively)~~officer), evaluated the effectiveness of our disclosure controls and procedures as of ~~June 30, 2018.~~March 31, 2024. The term “disclosure controls and procedures,” as defined inRules 13a-15(e) and 15d-15(e) under ~~the Securities Exchange Act of 1934, as amended, or~~ the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive officer and principal financial ~~officers,~~officer, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide

only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. ~~Based~~While we continue to evaluate our disclosure controls and procedures, including new procedures and processes relating to our internal control over financial reporting, based on the evaluation of our disclosure controls and procedures as of ~~June 30, 2018,~~March 31, 2024, our interim Chief Executive Officer and Chief Financial Officer concluded that as a result of the material weaknesses in our internal control over financial reporting as previously disclosed in our final prospectus for our initial public offering, dated June 20, 2018, filed with the SEC and as described in Part II, Item 1A. of this report, our disclosure controls and procedures were ~~not~~ effective at the reasonable assurance level as of June 30, 2018. Notwithstanding the material weaknesses, our management has concluded that the financial statements included elsewhere in this report present fairly, in all material respects, our financial position, results of operations and cash flows in conformity with GAAP.March 31, 2024.

We are implementing measures, including those described in Part II, Item 1A. of this report, designed to improve our internal control over financial reporting to remediate these material weaknesses. The measures we are implementing are subject to continued management review supported by confirmation and testing, as well as audit committee oversight. We will continue to implement measures to remedy our internal control deficiencies, though there can be no assurance that our efforts will be successful or avoid potential future material weaknesses. In addition, until the above remediation steps have been completed and are operated for a sufficient period of time, and subsequent evaluation of their effectiveness is completed, the material weaknesses previously disclosed, and as described above, will continue to exist.

Changes in Internal Control over Financial Reporting

~~Other than the changes intended to remediate the material weaknesses noted above, no~~No change in our internal control over financial reporting (as defined inRules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the three months ended ~~June 30, 2018~~March 31, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

PART II—OTHER INFORMATION

~~Item 1.~~

~~Legal Proceedings.~~

Item 1. Legal Proceedings.

From time to time, we may become subject to various legal proceedings and claims that arise in the ordinary course of our business activities. Although the results of litigation and claims cannot be predicted with certainty, as of ~~June 30, 2018, we do not believe~~March 31, 2024, we are ~~party~~not presently subject to any ~~claim~~pending or threatened litigation ~~the outcome of which,~~that we believe, if determined adversely to us, would individually or in the aggregate be reasonably expected to have a material adverse effect on our business. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Item 1A.Risk Factors.

~~Item 1A.~~

~~Risk Factors.~~

Investing in ~~our~~AVROBIO common stock involves a high degree of risk. You should carefully consider the following risks and uncertainties, together with all other information in this ~~report,~~Quarterly Report on Form 10-Q, including ~~our~~AVROBIO’s consolidated financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as AVROBIO’s other filings with the SEC, before investing in ~~our~~AVROBIO common stock. Any of the risk factors ~~we describe~~described below could adversely affect ~~our~~AVROBIO’s business, financial condition or results of operations. The market price of ~~our~~AVROBIO common stock could decline if one or more of these risks or uncertainties were to occur, which may cause you to lose all or part of the money you paid to buy ~~our~~AVROBIO common stock. Additional risks that are currently unknown to usAVROBIO or that weAVROBIO currently ~~believe~~believes to be immaterial may also impair ~~our~~AVROBIO’s business. Certain statements below are forward-looking statements. See “Forward-Looking Information” in this Quarterly Report on Form 10-Q.

Risks Related to the Merger

The exchange ratio will not change or otherwise be adjusted based on the market price of AVROBIO common stock as the exchange ratio depends on AVROBIO’s net cash at the closing and not the market price of AVROBIO common stock, so the merger consideration at the closing may have a greater or lesser value than at the time the Merger Agreement was signed.

The Merger Agreement has set an exchange ratio for Tectonic capital stock being converted into AVROBIO’s common stock, and the exchange ratio is based on the outstanding capital stock of Tectonic and the outstanding common stock of AVROBIO, in each case immediately prior to the closing. Applying the exchange ratio formula in the Merger Agreement, and after giving further effect to the proposed private financings, AVROBIO securityholders as of immediately prior to the merger are expected to own approximately 22.3% of the outstanding shares of capital stock of the combined company, former Tectonic securityholders are expected to own approximately 39.8% of the outstanding shares of capital stock of the combined company, and purchasers of Tectonic common stock in the private financings are expected to represent approximately 38.0% of the outstanding shares of capital stock of the combined company, subject to certain assumptions. Under certain circumstances further described in the Merger Agreement, the ownership percentages may be adjusted up or down including, but not limited to, if AVROBIO’s net cash as of closing is lower than $64.5 million or greater than $65.5 million. AVROBIO management currently anticipates AVROBIO’s net cash as of closing will be approximately $65.0 million to $75.0 million and the currently estimated ownership percentages are based on an assumption of closing net cash of approximately $65.0 million. In the event AVROBIO’s net cash is below $65.0 million, the exchange ratio will be adjusted such that the number of shares issued to the pre-merger Tectonic securityholders will be increased, and AVROBIO stockholders will own a smaller percentage of the combined company following the merger.

Any changes in the market price of AVROBIO common stock before the completion of the merger will not affect the number of shares Tectonic stockholders will be entitled to receive pursuant to the Merger Agreement. Therefore, if before the completion of the merger, the market price of AVROBIO common stock increases from the market price on the date of the Merger Agreement, then Tectonic stockholders could receive merger consideration with substantially more value for their shares of Tectonic capital stock than the parties had negotiated when they established the exchange ratio. Similarly, if before the completion of the merger the market price of AVROBIO common stock declines from the market price on the date of the Merger Agreement, then Tectonic stockholders could receive merger consideration with substantially lower value. The Merger Agreement does not include a price-based termination right.

If the merger is not completed, AVROBIO and Tectonic are subject to the following risks:

•

if the Merger Agreement is terminated under specified circumstances, AVROBIO could be required to pay Tectonic a termination fee of $2,712,500, and Tectonic could be required to pay AVROBIO a termination fee of $4,900,000;

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

•

if the Merger Agreement is terminated by AVROBIO or Tectonic due to AVROBIO stockholders voting on and failing to approve certain proposals, AVROBIO will be required to reimburse Tectonic for merger-related expenses up to $650,000. The expense reimbursement, to the extent paid, will be credited against any termination fee payable by AVROBIO in the transaction;

•

the price of AVROBIO common stock may decline and could fluctuate significantly; and

•

costs related to the merger, such as financial advisor, legal and accounting fees, a majority of which must be paid even if the merger is not completed.

If the Merger Agreement is terminated and the AVROBIO Board or the Tectonic board of directors, or Tectonic Board, determines to seek another business combination, there can be no assurance that either AVROBIO or Tectonic will be able to find another third party to transact a business combination with, yielding comparable or greater benefits.

If the conditions to the merger are not satisfied or waived the merger may not occur.

Certain proposals are a condition to completion of the merger. Therefore, the merger cannot be consummated without the approval of such proposals. If the AVROBIO stockholders do not approve such proposals, failure to consummate the merger may harm AVROBIO and/or Tectonic. Even if the merger is approved by the Tectonic stockholders and the requisite proposals are approved by the AVROBIO stockholders, specified conditions must be satisfied or, to the extent permitted by applicable law, waived to complete the merger, as set forth in the Merger Agreement. AVROBIO and Tectonic cannot provide any assurance that all of the conditions to the consummation of the merger will be satisfied or waived. If the conditions are not satisfied or waived, the merger may not occur or the closing may be delayed. For example, the closing of the merger is conditioned upon the satisfaction or waiver of the receipt of cash proceeds not less than $114.5 million in connection with the consummation of the transactions contemplated by the private financings. As of the date of this Quarterly Report on Form 10-Q, AVROBIO and Tectonic do not intend to waive this or any other condition. However, AVROBIO and Tectonic may ultimately determine, in their sole discretion, to waive such condition.

The merger may be completed even though a material adverse effect may result from the announcement of the merger, industry-wide changes or other causes.

In general, neither AVROBIO nor Tectonic is obligated to complete the merger if there is a material adverse effect affecting the other party between January 30, 2024 (the date of the Merger Agreement), and the closing of the merger. However, certain types of causes are excluded from the concept of a “material adverse effect.” Such exclusions include but are not limited to changes in general economic or political conditions, industry wide changes, changes resulting from the announcement of the merger, natural disasters, pandemics (including the COVID-19 pandemic), other force majeure events, acts or threat of terrorism or war and changes in GAAP. Therefore, if any of these events were to occur and adversely affect AVROBIO or Tectonic, the other party would still be obliged to consummate the closing notwithstanding such material adverse effect. If any such adverse effects occur and AVROBIO and Tectonic consummate the closing, the stock price of the combined company may suffer. This in turn may reduce the value of the merger to the AVROBIO stockholders, Tectonic stockholders or both.

If AVROBIO and Tectonic complete the merger, the combined company will need to raise additional capital by issuing equity securities or additional debt or through licensing arrangements, which may cause significant dilution to the combined company’s stockholders or restrict the combined company’s operations.

On January 30, 2024, Tectonic entered into the Subscription Agreement with certain investors named therein, pursuant to which such investors agreed to purchase shares of Tectonic common stock, at a purchase price currently estimated at approximately $96.6 million in the aggregate, for an aggregate purchase price among the transactions contemplated by the Subscription Agreement and the Tectonic SAFEs of approximately $130.7 million. The closings of the private financings are conditioned upon the satisfaction or waiver of the conditions to the closing as well as certain other conditions. The closing of the merger is conditioned upon the satisfaction or waiver of the receipt of cash proceeds not less than $114.5 million in connection with the consummation of the transactions contemplated by the private financings. While, as of the date of this Quarterly Report on Form 10-Q, AVROBIO and Tectonic do not intend to waive this or any other condition, there can be no assurance that AVROBIO and Tectonic will ultimately determine, in their sole discretion, not to waive such condition or that the private financings will close in a timely manner or at all. If such condition is waived, the private financings fail to close at all or less than $114.5 million in cash proceeds is received from the private financings, the combined company may need to seek alternative financing. In such scenario, the combined company’s cash runway would be shortened such that the combined company will need to raise significant capital following the closing of the merger. Additionally, the shares of AVROBIO common stock issuable upon the exchange at closing of the private financing will result in dilution to all securityholders of the combined company (i.e., both the pre-merger AVROBIO securityholders and former Tectonic securityholders).

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

Additional financing may not be available to the combined company when it is needed or may not be available on favorable terms. To the extent that the combined company raises additional capital by issuing equity securities, such financing will cause additional dilution to all securityholders of the combined company, including AVROBIO’s pre-merger securityholders and Tectonic’s former securityholders. It is also possible that the terms of any new equity securities may have preferences over the combined company’s common stock. Any debt financing the combined company enters into may involve covenants that restrict its operations. These restrictive covenants may include limitations on additional borrowing and specific restrictions on the use of the combined company’s assets, as well as prohibitions on its ability to create liens, pay dividends, redeem its stock or make investments. In addition, if the combined company raises additional funds through licensing arrangements, it may be necessary to grant licenses on terms that are not favorable to the combined company.

Transfers of the combined company’s securities utilizing Rule 144 of the Securities Act may be limited.

Following the closing of the proposed merger with Tectonic, a significant portion of the combined company’s securities will be restricted from immediate resale. Securityholders of the combined company should be aware that transfers of the combined company’s securities pursuant to Rule 144 under the Securities Act, or Rule 144, may be limited as Rule 144 is not available, subject to certain exceptions, for the resale of securities initially issued by shell companies (other than business combination related shell companies) or issuers that have been at any time previously a shell company. AVROBIO’s disposal of certain of its historical assets and operations, the halting of its remaining programs and the proposed merger with Tectonic will make AVROBIO subject to the SEC requirements applicable to reporting shell company business combinations. AVROBIO anticipates that following the consummation of the merger, the combined company will no longer be a shell company. As a result, AVROBIO anticipates that securityholders of the combined company (excluding non-affiliate AVROBIO stockholders as of the date of the filing of this Quarterly Report on Form 10-Q) will not be able to sell their restricted combined company securities pursuant to Rule 144 without registration until one year after the combined company files the Current Report on Form 8-K following the closing of the merger that includes the required Form 10 information that reflects the combined company is no longer a shell company.

AVROBIO’s disposal of certain of its historical assets and operations, the halting of its remaining programs and the proposed merger with Tectonic resulting in the conversion of Tectonic into a public company shall make AVROBIO subject to the SEC requirements applicable to reporting shell company business combinations. As a result, the combined company will be subject to more stringent reporting requirements, offering limitations and resale restrictions.

According to SEC guidance, the requirements applicable to reporting shell company business combinations apply to any company that sells or otherwise disposes of its historical assets or operations in connection with or as part of a plan to combine with a non-shell private company in order to convert the private company into a public one. AVROBIO has halted development of its remaining programs and had previously, in June 2023, sold its cystinosis gene therapy program to Novartis. As such, AVROBIO’s plan to merge with Tectonic, resulting in the conversion of Tectonic into a public company, shall be subject to the SEC requirements applicable to reporting shell company business combinations, which are as follows:

•

the combined company will need to file a Form 8-K to report the Form 10 type information after the closing of the merger with the SEC reflecting its status as an entity that is not a shell company;

•

the combined company will not be eligible to use a Form S-3 until 12 full calendar months after the closing of the merger;

•

the combined company will need to wait at least 60 calendar days after the closing of the merger to file a Form S-8 for any equity plans or awards;

•

the combined company will be an “ineligible issuer” for three years following the closing of the merger, which will prevent the combined company from (i) incorporating by reference in its Form S-1 filings, (ii) using a free writing prospectus or (iii) taking advantage of the well-known seasoned issuer status despite its public float;

•

investors who (i) were affiliates of Tectonic at the time the merger was submitted for the vote or consent of Tectonic’s stockholders, (ii) receive securities of the combined company in the merger (i.e., Rule 145(c) securities) and (iii) publicly offer or sell such securities will be deemed to be engaged in a distribution of such securities, and therefore to be underwriters with respect to resales of those securities, and accordingly such securities may not be included in the Form S-1 resale shelf registration statement anticipated to be filed after the closing of the merger unless such securities are sold only in a fixed price offering in which such investors are named as underwriters in the prospectus; and

•

Rule 144(i)(2) will limit the ability to publicly resell Rule 145(c) securities per Rule 145(d), as well as any other “restricted” or “control” securities of the combined company per Rule 144 (e.g., holders of restricted securities and any affiliates of the public company are also affected) until one year after the Form 10 information is filed with the SEC.

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

Non-affiliate AVROBIO stockholders prior to the closing of the proposed merger with Tectonic will not be subject to such restrictions on public resales of their shares.

The foregoing SEC requirements will increase the combined company’s time and cost of raising capital, offering stock under equity plans, and complying with securities laws.

Directors and executive officers of AVROBIO and Tectonic may have interests in the merger that are different from, or in addition to, the interests of other AVROBIO stockholders generally. These interests with respect to AVROBIO’s directors and executive officers may include, among others: acceleration or vesting of certain AVROBIO stock options or AVROBIO RSUs, retention bonus payments, extension of exercisability periods of previously issued AVROBIO stock option grants, severance payments if employment is terminated in a qualifying termination in connection with the merger and rights to continued indemnification, expense advancement and insurance coverage. One member of the AVROBIO Board will continue as a director of the combined company after the effective time, and, following the closing, will be eligible to be compensated as a non-employee director of the combined company. All of AVROBIO’s directors and executive officers are entitled to certain indemnification and liability insurance coverage pursuant to the terms of the Merger Agreement. These interests, among others, may influence the officers and directors of AVROBIO and cause them to view the merger differently from how AVROBIO stockholders generally may view it.

Tectonic’s directors and executive officers may also have interests in the merger that are different from, or in addition to, the interests of other AVROBIO stockholders generally. Such interests may include, among others, certain of Tectonic’s directors and executive officers have options, subject to vesting, to purchase shares of Tectonic common stock which, after the effective time, will be converted into and become options to purchase shares of the common stock of the combined company, Tectonic’s executive officers are expected to continue as executive officers of the combined company after the effective time and all of Tectonic’s directors and executive officers are entitled to certain indemnification and liability insurance coverage pursuant to the terms of the Merger Agreement.

Current members of the Tectonic Board may continue as directors of the combined company after the effective time, and, following the closing, will be eligible to be compensated as non-employee directors of the combined company pursuant to the combined company’s non-employee director compensation policy.

The AVROBIO Board and Tectonic Board were aware of and considered those interests, among other matters, in reaching their decisions to approve and adopt the Merger Agreement, approve the merger, and recommend the approval of the Merger Agreement to AVROBIO and Tectonic stockholders. These interests, among other factors, may have influenced the directors and executive officers of AVROBIO and Tectonic to support or approve the merger.

If the combined company is unable to realize the full strategic and financial benefits currently anticipated from the merger, AVROBIO stockholders and Tectonic stockholders will have experienced substantial dilution of their ownership interests without receiving any commensurate benefit, or only receiving part of the commensurate benefit to the extent the combined company is able to realize only part of the strategic and financial benefits currently anticipated from the merger.

If the merger is not completed, AVROBIO’s stock price may decline significantly.

The market price of AVROBIO common stock is subject to significant fluctuations. Market prices for securities of pharmaceutical, biotechnology and other life science companies have historically been particularly volatile. In addition, the market price of AVROBIO common stock will likely be volatile based on whether stockholders and other investors believe that AVROBIO can complete the merger or otherwise raise additional capital to support AVROBIO’s operations if the merger is not consummated and another strategic transaction cannot be identified, negotiated and consummated in a timely manner, if at all. The volatility of the market price of AVROBIO common stock has been and is expected to continue to be exacerbated by low trading volume. Additional factors that may cause the market price of AVROBIO common stock to fluctuate include:

•

the entry into, or termination of, key agreements, including strategic licensing or commercial partner agreements;

•

announcements by partners or competitors of new commercial products, clinical progress or lack thereof, significant contracts, commercial relationships or capital commitments;

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

•

the loss of key employees;

•

future sales of its common stock;

•

general and industry-specific economic conditions that may affect its research and development expenditures;

•

the failure to meet industry analyst expectations; and

•

period-to-period fluctuations in financial results.

Moreover, the stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of individual companies. These broad market fluctuations may also adversely affect the trading price of AVROBIO common stock. In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securities litigation against such companies.

AVROBIO and Tectonic securityholders will generally have a reduced ownership and voting interest in, and will exercise less influence over the management of, the combined company following the completion of the merger as compared to their current ownership and voting interests in the respective companies.

After the completion of the merger, the current AVROBIO stockholders and Tectonic stockholders will generally own a smaller percentage of the combined company than their ownership of their respective companies prior to the merger. Following the merger and after giving further effect to the proposed private financings, AVROBIO securityholders as of immediately prior to the merger are expected to own approximately 22.3% of the outstanding shares of capital stock of the combined company, former Tectonic securityholders are expected to own approximately 39.8% of the outstanding shares of capital stock of the combined company, and purchasers of Tectonic common stock in the private financings are expected to represent approximately 38.0% of the outstanding shares of capital stock of the combined company, subject to certain assumptions. Under certain circumstances further described in the Merger Agreement, the ownership percentages may be adjusted up or down including, but not limited to, if AVROBIO’s net cash as of closing is lower than $64.5 million or greater than $65.5 million. AVROBIO management currently anticipates AVROBIO’s net cash as of closing will be approximately $65.0 million to $75.0 million and the currently estimated ownership percentages are based on an assumption of AVROBIO’s net cash of approximately $65.0 million at closing.

The Chief Executive Officer of Tectonic will serve as the Chief Executive Officer of the combined company following the completion of the merger. In addition, the board of directors of the combined company will initially include one member of the AVROBIO Board. Consequently, former securityholders of AVROBIO will not be able to exercise the same influence over the management and policies of the combined company following the closing of the merger than they currently exercise over the management and policies of AVROBIO.

The Merger Agreement contains provisions that limit AVROBIO’s and Tectonic’s ability to pursue alternatives to the merger, could discourage a potential competing acquiror of AVROBIO or Tectonic from making an alternative transaction proposal and, in specified circumstances, could require AVROBIO or Tectonic to pay a termination fee, which could significantly harm the market price of AVROBIO’s common stock and negatively affect the financial condition, future business and operations of each company.

Covenants in the Merger Agreement impede the ability of AVROBIO and Tectonic to make acquisitions during the pendency of the merger, subject to specified exceptions. As a result, if the merger is not completed, the parties may be at a disadvantage to their competitors during that period. In addition, while the Merger Agreement is in effect, each party is generally prohibited from soliciting, seeking, initiating or knowingly encouraging, inducing or facilitating the communication, making, submission or announcement of any Acquisition Proposal or Acquisition Inquiry (each as defined in the Merger Agreement) or taking any action that could reasonably be expected to lead to certain transactions involving a third party, including a merger, sale of assets or other business combination, subject to specified exceptions. Any such transactions could be favorable to such party’s stockholders, but the parties may be unable to pursue them.

If the merger is not completed and the Merger Agreement is terminated under certain circumstances, AVROBIO may be required to pay Tectonic a termination fee of $2,712,500, or Tectonic may be required to pay AVROBIO a termination fee of $4,900,000. Additionally, if the Merger Agreement is terminated by AVROBIO or Tectonic due to AVROBIO stockholders voting on and failing to approve certain proposals, AVROBIO will be required to reimburse Tectonic for merger-related expenses up to $650,000. The expense reimbursement, to the extent paid, will be credited against any termination fee payable by AVROBIO in the transaction. Even if a termination fee is not payable in connection with a termination of the Merger Agreement, each of AVROBIO and Tectonic will have incurred significant fees and expenses, which must be paid whether or not the merger is completed. Further, if the proposed merger is not completed, it could significantly harm the market price of AVROBIO common stock.

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

In addition, if the Merger Agreement is terminated and AVROBIO or Tectonic determines to seek another business combination, there can be no assurance that either AVROBIO or Tectonic will be able to find a partner and close an alternative transaction on terms that are as favorable or more favorable than the terms set forth in the Merger Agreement.

Because the lack of a public market for Tectonic common stock makes it difficult to evaluate the fair market value of Tectonic’s capital stock, the value of the AVROBIO common stock to be issued to Tectonic stockholders may be more or less than the fair market value of Tectonic common stock.

The outstanding capital stock of Tectonic is privately held and is not traded in any public market. The lack of a public market makes it difficult to determine the fair market value of Tectonic’s capital stock. Because the percentage of AVROBIO equity to be issued to Tectonic stockholders was determined based on negotiations between the parties, it is possible that the value of the AVROBIO common stock to be issued to Tectonic stockholders will be more or less than the fair market value of Tectonic’s capital stock.

The tax treatment of the CVRs is subject to substantial uncertainty.

There is substantial uncertainty as to the U.S. federal income tax treatment of the CVRs and payments (if any) thereon. There is no legal authority addressing the U.S. federal income tax treatment of the receipt of, holding of, or payments under, the CVRs, and there can be no assurance that the Internal Revenue Service, or the IRS, would not assert, or that a court would not sustain, a position that could result in adverse U.S. federal income tax consequences to holders of the CVRs.

AVROBIO does not intend to report the issuance of the CVRs as a current distribution of property with respect to its stock, but it is possible that the IRS could assert that AVROBIO stockholders are treated as having received a distribution of property equal to the fair market value of the CVRs on the date the CVRs are distributed, which could be taxable to AVROBIO stockholders without the corresponding receipt of cash. In addition, it is possible that the IRS or a court could determine that the issuance of the CVRs (and/or any payments thereon) and the reverse stock split constitute a single “recapitalization” for U.S. federal income tax purposes with the CVRs constituting taxable “boot” received in such recapitalization exchange. In such case, the tax consequences of the CVRs and the reverse stock split would differ from the anticipated consequences, including with respect to the timing and character of income.

Risks Related to the Proposed Reverse Stock Split

The reverse stock split may not increase the combined company’s stock price over the short- or long-term, which may further impact the combined company’s ability to obtain or maintain listing on Nasdaq.

The principal purposes of the reverse stock split are to (i) increase the per-share market price of AVROBIO common stock above the Nasdaq minimum bid price requirement so that the listing of AVROBIO and the shares of AVROBIO common stock being issued in the merger on Nasdaq will be approved and (ii) increase the number of authorized and unissued shares available for future issuance in connection with the merger. It cannot be assured, however, that the reverse stock split will accomplish any increase in the per-share market price of AVROBIO common stock for any meaningful period of time. While it is expected that the reduction in the number of outstanding shares of common stock will proportionally increase the market price of AVROBIO common stock, it cannot be assured that the reverse stock split will increase the market price of its common stock by a multiple of the reverse stock split ratio mutually agreed by AVROBIO and Tectonic, or result in any permanent or sustained increase in the market price of AVROBIO common stock, which is dependent upon many factors, including AVROBIO’s business and financial performance, general market conditions and prospects for future success. Thus, while the stock price of AVROBIO common stock might meet the listing requirements for Nasdaq initially after the reverse stock split, it cannot be assured that it will continue to do so.

The AVROBIO Board determined that the minimum size of the reverse stock split, within the range of ratios approved by the AVROBIO Board, that is necessary to maintain AVROBIO’s Nasdaq listing and to accommodate the additional shares of AVROBIO common stock required to be issued in connection with the transaction is 1:3. The AVROBIO Board intends to take into account various factors prevailing at the time of its determination of the final ratio for the reverse stock split, including the resulting trading price that the AVROBIO Board determines in good faith would be in the best interests of AVROBIO and all of its stockholders. The AVROBIO Board has not determined to necessarily use the minimum ratio required for the transaction.

The reverse stock split may decrease the liquidity of the combined company’s common stock.

Although the AVROBIO Board believes that the anticipated increase in the market price of the combined company’s common stock resulting from the proposed reverse stock split could encourage interest in its common stock and possibly promote greater liquidity for its stockholders, such liquidity could also be adversely affected by the reduced number of shares outstanding after the reverse stock split. The reduction in the number of outstanding shares may lead to reduced trading and a smaller number of market

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

makers for the combined company’s common stock. In addition, the reverse stock split may not result in an increase in the combined company’s stock price necessary to satisfy Nasdaq’s initial listing requirements for the combined company.

The reverse stock split may lead to a decrease in the combined company’s overall market capitalization.

Should the market price of the combined company’s common stock decline after the reverse stock split, the percentage decline may be greater, due to the smaller number of shares outstanding, than it would have been prior to the reverse stock split. A reverse stock split is often viewed negatively by the market and, consequently, can lead to a decrease in the combined company’s overall market capitalization. If the per share market price does not increase in proportion to the reverse stock split ratio, then the value of the combined company, as measured by its stock capitalization, will be reduced. In some cases, the per-share stock price of companies that have effected reverse stock splits subsequently declined back to pre-reverse split levels, and accordingly, it cannot be assured that the total market value of the combined company’s common stock will remain the same after the reverse stock split is effected, or that the reverse stock split will not have an adverse effect on the combined company’s stock price due to the reduced number of shares outstanding after the reverse stock split.

Risks Related to AVROBIO’s Strategic Alternative Process and Potential Strategic Transaction

Failure to complete, or delays in completing, the proposed merger with Tectonic could materially and adversely affect AVROBIO’s results of operations, business, financial results and/or stock price.

In July 2023, AVROBIO announced that it was undertaking a comprehensive exploration of strategic alternatives focused on maximizing stockholder value, which may include, but are not limited to, an acquisition, a merger, business combination or divestiture. After a comprehensive review of strategic alternatives, including identifying and reviewing potential candidates for the merger, on January 30, 2024, AVROBIO entered into the Merger Agreement with Tectonic and Merger Sub, pursuant to which, subject to the satisfaction or waiver of the conditions therein, Merger Sub will merge with and into Tectonic, with Tectonic continuing as the surviving company and a wholly-owned subsidiary of AVROBIO. The closing is subject to approval by the AVROBIO stockholders and Tectonic stockholders as well as other customary closing conditions. If the merger is completed, the business of Tectonic will continue as the business of the combined company. Any failure to satisfy a required condition to closing may prevent, delay or otherwise materially and adversely affect the completion of the transaction, which could materially and adversely affect AVROBIO’s results of operations, business, financial results and/or stock price. AVROBIO cannot predict with certainty whether or when any of the required closing conditions will be satisfied or if another uncertainty may arise and cannot assure you that the proposed merger will be successfully consummated or that AVROBIO will be able to successfully consummate the proposed merger as currently contemplated under the Merger Agreement or at all.

AVROBIO’s efforts to complete the merger could cause substantial disruptions in, and create uncertainty surrounding, AVROBIO’s business, which may materially adversely affect AVROBIO’s results of operations and AVROBIO’s business. Uncertainty as to whether the merger will be completed may affect AVROBIO’s ability to recruit prospective employees or to retain and motivate existing employees. Employee retention may be particularly challenging while the transaction is pending because employees may experience uncertainty about their roles following the transaction. A substantial amount of AVROBIO’s management’s and employees’ attention is being directed toward the completion of the transaction and thus is being diverted from AVROBIO’s day-to-day operations. Uncertainty as to AVROBIO’s future could adversely affect AVROBIO’s business and AVROBIO’s relationship with collaborators, suppliers, vendors, regulators and other business partners. For example, vendors, collaborators and other counterparties may defer decisions about working with AVROBIO or seek to change existing business relationships with AVROBIO. Changes to, or termination of, existing business relationships could adversely affect AVROBIO’s results of operations and financial condition, as well as the market price of AVROBIO’s common stock. The adverse effects of the pendency of the transaction could be exacerbated by any delays in completion of the transaction or termination of the Merger Agreement.

Risks related to ~~our~~the failure to consummate, or delay in consummating, the proposed merger with Tectonic include, but are not limited to, the following:

•

AVROBIO may not realize any or all of the potential benefits of the merger, which could have a negative effect on AVROBIO’s results of operations, business or stock price;

•

under some circumstances, AVROBIO may be required to pay a termination fee to Tectonic of $2,712,500;

•

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

•

AVROBIO would remain liable for significant transaction costs, including legal, accounting, financial ~~position~~advisory and other costs relating to the merger regardless of whether the merger is consummated;

•

the trading price of AVROBIO common stock may decline to the extent that the current market price for AVROBIO common stock reflects a market assumption that the merger will be completed;

•

the attention of AVROBIO’s management and employees may have been diverted to the merger rather than to AVROBIO’s operations and the pursuit of other opportunities that could have been beneficial to AVROBIO;

•

AVROBIO could be subject to litigation related to any failure to complete the merger;

•

AVROBIO could potentially lose key personnel during the pendency of the merger as employees and other service providers may experience uncertainty about their future roles with AVROBIO following completion of the merger; and

•

under the Merger Agreement, AVROBIO is subject to certain customary restrictions on the conduct of AVROBIO’s business prior to completing the merger, which restrictions could adversely affect AVROBIO’s ability to conduct AVROBIO’s business as AVROBIO otherwise would have done if AVROBIO was not subject to these restrictions.

The occurrence of any of these events individually or in combination could materially and adversely affect AVROBIO’s results of operations, business, and AVROBIO’s stock price.

AVROBIO cannot be sure if or when the merger will be completed.

The consummation of the merger is subject to the satisfaction or waiver of various conditions, including the authorization of the merger by AVROBIO stockholders and Tectonic stockholders. AVROBIO cannot guarantee that the closing conditions set forth in the Merger Agreement will be satisfied. If AVROBIO is unable to satisfy certain closing conditions or if other mutual closing conditions are not satisfied, Tectonic will not be obligated to complete the merger. Under certain circumstances, AVROBIO would be required to pay Tectonic a termination fee of $2,712,500. Additionally, if the Merger Agreement is terminated by AVROBIO or Tectonic due to AVROBIO stockholders voting on and failing to approve certain proposals, AVROBIO will be required to reimburse Tectonic for merger-related expenses up to $650,000. The expense reimbursement, to the extent paid, will be credited against any termination fee payable by AVROBIO in the transaction. Even if a termination fee is not payable in connection with a termination of the Merger Agreement, AVROBIO will have incurred significant fees and expenses, which must be paid whether or not the merger is completed.

If the merger is not completed, the AVROBIO Board, in discharging its fiduciary obligations to AVROBIO stockholders, would evaluate other strategic alternatives or financing options that may be available, which alternatives may not be as favorable to AVROBIO stockholders as the merger, including a liquidation and dissolution. Any future sale or merger, financing or other transaction, including a liquidation or dissolution, may be subject to further stockholder approval. AVROBIO may also be unable to find, evaluate or complete other strategic alternatives, which may have a materially adverse effect on AVROBIO’s business.

Until the merger is completed, the Merger Agreement restricts Tectonic and AVROBIO from taking specified actions without the consent of the other party, and requires AVROBIO to operate in the ordinary course of business consistent with past practice. These restrictions may prevent Tectonic and AVROBIO from making appropriate changes to AVROBIO respective businesses or pursuing attractive business opportunities that may arise prior to the completion of the merger. Further, if AVROBIO’s net cash at closing is lower than anticipated, either because expenses exceed current estimates or due to delays prior to closing, then the pre-merger AVROBIO stockholders will own less of the combined company pursuant to the exchange ratio adjustment set forth in the Merger Agreement.

Any delay in completing the proposed merger may materially and adversely affect the timing and benefits that are expected to be achieved from the proposed merger.

Lawsuits may be filed against AVROBIO and the members of the AVROBIO Board arising out of the proposed merger, which may delay or prevent the proposed merger.

Putative stockholder complaints, including stockholder class action complaints, and other complaints may be filed against AVROBIO, the AVROBIO Board, Tectonic, the Tectonic Board and others in connection with the transactions contemplated by the Merger Agreement. The outcome of litigation is uncertain, and AVROBIO may not be successful in defending against any such future claims. Lawsuits that may be filed against AVROBIO, the AVROBIO Board, Tectonic or the Tectonic Board could delay or prevent the merger, divert the attention of AVROBIO’s management and employees from AVROBIO’s day-to-day business and otherwise adversely affect AVROBIO’s financial condition. Litigation may also impact AVROBIO’s ability to consummate a potential strategic transaction or the ultimate value its stockholders receive in any such transaction.

AVROBIO, INC.

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In connection with the proposed merger, one action has been filed in the United States District Court for the Southern District of New York captioned Garofalo v. Avrobio, Inc. et al., 24-cv-1493 (filed February 27, 2024). The foregoing complaint is referred to as the “Merger Action.”

The Merger Action alleges that the Form S-4 registration statement filed by AVROBIO on February 14, 2024 in connection the merger misrepresents and/or omits certain purportedly material information in connection with the merger, potential conflicts of interest of AVROBIO’s officers and directors, and the events that led to the signing of the Merger Agreement. The Merger Action asserts violations of Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder against all defendants (AVROBIO and the AVROBIO Board) and violations of Section 20(a) of the Exchange Act against AVROBIO’s directors. The Merger Action seeks, among other things, an injunction enjoining the consummation of the merger, costs of the action, including plaintiff’s attorneys’ fees and experts’ fees, and other relief the court may deem just and proper.

Also in connection with the Merger Agreement, AVROBIO has received demand letters from four purported AVROBIO stockholders demanding that AVROBIO disclose certain additional information relating to the merger, or the Demands.

AVROBIO cannot predict the outcome of the Merger Action or the Demands. AVROBIO believes that the allegations and claims asserted in the Merger Action and the Demands are without merit and intends to defend against them vigorously. Additional lawsuits and demand letters arising out of the merger may also be filed or received in the future, though AVROBIO will not provide additional disclosures unless those new complaints or letters contain material differences from those received to date.

AVROBIO stockholders potentially may not receive any payment on the CVRs and the CVRs may otherwise expire valueless.

The Merger Agreement contemplates that, at or prior to the effective time, AVROBIO, the holders’ representative and a rights agent will execute and deliver the CVR Agreement, pursuant to which AVROBIO stockholders of record as of immediately prior to the effective time (including holders of shares of AVROBIO common stock issued upon settlement of the AVROBIO RSUs) will receive one non-transferable CVR for each outstanding share of AVROBIO common stock held by such stockholder on such date, subject to and in accordance with the terms and conditions of the CVR Agreement. Pursuant to the CVR Agreement, each CVR holder is entitled to certain rights to receive a pro rata portion of 80% of the net proceeds (as defined in the CVR Agreement), if any, received by AVROBIO as a result of an AVROBIO disposition (including a license) of AVROBIO’s pre-closing assets after the effective date and prior to the 18-month anniversary of the closing, received within a 10-year period following the closing; provided that no contingent payment will be payable to any holder of the CVRs until such time as the then-outstanding and undistributed proceeds exceeds $350,000 in the aggregate. Such proceeds are subject to certain permitted deductions, including for applicable tax payments, certain expenses incurred by AVROBIO or its affiliates, losses incurred or reasonably expected to be incurred by AVROBIO or its subsidiaries due to a third party proceeding in connection with a disposition and certain wind-down costs. The contingent payments under the CVR Agreement, if they become payable, will become payable to the rights agent for subsequent distribution to the holders of the CVRs. In the event that no proceeds are received, holders of the CVRs will not receive any payment pursuant to the CVR Agreement. There can be no assurance that any holders of CVRs will receive payments with respect thereto.

