Financial Conflict of Interest Policy

Promoting Objectivity in Research Funded by the Public Health Service

1. Purpose and Scope

This Policy sets out the procedures by which Avagene Therapeutics, Inc. ("Avagene") complies with the regulations of the U.S. Public Health Service ("PHS") governing the responsibility of applicants for promoting objectivity in research for which PHS funding is sought (42 CFR Part 50, Subpart F, as revised and as may be further amended) (the "PHS Regulations").

This Policy applies to each Investigator (as defined below) who is planning to participate in, or is participating in, PHS-funded research conducted by Avagene, regardless of the Investigator's title or position.

2. Definitions

Terms used in this Policy have the meanings set forth in the PHS Regulations. The following terms are used frequently:

Investigator means the project director or principal investigator and any other person, regardless of title or position, who is responsible for the design, conduct, or reporting of research funded by the PHS, or proposed for such funding, which may include, for example, collaborators or consultants.

Significant Financial Interest ("SFI") means a financial interest consisting of one or more of the following interests of the Investigator (and those of the Investigator's spouse and dependent children) that reasonably appears to be related to the Investigator's institutional responsibilities:

• With regard to any publicly traded entity, an SFI exists if the value of any remuneration received from the entity in the twelve months preceding the disclosure and the value of any equity interest in the entity as of the date of disclosure, when aggregated, exceeds $5,000.
• With regard to any non-publicly traded entity, an SFI exists if the value of any remuneration received from the entity in the twelve months preceding the disclosure, when aggregated, exceeds $5,000, or when the Investigator (or the Investigator's spouse or dependent children) holds any equity interest.
• Intellectual property rights and interests (e.g., patents, copyrights), upon receipt of income related to such rights and interests.

SFI does not include the items excluded under 42 CFR 50.603, including salary and other remuneration from Avagene to the Investigator, income from certain U.S. government agencies and institutions of higher education, and income from seminars, lectures, or teaching engagements sponsored by certain non-profit or government entities.

Financial Conflict of Interest ("FCOI") means an SFI that could directly and significantly affect the design, conduct, or reporting of PHS-funded research.

PHS Awarding Component means the organizational unit of the PHS that funds the research that is subject to this Policy.

3. Responsible Officer

The President of Avagene serves as the "FCOI Official" and is responsible for solicitation and review of disclosures of Significant Financial Interests, determinations regarding FCOI, the development and implementation of management plans, reporting to PHS, and compliance with the PHS Regulations generally. Where the FCOI Official is also the disclosing Investigator, review and determination shall be made by an independent reviewer (e.g., outside counsel or a member of Avagene's Board of Directors with no financial interest in the matter) to avoid self-review.

4. Investigator Training

Each Investigator shall complete training regarding this Policy, the Investigator's responsibilities regarding disclosure of Significant Financial Interests, and the PHS Regulations prior to engaging in research related to any PHS-funded grant and at least every four years thereafter. Training shall also be completed immediately under the following circumstances:

• This Policy is revised in a manner that affects the requirements of Investigators;
• An Investigator is new to Avagene; or
• Avagene finds an Investigator to be non-compliant with this Policy or a management plan.

Avagene accepts the NIH Financial Conflict of Interest online tutorial, or equivalent training offered by a qualified provider, as satisfying this training requirement.

5. Disclosure Requirements

Each Investigator shall disclose all Significant Financial Interests to the FCOI Official:

• No later than the time of application for PHS-funded research;
• At least annually during the period of the award; and
• Within thirty (30) days of discovering or acquiring (e.g., through purchase, marriage, or inheritance) a new Significant Financial Interest.

Disclosures shall be submitted using the FCOI Disclosure Form maintained by Avagene. Investigators shall also disclose any reimbursed or sponsored travel related to their institutional responsibilities, subject to the exclusions set forth in 42 CFR 50.603.

