F-1/A 1 v378842_f1a.htm F-1/A

As filed with the Securities and Exchange Commission on July 7, 2014

Registration No. 333-193824

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549



 

Amendment No. 3
to
Form F-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933



 

Bio Blast Pharma Ltd.

(Exact name of registrant as specified in its charter)



 

   
State of Israel   2834   Not Applicable
(State or other jurisdiction of
incorporation or organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification Number)

 
Dalia Megiddo MD, MBA
Bio Blast Pharma Ltd.
37 Dereh Menachim Begin St.,
15th Floor
Tel-Aviv 6522042 Israel
Tel: +972 (0)3 7326616
  Zysman, Aharoni, Gayer and
Sullivan & Worcester LLP
1633 Broadway
New York, NY 10019
Tel: 212.660.5000
(Address, including zip code, and telephone number,
including area code, of registrant’s principal executive offices)
  (Name, address, including zip code, and telephone
number, including area code, of agent for service)


 

Copies to:

     
Edwin L. Miller Jr., Esq.
Oded Har-Even, Esq.
Shy S. Baranov, Esq.
Zysman, Aharoni,
Gayer and
Sullivan & Worcester LLP
1633 Broadway
New York, NY 10019
Tel: 212.660.5000
  Mor Limanovich, Adv.
Zysman, Aharoni,
Gayer & Co.
41-45 Rothschild Blvd.
Beit Zion
Tel-Aviv, Israel 65784
Tel: +972.3.795.5555
  
  
  Ivan K. Blumenthal, Esq.
Jeffrey P. Schultz, Esq.
Daniel A. Bagliebter, Esq.
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
666 Third Avenue
New York, NY 10017
Tel: 212.935.3000
  
  Barry Levenfeld
Eric Spindel
Yigal Arnon & Co.
1 Azrieli Center
Tel-Aviv, Israel 67021
Tel: +972.3.608.7777
  
  
  


 

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date hereof.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box. o

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

 


 
 

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CALCULATION OF REGISTRATION FEE

   
Title of Each Class of Securities to be Registered   Proposed Maximum Aggregate Offering Price(1)   Amount of Registration Fee(2)
Ordinary shares, par value NIS 0.01 per share(3)(4)   $ 46,000,000     $ 5,924.80  

(1) Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended.
(2) $4,830 previously paid.
(3) Pursuant to Rule 416, the securities being registered hereunder include such indeterminate number of additional securities as may be issued after the date hereof as a result of stock splits, stock dividends or similar transactions.
(4) Includes shares of ordinary shares which may be issued upon exercise of a 30-day option granted to the underwriters to cover over-allotments, if any.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.


 
 

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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to Completion, Dated July 7, 2014

           Shares

[GRAPHIC MISSING]

Ordinary Shares
$      per share

This is the initial public offering of ordinary shares of Bio Blast Pharma Ltd. We are offering       shares of our ordinary shares in this offering. Prior to this offering, there has been no public market for our ordinary shares.

We currently expect the initial public offering price per share to be between $        and $       .

We have applied to list our ordinary shares on The NASDAQ Capital Market under the symbol “ORPN”.

We are an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012 (the JOBS Act) and will be subject to reduced public company reporting requirements.

Investing in our ordinary shares involves a high degree of risk. See “Risk Factors” beginning on page 9.

   
  Per Share   Total
Initial public offering price   $            $         
Underwriting discounts and commissions   $     $  
Proceeds to us (before expenses)   $     $  

Certain of our existing investors and their affiliated entities have agreed to purchase an aggregate of approximately $        million worth of shares of our common stock in this offering at the initial public offering price. However, because indications of interest are not binding agreements or commitments to purchase, the underwriters may sell more, less or no shares in this offering to any of these persons, or any of these persons may determine to purchase more, less or no shares in this offering. The underwriters will receive the same underwriting discounts and commissions on any shares purchased by these persons as they will on any other shares sold to the public in this offering.

We have granted a 30-day option to the underwriters to purchase up to          additional ordinary shares solely to cover over-allotments, if any.

The underwriters expect to deliver the shares to purchasers in the offering on or about        , 2014 through the book-entry facilities of The Depository Trust Company.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.



 

 
Oppenheimer & Co.   Roth Capital Partners

The date of this prospectus is            , 2014.


 
 

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You should rely only on the information contained in this prospectus and any free writing prospectus prepared by or on behalf of us or to which we have referred you. We have not authorized anyone to provide you with information that is different. We are offering to sell our ordinary shares, and seeking offers to buy our ordinary shares, only in jurisdictions where offers and sales are permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of our ordinary shares.

Until and including       , 2014, 25 days after the date of this prospectus, all dealers that buy, sell or trade our ordinary shares, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions.

For investors outside of the United States: Neither we nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus.

In this prospectus, “we,” “us,” “our,” the “Company” and “BioBlast” refer to Bio Blast Pharma Ltd.

Our reporting currency and functional currency is the U.S. dollar.


 
 

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PROSPECTUS SUMMARY

The items in the following summary are described in more detail later in this prospectus. This summary provides an overview of selected information and does not contain all of the information you should consider before buying our ordinary shares. Therefore, you should read the entire prospectus carefully, especially the “Risk Factors” section beginning on page 9 and our financial statements and the related notes appearing at the end of this prospectus, before deciding to invest in our ordinary shares.

Overview

We are a development-stage biopharmaceutical company focused on the identification, licensing, acquisition, development and commercialization of drugs for rare and ultra-rare genetic diseases. We seek to identify therapeutic platforms that offer solutions for several diseases that share a common pathophysiological mechanism, which are the functional changes that accompany a particular syndrome or disease. We focus on rare diseases with severe and debilitating manifestations, where the unmet medical need is clear, the biological mechanism of action is understood and for which there is no satisfactory treatment. Since our inception in 2012, we have developed and in-licensed potential treatments for six diseases, one of which is in a pivotal clinical study, another one is in Phase 2 clinical study and an additional two of which we expect will be in mid/late stage clinical studies by late 2014 or early 2015. Our current drug candidate pipeline has been either in-licensed from academic institutions or developed internally. Our strategy is based on risk diversification through multiple therapeutic platforms, diversified clinical and pre-clinical stages of our programs, and diversified diseases addressed. We use strict selection criteria of our pipeline platforms and cost-efficient drug development. This allows us to pursue multiple programs in parallel with the goal of promptly delivering safe and effective therapies to patients in dire need.

Our current pipeline is based on three platforms:

Cabaletta is a mutant protein stabilizing platform based on a small repurposed molecule, Trehalose, which is currently used as an excipient for intravenous protein drugs. We are currently conducting a pivotal clinical trial to assess its efficacy and safety in treating Oculopharyngeal Muscular Dystrophy, or OPMD, and a Phase 2 clinical trial to assess its efficacy and safety in treating Machado Joseph disease, or SCA3. Subject to regulatory allowance, we plan to conduct an additional Phase 2 study in 2015 aimed at Kennedy’s disease, or SBMA. Mutant unstable cellular proteins are the cause of several genetic diseases known as PolyA/PolyQ, including OPMD, SBMA and SCA3. These proteins aggregate within cells, eventually leading to cell death. Our data to date from preclinical studies from both cells and animal models indicates that our Cabaletta platform has the potential to prevent mutant protein aggregation in humans.
mPRT is a mitochondrial protein replacement platform that is based on biological components that we synthesize in bacteria. Mitochondria are cell components that supply chemical energy for normal cell functioning. This platform is currently in preclinical development for two diseases: Friedrich’s Ataxia and Ornithine Transcarbamylase Deficiency. These diseases are among over 100 genetic diseases that are caused by a missing or mutant protein that has critical role in the normal mitochondrial function. While lysosomal protein replacement platforms have been successful in replacing a missing protein in lysosomes, we believe that our mPRT platform is the first one to be successful in replacing mitochondrial proteins. Our product candidates are new “fusion proteins” that are a combination of the replaced protein fused with two additional sequences that facilitate its transport through biological membranes.
BBrm is our read-through platform based on small repurposed molecules. The platform enables the read-through (or bypassing) of genetic defects called nonsense mutations or stop codons that interfere with normal protein formation and cause disease. Based on our preclinical data, we believe that this drug platform has the potential to treat six different diseases caused by nonsense mutation. Subject to regulatory approval, we plan to conduct Phase 2 clinical studies in late 2014 for our lead indication in Spinal Muscular Atrophy (SMA).

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The following table summarizes our product candidate pipeline:

[GRAPHIC MISSING]

Product Candidates

The diseases which we are addressing have devastating consequences on the patient’s health, quality of life and life expectancy. In addition, these diseases create significant burdens on the patient’s family and care takers as well as on the public health resources. In all the diseases we are addressing, patients cannot be offered an alternative therapy or the current solutions are inadequate in their abilities to change the course of the disease. We believe that prompt and efficient drug development can be of substantial benefit to the patients who are suffering from these incurable diseases.

Cabaletta for the treatment of OPMD

Cabaletta is our proprietary intravenous (IV) solution of Trehalose for the treatment of OPMD. OPMD is an inherited myopathy, which is a muscle disease caused by a primary defect in muscle cells, characterized by dysphagia (difficulty in swallowing) and the loss of muscular strength and weakness in multiple parts of the body. As the dysphagia becomes more severe, patients become malnourished, lose significant weight, become dehydrated and suffer from repeated incidents of aspiration pneumonia. These last two are often the cause of death.

Trehalose is naturally-occurring and is well known for its protein-stabilizing properties. It is used in several biological systems, such as freeze drying of red blood cells and the preservation of organs for donation and as a protein stabilizer in IV pharmaceutical products. Trehalose is approved by the U.S. Food and Drug Administration, or FDA, as a GRAS (Generally Recognized As Safe) food ingredient and is listed in the U.S. National Formulary, which is a compendium of public pharmacopeial standards, which are directions for the identification of compound medicines, as well as in Europe and Japan. It is a disaccharide chemical chaperone, which is a chemical molecule comprised of two sugar components that stabilizes the folding of proteins and buffers abnormal protein aggregation, that protects against pathological processes in cells. It has been shown to prevent pathological aggregation of proteins within cells in several diseases associated with abnormal cellular-protein aggregation as well as acting as an autophagy enhancer. Autophagy is the basic catabolic mechanism that involves cell degradation of unnecessary or dysfunctional cellular components. Autophagy, if regulated, ensures the synthesis, degradation and recycling of cellular components. Trehalose has been documented as demonstrating significant efficacy in preclinical animal models of OPMD and other PolyA/PolyQ diseases.

Trehalose is not effective when given orally since it is almost completely metabolized in the small intestine into glucose and often causes diarrhea and flatulence after ingestion of more than 50g. We have developed a proprietary IV solution of Trehalose, which we call CabalettaTM, to circumvent the breakdown of Trehalose in the gastrointestinal tract, and to enable therapeutic doses of Trehalose to reach the muscles.

We are currently conducting a pivotal multicenter clinical trial of Cabaletta to treat OPMD. The trial is being conducted in Israel, and subject to regulatory allowances, in Canada and the USA. If our current OPMD trial is successful, we will submit a new drug application, or NDA, to the FDA.

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Cabaletta for the treatment of spinocerebellar ataxia type 3 (SCA3 — Machado Joseph disease)

SCA3, also known as Machado Joseph disease, is the most common disease among the cerebellar ataxias, which are a group of genetic diseases that are characterized by memory deficits, spasticity, difficulty with speech and swallowing, weakness in arms and other muscular disorders. Symptoms can begin in early adolescence and get worse over time. Eventually, SCA3 leads to paralysis, and severe cases can lead to an early death in the fourth decade of life. SCA3 is incurable, and there is currently no approved treatment for the disease.

SCA3 is caused by a mutation in the DNA that leads to the creation of a pathological protein —  Ataxin 3. Ataxin 3 is unstable, meaning that it aggregates within the cells and eventually leads to cell death.

Multiple reported studies in cell models have shown that Trehalose, both as an anti-mutant protein aggregator and as an autophagy enhancer, is able to reduce protein aggregates and improve cell survival in several spiocerebellar ataxias, including SCA3 cells. Additional animal studies show that activation of autophagy may be beneficial in alleviating disease symptoms. We recently started a Phase 2 clinical trial of Cabaletta to treat SCA3 in Israel.

Cabaletta for the treatment of Spino Bulbar Cerebellar Ataxia (SBMA — Kennedy’s disease)

SBMA, also known as Kennedy’s disease, is characterized by the degeneration and loss of lower motor neurons in the brainstem and spinal cord. Patients present with weakness in muscle function, including severe difficulty in swallowing and aspiration, and other disorders. SBMA is caused by an abnormal androgen receptor protein. Like other PolyA/PolyQ diseases, the abnormal protein is unstable and aggregates within cells, eventually leading to cell death. Patients suffering from SBMA suffer from progressive neuromuscular deterioration that can end up in extreme disability and repeated aspiration pneumonia. There is currently no approved therapy for SBMA.

Studies in cell models have shown that Trehalose in its capacity both as an anti-mutant protein aggregation and as an autophagy enhancer is able to reduce protein aggregates and improve cell survival in SBMA cells. Additional studies show that activation of autophagy may be beneficial in alleviating disease symptoms in animal models.

We have entered into an agreement with NINDS (a group within the U.S. National Institutes of Health, or NIH) pursuant to which NINDS will conduct animal studies on SBMA mouse models to validate the potential efficacy of Cabaletta. NINDS will conduct the study using its own resources, and we will supply the research material. If the animal studies are successful, and subject to regulatory allowance, we plan to commence a Phase 2/3 clinical trial.

Mitochondrial protein replacement platform (mPRT)

Mitochondrial disorders are diseases, for which no cure has been found, that stem from a missing or mutated critical enzyme or protein in the cell. Our fusion proteins, comprised of TAT-MTS (het)-replacement proteins, help move proteins across biological membranes to facilitate the creation of mature proteins inside the mitochondria. Our replacement proteins are able to enter human cells and mitochondria and replace the damaged or missing proteins in the mitochondria. Our breakthrough platform technology demonstrated efficacy in several mitochondrial protein deficiencies in cells and animal models. Currently, Frataxin for Friedrich’s Ataxia (BB-FA) is our most advanced mPRT preclinical program, followed by Ornithine Transcarbamylase (BB-OTC) for Ornithine Transcarbamylase Deficiency (OTCD).

Our preclinical studies demonstrated the superiority of our proprietary approach of using a heterologous (non-native) mitochondrial targeting sequence (MTS) as part of our fusion proteins in four different aspects: expression by bacteria, cell penetration, mitochondrial processing and anchorage of target proteins, and rescue of cells in oxidative stress.

We have an exclusive worldwide and royalty-bearing license to commercialize, develop and use the technology, including certain patent applications, from the Hebrew University in Jerusalem. These patent applications cover our unique approach of using homologous and heterologous MTS in the fusion proteins.

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BB-FA for the treatment of Friedrich’s Ataxia

Friedreich’s Ataxia is an inherited disease characterized by progressive deterioration of the muscular and nervous systems, resulting in gait disturbance (Ataxia), cognitive impairment, progressive heart disease and diabetes. Patients are usually diagnosed in the first or second decade of life, and are typically wheelchair-bound within 15 years of diagnosis. Most patients do not survive beyond the fourth decade of life. In many cases the cause of death is myopathic heart disease. The underlying causes of Friedrich’s Ataxia are reduced levels of Frataxin — a protein responsible for iron-sulphor clusters in the mitochondria that are critical for the mitochondria activity. Our preclinical data demonstrated successful placement of Frataxin into the mitochondria and in the treatment of oxidative stress in Friedreich’s Ataxia patients’ cells. We are advancing the Friedreich’s Ataxia program through its preclinical development throughout 2014.

BB-OTC for the treatment of ornithine transcarbamylase deficiency (OTCD)

OTCD is the most common disorder among urea cycle disorders — a group of rare genetic diseases characterized by body’s inability to detoxify ammonia. Ammonia is a toxic breakdown product of proteins. OTCD is caused by a mutated and ineffective form of the enzyme, ornithine transcarbamylase. As a result, ammonia accumulates in the blood causing hyperammonemia. Newborn males affected with OTCD may suffer devastating hepatic coma in the first few days after birth, and survivors typically suffer from severe cognitive, mental and metabolic disorders and growth retardation. Many do not survive the first decade of life. Ornithine transcarbamylase is part of the urea cycle complex in the mitochondria. We are using our mitochondrial protein replacement platform to replace this enzyme in the mitochondria. Our preclinical data indicates that our OTC fusion protein is well able to be transferred into the mitochondria and processed in it. We are advancing the BB-OTC program through its preclinical development through 2014.

BBrm — our read-through platform

BBrm is our family of small molecule non-glycosides repurposed drugs for the treatment of patients with genetic disorders that arise from a type of genetic mutation known as a nonsense mutation (stop codon). The platform enables the read-through (deactivation) of the genetic defects that stop synthesis of proteins called stop codons. Deactivation of disease-causing nonsense mutation can alleviate the symptoms of genetic diseases caused by these nonsense mutations. Our BBrm family of repurposed drugs is able to induce translational readthrough, restoring full-length functional proteins in diseases where the nonsense mutation results in truncated ineffective proteins. We licensed the exclusive worldwide commercial rights for our BBrm technology for stop codon inhibition of orphan diseases from the Tel-Aviv University in January 2014.

BBrm1 for the treatment of Spinal Muscular Atrophy (SMA)

Using our BBrm platform, we developed a unique therapeutic candidate for SMA. SMA is the leading genetic cause of infantile death and is caused by the loss of a functional Survival Motor Neuron 1 (SMN1). The disease is manifested by loss of muscle mass and mobility as well as severe compromise of vital functions such as respiration. Another protein called SMN2 is a nearly identical copy of SMN1, differentiated only by a silent, single-nucleotide mutation within the DNA. SMN2 partially compensates for the dysfunction of SMN1, however, the small amount of the functional protein that is produced from the SMN2 gene is not able to fully compensate for the loss of SMN1. Prior independent studies proposed that read-through agents, such as aminoglycosides, can induce the read-through of the stop codon located in the SMN2-protein, thus elongating the SMN2 and creating a full length functional protein that can compensate for the non-functioning SMN1 and alleviate the disease. This approach was also successfully tested in SMA animal models. Nonetheless, chronic administration of aminoglycosides was found to be associated with prohibitive toxicity.

Nevertheless, we believe drug-induced read-through of premature stop codons remains a promising approach to elevate active protein expression from the SMN2 gene which is an ideal therapeutic target as it is found in all SMA patients. Our family of repurposed FDA-approved non-glycosides molecules (BBrm) induce significantly higher levels of full length functional SMN2 protein. These molecules are ineffective if administered orally or intravenously since they do not penetrate into the brain to create high enough therapeutic levels within nerve cells. Our BBrm1 product can be injected directly into the central nervous system (CNS), creating adequate drug concentration. This method of administration has the added benefit of

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further protection against off label use. We plan to continue our preclinical development of BBrm1 for SMA through 2014, and, if successful and subject to regulatory approval, expect to start a Phase 2 study late in 2014 or early in 2015.

Our Strategy

Our strategy is to identify, acquire, license, develop, and commercialize novel products for the treatment of rare and ultra-rare diseases in the United States, the European Union, and select international markets, with the goal of becoming a leading rare disease biotechnology company.

The critical components of our business strategy include the following:

Focus on rare and ultra-rare diseases with significant unmet medical need;
Focus on diseases and therapies with clear mechanisms of action;
Leverage our experience and relationships to in-license promising product candidates;
Develop and commercialize multiple product candidates in parallel;
Focus on excellent and rapid clinical and regulatory execution; and
Seek to retain global commercialization rights to product candidates.

Recent Developments

On February 6, 2014, we closed a private placement pursuant to which we sold to accredited investors an aggregate of 782,537 of our ordinary shares at a price of $6.07 per share for a total consideration of $4,368,000 net of expenses.

We recently initiated a pivotal clinical trial for OPMD and a Phase 2 clinical trial for SCA3.

Risks Associated with Our Business

Our ability to implement our business strategy is subject to numerous risks that you should be aware of before making an investment decision. These risks are described more fully in the section entitled “Risk Factors” immediately following this prospectus summary. These are not the only risks we face. These risks include, among others:

We are a development-stage biopharmaceutical company and have a limited operating history on which to assess our business, have incurred significant losses since our inception, and anticipate that we will continue to incur significant losses for the foreseeable future;
Even if this offering is successful, we expect that we will need to raise additional funding before we can expect to become profitable from sales of our products;
We are heavily dependent upon the success of our product candidates, which are in the early stages of clinical development, and we cannot provide any assurance that any of our product candidates will receive regulatory approval;
Because the target patient populations of our product candidates are small, we must be able to successfully identify patients and achieve a significant market share to maintain profitability and growth;
We have not completed preclinical development of several product candidates and do not have any products approved for sale by the FDA or any other regulatory bodies;
The insurance coverage and reimbursement status of newly-approved orphan products is uncertain and failure to obtain or maintain adequate coverage and reimbursement for our product candidates could limit our ability to market those products and decrease our ability to generate revenue;
If we are unable to obtain and maintain effective intellectual property rights for our technologies, product candidates, or any future product candidates, we may not be able to compete effectively in our markets; and

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Our future success depends in part upon our ability to retain our executive team, particularly Dr. Dalia Megiddo and Mr. Udi Gilboa, and to attract, retain, and motivate other qualified personnel.

Corporate Information

We are an Israeli corporation based in Tel Aviv and were incorporated on January 22, 2012. Our principal executive offices are located at 37 Dereh Menachim Begin St., Tel Aviv 6522042, Israel, and our telephone number is: +972 722409060.

Implications of being an Emerging Growth Company

We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not “emerging growth companies” including, but not limited to:

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; and
not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.

We intend to take advantage of these and other exemptions available to “emerging growth companies.” We could remain an “emerging growth company” for up to five years, or until the earliest of (a) the last day of the first fiscal year in which our annual gross revenue exceeds $1 billion, (b) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, or Exchange Act, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (c) the date on which we have issued more than $1 billion in nonconvertible debt during the preceding three-year period.

The JOBS Act permits an “emerging growth company” like us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. This means that an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are electing to delay such adoption of new or revised accounting standards.

Implications of being a Foreign Private Issuer

Our status as a foreign private issuer also exempts us from compliance with certain laws and regulations of the Securities and Exchange Commission (the “SEC”) and certain regulations of The NASDAQ Stock Market, including the proxy rules, the short-swing profits recapture rules, and certain governance requirements such as independent director oversight of the nomination of directors and executive compensation. In addition, we will not be required to file annual, quarterly and current reports and financial statements with the SEC as frequently or as promptly as United States companies registered under the Exchange Act.

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THE OFFERING

Ordinary shares offered by us    
             ordinary shares
Ordinary shares to be outstanding after this offering    
             ordinary shares
Over-allotment option    
    The underwriters have an option for a period of 30 days to purchase up to            additional ordinary shares to cover over-allotments, if any.
Use of proceeds    
    We expect to receive approximately $       million in net proceeds from the sale of          ordinary shares offered by us in this offering (approximately $       million if the underwriters exercise their over-allotment option in full), after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, assuming the shares are offered at $       per share, the midpoint of the estimated price range set forth on the cover of this prospectus. We currently expect to use the net proceeds from this offering for:
   

•  

completing our clinical program for OPMD, estimated at $6,000,000;

   

•  

completing our Phase 2 and pivotal clinical study for SCA3, estimated at $3,500,000;

   

•  

Initiating and completing our Phase 2/3 clinical study for SBMA, estimated at $4,200,000;

   

•  

completing our pre-clinical program for BB-FA and Phase 1 clinical study, estimated at $4,500,000;

   

•  

completing our pre-clinical program for BB-OTC and initiation and completion of Phase 1 and 2A-2B clinical studies, estimated at $7,800,000;

   

•  

Initiating and completing our Phase 1-2 clinical programs for SMA, estimated at $2,200,000;

   

•  

Other Indications, estimated at $500,000;

   

•  

Premarketing activity for OPMD, estimated at $1,500,000; and

   

•  

the remainder for personnel-related costs, preclinical research, working capital, and other general corporate purposes.

Risk factors    
    You should read the “Risk Factors” section starting on page 9 of this prospectus for a discussion of factors to consider carefully before deciding to invest in ordinary shares.
Proposed NASDAQ Capital Market Symbol    
    “ORPN”

The number of our ordinary shares to be outstanding immediately after this offering is based on 11,030,480 ordinary shares outstanding as of the date of this prospectus. This number excludes:

456,630 shares issuable upon the exercise of share options outstanding as of July 6, 2014;
269 shares reserved as of July 6, 2014 for future grants under our equity incentive plan; and
206,702 shares issuable upon the exercise of options granted to the Chairman of our Board of Directors subject to the completion of this offering.

