ࡱ;   !"#$%&'()*+,-./0123456789:;<=>?@ABCDEFGHIJKLMNOPQRSTUVWXYZ[\]^_`abcdefghijklmnopqrstuvwxyz{|}~Root Entry  \pCalc Ba=B  !=@ 8X@"1Calibri1Arial1Arial1Arial1Calibri General3._(\$* #,##0_);_(\$* \(#,##0\);_(\$* \-_);_(@_) #,##0\(#,##0_);[RED]\(#,##0\)!"($"#,##0_);[RED]"($"#,##0\)'""($"#,##0.00_);[RED]"($"#,##0.00\) #,##0.00;6_(\$* #,##0.00_);_(\$* \(#,##0.00\);_(\$* \-??_);_(@_)                + ) , *   (  ( (8 "8  $  $  $  $  $  #8 #4  $  $ `7*axcella health inc-axcella health inc-1?axcella health inc-2Maxcella health inc-3Acaxcella health inc-4axcella health inc-5!saccounting pronouncements$accounting pronouncements -1$accounting pronouncements -2$accounting pronouncements -3$accounting pronouncements -4$accounting pronouncements -5[terminal interest fee#terminal interest fee-1Wterminal interest fee-2terminal interest fee-3eterminal interest fee-4net loss per shareenet loss per share-1"+comparison of the three mo$_comparison of the three mo-1$comparison of the three mo-2"comparison of the nine mon$+$comparison of the nine mon-1$0comparison of the nine mon-28sources of liquidity=funding requirementsFaxcella health inc-6mKaxcella health inc-7Naxcella health inc-8Raxcella health inc-9iUaxcella health inc-10Xaxcella health inc-11TZR"!!      !3  @@  Axcella Health INCDelaware 26-3321056>(State or other jurisdiction of incorporation or organization)$(I.R.S. Employer Identification No.)R840 Memorial DriveCambridge, Massachusetts(Address of principal executive offices)02139(Zip Code)B(857) 320-2200(Registrant s telephone number, including area code)As ofSeptember 30, 2019December 31, 2018AssetsCurrent assets:Cash and cash equivalents)Prepaid expenses and other current assetsTotal current assetsProperty and equipment, net"Security deposits and other assetsDeferred offering costs Total assetsVLiabilities, Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit)Current liabilities:Accounts payableAccrued expensesTotal current liabilitiesLong term debt, net of discountOther liabilities!Preferred stock warrant liabilityTotal liabilities&Commitments and contingencies (Note8)/Redeemable convertible preferred stock (Note7)Stockholders' equity (deficit):Common stock, $0.001 par value; 150,000,000 and 47,000,000 shares authorized, 23,517,446 and 5,193,915 shares issued and 23,098,465 and 4,774,934 shares outstanding at September30, 2019 and December 31, 2018, respectivelyAdditional paid-in capital&Treasury stock, 418,981 shares at costAccumulated deficit$Total stockholders' equity (deficit)\Total liabilities, redeemable convertible preferred stock and stockholders' equity (deficit) Three Months Ended September 30,Nine Months Ended September 30,20192018Operating expenses:Research and developmentGeneral and administrativeTotal operating expensesLoss from operationsOther income (expense):9Change in fair value of preferred stock warrant liabilityInterest income (expense), net!Total other income (expense), netNet loss%Net loss per share, basic and diluted=Weighted average common shares outstanding, basic and diluted%Cash flows from operating activities:JAdjustment to reconcile net loss to net cash used in operating activities:Depreciation and amortization Stock-based compensation expenseNon-cash interest expense&Gain on sale of property and equipment*Changes in current assets and liabilities:%Net cash used in operating activities%Cash flows from investing activities:#Purchases of property and equipment0Proceeds from the sale of property and equipment%Net cash used in investing activities%Cash flows from financing activities:<Proceeds from initial public offering, net of issuance costs(Proceeds from issuance of long term debtPayment of debt issuance costs!Payment of success fee obligation.Proceeds from exercise of common stock options)Net cash provided by financing activities4Net increase (decrease) in cash and cash equivalents.Cash and cash