The CVR Agreement provides that AVROBIO will use commercially reasonable efforts (as defined in the CVR Agreement) during the 18-month period following the closing to effect dispositions of AVROBIO’s pre-closing assets to a third party that has delivered inbound interest (as defined in the CVR Agreement) with respect to such assets. As a result, AVROBIO will have no obligations to affirmatively sell or market such assets, in the absence of such inbound interest.

AVROBIO may not be able to achieve successful results from the disposition of such assets as described above. If this is not achieved for any reason within the time periods specified in the CVR Agreement, no payments will be made under the CVRs, and the CVRs will expire valueless.

If AVROBIO does not successfully consummate the merger or another strategic transaction, the AVROBIO Board may decide to pursue a dissolution and liquidation of AVROBIO. In such an event, the amount of cash available for distribution to AVROBIO stockholders will depend heavily on the timing of such liquidation as well as the amount of cash that will need to be reserved for ~~additional~~commitments and contingent liabilities, as to which AVROBIO can give you no assurance.

There can be no assurance that the merger will be completed. If the merger is not completed, the AVROBIO Board may decide to pursue a dissolution and liquidation of AVROBIO. In such an event, the amount of cash available for distribution to AVROBIO stockholders will depend heavily on the timing of such decision and, ultimately, such liquidation, since the amount of cash available for distribution continues to decrease as AVROBIO funds its operations while pursuing the merger. In addition, if the AVROBIO Board were to approve and recommend, and AVROBIO stockholders were to approve, a dissolution and liquidation of the company, AVROBIO would be required under Delaware corporate law to pay AVROBIO’s outstanding obligations, as well as to make reasonable provision for contingent and unknown obligations, prior to making any distributions in liquidation to stockholders. AVROBIO’s commitments and contingent liabilities may include obligations under AVROBIO’s employment and related agreements

AVROBIO, INC.

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with certain employees that provide for severance and other payments following a termination of employment occurring for various reasons, including a change in control of the company, litigation against AVROBIO, and other various claims and legal actions arising in the ordinary course of business, and other unexpected and/or contingent liabilities. As a result of this requirement, a portion of AVROBIO’s assets would need to be reserved pending the resolution of such obligations.

In addition, AVROBIO may be subject to litigation or other claims related to a dissolution and liquidation of AVROBIO. If a dissolution and liquidation were to be pursued, the AVROBIO Board, in consultation with AVROBIO’s advisors, would need to evaluate these matters and make a determination about a reasonable amount to reserve. Accordingly, holders of AVROBIO common stock could lose all or a significant portion of their investment in the event of liquidation, dissolution or winding up of the company. A liquidation would be a lengthy and uncertain process with no assurance of any value ever being returned to AVROBIO stockholders.

AVROBIO is substantially dependent on AVROBIO’s remaining employees to facilitate the consummation of the merger.

AVROBIO’s ability to consummate a strategic transaction depends upon its ability to retain its employees required to consummate such a transaction, the loss of whose services may adversely impact the ability to consummate such transaction. In January 2022, and then between July 2023 and February 2024, AVROBIO implemented reductions in force that significantly reduced its workforce in order to conserve its capital resources. As of May 2, 2024, AVROBIO had only 13 full-time employees. AVROBIO’s ability to successfully complete the merger depends in large part on AVROBIO’s ability to retain certain remaining personnel. Despite AVROBIO’s efforts to retain these employees, one or more may terminate their employment with AVROBIO on short notice. AVROBIO’s cash conservation activities may yield other unintended consequences, such as attrition beyond its planned reduction in workforce and reduced employee morale, which may cause remaining employees to seek alternative employment. The loss of the services of certain employees could potentially harm AVROBIO’s ability to consummate the merger, to run AVROBIO’s day-to-day business operations and to fulfill AVROBIO’s reporting obligations as a public company.

~~We have~~Risks Related to AVROBIO’s Financial Position and Need for Additional Capital in Event the Merger is Not Consummated

AVROBIO has incurred net losses since ~~inception. We expect~~inception, expects to incur net losses for the foreseeable future and may never achieve or maintain profitability.

Since inception, ~~we have~~except for the year ended December 31, 2023, AVROBIO has incurred annual net losses. AVROBIO incurred net ~~losses. We incurred net losses~~income (loss) of ~~$4.7~~$12.2 million and ~~$18.6~~$(105.9) million for the years ended December 31, ~~2016~~2023 and ~~2017, and $10.5 million and $18.7 million for the three months and six months ended June 30, 2018,~~2022, respectively. WeAVROBIO historically ~~have~~ financed ~~our~~AVROBIO’s operations primarily through private placements of ~~our~~AVROBIO preferred ~~stock. We have~~stock and, more recently, AVROBIO’s IPO and follow-on public offerings of AVROBIO common stock, as well as sales of AVROBIO common stock under AVROBIO’s ATM facilities. Although AVROBIO had established its 2022 ATM facility, as of the filing date of this Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, AVROBIO has not made any sales under its 2022 ATM facility, and AVROBIO will not make sales under its 2022 ATM facility unless and until a new shelf registration statement on Form S-3 is filed and declared effective. In addition, on November 2, 2021, AVROBIO entered into the Term Loan Agreement. In May 2023, AVROBIO announced that it had entered into an asset purchase agreement with Novartis providing for the sale of AVROBIO’s cystinosis gene therapy program (designated AVR-RD-04) and all other assets of AVROBIO specifically related to this program for an aggregate cash payment of $87.5 million upon closing of the transaction, or the Asset Sale. In June 2023, AVROBIO announced the closing of this transaction, as well as the pay-off of all outstanding amounts due and owed, including principal, interest and other charges, under the Term Loan Agreement and the termination thereof.

AVROBIO has devoted substantially all of ~~our~~AVROBIO’s efforts to research and development, including clinical and preclinical development of ~~our~~AVROBIO’s product candidates, as well as assembling ~~our~~AVROBIO’s team. ~~We expect~~In July 2023, AVROBIO announced the decision to halt further development of AVROBIO’s programs and to conduct a comprehensive exploration of strategic alternatives, and as such, AVROBIO’s research and development expenses have decreased. Should AVROBIO resume development of AVROBIO’s product candidates, AVROBIO expects that research and development costs would increase significantly, that it ~~will~~would be several years, if ever, before ~~we have commercialized~~AVROBIO commercializes any product ~~candidates. We expect to~~candidates, and that AVROBIO would continue to incur significant expenses and increasing operating losses for the foreseeable ~~future. We anticipate~~future thereafter. AVROBIO also anticipates that ~~our~~its expenses ~~will~~would increase substantially should AVROBIO resume development of AVROBIO’s product candidates and if, and as, ~~we:~~

AVROBIO:

~~continue our development of our~~•

resumes clinical enrollment activities, particularly if and as AVROBIO commences and continues clinical-stage activities for AVROBIO’s product ~~candidates, including continuing enrollment in our recently initiated Phase 2 clinical trial forAVR-RD-01;~~

candidates;

~~initiate~~•

initiates additional clinical trials and preclinical studies for ~~our other~~AVROBIO’s product ~~candidates;~~candidates, if any;

•

experiences delays or interruptions in preclinical studies, clinical trials, or AVROBIO’s supply chain due to the COVID-19 pandemic;

~~seek~~AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

•

seeks to identify and develop orin-license additional product candidates;

~~seek~~•

seeks marketing approvals for ~~our~~AVROBIO’s product candidates that successfully complete clinical trials, if any;

~~establish~~•

establishes a sales, marketing and distribution infrastructure to commercialize any product candidates for which weAVROBIO may obtain marketing approval;

•

~~seek to industrialize our~~~~ex vivo~~ ~~lentiviral~~

•

continues AVROBIO’s implementation of AVROBIO’s plato® platform as AVROBIO seeks to industrialize its HSC gene therapy approach into a robust, scalable ~~and, if approved, commercially viable process;~~

~~hire~~ and, ~~retain~~if approved, commercially viable process;

•

hires and retains additional personnel, such as clinical, quality control, ~~commercial~~regulatory and scientific personnel;

~~expand our~~•

expands AVROBIO’s office space, infrastructure and facilities as needed to accommodate ~~our growing~~AVROBIO’s employee base, including adding equipment and physical infrastructure to support ~~our~~AVROBIO’s research and development; and

•

continues to incur additional public company-related costs.

AVROBIO expects to continue to ~~transition our organization~~incur costs and expenditures in connection with AVROBIO’s strategic alternatives process. Should AVROBIO resume development of its product candidates, to ~~operating as public company.~~

To become and remain profitable, weit must successfully develop and eventually commercialize product candidates with significant market ~~potential.~~potential and acceptance. This will require usAVROBIO to be successful in a range of challenging activities, and ~~our~~its expenses will increase substantially as ~~we seek~~AVROBIO seeks to resume, initiate, conduct and complete preclinical and clinical trials of ~~our~~AVROBIO’s product candidates, and manufacture, market and sell these or any future product candidates for which weAVROBIO may obtain marketing approval, if any, and satisfy any post-marketing requirements. WeShould AVROBIO resume development of its product candidates, AVROBIO may never succeed in any or all of these activities and, even if ~~we do, we~~AVROBIO does, AVROBIO may never generate revenues that are significant or large enough to achieve profitability. If ~~we do~~AVROBIO does achieve profitability, weAVROBIO may not be able to sustain or increase profitability on a quarterly or annual basis. ~~Our~~AVROBIO’s failure to become and remain profitable would decrease the value of ~~our company~~AVROBIO and could impair ~~our~~their ability to raise capital, maintain ~~our~~their research and development efforts, expand ~~our~~their business or continue ~~our~~ operations. A decline in the value of ~~our company~~AVROBIO also could cause you to lose all or part of your investment.

In July 2023, AVROBIO announced that it was undertaking a comprehensive exploration of strategic alternatives focused on maximizing stockholder value, and in January 2024 AVROBIO announced its proposed merger with Tectonic. There can be no assurance that the proposed merger with Tectonic, or any other course of action, business arrangement or transaction, or series of transactions, will be pursued, successfully consummated or lead to increased stockholder value. Further, if AVROBIO does not obtain additional funding and/or if a strategic transaction is not completed and are unable to continue as a going concern, AVROBIO may have to liquidate its assets and the values AVROBIO receives for the assets in liquidation or dissolution could be significantly lower than the values reflected in AVROBIO’s consolidated financial statements.

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

~~Our~~AVROBIO’s ability to generate revenue from product sales and achieve profitability depends on ~~our~~AVROBIO’s ability, alone or with collaborative partners, to successfully resume and complete the development of, and obtain the regulatory approvals necessary to commercialize, ~~our~~AVROBIO’s product candidates. ~~We do~~AVROBIO does not anticipate generating revenues from product sales for the next several years, if ever. ~~Our~~Should AVROBIO resume development of its product candidates, AVROBIO’s ability to generate future revenues from product sales depends heavily on ~~our, or our collaborators’,~~AVROBIO’s success in:

•

re-initiating and completing research and preclinical and clinical development of ~~our~~AVROBIO’s product ~~candidates and identifying new lentiviral-based gene therapy product~~ candidates;

•

seeking and obtaining regulatory and marketing approvals for product candidates for which ~~we complete~~AVROBIO completes clinical trials;

•

launching and commercializing product candidates for which ~~we obtain~~AVROBIO obtains regulatory and marketing approval by establishing a sales force, marketing and distribution infrastructure or, alternatively, collaborating with a commercialization partner;

•

qualifying for adequate coverage and reimbursement by government and third-party payors for ~~our~~AVROBIO’s product candidates;

•

establishing and maintaining supply and manufacturing processes and relationships with third parties that can provide adequate, in both amount and quality, products and services to support clinical development and the commercial market demand for ~~our~~AVROBIO’s product candidates, if approved;

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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•

obtaining market acceptance of ~~our~~AVROBIO’s product candidates, if approved, as a viable treatment option;

•

addressing any competing technological and market developments;

•

negotiating favorable terms in any collaboration, licensing or other arrangements into which weAVROBIO may enter and performing ~~our~~AVROBIO’s obligations under such arrangements; and

•

attracting, hiring and retaining qualified personnel.

~~Even if~~Should AVROBIO resume development of its product candidates, and one or more of the product candidates that ~~we develop~~AVROBIO develops is approved for commercial sale, ~~we anticipate~~AVROBIO anticipates incurring significant costs associated with commercializing any approved product candidate. ~~Our~~AVROBIO’s expenses could increase beyond expectations if ~~we are~~AVROBIO is required by the FDA, or other foreign regulatory authorities to perform clinical and other studies in addition to those that weAVROBIO currently ~~anticipate.~~anticipates would be required. Even if ~~we are~~AVROBIO is able to generate revenues from the sale of any approved products, weAVROBIO may not become profitable and may need to obtain additional funding to continue operations.

If AVROBIO decides to resume development of its product candidates, AVROBIO will need additional funding, which may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force usAVROBIO to delay, limit or terminate ~~our~~AVROBIO’s product development efforts or other operations.

~~We expect our expenses to increase in connection with our ongoing activities,~~Should AVROBIO resume development of its product candidates, particularly ~~as we continue~~if AVROBIO continues the research and development of, initiate further clinical trials of and seek marketing approval for, ~~our~~AVROBIO’s product candidates and continue to enhance and optimize ~~our~~AVROBIO’s vector technology and manufacturing ~~processes.~~processes, AVROBIO expects its expenses would increase in connection with such activities. In July 2023, AVROBIO announced it was halting further development of its programs. Following such announcement, in September 2023 AVROBIO terminated its agreements with the University of Manchester for the license and development of a gene therapy for MPSII (Hunter syndrome) and discontinued AVROBIO’s AVR-RD-05, a Hunter syndrome gene therapy program. Previously, in June 2023, AVROBIO sold its cystinosis gene therapy program to Novartis. AVROBIO currently has a total of three gene therapy product candidates, for Gaucher, Pompe and Fabry diseases, none of which is currently in clinical development. Resumption of the development of these product candidates, if that were to occur, would require AVROBIO to expend significant resources to advance these candidates. In addition, ~~if we obtain~~should AVROBIO resume development of its product candidates and thereafter obtains marketing approval for any of ~~our~~AVROBIO’s product candidates, ~~we expect~~AVROBIO expects to incur significant expenses related to product sales, medical affairs, marketing, manufacturing and distribution. Though AVROBIO has halted further development of its programs to conduct a comprehensive exploration of strategic alternatives and has conducted reductions in force, AVROBIO may incur significant costs in connection with a comprehensive review of strategic alternatives, and AVROBIO has incurred, and may in the future incur, significant costs related to this continued evaluation. AVROBIO may also incur additional unanticipated expenses in connection with this process. Furthermore, ~~we expect~~AVROBIO expects to continue to incur additional costs associated with operating as a public company. Accordingly, weshould AVROBIO resume development of its product candidates, AVROBIO will need to obtain substantial additional funding in connection with ~~our~~AVROBIO’s continuing operations. If ~~we are~~AVROBIO is unable to raise capital when needed or on reasonable terms, ~~we would be forced~~and/or if a strategic transaction is not completed, AVROBIO may have to ~~delay, reduce or eliminate certain of our research and development programs.~~

~~Our~~liquidate its assets. AVROBIO’s future capital requirements will depend on many factors, including:

•

AVROBIO’s exploration of strategic alternatives to maximize stockholder value, including whether AVROBIO is able to identify and implement any potential strategic alternatives, in a timely manner or at all, whether AVROBIO realizes all or any of the anticipated benefits of any such transaction and whether any such transactions would generate value for stockholders;

•

should AVROBIO resume development of its product candidates, the scope, progress, results and costs of drug discovery, laboratory testing, preclinical development and clinical trials for ~~our other~~AVROBIO’s product ~~candidates;~~

candidates, including the extent of any impacts from the COVID-19 pandemic or similar public health crisis on these activities;

•

should AVROBIO resume development of its product candidates, the costs, timing and outcome of regulatory review of ~~our~~AVROBIO’s product candidates;

•

the costs of future activities, including, should AVROBIO resume development of its product candidates, product sales, medical affairs, marketing, manufacturing and distribution, for any of ~~our~~AVROBIO’s product candidates for which ~~we receive~~AVROBIO receives marketing approval;

•

should AVROBIO resume development of AVROBIO’s product candidates, the costs associated with ~~our~~AVROBIO’s manufacturing process development and evaluation of third-party ~~manufacturers~~manufacturers;

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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•

revenue, if any, should AVROBIO resume development of its product candidates, received from commercial sale of ~~our~~AVROBIO’s products, should any of ~~our~~AVROBIO’s product candidates receive marketing approval;

•

the amounts, if any, raised from potential financings and capital raising activities should AVROBIO resume development of its product candidates;

•

the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing ~~our~~AVROBIO’s intellectual property rights and defending intellectual property-related claims;

•

the costs of defending against and resolving adverse litigation, if any;

•

the terms of ~~our~~AVROBIO’s current and any future license agreements and collaborations; and

•

the extent to which ~~we acquire~~AVROBIO acquires orin-license other product candidates, technologies and intellectual property.

Identifying potential product candidates and conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and weshould AVROBIO resume development of its product candidates, AVROBIO may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, ~~our~~AVROBIO’s product candidates, if approved, may not achieve commercial success. ~~Our~~AVROBIO’s product revenues, if any, will be derived from or based on sales of products that may not be commercially available for many years, if at all. Accordingly, weAVROBIO will need to continue to rely on additional financing to achieve ~~our~~AVROBIO’s business objectives. Adequate additional financing may not be available to usAVROBIO on acceptable terms, or at all.

~~Raising~~Entry into an acquisition, merger, business combination, or other strategic transaction, or raising additional capital may cause dilution to ~~our~~AVROBIO’s existing stockholders, restrict ~~our~~AVROBIO’s operations or cause usAVROBIO to relinquish valuable rights.

WeIn July 2023, AVROBIO announced its intention to explore strategic alternatives, including a potential acquisition, merger, business combination, or other strategic transaction, and in January 2024 announced entrance into the Merger Agreement with Tectonic. If the merger with Tectonic is not consummated, the terms of any other strategic transaction that AVROBIO might enter into, if any, could result in the issuance of securities in the company, such as AVROBIO common stock, which could result in significant dilution to AVROBIO stockholders. Additionally, in connection with any other such strategic alternatives, AVROBIO may seek to raise additional capital through a combination of public and private equity offerings ~~debt financings, strategic partnerships and alliances and licensing~~or other financing arrangements. To the extent that ~~we raise~~AVROBIO enters into any other strategic transaction and/or raises additional capital through the sale of equity, convertible debt securities or other equity-based derivative securities, ~~your~~stockholders’ ownership interest will be diluted and the terms may include liquidation or other preferences that adversely affect ~~your~~ rights ~~as a stockholder.~~of stockholders. Any ~~additional~~ indebtedness ~~we incur~~AVROBIO incurs would result in increased fixed payment obligations and could involve restrictive covenants, such as limitations on ~~our~~AVROBIO’s ability to incur additional debt, limitations on ~~our~~AVROBIO’s ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact ~~our~~AVROBIO’s ability to conduct ~~our~~AVROBIO’s business. Furthermore, the issuance of additional securities, whether equity or debt, by ~~us,~~AVROBIO, or the possibility of such issuance, may cause the market price of ~~our~~AVROBIO common stock to decline and existing stockholders may not agree with ~~our~~AVROBIO’s strategic or financing plans or the terms of such strategic transaction or financings. If ~~we raise~~AVROBIO raises additional funds through strategic partnerships and alliances and licensing arrangements with third parties, weAVROBIO may have to relinquish valuable rights to ~~our~~AVROBIO’s technologies, or ~~our~~AVROBIO’s product candidates, or grant licenses on terms unfavorable to ~~us.~~AVROBIO. Adequate additional financing may not be available to usAVROBIO on acceptable terms, or at all.

~~Our~~AVROBIO’s limited operating history may make it difficult ~~for you~~ to evaluate the success of ~~our~~AVROBIO’s business to date and to assess ~~our~~AVROBIO’s future viability.

~~We are a development-stage company~~AVROBIO was founded in November 2015. ~~Our~~AVROBIO’s operations to date have been limited to corporate organization, recruiting key personnel, business planning, raising capital, acquiring rights to ~~our~~AVROBIO’s technology, identifying potential product candidates, undertaking preclinical studies and planning and supporting clinical trials of ~~our~~certain of AVROBIO’s product candidates and establishing research and development and manufacturing capabilities. ~~Although we recently initiated our Phase 2 clinical trial forAVR-RD-01,~~ ~~we have~~AVROBIO has not yet demonstrated the ability to complete clinical trials of ~~our~~AVROBIO’s product candidates, obtain marketing approvals, manufacture products on a ~~clinical or~~ commercial scale or conduct sales and marketing activities necessary for successful commercialization. Consequently, any predictions you make about ~~our~~AVROBIO’s future success or viability, should AVROBIO resume development of its programs, may not be as accurate as they could

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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be if weAVROBIO had a longer operating history. In addition, as ~~a new business, we~~an early-stage company, AVROBIO may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors.

Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect AVROBIO’s current and projected business operations and its financial condition and results of operations.

Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. Uncertainty remains over liquidity concerns in the broader financial services industry, and if any of AVROBIO’s contract organizations, vendors, suppliers or other parties with whom AVROBIO conducts business are unable to access funds pursuant to their own arrangements with such a financial institution, such party’s ability to perform their obligations could be adversely affected. Similar impacts have occurred in the past, such as during the 2008-2010 financial crisis.

Inflation and rapid increases in interest rates have led to a decline in the trading value of previously issued government securities with interest rates below current market interest rates. Although the U.S. Department of Treasury, Federal Deposit Insurance Corporation, or the FDIC, and Federal Reserve Board have announced a program to provide up to $25 billion of loans to financial institutions secured by certain of such government securities held by financial institutions to mitigate the risk of potential losses on the sale of such instruments, widespread demands for customer withdrawals or other liquidity needs of financial institutions for immediately liquidity may exceed the capacity of such program. Additionally, there is no guarantee that the U.S. Department of Treasury, FDIC and Federal Reserve Board will provide access to uninsured funds in the future in the event of the closure of other banks or financial institutions, or that they would do so in a timely fashion.

Although AVROBIO assesses its banking relationships as AVROBIO believes necessary or appropriate, AVROBIO’s access to funding sources and other credit arrangements in amounts adequate to finance or capitalize AVROBIO’s current and projected future business operations could be significantly impaired by factors that affect AVROBIO’s company, the financial institutions with which AVROBIO has credit agreements or arrangements directly, or the financial services industry or economy in general. These factors could include, among others, events such as liquidity constraints or failures, the ability to perform obligations under various types of financial, credit or liquidity agreements or arrangements, disruptions or instability in the financial services industry or financial markets, or concerns or negative expectations about the prospects for companies in the financial services industry. These factors could involve financial institutions or financial services industry companies with which AVROBIO has financial or business relationships, but could also include factors involving financial markets or the financial services industry generally. The results of events or concerns that involve one or more of these factors could include a variety of material and adverse impacts on AVROBIO’s current and projected business operations and AVROBIO’s financial condition and results of operations. These could include, but may not be limited to, the following:

•

Delayed access to deposits or other financial assets or the uninsured loss of deposits or other financial assets;

•

Delayed or lost access to, or reductions in borrowings available under revolving existing credit facilities or other working capital sources and/or delays, inability or reductions in the company’s ability to refund, roll over or extend the maturity of, or enter into new credit facilities or other working capital resources;

•

Potential or actual breach of contractual obligations that require AVROBIO to maintain letters of credit or other credit support arrangements;

•

Potential or actual breach of financial covenants in AVROBIO’s credit agreements or credit arrangements;

•

Potential or actual cross-defaults in other credit agreements, credit arrangements or operating or financing agreements; or

•

Termination of cash management arrangements and/or delays in accessing or actual loss of funds subject to cash management arrangements.

In addition, investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for AVROBIO to acquire financing on acceptable terms or at all. Any decline in available funding or access to AVROBIO’s cash and liquidity resources could, among other risks, adversely impact AVROBIO’s ability to meet AVROBIO’s operating expenses, financial obligations or fulfill AVROBIO’s other obligations, result in breaches of AVROBIO’s financial and/or contractual obligations or result in violations of federal or state wage and hour laws. Any of these impacts, or any other impacts resulting from the factors described above or other related or similar factors not described above,

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could have material adverse impacts on AVROBIO’s liquidity and AVROBIO’s current and/or projected business operations and financial condition and results of operations.

In addition, any further deterioration in the macroeconomic economy or financial services industry could lead to losses or defaults by AVROBIO’s contract organizations, vendors, suppliers or other parties with whom AVROBIO conducts business, which in turn, could have a material adverse effect on AVROBIO’s current and/or projected business operations and results of operations and financial condition. For example, contract organizations, vendors, suppliers or other parties with whom AVROBIO conducts business could be adversely affected by any of the liquidity or other risks that are described above as factors that could result in material adverse impacts on AVROBIO’s company, including but not limited to delayed access or loss of access to uninsured deposits or loss of the ability to draw on existing credit facilities involving a troubled or failed financial institution. Any bankruptcy or insolvency involving AVROBIO’s contract organizations, vendors, suppliers or other parties with whom AVROBIO conducts business, or any breach or default by such parties, or the loss of any significant relationships with such parties, could result in a material adverse impact on AVROBIO’s business.

Risks Related to AVROBIO’s Business if Merger is Not Consummated

AVROBIO may not be successful in completing the merger, and any strategic transactions that it may consummate in the future could have negative consequences.

AVROBIO is exploring strategic transactions regarding any product candidates and related assets, including, without limitation, licensing transactions and asset sales. There can be no assurance that AVROBIO will be able to successfully consummate the merger or that the merger will be completed on attractive terms, within the anticipated timing, or at all. The process of continuing to evaluate these strategic options may be very costly, time-consuming and complex and AVROBIO has incurred, and may in the future incur, significant costs related to this continued evaluation, such as legal and accounting fees and expenses and other related charges. AVROBIO may also incur additional unanticipated expenses in connection with this process. A considerable portion of these costs will be incurred regardless of whether any such course of action is implemented or transaction is completed. Any such expenses will decrease the remaining cash available for use in its business.

In addition, any strategic business combination or other transactions that AVROBIO may consummate in the future could have a variety of negative consequences and it may implement a course of action or consummate a transaction that yields unexpected results that adversely affects its business and decreases the remaining cash available for use in its business or the execution of its strategic plan. There can be no assurances that any particular course of action, business arrangement or transaction, or series of transactions, will be pursued, successfully consummated, lead to increased stockholder value or achieve the anticipated results. Any potential transaction would be dependent on a number of factors that may be beyond its control, including, among other things, market conditions, industry trends, the interest of third parties in a potential transaction with AVROBIO, obtaining stockholder approval and the availability of financing to third parties in a potential transaction with AVROBIO on reasonable terms. Any failure of such a potential transaction to achieve the anticipated results could significantly impair its ability to enter into any future strategic transactions and may significantly diminish or delay any future distributions to its stockholders.

If AVROBIO is not successful in setting forth a new strategic path for AVROBIO, or if its plans are not executed in a timely fashion, this may cause reputational harm with its stockholders and the value of its securities may be adversely impacted. In addition, speculation regarding any developments related to the ~~discovery~~review of strategic alternatives and perceived uncertainties related to the future of AVROBIO could cause its stock price to fluctuate significantly.

If AVROBIO is successful in completing the merger, it may be exposed to other operational and financial risks.

Although there can be no assurance that the merger will be completed, the negotiation and consummation of the merger has required and will continue to require significant time on the part of its management, and the diversion of management’s attention may disrupt its business.

The negotiation and consummation of the merger may also require more time or greater cash resources than AVROBIO anticipates and exposes AVROBIO to other operational and financial risks, including:

•

increased near-term and long-term expenditures;

•

exposure to unknown liabilities;

•

higher than expected acquisition or integration costs;

•

incurrence of substantial debt or dilutive issuances of equity securities to fund future operations;

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•

write-downs of assets or goodwill or incurrence of non-recurring, impairment or other charges;

•

increased amortization expenses;

•

difficulty and cost in combining the operations and personnel of any acquired business with its operations and personnel;

•

impairment of relationships with key suppliers or customers of any acquired business due to changes in management and ownership;

•

inability to retain key employees of AVROBIO or any acquired business; and

•

possibility of future litigation.

Any of the foregoing risks could have a material adverse effect on its business, financial condition and prospects.

AVROBIO’s corporate restructuring and the associated reduction in workforce may not result in anticipated savings, could result in total costs and expenses that are greater than expected and could disrupt its business.

In January 2022, and then between July 2023 and February 2024, AVROBIO implemented reductions in force that significantly reduced its workforce in order to conserve its capital expenditures. AVROBIO may not realize, in full or in part, the anticipated benefits, savings and improvements in its cost structure from its restructuring efforts due to unforeseen difficulties, delays or unexpected costs. If AVROBIO is unable to realize the expected operational efficiencies and cost savings from the restructuring, its operating results and financial condition will be adversely affected. Furthermore, its restructuring plan may be disruptive to its operations. For example, its headcount reductions could yield unanticipated consequences, such as increased difficulties in implementing its business strategy, including retention of its remaining employees. Employee litigation related to the headcount reduction could be costly and prevent management from fully concentrating on the business.

Any future growth of AVROBIO’s business would impose significant added responsibilities on members of management, including the need to identify, recruit, maintain and integrate additional employees. Due to its limited resources, AVROBIO may not be able to effectively manage its operations or recruit and retain qualified personnel, which may result in weaknesses in its infrastructure and operations, risks that AVROBIO may not be able to comply with legal and regulatory requirements, loss of employees and reduced productivity among remaining employees.

The impact and results of AVROBIO’s ongoing strategic process are uncertain and may not be successful.

The AVROBIO Board remains dedicated to diligent deliberations and the making of informed decisions that the directors believe are in the best interests of the company and its stockholders. There can be no assurance, however, that the company’s current strategic direction, or the AVROBIO Board’s evaluation of strategic alternatives, will result in any initiatives, agreements, transactions or plans that will further enhance stockholder value.

In addition, given the substantial restructuring of AVROBIO’s operations over the past several years, it may be difficult to evaluate its current business and future prospects on the basis of historical operating performance.

Risks Related to the Discovery and Development of AVROBIO’s Product Candidates

Business interruptions resulting from the COVID-19 pandemic or similar public health crises have caused and may in the future cause a disruption of the development of ~~our~~AVROBIO’s product candidates and adversely impact AVROBIO’s business.

~~Our~~Public health crises such as pandemics, epidemics, or any outbreak of an infectious disease or similar public health crises could adversely impact AVROBIO’s business. For example, the COVID-19 pandemic disrupted normal business operations both in and outside of affected areas and has had significant negative impacts on businesses and financial markets worldwide. While AVROBIO currently has no ongoing clinical development activities following AVROBIO’s decision to halt its clinical development programs while AVROBIO considers strategic alternatives, AVROBIO continues to monitor AVROBIO’s operations and follow applicable government recommendations, and the majority of AVROBIO’s employees have adopted a “hybrid” work schedule which generally limits the number of people in AVROBIO’s office at any particular time. Notwithstanding these measures, the COVID-19 pandemic, including potential outbreaks of new variants, or any other public health crisis could affect the health and availability of AVROBIO’s workforce as well as those of the third parties on which AVROBIO relies. If members of AVROBIO’s management and other key personnel are unable to perform their duties or have limited availability due to any outbreak of an infectious disease or similar public health crises, AVROBIO may not be able to execute on AVROBIO’s business strategy and/or AVROBIO’s operations may be negatively impacted.

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In addition, clinical trial activities, should AVROBIO resume any such activities, including patient enrollment and data collection, are dependent upon global clinical trial sites which were adversely affected by the COVID-19 pandemic. For example, as the global healthcare community responded to the fluctuations in COVID-19 cases and hospitalizations, many hospitals, including AVROBIO’s clinical sites, temporarily paused elective procedures, which included dosing of new patients with AVROBIO’s investigational gene therapies. While AVROBIO substantially resumed data collection and dosing of new patients until halting AVROBIO’s development programs in July 2023, AVROBIO’s ability to continue clinical activities without further delay or interruption, should AVROBIO resume development of its programs, will depend on future developments that are highly uncertain and cannot be accurately predicted.
Additional factors from any public health crisis that may delay or otherwise adversely affect enrollment in or the progress of the clinical trials of AVROBIO’s product candidates if AVROBIO resumes development of its programs, as well as AVROBIO’s business generally, include:
•
the potential diversion of healthcare resources away from the conduct of clinical trials to focus on pandemic concerns, including the attention of physicians serving as AVROBIO’s clinical trial investigators, hospitals serving as AVROBIO’s clinical trial sites and hospital staff supporting the conduct of AVROBIO’s clinical trials;
•
limitations on travel that could interrupt key trial activities, such as clinical trial site initiations and monitoring, domestic and international travel by employees, contractors or patients to clinical trial sites, including any government-imposed travel restrictions or quarantines that may impact the ability or willingness of patients, employees or contractors to travel to AVROBIO’s clinical trial sites or secure visas or entry permissions, any of which could delay or adversely impact the conduct or progress of AVROBIO’s clinical trials;
•
interruption in global shipping affecting the transport of clinical trial materials, such as patient samples, investigational drug product and conditioning drugs and other supplies used in AVROBIO’s clinical trials;
•
business disruptions caused by workplace, laboratory and office closures and an increased reliance on employees working from home, disruptions to or delays in ongoing laboratory experiments and operations, staffing shortages, travel limitations or mass transit disruptions, any of which could adversely impact AVROBIO’s business operations or those of third party service providers, contractors, or suppliers on whom AVROBIO relies, impair the productivity of AVROBIO’s personnel, subject AVROBIO to additional cybersecurity risks, create data accessibility problems, cause AVROBIO to become more susceptible to communication disruptions, or delay necessary interactions with local regulators, ethics committees and other important agencies and contractors;
•
business disruptions involving AVROBIO’s third parties on whom AVROBIO relies, including contract research organizations, or CROs, and other collaborators for the conduct of AVROBIO’s clinical trials or AVROBIO’s third party suppliers or manufacturers, which could impact their ability to perform adequately or disrupt AVROBIO’s supply chain; and
•
changes in hospital or research institution policies or government regulations, which could delay or adversely impact AVROBIO’s ability to conduct AVROBIO’s clinical trials.
These and other factors arising from the public health crises could reemerge or worsen and adversely impact AVROBIO’s ability to conduct clinical trials and AVROBIO’s business generally, and could have a material adverse impact on AVROBIO’s operations and financial condition and results. The extent to which any public health crisis impacts AVROBIO’s operations or those of AVROBIO’s third party partners will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the public health crisis, the efficacy and safety of vaccines, including against emerging variants, the ability of third parties to manufacture and distribute vaccines, among others.

AVROBIO’s HSC lentiviral-based gene therapy product candidates are based on a novel technology, which makes it difficult to predict the time and cost of product candidate development and of subsequently obtaining regulatory ~~approval.~~approval, should AVROBIO resume development of AVROBIO’s product candidates.

~~We have~~AVROBIO has concentrated ~~our~~AVROBIO’s research and development efforts on ~~our lentiviral-based~~AVROBIO’s HSC gene therapy approach, and ~~our~~should AVROBIO resume development of its product candidates AVROBIO’s future success ~~depends~~would depend on ~~our~~AVROBIO’s successful development of viable gene therapy product candidates. There can be no assurance that weAVROBIO will not experience problems or delays in developing new product candidates, should AVROBIO resume development of its product candidates, and that such problems or delays will not cause unanticipated costs, or that any such development problems can be solved. WeFor example, timely enrollment in AVROBIO’s clinical trials is dependent upon global clinical trial sites which were adversely affected by the COVID-19 pandemic. In addition, AVROBIO may also experience delays in developing a sustainable, reproducible and scalable manufacturing

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process or transferring that process to commercial, additional or alternative partners, which should AVROBIO resume development of its product candidates may prevent usAVROBIO from completing ~~our~~ clinical studies or commercializing ~~our~~AVROBIO’s products on a timely or profitable basis, if at all. For example, as of July 12, 2023, the ~~transition to~~date on which AVROBIO announced that AVROBIO was halting all further development activities in AVROBIO’s programs, AVROBIO had dosed 11 patients using AVROBIO’s plato platform, including six patients in AVROBIO’s FAB-GT clinical trial (for which AVROBIO previously halted enrollment) and five patients in AVROBIO’s Guard1 clinical trial. AVROBIO’s implementation of the LV2 lentiviral vector or of ~~our~~AVROBIO’s cell processing to an industrialized, automated closed system using ~~all~~ disposable supplies may not be successful or may experience unforeseen delays, should AVROBIO resume development of its product candidates, which may cause shortages or delays in the supply of ~~our~~AVROBIO’s products available for clinical trials and future commercial sales, if ~~any.~~any, or impair AVROBIO’s research and development efforts, including those in any future clinical trials. In addition, there is no assurance that preliminary results observed to date in products manufactured using ~~our~~AVROBIO’s proprietary LV2 lentiviral vector or manufactured using this automated system will ~~achieve~~be replicated in future studies or trials, should AVROBIO resume development of any of its product candidates. Furthermore, the ~~same favorable preliminary results observed~~FDA generally prefers that clinical trials be double-blinded and potentially include sham controls. Such a trial design could be challenging to ~~date in~~implement due to the ~~Phase 1 clinical trial~~nature of~~AVR-RD-01.~~ the treatment regimen of HSC gene therapy.