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Unless otherwise indicated, all information in this prospectus assumes or gives effect to:

the filing of our amended and restated articles of association, which will occur immediately prior to the completion of this offering; and
no exercise of the underwriters’ over-allotment option.

SUMMARY FINANCIAL DATA

The following table summarizes our financial data. We have derived the following statements of operations data for the years ended December 31, 2013 and 2012 and the balance sheet data as of December 31, 2013 from our audited financial statements included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results that may be expected in the future. The following summary financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes included elsewhere in this prospectus.

   
  Years Ended December 31,
(in thousands of U.S. dollars, except share and per share amounts)   2013   2012
Statements of Operations Data:
 
Research and development expenses   $ 732     $ 140  
General and administrative expenses     416       86  
Financial expense (income), net     (3 )      3  
Deemed dividend     26        
Loss attributable to holders of ordinary shares     1,171       229  
Weighted average number of ordinary shares used in computing basic and diluted net loss per share     8,423,018       7,551,427  

     
  As of December 31, 2013
(in U.S. dollars)   Actual   Pro forma (unaudited)(1)   As Adjusted (unaudited)(2)
Balance Sheet Data:
 
Total long-term assets   $ 7     $ 7     $  
Total current liabilities     131       131        
Shareholders equity     175       5,555               

(1) After giving effect to the sale of 1,065,076 ordinary shares on January 1, 2014 at the price of $0.95 per share and to the sale of 782,537 ordinary shares on February 6, 2014 at the price of $6.07 per share, as if the sale of the shares in each case had occurred on December 31, 2013.
(2) The unaudited as adjusted column in the balance sheet data above gives effect to the sale of            ordinary shares in this offering at the assumed initial public offering price of $      per share (the midpoint of the estimated price range on the cover page of this prospectus), after deducting underwriting discounts and commissions and estimated offering expenses payable by us, as if the sale had occurred on December 31, 2013.

Each $1.00 increase (decrease) in the public offering price per share would increase (decrease) total stockholders’ equity, as adjusted, by approximately $        million, assuming that the number of shares we are offering, as set forth on the cover page of this prospectus, remains the same and that the underwriters do not exercise their over-allotment option. Depending on market conditions and other considerations at the time we price this offering, we may sell a greater or lesser number of shares than the number set forth on the cover page of this prospectus. An increase (decrease) of 100,000 in the number of shares we are offering would increase (decrease) total stockholders’ equity, as adjusted, by approximately $        million, assuming the public offering price per share remains the same. An increase of 100,000 in the number of shares we are offering, together with a $1.00 increase in the public offering price per share, would increase total stockholders’ equity, as adjusted, by approximately $        million. A decrease of 100,000 in the number of shares we are offering, together with a $1.00 decrease in the public offering price per share, would decrease total stockholders’ equity, as adjusted, by approximately $        million.

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RISK FACTORS

An investment in our ordinary shares involves a high degree of risk. You should carefully consider the following information about these risks, together with the other information appearing elsewhere in this prospectus, including our financial statements and related notes thereto, before deciding to invest in our ordinary shares. The occurrence of any of the following risks could have a material adverse effect on our business, financial condition, results of operations and future growth prospects. In these circumstances, the market price of our ordinary shares could decline, and you may lose all or part of your investment.

Risks Related to Our Financial Condition and Capital Requirements

We are a development-stage company and have a limited operating history on which to assess our business, have incurred significant losses since our inception, and anticipate that we will continue to incur significant losses for the foreseeable future.

We are a development-stage biopharmaceutical company with a limited operating history. We have incurred net losses since our inception in January 2012, including net losses of $1.1 million for the year ended December 31, 2013. As of December 31, 2013, we had an accumulated deficit of $1.4 million.

We have devoted substantially all of our financial resources to identify, acquire, license, and develop our product candidates, including conducting preclinical and clinical studies and providing general and administrative support for these operations. To date, we have financed our operations primarily through the sale of equity securities. The amount of our future net losses will depend, in part, on the rate of our future expenditures and our ability to obtain funding through equity or debt financings, strategic collaborations, or grants. Biopharmaceutical product development is a highly speculative undertaking and involves a substantial degree of risk. With respect to most of our product candidates, we are in the early stages of clinical development. We have commenced pivotal clinical studies for only one of our product candidates, and it may be several years, if ever, before we have a product candidate approved for commercialization. Even if we obtain regulatory approval to market a product candidate, our future revenue will depend upon the size of any markets in which our product candidates may receive approval, and our ability to achieve sufficient market acceptance, pricing, reimbursement from third-party payors, and adequate market share for our product candidates in those markets.

We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. We anticipate that our expenses will increase substantially if and as we:

continue our research and preclinical and clinical development of our product candidates;
expand the scope of our current clinical studies for our product candidates;
advance our programs into more expensive clinical studies;
initiate additional preclinical, clinical, or other studies for our product candidates;
change or add additional manufacturers or suppliers;
seek regulatory and marketing approvals for our product candidates that successfully complete clinical studies;
establish a sales, marketing, and distribution infrastructure to commercialize any products for which we may obtain marketing approval;
seek to identify, assess, acquire, license, and/or develop other product candidates;
make milestone or other payments under any license agreements;
seek to maintain, protect, and expand our intellectual property portfolio;
seek to attract and retain skilled personnel;

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create additional infrastructure to support our operations as a public company and our product development and planned future commercialization efforts; and
experience any delays or encounter issues with any of the above, including but not limited to failed studies, complex results, safety issues, or other regulatory challenges that require longer follow-up of existing studies, additional major studies, or additional supportive studies in order to pursue marketing approval.

Further, the net losses we incur may fluctuate significantly from quarter to quarter and year to year, such that a period-to-period comparison of our results of operations may not be a good indication of our future performance.

We have never generated any revenue from product sales and may never be profitable.

We have no products approved for commercialization and have never generated any revenue. Our ability to generate revenue and achieve profitability depends on our ability, alone or with strategic collaboration partners, to successfully complete the development of, and obtain the regulatory and marketing approvals necessary to commercialize one or more of our product candidates. We do not anticipate generating revenue from product sales for the foreseeable future. Our ability to generate future revenue from product sales depends heavily on our success in many areas, including but not limited to:

completing research and preclinical and clinical development of our product candidates;
obtaining regulatory and marketing approvals for product candidates for which we complete clinical studies;
developing a sustainable and scalable manufacturing process for any approved product candidates and establishing and maintaining supply and manufacturing relationships with third parties that can conduct the process and provide adequate (in amount and quality) products to support clinical development and the market demand for our product candidates, if approved;
launching and commercializing product candidates for which we obtain regulatory and marketing approval, either directly or with a collaborator or distributor;
obtaining market acceptance of our product candidates as viable treatment options;
addressing any competing technological and market developments;
identifying, assessing, acquiring and/or developing new product candidates;
negotiating favorable terms in any collaboration, licensing, or other arrangements into which we may enter;
maintaining, protecting, and expanding our portfolio of intellectual property rights, including patents, trade secrets, and know-how; and
attracting, hiring, and retaining qualified personnel.

Even if one or more of the product candidates that we develop is approved for commercial sale, we anticipate incurring significant costs associated with commercializing any approved product candidate. Our expenses could increase beyond expectations if we are required by the FDA, the European Medicines Agency, or the EMA, or other regulatory agencies, domestic or foreign, to change our manufacturing processes or assays, or to perform clinical, nonclinical, or other types of studies in addition to those that we currently anticipate. In cases where we are successful in obtaining regulatory approvals to market one or more of our product candidates, our revenue will be dependent, in part, upon the size of the markets in the territories for which we gain regulatory approval, the accepted price for the product, the ability to get reimbursement at any price, and whether we own the commercial rights for that territory. If the number of our addressable rare disease patients is not as significant as we estimate, the indication approved by regulatory authorities is narrower than we expect, or the reasonably expected population for treatment is narrowed by competition, physician choice or treatment guidelines, we may not generate significant revenue from sales of such products, even if approved. Additionally, if we are not able to generate revenue from the sale of any approved products, we may never become profitable.

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Even if this offering is successful, we expect that we will need to raise substantial additional funding before we can expect to become profitable from sales of our products. This additional financing may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit, or terminate our product development efforts or other operations.

We are currently advancing our Cabaletta platform product candidates through clinical development and our other product candidates, BB-FA, BB-OTC, and BBrm1, as well as our other early stage research projects, through preclinical development. Developing our product candidates is expensive, and we expect our research and development expenses to increase substantially in connection with our ongoing activities, particularly as we advance our product candidates through clinical studies.

As of December 31, 2013, our cash and cash equivalents were $0.3 million. This amount does not reflect $5.3 million that we received in connection with sales of our ordinary shares in 2014. Upon the completion of this offering, based upon our currently expected level of operating expenditures, we expect that our existing cash, cash equivalents and marketable securities will be sufficient to fund our current operations for at least the next 12 months; however, we expect that we will require substantial additional capital to obtain regulatory approval for, and to commercialize, our product candidates. In addition, our operating plans may change as a result of many factors that may currently be unknown to us, and we may need to seek additional funds sooner than planned. Our future funding requirements will depend on many factors, including but not limited to:

the scope, rate of progress, results and cost of our clinical studies, preclinical testing, and other related activities;
the cost of manufacturing clinical supplies, and establishing commercial supplies, of our product candidates and any products that we may develop;
the number and characteristics of product candidates that we pursue;
the cost, timing, and outcomes of regulatory approvals;
the cost and timing of establishing sales, marketing, and distribution capabilities; and
the terms and timing of any collaborative, licensing, and other arrangements that we may establish, including any required milestone and royalty payments thereunder.

Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our product candidates. In addition, we cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all. Moreover, the terms of any financing may adversely affect the holdings or the rights of our stockholders and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our shares to decline. The incurrence of indebtedness could result in increased fixed payment obligations and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell, or license intellectual property rights, and other operating restrictions that could adversely impact our ability to conduct our business. We could also be required to seek funds through arrangements with collaborative partners or otherwise at an earlier stage than otherwise would be desirable and we may be required to relinquish rights to some of our technologies or product candidates or otherwise agree to terms unfavorable to us, any of which may have a material adverse effect on our business, operating results, and prospects. Even if we believe we have sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favorable or if we have specific strategic considerations.

If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay, or discontinue one or more of our research or development programs or the commercialization of any product candidates or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially affect our business, financial condition, and results of operations.

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Raising additional capital would cause dilution to our existing shareholders, and may restrict our operations or require us to relinquish rights.

We may seek additional capital through a combination of private and public equity offerings, debt financings and collaborations and strategic and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a shareholder. Debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions such as incurring debt, making capital expenditures or declaring dividends. If we raise additional funds through collaboration, strategic alliance and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams or product candidates, or grant licenses on terms that are not favorable to us.

Our recurring operating losses have raised substantial doubt regarding our ability to continue as a going concern.

As of December 31, 2013, we had an accumulated deficit of $1.4 million. Our recurring operating losses raise substantial doubt about our ability to continue as a going concern. Our financial statements include a note describing the conditions which raise this substantial doubt. As a result, our independent registered public accounting firm included an explanatory paragraph in its report on our financial statements as of and for the year ended December 31, 2013 with respect to this uncertainty. We have no current source of revenue to sustain our present activities, and we do not expect to generate revenue until, and unless, the FDA or other regulatory authorities approve our product candidates and we successfully commercialize our product candidates. Accordingly, our ability to continue as a going concern will require us to obtain additional financing to fund our operations. The perception of our ability to continue as a going concern may make it more difficult for us to obtain financing for the continuation of our operations and could result in the loss of confidence by investors, suppliers and employees.

Risks Related to the Discovery and Development of Our Product Candidates.

We are heavily dependent on the success of our product candidates, which are in the early stages of preclinical or clinical development. We cannot give any assurance that any of our product candidates will receive regulatory approval, which is necessary before they can be commercialized.

To date, we have invested substantially all of our efforts and financial resources to identify, acquire, license, and develop our product candidates, including conducting preclinical and clinical studies and providing general and administrative support for these operations. Our future success is dependent on our ability to successfully develop, obtain regulatory approval for, and then successfully commercialize one or more product candidates. We currently generate no revenue from sales of any drugs, and we may never be able to develop or commercialize a marketable drug.

Each of our product candidates is in the early stages of development and will require additional clinical development (and in some cases additional preclinical development), management of nonclinical, clinical, and manufacturing activities, regulatory approval, obtaining adequate manufacturing supply, building of a commercial organization, and significant marketing efforts before we generate any revenue from product sales. We currently have one product candidate in Phase 2 clinical studies and another one of our product candidates has advanced into a pivotal study. We are not permitted to market or promote any of our product candidates before we receive regulatory approval from the FDA or comparable foreign regulatory authorities, and we may never receive such regulatory approval for any of our product candidates.

We as a company have never submitted marketing applications to the FDA or comparable foreign regulatory authorities. We cannot be certain that any of our product candidates will be successful in clinical studies or receive regulatory approval. Further, our product candidates may not receive regulatory approval even if they are successful in clinical studies. If we do not receive regulatory approvals for our product candidates, we may not be able to continue our operations.

We generally plan to seek regulatory approval to commercialize our product candidates in the United States, the European Union, and in additional foreign countries where we have commercial rights. To obtain

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regulatory approval in other countries, we must comply with numerous and varying regulatory requirements of such other countries regarding safety, efficacy, chemistry, manufacturing and controls, clinical studies, commercial sales, pricing, and distribution of our product candidates. Even if we are successful in obtaining approval in one jurisdiction, we cannot ensure that we will obtain approval in any other jurisdictions. If we are unable to obtain approval for our product candidates in multiple jurisdictions, our revenue and results of operations could be negatively affected.

The regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time consuming, and inherently unpredictable. If we are ultimately unable to obtain regulatory approval for our product candidates, our business will be substantially harmed.

The time required to obtain approval by the FDA and comparable foreign authorities is unpredictable, typically takes many years following the commencement of clinical studies, and depends upon numerous factors. In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions, which may cause delays in the approval or the decision not to approve an application. We have not obtained regulatory approval for any product candidate, and it is possible that none of our existing product candidates or any product candidates we may seek to develop in the future will ever obtain regulatory approval.

Applications for our product candidates could fail to receive regulatory approval for many reasons, including but not limited to the following:

the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical studies;
we may be unable to demonstrate to the FDA or comparable foreign regulatory authorities that a product candidate’s safety-benefit ratio for its proposed indication is acceptable;
the population studied in the clinical program may not be sufficiently broad or representative to assure safety in the full population for which we seek approval;
the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical studies;
the data collected from clinical studies of our product candidates may not be sufficient to support the submission of a new drug application, or NDA, or biologics license application, or BLA, or other submission or to obtain regulatory approval in the United States or elsewhere;
the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes, test procedures and specifications, or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and
the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.

This lengthy approval process, as well as the unpredictability of the results of clinical studies, may result in our failing to obtain regulatory approval to market any of our product candidates, which would significantly harm our business, results of operations, and prospects.

Clinical drug development involves a lengthy and expensive process with an uncertain outcome, and results of earlier studies may not be predictive of future study results.

Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical study process. The results of preclinical studies and early clinical studies of our product candidates may not be predictive of the results of later-stage clinical studies. Product candidates that have shown promising results in early-stage clinical studies may still suffer significant setbacks in subsequent registration clinical studies. For example, the safety or efficacy results generated to date in preclinical and clinical studies for Cabaletta and BBrm1 or BB-FA, and BB-OTC do not ensure that later clinical studies will demonstrate similar results. There is a high failure rate for drugs and biologics proceeding through clinical studies, and product candidates in later stages of clinical studies may fail

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to show the desired safety and efficacy traits despite having progressed through preclinical studies and initial clinical studies. A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical studies due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier studies. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses. We do not know whether any Phase 2, Phase 3, or other clinical studies we may conduct will demonstrate consistent or adequate efficacy and safety sufficient to obtain regulatory approval to market our drug candidates.

We may find it difficult to enroll patients in our clinical studies given the limited number of patients who have the diseases for which our product candidates are being studied. Difficulty in enrolling patients could delay or prevent clinical studies of our product candidates.

Identifying and qualifying patients to participate in clinical studies of our product candidates is critical to our success. The timing of our clinical studies depends in part on the speed at which we can recruit patients to participate in testing our product candidates, and, although we have not yet experienced difficulty enrolling patients in clinical studies in the past, we may experience delays in our clinical studies if we encounter difficulties in enrollment in the future.

Each of the conditions for which we plan to evaluate our current product candidates is a rare genetic disease. Accordingly, there are limited patient pools from which to draw for clinical studies. For our current product candidates:

we estimate that several thousand patients in the United States suffer from OPMD for which Cabaletta is being studied;
we estimate that a few thousand patients in the United States suffer from SCA3 for which Cabaletta is being studied;
we estimate a few thousand patients in the United States suffer from SBMA for which Cabaletta is being studied;
we estimate that several thousand patients in the United States suffer from Friedrich’s Ataxia for which BB-FA is being studied;
we estimate that a few thousand patients in the United States suffer from OTC deficiency for which BB-OTC is being studied;
we estimate that several thousand patients in the United States suffer from SMA deficiency for which BBrm1 is being studied; and
we estimate that the prevalence of the diseases we aim at is similar and sometimes higher than the total number of patients in the United States.

In addition to the rarity of these diseases, the eligibility criteria of our clinical studies will further limit the pool of available study participants as we will require that patients have specific characteristics that we can measure or to assure their disease is either severe enough or not too advanced to include them in a study. Additionally, the process of finding and diagnosing patients may prove costly. We also may not be able to identify, recruit, and enroll a sufficient number of patients to complete our clinical studies because of the perceived risks and benefits of the product candidate under study, the availability and efficacy of competing therapies and clinical studies, the proximity and availability of clinical study sites for prospective patients, and the patient referral practices of physicians. If patients are unwilling to participate in our studies for any reason, the timeline for recruiting patients, conducting studies, and obtaining regulatory approval of potential products may be delayed.

If we experience delays in the completion of, or termination of, any clinical study of our product candidates, the commercial prospects of our product candidates will be harmed, and our ability to generate product revenue from any of these product candidates could be delayed or prevented. In addition, any delays in completing our clinical studies will increase our costs, slow down our product candidate development and approval process, and jeopardize our ability to commence product sales and generate revenue. Any of these occurrences may harm our business, financial condition, and prospects significantly. In addition, many of the

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factors that cause, or lead to, a delay in the commencement or completion of clinical studies may also ultimately lead to the denial of regulatory approval of our product candidates.

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

Before obtaining marketing approval from regulatory authorities for the sale of our product candidates, we 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. We 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, and our future clinical studies may not be successful. Events that may prevent successful or timely completion of clinical development include but are not limited to:

inability to generate sufficient preclinical, toxicology, or other in vivo or in vitro data to support the initiation of human clinical studies;
delays in reaching a consensus with regulatory agencies on study design;
delays in reaching agreement on acceptable terms with prospective contract research organizations, or CROs, and clinical study sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical study sites;
delays in obtaining required Institutional Review Board, or IRB, approval at each clinical study site;
imposition of a clinical hold by regulatory agencies, after review of an investigational new drug, or IND, application, or equivalent application, or an inspection of our clinical study operations or study sites;
delays in recruiting suitable patients to participate in our clinical studies;
difficulty collaborating with patient groups and investigators;
failure by our CROs, other third parties, or us to adhere to clinical study requirements;
failure to perform in accordance with the FDA’s good clinical practices requirements, or applicable regulatory guidelines in other countries;
delays in having patients complete participation in a study or return for post-treatment follow-up;
patients dropping out of a study;
occurrence of serious adverse events associated with the product candidate that are viewed to outweigh its potential benefits;
changes in regulatory requirements and guidance that require amending or submitting new clinical protocols;
the cost of clinical studies of our drug candidates being greater than we anticipate;
clinical studies of our drug candidates producing negative or inconclusive results, which may result in us deciding, or regulators requiring us, to conduct additional clinical studies or abandon drug development programs; and
delays in manufacturing, testing, releasing, validating, or importing/exporting sufficient stable quantities of our product candidates for use in clinical studies or the inability to do any of the foregoing.

Any inability to successfully complete preclinical and clinical development could result in additional costs to us or impair our ability to generate revenue. In addition, we may need to conduct additional studies to bridge our repurposed product candidates to generic products in the market. We may also be required to conduct additional safety, efficacy and comparability studies before we will be allowed to start clinical studies with our repurposed drugs. Clinical study delays could also shorten any periods during which our products have patent protection and may allow our competitors to bring products to market before we do, which could

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impair our ability to obtain orphan exclusivity and to successfully commercialize our product candidates and may harm our business and results of operations.

Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any.

Undesirable side effects caused by our product candidates could cause us or regulatory authorities to interrupt, delay, or halt clinical studies and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other comparable foreign authorities. Patients enrolled in our study of Cabaletta for OPMD, known as our HOPEMD study, may suffer side effects associated with the use of Cabaletta. Other enzyme replacement therapies have been associated with infusion-associated reactions due to a developing allergy to the product, which can cause rashes, pain, significant clinical disease, or even death. Our BB-FA and BB-OTC product candidates may also cause these or similar side effects. Results of our studies could reveal a high and unacceptable severity and prevalence of these or other side effects. In such an event, our studies could be suspended or terminated, and the FDA or comparable foreign regulatory authorities could order us to cease further development of or deny or withdraw approval of our product candidates for any or all targeted indications.

The drug-related side effects could affect patient recruitment, the ability of enrolled patients to complete the study, or result in potential product liability claims. We do not currently hold product liability insurance and do not anticipate obtaining product liability insurance until such time as we have received FDA or other comparable foreign authority approval for a product and there is a product that is being provided to third parties outside of clinical trials.

Additionally, if one or more of our product candidates receives marketing approval, and we or others later identify undesirable side effects caused by such products, a number of potentially significant negative consequences could result, including but not limited to:

regulatory authorities may withdraw approvals of such product;
regulatory authorities may require additional warnings on the label;
we may be required to create a Risk Evaluation and Mitigation Strategy, or REMS, plan, which could include a medication guide outlining the risks of such side effects for distribution to patients, a communication plan for healthcare providers, and/or other elements to assure safe use;
we could be sued and held liable for harm caused to patients; and
our reputation may suffer.

Any of these events could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved, and could significantly harm our business, results of operations, and prospects.

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

If our product candidates are approved, they will be subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising, promotion, sampling, record-keeping, conduct of post-marketing studies, and submission of safety, efficacy, and other post-market information, including both federal and state requirements in the United States. In addition, manufacturers and manufacturers’ facilities are required to comply with extensive FDA requirements, including ensuring that quality control and manufacturing procedures conform to current Good Manufacturing Practices, or cGMP, regulations. As such, we and our contract manufacturers will be subject to continual review and inspections to assess compliance with cGMP and adherence to commitments made in any NDA or BLA. Accordingly, we and others with whom we work must continue to expend time, money, and effort in all areas of regulatory compliance, including manufacturing, production, and quality control.

Any regulatory approvals that we receive for our product candidates may also be subject to 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 IV clinical trials, and

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surveillance to monitor the safety and efficacy of the product candidate. We will also be required to report certain adverse reactions and production problems, if any, to the FDA, and to comply with requirements concerning advertising and promotion for our products. Promotional communications with respect to prescription drugs are subject to a variety of legal and regulatory restrictions and must be consistent with the information in the product’s approved label. As such, we may not promote our products for indications or uses for which they do not have FDA approval. The holder of an approved NDA or BLA must also submit new or supplemental applications and obtain FDA approval for certain changes to the approved product, product labeling, or manufacturing process. We could also be asked to conduct post-marketing clinical studies to verify the safety and efficacy of our products in general or in specific patient subsets. If original marketing approval were obtained via the accelerated approval pathway, we could be required to conduct a successful post-marketing clinical study to confirm clinical benefit for our products. An unsuccessful post-marketing study or failure to complete such a study could result in the withdrawal of marketing approval. Furthermore, any new legislation addressing drug safety issues could result in delays in product development or commercialization, or increased costs to assure compliance. Foreign regulatory authorities impose similar requirements.

