Financial Performance - Net loss for the three months ended March 31, 2024, was $15,221,000, compared to a net loss of $14,445,000 for the same period in 2023, indicating an increase in loss of about 5.4%[6] - The company reported a comprehensive loss of $15,271,000 for the three months ended March 31, 2024, compared to a comprehensive loss of $14,445,000 for the same period in 2023, reflecting an increase of about 5.7%[6] - The total net loss attributable to common stockholders was $15,221,000, compared to a net loss of $14,445,000 for the same period in 2023, representing an increase of approximately 5.4%[81] Assets and Liabilities - Total current assets decreased from $30,884,000 as of December 31, 2023, to $20,558,000 as of March 31, 2024, representing a decline of approximately 33.5%[3] - Total liabilities increased from $43,408,000 as of December 31, 2023, to $50,102,000 as of March 31, 2024, an increase of about 15.3%[3] - Total stockholders' deficit increased from $84,636,000 as of December 31, 2023, to $99,574,000 as of March 31, 2024, an increase of about 17.6%[3] - Cash and cash equivalents decreased from $28,769,000 as of December 31, 2023, to $18,748,000 as of March 31, 2024, a reduction of approximately 34.9%[3] - Cash and cash equivalents decreased to $19.3 million as of March 31, 2024, down from $25.5 million at the end of 2023, representing a decrease of approximately 24%[12] - The aggregate liquidation preference of convertible preferred stock remained at $87,459,000 as of March 31, 2024, consistent with December 31, 2023[3] Research and Development - Research and development expenses for the three months ended March 31, 2024, were $10,818,000, down from $12,985,000 for the same period in 2023, a decrease of approximately 16.8%[6] - The company expects to continue incurring operating losses and negative cash flows as it develops its product candidates[16] - The company’s proprietary GEODe™ platform is currently in development, focusing on therapeutic proteins and antibodies targeting GPCRs[14] - The company anticipates needing to raise additional capital to fund its operations as it continues its research and development efforts[16] Cash Flow and Operating Activities - The company utilized $9.3 million in cash from operating activities during the first quarter of 2024, an improvement from $10.8 million used in the same period of 2023[12] - The Company paid $381,000 in operating cash flows for operating leases during the three months ended March 31, 2024, compared to $370,000 in the same period of 2023[53] Equity and Stock - The weighted-average common shares outstanding increased from 2,222,800 for the three months ended March 31, 2023, to 2,608,740 for the same period in 2024, an increase of approximately 17.3%[6] - The Company has issued a total of 6,825,483 shares of Preferred Stock with a carrying value of $80,627,000 as of March 31, 2024[57] - The Company has authorized the issuance of up to 11,947,558 shares of common stock, with 2,637,120 shares issued and outstanding as of March 31, 2024[67] - The 2019 Equity Incentive Plan allows for the issuance of up to 1,991,264 shares of common stock, with stock options being the only equity awards issued to date[68] - The total stock-based compensation expense for the three months ended March 31, 2024, was $321,000, up from $275,000 in 2023, indicating a year-over-year increase of approximately 16.7%[77] Mergers and Acquisitions - The company completed a merger with AVROBIO, Inc. on June 20, 2024, receiving $77.3 million in cash and completing the sale of $96.6 million in common stock[16] - The company entered into a merger agreement with AVROBIO on January 30, 2024, with the merger closing on June 20, 2024, treating AVROBIO as the acquired company for financial reporting purposes[91] - Concurrently with the merger, certain investors purchased 7,790,889 shares of the company's common stock for an aggregate purchase price of approximately $96.6 million[92] Fair Value and Liabilities - The company incurred a change in the fair value of SAFE liabilities amounting to a loss of $2,075,000 for the three months ended March 31, 2024[6] - As of March 31, 2024, the SAFE liabilities were valued at $32.59 million, up from $30.52 million as of December 31, 2023, reflecting a fair value adjustment of $2.08 million[31] - The fair value of the SAFEs issued in October 2023 was recognized at $10.4 million, with subsequent measurement resulting in total SAFE liabilities fair value of $32.6 million recorded in the statement of operations[87] Commitments and Expenses - The Company has commitments for annual maintenance fees and royalty payments under its agreements with Harvard and Alloy Therapeutics, which may total in the low seven digits annually[42][46] - The Company has a remaining installment of $56,668 due to Harvard in July 2024 as part of a license agreement[42] - Total lease costs for the three months ended March 31, 2024, amounted to $921,000, an increase of 4.3% compared to $883,000 for the same period in 2023[52] Depreciation and Fair Value Adjustments - Depreciation expense for the three months ended March 31, 2024, was $0.3 million, compared to $0.2 million for the same period in 2023[36] - The company recorded a change in the fair value of SAFE liabilities amounting to $2.1 million for the first quarter of 2024[12] Tax Assets - The company has maintained a full valuation allowance against its net deferred tax assets as of March 31, 2024, due to cumulative net losses and the likelihood of not realizing the benefits of these assets[79]