In addition, the clinical trial requirements of the FDA and other foreign regulatory authorities and the criteria these regulators use to determine the safety and efficacy of a product candidate vary substantially according to the type, complexity, novelty and intended use and market of such product candidates. The regulatory approval process for novel product candidates such as ~~ours~~AVROBIO’s can be more expensive and take longer than for other, better known or more extensively studied product candidates. To date, only a limited number of HSC gene therapies have received marketing authorization from the FDA or foreign regulatory authorities. ItShould AVROBIO resume development of its product candidates, it is difficult to determine how long it ~~will~~would take or how much it ~~will~~would cost to obtain regulatory approvals for ~~our~~those product candidates in ~~either~~ the United States, Canada, Europe, Japan or other major markets or how long it ~~will~~would take to commercialize ~~our~~those product candidates, if any ~~are~~were to be approved. Approvals by foreign regulatory authorities may not be indicative of what the FDA may require for approval, and vice versa.

Regulatory requirements governing gene and cell therapy products have changed frequently and may continue to change in the future. The FDA has established the Office of Tissues and Advanced Therapies within its Center for Biologics Evaluation and Research, or CBER, to consolidate the review of gene therapy and related products, and has established the Cellular, Tissue and Gene Therapies Advisory Committee to advise the CBER in its review. Gene therapy clinical trials conducted at institutions that receive funding for recombinant DNA research from the United States National Institutes of Health, or NIH, also are ~~potentially~~ subject to ~~review by~~ the NIH ~~Office~~Guidelines, under which supervision of ~~Science Policy’s Recombinant DNA Advisory Committee,~~human gene transfer trials includes evaluation and assessment by an institutional biosafety committee, or the ~~RAC,~~IBC, a local institutional committee that reviews and oversees research utilizing recombinant or synthetic nucleic acid molecules at that institution. Before a clinical trial can begin at any institution, that institution’s review board, or IRB, and its IBC assesses the safety of the research and identifies any potential risk to public health or the environment. While the NIH guidelines are not mandatory unless the research in ~~limited circumstances.~~question is being conducted at or sponsored by institutions receiving NIH funding of recombinant or synthetic nucleic acid molecule research, many companies and other institutions not otherwise subject to the NIH Guidelines voluntarily follow them. Although the FDA decides whether individual gene therapy protocols may proceed, the ~~RAC public~~ review process ~~if undertaken,~~and determinations of other reviewing bodies can impede or delay the initiation of a clinical trial, even if the FDA has reviewed the trial ~~design~~ and ~~details and authorized~~approved its initiation. ~~Conversely, the FDA can put an investigational new drug application, or IND, on clinical hold even if the RAC has provided a favorable review or an exemption fromin-depth,~~ ~~public review. If we were to engage anNIH-funded~~ institution, to conduct a clinical trial, that institution’s institutional biosafety committee, or IBC, as well as its institutional review board, or IRB, would need to review the proposed clinical trial to assess the safety of the trial and may determine that RAC review is needed. In addition, adverse developments in clinical trials of gene therapy products conducted by others may cause the FDA or other oversight bodies to change the requirements for approval of any of ~~our~~AVROBIO’s product ~~candidates.~~candidates should AVROBIO resume their development. Similarly, foreign regulatory authorities may issue new guidelines concerning the development and marketing authorization for gene therapy medicinal products and require that ~~we comply~~AVROBIO complies with these new guidelines.

The FDA, NIH and the European Medicines Agency, or EMA, have each expressed interest in further regulating biotechnology, including gene therapy and genetic testing. For example, the EMA advocates a risk-based approach to the development of a gene therapy product. Agencies at both the federal and state level in the United States, as well as the U.S. congressional committees and other governments or governing agencies, have also expressed interest in further regulating the biotechnology industry. For example, in 2016, the FDA established the Office of Tissues and Advanced Therapies, or the OTAT, within the Center for Biologics Evaluation and Research, or CBER, to consolidate the review of gene therapy and related products, and to advise the CBER on its review. In September 2022, the FDA announced retitling of OTAT to the Office of Therapeutic Products, or the OTP, and elevation of OTP to a “Super Office” to meet its growing cell and gene therapy workload. Although FDA has indicated that this change of name and responsibilities is intended to, among other things, increase review capabilities and enhance expertise on new cell and gene therapies, AVROBIO cannot be certain that this approach will improve the time and cost associated with navigating gene therapy regulatory requirements, AVROBIO’s regulatory strategy or the potential success of AVROBIO’s product candidates. Such regulatory action ~~may~~and developments could, instead, delay, impede or even prevent commercialization of some or all of ~~our~~AVROBIO’s product candidates.

These regulatory review committees and advisory groups and any new guidelines they promulgate may lengthen the regulatory review process, require usAVROBIO to perform additional studies, increase ~~our~~AVROBIO’s development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of these product candidates or lead to significant post-approval limitations or restrictions. ~~As we advance our~~Should AVROBIO resume development of AVROBIO’s product candidates, we

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AVROBIO will be required to consult with these regulatory and advisory groups, and comply with applicable guidelines. If ~~we fail~~AVROBIO fails to do so, weAVROBIO may be required to delay or discontinue development of certain of ~~our~~those product candidates. These additional processes may result in a review and approval process that is longer than weAVROBIO otherwise would have expected. ~~Delay~~Should AVROBIO resume development of its product candidates, the delay or failure to obtain, or unexpected costs in obtaining, the regulatory approval necessary to bring a potential product to market could decrease ~~our~~AVROBIO’s ability to generate sufficient product revenue, and ~~our~~AVROBIO’s business, financial condition, results of operations and prospects would be materially and adversely affected.

The FDA ~~recently~~continues to develop its guidance for assessing gene and cell therapy products. For example, the agency has released a series of draft ~~guidances, which amongst~~and final guidance documents relating to, among other topics, ~~regarded~~ various aspects of gene therapy product development, review, and approval, including aspects relating to clinical and manufacturing issues related to gene therapy products. ~~We cannot be certain whether such~~In January 2020, the FDA released a final guidance ~~will be relevant to or have an impact on our~~with recommendations for long-term follow-up studies of patients following human gene therapy ~~candidates or~~administration due to the ~~duration or expense~~increased risk of ~~any applicable~~undesirable and unpredictable outcomes with gene therapies that may present as delayed adverse events. Foreign regulatory ~~development and review processes~~agencies also may have requirements for long term follow-up studies of patients following human gene therapy administration.

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

During the conduct of clinical trials, patients may experience changes in their health, including illnesses, injuries, discomforts or a fatal outcome. It is possible that as ~~we testAVR-RD-01~~ ~~or other~~AVROBIO tests AVROBIO’s product candidates in larger, longer and more extensive clinical programs, or as use of ~~our~~AVROBIO’s product candidates becomes more widespread if they receive regulatory approval, illnesses, injuries, discomforts and other adverse events that were observed in earlier clinical trials, as well as conditions that did not occur or went undetected in previous clinical trials, will be reported by ~~subjects.~~patients. Additionally, any early access to AVROBIO’s investigational therapies, such as through expanded or Right to Try access or compassionate use, may lead to discovery of undesirable side effects, or other negative consequences that could have adverse impacts on AVROBIO’s development programs for AVROBIO’s product candidates. Gene therapies are also subject to the potential risk that occurrence of adverse events will be delayed following administration of the gene therapy due to persistent biological activity of the genetic material or other components of the vectors used to carry the genetic material. Many times, side effects are only detectable after investigational products are tested in larger scale, pivotal clinical trials or, in some cases, after they are made available to patients on a commercial scale after approval. FDA guidance advises that patients treated with gene therapies undergo long-term follow-up observation for potential adverse events for as long as 15 years, unless otherwise agreed by the FDA. If additional clinical or long-term follow-up experience indicates that~~AVR-RD-01~~ or any ~~other~~of AVROBIO’s product ~~candidate has~~candidates have side effects or ~~causes~~cause serious or life-threatening side effects, ~~the~~AVROBIO may be unable to resume its development programs and any further development of the product candidate may ultimately fail or be ~~delayed, or, if the product candidate has received regulatory approval, such approval may be revoked or limited.~~delayed.

~~There have been several significant adverse side effects in gene therapy treatments in the past, including reported cases of leukemia and death seen in other clinical trials.~~ Gene therapy is still a relatively new approach to disease treatment and ~~additional~~ adverse side effects could develop. Possible adverse side effects that may occur with treatment with gene therapy products include an immunologic reaction early after administration that could substantially limit the effectiveness of the treatment or represent safety risks for patients. Another traditionalA safety concern for gene therapies using ~~viral~~lentiviral vectors has been the possibility of insertional ~~mutagenesis by the vectors,~~oncogenesis, leading to malignant transformation of transduced ~~cells. While our~~cells and cellular outgrowth. As more patients are dosed with HSC gene therapies, it is expected that very rare cases of insertional oncogenesis may occur. For example, several patients with cerebral adrenoleukodystrophy treated in a third-party lentiviral gene therapy clinical trial have been diagnosed with treatment-related myelodysplastic syndrome to date. In addition, persistent clonal dominance due to vector integration has been observed in third-party HSC gene therapy clinical trials. While AVROBIO’s HSC gene therapy approach is

has been designed to avoid ~~immunogenicity after administration,~~insertional oncogenesis, there can be no assurance that patients ~~would~~will not ~~create antibodies that may impair treatment. If~~experience such adverse effects, including death. Should AVROBIO resume development of its gene therapy product candidates and any of ~~our gene therapy~~those product candidates demonstrates adverse side effects at unacceptable rates or degrees of severity, weAVROBIO may decide or be required to halt or delay clinical development of such product candidates.

In addition to side effects caused by ~~our~~AVROBIO’s product candidates, the conditioning, administration process or related procedures, also can cause adverse side effects. A gene therapy patient is generally administered ~~cytotoxic~~one or more myeloablative drugs to remove stem cells from the bone marrow to create sufficient space in the bone marrow for the modified gene-corrected stem cells to engraft and produce their progeny. This procedure ~~compromises~~causes side effects and, among other potential risks, can transiently compromise the patient’s immune ~~system. While certain of our~~system, known as neutropenia, and reduce blood clotting, known as thrombocytopenia.

In 2019, AVROBIO began transitioning, in connection with AVROBIO-sponsored clinical trials, towards a new conditioning regimen for AVROBIO’s product candidates ~~are~~utilizing busulfan as the myeloablative conditioning agent instead of the melphalan that AVROBIO previously used. The use of this conditioning regimen AVROBIO designed to utilize ~~outpatient, milder conditioning regimens that are intended~~a precision dosing program to ~~require only limited~~achieve a balance between the removal of a ~~patient’s~~sufficient amount of bone marrow cells ~~our~~from a patient to aid engraftment of AVROBIO’s

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genetically modified cells against potential risks, such as toxicity or graft failure. AVROBIO’s conditioning regimens may not be successful or may nevertheless result in adverse side effects. For example, busulfan, the myeloablative agent most recently used in AVROBIO’s conditioning regimen, has been known to carry certain safety risks, including the ~~ongoing investigator-sponsored Phase 1~~risk of impairment to fertility in both men and women, and such impairment has been reported in some patients in AVROBIO’s clinical ~~trial and our ongoing company-sponsored Phase 2~~trials. Moreover, in each of AVROBIO’s previous clinical ~~trial ofAVR-RD-01,~~trials several adverse events, including suppression of ~~white blood cell~~neutrophils and platelet counts ~~nausea and/or vomiting~~ following the conditioning process, ~~were~~have been observed. IfWhile such adverse events in connection with conditioning are expected, if in the future any such adverse events caused by the conditioning process or related procedures continue at ~~unacceptable~~unexpected rates or degrees of severity, the FDA or other foreign regulatory authorities could order ~~us to cease~~the cessation of development of, or deny approval of,~~AVR-RD-01~~ ~~or our other~~ product candidates for any or all targeted indications. There have been cases of therapy-related myelodysplastic syndrome, a type of blood disorder that is a potential precursor to acute myeloid leukemia, in patients with preexisting cancer where busulfan treatment was posited to be a contributing factor to this secondary malignancy. Even if ~~we are~~AVROBIO is able to demonstrate that adverse events are not product-related, such occurrences could adversely affect patient recruitment (should AVROBIO resume development of its product candidates) or the ability of enrolled patients to complete the clinical ~~trial.~~trial, and lead to a decline in AVROBIO’s stock price.

Additionally, if AVROBIO resume development of its programs and any of ~~our~~AVROBIO’s product candidates receives marketing approval, the FDA could require usAVROBIO to adopt a Risk Evaluation and Mitigation Strategy, or REMS, to ensure that the benefits outweigh its risks, which may include, among other things, a medication guide outlining the risks of the product for distribution to patients, a communication plan to health care practitioners, and restrictions on how or where the product can be distributed, dispensed or used. Furthermore, if weAVROBIO or others later identify undesirable side effects caused by~~AVR-RD-01~~ ~~or our other~~ AVROBIO’s product candidates, several potentially significant negative consequences could result, including:

•

regulatory authorities may suspend or withdraw approvals of such a product candidate;

•

regulatory authorities may require additional or boxed warnings on the label;

we•

AVROBIO may be required to change the way a product candidate is distributed, dispensed, or administered or conduct additional clinical trials;

we•

AVROBIO could be sued and held liable for harm caused to patients; and

~~our~~•

AVROBIO’s reputation may suffer.

Any of these events could prevent usAVROBIO from achieving or maintaining market acceptance of ~~our~~AVROBIO’s product candidates, lead to a decline in AVROBIO’s stock price, and ~~could~~ significantly harm ~~our~~AVROBIO’s business, prospects, financial condition and results of operations.

~~AVR-RD-01~~ is being investigated in an ongoing investigator-sponsored Phase 1 clinical trial and an ongoing company-sponsored Phase 2 clinical trial, and we have not commenced clinical trials for any of our other product candidates. We haveAVROBIO has never completed a pivotal or registrational clinical trial, and may be unable to do so for any product candidates weAVROBIO may develop, ~~includingAVR-RD-01.~~should AVROBIO resume development of its product candidates.

~~We are~~AVROBIO is at ~~a very~~an early stage of development for all of ~~our~~AVROBIO’s product candidates, ~~includingAVR-RD-01.~~ Asand has currently halted further development of ~~August 1, 2018, our product candidateAVR-RD-01~~ ~~has been administered to only three~~AVROBIO’s programs. Twenty-five patients were dosed in AVROBIO’s clinical trials, which includes 14 patients from AVROBIO’s Fabry program that AVROBIO deprioritized in January 2022, six patients in ~~an ongoing Phase~~AVROBIO’s cystinosis program that AVROBIO sold to Novartis in June 2023, and five patients in AVROBIO’s Gaucher disease type 1 ~~clinical trial and to one patient in our ongoing Phase 2 clinical trial. The ongoing Phase 1 and Phase 2~~program. Should AVROBIO resume development of its product candidates, further clinical trials ~~forAVR-RD-01~~must be completed ~~as well as potentially additional pivotal clinical trials~~ in order to obtain FDA or other regulatory approval to market~~AVR-RD-01.~~ ~~Carrying out later-stage clinical trials is a complicated process. We only recently dosed the first patient in our company-sponsored Phase 2 clinical trial in the second quarter of 2018. We have~~ these product candidates. AVROBIO has limited experience in preparing, submitting and prosecuting regulatory filings, and ~~have~~has not previously submitted a biologics license application, or BLA, for any product candidate. Carrying out later-stage clinical trials is a complicated and lengthy process, and AVROBIO does not expect that all data from patients participating in the clinical trials will be relevant or meaningful.

In addition, ~~we have not yet conducted~~across AVROBIO-sponsored clinical trials ~~of any our product candidates~~AVROBIO has dosed four patients in the United States, ~~our~~and AVROBIO’s interactions with the FDA have generally been ~~and are expected to be limited for the near future, and we~~limited. AVROBIO cannot be certain how many additional clinical trials of~~AVR-RD-01~~ or any of ~~our other~~AVROBIO’s product candidates ~~will~~would be required or how such trials should be ~~designed.~~designed, should AVROBIO resume development of its programs. In order to commence a clinical trial in the United States, ~~we are~~AVROBIO is required to seek FDA acceptance of an IND for each of ~~our~~AVROBIO’s product candidates. WeAVROBIO cannot be sure any IND ~~we submit~~AVROBIO submits to the FDA, or any similar ~~clinical trial application we submit~~CTA AVROBIO submits in other countries, will be accepted. ~~We recently held apre-IND~~ ~~meeting with the FDA to discuss the requirements to commence clinical trials in the United States, and we expect to open a U.S. site for our ongoing Phase 2 clinical trial~~Should AVROBIO resume development of~~AVR-RD-01~~ ~~in 2019. However,~~ its product candidates, there can be no assurance that ~~we will commence clinical trials in the United States on our expected timeframe or at all. We~~AVROBIO would be able to submit and secure similar clearances for any of AVROBIO’s other product candidates. AVROBIO may also be required to conduct additional preclinical testing prior to filing an IND for any of ~~our~~AVROBIO’s product candidates, and the results of any such testing may not be positive. Consequently, weAVROBIO may be unable to successfully and efficiently execute and complete necessary clinical trials in a way that leads to a BLA submission and approval of~~AVR-RD-01~~ or any of ~~our other~~AVROBIO’s product candidates. WeAVROBIO may require more time and incur greater costs than ~~our~~ AVROBIO’s

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competitors and may not succeed in obtaining regulatory approvals of product candidates that ~~we develop.~~AVROBIO develops. Failure to commence or complete, or delays in, ~~our planned~~the necessary clinical trials, could prevent usAVROBIO from or delay usAVROBIO in commercializing~~AVR-RD-01.~~

~~The ongoing Phase 1 clinical trial~~ any of~~AVR-RD-01~~ ~~is an investigator-sponsored trial being conducted by University Health Network. In addition, the planned Phase 1/2 clinical trial ofAVR-RD-04~~ will be conducted by our collaborators at the University of California, San Diego. We do not control the design or administration of investigator-sponsored trials, nor the submission or approval of any IND or foreign equivalent required to conduct these trials, and the investigator-sponsored trials could, depending on the actions of such third parties, jeopardize the validity of the clinical data generated, identify significant concerns with respect to our product candidates that could impact our findings or clinical trials, and adversely affect our ability to obtain marketing approval from the FDA or other applicable regulatory authorities. To the extent the results of this or other investigator-sponsored trials are inconsistent with, or different from, the results of our planned company-sponsored trials or raise concerns regarding our product candidates, the FDA or a foreign regulatory authority may question the results of the company-sponsored trial, or subject such results to greater scrutiny than it otherwise would. In these circumstances, the FDA or such foreign regulatory authorities may require us to obtain and submit additional clinical data, which could delay clinical development or marketing approval of our AVROBIO’s product candidates. In addition, while investigator-sponsored trials could be useful to inform our own clinical development efforts, there is no guarantee that we will be able to use the data from these trials to form the basis for regulatory approval of our product candidates.

Success in preclinical studies or early clinical trials may not be indicative of results obtained in later ~~trials.~~trials, should AVROBIO resume development of its product candidates.

Results from preclinical studies or early clinical trials are not necessarily predictive of future clinical trial results and are not necessarily indicative of final results. There can be no assurance that prior results, such as signals of safety, activity or durability of effect, observed from preclinical studies or clinical trials will be replicated or will continue in future studies or trials, should AVROBIO resume development of any of its programs. Furthermore, preliminary results may not be indicative of the final results of a trial after all data have been collected and analyzed. For example, in January 2022 AVROBIO announced the deprioritization of AVROBIO’s Fabry program due to several factors, including new clinical data showing variable engraftment patterns from the five most recently dosed Phase 2 FAB-GT patients. Although previously reported data from 13 patients treated across AVROBIO’s clinical-stage programs had shown durable engraftment out 9 to 54 months, the new data from the five most recently dosed Phase 2 FAB-GT patients were discordant with these other data and showed variable engraftment. Should AVROBIO resume development of its product candidates, there can be no assurance that similar engraftment or other issues will not occur in clinical trials of AVROBIO’s other product candidates, which are all based on AVROBIO’s technology and the same HSC approach utilized for AVR-RD-01.

There is a high failure rate for gene therapy and biologic product candidates proceeding through clinical trials. Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in late-stage clinical trials even after achieving promising results in preclinical testing and earlier-stage clinical trials. Data obtained from preclinical and clinical activities are subject to varying interpretations, which may delay, limit or prevent regulatory approval. In addition, the design of a pivotal clinical trial can determine whether its results will support approval of a product and flaws in the design of a clinical trial may not become apparent until the clinical trial is well advanced. ~~Our company~~AVROBIO has limited experience in designing and conducting clinical trials and weAVROBIO may be unable to design and execute a clinical trial to support regulatory ~~approval. To date, we have not received definitive guidance from the FDA or other foreign regulatory bodies regarding the necessary endpoints for~~ approval, should AVROBIO resume development of ~~any of our~~its product ~~candidates, includingAVR-RD-01.~~ There are no assurances that the FDA or other foreign regulatory bodies will find the efficacy endpoints we propose in future pivotal trials to be sufficiently validated and clinically meaningful, or that our product candidates will achieve the~~pre-specified~~ ~~endpoints in future pivotal trials to a degree of statistical significance. We~~candidates.

AVROBIO also may experience regulatory delays or rejections as a result of many factors, including due to changes in regulatory policy or the approval of competitive therapies during the period of ~~our~~AVROBIO’s product candidate development. ~~OurAVR-RD-02,AVR-RD-03~~ ~~andAVR-RD-04~~Should AVROBIO resume development of any of AVROBIO’s product candidates, ~~have not yet been tested in humans. Any of our other~~those product candidates may fail to show the desired safety and efficacy in clinical development despite positive results in preclinical studies. Any such failure would cause usAVROBIO to abandon the product candidate.

WeAdditionally, the clinical trials performed to date have been open-label studies and have been conducted at a limited number of clinical sites on a limited number of patients. An “open-label” clinical trial is one where both the patient and investigator know whether the patient is receiving the investigational product candidate or either an existing approved drug or placebo. Most typically, open-label clinical trials test only the investigational product candidate and sometimes may do so at different dose levels. Open-label clinical trials are subject to various limitations that may exaggerate any therapeutic effect as patients in open-label clinical trials are aware when they are receiving treatment. Open-label clinical trials may be subject to a “patient bias” where patients perceive their symptoms to have improved merely due to their awareness of receiving an experimental treatment. Moreover, patients selected for early clinical studies often include the most severe sufferers and their symptoms may have been bound to improve notwithstanding the new treatment. In addition, open-label clinical trials may be subject to an “investigator bias” where those assessing and reviewing the physiological outcomes of the clinical trials are aware that patients have received treatment and may interpret the information more favorably given this knowledge. As is typical in open-label studies in which interim reports are provided, the safety and efficacy data are regularly reviewed and validated. As a result, certain data may change over time, including reductions or increases in the number of reported safety events, as well as the characterization of the severity or relatedness of safety events, until the database is locked at the end of the study.

Should AVROBIO resume development of its product candidates, AVROBIO may find it difficult to enroll patients in ~~our~~AVROBIO’s clinical trials, which could delay or prevent usAVROBIO from proceeding with clinical trials of ~~our~~AVROBIO’s product candidates.

~~Identifying and qualifying patients to participate in clinical trials~~Should AVROBIO resume development of ~~our~~its product candidates, ~~is critical to our success. The~~the timing and success of ~~our~~AVROBIO’s patient enrollment and clinical ~~trials depends~~trial activities would depend on ~~our~~AVROBIO’s ability to recruit patients to participate as well as the completion of requiredfollow-up periods. Patients may be unwilling to participate in ~~our~~AVROBIO’s gene therapy clinical trials because of negative publicity from adverse events related to the biotechnology or gene therapy fields, competitive clinical trials for similar patient populations, clinical trials in product candidates employing ~~our~~AVROBIO’s vectors, the existence of current treatments or for other reasons. In addition, the indications that ~~we are currently targeting~~AVROBIO has targeted and may in the future target are rare diseases, which may limit the pool of

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patients that may be enrolled in ~~our ongoing or planned~~AVROBIO’s clinical trials. ~~The~~Should AVROBIO resume development of its product candidates, the timeline for recruiting patients, conducting studies and obtaining regulatory approval of ~~our~~AVROBIO’s product candidates may be delayed, which could result in increased costs, delays in advancing ~~our~~AVROBIO’s product candidates, delays in testing the effectiveness of ~~our~~AVROBIO’s product candidates or termination of the clinical trials altogether.

We Should AVROBIO resume development of its product candidates, AVROBIO may not be able to identify, recruit and enroll a sufficient number of patients, or those with required or desired characteristics, to complete ~~our~~AVROBIO’s clinical trials in a timely ~~manner. For example, in 2017, the ongoing investigator-sponsored Phase 1 clinical trial~~manner or at all. There can be no assurance AVROBIO will achieve that goal or any of~~AVR-RD-01~~ ~~encountered delays in the~~ AVROBIO’s other patient enrollment goals should AVROBIO resume development of ~~patients due to delays in identifying patients for enrollment and the evaluation of information from screened potential trial participants.~~ its product candidates.

Patient enrollment and trial completion is affected by factors including the:

•

size of the patient population and process for identifying ~~subjects;~~

patients;

•

design of the trial protocol;

•

eligibility and exclusion criteria;

•

perceived risks and benefits of the product candidate under study;

•

perceived risks and benefits of gene therapy-based approaches to treatment of diseases, including any required pretreatment conditioning regimens;

•

availability of competing therapies and clinical trials;

•

severity of the disease under investigation;

•

availability of genetic testing for potential patients;

•

proximity and availability of clinical trial sites for prospective ~~subjects;~~

patients;

•

ability to obtain and maintain subject consent;

•

risk that enrolled ~~subjects~~patients will drop out before completion of the trial;

•

patient referral practices of physicians; and

•

ability to monitor ~~subjects~~patients adequately during and after treatment.

~~Our current~~AVROBIO historically expanded AVROBIO’s patient enrollment activities to include patients who reside in a country other than the country where the applicable clinical site is located, and who are required to travel for some or all of the clinical testing and procedures required for patients in the applicable clinical trial. AVROBIO has encountered and, should AVROBIO resume development of its product candidates, in the future may continue to encounter logistical and regulatory challenges that could delay or prevent any such international patients from successfully enrolling and completing clinical trial procedures, including delays in processing or obtaining patient travel visas or denials of entry at borders, potential travel disruptions, or de-prioritization or unavailability of resources at clinical sites for non-resident international clinical trial participants, any of which could delay AVROBIO’s progress and completion of planned clinical trials and which would have an adverse effect on AVROBIO’s business. In addition, once these international patients return to their home country, they may need to travel back to the country where the applicable clinical site is located. If these patients are unwilling or unable to return to the clinical site for testing and procedures, progress and completion of the clinical trial could be delayed or prevented.

AVROBIO’s product candidates were being developed to treat rare conditions. ~~We plan~~Should AVROBIO resume development of its product candidates, AVROBIO would expect to seek initial marketing approvals in the United States, Europe and certain other major markets, including Japan. WeHowever, AVROBIO may not be able to resume, initiate or continue clinical trials ~~including our recently initiated Phase 2 clinical trial forAVR-RD-01~~ ~~for which enrollment is ongoing,~~ if weAVROBIO cannot enroll a sufficient number of eligible patients to participate in the clinical trials required by FDA or other foreign regulatory authorities. ~~Our~~AVROBIO’s ability to successfully resume, initiate, enroll and complete a clinical trial in any foreign country is subject to numerous risks unique to conducting business in foreign countries, including:

•

difficulty in establishing or managing relationships with ~~contract research organizations, or~~ CROs clinical study sites and physicians;

•

different standards for the conduct of clinical trials;

•

the absence in some countries of established groups with sufficient regulatory expertise for review of gene therapy protocols;

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•

AVROBIO’s inability to locate qualified local consultants, physicians and partners; and

•

the potential burden of complying with a variety of foreign laws, medical standards and regulatory requirements, including the regulation of pharmaceutical and biotechnology products and treatment.

~~If we have~~Should AVROBIO resume development of its product candidates and if AVROBIO has difficulty enrolling a sufficient number of patients to conduct ~~our~~AVROBIO’s clinical trials, ~~as planned, we~~AVROBIO may need to delay, limit or terminate ~~ongoing~~the resumption or ~~planned~~continuation of clinical trials, any of which would have an adverse effect on ~~our~~AVROBIO’s business, financial condition, results of operations and prospects.

WeShould AVROBIO resume development of its product candidates, AVROBIO may encounter substantial delays in ~~our~~resuming its clinical trials or weAVROBIO may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities.

Before obtaining marketing approval from regulatory authorities for the sale of ~~our~~AVROBIO’s product candidates, weAVROBIO must conduct extensive clinical studies to demonstrate the safety and efficacy of the product candidates in humans. Clinical testing is expensive, time-consuming and uncertain as to outcome. WeShould AVROBIO resume development of its product candidates, AVROBIO cannot guarantee that any clinical studies will be conducted as planned or completed on schedule, if at all. A failure of one or more clinical studies can occur at any stage of testing. Events that may prevent successful or timely completion of clinical development, should AVROBIO resume any clinical development programs, include:

•

delays in reaching a consensus with regulatory agencies on study design;

•

delays in reaching agreement on acceptable terms with prospective CROs and clinical study sites;

•

delays in obtaining required IRB approval at each clinical study site;

•

delays in recruiting suitable patients to participate in ~~our~~AVROBIO’s clinical studies;

•

imposition of a clinical hold by regulatory agencies, after an inspection of ~~our~~AVROBIO’s clinical study operations or study sites;

•

failure by ~~our~~AVROBIO’s CROs, other third parties or usAVROBIO to adhere to clinical study requirements;

•

failure to perform in accordance with the FDA’s good clinical practices, or GCP, or applicable regulatory guidelines in other countries;

•

delays in the testing, validation, manufacturing and delivery of ~~our~~AVROBIO’s product candidates to the clinical sites;

•

delays in having patients complete participation in a study or return for post-treatmentfollow-up;

•

clinical study sites or patients dropping out of a study;

•

the occurrence of serious adverse events associated with the product candidate that are viewed to outweigh its potential benefits; or

•

changes in regulatory requirements and guidance that require amending or submitting new clinical protocols.

~~Any~~Should AVROBIO resume development of its product candidates, any inability to successfully complete preclinical and clinical development could result in additional costs to usAVROBIO or impair ~~our~~AVROBIO’s ability to generate revenues. In addition, if ~~we make~~AVROBIO makes changes to ~~our~~AVROBIO’s product candidates, weor if collaborator-sponsored trials utilize different materials or manufacturing processes from AVROBIO’s to generate data, AVROBIO may need to conduct additional studies to compare or bridge ~~our~~AVROBIO’s modified product candidates to earlier versions, which could delay ~~our~~AVROBIO’s clinical development plan or marketing approval for ~~our~~AVROBIO’s product candidates. ~~For example, while we are currently utilizing the LV1 version~~

Should AVROBIO resume development of ~~the lentiviral vector in the ongoing Phase 1 and Phase 2 clinical trials ofAVR-RD-01,~~ ~~we plan to transition ourAVR-RD-01~~ lentiviral vectors to an LV2 version. While LV2 is intended to confer improvements in safety and efficiency in viral production, there is no guarantee that we can realize these intended benefits. In addition, the transition from LV1 to LV2 will likely require updates to our clinical trial applications and INDs with the relevant regulatory authorities, which may result in delay, suspension or termination of ongoing or future clinical trials pending our submission, and the agencies’ review, of such updates. Clinical study delays could also shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitors to bring products to market before we do, which could impair our ability to successfully commercialize ourits product candidates and, ~~may harm our business and results of operations.~~

Iffollowing such resumption, if the results of ~~our~~AVROBIO’s clinical studies are inconclusive or if there are safety concerns or adverse events associated with ~~our~~AVROBIO’s product candidates, weAVROBIO may:

•

be delayed in obtaining marketing approval for ~~our~~AVROBIO’s product candidates, if at all;

•

obtain approval for indications or patient populations that are not as broad as intended or desired;

•

obtain approval with labeling or a REMS that includes significant use or distribution restrictions or safety warnings;

•

be subject to changes with the way the product is administered;

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•

be required to perform additional clinical studies to support approval or be subject to additional post-marketing testing requirements;

•

have regulatory authorities withdraw their approval of the product or impose restrictions on its distribution in the form of a REMS;

•

be subject to the addition of labeling statements, such as warnings or contraindications;

•

be sued; or

•

experience damage to ~~our~~AVROBIO’s reputation.

Any of these events could prevent usAVROBIO from achieving or maintaining market acceptance of ~~our~~AVROBIO’s product candidates and impair ~~our~~AVROBIO’s ability to commercialize ~~our~~AVROBIO’s products.

~~Even~~Should AVROBIO resume development of its product candidates, even if ~~we complete~~AVROBIO completes the necessary preclinical and clinical studies, weAVROBIO cannot predict whether or when ~~or if we will~~AVROBIO would be able to obtain regulatory approval to commercialize a product candidate, and ~~the~~any approval ~~may~~could be for a ~~more narrow~~narrower indication than ~~we seek.~~anticipated.

WeAVROBIO cannot commercialize a product until the appropriate regulatory authorities have reviewed and approved the product candidate. Even if ~~our~~AVROBIO resumes development of its product candidates and they are able to demonstrate safety and efficacy in clinical studies to support submitting such programs for marketing approval, the regulatory agencies may not complete their review processes in a timely manner, or weAVROBIO may not be able to obtain regulatory approval. Additional delays may result if an FDA Advisory Committee or other regulatory authority recommendsnon-approval or restrictions on approval. In addition, weAVROBIO may experience delays or rejections based upon additional government regulation from future legislation or administrative action, or changes in regulatory agency policy during the period of product development, clinical studies and the review process. Regulatory agencies also may approve a treatment candidate for fewer or more limited indications than requested or may grant approval subject to the performance of post-marketing studies. In addition, regulatory agencies may not approve the labeling claims that are necessary or desirable for the successful commercialization of ~~our~~AVROBIO’s product candidates. If ~~we are~~AVROBIO is unable to obtain necessary regulatory approvals ~~our~~or labeling claims, AVROBIO’s business, prospects, financial condition and results of operations would be materially and adversely affected.

AVROBIO’s commercially-scalable plato platform has been used in only two of AVROBIO’s clinical trials and clinical development has been halted.

While AVROBIO has submitted and, should AVROBIO resume development of its product candidates, intends to continue to submit comparability studies to the FDA and other regulatory agencies, as needed, with respect to AVROBIO’s implementation of AVROBIO’s scalable plato platform, there can be no assurance that the FDA or other regulatory agencies will not in the future require AVROBIO to conduct additional preclinical studies or clinical trials that could result in delays and additional costs in AVROBIO’s development or commercialization programs for AVROBIO’s product candidates, which could adversely affect AVROBIO’s business. Should AVROBIO resume development of its product candidates, AVROBIO intends to continue implementing AVROBIO’s scalable plato platform, including heightened vector efficiency, AVROBIO’s closed, automated manufacturing system and utilization of a customized conditioning regimen, in connection with each of AVROBIO’s investigational product candidates. AVROBIO has developed the plato platform to form the backbone of AVROBIO’s commercial programs, with the intent of replacing AVROBIO’s original academic platforms with improved solutions for delivering AVROBIO’s gene therapy candidates to patients in multiple disease indications. In order to implement this transition, AVROBIO was and would continue to be required to conduct additional studies to bridge AVROBIO’s modified product candidates to earlier versions, including any earlier version that may ~~suffer.~~have been utilized in a collaborator-sponsored clinical study, which could delay clinical development or marketing approvals. Clinical trial delays could also shorten any periods during which AVROBIO may have the exclusive right to commercialize AVROBIO’s product candidates, if approved, or allow AVROBIO’s competitors to bring products to market before AVROBIO does, which could impair AVROBIO’s ability to successfully commercialize AVROBIO’s product candidates and may harm AVROBIO’s business and results of operations.

~~While we intend~~AVROBIO faces significant competition in AVROBIO’s industry and, should AVROBIO resume development of its product candidates, there can be no assurance that AVROBIO’s product candidates, if approved, will achieve acceptance in the market over existing established therapies. In addition, AVROBIO’s competitors may develop therapies that are more advanced or

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effective than AVROBIO’s, which may adversely affect AVROBIO’s ability to successfully market or commercialize any of AVROBIO’s product candidates, should AVROBIO resume development of AVROBIO’s product candidates.
AVROBIO operates in a highly competitive segment of the biopharmaceutical market. AVROBIO faces competition from many different sources, including larger pharmaceutical, specialty pharmaceutical and biotechnology companies, as well as from academic institutions, government agencies and private and public research institutions. Should AVROBIO resume development of its product candidates, AVROBIO’s product candidates, if successfully developed and approved, will compete with established therapies, some of which are being marketed by large and international companies. In addition, should AVROBIO resume development of its product candidates, AVROBIO expects to compete with new treatments that are under development or may be advanced into the clinic by AVROBIO’s competitors. There are a variety of product candidates, including gene therapies, in development for the indications that AVROBIO is targeting.
Should AVROBIO resume development of its product candidates, AVROBIO anticipates competing with biotechnology and pharmaceutical companies, many of which may have significantly greater resources than AVROBIO does. For example, for Gaucher disease, Sanofi, Pfizer, and Takeda market existing ERTs that represent the standard of care for Gaucher patients. For Gaucher disease AVROBIO also expects that AVROBIO would compete with oral therapies marketed by Johnson & Johnson and Sanofi. Sanofi also markets an enzyme replacement therapy for Pompe disease. In addition, AVROBIO may compete with other gene therapy companies in AVROBIO’s industry. Moreover, a number of gene therapy companies have announced preclinical or clinical non-viral and adeno-associated viral based gene therapy programs that, if successful in obtaining regulatory approval, could compete with AVROBIO’s gene therapies.
Many of AVROBIO’s competitors have significantly greater financial, product candidate development, manufacturing and marketing resources than AVROBIO does. Large pharmaceutical and biotechnology companies have extensive experience in clinical testing and obtaining regulatory approval for their products, and mergers and acquisitions within these industries may result in even more resources being concentrated among a smaller number of larger competitors. Established pharmaceutical companies may also invest heavily to accelerate discovery and development of novel therapeutics or to in-license novel therapeutics that could make the product candidates that AVROBIO develops obsolete. Competition may increase further as a result of advances in the commercial applicability of technologies and greater availability of capital for investment in these industries. AVROBIO’s business would be materially and adversely affected if competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, have broader market acceptance, are more convenient or are less expensive than any product candidate that AVROBIO may develop.
Even if AVROBIO obtains regulatory approval of AVROBIO’s product candidates, the availability and price of AVROBIO’s competitors’ products could limit the demand and the price AVROBIO is able to charge for AVROBIO’s product candidates. AVROBIO may not be able to implement AVROBIO’s business plan if the acceptance of AVROBIO’s product candidates is inhibited by price competition or the reluctance of physicians to switch from existing methods of treatment to AVROBIO’s product candidates, or if physicians switch to other new drug or biologic products or choose to reserve AVROBIO’s product candidates for use in limited circumstances.