If a regulatory agency discovers 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 a product, such regulatory agency may impose restrictions on that product or us, including requiring withdrawal of the product from the market. If we fail to comply with applicable regulatory requirements, a regulatory agency or enforcement authority may, among other things:

issue warning letters;
impose civil or criminal penalties;
suspend or withdraw regulatory approval;
suspend any of our ongoing clinical studies;
refuse to approve pending applications or supplements to approved applications submitted by us;
impose restrictions on our operations, including closing our contract manufacturers’ facilities; or
seize or detain products, or require a product recall.

Any government investigation of alleged violations of law could require us to expend significant time and resources in response, and could generate negative publicity. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect our ability to commercialize and generate revenue from our products. If regulatory sanctions are applied or if regulatory approval is withdrawn, the value of our company and our operating results will be adversely affected.

Risks Related to our Reliance on Third Parties

We rely on third parties to conduct our preclinical and clinical studies and perform other tasks for us. If these third parties do not successfully carry out their contractual duties, meet expected deadlines, or comply with regulatory requirements, we may not be able to obtain regulatory approval for or commercialize our product candidates and our business could be substantially harmed.

We have relied upon and plan to continue to rely upon third-party CROs to monitor and manage data for our ongoing preclinical and clinical programs. We rely on these parties for execution of our preclinical and clinical studies, and control only certain aspects of their activities. Nevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol, legal, regulatory, and scientific standards and our reliance on the CROs does not relieve us of our regulatory responsibilities. We and our CROs and other vendors are required to comply with cGMP, current good clinical practices, or cGCP, and Good Laboratory Practices, or GLP, which are regulations and guidelines enforced by the FDA, the Competent Authorities of the Member States of the European Economic Area, or EEA, and comparable foreign regulatory authorities for all of our product candidates in clinical development. Regulatory authorities enforce these regulations through periodic inspections of study sponsors, principal investigators, study sites,

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and other contractors. If we or any of our CROs or vendors fail to comply with applicable regulations, the clinical data generated in our clinical studies may be deemed unreliable and the FDA, EMA, or comparable foreign regulatory authorities may require us to perform additional clinical studies before approving our marketing applications. We cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical studies comply with cGCP regulations. In addition, our clinical studies must be conducted with product produced under cGMP regulations. Our failure to comply with these regulations may require us to repeat clinical studies, which would delay the regulatory approval process.

If any of our relationships with these third-party CROs terminate, we may not be able to enter into arrangements with alternative CROs or do so on commercially reasonable terms. In addition, our CROs are not our employees, and except for remedies available to us under our agreements with such CROs, we cannot control whether or not they devote sufficient time and resources to our on-going clinical, nonclinical, and preclinical programs. If CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols, regulatory requirements, or for other reasons, our clinical studies may be extended, delayed, or terminated and we may not be able to obtain regulatory approval for or successfully commercialize our product candidates. CROs may also generate higher costs than anticipated. As a result, our results of operations and the commercial prospects for our product candidates would be harmed, our costs could increase, and our ability to generate revenue could be delayed.

Switching or adding additional CROs involves additional cost and requires management time and focus. In addition, there is a natural transition period when a new CRO commences work. As a result, delays occur, which can materially impact our ability to meet our desired clinical development timelines. Though we carefully manage our relationships with our CROs, there can be no assurance that we will not encounter similar challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition, and prospects.

We rely completely on third parties to manufacture our preclinical and clinical drug supplies. Our business could be harmed if those third parties fail to provide us with sufficient quantities of drug product, or fail to do so at acceptable quality levels or prices.

We do not currently have, nor do we plan to acquire, the infrastructure or capability internally to manufacture our preclinical and clinical drug supplies for use in the conduct of our clinical studies, and we lack the resources and the capability to manufacture any of our product candidates on a clinical or commercial scale. We rely on our manufacturers to purchase from third-party suppliers the materials necessary to produce our product candidates for our clinical studies. There are a limited number of suppliers for raw materials that we use to manufacture our drugs, and there may be a need to identify alternate suppliers to prevent a possible disruption of the manufacture of the materials necessary to produce our product candidates for our clinical studies, and, if approved, ultimately for commercial sale. We do not have any control over the process or timing of the acquisition of these raw materials by our manufacturers. Although we generally do not begin a clinical study unless we believe we have a sufficient supply of a product candidate to complete such study, any significant delay or discontinuity in the supply of a product candidate, or the raw material components thereof, for an ongoing clinical study due to the need to replace a third-party manufacturer could considerably delay completion of our clinical studies, product testing, and potential regulatory approval of our product candidates, which could harm our business and results of operations.

We are subject to a multitude of manufacturing risks, any of which could substantially increase our costs and limit supply of our product candidates.

The process of manufacturing our product candidates is complex, highly regulated, and subject to several risks, including but not limited to:

the process of manufacturing biologics, such as BB-FA and BB-OTC is extremely susceptible to product loss due to contamination, equipment failure or improper installation or operation of equipment, or vendor or operator error. Even minor deviations from normal manufacturing processes for any of our product candidates could result in reduced production yields, product defects, and

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other supply disruptions. If microbial, viral, or other contaminations are discovered in our product candidates or in the manufacturing facilities in which our product candidates are made, such manufacturing facilities may need to be closed for an extended period of time to investigate and remedy the contamination; and
the manufacturing facilities in which our product candidates are made could be adversely affected by equipment failures, labor shortages, natural disasters, power failures, and numerous other factors.

Any adverse developments affecting manufacturing operations for our product candidates may result in shipment delays, inventory shortages, lot failures, withdrawals or recalls, or other interruptions in the supply of our product candidates. We may also have to take inventory write-offs and incur other charges and expenses for product candidates that fail to meet specifications, undertake costly remediation efforts, or seek more costly manufacturing alternatives.

The drug substance and drug product for our product candidates are currently acquired from single-source suppliers. The loss of these suppliers, or their failure to supply us with the drug substance or drug product, could materially and adversely affect our business.

In several cases, we rely on a single provider or manufacturer for our product candidates. For example, the raw materials used to manufacture our Cabaletta are acquired from a single third party drug products supplier. Additionally, our Cabaletta, is manufactured by a single third party manufacturer. It is possible that the Company will be required to switch providers in the unforeseen future. In such case, the process of switching suppliers and/or manufacturers may be costly and/or time consuming for us, and that may include the temporary or permanent suspension of a clinical study or commercial sales of our candidate products.

We do not currently have any other suppliers for the drug substance or drug product of our product candidates and, although we believe that there are alternate sources of supply that could satisfy our clinical and commercial requirements, we cannot assure you that identifying alternate sources and establishing relationships with such sources would not result in significant delay in the development of our product candidates. Additionally, we may not be able to enter into supply arrangements with alternative suppliers on commercially reasonable terms, or at all. A delay in the development of our product candidates or having to enter into a new agreement with a different third party on less favorable terms than we have with our current suppliers could have a material adverse impact upon on our business.

We and our collaborators and contract manufacturers are subject to significant regulation with respect to manufacturing our product candidates. The manufacturing facilities on which we rely may not continue to meet regulatory requirements and have limited capacity.

All entities involved in the preparation of therapeutics for clinical studies or commercial sale, including our existing contract manufacturers for our product candidates, are subject to extensive regulation. Components of a finished therapeutic product approved for commercial sale or used in late-stage clinical studies must be manufactured in accordance with 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 contaminants or to inadvertent changes in the properties or stability of our product candidates that may not be detectable in final product testing. We, our collaborators, or our contract manufacturers must supply all necessary documentation in support of an NDA, BLA, or Marketing Authorization Application, or MAA, on a timely basis and must adhere to GLP and cGMP regulations enforced by the FDA and other regulatory agencies through their facilities inspection program. Some of our contract manufacturers have never produced a commercially approved pharmaceutical product and therefore have not obtained the requisite regulatory authority approvals to do so. The facilities and quality systems of some or all of our collaborators and third-party contractors must pass a pre-approval inspection for compliance with the applicable regulations as a condition of regulatory approval of our product candidates or any of our other potential products. In addition, the regulatory authorities may, at any time, audit or inspect a manufacturing facility involved with the preparation of our product candidates or our other potential products or the associated quality systems for compliance with the regulations applicable to the activities being conducted. We do not control the manufacturing process of, and are completely dependent on, our contract manufacturing partners for compliance with the regulatory requirements. If these facilities do not pass a

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pre-approval plant inspection, regulatory approval of the products may not be granted or may be substantially delayed until any violations are corrected to the satisfaction of the regulatory authority, if ever.

The regulatory authorities also may, at any time following approval of a product for sale, audit the manufacturing facilities of our collaborators and third-party contractors. If any such inspection or audit identifies a failure to comply with applicable regulations or if a violation of our product specifications or applicable regulations occurs independent of such an inspection or audit, we or the relevant regulatory authority may require remedial measures that may be costly and/or time consuming for us 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 us or third parties with whom we contract could materially harm our business.

If we, our collaborators, or any of our third-party manufacturers fail to maintain regulatory compliance, the FDA or other applicable regulatory authority can impose regulatory sanctions including, among other things, refusal to approve a pending application for a new drug product or biologic product, withdrawal of an approval, or suspension of production. As a result, our business, financial condition, and results of operations may be materially harmed.

Additionally, if supply from one approved manufacturer is interrupted, an alternative manufacturer would need to be qualified through an NDA or BLA supplement or MAA amendment, or equivalent foreign regulatory filing, which could result in further delay. The regulatory agencies may also require additional studies if a new manufacturer is relied upon for commercial production. Switching manufacturers may involve substantial costs and is likely to result in a delay in our desired clinical and commercial timelines.

These factors could cause us to incur higher costs and could cause the delay or termination of clinical studies, regulatory submissions, required approvals, or commercialization of our product candidates. Furthermore, if our suppliers fail to meet contractual requirements and we are unable to secure one or more replacement suppliers capable of production at a substantially equivalent cost, our clinical studies may be delayed or we could lose potential revenue.

Our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will discover them or that our trade secrets will be misappropriated or disclosed.

Because we rely on third parties to develop and manufacture our product candidates, we must, at times, share trade secrets with them. We seek to protect our 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 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 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 competitors, are inadvertently incorporated into the technology of others, or are disclosed or used in violation of these agreements. Given that our proprietary position is based, in part, on our know-how and trade secrets, a competitor’s discovery of our trade secrets or other unauthorized use or disclosure would impair our competitive position and may have a material adverse effect on our business.

Risks Related to Commercialization of Our Product Candidates

If the market opportunities for our product candidates are smaller than we believe they are, our revenue may be adversely affected, and our business may suffer. Because the target patient populations of our product candidates are small, we must be able to successfully identify patients and achieve a significant market share to maintain profitability and growth.

We focus our research and product development on treatments for rare and ultra-rare genetic diseases. Given the small number of patients who have the diseases that we are targeting, it is critical to our ability to grow and become profitable that we continue to successfully identify patients with these rare and ultra-rare genetic diseases. Our projections 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 product candidates, are based on our beliefs and estimates. These estimates have been derived from a variety of sources, including

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the scientific literature, surveys of clinics, patient foundations, or market research, and may prove to be incorrect. Further, new studies may change the estimated incidence or prevalence of these diseases. The number of patients may turn out to be lower than expected. The effort to identify patients with diseases we seek to treat is in early stages, and we cannot accurately predict the number of patients for whom treatment might be possible. Additionally, the potentially addressable patient population for each of our product candidates may be limited or may not be amenable to treatment with our product candidates, and new patients may become increasingly difficult to identify or gain access to, which would adversely affect our results of operations and our business.

We intend to rely on third-party manufacturers to produce our product candidates, but we have not entered into binding agreements with any such manufacturers to support commercialization. Additionally, these manufacturers do not have experience producing our product candidates at commercial levels and may not achieve the necessary regulatory approvals or produce our product candidates at the quality, quantities, locations, and timing needed to support commercialization.

We have not yet secured manufacturing capabilities for commercial quantities of our product candidates. Although we intend to rely on third-party manufacturers for commercialization, we have only entered into agreements with such manufacturers to support our clinical studies. We may be unable to negotiate binding agreements with the manufacturers to support our commercialization activities at commercially reasonable terms.

Manufacturers may not have the experience or ability to produce our product candidates at commercial levels. We may run into technical or scientific issues related to manufacturing or development that we may be unable to resolve in a timely manner or with available funds. We also have not completed all of the characterization and validation activities necessary for commercialization and regulatory approvals. If our manufacturing partners do not conduct all such necessary activities, our commercialization efforts will be harmed.

Even if we timely develop a manufacturing process and successfully transfer it to the third-party product manufacturers, if such third-party manufacturers are unable to produce the necessary quantities of our product candidates, or in compliance with cGMP or other pertinent regulatory requirements, and within our planned timeframe and cost parameters, the development and sales of our products, if approved, may be materially harmed.

We face intense competition and rapid technological change and the possibility that our competitors may develop therapies that are similar, more advanced, or more effective than ours, which may adversely affect our financial condition and our ability to successfully commercialize our product candidates.

The biotechnology and pharmaceutical industries are intensely competitive and subject to rapid and significant technological change. We are currently aware of various existing therapies in the market and in development that may in the future compete with our product candidates.

Gene therapy, cell therapy, bone marrow transplantation and other approaches may also emerge for the treatment of any of the disease areas in which we focus.

We have competitors both in the United States and internationally, including major multinational pharmaceutical companies, specialty pharmaceutical companies, and biotechnology companies. Some of the pharmaceutical and biotechnology companies we expect to compete with include Shire, Sanofi, BioMarin, Alexion, and Roche, other smaller companies or biotechnology startups, as well as other large multinational pharmaceutical companies. Many of our competitors have substantially greater financial, technical, and other resources, such as larger research and development staff and experienced marketing and manufacturing organizations. Additional mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated in our competitors. As a result, these companies may obtain regulatory approval more rapidly than we are able to and may be more effective in selling and marketing their products as well. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies. 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 competitors may succeed in developing, acquiring, or licensing on an

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exclusive basis, products that are more effective or less costly than any product candidate that we may develop, or achieve earlier patent protection, regulatory approval, product commercialization, and market penetration than we do. Additionally, technologies developed by our competitors may render our potential product candidates uneconomical or obsolete, and we may not be successful in marketing our product candidates against competitors.

We currently have no marketing and sales organization. If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our product candidates, we may be unable to generate any revenue.

Although our employees may have sold other similar products in the past while employed at other companies, we as a company have no experience selling and marketing our product candidates and we currently have no marketing or sales organization. To successfully commercialize any products that may result from our development programs, we will need to develop these capabilities, either on our own or with others. If our product candidates receive regulatory approval, we intend to establish a sales and marketing organization with technical expertise and supporting distribution capabilities to commercialize our product candidates in major markets, which will be expensive, difficult, and time consuming. Any failure or delay in the development of our internal sales, marketing, and distribution capabilities would adversely impact the commercialization of our products.

Further, given our lack of prior experience in marketing and selling biopharmaceutical products, our initial estimate of the size of the required sales force may be materially more or less than the size of the sales force actually required to effectively commercialize our product candidates. As such, we may be required to hire substantially more sales representatives to adequately support the commercialization of our product candidates or we may incur excess costs as a result of hiring more sales representatives than necessary. With respect to certain geographical markets, we may enter into collaborations with other entities to utilize their local marketing and distribution capabilities, but we may be unable to enter into such agreements on favorable terms, if at all. If our future collaborators do not commit sufficient resources to commercialize our future products, if any, and we are unable to develop the necessary marketing capabilities on our own, we will be unable to generate sufficient product revenue to sustain our business. We may be competing with companies that currently have extensive and well-funded marketing and sales operations. Without an internal team or the support of a third party to perform marketing and sales functions, we may be unable to compete successfully against these more established companies.

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 with the requisite approvals from the FDA and comparable foreign regulatory authorities, the commercial success of our product candidates will depend in part on the medical community, patients, and third-party payors accepting our product candidates as medically useful, cost-effective, and safe. Any product that we bring 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 any of our product candidates, if approved for commercial sale, will depend on a number of factors, including:

the efficacy of the product as demonstrated in clinical studies and potential advantages over competing treatments;
the prevalence and severity of any side effects, including any limitations or warnings contained in a product’s approved labeling;
the clinical indications for which approval is granted;
relative convenience and ease of administration;
the cost of treatment, particularly in relation to competing treatments;
the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;

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the strength of marketing and distribution support and timing of market introduction of competitive products;
publicity concerning our products or competing products and treatments; and
sufficient third-party insurance coverage and reimbursement.

Even if a potential product displays a favorable efficacy and safety profile in preclinical and clinical studies, market acceptance of the product will not be fully known until after it is launched. Our efforts to educate the medical community and third-party payors on the benefits of the product candidates may require significant resources and may never be successful. If our product candidates are approved but fail to achieve an adequate level of acceptance by physicians, patients, third-party payors, and others in the medical community, we will not be able to generate sufficient revenue to become or remain profitable.

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

Our target patient populations are small, and accordingly the pricing, coverage, and reimbursement of our product candidates, if approved, must be adequate to support our commercial infrastructure. Our per-patient prices must be sufficient to recover our development and manufacturing costs and potentially achieve profitability. Accordingly, the availability and adequacy of coverage and reimbursement by governmental and private payors are essential for most patients to be able to afford expensive treatments such as ours, assuming approval. Sales of our product candidates will depend substantially, both domestically and abroad, on the extent to which the costs of our product candidates will be paid for by health maintenance, managed care, pharmacy benefit, and similar healthcare management organizations, or reimbursed by government authorities, private health insurers, and other third-party payors. If coverage and reimbursement are not available, or are available only to limited levels, we may not be able to successfully commercialize our product candidates. Even if coverage is provided, the approved reimbursement amount may not be high enough to allow us to establish or maintain pricing sufficient to realize a return on our investment.

There is significant uncertainty related to the insurance coverage and reimbursement of newly approved products. In the United States, the principal decisions about coverage and reimbursement for new drugs 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 CMS decides whether and to what extent a new drug will be covered and reimbursed under Medicare. Private payors tend to follow the coverage reimbursement policies established by CMS to a substantial degree. It is difficult to predict what CMS will decide with respect to reimbursement for products such as ours.

Outside the United States, international operations are generally subject to extensive governmental price controls and other market regulations, and we believe the increasing emphasis on cost-containment initiatives in Europe, Canada, and other countries has and will continue to put pressure on the pricing and usage of our product candidates. In many countries, the prices of medical products are subject to varying price control mechanisms as part of national health systems. 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 medicinal products, but monitor and control company profits. Additional foreign price controls or other changes in pricing regulation could restrict the amount that we are able to charge for our product candidates. Accordingly, in markets outside the United States, the reimbursement for our products may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenue and profits.

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 new products approved and, as a result, they may not cover or provide adequate payment for our product candidates. We expect to experience pricing pressures in connection with the sale of any of our 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

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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.

Healthcare legislative reform measures may have a material adverse effect on our business and results of operations.

In the United States, there have been and continue to be a number of legislative initiatives to contain healthcare costs. For example, in March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or the Health Care Reform Law, was passed, which substantially changes the way health care is financed by both governmental and private insurers, and significantly impacts the U.S. pharmaceutical industry. The Health Care Reform Law, among other things, subjects biologic products to potential competition by lower-cost biosimilars, addresses 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, increases the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program and extends the rebate program to individuals enrolled in Medicaid managed care organizations, establishes annual fees and taxes on manufacturers of certain branded prescription drugs, and promotes a new Medicare Part D coverage gap discount program.

In addition, other legislative changes have been proposed and adopted in the United States since the Health Care Reform Law was enacted. On August 2, 2011, the Budget Control Act of 2011, among other things, created measures for spending reductions by the U.S. 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 up to 2% per fiscal year. On January 2, 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, or the ATRA, which, among other things, delayed for another two months the budget cuts mandated by these sequestration provisions of the Budget Control Act of 2011. On March 1, 2013, the President signed an executive order implementing sequestration, and on April 1, 2013, the 2% Medicare payment reductions went into effect. We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our product candidates or additional pricing pressures.

Risks Related to Our Intellectual Property

If we are unable to obtain and maintain effective patent rights for our product candidates or any future product candidates, we may not be able to compete effectively in our markets.

We rely upon a combination of patents, trade secret protection, and confidentiality agreements to protect the intellectual property related to our technologies and product candidates. Our success depends in large part on our and our licensors’ ability to obtain and maintain patent and other intellectual property protection in the United States and in other countries with respect to our proprietary technology and products.

We have sought to protect our proprietary position by filing patent applications in the United States and abroad related to our novel technologies and products that are important to our business. This process is expensive and time consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection.

The patent position of biotechnology and pharmaceutical companies generally is highly uncertain and involves complex legal and factual questions for which legal principles remain unsolved. The patent applications that we own or in-license may fail to result in issued patents with claims that cover our product candidates in the United States or in other foreign countries. There is no assurance that all potentially relevant prior art relating to our patents and patent applications has been found, which can invalidate a patent or prevent a patent from issuing from a pending patent application. Even if patents do successfully issue, and even if such patents cover our product candidates, third parties may challenge their validity, enforceability, or scope, which may result in such patents being narrowed, found unenforceable or invalidated. Furthermore, even if they are unchallenged, our patents and patent applications may not adequately protect our intellectual

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property, provide exclusivity for our product candidates, or prevent others from designing around our claims. Any of these outcomes could impair our ability to prevent competition from third parties, which may have an adverse impact on our business.

We, independently or together with our licensors, have filed several patent applications covering various aspects of our product candidates. We cannot offer any assurances about which, if any, patents will issue, the breadth of any such patent or whether any issued patents will be found invalid and unenforceable or will be threatened by third parties. Any successful opposition to these patents or any other patents owned by or licensed to us after patent issuance could deprive us of rights necessary for the successful commercialization of any product candidates that we may develop. Further, if we encounter delays in regulatory approvals, the period of time during which we could market a product candidate under patent protection could be reduced.

Although we have a number of patents/patents applications covering methods of use and certain compositions of matter, we do not have complete patent protection for our product candidates. For example: We do not have a patent covering the composition of matter of Trehalose, and our patents cover only the route of administration (IV) and use in several orphan diseases associated with trinucleotide repeat expansion (PolyA/PolyQ) diseases. With regards to our mitochondrial protein replacement therapy we do not have a patent covering the concept of attaching TAT to a protein. With our read-through patents we do not have a composition of matter protection. Instead, we have filed a use patent application of a generic family of molecules in a non-systemic route of administration for genetic neuro degenerative and neuro developmental diseases and new route of administration through direct injection to the central nervous system. In addition, our patent applications have not resulted in issued patents.

If we cannot obtain and maintain effective patent rights for our product candidates, we may not be able to compete effectively and our business and results of operations would be harmed.

We may not have sufficient patent terms to effectively protect our products and business.

Patents have a limited lifespan. In the United States, the natural expiration of a patent is generally 20 years after it is filed. Although various extensions may be available, the life of a patent, and the protection it affords, is limited. Even if patents covering our product candidates are obtained, once the patent life has expired for a product, we may be open to competition from generic medications.

While patent term extensions under the Hatch-Waxman Act in the United States and under supplementary protection certificates in Europe may be available to extend the patent exclusivity term for Cabaletta, BB-FA and BB-OTC as well as the BBrm family of molecules we cannot provide any assurances that any such patent term extension will be obtained and, if so, for how long. In addition, upon issuance in the United States any patent term can be adjusted based on certain delays caused by the applicant(s) or the United States Patent and Trademark office, or USPTO. For example, a patent term can be reduced based on certain delays caused by the patent applicant during patent prosecution. If we do not have sufficient patent terms or regulatory exclusivity to protect our products, our business and results of operations will be adversely affected.

Patent policy and rule changes could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents.

Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection. The laws of foreign countries may not protect our rights to the same extent as the laws of the United States. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. We therefore cannot be certain that we or our licensors were the first to make the invention claimed in our owned and licensed patents or pending applications, or that we or our licensor were the first to file for patent protection of such inventions. Assuming the other requirements for patentability are met, in the United States prior to March 15, 2013, the first to make the claimed invention is entitled to the patent, while outside the United States, the first to file a patent application is entitled to the patent. After March 15, 2013, under the Leahy-Smith America Invents Act, or the Leahy-Smith Act, enacted on September 16, 2011, the United States has moved to a first to file system. The Leahy-Smith Act also includes a number of significant changes that affect the way patent applications will be prosecuted and may also affect patent litigation. The

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effects of these changes are currently unclear as USPTO, must still implement various regulations, the courts have yet to address any of these provisions and the applicability of the act and new regulations on specific patents discussed herein have not been determined and would need to be reviewed. In general, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business and financial condition.