Group 1 - Avrobio is preparing for a merger with Tectonic Therapeutic, which is set to take place today after investor approval [1] - A one-for-12 reverse stock split will occur after market close today, with shares trading on a split-adjusted basis starting tomorrow [2] - The stock ticker will change from AVRO to TECX following the merger, with Tectonic Therapeutic becoming a wholly-owned subsidiary of Avrobio [2] Group 2 - AVRO stock experienced slight increases in the morning, but there were reports of a significant drop in pre-market trading, possibly due to merger and reverse stock split plans [2]

Financial Performance - The company has incurred a net loss of $6.8 million for the three months ended March 31, 2024, compared to a net loss of $25.0 million for the same period in 2023, resulting in an accumulated deficit of $484.1 million as of March 31, 2024[112]. - Net loss for the three months ended March 31, 2024, was $6.8 million, compared to a net loss of $25.0 million for the same period in 2023, an improvement of $18.2 million[129]. - Interest income increased to $1.1 million for the three months ended March 31, 2024, from $0.3 million for the same period in 2023, an increase of $0.8 million[132]. - Cash and cash equivalents as of March 31, 2024, were $90.5 million[140]. - Net cash used in operating activities was $7.6 million for the three months ended March 31, 2024, compared to $20.3 million for the same period in 2023[143]. Research and Development - Research and development expenses totaled $683,000 for the three months ended March 31, 2024, significantly down from $17.3 million for the same period in 2023[120]. - Research and development expenses decreased by approximately $16.7 million to $0.7 million for the three months ended March 31, 2024, from $17.3 million for the same period in 2023[130]. - The company has terminated all treatment-related and long-term follow-up clinical studies for its Gaucher disease and Fabry disease programs, and discontinued its Hunter syndrome gene therapy program[107]. - The company expects substantial increases in expenses if product development resumes, particularly for preclinical activities and clinical trials[146]. - The establishment of a sales, marketing, and distribution infrastructure is necessary for the commercialization of product candidates[147]. Strategic Plans and Mergers - The company plans to halt development of its gene therapy programs and explore strategic alternatives, including potential mergers or acquisitions[106]. - A merger agreement has been entered into with Tectonic, with certain investors agreeing to purchase shares at a price of $12.39908 per share, totaling approximately $130.7 million in private financings[108]. - The merger is subject to approval by stockholders and is conditioned upon receiving cash proceeds of not less than $114.5 million[109]. - Future operations are highly dependent on the success of the merger, with no assurances that it will be consummated[110]. Funding and Expenses - The company has received gross cash proceeds of $428.1 million from sales of common stock through its IPO and follow-on offerings, and $87.5 million from the sale of its cystinosis gene therapy program[111]. - The company has not generated any product revenue since its inception in 2015 and relies on external funding to support operations[111]. - The company anticipates an increase in general and administrative expenses as it resumes development of product candidates and increases headcount[125]. - General and administrative expenses were $7.3 million for the three months ended March 31, 2024, compared to $7.9 million for the same period in 2023, a decrease of $0.6 million[131]. - Total operating expenses decreased by $17.3 million to $7.9 million for the three months ended March 31, 2024, from $25.2 million for the same period in 2023[129]. Currency and Financial Risk - The company recognized foreign currency transaction losses of $13, and $28 for the three months ended March 31, 2024, and 2023, respectively[154]. - A 10% change in the exchange rate between the U.S. dollar and other currencies is not expected to materially impact the financial position or results of operations[154]. - The company may finance cash needs through equity offerings, debt financings, and collaboration agreements, which could involve relinquishing valuable rights[148]. - The company has not entered into any foreign currency hedging contracts to mitigate exposure to foreign currency exchange risk[155]. Operational Considerations - Additional personnel will need to be hired and retained to support clinical, medical, and commercial operations[147]. - The company may need to delay or limit product development if additional funds are not raised when needed[148]. - There were no material changes to the company's critical accounting policies during the three months ended March 31, 2024[150].