6. Review and Determination Process

The FCOI Official shall review each disclosure of a Significant Financial Interest to determine whether it is related to PHS-funded research and, if so, whether it is a Financial Conflict of Interest. An SFI is related to PHS-funded research when the FCOI Official reasonably determines that the SFI could be affected by the PHS-funded research or is in an entity whose financial interest could be affected by the research.

If the FCOI Official determines that an FCOI exists, the FCOI Official shall, prior to the expenditure of any funds under the PHS-funded award, develop and implement a management plan that shall specify the actions taken or to be taken to manage, reduce, or eliminate the FCOI. Management plans may include, but are not limited to:

• Public disclosure of FCOIs (e.g., in each publication of research results, in presentations, and in communications with staff);
• Appointment of an independent monitor capable of taking measures to protect the design, conduct, and reporting of the research against bias resulting from the FCOI;
• Modification of the research plan;
• Change of personnel or personnel responsibilities, or disqualification of personnel from participation in all or a portion of the research;
• Reduction or elimination of the financial interest (e.g., sale of an equity interest); or
• Severance of relationships that create FCOIs.

7. Reporting to PHS

Prior to Avagene's expenditure of any funds under a PHS-funded research project, Avagene shall provide to the PHS Awarding Component an FCOI report regarding any Investigator's FCOI held by an Investigator that meets the criteria under the PHS Regulations, in the form and manner required by PHS.

Avagene will submit annual FCOI reports for the duration of the PHS-funded project. Avagene will also submit revised FCOI reports within sixty (60) days of identifying any new FCOI or a retrospective review finding (see Section 8).

8. Retrospective Review and Mitigation Reports

In the event of a failure to comply with this Policy or a management plan, or if Avagene identifies an FCOI that was not previously identified or managed, Avagene will, within one hundred twenty (120) days of the determination of noncompliance, complete a retrospective review of the Investigator's activities and the PHS-funded research project to determine whether the research conducted during the period of noncompliance was biased in its design, conduct, or reporting. If bias is found, Avagene will submit a mitigation report to the PHS Awarding Component in accordance with 42 CFR 50.605(a)(3).

9. Subrecipient Investigators

When Avagene carries out PHS-funded research through a subrecipient (e.g., a subcontractor, subawardee, collaborator, or consultant), Avagene will take reasonable steps to ensure that Investigators working for the subrecipient comply with the PHS Regulations. The subaward or subcontract agreement will require the subrecipient either to comply with this Policy or to certify that its own FCOI policy complies with the PHS Regulations. Where the subrecipient's own policy applies, the subrecipient will report identified FCOIs to Avagene in time for Avagene to meet its own reporting obligations to the PHS Awarding Component.

10. Public Accessibility

Avagene makes this Policy available via a publicly accessible website (www.avagene.org/fcoi.html) in accordance with 42 CFR 50.604(a). Information concerning identified FCOIs of senior/key personnel will be made available via a publicly accessible website, or upon written request, in accordance with 42 CFR 50.605(a)(5).

11. Enforcement and Sanctions

Failure by an Investigator to comply with this Policy may result in disciplinary action up to and including termination of the Investigator's relationship with Avagene, suspension or termination of the Investigator's participation in the PHS-funded research, and any additional actions required by the PHS Regulations.

12. Recordkeeping

Avagene will maintain records of all Investigator disclosures of financial interests and Avagene's review of, and response to, such disclosures (whether or not a disclosure resulted in Avagene's determination of an FCOI) and all actions under this Policy or the PHS Regulations for at least three (3) years from the date the final expenditure report is submitted to PHS, or longer where applicable regulations so require.

13. Policy Review and Amendment

This Policy will be reviewed at least annually by the FCOI Official and may be amended from time to time to ensure continuing compliance with the PHS Regulations and other applicable law. Amendments are effective upon adoption by Avagene.

14. Contact

Questions regarding this Policy may be directed to:

Rupert D. Smit, M.D.
President & FCOI Official
Avagene Therapeutics, Inc.
1701 Locust St, Unit 1906
Philadelphia, PA 19103
fcoi@avagene.org