Should AVROBIO resume development of its product candidates, AVROBIO would expect to seek designations for ~~our~~AVROBIO’s product candidates with the FDA and comparable foreign regulatory authorities that are intended to confer benefits such as a faster development process or an accelerated regulatory ~~pathway,~~pathway. However, there can be no assurance that ~~we will~~AVROBIO could successfully obtain such designations. In addition, even if one or more of ~~our~~AVROBIO’s product candidates are granted such designations, weAVROBIO may not be able to realize the intended benefits of such designations.

The FDA and comparable foreign regulatory authorities offer certain designations for product candidates that are designed to encourage the research and development of product candidates that are intended to address conditions with significant unmet medical

need. These designations may confer benefits such as additional interaction with regulatory authorities, a potentially accelerated regulatory pathway and priority review. However, there can be no assurance that weAVROBIO will successfully obtain such designations for any of ~~our~~AVROBIO’s product candidates. In addition, while such designations could expedite the development or approval process, they generally do not change the standards for approval. Even if ~~we obtain~~AVROBIO obtains such designations for one or more of ~~our~~AVROBIO’s product candidates, there can be no assurance that weAVROBIO will realize their intended benefits.

~~For example, we~~AVROBIO may seek a Breakthrough Therapy Designation for some of ~~our~~AVROBIO’s product candidates should AVROBIO resume development of its product candidates. A breakthrough therapy is defined as a therapy that is intended, alone or in combination with one or more other therapies, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the therapy may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. For therapies that have been designated as breakthrough therapies, interaction and communication between the FDA and the sponsor of the trial can help to identify the most efficient path for

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clinical development while minimizing the number of patients placed in ineffective control regimens. Therapies designated as breakthrough therapies by the FDA are also eligible for accelerated approval. Designation as a breakthrough therapy is within the discretion of the FDA. Accordingly, even if ~~we believe~~AVROBIO believes one of ~~our~~AVROBIO’s product candidates meets the criteria for designation as a breakthrough therapy, the FDA may disagree and instead determine not to make such designation. In any event, the receipt of a Breakthrough Therapy Designation for a product candidate may not result in a faster development process, review or approval compared to therapies considered for approval under conventional FDA procedures and does not assure ultimate approval by the FDA. In addition, even if one or more of ~~our~~AVROBIO’s product candidates qualify as breakthrough therapies, the FDA may later decide that such product candidates no longer meet the conditions for qualification.

Should AVROBIO resume development of its product candidates, AVROBIO may seek an accelerated approval pathway for one or more of AVROBIO’s product candidates from the FDA or comparable foreign regulatory authorities. The FDA may grant accelerated approval to a therapeutic candidate designed to treat a serious or life-threatening condition that provides meaningful therapeutic benefit over available therapies upon a determination that the product candidate has an effect on a surrogate endpoint or intermediate clinical endpoint that is reasonably likely to predict clinical benefit. If granted, accelerated approval is usually contingent on the sponsor’s agreement to conduct, in a diligent manner, additional post-approval confirmatory studies to verify and describe the drug’s clinical benefit, and the FDA is permitted to require, as appropriate, that such studies be underway prior to approval or within a specified period after the date of approval. Sponsors must also update FDA on the status of these studies, and under FDORA, the FDA has increased authority to withdraw approval of a drug granted accelerated approval on an expedited basis if the sponsor fails to conduct such studies in a timely manner, send the necessary updates to the FDA, or if such post-approval studies fail to verify the drug’s predicted clinical benefit.

Should AVROBIO resume development of its product candidates, prior to seeking accelerated approval, AVROBIO would expect to seek feedback from the FDA or comparable foreign regulatory authorities and would otherwise evaluate AVROBIO’s ability to seek and receive such accelerated approval. There can be no assurance that after AVROBIO’s evaluation of the feedback and other factors AVROBIO would decide to pursue or submit a BLA for accelerated approval or any other form of expedited development, review or approval. Similarly, there can be no assurance that after subsequent feedback from the FDA or comparable foreign regulatory authorities, AVROBIO would continue to pursue or apply for accelerated approval or any other form of expedited development, review or approval, even if AVROBIO initially decides to do so. Furthermore, if AVROBIO decides to submit an application for accelerated approval, there can be no assurance that such application will be accepted or that any approval will be granted on a timely basis, or at all. The FDA, EMA or other comparable foreign regulatory authorities could also require AVROBIO to conduct further studies prior to considering AVROBIO’s application or granting approval of any type, including, for example, if other products are approved via the accelerated pathway and subsequently converted by FDA to full approval. A failure to obtain accelerated approval or any other form of expedited development, review or approval for AVROBIO’s product candidate would result in a longer time period to commercialization of such product candidate, could increase the cost of development of such product candidate and could harm AVROBIO’s competitive position in the marketplace. Moreover, even if AVROBIO is able to obtain accelerated approval for any of AVROBIO’s product candidates, there is no guarantee that post-approval studies will be able to confirm the clinical benefit, which could cause FDA to withdraw AVROBIO’s approval.

Should AVROBIO resume development of its product candidates, AVROBIO may also pursue programs or designations from foreign regulatory authorities, such as the UK’s Innovative Licensing and Access Pathway, or ILAP, which aims to accelerate the time to market and facilitate patient access to certain types of medicinal products in development which target a life-threatening or seriously debilitating condition, or where there is a significant patient or public health need in the UK. To access the ILAP, an applicant applies for an Innovation Passport designation. Once an Innovation Passport designation is granted, the MHRA and its partner agencies (including The All Wales Therapeutics and Toxicology Centre, National Institute for Health and Care Excellence and the Scottish Medicines Consortium) will work with the Innovation Passport designee to define a Target Development Profile, or TDP. The TDP sets out a unique product-specific roadmap towards patient access in the UK, and provides access to a toolkit to support all stages of the design, development and approvals process, including continuous benefit-risk assessment, increased support for novel development approaches and enhanced patient engagement. However, although the goal of the ILAP is to reduce the time to market and enable earlier patient access, access does not accelerate conduct of clinical trials or mean that the regulatory requirements are less stringent, nor does it ensure that a marketing authorization application will be approved or that any approval will be granted within a particular timeframe or at all.

In addition, weshould AVROBIO resume development of its product candidates, AVROBIO may seek Fast Track ~~Designation~~designation for some of ~~our~~AVROBIO’s product candidates. If a therapy is intended for the treatment of a serious or life-threatening condition and the therapy demonstrates the potential to address unmet medical needs for this condition, the therapy sponsor may apply for Fast Track ~~Designation. The~~designation. However, the FDA has broad discretion whether or not to grant ~~this~~Fast Track designation, so even if ~~we believe~~AVROBIO believes a ~~particular~~ product candidate is eligible for this designation, there can be no assurance that the FDA would decide to grant it. Even if ~~we do~~AVROBIO

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does receive Fast Track ~~Designation, we~~designation, AVROBIO may not experience a faster development process, review or approval compared to conventional FDA procedures, and receiving a Fast Track ~~Designation~~designation does not provide assurance of ultimate FDA approval. In addition, the FDA may withdraw Fast Track ~~Designation~~designation if it believes that the designation is no longer supported by data from ~~our~~AVROBIO’s clinical development program.

In addition, weshould AVROBIO resume development of AVROBIO’s product candidates, AVROBIO may seek a regenerative medicine advanced therapy, or RMAT, designation for some of ~~our~~AVROBIO’s product candidates. An RMAT is defined as cell therapies, therapeutic tissue engineering products, human cell and tissue products, and combination products using any such therapies or products. Gene therapies, including genetically modified cells that lead to a durable modification of cells or tissues may meet the definition of a regenerative medicine therapy. The RMAT program is intended to facilitate efficient development and expedite review of RMATs, which are intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition. A new drug application or a BLA for an RMAT may be eligible for priority review or accelerated approval through (1) surrogate or intermediate endpoints reasonably likely to predict long-term clinical benefit or (2) reliance upon data obtained from a meaningful number of sites. Benefits of such designation also include early interactions with FDA to discuss any potential surrogate or intermediate endpoint to be used to support accelerated approval. A regenerative medicine therapy that is granted accelerated approval and is subject to post-approval requirements may fulfill such requirements through the submission of clinical evidence, clinical studies, patient registries, or other sources of ~~real world~~real-world evidence, such as electronic health records; the collection of larger confirmatory data sets; or post-approval monitoring of all patients treated with such therapy prior to its approval. RMAT designation is within the discretion of the FDA. Accordingly, even if ~~we believe~~AVROBIO believes one of ~~our~~AVROBIO’s product candidates meets the criteria for designation as a regenerative medicine advanced therapy, the FDA may disagree and instead determine not to make such designation. In any event, the receipt of RMAT designation for a product candidate may not result in a faster development process, review or approval compared to drugs considered for approval under conventional FDA procedures and does not assure ultimate approval by the FDA. In addition, even if one or more of ~~our~~AVROBIO’s product candidates qualify as for RMAT designation, the FDA may later decide that the biological products no longer meet the conditions for qualification.

~~Outside~~Should AVROBIO resume development of ~~the United States, we intend to developAVR-RD-01~~ in Japan under the purview of the Japanese Pharmaceutical and Medical Device Agency, or PMDA. Pursuant to Japan’s regenerative medicine law, an expedited path to conditional approval may exist for regenerative medicine products that show sufficient safety evidence and signals of efficacy in a Phase 2 clinical trial. However, there can be no assurance that the results of our recently initiated Phase 2 clinical trial will demonstrate the safety evidence and efficacy signals required for such conditional approval. In addition, this conditional approval is time-limited, and there must be an agreement as to~~follow-up~~ ~~collection of information to confirm efficacy and safety, similar to a post-marketing commitment in the United States.~~

Weits product candidates, AVROBIO may be unable to obtain orphan drug designation for ~~our~~AVROBIO’s product candidates and, even if ~~we obtain~~AVROBIO obtains such designation, weAVROBIO may not be able to realize the benefits of such designation, including potential marketing exclusivity of ~~our~~AVROBIO’s product candidates, if approved.

Regulatory authorities in some jurisdictions, including the United States and other major markets, may designate drugs intended to treat conditions or diseases affecting relatively small patient populations as orphan drugs. Under the Orphan Drug Act of 1983, the FDA may designate a product candidate as an orphan drug if it is intended to treat a rare disease or condition, which is generally defined as having a patient population of fewer than 200,000 individuals in the United States, or a patient population greater than 200,000 in the United States where there is no reasonable expectation that the cost of developing the drug will be recovered from sales in the United States. In the European Union, the European Commission grants an orphan designation in respect of a product after receiving the opinion of the EMA’s Committee for Orphan Medicinal Products ~~grants~~on an orphan ~~drug~~ designation application. Orphan designation in the European Union may be granted to ~~promote~~products where the ~~development of products~~sponsor can establish that ~~are~~such product is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition affecting not more than 5 in 10,000 persons in the European ~~Union.~~Union when the application is made. Additionally, orphan designation ismay be granted for products intended for the diagnosis, prevention or treatment of a life-threatening, seriously debilitating or serious and chronic condition ~~and~~ when, without incentives, it is unlikely that sales of the ~~drug~~product would generate sufficient returns in the European Union ~~would be sufficient~~ to justify the necessary investment in developing the ~~drug~~product. In either case, the applicant must be able to establish that there is no satisfactory method of diagnosis, prevention or ~~biologic product.~~treatment of such condition authorized for marketing in the European Union, or if such a method exists, the product would be of a significant benefit to those affected by the condition.

If ~~we request~~AVROBIO requests orphan drug designation (or the foreign equivalent) for~~AVR-RD-01~~ or any ~~of our~~ other product candidates, there can be no assurances that the FDA or applicable foreign regulatory authorities will grant ~~any of our product candidates~~ such designation. Additionally, the designation of any of ~~our~~AVROBIO’s product candidates as an orphan product does not mean that any regulatory agency will accelerate regulatory review of, or ultimately approve, that product candidate, nor does it limit the ability of any regulatory agency to grant orphan drug designation to product candidates of other companies that treat the same indications as ~~our~~AVROBIO’s product candidates prior to ~~our~~AVROBIO’s product candidates receiving exclusive marketing approval.

Generally, if a product candidate with an orphan drug designation receives the first marketing approval for the indication for which it has such designation, the product is entitled to a period of marketing exclusivity, which precludes the FDA or foreign regulatory authorities from approving another marketing application for a product that constitutes the same drug treating the same indication for that marketing exclusivity period, except in limited circumstances. If another sponsor receives such approval before ~~we do~~AVROBIO does (regardless of ~~our~~AVROBIO’s orphan drug designation), weAVROBIO will be precluded from receiving marketing approval for ~~our~~AVROBIO’s product for the applicable exclusivity period. The applicable period is seven years in the United States and

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10 years in the European Union. The exclusivity period in the European Union can be reduced to six years, if at the end of the fifth year, a product no longer meets the criteria for orphan ~~drug~~ designation or if the product is sufficiently profitable so that market exclusivity is no longer justified. The European Commission introduced a legislative proposal in April 2023 that, if implemented, could reduce the current ten-year marketing exclusivity period in the European Union for certain orphan medicines. Orphan drug exclusivity may be revoked if any regulatory agency determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the product to meet the needs of patients with the rare disease or condition.

Even if ~~we obtain~~AVROBIO obtains orphan drug exclusivity for a product candidate, that exclusivity may not effectively protect the product candidate from competition because different drugs can be approved for the same condition in the United States. Even after an orphan drug is approved, the FDA may subsequently approve another drug for the same condition if the FDA concludes that the latter drug is not the same drug or is clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient care. In the European Union, a marketing authorization may be granted to a similar medicinal product for the same orphan indication at any time if:

•

the second applicant can establish in its application that its medicinal product, although similar to the orphan medicinal product already authorized, is safer, more effective or otherwise clinically superior;

•

the holder of the marketing authorization for the original orphan medicinal product consents to a second orphan medicinal product application; or

•

the holder of the marketing authorization for the original orphan medicinal product cannot supply sufficient quantities of orphan medicinal product.

~~Even~~A marketing application for a product candidate with rare pediatric disease designation, or RPDD, if ~~we obtain~~approved, may not meet the eligibility criteria for a Priority Review Voucher, or PRV, or the RPDD program may sunset before the FDA is able to consider eligibility for a voucher.

Designation of a drug or biologic as a product for a rare pediatric disease does not guarantee that a BLA for such drug or biologic will meet the eligibility criteria for a rare pediatric disease PRV at the time the application is approved. Under the Federal Food, Drug, and Cosmetic Act, should AVROBIO resume development of AVROBIO’s product candidates, AVROBIO would need to request a rare pediatric disease PRV in AVROBIO’s original BLA for any of AVROBIO’s product candidates that previously received RPDD. The FDA may determine that any such BLA, if approved, does not meet the eligibility criteria for a PRV, including for the following reasons:

•
The disease indication no longer meets the definition of a rare pediatric disease;

•
the BLA contains an active ingredient that has been previously approved in a BLA;

•
the BLA is not deemed eligible for priority review;

•
the BLA does not rely on clinical data derived from studies examining a pediatric population and dosages of the drug intended for that population (that is, if the BLA does not contain sufficient clinical data to allow for adequate labeling for use by the full range of affected pediatric patients); or

•
the BLA is approved for a different adult indication than the rare pediatric disease for which the product candidate is designated.

The authority for the FDA to award rare pediatric disease PRVs for drugs that have received rare pediatric disease designation prior to September 30, 2024 currently expires on September 30, 2026. If the BLA for any of AVROBIO’s product candidates with RPDD is not approved prior to September 30, 2026 for any reason, regardless of whether it meets the criteria for a rare pediatric disease PRV, it will not be eligible for a PRV. However, it is also possible the authority for FDA to award rare pediatric disease PRVs will be further extended through federal lawmaking.

Should AVROBIO resume development of its product candidates, even if AVROBIO obtains regulatory approval for a product candidate, ~~our~~AVROBIO’s products will remain subject to regulatory oversight.

~~Even~~Should AVROBIO resume development of its product candidates, even if ~~we obtain~~AVROBIO obtains any regulatory approval for ~~our~~AVROBIO’s product candidates, they will be subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising, promotion, sampling, record-keeping and submission of safety and other post-market information. Any regulatory approvals that ~~we receive~~AVROBIO receives for ~~our~~AVROBIO’s product candidates also may be subject to a REMS, limitations on the approved indicated uses for which the product may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase 4 clinical trials, and surveillance to monitor the quality, safety and efficacy of the product. For

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example, the holder of an approved BLA is obligated to monitor and report adverse events and any failure of a product to meet the specifications in the BLA. FDA guidance advises that patients treated with ~~some types of~~ gene ~~therapy~~therapies undergo long-term follow-up ~~observations~~ observation for potential adverse events for as long as 15 ~~years.~~years, unless otherwise agreed by the FDA. The holder of an approved BLA also must submit new or supplemental applications and obtain FDA approval for certain changes to the approved product, product labeling or manufacturing process. Advertising and promotional materials must comply with FDA rules and are subject to FDA review, in addition to other potentially applicable federal and state laws.

In addition, product manufacturers and their facilities are subject to payment of user fees and continual review and periodic inspections by the FDA and other regulatory authorities for compliance with current good manufacturing practices, or cGMP, requirements and adherence to commitments made in the BLA or foreign marketing application. Manufacturers and manufacturers’ facilities are required to comply with extensive FDA, and comparable foreign regulatory authority, requirements including ensuring that quality control and manufacturing procedures conform to cGMP regulations and applicable product tracking and tracing requirements. If ~~we,~~AVROBIO, or a regulatory authority, discover previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured or disagrees with the promotion, marketing or labeling of that product, a regulatory authority may impose restrictions relative to that product, the manufacturing facility or ~~us,~~AVROBIO, including requiring recall or withdrawal of the product from the market or suspension of manufacturing.

If ~~we fail~~AVROBIO fails to comply with applicable regulatory requirements following approval of any of ~~our~~AVROBIO’s product candidates, a regulatory authority may:

•

issue a warning letter asserting that ~~we are~~AVROBIO is in violation of the law;

•

seek an injunction or impose administrative, civil or criminal penalties or monetary fines;

•

suspend or withdraw regulatory approval;

•

suspend any ongoing clinical trials;

•

refuse to approve a pending BLA or comparable foreign marketing application (or any supplements thereto) submitted by usAVROBIO or ~~our~~AVROBIO’s strategic partners;

•

restrict the marketing or manufacturing of the product;

•

seize or detain the product or otherwise require the withdrawal of the product from the market;

•

refuse to permit the import or export of products; or

•

refuse to allow usAVROBIO to enter into supply contracts, including government contracts.

Any government investigation of alleged violations of law could require usAVROBIO to expend significant time and resources in response and could generate negative publicity. The occurrence of any event or penalty described above may inhibit ~~our~~AVROBIO’s ability to commercialize ~~our~~AVROBIO’s product candidates and adversely affect ~~our~~AVROBIO’s business, financial condition, results of operations and prospects.

In addition, the FDA’s policies, and those of equivalent foreign regulatory agencies, may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of ~~our~~AVROBIO’s product candidates. WeAVROBIO cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If ~~we are~~AVROBIO is slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if ~~we are~~AVROBIO is not able to maintain regulatory compliance, weAVROBIO may lose any marketing approval that weAVROBIO may have obtained and weAVROBIO may not achieve or sustain profitability, which would materially and adversely affect ~~our~~AVROBIO’s business, financial condition, results of operations and prospects.

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

We operate in a highly competitive segment of the biopharmaceutical market. We face competition from many different sources, including larger pharmaceutical, specialty pharmaceutical and biotechnology companies, as well as from academic institutions, government agencies and private and public research institutions. Our product candidates, if successfully developed and approved, will compete with established therapies, some of which are being marketed by large and international companies. In addition, we expect to compete with new treatments that are under development or may be advanced into the clinic by our competitors. There are a variety of product candidates, including gene therapies, in development for the indications that we are targeting.

We anticipate competing with the largest pharmaceutical companies in the world. For example, Sanofi and Shire market the enzyme replacement therapies, or ERTs, that represent the standard of care for Fabry patients. Recently, Amicus secured regulatory approval in Europe for its oral therapy for Fabry disease. For Gaucher disease, we expect to compete with existing enzyme replacement therapies marketed by Sanofi, Shire, Protalix and Pfizer, as well as oral therapies marketed by Actelion and Sanofi. Sanofi also markets an enzyme replacement therapy for Pompe disease. Cystinosis is currently treated by therapies marketed by Horizon Orphan, Mylan and Sigma Tau Pharmaceuticals. In addition, we may compete with other gene therapy companies in our industry such as bluebird bio and Spark Therapeutics.

Many of our competitors have significantly greater financial, product candidate development, manufacturing and marketing resources than we do. Large pharmaceutical and biotechnology companies have extensive experience in clinical testing and obtaining regulatory approval for their products, and mergers and acquisitions within these industries may result in even more resources being concentrated among a smaller number of larger competitors. Established pharmaceutical companies may also invest heavily to accelerate discovery and development of novel therapeutics or to~~in-license~~ novel therapeutics that could make the product candidates that we develop obsolete. Competition may increase further as a result of advances in the commercial applicability of technologies and greater availability of capital for investment in these industries. Our business would be materially and adversely affected if competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, have broader market acceptance, are more convenient or are less expensive than any product candidate that we may develop.

Even if we obtain regulatory approval of our product candidates, the availability and price of our competitors’ products could limit the demand and the price we are able to charge for our product candidates. We may not be able to implement our business plan if the acceptance of our product candidates is inhibited by price competition or the reluctance of physicians to switch from existing methods of treatment to our product candidates, or if physicians switch to other new drug or biologic products or choose to reserve our product candidates for use in limited circumstances.

~~Our~~AVROBIO’s focus on developing ~~our current~~such product candidates may not yield any commercially viable products, and ~~our~~AVROBIO’s failure to successfully identify and develop additional product candidates could impair ~~our~~AVROBIO’s ability to grow.

~~As part of our~~While AVROBIO initially pursued a growth strategy ~~we intend~~ to identify, develop and market additional product candidates, AVROBIO has halted further development of AVROBIO’s programs and, should AVROBIO resume development of its product candidates, AVROBIO does not anticipate actively seeking additional product candidates beyond ~~our~~AVROBIO’s existing product candidates. Should AVROBIO resume development of its product candidates, ~~for Fabry disease, Gaucher disease, Pompe disease and cystinosis. We~~AVROBIO may spend several years completing ~~our~~AVROBIO’s development of any particular ~~current or future~~ product candidates, and failure can occur at any stage. The product candidates to which ~~we allocate our~~AVROBIO

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allocates AVROBIO’s resources may not end up being successful. Because ~~we have~~AVROBIO has limited resources, weAVROBIO may forego or delay pursuit of opportunities with certain programs or product candidates or for indications that later prove to have greater commercial potential than~~AVR-RD-01~~ ~~or our other~~ AVROBIO’s product candidates. ~~Our~~AVROBIO’s spending on ~~current and~~any future research and development programs may not yield any commercially viable product candidates. ~~If we do~~Should AVROBIO resume development of its product candidates, if AVROBIO does not accurately evaluate the commercial potential for a particular product candidate, weAVROBIO may relinquish valuable rights to that product candidate through strategic collaborations, licensing or other arrangements in cases in which it would have been more advantageous for usAVROBIO to retain sole development and commercialization rights to such product candidate. If any of these events occur, weAVROBIO may be forced to abandon ~~our~~AVROBIO’s development efforts with respect to a particular product candidate or fail to develop a potentially successful product candidate.

~~Because our internal research capabilities are limited, we may be dependent upon biotechnology companies, academic scientists and other researchers to sell or license~~In addition, should AVROBIO resume development of its product candidates, ~~approved products or the underlying technology to us. The success of this strategy depends partly upon our ability to identify, select, discover and acquire promising product candidates and products.~~

~~In addition,~~ certain of ~~our current or future~~AVROBIO’s product candidates may not demonstrate in patients any or all of the pharmacological benefits ~~we believe~~AVROBIO believes they may possess or compare favorably to existing, approved therapies, such as ERT. ~~We have~~AVROBIO has not yet succeeded and may never succeed in demonstrating efficacy and safety of ~~our product candidates or any future~~AVROBIO’s product candidates in clinical trials or in obtaining marketing approval thereafter. ~~For example, although we have evaluatedAVR-RD-02,AVR-RD-03~~ ~~andAVR-RD-04~~ ~~in preclinical studies and have evaluatedAVR-RD-01~~ ~~in an early-stage clinical trial, we have not yet advancedAVR-RD-02,AVR-RD-03~~ ~~andAVR-RD-04~~ ~~into clinical trials orAVR-RD-01~~ ~~into Phase 2 clinical development, nor have we obtained regulatory approval to sell any product based on our therapeutic approaches.~~ Accordingly, ~~our~~AVROBIO’s focus on treating these diseases may not result in the ~~discovery and~~ development of commercially viable products.

~~If we are~~Should AVROBIO resume development of its product candidates, if AVROBIO is unsuccessful in ~~our~~AVROBIO’s development efforts, weAVROBIO may not be able to advance the development of ~~our~~AVROBIO’s product candidates, commercialize products, raise capital, expand ~~our~~AVROBIO’s business or continue ~~our~~AVROBIO’s operations.

Risks ~~related~~Related to ~~our reliance~~Manufacturing

Gene therapies are novel, complex and difficult to manufacture. Should AVROBIO resume development of its product candidates, AVROBIO could experience production problems that result in delays in AVROBIO’s development or commercialization programs or otherwise adversely affect AVROBIO’s business.

The manufacturing process AVROBIO uses to produce AVROBIO’s product candidates is complex, novel and has not been validated for commercial use. Should AVROBIO resume development of its product candidates, several factors could cause production interruptions, including equipment malfunctions, facility contamination, raw material shortages or contamination, natural disasters, disruption in utility services, human error or disruptions in the operations of AVROBIO’s suppliers.

AVROBIO’s product candidates require processing steps that are more complex than those required for most chemical pharmaceuticals. Moreover, unlike chemical pharmaceuticals, the physical and chemical properties of a biologic such as AVROBIO’s generally cannot be fully characterized. As a result, assays of the finished product may not be sufficient to ensure that the product will perform in the intended manner. Accordingly, AVROBIO and AVROBIO’s manufacturing suppliers employ multiple steps to control the manufacturing process with the goal of ensuring that the product candidate is made strictly and consistently in compliance with the applicable process and specifications. Problems with the manufacturing process, including even minor deviations from the intended process, could result in product defects or manufacturing failures that result in lot failures, product recalls, product liability claims or insufficient inventory. AVROBIO may encounter problems achieving adequate quantities and quality of clinical-grade materials that meet FDA or other applicable regulatory standards or specifications with consistent and acceptable production yields and costs.

In addition, the FDA and other foreign regulatory authorities may require AVROBIO to submit samples of any lot of any approved product together with the protocols showing the results of applicable tests at any time. Under some circumstances, the FDA or other foreign regulatory authorities may require that AVROBIO not distribute a lot until the agency authorizes its release. Even slight deviations in the manufacturing process, including those affecting quality attributes and stability, may result in unacceptable changes in the product that could result in lot failures or product recalls. Should AVROBIO resume development of AVROBIO’s product candidates, there is no assurance AVROBIO will not experience lot failures in the future. Lot failures or product recalls could cause AVROBIO to delay clinical trials, or, if approved, commercial product launches, which could be costly to AVROBIO and otherwise harm AVROBIO’s business, financial condition, results of operations and prospects. AVROBIO’s manufacturing process relies on ~~third parties~~a platform structure, which AVROBIO refers to as AVROBIO’s plato platform, and, if AVROBIO experiences delays,

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deviations or failures that impact that platform, such delays, deviations or failures could have an adverse impact on AVROBIO’s development products or future commercialization programs.

Risks Related to AVROBIO’s Reliance on Third Parties

Should AVROBIO resume development of its product candidates, AVROBIO expects to rely on third parties to conduct some or all aspects of ~~our~~AVROBIO’s vector production, product manufacturing, protocol development, research and preclinical and clinical testing, and these third parties may not perform satisfactorily.

~~We do~~Should AVROBIO resume development of its product candidates, AVROBIO does not expect to independently conduct ~~all aspects of our~~AVROBIO’s vector production, product manufacturing, protocol development, research and preclinical and clinical testing. ~~We currently rely,~~AVROBIO has historically relied, and, ~~expect~~should AVROBIO resume development of its product candidates, expects to continue to rely, on third parties with respect to these items. ~~For example, we are moving our cell processing to an automated, closed system with a single third party supplier.~~

Any of these third parties may terminate their engagements with usAVROBIO or renegotiate the terms of AVROBIO’s agreements at any time. If ~~we need~~AVROBIO needs to enter into alternative arrangements, it could delay ~~our~~AVROBIO’s product development activities. ~~Our~~AVROBIO’s reliance on these third parties for research and development activities will reduce ~~our~~AVROBIO’s control over these activities but will not relieve usAVROBIO of ~~our~~AVROBIO’s responsibility to ensure compliance with all required regulations and study protocols. For example, for product candidates that ~~we develop~~AVROBIO develops and ~~commercialize~~commercializes on ~~our~~AVROBIO’s own, weAVROBIO will remain responsible for ensuring that each of ~~our~~AVROBIO’s preclinical and clinical studies are conducted in accordance with the study plan, protocols and regulatory requirements.

Even with relevant experience and expertise, AVROBIO’s third-party manufacturers may encounter difficulties in production, such as initial production, managing the transition from early to late-stage clinical and commercial manufacturing, and ensuring that the product meets required specifications. These difficulties may include delays, failure or inability achieving production yields, establishing and maintaining stage-appropriate cGMP quality procedures, operator error, shortages of qualified personnel, and compliance with federal, state and foreign regulations. AVROBIO cannot make any assurances that these difficulties will not occur in the future, or that AVROBIO will be able to resolve or address them in a timely manner or at all as problems arise.

~~If our~~Should AVROBIO resume development of its product candidates, if AVROBIO’s contract counterparties do not successfully carry out their contractual duties, meet expected deadlines or conduct ~~our~~AVROBIO’s studies in accordance with regulatory requirements or ~~our~~AVROBIO’s stated study plans and protocols, weAVROBIO will not be able to complete, or may be delayed in completing, the preclinical and clinical studies required to support approval of ~~our~~AVROBIO’s product candidates or the FDA or other regulatory agencies may refuse to accept ~~our~~AVROBIO’s clinical or preclinical data. ~~For example, in 2017, the ongoing investigator-sponsored Phase 1 clinical trial~~

Should AVROBIO resume development of~~AVR-RD-01~~ ~~encountered delays in the enrollment of patients due to delays in identifying patients for enrollment and the evaluation of information from screened potential trial participants.~~

~~Reliance~~ its product candidates, reliance on third-party manufacturers entails risks to which weAVROBIO would not be subject if weAVROBIO manufactured the product candidates ~~ourselves,~~itself, including:

•

the inability to negotiate manufacturing agreements with third parties under commercially reasonable terms;

•

reduced control as a result of using third-party manufacturers for all aspects of manufacturing activities;

•

termination or nonrenewal of manufacturing agreements with third parties in a manner or at a time that is costly or damaging to ~~us;~~AVROBIO; and

•

disruptions to the operations of ~~our~~AVROBIO’s third-party manufacturers or suppliers caused by conditions unrelated to ~~our~~AVROBIO’s business or operations, including the impact of the COVID-19 pandemic or the bankruptcy of the manufacturer or supplier.

Any of these events could lead to delays of ~~our~~AVROBIO’s preclinical and clinical studies or failure to obtain regulatory approval, or impact ~~our~~AVROBIO’s ability to successfully commercialize future products. Some of these events could be the basis for FDA action, including injunction, recall, seizure or total or partial suspension of production.

WeAVROBIO has historically relied, and, ~~our~~should AVROBIO resume development of its product candidates, expects to continue to rely, on sole source suppliers for AVROBIO’s automated, closed cell processing system; vector supply; plasmid supply; cell culture media supply; and drug product manufacturing. In addition, AVROBIO is dependent on a limited number of suppliers for some of AVROBIO’s other components and materials used in AVROBIO’s product candidates.

AVROBIO has moved AVROBIO’s cell processing to an automated, closed system with a sole source supplier. In addition, AVROBIO has historically relied, and, should AVROBIO resume development of its product candidates, expect to continue to rely, on sole source suppliers for vector supply, plasmid supply and cell culture media, as well as drug product manufacturing for AVROBIO-sponsored clinical trials. Should AVROBIO resume development of its product candidates, AVROBIO’s sole source suppliers may be unwilling or unable to supply product to AVROBIO reliably, continuously or at the levels AVROBIO anticipates or

AVROBIO, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(in thousands, except share and per share data)
are required by AVROBIO’s clinical trial activities. Such suppliers could still delay, suspend, or terminate supply of product to AVROBIO for a number of reasons, including manufacturing or quality issues, payment disputes with AVROBIO, intellectual property disputes with third parties, bankruptcy or insolvency, earthquakes or other natural disasters or other occurrences.
In addition, AVROBIO depends on a limited number of suppliers for some of the other components necessary for AVROBIO’s product candidates. Should AVROBIO resume development of its product candidates, AVROBIO cannot be sure that any of AVROBIO’s suppliers will remain in business, or that they will not be purchased by one of AVROBIO’s competitors or another company that is not interested in continuing to produce these materials for AVROBIO’s intended purpose. AVROBIO’s use of a sole source or limited number of suppliers of raw materials, components and finished goods exposes AVROBIO to several risks, including disruptions in supply, price increases, late deliveries and an inability to meet customer demand. There are, in general, relatively few alternative sources of supply for these components and equipment. Any of AVROBIO’s vendors may be unable or unwilling to meet AVROBIO’s future demands for AVROBIO’s clinical trials or commercial sale. Establishing additional or replacement suppliers for these components and materials could take a substantial amount of time and it may be difficult or impossible to establish replacement suppliers who meet regulatory requirements. Any disruption in supply from any supplier or manufacturing location could lead to supply delays or interruptions which would damage AVROBIO’s business, financial condition, results of operations and prospects.
Should AVROBIO resume development of its product candidates and AVROBIO is required to switch to a replacement supplier or manufacture materials itself, the manufacture and delivery of AVROBIO’s product candidates could be interrupted for an extended period, adversely affecting AVROBIO’s business. Establishing additional or replacement suppliers may not be accomplished quickly, and AVROBIO may not be able to enter agreements with replacement suppliers on reasonable terms, if at all. In either scenario, AVROBIO’s clinical trials supply could be delayed significantly as AVROBIO establishes alternative supply sources. In some cases, the technical skills required to manufacture AVROBIO’s products or product candidates may be unique or proprietary to the original CMO and AVROBIO may have difficulty, or there may be contractual restrictions prohibiting AVROBIO from, transferring such skills to a back-up or alternate supplier, or AVROBIO may be unable to transfer such skills at all. If AVROBIO is able to find a replacement supplier, the replacement supplier would need to be qualified and may require additional regulatory authority approval, which could result in further delay. For example, the FDA could require additional supplemental bridging data if AVROBIO relies upon a new supplier. AVROBIO may be unsuccessful in demonstrating the comparability of clinical supplies which could require the conduct of additional clinical trials. If AVROBIO resumes development of its product candidates, AVROBIO would seek to maintain adequate inventory of the components and materials used in AVROBIO’s product candidates; however, any interruption or delay in the supply of components or materials, or AVROBIO’s inability to obtain components or materials from alternate sources at acceptable prices in a timely manner, could impair AVROBIO’s ability to conduct AVROBIO’s clinical trials and, if AVROBIO’s product candidates are approved, to meet the demand of AVROBIO’s customers and cause them to cancel orders.
In addition, as part of the FDA’s approval of AVROBIO’s product candidates, the FDA must review and approve the individual components of AVROBIO’s production process, which includes the manufacturing processes and facilities of AVROBIO’s suppliers. AVROBIO’s current suppliers have not undergone this process, nor have they had any components included in any product approved by the FDA.
AVROBIO’s reliance on suppliers subjects AVROBIO to a number of risks that, should AVROBIO resume development of its product candidates, could materially harm AVROBIO’s reputation, business, and financial condition, including, among other things:
•
delays in production, supply, shipment or delivery as a result of the COVID-19 pandemic or trade sanctions, embargoes, and heightened export requirements resulting from the war in Ukraine and the evolving conflicts in Israel and the Gaza Strip;
•
the interruption of supply resulting from modifications to or discontinuation of a supplier’s operations;
•
delays in product shipments resulting from uncorrected defects, reliability issues, or a supplier’s variation in a component;
•
a lack of long-term supply arrangements for key components with AVROBIO’s suppliers;
•
the inability to obtain adequate supply in a timely manner, or to obtain adequate supply on commercially reasonable terms;
•
difficulty and cost associated with locating and qualifying alternative suppliers for AVROBIO’s components in a timely manner;
•
production delays related to the evaluation and testing of products from alternative suppliers, and corresponding regulatory qualifications;
•
a delay in delivery due to AVROBIO’s suppliers prioritizing other customer orders over AVROBIO’s;
57
AVROBIO, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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•
damage to AVROBIO’s reputation caused by defective components produced by AVROBIO’s suppliers;
•
increased cost of AVROBIO’s warranty program due to product repair or replacement based upon defects in components produced by AVROBIO’s suppliers; and
•
fluctuation in delivery by AVROBIO’s suppliers due to changes in demand from AVROBIO or their other customers.
If any of these risks materialize, AVROBIO’s costs could significantly increase and AVROBIO’s ability to conduct AVROBIO’s clinical trials and, if AVROBIO’s product candidates are approved, to meet demand for AVROBIO’s products could be impacted.