Merger and Ownership Structure - AVROBIO securityholders are expected to own approximately 22.3% of the combined company, while former Tectonic securityholders are expected to own approximately 39.8%[61]. - The merger agreement includes an exchange ratio based on AVROBIO's net cash at closing, anticipated to be between $65.0 million and $75.0 million[61]. - If AVROBIO's net cash is below $65.0 million, the exchange ratio will be adjusted, resulting in a smaller ownership percentage for AVROBIO stockholders[61]. - The merger cannot be consummated without the approval of certain proposals by AVROBIO stockholders[63]. - Following the merger, AVROBIO stockholders are expected to own approximately 22.3% of the combined company, while former Tectonic stockholders are expected to own approximately 39.8%[67]. - AVROBIO anticipates its net cash at closing will be between $65.0 million and $75.0 million, with ownership percentages based on an assumption of $65.0 million[67]. - If the merger is not completed, AVROBIO may be required to pay Tectonic a termination fee of $2,712,500, or Tectonic may owe AVROBIO $4,900,000[67]. - The completion of the merger is subject to various conditions, including approval from both AVROBIO and Tectonic stockholders[75]. Financial Performance and Capital Requirements - AVROBIO incurred a net loss of $105.9 million for the year ended December 31, 2022, and a net income (loss) of $12.2 million for the year ended December 31, 2023[78]. - AVROBIO has received a cash payment of $87.5 million from Novartis for the sale of its cystinosis gene therapy program, which has allowed the company to pay off all outstanding amounts under its Term Loan Agreement[78]. - The combined company may need to raise additional capital, potentially causing significant dilution to existing shareholders[64]. - AVROBIO's future capital requirements will depend on various factors, including the costs associated with drug discovery, clinical trials, and potential regulatory reviews[82]. - The company may need additional funding to resume development of its product candidates, which may not be available on acceptable terms[82]. - AVROBIO's exploration of strategic alternatives may involve entering into acquisitions or mergers, which could result in dilution for existing stockholders[83]. Strategic Alternatives and Operational Focus - In July 2023, AVROBIO announced a comprehensive exploration of strategic alternatives to maximize stockholder value, including a proposed merger with Tectonic announced in January 2024[79]. - AVROBIO's management and employees are currently focused on the merger, which may divert attention from day-to-day operations[74]. - The company has halted further development of its programs and conducted reductions in force while evaluating strategic alternatives[82]. - AVROBIO's cash conservation activities may lead to unintended consequences, including employee attrition and reduced morale[78]. - The company has implemented workforce reductions to conserve capital expenditures, but may not realize the anticipated savings or operational efficiencies from these restructuring efforts[87]. Clinical Development and Regulatory Challenges - AVROBIO's clinical development has been halted, and the commercially-scalable plato platform has been used in only two clinical trials[96]. - The company has limited experience in preparing and submitting regulatory filings, having never completed a pivotal or registrational clinical trial[92]. - The regulatory approval process for AVROBIO's novel product candidates may be more expensive and time-consuming compared to other therapies, with limited prior approvals in the HSC gene therapy space[90]. - AVROBIO's ability to conduct clinical trials may be impacted by changes in hospital policies, government regulations, and disruptions in third-party services[89]. - The company may face significant delays in resuming clinical trials due to challenges in patient enrollment, particularly for rare diseases[94]. Intellectual Property and Competitive Landscape - AVROBIO's ability to compete effectively depends on maintaining proprietary technology and manufacturing processes[129]. - The company may face substantial litigation expenses and resource diversion if claims of patent infringement arise[128]. - AVROBIO's reliance on trade secrets and confidentiality agreements poses risks, as these can be difficult to enforce[129]. - Changes in U.S. patent law, particularly the Leahy-Smith America Invents Act, could increase uncertainties