If we are unable to maintain effective proprietary rights for our product candidates or any future product candidates, we may not be able to compete effectively in our markets.

In addition to the protection afforded by patents, we rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable or that we elect not to patent, processes for which patents are difficult to enforce and any other elements of our product candidate discovery and development processes that involve proprietary know-how, information or technology that is not covered by patents. However, trade secrets can be difficult to protect. We seek to protect our proprietary technology and processes, in part, by entering into confidentiality agreements with our employees, consultants, scientific advisors, and contractors. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises and physical and electronic security of our information technology systems. While we have confidence in these individuals, organizations and systems, agreements or security measures may be breached, and we may not have adequate remedies for any breach. In addition, our trade secrets may otherwise become known or be independently discovered by competitors.

Although we expect all of our employees and consultants to assign their inventions to us, and all of our employees, consultants, advisors, and any third parties who have access to our proprietary know-how, information, or technology to enter into confidentiality agreements, we cannot provide any assurances that all such agreements have been duly executed or that our trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. Misappropriation or unauthorized disclosure of our trade secrets could impair our competitive position and may have a material adverse effect on our business. Additionally, if the steps taken to maintain our trade secrets are deemed inadequate, we may have insufficient recourse against third parties for misappropriating the trade secret.

Third-party claims of intellectual property infringement may prevent or delay our development and commercialization efforts.

Our commercial success depends in part on our avoiding infringement of the patents and proprietary rights of third parties. There have been many lawsuits and other proceedings involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries, including patent infringement lawsuits, interferences, oppositions, and reexamination proceedings before the 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 developing product candidates. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that our product candidates may be subject to claims of infringement of the patent rights of third parties.

Third parties may assert that we 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 product candidates. We have conducted freedom to operate analyses with respect to only certain of our product candidates, and therefore we do not know whether there are any third-party patents that would impair our ability to commercialize these product candidates. We also cannot guarantee that any of our analyses are complete and thorough, nor can we be sure that we have identified each and every patent and pending application in the United States and abroad that is relevant or necessary to the commercialization of our product candidates. Because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued patents that our product candidates may infringe. In addition, third parties may obtain patents in the future and claim that use of our 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 product candidates, any molecules formed during the manufacturing process or any final product itself, the holders of any such patents

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may be able to block our ability to commercialize such product candidate unless we obtained a license under the applicable patents, or until such patents expire or are finally determined to be invalid or unenforceable.

Similarly, if any third-party patents were held by a court of competent jurisdiction to cover aspects of our formulations, processes for manufacture, or methods of use, the holders of any such patents may be able to block our ability to develop and commercialize the applicable product candidate unless we obtained a license or until such patent expires or is finally determined to be invalid or unenforceable. In either case, such a license may not be available on commercially reasonable terms or at all.

Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize one or more of our 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 business. In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, pay royalties, redesign our infringing products or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure.

We may not be successful in obtaining or maintaining necessary rights to our product candidates through acquisitions and in-licenses.

We currently have rights to the intellectual property, through licenses from third parties and under patents that we own, to develop our product candidates. Because our programs may require the use of proprietary rights held by third parties, the growth of our business will likely depend in part on our ability to acquire, in-license, or use these proprietary rights. In addition, our product candidates may require specific formulations to work effectively and efficiently and the rights to these formulations may be held by others. We may be unable to acquire or in-license any compositions, methods of use, processes, or other third-party intellectual property rights from third parties that we identify as necessary for our product candidates. The licensing and acquisition of third-party intellectual property rights is a competitive area, and a number of more established companies are also pursuing strategies to license or acquire third-party intellectual property rights that we may consider attractive. These established companies may have a competitive advantage over us due to their size, cash resources, and greater clinical development and commercialization capabilities.

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

In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. We also may be unable to license or acquire third-party intellectual property rights on terms that would allow us to make an appropriate return on our investment. If we are unable to successfully obtain rights to required third-party intellectual property rights, we may have to abandon development of that program and our business and financial condition could suffer.

We may face competition from biosimilars, which may have a material adverse impact on the future commercial prospects of our mitochondrial protein replacment platform.

Even if we are successful in achieving regulatory approval to commercialize a product candidate faster than our competitors, we may face competition from biosimilars with respect to BB-FA and BB-OTC and future product candidates based on our protein replacement platform. In the United States, the Biologics Price Competition and Innovation Act of 2009 created an abbreviated approval pathway for biological products that are demonstrated to be “highly similar,” or biosimilar, to or “interchangeable” with an FDA-approved biological product. This new pathway could allow competitors to reference data from innovative biological products 12 years after the time of approval of the innovative biological product. This data exclusivity does not prevent another company from developing a product that is highly similar to the innovative product, generating its own data, and seeking approval. Data exclusivity only assures that another company cannot rely upon the data within the innovator’s application to support the biosimilar product’s approval. In his proposed

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budget for fiscal year 2014, President Obama proposed to cut this 12-year period of exclusivity down to seven years. He also proposed to prohibit additional periods of exclusivity due to minor changes in product formulations, a practice often referred to as “evergreening.” It is possible that the U.S. Congress may take these or other measures to reduce or eliminate periods of exclusivity. The Biologics Price Competition and Innovation Act of 2009 is complex and only beginning to be interpreted and implemented by the FDA. As a result, its ultimate impact, implementation, and meaning are subject to uncertainty. While it is uncertain when any such processes may be fully adopted by the FDA, any such processes could have a material adverse effect on the future commercial prospects for BB-FA and BB-OTC.

In Europe, the European Commission has granted marketing authorizations for several biosimilars pursuant to a set of general and product class-specific guidelines for biosimilar approvals issued over the past few years. In Europe, a competitor may reference data supporting approval of an innovative biological product, but will not be able to get on the market until 10 years after the time of approval of the innovative product. This 10-year marketing exclusivity period will be extended to 11 years if, during the first eight of those 10 years, the marketing authorization holder obtains an approval for one or more new therapeutic indications that bring significant clinical benefits compared with existing therapies. In addition, companies may be developing biosimilars in other countries that could compete with our products.

If competitors are able to obtain marketing approval for biosimilars referencing our products, our products may become subject to competition from such biosimilars, with the attendant competitive pressure and consequences.

The patent protection and patent prosecution for some of our product candidates is dependent on third parties.

While we normally seek and gain the right to fully prosecute the patents relating to our product candidates, there may be times when patents relating to our product candidates are controlled by our licensors.

In addition, even where we now have the right to control patent prosecution of patents and patent applications we have licensed from third parties, we may still be adversely affected or prejudiced by actions or inactions of our licensors and their counsel that took place prior to us assuming control over patent prosecution.

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

We are a party to a number of intellectual property license agreements that are important to our business and expect to enter into additional license agreements in the future. Our existing license agreements impose, and we expect that future license agreements will impose, various diligence, milestone payment, royalty, and other obligations on us. If we fail to comply with our obligations under these agreements, or we are subject to a bankruptcy, we may be required to make certain payments to the licensor, we may lose the exclusivity of our license, or the licensor may have the right to terminate the license, in which event we would not be able to develop or market products covered by the license. Additionally, the milestone and other payments associated with these licenses will make it less profitable for us to develop our drug candidates. See “Business — License Agreements” for a description of our license agreements with the Hebrew University in Jerusalem and the Tel-Aviv University.

In certain cases, we control the prosecution of patents resulting from licensed technology. In the event we breach any of our obligations related to such prosecution, we may incur significant liability to our licensing partners. Licensing of intellectual property is of critical importance to our business and involves complex legal, business, and scientific issues. Disputes may arise regarding intellectual property subject to a licensing agreement, including but not limited to:

the scope of rights granted under the license agreement and other interpretation-related issues;
the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement;
the sublicensing of patent and other rights;

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our diligence obligations under the license agreement and what activities satisfy those diligence obligations;
the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our collaborators; and
the priority of invention of patented technology.

If disputes over intellectual property and other rights that we have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates.

We may be involved in lawsuits to protect or enforce our patents or the patents of our licensors, which could be expensive, time consuming, and unsuccessful.

Competitors may infringe our patents or the patents of our licensors. If we or one of our licensing partners were to initiate legal proceedings against a third party to enforce a patent covering one of our product candidates, the defendant could counterclaim that the patent covering our product candidate is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and/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, or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution. The outcome following legal assertions of invalidity and unenforceability is unpredictable.

Interference proceedings provoked by third parties or brought by us or declared by the USPTO may be necessary to determine the priority of inventions with respect to our patents or patent applications or those of our licensors. An unfavorable outcome could require us to cease using the related technology or to attempt to license rights to it from the prevailing party. Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms. Our defense of litigation or interference proceedings may fail and, even if successful, may result in substantial costs and distract our management and other employees. In addition, the uncertainties associated with litigation could have a material adverse effect on our ability to raise the funds necessary to continue our clinical trials, continue our research programs, license necessary technology from third parties, or enter into development partnerships that would help us bring our product candidates to market.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of hearings, motions, or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our ordinary shares.

We may be subject to claims that our employees, consultants, or independent contractors have wrongfully used or disclosed confidential information of third parties or that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.

We employ individuals who were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although we try to ensure that our employees, consultants, and independent contractors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or our employees, consultants, or independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of any of our employee’s former employer or other third parties. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel, which could adversely impact our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

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We may be subject to claims challenging the inventorship of our patents and other intellectual property.

We may be subject to claims that former employees, collaborators or other third parties have an interest in our patents or other intellectual property as an inventor or co-inventor. For example, we may have inventorship disputes arise from conflicting obligations of consultants or others who are involved in developing our product candidates. Litigation may be necessary to defend against these and other claims challenging inventorship. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees. Therefore, we may receive less revenue from future products if such claims are successful which in turn could impact our future profitability.

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

As is the case with other biopharmaceutical companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the biotechnology industry involves both technological and legal complexity. Therefore, obtaining and enforcing biotechnology patents is costly, time consuming, and inherently uncertain. In addition, the United States has recently enacted and is currently implementing wide-ranging patent reform legislation. Recent U.S. Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on future actions by the U.S. Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future.

We may not be able to protect our 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 intellectual property rights in some countries outside the United States can be less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Among these countries is China where we intend to protect our intellectual property rights to the extent possible.

Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and may also export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States. These products may compete with our products and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets, and other intellectual property protection, particularly those relating to biotechnology products, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

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Risks Related to Our Business Operations

Our future success depends in part on our ability to retain our Chief Executive Officer and our Chief Financial Officer and to attract, retain, and motivate other qualified personnel.

We are highly dependent on Dalia Megiddo, M.D., our Founder and Chief Executive Officer, and Udi Gilboa, our Chief Financial Officer, the loss of their services without a proper replacement may adversely impact the achievement of our objectives. Dr. Megiddo and Mr. Gilboa may leave our employment at any time (subject, in each case, to a 60 days prior notice, under the terms of their consultancy agreements), as each one is an “at will” independent contractor. Recruiting and retaining other qualified employees, consultants, and advisors for our business, including scientific and technical personnel, will also be critical to our success. There is currently a shortage of skilled personnel in our industry, which is likely to continue. As a result, competition for skilled personnel is intense and the turnover rate can be high. We may not be able to attract and retain personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for individuals with similar skill sets. In addition, failure to succeed in preclinical or clinical studies may make it more challenging to recruit and retain qualified personnel. The inability to recruit and retain qualified personnel, or the loss of the services of Dr. Megiddo or Mr. Gilboa without proper replacement, may impede the progress of our research, development, and commercialization objectives.

If we fail to obtain or maintain orphan drug exclusivity for our products, our competitors may sell products to treat the same conditions and our revenue will be reduced.

Our business strategy focuses on the development of drugs that are eligible for FDA and European Union orphan drug designation. Under the Orphan Drug Act, the FDA may designate a product as an orphan drug if it is intended to treat a rare disease or condition, defined as a patient population of fewer than 200,000 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 EMA’s Committee for Orphan Medicinal Products, or COMP, grants orphan drug designation to promote the development of products that are intended for the diagnosis, prevention, or treatment of a life-threatening or chronically debilitating condition affecting not more than five in 10,000 persons in the European Union Community. Additionally, designation is 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 in the European Union would be sufficient to justify the necessary investment in developing the drug or biological product.

In the United States, orphan drug designation entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages, and user-fee waivers. In addition, if a product receives the first FDA approval for the indication for which it has orphan designation, the product is entitled to orphan drug exclusivity, which means the FDA may not approve any other application to market the same drug for the same indication for a period of seven years, except in limited circumstances, such as a showing of clinical superiority over the product with orphan exclusivity or where the manufacturer is unable to assure sufficient product quantity. In the European Union, orphan drug designation also entitles a party to financial incentives such as reduction of fees or fee waivers and ten years of market exclusivity is granted following drug or biological product approval. This period may be reduced to six years if the orphan drug designation criteria are no longer met, including where it is shown that the product is sufficiently profitable not to justify maintenance of market exclusivity.

Because the extent and scope of patent protection for our products may in some cases be limited, orphan drug designation is especially important for our products for which orphan drug designation may be available. For eligible drugs, we plan to rely on the exclusivity period under the Orphan Drug Act to maintain a competitive position. If we do not obtain orphan drug exclusivity for our drug products and biologic products that do not have broad patent protection, our competitors may then sell the same drug to treat the same condition sooner than if we had obtained orphan drug exclusivity and our revenue will be reduced.

Even though we have obtained orphan drug designation for OPMD in the United States, we may not be the first to obtain marketing approval for any particular orphan indication due to the uncertainties associated with developing pharmaceutical products. Further, even if we obtain orphan drug exclusivity for a product, that exclusivity may not effectively protect the product from competition because different drugs with different

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active moieties can be approved for the same condition. Even with orphan drug exclusivity, if a third party were to prepare or market a Trehalose IV preparation which infringes upon our intellectual property, we may need to initiate litigation, which may be costly, to enforce our rights against such party. Even after an orphan drug is approved, the FDA can subsequently approve the same drug with the same active moiety for the same condition if the FDA concludes that the later drug is safer, more effective, or makes a major contribution to patient care. Orphan drug designation neither shortens the development time or regulatory review time of a drug nor gives the drug any advantage in the regulatory review or approval process.

We will need to expand our organization and we may experience difficulties in managing this growth, which could disrupt our operations.

As our development and commercialization plans and strategies develop, we expect to need additional managerial, operational, sales, marketing, financial, legal, and other resources. Our management may need to divert a disproportionate amount of its attention away from our day-to-day activities and devote a substantial amount of time to managing these growth activities. We may not be able to effectively manage the expansion of our operations, which may result in weaknesses in our infrastructure, operational mistakes, loss of business opportunities, loss of employees, and reduced productivity among remaining employees. Our 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 management is unable to effectively manage our growth, our expenses may increase more than expected, our ability to generate and/or grow revenue could be reduced and we may not be able to implement our business strategy. Our future financial performance and our ability to commercialize product candidates and compete effectively will depend, in part, on our ability to effectively manage any future growth.

We may not be successful in our efforts to identify, license, or discover additional product candidates.

Although a substantial amount of our effort will focus on the continued clinical testing, potential approval, and commercialization of our existing product candidates, the success of our business also depends upon our ability to identify, license, or discover additional product candidates. Our research programs or licensing efforts may fail to yield additional product candidates for clinical development for a number of reasons, including but not limited to the following:

our research or business development methodology or search criteria and process may be unsuccessful in identifying potential product candidates;
we may not be able or willing to assemble sufficient resources to acquire or discover additional product candidates;
our product candidates may not succeed in preclinical or clinical testing;
our potential product candidates may be shown to have harmful side effects or may have other characteristics that may make the products unmarketable or unlikely to receive marketing approval;
competitors may develop alternatives that render our product candidates obsolete or less attractive;
product candidates we develop may be covered by third parties’ patents or other exclusive rights;
the market for a product candidate may change during our program so that such a product may become unreasonable to continue to develop;
a product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all; and
a product candidate may not be accepted as safe and effective by patients, the medical community, or third-party payors.

If any of these events occur, we may be forced to abandon our development efforts for a program or programs, or we may not be able to identify, license, or discover additional product candidates, which would have a material adverse effect on our business and could potentially cause us to cease operations. Research

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programs to identify new product candidates require substantial technical, financial, and human resources. We may focus our efforts and resources on potential programs or product candidates that ultimately prove to be unsuccessful.

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

As a public company, we will incur significant legal, accounting, and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, as well as rules subsequently implemented by the SEC and The NASDAQ Stock Market, have imposed various requirements on public companies. There are significant corporate governance and executive compensation related provisions in the Dodd-Frank Act that require the SEC to adopt additional rules and regulations in these areas such as “say on pay” and pay parity. Recent legislation permits smaller “emerging growth companies” to implement many of these requirements over a longer period and up to five years from the pricing of this offering. We intend to take advantage of this new legislation but cannot guarantee that we will not be required to implement these requirements sooner than budgeted or planned and thereby incur unexpected expenses. Stockholder activism, the current political environment, and the current high level of government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact the manner in which we operate our business in ways we cannot currently anticipate. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time consuming and costly. For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to incur substantial costs to maintain our current levels of such coverage.

The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal controls for financial reporting and disclosure controls and procedures. In particular, we will be required to perform system and process evaluation and testing of our internal controls over financial reporting to allow management to report, commencing in our annual report on Form 20-F for the year ending December 31, 2014, on the effectiveness of our internal controls over financial reporting, if then required by Section 404 of the Sarbanes-Oxley Act. Our testing may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses. Our compliance with Section 404 will require that we incur substantial accounting expense and expend significant management efforts. We currently do not have an internal audit group, and we will need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge. Moreover, if we are not able to comply with the requirements of Section 404 in a timely manner or if we identify or our independent registered public accounting firm identifies deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline and we could be subject to sanctions or investigations by NASDAQ, the SEC, or other regulatory authorities, which would require additional financial and management resources.

New laws and regulations as well as changes to existing laws and regulations affecting public companies, including the provisions of the Sarbanes-Oxley Act and rules adopted by the SEC and by NASDAQ, would likely result in increased costs to us as we respond to their requirements.

We may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, false claims laws, and health information privacy and security laws. If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties.

If we obtain FDA approval for any of our product candidates and begin commercializing those products in the United States, our operations may be directly or indirectly through our customers, subject to various federal and state fraud and abuse laws, including, without limitation, the federal Anti-Kickback Statute, the federal False Claims Act, and physician sunshine laws and regulations. These laws may impact, among other things, our proposed sales, marketing, and education programs. In addition, we may be subject to patient privacy regulation by both the federal government and the states in which we conduct our business. The laws that may affect our ability to operate include:

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the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, to induce, or in return for, the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs;
federal civil and criminal false claims laws and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payors that are false or fraudulent;
the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created new federal criminal statutes that prohibit executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters;
HIPAA, as amended by the Health Information Technology and Clinical Health Act, or HITECH, and its implementing regulations, which imposes certain requirements relating to the privacy, security, and transmission of individually identifiable health information;
the federal physician sunshine requirements under the Health Care Reform Laws requires manufacturers of drugs, devices, biologics, and medical supplies to report annually to the U.S. Department of Health and Human Services information related to payments and other transfers of value to physicians, other healthcare providers, and teaching hospitals, and ownership and investment interests held by physicians and other healthcare providers and their immediate family members and applicable group purchasing organizations; and
state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payor, including commercial insurers, state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures, and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities could be subject to challenge under one or more of such laws. In addition, recent health care reform legislation has strengthened these laws. For example, the Health Care Reform Law, among other things, amends the intent requirement of the federal anti-kickback and criminal healthcare fraud statutes. A person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it. Moreover, the Health Care Reform Law provides that the government may assert that a claim including items or services resulting from a violation of the federal anti-kickback statute constitutes a false or fraudulent claim for purposes of the False Claims Act.

If our operations are found to be in violation of any of the laws described above or any other governmental 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, any of which could adversely affect our ability to operate our business and our results of operations.

International expansion of our business exposes us to business, regulatory, political, operational, financial, and economic risks associated with doing business outside of the United States or Israel.

Other than our headquarters and other operations which are located in Israel (as further described below), we currently have limited international operations, but our business strategy incorporates potentially significant international expansion, particularly in anticipation of approval of our product candidates. We plan to maintain sales representatives and conduct physician and patient association outreach activities, as well as clinical trials, outside of the United States and Israel. Doing business internationally involves a number of risks, including but not limited to:

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multiple, conflicting, and changing laws and regulations such as privacy regulations, tax laws, export and import restrictions, employment laws, regulatory requirements, and other governmental approvals, permits, and licenses;
failure by us to obtain regulatory approvals for the use of our products in various countries;
additional potentially relevant third-party patent rights;
complexities and difficulties in obtaining protection and enforcing our intellectual property;
difficulties in staffing and managing foreign operations;
complexities associated with managing multiple payor reimbursement regimes, government payors, or patient self-pay systems;
limits in our ability to penetrate international markets;
financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our products, and exposure to foreign currency exchange rate fluctuations;
natural disasters, political and economic instability, including wars, terrorism, and political unrest, outbreak of disease, boycotts, curtailment of trade, and other business restrictions;
certain expenses including, among others, expenses for travel, translation, and insurance; and
regulatory and compliance risks that relate to maintaining accurate information and control over sales and activities that may fall within the purview of the U.S. Foreign Corrupt Practices Act, or FCPA, its books and records provisions, or its anti-bribery provisions.

Any of these factors could significantly harm our future international expansion and operations and, consequently, our results of operations.

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

Our research and development activities and our third-party manufacturers’ and suppliers’ activities involve the controlled storage, use, and disposal of hazardous materials, including the components of our product candidates and other hazardous compounds. We and our manufacturers and suppliers are subject to laws and regulations governing the use, manufacture, storage, handling, and disposal of these hazardous materials. In some cases, these hazardous materials and various wastes resulting from their use are stored at our and our manufacturers’ facilities pending their use and disposal. We cannot eliminate the risk of contamination, which could cause an interruption of our commercialization efforts, research and development efforts and business operations, environmental damage resulting in costly clean-up and liabilities under applicable laws and regulations governing the use, storage, handling, and disposal of these materials and specified waste products. Although we believe that the safety procedures utilized by our third-party manufacturers for handling and disposing of these materials generally comply with the standards prescribed by these laws and regulations, we cannot guarantee that this is the case or eliminate the risk of accidental contamination or injury from these materials. In such an event, we may be held liable for any resulting damages and such liability could exceed our resources and state or federal or other applicable authorities may curtail our use of certain materials and/or interrupt our business operations. Furthermore, environmental laws and regulations are complex, change frequently, and have tended to become more stringent. We cannot predict the impact of such changes and cannot be certain of our future compliance. We do not currently carry biological or hazardous waste insurance coverage.

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Risks Related to this Offering and Ownership of Our Ordinary Shares

We may be a “passive foreign investment company”, or PFIC, for U.S. federal income tax purposes in the current taxable year or may become one in any subsequent taxable year. There generally would be negative tax consequences for U.S. taxpayers that are holders of our ordinary shares if we are or were to become a PFIC.

We cannot rule out that we will not be a PFIC for our current taxable year or in the future. The tests for determining PFIC status are applied annually, and it is difficult to make accurate projections of future income and assets which are relevant to this determination. In addition, our PFIC status may depend in part on the market value of our ordinary shares. Accordingly, there can be no assurance that we currently are not or will not become a PFIC in the future. If we are a PFIC in any taxable year during which a U.S. taxpayer holds our ordinary shares, such U.S. taxpayer would be subject to certain adverse U.S. federal income tax rules. In particular, if the U.S. taxpayer did not make an election to treat us as a “qualified electing fund,” or QEF, or make a “mark-to-market” election, then “excess distributions” to the U.S. taxpayer, and any gain realized on the sale or other disposition of our ordinary shares by the U.S. taxpayer: (1) would be allocated ratably over the U.S. taxpayer’s holding period for the ordinary shares; (2) the amount allocated to the current taxable year and any period prior to the first day of the first taxable year in which we were a PFIC would be taxed as ordinary income; and (3) the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year. In addition, if the Internal Revenue Service, or IRS, determines that we are a PFIC for a year with respect to which we have determined that we were not a PFIC, it may be too late for a U.S. taxpayer to make a timely QEF or mark-to-market election. U.S. taxpayers that have held our ordinary shares during a period when we were a PFIC will be subject to the foregoing rules, even if we cease to be a PFIC in subsequent years, subject to exceptions for U.S. taxpayer who made a timely QEF or mark-to-market election. A U.S. taxpayer can make a QEF election by completing the relevant portions of and filing IRS Form 8621 in accordance with the instructions thereto. We do not intend to notify U.S. taxpayers that hold our ordinary shares if we believe we will be treated as a PFIC for any taxable year in order to enable U.S. taxpayers to consider whether to make a QEF election. In addition, we do not intend to furnish such U.S. taxpayers annually with information needed in order to complete IRS Form 8621 and to make and maintain a valid QEF election for any year in which we or any of our subsidiaries are a PFIC. U.S. taxpayers that hold our ordinary shares are strongly urged to consult their tax advisors about the PFIC rules, including tax return filing requirements and the eligibility, manner, and consequences to them of making a QEF or mark-to-market election with respect to our ordinary shares in the event that we are a PFIC. See “Taxation — U.S. Federal Income Tax Consequences — Passive foreign investment company consequences” for additional information.