AVROBIO and AVROBIO’s contract manufacturers are subject to significant regulation with respect to manufacturing ~~our~~AVROBIO’s products. The manufacturing facilities on which ~~we rely~~AVROBIO has relied may not continue to meet regulatory requirements and have limited capacity.

~~We currently have relationships with~~In AVROBIO’s development activities to date, AVROBIO has relied on sole source suppliers of AVROBIO’s automated, closed cell processing system; vector supply; plasmid supply; cell culture media; as well as drug product manufacturing for AVROBIO-sponsored clinical trials. In addition, AVROBIO has depended on a limited number of suppliers for some of the ~~manufacturing of our viral vectors and~~other components necessary for AVROBIO’s product candidates. Each ~~supplier~~of AVROBIO’s suppliers may require licenses to manufacture such components if such processes are not owned by the supplier or in the public domain, and weAVROBIO may be unable to transfer or sublicense the intellectual property rights weAVROBIO may have with respect to such activities.

All entities involved in the preparation of therapeutics for clinical studies or commercial sale, including ~~our existing~~AVROBIO’s contract manufacturers for ~~our~~AVROBIO’s product candidates, are subject to extensive regulation. Components of a finished therapeutic product approved for commercial sale or used in clinical studies must be manufactured in accordance with ~~good manufacturing practices, or GMP.~~cGMP. These regulations govern manufacturing processes and procedures (including record keeping) and the implementation and operation of quality systems to control and assure the quality of investigational products and products approved for sale. Poor control of production processes can lead to the introduction of adventitious agents or other contaminants, or to inadvertent changes in the properties or stability of ~~our~~AVROBIO’s product candidates that may not be detectable in final product testing. WeAVROBIO or ~~our~~AVROBIO’s contract manufacturers must supply all necessary documentation in support of a BLA on a timely basis and must adhere to the FDA’s good laboratory practices ~~or GLP,~~ and ~~GMP~~cGMP regulations enforced by the FDA through its facilities inspection program. Some of ~~our~~AVROBIO’s contract manufacturers have not produced a commercially-approved product and have never been inspected by the FDA before. ~~Our~~AVROBIO’s facilities and quality systems and the facilities and quality systems of some or all of ~~our~~AVROBIO’s third-party contractors must pass apre-approval inspection for compliance with the applicable regulations as a condition of regulatory approval of ~~our~~AVROBIO’s product candidates or any of ~~our~~AVROBIO’s other potential products. In addition, the regulatory authorities may, at any time, audit or inspect a manufacturing facility involved with the preparation of ~~our~~AVROBIO’s product candidates or ~~our~~AVROBIO’s other potential products or the associated quality systems for compliance with the regulations applicable to the activities being conducted. If these facilities do not pass apre-approval plant inspection, or if the FDA is unable to conduct such an inspection due to the COVID-19 pandemic or similar public health crisis, the FDA may issue a complete response letter or defer action on AVROBIO’s applications, and approval of the products ~~will~~may be delayed or may not be granted.

The regulatory authorities also may, at any time following approval of a product for sale, audit ~~our~~AVROBIO’s manufacturing facilities or those of ~~our~~AVROBIO’s third-party contractors. If any such inspection or audit identifies a failure to comply with applicable regulations or if a violation of ~~our~~AVROBIO’s product specifications or applicable regulations occurs independent of such an inspection or audit, weAVROBIO or the relevant regulatory authority may require remedial measures that may be costly and/or time-consuming for usAVROBIO or a third party to implement and that may include the temporary or permanent suspension of a clinical study or commercial sales or the temporary or permanent closure of a facility. Any such remedial measures imposed upon usAVROBIO or third parties with whom ~~we contract~~AVROBIO contracts could materially harm ~~our~~AVROBIO’s business.

If weAVROBIO or any of ~~our~~AVROBIO’s third-party manufacturers fail to maintain regulatory compliance, the FDA can impose regulatory sanctions including, among other things, refusal to approve a pending application for a new drug product or biologic product, or revocation of apre-existing approval. As a result, ~~our~~AVROBIO’s business, financial condition and results of operations may be materially harmed.

~~These~~Should AVROBIO resume development of its product candidates, these factors could cause the delay of clinical studies, regulatory submissions, required approvals or commercialization of ~~our~~AVROBIO’s product candidates, cause usAVROBIO to incur higher costs and prevent usAVROBIO from commercializing ~~our~~AVROBIO’s products successfully. Furthermore, if ~~our~~AVROBIO’s suppliers fail to meet contractual requirements, and ~~we are~~AVROBIO is unable to secure one or more replacement suppliers capable of production at a substantially equivalent cost, ~~our~~AVROBIO’s preclinical and clinical studies may be delayed.

~~We are dependent on a limited number of suppliers for some of our components and materials used in our product candidates.~~

We currently depend on a limited number of suppliers for some of the components necessary for our product candidates. We cannot be sure that these suppliers will remain in business, or that they will not be purchased by one of our competitors or another company that is not interested in continuing to produce these materials for our intended purpose. Our use of a limited number of suppliers of raw materials, components and finished goods exposes us to several risks, including disruptions in supply, price increases, late deliveries and an inability to meet customer demand. There are, in general, relatively few alternative sources of supply for these components. These vendors may be unable or unwilling to meet our future demands for our clinical trials or commercial sale. Establishing additional or replacement suppliers for these components could take a substantial amount of time and it may be difficult to establish replacement suppliers who meet regulatory requirements. Any disruption in supply from any supplier or manufacturing location could lead to supply delays or interruptions which would damage our business, financial condition, results of operations and prospects.

If we are required to switch to a replacement supplier, the manufacture and delivery of our product candidates could be interrupted for an extended period, adversely affecting our business. Establishing additional or replacement suppliers may not be accomplished quickly. If we are able to find a replacement supplier, the replacement supplier would need to be qualified and may require additional regulatory authority approval, which could result in further delay. For example, the FDA could require additional supplemental data and clinical trial data if we rely upon a new supplier. While we seek to maintain adequate inventory of the components and materials used in our product candidates, any interruption or delay in the supply of components or materials, or our inability to obtain components or materials from alternate sources at acceptable prices in a timely manner, could impair our ability to conduct our clinical trials and, if our product candidates are approved, to meet the demand of our customers and cause them to cancel orders.

In addition, as part of the FDA’s approval of our product candidates, the FDA must review and approve the individual components of our production process, which includes the manufacturing processes and facilities of our suppliers. Our current suppliers have not undergone this process nor have they had any components included in any product approved by the FDA.

~~Our reliance on these suppliers subjects us to a number of risks that could harm our reputation, business, and financial condition, including, among other things:~~

~~the interruption of supply resulting from modifications to or discontinuation of a supplier’s operations;~~58

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(in thousands, except share and per share data)

~~delays in product shipments resulting from uncorrected defects, reliability issues, or a supplier’s variation in a component;~~

~~a lack of long-term supply arrangements for key components with our suppliers;~~

~~the inability to obtain adequate supply in a timely manner, or to obtain adequate supply on commercially reasonable terms;~~

~~difficulty and cost associated with locating and qualifying alternative suppliers for our components in a timely manner;~~

~~production delays related to the evaluation and testing of products from alternative suppliers, and corresponding regulatory qualifications;~~

~~a delay in delivery due to our suppliers prioritizing other customer orders over ours;~~

~~damage to our reputation caused by defective components produced by our suppliers;~~

~~increased cost of our warranty program due to product repair or replacement based upon defects in components produced by our suppliers; and~~

~~fluctuation in delivery by our suppliers due to changes in demand from us or their other customers.~~

If any of these risks materialize, costs could significantly increase and our ability to conduct our clinical trials and, if our product candidates are approved, to meet demand for our products could be impacted.

~~Our~~AVROBIO’s reliance on third parties requires usAVROBIO to share ~~our~~AVROBIO’s trade secrets, which increases the possibility that a competitor will discover them or that ~~our~~AVROBIO’s trade secrets will be misappropriated or disclosed.

Because weAVROBIO has relied and, should AVROBIO resume development of its product candidates, would expect to continue to rely on third parties to manufacture ~~our~~AVROBIO’s vectors and ~~our~~AVROBIO’s product candidates, and because ~~we collaborate~~AVROBIO collaborates with various organizations and academic institutions on the advancement of ~~our~~AVROBIO’s gene therapy approach, weAVROBIO must, at times, share trade secrets with them. ~~We seek~~AVROBIO seeks to protect ~~our~~AVROBIO’s proprietary technology in part by entering into confidentiality agreements and, if applicable, material transfer agreements, collaborative research agreements, consulting agreements or other similar agreements with ~~our~~AVROBIO’s collaborators, advisors, employees and consultants prior to beginning research or disclosing proprietary information. These agreements typically limit the rights of the third parties to use or disclose ~~our~~AVROBIO’s confidential information, such as trade secrets.

Despite the contractual provisions employed when working with third parties, the need to share trade secrets and other confidential information increases the risk that such trade secrets become known by ~~our~~AVROBIO’s competitors, are inadvertently incorporated into the technology of others, or are disclosed or used in violation of these agreements. Given that ~~our~~AVROBIO’s proprietary position is based, in part, on ~~our~~AVROBIO’s know-how and trade secrets, a competitor’s discovery of ~~our~~AVROBIO’s trade secrets or other unauthorized use or disclosure would impair ~~our~~AVROBIO’s competitive position and may have a material adverse effect on ~~our~~AVROBIO’s business.

In addition, these agreements typically restrict the ability of ~~our~~AVROBIO’s collaborators, advisors, employees and consultants to publish data potentially relating to ~~our~~AVROBIO’s trade secrets. ~~Our~~AVROBIO’s academic collaborators typically have rights to publish data, provided that ~~we are~~AVROBIO is notified in advance and may delay publication for a specified time in order to secure ~~our~~AVROBIO’s intellectual property rights arising from the collaboration. In other cases, publication rights are controlled exclusively by ~~us,~~AVROBIO, although in some cases weAVROBIO may share these rights with other parties. Despite ~~our~~AVROBIO’s efforts to protect ~~our~~AVROBIO’s trade secrets, ~~our~~AVROBIO’s competitors may discover ~~our~~AVROBIO’s trade secrets, either through breach of these agreements, independent development or publication of information including ~~our~~AVROBIO’s trade secrets in cases where ~~we do~~AVROBIO does not have proprietary or otherwise protected rights at the time of publication. A competitor’s discovery of ~~our~~AVROBIO’s trade secrets would impair ~~our~~AVROBIO’s competitive position and have an adverse impact on ~~our~~AVROBIO’s business.

Risks ~~related~~Related to ~~commercialization~~Commercialization of ~~our~~AVROBIO’s Product Candidates

Should AVROBIO resume development of its product candidates

~~If we are~~ and obtain approval of any of AVROBIO’s product candidates, and AVROBIO is unable to establish sales, distribution and marketing capabilities or enter into agreements with third parties to market and sell~~AVR-RD-01~~ ~~and our other~~ AVROBIO’s product candidates, weAVROBIO will be unable to generate any product revenue.

~~We currently have no sales, distribution or marketing organization.~~ To successfully commercialize any of ~~our current or future~~AVROBIO’s product candidates, if approved, weAVROBIO will need to develop ~~these~~AVROBIO’s commercial capabilities, either on ~~our~~AVROBIO’s own or with ~~others.~~others, should AVROBIO resume development of its product candidates. The establishment and development of ~~our~~AVROBIO’s own commercial team or the establishment of a contract sales force to market any product candidate weAVROBIO may develop will be expensive and time-consuming and could delay any product launch. Moreover, weAVROBIO cannot be certain that weAVROBIO will be able to successfully develop this capability. WeAVROBIO may enter into collaborations regarding any approved product candidates with other entities to utilize their established marketing and distribution capabilities, but weAVROBIO may be unable to enter into such agreements on favorable terms, if at all. If any future collaborators do not commit sufficient resources to commercialize ~~our~~AVROBIO’s product candidates, or ~~we are~~AVROBIO is unable to develop the necessary capabilities on ~~our~~AVROBIO’s own, weAVROBIO will be unable to generate sufficient product revenue to sustain ~~our~~AVROBIO’s business. ~~We compete~~AVROBIO competes with many companies that currently have extensive, experienced and well-funded sales, distribution and marketing operations to recruit, hire, train and retain marketing and sales personnel. WeAVROBIO also ~~face~~faces competition in ~~our~~AVROBIO’s search for third parties to assist usAVROBIO with the sales and marketing efforts of ~~our~~AVROBIO’s product candidates, if approved. Without an internal team or the support of a third-party to perform marketing and sales functions, weAVROBIO may be unable to compete successfully against these more established companies.

IfShould AVROBIO resume development of its product candidates and the market opportunities for ~~our~~AVROBIO’s product candidates are smaller than ~~we believe~~AVROBIO believes they are, ~~our~~AVROBIO’s product revenues may be adversely affected and ~~our~~AVROBIO’s business may suffer.

~~We focus our~~AVROBIO has historically focused AVROBIO’s research and product development on treatments for serious lysosomal ~~storage diseases. Our~~disorders. AVROBIO’s understanding of both the number of people who have these diseases, as well as the subset of people with these diseases who have the potential to benefit from treatment with ~~our~~AVROBIO’s product candidates, are based on estimates. These estimates may prove to be incorrect and new studies may reduce the estimated incidence or prevalence of these diseases. The number of patients in the United States and elsewhere may turn out to be lower than expected or may not be otherwise amenable to treatment

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(in thousands, except share and per share data)

with ~~our~~AVROBIO’s products, or patients may become increasingly difficult to identify and access, and any approval AVROBIO receives from regulatory agencies may be for a narrower indication and smaller patient population than anticipated, all of which, should AVROBIO resume development of its product candidates, would adversely affect ~~our~~AVROBIO’s business, financial condition, results of operations and prospects.

~~The~~Should AVROBIO resume development of its product candidates, the commercial success of any current or future product candidate will depend upon the degree of market acceptance by physicians, patients, third-party payors and others in the medical community.

~~Even~~Should AVROBIO resume development of its product candidates, and thereafter if ~~we obtain~~AVROBIO obtains any regulatory approval for ~~our~~AVROBIO’s product candidates, the commercial success of ~~our~~AVROBIO’s product candidates will depend in part on the medical community, patients, and third-party payors accepting gene therapy products in general, and ~~our~~AVROBIO’s product candidates in particular, as effective, safe and cost-effective. Any product that ~~we bring~~AVROBIO brings to the market may not gain market acceptance

by physicians, patients, third-party payors and others in the medical community. The degree of market acceptance of these product candidates, if approved for commercial sale, will depend on a number of factors, including:

•

the potential efficacy and potential advantages over alternative treatments, including any similar generic treatments;

•

the efficacy and safety as demonstrated in pivotal clinical trials and published in peer-reviewed journals;

•

the prevalence and severity of any adverse events or side effects, including any limitations or warnings contained in a product’s approved ~~labeling;~~

labeling or that are later found to be associated with a product, including in findings from long-term follow-up studies;

•

the prevalence and severity of any side effects resulting from the conditioning regimen for the administration of ~~our~~AVROBIO’s product candidates;

•

the ability to offer the products for sale at competitive prices;

•

the clinical indications for which the products are approved by the FDA or comparable regulatory agencies;

•

the relative convenience and ease of ~~administration;~~

dosing and administration compared to alternative treatments;

•

the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;

•

the strength of marketing and distribution support and timing of market introduction of competitive products;

•

restrictions on how the product is distributed;

•

the availability of accessible and skilled healthcare centers capable of administering AVROBIO’s treatments;

•

publicity concerning ~~our~~AVROBIO’s products or competing products and treatments; and

~~sufficient~~•

favorable third-party insurance coverage and sufficient reimbursement.

Sales of medical products also depend on the willingness of physicians to prescribe the treatment, which is likely to be based on a determination by these physicians that the products are safe, therapeutically effective and cost effective. In addition, the inclusion or ~~reimbursement.~~exclusion of products from treatment guidelines established by various physician groups and the viewpoints of influential physicians can affect the willingness of other physicians to prescribe the treatment. AVROBIO cannot predict whether physicians, physicians’ organizations, hospitals, other healthcare providers, government agencies or private insurers will determine that AVROBIO’s product is safe, therapeutically effective and cost effective as compared with competing treatments.

Even if a product candidate displays a favorable efficacy and safety profile in preclinical and clinical studies, market acceptance of the product, if approved for commercial sale, will not be known until after it is launched. ~~Our~~AVROBIO’s efforts to educate the medical community and third-party payors on the benefits of ~~our~~AVROBIO’s product candidates may require significant resources and may never be successful. Such efforts to educate the marketplace may require more resources than are required by the conventional technologies marketed by ~~our~~AVROBIO’s competitors. If these products do not achieve an adequate level of acceptance, weAVROBIO may not generate significant product revenue and may not become profitable.

AVROBIO, INC.

~~If we obtain~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

Should AVROBIO resume development of its product candidates, if AVROBIO obtains approval to commercialize ~~our~~AVROBIO’s product candidates outside of the United States, a variety of risks associated with international operations could materially adversely affect ~~our~~AVROBIO’s business.

~~We currently plan to conduct~~AVROBIO had been conducting clinical trials for ~~our~~AVROBIO’s product candidates ~~outside of~~in the United States, ~~including in~~ Canada and Australia, ~~Japan, Europe~~ and ~~Israel.~~should AVROBIO resume development of its product candidates, AVROBIO would expect to expand AVROBIO’s clinical trials to other geographies. If any of ~~our~~AVROBIO’s product candidates are approved for commercialization, weAVROBIO may enter into agreements with third parties to market them on a worldwide basis or in more limited geographical regions. ~~We expect~~AVROBIO expects that weAVROBIO will be subject to additional risks related to entering into international business relationships, including:

•

different regulatory requirements for approval of drugs and biologics in foreign countries;

•

reduced protection for intellectual property rights;

•

unexpected changes in tariffs, trade barriers and regulatory requirements;

•

economic weakness, including inflation, fluctuating interest rates, or political instability in particular foreign economies and markets;

•

compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;

•

foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country;

•

workforce uncertainty in countries where labor unrest is more common than in the United States;

•

production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and

•

business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters including earthquakes, typhoons, floods and fires.

The insurance coverage and reimbursement status of newly-approved products isare uncertain. ~~Failure~~Should AVROBIO resume development of its product candidates, failure to obtain or maintain adequate coverage and reimbursement for any of ~~our~~AVROBIO’s product candidates, if approved, could limit ~~our~~AVROBIO’s ability to market those products and decrease ~~our~~AVROBIO’s ability to generate revenue.

The regulations that govern marketing approvals, pricing and reimbursement for new drugs vary widely from country to country. In the United States, recently enacted legislation may significantly change the approval requirements in ways that could involve additional costs and cause delays in obtaining approvals. Some countries require approval of the sale price of a drug before it can be marketed. In many countries, the pricing review period begins after marketing or product licensing approval is granted. In some foreign markets, prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted. As a result, AVROBIO might obtain marketing approval for a product in a particular country, but then be subject to price regulations that delay AVROBIO’s or their commercial launch of the product, possibly for lengthy time periods, and negatively impact the revenue AVROBIO is able to generate from the sale of the product in that country. Adverse pricing limitations may hinder AVROBIO’s ability to recoup AVROBIO’s investment in one or more product candidates, even if any product candidates AVROBIO may develop obtain marketing approval. Please see the section titled “Business – Government Regulation – Coverage and Reimbursement” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Should AVROBIO resume development of its product candidates, and obtain regulatory approval for such candidates, AVROBIO’s ability to successfully commercialize AVROBIO’s product candidates or any other products that AVROBIO may develop also will depend in part on the extent to which reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers, and other organizations. Government authorities and other third-party payors, such as private health insurers and health maintenance organizations, decide which medications they will pay for and establish reimbursement levels. The availability and extent of reimbursement by governmental and private payors is essential for most patients to be able to afford ~~expensive treatments, such as stem cell transplants.~~treatments. Sales of ~~our~~AVROBIO’s product candidates will depend substantially, both domestically and abroad, on the extent to which the costs of ~~our~~AVROBIO’s product candidates will be paid by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or reimbursed by government health administration authorities, private health coverage insurers and other third-party payors. WeAVROBIO may not be able to provide data sufficient to gain acceptance with respect to coverage and reimbursement. If reimbursement is not available, or is available only at limited levels, weAVROBIO may not be able to successfully commercialize ~~our~~AVROBIO’s product candidates, if approved. Even if coverage is provided, the approved

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reimbursement amount may not be high enough to allow usAVROBIO to establish or maintain pricing sufficient to realize a sufficient return on ~~our~~AVROBIO’s investment.

There is significant uncertainty related to the insurance coverage and reimbursement of newly approved products. In the United States, the principal decisions about reimbursement for new medicines are typically made by ~~the~~ Centers for Medicare & Medicaid Services, or CMS, an agency within the U.S. Department of Health and Human Services as ~~the~~ CMS decides whether and to what extent a new medicine will be covered and reimbursed under Medicare. Private payors tend to follow ~~the~~ CMS to a substantial degree. It is difficult to predict what ~~the~~ CMS will decide with respect to reimbursement for fundamentally novel products such as ~~ours,~~AVROBIO’s, as there is no body of established practices and precedents for these new products. Patients who are provided medical treatment for their conditions generally rely on third-party payors to reimburse all or part of the costs associated with their treatment. Adequate coverage and reimbursement from governmental healthcare programs and commercial payors are critical to new product acceptance. Government authorities and other third-party payors, such as private health insurers and health maintenance organizations, decide which drugs and treatments they will cover and the amount of reimbursement.

A primary trend in the U.S. healthcare industry and elsewhere is cost containment. Government authorities and other third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications. Outside the United States, international operations are generally subject to extensive governmental price controls and other market regulations, and ~~we believe~~AVROBIO believes the increasing emphasis on cost-containment initiatives in Europe and certain other major markets where ~~we plan~~AVROBIO plans to commercialize may put pressure on the pricing and usage of ~~our~~AVROBIO’s product candidates. In many countries, the prices of medical products are subject to varying price control mechanisms as part of national health ~~systems.~~systems, and pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a product. To obtain reimbursement or pricing approval in some countries, AVROBIO may be required to conduct a clinical trial that compares the cost effectiveness of AVROBIO’s product candidates to other available therapies. In general, the prices of medicines under such systems are substantially lower than in the United States. Other countries allow companies to fix their own prices for medicines, but monitor and control company profits. Additional foreign price controls or other changes in pricing regulation could restrict the amount that ~~we are~~AVROBIO is able to charge for ~~our~~AVROBIO’s product candidates. Accordingly, in markets outside the United States, the reimbursement for ~~our~~AVROBIO’s products may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenues and profits.

Moreover, efforts by governmental and other third-party payors, in the United States and abroad, to cap or reduce healthcare costs may cause such organizations to limit both coverage and level of reimbursement for new products approved and, as a result, they may not cover or provide adequate payment for ~~our~~AVROBIO’s product candidates. ~~We expect~~Should AVROBIO resume development of its product candidates, AVROBIO expects to experience pricing pressures in connection with the sale of any of ~~our~~AVROBIO’s product candidates, due to the trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription drugs and surgical procedures and other treatments, has become very intense. As a result, increasingly high barriers are being erected to the entry of new products.

Due to the novel nature of ~~our~~AVROBIO’s technology and the potential for ~~our~~AVROBIO’s product candidates to offer therapeutic benefit in a single administration, ~~we face~~AVROBIO faces uncertainty related to pricing and reimbursement for these product ~~candidates.~~candidates should AVROBIO resume their development.

~~Our~~Should AVROBIO resume development of its product candidates, AVROBIO’s target patient populations are relatively small, as a result of which the pricing and reimbursement of ~~our~~AVROBIO’s product candidates, if approved, must be adequate to support commercial infrastructure. If ~~we are~~AVROBIO is unable to obtain adequate levels of reimbursement, ~~our~~AVROBIO’s ability to successfully market and sell ~~our~~AVROBIO’s product candidates will be adversely affected. The manner and level at which reimbursement is provided for services related to ~~our~~AVROBIO’s product candidates (e.g., for administration of ~~our~~AVROBIO’s product to patients) is also important. Inadequate reimbursement for such services may lead to physician resistance and adversely affect ~~our~~AVROBIO’s ability to market or sell ~~our~~AVROBIO’s product candidates, if approved.

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

~~The manufacturing process we use to produce our~~ Moreover, if approved for marketing, because AVROBIO’s product candidates is complex, novel and has not been validated for commercial use. Several factors could cause production interruptions, including equipment malfunctions, facility contamination, raw material shortages or contamination, natural disasters, disruption in utility services, human error or disruptions in the operations of our suppliers.

~~Our~~are designed to provide their intended therapeutic benefit from a single administration, treatment with AVROBIO’s product candidates require processing steps that are more complex than those required for most chemical pharmaceuticals. Moreover, unlike chemical pharmaceuticals, the physical and chemical properties of a biologic such as ours generally cannot be fully characterized. As a result, assays of the finished product may not be sufficient to ensure that the product will perform in the intended

manner. Accordingly, we and our manufacturing suppliers employ multiple steps to control the manufacturing process with the goal of ensuring that the product candidate is made strictly and consistently in compliance with the process. Problems with the manufacturing process, including even minor deviations from the intended process, could result in product defects or manufacturing failures that result in lot failures, product recalls, product liability claims or insufficient inventory. We may encounter problems achieving adequate quantities and quality of clinical-grade materials that meet FDA or other applicable regulatory standards or specifications with consistent and acceptable production yields and costs.

In addition, the FDA and other foreign regulatory authorities may require us to submit samples of any lot of any approved product together with the protocols showing the results of applicable tests at any time. Under some circumstances, the FDA or other foreign regulatory authorities may require that we not distribute a lot until the agency authorizes its release. Even slight deviations in the manufacturing process, including those affecting quality attributes and stability, may result in ~~unacceptable changes~~a decrease in the product that could result in lot failures or product recalls. There is no assurance we will not experience lot failures in the future. Lot failures or product recalls could cause us to delay clinical trials, or, if approved, commercial product launches, which could be costly to us and otherwise harm our business, financial condition, resultsavailable pool of ~~operations and prospects.~~target patients.

Healthcare legislative reform measures and constraints on national budget social security systems may have a material adverse effect on ~~our~~AVROBIO’s business and results of operations.

~~Third-party payors, whether domestic or foreign, or governmental or private, are developing increasingly sophisticated methods of controlling healthcare costs. In both the~~The United States and ~~certain~~many foreign jurisdictions ~~there~~ have ~~been a number of~~enacted or proposed legislative and regulatory changes toaffecting the ~~health care~~healthcare system that could ~~impact our~~prevent or delay marketing approval of AVROBIO’s product candidates or any future product candidates, restrict or regulate post-approval activities and affect AVROBIO’s ability to profitably sell ~~our products profitably.~~any product for which AVROBIO obtains marketing approval. In particular, in 2010, the Patient Protection and Affordable Care Act or ACA or PPACA, as amended by the Health Care and Education Reconciliation Act of 2010, or the ACA, was enacted, which, among other things, subjected biologic products to potential competition by lower-cost biosimilars, addressed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected, increased the minimum Medicaid rebates owed by most manufacturers under the Medicaid Drug Rebate Program, extended the Medicaid Drug Rebate program to utilization of prescriptions of individuals enrolled in Medicaid managed care organizations, subjected manufacturers to new annual fees and taxes for certain branded prescription drugs, and provided incentives to programs that increase the federal government’s comparative effectiveness research. Some of the provisions of the ACA have yet to be fully implemented, while certain provisions have been subject to judicial and Congressional challenges. Further, on January 20, 2017, President Trump signed an Executive Order directing federal agencies with authorities and responsibilities under the ACA to waive, defer, grant exemptions from, or delay the implementation of any provision of the ACA that would impose a fiscal burden on states or a cost, fee, tax, penalty or regulatory burden on individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices. On October 13, 2017, President Trump signed an Executive Order terminating the cost-sharing subsidies that reimburse insurers under the ACA. Several state Attorneys General filed suit to stop the administration from terminating the subsidies, but their request for a restraining order was denied by a federal judge in California on October 25, 2017. In addition, the CMS has recently proposed regulations that would give states greater flexibility in setting benchmarks for insurers in the individual and small group marketplaces, which may have the effect of relaxing the essential health benefits required under the ACA for plans sold through such marketplaces. Congress may consider other legislation to replace elements of the ACA.

~~The Tax Cuts and Jobs Act of 2017, or TCJA, includes a provision repealing, effective January 1, 2019, thetax-based~~ shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.” Additionally, on January 22, 2018, President Trump signed a continuing resolution on appropriations for fiscal year 2018 that delayed the implementation of certain~~ACA-mandated~~ ~~fees, including theso-called~~ “Cadillac” tax on certain high cost employer-sponsored insurance plans, the annual fee imposed on certain high cost employer-sponsored insurance plans, the annual fee imposed on certain health insurance providers based on market share, and the medical device exercise tax on~~non-exempt~~ medical devices. Further, the Bipartisan Budget Act of 2018, or the BBA, among other things, amends the ACA, effective January 1, 2019, to reduce the coverage gap in most Medicare drug plans, commonly referred to as the “donut hole.” Congress also could consider subsequent legislation to replace elements of the ACA that are repealed. Thus, the full impact of the ACA, any law replacing elements of it, and the political uncertainty surrounding any repeal or replacement legislation on our business remains unclear. In addition, other legislative changes have been proposed and adopted in the United States, ~~since~~ the ~~ACA was enacted. In August 2011, the Budget Control Act~~pharmaceutical industry has been a particular focus of ~~2011, among other things, created measures for spending reductions~~these efforts and has been significantly affected by Congress. A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs. This includes aggregate reductions of Medicare payments to providers of 2% per fiscal year, which went into effect in April 2013, and will remain in effect through 2027 unless additional Congressional action is taken. In January 2013, the American Taxpayer Relief Act of 2012, was signed into law, which, among other things, further reduced Medicare payments to several providers, including hospitals and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

major legislative initiatives. There have been, and likely will continue to be, legislative and regulatory

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proposals at the ~~foreign,~~ federal and state levels directed at broadening the availability of healthcare and containing or lowering the cost of healthcare. ~~We cannot predict~~Please see the ~~initiatives that may be adopted~~section titled “Business – Government Regulation – Healthcare Reform” in our Annual Report on Form 10-K for the ~~future. The~~fiscal year ended December 31, 2023.

Should AVROBIO resume development of its product candidates, the continuing efforts of the government, insurance companies, managed care organizations and other ~~payors~~payers of healthcare services to contain or reduce costs of healthcare ~~and/or impose price controls~~ may adversely affect:

•

the demand for ~~our drug~~any of AVROBIO’s product candidates, if ~~we obtain regulatory approval;~~

approved;

~~our~~•

the ability to set a price that ~~we believe~~AVROBIO believes is fair for ~~our products;~~

any of AVROBIO’s product candidates, if approved;

~~our~~•

AVROBIO’s ability to generate ~~revenue~~revenues and achieve or maintain profitability;

•

the level of taxes that ~~we are~~AVROBIO is required to pay; and

•

the availability of capital.

~~Any denial~~Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical and biologic products. AVROBIO cannot be sure whether additional legislative changes will be enacted, or whether existing regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals of AVROBIO’s product candidates, if any, may be. In addition, increased scrutiny by Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject AVROBIO to more stringent product labeling and post-marketing testing and other requirements.

Moreover, increasing efforts by governmental and third-party payors in the United States and abroad to cap or reduce healthcare costs may cause such organizations to limit both coverage and the level of reimbursement for newly approved products and, as a result, they may not cover or provide adequate payment for AVROBIO’s product candidates. There has been increasing legislative and enforcement interest in the United States with respect to specialty drug pricing practices. Specifically, there have been several recent U.S. Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs. It is expected that the healthcare reform measures that have been adopted and may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that AVROBIO receives for any approved product and could seriously harm AVROBIO’s future revenues. Any reduction in reimbursement from Medicare or other government programs may result in a similar ~~denial or~~ reduction in payments from private ~~payors,~~payors. Should AVROBIO resume development of its product candidates, the implementation of cost containment measures or other healthcare reforms may prevent AVROBIO from being able to generate revenue, attain profitability or commercialize AVROBIO’s product candidates.

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

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory, and policy changes. Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of other agencies on which AVROBIO’s operations may rely, including those that fund research and development activities, is subject to the political process, which is inherently fluid and unpredictable.

Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect ~~our~~AVROBIO’s business. For example, over the last several years the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA and other government employees and stop critical activities. Since March 2020, when foreign and domestic inspections of facilities were largely placed on hold, the FDA has been working to resume pre-pandemic levels of inspection activities, including routine surveillance, bioresearch monitoring and pre-approval inspections. Should the FDA determine that an inspection is necessary for approval and an inspection cannot be completed during the review cycle due to restrictions on travel, and the FDA does not determine a remote interactive evaluation to be adequate, the FDA has stated that it generally intends to issue, depending on the circumstances, a complete response letter or defer action on the application until an inspection can be completed. During the COVID-19 public health emergency, a number of companies announced receipt of complete response letters due to the FDA’s inability to complete required

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inspections for their applications. Regulatory authorities outside the U.S. may adopt similar restrictions or other policy measures in response to the COVID-19 pandemic or any other public health crisis and may experience delays in their regulatory activities. If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process AVROBIO’s regulatory submissions, should AVROBIO resume development of its product candidates, which could have a material adverse effect on AVROBIO’s business. Further, future ~~profitability.~~shutdowns of other government agencies, such as the SEC, may also impact AVROBIO’s business through review of AVROBIO’s public filings and AVROBIO’s ability to access the public markets.

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

Given the nature of biologics manufacturing, there is a risk of contamination in ~~our~~AVROBIO’s manufacturing processes. ~~Any~~Should AVROBIO resume development of AVROBIO’s product candidates, any contamination could materially adversely affect ~~our~~AVROBIO’s ability to produce product candidates on schedule and could, therefore, harm ~~our~~AVROBIO’s results of operations and cause reputational damage.

Some of the materials required in ~~our~~AVROBIO’s manufacturing process are derived from biologic sources. Such materials are difficult to procure and may be subject to contamination or recall. A material shortage, contamination, recall or restriction on the use of biologically derived substances in the manufacture of ~~our~~AVROBIO’s product candidates could adversely impact or disrupt the commercial manufacturing or the production of clinical material, which could materially and adversely affect ~~our~~AVROBIO’s development timelines and ~~our~~AVROBIO’s business, financial condition, results of operations and prospects.

Risks ~~related~~Related to ~~our business operations~~AVROBIO’s Business Operations

~~Our~~AVROBIO’s gene therapy approach utilizes lentiviral vectors derived from viruses, which may be perceived as unsafe or may result in unforeseen adverse events. Negative public opinion and increased regulatory scrutiny of gene therapy and genetic research may damage public perception of ~~our~~AVROBIO’s product candidates or adversely affect ~~our~~AVROBIO’s ability to conduct ~~our~~AVROBIO’s business or obtain regulatory approvals for ~~our~~AVROBIO’s product ~~candidates.~~candidates, should AVROBIO resume their development.