and costs related to patent applications and enforcement, potentially adversely affecting AVROBIO's business[130]. - AVROBIO's ability to protect its intellectual property may be compromised if it cannot secure patent term extensions or data exclusivity for its product candidates, which could lead to reduced revenue[132]. Market and Economic Conditions - The market price of AVROBIO common stock is subject to significant fluctuations, particularly in the context of the merger's completion[66]. - AVROBIO's stock price may decline if the market assumes the merger will not be completed[73]. - The company is subject to provisions in its charter and bylaws that could delay or prevent a change in control, including the authorization of "blank check" preferred stock and a classified board of directors[138]. - AVROBIO's financial condition could be adversely affected by unfavorable global economic conditions, including the impacts of the COVID-19 pandemic and geopolitical events[141]. - The company has faced cybersecurity threats in the past, including a cyberattack in 2017 that led to the theft of funds, which could disrupt operations if similar incidents occur in the future[141]. Compliance and Regulatory Risks - AVROBIO is subject to various U.S. and foreign healthcare laws, and non-compliance could result in substantial penalties and reputational harm[120]. - Compliance with data protection laws, including GDPR, is critical, as violations could result in fines up to 4% of global revenues or €20 million[122]. - The company may need to enhance its business processes and systems to support future growth and ensure compliance with regulatory requirements[120]. - AVROBIO's suppliers have not undergone FDA approval processes, which poses risks for the company's ability to meet regulatory requirements[109]. Employee and Management Issues - AVROBIO has implemented workforce reductions, including a 50% reduction in July 2023 and further cuts in October, November, and December 2023, impacting employee morale and retention[118]. - The company is currently led by an interim CEO following the resignation of the former President and CEO on May 1, 2023, with no timeline for hiring a permanent replacement[118]. - AVROBIO's ability to retain key personnel is critical for its future success, with a competitive landscape for skilled employees in the biotechnology sector[118].

Merger Details - AVROBIO and Tectonic Therapeutic have entered into a definitive merger agreement in an all-stock transaction, with AVROBIO acquiring 100% of Tectonic's equity [1] - The combined company will operate under the name Tectonic Therapeutic, Inc and trade on Nasdaq under the ticker symbol "TECX" [1] - Tectonic has raised $130.7 million in a private placement, with the combined company expected to have approximately $165 million in cash and cash equivalents at closing [1] Strategic Rationale - The merger enhances Tectonic's ability to advance its clinical-stage Fc-relaxin fusion protein, TX45, and other pipeline assets [2] - Tectonic's GEODeTM platform enables the discovery of biologics targeting challenging GPCRs, which are central to human biology and the target of over 30% of approved drugs [2][3] - The combined company is expected to have sufficient cash to fund operations into mid-2027 [1] Tectonic's Pipeline - TX45, a potential best-in-class Fc-relaxin fusion protein, is being developed for Group 2 Pulmonary Hypertension in HFpEF patients, affecting over 600,000 people in the US [4] - Phase 1a data for TX45 has shown promising PK/PD effects, with Phase 1b and Phase 2 data expected in 2025 and 2026, respectively [5] - Tectonic's second program targets Hereditary Hemorrhagic Telangiectasia (HHT), affecting approximately 75,000 patients in the US, with human studies planned for late 2025 to early 2026 [5] - A third program focuses on fibrosis using a bispecific approach to inhibit two different receptors [5] Financial and Organizational Structure - Post-merger, AVROBIO shareholders will own approximately 22.3% of the combined company, while Tectonic shareholders will own approximately 40.2% [6] - The combined company will be led by Tectonic's management team, with one AVROBIO board member joining the new board [7] - The merger is expected to close in Q2 2024, subject to shareholder approvals and other customary closing conditions [7] Advisors - Leerink Partners is serving as exclusive financial advisor to Tectonic, with Cooley LLP as legal counsel [8] - Piper Sandler is acting as capital markets advisor to Tectonic, while TD Cowen and Houlihan Lokey are serving as financial advisors to AVROBIO [8]