equivalents, beginning of period(Cash and cash equivalents, end of period#Supplemental cash flow information:Cash paid for interestGSupplemental disclosure of non-cash investing and financing activities::Reclassification of warrants to additional paid-in capital$ YConversion of preferred stock to common stock upon closing of the initial public offering&Redeemable convertible preferred stock Common stockTreasury stockTotalSharesAmount Par Valuestockholders equity (deficit)BALANCE - December 31, 20170Accretion of preferred stock to redemption valueStock-based compensationBALANCE - March 31, 2018 Exercise of common stock optionsBALANCE - June 30, 2018BALANCE - September 30, 2018BALANCE - December 31, 2018BALANCE - March 31, 20199Issuance of common stock, net of issuance costs of $6,896 Exercise of common stock warrantBALANCE - June 30, 2019BALANCE - September 30, 20190Accounting Pronouncements Issued and Not AdoptedLaboratory equipmentLeasehold improvementsOffice and computer equipmentFurniture and fixturesProperty and equipment/Less: accumulated depreciation and amortization4Fair value measurements at September 30, 2019 using:Level 1Level 2Level3Assets:Cash Equivalents3Fair value measurements at December31, 2018 using:Level1Level2 Liabilities:Success Fee Liability!Preferred Stock Warrant Liability Success fee!Preferred stock warrant liabilityBalance January 1, 20198Increase in warrant fair value included in other expenseEReclassification to additional paid-in capital in connection with IPOSettlement of success feeBalance  September 30, 2019 *Accrued employee compensation and benefits2Accrued external research and development expensesAccrued professional feesOther4Total accrued expenses and other current liabilities"Principal amount of long term debt Debt discountDeferred financing feesTerminal Interest FeeYear Ending December 31,2020202120222023 Three Months Ended September 30,Risk-free interest rate 1.43% - 1.95%2.82% 1.43% - 2.50% 1.93% - 2.90%Expected term (in years) 0.34 - 6.25 0.25 - 6.25Expected dividend yield0%.Expected volatility of underlying common stock73.4%65.0%65%OptionsWeighted Average Exercise Price*Weighted Average Remaining Life (in Years)Intrinsic Value (in thousands)Outstanding January1, 2019Granted ExercisedCanceledOutstanding September 30, 2019;Options vested or expected to vest as of September 30, 2019,Options exercisable as of September 30, 2019Years Ending December 31,Net Loss Per Share Numerator:3Accretion of redeemable convertible preferred stock,Net loss attributable to common stockholders Denominator:ERedeemable convertible preferred stock (as converted to common stock)ZWarrants to purchase redeemable convertible preferred stock (as converted to common stock) Options to purchase common stock@Comparison of the Three Months Ended September 30, 2019 and 2018Change(in thousands)RevenueTotal other expense, net4Direct research and development expenses by program:AXA1665 AXA1125/1957AXA2678AXA4010DPlatform development, early-stage research and unallocated expenses:Personnel related#External manufacturing and research*Laboratory supplies and research materialsFacility related and other'Total research and development expenses Professional and consultant fees)Total general and administrative expenses?Comparison of the Nine Months Ended September 30, 2019 and 2018Sources of Liquidity!Cash used in operating activities!Cash used in investing activities%Cash provided by financing activitiesFunding RequirementsPayments due by periodLess than 1year 1 to 3 years 4 to 5 yearsMore than 5yearsOperating lease commitments (1)Debt obligations (2)Very truly yours,By:/s/ William HinshawWilliam HinshawChief Executive OfficerDate:August 22, 2019/s/ David Epstein David EpsteinDatec/o Axcella Health Inc.$840 Memorial DriveCambridge MA 02139Date: November 12, 2019/s/ William R. 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