Gene therapy remains a novel technology, with only a limited number of gene therapy products approved to date. Public perception may be influenced by claims that gene therapy is unsafe, and gene therapy may not gain the acceptance of the public or the medical community. In particular, ~~our~~AVROBIO’s success will depend upon physicians specializing in the treatment of those diseases that ~~our~~AVROBIO’s product candidates target prescribing treatments that involve the use of ~~our~~AVROBIO’s product candidates in lieu of, or in addition to, existing treatments they are already familiar with and for which greater clinical data may be available. More restrictive government regulations or negative public opinion would have a negative effect on ~~our~~AVROBIO’s business or financial condition and may delay or impair the development and commercialization of ~~our~~AVROBIO’s product candidates or demand for any products ~~we may develop.~~should AVROBIO resume development of its product candidates. For example, earlier gene therapy trials led to several well-publicized adverse events, including cases of leukemia, myelodysplastic syndromes and ~~death~~deaths seen in other trials using other vectors. Adverse events in ~~our~~AVROBIO’s clinical studies or discovered in long-term follow-up, even if not ultimately attributable to ~~our~~AVROBIO’s product candidates (such as the many adverse events that typically arise from the conditioning process), or adverse events in other ~~lentiviral~~ gene therapy trials, and the resulting publicity could result in a decline in AVROBIO’s stock price, increased governmental regulation, unfavorable public perception and, should AVROBIO resume development of its product candidates, potential regulatory delays in the testing or approval of ~~our~~AVROBIO’s potential product candidates, stricter labeling requirements for those product candidates that are approved and a decrease in demand for any such product candidates.

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

~~We are~~AVROBIO is highly dependent on principal members of ~~our~~AVROBIO’s executive team and key employees, ~~including our Chief Executive Officer, Chief Financial Officer, Head of Operations, Chief Science Officer, Chief Business Officer, and Chief Medical Officer,~~ the loss of whose services may adversely impact the achievement of ~~our~~AVROBIO’s objectives. While ~~we have~~AVROBIO has entered into employment agreements with each of ~~our~~AVROBIO’s executive officers, any of them could leave ~~our~~AVROBIO’s employment at any time, as all of ~~our~~AVROBIO’s employees are “at will” employees. ~~We do~~Following the resignation of AVROBIO’s former President and Chief Executive Officer, Geoff MacKay, on May 1, 2023, AVROBIO appointed its Chief Financial Officer, Erik Ostrowski, to serve in the additional roles of President and Interim Chief Executive Officer, effective on May 1, 2023. In July 2023, in connection with the determination to halt further development of AVROBIO’s programs and to conduct a comprehensive exploration of strategic alternatives, AVROBIO paused AVROBIO’s search for a permanent Chief Executive Officer. Accordingly, no assurance can be made as to when or whether AVROBIO will hire a permanent Chief Executive Officer. AVROBIO does not maintain “key person” insurance policies on the lives of these individuals or the lives of any of ~~our~~AVROBIO’s other employees. The loss of the services of one or more of ~~our~~

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AVROBIO’s current executive or key employees might impede the achievement of ~~our research, development~~AVROBIO’s ongoing business commitments and ~~commercialization~~strategic objectives. ~~Recruiting and retaining~~

Retaining other qualified employees, consultants and advisors for ~~our~~

AVROBIO’s business, including scientific and technical personnel, ~~will also be~~remains critical to ~~our~~AVROBIO’s success. AVROBIO implemented a reduction in force in January 2022 in connection with the deprioritization of AVROBIO’s Fabry disease program, and through the first half of 2022 AVROBIO continued to streamline employee headcount including senior management. In July 2023, in connection with the determination to halt further development of AVROBIO’s programs and to conduct a comprehensive exploration of strategic alternatives, AVROBIO implemented a reduction in force by approximately 50% across different areas. AVROBIO’s remaining workforce was further reduced by 11 employees in a workforce reduction implemented effective as of October 31, 2023, three employees in a workforce reduction implemented effective as of November 30, 2023, and five employees in a further workforce reduction implemented effective as of December 31, 2023. Reductions in force, management changes and program reprioritizations can have an adverse impact on employee morale. While AVROBIO believes AVROBIO’s relations with AVROBIO’s continuing employees to be good, there can be no assurance that AVROBIO can avoid retention challenges for skilled personnel as AVROBIO explores potential strategic alternatives. There is currently a shortage of skilled executives and other personnel in ~~our~~AVROBIO’s industry, which is likely to continue. As a result, competition for skilled personnel, including in gene therapy research and vector manufacturing, is intense and the turnover rate can be high. WeAVROBIO may not be able to ~~attract and~~ retain personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for individuals with similar skill sets. In addition, ~~failure~~AVROBIO’s ability to ~~succeed in preclinical or clinical trials may make it more challenging to recruit and~~ retain qualified ~~personnel.~~personnel could be impacted by other factors, such as remote or hybrid working arrangements, which could impact employees’ productivity and morale. In addition, in recent months, the market price of AVROBIO’s common stock has experienced significant downward pressure, resulting in “underwater” or “out-of-the-money” stock options for many of AVROBIO’s employees, thereby limiting the desired retentive effect that AVROBIO’s equity incentive program was intended to achieve. The inability to recruit, if necessary, or the loss of the services of any executive, key employee, skilled personnel, consultant or advisor may impede AVROBIO’s business objectives. Furthermore, AVROBIO may not realize, in full or in part, the ~~progress~~anticipated benefits, savings and improvements in AVROBIO’s cost structure from AVROBIO’s workforce reductions and restructuring efforts due to unforeseen difficulties, delays or unexpected costs. If AVROBIO is unable to realize the expected operational efficiencies and cost savings from the restructuring, AVROBIO’s operating results and financial condition would be adversely affected. AVROBIO’s restructuring plan may also be disruptive to AVROBIO’s operations, for example, AVROBIO’s reductions in force could yield unanticipated consequences, such as increased difficulties in implementing AVROBIO’s pursuit of ~~our research,~~strategic alternatives, including retention of AVROBIO’s remaining employees, attrition beyond AVROBIO’s reductions in force and employee litigation related to the reductions in force could be costly and prevent management from fully concentrating on the business.

Should AVROBIO resume development ~~and commercialization objectives.~~

~~We will~~of its product candidates, AVROBIO may need to expand ~~our~~or streamline AVROBIO’s operations and weAVROBIO may experience difficulties in managing ~~this growth,~~any such changes, which could disrupt ~~our~~AVROBIO’s operations.

AsShould AVROBIO resume development of ~~June 30, 2018, we had 34 full-time employees. As we mature, we expect~~its product candidates, AVROBIO may need to rapidly expand ~~our~~AVROBIO’s full-time employee base and to hire more consultants and contractors. ~~Our~~AVROBIO’s management may need to divert a disproportionate amount of its attention away from ~~our~~AVROBIO’s day-to-day activities and devote a substantial amount of time to managing these growth activities. WeAVROBIO may not be able to effectively manage the expansion of ~~our~~AVROBIO’s operations, which may result in weaknesses in ~~our~~AVROBIO’s infrastructure, operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining employees. ~~Our~~AVROBIO’s expected growth could require significant capital expenditures and may divert financial resources from other projects ~~such as the development of additional product candidates. If our~~if AVROBIO’s management is unable to effectively manage ~~our~~AVROBIO’s growth, ~~our~~AVROBIO’s expenses may increase more than expected, ~~our~~AVROBIO’s ability to generate and/or grow revenues could be reduced, and weAVROBIO may not be able to implement ~~our~~AVROBIO’s business strategy. ~~Our~~AVROBIO’s future financial performance and ~~our~~AVROBIO’s ability to commercialize product candidates and compete effectively will depend, in part, on ~~our~~AVROBIO’s ability to effectively manage any future growth.

~~If we are~~Conversely, headwinds in the overall economy and limited availability of suitable financing to meet AVROBIO’s needs could constrain AVROBIO’s ability to achieve AVROBIO’s growth objectives, and could in turn lead to further reductions in force or scaling back of business operations, that could impact employee morale and adversely impact AVROBIO’s ability to manage ongoing operations, should AVROBIO resume development of its product candidates.

Should AVROBIO resume development of its product candidates and AVROBIO is unable to manage expected growth in the scale and complexity of ~~our~~AVROBIO’s operations, ~~our~~AVROBIO’s performance may suffer.

~~If we are successful in executing our business strategy, we~~Should AVROBIO resume development of its product candidates, AVROBIO will need to expand ~~our~~AVROBIO’s managerial, operational, financial and other systems and resources to manage ~~our~~AVROBIO’s operations, ~~continue our~~resume AVROBIO’s research and

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development activities and, in the longer term, build a commercial infrastructure to support commercialization of any of ~~our~~AVROBIO’s product candidates that are approved for sale. Future growth would impose significant added responsibilities on members of management. It is likely that ~~our~~AVROBIO’s management, finance, development personnel, systems and facilities currently in place may not be adequate to support this future growth. ~~Our~~AVROBIO’s need to effectively manage ~~our~~AVROBIO’s operations, growth and product candidates requires that ~~we continue~~AVROBIO continues to develop more robust business processes and improve ~~our~~AVROBIO’s systems and procedures in each of these areas and to attract and retain sufficient numbers of talented employees. WeAVROBIO may be unable to successfully implement these tasks on a larger scale and, accordingly, may not achieve ~~our~~AVROBIO’s research, development and growth goals.

~~Our~~AVROBIO’s employees, principal investigators, consultants and commercial partners may engage in misconduct or other improper activities, includingnon-compliance with regulatory standards and requirements and insider trading.

~~We are~~AVROBIO is exposed to the risk of fraud or other misconduct by ~~our~~AVROBIO’s employees, principal investigators, consultants and commercial partners. Misconduct by these parties could include intentional failures to comply with the regulations of the FDA or of other foreign regulatory authorities, provide accurate information to the FDA and other foreign regulatory authorities, comply with healthcare fraud and abuse laws and regulations in the United States and abroad, report financial information or data accurately or disclose unauthorized activities to ~~us.~~AVROBIO. In particular, sales, marketing and business ~~arrangements~~conduct in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of healthcare professional interactions, drug pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Such misconduct could also involve the improper use of information obtained in the course of clinical studies, which could result in regulatory sanctions and cause serious harm to ~~our~~AVROBIO’s reputation. ~~We have~~AVROBIO has adopted a code of conduct applicable to all of ~~our~~AVROBIO’s employees, but it is not always possible to identify and deter employee misconduct, and the precautions ~~we take~~AVROBIO takes to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting usAVROBIO from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. If any such actions are instituted against ~~us,~~AVROBIO, and ~~we are~~AVROBIO is not successful in defending ~~ourselves~~itself or asserting ~~our~~AVROBIO’s rights, those actions could have a significant impact on ~~our~~AVROBIO’s business, including the imposition of significant fines or other sanctions.

~~We are~~AVROBIO is subject to certain U.S. and foreign anti-corruption, anti-money laundering, export control, sanctions, and other trade laws and regulations. WeAVROBIO can face serious consequences for violations.

Among other matters, U.S. and foreign anti-corruption, anti-money laundering, export control, sanctions, and other trade laws and regulations, which are collectively referred to as Trade Laws, prohibit companies and their employees, agents, clinical research organizations, legal counsel, accountants, consultants, contractors, and other partners from authorizing, promising, offering, providing, soliciting, or receiving directly or indirectly, corrupt or improper payments or anything else of value to or from recipients in the public or private sector. Violations of Trade Laws can result in substantial criminal fines and civil penalties, imprisonment, the loss of trade privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm, and other consequences. ~~We have~~

AVROBIO has direct or indirect interactions with officials and employees of government agencies or government-affiliated hospitals, universities, and other organizations. WeAVROBIO also ~~expect our~~expects, should AVROBIO resume development of its product candidates, that AVROBIO’s non-U.S. activities towould increase in time. ~~We plan~~Should AVROBIO resume development of its product candidates, AVROBIO would also expect to engage third parties for clinical trials and/or to obtain necessary permits, licenses, patent registrations, and other regulatory approvals and weAVROBIO can be held liable for the corrupt or other illegal activities of ~~our~~AVROBIO’s personnel, agents, or partners, even if ~~we do~~AVROBIO does not explicitly authorize or have prior knowledge of such activities. The failure to comply with laws governing international business practices may result in substantial civil and criminal penalties and suspension or debarment from government contracting. The ~~Securities and Exchange Commission, or~~ SEC also may suspend or bar issuers from trading securities on U.S. exchanges for violations of the United States Foreign Corrupt Practices Act’s accounting provisions.

~~We may be~~AVROBIO is subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, false claims laws health information privacy and security laws, and other health care laws and regulations. If ~~we are~~AVROBIO is unable to comply, or have not fully complied, with such laws, weAVROBIO could face substantial penalties.

~~If we obtain~~AVROBIO is subject, and may be increasingly subject if AVROBIO obtains FDA approval for any of ~~our~~AVROBIO’s product candidates, ~~and begin commercializing those products in the United States, our operations will be directly, or indirectly through our prescribers, customers and purchasers, subject~~ to various federal and state fraud and abuse laws and regulations, including, without limitation, the federal Health Care Program Anti-Kickback Statute, the federal civil and criminal ~~False Claims Act~~FCA and Physician Payments Sunshine Act and regulations. Please see the section titled “Business – Government Regulation – Other Healthcare Laws and Compliance Requirements” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

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These laws will impact, among other things, ~~our proposed~~AVROBIO’s clinical trial programs, healthcare professional interactions, grant making activities, and AVROBIO’s anticipated sales, marketing and medical educational programs. In addition, weAVROBIO may be subject to patient privacy laws by both the federal government and the states in which ~~we conduct our~~AVROBIO conducts AVROBIO’s business.

The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform. Federal and state enforcement bodies have recently increased their scrutiny of interactions between healthcare companies and healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry. Ensuring business arrangements comply with applicable healthcare laws, as well as responding to possible investigations by government authorities, can be time- and resource-consuming and can divert a company’s attention from the business.

The failure to comply with any of these laws or regulatory requirements subjects entities to possible legal or regulatory action. Depending on the circumstances, failure to meet applicable regulatory requirements can result in significant civil, criminal and administrative penalties, damages, fines, disgorgement, individual imprisonment, exclusion from participation in federal and state funded healthcare programs (such as Medicare and Medicaid), contractual damages and the curtailment or restructuring of AVROBIO’s operations, as well as additional reporting obligations and oversight if AVROBIO becomes subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws. Any action for violation of these laws, even if successfully defended, could cause a pharmaceutical manufacturer to incur significant legal expenses and divert management’s attention from the operation of the business. If any of the physicians or other healthcare providers or entities with whom AVROBIO expects to do business is found not to be in compliance with applicable laws, that ~~will affect our operations include, but are not limited to:~~

the federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from knowingly and willfully soliciting, receiving, offering or paying any remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce, or in return for, the purchase, lease, order, or recommendation of any good, facility, item or service for which payment may be made, in whole or in part, under a federal healthcare program, such as the Medicare and Medicaid programs. A person or entity ~~does~~may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs. Prohibitions or restrictions on personnel, sales or withdrawal of future marketed products could materially affect business in an adverse way.

Efforts to ensure that AVROBIO’s business arrangements will comply with applicable healthcare laws may involve substantial costs. It is possible that governmental and enforcement authorities will conclude that AVROBIO’s business practices may not ~~need~~comply with current or future statutes, regulations or case law interpreting applicable fraud and abuse or other healthcare laws and regulations. If any such actions are instituted against AVROBIO, and AVROBIO is not successful in defending itself or asserting AVROBIO’s rights, those actions could have a significant impact on AVROBIO’s business, including the imposition of civil, criminal and administrative penalties, damages, disgorgement, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of AVROBIO’s operations, any of which could adversely affect AVROBIO’s ability to ~~have actual knowledge~~operate AVROBIO’s business and AVROBIO’s results of ~~the federal Anti-Kickback Statute or specific intent to violate it to have committed a violation.~~operations. In addition, the ~~government may assert that a claim including items or services resulting from a violation~~approval and commercialization of any of AVROBIO’s candidates outside the United States will also likely subject AVROBIO to foreign equivalents of the healthcare laws mentioned above, among other foreign laws.

Failure to comply with health and data protection laws and regulations could lead to government enforcement actions (which could include civil or criminal penalties), private litigation, and/or adverse publicity and could negatively affect AVROBIO’s operating results and business.

AVROBIO and any potential collaborators may be subject to federal, ~~Anti-Kickback Statute constitutes a false or fraudulent claim for purposes~~state, and foreign data protection laws and regulations (i.e., laws and regulations that address privacy and data security). In the United States, numerous federal and state laws and regulations, including federal health information privacy laws, state data breach notification laws, state health information privacy laws, and federal and state consumer protection laws (e.g., Section 5 of the ~~federal False Claims Act~~Federal Trade Commission Act), that govern the collection, use, disclosure and protection of health-related and other personal information could apply to AVROBIO’s operations or ~~federal civil money penalties;~~

~~federal civil and criminal false claims laws and civil monetary penalty laws, such as~~ the ~~federal False Claims Act,~~operations of AVROBIO’s collaborators. In addition, AVROBIO may obtain health information from third parties (including research institutions from which impose criminal and civil penalties and authorize civil whistleblower or qui tam actions, against individuals or entities for, among other things: knowingly presenting, or causing to be presented, to the federal government, claims for paymentAVROBIO obtains clinical trial data) that are ~~false or fraudulent; making, using or causing~~subject to ~~be made or used, a false statement of record material to a false or fraudulent claim or obligation to pay or transmit money or property to the federal government; or knowingly concealing or knowingly~~privacy and ~~improperly avoiding or decreasing an obligation to pay money to the federal government;~~

the anti-inducement law, which prohibits, among other things, the offering or giving of remuneration, which includes, without limitation, any transfer of items or services for free or for less than fair market value (with limited exceptions), to a Medicare or Medicaid beneficiary that the person knows or should know is likely to influence the beneficiary’s selection of a particular supplier of items or services reimbursable by a federal or state governmental program;

~~the federal~~security requirements under Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created new federal criminal statutes that prohibit a person from knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private) and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters; similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation;

~~HIPAA,~~ as amended by ~~the~~ Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH. Depending on the facts and ~~their respective implementing regulations, which impose requirements on certain covered healthcare providers, health plans,~~circumstances, AVROBIO could be subject to civil, criminal, and ~~healthcare clearinghouses as well as their respective business associates that perform services for them that involve the~~administrative penalties if AVROBIO knowingly obtain, use, or ~~disclosure of,~~disclose individually identifiable health information ~~relating~~maintained by a HIPAA-covered entity in a manner that is not authorized or permitted by HIPAA.

Compliance with U.S. and international data protection laws and regulations could require AVROBIO to ~~the privacy, security~~take on more onerous obligations in AVROBIO’s contracts, restrict AVROBIO’s ability to collect, use and ~~transmission of individually identifiable health information;~~

~~the federal transparency requirements under the Affordable Care Act, including the provision commonly referred~~disclose data, or in some cases, impact AVROBIO’s ability to as the Physician Payments Sunshine Act, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program to report annually to the U.S. Department of Health and Human Services information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, as well as ownership and investment interests held by the physicians described above and their immediate family members;

~~federal government price reporting laws, which require us to calculate and report complex pricing metrics~~operate in ~~an accurate and timely manner to government programs; and~~

~~federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers~~

Additionally, we are subject to state and foreign equivalents of each of the healthcare laws described above, among others, some of which may be broader in scope and may apply regardless of the payer. Many U.S. states have adopted laws similar to the federal Anti-Kickback Statute, some of which apply to the referral of patients for healthcare services reimbursed by any source, not just governmental payers, including private insurers. In addition, some states have passed laws that require pharmaceutical companies to comply with the April 2003 Office of Inspector General Compliance Program Guidance for Pharmaceutical Manufacturers and/or the Pharmaceutical Research and Manufacturers of America’s Code on Interactions with Healthcare Professionals. Several states also impose other marketing restrictions or require pharmaceutical companies to make marketing or price disclosures to the state. There are ambiguities as to what is requiredcertain jurisdictions. Failure to comply with these ~~state requirements~~laws and ~~if we fail~~regulations could result in government enforcement actions (which could include civil, criminal and administrative penalties), private litigation, and/or adverse publicity and could negatively affect AVROBIO’s operating results and business. Moreover, clinical trial patients, employees and other individuals about whom AVROBIO or AVROBIO’s potential collaborators obtain personal information, as well as the providers who share this information with AVROBIO, may limit AVROBIO’s ability to collect, use and disclose the information. Claims that AVROBIO has violated individuals’ privacy rights, failed to comply with ~~an applicable state law requirement we~~data protection laws, or breached AVROBIO’s contractual obligations, even

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if AVROBIO is not found liable, could be expensive and time-consuming to defend and could result in adverse publicity that could harm AVROBIO’s business.

European data collection is governed by restrictive regulations governing the use, processing and cross-border transfer of personal information.

Should AVROBIO resume development of its product candidates, AVROBIO would expect to conduct clinical trials in the European Economic Area, or EEA, and the UK and as a result would be subject to ~~penalties. Finally, there are state~~additional privacy restrictions. The collection, use, disclosure, transfer or other processing of personal health data in the EU and ~~foreign~~the UK is governed by the provisions of the European Union General Data Protection Regulation, or GDPR (references to the GDPR include both the “EU GDPR” and “UK GDPR” unless specified otherwise). The GDPR is wide-ranging in scope and imposes numerous requirements on companies that process personal data, including requirements relating to ensuring a legal basis or condition applies to the processing of personal data, stricter requirements relating to the processing of sensitive data (such as health data), providing information to individuals regarding data processing activities, when necessary obtaining consent from individuals to whom the data processing relates, responding to additional data subject requests, imposing notification of personal data breaches to the competent national data protection authorities, implementing safeguards in connection with the security and confidentiality of the personal data, accountability requirements and taking certain measures when engaging third-party processors. The GDPR informs AVROBIO’s obligations with respect to any clinical trials conducted in the EEA or the UK. Its definition of personal data includes coded data, requires changes to informed consent practices and detailed notices for clinical trial subjects and investigators. In addition, the GDPR imposes strict rules on the transfer of personal data out of the EEA or the UK, including to the United States (see below). The GDPR also permits data protection authorities to require destruction of improperly gathered or used personal data and/or impose substantial fines for violations of the GDPR, which can be up to four percent of global revenues or 20 million Euros (£ 17.5 million for the UK), whichever is greater, and confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the GDPR. In addition, the GDPR provides that EEA member states or the UK may make their own further laws ~~governing~~and regulations limiting the ~~privacy and security~~processing of personal data, including genetic, biometric, or health ~~information, many~~data.

The GDPR prohibits cross-border data transfers of ~~which differ from each other in significant ways and often~~personal data to countries outside the EEA or the UK that are not ~~preempted~~considered by ~~HIPAA, thus complicating compliance efforts.~~

~~Because of~~ the ~~breadth of these laws~~European Commission and UK government as providing “adequate” protection to personal data, or third countries, including the United States in certain circumstances, unless a valid GDPR transfer mechanism (for example, the European Commission approved the Standard Contractual Clauses, or the SCCs, and the ~~narrowness~~UK International Data Transfer Agreement/Addendum, or the UK IDTA) has been put in place. Where relying on the SCCs/UK IDTA for data transfers, AVROBIO may also be required to carry out transfer impact assessments to assess whether the recipient is subject to local laws which allow public authority access to personal data. Further, the EU and United States have adopted its adequacy decision for the Framework, which entered into force on July 11, 2023. This Framework provides that the protection of personal data transferred between the ~~statutory exceptions~~EU and ~~safe harbors available, it~~the United States is ~~possible~~comparable to that ~~some of our business activities~~offered in the EU. This provides a further avenue to ensuring transfers to the United States are carried out in line with GDPR. There has been an extension to the Framework to cover UK transfers to the United States. The Framework could be ~~subject~~challenged like its predecessor frameworks. The international transfer obligations under the EEA and UK data protection regimes will require significant effort and cost, and may result in AVROBIO needing to ~~challenge under one~~ make strategic considerations around where EEA and UK personal data is located and which service providers AVROBIO can utilize for the processing of EEA and UK personal data.

AVROBIO has yet to adopt and implement comprehensive processes, systems and other relevant measures within AVROBIO’s organization, and/or ~~more~~with AVROBIO’s relevant collaborators, service providers, contractors or consultants, which are appropriate to address relevant requirements relating to international transfers of ~~such laws. If our~~personal data from Europe, and to minimize the potential impacts and risks resulting from those requirements, across AVROBIO’s organization. Failure to implement valid mechanisms for personal data transfers from Europe may result in AVROBIO’s facing increased exposure to regulatory actions, substantial fines and injunctions against processing personal data from Europe. Inability to export personal data may also: restrict AVROBIO’s activities outside Europe; limit AVROBIO’s ability to collaborate with partners as well as other service providers, contractors and other companies outside of Europe; and/or require AVROBIO to increase AVROBIO’s processing capabilities within Europe at significant expense or otherwise cause AVROBIO to change the geographical location or segregation of AVROBIO’s relevant systems and operations ~~are found to be in violation of~~– any ~~of the laws described above~~ or any other government regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from participation in government health care programs, such as Medicare and Medicaid, imprisonment and the curtailment or restructuring of our operations, anyall of which could adversely affect ~~our ability~~AVROBIO’s operations or financial results. Additionally, other countries outside of Europe have enacted or are considering enacting similar cross-border data transfer restrictions and laws requiring local data residency, which could increase the cost and complexity of delivering AVROBIO’s services and operating AVROBIO’s business. The type of challenges AVROBIO faces in Europe will likely also arise in other jurisdictions that adopt laws similar in construction to ~~operate our~~the GDPR or regulatory frameworks of equivalent complexity.

Although the UK is regarded as a third country under the EU GDPR, the European Commission has issued an adequacy decision recognizing the UK as providing adequate protection under the EU GDPR and, therefore, transfers of personal data

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originating in the EU to the UK remain unrestricted. Like the EU GDPR, the UK GDPR restricts personal data transfers outside the UK to countries not regarded by the UK as providing adequate protection. The UK government has confirmed that personal data transfers from the UK to the EU remain free flowing. The UK Government has also now introduced a Data Protection and Digital Information Bill, or the UK Bill, into the UK legislative process. The aim of the UK Bill is to reform the UK’s data protection regime following Brexit. If passed, the final version of the UK Bill may have the effect of further altering the similarities between the UK and EEA data protection regime and threaten the UK adequacy decision from the European Commission. The respective provisions and enforcement of the EU GDPR and UK GDPR may further diverge in the future and create additional regulatory challenges and uncertainties. This lack of clarity on future UK laws and regulations and their interaction with EU laws and regulations could add legal risk, complexity and cost to AVROBIO’s handling of personal data and AVROBIO’s privacy and data security compliance programs and could require AVROBIO to implement different compliance measures for the UK and the EEA.

Given the breadth and depth of its obligations, complying with the GDPR’s requirements is rigorous and time intensive and requires significant resources and assessment of AVROBIO’s technologies, systems and practices, as well as those of any third-party collaborators, service providers, contractors, or consultants that process or transfer personal data collected in the EEA or the UK. Compliance with the GDPR will be a rigorous and time-intensive process that may increase AVROBIO’s cost of doing business and ~~our results of operations.~~require AVROBIO to change AVROBIO’s business practices, and despite those efforts, there is a risk that AVROBIO may be subject to fines and penalties, litigation, and reputational harm in connection with European activities.

~~We face~~AVROBIO faces potential product liability, and, if successful claims are brought against ~~us, we~~AVROBIO, AVROBIO may incur substantial liability and costs. If the use of ~~our~~AVROBIO’s product candidates harms patients, or is perceived to harm patients even when such harm is unrelated to ~~our~~AVROBIO’s product candidates, ~~our~~AVROBIO’s regulatory approvals could be revoked or otherwise negatively impacted and weAVROBIO could be subject to costly and damaging product liability claims.

The use of ~~our~~AVROBIO’s product candidates including in clinical studies and, should AVROBIO resume the development of its product candidates, the future sale of any products for which weAVROBIO may obtain marketing approval, exposes usAVROBIO to the risk of product liability claims. Product liability claims might be brought against usAVROBIO by consumers, healthcare providers, pharmaceutical companies or others selling or otherwise coming into contact with ~~our~~AVROBIO’s products. There is a risk that ~~our~~AVROBIO’s product candidates may induce adverse events. If weAVROBIO cannot successfully defend against product liability claims, weAVROBIO could incur substantial liability and costs. In addition, regardless of merit or eventual outcome, product liability claims may result in:

•

the impairment of ~~our~~AVROBIO’s business reputation;

•

the withdrawal of clinical study participants;

•

costs due to related litigation;

•

the distraction of management’s attention from ~~our~~AVROBIO’s primary business;

•

substantial monetary awards to patients or other claimants;

•

the inability to commercialize ~~our~~AVROBIO’s product candidates; and

•

decreased demand for ~~our~~AVROBIO’s product candidates, if approved for commercial sale.

~~We carry~~AVROBIO carries master product liability insurance of $5.0 million per occurrence and $5.0 million in the ~~aggregate. We believe our~~aggregate in the United States. For studies conducted in certain countries outside the United States, AVROBIO maintains local admitted policies with varying limits. AVROBIO believes AVROBIO’s product liability insurance coverage is sufficient in light of ~~our~~AVROBIO’s current clinical programs; however, weAVROBIO may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect usAVROBIO against losses due to liability. If AVROBIO resume development of its product candidates and ~~when we~~thereafter obtain marketing approval for product candidates, ~~we intend to~~AVROBIO expects that AVROBIO would expand ~~our~~AVROBIO’s insurance coverage to include the sale of commercial products; however, weAVROBIO may be unable to obtain product liability insurance on commercially reasonable terms or in adequate amounts. On occasion, large judgments have been awarded in class action lawsuits based on drugs or medical treatments that had unanticipated adverse effects. A successful product liability claim or series of claims brought against usAVROBIO could cause ~~our~~AVROBIO’s stock price to decline and, if judgments exceed ~~our~~AVROBIO’s insurance coverage, could adversely affect ~~our~~AVROBIO’s results of operations and business.

Patients with the diseases targeted by certain of ~~our~~AVROBIO’s product candidates are often already in severe and advanced stages of disease and have both known and unknown significantpre-existing and potentially ~~life- threatening~~life-threatening health risks. During the course of treatment, patients may suffer adverse events, including death, for reasons that may be related to ~~our~~AVROBIO’s product candidates. Such events could subject usAVROBIO to costly litigation, require usAVROBIO to pay substantial amounts of money to injured patients,

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delay, negatively impact or end ~~our~~AVROBIO’s opportunity to receive or maintain regulatory approval to market ~~our~~AVROBIO’s products, or require usAVROBIO to suspend or abandon ~~our~~

AVROBIO’s commercialization efforts. Even in a circumstance in which ~~we do~~AVROBIO does not believe that an adverse event is related to ~~our~~AVROBIO’s products, the investigation into the circumstance may be time-consuming or inconclusive. These investigations may interrupt ~~our~~AVROBIO’s sales efforts, delay ~~our~~AVROBIO’s regulatory approval process in other countries, or impact and limit the type of regulatory approvals ~~our~~AVROBIO’s product candidates receive or maintain. As a result of these factors, a product liability claim, even if successfully defended, could have a material adverse effect on ~~our~~AVROBIO’s business, financial condition or results of operations.

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

~~We are~~AVROBIO is subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. ~~Our~~AVROBIO’s operations involve the use of hazardous and flammable materials, including chemicals and biological materials. ~~Our~~AVROBIO’s operations also produce hazardous waste products. WeAVROBIO generally ~~contract~~contracts with third parties for the disposal of these materials and wastes. WeAVROBIO cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from ~~our~~AVROBIO’s use of hazardous materials, weAVROBIO could be held liable for any resulting damages, and any liability could exceed ~~our~~AVROBIO’s resources. WeAVROBIO also could incur significant costs associated with civil or criminal fines and penalties. Furthermore, environmental laws and regulations are complex, change frequently and have tended to become more stringent. WeAVROBIO cannot predict the impact of such changes and cannot be certain of ~~our~~AVROBIO’s future compliance. In addition, weAVROBIO may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair ~~our~~AVROBIO’s research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.

Although ~~we maintain~~AVROBIO maintains workers’ compensation insurance to cover usAVROBIO for costs and expenses weAVROBIO may incur due to injuries to ~~our~~AVROBIO’s employees resulting from the use of hazardous materials or other work-related injuries, this insurance may not provide adequate coverage against potential liabilities. In addition, weAVROBIO may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair ~~our~~AVROBIO’s research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions or liabilities, which could materially adversely affect ~~our~~AVROBIO’s business, financial condition, results of operations and prospects.

~~Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations.~~

Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets. The recent global financial crisis caused extreme volatility and disruptions in the capital and credit markets. A severe or prolonged economic downturn, such as the recent global financial crisis, could result in a variety of risks to our business, including weakened demand for our product candidates and our ability to raise additional capital when needed on acceptable terms, if at all. A weak or declining economy could also strain our suppliers, possibly resulting in supply disruption, or cause delays in payments for our services by third-party payors or our collaborators. Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our business, financial condition, results of operations and prospects.

We or the third parties upon whom we depend may be adversely affected by earthquakes or other natural disasters and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster.

Earthquakes or other natural disasters could severely disrupt our operations, and have a material adverse effect on our business, results of operations, financial condition and prospects. If a natural disaster, power outage or other event occurred that prevented us from using all or a significant portion of our headquarters, that damaged critical infrastructure, such as the manufacturing facilities of our third-party contract manufacturers, or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible for us to continue our business for a substantial period of time. The disaster recovery and business continuity plans we have in place currently are limited and are unlikely to prove adequate in the event of a serious disaster or similar event. We may incur substantial expenses as a result of the limited nature of our disaster recovery and business continuity plans, which, particularly when taken together with our lack of earthquake insurance, could have a material adverse effect on our business, financial condition, results of operations and prospects.

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

Despite our security measures, our internal computer systems and those of our current and any future collaborators and other contractors or consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. For example, in 2017 we were subjected to a cyberattack by a third party, which led to the theft of a portion of our funds. We implemented remedial measures promptly following this breach and do not believe that this breach

had a material adverse effect on our business. However, if any cyberattack or data breach were to occur in the future and cause interruptions in our or our collaborators’, contractors’ or consultants’ operations, it could result in a material disruption of our development programs and our business operations, whether due to a loss of our trade secrets or other proprietary information or other similar disruptions. For example, the loss of clinical trial data from completed or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability, our competitive position could be harmed and the further development and commercialization of our product candidates could be delayed.

~~Comprehensive tax reform legislation could adversely affect our business and financial condition.~~

On December 22, 2017, President Trump signed into law the TCJA that significantly reforms the Internal Revenue Code of 1986, as amended, or the Code. The TCJA, among other things, contains significant changes to corporate taxation, including the reduction of the corporate tax rate from a top marginal rate of 35% to a flat rate of 21%, the limitation of the tax deduction for interest expense to 30% of adjusted earnings (except for certain small businesses), the limitation of the deduction for net operating losses to 80% of current year taxable income and the elimination of net operating loss carrybacks and modification or repeal of many business deductions and credits (including the reduction of the business tax credit for certain clinical testing expenses incurred in the testing of certain drugs for rare diseases or conditions generally referred to as “orphan drugs”). We continue to examine the impact this tax reform legislation may have on our business. However, the effect of the TCJA on our business, whether adverse or favorable, is uncertain, and may not become evident for some period of time. We urge investors to consult with their legal and tax advisers regarding the implications of the TCJA on an investment in our common stock.

WeAVROBIO might not be able to utilize a significant portion of ~~our~~AVROBIO’s net operating loss carryforwards and research and development tax credit carryforwards.

As of December 31, ~~2017, we~~2023 and 2022, AVROBIO had federal and state net operating loss carryforwards of ~~$19.0~~$575.9 million and ~~$18.9~~$657.0 million, respectively, and ~~state~~federal research and development tax credit carryforwards of approximately ~~$119,000.~~$6.4 million and $6.8 million, respectively. If not utilized, the net operating loss carryforwards and research and development credits will generally expire at various dates through ~~2037.~~2041 (other than federal net operating loss carryforwards generated in taxable years beginning after December 31, 2017, which are not subject to expiration and generally may not be carried back to prior taxable years except that net operating losses generated in 2018, 2019 and 2020 may be carried back five taxable years). These net operating loss and tax credit carryforwards could expire unused and be unavailable to offset future income tax liabilities. In addition, under Section 382 of the Internal Revenue Code, or the Code and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than ~~50%~~50 percentage point change, by value, in its equity ownership over a three-year period, the corporation’s ability to use itspre-change net operating loss carryforwards and otherpre-change tax attributes to offset its post-change income may be limited. WeAVROBIO may have experienced ownership changes in the past. WeAVROBIO may also experience ownership changes in the future as a result of subsequent shifts in ~~our~~AVROBIO’s stock ownership, ~~including our IPO,~~ some of which may be outside of ~~our~~AVROBIO’s control. In addition, the merger, if consummated, may also constitute an ownership change (within the meaning of Section 382 of the Code) which could eliminate or otherwise substantially limit AVROBIO’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes.

If an ownership change occurred or occurs and ~~our~~AVROBIO’s ability to use ~~our~~AVROBIO’s historical net operating loss and tax credit carryforwards is materially limited (or entirely eliminated), or if ~~our~~AVROBIO’s research and development carryforwards are adjusted, it would harm ~~our~~AVROBIO’s future operating results by effectively increasing ~~our~~AVROBIO’s future tax obligations. The reduction of the corporate tax rate under the TCJA may cause a reduction in the economic benefit of our net operating loss carryforwards and other deferred tax assets available to us. Under the TCJA,For taxable years beginning after December 31, 2020, deductions for federal net operating losses ~~generated~~arising in taxable years beginning after December 31, 2017 ~~will not be subject~~may only offset 80% of taxable income.

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Risks Related to ~~expiration.~~AVROBIO’s Intellectual Property

~~Risks related to our intellectual property~~

~~Third-party~~Should AVROBIO resume development of its product candidates, third-party claims of intellectual property infringement may prevent or delay ~~our~~AVROBIO’s development and commercialization efforts.