Financial Performance - The company has incurred a net loss of $20.9 million for the nine months ended September 30, 2023, compared to a net loss of $80.9 million for the same period in 2022, indicating a significant improvement [131]. - The company reported a net income of $20.9 million for the nine months ended September 30, 2023, compared to a net loss of $80.9 million for the same period in 2022, an improvement of $101.8 million [151]. - As of September 30, 2023, the company has an accumulated deficit of $468.5 million, reflecting ongoing financial challenges [131]. Expenses - The total operating expenses for the three months ended September 30, 2023, were $21.1 million, down from $23.0 million in the same period in 2022 [145]. - General and administrative expenses were $18.7 million for the nine months ended September 30, 2023, compared to $26.1 million for the same period in 2022, a decrease of $7.4 million [153]. - Total operating expenses decreased to $62.0 million for the nine months ended September 30, 2023, from $80.2 million for the same period in 2022, a reduction of $18.1 million [151]. - The company anticipates continued increases in general and administrative expenses due to costs associated with being a public company and exploring strategic alternatives [141]. Research and Development - The total research and development expenses for the three months ended September 30, 2023, were $14.8 million, a decrease of $1.1 million from $15.9 million in the same period in 2022 [145]. - Research and development expenses decreased by approximately $10.7 million to $43.3 million for the nine months ended September 30, 2023, from $54.0 million for the same period in 2022 [152]. - The company has terminated all treatment-related and long-term follow-up clinical studies for its Gaucher disease and Fabry disease programs as part of its strategic review [129]. - The company currently has three gene therapy product candidates, none of which are in active clinical development as of the filing date [129]. - The company has halted the development of its gene therapy programs and is exploring strategic alternatives, including potential acquisitions or mergers [128]. Cash Flow and Liquidity - Cash and cash equivalents as of September 30, 2023, were $105.8 million, indicating a strong liquidity position [165]. - Net cash used in operating activities was $55.2 million for the nine months ended September 30, 2023, compared to $73.5 million for the same period in 2022, reflecting improved cash flow management [168]. - Net cash provided by investing activities was $84.9 million for the nine months ended September 30, 2023, compared to cash used of $0.3 million for the same period in 2022, primarily due to the sale of the cystinosis program [169]. - Net cash used by financing activities was $16.1 million for the nine months ended September 30, 2023, compared to cash provided of $0.2 million for the same period in 2022, primarily due to the repayment of the Term Loan Agreement [170]. Other Income and Gains - The company recognized a gain on asset sale of $83.7 million for the nine months ended September 30, 2023, net of $3.8 million in transaction costs [154]. - Interest income for the three months ended September 30, 2023, was $1.4 million, a significant increase from $111,000 in the same period in 2022 [145]. - Other income, net, was $1.1 million for the nine months ended September 30, 2023, compared to $(0.7) million for the same period in 2022, primarily due to the elimination of interest expense related to the Term Loan Agreement [156]. Future Outlook - The company expects substantial increases in expenses if product development resumes, particularly for clinical trials and preclinical studies, as well as for hiring additional personnel and expanding infrastructure [171]. - The company plans to finance cash needs through equity offerings, debt financings, collaboration agreements, and other funding sources, which may involve relinquishing rights to technologies or revenue streams [172]. Foreign Currency Exposure - Foreign currency transaction losses were $116 thousand for the nine months ended September 30, 2023, compared to $70 thousand for the same period in 2022, primarily due to transactions in currencies other than the U.S. dollar [179]. - The company has not entered into any foreign currency hedging contracts to mitigate exposure to foreign currency exchange risk [180].