The market price of our ordinary shares may be highly volatile, and you may not be able to resell your shares at or above the initial public offering price.

Prior to this offering, there has not been a public market for our ordinary shares. If an active trading market for our ordinary shares does not develop following this offering, you may not be able to sell your shares quickly or at the market price. The initial public offering price for the shares will be determined by negotiations between us and representatives of the underwriters and may not be indicative of prices that will prevail in the trading market.

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The trading price of our ordinary shares is likely to be volatile. The following factors, in addition to other risk factors described in this section, may have a significant impact on the market price of our ordinary shares:

inability to obtain the approvals necessary to commence further clinical trials;
unsatisfactory results of clinical trials;
announcements of regulatory approval or the failure to obtain it, or specific label indications or patient populations for its use, or changes or delays in the regulatory review process;
announcements of therapeutic innovations or new products by us or our competitors;
adverse actions taken by regulatory agencies with respect to our clinical trials, manufacturing supply chain or sales and marketing activities;
changes or developments in laws or regulations applicable to any candidate product of our in each of our platforms;
any adverse changes to our relationship with manufacturers or suppliers;
any intellectual property infringement actions in which we may become involved;
announcements concerning our competitors or the pharmaceutical industry in general;
achievement of expected product sales and profitability or our failure to meet expectations;
our commencement of, or involvement in, litigation;
any major changes in our Board of Directors or management; and
legislation in the United States relating to the sale or pricing of pharmaceuticals.

In addition, the stock market in general, and The NASDAQ Stock Market in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of small companies. Broad market and industry factors may negatively affect the market price of our ordinary shares, regardless of our actual operating performance. Further, a systemic decline in the financial markets and related factors beyond our control may cause our share price to decline rapidly and unexpectedly.

We may be subject to securities litigation, which is expensive and could divert management attention.

In the past companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Litigation of this type could result in substantial costs and diversion of management’s attention and resources, which could seriously hurt our business. Any adverse determination in litigation could also subject us to significant liabilities.

Our principal shareholders, chief executive officer and directors currently own over 85% of our outstanding ordinary shares and will own approximately     % of our ordinary shares upon the closing of this offering. They will therefore be able to exert significant control over matters submitted to our shareholders for approval.

After this offering, our chief executive officer and directors, and shareholders who own more than 5% of our outstanding ordinary shares before this offering will, in the aggregate, beneficially own approximately      % of our ordinary shares (assuming no exercise of the underwriters’ over-allotment option and no exercise of outstanding options). This significant concentration of share ownership may adversely affect the trading price for our ordinary shares because investors often perceive disadvantages in owning stock in companies with controlling shareholders. As a result, these shareholders, if they acted together, could significantly influence or even unilaterally approve matters requiring approval by our shareholders, including the election of directors and the approval of mergers or other business combination transactions. The interests of these shareholders may not always coincide with our interests or the interests of other shareholders.

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If you purchase our ordinary shares in this offering, you will incur immediate and substantial dilution in the book value of your shares.

The initial public offering price is substantially higher than the net tangible book value per share of our ordinary shares. Investors purchasing ordinary shares in this offering will pay a price per share that substantially exceeds the net tangible book value of our ordinary shares. As a result, investors purchasing ordinary shares in this offering will incur immediate dilution of $       per share, based on an assumed initial public offering price of $       per share, the midpoint of the range on the cover page of this prospectus, and our pro forma net tangible book value as of December 31, 2013. In addition, as of the date of this prospectus, options to purchase 411,630 of our ordinary shares, excluding 45,000 options granted to an employee at an exercise price equal to the offering price per share of this offering, at a weighted average exercise price of $0.02 per share were outstanding. The exercise of these options would result in additional dilution. As a result of this dilution, investors purchasing shares in this offering may receive significantly less than the purchase price paid in this offering in the event of liquidation. For more information, please refer to the section of this prospectus entitled “Dilution.”

Sales of a substantial number of our ordinary shares in the public market by our existing shareholders could cause our share price to fall.

Sales of a substantial number of our ordinary shares in the public market or the perception that these sales might occur, could depress the market price of our ordinary shares and could impair our ability to raise capital through the sale of additional equity securities. We are unable to predict the effect that sales may have on the prevailing market price of our ordinary shares. Substantially all of the shares owned by our existing shareholders and option holders are subject to lock-up agreements with the underwriters of this offering that restrict the shareholders’ ability to transfer our ordinary shares for six months from the date of this prospectus. Substantially all of our outstanding shares will become eligible for unrestricted sale upon expiration of the lockup period, as described in the section of this prospectus entitled “Shares Eligible for Future Sale.” In addition, shares issued or issuable upon exercise of options and warrants vested as of the expiration of the lock-up period will be eligible for sale at that time. Sales of shares by these shareholders could have a material adverse effect on the trading price of our ordinary shares.

Our management will have broad discretion in the use of the net proceeds from this offering and may allocate the net proceeds from this offering in ways that you and other shareholders may not approve.

Our management will have broad discretion in the use of the net proceeds, including for any of the purposes described in the section entitled “Use of Proceeds,” and you will not have the opportunity as part of your investment decision to assess whether the net proceeds are being used appropriately. Because of the number and variability of factors that will determine our use of the net proceeds from this offering, their ultimate use may vary substantially from their currently intended use. The failure of our management to use these funds effectively could harm our business. Pending their use, we may invest the net proceeds from this offering in short-term, investment-grade, interest-bearing securities. These investments may not yield a favorable return to our shareholders.

If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they adversely change their recommendations or publish negative reports regarding our business or our shares, our share price and trading volume could decline.

The trading market for our ordinary shares will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors. We do not have any control over these analysts and we cannot provide any assurance that analysts will cover us or provide favorable coverage. If any of the analysts who may cover us adversely change their recommendation regarding our shares, or provide more favorable relative recommendations about our competitors, our share price would likely decline. If any analyst who may cover us were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our share price or trading volume to decline.

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Because we do not intend to declare cash dividends on our ordinary shares in the foreseeable future, shareholders must rely on appreciation of the value of our ordinary shares for any return on their investment.

We have never declared or paid cash dividends on our ordinary shares. We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends in the foreseeable future. As a result, only appreciation of the price of our ordinary shares, if any, will provide a return to investors in this offering.

The requirements associated with being a public company will require significant company resources and management attention.

Following this offering, we will become subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the listing requirements of the securities exchange on which our ordinary shares is traded, and other applicable securities rules and regulations. The Exchange Act requires that we file periodic reports with respect to our business and financial condition and maintain effective disclosure controls and procedures and internal control over financial reporting. In addition, subsequent rules implemented by the SEC and The NASDAQ Stock Market may also impose various additional requirements on public companies. As a result, we will incur additional legal, accounting and other expenses that we did not incur as a nonpublic company, particularly after we are no longer an “emerging growth company” as defined in the JOBS Act. Further, the need to establish the corporate infrastructure demanded of a public company may divert management’s attention from implementing our development plans. We have made changes to our corporate governance standards, disclosure controls and financial reporting and accounting systems to meet our reporting obligations. The measures we take, however, may not be sufficient to satisfy our obligations as a public company, which could subject us to delisting of our ordinary shares, fines, sanctions and other regulatory action and potentially civil litigation.

The JOBS Act and our status as a foreign private issuer will allow us to postpone the date by which we must comply with some of the laws and regulations intended to protect investors and to reduce the amount of information we provide in our reports filed with the SEC, which could undermine investor confidence in our company and adversely affect the market price of our ordinary shares.

For so long as we remain an “emerging growth company” as defined in the JOBS Act, we intend to take advantage of certain exemptions from various requirements that are applicable to public companies that are not “emerging growth companies” including:

the provisions of the Sarbanes-Oxley Act requiring that our independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting;
the “say on pay” provisions requiring a non-binding shareholder vote to approve compensation of certain executive officers and the “say on golden parachute” provisions requiring a non-binding shareholder vote to approve golden parachute arrangements for certain executive officers in connection with mergers and certain other business combinations of the Dodd-Frank Act and some of the disclosure requirements of the Dodd-Frank Act relating to compensation of our chief executive officer;
Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. This means that an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are electing to delay such adoption of new or revised accounting standards. As a result, our financial statements may not be comparable to companies that comply with the public company effective date.
the requirement to provide detailed compensation discussion and analysis in proxy statements and reports filed under the Exchange Act, and instead provide a reduced level of disclosure concerning executive compensation;

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our ability not to comply with new accounting principles that do not apply to public companies until such accounting principles become applicable to private companies;
any rules that may be adopted by the Public Company Accounting Oversight Board, or PCAOB, requiring mandatory audit firm rotation or a supplement to the auditor’s report on the financial statements; and
our ability to furnish two rather than three years of income statements and statements of cash flows in various required filings.

We intend to take advantage of these exemptions until we are no longer an “emerging growth company.” We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.0 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

Our status as a foreign private issuer also exempts us from compliance with certain SEC laws and regulations and certain regulations of The NASDAQ Stock Market, including the proxy rules, the short-swing profits recapture rules, and certain governance requirements such as independent director oversight of the nomination of directors and executive compensation.

We cannot predict if investors will find our ordinary shares less attractive because we may rely on these exemptions. If some investors find our ordinary shares less attractive as a result, there may be a less active trading market for our ordinary shares, and our share price may be more volatile and may decline.

Risks Related to Israeli Law and Our Operations in Israel

Our headquarters and other significant operations are located in Israel and, therefore, our results may be adversely affected by political, economic and military instability in Israel.

Our executive offices are located in Tel-Aviv, Israel. In addition, the majority of our officers and directors are residents of Israel. Accordingly, political, economic and military conditions in Israel may directly affect our business. Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place between Israel and its neighboring countries. Any hostilities involving Israel or the interruption or curtailment of trade between Israel and its trading partners could adversely affect our operations and results of operations. During November 2012, Israel was engaged in an armed conflict with a militia group and political party which controls the Gaza Strip, and during the summer of 2006, Israel was engaged in an armed conflict with Hezbollah, a Lebanese Islamist Shiite militia group and political party. These conflicts involved missile strikes against civilian targets in various parts of Israel, including areas in which our employees and some of our consultants are located, and negatively affected business conditions in Israel. Any armed conflicts, terrorist activities or political instability in the region could adversely affect business conditions and could harm our results of operations and could make it more difficult for us to raise capital. Parties with whom we do business may sometimes decline to travel to Israel during periods of heightened unrest or tension, forcing us to make alternative arrangements when necessary in order to meet our business partners face to face. In addition, the political and security situation in Israel may result in parties with whom we have agreements involving performance in Israel claiming that they are not obligated to perform their commitments under those agreements pursuant to force majeure provisions in such agreements.

Our commercial insurance does not cover losses that may occur as a result of an event associated with the security situation in the Middle East. Although the Israeli government has in the past covered the reinstatement value of certain damages that were caused by terrorist attacks or acts of war, we cannot assure you that this government coverage will be maintained, or if maintained, will be sufficient to compensate us fully for damages incurred. Any losses or damages incurred by us could have a material adverse effect on our business. Any armed conflicts or political instability in the region would likely negatively affect business conditions generally and could harm our results of operations.

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Further, in the past, the State of Israel and Israeli companies have been subjected to economic boycotts. Several countries still restrict business with the State of Israel and with Israeli companies. These restrictive laws and policies may have an adverse impact on our operating results, financial conditions or the expansion of our business.

Our operations may be disrupted as a result of the obligation of management or key personnel to perform military service.

Our male employees and consultants in Israel, including members of our senior management, may be obligated to perform one month, and in some cases longer periods, of annual military reserve duty until they reach the age of 40 (or older, for citizens who hold certain positions in the Israeli armed forces reserves), and, in the event of a military conflict, may be called to active duty. In response to increases in terrorist activity, there have been periods of significant call-ups of military reservists. It is possible that there will be similar large-scale military reserve duty call-ups in the future. Our operations could be disrupted by the absence of a significant number of our officers, directors, employees and consultants. Such disruption could materially adversely affect our business and operations.

Exchange rate fluctuations between the U.S. dollar and the New Israeli Shekel currencies may negatively affect our earnings.

We incur expenses both in U.S. dollars and New Israeli Shekels, but our financial statements are denominated in U.S. dollars. As a result, we are exposed to the risks that the New Israeli Shekel may appreciate relative to the U.S. dollar, or, if the New Israeli Shekel instead devalues relative to the U.S. dollar, that the inflation rate in Israel may exceed such rate of devaluation of the New Israeli Shekel, or that the timing of such devaluation may lag behind inflation in Israel. In any such event, the U.S. dollar cost of our operations in Israel would increase and our U.S. dollar-denominated results of operations would be adversely affected. We cannot predict any future trends in the rate of inflation in Israel or the rate of devaluation (if any) of the New Israeli Shekel against the U.S. dollar.

Provisions of Israeli law and our amended and restated articles of association may delay, prevent or otherwise impede a merger with, or an acquisition of, our company, which could prevent a change of control, even when the terms of such a transaction are favorable to us and our shareholders.

Israeli corporate law regulates mergers, requires tender offers for acquisitions of shares above specified thresholds, requires special approvals for transactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to such types of transactions. For example, a merger may not be consummated unless at least 50 days have passed from the date on which a merger proposal is filed by each merging company with the Israel Registrar of Companies and at least 30 days have passed from the date on which the shareholders of both merging companies have approved the merger. In addition, a majority of each class of securities of the target company must approve a merger. Moreover, a tender offer for all of a company’s issued and outstanding shares can only be completed if the acquirer receives positive responses from the holders of at least 95% of the issued share capital. Completion of the tender offer also requires approval of a majority of the offerees that do not have a personal interest in the tender offer, unless, following consummation of the tender offer, the acquirer would hold at least 98% of the Company’s outstanding shares. Furthermore, the shareholders, including those who indicated their acceptance of the tender offer, may, at any time within six months following the completion of the tender offer, claim that the consideration for the acquisition of the shares does not reflect fair market value, and petition an Israeli court to alter the consideration for the acquisition, unless the acquirer stipulated in its tender offer that a shareholder that accepts the offer may not seek such appraisal rights.

Furthermore, Israeli tax considerations may make potential transactions unappealing to us or to our shareholders whose country of residence does not have a tax treaty with Israel exempting such shareholders from Israeli tax. See “Taxation — Israeli Tax Considerations” for additional information.

Our amended and restated articles of association that will be in effect immediately prior to the consummation of this offering will also contain provisions that could delay or prevent changes in control or changes in our management without the consent of our Board of Directors. These provisions will include the following:

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no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; and
the exclusive right of our Board of Directors to elect a director to fill a vacancy created by the expansion of the Board of Directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our Board of Directors.

It may be difficult to enforce a judgment of a United States court against us and our officers and directors and the Israeli experts named in this prospectus in Israel or the United States, to assert United States securities laws claims in Israel or to serve process on our officers and directors and these experts.

We were incorporated in Israel. Substantially all of our executive officers and directors reside outside of the United States, and all of our assets and most of the assets of these persons are located outside of the United States. Therefore, a judgment obtained against us, or any of these persons, including a judgment based on the civil liability provisions of the U.S. federal securities laws, may not be collectible in the United States and may not necessarily be enforced by an Israeli court. It also may be difficult for you to affect service of process on these persons in the United States or to assert U.S. securities law claims in original actions instituted in Israel. Additionally, it may be difficult for an investor, or any other person or entity, to initiate an action with respect to United States securities laws in Israel. Israeli courts may refuse to hear a claim based on an alleged violation of United States securities laws reasoning that Israel is not the most appropriate forum in which to bring such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not United States law is applicable to the claim. If United States law is found to be applicable, the content of applicable United States law must be proven as a fact by expert witnesses, which can be a time consuming and costly process. Certain matters of procedure will also be governed by Israeli law. There is little binding case law in Israel that addresses the matters described above. As a result of the difficulty associated with enforcing a judgment against us in Israel, you may not be able to collect any damages awarded by either a United States or foreign court. See “Enforceability of Civil Liabilities” for additional information on your ability to enforce a civil claim against us and our executive officers or directors named in this prospectus.

Your rights and responsibilities as a shareholder will be governed by Israeli law which differs in some material respects from the rights and responsibilities of shareholders of U.S. companies.

The rights and responsibilities of the holders of our ordinary shares are governed by our amended and restated articles of association and by Israeli law. These rights and responsibilities differ in some material respects from the rights and responsibilities of shareholders in typical U.S.-based corporations. In particular, a shareholder of an Israeli company has certain duties to act in good faith and fairness towards the Company and other shareholders, and to refrain from abusing its power in the Company. See “Management — Approval of Related Party Transactions under Israeli Law — Shareholder Duties” for additional information. There is limited case law available to assist us in understanding the nature of this duty or the implications of these provisions. These provisions may be interpreted to impose additional obligations and liabilities on holders of our ordinary shares that are not typically imposed on shareholders of U.S. corporations.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements made under “Prospectus Summary,” “Risk Factors,” “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and elsewhere in this prospectus constitute forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “intends,” or “continue,” or the negative of these terms or other comparable terminology.

Forward-looking statements include, but are not limited to, statements about:

our expectations regarding expansion of the OPMD clinical study;
our expectations regarding the timing of commencing clinical studies with SCA3, SBMA, BB-FA, BB-OTC and BBrm1;
the likelihood of regulatory approvals for our product candidates;
the commercial launch and future sales of our product candidates or any other future products or product candidates;
our ability to achieve favorable pricing for our product candidates;
the potential for our drug candidate product to receive designation as an orphan drug and implications if it does not receive such designation;
our expectations regarding the commercial supply of our product candidates;
third-party payor reimbursement for our product candidates;
our estimates regarding anticipated expenses, capital requirements and our needs for substantial additional financing;
the ultra-rare diseases patient market size and market adoption of our candidate products by physicians and patients;
the timing, cost or other aspects of the commercial launch of our product candidates;
the timing of commencement, duration and cost of clinical trials for our candidate products or whether such trials will be conducted at all;
completion and receiving favorable results of clinical trials for our candidate products;
issuance of patents to us by the USPTO and other governmental patent agencies;
the development and approval of the use of our candidate products for additional indications other than ultra-rare diseases; and
our expectations regarding licensing, acquisitions and strategic operations.

These statements are only current predictions and are subject to known and unknown risks, uncertainties, and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from those anticipated by the forward-looking statements. We discuss many of these risks in this prospectus in greater detail under the heading “Risk Factors” and elsewhere in this prospectus. You should not rely upon forward-looking statements as predictions of future events.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Except as required by law, we are under no duty to update or revise any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this prospectus.

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USE OF PROCEEDS

We expect to receive approximately $       million in net proceeds from the sale of          ordinary shares offered by us in this offering (approximately $       million if the underwriters exercise their over-allotment option in full) assuming an initial public offering price of $       per share (the midpoint of the price range set forth on the cover page of this prospectus), after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. Each $1.00 increase (decrease) in the assumed offering price of $           would increase (decrease) the net proceeds to us from this offering by approximately $           million, after deducting estimated underwriting discount and commission and estimated offering expenses payable by us, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same. Each increase of 100,000 shares in the number of shares offered by us at the assumed public offering price would increase the net proceeds to us in this offering by approximately $           million. Similarly, each decrease of 100,000 shares in the number of shares offered by us at the assumed public offering price would decrease the net proceeds to us from this offering by approximately $           million. A change in the offering price or the number of shares by these amounts could have a material effect on our uses of the proceeds from this offering, and it may impact the amount of time prior to which we will need to seek additional capital.

We currently expect to use the net proceeds from this offering for:

completing our clinical program for OPMD, estimated at $6,000,000;
completing our Phase 2 and pivotal clinical study for SCA3, estimated at $3,500,000;
Initiating and completing our Phase 2/3 clinical study for SBMA, estimated at $4,200,000;
completing our pre-clinical program for BB-FA and Phase 1 clinical study, estimated at $4,500,000;
completing our pre-clinical program for BB-OTC and initiation and completion of Phase 1 and 2A-2B clinical studies, estimated at $7,800,000;
Initiating and completing our Phase 1-2 clinical programs for SMA, estimated at $2,200,000;
Other Indications, estimated at $500,000;
Premarketing activity for OPMD, estimated at $1,500,000; and
the remainder for personnel-related costs, preclinical research, working capital, and other general corporate purposes.

The amounts and timing of our actual expenditures will depend upon numerous factors, including the progress of our development and commercialization efforts, the status of and results from our clinical trials, whether or not we enter into strategic collaborations or partnerships, and our operating costs and expenditures. Accordingly, our management will have significant flexibility in applying the net proceeds of this offering.

We have no current understandings, commitments or agreements with respect to any material acquisition of or investment in any technologies, products or companies.

DIVIDEND POLICY

We have never declared or paid any cash dividends on our ordinary shares and do not anticipate paying any cash dividends in the foreseeable future. Payment of cash dividends, if any, in the future will be at the discretion of our Board of Directors and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects and other factors our Board of Directors may deem relevant.

The Israeli Companies Law imposes further restrictions on our ability to declare and pay dividends. See “Description of Share Capital — Dividend and Liquidation Rights” for additional information.

Payment of dividends may be subject to Israeli withholding taxes. See “Taxation — Israeli Tax Considerations” for additional information.

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CAPITALIZATION

The following table sets forth our cash and cash equivalents and our capitalization as of December 31, 2013:

on an actual basis;
on a pro forma basis to also give effect to the sale of 1,065,076 ordinary shares on January 1, 2014 at the price of $0.95 per share and to the sale of 782,537 ordinary shares on February 6, 2014 at the price of $6.07 per share, as if the sale of the shares in each case had occurred on December 31, 2013.
on a pro forma, as adjusted, basis to also give effect to the sale of            ordinary shares in this offering at the initial public offering price of $       per share (the midpoint of the range set forth on the cover page of this prospectus), after deducting underwriting discounts and commissions and estimated offering expenses payable by us, at the closing of the offering, as if the sale of the shares in each case had occurred on December 31, 2013.

You should read this table in conjunction with the sections titled “Selected Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes included elsewhere in this prospectus.

     
  December 31, 2013
(in thousands, except share and per share data)   Actual   Pro forma (unaudited)   Pro Forma
as adjusted (unaudited)
Ordinary shares of NIS 0.01 par value – 16,613,139 and 15,102,854 shares authorized at December 31, 2013 and 2012, respectively; 9,182,867 and 7,551,427 issued and outstanding shares at December 31, 2013 and 2012 respectively; 11,030,480 shares pro forma as of December 31, 2013 (unaudited));            shares pro forma as adjusted as of December 31, 2013 (unaudited).     24       29        
Additional paid-in capital     1,551       6,926        
Deficit accumulated during the development stage     (1,400 )      (1,400 )       
Total shareholders’ equity     175       5,555        
Total capitalization   $ 175     $ 5,555     $  

Each $1.00 increase (decrease) in the public offering price per share would increase (decrease) the pro forma, as adjusted, total shareholders’ equity by approximately $        million, assuming that the number of shares we are offering, as set forth on the cover page of this prospectus, remains the same and that the underwriters do not exercise their over-allotment option. Depending on market conditions and other considerations at the time we price this offering, we may sell a greater or lesser number of shares than the number set forth on the cover page of this prospectus. An increase (decrease) of 100,000 in the number of shares we are offering would increase (decrease) the pro forma, as adjusted, total shareholders’ equity by approximately $        million, assuming the public offering price per share remains the same. An increase of 100,000 in the number of shares we are offering, together with a $1.00 increase in the public offering price per share, would increase the pro forma, as adjusted, total shareholders’ equity by approximately $        million. A decrease of 100,000 in the number of shares we are offering, together with a $1.00 decrease in the public offering price per share, would decrease the pro forma, as adjusted, total shareholders’ equity by approximately $        million.