~~Our~~AVROBIO’s commercial success depends in part on avoiding infringement of the patents and proprietary rights of third parties. There is a substantial amount of litigation, both within and outside the United States, involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries, including patent infringement lawsuits, interferences, oppositions andinter ~~partes~~parties reexamination proceedings before the U.S. Patent and Trademark Office, or ~~U.S. PTO,~~USPTO, and corresponding foreign patent offices. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which ~~we are~~AVROBIO is pursuing development candidates. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that ~~our~~AVROBIO’s product candidates may be subject to claims of infringement of the patent rights of third parties.

Third parties may assert that weAVROBIO or ~~our~~AVROBIO’s licensors are employing their proprietary technology without authorization. There may be third-party patents or patent applications with claims to materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of ~~our~~AVROBIO’s product candidates. In particular, ~~we are~~AVROBIO is aware of issued patents in the United States that cover the lentiviral vectors used in the manufacture of ~~our~~AVROBIO’s product candidates. While ~~we believe~~AVROBIO believes that ~~we have~~AVROBIO has reasonable defenses against a claim of infringement, potentially including that certain of these patents are expected to expire prior to commercializing ~~our~~AVROBIO’s product candidates, if approved, in the United States, there can be no assurance that weAVROBIO will prevail in any such action by the holder of these patents. In the event that the holder of these patents seeks to enforce its patent rights and ~~our~~AVROBIO’s defenses against a claim of

infringement are unsuccessful, weAVROBIO may not be able to commercialize ~~our~~AVROBIO’s product candidates in the United States, if approved, without first obtaining a license to some or all of these patents, which may not be available on commercially reasonable terms or at all. In addition, the defense of any claim of infringement, even if successful, is time-consuming, expensive and diverts the attention of ~~our~~AVROBIO’s management from ~~our~~AVROBIO’s ongoing business operations.

Because patent applications can take many years to issue, there may be currently pending patent applications which may later result in issued patents that ~~our~~AVROBIO’s product candidates may infringe or be alleged to infringe. In addition, third parties may obtain patents in the future and claim that use of ~~our~~AVROBIO’s or ~~our~~AVROBIO’s licensors’ technologies infringes upon these patents. If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of any of ~~our~~AVROBIO’s product candidates, any molecules formed during the manufacturing process or any final product itself, the holders of any such patents may be able to block ~~our~~AVROBIO’s ability to commercialize such product candidate unless weAVROBIO obtained a license under the applicable patents, or until such patents expire.

Similarly, if any third-party patents were held by a court of competent jurisdiction to cover aspects of ~~our~~AVROBIO’s formulations, processes for manufacture or methods of use, including combination therapy, the holders of any such patents may be able to block ~~our~~AVROBIO’s ability to develop and commercialize the applicable product candidate unless weAVROBIO obtained a license or until such patent expires. In either case, such a license may not be available on commercially reasonable terms or at all.

Parties making claims against usAVROBIO may obtain injunctive or other equitable relief, which could effectively block ~~our~~AVROBIO’s ability to further develop and commercialize one or more of ~~our~~AVROBIO’s product candidates. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from ~~our~~AVROBIO’s business. In the event of a successful claim of infringement against ~~us, we~~AVROBIO, AVROBIO may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, pay royalties, redesign ~~our~~AVROBIO’s infringing products or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure. Even in the absence of a finding of infringement, weAVROBIO may choose to obtain a license, if such a license is available. A successful claim of patent or other intellectual property infringement against usAVROBIO could materially adversely affect ~~our~~AVROBIO’s business, results of operations and financial condition.

~~Our~~AVROBIO’s rights to develop and commercialize ~~our~~its product candidates, should AVROBIO resume development of its product candidates, are subject, in part, to the terms and conditions of licenses granted to usAVROBIO by others.

~~We depend~~AVROBIO depends upon the intellectual property rights granted to usAVROBIO under licenses from third parties that are important or necessary to the development of ~~our~~AVROBIO’s technology and products, including technology related to ~~our~~AVROBIO’s manufacturing process and ~~our~~AVROBIO’s gene therapy product candidates. In particular, ~~we have~~AVROBIO had in-licensed certain intellectual property rights andknow-how from the University Health Network, or UHN (relevant toAVR-RD-01 and ~~our~~AVROBIO’s Fabry ~~program)~~program, which AVROBIO deprioritized in January 2022) and affiliates of Lund University (relevant toAVR-RD-02 and ~~our~~AVROBIO’s Gaucher ~~program).~~type 1 and type 3 programs), and AVROBIO’s Fabry license agreement with UHN was terminated as of

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January 4, 2024. In addition, ~~we have~~AVROBIO has in-licensed patents and patent applications from BioMarin Pharmaceutical Inc., or ~~Biomarin~~BioMarin, (relevant toAVR-RD-03 and ~~our~~AVROBIO’s Pompe program)~~, and GenStem Therapeutics Inc., or GenStem (relevant toAVR-RD-04~~ ~~and our cystinosis program),~~ directed to compositions and methods related to the manufacture and use of~~AVR-RD-03~~ AVR-RD-03. AVROBIO also previously had in place in-licensed patent applications from The University of Manchester relevant to AVR-RD-05 and~~AVR-RD-04,~~ ~~respectively.~~ AVROBIO’s Hunter program, which license agreement was terminated as of September 8, 2023. Any termination of ~~these~~AVROBIO’s remaining licenses could result in the loss of significant rights and could harm or prevent ~~our~~AVROBIO’s ability to commercialize ~~our~~AVROBIO’s product candidates, should AVROBIO resume development of such product candidates.

Each of ~~our~~AVROBIO’s existing licenses with affiliates of Lund University and BioMarin are exclusive but are limited to particular fields, such as ~~Fabry disease,~~ Gaucher disease type 1, or Pompe disease, ~~or cystinosis,~~ and are subject to certain retained rights. Absent an amendment or additional agreement, weAVROBIO may not have the right to use intellectual propertyin-licensed for one of ~~our~~AVROBIO’s programs for another program. In addition, licenses that weAVROBIO may enter into in the future may not provide exclusive rights to use such intellectual property and technology in all relevant fields of use and in all territories in which weAVROBIO may wish to develop or commercialize ~~our~~AVROBIO’s technology and products in the future. As a result, weAVROBIO may not be able to prevent competitors from developing and commercializing competitive products in territories included in all of ~~our~~AVROBIO’s licenses. Licenses to additional third-party technology that may be required for ~~our~~AVROBIO’s development programs may not be available in the future or may not be available on commercially reasonable terms, or at all, which could have a material adverse effect on ~~our~~AVROBIO’s business and financial condition.

In some circumstances, weAVROBIO may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the patents, covering technology that ~~we license~~AVROBIO licenses from third parties. For example, pursuant to each of ~~our~~AVROBIO’s intellectual property licenses with ~~GenStem,~~ BioMarin, ~~and~~ the rights holders associated with Lund University, ~~our~~AVROBIO’s licensors retain control of such activities. Therefore, weAVROBIO cannot be certain that these patents and applications will be prosecuted, maintained and enforced in a manner consistent with the best interests of ~~our~~AVROBIO’s business. If ~~our~~AVROBIO’s licensors fail to maintain such patents, or lose rights to those patents or patent applications, the rights ~~we have~~AVROBIO has licensed may be reduced or eliminated and ~~our~~AVROBIO’s right to develop and commercialize any of ~~our~~AVROBIO’s products that are the subject of such licensed rights could be adversely affected.

~~Our~~AVROBIO’s current license agreements impose, and ~~we expect~~AVROBIO expects that future license agreements that weAVROBIO may enter into will impose, various obligations, including diligence and certain payment obligations. If ~~we fail~~AVROBIO fails to satisfy ~~our~~AVROBIO’s obligations, the licensor may have the right to terminate the agreement. Disputes may arise between usAVROBIO and any of ~~our~~AVROBIO’s licensors regarding intellectual property subject to

such agreements and other issues. Such disputes over intellectual property that ~~we have~~AVROBIO has licensed or the terms of ~~our~~AVROBIO’s license agreements may prevent or impair ~~our~~AVROBIO’s ability to maintain ~~our~~AVROBIO’s current arrangements on acceptable terms, or at all, or may impair the value of the arrangement to ~~us.~~AVROBIO. Any such dispute could have a material adverse effect on ~~our~~AVROBIO’s business. If weAVROBIO cannot maintain a necessary license agreement or if the agreement is terminated, weAVROBIO may be unable to successfully develop and commercialize the affected product candidates.

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

~~Our~~Should AVROBIO resume development of its product candidates, AVROBIO’s ability to compete effectively will depend, in part, on ~~our~~AVROBIO’s ability to maintain the proprietary nature of ~~our~~AVROBIO’s technology and manufacturing processes. ~~We rely~~AVROBIO relies on manufacturing and otherknow-how, patents, trade secrets, trademarks, license agreements and contractual provisions to establish ~~our~~AVROBIO’s intellectual property rights and protect ~~our~~AVROBIO’s products. These legal means, however, afford only limited protection and may not adequately protect ~~our~~AVROBIO’s rights. The failure to obtain, maintain, enforce or defend such intellectual property rights, for any reason, could allow third parties to make competing products or impact ~~our~~AVROBIO’s ability to develop, manufacture and market ~~our~~AVROBIO’s products, if approved, on a commercially viable basis, or at all, which could have a material adverse effect on ~~our~~AVROBIO’s financial condition and results of operations.

In particular, ~~we rely~~AVROBIO relies primarily on trade secrets,know-how and other unpatented technology, which are difficult to protect. Although ~~we seek~~AVROBIO seeks such protection in part by entering into confidentiality agreements with ~~our~~AVROBIO’s vendors, employees, consultants and others who may have access to proprietary information, weAVROBIO cannot be certain that these agreements will not be breached, adequate remedies for any breach would be available or ~~our~~AVROBIO’s trade secrets,know-how and other unpatented proprietary technology will not otherwise become known to or be independently developed by ~~our~~AVROBIO’s competitors. ~~If we are~~Should AVROBIO resume development of its product candidates and AVROBIO is unsuccessful in protecting ~~our~~

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AVROBIO’s intellectual property rights, sales of ~~our~~AVROBIO’s products may suffer and ~~our~~AVROBIO’s ability to generate revenue could be severely impacted.

~~Our~~AVROBIO’s licensors and ~~we have~~AVROBIO has sought, and ~~we intend~~AVROBIO intends to continue to seek to protect ~~our~~AVROBIO’s proprietary position by filing patent applications in the United States and, in at least some cases, one or more countries outside the United States related to ~~current and future~~ product candidates that are important to ~~our~~AVROBIO’s business. However, weAVROBIO cannot predict whether the patent applications weAVROBIO and ~~our~~AVROBIO’s licensors are currently pursuing will issue as patents, whether the claims of any issued patents will provide usAVROBIO with a competitive advantage, or whether weAVROBIO will be able to successfully pursue patent applications in the future related to ~~our current or future~~AVROBIO’s product candidates, should AVROBIO resume development of its product candidates. WeWhile AVROBIO has in-licensed patents and patent applications relevant to AVR-RD-03, AVROBIO currently ~~have~~has no owned or in-licensed patents or patent applications coveringAVR-RD-01 or~~AVR-RD-02,~~ ~~and the patent application that wein-licensed~~ ~~related toAVR-RD-04~~ ~~is at a very early stage. Many~~ AVR-RD-02. Some of ~~our~~AVROBIO’s product candidates arein-licensed from third parties. Accordingly, in some cases, the availability and scope of potential patent protection is limited based on prior decisions by ~~our~~AVROBIO’s licensors or the inventors, such as decisions on when to file patent applications or whether to file patent applications at all.

WeShould AVROBIO resume development of its product candidates, AVROBIO may not be able to protect ~~our~~AVROBIO’s intellectual property rights throughout the world.

Filing, prosecuting and defending patents on product candidates in all countries throughout the world would be prohibitively expensive, and ~~our~~AVROBIO’s intellectual property rights in some countries outside the United States could be less extensive than those in the United States. Although ~~our~~AVROBIO’s license agreements grant usAVROBIO worldwide rights, and ~~our~~AVROBIO’s currentlyin-licensed U.S. patent rights have certain corresponding foreign patents or patent applications, there can be no assurance that weAVROBIO will obtain or maintain such corresponding patents or patent applications with respect to any future license agreements. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States even in jurisdictions where weAVROBIO and ~~our~~AVROBIO’s licensors pursue patent protection. Consequently, weAVROBIO and ~~our~~AVROBIO’s licensors may not be able to prevent third parties from practicing ~~our~~AVROBIO’s inventions in all countries outside the United States, even in jurisdictions where weAVROBIO and ~~our~~AVROBIO’s licensors pursue patent protection, or from selling or importing products made using ~~our~~AVROBIO’s inventions in and into the United States or other jurisdictions. Competitors may use ~~our~~AVROBIO’s technologies in jurisdictions where weAVROBIO and ~~our~~AVROBIO’s licensors have not pursued and obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where ~~we have~~AVROBIO has patent protection, but enforcement is not as strong as that in the United States. These products may compete with ~~our~~AVROBIO’s product candidates and ~~our~~AVROBIO’s patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property protection, particularly those relating to biotechnology products, which could make it difficult for usAVROBIO to stop the infringement of ~~our~~AVROBIO’s patents or marketing of competing products in violation of ~~our~~AVROBIO’s proprietary rights generally. Proceedings to enforce ~~our~~AVROBIO’s patent rights, even if obtained, in foreign jurisdictions could result in substantial costs and divert ~~our~~AVROBIO’s efforts and attention from other aspects of ~~our~~AVROBIO’s business, could put ~~our~~AVROBIO’s patents at risk of being invalidated or interpreted narrowly and ~~our~~AVROBIO’s patent applications at risk of not issuing and could provoke third parties to assert claims against ~~us. We~~AVROBIO. AVROBIO may not prevail in any lawsuits that weAVROBIO initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, ~~our~~AVROBIO’s efforts to enforce ~~our~~AVROBIO’s intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that ~~we develop~~AVROBIO develops or ~~license.~~

licenses.

Issued patents covering ~~our~~AVROBIO’s product candidates could be found invalid or unenforceable if challenged in court. WeAVROBIO may not be able to protect ~~our~~AVROBIO’s trade secrets in court.

If one of ~~our~~AVROBIO’s licensing partners or weAVROBIO initiate legal proceedings against a third-party to enforce a patent covering one of ~~our~~AVROBIO’s product candidates, should such a patent issue, the defendant could counterclaim that the patent covering ~~our~~AVROBIO’s product candidate is invalid or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, written description ornon-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld information material to patentability from the ~~United States Patent and Trademark Office, or~~ USPTO, or made a misleading statement, during prosecution. Third parties also may raise similar claims before administrative bodies in the United States or abroad, even outside the context of litigation. Such mechanisms includere-examination, post grant review,inter ~~partes~~parties review and equivalent proceedings in foreign jurisdictions. Such proceedings could result

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in the revocation or cancellation of or amendment to ~~our~~AVROBIO’s patents in such a way that they no longer cover ~~our~~AVROBIO’s product candidates. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to the validity question, for example, weAVROBIO cannot be certain that there is no invalidating prior art, of which the patent examiner and weAVROBIO or ~~our~~AVROBIO’s licensing partners were unaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity or unenforceability, weAVROBIO could lose at least part, and perhaps all, of the patent protection on one or more of ~~our~~AVROBIO’s product candidates. Such a loss of patent protection could have a material adverse impact on ~~our~~AVROBIO’s business.

In addition to the protection afforded by patents, ~~we rely~~AVROBIO relies on trade secret protection and confidentiality agreements to protect proprietaryknow-how that is not patentable or that ~~we elect~~AVROBIO elects not to patent, processes for which patents are difficult to enforce and any other elements of ~~our~~AVROBIO’s product candidate discovery and development processes that involve proprietaryknow-how, information or technology that is not covered by patents. However, trade secrets can be difficult to protect and some courts inside and outside the United States are less willing or unwilling to protect trade secrets. ~~We seek~~AVROBIO seeks to protect ~~our~~AVROBIO’s proprietary technology and processes, in part, by entering into confidentiality agreements with ~~our~~AVROBIO’s employees, consultants, scientific advisors and contractors. WeAVROBIO cannot guarantee that ~~we have~~AVROBIO has entered into such agreements with each party that may have or have had access to ~~our~~AVROBIO’s trade secrets or proprietary technology and processes. WeAVROBIO also ~~seek~~seeks to preserve the integrity and confidentiality of ~~our~~AVROBIO’s data and trade secrets by maintaining physical security of ~~our~~AVROBIO’s premises and physical and electronic security of ~~our~~AVROBIO’s information technology systems. While ~~we have~~AVROBIO has confidence in these individuals, organizations and systems, agreements or security measures may be breached, and weAVROBIO may not have adequate remedies for any breach. In addition, ~~our~~AVROBIO’s trade secrets may otherwise become known or be independently discovered by competitors.

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

Certain of ~~our~~AVROBIO’s employees, consultants or advisors are currently, or were previously, employed at universities or other biotechnology or pharmaceutical companies, including ~~our~~AVROBIO’s competitors or potential competitors. Although ~~we try~~AVROBIO tries to ensure that ~~our~~AVROBIO’s employees, consultants and advisors do not use the proprietary information orknow-how of others in their work for ~~us, we~~AVROBIO, AVROBIO may be subject to claims that these individuals or ~~we have~~AVROBIO has used or disclosed intellectual property, including trade secrets or other proprietary information, of any such individual’s current or former employer. Litigation may be necessary to defend against these claims. If ~~we fail~~AVROBIO fails in defending any such claims, in addition to paying monetary damages, weAVROBIO may lose valuable intellectual property rights or personnel. Even if ~~we are~~AVROBIO is successful in defending against such claims, litigation could result in substantial costs and be a distraction to management. ~~Our~~AVROBIO’s licensors may face similar risks, which could have an adverse impact on intellectual property that is licensed to ~~us.~~AVROBIO.

In addition, while it is ~~our~~AVROBIO’s policy to require ~~our~~AVROBIO’s employees and contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to ~~us, we~~AVROBIO, AVROBIO may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that ~~we regard~~AVROBIO regards as ~~our~~AVROBIO’s own. The assignment of intellectual property rights may not be self-executing or the assignment agreements may be breached, and weAVROBIO may be forced to bring claims against third parties, or defend claims that they may bring against ~~us,~~AVROBIO, to determine the ownership of what ~~we regard~~AVROBIO regards as ~~our~~AVROBIO’s intellectual property.

WeAVROBIO may be subject to claims challenging the inventorship or ownership of the patents and other intellectual property that ~~we own~~AVROBIO owns or ~~license.~~licenses.

WeAVROBIO or ~~our~~AVROBIO’s licensors may be subject to claims that former employees, collaborators or other third parties have an ownership interest in the patents and intellectual property that ~~we own~~AVROBIO owns or ~~license~~licenses or that weAVROBIO may own or license in the future. While it is ~~our~~

AVROBIO’s policy to require ~~our~~AVROBIO’s employees and contractors who may be involved in the development of intellectual property to execute agreements assigning such intellectual property to ~~us, we~~AVROBIO, AVROBIO may be unsuccessful in executing such an agreement with each party who in fact develops intellectual property that ~~we regard~~AVROBIO regards as ~~our~~AVROBIO’s own; ~~our~~AVROBIO’s licensors may face similar obstacles. WeAVROBIO could be subject to ownership disputes arising, for example, from conflicting obligations of consultants or others who are involved in developing ~~our~~AVROBIO’s product candidates. Litigation may be necessary to defend against any claims challenging inventorship or ownership. If weAVROBIO or ~~our~~AVROBIO’s licensors fail in defending any such claims, weAVROBIO may have to pay monetary damages and may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, intellectual property, which could adversely impact ~~our~~AVROBIO’s business, results of operations and financial condition.

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(in thousands, except share and thus may be subject to federal regulations such as “marchin” rights, certain reporting requirements, and a preference for U.S. industry. Compliance with such regulations may limit our exclusive rights, and limit our ability to contract with nonU.S. manufacturers.per share data)

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

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

Changes in either the patent laws or the interpretation of the patent laws in the United States could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents. On September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law. The Leahy-Smith Act includes several significant changes to U.S. patent law. These include provisions that affect the way patent applications are prosecuted and also may affect patent litigation. These also include provisions that switched the United States from a~~“first-to-invent”~~ “first-to-invent” system to a~~“first-to-file”~~ “first-to-file” system, allow third-party submission of prior art to the USPTO during patent prosecution and set forth additional procedures to attack the validity of a patent by the USPTO administered post grant proceedings. Under afirst-to-file system, assuming the other requirements for patentability are met, the first inventor to file a patent application generally will be entitled to the patent on an invention regardless of whether another inventor had made the invention earlier. The USPTO developed new regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first to file provisions, only became effective on March 16, 2013. Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of ~~our~~AVROBIO’s business. However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of ~~our~~AVROBIO’s patent applications and the enforcement or defense of ~~our~~AVROBIO’s issued patents, all of which could have a material adverse effect on ~~our~~AVROBIO’s business, financial condition, results of operations and prospects.

The patent positions of companies engaged in the development and commercialization of biologics and pharmaceuticals are particularly uncertain. Two cases involving diagnostic method claims and “gene patents” ~~have recently been~~were decided this year by the Supreme Court of the United States, or Supreme Court. On March 20, 2012, the Supreme Court issued a decision in Mayo Collaborative

Services v. Prometheus Laboratories, Inc., or Prometheus, a case involving patent claims directed to a process of measuring a metabolic product in a patient to optimize a drug dosage for the patient. According to the Supreme Court, the addition of well-understood, routine or conventional activity such as “administering” or “determining” steps was not enough to transform an otherwise patent-ineligible natural phenomenon into patent-eligible subject matter. On July 3, 2012, the USPTO issued a guidance memo to patent examiners indicating that process claims directed to a law of nature, a natural phenomenon or a naturally occurring relation or correlation that do not include additional elements or steps that integrate the natural principle into the claimed invention such that the natural principle is practically applied and the claim amounts to significantly more than the natural principle itself should be rejected as directed to not patent-eligible subject matter. On June 13, 2013, the Supreme Court issued its decision in Association for Molecular Pathology v. Myriad Genetics, Inc., or Myriad, a case involving patent claims held by Myriad ~~Genetics, Inc.~~ relating to the breast cancer susceptibility genes BRCA1 and BRCA2. Myriad held that an isolated segment of naturally occurring DNA, such as the DNA constituting the BRCA1 and BRCA2 genes, is not patent-eligible subject matter, but that complementary DNA, which is an artificial construct that may be created from RNA transcripts of genes, may be patent-eligible. On March 4, 2014, the USPTO issued a guidance memorandum to patent examiners entitled 2014 Procedure For Subject Matter Eligibility Analysis Of Claims Reciting Or Involving Laws Of Nature/Natural Principles, Natural Phenomena, And/Or Natural Products. These guidelines instruct USPTO examiners on the ramifications of the Prometheus and Myriad rulings and apply the Myriad ruling to natural products and principles including all naturally occurring nucleic acids.

Certain claims of ~~our~~AVROBIO’s licensed patents and patent applications contain, and any future patents weAVROBIO may obtain may contain, claims that relate to specific recombinant DNA sequences that are naturally occurring at least in part and, therefore, could be the subject of future challenges made by third parties. In addition, the 2014 USPTO guidance could impact ~~our~~AVROBIO’s ability to pursue similar patent claims in patent applications weAVROBIO may prosecute in the future.

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

Moreover, although the Supreme Court has held in Myriad that isolated segments of naturally occurring DNA are not patent-eligible subject matter, certain third parties could allege that activities that weAVROBIO may undertake infringe other gene-related patent claims, and weAVROBIO may deem it necessary to defend ~~ourselves~~itself against these claims by assertingnon-infringement and/or invalidity positions, or paying to obtain a license to these claims. In any of the foregoing or in other situations involving third-party intellectual property rights, if ~~we are~~AVROBIO is unsuccessful in defending against claims of patent infringement, weAVROBIO could be forced to pay damages or be subjected to an injunction that would prevent usAVROBIO from utilizing the patented subject matter. Such outcomes could harm ~~our~~AVROBIO’s business, financial condition, results of operations or prospects.

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~~If we do~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

Should AVROBIO resume development of its product candidates and AVROBIO does not obtain patent term extension and data exclusivity for ~~our~~AVROBIO’s product candidates, ~~our~~AVROBIO’s business may be materially harmed.

Depending upon the timing, duration and specifics of any FDA marketing approval of ~~our~~AVROBIO’s product candidates, one or more U.S. patents that ~~we license~~AVROBIO licenses or may own or license in the future, if any, may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, or the Hatch-Waxman Amendments. The Hatch-Waxman Amendments permit a patent extension term of up to five years as compensation for patent term lost during the FDA regulatory review process. A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, only one patent may be extended and only those claims covering the approved drug, a method for using it or a method for manufacturing it may be extended. A patent may only be extended once and only based on a single approved product. However, weAVROBIO may not be granted an extension because of, for example, failing to exercise due diligence during the testing phase or regulatory review process, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents or otherwise failing to satisfy applicable requirements. Moreover, the applicable time period or the scope of patent protection afforded could be less than ~~we request.~~AVROBIO requests. If ~~we are~~AVROBIO is unable to obtain patent term extension or the term of any such extension is less than ~~we request, our~~AVROBIO requests, AVROBIO’s competitors may obtain approval of competing products following ~~our~~AVROBIO’s patent expiration, and ~~our~~AVROBIO’s revenue could be reduced, possibly materially. In addition, ~~we do~~AVROBIO does not control the efforts of ~~our~~AVROBIO’s licensors to obtain a patent term extension, and there can be no assurance that they will pursue or obtain such extensions to the patents that ~~we license~~AVROBIO licenses from them.

If ~~our~~AVROBIO’s trademarks and trade names are not adequately protected, then weAVROBIO may not be able to build name recognition in ~~our~~AVROBIO’s markets of interest and ~~our~~AVROBIO’s business may be adversely affected.

~~We currently do~~AVROBIO has registered the marks “AVROBIO” and “plato” with the USPTO and in certain other countries, but AVROBIO does not have trademarks or trademark applications with the USPTO for the ~~mark~~marks “AVRO” ~~and~~or the AVROBIO logo. In the future, even if ~~we apply~~AVROBIO applies for registration of these marks, there can be no assurance that such registration will be approved.

Once registered, ~~our~~AVROBIO’s trademarks or trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks. WeAVROBIO may not be able to protect ~~our~~AVROBIO’s rights to these trademarks and trade names, which ~~we need~~AVROBIO needs to build name recognition among potential partners or customers in ~~our~~AVROBIO’s markets of interest. At times, competitors may adopt trade names or trademarks similar to ~~ours,~~AVROBIO’s, thereby impeding ~~our~~AVROBIO’s ability to build brand identity and possibly leading to market confusion. In addition, there could be potential trade name or trademark infringement claims brought by owners of other registered trademarks or trademarks that incorporate variations of ~~our~~AVROBIO’s registered or unregistered trademarks or trade names. Over the long term, if ~~we are~~AVROBIO is unable to establish name recognition based on ~~our~~AVROBIO’s trademarks and trade names, then weAVROBIO may not be able to compete effectively and ~~our~~AVROBIO’s business may be adversely affected. ~~Our~~AVROBIO’s efforts to enforce or protect ~~our~~AVROBIO’s proprietary rights related to trademarks, trade secrets, domain names, copyrights or other intellectual property may be ineffective and could result in substantial costs and diversion of resources and could adversely impact ~~our~~AVROBIO’s financial condition or results of operations.

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

The degree of future protection afforded by ~~our~~AVROBIO’s intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect ~~our~~AVROBIO’s business or permit usAVROBIO to maintain ~~our~~AVROBIO’s competitive ~~advantage.~~advantage, should AVROBIO resume development of its product candidates. For example:

•

others may be able to make gene therapy products that are similar to ~~our~~AVROBIO’s product candidates but that are not covered by the claims of the patents that ~~we license~~AVROBIO licenses or may own or license in the future;

~~we, our~~•

AVROBIO, AVROBIO’s license partners or current or future collaborators, might not have been the first to make the inventions covered by the issued patents or pending patent applications that ~~we license~~AVROBIO licenses or may own or license in the future;

~~we, our~~•

AVROBIO, AVROBIO’s license partners or current or future collaborators, might not have been the first to file patent applications covering certain of ~~our~~AVROBIO’s or their inventions;

•

others may independently develop similar or alternative technologies or duplicate any of ~~our~~AVROBIO’s technologies without infringing ~~our~~AVROBIO’s owned or licensed intellectual property rights;

•

it is possible that ~~our~~AVROBIO’s pending licensed patent applications or those that weAVROBIO may own or license in the future will not lead to issued patents;

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

•

issued patents that ~~we hold~~AVROBIO holds rights to or may hold rights to in the future may be held invalid or unenforceable, including as a result of legal challenges by ~~our~~AVROBIO’s competitors;

•

one or more of ~~our~~AVROBIO’s product candidates may never be protected by patents;

~~our~~•

AVROBIO’s competitors might conduct research and development activities in countries where ~~we do~~AVROBIO does not have patent rights and then use the information learned from such activities to develop competitive products for sale in ~~our~~AVROBIO’s major commercial markets;

we•

AVROBIO may not develop additional proprietary technologies that are patentable;

•

the patents of others may have an adverse effect on ~~our~~AVROBIO’s business; and

we•

AVROBIO may choose not to file a patent application for certain trade secrets orknow-how, and a third party may subsequently file a patent application or obtain a patent covering such intellectual property.

Should any of these events occur, they could significantly harm ~~our~~AVROBIO’s business, financial condition, results of operations and prospects.

Risks ~~related~~Related to ~~ownership~~Ownership of ~~our common stock~~AVROBIO Common Stock

The market price of ~~our~~AVROBIO common stock may be highly volatile, and you may not be able to resell your shares at or above the ~~initial public offering price.~~price at which you purchased AVROBIO’s shares.

~~Our~~AVROBIO’s stock price is likely to be volatile. Since AVROBIO’s IPO in June 2018, through May 2, 2024, the trading price of AVROBIO common stock has ranged from $53.70 to $0.56. The stock market in general, and the market for biopharmaceutical companies in particular, has experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, you may not be able to sell your common stock at or above the price at which you purchased shares. The market price for ~~our~~AVROBIO common stock may be influenced by many factors, including:

•

the outcome of AVROBIO’s exploration of strategic alternatives;

•

adverse results or delays in preclinical studies or clinical trials;

•

reports of adverse events in other gene therapy products or clinical studies of such products;

•

an inability to obtain additional funding;

•

failure by usAVROBIO to successfully develop and commercialize ~~our~~AVROBIO’s product candidates;

•

failure by usAVROBIO to maintain ~~our~~AVROBIO’s existing strategic collaborations or enter into new collaborations;

•

failure by usAVROBIO or ~~our~~AVROBIO’s licensors and strategic partners to prosecute, maintain or enforce ~~our~~AVROBIO’s intellectual property rights;

•

changes in laws or regulations applicable to ~~future products;~~

AVROBIO’s product candidates;

•

an inability to obtain adequate product supply for ~~our~~AVROBIO’s product candidates or the inability to do so at acceptable prices;

•

adverse regulatory decisions;

•

the introduction of new products, services or technologies by ~~our~~AVROBIO’s competitors;

•

failure by usAVROBIO to meet or exceed financial projections weAVROBIO may provide to the public;

•

failure by usAVROBIO to meet or exceed the financial projections of the investment community;

•

the perception of the pharmaceutical industry by the public, legislatures, regulators and the investment community;

•

announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by ~~us, our~~AVROBIO, AVROBIO’s strategic ~~partner~~partners or ~~our~~AVROBIO’s competitors;

•

disputes or other developments relating to proprietary rights, including patents, litigation matters and ~~our~~AVROBIO’s ability to obtain patent protection for ~~our~~AVROBIO’s technologies;

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

•

additions or departures of key scientific or management personnel, or other skilled personnel;

•

significant lawsuits, including patent or stockholder litigation;

•

changes in the market valuations of similar companies;

•

sales of ~~our~~AVROBIO’s common stock by usAVROBIO or ~~our~~AVROBIO stockholders in the future; and

•

the trading volume of ~~our~~AVROBIO common stock.

In addition, companies trading in the stock market in general, and ~~The~~ Nasdaq ~~Global Select Market~~ in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may negatively affect the market price of ~~our~~AVROBIO common stock, regardless of ~~our~~AVROBIO’s actual operating performance.

WeAVROBIO could be subject to securities class action litigation.

In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for usAVROBIO because pharmaceutical companies have experienced significant stock price volatility in recent years. If ~~we face~~AVROBIO faces such litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm ~~our~~AVROBIO’s business.

An active trading market for ~~our~~AVROBIO’s common stock may not ~~develop.~~be sustained.

Prior to ~~our initial public offering~~AVROBIO’s IPO in June 2018, there had been no public market for ~~our~~AVROBIO common stock. Although ~~our~~AVROBIO common stock is listed on ~~The~~ Nasdaq, ~~Global Select Market,~~ an active trading market for ~~our~~AVROBIO’s shares may never ~~develop or~~ be sustained. If an active market for ~~our~~AVROBIO common stock ~~does not develop or~~ is not sustained, it may be difficult for you to sell shares you ~~purchase~~purchased without depressing the market price for the shares, or at all.

An inactive trading market may also impair ~~our~~AVROBIO’s ability to raise capital to continue to fund operations by selling additional shares and may impair ~~our~~AVROBIO’s ability to acquire other companies or technologies by using ~~our~~AVROBIO’s shares as consideration.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about ~~our~~AVROBIO’s business, ~~our~~AVROBIO’s share price and trading volume could decline.

The trading market for ~~our~~AVROBIO common stock will likely depend in part on the research and reports that securities or industry analysts publish about usAVROBIO or ~~our~~AVROBIO’s business. ~~We do~~AVROBIO does not have any control over these analysts. Although ~~we have~~AVROBIO has obtained research coverage from certain analysts, there can be no assurance, including during such time period that AVROBIO pursues potential strategic alternatives, that analysts will continue to cover usAVROBIO or provide favorable coverage. If one or more analysts downgrade ~~our~~AVROBIO’s stock or change their opinion of ~~our~~AVROBIO’s stock, ~~our~~AVROBIO’s share price would likely decline. In addition, if one or more analysts cease coverage of ~~our~~AVROBIO’s company or fail to regularly publish reports on ~~us, we~~AVROBIO, AVROBIO could lose visibility in the financial markets, which could cause ~~our~~AVROBIO’s share price or trading volume to decline.

Concentration of ownership of ~~our~~AVROBIO common stock among ~~our~~AVROBIO’s existing executive officers, directors and principal stockholders may prevent new investors from influencing significant corporate decisions.

Based on shares outstanding as of ~~June 30, 2018, our~~May 2, 2024, AVROBIO’s executive officers, directors, five percent stockholders and their affiliates beneficially owned approximately ~~62.22%~~38.3% of ~~our outstanding~~AVROBIO’s voting stock. As a result, if these stockholders were to act together, they would be able to ~~control~~significantly influence all matters submitted to ~~our~~AVROBIO stockholders for approval, as well as ~~our~~AVROBIO’s management and ~~affair.~~affairs. For example, these stockholders, acting together, may be able to ~~control~~influence elections of directors, amendments of ~~our~~AVROBIO’s organizational documents, or approval of any merger, sale of assets, or other major corporate transaction. This may prevent or discourage unsolicited acquisition proposals or offers for ~~our~~AVROBIO common stock that you may believe are in your best interest as one of ~~our~~AVROBIO stockholders. Some of these persons or entities may have interests different than yours. For example, because many of these stockholders purchased their shares at prices substantially below the current trading price of ~~our~~AVROBIO’s stock and have held their shares for a longer period, they may be more interested in selling ~~our~~AVROBIO’s company to an acquirer than other investors or they may want usAVROBIO to pursue strategies that deviate from the interests of other stockholders. Additionally, from time to time, any of AVROBIO’s non-affiliated stockholders may accumulate or acquire significant positions in AVROBIO common stock and may similarly be able to influence AVROBIO’s business or matters submitted to AVROBIO stockholders for approval.

AVROBIO, INC.

~~We are an “emerging growth~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

AVROBIO is a “smaller reporting company,” and the reduced disclosure requirements applicable to ~~emerging growth~~smaller reporting companies may make ~~our~~AVROBIO common ~~stock~~shares less attractive to investors.

~~We are an “emerging growth company,” or EGC,~~AVROBIO is a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements in its Annual Report on Form 10-K, and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation. To the ~~JOBS Act. We~~extent AVROBIO takes advantage of such reduced disclosure obligations, it may also make comparison of its financial statements with other public companies difficult or impossible. AVROBIO will remain ~~an EGC~~a smaller reporting company until ~~the earliest of: (i)~~ the last day of the fiscal year in which we have total annual gross revenues of $1.07 billion or more; (ii) the last day of the fiscal year following the fifth anniversary of the date of the completion of our initial public offering in June 2018; (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC, which means the first day of the year following the first year in which(i) the market value of ~~our~~its common ~~stock~~shares held by non-affiliates exceeds $250 million as of the end of that isyear’s second fiscal quarter, or (ii) its annual revenues exceeded $100 million during such completed fiscal year and the market value of its common shares held bynon-affiliates exceeds $700 million as of ~~June 30. For so long as we remain an EGC, we are permitted and intend to rely on exemptions from certain disclosure requirements~~the end of that ~~are applicable to other public companies that are not emerging growth companies. These exemptions include:~~year’s second fiscal quarter.