Financial Performance - The company has not generated any product revenue to date and has incurred significant operating losses, with a net loss of $42.5 million for the six months ended June 30, 2023, compared to a net loss of $57.9 million for the same period in 2022[125]. - The company has an accumulated deficit of $446.9 million as of June 30, 2023[125]. - Net income for Q2 2023 was $67.5 million, a significant increase of $95.5 million compared to a net loss of $28.1 million in Q2 2022[142]. - For the six months ended June 30, 2023, total operating expenses decreased to $40.9 million from $57.2 million in the same period of 2022, reflecting a reduction of $16.2 million[149]. Cash and Funding - As of June 30, 2023, the company had cash and cash equivalents of $124.7 million, which is expected to fund operations at least into the fourth quarter of 2024[129]. - The company has received gross cash proceeds of $428.1 million from sales of common stock through its initial public offering and follow-on offerings[124]. - The company may need substantial additional funding to support operations and pursue growth strategies, relying on external sources for financing[126]. - The company repaid all outstanding amounts under the Term Loan Agreement in Q2 2023, resulting in a net cash used by financing activities of $16.3 million for the six months ended June 30, 2023[164]. - Operating activities used $34.9 million of cash for the six months ended June 30, 2023, compared to $57.1 million in the same period of 2022, reflecting improved cash flow management[162]. Research and Development - Research and development expenses totaled $11.1 million for the three months ended June 30, 2023, a decrease from $18.9 million for the same period in 2022[134]. - The company has incurred research and development expenses related to various programs, with significant costs expected to increase if development resumes[134]. - Research and development expenses decreased by approximately $7.7 million to $11.1 million for Q2 2023, down from $18.9 million in Q2 2022, driven by reductions in development, manufacturing, and personnel-related costs[143]. - The company is focused on three HSC gene therapy programs, with AVR-RD-02 in a Phase 1/2 clinical trial for Gaucher disease type 1 and type 3[122]. Strategic Plans - The company plans to halt development of its programs and explore strategic alternatives, which may include acquisitions or mergers[122]. - The company anticipates increased general and administrative expenses due to exploration of potential strategic alternatives and preparation for commercial operations[139]. - The company plans to expand its infrastructure and hire additional personnel to support product development and commercialization[166]. - The company expects to incur significant commercialization expenses if regulatory approval for product candidates is obtained[166]. Currency and Accounting - Foreign currency transaction losses for the six months ended June 30, 2023, were $65,000, compared to $40,000 for the same period in 2022[174]. - The company has not entered into foreign currency hedging contracts to mitigate exchange rate risks[175]. - A 10% change in exchange rates is not expected to materially impact the company's financial position[174]. - There were no material changes to the company's critical accounting policies during the six months ended June 30, 2023[169]. - The company is classified as an "emerging growth company" and may take advantage of certain reporting exemptions until it no longer qualifies[170].