The outstanding share information above excludes:

403,110 shares issuable upon the exercise of share options outstanding as of December 31, 2013; and
53,789 shares reserved as of January 26, 2014 for future grants under our equity incentive plan.

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DILUTION

If you invest in our ordinary shares, you will experience immediate and substantial dilution to the extent of the difference between the initial public offering price of our ordinary shares and the pro forma as adjusted net tangible book value per share of our ordinary shares immediately after the offering.

Our historical net tangible book value per share is determined by dividing our total tangible assets, less total liabilities, by the actual number of outstanding ordinary shares. The historical net tangible book value of our ordinary shares as of December 31, 2013 was $175,000, or $0.02 per share.

On a pro forma basis, giving effect to the sale of 1,065,076 ordinary shares on January 1, 2014 at a price of $0.95 per share and to the sale of 782,537 ordinary shares on February 6, 2014 at a price of $6.07 per share, our historical net tangible book value of our ordinary shares as of December 31, 2013 would have been $5,555,000, or $0.50 per share.

The pro forma as adjusted net tangible book value of our ordinary shares as of December 31, 2013 was $          , or $     per share. The pro forma as adjusted net tangible book value gives effect to the sale of ordinary shares in this offering at the initial public offering price of $       per share (the midpoint of the range set forth on the cover page of this prospectus), after deducting underwriting discounts and commissions and estimated offering expenses payable by us. The difference between the initial public offering price and the pro forma as adjusted net tangible book value per share represents an immediate dilution of $       per share to new investors purchasing ordinary shares in this offering.

The following table illustrates this dilution on a per share basis to new investors:

   
Assumed initial public offering price per share            $  
Historical net tangible book value per share before this offering, as of December 31, 2013              0.02  
Pro forma increase in net tangible book value per share              0.48  
Pro forma net tangible book value per share as of December 31, 2013              0.50  
Increase in net tangible book value per share attributable to new investors in this offering   $             
Pro forma as adjusted net tangible book value per share after offering            
Dilution in pro forma tangible book value per share to new investors               

If the underwriters’ over-allotment option to purchase additional shares from us is exercised in full, and based on the initial public offering price of $       per share, the pro forma as adjusted net tangible book value per share after this offering would be approximately $       per share, the increase in the pro forma net tangible book value per share attributable to new investors would be approximately $       per share and the dilution to new investors purchasing shares in this offering would be approximately $       per share.

Each $1.00 increase (decrease) in the public offering price per share would increase (decrease) our pro forma net tangible book value after this offering by approximately $        million, assuming that the number of shares we are offering, as set forth on the cover page of this prospectus, remains the same and that the underwriters do not exercise their over-allotment option. Depending on market conditions and other considerations at the time we price this offering, we may sell a greater or lesser number of shares than the number set forth on the cover page of this prospectus. An increase (decrease) of 100,000 in the number of shares we are offering would increase (decrease) our pro forma net tangible book value after this offering by approximately $        million, assuming the public offering price per share remains the same. An increase of 100,000 in the number of shares we are offering, together with a $1.00 increase in the public offering price per share, would increase our pro forma net tangible book value after this offering by approximately $        million. A decrease of 100,000 in the number of shares we are offering, together with a $1.00 decrease in the public offering price per share, would decrease our pro forma net tangible book value after this offering by approximately $        million.

The table below summarizes as of December 31, 2013, on the pro forma as adjusted basis described above, the number of ordinary shares we issued and sold, the total consideration we received and the average price per share (1) paid by our existing shareholders and (2) to be paid by new investors purchasing our

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ordinary shares in this offering at the initial public offering price of $       per share, before deducting underwriting discounts and commissions and estimated offering expenses payable by us.

         
  Shares Purchased   Total Consideration   Average Price
Per Share
     Number   Percent   Amount   Percent
Existing shareholders           %     $            %     $       
New investors           %                             
Total           100 %    $          100 %    $     

The number of ordinary shares outstanding immediately after this offering is based on 9,182,867 ordinary shares outstanding as of December 31, 2013 and gives effect to the pro forma transactions of the sale of 1,065,076 ordinary shares on January 1, 2014 at the price of $0.95 per share and to the sale of 782,537 ordinary shares on February 6, 2014 at the price of $6.07 per share, as if the sale of the shares in each case had occurred on December 31, 2013.

The foregoing table excludes:

403,110 shares issuable upon the exercise of share options outstanding as of December 31, 2013; and
53,789 shares reserved as of January 26, 2014 for future grants under our equity incentive plan.

To the extent any of the outstanding options as of December 31, 2013 are exercised, there will be further dilution to new investors. To the extent all of such outstanding options had been exercised as of December 31, 2013, the pro forma as adjusted net tangible book value per share after this offering would be $       and the total dilution per share to new investors would be $      .

To the extent that new options are granted under our equity benefit plans, there will be further dilution to investors purchasing ordinary shares in this offering.

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SELECTED FINANCIAL DATA

The following table summarizes our financial data. We have derived the following statements of operations data for the years ended December 31, 2013 and 2012 and the balance sheet data as of December 31, 2013 from our audited financial statements included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results that may be expected in the future. The following summary financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes included elsewhere in this prospectus.

   
  Years ended December 31,
(in thousands of U.S. dollars, except share and per share amounts)   2013   2012
Statements of Operations Data:
                 
Research and development expenses   $ 732     $ 140  
General and administrative expenses     416       86  
Financial expense (income), net     (3 )      3  
Deemed dividend     26        
Loss attributable to holders of ordinary shares     1,171       229  
Weighted average number of ordinary shares used in computing basic and diluted net loss per share     8,423,018       7,551,427  

     
  Year Ended December 31, 2013
(in thousands of U.S. dollars)   Actual   Pro forma (unaudited)(1)   Pro forma,
as adjusted (unaudited)(2)
Balance Sheet Data:
                          
Total long-term assets   $ 7     $ 7     $  
Total current liabilities     131       131            
Shareholders equity     175       5,555        

(1) Gives effect to the sale of 1,065,076 ordinary shares on January 1, 2014 at the price of $0.95 per share and to the sale of 782,537 ordinary shares on February 6, 2014 at the price of $6.07 per share, as if the sale of the shares in each case had occurred on December 31, 2013.
(2) Gives effect to the sale of            ordinary shares in this offering at the initial public offering price of $       per share, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, as if the sale had occurred on December 31, 2013.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our financial statements and related notes included elsewhere in this prospectus. This discussion and other parts of the prospectus contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth under “Risk Factors” and elsewhere in this prospectus.

Introduction

We are a development-stage biopharmaceutical company focused on the identification, licensing, acquisition, development and commercialization of drugs for rare and ultra-rare genetic and metabolic diseases. We seek to identify therapeutic platforms that offer solutions for several diseases that share a common pathophysiological mechanism. We focus on diseases with severe and debilitating manifestations, where the unmet medical need is clear, the biological mechanism of action is understood and for which there is no satisfactory treatment. Since our inception in 2012, we have developed and in-licensed potential treatments for six diseases, one of which is in a pivotal clinical study, another one is in Phase 2 clinical studies and an additional two of which we expect will be in mid/late stage clinical studies by late 2014 or early 2015.

Our current drug candidate pipeline has been either in-licensed from academic institutions or developed internally. Our strategy is based on risk diversification through multiple therapeutic platforms, diversified clinical and pre-clinical stages of our programs, and diversified diseases addressed. We use strict selection criteria of our pipeline platforms and cost-efficient drug development. This allows us to pursue multiple programs in parallel with the goal of promptly delivering safe and effective therapies to patients in dire need.

To date, we have not generated revenue from the sale of any product, and we do not expect to generate significant revenue unless and until we obtain marketing approval of, and commercialize our product candidates. As of December 31, 2013, we had an accumulated deficit of $1.4 million. Our financing activities are described below under “Liquidity and Capital Resources.”

Financial Overview

Operating Expenses

Our current operating expenses consist of two components — research and development expenses, and general and administrative expenses.

Research and Development Expenses

Our research and development expenses consist primarily of cost of third party clinical consultants and expenses related to conducting clinical and preclinical trials, salaries and related personnel expenses, share-based compensation expenses, travel expenses and other research and development expenses.

We expect that our research and development expenses will materially increase as we plan to initiate clinical activity and prepare to conduct clinical trials in the near future.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries, share-based compensation expense, professional service fees for accounting, legal, bookkeeping and facilities, travel expenses and other general and administrative expenses.

We expect our general and administrative expenses, such as accounting and legal fees, to increase after we become a U.S. public company, and we expect increases in the number of our executive, accounting and administrative personnel due to the anticipated growth of our Company.

Financial Expense and Income

Financial expense and income consist of bank fees and other transactional costs and exchange rate differences.

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Critical Accounting Policies and Estimate

We describe our significant accounting policies more fully in Note 2 to our financial statements for the year ended December 31, 2013. We believe that the accounting policies below are critical in order to fully understand and evaluate our financial condition and results of operations.

We prepare our financial statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions. Our management believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

JOBS Act

On April 5, 2012, the U.S. Congress enacted the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. This means that an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are electing to delay such adoption of new or revised accounting standards. As a result, our financial statements may not be comparable to companies that comply with the public company effective date.

Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company,” we intend to rely on other exemptions, including without limitation, (i) providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404 and, (ii) complying with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis). These exemptions will apply for a period of five years following the completion of our initial public offering or until we are no longer an “emerging growth company.”

Stock-Based Compensation and Fair Value of Ordinary Shares

We account for stock-based compensation in accordance with ASC 718, “Compensation — Stock Compensation,” which requires companies to estimate the fair values of equity-based payments awards on the date of grant using an option-pricing model. The value of the stock options is recognized as an expense over the requisite service periods in our statement of operations. We recognize compensation expenses for the value of our awards granted based on the accelerated method over the requisite service period of each of the awards.

The fair value of the ordinary shares was based on the application of Option-Pricing Method (“OPM”). The first step in performing a valuation using OPM involves estimating the fair value of the total shareholders’ equity (capital instruments). As part of our analysis, we used recent investment rounds, respectively to the option valuation dates, in our shares in order to evaluate the fair value of our total shareholders’ equity.

Under the option-pricing method, we estimated the fair value of the ordinary shares as the net value of a series of call options, representing the present value of the expected future returns to the ordinary shareholders. Essentially, the rights of the ordinary shareholders are equivalent to a call option on any value of the Company above the respective preferred shareholders’ liquidation preferences, with adjustment to account for the rights retained by the preferred shareholders related to their share in any value above the values at which they would convert to ordinary shares. Thus, the ordinary shares were valued by estimating the value of its share in each of these call option rights. As all options were granted at par value and the exercise price is negligible, the fair value of the options is equal to the share price.

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Results of Operations

   
  Year ended December 31,
     2013   2012
     (in thousands US$)
Research and development expenses   $ 732     $ 140  
General and administrative expenses     416       86  
Operating loss     1,148       226  
Financial Expense (income), net     (3 )      3  
Loss   $ 1,145     $ 229  
Deemed dividend     26        
Loss attributable to holders of ordinary shares   $ 1,171     $ 229  

Comparison of the Year Ended December 31, 2013 to the Year Ended December 31, 2012

Research and development expenses

The following table discloses the breakdown of research and development expenses for the last two fiscal years.

   
  December 31,
     2013   2012
     (in thousands US$)
Cost to third-party clinical consultants and expenses related to conducting clinical and preclinical trials   $ 470     $ 75  
Salaries and related personnel     171       34  
Share-based compensation     44        
Travel     31       8  
Other     16       23  
Total   $ 732     $ 140  

Our research and development expenses for the year ended December 31, 2013 amounted to $732,000, representing an increase of $592,000, or 423%, compared to $140,000 for the year ended December 31, 2012. The increase was primarily attributable to an increase of expenses related to third party preclinical consultants and other expenses related to conducting preclinical trials in an amount of $395,000 and to an increase of salaries and related personnel expenses in an amount of $137,000 reflecting an increase in the number of employees engaged in research and development related activities from one to three, in addition an increase of stock based compensation expenses of $44,000 in 2013 from $0 in 2012.

Project expenses by project

     
  December 31,   Change
%
     2013   2012
     (in thousands US$)     
Cabaletta projects:
                          
OPMD   $ 407     $       100  
SCA3     39             100  
SBMA     22             100  
mPRT projects:
                          
Freiedrich’s Ataxia     75       64       17  
OTC def     94       64       47  
Read-through project:
                          
SMA     48       12       300  
Other costs     47             100  
Total   $ 732     $ 140        

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Our research and development expense is highly dependent on the development phases of our projects and therefore fluctuates highly from year to year.

The variances in expense between the year ended December 31, 2013 and the corresponding period in 2012 are mainly due to the following projects:

Cabaleta projects.  Our expenses related to OPMD, SCA3 and SBMA for the year ended December 31, 2013 amounted to $407,000, $39,000 and $22,000, respectively. These projects were initiated in 2013; therefore, there were no expenses in 2012.
mPRT projects.  Our expenses related to Freiedrich’s Ataxia and OTC def for the year ended December 31, 2013 amounted to $75,000 and $94,000, respectively, representing an increase of $11,000 and $30,000, or 17% and 47%, respectively, compared to $64,000 for the year ended December 31, 2012. The increase was primarily attributable to an increase in the number of employees involved in this project from one to two and to an increase in the activity.
Read-through project.  Our expenses related to SMA for the year ended December 31, 2013 amounted to $48,000, representing an increase of $36,000, or 300%, compared to $12,000 for the year ended December 31, 2012. The increase was primarily attributable to an increase in the number of employees involved in this project from one to two and to the initiation of pre-clinical trials.
Other costs.  We incurred costs associated with our research and development that are allocated to projects that were terminated.

General and administrative expenses

Our general and administrative expenses totaled $416,000 for the year ended December 31, 2013, an increase of $330,000, or 384%, compared to $86,000 for the year ended December 31, 2012. The increase resulted primarily from an increase of $201,000 in share-based compensation expenses, an increase of payroll in an amount of $48,000 reflecting an increase of payroll to our employees, and an increase of $43,000 in professional services.

Operating loss

As a result of the foregoing, our operating loss for the year ended December 31, 2013 was $1,148,000, as compared to an operating loss of $226,000 for the year ended December 31, 2012, an increase of $922,000, or 408%.

Financial expense and income

We recognized financial income of $3,000 for the year ended December 31, 2013, compared to financial expenses of $3,000 for the year ended December 31, 2012.

Loss

As a result of the foregoing, our loss for the year ended December 31, 2013 was $1,145,000, as compared to $229,000 for the year ended December 31, 2012, an increase of $916,000 or 400%.

Liquidity and Capital Resources

Overview

Since our inception through December 31, 2013, we have funded our operations principally with $1.3 million from the issuance of ordinary and preferred shares. As of December 31, 2013, we had $270,000 in cash and cash equivalents. Subsequent to the year end, on January 1, 2014 in connection with the share purchase agreement dated June 2013, we issued 1,065,076 ordinary shares for a total consideration of $1,012,000. In addition, on February 6, 2014 we issued 782,537 ordinary shares to investors for a total consideration of $4,368,000, net.

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The table below presents our cash flows for the years 2013 and 2012:

   
  Years Ended December 31,
     2013   2012
     (in thousands US$)
Operating activities   $ (865 )    $ (149 ) 
Investing activities     (2 )       
Financing activities     991       295  
Net increase in cash and cash equivalents   $ 124     $ 146  

Operating Activities

Net cash used in operating activities of $0.9 million during the year ended December 31, 2013 was primarily used for payment of $0.6 million for clinical trials and other third party expenses and an aggregate of $0.2 million in salaries and related personnel expenses. The remaining amount of $0.1 was for travel, patent, rent and other miscellaneous expenses. Net cash used in operating activities of $0.1 million during the year ended December 31, 2012 was primarily used for salary payments and for clinical trials and other third party expenses.

Investing Activities

Net cash used in investing activities during 2013 primarily reflected an increase in property and equipment. In 2012, we had no investment activity.

Financing Activities

Net cash provided by financing activities in the year ended December 31, 2013 consisted of approximately $1 million of net proceeds from issuance of ordinary shares. Net cash provided by financing activities in the year ended December 31, 2012 consisted of approximately $0.3 million of net proceeds from issuance of shares.

Current Outlook

We have financed our operations to date primarily through proceeds from sales of our shares. We have incurred losses and generated negative cash flows from operations since inception. To date, we have not generated any revenue from the sale of products and we do not expect to generate revenues from sale of our products in the next few years.

Our independent registered public accounting firm’s report to our financial reports for the fiscal year ended December 31, 2013, states that there is a substantial doubt that we will be able to continue as a going concern. Furthermore, according to our estimates, based on our budget, if we are not successful in obtaining additional capital resources, there is a substantial doubt that we will be able to continue our activities after December 31, 2014. Even if we are able to raise funds in the offering contemplated herein, we believe that we will need to raise additional funds before we generate positive cash flow from operations.

As of December 31, 2013, our cash, cash equivalents totaled $0.3 million. On January 1, 2014 we issued 1,065,076 ordinary shares for a total consideration of $1,012,000. In addition, on February 6, 2014 we issued 782,537 ordinary shares to investors for a total consideration of $4,368,000, net. We believe that our existing cash resources and the net proceeds from the current offering will be sufficient to fund our projected cash requirements approximately through the conclusion of 2015. Nevertheless, we will require significant additional financing in the future to fund our operations if and when we obtain regulatory approval and commercialize our drugs. We currently anticipate that, assuming consummation of the current offering, we will utilize approximately $     million for clinical trial activities over the course of the next 30 months. We also anticipate utilizing approximately between $1 million to $3 million for capital expenditures over such 30-month period, which consists primarily of expenditures for the manufacture of our drug candidate for use in clinical trials and supporting preclinical studies required for obtaining approval to conduct such clinical studies. Our future capital requirements will depend on many factors, including:

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

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the scope, prioritization and number of our clinical trials and other research and development programs;
the costs and timing of obtaining regulatory approval for our drug candidates;
the costs of filing, prosecuting, enforcing and defending patent claims and other intellectual property rights;
the costs of, and timing for, strengthening our manufacturing agreements for production of sufficient clinical and commercial quantities of our drug candidates;
the potential costs of contracting with third parties to provide marketing and distribution services for us or for building such capacities internally;
the costs of acquiring or undertaking the development and commercialization efforts for additional, future therapeutic applications of our drug candidates;
the magnitude of our general and administrative expenses; and
any cost that we may incur under current and future in- and out-licensing arrangements relating to our drug candidates.

Until we can generate significant recurring revenues, we expect to satisfy our future cash needs through the net proceeds from the current offering, debt or equity financings, or by out-licensing applications of our drug candidates. We cannot be certain that additional funding will be available to us on acceptable terms, if at all. If funds are not available, we may be required to delay, reduce the scope of, or eliminate research or development plans for, or commercialization efforts with respect to, one or more applications of our drug candidates. This may raise substantial doubts about the Company’s ability to continue as a going concern.

Contractual Obligations

The following table summarizes our significant contractual obligations at December 31, 2013:

         
  Total   Less than
1 year
  1 – 3 years   4 – 5 years   More than
5 years
     (in thousands US$)
Operating leases:
                                            
Facility     4       4                    
Motor Vehicles     39             39              

During the year ended December 31, 2013, we engaged with few service providers and vendors. However, we do not deem such engagements as significant compared with our current financial resources.

Off-Balance Sheet Arrangements

We currently do not have any off-balance sheet arrangements.

Quantitative and Qualitative Disclosure About Market Risk

We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of foreign currency exchange rates.

Foreign Currency Exchange Risk

Our results of operations and cash flow are subject to fluctuations due to changes in foreign currency exchange rates. Certain of our expenses are denominated in New Israeli Shekels. Our results of operations and cash flow are, therefore, subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign exchange rates. Approximately 40% of our expenses are denominated in New Israeli Shekel. Changes of 5% and 10% in the U.S. Dollar / New Israeli Shekel exchange rate will increase/decrease the operation expenses by 2% and 4%, respectively. We do not hedge our foreign currency exchange risk. In the future, we may enter into formal currency hedging transactions to decrease the risk of financial exposure from fluctuations in the exchange rates of our principal operating currencies. These measures, however, may not adequately protect us from the material adverse effects of such fluctuations.

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BUSINESS

Overview

We are a development-stage biopharmaceutical company focused on the identification, licensing, acquisition, development and commercialization of drugs for rare and ultra-rare genetic and metabolic diseases. We seek to identify therapeutic platforms that offer solutions for several diseases that share a common pathophysiological mechanism, which are the functional changes that accompany a particular syndrome or disease. We focus on diseases with severe and debilitating manifestations, where the unmet medical need is clear, the biological mechanism of action is understood and for which there is no satisfactory treatment. Since our inception in 2012, we have developed and in-licensed potential treatments for six diseases, one of which in a pivotal clinical study, another one is in Phase 2 clinical study and an additional two of which we expect will be in mid/late stage clinical studies by late 2014 or early 2015. We have not yet submitted any investigational new drug applications for our products to the FDA.

Our current drug candidate pipeline has been either in-licensed from academic institutions or developed internally. Our strategy is based on risk diversification through multiple therapeutic platforms, diversified clinical and pre-clinical stages of our programs, and diversified diseases addressed. We use strict selection criteria of our pipeline platforms and cost-efficient drug development. This allows us to pursue multiple programs in parallel with the goal of promptly delivering safe and effective therapies to patients in dire need.

In order to implement our strategy we are following three principles:

Strict selection criteria of our platforms and clinical programs;
Risk diversification through multiple platforms, clinical programs and stages of development; and
Variable lean cost structure.

We believe that our strategy and special business operation model is especially suitable for commercializing effective and safe products in a timely and cost efficient manner.

Strict selection criteria of our platforms and clinical program.

We target rare and ultra-rare diseases that:

cause severely shortened life expectancy or severe debilitation;
do not have an approved and effective therapy currently available;
have a drug candidate that we believe will either be lifesaving or significantly ameliorate the disease course;
have tangible and validated tests where initial efficacy can be demonstrated in a reasonable time frame to show initial efficacy; and
preferably have validated biomarkers and where there is availability of a natural history study.

As part of this selection process, we:

estimate the scope and availability of research tools for the preclinical studies required;
limit the diseases selected to those in which the full pre-clinical tool kit is available or can be obtained through collaboration with patients organizations;
estimate the size and structure of the clinical studies that will be required and confine our selections to fit what we believe will be a cost effective program that will not require unreasonable financial resources;
select diseases in which the regulatory path to approval is clear and well defined;
strictly evaluate the strength of the intellectual property that we license for further development;
estimate the required chemistry, manufacturing and control development program;

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exclude drug candidates that are known to have any safety issues and prefer, when possible and feasible to repurposed drugs; and
part of our screening and selection criteria involves the key opinion leaders and the advocacy group for the specific disease we are considering, and our decision to move forward is often taken in consensus with them.

Because these diseases are rare or ultra-rare, no prenatal diagnosis is widely offered that might reduce the incidence of the diseases. Optimally, our target diseases have geographic clusters around a small number of clinics with sufficient number of patients to avoid large multicenter studies. Due to our location in Israel we focus on such diseases for which we can find a disease cluster in Israel where we can start a proof of concept study promptly.

Risk diversification through multiple platforms, clinical programs and stages of development.

Drug development is a complex and unpredictable process with multiple risks. We believe that a biopharmaceutical company such as ours should diversify the inherent risk associated with drug development. Drug development occurs in preclinical and clinical stages, each of which must satisfy separate criteria with different risks, including safety and efficacy.

We have begun to diversify risk by initially focusing on three therapeutic platforms, each of them can be applied to several diseases. In each case, we have identified a lead program, but we believe we have the opportunity to benefit from the shorter and less expansive route to additional indications based on the same platform. In addition there are different risks associated with the development of a small molecule drug, a biological drug, or a repurposed drug. Our portfolio is comprised of all three therefore balancing the systematic risk associated with it.

Variable lean cost structure.

We believe in keeping a small, select and highly professional core team at our Company while relying on experienced service providers and CROs to result in an efficient and time – saving development process. We carefully screen our service providers and CROs for their expertise in the specific project required and work with them closely to complete the task assigned to them efficiently and professionally. This business operation model enables us to develop multiple programs while avoiding the exorbitant costs associated with learning curve, setup times, and high fixed costs associated with in-house development.

