ࡱ; ~  !"#$%&'()*+,-./0123456789:;<=>?@ABCDEFGHIJKLMNOPQRSTUVWXYZ[\]^_`abcdefghijklmnopqrstuvwxyz{|}Root Entry  \pCalc Ba=: =@ 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   #4 #4 #8 #4 #4 #4 # # # # #4 #4 ( `*axcella health inc"-condensed consolidated bal":condensed consolidated sta$aEcondensed consolidated sta-1$[Ucondensed consolidated sta-2"snotes to condensed consoli!x4 fair value measurements#}4 fair value measurements-1#4 fair value measurements-2"ۈ5 accrued expenses and othK6 debt financingYterminal interest fee7 stockholders equityי7 stockholders equity-17 stockholders equity-2"{8 commitments and contingeѧ10 net loss per share;10 net loss per share-1"three months ended june 30 Żresearch and development"general and administrative"six months ended june 30 2"research and development-1$general and administrative-1+ cash flowskcontractual obligationsaxcella health inc-1"certification of chief exe$certification of chief exe-1T:2t     3  @@  `AXCELLA HEALTH INC.Delaware 26-3321056=(State or other jurisdiction ofincorporation or organization)#(I.R.S. EmployerIdentification No.)R840 Memorial DriveCambridge, Massachusetts(Address of principal executive offices)02139(Zip Code)B(857) 320-2200(Registrant s telephone number, including area code)1Condensed Consolidated Balance Sheets (Unaudited)As ofJune30, 2019December31, 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, $0.001 par value; 150,000,000 and 47,000,000 shares authorized, 23,498,786 and 5,193,915 shares issued and 23,079,805 and 4,774,934 shares outstanding at June 30, 2019 and December 31, 2018, respectivelyAdditional paid-in capital&Treasury stock, 418,981 shares at costAccumulated deficit$Total stockholders' equity (deficit)\Total liabilities, redeemable convertible preferred stock and stockholders' equity (deficit);Condensed Consolidated Statements of Operations (Unaudited)Three Months Ended June 30,Six Months Ended June 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;Condensed Consolidated Statements of Cash Flows (Unaudited)%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?Initial public offering costs incurred but unpaid at period endOCondensed Consolidated Statements of Stockholders' Equity (Deficit) (Unaudited)&Redeemable convertible preferred stock Common stockTreasury stockTotalSharesAmount Par Valuestockholders equity (deficit)BALANCE - December31, 20170Accretion of preferred stock to redemption valueStock-based compensationBALANCE - March31, 2018 Exercise of common stock optionsBALANCE - June30, 2018BALANCE - December31, 2018BALANCE - March31, 20199Issuance of common stock, net of issuance costs of $6,896 Exercise of common stock warrantBALANCE - June30, 2019@NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)Laboratory equipmentLeasehold improvementsOffice and computer equipmentFurniture and fixturesProperty and equipment/Less: accumulated depreciation and amortization4. FAIR VALUE MEASUREMENTS/Fair value measurements at June30, 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 warrantliabilityBalance January 1, 20198Increase in warrant fair value included in other expenseEReclassification to additional paid-in capital in connection with IPOSettlement of success feeBalance  June30, 201915. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES *Accrued employee compensation and benefits2Accrued external research and development expensesAccrued professional feesOther4Total accrued expenses and other current liabilities6. DEBT FINANCING"Principal amount of long term debt Debt discountDeferred financing feesTerminal Interest FeeYear Ending December31,20202021202220237. STOCKHOLDERS' EQUITYThree Months Ended June 30,Risk-free interest rate 1.84% - 2.34% 1.93% - 2.90% 1.84% - 2.50%Expected term (in years) 0.25 - 6.25Expected dividend yield0%.Expected volatility of underlying common stock73.4%65.0%65%OptionsWeighted AverageExercise Price(Weighted AverageRemaining Life(in Years)IntrinsicValue(in thousands)Outstanding January1, 2019Granted ExercisedCanceledOutstanding June30, 20196Options vested or expected to vest as of June30, 2019'Options exercisable as of June30, 2019 8. COMMITMENTS AND CONTINGENCIESYears Ending December31,10. 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 Three Months Ended June 30, 2019Change(in thousands)RevenueTotal other expense, netResearch and Development4Direct research and development expenses by program:AXA1665 AXA1125/1957AXA2678DPlatform 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 expensesGeneral and Administrative Professional and consultant fees)Total general and administrative expensesSix Months Ended June 30, 2019 Cash Flows!Cash used in operating activities!Cash used in investing activities%Cash provided by financing activitiesContractual ObligationsPayments due by periodLess than1year 1 to3 years 4 to5 yearsMore than5yearsOperating lease commitments(1)Debt obligations(2)By:/s/ William R. 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