Financial Performance - The company reported net losses of $25.0 million for the three months ended March 31, 2023, compared to $29.8 million for the same period in 2022, resulting in an accumulated deficit of $514.4 million as of March 31, 2023[121]. - Net loss for the three months ended March 31, 2023, was $24.96 million, an improvement of $4.88 million compared to a net loss of $29.83 million for the same period in 2022[140]. - Net cash used in operating activities was $20.3 million for the three months ended March 31, 2023, compared to $28.0 million for the same period in 2022[149]. - Total other income (expense), net, was $0.3 million for the three months ended March 31, 2023, compared to $(0.4) million for the same period in 2022, primarily due to increased interest income[140]. Funding and Cash Position - The company has raised a total of $428.1 million from sales of common stock through its initial public offering and follow-on offerings, along with $87.5 million from preferred stock sales[120]. - As of March 31, 2023, the company had cash and cash equivalents of $72.3 million, expected to fund operations into the first quarter of 2024[125]. - Cash and cash equivalents as of March 31, 2023, were $72.3 million, expected to fund operating expenses into the first quarter of 2024[146]. - As of March 31, 2023, approximately $26.5 million of common stock remained available for future issuance under the ATM facility[144]. - The company has drawn $15.0 million in term loans under its Term Loan Agreement, with a repayment schedule starting November 1, 2024[145]. Research and Development - The total research and development expenses for the three months ended March 31, 2023, were $17.3 million, a decrease from $19.3 million in the same period of 2022[129]. - Research and development expenses decreased by approximately $1.9 million to $17.3 million for the three months ended March 31, 2023, from $19.3 million for the same period in 2022[138]. - The company is currently focused on four HSC gene therapy programs targeting rare diseases, with significant market opportunities estimated at approximately $3.5 billion in worldwide net sales in 2022[116]. - AVR-RD-02 is in a Phase 1/2 clinical trial for Gaucher disease type 1, with five patients dosed and six enrolled as of March 20, 2023, and a global Phase 2/3 trial planned for the second half of 2023[118]. - The company plans to initiate a Phase 1/2 clinical trial for AVR-RD-04 for cystinosis in the second half of 2023, following the completion of enrollment in a collaborator-sponsored trial[119]. - The company expects expenses to increase substantially as it advances preclinical activities and clinical trials of its product candidates[152]. Operating Expenses - The company anticipates significant increases in general and administrative expenses as it expands headcount and prepares for potential commercialization of its product candidates[134]. - General and administrative expenses were $7.9 million for the three months ended March 31, 2023, compared to $10.2 million for the same period in 2022, a decrease of $2.3 million[139]. - The company has incurred significant operating losses and will require substantial additional funding to support ongoing operations and growth strategies[123]. Currency and Interest Rate Exposure - The company recognized foreign currency transaction losses of $28 thousand and $46 thousand for the three months ended March 31, 2023, and 2022, respectively[161]. - The company believes that a 10% change in the exchange rate between the U.S. dollar and other currencies would not have a material impact on its financial position or results of operations[161]. - The company has not entered into any foreign currency hedging contracts to mitigate exposure to foreign currency exchange risk[162]. - An immediate 100 basis point change in interest rates would not have a material effect on the fair market value of the company's investment portfolio due to its short-term duration and low risk profile[160].

Financial Performance - The company incurred net losses of $105.9 million and $119.1 million for the years ended December 31, 2022, and 2021, respectively[236]. - As of December 31, 2022, the company had cash and cash equivalents of $92.6 million, expected to fund operations into the first quarter of 2024[242]. - The company may need to consider strategic alternatives, including mergers or liquidation, if unable to raise adequate capital[239]. - The company has federal and state net operating loss carryforwards of $340.4 million and $313.0 million as of December 31, 2022, and 2021, respectively[425]. - Federal research and development tax credit carryforwards amount to approximately $6.8 million and $6.2 million for the years ending December 31, 2022, and 2021, respectively[425]. Product Development and Clinical Trials - The company has a total of four gene therapy programs in its pipeline, with two currently in clinical development[244]. - The company has only dosed ten patients using its plato platform in clinical trials, including six patients in the halted FAB-GT clinical trial[265]. - The ongoing Phase 1/2 clinical trial of AVR-RD-04 is being conducted by collaborators at the University of California, San Diego, while the planned Phase 1/2 clinical trial of AVR-RD-05 has received acceptance for its CTA application from the MHRA[283]. - The company has dosed only 24 patients in its clinical trials, including 