~~not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, or Section 404;~~

~~not being required to comply with any requirement that~~Investors may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;

being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s discussion and analysis of financial condition and results of operations” disclosure;

~~reduced disclosure obligations regarding executive compensation; and~~

~~an exemption from the requirement to seek nonbinding advisory votes on executive compensation or golden parachute arrangements.~~

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

~~In addition, the JOBS Act provides that an EGC may take advantage of an extended transition period for complying with new or revised accounting standards. This allows an EGC~~AVROBIO expects to ~~delay the adoption of certain accounting standards until those standards would otherwise apply~~continue to private companies. We have elected to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

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

As a public company, and particularly ~~after we are~~because AVROBIO is no longer an ~~EGC, we~~“emerging growth company” as defined in Regulation S-K, AVROBIO will incur significant legal, accounting and other expenses that weAVROBIO did not incur as a private company. In addition, the Sarbanes-Oxley Act of 2002 and rules subsequently implemented by the SEC and Nasdaq have imposed various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. ~~Our~~AVROBIO’s management and other personnel will ~~need~~continue to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations ~~will increase our~~have increased AVROBIO’s legal and financial compliance costs and will continue to make some activities more time-consuming and costly. For example, ~~we expect~~AVROBIO expects that these rules and regulations may make it more difficult and increasingly more expensive for usAVROBIO to obtain and maintain director and officer liability insurance.

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

If ~~we fail~~AVROBIO fails to maintain an effective system of internal control over financial reporting, weAVROBIO may not be able to accurately report ~~our~~AVROBIO’s financial results or prevent fraud. As a result, stockholders could lose confidence in ~~our~~AVROBIO’s financial and other public reporting, which would harm ~~our~~AVROBIO’s business and the trading price of ~~our~~AVROBIO’s common stock.

Effective internal ~~controls~~control over financial reporting ~~are~~is necessary for usAVROBIO to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause usAVROBIO to fail to meet ~~our~~AVROBIO’s reporting obligations. In addition, any testing by usAVROBIO conducted in connection with Section 404, or any subsequent testing by ~~our~~AVROBIO’s independent registered public accounting firm, may reveal deficiencies in ~~our~~AVROBIO’s internal ~~controls~~control over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to ~~our~~AVROBIO’s financial statements, or may identify other areas for further attention or improvement. Inferior internal controls could also cause investors to lose confidence in ~~our~~AVROBIO’s reported financial information, which could have a negative effect on the trading price of ~~our~~AVROBIO’s stock.

~~We will be~~AVROBIO is required to disclose changes made in ~~our~~AVROBIO’s internal controls and procedures on a quarterly basis and ~~our~~AVROBIO’s management ~~will be~~is required to assess the effectiveness of these controls annually. However, for as long as ~~we are an EGC, our~~AVROBIO is a smaller reporting company, AVROBIO’s independent registered public accounting firm will not be required to attest to the

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

effectiveness of ~~our~~AVROBIO’s internal ~~controls~~control over financial reporting pursuant to Section 404. ~~We could be an EGC for up to five years.~~AVROBIO will qualify as a smaller reporting company if the market value of AVROBIO’s common stock held by non-affiliates is below $250 million (or $700 million if AVROBIO’s annual revenue is less than $100 million) as of June 30 in any given year. An independent assessment of the effectiveness of ~~our~~AVROBIO’s internal ~~controls~~control over financial reporting could detect problems that ~~our~~AVROBIO’s management’s assessment might not. Undetected material weaknesses in ~~our~~AVROBIO’s internal ~~controls~~control over financial reporting could lead to financial statement restatements and require usAVROBIO to incur the expense of remediation.

~~We and our independent registered public accounting firm have identified material weaknesses in our internal control over financial reporting.~~ If ~~we are unable to remedy these~~AVROBIO experiences material weaknesses or ~~if we fail~~deficiencies in the future, or otherwise fails to establish and maintain effective internal controls, weAVROBIO may be unable to produce timely and accurate financial statements, and weAVROBIO may conclude that ~~our~~its internal control over financial reporting is not effective, which could adversely impact ~~our~~AVROBIO’s investors’ confidence and ~~our~~AVROBIO’s stock price.

In connection with the audit of our consolidated financial statements for the years ended December 31, 2016 and 2017, we and our independent registered public accounting firm identified material weaknesses in our internal control over financial reporting relatedAVROBIO expects to deficiencies in our controls over the financial statement close and cash disbursement processes. Specifically, there was a lack of controls over the identification and review of complex accounting issues involving significant judgment or estimates as well as the cutoff and classification of certain expenses between general and administrative and research and development. In addition, our internal controls related to the cash disbursements process were not adequately designed to identify unauthorized payment requests. Specifically, in 2017 we were subject to a cyberattack by a third party. This deficiency in our controls resulted in the theft of a portion of our funds.

~~We are implementing measures designed~~continue AVROBIO’s efforts to improve ~~our internal~~AVROBIO’s control ~~over financial reporting to remediate these material weaknesses, including formalizing our~~ processes, and internal control documentation and strengthening supervisory reviews by our financial management; hiring additional qualified accounting and finance personnel and engaging financial consultants to enable the implementation of internal control over financial reporting and segregating duties amongst accounting and finance personnel; and planning to implement certain accounting systems to automate manual processes, such as tracking and accounting for stock-based awards.

~~We expect to incur additional costs to remediate these control deficiencies,~~ though there can be no assurance that ~~our~~AVROBIO’s efforts will ultimately be successful or avoid potential ~~future~~ material ~~weaknesses.~~weaknesses, and AVROBIO expects to continue incurring additional costs as a result of these efforts. If ~~we are~~AVROBIO is unable to successfully remediate ~~our existing or~~ any ~~future~~ material weaknesses in ~~our~~AVROBIO’s internal control over financial reporting, ~~or if we identify any additional material weaknesses,~~ the accuracy and timing of ~~our~~AVROBIO’s financial reporting may be adversely affected, weAVROBIO may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in ~~our~~AVROBIO’s financial reporting, and ~~our~~AVROBIO’s stock price may decline as a result. WeAVROBIO also could become subject to investigations by Nasdaq, the ~~Securities and Exchange Commission, or~~ SEC or other regulatory authorities.

~~Our~~AVROBIO’s disclosure controls and procedures may not prevent or detect all errors or acts of fraud.

~~Our~~AVROBIO’s disclosure controls and procedures are designed to reasonably assure that information required to be disclosed by usAVROBIO in reports ~~we file~~AVROBIO files or ~~submit~~submits under the Exchange Act is accumulated and communicated to management, recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. ~~We believe~~AVROBIO believes that any disclosure controls and procedures or internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in ~~our~~AVROBIO’s control system, misstatements or insufficient disclosures due to error or fraud may occur and not be detected.

~~Significant sales of our total outstanding shares sold into the market in the future could cause the market price of our common stock to drop significantly.~~

Sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in the market that holders of a large number of shares intend to sell shares, could reduce the market price of our common stock. As of June 30, 2018, holders of an aggregate of approximately 15.3 million shares of our common stock will have rights, subject to certain conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders. In addition, 1,871,139 shares reserved for issuance upon the exercise of existing stock options outstanding as of June 30, 2018 under our equity incentive plans will become eligible for sale in the public market in the future, subject to certain legal and contractual limitations. We have registered all shares of common stock that we may issue under our equity compensation plans, which can be freely sold in the public market upon issuance, subject to volume limitations applicable to affiliates.

~~We do~~AVROBIO does not intend to pay dividends on ~~our~~AVROBIO common stock, so any returns will be limited to the value of ~~our~~AVROBIO’s stock.

~~We have~~AVROBIO has never declared or paid any cash dividends on ~~our~~AVROBIO common stock. WeAVROBIO currently ~~anticipate~~anticipates that weAVROBIO will retain future earnings for the development, operation and expansion of ~~our~~AVROBIO’s business and do not anticipate declaring or paying any cash dividends for the foreseeable future. Any return to stockholders will therefore be limited to the appreciation of their stock. For example, our loan and security agreement with Silicon Valley Bank restricts our ability to pay any dividends or making any distributions on account of our capital stock. As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future.

Provisions in ~~our amended~~AVROBIO’s charter and ~~restated certificate of incorporation andby-laws,~~bylaws, as well as provisions of Delaware law, could make it more difficult for a third party to acquire usAVROBIO or increase the cost of acquiring ~~us,~~AVROBIO, even if doing so would benefit ~~our~~AVROBIO stockholders or remove ~~our~~AVROBIO’s current management.

~~Our amended~~AVROBIO’s charter and ~~restated certificate of incorporation, amended and restatedby-laws~~bylaws and Delaware law contain provisions that may have the effect of delaying or preventing a change in control of usAVROBIO or changes in ~~our~~AVROBIO’s management. ~~Our amended~~AVROBIO’s charter and ~~restated certificate of incorporation andby-laws~~bylaws, include provisions that:

•

authorize “blank check” preferred stock, which could be issued by ~~our board of directors~~the AVROBIO Board without stockholder approval and may contain voting, liquidation, dividend and other rights superior to ~~our~~AVROBIO common stock;

•

create a classified board of directors whose members serve staggered three-year terms;

•

specify that special meetings of ~~our~~AVROBIO stockholders can be called only by ~~our board of directors,~~the AVROBIO Board, the chairperson of ~~our board of directors, our chief executive officer~~the AVROBIO Board, AVROBIO’s Chief Executive Officer or ~~our president;~~

AVROBIO’s President;

•

prohibit stockholder action by written consent;

•

establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of ~~our~~AVROBIO stockholders, including proposed nominations of persons for election to ~~our board of directors;~~

the AVROBIO Board;

•

provide that ~~our~~AVROBIO’s directors may be removed only for cause;

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

•

provide that vacancies on ~~our board of directors~~the AVROBIO Board may be filled only by a majority of directors then in office, even though less than a quorum;

•

specify that no stockholder is permitted to cumulate votes at any election of directors;

•

expressly authorize ~~our board of directors~~the AVROBIO Board to modify, alter or repeal ~~our~~AVROBIO’s amended and restatedby-laws; and

•

require supermajority votes of the holders of ~~our~~AVROBIO common stock to amend specified provisions of ~~our amended~~AVROBIO’s charter and ~~restated certificate of incorporation and amended and restatedby-laws.~~

bylaws.

These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in ~~our~~AVROBIO’s management.

In addition, because ~~we are~~AVROBIO is incorporated in Delaware, ~~we are~~AVROBIO is governed by the provisions of Section 203 of the Delaware General Corporation Law, or DGCL, which limits the ability of stockholders owning in excess of 15% of ~~our~~AVROBIO’s outstanding voting stock to merge or combine with ~~us.~~AVROBIO.

Any provision of ~~our~~AVROBIO’s amended and restated certificate of incorporation or amended and restatedby-laws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for ~~our~~AVROBIO stockholders to receive a premium for their shares of ~~our~~AVROBIO common stock, and could also affect the price that some investors are willing to pay for ~~our~~AVROBIO common stock.

~~Our amended and restated~~AVROBIO’s bylaws ~~limit the~~contain exclusive forum ~~for certain litigation that~~provisions, which may ~~be initiated by our stockholders, which could~~ limit ~~our stockholders’~~a stockholder’s ability to ~~obtain~~bring a ~~favorable~~claim in a judicial forum ~~for disputes~~it finds favorable and may discourage lawsuits with ~~us or our directors, officers or employees.~~respect to such claims.

~~Our~~AVROBIO’s amended and restated bylaws provide that, unless AVROBIO consents in writing to an alternative forum, the Court of Chancery of the State of Delaware iswill be the sole and exclusive forum for ~~(i)~~any state law claim for (1) any derivative action or proceeding brought on ~~our behalf, (ii)~~AVROBIO’s behalf; (2) any action asserting a claim of breach of or based on a fiduciary duty owed by any of ~~our~~AVROBIO’s current or former directors, officers or other ~~employee~~employees to usAVROBIO or ~~our stockholders, (iii)~~AVROBIO stockholders; (3) any action asserting a claim against usAVROBIO or any of ~~our~~AVROBIO’s current or former directors, officers, employees or stockholders arising pursuant to any provision of the ~~Delaware General Corporation Law, our~~DGCL, AVROBIO’s amended and restated certificate of incorporation or ~~bylaws~~AVROBIO’s amended and restated bylaws; or ~~(iv)~~(4) any action asserting a claim governed by the internal affairs ~~doctrine.~~doctrine, or the Delaware Forum Provision. The ~~choice~~Delaware Forum Provision will not apply to any causes of ~~forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us~~action arising under the Securities Act or ~~our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees. Alternatively, if a court were to find~~ the ~~choice of forum provision contained in our~~Exchange Act. AVROBIO’s amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions which could have an adverse effect on our business, financial condition or results of operations. In addition, our amended and restated bylaws contain a provision by virtue of whichfurther provide that, unless ~~we consent~~AVROBIO consents in writing to ~~the selection of~~ an alternative forum, the United States District Court for the District of Massachusetts will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities ~~Act. We have chosen~~Act, or the ~~United States Court for the District of Massachusetts~~Federal Forum Provision, as ~~the exclusive forum for such causes of action because our~~AVROBIO’s principal executive offices are located in Cambridge, Massachusetts. In addition, AVROBIO’s amended and restated bylaws provide that any person or entity purchasing or otherwise acquiring any interest in shares of AVROBIO’s capital stock is deemed to have notice of and consented to the foregoing Delaware Forum Provision and the Federal Forum Provision; provided, however, that stockholders cannot and will not be deemed to have waived AVROBIO’s compliance with the U.S. federal securities laws and the rules and regulations thereunder.

AVROBIO recognizes that the Delaware Forum Provision and the Federal Forum Provision may impose additional litigation costs on stockholders in pursuing any such claims, particularly if the stockholders do not reside in or near the State of Delaware or the Commonwealth of Massachusetts. Additionally, these forum selection clauses in AVROBIO’s amended and restated bylaws may limit AVROBIO stockholders’ ability to bring a claim in a judicial forum that they find favorable for disputes with AVROBIO or AVROBIO’s directors, officers or employees, which may discourage such lawsuits against AVROBIO and AVROBIO’s directors, officers and employees even though an action, if successful, might benefit AVROBIO stockholders. Section 22 of the Securities Act creates a concurrent jurisdiction for state and federal courts over all suits brought concerning a duty or liability created by the securities laws, rules and regulations thereunder. While the Delaware Supreme Court and other state courts have upheld the validity of federal forum selection provisions purporting to require claims under the Securities Act be brought in federal court, there is uncertainty as to whether other courts will enforce AVROBIO’s Federal Forum Provision. The ~~U.S.~~Federal Forum Provision may also impose additional litigation costs on stockholders who assert the provision is unenforceable, and if the Federal Forum Provision is found to be unenforceable, AVROBIO may incur additional costs with resolving such matters. The Court of Chancery of the State of Delaware and the United States District Court infor the District of Massachusetts may also reach different judgments or results than would other courts, including courts where a stockholder considering an action may be located or would otherwise choose to bring the action, and such judgments may be more or less favorable to usAVROBIO than ~~our~~AVROBIO stockholders.

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

AVROBIO’s failure to meet Nasdaq’s continued listing requirements could result in a delisting of AVROBIO common stock.

If AVROBIO fails to satisfy the continued listing requirements of Nasdaq, such as the corporate governance requirements or the requirement to maintain a minimum bid price of $1.00 per share pursuant to Nasdaq Listing Rule 5450(a)(1), or the Minimum Bid Price Requirement, Nasdaq may take steps to delist AVROBIO common stock.

On October 4, 2022, AVROBIO received a written notice from the staff, or the Staff, of Nasdaq’s Listing Qualifications Department, notifying AVROBIO that, for the 30 consecutive business day period between August 22, 2022 through October 3, 2022, AVROBIO common stock had not complied with the Minimum Bid Price Requirement. On February 23, 2023, AVROBIO received a written notice from the Staff notifying AVROBIO that for 10 consecutive business days, from February 8, 2023 to February 22, 2023, the closing bid price of AVROBIO common stock was at $1.00 per share or greater, and accordingly, the Staff advised AVROBIO that AVROBIO had regained compliance with the Minimum Bid Price Requirement.

On May 11, 2023, AVROBIO received a written notice from the Staff notifying AVROBIO that, for the 30 consecutive business day period between March 29, 2023 through May 10, 2023, AVROBIO common stock had not complied with the Minimum Bid Price Requirement. On June 12, 2023, AVROBIO received a written notice from the Staff notifying AVROBIO that for 14 consecutive business days, from May 22, 2023 to June 9, 2023, the closing bid price of AVROBIO common stock was at $1.00 per share or greater, and accordingly, the Staff advised AVROBIO that AVROBIO had regained compliance with the Minimum Bid Price Requirement.

While AVROBIO has regained compliance with the Minimum Bid Price Requirement as of the date hereof, AVROBIO can provide no assurance that AVROBIO will continue to remain in compliance with the Minimum Bid Price Requirement. If AVROBIO is unable to maintain compliance with any of Nasdaq’s continued listing requirements in the future, AVROBIO may be subject to delisting. At that time, AVROBIO may appeal the Staff’s delisting determination to a Nasdaq Hearing Panel. There can be no assurance that, if AVROBIO receives a delisting notice and appeal the delisting determination by the Staff to the Nasdaq Hearing Panel, such appeal would be successful.

Such a delisting would likely have a negative effect on the price of AVROBIO common stock and would impair your ability to sell or purchase AVROBIO common stock when you wish to do so. Any such delisting could also adversely impact AVROBIO’s ability to raise additional capital or enter into strategic transactions. Additionally, if AVROBIO common stock is not listed on, or becomes delisted from, Nasdaq for any reason, trading AVROBIO common stock could be conducted only in the over-the-counter, or OTC, market or on an electronic bulletin board established for unlisted securities such as the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, and the liquidity and price of AVROBIO common stock may be more limited than if AVROBIO was quoted or listed on Nasdaq or another national securities exchange. In such circumstances, you may be unable to sell your common stock unless a market can be established or sustained.

General Risk Factors

Unfavorable global economic conditions could adversely affect AVROBIO’s business, financial condition or results of operations.

AVROBIO’s results of operations could be adversely affected by general conditions in the global economy and in the global financial markets. For example, the COVID-19 pandemic has caused extreme volatility and disruptions in the capital and credit markets. In addition, ~~some companies~~Russia’s invasion of Ukraine and the evolving events in Israel and the Gaza Strip may lead to a prolonged, adverse impact on global economic, social and market conditions. A severe or prolonged economic downturn could result in a variety of risks to AVROBIO’s business, including weakened demand for AVROBIO’s product candidates and AVROBIO’s ability to raise additional capital when needed on acceptable terms, if at all. A weak or declining economy could also strain AVROBIO’s suppliers, possibly resulting in supply disruption, or cause delays in payments for AVROBIO’s services by third-party payors or AVROBIO’s collaborators. For example, while AVROBIO does not have any current operations in Ukraine, Russia, Israel or the Gaza Strip, AVROBIO does not know the extent to which continuing and evolving conflicts in such regions could impact any of AVROBIO’s current suppliers and their ability to provide AVROBIO with supplies and services. Any of the foregoing could harm AVROBIO’s business and AVROBIO cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact AVROBIO’s business, financial condition, results of operations and prospects.

AVROBIO or the third parties upon whom AVROBIO depends may be adversely affected by earthquakes or other natural disasters and AVROBIO’s business continuity and disaster recovery plans may not adequately protect AVROBIO from a serious disaster.

Earthquakes or other natural disasters could severely disrupt AVROBIO’s operations, and have a material adverse effect on AVROBIO’s business, results of operations, financial condition and prospects. If a natural disaster, power outage or other event occurred that prevented AVROBIO from using all or a significant portion of AVROBIO’s headquarters, that damaged critical infrastructure, such as the manufacturing facilities of AVROBIO’s third-party contract manufacturers, or that otherwise disrupted

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

operations, it may be difficult or, in certain cases, impossible for AVROBIO to continue its business for a substantial period of time. The disaster recovery and business continuity plans AVROBIO has in place currently are limited and are unlikely to prove adequate in the event of a serious disaster or similar event. AVROBIO may incur substantial expenses as a result of the limited nature of its disaster recovery and business continuity plans, which, particularly when taken together with AVROBIO’s lack of earthquake insurance, could have ~~adopted similar federal district court forum selection provisions~~a material adverse effect on AVROBIO’s business, financial condition, results of operations and prospects.

AVROBIO’s internal computer systems, or those of AVROBIO’s collaborators or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of AVROBIO’s business operations or, if AVROBIO resumes development of its product candidates, AVROBIO’s product development programs.

Despite AVROBIO’s security measures, AVROBIO’s internal computer systems and those of its current and any future collaborators and other contractors or consultants are ~~currently~~vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. For example, in 2017 AVROBIO was subjected to a cyberattack by a third party, which led to the theft of a portion of AVROBIO’s funds. AVROBIO implemented remedial measures promptly following this breach and does not believe that this breach had a material adverse effect on its business. In addition, in February 2019, one of AVROBIO’s vendors was subject to a ~~suit~~cyberattack by a third party, which resulted in the ~~Court~~payment by AVROBIO of ~~Chancery~~a fraudulent invoice. AVROBIO has implemented remedial measures following this breach and does not believe that this breach had a material effect on its business. However, if any cyberattack or data breach were to occur in the future and cause interruptions in AVROBIO’s or its collaborators’, contractors’ or consultants’ operations, it could result in a material disruption of AVROBIO’s business operations or, if AVROBIO resumes development of its product candidates, its product development programs, whether due to a loss of AVROBIO’s business data, trade secrets or other proprietary information or other similar disruptions. For example, the ~~State~~loss of ~~Delaware brought~~clinical trial data from completed or future clinical trials could result in delays in AVROBIO’s regulatory approval efforts and significantly increase AVROBIO’s costs to recover or reproduce the data. Should AVROBIO resume development of its product candidates. To the extent that any disruption or security breach were to result in a loss of, or damage to, AVROBIO’s data or applications, or inappropriate disclosure of confidential or proprietary information, AVROBIO could incur liability, its competitive position could be harmed and the development and commercialization of AVROBIO’s product candidates, should AVROBIO resume their development, could be delayed.

Changes in tax law could adversely affect AVROBIO’s business and financial condition.

The rules dealing with U.S. federal, state, and local income taxation are constantly under review by ~~stockholders who assert that~~persons involved in the ~~federal district court forum selection provision is not enforceable. We recognize that~~legislative process and by the ~~federal district court forum selection clause~~IRS and the U.S. Treasury Department. Changes to tax laws (which changes may ~~impose additional litigation costs~~have retroactive application) could adversely affect AVROBIO or holders of AVROBIO common stock. In recent years, many such changes have been made and changes are likely to continue to occur in the future. Future changes in tax laws could have a material adverse effect on ~~stockholders who assert~~AVROBIO’s business, cash flow, financial condition or results of operations. AVROBIO urges investors to consult with their legal and tax advisers regarding the ~~provision is not enforceable and may impose more general additional litigation costs~~implications of potential changes in ~~pursuing any such claims, particularly if the stockholders do not reside~~tax laws on an investment in ~~or near the Commonwealth of Massachusetts.~~AVROBIO common stock.

~~Item 2.~~

Item 2. Unregistered Sales ~~of Equity Securities and Use of Proceeds.~~

~~On June 25, 2018, we completed our initial public offering~~ of ~~6,035,151 shares~~Equity Securities and Use of our common stock at a price of $19.00 per share for an aggregate offering price of approximately $114.7 million, including the full exercise of the underwriters’ option to purchase additional shares. Morgan Stanley & Co. LLC, Cowen and Company, LLC, Wells Fargo Securities, LLC and Wedbush Securities Inc. served as the underwriters of the IPO. The offer and sale of all of the shares in the offering were registered under the Securities Act pursuant to a registration statement on Form S-1 (File Nos. 333-225213 and 333-225764), which became effective on June 20, 2018.Proceeds.

We received aggregate net proceeds from the offering of approximately $104.2 million, after deducting underwriting discounts and commissions, as well as other offering expenses. There has been no material change in our planned use of the net proceeds from the offering as described in the final prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act.

Not applicable.

~~Item 3.~~

~~Defaults Upon Senior Securities.~~

Item 3. Defaults Upon Senior Securities.

Not ~~Applicable~~applicable.

~~Item 4.~~

~~Mine Safety Disclosures.~~

Item 4. Mine Safety Disclosures.

Not ~~Applicable.~~applicable.

~~Item 5.~~

~~Other Information.~~

~~None~~Item 5. Other Information.

None of our directors or “officers,” as defined in Rule 16a-1(f) under the Securities Act, adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement, as defined in Item 408(c) or Regulation S-K, during the quarter ended March 31, 2024.

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

~~Item 6.~~

~~Exhibits.~~

Item 6. Exhibits.


Exhibit Number		Description
~~Exhibit~~ ~~Number~~		~~Description~~
3.1
~~3.1~~		Fourth Amended and Restated Certificate of Incorporation of the Registrant (filed as Exhibit 3.1 to our Current Report onForm 8-K filed on ~~June~~June 25, 2018 (File No. 001-38537) and incorporated herein by reference).

3.2		Certificate of Change of Registered Agent and/or Registered Office of the Registrant (filed as Exhibit 3.2 to our Quarterly Report on Form 10-Q filed on November 5, 2020 (File No. 001-38537) and incorporated herein by reference).

3.3		Amended and RestatedBy-laws of the Registrant (filed as Exhibit 3.2 to our Current Report onForm 8-K filed on June 25, 2018 (File No. 001-38537) and incorporated herein by reference).

~~10.1~~ 31.1		~~Amended and Restated Employment Agreement by and between the Registrant and Geoff MacKay (filed as Exhibit 10.9 to our Registration Statement on FormS-1/A~~ ~~filed on June 11, 2018 and incorporated herein by reference).~~

~~10.2~~		~~Amended and Restated Employment Agreement by and between the Registrant and Nerissa Kreher, M.D. (filed as Exhibit 10.10 to our Registration Statement on FormS-1/A~~ ~~filed on June 11, 2018 and incorporated herein by reference).~~

~~10.3~~		~~Amended and Restated Employment Agreement by and between the Registrant and Katina Dorton (filed as Exhibit 10.11 to our Registration Statement on FormS-1/A~~ ~~filed on June 11, 2018 and incorporated herein by reference).~~

~~10.4~~		~~Form of Indemnification Agreement (filed as Exhibit 10.4 to our Registration Statement on FormS-1/A~~ ~~filed on June 11, 2018 and incorporated herein by reference).~~

~~10.5~~		~~2018 Stock Option and Incentive Plan and forms of award agreements thereunder (filed as Exhibit 10.2 to our Registration Statement on FormS-1/A~~ ~~filed on June 11, 2018 and incorporated herein by reference).~~

~~10.6~~		~~Senior Executive Cash Incentive Bonus Plan (filed as Exhibit 10.3 to our Registration Statement on FormS-1/A~~ ~~filed on June 11, 2018 and incorporated herein by reference).~~

~~10.7~~		~~2018 Employee Stock Purchase Plan (filed as Exhibit 10.14 to our Registration Statement on FormS-1/A~~ ~~filed on June 11, 2018 and incorporated herein by reference).~~

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

~~31.2~~ 32.1*		~~Certification of Principal Financial Officer Pursuant to Rules13a-14(a)~~ ~~and15d-14(a)~~ ~~under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

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

101.INS		~~XBRL Instance Document~~ Interactive Data Files pursuant to Rule 405 of Regulation S-T formatted in Inline Extensible Business Reporting Language (“Inline XBRL”).

101.SCH		Inline XBRL Taxonomy Extension Schema Document With Embedded Linkbase Documents.

~~101.CAL~~ 104		Cover Page Interactive Data File (formatted as Inline XBRL ~~Taxonomy Extension Calculation Linkbase Document~~

~~101.DEF~~		~~XBRL Taxonomy Extension Definition Linkbase Document~~

~~101.LAB~~		~~XBRL Taxonomy Extension Label Linkbase Document~~

~~101.PRE~~		~~XBRL Taxonomy Extension Presentation Linkbase Document~~with applicable taxonomy extension information contained in Exhibits 101.*).

*	~~Indicates the exhibit is being furnished, not filed, with this report.~~

* Indicates the exhibit is being furnished, not filed, with this report.

~~SIGNATURES~~84

AVROBIO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on

its behalf by the undersigned thereunto duly authorized.


				AVROBIO, INC.

~~Date: August 9, 2018~~			~~By:~~	~~/s/ Geoff MacKay~~
				~~Geoff MacKay~~
Date: May 9, 2024	By:	/s/ Erik Ostrowski
		Erik Ostrowski
		President, Interim Chief Executive Officer, ~~and Principal Executive Officer~~

~~Date: August 9, 2018~~			~~By:~~	~~/s/ Katina Dorton~~
				~~Katina Dorton~~
				Chief Financial Officer and Treasurer (Principal Executive, Financial, and Accounting ~~Officer~~Officer)

7085


	June 30, 2018			December 31, 2017
Assets
Current assets:
Cash and cash equivalents	$	155,015		$	5,963
Prepaid expenses and other current assets		1,132			345

Total current assets		156,147			6,308
Property and equipment, net		2,050			349
Other assets		533			365

Total assets	$	158,730		$	7,022

Liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)
Current liabilities:
Accounts payable	$	4,193		$	527
Accrued expenses and other current liabilities		5,438			2,098

Total current liabilities		9,631			2,625
Warrant to purchase redeemable convertible preferred stock		—			35
Derivative liability		—			371
Deferred rent, net of current portion		781			126
Other long-term liability		—			500

Total liabilities		10,412			3,657

Commitments and contingencies (Note 13)
Redeemable convertible preferred stock (Note 8)		—			26,500
Stockholders’ equity (deficit):
Common stock, $0.0001 par value; 150,000,000 and 51,000,000 shares authorized as of June 30, 2018 and December 31, 2017, respectively; 23,936,838 and 2,581,474 shares issued as of June 30, 2018 and December 31, 2017, respectively; 23,722,049 and 2,305,173 shares outstanding as of June 30, 2018 and December 31, 2017, respectively		2			—
Additionalpaid-in capital		192,443			339
Accumulated deficit		(44,127	)		(23,474	)

Total stockholders’ equity (deficit)		148,318			(23,135	)

Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)	$	158,730		$	7,022


	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Operating expenses:
Research and development	$	7,407		$	1,881		$	13,054		$	3,315
General and administrative		2,140			661			4,281			1,271

Total operating expenses		9,547			2,542			17,335			4,586

Loss from operations		(9,547	)		(2,542	)		(17,335	)		(4,586	)

Other income (expense):
Interest income		234			11			392			15
Change in fair value of preferred stock warrant liability		(150	)		—			(162	)		—
Change in fair value of derivative liability		(1,042	)		(3	)		(1,629	)		(35	)
Other expense		(2	)		—			(15	)		(5	)

Total other income (expense), net		(960	)		8			(1,414	)		(25	)

Net loss	$	(10,507	)	$	(2,534	)	$	(18,749	)	$	(4,611	)

Comprehensive loss	$	(10,507	)	$	(2,534	)	$	(18,749	)	$	(4,611	)

Reconciliation of net loss to net loss attributable to common stockholders:
Net loss	$	(10,507	)	$	(2,534	)	$	(18,749	)	$	(4,611	)
Accretion of issuance costs on redeemable convertible preferred stock		—			—			(2,243	)		(47	)

Net loss attributable to common stockholders—basic and diluted	$	(10,507	)	$	(2,534	)	$	(20,992	)	$	(4,658	)

Net loss per share attributable to common stockholders — basic and diluted (Note 12)	$	(2.98	)	$	(1.15	)	$	(7.16	)	$	(2.12	)

Weighted-average number of common shares used in computing net loss per share attributable to common stockholders—basic and diluted		3,529,269			2,202,735			2,930,358			2,192,283


	Six Months Ended June 30,
	2018			2017
Cash flows from operating activities:
Net loss	$	(18,749	)	$	(4,611	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		566			64
Depreciation and amortization expense		66			15
Impairment loss of property and equipment		235			—
Amortization of deferred offering costs		22			2
Deferred rent expense		(23	)		135
Change in fair value of preferred stock warrant liability		162			—
Change in fair value of derivative liability		1,629			35
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(768	)		(176	)
Other assets		(300	)		(3	)
Accounts payable		3,029			(545	)
Accrued expenses and other current liabilities		(98	)		626

Net cash used in operating activities		(14,229	)		(4,458	)

Cash flows from investing activities:
Change in restricted cash		24			—
Purchases of property and equipment		(424	)		(62	)

Net cash used in investing activities		(400	)		(62	)

Cash flows from financing activities:
Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs		58,258			3,468
Payments of issuance costs on debt facility		—			(32	)
Proceeds from issuance of common shares upon completion of initial public offering, net of offering costs		105,423			—

Net cash provided by financing activities		163,681			3,436

Net increase (decrease) in cash and cash equivalents		149,052			(1,084	)
Cash and cash equivalents at beginning of period		5,963			5,357

Cash and cash equivalents at end of period	$	155,015		$	4,273

Supplemental disclosure ofnon-cash investing and financing activities:
Purchases of property and equipment included in accounts payable	$	756		$	240
Purchases of property and equipment paid for by landlord	$	842		$	—
Deferred offering costs included in accrued expenses	$	1,241		$	11
Accretion of issuance costs related to redeemable convertible preferred stock	$	2,240		$	47
Issuance of warrants associated with debt facility	$	—		$	18
Property and equipment held for sale	$	19		$	—


	Warrant Liability
Balance as of December 31, 2017	$	35
Change in fair value		162
Conversion of preferred stock warrant to common stock warrant		(197	)
Balance as of June 30, 2018	$	—


	Derivative Liability
Balance as of December 31, 2017	$	371
Change in fair value		1,629
Transferred to accrued expenses		(2,000	)

Balance as of June 30, 2018	$	—


	June 30, 2018		December 31, 2017
Prepaid development costs	$	762	$	163
Prepaid rent		76		122
Other current assets		294		60

	$	1,132	$	345


	June 30, 2018			December 31, 2017
Laboratory and office equipment	$	926		$	126
Leasehold improvements		1,112			240
Computer equipment and software		83			28

		2,121			394
Less: Accumulated depreciation and amortization		(71	)		(45	)

	$	2,050		$	349


	June 30, 2018		December 31, 2017
Dilution payment (Note 3)	$	2,000	$	—
Compensation and benefit costs		846		794
Short-term deferred rent		171		9
Research and development costs		753		831
IPO issuance cost		693		—
Property and equipment		667		—
Other liabilities		308		464

	$	5,438	$	2,098


	December 31, 2017
	Preferred Shares Authorize		Preferred Shares Issued and Outstanding		Carrying Value		Liquidation Preference		Common Stock Issuable Upon Conversion
Series Seed preferred stock		3,333,333		3,333,333	$	1,500,000	$	1,500,000		806,711
Series A preferred stock		31,639,202		31,450,499		25,000,000		25,000,000		7,611,438

		34,972,535		34,783,832	$	26,500,000	$	26,500,000		8,418,149


	June 30, 2018		December 31, 2017
Shares reserved for Series Seed Preferred Stock outstanding		—		806,711
Shares reserved for Series A Preferred Stock outstanding		—		7,611,438
Shares reserved for issuance under the 2018 Stock Option and Incentive Plan		533,911		—
Shares reserved for issuance under the 2018 Employee Stock Purchase Plan		223,200		—
Shares reserved for vesting of restricted stock awards		214,789		276,301
Shares reserved for exercise of outstanding stock options		1,871,139		1,034,961
Shares reserved for issuance under the 2015 Stock Option and Grant Plan		—		143,717

Total shares of authorized common stock reserved for future issuance		2,843,039		9,873,128


	Six Months Ended June 30,
	2018			2017
Expected option life (years)		6.06			6.08
Risk-free interest rate		2.73	%		1.90	%
Expected volatility		83.86	%		85.50	%
Expected dividend yield		—	%		—	%


	Number of Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding as of December 31, 2017		1,034,961	$	0.78		8.94	$	3,427
Granted		836,178	$	6.38		9.74
Exercised		—
Cancelled or forfeited		—

Outstanding as of June 30, 2018		1,871,139	$	3.29		9.02	$	47,228

Exercisable as of June 30, 2018		309,594	$	0.72		8.13	$	8,619
Unvested as of June 30, 2018		1,559,125	$	3.80		9.20	$	38,609


	Number of Shares			Weighted-Average Grant Date Fair Value
Issued and unvested as of December 31, 2017		276,301		$	0.42
Vested		(61,512	)		0.42
Forfeited, canceled or expired		—			—

Issued an unvested as of June 30, 2018		214,789			0.42


	March 31, 2024
2024	$	224
2025		—
2026		—
2027		—
Thereafter		—
Total lease payments	$	224
Less: interest		—
Present value of lease liabilities	$	224


	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
	(in thousands)
Fabry	$	2,519	$	864	$	4,407	$	1,251
Gaucher		1,579		174		2,434		265
AML		—		—		46		166
Cystinosis		129		—		277		—
Pompe		237		—		384		—
Unallocated research and development expenses		2,943		843		5,506		1,633

Total research and development expenses	$	7,407	$	1,881	$	13,054	$	3,315