Our current pipeline is based on three platforms:

Cabaletta is a mutant protein stabilizing platform based on a small repurposed molecules, Trehalose, which is currently used as an excipient for IV protein drugs. We are currently conducting a pivotal clinical trial to assess its efficacy and safety in treating Oculopharyngeal Muscular Dystropy (OPMD), and a Phase 2 clinical trial to assess its efficacy and safety in treating Machado Joseph disease, or SCA3. Subject to regulatory allowance, we plan to conduct an additional Phase 2 study in 2015 aimed at Kennedy’s disease, or SBMA. Mutant unstable cellular proteins are the cause of several genetic diseases known as PolyA/PolyQ, including OPMD, SBMA and SCA3. These pathological proteins aggregate within cells, eventually leading to cell death. Our data to date from preclinical studies from both cells and animal models, indicates that our Cabaletta platform has the potential to prevent mutant protein aggregation in humans.
mPRT is a mitochondrial protein replacement platform that is based on biological components that we synthesize in bacteria. Mitochondria are cell components that supply chemical energy for normal cell functioning. This platform is currently in preclinical development for two diseases: Friedrich’s Ataxia and Ornithine Transcarbamylase Deficiency. These diseases are among over 100 genetic diseases that are caused by a missing or mutant protein that has critical role in the normal mitochondrial function. While lysosomal protein replacement platforms have been successful in replacing a missing protein in lysosomes, we believe that our mPRT platform is the first one to be successful in replacing mitochondrial proteins. Our product candidates are new “fusion proteins” that are a combination of the replaced protein fused with two additional sequences that facilitate its transport through biological membranes.

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BBrm is our read-through platform based on a small repurposed molecule. The platform enables the read-through (or bypassing) of genetic defects called nonsense mutations or stop codons that interfere with normal protein formation and cause disease. Based on our preclinical data, we believe that this drug platform has the potential to treat six different diseases caused by nonsense mutation. Subject to regulatory approval, we plan to conduct Phase 2 clinical studies in late 2014 for our lead indication in Spinal Muscular Atrophy (SMA).

The following table summarizes our product candidate pipeline:

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Product Candidates — Overview

Cabaletta for the treatment of Oculopharyngeal Muscular Dystropy (OPMD)

Cabaletta is our proprietary intravenous (IV) solution of Trehalose for the treatment of OPMD. OPMD is an inherited myopathy, which is a muscle disease caused by a primary defect in muscle cells, characterized by dysphagia (difficulty in swallowing), the loss of muscular strength and weakness in multiple parts of the body. As the dysphagia becomes more severe, patients become malnourished, lose significant weight, become dehydrated and suffer from repeated incidents of aspiration pneumonia. These last two are often the cause of death.

Trehalose is naturally occurring and is well known for its protein-stabilizing properties. It is used in several biological systems, such as freeze drying of red blood cells and the preservation of organs for donation and as a protein stabilizer in IV pharmaceutical products. Trehalose is approved by the FDA as a GRAS (Generally Recognized As Safe) food ingredient and is listed in the U.S. National Formulary, which is a compendium of public pharmacopeial standards, which are directions for the identification of compound medicines, as well as in Europe and Japan. It is a disaccharide chemical chaperone, which is a chemical molecule comprised of two sugar components that stabilizes the folding of proteins and buffers abnormal protein aggregation, that protects against pathological processes in cells. It has been shown to prevent pathological aggregation of proteins within cells in several diseases associated with abnormal cellular-protein aggregation as well as acting as an autophagy enhancer. Autophagy is the basic catabolic mechanism that involves cell degradation of unnecessary or dysfunctional cellular components. Autophagy, if regulated, ensures the synthesis, degradation and recycling of cellular components. Trehalose has been documented as demonstrating significant efficacy in preclinical animal models of OPMD and other PolyA/PolyQ diseases.

Trehalose is not effective when given orally since it is almost completely metabolized in the small intestine into glucose and often causes diarrhea and flatulence after ingestion of more than 50g. We have developed a proprietary IV solution of Trehalose, which we call CabalettaTM, to circumvent the breakdown of Trehalose in the gastrointestinal tract, and to enable therapeutic doses of Trehalose to reach the muscles.

We are currently conducting a pivotal clinical trial of Cabaletta to treat OPMD.

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The study is a pivotal study planned to include 40 – 60 patients in 3 centers: in Israel, Canada and the USA. All patients will be treated with 30g Trehalose IV weekly for the first 6 months. After 6 months, patients will be randomized into a treatment arm that will continue with the weekly IV 30g regimen and a non treatment control group that will be followed up under the same protocol for an additional 12 months. As of July 7, 2014, fourteen patients have been treated. If the trial is successful, we are planning to submit a new drug application, or NDA, to the FDA.

Cabaletta for the treatment of spinocerebellar ataxia type 3 (SCA3) (Machado Joseph disease)

SCA3, also known as Machado Joseph disease, is the most common disease among the cerebellar ataxias, which are a group of genetic diseases that are characterized by memory deficits, spasticity, difficulty with speech and swallowing, weakness in arms and other muscular disorders. Symptoms can begin in early adolescence and get worse over time. Eventually SCA3 leads to paralysis, and severe cases can lead to an early death in the fourth decade of life. SCA3 is incurable, and there is currently no approved treatment for the disease.

SCA3 is caused by a mutation in the DNA that leads to the creation of a pathological protein —  Ataxin 3. Ataxin 3 is unstable, meaning that it aggregates within the cells and eventually leads to cell death.

Multiple reported studies in cell models have shown that Trehalose, both as an anti-mutant protein aggregation agent and as an autophagy enhancer, is able to reduce protein aggregates and improve cell survival in several spinocerebellar ataxias including SCA3 cells. Additional animal studies show that activation of autophagy may be beneficial in alleviating disease symptoms. We recently started our Phase 2 clinical trial of Cabaletta to treat SCA3 in Israel.

Cabaletta for the treatment of Spino Bulbar Cerebellar Ataxia (SBMA — Kennedy’s disease)

SBMA, also known as Kennedy’s disease, is characterized by the degeneration and loss of lower motor neurons in the brainstem and spinal cord. Patients present with weakness in muscle function, including severe difficulty in swallowing and suffer from repeated aspiration pneumonia, and other symptoms. SBMA is caused by an abnormal androgen receptor (AR) protein. Like other PolyA/PolyQ diseases, the abnormal protein is unstable and aggregates within cells, eventually leading to cell death. Patients suffering from SBMA suffer from progressive neuromuscular deterioration that can end up in extreme disability and repeated aspiration pneumonia. There is currently no approved therapy for SBMA.

Studies in cell models have shown that Trehalose in its capacity both as an anti-mutant protein aggregation and as an autophagy enhancer is able to reduce protein aggregates and improve cell survival in SBMA cells. Additional studies show that activation of autophagy may be beneficial in alleviating disease symptoms in animal models.

We have entered into an agreement with NINDS (a group within the U.S. National Institutes of Health, or NIH) pursuant to which NINDS will conduct animal studies on SBMA mouse models to validate the potential efficacy of Cabaletta. NINDS will conduct the study using its own resources, and we will supply the research material. If the animal studies are successful, and subject to regulatory allowance, we plan to commence a Phase 2/3 clinical trial.

Mitochondrial protein replacement platform (mPRT)

Mitochondrial disorders are diseases, for which no cure has been found, that stem from a missing or mutated critical enzyme or protein in the cell organelle called mitochondria. Our fusion proteins, comprised of TAT-MTS(het)-replacement proteins, help move proteins across biological membranes to facilitate the creation of mature proteins inside the mitochondria. Our replacement proteins are able to enter human cells and mitochondria and replace the damaged or missing proteins in the mitochondria. Our breakthrough platform technology demonstrated efficacy in several mitochondrial protein deficiencies in cells and animal models. Currently, Frataxin for Friedrich’s Ataxia (BB-FA) is our most advanced mPRT preclinical program, followed by Ornithine Transcarbamylase (BB-OTC) for Ornithine Transcarbamylase Deficiency (OTCD).

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Our studies demonstrated the superiority of our proprietary approach of using a heterologous (none native) mitochondrial targeting sequence (MTS) as part of our fusion proteins in four different aspects: expression by bacteria, cell penetration, mitochondrial processing and anchorage of target proteins, and rescue of cells in oxidative stress.

We have an exclusive worldwide and royalty-bearing license to commercialize, develop and use the technology, including certain patent applications, from the Hebrew University in Jerusalem. These patent applications cover our unique approach of using homologous and heterologous MTS in the fusion proteins.

BB-FA for the treatment of Friedrich’s Ataxia

Friedreich’s Ataxia is an inherited disease characterized by progressive deterioration of muscles and nerves, resulting in gait disturbance (Ataxia), cognitive impairment, progressive heart disease and diabetes. Patients are usually diagnosed in the first or second decade of life, and are typically wheelchair-bound within 15 years of diagnosis. Most do not survive beyond the fourth decade of life. In many cases the cause of death is myopathic heart disease. The underlying causes of Friedrich’s Ataxia are reduced levels of Frataxin — a protein responsible for iron-sulphor clusters in the mitochondria that are critical for the mitochondria activity. Our preclinical data demonstrated successful placement of Frataxin into the mitochondria and in the treatment of oxidative stress in Friedreich’s Ataxia patients’ cells. We are advancing the Friedreich’s Ataxia program through its preclinical development throughout 2014.

BB-OTC for the treatment of ornithine transcarbamylase deficiency (OTCD)

OTCD is the most common disorder among urea cycle disorders — a group of rare genetic diseases characterized by body’s inability to detoxify ammonia. Ammonia is a toxic breakdown product of proteins. OTCD is caused by a mutated and ineffective form of the enzyme, ornithine transcarbamylase that is part of the urea cycle complex in the mitochondria. As a result, the normal breakdown of ammonia is disrupted and toxic ammonia accumulates in the blood causing severe damage to the brain and other vital organs. Newborn males affected with OTCD may suffer devastating hepatic coma in the first few days after birth, and survivors typically suffer from severe cognitive, mental and metabolic disorders and growth retardation. Many do not survive the first decade of life. We are using our mitochondrial protein replacement platform to replace this enzyme in the mitochondria. Our preclinical data indicates that our OTC fusion protein is well able to be transferred into the mitochondria and be processed in it. We are advancing the BB-OTC program through its preclinical development during 2014.

BBrm — our read-through platform

BBrm is our family of small molecule non-glycosides repurposed drugs for the treatment of patients with genetic disorders that arise from a type of genetic mutation known as a nonsense mutation (stop codon). The platform enables the read-through (deactivation) of the genetic defects that stop synthesis of normal full length proteins. Deactivation of disease-causing nonsense mutation can alleviate the symptoms of genetic diseases caused by these mutations. Our BBrm family of repurposed drugs is able to induce translational readthrough, restoring full-length functional proteins in diseases where the nonsense mutation results in truncated ineffective proteins. We licensed the exclusive worldwide commercial rights for our BBrm technology for stop codon inhibition of orphan diseases from the Tel Aviv University in January 2014.

BBrm1 for the treatment of Spinal Muscular Atrophy (SMA)

Using our BBrm platform, we developed a unique therapeutic candidate for SMA. SMA is the leading genetic cause of infantile death and is caused by the loss of a functional Survival Motor Neuron 1 (SMN1). The disease is manifested by loss of muscle mass and mobility as well as severe compromise of vital functions such as respiration. Another protein called SMN2 is a nearly identical copy of SMN1, differentiated only by a silent, single-nucleotide mutation within the DNA. SMN2 partially compensates for the dysfunction of SMN1, however the small amount of the functional protein that is produced from the SMN2 gene is not able to fully compensate for the loss of SMN1. Prior independent studies proposed that read-through agents, such as aminoglycosides, can induce the read-through of the stop codon located in the SMN2- protein, thus elongating the SMN2 and creating a full length functional protein, that can compensate for the non-functioning SMN1 and alleviate the disease. This approach was also successfully tested in SMA animal models. Nonetheless, chronic administration of aminoglycosides was found to be associated with prohibitive toxicity.

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Nevertheless, drug-induced read-through of premature stop codons remains a promising approach to elevate active protein expression from the SMN2 gene which is an ideal therapeutic target as it is found in all SMA patients. Our family of repurposed FDA-approved non-glycosides molecules (BBrm) induced significantly higher levels of full length functional SMN2 protein. These molecules are ineffective if administered orally or intravenously since they do not penetrate into the brain to create high enough therapeutic levels within nerve cells. Our BBrm1 product can be injected directly into the central nervous system (CNS), creating adequate drug concentration. This method of administration has the added benefit of further protection against off label use. We plan to continue our preclinical development of BBrm1 for SMA through 2014, and, if successful and subject to regulatory approval, expect to start a Phase 2 study late in 2014 or early in 2015.

Our current product candidate pipeline has been either in-licensed from academic institutions or developed internally. Where possible, our strategy is to acquire and retain global commercialization rights to our products to maximize long-term value. Over time, we intend to build our own commercial organization, which we believe will be of modest size due to the relatively small number of specialists who treat patients with rare and ultra-rare diseases.

The diseases which we are addressing have devastating consequences on the patient’s health, quality of life and life expectancy. In addition these diseases create significant burdens on the patient’s family and care takers as well as on the public health resources. In all the diseases we are addressing, patients cannot be offered an alternative therapy or the current solutions are inadequate in their abilities to change the course of the disease. We believe that prompt and efficient drug development can be of substantial benefit to the patients who are suffering from these incurable diseases.

We have assembled an experienced team, of employees, consultants, service providers and Board of Directors with extensive drug development and commercialization capabilities, particularly in the orphan drug area.

Our Strategy

Our strategy is to identify, acquire, license, develop, and commercialize novel products for the treatment of rare and ultra-rare diseases in the United States, the European Union, and select international markets, with the goal of becoming a leading rare disease biotechnology company. Our current product candidate pipeline has been either in-licensed from academic institutions or developed internally. Where possible, our strategy is to acquire, license and retain global commercialization rights to our products to maximize long-term value. Over time, we intend to build our own commercial organization, which we believe will be of modest size due to the relatively small number of specialists who treat patients with rare and ultra-rare diseases.

The patients we seek to treat have diseases with limited or no treatment options, and their lives and well-being are highly dependent upon our efforts to develop new therapies. We strive to build a company that is faster, better and smarter about advancing multiple product candidates through approval.

The critical components of our business strategy include the following:

Focus on rare and ultra-rare diseases with significant unmet medical need.  There are numerous rare and ultra-rare metabolic genetic diseases that currently have no approved drug therapy and for which no therapies, to our knowledge, are currently in development. Patients suffering from these diseases often have a high unmet medical need with significant morbidity and/or mortality. We are focused on developing and commercializing therapies for multiple such indications.
Focus on diseases and therapies with clear mechanisms of action.  We also focus on diseases that have biology and root causes that are well understood. For example, several of our product candidates are replacement therapies for a single deficient enzyme or substrate in the body. We believe that developing drugs that directly impact known disease pathways will increase the probability of success of our development programs.
Leverage our experience and relationships to in-license promising product candidates. Our management and board has strong relationships with key opinion leaders in the metabolic genetic field, as well as a history of success in the development and commercialization of therapies for rare

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and ultra-rare genetic diseases. Accordingly, we enjoy excellent access to many in-licensing opportunities. Most of our current product candidates are in-licensed from academic institutions. We believe these parties have agreed to license product candidates to us because they are confident in our drug development capabilities and experience in bringing rare disease therapies to market.
Develop and commercialize multiple product candidates in parallel. Clinical studies for rare and ultra-rare diseases can often be smaller, fewer in number, and less expensive than those for larger market indications. Development of multiple programs in the metabolic genetics field also generates organizational efficiencies and economies of scale. As a result of these efficiencies, we can feasibly develop multiple clinical-stage product candidates in parallel, resulting in a more diversified portfolio that provides multiple opportunities to create value.
Focus on excellent and rapid clinical and regulatory execution. We believe that building a successful and sustainable rare disease-focused company requires very specific expertise in the areas of patient identification, clinical study design and conduct, and regulatory strategy. We have assembled a team with a successful track record in managing global clinical development activities in an efficient manner, and with multinational experience in obtaining regulatory approvals for rare disease products.
Seek to retain global commercialization rights to product candidates. We intend to seek and retain global commercialization rights to our product candidates whenever possible to maximize the potential value of our product portfolio. Our plan is to establish our own commercial organization in major pharmaceutical markets and develop a network of third-party distributors in smaller markets. We believe this commercial organization can be modest and targeted due to the relatively small number of specialists who typically treat patients with the diseases to be addressed by our product candidates. As a result, we do not expect that we will require pharmaceutical partners for commercialization of our product candidates, although we may consider partnering for certain territories or indications or for other strategic purposes.

Product Candidates — Disease background, rationale for treatment, development plan and market potential

Oculopharyngeal Muscular Dystropy (OPMD)

Disease background:

OPMD is a rare inherited myopathy characterized by dysphagia (difficulty in swallowing), the loss of muscular strength and weakness in multiple parts of the body. Patients typically suffer from severe dysphagia, ptosis (eye lid drooping), tongue atrophy, lower limb proximal weakness, dysphonia (altered and weak voice), limitation in looking upward, facial muscle weakness and upper limb proximal weakness. The disease is most often diagnosed in the fifth-sixth decade of life and progresses throughout the patient’s life. As the dysphagia becomes more severe, patients become malnourished, lose significant weight, become dehydrated and suffer from repeated incidents of aspiration pneumonia. These last two are often the cause of death.

OPMD is one of a larger group of diseases called tri-nucleotide repeat disease that are associated with the presence of an abnormal cellular protein, that aggregates in the cells eventually causing cell death. In OPMD the mutant protein PABPN1 was found to be correlated with disease severity in animal models and was identified within the typical cellular protein aggregates-the intranuclear inclusion body (INI) that are the diagnostic hallmark of the disease.

There is no medical treatment or, to our knowledge, potential cure for OPMD. Current therapeutic strategies are confined to surgical interventions that have limited efficacy and need to repeated often while the progressive loss of muscle’s contractility continue relentlessly.

Rationale for treatment:

The naturally occurring disaccharide Trehalose is well known for its protein-stabilizing properties. It is used extensively in many applications as a stabilizer of frozen food, in freeze drying of biological systems and cells, as a stabilizer of therapeutic parenteral proteins and as an excipient in tablets and IV solutions. Trehalose has been shown to prevent pathological aggregation of proteins within cells in several diseases

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associated with mutant cellular-protein aggregation such as PolyA/PolyQ and taupathy diseases (for example OPMD, Huntington’s disease, Spinocerebellar ataxia, Parkinson and Alzheimer disease and more). Recent studies demonstrated that Trehalose enhances autophagy — a natural mechanism of debris-clearance within cells.

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Trehalose was found to be effective in cell studies and in a mouse model of OPMD. In this disease there are characteristic intracellular aggregations of the abnormal protein PABPN1 (INI). Animal studies showed a direct correlation between reduction of mutant PABPN1 aggregates (INI) in cells and reduced cell death. Trehalose effectively reduced the aggregation and toxicity of mutant PABPN1 proteins in OPMD cell models. Furthermore, treatment of an OPMD mouse model with Trehalose resulted in the attenuation of muscle weakness, decreased aggregate formation and a reduced number of TUNEL-positive nuclei in skeletal muscle fibers.

Like all disaccharides, Trehalose is metabolized at the epithelial brush border of the intestine into two D-glucose molecules. Less than 0.5% of ingested Trehalose is absorbed into the blood stream where it is further metabolized by the liver and kidney. Oral Trehalose in amounts exceeding 40 – 50 g per day causes diarrhea, bloating and abdominal pain. To achieve therapeutic amounts of Trehalose in the muscle cells, it is necessary to circumvent the massive metabolism in the gastrointestinal tract. Cabaletta is our proprietary IV formulation of Trehalose developed for the treatment of diseases characterized by unstable mutant protein aggregates causing cellular damage and eventually cell death.

Trehalose was approved by the FDA, EMEA and several other authorities as a GRAS food ingredient and is also registered on the US National Formulary, as well as in Europe and Japan. Its safety in preclinical studies was extensively researched and validated.

Clinical development plan:

Our clinical plan will include eventually three centers that will look at the safety and efficacy of Trehalose in OPMD patients across centers in Israel and North America.

The study is a pivotal study planned to include 40 – 60 patients in 3 centers, in Israel, Canada and the USA. All patients will be treated with 30g Trehalose IV weekly for the first 6 months. After 6 months,

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patients will be randomized into a treatment arm that will continue with the weekly IV 30g regimen and a non treatment control group that will be followed up under the same protocol for an additional 12 months. As of July 7, 2014, fourteen patients have been treated. If the trial is successful, we are planning to submit a new drug application, or NDA, to the FDA. Endpoints in the trial include (i) penetration aspiration scale based on video fluoroscopy, (ii) muscle strength, and (iii) quality of life.

The market potential for OPMD:

The prevalence of OPMD is estimated at 1:100,000. The disease is more prevalent among people of French Canadian origin residing in Canada and in the U.S., and among Hispanics in New Mexico, Arizona and the other south western states of the U.S. and in Israel. The prevalence of OPMD among French Canadians in the Montreal, Canada area is 1:1,000. There are estimated 4,000 – 5,000 patients in Canada. In Israel, the prevalence of OPMD among Bukharean Jews is 1:700. There are estimated 1,200 – 1,500 patients in Israel. It has been reported to occur in 33 countries in the world. In the United States, the estimated number of patients is less than 6,000.

Spinocerebellar Ataxia type 3 (Machado Joseph disease)

Disease background:

Spinocerebellar ataxia Type 3 (SCA3), also known as Machado-Joseph disease, is a dominantly inherited ataxia, and is the most common disease among the cerebellar ataxias, also known as SCAs. SCA3 is characterized by memory deficits, clumsiness in movements in the arms and legs, unstable gait, difficulty with speech and swallowing, impaired eye movements that may be accompanied by double vision or bulging eyes, and lower limb spasticity. In most individuals with SCA3, symptoms typically begin in the third to fifth decade of life but can start as early as young childhood or as late as 70 years of age. The cause of death is often aspiration pneumonia.

SCA3 is a caused by a repeat expansion in the DNA code causing the creation of an abnormal and unstable cellular protein Ataxin 3. Typically the longer the expansion, the more severe the disease which may manifest earlier in life and exert a broader range of neurological symptoms. Cellular aggregations of Ataxin 3 inclusion bodies are found in SCA3 patients’ brain and nerve cells.

There is no medical treatment for SCA3 and current approaches are focused on alleviating disease symptoms and supportive care.

Rationale for treatment and development plan:

It has been established that enhancement of autophagy in SCA3 is an effective approach that reduces intracellular aggregates and increase cell survivals. Trehalose was found to be effective in SCA3 cells as a stabilizer of the mutant Ataxin 3 and as an enhancer of autophagy. Animal studies to further prove the concept are now ongoing. We recently started our Phase 2 clinical trial of Cabaletta to treat SCA3 in Israel. This randomized placebo controlled trial will treat patients for one year.

Market potential:

The prevalence of SCA3 is estimated as 1 – 2 cases per 100,000 people. The prevalence of the disease is highest among people of Portuguese/Azorean descent. For example, among immigrants of Portuguese ancestry in New England, the prevalence is around one in 4,000, and the highest prevalence in the world, about one in 140, occurs on the small Azorean island of Flores. There are an estimated 4,000 to 6,000 patients in the United States, and an estimated 2,000 patients in each of Portugal and Brazil. SCA3 has been reported in over a dozen European countries with a few effected families mentioned in each of the reported case studies.

Spino Bulbar muscular atrophy (SBMA)

Disease background:

SBMA, also known as Kennedy’s disease, is a rare inherited X linked disease, characterized by the degeneration and loss of lower motor neurons in the brainstem and spinal cord resulting in progressive muscle weakness, atrophy, and fasciculation. The disease is typically manifested in the fourth or fifth decade of life. Affected patients also have signs of androgen insensitivity such as gynecomastia (large male breasts), reduced fertility, and testicular atrophy. As the disease progresses, disability is increased until the patient is wheelchair

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bound. Involvement of the bulbar musculature may be expressed as difficulty in chewing, swallowing, and speaking. Postural tremor and tremor in the upper extremities usually begins late in the course of the illness. Patient may also suffer from sensory disorders as well as symptoms related to endocrinopathy, particularly diabetes.