14 patients from the Fabry program that was deprioritized in January 2022[279]. - The company expects to enroll up to ten patients by the end of 2023 in the Guard1 clinical trial for Gaucher disease type 1, but there are no assurances this goal will be met[291]. Regulatory and Compliance Challenges - The regulatory approval process for the company's novel product candidates may be more expensive and time-consuming compared to better-known therapies[266]. - The FDA has indicated that patients treated with gene therapies should undergo long-term follow-up observation for potential adverse events for up to 15 years[272]. - Regulatory authorities may require a Risk Evaluation and Mitigation Strategy (REMS) if any product candidates receive marketing approval, which could include additional warnings and restrictions[277]. - The company has limited experience in preparing and submitting regulatory filings, having never completed a pivotal or registrational clinical trial[278]. - The FDA established the Office of Therapeutic Products (OTP) to enhance review capabilities for gene therapy products, but the impact on time and costs for regulatory approval remains uncertain[271]. Manufacturing and Supply Chain Risks - The company may face production problems due to the complexity of gene therapies, which could lead to delays in development or commercialization[336]. - Manufacturing processes are complex and may result in product defects or recalls if not strictly controlled, impacting inventory and financial performance[337]. - The company relies on third parties for vector production and clinical testing, which may lead to reduced control and potential delays in product development[339]. - The ongoing COVID-19 pandemic and geopolitical factors, such as the war in Ukraine, may cause delays in production and supply[350]. - The company relies on sole source suppliers for critical components, including automated closed cell processing systems, vector supply, plasmid supply, and drug product manufacturing for clinical trials[345]. Market and Competitive Landscape - The company faces significant competition from larger pharmaceutical and biotechnology companies, which may have more advanced therapies and greater resources[306]. - Competitors such as Sanofi, Pfizer, and Takeda currently market established therapies for conditions like Gaucher disease, which the company is targeting[307]. - The commercial success of product candidates is uncertain and may be adversely affected if market opportunities are smaller than anticipated[365]. - Market acceptance of the company's product candidates will depend on factors such as efficacy, safety, pricing, and the willingness of healthcare providers to prescribe the treatments[366]. Human Resources and Organizational Challenges - The company’s success depends on the ability to retain key employees and attract new talent, which is critical for ongoing operations and development[391]. - The company implemented a reduction in force in January 2022, deprioritizing the Fabry disease program, and continued to streamline employee headcount through the first half of 2022[392]. - The company faces intense competition for skilled personnel in gene therapy research and vector manufacturing, which may impede recruitment and retention efforts[392]. - The company restructured its organization in January 2022, significantly reducing its workforce to conserve capital resources, which may lead to unintended attrition and reduced employee morale[399]. Legal and Compliance Risks - Compliance with healthcare laws and regulations is critical, as violations could result in substantial penalties, including fines and exclusion from federal healthcare programs[404]. - The company is subject to various federal and state fraud and abuse laws, which will impact clinical trial programs and healthcare professional interactions[404]. - The company may face substantial fines for violations of the GDPR, which can be up to 4% of global revenues or €20 million (£17.5 million), whichever is greater[414]. - The company must comply with stringent data protection laws, and failure to do so could result in government enforcement actions and adverse publicity[410]. Financial and Market Access Challenges - The uncertainty regarding insurance coverage and reimbursement for newly approved products could limit the company's ability to market those products and decrease revenue generation[373]. - The company faces significant pricing pressures due to cost containment trends in the U.S. healthcare industry and extensive governmental price controls in international markets[375]. - Legislative changes, such as the Inflation Reduction Act of 2022, may impose new financial liabilities and affect pricing negotiations for the company's products[384]. - The company may experience delays in product approvals due to inadequate funding for the FDA and other regulatory agencies[385].

March 2023 Arianna living with Gaucher disease type 3 1 Disclaimer This presentation has been prepared by AVROBIO, Inc. (“AVROBIO”) clinical trial results, and product approvals; the timing and results of results, such as signals of safety, activity, or durability of effect, for informational purposes only and not for any other purpose. Certain our ongoing preclinical studies; the anticipated benefits of our gene observed from preclinical or clinical trials, will not be replicated or information contained i ...