Rationale for treatment and development plan:

SBMA is caused by an expansion of the CAG trinucleotide repeat in exon 1 of the human androgen receptor (AR) gene. A disease causing protein — a mutant AR have been identified in patient’s cells, where it aggregates both in the cytoplasm and in the nucleus. Several studies demonstrated the ability of Trehalose as a protein stabilizer and an autophagy enhancer to protect SBMA cells from the toxic effects of the mutant AR protein. We are now conducting an a study in animal models, in collaboration with the NIH. We plan to continue our preclinical development and if successful, expect to be in Phase II study in 2015 in the United States.

Market potential:

The estimated incidence of SBMA in the U.S. is approximately 1 case in 40,000 men, or approximately 3,775 patients. There is a general impression that SBMA may be under-diagnosed, owing in part to misdiagnosis and to the mild symptoms exhibited by some patients. The estimated prevalence in the rest of the world (Europe, Japan, Australia) is similar. Some regions, such as western Finland and Japan, may have a higher prevalence. There are an estimated 10,000 patients in Europe, 1,500 patients in Japan and 300 patients in Australia.

Friedrich’s Ataxia:

Disease background:

Friedreich’s ataxia is a rare inherited disease that causes muscle and nerve damage. It usually begins in childhood and is caused by progressive degeneration of the spinal cord and peripheral nerves. The cerebellum — the part of the brain that coordinates balance and movement, also degenerates. This damage results in clumsy, unsteady movements and gait and impaired sensory functions. The disease also causes severe heart disease, spinal deformity and diabetes. Typically patients are diagnosed within the first two decades of life and may become wheelchair bound within 15 years of diagnosis. Life expectancy is severely shortened and most patients do not live beyond the fourth decade of life.

Friedreich’s ataxia is caused by a defect (mutation) in a gene labeled FXN. As a result a protein called Frataxin is mutated and dysfunctional. Fratxin plays a pivotal role in the normal mitochondrial metabolism: Without a normal level of Frataxin, certain cells in the body (especially peripheral nerve, spinal cord, brain and heart muscle cells) cannot effectively produce energy, and buildup toxic byproducts leading to what is called “oxidative stress.” Frataxin deficiency may also lead to increased levels of iron in the mitochondria. When the excess iron reacts with oxygen, free radicals can be produced. Although free radicals are essential molecules in the body’s metabolism, they can also destroy cells and harm the body.

Rationale for treatment and development plan:

Unlike successful lysosomal Enzyme-Protein Replacement Therapy (ERT)- mitochondrial ERT has yet to be established. We have developed a successful mitochondrial PRT platform based on a recombinant protein containing targeting signals (TAT-MTS-protein). Our novel platform was the first proven approach towards correction of mitochondrial protein deficiency diseases. Based on our approach, PRT therapy has been studied in FA mouse model with some success, using the native mitochondrial targeting sequence (MTS) of Frataxin (MTSfa). We have made a scientific leap by replacing the native MTS with a heterologous MTS (one that is native to another protein). Our approach was tested in preclinical studies and was found to be highly superior in four major parameters: The expression of the fusion protein by bacterial cells, the penetration of the protein into FA patient’s cells, the breakout of the fusion protein into its components leaving the Frataxin protein in the mitochondria, and finally, the correction of the pathological “oxidative stress” of the cells.

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Better expression by bacteria

   
Protein   Final concentration (mg)   Amount purified from 0.5 bacterial culture (mg)
TAT-MTSfra-FRA     0.2       0.6 - 0.7  
TAT-MTScs-FRA     1.0       3 - 4  
TAT-MTSorf-FRA     1.0       3 - 4  
TAT-MTSlad-FRA     0.8       2.4 - 3.2  

Higher efficiency in cell rescue

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We continue our preclinical development of our BB-FA candidate and will advance into full preclinical regulatory route later in 2014. We expect to start clinical studies late in 2015 in the United States and Europe.

Market potential for BB-FA:

Although rare, Friedreich’s ataxia is the most common form of hereditary ataxia, affecting about 1 in every 50,000 people in the United States. It is estimated that the number of Friedreich’s ataxia patients in the U.S. is about 6,000, with approximately 15,000 patients worldwide.

Ornithine transcarbamylase deficiency

Disease background:

Ornithine transcarbamylase deficiency (OTCD) is the most common urea cycle disorder, a group of rare genetic metabolic disorders characterized by the body’s inability to detoxify ammonia. OTCD is caused by a mutated and ineffective form of the enzyme ornithine transcarbamylase (OTC).

OTC is one of the critical enzymes that participate in the “Urea cycle” — a metabolic process that helps the body get rid of ammonia, the toxic breakdown product of proteins. As a result, the normal breakdown of ammonia is disrupted and toxic ammonia accumulates in the blood causing severe damage to the brain and other vital organs, especially in the highly vulnerable nervous system.

Ornithine transcarbamylase deficiency often becomes evident in the first few days of life, however it can present at middle age. The typical initial symptoms of a child with hyperammonemia are failure to feed, loss of thermoregulation with a low core temperature, and somnolence. Symptoms progress from somnolence to lethargy and coma. Abnormal posturing and encephalopathy are often related to the degree of central nervous system swelling and pressure upon the brain stem. In cases where OTC enzyme production is low or non-existent, death can occur within the first days of life. Complications from ornithine transcarbamylase deficiency may include developmental delay and mental retardation. Progressive liver damage, skin lesions, and brittle hair may also be seen. Other symptoms include irrational behavior (caused by encephalitis), mood

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swings, and poor performance in school. In milder (or partial) urea cycle enzyme deficiencies, ammonia accumulation may be triggered by illness or stress at almost any time of life, resulting in multiple mild elevations of plasma ammonia concentration.

Rationale for treatment and development plan:

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Loss of OTC blocks the normal metabolism of ammonia into the less toxic urea that can be cleared from the blood by the kidneys. Replacement of the missing or mutated protein can restore the normal function of the urea cycle and prevent the toxic accumulation of ammonia. Based on our PRT platform, we have developed a fusion protein that is comprised of TAT-MTS (het)-OTC. We are developing it towards proof of concept in human cells and in animal models. We continue our preclinical development and expect to start a full preclinical regulatory phase in mid 2014. We expect to start Phase I study late in 2015 in the United States and Europe.

Market potential for BB-OTC:

The incidence of OTCD is 1 in 70,000, with approximately 4,000 patients in the United States, of which 2,000 males suffer from the severe lethal form. This incidence may be an underestimation due to under diagnosis. In some affected individuals, signs and symptoms of ornithine transcarbamylase may be less severe, and may not appear until later in life. Some female carriers become symptomatic later in life in times of metabolic stress. Despite milder presentations in adulthood, hyperammonemia, encephalopathy, cerebral edema, and death can occur. On February 1, 2013, the FDA approved RAVICTI® (glycerol phenylbutyrate) Oral Liquid for use as a nitrogen-binding agent for chronic management of adult and pediatric patients 2 years of age or older with urea cycle disorders (UCDs) who cannot be managed by dietary protein restriction and/or amino acid supplementation alone. In clinical studies, RAVICTI was shown to be noninferior to sodium phenylbutyrate, and kept ammonia at safe levels throughout the day and night and over the long-term (1 year). Despite RAVCITI’s effectiveness in lowering blood ammonia levels it has some significant limitations in that it is not approved for patients suffering from liver or kidney disease and many OTCD patients have some disturbance in liver or kidney functions. In addition, over 10% of RAVCITI users suffer from diarrhea, bloating, and abdominal pain. There exists a place for a therapy that will prevent the accumulation of ammonia in the first place.

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Spinal Muscular atrophy

Disease background:

Spinal Muscular Atrophy (SMA) is a neuromuscular disorder for which there is no available therapy. SMA is the number one autosomal recessive cause of infantile death. SMA is caused by loss or mutation of the survival motor neuron 1 gene, SMN1, while the nearly identical copy gene, SMN2 is retained. In contrast to SMN1, most SMN2 transcripts lack exon 7. This alternatively spliced transcript, |gD7-SMN, translates into a prematurely terminated (truncated) protein that is rapidly degraded. It has been established that read-through of the stop codon in exon 8 of the |gD7-SMN2 protein increases the amount of full-length SMN2 — a protein that can significantly attenuate disease severity in SMA patients.

Rational for therapy and development plan:

Drug-induced read-through of the premature termination codon enables full-length translation of SMN, thus serving as an ideal therapeutic target as it is found in all SMA patients. This approach was successfully tested in SMA cells and animal models using a known family of antibiotics called aminoglycosides. Unfortunately, chronic administration of aminoglycosides is impossible due to their well-known prohibitive toxicity.

Our family of FDA-approved molecules (BBrm) are non-glycosides that were found to be highly superior to aminoglycosides in enabling read-through and enabling the expression of full length functional SMN2 and rescue of cells.

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We continue our preclinical development of our BBrm program and expect to start Phase II clinical study by the end of 2014 or beginning of 2015 in Israel to be expanded to the United States and Europe in 2015.

Market potential for SMA:

SMA has a carrier frequency of one in every 35 people, affecting every one in 6,000 live births. It is estimated that some 30,000 children suffer from SMA in the U.S. and in similar numbers in Europe.

There are several drugs in development for SMA; however, there is no approved therapy for this disease.

Competition

The commercialization of new drugs is competitive, and we may face worldwide competition from individual investigators, major pharmaceutical companies, specialty pharmaceutical companies, biotechnology companies, nutraceutical companies, and ultimately biosimilar and generic companies. Our competitors may develop or market therapies that are more effective, safer, or less costly than any that may be commercialized by us, or may obtain regulatory approval for their therapies more rapidly than we may obtain approval for ours.

The acquisition or licensing of pharmaceutical products is also very competitive, and a number of more established companies, which have acknowledged strategies to license or acquire products, may have competitive advantages as may other emerging companies taking similar or different approaches to product acquisitions. These established companies may have a competitive advantage over us due to their size, cash flows, and institutional experience.

With respect to our programs in Cabaletta for OPMD, although we are not aware of any other products currently in clinical development for the treatment of OPMD, it is possible that competitors may produce, develop, and commercialize therapeutics, or utilize other approaches such as gene therapy, to treat OPMD. An academic based study testing the use of injected myoblasts has completed Phase 2 study.

With respect to our programs in Cabaletta for SCA3, although we are not aware of any other products currently in clinical development for the treatment of SCA3, it is possible that competitors may produce, develop, and commercialize therapeutics, or utilize other approaches such as gene therapy, to treat SCA3. Note that in the last few years several academic researches where conducted to explore the efficacy of approved drugs such as Lithium, Varenicline (Chantix), riluzol, Dalfampridine.

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With respect to our programs in Cabaletta for SBMA, Novartis is planning to conduct a Phase 2 study for its insulin resistance drug candidate BVS857 in SBMA patients. This will be a two year study that will look at the size of patients muscle as an endpoint. Although we are not aware of any other products currently in clinical development for the treatment of SBMA, it is possible that competitors may produce, develop, and commercialize therapeutics, or utilize other approaches such as gene therapy to treat SBMA.

Although we believe that Cabaletta should be considered a drug and that only insignificant amounts of Trehalose can be absorbed through an oral administration — it is possible that other companies or individuals may attempt to use food grade Trehalose as a substitute, and others may attempt to sell the product via a nutraceutical or food pathway. We believe that following the approval of our patent applications, if approved, we will be well protected in our intellectual property from the use of Trehalose as an IV product.

With respect to our programs in protein replacement platform although we are not aware of any other similar products currently in clinical development for the treatment of Friedrich’s Ataxia, there are a number of competitors trying to develop and commercialize therapeutics, or utilize other approaches such as mitochondria protecting agents, anti-oxidants, HDAC inhibitors, cell therapy or gene therapy, to treat Friedrich’s Ataxia. The table below describes, to our knowledge, the current therapeutic approaches in different stages of development. To our knowledge, none of these product candidates have received regulatory approval in the U.S. or Europe.

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With respect to the table above, BioMarin Pharmaceutical Inc. (Nasdaq:BMRN) announced on February 5, 2014, that it had acquired Repligen Corporation’s histone deacetylase inhibitor (HDACi) library and related intellectual property. Potential applications of the HDACi portfolio include Friedreich’s ataxia and other neurological disorders.

With respect to our programs in protein replacement platform although we are not aware of any other similar products currently in clinical development for the treatment of Ornithine transcarbamylase deficiency,

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there are a number of clinical approaches currently used to treat OTCD patients in emergency situation: Intravenous administration of sodium benzoate, arginine, and sodium phenylacetate might be beneficial for patients in hepatic coma; however, they can only be administered in a large medical facility setting with close laboratory monitoring available. Intravenous sodium benzoate and phenylacetate (Ammonul) was approved in the United States in February 2005.

Glycerol phenylbutyrate (Ravicti) is a pre-prodrug that undergoes metabolism to form phenylacetate. Results of a Phase III study comparing ammonia control in adults showed glycerol phenylbutyrate was non-inferior to sodium phenylbutyrate. In a separate study involving young children ages 2 months through 5 years, glycerol phenylbutyrate resulted in a more evenly distributed urinary output of PAGN over 24 hours and accounted for fewer symptoms from accumulation of phenylacetate. Ravicti was approved by the FDA early in 2013 (Hyperion).

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With respect to our program in BBrm- read through platform there are a number of competitors developing read through molecules, both small molecules (PTC) and exon- skipping RNA based platform (ISIS, Prosensa, Sarepta). Although not all have focused so far on SMA it is possible that they will develop in the future programs that will attempt to utilize their technology for SMA. In addition it is possible that competitors may produce, develop, and commercialize therapeutics, or utilize other approaches such as gene therapy, cell therapy or bone marrow transplantation to treat SCA3. The table below outlines, to our knowledge, the different approaches for developing drugs for SMA.

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We believe that our read-through platform could be synergistic to most technologies outlined above since most are focused on either generally enhancing the total production of SMN2 through exon skipping, or focused on the downstream effects of lack of SMN1. Many of our competitors have substantially greater financial, technical, and human resources than we have. Additional mergers and acquisitions in the pharmaceutical industry may result in even more resources being concentrated in our competitors. Competition may increase further as a result of advances made in the commercial applicability of technologies and greater availability of capital for investment in these fields. Our success will be based in part on our ability to build and actively manage a portfolio of drugs that addresses unmet medical needs and creates value in patient therapy.

License Agreements

We have entered into two license agreements with respect to two of our three platform technologies. On December 19, 2011, we entered into a Research and Exclusive License Agreement with Yissum Research Development Company of the Hebrew University in Jerusalem Ltd., whereby we licensed exclusively two patent applications covering our mitochondrial protein replacement platform. One patent application covers the use of TAT-MTS-Protein for protein replacement in mitochondrial diseases. The second patent application covers the use of heterologous MTS in a fusion protein for treatment of mitochondrial protein deficiency diseases. These patent applications, if issued, will expire in 2029 and 2033, respectively. In addition, on January 1, 2014 we entered into an Exclusive License Agreement with Ramot at Tel Aviv University Ltd. for the use, development and commercialization of our-read through platform.

Intellectual Property and Patents and Proprietary Rights

The proprietary nature of, and protection for, our product candidates, processes, and know-how are important to our business. Our success depends in part on our ability to protect the proprietary nature of our product candidates, technology, and know-how, to operate without infringing on the proprietary rights of others, and to prevent others from infringing our proprietary rights. We seek patent protection in the United States and internationally for our product candidates and other technology. Our policy is to patent or in-license the technology, inventions and improvements that we consider important to the development of our business. In addition to patent protection, we intend to use other means to protect our proprietary rights, including pursuing marketing or data exclusivity periods, orphan drug status, and similar rights that are available under regulatory provisions in certain countries, including the United States, Europe, Japan, and China. See “U.S. Government Regulation — Orphan Designation and Exclusivity,” “U.S. Government Regulation — Pediatric Studies and Exclusivity,” “U.S. Government Regulation — Patent Term Restoration,” “U.S. Government Regulation — Biosimilars and Exclusivity,” “U.S. Government Regulation — Abbreviated New Drug Applications for Generic Drugs,” “U.S. Government Regulation — Hatch-Waxman Patent Certification and the 30-Month Stay,” and “European Union/Rest of World Government Regulation — Orphan Designation and Exclusivity” below for additional information.

We also rely on trade secrets, know-how, and continuing innovation to develop and maintain our competitive position. We cannot be certain that patents will be granted with respect to any of our pending patent applications or with respect to any patent applications filed by us in the future, nor can we be sure that any of our existing patents or any patents granted to us in the future will be commercially useful in protecting our technology.

We seek regulatory approval for our products in disease areas with high unmet medical need, great market potential, and where we have a proprietary position through patents covering various aspects of our products, such as composition, dosage, formulation, use, and manufacturing process, among others. Our success depends on an intellectual property portfolio that supports our future revenue streams and erects barriers to our competitors. We are maintaining and building our patent portfolio through filing new patent applications, prosecuting existing applications, and licensing and acquiring new patents and patent applications.

Despite these measures, any of our intellectual property and proprietary rights could be challenged, invalidated, circumvented, infringed or misappropriated, or such intellectual property and proprietary rights may not be sufficient to permit us to take advantage of current market trends or otherwise to provide competitive advantages. For more information, please see “Risks Related to our Intellectual Property.”

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As of July 6, 2014, we own and/or are the exclusive licensee of five pending U.S. patent applications and corresponding patents and patent applications internationally. With respect to our issued patents in the United States and Europe, we may also be entitled to obtain a patent term extension to extend the patent expiration date. For example, in the United States, we can apply for a patent term extension of up to five years for one of the patents covering a product once the product is approved by the FDA. The exact duration of the extension depends on the time we spend in clinical studies as well as getting a new drug application approval from the FDA. The patent portfolios for our three leading platform and product candidates as of July 6, 2014 are summarized below.

Cabaletta

We have a patent application covering the use of Trehalose for the treatment of PolyA/PolyQ diseases and Taupathies. The patent application covers a novel therapeutic regime using parenteral administration of Trehalose, thereby achieving higher bioavailability and therapeutic efficacy in the treatment of myopathic and neurodegenerative diseases associated with abnormal protein aggregation, specifically polyalanine or polyglutamine expansion protein and tauopathies disorders such as OPMD, SCA, SBMA, Huntington and more.

The expiring patent terms for such pending patents applications in the United States would be 2033. We intend to pursue marketing and orphan drug exclusivity periods that are available to us under regulatory provisions in certain countries. We intend to submit a Track One Priority Examination patent application on related future patent applications.

In addition we have received orphan drug designation for the use of Trehalose in OPMD patients.

mPRT

We have licensed exclusively two patent applications covering our mitochondrial protein replacement platform from the Hebrew University in Israel. One patent application covers the use of TAT-MTS-Protein for protein replacement in mitochondrial diseases (See “License Agreements”). The second patent application covers the use of heterologous MTS in a fusion protein for treatment of mitochondrial protein deficiency diseases. These patent applications, if issued, will expire in 2029 and 2033 respectively. In addition, we have applied for a Track One Priority Examination approval for our FA and OTC program, based on our heterologous MTS patent application.

Read-through

We are the exclusive licensee of one patent and one patent application covering our-read through platform that we licensed from Tel Aviv University (See “License Agreements” section above). One patent covers a method for treating cancer through read through of nonsense mutation. This patent is already granted in Europe. The patent application covers a method of treatment for orphan genetic neurodegenerative and neurodevelopmental diseases through non-systemic administration.

The expiration dates on these patents are 2029 and 2033 respectively.

Trademarks

We have filed with the USPTO an intent to use application for the trademark CABALETTA in International Class 5 for certain pharmaceutical preparations.

Other

We rely upon unpatented trade secrets, know-how, and continuing technological innovation to develop and maintain our competitive position. We seek to protect our ownership of know-how and trade secrets through an active program of legal mechanism including assignments, confidentiality agreements, material transfer agreements, research collaborations, and licenses.

Manufacturing

We currently contract with third parties for the manufacturing and testing of our product candidates for preclinical studies and clinical studies and intend to do so in the future. We do not own or operate

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manufacturing facilities for the production of clinical quantities of our product candidates. We currently have no plans to build our own clinical or commercial scale manufacturing capabilities. The use of contracted manufacturing and reliance on collaboration partners is relatively cost-efficient and has eliminated the need for our direct investment in manufacturing facilities and additional staff early in development. Although we rely on contract manufacturers, we have personnel with extensive manufacturing experience to oversee our contract manufacturers.

To date, our third-party manufacturers have met our manufacturing requirements. We expect third-party manufacturers to be capable of providing sufficient quantities of our product candidates to meet anticipated full scale commercial demands. To meet our projected needs for commercial manufacturing, third parties with whom we currently work might need to increase their scale of production or we will need to secure alternate suppliers. We believe that there are alternate sources of supply that can satisfy our clinical and commercial requirements, although we cannot be certain that identifying and establishing relationships with such sources, if necessary, would not result in significant delay or material additional costs.

The drug substance for Cabaletta is purchased from a third party supplier and drug product for Cabaletta is manufactured by a third party manufacturer. There are other suppliers for pharmaceutical grade Trehalose in the market. We have not yet started the development of our clinical trial material for our pre-clinical programs in mPRT and Read through platform.

Sales and Marketing

We intend to build the commercial infrastructure in the United States and Europe necessary to effectively support the commercialization of all of our product candidates, if and when we believe a regulatory approval of the first of such product candidates in a particular geographic market appears imminent. The commercial infrastructure for orphan products typically consists of a targeted, specialty sales force that calls on a limited and focused group of physicians supported by sales management, medical liaisons, internal sales support, an internal marketing group, and distribution support. One challenge unique to commercializing therapies for rare diseases is the difficulty in identifying eligible patients due to the very small and sometimes heterogeneous disease populations. Our management team is experienced in maximizing patient identification for both clinical development and commercialization purposes in rare diseases.

Additional capabilities important to the orphan marketplace include the management of key accounts such as managed care organizations, group-purchasing organizations, specialty pharmacies, and government accounts. To develop the appropriate commercial infrastructure, we will have to invest significant amounts of financial and management resources, some of which will be committed prior to any confirmation that any of our product candidates will be approved.

Outside of the United States and Europe, where appropriate, we may elect in the future to utilize strategic partners, distributors, or contract sales forces to assist in the commercialization of our products. In certain instances we may consider building our own commercial infrastructure.

Government Regulation

Clinical trials, the drug approval process, and the marketing of drugs are intensively regulated in the United States and in all major foreign countries. Government authorities in the United States (including federal, state, and local authorities) and in other countries, extensively regulate, among other things, the manufacturing, research and clinical development, marketing, labeling and packaging, storage, distribution, post-approval monitoring and reporting, advertising and promotion, pricing, and export and import of pharmaceutical products, such as those we are developing. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local, and foreign statutes and regulations require the expenditure of substantial time and financial resources.

U.S. Government Regulation

In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act, or FDCA, and related regulations, and biologics under the FDCA and the Public Health Service Act, or PHSA, and its implementing regulations. FDA approval is required before any new unapproved drug or dosage form, including a new use of a previously approved drug, can be marketed in the United States. Drugs and biologics

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are also subject to other federal, state and local statutes and regulations. Failure to comply with the applicable United States regulatory requirements at any time during the product development process, approval process or after approval may subject an applicant to administrative or judicial sanctions. These sanctions could include the imposition by the FDA or an Institutional Review Board, or IRB, of a clinical hold on trials, the FDA’s refusal to approve pending applications or supplements, license suspension or revocation, withdrawal of an approval, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties or criminal prosecution. Any agency or judicial enforcement action could have a material adverse effect on us.

The FDA and comparable regulatory agencies in state and local jurisdictions and in foreign countries impose substantial requirements upon the clinical development, manufacture and marketing of pharmaceutical products. These agencies and other federal, state and local entities regulate research and development activities and the testing, manufacture, quality control, safety, effectiveness, labeling, storage, distribution, record keeping, approval, advertising and promotion of our products.

The FDA’s policies may change and additional government regulations may be enacted that could prevent or delay regulatory approval of our platforms and candidate products or any future product candidates or approval of new disease indications or label changes. We cannot predict the likelihood, nature or extent of adverse governmental regulation that might arise from future legislative or administrative action, either in the United States or abroad.

Marketing Approval

The process required by the FDA before product candidates may be marketed in the United States generally involves the following:

completion of extensive preclinical laboratory tests and preclinical animal studies, all performed in accordance with GLP regulations;
submission to the FDA of an IND which must become effective before human clinical studies may begin and must be updated annually;